FairPoint Communications (Nasdaq: FRP) says it’s willing to negotiate with striking workers but doesn’t want to budge on the employees’ core issues: hiring contractors, changing pension plans and reducing health care benefits.

Workers were dealt a blow last week when the National Labor Relations Board dismissed union complaints that the company bargained in bad faith and illegally imposed terms of its final offer proposal that froze the pension, required health care contributions for the first time and allowed the hiring of contractors.

The unions have vowed to appeal, but the process will take at least several months, officials say.

Compromise has proven elusive as the strike, now in its third month, creates an uncertain future both for the telecommunications company and more than 1,700 workers in Maine, New Hampshire and Vermont.

“The biggest challenge is there’s no good off-ramp for either side to compromise. There’s no real avenue without being seen as backing down,” said Barry Sine, an analyst at Drexel Hamilton, a New York-based brokerage firm, who isn’t involved in the negotiations.

Fairpoint CEO’s statement:

“We appreciate the fair and objective review of the facts that resulted in a favorable ruling at the Regional level,” said Paul Sunu, Chief Executive Officer of FairPoint in a statement. “As described in the NLRB ruling, FairPoint engaged in lawful bargaining designed to achieve our stated goals of cost savings and operational flexibility. The ruling today is gratifying and confirms our position and honest belief that we have bargained in good faith. As the unions appeal to the General Counsel of the NLRB, my expectation is that our case will continue to receive the fair and objective treatment that it did at the Regional level.”

“The unions have made allegations of bad faith bargaining their primary public rallying cry since before their decision to strike,” Sunu continued. “In this ruling the NLRB has declared there is no merit to these claims. The ruling establishes that the unions’ allegations were just propaganda. The unions have campaigned with the media, elected officials, the communities of the region and their membership seeking to blame FairPoint for the ongoing labor dispute. The time for all this spinning is over as the truth is now known. It is high time that the unions address the real issues that should have been addressed well before any strike.”

The International Brotherhood of Electrical Workers and the Communication Workers of America were hoping for a breakthrough Sunday when top officials from both negotiating teams gather for the first time in more than a month. The two sides last met for a one-hour session that went nowhere Nov. 18 in Boston. This time, the federal mediation service plans to take an active role. The closed-door session will be held in Washington, D.C.

Both sides agree that FairPoint workers had one of the best contracts in the business. They agree that workers need to give up some of benefits to keep the company competitive.

But workers who stuck with the company when it filed for bankruptcy after buying Verizon’s land-based telephone assets say the company is asking for too much. The company has yet to reverse net losses posted for every year of operation since the Verizon purchase in 2007.

Workers are especially concerned about FairPoint’s demand that it be allowed to hire contract workers. Workers fear they’ll eventually be replaced by lower-paid, less-qualified contractors.

“All of the pensions and health care in the world isn’t going to be any good if you don’t have a job,” said Pete McLaughlin, chairman of the unions’ bargaining committee.

The company contends it needs flexibility to hire contract workers to deal with peaks and valleys in work, especially in the summer when the old contract guaranteed at least two weeks of vacation for workers during the busiest time of the year.

Striking workers insist they’re not ready to give in unless the company is willing to meet them partway.

“They won’t break us,” said Mary Beam, a customer service worker from Westbrook.

FairPoint CEO Paul Sunu said the NLRB ruling showed that the unions’ allegations of bad-faith bargaining were “propaganda.” In a statement, he said it’s time to end “all this spinning.”

For now, customer service complaints are growing, with more than 700 in Vermont alone as FairPoint relies on replacement workers.

Despite the problems, most investors want Charlotte, North Carolina-based FairPoint Communications Inc. to stand up to the union, said Sine, the industry analyst. The company can probably weather some residential customer losses if it focuses on holding onto its big business customers, he added.

“All of the shareholders I’ve spoken to understand that pretty significant adjustments need to be made in benefits,” he said. “As unfortunate as the situation is, they need to hold their ground and get the company on a better footing.”