MONTPILIER, Vt. – Fed-up regulators opened a probe Monday into whether to revoke FairPoint Communications’ (NYSE: FRP) right to do business in Vermont, grilling its president about customer service problems and ordering the troubled telecommunications provider to respond to a state "show cause" petition within 30 days.
The state Public Service Board gave the company until Sept. 10 to formally reply to a petition filed last month in which state officials asked for an investigation into whether has the financial viability and operations know-how to recover from its inauspicious start handling telecommunications business in Vermont, New Hampshire and Maine.
FairPoint, which is based in Charlotte, N.C., bought Verizon’s land line business and Internet operations in the three states in a $2.3 billion deal last year.
It took over operations Feb. 1 and its customers have been plagued with problems since, from billing errors and service order delays to long waits on call-in complaint lines.
"As we said in our petition, if FairPoint cannot raise its service quality to an acceptable level, it’s our opinion that we’ve got to look at whether they should be operating the incumbent phone company here," said James Porter III, special counsel to the Public Service Board.
"It’s been an enormous amount of problems for an extraordinary amount of people. And we think they’ve had sufficient time to get things pulled together," said Porter.
Similar problems have occurred in Maine and New Hampshire.
In Maine, state regulators have rejected the company’s request to waive more than $845,000 in penalties owed to local phone competitors in Maine for poor network service from February through April. Maine’s public advocate has called for the hiring of an outside expert to scrutinize FairPoint’s computer systems.
In New Hampshire, the Public Utilities Commission is considering a request from the state consumer advocate to open a new investigation into Fairpoint’s poor performance.
Among the issues:
• Billing mistakes and other problems that led to an "unprecedented" number of complaints filed with the Vermont Department of Public Service and its consumer advocate, including 458 in February, 572 in March, 602 in April, 339 in May, 323 in June and 412 in July. Now, 518 of them are unresolved.
• FairPoint’s response to problems reported by both customers and the state. Vermont officials, who complained earlier that a "stabilization plan" filed by the company March 31 had no substance for turning things around. On Monday, in a meeting with the Public Service Board and FairPoint President Peter Nixon, Vermont’s coordinator of consumer affairs said state staff members randomly call FairPoint help lines and routinely wait between two and four minutes before a person comes on the line, far longer than the 17-second average wait time Nixon reported.
One board member told Nixon he’d seen complaints from FairPoint customers who said they called the company over a problem and were promised a callback but never got it.
"No excuses for not calling the customer back," said Nixon, who said FairPoint had reduced wait times on call-in lines, improved the accuracy of bills and made inroads in reducing the wait time for installations.
In an interview, FairPoint spokeswoman Beth Fastiggi said the company is eager to fix its problems and is eager to let the Board and the public know how it’s doing.
"Vermont is a very important business to FairPoint. We need to be successful. And to do that, we need to get our systems running the way we want them to be and improve our reputation," she said.
Ralph Montefusco, an organizer for Communications Workers of America Local 1701 of Burlington, which represents FairPoint workers, said the stakes of Vermont’s inquiry into FairPoint’s fitness are high – all across the region.
"We’re concerned about economic development in our states," he said. "These are small rural northern states. Telecom infrastructure is like rural electrification was in the previous century."