FairPoint Voluntarily Files For Ch. 11 Protection

[MaineDem]

Source: WCSH -Portland, ME

CHARLOTTE, N.C. (AP) -- Telecommunications services provider FairPoint Communications says it has filed for Chapter 11 bankruptcy protection after agreeing on a deal with key lenders that will help lower its debt by $1.7 billion.

Fairpoint said Monday the restructuring plan with lenders holding more than 50 percent of its outstanding secured debt is subject to bankruptcy court approval.

...

FairPoint owns and operates phone companies in 18 states with a total of 1.65 million lines, but its largest holdings are in Maine, New Hampshire and Vermont, where it bought Verizon's land lines and Internet services for $2.3 billion in 2008.



Read more: http://www.wcsh6.com/news/local/story.aspx?storyid=110396&catid=2

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The Unions have been saying this would happen for years. FairPoint has been horrible since they bought Verizon's landlines in northen New England.

[unhappycamper]

1. As near as I can tell, FairPoint is a bottom feeder.

Ivan still needs to sell the rest of the non-wireless stuff (including FIOS).

[Old and In the Way]

2. This sale never made sense to me in the 1st place.

Paying $2.8 Billion dollars for a business that is based on a high cost technology (telephone landlines) in a market that is shrinking as people move to cell phone convenience? I dropped my 2 landlines earlier this year as both my wife and myself have cell phones. The only calls we were getting towards the end were from people trying to cell us something.

A major ISP was up at my place yesterday, upgrading their tower to add 45x more bandwidth to handle internet/VOIP traffic. (My property is on a hill that happens to be the highest elevation in the county.) I was talking about this very point with the owner who was up to oversee the installation. He smiled when I mentioned Fairpoint and their model....he said he has more reach in Central/Mid-Coast Maine at a fraction of the cost that Fairpoint is burdened with.

I wonder if we really understand this deal that Verizon made with Fairpoint. Why would anyone make this kind of dumb investment? Even if they get their losses reduced by 50%, I see no long-term benefit...as more people drop landlines in favor of cell phones, the remaining customer base is going to pay more for their landline service - which will accelerate their future customer losses.

[JenniferJuniper]

3. It made tons of sense from Verizon's perspective

But customers are getting a raw deal. Verizon is now trying to do the same with other rural areas of the country with the Frontier deal they are trying to get past regulators now. Land lines aren't profitable and Verizon has no interest in investing in the running of fiber optic lines through rural parts of the country. So they dump them and grab the cash, leaving customers in the dust with crummy companies and poor service.

[MaineDem]

7. Absolutely it made sense from VZ's point of view

And you're right about the Frontier deal.

If I remember correctly, Verizon first sold off its Hawaiian landlines to a company owned (at least partly) by the Carlyle Group. They filed bankruptcy in 2008. I never doubted the same would happen to FairPoint. Especially since their customer service here in Maine has been abysmal.

[JenniferJuniper]

8. And let's not forget the old Yellow Pages. Idearc has filed for bankruptcy too.

Not an operating TelCo of course, none of these companies would have failed if they'd still been under the wing of the mother ship.

Frontier will likely follow down the same path. Regulators should be paying more attention to this next round. But they probably won't.

[melm00se]

4. it depends upon where the $$ is to be made

mobile technology requires hardlines (they link back to the telecommunications backbone). Ditto for highspeed internet lines.

[damntexdem]

5. Maybe should change the name to PoorPoint.

;-)

[FarCenter]

6. Wireline telephony is no longer economically viable

Coax or fiber distribution are viable in urban, suburban, and small town areas. Wireless is the only viable distribution technology in rural areas.

Verizon was smart to get out of the wireline business in Northern New England.