Maine's new telecom regulatory structure allows FairPoint to respond to competition

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Maine's Governor Paul LePage signed a new law this week that will effectively update the state's telecommunications industry regulations for the first time in almost 100 years.

FairPoint sign

Image source: FairPoint

"This legislation reduces red tape and regulation, and puts all telecommunication providers under the same set of rules," LePage said, adding that the new law modernizes regulation, while continuing to provide the necessary protections such as Provider of Last Resort (POLR) to Maine consumers.  

The new regulations make it easier for the state's incumbent ILEC FairPoint Communications  (Nasdaq: FRP) to "adjust" the pricing of its services to more effectively compete with aggressive cable operators that continue lure subscribers away with their own triple play bundle packages.

Steven Azarbad, co-founder & portfolio manager of Maglan Capital, said that the new structure will enable FairPoint to create a strong growth path.

"Legislation/regulatory reform is an important part of FairPoint's 4-pillars of sustainable free cash flow growth (operational improvements, regulatory process, revenue transformation, human resource strategy). The company is focused on achieving clarity and a level playing-field on the regulatory front," he said. 

Azarbad added that "a level playing-field means that FairPoint can compete effectively with CLECs, cable, wireless and VoIP providers while meeting its provider of last resort (POLR) commitment."

However, FairPoint still has to abide by POLR requirements, so any of the state's consumers can get access to affordable basic voice service. Given the financial commitment it takes to maintain POLR service, the state is considering a new funding mechanism to support the program.  

The law got support from all segments of the state's telecom industry players, including ILECs, cable operators, wireless operators, and consumer and industry trade groups.

Maine is not the only New England state that's been making changes to its telecom regulation structure. Fellow northern New England states New Hampshire and Vermont are also in the process of realigning the way they regulate traditional telecom service providers like FairPoint.

For more:
- see the release

Special report: Unraveling the triple play bundle

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