FairPoint gets approval to redirect Vermont penalty payments to broadband expansion

FairPoint (Nasdaq: FRP) has reached an agreement with the Vermont Public Service Board to redirect the penalties it accrued following its acquisition of Verizon's (NYSE: VZ) New England telephone lines in 2008 into expanding its broadband network in the state.

Under the new plan, the service provider will invest almost $7 million to build out broadband service to "unserved" areas, a concept that will be refreshing for parts of the state that have no broadband options.

The next challenge for the telco will be in its ability to keep interested consumers informed of where and when the service will be available in their respective town.

Mike Smith, Vermont state president for FairPoint, said the "The Board's decision now allows FairPoint Communications to redirect past penalties from 2008, 2009 and 2010 and put them to a much better use."

The PSB, which at one point considered revoking FairPoint's license to operate in Vermont, believes that having the telco invest its penalty assessments will help it achieve Governor Peter Shumlin's goal to provide universal broadband and cellular coverage by the end of 2013.  

By investing nearly $80 million in upgrading the state's network infrastructure since 2008, including the addition of 1,100 new miles of fiber, FairPoint claims that almost 90 percent of its Vermont telephone customers can get broadband service.

However compelling these goals are, the key question is ensuring when and where the service will be actually available to customers. One residential customer commented to FierceTelecom that in the 1,100-home area in which he lives, "(FairPoint has) connected less than 500 households to their DSL service."

As of last July, the service provider said that it had expanded DSL broadband access to about 140 communities and neighborhoods in the state. Likewise, it said that 83 percent of its telephone customers in Maine and over 85 percent in New Hampshire can get DSL-based broadband.

Set to be completed by 2013, FairPoint will work with the Department of Public Service and Vermont Telecommunications Authority to decide areas for expansion from the state's list of target communities.

For more:
- see the release

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