A year ago next Wednesday, FairPoint Communications, a North Carolina-based telco focused on rural markets, proposed to acquire 1.5 million or so access lines in Maine, Vermont and New Hampshire that were being spun off from Verizon Communications. The $2.7 billion deal still hasn't closed, as it awaits regulatory approval in two of those three states.
The preceding year has witnessed the deal facing more opposition and more scrutiny than any merger or acquisition I can remember in 15 years or so covering this industry:
*Â Opposition by consumers and consumer groups over concerns about ongoing service quality brought to life the stereotypical vision of a resident from this region as a crusty activist determined not to be simply carried along on the tide of corporate America.
*Â Opposition by some union folk over the safety of jobs and FairPoint's debt level has been inspiring in an era when we've seen telecom workforces chopped up and spit away at an amazing rate.
* Scrutiny and concern among the regulators has reinvigorated the idea that such officials are actually engaged, interested and have a sense of responsibility about what they are doing.
Voiced concerns, strong opinions and well-thought-out ideas have changed the nature of this deal for the better. They have had a positive effect at a time when much bigger deals affecting many more millions of people have come and gone with voices of opposition barely registering with deal-makers and regulators. Now, it is time to let this one pass.
Over the last year, FairPoint has met the concerns with thoughtful response:
* FairPoint pledged to create hundreds of jobs in the three states in which it is offering to acquire these lines.
* It has pledged to invest specific amounts of money within specific time frames to improve the networks supporting these lines.
* It has pledged to make specific broadband upgrades.
* It cut the dividend it pays to investors so that more money would go back into operations.
* It has re-assured competitors who were concerned about their existing network access deals with Verizon.
* FairPoint and Verizon adjusted the financial structure of the deal to help alleviate some of the debt FairPoint would take on. It's also worth noting that in times of general debt crisis, rural telcos are the closest thing the telecom industry has to recession-proof companies.
FairPoint is a mini-conglomerate of sorts, a 17-year-old company that has grown through acquisition to operate rural exchanges in 18 different states. It's done this before, and unlike Verizon and most larger telcos who believe rural markets can't support their triple play, fiber-based revenue ambitions, FairPoint wants to be in markets like the ones it's trying to acquire in New England. If there is one thing that's certain in all this, it's that Verizon will sell these lines to someone--it has wanted to do so for years.
We live in an era when customers in most industries--not just telecom--are sold, bought and traded like cattle, an era in which the two biggest telecom service providers in the U.S. have bought their way to the top and now have investment based on market demographics, customer profile and revenue potential down to a science. But, the changes of this era have cleared the way for a handful of independent, mostly rural telcos to grow. FairPoint is one of the small guys, trying to get a little bigger and better, and in doing so, maybe it can make things better for its customers, employees and investors, too. At least it's willing to try.- Dan