Why Can't DC See What We See

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Why Can't DC See What We See

I'm not the brightest guy in the world. Yet over and over I see politicians and regulators make decisions that the other 99% of the US knows will be bad news. One such decision: approving the sale of Verizon's New England region to Fairpoint.

For one thing, agents can no longer sell in that region because Fairpoint thinks they can sell better than a telecom agent can. Ha! I'd put any agent I know up against any W-2 from a telco.

Two, even VZ knew that it would become too expensive to maintain the copper plant in New England; nevermind deliver broadband to most of it. But for some reason the regulators in 3 states and the folks at Martin's FCC approved the deal. Buying into the story that while a giant like VZ can't, an elfin telco like Fairpoint could, while saddled with the debt from the $2.3B deal. 

The customers in New England are not happy either. As much as 12% of its customers have bailed out. (To cellular and cable probably). But it could get worse as Fairpoint hinted back in March that it could file bankruptcy because of its debt. Verizon still owns about 60% of Fairpoint (I think).

The only happy camper was VZ who took a huge one time credit, released $1.7B in debt, and dumped a rural liability. And smiled the whole time.

In a similar deal, Hawaii Telecom went BK - that was a former VZ area. I know when Alltel (now Windstream) took over Eastern KY, it was like buying a termite infested house. VZ doesn't leave its assets in a state that anyone can work with apparently. Hence, the WSJ suggesting that Frontier learn its lesson from the Fairpoint deal.

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