It’s highly unusual — if not unprecedented — to
have all three states’ regulatory boards hold a joint meeting, but it
speaks to the gravity of the situation for FairPoint, which has been
plagued by ongoing order-fulfillment, customer service, billing and
other problems in the three states.

FairPoint last year bought
Verizon Communications’ landline telephone and Internet business in
Maine, New Hampshire and Vermont for $2.3 billion. The problems
surfaced almost immediately when FairPoint officially took over the
phone and Internet system seven months ago.

“This level of
service and operational and financial problems is unprecedented, at
least in the last 20 years, especially in a company of this size,” said
Anne Ross, general counsel for the New Hampshire Public Utilities
Commission. “It’s not unusual to have problems in smaller companies,
but for a company with this size network and customer base, it’s
unusual to see problems of this magnitude.”

The New Hampshire
Public Utilities Commission, the Maine Public Utilities Commission and
the Vermont Public Service Board are conducting the meeting, which is
being labeled a joint status conference, in Derry, N.H. The meeting is
open to the public, but the public won’t be allowed to speak.

Regulators
are seeking an update on FairPoint’s efforts to stabilize its troubled
operations systems, as well as on organizational changes and financial
matters.

Attending for FairPoint will be Chief Executive Officer
David Hauser, President Peter Nixon, Executive Vice President Jeff
Allen and Vicky Weatherwax, who in July was appointed to the new
position of vice president of business solutions.

FairPoint,
which is based in Charlotte, N.C., owns and operates phone companies in
18 states with a total of 1.65 million access lines, but its largest
holdings by far are in northern New England.

The company welcomes
the opportunity to meet with all three regulatory boards in a single
session, rather than in three meetings in three locations on three
separate dates, said spokesman Jeff Nevins.

Already, the company
participates in phone conferences with regulatory staff in the three
states, and has been submitting reports on its progress in fixing the
problems.

“Nobody would say we haven’t been responsive to the
questions,” Nevins said. “Our focus going forward is fixing the
remaining problems we have with the system.”

FairPoint continues
to have ongoing billing problems with its wholesale and business
customers, Nevins said, but has made progress elsewhere.

The
company had a backlog of 2,500 new business orders at the beginning of
July, but it’s since been cut down to 500. The company is also
exceeding regulatory benchmark standards for customer service; last
month, FairPoint answered 89 percent of its calls from retail customers
and 80 percent of calls from business customers within 20 seconds,
Nevins said.

Nonetheless, FairPoint hasn’t remedied the overall
situation and continues to use a Band-Aid approach rather than getting
at the root of its problems, said Maine Public Advocate Richard Davies.

“It’s
a little bit like a garden hose. The water comes from the faucet and
comes out the nozzle, and it should take place automatically without
further intervention,” Davies said. “In this case, the hose has a lot
of holes in it and the company has to engage a lot of people whose
fingers have to be put over these holes to keep the water from leaking
out.”

Also troubling for regulators are FairPoint’s financial problems.

In
its Aug. 5 quarterly earnings report, FairPoint said it had reorganized
some of its debt, allowing it to reduce its interest expenses by $14.4
million for the second quarter of 2009. But it also reported that the
number of phone and Internet customers had dropped by 9 percent.

Revenues
for the three-month period ending June 30 totaled about $300 million,
down 13 percent from the same period in 2008, when Verizon was still in
charge.