CONCORD, N.H. (AP) – FairPoint Communications Inc. has moved another step toward taking over Verizon’s land telephone lines in northern New England, as the staff of New Hampshire’s Public Utilities Commission recommended approval of the latest revised deal.

FairPoint said Thursday the core agreement in New Hampshire is basically the same as those approved in Maine and being considered in Vermont. Those plans call for a $235 million reduction in the $2.7 billion purchase price and reduced dividend payouts by FairPoint to free money to pay off debt.

In New Hampshire, Verizon sweetened the deal, promising to contribute $50 million in two payments over two years for FairPoint system improvements and releasing FairPoint from reimbursing it for $12 million in broadband expenses in Maine.

Verizon said the conditions strengthen FairPoint’s finances and give the company more money to meet the commitments and conditions in the agreement.

FairPoint committed to spending $254 million on capital improvements in New Hampshire, to develop network- and service-quality improvement plans, and to expand broadband and assure the state of its financial viability.

The staff recommendation – from the commission’s telecommunications experts, engineers and financial experts – was disclosed late Wednesday and goes to the full commission. The purchase must be approved in all three states to go into effect.

Commission general counsel Donald Kreis said the staff recommendation is one factor the commission will consider.

“The fact that the staff of the commission is recommending approval does not, in any sense, mean the settlement will automatically be approved,” he said.

The staff is one party to the case, which also involves unions fighting the proposal and New Hampshire’s consumer advocate, who raised dozens of concerns about the initial takeover plan.

“It is not going to breeze through the PUC,” Kreis said.

He said hearings likely will be scheduled for early next month.

New Hampshire-specific requirements include:

– Making broadband Internet available to 75 percent of access lines in the state within 18 months, 85 percent within two years and 95 percent in five years or face stiff financial penalties.

– Maintaining Verizon’s broadband Internet prices and speeds.

– Benchmarks, with penalties, on service issues, such as how long it takes to get a line installed or repaired.

FairPoint agreed to keep local rates at current levels for 5 years.

FairPoint, based in North Carolina, even agreed to go around the state and remove thousands of unused, damaged utility poles that Verizon left standing next to replacement poles, agreeing to penalties if the number isn’t cut from about 7,000 to about 500 by mid-2010.

The Communications Workers of America, which represents Verizon employees, continues to oppose the deal.

In a conference call Thursday, union President Larry Cohen said even with the concessions, the sale is not good public policy and would leave New Hampshire, Maine and Vermont in the dust compared to other countries that are moving to faster Internet connections.

“That to me is a tragedy,” Cohen said. “There’s still an opportunity for northern New England to say our three states together can do something better here.”

He said national policymakers have not stepped up to require higher Internet speeds, so state regulators are reviewing proposals such as the FairPoint-Verizon deal with no policy requiring a higher level of service.

He said the union wants Verizon to consider spinning off the business to an independent company instead of selling to FairPoint.

Debbie Goldman, a research economist for the union, said FairPoint’s promises may not mean much.

“We think that there are a lot of protections for consumers that we’ve seen in the various stipulations,” she said. “The issue is: FairPoint can promise a lot of things, but will they be able pay for it?”

State Consumer Advocate Meredith Hatfield did not sign off on the proposal, but said that based on her first review of it, the companies appear to have considered her concerns.

“It certainly does look like some of the big pieces, they attempted to address,” she said.

They included reducing FairPoint’s debt, specifying what the company would spend to expand broadband service and improving quality.

“It includes, importantly, specific service quality measures the company would have to meet, and if they don’t meet them, (the agreement) puts in place automatic penalties,” Hatfield said.

Hatfield said she and others will question the companies at the hearings and either recommend the commission approve the deal or reject it pending further changes.

AP-ES-01-24-08 1543EST