Monday, January 21, 2008

No Fair Point

The proposed FairPoint purchase of Verizon's landlines in Maine, New Hampshire, and Vermont is coming to a head. While reading a story about yesterday's Patriots victory (yah baby!) on, I noticed a banner ad at the top of the page:

This is an interesting tactic on the part of the very strong, very organized opposition group known as (a project of the Communications Workers of America, AFL-CIO). NoFairPoint is using newspaper and radio adverting to make its case, but banner ads are usually used as marketing tools to reinforce a brand, usually a well-known brand. Because of years of negative conditioning, most Internet users do not click-through banners, so they are particularly ill-suited to calls-to-action. Despite this, I took action and clicked on it! The ad is designed cleverly as a newspaper headline -- and a scary one at that, because of my strong support for bringing high-speed Internet to rural areas, be it with Wi-Fi, WiMax, fiber, or at the very least, DSL on copper -- and I wanted to see what the story was behind the ad.

For those not up to speed on the story, this is a big deal. Evidently, Verizon wants out of landlines, which is not a growth area, so they can concentrate on wireless. Based in North Carolina, FairPoint wants to expand its LEC footprint. The problem is that FairPoint, while not exactly a small company (NYSE:FRP), is in no financial position to swallow a swath this wide. FairPoint is already in debt, and opponents say the additional debt will force the company to cut jobs or service. Or more likely, both.

Some advocates for the deal say the government shouldn't interfere with corporate deals. Nothing against FairPoint -- I know little about them -- but industries like telecom are a public necessity and are regulated for a reason: Private companies exist to grow and make money. The FCC, on the other hand, exists "to ensure that the American people have available, at reasonable costs and without discrimination, rapid, efficient, Nation- and world-wide communication services; whether by radio, television, wire, satellite, or cable." Indeed, after checking into the deal, one presidential candidate is calling for FCC investigation, citing the potential for job loss and negatively impacted service.

In an editorial on Saturday, The Portsmouth Herald outlined the whole deal and summed it up with a strongly caution:

The question that regulators have to ask is whether the deal is good for the businesses and people of the Northeast.

There are indications that it will not be, and if these indications hold up under what we hope is the intense scrutiny of the Public Utilities regulators of these three states, then FairPoint should be sent packing and Verizon should be forced to perform the functions it assumed when it was granted the right to operate in these three states.

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