Speculation Swirling About Verizon New England Plans

By Susan Bush
12:00AM / Wednesday, August 23, 2006

Speculation surrounds whether Verizon will maintain a major communications presence in parts of New England.

Speculation about whether communications giant Verizon is actively engaged in negotiations to sell its' 1.6 million telephone service lines in Vermont, New Hampshire and Maine is generating unease among company employees, including those represented by labor unions, and seems to be generating conflicting reports from company spokesmen.

Published estimates value the lines at between $2 and $3 billion. Verizon officials have declined comment on the estimates. Reports claiming a potential sale have appeared in the Wall Street Journal and other news venues.

Company Denial

Speaking during an Aug. 22 morning interview, Verizon spokeswoman Beth Fastiggi denied that any sales agreements were in place.

"Verizon is continually evaluating its assets for strategic fit and financial performance," Fastiggi said. "There is no agreement to make any changes in New England at this time. It is our commitment to let our employees and stakeholders know if that changes as soon as possible."

Any transaction could impact at least 3,000 company employees.

Fastiggi said that Verizon employs about 650 Vermont workers, including non-unionized management and workers represented by the International Brotherhood of Electrical Workers Local 2326. Workers are based at company facilities in locations such as Sunderland, Rutland, Brattleboro, White River Junction, and St. Johnsbury.

There are reportedly about 1,000 company workers in New Hampshire and a significant number of employees who work in Maine.

Of the three-state workforce total, about 2,700 are IBEW members and about 350 are members of the Communications Workers of America union.

Changes in telephone line ownership could impact services for Vermont and New Hampshire businesses that also host business sites in states that have not been linked to a possible sale, such as Massachusetts.

Legislative Concern

Earlier this year, Vermont Congressman Bernie Sanders, U.S. Sen. James Jeffords and U.S. Sen. Patrick Leahy submitted a letter to Verizon Chairman and CEO Ivan Seidenberg. The letter sought information about any proposed sale and the possible impacts on Verizon's Vermont employees.

Seidenberg denied any sale in a letter dated July 28.

"Thank you for your letter inquiring about media reports of rumors of a potential sale of Verizon assets in Vermont and other New England states," Seidenberg's written reply states. "Consistent with sound corporate governance practices, Verizon does not comment on speculation about the acquisition or sale of assets."

In language similar to that used yesterday by Fastiggi, Seidenberg wrote "While there is no pending sale of lines in the New England region, we continually evaluate our assets based on their strategic fit and financial performance."

Seidenberg assured the trio of legislators that if a decision to sell is made, employees and public officials will be notified "as soon as possible."

"Please be assured that if any decision is made to change our business operation in Vermont, you will contacted immediately," the letter said in conclusion.

But a recent August report published in the Lawrence, Mass.-based Eagle-Tribune newspaper reported that Verizon officials had confirmed possible sale plans.

A "Non-Story" At This Time

And an August Wall Street Journal on-line article claimed that Verizon is considering an offer from the FairPoint Communications company to buy the lines. Two other companies, CenturyTel Inc. and Citizens Communications Co. were also named as having approached Verizon as interested potential buyers; Verizon reportedly declined comment.

FairPoint Director of Corporate Communications Jennifer Sharpe said during an Aug. 22 telephone interview that the company does not offer any information about possible acquisitions and does not confirm or deny any possible transactions.

"At this point in time, this is a non-story for FairPoint," she said. "What I can tell you is our policy is not to comment on potential acquisitions."

Speaking in general terms only, Sharpe said that the company "grows through acquisitions" and is always seeking acquisitions that fit a specific criteria.

"Our goal is to improve customer service," Sharpe said. "We have a strong acquisition strategy."

FairPoint is headquartered in North Carolina and was founded in 1991. The firm owns and operates Rural Local Exchange Carriers in 30 states, including portions of northern Vermont, northern New Hampshire, and parts of Maine under the name FairPoint New England. Telephone enterprises that serve customers under the FairPoint New England umbrella include the Maine, Standish, China, and Northland companies.

Again speaking in general terms only, Sharpe said that the company has acquired companies with a unionized workforce.

"What we do is work to do our best to work with union contracts," she said.

Current union contracts between the IBEW and the Communications Workers of America and Verizon are set to expire in 2008. National Labor Relations Board District 1 Deputy Regional Attorney Robert Redbord said during an Aug. 22 telephone interview that a new company owner would likely not be required to adhere to existing contracts but would likely be required to "recognize and bargain with the union."

The Public Good

In Vermont, the Public Service Board is required to review and approve any proposed Verizon sale; a call to that entity seeking information about how such reviews are handled was not returned.

In New Hampshire, proposed public utility sales or changes are under the jurisdiction of the state's Public Utilities Commission. Commission General Counsel Donald Kries offered information about the process in New Hampshire.

"We have the authority to decide whether a transaction is for the public good and we would only be concerned with the service in New Hampshire," Kries said."It would be the subject of lengthy consideration. We would look at things such as the affect on [user] rates and service."

Kries said that as of Aug. 22 afternoon, there had been no approach to the commission from Verizon or a potential buyer. But an approach or an acquisition could happen quickly, he added.

Kries also noted that Verizon could opt against selling any of its lines or all of the lines in the three states generating current news reports, or the firm could choose to sell its' lines in a variety of ways, including some parts of Vermont, New Hampshire, and Maine, or parts of one or two states.

Michael "Mike" Spillane, president of the IBEW Local 2326 is on vacation and could not be reached for comment, according to the Local 2326 Business Manager Paula Dooley.

Will The "information Highway" Become A "Dirt Road"?

CWA Local 1400 Treasurer Sarah Rotovich of New Hampshire said that Verizon is investing billions of dollars to expand and grow a "FiOS" [fiber optic service] network and plans to abandon rural areas that generate significant service update and improvement costs.

"Verizon has all the money and they have the money to keep advancing into these rural areas," she said. "I'll say this, which is becoming a slogan, 'Don't let them turn the information highway into a dirt road.'"

For at least two years, numerous New England Verizon workers have been shifted away from assigned "home-base" workplaces to other New England regions, in part to expedite a switch from copper wire lines to the FiOS.

Numbers of the affected workers are away from home for weeks at a time. Workers from Maine, Vermont, and New Hampshire have been sent to places such as Rhode Island to do various types of upgrade work wanted by Verizon officials.

Meanwhile, many desired high-tech services offered by Verizon are not available to company customers in rural areas of the three states in part because the necessary infrastructure is not in place.

The company was involved in plans to offer cable television service to one New Hampshire community but abandoned the plans abruptly.

Rotovich said that the company is interested in offering television services but doesn't want to be encumbered by states with regulations that require companies to negotiate franchises on a community by community basis. The company prefers to deal with states that allow franchise acquisitions at the state level.

Verizon spokeswoman Jill Wurm reportedly said recently that the company is now negotiating in New Jersey, a state that permits single franchise agreements at the state level.[North Andover Eagle-Tribune article]

Verizon is a regulated company that holds its employees to a very high performance standard, Rotovich said. A smaller company with less revenue may be unable to match Verizon's quality of service, equipment maintenance, and employee performance standards.

"As a resident of one of three states, it is a concern of mine," she said. "People may not realize the standards that Verizon holds its employees to."

Fastiggi said that Verizon has been divesting itself of assets in other parts of the country, including Hawaii and parts of Alabama and Missouri.

Susan Bush may be reached via e-mail at suebush@iberkshires.com or at 802-823-9367.