Fairpoint Can Keep Penalty Money To Build Up Broadband Coverage

May 10, 2012 | 4:48 PM

By Amanda Loder

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The question of whether to offer customers rebates for bad service or expand broadband access throughout the state is now pretty much for Fairpoint to decide.

The telecom company faces $2.8 million in fines related to a series of service problems that cropped-up back in 2009.  Rather than return the fees to customers, Fairpoint asked the Public Utilities Commission to allow it to use that money to expand broadband access.  As we previously reported, it was a controversial proposal.  And, as Dennis Paiste now writes for the Union-Leader, the PUC approved the proposal by a vote of 2-1.  But Commissioner Michael Harrington wrote a dissenting opinion:

“’In my opinion, allowing FairPoint to keep the money and use it for unregulated capital investment sends the wrong message about the purpose of performance penalties,’ Harrington said.”

But, Paiste reports, Fairpoint isn’t exactly free to do what it would like.  If the telecom wants to use the money for broadband, the PUC ruled it will have to have a plan submitted by the end of the month for putting the funds in an escrow account.  That’s basically insurance that the money will actually go to enhancing internet coverage, rather than hitting corporate coffers.  And among other things, Fairpoint will be legally bound to keep its word, no matter what comes down from the legislature in the future.  Paiste writes the company will also have to “commit to expanding broadband in unserved areas of New Hampshire within FairPoint’s franchise anywhere in the state, not just in the North Country.”

If Fairpoint ultimately agrees to the arrangement, it will have to pay whatever’s left in the escrow account back to customers as rebates.

Right now, the company’s reviewing the PUC ruling.  Fairpoint will also have to rebate the penalties if  it doesn’t submit a plan for the escrow account, or decides against the commission’s terms.  If it does agree with the ruling, Fairpoint says it will add another $500,000 to broadband expansion, giving the project a grand total of $3.3 million in funding.