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Article has been updated, as of Aug. 25, 2009, at 10:45 a.m.
FairPoint Communications Inc., which took over land-based phone lines from Verizon Communications Inc. earlier this year for Maine, New Hampshire and Vermont, has been accused of having faked a test to determine its readiness to run those lines, and is now being asked by the Vermont Public Service Board to respond to the allegations by the end of the month.
According to Susan Hudson, clerk of the board for the Vermont PSB, regulators in the three Northen New England states received an anonymous e-mail tip on Aug. 14 from someone calling himself “David Unavailable” alleging that Charlotte, N.C.-based FairPoint (NYSE: FRP) had created a small program that faked good results in a test run by Liberty Consulting of Pennsylvania to determine if FairPoint’s network had the capacity to handle the amount of traffic that flowed over Verizon’s land lines.
The e-mail tipster says in the message that he was an employee in the Atlanta offices of FairPoint during the time of the switchover from Verizon ownership of the lines to FairPoint. The tipster worked on a team working with CapGemini U.S. LLC, the consulting firm FairPoint hired to help develop and implement software used in the switchover,
FairPoint has been flooded with complaints about service quality, response time to customer calls and billing errors since the lines changed hands on Feb. 1, online reports state. In addition, FairPoint is attempting to restructure some of its finances by converting $531 million in debt to equity, according to the Charlotte Business Journal. In a conference call earlier this month, FairPoint CEO David Hauser discussed the debt-to-equity move and said that if the company was not successful, it might have to seek Chapter 11 bankruptcy protection.
In January of 2007 Verizon agreed to sell its land lines to FairPoint for $2.7 billion. At the time, Verizon’s Maine, New Hampshire and Vermont properties served approximately 1.5 million access lines, approximately 180,000 DSL customers and approximately 600,000 long-distance customers.
Vermont has sent a memo to FairPoint asking them to respond to the state’s concerns by Aug. 31. FairPoint executives have also said that they in turn will ask CapGemini to respond to the allegations, according to the news reports.
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