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Verizon Cuts Off Northern New England

Vermont, New Hampshire, Maine Set Adrift

January 18, 2007

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Verizon is planning to say good-bye to Northern New England, selling off its 1.6 million phone lines in those states to FairPoint Communications, a Charlotte, N.C., company that currently has about 252,000 customers in rural areas of 18 states.

Verizon says the deal would enable it to concentrate on developing its wireless networks, shedding its "plain old telephone service" -- or POTS, as it's known in the telephone business -- and the billing, regulatory and maintenance headaches that accompany it.

Critics said the company was washing its hands of rural areas and noted that only 62 percent of Verizon's customers in the three states had access to DSL service.

In fact, FairPoint has a better record than Verizon in deploying DSL in rural areas. The company said that more than 80% of its customers have access to DSL, and 23% of those use the service.

Verizon is spending about $18 billion to build the nation's fastest fiber optics network in urban sectors of the Northeast and Mid-Atlantic regions and, with its British partner VodaFone, spending heavily to keep Verizon Wireless competitive.

Shortly after the FairPoint deal was announced, Verizon Wireless issued a press release touring its latest 29 new cell sites across Maine's Hancock, Knox, Oxford, Sagadahoc, Waldo, and York counties. In 2006 the company built and activated 100 new cell sites across the Pine Tree State.

In 2006, the company invested nearly $318 million in New England to stay ahead of growing demand for Verizon Wireless voice and data services, the company said.

"Reliable networks are not built overnight," commented Ken Dixon, New England president of Verizon Wireless. "Building 100 sites in one year, in one state, illustrates our strong focus and commitment to make the nation's most reliable wireless network even better."

The FairPoint deal would allow Verizon to transfer $1.7 billion worth of debt to the new company, a so-called "spin merger" that helps reduce the tax consequences of the sale.

FairPoint pledged that it would add about 600 jobs to the Verizon workforce, which currently totals about 3,000 in the three states.

Both Verizon and AT&T are trying to move away from land-line telephone service in favor of wireless, Internet broadband and cable-style video. They have also been unloading their directories businesses and shedding overseas holdings.

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