[OT] Verizon/FairPoint sale (was: Comcast!?!?)

[Bill McGonigle]

On Nov 12, 2007, at 18:51, Ben Scott wrote:

>   Yah.  <SPECULATION> I suspect they're mostly concerned about their
> jobs, and I don't blame them.  Verizon is a nice company to work
> *for*, by most accounts.  They can afford to do that, since they don't
> have to care much about being competitive.  I would expect FairPoint
> will be cutting back on both local staff and benefits. </SPECULATION>

I can enhance your speculation with some forward-looking statements -  
Fairpoint says that they'll be opening up new service facilities and  
adding net 150 jobs in NH (IIRC - the order of magnitude should be  
right).  Verizon has been shipping jobs out of state, so when you  
call the service center, maybe you're talking to a call center in  
Colorado (I'm making up the state) and Fairpoint feels it's more  
efficient (profitable) to have local knowledge answer the phone.

<good points snipped>

>   An interesting tidbit: They claim NH has 65% DSL coverage, but only
> 15% subscribership.

The FCC *just* switched from ZIP to ZIP+4 for "broadband" coverage  
metrics.  So, yeah, in the downtown area in my town they can get DSL  
from TDS.  Ergo, I have DSL at my house, according to the FCC (and  
hence the only available numbers).  Everybody knows these numbers are  
bad, so anybody using them to illustrate anything other than how bad  
the numbers are is being disingenuous at best.

If I had to guess 15% subscribership is due to another ~15% having  
cable and another few percent taking neither, so the real coverage is  
probably around 35-40%.

> It's the
> 45% who don't have either that are pissed.  So I don't see VZ staying
> or going as relevant to that.  (Though I didn't get around to raising
> this point.)

It _is_ relevant since Fairpoint is interested in service where they  
can make a profit, not necessarily just service where they can make a  
killing.  The fellow I met from Fairpoint who was trying to make this  
point is now the CEO and he grew up with his dad running the local  
telephone company where he comes from (Syracuse, perhaps?) - his  
implication was that real organic growth is more important than  
running the company into the ground to make quarterly stock numbers,  
'cause that's how his family did pretty well for a hundred years.

> The one point they make that made some sense to me is this: "When
> they [FairPoint] take over from Verizon, they'll have exactly the same
> incentives as Verizon does".  In other words, if rural areas are
> financially unattractive, selling to FairPoint won't help that.
> Still, that assumes all things are equal, and I don't think they are.
> VZ and FP likely have different ideas about what an acceptable profit
> margin and time-to-ROI are.  And FP, not having dense markets to go
> after, will likely find rural markets more attractive.  Adding more
> small potatoes still means more total potatoes.

I believe this is exactly the cruz of the matter.  Verizon doesn't  
invest here because they have better places to invest.  I don't think  
Fairpoint stands a chance trying to compete in Manhattan.

-Bill
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