The three commissioners acted after an exhaustive, 12-hour session, and only after FairPoint made significant financial concessions designed to reduce its debt after the $2.7 billion purchase.
Regulators in Vermont and New Hampshire, and the Federal Communications Commission, also must give their approvals for the sale to become final. Verizon and FairPoint hope to close by Jan. 31.
The case before the PUC was considered among the most important telecommunications decisions facing the agency in a generation. The outcome and its conditions will affect virtually every home and business customer that now gets telephone or Internet services through Verizon.
Verizon is Maine's dominant local telephone service provider. It owns more than 600,000 access lines, roughly 85 percent of Maine's total. The lines also support Internet access for thousands of home and business customers.
The PUC's approval included the following conditions:
• FairPoint will reduce the rate for basic home and business telephone service by more than $4 a month, for at least five years. The rate now is $19.29 a month.
– FairPoint will make high-speed Internet service available to 83 percent of all lines within two years, and 90 percent over five years.
– Prices for existing Verizon high-speed DSL service will be frozen at $15 a month with a two-year contract and $18 with a one-year contract, for at least two years.
FairPoint also will have to meet strict service quality standards, or face increasing financial penalties.
Both FairPoint and consumer advocates said they were pleased with the outcome.
"I'm feeling great," said Gene Johnson, FairPoint's chief executive officer and board chairman. "We're close to the end. I'm feeling wonderful."
Dick Davies, the state's Public Advocate, said the deal would be good for Maine phone customers, and that the negotiations and conditions that accompanied the sale put FairPoint in a stronger financial position to fulfill its promises.
"You're getting a company that really wants to be here," Davies said.
Those feelings were not shared by organized labor. Representatives of the International Brotherhood of Electrical Workers and the Communications Workers of America opposed the sale, arguing that FairPoint lacked the financial resources to honor its obligations to workers, among other things.
The three commissioners shared some of labor's concerns. In the end, however, they faced a dilemma that Kurt Adams, the PUC's chairman, summed up this way:
Verizon is a large, financially strong company, but it no longer wants to do business in Maine. The result has been inadequate expansion of Internet access and declining service quality. FairPoint is a much smaller company that will take on high debt to buy Verizon's assets, but it wants to focus its business on northern New England.
"One company doesn't want to serve Maine," Adams said. "Another wants to, but may not be able to."
To reduce this risk, Verizon, FairPoint, the Public Advocate and other parties negotiated a settlement agreement – which was accepted Thursday by the PUC with modifications – that addressed some of the concerns.
In the agreement, Verizon effectively knocked $250 million off the $2.7 billion sale price. That seemed like a good compromise to the public advocate. But it fell far short of the $600 million price cut that the PUC's hearing examiner called for in earlier recommendations to the commission, as a way to cut FairPoint's debt after the sale.
Ultimately, the need for more debt reduction was shared by the commissioners. "It seems to me there needs to be another $100 million in the deal," Adams said during the deliberations.
Adams based his reasoning on FairPoint's calculation, contained in...
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