Comments of Interested Persons

Several interested persons filed comments in response to the draft of the Plan released by the Commission on November 1, 2011. This section provides a summary of the most significant of those comments, and a discussion of the Commission’s consideration of those comments as it prepared its final version of the Plan. To the extent more than one company made the same (or substantially similar) comment, that fact is noted, but discussion of the merits of the point is not repeated for each such instance.

Finally, a complete copy of all of the comments received by the Commission over the course of the public inquiry it conducted in preparation for the development of the Plan can be viewed, and downloaded from the Commission’s Virtual Case File under

Docket 2011 at:

http://mpuc.informe.org/easyfile/easyweb.php?func=easyweb_splashpage. A. FairPoint

FairPoint believes that the “the ability to maintain uninterrupted voice service during a power failure,” is not an attribute that should be required of POLR service. In FairPoint’s view, this requirement is not technologically neutral and

perpetuates the sort of competitive disparity that the Resolve was intended to address. As noted above, the Commission is not unanimous on this issue, and has offered alternative approaches for consideration by the Legislature.

FairPoint agrees that POLR service should not include packages or services. Also, FairPoint believes that customers who purchase POLR service along with ancillary features or services should not be permitted to seek the assistance of the Commission’s Consumer Assistance Division in resolving complaints that are related to the “POLR” service (but not the ancillary features) that they purchase. Again, the Commission is not unanimous on this issue and has therefore presented options for the Legislature to consider.

FairPoint agrees that with the forward-looking cost model approach to be used in analyzing the revenue requirements for POLR service providers. However, FairPoint suggests that the costs modeled should include the entire network costs (construction and maintenance) in a given geographic area (e.g. exchange or census block) necessary for a POLR service provider to “to stand ready to provide POLR service” to any customer in the area requesting that service. The final Plan, as

submitted by the Commission, is in accord with this view by mandating a total network cost analysis. As noted above, however, if the total network costs are considered in a revenue requirements analysis, so to should total company, un-separated and un- regulated revenues.

FairPoint agrees that its FairPoint-NNE subsidiary, along with the other rural ILECs owned by the Company, should be designated as the POLR service providers throughout their respective service territories. It also agrees that it should become eligible for rate increases and, for the first time, Maine USF subsidies for POLR service provided by FairPoint-NNE. It also agrees that the costs of these subsidies should be socialized across all consumers of voice services in Maine, through the contributions to the Maine USF made by all VSPs.

However, FairPoint-NNE also seeks immediate, “interim” Maine USF subsidies on the grounds that immediate subsidization is necessary to help underwrite the “unfunded costs” of providing local exchange service that is currently bears. This assertion, which is in essence a petition for a legislatively mandated revenue increase, is one with which the Commission emphatically disagrees. FairPoint-NNE presently operates under an AFOR with an expiration date of July 31, 2013. In light of the existing incentive-based rate plan (which is legislatively authorized form of ratemaking

to which FairPoint consented), it is entirely incorrect to assert that FairPoint-NNE’s costs of service are “unfunded,” or that the revenues it obtains through its rates are

inadequate to meet existing service obligations. FairPoint expressly agreed to the terms of this AFOR for its FairPoint-NNE subsidiary as part of a thoroughly negotiated stipulation it signed at the time that it purchased the Verizon network in Maine. In the Commission’s view, it would be bad public policy to legislatively unwind the obligations and ratepayer benefits of any such stipulation, especially as it was adopted by the Commission following an intensely litigated proceeding involving numerous, adverse, parties.

Moreover, the existing AFOR provides FairPoint-NNE with the flexibility to pursue revenue-enhancing business strategies such as attempts to “win back”

customers previously lost to competitors by offering discounts in the form of lower rates. Thus, legislative repeal of the AFOR would accomplish only one thing with respect to rates: it would allow FairPoint-NNE to immediately raise rates in areas where the company believes that it can do so without losing customers to competitors. FairPoint agreed to a rate cap plan for FairPoint-NNE, and the Commission approved it.

FairPoint should not be permitted to seek an increase in revenues (through increased rates or Maine USF subsidies) until after the expiration of the AFOR. At that time, the Commission will consider any such request in the context of the forward-looking cost model approach set forth in the Plan.

FairPoint also suggests that the SQI provisions of the existing AFOR be completely eliminated entirely. Although the Resolve relieved FairPoint-NNE of the multiplier provisions of the SQI, it did not relieve it of the “base” amount of any rebates due to customers on account of substandard service quality through the remaining term of the AFOR. FairPoint’s suggestion, in its comments, that complete elimination of the SQI is necessary to make permanent the temporary relief provided by the Resolve is inaccurate. For the same reasons that the Commission rejected FairPoint-NNE’s request that it be allowed additional revenues through rates or Maine USF subsidies prior to the expiration, in July, 2013, of the existing AFOR, the Commission also rejects the suggestion that the Plan itself dissolve what remains of the AFOR’s service quality component.

FairPoint would also make permanent the temporary provision of the Resolve which prohibits the Commission from requiring that any ILEC be required to report significant service outages to the Commission as they are occurring. Thus, FairPoint rejects, as inconsistent with its view of parity, any requirement that would obligate it to report such outages any earlier than 7 days after service is restored. For the reasons set forth previously, the Commission believes that modification of the

outage reporting requirements, through a major substantive rulemaking proceeding, is a more considered approach to balancing the burdens that such reporting may impose on VSPs against the public safety interest that is advanced by system in which the

Likewise, FairPoint would make permanent the provision of the Resolve which would freeze the technological standards of the infrastructure maps that must file with the Commission. A consequence of this provision will be that the Commission will be prohibited from modernizing, through a rulemaking proceeding, the standards and level of detail of infrastructure maps, even as incremental improvements are made to GIS mapping technologies and such improvements are adopted both by government and relevant industries. The Commission believes that modern mapping technologies are a useful tool both for policymakers, and recommends that Title 35-A not prohibit the Commission from proposing modifications to its requirements in the future. The

Legislature might, however, consider whether such modifications should be presented to it in the form of a major substantive rulemaking.

The draft of the Plan circulated by the Commission for comments included its proposal that the Broadband Sustainability Fee, established by 35-A M.R.S.A. § 9216, be eliminated. In the Commission’s view, this fee is anti-competitive. FairPoint objected, on the grounds that the transfer payments required by the Fund are not anti- competitive as compared to the award, by the federal government, of stimulus funds to assist in the construction of the Three Ring Binder dark fiber project. The Commission strongly disagrees with FairPoint’s analysis. Nonetheless, as is the case with the existing AFOR, the Broadband Sustainability Fee will expire, by its own terms, on a date-certain. To advance a consistent policy of honoring the expectations of the affected parties regarding sun-setting provisions of law and of Commission Orders (such as the AFOR), the Commission has removed from the Plan its suggestion that the Legislature repeal Section 9216.

Finally, FairPoint advocates for the complete elimination of the Commission’s jurisdiction to evaluate and approve the sale or restructuring of the ownership of any telephone company. This was not contemplated by the Resolve. Moreover, it is the Commission’s view that there is a continuing need for oversight over proposals that would transfer ownership of critical telephone infrastructure in Maine. With respect to FairPoint, this is especially important, not only because the company owns the network backbone relied upon by many competitors, but also because the possibility of a change of ownership is, if anything, greater in light of the continued precariousness of the firm’s financial condition. Accordingly, the Plan preserves the Commission’s authority over reorganizations of telephone companies which result in a change of control in their operations. In addition, under the Plan, a definition of the term “change of control” (which was not provided by the Resolve) is supplied in a proposed amendment to 35-A M.R.S.A. §708 (reorganizations).