New Report Details Verizon Windfall in FairPoint Sale

The $600 million tax windfall Verizon is due to receive in its proposed sale of telephone operations in northern New England, if invested in network upgrades, would be enough to provide high-speed Internet access to every residential customer in the company's service area, according to a new CWA report.

In "You Make the Call – High Speed Broadband for All or Tax Loopholes for Verizon?" CWA and the IBEW make the case that state regulators should support the public interest and reject the sale. The report is being sent to governors and every member of the state legislatures in the three state region. The report is available at www.stopthesalenow.org.

Verizon has structured the sale of its phone business in Maine, New Hampshire and Vermont to financially strapped FairPoint Communications so as to avoid paying any federal taxes on the profits through an arcane tax loophole. That means Verizon would pick up $600 million in tax savings, enough funds to provide fiber optic service (such as Verizon's FiOS) to 84 percent of residential customers served by Verizon in the three states, or DSL access to nearly 100 percent of homes and FiOS to 75 percent of customers in the three states, the report found.

Currently, data from the Federal Communications Commission show that the three states rank at or near the bottom in terms of broadband availability in the United States. Only 64 percent of homes in the three states have broadband access as compared with the national average of 79 percent.

"If this deal is approved as currently structured, U.S. taxpayers will be subsidizing Verizon for abandoning its operations in northern New England and leaving these states as a communications backwater for years to come," CWA said.

Advisory staff for the public utilities commissions in all three states, as well as the offices of the consumer and public advocates in New Hampshire and Maine, have urged rejection of the proposed deal, and have called for stringent conditions to be imposed if the commissioners ignore their advice and approve the transaction.  The Maine and New Hampshire commission staff urged that, at the very least, Verizon's sale price be cut substantially – the Maine PUC staff recommended by $600 million -- to reduce the debt burden that the deal would load onto FairPoint. 

The regulatory commissioners in the three states are expected to announce their decisions on whether to approve, reject or impose conditions on the proposed sale later this month.