Hawaii: Cautionary Tale Over the FairPoint-Verizon Deal

Back in March, I posted a blog that talked about Hawaii Telecom knowing the problems they were facing ahead of time when taking over the Verizon accounts here in Hawaii:

…The specter that hangs over this is Hawaii Telecom. In that state a consulting firm paid $1.6 billion for Verizon’s landline service in 2005, only to collapse into bankruptcy because of myriad problems with billing and other “back-office” systems.

Bailey said the parallels are less than they seem, however.

In Hawaii, they knew the systems weren’t going to work when they turned them on. Here, the overall performance of the systems, although it’s not adequate, is better than a complete failure,” she said.

In Hawaii, they couldn’t even bill, so they couldn’t get any revenue in – their cash flow was nothing…”

According to today’s Morning Sentinel:

…In Hawaii, their members were involved in a situation in which a private equity firm borrowed heavily to buy the state’s largest telephone carrier from Verizon in 2005. Back-office transition problems led to poor customer service, declining revenue and bankruptcy reorganization. Hawaii was held up as a cautionary tale during the debate over the FairPoint-Verizon deal.

“There’s no satisfaction in saying I told you so,” said Rand Wilson, a spokesman for IBEW Local 2222 in Boston. “FairPoint said their experience would be different.”

The IBEW has 2,500 members at FairPoint, 800 of them in Maine. The union has been in contact with its counterpart in Hawaii to keep up on the bankruptcy proceeding there.

In late June, a competing cable operator made a buyout offer to take over Hawaiian Telecom, a motion opposed by the company, which is operating normally in the meantime. In May, it began promoting new pricing for service that bundles phone and Internet connections.

Full article here.

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