Disruptive Telephony

From the "Duh! What were they thinking?" desk, the big news up there in the northeastern part of the US is that our major local landline provider, Fairpoint Communications, has filed for Chapter 11 bankruptcy protection today. Last year, Fairpoint paid $2.4 billion for Verizon's landline business in Maine, New Hampshire and Vermont and formally took over the network earlier this year, with all sorts of ensuing service challenges which have been well-documented.

As FierceTelecom points out, this bankruptcy has been expected for quite some time now. Last week there was much publicity up in these parts about Fairpoint working with its unions and banks to try to avoid the formal filing... but obviously today's filing indicates that they couldn't pull the proverbial rabbit out of the hat. This morning, Fairpoint issued a news release and set up a web site about their restructuring:

http://www.fprestructuring.com/

Now, I should mention that I am a Fairpoint customer and do have a landline from them - I've also not personally had any customer service issues with their service. I am also not at all surprised.

I thought Fairpoint's acquisition of Verizon's landline business last year was an exceedingly dumb idea then - and I still think that today.

I mean... you don't need to be a rocket scientist or industry analyst to figure out that landlines are a dying business. Here's part of the overview from the most recent "Wireless Substitution" report from the US National Center for Health Statistics (my emphasis added):

More than one of every five American homes (20.2%) had only wireless telephones (also known as cellular telephones, cell phones, or mobile phones) during the second half of 2008, an increase of 2.7 percentage points since the first half of 2008. This is the largest 6-month increase observed since NHIS began collecting data on wireless-only households in 2003. In addition, one of every seven American homes (14.5%) received all or almost all calls on wireless telephones, despite having a landline telephone in the home.

I personally expect that trend to continue and if anything to accelerate as we collectively continue to choose mobile devices - and also as the cable companies and other players out there continue to offer compelling alternatives to the traditional landline. (Hmmm... and gee, do you think the cable companies up here aren't going to seize this opportunity to court Fairpoint customers?) And while I kept our landline for several reasons, I don't necessarily expect that I'll need it for a long time.

Sure... perhaps Fairpoint thought it could make money off the Internet access side of the house... I mean, buying your way into being the incumbent utility ought to be a good thing, right? But then again, the cable companies are right in there... as are the satellite folks and many others offering Internet access...

All I can say is kudos to whomever it was within Verizon that thought up this strategy of selling off their dying businesses to other companies... and let's see if they succeed in doing it again with Frontier Communications.

In the meantime, we will see what kind of chaos this filing stirs up today up here in both terms of business and political maneuverings...

It's also interesting to contemplate: what would happen if such a major utility like the "local phone company" were to completely fail?

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