Fairpoint May Declare Bankrupty

Last year, Verizon sold all of its landline assets in New England to a tiny company named Fairpoint. Even as Verizon was starting to wire suburban and urban areas with fiber-to-the-home networks, it continued to underinvest in rural communities, where those lucky enough to have DSL generally paid a lot for slow very slow speeds.

Rather than continue ignoring these properties, Verizon sold them to Fairpoint in a deal that some questioned as fraught with problems. Fairpoint has since met expectations: it is woefully unable to provide good service to people living in New England.

More recently, Fairpoint is hinting at future bankruptcy

In a filing with the Securities and Exchange Commission, the company warns that if the offer does not go through, it might not be able to make its interest payments due Oct. 1.

In a worst-case scenario, it said, this could lead to "an alternative restructuring plan (that) may include a bankruptcy."

If this were a publicly owned network, it would be championed by cable and phone companies as proof that those networks fail. We are not suggesting the opposite - that this is proof that all private networks in rural areas are doomed to failure, but it does offer evidence that a purely private sector-based model in rural areas is foolhardy.

Verizon is now getting rid of more rural assets by selling them to Frontier - a company better poised than Fairpoint to handle them, but also a company known for offering slow DSL speeds with a 5GB cap.

Communities that want to keep up with the rest of the world should look to themselves to build the networks they need. The private sector is either unable or unwilling to build the necessary networks to compete in the digital economy.