FairPoint plugs in | Communications firm targets economic development
FairPoint Communications promised to drive economic development in Maine if it succeeded in its $2.7 billion bid to acquire Verizon’s landline operation. As the North Carolina-based company enters its final phase of that acquisition, early evidence of its focused approach to statewide development is already apparent at 2275 Congress St. in Portland.
There, MPX, a printing and publishing company, is gearing up to develop, print and deliver 1.4 million pieces of FairPoint mail every month. Bills, statements, promotional materials and more will be generated in Maine, making FairPoint the 67-year-old company’s biggest client.
“This is a significant contract for us,” says Robert Willis, president. “It means an increase in our revenues in the 25% range.”
Other Maine companies are likewise contracting with FairPoint, which made a “buy
local” philosophy part of its strategy to gain approval from northern New England regulators to become a communications provider in Maine, New Hampshire and Vermont. But it expects to deliver economic development on a much bigger scale, according to CEO Eugene Johnson.
The company has pledged to make collaborative economic development part of its business model, abandoning the old supply-side philosophy of its predecessor, says Johnson.
“The old thinking was ‘Build it and they will come’,” he says of the traditional approach to expanding a communications networks. “We think it’s important to think about demand and how to stimulate that demand.”
For the past year, Johnson and other managers have canvassed Maine, asking hundreds of businesspeople what communications services they need and then integrating that information into FairPoint’s build-out plan.
“We’re looking at a different application for broadband,” says Johnson, who estimates about one-third of Maine lacks broadband service. “If an area is unserved, we’d like to come in and make that connection, but from an economic development standpoint, rather than just [a business] ordering service from us.”
For instance, Johnson said FairPoint representatives were invited to a gathering sponsored by the Aroostook County Partnership for Progress in Presque Isle last year. People from insurance giant Maine Mutual Group said they wanted to hire more claims adjusters who could work from their homes, but were thwarted by the lack of a broadband network.
“The information directed us to accelerate our build-out to those markets,” speeding up delivery dates by as much as six months, says Jeffrey Allen, FairPoint’s executive vice president for external affairs. The company won’t reveal the specific delivery dates because it does not want to tip off the competition, says Allen, but it has already committed $16.1 million to broadband expansion in Maine in its first year and has about 20,000 new customers ready to sign up for broadband service once the transition phase is complete.
Collaborative development
The switchover from Verizon’s data and support systems should be finished by Feb. 9. At that point, FairPoint will introduce new products and services, which it was prohibited from doing until the acquisition was final.
This final phase comes two years after Verizon and FairPoint inked the deal, and after a lengthy permissions process punctuated by union disputes and recurring questions about FairPoint’s ability to finance the $2.7 billion agreement. The communications company’s stock, selling in the $19 per-share range in January of 2007, is now down to around $3 per share.
Allen said, once the switchover is finished, FairPoint intends to roll out an economic development model used successfully in other states. Developed by the economic development consulting firm ViTAL Economy in Riderwood, Md., the model is a software package that identifies and assesses a region’s economic development assets. The program provides a tool to focus resources on commercial sectors with the best chances for success, says Allen.
The software allows users to project how changing a region’s economic base from a mature industry — such as pulp and papermaking — to an emerging knowledge-based sector impacts jobs, earnings, productivity and other factors. It also compares alternative strategies and provides a capital investment tool to gauge the cost for development. Data can be updated annually.
To ensure the model reflects the special characteristics of northern New England — such as its high energy costs – FairPoint and ViTAL Economy convened a users group with representatives from all three states. John Butera, executive director of Central Maine Growth Council, was one of the four members from Maine. Butera says the model has been thoroughly tested and has potential to help Maine better pursue a collective economic development vision.
“I think whenever you can bring additional resources, knowledge and experience to economic development daily practices, we all benefit,” he says.
FairPoint will offer the model to regional economic development groups for free beginning next month, says Allen.
A similar program was initiated in 2002 in Washington’s Olympic Peninsula. Planners there identified five economic opportunities and set regional goals, including creating 2,285 jobs with salaries of $40,000 annually while raising the salaries of 5,000 existing jobs by $5,000. Halfway through the five-year program, 1,745 jobs were created with an average wage of $43,337 and salaries of 999 existing jobs were improved by $5,000, according to Business Edge, a Washington-based business magazine that wrote about ViTAL Economy’s program.
Another component of FairPoint’s economic development plan is to provide $1.4 million over five years for pilot programs to help communities map their assets. The money will be split among FairPoint’s three New England states, with a significant portion of the money earmarked for training. Allen said he expects proposals will be solicited and reviewed, with one regional pilot chosen from each state by the end of this year.
While the communications company waits a few more weeks to fully launch its collaborative economic development plans, its individual contracts with Maine businesses have already borne fruit.
Willis, of MPX, said 10 to 15 new jobs have been created – at his plant or at subcontractors’ — in the wake of the FairPoint contract. FISC Solutions, a Lewiston-based lock-box operation that won Fairpoint’s bill-processing work, said its $1 million contract means additional jobs for that company. Whited Ford in Bangor and Rowe Ford Sales in Portland helped provide FairPoint with a $15 million fleet of service vehicles.
“We try to be good citizens,” said Johnson. “We’re trying to continue the old New England Telephone tradition of being part of the community.”
Most Recent
Most Recent
Comments