February 27, 2011 -- Mike Smith from FairPoint joins Kristin Carlson and Darren Perron to discuss topics including broadband, bankruptcy and service.
>> good morning everyone i'm darren perron.
>> i'm kristin carlson.
Our news maker this morning is fairpoint communications president in vermont mike smith.
Will talk to him about a host of topics from expanding broad band to ‑‑
>> later your neighbors in the news and this week they are out on the trucks every day.
Men and women that work for us are tremendous work force and valuable asset to the state of vermont andwcax brings you your news makers, your neighbors.
This is you can quote me.
>> good morning everyone, i'm
>> i'm kristin carlson.
Our news maker this morning is
president in vermont mike smith.
We will talk to him about a host of topics, from expanding broad band to emerging from bankruptcy.
>> later your neighbors in the news.
And this week we are on and under the ice.
>> but first let's get right to our news maker mike smith.
Thank you so much for joining us.
>> thank you very much for having me
>> you have been at fairpoint for about a year and joined the company at a real rocky point.
What made you decide to come out of of our semi retirement to take on this challenge?
>> a couple of things.
Telecommunications is a very important field in vermont for economic development and for a lot of other things here.
We rely on telecommunicationings, an important part of our fabric here in vermont and for ‑‑ for a lot of people here in vermont.
The second thing is that we have 600 employees here in vermont.
And i thought you know, we needed to find ways in order to show leadership to protect those 600 vermonters.
They are your neighbors, your friends.
They are out on the trucks every day, the men and women that work for us.
Are tremendous work force and a valuable asset to the state of vermont.
And a valuable asset to the economy.
And the third reason is, my wife made me go back to work.
>> did you have a moment where you thought i just emerged from a stressful job as administration secretary where you were upped the gun dealing with the budget, law make, you sort of took again a very very brief retirement if you can even call it that.
I think you just very short time.
>> 18 months.
>> 18 months.
Back at work.
Did you have a moment where you thought do i really want to lawn into something huge like this?
>> didn't because i knew this was of vital importance for the state.
And i ‑‑ i have thoroughly enjoyed this year.
I mean we have made tremendous progress and i couldn't have done it without the work force that i have.
I mean, hard‑working, they have persevered.
And they just really took charge of the situation that you know was handed to them.
In terms of cut‑over, with computer systems, and some other things.
To the point now where our service quality is above where it has been in decades.
And that is ‑‑ that is something that i'm very proud of, of what this ‑‑ what the employees here in the state of vermont have done.
>> speaking of them, and kristen touched on this and you did as well, when fairpoint took over verizon's land lines we saw a number of billing and service errors.
Are we still seeing that?
Have those problems been remedied yet?
>> we have what has happened is, when we tack over from verizon we had this change ‑‑ had to change computer systems.
We attempted to do one of the most ‑‑ one of the largest most complex computer cut whoever overs to a brand‑new system ever attempted in telecommunications.
And you know, the network performed fine.
I mean you pick up year phone, you get on your internet, everything performed fine there.
Where we had our problems was the back office systems where the computers weren't talking to one another so that caused billing errors, some other issues.
Most of those have been resolved.
In fact if you look at 18 of our service quality metrics like i said we are in many of those service quality metrics we are at levels we haven't seen in a decade so you know, the issues have been resolved.
May be a few we are still working on, but certainly the issues that happened in 20009 were far beyond 2010 was a much much better year and then of course, 2011 as we emerged from chapter 11, and moved forward, and reduce our debt by 1.8 billion dollars.
We come out as a more viable company with our systems fixed, and ready to move on.
>> are you seeing your customer base grow as a result of these problems being addressed?
>> well, we are seeing our customer base stabilize no.
Doubt we are seeing a decrease because land lines are decreasing nationwide.
But as we ramp up some of our broad band build, and we are doing extensive broad band build n fact you can put all our competitors together and they don't come close to what we are building out there in broad band.
We are bringing broad band to places like norton and westmore and high gate and richford and berkshire and east and goshen and windham and duxbury.
And to places that i know that there are ‑‑ some relatives would be very interested n kristen's mother.
That i think is ‑‑ is important.
Just so people can realize what we are doing.
We have laid 3.5 million feet of fiber in this state.
That translates to a thousand miles of fiber in this state.
To deploy our next generation network.
To those people that have neff had broad band before.
So i is an exciting time to be the state president here.
I have a great work force and we hope to really win back much of that market share that quite frankly, some competitors took advantage when we had to restructure our debt.
>> let's talk about broad band.
But first i still want to reflect on some of the things that happened.
What do you think went wrong and how can fairpoint make sure it doesn't happen again because i remember being at the hearings at the statehouse lawmakers were frustrated, customers were frustrated.
It was a difficult time.
What happened there that you can assure customers won't happen again if there is some other big upgrade or big change.
>> right well first of all you got to remember that the cut‑over that we attempted is a one‑time cut‑over.
I mean, we were going from a computer system that had been built up a legacy system that had been built up year after year after year for multiple multiple years where whether it was new england telephone, verizon, bell atlantic.
All those systems were built up over years.
So we cut over to a new system.
That new system is state of the art system.
Now, we will upgrade but you are upgrading from a base system as you move forward.
I don't foresee that sort of transformation happening.
And like i said this was a large.
If you have ever tried to sort of put a network in, even a small network you are going to have glitches along the way.
Now, to we were putting in huge computer program and those sort of things have been corrected and we are moving forward.
Now those happened in 2009, 2010, you know we saw limited issues with that and 2011.
You know, i just had a ‑‑ what we call a pizza meeting shall a staff meeting the other day and some of the things that we are doing now in terms of moving forward, providing broad band, you know addressing issues that may pop up as they happen, i mean we are having a big storm this weekend.
Our employees will make sure that this network out there is reliable and operating.
And that is a credit to my ‑‑ to the employees here in vermont.
>> broad band is something that i know a lot of people are concerned about and focused on, something i'm sure you hear a lot about.
Under governor douglas who you worked for there was a time frame of complete bronze band and cell coverage in the year 2010.
That didn't happen.
A new governor says it cap happen in 20 two years, 2013, do you think that is reel lift quick.
>> i do.
I think he will have to change some of the things.
I mean, i learned you know being the semi creator of the vermont telecommunications authority i definitely have learned a few things.
I think what we need to do in in state is sort of transform what we did sort of taking a relic what of we did before and transforming it.
And i think we have made some critical mistakes i mean, i'm very familiar with the vermont telecommunications authority because i have created it.
The laser focus was supposed to be on delivering broad band to the home.
The last mile.
And building cell towers.
I don't think that organization has succeeded in doing that.
And instead it has drifted off into building what is called middle mile and middle mile, there is a lot of midmile in this state and that's like the interstate that goes up and down the state.
We need to branch off and build to the home is where we need to do.
So i would ‑‑ would i ask ‑‑ if i were advising governor shumlin, i would say you can make this.
You can do this.
But what you need no do is refocus, reconstitute that vta to focus on the last mile and the middle mile is already taken care of.
You know there shun be any overbuilding and that is whatter with doing now.
We are overbuilding a network with another network and using stimulus money to do it.
I would redirect that stimulus money to the last mile.
My advice, you know you can take it or leave it, that i would offer.
>> you listed off a number of towns where fairpoint is now available.
Has broad band available to customers.
Where are we in the buildout of bronze band?
How big of a role will fairpoint play in the governor's initiative to bring it here in 2013?
>> we have invested 47.5 million dollars in a next generation network called vantage point, fiber ip‑based network that is state of the art.
Mean it can haul 400 gig and then it can split itself and haul more if it has to.
We will deploy virtually 100% broad band capability in 50% of our exchanges by june of this year.
On top what we've done in two years we have extended our broad band capability access lines from 66% to 81.4%.
There is a lot going on out there and right now, we are in the middle of one of the largest telecommunications construction projects to deploy this next generation network.
We are investing.
We never stopped investing.
And we will keep investing in this state and we will be competitive in this state.
>> why did it take so long you think?
>> to ‑‑
>> to reach what you are talking about, that last mile?
Is it just that we are so rural that economics just aren't there to make it work?
You know why has it taken longer than ‑‑ i have friends come visit me and they are still shocked that they can't use their cell phone in places.
I think ‑‑ i think a couple of things.
One, think we needed more that of laser focus you know, from state government.
And i will take some of the blame for that.
I think the vta should have been more focused on what it was doing.
The second thing is, we are a rural environment, you know environment and getting out is difficult.
So ‑‑ and expensive.
And so i think what i would urge is that you know you take some that of stimulus money and use that in those place where is it isn't economically feasible to build out and use it in that regard instead of sort of building networks on top of networks on top of networks that.
Just doesn't make any sense to me.
>> you mentioned some.
Towns that fairpoint in.
Very small towns.
How are the economics working for fairpoint, then to do these buildouts to these very small communities?
>> these are very expensive but we made the commitment to do this.
When we did ‑‑ when we came here and took over verizon, i mean it is a big capital expenditure to do this.
Now these communities will be available in june as will your mother's place.
But, it is ‑‑ it is a huge capital outlay to do this.
>> how do you make the numbers work?
>> well they will work.
Obviously we wouldn't do it if the numbers didn't work.
But we have a commitment to this state to provide the broad band that we have committed to.
50% of our exchanges, out there, also you know, we have ‑‑ we are getting very competitive in the business market as we move forward.
And the business market is an important market for us.
I mean we have lost market share in the business market and we will come back with new products and roaring back and that helps ‑‑ that helps rev he into you as we move forward so we are revenue sort of ‑‑ focused but at the same time we had commitments that we made and we never have abandoned this state in terms of those commitments.
And we made our commitment for this year and getting to over 80% of our access lines being broad band capable and we will get to our commitment for june 30 as well.
>> do regulations play a role in this?
I knee you have called for and have the backing of a long‑time senator, senator aluzzi for loosening regulations on fairpoint.
He says we are still dealing with regulations that date back about 50 years how many big of a role do regulations play and why are you hoping that those regulations will be loosened?
>> well, the market nowadays has changed tremendously since 1965 or even 2005.
I mean there is a huge shift in the market.
Most of our competitors are either wireless or cable carriers right now.
They are unregulated.
So, we are in a situation where we are heavily regulated like it was you know 1965 and we were a monopoly in an environment where we are no longer the monopoly nor are we no longer the dominant carrier.
So you know, i have said is, let's put us all on a level playing field so that the 600 employees here in vermont can compete.
And i think that is important.
Think it is very important.
Let me give why you a couple of examples why it is important.
Let's say one of my unregulated competitors comes to you and says i can offer this phone service for this amount of money.
And you call me up and say mike can you do the same thing.
I said yeah i can do the same thing but can you wait a couple months because i have to go down to montpelier and get it approved n this day and age you will tell me i can't wait.
And what i'm saying is, let's level the playing field in terms of pricing.
Also, probably unbeknownst to your viewers, we have 18 service quality metrics.
We miss one of those service quality metrics, by a certain amount, let's say one of the service quality metrics is we have to answer the phone within 20 seconds at one of our call centers.
We miss that service quality metrics, more than ‑‑ you know on a number of times, we are subject to 10.5 million dollars of penalties.
No other ‑‑ no other utility in vermont, you could add up all the utilities in terms of their automatic penalty exposure, including electric, including telecom, you could add them all together and no other company is exposed to that level of punitive penalties.
And all i'm saying here is, let's just level that out.
I'm in the saying get rid of it.
But i'm saying let's level that out, let's make it fair here because those people that i'm competing have no penalty structure.
>> do you think that it is feasible that this will make it through that lawmakers will say okay it is time to loosen regulation organization do you think that perhaps because fairpoint had struggled at the beginning when they took over verizon land lines that lawmakers are going to say we still need to keep a close eye on this company?
>> well i have never said not keep a close eye on us.
But i have sensed that people understand that this just isn't fundamentally fair.
As we go through.
And remember, we have a big presence in this state in terms of number of employees.
You know, it gets to the point if this level playing field done get leveled, you know then you know we ‑‑ i'm doing this protect the employees out there.
I mean these are jobs, these are good‑paying jobs.
And what i'm saying if we can compete, if we level the playing field, i will tell you i was in the statehouse yesterday.
And every lawmaker that i spoke to, and i spoke to a lot yesterday, understood this concept and understood the disproportionate of the way that it is now and i'm not saying you know, take off all the shackles.
What i'm saying is just make it more fair for everybody so that we can compete like our competitors can compete.
>> you say it protects the jobs.
Is that sort of a concern that if this bill doesn't get passed that, fairpoint could be in trouble if they can't compete?
>> no i think we will be able to compete.
But i do think that over the long run, when you are sort of in an uncompetitive environment, and this is over the long run, uncompetitive market, you are starting to lose land lines because that is normal trend.
You know you have got to be able to move as quickly as the market moves in this industry.
And i think you know that is all we are asking for.
As we move.
And if we can move as far as the market, that's what i said if we can move like that, we can compete and we can ‑‑ and we can move forward.
You know, i have a lot of people that ask me this question because i speak a lot out there and they say well, isn't the ‑‑ isn't the land line business sort of a dinosaur, you know?
And i say no.
Because think about this.
Went you make a cell call, when you get on any wireless remote, or any sort of device that you have, that goes to a tower.
But the secret in this, it is in the air as little time as possible.
And then the rest of it is on a network.
And as technology gets ‑‑ gets ‑‑ demands more in terms of band width, you know the bigger pipe that you have on a wire network and we just built a heck of a big pipe, the bigger pipe that you have, the more traffic that is allowed to flow over that, and the more reception you have for wireless or other devices.
As you move forward.
>> we will have to leave it there.
Mike smith the president of fairpoint communications in vermont.
Thank you very much for joining us.
>> thank you for having me.
I really enjoyed it.
>> thank you, mike.
Up next your neighbors in the news.
Sharon shows us what it is like under the ice.
Stay with us, everybody.
>>> well, when most of us vacation we want to be comfortable and of course we want to be warm.
>> and warm is not how would i describe this next place but it is cool literally.
As keaghan harsha shows us.
>> home to several luxury hotels.
>> not a typical hotel
>> one of the province's finest will soon be forced to close.
>> this is the entrance of the hotel du glass.
>> not due to a lack of business but because it will melt.
>>> the only hotel in north america made entirely of ice and snow.
>> only one of two ice hotels in the the world.
The other is in sweden.
>> everything is made out of ice.
Down to the furniture
>> a trip here begins in one of the hotel's two ice bars.
>> and ordering a drink comes with a disclaimer.
>> there is a trick to drinking.
>> tiniest part otherwise it will spill on you.
>> all right.
>> let's enjoy.
>> you don't want to sip too slowly or the glasses could melt.
>> very good.
>> very good.
>> keeps you warm.
>> takes 15,000 tons of snow and 500 tons of ice to build the 35,000 square foot hotel.
At a cost of about 3/4ths of a million dollars.
What's even more impressive is that it is constructed in just 6 short weeks.
>> that's how we put the blocks together.
>> use chain saws, chisels, and even household appliances to turn ice into art.
>> we use believe it or not an iron to soften the furniture.
Kind of cool, huh?
>> hotel's grand hall is a favorite with the kids.
Children and kids at heart have been known to spend more than an hour playing on the ice slide.
And some of the ice sculptures here are incredible.
From toucans to tigers.
>> they are like one giant work of art.
It is up credible.
I have never seen anything like this.
>> it just blows your mind.
>> lead the way.
Where are we headed?
>> we are heading to the chapel.
>> are we getting married?
>> not today.
>> the most elaborate room may this be one
>> the favorite room?
>> it is my favorite room.
>> more than 20 couples will wed here this winter.
At a cost of anywhere from 23 o‑‑ 23 to 65 hundred dollars.
>> it makes us cry when we walk into this budding because it is so mazing.
There are many details that you go to come often to realize how many details there is here.
>> i said it was one of the most amazing things that i have ever seen in my whole entire life
>> and it isn't a hotel without a cozy place to lay one's head.
>> so now we are entering the gingerbread house suite.
It is magical but it feels like you are walking in a disney set.
>> the hotel, the glass has 36 rooms, 15 are suites.
Which means they either have a private sauna, jacuzzi or a fireplace.
>> they are for your eyes only.
You don't want this place to be melting.
>> it costs about $150 a night to sleep on a bed of ice.
As much as 1500 bucks for a suite.
An experience in itself.
It is not a regular hotel where you want to stay for five nights in a row.
A one‑night deal.
>> believe it or not they have a 70% occupancy rates although most of the hotel's visitors will not stay here.
>> better to visit.
Maybe have a little warm drink and then go to a regular hotel.
>> but no matter how you visit, or for how long, the hotel the glass is a wonder to behold.
Ice magically transformed into a master piece of art.
>> it is a piece of art that will leave for three months.
>> keaghan harsha, channel 3 news in quebec city.
>> so cool.
If a hotel made out of ice isn't cool enough for you, how about a trip under the ice?
>> sharon takes us ice diving under lake champlain.
>> it is not as bad ace it sounds.
At least not i you have the dry suits and the equipment that the rescue dive team has.
They do stay dry for the most part.
With layers of clothing under a dry suit and a full face mask to protect them from the icy waters.
It is still begs the question why would somebody want to cuba dive under the ice in february?
The dive team from the colchester technical rescue dives under the ice at least once a year.
Some of them dive under the ice for fun.
But they also do it to keep their skills sharp.
This is the team that would go in after a drowning victim or to locate a car ar snowmobile that's submerged.
>> what we are here for, whether it is ‑‑ well searching for a drowning victim or evidence recovery that, type of thing, so it brings a whole different slant to the reason that we are diving.
>> that's good.
>> that's good.
>> it is a well choreographed exercise designed to keep the divers safe.
Keeping the equipment from freezing is a big challenge as is keeping the support people and the divers warm.
The divers are tethered to the support team back on the dock and a communication system means the support team and the diver can talk back and forth.
>> are you staying dry?
>> oh yeah.
I've got no water leaks or anything.
>> many of the dive rules are the same but there is one big difference.
>> what's it like when you are looking up and seeing the ice for you?
>> it can be a little intimidating because you know that you can't go through it.
>> the only way that's really different than diving in cold water is in an emergency situation you cannot make a direct ascent to the surface and that plays with some people's minds.
>> down in the weeds pretty far so i might be tangled some.
>> what happens if they lose their mind?
>> as soon as he realizes that he is disconnected, then he meetly goes to right below the ice.
There is a dive line here that is twice as long as the longest line we are using for the diver.
The safety diver would immediately take that, swim the length of the line under the ice and then immediately begin a sweep.
That line would come around and contact the dive ever who will then grab it, signal and everybody gets pulled in.
>> will pull on it?
Give it a good pull.
>> these are skills the dive team will have to keep sharp in hopes they won't be called in on a mission.
But knowing they probably will.
>> i guess i'm done.
>> mike is coming out.
>> the channel 3 underwater camera.
Take care everybody.
We will see you soon.
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