Wednesday, December 19, 2007

Verizon angles to keep state business

Published in the Portland Phoenix

Democratic governor John Baldacci had a private sit-down with Ivan Seidenberg, the president and CEO of Verizon, November 30. The meeting wasn’t publicized in advance and got only a small amount of coverage after the fact.

None of that coverage mentioned the roughly $6 million Verizon earns from providing state agencies with telephone services (that total doesn’t include in-state and out-of-state long-distance calls, which, according to state technology chief Dick Thompson, are also provided by Verizon at a rate of 2.98 cents per minute).

The meeting came just days after the staff of the Public Utilities Commission issued a devastating report recommending that regulators reject the proposed buyout of Verizon’s telephone landlines by FairPoint Communications (see “No Raises for Seven Years,” November 16, and “No Raises — It Gets Better,” online November 20, both by Jeff Inglis).

Neither Verizon nor Baldacci’s folks will say specifically what was discussed, but Verizon Maine spokesman Peter Reilly says the meeting was intended “to discuss Verizon’s role in the state in the future,” specifically the fact that “Verizon is going to be continuing to invest in businesses in the state.”

It’s fair to ask what business, given that PUC analyses of Verizon’s investment in landlines and consumer services such as Internet access suggest the company has done little, if any at all, in recent years (see “Internet Disconnect,” by Jeff Inglis, 24).

The answer may explain why Seidenberg wanted to talk to the business-friendly Baldacci: Verizon will continue to invest in wireless service in Maine, as well as “enterprise services,” Reilly says. He wouldn’t explain what “enterprise services” are, but the company’s Web site does — telephone service and high-speed Internet communications for large businesses.

The meeting between Seidenberg and Baldacci was first reported on, a blog closely monitoring the merger’s progress, where speculation ran rampant about whether Verizon was trying to cut a deal with Baldacci. All sides deny that.

Asked if Seidenberg was trying to make nice with Maine officials after the PUC staff’s report repeatedly accused Verizon of hurting Mainers by spending too little on service quality and upgrades, Reilly's answer was short: “All I can confirm is that Mr. Seidenberg met with Governor Baldacci.”

But if Verizon was trying to hang onto its revenue from public coffers, Thompson (who heads the state agency that arranges phone service for state offices) may have killed it: if the sale goes through, he says, the state’s phone provider would become FairPoint. Unless the gov says otherwise, of course.

Press Releases: Plum Creek watchdog

Published in the Portland Phoenix

Thanks to a Phoenix reader, Maine residents now know something the Portland Press Herald was not telling them: that the chief executive officer of the development company that wants to build nearly 1000 units of homes and condos plus two resort hotels in Maine’s North Woods joined the board of directors of the newspaper’s parent company 18 months ago.

To call the Plum Creek project controversial is an understatement, as attested by the 60 or so stories and editorials that the Press Herald has published on the subject in the past year and a half.

Yet none of those pieces — not even the editorials that questioned the deal — disclosed that Rick Holley, CEO of Plum Creek Timber, the project’s proposed developer, joined the board of directors of the Blethen Corporation (the family-owned company that owns the Press Herald) back in May 2006. Nor did they disclose that Holley joined at the personal request of patriarch Frank Blethen, as a Plum Creek spokeswoman told the Portland Phoenix last week.

In a December 2 article, PPH environment reporter John Richardson detailed Plum Creek’s donations to Maine politicians, quoting Bruce Freed, executive director of the Center for Political Accountability in Washington DC: “What they’re trying to is develop relationships and influence decision-making and policy.”

But Richardson’s story didn’t mention another way Plum Creek could influence decision-making and policy — namely, through close connections with the newspaper’s owner.

It’s possible, as Poynter Institute ethicist Kelly McBride notes, that the paper’s editorial team may not have actually known that Holley had joined the board. (If they did know, she says, they should have disclosed it earlier.) As it was, the disclosure came after the Phoenix, prompted by posts on, called Richardson and others at the Press Herald.

On Sunday, a Richardson article about Plum Creek added that Holley also sits on the board of the Seattle Times Company, though he (or his editors) took pains to distance Holley from the Press Herald, specifying that the company’s Maine newspapers (the Press Herald, the Kennebec Journal, the Morning Sentinel, and the Coastal Journal) have “a separate board of directors” on which Holley does not serve.

But not every article addressing Plum Creek in Sunday’s paper carried the disclosure: columnist Bill Nemitz left out the relationship between the people who sign his paycheck and the man at the helm of the largest private landowner in the country, who just happens to be the proposer of one of the largest land-development projects in Maine history (see “Up Plum Creek Without A Paddle,” by Yanni Peary, November 30).

That omission, and the 18 months of silence throughout the paper, fit a pattern of concealing the connections between the newspaper and Plum Creek: in the 20 mentions of Plum Creek in the Seattle Times since May 2006, none have disclosed Holley’s involvement.

Corey Digiacinto, communications manager for the Seattle Times Company, would not say how many directors the company has, nor whether Holley is a voting member of the board (versus an advisory one). She says the company doesn’t normally talk about its corporate structure, but did so “in this case, for reasons of disclosure.”

Why now, though, if Holley has been on the board for 18 months? Digiacinto referred that question to Press Herald/Telegram editor Jeannine Guttman.

Guttman and Richardson did not return phone calls seeking comment, as is the paper’s general practice when receiving inquiries from other media organizations.

But with Phoenix readers keeping watch where the Press Herald fears to tread, they’ll have to do better next time.

Disclosure: I like plums, and have swum in creeks. With a tip of the hat to the poster named “Jay” on

Wednesday, December 5, 2007

Courts allow photographs of documents

Published in the Portland Phoenix

Back in September, we told you that a Maine judge had issued a secret, unwritten order barring people from taking pictures of court documents (see "Speak Now, or Forever Pay for Copies," by Jeff Inglis, September 28). The practice, a popular tactic among reporters and members of the public alike to avoid the expense of buying official copies (at $2 for the first page and $1 for each additional page), had been permitted by court officials for more than five years. Last week, a memo went out from state-court administrator Ted Glessner to all Maine court clerks and their staffs re-authorizing the practice.

There has been no formal change of policy, but that too is in the works, according to Maine Chief Justice Leigh Saufley, who says the court system expects to take another two months to finalize new rules regarding using cameras in courtrooms during proceedings. The two topics are related because the no-cameras-in-courtrooms rule at the moment bars cameras from entering courthouse buildings at all, which would obviously prevent taking pictures of paperwork.

In the meantime, regarding the specific act of photographing documents, there will be “an internal order that tells everybody it’s okay,” Saufley says.

“It’s perfectly appropriate for people to use cameras to take photographs of documents,” she says, noting that existing rules — and the ones under consideration to replace them — bar people from photographing only participants in a trial, including judges, witnesses, attorneys, and defendants, without the judge’s prior written permission.

The larger problem is that “every single cell phone sold today has a camera in it,” Saufley says — and many laptop computers, too. Cell phones, cameras, and laptop computers are banned from the federal courthouse in Portland (though laptops are allowed for a “privileged few,” such as attorneys working on cases, according to federal-courthouse staff).

Saufley says the Maine courts have a tradition of being more open to electronics than the federal courts. (Also, the federal limits are at least partly offset by Internet access to court filings, which are not available for state-court cases.)

But while people can again bring cameras into state courthouses for the purposes of photographing documents, and Saufley appears unenthusiastic about banning cell phones and laptops from courtrooms, using cameras during trials and other court proceedings will likely continue to be restricted.

Court officials have talked to members of the state’s television media about their needs, and the state’s advisory Committee on Media and Courts is at work on crafting rules that would, in effect, state that “we don’t want to stop people from bringing cameras into the courtroom,” Saufley says, but “you can’t use cameras” there without advance permission.

Tuesday, November 20, 2007

Shopping advice from the star: The Marden’s lady lets you in on her secrets of surviving Black Friday

Published in the Portland Phoenix

If anyone in Maine knows how to shop with gusto, it’s the Marden’s lady. You’ve seen her all over the TV — you may have even seen her around town. The woman knows how to spot bargains, values, deals, and great items like nobody else in the state.

She doesn’t give out her name because of “trouble with paparazzi,” but we managed to find her, which led right into one of her problems: “One of my hardest things about shopping is the people that follow me because I am not only glamorous and a sex symbol, but they know I’m a consummate shopper. Sometimes I go in disguise.”

The Portland Phoenix convinced her to take a break from shopping in a quiet part of town, and got her to share her thoughts on how to survive — and even to thrive — on Black Friday.

“You gotta start early,” she says. “Like about a week and a half, two weeks in advance, you gotta start stocking up on the mini-marshmallows. ... You start drinking cocoa and you think of everything you can stick ’em in. Load the sugar on, because from here on out, it’s gonna be a sprint.”

She also observes that you might not be able to fit everything you buy into your car at once, and advises: “Get a few rental storage units, strategically placed between shopping areas, so you can drop off what you’ve got and go on to the next place. All you gotta do is rent ’em for a week.”

“You don’t ever want to eat turkey on Thanksgiving. All that tactrotactlycicerin or trychtelactin, everything that slows everybody down. ... The goal is to get speeded up. My mantra is ‘Caffeine, caffeine, caffeine, burn, baby, burn.’ ... Tofu turkey is never okay. I’ve eaten enough tofu in my life to know that. ... The bottom line of Thanksgiving is to stay away from things with feathers. If the Pilgrims had stayed away from everything with feathers, there’d be a lot more Native Americans here today.”

What to bring
“Allen’s Coffee Brandy could come in handy. I suggest you always keep your flask with you. I store mine in my hat.” Also, “Daddy’s wallet. Daddy’s huntin’ while I’m shoppin’. The men are all out wandering with their guns at all hours.” We think that means they don’t need their wallets.

Dealing with kids
“Daddy can’t take ’em huntin’ and you can’t take ’em shoppin’. You gotta feed them a lotta lotta turkey, and you tuck ’em into bed real tight. If they’re too young to be on their own, then maybe you have the neighbor kid look in on ’em.”

Dress the part
“Get deep into your own kind of style, because that is going to help your intuitive being. Do not wear one of those coordinated tracksuits — you’re gonna be confused all day.”

Find the perfect item
“It is kind of a religious experience. You walk in the store and you gotta receive, and when you start seeing an aura in a particular aisle, you gotta run. Until you see that aura, I suggest you run in place. You don’t know where they’re going to have hid the best stuff, so you gotta stay ready.”

Handle other shoppers
“I think a Taser might come in handy.”

Keep up your health
“It’s imperative at one point during the day to get some of that fresh-air shopping — do not miss it. Inhale short, quick breaths to recharge.”

If you shop in groups
“Be very careful, because you can avoid strangers, but it’s always your friends that hurt you the worst. If a friend grabs that one item you had your eye on, she won’t put it down. You can will a stranger to put an item down and then you grab it, but a friend know it’s worth something to you. ... I never shop in a herd. I like it when Daddy goes huntin’ alone — it’s safer.”

Share deals with friends
“Stay connected, cell phone at the ready, but hands-free. Do not call arbitrarily. A good friend is gonna buy two — if she finds something she’s going to buy two because she knows you need it. That may be difficult when it comes to ponying up for the things she bought you, though. ... You can lose good friends. If they like it and you didn’t buy them something, they won’t forgive you.”

Find a checkout line
“Pick a cashier that’s smilin’. If they’re not havin’ fun, then you’re not gonna have fun.”

Pay for your purchases
“Always pay in cold, hard cash. However, cash can be hard to come by, so what you want to do and what you end up doing are two different things.”

Get it to the car
“You’ve seen those people on TV who carry things on their heads. There’s a real advantage to that because when the cart’s full, you can push it with one hand and hold more on your head with the other. Also, people get out of your way."

Sidebar: PUC filings: Selections from the redacted text

Published as an online exclusive at

1: condition 1, p 3

The proposed transaction must be restructured to allow FairPoint to reduce its bond debt level by $600 million, thereby reducing the associated interest expense and debt leverage levels. A $600 million reduction in bond debt for the new enterprise is important and appropriate because:

the bond debt will carry a materially higher interest cost than the bank loan;

the bond debt issuance is at this point entirely uncommitted and subject to prevailing difficult credit market conditions;

bond debt reduction results in debt leverage ratios that are lower and more consistent with the Embarq and Alltel spin-offs (although still not as low);

bond debt reduction results in debt leverage ratios that are more consistent with investment grade bond ratings, which in turn are crucial for a public utility providing a necessary and essential service under challenging business conditions;

bond debt reduction will increase cash flow and permit further discretionary reduction of bank loan debt;

even if bond debt is reduced at this level, proceeds to Verizon [BEGIN SUPER CONFIDENTIAL] will still exceed the implied wireline valuation as calculated by Verizon. [END SUPER CONFIDENTIAL]

2. (footnote 17, p 12)
17 The amount of debt that would be borne by FairPoint was an important consideration for Verizon. Its original information letter, sent to sent to parties possibly interested in purchasing the NNE properties, asked for [BEGIN CONFIDENTIAL] “the specific total dollar amount of debt” that the FairPoint could support. [END CONFIDENTIAL]

3. (footnote 34, p 20)
34 There is no doubt about the risk that interest rates will rise, and FairPoint recognizes that risk. The federal funds rate that is contained in [BEGIN CONFIDENTIAL] the “Control” page of the FairPoint financial model is 4.75%. [END CONFIDENTIAL] However, the federal funds rate, as of July 12, 2007, was already higher -- at 5.25%. Brevitz Direct, p. 41, ll. 20-24.

4. p 21
FairPoint is not [BEGIN CONFIDENTIAL] making a commitment to use its surplus cash to reduce [END CONFIDENTIAL] its debt. 39 FairPoint’s financial model suggests that by the year [BEGIN CONFIDENTIAL] 2015, FairPoint would have reduced its debt by $318 million. However, as Walter Leach confirmed at hearing, that reduction is only an assumption, made for modeling purposes. FairPoint is making no plan and no commitment to reduce its debt over the next seven-year period. [END CONFIDENTIAL]40Id

5. p 21, footnote 38
38 Id., p. 43, ll. 1-3. Even with its limited ability to hedge interest rates, FairPoint remains exposed to trends of increasing interest rates, particularly since [BEGIN CONFIDENTIAL] its financial projections show that it will continue to have significant long term debt, and will have to refinance most if not all of that debt, $1.5 billion or more, at or before maturity. [END CONFIDENTIAL]Brevitz Direct, p. 43, ll. 3-8.

6. p 21, footnote 40
40 In its response to OPA-I-30-6, FairPoint states [BEGIN CONFIDENTIAL] “FairPoint has not made and is unwilling to make a binding commitment to use cash flows after dividends solely for debt reduction.” [END CONFIDENTIAL]OPA Exhibit# 25.

7. p 23, footnote 45
45 Originally FairPoint proposed a debt leverage ratio for the new entity of “3.25 to 3.5 times earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, which would result in a leverage ratio of 3.6 to 3.7 times EBITDA for the combined company.” FairPoint Communications Form S-4A, filed July 2, 2007, p. 55. FairPoint expressed reservations about taking on higher levels of debt: [BEGIN CONFIDENTIAL] “although we believe that pro forma leverage for NewCo could potentially be raised as high as 4.5x, providing maximum de-leveraging for Verizon, we do not believe this would be positively received by the equity markets as a more conservative leverage level.” [ENDCONFIDENTIAL]Brevitz Direct, p.24, ll. 21-24, fn.28. However, it appears that Verizon’s interests prevailed in negotiations because the debt leverage of the proposed transaction as announced is 4.1x. Brevitz Direct, p.25, ll. 1-3.

8. p 23, footnote 46
46 The advice provided to FairPoint by Lehman Brothers concludes: [BEGIN CONFIDENTIAL] “For tax reasons, a cash sale is not attractive for Viper whereas the Spin/RMT structure would be tax-free; to qualify as a tax-free transaction, Viper must retain 51% of equity following the transaction, but can own more; Viper also intends to use a debt-for-debt swap to achieve greater tax-free deleveraging.” [END CONFIDENTIAL]OPA #112 (FairPoint HSR documents, attachment 4(c)-3, Project Nor’easter Discussion Materials, Lehman Brothers, February 20, 2006, page 6.)

9. p 28
There is no “low hanging fruit” here.


& LD
$ 371 ALSK
$ 385 IWA
$ 400 CTL
$ 422 CNSL
$ 443 CZN
$ 465 NNE
$ 501 WIN

10. p 29
There is no “low hanging fruit” here.


Services &
$ 197 CZN
$ 210 NNE
$ 347 ALSK
$ 377 IWA
$ 399 WIN
$ 408 CTL
$ 486 CNSL

11. p 29
The results of the disaggregated analysis of the data & internet category are also shown in Table IV. It shows that NNE’s revenues per access line from this category are at the bottom of a wide range. There is revenue opportunity here, but it is not “low hanging fruit” due to the fact that DSL service revenues [BEGIN CONFIDENTIAL] as projected in the model are driven by very substantial penetration rate assumptions already accounted for. (“Detail” tab, rows 55 and 58). The model has consumed the fruit in its assumptions. [END CONFIDENTIAL]

12. p 30
Furthermore, the DSL model results show the importance of assumptions regarding charges between affiliates, in particular the DSL line sharing charge assumed in the model.


2006 Revenue Per Line

Data & Internet
$ 40 NNE
$ 51 WIN
$ 96 ALSK
$ 130 CNSL
$ 155 IWA
$ 163 CTL
$ 195 CZN

13. p 33, note 61
61 Loube Direct, p. 28, ll.14-16. According to FairPoint’s financial model, “Other ISP” revenue increases from [BEGIN CONFIDENTIAL] $5.6 million in 2008 to $16 million in 2010 and then drops back to $5.3 million in 2012. Those estimates are driven by percentage change estimates. However, there is no connection between the percentage change estimates and other features of the model. [END CONFIDENTIAL]Loube Direct, p. 28, ll. 14-19.

14. p 33, note 63
63 The Commission should also question the reasonableness of the assumptions made in FairPoint’s model regarding revenues from local service. However, it is difficult to identify those assumptions. [BEGIN CONFIDENTIAL] Reviewing the model, it is not possible to assess what FairPoint’s underlying assumption might be regarding loss of access lines over time. Nevertheless, it is clear from Verizon’s due-diligence materials that Verizon believes FairPoint is underestimating future line loss rates. [END CONFIDENTIAL]Brevitz Direct, pp. 76-77.

15. p 34
** Unrealistic Assumptions As to Annual Operating Expenses.
With respect to operating expenses, the assumption in the financial model is that for the 2008-2015 period FairPoint is expecting those expenses [BEGIN CONFIDENTIAL] to remain virtually flat [END CONFIDENTIAL]64

However, that assumption is completely unrealistic. For, example, it is not reasonable to assume, as the model does, that FairPoint NNE will have [BEGIN CONFIDENTIAL] zero [END CONFIDENTIAL] wage increases for seven years. There is no reason to believe that, over the next seven years FairPoint’s operating expenses will not be affected by cost increases from suppliers, increases in the cost of gasoline and electricity, wage increases, and other inflationary increases. Over the last five years, Verizon’s NNE properties have had a unit operating-expense growth rate of about 6% to 7%.65 In the twelve months ending March 31, 2007, FairPoint’s per-unit operating expense increased by 8.1%.66 Iunreasonable to expect that FairPoint can reduce that growth rate to the rate of growth assumed in its financial model.

16. p 35, note 67
67 For the key years of 2005, 2006, 2007, and 2008, [BEGIN CONFIDENTIAL] 79% to 82% of the operating expenses in the model cannot be tied to a verifiable source. [END CONFIDENTIAL]
Brevitz Direct, p. 81, ll.17-22.

17. p 35, note 68
68 FairPoint’s projections of the up-take for DSL over the next four years cannot be accurate because it has not been able to develop the specifics of its broadband deployment plans:[BEGIN CONFIDENTIAL] FairPoint will not have access to detailed plant records until after the closing of the proposed transaction. “Due to the fact that detailed plant and engineering records and resource relating to the to-be-acquired properties will not be available until after the transaction closes, FairPoint had to make a number of assumptions in generating the Maine Broadband Plan.…”[END CONFIDENTIAL]Brevtz Direct, p. 85, ll. 3-8, citing FairPoint’s response to OPA II-10-1.

18. p 36
** Different Balances for Shareholders Equity. The inputs to FairPoint’s financial model with respect to the balances of shareholders equity are not reasonable. The model projects negative balances for shareholders equity that are significantly different than the balances that FairPoint has projected in its Form S-4A report to the Securities Exchange Commission (SEC). Negative equity is an indication of the financial weakness of FairPoint. In its SEC report, FairPoint projects that starting in 2007 shareholders equity will decline almost $900 million dollars, to a negative $218 million in 2015.71 However, FairPoint’s financial model projects different balances for shareholders equity – balances that are significantly [BEGIN CONFIDENTIAL] more negative. [END CONFIDENTIAL] 72 In short, the inputs used in the model—which do not reflect reality -- appear to be part of an effort to “sell” the proposed transaction.

19. p 36, note 70
70 For UNE-L’s, for the years 2008 through 2012, FairPoint’s model projects [BEGIN CONFIDENTIAL] growth rates in the range of 14% to 20% annually. Those projected growth rates are substantially higher [END CONFIDENTIAL] than the annual growth rates experienced for UNE-L’s nationwide. Brevitz Direct,p. 86, ll. 4-13. Dr. Loube makes the same points at pages 33-34 of his Direct Testimony.

20. p 36, note 72
72 The financial model projects that, starting in 2008, the balances for shareholders equity will decline [BEGIN CONFIDENTIAL] by approximately $590 million dollars, to a negative $452 million in 2015. [END CONFIDENTIAL]Brevitz Direct, p. 87, ll. 9-11.

21. p 37, note 76
76 Indeed, in one of its Hart/Scott/Rodino documents, FairPoint’s senior management acknowledged the risk of unplanned capital expenditures that exists because FairPoint does not know the condition of the NNE operating plant. FairPoint acknowledged a “challenge” regarding [BEGIN CONFIDENTIAL] “unknown plant quality—probably poor—may consume a lot of capex to compete with Time Warner”. [END CONFIDENTIAL]Brevitz Direct, p. 60. ll.13-15; OPA Exhibit #112(FairPoint HSR Documents, Attachment 4(c)-11, at page 1). The FairPoint financial model simply [BEGIN CONFIDENTIAL] extends past Verizon capital-expenditure patterns forward, and does not adjust for the “unknown plant quality—probably poor” that it will begin operating after close of the proposed transaction. [END CONFIDENTIAL]Brevitz, Direct, p. 60, ll.16.19.

22. p 39, note 83
83 In its financial modeling, FairPoint did perform one “Material Adverse Change” scenario that was designed essentially to assume that no synergies occurred. That scenario shows that, with no synergy effect, [BEGIN CONFIDENTIAL] each year FairPoint would face climbing leverage ratios, and have essentially no cash left after payment of expenses, interest, taxes and dividends. [END CONFIDENTIAL]Brevitz Direct, p. 58, ll.4-11. That scenario suggests that the financial success of the transaction depends, in part, on full achievement of the estimated synergy savings – which, in turn, suggests that the proposed transaction is pretty risky.

23. p 42
** Employee Pensions or Other Post-Employment Benefits. The model makes the (inappropriate) assumption that, post closing, FairPoint will [BEGIN CONFIDENTIAL] have no expenses for either employee pensions or other post-employment benefits (OPEB). The model assumes (also inappropriately) that FairPoint will not incur those types of expenses for its newly hired “incremental” employees. [END CONFIDENTIAL] 95

24. p 47
This analysis indicated that, based on the Verizon stock price at that time, its wireline business had an [BEGIN CONFIDENTIAL] implied wireline multiple of 3.7x 2007 EBITDA. [END CONFIDENTIAL]99 Comparison of that EBITDA multiple to the proposed NNE transaction multiple of 5.6x 2007 EBITDA shows the extent to which FairPoint is overpaying for the NNE wireline business compared to the market’s judgment as to what that wireline business is worth.

25. p 48
Verizon’s valuation materials demonstrate that the upper end of valuation estimates is [BEGIN HIGHLY CONFIDENTIAL] produced by “acquisition comparables”, and is $3.04 billion, compared to the $2.715 billion proposed transaction price.100 The lower end of the valuation range is produced by discounted cash flow analysis, and is $2.064 billion. Hence, it can be seen that the transaction valuation as proposed is in the upper third of the valuation range—and for “a car without the engine”. [END HIGHLY CONFIDENTIAL]

Furthermore, the same document demonstrates that the proposed transaction price is well above [BEGIN HIGHLY CONFIDENTIAL] the implied valuation of Verizon’s wireline business in its stock price. Verizon’s own analysis demonstrates that the market values Verizon’s wireline business at 3.7 times 2007 EBITDA. On the other hand the transaction price results in FairPoint paying 5.6 times 2007 EBITDA. [END HIGHLY CONFIDENTIAL]

26. p 49
100 OPA # 94 Verizon HSR documents, “Confidential Presentation Materials prepared for the Verizon Board of Directors Regarding Project Noreaster”, Merrill Lynch, January 15, 2007, page 13.

101 CITE, Transcript, Brevitz, xxx.

Verizon’s own data and analysis support Mr. Brevitz’s statement at hearing that Verizon is charging FairPoint too much for the transaction, even though FairPoint has agreed to it. In effect, FairPoint has agreed to a “bad deal”.101 The fact that the transaction is for “a car without the engine” greatly exacerbates this “bad deal”. The Public Advocate’s recommendation that the amount of debt proposed for FairPoint be reduced by $600 million serves to bring the proposed transaction to a place that ameliorates the considerations above, but still results in proceeds to Verizon [BEGIN HIGHLY CONFIDENTIAL] that are well above Verizon’s implied wireline valuation of 3.7x, down from the transaction price of 5.6x to 4.4x. END HIGHLY CONFIDENTIAL]

27. p 73
Of particular note is the fact that FairPoint’s financial model assumes a monthly payment from the unregulated entity to the regulated telephone company of [BEGIN SUPER CONFIDENTIAL] $30.11 [END SUPER CONFIDENTIAL] per DSL line per month.133 See, Ex RL-10 of Loube Surrebuttal, Response to ODR-16. While examining super confidential exhibit RL-10 attached to the surrebuttal testimony of Dr. Loube, Mr. Leach agreed that, when viewed as a stand-alone business, the DSL business BEGIN SUPER CONFIDENTIAL: loses more and more money as time goes on:

MR. JORTNER: Okay, now let’s turn to the gross margin which is line 296 which is the line that the OPA added and this -- on the margin reported on row 296 are all negative and getting larger all the time, is that correct?

MR. LEACH: Generally that’s correct, yes sir.

MR. JORTNER: And if those numbers are correct it would indicate that the company is losing money on all these services correct?

MR. LEACH: No, that’s not correct. I think you cannot look at that number without the inner-company eliminations because part of the reason those margins are negative is because part of the cost structure is revenue being paid to the telephone company for providing these kind of services.

MR. JORTNER: Right and that’s what I’m getting to next because we’re trying to look at the DSL business by itself. So when we -- I’ll get to that issue. In fact the difference between the two pictures of profit has to do with the cost of goods sold, eliminations which are row 297, correct?

MR. LEACH: That’s correct. [END SUPER CONFIDENTIAL]. TR Oct. 3 at 45-46.

28. p 86
In addition, evidence in this proceeding reveals two other bases to conclude that FairPoint would be acquiring a utility with rates that are already inflated. [BEGIN CONFIDENTIAL]: On cross-examination, FairPoint witness King was asked to explain the large distinction between the higher costs allocated by Verizon to northern New England’s regulated utilities and the much lower comparable costs of other ILECs that Mr. King analyzed. Although Mr., King was hesitant to agree with Mr. Hagler that this necessarily represented “regulatory failure,” Mr. King candidly admitted that Verizon’s high cost allocations did not seem reasonable based on his experience. TR Oct. 5, at 11. Moreover, in Verizon’s HSR document, Confidential OPA Ex. 94, Verizon describes as one of FairPoint’s interests as (under “Access Line Market Characteristics), “Potential disposition lines are less dense, have fewer business customers and fewer areas targeted for FTTP, but produce higher margins than VZ average.144(emphasis added) [END CONFIDENTIAL]

No raises — it gets better: Fewer workers are also part of FairPoint’s plan to remain solvent

Published as an online exclusive at

FairPoint, as you might expect, has been in a tizzy since my story on the “unrealistic” financial assumptions underlying that telecommunications company’s attempt to swallow Verizon (see “No Raises for Seven Years,” by Jeff Inglis, November 16). Let’s hope the speed and quality of its response is not a sneak peek at how the company will respond to customer problems if it is allowed to take over phone service in Maine, New Hampshire, and Vermont.

After last week’s Phoenix story came out, the company took a day and a half to have a PR person call (and then, not even from FairPoint directly, but from a Portland flack firm). And after I told the PR guy who called that I would love to talk to someone at FairPoint, it took them another day and a half (plus a weekend) to get someone “authorized to speak” on the phone with me.

Walt Leach, FairPoint’s executive vice-president for corporate development, told me it was “misleading” to say that FairPoint wouldn’t give workers raises for seven years. Though he agreed that the company was expecting not to pay any more wages in 2015 than it will pay in 2008 (after the merger, if it goes through), Leach promised to “honor the existing contract” with Verizon’s 2700 or so union workers in Northern New England, and even to “extend it under existing conditions” if the unions would like.

But, Leach continued — and gave by far my favorite “explanation” from FairPoint about what was wrong with my story: FairPoint will hire 675 new workers, as promised to state officials (to tempt them into the deal), getting its total number of workers up to somewhere around 3400 in all three states. The company predicts that four percent of all those workers will leave within a year — including the equivalent of four percent of the 675 new hires! (Though “not necessarily” just-hired staffers, he says.)

Those workers will not be replaced (Leach calls it “attrition”), so, he says, FairPoint will have plenty of money to give raises to the ones left — the ones with more work to do (like handling billing and payments), with more equipment to install and maintain, the ones on whom residents of Maine, New Hampshire, and Vermont will be depending for reliable phone service (including E-911 service during life-threatening emergencies).

Leach says the company expects its employee numbers to drop by a little more than four percent every year — as landline-customer numbers decrease over time — and says the money those departed workers won’t be making will be enough to cover everyone else’s raises into the future.

Digging the hole deeper, Leach notes that the company’s financial model includes $142 million for dividend payments to shareholders, and says that money could be repurposed “if it’s needed” to improve service to telephone customers. But that puts dividends before service. Leach admits the company has not constructed its model to have $142 million in cash available to make service better (the company does not know how much it will cost to bring Verizon’s existing lines up to workable standards), and then — only if there is money left — to pay dividends.

While still trying to disprove my analysis of filings with the Maine Public Utilities Commission, Leach adds something new: I knew, based on PUC filings, that the company didn’t expect to spend any more money on its operations in 2015 than it would in 2008, but Leach revealed that the company also expects to make the same amount of money on its telephone service in 2015 as in 2008.

But even he calls the landline business “declining.” And sure, Leach says, FairPoint believes its service features can convince customers to stay longer and buy more services than Verizon’s customers do with their phone company now. But he has — and makes — no guarantees of that.

Reasonable doubt
All this — companies’ internal projections, market predictions, assumptions about revenue and the like — matters so much not because every company has to (or even does) behave rationally. Just this company — and any other corporation that is granted a government-approved monopoly to deliver vital services (such as water, sewer, electricity — and telecommunications).

“What our members intuitively know about FairPoint has come to light,” says Rand Wilson, who has been leading “stop-the-sale” efforts for the labor unions involved. The company, he says, is “run on a back-of-the-envelope, pie-in-the-sky basis.”

Pete McLaughlin, business manager for IBEW Local 2327, which represents many of the Verizon workers in Maine, says it seems to him that the company is “making business assumptions that are unrealistically optimistic.”

Normally, utilities companies’ full-scale business models and predictions over time are not of much concern to regulators, says Wayne Jortner, senior counsel at Maine’s Office of the Public Advocate, which works on behalf of the public in cases before the state’s Public Utilities Commission. In most mergers, the issues are “usually pretty clear. There’s really no issue of economic viability” after the merger, Jortner says.

In this one, however, there are significant questions, which have resulted in FairPoint being required to file detailed business plans, with which Jortner and his colleague, Deputy Public Advocate Bill Black, have found significant fault.

Which is not to say that Black, in particular, is glad this information is public.

“If somebody has gamed the system and used some sort of technological loophole to find and reveal information that we are bound to keep confidential by law, it is certainly unfortunate,” he says. When I tell him that a watchdog blogger (at has posted confidential information from PUC filings, and a method for getting that information — by copying-and-pasting it right out of electronic documents provided by Black’s office — Black gets frustrated.

“The requirements of the proceeding have been violated,” he says. He won’t say by whom, but will admit to being “very unhappy.”

Keeping secrets
As the law now stands, companies involved in PUC proceedings have to answer a lot of questions about how they operate, and about their finances. As a trade-off for being forced to open themselves to scrutiny, companies can designate information as confidential, to keep some of their internal projections from becoming known to competitors, labor unions, and the public. The PUC staff, and the Public Advocate’s staff, “get absolutely everything,” says Jortner — the restrictions are on who else can see the information.

There is a process for claims of confidentiality to be challenged, but in this case, Black says, his office has spent time fighting for its own access to information, never mind fighting for others to be able to see it, too. And he adds, “these cases involve lots and lots of paperwork and lots and lots of information and it is not possible to ... object to everything.”

Maine House Speaker Glenn Cummings (D-Portland) is watching the proceedings closely, and says the confidentiality provisions are a concern.

With the “high level of public investment and a high level of public interest in the outcome” of the deal, he says Maine consumers need to be sure that the PUC’s ultimate decision is one in which they can have confidence.

Because “some of it can’t legally be transparent,” he says, “we all suffer.” As a result, he and other lawmakers are concerned about “making sure that those processes are transparent” and ensuring they can “hold the PUC accountable for that transparency.”

Cummings is worried that the process has allowed FairPoint to keep secret not just arcane technical and budgetary details, but sweeping assumptions underlying its entire business model. “Long term, it raises a question of public transparency and public access to vital information,” he says.

More questions
Now that the information is out, even more questions are coming up. Cummings is still uncertain about whether the deal would ultimately work out well for Maine, but is now even more concerned about FairPoint’s finances, asking, “was this simply a shell game to help Verizon avoid taxes, or is FairPoint a company that can build infrastructure and deliver?”

Governor John Baldacci, a business-friendly Democrat, is more circumspect, says his spokesman, David Farmer, who observes that Baldacci appoints members of the PUC and the OPA, and says the gov is therefore trying to stay out of the details. He “thinks that Maine needs more investment in broadband capabilities,” and wants to be sure that any company that promises investment can deliver it.

Numerous people have written letters to the Portland Phoenix, saying they want the deal killed, or at the very least expressing serious concerns about it. One Verizon worker wrote, “I am afraid of the repercussions this will have not only on the state of Maine but on my fellow union brothers and sisters. We are in fear of losing our jobs.”

The next development in Maine is a report from PUC staff, analyzing all the filings and suggesting a course of action for the commissioners to take. That may be released before Thanksgiving.

McLaughlin, from the Maine union, says he hopes that report and the OPA’s analysis will prove persuasive: “I just hope that the Public Utilities Commission is listening to the stuff they’re being told by the experts.”

The aftermath
The deal is unlikely to be killed outright by regulators in any of the three states that must approve it, say observers and insiders alike. And “nobody is projecting it would be approved with no conditions,” says the OPA’s Jortner.

Rather, all three states are expected to be planning to put significant conditions on it — the most onerous is Jortner’s and Black’s recommendation that the purchase price be reduced by $600 million. (That’s one of 24 conditions suggested in Maine; Vermont’s regulators have received recommendations for 56 conditions, including requiring FairPoint to create a Vermont-only subsidiary whose finances and performances would be tightly controlled by its Public Service Board. New Hampshire has yet to issue recommended conditions for the sale.)

Any one of those conditions, or some combination of them, may cause Verizon or FairPoint to walk away from the deal. Or they may continue with it. (Verizon’s Maine spokesman never returned any calls seeking comment.)

“I expect to see a substantial, major sum of money from Verizon,” says union spokesman Wilson — he estimates at least $200 million and perhaps as high as $600 million, which could be knocked off the deal’s price tag or otherwise kicked in by Verizon to get FairPoint off to a better start.

“It’s going to be a brand-new company,” says Wilson, noting that the deal would more than quadruple the number of customers — and employees — FairPoint now has. “Having it be nearly $2 billion in debt on day one is not seen as an auspicious beginning.”

Click here to read the full-length redacted text from the Office of the Public Advocate (PDF)

Wednesday, November 14, 2007

Anti-activist bill backed by Collins, Allen, and Michaud

Published in the Portland Phoenix

US Senator Susan Collins and both of Maine’s US representatives are backing legislation that could result in more incidents like the November 2 run-in between police and eco-activists in Greenville.

Environmental and civil-liberties advocates fear that the “Violent Radicalization and Homegrown Terrorism Prevention Act of 2007,” which has already passed the US House, would make such intimidation by police more common — and more legal.

The bill creates a commission to study ways the government can prevent “the use, planned use, or threatened use, of force or violence” by anyone, including American citizens, “in furtherance of political or social objectives,” or “to promote . . . political, religious, or social beliefs.”

US Senator Susan Collins, who is seeking re-election next year, is the bill’s lead Senate sponsor. Her chief challenger for re-election, 1st District Democratic representative Tom Allen, voted with the 404-member House majority in favor of the legislation on October 23. So did 2nd District Democrat Mike Michaud. (Six members of Congress were opposed, and 22 abstained.)

All three Maine lawmakers — through their spokespeople — say they support protestors’ First Amendment rights and reject any suggestion this bill could result in intimidation of peaceful protestors, but activists fear increased bullying all the same.

“It’s inappropriate for the government to determine what is or is not an extremist belief system,” says Shenna Bellows, executive director of the Maine Civil Liberties Union. “This bill goes too far in attempting to limit freedom of thought and expression.”

“Any folks who have a dissenting opinion could be endangered,” says Emily Posner, one of three Native Forest Network volunteers cited November 2 for trespassing on the parking lot of Plum Creek corporation’s Greenville office, while filming footage for a documentary on the company’s proposed resort-development project around Moosehead Lake, which the NFN opposes.

Plum Creek officials told the Bangor Daily News they have been rigorously enforcing their “no trespassing” signs since 2005, when the company’s equipment and property was vandalized, and some was stolen.

The encounter went beyond a parking-lot standoff: after the NFN volunteers were cornered by a private security guard, they were allowed to leave, but were later tracked down by members of three law-enforcement agencies (a Greenville policeman, two Piscataquis County sheriff’s deputies, and two Maine Game Wardens) and questioned further, including about whether the group — armed only with a video camera — was violent or had any explosives, according to Posner.

Posner says she denied an officer’s request to search her car because he lacked a search warrant, and adds that the officer responded that her answer made him suspicious. She quoted him as saying, “It seems like you really know your rights, but you’re trying to hide something.”

She fears the new law could make things even worse, with activists “being tied up the courts,” distracted from their constitutionally protected activism.

And even the proposal of the law is an obstacle, Posner says, noting that now people who would otherwise be calling attention to social and environmental problems have to lobby DC politicians to keep their First Amendment rights unsullied.

Talking about Verizon and FairPoint on MPBN's Maine Things Considered

Aired on Maine Public Broadcasting Network's Maine Things Considered

Exclusive: No raises for seven years - That’s just one way FairPoint plans to pay for northern New England's Verizon buyout

Published in the Portland Phoenix

If regulators allow FairPoint Communications to buy Verizon’s telephone lines and systems in Maine, New Hampshire, and Vermont, its 3000-plus employees can look forward to seven years without a raise.

Further, FairPoint customers will benefit from no additional spending on telephone or Internet operations for the next seven years. FairPoint has pledged to buy and install new telephone and Internet equipment in all three states, but as of now, the company has no idea how much it will have to spend just to get the existing Verizon equipment working properly — something that must be done before the first upgrade project can even begin. And the company plans to spend the same amount running its systems in the year 2015 as it will in 2008.

Shareholders will be worse off than customers — apparently even more so than they’re expecting. According to filings with the Public Utilities Commission, FairPoint is predicting shareholder equity will decline by $1.1 billion (a figure 25 percent higher than the $900 million drop the company has publicly projected elsewhere).

The company as a whole will also be in bad shape. One possible scenario FairPoint has presented to Maine regulators would leave FairPoint with “essentially no cash left after payment of expenses, interest, taxes and dividends” — leaving it nothing to pay off the $1.5 billion in debt the company will incur in the $2.7 billion Verizon deal, much less the $625 million it currently owes its creditors. (And if that scenario doesn’t happen and there is cash left over, FairPoint has refused to promise regulators it would use the cash to pay off debt.)

If the proposed Verizon-FairPoint telephone merger is approved, the quality — and even the existence — of land-line telephone service throughout northern New England, will depend on FairPoint’s ability to make good on several key financial assumptions. But analyses in PUC filings call those assumptions “inappropriate” and assert they “do not reflect reality.”

The publicly traded North Carolina-based telecommunications company, which runs small local phone companies in 18 states (including Maine), has gone to great lengths to assure the public, politicians, regulatory officials, and industry analysts that the deal’s finances will work out. Its chief operating officer, Peter Dixon, told Mainers back in June that the money coming into FairPoint from former Verizon customers’ monthly service fees will be more than enough to pay for FairPoint’s increased expenses, including repaying outstanding loans. But the company’s internal financial projections, summarized in PUC records, say money will be so tight that success depends on, among other specious ideas, the price of gasoline remaining constant for the next seven years. (Another of those specious ideas is that the unions, whose contracts expire in late 2008, will accept zero-percent raises for the next seven years.)

That’s all beyond the fact that FairPoint almost certainly knows (and Verizon definitely does) that the sale price itself is far too high — nearly two-thirds higher than the amount at which Verizon values the assets that are being sold.

FairPoint executives’ financial plans for life after the merger include the assertion that the company will pay down $318 million in debt over the next seven years, though they don’t say how, and have not promised — or disclosed to regulators any possible plans — to do so. Even worse, the company is basing its financial predictions on interest rates being lower than they are today. Even if they are, PUC filings say FairPoint will have to refinance as much as $1.5 billion in debt to extend its repayment period, in order to continue to afford debt payments.

The FairPoint/Verizon deal has come under withering fire in all three states, with Maine’s Office of the Public Advocate recommending 24 conditions be imposed if our Public Utilities Commission approves the sale — including dropping the price by $600 million. Vermont’s Department of Public Service has recommended that state’s Public Service Board impose as many as 56 conditions before the sale is approved, such as requiring state approval before FairPoint can transfer any Vermont revenue to company operations outside the state. The New Hampshire Office of Consumer Advocate has not specifically recommended conditions, but has testified before its state’s Public Utilities Commission that there are major problems with the proposed deal.

FairPoint has countered those criticisms, claiming it will be a financially viable company, and pledging to expand high-speed Internet access in all three states (see“Internet Disconnect,” by Jeff Inglis, August 24).

But its own plans, as described in PUC filings, indicate that its finances will, in fact, be tremendously shaky, and that any expansion of service will have to cost the company nothing beyond the initial investment to install equipment. Another big problem, the documents at the PUC say, is that the broadband service FairPoint is promising as a great boon — to regulators, shareholders, and the public — actually “loses more and more money as time goes on.”

Wednesday, November 7, 2007

Kennebunk library cancels, reinstates art show

Published in the Portland Phoenix

An art show that has been in the works for more than two years was abruptly canceled last week by the Kennebunk Free Library — before the art even was on the walls — and then, almost as abruptly, un-canceled in time to be installed for its opening reception on Tuesday.

The exhibit, “Portraits in a Time of War” by Kennebunk artist Gerald “Bud” Swenson, is a series of stylized faces made from cloth pieces cut out of American flags. According to Swenson, the library agreed to display his work two years ago. Two months ago, he reports, he showed library trustees some of the portraits and “told them it might be controversial” because of his use of flag fabric.

“They approved the show. They sent out a press release, and then the day before the show they called and said it was canceled,” he says, adding that he was told the library had received a single complaint, about his cutting up American flags.

That was on Halloween; he was scheduled to hang the art November 1, and open the show to the public November 2. (The artist’s reception was to be on Election Day.) Swenson did not hang the art as scheduled, but did pass the word about the cancellation among the state’s arts community. That resulted in the library receiving several letters and phone calls in support of Swenson’s art. And on November 2, the library trustees met and decided the show would indeed go on; Swenson hung the work Monday, and the reception was happening as scheduled at press time.

Library director Janet Cate says the show’s month-long run will now be augmented by two yet-to-be-scheduled public forums, where anyone can come and discuss the works, the means by which they were created, or anything else relating to the show.

I’m very pleased,” says Swenson. “Censorship is stopped cold.”

“Portraits in a Time of War” | works by Gerald “Bud” Swenson | through Nov 29 | at the Kennebunk Free Library, 112 Main St, Kennebunk | 207.985.2173

On the Web
Gerald “Bud” Swenson:

Wednesday, October 31, 2007

It’s one in the morning — how sweet!

Published in the Portland Phoenix

Officials in New Zealand’s capital, Wellington, are considering a new way to reduce violence and other problems at bar-closing time: handing out chocolate. (Seriously! They say it lessens the likelihood of fights. Maybe it’s because eating chocolate triggers the production of endorphins, the brain chemical some call “natural opiates” that make people feel happy and relaxed. Or maybe it’s just hard to punch someone while holding a piece of candy in your hand.)

The NZ idea is based on success with a similar initiative in the English seacoast tourist town of Bournemouth, where businesses and city officials have devised ways to make nightlife both safer and more fun. It comes in the wake of an announcement by a group of local bar owners that “the behavior of a small minority of drunken youths threatened the future” of the downtown “party zone,” according to the Wellington Dominion-Post newspaper.

As Portland continues to grapple with managing the Old Port’s nightlife (see “Growing Pains,” January 27, 2006, and “The Freakin’ Weekend,” February 17, 2006, both by Sara Donnelly), we might consider making like the Kiwis and stealing a couple ideas from Bournemouth (pop. 160,000).

We’ve heard of a couple of their concepts before, specifically getting better support for an all-ages venue and having a night bus to get people home safely — and quickly (see “Ideas From Away,” by Jeff Inglis, January 5). And we actually have in place another one — HomeRunners, which drives you and your car home if you’ve been drinking. (Bournemouth’s service uses compact scooters that fit in the trunk, rather than a second car, like HomeRunners does.)

But there are some new ideas that could work, too, and are worth at least talking about here in Portland:

Number one, of course, would be the chocolate giveaway (though with Fuller’s Gourmet Chocolates gone from Wharf Street, the epicenter will by default have to be Old Port Candy on Fore Street instead). Also:

Having social-service agencies send counselors to bars, to offer support to people in need.

Getting the City Council to grant some (or any) late-night licenses (possibly without alcohol, but letting people hang out and maybe eat something), to both spread the mass release of revelers across several hours, and to let people wind down the night in a more relaxed way.

Asking bars to voluntarily agree to a minimum drink price (so no participating bar will offer specials cheaper than that amount), to reduce binge drinking of cheap booze.

But let’s just start with the chocolate. In England at least, the cops like it, the bars like it, the local government likes it, and we can only assume the staggering drunks getting the handouts like it. We know we would.

Thursday, October 25, 2007

Gambling on voters: Downeast Mainers pin their hopes on the turn of the ballots

Published in the Portland Phoenix

Question 1
Do you want to expand gambling in Maine by letting the Passamaquoddy Tribe build and operate a slot-machine parlor, high-stakes beano games, and a harness-racing track in Washington County?
A gambling operation in Calais, right on the Canadian border waaaay Down East, would be farther from Southern Maine than Foxwoods or Mohegan Sun. The Passamaquoddy Tribe wants to build a harness-racing track (which is not a big money-maker) and then use that track as a site for a massive-revenue-generating gambling hall with up to 1500 slot machines.

Supporters — such as the officials and community members in the TV ads pleading with Mainers to salve their poverty-induced misery with cold, hard cash — say it will be a source of economic development in a depressed area of Maine, and that it will provide more money for the state to spend. Opponents say it will prey on residents of an already poor part of the state, and that gambling isn’t a good method of economic development.

But the real dispute is not about this racino. It’s about whether this racino “opens the door” to more gambling in Maine. It may seem like a funny question, given how much gambling there is already.

We have two multi-state lottery games (Megabucks and Powerball), scratch tickets too numerous to count, bingo halls packing in the players, Penobscot Nation-run high-stakes beano games with prizes as high as $25,000, and nonprofit agencies regularly running benefit events consisting almost entirely of casino games. There’s tons of betting on horses — at the two tracks (to which this would add a third) and the four off-track betting parlors (including one owned by the company the state has hired to monitor slots revenue — see “Jackpot,” by Lance Tapley, June 8) — and the annual agricultural fairs. And don’t forget Hollywood Slots in Bangor, which has nearly 500 slots already, and next year will open a parlor with up to 1500 machines.

Question 2
Do you want to spend $55 million to support business development in Maine, including research and product-development grants, and business-expansion loans? (The grants would attract at least $50 million in federal or private matching funds.)
Nearly all ($50 million) of the money in this bond would go to the Maine Technology Institute, which awards grants in key industries where government officials think Maine has a competitive advantage, like marine-related industry and forestry. Grant recipients must find matching funds from other sources, like the feds or their own pockets. The remaining $5 million would go to smaller loan programs to help businesses expand.

Question 3
Do you want to spend $40 million to renovate and expand buildings at Maine Maritime Academy, at community colleges, and at UMaine campuses, and an additional $3.5 million to support renovations and improvements to schools, museums, historic buildings, and libraries?
Renovations and building expansions at the state’s institutions of higher learning are never-ending, and funding them is downright expensive. They are so costly, in fact, that public universities leave them out of their regular annual budgets, preferring instead to borrow money to pay for the work. This bond also adds $1.5 million into the state’s revolving fund for school renovations and expansions, which already has $6 million available. The extra money means more schools can be fixed up or expanded. And the bond includes $2 million to match funds raised for projects to improve museums, libraries, and other cultural buildings.

Question 4
Do you want to give $20 million to the Land for Maine’s Future land-conservation program, plus an additional $7.5 million to improve state parks, plus $1.5 million to improve irrigation systems, and a further $6.5 million to support river-based economic development programs?
The Land for Maine’s Future program has conserved nearly 445,000 acres of key Maine land (scenic spots, wilderness, shorefront, and easements on working farms and forests), at a total cost of $97 million, or an average of $220 an acre. The new money would continue that effort. And in recent years, state bonds have been issued to promote water-quality projects on farms, to fix up state parks, and for water-related economic-development projects — in this case to revive riverfronts in environmentally sensitive ways.

Question 5
Do you favor extending term limits for legislators from 4 to 6 terms?

Maine lawmakers are prohibited from serving more than four consecutive two-year terms in one house of the Legislature before they have to take a break for at least two years (though the “break” can include serving in the other house). Term limits were imposed in 1996 as part of an effort to get “new blood” into the Legislature, and to expunge inward-looking cronyism from the State House. The previous limit, of four terms, was an attempt to strike a balance between longevity-given experience and fresh ideas; this is a proposed revision to that balance.

Radios, beds, and commissioners
Cumberland County questions explained
Question 1
Should the county spend $1.7 million to upgrade radio and data-transmission systems for police, fire, and rescue personnel to use?

It may seem amazing in the 21st century — and seven years after 9/11 highlighted the problems (and deaths) that can result — that firefighters and police officers from different agencies can’t talk to each other on the radio. Sure enough, that’s still true here. This bond would buy radio and computer systems to prevent that, and would also provide systems that local police departments could use — not just the county sheriffs.

Question 2
Should the county spend $1.1 million to build an expanded medical clinic at the Cumberland County Jail?

Each day, roughly 200 inmates at the Cumberland County Jail need some sort of medical care, whether for an illness or injury, or a chronic condition, or even to deliver a baby. The jail’s 900-square-foot infirmary is too small to handle that amount of traffic — especially when inmates are accompanied by guards, or if someone has to spend the night receiving medical care. If there’s no room, inmates who are sick have to return to their cells, or get treatment at a hospital, which is much more expensive than if something can be handled at the jail. The money would build a 3000-square-foot expansion to the infirmary, allowing nearly every inmate with medical needs to be treated without leaving the jail.

Question 3
Should there be seven directly-elected county commissioners, instead of three?
Cumberland County residents are served by a three-person commission with the power to increase our property taxes. Lots of its spending is for services Portlanders don’t use, like sheriff’s deputies on patrol, who rarely work in towns with their own police departments. (Other county services, like the jail and maintaining property records, Portlanders do use.) With three districts, the same person has to represent the needs of Portland, Falmouth, Cumberland, North Yarmouth, and Long Island. (The other districts stretch from Cape Elizabeth to Standish, and from Brunswick to Bridgton.) This would further subdivide the county, letting each commissioner represent a smaller group of people.

Wednesday, October 17, 2007

Legislature moves to protect Maine journalists

Published in the Portland Phoenix

In September, Maine Superior Court Justice Arthur Brennan ordered 15 media organizations to surrender videos, photographs, and notes of interviews — including material never published or broadcast — from their coverage of a November 2006 fire in Biddeford.

The organizations, which included community-weekly newspapers, daily papers, and the state’s largest TV stations, were told to turn over the information — whatever still remained — to a private company because the company convinced the judge it feared a future lawsuit in connection with the fire, and needed the information to prepare a defense, in case such a suit was filed.

This case, and others of national prominence in which attorneys — often prosecutors — seek to use information collected by journalists as evidence in court (and demand access to material that had never before been made public) has led to a renewed discussion among policymakers of whether there should be so-called “shield laws” protecting journalists from being forced to disclose confidential sources and information.

“The whole point of these laws is to get accurate, useful information flowing to the public,” says Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press in Washington DC. “They ensure that the public has a better chance of getting truthful, independently reported information, ... maintain the independence of the media, and also make it possible for sources to come forth and inform the public.”

A shield law “would have helped a lot” in the Biddeford case, says Sigmund Schutz, a lawyer with Preti Flaherty in Portland, who coordinated media outlets’ responses. In the end, all but one of the media outlets had nothing to turn over, and the one — the Portland Press Herald — requested that the demand for information be narrowed. After the narrowing, the Press Herald had nothing to turn over, either, Schutz says. But he says no media outlets objected to the ruling on First-Amendment grounds. “Standing on principle without a shield law is expensive,” Schutz says.

A federal shield-law proposal moved to the Senate floor earlier this month, and Maine lawmakers are being asked to take up a similar proposal.

If legislative leaders agree that Portland Democratic representative Jon Hinck’s bill should move forward, it would be debated by lawmakers early next year. If not, the bill would have to wait until January 2009 before even being considered.

In recent years, federal prosecutors, in particular, have gotten more aggressive at using the courts to force journalists to reveal the identities of their confidential sources, often in order to pursue charges against the source for illegally disclosing the information.

The most publicized example was the New York Times’s Judith Miller, who spent 85 days in prison in 2005 for refusing to identify the person who told her that Valerie Plame, the wife of a US ambassador, was a covert CIA agent. That investigation resulted in the conviction of White House aide Scooter Libby for perjury.

Now, Dalglish says, as a result of “the heightened attention to the issue in the federal system,” many of the 17 states without a shield law are considering them, including Maine.

Journalism organizations in the state are looking closely at Hinck’s proposal; the Maine Pro Chapter of the Society of Professional Journalists (of which I am vice-president) was slated to discuss it Wednesday, after the Phoenix’s deadline.

Leaders of the Maine Association of Broadcasters, Maine Daily Newspaper Publishers Association, and Maine Press Association all say they will review the bill in the coming weeks, and expect their organizations to back the bill in general principle, while reserving the possibility that they might want some details changed.

Hinck is open to feedback, but thinks the bill is important. “We need a free press, desperately,” he says. “I have sometimes been an intermediary between whistleblowers” and reporters, and he knows it can be difficult to get good information if a source is worried about being discovered.

Suzanne Goucher, president and CEO of the Maine Association of Broadcasters, says one argument against a shield law proposal is that it “becomes a Christmas tree for everything that [legislators] like and don’t like about the media.” But she notes that such a law could be useful, too, citing the September court ruling. “The very fact that the court would grant a motion like this, when there’s no suit pending,” she says. “You’ve got to be kidding me.”

Wednesday, October 10, 2007

Press Releases: Straight to video

Published in the Portland Phoenix

Over the past few years, Frank Blethen, the guy in charge of the Seattle Times Company, which owns the Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal in Augusta, and the Waterville-based Morning Sentinel, has spent a lot of time supporting federal regulations that limit media consolidation, saying more owners equal more viewpoints, equals better democracy.

But recent moves by the Press Herald suggest that at least the first part of that equation isn’t necessarily true. While the paper may be owned separately from the city’s TV stations, it’s starting to act a lot like them, missing an opportunity to actually serve its audience something new.

Consider, for example, coverage of a vacant house that apparently filled with natural gas and exploded in South Portland on October 1.

Press Herald “online reporter” Dieter Bradbury, who has been with the Press Herald his entire 27-year journalism career, went straight to the scene after hearing about the explosion. Bradbury’s video on the Press Herald’s site was shaky, often without audio, and spent a lot of time showing us fire trucks with flashing lights and police officers walking around. Bradbury and other staffers filed written updates to the story throughout the day, and even into the next.

Other than the video pros covering the silent spots with voiceover, the Press Herald’s work was nearly identical to the TV coverage of the event.

But even Portland’s broadcasters don’t think the city needs more TV news. Two of the five channels that could have their own local news programs instead outsource it to other local stations. WCSH, the NBC affiliate on Channel 6, has a 10 pm news broadcast on WPXT, the Channel 12 CW affiliate. And WGME, the CBS station on Channel 13, puts out a 10 pm news show on WPFO, the Fox affiliate on Channel 23 (Channel 7 on cable).

It’s uncommon for print Press Herald stories to mention the TV coverage of the same events. But editor Jeannine Guttman continues to talk about “convergence” between the paper and the paper's Web site. We should expect, then, a good package story in the paper and online the following day, referencing video, at least, and maybe the previous day’s frequent updates.

Think again.

The 1250-word effort by staff writers Trevor Maxwell and Ann S. Kim on October 2 was written and presented — on the front page — as if no one reading it had heard the slightest rumor of a story that had received blanket coverage from the TV evening news and the Press Herald’s own Web site.

There is no mention — even in the online version of the story — of any video or previous coverage on the Press Herald’s site. And on subsequent days, the in-paper follow-ups repeated information that had been widely available hours earlier from the TV stations. The online follow-ups never once mentioned or linked to any previous coverage on the Press Herald's site, not even the words-only updates.

Let’s not kid ourselves — this was an insignificant story. It had good visuals (if you define “good” as a roof lying on the ground surrounded by tiny bits of wood), but nobody was dead, or even injured. No tragic tale of a life cut short — just a couple of neighbors who were a bit startled by the blast. Not even a family left homeless — the building was under construction and vacant.

The Press Herald has spent a lot of ink on Guttman’s talk of “trailblazing” news coverage. Its staff had a chance at a trial run at collaboration and teamwork on this story, with not much at stake if they did it poorly. Perhaps they gave it a try; if so, they failed so miserably that any effort was completely invisible. Or they didn't try, and will have to work out the logistics while on deadline for a vital story. Either way, they missed a chance to show Portland what they think news coverage should look like.

Gov’t secrecy is fine with Maine’s attorney general

Published in the Portland Phoenix

A man widely believed to be interested in becoming Maine’s next governor, Democratic Attorney General Steven Rowe, is refusing to defend the state’s Freedom of Access Act from a court ruling that would destroy the state’s open-government law almost entirely.

The ruling — that a three-man commission appointed by Rowe can keep its records secret because it was not a government body engaged in government business — is being appealed to the Maine Supreme Judicial Court, with the support of the Maine Civil Liberties Union.

If upheld, the ruling would allow Rowe — and any other government official — to “outsource” official business to a purportedly “independent” group of handpicked appointees, in complete certainty that the group’s actions will never become public.

The dust-up centers on the 1989 conviction of then-31-year-old farmer Dennis Dechaine for the 1988 rape and murder of 12-year-old Sarah Cherry, in Bowdoin. Dechaine was sent to prison for life, but a group of citizens who believe he is innocent have subsequently reviewed as much of the evidence in the case as possible — and have taken their efforts to the Legislature and through the courts to overrule repeated refusals from Rowe’s office to turn over documents. One member of the group, James Moore, a retired agent of the federal Bureau of Alcohol, Tobacco, and Firearms, has published two books detailing this investigation and the evidence he has found.

Even without access to crucial documents, Moore’s research raised enough questions in lawmakers’ minds that in 2003 they passed a law specifically forcing Rowe to open his office’s files to the public. And, in 2004, when Rowe violated that law by failing to hand over everything, Moore took him to court and won, getting copies of previously withheld state evidence — including information kept from the jury. Moore and others believe these documents prove Dechaine could not have killed Cherry.

Which brings us back to the Freedom of Access Act. After being forced to release his records, Rowe appointed the three-man commission to investigate the allegations, from Moore and others, of police and prosecutorial misconduct in the case. Rowe promised Dechaine’s advocates that he would publicize the commission’s report, which he did. It’s available on the AG’s Web site even today. It concludes that there was no “substantive merit” to the allegations of wrongdoing.

But when Moore asked to see the commission’s supporting evidence — the documents they reviewed and the notes from interviews they conducted — the commissioners refused, claiming that they are not, in fact, a government agency required to open their files.

In July, a judge agreed with them, but Moore has appealed that decision to the state’s highest court, arguing that the principles of open government demand their files be made public.

Rowe could, at this point, throw his weight behind Moore’s appeal and argue on behalf of the people of Maine that the Freedom of Access Act is gutted by the July ruling. But the attorney general, who has been selected four consecutive times by the Legislature to be the state’s chief law-enforcement officer, and who has once been formally asked by a resolution of the Maine House to support a retrial for Dechaine, appears to be on the side of secrecy. He is refusing to argue — in court or elsewhere — that the commission’s records should be made public.

Despite the fact that Rowe, in his memo appointing the commissioners, wrote that the group would be performing a “very important public service,” he now apparently supports the position that the report was not, in fact, the product of a public body.

Rowe did not return multiple calls seeking comment for this story.

“Presumably what [the commission] found makes the officials look good,” says Moore, professing confusion about why the commissioners have refused to open their files, and why the AG’s office has not gotten involved.

The MCLU is more direct about the long-term consequences of Rowe’s inaction: “The court order, unless overturned on appeal, creates a template by which public officials can dodge Freedom of Access laws by transferring their work to committees outside the scope of the Freedom of Access Act,” says Sigmund Schutz, from the Portland law firm Preti Flaherty, who is helping the MCLU with the case.

While we can lament his lack of resolve as attorney general, we can also act on it should Rowe ever appear on a ballot for governor.

Wednesday, October 3, 2007

US Rep. Allen to protestors: go directly to jail

Published in the Portland Phoenix

Neither US Senator Susan Collins nor the man challenging her for her senate seat will mention an important difference between the two: First District US Representative Tom Allen, a Democrat, has activists arrested when they demonstrate at his offices; Collins, a Republican, lets them stay.

In February, two anti-war protests at Allen’s Portland office resulted in 19 arrests. There were eight more, on September 25, at a rally supporting impeachment of President George W. Bush and Vice-President Dick Cheney.

“In Allen’s office, [the staff] really have the attitude like, ‘Why are you coming here? [Allen is] a liberal Democrat. You should be voting for [him],’” says Bruce Gagnon, a longtime Maine peace activist who has been arrested at several nonviolent civil disobedience demonstrations. He says Allen’s staff has been “cold and harsh and even a bit nasty to us” since at least 2005 (see “A Somber Occupation,” by Sara Donnelly, December 14, 2005).

Mark Sullivan, Allen’s spokesman, says the staff calls the police to arrest demonstrators because “at the close of business, we can’t leave the office with people still there.”

“I hope they realized that the man they work for had ordered the arrest of eight of his constituents,” wrote one of the eight who was arrested, Jonathan Queally, in an e-mail to the Phoenix, “whose only demand was that he uphold his solemn oath to defend the Constitution of the United States by holding Bush and Cheney accountable.”

Collins’s office doesn’t feel the need to involve the cops. At a March protest, a member of the senator’s staff was willing to stay the night to avoid throwing the demonstrators out or leaving them alone in the office, says Collins spokeswoman Jen Burita. She says the 12 arrests during that protest were at the insistence of security staff who needed to secure the Margaret Chase Smith Federal Building, not at the request of Collins’s staff.

The test of the senator’s hospitality came on August 31, when five anti-war protestors from Farmington visited Collins’s Portland office, which is not in a federal building. The group, all women involved in Farmington’s chapter of the protest group Women in Black, had an appointment with one of Collins’s aides, in which they urged the senator to end funding for the Iraq war. After that, all five stayed in the office and began reading aloud the names of Americans and Iraqis killed in Iraq.

At the end of the day, the aide asked if the women intended to stay. “We said we hadn’t finished reading the names,” says Lee Sharkey, a retired UMaine-Farmington professor who was with the group. The aide’s response made it “clear we could have stayed all weekend,” Sharkey says, but the aide has a family, and she was “uncomfortable” with the idea of staying so late on the Friday of Labor Day weekend. Sharkey says the protestors “had nothing against her” and didn’t want to keep her from her family, so they left voluntarily at around 9 pm. There were no arrests.

“Clearly the senator wasn’t interested in that kind of negative publicity,” Sharkey says.

Activists have had mixed results at the offices of Maine’s other two delegates to Washington.

Republican Senator Olympia Snowe’s office in Bangor has been “very, very bad,” says Gagnon. “The chief of staff ... slams the door in your face, won’t even let you get in.” In September 2006, 11 people were arrested there during a sit-in. Snowe’s Bangor office is not in a federal building.

At Second District Democratic Representative Mike Michaud’s Bangor office on September 26, the staff was so polite and welcoming to anti-war demonstrators, that the protestors “decided not to sit-in his office,” Gagnon says. “They felt they were having a real dialogue.”

Allen’s efforts to avoid speaking with protestors are extensive: those arrested in February were warned that Allen’s staff would have them arrested again if they returned to the building within a year. The protestors objected, saying that prevented them from having access to their elected congressman, and the warning was retracted, according to Kathe Chipman, who was arrested on February 21 and again on September 25.

Chipman, a retired art-and-architecture librarian, chose not to pay a $40 bail commissioner’s fee on September 25, and stayed in jail overnight because, she says, “I believe that sitting on the floor of an office paid for by taxpayers beyond closing time is not a criminal trespass but rather a purposeful presence, one that is the opposite of ‘criminal,’ since the sole goal is to effect honest adherence to the Constitution of the United States.” She was released without being charged the following day.

None of the February protestors at Allen’s office was charged with a crime, says Portland lawyer John Branson, who has represented people arrested at both February events. And Branson doubts the eight arrested September 25 will be charged, though prosecutors have reserved the right to do so.

“It’s a political decision,” says Branson. “This Republican district attorney [Stephanie Anderson] has essentially done a favor for this Democratic member of Congress by making the story go away very quickly” by not charging those arrested at his office. With Allen challenging Collins, Branson wondered aloud how long Anderson’s favors would continue.

On the Web
Video of protest: |

Wednesday, September 26, 2007

BruceFest: Music Seen at Bubba's Sulky Lounge, September 22, 2007

Published in the Portland Phoenix

On Saturday evening, Bubba's filled with fans eager to hear tributes to the heartland-rocker-in-chief, the gravel-voiced singer wrapped in the American flag. No, it wasn’t Toby Keith at the Tweeter Center (though that, we hear, was a great show, too). It was Portland’s fourth annual tribute to the Boss, Bruce Springsteen, on the occasion of his birthday (he turned 58 Sunday).

Founded and hosted by Phoenix scribe Rick Wormwood and his band, the Rumbling Proletariat, the night kicked off with “Blinded by the Light,” the first track from Bruce’s first disc, Greetings from Asbury Park, N.J. (1973), performed by Elf Princess Gets a Harley, whose frontman, Brandon Davis, drunkenly slurred half of the song’s lyrics. Few noticed, though: the words are pretty unintelligible anyway.

Next came Handsome Dan Knudsen, whose performances of “My Hometown” (off 1984’s Born in the USA) and “Brilliant Disguise” (from 1987’s Tunnel of Love) had a touch of Weird Al Yankovic. It was a great lead-in to the Peter, Paul, and Mary–influenced quintet Chipped Enamel, whose three-song set started with a cruise in a “Pink Cadillac” (the B-side of the 1984 seven-inch single “Dancing in the Dark”), moved through “Fire” (the oft-covered song not released by Bruce until 1986’s Live/1975-1985 compilation), and ended with “My City of Ruins” (from 2002’s The Rising).

But nobody was quite ready for reverb-heavy An Evening With, who started a disco-fest on the floor with “Dancing in the Dark” (Born in the USA), slowed down with “Streets of Philadelphia” (from the soundtrack to the 1993 Jonathan Demme film Philadelphia), and echoed their way through “Thunder Road” (Born To Run).

By then, the floor was packed for a seven-song J. Biddy and the Crossfire Inferno power-set: “Atlantic City” (Nebraska, 1982), “Tenth Avenue Freeze-Out” (Born, again), “Prove It All Night” (Darkness on the Edge of Town, 1978), “I’m on Fire” (Born in the USA), "Trapped" (The Essential Bruce Springsteen, 2003), “It’s Hard To Be a Saint in the City” (Greetings), and “Born To Run.” The “Free Bird”-like interlude between the last two, however, meant it was time to burn on down the road.

Speak now, or forever pay for copies

Published in the Portland Phoenix

Last month, the Maine court system forbade the public to photograph court documents — a practice it had allowed for more than five years. The order, issued by Superior Court Chief Justice Thomas Humphrey some time in August, was secret . . . and never put in writing.

But after inquires from the Portland Phoenix, the state’s top judge, Chief Justice Leigh Saufley, has promised to revisit the change, and perhaps to formalize permission for the practice, which helps members of the public save money and time when reviewing court documents.

Reversing Humphrey’s order would likely have more impact on poor people involved in legal cases than on journalists or lawyers. According to Gregg Leslie, legal defense director for the Reporters Committee for Freedom of the Press in Washington, DC, “non-media requesters [for court documents] are often people who are having a case brought against them . . . or they’re trying to bring a suit” to protect their rights or property. He also says that many states ban photographing documents to protect court-system revenue that comes from photocopying fees.

Saufley says one reason people may want to photograph court documents more than other government papers is because many agencies provide records electronically on their Web sites. The Maine courts do not. And they do charge photocopying fees — $2 for the first page and $1 for each additional page — that far exceed the actual costs.

By contrast, the federal courts have an online system that costs users eight cents per “page” viewed online, or, for in-person services at the courthouse, 10 cents per page of a computer printout and 50 cents a page for photocopies.

For years, people — including me — have avoided the state courts’ fees by bringing cameras into courthouses to photograph documents. When I was recently barred from photographing documents (based on Humphrey’s verbal order) a member of the Superior Court clerk’s staff told me it was because the courts want the revenue from photocopying.

State court administrator Ted Glessner said that’s not true: “We don’t get to keep or use any of the money” paid for copying fees.

He is technically correct. Court revenue goes into the state’s general fund, but that’s the same fund out of which the Legislature appropriates money for the court system. Lawmakers and court officials regularly talk about both the costs of the system and its revenue to the general fund.

In 2006, Maine’s court costs were $55 million, while revenues were an all-time high of $43 million, up from a meager $32 million in 2002. Of the 2006 record haul, $6.3 million was in “fees,” of which only $155,000 was for photocopying.

It used to be that photocopying was a service provided for the convenience of people who wanted copies of court records. The fees were instituted to cover the costs of photocopying, such as buying toner and paper, and paying for staffers’ time to make the copies (though all of that is already paid for by taxpayers). Now, though, photocopies are treated as a profit center.

Saufley takes pains to say that court-system revenue “has nothing to do with how much the Legislature should spend on access to justice,” but only after saying she might need lawmakers’ approval if the courts reduce their expected photocopying revenue.

She ends on a high note. In words suggesting she leans toward allowing the photographing of court documents, Saufley promises that at the very least the state’s advisory Committee on Media and Courts will discuss the matter publicly, and may recommend allowing the practice. If the practice is to be restricted, she says there will be opportunities for the public to weigh in, including — if it does go to the Legislature — public hearings before lawmakers.