7-11: The Provider of Last Resort?

If you go to the fridge at midnight and you’re out of milk, maybe 7-11 is the Provider of Last Resort, since they’re always open. A similar concept exists in telephone service, except it’s not optional – it’s regulated and required. POLR (which rhymes with ‘solar’) regulation stipulates that the phone company provide a dial tone to everyone, no matter where in Maine they live. This service is especially critical to the elderly because some equipment, such as TTY phones, lifelines, and some alarm systems require dedicated land lines.

An FCC Caption Call phone often provided free by audiologists that requires a landline to operate
An FCC Caption Call phone, often provided free by audiologists, that requires a landline to operate

The Provider of Last Resort in Maine is Fairpoint. That means Fairpoint has to bring you a copper twisted pair phone line, no matter where you live. Ironically, though, if you live in intown Portland or Augusta, where you have not only that twisted pair but as many as ten other cable and wireless communication providers (and no concept that you’ll ever use your phone line again, a concept known as cord-cutting), Fairpoint still has to provide that POLR service. Going back to our 7-11 analogy, there’s a lot of places you can buy a gallon of milk at midnight in Portland.

And requiring copper wire phone service to people who don’t use it may also have the effect of increasing prices for rural areas, since as the number of phone line subscribers in cities drops, infrastructure costs are spread across fewer (primarily rural) subscribers. Indeed, the cost of basic telephone service has been increasing statewide, most recently by $2 per line per month. So even though that government-mandated 7-11 in Portland is open at midnight, no one shops there because it’s more expensive.  That shifts more costs to the one in Sebec.

In an attempt to address the problem, the energy committee was presented three bills in this session that would largely eliminate the Provider Of Last Resort requirement statewide. This clearly went too far and was strongly opposed by many, including the AARP, on legitimate grounds. (This can be how we negotiate in the Legislature – a shoot the moon bill). However – and I think wisely – as opposed to just voting Ought Not to Pass, the committee recognized that there is a genuine problem, and appointed a stakeholder group to convene and recommend changes and a compromise approach.

Done right, this would allow Fairpoint to be more competitive in urban areas by removing regulation, which should reduce cord-cutting, thus preventing the subscriber losses. (Regulation, as it will, is making the service more expensive). We would also have in this legislation the opportunity to impose stricter penalties for missing service quality targets. Fairpoint has missed service quality goals in each of the last three years, but we do not today have a statutory requirement to impose a penalty – this legislation gives us an opportunity to fix that. We can also build in an abandonment clause, which prevents the removal of unused landlines without a regulatory proceeding.  This would assure order the landline network remains in place in case of future need.

I look forward to a full discussion of this proposed legislation. Essentially, I believe a well-crafted bill could make a tradeoff that would hold down pricing and improve service quality in rural areas. This would be done by exempting Fairpoint from the regulations in the largest communities. This should allow them to become more competitive (read: drop their prices, offer special discounts, etc.). In those markets, landline subscriber numbers have been dropping by double-digit percentages every year because the cost and hassle of a landline just can’t compete with cable and wireless. If we can reach a suitable compromise, we have an opportunity to make phone and internet service more competitive in larger cities, while at the same time improving service quality and reduce costs in rural areas.

See you at 7-11!

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