FairPoint Laying Off 400 Employees

Gee, this is a shocker.

FairPoint Communications is laying off 400 workers across its service areas, with 190 of them in New Hampshire. The company cites decreasing revenues and a decline in customers as its reason for the layoffs.

This is not a surprise to anyone paying even a little attention to the telecommunications industry.

FairPoint's purchase of Verizon's landline operations in northern New England was a disaster from the beginning. The number of landline customers had been declining for some time and Verizon saw an opportunity to divest itself of an operation in a declining market. FairPoint was stupid enough to buy it despite protests from many that it was paying too much for assets that would continue to decline in value. Once FairPoint took over operations from Verizon the problems multiplied, with a loss of 10% of its landline customers in less than 6 months. The continuing hemorrhage of customers and problems with its operations finally forced it into Chapter 11 bankruptcy and its delisting on the New York Stock Exchange.

Even after reorganization its customer base continued to decline as competitors like cable companies and cell providers undercut it in price and services. Ironically one of its biggest competitors is Verizon, whose wireless operations were winning over an increasing share of customers.

FairPont isn't the first company to see its landline operations become a money losing operation. And in yet another bit of irony, Verizon has seen its own landline services suffering, prompting it to demand concessions from its union employees. This led to a strike by both the CWA and IBEW against Verizon last month. The unions figured since Verizon was making billions in profits that they were somehow entitled to a share. But it was their wireless and business operations making the profits, neither of which are unionized. The landline operations were shrinking and losing money, and Verizon wasn't about to use profits from other operations to fund higher pay and benefits for their landline workers.

Is it any wonder FairPoint is shedding excess employees as its fortunes decline?