As Consolidated Communications lays off workers, regulators discuss accountability policies
The telecom company Consolidated Communications laid off about 5% of its Vermont workforce recently.
This comes as the company received more than $9 million from the state to help with Vermont’s broadband buildout in the Southern Vermont Communications Union District around Bennington.
Even before the layoffs, state regulators were working on new policies to make sure companies like Consolidated are being held accountable to the millions of dollars in public funding they’re receiving.
And now there is added scrutiny on a company that has had a spotty track record of serving its customers in the most rural parts of the state.
In late July, Consolidated announced that it would be laying off 10 workers in Vermont, including three line workers in Alburg and Groton.
The company employs about 220 people in Vermont.
In a letter sent to the Vermont Community Broadband Board, the International Brotherhood of Electrical Workers — or IBEW, which is the union representing the workers — said the layoffs were “motivated somehow by Consolidated's nationwide efforts to reduce headcount which pleases their investors, or potential investors.”
IBEW International Representative Ed Starr said the layoffs had nothing to do with a lack of work, and the union is appealing layoffs to the National Labor Relations Board.
“Consolidated has been getting a lot of federal funding and state funding to help build out areas,” Starr said. “So here they are with one hand out taking handouts, and the other one here ... The goal here should be to put Vermonters to work, right, because there’s plenty of it.”
Starr said more layoffs could be coming as the company is offering buyouts to senior employees in Vermont.
Consolidated declined to make a company representative available to talk about the layoffs, but in a press release said the company was, “taking steps to manage costs within a highly competitive industry while aligning resources and continuing our investments to transform from a copper-based telco into a leading fiber first provider."
The press release went on to say that the layoffs were, “a difficult step, that was necessary to ensure a sustainable company positioned to continue to invest in fiber broadband technologies and provide competitive solutions to our customers.
Financial losses and potential acquisition
Consolidated Communications released its second quarter financial results recently, and the company lost about $119 million.
The company also recently sold its assets in Washington state, and in April, Consolidated said it had received an offer from a private equity firm, Searchlight Capital, to buy the company and take it private.
Searchlight already owns more than 30% of Consolidated’s shares.
June Tierney, Vermont Department of Public Service commissioner, said the state would have to approve any sale of Consolidated Communications, though she would not comment directly on the potential sale.
“The sale of a company can mean changes to the company, such as new corporate control, management, access to capital, or all of these and more,” Tierney said. “A move to go public can have similar impacts, in that a measure of corporate control is transferred from the existing owners to the class of shareholders who buy the public shares in exchange for the use by the company’s controlling owners and management of the new shareholder’s investment dollars.”
Consolidated is a national, publicly traded company based in Illinois and worth about $420 million. It bills itself as one of the country’s top 10 providers of fiber.
They moved into Vermont in 2017, when they purchased FairPoint Communications' landlines, which were mostly used for telephone service at the time.
In 2017, the state did an investigation of Consolidated, and the company was ordered to invest $150,000 into its rural infrastructure.
Public money and accountability
The company is close to completing its work there to build 251 miles of fiber optic cable, which will reach about 6,400 addresses.
Consolidated also recently announced that it will be applying for two new grants with communications union districts, or CUDs, in Lamoille and Rutland counties.
Rob Fish, Vermont Community Broadband Board deputy director, said the layoffs will have an impact on how the state decides how much more public money should go to the company.
“The Vermont Community Broadband Board is going to be asking questions the next time Consolidated comes and asks for funding,” Fish said. “We want to be sure that they have the capacity to build the network, operate the network and provide the customer service that Vermonters deserve and expect.”
Even before Consolidated announced its layoffs, the Vermont Community Broadband Board was discussing new polices to protect the Vermont communities that are entering into contracts with the company.
At its most recent meeting in late July, the Vermont Community Broadband Board released new proposed polices which include putting liens on the broadband infrastructure and establishing certain design standards.
And at that meeting Sarah Davis, Consolidated Communications senior director of government affairs, said the company would not support those ideas.
“Consolidated believes the board should assist the CUDs in having their accountability and not demand their own policies which may not line up with the desires of the CUDs,” Davis said. “We’re putting in a significant amount of money with these applications and to do that and then risk the VCCB somehow having a lien on that property is something that will not work.”
The board is concerned about companies like Consolidated collecting the public money and then walking away from the broadband infrastructure in 10 or 15 years as the system requires upgrades.
We want to be sure that they have the capacity to build the network, operate the network and provide the customer service that Vermonters deserve and expect.Rob Fish, Vermont Community Broadband Board deputy director
Even with contracts in place, it will be very hard for the small, volunteer-run CUDs to fight a company like Consolidated in court.
The Southern Vermont Communications Union District held a press event in Peru last week to bring attention to the work that’s been going on in 14 towns in Bennington and Windham counties.
Work there is set to be completed by November, just 13 months after the CUD entered into its contract with Consolidated.
At the Vermont Community Broadband Board meeting, Sothern Vermont CUD chairman Eric Hatch warned the board about putting too many restrictions on companies like Consolidated, which are assisting the CUDs to bring fiber cable to communities that have been underserved.
“With the provisions just in this accountability proposal, it is going to scare off other private investment,” Hatch told the board. “Public private investment is what gets stuff done today. Whether we like it or not, that’s how it’s going to get done. And the point on why VCCB is around, I’ll also add that it’s there because the state could not solve the rural broadband problem. And that’s why they created the CUDs which is a fantastic model and approach. So that trust was given to the CUDs. And that needs to really be respected, and believed in. And not to micromanage and try to regulate the Internet through these grants processes.”
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