FairPoint Calls for Tax Fairness

Manchester, NH (August 27, 2012) – FairPoint Communications has challenged in court how much cities and towns can tax telephone poles, conduit and the use of right-of-ways on highways and streets.

In February 2012, the New Hampshire legislature voted not to reinstate a 20-year exemption on municipal property taxes on telephone poles and conduits, opening the door for cities and towns to impose a new tax. FairPoint – and a coalition of telecommunications providers – challenged that legislation, asserting that they and other telecommunications companies were already taxed equitably.

During the legislative hearings, FairPoint cautioned that without clearly defined methodology to determine pole and conduit valuations, there would be huge variations in the municipal tax assessments and telecommunications companies would be forced to challenge the assessments in court.

That warning quickly became a reality as FairPoint started receiving dozens of new tax bills with a 200 percent swing in some valuations.

The company is challenging those valuations, requesting abatements and calling on towns to review their assessment practices.

“It is inconceivable that a pole in one community could have a 200 percent swing in value in another,” said Patrick McHugh, FairPoint’s New Hampshire state president. “Poles in differing municipalities have no unique characteristics, such as homes with a view and commercial properties designed for business purposes; poles simply are a piece of wood used to support wires and fiber.”

FairPoint is not opposed to paying its fair-share of taxes and pointed out it has paid property taxes on its land and buildings for years, along with the Communication Services Tax to the State of New Hampshire since the early 1990s.

For the tax years 2011 and 2012 FairPoint has received tax bills from cities and towns for the new telephone pole tax assessments, plus additional right of way tax bills totaling more than $11.2 million. That number likely will increase, as it appears that some municipalities have not yet sent their tax bills out for the 2012 tax year.

McHugh noted that the New Hampshire Public Utilities Commission had initially approved passing a substantial portion of the municipal property taxes to consumers in the form of a surcharge. More recently the Commission noted that FairPoint can include this surcharge in its bills to customers.

“While municipalities view this as a windfall, it’s highly unlikely that taxpayers will see any benefit,” cautions McHugh. “FairPoint owes it to our customers to challenge such overinflated valuations. Our goal is to provide quality telecommunications and data services to our customers at a fair price and we do not want to build excessive pole, conduit and right-of-way taxes into our rate base.” McHugh previously testified before the Legislature that the surcharge would not be imposed, but for this new tax.

Other New Hampshire telecommunications providers also are subject to the new tax on poles and conduits and McHugh anticipates FairPoint will not be alone in challenging municipal assessments.

Since 2008, FairPoint has invested more than $182 million in communications infrastructure and technology to expand broadband in northern New England, including building thousands of miles of new fiber across the region. In August 2012 alone, FairPoint expanded broadband service to 4,200 additional New Hampshire homes and businesses including some of the state’s most underserved areas.

“These investments ultimately benefit New Hampshire’s residents, cities and towns,” said McHugh. “Asking FairPoint and other telecommunications providers to bear excessive, inequitable taxes is counter-intuitive and ultimately harms the New Hampshire advantage of minimal taxation.”

About FairPoint Communications, Inc.
FairPoint Communications, Inc. (NasdaqCM: FRP) is a leading communications provider of Broadband Internet access, local and long-distance phone, television and other Broadband services to customers in communities across 18 states. Through its fast, reliable network, FairPoint delivers affordable data and voice networking communications solutions to residential, business and wholesale customers. FairPoint delivers VantagePointSM services through its resilient IP-based network in northern New England. This state-of-the-art network provides Ethernet connections that support video conferencing, e-learning and other broadband based applications. Additional information about FairPoint products and services is available at www.FairPoint.com. You can also connect with FairPoint on Twitter (http://www.twitter.com/myfairpoint) and Facebook (http://www.facebook.com/myfairpoint).

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