FairPoint and Verizon officials remain optimistic that the $2.7 billion deal that merges Verizon’s Maine, New Hampshire and Vermont operations into FairPoint will be approved by regulators, despite public complaints and controversy concerned the merger plan announced last January.

The Vermont Public Service Board this week kicked off several weeks of hearings by regulators in three states as they consider the proposed sale of Verizon’s networks to Charlotte, N.C.-based FairPoint, which owns and operates other rural and small urban telcos. Those hearings are expected to include testimony from opponents of the deal, who fear FairPoint will be unwilling or unable to bring broadband access to areas where it doesn’t exist today, and believe the company will instead eliminate jobs. Verizon’s two unions, the Communications Workers of America and the International Brotherhood of Electrical Workers, have help lead much of the opposition to the deal, expressing concerns about their pensions and future work prospects. Others have complained that while FairPoint is promising to increase DSL penetration, other Verizon territories are getting fiber-to-the-premises via FiOS.

While those arguments are getting a lot of publicity, that doesn’t mean regulators have been swayed, FairPoint and Verizon officials say.

“The PUC [public utility commission] process has gone very well so far,” said John Crowley, executive vice president and CFO of FairPoint. “It’s natural that people would be concerned and ask a lot of questions. The instinctive reaction is that change is not a good thing. And people know what has happened in other industries when there are mergers and there was downsizing. But to the extent that we have been able to get our message through, I think people understand what we are trying to do.”

Eric Rabe, vice president of communications for Verizon, agreed that the two companies are working through regulator concerns in an orderly fashion, “as part of the regular process.”

“We don’t sense that the general consumer population of the state is concerned,” he said. “FairPoint has been very upfront in promising broadband deployment and higher staffing levels. I think people will come to see this is a net-net, and they will see nothing they ought to be concerned about.”

FairPoint maintains it will be able to both cut costs and increase hiring in the three states, while improving broadband penetration to 80%. That is all possible, Crowley said, because the company has expertise in running rural and small urban operations, and doesn’t have the large overhead of a company the size of Verizon.

“Using 2006 as an example, Verizon allocated $270 million in expenses onto this entity [the three state operations],” he said. “We think we can replicate and improve on the services they offered for about $75 million less. We plan to hire at least 675 people to do the work in region that is done outside the region now – that’s in addition to the people that are working there now.”

The Vermont Public Service Board held hearings last week, and will hear more the week of Sept. 17. Final briefings are due Oct. 31 so the decision won’t come until at least November. The Maine PUC has schedule public hearings Sept. 18, 20 and 25 while New Hampshire’s PUC will conduct its hearings in late October.

Verizon always expected to close the deal at year’s end, so the opposition to the deal hasn’t slowed things down considerably, Rabe said. He didn’t want to speculate on what might happen if one or more regulatory body rejected the deal, saying it is likely instead that further conditions might be imposed.

Crowley believes the regulators will see that the deal is good for consumers and for the states.

“There is always the possibility there will be additional conditions,” he said. “But these are business people, and they recognize that any new conditions have to be good for the company and for the consumer, and not just be new conditions for their own sake. They realize that we are continuing to expand broadband and that is good for this area.”