Last month, FairPoint Communications became the second major utility in recent New Hampshire history to declare bankruptcy. The first, of course, was the 1988 failure of Public Service of New Hampshire. It was that case that set the precedent that federal bankruptcy laws take precedence over state laws. That means that what happens next with FairPoint, the little North Carolina company that bought Verizon's landline business in New Hampshire, Maine and Vermont for $2.4 billion, will be up to a judge, not to the New Hampshire Public Utilities Commission and other state regulators.

FairPoint's bankruptcy was always a distinct possibility. At this point, it's good that it happened. The massive reduction in debt that will result will either allow the company make good on its promise to provide widespread broadband service or make it attractive to a buyer capable of doing so. Surviving on landlines alone isn't an option.

FairPoint's debt would have been hard to repay even in good times by a smoothly operating company. The severe recession, lousy service that caused customers to flee in droves and high interest rates on its debt doomed FairPoint.

When PSNH went belly up, its customers were captive. Few had the ability to go elsewhere for service and for years, because they were stuck paying the difference between what it cost to build the Seabrook nuclear plant and what the plant was worth, the utility's customers paid some of the highest electric rates in the land.

Most of FairPoint's customers have another option: cell phones. Between June 2008 and June 2009 the company lost 11 percent of its landline customers. They'll lose customers even faster if they raise prices. There are other threats to FairPoint's future. Small companies and cooperatives are beginning to offer wireless internet service in rural areas. So even if FairPoint succeeds in extending broadband into the boonies, it could face competition.

When Public Service went bankrupt, investors who bought the company's junk bonds were spared whopping losses. Not so the investors in FairPoint, who will exchange hundreds of millions of dollars in debt for stock that at week's end was trading for just over a dime a share. The investors gambled and lost. The free market worked.

FairPoint made a number of commitments to win state approval of its purchase. Whether such agreements must be kept is now up to the court.

Utilities are classically required to provide universal service. Urban customers subsidize service for rural ones for the good of society and because they may want to communicate with them. But the game changed when technology allowed other unregulated companies to poach on a utility's turf by offering cheaper or better service.

FairPoint will keep operating, and its customers are unlikely to see any effect from its decision to declare bankruptcy to reorganize and shed debt.

In hindsight, even if its new computer systems worked perfectly and the customer changeover from Verizon to FairPoint had gone off without a hitch, the company would have struggled financially. Freed of much of its debt, with the economic picture brightening and most technical glitches fixed, FairPoint has a fighting chance to prove that it can provide the services its customers want for a price they're willing to pay. For everyone's good, let's hope they succeed.