Broadband project challenged

The Three Ring Binder project to bring expanded broadband access for service providers to Downeast Maine may be threatened if meetings between the Maine Fiber Company and Fairpoint are unsuccessful. The areas of discussion revolve around access to Fairpoint's telephone poles as well as a disagreement about the project's impact on Fairpoint. However, Maine Fiber Company spokesperson Tom Janenda says of the meetings taking place between the two companies, "Everyone's hopeful."

The newly formed Maine Fiber Company will utilize a U.S. Department of Commerce grant of $25.4 million, plus approximately $7 million in private funds, to build "three rings" of fiber-optic networks in rural Maine, one of which will be in Washington County. The goal is to increase broadband access in areas of Maine that have been underserved by creating a "backbone" for Internet providers and others to build upon. The company has a federally-imposed deadline to complete the project by the end of 2012 or the federal grant will be rescinded.

Maine Fiber Company Chief Executive Officer Dwight Allison spoke on March 4 to a group of business and nonprofit economic development professionals at a presentation held at the University of Maine at Machias. "The impetus was to create a dark fiber network that is open-access, non-discriminatory. This is a key component and why it will be accessible," he said.

Allison displayed a piece of 96-strand fiber-optic cable, slightly thicker than a pen. "Three Ring Binder will be installing 144 or 288 strand cable." When one audience member remarked that access to high speed Internet in Washington County sometimes could be more accurately defined as access to "faux-speed," the lecture hall resounded with laughter. Allison noted that 12 to 24 strand cable is the norm in rural areas. "We believe that most of that fiber is already at close to full capacity."

Barriers to creating such a network before have been the high prices companies have needed or chosen to charge customers, Allison said. Because of the federal funds utilized by Maine Fiber Company, the cost structure will be significantly lower. The company is restricted in how it calculates its charges. "We were told to base our charges on costs, the reasonable return on the $7 million investment, not base it on the $25.4 million federal investment." This will allow the company to charge telecommunication providers a fee of $10 to $12 per strand, per month, per mile. At the moment, Allison said, the fee is more like a minimum of $45. The company is also restricted in how it contracts with providers. "No more than 20% can be leased out to any particular carrier in any particular segment. The intent is to keep competition, which will help the end-user. Monopoly situations make it difficult for the end-user."

Resistance from Fairpoint

The project, however, faces resistance from Fairpoint, Allison said C not the least of which is access to that company's ownership of almost half the poles that the Maine Fiber Company needs to use to string the new fiber-optic cable. "The poles are owned by private owners," Allison said. "We have 36,000 poles to deal with." He explained that each pole has to be analyzed by an engineer to determine whether the existing lines need to be re-spaced to accommodate the new line or whether a new pole needs to be put in place. "An application has to be submitted for each pole with each owner. It's very time consuming." Allison said that the law requires that pole owners allow access, but "dragging of feet" could jeopardize the project.

Fairpoint spokesperson Jeffrey Nevins says of his company's ownership of half the poles, "It may be half. I can't confirm that because I don't know exactly where their poles are going to be. I haven't seen a construction schedule or plan."

Fairpoint also has said that Maine Fiber Company would be creating a duplication of services because there is already some fiber that exists on these routes. "We don't agree with the assessment," Nevins says of Allison's remark about cable strand size and capacity. "Our network is fully capable of handling traffic in Maine." Since April 2008 Fairpoint has invested $90 million and 400 miles of new fiber across the states of Maine, New Hampshire and Vermont. Nevins adds, "It's not true that people don't have access to that fiber. There is capacity there. It's our network; we want people to use it."

Best use of taxpayer dollars

Nevins believes that the larger issue raised by the Three Ring Binder project is a question of public policy. "What is the highest and best use of tax dollars? We believe that this is not the highest and best use. We understand the importance of broadband. Shouldn't we look for ways to augment and complement the existing networks?" He likens the project to building an interstate highway that runs parallel to I-95 rather than spending the same amount of dollars on arteries and corridors that serve the interstate. "It's our intent to expand availability in Maine, and we agreed to some pretty aggressive targets" when Fairpoint bought Verizon's assets.

Citing the strand capacity of most existing dark and light fiber in rural areas, Allison said that the federal government has made fiber-optic projects such as this one a top priority because of the exponential growth projected to occur in telecommunications technology. Fiber-optic capacity and how it can be utilized with wireless technology are going to become increasingly important, he said, noting how the I-phone has developed over the past five years and has changed the face of supply and demand for telecommunications. "China bought 100 times more fiber than the U.S. last year. A bunch of European countries have made broadband a priority, much the way that this country made electricity and telephone service a priority many years ago."

Hurting or helping Fairpoint?

The Three Ring Binder project could hurt Fairpoint, Nevins maintains. "It's a competing network that has been subsidized and will offer significantly discounted rates. If they take customers away, there's potential impact on jobs. If revenue goes down, then our ability to invest in capital goes down. It may have short-term benefits, a blast of income and short-term jobs, but the long-term consequences could be dire."

Maine Fiber's Janenda disagrees, though. "Maine Fiber Company isn't taking customers away from Fairpoint, since they aren't end-user providers." Allison believes that Fairpoint will be the network's biggest user in five years, and Janenda says, "Our view is that it will help Fairpoint. They stand to have a stronger business because of it."

U.S. Commerce Secretary Gary Locke commented on the Three Ring Binder project during a speech given in December. "Private companies just didn't think this type of basic infrastructure investment would be profitable. Ten different Internet providers have already expressed interest in buying capacity on this network that will allow them to deliver service to consumers and businesses."

However, Nevins points out that Fairpoint had submitted two expansion plan applications for Aroostook, Hancock and Washington counties worth $15 million of "last mile projects to 20,000 homes and businesses" at the same time as the Three Ring Binder project was submitted. He says that it was reviewed with a positive outcome by the Broadband Strategy Council and then went to the National Telecommunications and Information Administration, where it was not approved.

"Maine Fiber Company supports Fairpoint's applications and hope that they are funded in the second round," says Janenda. "We hope for the sake of all the people of Maine without access that all of Maine's applications are accepted."

Currently two legislative bills have been introduced that could impede or enhance the ability of the Three Ring Binder project to proceed. LD 1697, an act to protect universal service, would not allow the state and divisions of the state, who would likely be customers and partners of Maine Fiber Company, to provide telecommunications services to clients outside the government sector. LD 1778, an act to enable the installation of broadband infrastructure, has been submitted on behalf of Maine Fiber Company, and would expedite the company's ability to begin work on the Three Ring Binder.