FairPoint Communications announced Tuesday that it will receive $13.3 million in federal funds annually for six years to expand broadband Internet service in rural Maine.
The company is accepting the funds from the federal Connect America Fund, or CAF, which subsidizes the expansion of broadband service to the country’s rural areas. The Federal Communications Commission developed CAF as a part of its mandate to expand broadband in high-cost service areas, which are often rural parts of the county.
The North Carolina-based company operates the largest land-line telephone network in northern New England, employing more than 1,700 union workers, including about 800 in Maine.
Accepting those CAF funds commits the company to expanding broadband Internet service in 35,500 underserved locations, which the FCC defines as census blocks. That service must offer download speeds of at least 10 megabits per second and upload speeds of 1 megabit per second, and less than 100 milliseconds of latency. It also requires the company to offer this service at affordable prices.
What areas in Maine will be the first to see investment has yet to be determined, according to Mike Reed, FairPoint’s president in Maine. While the company has opted to accept the funds, it needs to conduct more extensive studies before creating a time line for which areas will see investment over the six-year life of the program. A map of the 35,500 eligible locations in Maine, those colored dark green, is available on the Federal Communication Commission’s website.
“I’m very excited and pleased that we’ll be expanding broadband further into the difficult-to-serve areas of the state,” Reed said Tuesday afternoon.
However, the federal funding, which will total nearly $80 million over the life of the project, will not cover the total cost of the investment required to expand broadband to all of these 35,500 locations in Maine, Reed said.
The company won’t know precise costs until more specific engineering reports are complete, but he said, “We acknowledge that we are going to be spending the company’s money along with the federal government’s money to build this. We’re confident of that, but we still feel it’s the right move to make in the long run.”
While many people think of FairPoint as a telephone company, Reed said the future of the company is as an Internet service provider.
FairPoint will need to meet benchmarks to continue to receive the funds. It will be required to have built out broadband service to 40 percent of the Maine eligible locations by end of 2017, 60 percent by end of 2018, 80 percent at end of 2019, and 100 percent by the end of 2020.
This is the second round of CAF funds, known as CAF II, to be disseminated. FairPoint received $860,000 in the first round, which was of a smaller scale and announced in 2013, according to Jeff Nevins, a FairPoint spokesman.
In this second round of funding, FairPoint had to determine on a state-by-state basis whether to accept the CAF II funds. In total, it is accepting $37 million in 15 states. It opted to not accept CAF II funds in Colorado and Kansas, according to Sarah Davis, FairPoint’s senior director of government relations in Maine, who met with staff members of the Maine Public Utilities Commission and Office of the Public Advocate to inform them of the news Tuesday afternoon.
The $13.3 million FairPoint will receive for Maine represents its largest single subsidy. The second largest is in Vermont, where it will receive $8.7 million, followed by $4.3 million in New Hampshire, according to Nevins.
Reed said the size of the Maine subsidy reflects the difficulty of providing telecom services to a large, rural state.
“It’s important to recognize that the federal government has recognized the difficulty and the expense of serving our geographically challenged state,” Reed said. “It points to more than ever that we need to work together to get broadband to where we need to get it.”
Tim Schneider, Maine’s public advocate, said FairPoint’s decision to accept CAF funds was good news.
“It’s an exciting step for them to take the money,” Schneider said Tuesday. “They’re stepping up to provide broadband service in places that the FCC thinks federal support is required, and that’s great news. It’s a signal from the company that they’re serious about this line of business.”
Peter McLaughlin, business manager for the largest FairPoint employee union, the International Brotherhood of Electrical Workers Local 2327 in Augusta, hasn’t always seen eye to eye with the company’s management, but he welcomed the funding news.
“Any time we can expand broadband in the state, it’s a good idea,” he said.
The unions and company settled a months-long strike in February.
In terms of broadband technology it plans to deploy, Reed said that’s yet to be decided, but will likely begin with DSL service.
“Out of the starting gate it will be DSL, but this is a six year project and technology is changing,” he said. “I don’t think we’d tie ourselves down to a particular technology.”
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