BAIB chairman says Maine lacks awareness of program Portland lawyer speaks out about USDA federal loan plan

Pat Scully is a Portland lawyer who served as chairman of the Maine Broadband Access Infrastructure Board. He says Maine’s failure to take advantage of a key federal loan program designed to expand broadband services – the U.S. Department of Agriculture’s Rural Development Broadband Loan and Loan Guarantee Program – is primarily the result of a lack of awareness.

“We talked about this issue somewhat during the work of BAIB. I do recall the impression we had was that very few people in Maine, including the providers, knew much about the USDA program and the eligibility for the program,” said Scully. “So I guess if I were asking questions of someone from USDA, I would ask what they are doing to increase awareness and utilization of this program in Maine and, in particular, are they coordinating at all with the state’s formal efforts to expand broadband availability. If there is still no coordination here, there certainly should be.”

Curtis Anderson, a USDA official connected with the program, indicates that while awareness is growing, it still involves the basic need for someone to both present a business model that is going to work and demonstrate that funds are in place to start and sustain the broadband venture in question.

“Our program does not finance operations, we just provide financial backing for facilities, equipment or infrastructure. So somebody has to put up some money, or what we call skin in the game, in the form of 20 percent credit support. Along with that we have to see a five-year business plan and proof that the applicant has enough money to fund at least the first year of operation,” said Anderson.

A witness before a U.S. Senate committee hearing on the USDA program in May said that these USDA loans were subsidizing broadband deployments in areas already served by companies that are providing broadband service with no government subsidy, whereas the loans should go to extend broadband services into unserved areas. This witness also complained about the lack of transparency at the community level, which makes it difficult to assess such things as the status of existing broadband service in the specific market or community that the applicant proposes to serve, among other things. In effect, this witness questioned whether, in certain instances, this was an appropriate use of taxpayer funds.

The witness was describing a process known as “overbuilding,” whereby a company sets about to construct a new broadband network in an attempt to compete with companies already operating in a designated area or community. Anderson said administrator Jim Andrew was well aware of the need to increase transparency, and the USDA soon would start posting additional relevant information on its Web site so residents of every community would know which companies were applying under this program. Anderson also emphasizes that the USDA prefers to use the Rural Broadband Access Loan and Loan Guarantee Program to bring new services into unserved or underserved areas, although overbuild applicants do participate.

In April, a legal notice was published in the Bangor Daily News involving a company called Open Range Communications Inc. which was alerting readers that it is a prospective applicant under the Rural Broadband Access Loan and Loan Guarantee Program.

A company spokesman was contacted, but declined to comment or otherwise provide any details whatsoever about the company, including its location.

“We are required to announce our intent to provide broadband services [200 kilobits upstream and downstream] in the State of Maine in the following communities: Augusta, Bath, Belfast, Brewer, Brunswick, Caribou, Ellsworth, Gardiner, Old Orchard Beach, Old Town, Orono, Presque Isle, Saco, Sanford, Topsham, Westbrook,” the legal notice stated.

What is immediately apparent is that many of these communities already are served by one or more broadband service providers. This means that Open Range may be engaged in the process of “overbuilding” as described, although this cannot be confirmed. Again, the company has declined to comment.

This loan guarantee program is technology-neutral, and that means funds have been provided to all sorts of wireless and wired broadband service providers, according to Anderson. This fund is off-limits to any large telecommunications companies such as Verizon or AT&T, for example, which now serve 2 percent or more of existing subscriber lines in the United States.

In 2004, during a speech in New Mexico, President Bush outlined his vision of achieving universal, affordable broadband coverage nationwide by 2007.

“We are seeing the adoption of broadband taking off and the number of homes passed or able to access broadband services increasing dramatically. Given this trend, we are moving closer to meeting the president’s objectives,” said Anderson.

“Once we have universal access, then we can focus on affordability. Competition is one tool that can help bring about lower prices and increased quality.”

Next: A look at the lack of broadband service in rural areas and a perceived inadequacy of satellite providers.