Broadband access could increase in state Act shows support for BAIB

Editor’s Note: This is the second report in a multipart series about the availability of broadband Internet service in Maine.

The Maine Legislature, as an indication of its support for the state’s Broadband Access Infrastructure Board, or BAIB, and its findings, has passed LD 2080, or HP 1471, “An Act To Accelerate Private Investment in Maine’s Wireless and Broadband Infrastructure.”

This legislation, sponsored by Rep. Hannah Pingree of North Haven, is designed to stimulate investment in advanced communications technology infrastructure statewide by establishing the Advanced Technology Investment Authority.

Thomas B. Federle, Gov. John Baldacci’s chief counsel and top adviser on broadband issues, said Baldacci supported the effort to make sure broadband connection is a way of life for Maine people.

It is important to students, Federle said, but also to business owners, including some who do not realize what it could do for them.

“Greater broadband access in Maine will have enormous ripple benefits to the state’s economy,” Federle said. “Study after study has shown that rural businesses with broadband access do better than rural businesses without it.”

But Bruce Leichtman, president of the New Hampshire-based Leichtman Research Group, thinks Maine may well be missing the point as far as defining broadband and looking at the problem at hand. One of the most troubling aspects of the broadband gap is the way it affects Maine’s least-populated, rural communities.

The expression “digital divide” is often used to describe the way in which affluent communities are tapping into broadband technologies for a variety of new and innovative purposes ranging from education to health care, while unserved or underserved communities are being left behind with few if any Internet, let alone broadband, options.

But for Leichtman, the digital divide that Maine – and the rest of the nation – needs to address is not a matter of haves and have-nots when it comes to access to broadband services, but rather access to computers.

“The computer divide is where this starts. There is a direct link between household income and computer ownership. While 80 percent of U.S. households have computers, just over half of these households subscribe to broadband service,” he said. “When you look at households with incomes less than $30,000 per year, only 58 percent have a computer.

While the computer gap may compound the problem of insufficient broadband services, many think Maine simply has not been very aggressive or successful to date in attracting support from the federal government for rural broadband development funds in particular.

As deputy administrator at the U.S. Department of Agriculture for the Rural Development Utilities Programs since May 2002, Curtis M. Anderson helps administrator James M. Andrew oversee the Rural Development Broadband Loan and Loan Guarantee Program, one source of federal funding aimed at creating new rural broadband infrastructure. The other source is the Federal Communications Commission’s universal service fund. Anderson was interviewed just days after his latest trip to Maine in May for a ceremony in Princeton that kicked off a $7 million water treatment project.

Since 2002, this USDA loan program has provided more than $870 million to 57 applicants in numerous states to expand broadband availability. None of these applicants is engaged in broadband projects in Maine, but broadband projects in South Dakota have received $49 million; Minnesota, $104 million; Michigan $9 million; and Iowa, $25 million.

But the USDA has provided more than $30 million to Maine-based entities under its much larger and more traditional rural telecommunications funding program, which has provided $3.5 billion over the past five years nationwide to more than 700 applicants.

Asked why none of the USDA rural broadband project funding approved to date had found its way to Maine, Anderson was candid.

“I have a great job. I get to travel around the country and tell people that I am here from the government and that I am here to help you. And I really mean it. At the same time, we cannot approve loans that have not been applied for,” said Anderson. “Local leadership is the key. People have to come together and partner effectively to make this happen. This involves much more than a sound business plan. It takes local leadership to pull all the elements together.”

In May, two witnesses who were asked to testify about this USDA program before the full Senate Committee on Agriculture, Nutrition and Forestry on Capitol Hill made it clear that improvements need to be made. One witness gave the program high marks for being one of the few sources of long-term capital available for wireless high-speed access service providers in particular. But he went on to say that the process of submitting an application, having the application deemed complete, and negotiating and completing loan documentation was considerably more time-consuming than his company initially expected. He attributed some of the difficulty encountered to the fact that his company was a first-time borrower from the USDA without familiarity with USDA processes or documentation.

Jason Philbrook, president of Midcoast Internet Solutions in Rockland and a state broadband advisory group member, recalls that a USDA representative met with a group of independent Maine-based Internet service providers in Augusta at the Public Utilities Commission offices last fall as part of the governor’s efforts to increase broadband coverage.

“The ISPs and PUC were interested. However, the paperwork and stipulations for these loans were huge and would have changed the way many ISPs do business. Wireless also was the technology least likely to get funded based on prior awards across the nation,” said Philbrook. “For me, it is easier to get a loan at the bank for a little higher percentage and not have a person doing all the USDA legwork and ongoing compliance.”

Philbrook estimates that a bank loan would save six months of USDA application preparation, approval time and uncertainty.

“If interest rates go up a great deal, [this program] might be more attractive,” said Philbrook.

Anderson concedes that the actual loan or loan guarantee application process has been criticized, and that an effort is under way to revise and improve the process.

“Initially, we received a lot of incomplete or poor-quality applications. Since then we have done a lot of outreach and education. Now we see much better and more comprehensive applications,” said Anderson. “I estimate that around 30 percent of our loans go to startup companies.”