UMS sees revenue in the airwaves

AUGUSTA – Like several educational institutions across the country, the University of Maine System has discovered it has the communications industry equivalent of beachfront property.

UMS is negotiating to take advantage of a Federal Communications Commission decision that will improve its instructional television service, help Mainers gain access to broadband Internet services and bring the university a new revenue stream

“We recognize the importance of this opportunity,” UMS Chancellor Richard Pattenaude said last week. “We are looking forward to cooperating with private corporations and other parts of state government to provide broadband access to a greater part of the state to support economic development.”

The FCC is allowing educational institutions that hold licenses for frequencies used to broadcast instructional programs to lease some of that scarce capacity to private companies for use in providing wireless broadband services. The FCC started granting licenses to educational institutions in the 1960s so they could send televised instruction to classrooms.

UMS has 26 transmission sites from York County to northernmost Aroostook County, and the signal from each transmitter has a reach of about 35 miles. Nearly all of the populated regions of the state are covered by the transmissions.

“We are not giving up any capacity; we are gaining capacity and channels,” Pattenaude said. “We will be able to do more classes over the system with better quality.”

Ralph Caruso, the chief information officer of UMS, said last week that is possible because all of the transmitters will be upgraded from analog to digital. He said the space occupied by one analog channel can hold several digital channels.

“The direction from the board is to negotiate a deal that provides enough of an upfront payment to pay for that conversion,” he said, “and then we want an annual lease payment.”

In other states, that has been the pattern, with some schools negotiating for substantial payments. For example, Milwaukee-area educational institutions recently signed a deal that totaled $12.6 million upfront with monthly lease payments of $165,000 with annual increases. The total payment to the schools over the next three decades is estimated at $108 million.

Caruso declined to estimate what UMS might get for payments, but he expects its terms would be similar to the Milwaukee agreement, with an upfront payment as well as lease payments over a period of years.

“We are not the market size of that area,” he said, “so if the company that negotiates with us uses the same business model, we will get something less than that.

“It will be a win-win situation,” he said. “It should be enough to convert our existing educational channels to digital, add capacity and have the funds to maintain the system in future years.”

Not mentioned by either Pattenaude or Caruso is that the current system maintenance is an annual expense to UMS that could be covered by the payments, freeing up dollars for other uses by the university system.

In addition to the benefits to the university system, the leasing of the frequencies for use by one or more wireless broadband providers will benefit the state’s economy. In some areas of the state, there is no high-speed Internet access that has competitive rates, and the deal has the potential of increasing competition in the rest of the state.

Maine PUC chairman Kurt Adams, who also serves on the ConnectMe Authority, praised the university trustees for approving the negotiations.

“This will not be the solution, but it will be a solution for many businesses throughout the state,” he said.

Adams said in many cities and towns there already is competition, with cable companies and phone companies offering broadband access. He said larger firms are using fiber-optic links. But, he said, there are still communities without access at affordable cost.

“There is a lot of potential in this use of wireless, and I applaud the university for it moving forward on this,” he said.

But, Caruso said, so far those providers that have expressed interest are looking to lease the frequencies along the Interstate 95 corridor as far north as Bangor. That would leave considerable capacity unused in other areas of the state.

“That’s where we have to talk with other parts of state government,” Pattenaude said.

Getting the deal negotiated and putting new systems in place will take at least a couple of years, Caruso said.