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

Broadband service providers such as Verizon, Time Warner Cable and Adelphia tend to serve densely populated areas of the state, while the rest of the state has relied on a group of much smaller companies to introduce broadband services in areas where the big guys simply refuse to go. As of last week, Adelphia’s assets in Maine and elsewhere are now owned by Comcast and Time Warner Cable.

Fletcher Kittredge, president of Great Works Internet (GWI) in Biddeford, says that beyond the need to recognize that the broadband market is not one-size-fits-all and the set of regulations that control the telecommunications industry is complicated, his company’s biggest challenge involves access to the phone lines themselves.

“One really important concept in this area is the difference in the quality of access needed by businesses and educational institutions and that needed by consumers. For rural areas, business quality access is even more important than consumer quality access,” Kittredge says.

He contends that Maine suffers because most telephone company regulatory policy is made at the federal level, not at the state level, resulting in large, national companies enjoying an advantage over smaller companies such as GWI. In addition, while Maine has started to take some baby steps toward allowing local companies to compete, it is hampered in what it can do by existing federal regulations.

“We provide broadband via the copper wires used traditionally for phone service. About 40 percent of the phone lines in Maine are served off of what is called ‘remote terminals’ or RTs, which are the little huts or boxes you see from time to time on the side of the road. RTs serve phone lines outside of town centers,” says Kittredge.

“We are in constant quarrels with Verizon over access to the lines farther out of town. The overwhelming majority of the residents without broadband are served off of RTs. It is a marketing challenge to sell broadband when you can only serve part of a community.”

Attracting roughly 10,000 broadband subscribers statewide over the past five years, the GWI broadband offering has been a success story, according to Kittredge.

“I believe the state has only relatively recently recognized the nature and the scope of the problem. It was not that long ago that we were one of the leading states in terms of Internet availability. Steps have been taken to increase [broadband availability], but they are so recent that we will not know [the results] for a while,” says Kittredge.

With mounting speculation that Verizon may be planning to pull out of the residential market in Maine, New Hampshire and Vermont, by selling off its residential phone lines in these rural states, it lends support to Kittredge’s stance that, unfortunately for Maine, the larger national companies are not very interested in serving Maine. A Verizon spokesman says that no plan to sell off residential phone lines is in motion.

“The legislation [LD 2080] that was recently passed will make a difference. I think it is actually a pretty good bill with the only drawback being that it does not take effect for another year,” says Kittredge.

While he endorses measures that will increase competition and foster the expansion of broadband services statewide, he remains skeptical about wireless solutions.

“I think it is important to recognize that wireless in Maine has had about as much success as wireless anywhere. During the last 30 years, we have found that wireless must be part of the mix for providing Internet access, but that it has fundamental drawbacks that make it difficult for wireless to compete with wired access,” Kittredge says.

“Every two or three years some new form of wireless is announced that is supposed to get around the fundamental physical issues that make it uncompetitive against wireline, but it never happened. Any advance in wireless technology has been matched by proportional advances in wireline technology. The bar keeps moving up.”

Kittredge sees satellite in particular and wireless in general as not having the characteristics necessary to make them a widespread success.

“Price and performance are barriers to people buying service from wireless carriers. I think in rural areas, price is the major barrier,” says Kittredge. “It sounds like I am more down on wireless than I really feel. There are definitely places in Maine where wireless is the best alternative and there are a number of really good wireless Internet access providers in Maine. I particularly admire the MidCoast Internet folks in Rockland and Pioneer Wireless up in The County.”

TDS Telecom in Corinna, like GWI, is a broadband over-phone wire service provider. “We are continuing to roll out Digital Subscriber Line [DSL] services. This year, we are adding sites in Hampden, Corinna, Hartland, St. Albans, Swans Island, Isle Au Haut, Frenchboro and Matinicus to name a few. You can see that we are deploying in some very rural areas,” says Reggie Palmer, president of TDS Telecom.

One of the big challenges facing TDS Telecom is cost and the fact that where they offer broadband services perhaps only 10 to 15 percent of potential customers actually sign up.

“This makes it difficult at times to prove in a business case. As far as success is concerned, due to the rural nature of the areas we serve, I think each new area added is a success, and with current plans to continue investing I am encouraged,” says Palmer. “I will feel a lot better when we have some type of broadband available to at least 95 percent of our customers. In this industry, we are constantly deploying new technology so we are always raising the bar.”

Both Kittredge and Palmer were appointed by Gov. John Baldacci to serve on the Broadband Access Infrastructure Board (BAIB), which has helped make the governor’s ConnectME project a reality.

Palmer was chairman of the BAIB service availability subcommittee, which determined that about 86 percent of Maine households have some type of broadband available other than satellite. This estimate has been challenged, something that was discussed earlier in the series.

“Only about 15 percent of these households subscribe to a broadband service. These take rates [or signup rates for services passing by residences] do not seem to be drastically different than the average across the country,” says Palmer.

“ConnectME goes a long way toward helping some of the more rural parts of the state. Of course, the question is how should this be funded. The BAIB report – issued late last year – talks about these different funding options.”

According to Stephen R. Perry, product manager at Oxford Networks in Lewiston, despite facing a number of challenges, Oxford Networks is engaged in a process known as overbuilding: deploying a high capacity network in an area of the state that is now underserved and that has high potential for growth. The term “overbuild” describes a situation in which one company builds its network in an area already served somewhat by another service provider and then attempts to win over customers.

“This means we overbuilt the communities of Norway, South Paris, and parts of Oxford because they had solid economic underpinnings and they were poorly served by any broadband providers,” says Perry. “The communities of Lewiston and Auburn were similar in that they had solid economic underpinnings, were not being served as well as they could have been, and they had the potential for explosive economic growth.”

In each case, 100 percent of the area Oxford Networks overbuilt was done entirely with broadband. While this model constitutes a bold step, it precludes a company from considering low-density rural areas as the investment overwhelms the potential earnings that could reasonably be expected, according to Perry.

“Significant increases in broadband penetration will have to come either at the hand of improved technologies or through government intervention,” says Perry.

As a traditional telephone company, Oxford Networks has invested in upgrades to its network that enables more than 90 percent of its customers to obtain DSL broadband services.

“Wherever we have had older, less robust telephone cables, Oxford Networks has either augmented them by adding another cable or completely replaced the old cable,” says Perry. “Besides re-engineering the phone cables, the company has added many new central offices, which serve in effect as broadband service distribution points, in order to increase both the area served and overall performance of its network.”

Population density is the driver here. Where there are not enough people in a specific area to ever pay for the broadband-capable network deployment or upgrading process, homes and businesses are excellent candidates for satellite based broadband access, according to Perry.

“This is important for the governor’s plan because without a subsidy program in place, a universal wired broadband service currently does not make financial sense for companies to provide,” says Perry. “This is just an extension of the reality that universal telephone service does not generate enough revenue to be self-supporting, and thereby requires some form of government subsidy. It is very important to note that Oxford Networks is not asking for subsidization because all of our investments to date have been through our own capital investment plan.”

Next: A small internet service provider talks about the need for customer support and a satellite internet service provider in Ellsworth says it is doing a great business.