ANALYSIS

The Maine economy is missing a key ingredient: Fiber

Posted June 21, 2014, at 10:42 a.m.
Last modified Oct. 24, 2014, at 12:28 p.m.
George Danby | BDN

Maine’s Internet service has consistently ranked among the worst in the country: Recent rankings place Maine at 49 out of 50. Inadequate access not only hurts the quality of recreational Internet use but also affects schools and businesses, adding to the perception that Maine is a bad place for business.

But municipalities like Orono and Old Town wager tackling the challenge will bring long-term economic gains. Many in information technology see efforts by local governments and municipalities as key to improving access to the Internet and the economic gains it brings with it. Improving the quality of the Internet here may, in fact, be the best route to a bright future for Maine.

Going the ‘last mile’

Two years ago, the Maine Fiber Company completed an 1,100-mile fiber optic cable infrastructure project known as the “Three Ring Binder.” Upon its completion, former state Sen. Cynthia Dill heralded the project for connecting “more than 100 communities, from Skowhegan to Perry, to an information network fast enough to download a two-hour movie in half a second.”

Two years later, Maine has seen little improvement in the speed and quality of its Internet.

Even with the Three Ring Binder in place, Maine’s average download speed peaks at 10.9 megabits per second while pockets of higher speeds in southern Maine peak around 14.6 megabits per second.

The reason Maine has yet to see the uptick in speed is because most Mainers aren’t connected to the “Binder.”

The Binder established a “middle mile” connection, which acts as a backbone or high-speed interstate. What needs to be built is the “last mile,” off-ramps that connect the Binder’s fiber optic cables to homes and businesses. Internet service providers, such as Time Warner Cable and Axiom Technology, usually build these off-ramps to homes.

In Maine, as with most of the country, the “primary [Internet] service providers are the telephone and cable companies,” said Bruce Segee, University of Maine professor of electrical and computer engineering.

Copper cables used by Internet service providers were designed to transmit telephone and cable service. As a result, the capacity of these cables is not always able to keep up with the amount of information transmitted over the Internet. The capacity of copper cable is 1.54 megabits per second download compared t o 10 gigabits — 10,000 megabits — per second download for fiber.

Outdated copper cables used to connect homes and businesses to the Binder don’t provide the level of speed the Binder promises, said Dan Sullivan, chairman of the Washington County Fiber Initiative.

Subscribers connected with copper cables all share one lane. When traffic is low, they travel faster, but everyone slows down when traffic spikes. Subscribers connected with fiber cables, on the other hand, travel on individual lines like a multi-lane interstate.

“We [Mainers] don’t have a lot of political leadership to push for the proper infrastructure,” Sullivan said. “It is holding Maine back.”

Even if Maine had the legislative leadership, “it won’t happen overnight,” said Jeff Letourneau, executive director of Networkmaine, a unit of the University of Maine System. But these investments are necessary to bring Maine’s infrastructure into the current century and, in waiting, Maine risks “falling way behind,” Letourneau said.

For Segee — who, along with Letourneau and Networkmaine, helped bring the Binder to Maine — it’s “not a question of if but when. You can’t be a leader if you wait for someone else to do it first.”

The municipal connection

A lack of investment by Internet service providers has left municipalities like Orono and Old Town with few options but to try and build fiber to the home themselves.

“We see ourselves as a last resort,” Orono Town Planner Evan Richert said. “We haven’t seen a lot of evidence that [companies are moving ahead with these investments].”

Currently, Orono and Old Town are in the process of forming a corporation Orono-Old Town Fiber to manage and maintain fiber to the home.

Other towns in New England have also tired of waiting for Internet service providers to invest in fiber to the home. Twenty-four towns in central Vermont, including Montpelier and Braintree, joined to form a municipal fiber corporation called ECFiber. Residents saw Fairpoint was slow, and important infrastructure investments were not being made, said Stan Williams, CEO of ValleyNet, the nonprofit contracted to build and operate ECFiber’s network.

The towns both build the fiber infrastructure and provide Internet service. After an initial investment of $6 million, ECFiber expects to have 200 miles of fiber cables built by the end of the year, Williams said.

Unlike ECFiber, the proposed Orono-Old Town Fiber corporation would only build and maintain the fiber infrastructure and lease it to Internet service providers that will deliver service to the home.

Building and maintaining the infrastructure mitigates an Internet service provider’s risk. “Their risk would only be in leasing fiber service to subscribers,” Richert said, adding the towns are not trying to be competitors.

Bringing fiber into homes, however, comes with a high sticker price. Williams estimated ECFiber invested about $30,000 per mile of fiber cables, with an average of six connections per mile, and the cost rose to $36,000 for 12 connections per mile. Even though the infrastructure costs went up with each additional connection, the cost per customer was reduced, Williams added.

Still, cost has stymied the spread of fiber to homes for Internet service providers and municipalities with limited budgets.

While local investors lifted ECFiber, available state and federal funds can relieve the burden of investing in fiber to the home. The ConnectME Authority, U.S. Department of Agriculture, Federal Communication Commission and National Science Foundation provide grants supporting investments and research to improve Internet connectivity.

Build it, they will come

High-speed Internet has the potential to be a boon to Maine’s sagging economy. It has become a all but a necessity to have an online presence to effectively conduct business in the global marketplace.

E-stats from the U.S. Census Bureau show e-commerce has grown across all sectors from manufacturing to retail and, in the first quarter of 2014, contributed $71.2 billion to the economy, a 2.8 percent increase from the fourth quarter of 2013 and a 15 percent increase from a year ago.

“People don’t realize the amount of commerce that goes over the Internet,” Segee noted, and that appears poised to grow.

Historically, commerce has depended on roads and waterways. The Internet is the equivalent for the digital age. Likewise, as investments to maintain traditional infrastructure were necessary for commerce, so is investing in cyber infrastructure for e-commerce.

“People don’t have a hard time seeing the value in roads, but they do have a hard time seeing the value in the Internet,” Segee said.

Maine has the opportunity to attract “businesses [for which] place doesn’t matter,” he said, adding that the state is ideal for many tech companies because of the low cost of land and cool temperatures, which are ideal for data centers.

In September 2013, Forbes ranked Virginia as the best state in the nation to do business; in the same survey, Maine ranked 50 out of 50. A booming tech industry that has attracted giants like Microsoft, which built a data center there, contributed to Virginia’s ranking, and 45.4 percent of the state’s population has access to fiber connections, as compared with Maine’s 0.9 percent.

“We need better broadband connectivity [Internet speed] to attract and retain corporate entities. Everything requires connectivity. For-profit businesses can and will go elsewhere. We need it to maintain our economy and make it so that people can live here,” Letourneau said.

And municipalities are stepping up to the plate.

Four years ago Chattanooga, Tennessee, built a fiber network throughout the city and nearby municipalities, which has attracted computer programmers and others in related tech industries. Not long after, in 2011, Google installed its brand of fiber in Kansas City, Missouri. In these and other municipalities, fiber has fostered a generation of startups and development. Maine can join their ranks.

“If [municipalities] want prosperity, [they] need to make something and bring people from outside to buy it,” Segee said.

A desire to attract and grow businesses is part of the reason why Orono and Old Town have taken steps toward building fiber for homes. For Richert, “the economic development of small communities rests less [now] with big developments and real estate but more with startups and established small companies innovating with new products.”

There’s no time to wait for Internet service providers to step up and make the investment themselves.

“We can’t afford to wait,” Richert said. “We need to grow small businesses.”

For Sullivan, however, it’s a simple fact that “we can’t be in business without a connection.”

Christopher Burns is a BDN intern and University of Maine student.

 

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