Maine’s highest court has ordered a Biddeford internet company to pay more than $400,000 that was supposed to go to a broadband service group and the former Broadband Sustainability Fund.
The state and the ConnectME Authority sued Biddeford Internet Corporation, doing business as Great Works Internet, for $406,00 three years ago after the company stopped paying a fee levied on internet service providers using fiber cables built be the Three Rings Binder project to provide high speed internet access to rural Maine.
Great Works Internet — known as GWI — stopped paying the fee, contending that the project was unfairly singled out for an unconstitutional tax.
In 2009, GWI won a $25.4 million federal grant to help fund the Three Ring Binder designed to provide high-speed internet access to unserved and underserved areas of Maine. The grant, as required, was transferred to a new company, Maine Fiber, which built and operates the fiber network that internet service providers throughout the state can use.
When emergency legislation was being created in 2009-10 to provide the legal authority to build the Three Ring Binder, FairPoint, Maine’s largest provider of dark cable fiber and telephone service, opposed it, asserting the project would build over the existing network.
A compromise was reached, which “authorized a dedicated broadband sustainability fund, supported by a broadband sustainability fee to be collected from users of the Three Ring Binder,” according to court documents.
The purpose of the fee was “to support improvements to expand broadband access, and to reduce the competitive advantage to those utilizing federally supported dark fiber over those who had expanded broadband and dark fiber access using private resources,” according to court documents.
The funds were collected by the state and were then distributed to incumbent local exchange carriers, said GWI’s attorney Benjamin Leoni, with the Portland-based law firm Curtis Thaxter, who said that FairPoint Communications received the lion’s share of the fees collected.
“FairPoint made it clear that it wouldn’t stop its lobbying attempt to kill the bill unless the fee was added for which they would be the primary beneficiaries,” Leoni said.
GWI initially paid the fee but stopped when it decided to challenge the constitutionality of the fee which it asserted was a property tax, Leoni said. Property tax must be based on just value, which the fee was not, he said — in its recent decision the Maine Supreme Judicial Court affirmed that the assessment was a fee, not a tax.
The Three Ring Binder, Leoni said, was the only project that required users to pay a fee, despite hundreds of others who received federal and state grants. For instance, in 2015, FairPoint received an $80 billion federal grant to expand broadband services in rural Maine.
The Legislature repealed the statute that created the fund in 2015, two years before the fund was scheduled to end.
Leoni credits the lawsuit by GWI with ending the fund and the fee that supported it.
Despite losing the appeal, he said, the lawsuit brought to light the unfairness of the fee and it played a major role in the Legislature’s decision to end it.
The decision by the law court was issued Tuesday. GWI has until Oct. 24 to decide whether to file a motion for reconsideration, Leoni said.