Bill looks to cut UMS Internet sales

Posted Jan. 27, 2010, at 9:36 p.m.

AUGUSTA, Maine — FairPoint Communications took its cyber turf war with the University of Maine System to the State House on Wednesday, arguing for new restrictions on the institution’s ability to sell high-speed Internet services.

Relations between Maine’s largest telecommunications company and the university system have been strained since last year when FairPoint officials accused the public system of unfairly competing with the private sector in offering broadband Internet.

On Wednesday, lawmakers heard heated debate about whether UMS’ efforts to expand the state’s high-speed Internet infrastructure would undercut FairPoint’s attempts to grow its broadband business, which the company believes is key to its long-term survival.

Supporters of the university system, meanwhile, said it was FairPoint’s legislative proposal that could keep Maine in the “dark ages.”

“This bill, if passed, serves only the interests of one bankrupt company at the expense of Maine people,” said Sen. Elizabeth Schneider, D-Orono.

The bill, LD 1697, would as written prohibit the state and divisions of the state from providing telecommunications services to clients outside of the government sector. The bill’s sponsor, Republican Rep. Stacey Fitts of Pittsfield, said it was not his intention to preclude UMS from offering broadband services to schools or libraries, however.

FairPoint and a public-private partnership involving UMS competed last year for Maine’s share of federal stimulus money aimed at expanding high-speed Internet access in rural areas.

The public-private partnership, which also included the Biddeford-based communications firm GWI, was eventually awarded more than $25 million in stimulus money to install 1,100 miles of fiber-optic Internet cable in rural Maine. U.S. Secretary of Commerce Gary Locke traveled to Orono last December to announce the award.

The university system also has an existing broadband network that supplies services to colleges, research facilities like The Jackson Laboratory in Bar Harbor and other nonprofits.

But Fitts and representatives for FairPoint said public subsidies allow UMaine to offer services at a cheaper price, putting the company at a competitive disadvantage. That harms FairPoint’s ability to meet its regulatory obligation to lay the costly broadband infrastructure so needed in areas of rural Maine desperate for economic development, bill supporters said.

Attorney Tony Buxton, representing FairPoint, said lawmakers need to remember that UMS is not just selling to kindergarten-through-grade-12-schools and small nonprofits. Large potential broadband clients all along the Interstate 95 corridor, such as Maine Medical Center, are also nonprofit organizations.

“The consequences of this has been lower revenues to FairPoint,” said Buxton.

But the bill’s supporters were considerably outnumbered by opponents, which included school superintendents, college officials and representatives of major research facilities in the state.

“I think this is a direct attack on the university system and we are going to see a diminution of service if this bill passes,” said Jerry White, superintendent of schools for SAD 31 in the Howland area.

Ralph Caruso, chief information officer for the University of Maine System, said the bill could cost the system $2.5 million annually, could potentially force the university to forfeit grants and could end collaborative efforts.

Caruso also assured lawmakers that the university system has no intention of getting involved in the commercial broadband sector, other than offering services to nonprofits and research labs.

The most blistering testimony came from Schneider, who pointed out that the Business, Research and Economic Development Committee, which she chairs, rejected a similar bill last year. Schneider accused FairPoint of shopping around for a more receptive committee.

Schneider said FairPoint appears determined to return Maine to “the dark ages” and predicted the bill will undo the considerable progress the university system has made in expanding broadband capabilities in the state.

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