PORTLAND, Maine — FairPoint Communications plans to take $80 million in federal funds to expand broadband Internet service in Maine to areas where the company’s state president said “market forces cannot support expansion.”
The six-year disbursement of federal cash holds the greatest benefit for Aroostook County, according to analysis by the Federal Communications Commission, which offered the funds to FairPoint in April during a second round of awards through its Connect America Fund.
FairPoint had 120 days to decide whether it would accept the money and service expansion requirements.
The fund targets rural areas where investments in broadband fall within a Goldilocks zone for cost — deemed too expensive for the private sector to go alone but not exorbitantly expensive.
Mike Reed, FairPoint’s president in Maine, said the company’s engineering teams started work Tuesday to develop the projects it would seek to tackle first.
“We have nothing targeted right now,” Reed said in a telephone interview.
While the FCC found Aroostook County has the largest number of locations that qualify for broadband expansion under its program, Reed said the order in which projects are built depends on many factors and, in part, the deadlines the program requires the company to meet.
Those deadlines set out specific goals over the six years to extend service in Maine to 35,000 new locations, which could be single-family dwellings, businesses or multi-unit residences, Reed said.
The program requires the locations to have access to download speeds of 10 megabits per second and upload speeds of 1 megabit per second.
Reed said the company would likely start building out its DSL services, but noted that the preferred technology for these baseline broadband projects could change during the course of six years.
For average Internet speeds, Maine has regularly ranked at the bottom nationally.
Of the $13.3 million FairPoint will get annually for six years, Aroostook County makes up about one-quarter, or $3.5 million, of qualifying investment the FCC has identified at the county level.
Penobscot County stands to see the second-highest benefit from the funds, with an estimated $1.9 million in possible annual investment.
Those projects are identified not at the town level but by census blocks, which are boundaries defined by the census that may cross over multiple towns or constitute neighborhoods in urban parts of the state.
As the company starts to roll out its projects, Reed said he thinks that could be confusing to anyone waiting for better broadband to come to town.
“A census block might be in the town, but it might not be your part of town,” Reed said.
Nationally, FairPoint decided to accept $37.4 million in annual disbursements over the six years to expand rural broadband in areas across 14 states where it operates.
Reed said the decision to take the money in Maine came after assessing state regulations and general estimates of how much money FairPoint would need to invest alongside the federal grant. Reed declined to say how much the company estimates it will need to invest in Maine to meet the FCC’s requirements under the program.
That could also depend on whether some of its projects get state-level support through the ConnectME Authority, an idea Reed said the company has discussed generally.
Paul Sunu, FairPoint’s CEO, said in a statement the company’s agreement to participate in the program across 14 states will involve “committing hundreds of millions of dollars” to building and upgrading Internet infrastructure in remote areas of its service territories.
That funding comes from a total pool of more than $1.6 billion offered to telecom companies as part of the FCC’s shift of subsidies from landline telephone service to Internet infrastructure.
FairPoint, in a statement to investors, said it expects to lose $39.3 million in federal support for high-cost telephone services.