Rural Maine Towns Join Forces to Build Their Own Broadband Utility

Date: 27 Apr 2018 | posted in: MuniNetworks | 0 Facebooktwitterredditmail

Nestled along the south eastern border of Maine are Baileyville and Calais. As rural communities situated next to Canada in the state’s “Downeast” region, neither town is on a list of infrastructure upgrades from incumbents. With an aging population, a need to consider their economic future, and no hope of help from big national ISPs, Baileyville and Calais are joining forces and developing their own publicly owned broadband utility.

Baileyville and Calais

There are about 3,000 residents in Calais (pronounced “Kal-iss”) and 1,500 in Baileyville, but according to Julie Jordan, Director of Downeast Economic Development Corporation (DEDC), many of those residents are aging and younger people find little reason to stay or relocate in Washington County. The community recognizes that they need to draw in new industries and jobs that will attract young families to keep the towns from fading off the map.

Most of the residents in the region must rely on slow DSL from Consolidated Communications (formerly Frontier), while a few have access to cable from Spectrum (formerly Time Warner Cable); expensive and unreliable satellite is also an option and there’s some limited fixed wireless coverage in the area. A few larger businesses that require fiber optic connectivity can find a way to have it installed, but Julie tells us that it’s incredibly expensive in the area and most can’t afford the high rates for fiber.

Economic Development Driven

logo-baileyville-me.pngOrganized in 2015, the nonprofit DEDC came together with the focus on recruiting new businesses to the area and to support existing businesses. As DEDC quickly discovered, unless the region could offer high-speed, reliable Internet infrastructure, attracting new businesses and helping existing businesses expand would be extremely difficult. They also determined that new families would not be interested in Baileyville or Calais without high-quality connectivity. “It was a no-brainer,” says Julie, “you have to go fiber.”

One of the largest regional employers, Woodland Pulp, need fiber in order to operate and as Julie describes, “they pay up the nose” for connectivity. All their equipment is computerized and they require highly skilled employees that sometimes need to tend to the equipment during off hours. Woodland lost key employees because the only place where connectivity was adequate enough to service the equipment from offsite was within the city of Baileyville. Connectivity in the more affluent lake areas, where Woodland’s highly skilled technicians live, isn’t adequate enough to allow servicing of Woodland’s equipment. When had to choose between living out of town living within Baileyville to keep their jobs with Woodland, they chose to transition out of the company.

Is It Feasible?

DEDC commissioned local telecommunications company to complete a feasibility study, which they completed in October 2016. The company recommended that the two communities deploy a dark fiber network to allow ISPs to offer services via the infrastructure.

logo-calais-maine_0.pngOver the next several months, DEDC reached out to businesses and other members in the community to gauge interest in the project. Councils from both communities endorsed the project and interest from residents and local businesses was intense. They spoke with smaller ISPs that might be interested in delivering services via the fiber. In June 2017, DEDC hired Pioneer to help them develop an 87-mile network to serve both communities. Soon after, state elected officials from the districts expressed their support for the project.

Funding

While the folks in Baileyville and Calais suffered through slow DSL and new businesses averted the community due to the lack of high-speed connections, the communities still could not qualify for state funding. Because they’re considered underserved, rather than unserved, both communities had to take a back seat in funding to the many other rural locations in Maine where Internet access is even worse.

The DEDC, a quasi-municipal entity, had the authority to issue bonds, but had no assets to support them. They approached the USDA, but learned from the agency that the process to obtain a loan would take at least a year. If they chose to participate, Baileyville and Calais would be competing with other communities from around the country that were more likely to receive loans. Competing communities had higher percentages of lower-income households, more unemployment, and more unserved premises. Rather than spend the time and energy to compete for federal loans they didn’t think they could get, community leaders discovered funding closer to home.

Estimates for the Fiber-to-the-Home (FTTH) project to serve just under 3,000 premises came in at around $2.7 million; DBU plans to bring fiber to every premise. Local banks, interested in taking advantage of the new infrastructure and aware of the economic development possibilities, offered to provide loans for the project.

logo-DBU.jpgDBU has obtained a two-year line of credit at 1.99 percent interest for $2.9 million with all principal payments deferred for two years. The costs will cover construction of the network and central offices. At the end of two years, when they expect the network to be completed, they plan to renegotiate the amount due into a 20-year loan.

In order to accept the debt, however, both communities needed to approve the project and authorize the borrowing of the funds. The Town of Baileyville required that residents attend a special town meeting to hear the proposal and then to vote on authorizing the borrowing, which they finalized in August 2017. Organized as a city, the Calais City Council had the authority to vote on building the network and borrowing the funds. In October, they unanimously finalized their decision to participate and guarantee the loan.

Interlocal, Superlocal

In order to create the regional broadband utility as a public entity to own the resulting infrastructure, Baileyville and Calais entered into an interlocal agreement. Interlocal agreements can be used for almost any collaborative project between communities. Places such as Morristown and Newport in Tennessee and several local governments in the Austin, Texas area use this form of contract for connectivity projects.

Drafting an interlocal agreement that satisfies all parties can be a challenging and drawn out process. Often officials involved with multijurisdictional projects look back and see that achieving this step was a significant milestone. In November 2017, DEDC filed the Articles of Incorporation for DBU, establishing the entity as nonprofit corporation organized for public benefit.

New Rules Expedite Project

Julie notes that, while the project received support among both communities, changes in state law gave DBU the boost they needed to feel secure in moving ahead. One of those rules involved pole attachments.

Similar to many other projects that involve a publicly owned entrant into the Internet access ecosystem, DBU faced the challenge of attaching their poles on the incumbent’s utility poles. Incumbent providers can take advantage of their position by delaying negotiations for pole attachment agreements and  delaying make ready work.

seal-maine.pngRegulations involving utility poles include strict requirements for where on the pole particular types of cables can be connected. Each company adjusts the location of their own wires on the location of each pole, which must be done in succession in order to make space for the new entrant’s wires. By dragging their feet and waiting until the last moment as dictated by state regulations to complete the work, incumbents can delay the new entrant’s project, increasing costs and damaging momentum. Big national providers such as AT&T and Comcast use the tactic as often as possible to prevent competition.

In Maine, however, the state’s Public Utilities Commission (PUC) amended rules regulating attachments to utility poles and the procedure in which the parties determine and allocate costs. The change to the rules will allow DBU to attach their cable below other lines currently on the poles or on the back of the poles. According to Julie Jordan, the change has allowed DUB to plan on a quicker deployment. Make-ready costs will be much lower and easier to predict because now fewer lines need to be repositioned on each pole.

Ready To Roll

After issuing an invitation to bid in early 2018, DBU announced in April that they had decided to award the contract to oversee construction of the network to Pioneer Broadband. They plan to begin construction some time between July or December, depending on how quickly they can access the poles. As the project progresses, DBU will make the infrastructure available to ISPs that are ready to begin using it to offer Internet access. DBU will also release a bid to find an operator to manage the network.

DBU has spoken to six providers, including the incumbents, and four have expressed an interest in delivering services via the network. The large incumbents weren’t interested in partnering in any way, but the remaining smaller, local ISPs were all interested in developing arrangements to use the fiber.

In order to prepare for any negative misinformation that may come from the incumbents, DBU has already hired a marketing firm. “To help us keep control of our message,” describes Julie Jordan. DBU plans to focus on the quality of the service, the fact that it’s good for economic development, and that participating is helping the community. They’ve already been “assured” by the incumbents that they should “just wait” and the incumbents will “get to them,” but the people in Baileyville and Calais are tired of waiting for services that will never come — they’re ready to take care of the problem themselves.

For more on the project, check out the DBU Facebook page and website.

Image credit Chuck Murphy and Downeast pictures.

PDF icon Downeast Broadband Utility Article of Incorporation

This article was originally published on ILSR’s MuniNetworks.org. Read the original here.

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Lisa Gonzalez

Lisa Gonzalez researches and reports on telecommunications and municipal networks' impact on life at the local level. Lisa also writes for MuniNetworks.org and produces ILSR's Broadband Bits podcast.