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Last updated: Thursday, May 24, 11:59 a.m.
News |

Internet bill could cost system $2.5M

By William P. Davis
Posted on Feb. 04, 2010, at 4:12 a.m.
The Maine Campus | The Maine Campus

The University of Maine System may be barred from providing telecommunications service to nonstate entities if a bill introduced recently to the Maine Legislature passes.

The bill, LD 1697 — as introduced Jan. 27 by Rep. Stacey Fitts, R-Pittsfield — would effectively make Fairpoint Communications the front-runner for contracts to expand Internet access in Maine that Fairpoint said has previously been unfairly awarded to the university system.

The University of Maine System was part of a public-private consortium that received a $25 million grant in December to fund high-speed Internet infrastructure in Maine. The grant, which U.S. Secretary of Commerce Gary Locke announced at UMaine, will pay for a 1,100-mile-long fiber-optic cable network in rural Maine.

Fairpoint, which purchased telecommunications infrastructure in Maine from Verizon, competed with the system for the funds.

The bill, as it is currently written, would bar instrumentalities, institutions and agencies of the state from providing “telecommunications service or information service to any person other than itself or its tenants.” The University of Maine System currently provides Internet service to many schools, libraries, hospitals and nonprofits.

Fitts said the bill wasn’t aimed at directly protecting Fairpoint.

“I don’t think Fairpoint’s unique in this. Fairpoint’s just one example of a telecommunications carrier,” Fitts said.

The system partnered in 2007 with Jackson Labs and Mid-Maine Communications to dramatically expand the fiber-optic network capabilities of the system campuses and the lab, which also benefited many nonprofits unaffiliated with the system.

In prepared testimony, Ralph Caruso, chief information officer of the University of Maine System, said the bill “would severely reduce the competitiveness of Maine’s research institutions for grants and would raise the University of Maine System’s annual costs by $2.5 million or more.”

Fitts said an amendment is being drafted to narrow the focus of the bill so it couldn’t be construed as banning municipalities from setting up wireless access points, for example.

The bill “simply says the university can serve the schools and libraries, and it can serve itself, but it needs to not be in a competitive arena against entities basically that can be served by others,” Fitts said.

As the bill currently stands, and even with the proposed amendment, no mention is made of nonstate entities already serviced by the system, though Fitts said the bill isn’t meant to apply retroactively.

“If it’s an existing agreement, it’s not my intent to try to reverse anything that’s existing,” Fitts said.

Fitts said he doesn’t approve of using taxpayer and tuition moneys to fund projects that aren’t part of the system’s educational or research mission.

“I don’t think it was intended that they recoup what they invest. Those investment are to serve the university and the purpose the university has,” Fitts said.

Rep. Emily Cain, D-Orono, likened providing Internet service to nonuniversity entities to allowing community members to use UMaine’s Student Recreation and Fitness Center.

“Taxpayer money and student money have gone to fund these things,” Cain said.  “Shouldn’t the taxpayers of Maine have access to them?”

Fitts said allowing the system to compete for telecommunications contracts interferes with the free market.

“The university system is subsidized and paid for by the state. I’m more of a free market guy,” Fitts said.

“Competition has a connotation of being fair and even,” Fitts said. “And when the playing field is not level and that somebody is subsidized, and then they place a bid or offer service from a subsidized division, that’s not fair competition. That doesn’t help the market at all.”

“It’s not like we live in the middle of New York City where there’s tons and competition and tons of high-speed Internet and tons of access,” Cain said. “The university can be and should be a key player to places in Maine where private industry has not yet done it.”

This entry was posted on Thursday, February 4th, 2010, 4:12 am. You can follow any responses to this article through the RSS feed.

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  • tavi

    Great idea, Mr. Fitts. Let’s give a major corporation which has spectacularly let down many consumers more elbow-room in the marketplace. UMS, while subsidized, is not a for-profit entity; its mission is to serve the people of Maine. Fairpoint, on the other hand, has no intrinsic loyalty to Maine citizens. Cain has an excellent point. If the University’s participation in the market could be demonstrated to limit other, smaller entities in competition with Fairpoint, perhaps action should be taken. But if the reality is that LD1697 will just make an out-of-state behemoth bigger, it’s a BAD plan.

  • Mark from Manchester

    If the legislature (and the people they represent) want to change the university system charter to include telecommunications, road building etc outside off campus to be run as a non-profit corp, then great. Otherwise leave my tax dollar out of this and let others take care of this. I thought that the feds were going to provide stimulus money for rural internet. Was Fairpoint barred from applying or deemed not worthy? Gov’t needs to stop picking winners and losers.