Wednesday, April 7, 2010

FairPoint Seeks New Broadband Stimulus Funds to Overbuild Maine Broadband Stimulus Grantee 04/07/2010 San Francisco FairPoint Communications, Inc. (OTC: FRCMQ.PK) has applied for federal broadband stimulus funds to overbuild the network facilities of the Maine Fiber Company, the operator of the new network being funded with broadband stimulus monies which Fairpoint has accused of seeking to improperly overbuild its (FairPoint’s) network facilities.

FairPoint is the Charlotte, NC based rural local exchange carrier (RLEC) which acquired the northern New England assets of Verizon Communications Inc. (NYSE: VZ) for $2.7 billion, effective March 31, 2008.  The firm filed for Chapter 11 federal bankruptcy protection in October 2009 as it became unable to make debt payments taken on as a result of the Verizon purchase, and following a string of operational and regulatory disasters not seen in the modern history of American telecom sector.

While there was considerable public discussion and controversy ensuing from FairPoint’s applications for a total of $31.001 million in broadband stimulus monies, in 8 separate grants, in funding Round 1 of the federal program, this is the first public report of the carrier’s federal grant filing in the current Round 2 of the program.

FairPoint has been harsh in its ongoing criticism of the the Three Ring Binder large middle mile optical fiber project managed by the Maine Fiber Company (MFC), a project awarded on December 17 to Biddeford Internet Corp.  Recent local and national news reports have stated that Fairpoint is using its control of tens of thousands of Maine's utility poles to slow the construction of the federally subsidised project.  

Fairpoint's Round II Maine Middle Mile Project Detailed
Fairpoint has applied for $20.595 million in 1 single grant application to the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce.

In the published description of the proposed project the company states: "This BTOP middle mile project will expand high speed broadband to 626 critical community facilities throughout Maine. A last mile component will extend high speed broadband to remote, underserved areas of Washington and Hancock Counties in northeast Maine. The FairPoint Communications, Inc. (Applicant) and Northern New England Telephone Operations LLC (Co-Applicant)".  The latter entity is a Fairpoint affiliate created to manage the transition of former Verizon assets.

From the further description of the project, outlined in the firm's Executive Summary submitted with its Round 2 grant application, it appears that the company is proposing to both build last mile network facilities throughout its Maine exchanges targeted for extension of its broadband xDSL service, and to extend high capacity facilities to community anchor institutions.  This latter category of proposed federally subsidized network facilities appears to be intended to overbuild portions of the regional fiber rings of MFC.

No Public Statement by FairPoint To Date
The application is 1 of 867 applications released last Friday, April 2, into a public facing federal database which is part of the online portal operated by the 2 agencies managing the total $7.2 billion broadband stimulus program. To date, the carrier has issued no statement about its Round II application.

NTIA and its sister agency managing the program, the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA) both rejected all 8 of the carrier’s applications in funding Round I, for reasons that neither agency has publicly disclosed.  Fairpoint had applied jointly to both agencies for 6 applications, and solely to NTIA for 2.
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