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V O L . X X I I N O. V M A R C H 7 , 2 0 1 6 20 I T & C O M M U N I C AT I O N S F O C U S "It's not a 'done deal' in any way," Schneider says, declining to predict whether the compromise will pass muster with lawmakers and be enacted into law. Rethinking the rules For Reed, the deregulation of Maine's telecommunica- tions industry launched by the 125 th Legislature in 2011 has been all-too-similar to a 1993 movie starring Bill Murray. "It's 'Groundhog Day,'" he quips, but in his case the time loop involves the unresolved POLR question. "I said, 'OK, as a state we shouldn't forget them,'" Reed says, agreeing with the lawmakers' intent in 2011 and 2012 that Mainers living in remote areas should have reliable basic level telephone service at a reasonable cost. But the funding mechanism that was designed to help POLR providers recover the higher costs of serv- ing remote customers, the Maine Universal Service Fund, ended up being limited to small rural telephone companies. FairPoint has never received money from the fund because it was viewed as having a large enough customer base to cover any losses incurred in high-cost low-return service areas (rural Maine) with profi ts earned in low-cost high-return areas (i.e. urban centers). Reed says that from FairPoint's perspective that regulatory policy downplays the reality that it faces fi erce competition for those urban landline custom- ers, many of whom have opted to cut their landline cord and go solely with wireless cellphone service. Net result: FairPoint continued to be regulated as the largest POLR provider, with no compensation from the Maine Universal Service Fund, at the same time unregulated wireless and VoIP providers were eroding its landline phone customer base. "Regulation is a substitution for the lack of competi- tion," he says. " is agreement moves toward matching the state's regulations with the more than ample com- petition [in telecommunications] that exists today." In a Nov. 13, 2015 blog post on the Federal Communications Commission's website, Commissioner Michael O'Rielly gives credence to Reed's concerns. Citing a 2014 FCC report tracking consumer trends in the voice market between December 2010 and December 2013, O'Rielly notes the number of landline voice customers declined by 10% each year, while VoIP customers grew by 15% and mobile customers at 3% compound annual growth rates for the same period. "Over 45% of American homes have cut the cord and no longer have a landline telephone at home," he writes. "Additionally, more than one-half of all adults aged 18-44 and of children under 18 were liv- ing in wireless-only households." O'Rielly concludes: "Given these technologi- cal and marketplace changes, it is time to rethink rules that single out one class of voice providers for more burdensome regulations simply because they account for a larger share of a shrinking slice of the overall voice pie. at's like regulating typewriters in the modern age of computer keyboard, tablets and smartphones." Reed acknowledges the agreement reached with Public Advocate Timothy Schneider falls short of complete deregulation of Maine's POLR services, and ignores entirely the company's arguments that it should be allowed to tap Maine's Universal Service Fund to cover the higher costs of provid- ing POLR service in areas where there are limited options for aff ordable, reliable telephone service from other providers. What the agreement does accomplish, he says, is the removal of FairPoint's POLR requirement in 25 largely urban communities where there is robust competition already. If that small step proves FairPoint's arguments in favor of total deregulation, he says it should pave the way for lawmakers to eventually complete the job begun with the 125th Legislature fi ve years ago. " is gives us the ability to move the ball forward," he says. James McCarThy, Mainebiz senior writer, can be reached at JmccarThy @ mainebiz.biz and @ JamesMainebiz » C O N T I N U E D F RO M P R E V I O U S PA G E " Dirigo has been a critical partner in the growth of our online marketing capabilities. We'll never regret choosing Dirigo to guide us." – David Mehlhorn Vice President of Sales and Marketing Visit Us For A Free Consultation hello@dirigodev.com or 207.358.2990 learn more dirigodev.com/BIZ Wednesday, May 18 Holiday Inn by the Bay, Portland | 11AM-2PM Sponsorships Available Tickets and info: mainewomensfund.org Because when women and girls thrive, communities prosper. 207.774.5513 CAMDEN | FALMOUTH M ike Reed, FairPoint Communications' Maine state president, readily acknowledges the state's largest landline telephone company's future depends on how successfully it navigates the transi- tion to being a full-service Internet provider. "We're a broadband company, not a landline com- pany," he says at FairPoint's main offi ce in Portland. "That's a big difference." Problem is, he quickly adds, many people still think of FairPoint solely as a landline telephone company. Reed says the Charlotte, N.C.-based company (NASDAQ: FRP) has invested more than $700 mil- lion in next-generation communications technology in northern New England since April 2008, when it purchased Verizon Communications' landline and Internet operations for $2.3 billion. It maintains nearly 17,000 miles of fi ber lines in Maine, New Hampshire and Vermont, he says, and its invest- ment in broadband has boosted coverage from 68% of its customers at the time it purchased Verizon's northern New England operations to more than 90% today. FairPoint taps FCC funding to expand rural broadband Refl ecting the ongoing effort to expand its broadband capabilities in northern New England, Reed says FairPoint has accepted $13.3 million in annual support over six years for the second phase of the Federal Communication Commission's Connect America Fund for Maine. In accept- ing those funds last August, the company committed itself to expanding broadband Internet service, with service speeds of at least 10 megabits per second download and 1 Mbps upload, to 35,500 locations in Maine. Phase II of the Connect America Fund particularly tar- gets expansion of broadband services to areas that are most diffi cult to service. Under Phase I of the program, using its own capital and roughly $1 million of incre- mental federal support, FairPoint delivered upgraded broadband service to more than 30 municipalities in unserved and underserved areas of Maine. Qualifying locations eligible for the new service as part of a six-year buildout will be determined by the FCC. "The Connect America Fund support will bring Internet connectivity not just to Main Street, but also to rural parts of the state that are costly to serve and where market forces cannot support expansion," Reed says.

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