Maine State Library Maine State Documents ConnectME Authority Documents 1-15-2009 Annual Report on the Activities of the ConnectME Authority, 2009 Follow this and additional works at:http://statedocs.maine.gov/connect_docs Recommended Citation "Annual Report on the Activities of the ConnectME Authority, 2009" (2009).ConnectME Authority Documents.Paper 4. http://statedocs.maine.gov/connect_docs/4 This Document is brought to you for free and open access by Maine State Documents. It has been accepted for inclusion in ConnectME Authority Documents by an authorized administrator of Maine State Documents. For more information, please [email protected]. Annual Report on the Activities of the ConnectME Authority Report to the Maine State Legislature Joint Standing Committee on Utilities and Energy January 15, 2009 ConnectME Authority Annual Report January 15, 2009 TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................3 INTRODUCTION.............................................................................................................5 I. BACKGROUND..........................................................................................................5 A. The Importance of Broadband.......................................................................5 B. The Connect ME Initiative..............................................................................7 II. SUMMARY OF AUTHORITY AND BROADBAND ACTIVITIES IN 2008 ...............8 A. Budget .............................................................................................................8 B. Investments.....................................................................................................8 C. Grant Activities...............................................................................................9 III. STATE AND FEDERAL BROADBAND ACTIVITIES AND INITIATIVES..........12 A. Other States’ Programs................................................................................12 B. Federal Initiatives..........................................................................................13 IV. AUTHORITY ACTIVITIES FOR 2009 ...............................................................14 A. Coordinate Broadband Initiatives................................................................15 B. Implementing the 2008 Second Round Grants...........................................15 C. 2009 Grant Rounds.......................................................................................16 D. Increase Access............................................................................................16 V. CONCLUSION.........................................................................................................18 Attachments:...............................................................................................................18 Attachment A – ConnectME Authority and Advisory Council Members.....................18 Attachment B – ConnectME Fund Reports................................................................18 Attachment C – ConnectME Grant Awards: 2007 and 2008.....................................18 Attachment D – Maps of Grant Awards: 2007 and 2008...........................................18 Attachment E – PCs for Maine Computer Access and Literacy Project.....................18 Attachment F – What Is Broadband?.........................................................................18 Attachment G – Glossary...........................................................................................18 Submitted by the ConnectME Authority Page 2 ConnectME Authority Annual Report January 15, 2009 Annual Report on the Activities of the ConnectME Authority Report to the Joint Standing Committee on Utilities and Energy January 15, 2009 EXECUTIVE SUMMARY In recognition of the critical importance of technology for education, health and business success in Maine, the ConnectME Authority (Authority) was created in 2006. The goals of the Authority are to expand broadband access and “take rates” throughout the State.1 When the Authority was first established, only 86% of the State had access to high-speed Internet service with a “take rate” of approximately 39%. Increasing the access and take rates is critical to Maine’s education and economic prosperity given projections that for every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year.2 The Authority was charged with identifying areas of the State that did not have broadband access; to select projects for broadband expansion; administer the projects; and to provide funding, resources, and incentives for the projects. In the two years since the Authority was established, broadband access or availability has risen to nearly 91% and the take rate has increased to 49% percent. The goal of the Authority should be to ensure universal availability of broadband service and to increase the take rate to equal or greater than the national average by 2010. Much more work needs to be done meet these goals. As important, continued work needs to be done to bring all levels of government and agencies together to work collaboratively to get the best results for Maine’s future. This report summarizes the Authority’s activities for 2008; describes other state and federal initiatives; and outlines the Authority’s plans for 2009. Highlights from the report include: In 2008, the Authority awarded five grants for $1.44 million (representing a total project value of over $5.5 million). Four of the grants will provide high speed internet service to over forty-five communities representing nearly 9,000 households and businesses, adding another 1.7% in potential household broadband availability. The fifth grant provides a match requirement for a project to build a fiber optic cable network that will connect and provide high speed telehealth services for three partnering medical centers and seven health care facilities in six towns across Franklin, Oxford, and Androscoggin counties. 1 PL 2005, c. 665, and PL 2008, c. 698. 2 “The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data,” July 2007, The Brookings Institution. Submitted by the ConnectME Authority Page 3 ConnectME Authority Annual Report January 15, 2009 The following table summarizes the grant activities: Grant # of Grant Range Total Total Project New Increased Year Grants Grants Amount Households Availability 2007 6 $38K - $370K $738,724 $1.53 million 13,800 2.7% 2008 5 $45K - $533K $1.44 mil $5.5 million 9,000 1.7% The Authority’s Executive Director also participated in two additional projects. One was a legislatively established group3 that was formed to study the potential use of broadband capacity freed up when the University of Maine System converts its instructional television network from analog to digital.4 The second project was a legislative mandate to facilitate a stakeholder process to develop a model cable franchise agreement for municipalities and cable companies that choose to use it.5 In 2009, the Authority will:  Redefine the Authority’s goals, minimum performance criteria for broadband service, and areas eligible for Authority support, with guidance from the Legislature;  Serve as a conduit for Maine’s broadband initiatives at all levels of government and across agencies;  Conduct a comprehensive broadband mapping and inventory project to define served and unserved areas of the State;  Monitor and assist the five (2008) second round grantees to ensure that they have the resources necessary and meet requirements; and  Conduct a (2009) third grant round by spring and a fourth round later in the year. In addition, the Executive Director will:  Continue to work collaboratively with other Maine agencies to submit “stimulus package” proposals as requested by the President-Elect’s transition 3 The group resulted from a request by the Joint Standing Committee on Utilities and Energy regarding LD 2292, Resolve, To Establish a Stakeholder Group to Study the Sale or Lease of the State’s Excess Broadband Capacity. 4 A separate report on this activity will be submitted to the Joint Standing Committee on Utilities and Energy on January 15, 2009. 5 PL 2007, c. 548. A separate report and the model franchise agreement or template will be submitted to the Joint Standing Committee on Utilities and Energy by March 1, 2009 Submitted by the ConnectME Authority Page 4 ConnectME Authority Annual Report January 15, 2009 team and Congressional officials that enhance Maine’s broadband infrastructure and technology including education and rural health initiatives;  Help efforts by the Maine School and Library Network to connect every K-12 public school and public library to the internet with high-speed fiber-based access;  Work with the rural health care pilot program to enhance telehealth broadband connections; and  Assist the Maine Office of Information Technology (OIT) and the Maine Department of Transportation (MDOT) in developing policies and procedures for use of state facilities such as radio towers, buildings, and rights-of-way by private service providers for expanding broadband and cellular service. INTRODUCTION The ConnectME Authority 2008 annual report is divided into five sections: I. Background; II. Summary of Authority and Broadband Activities in 2008; III. State and Federal Broadband Activities and Initiatives; IV. Authority Activities for 2009; and V. Conclusion and seven attachments. I. BACKGROUND A. The Importance of Broadband A number of national organizations, governmental agencies, and public-interest groups have provided studies documenting the importance of broadband or high-speed internet access for rural states (Such as the FCC, Brookings Institution, Pew Internet & American Life Project, The Benton Foundation, and Connected Nation). The overwhelming consensus is that access to broadband services is a significant economic development tool for small businesses and home-based businesses, and enables telecommuting, rural education, and telemedicine. Speed defines what is possible. It determines the amount of information that can be transmitted in a given time, the quality of the transmission, and the timeliness of the transmission. Speed determines the type of transmission possible: two-way, voice, data, audio, and video. Benefits from truly high speed Internet networks include:  Economic Growth & Quality Jobs. New, high speed Internet applications create jobs and opportunities for innovation, growth, and e-commerce. Technology allows businesses based in rural and remote communities to compete in the global economy.  Telemedicine and Independent Living. High speed Internet allows instantaneous, interactive contact between health professionals and Submitted by the ConnectME Authority Page 5 ConnectME Authority Annual Report January 15, 2009 patients permitting remote monitoring, efficient chronic disease management, and more effective responses to emergencies. High speed Internet can help senior citizens and people with disabilities live independently, improve their quality of life and reduce costs of care.  Education & Integrated Learning. Two-way high speed communication and videoconferencing allows students and teachers to minimize the obstacles of distance and maximize the potential of simultaneous voice, data, and video sharing.  E-Government, Civic Participation and Public Safety. Advanced high speed networks will allow citizens to increase participation in civic life, beyond simply downloading forms or researching programs. Government meetings could be opened to many more citizens using two-way video technology. High speed networks enable police, fire, and emergency personnel to coordinate and respond more quickly to crises.6 A study by the Brookings Institution strongly emphasizes the benefits of broadband services.7 The report states: (n)onfarm private employment and employment in several industries is positively associated with broadband use. … For every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year. The finding of the strong link between broadband use and state-level employment has important policy implications, both on the demand-side and the supply- side. In particular, these results suggest that all levels of government should follow policies that encourage broadband competition, which will lead to lower prices and hence greater use.8 The necessity of high speed internet service has also been the focus of several recent Maine studies. A report from the Northern Forest Sustainable Economy Initiative Steering Committee (members from Maine, New Hampshire, Vermont, and New York) documents their recommendations “for building a resilient economy and creating good jobs in the region.”9 The report states: “In practical terms, we want cell phones and internet service to work as well in the Northern Forest as they do in Boston or New York City.”10 Their first recommendation, which may be an indication of priority, is: 6 “Speed Matters: High Speed Internet for All,” October 16, 2006, http://www.speedmatters.org/ 7 “The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data,” July 2007, The Brookings Institution. 8 Ibid, page 2. 9 “A Strategy for Regional Economic Resurgence,” Recommendations of the Northern Forest Sustainable Economy Initiative, June 2008. 10 Ibid. Submitted by the ConnectME Authority Page 6 ConnectME Authority Annual Report January 15, 2009 “Telecommunications – Deliver reliable, affordable and cutting-edge high-speed telecommunications to all Northern Forest communities through increased public-private investment.”11 Another report, “Measures of Growth in Focus,” finds: “The internet and telecommunication technology in general facilitates economic activity by allowing people to access information easily and communicate with others. Investments in all forms of connectivity infrastructure are critical as Maine seeks to integrate and compete in the global economy.”12 B. The Connect ME Initiative As early as 1995, the Maine Legislature recognized the value of broadband when it stated: The Legislature further declares and finds that computer-based information services and information networks are important economic and educational resources that should be available to all Maine citizens at affordable rates. It is the policy of the State that affordable access to those information services that require a computer and rely on the use of the telecommunications network should be made available in all communities of the State without regard to geographic location.13 In his 2005 State of the State address, Governor John E. Baldacci stated, “Tonight I am announcing ‘Connect Maine’ a broad and aggressive telecommunications strategy for this State. Connect Maine will give nearly every Mainer the opportunity to plug into the global economy from their community. It will ensure that 90% of Maine communities have broadband access by 2010… .” In 2006, the Legislature created the ConnectME Authority to identify unserved areas of the State; develop proposals for broadband expansion projects, demonstration projects and other initiatives; administer the process for selecting specific broadband projects; and provide funding, resources, and incentives.14 The Authority consists of a board of five members, an Executive Director, Staff from the Public Utilities Commission 11 Ibid. 12 Thirteenth Report of the Maine Economic Growth Council, (2007). 13 Title 35-A M.R.S.A. §7101(4). Also, Former Governor King stated in his 1999 State of the State address, “In the age of e-commerce, bandwidth is the essential commodity – just as the roads and railroads defined economic opportunity a century ago, these wires – or the lack of them – will spell the economic difference between businesses, towns, and states in the new century.” 14 PL 2005, c. 665. Submitted by the ConnectME Authority Page 7 ConnectME Authority Annual Report January 15, 2009 and the Governor’s Office, and an Advisory Council.15 (See attachment A for the Authority and Advisory Council members) II. SUMMARY OF AUTHORITY AND BROADBAND ACTIVITIES IN 2008 The ConnectME Authority statute requires the Authority to report on four components: A) Budget; B) Activities; C) Investments; and D) Market Conditions. This Section covers A, B, and C. Market Conditions are reported on in Section IV(D) and (E). A. Budget The funding mechanism for the Authority is a 0.25% (one quarter of one percent) surcharge on all communications, video, and internet service bills for retail in-state service.16 It is expected to generate between $1,000,000 and $1.4 million per year. The fund initially received $500,000 in “seed money” from the Maine Universal Service Fund,17 which was repaid in September 2008. Verizon-Maine, as a condition of the stipulation that was approved by the Public Utilities Commission in approving Verizon’s merger with Fairpoint, contributed $2.5 million to the ConnectME Fund.18 It was received on May 8, 2008. The ConnectME statute previously allowed reimbursement up to $500,000 annually of Maine sales and use taxes to purchase machinery and equipment primarily used to develop advanced communications infrastructure.19 The reimbursement program was allowed to sunset effective January 31, 2009.20 The grants awarded in 2007 and 2008, total over $2.2 million. The ConnectME fund balance on December 31, 2008, is $3,295,280. (See Attachment B for fund report) B. Investments 15 The Maine Public Utilities Commission provided a Utilities Analyst from its telecommunications section as staff to the Authority. 16 Also included are retail revenues received or collected from mobile communications services (i.e. cellular telephone) that voluntarily agree to be assessed by the Authority. 17 PL 2005, c 665, Section 6, “Temporary transfer of funds authorized.” 18 On December 21, 2007, in MPUC Docket No. 2007-67, known as the Verizon-Fairpoint merger case, an amended stipulation was filed and accepted that contained a provision stating (on page 10): “…within 30 days of closing Verizon will make a one-time cash contribution in the amount of $2.5 million to the ConnectME Authority in furtherance of the Authority’s statutory objectives.” Approved by MPUC ORDER, Docket No. 2007-67, issued February 1, 2008. 19 36 M.R.S.A., §2018. 20 PL 2008, c. 698. Submitted by the ConnectME Authority Page 8 ConnectME Authority Annual Report January 15, 2009 The ConnectME Fund is administered by an independent fiscal agent who manages the assessment process, invests the unused funds, and makes payments as directed by the Authority. The fund administrator operates under contract at the direction of the Executive Director.21 Interest generated by the fund is added to the fund balance. (See Attachment B for fund report) C. Grant Activities 1. Awarding Process and Grants Awarded The Maine Legislature established the Authority “to stimulate investment in advanced communications technology infrastructure in unserved or underserved areas.”22 The Authority believes that the goal to expand broadband access in the most rural, unserved areas that have little prospect of broadband service from a traditional or existing provider is a priority. The Authority accomplishes that goal primarily by awarding broadband expansion grants for projects that serve unserved areas. Grant applications are reviewed by three non-industry members of the ConnectME Authority Advisory Council, the Executive Director, and one ConnectME staff member. The applications are scored on the four criteria specified in the statute and rule: cost-benefit; community support; project scope; and project value. The public- private partnership concept is considered in the review, yet “getting the most for the money” is also a high priority because of the limited funds available. For the first grant round (2007) the Authority awarded six grants totaling over $738,000 for total project amounts of over $1.53 million.23 The grants ranged from $38,000 to nearly $370,000. The grants serve over fifty communities, with the potential of providing broadband service to nearly 14,000 households and businesses. At this time, four grant projects have been completed and two were granted extensions due to circumstances beyond the grantee’s control. When the grants are completed, the grants will represent a potential increase in broadband availability of approximately 2.7%.24 (Final reports from the four completed projects are in Attachment C. Maps of the projects are shown in Attachment D) For the second round (2008) the Authority awarded five grants for $1.44 million for total project amounts of over $5.5 million. Four of the projects will expand access to 21 The quarterly assessments are paid to an independent fund administrator the month after the end of each quarter. Rolka Loube Saltzer Associates (RLSA) is the fund administrator for the ConnectME Fund as well as the Maine Universal Service Fund and the Maine Telecommunications Education Access Fund. 22 35-A, M.R.S.A. §9203(1). 23 The small grant to fund a project serving the Town of Edgecomb was cancelled. 24 2000 Census (Maine State Planning Office), total occupied housing units = 518,200, population = 1.275 million, 2.39 = average household size. Submitted by the ConnectME Authority Page 9