FairPoint extends its Vermont broadband reach, but is it enough to satisfy customers?

Samantha Bookman, FierceTelecom

With broadband expansion, sometimes it's a shell game, particularly between large incumbents and small towns or rural areas.

Witness the recent brouhaha in North Carolina, where legislation, partly sponsored by MSO Time Warner Cable (NYSE: TWC) and ILECs CenturyLink (NYSE: CTL) and  AT&T (NYSE: T), recently passed that makes it extremely difficult to set up a municipal broadband system in that state. Proponents of muni broadband argued that such legislation would stifle competition, innovation, and speed; while opponents countered that muni broadband was already anticompetitive and burdened taxpayers with the cost of installing expensive fiber.

Incumbent service providers, accused of rolling out less-than-ideal speeds to rural areas, have countered that getting faster speeds on better networks is a costly investment that they will see little or no return on. It's a tug-of-war between advocates who want to see truly high-speed networks nationwide.

Which is why FairPoint's (Nasdaq: FRP) announcement last week that it has made broadband available to 90 percent of its phone customers in Vermont, just a few months after emerging from bankruptcy, was met with some suspicion by a few people. Is it truly broadband, or just imitation vanilla in the form of DSL? some asked. Does broadband really reach 90 percent of the state?

To answer those questions, I reached out directly to FairPoint's Vermont president, Mike Smith. He was quick to point out that the carrier is providing 3 to 15 Mbps speeds in all the areas reached. "Our core network is fiber, and from that goes out to the remote terminals," he said. "From the remote terminals we use the copper that's in place to deliver the broadband. Using the current technology we're able to deliver greater speeds (over copper)."

FairPoint is certainly providing access to broadband speeds around what the federal government deems appropriate for broadband in rural areas--approximately 4 Mbps. Hitting 90 percent availability in Vermont (and gaining in the rest of New England) is a notable goal, one that other rural regions can only hope to see.

Teresa Mastrangelo, Directing Analyst-Video at Infonetics Research, concurs. "In general, this meets or exceeds broadband availability in most markets, particularly rural markets," she told FierceTelecom. "Additionally, the speeds offered are typical speeds for a DSL network and can support most streaming video services."

But 3 to 15 Mbps is just a starting point, considering the potential bandwidth needs over the next decade. Now that FairPoint has reach the first of its goals in the region, will it continue to build on that established fiber network and keep increasing speeds to meet future demand?

Community broadband advocate Craig Settles doesn't believe that FairPoint will be able to do that. "What you have here is a financially struggling company playing in a state with limited competition in the local markets and offering decent speed over aging technology," he said. "The net result is, there is no competitive threat to force Fairpoint to upgrade to better service. That problem's compounded by the fact they don't have financial strength to improve infrastructure even if the company wanted to. So ultimately, the state's consumers will be screwed on price, and the state's businesses will be screwed because in the long run they won't have the kinds of communication speeds and quality of service they need to produce the type of economic impact that better infrastructure can facilitate."

Smith's take on the carrier's fiber future was, naturally, quite different. "I think you'll see more Ethernet over Fiber as we move forward. We have a commitment to build more (broadband); we just received a Vermont Telecommunications Authority grant to build out in the Jeffersonville area. ... We also have an agreement with the dept. to build, in 2012 and 2013, $7 million worth of expanded broadband."

Compared to some rural areas--rural Washington State, with neglected or nonexistent Verizon lines, comes to mind--Vermont is practically in the midst of a broadband boom. Additionally, state regulators in Vermont as well as Maine and New Hampshire are holding FairPoint to its promise to improve and add to the infrastructure it took over from Verizon (NYSE: VZ). It remains to be seen how things will actually go, but for now it appears that fiber infrastructure in New England will continue as planned.--Sam