FairPoint Communications' (Nasdaq: FRP) new three-pronged broadband expansion plan for Maine has gotten the thumbs up from the state's Public Advocate and the Public Utilities Commission (PUC).
The new plan will focus on extending broadband to more residential and business customers.
By next April, the telco has agreed to expand broadband service to 87 percent of its residential telephone customers, while investing an undisclosed amount on both residential and business customers. It will also spend an undisclosed amount of its own funds and federal funds to provide broadband to residents who live in unserved and underserved areas of the state.
"We think what we've negotiated will provide service to places that don't have any broadband service right now, or places where FairPoint is the only broadband service, and it's not as fast as it needs to be," Tim Schneider, Maine's Public Advocate told the Maine Public Broadcasting Network.
Last July, the telco got a $2 million grant from the Federal Communications Commission's Connect America Fund (CAF), which helped it fund broadband expansions in South China, Maine, for example.
In Maine, FairPoint said it has spent over $200 million to upgrade the state's broadband infrastructure and plans to upgrade 30 new locations to increase the speeds it can deliver to customers.
However, the challenge that FairPoint faces is building a business case to extend broadband services into more rural areas where there's lower density of customers.
"We've expanded broadband to the point where those who do not have it now--it's very costly," said Jeff Nevins, a spokesman for FairPoint. "So, we're at that point where, in terms of trying to develop a business case to expand beyond the current footprint, is very difficult just because, purely, the cost."
Broadband has helped FairPoint stem some of the bleeding from declining voice service revenues.
The telco's second quarter data and Internet service revenues grew 11 percent year-over-year and 5 percent sequentially in Q2 2013 to $40 million.
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