Spectrum’s big investment in Maine underscores the power of private markets
Spectrum, the internet provider serving 466,000 customers across 295 Maine communities, also known as Charter Communications, recently announced a massive investment in broadband infrastructure across rural Maine.
Thursday morning, representatives from Spectrum, the Department of Economic and Community Development (DECD), the Maine Connectivity Authority (MCA), and the Mid-Maine Chamber of Commerce met in the Maine State House Welcome Center to make the announcement.
Spectrum’s investment is made up of three parts, none of which will use state or federal funds to accomplish. First, the company will be spending $70 million to fortify their existing network, bringing gigabit-symmetrical service to more homes. Gigabit service means speeds of at least 1,000 megabits per second (Mbps); symmetrical service means that download and upload speeds will be equivalent to one another.
Second, it announced that it will be investing $12 million to deliver internet service to 3,500 currently unserved customers in nine rural communities across Somerset and Oxford counties. Last year alone, Spectrum’s investments brought 10,000 previously-unserved homes and businesses online.
Third, Spectrum announced that it will be acquiring Bee Line Cable, a local TV and cable company which serves customers in the areas around Skowhegan, Farmington, and Millinocket.
Notably, Spectrum’s investment will not use public funds. Heather Johnson, Commissioner of DECD, and Andrew Butcher, President of MCA, spoke in support of the plan because it advances Gov. Mills’ goal of universal broadband availability in Maine by the end of next year. MCA is a quasi-independent state agency that administers grants for broadband infrastructure build-outs, whose resources include about $150 million from the federal American Rescue Plan Act (ARPA).
Interestingly, at the press conference, Butcher said that “the state has enabled” this kind of investment, even though Spectrum is doing it without public money and outside of MCA’s grantmaking process. It is difficult to see how a state agency can claim credit for projects outside of its purview.
Over the last several years, MCA and its partners at DECD have shifted the goalposts for determining who is “served” and who is “unserved” by adequate internet service. Today, MCA regards customers with access to service with speeds less than 100mbps download and 20mbps upload (100/20) as “unserved,” versus the FCC standard of 25/3. This massively distorts the needs in the market, shifting policymaker’s perspective to expand access (infrastructure spending) instead of focusing on affordability.
Mills’ connectivity goal is an ambitious one, for sure. In February 2021, Peggy Schaeffer, former head of ConnectMaine, estimated that getting to 95% “served” would cost $600 million. While localities are encouraged to use public money to explore expensive, government-owned network infrastructure projects, state officials and private-sector stakeholders understand that affordability—not access—is the biggest hurdle to getting Mainers who want internet connected.
A Consumer Reports survey published in mid-2021 found that, among the 23% of Americans who are not broadband customers, nearly one-third cite cost as the reason, while a quarter say availability is their issue. Among those with broadband, 24% say it’s difficult to afford their monthly bill and 45% report dissatisfaction with the value of their service. Only 3% of Americans do not have access to the internet at all while 15% access the internet only via their smartphone’s mobile data network, and the rest use a dial-up or DSL connection.
To the affordability question, Johnson and Butcher pointed to the Federal Communications Commission’s (FCC) Affordable Connectivity Program (ACP) which offers a $30 monthly stipend for households which earn less than double the federal poverty limit. They noted that little more than one-in-four Mainers who are eligible for the ACP use it.
With this announcement, Spectrum will add to the $172 billion in network infrastructure private telecom companies have invested in the last decade across the nation. This has led to a 98% reduction in the price-per-megabit of data, from $28.13 in 2000, to just $0.64 in 2020, showing what private capital investment and a competitive marketplace can accomplish for internet consumers; much more efficiently than what government-directed broadband efforts can tout.