Wednesday, December 11, 2013
The Maine Fiber Co. announced Friday the completion of its 1,100-mile fiber-optic telecommunications network.
It is known as the Three Ring Binder because of the three loops of cable encircling Maine from southern York County to Washington and Aroostook counties.
More than 10,000 Maine businesses employing more than 270,000 people are now less than a mile away from the fastest, highest-capacity Internet speeds available, according to an analysis of the locations of existing telecommunications users conducted for Maine Fiber.
All this ahead of schedule and under budget. Quite an accomplishment.
But apostles of the "build it and they will come" theory liken this infrastructure expansion to that of the railroads of the mid-19th century and the electric networks of the early 20th century -- it will spawn an economic revolution.
But in early 21st century Maine, there is one big difference. In the Midwest of the mid 19th century, farmers couldn't wait to get their products to the railheads. And millions of immigrants pouring into eastern ports couldn't wait to use the same networks to get out to the prairies and mines and get their own piece of manifest destiny. In rural America of the 1920s and '30s, millions of housewives couldn't wait to replace the backbreaking work of hand-washing clothes with an electric machine, or trade the lonely nights for a radio show or a night at the movies. In both these cases, enormous demand already existed for the newly installed networks.
In Maine today, the demand for fiber-optic Internet speeds just doesn't exist. Even though 97 percent of American consumers look online for goods and services, 59 percent of Maine's small businesses don't have a website. And 39 percent say they see no need for one. And for those who are connected, 30 percent say that they don't move up to higher speeds because it is "too expensive." And when Maine householders without a computer in their homes were asked why, 45 percent answered, "I'm not interested," and another 21 percent said, "It's too expensive."
Therein lies the dilemma for the "build it and they will come" crowd. The central question facing Internet service providers -- at least the officials charged with allocating capital investment spending -- is, "How many users paying what price must I sign up to justify the cost of extending service to their area?"
While Maine Internet providers may argue about specific numbers in specific areas, all agree that we need to have some minimum assurance of demand before we will supply the connection.
And therein lies the dilemma for public policy around this century's digital infrastructure debate.
Should we subsidize providers (through taxes or higher prices for urban consumers) to push them into more rural areas based on the belief that non-users will sign up and good things will happen?
Or should we focus on the inadequate demand problem directly by increasing education and training so households and businesses understand the opportunities in the digital world? Instead of supply-side subsidies, should we support demand-side demonstration projects?
These are the questions Maine Fiber's accomplishment puts squarely before us today.
Charles Lawton is chief economist for Planning Decisions Inc. He can be reached at: