GWI sues Maine Fiber, alleges misuse of federal funds intended for statewide broadband expansion
There are 2 comments on the Bangor Daily News story from Jan 13, 2014, titled GWI sues Maine Fiber, alleges misuse of federal funds intended for statewide broadband expansion. In it, Bangor Daily News reports that:
Great Works Internet, commonly referred to as GWI, filed a lawsuit on Monday, Jan. 13, against Maine Fiber Co.
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#1 Jan 14, 2014
Maine Fiber network was doomed to fail from the start. The fact that fiber is available in rural areas of Northern and Eastern Maine does not mean that it is economically feasible for an ISP to serve those areas using this fiber. It is still extremely expensive for an ISP to serve these rural areas. Consider the costs of utilizing this network:
Fiber costs: Most ISPs will require 2 fibers around an entire ring. So for a 1100 mile network, an ISP would buy 2200 miles of fiber. At a rate of $14 per fiber mile, this equates to over $30,800 per month in fiber costs.
Electronics: Fiber networks need to have very expensive electronics placed every 60 miles on the network. Conservatively speaking, an ISP may need to place electronics at 15 different locations on this network. At a rate of $75,000 per site this would equal a total investment of $1,125,000 in electronics.
These electronics also requier fully equipped collocation facilities - with fire suppression, backup generator and 24x7 access. Typical monthly rent at such a facility costs about $1300 per month. Assuming again that 15 such sites are required, the monthly cost for collocation would be $19,500.
At this point, an ISP could have invested $1,125,000 in electronics and incur a payment of $50,300 per month for fiber and collocation. All of this without the ability to serve a single customer. Why not? Because this is a middle mile network. No last mile fiber is included. Assume a cost of $2500 for each fiber installation at a customer premise. This covers fiber splicing, the fiber installation and electronics. Yes,$2500 for each customer. A $60 per month Internet customer would pay this ISP for over 40 months just to cover the cost of installation at their home/business. Even after 40 months, the ISP has not made one nickel towards their $1,125,000 investment and $50,300 monthly costs.
Add all of these costs together and the entire model becomes prohibitive. No ISP can justify these costs to sell $60 Internet service in extremely rural areas where there are very few potential customers. Add to this the uncertainty of the Maine economy and the fact that most customers would switch to a new ISP in a heartbeat if they could save a buck.
Bottom line is that this model was never going to work. Some individuals and companies either had ulterior motives or had no clue of the costs associated with providing services on a fiber optic network.
It is no wonder that providing service to carriers in Boston and Canada has become the primary focus of this network.
#2 Feb 1, 2014
that is awful
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