MANCHESTER — U.S. Sen. Kelly Ayotte, R-N.H., took advantage of a visit to FairPoint Communication's central office in Manchester on Tuesday to point out that New Hampshire only gets 37 cents back for every dollar Granite State residents pay into a national program for broadband expansion.
She announced plans to introduce legislation to change the formula used to distribute money from the FCC's Connect America Fund.
"People in New Hampshire should be getting a better return," she said to a group of FairPoint executives and managers. "The current payout is not enough given the needs we have in rural areas of the state. For the North Country, this is an incredibly important issue."
The senator's visit to FairPoint's five-story network operations center on Concord Street came the same day the company announced plans to expand and upgrade broadband Internet service in 19 towns across New Hampshire.
FairPoint will leverage $848,000 from the Connect America Fund and invest more than $2 million of its own money to upgrade or install new service in Albany, Conway, Dalton, Fitzwilliam, Franklin, Greenfield, Hinsdale, Landaff, Lyme, Milan, Newbury, Pittsburg, Rindge, Spofford, Stewartstown, Troy, Tuftonboro, Walpole and Westmoreland.
The fund was established in 2011 to accelerate broadband build-out to the 18 million Americans living in rural areas who currently have no access to robust Internet service, and is financed through a 15.5-percent surcharge that appears as "universal service access charge" on telephone bills.
"I think that New Hampshire gets treated unfairly, in that we are a rural state, getting much less than we contribute," Ayotte said.
On Aug. 22, FairPoint announced it was accepting $3.3 million from the Connect America Fund to extend broadband services. More than $1.8 million was allocated to Maine and New Hampshire operations, with the remaining funds designated for FairPoint operations in the East, Midwest and South.
"Broadband access opens doors to the world for the residents and businesses in New Hampshire and is fundamental to the state's future economic growth," said Pat McHugh, FairPoint's New Hampshire state president in welcoming Ayotte to the downtown headquarters.
By the end of the year, the company expects to offer high-speed Internet in 95 percent of the FairPoint service areas in New Hampshire, which encompasses most of the state, he said. The remaining 5 percent is mostly in Coos, Grafton and Cheshire counties, and will be costly to connect.
"As you build to underserved areas, it's very expensive, given the terrain, low population density and return on investment," McHugh said.
The broadband expansion announced Tuesday will bring higher speeds to approximately 7,000 New Hampshire locations, with more than 1,470 qualifying for CAF funding. The project build-out will take three years with about a third of the communities coming online each year.
The Connect America Fund is part of the Universal Service Fund established in 1997 by the FCC to help meet the goals of the Telecommunications Act of 1996, one of which was to advance universal access to telecommunications services.
New Hampshire ranks 46 out of 50 states in the ratio of money collected for the fund versus money returned to the state for broadband expansion. The most recent data from 2011 released by Ayotte's office showed that New Hampshire was a net donor of $23.7 million to the fund, having contributed $37.9 million and received $14.2 million in return.
A key to job creation
"If you were to look at the other states that also fare poorly, none of them have the rural makeup that New Hampshire has," Ayotte said.
Only New Jersey, Massachusetts, Connecticut, Delaware and the District of Columbia fared worse. Maryland, Rhode Island, Florida and Nevada round out the bottom 10.
Alaska fared best, reaping $13.94 for every one dollar contributed. North Dakota, South Dakota, Mississippi and Montana were among the other top states.
Ayotte plans to introduce "The USF Equitable Distribution Act of 2013," which would establish a minimum rate of return for any rural state.
The U.S. Census Bureau defines a rural state as one with population density of less than 200 people per square mile. New Hampshire has a population density of 147 people per square mile. Any rural state would be guaranteed a return of at least 75 cents on each dollar it contributes.
"This would more than double the amount of money New Hampshire currently receives from the fund and will go a long way towards reaching unserved and underserved areas in places such as Grafton and Coos counties," said Ayotte. "Without broadband and access to key communications services, it is tough for businesses to thrive and jobs to be created."