A state program to help stimulate the expansion of broadband Internet access into rural Maine is generating some controversy as communications firms that compete against some of the grant recipients are challenging the fairness of the program.

Three grants awarded this fall by the ConnectME Authority, a state entity that uses public funds to help finance the expansion of broadband Internet access in Maine, are being challenged by competing firms. Pioneer Wireless of Houlton, Premium Choice Broadband of Bangor, and cable giant Time Warner have indicated they are challenging the grants because they believe they should not have to compete against firms that receive public funds.

The authority, which in September awarded a total of more than $1.5 million to six proposed projects, allows competing firms to challenge the grants if 20 percent or more of a ConnectME-funded expansion is expected to overlap with a challenger’s existing broadband service area.

The ConnectME Authority board is scheduled to meet in Augusta at noon today to consider the challenges that are being made, according to authority spokesman Phil Lindley.

Officials in the areas that would be served by the broadband expansion projects are concerned that the challenges might end up hindering needed infrastructure development.

In Bar Harbor on Mount Desert Island, where RedZone Wireless is hoping to use $346,000 in public funds to expand its radio-based broadband Internet network, some officials feel that Time Warner’s opposition to the local proposal amounts to obstruction. Besides the MDI area, RedZone Wireless also has broadband networks in Knox County and in the Hermon area, including parts of Bangor.

Dana Reed, Bar Harbor’s town manager, said Monday that Time Warner won’t extend its service to any building in Bar Harbor that is more than 293 feet from the end of its existing cable line. Even though some local residents live in relatively well-developed neighborhoods, they cannot get broadband access from Time Warner for this reason, he said.

Many people need residential broadband access for their jobs, Reed said, including some Bar Harbor municipal department heads who cannot get the service at their homes. Because of the growth of the Internet, dial-up connections quickly are becoming obsolete, he added.

“Today, high-speed Internet is part of your life,” Reed said. “Dial-up is insufficient for many Web sites.”

As for Time Warner’s challenge to the RedZone grant, Reed indicated in a recent memo to the Town Council that he was “outraged” that the cable firm has the “audacity” to raise an objection.

“It seems a little self-serving,” Reed said Monday. “Time Warner is not making a good faith effort to serve some areas [of Bar Harbor] that should be served. They need to make an effort to do so or get out of the way and let someone else do it.”

Other grants that are being challenged include $560,000 in public money to help Axiom Technologies of Machias extend wireless service to 29 towns in Washington County and $284,000 for Cornerstone Communications to build a broadband Internet network in 17 towns in the Greenville area, most of which are in Piscataquis County.

Greenville Town Manager John Simko said last week that the town has worked previously with Cornerstone Communications to help bring broadband Internet to the area. Cornerstone’s previous efforts led Verizon to offer broadband Internet service in central Greenville about five years ago, he said, but the remaining outlying areas around Moosehead Lake still can’t get the service.

Simko said he understands the concept of keeping government subsidies out of the competitive marketplace, but that he is worried Greenville will continue to be underserved if Cornerstone’s grant is denied.

“It is frustrating, because we thought we were on the glide path to having high-speed Internet throughout the whole area,” Simko said.

He said the Cornerstone grant, which would be used mostly to offer digital subscriber lines, or DSL service, over the local telephone network, is being challenged by Premium Choice Broadband, which is proposing to build a wireless network in the area. If the Cornerstone grant is denied, people who live in areas where PCB’s proposed wireless network won’t reach will have to continue to cope with substandard dial-up connections, he said.

“I think it might stunt the growth of the Internet here,” the town manager said. “There will be pockets and areas that won’t be able to get [the PCB wireless service].”

The three firms that are mounting challenges indicated this week the state should not be giving money to their competitors.

Peter Dewitt of Time Warner said Monday that more than 50 percent of people who would be able to get broadband wireless service from the RedZone project on and near MDI can now get broadband Internet access through Time Warner.

In a prepared statement issued Wednesday, Timothy McAfee of Pioneer Broadband wrote that Axiom’s grant application proposes to use the money in communities that already have broadband service, but it does not specifically indicate where in those communites Axiom will make that service available. The money would be better used in unserved parts of Washington County than it would in communities where broadband access already is available, McAfee added.

Andrew Vamvakias of Premium Choice Broadband said Tuesday he does not know how much overlap he would have with Cornerstone Communications in and around Greenville because Cornerstone has yet to release a map of their proposed coverage area.

“We don’t think it is appropriate [for us] to compete with other companies that get free money from the state,” Vamvakias said. “It’s just not fair.”

Vamvakias said he doesn’t think public funds are needed to help develop Maine’s broadband infrastructure. He was critical of the state program and suggested it could explore better ways to increase the amount of broadband availability in Maine, such as by helping companies get permits for erecting signal towers on hilltops and mountains.

Vamvakias said the state authority has not indicated how many broadband customers have benefited from the grant program, which also provided a total of more than $780,000 to seven projects in November 2007. PCB has invested millions of dollars in deploying broadband to unserved and underserved areas of western Maine and in southern Penobscot, western Hancock and southern Piscataquis counties, he said.

“We’re not trying to stifle competition,” he said. “I don’t see a lot of checks and controls in the program.”

But Harold Clossey, executive director of Sunrise County Economic Council in Machias, said last week that the program is necessary for delivering broadband Internet access to rural Maine. Such development is critical for business growth and retention in Washington County, he said, and if the Axiom Technologies grant doesn’t go through it could affect the county’s economic outlook.

“We’ve been waiting a long time for [private] investment, and it hasn’t happened,” Clossey said. “Not getting this ConnectME grant certainly would impede that growth.”

Susan Corbett, Axiom’s CEO, said last week that she is willing to not offer the expanded broadband network to people in Pioneer’s service area. Still, the grant would make broadband available to more than 1,000 Washington County residents who can’t get it now, she said.

“I have 1,200 people in a database waiting for service,” Corbett said. “They cannot be served by any [broadband] network that is deployed in Washington County today.”

According to a recent nationwide survey by PC Magazine, Maine’s average Internet speed is ranked 40th in the country. Nevada’s is the fastest while New Mexico’s is the slowest, the PC study indicated.

Lindley said the ConnectME Authority began its work in 2007 with the goal of addressing this situation by stimulating broadband Internet growth in unserved and underserved parts of Maine. Another recent survey by Speedmatters.org indicates that Maine’s average download speed ranks 21st nationwide, he said.

“Obviously, if your download speed is based on dial-up, it’s going to skew your Internet speeds,” he said.

Lindley said there were other challenges to the six ConnectME grants that were announced in September, but some have been resolved directly by the companies involved and subsequently dropped. He said that in addition to the $1.5 million in public grants, $6 million in private funds is expected to go toward the broadband Internet expansion projects.

“It’s a good leverage,” Lindley said of the public funds.