The town of Hampden is considering spending around $4.5 million to install fiber-optic cables, like these shown here, to deliver high speed internet. Credit: Courtesy of Jeff LeTourneau

Some residences and businesses in Old Town and Orono will have access to a limited municipal fiber network split between the two communities when it goes live — pending a signed contract with an internet service provider.

OTO Fiber tentatively chose an internet provider after soliciting requests for proposals in what the group hopes is one of the final steps toward getting its six-mile fiber network off the ground.

Maine businesses are doing more transactions online, making reliable and fast internet a critical tool to their success. Towns and cities with high-speed connections can market themselves better to prospective businesses and help existing companies grow. If the OTO Fiber pilot project garners enough interest from residents and businesses outside of the initial six-mile coverage area, it could expand to other communities, including their more rural reaches. The need for reliable internet service is underscored as more people are working or schooling at home during the coronavirus pandemic.

Municipal fiber projects can take a couple years to complete, but OTO Fiber has tried for nearly 10 years to build its own network. Other Maine communities have leapt ahead, with some municipalities beginning their projects later and still finishing sooner than Old Town and Orono.

One of those was Argyle, which started making plans to create a town-wide fiber network in 2019. Using an $81,250 ConnectME Authority grant, along with some Penobscot County funds and a $162,500 OTELCO investment, the unorganized township is now on track to complete its fiber build-out by the end of March. The company plans to start hooking up fiber connections shortly thereafter.

The town of Alton also set up its fiber network through OTELCO within the last two years. 

OTO Fiber’s story began in 2012 when the group tried to set up a Gigabit Main Street network.

The fiber-optic gigabit service known as Gig.U was a nationwide initiative to bring high-speed internet to research universities and the surrounding communities. The Gig.U plan was a big, aspirational idea meant to support the University of Maine’s research capabilities, Orono Assistant Town Manager Belle Ryder said.

Biddeford-based internet and telephone company, GWI, offered to build and service the network, but it didn’t work out.

Investing in fiber build-out doesn’t make business sense for private companies because they can’t get a fast enough return on their investment when they have to install the infrastructure up front, Ryder said.

Municipalities, on the other hand, can manage a long-term investment that doesn’t see immediate returns, she said.

GWI pulled out of the initiative, sending OTO Fiber back to the drawing board.

Early challenges in securing grant funding to help pay for the fiber build-out also hindered the project’s momentum. Around 2015, Time Warner Cable challenged the group’s efforts to access a $125,000 ConnectME Authority grant.

The telecommunications company argued that the state agency — which had named OTO Fiber Network as the grant recipient — couldn’t provide funding for areas deemed underserved before helping unserved ones.

Time Warner, which provided non-fiber-based service to the area, said that issuing the grant would violate a law limiting how much such projects can overlap with existing services. ConnectME Authority sided with Time Warner and OTO Fiber didn’t get the money.

While the group searched for different funding options, other municipal fiber projects began cropping up around the state.

In 2015, Sanford made plans to build the state’s largest municipal fiber internet network, and unveiled its 10-gigabit, 45-mile network four years later. In 2017, a pair of Washington County communities created their own broadband utility service.

“I think on the one hand, it’s been tough to see that we’re no longer at the forefront of municipal [fiber projects] in Maine,” Ryder said. But there is no single approach to creating a community fiber network. “The hope is we’ve found the right fit for Orono and Old Town.”

The project reached a turning point later in 2015 when it received a $250,000 Northern Border Regional Commission grant. That money and another $225,000 Old Town and Orono invested at the outset of the project were used to install fiber infrastructure.

Five years later, in 2020, that infrastructure was built to cover 6 miles split between the two communities.

Orono’s tax rate contributed to project delays over the years, too. Building a municipal-owned fiber network isn’t cheap — especially for a community with a high tax rate.

The town has a current tax rate of $28.09 per $1,000 of assessed value because of how many non-profit and non-taxable properties there are in town, such as the university.

“When you have 50 percent of the property owners paying for 100 percent of the services, you have to be smart about how you invest your funds,” Ryder said. “These projects are easier to do when you have a huge pot of money to start with. We’ve kind of had to ‘bootstrap it’ and figure out each step a little bit at a time and go from there.”

The pilot network passes through 400 properties within the two municipalities.

The Orono network begins on Kelley Road, then splits off onto Old Kelley Avenue and heads down Route 2, where it ends on Bennoch Road. The Old Town network picks up on Stillwater Avenue near Mahan’s Redemption Center, breaks off onto Center Street, loops around the post office and reconnects with Stillwater near Tim’s Little Big Store. It then circles part of downtown Main Street.

To connect residential and business customers, OTO Fiber needs an internet service provider and operator to install “drops” that will light up fiber to each property.

The group issued a request for proposals in December and by Feb. 2, it had selected a finalist to start contract negotiations with. OTO Fiber will pay for and own the drops — which run about $750 to $1,000 apiece — instead of putting the financial burden on property owners.

Old Town set up a revolving loan fund to help cover these costs, according to E.J. Roach, the city’s economic and community development director. OTO Fiber would borrow from that fund to install a “drop” once a customer signs onto the network. The network would later reimburse the city.

The loan fund is set at $100,000, allowing for a large number of drops to be paid for within the first year or two, Roach said. Orono also stood up a $250,000 bond in October to connect properties to the network.

The group hopes to expand the network beyond the initial six miles, but part of that will depend on how the communities respond to fiber internet service, Roach said.

“It’s why we have a pilot project and we didn’t invest $12 million to run fiber to the entire community and then turn it on and be like, ‘oh there’s four people who have adopted this’,” Ryder said.

The network is intended to be a community asset like any other municipal service, such as road paving or sewage, OTO Fiber Network member Jeff Letourneau said. Letourneau is the executive director of Networkmaine and sits on the ConnectME Authority Board.

“The numbers sound big but not when you compare it to other municipal services,” LeTourneau said.

For instance, to install fiber in all of Old Town would cost less than $5 million — less than it would cost to repave the city, Letourneau said. “You couldn’t even begin to top coat all of Old Town’s roads for $5 million. But nobody thinks about that.”

Fiber build-out is not a cash cow, but over time the technology improves the tax base and that’s what a municipality gets out of it, he said.

“We’re all local people,” LeTourneau said. “You say you’re gonna do something, you want to be able to deliver. We’re hoping it’s not going to take very long.”