AUGUSTA -- A state entity charged with helping to provide funds for rural broadband development projects on Thursday upheld its earlier decision to commit more than half a million dollars to a project in Washington County.

Axiom Technologies will get $527,000 from the ConnectME Authority to expand its wireless broadband network to 29 towns in Washington County.

The authority rescinded a grant of $284,000 it had awarded to Cornerstone Communications for a broadband network in the Greenville area, however, and tabled its reconsideration of a $346,000 grant it had awarded to RedZone Wireless for a project involving towns on and around Mount Desert Island.

The three projects were among six that were awarded a total of more than $1.5 million by the state agency last September. The three grants the authority revisited Thursday were contested by other communications firms that claimed the awards amounted to unfair competition because the expanded networks would overlap too much with their existing broadband service areas.

ConnectMe Authority rules prohibit the agency from helping to fund any project if 20 percent or more of the area that would be served by the expansion is expected to overlap with a competitor's broadband service territory.

Approximately two dozen people attended the afternoon hearing, which was held at the state Public Utilities Commission offices in Augusta.

Susan Corbett, CEO of Axiom, said after the hearing that she was "ecstatic" that the authority upheld Axiom's grant. The grant had been challenged by Pioneer Wireless of Houlton, but no representatives from the Houlton firm were at Thursday's hearing, Corbett said.

"We are absolutely thrilled," Corbett said. "This is a huge, huge boost for economic development in Washington County."

The Axiom grant originally also had been challenged by cable giant Time Warner and by Union River Telephone, but those companies dropped their challenges after Axiom met with them and agreed not to offer service in their service areas.

Corbett pledged to the four-person authority that she would not use any of the state funds to offer broadband service to anyone who currently can get such service from Pioneer Wireless. She said she might have to locate some network infrastructure in Pioneer's service area, but that such equipment would be used to relay Axiom's signal through Pioneer's territory, not to offer competition inside of it.

Corbett said though Axiom already offers wireless broadband in some Washington County towns, she has a database of 1,200 people in the county who currently cannot get any broadband service. She said she did not yet know in which towns the expanded network would be available, but that she expects to begin offering the service within the next few months.

Andy Hinkley, manager of Cornerstone Communications, said after the hearing that he thought the authority's decision to rescind his company's grant was "inconsistent" with its decisions on the other challenges. The grant that had been awarded to Cornerstone, which has offices in Bangor and Dover-Foxcroft, was challenged by Bangor-based Premium Choice Broadband, which is spending private funds to install a broadband network in the same area around Greenville and Moosehead Lake.

"There was room for us to have worked this out with the challenger," Hinkley said. "I think we should have had the same opportunity."

Members of the authority were concerned about state money being used to offer broadband service in approximately the same area where another firm was using private funds for the same thing.

Andrew Vamvakias, CEO of Premium Choice, told the board his company spent "hundreds of thousands of dollars" on expanding broadband in the Moosehead Lake area.

"It does seem like you're competing for the same area," authority member Mitch Davis told Hinkley.

The authority voted 4-0 to rescind the $284,000 grant to Cornerstone, but suggested that it would be willing to consider a cooperative grant application from the two companies if they were willing to work together.

Hinkley said that, without the grant, he does not see Cornerstone trying to offer any service in the Greenville area. In 2007 Cornerstone received another grant from ConnectMe to expand broadband service in southern Piscataquis and western Penobscot counties, he said, and has plenty to do.

When considering Time Warner's challenge to RedZone's $346,000 grant, the authority heard conflicting testimony about how much overlap there could be between the competing services. Tom Federle of Time Warner said that, based on the very general information he had received from RedZone CEO Jim McKenna, there would be at least 50 percent overlap and in some areas could be as much as 70 percent to 80 percent.

McKenna, however, said that Time Warner's coverage claims on and around MDI were inaccurate. He said that he anticipated zero percent overlap with where Time Warner currently offers its broadband service. He presented letters from five towns -- Bar Harbor, Lamoine, Tremont, Trenton and Winter Harbor -- that expressed support for his grant application

Members of the authority, however, wanted to see a detailed map of where McKenna was hoping to offer his wireless service, but McKenna told them a detailed map was impossible without spending a considerable amount of money on testing individual properties for signal strength.

"My intent is not to serve Time Warner subscribers," he told the board.

Clearly, one complicating factor was a certain degree of tension between Federle and McKenna. Each accused the other of refusing to meet to talk about their proposed coverage areas.

"You guys have to get together and figure out how to get along," Davis told Federle and McKenna.

The two men indicated that, despite their previous comments, they would be willing to meet to discuss how RedZone can avoid using the grant so that 20 percent of the project area does not overlap with Time Warner territory.

According to Phil Lindley, the authority's executive director, the board plans to meet in approximately two weeks to see if the two firms have made any progress.

btrotter@bangordailynews.net

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