Northern Michigan Receives $103 Million Broadband Federal Stimulus

Published October 12, 2010

For the second time since January 2010, money from the American Recovery and Reinvestment Act has been directed to Michigan’s Upper Peninsula and northern part of the Lower Peninsula for broadband buildout. The two grants total $103 million.

Merit Network, an Ann Arbor, Michigan company, received $33 million in January and another $70 million during the first week of September from the program. The stimulus money will be used to construct a 1,210-mile “middle mile” broadband network named REACH-3MC II (Rural, Education, Anchor, Community, Healthcare—Michigan Middle Mile Collaborative).
Middle mile refers to the connection between the “first mile” broadband network and the “last mile” Internet service provider connection to the end user. The Federal Communications Commission maintains the middle mile is the weak link in delivering reliable rural broadband service.

However, “Most households in this service area already have more than one good broadband option, and it doesn’t appear that the project will connect the relative handful who choose to live in the country,” said Jack McHugh, a policy analyst for the Mackinac Center for Public Policy, a Midland, Michigan-based research and education institution.

Expects Operations in 2012
Merit Network CEO and President Don Welch says REACH will “bring the best results to the most people.” He says he expects the 36-month project to be fully operational by fall 2012. Welch claims REACH will provide “up to 10 gigabyte speeds, a tremendous amount of capacity,” upon completion.

Roger Rehm, vice chairman of the Merit Network board of directors and vice president for Information Technology and chief information officer for Central Michigan University, says, “This buildout is great for Michigan. The obvious beneficiaries are Michigan nonprofit institutions, especially governmental agencies, schools, and libraries. Because of the commercial partnerships in the Merit project model, though, there’s a significant potential benefit for homes and businesses as well.”

The REACH project will use both underground and utility pole-mounted fiber optic cables, with the cost of digging trenches for the cable, the project’s preferred method for the Upper Peninsula, making up a big part of the expense, Welch notes.

‘Government Boondoggle’
McHugh says the REACH program puts government in the position of selecting winners and losers in the marketplace by granting a competitive edge to Merit through government monies at the expense of current providers in Northern Michigan.

Welch acknowledges REACH directly competes with existing network providers in upper Michigan, but he says, “We’re taking taxpayer dollars and giving them something very valuable in return. We’re going to share a bigger pie rather than re-slice the same pie.”

McHugh referred to Merit’s use of stimulus funds as “rent-seeking,” a term designating the recycling of taxpayer money for government programs without generating wealth beyond the immediate recipient, which in this case is Merit.

“So how is this not a government boondoggle?” McHugh asked. “Taxpayers will be paying debt service on this deficit spending long after the technology becomes obsolete.”

Bruce Edward Walker ([email protected]) is managing editor of Info Tech & Telecom News.