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In Vermont, High-Speed Internet for All Gets More Likely

Wednesday, March 20, 2019   (0 Comments)
Posted by: Jeff Couture

It's a familiar scene in rural Vermont: Cars cluster after hours outside libraries or cafés that offer Wi-Fi – residents sponging internet service that they can't get at home. A mom brings her middle-schooler, who finishes his homework with notebooks and a laptop laid out in the back seat. An investor pulls up to do some online trading. People download movies to watch at home.

At the start of 2019, more than a quarter of Vermonters lived without service that meets the federal government's definition of broadband: at least 25 Mbps download and 3 Mbps upload speeds. An estimated 5.6 percent of addresses were considered underserved – with either 4/1 Mbps or nothing at all.

That's despite roughly $174 million in funding granted or loaned to Vermont Internet service providers in 2010 – by far the highest per capita funding for any state – as part of the U.S. Department of Agriculture's Rural Utilities Service Broadband Initiatives Program, part of the federal stimulus package following the 2008 recession.

The program subsidized the cost of providing "last mile" service to addresses in sparsely populated places where commercial ISPs can't make enough profit to justify the expense of extending or upgrading service. Some of the funding also paid for "middle mile" coverage – high-speed data corridors from town to town.

Many residents, businesses and institutions have benefited from new service or faster connections since then. In four of the state's 13 counties, more than 20 percent of addresses enjoy 100 Mbps or faster symmetrical speeds. That speed is the state's goal for universal service by 2024. But even with that success, visions of what the stimulus funding promised and hope for Vermont's 2024 connectivity goal remain remote for most of the state.

But a community-based startup in east-central Vermont, combined with creative policy-making at the state level, is improving the prospect of universal coverage – and changing the lives of people who are getting connected.

OBSTACLES TO UNIVERSAL COVERAGE

The disconnect between the stimulus vision, the state's 2024 goal and current reality is partly due to competitive overbuild. Rather than direct infrastructure investments to addresses that lack service, some projects have upgraded speeds in areas they already serve, looking for an advantage over their competitors.

A sense of broadband accomplishment also is complicated by confusion over the term "broadband." At the time the stimulus money was issued, the Federal Communications Commission considered it to be any service with at least 10 Mbps download and 1 Mbps upload speeds. In January 2015, the FCC upped that to the 25/3 Mbps threshold that still holds today.

Yet even now, many federal grants to subsidize broadband build-out require only 10/1 Mbps speeds.

"The more rural you are, the more you need (high-speed service)," says Carole Monroe, former CEO and now a consultant for ValleyNet, a Vermont-based nonprofit telecommunications company. Disconnection can be crippling for people who live far from hospitals, mental health services and higher education, Monroe says. They need high-speed connectivity more than urban dwellers because they don't have physical access to such institutions "in their backyards," she says.

"But even the federal government doesn't think rural areas need it," Monroe says.

Clay Purvis, director of the state's telecommunications and connectivity division, says the lower-speed threshold for certain federal grants is due to concerns about landline telephone service providers in rural areas, such as Consolidated Communications (formerly Fairpoint Communications) in Vermont and other incumbent landline providers nationwide. With the market shift toward cell phones and internet-based technologies, their core business model of servicing landlines is faltering. Some regulators and observers worry that if their businesses fail, then rural America will be left not only without high-speed internet, but even without landlines.

But phone carriers generally can't deliver 25/3 Mbps speeds via DSL over their copper wires. Therefore, some grants are targeted to the incumbent phone carriers by only requiring 10/1 Mbps speeds – already obsolete technology.
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"They also believed, I think erroneously, that the cost of extending DSL service was less than the cost of overbuilding that system with a fiber-to-the-premises network," Purvis says. "So they thought they could get more broadband for their dollar."

Fiber to the home – virtually the only technology capable of delivering on Vermont's 100 Mbps symmetrical speed goal – was assumed by industry leaders and public officials to be simply too expensive to contemplate for last-mile broadband coverage.

MUNICIPAL FIBER OPTIC INTERNET SERVICE

That assumption is being challenged by a growing number of community-owned broadband and fiber networks. In Vermont, the disruptor is ECFiber, a 24-town telecommunications district building fiber-to-the-premises to every unserved or underserved address in its territory.

"That means out that 1.5-mile dirt road, in the mud, to a farm that's doing great business," Monroe says. Her client, ValleyNet, holds a contract to build and operate the network for ECFiber. The partners constructed a 20-mile pilot project in 2011. Now with $32 million in revenue bonds, all investors have been repaid and the organization is cash flow positive.

Christopher Mitchell, director of the Community Broadband Networks Initiative with the Institute for Local Self-Reliance and policy director of Next Century Cities, says community-based broadband initiatives take different shapes in different communities, depending on state law and local culture. Mitchell says one commonality is that, in areas with low population density, neighboring communities find they need to work together to get their own needs met.

"ECFiber is one of the best models we've seen in terms of many communities working together in relative harmony," Mitchell says. "In other places, even in western Massachusetts, we've seen friction. A lot of times, these towns have grudges against each other, or there's some scoffing" at the proposition of joining forces, he says.

But it's not just neighboring communities in east-central Vermont that needed to figure out how to work together. ECFiber also had to earn its stripes with the state. The initiative, which formed around the same time the stimulus funding was coming down the pike, could not land any of the grants or loans flooding Vermont at the time. Without proof of concept, the new model was simply too high-risk for investment of public dollars.

Instead, ECFiber raised initial seed capital through $1 million in private investment, followed by grassroots fundraising. By 2015, ECFiber had accrued nearly $7 million from about 500 investors in $2,500 increments. More importantly, that money allowed them to build a track record.

The state started taking notice. ECFiber has received nearly $1 million in state connectivity grants to date.

"They've really proven themselves to be a force in the broadband market in Vermont," Purvis says.

STATE POLICY SOLUTIONS

Where ECFiber's model once was met with skepticism by state officials, it's now a cornerstone of Vermont's 10-year telecommunications plan. The administration has even proposed establishing a revolving loan fund that could help other groups such as ECFiber to get off the ground.

This would follow significant policy development that's already enabled ECFiber to become an integral part of the state's connectivity initiatives – including legislation in 2015 that allowed the group to officially organize as a municipal district, rather than a collection of intra-local contracts. The designation is similar to the way communities share services for fire departments, water, sewer and schools. It's key to ECFiber's business model because it allows the group to raise money through low-cost municipal revenue bonds.

CVFiber, in central Vermont, is the second such "communications union district" to form. The group hopes to begin construction to its 16 member towns in 2020.

Monroe cites one more key action by state officials that paved the way for ECFiber's success: a project to build state-owned fiber corridors, also known as "dark fiber," for sale or lease to other entities.

Dark fiber typically is available for lease to connect towns or institutions, but not for distributing Internet service to residents and businesses located along that corridor. In rural Vermont, this bypasses a lot of people who can only look at – but not access – the fiber optic cable hanging from poles outside their windows.

Purvis says a lot of states used stimulus funding to build dark fiber, but the projects in east central Vermont were unique. State officials worked directly with ECFiber in advance to install dark fiber exactly where ECFiber wanted to provide service, he says.

Monroe cites this early access to infrastructure as one of the reasons ECFiber is on track to offer 100 Mbps symmetrical service to every house and farm on every dirt road in its range by 2020 – four years before the state's statutory goal.

Vermont lacks the resources to sustain that level of support, Purvis says. Nonetheless, the experiment gave ECFiber a chance to prove itself.

Now that other localities are following its lead, the Legislature is considering an executive proposal to let towns use general obligation bonds to finance the kind of infrastructure buildout the state once facilitated for ECFiber.

Source: US News & World Report