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Utilities, Internet Providers Team Up To Potentially Bid For Federal Broadband Aid

Tuesday, July 21, 2020   (0 Comments)

Source: Vermont Public Radio

Vermont electric utilities have teamed up with community-based internet providers and national partners to potentially win federal money to build out broadband internet.

Broadband is a necessity of life these days – a need made even more acute during the COVID-19 crisis as people are forced to work and learn at home.

Yet many parts of Vermont remain in a broadband backwater, with some 70,000 addresses not reached by high speed internet. This fall the federal government will make billions of dollars available to help pay for broadband in rural areas. In Vermont, an unusual coalition has formed to bid on the money and do the work.

The players include Green Mountain Power, electric co-ops, and “communications union districts” – municipal organizations that towns formed to build out infrastructure together.

A program established by the Federal Communications Commission called the Rural Digital Opportunity Fund has created the financial incentive for this new broadband effort.

The FCC has $16 billion available for the first round of a reverse auction to determine who gets the money. The process involves potential carriers making lower and lower bids for the amount of federal subsidy they calculate they’ll need to provide high speed service and basic telephone service.

All the unserved areas are in Consolidated Communications’ Vermont service territory. The company, which now owns the legacy landline business of FairPoint Communications, is likely to compete aggressively in the FCC auction to serve the customers it still has.

Bidders also include the communications union districts and electric utilities, said Rep. Laura Sibilia, I-Dover. Sibilia serves as vice chair of the House Committee on Energy and Technology and was a key sponsor of a 2018 telecommunications bill which made state backed loans and grants available to boost broadband in under-served areas.

Sibilia has worked this summer with two CUDs in her area, a national partner, and Vermont electric utilities as they put together a plan. “The response has been unbelievable,” she said. “And to think that we have these teams that have entered, even if they are unsuccessful, that they have been able to come together in the kind of sophisticated way…  to move forward and try, it’s remarkable.”

Sibilia would not name the utilities involved with the effort in her area. But other sources said the companies include Green Mountain Power and Velco, which operates the statewide transmission grid and owns a statewide fiber optic network that has a great deal of unused capacity. GMP confirmed its interest in a written statement. Velco would not comment.

“GMP is part of a team with an applicant looking to participate in the auction this fall,” GMP spokesperson Kristin Kelly wrote.

Sibilia said the utilities’ caution is due to strict FCC anti-collusion rules that went into effect Thursday, July 16 at 6 p.m. She said all involved are being very careful not to disclose anything that would threaten their chances of landing the federal money.

“It’s a pretty big pot of money and the need is urgent, so hopefully this is going to work out okay,” she said.

Sibilia said both the market and government regulation have failed to deliver vitally needed broadband. Congress in 1996 deregulated telecommunications and did not impose requirements on internet service providers to bring service to un-served and underserved areas. The free market has fostered competition in urban areas, but has left rural areas with deteriorating phone networks and inadequate internet.

“So in places where it is really not profitable, those lines are becoming less and less reliable,” she said. “And those providers are working with FCC on plans to retire those copper [wire] networks. So we’re not looking at a situation that is static. We’re looking at a situation that is deteriorating.”

Communities have to find their own solutions, such as creating communications union districts and looking for innovative funding solutions like the FCC auction, she said.

“I’m really excited about what’s happening in Vermont,” she said. “Volunteers in our communities are stepping forward and going with this effort.”

The FCC auction will open in October. Another team potentially bidding involves Washington Electric Co-op, Vermont Electric Co-op, two communications union districts and Kingdom Fiber, a local internet service provider, along with the National Rural telecommunications Cooperative, according to Michael Birnbaum of Kingdom Fiber.

Like Sibilia, Birnbaum was also careful about what he could disclose.

“We’re not allowed to say whether we will bid. We’re not allowed to say what state we’re going to bid in under the prohibited communications rules the FCC has put out,” he said in an interview before last Thursday’s blackout rules went into effect. "So I can just say that those in our consortium have common goals and a common purpose and that we’re going to seek consensus and that something good will come out of it.”

The involvement of the state’s electric utilities is a major development in the effort to provide broadband in Vermont. June Tierney, commissioner of the Department of Public Service, said she has underscored with local utilities the need for connectivity “equity” in Vermont. She said utilities are rolling out services – such as battery storage – that typically require good internet to work.

“There is now a technological and infrastructure need for there to be this all-pervasive connectivity that perhaps has been not fully recognized before,” she said.

“And in my view, the utilities therefore play [a role] in the deployment of broadband technology,” Tierney added. “And if an incidental benefit of that is that it also furthers the deployment such that people who have not had connectivity access in the past now have it, then that’s a good thing.”

Tierney said the COVID crisis has now made broadband a necessity to protect public health and safety. If the government orders you to stay home, yet you need to leave your house to go to a Wi-Fi hotspot to work or download a lesson plan for school, then you’re putting yourself and others at risk, she said.

“Suddenly you’re cut out of the public sphere, and it’s not safe for you to go out,” she said. “But you may feel impelled to. Yet the society has a real interest in you staying home for public health and safety reasons. And you personally have an interest in staying home for personal health and safety reasons. And the internet makes that possible. Yet you have to have access to it. And that’s what’s been revealed by the pandemic.”

The state has looked before at the possibility of electric utilities providing broadband to the last mile in Vermont. A feasibility study delivered to the Legislature in Janaury said the effort would cost almost $300 million. But the report said the work could be more cost-effective if utilities partnered with existing internet ventures.

Tierney said the study laid important groundwork for the utilities' current interest in the FCC auction. “We got the results that we did, which were that it would be a significant capital investment for utilities to do that [broadband buildout],” she said. “And I think that gave people pause. And I think the next thought was ‘well, what else can we do?’ And that’s how the energy built” for utilities to look at the possibility of winning the needed federal funds.

But for those without broadband, be prepared to wait another few years for this federal money to actually bring the service to your door.

Michael Birnbaum of Kingdom Fiber said the money won’t flow into Vermont until 2022, if it comes at all. “So for people who are thinking this is an imminent thing, it’s not,” he said. “But it involves an awful lot of planning and it’s a tremendous opportunity for Vermont, if we can succeed.”