After the American Revolution, Vermonters struggled to develop an effective network in support of residents and businesses. Of course, the network was not electronic. We are talking about roads. Each town was responsible for its own roads. The network was terrible. The state turned to the private sector and began chartering turnpikes. The roads improved. A generation later they were mostly converted to public roads. The roads improved further.
I cite this and note that the turnpike companies were understood by all to be providing a public good, and their owners were constrained by law. The transition from turnpikes to public roads was accomplished without great disruption at a price that satisfied turnpike owners.
We are never going to see this happen with broadband, because it was never built as a public good but rather as an add-on product to telephone or television service. Generations of telephone and cable executives have come and gone with no sense that they are responsible in any way for a public good, or perhaps more generously, they are not paid, not incentivized, to develop that perspective. This has left densely populated and wealthier areas the winners.
So when it is suggested that Vermont’s goal should be “fiber to the premises” everywhere on the grid, the reaction of the large national providers is predictable: No. Vermont should be technology-neutral, they say. Vermont should not allow “overbuilding” where there is “some” broadband. People don’t need that kind of internet service anyway, and all you need to do is pay for us to build where we don’t think it is economical otherwise.
There is nothing positive in the message. It is a strictly defensive response.
Why hasn’t the response been crafted in a way that acknowledges developments in Vermont, such as 2019’s Act 79? Why no real engagement with the state? There are two reasons, one philosophical, one practical.
The philosophical reason is that the big national carriers do not want to get into state-level engagements, and federal law exempts broadband business from state scrutiny, so even acknowledging state concerns risks creating a precedent.
The practical reason is that Vermont’s market is so tiny that it makes no difference to any business decision. Nobody in the upper levels of the big national carriers ever bothers to talk about Vermont.
They say Vermont should subsidize network expansion where they have determined it is not economical. But in the past six months, or six years, or 10 years, has anyone seen a plan that lays out expansion and puts a price tag on it? No. Why? Because our market is too tiny to bother. Vermont represents only a few percentage points of the business — in New England. And these are national carriers. Vermont’s business, to them, is a rounding error.
This will remain true even with the federal dollars coming from coronavirus relief efforts. These enormous sums are going everywhere — which means that executive decision-making and staff resources in these national outfits are going to be devoted to places representing significant percentages of their business. As always, Vermont will be an afterthought.
Vermont needs to find its own way. As the history of roads may be a guide, a recap of recent history is in order.
In 2010, with a $110 million federal grant available, 24 towns in Vermont proposed building a “fiber to the premises” network (known as FTTP) for $30 million in an area where NYNEX or SoVerNet were offering DSL in village centers and Comcast was offering cable service in the most populated parts of Hartford and in the village centers of Norwich, Woodstock and Randolph. At the same time, VTel proposed to build scores of towers delivering an LTE data-only service. In theory, this would bring wireless broadband to essentially all of Vermont.
The decision was made to go with VTel. Where it works, it works just fine, but two big problems hinder the service: Trees and hills block signals, and the tower locations were not selected for coverage but for population density.
While some towns remained internet deserts, places like Quechee suddenly had another choice.
The 24-town entity was dubbed ECFiber (which I now serve as chair). The towns raised money privately for a demonstration network. In partnership with ValleyNet, a nonprofit spun out of Dartmouth College in the early 1990s to provide dial-up internet service in the region, the FTTP service offered by ECFiber began to grow, funded entirely through privately placed promissory notes.
In 2015, ECFiber went to the Vermont Legislature and asked for the ability to become a municipality for borrowing purposes. The bond market wanted to issue bonds for ECFiber, but its legal basis — a contract signed by 24 towns — was not something bond market attorneys, economists or risk analysts were capable of dealing with. The Vermont law creating Communications Union Districts went on the books mid-year. ECFiber was reformed as the East Central Vermont Telecommunications District on Jan. 1, 2016, and within 90 days had issued its first municipal revenue bond, retired most of its startup debt, and began building at triple its prior rate.
In 2019, ECFiber again went to the Vermont Legislature, this time asking for changes in the law that would promote more cooperation from the pole-owning utilities. One of the biggest barriers ECFiber was encountering was the lack of timely attention to its applications for pole attachment licenses and for the prep work other utilities must do in certain situations, so called “make-ready” work.
Contemporaneously, the Legislature was again roiled by demands from Vermonters that something be done about internet availability in the state. The solution was staring the state government in the face: ECFiber. With essentially no state funding (the Orange County Connector “dark fiber” was a help, but not critical), ECFiber had pulled itself up by its own promissory notes and was on the way to building a truly world-class internet service in an area that contained more than a dozen towns that are as rural as they get in Vermont.
Agreeing that the state should set a goal of world-class broadband for every home on the grid, it created incentives for communities to create additional communications districts. In line with ECFiber’s experience — that it took about $8 million over a four-year period to reach the municipal revenue bond market — a lending facility through the Vermont Economic Development Authority was created.
Unfortunately, little progress was made until coronavirus relief funds began to become available, with significant constraints, in the summer of 2020. VEDA was not able to see its way to making loans to communications districts, imposing impossible conditions. The federal money was at least able to fund some staff time and studies for the new districts, which are now poised on one or another of the steps leading to service delivery.
Now, significant sums are arriving for broadband, largely unconstrained.
Vermont has already made two important, related decisions: Fiber to the premises, using the communications districts model as a funding mechanism. Now, though, instead of having only $10 million to prime the pump, which was never going to be enough, we have more than $100 million.
Since a build-out of fiber to the premises in all locations that do not already have it will cost around $450 million, that $100 million isn’t enough. But it is enough to get the new communications districts operational, get them to the point where they have three years of audited financials, and get them to the municipal revenue bond market.
There is no reason why cable and phone companies cannot be operating partners of the districts. In fact, because of the phenomenon of “convergence” — all communications being transferred to the internet — the phone and cable companies are converting their copper wire (electrical impulses) and coaxial cable (radio waves) to the far more efficient fiber-optic cable (light signals). This allows them to brag about having thousands of miles of fiber in the state. But it is not for customers. For them, the issue is converting the curb-to-home from old tech to the new. It is expensive. ECFiber capitalizes that cost and pays it off with a 30-year bond; the phone company wants an $800 installation fee.
The community broadband approach also has the benefit of being a lot more transparent in its pricing. And in ECFiber’s case, the staff and management are all local.
In sum then, Vermont has already gone past “technology neutrality” and decided, by law, that 100/100 service (meaning download and upload speeds of 100 megabits per second, currently available residentially only with fiber to the premises), is the mountaintop we seek to climb.
Not only does Vermont not want to expand old-fashioned cable networks, it has never been provided a serious public-private partnership proposal to do so. The cable companies and phone companies don’t want public money to be spent on “overbuilding,” but that assumes a network is made up of discrete segments when it is more like a spider web, where each segment is necessary.
In a state where $450 million will be spent building out FTTP, two-thirds of it with borrowed money paid off by user revenues, we can talk about the cost of overbuilt segments in five or six years. It will be clear that those segments are not more than two-thirds of the network.
There is no serious disagreement about what a “future-proof,” state-of-the-art internet service delivery network is: fiber everywhere. From pole to pole, from curb to house. Fiber is the backbone of wireless communication, the backbone of telephony, the backbone of cable.
Vermont has figured out how to deliver this to every premises in the state that is on the grid. It can now see the mountaintop. It is time to start climbing.
F.X. Flinn, of Quechee, is chair of the East Central Vermont Telecommunications District (ECFiber) and chair of the Vermont Communications Union Districts Association.