New Broadband Networks Increase Tension in Vermont

We have previously covered the East Central Vermont Fiber Network and their local frustrations at receiving little state or federal support in building a next-generation network. The feds and state government seem too heavily influenced by those with lobbying clout -- leading to subsidies to build lesser networks that local do not want.

They want real Internet, not another wireless promise that fails to deliver. A story from Vermont Public Radio discusses increased tensions as the networks struggle over a few community anchor tenants to help finance the rest of the network. Here, Loredo Sola of EC Fiber explains the problem:

SoverNet will own the infrastructure but is required to provide bandwidth at wholesale cost to providers who extend the service outward.

Loredo Sola is skeptical. He says he's already lost one institutional contract to the SoverNet project. He says that's forced E.C. Fiber to scrap its plans to serve smaller users in the area.

Sovernet is building a middle mile network connection community anchor institutions, but is an example of the exact wrong way to do it. Supposedly, the investment (the vast majority of which is funded by a federal stimulus award) will allow more ISPs to build more last mile networks as they have access to better backhaul.

But lowering the operating cost of a network does very little to make that network affordable to build. The high up front capital costs are what limit broadband in rural (and urban too!) areas. Compounding the problem is what Sola mentions above, Sovernet is taking the key anchor institutions off the board with its project so communities are actually left with a harder business case to connect themselves.

Groups like the Vermont Telecommunications Authority are so proud of having solved a short term problem, they have totally missed the fact that the longer term problem of making sure everyone has fast, affordable, and reliable access to the Internet is now much harder to solve.

When I first read about the WiscNet situation, I was interested to learn that it acted as an ISP but rarely provided the physical connections -- leaving opportunities for communities to build those connections themselves, using themselves as an anchor tenant.

Smarter programs, like the Building Community Capacity through Broadband project, result in the community owning the network. Communities have greater incentive to build out these networks to connect everyone because they understand the value of building infrastructure rather than just trying to maximize a profit from it.


Revenue is the key

This is a very interesting topic and I can see it playing out wherever federal stimulus middle mile projects meet local FTTH projects, federally funded or not.  These new middle mile networks enable the big connectivity that everyone is seeking 100 Mb, 1 Gb, 1 Tb.  Constructing and operating these networks costs money, especially across large geographic areas and connecting small and medium size communities.

Local FTTH networks cost money to build and operate, especially in smaller communities with few large customers, especially large private sector customers.  The revenue from customers has to be enough to cover long term, sustainable operations of both middle mile network and the local FTTH network.  

A funny thing happens with non-profits, cooperative and local units of government when they begin to deploy and operate networks - they begin to operate similarly to traditional private sector providers!  They want to pay debt service, pay their staff, and plan for expansion and network maintenance.  Seems that both EC and SoverNet want these customers; I am sure that the incumbent carrier who used to sell these customers T1s for $500 per month also laments the loss of these revenues.

The random nature of the ARRA funded projects, especially in the absence of any overriding broadband policies, is a major contributor to these conflicts.