In response to the $1.25 billion Vermont received from the federal Coronavirus Relief Fund, lawmakers immediately began discussing using $100 million of it to bridge the state's digital divide, with fully $45 million going to construction of new fiber networks across the Green Mountain State. But they were quickly stopped short by restrictions set on the monies, which stipulated the strict terms by which the funds were to be used. In the end, the state won't be seeing any construction from these funds. Instead a smaller amount — $43 million — will be directed at immediate relief efforts rather than long-term planning:
- "$13 million in proposed spending to connect Vermonters to broadband internet services. The bulk of that, $11 million, would create a program to be managed by the public service department called Get Vermonters Connected Now [to] provide subsidies to low-income Vermonters who can't afford to use broadband networks already available in their neighborhoods."
- "$20 million to compensate utilities . . . for the cost of continuing to serve people who stopped paying bills due to COVID-19."
- "$7.3 million for the Agency of Digital Services to make it more secure for state employees to work remotely and to upgrade the obsolete unemployment insurance computer system."
- "$500,000 for a "telecommunications recovery plan."
- "$466,500 for local cable access organizations in recognition of the additional coverage they've taken on during the pandemic."
It's possible that federal regulations could change, but in the meantime Vermonters will have to look inward to solve its connectivity challenges.
Vermont’s Department of Public Service recently released an Emergency Broadband Action Plan that is among the most aggressive of all state responses to the coronavirus pandemic. The state currently has 944 cases of COVID-19, with 54 attributable deaths. A full third of households with school children lacked broadband Internet or a computer as recently as last summer, and as the state’s teachers rushed to produce alternative learning materials after schools closed their doors in mid-March, the predictable happened: “[I]n a number of cases . . . folks really fell right off the radar,” one superintendent told VTDigger. The Emergency Broadband Action plan proposes regulatory changes and network subsidies to achieve universal broadband coverage for all citizens by 2024.
Leaving No One Behind
Currently 23 percent of the population in Vermont (totaling approximately 69,000 residences and businesses) doesn’t have access to a minimum broadband Internet connection, federally defined as a 25 Megabits per second (Mbps) download speed and 3 Mbps upload speed. Almost a third of that group doesn’t even have access to 4/1 Mbps service.
To tackle the problem, the Emergency Broadband Action Plan (EBAP) proposes a two-step process that it calculates will cost the state somewhere between $83 million and $293 million.
Step 1 of the action plan offers a number of relatively inexpensive fixes to quickly expand access to some. It includes legislation and regulatory changes (including passing S301 or H682). This part of the plan also seeks to speed up pole attachments and other permitting, and creates a fund to help defray construction costs to homeowners living within a mile of existing cable lines who want to pay to establish service. Finally, it offers suggestions for bolstering the state’s technical workforce and convenes a working group of public and private stakeholders to coordinate research with an emphasis on the connectivity needs of healthcare workers and educators.
Step 2 of the action plan turns to design, financing, and deployment of the necessary network infrastructure to provide all the state’s residents a broadband Internet connection. In the name of speed it recommends statutory exceptions to the state’s current 100/100 Mbps goal, which would otherwise foreclose on any DOCSIS 3.1 or less cable standards as well as potential solutions like fixed and mobile wireless. The Department of Public Service and the Telecommunications Advisory Board both see fixed wireless as a quick, cost-effective, and immediate solution to connect residents while longer term efforts to a universal hardwired network are explored.
Should that and other legislative hurdles be cleared, the EBAP turns to the most expensive part of its plan: to hold a reverse auction and award construction contracts for areas of the state lacking service to providers who would complete the buildout as quickly as possible. It identifies up to approximately $290 million in grants and/or loans to fund the projects with a completion date of 2024, though the plan expects “significant progress made in the first year.” The EBAP notes that, everything else equal, bids which prioritize faster speeds would win.
Importantly, for bids in areas with no broadband, 100 Mbps symmetrical service would be the required floor. Where 25/3 Mbps broadband already exists, auction winners would only have to meet that minimum speed. This has been one of the few points of contention for stakeholders, with both CUD representatives and Representative Peter Welch expressing concern about the compromise. “When I say, ‘future proof,’” Welch told Saint Alban’s Messenger, “I don’t want us settling for 25/3. Whatever is available in the urban areas with high-speed Internet, unless we have it, we’re going to always be playing catch-up.” Others, including Representative Robin Chesnut-Tangerman, disagree, privileging “rapid deployment to critical areas, as opposed to future-proof deployment everywhere.”
While the urgent need for connectivity during the coronavirus pandemic makes short-term solutions tempting, delaying investment in truly high-speed networks will likely result in the state spending money twice — once on slow connections now and then again for faster service later. We have seen in the past and in other parts of the U.S. how short-sighted policies which act as Band-Aids do little to solve broadband inequalities in the long term. In fact, the federal government has already wasted billions subsidizing national providers to expand inadequate 10/1 Mbps connectivity in Vermont and other states.
Importantly, the Department of Public Service sees the state’s Communications Union Districts (CUDs) as central to the effort, acknowledging their “very deep knowledge about connectivity technology and the needs of their communities. The EBAP recommends addressing the limiting factors preventing the CUDs from bringing broadband to their communities (namely the restriction which prevents them from drawing on taxes) by providing state money in two complementary ways: via the Broadband Innovation Grant Program for administrative costs and grant-writing activities, and via direct money so that they can meet the letter of credit obligations required by the FCC for the fall Rural Digital Opportunity Fund auction. Finally, the plan calls for an examination of current bonding and tax restrictions so that CUDs can tap into municipal taxes and participate in the reverse auction themselves. At the very least the EBAP advises giving Vermont’s CUDs “decision-making authority over whether bids for projects in their service territories would be awarded funding, unless the CUD itself chooses to participate in the auction.”
All Roads Lead to . . .
The broadband action plan points out that there is already a good deal of network infrastructure across the state which could be used to save time and costs. It calls for providing access to an existing middle-mile network owned by electric utilities to provide heavily discounted backhaul services to those building last-mile service at a rate of $1 per strand, per mile. If there is no substation within one mile of the service termination point, it suggests that the electric distribution utility install the requested fiber through existing conduit, with the requesting entity paying the full construction cost and the electric utility retaining ownership of the fiber. In both of the latter cases the plan provides an Indefeasible Right of Use term of not less than 5 years for entities that connect. Finally, it calls for the 144-strand, 340 route-mile network of dark fiber owned by the Department of Public Service which currently serves public and private providers on an open-access basis to end that practice and provide “free or reduced access to providers” that can use the fiber to complete the EBAP’s goals.
Cost of the Plan
The state acknowledges that the total cost for Step 2 of the project is not cheap, and without some infusion of federal dollars, meeting its timeline and goals will be difficult. A Senate Finance Committee meeting on May 12th included discussion of whether they could make use of existing funds (around $1.25 billion) from the federal CARES Act, with Department of Public Service Director June Tierney suggesting that while restrictions make it difficult, there are places — like in telehealth and education — where “stretch arguments” could be made.
The EBAP estimates the funding necessary will range from $84 to $293 million, based on a report by Magellan Advisors completed at the end of last year. It proposes two payment options: The first utilizes the state’s lending resources to combine 10 percent grants through its existing Connectivity Fund, with the remaining 90 percent coming in via subsidized 10-year loans through the Vermont Economic Development Authority, for a total of $263 million. The EBAP calculates that the total cost of the interest to subsidize those loans over 10 years at 3 percent would be about $80 million.
The second option is to just pay in full the lowest-cost winning bids for a total of $293 million. The department notes that if they can connect the plan to FCC’s RDOF auction this October, the number of target locations could drop to 48,701, saving almost a third of the proposed costs. The EBAP suggests the state auction could take place in as little as 3 months.
Finally, the EBAP offers an alternative whereby instead of the proposed plan, any monies would instead go to its High-Cost Area Program, whereby each ILEC would receive a pro-rated share of funds to build out 100 percent of their territory at a designated speed. It’s worth noting that following this avenue would effectively reward companies who have received state money but refused to invest in communities since the program began in 2014.
Green Mountain Staters Weigh In
Stakeholders who tuned in to the Telecommunications Advisory Board meeting on May 21 were generally supportive, while expressing some concerns. Leaders of CUDs emphasized the need for rigorous transparency and accountability with respect to the resulting networks, citing a history of theoretical speed goals which had no bearing on the eventual networks. CUD leaders requested the state provide fiscal and technical support. Others agreed that while fast-tracking pole licenses and funding the last-mile construction will be critical, the state has an obligation to provide the public with readable data on both. As a group they also made it clear that 25/3 speeds were not good enough, and that any public dollars spent on a project resulting in a less than 100 Mbps symmetrical network include a plan to supply those addresses with that speed by 2024. Finally, they placed particular importance on workforce development and construction resources to make sure the state had enough line workers and bucket trucks to see the project through.
The Uncertainty Principle
The Emergency Broadband Action Plan does an admirable job of accounting for the complexity of a fast but thoughtful expansion of existing networks to connect Vermont’s residents. Analysis of the state maps provided suggest the least-served areas (and thus highest per-county costs) are concentrated in the north-central, west-central, and south-central parts of the state. In many of these counties, 75 percent of towns are not served by broadband at all.
This aggressive plan fits with Vermont’s longer-term focus on luring remote workers to the state. Eighteen months ago the state unveiled a program to pay people $10,000 to move and work remotely. Two weeks ago 55 percent of respondents to one survey said that they would telecommute more even after the public health crisis is over.
Download the Emergency Broadband Action Plan below, and search for additional MuniNetworks.org coverage of the state’s plan under the “Vermont” tag.
"Autumn in New England's Barnet, Vermont" by Carol M. Highsmith