Vermont's East Central Fiber-Optic Network (ECFiber) has finished its second round of financing. We noted that the network had exceeded its financing goals at the beginning of this year by raising over $1 million and subsequently began connecting rural homes with its next-generation network. (See all of our ECFiber coverage here.) The network is now connecting 120 households, a bit below its goal of 164 for the end of the calendar year... but it also had to deal with an unexpected hurricane (Irene) that seriously disrupted the entire state and kept fiber-splicers running ragged. ECFiber has just completed its second round of financing. While the first round was dominated by a few major investors, the second round had a broader base -- a sign that many in the community have embraced the approach. From the ECFiber press release:

ECFiber is using an innovative funding method to extend its network, supported by local citizens who lend funds that enable build-out to local neighborhoods within and across member towns. Citizens who invest as little as $2500 allow ECFiber to reach all households along designated routes. ECFiber determines where it will build by choosing routes that reach the greatest number of unserved businesses and households, which are then connected to ECFiber’s state-of-the-art fiber-optic service.

These people are literally investing in themselves. ECFiber is an InterLocal Contract with a Governing Board composed of a representiative from each member town (of which there are 23). Investors are purchasing tax exempt 15 year promissory notes that effectively earn 6% interest (due to the one year holiday from interest and principal). They have raised $340,000 in this round of financing, which will allow the network to pass 60-65% of Barnard's 950 residents.

This has been a great month for communities building their own high capacity broadband networks in New England. Wired West in rural Massachusetts has formalized its coop of communities. Just last Friday, we wrote about the East Central Vermont Community Fiber network in beta. As of last night, EC Fiber is out of beta and officially live! Those interested can sign up at MyECFiber.net. Last night, they issued this press release:

SOUTH ROYALTON – Having completed its beta testing, and with the Phase I project nearly complete, ECFiber began connecting its first customers today. Eight customers have been beta-testing the system for the past two weeks, getting sustained 5Mbps symmetrical service. The Barnard General Store, one of the beta sites, has been offering the experience to customers via WI-FI, and has been finding folks on their doorstep at all hours, trying out the system. “It’s been amazing,” says Kim Furlong, one of the store’s proprietors. “Because so much more of what we do is online, it is truly a joy to reap the reward of high-speed internet. Dial-up, and even satellite, is such a time-robber. Fiber is very different – you can be more efficient, and that is exciting. At the same time, I have some trepidation. People are going to relocate here more permanently because of what is available, and that is probably going to change the fabric of the community.” According to Project Coordinator Leslie Nulty, 15 new accounts were opened within the first 24 hours after the doorstep delivery of information packets. Barnard Academy, another beta site, is also very excited about the service. They are planning an open house and community celebration of ECFiber’s arrival in mid-October. Barnard was chosen for the Phase I project because of its proximity to the central office and its large number of unserved users. Pre-registrations topped 90% before the project started. Phase II, to build out the rest of the town of Barnard, is in the planning stages, with an informational meeting set for Thursday night at 7PM at the Barnard Town Hall.

The East Central Vermont Fiber-to-the-Home network is officially connecting people. This has been a fascinating project to watch, though undoubtedly frustrating from the thousands of people who just want a fast, affordable, and reliable connection to the Internet (though any one of the three would be an improvement for them). They started trying to finance the network when the markets weren't interested in even lending water to Jesus. They seemed a lock for stimulus funding but that money instead when to a wireless project. The state begged them to apply for Vermont Telecom Authority broadband funds and then slammed the door when they complied. All in the shadow of Burlington Telecom. So they did what they now say they should have done from the start: financed it themselves. They organized and came up with $1 million locally to start the project. In July, they announced Barnard Vermont would get connected first. And now they are starting to turn those connections on. And regularly updating their blog, something I love to see! As of yesterday, they had 7 beta connections going and were planning to add 2 more. 3 in 4 of those asked if they want drops installed have already said yes. We look forward to tracking their progress.

The East Central Vermont Community Fiber Network has announced it will connect an entire town as its second phase. Barnard, Vermont, will be the first town to have universal access to ECFiber's next-generation network. An update on Phase 1 of this network:

Phase 1, with construction under way (see photo) and scheduled to go live in early August, brings an ultra-high-speed fiber loop from the ECFiber central office near I89 Exit 3, along VT Routes 107 and 12,  to the center of Barnard. ECFiber expects to begin connecting businesses and residents who live on this route in early August and will provide detailed subscriber information closer to that date.

ECFiber has 23 member towns, but Barnard could be the most enthusiastic. This is as grassroots as it gets:

At its June meeting, the ECFiber Governing Board authorized an initiative to extend service to the rest of Barnard town. This requires a second round of capital-raising through a similar "friends and families" offering directed specifically to residents, businesses, and others who wish to support the deployment of universal broadband in Barnard. Loredo Sola, ECF Governing Board Chair commented, "When we first took our plan to Barnard, we were inundated with residents offering to pay the entire cost of extending the Phase 1 trunk to their homes. This enthusiastic response inspired us to authorize a Barnard-only fund drive."  ECFiber will be organizing informational meetings for Barnard residents and businesses to explain the details of the plan. When sufficient funds have been committed to build out the entire town, the Barnard Local Fund will close, and construction of Phase 2 can begin.

Barnard had 94% of the community presubscribe! The success of ECFiber comes without any support of the state, which has continued to pretend wireless connections and out-of-state corporations will provide the networks necessary for the economic development needed by communities. Valley News took note of the story and expanded on it:

Without other funding streams, it could take seven to 10 years to build out to all 23 towns, Nulty said, but the company is committed to seeing it happen.

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.

Update: We have covered the second round of financing from ECFiber here.

The East Central Vermont Fiber Network, connecting some 23 rural towns, announced back in July that they would self finance a pilot project as a preliminary step to securing the full funding for the project.

Right around Thanksgiving, last year, David Brown updated the community on progress via an article in the Vermont Standard:

It would have been terrific to get the $50million needed to build out all 35,000 telephone and electric poles with 1,500 miles of fiber optic cable. Along the way, we learned an important lesson. We noticed that government money went to existing telephone companies to expand existing networks rather than funding start-ups like ours. That’s when the ECFibernauts decided on a change in strategy: build a small network, get a few real customers, and deliver rock-solid ultra-fast Internet to them as a proof of concept – all using our own money. Then, when all the critical components are up and running, go to the commercial markets for funding needed to expand out to all 23 towns.

The ECFiber Governing Board and our technology partners ValleyNet, Inc. are fortunate to have several experienced financiers within our ranks. Working with our attorneys (to keep everything legal) ECFiber is reaching out to the community with a private offering of tax-exempt promissory notes. As of this writing, we have raised more than three-quarters of what is needed to complete Phase I of our project. The ECFiber hub is now under construction on Waterman Road in Royalton and an initial pole attachment application for 500 poles is being processed. Phase I will bring ECFiber service to selected businesses, schools, town facilities and residents in Bethel, Barnard, Stockbridge and Royalton.

While the bad news about Burlington Telecom (BT) has traveled far and wide, it has been marked with errors, misinformation, and inaccurate comparisons to other projects. MuniNetworks.org will weigh in on this issue with a series of posts to explain what happened, what did not happen, and what lessons we can learn from it. But today, we are publishing a commentary from Tim Nulty, the General Manager who started BT and is now working with the folks in East Central Vermont to build a rural FTTH network. In this commentary he discusses his experiences with Burlington Telecom and what lessons it has for the EC Fiber project. In short, they differ in important ways.

Business Plans of Burlington Telecom and ECFiber Numerous loose allegations have recently appeared in the press regarding the business plans of Burlington Telecom and ECFiber. DPS Commissioner David O’Brien and John Briggs of the Burlington Free Press are examples but others have also chimed in. These statements are inaccurate, misinformed and unfounded. Since they affect organizations that are important to thousands of Vermonters they need to be corrected. BT’s business plan was based on those of similar Fiber-to-the-Home (FTTH) networks already running and successful at the time…including Reedsburg, WI; Bristol, VA, Kutztown, PA; Dalton, GA and Winona, Minn. Experts from these projects were consulted in developing BT’s plan. Several came to Burlington to assist with and vet BT’s planning and BT staff visited them to in turn. All of these networks were built in towns, which like Burlington, had established broadband incumbents already in place so their experience was highly relevant. By their fifth year all these networks had achieved penetration rates over 55% and most over 65%. A study by survey firm RVA, in 2007 and updated in 2009 identified 57 municipal FTTH networks operating in the USA and calculated that the average penetration, including new start-ups, was 54%. BT’s business plan was constructed so that it would become profitable with 4800 - 5000 customers of the 19,500 potential—a more conservative take rate than comparable networks had actually achieved in practice. This provided BT with a substantial “safety cushion”. All capital-intensive investments-- power stations, airports, steel mills--take some time to become profitable. This is also true of telecoms.

Vermonters are asking some hard questions about the federal broadband stimulus decision to throw money at a wireless network for Vermont rather than loaning money to an organization dedicated to delivering real broadband. Senator Bernie Sanders convened a meeting to discuss the awards toward the end of October.

Senator Bernie Sanders led off his “broadband town meeting” Saturday morning at Vermont Technical College with a ringing affirmation of the need for better broadband coverage in Vermont and the nation. However, nobody in the crowd of nearly 300 people needed to be convinced of that. What they wanted to know was whether a huge new federal grant to a private company was the right way to do it.

VTel, a small private telephone company, received a $116 million grant to build a FTTH network to serve their existing 18,000 footprint as well as a wireless network that is intended to serve the entire state. In contrast, the East Central Vermont Fiber Network (which we have covered previously), applied for a loan to build a FTTH network to everyone in the 24 communities that have joined together to form the network. The ECFiber network would be run by a nonprofit and would repay the loan from revenue generated by selling triple-play services on the network.

The East Central Vermont Fiber Network is launching a pilot project to start connecting rural customers with a FTTH network. EC Fiber has long labored to find funding -- it was one of many projects to see funding avenues disappear with the economic collapse following the fall of Lehman Brothers. The Feds also failed to fund them (instead opting to fund middle mile after middle mile of projects that were less offensive to powerful incumbent companies. But they have returned to the private markets and feel sufficiently confident about financing options to build this pilot project.

The pilot project will provide a solid foundation for the capital lease used to build out the rest of the network, providing 100% coverage in 23 towns in East Central Vermont. While the intent of the project is to prove that the larger project is viable, according to Nulty, “it will be able to stand on its own if we don’t raise another dime of capital.”

The project is expected to cost some $80 million in total to cover the 23 participating towns. ECFiber has already obtained the necessary permissions from the State to offer video and telecommunications services. The Pilot Project targets the town of Bethel, where the central hub for the entire network is located. ECFiber is one of many groups that are using a nonprofit ownership model to build the network. The towns work together to create a nonprofit that will finance, own, and operate the network to ensure community needs are put before profits -- now and in the future. Update: The pilot project will only offer broadband and phone services due to the high fixed cost of trying to offer video services for such a small population.