Showing posts with label Vermont. Show all posts
Showing posts with label Vermont. Show all posts

Friday, February 02, 2024

Paradoxical affordability crisis facing publicly owned Vermont CUDs

NEK Broadband continues to bring affordable fiber access to the long-neglected corners of the Green Mountain State. According to the latest update by NEK Broadband, a recently completed rollout has delivered affordable fiber access to 700 new addresses across multiple rural Vermont communities. NEK Broadband is one of nine Communications Union Districts (CUDs) scattered across the state of Vermont. NEK Broadband alone represents 45 Vermont communities across Caledonia, Essex, Orleans and Lamoille Counties in the northeast part of the state (see the full list of communities here).

NEK Broadband currently offers four tiers of broadband service: symmetrical 50 megabit per second (Mbps) service for $80 a month; symmetrical 250 Mbps service for $103 a month; symmetrical 500 Mbps service for $135 a month; and a symmetrical gigabit per second (Gbps) offering for $250 a month.

Unlike many large private cable and phone companies, there are no hidden fees, usage caps, or long-term contracts with NEK pricing. As a non-profit municipality, any revenue created through broadband subscription services gets funneled back into building and repairing infrastructure and increasing affordability for local residents.

Vermont CUDs tell Fierce Wireless they are considering the creation of a new, statewide fund to help fill the gap defunding the ACP will create, leveraging “philanthropic dollars, local donations, and digital equity dollars.”
https://communitynets.org/content/nek-broadband-expands-access-affordable-fiber-rural-vermont

If NEK Broadband’s rates are representative of other CUDs, it’s not hard to see why some households might struggle to afford the lowest cost option at $80 a month. It’s also something of a head scratcher insofar as publicly owned advanced telecommunications infrastructure comes with a lower cost structure than investor owned that must generate profits for investors and pay income taxes.

That offers major advantages for access and affordability since more premises can be connected and offered lower monthly access fees than with investor-owned ISPs. Yet ironically, here we are witnessing the same affordability challenges as with investor owned ISPs. And not surprisingly so at rates that emulate those of investor-owned ISPs and unfortunately reinforce the perception of "broadband" as a luxury.

To give NEK Broadband the benefit of the doubt, it could well be those rates are needed in order to service capital expansion and finance costs. But given the affordability issue, it might behoove it and other CUDs to take another look at the numbers before resorting to setting up a charity to support affordable access. For example, can they pencil out at a flat $50/month for all residential users at the same bandwidth for all instead of slicing and dicing bandwidth into price tiers like investor-owned providers do? Most nearly all households could probably do fine over the near term with symmetric 100 to 300 Mbps, assuming they aren’t hosting server farms.

Wednesday, November 15, 2023

Public bonds to finance publicly owned open access regional fiber

Private capital is recognizing the long-term asset value of fiber to the premises (FTTP) advanced telecommunications distribution infrastructure and its ability to generate long term revenue over its estimated 30 to 50-year lifespan. It also offers first mover advantage given FTTP functions as a terminating natural monopoly. The provider that makes the initial fiber connection is unlikely to face competition later from another fiber builder and will own the customer premise for decades.

That’s evidenced in the many private equity deals over the past year with investor owned FTTP players including a joint venture between BlackRock Capital Investment and AT&T. Fundamentally, this is a regime change, shifting away from the more constrained investment model of the large incumbent telephone companies. With their highly leveraged balance sheets and the need to pay large shareholder dividends, the short term value analysis has prevailed. Hence, FTTP deployment is deployed conservatively to areas where ROI and ARPU are projected to be the most favorable, leaving most without.

Now the public bond markets have the opportunity to similarly recognize the long term value and relative safety offered by FTTP networks. To spread risk and cost of deployment to gain economies of scale – particularly important amid labor and supply chain constraints and rising interest rates -- that investment would optimally be leveraged by regional public owned networks.

A model potential path ahead lies in Vermont. In that state, one regional network comprised of 31 towns formed under state law as a Communications Union District (CUD) obtained a BB rating for its $7.53 million 2023 Series A bonds from S&P Global, the nation’s preeminent credit rating agency. “This is a historic moment,” said Stan Williams, ECFiber’s municipal finance advisor. “For the first time, a CUD will be issuing a rated bond, which means that many more investors will be competing to buy those bonds, lowering the interest rate.”

That financing could potentially be expanded significantly if the nine CUDs operating in the state jointly issued a bond to fund their expansion. That could also enhance end user affordability with the financing costs spread over a much larger base.

Doing so would help ensure Vermont can meet its goal of getting FTTP to every location connected to the electrical grid by the end of 2028, particularly given a state audit report earlier this year that identified uncertainly associated with federal grant funding as a risk to attaining it, pointing out the need to identify other funding sources. The audit also noted CUDs have not been partnering for procurement of goods and services, risking higher costs and inferior outcomes.

Thursday, August 10, 2023

California, Vermont on the right path prioritizing FTTP

The California Public Utilities Commission (CPUC) presented its draft 5-year plan to connect the state’s unserved with broadband using the $1.86 billion BEAD funding it received, and at the same time warned the total $4 billion available in state and federal funding won't be enough.

Critics of “the fiber-above all” approach have called the CPUC’s concerns “unsurprising.”

“The fiber lobby has done a great job of pitching itself as kind of the end-all, be-all, and it does have a lot of great case study for it. But there are other opportunities that can come along,” said the Wireless Internet Service Provider Association’s (WISPA) state advocacy manager for California, Steve Schwerbel.

Colorado BEAD plan is ‘agnostic’ to fiber versus fixed wireless

Wireless Internet Service Providers (WISPs) have been a valuable stopgap for widespread deficits in landline advanced telecommunications infrastructure, first coming on the scene about two decades ago when telephone companies instead of fiber deployed digital subscriber line (DSL) technology that couldn't reach many customer locations over their aging copper delivery infrastructure.

But federal policy should regard them as just that and not subsidize them going forward, particularly in any major federal infrastructure improvement initiative such as the Infrastructure Investment and Jobs Act (IIJA).

They grapple with a difficult business model in which they must purchase landline backhaul at high cost or use microwave. That forces them to offer service at high monthly rates in limited areas in order to profitably operate, hindering affordable access to even what the federal government deems basic access. They also face technical challenges of terrain and foliage growth that blocks wireless signals from reliably reaching end user premises, limiting their potential customer base and promoting churn off. And most importantly, limitations on bandwidth imposed by radio spectrum physics that does not allow them to feasibly accommodate growing bandwidth demand.

California and other states such as Vermont are demonstrating the correct, forward looking approach to set fiber to the premises (FTTP) as the standard for advanced telecommunications delivery infrastructure.

Monday, August 07, 2023

Vermont draft BEAD Five Year Action Plan: FTTP to all on grid addresses by year end 2028.

The state of Vermont expects fiber to the premises (FTTP) advanced telecommunications infrastructure will reach every location connected to the electrical grid by the end of 2028. That’s according to a draft Five Year Action Plan setting a timeline and budget to achieve universal service in the state as required by the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program.

“Vermont shares NTIA’s strong preference for deploying end-to-end fiber connectivity to all unserved and underserved locations, as well as all eligible CAIs. Aligned with the VCBB’s statutory mandate, this approach prioritizes quality, scalability, and reliability,” the draft plan states.

The draft plan anticipates all remote off grid locations will be reached by other technologies deemed “reliable” by the NTIA: hybrid fiber-coaxial cable, digital subscriber line (DSL) technology and terrestrial fixed wireless utilizing entirely licensed spectrum or using a hybrid of licensed and unlicensed spectrum.

The draft plan estimates the cost of extending fiber to all of Vermont’s approximately 50,000 locations not served by fiber excluding locations where the U.S. Federal Communications Commission has allocated grants to subsidize infrastructure under its Rural Digital Opportunity Fund (RDOF) at $500-$700 million. The plan anticipates subsidies under BEAD, the American Rescue Plan Act’s Capital Projects Fund, subgrantee matches, and other funding sources will cover this cost.

The estimate is based on road miles. The upper estimate accounts for the risk of project cost overruns due to inflation, supply chain challenges, and labor shortages. The draft plan notes additional, more extensive analysis will be required to develop a more precise cost estimate. The state intends to refine the estimate in its initial proposal to the NTIA for BEAD infrastructure subsidy funding.

The plan notes the Vermont Community Broadband Board (VCBB) will continue its support of efforts by Communications Union Districts (CUDs) organized under state law to submit and gain approval for applications for grants to extend their end-to-end fiber networks. CUDs are two or more towns that join as a municipality to jointly build telecommunications infrastructure.

Monday, July 17, 2023

BEAD requires states to plan for universal service. But it doesn't fully subsidize it, necessitating states to develop their own funding sources.

As required by the Broadband Equity Access and Deployment program, each CUD must come to the state with a universal service plan to serve every address in their jurisdiction with high-speed internet. This is especially important for solving climate change, said Hallquist. “We have to get fiber to every address to solve climate change,” she said. Fiber is critical because it reduces latency and allows for faster reaction times. The smart grid enables faster responsiveness to electrical outages, even issuing warnings when equipment is about to fail.

Unfortunately, there are several barriers implemented in the BEAD program that may affect CUDs ability to use BEAD funds in their deployment, said Hallquist. The letters of credit requirement, which mandates that grantees receive a 25 percent letter of guaranteed payment from a bank on top of the 25 percent match requirement affects CUDs and smaller providers while favoring large, established providers, she said.

 Vermont’s Unique Communications Union Districts Support BEAD Outlays

The National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program – part of the Infrastructure Investment and Jobs Act (IIJA) targets capital cost subsidies to high cost areas. They are primarily limited to addresses based on the bandwidth advertised to them; those with 80 percent of addresses not advertised at least 25 Mbps down and 3 Mbps up with latency exceeding 100ms are eligible. Public entities building fiber to the premises (FTTP) infrastructure such as Vermont's Communications Union Districts (CUDs) should thus regard them as a limited, supplemental, one time opportunistic funding source.

Notably, BEAD requires states to develop “a comprehensive, high-level plan attain universal service.” But the program contemplates states develop their own funding sources to finance it. In other words, while BEAD requires states plan for universal service, it is not intended to fully fund the construction and operational costs of universal FTTP. States and regional entities like the CUDs can do this via bond funding and utilize end user fees to service the bond debt.

Friday, March 18, 2016

Vermont lawmaker: "No adequate ongoing resource" to fund telecom infrastructure

Deerfield Valley News - VTel House at odds over Internet access info: Guite also said that some Vermonters may have been misled into believing covering every person in the state was possible. “That could require a billion dollars,” he said. He also said that he has been making this comment publicly for at least five years. “I made that statement at a meeting that Bernie Sanders organized in 2010.” H. 870 also calls for an increase of 0.5% in the universal service charge. Sibilia said that this was to help create a vitally needed program. “There is no adequate ongoing resource for expanding Internet or cell,” she said. Her hope, she said was this increase would help create that resource. She also said it would be an inadequate amount.
Image result for everett dirksen
Bernie Sanders should paraphrase the late Illinois Senator Everett Dirksen: "A billion here, a billion there, and pretty soon you're talking about real access."

Monday, March 14, 2016

Vermont regional telecom district accesses institutional bond funding for expansion

ECFiber's growth plans could double service area | Vermont Business Magazine: ECFiber, based in Royalton and now officially known as the East Central Vermont Telecommunications District, announced plans to activate 110 miles of network in 2016 and build an additional 250 miles in 2017. “Working with bond underwriters, we believe ECFiber has reached the point in its financial development that allows us to access institutional capital markets for the first time in 2016,” says Irv Thomae, District Chairman. “Since 2011, we have relied on 450 local investors, some state-provided dark fiber, and VTA and Connectivity Fund grants to build the first 340 miles of network. By the end of 2016 we will be in parts of 21 of our 24 member towns, but many neighborhoods that desperately need ECFiber service cannot afford to raise the $30,000 per mile to complete a build. Outside financing would finally allow us to build to those towns that need us the most, not just those where we can raise capital.”

Regional telecom fiber modernization projects such as the Utah Telecommunication Open Infrastructure Agency and WiredWest in western Massachusetts have hit obstacles obtaining sufficient capitalization to expand. Due to the high cost of infrastructure projects, access to capital finance markets is critical given limited funding available from local governments and property owners.

According to this story by Vermont Business Magazine, the East Central Vermont Telecommunications District is accessing the institutional bond market for the first time for needed expansion capital, a development that bears watching since it demonstrates the bond markets' receptiveness to working with projects sponsored by utility districts.

Monday, November 16, 2015

Vermont's failure to ensure universal premise Internet service demonstrates need for national telecom infrastructure initiative

Some Vermonters Are Still Stranded In A Broadband 'Wilderness' | Vermont Public Radio: The importance of good broadband for work and education has been stated many times. Yet, as many clamor for faster speeds, there are hundreds of Vermonters still without anything the state considers broadband service.

* * *

Most have satellite broadband but aren’t satisfied with it. They say at
the prices they’re willing or able to pay, slower speeds and limits on
downloads keep them from doing much more than checking email.

* * *

But nearly two years after Gov. Shumlin’s self-imposed deadline for providing broadband to every address in Vermont, there are still those who are stuck in the wilderness.


This situation isn't likely to change in Vermont and other states anytime soon unless as I discuss in my recent book Service Unavailable: America's Telecommunications Infrastructure Crisis, the federal government steps in with an aggressive and well funded national telecommunications infrastructure initiative. Given how far the nation has fallen behind in the generation since the Internet came into popular use, a crash program is needed to catch up.

Thursday, August 28, 2014

Telecom Plan Raises Questions About Future Internet Service | Vermont Public Radio

Telecom Plan Raises Questions About Future Internet Service | Vermont Public Radio: “It’s shortsighted to make that investment in technology that can’t go the whole nine yards,” says Irv Thomae, chairman of the governing board of ECFiber, which currently serves 800 customers in six central Vermont towns.

Thomae says the draft plan doesn’t represent a commitment to the Legislature’s goal.

“If the Telecom Plan says we aren’t to take the 100 Mbps seriously, then we aren’t going to take it seriously,” he says.

Thomae says state funded "dark fiber" projects constructed by the Vermont Telecommunications Authority should be the model for reaching the 2014 goal. These projects enable service providers to lease space and compete for customers.

Thomae says the state should raise money through the sale of bonds to finance an extensive dark fiber system.

Thomae raises a key issue on U.S. telecom infrastructure planning and financing policy. The nation is at an inflection point where the service line extensions of the legacy telephone and cable companies have gone about as far as they can within their business models in terms of making landline Internet service accessible to all American homes and businesses. And possessing the capacity to deliver the bandwidth that will be needed going forward as bandwidth demand doubles every couple of years or so, consistent with Moore's Law on microprocessor development.

Vermont's situation is a metaphor for the United States as a whole and points to the need for greatly expanded public sector financing capacity for this infrastructure that's as critical to the 21st century as highways and electricity were to the 20th.

Thursday, March 06, 2014

Resolution Seeks High-Speed Internet For All Putney Residents | Vermont Public Radio

Resolution Seeks High-Speed Internet For All Putney Residents | Vermont Public Radio: “The governor made us a promise at town meeting here last year that he would get everything wired 100 percent, no ifs, ands or buts,” Field says. “I’ve got the quote.”

Instead, area lawmakers got an earful from residents who say they’re tired of hearing that Putney already has Internet service.

"Close to 300 of us in Putney only have dial-up," says Field. "In my case I pay $80 a month to Hughes.net. Can’t Skype, can’t stream anything. My wife’s a pediatrician in town. She can’t do her electronic medical records."

Nancy Braus says people on her road are getting Internet from Comcast or Fairpoint. But not her house. Braus has a daughter who’s deaf.
A couple of observations on this story:
  • It's an example of the blow back politicians face after years of promises to address deficiencies in premises wireline Internet service with little or no tangible results.
  • Ms. Braus's comment illustrates the highly granular nature of broadband redlining that renders government subsidy programs based on mapping and funding only "unserved" and "underserved" areas impractical. One address is offered service by incumbent wireline providers while another nearby premise is not.