Telecom Plan Raises Questions About Future Internet Service

Aug 25, 2014

Telecommunications is an essential part of the lives of most people.

If you own a telephone,  use the Internet, or subscribe to cable television, how can the state make sure those services are up-to-date, reliable and affordable in the future?

That’s a question the Department of Public Service is posing in a series of public hearings this week.

The department’s draft 10 year plan for the future of telecommunications in Vermont covers everything from landline and cellular phone service to cable television and E 911 networks.

It also includes an ambitious goal for broadband service.

It's a very ambitious goal, but it's a very expensive goal" - Vermont Telecom Director Jim Porter

It would essentially require fiber to home service to every Vermont address by the year 2024. 

That’s because earlier this year lawmakers decided that a decade from now, all Vermonters should have access to upload and download speeds of 100 megabits per second (Mbps).  

It’s a huge leap. Right now most Vermont broadband is from cable, DSL or wireless technology that isn’t capable of those speeds.

The government’s authority to regulate broadband is limited. Grants are used to enable service providers to extend and improve broadband coverage in underserved areas.

But it’s not clear how much money will be available in the future.

Department of Public Service Telecommunications Director Jim Porter says the 2024 goal is an aspiration, not a promise. 

“It’s one of the difficulties in writing a 10-year plan,” says Porter.  “Anyone can write a plan that mandates whatever speed, the problem is I don’t control the funding source. You try to work as best you can.  It’s a very ambitious goal, but it’s a very expensive goal.”

The definition of  high speed broadband is a moving target as technology improves. The current Federal Communications Commission benchmark is a download speed of 4 Mbps and upload speeds of 1 Mbps.

Porter says currently 78 percent of Vermont addresses have broadband speeds that meet that definition.

Earlier this month the FCC indicated it may raise the bar from 4/1 to 10/1. Porter says rather than focusing exclusively on the long-term goal of fiber optic speeds, the telecommunications plan takes an incremental approach.

“What we’re trying to do in the plan is have benchmarks so that we bring along all Vermonters to a basic level of service.  At this point our next goal to be met is either a 4/1 speed or a 10/1 speed depending on what the FCC does,” he says.

Porter says a new state connectivity fund and anticipated federal funds should help the state meet those shorter term goals.

"It's shortsighted to make that investment in technology that can't go the whole nine yards" - Irv Thomae of ECFiber

But the incremental approach raises the question of whether money should be spent on projects that can’t provide speeds in line with the long term goal.

“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.

Vermont is one of approximately 20 states with laws that restrict the ability of municipalities to invest in broadband systems.

Most of the ECFiber capital comes from small loans from several hundred individuals, but it is a municipal system, owned by the towns it serves.

Thomae is concerned about a section of the plan that calls for policies that refrain from funding municipal systems if it reduces competition. He says that provision of the plan shows a preference for for-profit providers over community based services.

“To see a thumb on the scale, here in Vermont, against municipally-owned efforts to reach customers where the commercial entities have chosen not to compete; to even suggest that we are a competitive threat to those deep-pocketed entities is astonishing,” says Thomae.

The 10-year Telecom Plan also considers the challenges facing Vermont’s so-called incumbent local exchange carriers, or ILECs.

These are the land line companies responsible for local telephone service.  They have lost much of their business to cable companies and cellular service providers.

A study done for the Public Service Department earlier this year reported that Vermont’s 10 ILECs phone companies together lost $39 million in 2011.

Vermont’s smaller local phone companies are now also in the business of providing broadband Internet service. But Roger Nishi of Waitsfield and Champlain Valley Telecom says the losses from the landline side of the business are too great.

“We’ve hit a point now where the broadband isn’t replacing all those revenue losses,” he says.

The situation is even more challenging in light of an FCC decision to phase out the current federal Universal Service Fund subsidy for rural telephone service. The money will be used to bring broadband to underserved areas through a new program called the Connect America Fund. 

Nishi says a state decision to redirect a portion of the Vermont Universal Service Fund will help make up for some of the loss of federal funds, but it will fall far short of filling the gap. He says companies may have to raise rates to rural customers.

Nishi says because the same lines that carry voice also carry broadband, rural land line companies see government efforts to support high speed broadband as essential to their futures. Nishi says the companies can’t build the networks on their own.

“If the country is serious about saying no one is going to be left behind, everyone deserves 100 Mbps symmetrical into their home, then we need to invest in fiber networks everywhere,” he says.

“There’s going to have to be money that comes from somewhere because with the current uncertainty in the market companies can’t make those investments.”

"There's a lot of money that could have gone out to the boonies and built fiber to the cow." - Retired PSD engineer Charles Larkin

Some argue that Vermont already has an extensive fiber network that could be better utilized to meet the telecom plan’s goals.

Sitting on his porch in Middlesex retired Public Service Department engineer Charles Larkin holds a photograph of a utility pole with fiber cables from three different companies.

“If we didn’t have all that money spent to put fiber all over the major areas of the state, if one company or two companies had fiber and the rest were on it, there’s a lot of money that could have gone out to the boonies and built fiber to the cow,” says Larkin.

During the legislative session a draft telecom bill included language that would have linked a telecom company’s application for a state Certificate of Public Good to the Telecommunications Plan. The language was removed in the final version of the bill.

Larkin says such a provision could be used to require companies to provide open access and lease space on their fiber networks to competitors. Open access raises legal questions and so far no state or municipality has succeeded in requiring providers like cable companies to lease resources to the competition. 

Larkin is disappointed that the state hasn’t done more to explore open access. He says the draft telecom plan offers no ideas for how to achieve goals.

“Even if there was no money, you should at least say if you have money, this is would we would do,” he says.

“But when you say, ‘open access, don’t know how to do that. Money, don’t know where it is.’ So therefore, we’ll have an aspirational plan,” he said.

Craig Settles, an author and broadband industry analyst, says most state long term Telecom Plans are aspirational and not especially detailed. Settles says now that the era of distributing federal economic stimulus for broadband is over, it’s unclear how much federal money will be available for broadband.

He says the idea of a government funded statewide fiber network that is leased to providers is “the smartest thing to do.” But he says due to politics and competitive concerns, it hasn’t been done successfully anywhere.

Settles believes states might be wiser to avoid a "one size fits all" approach to broadband. 

He says they may not need to provide the highest speeds to every location and suggests those decisions could be made by the communities themselves.   

“I think that if Vermont wanted to have the best end result, what they would do is create a structure and a criteria for communities to define and validate some level of need and then create programs that support those communities.  That takes away the artificiality of standard speeds,” says Settles.

The Department of Public Service will hold hearings on the plan:

  • Burlington, Monday Aug. 25, Holiday Inn, Oak Room, 1068 Williston Road
  • Brattleboro, Tuesday, Aug. 26,  Hampton Inn, 1378 Putney Road
  • Barre, Wednesday Aug. 27, Alumni Hall, 16 Auditorium Hill Road
  • Rutland, Thursday, Aug. 28,  Hampton Inn, 47 Farrell Road

All hearings start at 7 p.m.

The House Committee on Commerce and Economic Development and Senate Committee on Finance will hold a joint hearing on the plan on Thursday, Aug. 28 at 10 a.m. in Room 11 of the Statehouse.