Vermont Internet Service Improvement Program Created In 2014 Hasn't Used Funds

Oct 4, 2016

A state program created more than two years ago to fund improvements to internet service has yet to award any money.

It’s estimated about $1.5 million has accumulated in the Vermont High-Cost Program since it was created.

The stakes are not enormous in terms of dollars compared to federal broadband money that’s come into Vermont, but state resources are limited.

The Legislature created the program in 2014 to provide money for designated telephone companies to improve internet service in rural exchanges.   

The money comes out of the Universal Service Fund, which is a surcharge levied on all retail telecommunications.

The High-Cost Program is one of two such efforts created by the Legislature.

The other is the Connectivity Initiative, which has been giving out grants to internet service providers since April of 2015.

The High-Cost Program money hasn’t been used because the Public Service Board hasn’t worked through the process of deciding how it should be awarded and which telephone companies should be designated “Vermont Eligible Telecommunications Carriers” to receive the funds.

“Not being able to access this money has essentially caused us to only be able to make half the investment in broadband for the last two years that otherwise we would have made,” says Jim Porter, director of telecommunications and connectivity at the Department of Public Service.

"Not being able to access this money has essentially caused us to only be able to make half the investment in broadband for the last two years that otherwise we would have made." - Jim Porter, Department of Public Service

Porter calls the delay in accessing the funds “a big deal.”

The chair of the House Commerce and Economic Development Committee agrees.  

“It’s authorized, it's ready to go," says Pownal Rep. Bill Botzow. "It may not be enough money to do everything we want, but to not have that money available seems to me very problematic."

The High-Cost Program is supposed to fund internet network improvements in rural exchanges where there is not service available from at least two providers.

The Public Service Board has allowed the cable company Comcast to intervene in the process.

The company, which provides internet as well as television and voice service, argued the High-Cost Program funds should only be available where there isn’t broadband service from an unsubsidized competitor – such as Comcast.   

It appears the phone companies agree. Last month they joined Comcast in submitting a Memorandum of Understanding (MOU) in which they ask the Public Service Board to agree to their plan to divide rural exchanges town by town.

"It may not be enough money to do everything we want, but to not have that money available seems to me very problematic." - Pownal Rep. Bill Botzow

The MOU also asks the board to allow the companies to request a waiver to forgo making internet improvements under the program to any areas that already have service from another internet provider.  

“We share the same concern that Comcast does in that we want to be sure that the phone companies spend this money in areas where there’s not service of 4/1 or better,” says Porter.

The Legislature specified that the High-Cost Program should be used to improve internet speeds to at least 4 megabits per second (Mbps) download and 1 Mbps upload.  

That’s far short of the 25/3 Mbps that the FCC currently defines as broadband – and the long-term goal of universal 100 Mbps upload and download speeds the state’s 10 year telecommunications plan calls for.

State statute calls for supporting the best commercially-available technology and avoiding investments in “technology that becomes outmoded within a short period after installation.”

Porter says despite the long-term goal, the short-term focus should be on helping those Vermonters with the slowest internet speeds.

“To be able to build infrastructure that brings them speeds in excess of 4/1, sometimes with speeds of 10/1, they’re in a vastly better situation than they were before,” he says.

But Irv Thomae of the central Vermont fiber-to-home provider ECFiber says investments in slower technology mean the state will have to double back someday and spend more money on upgrades.

Thomae says most of the cost of expanding internet service is for labor, not the equipment.

“It costs very little more to be putting out fiber optic cable than to be putting out copper-based technology, which is going to max out,” says Thomae.

He says the state should provide incentives for much higher internet speeds than those required under the High-Cost Program.