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January 10, 2010

Backroads Broadband

We ARE going to get there from here. The Backroads Broadband Program, which was proposed by Governor Jim Douglas in his State of the State address to the legislature last week, is aimed at making broadband available to the last most-difficult 5% or so of Vermont residences, which are sparsely scattered along remote dirt roads or on the wrong side of signal-blocking hills and mountains. The proposed plan helps the economics of telecom providers that serve the very difficult to serve by accelerating the signup rate so that these providers can get a faster return on their investment than they would otherwise and so Vermonters get the advantage of being online sooner rather than later.

We currently estimate that about 85% of Vermont addresses have access to reasonable broadband (satellite doesn't count!). That number could rise to as much 95% assuming that FairPoint and Comcast complete the buildouts they are legally obligated to do and assuming that most of our broadband applications for stimulus money are granted (that's probably optimistic).

It's frustrating but the feds have been very slow to announce winners of the broadband grants. First they said they would do so in early November, then December. Come December they announced just a few percent of the national total and have only dribbled out a few announcements since then. Many telecom projects have been delayed this year as carriers wait to find out what they can get grants for. Stimulus announced but delayed has a contrary effect; it costs jobs and its costs progress. Soon there is supposed to be an opportunity to apply for a second round of broadband stimulus, but the rules for that haven't been announced. It's also hard to plan for the second round when we don't know the results of the first.

But, complaining aside, we need to move ahead to make sure broadband is available and adopted everywhere in the state. Rural economic survival depends on affordable broadband access as do the ability to deliver e-health, e-education, and e-government. Backroads Broadband proposes to use $3.17 million of flexible stimulus money (technically state fiscal stabilization fund or SFSF) that we know we have to assure that we're moving ahead in our most difficult areas.

Up until now providers who want to serve Vermont's rural areas have faced three obstacles:

  1. Lack of affordable highspeed wholesale connections to the Internet in rural areas (like not having any Interstates or even state highways);
  2. The high cost per residence of deployment due to the low number of residences per mile and difficult terrain;
  3. Relatively slow signup in areas that have not previously had service both because of setup fees required for some technologies and because, when a whole community has gotten by without Internet, immediate signup is not as compelling as when all your neighbors are already online and posting stuff you want to see to YouTube.

Problem #1 is well on its way to being solved. VELCO, our statewide electrical wholesale transmission utility, is in the process of building 1200 miles of high-capacity fiber to pretty much every corner of the state. This is being done without state or federal money and should be done within two years. The $69 million Smart Grid grant awarded to Vermont and the $69 million of utility money that will match it will further improve our data backbone. A collaboration the Vermont Telecommunications Authority (VTA) is managing with wholesale providers to use this capacity should result in wholesale and commercial rates for Internet access in rural Vermont which are competitive not only with our own little cities but also with major metropolitan areas in the US.

Problem #2 isn't going to go away. We don't want Vermont to be either over-populated or flat. We've got to live with sparse population and tough terrain but we can't let these stop us.

Backroads Broadband addresses problem #3. As proposed, money will be available as an incentive to formerly unserved households to hook up quickly. The incentive is only available through providers who agree to cover 100% of an area; we don't want to leave even smaller and less economic scraps of unserved geography behind. Providers who do agree to full coverage will be able to offer qualified new subscribers either deeply discounted (maybe even free) first year service or a big break on setup costs; financing for this incentive will come from the VTA funded first by the SFSF money and, assuming the program is successful but a little more is needed, up to $1.83m of general funds from fiscal year 2012.

The Backroads Broadband Program is over after two years; the deadline itself will create a sense of urgency. Both for consumers and for providers, the message is use it or lose it. In two years, broadband should be everywhere. We should reach a critical mass of people online so that there is a compelling reason for almost everyone offline to actually get connected and so Vermonters can count on broadband for their own purposes and so the State can count on broadband to deliver services and for e-education.

Right now this program is just proposal although initial reaction to it has been positive. Legislation will be introduced to appropriate the federal money for this purpose (under Vermont law, the Governor cannot spend this money without a legislative appropriation). Hearings will indubitably be held by the relevant committees. You'll have a chance to comment for, against, or something else. Suggestions for improvement are welcome.

We are going to get there from here.

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