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May 10, 2021

Broadband Equity Isn’t Happening in Vermont This Year

Why did Progressive Senator Pearson lead the opposition?

You’d think Progressives would be all in for a plan to use a fraction of federal Rescue funds to assure that every Vermont family regardless of income or location had a chance to get connected immediately to the broadband service they need to participate in the post-pandemic world. You’d be wrong!

You’d think a plan to provide outreach, technical help, training, and subsidies when required to families whose children have to go to the McD parking lot to do their homework and who have to go to the emergency room rather than see a teledoc would sail through a legislature with a huge Democrat majority despite conservative concern that a temporary subsidy program would become permanent. You’d be wrong!

You’d think that the administration of Phil Scott, which has done a great job of leading the state through the pandemic, would seize the opportunity to lead a crucial aspect of pandemic recovery. You’d be wrong! The administration was largely AWOL on this issue.

Why is the Vermont General Assembly on the verge of allocating $150 million of Rescue funds to yet-to-be-defined broadband construction projects which, at best, won’t be completed for five years, but refusing to allocate even $5 million to low-income Vermonters who could be brought online immediately? Why are they refusing to require that projects built with state and federal funds include low-income programs so that they can be accessible by all? Frankly, I don’t know.

Sen. Chris Pearson (P/D-Chittenden) and Sen. Ruth Hardy (D-Addison) led the opposition in the Senate Finance Committee to a proposal called the “Digital Equity and Affordability Program” introduced by Sen. Randy Brock (R-Franklin), which included a Broadband Corps to help an estimated 50,000+ eligible families find providers they can connect to immediately and get access to existing and new subsidies. According to VT Digger,

“By helping private providers offer subsidized service, the state would divert customers away from the CUDS [Communications Union Districts] and toward the companies that historically have avoided building out in rural areas, Pearson said.

“’The problem is that that could easily undermine the CUD model, which is essential if we’re going to get broadband to the outskirts, to the very far end of the dirt road, and you can’t undermine their business model, so it’s a real balance,’ Pearson said.”

The CUDs were established by the legislature several years ago as vehicles for municipal cooperation to provide broadband access in parts of Vermont which lack usable internet because it has been unprofitable to serve them with traditional technology. The private sector had not solved this problem. The idea was that the CUDs would borrow money at favorable municipal rates and, since they had no shareholders to satisfy, would be able to provide service and repay their loans. The model was EC Fiber, which already provides fiber service in rural parts of 23 towns in Vermont.

The CUDs were preparing plans and meant to follow EC Fiber’s lead and borrow money commercially. But, all of a sudden, we have a deluge of federal funds from CARES and ARPA legislation. There is probably more to come from the Biden infrastructure proposal. The Governor proposed $250 million and the legislature is currently allocating $150 million largely to finance the long-delayed buildout; both advocate funneling almost all of the money through the CUDs.

Whether it is wise to immediately commit all the marbles to well-meaning volunteer organizations with no track record and little relevant expertise is another subject for another post. Let’s assume for now that CUDs are the way to go for broadband buildout and go back to Sen. Pearson’s absurd claim that helping people get online now with ISPs already serving their neighborhood will undermine the “business” plan of the CUDs.

About 60% of Vermont families, including most in Pearson’s Chittenden County, live in areas served by Comcast which already has a $10/month low-income plan (50Mbps down, 5Mbps up, no data cap) with no signup charges and free equipment. No subsidy money would have gone through these families to Comcast under Brock’s proposal but the Broadband Corp would have encouraged and helped eligible families to sign up for it. Since these areas are certainly not “unserved”, they are not in need of CUD buildout. A state-sponsored survey shows that only 10% of eligible families take advantage of this program. Hard to see how getting these families online now at an affordable price hurts the CUDs but apparently Pearson thinks it would.

Another 25% of Vermont families live in areas where there is adequate broadband service but it is too expensive for some. This includes the territory served by EC Fiber which costs $140 to install and $72/month for minimum acceptable service. This area is also served by wireless ISPs, small telcos and cable companies. Under Brock’s proposal installation and equipment charges and all but $25 of monthly charges would have been subsidized for a limited time. Families in these areas would have been able to get online with one of the providers before the next school year begins.

The CUDs do intend to overbuild at least the parts of this area where there is not fiber available to each residence. Even though the need is not desperate in these areas, the CUDs say, anything but fiber is unacceptable and they need the income from these areas to subsidize their buildout to even more thinly served areas. EC Fiber is in some of this area and would benefit from new signups with this subsidy; they have no formal low-income program of their own although they have been generous on an informal basis. The rest of the CUDs offer no service today and so families who sign up in “their territories” would be signing up with Vermont companies like Cloud Alliance, Stowe Cable, and GlobalNet.

Sen. Pearson’s stated fear is that these customers won’t switch to CUD service when and if it’s available. Better to leave them without service, he says, than risk hurting the business plans of the CUDs. On WCAX he said “You’re undermining their ability to get to the last house. You’re effectively subsidizing these private companies to cherry-pick customers along the way.” Cherry picking?? EC Fiber has no formal affordable plan. Only about 35% of the families to whom their service is physically available actually buy it – presumably affordability is an issue for many of them. CUD testimony before the legislature (which may not be representative of all CUDs) was that, even with the flood of federal capital, CUDs will not be able to offer low-income plans. The families Sen. Brock proposed giving subsidies to can’t possibly be part of the CUD business plan since the CUDs say they can’t offer them service they can afford. Nothing in this subsidy plan would have hurt the CUDs ability to sell to those who can afford their service.

The final 15% of Vermont families live where there is no traditional broadband access good enough for the post-pandemic families. The CUDs are frank that they can’t possibly reach the end of these roads for five more years. Affluent Vermonters (and new urban refugees) in remote areas are ordering service from Starlink, the first of a new generation of low earth orbit satellite (LEOS) service providers who provide more than adequate service optimized for remote areas. 5G cell service will probably also be available in part of these areas soon. In this case Sen. Pearson is saying that low-income people should patiently wait five years for CUD service, which they probably won’t be able to afford when it gets to them. The statement is simply elitist and inhumane. It’s also economic nonsense. Even affluent Vermonters choosing Starlink are no threat to the CUDs, assuming the CUDs can offer them a better product or a better service when they finally reach them. Starlink has no contract commitment so customers are free to switch.

It is now all but certain that the legislature will deliberately refuse the opportunity to help unconnected low-income Vermont families thrive in a post-pandemic world which requires the ability to work from home, study from home, and take advantage of telemedicine. It’s ironic as well as tragic that this failure is based on a perceived need to advance the “business plan” of non-profits formed to remedy the failure of for-profit companies to provide broadband to the unserved.

[Bitterness alert: Mary and I have been working on an effort called Broadband Equity NOW! to convince the executive and legislative branches to seize this unique opportunity to close the broadband gap in Vermont immediately with short-term measures and set the stage for long-term affordability. We had lots of help from many caring people of all political persuasions and are disappointed that we failed and that the broadband gap, instead of being bridged, is growing into a broadband gulch.  We are also appalled that opponents of these proposals claimed that we were funded by Elon Musk (founder of Starlink) or some other commercial entity.]

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