High speed internet is no longer a luxury. In addition to being indispensable for virtually all businesses, it is the lifeline for many of Vermont’s cottage industries or work-from-home artists, craftspeople, and start-ups. Unfortunately, for too many people it is a frayed and unreliable lifeline.
How did we get here?
In Vermont, electric and telephone service are provided by regulated monopolies. The agreement is that providers of both services will operate under tight state regulation in exchange for a designated territory. A look at the map of electric utility territories clearly illustrates the history of private electric companies expanding only into territories with enough population density to earn them money. It was left to the electric co-ops to provide this now essential service into the boondocks, which was only feasible with serious federal commitment in the form of the Rural Electrification Program. But it worked.
The growth of broadband service is following an identical track. But broadband is federally regulated – and the federal government is clear that they still prefer a lightly regulated “free enterprise” approach. Private companies like Consolidated, xFinity, and VTel will build out service where they can make money, or where they receive subsidies. Any area providing fewer than about 15-20 customers per mile just don’t interest them. Unless there are subsidies. Most telephone companies are offering service to their existing customers but that is often a copper wire-based DSL internet in rural areas which has many limitations.
So what can we do?
The House Energy and Technology has approved a bill which takes a three-pronged approach.
- Currently, incentives for broadband providers to expand unto unserved or underserved areas come from the Connectivity Initiative. That is funded by the Universal Service charge on your phone bill – currently a 2% tax. But that tax first funds the E-911 service and some other programs as well. Then whatever is left over gets split and one of those portions is the available money for broadband expansion. In 2018 it was about $200,000. In 2019 it is forecast to be $0.
The Committee’s proposal is to add another 0.5% to that tax; that would generate about $1.5 million annually. On my home’s phone bill it would be an extra 4.5¢ per month.
2) The bill also requires a feasibility study of electric utilities providing broadband service, as is already happening in some states. Certain synergies exist: electric utilities already service almost every building in the state. Utilities require more intensive data handling to become efficient real-time energy managers; they also require a comprehensive, high speed communications network
There are obvious challenges as well. Utilities do a good job operating within the regulated monopoly sphere. But broadband is lightly regulated and highly competitive, so we are asking utilities to operate two very different business models together.
3) Recognizing that to date, neither private enterprise or the state has been able to resolve these issues the bill also creates a “toolbox” to assist communications union districts and other entities to take on broadband network expansion and operation. Learning from the experience of EC Fiber we are offering three tools: a new technical expert position created to advise these entities; grants and low interest loans for planning and construction; and a streamlined process for “makeready” – getting wires onto the poles.
These three options are not the only ones, but they represent a variety of approaches. Different areas require different solutions, and hopefully these options will fit different needs in different places.