VTel promises $10 rates, fiber optic service to “anchor institutions”

Sen. Bernie Sanders, right, talks to an audiece at Vermont Technical College; Jonathan Adelstein is seated in the center; Michel Guite is seated on the right

By Patrick Joy

Patrick Joy is a freelance reporter.

RANDOLPH – Michel Guite, the CEO of Vermont Telephone Company, promises to bring broadband Internet access to every Vermont town that now lacks coverage. He said Vtel would provide low cost service to residential customers within the next three years.

At a public meeting on the Vermont Technical College campus on Saturday, Guite outlined his company’s plans to spend nearly $116 million in federal stimulus money – $81 million in grants and $35 million in loans – to build out fiber-optic and wireless infrastructure in Vermont. He told 200 people at the event convened by Sen. Bernie Sanders, I-Vt., that VTel will contribute an additional $30 million in equity.

Guite stopped short, however, of guaranteeing coverage to every home in the state, explaining that technical, economic and physical restrictions could bar access to isolated residential pockets. He said, however, that VTel was making every effort to reach every home, and that dead zones would be rare.

“When we say everybody – we mean pretty much, functionally, everybody – but it is complicated,” he said.

The comment elicited a chorus of groans from the audience. Critics of the VTel plan worried that the bandwidth would fall below predictions and fail to meet the demands of modern businesses, schools and governments.

Guite laid out a four-pronged plan for the federal money:

• The extension of fiber-optic service to all of VTel’s current customers.

• A build-out of fiber-optic service to 200 “anchor institutions” throughout the state including select schools, hospitals, colleges, universities, community colleges, rural independent telephone companies, larger telephone companies and public safety facilities, including police barracks.

• A cutting edge, “fourth generation,” wireless network for the nearly 100 Vermont communities that lack broadband service. The projects would be the first “4G” long-term evolution systems in the country. Wireless towers would make Internet access available in remote and hard to service areas of the state. The July listing of these target communities can be found at http://www.telecomvt.org/RFP111-documents/VTA2010-111-Summary-Maps.pdf.

• The formation of a community development outreach group to educate towns about the project’s goals and progress.

Guite also said that negotiations were under way to coordinate VTel’s project with a federally funded smart-grid program to upgrade the state’s electrical transmission grid. VTel’s broadband service could link residential and commercial electric meters with utilities, which would improve reliability and provide more information to consumers.

The project would leverage a network of between 119-150 towers, all but a handful of which Guite said are already in place and in use as cell towers. Guite acknowledged that every tower that must be built comes with potential permitting issues.

“(Permitting) is unavoidable and unpredictable,” he said. “There is no certain, locked-in answer. Towers are the most complicated, because they are the least predictable.”

Former Vermont Chief Technology Officer Tom Evslin said the project could be transformative for the state.

“This is great,” he said. “If we don’t lead the nation (in broadband technology and coverage) in three years, it’s our fault. We can still trip over our own feet, but the funding is in place. This is our chance not to be behind in the nation, but to lead.”

Members of the audience expressed hope that the project would come to fruition, and stressed that if businesses and younger Vermonters are to remain in or relocate to the state – broadband access is essential.

“In my district we have some Massachusetts border towns,” said Rep. Ann Manwaring, D-Windham. “Because we are so close to some major metropolitan areas we have people who want to move here and telecommute. That will not happen without broadband.”

While some meeting-goers voiced support for the VTel effort, others were skeptical about the project’s capabilities, especially the 4G wireless network.

“When I look at the top 5 or 6 sites that our students are accessing, they all feature video,” said Jeanne Eicks, Director of Information Technology for Vermont Law School. “Why are we going to a wireless technology that won’t meet today’s needs?”

Guite acknowledged that the wireless network’s capacity was limited. While studies have predicted speeds of between 1.5 and 10 million bits per second –depending on the service package – Guite said the network may not support streaming video at all times to all customers.

“(It will support video)…but not easily,” he said. “Every wireless link is shared and has its limits.”

Some at the meeting questioned whether a complete fiber-optic network would have been a better option. They also asked for an explanation as to why the East Central Vermont Community Fiber Network (which proposes to deliver fiber-optic-to-the-home technology to more than 20 Vermont towns) was denied federal grant funding.

“This is going to be a stop-gap measure at best,” said Stan Williams of Norwich. “We can’t stop here because wireless is not going to be the long-term answer.”

Guite and Jonathan Adelstein, the rural utilities service administrator of the U.S. Dept. of Agriculture – which will oversee the VTel project – argued that the chosen mix of fiber-optic and wireless coverage provided a cost-effective leverage of the federal funds. Sanders said the cost of installing fiber-optic service to every home in the state would be $1 billion. The national budget for broadband stimulus funding was $7 billion.

“This can deliver high bandwidth and is upgradeable,” Adelstein said. “You’ll have fiber to anchors and wireless to the home. This is the 4G LTE technology… This is the most robust wireless technology in the marketplace today.”

Evslin noted that wireless and fiber technologies are not mutually exclusive.

“Just as much as we need broadband, we need mobility,” he said. “This provides that.”

Adelstein declined to answer any questions related to the East Central Vermont Community Fiber Network, saying that the group still had a grant pending before the federal government and he was not authorized to discuss it. He said an explanation of the initial grant denial had been sent to the group.

Guite forecast that prices for the VTel wireless service would be competitive, and said basic service is slated to cost just $10 a month. He would, not, however, guarantee that those prices would remain low, but said his company has never raised rates and in fact lowered them in recent years.

“I can’t and won’t make any guarantees — we’re a business and we do strive to be successful,” he said.

Sen. Sanders acknowledged that while the government has oversight as to how the stimulus funds are spent, it has no control over retail pricing.

“The day after he gets your money he can triple your rates,” he said. “But what he’s saying is that he has a track record that suggests he is not going to triple your rates.”

Adelstein said that while rates are beyond governmental control, his agency would carefully oversee the infrastructure project.

“We hold our grantees responsible,” he said. “We don’t give all the money up front. We fund it step by step as each step is properly executed.”

Comments

  1. Patricia M Sears :

    This was a very good meeting with ‘reality checks’ all around for the donors (USG), the grantees, our congressional delegation and Vermont legislators … and potential customers. And while I do get how as potential customers it can be ‘all about me’ sometimes, I was struck by how some ‘grown-ups’ did not demonstrate some thoughtfulness gained by experience of real life.

    If you are a specialty doctor who wants to continue education and can’t access large enough broadband at home for those classes, saying you don’t want to spend the hours needed in your office to do the needful gives one pause about your committment. Are you suggesting the state walk away from this opportunity because of your situation (that has alternative solutions)?

    Bullying the USG (and one of our US Senators who brought the transparency to this important grant & its implementation) re not getting a grant is as silly as it is tiresome. Because VT is especially blessed with access to a number of grants that are not available to other states, many of us are familiar with the grant process … ie, it is competitive! And the ‘deciders’ are in WDC. Congressional delegations can and do deliver support to the decision-makers and then it’s out of their hands because there are actually 49 other states who are competing as well. That’s Life and so it goes …

    What about partnerships? I DO want to see implementation through partnerships. There are a number of wireless companies who have been bringing service to the Northeast Kingdom and beyond (we are one of their customers) for years who can help with the delivery of service. Two of those companies started a conversation at this meeting to start partnering to leverage resources. Great Start!

    Whether you are a native Vermonter or you chose to live here, we all know that success comes from partnerships to being part of the solution. In this case keep vigilant about observing progress with implementing the grant to bring ubiquitous broadband services to the state of Vermont. When you see or hear about a hiccup in the process, find out Why and What You Can Do to help find a solution. Ask questions. Connect the dots for suggestions of solutions.

    We are understandably bitter that VTA did not deliver ubiquitous service by 2010 ;-) We didn’t realize that the $40M was in bonds they were not going to touch. Those of us who attended the event yesterday got the scoop as presented and realized a very strong ally in advocacy for accountability in the person of Sen Sanders, something we were lacking before. Be responsible to your community and the state of Vermont. Do the needful. Onward!

  2. David Usher :

    This combination of grants, loans and equity is Vermont’s best hope to provide ubiquitous broadband coverage. VTel was astute in recent years to acquire the needed radio spectrum that makes the 4G LTE wireless aspect of this deployment feasible.

    It’s unrealistic in our lifetimes for a rural state like Vermont to expect fiber optics at every residence. As Sen. Sanders points out, the costs are prohibitive.

    An intelligent blend of fiber optics and wireless is the only sensible solution for Vermont. Now let’s hope that NIMBYISM is not allowed to unnecessarily hinder the construction of towers that may be needed.

    Vermonters should be grateful to see this project move forward.

  3. Bill Bevans :

    Brava, Trish, for you wise insights and support of those who are finally getting the $$$ and “doing something” with them. The NEK welcomes any way out of the “dead zone” and a path for tech savvy entrepreneurs to join us here.

    BTW a few cell towers are a lot more welcome than twenty-one wind turbines each reaching 421 feet in the air and stretching out almost four miles along a concrete ditch dug out from the ridge line of the Lowell Mountain range.

  4. I have a somewhat different perspective.

    A couple weeks ago, someone told me that FairPoint had DSL available at my house. I was excited. I ordered it immediately. Long story short–I ended up calling them a week-and-a-half later only to be told that not only is DSL not available at my house but that there’s no plan to expand here any time soon. I tried to convince FairPoint to expand to our area, but to no avail. We’re not a big priority for FairPoint.

    Yesterday I too went to the “Broadband” Town Hall Meeting at VTC hosted by Bernie Sanders. V-Tel got the biggest chunk of money; V-Tel’s representative didn’t say much of anything promising. The “WOW” wireless-broadband project will not even allow for streaming video. The adjectives didn’t seem to fit the product: Broadband? High-speed? And yet, I can’t begin to tell you how many times we were told how “fast” this technology is. “WOW,” to me, sounds more like “HMM.”

    ECFiber is the only viable option as far as I’m concerned. I want a fiber-to-the-home connection.

    Good luck on the exam, Patrick (though I sincerely doubt you’ll need it).

  5. Ron Pulcer :

    Although I work in IT field, I am by no means a network or broadband expert (I work on the software side). I am one of the fortunate ones to “finally” get DSL in 2005!

    Yes, that was 5 years ago. But I was a Verizon customer in Rutland Town and Verizon had not previously even made DSL available 4 miles from downtown Rutland. Meanwhile, from 2001 onward, small towns like Grafton, Chester (where I’ve worked since then), Mt. Holly and Wallingford had gotten DSL before places closer to Rutland City. The previously mentioned towns were VTEL customers, whereas other parts of Rutland County were Verizon customers.

    I think VTEL has done a good job, and I wish them luck in this project. Vermont surely needs improved and additional access. It’s just too bad that for whatever reason, they and other companies were not able to provide more coverage throughout Vermont prior to 2010.

    Based on the size of the Federal grant to VTEL (“$81 million in grants and $35 million in loans … $30 million in equity”), is it any wonder why Verizon, FairPoint, VTEL and others were not able to provide near 100% coverage previous to 2010? Without a federal subsidy, it was just too cost prohititive to any company (even Verizon), given that we are a small, rural, mountainous state.

    Back around 2002, one of my co-workers from a much smaller town than I, gloated that he had DSL long before I did. I don’t know how true this is (as I am not an expert on federal laws), but my co-worker stated to the effect of:

    Under federal law, if Verizon invested in broadband infrastructure, it would have to “share” its resources with local/state providers, but the same was not true if the investor was the local / regional utility. If that was or is still true, than that means Verizon could not utilize certain infrastructure from other companies (i.e. VTEL) between their isolated pockets of customers (say, Rutland and Brattleboro Verizon customers).

    I found this interesting document from PSB:

    Understanding Broadband Deployment in Vermont
    February 2007
    http://www.state.vt.us/psb/orders/2005/files/7137rccredesignation.pdf

    Page 6: “Verizon serves approximately 82 percent of the state’s residential wireline telephone customers, but as of early 2006, only 56 percent of its access lines were DSL capable, leaving substantial areas of the state uncovered by broadband.”

    I know this is all in hindsight now, but shouldn’t our Governor and Legislature together pushed for more federal help for broadband several years ago, as opposed to now, as a stimulus after a financial collapse (Great Recession).

    If the effect of the “federal law” which my co-worker described is true, then is it any wonder why Verizon wanted to exit Vermont?

    I am now a FairPoint customer. I know they have had their customer service and financial problems in the past. I feel like my phone and DSL service have existed in the “eye of the hurricane” with respect to FairPoint. We have not had one single issue with our phone service, DSL or billing since we were switched over to FairPoint (at no choice of our own). We always get dial-tone and DSL is always up.

    I wonder if the Federal laws are stacked against multi-state utilities such as FairPoint, relative to in-state utilities such as VTEL?

  6. With VTEL deploying a two-tiered solution, we can expect that the current schism between the broadband ‘haves’ and the ‘have-nots’ may be destined to continue. the haves will see upgrades to fiber optic acces, and will continue to be satisfied. The have-nots are looking at a wireless network that is (as yet) insufficient for video access.

    With Cisco’s prediction that 90% of all consumer IP traffic will be video by 2013 (the year of VTEL’s scheduled project completion), the ‘have-nots’ do indeed have cause for concern.

    There are a host of questions which can’t be definitively answered yet, but it’s up to VTEL to offer clear & transparent communications to all stakeholders now and throughout the project.

  7. Jason Farnam :

    I wonder if our esteemed Senator has any special interest in VTEL? Just thinking out loud there… I am a network engineer and have had vast experience with many different types of internet access to include third world countries… I was sad to see VTEL get all the grand-standing when the fiber project has been working very hard for a few years to get very close.

    Wireless access (in perhaps three to six years) is a step in the completely wrong direction!

    I also had to comment on Miss Sears ideas of how greatful we should be about gov.org GIVING us some really nice grants… perhaps some would have been better served having a lecture on how the US Government doesn’t have any money at all… it comes from TAXPAYERS…

  8. Sam Chauncey :

    Have confidence in VTEL. They gave us, in southern Vermont, good high speed service long before most people in the State got it. They have great customer relations and Guite is a smart man who knows how to make things work.

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