$5 million cell phone expansion grant to VTel under question

VTel president Michel Guite testifies before the House Commerce committee in January 2013. Photo by Nat Rudarakanchana

VTel president Michel Guite testifies before the House Commerce committee in January 2013. Photo by Nat Rudarakanchana

A $5 million grant Gov. Peter Shumlin touted last December that would bring cell phone service to severely underserved parts of southern Vermont appears to be in trouble and may end up being yanked.

The grant’s status was thrown into uncertainty after a subgroup of the state’s Vermont Telecommunications Authority (VTA) failed to reach an agreement with Springfield based VTel on a final contract on Thursday.

VTA’s executive director Chris Campbell explained in an email to VTDigger late Thursday: “Recognizing that VTel and the VTA understand that no agreement can be reached on the 3G grant that was authorized by the board on December 7, 2012, and hereby authorize the staff to negotiate a 4G solution…to reach an agreement, if any, by April 25, 2013.”

Announced back in late December, the state’s $5 million grant to VTel sought to expand and improve 3G cell phone service in southern Vermont, in 21 underserved areas, which Gov. Peter Shumlin at the time described as “hugely dark” areas.

The failure to reach an agreement leaves the status of the $5 million grant unclear. The decision comes just a few weeks after the state authority withdrew two other grants to VTel, together worth $3.4 million. Those two grants were intended to provide high-speed Internet broadband.

Campbell said he couldn’t comment further on the stalled negotiations. “What the motion says is that we’re to negotiate for a limited period of time on a project that is a 4G cellular project, and it isn’t more specific than that,” said Campbell.

4G cellular networks are a newer and more advanced generation of cellular network technology, compared to 3G networks.

The day’s developments leave unclear whether VTel will lose its $5 million grant, or whether a new award for a similar or different amount, for a different 4G project, can be negotiated by the end of this month.

The two previously terminated grants, awarded in 2011 and 2012 and terminated on March 29, were intended to help VTel bring broadband to 936 unserved homes. In a statement from March 29, VTel described the grant terminations as a dispute between VTA and VTel over how to best install high-speed Internet in rural Vermont, as well as timing delays on two towers, which would be finished eight weeks late.

Michel Guité, VTel’s president, told VTDigger: “We would very much prefer to keep VTA working with us. I hate to see our alliance of broadband participants lose VTA,” he said, pointing to a “grand alliance” between VTel, the governor’s office, and several state and federal agencies. “But if it happens, it happens,” he continued.

At the subcommittee meeting, before entering into an executive session which wasn’t public because it detailed proprietary business information, Diane Guité said over the phone: “VTel is really hopeful that we can find a way to work with the VTA.”

“I know we need to nail down the details of the remaining $5.1 million grant in question…And I hope we can find a way to do that,” she said.

Just before that, in open public session, the VTA’s general counsel Holly Groschner and VTel’s Diane Guité revealed that the $5 million contract hadn’t yet been signed and finalized, even though Shumlin announced the award publicly at a press conference in late December, and the two parties have negotiated for about four months.

Campbell said it isn’t uncommon in grant situations that an award is announced but the final contract falls through. “It’s not final until you actually sign on the dotted line” of a contract,” he told VTDigger.

This same $5 million grant was also previously subject to a revote by the VTA in late January, after it became public that Karen Marshall, the state’s former telecom czar who’d voted on details of the grant twice in 2012, had joined VTel weeks after the state added $70,000 to the existing $5 million grant, in December 2012.

A recent accidental phone call, reportedly “pocket-dialed” from VTA board member Louise McCarren to Diane Guité, in which McCarren voiced frustration about VTel’s relationship with the state, has also reportedly made relationships between VTel and VTA more tense.

McCarren declined to comment on the incident, and Diane Guité didn’t return requests for comment. VTDigger learned that McCarren unknowingly dialed Guité and complained about VTel, with Guité overhearing.
The seemingly rocky relationship between VTel and the VTA also focuses some fresh attention on Shumlin’s oft-repeated pledge to bring broadband to all Vermonters by the end of 2013.

VTel’s Michel Guité told VTDigger that his technical federal deadline for completing his Wireless Open World (WoW) project, backed by $116 million in federal funds from the Rural Utility Service, is 2015, not the end of 2013.

Diane Guité said VTel is set to install the “vast majority” of its 180 4G/LTE wireless sites by the end of 2013. Their estimate of 80 percent completion by then leaves about 40 wireless sites still in question, which could translate to no broadband for several hundred, and potentially several thousand, homes.

“We think the majority, the vast majority of the network, will be built by the end of 2013, but the reason why it’s not a straightforward answer is because the network’s never really finished. It can always be improved upon, adding towers here and there to improve coverage,” said Diane Guité.

VTel’s not the only private firm working to help meet Shumlin’s goal, said Diane Guité. “We feel we’ll serve the homes the governor wants us to serve by the end of the year…There’s 140 sites that make up almost all of the state, and all those are going to be served,” she said.

“That’s our best estimate, but it’s changing every day, and we’re working as fast as we can,” she added. Other private firms, and one coalition of towns, rolling out broadband to rural Vermonters include FairPoint, EC Fiber (a group of local municipalities), Comcast, and SoverNet, according to Vermont’s new telecom chief Kiersten Bourgeois, who added that those firms are all on track to meet deadlines.

Bourgeois, and the state’s economic secretary Lawrence Miller, affirm that Shumlin’s pledge of universal broadband by 2013 will be met. The termination of VTel’s two broadband grants to VTel is only a “bump on the road” towards that goal, said Bourgeois, partly because the VTA will reassign the funds shortly, and do their best to have the work done within the year.

On those two withdrawn VTel broadband grants, which weren’t actually yet disbursed, Miller said: “In the context of the state’s overall objective, it’s a couple of fairly small aspects of the total spend.”

It’s unclear, however, when the VTA will re-award those recently freed funds, even though the work is supposed to take place this year. Campbell wouldn’t speculate on when the firms to do the work might be announced, but said that previous contract processes had taken as little as three to four months from start to finish.

He added that some locations may have been connected to broadband since the initial award announcement, meaning that there’d be no need for work there.

“At this point, I’m feeling pretty confident,” about the year-end 2013 deadline, Bourgeois told VTDigger, though she admitted: “We have some folks without a solution [at this point], but not very many right now.”

Miller added, too, that winter weather and untimely equipment arrivals were wild-card factors outside the state’s control, which could delay the arrival of universal broadband.

One aspect of this issue, said Miller, is that the state cannot always ultimately control what happens at the private firms who are chiefly responsible for realizing the governor’s vision.

“All the contracting, all the installation, all of the work is in the hands of private companies,” said Miller. “The state has created a set of incentives, and granted out funds for some work, and we’re working to make sure that permitting and access to state land is done…But yeah, in the end, it’s up to the private providers to meet the challenge.”

Still, Bourgeois said, the state and its private corporate partners are all marching “in lockstep” towards the 2013 goal.

CORRECTION: The story originally read: ” Other private firms rolling out broadband to rural Vermonters include FairPoint, EC Fiber, Comcast, and SoverNet, according to Vermont’s new telecom chief Kiersten Bourgeois, who added that those firms are all on track to meet deadlines.” EC Fiber is not a private firm, but is a group of local municipalities. The story has been updated to reflect that, at 9:40am, on April 12, 2013.

Follow Nat on Twitter @natrudy

Comments

  1. ECFiber is not a private corporation: “ECFiber, (the East Central Vermont Community Fiber Network) is a group of local municipalities.We have a Governing Board consisting of one delegate and one alternate delegate appointed by the Select Boards or City Council in each of the 22 member towns and one city (Montpelier).” See http://ecfiber.net/about-ecfiber.php for more information.

  2. HALE IRWIN :

    Might it not be wiser to award wireless service grants to wireless providers?

  3. Randy Koch :

    I wish Nat would amplify his account of how it happened that a perennial power figure like Louise McCarren could unwittingly butt-dial herself into a conference call. It’s hard enough to do on purpose. How much was skill, how much was luck? I wouldn’t be so mystified it had been Karen Marshall, tripped up by some revolving door.

  4. “The two previously terminated grants [together worth $3.4 million], awarded in 2011 and 2012 and terminated on March 29, were intended to help VTel bring broadband to 936 unserved homes.”

    That’s about $3,600 per household, assuming every family has the ability to pay for the service and wants a fixed microwave internet service that turns their home into a stealth cell tower.

    It’s really not too difficult:

    Fiber to the anchors, copper to the home, wifi in the garbage.

    • rosemarie jackowski :

      Matt….Good comment. Many reasons why wireless is not as good as some think. Health issues. Wireless did NOT work here during Irene.
      Land line phones will be the communication of the future – not sure when… might take a few years for health hazard to become well known.
      Reminds me of the situation in NYC hospitals after the big storm. Electronic health records were not accessable without power.
      There are somethings that should be uninvented – nuclear power plants, wireless, GMOs, health insurance companies…

  5. Mark Jefferies :

    I am sure Karen Marshall and make everything better……..

  6. Jeanne Eicks :

    When we discuss 4G wireless internet, lets not forget to include the facts that video is not likely to stream, the download limits are generally significant and the price is higher than landlines (satellite is $80/mo for 15gb – 4G with AT&T is ~ $80 for 12gb).

    These grants are offering inferior quality service at a higher price to rural under served and impoverished communities. What’s the gain? eMail service in a market dominated by video conferencing, WebEx training and Khan Academy home schooling videos? If we’re committed to supporting our mini-community-based economies, we need to do so with broadband that will meet the needs rather than fall short.

    I agree that we need 4G service. It’s crazy to think that we can’t use a dumb cell or smart phone consistently where throughout the state. However, 4G service should overlay a strong fiber network with reconditioned copper to the homes. Lets not say that 4G resolves the broadband issues in Vermont or gives us universal broadband coverage, rather lets say that it’s a step in the right direction.

  7. They should be awarding grants should be going to the providers. When will they learn?

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