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.”

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