An array of ideas for broadband expansion has coalesced into a bill that would authorize the Vermont Economic Development Authority to loan up to $1.8 million for individual broadband projects in underserved areas.
The bill, H.513, authorizes VEDA to lend the money. The legislation recognizes the risky nature of the loans to startup businesses, citing a likely higher than “historical loss rate,” and calls for higher-than-average interest rates.
Outgoing VEDA CEO Jo Bradley testified Tuesday to the House Commerce and Economic Development Committee that the statewide lender would be careful about using the program. The measure would allow interest and principal payments to be deferred for up to two years, which VEDA also allows with some loans to farms and startups. Borrowers would be required to put in at least 10 percent.
“It’s a riskier program than we have perhaps entered into before,” Bradley said. “Let’s just say we have our eyes wide open, and we intend to look very hard at the companies that come to us and get help from the people who are really knowledgeable in this industry.”
The Scott administration had proposed about $1.5 million for broadband expansion. An estimated 6 percent of Vermonters, or about 20,000 households, don’t have basic access to broadband.
The governor had also proposed putting an additional $950,000 into the state’s connectivity fund to pay internet service providers who do not have a financial incentive to expand to underserved areas. That has been reduced to $205,000, with the rest of the money to be used for planning communications projects.
Rep. Laura Sibilia, I-West Dover and vice chair of the House Energy and Technology Committee, said there was a clear need for more planning.
“I work in economic development, and I talk to towns and businesses and nonprofits all the time that are looking for funds, and so many times people will quit before they have even started,” said Sibilia, an active proponent of broadband expansion. “I always say, it’s never a lack of money that is really the problem, the problem is you haven’t articulated a well-thought-out project that is ready for funding.”
The administration had proposed about $540,000 for the new VEDA program and requested authorization for municipalities to use general obligation bonds for broadband projects. The House bill calls for a study of the municipal bond proposal.
Under the legislation, a staff member would be added to the Department of Public Service to help towns pursue broadband projects. And it calls for raising the existing 2 percent phone bill surcharge to 2.5 percent. The money would be used to provide telecom services to low-income households. The Scott administration opposes the fee increase.
Rep. Charles Kimbell, D-Woodstock, said he was concerned that nobody could say how many households the VEDA program might serve.
Department of Public Service Commissioner June Tierney, told lawmakers “No, we really don’t (know).”
“The hard reality is, in this sphere the question is always, if we build it will they come? The market has done a very good job of figuring out where it’s not worth taking the risk,” Tierney said.
There was also concern that large providers like Verizon could borrow money for small projects.
“This program is also eligible for non-startup companies, in which case these terms would be extremely favorable,” said Rep. Zachariah Ralph, P/D-Hartland. “I wonder if you’d consider having different terms for startups vs. Verizon or Consolidated Communications or VELCO.”
“It’s very difficult to say,” said Bradley. “This is a very different space than certainly we have been involved. I don’t know enough about this industry yet. We have a lot of work to do and people to consult. The DPS is going to be on our speed dial.”
H.513 needs approval from the House Ways and Means Committee before it can reach the House floor.
Rep. Mike Marcotte, R-Coventry and chair of the House Commerce Committee, said his panel wouldn’t take up the bill unless members had serious concerns.
Vermont business and economic development groups have pushed hard for better broadband, saying that a lack of service in some areas is suppressing business growth and deterring people from running businesses or working from home.
Clay Purvis, director of telecommunications for the DPS, said Vermont is in the middle of the pack nationally when it comes to rural broadband coverage.
“Every rural state has this problem,” he said. “Many states are in a worse position than we are.”
Correction: A previous version of this article referred to Rep. Laura Sibilia as co-chair of the House Energy and Technology Committee. She is the vice chair.
