Vermont’s emergency plan to boost broadband access in the wake of Covid-19 could stifle the growth of communications union districts. The local governance bodies enabled by a 2015 law are meant to make high-speed internet more widely available.
“The desire to be urgent and have an immediate response and be doing something could ultimately end up making it more difficult” for those districts to grow, said Katherine Sims, who’s on the executive committee of the NEK Community Broadband district.
There has been widespread frustration that many rural parts of Vermont still have no high-speed internet service, even though it has become essential to business and communications, and became imperative when schools closed down because of the pandemic. The communications union districts are a community-level effort to provide that high-speed broadband service.
Department of Public Service officials released a draft of the Emergency Broadband Plan in early May, detailing steps to immediately improve high-speed internet access during the coronavirus crisis.
The plan proposed holding a reverse auction (lowest bidder wins) for internet expansion projects — costing an estimated $42 million to $296 million — to give all Vermonters access to high-speed connections by 2024.
But district representatives worry that the Public Service Department doesn’t have enough staff to run the auction well — and that the auction could subsidize established commercial providers and crowd the market for the startup local districts.
“I don't think we want the urgency of this moment to cause us to undermine the long-term goals of serving everyone and the business models needed to sustain that,” Sims said.
Clay Purvis, head of the Public Service Department’s telecommunications division, acknowledged the potential for the auction to squeeze out local broadband districts.
If a commercial carrier built out grant-funded broadband within a district’s territory, it would put the district “at a severe competitive disadvantage, and it would more or less spell the end of the CUD,” he said.
Plans for the reverse auction have been paused for lack of funding, Purvis said, but some smaller initiatives in the emergency proposal are underway.
In recent public comments, communications union district representatives expressed concern that the reverse auction process and other components of the plan could harm their ability to provide services.
“The proposal to invest heavily is laudable but distributing the subsidies through a reverse auction would be wasteful and counterproductive,” wrote David Jones, clerk of the Deerfield Valley Communications Union District in southern Vermont.
The Department of Public Service plans to run its auction parallel to an October federal reverse auction for broadband projects. In the plan, state officials say the cost of the state auction could go down if it were designed to complement the federal auction.
Jones contends that coordinating the auctions would be difficult, and could cause fragmented initiatives and undermine the state’s current expansion efforts.
“If commercial providers win awards that support investments in some portions of CUD service areas, the remaining areas may not support a viable CUD business case,” Jones wrote.
“If two competing vendors receive uncoordinated subsidies for the same area, at least one of the vendors will fail to achieve the service obligations of its subsidy and one of the duplicative subsidies will be wasted,” he added.
That the state may end up subsidizing well-established commercial internet providers — at the expense of fledgling communications districts — underscores a contradiction between the emergency plan and existing policy goals.
Vermont is at a broadband crossroad, said Purvis.
“In a year, we've stood up seven additional CUDs,” Purvis said, referring to the number of districts formed since the passage of the 2019 broadband bill, Act 79.
“That's pretty remarkable,” Purvis said. “But they’re by and large in the same spot. And I think the state is now at a fork in the road: Are we going to support the CUDs exclusively, or are we going to continue funding an all-carrier solution?”
The final draft of the plan didn’t scrap the reverse auction idea, as was suggested by several districts and small internet providers.
“We tried to include CUDs as best as possible without implementing a protectionist policy,” Purvis said. “I think the rub is where the private sector and the CUDs might be competing for the same dollars, the same addresses.”
The Department of Public Service was uncomfortable with the idea of limiting the state’s options, he said; cheaper bids and potentially better results could come from the auction method.
Sims, from NEK Community Broadband, understands the state doesn’t want to pick winners and losers.
“Yet at the same time, many of the incumbent providers have failed to provide the level of service to all addresses in order to meet the state’s identified targets,” she said.
Evan Carlson, chair of the Northeast Kingdom district, said the group worries there aren’t enough staffers to successfully organize the auction within the DPS telecoms division.
Purvis said some of the tension played out in legislative debates over H.966, a Covid-related broadband bill signed by Gov. Phil Scott in July.
Legislators added language to the bill requiring officials to notify a district if a project under one Covid-relief program falls within its area. The district may then raise objections to the proposed project.
“I think that's a signal that there is concern that, to the extent that the state is funding the deployment of new broadband in these areas, it could very well undermine the CUD when it gets there,” Purvis said.
Public Service officials included a similar mechanism in the emergency broadband plan.
If districts choose not to participate in the state auction, the final draft suggests, “they would have significant authority over the development of the auction for towns in their service territory, and a decisive role in determining whether bids for projects in their service territories would be awarded funding.”
Purvis said districts wouldn’t be able to choose the winner of a project, but they would have a say in the parameters for services.
He gave a few examples: A district could stipulate that a project adheres to net-neutrality principles, or that it includes pricing options for low-income households.
Consolidated Communications, in its public comments on the original draft plan, was wary of that idea.
Communications districts are also concerned that there’s been discussion of a possible exception to the statutory goal of bringing 100/100 megabits per second service statewide. If companies are allowed to build out broadband slower than that, because it is faster and cheaper, the infrastructure would become irrelevant soon and would not solve Vermont’s longer-term needs.
Additionally, the districts worry they would not be able to participate in the federal auction without a letter of credit from the state. Officials decided to not to offer districts those letters in the final draft of the plan.
Purvis said his department hasn’t formally adopted the final draft plan yet, nor has it moved on the auction idea.
“It would cost a substantial amount of money to do that, and until there’s funding for that purpose, it would be difficult for the state to move ahead,” he said.
A legislative appropriation would let the department proceed, and congressional bills could help fund the plans, too, he said.
Some of the short-term goals of the plan are being pursued, he said: A line- extension program for consumers has been launched, and the Legislature funded his department’s Connectivity Initiative grant program.
Other short-term initiatives from the emergency plan — telecoms labor training and a pole database — have yet to be funded, he said.
Purvis said the Covid-related broadband bill last month called for putting together a telecommunications recovery plan, and that plan may look to reassess the state’s goals, add new ideas to the table or even recommend discarding the emergency plan.
“The (emergency plan) is not dead by any means,” he said. “But I think it’s an iterative process, and we will see updates and changes to it that hopefully make it stronger and more likely to be funded.”
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