Two Vermont utilities have announced a new program to pay broadband providers who reach unserved addresses.
The program, offered by Green Mountain Power and Vermont Electric Cooperative, will pay broadband providers up to $2,000 per unserved address that they reach.
That money would subsidize the cost of getting poles ready to hang fiber on them, which is called the “make-ready” cost. Electric utilities own the poles, and they charge broadband providers for using them, based on how much it costs to get the poles ready for fiber. This program offers a discount on those costs.
Some poles have to be replaced, or their height has to be adjusted to accommodate new wires. Other times, wires have to be shuffled around to make space for a fiber-optic cable.
Access to the poles is a significant expense for broadband providers as they build out infrastructure, running up to $10,000 for just one mile of coverage out of the total cost per mile of $35,000, according to Christine Hallquist, administrator of the Northeast Kingdom Communications Union District.
“That can add up to a pretty significant sum on a project,” said Hallquist.
For example, Hallquist is working on a $700,000 project proposal; the new program could cut that cost by $100,000.
“That allows us to take that money and spend it to go even further with the network and hit even more unserved addresses,” Hallquist said. She said Vermont’s communication union districts appreciate the program.
Communication union districts will be able to take advantage of the program, as will private internet service providers who can prove they have reached eligible addresses. About 7,500 people in Green Mountain Power’s service area are unserved — currently receiving internet that’s slower than 4 Mbps upload speed and 1 Mbps download speed. An additional 4,400 unserved Vermonters live within Vermont Electric Co-op’s territory.
Rebecca Towne, CEO of Vermont Electric Co-op, said the program is meant to be a catalyst for broadband deployment.
“We want to be part of making that happen,” she said. While there has been talk about increasing access to broadband for years, “we might be at the cusp of solving this problem,” Towne said.
Vermont Electric Co-op will spend up to $1 million per year over the course of the three-year program. That investment will come from the co-op’s members. In its filing, the utility says it expects the program to have a “negligible” rate impact.
Towne called it “an investment in innovation,” as broadband can play a role in electricity services, such as charging electric vehicles or powering a heat pump with load control.
Liz Miller, vice president of sustainable supply and resilient systems at Green Mountain Power, said the utility’s program has a cap of about $15 million over three years, based on the number of eligible addresses in its service area.
Miller said the unserved addresses are sprinkled throughout Green Mountain Power’s service area.
“A lot of communities have this challenge,” she said.
According to Miller, the impact on rates would be about 0.15%.
“The impact in any one year would be pretty small,” she said. The program cost would also be offset by pole attachment rental fees paid by internet service providers.
“This is a very modest program from an impact point of view with really good benefits because it will help broadband providers meaningfully put more projects out there to Vermonters,” Miller said.
But Clay Purvis of the Department of Public Service called it a “significant request to ask of ratepayers.” The state approved the program on Friday, March 12.
Purvis said preparing poles for attachment is a considerable preconstruction cost. That cost is getting put into the rate base and passed along to ratepayers.
“What GMP is trying to do here is reduce the cost of deploying broadband by covering and subsidizing the cost of make-ready,” he said.
“I appreciate GMP not going into this lightly,” Purvis said.
According to Purvis, the program is a response to Commissioner June Tierney’s call to utilities in April to help with broadband deployment.
Getting broadband to end-of-the-road addresses in Vermont has been a problem for years because the cost of reaching them is high, while the potential revenue for a private provider is low.
“Those two numbers aren’t in a happy place for us,” Purvis said. “It’s expensive, and take rates are going to be lower.”
With new federal money earmarked for broadband deployment in Vermont, Purvis said the program’s timing is good, and the state will be in a good position to fund broadband buildout.
Where the program is rolled out will now depend on internet service providers who enroll and start building.
