The Deeper Dig is a biweekly podcast from the VTDigger newsroom, hosted and produced by Sam Gale Rosen. Listen below, and subscribe on Apple Podcasts, Google Play, Spotify or anywhere you listen to podcasts.
As the Covid-19 pandemic forced companies and schools to go virtual, Vermonters without high-speed internet were left to scramble. But the crisis may prove to be the key to closing the state’s longstanding digital divide.
Federal Covid relief programs provided a windfall for broadband infrastructure, and lawmakers worked quickly to pass a bill that would chart a path forward. Now, the work moves to communities across the state.
Roughly 51,000 households in Vermont lack high-speed internet access, according to Christine Hallquist, the newly appointed executive director of the Vermont Community Broadband Board. But there are likely thousands more who are underserved.
Hallquist believes that grants to communications union districts — community-owned fiber optic networks across the state — will kickstart the infrastructure for sustainable rural broadband service moving forward.
Hallquist expects to get every household connected to fiber optic internet service in five to seven years.
“It’s an incredible challenge,” said Hallquist, who made broadband connectivity a centerpiece of her unsuccessful 2018 run for governor. “But we do have the funds now that I believe can make this happen.”
On this week’s podcast, Hallquist discusses the challenges ahead for Vermont’s broadband buildout. Below is a partial transcript, edited for length and clarity.
I wonder if you could briefly give me an overview of what this new role entails and what the scope of this board actually is.
Vermont has received a significant amount of [American Rescue Plan Act] funds, to the tune of $250 million, towards getting broadband to every Vermonter. So the main function of this board is really to allocate the grants. And I would say the highest level goal is to really get every Vermonter connected to fiber optic cable in the long run. In the short run, it’s to get every Vermonter somehow connected to broadband.
The Covid crisis really highlighted the issue of the digital divide in Vermont — the digital divide being the difference between those who have access to broadband to those that don’t.
Can you give me a sense of the scope of the digital divide here in Vermont? How many households, really, are we talking about?
I can say with about 80% confidence what the numbers are. But the problem we have is that, to get down to every site-specific connection point, the numbers are probably higher than what I’m going to give you.
So right now, the official number’s 51,000 households that don’t have access. But we believe that those that do have access, there’s a large number — for example, I’m sitting out here in Wolcott. And I’m talking to you with a Starlink satellite bonded to a DSL, which — most Vermonters don’t have that technical capacity, as well as the financial capacity to be able to do those things. But if I were to try to do this call with either one of those — that DSL, which is poor where I’m located, or the Starlink satellite — we wouldn’t be doing this right now. I would have to go somewhere else.
So a lot of people are in the situation in rural Vermont that I am in, which is they might be officially identified as having some level of service, but yet not adequate for doing day to day business.
One of the things that I’m always struck by in these conversations about broadband, is that it seems like there has been a certain level of consensus among the leadership in the state that that something has to be done with this, that more of these households need to be connected. And the refrain was always kind of just that the money wasn’t there. Now, you said, you’ve got this $250 million dollars to spend. How do you go about deciding how to spend it?
Well, I think the decision to spend, really, that’s going to fall within the communications union districts, as well as the Vermont Community Broadband Board. However, you’re stuck with laws of physics here, which kind of make the decisions a little easier, and depoliticizes the decision.
What do you mean?
What I mean is, if everything were equal, and we didn’t have to deal with laws of physics, that we’d have to make these decisions based on collective opinions, those kinds of things. But the reality is, you have to start at a certain point and lay a fiber backbone to get people connected. That point you start with is where fiber exists today. So when you build that network, you’re going to build along that network path. A large contributor into the decision is the physics of how this gets laid out. It’s a network design.
The first money we will spend will be on what’s called a detailed design, which really says, How are we going to get to every single household in Vermont? Most of the communication union districts, including the two that I am now presently the administrator of, NED Broadband and Lamoille Fiber, we’ve already done high level designs, we know the routes. We know the routes, but that doesn’t tell us what technology is needed and what the costs are. The next level of work is called detailed design. And that then will really define for us what the buildout will be.
Got it. And that’s where you start to figure out exactly how much this is going to cost in any given region.
I think we’ve got some pretty good ideas at this point. For example, the Vermont telecommunications plan talks about costs somewhere between $350-500 million. I think total buildout for Vermont is probably somewhere in that $400-500 million range. And I say that because NEK, which is the most challenging part of the state, for 3,000 miles of fiber, will cost approximately $132 million. And we have 25% of the underserved and unserved addresses. So if you extrapolate that out, it does come out to more than $500 million, but the rest of the state isn’t going to have to build the kind of mileage — we have some of the lowest densities in the state. So I’m pretty confident that we’re going to be somewhere in the $400 million range.
The good news is we have $250 million in grant funding. Some of that money won’t go directly to construction, but let’s say $200 million goes to construction. Well, now what you’ve done is you’ve now used grant money to fund those areas that don’t pay back so that you can build a business model. So the concept being you take the grant money, you construct the network you can with that grant money, you start collecting revenues on that grant money, you can borrow some percentage against that grant to go to your next phase, and then go to the bond market.
So I’m confident, with all the years and years — believe me, I started working on this back in 2003 — it’s an incredible challenge. But we do have the funds now that I believe can make this happen.
It’s kind of funny — cynical folks say, “Oh, yeah, four governors have tried to attack this and they were not successful.” Well, that’s because it’s a really hard problem. Just don’t give up, right? I certainly haven’t given up. And I know that our current governor hasn’t given up. But I do think we’re in a place now where, done correctly, we can actually achieve this goal.
How big of a change is what we’re seeing this year, from what came out of the Legislature and this new funding that’s available? How different is this from efforts that have been made in the past?
Well, there’s two things that I think have happened. In my 2018 campaign, I said, basically, if Vermont’s economy wants to thrive, we’ve got to get connected. And of course, I don’t think Governor Scott and I disagreed on that in the campaign, we both agree that getting connected is critical. But what’s really motivated this has been the Covid crisis.
Now, the Covid crisis brought this to a real head. When we’ve got 20% of our students that were completely absent from school because they couldn’t get connected — this really drove the issue home and made it a priority, and made it a priority at the federal level. That’s why these funds were allocated. It’s not just our state that was viewing these problems. This problem is happening all across the country. And it’s nonpartisan — it was happening in the deep red states as well as the deep blue states. So this is one thing that was a unifier at all levels in government.
And what you’re saying is that this money that we’ve received as a result, in some ways, of the Covid crisis — that initial money almost becomes like seed money. That once we build this system, it can be more self-sustaining, so that we’re not risking using up this windfall and then being left with expenses that we can’t pay down the line.
That’s correct. And just to give you some numbers today — the reason some people kind of badmouth the private telecommunication companies is because they don’t come out to the rural areas, but the reality is, once you get below 20 houses per mile, you actually start to lose money. Not-for-profit might be able to drive that down to 15 houses per mile. But below a certain number, you lose money, and you can’t build a business on losing money. So the idea that you can put this influx of grant money to build the network, that cuts your expenses on the financing side, so that you can now hit every address.
I want to ask you about how communications union districts, or CUDs, fit in here. I’ve been reading about rural broadband in Vermont for years now, and I feel like I still only have like a 50% understanding of what a CUD actually is, how it works, and how it solves that problem that you’re talking about. I wonder if you could give me sort of “CUDs 101.” How does this work, in layman’s terms, to where the numbers actually add up here?
I’m going to harken back to the 1930s and use the electrical grid as an example. In the 1930s, rural America didn’t have electricity. And there was no way the power companies would have come to rural America, because it was a losing proposition. Actually, 56% of America’s landmass didn’t have electricity. And so what happened is a very similar model was developed, called the Rural Electrical Administration, where all-volunteer boards came together to figure out how to get electricity to every milking parlor at the time, then the home became the afterthought. And ultimately, that’s how electricity is brought about.
And oh, by the way, the government provided an influx of capital spending in order to make that happen. So through the power of volunteerism, and through the power of the passionate commitment of those rural Americans, we got every single home connected to electricity that wanted it, some minor exceptions.
Although we haven’t done that at the federal level, we’ve done that at the local level by creating these municipal districts called communication union districts — similar to our water and sewer districts — where a collective group of towns comes together and gets the homes connected. And we now have this enormous influx of grant money. So this is really very much like the original rural electrification model.
How will it work for people who live in a CUD once you start implementing some of the programs that you are looking to implement? Are they just waiting for the day when someone knocks on their door and says, “Hey, we’re running the cable? Here’s how you sign up?”
I think it is. It’s going to be, “Hey, you now can get connected. Do you want to get connected?” And we build our business models assuming that a large number of people will want to get connected, which we know they will. But the average homeowner really doesn’t have much to do, because this requires skilled labor to put it all together and make it happen.
Now, when I get to my job at the Vermont Community Broadband Board, we’ll look at interim solutions. Because it’s going to take a while — five to seven years — to get that last address connected up, there are interim solutions that can be done at the local level. And hopefully, depending on what my board says, I would like to see some turnkey solutions that local communities could implement in the interim, which would involve fixed wireless or radio frequency. But radio frequency can’t be a long-term solution, because it doesn’t have the bandwidth you need in order to meet the upcoming needs.
When you talk about radio frequency, that’s something similar to what you said you’re using now — like a Starlink hookup or satellite connection?
Yeah. On my last call — I’ve got the technology where I can watch when Starlink fades, and the other one comes in, so I’ve got these backup systems. Well, I had 111 fail-overs on my call. That’s really the Starlink system failing over to the DSL. So literally, trying to have communications like this in Starlink just can’t happen. Even [Starlink CEO] Elon Musk has recognized that. Elon Musk, in his last interview, said this is a solution for about 3% of the world. And maybe Starlink is an interim solution for some of our real rural outposts. But it’s certainly not the long-term solution that we’re going to do business on.
As this happens with the various CUDs, do the CUDs then sort of act, effectively, like an internet company? Or are there partnerships with existing internet service providers that are going to help these buildouts happen and these people get connected?
It’s intended to be a public-private partnership. It doesn’t mean that the CUD doesn’t go into the ISP business. And certainly, an ISP is really your end provider — internet service provider, that’s what we call the [Consolidated Communications] of the world, or the Kingdom Fibers. But I believe — this is really just a projection, not a fact — that most will come up with the solution of a public-private partnership. And that’s exactly what NEK Broadband and Lamoille Fiber are doing. The idea being, we would partner with an existing provider.
The difference would be, we would have strings attached to those relationships. If we’re building the network, the provider doesn’t have to — and the strings would be, we want low cost of entry, we want to be able to have affordable bandwidth for people who are struggling, we want you to meet certain standards, resiliency and redundancy in the network design. The nice thing about locally controlled communication union districts is we can dictate the quality of service and the cost of service.
You mentioned the physics of this being one of the primary challenges — we’re talking about addresses that are far apart and the actual stringing of cables. I wonder, are there other major challenges that you’re looking ahead to in moving forward with the CUD model?
Well, there’s two issues that are right in the forefront, and that’s material and labor shortages. The material shortage will probably correct itself over time, because the market forces will take effect. And the reason the material shortages exist is because this is happening all across the country — all of a sudden, we’ve got this surge in demand, which, coming out of Covid, we’re seeing that happen everywhere. All prices are going up, because the demand is there. And our manufacturing supply hasn’t been what it was because people were in crisis. That goes into this, plus increased demand.
But the labor part is something that again, when I get to the VCBB, we’re going to address that issue, because labor shortages — that needs government intervention. That needs the help, working with Vermont Technical College and the local technical schools, to be able to really provide good employment for folks. And there’s a good model for that. Kentucky has done that: Kentucky Wired. It turns out Kentucky is doing 3,000 miles of fiber. And statewide fiber. They’re in year three. They’re on budget. And 57% of the people working on the network have been trained and are in-state residents.
So you’re hoping to somewhat replicate that here in Vermont. But we need people to actually put these wires up.
Yes, to do the work. And it’s great employment and a good future. So it gives people a chance to move up from the current jobs they have.
You said five to seven years as a timeline to really move toward universal connectivity. What happens if the economics of this shift in some way that makes it so that we are not seeing the same returns that you were expecting — and that all of a sudden, we’ve started this project because of this windfall, but we’re having trouble filling in the revenue to pay for the next stage. What would happen in that case?
Well, if it happens to us, it’s gonna happen to everybody, because we’re going to be the lowest cost provider. We’re a not-for-profit. Similar to the electric cooperatives — there’s about 1,000 electric cooperatives in the United States. They’re all in place today, and they adjust their rates according to costs. Our costs will always be the lowest because we’re not-for-profit. That’s the same problem everybody faces. It’s not going to be the end of the world. It would be an adjustment in rates. The same thing happens with all of our product deliveries at the end of the day.
If you look at the physics of fiber, there’s nothing that’s going to outperform it. We don’t know anything that goes beyond the speed of light in the universe, unless you get near dark matter or a black hole. But the point is, just like the electrical wires — we’re using the same electrical wires that we had in the 1900s. All of the technology surrounding it changes. But fiber is very much like an electric wire. There’s nothing that’s going to outperform fiber. And I can say that with a high level of confidence. You can ask all the greatest physicists in the world and they’ll tell you the same thing. And I’m not a great physicist.
You’re saying that that’ll position us in such a way that these CUDs, and these networks that are going to be set up through this, are going to be competitive no matter what.
Yeah, no matter what.
I wonder if you could help me paint a picture of what the long-term future looks like here. You said five to seven years to get this built out. If you look ahead 10 years, to when we really do have universal broadband in Vermont, what looks different? How is Vermont a different state with universal connectivity?
What you just asked is the most important question we should ask. Whenever talking to potential board members, that’s what I say: This is not a technology implementation. This is a social change.
We’re building a 40-year network. We have to think, 40 years from now, what’s Vermont going to be like? If you look at potential climate migration — and we even saw this in the Covid issues — those areas that are rural today may not be rural tomorrow. We’re going to be struggling with tremendous social changes.
My job is to implement the network, but it’s our job — when I say our job, it’s the Legislature, it’s everyone’s job — to say, OK, we’re gonna have these fiber networks. What does that mean for the social changes that might occur here in Vermont?
I think we can all pull together in Vermont to make it a better future. It’s not the technology. It’s what the technology does for us.