Vermont

Vermont applies for federal grants to improve broadband

A shipment of fiber optic cables will be delivered to Washington Electric Co-op in East Montpelier in April 2022. Vermont is seeking new federal funding in a competitive process that sees applicants compete statewide to improve $1 billion in grants Internet access. Photo by Glenn Russell/VTDigger

Vermont is attempting to secure a large chunk of federal funding in a competitive process that sees applicants compete statewide for $1 billion in grants to improve Internet access.

“We are using this as an opportunity to build a nationwide fiber design,” said Christine Hallquist, executive director of the Vermont Community Broadband Board.

Vermont is one of 235 applicants applying for funding under the Infrastructure Investment and Jobs Act signed into law by President Joe Biden last year. Collectively, the applicants have proposed projects totaling $5.5 billion, more than five times what is available.

Vermont is asking for $114 million to build 1,663 miles of fiber-optic cable that would connect its communications union districts — the building blocks of the state’s universal broadband strategy. The funding would also fund additional and improved connections to Quebec, New Hampshire, Massachusetts and New York.

The money would go towards building the “middle mile” of fiber optic systems, lines that cost a lot of money to run but don’t connect to new customers and therefore don’t bring in new revenue. That makes them less attractive for building private broadband companies that are already in the state.

The funding would also give Vermont more control over broadband rollout through the creation of a “special purpose vehicle,” a public-private partnership with majority public control. The state would pay to connect the communications union counties, with the goal of bringing nearly every Vermont household to fiber optic cable faster.

And the grants could reduce the amount of money that districts must borrow from communications unions to meet that goal.

“The more grant funding we get, the less credit we have to borrow to reach the last address,” said Christa Shute, executive director of NEK Broadband, the communications union district in the north-east of the Kingdom. That, in turn, will result in lower rates for customers, Shute said.

In April, Hallquist estimated that Vermont’s ambitious project to connect almost every home to the Internet would cost more than $1 billion. She now puts that estimate at more than $1.2 billion amid inflation, mounting supply chain problems, labor shortages and the Federal Reserve raising interest rates.

Hallquist said Vermont has already distributed $100 million in federal grants to communications union counties to expand the state’s fiber optic system. Another $250 million will go to communications union districts over the next five years.

The districts, made up of groups of Vermont towns and cities that merge, will need to borrow another $200 million in the bond markets. Private companies focused on upgrading their existing broadband networks to fiber are expected to spend an additional $650 million.

The new connections would also provide backup connections in cases where storms knock out fiber lines, Hallquist said.

To secure the federal grant, Gov. Phil Scott, in a letter to Alan Davidson, Assistant Secretary of Commerce for Communications and Information, committed to requesting an additional $30 million in state funds through his budget proposal to the Legislature. Vermont’s private fiber providers have also pledged another $16 million. Consolidated Communications, VTel, Waitsfield and Champlain Valley Telecom, and First Light are partners in the state’s grant application, Hallquist said.

“It will bring more alternate fiber routes into the backbone, reducing the likelihood of outages,” said Sarah Morris, senior director of regulatory and legislative affairs at Consolidated Communications. “In the unfortunate event of a fiber optic failure, we can reroute the network to keep it operational.”

State officials and communications union district managers are also hoping the new links will lower the wholesale price of fiber optic services.

“The more connections we have, the more competition we can have for data services coming into the state,” Hallquist said.

New links would also connect remote communities on the fringes of communications association districts to neighboring districts, ensuring customers remain connected to the system in the event of a line failure.

“We don’t want dead ends in the backbone of all these networks,” said Robert Fish, associate director of the Vermont Community Broadband Board. “If there’s a cut somewhere, customers will continue to be served.”

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