Vermont seeks federal grants to improve broadband

A shipment of fiber optic cables is delivered to the Washington Electric Co-op in East Montpellier in April 2022. Vermont is seeking new federal funding in a competitive process between nationwide applicants the to each other for $1 billion in grants to improve Internet access. Photo by Glenn Russell/VTDigger

Vermont is trying to secure big federal funding in a competitive process pitting applicants nationwide against each other for $1 billion in grants to improve internet access.

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

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

Vermont is seeking $114 million to build 1,663 miles of fiber optic cable that would connect its union communications districts — the building blocks of the state‘s universal broadband strategy — to each other. The funding would also pay for 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, which are lines that are expensive to establish but do not connect to new customers and therefore do not bring in new revenue. This makes them less attractive to build for private broadband companies already operating in the state.

The funding would also give Vermont greater oversight of broadband construction through the creation of a “special purpose vehicle,” a public-private partnership with majority public control. The state would pay to connect communications union districts, with the goal of connecting nearly every household in Vermont more quickly to fiber optic cable.

And the grants could reduce the amount of money that communications union districts have to borrow to achieve that goal.

“The more grants we get, the less we have to borrow to reach the last address,” said Christa Shute, executive director of NEK Broadband, the North East Kingdom’s communications union district. That, in turn, will lead to lower rates for customers, Shute said.

In April, Hallquist estimated that Vermont’s ambitious plan to connect nearly every home to the Internet would cost more than $1 billion. With inflation, soaring supply chain issues, labor shortages and the Federal Reserve raising interest rates, it now puts that estimate at more than $1.2 billion. of dollars.

Hallquist said Vermont has already distributed $100 million in federal grants to communications union districts to build the state’s fiber optic system. An additional $250 million is expected to flow to union communications districts over the next five years.

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

The new connections would also provide backup connections in case storms destroy fiber optic lines, Hallquist said.

In order to secure the federal grant, Governor Phil Scott pledged in a letter to Alan Davidson, U.S. Assistant Secretary of Commerce for Communications and Information, to seek additional funding of $30 million from the State through its budget request to the Legislative Assembly. Vermont’s private fiber optic providers have also pledged an additional $16 million. Consolidated Communications, VTel, Waitsfield and Champlain Valley Telecom and First Light are state partners in its grant application, Hallquist said.

“This will put more alternative fiber routes into the backbone, which will reduce the risk of outages,” said Sarah Morris, senior director of regulatory and legislative affairs at Consolidated Communications. “In the unfortunate event of a fiber cut, this allows us to reroute the network so it stays up.”

State officials and communications union district administrators also hope the new connections will lower the wholesale price of fiber optic service.

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

New connections would also connect isolated communities on the outskirts of communication union neighborhoods with neighboring neighborhoods, ensuring that customers will remain connected to the system even if a line is down.

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

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