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Vermont Network Takes Local Ownership to Next Level

Vermont's East Central Fiber-Optic Network (ECFiber) has finished its second round of financing. We noted that the network had exceeded its financing goals at the beginning of this year by raising over $1 million and subsequently began connecting rural homes with its next-generation network. (See all of our ECFiber coverage here.)

The network is now connecting 120 households, a bit below its goal of 164 for the end of the calendar year... but it also had to deal with an unexpected hurricane (Irene) that seriously disrupted the entire state and kept fiber-splicers running ragged.

ECFiber has just completed its second round of financing. While the first round was dominated by a few major investors, the second round had a broader base -- a sign that many in the community have embraced the approach. From the ECFiber press release:

ECFiber is using an innovative funding method to extend its network, supported by local citizens who lend funds that enable build-out to local neighborhoods within and across member towns. Citizens who invest as little as $2500 allow ECFiber to reach all households along designated routes. ECFiber determines where it will build by choosing routes that reach the greatest number of unserved businesses and households, which are then connected to ECFiber’s state-of-the-art fiber-optic service.

These people are literally investing in themselves. ECFiber is an InterLocal Contract with a Governing Board composed of a representiative from each member town (of which there are 23). Investors are purchasing tax exempt 15 year promissory notes that effectively earn 6% interest (due to the one year holiday from interest and principal).

They have raised $340,000 in this round of financing, which will allow the network to pass 60-65% of Barnard's 950 residents. Spokesman Bob Merrill said the network again surpassed its expectations of investor interest and noted that several neighborhoods came on board after one or two interested residents rallied neighbors to invest so they could finally have high-speed connections to the Internet.

The network remains committed to connecting every person in the 23-town area but absent outside financing, it will take another 10 years.

EC Fiber is offering telephone services and Internet access. Though the network does pass some areas where people already have service, ECFiber remains focused on the unserved areas. People in unserved areas presently have to deal with dial-up (over neglected phone lines owned by FairPoint) or satellite connections.

The November-December newsletter offers more details about the network, including the extended battery options that ECFiber offers that will extend the time phones will work in the event of an extended power outage. (FTTH networks do not supply their own power, as do copper telephone lines.)

ECFiber's services and pricing sheet is available here. The prices are higher than those typically found in metro areas, which reflects the higher cost (but not unmanagebly so) of building network in these areas of extremely low density.

Burlington Telecom Partners to Increase Digital Inclusion

On its facebook page, Burlington Telecom has announced a partnership with ReSOURCE, a local nonprofit, that will make refurbished computers available to qualified Burlington families.  

bt-digital-divide_0.jpg

A Survey of National Private Sector Broadband Providers

When it comes to expanding access to the Internet across the US, the federal government has long looked first to the private sector, ignoring hundreds of years of experience showing that unaccountable private companies cannot be trusted to sufficiently invest in or govern essential infrastructure.

Inevitably, they price access to high and invest too little as they maxmize their profits -- thereby minimizing the profits of all other parts of the economy.

So let's take a little survey of the progress we see from these companies.

We have long railed against the Verizon -> FairPoint fiasco in New England that left Verizon much richer at the expense of residents and businesses in rural Vermont, New Hampshire, and Maine particularly. Well, FairPoint creditors have realized the depth of Verizon's scam and are suing Verizon for $2 billion. Read the complaint [pdf].

According to the complaint (pdf), Verizon not only made out like a financial bandit up front, but took advantage of regulatory delays to strip mine the assets of anything of value, including core IP network components, business services, and localized billing and support assets required to support the three states. Verizon then billed out their support assistance for millions per month during the very rocky transition, during which time 911 and other services saw repeated outages, resulting in millions more in refund penalties.

Karl Bode is right to criticize the state authorities that allowed this fiasco to occur. Their inability to regulate in the public interest has hurt everyone stuck in the mess. While we can expect powerful companies like Verizon to try to game the system at every opportunity, there is no excuse for making it so easy for them.

Frontier Logo

As long as we are talking about Verizon shedding its rural investments, let's take a look at how Frontier is doing since it inherited thousands upon thousands of FiOS customers as part of its recent deal with Verizon. Frontier has decided the best approach is to transition those customers from the next-generation FTTH network to an older, slower, less reliable, DSL alternative. Find me another country where a major company is moving customers away from fiber-optic connections. This is a national embarrassment.

Rather than investing in better technology, Frontier has literally doubled down on DSL by marketing a second DSL line to customers. Connect one computer to one line and the TV/video game unit to another one. Of course, it turns out they are lying (or incompetent) when it comes to how much they are charging for it...

In other words, that $13.50 1.5 Mbps (if you're lucky) DSL line is actually closer to a $50 1.5 Mbps DSL line once Frontier gets done slamming you with additional fees. These kinds of below-the-line fees have been a mainstay at phone companies for decades, essentially allowing them to engage in false advertising and covertly jack up the advertised price post sale. It's a practice that has yet to see any real attention of regulators, even those ceaselessly professing dedication to "transparency." It helps that Frontier serves a lot of uncompetitive markets where users have no other options, resulting in "deals" like this one.

Let's move on to the nation's largest cable company, Comcast. We recently noted Comcast's dubious distinction as the least trusted company in America. It was simultaneously the second least trusted. I'm guessing we won't see that award plastered on the side of the vehicles their poorly compensated contractors drive around.

Comcast Logo

Occupy Philly, the City of Brotherly Love offshoot of Occupy Wall Street, recently demonstrated at the Comcast Center to bring attention to Comcast's corporate tax dodging. Hey -- I thought Comcast routinely said it wasn't fair that non-profit entities don't pay taxes!

Finally, the big cable companies in general have been singled out in a study showing that Americans lost $38 billion in wages last year while waiting for technicians and delivery people. Cable companies were the worst at making people wait - prompting one person to say "SCAMCAST should be their name."

There is plenty more of examples like the above, but I'm done writing about them today. Just recall that the federal government prefers that this group of unaccountable corporations build, own, and operate the most important utility of the 21st century. We prefer local ownership that is accountable to communities. Time Warner Cable has actually been sued for its terrible customer service!

Citibank Finally Files Suit Against Burlington Telecom

After more than a year of expecting Citibank to file suit against Burlington, they finally did. Burlington Telecom, a muni FTTH network, now illustrates the worst case scenario for muni broadband. After the founder of the network left following disagreements with the Mayor, the Mayor's Administration ran the network into the ground (leading us to recently publish the report "Learning from Burlington Telecom: Some Lessons for Community Networks."

Burlington had financed its network with a municipal capital lease, rather than the more commonly used revenue bonds, meaning that the actual network secures the loan. In this arrangement, the network is technically owned by the lender (Citi) and Burlington leased it. So when Burlington decided to stop paying the lease for the network, it became Citi's problem.

And Citi had a lot of problems due to the games massive banks were playing having killed the economy. BT became just one more non-performing asset. They did nothing while the City continued to run the network without making lease payments. Now Citi is suing for the world (this is how these things work) but it isn't clear that Citi can actually get what it demands (the State has a say in whether the network simply gets shut down, which Citi is presently asking for). And if the network did get shut down, Citi would be in a worse position to recover any of its losses because the value of the network is far greater than the sum of its parts.

State law says that losses from a public telecom venture cannot be carried by taxpayers, which is where we return to an interesting document prepared by the Mayor's Administration. As reported by Blurt:

In its lawsuit, Citibank notes that a letter written by attorney Joe McNeil on behalf of Burlington "expressly warranted to Citibank that at least 40 percent of Burlington's revenues were derived from sources other than taxpayers' funds and would be available to fund payments to Citibank, and further, that Burlington had the financial resources and ability to make all payments to Citibank for the full term of the agreement."

I read that document last year and remember being fairly surprised as it appeared to be incorrect from my non-lawyer reading of the law. This is just another case in which the Mayor's Administration played too fast and loose with essential infrastructure.

We have watched in dismay as Burlington Telecom transitioned over the past four years from a model community network to the worst case scenario. This situation proves only that community networks can suffer from bad management in some of the many ways private telecom companies can suffer from bad management (resulting in anything from bankruptcy to prison).

Communities can learn lessons from Burlington's situation -- chief among them that transparency is important. As with other public enterprise funds, the operation should be regularly audited and oversight must be in place to catch errors early, when corrections are easier and less costly.

Unfortunately, Burlington Telecom is in a very bad position presently. The actions of the Mayor's Administration made that position worse than it could have been. Time will tell if it can be saved. Given its important positive contributions to the city (millions of dollars in community savings, increased economic development), the City would benefit from its continued operation.

EC Fiber is Officially Live in Vermont

This has been a great month for communities building their own high capacity broadband networks in New England. Wired West in rural Massachusetts has formalized its coop of communities. Just last Friday, we wrote about the East Central Vermont Community Fiber network in beta. As of last night, EC Fiber is out of beta and officially live! Those interested can sign up at MyECFiber.net. Last night, they issued this press release:

SOUTH ROYALTON – Having completed its beta testing, and with the Phase I project nearly complete, ECFiber began connecting its first customers today. Eight customers have been beta-testing the system for the past two weeks, getting sustained 5Mbps symmetrical service.

The Barnard General Store, one of the beta sites, has been offering the experience to customers via WI-FI, and has been finding folks on their doorstep at all hours, trying out the system.

ecfiber-construction.png

“It’s been amazing,” says Kim Furlong, one of the store’s proprietors. “Because so much more of what we do is online, it is truly a joy to reap the reward of high-speed internet. Dial-up, and even satellite, is such a time-robber. Fiber is very different – you can be more efficient, and that is exciting. At the same time, I have some trepidation. People are going to relocate here more permanently because of what is available, and that is probably going to change the fabric of the community.”

According to Project Coordinator Leslie Nulty, 15 new accounts were opened within the first 24 hours after the doorstep delivery of information packets. Barnard Academy, another beta site, is also very excited about the service. They are planning an open house and community celebration of ECFiber’s arrival in mid-October.

Barnard was chosen for the Phase I project because of its proximity to the central office and its large number of unserved users. Pre-registrations topped 90% before the project started. Phase II, to build out the rest of the town of Barnard, is in the planning stages, with an informational meeting set for Thursday night at 7PM at the Barnard Town Hall.

EC Fiber Starts Connecting Rural Vermont to Internet

The East Central Vermont Fiber-to-the-Home network is officially connecting people. This has been a fascinating project to watch, though undoubtedly frustrating from the thousands of people who just want a fast, affordable, and reliable connection to the Internet (though any one of the three would be an improvement for them).

They started trying to finance the network when the markets weren't interested in even lending water to Jesus. They seemed a lock for stimulus funding but that money instead when to a wireless project. The state begged them to apply for Vermont Telecom Authority broadband funds and then slammed the door when they complied. All in the shadow of Burlington Telecom. So they did what they now say they should have done from the start: financed it themselves.

They organized and came up with $1 million locally to start the project. In July, they announced Barnard Vermont would get connected first.

And now they are starting to turn those connections on. And regularly updating their blog, something I love to see! As of yesterday, they had 7 beta connections going and were planning to add 2 more. 3 in 4 of those asked if they want drops installed have already said yes.

We look forward to tracking their progress.

Learning from Burlington Telecom: Some Lessons for Community Networks

Publication Date: 
August 18, 2011
Author(s): 
Christopher Mitchell - Institute for Local Self-Reliance

In little more than a year, Burlington Telecom went from being a hopeful star of the community fiber network movement to an albatross around its neck. The controversies surrounding it have encouraged cable and telephone companies to use it as Exhibit A in their case against communities going into the telecommunications business. However, most of those criticizing Burlington Telecom have very little understanding of what went wrong and how it happened. Examining what actually happened helps to explain how these problems may be avoided, as the vast majority of existing community networks have already done.

[Download the full report]

In 2007, ILSR issued a case study on Burlington Telecom. The report argued that Burlington Telecom was a model for how communities could build their own next‐generation fiber‐to-the‐home broadband networks.

This report revisits and updates that report, analyzes Burlington Telecom’s situation (for better and for worse), and extracts useful lessons for other communities pursuing community fiber networks.

In preparation for this report, ILSR examined many documents, including those available due to the investigation of Vermont’s Department of Public Service. We interviewed many people from Burlington, including former BT employees, citizens active around the project, and City Council members. We discussed Burlington’s situation with a number of others intimately involved in community broadband networks around the country and posed questions directly to a representative of BT.

Vermont Town First to Get Universal Access to ECFiber Community Network

The East Central Vermont Community Fiber Network has announced it will connect an entire town as its second phase. Barnard, Vermont, will be the first town to have universal access to ECFiber's next-generation network.

An update on Phase 1 of this network:

Phase 1, with construction under way (see photo) and scheduled to go live in early August, brings an ultra-high-speed fiber loop from the ECFiber central office near I89 Exit 3, along VT Routes 107 and 12,  to the center of Barnard. ECFiber expects to begin connecting businesses and residents who live on this route in early August and will provide detailed subscriber information closer to that date.

ECFiber has 23 member towns, but Barnard could be the most enthusiastic. This is as grassroots as it gets:

At its June meeting, the ECFiber Governing Board authorized an initiative to extend service to the rest of Barnard town. This requires a second round of capital-raising through a similar "friends and families" offering directed specifically to residents, businesses, and others who wish to support the deployment of universal broadband in Barnard.

Loredo Sola, ECF Governing Board Chair commented, "When we first took our plan to Barnard, we were inundated with residents offering to pay the entire cost of extending the Phase 1 trunk to their homes. This enthusiastic response inspired us to authorize a Barnard-only fund drive."  ECFiber will be organizing informational meetings for Barnard residents and businesses to explain the details of the plan.
When sufficient funds have been committed to build out the entire town, the Barnard Local Fund will close, and construction of Phase 2 can begin.

Barnard had 94% of the community presubscribe!

The success of ECFiber comes without any support of the state, which has continued to pretend wireless connections and out-of-state corporations will provide the networks necessary for the economic development needed by communities.

EC Fiber Truck

Valley News took note of the story and expanded on it:

Without other funding streams, it could take seven to 10 years to build out to all 23 towns, Nulty said, but the company is committed to seeing it happen. By building out to Barnard, a town with few other Internet options, and eventually providing “universal coverage” there, ECFiber hopes to demonstrate its business model and attract more investors who could speed up the process.

And some financial details:

In phase one, notes were sold for $4,500 a piece, with varying interest rates depending on the level of investment, Nulty said. For subsequent financing phases, the notes will be valued differently. About 25 percent of the note goes toward the central ECFiber fund to build out future “links” of fiber, he said, and the rest goes toward the network in the specific town being built out -- in this case, Barnard.

And finally, a classic quote from Tim Nulty -- a Vermonter who will always choose to be self-reliant if at all possible:

[I]nterviewed on Tuesday, he said it felt “fantastic” to finally make some tangible progress on the ECFiber dream. He only regretted the time wasted pursuing the federal stimulus money.

“As a native Vermonter, I can't tell you how many nights of sleep I've lost for going to the federal government with a beggar's bowl when we should have done it ourselves,” Nulty said. “So, it feels good, but it’s also coupled with immense regret.”

New Broadband Networks Increase Tension in Vermont

We have previously covered the East Central Vermont Fiber Network and their local frustrations at receiving little state or federal support in building a next-generation network. The feds and state government seem too heavily influenced by those with lobbying clout -- leading to subsidies to build lesser networks that local do not want.

They want real Internet, not another wireless promise that fails to deliver. A story from Vermont Public Radio discusses increased tensions as the networks struggle over a few community anchor tenants to help finance the rest of the network. Here, Loredo Sola of EC Fiber explains the problem:

SoverNet will own the infrastructure but is required to provide bandwidth at wholesale cost to providers who extend the service outward.

Loredo Sola is skeptical. He says he's already lost one institutional contract to the SoverNet project. He says that's forced E.C. Fiber to scrap its plans to serve smaller users in the area.

Sovernet is building a middle mile network connection community anchor institutions, but is an example of the exact wrong way to do it. Supposedly, the investment (the vast majority of which is funded by a federal stimulus award) will allow more ISPs to build more last mile networks as they have access to better backhaul.

But lowering the operating cost of a network does very little to make that network affordable to build. The high up front capital costs are what limit broadband in rural (and urban too!) areas. Compounding the problem is what Sola mentions above, Sovernet is taking the key anchor institutions off the board with its project so communities are actually left with a harder business case to connect themselves.

Groups like the Vermont Telecommunications Authority are so proud of having solved a short term problem, they have totally missed the fact that the longer term problem of making sure everyone has fast, affordable, and reliable access to the Internet is now much harder to solve.

When I first read about the WiscNet situation, I was interested to learn that it acted as an ISP but rarely provided the physical connections -- leaving opportunities for communities to build those connections themselves, using themselves as an anchor tenant.

Smarter programs, like the Building Community Capacity through Broadband project, result in the community owning the network. Communities have greater incentive to build out these networks to connect everyone because they understand the value of building infrastructure rather than just trying to maximize a profit from it.

Gary Evans of HBC Discusses Burlington Telecom Situation

In a bimonthly local show, Burlington City Councilmember Karen Paul discusses City issues. In the recent show, she discussed Burlington Telecom with Gary Evans, the head of Hiawatha Broadband Communications (HBC). Evans has been helping BT get back on its feet after struggling for years. HBC is a private company most notable for strong success in overbuilding cable companies in SE Minnesota as well as running the Monticello FiberNet for the City.

For those who need an update on what is happening to BT since its problems were widely publicized, this is a great place to start.