Economic Recovery Plan: Phase 2 - The Courtship

We are excited to be able to share the second phase of our economic recovery plan from Covid-19. Please consider supporting our efforts in the legislature to move forward these and other ideas. If you missed our introduction or Phase 1 of this plan, you can find them here.

Phase 2 – The Courtship. There is little doubt that Covid-19 has changed our world for good. One of the most meaningful ways is how we work. Many employers have discovered the benefits and limitations of remote work. Major corporations like Microsoft, Google, Facebook, Twitter and Spotify have gone remote. Salesforce even went as far as to declare that the 9-5 workday was dead. Office buildings in downtown San Francisco and Manhattan are now empty. What’s more, the majority of workers prefer to continue working remotely even after restrictions are lifted. Experts are predicting that 25-30% of the US workforce will still be working from home, at least part-time, at the end of 2021.[1]

This presents a massive opportunity for Vermont. We are within the drive market of multiple major metropolitan areas, we have an international airport, and our quality of life was ranked #2 (behind Hawaii) by CNBC in 2019.[2] This allows workers the flexibility to live a rural lifestyle but have relatively easy access to international travel or corporate offices should the need arise. See three more reasons why rural broadband matters for Vermont.

The major hurdle? Internet access. About 70k addresses in the state don’t have internet speeds that can reach 25mbps download, and more than 250k (82%) don’t have access to service that can reach 100mbps symmetrical.[3] Overall, Vermont ranks 47th for access to broadband.[4]

This is the issue we need to solve in order to compete in a 21st century economy as well as a post-pandemic economy. However, we have been at broadband buildout for far too long with too little to show for it. The polls and wires that have supported our telecommunications infrastructure for the past century are a reliable and efficient option for urban areas where houses are close together and the number of connections per mile is high. They become much more expensive (on a relative-basis) to install and maintain in places like rural Vermont, which is where (surprise surprise) most of our lack of high-speed internet is centered.

Vermont awarded almost $12M in grants last year for broadband buildout and connected over 10k households at a cost of about $1,200 per connection. That number is palatable until you realize that two-thirds of those connections were wireless broadband which costs significantly less than fiber. If you look at just fiber connections, taxpayers spent $3,036 per household.[5]

The Governor proposed $16M in grants for FY22, which is a generous 33% increase.[6] However, even if we were able to sustain this level of spending, it would take over a decade to secure the financing to connect every underserved household to fiber. Fortunately, it looks like the federal government might help solve this issue for us. While they have not yet announced rules around how the funds can be used, there is potentially $250M or more on the table for broadband expansion in Vermont.

Even with this unprecedented level of federal funding, the cost per connection of installing fiber cables is likely to increase as we push further into rural areas. Additionally, the cost of maintaining that fiber infrastructure may be impractical in the lowest density areas. Fortunately, we have some options to address this. There is the aforementioned wireless broadband which utilizes 4G mobile technology and a specialized modem to connect households without a physical cable. This technology can reach download speeds of 25Mbps and costs roughly $1,100 per year with a $200 installation fee.[7] However, some providers cap data usage, which can be a downside for heavy users.

Fortunately, the arrival of 5G would likely increase the speed of these types of services dramatically and also make data caps irrelevant because 5G antennas can carry much larger bandwidth. Current providers elsewhere are claiming 200mbps download speeds and no data caps with this technology. The downside, however, is that you essentially need a clear line of site between the tower and the receiver on your house, so it may not work in all instances.

This technology could also be deployed using mobile hotspots like Vermont (and many other states) used last year as a temporary solution to get people access. Mobile 4G coverage from AT&T and Verizon blanket nearly the entire state with coverage.[8] These devices could continue serving to bridge the gap while longer-term solutions are being put in place.[9] Additionally, in areas of weak service, booster antennas could be deployed to increase the speed and reliability of the service.

The newest kid on the block is Starlink, the satellite internet service from SpaceX. This new technology is has been beta tested in Vermont and users are reporting up to 150Mbps download speeds and surprisingly low latency (an issue for previous generation satellites). Currently, the company is focusing on rural users exclusively (which makes sense as this technology is most useful where fiber is cost-prohibitive). The cost is comparable to the fixed wireless systems at around $1,200 per year and about $550 for shipping and equipment cost. The speed and reliability of the service is also likely to increase as SpaceX continues to launch hundreds of satellites per month.[10] Two notable limitations are that while Vermonters can sign up for the service now, the installation equipment is not expected to arrive until sometime over the summer.[11] You also need to have a clear view of the northern sky.

Both wireless and latest generation satellite broadband offer excellent alternatives to traditional fiber at a fraction of the cost. Our friend Tom Evslin (who is the former Chief Technology Officer of the state by the way) compared these two services and the pros and cons of each. His blog post on this is well worth a read. By incorporating these two technologies into our current strategy, we could reach universal coverage THIS YEAR[12] and potentially provide stop-gap service while construction of fiber infrastructure is being completed.

We have an opportunity and responsibility to make Vermont competitive in a global marketplace. Our current approach subsidizes providers and their infrastructure buildout and providing service, but what if we also issued grants to families who need help to get connected and subsidies to keep those service affordable? Nearly every Vermonter is in a service area for fiber, cable, 4G, or satellite internet right now, but it’s the cost of installation and the cost of service that are preventing access. Vermonters need universal broadband access NOW and we have tools to do it.

Something we don’t talk about, but should, is that even if a fiber or copper cable runs past your driveway it doesn’t necessarily mean you have service. Often times if there is a long driveway the homeowner has to cover the cost of running a cable up it themselves, this can be thousands of dollars. Even in instances where internet service providers do drop a cable to the house the cost of routing that cable indoors and setting up a modem is still the homeowners responsibility.

The second financial barrier is the cost of the underlying service itself. Large providers like Comcast and Charter have reasonable low-cost plans for people, but these providers are mostly in urban parts of Vermont and the uptake rate is very low. Many local providers don’t have these programs available to customers. This matters for people who can’t afford to spend between $600 and $1200 per year on internet service.[18] This could prevent people on social security or other fixed incomes from accessing critical telehealth and remote monitoring services. Another issue exposed by the pandemic, and contributed to the rise of the “McClassroom”[19], was that low-income families couldn’t afford (or didn’t have access to) reliable internet service that supported Zoom lectures. As a result, students sought out WiFi connections at their local McDonalds or Dunkin Donuts to stream lectures or upload projects.

Those who can afford these costs are finding ways of getting connected and shouldering the cost of doing so, which is broadening our digital divide in concerning ways. Over the next few years, as we continue to build out infrastructure, the largest barrier to high-speed internet access is likely to be related to cost and not availability. To some extent, we were already addressing this through the first half of the pandemic with the Temporary Broadband Subsidy Program (TBSP) which was offered through the Department of Public Service sadly ran out of funds in January of this year.

Recommendations:

We recommend restoring funding for the TBSP that provided $40 per month subsidies to cover the cost of service for households who can demonstrate financial hardship and have an urgent need for service. Additionally, we would expand the program to provide up to $500 connection grants to households who are not currently connected to the federal standard of 25/3mbps or faster service (similar to the LECAP program). These grants could be used for the installation of any service of qualifying speed, regardless of the technology. The application process for this program should also be streamlined and we should better advertise its availability. We recommend setting aside $35M of the federal relief dollars for these efforts over the next three years. This gives the state time to develop a more sustainable long-term solution for affordability.

The remaining $215M should be directed into thoughtful infrastructure buildout. If we are able to maintain a (publicly funded) average cost per connection close to $3k, this should be sufficient to reach universal coverage with the current round of funding.

In order to determine which service model makes sense for each underserved area, we recommend the state conduct a detailed infrastructure poll survey to map which utility poles are ready and available for fiber cables now in underserved areas. Much of this information already exists with electric utility providers and could likely be gathered relatively easily by state officials. This mapping data will help inform decision-making around where to deploy fiber or alternate technologies.

We also recommend that the Department of Public Service investigate the potential of negotiating with AT&T and Verizon to either raise or eliminate data caps for customers who are in underserved areas or only have access to mobile internet service. Achieving this will make those services more viable as a “digital bridge” until other technologies reach them.

Additionally, we should ensure that grants and subsidies are platform neutral. Vermonters should be able to access whichever high-speed broadband technology is most amenable to them in their service area, whether that is satellite, 4G/5G, fiber, or even copper cable. A network of different technologies is a good thing, there is no one-size-fits-all solution here.

 

[1] https://buildremote.co/companies/companies-going-remote-permanently/

[2] https://www.cnbc.com/2019/07/10/these-are-the-best-places-to-live-in-america-in-2019.html

[3] https://publicservice.vermont.gov/content/broadband-availability

[4] https://broadbandnow.com/Vermont

[5] https://publicservice.vermont.gov/content/2020-connectivity-initiative-awards

[6] https://governor.vermont.gov/press-release/governor-scott-delivers-annual-budget-address-0#:~:text=The%20%2420%20million%20broadband%20package,the%20areas%20that%20need%20it.

[7] One example of a wireless broadband provider: http://www.cloudalliance.com/what/residential/

[8] https://www.whistleout.com/CellPhones/Guides/Best-Coverage-in-Vermont-USA

[9] As suggested in the VT emergency telecom plan: https://publicservice.vermont.gov/sites/dps/files/documents/VT%20Emergency%20Telecom%20Plan_Final_Dec%202020.pdf

[10] https://www.reviews.org/internet-service/spacex-starlink-satellite-internet-review/#:~:text=Starlink%20satellites%20will%20sit%20closer,between%20urban%20and%20rural%20areas.&text=Each%20Starlink%20satellite%20will%20communicate%20with%20four%20other%20satellites%20using%20lasers

[11] https://www.pcmag.com/news/spacex-opens-starlink-pre-orders-but-it-may-take-months-to-arrive

[12] Claim based on state funding levels and reporting on the rollout of satellite and 4G services (both fixed and mobile)

[18] Average cost of most available services per https://www.allconnect.com/local/vt

[19] https://www.mynbc5.com/article/mcclassroom-where-vermont-students-access-wifi-highlights-broadband-gap/36054189#

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  • Ben Kinsley
    published this page in Blog 2021-05-01 17:56:43 -0400

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