On Friday, Doug Hoffer (State Auditor) shared a presentation with the Senate Finance Committee regarding universal broadband in Vermont. He wanted to examine some “risks” at this stage, after nearly twenty years of talking about this. Even with a “river of money” from the Federal government, he anticipates the Communication Union Districts (CUDs) are going to be asking for “a couple of hundred million dollars more.”
He also flagged Affordability in Act 71 is yet to be well-defined or addressed. Citizens are anticipating service, but if rates are still unaffordable, “it will not work for them,” he said. CUDs and advocates raised the idea of seeking “public money down the road to reduce potential costs; that is not the same as defining affordability”.
Chairwoman Cummings interrupted to say that was the responsibility of this Committee and they “kicked that can down the road when we did Act 71.” Hoffer added that CUDs are brand new, barely functioning yet. Their capacity is unique to each and will lead to variability in outcomes for consumers. He noted that several CUDs may find they simply cannot function on their own, leading mergers between CUDs. Cummings agreed that potential failures are an issue but commented that “you don’t start up a new company by asking, while you are at it, tell us what happens when you go under.”
Robert Fish (Deputy Director, Vermont Community Broadband Board) and Christine Hallquist (Executive Director, Vermont Community Broadband Board) shared their presentation next.
Hallquist shared that they reached out to the Auditor as soon as the job started, in contrast that with the private sector where they “would have a consultant for that.” She pointed to privacy issues as an area they “struggle with,” noting that they “push the CUDs really hard to be transparent.” Public meetings have posed problems in some areas where CUDs are competing against private telecoms because they are essentially broadcasting their business plans. This can lead to a competitive disadvantage. They are hoping to strike the right balance.
During the discussion, Hallquist made an interesting comment, stating that “once [CUDs] get enough grant funding to get established, the difference between [CUDs] and the private telecoms is [CUD] prices will go down over time, while the private telecom providers will go up over time. That is because CUDs are not-for-profit and the debt service on capital is depreciated, and cost goes down over time.”
NOTE: It’s not clear that this dynamic is also not at play for private telecom companies. Additionally, the debt service for some telecoms may be lower than for CUDs. No testimony was taken on either of these points.
Fish added that they received a planning grant for digital equity and formed a cross-agency group looking at this statewide. One particular area of concern is what are called “line drops” from the utility pole to a customer's actual home. They are seeking funds for drops to mobile homes and “others eligible” under the Digital Connectivity Program.
There was a robust discussion about managing risk on behalf of CUDs and managing federal monies available from the Infrastructure Investment and Jobs Act as well as the National Telecommunications and Information Administration
According to Hallquist and Fish, they are “lighting a fire under the NTIA” with help from Senator Sanders’ office. However, one area of concern is that the revolving loan funds are a problem because the Federal monies cannot be used towards debt servicing.
Senator McCormack quotes Ronald Reagan, saying that “government is not the solution, government is the problem.” He commented that “it’s curious” when citizens ask why they still have no broadband, “that is the private sector” he said.
Hallquist agreed that she understood the time-frame frustration. The private sector can sometimes act more quickly, but the long-term investment in CUD will lead to a system that “works best,” but doesn’t necessarily build things the fastest.
Senator floated the workforce capacity issues. It was known when the passed Act 71 that that there was not sufficient workforce. Hallquist believed the problem had “largely been solved” by partnering with existing telecom providers. However, Fish added that next year might be problematic as more projects move out of the development phase and into the construction phase.
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