newest player in telecom competition: Your own town laying fiber, The
In addition to providing lightning-fast Internet connections along with a wide choice of cable TV channels and unlimited local phone service – all at unmatched prices – Burlington’s municipally owned fiber optic network turns out to have powerful magnetic properties. It’s attracting attention from towns all over Vermont.
About 25 towns have inquired about linking to the techno-hub Burlington Telecom (BT) has built in a nondescript brick building on lower Church Street And more than a dozen of those towns are moving toward signing contracts that will enable them to use the BT hub as the control center for their own fiber-optic distribution networks. Communities as large as Rutland and as small as Tunbridge could then offer their residents and businesses the same advanced telecom services that are already available in most parts of the Queen City.
In many cases, says Burlington Telecom director Tim Nulty, “it’s not a question of bringing service to a town that has none of these kinds of services at all. It’s mainly about bringing a much better set of services.” But rural towns with few broadband or video-reception options are among those most eager to link to the BT nerve center, Nulty adds.
He describes the hub as “the brains of the system, the place where all the digital networks are.” Cables extend from the humming basement of the building at 200 Church St. to six sub-stations around the city that in turn deliver telephone, Internet and TV services to their respective neighborhoods. Nulty likens the hub to the central office of a telephone company – only with more varied and usually more sophisticated equipment.
Built at a cost of $5 million, the BT hub can accommodate 100,000 users. But it’s projected that only about 10,000 Burlington homes and offices – about half the city’s total – will hook into the system once it’s fully operational and thoroughly marketed. The $5 million capital outlay and the annual $750,000 maintenance cost of the hub would have been the same even if it were to serve only 10 customers, Nulty notes.
It’s unnecessary – and probably financially impossible – for any other town in the state to build its own hub, Nulty says, The excess capacity in the Burlington system potentially allows scores of Vermont communities to get advanced telecom services without the cost of constructing central infrastructure, Nulty points out.
Montpelier is closest among the various towns to concluding a deal with Burlington Telecom. “The idea has been to focus on one place to create a template for the documents and processes that can be used by others,” Nulty explains. If all goes as well as it could, adds Montpelier City Council member Andy Hooper, the capital city would start receiving signals from the Burlington hub early in 2009.
Montpelier already has access to good telecom services in comparison to what’s available in most Vermont localities, Hooper notes. BT’s price advantages are what’s mainly fueling his community’s interest in the Burlington link, Hooper says.
The 2,000 homes and businesses currently connected to Burlington Telecom can choose among a variety of service packages. One of the most popular is the “triple play” that includes 130 cable TV channels, broadband Internet service, and unlimited local dialing plus 1,000 minutes of US/Canada calls – all for $99 a month. “It’s a sweet deal,” Hooper comments.
BT’s fiber optic network, under construction for the past three years, makes use of technology “an order of magnitude better” than any of its competitors, Nulty says. Hooper agrees. He contrasts Burlington Telecom’s state-of-the-art system with what Verizon and Comcast now operate, separately, in Montpelier. “It will be good to introduce some competition here because the two monopoly providers haven’t improved their infrastructure in a long time and have shown no interest in doing so,” says Hooper, chair of the Montpelier City Council’s telecom committee
Burlington Telecom’s pricing is gaining attention in other towns as well, with many local residents also attracted by the system’s cable TV and video-streaming capabilities, observes Jack Hoffman, head of the Vermont Broadband Council. The speed of BT’s connections allows clear and continuous transmission of such signals, Hoffman notes.
Fiber optic lines can carry data at rates of up to 100 megabits per second – which approximates the speed of light. It’s the quality of the transmitting and receiving equipment that slows the pace to the 54 megabits per second that Burlington Telecom routinely attains, Hoffman says. But compare that, he suggests, with the 2 or 3 megabits per second that are the fastest rates most digital subscriber lines (DSL) can achieve.
Even though it’s far slower than fiber, DSL does qualify as a form of high-speed Internet access, as defined by federal regulators, Hoffman notes. The official US standard for broadband is set at 0.2 megabits per second or higher.
Worries about the pending sale of Verizon’s landlines in Vermont are also spurring interest in the phone service offered by BT, says John Doty, an organizer of a three-town telecom consortium in eastern Chittenden County. Based on conversations with locals, Doty reports that many residents of Jericho, Underhill and Westford are concerned about what may happen to local phone service if FairPoint Communications, a much smaller company than Verizon, does gain regulators’ approval for the landline takeover.
Underhill and Westford have only limited access even to DSL service, Doty adds. “People here do understand that fiber optic would be a big improvement over DSL,” notes the Westford resident, an electrical engineering consultant.
An ultra-speedy connection to the Internet would make a major difference in his own family’s lifestyle, Doty points out. His wife, Beth Kirkpatrick, an infectious disease specialist at Fletcher Allen Health Care, would like to work partly from home in order to spend more time with the couple’s two children, ages 7 and 9. A fiber-optic line would allow her to send and receive medical images in seconds.
Television service is also a big issue in the three towns because most residents depend on satellite links, “and a lot of them aren’t happy with that,” Doty says.
Some of the same limitations are leading many Rutlanders’ to look toward the BT option, says Tom McCauley, director of the Rutland Redevelopment Authority. “We hope to be able to offer exactly what’s available in Burlington,” he says.
McCauley estimates the total cost of building a link to Burlington and a distribution network throughout Rutland at about $16 million. And he’s confident that financing can be arranged, with federal loan guarantees representing “one promising route.” Some costs might also be shared with towns along the route between Burlington and Rutland, McCauley suggests. It would not be complicated for Shelburne, Charlotte, Vergennes, Middlebury, Brandon and Pittsford to tap into a BT fiber optic line, McCauley notes.
Environmental concerns will probably will not impede construction of links to Burlington and within the various towns, according to many of those involved in the effort. “We have a legal right through Burlington Telecom to gain access to existing poles,” says Doty of the Jericho-Underhill-Westford consortium. The fiber-optic cable can be strung on utility poles already in place in many areas, although some new construction will likely be needed as well, organizers say. Even then, “it won’t be as though we’re building something like the Velco transmission line,” Doty adds, referring to the 63-mile, $228 million upgrade project being undertaken by the Vermont Electric Power Co. in western part of the state.
Despite the competitive advantages that Burlington Telecom appears to offer, the envisioned infrastructure links would not prevent a town from choosing to contract with a different service provider, Hoffman points out. “The $99 package is going to be hard to top,” he says, “but there could be competition to it at some point down the road.”
Organizers of the eastern Chittenden County consortium do intend to solicit otters from Verizon and Comcast, Doty notes. “We’ll probably go with Burlington Telecom, but if Verizon came up with a really good deal there’d be no reason not to hook into their fiber link,” he says.
The cost of building a local distribution network for all three of the communities in Doty’s area would be about $10 million, he estimates, And he too expects that the financing will not be difficult to secure.
In some cases, though, the projected costs do seem formidable. The 13-town East-Central Vermont Fiber Network estimates it will have to raise about $30 million to build a link to Burlington and to run cable to households and commercial properties throughout a sizable area with challenging terrain. Still, many members of the consortium, which includes towns such as Vershire, Chelsea, Sharon and Tunbridge, are committed to making the project a reality, says Henry Swayze, one of the lead organizers. The consortium could impose a modest local surcharge on the service packages offered by Burlington Telecom as a way of off-setting some of the construction costs, he suggests.
Broadband Internet service has become an integral feature of contemporary life, Swayze argues. Businesses need it in order to compete successfully, and many residents of east-central Vermont have come to view high-speed video and data connections as a basic amenity, he says. Wireless links are not an option for a sizable number of locals because of the hills that block signals in much of the area, he points out.
Swayze, a retired techie, also sees the initiative in political terms. Explaining that he’s seeking ways of reducing energy consumption on a societal as well as a local level, Swayze believes “broadband has the potential to make it so that more people don’t have to drive to work.”
He also looks at his region’s proposed fiber optic web as an egalitarian element. lust as electricity goes to everyone, we want to make sure broadband does too,” Swayze says,
Towns themselves may not have to increase their debt load in order to construct local networks, notes Hooper, a coordinator of the Montpelier project. It will cost about $8 million to string cable to Burlington and in Montpelier itself, he estimates, adding that the city won’t have to take on any of that debt if the initiative is structured as a capital lease. “Investors would give us money to build and operate the network until it becomes profitable say, over 15 years,” Hooper explains. Paybacks would be made once profits do start to accrue, Because of the lease arrangement, the borrowed funds “would not be on the books as municipal debt,” he says.
Some advocates of the BT-focused system are also looking to Vermont’s new Telecommunications Authority for assistance in securing financing for the towns’ individual projects. “My hope is that the Authority supports this strongly and helps the towns get funding,” says Hoffman, the Broadband Council. director.
The recently enacted law establishing the Telecom Authority is vital to the buildout of a statewide fiber-optic network in another way as well. Prior to the Legislature’s action last session, only a few towns in the state had a legal basis for getting involved in telecommunications, notes BT’s Nulty. The law enables all Vermont towns to take on that role, he adds, cal* it “a big step.”
The Douglas administration has proven helpful in regard to Burlington Telecom, Nulty notes. “The governor has made speeches around the country in which he points positively to what we’re doing in. Burlington,” he says.
And hardly anyone in Vermont continues to question the political and economic propriety of a municipality building and maintaining a fiber-optic network, Nulty adds. McCauley of the Rutland Redevelopment Authority echoes that appraisal, saying, “I haven’t heard anyone around here saving this is a bad way to go.”
What’s envisioned in regard to the ownership of the fiber-optic web, Nulty suggests, is similar to the auspices for electricity delivery in Burlington. and waste disposal in Chittenden County. Pointing to the examples of the publicly owned Burlington Electric. Department and Chittenden Solid Waste District, Nulty says of BT, “We’re doing some-thing the private sector does in some places and something the public sector does in others.”
There’s also no predicting which type of entity – public or private – will be able to operate a telecom system more efficiently, Nulty observes. Noting he’s been in the telecom business for 40 years in many parts of the world, he says, “You’ll find government, co-ops and private [systems] scattered in the top 10 in terms of their performance, and you’ll find the same mix in the bottom 10 as well. It’s way too simplistic to say that a system will run better based on its ownership model.”
Copyright Boutin-McQuiston, Inc. Oct 2007
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