by Timothy McQuiston Vermont Business Magazine CoverageCo submitted a preliminary plan on Saturday for restoring and expanding its rural cell/e911 service, nearly all of which is currently shut down. And it could remain shut down unless Consolidated Communications, the state's largest telecom, either comes back on board or a different telecommunications solution presents itself.
The Vermont Department of Public Service will now consider the plan and either move forward with CoverageCo or issue a Request for Proposal (RFP) to consider any bidder for the rural cell service.
"We are reviewing the plan. I do not have a specific timeline, but are reviewing it as quickly and thoroughly as possible," Clay Purvis, Director, Telecommunications and Connectivity at the Department of Public Service, told Vermont Business Magazine.
CoverageCo, as first reported by VBM in March, fell into deep financial trouble after its founder Vanu Bose, of the Bose audio family, unexpectedly died last November.
CoverageCo had recently boasted of new service in rural parts of Vermont, including at Twin Valley Middle/High School in Windham County. But service rapidly started to fall off across the state. Twin Valley and the surrounding area soon went dark as did the area around Grace Cottage Hospital in Townshend. While the hospital worked with the state and AT&T to set up a mobile site there, nearly all the rest of the CoverageCo sites, initially about 160, have gone dark.
The state owns the hardware. The service was mainly employed in the far south and far north of the state.
The new CoverageCo plan includes one of its original investors. They have grand plans to extend the service to nearly 500 sites and upgrade it eventually to a 4G/LTE network from the current 2G service, with its inherent data limitations.
A couple of the roadblocks to the service ever taking off was that CoverageCo had to pay the state 911 geolocation fees and, more importantly, AT&T declined to offer roaming on the system. AT&T is the largest cell provider in Vermont and therefore revenue was limited.
AT&T subsequently joined the network in May 2018 and new funding for the 911 geolocation should be available in the new state budget. But then Consolidated dropped out.
Consolidated was owed more than $100,000 by CoverageCo. Unlike, say, Green Mountain Power and the state who continued to provide service despite the arrears, Consolidated had had enough of not getting paid.
CoverageCo had made a good-faith payment to Consolidated in May and promised they would keep up with their bills moving forward. But apparently that was not good enough and Consolidated pulled its DSL service, which allowed the calls and data to get through.
CoverageCo appealed to the state Public Utilities Commission for an emergency renewal of service, thus forcing Consolidated to keep operating. But the PUC ruled in June that it did not have jurisdiction because the Internet is regulated by the federal government and DSL is considered Internet.
There is no obvious replacement for Consolidated. Telephone companies have monopoly service areas, while cable and fiber companies tend not to extend service into the low-density areas where CoverageCo intentionally was dedicated to operate.
In filing its plan, CoverageCo took issue with Consolidated, not only because of CoverageCo's recent payment and promise, but also because Consolidated (then FairPoint Communications) itself received concessions from state regulators in 2010 in order to remain viable.
CoverageCo wrote in its plan: "It is ironic that in 2010 FairPoint Communications received many millions of dollars in concessions from the State of Vermont and ratepayers (who were due service-quality refunds) in order for the company to be able to maintain operations in the state, and yet the same organization under Consolidated now prevents Vermonters and visitors from having access to the 911 emergency calling that the state-owned network operated by CoverageCo provides."
SEE FULL PLAN AS SUBMITTED JUNE 30, 2018, BELOW
Low population densities, high mountains and low valleys all discourage investment in rural cell phone service, whether it’s in Vermont or anywhere else. You don’t have to go very far into rural New York or New Hampshire, hardly at all in fact, before you lose cell coverage.
Representative Laura Sibilia (I-Dover) has been a champion of rural cell service. Her constituents include villages and back roads in south-central Vermont: Dover, Readsboro, Searsburg, Stamford, Wardsboro and a bit of Whitingham. Any place known as “Twin Valley” can be counted on to have difficult cell coverage.
“The problem is solvable,” Sibilia told VBM in an email exchange last week. “There are other companies (other than CoverageCo) that actually can complete, fix, operate the project. It is my hope that an RFP soliciting for services goes out soon. It is disappointing and unacceptable that Vermonters have lost this service.”
Vanu Bose’s idea was to use a low power, low tech, low cost system. Instead of building giant and expensive towers that may or may not reach into the gullies, these radio-based systems, known as microcells, would be installed directly along the roads.
You’d need many to make it work and a public-private partnership to finance it. The big telecoms are not interested in building towers where there is little traffic because they make money only when people place a call, text or access data.
The idea interested the state because it could help solve the low population, high mountain dilemma.
CoverageCo also would bring emergency 911 service to these remote areas along with the basic cell service. The data service, and therefore revenue opportunities, might be sketchy, but it’d be better than nothing.
Vermont taxpayers sunk $4 million into the project.
Just last September, CoverageCo initiated service in Whitingham in Windham County and in North Troy, hard by the Canadian border near Newport. This included the Troy School in North Troy and Twin Valley Middle/High School in Whitingham.
Sibilia said the service is now dark in her region.
“This does include Twin Valley High School – a consolidated middle/high school district between Whitingham and Wilmington. It also includes the town of Readsboro,” she said.
“Commissioner Tierney is giving CoverageCo ample opportunity to reverse their 5-year course of less than stellar project management – both implementation and financial,” Sibilia said. “She has stressed the need for our committee (Energy & Technology) and other concerned legislators to demonstrate patience and allow her time to negotiate a solution.”
Clay Purvis, Director, Telecommunications and Connectivity at the Department of Public Service told VBM shortly before the preliminary plan was submitted: “CoverageCo has agreed to submit a business plan to us by the end of June. Department staff will carefully review that plan before taking action. We are hopeful that CoverageCo will produce a plan that addresses the system’s revenue challenges and gets the state-owned radios back online.
“The General Assembly has given the Department the authority to spend $100,000 on the E-911 geolocation services, which we anticipate will be included in the final budget. In the last session, the General Assembly reauthorized the use of $900,000 in capital spending to complete the network buildout of the state-owned radios.”
CoverageCo has been reorganized and the preliminary plan was prepared with the assistance of Trilogy Networks Inc of Plano, TX.
Purvis’ boss, DPS Commissioner June Tierney, told Sibilia and other concerned legislators in a June 1 letter, in part, that: “The Department is awaiting both the end of the special session and the delivery of the plan before conclusively assessing the Company's prospects in the near future for success or failure in meeting its contractual obligations to the State.
“In light of all these circumstances, the Department has exercised restraint with respect to its contractual remedies vis-a-vis CoverageCo and in determining whether to issue an RFP seeking a successor vendor. To this point in time, such restraint has appeared advisable to best protect the public interest in preserving the availability of cell service in CoverageCo's area of operations, given that the State made a capital investment of several million dollars in its partnership with CoverageCo between 2013 and early 2017.”
In closing, she said: “I offer you my firm assurances that the Department will spare no effort in finding a reasonable and sustainable path forward in bringing reliable cell service to these affected Vermonters, as well as to others in our state who have yet to enjoy the benefit of this means of communication. Patience and sound policy vetting will be needed, though, to guard against repeating the setbacks and disappointing aspects of the CoverageCo that Vermonters are now experiencing.”
The 2G cell network had several problems, technological and commercial. AT&T did not participate in the roaming network until May, while the other large carriers did (Verizon, T-Mobile, Sprint). The 2G technology itself has rapidly become antiquated. There has also been “contention” issues in the current system, in which cell providers hand-off signals to each other.
Richard Biby previously said that the system indeed needed an upgrade that would make the system more powerful, but which also would require new equipment. Biby initially worked with Bose, had a falling out, and was then put back in charge of what was left after Bose’s death. Biby still has a financial stake in the outcome from his previous relationship with the company, which he is now leading, at least in the interim.
In a memo to the DPS dated April 23, 2018, he said: “CoverageCo's revenue model and device placement strategy was originally based on national averages for cell phone use while driving. However, Vermonters use the phone on the road at a much lower rate than national average. The result is that the current average revenue per installation is $56/month/site, and because current operational costs are $135/month/site, this has led to a $79/month/site deficit.”
Generally, the CoverageCo cell sites deliver a half-mile radius of cell service, depending on terrain and location.
Of the 157 units that were operational at its peak, only the handful installed as post-Tropical Storm Irene contingencies, and self-powered with solar panels, are likely still operational.
No one seems to know for sure how many others are still working and CoverageCo representatives have not returned requests for comment (“That’s an important part of the story,” Sibilia said.)
Adding to its demise, in May Consolidated Communications discontinued providing vital DSL service, just as smaller vendors, both electric and telecom backhaul, have dropped service. Some of the hardware also is likely in disrepair.
GMP has said it won’t disconnect power to the microcells in its service territory, but it’s not clear if any are still operational in any case.
Trilogy Networks has taken the operational lead for CoverageCo. On May 23, Trilogy Executive Vice President Technical Operations Daniel Person wrote to Consolidated:
“I can confirm that CoverageCo is committed to making payments going forward, as it has already done with the $8,275.95 monthly services payment that it made to Consolidated five days ago.
“As a show of good faith in response to your concerns, the company is willing to pay the invoice issued around May 9th and due around June 6th as early as today instead of when it is due in a couple weeks. Please send along that invoice in order to ensure that the correct amount is paid.
“The company intends to pay the next poll attachments invoice when it is issued. I am not aware of any commitment having been made to pay the past January poll attachments invoice, and such a payment would be inconsistent with how the company and its other business partners are working together to create a positive path forward, but if you understand such a commitment to have been made please let me know.
“Thank you for your support on this.”
In an email to VBM, when asked about Consolidated’s response to the payment and whether it was still providing service to CoverageCo, vice president for regulatory affairs Michael Schultz said: “None of Coverage Co services are operational in Consolidated’s service territory.”
Consolidated supplied DSL service to about 120 microcells, or the vast majority of the system.
CoverageCo owes Consolidated at least $100,000 and even if payments are made going forward, as of this writing there was no plan to pay off the arrears.
Consolidated cut off service to CoverageCo on May 23, 2018.
CoverageCo then petitioned the PUC as an emergency order to force Consolidated to restore the DSL it provided to the system.
As a regulator, the PUC has significant power over utilities to maintain the public good. But in this case, it lamented that DSL is a federal issue and the state has no jurisdiction and therefore dismissed the case.
“We do not doubt that Consolidated’s decision has led to a decrease in cell phone coverage – and access to 911 via cell phones – in certain areas. Our decision today does not depend at all on the size of the area that is affected. We are troubled by the possibility of even a single person being delayed in contacting 911 in an emergency situation because CoverageCo can no longer provide the cell phone service it previously provided,” the PUC commissioners wrote in their opinion dated June 18.
As Consolidated and the Department (Vermont Department of Public Service) note in their filings in this proceeding, federal law places significant limitations on our ability to address the issues related to non-payment for DSL service that have now led to a lack of access to 911 via cell phones.
“The Federal Communications Commission (“FCC”) has held that the specific service Consolidated provides to CoverageCo – DSL service, a broadband service that the FCC classifies as an information service – cannot be regulated by state public utility commissions. The federal courts have accepted this distinction and agreed with the FCC that a purely information service cannot be regulated by states. We agree with Consolidated and the Department that we lack jurisdiction in this matter.”
CoverageCo won a contract from the Vermont Telecommunications Authority in 2012 to set up 357 micro cell sites that use proprietary radio signals to allow for cell service in rural areas of the state.
But only 160 sites were ever operational, according to Purvis.
The VTA was eventually folded into the Department of Public Service.
The fact that it was a contractual, public-private relationship and not a regulatory one is also creating issues because there is no requirement on the part of CoverageCo, as there would be with a utility, to maintain the service. To end service, a regulated entity would have to apply to the Public Utilities Commission in order to abandon it. In this case, the various utility and backhaul providers can just cut off the local service, just as they could for anyone not paying, say, their cable bill.
Nor can the state simply require CoverageCo or the vendors to tell them what is going on and reveal who all the vendors are.
The PUC ruling reinforced those regulatory limitations.
CoverageCo was founded by Vanu Bose, son of Amar Bose, the audio pioneer. Vanu Bose died unexpectedly at 52 last November in Boston of a pulmonary embolism.
The Vermont operation was then left in a lurch.
Stephen Whitaker, an individual advocate, watchdog and a frequent thorn in the side to various administrations, including this one, has been pushing hard for the state to be more urgent in keeping the CoverageCo system alive.
Long before the PUC dismissed the CoverageCo case and offered serious concern to the loss of e911 service, Whitaker already had foreseen the demise of CoverageCo, the loss of rural service and the failure of the e911 service that went with it.
“All it takes is one person dying in one of the areas that had one of those 911 sites,” Whitaker told VBM in the spring as the system started to lose cells.
In the 12 months ending last March 1,215 e911 calls were made on the system.