by Timothy McQuiston Vermont Business Magazine It seemed like a good idea at the time, but just six months after the most recent microcell/911 service was rolled out in two rural areas of the state, the service is dying. The Department of Public Service told VBM Friday that it could cease service as early as Easter Sunday.
The CoverageCo network of radio cell sites was intended to offer low-cost and admittedly low-grade service in the many places of Vermont where it was uneconomical for the big commercial carriers to put up cell towers. As it turns out, even this low-cost, 2G effort has proven uneconomical.
While the 2G service and AT&T’s lack of roaming limit it even where it’s up and still running, it’s still providing some service as well as maintaining 911 calls. Over 900 emergency calls have been made a year on these remote radio devices.
Rich Biby, PE, wants to keep CoverageCo going, but he’s going to need help. Vanu CoverageCo set up the service with the former Vermont Telecommunications Authority six years ago. The plan was to get cell service to remote areas of Vermont by putting 2G microcell sites on telephone poles.
Of the 160 sites installed over the last few years, only 56 are currently operating.
It’s easy to understand why. The thing is losing money and has always lost money. Expenses are relatively high and revenues are relatively low. Revenues are hurt by the microcell sites remote locations, which by their nature don’t generate much revenue, and that AT&T does not participate in the roaming.
AT&T is the primary cell carrier in Vermont. Without its roaming revenue, CoverageCo was immediately in financial trouble.
Biby is principal of Two Hops Wireless, LLC in Virginia. He was CEO of CoverageCo during its initial Vermont installation. He views the service as a public safety imperative.
What Biby needs from the Vermont Legislature, the administration, regulators and private sector vendors is significant help to keep service running while he bridges the gap to 4G LTE technology.
Specifically, he needs to get AT&T to offer roaming on the CoverageCo sites. He also wants enough e911 money to be released from the Universal Service Fund to cover the costs of the e911 geo-location service. He said at $50 per site per month, this alone is more than some sites bring in.
Separately, he needs more flexibility with backhaul (providers like FairPoint and Comcast that pick up the cell call) and utility costs (Green Mountain Power, Vermont Electric Cooperative, and the four other utilities who are providing service).
GMP Vice President Kristin Carlson said they have not turned off power to CoverageCo: “We are working to preserve this service in these areas for Vermonters until a resolution by regulators.”
GMP CO Brian Otley added: "GMP and Fairpoint have been coordinating with each other, as well as with the DPS, to try to manage the situation in the best interest of the local customers who would be impacted by an end to the CoverageCo service. Both organizations have continued their service to these sites despite the financial conditions with CoverageCo. I know the DPS is working hard to try to facilitate a resolution of this unfortunate situation and we are keeping these sites powered and operating while that process continues in the short term."
Without offering specifics, Vermont electric Cooperative’s Andrea Cohen told VBM, “Utility costs certainly can be one of the larger business expenses depending on the type of business, and they are usually considered as part of business plans and as part of any bidding for contracts. We are not in the position to know about CoverageCo’s business plan or finances but we do hope there is a good path forward so that our rural towns have the critical communications services they need.”
Biby estimates that to rent space on a telephone pole plus electric service ranges from $35-$47 per site per month, depending on the utility.
The e911 geo-location cost (so a first responder can find you) is another $50 per month per antenna.
The backhaul service for the sites from the phone and cable companies ranges from $35-50 per month.
Switching and routing is another $65 per month, he said.
For these costs alone, not including any maintenance, billing and related costs, the total is $185 to $212 per microcell per month.
Meanwhile on the revenue side, roaming charges bring in 3-4 cents per minute and up to 10 cents per megabyte for data.
The utilities are by regulation not allowed to provide customer information, so the debt to the utilities is unknown. The revenues for CoverageCo also were not available.
But considering that 102 sites have been shut down by unpaid vendors, one can easily imagine the scope of the financial problem.
Clay Purvis, Director of Telecommunications and Connectivity at the Department of Public Service told VBM Friday afternoon: “CoverageCo’s situation is in a state of flux. Based on the best information we have at the moment, it is likely that service will cease come April 1. The Department expects to issue an RFP next week seeking bidders who are willing and able to operate the network. In the meantime, the Department is also pursuing interim solutions to keep certain critical sites active.”
Public Service Department Commissioner June Tierney told the Senate Finance Committee last Friday that the most pressing concern related to service suspension was at Grace Cottage Hospital in Townshend, which otherwise would be without any cell service.
While Townshend is one of those locations where CoverageCo service has been dropped, the hospital is still up and running because the backhaul is going through its own Internet service, according to Travis Macie, IT Manager.
Tierney told Finance that staff had briefed her last summer that CoverageCo was having financial problems.
“They owe us 90 grand,” she said. VTA had bought the equipment and leased it back to CoverageCo.
AT&T phones can use the CoverageCo 911 service, but you cannot make a regular call because AT&T declined to offer roaming on its service. As far as AT&T roaming service is concerned, you might as well be holding a block of wood with a PopSocket stuck to it. You can access the Verizon, Sprint, et al, networks via the 2G network.
Biby’s motivation in trying to save the service is pretty clear.
On the one hand, Biby said, “I helped birth this thing... I feel responsible.”
On the other, “The company owes me money.” While he declined to say how much, he said he won’t see any of it if CoverageCo folds.
The complication of the service is in contrast to the size of it. There are multiple utilities and backhaul providers. But it’s described as important in the rural areas in which it’s found, which is mostly along the local highways running along the eastern side of the Green Mountains.
It is literally and by design, the only game in town.
Grace Cottage Hospital on Route 30 in Townshend is such a place. The state’s smallest hospital of course has landline and Internet service, but is not reached by regular cell service. CoverageCo continues to provide service there, albeit without the AT&T roaming.
Telecommunications advocate Stephen Whitaker has been pushing lawmakers and the administration to keep CoverageCo alive.
He sees the covering of e911 costs from the USF as a crucial part of the salvage operation. He also wants regulators to cajole or even force AT&T into a roaming agreement.
“All it takes is one person dying in one of the areas that had one of those 911 sites,” Whitaker said.
He also said he supports a rewrite of the state’s 10-year telecom plan and a propagation study to get a real handle of where these microcells are needed. The last propagation study conducted in 2013, which included drive-test validation, cost under $400,000, Whitaker said.
Tierney in her testimony believes that regulator action is limited because the original deal was not through a regulatory process, but was undertaken with a contract executed between CoverageCo and the non-regulatory VTA.
“Our hands are a bit tied,” she told the committee.
Biby suggested that a deal with AT&T might be reached outside of regulatory action because its absence from the current roaming agreement was based on disagreements that were “not business related.”
AT&T is the biggest player in Vermont, he said, so its participation is vital.
As for the e911, the state would have to step in to help cover those costs. So far, neither the administration’s Public Service Department, regulator Public Utility Commission, nor the Legislature seems ready to act.
The PSD has suggested issuing a Request for Proposal, which could take several months and perhaps a year and a half to get through. By that time, the current service will have died, Biby said, “You’d have to scrap the whole thing and start over.”
Biby doesn’t believe that the major carriers, at that point, would bother to get back into it.
He maintains that keeping the current system alive through a transition phase is the only way rural cell/911 service in Vermont will continue.
Meanwhile, AT&T has won the bid, and the $25 million that goes with it, to establish the FirstNet service.
FirstNet is intended to provide first responders cell service across the nation. It does not require universal roaming. The FirstNet mandate does not require it to cover the remote service territories CoverageCo is intended to cover, though it coincidentally might, at least in some places.
In the meantime, Biby said that, “I can keep a few plates spinning,” until a more stable, and at least a break-even, service materializes.
Biby said he recently received authority to negotiate on behalf of CoverageCo.
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 Telecommunications chief for the DPS.
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 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 CoverageCo assets are apparently in the hands of its investor, but Tierney said that even who is running the service is murky because the entire CoverageCo board has resigned.
“It was a troubled enterprise,” Tierney said. “It was visionary. It was innovative. It was also high risk. And unfortunately, the risk has not paid off.”
Purvis told VBM that that it’s still possible CoverageCo could find a buyer, but he said it was unlikely it would do so. The service has lost money for its owner.
“We expect over time individual sites or the whole network will go down. We just don’t know when,” he said.
CoverageCo was founded by Vanu Bose, son of Amar Bose, the audio pioneer. Vanu Bose died at 52 last November in Boston of a pulmonary embolism.
The Vermont operation was then left in a lurch.
The 2G cell network had several problems, technological and commercial. AT&T did not participate in the roaming network, while the other large carriers did (Verizon, T-Mobile, Sprint). The 2G technology itself has rapidly become antiquated.
Purvis also said there was “contention” issues, in which cell providers hand-off signals to each other.
“The business model was part of the problem,” Purvis said.
He added that wireless service in Vermont, with its mountains and valleys, is also a tricky business, which everyone with a cell phone understands.
Former legislator and Vermont gubernatorial candidate Matt Dunne, lobbying on behalf of CoverageCo last spring, outlined the monetary problem the firm was facing. CoverageCo was the middleman and relied on usage fees paid by providers like Verizon.
Dunne wrote the House Committee on Energy & Technology in April 2017:
“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 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 lead to a $79/month/site deficit.”
“The funding of 911 service is necessary not just for the CoverageCo project to succeed, but for any hope of getting 911 cell service from any provider to these more remote parts of the state in the near future. That's why the reimbursement policy should be available to any provider willing to take on this challenge.”
“Cost to the State:
- “Current cost of 2G 911 service for 145 sites at $50/mo is $7,250/month
- “Cost of 2G 911 service for all 357 planned sites at $28/mo is $9,996/month
- “Annual cost of 2G 911 service, once all 357 sites are running, would be $119,952.”
- “Note: In the event that CoverageCo adds LTE service, that would be an additional $50 a month for 911 coverage per unit. In that case, the total annual cost would be $334,152. ($119,952/year for 2G + $214,200/year for LTE).”
Purvis said the state already has invested $4.1 million in the service. He said the state would not be in a position to upgrade the CoverageCo service nor would it be likely for one of the providers to take it over.
AT&T will at some point implement its FirstNet service, which is expected to be a 3G and 4G cell network. But that service, while available commercially also, is primarily intended for first responders and may only have marginal overlapping service to remote areas of the state.
As for the 911 component, Dunne said in his statement to the House committee that, “There were 918 completed calls to E911 (non-test and non-hang-up calls) made through the CoverageCo network in the last 12 months.”
Purvis acknowledged the public safety concern of losing the service but could not verify the number of 911 calls made on the CoverageCo system.
“Public safety was always a component of this project,” Purvis said.
“I think that although it will be a loss of coverage, whether it makes a significant impact on public safety in these areas. I don’t know,” he said.
A unique feature of the system, Purvis said, is that 10 CoverageCo sites are “resiliency points.” These were grant funded in the wake of Tropical Storm Irene (August 2011) to provide service in the event of a disaster. These sites are connected to solar panels, which, he said, was a “significant component of the project.”
Just last September, CoverageCo initiated service in Whitingham in Windham County and in North Troy, hard by the Canadian border near Newport.
In a press release, Chris Young, principal at the Troy School in North Troy, said, "Student safety is paramount, and we are fortunate to have skilled and dedicated first responders in our immediate area. Having access to 911 through cell phones will enhance our ability (to) access these services and to provide a safe school environment for our students, staff, and community."
Vanu Bose said in the press release, “Deploying cell service in Vermont has been a real community effort, and working with schools, libraries, businesses and homeowners in the state to increase coverage has been a great experience. And when student safety is involved like in North Troy and Whitingham, successful cell service expansions are all the more rewarding.”
DOWN SITES (as of March 30, 2018)
|Site ID||Town||Funding Source||Hosted||Power Provider||Backhaul Provider|
|108-14||S. Strafford||VTA||No||GMP (CVPS)||Fairpoint|
|152-10||Northfield||EDA||No||Washington Co-Op||TDS Telecom|
|152-8||Northfield||EDA||No||Washington Co-Op||TDS Telecom|
|155-1||Whitingham||EDA||No||Village of Jacksonville Electric Dept.||Fairpoint|
|155-14||Whitingham||EDA||No||Village of Jacksonville Electric Dept.||Fairpoint|
|155-7||Whitingham||EDA||No||Village of Jacksonville Electric Dept.||Fairpoint|
|6-1||Newfane||CovCo Funded||No||CVPS||SV Cable|
|6-11||Townshend||CovCo Funded||No||CVPS||SV Cable|
|6-12||Townshend||CovCo Funded||No||CVPS||SV Cable|
|6-13||Jamaica||CovCo Funded||No||CVPS||SV Cable|
|6-14||Jamaica||CovCo Funded||No||CVPS||SV Cable|
|6-16||Jamaica||CovCo Funded||No||CVPS||SV Cable|
|6-2||Newfane||CovCo Funded||No||CVPS||SV Cable|
|6-3||Newfane||CovCo Funded||No||CVPS||SV Cable|
|6-4||Newfane||CovCo Funded||No||CVPS||SV Cable|
|6-5||Newfane||CovCo Funded||No||CVPS||SV Cable|
|6-6||Townshend||CovCo Funded||No||CVPS||SV Cable|
|6-7||Townshend||CovCo Funded||No||CVPS||SV Cable|
|6-73||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-74||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-75||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-76||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-77||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-78||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-79||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-8||Townshend||CovCo Funded||No||CVPS||SV Cable|
|6-80||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-81||Dummerston||CovCo Funded||No||CVPS||SV Cable|
|6-82||Newfane||CovCo Funded||No||CVPS||SV Cable|
|6-9||Townshend||CovCo Funded||No||CVPS||SV Cable|
|Site ID||Town||Funding Source|