Auditor's report identifies risks to Vermont’s universal broadband efforts

Vermont Business Magazine In a report released in March, Vermont Auditor Doug Hoffer offered a sobering review of the state's efforts to bring broadband Internet service to residents and businesses across the entire state, despite significant federal funding. Vermont policymakers have struggled for nearly 20 years with the challenge of ensuring high-speed internet reaches every home and business in the state. 

Thousands of Vermonters have had poor access or no access at all because, unlike telephone service, private internet companies are not obligated to provide universal service. They can cherry pick. As a result, they have invested in more lucrative population centers and ignored less profitable rural areas. 

Unsurprisingly, the report states, efforts to serve those the national corporations have ignored have been hampered by the lack of a dedicated source of funding at the level needed, estimated to be between $600-800 million. Multiple waves of COVID-related funding to states, however, has now helped mitigate the cost challenge. 



In fact, the Legislature has tasked the newly formed Vermont Community Broadband Board (VCBB) with overseeing the distribution of more than $475 million in federal funds to extend high speed internet to every unserved address in the state. 

At the local level, ten communications union districts (CUDs), which have been formed by groups of Vermont towns, are receiving the funds and partnering with private telecommunications companies to extend fiber to residential and business addresses and to provide service. 

Hoffer praised their efforts.

"I know that many people, including hundreds of unpaid local volunteers, have been working extremely hard to fill in the broadband gaps left by the large corporate telecom companies," Hoffer said. "They’ve had to create new organizations, develop business plans, and hire contractors in short order. Our report is meant to support their work by flagging for them and state officials the things that could impede success. Far better to address these concerns before spending hundreds of millions of additional dollars than to regret unforced errors after the fact.

"I am pleased to report that the VCBB has been working its way through our report to identify steps they can take to enhance their efforts and mitigate the risks we identified. Their proactive response is what auditors hope for, and what taxpayers deserve. It is a credit to the VCBB."

Hoffer's office released the report in the spring to highlight potential risks to Vermont’s unique strategy to achieve universal broadband access. 

"This broadband effort represents one of the largest infrastructure projects in Vermont history. Without the massive infusion of federal funds Vermont has received, we’d be looking at incremental progress, not a universal plan. It is precisely because of the once-in-a-lifetime nature of the level of funding that we can’t afford to make mistakes. There will be no second chance," Hoffer said. 

The report identifies ten risks the VCBB needs to mitigate to increase the likelihood that every Vermonter will have access to 100/100 Mbps service. The risks range from supply chain issues, to federal spending restrictions, to contract and governance oversight concerns. 

The ten risks are:

  • Some CUDs face a potential construction funding gap in calendar year 2024 which could halt construction mid-stride if additional funds are not identified
  • CUDs may struggle to access needed construction materials
  • Construction may be slowed by a lack of qualified construction workers
  • The tension between the VCBB supporting the CUDs and ensuring they are viable risks allowing any weaknesses in CUD business plans to persist and deepen
  • Reliance upon CUDs with varying levels of expertise and capacity may delay broadband service to some Vermonters, lead to increased spending, and establish inequitable policies and access
  • With the exception of an early VCBB fiber purchase, CUDs have not been partnering for procurement of goods and services, risking higher costs and inferior outcomes
  • Statutory confidentiality provisions shield some CUD decision-making from the VCBB, policymakers and residents of the member municipalities despite receiving tens of millions in public funds
  • Lack of affordability definitions and requirements threaten to reduce service connections, undermine CUD business plans, and create regional inequities
  • The firm the VCBB employs to evaluate CUD business plans has also consulted for a CUD and does not appear to be prohibited from consulting for others, raising conflict of interest risks
  • A major federal funding program’s irrevocable letter of credit requirement is not designed for new and small telecommunications entities like CUDs

Related VermontBiz stories:

Vermont to receive $229 million from the feds for broadband buildout

Welch hails broadband expansion with ECFiber


 

The full report can be found here.  

To watch their discussion of the report, click on the image below. 

 

Discussion of State Auditor's report at VCBB Board Meeting, May 8, 2023