DV Fiber and Vermont’s Bold Broadband Model - Episode 625 of the Community Broadband Bits Podcast

Steven John (00:07):
People were pretty skeptical that anything was going to get happening. Now we've got customers, we've got things lit up, we have redundancy.

Christopher Mitchell (00:14):
Welcome to another episode of the Community Broadband Bits podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance in St. Paul, Minnesota. Today I'm speaking with Steven John, who is the chair [00:00:30] of the governing board of Deerfield Valley Communications Union District, which is known as DV Fiber, and you're about to learn a lot more about it. Welcome to the show, Steven. Thank you. Thank you. I am excited to dive into this. I think the communications union districts are just so exciting as how Vermont is tackling its challenge for getting communications out to everyone. But I wanted to note before we start talking about it that we are doing [00:01:00] this interview as a reminder that my colleague Ry, he wrote a report along with Revati, which was called Neighborly Networks: Vermont's Approach to Community Broadband. You can find that @CommunityNets.org under the Reports, and we also wanted to thank the Benton Institute for Broadband and Society and Revati for the work that they did, but we tried to detail some of that background there that we won't get into entirely here. [00:01:30] So with that being put behind us now, Steven, what is Vermont like in the area that you're living and doing this

Steven John (01:38):
Work? As Vermont is known as a rather rural state, I don't think I have to describe too much. It's the woods and the mountains, the green mountains. There's some recreational activities. Certainly hunting is on us now hunting season, and then there's the ski industry, and then there are the summer recreations of kayaking and hiking and biking [00:02:00] and mountain biking and so forth. We are very made up of small towns. Vermont has no county government. We only have towns, so 256 towns in the state, and I've lived in the town of Marrow Borough and have been here since 1973. This town has typical rural population, less than five homes on a mile of dirt road. [00:02:30] I average about 60 miles of dirt road in each town. Some of the towns have a municipal center that might be densely populated such as Brattleboro, one of our member towns on the Connecticut River. But most of the time we're talking about population of towns less than 2000, some less than a thousand, including my own, and it's pretty hard to expect broadband to get to us on a [00:03:00] typical private sector business model.

Christopher Mitchell (03:04):
We've seen some attempts with both the private business model and then also some of the subsidies over the years to some of the different carriers, the telephone company and also Vitel years ago, and I think we've learned a lot of lessons and Vermont, I would say faster than many other states has recognized the importance of this communications union district model, which [00:03:30] keeps a strong public role in ownership of the network. And so I'm curious if you could tell us a little bit about, as someone who's been there for so long, maybe your experience watching the state trying to give money out before settling on the communications union district model of towns working together to own the infrastructure.

Steven John (03:52):
I would argue that we aren't really so fast at coming to this kind of conclusion in my opinion, but the state does and the legislature does [00:04:00] deserve every credit for trying to come up with a unique solution. I say unique because we understand it doesn't exist anywhere else in the other states. I would like to go back to when we had electrification. Many people may not be aware that as late as 1959 was when the last home got connected to electricity in Vermont, and that certainly is in my lifetime. I wasn't here at the time. That was the model I think that finally occurred to the legislator [00:04:30] and those of us who are pressing to reach everyone and consider access to high speed Internete broadband services basically in a utility. It's not something that's a fru or some kind of added thing that's nice for people that can afford it, but who needs it?

(04:48):
Well, we all need it and COVID has proved that to us. So that did happen to unfortunately occur at a time which added greater impetus to our [00:05:00] recognition that high-speed broadband should be a universal, universally accessible and affordable opportunity to engage with the rest of the world for education, medical consultation, business, various small towns did try to form committees and tried to get private sector interest. We did so in Marlborough. We had a little local committee about eight people appointed by the select board, and we [00:05:30] put out an RFP and we had some proposals come back and these companies wanted more money than we could manage. We're very appreciative that the legislature of Vermont came up with this ingenious concept of a single purpose municipality, much like a water district or a fire district in other parts of the country and its income would however be limited to the fees that customers pay. We have no right for [00:06:00] taxation even though we've combined in this particular communications unit district 24 towns, most of which are in Wyndham County. And to give you an idea of the scope, let's say we have 1, 2, 3, 4 towns that are in different counties, neighboring counties, and all these towns have voluntarily joined to form this municipal entity that actually competes with the private sector [00:06:30] to provide universally affordable Internete service to high speed by fiber. That's our mission to every household and location on the grid, on the power grid.

Christopher Mitchell (06:45):
Those are really helpful details. One of the things that sometimes happens on this show is we talk to people who have plans but haven't started doing them, but you actually have a network and so you've connected people, you have goals for next year. [00:07:00] Why don't you help people better understand where you are right now in terms of connections and operations?

Steven John (07:06):
Right. Well, that certainly is a big accomplishment. We formed in 2019 20 and we connected our first customers very late in 2022, about five customers in a pilot program in one of our small towns, reedsburg. And that has now continued. [00:07:30] The construction has continued with the opportunity that the ARPA funds have provided from the state to now extend, I think 250 miles to 300 miles we have built now. And we have over 600 customers that are happily paying our rather economical fee for symmetrical service that is astoundingly better than anything anyone in our neighborhood has experienced in the past. That's just [00:08:00] to the credit of volunteer work at the board level, and then we contract this governing board contracts with the professionals to get the job done.

Christopher Mitchell (08:10):
So you are responsible for the fiber network, the poles and holes as it's sometimes called, and then who's your partner and tell us a little bit about that arrangement.

Steven John (08:21):
Yeah, well first of all, let's get to the polls and holes in our communications union district. In our region, there is one [00:08:30] major power company that's a green mountain power, I have to say a very progressive company, and they are actually assisting us in the preparation, what they call the make ready that's necessary because unfortunately we have a very old infrastructure here. Some of these polls probably were put in back in the early 19 hundreds and they show it. So [00:09:00] some of those poles have to be replaced, and that gets to be an expensive proposition, and that's part of our issue to deal with. So Green Mountain power is very important to us, and I meet with them regularly to discuss what their plans are and how we can make sure that we're following their power grid and hardening it wherever possible because we do have a lot of storms in this area and a lot of trees go down on the [00:09:30] power line. So that's one dimension. The next part is that we put out forbid to an RFP for constructors, that is companies that could provide the expertise to actually hang the fiber, install the fiber on the poles, and do the engineering prior to that, and then also connect and provide customer service for our customers as they get lit up. [00:10:00] That is all being done with our partner. Great Works Internete of Bedford Maine, and that's a company that won our bid.

Christopher Mitchell (10:14):
Yes, I would just throw in that Gwis Fletcher Kittridge has been on the show before. I think they've had a lot of great partnerships or a great company to work with, although I will say that I'm sure that every partner always has [00:10:30] some thorns as you're trying to work through them.

Steven John (10:34):
Yeah, well, Fletcher's been over here and stayed at the Marlboro Wetstone Inn here, and we've had a couple meetings directly, so this is, it's a warm relationship.

Christopher Mitchell (10:45):
I'm glad to hear it,

Steven John (10:47):
And we really appreciate Gwis experience and commitment to small town and rural America. That's really what we saw as a primary asset in their background [00:11:00] under their supervision, although not their direct management, we put out a contract separately for the construction, and that's with Sertex, S-E-R-T-E-X in Rhode Island. You may wonder why we went outside the state. Actually that was the best bid we got, but also gave us a resource to a labor pool that is quite limited in Vermont to hang and install fiber, [00:11:30] and there are other Cuds communications union districts, eight others in Vermont that a similar timeframe are looking to construct and putting demands on that limited labor resource. That's turned out to be a very, in fact, I had to write a compliment to the president about his crews because the people my town were commenting about how welcoming and how informative these [00:12:00] crews were that were working on our roads to install this fiber because as we speak now, my particular town is being, the construction is proceeding at a pace to get us perhaps connected as early as spring.

Christopher Mitchell (12:17):
That's really good to hear. I mean, I have to say that I am frequently seeing news stories about residents in various cities across the United States, very frustrated with [00:12:30] construction crews, and I feel like when a community goes out of the way to make sure they're finding the right team, you can see that in the lack of frustration and actually the support the community may have for those crews.

Steven John (12:43):
Right. Well, that's part of the selection process and I think an advantage of, I'd like to say of a volunteer board. There's one representative on the governing board from every member town, and it's the collective wisdom of these people and certainly there are plenty of skeptics among us [00:13:00] that are making sure that we're not being taken advantage of. We have a contract which calls for a certain quota target of miles being built per month on average over a quarter or over the year, and we were pleased to see that that's been met and we had a penalty clause, which of course gave motivation, but that's a tip for anybody involved in this business. [00:13:30] There have to be some checks and balances, some reciprocity. I did want to add, there's one unique aspect about our business model and that is we have a mission to be affordable.

(13:46):
At the same time, we can't be giving away our service. We have to be business sustainable and we still have more customers to gain. Before we've reached the point where we could issue [00:14:00] a municipal revenue bond that's permitted by the law that enacted our communications union districts. We can't tax, but we could borrow if we had a sufficiently strong base to really complete our connections to all people. Right now, our grant covers the unserved and underserved that amounts to about 4,000 people locations in our 24 town district, [00:14:30] and that would take over a thousand miles of construction to reach. That's the next challenge is to continue with this work beyond the six towns now that have customers connected in our district.

Christopher Mitchell (14:48):
Let me put a fine point on that. I thought that this was one of the really smart things also that Vermont did in terms of how to try to catalyze [00:15:00] a major investment that needs to be made without being able to write a check for all of it and the idea that you would start these things up, give them enough support that they really could generate cashflow and become a trusted entity to go to the private borrowing markets and to be able to take investors on. And so that's exciting. I mean, obviously if there were more grants available in the future, that would be nice, but you're not banking on that. You are trying to build a business that [00:15:30] will be able to borrow money even though you can't offer a bond that has a full backstop of the full faith and credit of the communities. But we've seen bonds from utopia fiber, for instance, go out without having that pure revenue bonds, and that's something that I would see working in the future for all of you.

Steven John (15:52):
Yeah, I think that was the key to the success of this legislation, enactment legislation because after all, [00:16:00] I went around to various towns to see if they're interested in joining and well, I might add, my background was that I was superintendent of schools in this region for at least, let's see, 13 of the towns. And so I was familiar with the towns and I went to their select boards to present the opportunity, and of course, since they weren't at risk of having to raise their taxes or [00:16:30] encumber their citizens in any way, it was kind of a win-win situation because certainly they all recognized the need for greater competition among this Internete service providers. Most of us don't even have access, but if we do, it's usually just one entity and you take it or leave it, and that's another very important aspect of our mission, that we present competitive environment so that we're held accountable [00:17:00] and the private sector is held accountable to the best service possible.

(17:05):
We had an advantage in being somewhat late to the game. Most of the private sector has started out as small cable companies and then been purchased by larger companies, and it's been recreational focused on entertainment and so forth. That's what cable does very well, and it's connected to large 222 channels or [00:17:30] whatever on a monthly basis. We are not in that business at all. We're just providing the connection to the web and people can a la carte subscribe to whatever they want. Our business model is not dependent upon income from channel packages, TV and so forth. That's an important aspect of our being an open system. The public has invested money in this for the ARPA grants, and we are [00:18:00] obliged to be an open network. That's another aspect of our work that I think is unique.

Christopher Mitchell (18:07):
Yes, and it's exciting.

Steven John (18:10):
It is. It's very exciting. Wouldn't it happen? I mean, people were pretty skeptical that anything was going to get happening. Now we've got customers, we've got things lit up, we have redundancy. I was going to say one of our vantages is that the whole district is designed for universal coverage as universal service plan, [00:18:30] which was also required by the state. That means that we can have a resilient network that is much more reliable than some of our competitors. For example, we have a ring design that if something goes down in part of the ring, the rest of the people will still be served. And we also have two connections, both diverse geographically and by different fiber Internete [00:19:00] providers of bandwidth. One connecting us to Albany in New York and one connecting us to Boston. And if one goes down, the other one is still up. And that's very important because people depend on their Internete and they want to have it all the time, and we provide a battery backup so that even people in a rural place that may lose, I do lose power from time to time will continue [00:19:30] to be able to use our Internete connection even when the power is down.

Christopher Mitchell (19:35):
And you're also offering a telephone service. And that becomes even more important there as well.

Steven John (19:40):
Right now that's obliged by the FCC. I think if you do telephone VoIP over voice over Internete protocol, you do that service, then you have to have a battery backup. We're actually doing it for everybody regardless of whether they take telephone or not. But that is an important aspect. We have about, [00:20:00] I think it's around 25% of our customers presently are choosing to add voiceover Internete protocol through the fiber service we provide. That's, of course helps make us a full service, more viable network financially.

Christopher Mitchell (20:20):
One of the things I'm curious about is starlink. So there is right now a disturbing, and I'll say that [00:20:30] we're recording this one week after the election, but there's this Elon Musk craze in the media right now talking about starlink, and there's an expectation that starlink will get more money, and this is the great rural solution. And I'm just curious, I would assume that people who have had mixed reviews, probably some people that have a great big view of the sky have a great experience and other people, it may not work at all for them based on where they are. What are you seeing out there?

Steven John (20:58):
Yeah, well, I've [00:21:00] got examples of both for sure. In my town, we're studying how to reach people in the next federal grant availability. It is a BEAD grant. You may be familiar with that BEAD funding,

(21:14):
That actually includes people off the grid. And we do have people in Vermont, not a vast number, but we do have a significant slice of the population move to Vermont to be away from everything and be on their own and have their own solar panels or whatever they're [00:21:30] doing in pretty off the grid locations. Some of those locations will be extremely prohibitive, a hundred thousand dollars to connect them by fiber even more. I think one was cited at $800,000. You can't have a business model if you're spending that kind of money to get everybody connected that way. So the jury's out, I don't know what's going to happen, but I know that the state had [00:22:00] been considering how we would deal with those, what they call high threshold locations and make sure that they do have some service. It certainly wouldn't be equivalent to the fiber. No one has claimed that at least no one in our state who has experienced with the star links or with HughesNet for example, I mean the other satellite companies, I think that starlink has an advantage in being a low earth orbit. [00:22:30] I happen to retired physics teacher, so I know something about that. The problem in Vermont is the topography and the fact that most people don't want to cut down all their trees to be able to get that kind of good connection, a consistent connection,

Christopher Mitchell (22:45):
Right. That's the problem.

Steven John (22:49):
Well, the same thing's true of cell coverage. I don't have any cell coverage in my home here. I don't know when it'll happen. It might happen eventually, [00:23:00] but the problem is that you got to put up a lot more cell towers, and once again, people don't want to cut down their trees or look at the cell towers, so if they live in the woods. So that's why this fiber connection is really, in my opinion, much more future proof in terms of all forms of communication, and it certainly is well worth the investment. I think the biggest [00:23:30] problem in the future for us will be at either end. That is at my end, whether I continue to upgrade my computer system and so forth to be taking care of holographic communications, for example in the future or something else that seems to be visionary to people now. But one time Dick Tracy with his little watch that he could use as a radio was pretty visionary.

Christopher Mitchell (23:56):
Yes, indeed.

Steven John (23:58):
That's turned out to be true. So

Christopher Mitchell (24:00):
[00:24:00] What are the challenges that you're facing? I mean, obviously you're running a business and there's always concern about the future, but what keeps you awake at night?

Steven John (24:09):
I'm pretty optimistic. I don't want to project a doom and gloom, nor do I keep myself awake at night. It is true that we are not yet business sustainable with our present base of customers. It's also true that the private sector [00:24:30] is going to try to make us fail. That's what competition's about, and I think they would, if you really want to know the nightmare, it would be, well, we have to declare bankruptcy and therefore they go to bankruptcy court and the private sector. Some company buys our network built on public dollars for pennies on the dollar. That's why when [00:25:00] I speak to my neighbors, I point out to them a number of reasons why you want to take our service. Our service is more resilient and reliable than what you can get elsewhere, and it certainly is priced well. But keep in mind also that you have control as a customer over the fee structure and how much you're going to pay. And most of us have had the experience of the price charged us for the service for [00:25:30] telephone and Internete over the copper line I have now has continued to go up. It's gone up from $90 to $160 in the last 12 months, and that's because I don't have any choice about service.

Christopher Mitchell (25:43):
Well, I was going to say, has the service improved significantly? Probably not.

Steven John (25:47):
No. Well, with copper, if you got five people on the line before you and they're all on the Internete, you won't get much. You're getting the end of the trickle at the end of the line. My copper [00:26:00] comes from a fire station that's about a mile away. And so there are a lot of people in between there that will be on that same copper line. It's not that the private sector doesn't want to do better, but it takes an investment. And when you only have an average of four or five locations possible customers on a mile of investment, it just doesn't make sense unless you can, as [00:26:30] we intend to do, stay as far out of debt as possible. And we obviously don't have to pay investors or stockholders.

(26:45):
We're a municipal service and we don't do anything else. One thing that's good about this is we're entirely focused on one thing, and that is fiber, high speed fiber access to the Internete for everybody, affordable [00:27:00] and accessible for all. And it's wonderful to have that kind of singularity of mission. When I was superintendent, I couldn't say that I had to deal with all kinds of things, but that's why I think there's every prospect that we will succeed and we will only fail if we don't provide the service that our customers expect, our neighbors expect. And if our neighbors have a complaint, they don't have to worry about [00:27:30] waiting on the telephone and waiting for call, waiting response or something. I mean, they'll just get me here in Marlboro, like the other representatives on our governing board from each town. I mean, that's person. You'll know you want to complain about something, you've got somebody that can do something about it. That's democracy. I mean, that's local control.

Christopher Mitchell (27:55):
Yeah, that's the dream. I am afraid I'm not going to have that anytime [00:28:00] soon here, but it would be nice.

Steven John (28:02):
Well, that's where we have to credit the Vermont legislature, and they would not have passed this law if they hadn't realized that it just wasn't going to happen with the traditional models of competition and free enterprise.

Christopher Mitchell (28:18):
And that's where I would go back to where we started in that. I do feel like, I mean, I a hundred percent agree with you that I'm sure it felt to you like it took them too long to figure it out. But if I look at New Hampshire, Pennsylvania, [00:28:30] or a bunch of other places, those legislatures haven't figured it out yet. And in Vermont, there was a real opposition to this idea when EC fiber was getting started there, not too far away from you, but to the credit of Vermont's legislature, they looked at it with fresh eyes and said, actually, this is a model that makes sense.

Steven John (28:49):
Yeah, it's success has certainly been what it contributed, supported by pretty troubling times of COVID and all that. Now, [00:29:00] I'll give you a practical example. So since we had 24 towns, if my board had to come together as a municipal entity and meet live as a board in person, it would take an hour at least one way for everybody to get together of driving. And that's not counting the winter weather because of COVID, we all recognized and the legislature enabled us to have remote meetings, not only only our entity, but [00:29:30] town government in general, and people could enter and participate in the discussion as citizens remotely. Now, of course, that reminded us time. We had a board meeting that our connections weren't very good. We'd freeze up or something else would go bad or somebody couldn't get called in or whatever.

(29:53):
But it was a learning experience, and that's really exciting about this project. See this kind [00:30:00] of single purpose entity in this domain in the field of Internete service is not been done before. And so we have to constantly be aware of the balance between public governance and transparency and open meeting law, which is a state law in Vermont, and our necessity to be acting in the customer's [00:30:30] best interest as proprietary competitive business. So we do have lengthy executive sessions that had to do with strategy and finance that if it were known publicly, would put this public entity at a disadvantage with the competition. That's really been quite an adventure for us, and it reminds us that we are unique. We're on the frontiers of [00:31:00] not only reaching everybody in this technical way with this service, but also in terms of governance and how the private public sector can be combined to best serve the public

Christopher Mitchell (31:13):
Well. I think that's a great place to wrap up. I want to thank you for your time today and all the great work you're doing out there.

Ry Marcattilio (31:19):
You're very welcome. We have transcripts for this and other podcasts [email protected] slash broadbandbits. Email us at [email protected] with [00:31:30] your ideas for the show. Follow Chris on Twitter. His handle is at community networks. Follow community nets.org stories on Twitter. The handle is at muni networks. Subscribe to this and other podcasts for ILSR, including building Local Power Local Energy Rules, and the Composting for Community Podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly [email protected]. [00:32:00] While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arnie Sby for the song Warm Duck Shuffle, licensed through Creative Commons.