Time to change the license plate?
Vermont's e-state initiative
by Kevin Kelley
Governor James Douglas may not be able to achieve his announced
ambition of making Vermont the nation's first e-state.
But some telecom analysts think Vermont might nevertheless reach
the goal of making high-speed Internet connections and reliable cell phone
service available to all the state's residents by 2010. And, they say, the
economic ramifications of such universal access could prove profound.
Douglas conceded recently that Rhode Island might beat Vermont in
the race to become the first e-state. But Little Rhody is a lot smaller than the
Green Mountain State and its terrain presents fewer barriers to wireless
signals, the governor noted.
Whether it finishes first or not, Vermont is taking some significant
strides toward providing broadband Internet and cellular voice services in the
15 percent of the state's area currently lacking such links. In its recently
concluded session, the legislature approved Douglas' plan to create a Vermont
Telecommunications Authority that will build an advanced telecom
infrastructure. The authority is being vested with $40 million worth of bonds.
And that sum could leverage more than $200 million in private investment, the
governor says.
The plan calls for the new state entity to lease its infrastructure to
private companies like Comcast or FairPoint, thus generating revenues that
would be used to help pay back the bonds.
But this arrangement may not prove as effective as its backers
intend.
Sizable investments will be needed in order for the e-state promise to
become a reality, says Jack Hoffman, director of the Vermont Broadband
Council. "It's not as costly as building an interstate highway to Hardwick, but it
will still take a lot of money," he observes.
"I worry that the authority will defer too much to the private sector,"
Hoffman adds. He says he hopes the telecom authority's members, due to be
appointed soon, "will make it clear to the private providers that they want
something that will remain effective for the next 15 to 20 years. It can't be
just an expansion of DSL."
Hoffman points instead to the fiber-optic cable network being put in
place by Burlington Telecom. He calls this citywide system, which will deliver
voice, data and television, a model that other municipalities in Vermont would
do well to emulate. The infrastructure being put in place by a city department
is scheduled to be fully installed by the end of next year, making high-speed
access available to every resident and business in the city.
It's appropriate for a government entity to play such a role, observes
Tom Evslin, a former CEO in the telecom sector who also served as Vermont's
transportation secretary. Historically, he notes, public agencies have helped
deliver vital services, such as electricity, to unconnected rural areas.
And broadband does qualify as a vital service these days, adds Greg
Brown, director of the Chittenden County Regional Planning Commission. "For
most businesses, it's become as basic a necessity as electricity," Brown says.
"It's absolutely fundamental, especially for the kind of companies Vermont is
trying to attract."
Questions are meanwhile being raised about the ability of FairPoint
Communications to provide services consistent with the e-state vision.
FairPoint, which is based in North Carolina, has agreed to purchase Verizon's
landline and broadband operations in Vermont, Maine and New Hampshire for
$2.7 billion. The deal must be approved by state regulators, who are being
warned by some Vermont officials that FairPoint lacks the resources needed to
reach the e-state goal.
"We haven't yet seen FairPoint demonstrate that this transaction is in
the public good," Public Service Department telecom specialist Christopher
Campbell testified recently. He said the company has made only general
promises regarding broadband deployment in the state. "We have not seen
anything that we can say is better than what Verizon has already committed to
do in Vermont," Campbell added.
Evslin shares these concerns. "I don't think the deal is in Vermont's
best interests," he says, pointing to the heavy debt load that, he suggests,
could prevent FairPoint from investing sufficiently in an essential upgrade of
Verizon's infrastructure.
FairPoint officials insist the company will be able to afford the
commitments it is making to Vermont and the two other northern New
England states.
But even if that assurance proves incorrect, "one company is not
going to make or break the e-state initiative," says Douglas spokesman Jason
Gibbs. In addition, he notes, "companies can be compelled to do the right
thing if they're not motivated to do it."
State Representative Warren Kitzmiller, chair of the House Commerce
Committee, shares Gibbs' confidence in Vermont regulators' ability to ensure
that telecom service providers will act in synch with the public good. "I'm sure
the Public Service Board will weigh all the relevant factors and rule in the
state's interest," says Kitzmiller, one of the architects of the Vermont
Telecommunications Authority legislation.
Hoffman, head of the broadband council, takes a sanguine view of
FairPoint's capabilities. "I think they're going to focus here," he says. "But
whatever happens, it's hard to say it would be worse than the situation with
Verizon. And whether or not the FairPoint deal goes through, it's going to be
tough to provide coverage to every place in the state by 2010."
Improvements in Internet access and mobile phone service are
needed in parts of Chittenden County, not just in the state's remote reaches,
Gibbs notes. The aim of Douglas' e-state initiative is, in any event, broader
than simply closing gaps in coverage, the governor's press secretary adds.
"The heart and soul of the initiative is to level the playing field economically for
the state's rural communities and to completely obliterate the old paradigm
that required businesses to be located near their markets," Gibbs says.
With universal access to high-speed Internet links and dependable
cell-phone signals, "you can be as competitive in the world economy in a rural
community in Vermont as you can be in New York City," he declares.
Evslin emphasizes the importance of providing alternatives to digital
subscriber lines rather than simply extending the existing DSL network. Access
to the Internet is likely to prove increasingly non-competitive for that portion
of the state where DSL is already available, Evslin says. Verizon has not
invested adequately in maintaining and upgrading its DSL system in Vermont,
he maintains. And DSL itself lacks the capacity to achieve the speeds that will
be needed for many applications in the coming years, Evslin adds.
Wireless holds greater promise for enabling the e-state initiative to
reach its potential, he says. "I'm convinced we can do what needs to be done,
but it will take an unusual degree of cooperation between the public and
private sectors. The public agencies will have to move much more quickly than
they usually do, and the private companies will have to take some risks they
might normally not take," Evslin says.
All those offering assessments of the e-state plan agree that universal
access represents a vital economic-development tool for Vermont.
At-home businesses will be better able to thrive in communities such
as Underhill that lack high-speed Internet access, State Rep. Kitzmiller notes.
The initiative can also make the Northeast Kingdom "a really
attractive place for entrepreneurs," Hoffman adds. "Housing prices are lower
there, and the Kingdom is a wonderful place to live. But the one big drawback
has been that you can't connect to the rest of the world."
As a true e-state, Vermont could also enhance its delivery of public
services, Douglas has suggested. The governor said in a recent speech that
Vermont has the potential to equip each of its classrooms with technology
enabling students to access the library at Oxford University, tour the Louvre
Museum and chat with a peer halfway around the world.
Concurrent with its effort to implement the e-state plan, the state
should consider adopting laws that would enable digital companies to declare
Vermont their physical domicile, Kitzmiller suggests. Businesses that exist only
on the Internet do need a place to call home for purposes of registration and
taxation, he notes. Vermont should investigate whether it can become that
place - just as it has established itself as the nation's leading domicile for
captive insurance companies, Kitzmiller says.
