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Frequently Asked Questions About ValleyFiber
For details about our current project with ECFiberNet, visit their Frequent Questions page on the ECFiberNet website.
What exactly is being proposed?
What services would be available?
Why is this important?
Who pays for this? Why should our town float a bond for this project? Aren't taxes are too high already?
Is the federal government doing anything to expand broad band coverage?
Why should towns get involved in providing telecommunications services? Wouldn't the private sector do this better?
Why do we need fiber when I have cable/DSL/wireless?
Isn't wireless better suited to providing remote last mile access?
How can a rural area afford a fiber-to-the-home network?
What is the risk to the towns?
Doesn't "state of the art" mean expensive and risky?
Won't this project have an unfair cost advantage over private providers?
How is ValleyNet involved?
How can I get involved?
What exactly is being proposed?
ValleyFiber, a non-profit service company, in partnership with groups of local municipalities such as ECFibernet (www.ECFiber.net), is planning to implement a series of regional high capacity fiber optical cable network capable of serving 100% of homes and businesses in participating towns with Internet, telephone and cable television service. ValleyFiber has recently engaged Tim Nulty, the former executive director of Burlington Telecom (www.burlingtontelecom.net) - a successful municipally owned fiber-to-the-home network in Burlington, VT., as a consultant to implement these networks.
These networks would be privately financed by 15 year non-recourse capital leases. The private financier would own the network for 15 years and lease it back to the towns. After 15 years, participating towns would own the network. Networks would be financially self-sustaining. "Non-recourse" means the towns would not be obligated to pay any expense of the network. User fees would cover interest, principal and operating expenses.
One time fees for connecting to the network would be on the order of $100, or pretty much what you would pay for a new phone or cable connection. Monthly fees for Internet, telephone and cable television would start around $50 per month.
No municipal bonds or taxpayer funds would be necessary to fund the effort. In fact the network would have a positive effect on taxes in several ways:
- each participating town's grand list would increase substantially due to the investment in the fiber optic distribution system by the network . Taxes paid by the network would be approximately $30 per household per year.
- at some point, profits from the network would be distributed back to towns, further reducing taxes to residences and businesses.
- municipalities and school systems would benefit from access to less expensive communications options
- in towns where the cable company pays franchise fees (typically a small percentage of cable revenue), the network would pay the same percentage of cable revenue to the towns.
What services would be available?
High speed Internet access, up to 8 Megabits per second symmetrical access (which means that it has the same upload and download speeds)
Standard local and long-distance telephone service (e911 compliant)
Television - up to 200 channels of traditional network, specialty, and premium television.
Plus:
Video-on-Demand
High Definition Television
Digital Video Recorders
Packages would be available for telephone, Internet and cable TV ranging from $50-$200+. A 10% discount would be given over individual pricing for subscribers choosing all three services. For example, for roughly $50 per month, subscribers would receive 1 megabit per second symmetrical Internet access, telephone service, and 20 channels of television. A la carte pricing would also be available.
Plus:
Virtually unlimited opportunities to distribute public access and user content (thousands of channels would be available)
Home office packages, designed to take advantage of the high-speed network for those working at home
Small-business packages for small companies needing high-speed access and sophisticated telephone options
Business services for larger companies
Why is this important?
Our country has a rich infrastructure - if you are talking about roads, electricity, and telephones. The United States is far behind other countries in providing ubiquitous broadband access. South Korea, Japan, France, even Iceland are significantly ahead of the US (and far ahead of the Upper Valley) in the availability of broadband access.
A universally-available service would have great advantages to residents, as well as town governments, schools, businesses, and non-profits, and would improve the region's attractiveness to high-tech industries and the home-based businesses on which the Upper Valley's economy increasingly relies.
One clear beneficiary would be our school systems. In Burlington, which has a municipal fiber network, the schools have been able to significantly improve their Information Technology capabilities at a lower overall cost. Ultimately, a universal network would provide important curricular and educational opportunities.
Who pays for this? Why should our town float a bond for this project? Aren't taxes are too high already?
Taxes would not increase; in fact, the value of the network would mean that property taxes would be paid TO participating towns. The fiber network would not be financed by municipal bond. The interest and amortization of the capital lease is paid by the network's subscribers.
The network is financed privately through a fifteen year non-recourse capital lease. In the case of default, ownership of the network would revert to the provider of the lease. The towns would have no legal obligation to pay the debt.
The recently enacted bill establishing the Vermont Telecommunications Authority (VTA) with $40M of bonding authority could provide credit enhancement. For example, in return for a small "insurance fee", the state might agree to cover 10% of the value of the capital lease in the case of a default, thus minimizing risk to the town's credit rating. This would also have the effect of reducing the interest rate on the capital lease because, from the perspective of the private financier, the project would have less risk.
Is the federal government doing anything to expand broad band coverage?
Unlikely - the Federal Communications Commission (FCC) still defines broadband as greater than 200 kbps (around 4 times the speed of dial-up service.) Most European countries define broadband as greater than 1 or 2 Mbps (20-40 times the speed of dial-up service.) FCC Commissioner Michael J. Copps recently wrote in the Washington Post:
America's record in expanding broadband communication is so poor that it should be viewed as an outrage by every consumer and business person in the country. Too few of us have broadband connections, and those who do pay too much for service that is too slow. It's hurting our economy, and things are only going to get worse if we don't do something about it.
Why should towns get involved in providing telecommunications services? Wouldn't the private sector do this better?
Universal broadband communications access is fast becoming a necessity, much as public roads, electricity, and telephone service. All these now universally available necessities were built with some form of public support or subsidy. Private providers invest in infrastructure in regions with greatest density- no private providers are promising universal coverage.
Why do we need fiber when I have cable/DSL/wireless?
Current services are relatively slow and asymmetrical, which means that the download speeds are higher than upload speeds. These services are unsuitable for high quality teleconferencing, for example.
As more and more services are available on the web, using more and more bandwidth, the speeds of cable, DSL, and wireless will soon no longer be adequate. Fiber has the speed and capacity for today's needs, as well as for advanced bandwidth-intensive services in the future that we can only begin to contemplate.
Isn't wireless better suited to providing remote last mile access?
Wireless access is also asymmetrical (the upload speed and download speeds are different) and can be slow and unreliable. There needs to be a clear line of sight between the transmitting tower and the receiver at the residence; the very nature of the wireless signal and local topography prevent truly ubiquitous wireless coverage.
How can a rural area afford a fiber-to-the-home network?
Because a group of several towns (or an entire region) is involved, the average household density is high enough, and the cost per household low enough, to allow payment of interest and capital on the construction of a fiber network.
In some ways, the most rural areas are better prospects for a fiber network because there is often no alternative for high speed Internet service. In Burlington, where nearly everyone has access to high speed DSL or cable modem internet service, more than 40% of the households in areas served more than 18 months have switched to fiber. One would logically expect the penetration rate in rural areas to be even higher.
What is the risk to the towns?
The risk of a default on the capital lease is very small, but it is possible. The most likely scenario in the case of difficulty paying the interest and principal is a restructuring of the capital lease terms (for example, a longer term.) In the case of a default, the financier's first recourse is to repossess the network.
Doesn't "state of the art" mean expensive and risky?
Municipal fiber networks (and fiber networks in general) are becoming more common, both in the US and internationally. For example, Verizon is essentially using the money from the planned sale of its VT, NH and ME phone lines to build nearly identical fiber-to-the-home networks in its urban and suburban markets. As the technology has become more common, prices for equipment have dropped.
Burlington, VT, is close to completing a network passing over 20,000 homes, providing a proven network architecture and business model. Tim Nulty, the former head of Burlington Telecom, recently announced his resignation and has joined VallyNet/ValleyFiber to manage the buildout and operation of this project.
The network would utilize largely the same network design and service offerings that have convinced nearly 40% of Burlington households with access to the fiber network to switch to the fiber network for Internet, and/or phone and/or cable services.
Won't this project have an unfair cost advantage over private providers?
The fiber-to-the-home network would pay the same franchise fees, pole attachment costs, and taxes as existing providers. Any town support would be paid for at arms-length prices.
How is ValleyNet involved?
ValleyNet is a 501(c)(3) non-profit that brought local Internet access to the Upper Valley in 1994 and managed over 6,000 local dial-up customers before exiting the dial-up business in January 2006.
ValleyFiber, a division of ValleyNet, serves as the umbrella organization that would design the regional networks, would draft the necessary legal documents, finance the initial organizational effort (legal fees, etc.), obtain financing for the project, and then build and manage the networks. The towns would jointly own the network and, at some point, could decide to operate the networks by themselves.
ValleyNet is also studying an effort to provide Internet access to those members of our communities with limited resources (for example, all children older than middle-school age who qualify for free school lunch.)
How can I get involved?
Show your support for our current project by indicating your (non-binding) intention to take service by submitting a ECFiber pre-registration. Financiers view a strong level of pre-registrations as a very good indication of likely demand. We also hope to provide service most quickly (starting in fall 2009) to those towns and neighborhoods with the highest percentage of households pre-registering.
Tell your neighbors. Let them know about this website and www.ECFiber.net as a way to find out more about the project. Print out this pre-registration form and carry a stack around with you in your car, your pocket, your purse. Practice your one-minute "elevator" pitch on everyone you meet - "hi, did you know we may be able to get a community-owned fiber optic network covering everyone in our town with no burden to taxpayers. You can pre-register for service using this form or go online to find out more."
If you need a lot of forms, write to us (or call, or email) at:
EC VT Community Fiber Network
c/o ValleyNet
58 North Main Street
PO Box 486
White River Junction, VT 05001
(802) 359-4162
information@valleyfiber.net
If you're lucky, we might send you a "got fiber?" bumper sticker too.
Come to our informational meetings. A series of public informational meetings is in progress.
See the ECFiberNet website for up-to-date information on upcoming meetings and presentations about that project.
Submit a Question
Have a question about this project that we've not answered here? Please submit it so that we can add it to this frequent questions page.
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