Community Broadband – Grant of Authority to Municipalities – Vermont

Prior to June 2007, a Vermont town that wanted to create a community broadband network would have to amend the town charter and get it approved by the Vermont Legislature to gain the necessary authority to do so.  Public Act 79 of 2007 changed that, granting broad authority to communities to create their own networks.

The national telecommunications companies like Comcast and Verizon had largely ignored Vermont, like other upper New England states.  These companies invested little in the low density communities – preferring to invest where they could maximize profits.  Realizing the future required fast broadband networks, the Vermont Legislature and Governor Douglas partnered, forming an overwhelming majority to pass legislature to encourage broadband investment.

It starts by noting the “significant gaps” in existing coverage:

A new level of creative and innovative strategies (including partnerships and collaborations among and between state entities, nonprofit organizations, municipalities, the federal government, and the private sector) is necessary to extend and complete broadband coverage in the state, and to ensure that Vermont maintains a telecommunications infrastructure that allows residents and businesses to compete fairly in the national and global economy.

It calls for both affordable broadband and mobile telecommunications services:

The universal availability of adequate mobile telecommunications and broadband services promotes the general good of the state.
(b)  Therefore, it is the goal of the general assembly to ensure:
(1)  that all residences and business in all regions of the state have access to affordable broadband services not later than the end of the year 2010;
(2)  the ubiquitous availability of mobile telecommunication services including voice and high speed data throughout the state by the end of the year 2010.

The Act established the Vermont Telecommunications Authority (VTA); giving it the authority to form partnerships, bond, and help municipalities create networks.

[Grants authority] to provide financial assistance in the form of loans, grants, guarantees, other financial instruments, or, in accordance with section 8064 of this title, to issue bonds backed by project revenues, the state, or its political subdivisions, or both, for the purpose of building infrastructure capable of delivering mobile telecommunications and broadband services to all Vermonters;

in collaboration with the Vermont municipal bond bank, to act as agent and advisor for municipalities that wish to offer municipally backed financial assistance, consistent with chapter 53 of Title 24, to develop telecommunications infrastructure or services in their communities;

However, the VTA is limited in that it may not directly provide services to the public and cannot have outstanding debt greater than $40 million.  VTA can help other entities to borrow and may also issue outright grants (depending on legislative appropriations) but no project may get a grant larger than $100,000.

Municipal Authority

A municipality is authorized and empowered to own, maintain, operate, improve, and extend, or otherwise acquire, and to sell, lease, or otherwise dispose of, in accordance with and in any situation or manner not prohibited by law, its communications plant for the furnishing of communications services within or without the corporate limits of the municipality, for public, domestic, commercial, and industrial use, and for the provision of communications service.  For the aforesaid purposes, the municipality may hire, lease, purchase, own, hold, and acquire by contract, agreement, or eminent domain proceedings any buildings, land, rights of way, and any other real property necessary or convenient to the operation of the communications plant, and may use any public highway over which it may be necessary or desirable to pass with the poles and wire of the same, provided that the use of such public highway for the purpose of public travel is not thereby unnecessarily impaired.  These powers may be exercised through a taking by eminent domain in the manner prescribed by law.  All of the foregoing powers are in addition to and not in substitution for or in limitation of any other powers conferred by law.

Municipalities are not allowed to raise taxes to finance these networks or pay the debt incurred from them:

A municipality’s operation of any communications plant shall be supported solely by the revenues derived from the operation of such communications plant, except that portion which is used for its own municipal purposes.

To the extent that a municipality constructs communication infrastructure with the intent of providing communications services, whether wholesale or retail, the municipality shall ensure that any and all losses from these businesses, or in the event these businesses are abandoned or curtailed, any and all costs associated with the investment in communications infrastructure, are not borne by the municipality’s taxpayers.

Ideally, a broadband network would be supported solely by revenues from subscribers.  However, we do not believe a community should be prevented, if it so chooses, to subsidize a broadband network with tax revenue.  These networks are a public good in the economic sense – they improve local government efficiency, increase opportunities at the schools and encourage economic development.  Much like the libraries, police departments, and public transit, we believe a community should have the right to raise money from everyone in the community (via taxes) because public goods benefit everyone.  Citizens may always choose to sell the network if they choose.  In fact, the Burlington, Vermont network has been valued at twice what it has cost to build.

Since this rule has passed, some have been greatly disappointed in that the VTA has chosen to focus more on encouraging privately broadband networks rather than the intended role of spurring public owned networks.

Nonetheless, a group calling themselves the East Central Vermont Fiber Network, comprised of twenty-some towns has banded togetherand created a plan to bring a universal fiber-to-the-home network to their communities.  Tim Nulty, original General Manager of Burlington Telecom, has spearheaded the effort.  Though they originally anticipated securing funding in Fall 2008, the collapse of the economy has delayed that crucial step.


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