 Good morning, and Peter here. Hey, Peter, this is Tim Brighlin calling. Thank you. Thanks for joining us this morning. I just want to let you, I'm the Chair of the House Energy and Technology Committee. And we've got you phoning into our committee room. There are... Good morning, everyone. Good morning. Good morning. We have nine members of our committee, and seven of us are here right now. So hopefully we'll... Turn it off. Yeah. That's exactly it. I mean, I could be there as people wander it out. Well, we hope to meet you in person at some point in the future, but really appreciate you being able to join us this morning. Just, as you know, we're taking some testimony on the USF, and I know that you have a history with that in Vermont. So for that reason, it's good to have you as an expert on the phone. What I wanted to let you know ahead of time, our committee assistant, Sarah, had mentioned that you probably have about a half an hour of testimony and then some time for questions. What I want to alert you to, and members of the committee as well, is that we have a quickly compacting warning in terms of our schedule. So I think I'll just start off with saying that we'll take 45 minutes with you and anticipate that being you sharing your thoughts with us for a half an hour. And then, you know, if we have 15 minutes for questions or whatnot, that would be terrific if that works for you. Okay. Chairman McGregor, I don't really know all about the committee's interest. I have prepared testimony in a variety of topics. Should I try to just forge ahead and begin with the first one and then let you give me feedback as I go, or do you want me to give you an outline of what I am planning to say? You know, I'll let you handle it as you see fit. Okay. Just to be clear, though, we're in the process of working on a piece of legislation that deals with broadband connectivity in the state. One of the things that would potentially fund some of the initiatives that, you know, the governor and folks in the legislature are interested in would be an increase in the USF fee in Vermont from 2% to 2.5%. Okay. It's something that the legislature... Actually, I'll say it's something that the Vermont House of Representatives has passed on multiple occasions in recent years. It hasn't quite gotten through in the Senate. But in any rate, it continues to be a place that we look to for funding additional connectivity initiatives in the state. And so you being an expert on that, that was in particular why we had interest in you joining us this morning. But if there are things beyond that... Hi, Peter. How are you? I am. Nice to be working with you again. You too. Okay. I'll start. Yeah, take it away, please. My background is that I worked at the Legislative Council for about 10 years, just about exactly back in the 70s and 80s. Then I went over to work for Governor Cunin for a couple years as Deputy Secretary of Administration. And I finished my career about just about half of it, a little more at the Public Service Board, ending up as the policy director over there. I spent a lot of time with the Commerce Committee and the Senate Finance Committee working on various pieces of utility legislation. A lot of them sort of social benefit things. Representative Pat and I worked together on some funding for rehabbing housing and making it more energy efficient. That's one of the ways I knew him. Anyway, I wound up sort of making a specialty of the Universal Service during my Public Service Board time. I worked with the Commerce Committee mainly in drafting the legislation that first became the BUSF law. And I sort of stuck with it at the federal level. Later I served for about 10 years on the Universal Service Joint Board and that something else similar was called the Joint Board on Separation, which was a federal-state collaboration. So I got to see sort of the Universal Service picture from a lot of different angles. On the other hand, I have lived now in Massachusetts near my grandchildren for about almost 10 years, seven years. And I haven't been reading the Vermont papers, so there's a lot that has passed in Vermont that I have only been told about and maybe some important things that I don't even know about at all. So you have to be the judge of that. So let me launch in then to the history and some important points about Universal Service. So we've always had Universal Service efforts of one kind or another. The first place that anybody paid any attention to trying to expand the networks really was in electricity and outfits like the Washington Electric Co-op did a lot to bring the electricity up in the hills where the local investor on utility had not yet accomplished. And little by little during the middle of the 20th century the concept of Universal Service got expanded the telephone and pretty soon the FCC got in the game and started publishing data. You could see over the course of the 50s, 60s, 70s, 80s there was an ever-increasing percentage of people who had telephones in their houses and who had access to telephone. But it was all based on the landline telephone. And as you know, landline is now a distinct minority of access lines. So a lot of what went on back then has changed fundamentally. What we did at first was we did something called rate averaging. The cost of providing telephone service and electric service in rural areas is much, much higher than it is in towns and villages and cities where the average distance between customers in Burlington might be 100 feet. In rural parts of Vermont it could be miles or at least portions, major portions of miles between houses. And that means there's a lot of cable that has to be dedicated just to serve one customer. And what we did is we pretty much, with some minor exceptions, we pretty much charged everybody the same rate regardless of cost. And this was maybe the power or the arrogance of regulation. We set rates based upon what's fair in our eyes and not necessarily on where the costs lay. And a lot of people criticize this mechanism as containing something called an implicit subsidy, which is that even though the rates are the same, some people are paying more than their costs, others are paying less than their costs. In the 70s and in the 80s, the FCC did a lot to revise the intercarrier payments that it was largely in charge of. And every time it would revise or reduce a charge that particularly those that were paid the small carriers, it sort of created a new mechanism. It started creating these explicit universal service funds. And they turned the money over to be collected by a carrier association called NECA. But there was basically by the time I sort of came on the scene in 1990, there were two distinct subsystems of support. One, sadly it was really organized around the lobbying groups more than it was around the needs of the countryside. It was a support system for the large carriers and it was a different system for the small carriers. And small, you know what this means in your state, it's not. The large carrier was, the only large carrier we had was the bell carrier known as telephone. And the only other, I think it was nine companies were considered small carriers. And the latter group, the small carriers, had a much more generous system of support. And the problem in Vermont that I saw was that we were organized in a way such that it was really an historical accident. It was true in all of the southeast coast. Most of our rural areas were served by the bell company. We had, as I said, nine small carriers, but they really had a minority of rural lines. So they were doing quite well with this generous small carrier support system. And they could expand their networks and receive generous federal subsidies, so called interstate subsidies to support that. But Verizon, the England telephone, Ninex, the Atlantic, Verizon, was unable to get that funding. So one of the things I did in my career, and the board was on the joint board, on the federal state joint board, was they had to pay for increased support to the England telephone. For a while, we got a little bit more. But the problem, the political problem, was that the big companies, all of their executives lived in New York and Philadelphia and places like that, and they just didn't want to pay. And so the large company, politically, was opposed to support for large companies. And it became sort of an insuperable problem. I also want to spend a minute talking about regulatory jurisdiction. As a committee, familiar with where the concept of interstate and interstate came from and where it stands right now, would I, a few minutes on that, be useful? So I'll speak for the chair. It wouldn't be helpful to have a little bit of that. Okay. So early in the 20th century, there were some court decisions. I don't know if you guys are any of you are lawyers, but lawyers for a long time were really into the commerce clause and the extent of the commerce clause. And a lot of what happened in the Roosevelt, Franklin Roosevelt years, was about construing the extent of the commerce clause. And so the courts were really into this question of what is the extent of the federal power. And there were some early decisions in the early 20th century which said that you couldn't charge one group for the expenses and courage for the other group. And the groups were the people who used the network for in-state calling and the people who used the network for out-of-state calling. And so telecom developed this really kind of bizarre artifice that divided each telephone company into two virtual companies. There was an intrastate company and an interstate company. And each had each company, a pseudo company, had a set of costs and it had a set of rates that you could use to recover those costs. So local exchange rates were intrastate and as was in-state toll calling. Most of you are probably old enough to remember the toll calling. And the federal jurisdiction was primarily interstate toll calling but also something called special access. So each sort of side had its own set of costs. Each side had its own set of revenues. And regulators sort of remind me some sort of the old joke in The New Yorker about, do you ever see the joke where the cartoon where they have a picture of the United States and Manhattan is like three quarters of the map and then there's the Hudson River and then there's New Jersey and then the next comes California. Regulators are sort of like that about jurisdiction. They think everything sort of ought to be divided according to the regulatory jurisdiction model. And that's important in universal services. I'll explain in a minute. There was some effort at pooling among telephone companies. As I mentioned, the feds had created some support for the rural companies and that they once had been collected and distributed by an industry group, NECA. Now, in remind, we did that too for a while when we first adopted the Lifeline program in the, I'm going to say, the early 80s. The funds were, not everybody, not every company had the same percentage of people getting Lifeline support. And so all of the funds were being collected sort of uniformly, but they weren't being distributed uniformly. So they needed a set of a pool to distribute the burden more equally. And they set it up again using the federal model. They used the on-telephone association to collect and distribute those funds. And around the 1990s, it became apparent that the technology was changing. The attitudes about the monopolies were changing. And everybody knew that local exchange monopolies were going to be broken up. And it took a few years, but finally, in 1996, the Congress passed the Telecommunications Act of 1996 and mandated local exchange competition. This made insecure all of the implicit subsidies that we had been relying on to keep rural rates low. And the concept gained currency that we needed to create explicit subsidies. Well, eventually the FCC did a lot of that work and they continued it until quite recently. There's still really reducing rates that they consider an excessive cost. But in Vermont, we were a little bit more cautious. We knew that some stuff was coming, but maybe we weren't quite ready. But then along comes the E911 technology and the legislature quite reasonably decides that promoting our 911 program up to an E911 program was a timely thing to do, but they needed a source of funds. So we merged the two things. The E911 program sort of gave it the motive force. We had to get some funding for that, but we also said, well, we have this need for universal service coming down the road to generate explicit subsidies that will replace implicit subsidies. So why don't we just create a fund that could do all of this stuff at once, have one revenue source. We'll give it to a private company to be the fiscal agent for us, but it'll be mandated by state law. So that's what happened in 1984. We created the fund. We set up priorities for funding different components of the distribution program. And E911 is off and running, I think, in October of 94. And the high-cost portion of it was reserved for a future day. And I know that you have since then created some high-cost funds. I have some observations about the collection mechanism that we chose back then. We used retail telecommunication service and we used the state law definition of that. And I strongly advocated and still feel it's important that because the state of Vermont is exercising its taxing power, it should consider itself free to define terms in its tax laws as it wishes. And that you aren't necessarily bound by line drawing that happens at the FCC as to term what the meaning of terms is in federal law. It's important also to realize that we had a very limited concept of how many companies would be involved in this. We had a dozen companies, roughly, reporting in the first year or two that were old telephone companies plus a few long-distance companies like MCI. But it was only on retail, of course. You don't want to surcharge wholesale because then you'll discriminate against anybody who's providing a sort of middle-level service that feeds into a retail service. We applied the surcharge to both regulatory jurisdiction, the intrastate and the interstate. And this was somewhat controversial in Vermont, but enormously controversial later at the federal level and in other states. I had found a Supreme Court case from a few years before that sustained the Illinois sales tax which had been applied to both intrastate and interstate. And on that basis I advised the Commerce Committee that Vermont could apply the universal service charge to both intrastate and intrastate sales. We were almost the only ones who did that. Two years later when the FCC got, or when the Congress passed the 1996 Act, everybody agreed that the new interstate, the new FCC surcharges would be only on the interstate portion. And most states that enacted universal service charges after us, so we were really almost the first, most states went the same way that the Congress went and applied their surcharges only to the intrastate portion. In retrospect, I think this is my opinion now, but I think we did exactly the right thing. The distinction between interstate and intrastate was always somewhat artificial. There were lots of sort of rules of thumb that were applied. You know, if you're a wireless partner, you do it this way. If you're selling special access, you do it that way. And so it was never really anything but an artificial construction, but now it's an irrelevant artificial construction because people don't really keep track of their packets. Some of the carriers claim that they can keep track of where calls originate and terminate, but a lot of those claims are really suspect. And most people now just buy a bundle of service that includes whole service nationwide and to Canada. And there's no longer, for a long past few days, I think where most of us are paying more per minute to call Burlington than we are to call Los Angeles, which was a thing once upon a time. So I once again commend your predecessors for having me, but I think in retrospect it would be a wise decision to exert your taxing authority without regard to the regulatory jurisdiction of the service. I have a couple of thoughts about spending universal service funds. There was always a distinction in our minds between PSAPs and dispatch. PSAPs, as you know, are the places that get the initial call from a 911 call, and then the PSAP has to hand a call off to the proper fire or medical or police agency to send a responder. And the time we felt it was important to maintain the distinction between the two was partly practical because you couldn't really know whether the fire chief was on vacation or not. And so there was a lot of local knowledge that was necessary for effective dispatch. But the other problem, the contrasting problem, was that PSAPs are expensive. You have to train the people. You have to have the right equipment. You have to buy the electricity and the circuits and you have to have the right equipment. You have to buy the electricity and the circuits and you have to keep people there 24-7. So it's a lot of people and a lot of equipment. And very few, in the beginning, very few cities wanted to stand up and say, we'll take a PSAP here and we'll incur the cost. So it was always sort of partly a practical, partly a financial decision to keep them apart. But the other thing that was felt to be really important was that the committees back then didn't want telephone monies, surcharges on telephone service, to be used for other purposes than to make telephone available. And dispatch was considered to be more police service than it was a telephone service. It was a similar artificial distinction and it's been hard to, I understand it's been hard to maintain and a lot has happened since I knew anything about it. But I just wanted you to know that history. Maybe I'll pause and get my breath and ask if anybody has any questions at this point. I'm going to think of them about halfway through. Okay. We do have a couple of questions. Good morning, Peter. This is Robin Chestnut-Tangerman. Hi, Robin. Nice to speak with you. Yeah, I'm staying here. So I'm intrigued by you talking about the decision to tax interstate as well as intrastate calls. Yeah. And the distinction between the two being somewhat meaningless at this point. And I'm extending my, so my question is about does that same distinction apply to telephone services over broadband and the ability to tax them? Yeah, in the later part of my talk I might as well go into it now. I do think that there's a sort of a tail wagging the dog problem here now. The network has evolved so that the really big thing on the network is broadband, is packets. Even the old TDM football network is now most deep and packetized. Actually, they had packets long before the internet came along, but nobody seemed to think that was important for a regulatory point of view. But it's very clear now that IP traffic is much bigger than voice traffic. And, you know, if you watch, you know, an hour on streaming and Netflix, you're getting more biffs into your telephone than you could probably spend in a month on talking on the phone. So what you have is the situation of telephone customers paying into the universal service fund that is being used primarily to extend broadband. And that's maybe a good deal for some people to do it. It's a terrible thing for the urban customer who's imposing low costs on their telephone company who's still got pretty much average rates and who maybe can't afford broadband or doesn't have good broadband at his house. So there's a sort of a mismatch between the people who are paying and the people who are benefiting. In many cases, they're the same people, but there will be circumstances where someone is in one category or the other, and it seems also increasingly sort of artificial to exclude broadband. It has happened at the federal level. They go through a lot of machinations down at the FCC to include and exclude certain things from information services, and it reminds me nothing so much as scholastic philosophy. So it's more of this than the essence of it is that. But what they have done is they have excluded broadband for their purposes, and the result is they have an ever-declining revenue base. If you looked at the website of the Universal Service Administrative Company, USAC, you can find that the trend of interstate chargeable telecommunications revenues has been constantly down for a number of years. It partly has due to the poor administration, I think, but partly it's just due to the fact that telephone is counting for less and less of the network. And if you want something, if you want a fund that is capable of supporting expansion of the network into rural areas, I think it's reasonable to say you should look at the revenues from the network to pay for it. Peter, can I interject with a question here? I don't know if you have visibility kind of nationally, but what is the, for other states who have Universal Service Funds, to the extent that they very specifically reach into kind of the voice kind of model to assess kind of a USF, which we do in Vermont, but I... You know, Robin, I'm sorry, I haven't really researched that. I know that there have been cases my business partner Bob Lowe was involved in a case, I think, in Minnesota, which I think did not come out well from my point of view or his point of view, and we could perhaps research that for you, or you could, you know, ask your lawyer to look it up. I understand it was a appeals court decision from Minnesota, but I haven't read the decision. And so I'm sorry, I'm not really prepared to fully answer your question. It sounds like that's an evolving area. It's an evolving area, and it's legally perilous. I mean, there's very little that's clear, and you'll hear all sorts of, you know, people with great assurance telling you it'll go one way or the other, but I'm not sure anybody really knows, but I would want to do more research before it really gave you an opinion. Peter, we have another question, right? Yeah. Representative Mike and Tatchka, you were talking about the case with Illinois applying the U.S. or sales tax, I guess it was, right? To interstate and interstate. How broad was that decision? Does it apply to the state's taxing authority in all areas? You know, it's been a number of years since I read it. As I remember, the court talked about what the elements were for a constitutionally acceptable sales tax. And we're not talking here about a sales tax that's prohibited by federal statute. We're just talking about something that may or may not be in conflict with the U.S. Constitution and the Commerce Clause. And the court outlined some minimum requirements. For example, you can't apply a sales tax to something that's already been taxed by another state's sales tax. They have to give a credit for a sales tax that was paid elsewhere. It reminds us that. It recently does that. So the things that were constitutionally required were already working on delivering on sales tax. And we built them into the BUSF. I think you'll find there's a section in the original BUSF, probably still there, that says if you pay a similar tax, a similar charge in another state, you get to deduct it from your payments to the fiscal agent. Does that answer your question? Oh, yeah. Actually, I was thinking about how it might apply to other areas. For instance, applying a fee to energy that's sold out of state. Oh, boy, that really is out of the way. And I want to add, if you're not an expert in that, I don't expect it to answer, but I was just wondering, do you happen to know what the case was that you were referring to? Illinois Vices. I can send your committee assistant the case. I don't remember it off hand, but I can look it up easily enough. Okay. Thank you. I think you might have trouble with that. I think there has to be that would be an export tax. And so you're talking about energy that you generate in Vermont, but that's sold out to someone out of state. Right. I think the courts, this is really reaching way, way back, but I think you'll find that the courts are very critical of anything that involves taxing exports. Okay. All right, thank you. That's all I know. I appreciate it. Maybe more than I know. That never stops us. What do we want to do, Mr. Chairman? Well, so we've got another 10 to 15 minutes of your time. And I don't know if you want to kind of focus on a few more things that you wanted to share but we can jump in with questions, hopefully not taking us too far off that. Sure. I think I talked about the dispatch. The next thing that I wanted to discuss was spending USF funds on wireless. Most people have cell phones, everybody just about. Even my grandson has a cell phone. And a lot of people have given up their landline phones. And so the number of wireless phones is quite a bit larger than the number of landline phones now. And but remind, I do want to commend the department for having Corey Chase drive around with his little box of cell phones and taking maps. You guys know that they did that. Oh, yeah. Yeah. That's more than anybody did before. And I think it's commendable. And but if there's still gas, apparently. And so you had this for a while. You had this thing called a microcell network going. And I guess it fell apart recently. Yeah. But the equipment apparently somebody in the state bought 400 microcells and about 100 of them more or less from now on unfolds in the dark. And it wasn't clear that they had a viable business plan. They were they were incurring a lot of costs for power. They were incurring a lot of costs for interconnections. They were incurring a lot of costs from the SEC for for the ability to locate signals for 9-1-1 purposes. And some of those costs could be reduced possibly. But I think you might want to consider whether a reasonable use for Remotten Universal Service Fund is to expand the network of cell sites either using microcells or something else so that more rural areas get cell services. And you know it's important for people who are driving and get off the road during a snowstorm or somebody's up in the woods and cuts himself with his chain so on and has a cell phone. Having wireless services just about everywhere could be really valuable. And so I think it's an appropriate application for USF funds. The particulars of this microcell network are a little troubling. You know it's 2G technology and there now we're mostly going to be a 4G with some urban areas at 5G so it's not the latest and the greatest technology but it's cheap, it's on hand at some cost they have quite a number of these things and if you put them up and you get them running on a pay-as-you-go basis so they can support themselves they would be able in the future to be upgraded to 4G quality and I think it would be a small sort of first step. The only question I would have is that there's a fundamental rule of economics that Congress and the FCC don't seem to understand which is competition is great in urban areas where there's some sort of profit and cream to skim from overcharging incumbents but in rural areas it's hard to get the money together to build the first network nevermind the second and the third and the fourth network by competitors and that's why it's been so hard to get universal service out to rural areas because the FCC has been devoted to this sort of competition model and let private industry solve it well my recommendation is not that you have to stay on these things and operate them but I do think that they should operate on a sort of rules in which the operator of the microcells is a neutral party and it's not using the microcell to extend a proprietary network such as that owned by AT&T or Verizon so the concept here is that they should be operated by a neutral host and I don't know enough about what the Department of Public Service has out there in the way of bid solicitations but that would be a question that I would be asking them if I were to talk with them about this project I'll move on unless there are any questions about that the next topic is that I wanted to talk about is E911 and IP integration I've read the reliability report from the E911 board and I'm a little surprised that 25 years into the program the elements that were put in place in the early in the mid 90s are really still there and they're still costing us apparently a fair amount of money they still rely on so-called special access point-to-point circuits between the telephone central offices and the so-called tandem the E911 tandem where all the calls are funneled and I don't have the number for the cost of this but I'm surprised that they would still be using special access because special access is something that has been pretty much the telephone companies have a lot of market power and setting their special access rates and it's been traditionally a very important and very strongly protective product line for them and they vehemently oppose any sort of efforts at the federal level to reduce rates of special access so I'm assuming that the 911 folks are still paying a lot for these circuits and there's a lot, there are a lot of options and it comes out not only just in terms of cost but also in terms of reliability excuse me I understand that Vermont has had cases recently where so-called remote switches have been isolated I don't want to go into the technical stuff now in the short time but if there's a break in the circuits between a remote switch and a rural area and its host switch the 911 service can be disrupted for quite a while and it seems to me that there could be if the 911 board were willing to sort of break apart this sort of turnkey contract as asked for and consider the possibility that the 911 people might go into the central offices of the telephone companies use the acts of the legal access that the Congress gave them in 1996 and maybe put a piece of equipment in that failover basis connects to 911 call to the internet or to a cellular tower they could solve this remote switch isolation problem and they could probably have probably reduced costs and by less special access circuits so that's any questions on that I'm almost done here no, we're starting now we're using our problem now in the current network there are much much worse of problems than it was in the old days when telephones ran on power from the central office central offices had a generator lots of diesel oil in the tank almost every piece of equipment now that's not in in the central office has to have batteries now and this includes so-called remote platforms that are in many neighborhoods when they started you know putting in remote platforms they could push DSL farther and farther out into the into the sticks and so those things they run on electric power and when electric power goes out they have batteries that last for a while and then somebody has to go and arrive in a truck with a generator and charge up the batteries again there's often the problem that there aren't enough trucks and there aren't enough generators and the same thing for cell power the same thing for the devices that the cable companies use it's even true for your phone in your home the phone I'm talking to you on is a cordless phone that has batteries in it and if I lose electric power 24 hours from now this phone will work so maybe one of the things that the committee might want to look at is is Vermont doing enough to ensure that battery backups are at least available if not required for all the different ways of getting telephone service finally my comments I have some comments by extending the broadband network I see that you have a very ambitious and I shouldn't say very ambitious quite a stretch goal for 2024 of 100 megatits felt directions and but I also see that you have only five years left and I think you're going to have to move into a higher gear if you're going to try to really reach that your Vermont universal service fund is awarding support to companies that provide four megatits down and one megabit up on the downside that's one-twentieth of your goal and on the upside that's one-one-hundredth of your goal so I think I would suggest that you maybe spend some time if you have it talking about what a real plan to get to 100 105 years might look like and finally oh no I'm not finding that almost I want to suggest an open market for middle mile fiber the the 96 act when it was passed imagine a situation where prices were available for all sorts of things in the telephone network competitors are going to come in they're going to sign interconnection agreements they're going to be filed with state commissions the next competitor could come and look at the last competitors interconnection agreement and use it as a basis for opening negotiations the concept was that competition can work to drive down prices and if it works we can eliminate regulation but we have to have an open market we have to be able to know what the prices are what the conditions are for interconnection I don't think much of that is true of your dark fiber market a lot of people are monitoring built fiber over the years there's nobody that you can go to to say you know if I want to transport a signal from point A to point B who's got fiber there and what do they charge so you might consider whether developing such a thing excuse me would be useful and I'm pretty sure it would be useful I don't know what it would cost you to do it Peter can we get a question question go ahead yeah Peter why are you under the impression that there is no one to ask where fiber exists in the state well I know that you can find out where some fiber is the state has listed it's where it's fiber is and it's tower isn't such but I don't I don't believe that there's any place you can go for example to find out where details fiber is and what they charge for it and I know that there are a lot of other companies that have laid fiber in Vermont like I just I'm just not aware of any places okay thank you I'm sorry I can't hear you no I said thank you okay anyway I think it's technically possible to establish a database for this service and I think it would produce some thought savings that might be useful for the E-911 people but there is some risk that federal law might complicate your effort to establish it because they've gotten really used the federal the industry has used the federal law to there's a shield against state regulation I see I've only got a minute left but I'll say that I do have some ideas about spending USF funds on broadband I think you should make sure that whatever mechanism you develop should be efficient in the sense that it doesn't give funds to providers that don't need the funds to be effective in the sense that it should accomplish something that wouldn't otherwise be accomplished and that that was actually the end of my talk thank you thank you very much yeah that was helpful thank you I can hardly hear it thank you thank you we feel like we use that most we feel like we use most of your voice up in your 45 minutes as well so thanks for your time alright very good bye bye thanks thank you you have a great heads up on that Jeremy welcome thank you very much thank you for being here a few minutes early we've got a busy morning and appreciate you being able to join us no worries I will try to be as brief as possible you have my my printed statements too I believe okay it made it to you not sure so for the record I'm Jeremy Hansen I'm the chair of CV Fiber Communications Union District serving seem to be 17 towns in Washington Long Island counties and also an associate professor of computer science at Norwich University and also the vice chair of the Berlin Select Board so there's really two distinct goals that we're talking about when we talk about making broadband better in Vermont and it's I think it's important to make sure we keep in mind which one we're talking about which goal we're seeking as these different policy pushes that we're looking at here are pursued one is improving broadband to more like 21st century speeds so that's applications that can support modern computer applications not just everything that we've been able to do with our computers so far so and improving broadband to those speeds for large swaths of Vermonters number two is bringing adequate broadband something being better than nothing to those last few Vermonters who are and before I sort of dive into some into the specifics of the bills that you have in front of you I want to point out that the connectivity fund really supports goal number two that's how do we get those last handful of people some service that's adequate where they have something so they can get to their email so they can get to you know job boards not necessarily so that they can stream anything but the connectivity fund has been underfunded which I'm excited to see that you're taking steps to mitigate that but honestly it's not terribly helpful to see the fiber at this point the eligible addresses are not terribly densely packed so for projects that we're looking at it would not be helpful for us I would say in the first several years it's not something that we're really going to be able to take advantage of just network engineering so because our mission is to bring fiber to the premises throughout those soon to be 17 towns those places that we're targeting do tend to be underserved in that they only the folks that only have DSL that don't have cable or anything else those are the folks who are most interested in serving first that said those that are defined by needing service by the connectivity fund there's a handful here and there and it's not they're difficult to reach and don't have the numbers in the larger design of what we're imagining our network to look like and I don't have the numbers in front of me but the connectivity fund has been in the past fairly cost and effective you've got a lot of money being plowed into these you know handful of people at the ends of dirt roads but this money's going in a lot of cases to out of state for profit corporations who are investing today that where I talk about this sort of reinvestment in archaic obsolete technologies that the money of the taxpayers of Vermont I think could be more wisely invested so the goals of reaching everyone to give adequate broadband to everyone is certainly a laudable goal it's really important it's one I know that DPS for example strongly supports something that's going to help CB fiber and new communications you mean districts get off the ground just by the way that's currently structured in the short term long term yes we will have we will be looking at using that for completing portions of the network but otherwise but it's it's so small first of all and it's really targeted at those people who have nothing it's not it's not going to be helpful to us however there's so this is on page 3 of the as introduced bill there's funds allocated for feasibility studies and technical assistance to municipalities this is great this will help us this will help us get off the ground and get moving forward I do have a small sort of nitpicky request if the language could be changed so that those of us who already have created a communications union district so that we would be eligible for that as well the language says two municipalities in the process of developing the district for us that process is it's past I think so if you change that to existing communications union districts or the next line in my testimony there to just simply say just two municipalities and I just ask a couple of things so Jeremy when you're imagining feasibility studies and you're developing you have the district but it's a large district of a lot of towns are you doing a single feasibility study are you doing a feasibility study for functionality in your district are you doing it for several how do you envision that happening that's a good question there are going to be feasibility studies throughout our lifespan I mean so our initial feasibility study that we're looking at is putting out a survey gathering data looking for where it makes most sense for us to start and that feasibility study should give us a sense of what the economics what the take rate of those different places first and we will have hopefully some good data there but that that gets us to a certain point so that we can get into our pilot project hopefully by the end of the year but later when we go to build the next part we will probably have to do more studies we'll have to then resurvey people or look at where what might make sense to build next because we're necessarily small because that's really all we have is just to keep this simple target this at one specific narrow five or six miles of fiber and we're going to have to go back and I don't want to say start over we will have a lot of the business plan we'll have a lot of the economics solid but we will need to go back and do more and do another study of some sort to decide about our next steps and subsequent steps planning exactly to describe that study is not a beloved word in this building no it's that's something you do in the summer right okay so it wasn't a bill that you wanted me to comment on but I wanted to use H96 to illustrate a point in H160 which I'll get into a bit more H96 has a requirement or proposed to add a requirement of the process of bypassing but the minimum threshold that it sets is really really painfully low so it says at 4 megabits per second down and 1 megabit per second up and so this incentive makes sense you want to make sure that there's kind of a minimum minimum threshold for what kind of project would justify this waiver modern wireless communications you can go easily 10 times faster than that sometimes even more depending and that's only getting better at 4 meg down and 1 meg up if you're going to give them a way to get to if you're going to give telecommunications companies the ability to get out of the act 250 and some and the local process why not make it so that they have to have to reach something that's actually going to be usable I mean and I don't want to mince words about it but looking a bit farther into the future if we're going to ask for slow we're going to do something but we're going to get to the end of the road and it's okay but it's not most modern internet applications so segue then into h160 so what would your recommendation be 25 30 no if we're going to build telecommunications infrastructure 202c and that says that it's in statute says by 2024 we should have everyone connected with the 100 meg up and 100 meg down What that may not be reasonable for wireless sites But on the other hand we should be asking for way more than four And that's and that's that literally what I'm what I'm getting to next. Yeah, I was gonna say is that It's 100 100 threshold or I don't have So it says Support measures designed to ensure that by the end of the year 2024 every E911 business in a residential location in Vermont Has infrastructure capable of delivering internet access with service that has a minimum download speed of 100 megabits per second is symmetrical up and down Like that. That's the goal I don't I don't know that that's reasonable That's what I was asked asking and I think every senator Pitley's a question as to The recommendation on changing that from four or one two to what 25 three or 25 symmetrical or what? It's it's better. I mean, I mean if we're going to again if we're going to build 21st century infrastructure Why are we building 1990s infrastructure? Is anything capable of delivering 25 symmetrical capable delivering 100 symmetrical With fiber most certainly is cable can cable can deliver 25 three and there are wireless technologies in the 4g umbrella of technologies that can certainly Certainly deliver 25 and some of them just depending on how their site and how their bill can deliver 100 as well the symmetric is Maybe I German just my impression is that the life span of copper infrastructures 30 years That's how it's usually depreciated and and for fiber. It's more like 50 It depends on the technology, but I would say that that's reasonably accurate Yeah, so the where I'm going with this is I think the idea of You know, okay, so we'll build for one to somebody who has nothing because it's better than nothing as a bridge But we're talking about a 30-year bridge Which there's been no incentive to is it a bridge to nowhere, right? I mean is you know is there going to be some guarantee that then that person once they have for one I mean, so that's that's the modern-day equivalent of I mean that dial-up is still out there Don't get me wrong before one right now is the modern-day equivalent of dial-up if you sort of Walk back in time about ten years It's it's not adequate This is a question I'm really struggling with so how do we ensure if if we raise these speeds How do we ensure that that does not refocus the discussion on the centers that are served and Continue to leave the last mile Unserved or underserved and in my mind that is an increasing EC fiber is building out fiber wall-to-wall in all of their territories Including those folks that are that are eligible for funding through the connectivity initiative Including they're not using wireless But including those that would be eligible under h96 for this bypassing of the act 250 process, so it's possible It's economical. It's different Then how this is stuff has been incentivized before so if you want us to be building fiber incentivizing us building fiber would probably make a good I would say that would make a good policy statement Okay h160 allows for municipalities to issue general obligation bonds to help instruct communications plant with a minimum speed of ten down and one up and this is something that Is understanding you see fibers not a fan of allowing towns to issue general obligation bonds for this purpose so I'm gonna I'm gonna come back to that but Again ten down one up is that's something that I arguably get with my service with my DSL service at home That's more like the advertised speed and I basically never get it I really honestly where I am right now even with that the higher and DSL connection I have I can't watch Netflix anymore when the weather's bad. I Can't do work. I can't do remote work You know submitting videos to my students when I record video lectures I can't submit those to my students unless I drive back down to Northfield and upload them from the campus network I'm a computer scientist, so I'm sort of maybe I'm spoiled about this But you know when somebody sends me a 23 second video of Their dog playing in a Vermont river and say hey look at this ha ha cat videos, right? They send me this video and it takes me 10 minutes to download Okay, ten one is advertised speed ten one you never get And again, I'm I'm not gonna mince words I'm just gonna just gonna tell you like this if we want to incentivize modern infrastructure Let's align this with a hundred hundred and each 160 can If you wanted to say if municipalities are going to issue general obligation bonds, which is this thing that maybe is good idea Maybe not a good idea. Let's have it. Let's have and people invest in stuff That's going to last and that's going to provide actual 21st century speeds That was there's no cunning corners, there's no installing technology. That's already obsolete. There's no more stringy digital copper on the pulse that are out there and then to address the concern about Making people reluctant to form a CD because the possibility of general obligation bonds as I was talking to all of the various select boards in the 17 towns It came up about, you know, they were people really were Really appreciated the fact that there was this financial firewall between sorry the technical term between the Between the district and the municipalities that said I also had folks in municipalities come up to me and say How can the city or town? How can we invest and I have to tell them you can't it's not that's not really Unless you are contracting with us to do a particular project. That's not really something you can do But as I understand it I expect that if they're issuing general obligation bonds That still has to go in front of the voters So the voters of each town would presumably have a chance to say I don't want my taxes to pay for this Or I do want my taxes to pay for this So I'm I'm not sure that that's as big of a problem as EC fiber said This is one of those one of those small places, but I think CV fiber EC fiber might be a divergent opinion a little bit And that could just be because of where we are. I mean they are cash flow positive. We are We have a bank account of donations right now. So we're a bit earlier in the process Each 160 also designates the think Vermont Innovation Fund to help provide technical assistance grants to Vermont Communities planning broadband projects. This is this is great. This is super important We get back to this technical assistance or planning idea and making these resources available to us That will help us get off get off the ground super important There's language in there that says that it's offered to communities and I would just suggest just for picky detail sake that we replace that with municipalities because Arguably the communications union district is not a community. It's a municipality And so here's me being a broken record H 160 establishes the broadband expansion loan program We love this CV fiber would definitely want to partner with the state with this and hope that if this passes We will be engaging with the state in this as soon as possible But you say the minimum is 25 down three out We're going to build modern broadband infrastructure and ought to align with what our stated statutory goals are 100 100 That's on page 8 on page 160 as introduced so Something at all up we have the chance to build up broadband right to bring it to everybody Literally everybody and we can put we can leapfrog these 1990s era technologies and we do that on a statewide scale It really requires us to be a little bit more ambitious on setting our Minimum standards those minimum goals for the whole span of bills that you have in front of you today so do you have a question on the The point you raised with regard to the broadband expansion Loan program and this may flow through to some of the other Points you made here with regard to what are the minimum standards that we should be holding ourselves to and certainly state money These things I'm an EC fiber customer. I have the capability of getting 100 100 or even faster. I think so I actually only get 25 3 Which use me So I Have the ability to get much faster. I choose to take only what I mean sure I just want to be clear the point you're making here is the ability to get the right as opposed to What what people would actually be willing to take? I think actually not a lot of EC fiber customers actually take that highest level certainly the highest level I think most take 25 3. Yeah, and the 25 25 20 it costs $74 and the 700 700 costs around $150 so if you average the how much all of their subscribers are paying It's a little bit over a hundred dollars. So There's a spectrum of people who are you know, there's a bunch of people certainly taking the lower level There's plenty of people taking higher levels as well So technology for Fiber cable some of the more modern cable protocols can do this And there are some shorter range wireless that can do this as well. So could you potentially have? Fiber fixed wireless Program that could do this So fiber some of the more modern cable infrastructure in short-range Wireless right. Yes, it's fixed wireless Maybe maybe not. I mean there are some 4g protocols I don't know that we're they're being used in Vermont that do support those higher speeds 5g there's definitely some that are being touted under that umbrella of Offering those speeds as well and actually quite quite a lot faster than that Issues with 5g. I won't go into right now. We're not Okay, I was just gonna say what we're talking about here for me building Minimum capacity of Not that they have to be To remember my question is I learned a little bit yesterday. I believe that I asked about Fiber versus cable and it was said that you could run fiber from cable with certain Technology is that correct? Sure, I mean you can run fiber from copper as well I mean it just depends on how you kind of architect the network So I guess my point there is if you have an area that's served by cable And it's being extended. Are you saying also that extended with fiber even though it may cost more to Transfer it. I mean so Extending the network again, there's this notion of middle mile Whether you're extending sort of that this backbone or whether you're extending the links to the individual houses And even when we have cable infrastructure a lot of them that backbone that middle mile is actually already fiber So look at trans video in Northfield. They're backbone in the village of Northfield. It's fiber What they use to bring the that last mile to the individual houses is cable Doesn't have to be trans video could String fiber to the individual residences and offer gigabit speeds. They have the capacities. It's just not not their business model So Jeremy that Seems one of the critical factors of this is It's easy to do the build out but that take up rate take rate and So in driving Costs down you get the big upfront cost to make ready I'm wondering if you comment on ways to drive those costs down And on the other end you have the individual drops to the houses, which are sometimes quick and easy, but a long driveway Can be really prohibitive and And I'm just I mean I'm thinking that people who live on the end of the dirt road Are often DIY people who would be completely willing to bury a conduit themselves and do you Anticipate working with customers that way to drive down Yeah, I mean as I understand it the way you see fiber does it if they essentially say if the drop is any longer than 300 feet the customer is essentially responsible for Figuring out how they're going to do that whether that's paying EC fiber to pay the contractor to do that construction or in some in some real way for the customer to do that themselves So yeah, I mean I think that's I think that's a possibility There's also you know going back to representative Higley's suggestion about like hybrid technologies You can also use short-range wireless technologies if you have somebody on the top of the hill There's no poles to get there and it's all ledge and you're not really going to easily get a cable up there It's perfectly possible to build a point-to-point wireless connection and give them awesome speeds That's not something that we're like planning on to point widely, but it's something we've certainly talked about so if you're Far up there. We've got line of sight Maybe not always the case either, but we can get line of sight and get a point-to-point wireless like yeah You can still you can still hear to those speeds That's possible Yeah, correct me if I'm wrong, but if you take fiber off cable You're still limited to whatever spaced cable can Yeah, sir, so if you imagine you have a big sewer main and it feeds into a smaller sewer main there's that's a choke point I mean it's only going to flow as fast as the smallest link in the chain Docsis which is the cable technology and twisted pair which is the phone lines can all go up to a gig It's just dependent on the distance so if if there is a Facility that is really tough to get that last little bit depending on how far it is from how far we can get the fiber It is possible to use that for the last connection and still have phenomenal service, so I Guess a question would be are you recommending language that specifies a particular transport medium or particular speed speak me People don't care about the medium. They just want to be able to watch the cat videos The internet is a series of tubes for the cats. There you go so I want to dig in a little bit on the Part of your testimony at the top of the second page which gets into the geobahn discussion and We're getting various signals In fact, I would say even within the EC5 our community we're getting a very simple we heard from Michael Bermbalm yesterday and I just want to Go through in some grand party how as you are kind of building your business model here Potentially adding additional towns to the to the CUD How do you think about how this could be helpful to you? You know where the potholes are You've got land that a little bit here But you know I'm thinking about this in the kind and this is something you've said in your testimony that Town should absolutely Have the final say as to what they're putting their taxpayers. I'm hope for it At the same time, maybe you've got a town that has joined your CUD That municipality that CUD decides at some point two years down the road Yeah General obligation guns is is a place that we should turn At that point does a town have the ability to say we don't want to be part of the CUD anymore because I'm trying to think of Just from a practical standpoint how this works as you're kind of building the business model It's your move. Sure. I mean so this notion of economies of scale doesn't Makes it very difficult. I was gonna say it doesn't make sense But it makes it very difficult for a single town to go alone. That's not to say that they can't so And we've heard testimony about this that you know when New Hampshire and solidators work with the town, of course That might not be possible here yet, but it may be with age 160 And we haven't looked at that business model closely something we're interested in so sure so It's I mean it's a possibility, but I mean I'm as a select board member I'm I'm also a fan of local control and if the town decides that the best way to have to get those those economic development Benefits is building their own network. Okay, then there's a procedure for them to leave the district and that's that's okay We would hate to see them go, right But on the other hand I hear more about the town not wanting to have that responsibility And I'm wanting it to work, but I have had towns in my district say Again, how can we help? You know, can we can we do this? So Montpelier for example is a CUD member of both EC fiber and CV fiber and there's a reason for that It's because they they're almost 100% served by cable and people are still chomping at the bit Everyone I talked to Montpelier most people I talked to a Montpelier still want fiber and I I can understand why and And There might be more appetite in Montpelier to build something like that I don't I don't get the sense and this is purely anecdotal. I don't get the sense that they would want to go it alone But I would I mean I guess I would support if they want to go it alone Then okay, if they're gonna find this much more expensive for them to do it solo then it is with a kind of our consortium of 17 towns so with a consortium of 17 towns I'm sure all of them don't agree You know, there's there's there's you know a lot of turn attitudes particularly on something like geo-bonding so What I'm trying to get my head around is Isn't there any place for geo-bonding when you've got a consortium of 17 towns Probably with a variety of different financial capabilities and demographics of Perspective subscribers to to fiber service. Is there any way to kind of bring that group around? the idea of geo-bonding is something that works for this Municipality that's been formed by these 17 paths this year sure I mean it's going back to the Montpelier example The reason that EC fiber and the reason that CV fiber the reason the EC fiber has not built in Montpelier to date And the reason that CV fiber right now is not really looking at Montpelier is it requires a different business model The density is different the take rate is different competition is different There's a lot of stuff already in the polls. There's a lot of there's a lot of buried lines So it's much more expensive. It's it's a different landscape if Montpelier came out and said hey We want to invest in this as a municipal infrastructure project and we want you to manage this We would say okay. Now we can look at the economics and it starts to look like That's something that we could do because that's not us chasing after how we're going to make it happen They could partner with us and essentially contract with us to build them out and I've told folks in Montpelier In very city in very town that have pretty pervasive Amounts of cable. It's like you're not really on our radar for the first couple years frankly Just because it's a it's a harder It's a harder situation. There's people in there's people in Roxbury and Elmore and Orange who will Sign up in greater numbers and even though we're this public entity. We still have to make the business case We still have to pair bills at the end of the month. There's still expectations that the business has to work So we're going to go to the places where we can serve people we can meet our mission and we can make the numbers work So one could look at geo bonding authority as Simply a another tool on the toolkit for CUDs to find a financial Modeling path to where you're trying to get to A concern that I have But I'm trying to alleviate in these conversations is does it impair you? just the existence of that ability for the CUD to take that does it impair you from Trying to bring your consortium of 17 towns That threat which sometimes could look at it as Geez if we join CV, you know, we're gonna we might somehow be on the hook So, I mean, I mean that that language will always be brought out It was even brought out when I pointed to statute and I says actually statute right here says that this is impossible, right? So but it was it was brought up so in new communications union districts. Could that be an impediment? Maybe but again being able to point back to say it's always the citizens vote on that bond issue That would be the things stopping it from affecting your taxes at all So what would affect it it could but the margins that people voted to join the communications union district and The language that I heard from the select boards who joined it after it was created I'm If we had a 10% reduction in support, we would still pass in every town it passes unanimously in a number of towns. So I'm personally not not convinced that it's going to make that much of a dent because the ultimate decision for Taking on that debt still lies with the voters Capacity to How how your CUD formed so were these paid entities that kind of pulled this together was someone paid to organize this Are the board members paid like how has this come together? Sure? So I'm on the Berlin select board and town meeting 2017 I Should back up. I got a lot of complaints from residents of the town of Berlin about their internet service Wherever they were and I put out a survey to the town Informally from porch forum or whatever and and asked a bunch of questions and one of the things came up was about internet service so I thought about it and thought about it and I'm going too long with my history lesson here. Please. Please stop me and as a Technology geek myself and as someone who teaches networking. I sort of know the lay of the land I know how to build networks. I've maintained them professionally before and I was looking around and trying to think about, you know What's what's the way that we could make something like this happen in Vermont because it I wasn't seeing any motion in building out of actual actual no-joke broadband capacity in Vermont and So I started looking around at different models and I Found There's a there's a wonderful podcast the community broadband bits podcast and I was listening to Irv and Carol from EC fiber talk about what they did in Vermont. I'm like, oh, wow This is already happening here and I became aware of that that effort and so I actually brought to in 2017. I brought to I Brought to town meeting as a just a floor vote. I explained the situation I said is this something that the voters of the town of Berlin would be interested in pursuing I said I was gonna spearhead this and it was unanimous. Yes, including I should say the governor is a resident of the town of Berlin Right up from the left Yeah, and what capacity were you Was it wasn't a paid capacity? I'm as a select board member. I mean select board members do get paid a little They get handful of coins at the end of the year Sometimes sometimes if we're lucky, that's a pay raise and so and so I started learning more about How the communications union district worked I met with Carol I met with Irv. I said at the meeting in Berry City in October of 2017 after I had heard from the folks in the town that they were interested in this and I met with elected officials from Plainfield and Middlesex and all over central Vermont and Irvin Carol came and gave her presentation I presented my vision. We all sat down and just chatted And then I started meeting with other select boards It was a select board member for Middlesex who took this back to Middlesex and voted to put it on the ballot for 2018 town meeting to happen in Plainfield and I basically talked to Almost every select board in Washington County and the Williams town Elmore did it on their own and no, I was not gonna be paid for this I was doing this as a volunteer in my capacity as a select board member and I just chased down all these people went to all these meetings and Explained How communications union districts were formed I gave them as much information as I had about this and then slowly but surely Started to come together. I think we had 12 towns And it'd be 13 towns that voted on a town meeting and it passed unanimously What's that in 2018 so March of March of last year and it passed in all those towns Berry towns town meeting doesn't happen until May they passed it there The town of Cabot the town of orange were added later by a vote of their select boards to apply To enter our district And we have a pending application from the town of Woodbury to also join So each town appoints one board member none of those board members are paid as a matter of fact I made the last time I was in here and made this sort of like money shakedown joke But now it was we were much more serious about the money shakedown of our board members And the reason that we have $5,000 in the bank right now is because our members put that money there our governing board members I should say put that money there So no, I mean it's we are we are paying for the privilege to serve in the capacity of this governing board So I'm just thank you. That was helpful. I'm trying to kind of just get after What are impediments to this happening in other places and so, you know One of them that I suspect is this, you know, who's who's going to do it? And so, you know, not to ask you to teach your own horn, but as is the case in many places You know one inspired individual That is, you know getting the ball rolling and that worries me, frankly when I think about the entire state That we're just relying or hoping that there will be You know at Jeremy and send in all of these corners of the state Well, I'll even go beyond that. It's beyond the entrepreneurial idea It's also kind of relying on folks who have come before you to help the next person, of course And that's, you know, as helpful I think as that has been to date What is that about there? Putting together a toolkit. I mean, I kind of scrabble together my own toolkit of documents and data in my presentation and You know use my position as a select board member for some credibility there and was able to talk You know select board member to select board member and say yes I know these you know these issues at the municipal level, but yeah Hand to be able to hand somebody a package and say give that not only technical Assistance, but also, you know, what's the what's the kind of the political process, you know Establishing communications and talking to select board members and getting community buy-in That's an important. It's an important process that had I not sort of done those sorts of things before I wouldn't really have known I wouldn't have known how to proceed as much and people who have approached me saying I want to start a CUD Here or there or wherever there's like, how did you learn how to do that? I don't know. I just I just did it But then they ask questions. They say, what do I do next? That's why just keep feeding them all the data that I have all the information I have and then they go and do the like work And it's my I'm I agree that the toolkit would be really helpful, but people do have to take responsibility In their own areas to do stuff I mean, I don't mean to be you know, they're not just gonna be handed down from Montpelier every you know, sorry Because Montpelier's not So So speaking of the tools we have the CUD is this tour operating with but obviously the Areas of need the areas of feasibility don't follow town lines As opposed to like a ready can incorporate sections of towns so I guess I'm wondering about that the Benefits and liabilities of the CUD as it's defined as opposed to something more flexible already or a virtual community or So, yeah, don't don't get me wrong radio districts are great And as a matter of fact, you'll find that what's written rural economic development infrastructure And it does have the flexibility of going you know taking a part of a town or part of two towns And I think it's a good model and you'll find that a lot of the language and statute For the ready districts was simply copied and pasted communications union district statute, which is Which is good because I think it's it's good language for the most part I think one of the things that ready districts may run into though is this idea of economies of scale It's gonna be much more expensive to do this in a part of town or in one town or even in two towns and make it Financially feasible. That's not to say that there aren't other models out there that we are not currently considering That couldn't make that work but they're out there and Actually, but I've talked to the folks from the Newbury ready net projects on Tuesday and actually suggested that one of them One of them visit here today, but they were they were all hooked up Because they want they wanted to weigh in on some of these things too because they are They're looking to do the same thing but a much from a much smaller perspective with the different business model EC and CV seem to be building New networks from scratch and new utilities from scratch Can you talk for a minute a quick minute about the the economics of trying to do that instead of partnering with the first lights? The consolidated it's the Comcast the pre-existing utilities and leveraging their economies of scale to build out to your particular region sure So one of the things EC fiber did I can go to them for a moment is they they use some of the existing Fiber capacity that was already in place from the Vermont telecommunications authority So they were able to take advantage of that, but realizing that In a certain in a certain way CV fiber and EC fiber are competitors of those entities It's would be rather unlikely that they'd be willing to you know light up strands of their fiber to give us access when it could conceivably Push down their their revenue So couldn't it work it's possible possible But the general consensus from everyone that I've talked to Here and there is that Not really gonna happen it has not really happened in other parts of the country where you have a major Telecommunications company offering part of their network to a competitor. It's just not I really happened I guess what I'm picturing is something like the CUD says alright. We need to light up everybody in this Circle for lack of a better geometric shape Take bids from the utilities that have the established infrastructure Here's the minimum 100 to 100 that you're going to provide Since internet is not a regulated utility you say and here's the price you're gonna charge these customers How much is it gonna cost you to do it? Michael Bernbaum who's here yesterday at Kingdom fiber went through this exact process you're talking about up in Craftsbury Where they thought it was important for the town to go out and put this out to a competitive bid It was part of their bidding process It is in the town of Berlin too and they put out to bidding process and there were some of the major providers who bid on the process and kingdom fiber came in way Under the asking price of the other of the other bids and at speeds that were far beyond What they were offering so this is this process has happened I mean it's it's not data since that's one anecdote But as I understand it that process turned out in favor of the the homegrown local fiber provider So we talked a little bit about My family and their hard pancake pictures Sorry Talked a little bit about the capacity to do this and you know the volunteer effort really that's underway to do this With regard to the providers that are in the CV territory, which of course Not operating on a volunteer Scale and are spending a lot of money in this building trying to influence policy have any of them come to you to suggest Solutions to say with a proposal for hey, we understand you're trying to do X. Here's how we could do it Considering, you know, this is what they do No, I mean So there is a local provider within our district I kind of reluctant to talk about them too much This is still sort of happening that I would like to partner with and that we have a way that we could reasonably partner with But that's hypothetical, and I don't know if it's gonna work out Well, I've taken it upon myself because Regardless of what happens in this room. It's my intention to build out fiber the premises everywhere in our district Period so these are tools that will help us to get there more easily and more more cheaply for everybody But I mean, it's it's it's going to happen Thank you very much Well, thank you for thank you for having us here I think what you'll hear probably is a fair bit of commonality in terms of our thoughts I know I know some folks that submit comments on h95 hospital 95, which we are in agreement with Just in terms of how to move forward I think you'll hear some commonality So I think what you're going to find is Velco certainly in the deus very supportive of the committee's efforts to address the broadband issue Obviously a critical issue for them on And we also share the belief that if we're going to move from where we are today To what is an enduring permanent solution there's a paradigm shift necessary It's very difficult to do this kind of incremental So thinking about what that intern solution is and how we move as I said from from where we are today To the to that endurance solution is is is a big step Just want to point out just remind folks I know when we when I was in kind of doing Velco one-on-one there was a little bit of I know you guys were drinking more fire hose So there was a little bit of confusion around the difference between Velco in the deus and actually the The fundamental differences relate to fiber as well as electricity So we are we are kind of that middle mile think of us as the interstate highway system of Vermont or of New England Whereas the distribution utilities are really the roads in the towns and cities so the smaller roads We play the same role in fiber the fiber that we've put in Basically was put in to provide connectivity for our transmission system And so it's in the same locations and it is that middle mile in for interstate highway fiber as well Again put in with the idea to support our system But obviously as the electronics improve on either end of that system there is capacity that's made available as a result of those upgrades As we think about House bill 95 and kind of where some folks are talking about moving to us moving to a paradigm where the utilities Effectively quote-unquote do broadband or become the primary engine behind the deployment of broadband in Vermont Whether we define that as fiber to the home whether we find that as a wireless solution or a hybrid Which is probably somewhere near the answer I think there's a lot to be addressed and assessed before we move from where we are to that being the end game solution There are certainly some pros and cons and intuitively it makes a lot of sense But I think when you start to dig under the surface in terms of whether the utilities are best positioned to deploy that so that ultimate enduring solution I think remains to be seen What we believe Are the right next steps forward? Really from my perspective and I made it for a little bit from from the folks You're going to hear in the DU community on this, but is number one We think actually having DPS do a much more detailed study That ground truths a number of things number one is and I know that there's a lot of work going on this committee to do this Right now, which is what does success look like? What is that enduring solution? Is it fiber to every premise in Vermont? Is it wireless? Is it is it a hybrid of the two? What kind of speeds are we talking about when we think about defining speed for a future generation? It's not about a defined speed It's about something that's indexed to an FCC or some kind of industry norm And we want to be at 35 or 50 percent or 70 percent of the optimum speed or more Sustainably through the future and that that informs how you think about the infrastructure you deploy because much like the Velco Farter system you want to deploy a system that's got the ability to increase in capacity as Electronics and technology evolve and as the speeds evolve around the country So bottom line is we don't build a system for today. We build a system for tomorrow, and that's it is a very different paradigm Other things that we could ground truth really getting Fantastically accurate data as to what is on the ground today in Vermont. What we're what is being served? What isn't being served? There are different definitions We've looked as you well know at a number of pilot opportunities and we're struggling to Fully understand what's on the ground today and what's what is served versus unserved? What's the sports beads are people being served at is that sufficient? What are expected uptake rates? How much how much are people really willing to pay incrementally pay for this service because that obviously informs how you think about a funding model? And making sure that if we actually build this system that it's going to be fully utilized in Vermont I think that's an important thing to ground truth. We've done some of that and I'll talk about that in a minute briefly There certainly are some models from other states I know you probably looked at a number DPS is looked at a number I think there are models from other states where there are significantly rural populations that probably could serve to inform an ultimately enduring solution With utility with utilities potentially with utilities through the through the creation of a telecommunication or broadband co-op model Which actually potentially avails yourself you would avail to the state to a different level of funding a different style of funding Whether it's RUS or some other level of funding much like when one electrification was deployed in Vermont and other places decades ago So I think a Funded study at the DPS that really looks at what are the different opportunities to move that move to that enduring solution? What are the things that need to be ground truth and in parallel with that? I don't I don't want the idea of a study to make it sound as though I'm suggesting or we're suggesting that we stamp Pat is the continued progress towards a pilot Finding we have we have as folks are on this committee are probably aware DPS reached out to Velco a number of months ago six or eight months ago To seek our help with thinking about how to define a pilot location where we could actually Deploy a broadband pilot again to be defined in terms of the solution ie fiber of the home or wireless or both Where we would be able to through that pilot Learn and as I say ground truth a number of different facts that would help inform how we think about a statewide solution a broader solution I think I know there's a lot lower. I know representative civilians on a lot of work We certainly have a number of conversations around how to define a pilot or pilot sites We have actually in some of the towns where we have looked at we have gone as far as ground truthing How much would it cost to build infrastructure to every premise in the town? What would likely uptake rates be and how would that inform the the financial viability based on the models? We're looking at What is the service today and how do we think people respond to a significantly higher speed? So we've done a lot of the work I do think a pilot funding a pilot and moving towards a pilot in the near term We would love to see a pilot get off the ground within a year at least in one or two or more communities again That could inform we think having a study done about an around enduring solutions and a pilot to address and help us inform some of The questions that remain is a really good way for that. That is all the comments that I have I So with regard to Yes, so I would love for you to be as Specific and granular as possible about what you need. Yeah, and what the impediments are absolutely we hear this discussed vaguely generally And you know, it just kind of Keeps getting tossed out as you know, it's a problem I can certainly take it away and come back to you with much more detail I know I know Mike Lucy who works for me and I know you're familiar with Mike Has done a lot of that working with clay at the department to address Where we think the gaps are in the current maps versus what we would need to really fundamentally Ground truth. In fact, we have actually we've done a bit of that some in your some in your territory And some in the Morrisville hardware territory We've actually taken a step of driving around the towns to look and see what is actually physically there Versus what's on the publicly available maps and there are significant gaps So I don't have that data today representative, but I will certainly bring it will certainly get that to you And are you and you're talking about wired and yeah, mostly wired but wired and wireless Yeah, really getting specific about the nature of the I mean, we have some proprietary issues and then With regard to the pilot the same question that is starting to really occur to me And CUDs, which is what we're starting to really circle around we just talk about this pilot of pilot and CUDs like how that would be in service to well One could argue that the CUD approach maybe is not an enduring solution and from a statewide perspective But I do think a pilot a pilot and I think Patty Richards may talk a little bit more about what WEC is up to Regardless of how a pilot move forward and the pilot is done through a CUD structure We're still going to ground truth a lot of the same things right we're going to understand What it costs to deploy fiber? What the uptake rates look like we're going to begin to get an understanding of What are the ongoing operation and maintenance hurdles that that a broader fiber system presents and who is best positioned? To do that kind of ultimately in a centralized way So I don't necessarily I think I think however we feel and you and I've had this conversation However, we feel we can wherever we can get the most traction so that if we actually do a pilot the pilot is successful And allows us to learn anything we learn that we don't know today I think helps us move towards a more enduring solution and so just to be a little more specific the pilot is around utilities Bringing out Yes In the telecom plan the department talked about their middle Fiber and I think they said the utilization rates have been disappointing. Yes And I'm sort of if you build it. They still won't come And I'm wondering if you're finding the same thing Of course are the the the initial the initial catalyst for Valco just during the fiber Which is to have a much better real-time understanding of what's going on on our transmission system The fiber spent tremendous benefit to Vermont to Valco and ultimately the state of Vermont I think I may have mentioned the last time I was here There was a there was a fault on a PB 20 line Which is the line that goes through Lake Champlain over to New York State the other sides operated by Nipah a helicopter Impact of the line in the New York side and within three electrical cycles because of the fiber of connectivity We had we were able to re-switch the system so that didn't cost cascading out just as room in Vermont So that kind of real-time information is critically valuable beyond that We've done some things to utilize that middle-model fiber like connecting the Northern Vermont University Lyndon and Johnson That's what it was the third party the third party So we've begun to do some of those things kind of that are a little bit you could argue outside of our core mission But what's what's happened as I talked what's happened with that fiber is as the electronics on either end of that fiber have improved The available capacity of the fiber that we installed years ago has increased and so there is clearly I mean I think we said something around 50 percent utilization of our middle of that middle-mile fiber for our purposes and the purposes like connecting Colleges, but there is still significant capacity there, and we believe that will only increase potentially as those electronics Is is your fiber within the electric lines in other words So it's not real feasible to do Individual connections. It's more of a You talked about the colleges. That's kind of a direct line Right, so we did we did build some additional fiber to get to the colleges But what you're getting at really more in the distribution space and probably a good question for the distribution utilities is the pros and cons of Running fiber in the electric space on distribution infrastructure One could argue there is a there is a there's a Positive in the sense that you can probably reduce cost by running an electric space Just because of efficiency and that's just a question of the make ready work that you need to do to drop into a space that can feed homes and businesses But there are there are cons to that for example the only people that can work in electric space are Fully trained and qualified electric linemen. That's a lot more expensive than somebody who works in a safer space down below So there are pros and cons. I'm probably not the most qualified person to tell you what those are But all of ours is in the electric So I'm going to ask you the last question sure and then In the context of some of the legislation we're considering including you know this feasibility There's also discussion about a pilot which you get talked about And there's a there's a carton horse question that I have some of the things that the feasibility study look at is Actually enabling legislation that could come out of that feasibility study that would allow some of our electric utilities To actually operate in this space But a pilot project suggests that we're allowing Utilities to operate in that space so again, I'm Just from a legislative standpoint trying to think about the pacing of these things and From my perspective the pace is as fast as possible but also being aware of what can be done and what has to be you know kind of granularly studied from a statutory perspective first so There's a kind of a big thing that we've got to figure out as a committee and that you may be helping us with in the coming weeks What how do those two things put together a pilot where you're gonna you know looking at doing in this in that town? Or an area relative to actually kind of feasibility study I think they're I think they're actually I think they're very Symbiotic together because I think the pilot if we pick the right community and we go about we go about it the right way As I said earlier, I think it really allows you to get real-time Understanding of some of the critical things that need to inform that feasibility study and that ultimate solution That hopefully we can reach and that's enduring for the state of Vermont As I said, I think things around Cost and what's the best way to do it in electric space out of electric space How do we think about funding and maybe we look at different funding models? Maybe we try a wireless pilot in the area that that where that seems much much more apt for in your terms I'm a river Representative civilians territory and see how it works doesn't really work There are certainly challenges topographically in Vermont with a wireless broadband deployment, but let's let's try those Let's see what works. Let's see what doesn't work understand how people react I think it would be great to be able to get some kind of lens into the value if you in the Communities where the pilots are rolled out. What is the economic development value of that increased connectivity do businesses come Do people move to those towns? I think I think there's I don't think there's I don't think there's there's much to be lost in a pilot As long as it's designed with an eye towards That longer-term enduring solution and I'll just say one more thing about that longer-term enduring solution that I promise I'll be quiet and step away which which is if I were came for a day and somebody came to me and said How would you solve the infrastructure problems of Vermont? I would lay out as a what are the biggest infrastructure problems? How do we get to 90 by 50 is a huge issue for that involves electricity transport involves electrification of the thermal sector the heat sector It involves obviously solving things like Shia and making sure that Vermont is a place where we can deploy more renewables not less Somehow as I think holistically about policy and moving policy forward broadband fits in there They're not in silos and if I'm thinking about electrification of transport I'm obviously talking about additional connectivity at home and charging and those kind of Stacking a broadband and enduring broadband solution in inside that broader connectivity Solution I think actually probably has symbiotic benefits synergistic benefits. So with that I will Thank you. Thanks you What thanks for joining us I Haven't mentioned We record all our testimony. So if you can identify yourself in the record, I'm right out of agreement on power on the chief operating officer Thanks for having me Take away, okay, so I'm not gonna John covered a lot of ground he covered a lot of ground that I agree with so I'm not gonna cover What I thought I would do is I had I've been shared some language that the committee has been working up. I provided some feedback on that I thought I'd just review that and then if questions come up, you know take it from there That's great. So the first concept in the language. I saw for age 95 Was very consistent with John said is Really important to be clear about the goal You know the broadband is a is a broad term broadband can be misinterpreted regularly broadband can be talked about without any sort of shared definition between like like minded people and it can cause confusion. So I think it's really important to get specific about What is the objective? Is it last is it five or two the home? Is it a fixed location broadband solution, which is a wired solution? Is it a mobile broadband solution which would imply wireless? Is it a combination of the two? that Without that clear definition of what problem is trying to be solved We're gonna wander around the wilderness for quite a bit as we have for for years So I suggest it's a language that I think can Help there the second concept is I think in any study. It's really important to include the current competing telcos They have a place in this They have a past they have a track record and they probably can have a future and so Whatever study is done absolutely Velco the distribution utilities should be deeply involved in that As organized by the Department of Public Service But I also think including the telcos in all of that discussion and assessment and evaluation is important So I go for some language around that and then Finally around speeds Consistent with what John said as well I'm not a fan of naming an absolute speed whether it's 25 up and 25 down Those speeds are going to change over time the definition of broadband five years ago It's very different than it is today will be very different. It will be five years from now the FCC has a standard Definition of broadband that evolves over time and so hitching the cart to Some percentage of what that FCC standard is for multiple or multiple over time I think is the best thing because as soon as you name an absolute number whether it's 25 up 25 down You're gonna you're gonna go to that number as soon as you get there. You're gonna be obsolete So so hitch it to a standard. That's the way you look longer term and try to future-proof things And the technologies today Thankfully broadband in the past was was typically a hardware solution Where the hardware would be upgraded with new hardware that had physical limitations to it And when that read reached obsolescence that got upgraded by more hardware Broadband solutions today and going forward our software solutions software Runs independent of hardware and can be upgraded without Replacing physical assets and provide higher speed properties and higher speed characteristics Without you know physically having to touch the gear, which is a is a real breakthrough That's kind of the gist of what I the feedback I had provided. I'm happy to discuss No, the other thing I would think about is Distribution utilities offering broadband that's a big departure from our mission or from what our history Historic mission has been it's a worthy departure. I think But in the in the years ahead I think be thoughtful about what is the best use of distribution utility resource and thinking Right now almost all of the DUs in the state are really focused on carbon and getting carbon out of our economy Vermont has a real chance to be a world leader in doing that. We're a leader today We have a chance to continue that leadership position and be a role model for the rest of the country in the world Developing a new broadband line and offering those services directly. That's that is not trivial That's a brand new skill set and so like any organization Focus is where you get your best results. So just be thoughtful about What's the best use of DU? distribution utility resource and focus right now Is it is it you know helping to solve the broadband problem? Or is it? You know continuing the attack on getting fossil fuels out of our economic activity. I would say it's I Am inspired by the fossil challenge We're happy to help with the broadband But if we're gonna be from my position if we're gonna be Delivering end-use broadband to customers. That's a you know That's a big new service line that will take a lot of our resource to stand up What you say, but also I've seen some Synergy in there. Yeah, that you know if we can Move electrons instead of people That's that's a huge step. Yeah. Yeah, I mean broadband definitely is an enabler to a lot of the clean energy challenges we're trying to implement You will find for our own use most of the Broadband need for energy use cases. It's pretty small bandwidth stuff. It's not we're not We're never gonna be octet to implement our solutions. We don't we don't physically need these you know huge pipes to do that That's consumerized stuff, but you're right. There's a synergy and there's an adjacency. Absolutely Just noting that the bill was as drafted lists electric utility distribution Operating I'm wondering about the technical side of if if fibers run in the electric space Does it require? Does that require? Every connection to our house every connection to a premises to come off of that space or is there a way of Having sort of drops that would facilitate a local network of Fiber to the premises that could be installed and maintained by by Communications workers rather than rather than the line workers. Yeah, you see what I'm asking I do I do the and don't confuse the Fiber today runs on our poles just not in the electrical space, right? The option of running in the electrical space is one that's been talked about so that's why I'm asking about it Yeah, and frankly, I don't understand the fixation on that the as long as it's on the pole It's gonna be running it's gonna be running roadside, you know, yeah Passing whatever whatever residents are located on that roadside. So the physical placement on the pole in the electrical space I think is a that's not a it's to be considered But it's not it shouldn't I don't think it'll affect it should affect your decision making on this You're thinking on this too much As John said if it's in the electrical space that Confines the types of workers who can actually touch that right and so fiber below the actual space actually is a more flexible option Right, but but yeah the the typical The typical setup now is You know fiber drops are done to you know a cabinet in front of each premise And then that's what is replacing happens and then goes, you know that last however many feet to the actual home So there's a fiber drop at each premises. There has to be some sort of a splice connection there so that the You know the the bigger the bigger fiber can get down to what's necessary to go to the house But that's you know, that's that exists today in a lot of areas of the state I you know, I'm one of the lucky people I live in a fairly rural part of Vermont I got fiber in my house last year. It was like, oh Oh You know, it was it was not a small little construction activity on the road for the better part of a few months and And it was just nice that my local provider was able to do that But that that type of splicing and that type of service delivery is very common and people not to do that all day So Brian, I'm gonna give myself the last question. Yeah, and I Don't know if this has been fully thought through or if this is In its infancy And this is really where we need to go with a feasibility study. So as a highly regulated entity that has a very prescribed business model Talking about providing a broadband Service to customers, which is not a regulated world. How does that? How does that dovetail into your existing model? Is it viewed as something that will be Embraced as part of a highly regulated business model. Is it looked at as a Holding company that is unregulated How will it affect your rate case that you take before the PUC? Have you and others in the room frankly, we're gonna sit and share has that been thought through. Yeah, great question And those are all questions we have it's you I think you can do anything you you want But it's got to get approved and and the model will be dictated based on how things get effectively paid for so You know our our model today is you know very tightly regulated in our our charter Around electric distribution is all part of that regulated business model. We have very very few Unregulated businesses that are fall under our umbrella our operating umbrella One of the questions we would have is exactly what you're asking which is will this be considered a regulated activity or an Unregulated activity if it is unregulated, you know Who what is the funding source for those services and how do they get paid back if it's regulated will it be included in Rate base and then is that is that an appropriate? Investment for electric customers to be making to be able to deliver broadband services to some of the customers Yeah, I don't know the answer to those questions. Those are really important questions But those are ones that you know as these concepts get formulated. We have those we have those questions We don't have the answers to them. Yeah, we're not we're not allowed to give our own answers Thank you, Brian. Yes. Yes Cut this way back because you really have hit a lot of what we were going to share so I'll just Start by thanking you for taking this as you want it's complicated and it's really important And it's important to our communities and it's important to our business as well so, you know thriving Vibrant communities are you know going to help us not leave those rural communities behind so You know the spirit of these comments and what we'd like to do is to be a collaborative partner in this We so we welcome your leadership We welcome the investigation all these questions that you were just talking to Brian about it the very questions that come up in our boardroom and with our leadership team as we talk about You know a lot of attention on what role can we play and what should we do and how do we add value to this and those issues about you know regulated utility jumping into a Competitive risky Unregulated market, you know what one of our board members actually said let's just stick to our knitting Oh, let's like do what we need to do and do it. Well If you know the history of the co-op We're on very strong financial footing that Rebecca town was just in a week or two ago talking about you know Our a plus bond rating on the first thing we say as well We like we've worked so hard to get on strong financial footing to jump into a risky business Would require a lot of thinking and a lot of analysis a lot of you know being thoughtful so We would expect if we do a feasibility study with DPS those kinds of issues would you know come out those Conversations to do well compensated well trained line workers. You know should they be stringing fiber or should you know Is that the role we play? You know, what is the role? How do we add value? How do we you know help move us along because it benefits our communities it benefits our members As a nonprofit cooperative. That's our primary motivation. It also helps our own business because Our vision for the future about you know, how we're going to deliver cost-effective reliable clean energy Will rely on robust, you know broadband in our communities We're going to want to control when cars are charging and when you know how we're going to control load and shift Peaks and we need those communities to have robust so we're invested and we want to be part of this so As you look at the language One of the things that we might suggest we agree with everything Brian And John had offered in terms of some tweaks to the language, you know Let it be a collaborative probably I think an assessment of what do we bring to the table? We might not bring everything, but we certainly have some things we can bring And we're starting those conversations now with some of the smaller Fiber groups like Mansfield fiber Kingdom community fiber. We're having we're taking meetings now with them basically just say what what do you need from us? You know, how do we help facilitate because we want to see this work, too. So We would say as part of this study or feasibility, you know is an assessment of what do the utilities bring? What can we bring? Where do we add value and how do we help move along? I think I can leave it to you know, we talked about risky environment That's new for us. We could do anything But how much will it cost for us to do it is a fair question So I think that we get teased out too as we do this so we welcome, you know that analysis and I think that's my short version of So so it sounds like you're saying that I think right now that's that's what the conversation our board room and there's no consensus necessarily we have board members are like We should just do this and jump in and others like we no way, you know, this is very risky I think we're just starting from that point of homeless just like okay We know we can bring value. How do we how do we help move it along without jumping all in? Those questions about what's the business model, you know, we'd have to create a whole nother business. We're relatively small Would that pull resources away from you know other things? I don't know how we would do and then the cost-shifting conversation then comes in, you know, we have Different different members have different needs for this, you know, how robust of a system and should we ask You know the 40% of our members who are fixed and low-income Actually more if we put those together over 50 percent, you know to pay for infrastructure that they don't necessarily need You know, is that the right place to go for funding it or not? So your poles and wires A lot of them do yeah I'm not the right person to answer how we're using that it's more for our substations It's not for to write right. You can help me. You know more than I know about our system. It's really just our our subs and managing load so Conducting this usability And and being sensitive to the chair's question earlier. So we have that Department of Public Service currently Listed who is your regulator? Conducting this study Now do you You know, do we put some of you on? Assessment like do you have any thoughts about? should Are you looking at like an advisory committee? I don't know. Yeah, I mean I mean the department So we're asking the department to do it and now consult with us consult with the telecoms the current providers consult with the The municipal entities. There's a lot of players here. We all bring something. Yeah, that's the interesting