Some Vermonters Find the Cost of Newly Expanded Broadband Is Too High 

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• Tim Newcomb

Amid ambitious efforts to make broadband accessible statewide, Vermont is facing a related challenge: making it affordable for every potential customer.

Regional groups known as communications union districts are backed by nearly $250 million in federal funding to build out the state's high-speed internet network. But some are finding it difficult to create a viable business and keep down the price of monthly service for all Vermonters.

The problem is pronounced in Essex County, the poorest in the state. The communications union district that covers the Northeast Kingdom, called NEK Broadband, is launching long-awaited high-speed internet services in Concord, Lunenburg and Waterford. But for a number of residents — especially those on fixed incomes — the $50 to $80 monthly fee for the cheapest level of internet service is out of reach.

Kimberly Petrich, a Lunenburg resident, said many of her neighbors are choosing not to subscribe to NEK Broadband because of the cost. "It feels like we're being price gouged because we live in a rural setting," Petrich said. Comparable service in Chittenden County costs between $25 and $35 per month.

Other districts across the state are also grappling with the challenge. A federally run program that provides discounts of up to $30 per month for eligible customers will run out of funding in 2024, adding time pressure in the quest to ensure that Vermont makes good on its promise of broadband for all.

"We're still struggling trying to figure out how to make it completely affordable," said Christine Hallquist, executive director of the Vermont Community Broadband Board, which oversees the statewide network of communications union districts. "We've got the CUDs in place to get everybody connected. Now we're intensively focused on that next level."

Vermont's innovative model for building out broadband was designed to fill a vacuum left by private providers, which saw few financial incentives in expanding service to rural areas. The communications union districts — of which there are 10 statewide — allow municipalities to band together and build fiber networks using bonds, loans, grants and gifts.

There have been some success stories, but the task is harder in remote areas, where the cost of construction is spread across fewer clients. There's also less competition to provide internet service there than in more densely populated parts of Vermont. That means rural communities — some of the poorest in the state — can end up paying more per capita.

"It's a twofold issue," said Christa Shute, executive director of NEK Broadband. "One is the people and what they need. And the second is that we need to create a sustainable business model."

There are plenty of obstacles. For starters, few Vermonters are taking advantage of the federal discounts, known as the Affordable Connectivity Program, according to Holly Groschner, a telecommunications lawyer who serves on the Vermont Community Broadband Board. One reason: Would-be subscribers need internet access to complete the online application. Groschner also thinks social service providers have done little to help qualifying Vermonters trudge through the time-consuming application process.

At NEK Broadband, the district set the lowest monthly fee at $79.95. A $30 subsidy from the Affordable Connectivity Program would bring the customer's cost to roughly $50 a month.

For many low-income residents in the area, that's still too much. Sharon Eaton, board president for the Gilman Senior Center in Lunenburg, said many of the seniors she serves can't afford even $30 a month.

"My road was one of the first ones for the new high speed hookups," a member of the senior center recently posted on Facebook. "I am retired and on a fixed income...cheapest plan is $80 a month...more than my electric bill...crazy! I don't qualify for the senior discount program through the government, and have few options for the internet!"

The affordability conundrum is not entirely new. F.X. Flinn, chair of ECFiber — the state's first communications union district, formed in 2016 — said he focused on ensuring that it was on sound financial footing before tackling affordability.

"I feel no need to try and keep prices low because there's plenty of people out there who can not only afford them but think it's no big deal," he said. "But I can take the surplus and create a fund for people who can't afford broadband."

In 2021, he did just that, founding Equal Access to Broadband, a nonprofit tasked with using ECFiber's net revenue to ensure that qualifying customers received subsidies. Staff members helped residents apply for discounts under the Affordable Connectivity Program, and the nonprofit chipped in an additional $20 subsidy for customers who qualified for federal aid. That brought the overall average fee to around $20 per month — a sum that Flinn said most found affordable.

Earlier this year, though, ECFiber shuttered the nonprofit after it struggled to reach the residents who would benefit from the program. Flinn said the org will continue to offer $20 discounts to qualifying households, and he hopes to resurrect the nonprofit in the future. He's also inspired Shute, who wants to replicate Flinn's model in the Northeast Kingdom.

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• File: James Buck
• Christine Hallquist

At the state level, the Vermont Community Broadband Board has created a team to address the affordability problem. It will begin with a number of "digital equity listening sessions," to be announced later this month.

Hallquist, of the statewide board, wants to encourage the local districts to reduce the overall price of broadband. "We can design rate structures that will give people the ability to come in at a lower entry fee," she said.

With that goal in mind, the board is proposing incentives for federal funding to internet service providers that can offer a $45 plan for households that are eligible for subsidies. That could drop the cost to about $15 per month for those customers.

But Flinn worries that the deep discounts won't make business sense for some communications union districts. Shute feels the same.

"We cannot put that price point in place," Shute said. "That's literally less money than it takes to operate the network."

For some residents in Lunenburg and other rural areas, these questions of affordability have real-time ramifications.

"Everyone talks about getting high-speed internet into every home, but they don't think about seniors or other fixed-income people," said Eaton, of the Gilman Senior Center. "The income in this area just isn't going to allow for the current cost of broadband."