The headline and article in Saturday’s Valley News about ECFiber (“VT Telecom Panel Snubs ECFiber”) left a seriously misleading impression that the fate of a grass roots effort depended on the Vermont Telecom Authority (VTA). In fact, it does not.
ECFiber won near unanimous community support on town meeting day. As has always been the case, financing will be up to private sector financiers and the growing numbers of Vermont citizens who have eagerly indicated a readiness to subscribe to world class fiber-based services. It will serve upwards of 60,000 people, bringing the entrepreneurial economy to their doorstep.
ECFiber has received a ringing endorsement from Atlantic Engineering Group (AEG) , one of the foremost design/build telecommunications engineering firms in the country. . AEG has successfully built 65 Fiber-to-the-Premises networks including 16 municipally-owned ones AEG has signed a letter of intent with ECF for a fixed price construction contract covering 75% of the projected capital expenditure. The balance of the capital expenditures includes the “pole make-ready” which work must be done by the utilities that own the poles, and is governed by Vermont law and regulation, and the design and construction of the network hub, which ValleyNet prefers to do on its own. ECF believes this agreement with AEG will provide a significant measure of comfort to private financiers by essentially eliminating the timing and cost over-run risks associated with a project of this magnitude. AEG reviewed the same data presented by ECF to VTA, and found: “AEG considers the ECFiber network design to be sound and has tested the ValleyNet cost figures using its own proprietary pricing models … and has concluded that ValleyNet’s figures … are reasonable and achievable. AEG believes that the execution schedule…is reasonable and will commit to meet that schedule.”
The history of ECFiber’s request for financing from VTA is as follows: ECfiber would have been content with a very nominal amount from VTA. However, VTA’s Chairman stated publically that VTA could only bond for a minimum of $10 million. Hence, ECF submitted a proposal for discussion for two-tier financial support, of which only $4 million (not $8 million as reported), was direct lending, with the balance in escrow as a contingency fund. Further, ECF continually expressed willingness to accept any sum, no matter how small, since the purpose was only to attach some financial gesture to the letter of moral support VTA had already provided. Once VTA took the position that it could only fund a project with near-AAA credit rating, ECF withdrew its request, since no start-up venture can meet that standard. Private financiers understand this. (The VTA has since provided ECF with a $25,000 planning grant, saying “The ECFiber application meets all the Broadband Grant goals.”)
By its decision, the VTA refused an invitation to contribute toward creating a more favorable investment climate for ECFiber. In so doing, its actions – unwittingly or not –have had exactly the opposite consequence. This is evidenced by a wide spread impression created by VTA’s actions and subsequent press coverage in the Valley News and other regional media that VTA had not just snubbed but “killed” the project.
Reports of ECFiber’s demise” are dead wrong. On Monday, April 21, 20 towns presented their signatures to the Interlocal Contract that establishes the venture as a legal entity. An Executive Committee of delegates was elected, by-laws adopted, and a committee structure for carrying the project forward in association with ValleyNet, the non-profit operating partner, was established. . ECF now has all the elements in place to approach the private capital markets with a final prospectus, and has already received encouragement from a number of interested investors. Nonetheless, given the turmoil in the capital markets, this is expected to be a much longer process than would have been the case a year ago. However, ECF is confident that it will secure the municipal capital lease financing upon which its business model is based, with the continued and growing grassroots support that has made this project possible.
Providing future economic opportunity and security for the towns of our region is not an exercise for the faint of heart or for those fearful of failure. Inaction will condemn communities and businesses in our region to a far more ominous set of social and economic risks.
ECF now has all the elements in place to go out to the private capital markets with a prospectus, and has already received encouragement from a number of interested investors. Nonetheless, given the turmoil in the capital markets, this is expected to be a much longer process than would have been the case a year ago.
However, ECF is confident that it will secure the municipal capital lease financing upon which its business model is based, with the continued and growing grassroots support that has made this project possible.
About East Central Vermont Community Fiber Network
East Central Vermont Community Fiber Network is an association of 20 towns in East Central Vermont formed to build a community owned fiber-optic communications network for the purpose of making high speed internet, reliable telephone and telephone services universally available to the approximately 23,000 businesses and residences in its constituent towns. Funding is to be achieved through a non-recourse capital lease at no cost to the town taxpayers. At present more than 3,000 future subscribers have pre-registered for the service. For more information, visit ECFiber’s website at www.ecfiber.net.
Contact Information: Loredo Sola (EC Fiber) 802-236-0735
Andy Hooper (EC Fiber) 802- 249-0673
Stan Williams (Valley Net) 802-384-5664