Built With Federal Funding, VTel's Broadband Wireless Service Failed To Fully Deliver

Mar 25, 2019

Tens of millions of taxpayer dollars have gone toward bringing high-speed internet to the small towns and backroads of Vermont. But one project, a wireless system built by Springfield-based Vermont Telephone Company, has not yet delivered what was promised.

On a sunny summer day in Hardwick almost five years ago, VTel CEO Michel Guite unveiled his company’s Wireless Open World system. Using 156 towers and other sites, such as church steeples, VTel's transmitters were designed to reach vast stretches of Vermont with broadband internet.

“This is really the fastest internet anywhere in the state of Vermont, on any technology, and it's over wireless," Guite said at the time.

VTel didn’t pay for the system all on its own dime; It won more than $35 million in federal low-interest loans to put up the towers, and another $82 million in federal grants to build out its fiber-optic internet service.

In its 2010 application for the federal loan funds, VTel said the wireless network would cover “all of the 33,165 unserved households in Vermont… comprising virtually 100 percent of Vermont’s unserved population.”

But, that’s not quite how it turned out.

“We heard the promise,” said Rep. Jim Masland, a Democratic state lawmaker from Thetford. “And while people in some of the towns were waiting for service from VTel that was supposed to be delivered at a certain date, it just never was arriving — or when it was supposedly there, in fact it was not.”

"While people in some of the towns were waiting for service from VTel that was supposed to be delivered at a certain date, it just never was arriving — or when it was supposedly there, in fact it was not." — Thetford Rep. Jim Masland

Masland noted that VTel actually received federal money for two projects.

One project was to build fiber-optic lines to residences in the phone exchanges it covers in the Springfield area and surrounding towns. By all accounts, that fiber build-out has delivered exceptional internet service. 

“The other part, the part that’s been a boondoggle," Masland said, "was to build, develop, install wireless towers to supposedly serve all the rest of the state, which has turned out to be a phenomenally bad false promise.”

Rep. Laura Sibilia, an independent representative from Dover, is another critic in the Vermont Legislature. She said her constituents have waited for years to get VTel service.

“Building the towers is a little different than serving virtually every under-served address in Vermont, which is what they pledged to do,” Sibilia said.

VTel CEO Michel Guite did not respond to several requests for an interview. But in a 2016 appearance before a legislative committee, Guite told lawmakers the company never made the promise people now want to hold him accountable for.

“A misunderstanding that somehow has occurred over the years regarding our project [is] the idea has been widely accepted that we had promised to serve absolutely every home in Vermont that didn't have service," Guite said in 2016. "VTel never committed to serve all unserved households.”

VTel's offices in Springfield. The company also expanded its fiber-optic broadband service in Springfield and beyond.
Credit Howard Weiss-Tisman / VPR

The VTel story is not new. Critics for years have called out the company for failing to fully deliver with its Wireless Open World system.

Yet VTel’s use of federal money to build its network has new relevance now as the state again works to build out broadband. That’s because the federal agency that funded the VTel project says the areas supposedly reached by the wireless network are no longer underserved, so no more money is available.

Clay Purvis, the state's telecommunications director, said a huge part of Vermont is no longer eligible for the funding because VTel got the funds to serve those areas.

“We’ve heard anecdotally that people said, ‘I tried to get VTel service, I’m in the funding area, but they can’t serve me,’” Purvis said. “And so those are the people we worry about, whether they can in fact get good broadband — and if they can’t, is there funding available to help them get broadband?"

"We've heard anecdotally that people said, 'I tried to get VTel service, I'm in the funding area, but they can't serve me.' And so those are the people we worry about. " — Clay Purvis, state telecommunications director

The new Farm Bill should help with the funding issue by late next year because of recent changes that redefine previously served areas.

But the VTel project and its use of federal money also raise obvious questions of accountability: How many people subscribe? What speed internet do they get? And what is VTel doing to improve things?

“Basically they promised ubiquitous broadband access,” said David Weinstein, the state director for Sen. Bernie Sanders, whose office helped VTel win the federal funding from the Rural Utilities Service, or RUS.

Weinstein has followed the VTel project over the years and has pressed hard for answers. He said the RUS and VTel have refused to turn over information that would show exactly where in the state the wireless signal reaches.  

“This is a publicly funded project, and the public deserves to know how well it is performing in terms of meeting that promise. It’s a simple matter of transparency,” Weinstein said. “Meanwhile RUS, the funding agency, said: 'Well, VTEL built the towers, so it’s complied with the grant agreement.' And that’s just crazy. The problem was never that rural Vermont needed more towers. We needed access to 21st-century broadband.”

VTel vice president Gordon Mathews said RUS field-tested the service and approved the close-out of the project. In an emailed statement, Mathews said VTel has since worked to upgrade and expand the wireless network.

Mathews noted that the company is in the permitting process for a new tower in Whitingham that should improve service in nearby communities as well.

That’s good news for Omar Smith, chairman of the Readsboro Broadband Committee. VTel lists Readsboro as among the communities it serves, but Smith said the company’s signal is faint to nonexistent in town now. He said he doesn’t know anyone who subscribes.

“My understanding is that VTel is still building out its system,” Smith said. “Once that [Whitingham tower] is built, that could significantly impact Readsboro as far as availability of service.”

And – if you can get to the internet and visit VTel's website – you’ll see the company continues to aggressively promote its service. VTel advertised during the Super Bowl, and recently sent out a flyer to many Vermont households advertising its high-speed wireless.

"Once that [Whitingham tower] is built, that could significantly impact Readsboro as far as availability of service.' — Omar Smith, Readsboro Broadband Committee

But the wireless technology itself may be the fundamental challenge VTel faces in a state like Vermont. Purvis, the state’s telecommunications director, said hills, trees and rock ledge all block wireless signals.

“With wireless it’s hard to guarantee a level of speed. So with VTel’s service, you might have 15 [megabits per second, or Mbps] down in an area, and then you go 300 meters west of that particular point and you might have nothing or you might have 1 [Mbps download], 1 [Mbps upload]," Purvis said. “And it’s very hard on an address-by-address basis for them, or really any wireless carrier, to say with any certainty what level of service is available at that particular address."

More from VPR — The Challenges Of Bringing Broadband To Vermont's Hills And Hollows [Feb. 24]

VTel does have satisfied customers. Paul Fixx, of Hardwick, was at the big unveiling of the wireless project back in 2014. He said recently that the service has been fine over the past four years.

“Although sometimes it’s too slow to do what I need to do,” Fixx said. “I do work in technology and sometimes need to upload or download big files, and you know, sometimes it’s slow. It’s easier for me to walk the half a block to the library to use their very high-speed fiber connection than it is to sit at home.”

Right before we talked, Fixx tested his internet speed. He got 3 Mbps download and 1.5 Mbps for upload. That’s well below the federal government’s definition of broadband, which is 25 Mbps down and 3 up.

Correction, March 27, 2:30 p.m.: The story has been updated to note that not all of the $116 million in federal grants and loans went to build the VTel towers for its wireless project. About $35 million in federal loans helped pay for the towers; VTel says the rest of the money was in the form of grants to build out its fiber-optic internet service.