Municipal Districts: The Fix for What Ails Rural Internet?

A common issue with rural broadband expansion is small towns not having enough leverage to establish better Internet service. But legislation could turn the tables, giving communities the authority to form a unified district.

by / November 11, 2019
The GOP-held New Hampshire Senate and House are both at risk of flipping control. (Shutterstock)

Rural communities must often get creative if they want to bring broadband to their residents, and sometimes their hands are tied due to state restrictions or a lack of favorable legislation. Smaller municipalities in New Hampshire, however, may soon have the option of forming a multi-town district for the purpose of establishing a broadband system. 

State Sen. Jeanne Dietsch is at the forefront of just such a legislative effort, which she considers important for the “smallest towns that can’t attract a provider on their own.”

At present, the bill that would authorize the multi-town district option has not been finished. Dietsch is still working with legislative service requests. But once the law is written, it will be on the docket for the Legislature’s upcoming session.

She anticipates little, if any, pushback. 

“I would be very surprised if it’s not [passed],” Dietsch said. “I’ll be surprised even if we see any of the providers come out against it, because it basically allows these districts to contract with them to provide service.”

The legal stipulation that the districts shall work with private companies comes from earlier lessons learned in the state. Earlier this year, Gov. Chris Sununu signed Senate Bill 103 into law. It authorized “municipalities to engage in multi-town bonding projects.” But passing the bill was not easy, having been delayed for about four years because of industry pushback, Dietsch explained. 

“They [Internet service providers] feared that towns were going to try to start and set up their own ISPs and so forth,” Dietsch said. “That’s an unfortunate miscommunication because that is not what towns are trying to do. They just want to get some service.”

The incoming legislation is partially inspired by a law signed in 2015 in neighboring Vermont. To the lawmaker's knowledge, no other state has a law that allows such districts to form. The actual language of New Hampshire’s bill will have its own distinctions, though, in that the broadband districts would be similar to existing sewer districts in the state. 

“We modeled it on New Hampshire sewer districts just because that is language that’s already familiar to our legislators, and it’ll be much easier for them to pass it that way than to try to make it look like Vermont,” she said. 

ECFiber in Vermont

The first official multi-town broadband district in Vermont was the East Central Vermont Telecommunications District, also known as ECFiber, and it's the partnership between the district and operations company ValleyNet for its fiber build. The district is comprised of 23 active towns, about 12 of which have full Internet coverage, ValleyNet Managing Director Christopher Recchia said. The remaining towns are all at some point in the construction process, helping to keep regional jealousy at bay. 

Recchia, who once served as commissioner of the Vermont Department of Public Service, has watched the development of ECFiber from its very beginning in 2011, years before an official district could legally be formed. The idea was for towns to work together for fiber to residents, but they were without the financial means and legal standing. 

“The only way that the fiber process could get started is by private investors, who lived in the area, agreeing to front some money to make this happen and to demonstrate that it was a viable way of doing this,” Recchia said. 

After the legislation became law, the towns were able to issue revenue bonds for the remaining build, and the original investors were eventually paid back. 

Recchia said the district’s use of revenue bonds, which can be repaid with revenues from broadband subscriptions, was preferable to the use of general obligation bonds, which must be paid back through taxes. Recchia cited the example of Burlington Telecom in the state as a cautionary tale, which involved the unauthorized use of about $17 million in taxpayer dollars. 

“No taxpayers in these [ECFiber] communities are on the hook if something went wrong,” Recchia said. 

Fiber construction within the ECFiber district does not follow typical patterns across the U.S. Recchia said companies tend to build near town centers and don’t normally consider towns with a population of 5,000 or less as good returns on investment. 

ValleyNet generally begins construction from the outside of a community, working its way toward the core. In other words, the company tends to start with the margins, flying in the face of conventional ISP wisdom.

Despite this unusual strategy, take rates in the ECFiber district are 40 to 50 percent, on average. Recchia said sometimes ECFiber will see about an 80 percent take rate in an area, meaning the district can meet its financial obligations. 

On top of that, download and upload speeds in the district range from 25 Mbps/25 Mbps to 700 Mbps/700 Mbps, with plans for an 800 Mbps/800 Mbps option in 2020. Such symmetrical speeds would be unlikely without the district’s existence as the cost of fiber would be too great to bear for these single towns, especially given the challenges of the state's hilly geography, Recchia said. 

The Makings of a District in New Hampshire?

In Western New Hampshire, Carroll County Broadband reflects a regional attempt to do something about the lack of broadband in rural areas. The organization, formed in the spring, is a committee that represents 16 of the 18 towns in the county, committee co-chair Stephen Knox said. At present, the committee doesn’t have legal standing, but Dietsch has recognized Carroll County Broadband’s potential to become perhaps the first broadband district in the state. 

Knox said the county is “rural America personified,” facing the same Internet problems as other small communities across the country, even explaining how it lagged behind others when electricity was the new essential utility during the 1920s and 1930s. 

“The road that I live on never got electricity until the mid-1940s,” Knox said. “And there was a small town [in Carroll County] … they never got electricity until the 1970s. So our concern was that, recognizing the importance of broadband to our future, we could not basically let this become Act II of electrification.” 

While he acknowledges the simple economics of the situation, Knox said the example of Vermont's ECFiber has been an inspiration to Carroll County Broadband, which plans to cement its status as a legitimate regional committee early next year through town votes. 

“We firmly believe that having 16 towns sitting at the table gives us a far greater strength in negotiating contracts and so forth with Internet service providers than just each town on its own,” Knox said. 

Jed Pressgrove Staff Writer

Jed Pressgrove has been a writer and editor for about 15 years. He received a bachelor’s degree in journalism and a master’s degree in sociology from Mississippi State University.

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