All About Vermont’s Communications Union Districts (CUDs)

A CUD is an organization of two or more towns that have joined together to create a municipal entity to build communications infrastructure.

In 2015, 30 V.S.A. § 3051 enabled the formation of Communications Union Districts (CUDs), which are organized as municipalities, akin to waste and water districts, with the exception that CUDs cannot access the property taxing authority of member towns.

For every household and business, broadband has become as essential as running water and electricity. Lack of broadband and low internet speeds prevent businesses and households from using many of today’s most critical internet tools, such as:

  • video-based meetings

  • remote education and informational resources

  • telehealth services

  • having multiple devices or users accessing the internet at the same time.

Perhaps most importantly, a lack of reliable, high-speed internet can seriously affect a community’s ability to attract and retain economic and social vitality. This harsh reality has prompted most of Vermont’s municipalities to become part of a CUD.

 

Speed & Access — The Important Issues

Speed

Broadband speed, i.e., the rate data is transmitted, can vary widely. Broadband speeds list the download rate, followed by the upload rate. For example, 25/3 allows you to download up to 25 megabits of data per second (mbps) but only allows uploading at speeds of up to 3 mbps. Although the upload rate is equally important, many ads only cite the download rate.

Since 2019, 100/100 is Vermont’s goal and represents the threshold of world-class broadband (residents of the most modern cities, such as Hong Kong, have ready access to 5000/5000 or “5 gig” internet). This symmetrical service:

  • Allows everyone in a family of four to stream a movie, make a mobile phone call, participate in a Zoom meeting, attend an online class at the same time with no noticeable lag;

  • Eliminates barriers to working from home for such highly paid professionals as big-data analysts, and radiologists, who need to be able to move data out as quickly as in;

  • allows users to turn on their smartphone WiFi calling and use their mobile phones in places where there is no signal, eliminating the need for a traditional copper wire landline or a VOIP service typically offered by cable companies;

  • is usually associated with offerings of 800/800, 2000/2000 or higher

  • is only available as a residential service via FTTH – fiber to the home; neither copper wire nor coaxial cable is designed for residential delivery of symmetrical broadband.    

Access

Providing broadband to areas with high density, such as cities and town centers is profitable; bringing broadband to low density areas is not. As such, for-profit companies have provided broadband only where it is viable to their bottom line, bypassing Vermonters and businesses in the rural, low density areas.

In rural areas, the lack of adequate broadband is critical. Outside of Chittenden County, only 15.6% of Vermont buildings are served with 100/100mbps broadband. Over 20% of premises are at a level of 25/3mbps or lower, meaning they cannot access only a fraction of the resources that broadband provides.

Why are CUDs Needed?

For more than 20 years, Vermonters waited patiently for telephone, cable and other providers to fulfill their promises of providing adequate internet. In a far too typical example, one provider received $35,000,000 in federal loans only to offer lackluster speeds and a level of access far below their claims. Giant companies appeared to take little interest in providing quality service to rural Vermont- leaving residents .

Finally, in 2008, a group of towns in the Upper Valley banded together to solve broadband issues in their region, forming ECFiber, which in 2014 drafted the legislation passed in 2015, in order to be able to access the municipal bond market (the bankers complained none of their attorneys knew what an interlocal contract was and kept asking, ‘why aren’t you like a water district?’). Today ECFiber is approaching 7,000 customers on 1600 miles of network in 23 of its 31 towns, and has issued $64 million in revenue bonds. The success of ECFiber led to legislation in 2019 encouraging the formation of other CUDs as the only proven path to bringing world-class broadband to rural Vermont.

There are several advantages to having CUDs provide broadband:

  • Because market profits are not possible, capital is not readily available. As municipalities, CUDs, once established, can access low-cost, long-term “slow money” capital from the municipal revenue bond market.

  • Aggregate demand – Mixing dense and less dense towns makes the project more attractive to providers (with more negotiating power for the CUD).

  • The entire region can benefit rather than creating a digital divide with town-by-town buildout by different carriers.

  • Efficiency – Network design, construction, and operation can all be more efficient when planned together from the onset.

  • Town boundaries are less important than electric utility polesheds, road network, and topography.

  • Risk mitigation – Individual towns are not on the hook.

  • Most importantly, the primary commitment is to the community and to serving all addresses.

There are currently nine CUDs in Vermont, covering approximately 12,500 road miles. It currently costs about $42,500/mile to build a fiber network. Because CUDs can ultimately pay back all money borrowed to build their networks, the goal now is to use federal ARPA and NTIA funds which have been placed in the Vermont Community Broadband Fund to achieve a full buildout, meaning that 95% of the state’s 300,000+ premises will have access to world-class FTTH. Approximately half the cost will be covered by grants, and the rest by municipal revenue bonds being paid off during the 2025 – 2055 timeframe – not a single dime from taxpayers.