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 that won near unanimous community support on town meeting day depended on the Vermont Telecom Authority (VTA.) It does not. Instead, as has always has been the case, it depends on private sector financiers and the growing numbers of Vermont citizens who have eagerly indicated a readiness to subscribe to world class fiber-based services.

At VTA’s request, and after the Chairman’s public statement that VTA could only bond for a minimum of $10 million, ECF submitted a proposal for discussion for two tiers of 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, as any private financier knows, no start-up venture can meet that standard. (The VTA has since provided ECF with a $25,000 planning grant, saying “The ECFiber application meets all the Broadband Grant goals.”)

ECF and participating towns strongly believe that 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. However, inaction will condemn communities and businesses in our region to a far more ominous set of social and economic risks.

Fortunately, 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.

Concurrently, ValleyNet has concluded an agreement with Atlantic Engineering Group (AEG), one of the foremost design/build telecommunications engineering firms in the country, for a fixed price construction contract covering 75% of the projected capital expenditure. AEG has successfully built 65 Fiber-to-the-Premises networks, of which 16 are municipally-owned. 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. AEG extensively reviewed the same data presented by ECF to VTA, and stated: “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.”

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. 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.

Press Contact: Loredo Sola, ECFiber Chairman