The decision stems from what was described as a performance problem with one grant.
The Vermont Telecommunications Authority says the grants to VTel were designed to pay for providing broadband to more than 900 addresses*. They total $3.4 million.
The problems stem from a 2011 grant. The state and VTel couldn’t agree on a deadline for expanding the service. And they couldn’t agree on the cost of the project. The telecommunications authority terminated the grant on March 26.
That raised questions about a more recent grant awarded in August. Authority board members were concerned that the same issues would crop up. So they’ve decided to terminate that one, too.
Holly Groschner is the telecommunications authority’s general counsel. She spoke to Vermont Telecommunications Authority board members at a special meeting this morning.
"In a nutshell, we have a performance problem," said Groschner. "We’re not able to get resolution and we’re concerned that the same issues would be revisited in a 2012 grant."
In a conference call with board members VTel president Michel Guite objected to the way the situation is being characterized.
Guite says the problem stems from having to build a separate project for the 630 customers included in the 2011 state grant, instead of including them in a much larger wireless broadband project the company is building with an $81 million federal grant.
"It’s hard to serve 630 as a carve-out, when we’re doing 240,000," he explained. " I just don’t like the sound of the suggestion that we’re not on target and ahead of target, or that we’re not going a great job serving all these homes. The 630 homes we’re talking about will be served with your money or without your money."
Who gets broadband from VTel as a result of the federal grant and who is served thanks to the state grant is an important distinction for the telecommunications authority.
"It’s very important to us that the funds that we award create additional coverage in areas that are not the subject of the areas that VTel has already been awarded to serve," says executive director Chris Campbell
The state says that by the end of 2013 all Vermonters will have access to broadband.
Campbell says the decision to terminate the VTel grants now will give the telecommunications authority the opportunity to recruit another company to provide service to the areas VTel was supposed to serve. So a current round of funding under way now is being expanded.
"There’s only so much time left in the year and we need to be in a position to consider other alternatives," he says.
Campbell says he believes other providers will apply to serve the areas covered by the VTel grants.
He says no money had been awarded to VTel and the company is free to apply for additional grants from the telecommunications authority.
The grant terminations are unusual. The only other termination was for a modest grant awarded in 2009 to a small local provider.
In a prepared statement VTel said, "despite the VTA’s decision to withdraw committed funds, VTel still plans to serve all of the targeted homes using its own capital."
*Including addresses in Arlington, Bennington, Braintree,Brattleboro, Chittenden, Corinth, Danville, Dover, Dummerston, Lyndon, Newfane, Pittsford, Pownal, Putney, Randolph, Shaftsbury, St. Johnsbury, Stratton, Wardsboro, Westminster, Whitingham and Wilmington.