The Internet Slow lane

[Andre Kesteloot]

  International Herald Tribune <http://www.iht.com>
Rural states could wind up in Internet's slow lane
By Ken Belson The New York Times
THURSDAY, SEPTEMBER 28, 2006

*CANAAN, Vermont* For most businesses, the goal is to attract as many 
customers as possible. But in the fast- changing U.S. telephone 
industry, companies are increasingly trying to get rid of many of theirs.

Bill and Ursula Johnson are among the unwanted. These dairy farmers in 
northeastern Vermont wake up before dawn not just to milk their cows but 
also to log on to the Internet.

Their dial-up connection is so weak that the only time they can reliably 
get onto the Web site of the company that handles their payroll is at 4 
a.m., when it is less busy. Johnson doubles as state representative for 
the area, and he does not even bother logging on to deal with that. He 
communicates with colleagues in Montpelier, the capital, by phone and 
post instead.

The Johnsons' communication hurdles could soon get worse. Instead of 
upgrading them to high-speed Internet access, Verizon, their local phone 
company, is looking to sell the 1.6 million local phone lines it 
controls in Vermont, New Hampshire and Maine. The possible sale is part 
of an internal plan called Project Nor'easter, according to a person 
with knowledge of the details.

A Verizon spokesman, John Bonomo, would not comment on the plan but said 
the company "continually evaluates the assets and properties in our 
portfolio for strategic fit and financial performance."

Verizon is not alone in its desire to reduce the number of land lines it 
owns. Big phone and cable companies are reluctant to upgrade and expand 
their networks in sparsely populated places where there are not enough 
customers to justify the investment. Instead, they are funneling 
billions of dollars into projects in cities and suburbs where the 
prospects for a decent return are higher.

But such networks are unlikely to reach rural areas of Vermont and other 
states, leaving millions of people in the Internet's slow lane, just as 
high-speed access is becoming more of a necessity than a luxury. The 
United States already lags behind much of the industrialized world in 
broadband access.

If Verizon does sell the New England lines, it would most likely be to a 
smaller company or private equity group that could be even less capable 
of offering fast Internet access. That prospect has Vermonters fearful 
that the exodus of jobs and employers from the state could accelerate.

"We have companies that lose money because they don't have broadband," 
said Maureen Connolly, a director at the Economic Development Council of 
Northern Vermont. "We're not a third- world country. We shouldn't have 
to beg for service."

The proceeds from any sale of New England lines would help Verizon pay 
for the potentially more lucrative fiber optic network it is building in 
and around cities like New York and Boston. The network is part of 
Verizon's push to transform itself into a fast- growing technology 
company and shed its image as a stodgy utility.

The possibility that Verizon may sell local lines is another sign of how 
much the phone business has changed in the last half-decade.

Verizon and other former local phone monopolies argue that since the 
cellphone, cable and Internet companies that are luring away millions of 
their customers are not compelled to serve remote and rural places, then 
they should not have to bear that burden, either.

In Vermont, Verizon has broadband available on just 56 percent of its 
330,000 lines, compared with 95 percent for most local phone companies, 
which receive substantial federal subsidies. Without the same aid, 
Verizon must bear more of the financial burden to upgrade its network.

"Vermont, like all rural states, has higher fixed costs of providing 
service," said Polly Brown, president of Verizon Vermont, where the 
number of land lines has declined 9.1 percent since 2002. "You're 
spreading those costs over fewer customers, who are located far and 
wide, and you're dealing with topographical challenges such as mountains 
and a rock base."

Vermont residents, unions and politicians do not dispute that the phone 
business is challenging, but they say residents will have a harder time 
telecommuting or home-schooling their children.

Towns like Canaan will not have access to the growing number of 
government records kept online, they say, and hotels and other tourist 
attractions will have a harder time attracting outsiders.

In places where Verizon does not sell high-speed Internet, some people 
have the option of getting broadband from their cable provider.

But in Vermont, cable companies have focused on more populous towns like 
Montpelier and Burlington, the state's largest city.

Cable coverage in the northeastern part of the state is spotty.