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‘Last few inches’ of digital divide prove taxing for towns



Tuesday, April 21, 2015
After years of pushing for the state to build out the “middle mile” and help with building the “last mile” to bring broadband Internet service to the most rural unserved and underserved towns, communities are confronting a grim financial truth: the home stretch for “the last few inches” of the digital divide.

Some communities, part of a 32-town contingent of the WiredWest cooperative, have town meeting warrant articles to allow borrowing for engineering and construction costs of a shared WiredWest fiber network and a debt exclusion ballot question at annual election. The communities are also being asked to “pre-subscribe” with a $49 deposit to show that there’s the 40 percent of subscribing households needed to make the network profitable enough to pay off their borrowing costs without driving up local tax rates.

Those who have long been advocating access to high-speed Internet are confident that once WiredWest is up and running, the borrowing debts will successfully be paid off through the subscriber base.

In Cummington, a $1.4 million borrowing article will be presented at annual Town Meeting May 1, followed by a debt-exclusion override vote May 11. An information session will be held Sunday at 8:30 a.m. at Berkshire Trail Elementary School.

Cummington Select Board member James Drawe, vice chairman and treasurer for WiredWest, said he sees the investment as a necessary one to stem the tide of Hilltowns becoming retirement communities where fewer young families live.

“It’s best to view this broadband fiber infrastructure the same way you view roads and bridges, as community infrastructure, and without it the community becomes less and less valuable,” Drawe said.

Drawe acknowledges that asking people to back up the project with their tax dollars is a challenge, but WiredWest aims to be self-sustaining and repay each town’s debt service. Residents will also be spending less for monthly Internet and phone, as well as making their homes more attractive if and when it is time to sell.

“Families don’t want to buy homes in towns where they don’t have high-speed Internet,” Drawe said.

In Goshen, the $1.39 million price tag for the buildout will be presented at a special Town Meeting June 29. This is scheduled to ensure that many of the seasonal residents in town are back to participate in the decision-making, said Bob Labrie, Goshen’s delegate to WiredWest.

Labrie said information sessions, including one in the evening and the other on a Saturday, will take place in May and June, to educate and answer questions from concerned residents.

For a Goshen home valued at $200,000, approval of the borrowing will mean approximately $150 more in taxes on the annual property tax bill. But even if the WiredWest subscriber base is insufficient to pay back this debt, Labrie said, people will benefit by reducing their high-speed Internet and phone bills.

Labrie calls WiredWest a game changer for the underserved communities.

“We know that having a quality Wi-Fi, high-speed broadband to a home increases the value of a home, and will make the home more salable,” Labrie said.

Hungry for broadband

Shutesbury is preparing for its May 2 Town Meeting, where voters will be asked to borrow $1.57 million for its buildout, adding up to $127 to the annual tax bill for an average $243,000 home. Already, 46 percent of residents have subscribed to WiredWest and the Shutesbury Broadband Committee is aiming to push this to 60 percent in the next 10 days.

Gayle Huntress, co-chairwoman of the Broadband Committee, said voters should understand that WiredWest is designed to be a revenue-generating municipal project that benefits every resident.

These potential revenues mean taxpayers may not be burdened with the added $127 per year.

“Our hope is that it will be much less than that, maybe even zero,” Huntress said.

Being part of Five College area, the committee, she said, is observing a demographic that is hungry for high-speed Internet.

But in some small towns, like Hawley — where the estimated borrowing cost would exceed $4,000 per resident — it’s a price some fear might be too high. Noting that Hawley has only about 300 residents, and about 60 miles of “arduous roads” for a bonding cost of nearly $7,800 per dwelling, Selectman Phil Keenan is nervous about the price tag.

“When they’re trying to get a town like Hawley to take out a revenue bond of $1.4 million, that’s untenable,” Keenan said. “Why would we liquidate all our potential financial reality? What if we had another (Tropical Storm) Irene, where we had to take a $2 million note out?”

Charlemont would have to borrow $1.75 million to pay for an estimated $2.67 million buildout for broadband in its community, and that’s even after receiving $920,000 from a $40 million state bond.

“It’s like this thing where you need a hand, I’ll give you a hand, you reach out and you’re 6 inches apart,” said Charlemont Broadband Committee member Robert Handsaker. “And you can’t get a hand because you can’t get the last 6 inches to reach.”

Yet even with these concerns, both Keenan and Handsaker share an understanding about the critical need for broadband Internet, especially in towns where there are few alternatives.

“It’s a fundamental sensibility shift, just as the technology is,” Keenan says. “Fiber connectivity is simply our best possibility for economic development. We don’t have land to develop, all the towns in the hills are facing an aging population, the schools are being shuttered, nobody’s moving in here.”

Handsaker said he believes that most people in Charlemont — which is more than halfway toward its goal of 40 percent subscribers — understand that this issue is about economic development, business development, enabling residents to telecommute, increasing property values and attracting younger people to move to Charlemont.

“Yet there’s a lot of concern about the impact on taxes,” he says, with some people believing that the issue at hand seems like a choice between schools and the Internet.

It’s a tough choice, even though the $49 monthly Internet cost for 25 megabyte-per-second service, plus $25 for telephone, including long distance, would be a savings over what many are now paying.

Waiting an option

It’s become an issue that has`towns juggling what to do, which is partly why the Massachusetts Broadband Institute intends to hold 6 p.m. informational meetings in Ashfield Town Hall on Wednesday and Swift River School in New Salem on Thursday.

Some towns are moving ahead — Leverett has begun turning on its go-it-alone, $3.6 million LeverettNet service — while others are hitting the pause button. Warwick, for example, has decided to wait to vote on borrowing up to $2.5 million for its share of the WiredWest project rather than putting it on the May 4 annual warrant.

Waiting may not be a bad idea, says state Rep. Stephen Kulik, who has championed the state’s $50 million bond to pay for bringing broadband to not only the unserved towns, but also those partially served by cable.

“I know the frustration people feel locally,” Kulik said. “They’re having sticker shock about how much bringing ‘last mile’ to every home in these communities is going to cost. They may want to slow down and look at this a little more carefully and not do this at town meeting”

Kulik insisted the $50 million program is not going away, but he also made it clear that he doesn’t see any likelihood that the state — facing its own financial crunch — will invest additional money to build out a network.

Several towns, like Rowe, Wendell and Shutesbury, have already exceeded the 40 percent subscription goal and New Salem is 95 percent of the way there, leading many to say the towns are likely to get to an 80 percent “take rate” by the time it’s built out in an estimated three years, making the service even better able to pay down the debts.

Montague, one of 11 partially served towns along with Northfield, Gill, Bernardston, Conway, Buckland, Shelburne and Pelham, is also considering a warrant article for its May 2 town meeting to extend broadband to a neighborhood adjacent to newly lit-up Leverett, with a fiber-optic connection brought to the Montague Center Fire Station as a hub.

“One of the challenges that we have is that some towns are very expensive to build in, and some have far fewer subscribers for the number of miles being divided,” MBI Director Eric Nakajima said. “If we reallocated and provided a deeper subsidy to some towns that are more expensive, that’s going to take money away from a lot of other towns, which are then going to have significantly higher tax burdens.”

Nakajima said that with the available money and the total project cost in general, it’s really hard or even impossible for the Broadband Institute to be able to provide a deeper subsidy now. He said officials will continue to engage with towns about their challenges and ability to sign up, and then, if needed, evaluate alternatives for those towns.