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03/27/07 12:00AM By Allen Gilbert
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(HOST) A 1989 state report said that Vermont was poised to become a leader in telecommunications. Eighteen years later, we're trying to play catch-up through the creation of a state Telecommunications Authority. What happened? Commentator Allen Gilbert takes a look.

(GILBERT) I've been interested in the broadband issue that the Legislature is reviewing. The Douglas administration wants to create a state telecommunications authority. It's a big step for the state to create such an agency. It's an admission that we're facing a major challenge, and that we need the weight of government behind finding a solution.

The discussion is ironic, given promises made in the past by private telecommunications companies, state officials, and economists.

In 1989 a report called "Pathways to Prosperity" was published by the Governor's Commission on the Economic Future of Vermont. The report identified telecommunications systems as important keys to the state's prosperity. The report said that Vermont was well-positioned in this area: "Vermont's public network is rapidly modernizing and by 1992 will be the most technically advanced system in the country."

The reaction by Vermonters today struggling to connect to the Internet with a dial-up modem from their home computers is likely to be, "What happened?"

The answer is the failure of the free-market system to deliver high-quality telecommunications service throughout the state. The rosy prediction in the report was based on an agreement made in 1984 - an agreement to deregulate much of the telecommunications industry in Vermont. The 1989 "Pathways to Prosperity" report noted, "Vermont, because of earlier far-sighted regulatory decisions, is poised to become the first state with a fully developed telecommunications network and thus enter the 21st century as the leader in an industry that's growing at a rate five times faster than the overall U.S. economy."

There's no doubt that deregulation brought benefits. Long-distance phone rates dropped. We now all have answering machines at home. We buy the phones we want with the features we want. The phone network is digital, not analog. Remember rotary dial phones? They weren't very versatile.

These changes resulted from competition. Competitors forced the old dominant phone company of the time, the "Bell" system, to lower costs and offer better services - or lose business. Profits were at stake.

Access to high-speed Internet has been different. In many areas of the state, there is no competition to offer high-speed access. If you live on a dirt road more than three miles from a population center, chances are that you can't get broadband - of any kind. Phone companies can't make enough money from serving such locations. Your only option may be satellite, but that's expensive.

This situation has come about despite repeated promises from Verizon to "build out" high-speed access around the state. The build-out, in fact, has been required by agreements that it's made with the state. Verizon hasn't delivered, which has angered state officials. The rosy future based on deregulation hasn't happened. Now Verizon is shedding its Vermont business. So we're stuck with having to create a new state authority to do what private business promised years ago to do, but didn't.

The cautionary tale here is that deregulation of critical industries can work - but only up to a point. Public efforts can be an important -- and necessary -- alternative.

Allen Gilbert is a former journalist, teacher, and consultant currently serving as executive director of the ACLU of Vermont.

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