Gigabit Internet and phone service for $48 a month?

VTel started deploying construction crews to roll out gigabit-speed fiber to its 17,500 customers about four months ago, and has about 10 percent of them hooked up so far.

Gigabit Internet and phone service for $48 a month? It really exists With $116M in federal funds, Vermont telco offers gigabit fiber and LTE. by Jon Brodkin - July 2 2013, 4:25pm EDT NETWORKING Ars Technica Vermont Telephone Company owner and CEO Michel Guité. Vermont Telephone Yesterday, we brought you the troubling tale of AT&T offering 768Kbps Internet for $20 a month (but the fee was actually more than $20 once you read the fine print). Today, let's shine a light on the flip side—a deal so good you're going to be jealous of the few people who actually get to buy it. In a small part of Vermont, thanks to an ambitious local telco and $116 million in federal funds, residents can buy gigabit Internet and phone service for prices starting at $48 a month. Gigabit Internet is ever so slowly inching its way through the US, but typically it costs a bit more than what these Vermont residents are paying. If you're one of the very lucky people who live in a city with Google Fiber, you're paying $70 a month for gigabit Internet or $120 per month for gigabit Internet and TV service. It's a fair price based on the market—Sonic.net has gigabit Internet for $70 in parts of California, and the new gigabit Seattle costs $80 per month. The best deal we've heard of can be found in Hong Kong, where gigabit-speed fiber to the home was being offered for just $26 a month, according to a New York Times report in 2011. But in the US, we haven't seen anyone beat Vermont Telephone (VTel). Quick, everyone move to Vermont! VTel is selling gigabit Internet for $29.95 or $34.95 per month, with no up-front installation fees. The service must be bought along with a landline telephone plan, putting the price range at $48 to $70 a month for gigabit Internet and phone service. A triple play package including TV costs $95 a month. VTel started deploying construction crews to roll out gigabit-speed fiber to its 17,500 customers about four months ago, and has about 10 percent of them hooked up so far (the non-gigabit customers get up to 24Mbps over DSL). All 17,500 should have gigabit fiber within the next year—but it took a lot of help from the federal government in the form of an $81 million broadband stimulus grant and a $35 million loan. That money, from the American Recovery and Reinvestment Act, is for both the gigabit Internet rollout and a statewide cellular deployment. This sort of thing doesn't happen in every rural part of the US, obviously. Even the CEO of VTel isn't sure whether companies of VTel's size can prosper nationwide in the face of competition from the likes of Comcast. VTel is based in Springfield, a town of just over 9,000 people. "There's nobody better able to survive than us [among small telcos]," said VTel owner and CEO Michel Guité, who bought the company in 1994. "But it just may be so that there's no room for anybody small left in America." The gigabit fiber is limited to VTel's telephone service area, about 18,000 homes and businesses, Guité said. VTel obtains capacity from Cogent Communications in Boston and New York, as well as Hurricane Electric in New York. So far, VTel is using less than 24Gbps, but usage is rising rapidly, and the company has plenty of capacity to handle that growth. The federal funding allowed VTel to build 100Gbps data paths between Montreal, Boston, and New York. "We have multiple hundred gig pipes to Boston, New York, and Montreal, with Vermont in the middle," Guité told Ars. The fibers aren't exclusively for VTel's rural customers. "A large university in Cambridge, MA, uses two more of our fibers from Albany to New York City, with multiple hundred gig being discussed," Guité said. "We have only one hundred gig pathway lit on two more of these VTel fibers, for our own VTel use. … We are talking to several others about offering this same hundred gig capacity on our VTel fibers." VTel is also using its federal funding to deploy 4G LTE cellular service throughout the state, using the same fiber capacity to provide backhaul to its wireless towers. "The first towers are now operating and we're trying to turn on about 150 by year-end," Guité said. VTel owns spectrum in the B and C blocks of the 700MHz band, as well as in the Advanced Wireless Services, Broadband Radio Service, and Personal Communications Service bands. The company has an LTE roaming agreement with AT&T so customers can stay connected when they're outside Vermont. Wireless service is expected to launch at the end of the year. Buying capacity, trading fiber VTel pays an average of about $1.60 to its backhaul providers for each megabit per second of capacity. The rate would be higher, but VTel is able to lower the average by trading dark (i.e., unused) fiber connecting Montreal and New York to Cogent in exchange for capacity. Customers pay a minimum of $29.95 a month for gigabit service, but to get that price they also need to sign up for VTel's "PlainTalk" and long distance phone service—bringing the total monthly price to $70. The least a VTel customer can pay for gigabit Internet ends up being $48, through a $34.95 monthly plan that requires a basic phone service charge of $13 per month, Guité said. VTel could theoretically sell gigabit service alone, but it prefers customers to buy phone service so it can tap into federal money for rural providers through the Universal Service Fund. "It's way better for us when they take voice with it because it puts it into these federal subsidized pools," Guité said. As mentioned, VTel also offers a package including TV for $95 a month. "I don't want people saying 'I just want Internet and none of your other services'—we want to encourage them to take the whole suite of services," he said. The price is guaranteed for the first year, and Guité said VTel generally doesn't raise prices much if at all. VTel does have competition in its service area from Comcast. "Our goal is to be about 15 percent cheaper than Comcast under all circumstances, no matter what," he said. "We've got Comcast going door to door, knocking two or three times on every door, saying 'sign up for Comcast' and making wonderful offers." Comcast offers speeds of up to 105Mbps down and 20Mbps up in VTel's territory. When I checked prices on Comcast's website for Springfield, Vt., the 105/20 service cost $79.99 monthly for the first six months, with a "special offer" for customers who also subscribe to either Xfinity Digital TV or Voice. Speeds of 50Mbps down and 10Mbps up cost $34.99 a month for the first six months, also requiring a TV or Voice plan. Triple play deals for Comcast ranged from $142 to $240. VTel's testing in customers' homes shows that its gigabit customers typically get between 925 and 950Mbps for both downloads and uploads, Guité said. VTel buys the same Actiontec modems and routers used by Google Fiber. "They were building these for Google and we said 'why don't you sell to us?" Guité said. "They were lovely to deal with. Google helped get them built, and brought the price down." Why don't customers get a full gigabit? VTel CTO Justin Robinson notes that "there are a lot of factors that will affect throughput speed—especially as you get near 1Gbps rates." A PC's Ethernet port or motherboard architecture could limit throughput, as can a firewall, he said. "The size of the packets that are being sent/received can increase overhead (more smaller packets essentially add more overhead, and reduce the amount of actual useful throughput you can receive)," Robinson wrote in an e-mail to Ars. "The type of packets you are sending can also impact throughput. TCP, a commonly used protocol, has a lot of built-in protections to be sure that data you send is received. These protections cause receive acknowledgements to be sent, and in the case of lost packets, will allow for retransmission of the data. While this has the benefit of overcoming dropped packets, or loss of data out in the Internet, it also has the effect of reducing available throughput. UDP, another commonly used protocol, is more efficient in throughput, but does not contain a lot of the redundancy advantages that TCP has for transmission. There are many other protocols available, but which protocol is used is decided on a per-application basis, and is not something that the underlying service provider, like us, controls." “Unlimited” data, unless someone really goes overboard Guité said VTel offers unlimited data to customers. The company does reserve the right to limit individual customers' data if they use a ludicrous amount, but Guité said, "we've never declared anybody over their limit in the last 10 years." There is one customer who somehow downloads 3TB a month, Guité said, but VTel still has enough capacity that it doesn't have to impose any specific limits. "There's probably no more than 3 or 4 percent of people who use a huge amount, [and] because we have so much capacity we're happy when they do use a huge amount," he said. (Edit: As one reader points out, the VTel website states that there is a limit on data. "All access accounts come with a 500GB monthly maximum allotted transfer," the site says. "Additional usage billed in increments of 1GB." Guité told us that despite what the website says, VTel has never penalized customers for using too much data—even the guy downloading 3TB a month. "We stopped telling people they were 'over' about 18 years ago, when the average was about 4GB and some people were at 15+," Guité said.) Guité worries about the future of small businesses like his own, particularly those serving areas even more rural than VTel's service area. The costs of deploying phone service to sparsely populated areas can vastly exceed the fees customers pay, and recent changes to the Universal Service Fund can reduce subsidies to phone companies, he said. But at least for the moment, VTel is sitting pretty. "We've got 500 video channels, massive Internet capacity, a huge amount of wireless coming along and you know, what the hell?" Guité said. "It might work."