Broadband Funding

Expanding broadband is expensive and requires piecing together funding from a variety of sources. State law also limits the funding options (see Approaches to Broadband Expansion and Options for Towns) available to municipally driven efforts to expand broadband.  This page provides an overview of various funding methods that have been leveraged in Vermont and elsewhere. These include Revenue Bonds, State Funding, Federal Funding, Private Funding, and Public-Private Partnerships.

Parts of this page have been adapted with permission from the Lyndon, Vermont Broadband Feasibility Report, published by Vantage Point Solutions (2019).  The Department of Public Service also suggests visiting the National Telecommunications & Information Administration (NTIA) BroadbandUSA Broadband Funding Search webpage to identify additional funding opportunities.  

Revenue Bonds (allowed)

Aside from allocating capital project funds as part of the budget process, bond funding is something municipalities can use to assist with funding network construction and to support startup and maintenance costs. This is traditionally what many municipalities and Communications Union Districts have used to finance their broadband networks. Bonds can be repaid by revenue generated from the operation of the network or fees assessed on subscribers.  If revenue from the network is expected to be relied upon as funds to pay back the bond, the business plan must support that expectation. Consult with an attorney before embarking on this funding model.

General Obligation Bonds (not allowed)

Since 2008, state law has limited the financing of operations and capital improvements for municipally run telecom plants to revenue bonds paid for out of the net proceeds of the communications plant’s operations. This restriction bars communities from using general obligation bonds to support a municipally run broadband network or providing any other taxpayer support. 

For more information, please see Vermont Statutes 24 V.S.A. § 1911 (2), 24 V.S.A. § 1913 (b), and the 2019 Department of Public Service report to the legislature, Report and Recommendation on General Obligation Bonds for Municipal Communications Plants.

State Funding

  • Broadband Innovation Grants – This program helps communities conduct feasibility studies and create business plans related to the deployment of broadband in rural, unserved and underserved areas of Vermont. The program awards up to $60,000 per grant to eligible grantees including non-profit organizations, for-profit businesses, cooperatives, distribution utilities, Communications Union Districts and other government entities. Grantees must deliver a feasibility study that proposes new broadband systems with minimum speeds of 25 Mbps download and 3 Mbps upload in unserved or underserved areas.
  • Connectivity Initiative Grants – The Connectivity Initiative is the only state program addressing broadband development. Funded by proceeds from the Vermont Universal Service Fund, Connectivity Initiative grants are awarded to internet service providers that agree to extend service to designated areas least likely to be served through the private sector or through federal programs.
  • VEDA Broadband Expansion Loan Program – The Vermont Economic Development Authority (VEDA) provides loans for startup broadband projects and expansion of existing broadband networks. Eligible project costs include working capital, construction, and infrastructure/installation. Borrowers eligible to participate include Communications Union Districts and other governmental entities, nonprofit organizations, cooperatives, and for-profit businesses. Applicants must be capable of offering broadband service speeds of at least 100 Mbps symmetrical. The maximum loan amount is $4.0 million. Financing can be provided for up to 90% of project costs. 
  • Municipal Planning Grants  – The Municipal Planning Grant (MPG) program encourages and supports planning and revitalization for local municipalities in Vermont. Awarded annually and administered by the Agency of Commerce and Community Development, the MPG program works to strengthen Vermont by funding local planning initiatives that support statewide planning goals.
  • Draft Emergency Broadband Action Plan – Recently, in response to the COVID-19 pandemic, the Department of Public Service developed an Emergency Broadband Action Plan that lays out a strategy and action steps for how to get internet service to the nearly 70,000 business and residential locations, or about 23% of the state, that presently do not have access to service at or above 25/3 Mbps (the current federal definition of “broadband”).

Federal Funding 

Private Funding

Many efforts start with private funding. Some examples are discussed below.

Promissory notes
These notes establish the conditions for repayment of a private loan for an individual or a bank.

Crowd-sourced funding  
Thanks to the Department of Financial Regulation, Vermont now boasts the nation’s most progressive local investing regulations, making it easier for small businesses to raise much-needed capital from their friends, families, customers and neighbors who want to invest in their local economy. This was done through substantive revisions to the Vermont Small Business Offering (VSBO) regulation. For more information, visit the Agency of Commerce and Community Development Vermont Crowdfunding Page.

  • Investors Milk Money is powered by VSECU through its wholly owned, independently operated subsidiary, Vermont Heritage Financial Group, Inc.
  • Friends and family  Kickstarter and GoFundMe are examples of platforms that could be leveraged to raise funds.
  • Broadband and the Community Reinvestment Act (CRA)  The federal  Community Reinvestment Act (CRA) enacted in 1977, was designed to to encourage financial institutions to help meet the credit needs of the communities in which they do business, including for infrastructure investment. Broadband, along with health services, education, public safety, public services, industrial parks and affordable housing, is considered an essential community service. Infrastructure investment for these services includes that for faclitating their construction, expansion, improvement, maintenance or operation. For more information, please see the Federal Reserve Bank of Dallas report, Closing the Digital Divide (July 2016).
  • Community philanthropy – Foundations, local banks and larger merchants (including national chains) often have community funds that provide financial assistance for local initiatives. Contact specific agencies individually for information.