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Google Fiber's expansion plan hits speed bump as Vermont deal crumbles

Google Fiber's plan to build out in northwestern Vermont has hit a wall after determining one of its erstwhile partners could not pull off a project that originally aimed to bring an open access fiber network to a minimum of 42,000 homes.

As first reported by local pub VTDigger, a plan for the fiber network buildout is on ice after Google Fiber pulled out of the negotiations over concerns that Lamoille FiberNet, one of the union districts serving northwestern Vermont, could not carry out the project. However, Lamoille FiberNet argued that an "onerous and unrealistic" service level agreement (SLA) would set up Lamoille up to fail.

(Source: Zoonar GmbH/Alamy Stock Photo)
(Source: Zoonar GmbH/Alamy Stock Photo)

Several details leading to Google Fiber's decision were outlined in an August 17 letter from Northwest Fiberworx Executive Director Sean Kio to his company's board, obtained by VTDigger. Northwest Fiberworx is a separate union district that has been working with Lamoille FiberNet on an open access fiber network that can host multiple ISPs.

In the letter, Kio wrote that he was notified by Lamoille FiberNet on July 29 that Lamoille "may have discovered a critical flaw in their financial models," and that a review of "new economic assumptions" found that Google Fiber's payment structure was "not viable."

"Until this point, we had seen no indication that Lamoille did not have a viable financial model," Kio explained. "While their margins were slim, they had indicated and shown profitable models."

Then, on August 3, Lamoille held an emergency board meeting and, the next day, "expressed the intent to break off negotiations with Google Fiber." Lamoille's purported concerns included the aforementioned SLA, issues with the revenue share model and an inability to meet the build requirement.

The hammer came down on August 16, when David Finn, director of corporate development at Google Fiber, notified the group that the negotiations had ended due to a "lack of confidence that Lamoille would have the ability to execute," and meet the provision to build fiber to at least 42,000 locations, Kio explained in the letter. Google Fiber has been asked for further comment.

Kio also told the Fiberworx board that Google Fiber would not accept a lower count on the build provision, but did attempt to secure additional locations to help expand the buildout footprint. "We now find ourselves at an impasse and must choose a new path," he lamented.

Kio told VTDigger that Fiberworx, which covers about 30,000 addresses, is still interested in building and supporting an open access network in the three counties it serves: Franklin, Grand Isle and Chittenden.

Google Fiber pushing ahead with expansions

The failure in northwest Vermont is a clear indicator that not all of Google's local partnerships are made to be slam dunks. In fact, this latest snafu comes more than two years after Google Fiber's embarrassing exit in Louisville, Kentucky, after tests of its shallow trenching techniques didn't pan out.

Still, the situation in Vermont is likely a blip in Google's revised plan. Following a pause on expansion in 2016, Google Fiber is now pressing ahead to reaccelerate fiber network buildouts in a handful of states.

Earlier this month, Google Fiber CEO Dinni Jain outlined those plans, noting that the company is in talks with city leaders in five states – Arizona, Colorado, Nebraska, Nevada and Idaho – about fiber-to-the-premises buildout opportunities.

Jain's expansion declaration followed recent deals to build FTTP networks in West Des Moines and Des Moines, Iowa, and in Mesa, Arizona.

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— Jeff Baumgartner, Senior Editor, Light Reading

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