VTel Rushes to Meet Cellphone Deadline

Valley News Business Writer
Published: 10/28/2017 12:17:36 AM
Modified: 10/28/2017 5:23:28 PM

Springfield, Vt. — Days before VTel Wireless faces a Nov. 1 deadline to show it has reached a threshold number of cellphone customers or risk being forced to refund millions of dollars to Vermont, some customers have begun receiving free cellphones in the mail in an apparent bid by the company to quickly ramp up its mobile phone service.

The move comes as the Springfield phone company last week began promoting on its website the availability of mobile voice service available over its wireless broadband internet network across the state.

VTel has sent emails to some customers of its statewide wireless internet network informing them that they have been “selected” to receive a new Samsung smartphone “to pioneer our new mobile voice service.”

The service, while free for a year, initially will work only within range of wireless transmission towers VTel has built around the state because the company said it does not yet have “roaming” agreements, which the company said in the email it expects to implement “next year.”

VTel Wireless, a unit of Springfield-based Vermont Telephone Co., received a $2.6 million grant from the state in 2012 to extend mobile voice service over its wireless internet network that it built with federal funding.

Two years ago, after complaints that VTel had yet to implement the cellphone service, Vermont lawmakers required VTel to demonstrate that it has 2,000 mobile phone customers as of Nov. 1, 2017, or it would be required to refund the grant.

VTel did not respond to requests for comment, and the number of customers who have been offered free phones and signed up could not be independently verified, but people who have been in communication with VTel’s chief executive, Michel Guite, said he has told them he expects the company to meet the 2,000 mobile phone customer threshold by Wednesday’s deadline.

Guite said in the email to subscribers the Galaxy J3 smartphone required Samsung to write special software to accommodate the 4G LTE network that VTel built, and that slowed the company down.

“They just turned on voice and sent out the phones this past week,” said Steven Whitaker, a Montpelier telecommunications activist who said he spoke with Guite last week. “I think he’s got 2,000 (customers).” Whitaker said he accepted VTel Wireless’s offer of a free mobile phone but has yet to receive it.

Phil Edelstein, a Whitingham, Vt., electronics industry professional and VTel Wireless customer who has done consulting work for VTel, said Guite also told him the company has sent 2,000 cellphones to VTel Wireless subscribers. Edelstein said he himself now has one.

“I got mine yesterday,” Edelstein said on Friday. “And it works fine.”

VTel received the $2.6 million grant from the former Vermont Telecommunications Authority in December 2012 for the purchase of technology and equipment to provide mobile phone service over its 4G LTE network in Vermont. The network itself was built with $117 million in funding awarded in 2010 by the U.S. Department of Agriculture’s Rural Utilities Service under the federal government’s recession-era stimulus spending program.

The federal funding included an $82 million grant allocated toward the building of a fiber-to-the-home network to VTel’s customers within its core Springfield-area telephone system and a $35 million government loan that went toward the building of 152 cell towers around the state to beam wireless broadband signals into communities that did not have internet service.

The first towers were turned on in 2014 and VTel has slowly been adding customers since.

Guite told lawmakers during a committee hearing in 2016 that offering mobile voice service over the wireless internet network had been delayed because of the priority in establishing Enhanced 911 service. At the time, VTel also was coming under scrutiny by lawmakers over how few people had signed up for its wireless internet network.

How many subscribers VTel’s wireless internet network currently has is not known — the company redacted all the information contained in its 2016 annual report filed with the Department of Public Service, which was requested by the Valley News, that would reveal the number of customers and financial results of the business.

But in a presentation to the House Committee on Energy and Technology in February, VTel reported it had 3,100 wireless customers across the state, of which 2,600 were residences and 500 were commercial.

That represents a 9 percent penetration of the approximately 33,000 “unserved households” the company identified that do not receive internet service in Vermont when it received federal funding for the project seven years ago.

VTel Wireless has said for more than a year that it planned to launch mobile voice service in 2017 but that data plan subscribers already could make calls via third-party providers such as Skype or Google Voice.

The updated system VTel is now providing harnesses a different technology to enable the use of cellphones over VTel’s 4G LTE network.

VTel said in the February presentation to lawmakers that it “hopes to reach” between 3,500 and 4,000 internet customers with its wireless broadband network by the end of 2017.

When VTel received federal stimulus money, it promised to deliver high-speed internet service to “virtually” every unserved home in the state, a pledge also made by then Gov. Peter Shumlin. Questions about how well it has fulfilled that promise and the quality of its service have been a point of contention between the company and some state lawmakers.

John Lippman can be reached at jlippman@vnews.com.

Correction

This story was corrected on Saturday, Oct. 28, 2017, to show that Montpelier resident Stephen Whitaker accepted VTel Wireless’s offer of a free mobile phone but has yet to receive it.




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