The Deeper Dig is a weekly podcast from the VTDigger newsroom. Listen below, and subscribe on Apple Podcasts, Google Play, Spotify or anywhere you listen to podcasts.
When VTDigger reported last month on FirstLight’s use of banned Huawei equipment, the telecommunications company promptly retaliated by canceling an underwriting contract with the organization. But FirstLight has also taken action against a competitor, VTel, for its role in the story — a move state regulators are now questioning.
Now, FirstLight is trying to kick VTel off of a dark fiber line that came under the company’s purview during its 2018 acquisition of New Hampshire-based 186 Communications. FirstLight argues that by allowing VTDigger to publish photos of the facility, VTel broke a confidentiality agreement in their contract for that equipment.
A VTel employee gave VTDigger access to the data center where Huawei equipment, which was banned for state contractors in February, was visibly operating. (FirstLight contracts with the state for E911 service and data centers.)
The state’s Public Utility Commission heard arguments in the case last week.
According to VTel, the loss of this dark fiber line could compromise geolocation services for emergency calls, which allow 911 operators to detect a caller’s location. It could also impact some television and long distance phone service, the company told regulators.
But FirstLight said VTel’s actions were a clear breach of their contract. They also questioned whether Vermont’s PUC had jurisdiction to intervene in a case that largely centered on equipment located in New Hampshire and Massachusetts. That’s a question that regulators are likely to keep facing, as companies like FirstLight continue to consolidate local telecom systems into larger regional networks.
On this week’s podcast, VTDigger editor Colin Meyn describes what’s at stake for the companies and their customers.
—Podcast transcript—
This week: The telecom company FirstLight is retaliating against a competitor for its role in our reporting about FirstLight’s use of banned equipment. Now, it’s up to state regulators to decide how far FirstLight can go.
Back in June, our editor Colin Meyn got access to a telecommunications facility that’s typically only seen by engineers.
Colin Meyn: I was invited to go to a colocation office, which is a space that’s owned by Consolidated Communications, which is the main landline carrier in Vermont. They sort of have a building where all the other providers store their telecommunications equipment.
There’s lots of wires there, there’s lots of routers, there’s these things called patch panels. And I was told that one of the pieces of equipment being used by FirstLight, which is one of the largest providers in the state, was made by Huawei, which is equipment that has been banned among
state contractors in Vermont.
I paid a visit to this facility in Montpelier first, and was let in by an engineer for Vermont Telephone Company. He showed me his equipment, and then I walked over to FirstLight’s rack in this room and took a photo of what was clearly Huawei equipment sitting there with power on and wires going in and out.
What’s the significance of this company using Huawei equipment in the first place? Why is that a big deal?
Colin Meyn: The state of Vermont in February put out a directive. It was the first state in the country to do this. And it cited federal concerns that companies using Huawei gear would essentially, potentially give the Chinese government an opportunity to sort of spy on those networks.
President Donald Trump: Huawei is something that’s very dangerous. You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous.
Colin Meyn: There’s quite a bit of debate over the extent to which that is a security concern. And certainly for this piece of equipment that I saw, it doesn’t seem to be the type of thing that would really allow a great deal of cyber espionage. But it did appear to be a possible violation of this directive that came up in the state of Vermont.
You write a story about this. What happens?
Colin Meyn: Pretty quickly after the story was published, we heard back from FirstLight, the company that was using this equipment. And they had given us this sort of response very early on in my reporting process, saying that they didn’t want to talk about their customers. And then that was sort of it. And I sent them many other emails. I sent them photos that I took from this office, many other things, and they didn’t have anything to say about it until the story was published. And then they had a lot to say about it.
Their general counsel wrote a very angry letter talking about how we had created security concerns for them, how reckless the reporting was, accusing us of collaborating with Vermont Telephone Company to damage them. And then our marketing department got a call from their public relations person saying that they were canceling a $15,000 contract for underwriting with VTDigger. So that spoke pretty loudly as well as far as what they thought about this story.
Then they also lashed out at VTel, the company that let me into this office. They kicked them off of a piece of equipment that VTel was leasing from FirstLight. And that’s what really has led to this hearing before the Public Utilities Commission and bringing the lawyers to fight this out in Vermont.
In front of the Public Utility Commission this week, this regulatory body, what did VTel say the stakes would be for them to lose that piece of equipment that FirstLight wants to kick them off of?
Colin Meyn: Sam Coleman, the network engineer for VTel who let me into their offices, went up there on the stand and talked about a number of different ways that them being kicked off of FirstLight’s equipment would hurt customers in Vermont. VTel’s main argument here is that if FirstLight follows through with kicking VTel off of this dark fiber, then that’s going to hurt Vermont consumers. And it is the Public Utility Commission’s job to protect Vermont consumers, that’s sort of the fundamental argument that they’re making here.
The line that they use from Lebanon to Boston, it’s not their primary connection. It’s their redundant line, essentially, their backup. So they have another line to New York that is sort of their primary channel out of Vermont.
Sam Coleman: They’re both used. Whichever one — if one is failed, they will switch to the Boston side. If Boston fails, it will go over the New York side.
Colin Meyn: This is their redundant line, and there’s really no obvious replacement for it. They’re using this dark fiber, which gives them control over the line. They can plug in their own equipment. There seem to be other alternatives for what’s called lit fiber, which is much more expensive, and they said would be much slower.
You could purchase 4400 gigabytes of lit service?
Sam Coleman: You could, but I don’t even want to know how much that would cost. We’ve already sunk a fair amount of money into the equipment that is today capable of that.
Colin Meyn: Sam talked about how if they were kicked off this dark fiber, and they couldn’t find another redundant route that had the same speed, there’s a number of things that could be impacted — one of which is a 911 geolocation services, which is when you have an emergency call, and you’re not able to actually tell the person who receives that call where you are, that there’s a system in place that allows them to pinpoint where you are so that first responders can still respond, despite the fact that you are unable to explain their location. That would be severely diminished if they didn’t have this redundant line or the redundant line was slower.
Sam Coleman: If one doesn’t exist, and the single one failed, the geolocation will not be available to first responders.
Colin Meyn: They also talked about things like a few cable TV stations from Boston, and some data services that they provide to clients that would be harmed.
What would the grounds be for FirstLight being able to kick VTel off of this equipment in the first place?
Colin Meyn: Yeah, so FirstLight has gone on this buying spree of companies around New England.
[Promotional video]: In 2016, FirstLight is acquired by Oak Hill Capital Partners, setting the stage for its next phase of aggressive growth.
Colin Meyn: One of those companies is called 186.
[Promotional video]: FirstLight also acquires 186 Communications, which operated a fiber network in New England.
Colin Meyn: They had a previous contract with VTel for this stretch of dark fiber going from Lebanon, New Hampshire to Boston. And dark fiber is basically high speed optic fiber that a company rents, and they plug in their equipment on one end and their equipment on the other end. So it’s really just this cutting edge fiber that they’re renting. FirstLight came to acquire that fiber and also inherited this contract. So they’re effectively trying to cancel the contract, claiming that VTel violated a confidentiality clause by letting me into this colocation facility and not stopping me from photographing FirstLight’s equipment.
Josh Bobeck [FirstLight attorney]: You testified that you were in the Stowe central office for approximately 10 minutes.
Sam Coleman: If that, yes.
Josh Bobeck: And that Mr. Meyn was never out of your sight.
Sam Coleman: He was standing right beside me the whole time.
Josh Bobeck: And you saw him take photographs of FirstLight’s equipment?
Sam Coleman: He had a phone. I was assuming he took a photo, yes.
Josh Bobeck: But you testified that he took no other pictures while he was in the Stowe central office with you.
Sam Coleman: I don’t have his phone. So I don’t — I can’t testify what happened. But it didn’t — having a phone myself and taking pictures did not appear that that happened. No.
Colin Meyn: There’s very vague language in the contract about how the two companies’ confidentiality can be understood: things that are understood to be confidential shouldn’t be shared with the public. This sort of language. It gets into the nitty gritty legal arguments as to what’s confidential and what’s not.
Brandon Payton: When we go through and decide what gets released to the public, there’s a full process of the security board, of which I’m a member, that goes through and sanitizes and says this is what we’re going to go with. This is what we’re allowed to release. When marketing wants to press releases, are we okay with this? Does this particular thing represent a risk to us? That security board goes and says yes or no.
Colin Meyn: Brandon Payton, who is the chief network officer for FirstLight talked about — he was pressed by VTel’s lawyer, at what point exactly was this confidentiality thing broken? Does simply bringing in unvalidated guests count as breaking this confidentiality? Or is it the point at which I took out my smartphone and pointed it at the equipment that broke confidentiality? Or was it the point at which VTDigger published this photograph and made this all public knowledge and turned it into a public discussion? Is that the point at which confidentiality was broken?
Brandon Payton: The allowing them entrance isn’t the confidentiality access, it’s network security access. The publishing or enabling the publishing of, is.
Colin Meyn: Brandon said that really it was the publishing of the photo that really crossed the line for them, and turned it into something that was clearly an attempt to damage their company and that sort of thing. Which is interesting, because really, that’s the one point at which VTel has no control over what happens.
They were the ones who decided to open the door. Sam didn’t make an attempt to prevent me from doing anything in particular in the colocation facility. But once I had the photo, it wasn’t really up to VTel to decide whether or not I published it. But FirstLight’s argument basically is that VTel knew what it was doing. It knew that these spaces are only supposed to be accessed by people who have the access cards and are there to do engineering work, basically, and that they intentionally used that access to damage their competitor.
Brandon Payton: By VTel using a reporter to produce negative press about a competitor, it’s very clear that the direction is to try and discredit FirstLight in one way or the other. So firstly by using the equipment that talks about the Huawei, focusing on the Huawei topic, which is not relevant, as well as the enablement of all the other equipment that is in the CO.
Colin Meyn: VTel’s lawyer quickly sort of snapped back at that and said, how exactly did VTel use this reporter?
Bennett Ross [VTel attorney]: I thought I just heard you say VTel used a reporter. On what facts do you base the claim that VTel would use a reporter?
Brandon Payton: A reporter used VTel’s access. I’ll restate.
Colin Meyn: I think FirstLight’s sort of acting assumption throughout this has been that VTel fed me this story, and essentially sort of engineered this whole thing in an attempt to hurt FirstLight, which is not accurate.
Bennett Ross: So if all the Huawei equipment is out of FirstLight’s network, what competitive harm or competitive mischief can the photographs be used to cause FirstLight?
Brandon Payton: When looking at an irrelevant topic like the Huaweis that are completely removed from the network, they’re bringing in questions that are not there. There is no discussion around Huawei in the state of Vermont. Therefore, when there’s questions raised that do not need to be raised, it’s irrelevant.
There was some discussion of the actual decommissioning of the Huawei equipment. What did we learn from that exchange?
Colin Meyn: This had been conveyed previously in the filings, as the companies have sort of gone at it in their filings and counterfilings leading up to this hearing. We’ve learned quite a bit about what exactly was happening in FirstLight’s network during the time that I was reporting the story. And one thing that’s clear is that they said that they had been decommissioning this equipment for quite some time, since 2018, and that it was a matter of time before it all came out. Whether or not it was public that they were using this Huawei equipment. And coincidentally, it seems, or so FirstLight argues, they completed their decommissioning of the Huawei equipment the day before we published our story. And there was some discussion over to what extent that was coincidental or not
Bennett Ross: Was it just coincidence that [FirstLight] decommissioned all its legacy Huawei equipment one day before the VTDigger article?
Brandon Payton: That is — you’re simplifying the decommissioning of Huawei. It involves many, many, as described in the statement, it involves many months of planning and merging of services.
Bennett Ross: Was that a no or a yes?
Brandon Payton: It was not a coincidence.
Bennett Ross: FirstLight knew—
Brandon Payton: Let me restate that. It is a coincidence.
Colin Meyn: I think VTel was certainly suggesting that it was more or less a public relations move to rip out the equipment right as the story was going to be published, so that they could make it a non-issue as it was becoming public.
FirstLight contested that. They said that essentially, their schedule was happening regardless of this article. And then, although they had been reached for comment, it was completely coincidence that the two things lined up so closely.
The Department of Public Service raised this question about jurisdiction, and what the Vermont Public Utility Commission’s role is in a case like this. What were they arguing?
Colin Meyn: At the end of the hearing, Dan Burke, the lawyer for Department of Public Service, talked about how they were particularly concerned to hear about this 911 geolocation issue.
Dan Burke: It just raises significant questions as to whether or not that’s in federal FCC jurisdiction exclusively.
Colin Meyn: But then, he said something else that was really important. The hearing officer, Jake Marin, he said the big questions for him in this case — he’s ultimately going to make the decision as to who wins the day, or how to split the baby, that kind of thing — that he was really wondering about jurisdiction, and to what extent the PUC in Vermont has jurisdiction over a contract that was signed in New Hampshire, that is over a piece of equipment that exists physically in New Hampshire. And is that really something that the Public Utilities Commission can decide on?
Dan Burke, the lawyer for Department of Public Service said, he would be very wary of limiting the scope of the Vermont’s PUC only to things that exist neatly in Vermont.
Dan Burke: All the companies that are providing service in Vermont are not are generally, in some way, shape or form reliant on each other for network infrastructure or connections that are outside the state. That goes for even the largest here, Consolidated Communications.
Colin Meyn: He talked about how telecommunication systems have taken on a nationwide and worldwide nature, just the scope of them. You have companies like FirstLight who are buying up vast tracts of fiber all around the region, and perhaps all around the country from other providers. And that if Vermont were to take such a limited view of where it could really regulate the companies operating in Vermont, that that could limit their ability to do much of anything down the road.
So the consolidation that’s been happening in this industry in general is part of what is making this case so complicated.
Colin Meyn: Yeah, definitely. You look at the extent to which FirstLight controls regional networks. And VTel was trying to make the argument that FirstLight is regulated in Vermont, it’s making decisions that are going to impact Vermont consumers. So why wouldn’t it follow that Vermont regulators are able to weigh in to those decisions?
Anthony Iarrapino [VTel attorney]: I would contend broadly under 203, 208 and 209, the proposition that a company can use its control over infrastructure that happens to be physically outside of the state to cause harm to Vermont customers, to cause harm through the deprivation of services that are regulated by the Commission — that that is a very slippery slope. To say, just because in this increasingly complex, heavily networked telecommunications world, just because the physical infrastructure resides outside of the state, when the company who owns that infrastructure knows that action it takes with respect to that infrastructure will cause harm within the state of Vermont, where it is a regulated entity — I think the Commission’s broad grant of jurisdiction through all of the statutes just mentioned and language cited throughout our briefs, is adequate to hear and resolve this dispute.
Colin Meyn: There were some extremes raised as to, if you say that you’re able to regulate contracts that were written in New Hampshire, does that also mean that you can stop construction projects in the Gulf of Mexico if those are going to impact Vermont consumers? The hearing officer asked whether if FirstLight was also selling ice cream on the side, would they be able to regulate FirstLight sales of ice cream cones?
Jake Marren [Public Utility Commission]: Let’s let’s say they sell ice cream cones. I can’t regulate their ice cream.
Anthony Iarrapino: No, I would agree with that.
Jake Marren: Okay. Yes. But the difference here is that this line is serving and being used by another company to serve Vermonters.
Anthony Iarrapino: That’s correct.
Colin Meyn: As is often the case when people are tossing around legal ideas, they sort of took it to the extreme. But I think that the Department of Public Service, what they had to say will be heard loudly in this case. That if regulators in the telecommunications industry want to be able to protect consumers in their state at all, there has to be some ability to reach outside the state. To stop companies from making decisions that are going to hurt Vermont consumers, if indeed that’s the case.
What happens next?
Colin Meyn: Well, there’s a bunch of filings coming up. These Washington lawyers came up to Vermont to take part in this hearing, and they’re heading back. In a month, they’re supposed to make their next filings, which will focus on this question of jurisdiction and confidentiality. And then the other sides will have a week to respond. So maybe in about a month and a half or two months, it’ll really be in the PUC’s court to make a decision on this.
And we’ll be watching?
Colin Meyn: We’ll be watching.
Cool. Thanks, Colin.
Colin Meyn: Pleasure.
