transcript

Transcript: Community Broadband Bits Episode 229

This is episode 229 of the Community Broadband Bits podcast. Former head of the FCC's Office of Strategic Planning and Policy Analysis Jon Chambers discusses how electric cooperatives can be the path to rural connectivity. Listen to this episode here.

Jon Chambers: There is no reason this country can't do today what our forefathers were able to do in the '30s which is delivered to rural areas the same kind of life that you can get in the rest of the country.

Lisa Gonzalez: This is episode 229 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. More and more world telephone and electric cooperatives are offering high quality internet access to their members. Why? Rural communities are tired of waiting for national providers to bring the kind of activity they need and because the business model works. Jonathan Chambers, a partner with Conexon and former head of the FCC Office of Strategic Planning and Policy Analysis joins Christopher this week. They talked about the role of electric cooperatives in bringing broadband to rural America. Jonathan points out how cooperative Fiber-to-the-Home of deployments works so well in rural America where so many people need and want them. Chris and Jonathan discussed political perceptions how events in DC have sculpted the current internet access situation in rural America, and how Washington could help local communities in the future. Now, here are Chris and Jonathan Chambers on rural electric cooperatives and ways federal policy can improve rural connectivity.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell and today I'm talking with Jonathan Chambers. He's a partner with Conexon and formerly the head of the FCC Office of Strategic Planning and Policy Analysis. Welcome to the show.

Jon Chambers: Thank you, Chris. It's a pleasure to be with you.

Christopher Mitchell: I think some of the people who listened to the show may have either seen you or seen videos with you in it in which you were talking about your ideas for rural America and how you recommend the people look into those if they're able to. I wanted to start with kind of a poke at what is common knowledge Which is that it is just too expensive to build Fiber-to-the-Home in rural America. How do you react?

Jon Chambers: There's some who come to believe it's too expensive to build fiber in lots of parts of the country. People know now Google Fiber which launched a very public and very inspiring fiber effort getting the whole country involved and gigabit service has pulled back its own plans to deploy fiber. What we're seeing, my partner and I who worked with rural electric cooperatives throughout the country is that co-ops can build and are building Fiber-to-the-Home in the most remote areas of the country are doing so without any government support, are doing so profitably and in delivering services, one gigabit service, hundred megabit service at affordable prices to their members. It add then common wisdom for many, many years at the FCC and all the smart people who analyzed this that building Fiber-to-the-Home was a step too far for rural America. As it turns out, it's not at all. We're building Fiber-to-the-Home throughout the country in rural population densities of three and four and five and commonly less than ten homes per mile. It is an exciting time to be in this particular part of the business. You had mentioned I was with the FCC. I was with the FCC for four years, but I'm now back doing what I really enjoyed doing which is working with companies that build networks.

Christopher Mitchell: You mentioned your partner I think is worth pointing out. He's actually a former customer podcast, Randy Clint doing a wonderful work with Ozarks and also with Conexon formerly with Como. Can you tell us a little bit about how co-ops are able to make this work when it's like I said it's a common knowledge that there's just the business model falls apart. Why are collapse so special?

Jon Chambers: Yes. You know that every good story has a good protagonist, and the story of electric co-ops building fiber at the home, the protagonist there is Randy Clint. Randy was working at a cooperative in Central Missouri called Como. Como had applied for a grant as part of the recovery act funding to build a fiber at home project in rural Missouri. The best thing that happened for rural Missouri, for rural America was that Randy in Como were turned down by the federal government when they applied for that grant. As a consequence of having been turned down, Randy is the type of person who and if you tell him you can't do something, he just tries harder and wants to prove people wrong. He and the membership of his co-op had gotten so enthused about building a fiber network that when they were turned down, they decided to proceed anyway. They took out a loan from CoBank. They built a fiber to the network which today provide service to every availability to every single one of their members. About half of their members take service. They offer a hundred megabit per second service for $49.95, gigabit service for $79.95. They were the first company anywhere to sell gigabit service in rural America. That network is the most complete and profitable network of its kind in the country and other co-ops in the country have started to adapt the same methods. These electric cooperatives have an existing infrastructure in place so they're leveraging an existing infrastructure. They have poles and docs and conduits and rights of way and bucket trucks and alignment. They used to responding to storms and emergencies in the middle of the night. They have equity in their current electric system. They have the capacity to borrow funds to continue to build. Above everything else, they are membership organization. Some people think that the benefit of say an electric cooperative or a telephone cooperative is that they're oftentimes not for profit. They're not all not for profit. The real benefit is that it's a membership organization. As a membership organization, the members decide how they want to invest their own money, their own equity. You have a built in base of interest when you start a project like this. You're only building because the membership wants it. That doesn't mean they translate to do a 100% if the member's buying the service. Part of the arrangement here is you're planning a 100% availability. You're serving everyone because that's the ethos of the cooperative movement that started in the 30's in these rural areas and today serves 80% plus of the geography of the country. What they do today, what the dozens of electric co-ops are doing today is similar to what their grandparents or great grandparents did in the '30s which is provide a service that no else is willing to provide. In the '30s it was the investor on utilities that were unwilling to build into rural areas. Today, it's the exact same story with fiber networks. What they will offer is unique but it's consistent with the way people have thought of telecommunications networks, consistent with the way people think of networks in general which is the network is stronger if you reach everybody. The network is stronger if everybody gets on the network. When we designed these networks, when we write business plans for these networks, when we execute on the business plan, we always talk about serving every single person and serving every single person with the same level of service. Everybody gets one gigabyte service or a hundred megabit per second service. You don't offer a better service to people who live closer to in the telephone world, to a central office and a slower speed when you live further out. You don't put data caps. You don't put tricky pricing in and try to encourage people to come in for a few months and then raise the pricing. The pricing of service level, all of it is all of a piece which is to say it's a cooperative community effort. It's in the tradition, sort of been the best of American and rural traditions in this country. It's still at the early stages, but like many things in life you can see something at an early stage and recognize its potential.

Christopher Mitchell: What are the things that comes to mind as you're saying all these things? These are the sorts of things that I think a lot of people associate with more of a left wing philosophy. In fact, I think people on the left associate collapse with socialism and historically some people on the right did. Now, people on the right I think more often associate cooperatives with private organizations. You mentioned it's not about the profit or the non-profit. It's about being a membership org which I think is worth reiterating. I want to just know you're more conservative and I wanted to know, this is the time in which our country might be as divided as it's been and certainly living memory. You've pretty much are summing up incredibly important values in terms of getting everyone connected. What do you respond to those? I think it's more commonly a conservative critique that, "Hey. If you choose to live in a rural area, you get poor service." Am I wrong in thinking that's more of a conservative position?

Jon Chambers: I'm a life long Republican. I'm a conservative. People I work with in rural America tend to be Republicans. They live in the red states. They live in the red areas of the red states. I've never had a political conversation with anybody from a co-op. It doesn't come up. I mean, this isn't, and I live inside the Beltway in Washington and I have for most of my life but I travel every week. I travel several days a week in rural areas. I don't find people talk to me about politics.

Christopher Mitchell: They talk to you about solving problems.

Jon Chambers: Which is refreshing because the politics get tiring even for those of us who or maybe especially for those of us who live inside Washington. I'd say it's not a like a right, left thing but these are businesses. First and foremost, the co-ops are businesses. It's not like a do good organization or a community organization that set out to try. It's a business first and foremost. The business that was established to provide electricity service and provide other services to its members. The actual organization is as a membership organization just means that the businesses owned by its members, being owned by members, being own by shareholders, being own by a one single private entity. Those are just different business structures. In this case, the business structure is membership. I guess it's an American thing. Again this is, I guess that's the point I'd like to make sure if you understand. It's not a right, left, red, blue, conservative, liberal, rural, urban. This is an American tradition. I'll tell you one quick story about my time in government. I was at the FCC for four years. I was promoting better service for rural areas and changing the way the FCC would go about it. That is to say the FCC spends a lot of money every year $4.5 billion a year for service in rural areas. The level of service the FCC had been advocating at the time and I'm talking about, They're obligating four megabit per second service which is faulty and inadequate and sub standard. I became a very vocal critique of that level of service, of the expectation and that's all a government or a telephone companies or the internet service providers could provide in rural areas. I'm fond of a saying by Michael Gerson who worked for President Bush years ago. In a different context, he talked about the soft bigotry of low expectations. I think that's been the FCC's view of rural America for a long time. At a time when the FCC have said in a national broadband plan that the goal was a hundred megabits per second for a hundred million households. The FCC was saying explicitly was those hundred million households. Well, that's not rural America. The 116, 117 million households in the country and it wasn't just the people like round numbers of the FCC was saying. Well, a hundred megabits for hundred million household and those are nice round numbers. The FCC followed up without saying what should be expected in rural America and what they were expecting was four megabits per second at the same time. They're expecting a hundred megabits per second elsewhere. It's not just about speed because speed is what enables activity, business activity and social activity and education and learning and health care and other things that we all do on the internet today. The expectation was low and that's what I began to criticize. I was stopped in the hallway one day by somebody, a lobbyist for one of a large telephone companies who said to me, "What do you think you're doing? Don't you know we had a deal?" What this lobbyist meant was in the previous administration before I had been there.

Christopher Mitchell: When you say previous, was that under Genachowski before you were there or is that the previous admin like under the Bush administration.

Jon Chambers: I was hired by Julius Genachowski but it was the deal that was set in 2010, 2011 was the deal that this person was referring to.

Christopher Mitchell: Right. For people who weren't aware that was the Obama administration, that was the previous FCC chairman.

Jon Chambers: Yes. That's right. That's right. The deal this person I was referring to is a deal that in rural areas the large telephone companies would continue to get billions of dollars of years in public support and would have to offer only four megabits per second speed. That was the deal. I have been a critique of the FCC for a long time including when I was there. My criticism isn't that I am against the government. I've worked in government. It wouldn't be viewed as sort of a personal attack that I don't like certain people. The FCC has at times over the years been interested in deal making. They have been coming over the years who have enjoyed merger reviews because it's allowed them to cut a deal, regulatory policy, rule makings, merger review, other things in which the FCC has in a sense cut a deal for the American people but it's deal making. I've long been opposed to sort of a regulator as deal maker. I tell you something that I've learned from my rabbi which is the difference between a contract and a covenant. For a lawyer a contract is when both parties have given consideration that is both parties get something and got something in return. It's oftentimes a zero sum game. A covenant is never a zero sum game. A covenant is something which binds people together and rises and lifts all people of. What the co-ops I worked with understand is this notion of covenant. Again, it's not a right or left notion. It's an American notion. It's an historic notion. We have a covenant in this country. A covenant can be thought of in three words; we the people. The people I work with, they were in electric co-ops. They understand covenant. They understand that they are formed of their members, by their members, for their members to better the lives of their members. In the case of the internet service which is the economic issue of the day for rural America, they understand that if they don't stand up, their communities will be the worse off. All across America, rural electric co-ops are standing up. They're investing their own money. They're investing their member's money. They're borrowing money in order to build world class internet systems because they understand what it meant in the '30s and they understand that's what it will mean that the kids, their grandkids are the future of their communities.

Christopher Mitchell: A key question in my mind is, to what extent the federal government is helping these co-ops and to what extent it might be hindering the co-ops? Let's start with hindering because we're kind of on that team a little bit. Other things the federal government is doing is making life harder for the co-ops to get this done?

Jon Chambers: The federal government has just simply not helped. It has the potential to help. There are some states in which co-ops have not been permitted to offer internet services but thanks structurally, we're finding a way to offer service throughout the country. I wouldn't say the federal government I bet hasn't hindered other than out of benign neglect. The greatest hindrance that the FCC is the federal government. The greatest hindrance has been this low expectation, this notion that poor service is good enough for some parts of the country or some people in the country. There's notion that satellite service, a fixed wireless service, things that are not subscribed to in great numbers or by whole communities anywhere in the country but that somehow going to be a good enough level of service for rural America. Then along the way, again it isn't a hindrance so much as it's been a mistake that the FCC and again all the sort of smart people that's hired over the years to look at these issues have made a fundamental mistake and how they evaluated the cost of building networks in rural areas. The FCC has looked at and spend a lot of time and money and energy developing a cost model which attempted to define with great precision found to the penny and a tenth of the penny what it would cost to provide Fiber-to-the-Home service to every part of the country. That cost model is the basis upon which the FCC has spent and is committed tens of billions of dollars, over $30 billion in just the last year alone committed by the FCC. That cost model is simply inaccurate. It simply does not capture lots of aspects of building a network which already exists. That is if you have existing infrastructure in place, if you can leverage infrastructure, if your cost of building is less then the model will assume it to be. All of that has led to an over expenditure that is an allocation of resources. The places it need not go and not spending money in areas that it does need to go, and not spending money on the types of services that can and will be built. I mentioned before, the co-ops I worked with is building without any federal money. That's not to say that money doesn't help. Money can always help, but where money really helps is in the most remote areas of the country. In areas where there's two or three or five homes per mile. As odd as this will sound to anybody listening in, the FCC made a decision several years ago not to give any money to those areas. The FCC considered it too expensive. That's the very area that needs money. At the same time, the FCC has given tens of billions of dollars to areas where it needed to give any money. There's been this misallocation of resource. We can get Fiber-to-the-Home to every home today that has an electric line. That's not just a pipe dream. It's happening. If the FCC would do like two things. One, set the standards high and two, allocate resource where it's needed. It could get that job done. Leaving up the FCC does nothing, we'll still do it.

Christopher Mitchell: One of the things that I think people don't always realize is how much money is already being spent. You noted that already and to some extent just redirecting it toward loans rather than giving money away to co-ops. Loans that might be unfavorable terms or might gently subsidize the interest rate in certain areas. I think we're talking about bribe them. That's what we're talking about spending new money, if they would spend it wisely. One of the things that you recently wrote I think suggest that you know, I go back in my head whether or not this is an issue of ignorance or malice. Not really malice, but sort of neglect. You know, there's a perception among Democrats that Republicans like corporate welfare and they're going to give money to the telephone companies to keep Republicans on the hill happy. Then, a separate quote in this book posted that you said we're democrats and rural Americans are not our people. Give me a sense that let me just tell one more thing is that I feel like in a lot of issues, these groups that organize around us think. If we just had someone high up at the FCC, we could break through and we could get things done. You're that person and I think you left the FCC in a lot of frustration after trying to break through and not being able to really dent the mentality of the FCC folks.

Jon Chambers: Let me remark on one thing which is capital for building rural areas is not a problem. We borrow money, private banks, CoBank loans money, publicly the rural utility service lends money. We haven't found any problem getting capital. It would be helpful to get some of the money that's spent, a fraction of the money that's spent by the federal government every year to support telephone companies to have that spent in a competitive way where the best service could get access to the money and prevail. You made some that nice remark about me, I want it to be as clear as I can. I was in the government for a few years but I never thought any of this was about me or what I thought. I spent most of my time while I was in the government trying to reach out to people and hear their stories. It was very great compliment paid to me over the years that I got invited to speak in a lot of places and I still go speak a lot of places. I used to use a line at the end of it. I never go someplace to just speak and so I get invited to talk but I always come to listen. I always spent at least the day wherever I went to ask people to come to me and just tell me about their lives and their stories. Great people at the FCC, there's a not so great people at the FCC, it's not so much a personality thing. It's natural in federal government that people sit in these offices and they get visited by lobbyist. They get praised for what they do and they complimented for their views. It's a very insular world. I used to say that people just get out of Washington. Go out and spend as much time as you can in areas where your talking to people where your policies are affecting those people. When I talk to co-op boards and others, I would say, "Look. I've got a one rule of thumb which is you put the member's interest first. You put the member's interest first and everything else follows." As corny as that sounds and as sanctimonious maybe as it sounds, I view that as my role of the FCC that is when I've been in government, it was a privilege. I viewed as my job, my boss, the people of the country, people of the United States of America, that's who I worked for. I didn't work for any particular chairman. I didn't work for an institution. I didn't work for bureaucracy. I worked for the people. I still do. The people I work for now are members of rural electric co-ops. I get a charge out of working with people where you have a chance to affect their lives. You know, people have joked with me about how I think broadband like broadband is the answer to everything, I ain't going to eh I don't really think that but that's what I do for a living.

Christopher Mitchell: I've been there.

Jon Chambers: I walked into a colleague's office one day at the FCC and I said something like, "Half a million of our fellow Americans, kids, families, veterans are going to sleep on the streets tonight and it's cold out there." A guy looked at me and he said, "So what? Chambers here. Your answer is broadband." I said, "Well, no. You know, I --" I said, "But I don't work for the Department of Housing and Urban Development. I don't work in Housing field. I don't really know a solution to homelessness." I said, "But I do know is when I come to work in the morning and I drive in a certain direction, I pass by the Martin Luther King Junior Library downtown in Washington. I say, "And I don't see sometimes a line out front waiting for the library to open. And that line is for people waiting to get in so that they can use the free computers and internet access in that library." I said, "When I leave at night sometimes if I take that same route home and I pass by that same library,' I said, "I see those people are because they're homeless shelter, buses parked out in front of the library waiting to take people back to the shelters." It's not answer to everything. Sometimes, it's just enough to give people an escape. My view of broadband is it's a lot of things. It's good things, it's bad things. It's part of all our lives now. Some of the best part of it is just it's a way to reach out to people. It's a way to feel socially involved. Sometimes it's just a way to get out your own life and escape into a next one.

Christopher Mitchell: I think that maybe we'll end on this last question which is, if you have any advice for people who are served by an electric co-op and their electric co-op doesn't have an interest. Maybe management or the board is too worried about the risk of this or they just don't see the value, what advise do you give them?

Jon Chambers: It always takes in every case I know, every co-op that my partner and I worked with and we're working now with several dozen co-ops around the country which is the facts and there's over 800 electric co-ops in the country. This is still early days. It always takes somebody to take a leadership role within the co-op. It could be the CEO or general manager. It could be a member of the board. It could be the board president for us to be led and we give advise. We write business plans. We have materials relationship. We can help people get funding. We can do fiber design. We can manage a construction process. All of that is just the implementation piece. What I know to be true is every cooperative in the country can build a Fiber-to-the-Home network. The business case gets harder, the more remote you are. In those cases, we encourage co-ops to work together because if you can get some more scale, it helps the business case. I know because I've been approached sometimes by members of the co-op in the past and I talked to their CEOs. Their CEO is not interested, which is fine but this is still viewed as a risk to folks. Even though I think the risk runs the other way, I think the risk runs to not doing anything. The risk runs to not building. I know that it scares some people. I think we'll reach the point inside of a year or 18 months where we'll go from the early pioneers in this to where it becomes common. We'll reach that tipping point. I don't know if it's 100 co-ops we're building or a 150 co-ops but I think we'll reach that tipping point inside of 18 months and that it will become common place. Nobody will even wonder within a few years about it and it will be like the expectation that you can get electricity. You can get fiber and people shouldn't settle for something less than the same kind of service you get. Same kind of service I have in my home, just fiber into my home to look at by the horizon and it's great. There is no reason that this country can't do today what our forefathers were able to do in the '30s which is deliver to rural areas the same kind of economic opportunity, same kind of education opportunity, same kind of life that you can get in the rest of the country.

Christopher Mitchell: I just want to point out that based on your timeline which I fully believe we're seeing. Just incredible activity from not only electrics but also telephone cooperatives. You're not going to have kind of activity that's as good in rural areas and as cities. Frankly, the kind of activity in rural areas will far exceed in what many of us have because we're mostly beyond cable. In the last generation technology that probably won't significantly upgrade to offer the same capacity and another benefits one has from the next generation network. That something to really cheer I think.

Jon Chambers: Yeah. My partner Andy has a variety shows when he makes presentations about in rural Missouri in Co Mo, Central Missouri where he was from. The internet speed done by some speed test showing the fastest speeds available in the country. There in rural Missouri was his system and it was showing the third fastest internet speed available anywhere in the country. It wouldn't be a great thing if people had a reason to move after rural areas. One thing that folks in rural areas know is that population is declining. For the first time in this country between the 2000 and 2010 census, population decline in a part of the country. Population decline in rural America. I'm not saying this turns it all around but you're right. You have a better level of service where these networks are being built. Wouldn't it be great part of the reason to move out into the wide open spaces and still have access to everything, to all of the information and attainment and social connection that anybody has anywhere. It's not a pipe dream. It's happening today. All you have to do is look at Co Mo in Missouri, in mid west in Michigan or part in Virginia or Ozarks in Arkansas.

Christopher Mitchell: North Georgia Network. Yeah. You get --

Jon Chambers: North Georgia Network, Habersham Electric. All across the country, people are proving this out.

Christopher Mitchell: -- Thank you so much for taking the time to talk to us about this. It's something we're going to keep covering certainly. I like to check it back in with you as you move forward with more companies you're working with, more the co-ops.

Jon Chambers: Thank you. It's been great talking to you as always, Chris.

Lisa Gonzalez: That was Chris talking with Jonathan Chambers, partner at Conexon and former head of the Office of Strategic Planning and Policy Analysis at the FCC. As electric cooperatives makes strides across rural America, we will continue to share their stories on MuniNetworks.org. Remember, we have transcripts for this and other Community Broadband Bits Podcast available at MuniNetworks.org/broadbandbits. Email us at podcast@muninetwork.org with your ideas for the show. Follow Chris on Twitter, his handle is @CommunityNets. Follow MuniNetworks.org stories on Twitter also where the handle is @MuniNetworks. Subscribe to this podcast and all the podcast in the ILSR podcast family on iTunes, Stitcher or wherever else you get your podcast. You can also subscribe to our monthly newsletter at ILSR.org. We want to thank the group mojo monkeys for their song "Bodacious" licensed through Creative Commons. Thank you for listening to episode 229 of the Community Broadband Bits Podcast.

Transcript: Community Broadband Bits Episode 228

This is episode 228 of the Community Broadband Bits Podcast. Fiber Infrastructure and Right of Way Manager David Young of Lincoln, Nebraska, describes the city's work with local Internet Service Provider, Allo Communications. Listen to this episode here. 

Listen to, or read the transcript for, episode 182 in which David Young, Mike Lang, and Steve Huggenberger discuss conduit policy in more detail.

 

David Young: Engaging your provider, engaging your community upfront and deciding what your model should be and then creating a plan and executing that plan is very important.

Lisa Gonzalez: This is episode 228 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez . A number of states have laws on the books that obstruct local governments from directly providing high quality Internet access to businesses and residents, or even partnering with local providers. Nebraska happens to be one of them. In Lincoln the community found a way to work within the confines of the law by using publicly owned conduit and creating a welcoming environment for private Internet Service Providers. As a result, Lincoln has entered into an agreement with the local provider Allo Communications who will use the conduit to build its Fiber-to-the-Home network. David Young, Lincoln's Fiber Infrastructure and Right of Way Manager talks with Chris this week. David discusses the early days of the project and how it has evolved. He also shares more information about the franchise agreement and more about the partner Lincoln chose. Be sure to take a few moment and listen to Chris' interview with David and several of his colleagues in episode 182 from last December. Now here are Chris and David Young, Lincoln, Nebraska's Fiber Infrastructure and Right of Way Manager talking about the community's conduit network and how they are capitalizing on it to bring better connectivity and technology to Lincoln.

Chris Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell. Today I'm speaking with David Young the Fiber Infrastructure and Right of Way Manager for the city of Lincoln and the public works department. Welcome back to the show.

David Young: Hi Chris, how are you?

Chris Mitchell: I'm doing well. I'm excited to speak with you again. Last time we had you on the show was the day after my son was born because he came a little bit early and I really wanted to get that interview in. I'm a little less frazzled today, although once again some traumatic events this week as we're recording the week of the election.

David Young: Yes. I did enjoy seeing your son at the Broadband Communities conference, good looking kid. It looks like he's very healthy.

Chris Mitchell: Yes. Yes, he's doing well. Now I wanted to note that since we spoke you've become a bit of a trade show hopper. You were at the NTIA in Big Sky Missoula where we served on a panel together, and then I think you knocked them dead here in Minneapolis for the Broadband Communities conference. I hope that people will feel that you're a more seasoned, more a big get for us now.

David Young: I think you're being overly kind. How much can you talk about broadband in front of a group of people who know a lot about broadband?

Chris Mitchell: I just wanted to see if I could start off by making you blush and be modest. We're going to talk about some more details that I've learned about the franchise you have with a Fiber-to-the-Home provider in your community that results from your system of conduit. I think people should start by listening to that podcast that we had done previously, it was in December of 2015. For a quick refresher, for people who aren't familiar with Lincoln, what have you all done to supercharge Internet access in the community?

David Young: Starting in 2012 the mayor and Public Works Department came up with a broadband technology plan. Basically the goal was to attract new carriers to the market and have those be very specific carriers. We wanted Tier 1, Tier 2 and Tier 3 carriers to provide competitive access to broadband for businesses. Under state law, Lincoln, or any city in Nebraska, is not allowed to provide municipal broadband. Lincoln took stock and figured out that what we could do is put in conduit system and lease out those conduit to other providers. We initially put in five miles of conduit in our downtown area as part of a revitalization project and started looking around and found 80 miles of abandoned waterline, probably 40 miles of abandoned waste water lines. We repurposed those lines into conduit systems and traffic conduit, old electric conduit, old natural gas lines, basically any pipe we could get our hands on and turned it into a conduit system that now is over 350 miles. We've leased that out to seven carriers total. When we got down to the last space we started talking about, "Gee, this is pretty successful, maybe we ought to look at Fiber-to-the-Home." We started working with different carriers and financing professionals to build a Fiber-to-the-Home with that last space in the conduit system. In December of last year we signed that agreement. Can you believe it's already been a year? It's been very exciting on our side, very busy.

Chris Mitchell: Yes, I can imagine. How much did the city spend in creating this asset?

David Young: In total about $1.2 million over four years. There was about 600,000 upfront in conduit expense and then staff time and maintenance and a $600,000 CIP, so a little bit more than about 1.2 million.

Chris Mitchell: CIP, that's Capital Improvement Program?

David Young: Yes, I'm sorry. Yes. For all those in the government, CIP is the Capital Improvement Plan, which is a six year plan that is how you allocate your capital dollars across programs like streets, water, sewer, those kind of things.

Chris Mitchell: If we ignore the new businesses that have come to town using some of this fiber that these carriers are leasing from you and if we ignore the better competitiveness of some of the businesses that were already in town, what are some of the direct benefits the city has had in terms of raising revenue from that 1.2 million that they spent?

David Young: If you're only talk pure money from the system we make $475,000 a year in lease revenue.

Chris Mitchell: That's like a three year payback then, just from that alone from today.

David Young: Right, and we've been making money since 2013. 2013 is 55,000 and then we had two more leases in 2014 and really 2015 was our banner year. Right now we're at 475, with the Allo project we're expected to be in the neighborhood of two to two point seven million a year by 2018.

Chris Mitchell: Allo is a local company, it's in Nebraska. I know in people in Colorado are familiar with it. It's incredibly well regarded by its customers from what I can tell. Tell us a little bit more about Allo, I think it's in a unique position there in Lincoln.

David Young: Allo is a Western Nebraska company. It was started by, they like to say, Nebraskans for Nebraskans. The city was meeting and doing presentations on Fiber-to-the-Home and the value of the community to various local organizations, building that community support for the program. We were meeting with financiers and talking to them and Allo was brought in and offered to competitively bid on the Fiber-to-the-Home project in Lincoln. We had another company, Bluestem, also bidding on the franchise. Bluestem is still in operation, they are building one portion of the city. We actually have three Fiber-to-the-Home projects going right now. Allo won the citywide franchise, Bluestem is doing a small neighborhood in Northeast Lincoln and then our incumbent provider, Windstream, has announced that they will upgrade 5,000 homes over the next two years in Southeast Lincoln to Fiber-to-the-Home. It's been very successful from a community planning aspect of partnering with the private sector to build this infrastructure, but it is a lot of work. It's hard to believe that we're going on our fifth year of operation.

Chris Mitchell: I want to clarify something with the franchise, which is I think sometimes people think of franchises as being exclusive. Now you talk about offering a franchise because of the limited conduit space, that's the franchise to use that conduit. A company like Bluestem, there's nothing stopping them from building to the rest of the city, they just wouldn't be able to use the same asset that Allo is using. Am I getting that correct?

David Young: You are. We had one space left in the conduit system and I will tell you, sometimes that space isn't even there. The conduit system is getting very full. It's been very successful. The last guaranteed spot in the conduit system, what we said was we wanted somebody to provide Fiber-to-the-Home services and in order to do that we wanted to franchise for that last position. Allo and Bluestem both worked with the city very closely. It took us about 90 days to come to an agreement and Allo was ultimately chosen to do the project.

Chris Mitchell: Now when you say there's no more room in the conduit, I'm assuming that over time you'll fix that, you'll be putting in extra conduit or you might be doing something differently now because it's not like this is the end of the conduit forever.

David Young: Correct. No, no, no, there's nothing to prohibit the city from putting in additional conduit, and we are. The new conduit system as we're building it out is designed for six carriers occupancy. All extensions of the conduit system that are performed by private providers are deeded over to the city and owned by the city. All the additional expansion, all expansion construction is now under the new standard of six pack of conduit system.

Chris Mitchell: We did talk about that in the previous show so if people want more detail I invite them to go review that. The transcript's on our website at muninetworks.org. Before we get into the franchise, which is where I'm really excited about some of the things that you guys are doing with that, I wanted to make sure people understand, Allo is a little bit of a unique company that has I think more of a local focus than other companies. The reason that I think it's important is because other cities that might think, "We'll build our own conduit system," you may not get the same results. I hope that they would. I hope that they'll find firms that are interested but Allo has a direct relationship to another Lincoln company, Nelnet, which I'm hoping you can tell us a little bit more about in terms of how Allo's capitalized.

David Young: Nelnet is a Nebraska based student loan provider I believe, and a bank. They have been very successful, very community focused. They were one of the entities we were working with to build community support for the Fiber-to-the-Home program. Nelnet decided they would capitalize the entire project for Allo. They really believe in the community in Lincoln, Nebraska, and broadband as an infrastructure that is designed for 21st century cities. They wanted, Nelnet, their home town to have that infrastructure. It's my understanding they have given Allo $100 million loan to build the entire city.

Chris Mitchell: Right, I think from my perspective as someone who works at the Institute for Local Self-Reliance, we love seeing that kind of local focus, local businesses investing in the community. I think the city of Lincoln has really done a great job in terms of making it easier for that to happen and really facilitating that. In particular because you have this conduit system you have a little bit more leverage in negotiating with Allo for this franchise. If you didn't have the conduit system, do you think you would have had a different discussion with Allo?

David Young: Yes. I have talked to several communities in Nebraska and a few surrounding states about this project and I think your cautionary statement is very correct. Sometimes building a conduit system isn't the right model but I do think that engaging your provider, engaging your community upfront, and deciding what your model should be and then creating a plan and executing that plan is very important. We had the last space in the conduit system, we had a very successful model and we had a ton of community support for our program. When you put those three things together, yes we had a significant asset walking into the negotiations for the Allo project. I think that was born out in the agreement. I wouldn't describe it as leverage. Any partnership, what you bring to the partnership creates value for you and what the other party brings creates their value. We were just trying to maximize value for both parties. With a very successful system already in place we had a lot of value on our side of the table.

Chris Mitchell: Because you brought that value you could then make asks of Allo. One of the things I would start with is this idea of the SSIDs, which is I think we're using that as shorthand for virtual networks and SSID is the name of a wireless network that you see when your device is trying to connect to a WiFi network. Now tell us in terms of Allo's network how these virtual networks are involved.

David Young: Of course you're going to cause me to geek out and your listeners may want to fast forward to this next section.

Chris Mitchell: I think there's other people who might be fast forwarding to this section because we don't geek out enough.

David Young: Really?

Chris Mitchell: You never know.

David Young: One of the sections of the franchise, and this is a public document, anybody can have access to it, is called service to government buildings and facilities. A standard clause in many franchises but there's one section I'd like to read it to you. "The franchisee shall provide 15 Virtual Local Area Networks, VLANs, across the entire system. The public VLAN shall be provided free of charge to the city for non-competitive use. These VLANs shall be available at every connection and termination point on the franchisee's network." To those network engineers out there listening, they will have a big smile on their face because that means I have 15 virtual networks across the entire system that Allo deploys and at every termination and connection point, meaning wireless access points, I can have access to those VLANs. I can turn up my own SSID, Lincoln public school's access, health department access, those are a few of the ones that we're working on right now. A public VLAN access for education is in our library system, combining those two together so they're available on the entire system. It is very exciting. VLANs, if you really want to go to sleep late at night look up and read about VLANs. Basically it's an addressing system for the network and we have 15 of them.

Chris Mitchell: Let's talk about one use case that I'm very excited about. I've been in some ways evangelizing for this type of approach. The intricate technology is not as important to me as the sense of what you can do with it. I like to imagine, I have a child in the public school system, they have a device likely from the public school system. This is hypothetical of course, Jackson is almost one year old. What happens is wherever he goes with that device as long as those VLANs are there, that device could just log in. If he's at a friend's house or even if maybe I'm a low income family, if then he goes out to a public access point or perhaps the neighbor's signal is there and if the neighbor has consented to this, then his device will just connect. Effectively he will be at school on his device.

David Young: With all of the school's network security policies and access to all of the public school's resources, the public library resources. It would be as if seamlessly he was inside school on the same network. Yes, that is one of the most exciting use cases for us as well.

Chris Mitchell: The nice thing is, is that if you're a parent who's really worried about your child being on the open Internet, where they might find material that they're not even seeking and would be inappropriate, the fact that even in your home you wouldn't even have to worry about managing that connection -- Because I think a lot of parents are worried that their kids are going to be more tech savvy than they are, or they're worried that they won't have it set correctly, but now even in your home own your kids is using that device behind the filters and using all those resources. To me that seems like it's a very good solution.

David Young: We were very excited about it. It was one of those conversations, it's like, "What could we do with this? What would be the actual cost of providing this?" It's not a lot because there's some version of over 9,000 VLANs on a particular network so what does providing 15 cost? Not a lot from the provider, other than willingness and creativity of thought. By building this network as a public/private partnership there was a higher level discussion than just a dollar here or a dollar there, it's what could we do together. The Virtual Network, Virtual Local Area Network, VLAN project is actually my personal favorite part of the agreement. As we go forward we're connecting all the traffic signals in the city as they're building it out. We have a new program called Green Light Lincoln, which is upgrading out entire traffic system to the 21st century. We'll be putting in a new ATMS, Advanced Traffic Management System, next year to leverage all these new connections. Over the next three years every street light in the city will be connected to this new ATMS system.

Chris Mitchell: Let me suggest that perhaps your traffic engineers haven't seen Die Hard Four. It's a little bit concerning.

David Young: Technology should be treated cautiously I agree. Die Hard Four was a wonderful movie.

Chris Mitchell: Yeah, especially the part where the car flies up to take the helicopter out, but it's not something I've seen more than ten times, I assure you.

David Young: If you think about commute times and public dollars and impacting people's daily life, if we can make the system more efficient, that impacts everybody's life every day, whether you're riding the bus or whether you're driving your own car.

Chris Mitchell: Right, you can do a prioritization for public transit. As you said if everyone spends less time in congestion you're not only saving them time, you have less pollution. There's tremendous benefits to this.

David Young: On that, and then the other piece what if we don't have to widen the road? To widen the road costs us -- A road widening project for one mile is $10 million. What if we can just upgrade the infrastructure and allow more cars to travel through faster? We don't have to spend that public dollar there, we can spend it on maintaining that road instead of widening it and impacting those properties that are adjacent to it. It is really exciting for us. It's an exciting time to be in Lincoln working with the Public Works Department. Fiber-to-the-Home, the Fiber-to-the-Business project, the Green Light Lincoln project, there's a lot of technology projects going on right now in Lincoln.

Chris Mitchell: We talked about a couple of different aspects with the franchise. Is there anything else that you see that you are doing in Lincoln working with Allo that others aren't doing where you're getting ahead of the curve?

David Young: Defining the characteristics of service is something we do in our franchise. Basically, in most franchise you provide service to the city, great but we go a little further and we say that all residents and subscribers shall be provided service under non-discriminatory rates, terms and conditions. Meaning everybody gets the same price, no more negotiating for price. We also say that there are no residential contracts for service allowed, so if you don't like the price you're receiving you're not locked into a contract. We also do not allow installation fees, except for in very unusual circumstances. You can't get charged to have it installed, there is no contract and you're paying the same rate as your neighbor. We think these are actually very good things to put in a franchise because it creates a very competitive marketplace for the carrier, they have to compete on customer service and quality of service, not on contracts and the fact that you negotiate better than your neighbor about price. I think that's important. I think that other communities should consider doing that. I'm staff for the telecom advisory board for the city and a lot of the complaints we get are, "My service isn't great from X carrier," and, "I pay too much," but there is no competition. That was the single most, the highest complaint that we received. The highest number of complaints that we received was “there's no competition.” When you're building out a new infrastructure you're going built to every home ensuring that those competitive roadblocks are not institutionalized in your franchise agreement. It was very important to us, and I think other cities could look at that.

Chris Mitchell: I want to talk briefly about Rights of Way management, which is a part of your title. I'll telegraph that you're going to be back for a show later this year, in I don't know maybe another 10 episodes, in which we are going to be talking about some small cell deployment type stuff that your approach is enabling you to do. One of the things I feel like you've done in Lincoln is that you have simplified permitting in ways that both Allo and Bluestem may find it easier to pull permits and to build than they would in my city, in St. Paul, Minnesota perhaps. Do you have any advice for communities in terms of dealing with Rights of Way?

David Young: One of the major initiatives we had in 2013 was how to make our system more business friendly. Permitting was the number one area of conversation with every carrier we talked to. We did a little reorganization project and a study inside of public works and identified every staff position that was associated with managing the Right of Way, inspections, plan review, private development, public development, and we put them into one team called the Right of Way Construction team. That team is responsible for all public facing Right of Way construction projects, meaning if it's a natural gas project, if it's the waterline project, if it's a sewer line project, if it is not a CIP project, so not a capital project, then this group manages that and works with the public to ensure a fast, safe, and affordable project. As part of that program, as part of that program, we created an electronic permit system where carriers or franchisees can upload their plan set in a very simple permit. Our goal is to have that approved in two business days or less. Sometimes we get a little bit longer than that but most of the time we get it approved in about two business days.

Chris Mitchell: One of the things you had told me before was that when it comes to dealing with these companies, many of which I think local governments are frustrated with because they don't feel like they can get enough out of those companies in return for use of the Right of Way, I think you've said those companies are much more willing to negotiate on terms that would be viewed as favorable to the community if the community can turn permits around quickly. That's the thing they really care about.

David Young: The old adage, time is money, is very important. From the time a sales person goes into a business and says, "I would like to provide you with next generation broadband," to the time the company can actually deliver that broadband, is a very sensitive topic. The faster they can do it, the better they look to their customers, and, when they go slow, they point the finger at the city and say, "We can't get through permits, blah blah blah." If you can align your interest with the company, which is the city wants that customer turn up on broadband, we want them to be a happy customer, they're our customer too. Streamlining the permit process, it takes a little insight into why you're a community, why you're a service provider in the community and what your values are as an organization. For Public Works, it was providing good customer service that means providing good customer service to our corporate clients as well, and permits is how we do that. Establishing a goal, making that goal known, putting a goal in the contract, that gives the carrier comfort, allows them to forecast a little bit better. It gives them a better level of customer service, a better sense of partnership in the agreement instead of a one-sided agreement. It has paid off with us, all of our contracts have 15 minimum day turn times permits and we try to do it in two.

Chris Mitchell: Great. I want to ask if there's any last words of wisdom you might have from your entire lifetime working on this conduit project?

David Young: You know this is the second conduit project I've worked on, getting out there and talking to the community is critical.

Chris Mitchell: Let me ask you about that for a second, because I just imagine me going out and trying to talk to people in the community about conduit. I imagine people rolling their eyes and being like, "I'm bored," or, "I'm not interested." What does that mean?

David Young: I don't talk about conduit.

Chris Mitchell: Okay.

David Young: I talk about the Internet. We open with a couple of jokes and everybody laughs and we have a good time. Then we talk about the Internet and why it's important in their lives. The access to a trillion dollar marketplace, the competitiveness with other cities to attract and retain young people, young workers. We talk about the highest paid IT jobs, network engineers, database administrators, and architects, server engineers. You don't get those jobs unless you have a good robust broadband infrastructure. People get excited about that. A lot of people still don't understand truly what the Internet is, there's a feeling in some circles that it's a nebulous thing. Why is it important to me? My presentations generally are 10 slides and 15 jokes, and then we talk about what's really important to them, how their business can leverage the Internet to make more money, be more customer-focused. I'm done in about 30 minutes and then we talk, answer questions for 30 minutes. It's a great time, people feel like you're actually talking to them about what's important to them. We don't really talk about conduit. Usually I bring a piece of conduit, a piece of fiber and pass it around the room and let everybody touch it and feel it so they get an idea. When I first started here in 2012 almost every group that I went to that I took this piece of conduit and fiber to loved it. People wanted to see it, they had never seen and heard about fiber their whole life. They'd never seen it, they'd never touched it. Giving them that tactile sensation of handing around a piece of hard conduit in your hand and somebody says, "What happens if somebody digs into it?" You bang the conduit on the table, "It's pretty tough stuff." They laugh, and it's a good time. You have these visions, and I've been to these meetings where it's long and painful and slow. It doesn't have to be that way, but it takes a lot of work building a presentation that's fun and exciting and really talks to what people care about, not what you care about. I care about conduit but most people really don't care about that, they just care about the Internet, how it impacts their life. Talking about that is the best advice I can give people because people get excited about that and then you get to ask for support, asking for help in the community to prioritize budget money for that project. It's a finite pool. People want to support projects that they like so you have to get out there and market your project to the community so that the mayor and city councilors hear from those groups, to say, "Yes, we want this. Yes, we want to support this. This is a good thing."

Chris Mitchell: I think that's a great note to end the show on. Thank you so much for coming on.

David Young: Chris thank you very much.

Lisa Gonzalez: That was Chris talking with David Young, Lincoln, Nebraska's fiber infrastructure and Right of Way manager. As the network unfolds we will bring you more news. Remember we have transcripts for this and other Community Broadband Bits podcast available at MuniNetworks.org/broadbandbits. Email us at podcast@muninetworks.org with your ideas for the show. Follow Chris on Twitter, his handle is @CommunityNets. Follow MuniNetworks.org stories on Twitter where the handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR podcast family on iTunes, Stitcher or however else you get your podcasts. Never miss out on our original research by also subscribing to our monthly newsletter at ILSR.org. We want to thank the group mojo monkeys for their song, Bodacious, licensed through creative commons and we want to thank you for listening to episode 228 of the Community Broadband Bits podcast.

Transcript: Community Broadband Bits Episode 227

This is episode 227 of the Community Broadband Bits Podcast. Chief Information Officer Paul Kronberger of Madison, Wisconsin, explains how the fiber network pilot project will help bridge the digital divide. Listen to this episode here.

Paul Kronberger: We specified we wanted to keep the costs very low and to remove as many barriers as possible for individuals to obtain this service.

Lisa Gonzalez: This is episode 227 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Madison, Wisconsin, has embarked on a pilot project with multiple purposes. As the community seeks ways to improve connectivity citywide, they will use the project to collect data about benefits of providing services to the community. Simultaneously, the project will bring fast, affordable, reliable connectivity to areas of the city with the highest concentration of low-income households. In this interview, Chris talks with Paul Kronberger, Madison's Chief Information Officer, who offers more details about the Connecting Madison pilot program. In addition to describing the aims of the project, Paul explains how the city is using existing assets and how they're contending with restrictive state law as they embark on their partnership with a private ISP. Now, here's Chris with Paul Kronberger, Chief Information Officer for Madison, Wisconsin, discussing the pilot program to help bridge the city's digital divide.

Christopher Mitchell: Welcome to another addition of the Community Broadband Bits Podcast. I'm Chris Mitchell. Today, I'm speaking with Paul Kronberger, the CIO of Madison, Wisconsin. Welcome to the show.

Paul Kronberger: Thank you. Glad to be here.

Christopher Mitchell: I'm also glad to have you here. It's a bit of a rivalry time between Minnesota and Wisconsin, but I'm happy to learn more about what's happening over there. For people who aren't familiar with Madison, the home of incredible football and basketball teams, can you tell them a little bit about your city?

Paul Kronberger: We're the state capital of Wisconsin. Our city has a population of about 250,000 or so. We're also home to the main campus of the University of Wisconsin. I mean, there's quite a few other four-year campuses and two-year campuses, but we're the largest, the central UW campus. It's a beautiful city. We're nestled between two good-sized lakes. The central part of the city is actually an isthmus. We have a diverse population and quite a few people who are in the technology area. We have some major government institutions, including the seat of state government. Many of the state agencies are centered here. We have the city of Madison, Dane County, the Madison school district, one of the largest technical colleges here, and another college called Edgewood College, which is a private institution, but it has a pretty diverse and large student body as well. We also are the home to some major corporations, including Epic Systems, which you probably know is a major healthcare IT provider, also American Family Insurance, Cuna Mutual, and a number of other corporations.

Christopher Mitchell: I think you're also home to one of the most interesting of the digital divide efforts that we've seen around the country, where the city has picked four neighborhoods and is building out a rather robust fiber optic network. That's the main thing we're going to talk about. We'll talk a little bit about future plans or discussions around a citywide network, but what can you tell us about the goals of this four-neighborhood network?

Paul Kronberger: We have been discussing the issue of the digital divide for some time, and there's been growing awareness the last few years. We've had a number of discussions with the mayor and other city officials. The mayor moved ahead on this by establishing a city committee that would help determine a direction to go in, and the committee is called the Digital Technology Committee. It has nine members. Two of them are alders, our elected officials, and then the other seven are citizen members. Then I and my staff staff the committee. One of our members is Barry Orton, who is a professor of telecommunications from the University of Wisconsin, I think pretty well-known in the broadband area. He's been a major contributor and part of the effort. In fact, he chairs a subcommittee called the Citywide Broadband Subcommittee. In the early discussions on the committee, we were trying to work through how can we address the digital divide, and discussions ranged in many different directions. Finally, we settled on an idea of doing a pilot project to wire one or more of some of the challenged neighborhoods in Madison, and we went through a selection process where basically we're looking at a number of areas. Madison already has some predefined areas called NRTs, which stands for Neighborhood Resource Team areas, and these were defined years ago as areas that need more attention from the city and more intensive, coordinated effort from the city. Our primarily-challenged neighborhoods have some factors that make them challenged. The committee went through a process and ended up selecting four areas for a pilot project. We weren't sure how to move forward on that, so we did a request for information to get some ideas on what vendors would propose like, "How would you do a pilot project? What technologies would you use? Wireless? Wired?" et cetera. We learned something from that, and then we moved ahead within RFP, a more formal procurement. Our committee, in discussing this, they felt that wireless was perhaps a better option. We structured our RFP to say that a wireless proposal would be preferred, but we were open to other technologies and proposals and would like to see whatever the responders -- whatever they submitted. As we received the responses and then evaluated the RFP, information from the different vendors and such, what came to the top was a solution from a local firm that was for a fiber solution. Basically, leverage the city's extensive fiber backbone and extend that network into each of these four pilot areas and basically have a Fiber-to-the-Premise in those areas. Then the vendor would actually provide the Internet services, and we specified we wanted to keep the costs very low and to remove as many barriers as possible for individuals to obtain this service. At this point, we're moving ahead with offering low-cost but high-speed Internet service for $10 a month. No gimmicks. No need to add on extra services or bundle, unless you wish to, but you don't have to.

Christopher Mitchell: Is that available to anyone that lives within the area, or does one have to qualify by having a certain kind of income or a child in the school system or something like that?

Paul Kronberger: It's available to every household within those defined areas, their defined geographic areas. We actually have it down to the individual address level.

Christopher Mitchell: Okay. I found it really interesting. You mentioned the city's existing fiber network, which has a very cutesy name, MUFN. I'm assuming the first word is Madison.

Paul Kronberger: Actually, it's not the first word.

Christopher Mitchell: Oh, it isn't?

Paul Kronberger: Metropolitan. It's an acronym. It stands for Metropolitan Unified Fiber Network.

Christopher Mitchell: Ah, okay. I got those other three letters right. The private provider extended the network, but that fiber, was that entirely paid for by the city of Madison, or was that a partial where the city kicked in some and the provider kicked in some also?

Paul Kronberger: For the pilot project, the city is paying the capital costs of running that fiber to each of those households or apartments.

Christopher Mitchell: That's the entire cost, and then the city will also retain ownership of that, right?

Paul Kronberger: Yes. That's the plan. The stated purpose of the pilot project -- and I'm sorry. This is more background, but you may be aware of a Wisconsin state statute which places a number of requirements on any municipality that is thinking about a broadband service for its residents. One of the requirements is that, before any service is actually instituted, the city do a cost-benefit analysis and hold a public hearing and a number of other requirements such as that. The stated purpose of our pilot project is to gather data in order to do the cost-benefit analysis. We intend to move ahead with this pilot project, gather that data, and then have that available, but it also will be a very good learning opportunity for how services could be provided to the public.

Christopher Mitchell: Is this envisioned as a temporary project? If it is, I'm curious what happens at the end of that period to the fiber that's already been created.

Paul Kronberger: The city would take ownership of that, but in parallel with that, we are moving ahead with a major citywide Fiber-to-the-Premise project. It's really in parallel, and I think as we learn more, as we move along on that, that'll help determine or answer some of the questions about what becomes of the pilot infrastructure and will that continue to be used and be incorporated into, say, a citywide infrastructure.

Christopher Mitchell: One of the things that the state law also does is that if you became a service provider, there are some pretty stringent accounting requirements that I think are designed to basically make it infeasible for you to offer services. Is that part of the reason that you're so focused, that you're working with a private provider in providing this service?

Paul Kronberger: That's part of it. We take a step back, and we look at, "What does this mean, to be providing this type of service?" As an information technology department, I am not staffed up to do that. I do not have staff to provide those customer call services or help desk services. We really know that we have to work in partnership with the private sector to accomplish this. With our pilot project, we're doing that. We have the private sector extending that network, and they're going to actually provide the actual service and bill the residence for that service.

Christopher Mitchell: Is ResTech expecting that they will break even or make the profit that they may need solely through selling customers services?

Paul Kronberger: They're doing this as a for-profit corporation, so they would not be engaging in this if they didn't expect to make some money from it.

Christopher Mitchell: I guess the question, then, is for people -- Frankly, I think there's other cities that are going to be interested in doing similar things or, at the very least, evaluating if they would be able to. I'm curious. Does ResTech have to offer a lease payment to the city for using the fiber? What's their arrangement with the city in that regard?

Paul Kronberger: Right now, no. They do not. They do not lease the fiber. We're providing the money to build that network out, and they are not leasing it from the city, but they will utilize it and then complete the installations within the individual residences. Again, it's designed as a pilot project to help make this happen and move along and then give us the opportunity just to see what we learned from this pilot.

Christopher Mitchell: Right. There's a lot of cities that have had to figure this all out just using paper and math ahead of time. I think actually doing it will give you a much better sense of the true costs and opportunities. One of the things that I think is noteworthy, I think there's a growing trend where, 10 years ago, almost every city that got involved in this said, "Well, we're going to invest in fiber, but that fiber is going to have to pay for itself." Now, it seems like Madison, you're really treating this as infrastructure and as a digital divide effort where your number one goal is to provide social benefit. It's not to make sure that the fiber can maximize its value.

Paul Kronberger: That's correct. We're really looking at the social aspect of this, how to meet some of these needs for people who are affected by the digital divide.

Christopher Mitchell: If I can just ask a final question, since the fiber installs have been happening for some time, have there been any early lessons or big success stories, people being really excited about this available in their neighborhood? What's the reaction from the community been?

Paul Kronberger: It's been positive. I should mention other aspects of the projects. The pilot project for the digital divide is a three-pronged effort. The first is the actual network itself, to get that network to each residence. The second prong is education, digital literacy education. We've contracted with a local non-profit who is, and is going to continue, providing training and basic computer training for people and provide some basic help desk, rate-fixed types of services, and also the installation of computers for the residences. Then the third aspect of it is the computers themselves for the people. What we did is we partnered with another local corporation, actually one of our vendors, who really stepped up to the plate and coordinated the donation of computers from some of the large corporations in the area. Then they're processing any reconditioning that's necessary on those computers and are working hand in hand with our educational non-profit to get those deployed to residences as their services come online. We've been fortunate that several of the corporations locally have donated computers. We actually, at this point, have sufficient numbers of computers, and they're late-model, high-end, corporate computers that are perhaps two years old to three years old that are being refreshed by the corporations, and they're donating these to us. The equipment that's going to go out to the participants in the pilot project, it's going to be decent equipment. That's a three-pronged effort that's part of the project.

Christopher Mitchell: Great. It sounds somewhat similar to a project called Eliminate the Digital Divide and something that I think is a good model for communities anywhere, especially those that have large corporations locally that may have these recent computers that are nonetheless outdated for their needs. Then I just wanted to finish up by noting that you mentioned a citywide potential project. You have a feasibility study that I looked at, doing a citywide dark-fiber-type approach. We will look forward to following any progress there and hopefully talking with you as you move forward. I certainly hope that you're able to make it work out.

Paul Kronberger: Thank you. We're very hopeful about it, and we are really moving it to the next phase where we are planning to engage some outside resources to help us develop an implementation plan. When that's ready, we will then submit that to our city council. It would include options or recommendations for how to finance this and how to move forward on this. There's a very big decision point that'll come up next year for our city council on where we go with Fiber-to-the-Premise citywide, but we're not at that point yet.

Christopher Mitchell: Great. Well, I look forward to seeing what happens, and I just want to salute you for taking a novel approach and just going out there and figuring out how to get fiber to low-income areas and to gather the data that you ultimately need to figure out how to make it work citywide. Thank you for taking the time to talk with us today.

Paul Kronberger: You're welcome, and thanks for having me.

Lisa Gonzalez: That was Chris talking with Paul Kronberger, Chief Information Officer from Madison, Wisconsin. For more coverage, follow the Madison tag on MuniNetworks.org. We'll continue to follow developments as the project grows. Remember, we have transcripts for this and other Community Broadband Bits Podcasts available at MuniNetworks.org/broadbandbits. Email us at podcast@MuniNetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. You can also follow MuniNetworks.org's stories on Twitter. The handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR podcast family on iTunes, Stitcher, or wherever you're out to get your podcasts. Never miss out on our original research by also subscribing to our monthly newsletter at ILSR.org. Thanks to the group mojo monkeys for their song “Bodacious,” licensed through Creative Commons, and thanks for listening to episode 227 of the Community Broadband Bits Podcast.

Transcript: Community Broadband Bits Episode 226

This is episode 226 of the Community Broadband Bits Podcast. Joining Christopher Mitchell are Will Aycock and Suzanne Coker Craig. They discuss the situation in Greenlight and Pinetops as well as the importance of connectivity during the recent hurricane. Listen to this episode here.

Suzanne Coker Craig: We just think it's phenomenally important to our town, to really the existence and survival of our town.

Lisa Gonzalez: This is episode 226 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. As many of our listeners know, in February 2015, the FCC issued an order that preempted restrictive state laws in Tennessee and North Carolina. The FCC's order allowed Greenlight, the municipal network developed by Wilson's electric utility, to expand its Internet access, telephone and video services outside of Wilson County. Pinetops, a small community of about 1300 residents, was connected soon after the FCC ruling and the community, its businesses and residents, finally received the high quality connectivity they needed to step into the 21st century. This last August, the order was reversed by the 6th Circuit for the US Court of Appeals. Wilson had to stop offering service to Pinetops or risk losing the exemption to the state law. In other words, stop serving Pinetops or the state would shut them down completely. In this interview, Chris talks with Will Aycock, Greenlight's General Manager, and later, Suzanne Coker Craig, a Pinetops business owner and town commissioner. Will describes a situation in the area, especially since the onset of Hurricane Matthew, which has hit Pinetops hard, and how Wilson found a way to continue to help its neighbor. Suzanne describes what it was like before the community had high quality services from Greenlight. She also describes how important the services are for the town, and how Greenlight has gone above and beyond to help the people of Pinetops. Now, here's Will Aycock, General Manager of Greenlight, and Suzanne Coker Craig, Pinetops' Town Commissioner and local business owner.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm starting off today talking with Will Aycock, General Manager of Greenlight, the municipal fiber network in Wilson, North Carolina. Welcome to the show.

Will Aycock: Thank you, Chris. Happy to be here.

Christopher Mitchell: It's great to have you back. I think a lot of people are aware that you have had a state law in the past that has prohibited you from building your network outside of the county, though you have many neighbors that would like to have it. For a period of time, the FCC preempted that law and made it so that you could expand. What did you do during that period?

Will Aycock: During that period, we offered our service to the residents of the town of Pinetops, North Carolina, over in Edgecombe County. Pinetops is a wholesale power customer of our electric utility, so we actually had fiber all the way into the community and had been helping them with building fiber even before the change in the law that allowed us to provide our broadband services. Since we already had fiber access in the community and we'd actually been working back in 2009 and 10 with the town officials down in Pinetops, to basically do the engineering studies required to go ahead and bring broadband into their community, so all that legwork had been done. When the window of opportunity presented itself, we went ahead and began providing our broadband service to their residents.

Christopher Mitchell: You guys are about 50,000 people. Pinetops is what? 1,800? It's a pretty small city.

Will Aycock: Yes, it's a very small, eastern North Carolina typical town.

Christopher Mitchell: That's very complicated, because the 6th Circuit has reinstated the law. What does that mean for Pinetops?

Will Aycock: In effect, it means that we are no longer allowed to provide telecommunications services for a fee outside of Wilson County, which puts us in the position of potentially having to disconnect or withdraw our broadband services from that community. However, as you may know, we have uncovered at least a temporary solution that hopefully will allow us to find a permanent solution to the issue.

Christopher Mitchell: Yes, under the law, you have 30 days basically to stop serving them, although I think it's not really clear when that 30 days started from. In any event, you had scheduled basically the end of October to cut them off, and just last week, or as this is airing the week before, you decided to offer free service because that is allowed under the law. What made the Wilson City Council decide to do that?

Will Aycock: First and foremost, we've been working and trying to uncover essentially any opportunity to avoid withdrawing service, especially right now during this critical time for that community. As you may be aware, we're barely two weeks out from Hurricane Matthew, one of the most devastating hurricanes that's happened to this part of the world since really Floyd back in the late 1990s. Obviously, there was already an effort underway to try to figure out how to not withdraw this critical infrastructure from the residents of Pinetops. They sort of layer on this natural disaster with many of their residents living in emergency shelters, relief organizations coming in to the community, helping to get people back on their feet, all of those operations relying on the broadband network really for the essential communications behind those efforts. That really put an increased amount of weight on trying to find a solution. Our attorneys came to the realization that there was this sort of potential loophole that would allow us to at least temporarily provide broadband and voice service in the community at no charge. Obviously it's not a permanent solution, and it wouldn't be a solution at all if it were not for our private sector partners. We've actually had two of our wholesale providers that we purchase the bandwidth and dial tone from step up and they are actually offering us services for free for a limited period of time to essentially help us to bridge this gap in the community, both to give them opportunity to get back on their feet after this natural disaster, and from a broader sense, hopefully allowing us in partnership with some of our state legislators to find a permanent solution.

Christopher Mitchell: First of all, I just want to say it's really great to hear that there's multiple entities coming together to make sure that Pinetops is not left out. It's also worth noting that you were the only broadband provider in Pinetops. There is no cable. There is DSL provider, but I know a person in Pinetops and he has assured me that no one could get more than 10 megabit service, which is not broadband access and certainly would be very hard to run a business on. You pulling out would be a significant hardship. I'm just curious, if you could just briefly tell us some of the important ways that the broadband service has been essential dealing with this emergency situation.

Will Aycock: Right. One of the first things is simple communication with family members. As these residents were evacuated from their homes and they were moved into this emergency shelter there in the community, they have relative and family and friends across the nation and across the globe who want to know that they're okay. There's been some lack of communications services that we fielded the call basically saying, "Can you guys come down and set up wireless in the shelter, so that these people's devices will work and it will allow them to communicate with their family and friends across the globe, letting them know that they're okay?"

Christopher Mitchell: You noted broadband and telephone services, but there will be no cable services. This is a lifeline type of service really that you're going to be providing while we hope that the North Carolina legislature, at the very least, exempts Pinetops from the law or ideally reconsiders the entire limitation that you have to deal with.

Will Aycock: Right. Certainly our immediately priority is extending these lifeline services during this transition period, hopefully allowing the legislators to, at a minimum, as you said, provide a fix for the residents there in Pinetops and our other customers outside of Wilson County, although our goal certainly is to have all communities in this state have the option to be able to meet their own infrastructure needs as their elected officials deem appropriate.

Christopher Mitchell: I'd just like to ask you one other thing as we finish up, and that's just so people are aware, in the middle of this almost existential crisis for Pinetops with this devastation from the hurricane, you still have them prioritizing, getting down to Raleigh to argue for some relief from the state in the form of this law. I think that, just to me, it shows me how incredibly important this issue is. This isn't just about downloading Netflix. This is about the survival of a community in the modern era.

Will Aycock: Absolutely. It's been very moving to see what's going on in the community and to watch their elected leaders, their mayor and commissioners, trade duty between working at the shelters, helping to serve their citizens there, and then sort of ferrying back and forth almost a relay at Raleigh to meet with various state officials to try to advocate on behalf of their community for long term access to this infrastructure. I think seeing that play out has really highlighted for me and for many others the importance of this infrastructure in these communities.

Christopher Mitchell: Well, thank you very much, Will, both for the call today and also for setting an example of how communities should be helping each other out to make sure that we can all thrive in this country.

Will Aycock: I appreciate it, Chris. It was great talking with you.

Christopher Mitchell: Now, I'm speaking with Suzanne Coker Craig, a town commissioner and small business owner in Pinetops, North Carolina. Welcome to the show.

Suzanne Coker Craig: Thank you very much. I appreciate being here.

Christopher Mitchell: I really appreciate you taking the time. I know that there's a lot going on there. I'm curious, if we could start just with a sense of what it was like to be a small business owner prior to getting the Wilson Internet service in Pinetops.

Suzanne Coker Craig: You kind of make do with what you have, so we were very used to dealing with slow Internet, but we didn't have any options. We made the best of it, but our Internet was pretty slow and unreliable. I spent almost 20 years living in Raleigh in the triangle before I moved back home, so I was used to a little more modern approach and still have lots of friends and family who live in Raleigh. I go up there and realize how much faster real Internet was. Customer service was terrible. You got the feeling that we were the small town dealing with the large company who really didn't care about us at all, and go through all kinds of mazes to get through to a person to talk with them if you had a problem. Generally, you were told the problem must be on your end. It was frustrating and it was slow and it was unreliable.

Christopher Mitchell: When you say unreliable, I think there's a number of people who might think, "Well, yes, my cable Internet cuts out every few months or so." I'm guessing it's significantly more unreliable for you.

Suzanne Coker Craig: Absolutely. There would be periods during every day when more than one of us were online down here at my shop, we'd both be waiting and it would be dragging. Sometimes it would just drop off. When you say people are used to that kind of thing once every couple of months, this would be about once a week that it would just drop off for no reason. It may not be off long, but just enough to interrupt what you were doing and really just got aggravating. There would be times, honestly, with a light rain, that it would just disappear for a few minutes. It was constantly your connection would drop off on your computer, and it would have to be searching for the connection again. It was much more common than I think anyone would really be used to or expect.

Christopher Mitchell: How did things change when Wilson began offering the service, the much faster Internet service?

Suzanne Coker Craig: Oh, my goodness, it was night and day. The difference with the Internet services was it was incredibly fast, and I've actually tested. I will be honest and say that I did not have a chance to hook up my business with Greenlight, I had Greenlight at my house, which is about a block away. I have it in my home but not in my business yet because I was in line to be hooked up when the court ruling came down. I'm kind of on the waiting list for my business, but I had tested my service at home versus my service here at work, and the Internet at home is five times faster. The speed was very noticeable and the service is seamless. I don't think I've had any interruptions other than probably for about 45 minutes during the hurricane a couple weeks ago.

Christopher Mitchell: Right, and that's somewhat understandable.

Suzanne Coker Craig: Yes. That I don't complain about. It was noteworthy that's all the time we lost it. It's fast enough that I will routinely leave my business if I have a large file to upload or something like that and will run home and upload files and do things that I need fast, reliable Internet. I will walk a block to my house with my laptop. It's very noticeable, and people here have been incredibly excited about it. Everybody that's gotten it has loved it and has commented on how much more efficient it is, and just really, really excited about it. The fact that they had an option was also noteworthy for all of us here. We don't have to choose the only one. We have an option.

Christopher Mitchell: I have the impression that now that the town has had it and it is possibly about to be taken away that people are fighting harder than they would be if it was just a hypothetical issue, because obviously people could've been upset about this law two and three years ago, but now that they've tasted it, it seems like something's different.

Suzanne Coker Craig: It's entirely different idea because, yes, I guess when you live in a small, rural town, you get used to being left behind in things. I'm sure when the law was passed in 2011, it was one of those, "Well, they wouldn't let us get this anyway, I'm sure." That was five years ago and it wasn't quite as common for areas to have that kind of speed of Internet. Honestly, our economy has gotten even more dependent on good Internet service since then. I think the combination of those things, and yes, when you get it and you realize how good it is and then somebody wants to take it away, yes, our folks are extremely upset about this.

Christopher Mitchell: Just turning to Hurricane Matthew, can you briefly tell us the lasting impact that you've had from the storm?

Suzanne Coker Craig: Our little town of Pinetops, which is about 1300, similar to when Hurricane Floyd came through, we are almost like a little island and I'm not exaggerating this, within a half a mile of our town's borders, just about on all sides, we have significant flooding. People within our community, quite a few people lost their homes. We had others who had significant damage to their homes and were displaced for a couple of weeks at least. There's obviously still a lot of rebuilding going on and a lot of recovery efforts and those kinds of things. That situation also brought about how important it was to have good Internet. One of our churches here set up an impromptu shelter because all of this was pretty unexpected as far as the level of the flooding. One of our local churches set up a shelter and within a couple of hours of them doing that, the folks from Greenlight and Wilson were at the shelter hooking up the fellowship hall, where they had about 100 people housed, for the Wi-Fi connection. They had Wi-Fi already at the church, but it wasn't strong enough to reach the area. The folks from Greenlight hooked it up and we had quite a few people in the shelter who were Hispanic. They immediately were able to get on their phones and let people know, let their families know, that they were okay. That was a tremendous relief to a lot of folks and really made a difference. We saw immediate impact from that. Like I said, the folks from Greenlight had been here, they had serviced us very well, very quickly, and we know that we are a priority with them in the service they have given us, even through this disaster situation. There have been several situations. Especially considering that they may have to take their service away from us, and they have gone above and beyond with service calls and those kinds of things given that situation that it would be easy for them to brush us off and say, "Well, we're going to have to cut them off anyway." But they haven't and that's been a tremendous difference in the attitudes of the folks in this town as well.

Christopher Mitchell: I've met a number of people from Greenlight over the years and I've always been impressed with their character, so I'm very happy to hear that. One of the reasons I wanted to ask you about the hurricane is because I found it really powerful learning from Will that your town's leadership, in the midst of dealing with all this, was still having to go to Raleigh to plead your case to be exempted from the law that's preventing Wilson from expanding. To me, it just showed how seriously this is being taken by your town's leadership.

Suzanne Coker Craig: Absolutely. It's one of those things -- We had a meeting that Friday. The hurricane basically came in late Friday and Saturday. We had a meeting Raleigh. We thought the folks in Raleigh might call it off because of the weather but they didn't, so we got all trooped up there. Everyone, with time to go, went to Raleigh. It's that important for us. Our entire area, really, in eastern North Carolina, the small, rural areas really struggle economically and we're in one of the poorest counties in the state. It is very hard for us to attract business. It's hard for us to attract population here. This Greenlight service really gives us a considerable economic boost, and we just think it's phenomenally important to our town, to really the existence and survival of our town. We think it's that important.

Christopher Mitchell: I want to thank you for taking time out while you're in the middle of these two important issues and running a business and running a town and everything else. I think people are really going to be interested in what you have to say, so thank you for taking the time.

Suzanne Coker Craig: Thank you very much. It's my pleasure, and we will keep fighting.

Lisa Gonzalez: That was Chris talking with Will Aycock, General Manager of Greenlight, and Suzanne Coker Craig, Pinetops' Town Commissioner and local business owner. We have plenty of coverage of Pinetops, Wilson, and Greenlight at MuniNetworks.org and we'll continue to follow developments there. Remember, we have transcripts for this and other Community Broadband Bits Podcasts available at MuniNetworks.org/broadbandbits. Send us your ideas for the show. Email us at podcast@MuniNetworks.org. Follow Chris on Twitter. His handle is @CommunityNets. Follow MuniNetworks.org stores on Twitter, where the handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR Podcasts family on iTunes, Stitcher, or wherever else you get your podcasts. Never miss out on our original research. You can subscribe to our monthly newsletter at ILSR.org. We want to thank the group Mojo Monkeys for their song Bodacious, licensed through Creative Commons, and we want to thank you for listening to episode 226 of the Community Broadband Bits Podcast.

Transcript: Community Broadband Bits Episode 225

This is episode 225 of the Community Broadband Bits. Representatives of Midwest Energy Cooperative discuss their project to bring high-speed connectivity to rural southwest Michigan. Listen to this episode here.

Dave Allen: I really see this as a re-lighting of rural America.

Lisa Gonzalez: This is episode 225 of the Community Broadband Bits podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. There's a project taking shape in rural southwest Michigan and the nearby regions of Indiana and Ohio. It's headed up by the Midwest Energy Cooperative. At the recent Broadband Communities Economic Development Conference in Minneapolis, Chris ran into Bob Hance, President and CEO of the cooperative, and Dave Allen, the cooperative's Vice President of Regulatory Compliance. Naturally, we wanted to hear more about their project and share the details with you. They provide some history and how access to high quality connectivity has positively impacted a number of their rural members. Chris, Bob, and Dave also have some interesting thoughts on federal funding programs, project standards, and the different rules for cooperatives and big corporate providers. Learn more about the project at teamfiber.com, where you can also discover more about the cooperative. Now you may notice some background noise. We apologize in advance. While we advocate for local choice and access to technology, sometimes technology is just not on our side. We had a little trouble with the mic that day. Also, Chris is suffering from allergies, and until winter sets in, he may sound a little like the late Howard Cosell, but never fear, it is our Christopher. Now, here with Chris are Bob Hance, President and CEO, and Dave Allen, Vice President of Regulatory Compliance for Midwest Energy Cooperative.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell. Today, I'm speaking with two folks from Michigan. Bob Hance, the President and CEO of Midwest Energy Cooperative. Welcome to the show.

Bob Hance: Thank you.

Christopher Mitchell: And Dave Allen, the Vice President of Regulatory Compliance for the Cooperative. Welcome to the show.

Dave Allen: Thanks, Chris. Good to see you out in Minneapolis.

Christopher Mitchell: Yes, Dave, it was terrific to run into you and to learn more about your approach.

Bob Hance: Not many people say that, Chris.

Christopher Mitchell: Well, I'm happy to be the one. Now your cooperative is really leading Michigan, in terms of delivering high quality Internet access. Can you tell us about your regions that you serve?

Dave Allen: I can touch on the areas that we serve and set that up. Bob does a great job of talking about our history in the communication space. Midwest Energy serves twelve counties. Eight of those in Michigan, three in Indiana, and another two in Ohio. We have two distinct service areas. One in southeast Michigan, and one in southwest Michigan. The area we’re really focusing on, in terms of our initial phase of this project, is the southwest Michigan district. That scenario's characterized by Notre Dame, down in Indiana and South Bend, and you can go in a northeasterly direction toward Kalamazoo and southwest Michigan. We're those counties that fall in between that space. The area is really kind of identified by Whirlpool's world headquarters. Kellogg world headquarters is nearby in Battle Creek. We've got Pfizer up in Kalamazoo. A lot of industry that is in the area but not in our direct service footprint. The areas we serve are more rural areas, more characterized by seed corn industry, and perhaps to the south, the RV industry. My point being is that we are extremely rural. We probably serve about eight members per mile, but we do have large industry that's in the area that lives in our service footprint and really have a need for access to high speed broadband.

Christopher Mitchell: I have to point out that after talking with some of the telephone cooperatives here in Minnesota, eight people a mile is a positive luxury in some cases.

Dave Allen: In terms of municipals are 60-some-odd customers per mile. Investor on utilities run on the 30 members or customers per mile range. So at eight customers per mile, that's still pretty rural.

Christopher Mitchell: I think that a rule of thumb has been that you make money when you have eleven people per linear mile or more with a private sector business plan, but not if you have less than eleven people per mile. But let's talk about your history of offering communications services.

Bob Hance: Technically, we've been an active ISP since the mid-90's. That was all brought upon by a relationship we had with Trans World Network. We provided third party long distance, as well as ISP services through dial-up. As the Internet progressed, and people became more and more in tune with all things related to the electronic world and personal computers and the mobile devices that we have today, obviously dial-up service was just not going to be the thing of the future. So over time, we've had many, many folks who have left that to go to other options, including satellite, which we've entered in to providing terrestrial broadband, thinking that that was going to be a possible solution to the rural space that we were in, and a good replacement for dial-up. Unfortunately, we ran into problems such as limited band availability in the service territories that we were trying to serve. We had numbers of people who had signed up for that service but were let down because the capacity of the satellite just was not going to reach the demand. And even though they launched the second satellite, we ran into the same problem with that and eventually moved on to phase number three, if you will, with trying to provide rural America with some semblance of broadband. And that was broadband over power line. We were one of nine co-ops that were involved with a company called IBEC that was a single source provider of equipment and a process that would provide a signal across the power line. So an injection on our current equipment that sounded very promising as well. Unfortunately, we were two years into it and finally started to get past some of the technical issues that came with broadband over power lines when IBEC announced that they were bankrupt. That was back in December 2011. So here we have a few hundred people who had been hooked up with satellite and broadband over power line, and instead of abandoning them entirely, we just went back to the drawing board and said, "What's next?" Interestingly enough, at the same time, separate from communications, our utility folks, which includes me, were kicking around what we were going to do with respect to our needs in communications for the electric space. We have an active SCADA system. We know what's going to happen with the further smartening of the grid. So clearly utilities have been using various forms of communications between substations and their corporate offices at headquarters to get data back from the field. Eventually the light comes on and we say, "If we put in this fiber system, we take care of our utility needs, and at the same time, we can leverage that with the opportunity to replace what we've been trying to do by providing a true broadband to our membership, which married quite well together I can say."

Christopher Mitchell: Well, it's interesting because I think almost all electric utilities are involved in communications for internal needs, but there is a split between those who see themselves purely as an electricity co-op and not interested in doing anything externally, and then those that see themselves as more technology driven and bringing the technology of the day to their members. Is that your experience?

Bob Hance: I think you're spot on. I think those are the conversations that have been had across the country. I like to see it as we're doing what is required to continue to serve our membership in a relevant way. I'll just exercise that a little bit by saying that if not for the insistence of them for the last several years that we look at ways to provide them this service, I don't know that we would have. I think our principle responsibility and our duty is to our membership, and if the membership is asking us to consider other products and services that make being part of the rural landscape more enjoyable, more affordable, more reasonable for them, that's what we ought to do.

Christopher Mitchell: Dave, do you have anything to add on that?

Dave Allen: Yeah, just to add to that, we don't have an annual meeting per say, but we have district meetings where Bob goes out and engages our membership. And over the course of probably the last three or four years, the questions trended away from anything having to deal with electricity and more toward can you provide a broadband solution. We have a lot of folks out here that are on air cards. I think there are still some people on dial-up and folks utilizing satellite ... frustrations with usage allowances, with costs, with reliability, all these things that enter into the equation. They are just tired and fed up with that, so increasingly they have asked us to enter that communication space, where in all honesty, we were comfortable remaining an electric co-op. So we're a little bit of a reluctant participant. But there are a lot of things going on with respect to energy too, and Bob touched on some of the smart grid things we're doing. We have to do a better of helping people manage their energy use better, so this is one component of that.

Christopher Mitchell: I understand that you are not alone. There are other cooperatives in Michigan that are interested in working together to improve Internet access?

Bob Hance: We are working in conjunction with the other electric co-ops in Michigan. There are nine of us, specifically. A number of them are going through this process of evaluating from a conceptual standpoint. Maybe moving forward they are doing their due diligence. There are some surveys that have been presented to the memberships. At least three of them are fairly active in this process, but of course it takes a little bit of time for them to walk through that. I think it's promising. I think they understand that we're here to help in any way. We're the example that is on their way with already building a project, so we're a ready resource, and a valuable resource in their process. We'll see where it goes.

Christopher Mitchell: Thanks, Bob. I'm also curious if there is a difference in your members across different states in terms of appetites for delivering broadband or if the interest is pretty similar.

Bob Hance: Chris, I think there is interest from all kinds of areas. Even those co-ops that are serving closer to the suburban areas. What everyone understands, and you get this firsthand, is when Google showed up with this whole idea of Google-fying a city, or Google-fibering a city, and that whole contest that went on for the better part of two years, raised the specter of what does this mean, fiber, and what can this provide versus what we already have. This notion of this being like the technology that passes every other technology easily and to the extent that you can say it is future-proof, it just seems like there isn't any end to the desire of folks, even beyond our memberships, that would really like to get connected to fiber. If you look at who is signing up on our website, it is probably three to one right now. So for every three members that we have signing up to take service from us, we have a person signing up that is not an electric member of ours but is close enough to see what we're doing and hoping that they can get connected as well.

Christopher Mitchell: Interesting. You're getting pressure to expand even to people who are not members of the co-op at this point then.

Bob Hance: Yes, very much so. It's probably one of the hardest things for us to manage toward is this demand that is outside or external to our current footprint. And the strong desire for all these other people to get connected too.

Christopher Mitchell: I think that there are two key questions that come up. And Dave, I'd like to direct this to you first. In terms of a project like this, how do you finance it? There is a context here that rural areas have too little demand, and if you wanted to deliver high quality Internet access to them, it would be too costly. So how do you make it work?

Dave Allen: Well, in terms of your first question, our financing the project through member equity. We reached out to USDA, RUS, the Rural Utility Service, because as Bob mentioned earlier, we were looking at our need for better communications utilizing fiber. So we talked with the RUS about improving communications, utilizing fiber through our substations, through our facilities, and ultimately to the member home, and they agreed that that was a good purpose for us to pursue. You're looking at the clean power plan in the very near future in terms of what the ramifications might be to the users of electricity. Also in the state of Michigan, looking at a new energy bill, and our need really to help people manage their energy use better going forward. So that did resonate with the RUS, and ultimately, we're financing this project through an RUS work plan loan through the electric side. That provides us with the equity to pursue this project, which is going to be deployed over five years, running about 400 miles of fiber a year. As we're connecting homes, looking at those folks that would enjoy a voice or a data drop. So it's kind of an integrated project. Again, smart grid communications first and foremost for utility purposes, and then voice and data drops beyond that.

Bob Hance: You know our financial modeling bears the fact that we'll be cash positive after three years of building on our project, so we're very confident that despite the fact that we're in rural areas, there is an ability to realize a profit for the entity, so that beyond the five years, we can begin looking at those areas that are not an immediate part of our service footprint. It's been a very good and very positive project for us, and certainly resonates with members and non-members alike.

Christopher Mitchell: Let's clarify though Rural Utility Service financing. This is loan financing, right?

Dave Allen: Yeah, correct. We did receive a small, rural broadband experiment through the FCC. Bob has been very engaged in the past, advancing the notion that non-traditional providers of broadband services should be considered in the Connect America Fund, and as part of that, we applied for that rural broadband experiment, received a little more than $200,000. Probably the better part of that was just becoming eligible for the CAF phase 2 options, which will hopefully happen some time in 2017. But for the most part, yes, we are doing this through member equity, but there is an opportunity to engage CAF phase 2 and receive some funding that will really help us build out a little bit faster and perhaps consider some of the folks in those census blocks that we build out to that are not part of Midwest Energy.

Christopher Mitchell: Bob, I really want to make this very clear for everyone, that even though it took a tremendous amount of investment to take electricity to everyone, I don't think it really cost the American tax payers very much.

Bob Hance: I'm not trying to mix things together too much here. We have roughly $120,000,000 of plant that took us 80 years to build. What's interesting about this project is that although we are telling people that we're going to build 2,000 miles of fiber from scratch, and we're going to do it in five years, it doesn't seem to be fast enough. And the fact that it's nearly a $60,000,000 investment. So it can be done with the help of RUS, with respect to seeing the need and the opportunity, as Dave was projecting, the notion of smart grid and getting connections all the way to the home so that we can deal with in-home devices at some time in the future is invaluable.

Christopher Mitchell: That's right. The point that I really want to hit on is that when the federal government is giving out loans, the budgetary impact is quite small compared to other programs. The electric co-ops receive billions of dollars of loans, followed by billions of dollars in repayments over many years and over decades, so the interest rate may have been subsidized, but overall, this type of program seems like a very reasonable investment.

Bob Hance: When you think about bang for the buck, I can't imagine that there is another federal program that you could point to that has been as successful, or as deeply successful as the REA RUS program, bar none.

Christopher Mitchell: That's what I want to hear.

Bob Hance: You think about this over time and what was accomplished with loan dollars as you pointed out may be subsidized a little bit with respect to the interest rates, but when you see what we've accomplished and what we continue to accomplish with those loan dollars, and now carrying on the position as we did with the electric systems now with another product that is becoming more and increasingly important in the mix with respect to services to folks, we're just repeating what we did back in the 30's.

Christopher Mitchell: You mentioned the CAF 2 dollars. That's one of the ways that the federal communications division is giving out these grants, but as we move into the final question of this show, I want to talk about the response from your members to this service. But first, let's just finish the CAF 2 discussion by noting that the FCC has just given, without any hope of repayment, these are just grants, billions of dollars to the biggest private telephone companies so that they can build out to the obsolete 10 Megabit down, 1 Megabit up standard. You all got $200,000 to deliver much faster connections. Do your members appreciate the difference between what you're doing, versus what that 10 Megabit by 1 Megabit minimum is?

Bob Hance: Chris, I think unfortunately most folks don't get it. Most folks don't really understand what's really happening with Universal Service Fund and now CAF. I think there would be a country-wide outcry! I think you would have pitch forks and other things arriving in our nation's capital if they knew what we know. Dave and I, having gone to the FCC for the last almost four years now and seeing firsthand how quickly it is to throw $30 billion through the fan without ever giving a second thought to what we are getting for the $30 billion other than second class citizenry for our folks getting 10/1 when the rest of the country is moving toward these other standards. It's close to being criminal. I fashion it to be like you just shoved one of those metal objects into the sore part of my mouth. It's just crazy. Even with CAF 2 and the struggles we've had to help them get rules in place so that you have this stupid auction in the first place. And all the restrictions on $2 billion that they never put on the $30 billion. It's just crazy. It's ludicrous.

Christopher Mitchell: Dave, let me jump in quickly before you respond. I just want to make sure the people understand that making loan guarantees to co-ops requires a 10% budget hit. That is to say that doing $30 billion in loan guarantees requires budgeting only $3 billion. The $30 billion that is being misused from the CAF, from the Connect America Fund, that could have wired the entire country if it was spent in co-op loan guarantees. So now, Dave, can you please pile on?

Dave Allen: My only point in talking about the $30 billion, which has gone out the last 15 months to the price cap carries and rate of return carriers, is to point back to a conversation I had with Danna MacKenzie, who is the chief of Minnesota's broadband office, and they've set an appropriate benchmark of 25 download and 3 up, state-wide in terms of what they are promoting in the state of Minnesota, which is a national broadband standard. But of course that $30 billion went out with the only expectation that they build out to a 10/1 standard. So I had that chat with her, "Are you frustrated, are you disappointed?" And she said, "Immensely so." If the FCC from a policy standpoint had the intestinal fortitude to set that standard at 25/3, they essentially would have realized their goal well ahead of the date they had set, which I think was 2020 to hit that standard. Our frustration in going in and chatting with the FCC is, let's not set it at 10/1, let's at least set it at the broadband standard of 25/3 so that we can incent people to build out better networks like fiber going forward.

Christopher Mitchell: It's worth noting that the Minnesota requirement is not only 25 Megabits by 3, but that you also have to be using a technology that can scale all the way up to a 100 Megabits. I think that's a really good approach.

Bob Hance: Chris, I think that's consistent with the New York standard now too.

Christopher Mitchell: I think it's important to make sure that we're wisely investing so that we don't have to spend more in three more years for a new round of upgrades on networks that we've just subsidized. But I want to end on a more positive note. Dave, can you give us a testimonial from your members explaining why this is so important?

Dave Allen: I mentioned that when we were out in Minneapolis. We've actually taken over 100 pages of testimonials in to the FCC and left them with commissioner offices because they do resonate. They hear from us, but to hear from our members, our customers, folks in the rural space, really resonates with those folks. And even now, when we go back out there, they ask if we've updated that because we get these testimonials daily. My favorite, and I'll let Bob chime in with a couple of his, but this person from Metridgeberg said, "We're so pleased with Midwest, as we thought this service would never come down our dirt lane off of a dirt road." I think that really explains what we're doing. We're not going out to the urban areas, areas of high density. We came down a dirt lane off of a dirt road to provide this person with gigabit-capable fiber.

Christopher Mitchell: And Bob, do you also have one that you would like to share?

Bob Hance: The one that's striking to me is this one. Another customer that's hooked up now says, "When you live out in the country, you learn that not all things are easy. Not all things are accessible at a moment's notice. The country teaches you patience and understanding. Today, with the blink of an eye, something that I was told would never happen to the rural people, we have Internet. Not by tether of a phone or an air card with an astronomical price tag on it. Thank you Midwest Connections for being the stand up people that you said you were. I cannot tell you thank you enough."

Dave Allen: I'd just add too, it's interesting how life-changing this is for people in our area. They have been used to poor service, dial-up service, and to have fiber optic available to them has been just amazing for them. It's taken me by surprise in all honesty.

Bob Hance: There is a certain class of people though who live in cities and might be thinking, "What do I get out of it if they have better Internet access out there in the country?" My answer is a thought experiment. What if we did not electrify the country with the REA, the Rural Electrification Administration, and we thereby save a few billions of dollars in federal budgeting over many decades, maybe, we don't even know that we would save that much. But if we did, we would also end up with smaller markets. We wouldn't have people being as productive in the rural areas, and they would not be buying things that other people are producing. And my point is that this is not charity. It's in my self interest, as someone living in St. Paul, to make bigger markets everywhere because we're going to have a better economy.

Dave Allen: We're seeing for the first time in our nation's history the fact that rural areas are losing population. As they continue, births aren't keeping up with the rural out-flight. As people move back to cities and urban centers to avail themselves of services like broadband, that's going to tax those urban centers from an infrastructure standpoint. That should be a concern to urban areas in terms of how to maintain roads, sewer systems, and things like that as people move back to cities.

Bob Hance: I'd like to remind folks, but for rural electrification and now this new valuable service with respect to particularly how farms operate today, we have the food out here. We're the producers!

Christopher Mitchell: Yeah, the food doesn't just magically appear in Kansas then, I guess! That's a good reminder. I'm excited about your project, and I really want to thank you for joining us on the call. Thank you very much.

Dave Allen: Chris, we have reminders of our past scattered throughout our office of when this co-op was constructing the lines back in the 30's. And one that's really striking to me is a lady who is reaching up to turn on that light bulb for the first time. And that's exactly what this feels like to all of us, and it's really helpful to get the kind of affirmations that we're getting from members. I really see this as a re-lighting of rural America.

Christopher Mitchell: Yes, I'm with you. I think sometimes people say that this isn't as big as electricity, but when electricity was first rolling out, people didn't know where that was going to go either. So I think you're doing the right thing. What we have to do is make wise investments, and then let time do its thing.

Dave Allen: I like to think that we spend once. Build once, spend once.

Christopher Mitchell: Thank you so much.

Dave Allen: Thank you, Chris!

Bob Hance: Thanks, Chris!

Lisa Gonzalez: That was Chris talking with Bob Hance, President and CEO from Midwest Energy Cooperative, and Dave Allen, Vice President of Regulatory Compliance from the cooperative. Remember, we have transcripts for this and other Community Broadband Bits podcasts available at MuniNetworks.org/broadbandbits Email us at podcast@muninetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow MuniNetworks.org stories on Twitter. The handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR podcast family. You can do it on iTunes, Stitcher, or wherever else you get your podcasts. Never miss out on our original research. You can also subscribe to our monthly newsletter at ILSR.org. Thank you to the group Mojo Monkeys for their song "Bodacious," licensed through Creative Commons. Thanks for listening to episode 225 of the Community Broadband Bits podcast.

Transcript: Community Broadband Bits Episode 223

This is episode 223 of the Community Broadband Bits podcast. Eleven communities in Northern Utah are now served by a regional open access fiber-optic network, UTOPIA. Perry City's Mayor Karen Cronin and UTOPIA's Executive Director Roger Timmerman join the show. Listen to this episode here.

Karen Cronin: We don't have the money that some of the lobbyists are getting from big companies, but we have a voice and I think that our legislatures will listen to local voices if they have the courage to step forward.

Lisa Gonzalez: This is episode 223 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. The Utah Telecommunications Open Infrastructure Agency, also known as UTOPIA, began serving north-central Utah in 2004. The regional open access fiber-optic network has had its share of challenges since launch, but has slogged through them to now bring healthy competition to residents and businesses in 11 communities. Joining Chris this week are the mayor of one of the UTOPIA cities, Karen Cronin from Perry. Roger Timmerman, executive director of UTOPIA, is also part of the conversation. Our guests share stories about how competition has benefited local businesses and residents. They also describe infrastructure sign-up choices they have as property owners in a UTOPIA community and what it's like to have more than one or two ISPs at your feet. Now here are Chris, Mayor Cronin from Perry, and Roger Timmerman, executive director of UTOPIA.

Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast. I'm Chris Mitchell. Today I'm speaking with two wonderful guests from the state of Utah. Roger Timmerman is the executive director of UTOPIA, the Utah Telecommunications Open Infrastructure Agency. Welcome to the show.

Roger Timmerman: Thank you. Thanks for having me on.

Christopher Mitchell: Perry City mayor, Karen Cronin. Welcome to the show.

Karen Cronin: Thank you. I'm delighted to be part of the conversation.

Christopher Mitchell: I'm excited to talk more about what's happening in Utah today. You've all been trailblazers in open access approaches. Roger, I think you were only of the early trailblazers who's now back with UTOPIA. Today we'll talk about the results, particularly in one of the UTOPIA communities, Perry City. Let's start there. Mayor Cronin, can you please tell me about your community and the internet access you have there?

Karen Cronin: Yeah. Let's start with what the community is like. Perry City is a small city, about 5,000 residents. It's located about 50 miles north of Salt Lake City. Six months ago we had very limited options for internet. We had some of the neighborhoods who didn't have any option except for dial up. At my house, we were on a satellite system where I was getting 5Mb speed. Fast-forward a few months and we were able to connect into the direct line with UTOPIA, the direct fiber line, and I now have upwards of 250Mb of speed, as does the whole city. The city was built out in less than four months. We've gone from a dial-up system to the cutting edge of what's available.

Christopher Mitchell: Well, that's remarkable. I'm sure that there are many people listening who would just love to have that kind of capacity available. Roger, can you help fill in some of the gaps for people who might be unfamiliar with UTOPIA? What is it?

Roger Timmerman: UTOPIA, we're a group of 11 cities. Perry City is one of those cities. These are cities that felt like they were not being served by the incumbents. Just wasn't enough options. They felt the negative impact of businesses leaving their communities in some case and just not offering the type of connectivity that they felt was needed to develop businesses and residences. They got together, they created UTOPIA and UTOPIA's an interlocal governmental agency, which is made up of these cities, and they built a massive backbone to connect these cities together and can collectively bond for the construction and operations of this network. The reason they did it that way was if you think of a city the size of Perry City, it's a great city, but it's not very large. The ability to put into place the fiber of the home system and operate that, get providers in there, it would be very difficult for just one small city to do. Collectively, the cities could get an economy and scale together to attract service providers, to get an efficiency of operations that would make this work. UTOPIA's had a difficult path. Initially, it started up and ran into some funding obstacles. The cities have since decided, let's fix some of these things and move forward. It was about five or six years ago, we took down a new model and took down additional debt and with that we've been very successful so for the last six or seven years UTOPIA has actually been able to build networks where the revenues from the builds of those networks are covering all of the debt service for the cost of building those networks and so we are in a great state now where we are now covering all of our operational expenses and all of the incremental debt we've taken justifies and sustains the growth of the system. Well, Perry City is one of these cities that's benefited from that in the sense that it hasn't really cost Perry City any additional money other than their original membership in the system and the collective funding of the cities but we've been able to build out that entire city and we're building out very rapidly in other cities in parallel. The nice thing about Perry is the whole city is covered. They can all get the same gigabit service. We install gigabits to homes and businesses typically. Larger businesses will get 10 Gig. Some very large connections we support are 100 Gig. In a city like Perry, it's very rural, but they can attract enormous investment from a data center or a large business or an industrial partner or something because we can deliver 100 gigabit anywhere in that city and actually offer that in a redundant way because of this redundant backbone put in collectively by these cities.

Karen Cronin: In Perry City we have a great number of home businesses. The demographics of Perry City, although it's small, it has the highest education rate for its' members and a lot of those people work from home. Having this option has brought even more people into the city and we have people calling and telling me that they have now had their bosses ask them if they can work from home because their home connection is faster than their at work connections and they get more done.

Christopher Mitchell: That's remarkable. I always like to hear that. I have to say that one of the things I love about UTOPIA and Roger, I'm sure you can't pick favorites but I can, I love that UTOPIA gives small providers like Xmission an opportunity to have many more customers. Xmission has been a guest on this show before, I think they have wonderful privacy policies, very bull-ish. I like seeing cities that have small, historic ISPs like Brighamnet also being able to expand and get more customers and thrive. I think that's an important role from my point of view, that UTOPIA really allows local businesses to be very competitive with the big companies with Comcast and CenturyLink that I happen to have here, where I'm recording this and I know you have out there, that don't always meet local needs in a way a local provider can.

Roger Timmerman: I agree. That's a major part of why we do it the way we do it. Open Access is not easy and it's taken quite bit a of time for UTOPIA to have a good, stable, competitive environment of providers and today we have 10 companies that compete residentially and about 25 that compete on the business side of things. Perry by itself even if they had fibers at home they may not naturally attract competition on that system but because of the scale of UTOPIA it's big enough to attract this level of competition and enable lots of these local providers and also some bigger providers to all kind of compete under a fair fiber infrastructure put in place by some of the cities.

Karen Cronin: That point is so important because it creates such a win-win for the residents by having an open network system. It creates the competition and it requires the service to be great and the price to be competitive if they are going to stay on the system and be competitive but it also allows like you said local businesses to be able to play at the same arena that some of the big businesses do and have a fair shake so it is a win-win all the way around.

Christopher Mitchell: Mayor Cronin, do you know of any personal anecdotes of people who have talked about how they are amazed that Perry City has this incredible connectivity available to them and it's enabled them to succeed in ways they might not otherwise have been able to.

Karen Cronin: I can tell you about a business that produces things from the home and then sells them out. They were telling me that before their Internet power didn't allow them to have the mass marketing they wanted and be as responsive and have the service level that would sustain their business. Since they've been able to connect to UTOPIA and have the ability to shop around for what suited their business best as far as a provider, they've been able to see their Internet sales increase dramatically.

Christopher Mitchell: Roger, I'm curious. If I'm a resident or a business in Perry, getting connected to you is just a little more different to what most people are used to. Can you walk me through my options as a homeowner on how I'd possible connect to Utopia?

Roger Timmerman: If you live in an area where UTOPIA is available, you can go to our website, put in your address, and it will pull up and show you, here are the services available to you from 10 different companies. It's a shopping cart of services. So, what happens is you sign up for the infrastructure from UTOPIA and we present the retail offerings from our partnered service providers so you kind of sign two agreements. You're getting infrastructure from the city and UTOPIA collectively and then Internet or phone or video or whatever those services you want bundled from the service provider. So you, two pieces and then how you pay for your fiber connection, a lot of our customers will say, "well, I'll just lease that monthly for 30 bucks and there's a 2 year term so it looks a lot like what you'd get from other options". We have some people who take a different option and that's where they essentially own their fiber connection. They pay up front a larger amount, $2,750 is actually the amount and then they never pay for it again. They own their fiber and then it just becomes, a very low bill because then they're only paying $35 to their service provider and it'll never go up after that. If you're leasing the connection from us, it starts at about $65 a month for 250 Megabit connection. I say that as an example of what we have right now but we don't control those prices. The beauty of it is that it is competitive and those retail providers are free to change their prices whenever they want to be competitive. We struggle because we try to publish the pricing and then they change it. It's a struggle but it's also the beauty of competition is that they're constantly coming up with different promotions and lowering and raising and adding options and they have the freedom to do that and that's one of the beauties of open access.

Christopher Mitchell: One of the things as an outside observer that's impossible to miss is you have, in your region, a nonprofit organization that I suspect largely gets contributions from CenturyLink and Comcast that paints a picture that people in Utah are very frustrated and angry that UTOPIA wasn't able to pay its way in the way it was expected. Now, Mayor Cronin, I'm just curious. Do you get a sense from your citizens, are they glad UTOPIA exists or would they prefer that they didn't have these options and they didn't have to hear these claims that the network is not good?

Karen Cronin: I will be honest with you. As Roger has mentioned, it's had a tough start and it was a new idea, a very forward thinking idea and for the first few years we were paying into UTOPIA collectively as one of the original 11 member cities and we were getting 0 service and that was hard. We still get a lot of comments from residents but about 3 years ago we as the 11 cities came together and said we need to make this system work and we talked through several options and like Roger said we got to the point where we were able to start funding build out and things. Once we had the build out and once we took it to our residents which was last February and told them where we had come, I have heard nothing but positive, nothing but positive since February when we rolled it out. We had a town hall meeting, we told them where we had come and the obstacles we had overcome and at that point we were able to roll it out that it was totally optional. If people wanted it, great. If they didn't there wouldn't be any extra assessments to them. Once they saw the competitive advantage it gave them because of the number of people on the network and having the fiber direct to their home it has been phenomenal excitement in the city.

Christopher Mitchell: I'm not too surprised to hear that. I've seen that in other places as well. This is an infrastructure that's going to last a long time. I look back, a number of the airports that cities built many decades ago, they took a long time to break even but people were generally glad to have them available. One of the things people often realize is you were among the first to be doing this. The lessons you learned really helped a lot of other communities to be successful in terms of structuring their programs and learning lessons about how to move forward. So, I think, in some ways, the mistakes you made were a bit of a public service in terms of teaching others a lesson. One of the other things I want to talk about as we are running out of time with the time we have left, some of the problems you faced weren't your fault. The state made it hard on you. Roger, I'm wondering if you can tell us a little about the ways of which the state, I think, acting on behalf of the big companies that you're competing with, actually put its thumb on the scale to make your life more difficult.

Roger Timmerman: Yeah, one of the things was, the prohibition on us offering services directly. We like the idea of open access but it would be possible to provide some of the services directly while still allowing competition on the network. It was a big curveball at the UTOPIA cities to get legislation that showed up from a legislator that wasn't even in the cities involving UTOPIA that put all these restrictions on what cities could do and all this additional process and red tape that they'd have to go through to get the product in place. The legislation, what has been used as an example, since then, of how to go buy some legislation. It wasn't even in the conversation in Utah among citizens and legislators, it was brought in and given to legislators to push in behalf of a private interest.

Christopher Mitchell: Brendan Greeley wrote a great article in Business Week many years ago and it's titled, "Psst... Wanna Buy a Law?" If people Google that, I have no doubt they'll find it. It's exactly how you describe it and it's worth reading, but please continue.

Roger Timmerman: That was the initial obstacle. Open Access, we like it, it does provide a scalability issue. There's less dollars coming to UTOPIA to cover our investments. It's a good model, it's a more difficult model. The biggest problem UTOPIA has had has been financials. It's been a problem for us. Since that time, it seem like every year or two years another piece of legislation shows up trying to further restrict what we can do and it's a fight. We don't have a budget like the private companies do to go and lobby and push for influence at a legislation level. It's really an interesting contrast because among residents, populations in our cities, and businesses even, UTOPIA is extremely popular and the incumbents are some of the most hated companies in America. Along legislators, the incumbents are really popular, you can imagine why that is because of, whether it's campaign contributions or influence among different groups.

Christopher Mitchell: Weekly golf trips?

Roger Timmerman: It's night and day between the citizens and legislators and what their interactions are with the incumbents.

Christopher Mitchell: Mayor Cronin?

Karen Cronin: I remember a couple years ago when there was a piece of legislation that was going to pass that was going to greatly affect the way we could promote the UTOPIA's, the 11 cities and the 11 cities banded together and went to talk to the legislature. It was because of that, the local involvement that the legislators listened and gave us a bit more time and didn't pass that legislation. I can't emphasize enough how important it is -- if people want local control then the local elected officials need to be involved and make things happen. We don't have the money that some of the lobbyists are getting from big companies, but we have a voice and I think our legislators will listen to local voices if they have the courage to step forward.

Christopher Mitchell: I think that's a really good point. It's not enough to just be right, you have to make sure you're raising your voice up as local elected officials and just citizens to say this is our point of view. Because, as we discussed, the legislators, they hear from the big companies every day. They need to hear from multiple constituents every day on these issues as well in order to even just think they're similar in terms of important, in terms of policy preferences. I think we're about out of time but I'd love to give you another chance to say anything else you'd like to say as we finish up our discussion. Let me start with you Roger.

Roger Timmerman: It's an exciting time in the space of municipal fiber. What we've seen in our own area is that the demand for this service is higher than it's ever been. We started this thing back in 2002 and back then people were still trying to figure out what Fiber was and what the benefits were and there was a major population that didn't use it. Now it's a given. Everyone wants Internet connectivity and they don't just want it, they want good speeds and good service. Over time it's been legitimized and we've seen that in the form of increased demands and then we see, where's the rest of the industry, where's the incumbents and other options and it seems that they're actually falling further behind. We go back ten years and these guys weren't the most hated companies in America. Things have gotten worse for them, not better. Rather than upgrade and compete, we see an increased and deliberate effort to stop municipal progress building Fiber projects, and so it's good in the sense that the success and demand for municipal fibers have increased but there's an increased threat because there's a lot of work being done to preserve incumbent interests. It's great, we're seeing successes here. Our financials are better, we're in a position that we're actually growing faster than we have in our whole history. Things are good. We have other cities looking to partner with us in other ways and that wasn't a conversation we weren't able to have because of the past difficulties. I think you'll see UTOPIA continue to grow and be successful and I think you'll see efforts like UTOPIA across the country and have success.

Christopher Mitchell: Parting thoughts from Mayor Cronin?

Karen Cronin: I think in the world we live in today we are seeing the rate of technological advances is at warp speed. In order to be competitive and stay at the forefront, we need to allow the free enterprise system to work and not put legislation in place that may limit that free enterprise system. I would put Perry out there as one of the success stories. A small rural community of 5,000 and yet now we have the capability through the UTOPIA network and the open market to be able to have 100 Gigabit connections and redundancy and multiple providers and that puts us on the map to be able to support some of the biggest companies that are looking at trying to locate in the West. It's a great thing and we've benefitted enormously.

Christopher Mitchell: Thank you both for taking time to come on and share your experiences and the message of hope coming out of Northern Utah.

Karen Cronin: Thank you for allowing us to talk to you Chris.

Roger Timmerman: Thank you Chris.

Lisa Gonzalez: That was Mayor Cronin from Perry and Roger Timmerman, executive director of UTOPIA talking with Chris about the Utah Telecommunications Open Infrastructure Agency. Check out their website at UTOPIAnet.org to learn more. We also have a number of stories about UTOPIA on MuniNetworks.org. Remember, we have transcripts for this and other Community Broadband Bits podcasts available at MuniNetworks.org/BroadbandBits. Email us with your ideas for the show. Send a note to podcast@MuniNetworks.org. Follow Chris on Twitter, his handle is @CommunityNets. Follow MuniNetworks.org's stories on Twitter, the handle is @MuniNetworks. Subscribe to this podcast and all the podcasts in the ILSR Podcast Family on iTunes, Stitcher, or wherever else you get your Podcasts. Never miss out on our original research by also subscribing to our monthly newsletter at ILSR.org. Thank you to the group Mojo Monkeys for their song “Bodacious” licensed through Creative Commons. Thanks for listening to Episode 223 of the Community Broadband Bits Podcast.

Transcript: Community Broadband Bits Episode 222

This is episode 222 of the Community Broadband Bits podcast. Centennial, Colorado's Fiber Director Tim Scott joins the show to discuss conduit policy, dark fiber strategy, and Ting. Listen to this episode here.

Tim Scott: How do we create a more competitive environment and enable new entrants to look at the market and put together products and services, leveraging the city’s backbone that can create this new, competitive, compelling environment in Centennial?

Lisa Gonzalez: This is episode 222 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. In 2013, Centennial, Colorado voters chose overwhelmingly to opt out of the state's law that restricts local telecommunications authority. Since then, they've steadily advanced toward a plan to use their publicly owned fiber to bring better connectivity to the community. Last month, Internet service provider, Ting, announced that it would be partnering with Centennial to bring gigabit Internet service access via the city's publicly owned fiber-optic network. Tim Scott, the city's director of fiber infrastructure, joins Chris today to talk about Centennial's voyage from a new Denver suburb to a city that has the fiber to draw in a growing provider like Ting. He explains what the city has created and how, what providers are looking for, and offers more information about the new partnership. Now here are Chris and Tim Scott, director of fiber infrastructure from the city of Centennial, Colorado.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell. Today I'm speaking with Tim Scott, the director of fiber infrastructure for the city of Centennial, Colorado. Welcome to the show.

Tim Scott: Morning, Chris. Thanks for inviting me.

Christopher Mitchell: I got it right, Tim Scott?

Tim Scott: Yeah, you did. You got it right. Good job.

Christopher Mitchell: The community of Centennial, I've actually been down in that area, in the Denver metro area. Can you tell us a little bit about it?

Tim Scott: As you say, it's really considered a suburb nearly of Denver. We're right down on the southeast corner of the Denver metro area. What's kind of interesting about the city of Centennial, a lot of people don't know this, it's a very new city. We're only 15 years old. We were incorporated in February 7th, I believe, 2001. It's a very new city that was pieced together in a lot of what was unincorporated Arapahoe County land. We're 14 miles wide across. We often refer to the city as shaped a bit like a dumbbell. We've got this larger eastern residential area, which would be one of the dumbbells, and then it sort of narrows along the middle where we kind of have more of our central business district, or CBD area, and then it widens out again into more of a dumbbell shape on our western side of the city. 14 miles across and a population, I believe, of 107,000.

Christopher Mitchell: I think that shape actually plays into a lot of our discussion in terms of what Centennial's done with fiber-optics. We'll talk in a minute about the partnership that you're going to be engaging in where Ting is going to be leasing some lines from you. First let's talk about what Centennial has. What has Centennial built over the years?

Tim Scott: The city really has been on a path of really trying to figure out how fiber can continue to develop the city and keep it ahead, really, of a very competitive growing Denver metro area and sort of looking at ways to use fiber as a leading edge tool that continues to keep the city at the forefront, whether it's from an economic development perspective, for creativity, for our own city services. This has really been a path that the city's been on probably for, I would say, four years. It's probably a good indicator hopefully to some listeners of really how long it can take to figure all these pieces out. I know, Chris, that you've met many of their council members that attended some of the broadband shows over the years as they really tried to put these different pieces together. During those years, they took some really important steps, I think, to sort of get the city prepared ultimately for a broader fiber initiative with partnerships, potentially. Across those years, they continue to invest in some city owned fiber. We have about 50 miles today of fiber along most of the major roads through the city. They primarily are used— it’s city owned fiber, what we call ITS for intelligent traffic signaling. It really doesn't do anything more than that. That in itself has really served a purpose because the city through our Public Works Department built, deployed, managed contractors to deploy that fiber— some of that knowledge is internal within the city now, which is great. Probably most importantly really what it required was the building and the ownership of existing city conduit that that fiber would reside in. I think what we learned as a city is that ownership of that physical asset is so important and in this case ownership of as much as our own city conduit was really important because ultimately that's what's going to be leveraged in our next phase of our fiber build out.

Christopher Mitchell: I think the shape of the city actually really works to your advantage because if I understand it correctly, you were able with your intelligent traffic signaling to put in conduit and fiber along a few major corridors and yet be very close to the vast majority of the premises in the community.

Tim Scott: Yeah, that's correct. If we look at 2013, which is really our starting asset for our fiber master plan, which we'll talk about, which is really our 2016 initiative, if we look at our assets in 2013, where we had fiber in conduit, it really isn't that different from where we're going to invest and build new fiber in 2016 going forward, it's just that's called a different type of fiber with a different purpose, and that's going to be for serving our community anchor institutions and for serving ultimately businesses and residents. You're right, even in 2013, the city already had a strong footprint of existing city owned conduit and some existing fiber serving our traffic signaling, would run east to west across the city down those main roads, main lines, as you said really passes some significant residential populations and again with our coming down the core of that central business district in the middle of that dumbbell, passing a lot of business in our city as well that ultimately can be served with fiber.

Christopher Mitchell: Tim, I'm curious, I think a lot of people just sort of think, well if you had fiber to a lot of these places in 2013, why do you have to do something different now to achieve different ends, rather than the original ITS, intelligent traffic signaling ends?

Tim Scott: It's a great question, Chris. It's something I think that the city probably took a good 12, maybe even 24 months to really understand and get their head around completely that this strategy for fiber from a broader perspective needed to be a little different. Around 2013, the city had deployed fiber in typically a let's call it a point to point fashion, where the pure purpose of that fiber was to go from really one street crossing to another street crossing to serve traffic lights. That was a good purpose and why it was built at that time, but obviously when it was built at that time from a fiber density perspective, it was also low count fiber, like everything from 12 fibers up to 40 type fibers, but what we would call low density fiber. Also perhaps most importantly, I always feel a lot of communities tend to forget this, is it's really the accessibility to the fiber that becomes important. It's not just where the fiber goes, but it's where the handholds are and the future splice points are that ultimately that stretch fiber could be utilized to be used from an expansion perspective. Where do you break into that fiber to create a lateral that can connect to an anchor institution, a business, or a resident? It was a great starting point because it was, again, conduit that the city went through the process of either building and owning itself or getting it co-built with a carrier that may have been building some conduit in the city too, and then being able to use that existing conduit to serve a purpose in 2013, but again, revisit that conduit now in 2016 and say, "Okay, the best way for us would be to build a new, what we would call, carrier grade backbone infrastructure," but again using that existing conduit, a lot of it, that was built in 2013 and prior to 2013 to run this high count. In the case of the city of Centennial's backbone, you're going from low strand fiber to a 432 fiber backbone. That is a lot of fiber. A lot of people fall off their chairs when they say, "The city's building a 432 fiber backbone," so absolutely the city's backbone that will be deployed all around the city and in many of the same locations where we had ITS fiber and city owned conduit, except now it'll be probably 65 plus miles of new fiber backbone, 432 fiber count, the latest and greatest from a spec perspective in terms of fiber that's on the market today. Again, with all the records that we think are really important to accompany that. You've got to be able to prove conduit ownership. You've got to be able to create the right splice points and the right accessibility to the backbone fiber, and ultimately then back that up with the right level of documentation that shows the correct as-built exactly where it is, exactly how it's accessible. It's really building it with a purpose to serve as a facilitator for the private sector. I think that's very different than building fiber that has a single purpose, which in our case was ITS, and then building fiber as a backbone that really can be leveraged ultimately someday by the private sector who could come and use it, but has a higher level of expectation in terms of documentation, accessibility, support, how it was built, all that complex stuff that ultimately becomes important. We're going through all that complex stuff to build it exactly in the right way so it could be considered carrier grade.

Christopher Mitchell: There's a couple of questions that sort of spring to mind, and one is when you say you're reusing the conduit, did you have enough space to just put additional fiber in there or do you have to pull out those original 40-some strands?

Tim Scott: Yeah, good question. We have a lot of conduit conversations because actually what's quite interesting with this project is that we're 100% underground. It's all city owned conduit or ultimately what will be city owned conduit. In a lot of places, that's two inch conduit. Where we have two inch conduit and we have city fiber already there, we may build, as we go through this build process, another parallel conduit that will sit right beside it that will serve the 432. We're really going through that process right now with what we're calling our design engineering firm or our owner's project manager that really looks exactly what where do we have conduit, where do we have clean, clear two inch conduit that we can use for the new 432 backbone. Great. Where do we have existing conduit where it's clean and it's a quarter inch conduit, and where do we have existing city conduit where it's maybe two inch but there's going to be some fiber already in there? The plan right now, and of course this is all subjective to ultimately final budgets and stuff, but the plan right now is we really don't want to have to cut and pull out any fiber and then replace it with new backbone. Our preference would be to ensure that the city has lots of available city conduit, both for this project but even for the future too. I mean, if we can put in three two inch conduits in some locations, we'll look to do that because we believe that's still an asset and 10, 20 years down that could be very valuable.

Christopher Mitchell: Now, let's get onto what many people might consider the big news, which is that we've just learned that Ting, a company that's already working in Charlottesville, Virginia, Westminster, Maryland, we've talked about many times. They've also announced Holly Springs, North Carolina, and Sandpoint. And their fifth community they're going to be working with is Centennial, which I think is pretty tremendous, given that everyone seems to love their services. I've long been a wireless customer of theirs and I'm very happy. What's your relationship with Ting in terms of how they're interacting with you?

Tim Scott: Two weeks ago Ting broke the news that they were coming to Centennial, Colorado, which I think as you mentioned is their fifth planned community project. We're very excited about Ting. Ting is a company that certainly I've followed over the last couple of years as they've worked really diligently to get their first couple of projects on the eastern seaboard off the ground. I've had the pleasure of visiting those communities and really understanding both what Ting does locally, but also probably even more importantly is their engagement with the local community. Ting followed an RFI process that the city had, expressed their interest in leveraging this new, to be built, carrier grade 432 backbone, to really come and enter what I think is a wonderful market for them. It's an extremely fast growing area of the country. It's an extremely fast growing area of the Denver metro market. We have actually, in Centennial, we have the highest Internet adoption rate in the country of 96%. We believe we've got a very educated, very connected community. We think it's a great opportunity for a fiber player to come to town, leverage the city's backbone that gives that pervasive coverage across the city, and ultimately invest their dollars to bring the backbone to the premise, whether it's businesses, whether it's residential. One of the things you mentioned I think that's been a real standout has been what we've learned about their customer service. You've experienced that obviously on the wireless side, but it appears to be very similar on the wired side, the fiber side. We're excited about that. Obviously we're excited about their products and their future services, which hopefully they'll be bringing out as well to markets like Centennial. I look at it as a real game changer for the city. I really think that this presence of Ting will really transform the city of Centennial. I'm excited to see their white and blue trucks and vans drive around Centennial just like I saw them in Charlottesville, Virginia.

Christopher Mitchell: I'm curious, are they actually going to be leasing your fiber then or your conduit or will it vary depending on location? Is that all worked out yet?

Tim Scott: No, it's not all worked out yet. Basically the announcement is I think confirmation that they're in the what I would call research stage. They've already done their preliminary research. They're very happy about the demographics and obviously what they consider is a great market opportunity in Centennial. Now they dropped down a layer and they start to figure out, okay, where exactly should we target first? Which residential areas of the city make sense? What about the businesses? How do we do that? Obviously they have a large step up to create in terms of creating a local team in the Colorado market, something they'll be starting very soon. There's a lot of actions that they have to take. Then really their relationship with the city at this point is ultimately they will execute some sort of agreement or lease of fiber on the city's backbone. I think that will obviously be dictated a little bit about some of the decisions they have to make about where they will go first, which areas of the city, which residential areas of the city. The business relationship, if you want to call it that, is basically they're taking an IRU for fiber lease from the city of Centennial, which would absolutely be obviously available to the next partner that might want to take an IRU on the city's backbone.

Christopher Mitchell: That's actually something I wanted to ask you about. With 432 fiber strands, it seems like you have plenty of capacity then for any other ISPs that might want to also invest in Centennial.

Tim Scott: Yeah, we do. I mean, we are building deliberately a backbone that has a lot of capacity, both for opportunities for private carriers to lease dark fiber capacity on the backbone, but also for our community anchor institution use, public safety use for many agencies across the city. The opportunity is there for other carriers to lease fiber on our backbone and make that bet of investing to create fiber to the premise opportunities. I think a lot of people think about it and I think a lot of people see those opportunities, but actually taking the steps that Ting have done to create the brand around it, create the local teams around it, have the product services and customer support to back it up, those are different. Those are different steps. We're very pleased with the partnership. We're very pleased with where we are with Ting and we look forward to the decisions that they make over the next few months, which will really set up what they do in 2017 and beyond.

Christopher Mitchell: Now, this is a key moment in the podcast that I usually come up against, and that is we could end it right now and have a nice short podcast, but there's another question that's burning in my head. You're a unique person that can help answer it, I think. You have a pretty long background in dealing with various open solutions, both dark and lit open access approaches. Your background, you've worked previously with Axia, which is an open access provider working in the state of Massachusetts. I'm really curious if you can just – Some of our other cities who aren't Centennial who are trying to figure out how to think about their different options in terms of a dark versus a lit strategy for encouraging open competition in the community. What thoughts can you give them?

Tim Scott: Yeah, and it's a great question and I think one, Chris, that we've seen tossed about for years at various broadband and community fiber forums. I think the way that I would answer this is, first of all, just talking about what the city of Centennial did. The city of Centennial really tried to figure this out for a number of years. Went through the process, you've got to sit in a room and have everybody say, "Okay, we can either, at one end of the scale, do nothing or, at the other end of the scale, we can do everything," meaning that we can build a network, fiber, electronics, offer services, move into the whole competitive environment. At one end of the scale it's obviously $0, do nothing, and the other end of the scale it could be $150 million plus and become this new entity. I really believe that in all situations, depending on the community, there's a model for each. In the case of Centennial, it was not really to pick a middle ground or anything, but the right answer because of our drivers which was we didn't have a significant fiber in our community from a city perspective that we could really leverage. We had a competitive environment in the sense that we have Comcast and CenturyLink, but no fiber products being developed or being brought into the community from a fiber to the premise perspective. We had small, small numbers of fiber where the largest enterprises could get served with basically expensive fiber. We really felt, from an economic development perspective, the focus was on how do we create a backbone that can create a more competitive environment and enable new entrants to look at the market and put together products and services, leveraging the city's backbone that can create this new competitive, compelling environment in Centennial? Again, that just takes a lot of time to go through the process as a team to figure that out, to get through the right political support behind it, to educate everybody that's on council, not just the wonderful three members that we had on our fiber subcommittee who are all three sitting council members as well. It just takes time to go through that. In our case, the answer to what Centennial should provide became very evident through a lot of different workshops. It became very evident of what we felt we needed to do to change those dynamics. I see other communities that maybe are more rural and they really, truly believe that they have to move into what I would call the business. Maybe they only have one carrier serving their community and maybe they're not very focused on doing a great job. Obviously they need to go further on that scale towards that number that I talked about, that $150 million number, where they need to not just build fiber, but they might need to light up the electronics and even provide— compelling at least Internet services.

Christopher Mitchell: What I'm curious in particular is for a community that is really set on providing services indirectly, really focusing on wholesale services or wanting to encourage that, I'm curious about the merits of a dark versus a lit strategy. The city's basically already saying, "We're not going to provide services ourselves."

Tim Scott: Yeah. I feel like in our case we chose that dark fiber strategy because we see a line in the sand between being a provider of dark fiber and the complexity that's associated with making that business work and making those prices and products compelling for the marketplace. Then on the other side of that line, the complexity of moving into wholesale lit services is just a different ballgame. You've got to have a different type of team and you've got to have different capital and you've got to have different levels of expertise and different levels of support, and that option which would be wholesale lit services. Again, for us, it just became apparent through our process that creating a dark fiber backbone that was citywide, that has been built to a carrier grid standard that you can prove to any private parties that you sit down, whether it's the biggest guy in the country or the smallest guy. You can say, "Here's how it was built. Here's the as-builts. Here's the quality. Here's the data centers and carrier hotels that the backbone connects to." That becomes a very compelling proposition. There's other things that are important too, Chris. To ensure that dark fiber proposition works, the city has got to be organized. The city's got to have this permanent fix. It's got to have the right of ways fixed. All that stuff, what Google looked towards cities to provide, a lot of that work has gone on in the background as well over the last couple of years as the city also got organized to ensure that we could really be very responsive as it related to our codes and permitting and all those other requirements.

Christopher Mitchell: Great. One last follow up question, which is you mentioned this a couple of times and I think you're probably someone who could define it well, when you talk about carrier grade, I assume that's in contrast to enterprise grade, which is not a Star Trek reference. Aside from all the paperwork, which I find very interesting to prove that it's not going to cause any headaches for someone who's using it in the future, what are some of the other things that a potential ISP would be looking for in terms of something that's carrier grade?

Tim Scott: Yeah. It seems to get thrown around, but I think you got to be able to demonstrate to a private carrier that this backbone fiber that ultimately they're going to use and really treat as their asset under an IRU, you have to be able to demonstrate that it's been built correctly, with the right as-builts, that it's been tested correctly with the right fiber test results, such as OTDR testing, which they would, I assume, expect to see and many of them will, and that it's ultimately the right type of fiber in terms of its specifications. Some of those ... Those three elements I would certainly say all factor into something being termed carrier grade. Then the other piece that we touched on earlier that I didn't want to forget about is accessibility. There's no point in having the latest and greatest fiber backbone from point A to point B if you can't get at it in between. It's the getting at it in between that creates the valuable laterals that connect to the residential communities or connects to the businesses or connects to anchor institutions. It's combining, I feel, all the factors, right, and into that definition of what's carrier grade. Unfortunately, I've sat down over the years with many communities that might have the fiber asset but really struggle to explain and demonstrate to a private party that it's carrier grade because they don't have the documentation or they don't have the test results or they can't prove that it connects to the right points, A and B or A and Z locations, or that it's accessible in between and they've got the documentation to demonstrate where it's accessible in between. All those factors I feel melt into that broad definition of carrier grade.

Christopher Mitchell: Thank you for coming on the show to tell us so much more about what's happening in Centennial. I think also almost uniquely in this history of this show at least to really give us the nuts and bolts between the differences between building a network out for intelligent traffic signaling and how to attract a brand new carrier. It's been great.

Tim Scott: Thanks, Chris. Thanks a lot for having me on the show. I look forward to seeing you in Colorado sometime soon.

Lisa Gonzalez: Thank you for listening to episode 222 of the Community Broadband Bits podcast. Again, that was Tim Scott, director of fiber infrastructure from Centennial, Colorado. Read more about Centennial at MuniNetworks.org. Remember we have transcripts for this and other Community Broadband Bits podcast available at MuniNetworks.org/BroadbandBits. Email us at podcast@muninetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow MuniNetworks.org's stories on Twitter, where the handle is @MuniNetworks. Thanks to the group, mojo monkeys, for their song “Bodacious,” licensed through Creative Commons, and thanks for listening.

Transcript: Community Broadband Bits Episode 221

This is episode 221 of the Community Broadband Bits podcast. President and CEO of the Roanoke Valley Broadband Authority joins the show to discuss the award-winning open access fiber-optic project. Listen to this episode here.


Frank Smith: We need to be an ingredient in what people need to be able to do what they want to accomplish.

Lisa Gonzalez: This is episode 221 of the Community Broadband Bits podcast from the Institute of Local Self-Reliance. I'm Lisa Gonzalez. Roanoke Valley, Virginia, has had some ups and downs as they planned and deployed an open access fiber-optic network, but they're now on course. This year they began providing a range of services for Internet service providers and local businesses. They're also bringing better connectivity to public facilities and community anchor institutions. Frank Smith, president and CEO of the Roanoke Valley Broadband Authority, talks with Chris this week. In addition to explaining what the authority is, and describing its function, Frank explains the situation in the Roanoke Valley, which led to the decision to invest in the network. Frank provides information about how the authority is working to collaborate with different partners, and he also reflects on challenges and shares plans for the future. Learn more details at highspeedroanoke.net. Now, here are Chris and Frank Smith, president and CEO of the Roanoke Valley Broadband Authority.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell. Today I'm speaking with Frank Smith, the president and CEO of Roanoke Valley Broadband Authority, in Virginia. Welcome to the show.

Frank Smith: Thank you very much Christopher. It's a pleasure to be here.

Christopher Mitchell: Well, I'm excited to talk to you because I remember looking into this project in years back and seeing some fits and starts and hoping that someone would pull it all together. Over the course of this conversation, I think we'll discuss that. Let's just start off and let people know what is going on in Roanoke Valley and even more importantly, where and what is it.

Frank Smith: The Roanoke Valley Broadband Authority, just to give you kind of a background, as far as where we are geographically, we're approximately three hours due north of Charlotte, North Carolina, and approximately three and a half hours southwest of the Washington DC metro area. Not too far down the road, forty minutes is Virginia Tech. When we go out about a thirty mile radius, we probably pick up a population between three hundred and fifty and four hundred thousand people. We have various industries that are here, both on the medical side, the education side, technology, all sorts of other things. We're home of Advanced Auto Parts and we've got the Virginia Tech Biomedical Institute, and the medical school they've built here in the Roanoke Valley. We have a lot of things going on. The Roanoke Valley Broadband Authority actually was created approximately, I think it's about three or four years ago by a group of -- It was driven by citizens who saw a need to provide greater access and more competition and a few things within the broadband network provisioning side of things. The interesting thing for us is that they called us a doughnut hole. I actually like doughnuts and probably too much, but liked the fact of the analogy of the doughnut holes because that I can understand pretty easily.

Christopher Mitchell: Also doughnut holes are much more healthy than entire doughnuts.

Frank Smith: Yes, that's a great rationalization. I like you already. This is good. Just don't tell my wife, if that's all right. Krispy Kreme has a store here and I have to try to stay away. The one thing is about the doughnut hole is that we are not big enough to be what we'd considered an NFL city, to get a large investment to come in there, from a provisioning or from a network planning standpoint. We have some good existing providers that are here, but we're not getting the same level of investment, which leads to additional competition here because we're not of that size. At the same time, we're too large to get a lot of the federal funding and other state and local funding. We have urban areas, we have suburban, we do have rural but for example, when we get Tobacco Commission money or other types of things, which would be part of the Commonwealth of Virginia, we're too big.

Christopher Mitchell: I sometimes simplify that in terms of saying that you're basically big enough to have some good cable, decent cable systems, but you're not good enough to really expect that there will be a better option beyond that. You're in a challenge in that because you already have decent service. No one wants to fund you to get better service, whereas places that have practically no service, they do tend to get some source of help.

Frank Smith: We've got a fairly unique situation and I think that's where the business community specifically drove this. It didn't come out of the government side first. The government side became a partner with the key leaders within the government community driving this. The one that we talked about is the importance for us to recognize that there was a requirement for an open access network. An open access network is not a sole-source provider. It allows other people to ride on that network, so we wanted to encourage competition, but also we wanted to encourage companies to be able to come in here and provide different types of services, and also work with existing providers too. We look at it a couple of ways. We look at partnering with the existing providers that are here, providing additional backbone for them to use, but also for us to provide services as required. We look at three verticals: government, education and business. Our goal is not residential broadband. That's not our play right now. Then, in addition to that, we're looking at different ways to partner. For example, we've already been approached by companies who are local in the area -- wireless Internet service providers who are interested in providing the last mile. We've had land line Internet service providers looking to use the physical infrastructure to then build out to communities, so they could in that case, take a look at providing residential service. Now we'd be the enabler if they wanted to use our middle mile. Then we also have groups that have taken and looked specifically at what we've done, we've formed a group down here, created a chapter what they call the Armed Forces Communications and Electronics Association. This is a huge group. It's been around for seventy years. The point is, we've got a growing defense industry here, both figuratively and literally above and below the radar. What we're trying to do there is saying, look, we've got a great infrastructure, we're building it out, and also the equipment we're using -- our particular network is all certified, the switches and the routers, they're all certified under Defense Department process called, not getting too far in the weeds, but called JITC, Joint Interoperability Test Command. They come in and take a look at vulnerabilities. We made sure that was a table stakes requirement for the vendors that we put into the network. The key thing is that we're close enough but far enough away from some of the key centers such as Charlotte and DC. We've seen success right down the road, several hours from us where people have been able to put in disaster recovery sites, or data centers in service of both state and federal players like the US House of Representatives. The key thing is there are different things that we look at. We have groups here that need to be aware of who we are, they need to be aware of each other. At the end of the day, our purpose, our primary purpose is economic development.

Christopher Mitchell: A lot of our listeners, I think, are more familiar with municipalities doing these sorts of things. You're actually an authority. What does that mean?

Frank Smith: We were able to create this under the Wireless Broadband Act. I think it was 1999 which was passed by the state legislature. The Authority, we are technically called the Political Sub-Division of the Commonwealth of Virginia. What that allows us to do is we brought together four municipalities, the county of Roanoke, the city of Roanoke, Botetourt County, and then the city of Salem. Three of those are financially participating right now. A fourth I think will be coming down the road as they take a look at how they want to expand into their particular area. We called it an authority, we've done something very similar. It's actually an organizational construct that's authorized within the Commonwealth of Virginia. For example, we have a local water authority, and that's similar to the Roanoke Valley Broadband Authority. We are subject to the procurement integrity rules of the Commonwealth of Virginia, so obviously we have fully transparent books. Everything is -- We have primary, secondary, judiciary checks for how we spend and account for things. Those are all subject to Freedom of Information Act, so everything is clear and open. We are subject to oversight.

Christopher Mitchell: Let's talk a little bit about your plan. You're very enthusiastic about open access. What is currently happening in terms of where you're able to build out and target and that sort of thing?

Frank Smith: There are a couple of things going. We've been in production for, I want to say full-on production live for four months. I've been with the authority for almost fourteen months. During that time, we took it from bidding out and selecting the first (for the first phase of the network) the first fifty miles, a hundred and forty four strands of CommScope microfiber. Then we put in a four channel conduit and we're using one of the four paths. The key on that is that we can lease that out, we can expand our existing fiber, we can do all sorts of things, so there's capacity that's build in. That means that other folks can come in and use both our fiber and our conduit. We've also, under the first initial hundred forty four strands of fiber, we've taken part of that and just said okay 25 percent of that or approximately 34 strands will be used for dark fiber. For those who are not familiar with dark fiber, it's the unlit glass or unlighted glass that we've had several carriers approach us and are taking a look at leasing dark fiber from us, so they can get to different points in the network, serve different customers without having to build additional infrastructure. That is good on a couple of things. First it's good for us because it's a revenue stream and we have an operating budget, and we have a pro forma, which is basically our business plan that we need to stick to. We need to be breaking even from an operating expense standpoint (Opex) within a five point nine years. That started in May of 2016, so that clock is ticking. It helps us generate revenue, but also allows other folks to use facilities without having to come in and build. That goes for both the carriers that are here and also carriers that want to come in or entrepreneurial carriers or start ups that want to use our facilities. That's one, that's the dark fiber. We've got 25 percent allocated for that. The second thing we have, specifically is what we call transport services. Let's imagine that you got the dark fiber, or the dumb glass. You've got to be able to connect that, you got to put electronics on it because it takes lasers to send the light that transmit the data. Let's say you've got two or three locations in the area, and you need to get from point A to point B to point C and you're not interested in Internet traffic or passing packets out the area down the backbone of the Internet, but you need transport. You might have data center facilities or things like that, or you want to be able to run other applications. You could strictly get transport from us or take a combination of different things. That's where we would use our electronics to light up the glass and allow dark fiber and allow you to pass traffic. The third option is really taking a transport, or the stuff that's illuminated with our lasers or switching equipment, the optical transport equipment what they call it. Then taking it and taking it then taking it up to what they call a Layer 3 service, or being able to take it out onto the Internet, get Internet service. We have redundant. We've build in disaster recovery, redundant paths, diverse routing. These are all table stakes. If you're not familiar with them, these are things that when you build a network, they talk about carrier grade. They have things like, you hear the words NEBC=S, network equipment building compliant. You look at a network, you've got to have redundancy, you got to have ability to restore quickly because otherwise you're out service can cause all sorts of cascading failures in the network, and the third is resiliency. We've got routes going up north, and we've got routes going south. We recently had a storm here, not in the area, that hit one of the surrounding states which took out a lot of service, a lot of backhaul service and poles, and things like that. We were not affected, which was good. We were able to maintain our service. We didn't have an outage, and that's because we had redundancy. Now fortunately both our paths were not affected, but if one is, it automatically switches to the other. The key thing is that for a carrier, for somebody who wants to come on our network, we have to have those standards. Those standards have to be met because otherwise we're not carrier grade, we're sub-standard. That's one of the things that we built into. Open access really has a lot of facets to it. The key thing is that everybody can ride on it and use it, which then generates interest, shows businesses what they can be doing. They can use other folks to supply that service to them, they can be providers for themselves. You've got more choice. I think from a consumer standpoint, regardless of what market you're in, and the markets that we address are business, government and education.

Christopher Mitchell: If I'm a provider and I'm trying to figure out how to get from point A to point B, about how many locations do you have where I could hop on and hop off?

Frank Smith: It depends on where they want to connect. There are many places. There are places where they could splice into us, into our network, depending on where the equipment is and where they want to connect. There are things called handholes, and if you're walking along the street and you see a box that's level with the pavement, you'll see, for us, it'll say RVBA Fiber, Roanoke Valley Broadband Authority Fiber. Those are places where we have connection points, in some cases. We have over three hundred of those. That's places where the fiber's connecting and people can also be able to splice in if we need to connect customers or other locations. The other way is we do, called colocation facilities, co-locates. We have five optical switches, or main switching centers. We have one that's called the, it's a colocation for Mid-Atlantic Broadband Communities or MBC.

Christopher Mitchell: Yes, we've had them on the show before actually. Tad Deriso.

Frank Smith: We work with them. They're a great partner. Specifically we co-locate in one of their facilities. We actually hand off to them, they hand off back to us. Then in addition to that, we also have other places, there's what they call the higher education center, a beautiful building. They re-purposed that building to be the higher education center. I think it's the Roanoke Higher Education Center, if I get that correct. Multiple universities in there are teaching, but they do that as a remote teaching site. In addition to that, we have a great facility which is a used as a POP, point of presence, or switching center, which is hardened. We put switching equipment in there, that's another place they can connect, and some other carriers come in there already. Then in addition to that, we actually manufactured a telecommunications hut. You sometimes see these, they're about maybe twelve by sixteen, about eight feet tall. We put those in, and there's a place where folks can connect in there, if they want to co-locate. Then there are two others, at the Salem Data Center. Salem is one of the municipalities. They were actually in their data center and that's a place where we can cross-connect to other carriers who want to use our facilities and we can cross-connect to the facilities from other carriers, if we need to get at them. We've done that. The one that we, I think is probably the crown jewel, and this is where it gets interesting from a community stand point is Blue Ridge PBS, and Blue Ridge PBS is public broadcasting, I think it's public broadcasting service or system. Blue Ridge PBS, and their facility was built in the '60's. They are a great local asset. Nobody can be against Elmo or Big Bird, so I look at it that way. They've been great. We've been working with James Baum and he is the present CEO of Blue Ridge public television. We've been working with Will Anderson, who's their vice-president over there. I think he's actually technically the COO. Then Dan Ullmer, who's their Director of Network Engineering. These guys have been tremendous. We have put one of our main switching centers there, but we're also developing a colocation/data facility there because their television operation center is a hardened facility, raised floor. Basically it's a computer room. They've got back-up, huge back-up Caterpillar diesel generator, and all these great things. They are consolidating their equipment. Their equipment has gotten smaller and smaller so that's freed up a lot of space. We have worked with them and we've been able to put a series of Great Lakes cabinets in there and one of our switches in there. In addition to that we have room to expand, so we're talking to several providers right now. We want to co-locate there and be able to cross-connect into our system. That's great because it's a revenue stream for Blue Ridge PBS because they own the facility, we’re leasing parts, so they can rent and gain a new revenue stream to help them in their budget. The other part of that is we're selling capacity. It's a win-win. We've got a great partnership, and they're an integral part of the community. The other thing which is good about this too we think, how we play, it's just not about technology, but it's how you're going to impact the people in your community that you live with, and that you want to support. Blue Ridge PBS is a good example of that. Right down the road is Virginia Western Community College which is part of the Virginia Community College system. One of the things for us, they've connected into our network, and they're using a series of different things to be able to take advantage of it, so there are potential things down the road. We're a facilitator. We're providing an open access network to stimulate growth and economic development which translates into we need to be an ingredient in what people need to be able to do what they want to accomplish. That's our goal. We're there to serve. This goes back to Virginia Western. They have a program, on mechatronics, which I guess is more how things work in a system as far as assembly, manufacturing. Due to fact that they were able to do this and have this ability, that became a key ingredient in attracting an overseas Italian maker of, I think a battery or transmission systems for electric cars, hybrid cars. One thing leads to the other, so we want to make sure that we're providing or enabling different groups to support their missions, execute their missions by providing telecommunication services in an open environment which stimulates growth, stimulates creativity and more important for me, is innovation because that makes a difference in the community.

Christopher Mitchell: One of the things that I love hearing from people is this idea of the open access, of building a network that's open to many people and encouraging innovation, so I certainly salute you for that. We don't always find that the existing providers are so excited about dealing with the competition of the providers that you may well facilitate coming into town. Although I'm sure that you, as you've said, you're network is open to the incumbents. They just tend not to like that business model so much. I'm curious if you've seen any push back from them?

Frank Smith: Oh well sure. We're the new kid in the block. We're new and we are a disruptive force in a medium size to smaller market. Usually, and any time, regardless of who it is, it creates waves. The question is what do you do with that, because waves have energy. The question is how do you translate that into something productive? Again, as I said before, we've got a couple of carriers who we're working with. We just hired a vice president of network engineering and operations, a guy by the name of Dave Armentrout. He's been in the industry for a long time, knows how to work specifically with the existing providers. My belief, all boats rise and fall with the same tide. If we're generating new abilities to track customers, retain customers and grow, the network usage that customers require, that benefits everyone in the community. That includes the existing providers. We have places where we have existing providers already leasing facilities from other providers. In this case, a municipal provider who already has some fiber. It's one of the municipal providers that we partner with, or actually part of our network. It's a question of its time, education, and most of all, patience but probably the bottom line is perseverance. I am rationally optimistic. We will grow a relationships.

Christopher Mitchell: Let me ask you about something that, I'm wondering if it's an old joke yet with the ice cream. When we spoke last it was still something that you were laughing at. I'm assuming that at a certain point you're going to say, "Oh I just wish we could get beyond this," but for my listeners, tell us about the ice cream.

Frank Smith: I'm a public servant. Regardless of what I think personally or professionally, I'm here to serve. That's the other difference of the authority, I am a public servant. Folks, remember part of the interesting thing is, it's kind of public private thing that we're going on here because we're entrepreneurial in how we're running the business, but yet we're also sticking to good, practical, fiscally responsible spending and planning. That's at the core of this. That's just table stakes, we can't get away from that. Then we carry over on the more of the public policy side, so you have elected officials who are elected by their constituents to serve. Part of the course of the politics, is always discourse. Whether you like the discourse or not, that's their job and they can speak their mind because we live in a democracy. Technically republic, but we have a democratic system. As far as the ice cream, the ice cream authority, somebody had said that we should be selling ice cream -- we'd like the government getting in that business.

Christopher Mitchell: One of the things that you were talking about earlier is just how important redundancy and reliability is. One of the arguments that we saw raised is this idea that you aren't doing anything that isn't already available in the market. Therefore, it might be similar to the county or the city or any public entity deciding that they were going to open an ice cream shop and try to perhaps run the other ice cream shops out of business.

Frank Smith: The short answer is that redundancy is basically a table stakes requirement in telecommunications. You need to have multiple paths, you need to have multiple providers. That argument does not hold water because at the end of the day, the more competition they have, the more options you have, the stronger your community is, the stronger it is for those who need to rely on that service. It's an interesting illustration, it's entertaining, but it's not accurate.

Christopher Mitchell: One of the things that I enjoyed was seeing that the local newspaper actually did an editorial on it and for me it's always important to see that, if it's something that the local paper feels strongly about, it indicates something to me I think.

Frank Smith: The paper is for the state and I have a lot of respect. Sometimes I agree with what they put in the paper, sometimes I don't. At the end of the day, that's their job. A very good job and their op-eds and other things have been very supportive, but they've also asked a lot of questions. They've gone through our books and done other things, and we've opened our books. Particularly they've ask for, they wanted to do FOIA or Freedom of Information Act requests, and we said "No, don't worry about. Just come in and see our books." We have a good team and we are doing what I consider the right thing for the community. Part of that all goes back to what's the motivation? It's economic development through, in this particular case, an open access network which is built upon a desire not just from the government side, but really both from public private on the business side, government, education and business to go forward and create something that's different that's a competitive advantage for the Roanoke Valley.

Christopher Mitchell: Well that's one of the other things I wanted to mention is actually as you leave the Roanoke Valley, I think one of the challenges you face is that heading over to Richmond, you're going to run into some pretty powerful lobbyists. A lot of times local governments, your authority, you don't have the capacity to be there every day, every night when these arguments are happening. Are you seeing anything coming out of Richmond that worries you?

Frank Smith: Well I think the thing is, it's not a question of stuff worrying me out of Richmond. It's being aware. We can't keep our head in the grass. We need to make sure that our voice is heard. We need to make sure that we do it accurately, succinctly, and most importantly, that we don't waste people's time. We've got to be on the mark as far as what we're about. Part of that goes to making sure we have an obligation to our customers. I have an obligation to my board and to the community. We're making sure that we are following things. There are different channels. We have things that we can use specifically, if that makes sense, so that those who are in the public policy arena are aware of who we are, what we're doing, why we're doing it, and most importantly, why is it important to them because of the impact it has on us as citizens.

Christopher Mitchell: Excellent. Is there anything else going on there that you want to make sure we cover that we haven't talked about yet.

Frank Smith: Well we're really excited about trying to develop new verticals for this area, and in particular on the defense side because we've got great cooperation with the folks down there in the Blacksburg community, which is only 30, 35 miles away.

Christopher Mitchell: Right, and that's Virginia Tech. I mean that's --

Frank Smith: That's Virginia Tech and Blacksburg and they got their corporate research center. We've got strength in our region, we've got strength in our individual municipalities, and we've got strength in the region that is here as a whole. That region is technically considered the New River Valley, but we're working together. We see even a good play for us, just the strength of the southwestern part of Virginia. The chapter with the Armed Forces Communications and Electronics Association, which is actually headquartered out of the northern Virginia area, will gain greater awareness as far as what's down here. More importantly, what can be brought here. I'm really excited about that because that's something that's going to be a benefit for both the area here and also for the greater region.

Christopher Mitchell: Excellent. Well, thank you so much for your time today.

Frank Smith: Thank you Christopher.

Lisa Gonzalez: That was Frank Smith, president and CEO of the Roanoke Valley Broadband Authority in Virginia. Remember, we have transcripts for this and other Community Broadband Bits podcasts available at MuniNetworks.org/broadbandbits. Send an email to podcast@MuniNetworks.org with your ideas for the show. You can follow Chris on Twitter, his handle is @CommunityNets. You can also follow MuniNetworks.org stories on Twitter, where the handle is @MuniNetworks. Thanks to the group Mojo Monkeys for their song “Bodacious” licensed through Creative Commons, and thanks for listening to episode 221 of the Community Broadband Bits podcast.

Transcript: Community Broadband Bits Episode 220

This is episode 220 of the Community Broadband Bits Podcast. CEO David Corrado of Medina County Fiber Network in Ohio joins the show to discuss the role of the county's fiber infrastructure and their work with Internet service providers. Listen to this episode here.

 

David Corrado: It is the next infrastructure. It is needed for economic development just as a waterway, or a highway, or an airport.

Lisa Gonzalez: This is episode 220 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Medina County in Ohio is a growing community, in part because it’s located between Cleveland and Akron, but also because it has invested in fiber optic infrastructure. The county has aggressively pursued a more connected environment for economic development, and it’s working. In this interview, Chris talks with David Corrado, CEO of Medina County Fiber Network. He discusses the challenges, progress, and the history of how the community came to have its great asset. David also describes the role the county place and how they work with Internet service providers that use the infrastructure to serve customers. You can learn more details at medinacountyfibernetwork.com. Be sure to stick around after the conversation for a special treat at the end of this week’s show. Now, here are Chris and David Corrado, CEO of the network.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I’m Chris Mitchell. Today, I’m speaking with David Corrado, the CEO of Medina County Fiber Network in Ohio. Welcome to the show.

David Corrado: Thank you Chris. How are you today?

Christopher Mitchell: I’m doing well. As we’re just joking a little bit about, and I actually I screwed it up in the first attempt, but it is Medina spelled M-E-D-I-N-A, which could be confused with Medina and that happens sometimes. Tell us a little bit about the section of Ohio you’re in. What kind of communities do you have?

David Corrado: We are about 30 minutes south of Cleveland. Medina County is one of the counties that had extensive growth in the 80s and 90s, about 75,000 households, roughly 8,500 businesses, third fastest growing county in the state of Ohio, so it’s a fairly affluent county with many businesses looking to locate here because of the nice location between Cleveland and Akron.

Christopher Mitchell: You were one of the earlier members of Next Century Cities and one of the rare county members which there is a few. That’s something that you got into pretty early, it seems like.

David Corrado: We were the 50th member of Next Century Cities. As far as the city’s counties go, you look at municipal networks, predominately they are city based so we are a little larger, 151 miles. We have three larger cities within some smaller towns that are also within the county. The demographics and the way that we run the network is a little different than some of the cities that people may have heard about in the past.

Christopher Mitchell: Sure, and we'll get into that in a minute. There’s one other thing that I thought was pretty interesting and that’s your email address. You guys are Fiber County. Is there a story behind that?

David Corrado: We are, we are. Our marketing department said, “Let’s set up a domain which really talks to exactly what we’re doing.” We actually have a sign that says Fiber County USA. The colors of the sign in the lettering are the colors of each of the cities that are represented in the county. Our domain is @fibercounty.com, so that is exactly what we’re trying to do here.

Christopher Mitchell: Excellent. Tell me how the county got started with fiber optics.

David Corrado: About 10 to 15 years ago, the county realized that many corporations were asking for connectivity outside of the county as we went to a more global economy. They started to lose some businesses that could not exist on DSL or cable. They started, the county started to put together an analysis to look at what would be needed, and basically it’s a very standard approach. It is the next infrastructure. It is needed for economic development just as a waterway or a highway or an airport is put in for towns to grow and accumulate business and individuals. That’s what they realize that they had to build this fiber infrastructure to attract new services into the county.

Christopher Mitchell: Often, when I've heard of counties doing something like this, they would put it under a CIO type position within an existing department that already dealt with technology. It sounds like you may be did things a little differently.

David Corrado: It is a little different here in Medina County. There really is not a definitive central IT staff with the CIO, the different functions within the county have different IT support staffs and really what was done here is that this project was given to the Medina County Port Authority which is basically a sub government agency that handles large projects for a County usually on an economic development basis. They have a little bit more leeway than, say, a government does. In this case, the Medina County Port Authority was the governing body that was working for the county. That is how we are lined up today.

Christopher Mitchell: You started off, you built some fiber and we’re going to get really into the savings and the benefits, but one of the things that strikes me and I think is tied up in my history with you is that we first started communicating at a time when I think you had this great fiber asset, and it was really underutilized, something that’s changed since then fortunately. Can you tell us a little bit about the growing pains that you went through?

David Corrado: Well, the challenge as with and I’ll say this is … We’re not considered rural by populace but still we have many small businesses and Medina County still has a strong agricultural component to this economy. In any of those type of geographical locations, you still have the cable modem or the DSL being extended from the household into the business. Many people did not know what fiber brought, so it was a very large reeducation of what could be done for the companies. There were many companies that their network would go down once a month. They would lose their Internet or lose their phones. That was acceptable because they didn’t know that anything else existed. We had to reeducate constantly show what could be done, get consortiums together. We still have a long way to go but we are making some good traction of course starting with larger companies. Our latest is that we hopefully can partner with the Fiber-to-the-Home partner because we believe that that would definitely sort of solidify what fiber can do on residential basis.

Christopher Mitchell: That’s a good point of clarification, I think, because I was not very clear. Your county network does not reach out to the home. You’re not a service provider. You just make sure people have the basics of what you do.

David Corrado: We are the railroad tracks. Medina County Port Authority decided that they did not want to get into business of competing with carriers. What they did is they put the fiber network in. It is both lit in dark services. Today, we connect with three carriers. We'll have three more carriers connecting here within the next two months. Basically, what we do is we try to position the carriers. They can either sell directly into the customers or we sell their services, but the carriers provide everything above the transport. We strictly do the transport to the connection for the carrier so we're the last mile. We monitor that just like a carrier would. It has definitely broken down the economic barriers of a carrier having to come in and build the fiber themselves. We are starting to really get momentum for carriers saying this is a great opportunity, there’s no financial risk for us, there’s no cost to do an NNI connection with us and we help sell their services.

Christopher Mitchell: Do you want to just briefly describe what an NNI connection is?

David Corrado: Sure. It’s a Network to Network Interconnection or Network to Network Interface depending on who you're talking with. Basically, it’s a piece of our network equipment that sits on our network with high-speed fiber connection to a piece of equipment sitting on the carriers network. That’s where they deliver the phone services and the Internet services, firewall, managed services, anything that basically comes across the fiber network is delivered at that point. We have an NNI with each carrier and they are segmented so they don’t bleed over onto each other, and it works very well.

Christopher Mitchell: This is, I think, a good point of differentiation with some other approaches that counties and cities have taken, which is to say that let’s assume that I’m a small business and I'm on a street, some of those municipal and county approaches would go past the house or past the business and another business, an ISP could lease that connection to you, but then you would have to connect from the street to the business. Now, if I understand correctly, you will actually do that part as well if that’s the desire of the ISP.

David Corrado: That’s what we normally do. We have budgeted in our business plan to connect from the street into the customer premise with fiber so it’s complete fiber to the premise. We put in a piece of network equipment and then the carrier connects to our network equipment at the customer location. We deliver the transport back to where we connect with the carrier.

Christopher Mitchell: I want to get into some tips for others who might want to learn from what you’ve gone through. I guess, I’m curious if that was one of the things you learned was just that you need to go that extra mile. I think that might almost be a pun. You need to do that final connection possibly to get some of the carriers more interested.

David Corrado: You do. You need to budget for it. It is a big piece of your capital expenditure, so you need to make sure and the customer premise equipment that you’re putting in there, you want to do that so you can monitor and give statistics to your carrier. You’re playing two sides here. Your carrier is your customer and the customer is also the customer of Medina County Fiber. However, they signed their contract with a carrier and we invoice the carrier for the transport but we are also an advocate for that end user if they need to have something escalated to the carriers. It gives a support structure a little extra level for the customer. Again, as you said, it attracts more carriers because we are adding a little bit of a financial piece that would’ve kept them from coming into Medina County

Christopher Mitchell: Do you have any other suggestions for how to approach carriers, how to talk to carriers about this to encourage them to join a network like yours?

David Corrado: The key is a lot of patience. Sometimes it’ll take, it took us two years to get one carrier to connect. I wish I had some sort of key that could unlock the solution to it. Basically, what you need to do is you need to find out what carriers are in the area, what type of services are being delivered and then you need to research what other carriers outside your area have to deliver and find out if their plan has any type of geographical expansion. After you get your first two or three, then the others start to realize that there’s potential here. I think that’s the real big piece but it’s just basic tenacity. It’s basic block and tackling, lots of emails, lots of phone calls and get high up on the ladder as high up as you can go, and show it from a business case where it’s low risk, low financial investment by the carrier. In our case, we also have the entire county supporting this network also financially. It’s not going to go anywhere.

Christopher Mitchell: Great. As we transition into talking about the savings and the benefits, let’s just set a base for what those benefits come from and that’s how was the network financed and how is it supported.

David Corrado: The network was financed through floating bonds on the open market, federal bonds, recovery zone bonds, and government bonds. However, like any startup, it takes time for a business to become completely self-sufficient, fully sustainable. In that short term, our project plan is a five-year sustainable plan. I think if you talk to other network people, that’s an aggressive plan but that’s what we’re moving toward and we are on target. Any shortfall of paying back the bonds is backed by the entire budget of Medina County. The county has AAA bond rating and they’re very secure. They run a very good budget, a good tight ship. They then give that financial support but we are all striving to make the network self-sustainable so funds from the county can be there to help people and other areas too and have the network run on its own.

Christopher Mitchell: Let’s tackle some of the benefits then that are, I think, the reason why we see local governments wanting to take those steps. Let’s talk about some of the cost savings first maybe that are resulting from the network.

David Corrado: There are four or five major benefits, so let’s talk about the hard dollars. We average about $350 per month savings per customer. We have some customers saving in the thousands per month and other customers smaller ones saving $50 to $100. We are able through multi dwelling units or if we get a number of buildings close together where we can service the smaller customer and they get the chance now to have enterprise class network equipment, fully monitored, managed services, the stuff that only big companies could afford before. Much of that savings comes from voice, voice over fiber is much less expensive. The capacity of fiber allows you to deliver many more phone lines, or some people call it concurrent paths compared to over copper. It also gives you the capability to offer and I’ll use some technical terms here PRI, SIP trunks, analog, digital all over that fiber rather than having to change equipment or change the type of media, etc. That has been a huge benefit for many of our customers that have had these large expensive PRIs. Now, they can pay too for only what they’re using rather than having to buy a bigger product.

Christopher Mitchell: Right, and to be clear, those are customers that are small and medium-size businesses I’m guessing largely.

David Corrado: That’s predominantly correct. That is our demographic here in Medina County.

Christopher Mitchell: Have you seen any cost savings from any public facilities that you’ve connected along the way as part of building this network?

David Corrado: We do have 10 of the municipal buildings connected in a municipal ring. It’s not just connected point-to-point, but they have full redundancy which has been a big help for the network bringing on critical applications such as E911 that we have running communications dispatch to the police, the sheriffs, they’re all on high-speed fiber now which the network has only had one outage for approximately 20 minutes in the last three years. They are now bringing in voice for the E911 because of that. There’s been a lot of money saved. I haven’t quantified it from the public side because the network is owned by Medina County. They're using their own asset if you will but then they don’t have to use commercial, I would say there’s probably 10 to 15% savings as you know government has a fairly good state discount. The other piece of the public side is that we were granted $100,000 from the state of Ohio. It was a proposal that we wrote to connect the state agencies through the state of Ohio network or net which is built for research and public institutions so we can bring those services directly to state agencies. We're going to use that money to build out into those buildings to help save them money. That should be another 20 to 30% savings for them.

Christopher Mitchell: I think it can be hard to figure out how do you quantify the savings of a network that’s more reliable when you ‘re talking about 911 and things like that. I mean, being in Ohio, you can have some pretty horrible thunderstorms, you have some real challenges here and there, you hope that you never need it, but it’s one of those things that just like to remind people that you can quantify some of this stuff, but some of it is pretty hard.

David Corrado: Yeah, that’s very true. Part of it is not on the direct money but it’s basically on the type of environment you’re living in, how safe is it, how quickly can your safety forces respond to you and it’s your quality of life. Those are very hard to quantify in dollars.

Christopher Mitchell: But you have quantified many other things so let’s get back to some of those. What other benefits have you created through the network?

David Corrado: Well, we’ve seen the carriers that were here which are predominantly copper-based or coax cable providers. We've seen about a 10 to 15% drop in pricing across the board, so those people that are using the services still, or preferred those services, are also getting in a nice cost-benefit from that. In one case, when we were direct head-to-head competing with one of the cable providers, they actually came in with a 50% price decrease for about 315 users that happened to be an apartment complex. We’ve seen those savings at about as high as 50%. I know that for a fact because one of the people worked in the office where I’m at, and she came in and thanked me even though we didn’t win for getting her cable bill down. We have created that type of environment too, where competition now, companies and individuals are benefiting from it.

Christopher Mitchell: What kind of new jobs have you seen that you can tell have resulted from network-related activity?

David Corrado: We've generated about 50 new jobs, the majority of them coming from a company out of Australia who decided to come to Medina County rather than Cleveland. They have roughly about 30 people working there. The other jobs have been through expansions. More companies did expand, and fiber was important to them. We have some very large projects that have not signed on yet but it would be an all-new building in Medina County and we’ve already met with and some of their first requirements was a fiber infrastructure. That would be 2 to 300 jobs if those large structures hit. The sell-cycle is long and we’ve met with them over the past 8 to 10 months so where we keep working on that. Little by little, the economic cycle is starting to pick up.

Christopher Mitchell: When you talked about Fiber-to-the-Home earlier, I didn’t imagine that, did I?

David Corrado: No, you didn’t. When I took this job, Chris, three years ago, I started doing quite a bit of research. A lot of it, of course, actually comes through newsletters and podcasts, which I think are fantastic, help me ramp up. Then, of course Next Century Cities with Deb Socia’s information was also very helpful. I kept reading about all these cities starting with residential plans and Fiber-to-the-Home. I realized that it was something of a necessity. It was never really considered in the network. As I learned more and more, we started then reaching across the country, talking with many Fiber-to-the-Home providers. We've had a couple of them here already and they’ve done drive-throughs and they brought their executive teams. We’re just as anxious as everybody else. I think in approximately the 900 calls I’ve made to businesses over the last 3 - 3 1/2 years, at least 95% of those people have said to me, “When are you coming to my house?” There definitely is a demand for it. We just need now to convince the Fiber-to-the-Home carriers that we have a great opportunity here in Medina County and people are waiting for it. I get calls weekly from associations. Let’s say we have 100 houses and we want to talk with you. It definitely is something I would say, anybody putting in a municipal network, don’t ever lose that focus. Maybe that is the start off point even perhaps something that you work coterminously.

Christopher Mitchell: I have to assume that in that sort of a scenario, you would probably do a hand off to the carrier in the neighborhood. You would not be building up and down the alleys and connecting every last premise with county network at that point.

David Corrado: That is correct. We have 125 drop-off points around our network. We have already pulled all the parcels and we send that database to Fiber-to-the-Home carriers who overlay it on the fiber map for our backbone and where our drop-off points are. They can build their financial plan by how much they would need to build in the area. We are open for adding more drop-off points if need be to help the Fiber-to-the-Home carriers

Christopher Mitchell: Great. Was there anything else that you wanted to make sure people knew about Medina County and the fiber network?

David Corrado: Like I said, a rural setting, we have a public square but it’s a place where now that the fiber has come to is a great place to bring your company. There are a lot of tax credits, CRAs, the cost of living is low. We have a couple companies already that connect to Austria and to Switzerland. If your parent companies is overseas, there’s no problem, we can take care of that for you, great school districts and if you’re Fiber-to-the-Home person, company listening to this, please give me a call and we would be more than happy to give you a tour and take you out to lunch. How’s that?

Christopher Mitchell: Sure. You can’t neglect to mention the reigning NBA champions being right there.

David Corrado: That’s right. Right there, Cleveland Cavaliers just a stone’s throw up by 71. You're right there at Quicken Loans [Arena] and you get to watch them. You can’t beat that.

Christopher Mitchell: Great. Well thank you so much for your time and for sharing your experiences.

David Corrado: Thank you Chris. I appreciate it and look forward to reading more of your newsletters and listening to your podcast.

Lisa Gonzalez: Thank you for listening to episode 220 of the Community Broadband Bits podcast. That was David Corrado, CEO of the Medina County Fiber Network in Medina County, Ohio sharing the story of a network and offering some tips for other communities. Remember, we have transcripts for this and other Community Broadband Bits podcast available at MuniNetworks.org/broadbandbits. Email us with your ideas for the show. Send a note to podcast@MuniNetworks.org. Follow Chris on Twitter. His handle is @communitynets. Follow MuniNetworks.org stories on Twitter where the handle is @MuniNetworks. Thank you to the group Mojo Monkeys for their song Bodacious licensed through Creative Commons.

Now, keep listening for the story of Pinetops, a small rural town near Wilson, North Carolina. You can also link to the story on PRX from our podcast page. Thanks again for listening. On Thursday night, September 15, the city Council of Wilson, North Carolina reluctantly voted to step along its municipal Internet utility Green Light to offer services in nearby Pinetops. The municipal utility began serving Pinetops this past spring after the Federal Communications Commission preempted North Carolina laws that prevented Wilson’s municipal electric utility from offering Internet access to communities outside Wilson County. In August however, the Sixth Circuit Court of Appeals sided with the state, and North Carolina again has effectively outlawed municipal broadband. When the state of North Carolina adopted the law in 2011, it provided an exemption for Wilson where Greenlight was already serving much of Wilson’s businesses and residents. The city of Wilson now has no choice but to stop serving Pinetops or risk shutting the entire network down. Pinetops, a community of about 1,300 could not get private providers to bring high-speed Internet to town. Slow, spotty, unreliable DSL was the best offered which kept the residents in the last century and was especially difficult for local businesses. When Greenlight came to town, the community immediately felt a positive impact. In addition to a number of new at home businesses that finally had the conductivity they needed to operate, existing businesses signed up to improve operations. The big family farm invested in a new potato distribution facility that required the gigabit connections they could only get from Green Light. Long-distance sales have jumped but Green Light service to the big family farm ends on October 31. Suzanne Coker Craig, a Pinetops Town Commissioner and a local small business owner says Greenlight gave her screen-printing business the ability to truly compete. She recognizes that the states barriers that prevent local authority are part of the problem.

Suzanne Coker Craig: This is a situation that Pinetops and other small towns in rural areas of North Carolina are not being served by private providers with high-speed good quality Internet service. We see this very similarly to how power was provided back in the 30s and 40s when rural areas couldn’t get power, local government stepped in. This is the same thing for us. We consider that high-speed quality Internet service in today’s economy is a utility. When you can’t have private providers willing to do this, why not let progressive municipal governments like Wilson help us out with this. We think this law is really a significant hindrance. Our areas are already struggling economically and we are losing population. This is only going to further that, it's not going to allow us to help ourselves grow and help ourselves pick ourselves up out of the economic slump that we are already in.

Lisa Gonzalez: Coker Craig says that the town is not taking the decision lying down. Immediately after the vote, the Town Board of Commissioners passed the resolution calling on the North Carolina General Assembly to repeal restrictive states barriers. Pinetops Mayor Steve Burress also appealed directly to Governor McCrory. They just started a new Facebook page NC Small Towns Need Internet Access. In addition, community leaders are planning more grassroots activities. They see themselves as a poster child for all rural North Carolina communities. This is Lisa Gonzalez with the Community Broadband Networks Initiative at Institute for Local Self-Reliance.

Transcript: Community Broadband Bits Episode 219

This is episode 219 of the Community Broadband Bits Podcast. Christopher Mitchell travels to Saint Louis Park, Minnesota, to speak with the city's Chief Information Officer Clint Pires about conduit policy and apartment buildings. Listen to this episode here.

 

Clint Pires: Fiber is going to be a part of the future. Until we can go faster than the speed of light, that's probably going to be an important part of our communications infrastructure.

Lisa Gonzalez: This is Episode 219 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. This week Chris took a trip outside the studio to visit Saint Louis Park, Minnesota where he could talk with Clint Pires, the city's Chief Information Officer. Back in the 1990s, the community began to realize a vision that continues to evolve but always integrates its high-speed fiber optic network. In this interview Clint describes how the city's partnership with the school district started them on a path that has led to better connectivity for the municipality, local businesses, and even a number of the city's municipal dwelling units. Saint Louis Park is also implementing smart policies to expand the fiber infrastructure as a way to encourage choice of Internet access providers. Now here are Chris and Saint Louis Park, Minnesota's Chief Information Officer.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm sitting here today with Clint Pires, the Chief Information Officer for the city of Saint Louis Park. Welcome to the show.

Clint Pires: Thanks a lot Chris, good to be with you.

Christopher Mitchell: Well I love talking to people in Minnesota, we're right here just a little outside Minneapolis. Why don't you tell us a little bit about Saint Louis Park for people who, I don't know, don't know where a New York Times columnist comes from.

Clint Pires: We do have a lot of famous people from Saint Louis Park, Todd Freeman being one of them.

Christopher Mitchell: Right, the Coen brothers might be my favorite.

Clint Pires: Yeah well I have history here in Saint Louis Park. Saint Louis Park is a community that is approaching about 48,000 people. We have 10 square miles roughly of land. We have about 41 or 42,000 people who come here to work every day in our 2,500 businesses. We have about 23,000 households; 40-45 percent of those are multiple dwelling units, which a lot of people don't realize. We border Minneapolis in the south west close to the chain of lakes, and so that it's a great great advantage for Saint Louis Park. Location! Location! Location!

Christopher Mitchell: Saint Louis Park it's not so much a suburb as it is, it's more like a city, right?

Clint Pires: Yeah we refer to it as micro-urban, I guess, is another way of looking at it because we do have so many aspects of the city life here.

Christopher Mitchell: One of the things that I've long known about Saint Louis Park is that you have some municipal fiber, your schools are connected by a publicly-owned fiber because of an interesting partnership. You don't have a municipal utility so how did you get involved with fiber?

Clint Pires: This really goes back to a longstanding cooperative relationship between the city and the school district, Saint Louis Park School District. As you know we're separate units of government. We're one of the cities where our boundaries are almost coterminous and for a long time on a lot of different issues including community education, sharing of athletic fields, the cities and the school districts have worked together; fiber's no different. Back in the 1990s the IT Director at the school district who is still there, Tom Marble and myself and a group of people from LOGIS, which stands for Local Government Information System, it's a consortium of cities built around IT. We got together and we were actually envisioning the idea someday back in the early 1990s again of being connected by fiber. At that time of course we were relying on the cable company and the telephone company, it’s all copper wire to connect our buildings. Yet it seemed at that time that fiber was going to become more and more cost-justifiable, and indeed it did. School district and the city instead of building separate networks, fiber networks, planned out a joint network. In the late 1990s the school district embarked on connecting their school buildings. In 2004/2005 the city embarked on connecting its city buildings in part over the same cable pathways as the school district had previously built. We did not duplicate those, we just extended to the buildings we needed to so we started connecting fire stations, our municipal garage, our nature center, our recreation center, those kinds of buildings; City Hall and police of course. By the end of 2004, we basically had a joint fiber network, city and school district work together. We cooperate together. We cooperate on maintenance, we have one locate service, and so we have that long tradition again of cooperation between schools and the city. Over time we continued to add fiber to the city network. School district was pretty much done at that point once their buildings were finished, but our City Council said, "It really makes sense whenever we reconstruct a street and the ground is open to at least put in fiber conduit even if we don't put fiber itself." We've taken that approach since about 2006.

Christopher Mitchell: Is that true of every street more or less? Is it a case-by-case basis? If you're like in a purely residential neighborhood, is it still done there?

Clint Pires: It is still done there. The only places we don't do it are the places where we already have the fiber conduit. The idea in the City Council's mind and what I've tried to promote is that we don't know when and we don't know who's going to use it but we really believe that fiber is going to be a part of the future. Until we can go faster than speed of light, that's probably going to be an important part of our communications infrastructure. Again it could be the city that uses that to connect buildings, it could be a private vendor that comes in and says, "Hey, we're interested in leasing some of that fiber infrastructure that you have, and we're willing to pay you for that." The point is there's no real reason for people to duplicate that, and if the infrastructure exists why not lease it? It's like turning looking back in the old days and we said, "We're going to put roads everywhere because along roads come economic activity and economic development. We're really seeing the same thing in the 21st Century. Our digital future is really our economic future as well, and so maybe fiber's really becoming the road to the 21st Century.

Christopher Mitchell: It's interesting because you said it's a little different from when you might be leasing lines. In the Twin cities I'm an avid bike cyclist which means I almost always bike west. There's a few places I can go east, north and south but this county has the best bike trails in the metro. And coming here I was like your water towers they have, you're leasing that space to telecommunication providers and so leasing fiber is not that much different from that asset that you're already leasing.

Clint Pires: Absolutely. We have three elevated water towers in Saint Louis Park, we have long-term indefeasible rights of use agreements basically, long-term agreements with many of the wireless carriers. You're actually right Chris, there's no difference re-leasing this as a fiber asset; it's available. We identify what fibers we need now and in the future, and then the fibers that are still available are the ones that we're making available for lease.

Christopher Mitchell: Right. Now you have an official statement, did you want to read that to us, what motivates the City Council and where they put that on?

Clint Pires: Sure, yeah sure I'd be happy to. City Council has set some major priorities between 2015 and 2025 and one of them was around broadband. They basically entitled it "Saint Louis Park is a technology-connected community." Why is this important to the City Council and the city of Saint Louis Park? What we believe is a community's broadband speed and capacity requirements continue to grow, as technology and the Internet continue to evolve. A community that is connected by a very robust and comprehensive broadband system will set itself apart and be better able to provide free economic growth, innovation and community development. High-speed broadband enables the exchange of information in many different forms and is vital to the high tech community as well as the medical industry and to the delivery of services and education, health, government, public safety, and for overall quality of life. Given the significant amount of fiber infrastructure in place that is owned by the city, which we recently discussed, we are uniquely situated to take advantage of the digital economy. That's the belief that our City Council and our community has, and so we use that as a mechanism by which to create strategies and goals and action plans to achieve what that statement says. Of course it's a long-term effort. Really at the base of it it's around community development; we don't do technology or fiber for the sake of technology and fibers for some larger goal. That larger goal is around being a competitive city where we can attract and retain people who want to live here, who want to work here, and who want to stay here. In order to do that we need to more than just be in a good location; that's a great help but it's not enough. We think that broadband in all its forms provided by a wide variety of players, certainly not just the city, the city is just a partner in this, is one way of maintaining that attraction.

Christopher Mitchell: One of the things that I've heard from other Minnesota local governments, St. Paul, Ramsey County, where I've had some of these discussions is some pushback. They'll say, "Even though conduit doesn't cost a lot of money and we agree that we'd like to be that kind of community” where you just read that statement. They believe that the high tech jobs that it's important to figure out ways of attracting them. They'll say things like, "You know there's that it costs a lot to put a conduit in; that's money that we could spend elsewhere where we know we're going to get a return on it whereas conduit is an uncertain return." Has that come up at all here in Saint Louis Park?

Clint Pires: It has really not because I believe in part our City Council sees the future benefit of high-speed communication. That one of the things that we have found over time is that when the opportunities come along we need to be ready. One of the things that we're going to talk about a little bit later I think and maybe right now is this leasing arrangement that we have for fiber. Whatever success we've had in leasing fiber, and we've just started and we have a few agreements signed now, is because we had the conduit ready, where we had the fiber strands available, we had interested players. Not everybody is interested by the way in the private sector in leasing from government.

Christopher Mitchell: Right right. There's a number of very large firms that have cast a -- They have no interest.

Clint Pires: They have none whatsoever, and you have a template agreement ready to sign. Our City Council directed me and other staff members to put together basically an agreement template that we can use whenever an opportunity comes along in a company. Frankly they've been small companies most far so far want to lease from us they can sign a shot-term lease agreement. Or they can sign an indefeasible Right of Use agreement, an IRU and it's there and it's ready.

Christopher Mitchell: For our listeners I think there's a difference between if you're going to commit to 20 years. That's the IRU approach.

Clint Pires: Correct. It's similar to the approach that is taken for example the water towers that we discussed earlier with the wireless carriers. I understand they've got a big investment, they want to have an assurance that they're going to have the ability to use that asset for a long time. That readiness is critical, it's absolutely critical. We're seeing the results of that now. As we built our fiber network over time by putting conduit in the ground, or MnDOT might be coming along Highway 7 and they're putting in fiber for their traffic management system, we put in fiber right along with them. It doesn't cost us very much and we have it available. We are now to the point where we have about 50 miles of fiber between school district and the city in Saint Louis Park. Again we're only 10 square miles and we're about 120 miles of streets. Well we're approaching about 45% of those streets having fiber on them. Now when a player or a small company wants to come in and maybe connect up one of their customers, there's a good likelihood that we're going to have fiber close-by.

Christopher Mitchell: Are those are they generally looking for a business customer or residential customer or a mix?

Clint Pires: It's been primarily to this point a business customer that they're trying to serve. Over time we believe that fiber to the premise is going to take off. That yes there was a time when copper was king and there was a time when coax was king. Then we really believe that fiber is going to be the next king or queen.

Christopher Mitchell: I want to come back I have a couple of quick questions, but I wanted to raise something, and it's interesting to me you community remains very bullish on this despite significant hiccup, a bit of history, which was a lot of cities either went down the Wi-Fi path themselves or with partners. You guys attempted to do a solar-powered Wi-Fi project that didn't end well, but you didn't give up; you learned from it. Is that what I'm to understand?

Clint Pires: Yeah, it was an interesting experience obviously to go down that path and a lot of cities did. It was unfortunate that our provider at that was not able to deliver on that system. I remember very clearly in the aftermath of that going to coffee shops here in Saint Louis Park and I'd be recognized. I think the thing that really struck me was people coming up to me and saying, "Aren't you the Wi-Fi guy?" Of course I'm getting ready-

Christopher Mitchell: “No, I’m the guy that’s saving our city millions of dollars from having this because we have smart telecommunication policies so we're not leasing for our schools and everything”

Clint Pires: Right, and I'm going, "Well that project didn't go so well," and they said, "Yeah it didn't go so well." The residents were saying, "It's too bad the company didn't get that done," and their next question to me was, "What are you going to try next and when are you going to do it because we're still interested in having competition and choice." That's part of what our community is telling us is that “City Council get us competition and get us choice.” The worst thing in the world is to have no choice, where we get backed into a corner. The City Councils continue that policy and say, "Okay, the Wi-Fi project didn't work out. After the law suit was done it cost us about a quarter of a million dollars. In the big picture, it was worth it." One of the things that we got as a result of that lawsuit was some excess fiber that was built by the provider added to our network. We're not looking at being the ISP in the future, we are saying that we could be a provider of some of the infrastructure though. Cities do pretty well at infrastructure.

Christopher Mitchell: Well let me ask you then, we have a situation back to the leasing of the fiber where you have company A comes in and connects a bank and next to the bank maybe is another business. Is the conduit near that? Do you have extra conduit? How do you make sure you're not, you don't run out of it pretty quickly?

Clint Pires: It's a good question, there are

two things: one again we identify the available strands of fiber that we have in any given conduit and we're typically leasing fiber strands not the entire conduit in which the fiber cable exists. The other thing that we did was we out in typically two conduits when we put in the fiber conduit infrastructure. The incremental cost of putting a second conduit when you're boring is very minimal. Now we have the ability to go back and add fiber to that empty conduit should we need that capacity in the future. Of course as the cost of fiber continues to decrease, it becomes more advantageous to do that. It's really

two things: we're looking at using up the available strands that we have; we don't know how long it's going to take. Yes it is a first-come first-served to some degree in that regard, but we've made this available to any of the private sector players who are interested. In the future if we have more demand we can go down that second conduit and add more fiber strands.

Christopher Mitchell: Okay, so then the last question on this, I'm a little off-script because I just get enthusiastic about where we're going with this. You are more of a technical person that has a lot of experience with this. You said, "Yeah we just put fiber in the ground or conduit in the ground when we can." How do you make sure that the conduit is broken or that you have that, not broken in the sense of not working, but that you can get out of it where you need to. If you want to connect an apartment building in the middle of a block, how do you make sure that somebody doesn't have to go to a handhole half-a-mile away come out, and then run it all the way back?

Clint Pires: Sure, sure. You just try and put the handholes the access points at strategic locations. It's also true that you can go back and add access points handles along the fiber network where you need it if it happens to be that the ones you have don't serve that particular need. We're seeing that right now with folks who are coming in and leasing from us. In fact what they'll often do and typically do is put their own handhole next to our handhole to separate access and then we'll just connect them via a conduit. That allows them to lease our fiber strands from us but then use their own handholes to go the customers that they need to.

Christopher Mitchell: Excellent. Let's talk about these agreements because you mentioned that you didn't want to be caught flat-footed when someone's coming up. You presumably have negotiated these sorts of things before otherwise cities will have the same sort of situation. How were you ready for the first negotiation to make sure that you have done your homework and you can make it easy on the provider?

Clint Pires: We kept getting approached by different people when we weren't ready. They weren't all that serious at that point but they were approaching us.

Christopher Mitchell: These are maybe local firms?

Clint Pires: Yeah local for the most part local, small firms.

Christopher Mitchell: That might be looking to connect apartment buildings and businesses and that sort of thing.

Clint Pires: Right, and what they're looking for is a way to get from point A to point B without having to build their own infrastructure and they lease from us instead if we happen to have a conduit there. What we did is we engaged a consulting firm, Columbia Telecommunications Corporation which has done work for us in the past.

Christopher Mitchell: Which almost everyone knows as CTC.

Clint Pires: CTC exactly. They do what they do some great work, they had done a fiber study for us in 2012.

Christopher Mitchell: One of their employees lives here at Saint Louis Park-

Clint Pires: That's right, that's right. We engaged them to study rates for fiber leasing around the country. It was all over the board, but we got a sense of what going rates were and there were a couple of communities here locally that were starting to embark on leasing fiber. We got a sense of what those rates were and those are the rates that we essentially built into our template, our template agreement. Now what makes it easy we've got all the other conditions there and then we have this area that identifies the segment that's being leased, the length of that segment and then times a price per strand per mile. That allows us to complete the agreement essentially as long as the provider's okay with that particular rate. In some cases we're looking at swapping assets as well. Let's say there's a company that comes in and says, "You know, we'd like to lease this from you and in exchange we have this other asset and if you find it valuable would you be interested in that in lieu of a per strand per mile rate. That's another way of doing it so we may be looking for connectivity in a part of town where we don't have it for some reason and we're being offered that. We'll take that in exchange. Of course we have to assign a value to that that is at least equivalent to what we would have gotten through the payment.

Christopher Mitchell: Great. It's really wonderful, I keep thinking to myself just even though you have the most enlightened City Council or there's been a lot of background work. I remember we did this case study on Santa Monica which has also done tremendous work around this, and I was speaking with Jory Wolf about it and I would say, "It seems to be amazing that they let you reinvest the savings that you created," and he said, "Well yeah, but I did a lot of work explaining the value and that sort of thing." Do you have advice for other CIOs or people that are working with the council that might be doubtful as to why all this effort is worth it?

Clint Pires: I think it has to do with looking ahead and being willing to take some risks. Obviously we're one of those communities that have taken some risks, and they all haven't worked out; the Wi-Fi program's a good example of that. There has to be a culture in this community not just the City Council but the community as a whole that says, "We expect our government to be on the cutting edge. We expect the government to be looking ahead to keep this a healthy place. We need to be looking in the future." We've had and are on our third round in Vision Saint Louis Park. What was Vision Saint Louis Park? It was the community telling the City Council what it wanted Saint Louis Park

to be: housing, transportation, economic development, redevelopment. Same thing happened in 2005, the same thing's happening again 10 years later we just started a new process. From that big cultural movement of looking forward for the next 10 years comes the attitude that we need to prepare in all ways. One of those ways is communication, and the ability for people to live here and to work here in a very dynamic way, in a way that enables them to connect with the rest of the world. When you have a culture like that, it allows for these kinds of effort. I don't think it's about the technology itself, I think it's about creating the culture that says, "We're willing to take some risks for the sake of succeeding, with the idea of succeeding." The idea that you won't necessarily succeed every time but you're moving the ball down the field and you're thinking forward, you're not thinking back. You can't be afraid. You've really got to be willing to try some new things. Again our City Council if you were to be in a meeting with me and them, you would find them being more aggressive than me. I'm probably the more conservative one because I do know what goes in to making these things work, nevertheless they are the ones who provide me with the inspiration and the adrenaline to say, "Let's try some new things," because no matter what's happened in the past, you know what, our community still wants to try new things.

Christopher Mitchell: I think it's just worth making sure people are aware. You have Comcast here, I'm sure you have some of the best service that Comcast provides in any of its markets in the Twin cities. I'm guessing CenturyLink has made some of its gigabit investments in this community. You're not at backwater where you have to, you're looking at providing a choice and making sure that you're ready for the future.

Clint Pires: Right. We have a CLEC it's providing a lot of their services including fiber. The last milestone might be copper in most cases. Comcast is doing something similar with coax and fiber. What we're looking at now is what is that next wave? Many of us including myself believe fiber directly and completely to the premise is part of that next wave. It's not for the exclusion of the others, it's to add a choice to the others. It's to provide some competition that hopefully makes it the pricing better for our residents and businesses as well. Also to say if we're going to take advantage of what's coming in the future technologically, we believe that fiber provides the capacity for that in a way that very few with any other technologies really do.

Christopher Mitchell: That leads us really nicely into the final topic which is apartment buildings but in the back of my head I'm been meaning to work this in somewhere. That's just in addition to providing that vision for the future, have you ever calculated the kind of cost savings you're seeing by self-provisioning, just for the municipal assets?

Clint Pires: Sure sure, in fact that goes back in history when we first connected the city buildings. In 2003 when we were doing this analysis, at that time, we were paying approximately $45,000 a year to connect our city buildings and network them and connect them to the Internet which was starting to take off, and the web of course was starting to take off. What we discovered was that it would cost us about $380,000 to connect all of our city buildings with fiber ourselves. Your ROI is maybe 8 or 9 years.

Christopher Mitchell: Right, with all the operations it could be 10 or 11.

Clint Pires: Sure, and so of course you look at the obsolescence factor. Is fiber going to deteriorate and if so how long is it going to take? Secondly, is it going to become obsolete? You guess, and you don't have to guess too hard because we've had Transatlantic and Transoceanic fiber for a long time that isn't deteriorating very fast. We figured that the life of that asset is going to far exceed 8 or 9 years. Then we looked at the potential obsolescence and again until things can go faster than the speed of light it's probably going to be a player. It became an easy justification to say to our City Council, "We'll get our money back within about 8 or 9 years. We're going to build the capacity in fiber and have the capacity in fiber for bandwidth that far exceeds T1 lines, back in the old days, you remember, and we're looking at, like, we’d get 1 megabyte per building that we were sharing."

Christopher Mitchell: In that cost allocation for a 9-year payback requires that you would have paid $45,000 a year continuously-

Clint Pires: Correct.

Christopher Mitchell: -when in fact we know that probably you would have been close to the $500,000 a year by the end of that 10-year cycle.

Clint Pires: Exactly, the prices weren't going down at that time.

Christopher Mitchell: Right, they were going up and then your needs go up. Not just that I would guess that owning your own network provides you with a higher degree of reliability. When your first responders are depending on that network, you need to make sure that you really have full control of it.

Clint Pires: Exactly, exactly, and that's what led into then of course when you own a fiber optic network part of what you're relying on is the availability. Much of what we've done in the city here, and putting in fiber and conduit in some of these construction project, is it's enabled us to get redundant paths to the different city buildings because there's something called fiber cuts right now-

Christopher Mitchell: Even a tornado came through not far from here just 2 or 3 years ago.

Clint Pires: Sure, and that's the other beauty part because all of our fiber infrastructure is underground in our case. We're far less susceptible to above-ground damage on poles and things like that. Our reliance on it is great, but so is our availability. You put all those factors together of cost, the ROI, the speed and it became a fairly easy decision for this City Council to say, "Go forward and do this." As the benefits accrue, because first we were carrying data between the buildings, and then we were able to add telephones when we went to Voice over IP, and then we were able to add video through surveillance cameras, and then we were able to connect our 800 megahertz system via fiber instead of building a giant tower to the Hennepin County Sheriff's office. Now you've got those 4 different types of technologies that you're able to carry over 2 fiber strands to each building. The benefits just grow and grow and grow. Our staff sees it, our City Council sees it; it really has paid off.

Christopher Mitchell: I mentioned that we were going to lead into the-

Clint Pires: Apartment buildings.

Christopher Mitchell: -apartment buildings.

Clint Pires: Sure.

Christopher Mitchell: This is something that has come up in cities across the country where they're trying to figure out how some of them you're looking at a good solution for the single-family units, single-family homes where a person owning a home they can choose what provider they have. If you're renting you may not have that choice. As I understanding you've worked out some voluntary agreements and maybe there will be some opportunity in the future to put that into a requirement.

Clint Pires: Mm-hmm (affirmative).

Christopher Mitchell: Let's start with where you are, what have you done with some of the I'd say more forward-thinking building managers and landlords?

Clint Pires: Well another piece Chris came out of the 2012 fiber study was the idea of working with MVUs or mixed-use developments where there's maybe commercial as well as residential use of buildings. Trying to find a way to encourage them to provide the capacity for broadband within their buildings as they're developing them. We started with newer developments, and it's typically re-developments. As you know Saint Louis Park is a pretty fully-developed community, so when we see development it's usually something else being torn down and something new being built. We started a couple of years ago working with some of the new developments. We have been able to encourage them to provide broadband capacity within their buildings and to their buildings. Specifically what ends happening in the way we've written up some of these voluntary agreements is to first try to be reasonable, what's going to work for the developer and what's going to be most cost-effective for the developer. The idea is to build capacity in the form of 2-inch conduit between their building and the public right of way where there typically is our telecommunication providers or will be telecommunication providers in the future; high-speed telecommunication providers. That conduit goes to their point of presence, their telecommunication point of presence in their building. Then from that point of presence it goes to each of their wiring closets, typically 1 per floor. Then from those wiring closets we're requiring 2 connections to each living unit and working unit that are capable of gigabit speeds.

Christopher Mitchell: Cat-5e, Cat-6?

Clint Pires: Right exactly. The carrot here if there's carrot is to say, "Look, we can provide you those specifications and when a high-speed provider comes down the road in the future, literally down the road, they'll be able to tie in to the conduit that you've put out there. That will give you an additional provider beyond the current cable company or the current telephone company. This will make you broadband-ready for them and whether you do come along, they'll know you're there, it's easy for them to give in because the cost of doing that retroactively after the building is built it's pretty high. While there's building there it's easy to add this capacity now as you're building and it's less expensive and it will be more attractive presumably for your clients as well to know that your living units and your working units are already waiting for that provider to come by. Now that is conjecturing that some day in the future broadband is going to be available pretty ubiquitously throughout this community and that people will want it.

Christopher Mitchell: From a different provider?

Clint Pires: From a third provider.

Christopher Mitchell: Right. When you look at the kind of investments we're seeing, increasingly those apartment buildings that are ready for competition and have landlords that are ready to welcome that in, it's a really ripe target for some of these smaller firms or Google. You have a range of companies that are looking for those kinds of opportunities, especially when this landlord will know that the city has a way of in most cases or in many cases helping that provider get from Minneapolis perhaps to that wiring closet. It's not like a small firm will have to build up their fiber network all the way down the street to finally connect to that apartment building.

Clint Pires: We've seen this with US Internet in Minneapolis, and of course those buildings existed so US Internet has to do, for example, a lot more work to get into a multiple dwelling unit or an MDU. We're trying to make it ready for a player like USI or somebody else to come in and will easily get in there. We have-

Christopher Mitchell: Right, and sorry I was just, for people who aren't aware the Google bought this company Webpass which is doing this in 5 major cities. I think it woke up a number of people in the media to this model of just focusing on apartments buildings. There are providers all across the Twin cities, there's probably at least 3 or 4 that specialize only in apartment buildings so you have those sorts of players that are interested. This isn't very speculative is what I'm trying to say.

Clint Pires: Right, it's happening, it's happening absolutely. It's really been interesting because in the 7 deals that we've been able to negotiate without any ordinance.

Christopher Mitchell: Handshake agreements with landlords.

Clint Pires: Well it's more than handshakes, we put it in a - There's usually a development agreement, but we did have an ordnance in place that required it. We sat down with them and said, "Here's what we think is good for you for the business and what's good for our, the people who are coming here to let's say live or work in that mixed-use development. The developers get it; they understand. What this does is simply clarify for them what they need in order to be prepared. We've had none of these 7 developers go away and say, "This is a bad idea."

Christopher Mitchell: Which would be their right if they wanted to.

Clint Pires: It would be, it would be absolutely. We've been able to use them to essentially an experiment to say, "Can we make this work? You've made it work voluntarily and now we're putting those same requirements, yes in the form of an ordinance, just to make it simpler," but because we haven't had any resistance to this. I truly believe that market is going in this direction anyway and that smart developers will understand that. Again we've just clarified it for them and now we can go forward and make it a standard requirement. We were able to do a deal sometime ago with the West End development over there in Park Place Boulevard and 394 back in 2008 when that went live. Part of that development agreement included something like this, not quite as mature as this, but we did get very similar requirements put in with Duke Realty at the time for the West End. I do believe that developers don't see this as an owner-risk kind of thing, they see it as a smart thing to do.

Christopher Mitchell: Are these all new buildings?

Clint Pires: The ones that we have done thus far-

Christopher Mitchell: The 7.

Clint Pires: - are new buildings with one exception, and that is Meadowbrook Manor which has been here for quite a long time. They voluntarily as they're redeveloping part of their complex putting in a new complex said, "Yeah, we'd like to put conduit in from that new clubhouse out to the public right of way, and we're hopeful that somebody's going to come in and serve us as well.

Christopher Mitchell: The reason I ask is that there is a significant group of building managers or landlords that are saying, "We prefer to get these marketing payments," which is what they're called, "From the incoming provider, and we prefer to try to limit our tenants to just one option because that gives us some extra $20,000/$30,000 a month depending on the size of the unit." Just throwing some numbers out there. It sounds like maybe are you dealing with developers rather than the building managers, and it's earlier in the process maybe they're more receptive at that point?

Clint Pires: Correct yeah. Of course that's a grey area sometimes when does the management come in, and you start to deal with them versus the developers themselves. At this point yes we've been dealing during the development agreement. Period. I understand what you're saying and of course it's the right of that building owner or manager to have whatever agreement they want. What I believe is people like competition, people like choice; that's such a theme that we hear from our residents and businesses. That's something we can help do; we can't be the provider but we can set the environment in which choice and competition can really exist. It does occur that some building managers do that, and I believe that they will hear from their tenants, be they residents or businesses, "You know, I've heard about this other provider out there. Have you thought about allowing them into the building?" If that other provider's offering is compelling enough, I truly believe that that will shift the manager's stance.

Christopher Mitchell: Great, well this has been terrific. I really appreciate you taking all this time to walk us through it. I think you're doing some really great stuff. In my work with Next Century Cities, we deal with people around the country that are coming to us and saying, "Where has anyone done this MDU agreement?" I think you might actually be the second, although the people that did it first in Loma Linda, California, it's more or less incomprehensible to most of us what they did. The way you're doing it I think will actually be replicable more widely.

Clint Pires: One of the other areas we're looking at is single-family homes. Not trying to make it onerous on the homeowner either. I believe that the fact that we're going down most residential streets here as we have the opportunity to put in fiber infrastructure is about the most and the best that we can do. If I look at other examples let's say next door in Minneapolis if the conduit is in the ground in a residential area, it's relatively easy, relatively easy because nothing's easy, relatively easy for the provider to go from there into each of the homes. I'm not sure they have to do exactly the same things that an MDU or other complex would have. It's exciting time to be here, and it's an exciting time to be working in fiber.

Christopher Mitchell: For 20 years.

Clint Pires: Really looking at the future and sort of like planting a tree, this will I hope one that'll outlive me.

Christopher Mitchell: Terrific! Well thank you.

Clint Pires: Thank you very much for your time.

Lisa Gonzalez: That was Chris talking to Clint Pires, Chief Information Officer from Saint Louis Park, Minnesota. They were talking about the community's fiber network and the policies they use to encourage expansion and competition. Remember we have transcripts for this and other Community Broadband Bits Podcasts available at muninetworks.org/broadbandbits. Email us at podcast@muninetworks.org with your ideas for the show. Follow Chris on Twitter, his handle is @CommunityNets. You can also follow MuniNetworks.org stories on Twitter where the handle is @MuniNetworks. Thank you to the group Roller Genoa for their song “Safe and Warm in Hunter's Arms” and licensed through Creative Commons. Thank you for listening to Episode 219 of the Community Broadband Bits Podcast.

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