Transcript: Community Broadband Bits Episode 13

This is Episode 13 of the Community Broadband Bits Podcast. Curtis Dean the telecommunication services coordinator of the Iowa Association of Municipal Utilities, joins the show to explain the importance of rural broadband. Listen to this episode here.

Lisa: Hello and welcome to the Community Broadband Bits Podcast. I'm Lisa Gonzalez with the Institute for Local Self-Reliance and I'm also a writer from muninetworks.org. In episode 13 Christopher Mitchell speaks with Curtis Dean, the telecommunication services coordinator of the Iowa Association of Municipal Utilities. Curtis offers great insight into why so many community networks hail from Iowa and other parts of the Midwest. Curtis also shares the story of a local small business that was on the brink of closing in Spencer, Iowa. Thanks to a local network, and the ability to reach out to customers through online sales, Hanson Clothiers is once again thriving.

Christopher: Curtis, thank you for coming on the Community Broadband Bits broadcast.

Curtis: My pleasure, thanks.

Christopher: You are the telecommunication service coordinator of the Iowa Association of Municipal Utilities and so the first question is: Why does Iowa have so many municipal networks? There really are quite a few.

Curtis: Yeah, in fact we have right now about 28 communities in the state of Iowa offer some form of broadband service to the community. A couple of those have just like a fiber optic ring that they've installed that they then lease to other providers to provide connectivity, mainly to businesses. The vast majority of those offer retail services to homes and businesses. I think the main reason Iowa has this propensity for municipal telecommunications is the fact that Iowa has a long tradition of home rule. By home rule we mean that our legislature in Iowa has allowed communities to make a lot of their own decisions on issues that directly affect their citizens. So, in the early to mid 1990's, when many communities started to feel like if they did not do something that they would be left in the backwaters by the large privately owned telecom companies, they could look to Iowa law and see that there was nothing that would prohibit them from operating a utility that would provide those services. All they had to do was go to the voters in the community and say: 'This is something that we think we should do as a community effort,' and that's exactly what has happened in those communities and many others have actually held elections and passed those referenda but have never actually built anything.

Christopher: There's also something that people don't always understand, which is a lot of these Midwestern states, there's a real strong tendency toward self reliance. Farmer co-ops go way back, I mean it's just the sense that people don't expect to have other people solve their problems for them, I think.

Curtis: It's the same reason that Iowa has such a huge concentration of independent telephone cooperatives. It's the same reason that Iowa has a large number of rural electric cooperatives, and municipal electric, water, and gas utilities. The turn of the 19th into the 20th century saw a technological innovation and it was something that every community said 'We've got to have this to make our community keep up with modern times.' That technological innovation was electricity, and in those days the larger communities were being serves by large investor-owned utilities that could make a business case for putting in electric wires to serve people. In the smaller communities, and certainly the rural areas, that was much harder business case to make. But those communities felt like, 'you know what, we still need to do this,' so they did it themselves and that's why we have 130-some municipally-owned electric utilities ranging in size from 70 meters to, you know, 12 or 15 thousand meters. A hundred years after that we had the exact same emphasis in telecommunications. A new innovation comes along, this time it's broadband, we aren't getting served adequately by private providers so let's do it ourselves. That self-reliance you mentioned came back up in the turn of the 20th into the 21st century.

Christopher: So what are we seeing? We've got 28 towns, can you give us some of the results that these communities have seen from building their own networks?

Curtis: Well, we've got of those 28 towns first of all - all of them have been successful in providing those services. Despite what sometimes is kicked around by independent, or I should say not independent but...

Christopher: (laugh) Very dependent.

Curtis: ...Very dependent (laugh) yeah. The mediacoms of the world - the Comcast, the TimeWarners, who are never in favor of someone competing with them. They often make claims that all municipal telecommunication utilities and municipal cable systems have failed over and over again. I'm not sure what story they're telling, but they're not talking about any in Iowa because every one of them that has ever been founded has operated successfully. There've been a few cases, three I think, where we've had city owned cable systems - simple cable, no broadband or anything - that were built back in the early 70's that then later sold to a nearby independent telephone cooperative. There's been no cases where a municipally built system has failed outright. The success story is pretty much across the board. It's not easy, because just like every other business you have to be able to ride the trends of technology. We're seeing that with our members right now that built hybrid fiber coax systems in the late 90's that at the time were state of the art. Certainly they're seeing the squeeze on those systems as more and more bandwidth is required for customers to be able to have high-speed Internet, as more and more bandwidth is needed for digital video services and high definition and whatnot. Those systems are in the process of evaluating what the next-generation network will look like. We've already had several that have made the decision to start the process of rebuilding the networks to do fiber to the home. Others have upgraded to DOCSIS 3, but they're all thinking about the future

Christopher: I think Cedar Falls has mostly completed their fiber to the home upgrade from the DOCSIS 2 or DOCSIS 1 I believe right?

Curtis: Yes, that is correct, and they were one of the first HFC systems municipally owned in the state and you know, they got about 15 years of life out of that system. They knew they needed to provide more capacity and they decided that the best thing for their community was to go ahead and rebuild it with fiber. So they'll be - I think by the end of this year they'll have that conversion done. We've had a couple of other communities that have partially put in fiber to the home as their upgrading other parts of their existing telecom network, or in the case of Harlan Utilities, they had to do a major electric utility upgrade and so they used that as an opportunity to do about one third of their community with fiber to the home.

Christopher: I can't ever talk about Iowa quite honestly without talking about, at least mentioning, what I've found was the most terrific stories which was: Cedar Falls got stimulus dollars to expand their network to areas outside of town in some cases where people were having to pay long distance to do dial-up to the Internet. I don't know if there's a bigger insult or tragedy in the United States of America than that when it comes to broadband specifically. It's really unfortunate.

Curtis: It reminds me of the bad old says of America Online and having to call a long distance number to get online. That lasted about as long as the first long distance bill I got.

Christopher: At the time I'm wondering, if you were in Spencer, I'd like to hear some of your reflections on Spencer where you have lived and worked for a long time I believe. Where they have their own fiber to the home network.

Curtis: Yeah. That's kind of where I cut my telecom teeth, in Spencer. I was actually working in the news business in Spencer in the late 1990's and we had a group in the community that rallied essentially to have a referendum to create a municipal telecom utility. Spencer had a successful electric and water utility, in fact the electric utility at that time had maybe the fourth lowest rates in the state as far as general electric rates. So we felt that, you know what, this is a good institution that can serve us a lot better than the existing for-profit communication companies that were based in places like Denver and Middletown, New York. We had a citizen committee, we had an election. 91% of the voters said 'yes, let's do it,' the system was built - an HFC system built the beginning in 1999. By 2002 it was community wide, and within just a few years rapidly adopted to the point where 80-85% of all households and businesses in the community were getting services from Spencer Municipal Utilities. It was a great experience, the things that got us going at that time were really more visionary than just wanting cheaper cable or better channels. It was more about what's the future of our community, which direction are we going? Kind of in that theme of self-reliance that you see in other communities. It was felt that, you know, we can't wait for somebody to do this for us. The same philosophy that leads a community like Spencer and many other examples around the country to say 'We can't wait for somebody to built us a fine arts facility, we're going to do it ourselves. We're going to raise money, we're going to have a bond issue, we're going to do what we need to do to give our community the things that it needs.' This infrastructure, the telecom infrastructure, is just another example of that.

Christopher: In Spencer, I'm curious if you can talk a little bit about the effect on economic development and how it's impacted numbers in the community, for lack of a better term.

Curtis: Well, you know, it's always a difficult challenge in rural America and Iowa, and Spencer's been no exception to that. Population continues to shrink in some of those rural areas and in a town like Spencer with 11,000 I think has successfully fought the shrinkage more than other communities. Their population has been fairly stable. One of the things that helps keep is stable is the fact that people are getting a high-value telecommunication utility services and they're getting those for an inexpensive cost. One of the biggest economic development impacts that we saw in Spencer was - it was not so much, you know, Google didn't come and build a server farm in Spencer, Iowa. They could have, but they didn't.

Christopher: Right.

Curtis: What we saw instead were existing businesses, and we're talking small businesses - 5-50 employees, were able to utilize communication technology to expand their operations right there in town without having to move somewhere else. We had a Mom-and-Pop clothing shop in downtown Spencer, mom-and-pop clothing shop had been there for years, the owner was in his 70's, they sold high-end men's clothing. Now picture a high-end men's clothing store in a town of 11,000 and just how much business they could generate in that town. It was a matter of shuttering the doors at some point. Somebody in that family said, 'let's do something else' and so they got high speed Internet, they set up their own web server and they started selling their clothes online. Hanson Clothiers is the name of the business. Their sales went through the roof, and most of those sales were sales to people all over the country who didn't even know where Spencer, Iowa was. They just know that if you wanted this high-end type of clothing, this suit, this jacket, this pair of slacks, these shoes, this was a place you could get it. They were successful in completely repositioning their business and, you know, they probably don't have more than a few people a day walk through their doors but they're doing the same volume of business that a clothing store in a big city would do. That gives you the idea, and there are other examples like that in Spencer and other towns, where access to a broadband connection can make the difference between a business that's slowly dying and a business that continues to grow successfully.

Christopher: That is a terrific story. I'm curious if you have any numbers in terms of the cost savings to people in the community and if that money recirculates locally more or something along those lines.

Curtis: Yeah, in Spencer we ran those numbers back in the 2000's because we were under attack by the large investor-owned telecom companies who were working very actively in the Iowa legislature to try to reverse some of the home-rule decisions it'd made in the past. Countering that, and they were saying things about being unsuccessful and whatnot, so we put together some statistics and I believe that the last year I calculated those was like 2008. But, up to that point, people in Spencer were saving about 1.7 million dollars collectively a year and that was regardless of whether they got their service from Spencer Municipal Utilities or MediaCom or CenturyLink or whomever. That was just based on the fact that the rates were so much lower there, partially due to competition but primarily due to municipal competition, than those rates would have been in nearby communities served by the same companies. So, we always used to say to people: 'You know what, whether you get your service from us or not, that's a lot of money that's staying in your pocket.' You're going to take that money out of your pocket and you're going to go to the grocery store, you're going to go to the car dealer, you're going to go to the furniture and they're going to play their suppliers and over and over. I heard statistics that that money turns over in a community up to seven times, so you can see the economic value that comes back to a community like Spencer, like Muskatine, Cedar Falls and the others, that is simply money that never left town in the first place.

Christopher: It adds up. The last question plays a little bit off of the successful business that you noted. Iowa has a lot of rural people, and I think a lot of people in the United States think of Iowa, rural Minnesota, Wisconsin, you know these Midwestern states as being full of unsophisticated people who wouldn't know how to use the Internet if they had access to it. I'm curious how you react as an Iowegian to the idea that people in rural areas don't know how to use the Internet or somehow don't want it.

Curtis: Well, it's a fallacy obviously. Like every other fallacy the only way you can counter it is by telling the real story. The real story is that rural Iowans are just, need access to affordable, reliable, fast broadband, as anyone else anywhere else in the country. In most cases they're getting it, they're not just getting it from municipal providers, but I'll give you a great example. Many of the small independent rural telephone cooperatives in Iowa did their networks, primarily rural, to fiber to the home. If you live in rural parts of the state of Iowa, you can get a fiber connection to your home that you can't get in New York City. Certainly that's also the case in some of the communities served by municipal broadband utilities as well.

Christopher: Right.

Curtis: In fact, you'd be hard pressed to find many examples where a customer could have a fiber access that's not served by a municipal or independent telephone cooperative. The idea that because you live in a rural area doesn't mean you don't need the best Internet possible, I point out examples of farmers that are using cloud services to collect and upload data on crop yields to allow them to more efficiently plant their crops. Small businesses like the ones I mentioned that are using it to increase their sales and increase their market area to not just the boundaries of a small community, but the world. Certainly, the average consumer, whether they live in a rural area or an urban area still wants access to streaming video and the ability to use Skype or some other services to communicate with their family members and loved ones. They may not use it exactly the same way as someone in an urban area, but they still use it. They still want it, they still need it and they still have to be able to afford it. I would say that it has to be as much or more affordable in rural areas because income abilities in some rural areas are less than in urban areas because there's fewer economic opportunities. It's really an economic development issue, the whole digital-rural divide is a fairness issue, and I think Iowa is an example of the state where we've tackled that pretty well although there's a lot of work to be done.

Christopher: Right, I certainly think so. I think in terms of the home-rule focus, it's a smart way to move forward. As opposed to Texas, where so many communities that are similar I think, are stuck and they don't have those options.

Curtis: You know, if I live in a community I know my community better than the people in the state capital. I certainly know my community better than the people who run a large publicly traded communication company.

Christopher: Right.

Curtis: So why shouldn't I be able to say 'This is something I want to do.' By the way, in no cases here were taxpayer dollars ever put at risk. There's a lot of concern about government debt and government deficits, as well there should be, but these are all systems that were built and are being paid for not by taxpayer money but by the money that the people are paying when they pay their bills. It's been successful and it will continue to be successful, although it gets more and more challenging as time goes just because the business becomes more and more complicated.

Christopher: I want to take issue with something you said earlier. Which, I think, I want to have a different take on it, I guess, because you said it's about fairness.

Curtis: Sure.

Christopher: In my mind, the reason that we want to connect everyone in Iowa with an affordable, fast connection, in my mind, isn't actually about fairness at all for them.

Curtis: Okay.

Christopher: It's about fairness for me, because the entire United States economy would be doing better if everyone in Iowa had access to being more productive, if they had access to better education, if they weren't maybe stuck taking fewer classes because they can't afford to drive 100 miles round trip to a college. There's all kinds of reasons that it's not even about fairness, why we have to make sure everyone has that universal access. I know that you're not going to disagree with me, but I think it's something that, fundamentally, urban folk need to understand is that those of us that live in the big cities will do better if everyone is connected.

Curtis: Absolutely. People who live in the big cities certainly want, for example, America's farmers to have access to the technology they need to keep growing the crops and producing livestock to put food on our tables. I think this year's a pretty good example that we've had a near-record drought here in Iowa, and yet crop yields are a lot better than they would have been 20 years ago with the same conditions. Why? Not necessarily telecommunications, but technology has allowed our farmers to become smarter on how they plant, smarter on how they cultivate, smarter on how they grow their crops. The next wave of farmers are going to be using telecommunications even more and that's why I think we'll be able to keep up with the world's growing population. Because we'll be able to keep up the production levels to where they're needed.

Christopher: Well, I really appreciate you coming on. I'm sure we're going to have you on again to learn more about what's happening with some of the other utilities in Iowa, and we wish you the best of luck moving forward.

Curtis: My pleasure, Christopher, thank you so much and thank you for everything the Institute of Self-Reliance does. I think it's been a valuable tool for all of us in the nation that are really concerned about broadband and broadband availability across the nation.

Lisa: That was Christopher and Curtis Dean from the Iowa Association of Municipal Utilities. They were talking about municipal broadband networks in Iowa. To learn more, visit our show page on munienetworks.org where you can find links to some of the material mentioned in the interview. If you have any questions or comments, please let us know. Email podcast at muninetworks.org. Our handle on Twitter is @communitynets. This show was released on September 18, 2012. We want to again thank Fit and the Conniptions for the music licensed for using creative commons. The song is called Spell Bound.