Digging Into the Details With RVA Market Research & Consulting - Community Broadband Bits Podcast 305

Michael Render: When you ask people specifically a list of factors, very good, very reliable broadband actually comes in, number one, and number two are the necessities like Washer and Dryer in the unit.

Lisa Gonzalez: This is episode 305 of the community broadband bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. As we've covered advances in publicly owned municipal networks, we've learned that anecdotes about faster connections, better rates, and more reliable service are plentiful. On the other hand, collecting other types of data isn't always so easy. That's where this week's guest comes in. Michael Render from RVA Market Research and Consulting makes it his business to study the details of before and after data of public and private networks. RVA allows us to see the trends, improvements and opinions through data analysis. Christopher caught up with Michael at the Broadband Community Summit in Austin, Texas, where the two talk about the work of RVA and some of the interesting discoveries they've encountered through their research. Learn more about their work at RVALLC.com. Now, here's Christopher with Michael Render.

Christopher Mitchell: Welcome to another edition of the community broadband bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance, normally in Minneapolis today in Austin, Texas at the Broadband Communities Summit sitting across from Michael Render. Welcome to the show.

Michael Render: Thank you.

Christopher Mitchell: Michael is the founder of RVA, which is a, a research organization that if you're familiar with Broadband Communities Magazine, you've seen his research. If you've seen a lot of work from the Fiber Broadband Association previously, the Fiber-to-the-Home Council, you've seen his research. Just tell us a little bit about what you specialize in in terms of research.

Michael Render: Well, we've been in the business since 1990 doing various kinds of market research, but in 2002 we got involved with the then Fiber-to-the-Home Council doing work on broadband and specifically fiber-optics starting at the point when we could find maybe 5,000 homes in the US with, with broadband, with fiber, if you remember.

Christopher Mitchell: I just have to like have this for a second, 2002. I'm going

to guess: Chelann -- , so a couple, a couple of communities in a Washington state, Cookstown, Pennsylvania. Where else? Was Bristol Virginia started at that point?

Michael Render: Bristol Virginia, I think was on the list, there was a little community north of DC. I can't remember some of the names, but yes, we had probably 30 communities and of course we counted housing additions at that point that had said some fiber so. And it was funny. We, when one of the people I saw at this conference, kids me that I used to call him up and he'd say, yes, we added a customer this month. I'd say, well that's great. I'll add to the list

Christopher Mitchell: A point, like a fraction of a percentage point increase, but you could see it.

Michael Render: Yeah, at that point it made a difference and we actually moved the needle. So--

Christopher Mitchell: Right. And so I interrupted you when you were just discussing, but you got into this in 2002.

Michael Render: So we started doing work for the Fiber-to-the-Home Council and now the Fiber Broadband Association. And worked for them ever since doing market research, keeping track of the deployments, the official numbers of how many homes are passed and connected with fiber in North America. Probably 12 years ago we started doing some consumer research as well for them in terms of a US-large study of about 2,500 people using all kinds of broadband, comparing their experience, their satisfaction, the differences that makes to their, their lifestyle and so forth. So that's, that's been the predominant part of our work. Then we've also done work for some communities and for some vendors and so forth.

Christopher Mitchell: Is this just a niche for you? Are you particularly interested in broadband?

Michael Render: We do a lot of different kinds of very diverse work and I enjoy work that's very technical on one side and we do some consumer work as well that's not. But I've always looked for niches where I feel like we're might make a difference because it's a -- it's a technology, for example, that I believe in and I -- and I immediately saw fiber as such an opportunity that I would enjoy being involved with and really have enjoyed it for 16 or 17 years now.

Christopher Mitchell: Sure. I'm just curious. I'm sure you have a lot of memories over the years of how the numbers have changed. It strikes me that if you think back to the data, the big changes, Verizon Fios,

Michael Render: Right, the biggest, the biggest, the first change was back in 2004 when Verizon started to build and that quickly changed the numbers. Prior to that time we had made a prediction that fiber would grow into the, I don't remember what the number was, one point 5,000,000 or something within so many years and no one believed that prediction. But fortunately Verizon help help our forecasting come, come to pass. And they, they certainly passed a number of homes between 2004 and 2008. And that really started to, to push the industry forward.

Christopher Mitchell: The work that you've done that I've referenced the most times, and it's a little bit out of date now, was from I believe in 2009. You did a study that included municipal networks that had several years of operation and their take rates. And the take rate at that time was, I believe 54 percent on average for the municipal Fiber-to-the-Home networks that had been in operation for long enough to get a sense of their out of the startup phase. You recall that? Or am I the only one that, because I read it many times.

Michael Render: I do, yes. Of course we're agnostic to the kind of provider and feel that all kinds, all types of providers have had an impact, but a municipal providers had a particularly large impact prior to the Verizon build, for example, because they were the first large builds of the time, you know, large at that time was 10 or 15 or 20,000 homes past,

Christopher Mitchell: It wasn't just like a housing and private housing development of a few hundred homes or a thousand homes.

Michael Render: So it actually helped prove the technology, and I said I think led the -- the industry forward and helped prove things for Verizon and other private providers to go forward. Prior to that, it was some small independent telcos and some municipals and very, very small providers. Municipals played a role. Municipals have continued to play a role throughout the process. It fairly small percentages that as a total percent, but they obviously played a role and have been quite successful as a rule, you know, there, there are obviously exceptions, but there are exceptions in all categories so,

Christopher Mitchell: Right. Well I like to note to people that, that a lot of those networks were built in areas where there was no cable operator or where the cable operator had -- had folded and walked away. So they were incumbents in a fact, or they were the only provider and so they were hitting take rates of 70, 80, 90 percent. Whereas those that were in competitive areas, we're succeeding with 30 percent. So that's how we ended up with 54 percent. I think if you redid it, those numbers now you and I would agree that, um, it would be under that because many of the municipal networks now face much more competition.

Michael Render: Municipal networks now on average, it depends on the situation. Municipal, as you mentioned, municipal networks that are, that are larger, particularly in very competitive areas, uh, might be hitting the 35 percent after, say five years, those in semi-rural areas, maybe in the high forties sometimes or for mid forties I'd say. And then, you know, there's, there's some categories that have been tougher, the -- in the states that have had mandated wholesale operation because of various factors take longer to reach their take rates and they typically struggle to hit about 30 percent after five years and then grow, continue to grow from there.

Christopher Mitchell: Right. And I think that -- that one of the responses that we're seeing that as cities we're looking at more incremental models for open access now to try and deal with those challenges and I'm very enthusiastic about those responses, but I'd like to move to just ignoring the owner and talk about Fiber-to-the-Home satisfaction rates. Some of the research that you've done that, that fascinates me is in particular the response of people who are living in apartments to the technology. Because I think most of us assume people think broadband's broadband and they don't much care what they got, they just, you know, they'd like to pay less and they'd like little bit more. But your research suggests that there's a lot of people who are paying close attention to what's available to them.

Michael Render: They really do, you know, if you just look at why people switch, they tend to switch more for reasons like cost or speed, which they have at least a reference point from, from the provider of what they might expect. But we find that when people actually have a technology particularly they are particularly interested in or liability first, then speed and it's not just download speed it's upload as well. So there is a, a much greater satisfaction with fiber deployment than DSL or cable modem and people do then spread that by word of mouth.

Christopher Mitchell: So if I was to be antagonistic to you, it's totally contrary to my expectations that people would be aware of the upload speeds. There's, I think a lot of us that are very technical think people just don't understand it and don't get it. But you're not seeing that in your numbers.

Michael Render: The thing that people understand the most is reliability. They understand when their, when their systems down, they need to do some work. Their kids needed to do some work or whatever and their systems. And so actually when we do surveys, reliability is the number one thing. And fiber actually does have higher liability. We know that because of less electronics and so forth. But we also see it on our survey numbers. We asked people how many times they have to reboot their modem. So many times I have to call customer service and it's about half the number of times that they do with Dsl or cable modem for example. So that's number one. Number two is speed and people are starting to get the idea of upload speed because people are dealing with uploading large amounts of pictures, family pictures and videos and so forth. So it's starting to sink into people that that is important. Latency has been the last one that people get, but younger people in particular are starting to understand that particularly because of gaming and other things.

Christopher Mitchell: Right. And I think we're gonna see that it'd be a much bigger, much bigger deal in some ways. I'm often a thing that people might see me as a 5G skeptic. I'm quite excited about 5G. I'm trying to be realistic about it, but as latency really improves on mobile networks, which is going to take many years, I hope that will be reflected in the cable networks. And certainly, you know, the fiber networks already have really good latency. I just want to note this and I'm curious. I'm curious if you have any great stories when you're collecting this data. I don't know if you have like the ability for people to submit stories, but you're note about reliability struck a chord with me. We're doing an interview with a woman in Ammon, Idaho who, her family is one of the folks on the network and they had been on the cable network and they were very dissatisfied and in part because every Saturday morning their kids would come running into their room while they were still sleeping and say the Internet's out, you know, you need to reset the modem or whatever.

Christopher Mitchell: And so that have to get out of bed and go do that, and the week after they switched on the, as a Beta customer for the Ammon fiber network are sort of laying in bed on Saturday morning and nobody had bothered them. For them, that was like, there was sort of like a sense of what's going on? and it was because the network stays up for more than a few hours that I think many people that have stories, whoever is the IT expert in the household tends to get calls, frantic calls from, from home saying, you know, I'm in the middle of this project and all of a sudden my, my Internet's out, what do I do now? So people definitely notice those kinds of things. So when you're looking at people that are choosing an apartment or place to live, and let's, let's focus on apartments first because I think you survey those separately and I would think people are looking for an apartment. They're looking at costs. Looking at maybe transit routes, for younger folks today. What are you seeing in terms of priorities from people?

Michael Render: When you ask people specifically a list of factors, very good, very reliable broadband actually comes as number one and usually number two are the necessities like washer and dryer in the unit. So people do definitely realize that they need it for, for their living. Now sometimes, and I tell people this -- that are marketing communities -- it's more invisible than, than granite countertops for example. So sometimes when people walk into to a new apartment, they're not thinking about that right off the bat, so it's incumbent upon the owner or manager of a, of a property to put that more in the face of the prospective buyer with, with, with the demonstrations or literature or whatever. But when people do think about it that, that, that is extremely important to them and we've seen that go up and up and some things like cable television for example, have gone down over the last few years that we've surveyed.

Christopher Mitchell: What do you see for people who are buying homes than single family homes?

Michael Render: The same kind of list. We have some different amenities we ask about with homes versus condos and apartments, but fiber is generally one or two in that list as well, and so it's very important. We do see one difference between apartment renters and home buyers. People that are renting an apartment have a shorter time length they're looking at so when we ask questions about would they actually pay more for an apartment with high quality fiber for example, or how I called the Internet, people give a figure on average, which works out to be about eight percent on a rental basis-- pay about eight percent more percent more to get that --to get that higher quality bandwidth. On a home or a condominium owned unit MDU unit people pay about three percent more and we hypothesized the difference is that people think there's some cap because eventually they might get that service so they're going to go up a certain amount, but they still are willing to pay more.

Michael Render: We've seen that in our surveys year after year. The fiber broadband association also did a study based on assessments. They hired a firm to look at the actual assessments of properties and they saw that as almost the, exactly the same difference in, in property values.

Christopher Mitchell: So moving to an area that I know you've just studied 5G Next Century Cities, asked you to do a study of, of a number of cities. What was the sample size?

Michael Render: We ended up with 176 responses

Christopher Mitchell: And they tended to be higher tax cities due to the nature of who responded. But I'm just curious if you have top of your head any findings that you've found particularly interesting and let me note that people should definitely look at the Next Century Cities website to, to get a full link to a presentation that you did. And in more details about that study.

Michael Render: Well, we found that the cities we studied, we're quite interested in 5G which we actually defined it in the survey as small cells because you start out with 4g densification, just denser use of current technology and gradually migrate to actual 5G technology.

Michael Render: But they're also interested in that and smart city technologies. And these are technology focused communities that you mentioned, so there, there, there tend to be fiber oriented and 5G oriented and at the same time they have some concerns that they voiced the opinion that they want to maintain some level of control of the process, concerned about some, some potential laws being passed and particularly they want to control things like the aesthetic of poles and so forth. They acknowledge at the same time concerns of providers about the length. Some of them mentioned that they have complaints from providers about length of time for permitting and some of them acknowledge that that's an area that they could work on, but there's definitely a a concern about this early stage of the process trying to do it in their opinion. Right at this stage.

Christopher Mitchell: So let me ask you a totally open question. Having done this for more than 15 years now, do you remember being surprised that at how some of these things shifted over time? Was there a year when you're thinking, wow, that's really different? Things are changing suddenly?

Michael Render: Well, you know, I, I don't know that I can think of anything that's changed dramatically from one year to the next, but things do shift over time and we've also continually found new ways to try to measure what's important to people. And, you know, just this year when we were looking at MDUs for example, we were looking at.

Christopher Mitchell: Those are multiple dwelling units or apartment buildings for people not in the, uh, in the hip industry?

Michael Render: Sorry, sorry. In that field, we were looking at how many times people, how much people work from home for example, and got to thinking, well, I wonder if that correlates with the commute time, if there's any relationship.

Michael Render: And sure enough we found that the longer someone's communte time is, the more likely they are to work from home. So there's actually a pretty good mitigation of at least 30 percent of that commute time and in fact, and people that say they can work from home, in other words, they don't have to be at a physical location to do their work. It's actually closer to 50 percent mitigation of that community time. So that has several inferences. One, it makes life more pleasant for the, for the occupants. Number two, it'd probably broadens the potential market range for an MDU, for a property owner to be able to market to. And number three, it has obvious implications in terms of traffic congestion and pollution output and so forth.

Christopher Mitchell: So are there. Are there any other areas of your research that we haven't covered? I mean, I think we've hit the areas that I come across the most often, but is there anything else that you think people who are following this sort of stuff might be interested in?

Michael Render: Well, I think just going back to the point that people are starting to realize that the broadband experiences more than just a single number, it's just, it's more than just the download speed number.

Christopher Mitchell: All right. I think of it as a cameras. At a certain point, people thought megapixel, megapixel, megapixel. Now they understand that there are multiple factors to consider.

Michael Render: Not all people understand that yet, but I think people are are starting to get smarter about that. The current word is gigabit Internet. Gigabit refers to the download speed in most cases.

Christopher Mitchell: I strongly resist that myself, but I agree we've. I've lost that battle.

Michael Render: But you look at is gigabit Internet the same and we found that gigabit Internet code, gigabit Internet delivered from fiber providers is much different than gigabit Internet delivered by HFC hybrid private folk co-ax cable provider for example.

Christopher Mitchell: And would you attribute that entirely to the fact that the cable provider has a slower upload speed much slower or there are other technical differences that also come into play?

Michael Render: The biggest difference is we can measure through that question about reboots number reboots and calls to the service center is reliability and that's probably what makes people most emotional. But secondly, it's the upload speed is a factor as well.

Christopher Mitchell: That's interesting. Have you ever studied anything in terms of people's preferences for the provider? As you know, I'm a strong advocate for municipal networks and and I would argue that a person like me would notice a difference between Chattanooga or Verizon FIOS. But I'm going to guess most people don't even notice that or probably even aren't even aware of who their provider is. But have you looked at anything along those lines?

Michael Render: You know, I think the brand or the type of provider does make some difference in it depends on somebody's preference and also depends on past experience. For example, I was talking to a gentleman from frontier recently at the show who agreed that this was not unusual, that they acknowledged they had a big problem in the changeover in, in purchasing a Verizon FIOS turning it into Frontier FIOS and we've noticed and they have noticed the satisfaction is not as good even though it's a fiber product now that whenever someone has a, a legacy that they've built in terms of people's expectations, it takes a while to get over that. So different versions of fiber for example, can have different connotations. People particularly like Google fiber for example, the -- you know, they haven't had have an expectation and haven't had the negative experiences perhaps from the past. So they, they are particularly fond of that.

Christopher Mitchell: It is a more fun name to say that. Most other ones I've always, I think I'd probably love the CruzIO Fiber -- CruzIO Fiber from Santa Cruz just because I love their name. But with, with frontier, I mean, I, I'm curious if, if what you're saying is to some extent they are now delivering at a reliability comparable to what Verizon had achieved, but because they had several months or a year or however long it was, really had increased outages that sort of stuck with them.

Michael Render: It did. Although the representative said that that's quickly changing and they're moving forward and I would tend to agree that we've seen the numbers coming up and probably by next year there will be back in, in sync with the rest of the fiber providers. But. But I guess that brings to the point, you have to have a good product. You have to market it well and you also have to have good customer service to go along with that. You know, I always tell fiber providers, you've got a built in advantage because you've got better reliability. You've got half as many people calling the call center so you don't have to hire as many people. Your expenses aren't as high. Do a great job on the human element as well, and people appreciate that. And, and to your point about local providers, sometimes local providers have an advantage of being able to serve customers with a call to somebody they know and people who that that actually when we've done regression analysis of take rates, that is an advantage that local providers be it municipal or a small telco or whatever, has sometimes over a larger provider where people feeling they're calling another state or another country for, for service.

Christopher Mitchell: At the, the fall event for broadband communities where the economic development events happened. It was in Atlanta last year and Mayor Fuller from Opelika, Alabama came and, and he's got a great Alabama drawl and he said that, you know, when something goes wrong on their network, which she would argue it doesn't happen very often. You call someone and that person who answers the phone speaking Alabama. And so you're not going to get someone who's going to speak. I don't Mississippian, so yeah, it's definitely something that a number of small providers have noticed. Right. Well, thank you so much Michael, for coming up and sharing this with us. Uh, I think this is going to be great for our audience to get a sense of what the numbers are and I appreciate you the legacy that you have from having done this for so long. Great. Well thank you Chris.

Lisa Gonzalez: That was Christopher with Michael Render from RVA market research and consulting. We have transcripts for this and other 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 the other ILSR podcasts: Building Local Power, the Local Energy Rules podcast. You can access them on Apple podcasts, Stitcher, or wherever else you get your podcasts. Never miss out on our original research, subscribe to our monthly newsletter at ILSR.org. Thank you to Arnie Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thanks for listening to episode 305 of the Community Broadband Bits podcast.