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Doug Dawson Shares Surprises and Safe Bets - Community Broadband Bits Podcast 353
Doug Dawson, President of CCG Consulting and author of the POTS and PANS blog, was willing to sit down with Christopher for episode 353 of the podcast this week. Christopher interviewed Doug in Austin, Texas, at the 2019 Broadband Communities Summit. They discussed all sorts of happenings in the telecommunications and municipal network space.
In addition to 5G and the hype that has surrounded it for the past year, Doug and Christopher make some predictions about where they think the technology will go. They also talk about the involvement of Amazon in the satellite broadband industry and what they think that means for different folks from different walks of life.
Other happenings that Doug and Christopher get into include different public-private partnerships that Doug has been watching and some new models that he’s seen this past year. He’s noticed that communities are more willing to work outside the box and that an increasing number of local communities are moving beyond feasibility studies to investment. Doug and Christopher talk a little about Erie County, New York, where the community is developing a middle mile network, and Cortez, Colorado, where the town has attracted several private sector companies because they worked hard to develop the right infrastructure.
Check out POTS and PANS for Doug's great articles.
This show is 33 minutes long and can be played on this page or via Apple Podcasts or the tool of your choice using this feed.
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Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Doug Dawson: And these communities are going to wither and die if they don't get broadband, and they all are realizing that now.
Lisa Gonzalez: Welcome to episode 353 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Our series of interviews that Christopher conducted at the 2019 Broadband Communities Summit in Austin, Texas, continues this week. Doug Dawson, president of CCG Consulting, who also writes the popular POTs and PANs blog, sat down and talked about important happenings for this week's podcast. Christopher and Doug get into 5G and all the hype that surrounded it. They also talk about electric cooperatives and how their involvement in broadband deployment has continued to rapidly expand, and they get into public-private partnerships. Doug and Christopher talk about the fact that more communities now than ever are interested in developing publicly owned networks. They also talk about recent projects and events that have surprised them and make a few predictions. To stay up to date with events in telecom, municipal networks, and broadband, check out Doug's blog, POTs and PANs by ccg.com. Now here's Christopher with Doug Dawson of CCG consulting.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance, doing another interview from Austin, Texas at the Broadband Communities Summit. I'm here with Doug Dawson, a fan favorite from last year, president of CCG Consulting. Welcome back, Doug.
Doug Dawson: Thanks Chris.
Christopher Mitchell: You asked as we were sitting down what we were going to talk about, and I was just thinking "whatever." There's a lot of things happening. What does CCG consulting do, for people who didn't listen last year?
Doug Dawson: We're a full service telecom provider, so we do a little bit of everything. And because of that, over the years we've had 900 clients, so that's a really big chunk of the broadband industry. We do feasibility studies, we do regulatory compliance, we do engineering, we help people with billing systems, we raise money. So if you need it, we probably do it.
Christopher Mitchell: And at least one of you lives and dies by Maryland.
Doug Dawson: That would be me.
Christopher Mitchell: Sorry about them in the tournament. I was a fan. So, let me ask you, how embarrassed are you that last year you thought 5G wouldn't be the amazing end of the world, you know, solve everything problem, and here we are in 2019 and 5G is everywhere. It's 5GE everywhere, right? That's what the "e" stands for.
Doug Dawson: Uh, yeah. That's everywhere except where you are, yes.
Christopher Mitchell: So what has changed? Has anything changed in the 5G hype from what you expected and what we were talking about last year?
Doug Dawson: Not at all. The hype has become clear that it's really a political motivation more than anything else. They're using that as the hammer to get what they want out of the FCC, who's handing the wireless carriers everything they ever wanted on their wishlist. They've created this idea that we're at a 5G race. You can't be at a race for a technology that every country in the world can buy they want. So it's working. I mean, the FCC is using that as an excuse to hand them everything they want. It's also good for their stock prices, but there is no 5G coming next year or the year after or the year after. Even though there's a whole new round of announcements the last week alone, there's no actual products there. At&T's rolling out 5G in 19 cities — there's no 5G phones.
Christopher Mitchell: Well, there's an announcement from Samsung that people are trying to make a lot of hay about. There's this weird attachment because it'll kill your battery if you leave it on for 10 minutes, because of the energy consumption from 5G. I mean, that's what you're talking about. I mean, not the novelty things, but a real product.
Doug Dawson: A real product. It's going to break in over 10 years, just like 4G did, and that's what we knew from the beginning. I think by next year the hype's going to die down. I think eventually people will go, "Shut up."
Christopher Mitchell: Well, at least someone will join us saying, "Shut up," I guess.
Doug Dawson: Yes. Yes, indeed.
Christopher Mitchell: We've heard a little bit about the results in Sacramento of 5G from a study that Craig Moffett did on Wall Street. I don't know if you had a chance to look at it, but there's been a lot of discussion about his findings. I'm curious if anything in Sacramento struck you as surprising, in terms of what Verizon's doing in its first proprietary 5G rollout.
Doug Dawson: It actually almost completely validated what I expected, so you know, speeds that are good but not awesome. I mean, let's not make any mistake, 300 Megabits a second is great, but I don't believe that they can do it for 2000 feet. I believe they're fudging those numbers. The physics is just not there. But you know, what Craig Moffett says is he doesn't see the business case, and I don't either because you're now directly competing with Fiber-to-the-Home. If you get fiber close enough for every five or six houses, why wouldn't you just build the drops. Today that's cheaper than what they're doing. And so for that to work for them, they've got to get the price of those radios way down and then they have to look at the lifecycle costs. Those radios are just flaky. They're always going to be flaky on every kind of bandwidth you would ever use, so keeping them running, right, is always gonna — you know, Verizon laid off, what is it, 20-some percent of their staff last year, remember? 44,000 people. They're trying to get rid of people. Why in the world would they get back into a neighborhood intensive wireless business? I don't understand what they're thinking here, and I don't know that they have any intentions of doing it. I think that this was for their stock price again. There's not many cities where there's going to be enough fiber for them to actually go up and down all the streets. But I agree with Craig Moffett. I don't see how the math works, unless those radios are $40 a piece and they're not. They're going to be way more than that.
Christopher Mitchell: I mean, one of the headlines that I'd seen, which I didn't check on, it really validated my assumptions, which is dangerous — anytime you read a headline that validates your assumptions, you should have the integrity to look into it more rather than just assuming that you are right. I mean, this is a major problem of our society right now I think — but I'm curious what you think. It was basically the idea that like this tester wanted to check out 5G, but he had one tree between him and the radio and could not use it because of that.
Doug Dawson: Right. And that's the reality of the complete flakiness of wireless. It's never going to be one hundred percent coverage. You can't make it work, and there's no way around that. You're going to end up with 70 percent coverage or something. You come out to their house, visit, spend a truck roll, and then go, sorry it doesn't work here. I don't know that we're ever going to see that. I expect that actually to pop up in small, rural county seats, not done by Verizon, done by little guys. You know and places like that, that might be a good technology where there is no fiber at all, and it might turn out that they can make a business case out of that. There's no way they're going to do that for all of Sacramento or all of any major city. Verizon just announced they're closing down, at this point, I think it's over 150 wire centers from copper, and so they're going to finish those off in fiber. And they've proven fiber lasts forever where they already have Fios. Why would you put in a technology that's going to be having problems in seven or eight years, and why would you put in a technology where, as we keep doubling the speeds we need every three years, it's okay today and in 10 years it won't be that okay? It's like everyone else will be selling 5 gigabit and you're selling 300 megabits. It's not going to have a good marketing appeal at some point. I don't think they really are going to do that. I just really can't believe that that's a good idea for them.
Christopher Mitchell: So as we move away from 5G in our discussion and ideally the obsession that it has over the industry, what out there is changing? Is there anything about 2019 in terms of dynamics that you're seeing that are different that you may not have protected?
Doug Dawson: I didn't think that the electric co-ops were going to leap at this as fast as they are. I mean, I've had a number of electric co-ops as my clients for 15 to 20 years. They're very conservative folks. Co-ops are generally run by farmers and local business folks, and they're not usually young people. That's who's on co-op boards, and for them to all be deciding to get into fiber tells us something about the true nature of rural broadband. We do surveys as one of the many things we do, and we did a survey for a co-op out west that every single customer said they wanted fiber, including people who don't even intend to have a computer in their house. They wanted everybody else to have it. And so, we've never seen that before. Anywhere close to that.
Christopher Mitchell: I know that you know the difference, so let me clarify. They didn't say they wanted broadband . . .
Doug Dawson: They wanted fiber.
Christopher Mitchell: They wanted fiber.
Doug Dawson: They wanted the co-op to build a fiber network. And so, you know, these are folks who are living on their cell phone data. They've all given up on satellite data. It just doesn't even work, actually connect. And these communities are going to wither and die if they don't give broadband, and they all are realizing that now. What's amazing to me is that the rural folks have talked the co-op board members into it; they've also talked local politicians into it. I've visited counties now where they tell me the number one political issue is lack of broadband. You know, opioids or something else will be a far distant number two, but everyone that wants broadband in their house. So you know, it's now becoming a true crisis out there. I didn't expect it to get that big that fast. I mean there's been five very conservative states who overturned the law against co-ops being in the business. Who would have ever thought that a state like Mississippi would do that, where AT&T owns the politicians in that state? It was a unanimous vote to overturn that. I mean, that tells you something. That's completely unexpected. I would've not been surprised by a 55 - 45 vote, but 100 percent. Every single politician voted for it at the state level, including the guys from the cities. They can't vote against it right now. To me, that's a big change that I didn't expect. The other big change I'm seeing is public-private partnerships are actually starting to work and get popular.
Christopher Mitchell: So let's come back to that in a second and we'll dig into that because I want to dig into this for a second. The rural issues with the co-ops — there are senators who are telling people who contact them, "Oh, we've got it covered. We have ReConnect. $600 million is going to be great." The people I'm talking to here are telling me that — and frankly, by the time this airs, we'll know a lot more because this is one of many interviews that we're recording, but the ReConnect seems like there might be more than $3 billion of applications for $600 million.
Doug Dawson: Well, think about it. That's $12 million per state. That doesn't even do half of a county project.
Christopher Mitchell: Sure.
Doug Dawson: I mean, let's get serious about how little of an amount of money that is. I mean, you're from Minnesota where they've been given out $20, $30 million a year and they need to do that for three decades to make a dent in the problem. So $600 million is nothing. On top of that, the money so hard to get that a lot of the folks are not going to qualify for it anyways.
Christopher Mitchell: Well that's one of the suppositions because the rules are a little bit crazy. They seem like right now they're being softened a bit because they were so crazy in terms of, if you identify one premise that you identify as not having broadband but it does have broadband, then your application gets tossed out. I mean, given the level of data we have, nobody can make that level of certainty, and people are thinking that's because they're just trying to weed out as many projects as possible given the oversubscription that we're expecting.
Doug Dawson: Yeah, there's gonna be a whole lot of applicants who will be very disappointed. The money's going to go to folks who are already RUS borrowers. That's where it's going to go — hate to say it.
Christopher Mitchell: So let's talk about public-private partnerships. I agree with you absolutely in that it seems like it's more viable. What are you seeing, and what does that mean? Because that term has been used for so many different things.
Doug Dawson: Well, I'm seeing three different kinds. First off, you're from a state where I think it's almost a dozen counties at the county commissioner level have voted to contribute a grant towards broadband if they could find a partner. Now they haven't all found a partner yet, but they've put the money on the table.
Christopher Mitchell: Right.
Doug Dawson: So that's one kind of public-private partnership.
Christopher Mitchell: Right, and these are counties that have economic distress in many cases.
Doug Dawson: Some of these counties have no money. The very first county that did it, I just — it's like wow. You know, they had trouble finding the money to pay for the $50,000 broadband study, and then they put $5 million on the table. I mean, that's pretty eyeopening how bad they think the problem is. And the people in the county supported that, and they're going to support a bond issue, which means their property taxes are going to go up. It's the only way to pay for it. So that's one kind, and that's new. I don't think I remember a local grant for broadband before.
Christopher Mitchell: I agree.
Doug Dawson: I can't remember one in the past. There might have been a few here and there or maybe little tiny ones, you know, but they're putting big numbers on the table.
Christopher Mitchell: They are, yeah. In some cases it's a grant. Sometimes it's a loan that has like a . . . like it's 10 years until you start repaying it. Yeah, but it's real money and it's taxpayer dollars. Like, there's no bones about it, right?
Doug Dawson: It's taxpayer dollars. The other kind we're seeing is they're going, look, I can find the money to build a network, but we do not want to be an ISP, so they're bringing in people to operate it. And so, that's a pretty common model. That's happening all over the place. You know, people really want to do open access and, you know, they just can't make that work, so they just bring in one quality operator. It's usually somebody local. It's usually someone who the people in the town already know — the county next door has them already and likes them. So that's a really popular model. The third model is interesting, and there's only a few of them that are public-private partnerships. This is the model that's going for the co-ops. It's the model where they find a partner to operate it, but they both put money into it. There's not too many government ones of those yet. There's been a bunch that discussed it, but that's a pretty uncommon model. But in electric co-ops, the co-op is building the fiber, then the partner builds everything else. They bring in the trucks, all the electronics, all that sort of stuff. It's like a true partnership where they then somehow share in the profits over the years. So you know, communities are looking at that. They're a little nervous about that, but I've talked to a lot who are considering it. So I think going to by the end of this year — you said what's new in 2019. I think we're going to see a couple of those come out in the public this year. That would be new. It's sort of like what Huntsville did, but in the rural places.
Christopher Mitchell: So actually jumping back to rural again for a second, what do you think — I mean we have Amazon now talking about a very low earth or at least lower earth orbit satellites. I think that's the fourth or fifth. I mean we're looking at upwards of 20,000 satellites in the sky in low earth orbit.
Doug Dawson: Well there's been applications for 10,000, now and there's still other companies talking about it. That's scary if you're going to be a manned space flight, trying to work your way through that belt. But what we don't know is anything about price or speed, and I think we got our first hint of that two weeks ago when OneWeb came to the FCC and asked for a million licenses for US earth stations, which means customers. And so, they're not trying to solve everyone's problem. They're not trying to bring 14 million people, 14 million households broadband. So that tells me they're going to charge a premium price, and in rural areas you can. So I think their model is going to be a premium price, and if they fill up their satellites, I honestly don't think we're going to be looking at mass speeds of more than 100 megabits. That's my guess. Again, SpaceX said that they could do a gigabit, but what they didn't tell you, because if you read their spec in great detail, they would have had to shoot a beam down from like five satellites to the same customer just to add up to the gigabit. And they're not about to — if they do that, they're only going to be able to serve, you know, 10,000 people.
Christopher Mitchell: Right.
Doug Dawson: They were not going to do that. I actually think they will do that. They're going to do cell site backhaul if that's what they do. I think a lot of these guys are building the networks for that, and they're going to realize there's a whole lot more money in cell site back haul. They're going to go, wait a minute, I could have three customers or I could have a million customers — it's a lot easier to deal with three customers. So we'll have to wait and see if they actually do residential broadband because that's hard work. We all know that it is.
Christopher Mitchell: One of the lessons I take away from just Sirius and XM as well is that we may start off with four or five companies doing this, but I presume that within a year or two, maybe a little bit longer, it will consolidate into one.
Doug Dawson: It may not because a few of these guys are billionaires who are very stubborn people.
Christopher Mitchell: Okay, sure.
Doug Dawson: You know, they're like, I'm not joining with that asshole, you know, so we'll have to see about that. This is not a normal industry.
Christopher Mitchell: Okay.
Doug Dawson: I mean, what amazed me was, you know, Amazon is not — I mean, he took that satellite company 100 percent in the divorce settlement. He really thinks this is important. That's a business with no assets or money, but his wife just gave him 100 percent of that. That's his baby, right? And these guys are, you know, they're the generation that I come from. They all love the idea of getting out into space. It's the dream.
Christopher Mitchell: Well, you know, I'm in the middle of one of many science fiction novels right now so I'm a fan, and frankly I think a lot of the naysayers are jerks because like it was one of those things that the kinds of people who do things that are totally unexpected, they're not people like normal people, like our neighbors, right? Like, they are people who have big egos and they do special things.
Doug Dawson: You know how people always say, I want to have a beer with that guy running for president. No one really wants to have beers with these guys.
Christopher Mitchell: Right, right, and you know, that's what we need. I mean, Tesla was not the kind of guy who would be comfortable to have a beer with.
Doug Dawson: No, he was not.
Christopher Mitchell: So let me ask you, in terms of the munis, we are seeing — I mean, right now I was trying to count it up, but in terms of like . . . We have like what, like maybe 20 municipal projects happening in western Massachusetts and that's sort of a unique circumstance, but on the front range we have a good three or four that are percolating and very seriously moving forward, I think, and I'm forgetting several others. I mean, there's a lot of things moving forward right now. Are we seeing something different in terms of cities, you know, committing to this and actually building out in municipal ownership — some of them might be using partnerships, but what I'm trying to get at is municipal citywide networks. Are we seeing a growth?
Doug Dawson: You know, we do 15 to 20 feasibility studies every year now for a couple of decades. I think a large percentage of the ones I'm doing now are actually going to turn into projects. I mean, there's years where I did them and none of them turned into projects. They were just seeing if that was a good idea or not. But everyone is coming to me now is pretty serious about it, so I do think there's been a change. Now that doesn't mean they're going to make it because raising the money's always the hard part, so you know, if there's anything that stops them it will be that. You know, I mean we saw Tallahassee put out a bid for RFP and then obviously within the following three weeks, Comcast or AT&T got to them and then they voted to reverse it.
Christopher Mitchell: Right.
Doug Dawson: But the past three to two. They weren't serious about it.
Christopher Mitchell: Right. No, and I think that's really important as cities are thinking about this. I was — who was I talking to? Someone was just talking about — it was a consultant here talking about an electric board, and we were talking about the co-ops that aren't doing it. He thinks maybe a third of the electric co-ops will ultimately not do anything around broadband. And he was citing as an exampl, a board in which the deciding vote was five - four I think, and the guy was very happy to have been a deciding vote to stop the project. Which, you know, from what you're just saying, I would actually say yes, I'm glad he did too because like when you're talking about something that is an existential, either make or break for the organization, you shouldn't do it on a 5 - 4 vote.
Doug Dawson: And you don't want to have it canceled a year into the project where you spent a whole bunch of money and have nothing done for it. Yeah, I agree with that. The board has to be behind it. Now, if that community really cares, they'll get a new board.
Christopher Mitchell: Yeah, that's exactly it, and this is where —
Doug Dawson: And then they deserve to get it to them. I also think you have to remember electric co-ops fall into two categories. There's the ones who can walk: you do a feasibility study, you go, "It's $45 million," they go, "Okay, we're good," because they already know they can borrow that much. So now they just have to decide if they want to do it, but the money is not an issue for them. And probably about a third of them are in that category. The rest of them, money is the scary issue. You know, some of them don't have the reserves. They are so rural that even on the electric side they're not making a lot of money, and they can't go to the bank and easily borrow this money.
Christopher Mitchell: Well, and some of them are upside down on propane ventures or other things, and they're really scared after that.
Doug Dawson: Right. So some of them probably can't make this work unless they get some of the federal government help or some other way to make it work, and so you can't really fault some of them for not thinking it's a good idea because they may not be able to pull it off financially. That's a pretty big concern. If you can't pay your debt back, you lose your co-op. When you pledge your co-op to a loan, that co-op's going to be sold off to commercial provider for 10 cents on the dollar at some point, so . . .
Christopher Mitchell: Yeah, and I think, you know, some of these areas that are not moving forward, I suspect that they're kind of in a declining pattern. You know, I mean, the way that the United States government and many state governments I think have systematically harmed rural economies is irreversible.
Doug Dawson: Most of them are losing population, right? And the population is aging like crazy, so that's not a good combination.
Christopher Mitchell: One of the things that ILSR is constantly talking about, I mean, you need strong local economies for these places for people to want to live there, and when you're giving all these incentives to companies like Amazon to basically try and take the margin away from them so people are buying their products on Amazon rather than locally. There's a lot of government policies that are involved in that. That's really harming the kinds of businesses that you need to be livable because when a grocery store closes, people start moving out,
Doug Dawson: Right, they do. Grocery stores or doctors. When you can't get those two things, you leave.
Christopher Mitchell: Right. So have you paid attention to the Erie County, in New York, approach?
Doug Dawson: I have.
Christopher Mitchell: What do you think about this, and I don't want to talk specifically about them unless you want to for some reason but this is an interesting model. If I were to describe it more generically, a county says we can't afford to bond to build out to everyone. so we're going to build a backbone and try to work with a few providers ideally to, you know, connect. And this is what Centennial did with Ting. What do you think of that model?
Doug Dawson: Well, we have enough evidence that half the time it works and half the time it doesn't work. There were a whole lot of middle mile networks built with the stimulus funds 10 years ago, and some of them don't have a customer on them yet. Some of them have been very successful. And so, just building the middle mile fiber is not enough. There still has to be a business case there. In Erie County, just to talk about this a second, they have two different bands of the county. They have one that's somewhat populated, and people can probably make a business case in there. And then they've got the same stuff we all have, which is really spread out houses. The middle mile's not going to lure somebody to do that because that's not your big cost of doing it. It's the last mile. So the middle mile doesn't fix you. They could pay you to take the middle mile and it doesn't make a business case. So it'll work maybe. It doesn't hurt, but they're talking about spending a lot of money. If they do that and nobody shows up, they just wasted a lot of money.
Christopher Mitchell: Well I think in their case they are hoping to use it for some efficiencies and they're hoping to get some 5G and things like that that they'll be leasing to. But let me ask you this. If it works out in the way that you just described, is it unreasonable to think that the county would say, all right, we're going to build this middle mile and we'll have a company — hopefully a local company like Empire will come in and build out to the homes in areas where they can make it work and then maybe the county will bond again in a few years and build out more to the last out of those hard to reach areas.
Doug Dawson: That's what it's going to take. It would take a long protracted — you know, if it's really going to — and I don't have any numbers, but let's say it took them $150 million to get everybody, and that could be twice or half the number, they would have to go after that year after year after year. If they don't have the money to do it now, then they could do it over time. The fact is they're doing this because those folks were telling them they want broadband. They're trying to respond to that big cry for help, and so you have to say their heart's in the right place. I'm not saying it won't work. I'm just saying there's a lot of places where it didn't work. Now, if I was doing it, I wouldn't build the middle mile til I had the end user ISPs signed up already. Now that it's on the table, let's have a serious discussion about if I build this, will you show up? Let's sign contracts. You know, I don't think I would do it otherwise — or at least enough of them to cover a pretty big percentage of them so it made sense, you know. And if all they end up doing is getting the outer suburbs served, they've still made a lot of progress because that's probably where most of the people are who are outside the city limits. So, you know, there's no right or wrong here. They're trying, and I hope them success and I hope it works because there are some middle mile networks that have been highly successful.
Christopher Mitchell: Well actually, in fact in — I'm stumbling over my words here because frankly I'm frustrated. It wouldn't have gone the way I wanted it to, but Ontario built a network. Ontario County, they built their Axcess Ontario network, middle mile. It did not catalyze a lot of investment until it did, where Empire had started building out a little bit and then bought the whole network from the county. Now unfortunately the county no longer has an open access network, but they do have a local provider that is investing.
Doug Dawson: I think cities have to recognize that if they build it, the chances are probably 50 - 50 that it's going to eventually get sold. It's just too attractive. If someone comes and offers you money, counties and cities have a hard time turning down that profit. They never see profits. And so they end up with one provider, but the point is they got fiber. Is it more important to get fiber or open access, and that's a decision they each have to make.
Christopher Mitchell: Well, so here's what I would say to that, and let me know if I'm interpreting your comments correctly because I don't think you're passing a judgment of whether it's wise to sell it, but you're saying that the incentives of a given city council and mayor are to sell it and then knowing that they're not going to be around when perhaps 10 years down the road, it proves not to have been a wise decision.
Doug Dawson: Oh, absolutely. It's a election year decision. You bet.
Christopher Mitchell: So my answer to that though is that I think they should think about — and I always compare Chattanooga to Fios, right? Both GPON — same fiber, same technology. What Chattanooga is doing with it is vastly different in terms of the community benefits. Now, it's worth noting Chattanooga is an outlier, Wilson is an outlier in terms of the way they've done that, so most munis haven't achieved that same level of benefits. But with the right leadership, I think, ownership of the network does create vastly more benefits than just the fiber itself.
Doug Dawson: It can, but not all cities — some cities build it and they just operate it like a business and they don't do any of that community benefit stuff. And there's nothing wrong with that either if it brings everybody broadband, but the cities who put that extra effort into it end up with amazing things happening. I mean, Wilson's reinventing their town. Chattanooga — I was their first consultant many, many years ago. That town was poor. I mean, that's transformed their town. It's not like made it all of a sudden rich, but you can just see the benefits all over town from it.
Christopher Mitchell: Well in fact, if the state would take the chains off, I'd love to see what they could do. I mean, the fact that they have a dramatic profit, a net income, and they are not allowed to drop the cost to low-income subscribers below a set level that the state set is just infuriating.
Doug Dawson: It's mind boggling.
Christopher Mitchell: So last question —
Doug Dawson: The state is voting against citizens getting cheap broadband.
Christopher Mitchell: Right. I mean I like to say this: the city has decided that rather than cities expanding broadband at no cost to the taxpayer, they want to subsidize slower, more obsolete forms of technology. Although most of the money is going to fiber even though they didn't have to. So last question I would ask is, is there anything, like any of your clients or anything you've read about, in terms of cities that are doing anything that's really cool that again you just think more people should know about?
Doug Dawson: I did a study for Cortez, Colorado. It's in the southwestern corner, and it is isolated. You have to drive an hour in any direction outside the city limits to see the next set of house. Right?
Christopher Mitchell: Yeah. My wife and I drove through there once, and it is beautiful.
Doug Dawson: There's an hour away is Durango, and then around those two towns for a long way, there's nothing.
Christopher Mitchell: Right.
Doug Dawson: So this is the kind of place that's hard to justify fiber, right? I did a study for them. They put out an RFP to see if somebody else would come in and build it out of their own money, and they got six responses, five of which I think were really serious. That's never — how many RFPs have we seen in the last 15 years of cities inviting somebody to come build and nobody ever responded? I've never seen anyone actually pull that off, and now there was five responses. That tells you that there's commercial companies out looking for the right opportunities, so that's a big change. So that one surprised me. It's not going to be a muni project, but they did the work. They did the work to quantify the cost of the network. They did the work to set a rate structure. Not that those other companies will follow it, but they have a model that I created that they hand to the guy and they go, "I can make money here." And so, they did all the hard work because ISPs don't want to go into a strange market and try to figure that out. That's expensive.
Christopher Mitchell: My assumption is, is that there's a real benefit in Cortez because they have a lot of the businesses on net, and so you can start generating revenues day one when you go in there because they have that — even though there's a lot more investment that's needed, there are some revenues on day.
Doug Dawson: There's some revenues on day one. I mean, it's not a lot and it's not going to pay for the network, but it's better than zero. It's just an interesting — and again, that's not a wealthy town. I was surprised to get five. If they would've got two I would've been surprised. To get five is just mind boggling.
Christopher Mitchell: What's the — there's a backpack company there that stayed in town because of that fiber.
Doug Dawson: Right.
Christopher Mitchell: I can't remember the name of them though. My wife and I love them. My wife has like six of their packs. I just have one big one.
Doug Dawson: They have the coolest little factory; I've been to it. Yeah, it's a bunch of hippies. You'd think they were in Asheville or one of those other cities like that. It's an awesome place to work, and boy, they do good stuff.
Christopher Mitchell: Osprey backpacks.
Doug Dawson: Yes. They're awesome. They're the best backpacks.
Christopher Mitchell: Yes. I'm a huge fan. So they actually manufacture them there too? I know their headquarters are there.
Doug Dawson: They do. They found an old building that had been some other sort of little manufacturer; they completely rehabbed it. They have this awesome workspace. The employees have great benefits. They give them all the perks, like you can take off and go hiking when you want because this town is in the middle of all those beautiful national parks. They actually thought about moving because they couldn't get broadband, and so when the city brought them the broadband that took that off the table because they did not want them to leave. That was the first new place they had in years, but they're going to be there forever now. They have great broadband, so yeah.
Christopher Mitchell: Great. Well thank you, Doug. It's always great to get a sense of what's going on. I love your blog, POTs and PANs by CCG. You can sign up to get it by email, so like once a week you get all the stories. And it's been cited on multiple panels today and yesterday as well. A lot of people are reading it.
Doug Dawson: I started it as a way to make myself read what's going on in the industry, and now I don't seem to be able to stop.
Christopher Mitchell: Well, we appreciate you coming on to share your learnings with us.
Doug Dawson: Alright, well thank you very much, Chris. Always good to see you.
Lisa Gonzalez: That was Christopher and president of CCG Consulting, Doug Dawson. We have transcripts for this and other podcasts available at muninetworks.orgs/broadbandbits. Email us at email@example.com with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. You can also follow muninetworks.org stories on Twitter. The handle is @muninetworks. Subscribe to this podcast and the other ILSR podcasts, Building Local Power and the Local Energy Rules podcast. Access them wherever you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at ilsr.org, and while you're there, please take a moment to donate. Your support in any amount helps keep us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thank you for listening to episode 353 of the Community Broadband Bits podcast.