The Public Utility District Taking on the Olympic Peninsula - Episode 558 of the Community Broadband Bits Podcast

Will O'Donnell (00:07):
I cannot wait till we get these people service. And the thing that I'm so excited about is that our most rural customers are gonna have better service than almost all of Seattle.

Christopher Mitchell (00:17):
Welcome to another episode of the Community Broadband Bits podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance, and today I'm in Spokane, Washington, where I'm speaking with Will O'Donnell, who is at Jefferson Public Utility District, where he is the Broadband and Communications Director. Welcome to the show. Will.

Will O'Donnell (00:36):
Hey, thanks for having me, Chris.

Christopher Mitchell (00:38):
Well, you hosted me. I had a great time many years ago for a broadband conference out there on the Olympic Peninsula across the sound from Seattle. How have things been since

Will O'Donnell (00:49):
Things have been very busy? It was great having you. That was the kickoff of our strategic planning session in 2019. We went on to do two of them. The first strategic planning it didn't go very well,

Christopher Mitchell (01:05):
<Laugh>. So, so after, after I screwed it all up, you brought in a proper keynote and it went much better.

Will O'Donnell (01:10):
No, no, no. It wasn't anybody's fault. It just at the time we did the study and we saw the writing on the wall, which was that it was gonna be very expensive and it was going to be hard to get to break even on expanding wholesale broadband service to all of our rural customers. We're on the Olympic Peninsula of Washington. We've just got miles and miles of coastline hills, forest trees, and not much density which doesn't pencil out. So we did another study in 2021. We tried to focus very tightly on the numbers. We wanted it to paint the worst picture possible. And we were lucky to retain Doug Dawson, who, you know to do the study for us. And he pre presented a very grave picture,

Christopher Mitchell (02:02):
I hope he gets yours right. He's an old man, <laugh>.

Will O'Donnell (02:06):
He he pre presented a very grave picture and said the only way that this would make sense is if the federal government paid for all of the capital construction costs and if Washington State legalized PUDs to sell retail Internet.

Christopher Mitchell (02:19):
And so you just had that happen and then followed

Will O'Donnell (02:22):
You. And both of those happened in three or four months. And we went full bore after the money and we pursued retail authority. And now we have 50 million in projects that are likely funded. And we are pursu, we're one of the, I think we're the only p u D in Washington state to be its own retail I s P, or we're planning to be, we're still, we haven't started the build that'll be this summer.

Christopher Mitchell (02:46):
And who knows, right? I mean, that's one of the things that I feel like people don't always appreciate. Who knows what the future will bring? So I I, and I just say that because we have the opposite problem. Well, it's, it's a similar issue just in that as people are enthusiastic about open access, I feel like it's worth saying, who knows what will happen in the future. You can always open up a network once you have a lot of the cost paid. So I don't know if you're getting any of, any disrespect here at this event, which is filled with people who are running open access networks.

Will O'Donnell (03:16):
<Laugh>? No. No. We've, we have had a little bit of like, what are you guys doing? But we are at, we've been a wholesale provider. We have an open access network. We will continue to have an open access network. We will our existing ISPs can sell services over over it. We expect to be adding a couple or more. But we have not had, the local companies have not had the scale or ability to mm-hmm. <Affirmative> serve some of our, the, the numbers that we need to do. So we have prepared it so that we can take on everybody. And if anybody wants to choose a different provider, they can do that. We've been working really hard over the last few months to come up to really define our policies. When we first did it, we, we kind of had our first go at our open access policies. Were basically, here's our rates, here's 30% off. There's our wholesale rates. To me, that didn't seem like the best option for our customers. Well,

Christopher Mitchell (04:13):
What, yeah. What, what purpose is being served there necessarily? Yeah,

Will O'Donnell (04:16):
Exactly. It was just like the, the, the thing that we really wanna provide our customers is choice. Mm-Hmm. <affirmative>. So we develop our product and what I've been really working hard for, and we're, we're kind, we're gonna be taking our, another go at it in our open commission meetings in the next month or two, is I wanna make it so that the ISPs that are gonna be on our open access network can develop their own products, their own rates. We'll just have a couple of simple products they can purchase from us and they can tailor them however they want. Mm-Hmm. <affirmative>. And I think that's gonna give our customers the, the most value over the network. The other thing for us is, because we're new to this and because we wanna try to prevent truck rolls, we're gonna be doing managed wifi for every customer that just comes with the service.

(05:05):
We we're gonna be providing the routers and even mesh routers if they need that. And we'll all have it under one network so that we can monitor it. Folks don't want that system. They can go with an ip. The ISP can either provide them the router or they can do their own. Cuz there are a lot of folks who are like, well, why do I have to have the router you provide? Right. Right. We need them to have it so that we can monitor the system and provide them the best service. If they don't want 'em, they can choose a different or didn't, don't want that system. They can use another I S P and

Christopher Mitchell (05:34):
I. I'll say that if, if anyone here is listening is, is kind of doubting that or wants to know more about it, we did an interview with cx with Claudia Tarbell and the C e o Michael weaning. And we talked about this in the middle and end of the show. And and I think the benefits of having everyone standardized and having the ability to offer that service way outweighs the ability of people that have their own preferences. And they wanna, maybe they want to get the wifi seven as early as possible or whatever. Like, all right. Let them deal with other ISPs and whatnot. There's a lot to be said for focusing on making sure you have a good plan that will pencil out. You're not, you're taking as much risk out as possible. I wanna come back to that in one second. Sure. So the public utility district, you do electricity? Just

Will O'Donnell (06:20):
We do electricity, we do water, we do sewer. And, and we've done wholesale broadband moving into retail broadband

Christopher Mitchell (06:26):
Because not every public utility district does electricity. But you do.

Will O'Donnell (06:30):
We do, yes. Yep. Not every, yeah, they, they, they have any kind of combination. Some are only water, some are only electric, some do a little bit of everything. We do everything right.

Christopher Mitchell (06:39):
But I wanna, I wanna come back to this just to make sure that people have a sense then of when you say you need to pursue retail authority, that's often about banking relationships, right? Like banks are not necessarily banks, but lenders want to know that you have the capacity to generate all the revenue and they're looking at the facial or your facial expression. Maybe that's not correct. In this case,

Will O'Donnell (06:59):
No. For us, it was for the amount of investment that we would need to put in to build these, the fiber optic cables out to our rural customers, you know, down gravel roads, over foothills through the forest. We needed to ha return as much revenue as possible to be breakeven. Mm-Hmm. <affirmative>. We don't need to profit, but we, the other part of it is if we're going to be building this network, we'd like to have a bit of return so that we can keep expanding the network. So I, you know, we have to break even, but we wanna have enough so that we can continue to reinvest in expanding the network and serving more customers. Cuz we have these, we've got our rural areas where folks are on DSL copper, and they're, a lot of them, they'll, they'll sell the property and then the new folks can't get service once they go.

(07:46):
A lot of 'em are paying a lot of money for satellite connections. And they're very unhappy, especially during the covid years when they couldn't do zoom school over satellite or the, the delays were really difficult. So we've got, we've gotta connect all those folks, but then we have a lot of folks in you know, the kind of the semi developed areas of our counties who are paying a ton of money for not very good service. And if we're gonna be building out this massive asset of fiber optic cable throughout the county, you know, we we're a public utility. We want to be able to provide it to everybody.

Christopher Mitchell (08:23):
That makes a lot of sense. I should have said also, we're here at the Washington Public Utility district Association conference which is why we're able to talk to each other here at the historic Davenport Hotel, which is really cool.

Will O'Donnell (08:36):
It's a lovely old hotel.

Christopher Mitchell (08:38):
Yeah, it really is. Yeah. And I guess it was restored 20 years ago or so is,

Will O'Donnell (08:41):
I have no idea. I always like coming here though.

Christopher Mitchell (08:43):
And they supplied me with X L R cords because I forgot mine to do this interview. And so I'll just note that it's also quite affordable and lovely <laugh>, so I highly recommend it.

Will O'Donnell (08:52):
Right near the Riverwalk, the famous Riverwalk in downtown Spokane.

Christopher Mitchell (08:56):
Yes. So what are some of the challenges that, that you've seen? Like, I'm just curious, you, you put together that whole event that we did in 2019, and then you found that the numbers didn't pencil out. Was that crushing to you? Did you go into a period of depression at that point? <Laugh>,

Will O'Donnell (09:12):
Me personally, and I can't speak for the utility on this, I didn't find the numbers not penciling out to be a problem. I, I feel like as a, as a public utility, it's our job to provide our customers the service they need. Mm-Hmm. <affirmative> and seeing how many folks could not get access and how, how important broadband was. And it's funny cuz in 2019 it definitely seemed important. Two years later it was essential. Right.

Christopher Mitchell (09:39):
<Laugh>.

Will O'Donnell (09:41):
So I just felt like we had to do it no matter what. We would just have to find a way. And there were little glimmers of hope we could do things like local utility districts, which were self financing. Some of,

Christopher Mitchell (09:52):
We'll come back to

Will O'Donnell (09:52):
That in a second. Yeah. Some of the, some of that was, was challenging unless we really, and then we, we never really got a conclusive look at whether or not wireless would work for us. And we wanted to pencil out, we wanted to sharpen the pencil on, on putting in a wireless system and the pencil remain dull on

Christopher Mitchell (10:09):
That. I would imagine. So it's not the most hospitable terrain. Way too many. No, no way too many green things. Yep.

Will O'Donnell (10:15):
In the air. Yep. Exactly.

Christopher Mitchell (10:16):
So LEDs, this is only a kitsap, your neighbor. Yep. they, they have done a lot of. Yep. I don't think you have that same sort of territory. It's a little different. I'm guessing the cost would've been much higher for the people that would be wanting to do it.

Will O'Donnell (10:31):
It would not have worked as well for us. I think it has worked well in areas that are rural, that new developments have gone in. Mm-Hmm. <affirmative> that have, that don't have the service. Cuz the new development is in a far out area. We don't have any new developments coming into our area. So it, it would've been grouping together. Homes that are really disparate would be really hard to get the density needed to make it pencil out. Yeah. Unless we were to do the fiber hood model that our neighbors in Mason three do, which is a fantastic model, but that requires a lot of self-funding upfront that we didn't have at the time. So we're, we're happy with the route we've chosen. It's, it's worked well so

Christopher Mitchell (11:15):
Far. But, so to reiterate, it's one of those things that I'm, I'm sensitive to this. Yeah. Critics of public ownership, <laugh> frequently talk about how consultants come in Yeah. And they lead you astray. They tell you it's gonna be super easy and then you get in over your head. That is not at all your experience.

Will O'Donnell (11:32):
I, I would say our consultant for the first round was very optimistic, but the final report was sobering. The idea is there are communities that do this. There's always a way. And I think that that is definitely true. But yeah, I think I, I think our general manager was very clear. He built fiber optic networks for scada for you know, remote control of electric assets, things like that over

Christopher Mitchell (11:58):
Computer. Super, super

Will O'Donnell (11:59):
Supervisory. Supervisory. Oh, now that you started,

Christopher Mitchell (12:01):
I not remember. No. Was supervisory control and data acquisition. Correct. It was a, I struggled with supervisory. The hard, easiest part. <Laugh>.

Will O'Donnell (12:09):
Yeah. So he'd build the, and he knew that it was gonna be difficult to make it pencil out. And also, you know, we, we will get back to the retail side of it. We are gonna be charging as our, as our entry fee, $65 a month for 150 by 150. 65 is maybe a little bit higher than we would like to be at, but that is gonna be at our cost. And so that's kind of our starting point for us. We are lucky. We've got a, a really proactive elected body and we have a low income rate that we give to all of our electric and water customers. Anybody that's enrolled in that program, we immediately get $20 off of their service from us. And then if we're, we've also enrolled in acp. So the starting rate for some folks could be as low as $15 a month if they're income eligible.

Christopher Mitchell (13:00):
Are you serving anyone today?

Will O'Donnell (13:02):
We do have a couple of business customers we take on as a trial basis. They're on our, what we're calling our legacy, active active network. And we're building a new PON network. We do not have any pon customers at this time.

Christopher Mitchell (13:15):
And I've been trying to figure out a way to work Travis in. Cuz you're a big fan of Connect This <laugh>. Yep.

Will O'Donnell (13:20):
Big fan. Frequent listener.

Christopher Mitchell (13:22):
You should comment more <laugh>.

Will O'Donnell (13:25):
I listen to you guys like at all still live. Oh, after, yeah. Yeah, yeah.

Christopher Mitchell (13:29):
Okay. Sorry. Yeah. Harder to comment that way. Yep. Yep. Yeah. But but he, he'll be sad that you're not using the direct I'm curious when you're, when you're looking at this equipment, I was just at a tra I was just at a show mm-hmm. <Affirmative> and getting a sense of new things that are coming out. Some microfiber, micro conduit type stuff. When you're looking at this and trying to figure out how to make it go and making sure that you can hit your numbers and everything else, are you trying out things that would feel new? Are you going for tried and true technology? Like how are you evaluating what technology to actually use in the field?

Will O'Donnell (14:01):
We haven't, we are really, depending on our design engineer or consulting engineer for a lot of that advice. They've built a lot of networks. They work with Doug Dawson, Finley Engineering. Mm-Hmm. They've been great so far. Let's,

Christopher Mitchell (14:14):
Some of them are from Minnesota. You gotta watch out.

Will O'Donnell (14:16):
Yeah, exactly. Well, they're used to all that flat, soft land. So I, I know it's gonna be a little difficult in our terrain. We're probably gonna be a little bit conservative on how we start off, at least with our first projects. And then we'll kind of, kind of have to see as we go forward. Right now it, you know, our main goal is just we wanna get fiber to everybody. Mm-Hmm. <affirmative>.

Christopher Mitchell (14:35):
Yep. And with 50 million of project is you said you're gonna need a pool to be able to expand beyond that. Do you have a sense of what, what a total cost is to connect to everyone?

Will O'Donnell (14:45):
We, our original estimate was almost a hundred million dollars to connect everybody. I think that was

Christopher Mitchell (14:50):
Low. Does 50 get you to like 80% of the people?

Will O'Donnell (14:52):
Oh no. God no. Oh no. 50 million gets us about 4,000 customers out of 21,000 meters. So that's a quarter. Yeah.

Christopher Mitchell (15:03):
Oh wow. So this is literally not one of those things where you can, you don't have any pockets of density is what you're saying? Not one basically <laugh>. No.

Will O'Donnell (15:10):
Well, it's funny, we we did take out, we got, we were awarded a 2 million very low interest loan from the state of Washington to build fiber to the downtown Port Townsend, which is our only city. It's got just about 10,000 people. It's beautiful, historic community, right on the water, the loan requirements. We were the only ones in the, the state to, to apply for it. It's 0.4% interest rate. What they defined as unserved was businesses who don't have one gig down by 50 megs up. Mm-Hmm. <affirmative>. And nobody in Port Townsend has that. So we applied and we're like, this is a sure thing and we got it. So that's our only dense area, but that's only for businesses, not for residents. Okay. Everything else is as rural and as far flung and as inexpensive to build as you can imagine.

Christopher Mitchell (15:57):
That sounds like it. I mean, I, I remember when we were driving through there, so it fits with my memories, but at this point, anything pre pandemic, I don't trust there's too many cobwebs. <Laugh>.

Will O'Donnell (16:07):
Yep. Yep.

Christopher Mitchell (16:08):
What are you excited about? You know, if I, if I'm talking about like, what do you, what do you think in two years are you gonna be are there any things in the, in the short term that you're looking forward to? Or is it kind of grim as you're just looking to this hard slog of, of not just spending the money you already have, but continuing to look for more money?

Will O'Donnell (16:25):
No, I'm so, so excited about this project. I mean, people are desperate for it. They've been asking us to do this for years. I sent out a message to some of our customers the other day saying, Hey, our old website data wouldn't upload to the new website. Do you mind sending us your info yet again? And I felt bad, I was trying to find a technical solution around this, but they were just so happy to hear from me, <laugh> and so happy that this is moving forward, that they would call and thank me for having to do the same work all over again. So I, I cannot wait till we get these people service. And the thing that I'm so excited about is that our most rural customers are gonna have better service than almost all of Seattle. Fiber in Seattle is few and far between. Mm-Hmm. <affirmative>, most everybody's on cable. They're paying a lot for it. And they're not getting great service. So we're, all of our rural residents are gonna have amazing service for a great price. And it's delivered by their local power company and they're friends and neighbors. So Yeah. I'm, I'm psyched.

Christopher Mitchell (17:24):
And that's coming from Will O'Donnell the most popular person in <laugh> in Jefferson County, <laugh>? No way. Nope. What advice do you have for other folks who are looking at this issue and trying to figure out, you know, this looks hard. Is this really something I wanna spend years of my life working on?

Will O'Donnell (17:41):
I'll put it a different way. The boring thing is like, this is a once in a lifetime opportunity, which it is. And it has been. We've been more, we're trying to get everything wrapped up before the, for our funding and before the bead even comes out. We, we expect the bead to be more competitive. And so we're hoping we can have all of our rural areas taken care of before that.

Christopher Mitchell (18:02):
Like we were just talking, Louis p u d was on the stage mm-hmm. <Affirmative> a little while earlier and they were talking about how, you know, it seemed like they were kind of saying if there's an award program that they haven't earned money from, they'd like to know about it because they've, they've hit 'em all. They got the reconnect, they got the, the state awards. They've they've been, they've been busy.

Will O'Donnell (18:19):
Yeah. And then we've been on the exact same track. I, I think the thing for us is gonna be the big challenge is, like I said about our rural area is gonna have better service than Seattle. Our rural areas are gonna have better service than all of our dense areas or slightly dense areas, our small towns in our county. So the, the next challenge for us is figuring out a funding model that can get to them. And at that point we will have to be a competitor. We're a little bit of a competitor now. A building in the area where folks have satellite service and where they have other things. That's been the thing. I've probably, I've researched a bunch and I haven't come to a conclusive answer, but try and figure out a way we looked into doing video over ip, the the

Christopher Mitchell (19:02):
Tele Oh, you wanted to have a headache?

Will O'Donnell (19:04):
Well, here's the thing is that, you know, the same reason we did the managed wifi was that we have a lot of older folks in the rural

Christopher Mitchell (19:09):
Area Sure. And they have preferences.

Will O'Donnell (19:11):
Most of them have satellite. And we're gonna be asking them to take on a $65 payment for a service that they don't really necessarily need. Mm-Hmm. <affirmative>, you know, I think they do need it, but they, it's not one of the things they're looking for on a day-to-day. So we have to convince them to take this. We install it to their home for free. We provide that fiber optic cable. But a lot of 'em won't wanna sign up unless they can really use it. And if we don't have a television component, it's gonna be hard for them to be enthusiastic about assigning.

Christopher Mitchell (19:42):
Right. Because they have to make room in their budget for another thing. Right. And one of the ways to do that is to say, we're gonna offset your cost of cable television. Right. But if they're not gonna be able to watch the Mariners, I'm guessing Right. Or whatever, then they're gonna be less enthusiastic about it.

Will O'Donnell (19:56):
They're gonna be less enthusiastic. In fact, they've had children of folks who have homes in some of these rural areas or adult children who've talked to me about how they, they've been trying to convince their parents to sign up for it and telling 'em it's free. You should do it. And they're like, well, I just don't need it. Why would I want that? Mm-Hmm. Why would I take on that service? So we did a hard look at providing television. It did seem like too much trouble. I think it, it's gonna take a lot of outreach and I've been sampling all the services to figure out, you know, how they work and how we can communicate that. And frankly, the, the subscription services are not great. You don't get the local TV as well. They're confusing.

Christopher Mitchell (20:35):
Yeah. I really like YouTube tv, but it is not cheap.

Will O'Donnell (20:38):
It's not cheap and it's not that user-friendly. And Hulu was not either. I have been loving Tubi which is free and I can watch strange British shows. I've been watching the New Zealand hit comedy Outrageous Fortune. And they have oh, they have V which I watched when I was a kid. Do you remember v I do the Weird Alien show from NBC in like 1982. Yeah. So May maybe I can sell 'em on Tuby cuz it's free and they can <laugh>, but they're not gonna watch the Mariners that way. Yeah. That's, it's gonna be a challenge. That's one of the things that is gonna be interesting as we get closer to, you know, we've, we've got, we've had no problem getting close to our take rate projections. People want the service, but when they have to make that final decision about do I want to pay that $65 a month it's gonna be interesting to have those conversations about what they get for it. So

Christopher Mitchell (21:28):
You said, I mean is this still mostly theoretical though in terms of it, because you haven't signed up a lot of customers yet, but you have a lot of confidence about the take rate. How is that working?

Will O'Donnell (21:37):
No, we've had folks pre, pre-register. Okay. Because there's no cost to build to them. We have them sign up online to get the service. Mm-Hmm. <affirmative> I think in our two biggest areas we're approaching 50%. 60% was our take rate goal. And we've done not very much outreach. We sent one round of postcards we've done on online stuff. We've done stuff in our newsletter. We've, we've spent no money really on advertising or marketing. We don't have a radio station. We don't have TV that we can sell to them on.

Christopher Mitchell (22:08):
50% is pretty exciting when people have to take it on faith that it's actually gonna be worth it.

Will O'Donnell (22:13):
Right. Exactly.

Christopher Mitchell (22:13):
Usually you'll get a second wave then as the, as the word of mouth starts spreading.

Will O'Donnell (22:17):
Well, and, and I've just been, we are getting closer and closer to going out to bid for construction. And once we get there, I really wanna do another push to get people. Cuz then it'll be real. And once we're actually building and they see the trucks in the area, I think the numbers will go way past our take rates. Yeah.

Christopher Mitchell (22:33):
You should have a, this would be not safe, but it will sign on the truck when they're waiting in traffic, cuz construction in the road that says sign up while you're waiting. <Laugh>,

Will O'Donnell (22:43):
Sorry for the delay. Sign up for Yeah. Yeah. Get out your phone.

Christopher Mitchell (22:45):
Make this all worth

Will O'Donnell (22:46):
It. Right. With a little QR code on the side of the Yeah. No, I thought QR codes were worthless at first, but now that they're Oh, I love them. Yeah. Now that they're useful. Yeah. Yeah. I remember when I would first see them. Well, at first it felt like everybody wants you to watch a video. Every QR code was like a five minute documentary and now it's like you just buy the service. Yeah.

Christopher Mitchell (23:06):
Yeah. Or for me it's just like, you know, download this podcast.

Will O'Donnell (23:09):
Right. There you go. Perfect. Yeah. Yeah, yeah, yeah.

Christopher Mitchell (23:11):
Yeah. Cool. Well thank you so much for your time today. Thank

Will O'Donnell (23:13):
You.

Ry Marcattilio (23:14):
We have transcripts for this and other podcasts available at muni networks.org/broadbandbits. Email us@podcastmuninetworks.org with your ideas for the show. Follow Chris on Twitter, his handles at Community Nets. Follow muni networks.org stories on Twitter, the handles at muni networks. Subscribe to this and other podcasts from ilsr, including building local Power, local energy rules, and the Composting for Community Podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter@ilsr.org. While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arne Hughes B for the song Warm Duck Shuffle license through Creative Commons. This was the Community Broadband Bits podcast. Thanks for listening.