Thanks to Jeff Hoel for providing the transcript for Episode 123 of the Community Broadband Bits podcast with Rick Mervine of Aurora, Illinois. Listen to this episode here.
Rick Mervine: The objective here is not to go out and cover the same amount of money that they were paying before. The objective here is to make sure they get a scalable connection that can grow with their needs, and, you know, provide them a reasonable baseline of expense, with all the advantage -- with all the ability to take advantage of the technology.
Lisa Gonzalez: Hello there. Welcome again to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
Not long ago, I visited with Rick Mervine, an Alderman from Aurora, Illinois. We started looking at the community of Aurora last year, and discovered that they have developed an interesting business model for their network, OnLight Aurora. They use both nonprofit and limited-profit entities. Since Chris has been globetrotting quite a bit lately, it's my turn to take over the microphone. And so this week, I decided to share some of the highlights of my conversation with Rick. The community realized in the early 2000s that there were a couple of reasons why publicly-owned infrastructure was a good idea. So they started with a vision, came up with a plan, and then deployed their network. The network began serving municipal facilities in 2008. And then about a year and a half ago, they branched out to work with community anchors and a few businesses. A key consideration has always been a long-term approach. Community leaders focus on the ability to develop a network that's scalable, to serve far into the future. Here's a little bit of my conversation with Alderman Rick Mervine, from Aurora, Illinois.
So, I'm talking today with Rick Mervine. He's an Alderman in Aurora, Illinois, home of OnLight Aurora. Hi, Rick. How are you?
Rick Mervine: How are you doing, Lisa?
Lisa: I'm doing great. Thanks for asking. What were some of the reasons why Aurora decide to go ahead and invest in a fiber network?
Rick: The idea to do this didn't come from me. It came initially from the Mayor of the City of Aurora -- his name is Tom Weisner -- had a very good understanding of, you know, how telecommunications had been evolving over the years. It had gone from just the regular POTS-type service to, you know, voice over IP, to cable services -- and in my area, that's Comcast. And had a pretty good understanding of what was out there. The city also understood that these services from the regular service providers were not evenly distributed throughout this community. This is a community of 200,000 -- and growing. And it's roughly 47 square miles. It's 35 miles from the city of Chicago. It's its own metropolitan area. And, you know, at the same time, it's also a very strong and vibrant melting pot. And, you know, it's on the Fox River. It's one of those, you know, industrial river communities that -- you know, manufacturing kind of moved away -- or some of it did, not all of it. You know, so the city has been reinventing itself, and doing a very good job of that.
But one of the issues was that the service providers were not providing service on a uniform basis throughout the city. Now, you could get cable service in some areas of the city, and you wouldn't be able to get it in others. So, we have 17 established business parks in this city. You know, you have substantial businesses that are moving in that are -- they ask the question when they get in there, well, who do we hook up for, you know, high-speed broadband? You know, you can get DSL or you can get -- DSL. Or you could sign up for a T1 line and get, you know, 1.5 megs. There was not a good -- even and forward-looking -- service throughout the community. And the community set its sights on making sure that economic development, and making sure that jobs were available for everybody in the community, you know, was a key entity that they were going to do -- this BTOP thing that was going to happen.
The city also looked at what it's own costs that it was paying for a lot of these services. As the CTO of the city says, you know, I had fast buildings, I had slow buildings. It was a mish-mash of things trying to be able to get connectivity, and trying to keep it up and running, when you've got, you know, a 9-1-1 system that dispatches for other communities, dispatches police and fire. And, you know, there are other government agencies that work out of our facilities. And that gets to be very problematic. And it was very obvious that there was no impetus for the regular service providers to provide these services.
So, the city took a look, and determined that they could save an enormous amount of money if they cut these cords and went to an alternative way to provide high-speed broadband -- and, in this particular case, fiber. That number is just under half a million dollars a year. I believe it's some where in the -- $480,000 a year -- that they could save, annually -- develop our own fairly comprehensive fiber optic network, connect all the buildings, connect the water towers, connect all the water department facilities, connect the public safety facilities, connect the libraries, and make sure that the municipal needs were met. That was the initial basic thinking.
Lisa: How was the original network funded?
Rick: It was funded through bonding -- general obligation.
Lisa: So it was around 2006, the community began to develop a strategic plan. Why don't you describe the plan for us?
Rick: So, the first part of that was, the municipality could, on its own, do this, and save a substantial amount of money, and do very well, And there would be a very good -- roughly a ten-year -- return on investment on this project. And, at the same time, understood that they would have far more control over the type of network and the security on the network, the redundancy of Internet connectivity, and the ability to be able to scale that network if it needed to. Well, the initial network was decided to be a 43-mile, self-healing ring. When it was designed, it was designed to try to go near as many schools as possible. That was not going to be part of the first phase. But it was considered that there was a second phase to this. And the second phase was to be able to use the municipal network, that would then be connected to all the municipal structures. That municipal network would also provide for voice over IP phone system for the city, for the city municipal needs. Make teleconferencing a lot easier. You know, a lot of different advantages. And also to be able to control its availability as well. We've had some difficulties in the past, the municipal network not being available when it was required.
First phase was to get these buildings up and running. And it was roughly $7 million -- a little over $7 million -- to build this network.
Lisa: Now, as you were deploying, what methods did you use to prepare yourselves for the future expansion?
Rick: It's all underground. OK? And it was built so that the network had a lot of growth opportunity. So, it was done in a couple of different ways. There were three conduits put into the ground. One was filled with 144 fibers. And that was the initial fiber build. The other two were capped and empty, and ready for expansion in the future. In addition, it was built as a partially-DWDM network. The rest was CWDM. So, the ability to be able to divide each fiber by the light spectrum. And be able to carry 10 gig of network services over -- Blue. OK? Or red. Or whatever the light spectrum was. Dividing it into -- with DWDM, you get to divide it into 40 different colors -- or essentially multiply the capacity of the fiber by 40 times.
So, it was a fairly substantial network. The cost of building a network is -- the first fiber, in the first conduit, getting it in the ground. So, adding more fibers to it -- and even adding more conduit to it -- was the least cost of the entire process.
Lisa: Does Aurora have a "dig once" policy, or an ordinance to help expand the network?
Rick: It's actually not an ordinance. Because we determined that it was now so ingrained in the operations -- in the administration and operations of the city. Because the Mayor is still the Mayor. The -- all of the departments know the value of the fiber. And all the departments look out for all this. So every time we go out to build a road, we ask that question. And we get an answer to that question. Do we want conduit in this road? Do we want conduit and fiber in this road now? What do we want? Or, do we not want anything here? All the department heads see the value of asking that question. And we've pretty much found, at this point, that we don't have to legislate for it, because it's happening on an administrative basis. It's become part of the DNA, if you will, of the municipality. But we talk about it as a "dig once" concept. OK? You want to be able to make sure that you're not opening things up twelve times. And you're not adding cost to everything. Every time we get a chance to go in and lay conduit, in a road that's being rebuilt, it's less expensive to lay that conduit.
Lisa: So, phase 1 was completed around 2008. What did phase 2 involve? What were the connectivity goals for the second phase?
Rick: For the most part, it was effortless. And the city -- the municipal network went from sketchy and unreliable to highly reliable and highly available and VERY fast. And scalable. Initially, we started with one supplier for the Internet. Well, now there are two, and we're headed for a third. So we're now what they call "multi-homed."
As part of this plan, there was always a second phase. And the second phase was, once you get the city -- the municipal network -- up and running, and you get voice up and running for the city's municipal buildings, and it's stable, and there's no problems, and everything else, then start to look at how to be able to take this network and make it available to the community anchor institutions, and bring further value to the community.
Phase 2 was to go to the community anchor institutions. Education -- not just K-12, but P-20. In this city, we have six school districts, a bunch of private schools, preschool -- some of it school-district-fostered, some of it private. We're -- the city is in four counties. So it has multiple options available from a community college point of view, to be able to get higher education beyond high school. That also includes workforce development aspects of things, where you can train properly to, you know, be able to fill the jobs that are in the area, that you need to be trained for. Community colleges are very attuned to that at this point. In addition, we also have four-year institutions here.
The second was healthcare. We have a series of medical centers here. We also have a very vibrant arts and entertainment arena. We've got a 220-seat small, intimate theater. We have a 1900-seat large theater that is very active. We have a 10,000-seat outdoor music park on the river, on the riverfront. Now, it brings in major acts, like B.B. King and Lady Antebellum and Peter Frampton and things like that. OK? So we've got a lot here. And all of that ended up with fiber.
Lisa: I understand you have somewhat of a hybrid business model that allows OnLight Aurora to serve both community anchor institutions and commercial customers. Could you tell us a little bit about that?
Rick: The best way to do this was, in fact, the not-for-profit model. It'll be three years in January, the not-for-profit was put into place, as OnLight Aurora. And then that summer -- spring, I believe it was -- applied with the IRS for a 501(c)(3). Part of the model here was to be able to go after grants, to be able to make a lot of this work -- help fund some of the construction, and things like that. And, you know, that remains the model today. The organization also realized that from an accounting point of view and a tax point of view, even as a not-for-profit, the more business you do with for-profit entities -- So, it's an economic development concept here -- so you're going to be connecting businesses, both existing businesses, as part of the model, to be able to retain business and help them expand, and to attract new business, coming into the community. For part of that, you're going to do business with a lot of for-profits as well. There were tax implications for that. And so the not-for-profit started a limited-profit -- it's called a L3C [low-profit limited liability company]. It's a type of LLC, but it's a L3C. It was available, at the time, in only 10 states. The IRS set this up as a way for -- to allow for limited profit expectations for social entrepreneurship. And that's what this entity was. It was a social entrepreneurship entity. The L3C limited-profit corporation is a subsidiary of the not-for-profit. And we've been connecting the community -- the entities to this since we started.
Lisa: So you've been providing service to community anchors and a few businesses. What's the general consensus? What are customers saying about OnLight Aurora?
Rick: In some cases, we've gone in, and they've said, you know, well, you're going to be our backup connection. We're less expensive than their primary one. We're scalable and their primary one is not. And we offer the ability to be flexible. So, with school districts, once or twice a year, they have big online testing needs, where they spike. We don't care if they spike. We'll cover them. So we'll let them spike for a couple of weeks and we'll cover them. Well, we went from being their backup, in some cases, to -- a week or 10 days later, we'd get this call and say, uh, by the way, I think you're our primary. You know, all they really wanted to do was find out for sure that we didn't go out, and in that timeframe, their primary provider did. So, it's kind of interesting, we go from backup to primary in a heartbeat.
Lisa: How much money are you saving some of these customers that have switched to OnLight Aurora?
Rick: We're finding that some of the standard service providers were kind of all over the board with some of their costs. In some cases, we're maybe saving them 10-20 percent. But in other cases, we're saving them 50-60 percent on the cost. You know, the intention here is to be able to help them make this more mainstream in what they do, and then -- so that they use the technology to grow and to provide jobs. For us, the objective here is not to go out and cover the same amount of money that they were paying before. The objective here is to make sure they get a scalable connection that can grow with their needs, and, you know, provide them a reasonable baseline of expense, with all the advantage -- with all the ability to take advantage of the technology. Yeah, we are saving all of our clients money. In some cases, that saving comes from the fact that, you know, we might still be a backup, or secondary connection for some of them. They didn't have that before, because they didn't feel they could afford it.
Lisa: Let's talk a little bit about the way the network has brought grants into the community, and how this has factored into Aurora's return on investment.
Rick: If you take a look at the ROI for the initial city network, we figured it was ten years. But, you know, we also believed we were going to be able to achieve -- bring in some other grant money that, had we not had the fiber, that would not have happened. To date, because we have the fiber, we've brought in over $17 million in grants, just because the fiber's in the ground. So we kind of figure that, between that and the savings we have already, that we've paid for this -- we've paid for this network.
So, one of those was just about $15 million, with a series of different funding grants, to be able to go through and upgrade the traffic light system in the community. We've got 119 traffic lights -- or traffic light intersections -- to upgrade those and to synchronize them so people aren't just sitting there idling. And we can keep traffic moving. We completed that this past spring. Everything can now be controlled remotely. Everything -- it's a wonderful system, considering we're also doing an enormous amount of road construction. We're -- fiber, by the way, is going in the ground -- or conduit is going in the ground. And, you know, it helps us to, as lanes change and other things change, change traffic lights on a moment's notice.
We also got a grant for our fire department, and brought in a neighboring fire department with it as well, for just under a million dollars, to provide a telepresence system on this fiber network. And all the fire stations are all connected to the fiber network. This telepresence system set it up so that when our fire department, which is the second-largest in the state -- and is very active and very good at what they do -- but they need to continuously train. And, you know, during the week, Monday through Friday, they train pretty much every day. And at any given time when you do training, you take out half of your stations and the other half covers the rest of the city. Which can be problematic. We don't like the response times in those situations. So now, they use this telepresence unit so that they can literally train from their individual firehouses.
With things like that are added value that -- you know, we never would have got that traffic system -- When they were initially -- we were initially going to talk to them about doing something, it was going to be very small. And one of our people mentioned that we had a fiber optic network. And they said, wait, wait, wait, you have a fiber optic network? Showed them the map, showed them it went all over the city. And they said, well, then we don't have to spend a lot of money. We can kind of give you all of this without spending $50 million. We don't have to build a whole fiber network to do this. We can use this to connect and connect your whole city. We wouldn't have gotten that without the fiber network.
Lisa: Great! Well, thanks so much for sharing Aurora's story, Rick. We look forward to hearing more as you connect even more businesses and entities.
Rick: My pleasure, Lisa. Thank you very much.
Lisa: Learn more about the network and the community at onlightaurora.com . We also have some stories about Aurora at muninetworks.org . Send us your ideas for the show. E-mail us at email@example.com . Follow us on Twitter. Our handle is @communitynets . This week, we want to thank Jessie Evans for the song, "Is it Fire?" licensed using Creative Commons. And thanks for listening.