Thanks to Jeff Hoel for providing the transcript for the episode 126 of the Community Broadband Bits podcast with Melanie McCoy on how the small town of Sebewaing, Maine achieved gigabit connectivity despite state barriers. Listen to this episode here.
Melanie McCoy: We are owned by our residents. They're our shareholders. Our customers are our owners. They were the ones that wanted this installed. And they knew that we would be paying for it -- we all pay for it -- as ratepayers. So we felt it was a good project.
Lisa Gonzalez: Hello. You are listening to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. My name is Lisa Gonzalez.
In the summer of 2013, we published a story on muninetworks.org about the community of Sebewaing, Michigan. The small town, located in the Thumb Area of the state had just released an RFP for a communitywide gigabit network. Since then, Sebewaing has been through the RFP process, and we're happy to report, they eventually built a communitywide gigabit fiber network to serve residents and local businesses. Even though Michigan is one of a handful of states that impose barriers to public investment in broadband infrastructure, this rural agricultural community felt it needed to something to improve its connectivity. In this podcast, Chris interviews Melanie McCoy, Superintendent of Sebewaing Light and Water. She describes how state restrictions bogged down the process, and could have threatened Sebewaing's ability to get the connectivity it needs. When most people hear the term "gigabit community," their mind immediately travels to Chattanooga. Sebewaing, Michigan's first "gigabit village," proves that urban centers are not the only places where residents can get the best connectivity. Here are Chris and Melanie.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell. Today, I'm speaking with Melanie McCoy, the Superintendent of Sebewaing Light & Water in Michigan. Welcome to the show.
Melanie McCoy: Thank you.
Chris: It's wonderful to have you on the show. We've been following the progress of your community for quite some time. But why don't we start by you telling us a little bit about where Sebewaing is, and what are some of the basic facts about the community that we should know for background?
Melanie: Sebewaing is a small, fairly rural community in southeastern Michigan. It's in the Thumb of Michigan, on the Saginaw Bay. Our claim to fame is the Sugar Beet Capital of the World. So, we have around 1800 people who live in the village of Sebewaing.
Chris: You have -- you're surrounded by more or less undense space, I'm guessing.
Melanie: Correct. A lot of agriculture in our area.
Chris: Must be, with all the sugar beets. I was not aware that there was a big sugar beet industry in that part of Michigan.
Melanie: The factory is our largest customer, **, and is the largest employer in the area.
Chris: OK. Well, for about the last ten or eleven years, as I understand it, you've been a little bit involved as a utility. You're a municipal utility. You've been involved in wireless Internet access. Can you tell us a little bit about that?
Melanie: It was around 2001. The utility -- we're an electric, water, and at the time we went into the Internet utility. We partnered with businesses in town, and put in a fiber loop, and shared the cost of a T1 line. At the time, the residents then said, isn't there something you can do to provide US with Internet access, because it's limited up here. We had some, but it wasn't to all of the community. So we put in a wireless system, back then. And that has been up and operating. But recently it started "limping," if I can say. And customers wanted faster speeds, which caused us to start looking at fiber-to-the-home.
Chris: And so you're looking at fiber-to-the-home. What sort of process did you have to follow to figure out how you could make sure that people were having the speeds that they needed in their homes?
Melanie: Pulse Broadband came in and started looking at some different options for us -- of what it was going to cost, how we would be able to get it to the community, and what the benefits would be for everyone. And we went though that process. And went out to bid, to try and get an estimate of what it was actually going to cost, and then look at the payback. And we decided to go forward with it.
Chris: You released an RFP. Can you tell us a little bit about Michigan law, and how it complicates the process that you then used to ultimately start building your gigabit network?
Melanie: Yeah. We had actually started going down the path of installing our network. And they we realized, we had, as you mentioned, because of Michigan law, needed to go back and actually put out an RFP for anyone to be able to provide us the types of service that we wanted. So you go out to bid, and if you get more than three competitive bids, the law states that you cannot build it then. Then a local municipal cannot build the network. Essentially, I guess, because they assume there's enough competition there, and enough source of the broadband for you. But we did not get three competitive bids. We got one bid, and one non-qualifying bid. So that said that we could go on and install the system.
But before that, there's some other hurdles that you have to do, because of Michigan law. One is to do a cost estimate and a payback, and actually hold a public meeting to review that again. So that a community is not putting money into a product or a project that's going to lose money. And I guess that some of the incumbents don't like the fact that a municipal could install it and maybe you're not paying for the utility -- for the Internet, I'll say -- through Internet revenue. But we set it up because we are a utility -- an electric utility, water utility. We look at the Internet being another utility that's going to pay for itself.
Chris: Now, how did you structure the RFP? I mean, I'm curious, because I'm sure that, you know, there are some companies who would love to just come in and provide a gigabit to a few customers, maybe. Or your sugar beet industry but no one else. Were you able to structure it so that you were able to capture the fact that if a private company was to do it, it may not have the same impact as if you did it as a utility?
Melanie: You know, we actually put it out as a pure bid. And we did have a private company that bid on it, to provide the service. But we were able to do it for less than that. Which is why our village decided to go ahead and do it. And, also, if we had gotten three bids, it might have been a different story.
Chris: If you had received three bids, but of those bids, none of them were going to build the entire community, would the response, would be serving the entire community? Or would they be able to game it in some way?
Melanie: The way we wrote the RFP was that it would be a gigabit community product, you know, so it wasn't that it would be less than that. And they had to cover our village. They basically had to cover the whole village, with our thousand customers.
Chris: And you noted that the cost of building it yourself was actually lower than cost of the one company that had successfully submitted a bid that you considered. What was the cost of building this network?
Melanie: Our cost is in the $1.5 million range. Some of that is because we're able to benefit by already having the right-of-ways and the easements, because of our -- either the electric or the water -- that really assisted us in this construction.
Chris: And how are you financing this network?
Melanie: We are lucky. We have the capital reserved that we're able to finance it with. Because the community had been looking at this for a while, we were able to save up some capital reserves.
Chris: Well, that sounds like better planning than it does luck.
Melanie: It is. [laughs] It is. The utility here has been very, I'll say, fiscally responsible, in terms of saving money for these kind of projects -- for the big projects that are needed.
Chris: And so, now that you're actually -- you've built the network, as I understand. Is that right?
Melanie: Correct. We have built the network. We have 150 of our residents hooked up right now. We have one gigabit customer that has been hooked up. And we have another 200 on the waiting list.
Chris: So, what are some of the benefits that you're already seeing in the community from the network? And I'm guessing there's other municipal facilities -- or village facilities -- that you have connected. How is it different, versus how you had been connecting them with prior?
Melanie: We are actually -- Actually, we are taking a little different approach. We're starting with our residents and the smaller businesses first. So the municipal facilities are not hooked up yet. We are hooked up to our old system. So, when I talk about our fiber loop that we put in and shared the T1 line, for the businesses, that loop today is still operating. Not on the T1, but on regular fiber on another system. Actually, through Merit.
Chris: OK. Michigan has this statewide educational network that does a rather good job of making sure a lot of schools are connected. I know that you already know that, but some of our listeners may not have.
Melanie: Correct. Correct. Through the Merit system, was a partnership with the schools. We brought it in because they were in the area. So we have many of our businesses -- there's 19 of 'em -- that are hooked up to that. The village municipal facilities are part of that also.
Chris: Oh, OK. So you have previously, basically, built the needs -- built out to them.
Melanie: Right. Exactly. They only go up -- their speeds are under 100 [Mbps], but it's still adequate for most of them. And we have seen businesses that, because of that existing fiber loop, are happy with it. They're able to add employees, add shifts, because they have the capacity to -- of the Internet. It's exactly the reason that the community started looking at this, too, was, not just the residents saying can we have it, but also the businesses. And hopefully it's an economic incentive.
Chris: How does having a network -- this sort of advanced fiber optic network -- being, you know, I believe you saying you're the first fiber optic village in the state -- how does that change a community like Sebewaing?
Melanie: We are hoping -- that's actually one of the goals of this project. We're hoping to bring some small businesses to our community. We had manufacturing in our area, that has closed down. So we are "underemployed," I'll say, some of our areas. So we're hoping that we can bring those small businesses back here. And each customer has a different need. Whether it is the student going -- having their courses online. Or the little quilter's cottage, where she does all of her business online, at making quilts for -- or all of her sales online. Or our first gigabit customer, which was Bay Shore Camp. It's a Methodist camp in town. They have 300 kids there every week in the summer, plus another 100 or so counselors. And, you know, each one of those people have several devices on 'em. So they need a very powerful wireless system in addition to the bandwidth. So -- and that's critical to them, because all those kids going to camp, if they don't have their devices, it's -- they're not having as much fun.
Chris: I can definitely imagine that. It's such a good reminder, too, of the need to have both excellent wired facilities, to just enable wireless facilities, that is what most of the devices we end up using are.
Chris: So, let me ask you, as we're sort of closing out here, what -- how did Michigan law make it easier or harder for you to get to this outcome, where you have this advanced network available throughout your community?
Melanie: It made it harder, because of the timeline, and having to go through all the steps. We almost had to backtrack to go out for an RFP. We had to pay extra for a CPA firm to look over our cost estimate. We had to have the public meeting. Then we had to go out to bid. Finally. So the community kind of got anxious, 'cause it took so long. It was like, you've been talking about this forever.
Chris: Now, I would guess that, being a municipal utility, you probably would have had some public input already, anyway. Is that the case?
Melanie: That is the case. We are owned by our residents. There are shareholders. Our customers are our owners. They were the ones that wanted this installed. And they knew that we would be paying for it -- we all pay for it -- as ratepayers. So we felt it was a good project.
Chris: So you had to pay extra, to do some of the extra RFP work, just to demonstrate a fact that you already knew, which is that the market was basically broken.
Melanie: Correct. Correct. Especially for rural communities.
Chris: Well, I think it's disappointing that Michigan's created these hurdles. But, at the same time, I'm very glad that you've been able to move ahead and demonstrate the benefits of a city that can take its destiny into its own hands. So, congratulations for that.
Melanie: Thank you. It's pretty exciting.
Chris: And thank you for coming on this show today.
Melanie: Certainly. Thank you.
Lisa: Take a few moments to learn about Sebewaing's network 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 . We have some new music this week. Thank you to Dickey F for his song, "Florida Mama," licensed through Creative Commons. And thank you for listening.