Transcript: Community Broadband Bits Episode 140

Thanks Jeff Hoel for providing the transcript for the episode 140 of the Community Broadband Bits podcast with Randy Klindt on Co-Mo Cooperative's fiber-to-the-home project in Missouri. Listen to this episode here.

 

00:08:

Randy Klindt:  And we're saving everybody, on average, around $20 to $25 per month.  And when this project is complete, that's about $1 [million] to $1.5 million a year of disposable income put back into our members' pockets that they can spend on other things.

00:25:

Lisa Gonzalez:  Hello.  This is the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance.  I'm Lisa Gonzalez.

Many people think that Google Fiber in Kansas City has the top average speed in Missouri.  Well, in 2014, Ookla ranked Tipton, with approximately 3,200 people, as number one.  This rural town was also ranked 18th in the U.S., all thanks to its local electric provider, Co-Mo Cooperative.  The electric cooperative, located in the center of Missouri, began in 1939 to bring electricity to rural farmers.  Co-Mo Cooperative is on-track to provide Internet access via next-generation fiber to all its members for a large swath of rural central Missouri.  In Episode 140, Chris talks with Randy Klindt, General Manager of Co-Mo Connect, the triple-play service available from the utility in the Tipton area.  Randy's description of the Co-Mo Connect network echoes what we've heard from other cooperatives.  A community-minded approach that focuses on including both town and rural properties.  As more electric cooperatives answer rural demands to provide broadband access, successful cooperatives, such as Co-Mo, can pass on lessons learned to ease the way for others.

Each week, we bring you the latest on municipal networks and telecommunications through the Community Broadband Bits Podcast, without annoying advertisements.  Please take a moment to go to ilsr.org and click on the orange "donate" button.  Or click on "donate" at muninetworks.org .  Every contribution is appreciated.

Now, here are Chris and Randy, talking about Co-Mo Cooperative's fiber-to-the-home project.

02:08:

Chris Mitchell:  Welcome to another edition of the Community Broadband Bits Podcast.  I'm Chris Mitchell.  Today, I'm speaking with Randy Klindt, the General Manager of Co-Mo Connect, with the Co-Mo Rural Electric Cooperative, in Missouri.  Welcome to the show.

02:23:

Randy:  Thank you.

02:24:

Chris:  Randy, I'm excited to talk with you, because right in the center of the country -- you know, you're a little bit south of the famous Google gigabit.  You're doing a gigabit, to some of the more challenging terrain, economically, to deliver that same level of service.  But let's start with a little bit of -- just a little bit of history.  Can you tell us a little bit about Co-Mo, and its history within the region?

02:49:

Randy:  Sure.  Co-Mo Electric is an electric distribution cooperative.  We serve about 31,000 electric meters in central Missouri.  And we've -- we just celebrated our 75th anniversary as a cooperative this past year.  So we have a lot of history in the area, where, you know, we were founded to serve an unserved group of people.  And it's repeating itself, now, with broadband.  But we serve, definitely, a rural -- very rural -- challenging area to serve.  But one thing we noticed right away is that broadband was severely lacking in our service territory. We are served, primarily, in our 2,300 square miles by the big price cap carriers, that just didn't have a good track record for expanding broadband into areas like ours.  So, when our members started requesting service -- I don't know why they thought they could come to their electric coop and ask them to serve broadband, but they did.  We tried to get a stimulus grant.  We weren't successful in that.  But we had driven so many of our members' hopes up during that process that it's just something we couldn't leave on the table.  So we did a lot of work.  We did a lot of financial modeling.  We did a pilot project, where it was demand-driven.  We had to have so many customers before we would build it.  And -- bottom line is that the demand was there, the pilot project was very successful.  And now we're on the road to building 4,000 miles of fiber-to-the-home.

04:39:

Chris:  Would I be correct in assuming that, across your service territory, you have a lot of people that are off on their own, and they have access maybe only to dial-up and satellite?  But then, you have other people, and maybe some smaller towns, that have DSL and perhaps cable?  Is that about the distribution?

05:00:

Randy:  That would be about right.  We -- about -- of the 32,000 or so houses and businesses that we pass, maybe about 6- to 7,000 of those had access to cable.  And then we have some very low-speed DSL.  We don't have anything, really, any faster than about 10 megabits.  And those are primarily in the communities.  And then, you're right, it's down to dial-up and satellite after that.  One thing, in Missouri, most electric coops do not serve inside city limits.  So, we come up -- right up to the city limits, which is pretty much where the DSL range stops.  So, even where there is DSL, that's very rare.

05:46:

Chris:  Oh, so you actually have areas, then, where -- we've seen this in some places in Minnesota, where, you know, originally, people wanted to move to the town, because they could get DSL.  But now, are you seeing some people that are moving out of the towns and into your territory to get the much better access?

06:02:

Randy:  When we set out to do this, we knew this was an economic development project, for the region's benefit.  And so, we made the determination, we didn't want to leave the small cities out.  So, we are -- actually, we just finished one of the communities last fall.  And we're in the process of building two more communities, even though we don't serve them electrically.  We just think the people and the community are just -- they're just too intertwined to leave people out.  So, we're trying our best to serve everybody inside of our footprint.

06:36:

Chris:  Well, I definitely salute that.  Here, we have, in Sibley County, we've talked about an RS Fiber Coop, where they're creating a whole new cooperative.  And they have the exact same sentiment.  They'll often say, you know, without the farms, we wouldn't have the towns, and without the towns, we wouldn't have the farms.  So we're sticking together.

06:53:

Randy:  Right.

06:54:

Chris:  One of the things that I'm curious about is how you've financed it.  Do you have a connect fee, where you charge people up-front?  Or, how are you able to make this work?

07:06:

Randy:  Well, we have a -- we just have a minimal installation fee.  It's $100.  We do everything pre-sold, prior to construction.  So, when we open up an area for construction, we offer the $100.  But it's a limited-time offer.  They have to sign up during construction, or the $100 offer goes away.  We try to drive a lot of the demand, during construction, which, you know, makes more sense when the crews are on the ground constructing, to connect houses as they go through.  So, that $100, obviously, doesn't come anywhere near cost it takes to build fiber-to-the-home.  But we're doing it, you know -- as a cooperative, we have an expectation of long life of our assets.  A lot of our electric lines are 30-40 years old and still functioning.  So we don't have to have a 3-year return on our investment, or a 5-year return on our investment.  This is a long-term project for us.  So, that makes it much more feasible, if you look at it in the terms of 10 years, 15- and 20-year returns.  And we're just -- we're financing this with more traditional financing sources.  And no grants or government loans.

08:21:

Chris:  What kind of take rates are you seeing, when you go into some of these communities and you have this time-limited period?  How much interest do you see?

08:29:

Randy:  In the unserved areas, we are -- it's really fun when we open those up, because we send a packet out that describes the service.  Of course, most people know what's coming, and most are very impatient.  But when we do send a packet out, we announce that their area has been opened for sign-up, it's not uncommon, in unserved areas, to hit 50 percent of every electric meter signing up for service in a matter of weeks.

08:52:

Chris:  Wow!  Yeah, that's the kind of thing that we've seen.  And not only that, you know when you're making those investments that you're going to have that customer for a long time.  Because not only do they have this long-standing relationship with the cooperative but you're not expecting to see AT&T doing a competing fiber line right next to yours, I'm guessing.

09:13:

Randy:  No, they haven't done it to date.  I can't imagine them wanting to do it against competition.

09:19:

Chris:  Right.  Well, how fast does your service go, in terms of the people who are already connected?

09:24:

Randy:  We do offer a residential gigabit service.  All of our services are symmetrical.  So, we have a 5-meg, 35-meg, 100-meg, and gigabit plan.  And our gigabit plan is $99.95 a month.

09:38:

Chris:  And, as I understand it, your gigabit might be faster than some other gigabits.  Did you recently win an award?

09:45:

Randy:  I think what we do is -- we pay a lot of attention to our net index rating, which is created by SpeedTest and Ookla.  And -- I was just actually looking at it this morning, and -- it's funny, our headquarters is in Tipton, Missouri.  And Tipton, Missouri, is, I think, listed as the second-fastest city in the state of Missouri.  And I think right now, Co-Mo Connect is the 18th fastest ISP in the nation.

10:12:

Chris:  [laughs]  Not too bad, for being spread out so thinly, as you are.

10:17:

Randy:  Right.  And, you know, in going into those averages are some of those people from the 5-meg plan.  So, if we didn't have those lowest speed tiers, the economical tiers, I think we'd be way up there.

10:29:

Chris:  And so, what does this network do for your ability to control the grid, and to be more efficient as an electric utility?

10:37:

Randy:  That is one of the main criteria that we used when we decided to build the network, was to support smart grid.  And we are -- almost every one of our substations now is connected via fiber.  And we are starting to connect our down line devices, like breakers and regulators and capacitors.  And it's going to create huge benefits for electric grid.  And create a more reliable service.  And hopefully keep the upward pressure on rates, to keep it kind of down a little bit.

11:15:

Chris:  When you were trying to decide, you know, about this plan, were there benefits of using fiber that would not have been present if you'd gone with a wireless-type system?

11:25:

Randy:  Oh yeah, absolutely.  Latency is a big thing.  And, of course, coverage.  We -- about the lower third of our service territory is very hilly, covered with lots of trees.  And getting good wireless coverage in that area is very difficult.  And the ability to hit every one of our devices, obviously, with fiber being on every one of our electric lines, is a big advantage.

11:49:

Chris:  And I'm always curious about the impact on economic development.  You know, it's fairly common that jobs are leaving some of the rural areas that do not have good access.  You have kids going off to college or university, and they may not want to return to an area where they could only get slow DSL.  Are you seeing any kind of impact because you have this great network available in regions that suffer from those sorts of problems?

12:16:

Randy:  You know, most of what we've seen, as far as economic development goes, are just single stories that we're hearing from our membership.  We don't have any large business that we can point to that we've attracted to the area.

We do serve a recreational area, around the Lake of the Ozarks.  A lot of summer homes.  And what we are seeing, for sure, is that people out of Kansas City, out of St. Louis, coming to their lake homes, and they're spending more time here, because they have high-speed connectivity back to their offices.  And it's interesting that 2- to 3,000 of our members actually reside in a Google Fiber territory.  So, I think -- in fact, one guy on Facebook commented that he thinks he may be the first person to have gigabit at his full-time home and his vacation home.  So, we do know that is going on, because people will e-mail us, telling us their family thanks them because they get to use their vacation home more, because they can stay during the week, when they need to do work.

13:21:

Chris:  And that's actually something that -- I was actually just at the Wisconsin Farmers' Union meeting.  And there, there was a discussion about how, if people spend, you know, an extra week per year or two weeks per year in some of the northern Wisconsin communities, which are more where people have second homes that has a real impact on the economy around there.  I mean, it could be millions of dollars in aggregate, because of just the multiplier effect, from keeping people and spending more money in local areas.

13:50:

Randy:  Yeah, that's correct.  And the other that we've noticed -- and this was a surprise to us, we didn't put this into our decision early on -- but as we convert more and more people over from the other carriers, one thing we do is, we ask for a copy of their phone bill, so that we can make the number portability portion easier.  And -- so we started seeing some of the totals on their old bills.  And started totaling up what they were paying prior to our service and what they're paying after.  And we're saving everybody, on average, around $20 to $25 per month.  And when this project is complete, that's about $1 [million] to $1.5 million of disposable income put back into our members pockets that they can spend on other things.

14:40:

Chris:  Wow!  That's quite a number, for some of those smaller economies in the smaller towns.  One thing I'm curious about is, I sometimes hear from other people who are served by rural electric cooperatives, and they're not sure what they can do.  You know, you mentioned, people started contacting you and asking you to do something.  Do you have any advice for -- let's start with people who are cooperative members.  And then I'll ask you about the leadership of cooperatives next.

15:13:

Randy:  Oh, I would say, cooperative members, if they do what our cooperative's members did, your cooperative is bound to listen.  I mean, they're the owners of the cooperatives.  They, obviously, can talk to their board members.  They can go to their annual meeting.  They can ask for the service.  And more and more cooperatives across the country are doing this now.  So it's not going to be like it's a surprise, I wouldn't think, to the cooperative leadership, if their members asked.

15:39:

Chris:  You're also doing cable television.  And so, I'm curious if -- whether that's a part of your advice or not.  But it you -- I'm sure you have other cooperative boards reaching out to you to get this sense of what lessons you've learned.  But what advice would you give other rural coops, as they're trying to figure out what they can do in this space?

15:59:

Randy:  Well, as far as -- to evaluate the feasibility of this project, I would recommend that coops follow in the footsteps, if they're unsure, that we did, is to do a demand-driven pilot project.  Carve out a service -- carve out an area of their service territory, and notify those members, and get them to put some skin in the game.  You know, surveys always look real positive until you ask them to put down $100.  And that sure changes the results.  So, you know, put together the program where, by giving you a $100 deposit, and see what the demand is.  And I think they might be surprised.

16:37:

Chris:  Is there anything else that I should ask you before we end the interview?

16:40:

Randy:  No, I don't think so.  I think you touched on TV just a little bit.  And I think every- -- anybody that's looking to doing this probably has to make that TV decision for themselves, based on their market.  It does help to create a bundle, which makes you more competitive.  If you have -- you know, if somebody has DSL, and then they have a satellite television service, and telephone from another source, those are very expensive.  And it makes you very competitive when you can package those together.  Of course, we all know -- we keep hearing -- that over-the-top is coming.  You know, I think every entity looking at doing this is going to have to make that decision, based on the time they decide to get into the business.  So, for us, it's working.  It's a very difficult business to be in.  Programming costs are out of control, and there's not much you can do to combat that.  But it's working well for us at this point.

17:32:

Chris:  Well, actually, that brings up one last question that I do want to ask you.  And that's -- you know, you certainly have your hands full as you're expanding right now.  But I'm curious if some other areas outside of your territory, or even a local government, wanted to work with you, where maybe they put up the capital for the infrastructure but asked you to provide services, is that something that's on the table?

17:54:

Randy:  That's something that we would take before our board.  I think it's something we would look at.  We are -- we just approved our final two phases of our project, which will give -- it's light at the end of the tunnel for our construction.  And we know the end date is coming soon.  And some of the neighboring -- either electric cooperatives or munis that would be interested, we would definitely entertain being able to help them out, if -- so be it, whether it be a provider or -- if they just want to come visit and take a look at what we've done, we're happy to do that.

18:29:

Chris:  Excellent!  It's that -- the cooperative spirit of, cooperatives have to help other cooperatives.  So, thank you very much for coming on this show.

18:37:

Randy:  OK.  Well, I appreciate your time.

18:39:

Lisa:  We have a few stories about Co-Mo Cooperative on muninetworks.org .  Take a moment to check them out for more info.  Send us your ideas for the show.  E-mail us at podcast@muninetworks.org .  We have a Facebook page, Community Broadband Networks, and we encourage you to go there and to like it, to receive regular updates on news stories and developments in community broadband.  You can follow us on Twitter.  Our handle is @communitynets .  We want to thank Persson for his song, "Blues walk," licensed through Creative Commons.  And thanks again for listening.  Have a great day.

 

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