This is episode 229 of the Community Broadband Bits podcast. Former head of the FCC's Office of Strategic Planning and Policy Analysis Jon Chambers discusses how electric cooperatives can be the path to rural connectivity. Listen to this episode here.
Jon Chambers: There is no reason this country can't do today what our forefathers were able to do in the '30s which is delivered to rural areas the same kind of life that you can get in the rest of the country.
Lisa Gonzalez: This is episode 229 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. More and more world telephone and electric cooperatives are offering high quality internet access to their members. Why? Rural communities are tired of waiting for national providers to bring the kind of activity they need and because the business model works. Jonathan Chambers, a partner with Conexon and former head of the FCC Office of Strategic Planning and Policy Analysis joins Christopher this week. They talked about the role of electric cooperatives in bringing broadband to rural America. Jonathan points out how cooperative Fiber-to-the-Home of deployments works so well in rural America where so many people need and want them. Chris and Jonathan discussed political perceptions how events in DC have sculpted the current internet access situation in rural America, and how Washington could help local communities in the future. Now, here are Chris and Jonathan Chambers on rural electric cooperatives and ways federal policy can improve rural connectivity.
Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell and today I'm talking with Jonathan Chambers. He's a partner with Conexon and formerly the head of the FCC Office of Strategic Planning and Policy Analysis. Welcome to the show.
Jon Chambers: Thank you, Chris. It's a pleasure to be with you.
Christopher Mitchell: I think some of the people who listened to the show may have either seen you or seen videos with you in it in which you were talking about your ideas for rural America and how you recommend the people look into those if they're able to. I wanted to start with kind of a poke at what is common knowledge Which is that it is just too expensive to build Fiber-to-the-Home in rural America. How do you react?
Jon Chambers: There's some who come to believe it's too expensive to build fiber in lots of parts of the country. People know now Google Fiber which launched a very public and very inspiring fiber effort getting the whole country involved and gigabit service has pulled back its own plans to deploy fiber. What we're seeing, my partner and I who worked with rural electric cooperatives throughout the country is that co-ops can build and are building Fiber-to-the-Home in the most remote areas of the country are doing so without any government support, are doing so profitably and in delivering services, one gigabit service, hundred megabit service at affordable prices to their members. It add then common wisdom for many, many years at the FCC and all the smart people who analyzed this that building Fiber-to-the-Home was a step too far for rural America. As it turns out, it's not at all. We're building Fiber-to-the-Home throughout the country in rural population densities of three and four and five and commonly less than ten homes per mile. It is an exciting time to be in this particular part of the business. You had mentioned I was with the FCC. I was with the FCC for four years, but I'm now back doing what I really enjoyed doing which is working with companies that build networks.
Christopher Mitchell: You mentioned your partner I think is worth pointing out. He's actually a former customer podcast, Randy Clint doing a wonderful work with Ozarks and also with Conexon formerly with Como. Can you tell us a little bit about how co-ops are able to make this work when it's like I said it's a common knowledge that there's just the business model falls apart. Why are collapse so special?
Jon Chambers: Yes. You know that every good story has a good protagonist, and the story of electric co-ops building fiber at the home, the protagonist there is Randy Clint. Randy was working at a cooperative in Central Missouri called Como. Como had applied for a grant as part of the recovery act funding to build a fiber at home project in rural Missouri. The best thing that happened for rural Missouri, for rural America was that Randy in Como were turned down by the federal government when they applied for that grant. As a consequence of having been turned down, Randy is the type of person who and if you tell him you can't do something, he just tries harder and wants to prove people wrong. He and the membership of his co-op had gotten so enthused about building a fiber network that when they were turned down, they decided to proceed anyway. They took out a loan from CoBank. They built a fiber to the network which today provide service to every availability to every single one of their members. About half of their members take service. They offer a hundred megabit per second service for $49.95, gigabit service for $79.95. They were the first company anywhere to sell gigabit service in rural America. That network is the most complete and profitable network of its kind in the country and other co-ops in the country have started to adapt the same methods. These electric cooperatives have an existing infrastructure in place so they're leveraging an existing infrastructure. They have poles and docs and conduits and rights of way and bucket trucks and alignment. They used to responding to storms and emergencies in the middle of the night. They have equity in their current electric system. They have the capacity to borrow funds to continue to build. Above everything else, they are membership organization. Some people think that the benefit of say an electric cooperative or a telephone cooperative is that they're oftentimes not for profit. They're not all not for profit. The real benefit is that it's a membership organization. As a membership organization, the members decide how they want to invest their own money, their own equity. You have a built in base of interest when you start a project like this. You're only building because the membership wants it. That doesn't mean they translate to do a 100% if the member's buying the service. Part of the arrangement here is you're planning a 100% availability. You're serving everyone because that's the ethos of the cooperative movement that started in the 30's in these rural areas and today serves 80% plus of the geography of the country. What they do today, what the dozens of electric co-ops are doing today is similar to what their grandparents or great grandparents did in the '30s which is provide a service that no else is willing to provide. In the '30s it was the investor on utilities that were unwilling to build into rural areas. Today, it's the exact same story with fiber networks. What they will offer is unique but it's consistent with the way people have thought of telecommunications networks, consistent with the way people think of networks in general which is the network is stronger if you reach everybody. The network is stronger if everybody gets on the network. When we designed these networks, when we write business plans for these networks, when we execute on the business plan, we always talk about serving every single person and serving every single person with the same level of service. Everybody gets one gigabyte service or a hundred megabit per second service. You don't offer a better service to people who live closer to in the telephone world, to a central office and a slower speed when you live further out. You don't put data caps. You don't put tricky pricing in and try to encourage people to come in for a few months and then raise the pricing. The pricing of service level, all of it is all of a piece which is to say it's a cooperative community effort. It's in the tradition, sort of been the best of American and rural traditions in this country. It's still at the early stages, but like many things in life you can see something at an early stage and recognize its potential.
Christopher Mitchell: What are the things that comes to mind as you're saying all these things? These are the sorts of things that I think a lot of people associate with more of a left wing philosophy. In fact, I think people on the left associate collapse with socialism and historically some people on the right did. Now, people on the right I think more often associate cooperatives with private organizations. You mentioned it's not about the profit or the non-profit. It's about being a membership org which I think is worth reiterating. I want to just know you're more conservative and I wanted to know, this is the time in which our country might be as divided as it's been and certainly living memory. You've pretty much are summing up incredibly important values in terms of getting everyone connected. What do you respond to those? I think it's more commonly a conservative critique that, "Hey. If you choose to live in a rural area, you get poor service." Am I wrong in thinking that's more of a conservative position?
Jon Chambers: I'm a life long Republican. I'm a conservative. People I work with in rural America tend to be Republicans. They live in the red states. They live in the red areas of the red states. I've never had a political conversation with anybody from a co-op. It doesn't come up. I mean, this isn't, and I live inside the Beltway in Washington and I have for most of my life but I travel every week. I travel several days a week in rural areas. I don't find people talk to me about politics.
Christopher Mitchell: They talk to you about solving problems.
Jon Chambers: Which is refreshing because the politics get tiring even for those of us who or maybe especially for those of us who live inside Washington. I'd say it's not a like a right, left thing but these are businesses. First and foremost, the co-ops are businesses. It's not like a do good organization or a community organization that set out to try. It's a business first and foremost. The business that was established to provide electricity service and provide other services to its members. The actual organization is as a membership organization just means that the businesses owned by its members, being owned by members, being own by shareholders, being own by a one single private entity. Those are just different business structures. In this case, the business structure is membership. I guess it's an American thing. Again this is, I guess that's the point I'd like to make sure if you understand. It's not a right, left, red, blue, conservative, liberal, rural, urban. This is an American tradition. I'll tell you one quick story about my time in government. I was at the FCC for four years. I was promoting better service for rural areas and changing the way the FCC would go about it. That is to say the FCC spends a lot of money every year $4.5 billion a year for service in rural areas. The level of service the FCC had been advocating at the time and I'm talking about, They're obligating four megabit per second service which is faulty and inadequate and sub standard. I became a very vocal critique of that level of service, of the expectation and that's all a government or a telephone companies or the internet service providers could provide in rural areas. I'm fond of a saying by Michael Gerson who worked for President Bush years ago. In a different context, he talked about the soft bigotry of low expectations. I think that's been the FCC's view of rural America for a long time. At a time when the FCC have said in a national broadband plan that the goal was a hundred megabits per second for a hundred million households. The FCC was saying explicitly was those hundred million households. Well, that's not rural America. The 116, 117 million households in the country and it wasn't just the people like round numbers of the FCC was saying. Well, a hundred megabits for hundred million household and those are nice round numbers. The FCC followed up without saying what should be expected in rural America and what they were expecting was four megabits per second at the same time. They're expecting a hundred megabits per second elsewhere. It's not just about speed because speed is what enables activity, business activity and social activity and education and learning and health care and other things that we all do on the internet today. The expectation was low and that's what I began to criticize. I was stopped in the hallway one day by somebody, a lobbyist for one of a large telephone companies who said to me, "What do you think you're doing? Don't you know we had a deal?" What this lobbyist meant was in the previous administration before I had been there.
Christopher Mitchell: When you say previous, was that under Genachowski before you were there or is that the previous admin like under the Bush administration.
Jon Chambers: I was hired by Julius Genachowski but it was the deal that was set in 2010, 2011 was the deal that this person was referring to.
Christopher Mitchell: Right. For people who weren't aware that was the Obama administration, that was the previous FCC chairman.
Jon Chambers: Yes. That's right. That's right. The deal this person I was referring to is a deal that in rural areas the large telephone companies would continue to get billions of dollars of years in public support and would have to offer only four megabits per second speed. That was the deal. I have been a critique of the FCC for a long time including when I was there. My criticism isn't that I am against the government. I've worked in government. It wouldn't be viewed as sort of a personal attack that I don't like certain people. The FCC has at times over the years been interested in deal making. They have been coming over the years who have enjoyed merger reviews because it's allowed them to cut a deal, regulatory policy, rule makings, merger review, other things in which the FCC has in a sense cut a deal for the American people but it's deal making. I've long been opposed to sort of a regulator as deal maker. I tell you something that I've learned from my rabbi which is the difference between a contract and a covenant. For a lawyer a contract is when both parties have given consideration that is both parties get something and got something in return. It's oftentimes a zero sum game. A covenant is never a zero sum game. A covenant is something which binds people together and rises and lifts all people of. What the co-ops I worked with understand is this notion of covenant. Again, it's not a right or left notion. It's an American notion. It's an historic notion. We have a covenant in this country. A covenant can be thought of in three words; we the people. The people I work with, they were in electric co-ops. They understand covenant. They understand that they are formed of their members, by their members, for their members to better the lives of their members. In the case of the internet service which is the economic issue of the day for rural America, they understand that if they don't stand up, their communities will be the worse off. All across America, rural electric co-ops are standing up. They're investing their own money. They're investing their member's money. They're borrowing money in order to build world class internet systems because they understand what it meant in the '30s and they understand that's what it will mean that the kids, their grandkids are the future of their communities.
Christopher Mitchell: A key question in my mind is, to what extent the federal government is helping these co-ops and to what extent it might be hindering the co-ops? Let's start with hindering because we're kind of on that team a little bit. Other things the federal government is doing is making life harder for the co-ops to get this done?
Jon Chambers: The federal government has just simply not helped. It has the potential to help. There are some states in which co-ops have not been permitted to offer internet services but thanks structurally, we're finding a way to offer service throughout the country. I wouldn't say the federal government I bet hasn't hindered other than out of benign neglect. The greatest hindrance that the FCC is the federal government. The greatest hindrance has been this low expectation, this notion that poor service is good enough for some parts of the country or some people in the country. There's notion that satellite service, a fixed wireless service, things that are not subscribed to in great numbers or by whole communities anywhere in the country but that somehow going to be a good enough level of service for rural America. Then along the way, again it isn't a hindrance so much as it's been a mistake that the FCC and again all the sort of smart people that's hired over the years to look at these issues have made a fundamental mistake and how they evaluated the cost of building networks in rural areas. The FCC has looked at and spend a lot of time and money and energy developing a cost model which attempted to define with great precision found to the penny and a tenth of the penny what it would cost to provide Fiber-to-the-Home service to every part of the country. That cost model is the basis upon which the FCC has spent and is committed tens of billions of dollars, over $30 billion in just the last year alone committed by the FCC. That cost model is simply inaccurate. It simply does not capture lots of aspects of building a network which already exists. That is if you have existing infrastructure in place, if you can leverage infrastructure, if your cost of building is less then the model will assume it to be. All of that has led to an over expenditure that is an allocation of resources. The places it need not go and not spending money in areas that it does need to go, and not spending money on the types of services that can and will be built. I mentioned before, the co-ops I worked with is building without any federal money. That's not to say that money doesn't help. Money can always help, but where money really helps is in the most remote areas of the country. In areas where there's two or three or five homes per mile. As odd as this will sound to anybody listening in, the FCC made a decision several years ago not to give any money to those areas. The FCC considered it too expensive. That's the very area that needs money. At the same time, the FCC has given tens of billions of dollars to areas where it needed to give any money. There's been this misallocation of resource. We can get Fiber-to-the-Home to every home today that has an electric line. That's not just a pipe dream. It's happening. If the FCC would do like two things. One, set the standards high and two, allocate resource where it's needed. It could get that job done. Leaving up the FCC does nothing, we'll still do it.
Christopher Mitchell: One of the things that I think people don't always realize is how much money is already being spent. You noted that already and to some extent just redirecting it toward loans rather than giving money away to co-ops. Loans that might be unfavorable terms or might gently subsidize the interest rate in certain areas. I think we're talking about bribe them. That's what we're talking about spending new money, if they would spend it wisely. One of the things that you recently wrote I think suggest that you know, I go back in my head whether or not this is an issue of ignorance or malice. Not really malice, but sort of neglect. You know, there's a perception among Democrats that Republicans like corporate welfare and they're going to give money to the telephone companies to keep Republicans on the hill happy. Then, a separate quote in this book posted that you said we're democrats and rural Americans are not our people. Give me a sense that let me just tell one more thing is that I feel like in a lot of issues, these groups that organize around us think. If we just had someone high up at the FCC, we could break through and we could get things done. You're that person and I think you left the FCC in a lot of frustration after trying to break through and not being able to really dent the mentality of the FCC folks.
Jon Chambers: Let me remark on one thing which is capital for building rural areas is not a problem. We borrow money, private banks, CoBank loans money, publicly the rural utility service lends money. We haven't found any problem getting capital. It would be helpful to get some of the money that's spent, a fraction of the money that's spent by the federal government every year to support telephone companies to have that spent in a competitive way where the best service could get access to the money and prevail. You made some that nice remark about me, I want it to be as clear as I can. I was in the government for a few years but I never thought any of this was about me or what I thought. I spent most of my time while I was in the government trying to reach out to people and hear their stories. It was very great compliment paid to me over the years that I got invited to speak in a lot of places and I still go speak a lot of places. I used to use a line at the end of it. I never go someplace to just speak and so I get invited to talk but I always come to listen. I always spent at least the day wherever I went to ask people to come to me and just tell me about their lives and their stories. Great people at the FCC, there's a not so great people at the FCC, it's not so much a personality thing. It's natural in federal government that people sit in these offices and they get visited by lobbyist. They get praised for what they do and they complimented for their views. It's a very insular world. I used to say that people just get out of Washington. Go out and spend as much time as you can in areas where your talking to people where your policies are affecting those people. When I talk to co-op boards and others, I would say, "Look. I've got a one rule of thumb which is you put the member's interest first. You put the member's interest first and everything else follows." As corny as that sounds and as sanctimonious maybe as it sounds, I view that as my role of the FCC that is when I've been in government, it was a privilege. I viewed as my job, my boss, the people of the country, people of the United States of America, that's who I worked for. I didn't work for any particular chairman. I didn't work for an institution. I didn't work for bureaucracy. I worked for the people. I still do. The people I work for now are members of rural electric co-ops. I get a charge out of working with people where you have a chance to affect their lives. You know, people have joked with me about how I think broadband like broadband is the answer to everything, I ain't going to eh I don't really think that but that's what I do for a living.
Christopher Mitchell: I've been there.
Jon Chambers: I walked into a colleague's office one day at the FCC and I said something like, "Half a million of our fellow Americans, kids, families, veterans are going to sleep on the streets tonight and it's cold out there." A guy looked at me and he said, "So what? Chambers here. Your answer is broadband." I said, "Well, no. You know, I --" I said, "But I don't work for the Department of Housing and Urban Development. I don't work in Housing field. I don't really know a solution to homelessness." I said, "But I do know is when I come to work in the morning and I drive in a certain direction, I pass by the Martin Luther King Junior Library downtown in Washington. I say, "And I don't see sometimes a line out front waiting for the library to open. And that line is for people waiting to get in so that they can use the free computers and internet access in that library." I said, "When I leave at night sometimes if I take that same route home and I pass by that same library,' I said, "I see those people are because they're homeless shelter, buses parked out in front of the library waiting to take people back to the shelters." It's not answer to everything. Sometimes, it's just enough to give people an escape. My view of broadband is it's a lot of things. It's good things, it's bad things. It's part of all our lives now. Some of the best part of it is just it's a way to reach out to people. It's a way to feel socially involved. Sometimes it's just a way to get out your own life and escape into a next one.
Christopher Mitchell: I think that maybe we'll end on this last question which is, if you have any advice for people who are served by an electric co-op and their electric co-op doesn't have an interest. Maybe management or the board is too worried about the risk of this or they just don't see the value, what advise do you give them?
Jon Chambers: It always takes in every case I know, every co-op that my partner and I worked with and we're working now with several dozen co-ops around the country which is the facts and there's over 800 electric co-ops in the country. This is still early days. It always takes somebody to take a leadership role within the co-op. It could be the CEO or general manager. It could be a member of the board. It could be the board president for us to be led and we give advise. We write business plans. We have materials relationship. We can help people get funding. We can do fiber design. We can manage a construction process. All of that is just the implementation piece. What I know to be true is every cooperative in the country can build a Fiber-to-the-Home network. The business case gets harder, the more remote you are. In those cases, we encourage co-ops to work together because if you can get some more scale, it helps the business case. I know because I've been approached sometimes by members of the co-op in the past and I talked to their CEOs. Their CEO is not interested, which is fine but this is still viewed as a risk to folks. Even though I think the risk runs the other way, I think the risk runs to not doing anything. The risk runs to not building. I know that it scares some people. I think we'll reach the point inside of a year or 18 months where we'll go from the early pioneers in this to where it becomes common. We'll reach that tipping point. I don't know if it's 100 co-ops we're building or a 150 co-ops but I think we'll reach that tipping point inside of 18 months and that it will become common place. Nobody will even wonder within a few years about it and it will be like the expectation that you can get electricity. You can get fiber and people shouldn't settle for something less than the same kind of service you get. Same kind of service I have in my home, just fiber into my home to look at by the horizon and it's great. There is no reason that this country can't do today what our forefathers were able to do in the '30s which is deliver to rural areas the same kind of economic opportunity, same kind of education opportunity, same kind of life that you can get in the rest of the country.
Christopher Mitchell: I just want to point out that based on your timeline which I fully believe we're seeing. Just incredible activity from not only electrics but also telephone cooperatives. You're not going to have kind of activity that's as good in rural areas and as cities. Frankly, the kind of activity in rural areas will far exceed in what many of us have because we're mostly beyond cable. In the last generation technology that probably won't significantly upgrade to offer the same capacity and another benefits one has from the next generation network. That something to really cheer I think.
Jon Chambers: Yeah. My partner Andy has a variety shows when he makes presentations about in rural Missouri in Co Mo, Central Missouri where he was from. The internet speed done by some speed test showing the fastest speeds available in the country. There in rural Missouri was his system and it was showing the third fastest internet speed available anywhere in the country. It wouldn't be a great thing if people had a reason to move after rural areas. One thing that folks in rural areas know is that population is declining. For the first time in this country between the 2000 and 2010 census, population decline in a part of the country. Population decline in rural America. I'm not saying this turns it all around but you're right. You have a better level of service where these networks are being built. Wouldn't it be great part of the reason to move out into the wide open spaces and still have access to everything, to all of the information and attainment and social connection that anybody has anywhere. It's not a pipe dream. It's happening today. All you have to do is look at Co Mo in Missouri, in mid west in Michigan or part in Virginia or Ozarks in Arkansas.
Christopher Mitchell: North Georgia Network. Yeah. You get --
Jon Chambers: North Georgia Network, Habersham Electric. All across the country, people are proving this out.
Christopher Mitchell: -- Thank you so much for taking the time to talk to us about this. It's something we're going to keep covering certainly. I like to check it back in with you as you move forward with more companies you're working with, more the co-ops.
Jon Chambers: Thank you. It's been great talking to you as always, Chris.
Lisa Gonzalez: That was Chris talking with Jonathan Chambers, partner at Conexon and former head of the Office of Strategic Planning and Policy Analysis at the FCC. As electric cooperatives makes strides across rural America, we will continue to share their stories on MuniNetworks.org. Remember, we have transcripts for this and other Community Broadband Bits Podcast available at MuniNetworks.org/broadbandbits. Email us at email@example.com with your ideas for the show. Follow Chris on Twitter, his handle is @CommunityNets. Follow MuniNetworks.org stories on Twitter also where the handle is @MuniNetworks. Subscribe to this podcast and all the podcast in the ILSR podcast family on iTunes, Stitcher or wherever else you get your podcast. You can also subscribe to our monthly newsletter at ILSR.org. We want to thank the group mojo monkeys for their song "Bodacious" licensed through Creative Commons. Thank you for listening to episode 229 of the Community Broadband Bits Podcast.