Transcript: Community Broadband Bits Episode 256

This is the transcript for episode 255 of the Community Broadband Bits Podcast. Doug Seacat from Clearnetworx joins Christopher Mitchell to discuss small private providers and big Telecom. Listen to this episode here.

Doug Seacat: That's definitely hurt the community as far as the competition build out in that area, and I think CenturyLink for that purpose definitely won.

Lisa Gonzalez: This is episode 256 of the Community Broadband Bits Podcast from the Institute For Local Self-Reliance. I'm Lisa Gonzalez. Building a new Internet network requires expertise, planning, and funding. It's especially difficult for new entrants in a market where incumbents have a foothold and rules may work in their favor. In this interview with Doug Seacat from Clearnetworx we learn about some of the challenges his company's faced as it's worked to bring better connectivity to region 10 communities in Colorado. Christopher met up with Doug recently at the Mountain Connect Conference in Colorado to talk about Doug's experience. Check out what services the company offers at clearnetworx.com. Now, here's Christopher with Doug Seacat.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell. Today I'm coming at you from Mountain Connect in lovely Keystone, Colorado. I'm here with Doug Seacat, the owner of Clearnetworx. Welcome to the show.

Doug Seacat: Thank you. Glad to be here.

Christopher Mitchell: You are from Ridgway.

Doug Seacat: I'm actually from Montrose, Colorado. It's about 20 miles North of Ridgway.

Christopher Mitchell: Right. We're going to be talking about Ridgway. This is hardcore Western Rocky Mountains. Right? You've got a famous gorge right by there. Right?

Doug Seacat: Yeah. Well, Black Canyon's just right up the road. Yes. And we have broadband issues, just like everybody else.

Christopher Mitchell: So tell me about Clearnetworx. What is Clearnetworx?

Doug Seacat: Well, I've owned a company, actually Deeply Digital, for about 14 years in Montrose, and we service all the different communities around there. We take care of the schools and community area, as far as the governments and stuff there, so Montrose, Ridgway, Ouray are where we've been working for the last 14 years. We started Clearnetworx about four years ago to provide better Internet, because a lot of our customers didn't have that, and so in the last four years we've been building out fiber for the most part in those communities with some wireless to get to some of the outside areas that we couldn't serve with the fiber.

Christopher Mitchell: You're a private company. You don't get municipal money. You're not a municipal government or anything like that, just a standard company.

Doug Seacat: That's right. We had one big customer that needed served, and they called CenturyLink, asked for some service. CenturyLink gave them a quote and started the project. We approved the project. We approved the project, and, you know, I was working as an IT consultant for Deeply Digital for that customer. CenturyLink got there and said. "Well, I can not provide service like we thought we could."

Christopher Mitchell: It's not the first time I've heard that.

Doug Seacat: So I said, "Well, I guess we'll figure it out." We ran about two miles of fiber then for that company, and at that time we went to both the city and our local power company. They had some fiber also in those areas, and we needed some connections from them, which they asked me to go into -- There was another private company that was working on some fiber for a school at the same time in town, so they asked both of us to worked together. If we would work together, then the city and the power company would also work with us, so we kind of joined a new company, which was Clearnetworx at that time, and the power company and city gave us some access to some conduit and fiber that we needed to make those two connections happen. That's really where we started. We had about four miles of fiber at that point with their two miles and our two miles.

Christopher Mitchell: What's that power company?

Doug Seacat: DMEA.

Christopher Mitchell: Right. We've talked about them a little bit, Delta-Montrose Electric Association, a co-op. It's doing a lot of interesting things also.

Doug Seacat: That's right. Fast forward four years. They've talked about now purchasing us, and we've been building fiber for those last four years, and now they're interested in taking us on and working with us to continue that effort.

Christopher Mitchell: Right, but what brings us to this discussion and why Ridgway was on my brain was that you sought some state funding to be able to serve Ridgway with fiber networks that was available. I would term is as you ran into a buzzsaw. You kind of got screwed by the Public Utility Commission. I guess just briefly, what was the fund that you were seeking money from to be able to expand in Ridgway?

Doug Seacat: Well, I got some emails from several different entities in the community. You know, the county officials sent me an email, forwarded an email about the Colorado Broadband Fund. There was $2.4 million set aside for smaller, private companies to build out last mile. The DOLA funds were kind of set aside for middle mile, and this was supposed to be kind of a piece I think on top of that to get that fiber out to the last mile needs. We were kind of excited. We had already started a little bit of an idea with Ridgway and Ouray both, and we'd looked at both of those communities and decided that Ridgway was maybe our best opportunity to get some funding for. So we worked with the city and county officials there and came up with a plan to provide fiber to every home in Ridgway City and the outlying areas around Ridgway right there and then to also provide some LTE fixed wireless to some of the further subdivisions that we didn't feel like we could reach with fiber. We worked pretty hard. That was the first grant we'd ever gone for or even thought about trying for. You know, we're not grant experts by any means, but we knew how to build a fiber network, and so we thought we'd try it. I remember staying up super late several nights putting together that thing, and I had some great help with a few of our employees. We put together some that looked fairly official and sent it in. A few weeks later we found out that we had won that grant, and so we were very excited, but we knew there were some uphill processes that had to happen or would most likely happen, which did. We went through those, and it was a little bit of a challenge. We had to go through that process.

Christopher Mitchell: So Ridgway is a small mountain community. It already is served by CenturyLink, the telephone company that serves most of Colorado, but it's a few hundred people. What's the demographics of it like?

Doug Seacat: Yeah. The population of Ridgway's about 1,050 or so. The number that we had some up with were about 565 buildings in that community, and so we were planning on reaching those buildings, and those homes and businesses both, with fiber.

Christopher Mitchell: Here's where we get into I think more of the policy issue that I find insanely frustrating, which is the power of the CenturyLink in this case, but generally big telephone and cable companies that shape the law. Colorado has implemented what we call a right of first refusal to this grant program. We've seen this in many states, where basically you spent all this time, a small company, figuring out how to connect this community with fiber. In good faith you present it, you win the award, and then CenturyLink gets to appeal and say, "Actually, you have to give the money to us, because we were here first, and we are now going to do something there, even though we weren't going to build in Ridgway before. Now we will, basically because A, we'll get money to do it from the state, and B, we'll prevent competition from this other firm, Clearnetworx, that would have gone in with the money to build the network." Is that a correct characterization?

Doug Seacat: Yeah. I definitely didn't understand it at first. I knew there was this first right of refusal, and what did that mean exactly? I guess I didn't fully understand it. I probably should have checked into that a little bit more. After winning it, then I realized, "Well, shoot. Now, if they win the appeal process, they actually get that money," you know, which not only do I lose the million dollars that we needed or thought we had run, but I'm also now giving it to my competition to help compete with a company that doesn't have those funds to work with in the first place. There's stiff competition as it is, and so now here I just gave the another million dollars to compete against me, which was definitely frustrating once I figured that out, how that worked.

Christopher Mitchell: Now, one of the challenges is, and I think I have to look at the actual legislation, but it is not supposed to be the case that CenturyLink can say, "Well, we're just going to do some DSL, and we'll get the money, and that will deny it to Clearnetworx," because they should have to be doing something that's functionally similar. Right? Yet it sounds to me like through the appeals process maybe the people that were hearing the appeal didn't really understand the technologies involved, they were confused, or something. Can you walk us through how that happens? Because I think in theory if CenturyLink comes back and says, "Well, we could do DSL here," the board should have probably said, "Well, that's not what's being proposed." You know? We could spend a lot of money and get a really great network, or we could spend a little bit less money, but still a fair amount of money, and get nothing that's great, and not only on top of that, but something that we'll need a subsidy in five more years anyway to upgrade."

Doug Seacat: Right. Yeah. Well, that was the process. They had to come back with a plan that was sufficient and similar to our plan. We presented what we wanted to do. They were then given that plan to look at and figure out their plan and how they would tackle the same problem in Ridgway with getting service. When they came back their plan was to provide DSL and to upgrade some of their equipment to be able to provide faster speeds, but also to still stick with the same DSL technology, or maybe a little better DSL technology, but still using copper.

Christopher Mitchell: It sounds like it wasn't exactly clear, and they were kind I would say nebulous, which is, it's smart of them to do that, because they won.

Doug Seacat: But they were specific on what they were going to do. They are going to pull fiber to a couple of their DLSAMs and upgrade the equipment inside of those equipment racks for them to be able to provide better service in that area, but it was still a copper to the premise technology, depending on what technology they use necessarily is I guess indifferent to me. It's not fiber. It's something different. The first appeal, when they brought that back, the board did say, "Well, that is not similar." We actually won that first appeal and they were denied, but then the second appeal they came back again, a second time, and said, "Well, we're still going to use DSL, but we're going to offer 100-Megs (Mbps) service." We had also said we're offering 100-Megs (Mbps) service, so during the board discussion that kind of became we're both providing 100-Megs (Mbps) service, not really ones on DSL and one's on fiber, as much as we're both providing 100-Megs (Mbps) service.

Christopher Mitchell: To me it just seems ridiculous, knowing the technologies, because it's kind of like saying, "I'm going to build an interstate," and they have a dirt road, but they're arguing, "You can drive 100 miles per hour on our dirt road too. Right? Which is not correct and is not a proper comparison, so it's frustrating.

Doug Seacat: And only in one direction. We never even talked about upload speeds or what that meant.

Christopher Mitchell: Yeah. Of course, you were going to be providing 100-Megabits (Mbps), but that wasn't the ceiling. You could go much higher--

Doug Seacat: That's where we started. Right.

Christopher Mitchell: Exactly. I mean, to some extent did you feel like the board really had a sense of what was going on, or did they just have a sense that they were doing apples to apples and one costs less?

Doug Seacat: Well, I think it's kind of a perfect storm. There was just a lot of weather that day. The entire board membership did not make it to the meeting. There was some board members that definitely had the technical knowledge to understand the difference, and I think there was some board members that are just community officials, that 100-Megabits (Mbps) means the same thing to them, no matter what the technology. I probably needed to educate the board a little bit more and didn't fully understand that. I assumed the board members all understood the difference. It sounds like in this decision they could not use technology as a deciding factor. I mean, it had to be agnostic to technology, which is a piece that I feel like needs to change somewhat with that money. It doesn't make sense to spend money on an old technology, like you said, that's going to need to upgraded again in five years. Why waste that money now?

Christopher Mitchell: Well, when you say agnostic to technology I think, if I understand correctly, they shouldn't be choosing fiber over DSL just because it's fiber, but on the other hand, I think, you know, you're taking a lot of responsibility, when in fact I would say it's bad policy if we're expecting small business owners to become expert arguers in front of boards on these policies. That's not a good way of doing it, because it will always privilege the companies that have lots of lawyers. If you had argued that you were going to offer a gigabit, or even 10-Gigabit, or something like that, then probably they would have had a reason to go with you, or if there was able to bring the upload in and you could make that understanding.

Doug Seacat: We had to provide what we would charge for services, and I had a gig service on there. The board members I don't think fully knew our package or what we were offering. They probably read all the different proposals, you know, three or four months ago, and by the time this process was happening they had forgotten that we were offering 100-Megs (Mbps) and a gig. They just started talking about 100-Megs (Mbps), because that's what CenturyLink brought up, and I didn't have the ability to argue or to bring up, "well, we're also offering a gig." I definitely felt like if they would have known and read the proposals again before that board meeting, it would have been completely different, but it was what I brought up in that 20 minutes I had to talk, and I didn't discuss speeds all that much, because I felt like that wasn't even in question anymore. That first appeal process went over that, and they said that the speeds were not even a question, that our speeds were way faster. The second appeal was more about the number of people being served, and CenturyLink argued that they were servicing about 1,050, which is abut the population size, and I was arguing I was offering connection to 565 buildings.

Christopher Mitchell: Which is the correct measure.

Doug Seacat: You know, we can sit there and argue that, but --

Christopher Mitchell: I don't know about you, but my son lives in my home. He's another person, but he does not pay a separate bill for our Comcast line.

Doug Seacat: Right. That was my point, but that didn't seem to go over quite with the board, and our maps were identical. That's what I brought to the second meeting was our two maps. I put them up on the board and showed that our maps were identical, but the number of people in question was definitely a point that they made and decided I think to give it to CenturyLink based on their numbers versus mine.

Christopher Mitchell: So CenturyLink is doing something with copper now. They didn't get the full amount you would have got, because they're costs are lower, because they already have some infrastructure there. Do you know roughly what they got?

Doug Seacat: It was about $850,000.

Christopher Mitchell: Wow. Rather than giving you a million dollars and getting fiber to every home, they gave CenturyLink $850,000 to basically get slightly better DSL and presumably for some locations maybe 100-Megabit download, because there's been a lot of talk in the industry over copper about this G.fast standard, which allows you to get much higher speeds over copper, but it's very limited in terms of distance, and it requires pretty high quality copper that a lot of times you don't find in communities that have had networks for a while that have been being used and just suffered environmental degradation.

Doug Seacat: Right, which is a concern of mine in that town, where with Deeply Digital we have a number of customers that have DSL in that area, and the copper's been cut up a number of times. They're doing a road project right now where they're paving all the roads in Ridgway, and so they've been digging up the streets. Things have gotten cut. The CenturyLink repairmen have been out there splicing stuff back. It's old plant anyway. It's been there for a while as it is, and now I feel like in the last two years it's been beat up even more. TO try to get good service on that copper just seems like a challenge for sure for CenturyLink.

Christopher Mitchell: Do you have any sense of a timeline for when this project has to be completed and we'll have a sense of whether or not CenturyLink is delivering on what it claimed it would be doing?

Doug Seacat: Yeah. They have one year to complete it, and I think they've already started. I've seen them out there working. I don't know who follows up. I'm sure they'll see that it's completed. I don't know how many people are going to let us come into their house and do a speed test and see if we're getting 100-Megs (Mbps) or not in their living room.

Christopher Mitchell: I hope that a few will, because this is one of the things that is another Achilles' heel of these kinds of programs is that follow up, because I think, once again, if you have an incumbent that is trying to prevent losing customers, because CenturyLink knows that fiber is going to offer a much better product than they can offer, and so they would have to use their own money to compete if you had brought fiber in. They would have not offered as superior of a product, and so for them, even if they later get fined or something to some of the money gets taken away, they've gamed the system. They've won. I find it hard to believe that anyone's even contemplated what penalties would be that would be appropriate to what they've done to prevent competition.

Doug Seacat: Well, it hurt the community, Ridgway. I mean, I definitely am not going to build the same network that I was planning on building with that million dollars. You know, we're still building in that community, and there'll still be some competition, but to get it to every business and residential location is going to be a challenge for sure. I think that's definitely hurt the community as far as the competition build out in that area, and I think CenturyLink for that purpose definitely won, because they don't have to deal with me for that.

Christopher Mitchell: Right. Well, fortunately though you're undaunted. You're looking for other opportunities to expand and to improve access in Colorado.

Doug Seacat: Well, there's definitely a part of me that wants to figure out a different way of getting it done there for sure. We've actually started working with the power companies, both in Montrose and in Ridgway, to see what we can do to get fiber to that community still.

Christopher Mitchell: Great. Well, I'm glad to hear that, but it is frustrating to know that $850,000 basically went to making it harder for people in Ridgway to have good Internet access.

Doug Seacat: Sure. Yup. Yeah. It's too bad.

Christopher Mitchell: Thanks for coming on and sharing the story.

Doug Seacat: Yeah. Thanks.

Lisa Gonzalez: That was Christopher with Dog Seacat, owner of Clearnetworx, talking at Mountain Connect. We have transcripts for this and other Community Broadband Bits Podcasts available at MuniNetworks.com/broadbandbits. Email us at podcast@MuniNetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow MuniNetworks.org's stories on Twitter. The handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR podcast family on iTunes, Stitcher, or wherever else you get your podcasts. Never miss out on our original research. Subscribe to our monthly newsletter at ILSR.org. We want to thank Arnie Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and we want to thank you for listening to episode 256 of the Community Broadband Bits Podcast.

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