Transcript: Community Broadband Bits Episode 263

This is the transcript for episode 263 of the Community Broadband Bits Podcast. Anne Fifield and Nick Nevins discuss how Eugene, Oregon, uses a dark fiber network to encourage economic development. Listen to this show here.

Anne Fifield: I think we're going to start running out of office space downtown that we've had firms grow. We've had firms come just to locate here. They're here because of the fiber.

Lisa Gonzalez: This is episode 263 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. This week, Chris talks with two folks from Eugene, Oregon where the community is working on a dark fiber project to improve connectivity to the downtown area. He's joined by Anne Fifield who works in economic development and Nick Nevins from the Eugene Water and Electric Board, also known as EWEB. In this conversation, we learn about the collaboration between the two entities, including how the infrastructure is already improving Eugene's downtown, how they're funding the project, and more about the decision to expand existing fiber in Eugene. Before we start the interview, we want to remind you that this commercial-free podcast isn't free to produce. Please take a moment to contribute at ILSR.org. If you're already contributing, thank you for playing a part and keeping our podcast going. Now, here's Christopher with Anne Fifield and Nick Nevins from Eugene.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance. Today, I'm talking with Anne Fifield, Economic Development Planner for the city of Eugene in Oregon. Welcome to the show.

Anne Fifield: Hi, Chris.

Christopher Mitchell: We also have Nick Nevins on the line and he is the Engineering Technician for Eugene Water and Electric Board. Welcome to the show.

Nick Nevins: Thanks for having me, Chris.

Christopher Mitchell: I'm excited to learn more about what Eugene's doing and what the results have been. But let's start off with just a little bit of a background on what Eugene is for people who haven't been out there on the West Coast. Anne, can you tell us a little bit about the city?

Anne Fifield: So, Eugene is in Western Oregon about halfway between Portland to the north and the southern border of Oregon. We're about 160,000 people. One of the big notable things about our town is University of Oregon sits in Eugene and that drives a lot of our local economy.

Christopher Mitchell: It's a pretty progressive place, as I remember it.

Anne Fifield: Yes. Very politically liberal. Very much a blue part of Oregon.

Christopher Mitchell: Nick, I'm curious. You have an electric board there and I guess some people might just assume a really progressive city, you would have just gone out and started building fiber a while ago. But the approach is somewhat different. So, maybe you can just give us a very brief overview of what's going on with the electric board.

Nick Nevins: We did start to build fiber back in the early 2000s for our own use and leased out spare capacity, mainly to public agencies. Just in the last handful of years that we really reached out or branched out into the commercial market, leasing to ISPs, we just provide dark fiber.

Christopher Mitchell: When you say, "We just provide dark fiber," I think we're going to be exploring that a bit because I think the impact has been somewhat greater than that might suggest. But I think it's worth just going back to this decision. Anne, I'm curious if you can give us a sense a little of the city's perspective in terms of the challenges Eugene is facing in terms of Internet access.

Anne Fifield: So, we're a midsize city. We're not a large city. We're never going to attract a lot of competition unless we initiate it ourselves. If we're going to do it, we have to bootstrap it ourselves. It's been a conversation for a very long time. There's been a lot of work. I'd say over 20 years that has slowly built up to this. But we decided that we had a technical and a political will locally to see if we could build a municipally owned fiber network. The idea was that EWEB, because they already owned this fiber that served themselves and they had a little bit of movement in that direction of leasing towards private ISPs, that we would build on that existing capacity to pilot a dark fiber network in the downtown of Eugene. One reason we focused on downtown is there's a lot of software companies that have existed in Eugene. We have a very surprising number of video game developers in Eugene. So, there was one company here and when the big company pulled out, a lot of folks who lived here stayed and there's a lot of startups here. We've got a lot of video game programmers. If you look at the product that those guys make, when I was young, you had to go to Pizza Hut to play video games. Then people started getting consoles at home and you would buy the game on a CD. You don't do that anymore. My kids buy their games over our Internet connection. It's not just the video games. There's a lot of other software here. They deliver their product over the Internet. One of the biggest barriers for those firms to grow was adequate Internet access. There's a lot of other markets that would be very happy to have those jobs. We've had companies leave for other markets and we've had a lot of those local companies really advocate for a better Internet connection. I think that's really where that political will came from was local companies who wanted to stay in this town, it's a great place to live. But this was this huge barrier for them to access the global market with their product.

Christopher Mitchell: For people who may not be familiar, you have a lot of software development, a lot of open source in particular, up north in Portland. So, it's not very surprising that you have a lot of this in Eugene as well. You mentioned, Anne, that you often get the games delivered over the Internet. I wonder if there's any games your children play that aren't involved with the Internet in terms of the actual gameplay as well.

Anne Fifield: Sometimes they play outside. But no. It may not have an active connection, but that's how the product's been delivered to the house is over the Internet.

Christopher Mitchell: Nick, I'm curious in terms of the dark fiber leases. These kinds of big video game companies, they're ones that can use dark fiber. They have no compunction about hiring the kind of technicians, that probably not unlike the background you have, to be able to manage the dark fiber connections. I'm curious if there's any other businesses in Eugene that are also really taking advantage of dark fiber.

Nick Nevins: Historically, we've dealt more with the public sector, like Anne was saying, the city, the county, health, school district is a big user of our dark fiber. But getting more into the private sector, our projection or current path has actually been leasing to ISPs so that those smaller, more customer focused ISPs can reach out too and get that last mile connection to business and buildings that they wouldn't be able to build to otherwise. They just don't have the infrastructure around town, so they lease from us to get their product to various parts of town.

Christopher Mitchell: I think you were suggesting the smaller ISPs, more regional, local ISPs, I'm guessing.

Nick Nevins: Correct. Yes.

Christopher Mitchell: Right now, there's so much support. We saw a pew poll saying seven out of 10 Americans are supportive of municipal networks. We see a lot of places where people are just saying, "Look, we just need to build a municipal network." I'm curious if you can give us a sense from a utility point of view, what are some of the challenges of getting involved with what you've done with the dark fiber that might be a little different from your traditional mission?

Nick Nevins: That's the thing. As a primarily electric and water company, fiber is not our core business. So, we started out using basically our spare capacity and that's the mindset of what we have now. We dabbled or explored the option of actually becoming an ISP ourselves and realized there's people, they're better. That's their core business. So, they're just better suited for that. The people and the experience that we have is actually stringing the lines and putting in the infrastructure. That's the knowledge base that we have on hand. So, we decided to utilize that.

Christopher Mitchell: Critics of municipal networks will often suggest that the utility and the city and inseparable, that they're basically one entity. I'm curious, and I'm definitely open to hearing from both of you, how it actually is on the ground in terms of the challenges of making sure that you're on the same page.

Anne Fifield: We are not the same entity. We have two different elected boards and we're not always on the same page. But we're important partners, and ultimately, we're both serving the exact same community. There's always a political element to this and we at the city, the city's bringing a funding to the project while EWEB is actually implementing the project. So, it took a big political push to make sure that we had the political will within the city. But then as we worked with EWEB, we have an intergovernmental agreement between the two of us over this project. It was a lot of work to get to that agreement that satisfied both parties. It protects EWEB financially and ensures that the city's investment, it continues to be implemented by EWEB. It seems it's sort of simple, but I think with Nick, it came down to a three page intergovernmental agreement. But it took months to get there.

Christopher Mitchell: Nick, any comments?

Nick Nevins: I agree with what Anne said. We're definitely two different agencies. Sometimes we agree, sometimes we don't. But I think both agencies realize that we're partners in the same community and ultimately, like Anne said, service the same people. We generally find ways to come to common grounds and work through any issues that arise.

Christopher Mitchell: Nick, I'm curious if you can tell us a little bit about other partners. Who else, what other agencies or people have to be involved to make this project a success?

Nick Nevins: The two other agencies that aren't really on this call right. The Lane Council of Governments and then the Technology Association of Oregon are the two other players that are helping make this project a success.

Christopher Mitchell: What is the Lane Council of Governments?

Anne Fifield: We lie in Lane County. So, Lane County's Council of Government. The COG, it's called. It's a quasi-public agency that provides service to the local communities all across Lane County. Lane County's a really big, geographically very large county. It extends all the way from the mountains in the Cascade range to the coast. So, what they do is they provide a lot of intergovernmental service and as well as they'll provide specialized services to the smaller governments who don't have the staff capacity to work on special projects. Everyone calls them LCOG. They've been a key player. They're one of the players for 20 years, slowly adding in infrastructure that has expanded the regional telecommunications network. They've implemented grants. They had a stimulus grant that built a dark fiber across much of Southwestern Oregon extending well beyond Lane County. So, they have a lot of that technical expertise that individual agencies lack because we tend to be smaller agencies because we're smaller communities.

Christopher Mitchell: I'll bet the coordination really helps for these kinds of networks. Let's dig into the financing. How does the financing work for this project?

Anne Fifield: This project is focused on Downtown Eugene. We had to identify what that was because the funding sources have geographic components to it. What we decided was our service area, about 50% of that is covered by two different urban renewal districts that are part of the city of Eugene that the City of Eugene city council are the officials of the urban renewal agencies. We had the Downtown Urban Renewal District, which is an old district, was set to sunset. Last year, there was a lot of political advocacy by the community to amend the plan and get the urban renewal district, keep it alive for another few years with four specific projects. One of those projects is to build the fiber network. So, the primary revenue source is that urban renewal district. All local funds is funding this. Also, we're asking as we build the network, individual property owners are asked to pay a small fee to connect to the network, a small fee of $2,000. That adds a little bit of money to the project. But from there, we still have a funding gap. We can't quite get 100% built. We had pursued state funds and were not successful. But last summer, we began the process to apply for a grant from the Federal Economic Development Administration. We found out just under two months ago that we have been awarded a grant and they're awarding us $1.9 million. So, that seals the gap on the project.

Christopher Mitchell: So, when property owners connect, is that something they have to pay in a lump sum, then?

Anne Fifield: Yeah. We're asking for a lump sum payment at the time they're connected.

Christopher Mitchell: Are there any individual homeowners in this area or is this entirely commercially focused?

Anne Fifield: It's downtown. The project is an economic development project. But it's a downtown. So, there's all kinds of different uses. There's a movie theater, there's a regular public theater, there's a few apartment buildings, there's some affordable housing, and then there's a lot of office buildings as well. It goes to anybody who's willing to pay the $2,000, really. So, your connection comes into your building and whatever the use is, it doesn't matter. There are no single family detached houses in the service area. So, it's all multi-floor apartment buildings that are in the area.

Nick Nevins: The service area that we determine, EWEB has a web of underground electric conduits in our downtown area. Electric system forms an electric network system down there. When all the duct banks were put in back '50s or '40s, '50s, something like that, they actually had the foresight at that time to reserve or identify a conduit as a communications conduit. Of course, what that means has changed over time. But we're actually installing this dark fiber network through existing infrastructure, pulling it through, pulling microduct through existing conduit and actually even getting into the buildings through the electric service conduit that actually enters the building. So, this entire project serving roughly 120 buildings, we're actually only going to disturb soil in just a few select areas. That's one of the main cost savings and benefits to this project.

Christopher Mitchell: It's a reminder how important policy can make many, many decades of difference when you do it correctly. Nick, can you tell me a little bit more about, I pay $2,000, I'm a business owner. What do I expect? What are my ongoing costs? How does it work?

Nick Nevins: So, basically, a typical building would sign up on our website. As we move through the project, the first step is I actually go out to the building, just make sure nothing visually looks like there would be any red flags, like that we couldn't pull the microduct through, as I mentioned with the electric service, to get it into the building. Once it gets into the building, we actually terminate the fiber, typically in the same room of wherever their electrics equipment is. From then, because it's an open access network, it's up to the individual ISPs that lease fiber from us to go around and basically sell their product or the tenant, the business owners, can go to these ISPs and basically have them compete for their product. Then once they sign up with one of those ISPs, they ISPs actually lease fiber from us. So, once the fiber's in the building, we really don't have a lot of interaction with the individual tenants.

Christopher Mitchell: Is there a maintenance fee?

Nick Nevins: Yeah. We charge a lease fee to the ISPs, then the ISPs charge whatever they charge to the individual businesses. But we actually don't have any lease fees or anything for the buildings.

Anne Fifield: Any kind of maintenance fee is incorporated into the lease rate that EWEB has.

Christopher Mitchell: There's an interesting question as to how technologies change. I'm presuming that most people, they use an active technology and you terminate the other fiber. I guess it goes wherever you want it to go. Different ISPs may take it to different places.

Nick Nevins: All of the fiber for this project all goes back to a centralized location to the Willamette Internet exchange. They're actually in LCOG. So, there's actually five or six ISPs that have a presence there in that data center. So, they can serve them from there. But to your point, we could patch across, jump across to one of our other cables that then serve any part of Eugene. So, yes. Any business downtown could get to a different part of the city or even to other cities on other fiber.

Christopher Mitchell: One of the things I'm curious about how services may evolve in the future so you may have a business that wants to have multiple ISPs serving it over the same fiber and that would just be something you'd have to work out at that Willamette Internet exchange, I'm guessing.

Nick Nevins: Yeah. Typically, what we found is that the fiber going into a single building would have multiple ISPs leasing fiber to get into that building because maybe ISP number one is serving Tenant A and ISP number two is serving Tenant B. But there's nothing that says one tenant might reserve or get service from two different ISPs.

Christopher Mitchell: So, let's talk about the impacts as we wrap up. What's happened in Eugene as a result of having made these investments?

Anne Fifield: The project is still under construction. We've only just gotten, I think 16 buildings are fully connected right now and we're moving forward on getting the rest of the 120 buildings or so connected. You can see the impacts. There's one company where they own the whole building. So, it's a single tenant building. So, the fiber connection just serves one client. It's a big software developer. They develop games for both the private market as well as they work with the Department of Defense building games that train soldiers. They told us that if they got their fiber connection and they could take on a new project, that would require them to hire 40 people. On the promise of us getting it to them by a certain date, they started hiring those people. So, one business downtown increased a number of jobs by 40. Then in the other buildings, most of the buildings that are served are multi-tenant buildings. Those buildings that are served have some of the lowest vacancy rates in town. A lot of them have zero vacancy. I think we're going to start running out of office space downtown that we've had firms grow. We've had firms come just to locate here. Parking guy in the city came to talk to me to tell me that he's running out of parking spaces. I said, "That's a great problem to have that we're actually getting so busy that we're running out of space." So, yeah. It's busier downtown. There's more stuff happening, there's more business in those office buildings. They're here because of the fiber, which then has a positive feedback loop. There's more restaurants, there's more other activity. So, it just keeps growing and growing and growing. But it wouldn't be happening without the fiber.

Christopher Mitchell: Nick, I'm curious if the utility is planning for decades ahead in terms of when you're doing other water projects or other electric projects. Are you putting in lots of extra conduit then as part of those investments?

Nick Nevins: Yes and no. It's not a standard practice across the utility, but there's definitely, I and other people definitely keep their eyes open for opportunities where we think there'll be good growth. We'll definitely look at investing. If nothing else, just throwing a stick of conduit in the ground.

Christopher Mitchell: Is there a reason that it's not a standard practice? Is it that you have so many different types of investments? I don't know really know. Sometimes I've heard that if you're trenching for a water main, you may have to make it a lot wider to incorporate fiber and that's going to be a challenge that you may not want to do. What's the real world scenario there?

Nick Nevins: I think the biggest reason that hasn't happened more or become a standard practice has just been a matter of it's not viewed as our core business right now. In the past, it's been a little forgotten about. We're trying to get that to change now.

Christopher Mitchell: One of the nice things about utilities that have been around for many decades to a hundred years is that they figured out how to succeed over a long period of time. But unfortunately, the short term, what that can often mean is resisting change and making sure that something's really important before just committing to it. So, there's a double edged sword there, I think, with these long lived utilities.

Nick Nevins: Yeah, definitely.

Anne Fifield: One of the reasons that I think it's a partnership is that the city's the one whole really wanted this to happen and we're the ones paying for it.

Christopher Mitchell: I would just assume that you're getting some phone calls at city hall because I have yet to talk to anyone at city hall that's not hearing from people on this.

Anne Fifield: I take the calls from people who want to know, "When's it coming to my neighborhood?" I get at least one a week. It's a pretty regular question. People are very excited about it. We'll see what happens after we're, finish out downtown, if we're able to extend it beyond. Right now, we're just focusing on getting the downtown done.

Christopher Mitchell: Right. It's one of those things that I feel like people can ask the question to city hall, but if they really want it in their neighborhood, they better be out there talking to their neighbors about it and making sure that it's a priority because city council's got a lot of problems to deal with and they need to input on how to prioritize.

Anne Fifield: Yeah. I think you're right. We've had a lot of political agitation for the downtown because it was economic development effort. The rest of it, I think it'll be more expensive. The financing will be really different because it's lower density, not downtown. So, you get fewer customers per mile.

Christopher Mitchell: Right. We have seen a few miles. Actually, oddly enough, many of them are in the Pacific Northwest where the homeowners are basically putting their money where their desire is and they are finding ways of self financing in local districts. So, who knows what the future will hold? But thank you very much both Anne and Nick for coming on to tell us more about what's going on in Eugene.

Anne Fifield: Thanks for having us, Chris.

Nick Nevins: Thank you.

Lisa Gonzalez: That was Anne Fifield, Economic Development Planner from Eugene and Nick Nevins, Engineering Technician from EWEB. They were talking with Christopher about their downtown dark fiber network project. Check out our stories on Eugene at MuniNetworks.org. We have transcripts for this and other Community Broadband Bits Podcasts available at MuniNetworks.org/BroadbandBits. Email us at Podcast@MuniNetworks.org with your ideas for the show. Follow Chris on Twitter; his handle is @CommunityNets. Follow MuniNetworks.org stories on Twitter where the handle is @MuniNetworks. Subscribe to this podcast and the other ILSR podcasts, Building Local Power and The Local Energy Rules Podcast. You can access them on Apple Podcasts, Stitcher, or wherever else you get your podcasts. Never miss out on our original research. Subscribe to our monthly newsletter at ILSR.org. Thank you again to Arne Huseby for the song "Warm Duck Shuffle", licensed through Creative Commons. Thanks for listening to episode 263 of the Community Broadband Bits Podcast.