Transcript: Community Broadband Bits Episode 276

This is the transcript for episode 276 of the Community Broadband Bits podcast. Allband Communications Cooperative is the story of large corporations, government bureaucracy, and intrepid individuals. Listen to this episode here.

Ron Siegel: It's not as easy as just saying rural broadband needs to happen. I mean, it needs a really hard look at how it's going to get done and how it's going to get paid for it.

Lisa Gonzalez: You're listening to episode 276 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Allband Communications a cooperative in rural Michigan began bringing telephone services to the community in the early 2000s. No private sector providers served the area. It was only a matter of time before they started offering some of the best Internet access to their members via their fiber network. This week, Ron Siegel from Allband visits to share the interesting story that started when one driven individual discovered a need and worked with his community to fill it. Learn about what Allband has done, what they're working on now, and what sort of challenges they face in the state of Michigan. Here's the interview.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell, and today I'm speaking with Ron Siegel, the General Manager of Allband Communications Cooperative in Michigan. Welcome to the show.

Ron Siegel: Thank you. Appreciate it.

Christopher Mitchell: This is a story, the Allband story, that I think is really unique and I don't see that to say that it's interesting, but it's literally unique. I don't know if there's another organization like yours. We'll get to that in, toward the end of the show, where you came from, but I think it makes sense to dive in with you know what are you doing where are you located.

Ron Siegel: We're located in the north east lower peninsula of Michigan. We're about our home base is about 30 miles southwest of Alpena, Michigan. And we are essentially a Fiber-to-the-Home provider. We've been doing Fiber-to-the-Home for over 12 years now. You know we provide 100 megabit Internet. This was actually a greenfield area meaning that nothing was ever built. I know I'll save that for the history and discussion but that's really what we're doing is expanding our fiber presence as much as we can and we do that through unique business models and a lot of blood, sweat, and tears by me and a lot of other people who are bored and just trying to get these pipes to these people and to build a good foundation for the future out here and right now we're over 400 miles of fiber and we cover an area that's about 300 square miles and it's about a density of about one and a half people per mile and they're rural, rural areas. So it's definitely one of these situations where you would not expect to see a network like this in an area we're in but through a lot of you know unique opportunities and utilizing subsidies, and some of -- the some of subsidies from the government, which has been you know under a lot of change for the last seven six - seven years. But that's how it kind of got started. It's very wooded, very hilly. There is some agricultural areas but we are in a very wooded area. We bury all of our fiber. So we've kind of done that to maintain the serenity of the area. It's been an interesting story it's been an interesting uphill battle, but we're quite proud of what we did. And I've been here since I got out of Michigan State University. I got my Master's in telecom and I actually wrote my thesis in rural telecom development. So it's been very interesting to take my education and kind of be thrown to the wolves up here and build this company from the ground up and watch the impact it's had in our community. It's just been really great and it's been hard at times but it's very fulfilling to see what we've done for the people.

Christopher Mitchell: So when you see the community in the 300 square miles is that entire areas in which there are no other providers in which you were the first? or is there a mix?

Ron Siegel: We actually have three entities now. We've started referring to ourselves as just Allband Communications. But the original entity and the parent entity is Allband Communications Cooperative. That's a not-for-profit. It originally covered eight hundred seventy seven square mile area and that's the area of our regulated exchange. So the co-op is actually technically an incumbent local exchange carrier because there was nothing here previously. It was a black hole that was left behind. It was one of like 15 actually in the entire state back when we first started this. That the independent large independents like GTE or the Bell companies left behind because there was no reason to build. As time went on we started identifying and our local residents or on here started requesting service and found out that they couldn't get it nor would they ever get it because it wasn't a tariff area and that's essentially why we started the co-op. We worked with the public the you them machine the Public Service Commission and the FCC and USAC and we had to go through a lot of red tape to get waivers to be classified and I like which was at the time we were the first one to get that designation in like 30 years.

Christopher Mitchell: If I could just break in for a second. It's worth noting for people who are more on the broadband side that historically the telephone companies were incumbent telephone these back when there was no competition and then in 1996 we created this new thing called CLECS which are competitive local companies that were the new competition that team in and so those kind of odd to create a new incumbent because there just aren't that many areas where there was nothing previously.

Ron Siegel: Yeah. And because of this black hole or an area or actually we call it an assigned area meaning that you know no incumbent carrier or phone company a traditional carrier was basically had a license to serve it. It never got served and it all started. And I don't want to jump into history too soon. But you know our president tried to get a phone from GTE at the time and couldn't found out that he lived in this black hole area and that's what started all this. And you know everything is broadband centric now everything's about broadband and you know landlines are kind of the thing the past is we know and you know it's at a point where a lot of these larger companies are starting to dismantle their copper in lieu of wireless because that's where our ally is. But in these areas like we're in we still don't have quality cell phone coverage so having these landline connections and having 911 is critical and that's really why Allband was started originally was to provide 911. So you know we got a loan from the Rural Utility service and were able to get waivers from the FCC to be classified as an eyelash.

Ron Siegel: And that allowed us to get high cost loop funding from us and allowed us to work with the national carrier so she can participate in their pool system. So basically if we hadn't done that and we built this network we would have been encouraging people you know three quarter dollars a month for phone and because it was Greenfield because nothing was here because the cellular networks are non-existent because there was no base line infrastructure. We decided even back then to do Fiber-to-the-Home. And it was a great decision because we've had this wonderful foundation and we've gone from offering three mega Internet all the way up to a hundred and higher now. And once we built that out when Obama took office and the American Recovery and Reinvestment Act took place we were very blessed to work worked very hard to get a 100 percent grant from that. And we were able to expand north and south. Our Rob Creek exchange which is the regulated phone exchange to serve people that didn't have broadband so to answer your question in the co-op area was originally built because it was absurd with phone and broadband obviously. Now back then that was a time when we had like 1 1 PC per household. Now it's different these days. And then we form Allband Multimedia which is our non-regulated entity and that serves the other areas we're in north and south of our regulated exchange and those are areas where no broadband existed which obviously was a requirement from the agreement. That's how we got our start.

Christopher Mitchell: While we're back in history I think it maybe was just go through the origin story and just the quick version of it which you know as I understand starts with the telephone company quoting an outrageous price to your founder and then when he finally agreed to pay it, saying "we're not going to even do it at that price."

Ron Siegel: Yeah it's an interesting story and you're right it is unique and it hasn't been duplicated and others tried to duplicate it. But regulatory reform kind of got in the way of that unfortunately. But yeah our founder John [Reigle] he was building a house on his hunting property up here that was in his family for years and called G.T. and got a phone number assigned and they came out and said "well we've got a problem here. you're four miles from or near pedestal" and he was "what are you talking about" I have my number here he goes well you understand like we have to build for miles to get to hook you up. And he actually because of the necessity for his business and a lot of other reasons he actually worked for them to pay a significant amount of money. And it's a story that is actually quite it was duplicated by people around here trying to get phones and giving you know exorbitant huge bills and he actually went and paid it. And but right when he did that Verizon took over GTE and they came back and gave him his check back and said we're never going to serve you. And he was like What are you talking about. You're in an assigned area. We don't have to serve you nor will we. We're not terrorists can we can't. This isn't our exchange.

Christopher Mitchell: And I think it's worth noting that he had decided to invest in building a larger home there on the promise that he would be able to connect it and them changing their mind and changing their policy was not just a matter of telling someone "oh it's unreasonable" but he had made a significant investment with that promise in mind.

Ron Siegel: Correct. Yeah you know that's the problem right. You know when you're a large corporation you're probably talking to somebody in Texas or the East Coast or something. They didn't know. The whole idea of having these on the side areas are just completely like you know like mind blowing to people because we live in a modern world where cell phone is really your main method of communication and now we're in a broadband world. But even back then there was absolutely zero cell phone coverage. And John actually started this co-op literally by driving 10 miles down to the gas station in Curran and sitting on the phone literally all day. I mean, the folks at the gas station got to know him so well they would bring them coffee throughout the day. He was just sitting there on the payphone because it's the only way you could get calls out. And you know so when this happened to him he started researching this more and started talking to neighbors and found out that it was actually a very traumatic issue because people were dying. Up here we had you know there was a young boy that drowned. There was a gentleman who had a heart attack and the wife couldn't call for help and she by the time she drove in Alpena and got in the ambulance back where he had died alone on this floor. There was fires and car accidents that you know. And John one time I think actually had to help with a near fatal or fatal car accident I don't recall so you know going beyond his economic needs and his you know convenience needs and the fact that you know we had this thing called universal service that said everybody was entitled to a phone. He identified, this was a problem. And so what happened is he called the Michigan Public Service Commission you know file a complaint and see what they could do. And they basically said sorry we can't do anything we can't make them serve you. It's not a tariff area. Well ironically that was a very wonderful gentleman named Ron Choura who has since passed away many years ago. If you want to talk about a man that was very pro-consumer and trying to you know sift through all the red tape he really wanted change so Ron was actually adjunct faculty at Michigan State University and that's all I got involved in this as I kind of had this awakening at the end of my bachelor's. You know what I'm going to do with my life and I started asking my professors for some real world experience.

Ron Siegel: And he got me involved in John what he did John. It is he partnered with Michigan State University's telecom department and I helped lead a group of students on how to improve broadband and phone up here and we got a grant from the Link Michigan initiative which was an old broadband development grant the state of Michigan which they really need to do more of those. And that's been the seed funding to start L-band and that's how we were able to get our application built for us and go in higher the attorneys. So it was really a grassroots effort of a lot of different entities. Northeast Michigan Council of Governments and Michigan State and Michigan the FCC are us. I mean, it was really a wonderful exercise and we were literally the poster child of us at the time. Now that's gotten a little bit more complicated since reform started in 2011 and we've actually been fighting for our survival. But I'll be honest with you that's a whole other podcast. We could do. That's kind of how we got started.

Christopher Mitchell: When you say fighting for your survival I think one of the concerns that people have about subsidizing rural networks is the idea that they would need indefinite subsidy. Is that something that that's true or are you able to if you didn't get any more grants would you be able to continue operating the network you have.

Ron Siegel: You know it's it's more complicated than just saying that. I mean, when we entered into this it was a joint effort by the FCC and the Rural Utilities Service to basically when we applied for its funding from our US they said one of your prerequisites is you have to get approved as an island so you can get support. And the FCC looked at it they looked at the business model they knew it was a very rural area. They knew what Congress intended to do with USF and they said this was in the best interest of the public its in the best interest of the constituents so they went ahead and approved it. And you know it's been a long road because when you're in a rural area you're dealing with right away issues you're dealing with construction issues there's a high expense and I mean, obviously the the business model of rural broadband just doesn't work with the free market. I mean, the free market fails rural areas I think you probably better than anybody know that. And that's why you need a creative subsidy. So to answer your question, I mean, really it's not indefinite. I mean, you have to remember about USF is this it's a cost recovery mechanism. It's not like we're just getting the free money. We had to spend the money for two years and survive for two years before we started getting our high cost loop's support. And it's a recovery of that investment or of that operating expense to keep the costs down for the consumer so people out here and anywhere no one who would pay$400 for a phone. I mean,this is not how it works and that's a problem for. And as your plant depreciates And as you start rolling your customer base your dependency or your cost per loop starts to come down. And that was the problem in 2011 when they reformed us and put a cap on it we were way above the cap. Really you know we're not looking for funding for ever. I mean,I am very proactive in leveraging this investment. We've been blessed with out here in trying to do more of it. The original model was is we're going to take this money out from our U.S. you know everyone sees it sees that to make sure that these people out here can get serviced. Just like Congress intended and we're going to need the subsidies to pay back this lot. RUTH RUSSELL because there's no r y on this network and know really a way to do wireless at the time wireless wasn't even something I would even entertain you know even though suggestions were made to use satellite phones and things like that. And this is crazy. But yeah I mean,really what we're looking for is to continue the support so we can pay back as Russell. But we've been very very proactive with the limited resources and staff we have out here to continue to grow our loot base continue to work with the government and the local municipalities to allow access. But you know for example we have a larger area in our exchange it's very hard to get to because it's all privately owned roads. In Michigan there's no real eminent domain or anything like that. So if I need to get an eagerness for utility in some of these areas easements from like 20 people and if one person on that road decides to be a holdout or doesn't want to work with me then everyone else can't get phone service. So it's it's tough.

Christopher Mitchell: It is worth noting that Indiana just dealt with this for their electric co-ops. And so there may be some model legislation in terms of easements that you might be interested in seeing if the machine legislature would consider but I think it's worth revisiting just how rural you are. I mean,you said you're dealing with these smaller cities there is one and a half people per mile. And you know I think rural often starts for the private sector had like 11 people per mile and the electric co-ops that I'm familiar with can often build without subsidy to five people per mile. Boone you're down to one and a half people per mile. I feel like you know I feel like much of rural Michigan probably looks at you and says well these guys are really rural.

Ron Siegel: You could kind of job plus sign over the long peninsula of Michigan you know and demographically the west side the northwest side of the state. You know here in the Traverse City we have Pitofsky and believe in other areas over there that are still tremendously unsure of too. But it's more of a touristy site on that side over here. You know you have a lot more people coming up for hunting and fishing camping. It's more blue collar. It's you know more economically distressed. That's the way it is. You know when you factor all that in into the world this you have this disconnect with people want it where they don't want to pay for it and they can't afford it. And you know that's hard for an ISP or a rural provider like me and that's where subsidies come in. I mean,I mean to cut to the chase there's two words that really explain rural broadband. And that's that's that's subsidy and that's density. And if you don't have the density and the subsidy and nothing is changed and you know I don't want to go on a political rant. But you know rural broadband has this constant cyclical political discussion. Every politician whether or not they want to get elected for the first time they get re-elected. They listen to their constituents the constituents go to the politicians and complain about not having access because the big companies aren't doing it. They're not listening. You know they make these efforts to aggregate demand and they're not doing it. And then they look to companies like me and I don't have a magic wand. You know I am a very unique case and I do what I can. But you know without the subsidies I don't know what we really can do. Over the years it's taken over a decade but we're finally getting people understand that you know let me put my fiber in closer to the road where it's not so expensive. You know we have our federal government talking about the structure things happening. We have a lot we have millions of dollars going to the price cap carriers like frontier with cash to them.

Christopher Mitchell: You said millions but it's actually billions and billions billions. But you're right.

Ron Siegel: And you know that's going into a legacy technology called DSL which you know if you talk to people up here people are not happy with and I don't mean to be bashing on them but you know it's frustrating when the the real pioneers of rural broadband the independents have been fighting all these years and all of a sudden we see millions and millions of dollars going to the big companies and we see you know little guys are left to fight over chicken bones and these USF caps and things like that. And there's a disconnect between rural broadband and politicians. I'm sorry. You know they think wireless is everywhere it's not. They think wireless magically appears on towers. Well guess what if you don't have a baseline infrastructure to support those towers it's never going to happen and everything is based around and our why everything and without the government providing subsidies for example you do a lot of stuff municipal broadband.

Ron Siegel: I listen to your podcast. I've listened to see when I've gone to visit freebooting. I've worked closely with Holland in Michigan to see you know how we considered politically you know try to provide some kind of municipal and you know now I'm seeing legislation come out from our own state saying they're trying to limit what funding municipalities can get so frustrated because it seems like we worked so hard from here and we're in the trenches and we're just not getting the support we need and you know there are grants out there that can get grants and things like that but they're highly competitive a lot of them go to tribal nations and we're left here kind of getting creative in that kind of segues into what we're doing now we've actually fortified the ones he called the Allband's Center for Education and Research and that's a traditional 501C3 that is focused on using our broadband infrastructure in others around here like Mare network for example had built this amazing middle mile that reach network which I'm sure you know about and companies like us who are not for profit are trying to work with them to help build communities to help look at ways we can address societal needs so I don't see three entities we're using to do research. We're trying to work with entities like the DNR and governments and schools to say look we have this very rural area. An example is we have you know wildlife issues up here like chronic wasting disease and bovine tuberculosis which is affecting your economies and the property values of our hunting properties up here. What we're trying to be a facilitator for data collection where you know we can accept the money and get grants and work with these entities to use our fiber to do wildlife research to do broadband work. Farms then a welfare to do telemedicine research you know anything you can use broadband for. When I talk to our legislators and I look at these you know especially junior politicians and they say you know if you're putting put on these these appropriations committees you're deciding how much money is going to each area. If you give me any area in politics I can show you how broadband can help it. Right. And until people start looking at that and looking at broadband as a gateway service as a utility they're not going to get it. And that's what we're trying to do is we're trying to get create and we have this amazing backbone we have access to an amazing statewide backbone and we're really trying to look at you know how we can use this fiber investment that the federal government has and the U.S.'s ratepayers have blessed us with to do more with it. And now we're even looking at wireless.

Christopher Mitchell: You know you mentioned about how broadband makes everything better. I'm reminded of I think it was in the 80s I was when I was growing up there was these ads everywhere. That was from BASF. And they would say you know BASF we don't make the products that you use but we make them better. And it really is sort of similar when I'm looking at broadband. I mean, broadband itself doesn't necessarily solve all these issues but it makes it gives us new tools to use. And particularly I mean, one of the reasons I didn't want to interrupt you as you were you know being passionate there is I feel like people need to understand it. I mean, you're here trying to make this work you're doing you know you're doing what needs to be done to make sure that the rural America is not left behind in the ways that we decided in the past that as a country we were not going to leave it behind for electrification.

Christopher Mitchell: We're not going to leave it behind for telephone and we've reap the rewards of that. And people need to be reminded. But in the meantime I think you're up there doing this work so. So I do I appreciate that you use the term in the trenches.

Ron Siegel: I mean, I'd love for the FCC commissioners for example to make a little feel good about here. I post them for several days. I'd keep them busy on what's going on. And you know I'm not saying or they're not trying to do what's best for their constituents but it does. There seems to be a disconnect whether it's the state or the federal government and it's not as easy as just seeing rural broadband needs to happen. I mean, it needs a really hard look at how it's going to get done and how it's going to get paid for. And when I look at the stuff we spend money on in our government and you know look defense is important don't get me wrong but we're spending millions and millions moves on missiles and I get chastised for wanting to spend millions of dollars on 9/11 Fiber-to-the-Home in a rural area. You know that's what frustrates me is that criss cross and you know in 2011 came around and they started reforming us. We started getting a lot of political negativity towards the home. It's gold plated -- doing fiber in rural areas is gold plating. Well you know Google started a trend and now everyone is doing Fiber-to-the-Home and it's the next big thing. And if you don't have an area that has anything why would you put in copper. It doesn't make any sense.

Christopher Mitchell: One of the things that people will suggest is wireless magic wireless specifically will just solve all of these problems. And so I'm curious as we wrap up the show if you can just give us a sense of of what the real world is like how you're using wireless and in how it plays into your overall solution.

Ron Siegel: So since I've been here you know I've worked in you know kind of rubbed elbows with a lot of WISPs up here and you know they've been you know they've been using license 900 megahertz things like that. And I always give you guys credit because it's long gone back to when I was in college. They were trying to do something you know something better than dial-ups something better than satellite and you know but it became tough. And you know it seems like in rural America you're always chasing demands of society. You know there's a big difference between you know third world countries that are just getting broadband in areas in our country that are like a third world country. But you have consumers that expect something and trying to keep up with the demand and the insatiable broadband demand of our public these days can be hard. I don't have a problem with fiber but I've always been kind of anti wireless up here mainly because of the terrain we're in we have a lot of trees which is the number one enemy of wireless. A lot of that being coniferous trees. You have a lot of cells and you know it's tough and you want to be able to give somebody the future proofed a technology that is future proofed and workable and can support the insatiable demand of families. Now with several devices in their home so I've been kind of anti-worker list especially during the era time because I was worried you know what's going to happen if the government keeps investing in this wireless technology that has a 5 to 7 year lifespan on it. Are you going to come in and give them more money to replenish it. Because I doubt that they have enough depreciation accrual going on to reinvest in these networks. But you know now we were actually working on tv white space technology which is kind of you know in its pioneering state but we're we're working with Meritt network and Microsoft right now on piloting TV white space up here. I'm working with five gigahertz technology and some of the denser areas I'm trying to find a magical recipe to combine or cambium tight type 5 gigahertz technology in more of the more populated at least in terms of rural ness more of a populated pocket areas and then looking at stuff like white space to kind of serve the needs of the outliers. But you know the goal here is we want to start leveraging this far more in one of the problems we have is they have they struggled to find good backbones in rural areas at a fair price and we've been able to put this fiber in. So we're trying to find new ways to do that you know and it's the idea of going from macro pop to micro pop you macro pop is putting up a$250000 tower like LTE companies versus micro Pop where if I have a mile mile and a half road in a rural area and I didn't have enough funding or demand to put fiber down it I can take my fiber in it at the beginning of the road on the main road put up a little point to point wireless node. Shoot it down the road and then put up a little like you know five gigahertz distribution node there and serve like a pocket of six people at the end of the road and do it to the point where I can financially afford to put it in and actually get my money back on and continue to accrue money for future investment.

Christopher Mitchell: And that's real world scenarios of how you get the job done when you have the tools you have. Thank you for sharing that with us. You know it's really useful to get a sense of how people are making this work in the real world and what the real challenges are. You know just to document it and hopefully we'll get this to some of the folks that are making decisions and maybe they'll learn a little bit.

Ron Siegel: I appreciate the time and appreciate the opportunity to tell our story. And I also appreciate what you guys do you guys do a tremendous job. I enjoy listening to your podcast very much.

Lisa Gonzalez: That was Christopher talking with Ron Siegel from Albany Communications, a rural Michigan cooperative. We have transcripts from this and other podcasts available at E-mail us at podcast at MuniNetworks stack with your ideas for the show. Follow Chris on Twitter his handle is at community next. Follow MuniNetworks stories on Twitter. 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 Thank you to Arne Huseby for the song Warm Duck Shuffle licensed through Creative Commons. And thanks for listening to episode 276 of the Community Broadband Bits podcast.