Transcript: Community Broadband Bits Episode 277

This is the transcript for Episode 277 of the Community Broadband Bits podcast. Luis Reyes from Kit Carson Electric Cooperative joins the show to explain how electric cooperatives are solving the digital divide in rural America. Listen to this episode here.

Luis Reyes: People trust co-ops. They trust Electric co-ops. They've been - been around since the mid 30s. I think there was a lot of faith that we could pull this off and make it as reliable as we made the electric system.

Lisa Gonzalez: You're listening to episode 277 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Rural New Mexico has some of the most scenic landscape in the U.S. It also presents some of the most difficult challenges in getting its widely dispersed population connected with high quality connectivity. The Kit Carson Electric Cooperative it's changing the situation in the north central area of the state. For several years now they've been connecting people in the region with fiber to the home improving connectivity for residents, businesses, and local entities. This week we hear more about the project from Luis Reyes CEO of Kit Carson who gives us a history of the project and how high quality Internet access is benefiting the region. Now, here's Christopher and Luis.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell from the Institute for Local Self-Reliance up in Minneapolis, Minnesota. Today I'm speaking with Luis Reyes the CEO of Kit Carson Electric Cooperative. Welcome to the show, Luis.

Luis Reyes: Thanks Chris. I'm happy to talk to you.

Christopher Mitchell: Well I'm excited to talk to you as well. We've we've been covering a lot of the electric cooperatives getting into fiber networks. You've been doing this longer than many. We've interviewed a few others but I think this is incredibly important for rural America. Maybe start by telling us a little bit about Kit Carson. Where are you located and what's the geography around your area?

Luis Reyes: So Chris, Kit Carson is located in north central New Mexico. So Taos being the center of our system. We sit right in the middle of a mountain range of Sangre de Cristo Mountains which is a spur of the Rocky Mountains.

Christopher Mitchell: It's so beautiful. I've been up, and I've been up in that area a little bit up in Colorado where the great Sander's National Park is. It's -- those are wonderful mountains.

Luis Reyes: You know it is and you've caught us at the beginning of fall and our first snow. So you know Taos sits at about 7000 feet and we rise up to 13000 we have the highest peaks in New Mexico here. And so we have very mountainous territory we do go out into some plains, but it's really a high desert. Carson also has about 30000 members and operates about 2900 miles of both electric and fiber lines today.

Christopher Mitchell: And how has the Internet access before you started for most of your ratepayer members.

Luis Reyes: You know prior to Kit Carson getting into into broadband very very spotty. You know you had certain areas that had access that is really DSL access faster speeds you could probably get into house unless you were a business was probably 3 Mbps if that were in the rural areas. There are people who didn't have access to to any Internet or broadband services unless there was a wireless or satellite solution. So it was one thing that was really keeping the community behind in a lot of aspects until our membership decided that Kit Carson should fully get into a broadband company and offer very fast speeds well.

Christopher Mitchell: And when you decided to do that you were blessed with one of the rare fiber to the home both combination grants and loans from the stimulus projects to expand broadband. Tell us a little bit about how you decided to go into that and and what happened there.

Luis Reyes: So since about 2000 Kit Carson has been a fixed wireless broadband company so we did offer some fixed wireless products to certain areas in probably the mid 2000s we started to install fiber on our electric lines in concert with with building electric facilities that got us probably 100 miles of fiber. When the stimulus came aboard we actually tried, Chris, tmhree different times to build a fiber network that would first enable better services or more services for our electric infrastructure and really broadband was kind of going to be a byproduct at the end we lost to around and then at the end or third round we actually won the $64 million award. $44 [million] was a grant. $19 [million] was a loan to build out a fiber to the home network which we did. So we've built out about 2500 miles of backbone or transmission.

Luis Reyes: And we have about 7000 drops of fiber to the home and we continue to build it. A lot of this is just based on the membership wanting us to get into high speed services and offer opportunities that they were getting with the current providers in the area.

Christopher Mitchell: When I talked to electric utilities that are getting in to some of the fiber networks, one of the things I sometimes get a sense of is that this is so much more important than just broadband or that broadband is so much more important than people realize for an electric utility because as I understand it you're in a rural service territory. You seem to clean D-Minn. on the electric side and increasing mandates to do new investment in generation for renewable or other kinds of requirements that could really put you in a difficult position. So I'm curious to what extent the building the broadband network was in some ways an existential question for the utility as a whole.

Luis Reyes: If you look forward, I do think that electric and communication networks are already kind of being intertwined and I think moving forward with some of the issues that you brought up we have declining energy sales. We have people that are putting our members putting generation resources behind the meter whether its solar panels on the roof, their own wind turbines, with us putting our own solar fleet we are going to have to create what was conventionally a one way highway electricity you know we get it and we deliver to home to really a two way communication to be able to accommodate those members who want to sell energy to us and be able to manage it. We also and we have to manage real time because electricity for all intents and purposes is kind of on the spot usage. There is going to be storage in the future. But we were not thinking that way.

Luis Reyes: Everything with electricity is real time and two-way. I also think that electric co-ops or utilities are going to morph into more service based organizations in which we can have better control water heaters, thermostats, water pumps, stuff that we do now that we probably will have to do real time went forward. The fiber network is going to enable us to communicate with any device with the member and make decisions on which is the best way to handle the electricity that day with the idea of us putting solar arrays you know we have a plant become 100 percent solar by 2022. We're going to have to manage probably 35 different arrays real time to determine what's the best use of those arrays on that given day. And then as we integrate battery storage and just general operations of the electric utility, knowing where the outages are, you know, getting there sooner is going to require two way communications.

Luis Reyes: So it's it's actually as much a putting fiber is as much a function of optimizing our electric grid and giving our members options for power supply. It's as important as getting bandwidth and getting broadband to the home.

Christopher Mitchell: One of the things that we've seen in a lot of these co-op territories is declining population. And I'm curious,bBuilding the broadband network are you seeing a change in terms of people where you're seeing either population growth or stabilization.

Luis Reyes: We do see it stabilizing because now we have some true broadband speeds. I mean our system is capable of symmetrical speeds. Give you examples, Chris, our basic package is 40 up 40 down and 100 hundred for businesses. So it's and it's scalable. So there's not an issue with speed. So what we see is a lot of home businesses now starting to to rise. Graphic designers that can live here in kind of a beautiful rural setting but they send their work to the coasts. We see a lot of day traders because of the bandwidth being able to work from home. So we see a stabilization. People aren't leaving. There's actually been about a half percent growth in the last couple of years of population. We've seen more home businesses start to operate that are -- that need a broadband connection and we are getting more inquiries on small startups that are broadband based I would like to set up a small four to eight person business here because of the quality of life but send their work out of state.

Luis Reyes: So we have started to see some of the benefits of having a robust broadband connection that passes every home and business we serve.

Christopher Mitchell: You mentioned that your membership was enthusiastic about taking this on and obviously you had experience with the wireless and doing some of the fiber yourself before you decided to go to every home. I'm curious how has the reception been now that people actually have the option to taking service will kind of take rate or are you seeing.

Luis Reyes: So we have about a 70 percent take rate are our biggest issue now is we are able to hook up people fast enough. We have about 7000 drops probably 60 500 connected. We probably have another 65 to 7000 on a waiting list. It really has been one of those things where we thought we were going to be successful by saying we are going to hit 45 percent penetration for these great services. We've missed that mark almost by by half. And so that's been our biggest obstacle is hooking up people fast enough. And what really has helped is first people trust co-ops they trust electric co-ops have been been around since the mid 30s and so we reliable we got that same type of reception when we went Telecom. I think there was a lot of a lot of faith that we could pull this off to make it as reliable as we made the electric systems in terms of word of mouth Chris.

Luis Reyes: Never gets it how sudden it can be as simple as I get Netflix and its not streaming. The neighbor calls us and says I want one my neighbor has. And so it really has been an explosive business.

Christopher Mitchell: Yeah that's something that I've seen as well it's almost viral in terms of how it spreads and we of course saw that with electricity as well when the co-ops were being created. People had trouble visualizing it until they saw it and then they recognized how important it was. Now one of the things you said about the challenge of hooking people up really resonates. And let me paint a little picture based on interviews I've done with other folks both municipal networks and private companies. The challenge of hooking people up is often one of managing the installers and one of the things I've seen is that it's hard to attract high quality people that are going to be representing your business your co-operative and they're going to people's homes and they're signing them up and there's just a lot of management challenges around that and getting the right people and keeping them on getting rid of the people that are not as good at it. Do you have any lessons learned or things that you've adjusted in the course of trying to manage that.

Luis Reyes: I think one of the lessons learned and I guess maybe it comes from the perspective of electric is not really a competitive market. And we train our linemen and since we're the only show in town there's longevity with our linemen where we we're in a competitive market on the telecom side the broadband side. I mean we still have competitors like the incumbent carriers and other Wi-Fi companies. And so once we train someone you have to make sure we compensate them and take them so they don't jump to the other company. That's one of the lessons learned is making sure that we get people that just aren't capable but actually have some loyalty and then we we as a company make sure we have the incentives for them to stay. The other thing that we learned is once we get into a home, the customer the member expects us to basically fix almost everything that is connectable.

Luis Reyes: So you you know you said yeah you said some time to say OK I'm going to get your router going. I mean we get your broadband going and I'm out the door. And you know an hour later they wanted a couple of TVs and they want the iPad to be hooked up. We're learning how to address those type of issues. And that goes to time management because all that happens and Chris is an hour an hour late to the next appointment and then you compound that by we probably have 10 to 12 crews out every single day. You just end up having a backlog by trying to do too much customer service. So really it's trying to find that balance of what we should be doing for the customer and then what someone else should be or how do we educate customers that that's kind of not what we want to do

Luis Reyes: and here's another firm that can do that for you. So I think those are the major things that we have learned. I think the other thing that I've learned more maybe from a personal basis running both an electric and broadband is always taught that electric was king right if you lost electricity kind of the world stops. That's not true. If you lose electricity I think there is a perception from our members that we'll fix that. You know it may take time but the corporate power crews out will fix it. If you lose your broadband it's kind of the end of the world. It's you can't do without your router working you can't do without getting to the Internet. So it's made us change our mindset of how do we properly serve our members to make sure that their expectations of having basically the 5-9 over broadband can be accomplished.

Christopher Mitchell: Yeah I can imagine that. I'm trying to think psychologically. I've I've run into this a little bit with some of the utilities up in Washington state where after a major fire they were talking to people and saying you know it's going to last a week or two to get your electricity back up and people were saying Yeah yeah yeah whatever when are you going to get my fiber back up. I suspect those people running on generators or some of their own solar because of course without electricity you do not have the ability to use a lot of devices. But I suspect that you know when the fiber goes out and your electricity is still on you're like oh I could use a TV but it's not working, so your life continues more normally. Perhaps you just have a different psychological reaction to it.

Luis Reyes: Exactly and I think what would happen is we're so used now to have cut the cord and being connected. One of the big one of the big drivers for ski areas now resorts is kind of activity. So we surf for ski areas. We meet with them you'd think that when they're big the biggest drivers are as reliable electricity.. Well they have backup generators and that kind of stuff. At the end when they do surveys the biggest issue guests want is to be connected and I don't know if you've ever watched people in resorts are coming off the ski areas doing the selfies as they're coming down a hill. But that's become kind of the norm kind of activity and then fast connectivity because people were kind of in that Snapchat, Facebook era that you know the minute you snap a picture or a selfie you need a post-it and you need a connection.

Luis Reyes: So. So your friends in the rest of the world really are seeing how much fun you have. And I think that's the kind of mindset now as the fiber provider we have to get into is people are expecting just not fast speeds but fast reactions to the devices that are connected to the Internet so that the world can kind of enjoy what they're -- they're living at that moment where you can have backup electricity but you can have backup Internet. Exactly. You get it right we'll persevere if the electricity goes out for a couple hours. But you know and you can notice that when someone can get a signal on a cell phone, and that's important because we have fiber going to cell towers to get these 4G services so you do need fiber. People really don't know what to do without being connected to the phone. They'll move around looking for a signal. So it is actually pretty interesting to just watch people and how fast Internet has changed basically their behavior.

Christopher Mitchell: Also one of the hopes that I think we have in terms of expanding high quality rural access isn't just co-ops like yours that have done it yourself. But the ability to expand and and help other co-ops. Looks like you're starting to work with Continental Divide Electric Cooperatives to help them expand. I'm sure that improves your business case was kind of a win win. What's going on there.

Luis Reyes: Rural areas generally aren't very unique from each other in the sense that they generally lack the same type of services. So as we get into it the community of Grants, New Mexico, where Continental Divide is located probably about 200 miles from Taos. Their members desire the same type of speeds that we're getting and they like the co-operative model where they had to say. So we worked out a deal with Continental divide where we're using our head and our design and replicating it with the help of good engineers in Continental Divide. So we collect all the traffic we help and with design, material construction, to enable our community to get high speed. So you have co-ops helping co-ops enabling rural customers to get high speed. Our first customer, Continental's first customer in that area, was the local bank that needed basically redundant feeds. So the bank had a primary speed and wanted a secondary high-speed.

Luis Reyes: We've been successful in making Continental's the primary speed and the incumbent the secondary kind of realizing the same issues we have is through word of mouth. Now they have waiting list the people who want to be connected and Chris for the same reasons. It's just not entertainment. It's for economic development. It's to support any broadband based businesses as simple as getting a credit card you know credit card machine they're working with the local schools. So it actually has been probably one of the more gratifying projects we've done because what we set out to do initially is create a model that could be replicated at other co-ops and other rural communities. And that started to happen with a co-op that's about 200 miles from us.

Christopher Mitchell: Well let me ask you is a closing question have you had in the incredible reactions from many of your members in terms of how excited they are how this has changed their lives. You'd like to share with us.

Luis Reyes: Yeah I mean we've had people that really had moved to town for the quality lives and we're professionals. So I mentioned early graphic designers that actually lived at the base of the wilderness and were about to leave and go back to Los Angeles where it was heavily populated a lot of smog. And you were basically a number we made them our first customer and they've been able now to get that quality you actually want it get the work in the morning to do their graphic design. They hike in the afternoon and they become big advocates. Another kind of feel good story is we have a branch of SMU University here in the mountains that did a lot of archaeology and their enrollment was decreasing because they didn't have the bandwidth to be able to talk to the Dallas campus. Once we introduced our product to them they were able to use iPads so that students could build and show their professors or teachers in Dallas some of the pottery and artifacts they found.

Luis Reyes: Since then it's increased both the offerings that some you can make plus the enrollment. So really has had a profound impact on those people who need it either for business or education so far. And we think that's just going to continue to grow because at the end a lot of people live in rural areas for the quality of life. And I think it's a co-op's mission to be able to enhance that through the products we serve.

Christopher Mitchell: So I actually I just came up with one additional question that I want to ask you because you have experience with fixed wireless in the Midwest and in the Appalachians. One of the challenges with fixed wireless is there's a lot of trees in the way. I don't know if that's one of the issues you have but one of the ongoing problems we have is I think too many people don't understand that we can do high quality fiber networks in rural America. People want to settle often for a wireless solution. Do you have any advice for people that are trying to weigh fiber versus wireless for last mile in rural areas.

Luis Reyes: Well you know I think at the end if you have your preference hard line hardware fiber is going to be the most flexible today and going in future because it's so scalable. We have fixed wireless and you do have issues with trees. You have addressed the issues with distance and then you have the issue with access points once you kind of Saturnian access points all the speeds start to diminish. When you have a fiber network you know we can offer good services to every single one of our 30000 customers and really not push our head around that much. And so if you're looking out to the future and thinking that we certainly are going to be in the Internet of Things at the residential level then finding a fiber solution is going to be the best investment long term especially for cost of utilities.

Luis Reyes: You can you can run the fiber within the electric line along the same rights of way. So there's not an additional cost to kind of optimizing your investment by using the same structures. That's what we see and that's what we advisors. Is going to be here for a lot longer than radios. You know all that's happened with radios is it's kind of a laptop in a year. The next best model comes up and then you're wondering should I change them up because people want better speeds with a fiber network all you do is kind of just turn up the dial and you get the fast speeds.

Christopher Mitchell: Those are some great examples of what people should be thinking about. Is there anything else you want to tell us about your network your approach.

Luis Reyes: You know I think the most important thing with our approach is we did get buy in from our community I think in general people want better services better connectivity. I think most people understand the world is changing and you have to have that kind of robust network. But in getting buy in from the community both the residential elected officials and the private sector it really helped promote these products as a truly local product. And so you had a lot of member buy in and very very little pushback. What we're trying to do and so I really do think that's one of the common threads that ties in. You know we serve Chris but 29 different communities including two two Indian tribes. Fiber has kind of made the comment thread that has tied really three together. And so I think that's the one thing I would advise is to make sure you get buy in from the community you serve.

Christopher Mitchell: Well that's a wonderful way to end the show. It's a it's a very good reminder that people need to take to heart. Thank you so much for coming on and sharing your wisdom with us.

Luis Reyes: Chris appreciate it. You have a great day.

Lisa Gonzalez: That was Christopher talking with Luis Reyes CEO of Kit Carson Electric Cooperative. They were discussing the rural cooperatives project to bring high quality connectivity to their service area. We have transcripts for this and other podcasts available at MuniNetworks.org/broadbandbits. Email us at podcasts@MuniNetworks.org with your ideas for the show. You can follow Chris on Twitter. His handle is @CommunityNets. You can also 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 by Also subscribing to our monthly newsletter at ILSR.org. We want to thank Arnie for the song "Warm Duck Shuffle" licensed through Creative Commons. I want to thank you for listening to episode 277 of the Community Broadband Bits podcast.