Transcript: Community Broadband Bits Episode 309

This is the transcript for Episode 309 of the Community Broadband Bits podcast. The towns of Baileyville and Calais, Maine, joined forces to create a the Downeast Broadband Utility. Christopher interviews Julie Jordan, the director of the project.

 

Julie Jordan: You couldn't really go out and attract young people or new employers without this good piece of infrastructure.

Lisa Gonzalez: This is episode 309 of the Community Broadband Bits podcast from the Institute for Local Self Reliance. I'm Lisa Gonzalez. As one of our most rural states,q Maine has many regions lacking in high quality connectivity. Over the past few years, we've seen several communities engage in projects to develop publicly owned networks. They want to bring broadband to places where big ISP won't upgrade their services. In this week's podcast, Christopher talks with Julie Jordan, who lives and works in one of those rural Maine communities. The towns of Baileyville and Calais have joined together to form the Downeast Broadband Utility. They plan to deploy a fiber optic network in the region for residents and businesses. Their project caught the eye of the Post Road Foundation, a nonprofit organization that is researching the possibilities of linking smart grid applications and multiple utility functions. In this interview, Christopher talks with Julie about the Downeast Broadband Utility project, some of the challenges they've had to overcome, and how the Post Road Foundation will be involved in studying their project. Now here's Christopher with Julie Jordan from the Downeast Broadband Utility in Maine.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self Reliance up in Minneapolis, Minnesota. And today I'm speaking with Julie Jordan, the director of the Downeast Broadband Utility. Welcome to the show.

Julie Jordan: Thanks, Chris.

Christopher Mitchell: I'm really excited to be talking to you, because I was just out in Maine where the downeast region is and I find Maine to be inspiring in terms of the work that's being done from local communities and I'm just really excited to tell more people about what's happening. But the first thing is when we say "down east" and talking about the communities of Baileyville in Calais -- I think Lisa wanted to make sure I pronounced that correctly -- people have a sense of what we're talking about. So where are Baileyville and Calais?

Julie Jordan: Okay. Geographically, we're actually considered way down east. Um, I think most people think of Rockland, Rockport, Camden as true down east region. So we're north of Bar Harbor by about three hours on the Canadian border. The St Croix River divides us from New Brunswick, Canada, so we're about as far east in state as you can get.

Christopher Mitchell: And that is on the, right on the Canadian border, so people might be thinking of it as the northeast part of the state, but it is called down east.

Julie Jordan: It is, it's a little confusing. We like to keep everybody on their toes.

Christopher Mitchell: So what is, uh, what's life like in the down east? In your particular corner of the down east, I should say.

Julie Jordan: Life is really nice and good, clean living. It's rural. We're a tad isolated geographically because we're not close to an interstate. There's a main road called "The Airline Road" that will take you from Bangor directly to us, it's about 100 miles due east. But other than that it's Route One. So we're pretty far from the interstate. Well, we're the largest producer, I think, of wild blueberries, for the world's production. I think we produce 85 percent of wild blueberries. And we have, of course the forestry industry and, paper products. So Baileyville is more of a manufacturing center. There's, Woodland Pulp and St. Croix Tissue are the big employers in that area. And then, a little south of Baileyville, which is Calais, about eight miles, they do more of the retail sector for the county basically on both sides of the border. Charlotte County, New Brunswick and Washington County, Maine. So it's a slow pace, a really nice, small town, great scenery.

Christopher Mitchell: And the Downeast Broadband Utility, it's a, it came about in part because of a need to encourage more economic development, which is I think when you hear a description of your community, one of the things people are often thinking of is it growing or shrinking in the modern economy and places without high quality Internet access seem to be on the shrinking end of that, generally.

Julie Jordan: Oh, that's so true, Chris. Our project really started when we were focusing on economic development for the region. Our area's been stagnant and actually declining in demographics for the past two decades for a lot of reasons, but we didn't want to see that continue. So, the two communities got together and said, let's focus on the region as a whole, not each community individually and see what we can do to attract new employers to this area. And that's when we hit the wall with our infrastructure issues, namely broadband, that although we have some service, it wasn't always reliable and it wasn't fast enough to accommodate the needs of a lot of employers, including one that's already here, St Croix Tissue. The, you know, the equipment today for paper production is all computerized and they just really needed to have a fiber connection. So that's how we got started. We couldn't really go out and attract young people or new employers necessarily without this good piece of infrastructure.

Christopher Mitchell: Before the Downeast Broadband Utility was created then, I'm just curious how, as you were weighing your options, did you rapidly decide that you'd have to do it yourself or was that something that you came to after having some other plans that went different directions or how did that come about?

Julie Jordan: It did. It came about with research. I mean, our first, we didn't know what we were doing, certainly even how to start. So the first thing we did was called all of our local providers, including our incumbents, you know, the bigger players to the table and ask for their advice. You know, how would you do this if you were going to do it? Um, what are your suggestions for any kind of model to structure ownership of the fiber. And we got lots of great input from, especially from our locals right around here. And, based on those discussions, we decided, gee, what, if we formed our own utility? A regional one, which fortunately for Maine, we can do here. The Maine state legislature -- and you're probably familiar with the statute that was tweaked in 2017, allowing municipalities to form together a regional utility strictly for the purposes of broadband. Either expanding existing infrastructure or putting a new infrastructure in place. So that's what we went with, so that the utility will own the fiber and then lease it to providers with an open-access system.

Christopher Mitchell: I mean you could start by telling us a little bit about how much you're expecting it to cost, but I'm curious about your reaction to that as well.

Julie Jordan: The first reaction was definitely sticker shock. When we met with providers -- because again, we hadn't done a design study at this point to get a real figure -- but these providers had experience in the field and we said, what do you think, you know, just guesstimate. Are we talking $1 million? Are we talking, you know, $20, million dollars. We had no idea. It's basically 87 miles that we were trying to fiber up here. We want to reach 100 percent of the premises in each community. And the figures varied really quite a bit from each provider, so that when we did finally get a design plan in place and saw the real figure, which was a bit less than most of the providers said had started us out with, it was a relief. It was like, 'wow, we can really do this.' We can really do it. So I think the first numbers were, came in, were high. Some might've been a little lower and I think we don't know the final figure yet, Chris, but we're estimating about $3 million. I'll be honest, I think, you know, we've miscalculated on a few items in the pro forma. For instance, insurance. Pole owners require $5 million in liability plus a surety bond, for any work being done on poles. And that was almost twice as much as we expected. And that mostly it was because we are not a tried-and-true entity yet. We didn't have three years of audited financials. We actually had trouble finding an insurance company that would, would write upon for us. That delayed our project about six weeks. We've got numbers as low -- and this was without design work, so these were true guesstimates based really on miles and a rough guess of premises -- from as low as, our first one I think was $2 million, maybe even a little under two, $4.8 million. That was the range that we got. And we thought, well, if we could be somewhere around three, then we think we can raise the money and that's when we paid for the design work and it's sort -- it's, it's a big risk. It's a jump you have to make to, because the design work cost $80,000 and we don't have that money and we tried to get grants and we couldn't. So we're borrowing the $80,000 just to make sure that that $3 million number is actually going to be real.

Christopher Mitchell: And, that's really helpful because one of the things you'll find, of course, is that when you get bids to actually do the work and begin constructing that, the more rigorous you were in the design, the more accurate the bid should be and the easier of a path you should have through the rest of the process.

Julie Jordan: Right. That's correct.

Christopher Mitchell: Now are you on the Three Ring Binder?

Julie Jordan: We are.

Christopher Mitchell: That's got to be a tremendous help. There's a lot of communities I think, who are, who are thinking, well, how do you get out of downeast and back to Bangor on your way to Boston or something like that. But that's been solved by you. If you want to just briefly let people know, who aren't familiar with that project, like a 90 second background on it would be really helpful.

Julie Jordan: Okay. So the Three Ring Binder was, I believe funded with $26 million of federal funds to go up the coast of Maine and circle around the top and come back down and connect, oh, maybe in central Maine. But it's basically the backbone of fiber networks. So the thought process was if we put this in place, then we'll have all these providers come and pull the fiber off the three ring binder and take it to the last mile, the last premise. Take it down the side street, and everybody will hook up because that part is already there. That didn't really work out. Um, and I'm not sure when it was installed, Chris, you probably know this...

Christopher Mitchell: Right, well it was built after the 2010 or 2009 stimulus. So I would assume in 2010, 2011, 2012ish.

Julie Jordan: So a lot of it, uh, remained unleased and still is, unleased. I think it's owned by Maine Fiber Company now, and they lease it out to providers who will use it say in our project to take it out to the last mile. So it is helpful, definitely.

Christopher Mitchell: Good. Yeah. We actually, I did a conversation with Fletcher Kittredge, in which we talked about middle mile versus last mile in some of this because I have been arguing for more than 10 years that the middle mile investments do not catalyze last mile investments. The economics aren't, don't quite work in that way. Um, but you do need to have the middle mile for communities like yours to be able to build last mile. Um, so if people are interested, Fletcher has been a wonderful person helping folks in Maine. He runs GWI, a company that's been doing Internet access for a long time. But if people really get into that debate, there's a podcast in our archives that covers it. But at any rate, I think it's worth noting that because of that really smart investment and because the Maine Fiber Company keeps that fiber open for others to use, it's terrific for you. And actually it seems to me that that's sort of how you want to run your network locally as well, right?

Julie Jordan: Yes. That's, it's the same model: We'll lease the fiber to the providers and have them bring it out to the customers.

Christopher Mitchell: And to do that, you're actually working with another of the local companies in Maine that's making a difference. Can you just tell us about how everything fits together in terms of the role Pioneer plays in building the network. And then, how you'll operate it.

Julie Jordan: Okay, so Pioneer Broadband was one of our local providers that we sat down and talked with when we were first talking about this project and they're based, Chris, in northern Maine, out of Houlton, and they had a little experience in putting fiber optic networks in Houlton, Maine and a few other smaller communities. And, they were really very creative in their approach with us because they wanted to expand their territory. They wanted to grow, and they wanted to move southward and they thought we would be a good project for them to make that move and we would be a good fit. So, they offered to do our feasibility study for us at no cost because see, we had no money for that either. And then we were very appreciative of that and ask them to please do the design work. So they've done all of the design work for us and they will oversee the build to have the network constructed. At which point, and we're in this process right now, we'll issue a request for proposal for all providers throughout the state to operate and maintain this network. We don't have the expertise to do that and frankly we don't want it. We, we bring experts in, offer a multiyear contract to operate, maintain and pay them an annual fee to do that. And that's built into our model, our financing model.

Christopher Mitchell: To be clear, the company that'll be maintaining it, they'll just be maintaining it, making sure it works and the other providers will be able to access it.

Julie Jordan: That's right.

Christopher Mitchell: Now will then maintainer be able to also offer services on it?

Julie Jordan: Yes, they will.

Christopher Mitchell: Okay. So they'll just be making sure that if something breaks it's fixed and um, that there's a good --

Julie Jordan: And they'll do billing, stuff like that. So, the utility will accept the lease payments from all the providers that are using the fiber and take those lease payments, pay the firm that's going to operate and maintain, and pay off the debt.

Christopher Mitchell: So thme utility is really the, specifically the Downeast Broadband Utility, is really there to make it happen and to deal with the financing. But aside from that, there's the rule is just making sure that it continues to work from an administrative point of view.

Julie Jordan: Correct.

Christopher Mitchell: That's, that's one of those things that I think people sometimes miss the importance of because without you it wouldn't start. Now, if you can have a small ongoing role, I'm sure you'll view that as a success.

Julie Jordan: Yes! We'll view it as a great success.

Christopher Mitchell: Now, one other entity's coming in to help make this work, which is terrific. It's a organization called the Post Road Foundation. Tell us a little bit about them.

Julie Jordan: Post Road Foundation is an arm of the Kennedy School of Economics from Harvard University and they've been funded in part by the Rockefeller Foundation to study intelligent infrastructure or smart grid technology specifically in rural communities across the country. And so, they reached out to us because we're rural number one, we've done a little groundwork here by starting to build a fiber optic network and we're also in a region that has an electric cooperative. So their study, Chris, is going to be to examine the territory of this electric cooperative and do a what if, what if we had a fiber optic network throughout this territory on all of these utility poles that combined all forms of infrastructure: electricity, Internet, sewer, water, smart city technology, home security, you know, where I'm going with this, right? What if it was all combined, would it be more efficient use of energies, would it costs less for the consumer and woudl it leave a softer footprint in the environment. And so, we're going to be part of that study; we were one of five communities or we're a region actually, that was selected. Two others in Maine and I think one in Georgia and one in Michigan. And they'll start that study any day now. They should finish up by the end of September and publish and release the results and then take it from there if the results are as expected.

Christopher Mitchell: Yeah. One of the things that I'm very excited about with them is that they, I think get it. Um, it's, it's always dangerous when someone comes to you advice and you go around telling everyone how smart they are because they've listened to you. I've only one of many people that they've consulted as they've been looking at this, but` I'm very excited because I think they fully understand the ways in which there's all kinds of indirect benefits, some of which have material benefits for communities to make sure that everyone has this, this high quality access. So, um, I think people should really pay attention to what they come out with in September.

Julie Jordan: Yeah, we're really excited and you know, the potential is enormous. If the results of this study are as hoped, to then start modeling the build out of these infrastructures of communities on what they've learned and what it could really just, it could just empower communities all over the country.

Christopher Mitchell: And one of the things that I think they'll bring is perhaps new sources of capital, new entities that will have an interest in investing in this that will really help as we see more and more rural areas, I think doing what you're doing. But there's, there's one other piece of, one of the things that I love about Maine that I want to touch on and that is that you've had some slow downs because of pole attachment and pole challenges, but things are looking up. Tell us a little bit about why you're optimistic about poles being less of a hassle for you than others.

Julie Jordan: Well, I'm going to just credit the state of Maine, the Maine Public Utilities Commission, for finally taking a hard look at what it takes for anyone, any organization to attached to a utility pole. The process is so lengthy and cumbersome and actually isn't, isn't uniform in any way, so one pole owner can have different requirements than another one. So they, the PUC, Maine PUC took a good hard look and said, wait a minute, we think this is out of control. We want to really help communities put fiber in place or expand an existing infrastructure. So we're gonna, we're gonna change the rules a little bit and for us it was exciting because pole attachment is the largest cost for this project for I think anybody definitely for us, huge. It's almost a million dollars of the $3 million is our estimate.

Christopher Mitchell: Well and, if I could just jump in for a second, it's also a source of uncertainty because, you know, for your financial arrangement, you're expecting after two years to be negotiating your line of credit into a loan and if after two years only half the network is built because of pole attachments challenges and you're not even sure when you're going to be able to build the rest of it, that that's going to be a major financial headache.

Julie Jordan: Yes it will.

Christopher Mitchell: And so, fortunately, you'll avoid that.

Julie Jordan: We can avoid some of the costs that we've projected because the PUC has said, "We're going to let some of these people attach behind the poles or at the bottom of a pole," and that will lower costs, that you don't have to get five other wire owners up there to move their wire five inches to accommodate ours, which really adds to the cost. But as far as how long pole owners can take to allow you to attach, that's probably not going to change for a while. Certainly not in time to accommodate our project, if we move ahead. We do hope that the rental fees that are attached to a pole attachment may change to our benefit before the end of the summer. That's our big hope.

Christopher Mitchell: And so, to reiterate, the two of the big things for you are that you can go in the back of the poles and at the bottom of the poles.

Julie Jordan: We go on the back or the bottom. In the past, the pole owner could say, "You know what? We think you need to go halfway up the pole, and there are two other lines that are there already, so you're going to have to get the people who have those lines here to move theirs, and then we're going to let you attach. So now you've got to go to another party and say, "All right, will you please move your line?" And you fill out those applications and you pay those fees and then you hope they come and do that in a timely manner. I mean, right now, pole owners can take up to 179 days before they'll say, "okay, go ahead, you're good to go." Now, do they have to take that? No. And, will they? We don't know. That's our, our gamble,

Christopher Mitchell: Right. Well, we're very enthusiastic about these changes and that we really hope that it leads to you having as minimal a headache as possible.

Julie Jordan: Hah, thank you!

Christopher Mitchell: I guess I have one final question, which is kind of the local reaction. I mean, has there been anyone that's sort of skeptical of this or, you know, in some areas the incumbents go to a great effort to try to confuse people or mislead them. Has there been opposition to what you're doing?

Julie Jordan: Certainly, I've gotten some pushback. Not as much as we expected. But, I mean, I'm not sure that anybody thinks this is really going to happen yet. You know, I'm not, I'm not sure we're on anybody's radar enough to get a lot of pushback, but there has been some. There's been a lot of skepticism that this is a good project, a viable project, a worthwhile project. I think, you know, we're preparing for some major pushback. So, we've engaged a marketing firm to keep our message positive and out there because there's a lot, been a lot of time between when the voters said, "Yes, we're going to allow you to borrow this money and build this network," and when they actually see somebody on a pole attaching fiber. We don't want enthusiasm to wane. We don't want our positive message about what this can do for this area to lessen in any regard. So, we need to keep potential subscribers engaged. And so that's why we've hired a digital marketing firm just to really target these two communities, keep the news out there all the time, you know, and we'll combine that with a grassroots effort with our buttons and our posters and, "Coming soon to a utility pole near you!" You know, "fiber optic broadband!"

Christopher Mitchell: Yes, that's excellent.

Julie Jordan: We're hoping that that's gonna really help to keep our subscription rates where we want them to be.

Christopher Mitchell: And so what is the, what is the timeline as we wrap up the show here?

Julie Jordan: We've already submitted our first pole attachment applications. So, the best case, if pole owners are as excited as we are about this, they'll let us start doing work in July. If they take it to 179 days, then we're looking at December, January.

Christopher Mitchell: Yeah, and that's unfortunately rough. I've, um, being in a part of the country that also has winter, that can be challenging.

Julie Jordan: Yeah, it can be.

Christopher Mitchell: Okay. Well we'll look forward to looking in on you and getting a sense of how things are going. And thank you so much for sharing this model. I think it's inspiring for folks, not just that you that you decided to move forward with this, but that you're able to work with local providers in such a collaborative fashion.

Julie Jordan: Thanks, Chris.

Lisa Gonzalez: That was Christopher with Julie Jordan from the Downeast Broadband Utility in Maine discussing their fiber optic project. Read more about the project at MuniNetworks.org and downeastbroadband.com. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us podcast@MuniNetworks.org with your ideas for the show. Follow Chris on Twitter: His handle is @communitynets. Follow muninetworks.org stories on Twitter: The handle is @MuniNetworks. You can subscribe to this podcast and the other ILSR podcasts, Building Local Power and the Local Energy Rules podcast. Access them on Apple podcast, Stitcher, or any place you get your podcasts. Never miss out on our original research. Subscribe to our monthly newsletter at isr.org. Thanks to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thanks for listening to episode 309 of the Community Broadband Bits podcast.

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