Transcript: Community Broadband Bits Episode 324

 This is the transcript for episode 324 of the Community Broadband Bits podcast. In this episode, Christopher discusses the new Fiber-to-the-Home project from Great Lakes Energy, Michigan's largest electric cooperative, with Shari Culver, the co-op's Vice President of Communications, Marketing, and Energy Optimization. Listen to their conversation.

 

 

Shari Culver: We identified Fiber-to-the-Home as something that was really important to the future of Great Lakes Energy. And there's lots of synergies with the grid. It's important to future technologies, but it's also really important to our members. We want to help them have a better experience, you know, at home and in their personal life.

Lisa Gonzalez: This is episode 324 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzales. Increasing numbers of rural electric cooperatives are using their infrastructure as a foundation to develop Fiber-to-the-Home Internet access service. In the northern areas of Michigan's lower peninsula, Great Lakes Energy has started a project that will begin connecting members as early as October. In this week's podcast, Christopher talks with Shari Culver from the cooperative about their service, Truestream. Their project is starting in Petoskey and will offer symmetrical services up to a gigabit to residents. As the project progresses, the cooperative will examine demand and take a nimble approach to their deployment plans. Shari explains the environment in the region, the history of Great Lakes Energy, and the factors the cooperative have needed to consider as they've pondered the potential of a large Fiber-to-the-Home project. Now, here's Christopher with Shari Culver from Michigan's Great Lakes Energy.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance in Minneapolis, Minnesota, talking with Shari Culver, the Vice President of Communications, Marketing, and Energy Optimization at Great Lakes Energy. Welcome to the show.

Shari Culver: Thanks, Chris.

Christopher Mitchell: I appreciate your patience. I'm struggling a little bit to get started here on a Monday morning, but I'm looking forward to learning more about — one of the most fun announcements I've seen for your electric cooperative announcing that it's building fiber optic networks out to everyone was one of your member-owners said, "Holy cat balls!," in response apparently, which I loved.

Shari Culver: Yep. They have just been so excited. The comments we've been receiving from our members — I think you saw that on our JoinTruestream.com website, and I remember that comment from that member. He's one of our most active on there and on facebook. I mean, members are just excited for the service, as are we to bring it to them.

Christopher Mitchell: That's wonderful. Let's give a little bit of background. Great Lakes Energy is a very large, very spread out cooperative in in Michigan. Tell me a little bit about it and where your territory is.

Shari Culver: Well [at] Great Lakes Energy, we serve 26 counties in the lower peninsula. So we're based in Boyne City, which is where our headquarters is, and we have eight offices throughout our service territory. We're actually the product of a merger. We merged with two other electric co-ops in 1999 — January 1, 1999. Great Lakes Energy, Top O' Michigan Electric, and Western Electric came together to form the biggest electric cooperative in the state of Michigan, and we're the third largest in terms of miles of line nationally. So we've got a little over 120,000 members [and] 14,000 miles of line. 11,000 of that is overhead and about 3,000 of that is underground. So it's been about 20 years. We're coming up on our 20 year anniversary of the merger. It's very spread out. It's a very rural service area, just like most electric cooperatives are. And there are some gaps in our service territory just because of the merger. We do serve approximately nine members per mile of line, and we've got about 240 full time employees.

Christopher Mitchell: So let's get into a little bit of the broadband space here. What led you to get involved with that? And if you could just walk me through the decision making process, I'd love to hear about it.

Shari Culver: Well, we entered into a strategic planning process with our board and our executive team. It's been about two years ago, I would say. So it's been moving pretty quickly, and you know, during that strategic planning session, the board and the executive team, we identified Fiber-to-the-Home as something that was really important to the future of Great Lakes Energy. And there's quite a few reasons for that. I mean, there's lots of synergies with the grid, it's important to future technologies, but it's also really important to our members. We want to help them have a better experience, you know, at home and in their personal lives. And also, it's going to help spur economic development. People's lives are so dependent on technology: education, healthcare, working from home, or just your general entertainment — I mean, the gamers, watching Netflix. The demand just keeps growing. We've got about 35,000 seasonal members, which is just a huge seasonal base for a cooperative. And so we really feel the potential for these members to now even spend more time at their seasonal homes is huge because now they can be connected to the rest of the world. They can work from home. They're here in our areas, you know, spending money using electricity. So after we identified fiber as a strategic initiative, we then performed some feasibility studies. You know, the board really wanted to do their due diligence. So we did three feasibility studies. We also performed a survey of our members. We have a really obviously established base of customers because as a cooperative, we've been around about 81 years and [have] very positive satisfaction with our Great Lakes Energy members. And the results of the feasibility study and the results of the member survey, you know, really showed our board and our team that this is something we wanted to do. We had about 75 percent of our members supporting the service. There's about 45 percent of them, through the results of the survey, that just don't have access to broadband. They're dissatisfied with the services they do have. You know, they're paying too much for a really slow service. And so we felt offering this service will continue to help us build our positive relationship with our members and really be able to offer them a service that they can't get anywhere else. But the decision itself was — you know, it was hard. I think our board took a really big step in making this decision. I think they can be very proud. We're good at what we do. We offer electricity. We know how to do that. So this is something new, and we're investing just a lot of resources in it. And we think it's going to be great, but it's a really big step on the part of everyone at Great Lakes Energy,

Christopher Mitchell: I think there's a lot of people who are members of electric co-ops in rural areas that are interested in a little bit more of the process. So let me ask you a couple of pretty easy questions. I think one is, is your general manager close to retirement?

Shari Culver: He is.

Christopher Mitchell: Okay, because that's one of the things that we're always curious about. There's so many across the country — all the rural electric cooperatives — so many of the general managers are close to retirement. We're always curious if that impacts the decision to move forward, but in this case, that wasn't a problem apparently. And the other thing is, you mentioned this started sort of two or three years ago. So five years ago, if I had called you up out of the blue and said, "Hey, do you think you're ever going to be doing broadband?" do you think you would have said no at that time?

Shari Culver: I think so. I mean, we've explored broadband over power lines years ago. We also offered dial-up service, which I think sounds kind of funny now to say that. But like some of the other co-ops in the nation, we partnered with TransWorld Network and offered long distance phone service and different types of Internet service, primarily dial-up, to our members. It was pretty popular at the time.

Christopher Mitchell: Oh yeah. I bet.

Shari Culver: You know, but five years ago to undertake a big fiber project like this — no, I probably would've said you were crazy. But ...

Christopher Mitchell: And so how did this come about? Were there members that petitioned or made noise, or was the board just looking around and thinking, you know, this is something the area needs? Because I've seen both grassroots movements that were started outside of the cooperative structure, and then I've also seen cooperative boards that were just very proactive.

Shari Culver: I think some was with our board. You know, we were in a state with Midwest Energy Cooperative, MEC, and they undertook a project like this, I believe five or six years ago.

Christopher Mitchell: Yes. We interviewed them a year or two ago I believe, to talk about that project.

Shari Culver: Right. So we've been keeping an eye on Midwest Energy and what they're doing, and you know, they've had a lot of great successes with their program. And keeping an eye on that, the board has been hearing about their project as well as national [projects] at national meetings they would attend. You know, they hear about other co-ops who are entering into the fiber space and really having a lot of great success with it. So they were learning about that. And then our team, you know, from an engineering standpoint is looking at what we can do, what fiber will provide to us for future efforts with engineering and communication capabilities and [to] be able to provide better reliability to our members.

Christopher Mitchell: How were you deciding where to deploy the service and when?

Shari Culver: Well, we are starting with our Petoskey service district. And so, we looked at Petoskey for this first phase, which is really a pilot project. Petoskey is in the northernmost part of our service district, and we chose it because of a couple of reasons. There's quite a bit of diversity there in terms of geography. There's, you know, lakes and swamps and hilly terrain, and there's also diversity in terms of the type of member living there. There's a very rural member, but then there's also some very wealthy members, both full time residents and seasonal residents. We serve along the lake shore of Western Michigan. It's very scenic. It's a resort area — ski resorts, golf resorts, [and] large homes on some beautiful lakes. If you haven't visited, I would encourage you to. It's wonderful. So a really diverse type of membership there. There's also a lot of competition really in the Petoskey service district. There's quite a few members who have cable. So they have access to cable, which is not as fast as Fiber-to-the-Home, but it is significantly faster than dial-up or other services. There are actually quite a few members who have nothing. They have access to dial-up only and they just don't have any Internet service at their home. So we started in Petoskey and we're going to be looking at the success of that area, and that'll help us to decide if we move into another area or what we do next after we're done building there.

Christopher Mitchell: It sounds like you'll face a little bit of everything in that area, then.

Shari Culver: Yes, we will be facing a little bit of everything there. Especially in a couple months, we'll be facing lots of cold weather.

Christopher Mitchell: Right. I'm well familiar with that here in Minnesota. You'd mentioned the number of seasonal accounts you have, about one out of three it sounds like. At that point I wanted to throw in and I figured I would now, but I remember a study from northern Wisconsin that if they could do things that would have people spend an extra week on average at their seasonal properties that the impacts on local economies would just be staggering and beneficial. So this is the sort of thing that I'm sure is a part of your calculus.

Shari Culver: It really is. One of my favorite comments from some of the surveys that we performed was from a member that said, you know, having high speed internet is like running water. I can't sell my home because I don't have high speed Internet available here, and we really, really need this. And so if we have that service available for our members who live here but then for that seasonal base, they can come here, they can spend time, they can work from home. Maybe they can, you know, move here permanently and convert that seasonal home to a full time residence, which really has a positive impact on the local economy.

Christopher Mitchell: Will you be planning to serve businesses as well or are you focused on residents?

Shari Culver: We are looking to serve businesses. That's something that we're going to be looking at in 2019. We don't currently have any service offerings for businesses at this time, but we know it's important. And there are businesses, either current businesses who will want the service, or we're hoping there will be new businesses that will come to the area and move into our service territory because they will now have that high speed internet and really be able to compete in the global economy.

Christopher Mitchell: And is your vision then ultimately that you'll be serving everyone? It sounds like you're not quite sure how soon that'll happen and you're just starting the pilot project this year. But I'm always interested in how cooperatives view this, particularly as you may have an average of, I think you said, nine people per mile, but I'm guessing that in some areas it's a whole lot lower.

Shari Culver: It is. I mean that's the average. So really it all hinges on the success of this initial phase in Petoskey. So, can we be successful in the Petoskey service district? And we really think we can, but we are going to be watching that very closely. We're hoping to hook up members as soon as the end of October. We're going to hook up a small group of members to start testing the service for us and then we'll be watching those installations and learning from the members and as we start installing in more areas, into more homes, really watching the project and looking at the demand. I mean, so far demand has been overwhelming for it. Interest from the Petoskey service district as well as all our other service districts. We have over 6,300 members who've already signed up their interest in the service. So we think that's a great number. And you know, about 3000 in the Petoskey Service district who say they want the service when it comes to them. So ultimately, yes, we would like to connect everyone. It could take about 10 years to do that. It's going to take a while. So we're going to have to in the meantime, manage those expectations of our members. I mean, people want it and they want it now. It's hard. It's hard to build out that fast. Takes a lot of time and a lot of resources. So we're starting with Petoskey. We feel we're in a really good position to build out to the rest of the area, but it's gonna take some time.

Christopher Mitchell: When I look at your service offerings on your website, I can see why people are pretty excited: 100 Megabits symmetrical for $60 a month, 200 for $70 a month, and then a gig for $100 a month. To give people a sense — and I'm sure everyone is doing their own calculations — I know that I pay Comcast somewhere between $80 and $105 a month, depending on which promo deal or whether I'm off a deal or whatever. And I'm getting 300 down, but I'm only getting 10 up. And it's that upstream that just drives me nuts. It really limits my ability. So I certainly have a sense that moving to Michigan, having a much more scenic house than I have in St. Paul perhaps, [and] paying less for higher quality Internet would be pretty nice.

Shari Culver: Yeah. And one of the challenges for us is that education of members. They don't really understand the speed that they have, upstream, downstream, what that means, why fiber is different, why Fiber-to-the-Home is different. I mean, you've got competitors out there — everybody's claiming they have fiber. Well, they have a fiber backbone, but true Fiber-to-the-Home, it's really not available in our service area. So we're finding we really have to educate people on what this means, why it's different, and why it's better.

Christopher Mitchell: So I mentioned the speeds and the prices. Is there any kind of install cost?

Shari Culver: Right now, there's no installation cost, no contracts, no data caps, no installation fees. So we're starting with building our core and connecting all of our substations. And members within about 1,500 feet of that core backbone in the Petoskey service district will be eligible for service first. They all have overhead, and then we'll be moving to those members, in the spring of 2019, who have underground service. We do believe the fiber's probably gonna follow the path of the electric conductor, but there is a chance, you know, maybe if you have underground to your home that we could run the fiber overhead. So we're making some of those decisions as we go.

Christopher Mitchell: One of the things that sometimes people ask me that are more technical is, are you using fiber that allows you to put it up in the electric space as the electric utility can or are you running it down in the communication space?

Shari Culver: We are using ADSS which is installed within the electric space versus strand and lash, which is installed lower.

Christopher Mitchell: Right. And that's nice because then you don't really have to do any make ready. You don't have to worry about space on the pole.

Shari Culver: Right. You don't have to do as much make ready. It goes up a lot quicker. So we've got about 60 percent, a little over 60 percent, of our core already built.

Christopher Mitchell: Wow. The last question I think people may have is, especially getting a sense that this is such a good deal, how are you financing this? Have you received any subsidies from the federal government? How does this possibly work to have such good connectivity in western Michigan

Shari Culver: We are using a smart grid loan to finance it through RUS. In the future, we do hope to use a combination of loans and grants. We will be applying for federal money, you know, when the rules come out. We were also part of the Rural Electric Cooperatives Consortium, and they were successful in securing funding through the Connect America Funds auction. So we're still in the quiet period right now with that, but you know, we were very happy with the end results.

Christopher Mitchell: Oh, great. I was going to ask you about that. So [in] the CAF II auctions, there was a consortium, and I don't know how many people were involved with it but certainly a lot of money, and we did an interview with Jon Chambers who was pretty happy with the amount that went to the electric cooperatives in general. So I'm glad to hear that you were a part of that.

Shari Culver: Yes, it was great to be a part of that. Jonathan Chambers, he knows what he's doing. He did a great job. It was good to work with him.

Christopher Mitchell: It's exciting, I have to say. I mean, I'm sure that you all are very excited, but you know, for a few years we've been thinking that the rural electric cooperatives could really make a huge difference in making sure that all Americans have high quality Internet access, and it's great to talk to you and get a better sense of how you're doing it.

Shari Culver: Yeah. Well thanks for having me. I mean, we're excited too. It's been a lot of work for our staff. It's a lot of new things we're learning as we go, and it's really moving quickly. But it's been really exciting. From my end, From Communications and Marketing, we're getting to do a lot of fun stuff that we don't necessarily get to get to do with communicating about electricity. We're going to events. We're hosting members. We're really out there in the community getting the word out, and it's been exciting.

Christopher Mitchell: That's terrific. Thank you so much for coming on the show.

Shari Culver: Yeah, you're welcome.

Lisa Gonzalez: That was Christopher with Shari Culver from Great Lakes Energy in Michigan. Read about the project JoinTruestream.com or at MuniNetworks.org at the Great Lakes Energy tag. We have transcripts for this and other 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. The handle is @MuniNetworks. Subscribe to this podcast and the other podcasts from ILSR, Building Local Power and the Local Energy Rules podcast. You can access them wherever you get your podcasts. Don't miss out on our original research. Subscribe to our monthly newsletter at ILSR.org, and while you're there, take a moment to donate. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thanks for listening to episode 324 of the Community Broadband Bits podcast.

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