This is the transcript for episode 326 of the Community Broadband Bits podcast. In this episode, Christopher talks with representatives from the City of Mont Belvieu, Texas, about their community fiber network MB Link. They discuss some of the legal challenges the city had to overcome to establish MB Link and how Mont Belvieu has managed to successfully market the network to city residents. Listen to the episode here.
Nathan Watkins: And the courts ruled that electricity was a public improvement, similar to public works and utilities, and we argued that reliable high speed broadband Internet is also a public utility and a public works. And the judge ruled in our favor.
Lisa Gonzalez: This is episode 326 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. In this episode, four folks from Mont Belvieu, Texas, talk with Christopher about their network MB Link. Nathan Watkins, Dwight Thomas, Scott, Swigert, and Brian Ligon discuss their experiences with the network that the community has been quick to embrace. They talk about some of the challenges they faced, including a hurdle put in place by the state of Texas, and the many ways overcoming those challenges have paid off. Mont Belvieu has a thriving oil and gas industry, but they're quickly becoming known for their gigabit connectivity. Now, here's Christopher with Nathan Watkins, Dwight Thomas, Scott Swigert, and Brian Ligon.
Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance, and today we're breaking a record. We're going to have more people on this show than we have had in any other episode. So let me start by introducing these folks from Mont Belvieu, Texas. Nathan Watkins is the City Manager. Welcome to the show.
Nathan Watkins: Thank you for having me.
Christopher Mitchell: And we have Dwight Thomas, the Director of Broadband and IT.
Dwight Thomas: Thank you for having me as well.
Christopher Mitchell: We also have Scott Swigert, the Assistant City Manager. Welcome.
Scott Swigert: Thank you. Welcome. Thank you for having me today.
Christopher Mitchell: And Brian Ligon, the Marketing and Communications Director for the city. Welcome to the show.
Brian Ligon: Thank you very much. Happy to be here.
Christopher Mitchell: So let's start with Nathan with a little bit of background. Mont Belvieu [is] a little bit east of Houston. Tell me a little bit more about the community and the size, and just give the audience a sense of where you're at.
Nathan Watkins: Okay. The City of Mont Belvieu is located on Interstate 10 — just north of Interstate 10. We're approximately 14 square miles, just under 8,000 population. We were incorporated in the '60s. Primarily, we were an industrial town. There was oil and gas drilling here that started in the early 1900s, and that evolved into storing natural gas liquids in underground salt formations here. It's the largest and highest quality salt dome in the world, and that's kind of what makes Mont Belvieu special. Um, 85 percent of the natural gas liquids, the United States are processed here. We have pipelines that come in from the East Coast, all the way from Pennsylvania, and then to the west of us from New Mexico and north to Nebraska — kinda all pipelines merge here. We have 10,000 linear miles of pipeline in two square miles located on the salt dome complex. So, an oil and gas industrial town, and that's where our revenue comes from and that's what gives us the opportunity to do great projects like MB Link.
Christopher Mitchell: So let's talk about MB Link, because it sounds like one of the other things that sets you apart is you're probably one of the better connected cities in all of Texas now. Tell us about that.
Nathan Watkins: We're definitely one of the better connected cities in all of Texas now, but that wasn't always the case. About four or five years ago, we started hearing complaints from our businesses and our residents about our internet connectivity and reliability and the frustrations associated with that. We went out and conducted a survey, and [it was] pretty conclusive that 90 percent of our residents felt that we didn't have broadband and that they felt that modern day Internet was a critical utility just like water and sewer. So that's what really kicked us off into looking at becoming the first city in the state of Texas to do a 100 percent rollout and become an ISP for the community.
Christopher Mitchell: I'm curious, if anyone else wants to jump in and give a sense of what it was like to make this decision and what motivated it.
Nathan Watkins: Yes, Nathan, I'll add to that. So it was really driven by our residents' need for reliable Internet. I mean, that doesn't seem — you know, in 2018 and previously 2015/16, that doesn't seem like a challenge a lot of communities face, especially one that's 30 miles east of Houston. But it's definitely one that we were facing. The fastest speeds that were available in the City of Mont Belvieu, whenever we get started, were 1.5 megs DSL and 5 megs over cable, and there [were] basically two providers for the entire 14 square miles. Ultimately, we had new subdivisions going in — we've kinda been in a high growth area for the last six to seven years, growing at about eight percent a year — but we had new homes going in and new sections of subdivisions where broadband providers and Internet service providers just simply refused to go in. [They] said, "Hey, we're not gonna bring service to these 120 new homes in the community." So people were having to rely on cell phone connections and mobile hotspots to address their needs for Internet.
Christopher Mitchell: So let me ask you, Dwight, Mb Link was your answer to that. What exactly is MB Link in terms of the services that are available and who offers them?
Dwight Thomas: Sure. So MB Link is a 100 percent fiber optic, and we can call this probably Fiber-to-the-User, network. [It's] a system that we've taken a little bit farther than most of your typical Fiber-to-the-Home implementations., whereas we bring the fiber directly inside to you. Just as Nathan mentioned, this was to address a big need, one that I definitely came to learn more about as being part of this project and ultimately for the city. So at the moment, MB Link, we only offer one plate, which is data at the moment. The initial package was what some called the Google package. It's up to a gig up, up to a gig down is what we're doing for residential. [We're] rolling out residential services now, and looking forward to bringing on businesses first of the year.
Christopher Mitchell: Let me know a little bit about the competitive environment. Have you seen the incumbents step up now that you've set the bar so high?
Dwight Thomas: Yes. And actually, I've spoken to probably all except Comcast at the moment. So in this area, we have two major [providers], which is Verizon — Frontier and of course Comcast, and then we also have a sort of a WISP, which is called ims. And at some point I've talked to all of them about this, about what we're offering, and they understand it. Of course, they are definitely aware of all the challenges and ultimately could not believe that we were able to get this off of the ground and it'd be as successful as it is.
Christopher Mitchell: Brian, let me ask you as the marketing [and] communications person, have you faced a challenge in terms of marketing a city-owned service and what I assume is a pretty standard conservative-thinking town in Texas?
Brian Ligon: I got to tell you, it's actually been a lot easier than you might think. We understand that the national providers have the greatest minds with all the bells and whistles and national marketing and advertising campaigns, but we have one thing that they can't buy. And that's hometown. We are their hometown Internet service. We're the ones that are building the network. We're installing the network. We touch these customers every day. The same people that they rely on for water, sewer, they now can trust for Internet. You know, when people go and they turn the water faucet on, they don't think about, "Well, is my water going to come on today?" If they go and flush the toilet, they don't go, "Is the toilet gonna flush today?" It just works. And so we've been able to take that brand equity as the city as — I mean people live inside of our brand. They chose to live here for a reason. We've been able to take that and, and, and use that to our advantage to gain that adoption of the service, to let people know that when they call us it's going to be different. It's not odd for Dwight to actually go and meet with a customer and address their needs individually. He won't tell you this because he's too humble, but I will tell you that, you know, he was actually at a customer's house the other day. He was telling me about a call he had, and he went to a resident's house and helped them address their issue individually. And [he] got them, where they were like, "Nah, this doesn't work, this is new, and I shouldn't have jumped on this train," to, "Oh man, this really works. Thank you." And that customer told him, "I never would have gotten the time and attention that you gave me today to get this running the way that I would from a national provider. I don't understand, why did you do this?" And that's the thing — it's because it's hometown service. You know, that's what's differentiating us in the marketplace, and it's the one thing the big providers can't buy.
Christopher Mitchell: That's great. Those are the stories that we love to collect. Scott, you know, I'd like to bring you in as Assistant City Manager and ask you, are you seeing any changes in the community as a result of this? You know, [is there] anything that comes to mind and gives you some pride about your community doing this service?
Scott Swigert: Well I know one of the things that I've heard in conversations with some of the families actually getting on MB Link, is the fact that now they are able to enjoy some of the amenities a lot of people have already been able to enjoy across the country. You know, now that we've got a [gigabit] service that they're able to tap into, they're able to get smart devices for their homes. They're able to get Alexas, they're able to get the air conditioner controls that you can control through your Internet, and your security cameras and security system that they haven't been able to utilize in the past, and now they can use those smart devices. And so that's been a great positive for our community.
Christopher Mitchell: That's really good to hear. Now, I was just at an event last week in Ohio, and I was speaking with a community from Texas up in the region around Dallas. And Nathan, I'm going to ask you this as a city manager. They were under the impression that they could not even build a municipal network, and they said that they had reached out to the Attorney General of Texas who told them that they couldn't. And I know there's been some confusion because Texas is quite clear that cities cannot build a local exchange services, like telephone or cable services. So can you tell us a little bit about Texas law and how you went about building your network?
Nathan Watkins: Yeah, that's definitely a similar position we were in once we conducted a feasibility study and it looked like this was something that was going to be feasible and we wanted to take on. So we started going through the case law, and just like you mentioned, there's a very specific law around switched access and municipalities are prohibited from attaining the required certificates for doing telephone services. And it was really unclear whether or not a broadband network was included in that or not. So as part of this process, we sought a declaratory judgment from the attorney general regarding our ability to issue debt for a solely-owned broadband Fiber-to-the-Home network. The court ruled in our favor and the attorney general accepted that ruling. We issued the debt and it's kind of history in the books. And we're building them. We've got customers on the system now. The interesting thing is we use case law regarding public utilities from the early 1900s. We specifically used electrical case law where cities were getting into electrical service in 1913 and 1925. We used a case from Nacogdoches and a case from the City of Clifton regarding this matter. And the courts ruled that electricity was a public improvement, similar to public works and utilities, and we argued that reliable high speed broadband Internet is also a public utility and a public works. And the judge ruled in our favor.
Christopher Mitchell: I think that's interesting on two levels because you actually solved two problems. I think one was whether or not the city could own and operate and the second is financing, and you were able to achieve both goals.
Nathan Watkins: That's correct, and those were specifically the two things that we had to address. One, could we issue the debt to do the project? I know other cities have included fiber in other bond packages, but there had never been a sole issuance for the construction of a broadband network. So we had to get that addressed and the attorney general agreed with us there, and then the legislation regarding electrical utilities and how that was comparable to a modern day broadband network. And the judge ruled in our favor and said, yes, it's critical infrastructure, just like water and sewer, and everybody should have access to it.
Christopher Mitchell: Well, and now everyone will.
Nathan Watkins: That's correct.
Christopher Mitchell: Dwight, let me come back to you. What's the plan? You said that you're serving residents today and you're going to start serving businesses next year. What's the plan for when it will be available to everyone?
Dwight Thomas: Maybe first quarter of next year. I mean, it'll be available to everybody. The preference though was to take care of the citizens, our residential customers. They have the greatest need and of course, part of our implementation and layout — I know some cities may have more businesses than they do homes. Ours was a little bit of a mix, whereas our residential customers kind of were a little bit larger than our businesses at the moment. So that's been our focus. We've been attacking that with great fervor ,and now we're moving over to the business which all have a sense that they want and they've expressed their interest in it. They're ready to move forward with it, so we're looking to do that. And just to add to that, Chris, this is really just the start of some of the things that we're doing here. We're looking to move over into the smart city space as well, which the fiber that we're laying a provides a great foundation for that too. So a lot of big things happening here in Mont Belvieu.
Christopher Mitchell: Are you seeing other communities around you that were in a similar position to what you were in? Are they looking at what you're doing and thinking, "Man, I'd like to get me some of that here"?
Nathan Watkins: Yeah. We've reached out and spoken to several different city manager groups, city manager study groups, city manager luncheons. And then there's actually other city councils we've heard of that have initiated this process. I think the scenario was kind of a perfect storm for the City of Mont Belvieu to be the first to try it out. One, we didn't have the connectivity that our community desired. We had the means to issue the debt and service the debt to deliver the project. And the business model was built around a 65 percent penetration rate. So, our goal was to have 800 homes connected by the end of the third year. We had 700 homes connected before we even went live to the first customer. So, there was so much pent up demand, we had all of our residents pay their deposit, put their money down, and say, "Hey, we want to be on the list" before we even had the first person connected. And really the biggest challenge we face now, is there's a wait to get on it. As Dwight mentioned, it'll probably be the first quarter or early next year before we can get everybody connected that has signed up. And so the challenge we face now is how fast we can get everybody online. It's not a matter of if we're gonna meet our penetration rates and if we're going to meet the business model projections. It's just getting it out there and getting it delivered and getting it done.
Christopher Mitchell: That's great to hear. I mean, I think 65 percent is ambitious and you know, I'm curious, Brian, if you would have any words of advice for other communities that are looking at that because, you know, in our experience, word of mouth and existing demand is enough to get you 20 or 30 percent of the market. But, it often takes some savvy marketing to make sure you're cracking above 50 percent.
Brian Ligon: I would agree. You know, the thing I would tell other broadband marketers or potential broadband marketers that are getting into this space — and I've had to learn very quickly being that we're the first in Texas and one of a handful. I don't have a lot of other government communicators that I can say, "Hey, so what did you do for your broadband network?" I mean, it doesn't exist. So I've had to make a lot of this up as I go. But one of the things that I would say is just making sure that that brand, that co-branding, happens. We co-brand — we make every effort to co-brand the city with the network. I've even gotten to the point now to where I've got our city utility workers and parks and rec guys wearing MB Link hats when they're out in the field. They're gray and DayGlo green, so it meets their OSHA requirements. But whether someone is out there cutting the grass or fixing a pothole, our residents see that, those city functions, but they see them, even in their roles, integrated into MB Link as a brand. We make sure that we're always putting that impression out there, the brand impression, for the network along with the city. We've gotten a lot of mileage on that, and it's helped us a lot. Beyond that, just leveraging the power of a social has been huge for us, even to the point that Dwight and I are now doing a scheduled Friday post every Friday at noon to help people make the most out of this new power that they have with these high speed connections. We're doing a Fiber Facts Friday, and if anyone wants to follow that, it's #FiberFactsFriday and you can see what we've done so far and what we'll do in the future. But we help people make the most out of the technology they have in their home. And people are loving it. We're getting great feedback on it.
Nathan Watkins: Yeah, this is Nathan. I would like to add to that. You know, that's something that we were definitely concerned about, going up against a huge marketing dollars of the national telecommunication companies, and how we were going to be able to address that and get the word out. But part of what has made us successful is, it is a hometown service. We have just one bill that goes out. So you get your water, your sewer, your trash, and your Internet bill all in one place. If you've got any questions or concerns, you know, most of our residents are driving by city hall every day and they're just a phone call away from being able to talk to Brian or myself or Dwight and get the answers they need. And then, the biggest thing is the service is exactly as we've advertised. We don't have interruptions. We don't have reliability issues. We don't have connectivity issues. We made sure that we had all the right equipment and that it's set up properly in the houses so that everybody has the service that we've promised. And it just works. And when something just works, it spreads like wildfire through the community. And the people that were kinda on the fence and said, "Man, is this really going to work? No city's ever done this before." and taking the wait-and-see approach, those people are the ones that I was talking about earlier that are the most disappointed that now they've got to wait 60 to 90 days before they can get service because they missed that opportunity to jump on the bandwagon at the beginning of it. It's really been a huge PR success for the city. Certain cities have reputations and challenges they face and I think we had a very positive reputation, but getting outside the box and delivering a service that was a critical need for the community and doing it successfully — just about anywhere you go now in the community, there's people talking about MB Link and how great it is, and you know, they're just so thankful and appreciative that the city council was willing to take this challenge on and make it work.
Christopher Mitchell: So I have two questions to finish up with, and I'll throw the first one to Scott first and that's one about structure. A lot of the cities that have built their own networks already had electric departments and they often would put the network under the electric department. How did you structure it in Mont Belvieu, for oversight and things like that?
Scott Swigert: Well basically, we stood up a whole brand new utility. We created a department from scratch, and of course Dwight was our first employee of that new utility, who was coming in and helped us create and develop and design that structure and to grow it. It's a fast growing department, as it started with one, you know, six [to] nine months ago and now we're getting closer to seven employees that we're trying to pull on and bring on board at this time to kind of service this. And we know that we're going to continue to grow as we continue to bring on additional users, and as our city continues to grow, and as Nathan mentioned earlier, as we get our businesses on and to be able to provide the services that we need for that. And so, again, it's one of those things that we had to basically start from scratch, but there wasn't a place that we could really put this new utility. It's totally different and unique from the other things that we provide, but it's something that we were able to do. And it goes back to just the ability that cities and municipalities have, that we're able to hear the need of our citizens and to be able to bring something that our community needs that even the private sector was not able to provide to our community. But we were able to stand up and bring that service to them, and it provided an excellence they're not going to be able to get anywhere else.
Christopher Mitchell: It's good information for communities to have because I think a lot of people have those same questions about where to put it in terms of the structure of the city. Dwight, I'm curious — a technical question for folks that are listening and starving for some technical details, did you go with the GPON network or you want to tell us a little bit about the technology behind it?
Dwight Thomas: Sure. And Chris, you are right. This is definitely a GPON and active Ethernet network, primarily GPON, due to the flexibility that I get from it and then of course the ability to be able to split and serve many customers. I don't know how deep you want to go into the technical stuff. I can talk about this stuff for days. But that's essentially what it is. We're going to layer services on top of the dotted line. Well, we will offer some MPLS focused services, even add LAN services, you know, we get close to the business side, but right now it's primarily GPON and of course active Ethernet.
Christopher Mitchell: And so it will be more active for the businesses which are likely to want the dedicated circuits. Is that what you're saying?
Dwight Thomas: Sure. Businesses, and of course, you know, you have the occasional customers who are big gamers and really, really need the bandwidth or exceed bandwidth of the service that GPON requires, right? So we'll kind of walk them over to the active Ethernet side.
Christopher Mitchell: That's great. Is there anything else anyone wants to throw in before we sign off — things people should know about Mont Belvieu and MB Link?
Brian Ligon: If they don't believe it, they should try it for themselves and their community. It can be done. And if you need to try it, come on down. We'll let you hop on the network and test the speed for yourself. You'll be surprised what a city with some "can do" attitude can do.
Christopher Mitchell: Well, I like that idea. I want to take my wife and kid down to east Texas, Louisiana area sometime in the near future, so I'll be swinging through when I do that.
Nathan Watkins: Definitely, come on by, Chris.
Christopher Mitchell: Let me thank you all for sharing your background, your information with us. I think it's just terrific to see a small town figuring this out, moving forward, being an inspiration to others. Thank you so much.
Dwight Thomas: Thank you very much, Chris. What a pleasure.
Nathan Watkins: Thank you, Chris.
Brian Ligon: Thank you, Chris.
Lisa Gonzalez: That was Christopher with Nathan Watkins, Dwight Thomas, Scott Swigert, and Brian Ligon. 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. 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 326 of the Community Broadband Bits podcast.