This is the transcript for episdoe 369 of the Community Broadband Bits podcast. In this episode, Christopher talks to Greg Dean from the South Dakota Telecommunications Association. They discuss how the association's membership, which includes cooperatives, municipalities, and locally-owned companies, has invested and continues to invest in high-speed fiber connectivity for rural South Dakota. Listen to the episode, or read the transcript below.
Greg Dean: Our companies, collectively they're going to spend right to the tune of about $700 million to make sure that broadband is available and working for the citizens within their service areas, for the citizens of South Dakota.
Lisa Gonzalez: Welcome to episode 369 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. If you live in South Dakota, you're no stranger to large swaths of rural landscapes. If you live in one of these rural landscapes, chances are good you're also no stranger to high speed Internet access. Even though much of the state is covered with ranch and farmland, cooperatives, tribal community and small ISPs, and a few municipalities are investing in high-quality connectivity for folks in South Dakota. Many of these providers are members of the South Dakota Telecommunications Association. This week their director of industry relations, Greg Dean, talked with Christopher about connectivity in such a rural state. Greg describes what the SDTA does for members and how their connections to local communities have influenced decisions and their ability to understand local needs. He discusses how working together has helped expand high-quality Internet access, funding, and how broadband is more important than ever in rural communities. Now here's Christopher and Greg Dean from the South Dakota Telecommunications Association.
Christopher Mitchell: Welcome to another, another episode of the Community Broadband Bits podcast. This is Chris Mitchell with the Institute for Local Self-Reliance in Minneapolis. And I'm just starting the show for a second time after Greg and I are having this great conversation, so hopefully this won't seem a little bit stale to y'all. But I'll introduce Greg Dean, who is the director of industry relations for the South Dakota Telecommunications Association and is going to share a lot of the really remarkable investments we've seen in South Dakota. So Greg, I was hoping you could tell the audience, in addition to me, now that I'm recording properly, what the SDTA does.
Greg Dean: What we do here at the South Dakota Telecommunications Association is we represent the 18 companies within our membership, both on a regulatory and a legislative basis in terms of doing advocacy work collectively for them. And as I describe to people, these 18 companies, really have long histories and long roots back into South Dakota. The way I describe them is they grew up as telephone companies, but I think virtually every one of them today will tell you that they are a broadband provider first and foremost, and while they are all also video providers some way, shape, or form, they will probably tell you that that landline telephone is becoming an increasingly smaller part of their business as the years go by.
Christopher Mitchell: Now, when I see telecommunications association, I often think small, independent private companies — often cooperatives in the Midwest here — but you have a different mix than most I would say. So tell us about your different kinds of members.
Greg Dean: Like I said, we've got 18 member companies within our membership. The bulk of them, 12 of our 18, are member-owned cooperatives. We have three municipal companies. The only three municipal companies in South Dakota are members of our association. We have two small commercial providers and then the tribal telephone authority up at Eagle Butte.
Christopher Mitchell: And I always like to note this because we cover a lot of municipal type providers: yours are the original telephone companies in the area. They're not municipalities that decided to get in later in the game.
Greg Dean: Correct, correct. These are all municipal companies that have been serving their respective communities for a number of years. The three in South Dakota are Brookings, which is a home to South Dakota State University, a community of about 20,000 right on the Minnesota border virtually; Beresford, which is a community of about, I would say, 2,000 to 2,500 people about 30 miles straight south of Sioux Falls; and then the third is Faith, which is a small ranch community of about 500 - 600 people probably about roughly a hundred miles northeast of Rapid City.
Christopher Mitchell: And your members aren't from the metropolitan areas of South Dakota. I mean, a lot of listeners aren't going to be familiar with the population distribution, but when we're going to be talking about the remarkable investments that your members have made, it's important to note that this is the least dense areas of the state and not in the most dense areas of the state.
Greg Dean: These companies collectively serve about 76 percent of South Dakota's land mass. It's right at about 60,000 square miles. And actually, we just did a rough estimate in terms of the amount of population that these companies serve, and that estimate came up at about 280,000 people total that live within those 18 companies' service areas. So if you get right down to it, that pencils out to about four and a half people per square mile. The biggest community that our companies serve is Brookings, served by Brookings Municipal Utilities. Their communications company actually goes under the name Swiftel. And then probably the second biggest community that our companies serve is Brandon, which is a bedroom community to Sioux Falls. It's about five miles east of Sioux Falls. And then it really tails off after that. Then you're really getting into communities of about 2,000 to 3,000 people, [which] would be kind of the next tier, and then it really gets down into a whole bunch of communities that have populations of a thousand or less and a whole lot of farm and ranch land in between those communities.
Christopher Mitchell: That is not significantly different from what I think North Dakota has in terms of population. They've also had remarkable investment. But if you look south of yourself, where I think again you have similar density patterns, we don't see near the amount of investment in a state like Nebraska. So I'm curious if you can walk us through what has allowed your members to just make these kinds of investments — what motivates them in many ways?
Greg Dean: Well, I think there's a couple of things. One is — and I give a lot of credit to the commitment and the foresight that these companies really have in terms of making sure that their customers really have the best and most state-of-the-art kinds of services available. And most of those companies within our membership are member-owned cooperatives, so they are run by and the policies are really driven by board members who live throughout the service areas. All of our member companies are community-based providers. I mean they really — I think all but one of them are headquartered in South Dakota. They really have a connection, both figuratively and literally, to the communities and the customers they serve, and so they really are committed and deeply woven into the threads of South Dakota's fabric. The other thing beyond just that commitment and that investment that has really allowed South Dakota to take advantage of the broadband connectivity that's available today, is roughly 30 years ago a subset of our companies originally saw an opportunity to begin interconnecting their own unique networks, and what really rose out of that is an entity called South Dakota Network or what's known today as SDN Communications. And the original thought behind the creation of SDN, back in the late 1980s - early 1990s, was really a way to bring about and give customers in South Dakota a choice of national long distance services because national long distance companies at the time were probably not going to bring their own facilities and try to deliver their own facilities into places like Kimball and Groten and Bison and other kinds of small communities where our companies are headquartered. But our companies saw an opportunity that if they jointly engineer their networks and aggregate their customers, bring them all together to one point, in this case Sioux Falls, it made it much more attractive for the national long distance companies to come into one point in South Dakota. And so as a result of that, we have a significant amount of backbone fiber, transport fiber, throughout the entire state of South Dakota. The really has morphed into a really dynamic data delivery network, as I call it, the interstate highway system of data delivery and really runs that kind of data connections out to and near to lots of small communities in South Dakota that probably would not have had that opportunity had it not been for the birth and creation and evolution of SDN Communications.
Christopher Mitchell: Well, I see that. I think it was a report that you did last year notes that even as of then 76 percent of their customers already had broadband at the minimum FCC defined 25 Megabits down and 3 Megabits up. And I'm guessing that's even increased more, but that's a sign of how deep they're going into the neighborhoods because I'm presuming a lot of them had been using DSL that they're switching over to fiber. That means that there's been a lot of investment to be able to drive DSL that fast.
Greg Dean: Yeah. And the investment, again, it goes back to the commitment and the foresight that these companies. And as you will understand and I think people who listen to this podcast understand that delivering broadband out to the customers is no cheap service. And our companies are considered small when it comes to national comparisons, but from the beginning of 2013 through the end of 2017, in that five year window, our companies collectively invested right at about $400 million into their capital networks. And as we asked them what they projected to do in the four years following that, from the beginning of 2018 through the end of 2021, they're projecting they're going to spend an additional $300 million collectively. So over that nine year period, our companies, again albeit the fact that they are relatively small by nature compared to a lot of other companies, collectively they're going to spend right to the tune of about $700 million to make sure that broadband is available and working for the citizens within their service areas, for the citizens of South Dakota.
Christopher Mitchell: So with all that investment, I would guess that a fair amount of that comes from Washington D.C. Through the universal service program historically, but I have no sense of how much. Like, what's attributable to that versus loans they're taking out? Like, how does this actually get financed in practice?
Greg Dean: There's no doubt that the Universal Service Fund is a key component of the investment that our companies have made. We did a comparison of the costs of putting a mile of fiber backbone in rural South Dakota versus a metro area like Sioux Falls.
Christopher Mitchell: Sure.
Greg Dean: And in rural South Dakota, putting a mile of backbone fiber costs about $16,000. because of all of the extra construction and challenges of putting a mile of fiber in metro Sioux Falls, that number actually runs about $60,000 per mile. But again, if you look at the number of people in our service areas, it's a little over four people per square mile versus in Sioux Falls, that number is almost 2,500 people per square mile. So the return per residence in Sioux Falls for a mile of fiber is about — the average cost to put that in is about a little over $25 per resident. You get into rural South Dakota, and that number skyrockets to over $3,500 per resident. And so that's why the economics of delivering comparable services in rural America versus urban America really are bridged by the Universal Service Fund. That's why it's such a key component of making broadband both available and affordable in places like rural South Dakota.
Christopher Mitchell: When you say $16,000 per mile, I think some of the folks on my podcast would be curious. Is that basically just a machine that's plowing it directly in with some sort of armored cable? Or is it just, you know, what sort of technology is that often using in the more rural parts of the state?
Greg Dean: You're going to need to acquire the fiber strands. Those are obviously engineered in such a way that, you know, fiber is a very technical technical piece of equipment, and I equate broadband to basically like delivering water for example. I mean, instead of putting a pipe in the ground that's going to have water running through it, you're going to put a piece of fiber in the ground and there's going to be data running through it. In the case of a water system, you can push water through that pipe, but unless got a pump every so often on that water system, that water is only gonna go so far. And it's the same way with electronics out in the field, out in rural parts of the country. And so, not only do you have to put that fiber in the ground to connect homes and businesses across rural South Dakota, you also have to put electronics to make sure that that signal gets a boost every so often. Otherwise, those speeds, the further out that you get, will tend to degrade and they're just not as — certainly not as usable or as viable, unless you continue to put those electronics further out into the country. And so there's a cost obviously associated with those as well.
Christopher Mitchell: Right. Yeah, that's yet another additional cost that you don't have in the city in the same way. And I wanted to note, I think Minneapolis and St Paul, if you get toward our urban areas, you're looking at $100,000 per mile I think, or you know, in some cases in still larger and more dense cities maybe per block quite a bit. So, one of the questions I wanted to ask you since you're the director of industry relations, I'm curious, like, what are the challenges that your companies are wrestling with right now to be able to finish off these investments and keep providing that high quality service?
Greg Dean: I think one of the challenges they're wrestling with is just continuing to push that investment further and further out into the countryside. I mean, we talked earlier about the fact that I think it's extraordinarily commendable that these companies will be at 90 percent plus connections of fiber to homes and businesses across their service areas within just a couple of years, but that still leaves another seven to ten percent or so that still need to be connected. And those are some of the most sparsely populated parts of the country, so that will create a challenge. I think the other thing that we as advocates for rural broadband providers have to continue to remind policymakers and elected officials [is] that just because the fiber is in the ground and the electronics are out in the field, just because it's done once doesn't mean that you're done, doesn't mean you can stop. Because about the time that you've gotten to maybe that hundred percent connection rate, that's about the time that you've got to start over because some of those early pieces of fiber that were put in 20 or so years ago, maybe even earlier, now comes the time that you've got to start replacing some of that. And the demand from the customer is such that they're demanding more and more all the time. I saw a presentation not too long ago where one of our industry consultants pulled a slide from a presentation he used back in 2004, I believe, where he put in this presentation the projections that by 2018 people were going to be demanding 50 to a 100 heg at their homes. He said, "People thought I was crazy. They thought I was out of my mind, that nobody would ever need 50 to 100 meg." Well, we know now that 50 to 100 meg is kind of becoming the standard for even a lot of people in the consumer side of the business. And so, I don't think it will be too many years before we're realistically talking about 500 meg or a gig at the consumer level, let alone at the business level. And those are the kinds of things and demands that are going to continue to drive more and more investment from companies to make sure that their customers are suited and able to handle and deliver the kinds of services that those consumers are demanding in today's world.
Christopher Mitchell: Well, I think this gets to a point that can be a little bit contentious among some, which is this question of at which point does it make sense for the public to invest in rural areas? And so I'm curious, whenever you're hearing people, whether it's policymakers, or you know, if you just make the mistake of reading comments on a newspaper article or something like that, who are saying, "Well, if you choose to live out in South Dakota, away from the metro, then maybe you shouldn't have high-speed Internet access." Why is it smart that we have a Universal Service Fund and the Connect America Fund and things like that?
Greg Dean: I would say that in a lot of cases, it's probably more important to bring broadband kinds of services and high levels of connectivity out to rural areas. Simply from the standpoint of broadband and the Internet make the world smaller, and in a state like South Dakota — and I'll give you a prime example. Whether it be for delivery of educational services to small school districts, especially in very sparsely populated areas of South Dakota, or telemedicine kinds of facilities — I was just down in Sioux Falls and toured the Avera health system. It is really known as a national leader in terms of delivering telehealth services to their clinics and hospitals across South Dakota, and they are able to connect emergency rooms in critical care facilities all across their footprint. They have a critical care and an ER trained doctor, for example, in Sioux Falls who can in essence look over the shoulder of a health care provider who is in an ER room in some place like Chamberlain or Wessington Springs or a number of small town hospitals that can really advise that health care provider in that small town in a critical care situation, in a trauma kind of situation. So you've got another set of eyes and ears there saying, "Here's what you need to look for." And if you've ever traveled across South Dakota, once you cross the Missouri River at Chamberlain on I-90, it's about roughly about 200 miles to Rapid City and in that 200 miles — and we can go 80 miles an hour on the interstate and South Dakota, so in that two and a half hour drive roughly, there literally is one hospital that's about 10 miles off of the interstate. There literally are no hospitals on that interstate highway system for about a 200 mile stretch and access to even, whether it be an ambulance or an emergency room, those are the kinds of things that make critical care and broadband and the Internet really make the world smaller and provide those kinds of services that allow these people who live out here access to those kinds of services.
Christopher Mitchell: And I imagine that you have some stories we don't have enough time to get into, but there's probably a lot of people in South Dakota who are contributing mightily to the country and better able to because of high-quality Internet access, whether it's through markets or interesting ideas or whatever else they might be doing.
Greg Dean: Yeah, there's all kinds of examples of lone eagles who are working from their homes for major corporations, tourism kinds of businesses, precision agriculture, farmers accessing markets — just all kinds of stories where there are all kinds of commerce and job opportunities for people who live in rural South Dakota that are able to live and work in small communities simply because they have access to high-grade Internet services.
Christopher Mitchell: Well I'd like to wrap up by just noting three of my favorite things about South Dakota, for many of the people who are listening who may not have had the benefit yet. And that's of course, the Badlands is amazing; wild horses running around, if you've ever get a chance to come across those; and a town named after me, Mitchell, that has a corn palace. So, I love driving across South Dakota beause I see my name on every other sign in the eastern part.
Greg Dean: Absolutely. Mitchell's a wonderful community, and I'm sure you have a good namesake right there. The Badlands are just phenomenal. If any of the listeners get a chance to stop through and take a tour off of interstate 90 for a couple hours, there are some great hiking opportunities. The only thing I would suggest is is maybe going in the spring or the fall because if you're out in the Badlands in a 95 to 100 degree day, it may not seem quite as appealing.
Christopher Mitchell: Sure, absolutely. Thank you so much for taking the time and working with me through the technical difficulties. I appreciate it.
Greg Dean: Absolutely. Good to talk to you.
Lisa Gonzalez: That was Christopher and Greg Dean from the South Dakota Telecommunications Association. Learn about the organization at sdtaonline.com. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at firstname.lastname@example.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. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at ilsr.org. While you're there, please take a moment to donate. Your support in any amount helps keep us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thank you for listening to episode 369 of the Community Broadband Bits podcast.