Transcript: Community Broadband Bits Episode 384

This is the transcript for episode 384 of the Community Broadband Bits podcast. In this episode, Christopher speaks with Matt Larson, owner and CEO of wireless ISP Vistabeam, about his company, the CAF II auction, and rural Internet access. Listen to the episode, or read the transcript below.

 

 

Matt Larson: These ranchers had actually put the lines up themselves. They had bought the equipment and the wire to put the lines up themselves. So what's really interesting I think is the fact that we're building the service out here and working with these property owners, these ranchers. I think that is interesting deal to be able to show that there's this ability for people in these areas to figure out their own solution.

Lisa Gonzalez: Welcome to episode 384 of the community broadband bits podcast from the Institute for Local Self Reliance . I'm Lisa Gonzalez. You've likely heard the term space cowboy and probably urban cowboy, but this week Christopher talks with Matt Larson, a "wireless cowboy". Matt is owner and CEO of Vistabeam. During this interview, you'll learn that the nickname doesn't come from the garb he wears, but from wrangling Internet access for people in some of the most rural areas in the American West. Vistabeam was awarded subsidies in the connect America funding part two auction and is working to extend their fixed wireless service to more rural communities. Matt who grew up on a ranch knows what it's like to struggle without high quality connectivity and he's made it his life's mission to change that for others living in extremely low population density areas. Matt and Chris talk about the CAF II Auction, the bidding process, and the challenges that Vistabeam has faced as a small company participating in the process. They talk about the new lifeline product that will provide much more affordable and reliable connectivity than the satellite Internet access many locals depend on in the very rural areas. Matt discusses the people they typically serve and why he's not worried that the space X project or places companies services anytime soon. Now, here's Christopher talking with Matt Larson from Vistabeam.

Christopher Mitchell: Welcome to another episode of the community broadband bits podcast. I'm Chris Mitchell at the Institute for Local Self Reliance up in Minneapolis, Minnesota. Today I'm talking to one of my favorite guests over past episodes, Matt Larson, the owner and CEO of Vistabeam. Welcome back to the show, Matt.

Matt Larson: Hey Chris!

Christopher Mitchell: I've been wanting to have this conversation with you because I think this subject of making sure that people in rural areas are able to afford Internet access is really important and has been one that has been neglected while we're just trying to figure out some way of making sure there's some level of access available. And so I'm really excited to dive into that with you. But for people who are newer to the show, for the thousands of people who are listening to this episode for the first time, tell us what Vistabeam is.

Matt Larson: So Vistabeam is a fixed wireless Internet provider. We've been in business since 2004 and we serve a huge area in Western Nebraska, Eastern Wyoming and Northern Colorado. We cover about 40,000 square miles. Almost all of our areas we cover is rural — very low population density. And, you know, that's a big part of our mission has been getting broadband out to a lot of people that don't have a lot of their choices.

Christopher Mitchell: Now you're someone who takes — this is going to come totally out of the blue, but I just remembered, I've been wanting to ask you this question for like six weeks. I came across a Texas town that called itself the cowboy capital of the world. And I wanted to get your reaction to that, knowing that your love of the cowboy culture.

Matt Larson: So I grew up on a feedlot and we had a big ranch in Wyoming, so I spent a lot of time out there. And let me tell ya, real cowboy culture is a lot different than what you see on TV and in the movies. There's a lot of hard work out there and there's a reason I'm doing stuff related to computers as opposed to, you know, riding a horse around. Plus, I don't look very good in a cowboy hat and I wasn't very good at riding a horse. So I was a lot better with computers. The one thing I do love about what I get to do is we get to spend a lot of time out in some beautiful natural environments out here. And that's part of why I, you know, decided to, I kind of called myself a little bit of a wireless cowboy because I still get to go out to the Saint pastures that I used to go out to with my dad a lot of times. But we've got a tower out there instead of cattle, that works for me.

Christopher Mitchell: Yeah, well that's great! One of the things that we were frustrated about is that the telephone companies were getting access to subsidies that you didn't have access to. You built your network almost entirely without any subsidies and you can correct me if there was zero involved. But they were doing a worse job providing worse service than you and had access to all this money. And now the Connect America Fund II Auctions that concluded last year, you qualified and won a substantial amount. So, so just tell us about that.

Matt Larson: So participating in the Connect America Fund was a really big decision on our part. Most of the network that we have was built on private investment. We did have some success with some local initiatives, some local economic development funds in Nebraska that we were able to put some stuff together based on job creation that helped us with some of our initial build out. A few of the communities had their own economic development funds that we were able to borrow money from and use that to build service out to their areas. Eventually, we were able to get in on a couple of state programs in Colorado and Nebraska that helped pay for some network upgrades and some network expansion. But Connect America Fund was on a completely different level. It really meant that we were going to have to completely change the way that we ran our company. It just required us to evolve. There are a lot of different things when you're working with big government entities that had to do with regulatory responsibility. We had to change our accounting, so we had audited financials. We had to adopt gap accounting, which, you know, these are things that a lot of other, you know, bigger carrier type companies are doing that from the start. But as a small company, you know, we ran it like a small company for a long time and this was really something that forced us to change, but it took three year commitment and then we had to kind of look at our area based on the parameters and say, okay, what can we do that's actually going to be doable for us? One of the things that we tried to do where we put our plan together was to make sure that we didn't out kick our coverage, so to speak. I think that we chose areas that we knew we'd be able to get into in pretty short order and bandwidth goals that we could meet. And I feel really good about where we ended up with the program. I think we're going to get a little over 5 million over 10 years. It really helped focus a lot of our efforts, you know, so the areas that we were going to get the investment in — they're going to get better service than they would've gotten otherwise because these are some pretty remote areas. One of our areas has a little bit of population in it, but the rest of them are like really extreme rural. You know, one of them where we got an award was Niobrara County, Wyoming and Niobrara County is the least populated county in the least populated state. So it's, you know, we're talking about maybe one location per square mile when everything's averaged out, which means that there's places where it might be 10 square miles before we even have a location in some of these places. But we have some unique things that we've developed to be able to deliver broadband into really rural areas like that, requires a lot of close communication with the people that live there, people in the communities. It's got to be kind of a cooperative effort because we need to work with the locals to be able to put in infrastructure, it's going to be able to get to them. There's a story I really think is interesting about this. As I was doing some research into Niobrara County in particular, there's a big chunk of the Northern part of the county that has a terrible problem with their telephone lines. I took a phone call one day — one of our installer is out there and he had used the landline and it sounded like there was a dial up modem on the line at the same time because the lines were so bad. As I was doing some research, I found out that these ranchers had actually put the lines up themselves. They had bought the equipment and the wire to put the lines up themselves. And then at some point US West actually took over ownership of the lines and was supposed to maintain them and didn't. So what's really interesting, I think, is the fact that we're building the service out here and working with these property owners, these ranchers, you know — history is repeating itself a little bit. They actually did a lot of the work to try and get themselves service back in the day and then had to turn it over to another company that didn't take care of it, so we're working with them to get service again. And I think that's kind of an interesting deal to be able to do that, to kind of show that there's this ability for people in these areas to figure out their own solutions.

Christopher Mitchell: Yes, well you're preaching to the choir on there. And if you could, if the listeners could see my face when you were describing that US West did not maintain the lines — the expression was not surprised. So when you bid in one of the auctions, what levels did you bid at for what speeds? Was it one consistent one or a couple of different ones in different areas?

Matt Larson: We bid 25 down, 3 up in all of our areas. I don't think it would've been a stretch to do 100 by 20 in some of the more dense areas, but based on the existing equipment that we've got right now, we felt like 25 to 3 was going to be on achievable and sustainable level and appropriate depending on — when we look at what our average customer utilization is, it seems like that's going to be a sufficient level, especially as a minimum. When we made our bid, which you had know at this point, this was like a year and a half ago, it looked like a hundred by 20 was going to be a little bit of a stretch. Now since then, new equipment has come onto the market that I think is probably going to be capable of doing a hundred by 20 in fixed wireless scenarios pretty easily. But at the time, you know, we were, we didn't think that we could bid that out. And the other part of that is it kind of turns into a little bit of a backhaul issue. You know, if you've got a build, you know, a hundred miles worth of microwave backhaul to get to somebody before you even get to fiber, there's going to be some limits in how many customers you can put on that. So we had to kind of factor that in as we put our bid together.

Christopher Mitchell: What kind of coverage do you have to offer in these areas as part of receiving these funds? Do you have to hit every home or how does that work?

Matt Larson: We have to hit 100% of the locations. And so the way that the system is laid out there's like a census block group and then within the census block, you know, there will be some locations in there. I actually had to, I spent about a week on Google earth putting markers on every house and every location that could be serviced in there. So we had a pretty good idea of exactly how we had to get to them. So there is a little bit of, I think there's like a 5% factor in there. But we feel pretty confident. We're going to be able to get to probably 98% without a whole lot of problem that last 2%. We will be able to figure out how to get to them one way or the other, but it's going to be a little bit of a challenge. Honestly, the first 80% is going to be fairly straightforward, the last 20% is going to provide 80% of the actual challenge on this project.

Christopher Mitchell: Yeah, I'm not too surprised. Well, let's talk about the kind of people that are out there. I'm going to assume that they're all millionaires. Probably, you know, from California, they bought up all kinds of land and they're young millionaire type folks. Is that the demographic we're talking about?

Matt Larson: Wow, I don't know where you get that information.That's not to say, I mean, every once in a while there are some huge land owners. I know one of our customers has the largest log home in the world built out in a very rural area. We had a guy that moved into Wyoming from Texas and asked if he could get Internet at his house. And we kind of said, you know, it's going to be really expensive, you know, we're going to have to put it in a tower and it's probably going to be, you know, $15,000 up front to even get a connection to your house. This was three years ago when he had called us and he just had his South Texas accent saying, "buddy, I just paid a plumber $12,000. I need Internet worse 19 running water so you just make it happen, you know" But those guys are really the exception. For the most part, we have a lot of ranchers and people have been been there for a few generations. They have kind of a fixed income where they might have lands worth a lot of money, but they have to pay a fair amount in upkeep and taxes. They don't have a lot of disposable income to put towards this so I know when we started talking to some of the people in these areas and kind of talking at, we've had just a few meetings with people and it seemed like one of the things that was very interesting to them was the fact that we were going to be bringing a low cost broadband option to them that they'd be able to afford. We've actually had a couple of situations where, you know, the guy that I mentioned from Texas, he spent the money to put that tower up, but six of his neighbors were able to get service because of that. So we've seen multiple situations where the one guy or the one landowner that's a little bit better off, spends the money to try and get service and it kind of benefits the neighbors. And that's been a nice thing to see, you know, kind of this neighborly attitude out there. And what we're hoping is that, you know, with the CAF II, we're going to be able to kind of take that but instead of the rich guy from Texas, you know, uncle Sam will help put the tower up and help get the neighbors online. But we're not talking about a bunch of rich people for the most part or any of our customers out here. People have lived here, their families have been here, you know, since homesteading days and they are not rolling in the dough like you might think.

Christopher Mitchell: Well, yeah, I would hope that nobody has that misconception. I just thought it'd be fun way to introduce the question. One of the, like I said at the beginning of the interview, I think this is crucial because there's been so much of a focus on rural availability of access and then affordability has mainly been a question in urban areas. And so, you know, you are offering now a lifeline product and that is a requirement as part of Connect America Fund but it also sounded like something that was, it was something you wanted to do anyway — in this kind of forced you to go ahead and wrap it up. So tell us about the lifeline program that you're working on.

Matt Larson: The plan is to offer 25/3 lifeline product for $29.95/month. Our regular plan is $39.95. I think that's going to be a big benefit. A lot of the people that we've talked to have been paying a lot more than that for satellite — if they can even get it and the satellite has really been suboptimal for what they've been trying to do because it's got some pretty substantial limitations. Every time we put in a new service in places where typically it's been satellite, we get almost a 100% everybody switches over, right? Because it just works that much better.

Christopher Mitchell: What I find amazing is that there's a substantial number of people in this country who want Internet in rural areas, have access to satellite and would prefer nothing to paying for satellite. So that gives you a sense of just how bad satellite can be.

Matt Larson: Yeah, emergency here suddenly kind of, but I mean we've also got to people that were using hotspots in situation — if you could get a hotspot that would work. I know that we had one ranch that had, I think they had like eight homes on this fairly rural ranch and they were running up a three to $4,000 a month bill with Verizon on hotspots. Now they could access the hotspots, but that's a kind of, that's a kind of insanity that you see sometimes in rural areas when you've got, when you don't have the regular infrastructure there.

Christopher Mitchell: So the lifeline program that you're providing, are there qualifications for that or how does that work exactly?

Matt Larson: So it's based on income. And then if you qualify for food stamps and, you know, there's a set of, there's a set of criteria that's on the USAC page that establishes and we have to go through and make sure that somebody can meet all those qualifications. And if they meet those qualifications, then we can open up the program to them and obviously then we have to turn around and do all the right documentation with USAC. But I think it's going to work out really well because that's a really good way of determining who does and who doesn't need access to the program. And I think we've got a pretty substantial number of people in our service area and this is going to actually make a pretty big difference for, and you know, I like the idea of being able to do something that's really gonna help out, you know, the people in our service areas like that. And we're going to actually take a little bit of a hit — we're gonna take a little bit less money ourselves, even though the government is going to be paying for part of it to, you know, to kind of show, that's a big part of what we're trying to do is to do something for our communities. That's why we're here in the first place because I lived out, really, I grew up on a ranch. We didn't have Internet and when I had the ability to try and get there, that was one of the first things that we did. So, you know, we want to be able to get this out to as many people as possible and make it as affordable as possible is you know, part of that.

Christopher Mitchell: I think it's worth reiterating also that your regular price is $40 a month, which already makes it a lot more affordable than what a lot of people in urban areas are paying for, you know, that level of service. So I appreciate that you keep your prices low to make sure people are able to afford that. You know, regarding the lifeline, I know one of the challenges that you faced is that you have this odd administrative challenge right now, in that you would like to offer it to many of your areas. It may not be feasible to offer it everywhere because of some legacy systems that you have. But tell us just a little bit about that challenge of the the fact that you'd like to do more, but you may be stuck between doing the minimum required or doing everything which is not feasible.

Matt Larson: Right, so all of our areas that we qualified for CAF, we're not going to have any problem offering a lifeline there because as soon as we certified, we served those areas. We're putting up new equipment and it's going to be able to do a 25/3, no problem. The minimum requirement for the lifeline broadband right now, I believe it's like 15 2, and we have some areas in our network that are gonna take some upgrading before we can get there. So what I'd like to do is every area that we can do the 15 2, we want to be able to offer the lifeline. But there is some, we're trying to work through some issues right now about whether those areas are going to qualify as for reimbursement under the lifeline program or whether it's only going to be locations that are specifically part of CAF. And then the other thing is we want to be able to, we're gonna work as hard as we can to get our entire network upgraded to where, you know, we're hoping within 18 months we'll have everything up to where 25 3 will actually be our minimum speed period. Even though it's the speed that we had to offer, we could offer lower speeds according to CAF. Our goal is to get our entire network up to where 25 3 is the minimum. But we've been working on the program for that and we think it's probably going to be 18 months. So the challenge is — okay, we're going to offer it, we know that we're going to offer lifeline in the areas that we qualified for CAF, but we have to get it sorted out. I really want to be able to offer it to everybody in our service area, but it's going to take a combination of a little bit of upgrading on our side and then making sure that all of our non-cash subsidized areas will actually qualify for lifeline.

Christopher Mitchell: Matt, are you at all worried about SpaceX? They're going to be launching this service next year. And we were talking about the satellite, which is the geostationary, which is much farther away and cannot offer a service anywhere close to what you're offering, but the SpaceX materials that they've released suggests that they will be able to offer service as comparable to what you're offering.

Matt Larson: I think we go through this with satellite on a regular basis. There's a cycle of, you know, it comes out and there's this promise that it's going to work really well. And then the first few people that are on it, it seems like it's going to work and this is going to be a big game changer. And then satellite generally tends to not scale very well. So I think we're gonna see that again with SpaceX — you've got extremely complex deployment system that involves kind of a mesh of satellites and maintenance in space is very difficult as opposed to terrestrial maintenance. And I really don't think that they're going to be able to come up with something that's going to be economically sustainable like fixed wireless terrestrial network would be. So I feel like we've got a very capable and very economically sustainable business model that's going to survive just fine. No matter what challenges come up, whether it's satellite, whether it's 5G, I think we're going to be able to be just fine there. You know what, there's enough demand for broadband. It's not like somebody who is going to come in and just crowd everybody else out — there's room. It's like use the right tool for the right job.

Christopher Mitchell: Speaking of that, I was just thinking, in space no one can hand you a wrench.

Matt Larson: Exactly! Well, I mean, my viewpoint on it, I think the whole SpaceX and all of these systems, the real purpose behind these systems is to launch more rockets. So I think they're using broadband as an excuse to get investor money to cover the cost of building and launching more rockets, which gets their volume, you know, the discount it gets, gets the critical mass put together so that they can make space flight cheaper. So from that point, you know, that I think probably makes sense if you're building rockets as a broadband network. I don't think it really makes a whole lot of sense. I think that's the real motivation behind us to launch more rockets.

Christopher Mitchell: That's smart, I hadn't thought of that. I frankly, I should have thought of that. I'm, that's a really, really good point. And I appreciate that. I'm glad I asked you that question now. So Matt, I know that you have looked at the report Jonathan Sallet did from the Benton Institute for Internet and Society and you had a reaction to it — probably multiple reactions but there's one that we have time for, so I'm curious how you react to the report he was on a few weeks ago

Matt Larson: Looking at the report, I saw it, there was some good mention about fixed wireless as being a good solution in some of these areas. But one thing that really stuck out to me was they were very big in their report on talking about symmetrical bandwidth that you need to have equal bandwidth up as you do down. And I think that's a big error in the report. That really kind of says, well, if you are going to have symmetrical, then you have to have fiber because to really get the download speeds optimized, you have to take some of your capacity and devote it from upload and devote it to download. And based on what I've seen from how our users use the network, we see almost, I want to say somewhere between eight and 10 times more download traffic than upload traffic. So I think if you take real world, real user data and look at that—the need for symmetrical bandwidth is just not there, especially, for residential. For business applications, I can see that is a more useful goal. But for residential, we just don't have the kind of, we don't have the kind of usage profile that's going to take advantage of the upload and that really puts a lot of the fixed wireless. And even the satellite solutions really kind of behind the eight ball because it's going to be a lot harder to meet the download requirements without taking a pretty good check of the capacity for upload and devoting it to download. So other than that, I thought there were a lot of good points in his report, but that was one thing that I kind of took issue with that I think could use some re-examination.

Christopher Mitchell: Well let me say, you and I over the years have come much closer to agreement than we used to be. I'm glad that we still disagree on something significant on this. I would push back on you and I'm curious because I'll be curious as you're saying, this technology is improving and you have more capacity. I think that the focus on equal is misplaced. I think we want robust in both directions. I mean, fundamentally, right now my Comcast connection is very asymmetrical. I mean, I was on the order of like 300 down and 10 up and I would pay them to go to 100 down and 100 up, you know, so I would effectively have less megabits at my disposal, but I would be able to do more things. And, my household, I'm always going to be downloading more over the course of a month because of the nature of video but I would like to see my upload transactions clear more rapidly when I have them, even if they're less numerous. And so, you know, in some ways I think we do see residents using upload less in part because we're all used to doing that. The technology has rarely allowed us to do rapid uploads. And I think we're going to see more online storage and things like that, particularly with these — the fact that our software is not getting any more secure with ransomware attacks and things like that, I think people will want more upload. And so I'd be curious if in five years if you're not, you know, doing much closer to symmetrical, even if you're not doing symmetrical at that point. Speaker 1: A lot of it depends on when you look at the way the equipment is configured, especially with wireless, you have to devote a certain amount of capacity to upload as well as download. And I'm just looking at what users actually use. And in my mind, I don't disagree with your use case. I mean, it would be nice to be able to do that, but unless you're on a fiber network, you can't just automatically say you're going to partition equally because whether it's wireless and, actually, cable, they have the same set of situations. They have to do so many channels to download, so many channels to upload. That's why you have massively asymmetrical connection because Comcast has some very, very smart engineers. I've worked with them at Biotech and that's what they've figured out is the optimal way to provide the service that, you know, probably 95% of their users want. So that's why I have a little bit of the pushback. I don't disagree. Obviously we're going to try and do as much upload as we can, but we do have solutions, like if you wanted to buy commercial connection from us, for example, we do offer commercial connections, but they're on a different system where we can optimize that type of setup. Speaker 3: I'm curious about the technology. I would have assumed that we'd be heading in a direction of software defined radios and which you may be able to even change those things over the course of a day. But I don't know anything about how these radios work. Am I just living in LA LA land? Speaker 1: It's really complicated. I wish I could give you a better explanation for it, but it comes down to — it's basically airtime. So the airtime that's used to broadcast a bit can either be used for sending it to you or receiving it from you. And that's something that, you know, you can't run unless you've got some sort of a dual frequency type of a scenario where you're always broadcasting on one channel and always receiving on the other channel. That's the only way you can really do symmetrical over the air to make sense. And because we have a shortage of spectrum, everybody's trying to figure out how to get more capacity into smaller channels. Now, if we got to the point, we had a lot of radio systems that had dual channel type capability. That's one way to do that or to, you know, take dedicated chunks of spectrum where you do a dedicated connection to a customer and then you can adjust it according to what the customer wants for that particular application. But when we're talking about general purpose like went out to residential customers, you kind of have to deal with what the 95% of the customers want. And that's why you see setups that are done that way.

Christopher Mitchell: Great! Well, I really appreciate the conversation. Matt Larson from Vistabeam. Thank you so much, Matt.

Matt Larson: You bet, Chris. Thank you.

Lisa Gonzalez: That was Christopher with Matt Larson from Vistabeam, a fixed wireless provider offering services in some of the most rural areas of the country. Learn more about the company at www.vistabeam.com. We have transcripts for this and other podcasts available at www.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 anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at www.ilsr.org. While you're there, please take a moment to donate. Your support in an email 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 384 of the Community Broadband Bits podcast.

Tags: