Transcript: Community Broadband Bits Episode 396

This is the transcript for episode 396 of the Community Broadband Bits podcast. In this episode, Christopher speaks with Travis Thies, General Manager of Southwest Minnesota Broadband Service (SMBS) about their collaborative effort to connect eight communities in Southwestern rural Minnesota. Listen to the episode, or read the transcript below.

Travis Thies: Seems like the first question that gets asked when somebody is contemplating moving into town is, "What's available for Internet?"

Lisa Gonzalez: Welcome to episode 396 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzales. For eight communities in Southwestern rural Minnesota, high quality Internet access isn't a problem as it is in other small towns. That's because Southwest Minnesota Broadband Services or SMBS is providing fast, affordable, reliable connectivity to residents and businesses.

Lisa Gonzalez: This week, Christopher visits with General Manager, Travis Thies, who shares the story of the network and tells us more about some of their challenges and solutions. Travis describes the communities that SMBS serves and recounts the collaborative effort that resulted in the regional network. Now, here's Christopher talking with Travis Thies from Southwest Minnesota Broadband Services.

Christopher Mitchell: Welcome to another episode of the Community Broadband Bits Podcasts. I'm Christopher Mitchell with the Institute for Local Self-Reliance in Saint Paul. And for the second week in a row, talking to another guest from lovely Minnesota. This week we have Travis Thies on the show, who is the general manager for Southwest Minnesota Broadband Services. Welcome to the show.

Travis Thies: Thanks Chris. It's a pleasure to be here.

Christopher Mitchell: I'm excited to catch up on the network. I've been meaning to reach out to you. I don't know, ever since the network started. In some ways, I feel like I just cheated and asked Dan Olsen how things were going and he would sort of give me the lay of the land. But it's been many years since I've even checked in.

Christopher Mitchell: So I'm really excited to get a better sense of everything that's been happening with your remarkable fiber network in Southern Minnesota, Southwestern Minnesota. But first for people who aren't familiar, what is Southwestern Minnesota? What does that region entail and what does is it like?

Travis Thies: A lot of farming communities or a lot of farming, some small industry. And so, that's, kind of, the biggest makeup of our area.

2:05

Christopher Mitchell: So let's talk about how you got into the fiber game. How did Southwest Broadband, which is, kind of, the shorthand version of describing Southwest Minnesota Broadband Services. How did you get started?

Travis Thies: Sure. So Southwest Broadband is really a unique makeup. So back in 2010, we were fortunate enough that we had some local leaders throughout some of the communities that we serve, that really could see the writing on the wall with broadband and how important that was going to be in order for these communities down here in Southwest Minnesota to really thrive. What happened is, back in 2010, we had seven municipalities, in the area, get together form a joint powers. And once that was formed, they basically developed a nonprofit organization, which is Southwest Minnesota Broadband Services, to provide broadband connectivity to eight rural communities.

Travis Thies: So we serve eight rural communities. And of the organization, we're governed by a board of directors. And those board of directors consists of five of those seven original member cities. So we have seven cities together, altogether, that make up the nonprofit organization. And five of those are voting members cities. So that's how we're kind of governed.

Christopher Mitchell: So you have eight cities that you're connecting, or towns. And five of them, are those ones that took more risk on the project and that's why they're the voting members?

Travis Thies: Yeah. So five of those communities, they actually contributed loan dollars into making the company, to help get the company off the ground and get started, and, again, most of the dollars that came in and helped build the network. Back in 2010, the federal government had the broadband initiatives program going on. And so we were able to capitalize on... Our project was a $13 million dollar project. Half of that being grant dollars and then half of that being loan dollars. So that's where, really, the dollars came, to put this together, and to do this build out and provide the connectivity to these communities.

4:11

Christopher Mitchell: When you say communities, I do feel like people often think of Main Street and the blocks around there. But you're talking about communities that may have a Main Street, but also all the farms around there. I mean it's a wide radius around that you're talking about that you connect.

Travis Thies: Correct. Correct. So, not only do we serve all the businesses and and the homes within the communities, but we also have 175 mile ring that connects all of these communities. And we use that ring for redundancy purposes. Now we don't serve the entire county. We're across three separate counties. We don't serve all of those counties. We do serve within about a quarter mile off of our fiber routes that go out through those communities.

Travis Thies: But one of the nice things that we've been able to do, over the course of the last few years, is we've been able to partner with a local wireless provider. And that has just been huge for us and the folks in our area. Now, not only are we able to provide the high speed Internet connectivity to the folks within those communities, but we're also able to reach out farther than what our fiber can get to. So by partnering with that local wireless provider, we've been able to provide those speeds to, basically, everybody across our, tri-county area.

Christopher Mitchell: Now, tell me a little bit more about how you got this going, because I think the fact that Windom already had a municipal broadband network, that allowed you to use their NOC, I assume, how did you interface with them?

Travis Thies: Well, that's a good question. So Windom was very, very influential, as far as helping set up and, kind of, get the whole concept of Southwest Minnesota Broadband Services, kind of, on the radar. And matter of fact, I know that you've talked with Dan Olsen, a previous General Manager of Windomnet, that he was very instrumental in the setup and, kind of, getting everybody going. Windomnet, they learned a lot when they did that. And that, kind of, helped provide all the stepping stones to making Southwest Broadband happen.

6:21

Travis Thies: And Southwest Broadband was able to, really, capitalize on the use of a lot of those high capital dollar items, like the NOC, the head end, things like that, for video services and both data services. And so, Southwest Broadband was able to save a lot of dollars and not have to make those initial investments and be able to utilize Windomnet to purchase those services and, eventually, pass down and offer through the Southwest Broadband Network.

Christopher Mitchell: And is that still how you work? Are you still pretty integrated with a Windom in the network operations center?

Travis Thies: We still work fairly close with Windomnet. We have went away. And we just, we've gotten a little bit bigger and we've been able to provide some of those services on our own now. So we work a lot with Windomnet, in regards to voice services. Data services, we've kind of converted over and we've made some investments of our own. And so we're, basically, providing all of our own data services, all of our own connectivity, to multiple data centers that get out to the rest of the world.

Travis Thies: So back in 2018... Prior to 2018, we really relied on Windomnet to provide all of the video services that we transported across our network to our customers, throughout the communities that we serve. And we did that with an old legacy RF type of deployment. So prior to the build-out of our communities, two of our larger communities had their own stand-alone municipal cable TV systems. And those systems were both, kind of, reaching their life expectancy and really needed to be replaced.

Travis Thies: So the timing of Southwest Broadband coming into play was really, really beneficial, as far as being able to pick up on where that was really going to leave off. And when we first rolled this out, this was really a data network, is really what Southwest Broadband was meant to do is provide these data speeds, these high data speeds, to these rural communities. But because of the makeup of our communities, we have a lot of older demographic that really still... They want access to the linear TV, and what we know as, traditional cable TV, so to speak.

8:27

Christopher Mitchell: Right. They don't want to deal with apps. Right? They just want to be able to have a clicker and go to watch the Twins or whatever they want to watch. And they don't want to deal with a lot of the other stuff. I'm guessing.

Travis Thies: Exactly. Exactly. So now that Southwest Broadband... We have the network put into place and we've got the best of the best, in regards to a data network. We're still piping in an old RF video signal. So as the pricing and the content kept going up and up and up, we sat there and we struggled with trying to provide a better service and a better product. Well it, really, didn't make any sense for us to continue throwing capital at a service and a product that was declining in subscriber rates, worldwide, right?

Travis Thies: So, that's where we had to get really creative. We looked at, what do we do if we just completely get rid of video altogether? And because of that older demographic, and there was still a lot of demand for that traditional TV service, we didn't feel like we could completely get rid of it. So, that's when we really got creative. And we looked out and we tried to figure out every option we could. And then, finally, we decided, why not try to... In order to keep this, we're really going to have to probably stick with an app based delivery type of system.

Travis Thies: So we partnered with another company. And we were able to roll out a decent app based delivery service and really harness the power of our data network in order to do it. And so we didn't have that big capital investment, in going out and building a new TV headend or cable TV headend. We didn't have any of those. We were able to harness the power of the data network and really push that out. So towards the end of 2018, October/November timeframe, is really where we completed converting all of our customers.

10:14

Travis Thies: And I think we were able to convert, probably, we converted right about 85% of our original cable TV customer base, which was really, really positive. And we expected to, continually, see those subscriber take rates, probably, decline. But really with... They've really, really maintain steady, which has really surprised us. So we don't know if that'll be a long-term thing or a long-term offering. But it's filling the need, right at this point in time, and we'll see how it goes.

Christopher Mitchell: Maybe it helps, go for sports, doing a little bit better this year than they had in some previous years for football, especially.

Travis Thies: Well, that definitely helps. It definitely helps.

Christopher Mitchell: So what app did you end up using?

Travis Thies: We rolled out a white labeled app and we labeled it Southwest Stream. So we have it available to our customers. Now, one of the caveats is that we have to offer it over a closed and private network. So we can only offer it to customers that have our Internet service.

Travis Thies: So customer signs up with our Internet service. If they're interested in our streaming option, they, basically, load an app onto their Roku and we provide them with a set of credentials. And they're allowed to receive that content over that approved app, and away they go. And instead of traditional cable TV type of look, guide, all that, some cloud based DVR.

Christopher Mitchell: I'm not too surprised to hear you say Roku because it does seem to be one of the more friendly ones for people who are not very high tech. Oftentimes, a very simple remote that they feel comfortable with and off they go.

11:54

Travis Thies: Yeah. Once it's up and running, it's really pretty trouble free. The biggest hurdle that we had is helping assist folks that weren't used to being able to run apps. And, that just wasn't their thing. So trying to get them accustomed to understand how to go in and how to set up a Roku account and how to go in and add an app or add a channel. And then, go in and be able to get that to connect to their Wi-Fi. And a lot of these folks were even folks that didn't have data subscriptions. So that was a big hurdle.

Christopher Mitchell: Right. Well, their grandchildren, in many cases, I'm sure, are thanking you quite a bit.

Travis Thies: That was definitely the case.

Christopher Mitchell: Let me ask you about things that have changed in the area. Because I suspect that not far from you, there are still many places that have... Maybe they feel lucky to have DSL because there's other places that don't even have that. What has changed in your footprint that you can attribute to the network?

Travis Thies: Well, I think there's a lot of things that have changed as far as economic growth. I know, I can count, on one hand, a number of business that had contemplated moving out of the area before we built our network because they just didn't have access to the bandwidths that they needed to sustain their businesses.

13:13

Travis Thies: Some of the other things that have changed is, now we're starting to see people that, maybe, grew up in this area coming back to this area and working from home. They're trying to get out of the big cities. And they grew up in small towns and that's what they prefer. And now, they're able to come back to these small towns and work from home, based on their ability to have access to the speeds that we're able to provide.

Christopher Mitchell: Do you find that people who are in neighboring towns are choosing to come to a rival town, perhaps, because of those speeds?

Travis Thies: I tell you what, it seems like, the first question that that gets asked when somebody's contemplating moving into town is, "What's available for Internet?" And I'm sure that's probably the case, getting to be the case, in most areas across the country. It's really obvious that, that's the important piece, or one of the most vital pieces of determining where folks want to live.

Christopher Mitchell: No, no. I'm sure that the local real estate agents are happy to answer that in your towns.

Travis Thies: We probably get four to five calls, a week, just inquiring of, "Does this property have access to broadband? Do they have a fiber line? And if not, can they get it? What's it going to cost to get it?" I mean, it really becomes a bargaining tool when working on housing prices.

Christopher Mitchell: Oh, I'm glad to hear that. I mean, I feel like the real estate agents aren't always that sophisticated in the more metropolitan and suburban areas, because they haven't had to worry about it as much. But I know that real estate agents have paid more attention to broadband, but knowing that they're actually calling you now, directly, to just get the answers is interesting.

Travis Thies: Yes.

Christopher Mitchell: So you described the challenge of the switching the video product. Have you encountered other challenges along the way?

Travis Thies: Not so much challenges, probably, just, maybe, growing pains. When we built the network, back in 2011, we integrated a one gig ring that fed all of these eight communities that we serve. And for the first two years, we were very comfortable with that being enough bandwidth to serve all of these communities for all of their bandwidth needs. And just, today, we're looking at February of 2020, now we've advanced that up to a 20 gig capacity ring.

15:30

Travis Thies: So it's just really amazing to see the growth and how much demand there is for broadband and how quickly that continues to advance. I suppose the biggest challenge would just be to, continually, staying ahead of those demands and ahead of those needs, so that we always have a sufficient amount of resources to be able to provide what our subscribers are going to need.

Christopher Mitchell: I was just talking to someone in another state. I was talking about a co op that had built fiber out to a rural area and how they were getting these remarkable take rates. And even more remarkable, when this organization was planning on building the network, was that the very large, very disliked company that had been serving them before, was only getting take rates at 20 or 30%, for their DSL product. And so they assumed there wasn't much demand when, in fact, there was a demand, it was just for a higher quality service. And that's a roundabout way of, sort of, asking you about how the take up has been. Have you seen a lot of interest from the areas? Has it matched what you expected?

Travis Thies: I think it's far succeeded what we expected. And right now, we're sitting at, probably... We're serving approximately 75% of households across, as a whole, within these communities.

Christopher Mitchell: Yeah, that's pretty good.

16:52

Travis Thies: It is. Yeah. It's excellent. And I mean, we get calls every day. The biggest problem that we have is, we're still continuing to grow within these communities. Because when we first put this project together, unfortunately, there was a tsunami, over in Asia, right after project totals and stuff came in. And it wiped out a couple of the fiber suppliers over there. So the cost of fiber optic went through the roof.

Travis Thies: So in order to make our projects still, we had to scale back. And one of the things that we did, when we scaled things back to try to cut costs is, we went back to all these communities, all these communities, we originally were going to put a fiber drop to every home and every business. Well, now that the price of that fiber optic went up, at that time, back in 2011, we had to go back and say, "Okay, we're going to commit to bringing a fiber drop to every home and business as long as they commit to taking a service from us.

Travis Thies: So trying to get in touch with all of those people and making sure that they understand the process. It was a little difficult to do, but that's what we had to do. So along the way, there was quite a few residential homes in some of our communities that, maybe, just didn't understand what was going on or, maybe, the homes were empty. So we still struggle in some of those communities about trying to get new drops and stuff out to those homes, which has been very successful. We ran a lot of programs over the past two years just trying to get more drops out there and educate people on what it takes to do to get those drops there. But we're plunging ahead.

Christopher Mitchell: What's the challenge there? Is it the distances involved? Is it the fact that you got to be able to schedule crews in advance? What's the actual headache?

Travis Thies: The biggest thing is because how new we are. Right? So, we didn't have the ability to put forth a bunch of extra capital, two years, three years after we got up and running. One of the biggest things that I pride ourselves in is, we're fully self-funded. We're nonprofit. We're not subsidized by any of our members cities. A lot of municipalities have been scrutinized over the years by some of the bigger companies, saying, "Hey, you don't have a place here in the market. You don't know what you're doing as far as providing broadband. And you shouldn't be doing it."

19:15

Travis Thies: We, on the other hand, have been very, very successful. And we've, kind of, flown under the radar. And we've tried to do things smart and cost-effectively. And for the first few years, we really didn't have the ability to go out and spend a bunch of capital and put more lines in. So, we were able to save a little bit of money and put a little money in the bank.

Travis Thies: And then, build a little bit up, and then reinvest, and start getting the costs of those drops at a more affordable price for subscribers. So that was, kind of, the biggest hurdle. And I think we've got to that point, now, where we can effectively provide those services to those people that may have been missed at a more affordable cost.

Christopher Mitchell: That all makes a lot of sense. I guess the question, in my mind, is actually, maybe, even a little bit more technical. I mean, I'm guessing that you're not having a problem with like OLT ports. You probably had enough of those reserved. Right? And having... I'm guessing you used a passive network with splitters. Is the challenge today, then, a drop length, because you just have to go so far to get a home? Or, makes it more difficult to connect customers today?

Travis Thies: It's not so much drop length, as it is to... We have all the OLT ports, we have resources available to feed those customers. Our biggest thing is, is contractor availability, believe it or not.

Christopher Mitchell: Oh, yeah. No, I believe it, 2020.

Travis Thies: There's so much building. There's so much going on, it is extremely tough to be able to find contractor time to be able to come in. Because most contractors that are working on big projects, they're putting in hundreds of drops a week. Where companies like us, we're not. We've got a majority of our community is built. So we're just, kind of, coming back around and doing hit and miss, where we've got a handful a week. It's just tough to find the contractors that are willing to leave those big jobs and come and do some of these small jobs.

21:09

Christopher Mitchell: That's what I was wondering about. So, that's helpful. Have you been tempted, at all, by the state border-to-border fund, to look at some grant money to try to expand to some of the areas around you?

Travis Thies: We have. We, definitely, always keep it in mind every year. We look at what's being served, where is there demand? Unfortunately, because of our... I shouldn't say, "Unfortunately," because it's really not unfortunate. It's a fortunate thing. But, fortunate for the wireless company that we've been working with over the past several years. Other than the real rural areas, in our area, I think we've really done a great job at being able to provide adequate speeds. But we're always open to, if there's opportunities for us to grow, we're always interested in it.

Christopher Mitchell: Who's the wireless company you're working with?

Travis Thies: The wireless company that we work with is BackForty Wireless. They're locally owned right out of Jackson.

Christopher Mitchell: Is there anything else I should ask you?

Travis Thies: I'll just jump back to the BackForty Wireless thing. I think that's one of the best partnerships that we have right now. And being able to provide the best broadband, that we can, to the rural folks that we have an obligation to provide good service to.

Christopher Mitchell: Well, that's great. Travis, I really appreciate your time. It's been great getting a better sense of what's going on. And I'm looking forward to finding an excuse to get down there and visit you and see what's going on.

Travis Thies: Hey, I'd love to have you down here, Chris.

Lisa Gonzalez: That was Christopher talking with General Manager, from SMBS, Travis Thies. 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 anywhere you get your podcasts.

23:08

Lisa Gonzalez: 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 at any amount helps keep us going. Thank you to Arne Huseby for the song, Warm Duck Shuffle, licensed through Creative Commons. This was episode 396 of the Community Broadband Bits Podcast. Thanks for listening.

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