Transcript: Community Broadband Bits Episode 440

This is the transcript for Episode 440 of the Community Broadband Bits Podcast. This week on the podcast Christopher talks with two representatives from RS Fiber, which serves almost three thousand members in Renville and Sibley counties. Our first guest is Jake Reiki, a corn and soybean farmer and Board Chair for RS Fiber. We’re also joined by Jenny Palmer, City Administrator for Winthrop and Treasurer for the cooperative. Listen to the episode, or read the transcript.

Jake Reiki: Living in Sibley County with the pandemic and things shutting down. It has really been a lifesaver for all of us here who have it and have been able to utilize it.

Ry Marcattilio-McCracken: Welcome to episode 440 of the Community Broadband Bits Podcast. This is Ry Marcattilio-McCracken here at the Institute for Local Self-Reliance. Today, Christopher talks with two representatives from RS Fiber, a cooperative bringing Internet access to almost 3000 members in Renville and Sibley counties in the great state of Minnesota. Our first guest is Jake Reiki, a corn and soybean farmer and board chair for RS Fiber. We're also joined by Jenny Palmer, city administrator for Winthrop and treasurer for the cooperative. Christopher, Jake, and Jenny talk about the trials that shaped a network which fostered some division but which the community now takes for granted. It's hybrid fiber and wireless approach to connectivity, what having fast affordable broadband has done for families and businesses in the area, and where are the networks it's financially moving ahead, as it continues to expand and see robust, steady growth. Now here's Christopher talking with Jake and Jenny.

Christopher Mitchell: Welcome to another episode of the Community Broadband Bits Podcast, I'm Christopher Mitchell at the Institute for Local Self-Reliance in St. Paul, Minnesota. Today, we're going to dig into one of my favorite projects of all time in Minnesota, the RS Fiber Cooperative. Let me start by introducing Jake Reiki the board chair and a corn and soybean farmer. Welcome to the show.

Jake Reiki: Thanks Chris. Good to be here.

Christopher Mitchell: We also have Jenny Palmer, a city administrator for the city of Winthrop, which was one of the major cities pushing this forward from the beginning. Jenny is also the treasurer for RS Fiber. Welcome to the show.

Jenny Palmer: Thank you. Well, I'm happy to be here.

Christopher Mitchell: Mighty Winthrop.

Jenny Palmer: Yes. Mighty Winthrop.

Christopher Mitchell: Like I said, I love this project. I mean, I kind of understand a little bit, I shouldn't say I really know what you went through and all those years organizing for this network. But let me ask you for a quick history of it Jake and also just looking at the sharp video that you're sending right now, obviously something's gone very right. So how did this all start?

2:20

Jake Reiki: The very first rumblings of it kind of started back in 2008, 2009, 2010 timeframe and right around the 2010 timeframe is when it started to hit the public side That's when informational meetings started to happen and the word started getting out that a potential project here was in the works. But basically from 2010 until about the 2014 timeframe, the project went through various iterations of how it was going to be financed, who was going to own it, who was going to have control over it. Ultimately in 2014 is when they decided to turn it into a cooperative whereby the cities would lend money to the cooperative and the cooperative will go out and leverage that initial financing to take on senior secured financing in order to finance the construction and the network.

Jake Reiki: So it ended up being a three partnership between cities, Hiawatha Broadband Communications and RS Fiber Cooperative. So you basically get three entities involved. Two of them private entity is one of the public joint powers board, which is a part of the public financing side of it. So in 2014 is when they finally landed on a financing model and it took about another year or two to finalize and actually close on that financing. Late in 2015 is when the first customers started getting hooking up and in the construction of the network really took hold in 2015.

Jake Reiki: That was the year that we brought in fiber from the Southeast corner of Sibley County, brought it into Winthrop and that was our backbone. From Winthrop we sent fiber over to Gaillard and started building out the internal backbone on our network. So at the end of Winthrop... or excuse me, at the end of 2015, we had Winthrop and Gaillard ready to start hooking up customers and we hooked up about 81 that year, at the end of 2015-

Christopher Mitchell: Approximately.

Jake Reiki: Yep. Approximately 81 customers were connected to the network. Also in 2015 we built the wireless side of it, and it wasn't totally built out in that first year, but between 2015 and 2016 we had the majority of Sibley County and a portion of Renville County covered on the wireless side. So the rural folks could start connecting using fixed terrestrial wireless. So in the cities you had the fiber or the home networks and out in the rural side you had the fixed wireless side.

5:20

Christopher Mitchell: It's a very good history and I think we can avoid digging any deeper because somebody wrote a brilliant case study on RS Fiber-

Jake Reiki: That's true.

Christopher Mitchell: Called Fertile Fields for people who really want to dig in, and we've had several folks from RS Fiber over the years on the show to talk about it. Like I said, I mean, so this is RS for Renville, Sibley. We're talking about real strong Ag producer counties in Minnesota, mostly communities around in Sibley with some in the eastern part of Renville. I have to ask Jenny, is this everything you dreamed it would be? I mean, we had pretty big dreams. Y'all, there was big expectations and here we are many years into it.

Jenny Palmer: I had probably bigger dreams, but this has worked out very well and I can't tell you how grateful we are to have it in this time of living in Sibley County with the pandemic and things shutting down. It has really been a lifesaver for all of us here who have it and have been able to utilize it.

Christopher Mitchell: I think we'll discuss a number of different angles about how to evaluate the network. But I think one of the things that has always stuck with me was this sense that the network was clearly about bringing good quality connectivity to the areas, both in the cities and the more rural areas in the counties and it looks to me like that has been met. Again, I'll just come back to, I think Jake might have a better video than I do.

Jenny Palmer: Yeah. Not only the cities, but with the wireless, the things they've been able to do to bring that kind of connectivity to the rural areas, as quickly as they have without building the backbone out there, they really do have superior service on the air side as well.

Christopher Mitchell: What's the community agreed on this? Is this something that people are pretty supportive of? Are there divisions? How did it fall down now that there's actually a product to argue over?

7:25

Jenny Palmer: It's still considered a little controversial to some I think, but for the most part, people are getting on board and the people who were at one point not in favor of it are using the service and really enjoyed it and getting the most out of it and I think they're starting to see how important it was to the area for us to have this kind of service.

Jake Reiki: I think the truth is in the numbers, Chris, because we do continue to grow. The more and more people that hop onto this network, the more people realize how good Internet is supposed to operate and what they had before was insufficient. So we continue to grow and the numbers are there. So at the end of the day, people realize the importance of it.

Christopher Mitchell: Right. I would expect that your turn rate is probably quite low. I mean, not only do you have a very high quality network that RS Fiber owns, but to have HBC as a partner, which is known as a very, very good local ISP, it's got to be terrific.

Jake Reiki: Yes, exactly. No, our turn rate is very low. Once people hooked on hook up with this network they have a tough time going back to what they had before. That's for sure.

Christopher Mitchell: So I'm curious then if there's any stories in particular whether it's a business or a person. Jake, you just mentioned that people didn't really know what good Internet access was before. Jenny or Jake, is there any stories that come to mind that would sort of illustrate this with a personal touch?

8:59

Jake Reiki: I can certainly talk about my own family. Our household and our farm is just flooded with devices and once you have that quality Internet connection, it really just blows the doors wide open for what your network is capable of and what technology is available to you. Because before RS Fiber, there were lots of things that I was in terms of technology and farming that were available, but you'd kind of see the marketing material and you'd think, well, I don't think our Internet connection would handle that. So then that was about as far as you got, and you never really jumped on the technology bandwagon because you knew that your Internet connection would struggle with it.

Jake Reiki: The funny thing is once people do have a high quality Internet connection, you really take it for granted really quickly. You forget what it was like, what you had before. I mean, it's kind of like if you've ever lived in a third world country where the power might flicker in and out, we don't get that so much here in the US. But whenever you have a power outage you know it right away and the same is true as the Internet. Once you're use used to that high quality Internet connection, it's really easy to take it for granted and forget what life was like before it.

Christopher Mitchell: Jenny, I know that you do double duty as the head of economic development for Winthrop. So I'm hoping you're collecting some of these stories.

Jenny Palmer: Well we do and we have some pretty big industries in Winthrop. Winfield Solutions, Heartland Core Products, United Farmers Co-op is headquartered here. Both UFC and Heartland are big proponents and big backers of the project and it's helped their industries out tremendously. I know Winfield Solutions is also, they were at one point providing free Wi-Fi in their parking lots for people to use, to work or do schoolwork or whatnot. There's JTI Services uses the RS Fiber broadband for their services. We have two clinics in town that have really taken advantage of it as well for home visits and things like that. I don't know that there's one big story to say about it, but all of our industry have benefited greatly for having the fiber network here.

Christopher Mitchell: One of the things that I am always curious about with these networks is the wireless experience. I think if you go back to the five years ago, there was an expectation that fiber would be marching out into the townships more by now, but also probably that the wireless wouldn't be as good as it is today. So I'm curious, I mean, Jake I think by 25 or so. How is that in terms of, I know you said multiple devices. When my colleague Ry did an interview with you recently, you said your daughter was playing games at the same time. So you've been with despair, but is it meeting the needs then and will for the foreseeable future?

Jake Reiki: The one thing I would say about the wireless, it really does meet the needs for our family. But the one thing I would say is the latency's a little higher than you'd see on a fiber network. As more and more households need more bandwidth especially in times of a pandemic and more and more people are on Zoom and using video applications. So as more and more people need more bandwidth on the wireless side, the heavier tax that you feel on the equipment. So I really think that the fiber is still the end game. If we were able to get fiber out to all of the farms in the countryside, I think you could sit back and you say our work is done here. Whereas on the wireless side, it's a little more questionable.

12:43

Jake Reiki: I am really happy with our service, but there are days when you wonder what it would be like to have a fiber optic connection, but as you can see, I mean, everything here is working properly. The one thing about wireless is it does take a little more work to maintain it. Towers and stuff, sometimes they're hit by lightning or power surges. So they're a little more sensitive to truck rolls and you need a little more work to maintain the setup and if somebody wireless receiver goes down or something like that, it costs a little more money to maintain this for sure. But we're really happy to have access to this network out here.

Christopher Mitchell: If I remember correctly, I think you've started with like eight or 10 towers, but you're more than double that now. So I'm guessing that's been a really helpful in dealing with the load from the pandemic and people working from home or the kids at home.

Jake Reiki: Yeah, definitely. You want to be able to spread out those homes across as many towers as you can and it does help handle that excess bandwidth better. But what it really does is improve our coverage and just give our installers a lot more options for where they can pull a signal from. You might have a grove block in the north side of your home, and then it would make it challenging to get that wireless receiver on the other side of the grove. Well, the more access points you have out there, the easier it is for our installers to grab a signal.

Christopher Mitchell: I have to think, and this just popped into my head, but being a co-op with so much local community support, you must have plenty of options for when you need to put up a new tower. I'm guessing people are probably pretty accommodating.

Jake Reiki: Yeah. There's lots of farmer, grain legs out there. I've got a few of my neighbors connected off of my silo here. We've got four receivers on our silo and it kind of triangulate to catch our neighbors who have a little time catching the water tower in Fairfax. So yeah, no, there's a ton of tall structures out here. Really, our biggest nemesis is valleys in like the Minnesota River bottom. Those are really difficult and challenging to try and get signal down in there.

15:10

Christopher Mitchell: I think one of the other challenges as I understand it, Jenny, is that we would like to, I mean, I think many of these areas definitely need more money to build out, but because you're doing a good job of already meeting needs, you're now at the bottom of the list for subsidies. So I'm curious if you have a sense of how you come out of that challenge ultimately.

Jenny Palmer: More subscribers. It is a struggle because every year the question comes up, do we qualify for grants? Do we qualify for grants? I was on the Minnesota Rural Broadband Coalition for a while and that was always the number one, do we help get the people built out who need it, or do we help the people who are in the middle of projects? It always went to the people who needed to be built out. So we always do fall down to the bottom of the list when it comes to getting money, but there is still a need here and we still have areas that need to be built out. So it's kind of a catch 22.

Christopher Mitchell: Yes. The sense I had was that there would be, I think, more potential with the new markets tax credits. So I guess I'm curious, do you have any sense of whether the original plan for financing was maybe too ambitious or miss certain nuances? Or was it just a matter of, this was always the heart issue that was down the road?

Jenny Palmer: I think this was always the heart issue that was down the road. I think it's always nice to put a plan together, but how often does the plan actually follow through the way you think it will? Everybody knew there were going to be struggles coming. Most of us were hoping that they weren't coming, but it is what it is essentially and I wouldn't change it for a thing. I mean, I'm so glad we have it here and there's people who would pay double what we're paying for a fiber connection like we have here. I think the more people that are getting on it now truly understand that.

Christopher Mitchell: I'm one of them. I love having 40 megabits up on my cable connection and that's as good as it gets on the cable connection.

Jenny Palmer: Yeah, that's frustrating.

17:20

Christopher Mitchell: Now, I am curious, have you seen new competition because there was talk that the telephone company in your area might try to build more, or I guess maybe it was nearby that it was building.

Jenny Palmer: We have a local phone company who has been working on building out some fiber. I don't believe it's fiber to the home, I could be wrong about that, but they have built out one of the townships that did decide not to become part of RS Fiber project and they have been some work in Winthrop too. So I think our service's better, but I don't have any experience with their fiber connection either.

Christopher Mitchell: Right. I don't want to put you on the spot. I think it's always interesting how it is not uncommon that we see more investment following one very strong investment into an area.

Jenny Palmer: Mediacom has done some work too. They've come out here and they upped everybody's bandwidth, they've upped their data caps and things like that. They still have data caps though, which is something RS Fiber doesn't have and which in my home anyway with two kids and my husband online all the time those data caps we'd blow through them in a week.

Christopher Mitchell: Yes. If we had a lot more live sports really in the pandemic, I think more people would have become accustomed to that because of the sports stopped, we had less streaming perhaps. So Jake, one of the things about Mediacom reminds me also is that I think in the cities where Mediacom was active prior, they also really lowered the prices. Do you have any sense of how much economic impact the network has had in terms of people just saving money, even if they're not taking your services?

Jake Reiki: Yeah. I mean, you certainly did see more competition on the price side because that's what these big companies tend to do is, they're not going to make the big investment and replace their entire network with fiber. What they can do is make their product cheaper. So yeah, no, definitely. I don't know the exact dollar number, but I do certainly know that when they started hemorrhaging customers to us, they tried to react, and the way that these big ISPs react is by dropping their prices and they haven't been able to do too much for a better service. I know we picked up a ton of customers in Fairfax because they were having issues south of the railroad tracks and they just couldn't get it figured out for some reason. So all of a sudden there was just this big flood of incoming customers because their service was having issues for one reason or another.

20:07

Christopher Mitchell: So 10 years ago, neither of you knew much about telecom, I'm guessing. If you think back, I'm just curious, now as board members managing this enterprise and paying attention to this. One of them is like lightning hits towers, but like, what are your kind of your surprises? What would you have been surprised to know then that you now maybe take for granted today?

Jake Reiki: I think probably the biggest surprises was one that hit me early on, which is that fiber is really always going to be necessary. I think a lot of people don't realize that technology moves quick, right? Constantly there's stuff coming out every five years. New iPhones, new, whatever it may be, new devices. But at the backbone, at the foundation of all that, it's going to take a fiber optic connection. In my opinion, you've got stuff happening on the satellite side. You've got stuff happening on the fixed wireless side. Sure. But at the end of the day if you want to solve the problem, you get fiber to every home in the US and you're done.

Jenny Palmer: The amounts of broadband that people are using, five years ago they said, "Oh, you wouldn't need more than 100 megs or whatever." Now the technology that's come out just in last two or three years, people are using double and triple the bandwidth that they were just a number of years ago.

Christopher Mitchell: Yeah. I think one of the things that people miss is that even if every device doesn't significantly increase just the fact that there's going to be so many more devices, that all are doing interesting little things. So I guess one of the things I am curious about, I remember I was there at that meeting when it became clear that RS Fiber was not going to be able to fully cover the debt payments to the cities. The thing I took away from that meeting was people were basically like, okay, well, that's disappointing, but we want the network to be done more quickly. Sort of like, okay, that's sad, but we would really like just make sure we have the network that you now have today. So I'm curious now more than two years later, how are the numbers looking in terms of the customers? I mean, you certainly said that you're growing, but are you back on track to eventually take back over the levy and things like that?

22:31

Jake Reiki: When we put the refinance together, we put together projections that showed a modest amount of growth over the next few years and basically what those projections told us was that we were going to be able to resume payments to the cities in a seven to nine year timeframe. We are still on track for that timeframe to come to fruition. Actually, there's potential that it could happen sooner but we don't want to get the cart in front of the horse. We don't want to promise anything that we can't see through.

Christopher Mitchell: Has it been pretty well accepted then? I mean, if I remember correctly, do you have the numbers of the impact per household? I think it was on the order of that many households are probably still paying if you combine the taxes and the service fees that they're paying today, they're still in the same ballpark relatively of what they had been paying before. So people have better service at about the same chunk out of the household budget, I think. Is that accurate?

Jenny Palmer: Yeah, that's pretty accurate I would say. We did just refinance the bonds too and saved some money on interest, the lower interest rates. So that was very helpful for the cities that lowered everybody's payment around 10%.

Christopher Mitchell: I guess one of the things since Jake you're on the line, when we looked at the approach in Michigan, where they raise taxes on themselves. One of the things that I learned quickly was that averages can really hit farmers hard. So I don't know if there's if the co-ops in Winthrop, for instance, if they've taken a bigger chunk of that and if they just see that as the cost of doing business. I know that you can't speak for them, but I'm just curious if you have a sense of perception.

Jake Reiki: I think the businesses in Winthrop are just happy to have such a high quality Internet connection at such a reasonable rate. You phrase it in the households, the households are saving money with their telecom bills. So businesses are saving money with their telecom bills almost like tenfold. I don't know what the number is, but RS Fiber's business pricing is just exponentially smaller than what the big ISPs are doing. So I remember for a long time at that UFC people, "Why aren't you charging more? I mean, this product is worth so much more." We're like, "Well, these are our rates and we're happy to give them to you for a fair price."

25:11

Christopher Mitchell: I think it is hard to even compare a slow unreliable DSL connection or a cable connection of like that Mediacom had several years ago. You can try to compare the prices, but honestly, moving from a five megabit or slower connection to 50, 100 a gig, it changes the way your business can operate just fundamentally. It's a whole different experience.

Jake Reiki: Absolutely. I don't know how we'd distance-learn our children right now if we didn't have the Internet connection that we have. I honestly, I have no idea how it'd work because the connection that we had before, it couldn't really handle the upload. The video would be blocky, the audio would be choppy. You look at this especially in times of a pandemic, it's absolutely critical that the infrastructure is there to handle it.

Christopher Mitchell: Now, both of you, Jake you're chair of the board and Jenny, you are there as both economic development talking with lots of other folks and the administrator for the city of Winthrop. I'm guessing both of you are regularly getting calls from folks saying, "Hey, when are you going to expand this? We'd really like to be a part of this." There's some counties around you that have some need. Do you have any sense? I mean, in some ways it may be easier for you to expand to folks you're not serving than to improve from wireless to fiber in areas that you already are serving. So have you been able to give that any thought?

Jake Reiki: You're absolutely right. The grants are focused on new areas and not improving existing customers. So we did kind of shoot ourselves in the foot here by serving our rural wireless customers with fixed wireless because this area is considered served with that 50, 25 service. So it makes this area very difficult to apply for grant funds because they're considered served. But we did receive a grant allocation through some Cares funding that allocation in Renville County funded an additional six towers. So we are expanding wirelessly in the Renville County. By the time it's all said and done, we will have 10 total towers up and running there in the Renville side, and we should be able to cover somewhere between 40% to 50% of the rural customers there in Renville County. So we are expanding wirelessly as far as fiber expansion, that's not something that we are financially positioned to be able to do.

27:58

Christopher Mitchell: Jenny, did you want to add onto that at all? I can just imagine people coming to you and trying to-

Jenny Palmer: Jake, correct me if I'm wrong, but wasn't Nicollet County interested in having us expand all that way-

Jake Reiki: That's right.

Jenny Palmer: That just wasn't in our financial plan at this time, because there are other counties that are very much interested in being part of the project now.

Christopher Mitchell: I always have to check in too. Is there any lingering frustration from, was it Arlington that chose not to join and had some considerable debate over it?

Jake Reiki: We get contacted from time to time from individuals in Arlington, but they've never really put together a formal effort to provide an offer to us.

Jenny Palmer: I know that I was talking to someone over there in an office building and they were frustrated because they keep getting kicked out of their Zoom meetings for the city. I thought, well, that's too bad.

Christopher Mitchell: You didn't know it happened.

Jenny Palmer: Yeah. But I know we do serve people with air towers in Arlington and the people that we serve there are happy with the service.

Christopher Mitchell: I want to end by just saying that, I don't know if you all think about this much, but there was a moment there when there was some stress, I think, between the cities, the Co-op and HBC in which the board had to make some pretty difficult decisions about how to move forward. The Co-op could have decided to just kind of walk away from the cities and not make a refinance plan in which the Co-op would still resume payment. It's the kind of thing that I think it's a decision that you could have made you chose not to. It probably would have led to decades of feuding, the sort of town versus counties and sort of the frustrations that can do that. Do you ever come back to that and just think, "Wow, I'm really glad we did the right thing and we upheld our obligation."

29:59

Jake Reiki: Yeah. The city is having skin in the game like that, it really changed the calculus when it comes to financial difficulties and especially internally on the board, there was just such a resistance to have to just to say goodbye to the joint powers board, that it really forced all the partners involved to figure out a solution that worked for all of us. Ultimately we found a solution and HBC sure stepped up with their senior secured financing and we at least have a path in mind to repay those cities and in the seven to nine year timeframe. So, yeah, we had our backs up against the walls there for a while, but after the refinance and it's really looking positive now, we just keep cheering away, just needed to keep growing and ultimately we'll get everything back together.

Christopher Mitchell: Jenny, I know that you feel good about that decision.

Jenny Palmer: Oh, yes. Yes. The city administrator side of me is very happy about that.

Christopher Mitchell: I think it's a good note to end on because it's been a lot of years of political polarization and here you have a dynamic of towns versus the Ag producers and the argument from the beginning was always that you all needed each other to thrive and I think you've demonstrated that and I just hope other people can take note of that and that even when the going gets tough you can still pull together to get through these things.

Jenny Palmer: The township's really so supportive of this project yet, even though that phase two part of the plan hasn't even gotten pen to paper, but they are still in 100% and it's incredible how supportive that they still are.

Christopher Mitchell: That's great. Thank you both for taking time today, I really appreciate it.

Jenny Palmer: Thanks Chris.

Jake Reiki: Thank you.

Ry Marcattilio-McCracken: That was Christopher talking with Jake Reiki and Jenny Palmer. 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 and other podcasts from ILSR, including building local power, local energy rules, and the composting for community 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 ilsr.org, while you're there, please take a moment to donate your support in any amount keeps us going. Thank you to Arne Huseby for the song, Warm Duck Shuffle licensed through Creative Commons. This was episode 440 of the Community Broadband Bits Podcast. Thanks for listening.