Transcript: Community Broadband Bits Episode 465

This is the transcript for episode 465 of the Community Broadband Bits podcast. On this episode, we're joined Sean Gonsalves, ILSR's Community Broadband Senior Reporter, Editor and Researcher to catch up on some of the most interesting broadband stories in recent weeks. Listen to the podcast here or read the transcript below.

Sean Gonsalves: The digital divide in this country, isn't rural versus urban. It is really all over the place.

Christopher Mitchell: Welcome to another episode of the community broadband bits podcast. I'm Christopher Mitchell, and I'm in St. Paul, Minnesota, at least for a little bit longer. We're going to start doing some traveling again soon. But today we're going to cover some recent news, some interesting stories that we've been seeing. It's going to be a shorter show than normal. We're going to highlight some of the stuff that we have on our site. And frankly, if you want the longer piece, you can go check it out and read it real quick. Today I pulled Sean Gonsalves our senior editor, researcher, writer, cheese aficionado.

Sean Gonsalves: I like that. I was going to say connoisseur, but yes.

Christopher Mitchell: Yeah, I would say you're a connoisseur as well and just generally all around person who does interesting things at ILSR.

Sean Gonsalves: Thank you. Glad to be here.

Christopher Mitchell: Let's start with a story that's not even yours. Let's start off talking about New Hampshire quick and we'll run through it really quick. But I wanted to do this because I'm excited about this story. Jericho Casper on our team, she wrote it, she ran it down, she reported it out. We got it published in Gov Tech. It was sort of a little bit of a slim down version because Gov Tech doesn't want to run these 3,500 word pieces and then we've just published it on our site in a little bit more detail than it ran in Gov Tech.

Christopher Mitchell: Do you want to give a quick overview of what's going on in there and that Southwestern or Southeastern corner of New Hampshire?

Sean Gonsalves: Well, they've developed this partnership, as I understand it, with an incumbent provider in that area that previously hadn't been all that popular. But who knows after they've rolled out this fiber network that they're looking to build in that corner of the state, folks, I'm sure will be a lot more pleased at least with the reliability of the service. And so it's a public, private partnership, as I understand it, where the various towns have come together and have voted. Each of these towns that are participating to issue revenue bonds to build the network and consolidated communications is going to be operating in managing the network.

Christopher Mitchell: In many cases.

Sean Gonsalves: In many cases, right.

Christopher Mitchell: Not all of them.

Sean Gonsalves: Yes.

2:30

Christopher Mitchell: Yeah. It's Cheshire county and it's exactly as you state. Consolidated is, as a company that throughout New Hampshire, often provides DSL. It inherited a network from FairPoint previously. It was the incumbent telephone company. And exactly like you said, they've not been very popular because there haven't been a lot of upgrades over the years through the different owners. But yeah. Now cities with the opportunity to work with them, it offers them a quick opportunity to get fiber out. The part that I find really interesting that makes it work in some of these cases, is that Consolidated is actually guaranteeing the debt. It'll actually be paid by the people who subscribe through Consolidated, but if in terms of the risk, the cities have practically no risk. And that's pretty interesting, I think.

Sean Gonsalves: Yeah. And super, super attractive and in contrast, in some ways, to the neighboring state of Massachusetts, which I've reported on a bit on some of the towns out in the Berkshires who have- They're similar communities in the sense that there are these small towns, rural. We're talking about towns that have several hundred people, residents or maybe a thousand or so-

Christopher Mitchell: A lot of people might live like five miles from the town square.

Sean Gonsalves: Right. We're talking about not very densely populated areas. In western Mass, of course, it's been very successful so far. You've got maybe two dozen towns or so that have built, or in the process of building, fiber networks. In those instances they didn't partner with a private company. They've actually been working with WiredWest, a consortium of towns and the utility out there Westfield Gas and Electric.

Christopher Mitchell: Right.

Sean Gonsalves: So it's bit of a different model in New Hampshire. But it's interesting to see some of these rural towns in the Northeast come up with these different models as a way of- How do we build these networks in these hard to reach communities that are not very attractive to private companies to build networks? And so there's these different models that we can now see side-by-side in Western Massachusetts and New Hampshire. And then of course in Vermont, they're doing something a little bit different.

4:50

Christopher Mitchell: Yes. And some of the towns in New Hampshire are not working with Consolidated or working with a New Hampshire electric co-op, which is an organization that we've reported on. An electric co-op that the management did not want to get into broadband. The board did not want to get into broadband in a local organizing effort led to them changing their minds and demonstrating that there was a lot of desire from member owners of the cooperative that they wanted the electric cooperative to help solve this problem. And it sounds like some of the towns there will be partnering with that electric cooperative as well. I would be shocked. Let's do a little prediction, in two years I think there could be 50 New Hampshire towns that have done something like this. So let's throw that out there.

Sean Gonsalves: Yeah, for sure. And I think one of the things that's really interesting about, particularly in some of these rural towns in building these networks that sometimes folks don't often think about, is since the onset of the pandemic, there's been a lot of movement from people from cities into areas where now that you can work remotely and work from anywhere, a lot of these communities become a lot more attractive. Except for the fact that if you don't have good Internet connectivity, it makes remote work essentially impossible if you don't have really a reliable connection.

Sean Gonsalves: And so in these areas where they're building these networks, it becomes something that can draw people into these communities. In many cases bringing people who grew up there and moved away, went to school, worked in big cities and now they're able to come back to where they grew up. That's a feature or a benefit, I think, of these networks. I think a lot of these more rural communities are going to realize that it's very attractive to live in areas that are far away from dense population centers, but have the beautiful towns and the environments and kind of slower way of life, but yet you're not having to sacrifice your connection to the modern world living there.

Christopher Mitchell: Yeah. I think one way to phrase that might be that we may see some of these vacation homes, some of these get away from the city for a week or two homes, turn into summer homes where people aren't just coming up for like a few weeks out of the year, but they are spending almost the entire summer there because they can work from there. And I think people who thought the pandemic would end the demand in high costs, urban areas, we haven't seen that at least.

7:40

Christopher Mitchell: The house across from me just sold for $120,000 more than it did two years ago. I guess I'm a terrible neighbor by the way, PSA. But we're seeing property values continue to increase dramatically across the United States and urban areas. But I do think people who can afford it, have those second homes and they will be spending more time there if they can work reliably from there. Even if kids can do school from there on occasion.

Sean Gonsalves: Exactly.

Christopher Mitchell: So let's talk if we go a little bit west of there, we go some the Northwest. You just published a cover story on a kingdom. Tell us about this kingdom in Vermont.

Sean Gonsalves: Yeah. Well, first of all, Vermont has got great cheese. So we should say that right out of the gate here.

Sean Gonsalves: So I recently wrote about the Northeast Kingdom. NEK is the initials. And in the Northeast Kingdom, which is a very rural part of Vermont. Let's face it, most of the state of Vermont is rural. But this particular part of Vermont is about the most rural part of the state. It's the Vermont of Vermont. In fact, that particular region several years back was designated as, they call it a reap zone. Which is rural economic area partnership zone. This is a designation that the USDA has for actually only a select few areas of the country. I think there's only like four. There's one in North Dakota, two in New York and this section of Vermont. And it's basically a way of saying that it's a very economically deprived region and that designation gives them access to certain special grants and so on and so forth. But it's just a way to sort of characterize that area as one, that even the federal government recognizes as a very rural area that's been deprived of a lot of economic development. And that's what we're talking about in the Northeast Kingdom there.

Christopher Mitchell: Right, so you have these twin challenges of extremely rural and extremely low income. It makes it very difficult for a business plan to pencil out, to get broadband infrastructure to every home.

9:49

Sean Gonsalves: For sure. For sure. And in the state of Vermont, they've taken an interesting approach in that they have decided that the best way to- First of all, the state's goal is by 2024 for the entire state, for there to be universal access to broadband. And the vehicles that they want to get to that goal in, is through these things called communication union districts. Which are these municipal entities that are, I guess you could say, they're akin to say a water district or a sewer district where multiple towns can come together and form these districts that are these municipal entities and- But to build communication infrastructure. And that's the primary vehicle by which the state has decided that they're going to pursue universal access to broadband. And the Northeast Kingdom-

Christopher Mitchell: Before you get into there. I think, you might not be in a position to correct me, but if you are, you're not allowed to. No, I'm just kidding. I think the communications union districts, because of the financial conservatism of Vermont, I think the CUD's are either limited or unable to issue debt that is general obligation debt for the entity. And so it's difficult to get a startup going.

Sean Gonsalves: That is correct. And they have no authority left to levy taxes whatsoever. Although being municipal entities does put them in a position to get access to grant money and eventually go to the bond market. And in this case, in the Northeast Kingdom, that's precisely what is their business plan.

Sean Gonsalves: What they're looking to do- There's 55- First of all, I should say that there's nine communication union districts throughout the state. This is one of them. One of the more recent ones-

Christopher Mitchell: If we are painting a picture, there's kind of one that is like way out ahead of the others. That's EC Fiber. We've talked about them before many times. Wonderful project. And now that has spawned additional ones. They helped to create this whole idea of a communications union district. And now all these other ones are trying to figure out how to make a similar model work for their areas.

Sean Gonsalves: That's right. That's right and the NEK CUD that was formed in March of 2020. So they're fairly young. You could say that they're a fledgling CUD. And so far they've raised about $750,000 through various grant programs. And they have this little partnership with Kingdom Fiber, which is a private company, and used some COVID relief funding to connect about a hundred homes or so in several towns as almost like a pilot project. But just recently in the past few weeks, they approved a $120 million business plan to bring fiber to the home, to all 55 towns in the Northeast Kingdom. And we're talking about passing 33,000 premises, they're talking about deploying about 2,800 miles of fiber and a seven year rollout process. And what they're really excited about is a new grant program that was established when the governor signed a bill H360, I believe is the bill number.

13:11

Christopher Mitchell: Before you get out too far ahead of that, I feel like people are always curious, what about the people that live outside the towns? And it's worth noting that in Vermont, as in other places in new England, there's no place outside of the towns. The town boundaries all abut each other. And so we use the term town, but it encompasses all of the territory. And so this is more or less every last person in the area. When we say the 55 towns, it's all the people that live in that area basically.

Sean Gonsalves: Yeah. Right, right. Good point. Good point.

Christopher Mitchell: So Vermont, just amazing- This bill, which we're tracking Jericho Casper wrote about several times over the course of this year on muninetworks.org, what happened in this bill?

Sean Gonsalves: So it took the COVID relief money that was in the American rescue plan and dedicated $150 million that will be a pot of money for the CUD's to access as grant money. And to build out these networks. And in the Northeast Kingdom case, they are eligible for, they believe, $40 million of that, and are actually looking forward to accessing that money and using that $40 million as essentially, as their initial money that they'll use to build the network. And then that will put them in a position to then go to the bond market. Once you've kind of established a good asset base and some level of service, they can then go to the bond market and then build out the rest of the network. And they think that process will take about seven years.

Christopher Mitchell: So the way to think about this is, a city might, although they don't often, but a city might issue debt and say, hey we've got this business plan. But at the end of the day, the business plan fails. We'll raise taxes in order to pay you back. And that's what you think of secured debt or a general obligation debt. They're not allowed to do that in Vermont.

15:26

Christopher Mitchell: So it's very hard to issue unsecured debt when you don't have a track record, because investors are looking at you and thinking, well, maybe they'll do a good job, but maybe they won't. And if anything goes wrong, what can I seize as an asset? And there's not a lot to seize in a network that's not working well. So what happens is, is you can get this started, and you can demonstrate that you know what you're doing, you're doing a good job of serving customers. Then investors are much more willing to loan you the kind of money that they will need. Which is on the order of another $80 million or so to build out to everyone. And who knows in that time period, we might see other federal programs or what not to help along in these more rural areas.

Christopher Mitchell: But I just have to say $150 billion in Vermont for the communication union districts, just, I'm doing my happy dance in my head. You know, it's very exciting.

Sean Gonsalves: And it's even more exciting if you live in the Northeast Kingdom, because for most folks your choices are essentially DSL or HughesNet. There's some folks that have signed up with Starlink in the beta test program. It was funny that while I was interviewing the chairman, Evan Carlson of NEK Community Broadband, he's got Starlink, recently subscribed. And in the middle of him saying, so I have Starlink and it's not perfect, but- And we were doing a zoom call and it froze for about 10 or 15 seconds. So to give you a sense of fact that satellite, even with all of the fanfare of Starlink, isn't quite what folks would, I'm sure like to have, which is a very reliable connection where you're not in the middle of, in this case, it was just an interview with me, but, if you're in an important meeting, it's not acceptable to be freezing as often as we were in our conversation.

Christopher Mitchell: Well, I do think that the Starlink ardent supporters would remind us of the expectation is that that will go away as there's more satellites and that this is still the beta. And I would suspect that- I know one of the people in Vermont that has it, and boy, they're so happy that they have something that works 95% of the time or more at those speeds. So you're right. And I think it can be really hard to try to work on a VPN all day if you're running into that every 20 or 30 minutes. So that's the context that they're in right now.

18:02

Sean Gonsalves: That's right. But credit to the Starlink for being as candid as they are. Isn't the phrase, something like better than nothing? Or good enough?

Christopher Mitchell: Yes. Yeah. It is. I remember when you had to get an invite to join Gmail and it was in beta still like eight years later or something. So the term beta is not always well-defined. But in this case there's clearly some issues that make it relevant.

Christopher Mitchell: So let's talk about the last thing that you've been working on this week in particular. And that is something I asked you to do. Something that we're going to be releasing, hopefully here in early July, talking about what is the problem with broadband? Which it seems like it's kind of an easy question, but when I talk to folks, whether they are, let's just say people who are in high positions who are tasked with solving this problem in the federal government down to local leaders. I don't think people always have the right conception in their mind with what the actual problems, and I say problems with broadband are in the United States. So what's your focus in this paper?

Sean Gonsalves: Well, one of the things that I think is important to get across, and hopefully this brief will help do that. Which is that there are folks that have this idea in their head that lack of access to broadband is really only a problem in rural America and for people that are out on the farms and in the outskirts.

Sean Gonsalves: That is certainly true that there is a severe connectivity problem in rural America. But the truth of the matter is that it's a bit more nuanced than that and that the digital divide in this country isn't rural versus urban. It is really all over the place. I think part of the reason why this idea that rural America is where the problem is- As we talk about the broadbandification of the United States, it's often talked about in saying that we're in a similar time to the 1930s in electricity. And in that sense, you had the rural electrification act that really helped bring electricity to those rural parts of America that didn't have refrigerators, that didn't have lights in their home. So on and so forth.

20:35

Sean Gonsalves: Part of the problem with that analogy is that it sort of implicitly suggests that much like with electricity, the same is true with broadband. That is true, except that the issues go far beyond just rural America. And what we mean by that is that the lack of access to broadband is not just that there isn't infrastructure in place everywhere. That is a problem that it's sort of a patchwork, but there are other issues to accessing broadband.

Sean Gonsalves: Namely, a lack of affordability which is the result of a broken market. Meaning that there are a lot of areas in this country, including major metropolitan areas that are served by monopoly incumbents who don't have any incentive to make real investments in the infrastructure that exists and don't have really any incentive to offer prices that are affordable. And so there's a real need to introduce competition into the market. And that is something that is an important aspect to solving the digital divide and that's something that's important to communicate to folks that are making laws and deciding how the federal government, or should the federal government be subsidizing the building of networks anywhere.

Christopher Mitchell: Yeah and I have to say, this is a pet peeve of mine, and I would take it in a slightly different direction. But I really liked the direction that you took it with the rural electrification. And in my frustration is there's a bunch of people who are like, we've got this major problem to solve. And even if they defined it along the lines that you do. Not just like a lack of access to infrastructure. But if they set some kind of high quality infrastructure or something like that, and their solution is we need fiber. And rural electrification didn't succeed because we put copper on phone lines. It worked cause we built like 900 electric cooperatives that had the right incentives. Not just to build the networks, but to deliver power reliably at an affordable price. And to keep it that way decade after decade.

22:49

Christopher Mitchell: For people who are like fiber, fiber, fiber- I'm just annoyed because first of all, I'm cranky, like getting hot I'm not sleeping enough cause I'm doing too much. But I'm cranky about it because the problem isn't just the technology. If you forced me to choose between, right now basically saying all federal dollars got to go to fiber- And not just like someone could take that in a weird way, like a genie, like the sort of the monkeys paw.

Christopher Mitchell: Let's just say for a second that you could generally direct the money toward fiber and intelligent cost-effective ways. And that's one option. And the other option is that to the greatest extent possible, we're going to empower and give money to the cooperatives in rural America and the local companies that have made real commitments over the years to do a good job. And some of them might use that money to build fixed wireless. I would rather have the money going to those locally accountable entities than picking the technology. Because the danger is that if you're focused on fiber, well, Frontier can build fiber. AT&T can build fiber, but that's not the solution. And it just irritates me.

Sean Gonsalves: I get it. And that's a great point is that we don't need to really obsess as much over the specific technology that's used so much, is that that local accountability piece. And injecting some competition into these markets that have long been dominated and frankly protected by the federal and state governments. These monopolies that have led to where we are today, where millions of Americans are paying high prices for essentially second rate service.

Christopher Mitchell: Yeah. Many tens of millions. I mean, you and me specifically.

Sean Gonsalves: That's right. That's right.

Christopher Mitchell: And we see this in cities in which the federal government and we're dealing with this issue with the treasury department and the rescue plan funds. And I feel like the treasury department looks at this and says that they have the wrong conception of what's broken in broadband. And so they say, well, obviously we should spend money on broadband infrastructure in areas that lack it.

Christopher Mitchell: But the thing is that, and I use this example all the time, Baltimore has, I don't know, 600,000 people, something like that. Comcast can deliver a gigabit to pretty much any one of them that it wants to. And at the same time, half of the kids in the Baltimore schools did not have Internet access during the pandemic. And that clearly demonstrates that the proper metric of understanding what's going wrong in Baltimore and in many of our cities is not this question of whether 25-3 is there physically. Whether or not a company claims they can provide it, but whether or not the job's getting done. And I have some sympathy because sure, how do you legislate, put into words, Chris's idea of the job is getting done? But that's what we need to do.

25:55

Sean Gonsalves: Right. One of the things that was hopeful when the Biden administration initially put out there ideas around infrastructure was that it was prioritizing local entities. Municipal networks, cooperatives, non-profits. And it seemed to suggest that the Biden administration had this idea that the lack of competition is a big problem as it relates to broadband access. And that it is the job of the federal government to create a competitive markets. To create the conditions for competitive markets and not just remove regulations as has been kind of the standard operating procedure. Now who knows where this whole infrastructure stuff is going.

Sean Gonsalves: You know, there's potentially tens of billions of dollars that will be directed towards local communities. So this is potentially a real watershed moment. There's a lot to be said as to- It's hard to read the tea leaves as to where that will shake out and kind of the timeline of those things. But, to your point, that was one of the things that was initially exciting about what we saw in some of the early infrastructure proposals that as it related to broadband.

Christopher Mitchell: Cool. So let me say thank you, Sean, for popping in here to talk about some of these stories. People can check out muninetworks.org. If you haven't come across that website, I'm a bit confused as to how you found us. But we're not just lovely voices. We also write.

Christopher Mitchell: Let me also say that I'm confused in exactly how to proceed as we do this show moving forward. And I'm curious whether we should do more of these internal episodes, where we're talking about some of the great writing that our colleagues are doing on the team. Or if we should continue our focus on outside guests.

28:01

Christopher Mitchell: So if people have any thoughts about that, feel free to drop a comment, send a tweet, drop by my house and tell me how we're doing. But let us know what you think.

Christopher Mitchell: And thank you, Sean for your time today.

Sean Gonsalves: Absolutely. Thank you.

Ry Marcattilio-McCracken: We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us@podcastatmuninetworks.org, with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. Follow muninetworks.org stories on Twitter. The handles @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 @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 the Community Broadband Bits podcast. Thanks for listening.

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