Transcript: Community Broadband Bits Episode 470

This is the transcript for episode 470 of the Community Broadband Bits podcast. On this episode of the Community Broadband Bits podcast, Christopher Mitchell is joined by Executive Director of the ConnectMaine Authority, Peggy Schaffer to discuss strategies that might make Maine and other states successful in solving connectivity issues with the $42 billion in broadband funding the new infrastructure plan sets aside to go directly to states. Listen to the podcast here or read the transcript below.

Peggy Schaffer: There's money coming, take a breath and figure out what it is you want for your community for the next 50 years because that's what you're going to be able to get.

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 I'm speaking with Peggy Schaffer from one of my favorite states, don't tell anyone, from Maine, the executive director of the Connect Maine Authority in fact. Welcome back to the show, Peggy.

Peggy Schaffer: Thanks for inviting me. It's great to be here.

Christopher Mitchell: Yes. And I've, I have to say that, obviously my organization has deep roots in, in Maine, in the Portland area particularly, but Maine has been one of my favorite states for broadband to. The main Broadband Coalition that you've been involved with, historically that you still are involved with, but so many great folks, so many great partnerships, really interesting approaches throughout the state. Let me just start with a general question. You've also been active in helping to shape the broadband piece of the infrastructure bill. How are you feeling right now, now that that language is sort of written in and maybe kind of quickly curing concrete?

Peggy Schaffer: I think it's a huge win. I really do. And here's, here's why, I mean, I think there's holes, right? They're always going to be holes in federal dissertation, but to me, the huge win is the significant shift from moving away from federally run programs to state run programs, because I'm a huge believer that the states are the people doing this work. It's really, this is an on the ground street by street battle and the states of the people doing this work. And so to be able to put the money through state programs who best know the issues, best know the constituencies, and the providers, I think is a huge, huge step for the federal government.

Peggy Schaffer: I just, I think it's a significant shift away from them to the actual people who do the work, which is I think really important. It's pretty broad ranging there's money in there for digital equity. There's money in there for tribes. There's money in there for affordability. There's money in there for a middle mile. While it could of course always be better, this is really good. This is really good. And it's really, it sets a path for future action, that I think is really critical, right? I mean, we have, we have to deliver, we have to deliver on this. I know we can, but we have to deliver on this. But once we do that, it lays a path that says, this is how we should do things from here on in.

2:42

Christopher Mitchell: I really like that. I agree with your assessment. I think I'm not as overly positive in all the ways. I mean, I have some, some concerns and disappointments, obviously. I mean the, the Biden administration got our hopes up in ways that I, if you asked me in February, is the Biden administration going to prioritize municipal and cooperative networks? I probably would have said, eh, probably not. But then he said he was, so.

Peggy Schaffer: But here's what I would say about that. Right. So we do, there are states who for a lot, mostly political reasons have those bands, right? They do. This does allow for states that don't have those bands to do those kinds of activities, right?

Christopher Mitchell: Right. Yes.

Peggy Schaffer: So it puts, in states that don't have those bands, so again, it puts us on an equal footing, puts municipalities and other projects on an equal footing because it's, so it's going to allow expansion in states where, where there aren't the municipal bands. But the other thing it will do, I think it will put pressure on those states that have those bands to remove them.

Christopher Mitchell: Yeah.

Peggy Schaffer: I mean, that's a [inaudible 00:03:42] strategy but.

Christopher Mitchell: Right. No, I agree. And I, and that's the thing is that this is my version. This is a, this is good for multiple reasons to give the money to the states. One is that I've said this in multiple times, if the states screw this up, there will be political accountability I believe. If the FCC got all the money and they screwed it up, I don't think there would be very much accountability. So, so this sets us up for longer-term.

Christopher Mitchell: Now I want to come back to the states in one way, but I'm going to go down a different path. I was trying to figure out which path to go down. So the first is, for states that do screw this up, let's say that they, they squander this money. They give it to 18 T, or Lumen, or Frontier, or something, and just not very much gets done. This, this 42 billion for infrastructure more or less should be the final amounts that have spent correctly would solve nearly everyone's unconnected problem. The people who have no infrastructure near them in rural areas. So if North Carolina or Idaho screw this up, should they have future federal funds available to them? Or should the federal government say, "You know what? Now you're paying for it"? For anyone that's not connected past this.

Peggy Schaffer: That's a good question. I think there needs to be some level of accountability on the space for a couple of things, right? We need to make sure whoever we give the money to builds what they say they're going to build. So that's an accountability. I mean, the feds got a lot accountability on that, but we're going to need that too. I'm not sure what the answer is to that because I know that in our state, we guess, and it is a guess, because the data on all this stuff is really bad. But, so we guess our hole is six hundred million dollars. It's probably a little higher than that. If we're going to achieve, a hundred over a hundred, it's probably a lot higher than that.

5:14

Christopher Mitchell: Right.

Peggy Schaffer: Because the 600 million is really based on a back of the envelope guess of where cable is. And so if we're going to build a hundred over a hundred, which is what our current state standard is, that number is going to be bigger than that. And so this potential 300 to 400 million come into our state, when you add in potential community funds and potential provider funds should get us to probably 700 million. That should solve most of our problems, right. But there will be a hole left. And so the question is for those states who maybe don't do this right. Maybe give it to a provider and they're not as accountable as they should be, or they don't build what they're supposed to be, how to separate out where they provided funding, that didn't work and where there's, where they couldn't provide funding because of, for whatever reason.

Christopher Mitchell: Mm-hmm (affirmative).

Peggy Schaffer: They still needed additional funding to get there. So I think there needs to be some level of sort of corrective action. I will say that, I'm on the state broadband leaders network and there are more, and more, and more states now actively and aggressively engaged in this. It is a really supportive group of directors who have many, many conversations with each other outside of the NTIA structure about how to do this. We're constantly passing information back and forth. We're stealing the information on people's Facebook, from their Facebook pages.

Christopher Mitchell: Mm-hmm (affirmative).

Peggy Schaffer: We cut and paste all, everybody's webpages or cut and paste all over the place. Because there's lots of good information out there and we're sharing and trying to learn from each other. Every state is very different in terms of their political status, of where they are. And that's true about where their offices too. Some are located in the Governor's Office, which has a little less stability. Some are located in economic development offices, where they have a little more. So, I think that there needs to be some, there needs to be good accountability, but you need to be flexible enough to understand sort of the politics of what's going on in the state. That's not really an answer to your question. No,

Christopher Mitchell: No. That's, I think that is a very good response in terms of, we don't know yet. And frankly, materials costs keep going up. This money is not going to go as far as we thought it would. So there's going to be some challenges along the way. Maine is one of the higher cost states to build in. Obviously anything that has to go underground is incredibly difficult. Even setting poles in many places is much more expensive than in other places. Your folks that, that are out there are quite a ways out there with so much of the population being close to the coastline, but the ones who aren't often deep into the forest. Do you have a sense of whether you're going to be able to start dealing with the underserved or do you think almost all this money will be going to the unserved folks?

7:55

Peggy Schaffer: A lot of that depends on the federal guidelines, right? How the feds, how whoever ends up doing this. I think NTA ends up interpreting the federal priorities, which are, the top ones 25 three, the next one's a hundred over 20. I think that we're going to get to some a hundred over 20. I am hopeful that the money is flexible enough that we can begin looking at areas of the state that are dense,

Christopher Mitchell: Mm-hmm (affirmative).

Christopher Mitchell: even for Maine. That are low income. We have housing sections in, in Lewiston for instance, and Portland, and South Portland, that don't have very good service. But we can't reach there because they technically have service. I am really hopeful that we can use some of this money to look at what others towns, what other states are doing. Like the New York city mesh thing and the Detroit mesh thing.

Christopher Mitchell: If there's ways that we can do that, because for all of this money, it's really important that we step back. Our concern is, should be, that people need to have access to broadband. They need to know how to use it. They need to know how, they need to have a device. They need to be able to afford it. And they needed to have something running by their house they can connect to, right. And something running by their house. This pays for, and it pays for us to some extent, the affordability to a piece and how to use it to a small piece. But as we build these networks with this money, it's really important that we step back and look at the very basics of where those costs start. So do they start with middle mile? In Maine, we have essentially one connection to Boston, right. That's it.

Christopher Mitchell: And so how do we as a state think about, if we're going to build this infrastructure to make sure it's affordable, by the time it gets to the customer. And so do we need more peering in the state? Do we need more middle mile? Who should own that middle mile? How do we keep those costs low? So, when we get to the end that the service is affordable. And the same thing, it's true, I think with these sort of mesh networks, I think that the, to me, the exciting piece about the New York and the Detroit and other ones are, a they're having citizens build it. So you're getting workforce, you're getting skills, you're getting community engagement, all of that stuff. But the other thing is once you build it, the people own it. And so you don't have that constant, you don't need that constant emergency broadband benefit to help pay for it because it can be a lower cost because we own the infrastructure.

10:15

Christopher Mitchell: Mm-hmm (affirmative).

Peggy Schaffer: And to me, that's a really important piece. And you know, when we talk to towns about municipal broadband, that's one of the conversations that we try to have. You need to look at affordability in your town, figure out how many people are, are low income, and there's always a ton, and then figure out how you're going to make sure that there is universal access here and you owning the infrastructure helps that conversation. So that's my hope is that this money isn't just, let's get something to the last mile so everybody gets connected. It really takes a moment and steps back and looks at the structures that we need to make sure that this is an affordable product by the time it gets to that last mile.

Christopher Mitchell: That's terrific. I want to talk more about what you're doing in Maine. Last year, there was a referendum in which people voted to, to, to put, I think it was $15 million, was it? Toward, toward broadband projects? How, how is that moving forward?

Peggy Schaffer: So we have done our first round of funding. ConnectMaine was created in 2007, and we'd had a small amount of funding every year. It's basically based, an assessment based on the landline. So it's a decreasing revenue stream. And so we put up maybe, somewhere between 750 and a million dollars a year in, in, in grants. So over the 12 year history, probably 12 million bucks. Since last year up until now, up until this fall, fall 2021, we're going to have put out almost $22 million in grants. So twice of what we put out over the last four years, some of that we did, we did a small bit of COVID money, CARES Act. In this fall, we did about $6 million of that and we get that out the door in two weeks, and networks that were built by December. So unlike, USDA, who's still building networks.

Peggy Schaffer: And then we have this, this broadband bond that passed last summer. We put out a, we're doing two rounds of applications with that. The first round was this spring and we awarded about $8.6 million to I think, seven providers to cover about 9,000 locations. In that we funded three municipal projects. Some of them were what we call provider expansion. So it really, it wasn't like a universal bill that was like, I want to take my footprint and bring it out here. Those projects are mostly under contract and get going. We are always evolving, right? All of this for us is an evolving. And so we are looking at our grant processes for the next round learning what we did from this round. And we're going to make, be making some adjustments. Some of that is because we finally brought on smart people to run, help run, help us run this.

12:54

Peggy Schaffer: We hired Tilson technologies and ventral fiber to help us both with the design in more importantly the mapping. And we're going to use that information to improve our processes going forward, which will allow us to, to make some significant process changes, to help applicants, make it a little easier for towns to apply. Let us look at the information a little differently so that we can look at really what we're, what, what the cost is per passive and what we're paying for versus just what is the project costs. And so that might help, that's going to help us make better decisions about how to spend this money to reach the most people.

Peggy Schaffer: So it's a lot of work. It's all very exciting and it's constantly moving, which I got to say, the industry communities are like, "why are you changing this all the time?" And it is because, first off this technology is changing, right? Not, not the technology of how to bring you service, but the technology of understanding who has service and who doesn't is changing all the time. And so we're taking advantage of that to constantly refine our process. It's not huge [inaudible 00:14:02], but it is, there's significant refinement that that's important.

Christopher Mitchell: Well, no, and that's really good. Because what you're doing is, I mean, you're talking about, you learned a lot, I'm sure through those like 750,000 to a million dollars per year now you've gone up by a factor of 10 and you're going to learn a lot. And soon you're going to have another 10X jump here, whether that's the money from the, the 10 billion from the treasury department funds, which we hope we'll hear from in the fall. I mean, I think there's a sense that many of us had that, that, that program was slow rolled as they were waiting to see if it was going to be clawed back. And now we don't think it's going to be clawed back. I, I was very worried about that. I know that you had some concerns about that.

Peggy Schaffer: Yes. Yes.

Christopher Mitchell: So that program will hopefully be going forward soon. And then as soon as you're in the middle of that is when you'll start to get this other money from this infrastructure bill, if it goes through as well. So it'll be really good to be a pro, a seasoned pro by the time that comes out.

14:58

Peggy Schaffer: Right? I mean, so we're laying a path based on $15 million, which was huge last summer, right? Huge.

Christopher Mitchell: Yes.

Peggy Schaffer: This summer, we're looking at 300 to 400 million dollars in the next couple of years, which is mind-blowingly huge. And that's, I mean, you hear this conversation on a national level and we're trying to have it on a state level too, which is we need to shift our mindset from one of scarcity, which is, can we build for the cheapest to serve the most people to one of abundance, which is what is it people need to make this service work for them for 50 or 40 years, we'll want to go back and build this infrastructure, then how do we do it right now? And how do we know how to do it right now? And that's the piece I think that abundance allows us to do. And it's, it is a significant mind shift.

Peggy Schaffer: I had this conversation with all the, all the time with people and they're like, "well, what about?" And I'm like, stop, stop thinking that way. There's money coming. Don't be thinking about, ooo, no there's money coming. There's money from the American rescue plan that your town has had and your county has, which can help. There's money the state has from that, there's the treasury money. There's, there's money coming. Take a breath and figure out what it is you want for your community for the next 50 years because that's what you're going to be able to get.

Christopher Mitchell: That's, I think that's very good advice. And one of the things I found interesting is that this money that's coming, becoming available, you're, presumably Maine will have you distribute it. And communities, if they want to put in their own projects, will have to put up 25% at least, and as a match and they can use the American Rescue Plan dollars that are available to them. And so it's important, not that they spend that money immediately, but to make sure that they are reserving a, an appropriate amount, if they don't want to have to find it within their own tax revenue what they're going to use for that match.

Peggy Schaffer: Yeah. I also think it's really important for, this is one of the things that we haven't gotten to yet, but we want to, which is essentially what I, I it's, it's more complicated than this, but I essentially say it's a spreadsheet, right? If you know what your cost is and you know what your take rate is, and you know what your, you can figure this out. So you can look at, what is the revenue stream that you're going to get from this service? And what is the whole, when you're done, right? So if you have a revenue stream that's going to pay for maybe 50% of the bill, then your whole is 50% of the bill. So then you're not, you're not figuring out how to find a 100% you're figuring out how to find 50%. And how much of that is, is how much of that can be alone? How much of it can be a grant?

17:33

Peggy Schaffer: And, and that helps all of us spend this money further, right? When we can figure out how to use the potential revenue stream that does come in, because people pay every month, from these systems to help build that system. And for towns who want to build their own network, they have much greater capacity of this because they can borrow for 20 to 30 years. So that really stretches out that payment. And they can do some of it if they want to on their tax base, or they can also do it with a revenue bond.

Peggy Schaffer: And all of that sort of allows for communities to think about, all right, if we're going to pay this much chunk in our, and our community can afford this much. Here's the piece that's left. There's a small piece that's left here. And what are the, what are the components of that piece? So is it provider money? Is it federal money? Is it state money? And it really helps them really think better about, I think everybody gets stuck on, "Oh my God, this is so expensive". And it's, it's not, it's not. I'm on our town budget committee. We paid about three miles of road a year and it's $400,000.

Christopher Mitchell: Mm-hmm (affirmative).

Peggy Schaffer: Broadband in Maine is about 30 or $35,000 a mile. So it's cheaper than paving the roads.

Christopher Mitchell: Well Yeah. I look back at the, the, the bridge that was replaced. Oh, it must be 10 years ago, eight years ago. Something like that. Up on the way, on the highway that goes right along the coast.

Peggy Schaffer: The Verona bridge.

Christopher Mitchell: Yes. Yeah. The one that's beautiful now that amazing suspension bridge.

Peggy Schaffer: It was a gorgeous, we called it the singing bridge before because it used to sing in the,

Christopher Mitchell: Okay. I remember driving over that when it was either being painted or there was some construction on it and it was, let's just say it wasn't the same visual aesthetic beauty on the landscape that the, that the new Verona bridge is. But I can't imagine how much that must've cost.

Peggy Schaffer: I think, I know, I think it was 70 or $80 million and that was just one of our, their, their bridges that connect, that bridge connects an island.

Christopher Mitchell: Mm-hmm (affirmative).

Peggy Schaffer: And is, route one goes across it or route three I think it is anyways, it's a major bridge. And when those go, you can fix them right then. And that, so that bridge went before. What we thought was, we thought they were 70 years and it wasn't 70 years it was less than that. But it was, I think it was 70 or $80 million that we had to come up with in a summer to pay for that.

19:53

Christopher Mitchell: Right. And that's critical infrastructure. And at the same time, I mean, in a, in a low density state, like the bridge, isn't, it's not, it's not like a bridge in New York City.

Peggy Schaffer: Yeah.

Christopher Mitchell: In terms of the amount of volume that it carries. But yeah, these things are, we're used to paying for bridges and roads and things like that. And, and with the particularly when you do it right, as you're focused on, when you're building this fiber infrastructure that has this very long life and low operating costs, then making sure you get it done right means that we're not going to be suddenly stuck when, when have a, when we need a forklift upgrade for a wireless system, for instance. There's, there's definitely roles for wireless and less so in New England and often than in many other cases in part for a variety of local reasons. But, but yeah, I just, I think it's really important to, like you're saying to get this right. I mean, right now, if you just say, if you're like, !we just got to get started immediately. We're going to start ordering our gear". Well, you're still going to have 18 months or two years while you're waiting to get it. So, don't, don't, don't skimp on the planning. Let's make sure we're getting it done right.

Peggy Schaffer: That is usually, that's a message we try to give, when the American Rescue Plan came out everybody's like, "I'm going to go spend it right now". It's like, you don't, you don't, you have until the 20, you have until 2024 to decide what you're going to do. And then you have until 2026 to build. You have plenty of time, read, plan, stay focused. Don't panic.

Christopher Mitchell: Yes. And, and Maine has so many local companies. And even it looks like Consolidated is now much more willing to partner in interesting ways. So there's a lot of good partners to, to tap into.

Peggy Schaffer: Yeah, no, we are, we are very fortunate in that we have a very good ISP community. And the shift that Consolidated has made in the last six to nine months is significant, right? So they had a project that they were going to do on Stonington, which is a bridged island. It's off of Bridge Island. It's a bridge island, off a bridge island, off a bridge island. Another one of those critical bridges, the Deer Isle Bridge. And they were going to do DSL there. And the town was happy because they have nothing, right. The town was happy and upgrade their DSL and they were happy. And Stonington went back, they went back to CCI, went back to Stonington in the spring and said, "You know what? We're not going to do a DSL anymore. We're going to bring fiber". And it's like, wow.

Christopher Mitchell: Mm-hmm (affirmative).

Peggy Schaffer: And that's a significant shift and because there are a huge footprint in the state, it's a significant opportunity for us.

Christopher Mitchell: Yes. And then they have the interesting partnerships with public ownership in New Hampshire. And I don't want to, I don't want to say anything negative about them. It's wonderful that CCI is doing this. Many of the incumbent telephone companies are not. If I'm living in Maine though, I'm still looking for one of those local nimble companies to, to partner with that you have so many of as well.

22:36

Peggy Schaffer: They're doing the, the project they did in, in New Hampshire, they're doing the exact same model on an island on Long Island off the coast of Maine. Of course, the Portland this year, we funded part of that project.

Christopher Mitchell: Okay.

Peggy Schaffer: And they're going to do these exact same thing where there's, the town does a revenue bond, our grant helps with that revenue bond. CCI pays essentially for the drops and when the revenue bond is done, the town will own that infrastructure.

Christopher Mitchell: That's wonderful. This, what progress we've made. For all the problems and challenges that we still have, things are so much brighter now than they were five, six years ago.

Peggy Schaffer: Yeah, no, they are. It's, it's a significant, it's a very different conversation. When I first started doing this work with the Maine broadband coalition, this is a very different conversation. There's much more community voices involved, which I think is really important because this too, there were two reasons. First off the customers, our taxpayers and the rate payer. So they actually, they're the ones who paid for all this stuff. Right. So having their voice in this is really important. And that's, I think it's important, not just for any potential for municipal broadband. It's also important around the digital literacy and digital inclusion. And it also gives the providers an opportunity to say, "oh, wait, there is a market here". I can come into that town and I know I'm going to get a high enough take rate that I know I can build on and I can pay it back.

Peggy Schaffer: So those community conversations are really, really important. And I think the knowledge people are gaining about how this infrastructure can benefit them is only more and more helpful as we go forward, because we don't know what the Internet is going to bring us. We don't. Right. Right. But who would ever guess that the largest hotel chain in the, in the, in the world, Airbnb doesn't actually own anything. Right. And that's because of the Internet. So that's the kind of innovation that can happen over this. And it's really important that everybody has access to that resource.

Christopher Mitchell: Yes, absolutely. Thank you so much for your time today.

Peggy Schaffer: Anytime.

24:34

Ry Marcattilio-McCracken: We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at podcastatmuninetworks.org with your ideas for the show. Follow Chris on Twitter, his handle is @communitynets. Follow muninetworks.org stories on Twitter, the handle's @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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