Transcript: Community Broadband Bits Episode 492

This is the transcript for Episode 492 of the Community Broadband Bits Podcast. In this episode, Christopher speaks with Joe Poire, Director of Petrichor Broadband in Whitman County, Washington. They discuss public open access networks in Washington State. Listen to the episode or read the transcript below.

 

Joe Poire: Who knows where the world's gonna be in 20 years. But if something operates for 20 years in an open access environment, it's gonna change the community significantly.

Christopher Mitchell: Welcome to the Community Broadband Bits podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance in St. Paul, Minnesota, and today I'm speaking with Joe Pore, the director of Core Broadband. Welcome to the show.

Joe Poire: Thank you.

Christopher Mitchell: It's wonderful to have you. I feel like I've long wanted to delve into the world of Washington Ports, which seems like an ecosystem all to itself. A lot of interesting investments, a lot of great partnerships between the public and private sector. But let's just start off quickly with your background. You've been in the game a long time. Tell me how did you get into broadband and just maybe fast forward then to how you got to where you are now.

Joe Poire: My start was in 1980, building cable television systems and from there I moved into the analog cellular systems, ITFs analog microwave video and audio systems for both entertainment and education onto Washington State University, where I worked on a statewide remote learning telecommunication system and its early infancy of digital video in the early nineties and then on to the port of Whitman County where I thought I I'd left that industry behind .

Christopher Mitchell: Well, and I feel like a port is an interesting political jurisdiction or political entity in the United States. Just for people who aren't that familiar, what does a port do?

Joe Poire: So in Washington state there's 75 port districts and in a lot of communities, when you land at an airport or you see a shipping port on the water or an intermodal railroad yard, that could very well be a municipal piece of infrastructure called a port district. Right now in our country with inflation and supply site problems, big stories of 30 to 50 ships off shore at San Pedro and Los Angeles, those are three big shipping ports, container ports down there. And so a port can be of that magnitude and operate 'em an international airport and intermodal yards for rail and it can go all the way down to operating a community boat ramp and a small campground.

Christopher Mitchell: The Mississippi, we have a number of ports here and often it seems like people think of a port, they think of cranes and large ships. We don't have as much shipping on the Mississippi as we used to, but they still do a lot of economic development. That's what I think of is they're often tasked with thinking broadly about economic development and usually in larger projects in cities.

Joe Poire: So our legacy, we're 435 miles up the Columbia Snake River System from the mouth of the Pacific , and we ship primarily agricultural products down the river system. The efficiencies and the cost effectiveness of barging commodities on a river system such as the Mississippi or the state Columbia system is where our start was in 1958 for our particular port, a younger port. And then in 1997 I started at the port in 96. In 1997 dial up Internet became something that was gonna reach every community. And in Whitman County where the Port of Whitman County's located the county's larger than the state of Rhode Island and the way it got broken up from the deregulation of long distance and local Luke calling from Bel, we wound up with a lot of boundary running through our county, effectively making the community, the land grant college community of Pullman with Washington State University, effectively making that be in Idaho and five different telephone companies in Whitman County with a 32 to 35 cent a minute long distance charge to call to where the Internet service providers had modem banks. And we could just see right away that the unintended consequences of how the monopoly phone company got broke up and the tariffs and fee filing charges for voice telephone, were not gonna work for Internet.

05:10

Christopher Mitchell: Cause you might be looking at over one hour, you might rack up 20 or $30 a long distance charges, but if I'm making a local call, I'm probably paying $20 a month, just total cost. And so that long distance charge really changes the cost structure of whether you can use the Internet at that time.

Joe Poire: Yeah, yeah. Matter of fact, yeah, that was right when the sprint commercials were coming on nationally and you could lower your long distance calls down to 9 cents and hear a call between two towns. 10 miles part is 35 cents a minute, and you're modem that's running at 18, so you're gonna spend two before the thing latches on. But we have a land grant college in the community and a lot of technology transferred that has stayed in the area. So the university had the Internet and the university had capacity and people were exposed to it and business was getting exposed to it. And the port district working in economic development saw that we've gotta change this game quickly. So we started in 1998 based out of the Port of Whitman County asked for a legislative change to be able to build telecommunications infrastructure. Did not pass that session. And it passed the next session in the year 2000, we started building fiber optic cable, bridging these unintended consequences of a deregulated market.

Christopher Mitchell: Was this sort of like they brought you in 1996, the writings on the wall with the telecommunications act? I mean, I have to assume there's a reason they brought in a person who has a whole lot of background in telecom recognizing that would be a need. Or were you there for different purposes and you just got pulled back into your old life?

Joe Poire: We had sold our businesses. I had spent three years working at Washington State University and took a job in 1996 to do some part-time construction management work. I thought I left the industry completely behind at the time. My daughter was 16 years old and it was really approaching what I thought was gonna be the first time in my life that I would be home for dinner every night and the office was gonna be 15 miles from my home. And I didn't know much about the port but when I learned quickly with some of the benefits to the community and the type of work it did, and I thought I'd left broadband completely behind and was gonna work in industrial development and working with businesses that are transferring intellectual property out of the university and growing in manufacturing.

Christopher Mitchell: Well, in some ways I think if you wanna take a strict definition, you did leave broadband behind because the port only deals in dark fiber. And so in a way, or am I wrong, do you also provide lit services?

Joe Poire: No. No, we do not. And our model statewide does not provide any lit services. And we can get into that. So yeah, what I did is I married capitalization of private sector companies and the money we needed to raise the infrastructure we needed to build to make a profit quickly for investors together with what a port does, which is takes a long term infrastructure based approach for its community. So we knew that we were gonna take a longer return on investment and build much needed infrastructure. But as Paul Volker at the time from the Fed as he was leaving and Greenspan was coming in about that time, I believe he said, You've gotta know when to pull the punch bowl and it just can't become a party on the public purse. And the port commissioners were very astute about that. And we married together what we knew was a safe investment in the long term infrastructure that on empowered local companies not to have to capitalize that they could spend their money on staffing, electronics, diversifying their business portfolio, differentiating themselves and growing. And today we have 23 companies writing on our fiber all providing different services.

Christopher Mitchell: It's a vision that seems to have worked out well.

09:36

Joe Poire: Yeah, it was working really well. And then the pandemic came. Now it's in hyper drive.

Christopher Mitchell: Right. . So I, you referenced the job where you would be home for dinners. I'm guessing that that did not quite pan out for a lot of those years.

Joe Poire: It's never panned out. My daughter Nel lives in Boston and at six in the morning when I get in the car to go to work, it's nine in the morning. There we have a talk.

Christopher Mitchell: Nice. . Well, one of the things I'm interested in is how you went from focused on the Port of Whitman County in which I believe you are already working well beyond the boundaries of Whitman County, but then you decide to form Petco Broadband. How did that come about?

Joe Poire: The legislative authority for a port district works within or outside your district for the benefit of your district. Hence shipping things down a waterway, operating shortline, railroads operating an airport most intermodal transportation, it doesn't stop at a county line. So we built infrastructure at the Port Whitman just leading up to forming Core and a lot of other port in the state jumping in. We built fiber optic infrastructure a little over 400 miles in two states, six counties and 30 some cities up to Spokane, Washington, where we have space in two different floors of building this may. Basically the meet me hotel for all the broadband providers. And we just make our rural areas transparent to an urban area, easy to do business in. And when the companies don't have that capitalization, they'll come.

Christopher Mitchell: And then you said two states, one of those being working with ports in Idaho that are also on that same snake and Columbia River.

Joe Poire: Yes. We reach in along the Snake River and then 40 miles up from the river we reach over from Washington State University to the University of Idaho. They're 10 miles apart.

Christopher Mitchell: So you've built in excess of 400 miles of fiber now how far an ISP often have to take the handoff from you so you know, might build into a town. I think Garfield is one of the towns you've built into that I had seen. Do you build close to every home or in premise or do you hand it off to the ISP and they build a significant amount of fiber in the town themselves? How does that handoff work?

Joe Poire: Our model has always built to a a on the premise, be it a commercial building or a home. And then there's a little box on the outside of the home where there's a, where the port takes care of the fiber from that demarcation back to a location. And then the company is leasing the fiber from the port will plug in on the other side of that D mark, run their electronics at the home service their customer. Oftentimes the people that are buying the end service don't know that it's a municipal system or that this company is leasing fiber . And we like it that way. We're not out there to muddy the communication between an end customer that's been picked up by an ISP or a broadband service provider on a success based business transaction. To be in the middle of all that. We just simply deal with the carriers and they deal with their customers in Garfield and six other communities in growing, three communities coming online in the next month or two over on the west side of the state. We do fiber to the premise and we fiber every home.

13:37

Christopher Mitchell: And I mean that's just remarkable because there's a lot of places where I think they want to do that, but they haven't figured out how to make the numbers work, particularly among more rural areas because the costs of connecting each home are presumed to be so great in excess of three $4,000 in some cases, maybe even a significant more than amount that. And then for you to be able to recover those costs just with some of the fees that the ISPs pay you that's remarkable.

Joe Poire: Well, on paper, when we plan things out, it can be a 10 to 12 year return on investment usually winds up being a seven to nine year return on investment. Right now there's stresses on materials that our major vendors on fiber aren't even taking quotes right now. Mm-hmm. previously to that position, they were stating 50 weeks. And so we need some things to break there. When you do a municipal system like this the capitalization of course is the challenge. One of the instruments that we have used successfully is an irrevocable right of use where with the incumbent licensed exchange carrier in the community, they'll do the design to our specifications for open access and they'll construct it, We'll approve the construction once finished, and then it'll operate for 20 years as an open access model. And there's economies to scale in doing collaborations like that are lowering the cost down. Matter of fact, communities that we did a year and a half ago the cost with 20 years of maintenance built in was $800 a pass.

Christopher Mitchell: Wow, okay.

Joe Poire: Yeah. And two to $3,000 could be real realistic today. Who knows where the world's gonna be in 20 years, but if something operates for 20 years in an open access environment, it's gonna change the community significantly. And right now in the communities where we're operating that we have three to four companies offering gig service for under $75 a month competing with each other.

Christopher Mitchell: Well, and I think one of the other benefits you've had is that Washington has had a pretty good program for grants to subsidize some of the high cost areas. I think you've been a recipient of I think they're called the curb grants, the C erb, is that right?

Joe Poire: Yeah. Yeah. Department of Commerce at Washington State started in 1998 with some broadband money through the Community Economic Revitalization Board. That's Curb today. We have the Public Works board working in broadband money and the state broadband office that just started two years ago. So we have three pots of money at the state level. It's all N T I money handed down federally to the state with the same rules. And we were very pleased to see in the rule making on the federal level and the state level where the money has to go to a public and it has to be open access,

Christopher Mitchell: We're fascinated to see what states do with this. Because I mean the way you just struck stated it with I think is standing states have some leeway. They're encouraged to hand it to the public. And I think they're encouraged for it to be open access, but I don't think it's required. And so I'm curious to see which states really do that. I think states where you have approaches like yours where it's worked so well, are probably gonna do a lot more of it. I think.

Joe Poire: Well we have a meeting this afternoon with another community that was just awarded some money from the broadband office and well, it'll be interesting to see but where this goes. But yes, there's a number of people and you can't blame them one bit, that are working in county or city administration that are like, Hey, this money became available and our local broadband company, be it an ISP or the IEC or a clac or whomever it is, came to me and said, I'll write the application and I'll do this thing and I'll add it on to my network and we'll take care of this and we'll get broadband to all these people. And the administrator says, Well that's just great because I'm busy already and we wouldn't do anything. We bring a different voice to that in Washington state. I question whether some of the deals that I've seen in other states is gonna pass the scrutiny of NT I a and the federal oversight cuz they're not open access. I also question the simplifying it down to that level from a municipal perspective, you're gonna have 20 years of audits, you're gonna have oversight on this thing, it's got a tail and if you're not collecting revenue, it's actually gonna cost you money. . And if you don't have oversight over at operating correctly through the state back to nt, if you read the legislation, they can call you up and ask for the money back.

18:42

Christopher Mitchell: Yes. , one of the words that they use is in the, the infrastructure is de Dee, which is interesting.

Joe Poire: And being obligated

Christopher Mitchell:

Joe Poire: Could be a little painful.

Christopher Mitchell: Yes.

Joe Poire: 13.

Christopher Mitchell: Yeah. Because it's pretty difficult to pull the fiber back out of the ground or off the poles and put it back on spindles and return it for full refund.

Joe Poire: Oh, they're gonna go after the general obligation taxing authority of the entity

Christopher Mitchell: Of localities that haven't done the correct job. Yeah, yeah.

Joe Poire: And unlike B o, there is some oversight this time.

Christopher Mitchell: Yeah, I do think that's a benefit. I mean, I'm curious to see how NT, I writes the rules, the rescue plan. I feel like that money that's out there I think communities won't face as much oversight. But we'll see. I think a lot of the communities are going to be doing open access for a variety of reasons. But I'm curious to see what lessons we'll learn from this because I think there's very little oversight in the rescue plan. And then like you said, NT I though does have obligations to keep overseeing it from the infrastructure dollars as those come out.

Joe Poire: Yeah. We're curious too, Our phone's ringing by the way.

Christopher Mitchell: Oh, I believe it

Joe Poire: , a lot of people are wanting to do open access. They believe in it. Well

Christopher Mitchell: One of the things that I enjoyed from a quote that I believe you gave my colleague me when she wrote an article about Petco and in the western part of the state building these networks north of Portland. You said we spent 80 billion in the last 20 years trying to solve the broadband problem through different federal programs. And we've, all we've done is made high cost companies rich and there's no service to the high cost customers. And that's something I hear from people who have been doing this work for a long time is this frustration that so much money's been spent. It's not that we haven't spent money that it's been spent ineffectively. And so it sounds like you're getting more people are listening to you. Now in terms of the success of this approach

Joe Poire: At the federal level, we were very pleased to see the money go to the Department of Congress down nta. When we look at the reverse auction that the FCC just did, it's s d a rule utility service, which has done good work, don't get me wrong. And some of the FCC programs like Calf two and then onto rdo, that's where the 80 billion has gone. And we still have the mass of geography of our country with the 50 to 75 year old copper phone line in the ground. and 80 billion could have fibered the country. But we've created a cost benefit analysis over a hundred year period of time where these are very high cost companies and that's how you get the subsidy. I had a Washington Utilities and Transportation commissioner tell me in 1998, very brilliant guy. He said, Joe, we gotta find a way to start funding the high cost customer, not the high cost company. , since he told me that we've spent 80 billion in subsidy.

Christopher Mitchell: Right. And now I feel like it's worth calling out some of the folks cuz we've seen some of the telephone cooperatives have done a great job of turning that money into fiber and Futureproof investments Some of the independents, Minnesota and Iowa sort of land of the independence. A fair number of those have done really good things with the money. Some of the biggest companies who have been the largest recipients, I think have been among the worst where they just haven't made the investments that are needed and haven't been required to by rules that are far too lax.

22:27

Joe Poire: Well, we've written position papers to the FCC and the state UTC on accountability and always trying to get our voice in there. That's true. That's how it's gone. That's very factual. Even on rdo, I'm not sure if they've gone to contract yet a year later.

Christopher Mitchell: Oh yeah, we were just tracking this down and I think somewhere between half and two thirds of the money has gone out the door. The rural electric cooperatives have largely, she got their money. A lot of the local companies have gotten their money. I think Charter Spectrum is getting their money but some of the biggest winners haven't gotten a dime yet because of the fcc. I think trying to figure out just what level of scrutiny they're gonna apply to some of the business plans and that sort of a thing.

Joe Poire: So that's a good sign.

Christopher Mitchell: . Yes, . So the last thing I wanted to ask you about was a significant change of law in Washington. You now have broader authority to begin offering retail services. And yet whether I talk to you or the rural public utility districts it doesn't seem like many of you wanna change your model. You do like the model and even though you have extra authority now it seems like you're likely to continue operating in the way you have.

Joe Poire: Oh, we will. Statewide, we work with, oh, over 25 telecommunications service providers. We felt when we started that we were not gonna outthink the private sector. We were not gonna out-innovate the private sector. We were gonna stick to building expensive capitalization infrastructure that's long term use and leave the technology and the running a business to the experts that compete. And we also knew that a non-discriminatory open access system where everyone could compete would provide the best quality services in pricing to our constituents. And 20 years later, that's proved out tenfold. And so I just gonna imagine a case study where we would purchase the electronics staff up and start competing with these companies that have built their business models around this infrastructure. Everywhere we go, at least three or four good companies rush in to compete even in little tiny markets with 80 homes.

Christopher Mitchell: I assume that many of those operate blanket across your system. Is that right? I mean, do you have companies that only compete on some segments of your system, like in Western Washington or once they're on your system, do they compete for every last customer on it?

25:12

Joe Poire: I mean, we have the national companies that lease fiber from us, but a lot of the ISPs are regional based and they focus on the communities where they live.

Christopher Mitchell: . The other last thing that pops into my head is some of these companies that have received the billions of dollars and not made the necessary investments they employ people at think tanks and other places where they wanna make out people like you and I to be anti-business suggest that we are trying to destroy the market system. And I'm just curious how you respond to that.

Joe Poire: It's pretty difficult. I come from the private sector raised capital for my own business, sold my own business have a lot of respect for that. Moved to public work in this sector and when you start working on a public side of this, you realize that it's a monopoly based business. It started with Watson, can you hear me? ? And it was 75 years later it started breaking it apart and in our country we didn't probably do the best job of breaking that apart and creating a fair playing field for competitors and companies. The larger ones with the most assets and employees that are now in their fifties, sixties, and early seventies that are people that have been in the industry their whole life are still trying to keep a market edge through every opportunity they can. And barrier stand entry with infrastructure is a big place where they can hold that together. If we want to service an area a community wants broadband and there's only a 12 strand fiber running in there from the IEC and there's no room in the colocation facility, it gets pretty hard for competition to show up without spending a lot of capital. If the port or a municipality takes that on you'll immediately see competition, pricing, and services that are competitive.

Christopher Mitchell: Excellent. Thank you so much for your time today.

Joe Poire: Thank you

27:25 Ry Marcattilio-McCracken: Christopher. We have transcripts for this and other podcasts available@muninetworks.org slash broadband bits. Email us@podcastmuninetworks.org with your ideas for the show. Follow Chris on Twitter. This handles at communitynets follow muni networks.org. Stories on Twitter that handles at muni networks. Subscribe to this and other podcasts from I lsr, 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 Arnie Hughes. Be for the song Warm Duck Shuffle, licensed through Creative Commons. This was the Community Broadband Bits podcast. Thanks for listening.

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