Transcript: Community Broadband Bits Episode 493

 This is the transcript for Episode 428 of the Community Broadband Bits Podcast. In this episode, Christopher speaks with Jeff Magsamen, Telecom Director at Waverly Utilities in Waverly, Iowa. They discuss Waverly, Iowa's journey to building a municipal network. Listen to the episode or read the transcript below.

 

Jeff Magsamen: We're always there and willing to help out and get them started. We work side by side with our electric utility, so when electricity is delivered, communications is delivered.

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, and today I'm speaking with Jeff Magman, the telecom director at Waverly Utilities in Iowa. Welcome to the show, Jeff.

Jeff Magsamen: Thank you. Glad to be here.

Christopher Mitchell: I'm excited to talk to you. I remember not too long ago I was talking with Mike Liter about the plan to build the network in Waverly, and I thought I had come back to check in on it, and I know that we've written about it a bit but a lot has happened since that plan was being developed. But let's start with a quick reminder of Waverly and what part of Iowa are you in and what's it like around there?

Jeff Magsamen: So Waverly's in northeast Iowa, geographically from some of the bigger communities, we're north of Waterloo, Cedar Falls by about 10, 15 miles. So Waverly's a great location, community of little over 10,000 people, Palm of Warburg College, and a pretty good wrestling tradition from peewee through college, through Warberg.

Christopher Mitchell: Pretty good soccer program too for division three athletics.

Jeff Magsamen: Absolutely. Yep, Yep. And I believe the high school team has won or placed pretty high from a soccer standpoint too.

Christopher Mitchell: Excellent. And home to citywide municipal fiber optics run by

Jeff Magsamen: You. Yeah, I left that off

Christopher Mitchell: . So we'll talk a little bit about the history. We have talked about this more in depth so we can kind of gloss over the early years, but sure. As a reminder, in Iowa, you're required to have a vote to set up a telecom utility, and that had been quite a while ago now.

Jeff Magsamen: It did back in 2000 there was a referendum, kind of a two part question of does the community want to start a local communications utility and then who should it be managed by? Or the actual boat was, should the local electric utility manage the communications utility? And both of those passed with 80 plus percent favorability

Christopher Mitchell: In 2000 is a long time ago. A lot of the utilities in Iowa that voted a long time ago voted in what, 2004 or 2005 . So you were really ahead of the game.

02:43

Jeff Magsamen: We were.

Christopher Mitchell: So what were the main reasons to get involved with it at that time to seek that authorization, even though we'll spoil the secret that it took a while before you actually used that authority.

Jeff Magsamen: So some of it could have been community envy Cedar Falls utility. It was kind of the poster child for municipal broadbands in the state and maybe the country. So I think we saw what they were doing and probably a little bit envious or wanted to go down that same track or path. And so that was part of it. And I think just the need that the community identified that internet or broadband services was vital in a community our size.

Christopher Mitchell: Well, and it's funny you say that it might be envy involved. I wonder if Waterloo's a little envious of you now.

Jeff Magsamen: Yeah, maybe. I think they're doing more research to see if they can start a municipal also.

Christopher Mitchell: So for people who aren't familiar, you mentioned Cedar Falls certainly was a nation leading network built as a cable network in like 96, 97 timeframe and was certainly one of the earlier ones. It was targeted. Many times people have been accused of being a failure despite the fact that they've not had any problems. They've made all their debt payments, they've paid for their operational costs, and just about everyone in the city of Cedar Falls takes service from them. Waterloo had not made its own investment, but is working on that right now has put serious money into studying the issue. So for people who aren't familiar but in 2013, like I said, we did an interview checking in on y'all, and at that point I think plans were being finalized. So what did you decide, and we'll talk about how it's going after that.

Jeff Magsamen: Yeah, so our board made the decision to move forward with communications. Utility actually started a task force to study it again, this was probably maybe the third or fourth study that took place since 2000. So they took the initiative to do another study and created a task force community task force. And that task force came back with the recommendation to move forward with the communications utility and the board approved that.

Christopher Mitchell: And I think that's where of highlighting in particular, because I know people like you are running these networks don't often want to be federal news, like national news, . You just wanna do your thing, benefit the community. But yeah, with the rise of more cities considering this around the country there's more claims that are being made by opponents of municipal broadband. And one of them is that communities will just jump into this. And what we see is communities will often study it and say, You know what? That plan it. It's still too risky. We're gonna look at it again in a few years. And they come back and they study it. What you went through, it sounds like.

05:33

Jeff Magsamen: Yeah, I think there was some excitement after that 2000 referendum, but when you put pencil to paper and seeing what some of the costs were, I don't think the utility or the board was willing to put that big of an investment into it at the time. And honestly, I think since there was a little bit of potential competition, the providers at that time did step up and increased capacity or increased services, both the local cable company and the incumbent local exchange company.

Christopher Mitchell: So when you were looking at launching services, then if I remember correctly, you are of a pretty significant partnership with Cedar Falls.

Jeff Magsamen: We do, yep. Yep. So maybe in reference, we actually went into a partnership with a shared I P TV head end. So internet protocol tv, not Iowa public Television. But yeah, we went into a partnership, Cedar Falls utility, had all the equipment from receivers to satellites and say, had been in this business before, it was just a different technology or protocol to deliver that TV signal. So we partnership partnered with Cedar Falls utility. At that time it was a 50 50 partnership, but since then we've had other municipal providers join our little consortium of I PTB providers. So it's worked out really well. We didn't have to do maybe a seven figure investment into a head receivers. Again, satellites, receivers, equipment to support those,

Christopher Mitchell: And then the operating cost to have someone staffing them constantly and whatnot. So I mean, that must make the numbers look really well when you can make it work financially when you're 50 50. And then if you get down to smaller percentages, that must be really nice.

07:19

Jeff Magsamen: So it, I'll give our ceo some kudos with that relationship. And also at the time Cedar Falls is CEO to kind of have that foresight, to have that conversation and have that idea and bring it forward.

Christopher Mitchell: And this is something that we have seen some other utilities do around the nation, but I think Iowa was one of the earlier ones. I mean, I think Cedar Falls specifically, and you are one of the earlier ones, and it's still we've seen more of that in Iowa. In other places we might see a municipal often electric fiber network that expands out to one or two neighbors. But is it's not only is it several cities, I imagine it'll be continuing to grow well into the future.

Jeff Magsamen: Yeah, we'll have to see. Some communities are opting not to do TV these days, so you never know what it's gonna look like going into our original business plan. It's kind of interesting to go back and look at that now. And this would've been in 20 13, 20 14, I think there was an 80% take rate for triple play services. So telephone, video and internet. And that's been kind of turned on. It's turned upside down. The take rate for video is certainly not 80%. In our case, it's probably closer to 50%.

Christopher Mitchell: That's still pretty good though. Can you share the take rate for your data services?

Jeff Magsamen: So we're about 92% from the take rate on internet services. So

Christopher Mitchell: That's 92% of the people living in town take service from

Jeff Magsamen: It. 92% of our customers. Okay. Take internet services.

Christopher Mitchell: And so that would be certainly the leading. And then is telephone service something you do? I know Cedar Falls didn't for a long time,

Jeff Magsamen: Right? Yep. From the beginning we started providing telephone service.

Christopher Mitchell: How popular is that?

09:12

Jeff Magsamen: It's at about a 25% take rate. Cell phone obviously is where I think most people go. We've seen more customers maybe move to those cloud service providers during the pandemic. Companies like Zoom and Microsoft started offering local, They're a local telephone provider. They can port a number just like can or any other local exchange company.

Christopher Mitchell: Has it been important when you're looking at small business services to have that telephone service?

Jeff Magsamen: It has. Yep. Yep. Certainly the main street companies where they may have one or two phone lines. It's a good service to be able to bundle that with internet service.

Christopher Mitchell: And now, do you work with the other Iowa municipalities in terms of getting a good rate on your back haul, on your transit costs?

Jeff Magsamen: We have worked with some of the other local municipals on if there's a favorable path or we can provide a path for another municipal. We've worked on that. When I first started back in 2015, maybe 2014, there was some effort to create more of a internet ring in northeast Iowa that didn't quite take traction in the scope that it was proposed, but kind of piecemeal. It started to build itself out here over time.

Christopher Mitchell: Yes. That was something that I was very hopeful for. I thought it would've really benefited a lot of the communities who hadn't invested yet and some of the ones who were just getting into it.

Jeff Magsamen: Right.

Christopher Mitchell: So I'm curious then, you're someone that presumably has a lot of opportunities. I mean, when you're at that position of a utility what is exciting about the job and providing the service?

Jeff Magsamen: I think our best differentiator is service side. I know it sounds a little cliche, but I like it when our staff go out and we get compliments from our customers. The technology is great and everything, but that's probably what brings me most satisfaction is helping out a customer, making sure that we provide good service. Again, I know it's kind of cheesy from a technology standpoint, the fiber stuff is just kind of mind blowing when you really think about it. But yeah, it works well and the technology's pretty cool. But I'd say more just the interaction and customer service side.

Christopher Mitchell: Do you get to interact with customers much or you just get to after action reports?

Jeff Magsamen: Nope. So we're pretty small shop with probably six staff. So yeah, I'll pick up every once in a while and take a service call.

Christopher Mitchell: I thought so what was it? There's a phrase, a chief bottle washer, . Yep,

Jeff Magsamen: Yep, yep. Head cook and chief bottle washer,

Christopher Mitchell: . Can you share the take up of services in the community?

12:00

Jeff Magsamen: We just provided our board some information. We're over 70% take rate from a residential standpoint and just shy of 80% on our business side. We feel good. We've been in operation for a little after five, five and a half years from activating our first customer. I feel pretty good about those numbers. You always want it to be a little higher, but

Christopher Mitchell: Yeah, I mean for reference, if you read Wall Street reports about Fios or at and t's fiber sense, reeling fiber there's an assumption that they will usually hit about 40% in Plateau. And so 70% is very impressive among municipal networks that have been in operation for as long as you have. I feel like you're on the high end. I think often municipal networks that have been in operation for eight or nine years, if they're above 60%, they're really happy. A lot of 'em might even be in the 45 to 50 range. So it's quite good.

Jeff Magsamen: Yeah, we feel good about it. I guess on the flip side is can you handle that growth if you went up from 70% to 90%? There's always a balancing act. Our first six months of operation, we were at 25%, so that was quite a bit of work and each year has been some work, but the number of customers activating slowed down a little bit.

Christopher Mitchell: Do you have greenfield developments that are going in?

Jeff Magsamen: We have had a few. There's some rural areas, development areas that our board has approved for us to extend. So we have, we're I guess pretty particular about where we go and the payback and everything. But there have been a few areas where we've built outside of our existing territory.

Christopher Mitchell: And that's outside of your electric footprint then,

Jeff Magsamen: Correct? Yep.

Christopher Mitchell: That's interesting. Yeah, I know one of the things that we hear from utilities is that you wouldn't want to take on risk because your citizens that vote for your board don't want to take on risk of building someone else because it's just politically not a wise decision.

Jeff Magsamen: I think it would probably get a little bit riskier if you tried to go into a city or township that may have some type of a franchise agreement with another provider, but we felt the risk was somewhat low if we were going out into a rural area.

Christopher Mitchell: Well now Iowa has a pretty nice program for that even gives you some bonus points for being a municipal network if you're expanding, extending into those areas. So I guess the thing I'm always curious about too is can you share, is there a fun anecdote or story, whether it's a business or a resident that sort of captures the spirit of what the service means to the community?

Jeff Magsamen: There's a new business starting out. We're the ones there that are talking to them about how can we help you be successful. We've had a few business startups, not maybe small business, one or two employee, but maybe in that 10 to 12 type and we're always there and willing to help out and get them started. I think we've heard horror stories in the past where, and other providers, communications providers it could be months if not years, where they would get service or they needed to go to city council to get somebody to light a fire under the business to get something done. Same thing for residential development. Fortunately, we work side by side with our electric utility, so when electricity is delivered, communications is delivered. So that's probably been one of the more proud moments of we're not telling people they have to wait or we're not hanging 'em out to dry, per se. If they're starting up a business, we'll have service for 'em. We'll be working with them.

15:55

Christopher Mitchell: And your support, do you often have situations, maybe, perhaps not often, but these situations where you have residents who are struggling with a technical problem that isn't your network, isn't your problem and your tax, I'm gonna guess go ahead and help 'em out anyway. We

Jeff Magsamen: Do. Yep. We try to avoid any truck roll charges as much as possible. But there are times when people struggle with some of the technology and we do our best to help 'em out. That line is definitely blurring. I think one thing I've told our board is most people don't call it any internet anymore. They call their internet wifi. And so that's a mindset that is changing and I think the expectation is that wifi is provided by your internet service provider.

Christopher Mitchell: And have you gone to mostly managed wifi wherever you can to avoid those truck roll then?

Jeff Magsamen: So when we rolled out, we provided wifi as our standard internet pricing. We did start up this year with an enhanced whole home wifi service. So we provide wifi six modems and routers, and we provide a access device or an extender and an app to manage your own wifi network. So that is an additional feed for us starting going forward. But yeah, we saw that most of the bottleneck per se, or the capacity usage isn't necessarily to the internet, but it's within the four walls of the home , where some customers, when we look 'em up online and try to do some problem resolutions, some customers have 30 40 devices that are wifi connected.

Christopher Mitchell: Well, and I thought you might say also that some of them have a habit of putting the wifi device in a closet that's like lined with lead . Right? Right.

17:48

Jeff Magsamen: We try to put it in the best place possible. That mesh extender device or access point really gives us some options to improve the wifi signal or coverage.

Christopher Mitchell: Wonderful. It's really great to hear these stories cuz you have these towns that have been overlooked by the big providers where you haven't had to reinvent the wheel. You've been able to build a service work with their neighbors on it, and it's just a model for getting things done. And so I'm hoping that one of my expectations is that as we see more municipal networks there will be many fewer head ends and knocks built. They'll be working together on a lot of that.

Jeff Magsamen: Great. Yeah.

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

Jeff Magsamen: Thanks a lot. I appreciate the conversation.

18:31

Ry Marcattilio-McCracken: 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, his 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 at I L S r.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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