Transcript: Community Broadband Bits Episode 64

Thanks to Jeff Hoel for providing the transcript for the Episode 64 of the Community Broadband Bits podcast with Dan Olsen on WindomNet's benefit fot southwest Minnesota. Listen to this episode here

 

00:05:

Dan Olsen:  You can have broadband -- I mean true, you know, fiber-fed broadband.

00:11:

Lisa Gonzalez:  Hi again.  This is Lisa Gonzalez from the Institute for Local Self-Reliance.  Welcome to the Community Broadband Bits Podcast.

This week, Chris talks with Dan Olsen, General Manager of WindomNet in southwestern Minnesota.  WindomNet has served the local community with fiber service.  In addition to the town of Windom, the network serves nearby communities, creating a regional effort.  Farmers, manufacturers, government, education, business, and even residents depend on the affordable fiber service.  Over the years, Dan has collected numerous stories of economic development directly related to the presence of the network, and he shares those with Chris.  Regardless of the stories we are about to hear from Dan, WindomNet is often viewed skeptically, and sometimes its success is questioned.  In the interview, Dan and Chris touch on the concept of success for publicly-owned networks.  Should munis be judged on the same criteria as Comcast, AT&T, or CenturyLink?  Or is there more to success than profitability and the bottom line?  Here are Chris and Dan, to talk about how WindomNet has defined its own success in rural Minnesota.

01:13:

Chris Mitchell:  Welcome to another episode of the Community Broadband Bits Podcast.  I'm Chris Mitchell.  And I'm here today with someone I've been trying to get on this show since we first launched it: Dan Olsen, General Manager of WindomNet in Windom, Minnesota, and incredibly interesting municipal network in a small community in southwestern Minnesota.  Welcome to our show.

01:36:

Dan Olsen:  Good morning, Chris.

01:37:

Chris:  I'm really, really glad to have you come in.  You have a -- there's a lot of anecdotes that come out of Windom that I use when I'm talking with other communities.  And so I'm just excited to get caught up on what's been happening lately, and to make sure that all of our listeners know about your network.  Why don't we start with the referendums?  How did Windom come to have this fiber-to-the-home network?

02:00:

Dan:  Windom -- the city of Windom -- it operated a cable TV system since about 1982.  And the cable TV system was in need of being upgraded or replaced.  And so a group was formed, and they studied all the options.  And, at that time, the best option was, well, let's go with fiber-to-the-home, 'cause, you know, that's the greatest, newest technology.  And this was all in about 2003, 2004.  And it was decided, well, if we're going to do fiber-to-the-home, you know, let's do the triple-play -- and actually what I called the four-play -- and get data on there, Internet, voice with it.  So, it was packaged together, put out, and rolled out to a referendum that, you know, here's what we're going to do.  The first one actually failed.  With -- they couldn't get enough votes to pass, you know, doing upgrades.  So it was shelved and said, well, you know, we'll just maintain the cable system.

02:52:

Chris:  Right.  And, actually, I mean, this is something that we've seen in a number of places, I think, where you have an initial referendum, and people aren't very engaged, they're not really sure what's going on.  But when the news comes out afterward, people figure out, wait a minute, what just happened?  Then they become more interested, and the can be frustrated that they didn't pass the referendum.  Right?

03:15:

Dan:  And that was part of it.  And part of it -- and, you know, I was actually not here in the area.  But Dennis Nelson, the former City Administrator that was, you know, kind of not spearheading but managing the project, after it failed, was --  The incumbent -- and the city had talked with the incumbent, are you going to roll out DSL and everything, and they said, yes, yes, yes.  Well, an ad appeared in the paper -- the local paper -- that DSL was coming everywhere except for Windom.  So the Ministerial Association then approached Dennis and said, hey, wait a minute, we've been kind of duped, 'cause, you know, they fought us, had everybody vote against the referendum, that we were going to have, you know, some form of higher-than-dial-up speed here, and now we're not getting it.  So the Ministerial Association said, well, let's put the referendum back out.  This time it passed above 80 percent.  And that started the process of, you know, let's build fiber-to-the-home.  And, you know, construction was started, actually, in that 2004 timeframe, with, you know, first trial customers turned up and, actually, paying customers in 2005, with, you know, high-speed Internet, fiber-delivered.

04:20:

Chris:  How many people live in Windom?

04:23:

Dan:  The population's right at around 4500.

04:27:

Chris:  So, it's a small community, and it's surrounded by a number of other small communities that are mostly farming areas.  And, basically, you had to take action or risk being left behind.

04:39:

Dan:  Correct.  And we said, well, let's grab our bootstraps.  If, you know, we don't do it for ourselves, nobody will.  And let's move forward with it and, you know, get this.  And there's -- you know, they seen the advantages of having the system in.  And it's, you know, starting to prove out that way.

04:54:

Chris:  And so, I want to just -- for our listeners who are either familiar or not -- I want to say that the network continued forward and eventually received the stimulus funding to be able to expand these incredibly fast connections to nearby communities.  That's turned into a project called the Southwest Minnesota Broadband Services.

05:16:

Dan:  And the city of Windom did partner with these other communities.  And did receive stimulus program.  Windom acts as the NOC that feeds this.  But the city of Windom, we're also, you know, a provider.  We've got a lot of partners now, and we're actually, you know, a -- what we call a data center.  We're actually becoming a point-of-presence here in southwest Minnesota, you know, with multiple other carriers, you know.  Some of the big guys, as we call them, are here located.  And we're providing service for them, too.  So it's worked out pretty well.

05:46:

Chris:  Right.  You're the -- sort of the hub.  I just want to demystify two terms there.  You said you're the "NOC" for region, which is the "network operations center."  It's a -- it means that other communities don't have to build a reinforced, tornado-proof building that has diesel generators for backup, and air conditioning, and all that stuff.  And they can monitor the network from there.  And so you, having made that investment benefits everyone else, who can piggyback on it.

And then, being the "point-of-presence" basically means that you've got some high-capacity lines that come in there and then people can go there, to you, to "meet up," basically.  Because networks typically have like these trunk lines that go into an area and they hit a "point of presence" where others can join them.

06:27:

Dan:  Correct.  That is correct now.  And we actually have a presence in, you know, Minneapolis now at the 511 Building that's part of it.  So we're, you know, connected globally now.  And we also have multiple routes out to the east of Mankato, to Sioux Falls, and, you know, we're working on routes in to Iowa, now, to, you know, kind of be, you know, a leading Midwest POP.

06:47:

Chris:  Yeah.  You're not too far from Spencer and all those other Iowa munis.  So, I'm sure it would be nice to be linked into them.

06:55:

Dan:  Correct.

06:55:

Chris:  But let's go back into Windom.  And what are some of the benefits that the community has because you're operating this fiber network?

07:02:

Dan:  Well, they've -- you know, they've had fiber to their homes since 2005.  And, you know, back then, it was a huge leap for them.  And, you know, broadband adoption is -- it's steadily growing.  It's nice to sit and look at, you know, graphs over the years, of usage.  And, with it, the other thing is, you know, some very reasonably priced service, with it.  You know, we have a, you know, a full soft switch sitting there that we can provide actual digital services on the voice for businesses and residents with it.  High-speed Internet -- you know, we've got a standard offering of packages, but we've always got an asterisk on the bottom that says, well, you know, if you want a gig, just call us and we'll put widgets on the ends and provide it.  If you want 10 gig, same thing with it.  You know, we hear, you know, the big GigE initiative.  Well, we've kind of almost quietly have done that.  We've got, you know, Toro Corporation running some gig circuits from building to building with it.  You know, the community has benefitted.  We, you know, provide services with it.  We provide services with all the municipal buildings that are, you know, city-owned here.  And, you know, basically, free of charge for all the city facilities with it.  And running them.  And some initiatives there -- our hospital is able to us for transport to get to one of their partners.  They're a large Sanford affiliate.  Do we haul all their traffic for them now with it.  The list goes on and on.  The schools, we -- actually, the schools are serviced by a service coop that is a partner with us.  But we actually haul, you know, the services for the service coop, to get there.  So we leverage the network to get them.  Our schools actually rolled out iPads to every student -- now, I believe, every student -- in school.  And running up against any more bandwidth.  And we're able to basically provision that for them, and coming up here and work with them.  So, the economic benefits are huge.  We've, you know, created jobs with it.  We've got multiple big projects.  But we've also anchored our existing businesses that are sitting here with, you know, as simple as, you know, we've got a small gas station that has three pumps, that -- credit cards, everything.  They actually have cameras that monitor it.  That the gentleman can sit out at his home and watch what the employees are doing in there, and -- with it.  If the tanks need fuel, they call over the broadband network and say, hey, send us another tank of gas.  And so it's anchoring his business.  It's making ease of doing business.  Just -- it's there.

09:28:

Chris:  It's always interesting to me how the economics of these networks plays out.  Because when networks are judged in the private sector, it's whether or not they're making money.  And then you have a network like WindomNet, where you're providing, first of all, free services to the municipal buildings and to the library.  And so, there's a whole lot of money there that's benefitting the community that's not accounted for.  And then, on top of that, you have all the cost savings because of the prices that you offer.  And then, the fact that there's competition means that there's lower prices for even those who aren't taking service from you.  And so, I think, it's just really helpful to run through all those things that you just listed.  I mean, the job benefits are incredible.  But it's really interesting how these networks result in so many indirect benefits to the community.

But I want to actually turn to a direct benefit.  There's a particular example that when most people in Minnesota hear about Windom and the municipal network -- I think this story's been told a lot -- they think of Fortune Trucking.  And so, can you just walk us through what happened with Fortune Trucking, and that you sort of came in and were able to work with them and help them out?

10:45:

Dan:  Fortune Trucking is a wonderful story.  It's kind of dear to my heart, and --  I was sitting in my office one day, pushing paperwork around, as we do, and the owner of Fortune Trucking called me up and -- you know, I'm aware of the gentleman -- and he said, you know, asked me what I was doing, and I said, well, what do you need?  And he said, well, get out to my office now.  So I thought, OK, what's going on?  And did we do something wrong?  So I got in the truck and drove out there.  And they had spent a considerable amount of money and -- They sit about a mile and a half outside of town.  They spent a considerable amount of money, due to their growth and great success, on a new office building, and had bought a new phone system and everything, and were getting ready to turn it up.  And they bought services from a large provider out in the world, and they couldn't deliver it.  And he said, well, we've got all this investment sitting here.  What am I going to do?  He said, I've got another location, you know, in Roswell, New Mexico.  Do I send, you know, the staff down there to work?  Because I can't get services.  And I said, well, hang on.

So we quickly engineered it, and jumped through some hoops, and said, well, we'll get you fiber out there, and we'll get you those, you know, digital PRI trunks that you want in there, and some high-speed Internet. I mean, they literally track the price of fuel throughout routes, and, you know, trucking nowadays is a brokerage where a load of cheese comes out and they will get that delivered directly to their buying system, and they can bid it immediately and back.  And, you know, we're actually building them a redundant connection now, because the business depends on it.  So, we got him up, and we built it -- basically, we were completed in four and a half weeks, you know, and that was, during that time of -- try to find a roll of fiber was -- fiber was, you know, 6-8 weeks out and everything.  So, we used some friends and favors, and got a mile and a half of fiber, and built it, and turned him up.  And they were able to maintain their presence here, and continue to go.  And Fortune's continued to grow.  I believe they're over that 250-truck mark.  And it's an amazing story what they do, with technology, for the trucking industry.

12:57:

Chris:  It really is.  I mean, it -- well, first of all, the whole trucking industry now is just itself fascinating, with how computerized everything is.  And the need for not just fast connections but reliable connections, because if that connection goes down for an hour or two, boy, you're missing contracts, and that's a real problem.

13:16:

Dan:  You look at the new hour of service laws that have just been mandated on drivers, and logs, and where they're at, and where freight's at, and homeland security.  It's -- you know, they -- just recently they've updated their infrastructure inside just to meet these demands.  And, you know, trucking's competitive.  And, yeah, it's simply amazing what they do.

13:40:

Chris:  Well, in a town of 4500 people, I mean, that's a pretty significant employer, I'm guessing.

13:45:

Dan:  Yes, it is.  And they employ people, you know, throughout.  They've got drivers from all over.  And, you know, the drivers check in.  But their brokerage side of the house is pretty large, because they do have this ability to, you know, maintain weather, maintain context of trucks, and maintain directing their office connectivity with their other offices, and with their customers out there.  They can, you know, hook up through the Internet and, you know -- customer B has a load of cheese, bang, it's there on their desk; they can get it and go, and, you know, confirm that order, in a real-time manner.

14:20:

Chris:  For me, this is the salient point of something that came up -- first, that I saw it in a Minnesota Public Radio article in which you were quoted, saying that your business plan had called for breaking even in Year 5 of your network.  And that was in 2010.  And you came within $50,000 of breaking even.  Now, some would say -- look at that and say, well that's proof that Windom shouldn't have done it.  They lost $50,000.  Now, people like me look at that and think, yeah, $50,000.  Let's put that on one hand.  And in the other hand, we're going to put all the jobs from Fortune Trucking that would have left.  We're going to put free services for the schools, the libraries.  We're going to put lower prices for the whole community.  And, wow!  You know, there's no local leader on this planet who would rather have $50,000 than all those benefits.

15:11:

Dan:  Exactly.  It's very hard to, you know, account for all those dollars -- that we do in-kind services.  And, you know, we look at it as infrastructure.  You know, we're building $3 million worth of roads this year with it.  We're building this broadband.  And part of the story also is, our original business plan called for, you know, roughly 1400 drops.  Well, we put in 2200.

15:37:

Chris:  So, you're saying that it was much more popular than you expected with residents.

15:42:

Dan:  When you're successful, the problem is that you have to buy a lot more capital equipment.  And trying to recover those costs, you know, your business model moves out further.  And you know something, you know, one of our bad points is, we don't toot our horn, and we don't have an analyst sitting here crunching numbers constantly and, you know, going out to the naysayers saying, well, here.  We don't hire a person to look at this stuff and say, here, here's why it was what it was, and actually nail it down.  We're so busy taking care of the people that want broadband networks hooked up and run with it.  And, you know, we've -- you know, we're doing wonderful.  We're actually -- you know, we're governed by a board of, you know, the City Council.  And we look at it.  And we keep rates low and affordable for everybody, and try to go it.  And it's not about being a huge profit center.  You know, last year we actually made money.  We, you know, hit it over -- I think we're about $22,000 ahead.  And that was with taking on a lot of projects and continued growth.  With it, trying to, you know, fund the capital and keep moving forward.  So, yeah, you know, when they say, well, jeez, you lost $50,000 -- well, yeah, but we also, you know, bought $400,000 worth of capital equipment to put new customers on.  And some people can say, well, yeah, when is that going to stop?  And we kind of say, well, jeez, we kind of hope it doesn't stop -- the growth -- because that means people are moving in and buying those house and moving in, and we're having to do installs with it.  So it's a good thing.

17:13:

Chris:  Right.  And for people who aren't aware, I cover this in my case study on Bristol, Virginia -- BVU, the network.  Because they had a similar issue, where, you know, when you have a business plan, and you expect a certain number of people to sign up, well, that's millions of dollars of equipment.  If twice that many people sign up, then you need to find millions more dollars to be able to put that equipment on the side of their houses.  And that's what you were just describing.  It's a hard problem to solve.  But you came through it really well.  You adjusted the business plan.  You know, the network has done far more than breaking even, in the sense of all the benefits it's delivered.  And so let's get into that right now, with some of the benefits you've seen more recently.  In terms of companies recognizing that Windom is a great place to get connected to the Internet.

18:02:

Dan:  Sure.  And, you know, we look at it.  And we've got some -- You know, we're a small town, but we have a great anchor -- what I'd say is an anchor company here, Toro.  And they have a large manufacturing facility here.  They employ, you know, upwards of 700 people in this town with it.  You know, we've -- I've got a great relationship with their director of information technology there.  And we provide him with whatever he needs.  And it's ease of doing business, you know.  He handles some of the business for other Toto operations here with it.  So they're able to -- you know, we have fiber directly built into them.  They've got -- just 'cause of their success.  And they've got off-site locations -- I think there's up to six off-site locations within the Windom area, and a few out in the SMBS network that we we've got 1-gig circuits built back.  I mean, it's, you know, just-in-time manufacturing.  If -- inventory -- and knowing how many nuts and bolts you have throughout all these locations, and needing them back, it's barcode read in.  And when a nut leaves, you know, warehouse number 1, heading for the main plant, they know it in real time with it.  And that's how they're connected.  So -- and that goes back to ease of doing business.  They're able to get these circuits provisioned by a simple phone call.  And we turn around and go.  And they can concentrate on doing the real thing in business, which is, you know, building snowblowers and lawnmowers and, you know, what they sell for product.

19:31:

Chris:  If a company called up a major telephone company operating in southwest Minnesota and asked for a gig circuit, how do you think that would compare to the service you deliver?  Or is it even available?

19:43:

Dan:  It's not available in our service area that we know of, with it.  If they call up and ask for a gig circuit, to us, at the city of Windom, they're basically, you know -- I'm going to be on the phone with them, say, OK, you want it where to where?  And we start provisioning it.  And typically we've turned them up as quick as same-day.

20:05:

Chris:  Wow!  I mean, I just -- in my experience, up here in St. Paul, you know, the core -- the metro core -- of Minnesota, I can't imagine how long it would take to get a gig circuit.  I mean, I don't think -- I'm sure they're available.  But the fact that you can do that -- turn that around so quickly, when, you know, competitors to you can't even deliver that kind of service -- or, if they did, I mean, I don't know -- what we've seen for pricing elsewhere suggests to me that it would be tens of thousands dollars in an up-front, one-time install fee, and then probably $10,000 or $20,000 per month beyond that, from a major provider.

20:47:

Dan:  And typically what we do is, we look at it and say, hey, you know, we -- if, you know, if -- and the reality is, you know, if Toro leaves Windom, we've got bigger problems.  So let's make it easy.  Let's accommodate them.  Let's turn it up.  Let's say, hey, let's go over and meet with them, and go do, you know, do -- what do you want, and let's get it turned up for them.

You know, we've got another business here in town, Big Game Treestamds, for all the people that hunt out there.  And their corporate headquarters is here.  And they just actually bought another building, spent, you know, quite a bit of front money, remodeled it, made it the corporate headquarters,  They still have their other building, and they wanted interconnectivity, in between the buildings.  And we actually turned up, basically, a dark fiber circuit we did for them there.  So, you know, they've got a full gig in between the two buildings, with it.  And then they buy a, you know, a 100-meg Internet service to feed those buildings with interconnectivity-wise, and they can do their backup to the other buildings here.  Plus we do their voice and everything else.  And, you know, we just -- they had a remodel, and we were in there and provisioned everything.  So the day they moved, everything was transferred to the new building, and it all took, you know, it just took place.

21:56:

Chris:  Are there any other examples of this economic development you want to run through before we end the interview?

22:05:

Dan:  We have a very nice development.  The Windom Economic Development Authority owned a piece of property, 80 acres, just  -- it's in the city limits, just on the north side, on Highway 71.  We had -- Fast Sprayers decided to move to the town and actually expand.  They're going to keep their presence that's out in the country, about ten miles, probably, to the east of us here.  And they're building a very large building.  Whether it's in building process, we actually widened Highway 71 to five lanes, for ten lanes and everything.  Put in infrastructure: sewer, water. There’s four miles of gas line going out there.  We'll be building the -- about -- probably close to a half mile of fiber to get in to them.  And, you know, these guys are -- they build farm sprayers and a lot of that equipment.  And they use lasers and computers and CNC machines.  I don't pretend to know their business.  But when their customer says, hey, I'm going to send you an AutoCAD file and I want this built, they need to have a broadband -- a huge broadband connection to deliver that file.  There's -- you know, they can't wait for, you know, six hours for that file to trickle in and maybe not happen.  They want the file.  They want it now so they can start working on it, to keep their customer happy.  They're going to employ up to 90 people here in Windom and, you know, continue to grow that operation, with it.  You know, when they start, their suppliers will then look, and they want -- you know, they will probably, you know, build somewhere that, you know, they gotta deliver parts and widgets and stuff to them.  So why not have direct Internet -- you know, our direct connectivity -- in between the two buildings ...

23:48:

Chris:  Um hum.

23:48:

Dan:  ... with a supplier that connect with them, so if, you know, Fast needs a bucket of bolts, hey, it's just -- there it is.  They know they can bring it over and **.  We're all provisioned to pull that off.  So that's a wonderful project.  It brings additional economic growth into the area.

24:07:

Chris:  You know, I should compliment you, I think, because you could have, certainly, as a city or as a utility, said, if we have this incredible fiber network, and we don't share it with our neighbors, then all the jobs will have to come to us, and people are going to want to live in Windom rather than living in Jackson or other nearby places.  But you -- you've worked out -- but you've shared it with them.  And you've helped them to build a network that connects them as well.  And, you know, I wouldn't be surprised if there's more invitations to expand it further beyond that as time goes on.  So, I do want to return to that in a future show, but you really should be congratulated for not hoarding this investment, and sharing it with your neighbors.

24:52:

Dan:  No, I mean, it's regional.  We have people that, you know, drive from Windom to Jackson to work at AGCO.  And people from Jackson drive to Windom.  You know, we're, you know, very rural out here.  I mean, we have fiber to a community that has 11 homes in it.  And they need it.  I mean, look at the farmers out there.  We're called daily about, you know, when can you get fiber down to us?  And trying to figure out a way, because, you know, farmers are trading grain on the markets, you know, on a real-time basis, and -- you know, it's regional economic development.  As a matter of fact, we have a wonderful Blandin Foundation grant, and we've created a group called the 60/90 Technology Triangle, and it kind of stretches from Worthington to Bingham Lake back down to Jackson and back to Worthington.  You know, here it is.  You could put up a manufacturing facility or, you know, call center in one, and have work-at-home people spread all over a almost three-county area.  And, you know, the cost of living's reasonable, and schools are great, and the quality of life is there.  You can have broadband -- I mean, true, you know, fiber-fed broadband.  That, you know, the customer service is, you know, ** enough.  And you call -- I'll take it.  Our network breaks.  We know.  Everybody's does.  And we've got the, you know, best staff anybody could ask for in the world

26:12:

Chris:  Well, thank you so much, Dan, for coming on this show and sharing your experiences with us.

26:16:

Dan:  Thank you, Chris.

26:17:

Lisa:  Be sure to learn more about the network at windomnet.com .  We also have several stories on the network at muninetworks.org , including the story Dan shared with us about Fortune Transportation.  Thanks again for listening to the Broadband Bits Podcast.  We want your ideas for the show.  E-mail us at podcast@muninetworks.org .  You can also follow us on Twitter, where our handle is @communitynets .  This show was released on September 17th, 2013.  Thank you again to the group Break the Bans for their song, titled "Escape," and licensed using Creative Commons.  Thank you for listening.