Thanks to Jeff Hoel for providing the transcript for the Episode 75 of the Community Broadband Bits podcast with Kent Halder and Rob Houlihan on long term muni network success in Cedar Falls, Iowa. Listen to this episode here.
Kent Halder: We are municipally owned, and we answer to the citizens of our community, and feel compelled to a higher standard than we would be otherwise.
Lisa Gonzalez: Hi there. This is the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. Lisa Gonzalez here.
Rob Houlihan, Network Services Manager, and Kent Halder, Communication Sales Manager of Cedar Falls Utilities, join Christopher this week. CFU is located in Cedar Falls, Iowa, and announced earlier this spring that it would begin offering gigabit service to all its customers. We've also reported on several occasions when CFU increased speeds for customers at no extra charge. CFU began serving the community in the late 1800s as a water utility. Since then, it's expanded to include gas, electricity, and most recently communications. CFU is one of the first municipal utilities to bring communications to its customers, and we've watched it upgrade from a hybrid fiber-coax [HFC] system to a fiber-to-the-premises [FTTP] system. What's the secret behind CFU's success? The answer is multifaceted, of course, but the core motivation remains the same. Their mission is to benefit the community in the best possible way. Here are Chris, Rob, and Kent.
Chris Mitchell: Welcome to another Community Broadband Bits Podcast. I'm Christopher Mitchell. And today we're talking with two folks from Cedar Falls, Iowa. We've got Rob Houlihan, the Network Services Manager at Cedar Falls Utilities.
Rob Houlihan: Good afternoon.
Chris: And we also have Kent Halder, the Communication Sales Manager with CFU. Welcome to the show.
Kent Halder: Thanks, Chris. Glad to be here.
Chris: So, Kent, you and I were just together in Chicago. We had a fun time on a little panel talking about economic development. And it seemed like a good time to get you on the show. Can I start by asking you to tell us a little bit about Cedar Falls?
Kent: Yeah. Cedar Falls is community, nearly 40,000 people. It's located in the northeast quadrant of Iowa. It's a -- we're a college community, and the home of the University of Northern Iowa, which has about 13,000 students. So that creates quite a lot of churn during the move-in-move-out times around the community. Cedar Falls, we got a fantastic downtown, recognized nationally as a Great American Main Street. Cedar Falls is also part of a larger metropolitan area, which includes Waterloo and area towns. And collectively there's about 160,000 people in the area. What that really helps us is -- it provides great access and close range to a very large workforce, that's really helped grow the businesses, especially out in our Cedar Falls Industrial Park.
Rob: Yeah, our industrial park, back in 1990, had 27 businesses and 800 employees. In 2013, it has grown to 170 businesses and 6700 employees. And we believe having reliable, high-capacity broadband has certainly been a key attribute to its growth.
Chris: What else does your utility provide? I'm sure any sort of -- that sort of growth is always good for a municipal utility.
Kent: Yeah. Cedar Falls Utilities consists of four utilities: communications, with cable TV and Internet; gas; electric; and water. So we're somewhat unique in providing all four services to our citizens. However, at the same time, that uniqueness brings a lot of benefits, where -- as people that come in and then need to get signed up for electric and gas services, also provides us a great opportunity to tell them about our communications services.
Chris: Now, Cedar Falls wasn't always in the cable business. But, quite honestly, it kind of seems that way, 'cause you've been in it for a long time. You're one of the earlier networks, and you've actually -- we'll get into this in a little bit -- but you've already transitioned past the original cable infrastructure. Can you tell us why you got into it originally?
Kent: Yeah. Originally, there was just discontent with the current provider of the cable TV services. We had great success providing gas and water and electric services. So the community, given that, and their disappointment with the current incumbent, thought this would be another opportunity where we could provide and serve our local community better. So, in '94 -- 1994 -- a referendum was passed with about 74 percent of the vote. And therefore, in '95, the system was built. Cable TV was introduced in '96. And then in '97, we introduced broadband services, and had, by the end of the year, about 1300 customers.
Chris: And you've come a long way. I want to bring Rob back into this a little bit. Rob, one of the things that I know is really important for a system like yours is reliability. We often get focused on the "gigabit," and that's all the rage right now, and I know that you're actually the first community in Iowa to get a gigabit. But I'd like you to tell us a little bit about why reliability is important.
Kent: That's right. We've found over the years, as our reliance on the Internet has grown, especially from our business community, we heard more and more that reliability was a key factor. Which is great for us. Delivering electric service, we sure speak the reliability language. So when we rebuilt the fiber-to-the-home -- our HFC system to fiber-to-the-home -- we're a GPON system today -- we designed the system to be more redundant, more reliable. We had, originally, just one head-end. And with the new system, we used distributed hub sites, and each hub site serves 2 to 3000 customers. But each hub site is fully redundant, through to our core switches, and out to the Internet from there. So we can have a failure of any core switch, any edge router, any one upstream provider and still deliver full Internet service to all of our customers.
Chris: When I was speaking with some of the folks from Wilson, North Carolina, one of the things that they told me they were really proud of with their municipal fiber-to-the-home network is that, you know, on of their major employers on the network has gone six years without an outage! Pretty incredible, I know, but do you have any comparable statistics?
Rob: One thing I can point out is, on our HFC system -- in the electric world, it would be called ASAI [Average Service Availability Index] -- our availability was roughly three nines. And we're pushing -- now, on the new system, we're pushing a strong four nines, almost into five nines of reliability, across the whole system.
Chris: Wow! And, of course, the five nines gives you mere hours of breakdown -- or, of non-access -- per year. So that's really an incredible metric.
Chris: So, Kent, one of the things that I think of when I think of Cedar Falls is not only how long you've been offering service but the incredible penetration you have in the community. Just -- everything that I can tell is that you are really in most of the households, it sounds like. So, can you tell us a little bit about how many people take your service? And what you attribute your success to?
Kent: Yeah. Today, in both the residential and the business sector, we're probably in 90 percent of the houses. One of the key attributes to that, as to why -- even on day-to-day conversations and from these surveys, we're always trying to be attentive to exactly what are the needs of the customers. We try to provide these needed services and products, and provide -- bring value to the customer. And we've been successful at providing it, at even a lower rate than the competition. We also strive to provide great customer service. We want to get -- provide easy access to our staff, so customer questions are answered quickly, and competently. It may be getting a service technician on-site when warranted. Typically, we're able to do that the same day. So I think that's a key attribute to getting a customer back up and running quickly. And, you know, I think the other big aspect of that is what Rob talked about: is reliability. You know, in this
day and age, when you need a service, it's almost the expectation: it's going to be on when you want to use it. And --
Chris: You know, one of the funny things that I've heard, in terms of talking about this issue of customer service and reliability is that, in networks where reliability starts really going through the roof, there's a fear that people won't recognize how incredibly good your service is, because they will never need to report a problem to you. It's a good problem to have, I think.
Kent: The customer service is such a huge focus for us. And a lot of it is because we are municipally owned, and we answer to the citizens of our community, and feel compelled to a higher standard than we would be otherwise.
Chris: When I found out that you were migrating from your HFC cable plant into a fiber-to-the-home, and I was trying to get a sense of why. You know, why go to the fiber-to-the-home rather than just a faster cable on the DOCSIS 3 -- which I'm going to ask you, Rob -- but I also wanted to get another question in there as well, which is, you know, Kent had suggested, in our conference in Chicago, that you considered another question as well, which was: should we just sell the network? Do we still need to be in this business? And so I'm curious. In particular, there's over 70 community that have cable networks. Can you walk us through the decisions that you had to make in your migration from HFC to the fiber-to-the-home?
Rob: Yeah. We looked at all of our options. Obviously, selling the network was one of the options. If you're going to make such a large investment, you need to really step back and look and see, is this really the best thing for the business, or best thing for the community? And, obviously, we decided that it was. But we looked at driving fiber deeper into the network, going with DOCSIS 3, which at the time was just becoming a standard. And when we looked at the cost of DOCSIS 3, GPON was more expensive. But we felt that we would end up going that route anyway. So why not just make that leap now, instead of making a partial step now and then a full step later, and actually end up spending more money down the road? One of the other thoughts we had on our HFC system: since it was so old, we knew that we would have to do a lot of replacement in the field of equipment, and -- so that drove up the cost as well, in order to get the reliability that we were after.
Chris: This is one of those networks that's been around so long, I feel that we can really get a better sense of how a community-owned network is different from a corporate-owned network, especially one that's owned, you know, from a company that's headquartered many states away. Kent, why don't you tell me one of the things or two that you think sets your network apart from those you might find in another city, where it's owned by a big corporation.
Kent: We do a report card every year, comparing our rates to twenty peer communities in Iowa. And take the average size home for -- and determine their use for gas, water, electric. And then we also factor in communications and what they would pay for a basic-plus, a family tier of cable TV, along with home Internet product. Out of those twenty communities, we're very fortunate: we rank number one, as far as providing the lowest yearly charges for those. And we're able to save, compared to those twenty, about $437 per year, to each one of our residential customers. On the communications side alone, we're saving our customers about $200 per year. So, pretty significant there. About $7.1 million in all, that's left to put back in the pockets of our customer-owners.
As far as community benefit, also, we have a very good working relationship with some of the local schools -- the Cedar Falls Community School District. Since the early days, when the fiber system was built, we were able to provide fiber and transport services to their twelve buildings. That's a significant value. And it's pretty unique, where the Technology Coordinator in Cedar Falls is quite envied by many districts throughout Iowa, in that he is able to receive those services at no charge, and able to -- whatever he would have been paying, they can use it -- repurpose that money for other things.
We also got another success story with the University of Northern Iowa. A couple of years ago, we entered into an agreement with them for bandwidth services. And we were able to double their bandwidth capacity purchases for the same annual expenditure.
Chris: And, Rob, you've been there for six years, you said. So what are some of your stories, in terms of how you've seen this communications really benefit the community?
Rob: Certainly, the fiber-to-the-prem -- the GPON system -- is an innovative product. The reason that's important is because we've got a number of businesses that compete on a national and global level for business or contracts, and, you know, they get the question: Cedar Falls, Iowa?? And the answer is, yes. I mean, we deliver high-quality, reliable services. These customers of ours are extremely innovative, and so they push us to stay half a step ahead. And they can walk into a client on Madison Avenue in New York City and compete for that business.
Chris: I seem to recall, one of the local employers there had considered moving to Chicago a while back. And decided not to, because they were able to get all the connectivity that they needed from you.
Kent: Yeah. This business -- they're actually a full-service advertising agency. And they do state-of-the-art TV production in the studio. So, they're able to broadcast, live, a weekly television show from right here in Cedar Falls, Iowa. And there was concern at that time, would they be able to do it? And after discussions, and without hesitation, they built this state-of-the-art studio, and the bandwidth has been greatly received, and highly reliable, and they're able to continue and maintain operations out here.
Chris: And I think that's -- if I'm correct -- that's Mudd TV, right? We did ...
Kent: Right. [Mudd] Advertising. Yup. Yup.
Chris: And so I have one last question that has sort of popped into my head, and I haven't really prepared you for. But I'm curious, because I know that you're expanding to rural areas near you, that are part of your electric territory, that are outside of Cedar Falls town limits. You're doing both fiber-to-the-home and wireless. And I'm curious, you know, what is your limitation, in terms of being able to expand your network even further out into rural areas that would want it?
Kent: Yeah, right now, as you've mentioned, it's a hybrid mix of between -- We got about 90 square miles of rural electric. And so we pass about 450 customers with fiber. And our take rate, as you can imagine, has been very, very high, especially with the Internet. And we also have wireless, to try to serve more remote rural folks. But it's really, at this point, been restricted. They have to be a rural electric customer. And we've been looking, trying to see if there's an opportunity to expand that footprint. Municipality law has some limitations, I guess, as far as how far we may be able to go.
Chris: There's a legal issue. And then, I'm also just curious. Do you foresee, in ten, twenty, maybe thirty years, fiber to everyone in your electric footprint, even those hardest-to-reach areas that you're going after with wireless now?
Kent: What really aided us to go out there in the first place was, we received a ** stimulus grant. So that provided much-need assistance. To take fiber deeper, it would probably require some other grant in the future. Unless the costs come down significantly. But, you know, as we know, that's not likely to happen, because a lot of times, the cost is in the labor, etc., when you're building the system.
Chris: Right. So I guess the question -- the final question -- related to that is, is that a one-time cost? Or is that something you would need ongoing assistance, in order to be able to continue serving, if you were able to get a capital grant, to be able to go further?
Kent: Capital grant would certainly help. At the same time, I could see us continue to try to bite off a little bit at a time. One bite at a time, and hopefully you can expand.
Chris: I really appreciate that, because I believe that, you know, there will come a time when most people in the United States have access to fiber. And there are some who say, well, it will never -- we'll never get it out to some of these rural areas. And from what I hear, time and time again, it's an issue of -- it's a one-time cost often. And then there's also just a smatter of, well, over time, we can slowly whittle away at the problem.
Kent: Yeah, I agree with that completely. I think it is a one-time problem. Once the fiber's in the ground, that it's arguably an infinite resource. But once it's there, it's there, and operating the network is -- at that point, it's just part of operations.
Chris: Well, thank you so much for coming on the show.
Kent: Right. OK.
Rob: Thank you.
Lisa: That was Rob Houlihan and Kent Halder talking with Christopher. If you visit CFU.net , you can learn all about Cedar Falls Utilities and the services they offer. Muninetworks.org also carries quite a few articles and videos on CFU. We've reported on the network since 2004. And we look forward to sharing more stories about CFU as the network continues to serve its community. We encourage you to contact us with questions or ideas for future podcasts. Feel free to e-mail us at email@example.com . If you want to follow us on Twitter, our handle is @communitynets . This show was released on November 26th, 2013. Thank you to the group Mudhoney for their song, "The Neutral," licensed using Creative Commons. Have a great day, and thanks for listening.