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Auburn Essential Services Steady as It Grows - Community Broadband Bits Podcast 394
Auburn Essential Service (AES) is one of those networks that has been serving the community for years with a steady presence and a strong commitment to the community. This week, Christopher talks with AES General Manager Chris Schweitzer about their fiber optic network, how they're innovating, and their recipe for consistent growth.
AES began with fiber infrastructure for their electric utility. They entered the broadband business first for municipal facilities, and later for businesses when the incumbent providers couldn't deliver necessary connectivity to one of the city's prominent employers. The company was ready to relocate until AES stepped in. Rather than face the economic impact of substantial job losses, AES connected the company and never looked back.
That was in the early 2000s and now AES offers Internet access to large segments of residents and businesses. Christopher and his guest talk about the way AES has taken a deliberate approach to expanding the network citywide and how they're implementing new technologies as they refresh the infrastructure. They discuss the network’s financial health (hint: it’s doing great) and how AES seeks grant funding to aid in further expansion.
Chris describes the new partnership that AES and nearby Garrett, Indiana, have developed to bring fiber broadband to the residents in the small community of about 6,300 people. The utility has a philosophy that other munis also embrace — straightforward pricing and customer-centered services — that have helped drive their success in the residential market.
Check out our first interview with Chris back in 2013, when he joined us for episode 77.
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Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Chris Schweitzer: For us, given our smaller footprint, where we're postured, how we're planning to do our build, which is steady, just trying to really be intentional about it and look back in 20 years and have built several hundred miles of lines that have served several thousand more customers, that we didn't think was maybe possible in 2020.
Lisa Gonzalez: Welcome to episode 394 of the Community Broadband Bits podcast, from the Institute for Local Self Reliance. I'm Lisa Gonzalez. Auburn Essential Services in Indiana has been offering fiber for connectivity for around 15 years now. On today's podcast, general manager Chris Schweitzer talks with Christopher about the network and the way the utility's steady approach has paid off over the years. The guys discuss Auburn Essential Services refresh in order to replace the original infrastructure and the new innovations they've integrated as part of their new offerings. They also talk about the utility's transparent pricing and efforts to keep account straightforward, a subscriber preference. We also learn about the utility's exciting new partnership with nearby Garrett, Indiana, where Auburn Essential Services is working with the town's electric utility to provide broadband. Now, here's Christopher talking with Chris Schweitzer from Indiana's Auburn Essential Services.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcasts. I'm Christopher Mitchell with the Institute for Local Self Reliance in Saint Paul, Minnesota. Well, office is in Minneapolis, but Saint Paul is where I live and it's where I love to be. So local rivalry across the river. But today, more importantly, I'm speaking with Chris Schweitzer, the general manager of Auburn Essential Services in Indiana. Welcome back to the show, Chris.
Chris Schweitzer: Thanks Chris. Glad to be here.
Christopher Mitchell: We talked a long time ago when you described what Auburn had done. That is still one of my favorite models, a rather low risk, very impressive incremental effort to getting to city wide. And now as we'll talk today beyond the city, fiber optic, Internet access through the city utility. But let me start off by just asking you to remind people, what's Auburn like?
Chris Schweitzer: Yeah. Auburn's a really cool town. Been around since 1900, classic car capital of the world, is what we're known for with our classic car museums and where they used to build those Duesenbergs and Cords and Auburns. And we've got a municipal electric utility and AES was grown out of that about 15 years ago. We were celebrating our 15th year of this year. And it's got a lot of great industry and business and a lot of great doers. And it's a community that's forward thinking and investing in downtown and it's a great place to live and to raise a family. And so broadband utility now has been growing and we bend to every passing that we can here in town and we've been partnering with surrounding communities and we're looking to grow beyond our borders as well.
Christopher Mitchell: So let's start off by going back 15 years quickly, in part because I was just recently reading about the retirement of mayor Yoder who retired at the end of 2019, served the city for 20 years. And he looked back and he considered that the municipal broadband network that you've run for so long, that that was one of the key achievements of that term of service. And so I'm curious, have you felt that it's that important to the community as you're working on it?
Chris Schweitzer: Well, yeah. I mean mayor Yoder was a great supporter, an advocate for Auburn Essential Services. He was here and got help to get that thing off the ground. And I do, I echo that. I think AES has become a very important asset to business and to homeowners, improving competitiveness and improving reliability and relying on business communication services, Internet voice, point to point services here for healthcare and finance and all kinds of the different businesses we have here in town. And the quality of life at home, in terms of lots of folks working from home and home based businesses. And I think our brand is, it's really cool to hear from customers that just talk about hands down AES is the service provider to pick. People have choice in the community and thankfully feels like we're number one, so it's a good thing to serve a great customer base and the growth just continues to be there even though we've finished our build several years ago. So yeah, I think it's an important asset for sure.
Christopher Mitchell: I think it's worth noting that when Cooper Tire at the time, major employer came to mayor Yoder and said, "We need the city to do something, broadband." He said, "I'd really like the private sector to solve it.' And strongly encouraged the existing providers to step up. They didn't. And when the city looked to then reluctantly fill that gap, the state legislature considered doing what several states had done, which was to say the city wouldn't be able to do that. But mayor Yoder, a Republican, according to an article that I recently read, worked with a group of Democrats in this state, for with a bipartisan coalition to make sure that cities would be able to make these kinds of investments if they so chose. And so I just feel like in this time of where it feels like we're so polarized, it's worth looking back on that. And I suspect that today, at the local level, you probably work with Democrats and Republicans and would be able to form a coalition like that because at the local level we still do that sort of a thing.
Chris Schweitzer: Yeah, absolutely. There's wide support for broadband in the community. And in this line of business, as a service provider, we get to see the entire cross section of the community, businesses, industry, investors, homeowners, renters, healthcare, all the different disciplines and broadband is a common thread through all of that. And we're thankful to be part of that. And really we get to serve and solve problems with those folks looking to stay here and they need to have all kinds of ingredients to be able to stay and grow and thrive here in Auburn. And broadband is one of them and we're thankful to be able to help with that.
Christopher Mitchell: So I have not spoken with someone like you about the older parts of the network, parts of your network are younger, but as we were talking a little bit before the interview started, parts of it are 15 years old and you're refreshing it. And so I think people would be interested to get a sense of what that means.
Chris Schweitzer: It's an exciting thing and it's a challenging thing. When you've got thousands of customers out there on a network that's well understood and known to be reliable, we've been pouring investment. We started off with our core network. We've got a modern service provider architecture scalable now. And we bring the heart of the Internet from Chicago out West and Columbus out East, right to little old Auburn. So we're milliseconds away from global networks, which is really great. And so that part we've done just a year or two ago, so we're poised for growth there. And then we started here recently on the migration of all several thousand of our customers from an older chipset fiber to the home platform that was all gig capable and it's been providing gigabit services throughout the community for 15 years, but it's aged and it's not well supported anymore, so we're moving to a Calix AXOS based platform.
Chris Schweitzer: And so we're about a third of the way through. We've probably got another six to eight months there and that's empowering us to do a lot of cool things in the home and in the business as well. But that transaction is a long one, we're managing customer expectations growing while we're trying to change out the old. So it's a workload that's an interesting thing. We've got great staff, great attitudes. They see the vision for what the end game is and they're trying to maintain service excellence while we update and modernize the network.
Christopher Mitchell: What are some of the new services you can provide on the new platform?
Chris Schweitzer: Really empowered by Calix. Calix is an interesting company and what they're doing is helping operators like us, focus on the local customer service aspect of what we do. So we can focus on customer service, reliability, performance and innovating and using the products, but not necessarily having to be an innovator of products. But really we can be an innovator of deploying those products and how we commoditize them and put them together in a alert service solution set.
Chris Schweitzer: So we've always been an access provider, access provider up to the edge. There was a D mark, clarity mark at the home and the business and what Calix is doing with managed wifi and smart home technologies and a lot of service applications in the home and in the business, is empowering us to erase that or that D mark is washing away because really it's not just access, it's access and everything access affords the customer. So we feel our customers feel that having a service provider that they know is local, tenable that we can reach out and touch one another because we're local, we come to know our customers. We're great listeners to our customers, which is probably the most important thing that we do. And then we can provide a portfolio from small access to multi service integrator and everything in between based on what we hear customers need. And so those technologies are, we manage wifi, smart home, security, same in the business. So that's really the enabler for the next generation.
Christopher Mitchell: Well, let's step back for a second. And when you mentioned the D mark, I mean it's interesting to me that you're enthusiastic about getting rid of the D mark, but I want to make sure that I'm properly understanding what that is. And so back prior to this platform effectively, the D mark was where you were responsible on up to the side of the home and into the router. But then beyond that, whatever worked or didn't work, that was on the user, as long as you were providing the service to the router that needed to get there. And now basically you're saying with this new platform that not only are you able to do more, but you are planning on doing more in the space that previously was basically left just to the customer, the end user.
Chris Schweitzer: Yes, sir. And it is a challenging thing. I think we were naturally being called to do it. People would call in and customers, many customers don't really know what the D mark is or what their responsibility is, even though we understand what it is.
Christopher Mitchell: Right, we all have parents or friends and anyone who's listening to this show is probably providing tech service to family members.
Chris Schweitzer: Exactly. And so as a local provider, obviously we desire to help our customer. If we're helping them be successful, they're desiring to grow with us and stay with us and we're just trying to do the right thing there. But regardless of whether we're able to offer the service, we're trying to help them. But the cool part about this platform is that now we can again, listen to the customer and if they're having challenges, we can afford them a service now, we can offer them a service that we couldn't before.
Chris Schweitzer: So the cool part is we're not a one size fits all, based on what the customer needs we can deploy. However, what it also gives our customer service reps, quite frankly, is an ability to more clearly identify what is our responsibility. And then if they want our help beyond the D mark, we now can offer services that really empower us to do a good job there. So it's actually an enabling thing. You were absolutely right, Chris, we couldn't go into that space without these new technologies and new ecosystems that let us do it well. But now that we have a deployable solution, we can listen to the customer and deploy what they need and then we can support them well in that. So it's actually a welcomed thing, which honestly you asked me that a year ago, I don't think I would have believed you.
Christopher Mitchell: Right. The managed wifi we've talked about in the past and that's something that is responsible for a lot of service calls. And so the fact that a person working in your network operations center can resolve a lot of those issues remotely is a big deal that I think we've covered pretty well in other interviews that we've done. But we haven't talked much about network security and you mentioned that and what sort of things are you going to be able to do there?
Chris Schweitzer: So this is a relatively new offering from Calix. If you pay attention to their marketing and where their productization is that, it's something that's literally coming out this year. So they've got a couple of layers that they're affording on their managed wireless platform, they're going to be offering some deployable components and parental controls and quality services one and then network security. So having the ability to filter and watch for malware and things at the network edge, is an important strategic option for customers. And so they can, instead of them taking that burden on and being at risk, they can for a few bucks be able to ask us to enable some services and then we can help them at the network edge with security. So we don't have that in play yet, but we follow Calix and we're excited about that option. So everything we've been doing is posturing ourselves to be able to adopt and deploy the new, the wholesale service offerings that they have.
Christopher Mitchell: It seems like the marketplace may be noticing these enhanced services or at the very least, your commitment to serving the customer. Because it strikes me you've never been one to engage in the price war. You haven't been someone that is just going to slash your prices to try and gain market share. And so you've had, what I would call, steady growth, that, as I understand it, is actually as rapid now as it has ever been.
Chris Schweitzer: Yeah. You're exactly right. Other than service level agreements with specialized custom solutions for the enterprise customer, we've never had contracts or like you said, introductory gimmicky pricing or any, if you will, games. I remember our first focus groups with local residents and businesses and they asked for a couple of simple things and one of them, just an everyday fair price and treat me good and have a reliable service. So we've honestly tried to absolutely do that every day.
Chris Schweitzer: So not having any special prices, it's a very clear and well understood thing with customers. Our marketing is simple. Our customer care teams get to understand the product more easily. It's easier to talk about because we're not tripping over small print and a bunch of other stuff and we're incentivized everyday because there isn't a contract. It doesn't happen very often, but if someone doesn't stay for a normal duration and we don't recover our capital outlay and they want to come back, and that happens, that we do make them sign a two year contract then. So we're just protecting the rate payers and the system owners and it's cool that way. But yeah, it's a good thing
Christopher Mitchell: It looks to me like you have half the businesses in town and roughly half the residents it sounds like.
Chris Schweitzer: Yeah, you're right. So that growth has been, it's not been spiky, it's been very constant. And even though we've finished building our last local convergence cabinet years ago, we had actually our largest growth year last year actually. So it's been a wonderfully steady rate of growth and we are fortunate to serve northbound of 50% in these areas. And we've exceeded, if you asked our business consultant, we've exceeded where we thought we'd land, by I guess, nearly almost a thousand subscribers now. So it's a good thing. It's really comforting to know that we've built it based on quality and service reliability and that'll go a long way.
Christopher Mitchell: Talking more about outside of city limits, you are mostly debt free or entirely debt free, how is that situation treating you?
Chris Schweitzer: Yeah. So we do carry a little bit of debt, but we've got cash reserves that more than pays that off. So just for agility and the ability to make investment, because we knew this day was coming, where we just upgraded our core network and we've got well over a million dollars of distribution technology to deploy. We're also modernizing our TV platform, it's still a pay TV model, but it's going on a streaming model. So we're having to overhaul the core, the distribution, deploy new technologies on that distribution network, but then also reinvest and redeploy our pay TV program. So that happens by way of, like you said, building some cash reserves so we can go ahead and make that reinvestment as needed. We carry some debt, but we're virtually debt free. We can pay that off.
Christopher Mitchell: And that's just remarkable. I mean, you're 15 years in, at the same time, you had one customer 15 years ago. And so you've done a remarkable amount of building without accumulating debt. And I feel like that's a discussion we have to go in much deeper in the future. Perhaps if we're together at an event, I'll just query you just on that. But I do want to talk about what you're doing in Garrett and in other areas. So Garrett's a nearby town in which businesses and people have been pestering you to expand and you've been working with the utility there. But tell us the story of what you're doing in Garrett.
Chris Schweitzer: Garrett's really cool, they're a municipal electric, much like Auburn electric. We know those guys really well. Their line crews and their superintendent, they're good, good folks and share like values I think, in serving the customer and taking care of the community. And about five years ago, like we said, they saw what we're doing and they have like desires for their constituency and their rate payers in providing an option for reliable and cost effective Internet and services. And so they'd made the decision to first deploy to business districts, which is again, I guess what we did as well 15 years ago. They've had success there and they're ready to make the next step with residential.
Chris Schweitzer: They're focusing on the passive optical network, the infrastructure, and then we've got a really cool partnership arrangement where we're going to help them light that up. We'll own the customer experience, which I think really for us communicates that they trust us with that and we're privileged to have their trust in that and glad to work with them on a daily and weekly basis to deliver something that they're not currently getting in their community. So it's a really cool story. It's a feel good story as well, but more importantly I think it has some impact for their community, like it has an Auburn.
Christopher Mitchell: Well, and I think one of the benefits that we see in some other places where this is happening, is that Garrett then is able to have this high quality option that you're providing without having to take on significant risks, without having to negotiate channel contracts or worry about changes in the technologies in the near future. Don't have to build a head end. It really makes a lot of sense for a first mover like you to work with nearby local governments in order to make this happen, rather than having someone reinvent the wheel.
Chris Schweitzer: I totally agree. As you're talking about that the things that come to mind is, you're right. I mean, Auburn is a small community. We're 13,000 people. We're 7,700 meters. So we're a small operator and so it's probably harder for a community much smaller than that, to do broadband really successfully. It'd be interesting to look at the different scales of models, but even when you look at municipals, they're generally a lot bigger than Auburn. So what's cool about DeKalb County, is in Auburn, is the communities that are in DeKalb County are small towns, but they're forward thinkers and they're great places to live. So having this amenity and this key piece of infrastructure, is cool.
Chris Schweitzer: I think what's really neat for them is the partnership in the sense that they're the ones investing in the fiber optics. They're leveraging that fiber investment for traditional core business, communication between substations for relay protection and control. They're going to be using it for AMI metering, but at the same time they're leveraging that infrastructure investment for the benefit of their rate payers, with additional services, like Internet, et cetera. And in fact you're exactly right because Auburn Essential Services, we're taking on the risk of building the head end. We're going to build another small hut over there. So we're building, we're taking on the risks of scaling it out to them. And so they've got the longer range return with their passive optical network and we've got the shorter range risk that we're taking on by adding the technologies that have to be refreshed every five to eight years. They're putting investment in the ground like they're used to, which is conductor in the air and pipe in the ground. It's got long asset depreciation timeline. So it's, I think a cool afforded opportunity that we're both taking advantage of to help our communities.
Christopher Mitchell: Do you ever have any political challenges within Auburn from people who are saying, "Why are you wasting your time outside city limits? What matters is focusing on Auburn."
Chris Schweitzer: That's an interesting topic. We haven't done a great deal of expansion beyond. But as I say that, you're right, we've partnered in Garrett, we've built some networks beyond, I think we are looking at it as building Auburn's impact for our community. And it certainly is Auburn, the Auburn constituents, but it's also the Auburn electric rate payers, which go beyond Auburn by rights, by nature because of our territory. And I think our board of works and council who support and fund and look at the financial side of this, sees that if AES can grow its footprint in ways that serve our local economy, which is beyond Auburn, that's a win situation. I'm not aware of any political issue that's came up because of that. The folks that we interact with, if you talk to the mayor, if you talk to the council, AES is a widely accepted utility asset, that we're thankful is here. I'm not aware of anything anyway.
Christopher Mitchell: Well I'm glad to hear that. I mean I think that makes sense because one of the things that I'm sure happens is that for every paying customer you get in Garrett or one of the other areas, they're paying some of the fixed costs of service that customers in Auburn otherwise would have to pay.
Chris Schweitzer: That's absolutely right. And I think we want to scale the network and scale the business in ways that maximize the utility of it. And so that means the experience reliability, the finance of it of course, so we can continue to reinvest and modernize. And we do talk about scale, we've got customers on the edge of the County by way of, we don't do a lot of fixed wireless, but when customers ask, we don't want to turn them down necessarily if we can provide a good working solution. And so we asked the question, where do we want to grow to? And so that's a conversation we're having at all kinds of levels. We want to make the right decision for our folks. And we do believe that it's within the County. I don't think we have any desire to grow outside of our county's footprint.
Christopher Mitchell: You're not going to seek grants to work in Michigan?
Chris Schweitzer: Probably not in Michigan, probably not that far North.
Christopher Mitchell: Yeah, no, I was just pushing it a little bit. But yeah, I did want to ask you about grants though. What grants are you seeking to expand to some of these folks that don't have a lot of options today?
Chris Schweitzer: The state of Indiana has got the next level connection grants and so they had their first round and then they're going through a second round and the second round is still what they're calling unserved. So if you look at the definition of that, I believe it's folks that do not have an option for broadband, which is in their definition of what they're saying is don't have an option for a 10 megabit down, one megabit up. And so when you look at the mapping that the state's provided, it shows much of our areas underserved but not unserved. And so I'll tell you and as we talk about growing outside of the area, we have been approached unsolicitedly by several folks, a business here, several residential here, where they have came and said, "Look, we, we do not have other options. Some of your options aren't acceptable for any number of reasons, either service and reliability or cost or whatever. And we don't have any other options."
Chris Schweitzer: And so they have actually been putting down in aid to construction dollars to help say, "Hey, we're serious. We want to have skin in this game, please make us a priority." And so when you've got that grassroots skin in the game effort, now we've got an anchor tenant that really can help things get started. And so we've got several examples and it's really blossomed up here in the last year. We have done some extensions, Chris, beyond our network, to the airport, to a private school, to another subdivision. But these recent ones have came at under increasing pressure and some of them are very rural. We've got seven passings in a mile, for example.
Chris Schweitzer: And so what happens is we got to do the math and say, "Okay, here's what it takes to build that. We can't take the risk unless there's this amount of in aid construction." And so we're starting to see folks that have been making that investment to be a catalyst. And I'll tell you, that's one of the things, that's telling us, I think, that they are dramatically underserved and there's a need there. And so we're going after the grant and one of the things we're doing is really working on a survey to help us gather the right statistically important data, to help tell the story that while the map says they're underserved, really they're unserved. And so we're excited because I'm hoping that we can, even if we gather a little bit of seed money, a little bit of investment incentive to grow the network, it really gets us to a place where we can grow then further. So it's a step at a time, but we're hopeful that we can do well with the grant.
Christopher Mitchell: Yes. I wish you luck with that because we're seeing similar things around the country and increasingly state legislatures are understanding that there is no authoritative data service that shows who has service and who doesn't. And I think if a year from today, the FCC finally solved this problem, that would be faster than I think most people think. I mean, I think the FCC is finally going in the right direction. The question is just how long it's going to be until that data is then made available once they finally start collecting it.
Chris Schweitzer: We're excited about the ability. You hear a lot about wireless, I think there's a great portfolio of options that make sense in various situations. And for us, given our smaller footprint and where we're postured and how we're planning to do our build, which is steady, slow is smooth, smooth is fast, just trying to really be intentional about it and look back in 20 years and have built several hundred miles of lines that has served several thousand more customers that we didn't think was maybe possible in 2020.
Christopher Mitchell: I like that philosophy. I've been saying it for a while, but I say it out of conjecture, you say it out of experience.
Chris Schweitzer: It's cool.
Christopher Mitchell: Well thank you so much for coming on and giving us the update of where Auburn's at. It's just wonderful to hear it and very hopeful for DeKalb County and hopefully nearby regions will take some inspiration from it too.
Chris Schweitzer: Chris, thanks so much for the invitation. Always glad to talk with you and thanks for the opportunity.
Lisa Gonzalez: That was Christopher talking with Chris Schweitzer from Auburn Essential Services in Indiana. Read more stories about AES at muninetworks.org. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at firstname.lastname@example.org with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. Follow muninetworks.org stories on Twitter, the handle is @muninetworks. Subscribe to this podcast and the other podcasts from ILSR, Building Local Power and the Local Energy Rules podcast. You can access them any way 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 helps keep us going. Thank you to Arne Husbey for the song, Warm Duck Shuffle, licensed through Creative Commons. This was episode 394 of the Community Broadband Bits podcast. Thanks so much for listening.