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Bozeman's Public-Private Approach In-Depth - Community Broadband Bits Podcast 142
In Montana, local businesses and the city of Bozeman have been working on a public-private partnership approach to expanding Internet access that is likely to involve the city building an open access fiber network. We discuss their approach this week with Brit Fontenot, Economic Development Director for the city of Bozeman; David Fine, Bozeman Economic Development Specialist; and the President of Hoplite Industries, Anthony Cochenour.
Bozeman has long been known as a city with opportunities for outdoor activities but it also has a significant tech presence though like nearly every other community in the United States, many recognize the need for more investment in better options for connectivity. A group of citizens, local businesses, and city staff have been examining their options, how they might finance it, and how to encourage the existing providers to work with them in improving Internet access.
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Thanks to Persson for the music, licensed using Creative Commons. The song is "Blues walk."
David Fine: But, I think, for a lot of these startup businesses, they're just suffering -- there's a big gap between, you know, fiber-delivered broadband services that they can get and then everything else in the market, as far as the service that they can get. And I think that's where this network comes in.
Lisa Gonzalez: Hello. This is the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
Many of us dream of living in regions surrounded by natural beauty, such as mountain communities, the open range, or lush forests. Unfortunately, these geographies are not necessarily rife with broadband networks. A growing number of these communities are organizing to take control of their situations and invest in fiber networks for economic development. In Bozeman, Montana, a group of community leaders, businesses, and residents have moved beyond an idea, to work toward better connectivity. In this podcast, Chris touches base with several guests in Bozeman: Brit Fontenot, the City of Bozeman Economic Director; David Fine, City Economic Development Specialist and Project Manager for the Bozeman Fiber Initiative; and Anthony Cochenour, who is President of local Hoplite Industries. In addition to being a local business leader, Anthony is also working on the Bozeman Fiber Initiative. In this discussion, Brit, David, and Anthony describe how they've moved from vision to reality. They talk about their inclusive approach to keep providers engaged, and they discuss their long-term plan for the network.
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Now, here are Chris, Brit, David, and Anthony, discussion the Bozeman Fiber Initiative.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell. And today, I've got a bunch of guests on the phone. We're going to talk about Bozeman, Montana. We're going to start with Brit Fontenot, the City of Bozeman Economic Development Director. Welcome to the show, Brit.
Brit Fontenot: Thanks, Chris. It's a pleasure to be here. Thank you.
Chris: We're also going to have David Fine, the Economic Development Specialist and Project Manager for Bozeman Fiber Initiative. Welcome to the show.
David Fine: Thanks, Chris.
Chris: And we've also got Anthony Cochenour, the President of Hoplite Industries and a private business representative that's working on the plan. Welcome to the show.
Anthony Cochenour: Thank you.
Chris: So, I'd like to start by going to Brit, and asking you, for people who haven't ever heard of Bozeman, or haven't had the pleasure of spending a night or two there, like I have, how would you describe it?
Brit: Thanks, Chris. So, Bozeman, Montana is a Rocky Mountain community situated about 80 miles to the west of Yellowstone National Park -- to the north and west of Yellowstone National Park. So we consider ourselves not only a gateway community to all things outdoors but we're also the home of the land grant institution for the state of Montana, Montana State University. So, we're very proud of that association, to host them in our city of Bozeman. We're a city of about 40,000. And so we've got a -- we're a growing community -- one of the fastest growing communities in the state of Montana, both in terms of our population and our economy. And so, my role at the City of Bozeman is to try and understand where that's headed, and see what we can do to provide good economic development projects that will keep growing our economy, diversifying our industries, and creating jobs.
Chris: And I'd like to ask Anthony, can you describe a little bit what the need is like there? I mean, I think, a lot of people, when they think of s city in Montana, they may think of extractive industries first. But you sound like you're a very sophisticated, next-generation, next-economy kind of company.
Anthony: We actually have a very diversified mix. Geography considered, we're a pretty heavily diversified, with high tech, bio-medical, photonics, healthcare, and kind of healthcare research. And -- as well as complementing all the agricultural and extractive industry that you may consider when you see large mountains and beautiful valleys and things of that nature. I would say the need is -- regardless of the size or location of the community -- really kind of comes down to three basic areas. And maybe I'm oversimplifying it, but as we see it, it's economic development, to continue that broad-based, diversified economic development that fits what we're after here as a community and as a region. The second is, really, education. The 2014-2015 school year is Montana's first year for common-core curriculum. So that has significant impact in terms of network and Internet resources for all our public education institutions. The third, really, is healthcare. With a large number, and, fortunately, a growing number, of critical-access hospitals, rural clinics, and things of that nature. The key enabler for those is, of course, broadband. And accessible, diversified services. So those are, really, as we sat down to quantify, is there a need, what is the need, and how we articulate that, those were the three that kept coming up. And those have been the underpinning of what we've been trying to deliver.
Chris: Well, I'd like to dig into a little bit of the process that you went through. And so, David, as the Project Manager, maybe you can walk us through the point at which, you know, you, as a representative of the City of Bozeman -- how did the City of Bozeman discover that it had a need? And what steps did you start taking to bring this conversation around?
David: Sure. Well, I came to the project kind of in the middle of the exploratory phase. But there was actually a really robust group of stakeholders that had kind of organically formed a steering committee. And I think Brit can probably talk a little bit more about how the steering committee formed. Because I think having these people come forward and invest so much of their time is a big part of the reason we've gotten to this point with this project.
Chris: Yeah, Brit. How did the group of stakeholders come together?
Brit: So, over a year ago, the former CIO of MSU, Dewitt Latimer, and I were discussing some of his goals, as a new CIO at Montana State University, where he saw some potential not only for town-gown opportunities between the university and the city but some real impactful projects that had the potential to -- in economic development terms -- to really change the way we do business -- if you'll pardon the pun there. And Dewitt had a lot of experience, coming from the University of Notre Dame, in South Bend, Indiana. So he took what he had learned there, with the St. Joe County MetroNet. And he really thought -- he was inspired to do something similar to that here in Bozeman. And for those who knew Dewitt, knew how much he added to our community in the short time that he was here. And, unfortunately, Dewitt passed away, in a motorcycle accident, at the very front end of this. But his effort and spirit and vision continue to live on. And so, it was with his real credibility, he reached out to many of the stakeholders that are on the broadband steering committee, including -- even up to today, including Anthony, who's on the phone now. And others, like Dr. Doug Gale. And, you know, Rob Gilmore. Matt Johnson, from the banking community. We've got other private-sector individuals in the computer industry, but also financial figures and private-sector business persons. And so, we really tried to round out a group of community stakeholders who could buy into the vision of moving Bozeman from a sort of adequate service to what we consider to be robust, redundant, and, you know, 21st-century service, to set our community up for the future.
Chris: The way that you've addressed this group coming together, I think, happens in a lot of different places. Where you have a few people who have positions in the community of leadership, and they call some of their friends, and they get together. But it doesn't always result in this kind of approach, where you actually have results so quickly. You know, I'm curious, Anthony, if you can identify anything that really helped to make sure the steering committee turned into a real, viable project.
Anthony: I think the two elements that stand out there, Chris, really come down to just fortitude -- not taking no for an answer -- not that we really encountered a lot of noes, but we definitely had our minds set on positive outcomes. And I think that really bolstered all of the broad and deep relationships that we have, even up to and including carriers, such as CenturyLink and Charter Communications. As well as many, many rural coops and independent ISPs that, I think, especially, the private-sector folks on the committee, involved in this project, brought to the table. And we started socializing the notion of "open access." Some of the open access and open arms type policy. We started socializing that early and often, to really let the private-sector players know that we weren't here to compete with them. In fact, we're here to enable their businesses. And allow them to hit the ground running faster. And I think it was that combination of just really sticking to it, and being persistent with it, and also making sure that we were able to articulate the benefits to the private sector. If you roll those things all together, and, you know, a few years’ worth of effort, and you arrive at where we are today. And I think we have happy potential partners and definitely happy participants.
Chris: David, we've already started talking about "open access." And I think most of the audience has heard the term before. But maybe you can fill us in a little bit on what you have in mind, in terms of how Bozeman will be approaching "open access," and what that means.
David: Sure. So, we've been working with some consultants from Design Nine, who have done this in a number of other communities. But we really like their "open access" approach, because what they're doing is building what's primarily a layer 2 open access model, where we're leasing circuits to providers to provide a wide variety of services. And, as we all know, broadband is not just limited to the Internet service. There's all kinds of other services. And I think, as we open up the network model of what we do here, we're going to see all kinds of services we haven't even thought of, because it would be too difficult to deliver them with the network services that we have today. And so, you know, our goal is to facilitate as many providers as possible providing a wide diversity of services in Bozeman, and really use the network as infrastructure. As an opportunity for people to provide more and better services in Bozeman.
Chris: And do have any commitments from existing service providers, or entrepreneurs who are excited to offer services? Or is it too early in the game yet?
David: We have had two that have made that kind of -- kind of a broad commitment, in writing, to the project. TCT, which is a -- Tri-County Telecom. They actually are one of the providers on the City of Powell, Wyoming's open access network. And there is another small carrier, called Treasure State Internet, that's also committed to ride the network if we end up building it. And so, that's just two. And we've had a number of discussions with other companies.
Chris: And, Brit, I'm curious, in terms of the different services that David just mentioned that would be available. You know, as an economic development person, I'm curious if you have a sense of how existing businesses are excited about this. Or if you have any sense of how this might encourage new businesses to come into the region.
Brit: Well, I'm optimistic on both fronts. And the businesses that we've talked to, and the ones that have appeared, you know, at the public hearings, when we've discussed this topic before our local elected officials have all expressed a desire, or need, to have better services here locally, in the Bozeman area. And so, they're excited, in the sense that we've gotten our plan through the commission. We've got a unanimous approval for what we've been talking about for so long. And now we just -- now, our challenge is to put it in the ground and make it functional. But -- so, in that sense, those businesses that have been following the project for so long, including a few that are on the steering committee, are very excited about what the future holds. You know, the film maker who won't have to dedicate a computer and a person 12 hours to upload his high-definition movies to National Geographic -- that guy's really excited about, you know, what fiber can mean for his business. The folks that are in our, you know, downtown core, who are a software-as-a-service company, and require the Internet to be on 24/7/365 in order to pay their bills are excited about new and more robust services. So, I would say, there's an excitement level that's been building, most recently, over the last couple of weeks. Because we've been slowly, methodically, and thoughtfully working through this process, as Anthony describes, on getting the stakeholders around the table numerous times, to understand what the pros and cons are, where we can make the proposal better. And so, now that it's been sort of unleashed on the community, I feel like there will be -- there's a lot of interest yet to be generated, but it seems to be happening.
Chris: Anthony, I'm curious how this will impact your business. Is this something that you're just dying for? Or is this just a matter of you would like to have a reliable, redundant kind of connection, that would supplement what you already have?
Anthony: Frankly, a little bit of both. But very much for the business impact. This will actually be our second round of working with such a fiber project, the first of which was actually just about 80 miles west, over in Butte, Montana. Last year, they lit up a -- I think it was about a 30-mile fiber ring -- redundant ring. You know, with -- they definitely had their eyes on economic development, much as we do. And the advantage for Hoplite Industries -- or, I think, really any kind of end-point or end-customer focus business -- is that -- assists in building customer base for us. We definitely plan to be directly connected early-on, on the network. And, for the nature of our cybersecurity platform, it's great, because we're actually able to provide real-time threat protection even faster. Because -- if our network's -- if our customer's, you know, sharing capacity on this network. And so, what we've already seen is that, you know, it's a great conversation starter, from a business point of view, to say, hey, we're on the same fiber network. We're a big supporter of this. There are advantages of us delivering cybersecurity and, you know, threat protection over such a network. You're able to get it faster, and at higher capacity, and we can actually help to defend the network overall. And so, we're certainly excited here. And I tend to think that with the broader -- perhaps broader -- approach that we were able to take here with this project in Bozeman, I actually think we may end up seeing, you know, even more spectacular results than we already have in Butte. So, for us, selfishly, there's very direct impact, very direct meaning. And I know there certainly is for a lot of other tech-first and tech-second businesses, in terms of redundancy, reliability, and, certainly, speed.
David: Yeah, I'd like to add on to that.
Chris: Go ahead, David.
David: A couple of years ago, one of Bozeman's largest businesses, a company called RightNow Technology, was acquired by Oracle -- you know, the computing giant out of California. And so, as part of that, there's been a lot of energy, as original RightNow people cashed out, and have gone on to start new businesses and a lot of software-as-a-service firms in the area. But also, just having one of the largest software companies in the world with a significant number of employees in Bozeman, has, I think, put Bozeman on the map as a place where people can do more tech and startup kinds of things in this space. And so, there is fiber in Bozeman. And Oracle can certainly afford the fiber that's here. But, I think, for a lot of these startup businesses, they're just suffering -- there's a big gap, you know, between fiber-delivered broadband services that they can get and then everything else in the market, as far as the service that they can get. And I think that's where this network comes in.
Chris: And, David, can you just tell us, briefly, then, how the network is -- what the plan is for financing it?
David: Sure. Well, this is very much a public-private partnership, in terms of how we're financing it. So, we're looking at our tax-increment finance districts -- in the downtown, and there's another central business corridor called the North Seventh corridor -- where we think this network would have a really big impact in economic development and urban renewal. And so, we're hoping those boards will play a role in constructing one of the phases of the network. And then we're also looking at making this more like a business. I think where a lot of these open access networks have failed, they've said, we're going to build an open access network to every business and residence in our entire community, regardless of demand. And that's not what we're doing. In fact, part of the reason we've set this apart from the city, and recommended creating an outside entity to manage it, we don't want -- the city doesn't want the risk of doing that. But we also think that this needs to run like a business, and make decisions like a business. And so, we're hoping to use our financial pro forma to go out and get outside financing from just the financial sector. We think this business can stand on its own, and so that's going to be a big portion of what gets us started.
Chris: One of the things that we saw, in our coverage from here in Minnesota, as we were paying attention, is, it seems like you have a pretty friendly relationship with the existing providers in the community. And I'm curious if you can just tell us a little bit about how that came about. David, I think you were going to jump in on this one.
David: Sure. Well, I think it started a long time ago, when we first started this. And I think Anthony talked earlier about the socialization aspect of -- we've really been trying to make a big point of trying to explain to service providers and the general public about how this is an opportunity. This is a project that can raise everyone's boats. And so I think we've been really careful to meet with providers on a regular basis, to return their phone calls, to not see them as a threat, to not treat them as a threat. Because, honestly, we think that everyone could benefit from this. And -- will all the providers ride the network? Maybe not. But we think there's an opportunity there. And so we've really tried to be inclusive throughout this project, and say, this is not a threat to your business. In fact, it's an opportunity.
Chris: And, Anthony, I'm curious, in terms of the network reach. You've been involved for a long time with it. Do you have a sense of -- if it will ultimately span the entire community, or will it just be based on demand, or do you see it more or less focusing on the local businesses?
Anthony: Yeah. I -- the first. And again, we can speak in terms of -- say, I think that it will mean something different to pretty much everyone. But the three phases, as we have them laid out, up-front, are primarily focused on capturing business. Because, obviously, in terms of higher dollar services, higher need for differentiated services, I think it's clear that, you know, businesses is the way to focus there. We will not, however, be ignoring the residential component. It's simply, we're not going to use the residential piece as project or financial justification. Longer term, as we've taken a look at -- you know, as you look at pro forma today, I think it's pretty clear that -- especially as we start to get to year 5 -- even with very conservative take rates on the network, we -- and we're excited about this -- we get to the point that the network is not only handling its own cash flow and own OA&M, but we can then begin to plow profits -- you know, revenue -- back into expansion. And so, I think, over time -- I think, kind of years 5 through 10 -- I think that's the point at which -- where, even if we don't achieve ubiquity with it, we'll be pretty darn close -- in driving to that end, to where it's a matter of, if you have a house in Bozeman, chances are better than not you'll be on or very close to the network. So, I think that's -- that ubiquity is really kind of the end state. But, up-front, you know, I think the goal is to capture as much, in terms of business take rate, as we can. And then -- thoughtfully, quickly -- you know, build out from there to expand the reach.
Chris: Excellent! Well, I want to give each of you an opportunity to say any last thoughts you may have. So, any thoughts? Any final thoughts?
Brit: Sure, I'll just take a stab at that, Chris. Thank you very much for having us on your podcast. It's a great opportunity to talk about what we're working on here in Bozeman. And we're pretty excited about what the future holds for our community, and for the good of our town, and the businesses, and the lifestyle that we're able to provide here. And we think that this open access fiber network is another reason -- of the several that we think we already have -- why good businesses -- tech businesses -- and businesses of the 21st century -- would look to our town as a place to come and create jobs and diversify our local economy. So, thanks very much for the opportunity to talk about that.
Chris: Well, thank you, Brit. And thank you, David and Anthony. I think a lot of our listeners will be very interested to watch and see how this continues.
Brit, David, and Anthony: Thank you.
Lisa: Follow the 'Bozeman' tag at muninetworks.org for the specifics, and stay up-to-date on this project.
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