Broadband as the Fifth Utility in Knoxville - Episode 549 of the Community Broadband Bits Podcast

Jamie Davis (00:07):
We really followed that public power model of bringing in electricity, you know, back in the day, so to speak. And, and we kind of feel like we're in that second generation of our purpose to bring them high speed Internet into areas that, that don't have it. Otherwise.

Christopher Mitchell (00:19):
Welcome to another episode of the Community Broadband Bits podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance in St. Paul, Minnesota, and speaking today with Jamie Davis, the Vice President of Fiber, and the Chief Technology Officer at the Knoxville Utilities Board. Welcome to the show.

Jamie Davis (00:41):
Thanks, Chris, for having me today.

Christopher Mitchell (00:42):
It's really great to talk to you, Jamie. I, I, you know, I let you know ahead of time, like I've been watching Knoxville a bit. I've I was in Chattanooga before they actually built their network around the time they had just started construction of it, and I've been fascinated by just a lot of the real nation-leading investment we've seen in, in Tennessee. And and so I'm, I'm just excited to be talking to you several years into this project and spreading the word. So let's just start with what does the Knoxville Utility Board do across the board? And then we'll come back to the fiber network.

Jamie Davis (01:14):
KV is a five utility, five service utility. We serve Knoxville, Knox County, and parts of seven surrounding counties with services around electricity, water, wastewater, and natural gas. And now our fifth and newest division in fiber if is with a lot of the, all our Tennessee distributors of tba state law allows us to serve fiber where we serve electricity. We have about 5,000 miles of electric conductor covering, you know, 200,000 customers. And so that's where we will be able to serve fiber as we continue our,

Christopher Mitchell (01:47):
And we're talking about Knoxville with the University of Tennessee. We're talking about more than 200,000 homes. So, you know, maybe approaching 500,000 people about,

Jamie Davis (01:57):
I assume so. That sounds about right. I'd have to look at the numbers to be sure. A hundred, a hundred thousand for sure on any given Saturday inside of Mainland Stadium. Let's say that I'm,

Christopher Mitchell (02:05):
Please and now you're building out the fiber network. And I, I assume that this has significant implications for electricity, but for, for my interest you know, delivering high quality Internet access to every last person that gets your electricity service, that's, that's a remarkable goal given how spread out you are outside of those dense areas.

Jamie Davis (02:26):
Absolutely. We we're a very diverse system. A lot of folks think that we are, are just kind of the urban area, like you called out, kind of, kind of city and Knoxville proper. But our density in some of our more rural areas we really followed that public power model of bringing in electricity, you know, back in the day, so to speak. And, and we kind of feel like we're in that second generation of our purpose to bring them high speed Internet into areas that, that don't have it otherwise.

Christopher Mitchell (02:50):
Okay. So you're building out the fiber network, and I wanna get to the story of how we got there, but let's just update people on where you are. You started construction was it one or two years ago?

Jamie Davis (03:01):
We had been building a, a fiber backbone, if you will, to our substations, really over about the past five or six years. We were officially, you know allowed to be in the business in July of 21, and that's when it really kind of, kind of hit hyperdrive to, to really try to launch out to other communities. We've extended into three major areas. We lit our first pilot customer in July of this past year and right now currently continuing to extend in other areas, opening up new areas as the months go along in that particular regard. We have made service available to about right at 18,000 customers by the end of the fiscal year. We'll add another 13,000 available by the end of next fiscal year. So June of 24. It'll be made available right at about 90,000 customers. We'll be almost halfway through our entire bill at that particular point in time.

Christopher Mitchell (03:58):
And that is, I feel like a pretty remarkable pace.

Jamie Davis (04:02):
Definitely, definitely moving right along as, as fast as we can in that particular regard. You know, supply chain's been a little bit of an issue as it is with everybody in their, in their personal lives right now. But, but folks are for sure clamoring for our service, and so we're trying to, trying to meet that demand just as fast as we can.

Christopher Mitchell (04:20):
So I remember back in, I wanna say like 2012 Knoxville first came on my radar as I started seeing local news stories from television outlets in Knoxville, talking about businesses that were looking with some envy over at Chattanooga. And I think a few even started expanding into Chattanooga. And at that time your existing cable and telephone companies said the same thing that they tell everyone, which is, our services here are great, and you don't need anything else. And and I recall, although I didn't go back to double check, I recall the utility board at that time saying this is not something that we are prepared to do. Like, we're excited that Chattanooga's doing it, but it is not something that we think we should do. And and so I'm just curious, you know, if you can walk us through a little bit of how the utility board, you know, thought about this. You mentioned the pandemic, so I'm sure that played an important role in it.

Jamie Davis (05:16):
Absolutely. I mean, you know, back then a lot of folks had a desire for us to get in space, just like Chattanooga. I've personally been involved in, in two or three, you know, reviews of, of this being an effort. And at every step, you know, there were commitments by those already in the business to serve the customers that had not been served. And so we thought that, that, that would be an option as time went on, as we built that fiber backbone for our substations, we would, we would reach out to existing providers and say, if we can play a part in helping you extend to our customers, we'd be glad to do that. And again, we would receive commitment. No, we're gonna, we're gonna serve, we're gonna reach these communities. And then with the pandemic, it really, it really heightened, I mean, all of us, obviously, you know, what you and I are sitting here doing today, online, having a conversation became our normal way of life for health and education and, and just staying connected.

(06:06):
It was at that point, we really felt like that, that it had no longer become just an entertainment, you know, entity for, to having Internet service. It really was a, a pure sense of, of the utility. Our existing city mayor India Concannon had asked our ceo, Gabriel Bois, you know, to take a look, is this an option for, for K at this point in time? And, and that was actually right before the pandemic, but when the pandemic hit, it really kind of changed. I would tell you the equation. And what we saw was not only were there unserved folks in what people historically think are our rural counties, but what we would call underserved, even, even within the shadow of where I'm sitting in downtown Knoxville today, that there may be pockets of folks that either from an affordability perspective or even just a adequate service perspective or a cost to extend that last model to them it was service was just unobtainable.

(06:57):
And so, you know, beyond just the business aspects of it, it really was a, I'll call it a purpose aspect. It really kind of, kind of hit us and, and realized that we needed to be playing a role in our community. And so I think, I think with all that being said, you know, the models have been proven out. You know, we've got folks in our neighbors, our friends at E P B at Morristown, others who've been in this space now for, for multiple years. They've kind of paved the way, forged the trail, and shown the rest of us how it can work. And, and as a result we just kind of, we kinda took pages outta the playbook. And, and I, I think that's really what changed. I like to tell folks, you know, we were right for us for Knoxville in, in those earlier years that you referenced, and we're right now today as well too.

(07:36):
Folks have come into this space at different times for different reasons. And but, but our story is, is that, you know, again, the pandemic really kind of highlighted the need for that. And you referenced earlier the need for the technology on our other utilities system side. But the case for, for fiber really starts for us as utility folks in, in managing the system of the future. Automation is gonna be the way to go. Folks have a higher and higher reliance on reliability. There's more and more data to be gathered down in the system, and you need a low latency, high speed, very reliable communication medium to help you do that. Fiber for us is, is, is that, is that medium of choice. And, and when you've got that network, it just enables you to be able to, to provide, you know, broadband service to citizens and, and they're asking for it. And, and there's Dave Ford as well, too.

Christopher Mitchell (08:24):
Yeah, I mean, one of the things that that you, you discussed there, I think is something I want to just emphasize. You know, people that are paid to oppose these projects I'm not saying that there's no one who has a honest, you know, degree of opposition to 'em, but, but the folks who are loudest often get in those paychecks. They you know, they'll say things like, all these cities just dive in without really understanding what they're doing. You know, Chattanooga went through four or five different business studies over mo over more than a decade before Harold De Priest decided that it was a smart investment for them. You went through several, and I think that's important for people to hear that this is not something where the pandemic hit and you said, well, let's embark on a fifth utility. You know, <laugh>, you're able to look at those numbers. You have a sense of how the numbers are changing on a, on a every couple of year basis, and, and you're able to make that decision based on you know, different changing factors and, and in including a forecast of what you think you're likely to get from other private investment. I think,

Jamie Davis (09:22):
You know, it's not to be taken lightly, you know, for kb it's a, a significant investment. We are, are called to be good stewards of our right payers money. This is their system. It's not mine, it's not our board of directors, it's theirs. And so really it's their choice. And I I, some of the strongest feedback we got worked for market constituent by state law in, in our approval process were required to have public meetings, a public meeting. We had two. And the overwhelming feedback that we got time and time again was we, we need a better crop. And, and that was, you know, indicative of whether that was in the rural areas or in the highly dense survey areas in Knoxville. I think that, that as the demands of, of capacity and speed and reliability continue, our tolerance for, for the spinning wheels we call it, you know, is, is, is smaller and small devices, the number of devices are getting connected in your home are more, more and more from a, from an economic development perspective.

(10:20):
You know, Chattanooga has proven they're their models and studies that it's been billions of dollars of impact in Chattanooga area. Their brand is a city of gig city really kind of cascades down to a number of areas. And, and we too commission to study with the Boy Institute at University of Tennessee. And, and they predict similar, you know, benefits to our community of having a hundred percent fiber to home network in, in our area. So again, I I, I think that whether that's the, the municipal co-op model or whether that's the for-profit provider model, both can work. It's just the notion that, that that folks deserve this, this type of service and, and and communities are, are beginning to expect it. And I think if you wanna be a community of the future you have to have this type of infrastructure.

Christopher Mitchell (11:04):
Yes, I think it is important to know, you know, the, the role of utility is not to try to put any existing businesses out of business. It is to make sure that everyone has, you know, a, a good service. It's to raise the bar for what is the minimal accepted pricing and services and whatnot. And then people have a choice. And one of the things we've seen is, you know, I could name I think two out of, well over 200 where there are citywide systems where the private telecommunications providers pulled out. And that was, those were both very small areas. I mean, these things are, these investments are smart for encouraging competition. I wondered if you could compare a little bit, just so people have a sense, this is a, a, a, it is an expensive investment. I many I'm guessing multiple hundreds of millions of dollars. I forget what it was, but could you put that in context of the other investments that the utility has made as well, so people have some context?

Jamie Davis (12:01):
Just rough terms, again, off the top of my head, this is about a 700 million endeavor over a course of about seven to 10 years, let's call it. That's both operations and capital expenditures kb right now. We just had our budget presentation yesterday. We are now as a company with five utilities, a billion dollar budget a year. So you can kind of get a, a perspective in that particular regard. As far as a multi-year project, probably the largest that you know for sure that we've done. But we've also been under a consent decree for our wastewater system. So those are very large projects. We're currently have a, a project in our water plant that is the single largest project of K's history.

Christopher Mitchell (12:46):
That's one of the things that I've, I've really learned in all of this work is that people have no idea how expensive water treatment plants are. <Laugh> when people talk about Internet access being expensive, <laugh>

Jamie Davis (12:57):
And, and higher the regulation, the, the more expensive things ultimately get. Now being in the utility business is very capital intensive. It's infrastructure. That's reason we hear it talked about on a national level with a lot of the ARPA funds that are coming down. Everything else too, obviously, we all kind of take it for granted. And we, we like our customers doing that. We don't want to be necessarily thought about. We wanna be in the, in the, in the shadows providing great service to our neighbors. But as we call our Century two program, I mean, these, these investments in some cases in our cities are hundreds of years old. And it's time for, for us to be in a, in a methodical, logical way of replacing those aging assets. In the case of fiber, it's really the next generation, you know years.

(13:39):
I say years ago at kb we connected our substations with Twisted Copper Repair. Somebody had a, a vision of having an analog communication network allowing us to communicate from point to point to point. Somebody stepped down on a, a limb, you know, made that investment paid off for decades. In that particular regard, we don't even have an idea of how our fiber investment's gonna pay off fully. We've got a, we've got a really great thing of what we know today, but, but we know that future applications that will be able to write on that network, we don't even understand what they're nowadays. So we believe that our, our uses from the utility side, our customers use this from the, the receiving broadband service are just, that case is a solid and steady case, but there'll be uses that you and I don't even know about.

Christopher Mitchell (14:21):
One of the things that also has struck me in looking at Tennessee as a whole, which I expect you know, as you just said, we won't know for a while. I mean, the, the supply chain, the inflation's gonna put pressure on you, but when we looked at all of the citywide broadband systems in Tennessee, and this was this was five or six years ago we found that I believe half of them had never raised their prices, some of them for more than a decade for Internet service. Now, cable television is different because that's a nightmare of a business to be in where you don't have a lot of control. But you know, Chattanooga still hasn't raised the rates to begin with. You're coming in with a very competitive rate for a gigabit and I, I'm curious how the that's being received by the public.

Jamie Davis (15:07):
I'm very, very solid. I think that you know, what we've seen, and you referenced it earlier about the general response of incumbent providers once a new entrance to market you know, the proverbial high tide raises all ships. And we said too, that the entry of the market extends, service extends better service from our competitors than NOx, and the area wins as well. And so right now from a market value perspective there's some, there's some really good deals going on in Knoxville as it relates to Internet. But at the same time our plan is to be non gimmicky, non-promotional, and really taking a page out of, out of Chattanooga's playbook of consistency and being a fair dealer in the market, and in our case, $65 for a gigabit symmetrical unlimited. And in our business case plans, you know, you, you never wanna nail anything in the stone, but our thought is, is that that price is gonna hold for a long time.

(16:02):
It's a very fair value in the market. We talked with our board yesterday literally about, you know, what the com competition has done, and for sure for a gigabyte we are still the best deal in town as it relates to that. So many of your other co-op and municipal providers in our, in our area are very similarly priced. And, and so you can get that, you know, in a lot of cases you can get a gig or at least a half gig pack for similar pricing in some of the most rural areas of East Tennessee whether it's a community or co-op,

Christopher Mitchell (16:33):
Right? And so $65 a month, no gimmicks. And that then results in, I mean, you're talking about 200,000 households. Not everyone yet I'm sure is seeing the result of that competition because you're in a, a fraction of the area. And those other companies are often pretty good about targeting their sales folks to where you are and where you will be in the next six months, <laugh>. But as you're rolling through this, I mean, from the numbers that we have seen we would expect, you know, well over one, possibly more than two or 3 million of extra money in aggregate in the community every month, you know, and in well over 10, 15 million of savings per year, that's new money effectively, that's in people's wallets that would not have been there. You're not getting that money. They're ta probably, I think most people take that to a local restaurant or a movie or something like that with that, you know, that, that sort of extra money in their pocket. But it's a big deal. It adds up over time.

Jamie Davis (17:28):
Absolutely. I mean, I, I think that's the, that was one of the key economic benefits of the Void Center report that I referenced mentioned was that let's, let's just call it disposable income at that point people can choose to u utilize that elsewhere. And especially with inflationary pressures on all of us nowadays everybody can appreciate a little more, little more.

Christopher Mitchell (17:52):
Now you have a good relationship with the state broadband office. They have put a lot of money into the highest quality networks in rural areas. I, I'm, I'm excited that you know in Tennessee to date we don't know what tomorrow will bring, but one of, one of several states, which is making sure that public money is spent on long-term investments that are gonna meet people's needs often through entities that are really committed and locally rooted. You know, those local co-ops and, and, and municipal networks in many cases, or, or providers that have just, that have proven time and again, that they are focused on the future of Tennessee. You got 15 million to connect some of those more rural areas. And I guess I'm curious if you can tell us a little bit about that program and do you anticipate needing to get additional funds to help with some of those more real low density areas? Or is this pretty much what you needed? I can't imagine that's all you needed, <laugh>.

Jamie Davis (18:50):
Well, well, believe it or not as I've discussed, we have some pretty low density rural areas, but under current criteria, which is basically the FCC maps, where in the case of the state of Tennessee, we applaud them from raising that FCC standard of 25 3 up to 120. Meaning that if it did not have download speeds of a hundred upload speeds of 20 megabytes, then then it was eligible. That opened up what we were eligible to apply to grants for quite a bit. Had that speed been raised a little bit more or other prohibitions lifted, perhaps we would've awarded more dollars. But where, where the FCC maps would tell you that, that that is not available, we were, we received four of the five grant application areas. And those four like you said, totaled 15 million, it will, it will, for the most part, cover all the costs in those particular areas that, that meet that criteria.

(19:49):
That's not all of our rural areas, but again, the rural areas where that criteria is met and it, it, it goes, it goes a long way in those areas. But, you know, if we're talking a, you know, 400 million capital, you know, budget, it, it's a, a small portion, but every bit helps. We're very tickled. We do have a wonderful broadband program here in the state of Tennessee, led, led by great directors over the years with real, real vision of how to, to do that. It's you know, a real partnership effort if you, if you see about who's been awarded the grants, it's not all muni, not all co-op, not all for-profit providers. I think it's been a very balanced scorecard in that area. But I think all the providers and for sure of the heart of the broadband director of areas is to get, is to get broadband to folks that need it in the most rural areas of Tennessee that, that have been really left behind in many years.

(20:39):
So this is, this has been a, a longstanding, you know, I guess you'd say tradition for this office to be putting public funds into this space. And I think with the most recent funds that have been flowing down to the state of Tennessee really meet the needs of some of the folks, our citizens that need it the most. And so we're very excited about that. So the shock clock has started. We've got three years to get into those areas. And we're about to like the first area in our electoral community, which covers parts of the union in Granger counties. Our rural areas, we're gonna hopefully light them up this May which is, is almost now, so hopefully late May, early June is our goal. And we're very, very excited about that. Those folks are very excited about getting think about service.

Christopher Mitchell (21:21):
You alluded to other restrictions Tennessee not the broadband office, but the legislature has for 25 years I think at this point, not allowed the city's the municipal electric providers to provide service outside of their electric boundaries. And I'm get, I'm guessing that your CSRs probably still get phone calls from people who are on the wrong side, and they're, they're upset and confused that, that they, that you are not able to serve them. And that is that's gotta be a frustration for a lot of folks involved

Jamie Davis (21:54):
When there are neighbors, you know, we, we see 'em at the ballpark or, or, you know, places of worship and, and things like that. And they, I wish I could get fiber or whoever it might be, so, well, you're not our electric customer, in our case, providing, you know, now five services. We, for example, have a, an area that where we may provide only natural gas service and not electricity, yet they're, they're, we fill a relationship with them that we can't provide them service in many cases for tb. The good news is our neighboring utilities have decided to be in the space as well, so they at least have access to a provider. It's in the areas in which our folks have no service or very, very, very limited service that, yeah, it's a little bit of a frustration in that regard. There's an ongoing dialogue amongst all distributors for a number of years now about, you know, perhaps a good neighbor provision, which would allow a distributor to talk to another distributor, electric company to electric company, and be invited in through their territory and say, can you do this for us?

(22:52):
And I know there's been good discussion at the legislature, but today nothing's really forward of substance.

Christopher Mitchell (22:57):
Yeah, we've seen that in we've seen that in Iowa. We've seen that in Wisconsin, Illinois. No, Indiana is what I'm thinking of. I don't know, maybe in Illinois, but I'm not aware of anyone off the top of my head. And you know, that's the sort of thing that I I just say that I understand that people are worried about risk and about cities or, or municipal electric utilities doing something that they're not that familiar with. But once you've established a track record of success the risk of expanding to another city is, is really quite low. And so it's not the best justification for not allowing that. So but that said, we're running out of time, and I really want to ask you about the student Internet access program which is something that I think is somewhat newer. I don't even know if you've gotten it Roland or not yet, but I know that it's been talked about for a while. What are you doing on that program?

Jamie Davis (23:47):
Well, I'm, please report that we're, we're starting to pilot that program with three high schools in area in which we have a relationship with in our inner city. Wish we could take credit for the creation or or concept of this program, but again emulating our e p when the pandemic hit they, they, to meet the need of, of kiddos that were being unserved work with their local school board their local governments and some private foundations to create a program that, that literally we mirror that will provide free Internet to students that meet certain criteria income criteria

Christopher Mitchell (24:26):
For people that wanna look it up. The Hamilton County Schools over in the, the Chattanooga version of it, it's called H C s Ed Connect. And I've talked with Deb So=ca about it several times over the years wonderful program and really exciting that y'all were able to build on it.

Jamie Davis (24:42):
Absolutely. We we met with our local officials and said, you know, AST gets into this business. Some of our, our costs are going to increase, such as the, the in lieu of taxes that we pay. We don't pay taxes, but we pay in lieu of taxes. And said, as a community, why don't we do something neat? Why don't we take that incremental increase tax and fund a portion, if not all of a program like this? And today we've gotten it off the ground working with our city officials. They've been very supportive of that. As time goes on and our tax base increases, we can, we can hopefully help more and more kids with that. We but our, our program's called Connected be the name of our program. And again utilizing the funds of the acp, the Portable Connectivity Program, if family would like to receive our funds for the educational portion they, we basically mirrored the criteria for the acp.

(25:38):
They will qualify and receive ACP funds, and we fill in the gap in between there. We are also providing an in-home, you know, as part of that service, an in-home router, which also then comes along with our technical support, helping them tune it, service it, whatever the case may be, to make sure that they're getting pick up. The other thing that that kind of partners in alongside of that, I think is our chamber of commerce during pandemic really fill the gap working with the school system also, not by connectivity, but about how to utilize technology. And so our EOCs pilot here in Knoxville has started a, a, basically a technology training program for folks that had successful completion of that course. They received a Chromebook and also are connected through hopefully a provider that's available in their neighborhood with affordable Internet. So not only, you know, to really get people to access and utilize Internet, it's, it's accessibility, it's affordability, and there's a knowledge base that's needed there to be able to do it. So we're really in our infancy here in Knoxville and especially TB about getting our service out there, but also working on these two other programs. But we really see it as kind of the trifecta, if you feel of, of getting folks what they need in this space. So we're, we're very excited about, about all of that.

Christopher Mitchell (26:51):
That's great. I look forward to checking in with you on that in a few years to talk about some of the, the success stories of folks that are taking advantage of that and hopefully helping their family become a, a little bit further up on the economic income scale. One last thing I wanted to ask you about was just you have any advice for folks that are they're, they're seeing the state come around and, and asking about the every state is building their broadband plan, and there's having these local meetings. And I, and I think you wanted to encourage people to make sure they're taking part in that

Jamie Davis (27:24):
On a national dialogue. There's a lot of money being put into the plant by the Biden administration to expand broadband areas that, that don't have broadband. I would encourage, you know, both consumers and other, you know, folks that are considering the puring services get plugged in how that look for us, again, with our, our broadband community is strong here in Tennessee, our department of of economic development that really heads up our broadband offices and, and working with nt I a and local representatives of that have asked and, and have been having listening sessions asking folks and asking purveyors to, how, how should we spend this money? How should it be laid out? I would encourage folks to get involved on the front end of that as opposed to waiting for the rules to be published. And so, seek out your local NTIA rep or reach out at the federal level, your state broadband director, ask how they plan to do out these funds and find out exactly how that's gonna be spent in the communities, whether it be for access for education it feels as if there's a, an opportunity and plenty of money in those places to, to really do some good.

Christopher Mitchell (28:25):
Wonderful. Well, Jamie Davis it's been wonderful to, to meet you and to, to talk with you about what's going on in Knoxville.

Jamie Davis (28:32):
Yes, sir. Chris, great to talk with you and look forward to future, future chat down the road.

Ry Marcattilio (28:36):
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