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Chattanooga Fiber Surpasses Expectations, Offers Lessons - Community Broadband Bits Podcast 257
One of the very many treats at Mountain Connect this year was a keynote from Chattanooga EPB's Director of Fiber Technology, Colman Keane. (Watch it here.) After discussing their remarkable successes, we snagged an interview with him (he was last on the show for episode 175).
We discuss whether or not Chattanooga is an appropriate role model for other cities considering a municipal fiber investment and the general viability of citywide approaches in the current market.
We also get an update on Chattanooga's financials, their enthusiasm on connecting well over 90,000 subscribers, and how the smart grid deployment is creating tremendous value for both the utility and the wider community.
For more about Chattanooga, take a look at our ongoing coverage. We've been following the network and the community since 2009.
We want your feedback and suggestions for the show-please e-mail us or leave a comment below.
Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Colman Keane: When you look at Chattanooga, it was really the perfect time, and really a good place to launch this. When you're able to bring something like this to an engaged community, then you can get the benefits that Chattanooga sees.
Lisa Gonzalez: This is episode 257 of the Community Broadband Bits Podcast from the Institute for Local Self Reliance. I'm Lisa Gonzalez. Colman Keane is back on the show for an update on the situation in Chattanooga, Tennessee. In addition to surpassing expectations for subscribers, the municipal utility is doing very well financially. Electric rates have been kept in check for everyone in the EPB service area, regardless of whether or not they use the fiber to the home Internet service, and the infrastructure smart grid has kept expensive outages to a minimum. Colman and Christopher also talk about the Chattanooga community, and how it's culture has contributed to the success of the network, which has in turn provided multiple benefits.
First, we want to urge you to take a moment to help us out, by contributing at Muninetworks.org, or ILSR.org. Shows like this don't have commercial interruptions, and we like it that way. But they still cost money to produce. If you're already a donor, we want to thank you. Your contributions help spread the facts about municipal networks, so kudos to you for participating. Now, here's Christopher with Colman Keane from Chattanooga's EPB.
Christopher Mitchell: Welcome to another edition of the Community Broadband Bits Podcasts. I'm Chris Mitchell. Again, coming at you from Mountain Connect in Keystone, Colorado, a wonderful regional conference, one of the best in the nation. I'm here today with Colman Keane, the Director of Fiber Technology for EPB Chattanooga. Welcome back to the show.
Colman Keane: Thank you very much.
Christopher Mitchell: I just looked it up earlier. You were last on for episode 175, which would be about a year and a half ago I'm guessing.
Colman Keane: Wow.
Christopher Mitchell: I wanted to tell you congratulations. You gave a wonderful keynote this morning.
Colman Keane: Thank you.
Christopher Mitchell: Also you've surpassed 90,000 customers.
Colman Keane: It is hard to believe. It's a long ways away from when we started and where we thought we would be.
Christopher Mitchell: Just go over that for a second, because you mentioned where you expected to be.
Colman Keane: Right. In our initial business planning process, we were looking at somewhere around a 30% take rate in order to be break even for the whole project to work. In the plan we targeted having somewhere around 45,000 customers, that was kind of our best case scenario. We're twice that today, so we're very happy. It's been a very good experience for us, and for Chattanooga.
Christopher Mitchell: One of the things I was curious about is, what causes 89,999th customer to sign up finally? They've had years of this. You mentioned that some of it has to do with your community engagement.
Colman Keane: That is my opinion. I absolutely believe that as time has gone on, just people talking in the community about what a great service EPB provides, because we actually believe in great customer service, and we deliver that. Plus the fact that we have gotten so much press for being Gig City, that the community itself has really embraced that. I think people want to be part of something bigger than they are, and this is just one way of doing that.
Christopher Mitchell: What are the kinds of things the utility does? You're familiar with electric utilities, and there's a continuum. But I think most aren't as involved in the community as EPB does.
Colman Keane: Right.
Christopher Mitchell: What are some of the things that you do, that others don't?
Colman Keane: We have tried to be a good community player ever since day one. That was really one of our key reasons for coming into being, was economic development and quality of life in Chattanooga. But just like every business you get stuck in a rut. After a while you're going to work to benefit yourself, not necessarily the community. Actually, taking this project on has reinvigorized us, and the level of customer service that we give is much higher than it was even ten years ago. I think all of that type of stuff goes into helping us be a better electric utility, by the fact that we have the fiber optics and we're engaging on the customers on both sides. We're going in their houses today and having more one on one conversations than we used to. Used to kind of be this wall, and never go past that front door. Now we are much more involved with our customers, and I think that makes us a better company.
Christopher Mitchell: 90,000 customers out of how many possible?
Colman Keane: There's 170,000 homes and businesses. So basically out of 170,000 potential customers.
Christopher Mitchell: That's including even apartment buildings that you're basically not able to get into.
Colman Keane: That is correct. So we have about a 55% take rate overall, and still growing.
Christopher Mitchell: About how many people take the gig, which is now $70?
Colman Keane: The last time I looked it was just under 10,000, so 9,000 some odd people are taking the gig.
Christopher Mitchell: Okay. 10 gig, any takers?
Colman Keane: We have a handful, not a lot. We didn't expect a lot, but it's available for anybody who wants it.
Christopher Mitchell: For $299. I thought it was more expensive.
Colman Keane: No, that's a great deal. As we move forward more businesses will start to take it, then it'll move to the residential, just like the gig did. We saw the same type of deployment with the gig when we first announced it, so -- We're excited to be able to offer it and can't wait for customers to start embracing it.
Christopher Mitchell: You have yet more good news, it's not really that big of a deal, but conceptually it is. The communications division has retired its debt.
Colman Keane: Absolutely. A big hurdle, right? We're very excited about that. The communications side has been cash flowing positive pretty much since year two, and we've been funding new capital developments. We're still building and adding new customers, and that's very capital intensive business. As well as providing significant dollars over to the electric side, which this year was around 30. Next year we're budgeting about $40 million going from the fiber optics over to the electric.
Christopher Mitchell: To be very clear, that is basically your 90,000 customers, who take television, Internet, or phone service, or some combination of them, are subsidizing the rate payers.
Colman Keane: Yes, the electric rate payers. That is exactly what's happening at this point in time. Since inception, we have forgone on the electric side, about a 7% rate increase, which is a pretty significant number.
Christopher Mitchell: Absolutely. Obviously electricity's always a concern, particularly for lower income households, households on a fixed income.
Colman Keane: Right.
Christopher Mitchell: That's a big deal.
Colman Keane: On our electric side we are actively engaging with a lot of different programs to help people make their homes and businesses more energy efficient. It seems counterintuitive, but to us that's good customer service.
Christopher Mitchell: Speaking of good customer service, I wanted to ask this question earlier. I posed a different question this morning, but I actually think -- And I don't know if you've marketed yourself this way. You have in at least one instance, a faster response time than the fire department to a fire. This is remarkable story.
Colman Keane: Yes. No, we haven't used that as a marketing ploy. I will take that back and then talk to our marketing department about it. The information we're getting back out of our system is allowing us to do a lot of proactive things with our customers. We're working with the Department of Energy, and Oak Ridge National Labs to help dealing with the big data problem we have, to figure out what other tools we can use to provide better service to our customers. Finding premature failures of equipment inside their house is one thing that we really would like to get to. We already have examples like you mentioned with the fire.
Christopher Mitchell: You saved a pet I think.
Colman Keane: I saved a pet. Or people who have had issues with their heating and air and stuff like that, where their -- Were going to get huge energy bills. We were able to proactively go warn them, and they were able to get those problems solved quickly. It's just better customer service, and it's a driver for us.
Christopher Mitchell: How often are you polling now to check those smart meters from the homes?
Colman Keane: Every 15 minutes we get back real time. We do have the ability to go out there and ping them, if needed. From meters we're getting it every 15 minutes. From our SKADA system we're getting it every two seconds.
Christopher Mitchell: Right. I feel like I'm jumping all around, because this is incredibly exciting, all of the great news coming out of Chattanooga. Although, I do think you've become such an outlier, it's actually harder for communities to try to be you. I literally think it's dangerous for cities to think they could be you. I'm curious, how you react to that?
Colman Keane: They can always be us. We want to encourage them. I think that communities need to go into these with their eyes wide open. They need to realize what their strengths are, what their weaknesses are, and how they can leverage what they have. When you look at Chattanooga, it was really the perfect time, and really a good place to launch this. Chattanooga had already had a lot of visioning processes, so we had an engaged community. When you're able to bring something like this to an engaged community, then you can get the benefits that Chattanooga sees. It's one thing to build a technical solution. It's another to get people to embrace it, and actually push it to it's full potential. Being able to brand ourselves Gig City, that was a multi tiered approach. Not just EPB, but a lot of movers and shakers in this city getting behind that.
Christopher Mitchell: I think communities certainly could emulate you, and do a lot of things to try and succeed in the ways you've succeeded. However, in my going to Chattanooga, it seemed like you have more people rowing in the same direction than most communities. It takes years, decades to achieve that. This is not just a fiber network that sprung up in Chattanooga. It's more a very smart community that was doing a lot of the right things that built a fiber network.
Colman Keane: Right. We intentionally tried to get the community engaged. We did kind of build it, and kind of sat back on our laurels so to speak. We though everybody was going to embrace it, and that didn't necessarily happen out of the gate. We literally started a process where we spent a year bringing people in from the community. We would bring groups of 15 to 17 people from all walks of life into these, and once a week we would meet with them. You've been to our control center. We would bring them in there and talk about how we built the network, what the network was capable of, and how a community like Chattanooga could take advantage of that. Then basically charged them, "This is your network, you need to figure out how to leverage it." It took a little bit of kicking to get the community to engage, but we already were an active community so it didn't take a lot of kicking. But it does take a community that's going to work together, and understand the benefits of working together, to get the most out of a system like this.
Christopher Mitchell: You yourself were someone, you said, who had left Chattanooga, after college I presume, or around that time, and then later came back.
Colman Keane: Right. We were suffering the brain drain like a lot of small cities do. Kids went away from college, and never came back. I was one of those. I moved back to Chattanooga, I was lucky enough to find a job. I consciously made the decision to take less wages and move back to Chattanooga, because I thought it was a great community to raise a family in. Me and my wife consciously made that decision, and it turned out to be a really good one, because I got to work at EPB, and roll out a really great network. Today, it's a little different. Today we have people moving into the community. We have a lot of young people showing up that don't have ties, they don't have relatives, they don't necessarily have a job. They come to Chattanooga and basically say, "I'm going to figure it out when I get there." It's an exciting place.
Christopher Mitchell: One of the challenges that I think you face is trying to figure out what your impact is. We know that you've had a tremendous impact on the community, and one can point to the jobs that have come in from a few large employers. But it's really hard to try and figure out what impact you've had on those small entrepreneurial firms, existing firms that may have been more successful. How do we know that the network has had such a positive economic impact on the community?
Colman Keane: That is something that's very difficult to statistically measure, let's say. There's a lot of things we can look at. We have the Chamber and they know how many large companies have come into town, and we can extrapolate jobs from that. You can walk around in Chattanooga and you can see the revitalized communities, and you can see the storefronts that are opening up. That's not necessarily captured buy the Chamber. A lot of those are small business, one or two people working at them type thing. We have tons of those going in. When you look around, and you look at housing. You look at the growth in Chattanooga, you look at the people moving back into the downtown area and stuff like that. You can feel the excitement. It's something almost, you have to come and see to believe. But it's very difficult, and we're trying to figure out how to do a better job of measuring that. But how do you capture somebody who is working out of their house? Much like you might do for a lot of things that you do. How would you show up in a statistical model, right? That's a problem we face, is we have a lot of people doing those type of work. That gig economy type stuff is hard to measure. I'm using gig as in the job, not necessarily the bandwidth in that scenario.
Christopher Mitchell: It fits for both industries.
Colman Keane: It fits for both. Exactly.
Christopher Mitchell: One of the things that you have clearly measured is the benefits to the electrical side. If we just back up for a second, it's worth noting, you've not retired all of the debt of the network. You've retired the debt that was attributed to the communications side.
Colman Keane: That is correct. And we are paying down the debt that's being borne by the electric side. We're not in any hurry to pay that down, because we're getting very attractive rates on that. But it will be paid off during the normal course of business.
Christopher Mitchell: I would think so if you're doing transfers of $30 to $40 million.
Colman Keane: We're transferring about three times what's needed to pay off that debt today. The electric is seeing huge benefits from the smart grid that has been rolled out, and so are our customers. When you look at our outage -- There are measures that utilities use, and we have seen those reduced significantly, 50 and 60% reduction in those reliability measures. That doesn't equate to the fact that we're not rolling trucks for those outages anymore. A number of miles, we're at hundreds of thousands of miles every year being saved in truck rolls, just on meter reading. Another couple hundred thousand miles being saved where we're actually having to go scout and find outages before we can fix them.
Christopher Mitchell: It's worth pausing there for a second, because most electric utilities, when they have an outage, they find out about it through customers calling them and saying, "I don't have any power." Then they send trucks out to zigzag around to physically locate, with their eyes, the break.
Colman Keane: That's right. Then once they find the break, then they do a manual work around if they can. So they roll trucks to manually switch the power, if they have that capability. A lot of that takes time and effort, so you could be looking at two to six hours for a relatively small outage. Our smart grid, we have put in the intelligence switches, so a lot of that switching happens automatically. We have information coming back from our smart meters and other sensors, so we know pretty much know exactly where that outage is and can roll trucks right to where the job needs to be fixed. So we're saving tons of money just from what we call "scouting" for the outage.
Christopher Mitchell: You covered this this morning, and the slides are more visual to show the exact number, but you had an outage that impacted on the order of 14,000 people?
Colman Keane: Yeah.
Christopher Mitchell: If you remember roughly the time periods of --
Colman Keane: It was roughly 13,000 customers, it was on a
5:30 on Friday afternoon, so a lot of our employees had gone home just like everybody else. A tree fell and took out a transmission line, to take all those customers out at one time. Basically, in less that 30 seconds about 10,000 of those came back on automatically because of our automatic switching and intelligence that we have built in to the network. About another 30 seconds after that we had a couple more come on through automatic switching. At that point people in the office were aware of the outage and were looking at it, and were able to very quickly, manually switch, in two different scenarios. In a three minute period, then in another two minute period, they got the next couple hundred on in each one of those. Within six, six and half minutes, all 13,000 were back on, and we had a truck rolling to where the tree had fallen, without anybody going out scouting, having to go out and do manual switching. That outage would have been six to ten, twelve hours. That would have been a significant time for us to get all those customers back on prior to our smart grid being in place.
Christopher Mitchell: That's the thing that I knew. The thing that I didn't know, was you also would have had to recall all kinds of employees to answer phones.
Colman Keane: That's right. They were already going home. To handle the volume of calls, or even to get people to go do the scouting, we would have been literally, "Okay. We know you just walked in the door at home. You mind getting in your car and coming back?" So that we could handle the call volume, as well as the work load to do the manual fixing on the outage.
Christopher Mitchell: I don't know if you have any comment, but I saw on the Twitter feed today from EPB, that you're seeing an abnormally high number of trees falling over, unfortunately, due to presumably temperature changes and things like that.
Colman Keane: What we've had is an abnormally wet first part of the year. We had a drought last year, so the combination of having a drought and then -- It's really affecting the oak trees. We've had very large trees come down over the last two months. We've had some significant outages with similar repairs times that we have just talked about. Where we've had 25,000 customers out, and most of those come back on relatively quickly, and we might end up with 2 or 3,000 where we've had to literally roll to actually take trees, and remove those trees. Those would have been multi-day outages prior.
Christopher Mitchell: Right. It's also sad to see giant trees going.
Colman Keane: Yes. Especially these are large, old oaks. You're probably talking hundred year plus trees that are going down at this stage.
Christopher Mitchell: One of the things that I know you do, is you track the industry very closely. I'm actually surprised when I look at -- I was having a conversation. In Iowa alone we might see four new municipal, citywide fiber to the home networks in the next year. I was expecting to see less than five a year across the entire country. I was expecting to see a lot of municipalities doing incremental investments and things like that. Because I fear the market is so fragmented now, it would be harder to enter the market than it was when you did. I'm curious what your thoughts are in terms of that. Is there still space for those citywide builds?
Colman Keane: I think there absolutely is space. If you back two years ago, every mayor wanted to be a gig city. You've had a lot of people chasing it for about 18 months, so it doesn't surprise me that you're starting to see some of those efforts actually start to bear fruit. I think the bigger issue really is financing for most people, and getting over the fear of being able to actually deploy and run a network like this. A lot of people are actually almost to that level of a decision point, versus whether they think they want it or don't want it. I think they know they want it, they just don't know how to get it.
Christopher Mitchell: Do you have a sense of how many people have left EPB to go work with other cities that are doing this sort of thing.
Colman Keane: That's a good question. We actually have not had a lot of people leave to go do that. We've had some people leave to go work with some vendors, but actually the relative -- At that level, it's been relatively low. We have had more employee turnover than we were used to historically, but it's been mostly at the customer service level. A lot of that is that the employees that we were hiring are skewing younger, and they tend not to stay as long.
Christopher Mitchell: I was just curious. There's a fair number from Google Fiber that are coming out and looking for jobs and things like that, so I was just curious if you were seeing any of that.
Colman Keane: Chattanooga's such a great place to live, nobody wants to leave.
Christopher Mitchell: That is one of the things that I got the impression, is that working at EPB is really great. I can imagine that people wouldn't want to go work for a municipal utility, where they may still believe in the job, but the culture may not be there.
Colman Keane: It's a tough transition.
Christopher Mitchell: That's where, again, I feel like we've always tried to advise cities, "If you want to do what Chattanooga did, it's not just about technology. So much of it is about culture within the community."
Colman Keane: It absolutely is. Kind of like I was talking today, you mind your Ps and the rest of it takes care -- Planning, prep, people, performance, and partnerships. People and partnerships are the most important out of those five. Making sure that you have the right culture, you have the right staff, that they're willing to learn and engage with customers. It's a make or break.
Christopher Mitchell: Right. It's exciting, and I just can't tell you how interesting it is watching Chattanooga. I feel like there's a sense that cities aren't exciting or this or that. When you look back, a lot of really interesting innovations have come from cities you wouldn't have expected from. Frankly, Chattanooga's even big compared to some of the really interesting innovations that have come out of communities, where people do great things.
Colman Keane: Right.
Christopher Mitchell: I'm excited to have been chronicling Chattanooga as you've been doing it.
Colman Keane: Right. Yeah, you've been there pretty much since day one.
Christopher Mitchell: Yeah, actually my first time in Chattanooga was right around the time that the network started being built.
Colman Keane: Yeah.
Christopher Mitchell: It's exciting. Well, thank you so much for coming on the show again.
Colman Keane: Sure, no problem.
Lisa Gonzalez: That was Christopher with Colman Keane, who shared updates from Chattanooga's EPB. We have transcripts for this and other Community Broadband Bits Podcasts available at MuniNetworks.com/broadbandbits. Email us at podcast@MuniNetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow MuniNetworks.org's stories on Twitter. The handle is @MuniNetworks. Subscribe to this podcast and all of the podcasts in the ILSR podcast family on iTunes, Stitcher, or wherever else you get your podcasts. Never miss out on our original research. Subscribe to our monthly newsletter at ILSR.org. We want to thank Arnie Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and we want to thank you for listening to episode 256 of the Community Broadband Bits Podcast.