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Lessons From the Nation's Oldest Open Access Fiber Network - Community Broadband Bits Podcast 279
Grant County's Public Utility District was, along with some nearby PUDs, among the very first deployers of Fiber-to-the-Home networks shortly after the turn of the millennium. And per Washington's law, they built an open access network that today has more than twenty service providers.
Grant County PUD Project Specialist Russ Brethrower joins us for Community Broadband Bits podcast 279, a live interview from the Broadband Communities Economic Development Conference in Atlanta.
We discuss the history of the network and other observations from Russ, who has more direct experience in these networks than the vast majority of us that regularly speculate on them. We also talk about the experiences of open access over 16 years and how they financed the network.
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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.
Russ Brethrower: Our commission, management, everybody's made it really clear. Our capital is an investment in the future of the county up and down the food chain. It's -- it's a given that it's an investment and the capital is not expected to be returned.
Lisa Gonzalez: You're listening to episode 279 of the Community Broadband Bits podcast from the Institute for local self-reliance. I'm Lisa Gonzalez. Christopher recently attended the broadband community's economic development conference. He attends every fall and if he's lucky he's able to record interviews with people from some of the communities we're curious about. He also makes the trip to each Broadband Community Summit the spring time event. While he was at the November event in Atlanta, he connected with several people including this week's guest Russ Brethrower from the Grant County Public Utility District in Washington Grant County PUD has one of the most established and geographically largest open access community networks in the US. The rural communities population is sparse and widely distributed but community leaders had an eye toward the future when they decided to invest in fiber infrastructure. In this interview, Russ shares the story of their network and describe some of their challenges. Here's Christopher with Russ Brethrower from the Grant County Public Utility District in Washington.
Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance. Today I'm in Atlanta sitting on the runway of the Atlanta airport at the Broadband Communities Summit which is focused on economic development here. And today I'm talking to Russ Brethrower Project Specialist for Grant County Public Utility District in Washington. Welcome to the show. Thank you very much Chris. So Russ I've been trying to get you on for a long time. You are one you're coming from one of the communities that has the oldest municipal fiber networks in the nation.
Russ Brethrower: Yeah, we actually started back in 2000 with a pilot [project] and have been building part of the home off and on ever since.
Christopher Mitchell: Yes. For people's contacts in the late '90s early 2000s was that transition and so you were actually building some fiber to the home when the last HFC [hybrid fiber coax] networks were still being built and it was that transition you figured out how to make it work at a time when nobody else was doing fiber to the home.
Russ Brethrower: We actually bought a lot of equipment replaced a lot of equipment based on promises not coming true. So we were definitely one of the pioneers when it came to fiber to the home.
Christopher Mitchell: And I am always curious about this because I feel like people always assume that the large companies are the ones out there trying new things and I think in some fields they may be I'm not as I don't believe that as much but I don't research it as closely as I should maybe. But you know were there other private companies like local firms around the nation that you were in touch with like how what was that ecosystem like then?
Russ Brethrower: It kind of started it in Grant PUD with a visionary and we happened to have a nice cash register on the Columbia River that had us a little bit of extra cash in our pockets so the commission they were really the visionaries. But they ask what they could do to better the community. And so one of the engineers on staff happened to have been doing research and in contact with other folks and said yeah fiber to the home is the future.
Christopher Mitchell: When you say a cash register we can step back for a second. I remember when I was first getting a sense of what it's like in Grant and Chelan and other public utility district that also has activities that Douglas was active then as well just to give them their due. Absolutely. It was maybe five or six years ago I saw it as an argument in Chelan I think it was about electricity prices going up to 3.3 cents a kilowatt hour and people were frustrated.
Russ Brethrower: Yeah we struggle with raising our rates. You know we make some commitments not to raise them very high but there's still someone the cheapest in the country. I mean Chelan's normally the cheapest or Douglas or us and it depends on the year.
Christopher Mitchell: Right and so there's a couple of things to keep in mind when the rates are that low. People use electricity heck of a lot more. So I don't think they don't think they're -- you know, I don't think it's a total free ride. And you get a lot of that revenue from the reason for that. The reason for that is that you have these dams on the Columbia which are a relic of how we electrified the nation.
Russ Brethrower: Absolutely, some other visionaries you know 50 60 years ago in Grant County took it upon themselves to actually invest in dams on the main stem on the Columbia. And there's a lot of you know ecological issues that go with dams on the main stem of the Columbia these days. But we've got we and our partners have 2000 megawatts of generation on the Columbia right. That's a that's a decent sized nuclear reactor but it can run a few cities this the size of Seattle. Now
Christopher Mitchell: let's fast forward 17 years into the future to today. What does the fiber footprint look like in Grant County?
Russ Brethrower: Right now we've actually got it about 7 percent of the people in Grant County as an electric utility we look at it as you know the number of electric meters that were in front of and we have very close to 50000 electric meters and you know we've got 30000 fiber passings. But when I say we've got 50000 meters about 10000 of those are actually irrigation meters that aren't going to use fiber to the home
Christopher Mitchell: at least not right now.
Russ Brethrower: Well and agriculture. I mean it's a huge user of broadband and it's getting more and more so. But we know we won't have to build fiber to the pump because the the farmers the irrigators already have connectivity to their pumps otherwise they go out of business.
Christopher Mitchell: and just to give one other context of scale I mean you're a large county but you're not very dense and some people think County and I have to remind people that counties out west are the size of state south east
Russ Brethrower: I told someone the other day that size and I said Well we're about 3000 square miles and the jaw just dropped because you know we are a fairly large county even for out West. And when you compare it to what people call rural here around Atlanta we're desolate. Population is dense in a few little towns around. We call them cities. You know the largest town in our county is Moses lake and it's got I believe 26000 population right now and we're not talking about nice easy to plow underground fiber paths. You got some rock here depends on where you're at in the county actually. Some parts of our county people almost pay us to plow because it's so easy. Other places you actually get out a hammer and hammer to get any sort of a trench.
Christopher Mitchell: So as we're talking about the modern day what kind of impact I mean if you can imagine what Grant would be like without these investments. You know what's the difference.
Russ Brethrower: We get to have lots of discussions because it's always political around building fiber to the home.
Russ Brethrower: But right now we have data centers large data centers locating in Grant County cheap power absolutely is important. Cheap land. The state of Washington giving tax incentives for them to show up. But without the fiber there wouldn't have been there either. So it's not like the fiber brought them but the fiber was the key infrastructure for them to land there.
Christopher Mitchell: And I imagine I was just recently talking with a small community in eastern Oregon. I would imagine you have a fair amount of people who live in more of their time in Grant County because it's a pretty active place to be than they might otherwise you know Grant County is an interesting location.
Russ Brethrower: It's got over a billion dollars of agricultural revenue number one potato producer in the country. So big farms and sagebrush and you know it's a high desert environment. So for some people that's very attractive.
Christopher Mitchell: People with arthritis.
Russ Brethrower: And for other people it's not that attractive.
Russ Brethrower: You know it's it's individual taste but it's very attractive for the data farms and data farms actually even though they pay what most people in the country would say is a very low electric rate. It's more than our cost to serve them. So they're actually a very good source of revenue for rent beauty.
Christopher Mitchell: So how does how is the discussion going about connecting the 10000 or so additional electric meters that I may want to be connected in coming years.
Russ Brethrower: Right now our commission has made it clear to the management that it's the most important thing is maintaining reasonable electric rates. There's no longer a big market to sell excess generation to California. We don't make money on that anymore. There's days where we actually pay people to take the power because we have to move fish. So as with anybody. Times are a little bit tight from a capital perspective. So there's a lot of discussion around it right now of what's more important. Finish Out the broadband or keep all electric rates low. And honestly it hasn't been completely answered yet. Our commission still chewing on that one because they're getting chewed on very hard by the we call it 30 percent of our county that doesn't have the fiber but we've supported this by you know having electric rates a little bit higher than they would have been if we hadn't built fiber. So everybody's really comfortable that they've been paying for the fiber even though 30 percent of them don't have it.
Christopher Mitchell: I can imagine that that can be frustrating for those who want it in particular the one of the interesting things is that you have possibly the largest open access network in the country or close to it.
Russ Brethrower: Geographically I guarantee you it is. But you know as far as users We've got about 16000 users on the network and it's wide open access. The cost to become a service provider$500 set up fee a$2500 deposit and a million dollar liability insurance policy. And you too can be a service provider on our network.
Christopher Mitchell: And let me just I'll just jump in for a second. Longtime listeners know I'm a photographer I carry a million dollar liability policy. It is not a barrier it's reasonable insurance costs. Thank
Russ Brethrower: you. Yeah it sounds like a lot but it's actually very inexpensive but it gives us a little bit of protection as the network operator. So you know today we have been saying 23 all week to folks who ask but I actually look back and count them we have 24 different service providers on our networks. Some of them you know revenue off of those folks maybe a couple of thousand dollars a month. And some of them it's hundreds of thousands of dollars a month.
Christopher Mitchell: So it's working for those service providers because we've had 20 plus service providers for years and years and this is one of the concerns that I've amplified that I thought was actually happening reason nobody should ever listen to me apparently is that with you have when you have such low cost of entry for a service provider to come in there has been a concern that you would not be profitable as a service provider you'd end up losing all that competition but you're not seeing that. And you I mean it's like three or five years of data. You have 16 years of data.
Russ Brethrower: Exactly and you know we kind of expected them to sort it out sell out to each other. And then there's been a little bit of consolidation. Don't get me wrong. You know some of the bigger ones do take over some of the smaller ones that want to get out of the business but we still have twenty four almost 23 again. So it must be working for him.
Christopher Mitchell: Right and you said that I asked you if one of them has like 90 percent market share and he said absolutely not one of them.
Russ Brethrower: I was looking to prepare for this. And one of them has about 50 percent of our revenue and then it's scattered across the rest and that the one that has a 50 percent they're very aggressive. I mean they market they market more than we do. They have a triple play. There is no head end on our network but neighboring utilities have had ins ones in IP and ones not as a standard cable TV had in all that video can come down on our network. So
Christopher Mitchell: they are offering triple plays across and that's that's beneficial to them obviously well and we noted that you were able to fund this without having to go out and get big loans or anything like that because you have all this revenue coming in.
Russ Brethrower: That's another fun political argument. Our commission very much was of the perspective that our surplus revenues from again selling power out to California is what we use to build a network. So in their minds we really weren't incurring debt for the network but the district as a whole has debt. We have dams on the river where refurbish the dams. We have a lot of debt so it's a politically arguable point as to whether any debt was used on the fiber network and I bring that up because it's not expected that revenues from the network will cover the cost of having built the network our commission management everybody's made it really clear our capital is an investment in the future of the county and being a desolate County. You know kids were leaving farms no matter how big they were. We're going to have trouble staying in business so everyone wanted to keep people there at least afford them the opportunities to stay there.
Russ Brethrower: If that worked for him. So up and down the food chain it's it's a given that it's an investment and the capital is not expected to be returned. I
Christopher Mitchell: always want to remind people that we're talking about this I think there's a little bit of a lack of sophistication among some people in terms of understanding that a one time capital investment is a brilliant way to do a subsidy whereas there are some that works that are running negative operating and then recurring subsidies. I'm I'm so thrilled to see local communities that embrace this approach voting to do that so leveret Massachusetts recently chose to raise that property tax to pay for the one time capital cost of the network. Linda in Michigan just so in some ways you're again we're ahead of the curve. I am I would love to see more communities deciding that it would be appropriate for them to tax themselves for a one time cost of building fiber and keeping it open to multiple providers. I
Russ Brethrower: am a big proponent of open access because it is working and it allows small local businesses to grow if they want to and make a living in you know in the high tech world. But it's more important that it's local control what works for the locality we happen to run an electric utility. So
Russ Brethrower: we happen to have some high tech people. Yeah we can run a network and you know set up. The logical networks across to allow 24 different service providers to be on our network. Not every municipality. Has that. So it's like what works for them.
Christopher Mitchell: So one thing that we see often in Washington and in talking to different public utility districts across Washington I recognize there's a variety of opinions is we're seeing more of user financed where you set up a local improvement district or whatever you want to call a local utility district. You know someone who must pay close attention to this you know what kind of prosing columns do you see with that kind of approach to expanding access.
Russ Brethrower: The pros and cons it bothers me to see winners and losers and you know local improvement districts are great for people who are frustrated that they're not getting the infrastructure. OK so what should that actually tell the local elected officials. It's like no it shouldn't be telling you that oh the ones who can afford it should have it and the rest of them shouldn't. It's like no it's a required infrastructure. Let's take a look at how to actually fund it broadly. I mean I applaud the people who step up and actually go set up a tax on themselves to pay for this infrastructure. But it really kind of hard hides the main argument right.
Christopher Mitchell: It's in some ways. I mean what I'm expecting is that this is a good way for utility district that hasn't been involved with this before in terms of publicly provisioning fiber to maybe get their toes in the water. And then I would expect to see more demand over time and not the not to be using that model necessarily in five years. You
Russ Brethrower: would hope so. But I chatted with the gentleman from Minnesota yesterday and it's like asking him how many conferences have you been to where people are arguing about how to pay for the highway. The answer was zero.
Christopher Mitchell: Well let's just hold on for a second there because people talk about fiber is so expensive in rural areas. How much does it cost to run a road County.
Russ Brethrower: And nobody even ask and most of them are paved. And most of them require annual maintenance and there is no revenue. You know it's a tax base to support that. This is a network that will actually once you've made that initial investment it will actually support itself as far as ongoing operation and maintenance.
Christopher Mitchell: Right now I just I always I always appreciate the reality check because I mean we're we do comparisons you know Seattle's thinking oh man we can't possibly even do a fiber network citywide. And I think there are reasons for them to consider certain models and this and that. But at the same time you're talking about hundreds of millions of dollars they're spending$4 billion on one bridge. It's an important bridge but people people get obsessed about the costs of fiber. It's one of the cheaper municipal investments we see made absolutely and it's a long term investment.
Russ Brethrower: The fiber you know we argue all the time about what the right architecture is for the network but bottom line is once the fibers there you can architect your next work any way you need to. It's it's very easy to get caught up in the small percentages of increases in revenue that you have to have as a municipality or you know a governmental entity to fund the network. But. If you look at it from the perspective of your overall cost and your overall tax base like we looked at it on the electric side and we'd have to the most pessimistic studies we'd have to raise our electric rates 3 percent to go build the rest of the network with 3 percent of a flow rate is still a low rate right.
Russ Brethrower: I mean Xcel Energy my service provider just raised our rates four and a half percent and I'm not getting anything for that. You're getting electricity right. I mean continued electricity. Yeah that's important. But absolutely right. It's a good reminder.
Russ Brethrower: I love to say and come from the public side you can do better. I mean if you didn't talk about nobody would notice but obviously you have to talk about it. And full disclosure and wide open. But at the end of the day and that's what we had focus groups and a lot of the folks once they understood what the monthly impact was on their electric bill it's like there Bill is more than that based on what they were pumping water that month or not.
Russ Brethrower: So it's like you know they didn't even notice. Right. Go out and buy a few Ltd's and it may offset it.
Russ Brethrower: Absolutely. And I mean it's it's it's getting to be more and more critical infrastructure and people. I mean that's the fun part about a conference like this is it's obvious it's it is the infrastructure of the future.
Christopher Mitchell: Well let me ask you as you've been doing this for 15 years. Yes. How how have things changed in that. I think people are getting I think in fact a lot more people get it than elected leaders and the elected leaders are lagging the sense from people that it's utility. But how how have things progressed did you think that by 2020 we'd have a lot more fiber or a lot less fiber than what we're looking to have.
Russ Brethrower: I actually figured that we'd be done having the discussion honestly because there's so much that can be done across. We have we have people that are working in San Francisco that live in Grant County because they have fiber to their home and they can do home network. So it's like you know it is still frustrating that it's even a discussion but it is encouraging that it's getting to be less and less of a discussion. It's just around you know what are the most important municipal services to offer. And it's definitely coming to the top.
Christopher Mitchell: So last question in all of this time how many times have you been told that fiber is not the future that wireless is the future.
Russ Brethrower: About weekly and you know it's proven wrong just about every time but you know it's not an either or. The wireless is absolutely a critical overlay. People want that mobility and it's all going to the smartphone or tablet. Absolutely. That's what you want. But as we've seen at this conference it's like even if you go to 5G it's like OK best range is a thousand feet and you've got to have a fiber connection to be able to support it. So it's like everybody there is no argument about what the technology is going to be it's going to be fiber.
Russ Brethrower: At least to the curb if not to the home.
Christopher Mitchell: Well thank you so much for coming up. I've been wanting to pick your brain for a while really appreciate the chance.
Russ Brethrower: Thank you very much. It's fun to talk.
Lisa Gonzalez: That was Christopher talking with Russ Brethrower Project Specialist from Washington's Grant County Public Utility District. We have transcripts from this and other podcast available at Union networks dot org slash broadband bits. E-mail us at podcast@MuniNetworks.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 all the other ILSR podcasts. Building Local Power and the Local Energy Rules podcast. You can access them on Apple Podcasts, Stitcher, or wherever else you get your podcasts. Never miss out on original research. Subscribe to our monthly newsletter at eyeless dot org. Thank you to Arnie Huseby for the song "Warm Duck Shuffle" licensed through Creative Commons. And thanks for listening to episode 279 at the Community Broadband Bits podcast.