NEK Broadband’s Big Merger and Bold Vision - Episode 627 of the Community Broadband Bits Podcast

Christa Shute (00:07):
It is a fundamental aspect of our business plan that these folks need to be able to connect in order to have take rates and because fundamentally our mission is about getting people connected.

Christopher Mitchell (00:24):
Welcome to another episode of the Community Broadband Bits podcast. [00:00:30] I'm Christopher Mitchell at the Institute for Local Self-Reliance in St. Paul, Minnesota. We get a fine dusting of light snow on the ground. The ground's starting to freeze and my ice rinks are coming out, so you'll probably just not hear from me for quite a while. We didn't get to skate at all last year. That's already more than you wanted to know, but today we're going to be talking with the Executive Director of NEK Community Broadband. Christa, shoot, welcome to the show, Christa.

Christa Shute (00:57):
Thank you. It's a pleasure to be here.

Christopher Mitchell (00:58):
And we're going to talk a little [00:01:00] bit about how NEK Community broadband is no longer what it used to be. There's been a pretty cool merger. But first let me introduce Ry Marcattilio, who is our Associate Director for Research. Welcome back to the show, Ry.

Ry Marcattilio (01:15):
Thank you Chris. Good to be here. Good to see you.

Christopher Mitchell (01:17):
I am excited to do this show with you Ry, the author of Neighborly Networks, Vermont's Approach to Community Broadband, which is available @communitynets.org under reports and was [00:01:30] done in a collaboration with the Benton Institute for Broadband and Society. So this is one of a few interviews that we're doing in order to help people better understand the brilliant approach of Vermont

Ry Marcattilio (01:41):
And what has changed since we put that report out right about a year and a half or two years ago. So lots of progress made, which is exciting.

Christopher Mitchell (01:48):
So we actually put that report out in the earlier part of this year and in 2024, which is to say, and also in early 2024, I think it was when that cool half hour [00:02:00] documentary was released about the CDs as well. I just rewatched that over the Thanksgiving break and part of an effort to close tabs on my computer. So I watched a bunch of videos I've been meaning to and it was lovely. I highly recommend it. We'll include a link to that in the notes for this podcast. But Ry, let me just actually cut you out for a second and ask Christa to tell us a little bit about NEK Community broadband and then we'll go into how it changed, but [00:02:30] what's the original vision and how you got started with NEK?

Christa Shute (02:33):
NEK stands for Northeast Kingdom and we were originally comprised of 51 towns across the top three northeastern counties. When people first started getting together, it was only about 20 towns. And then we built out from there to include every town in the counties of Caledonia, Orleans and Essex as well as Wolcott in Lamo County. [00:03:00] And the idea was that we would build public infrastructure that would be owned by the community, we'd be accountable to the community and therefore everything that we make from all the funds that are collected from customers are reinvested in either the infrastructure or in affordability programs or in reducing pricing or preparing for the future, but they're all reinvested effectively in the community.

Ry Marcattilio (03:29):
I know a lot has been [00:03:30] going on with you folks over the last couple of years or so. I wonder if you could just give us a quick sense of the connectivity gaps that were in the region when you got going for folks that maybe didn't listen to the previous episode of Community Broadband Bits where we talk a little bit about any NEK.

Christa Shute (03:48):
The Northeast Kingdom is one of the most rural and lowest income sections of the state, or it is the most rural and lowest income section of the state. And so [00:04:00] the vast majority of houses just simply don't have broadband except for the two cities that exist. And so there's only 5,000 out of 30,000 that actually have broadband service. So we've been working to correct that and building, we are up to roughly over 500 miles [00:04:30] just in the Northeast Kingdom. Part of it, and it's part of what you have to look at when you're standing up an organization from the ground is what does it take to get to long-term success and sometimes understanding what your long-term costs are going to be per customer helps you look at the opportunities that may be around you. And one of [00:05:00] those opportunities was with our nextdoor CUD CVFiber. They use the same construction management firm as we did the same design firm, the same contractors. And so it really made sense for the tud to join together into a single CUD for administrative efficiency, construction efficiency, and really an overall long-term success for both regions. [00:05:30] So we are now 71 towns.

Christopher Mitchell (05:33):
Can I assume that meeting efficiency has not gone up with 71 towns?

Christa Shute (05:38):
Well, I mean we have a governing board that's comprised of one member from every town is a voting governing board member, plus most of them have alternates or two alternates. So we have 130 governing board members, and I'm fond of saying that our governing board has more people on it than five [00:06:00] of our towns have people populations in them. So it's quite something to have a governing board of that size. So many of them are really deeply involved in their communities and with our organization. So they show up for the governing board meetings that happen five to six times a year as well as executive committee meetings, which happen twice a month. So we now have an executive committee of 11 [00:06:30] that's represented with members from every county. We make sure that we keep a balance between the CVFiber towns and the NEK towns. And for now we've kept both of our brands and that may change in the future.

Ry Marcattilio (06:43):
So this is a super interesting partnership. You guys announced early in the summer of 2024 and you mentioned some of the efficiencies you get back and certainly you have to navigate some things like grant administration and some of the other regular things that go along with something [00:07:00] of this size. And you mentioned so many of the early-ish stages where you had similar things going on that the partnership made sense, you guys both were or still are using the same operational partner, so the cuds own the infrastructure, but you're using Waitsfield, Champlain Valley Telecom as the operational partner for a set period of time.

Christa Shute (07:20):
Yeah, thank you. I mean, that's the foundational piece of why this merger made sense was because WCVT is our network operations [00:07:30] partner as well as our retail services. So they help provide all the customer service, the billing, et cetera for all of our customers, and that's the case for both of us. So yeah, they're a huge reason that this merger made sense

Ry Marcattilio (07:48):
And they've been operational in rural parts of the state for a long time up there.

Christa Shute (07:52):
Yeah, they've reached 120 years of family owned and they are actually passing on to the [00:08:00] next generation soon. So in the years to come, they will be bringing on the generation that comes next. So we're very excited to know that they will stay family owned and that was an important part of our selection of them as well as it making the most financial sense.

Ry Marcattilio (08:21):
I think one of the other reasons that the CDs in Vermont have been so successful in the last few years is the close kind of partnership with the [00:08:30] Vermont Community Broadband board, the state kind of entity that has been doing a bunch of background work but also obviously providing grants and other funding vehicles for you all. Can you give folks a sense of, I know you've gotten both some pre-construction grants. Construction grants, you said you're at 500 miles past about at this point. Can you give us a sense of where you're at with the numbers these days?

Christa Shute (08:54):
The Vermont Community Broadband Board has been absolutely foundational to the ability for [00:09:00] the cuds to stand up, and that's a direct result of the allocation of ARPA funding and state funding from the legislature and the governor. So it's definitely been a statewide support of the concept of public infrastructure and investing in our communities. That's been the vast majority of the funding that has been raised in the NEK region. [00:09:30] We've raised approximately 72 million in state funding through the Vermont Community Broadband board and CVFiber has raised approximately 20 million in that same area, 2020 2 million in that same area. In addition to those numbers which are substantial, we [00:10:00] also have raised money from the US Department of Agriculture, and so we were able to get a 17.5 million grant from them, and then we also recently were able to get a Community Connect grant from them for $3 million and we have waiting in the wings, we will see about a Reconnect five loan that we have applied for.

Ry Marcattilio (10:30):
[00:10:30] Okay, cool.

Christa Shute (10:30):
So all told we've reached about a hundred million dollars in grant funding that's contracted and secured and an additional 40 million that we've been awarded that we're waiting for contracts on. So it's a lot of money.

Ry Marcattilio (10:45):
Yeah, that's fantastic. And just to be clear for folks, this is a part of the country where these grants are absolutely a hundred percent necessary. You alluded to it earlier, but in some parts of your footprint you're looking at six homes per mile, you're in a reap zone, so there are additional [00:11:00] economic challenges that face you all. This is one of those projects that would not have happened without all the behind the scenes work by you folks to get some grant funding to make it work.

Christa Shute (11:12):
Yeah, that's absolutely true. There's no business case in which these folks get broadband without grant funding. So what has happened with whether it's Internet for All through BEAD and ARPA, the Reconnect funds, it's just been an absolute game changer [00:11:30] and it makes it possible for us to get to everybody and we really wouldn't have been able to do that for a much longer period of time. If we were trying to borrow our way through this, it would've been extremely difficult and maybe not possible to get all the way there.

Christopher Mitchell (11:49):
Are you anticipating support from BEAD?

Christa Shute (11:51):
Yes,

Christopher Mitchell (11:53):
I would think you'd be a fine candidate for it. Yes.

Christa Shute (11:56):
I mean,

Christopher Mitchell (11:56):
One of the things that I've appreciated about Vermont in this approach, [00:12:00] and I want to go back into the history in a second, but Vermont's approach as stated, I think has been very smart, which we don't always see in this space, which is that the goal is to basically create going concerns where you'd have networks that were able to stand up, pay their way, and then seek additional investors to be able to continue and finish the buildouts. Just I want to point that out, but ask you where [00:12:30] were you about 10 years ago? Do you know a little bit of the history of how I felt like from afar To me, the state of Vermont was not a friend to the idea of these towns getting together and solving the problem themselves, and then suddenly there was a shift in the state recognized that this was working well and for me, I feel like people might be like, oh, Vermont, they were always going to go this direction, but it definitely wasn't the case and it took the work of a lot of people to convince the state that this was a smart thing to do.

Christa Shute (13:00):
[00:13:00] Yeah, absolutely. I mean, for myself, 10 years ago I was with actually a quasi-state unit unit called the Vermont Telecommunications Authority, so it's a quasi-state entity. It was originally created by Governor Douglas as an attempt to get service to every home with broadband and cellular. And we struggled with how do you do that and [00:13:30] how do you make that happen? Some of the work that we did was to help provide grants to EC fiber, which was the first communications union district, and I think really help them get over the hump into that ability to bring municipal revenue bonding money to the fore. And that really helped show that this idea of a public [00:14:00] infrastructure is really possible. At the same time also, I was part of bringing together six entities across five different funding sources to create a network in which we all swapped fiber so that we could connect 155 miles together, and that was in the Northeast Kingdom.

(14:25):
So it was kind of nice to then be in the position as [00:14:30] the executive director for NEK broadband to then be given that infrastructure from the state because the state was the one that had owned it, and that formed the basis of our backbone. But that was a tough thing to look at, and we still have a big fight to go on cellular as well. That's not a done deal. And depending on what happens with be, if BEAD goes through the way it's intended to, then [00:15:00] we will be able to get the state to the point where it is a hundred percent served. So

Christopher Mitchell (15:06):
That's good. I like to say that possibly the only thing harder than making wireless systems work well in Vermont and particularly in the Northeast Kingdom perhaps, is convincing Vermont landowners that they want to have towers on their property.

Christa Shute (15:23):
Yeah,

(15:25):
I think fiber can play a great part in getting cellular service. We did [00:15:30] a small cell concept back as part of the Vermont Telecommunications Authority, and in the end it didn't work for a number of different reasons, but it is still, I think the concept that's going to get us to where we need to go. I think we've put towers most of the places that we can, at and t had the first net requirement to get service everywhere, and it doesn't. So the places that are left, we have [00:16:00] to be more creative and I think the underlying fiber infrastructure is going to give us the backbone to run things off of the poles along the roads where we are hanging the fiber.

Ry Marcattilio (16:12):
Speaking of hundreds of miles of new fiber infrastructure, you guys have a new job training program to train up some outside plan folks and try to get some people out on the ground and running?

Christa Shute (16:23):
We do. We established with the North Country Career Center a training [00:16:30] for installers, contractors, construction, and one of the things that we're doing inside of NEK is we are hiring people for our warehouses, then training them to be installers, and we're rotating them up and through to our contractors. And the purpose of that is when BEAD hits this country with 42 billion, all of the workforce that does this specialized work, it's [00:17:00] going to go either to home where they can go home at night or to where they can get more money, and we need to build a workforce here at home. And so our workforce development program is a combination of the work the state is done on apprenticeships, working with our trades schools, and then hiring and training the folks within so that there are more people that are paid and out there and doing the work.

Ry Marcattilio (17:28):
And I know it's only been [00:17:30] about six months since you announced that program. Is it too early to tell? Can you give us a sense of if you've had a couple of cohorts of folks move through that in terms of numbers?

Christa Shute (17:40):
Yeah, so we had our first cohort move through, and of the seven people that graduated, five of them are hired into the industry. Three of them are with us, two of them are with one of our contractors. In addition to that, we have another cohort that's scheduled for [00:18:00] sometime in the first quarter. We want to make sure we have a critical mass before we finalize the date on that, but we've just interviewed three candidates that will go into that training and then at least one of them will be hired by us and then others will be hired by contractors.

Christopher Mitchell (18:19):
That's

Ry Marcattilio (18:19):
Really great.

Christopher Mitchell (18:21):
How does that program work? Who does the teaching? Do you have someone at any community broadband that needs to be doing that, or how does that actually come together?

Christa Shute (18:29):
The first [00:18:30] round or north country brought in instructors from afar to do it. That was the best way to get off the ground right away. For this next round, we have actually hired a person who is our field services and workforce development manager, and he's actually going to be teaching some of those courses. So he'll be teaching splicing and some of the other aspects of the program, [00:19:00] so it'll be even more integrated than it was. He's also working directly with WCVT and creating the materials that are needed for the training to make sure that folks know everything they need to know to do installations or to do construction.

Christopher Mitchell (19:19):
So when you hired him, I'm presuming then that you had to, rather than just looking at perhaps the traditional skills that a person might bring to outside plant, you wanted to also have the teaching skills, the [00:19:30] ability to communicate well and things like that when you were picking that person out?

Christa Shute (19:34):
Yeah, we were pretty lucky actually. So Jared comes to us with not only two decades of experience in telecommunications, but he also did internship programs where he is coming from. And so it was Providence. It was really, we were really super lucky to get him and that he and his family chose to move to Vermont a couple of years ago [00:20:00] and that this was the right fit, the right time.

Ry Marcattilio (20:03):
A perfect segue, speaking of the human infrastructure of broadband deployment, I think a lot of people don't know how bare bones this uds were when they were getting things going, just a few people and tons of volunteer hours. I imagine at this point that has changed for NEK quite a bit. And so I'm curious, how much of your day is Chris's just ignoring the emails of your staff members?

Christopher Mitchell (20:28):
Christa, let me just also say that [00:20:30] you probably heard the same thing I did, which is that this is wonderful experiment in grassroots, blah, blah, blah, but these volunteer boards were going to be the biggest problem that you would face. So I mean, it's a real challenge to overcome, I feel like in some ways, but it's showing results.

Christa Shute (20:47):
Our volunteer boards were absolutely fundamental to getting this off the ground. There's no question. They put in hundreds and hundreds of hours just expertise from all sorts of walks of life, [00:21:00] and some of them still do put in a ton of time, but it's in a much different, more governance oriented aspect now as well as sort of the grassroots community informing and getting people excited about what's coming, we have been able to shift to an internal operations. So we are currently at a staff of 13 for NEK CV, so the combined 71 [00:21:30] town district, and we have a budget where we are scheduled to be at roughly 20 employees by the end of 2025, and part of that is part of the workforce development piece. It's part of ensuring that we're bringing the workforce into the kingdom. So I think there are still cuds that rely heavily on some [00:22:00] volunteer time, but we've all progressed all of the ones that are doing our own public infrastructure, which is about half, have all progressed to having internal staff and contracted support.

Christopher Mitchell (22:16):
But do you actually answer your emails?

Christa Shute (22:22):
I am going to take the fifth on that.

Christopher Mitchell (22:25):
I need some volunteers. I'm going to do a volunteer for anyone that wants to answer my email for me, especially Ron.

Ry Marcattilio (22:30):
[00:22:30] So Christa, in May of 2024, the Affordable Connectivity Program closed its doors. A few households here and there got the benefit of their provider continuing to offer service at a discounted rate on their own dime here and there across the country. But for a lot of states, their BEAD plans were kind of built around the continuance of some sort of low cost option, or at least a part of their BEAD plans were built [00:23:00] around the continuance of a low cost option. I'm curious how you guys have wrestled over the last six months with the disappearance of the Affordable Connectivity program and if you've got a sense of how you're going to move forward without it.

Christa Shute (23:12):
So first we did continue for anybody that was on the program. We did continue the program and funding it. In addition to that, we created a pilot program with neco, which is the Northeast Kingdom Community Action Agency, and it's called [00:23:30] NEK DEP, which is NEK Digital Equity Pilot. And that pilot program was about identifying additional people that needed the assistance both inside of our network. Obviously we want more customers, but also just generally the people that they ran into that needed assistance. We didn't discriminate of like, don't help them if they're not coming to NEK. So we really tried to create [00:24:00] a program through that and we have elected to continue it. So we've continued the ACP. We are continuing to offer that discount to folks that qualify. It's challenging to get people to understand that those possibilities are available. So that communication piece we continue to work on with NEK DEP and with ourselves as part of the bigger picture, longer term [00:24:30] piece, the ACP, I think it's just a really important way to ensure that every portion of our population has the opportunity to get digitally connected so they can access government services so they can communicate with families so they can be a part of education and healthcare.

(24:54):
And we saw tremendous stories around that, around covid as many people did around the [00:25:00] country. So in an area like the Northeast Kingdom where the rate of poverty is higher than the national average, it's unclear to the degree that we can sustain that without state or federal help. Our goal and what we currently do is that anyone that takes one gig or two gig symmetrical service from us, we will subsidize one [00:25:30] or two folks to get an ACP like credit. And so also have a nonprofit that Northern Enterprises that is pivoting to gear towards raising money within the kingdom and from outside sources to try and supplement it. It's a fundamental aspect of our business plan that these folks need to be able to connect [00:26:00] in order to have take rates and because fundamentally our mission is about getting people connected and it's not just about infrastructure, it's about access. It's about knowing how to use it, it's about being protected. So I hope that we can see some kind of assistance that comes through, but I'm not really sure what that looks like.

Ry Marcattilio (26:28):
Yeah, the cost part [00:26:30] of it is certainly a part of the equation, and I think though we all might've wished to see the ACP continue, it is heartening to look around the country and see all the entities and organizations are putting together some kind of plan to make sure that the households that can't afford the connections can at least get some help.

Christa Shute (26:53):
The BEAD funding is really important to that. I mean, that is one of the underlying tenants is you create [00:27:00] affordable pricing as a result of getting BEAD funding, and it does make a difference. Like the tens of millions of dollars that you get in grants that you don't have to pay back does enable you to bring your price down. And so what we'll be working on for the BEAD project is the balance between bringing down lower income, middle income, and high-speed gig pricing. Where does that price [00:27:30] balance to reflect the grant funding come from?

Ry Marcattilio (27:34):
Absolutely. Wonderful. Thank you, Christa. My last question was just out of curiosity, so you're live with Homes Connected subscribers today. You've got plan tiers from a hundred megabits a second to up to two gigabits per second. I was just curious, which one is your most popular?

Christa Shute (27:50):
So our most popular is the 250 symmetrical.

Ry Marcattilio (27:55):
Okay, cool. Yeah,

Christopher Mitchell (27:56):
It's wonderful to hear all that, especially the part about [00:28:00] creating those local jobs, the training and the training. I think that's really important, workforce development. So wonderful that that's happening in areas where you may have some people looking for that kind of work and where it's going to be hard to get contractors to come in. And so you kicked off the call noting that you wanted to keep more of the money in the community, and it sounds like you're well on your way to doing it. So from the Institute for Local Self-Reliance, we salute you.

Christa Shute (28:27):
Thank you. Thank you so much.

Christopher Mitchell (28:29):
Yeah, thanks for your time [00:28:30] today. You

Christa Shute (28:30):
Bet.

Ry Marcattilio (28:31):
We have transcripts for this and other podcasts [email protected] slash broadbandbits. Email us @podcastatcommunitynets.org with your ideas for the show. Follow Chris on Twitter. His handle is @communitynetworks. Follow community nets.org stories on Twitter, the handles at muni networks. Subscribe to this at other podcasts from ILSR, including building Local Power Local Energy Rules, and the Composting for Community Podcast. [00:29:00] You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly [email protected]. While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arnie Sby for the song Warm Duck Shuffle, licensed through creative comments.