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Overbuilding and the Value of Real Competition - Episode 451 of the Community Broadband Bits Podcast
This week on the podcast, Christopher talks with Travis Carter (CEO, US Internet), Deb Socia (President/CEO, The Enterprise Center), and Brian Worthen (President, Visionary Communications and CEO, Mammoth Networks) to talk about overbuilding.
The group discusses the importance of reclaiming the term as what it really is: plain old competition. They talk about the economics of building competitive broadband infrastructure in rural and urban areas, pending Washington State legislation which would unlock the power of the state’s utility districts to deliver retail service, and why we don't see more small, competitive fiber builders around the country.
This show is 59 minutes long and can be played on this page or via Apple Podcasts or the tool of your choice using this feed.
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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.
Brian Worthen: When you say this shows about overbuilding and competition, overbuilding is actually discussing competition.
Ry Marcattilio-McCracken: Welcome to Episode 451 of the Community Broadband Bits Podcast. This is Ry Marcattilio-McCracken here at the Institute for Local Self-Reliance. Today, Christopher talks with Travis Carter, the CEO of US Internet, Deb Socia, the President and CEO of The Enterprise Center, and Brian Worthen, the CEO of Mammoth Networks to talk about overbuilding. The group discusses the importance of reclaiming the term as what it really is: plain old competition. They discuss the economics of building competitive broadband infrastructure in rural and urban areas, pending Washington state legislation, which could unlock the power of the state's utility districts to deliver retail service, and why we don't see more small competitive fiber builders around the country. Now here's Christopher talking with Travis, Deb and Brian.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits Podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance in Saint Paul, Minnesota. Today, we're going to be talking about overbuilding and competition, and we're going to be talking about that with Deb Socia, who's coming back for her second episode. Deb is the high president and CEO of the Enterprise Center in Chattanooga. Welcome back, Deb.
Deb Socia: Thanks, Chris.
Christopher Mitchell: We also have Brian Worthen, who's here for the first time, but he's been on the Community Broadband Bits Podcast before. Brian is the almighty CEO of Visionary Broadband. Welcome.
Brian Worthen: Thank you, Chris.
Christopher Mitchell: And we got Travis. Travis is the dear leader of USI Fiber in Minneapolis.
Travis Carter: Hello, Chris. How are you?
Christopher Mitchell: And then I'm Chris, Chris Mitchell. I'm the court broadband jester at the Institute for Local Self-Reliance. So, just trying to do something a little bit fun to kick off every episode. We're going to be talking about competition today, although not in the way that we've talked about it before in terms of open access. Open access, that's the way we say it up here in Minnesota. And we're going to be talking more about overbuilding, which is a word that probably we shouldn't even be using because it just reinforces the wrong ideas about this stuff, but I'll use it a few times. It's really about whether government should be encouraging or discouraging competition. So, we're going to be talking about that. 25 years, sitting here, after the 1996 Telecommunications Act, and most Americans barely have a choice. We're hearing a lot about breaking up the tech giants like Amazon, like Facebook, Google, others, this sense of breaking up, and I'll start with you, Deb. Should we encourage the federal government to use its powers to break up Comcast?
Deb Socia: I was really hoping you wouldn't start with me, Chris, but I am of two minds with that. I think that one of the conditions of their merger years ago was that they run internet essentials across the country. Internet essentials have a shelf life in that agreement, and they have gone beyond it, and they've actually improved access through it, and I'm really pleased about that because for a lot of communities, think Chicago, this has been a really important outcome. They've been able to connect kids. So, I'm kind of two minds because I don't think we need any more great big companies running broadband. On the other hand, I'm kind of happy that they've done this other thing that was a condition of the merger.
Christopher Mitchell: Okay. So, you're going with no because of public benefits that go wider because they have so many people they're in front of. Brian, what do you think?
Brian Worthen: First of all, you said break up and then instantly black helicopters, I could hear circling over the building. There was a time 20 years ago, we'd rush home on Thursdays to watch Seinfeld and Friends, and whatnot, and I'm really hoping for that again from NBC. So, I don't necessarily want to break up Comcast. I still have high hopes that there's another Seinfeld out there, but to answer it more professionally, I would say whatever results in better broadband. I'm truly a believer in better broadband. We need to solve this for the nation, and if it helps, great. If it hurts, don't do it, right?
Christopher Mitchell: So, the analysis would hinge on some kind of evidence that one direction or the other would be better for broadband deployment?
Brian Worthen: Right. What's the impact on broadband?
Christopher Mitchell: Okay. Travis, I think we haven't had a yes or no yet.
Travis Carter: Yeah, so I would say no, and I guess my rationale is I think cable and Comcast is a good baseline for communities, and they do a reasonably good job as an operator. So, the question I would ask is, "What are the hurdles to build competition on top of that baseline?" Because I'm not sure that any other person that would come in and take over the cable plant here in Minneapolis would do a much better job running it. The real question is, why do we have very little competition predominantly... Well, almost anywhere. That to me, is a more broad question. So Comcast, keep doing what you're doing.
Christopher Mitchell: All right. So, it's on me. Go ahead, Deb.
Deb Socia: I would just say, "Please get better customer service." That would be my one caveat.
Christopher Mitchell: So, I wasn't sure what to expect from you all, and I said that I would just kind of make up my mind based on things that weren't said, and so I guess I'll have to say, "Yes," that I would lean strongly in favor of breaking Comcast up. I picked Comcast, I went back and forth on this because I feel like it's easy to ask, "Should you break Charter Spectrum up?" Charter Spectrum is a mean company. They treat their employees poorly. They're not a very good company in terms of the technologies that they use. Comcast is the professional company. Comcast has done more for high quality broadband stuff than just about any of the other... probably all the other big companies combined. I think the question is, with Comcast, is one of political power. I think a company the size of Comcast is too big, and so even though I think Travis is right, I think if you broke Comcast into five pieces, I think that several of those pieces would be run in a less professional manner in the short term perhaps.
Christopher Mitchell: I hope that it would result in more competition, there'd have to be requirements when you just have an AT&T temporary situation, but there would be real trade offs, and I think that it would be worth it if only to prevent one or two companies from having the kind of power they have in state capitals and in Washington, DC. So that said, I'm not really holding my breath for that. And for people who are really into this stuff, I think we've been thinking primarily of breaking them up horizontally, not vertically, and that's a whole different question, but whether a company should be able to have the number of subscribers that Comcast has.
Christopher Mitchell: So, that's an interesting question that we can come back to if people are interested in the future. We'll see what happens with the tech giants. We are going to talk about overbuilding and competition almost exclusively this show, and Deb, I wanted you to come in because you've given us a lot of thought while you're at Next Century Cities. Travis and Brian, you're both entities that... Well, does Visionary have an incumbent territory? I think of you, you're so big now that you're almost entirely a competitor.
Brian Worthen: We're just entirely a competitor. There's no incumbent territory to us.
Christopher Mitchell: Okay. So, we're hearing, once again, about overbuilding and the evils of overbuilding, and Brian, Visionary has been embroiled in some accusations that were made that have been litigated a bit and may ... We're working on a story that goes more into it. I don't know that we need to get into that, but if we do, that's fine. But I was wondering, since this is something that really motivates you thinking about these lines, when you hear the word overbuilding, what do you think about that word?
Brian Worthen: Well, when you say this shows about overbuilding and competition, overbuilding is actually discussing competition. So, they're used interchangeably and at a governmental level, overbuilding is code word for, "Did we spend federal dollars twice in the same area?" That's really what overbuilding is trying to encapsulate.
Christopher Mitchell: I mean, let me just push back on that for a quick second for that definition because I think it's a worthy definition. Is it federal dollars, or is it just spending federal dollars even once in an area where there is already some service?
Brian Worthen: There's this notion that people can plant a flag in an area and it's untouchable, right? And as a competitive provider, we fight against that every day because you've got an incumbent [inaudible 00:09:04], you got an incumbent cable company, and in some locations, I can think of three or four towns, right off the top of my head, within an hour of my home, there's only one provider. There's not even a cable provider. So, the notion that overbuilding is establishing another program or funding source to supplant a monopoly, that's actually a positive thing. It boggles my mind to think about this. You're talking about should large companies be broken up? You got the FTC on one hand and you got the FCC handing out broadband funds on the other, and they're doing this whole West Side Story thing where each is on the other side of the street, and we're doing this yin and yang thing, right?
Brian Worthen: Should we get bigger? Well, there's more efficiencies. And larger companies can take advantage of funds much better than smaller companies, and so there's this dichotomy of, "We need to protect the monopoly," and that's been around forever, and that's what the entire telecom lobby is all about is, "Well, we don't want to spend this money where money's already been spent, or where people have made an investment." I make investment every day. Travis makes investments every day. It's a good thing.
Christopher Mitchell: Deb, what do you think of when you hear that the term overbuilding from all of your time working on this?
Deb Socia: I would say that it is more of a term used by lobbyists than it is necessarily anybody in the field. We know what it means, it means we are going to have more than one provider. That means it's competition. I mean, Jonathan Sallet says, "What some people call overbuilding, should really be called by its more familiar term, competition," and I think Jonathan Chambers also talks about it a lot in the rural community because what he says, "Overbuilding is not a problem in rural America, it's actually the solution," right? So to me, anytime we can think of a way to bring competition into a market, we're going to improve service, we're going to reduce costs to the consumer and for me, that's a win.
Christopher Mitchell: Yes. Jon Sallet writing... I actually wrote this down because I want to make sure we credited him. He did wonderful work in his paper, Broadband for America's Future: A Vision for the 2020s, put out by the Benton Institute for Broadband & Society, and he's done a lot of very good thinking about this sort of stuff. So Travis, overbuilding. What do you think of?
Travis Carter: Historically, I really haven't thought about it. Are we overbuilding somebody else, because to me, that means you're just putting in something that's similar to what's already there. I guess maybe we like to call it over-improving, to be bringing in the latest and greatest technology where the citizens and constituents can benefit from, and hopefully we can build a solid financial and business model around it. So overbuilding, I guess somebody coined the term, I guess. I'm all for it.
Christopher Mitchell: I think the term actually came from, and I hope there may be people out there who know much better than me, but I think the term came from a monopoly environment in economics, which was the telephone system was a monopoly and there was not expected to be competition because it was felt that competition would be harmful to the overall system. The cable system, many cities had exclusive franchises, and then as those went away, a new entrant would be considered overbuilding, and many of those didn't work very well because of the economics that have continued to limit competition when you have incumbents that have so much power. I know that we don't have everyone's point of view on this. I mean, we have two providers that are both aggressive in here and build great networks and aren't worried about defending some networks that's putting out 20 megabits per second by gaming` the statutes or the programs, but should we have government.... I mean, Brian made this point, so let me put it to Deb. Should we have government emphatically trying to break monopolies by putting money into areas to encourage competition?
Deb Socia: I'm going to say yes, and I'm going to have a caveat to that, right? Government should be allowed to do whatever they need to do to ensure every resident in their community has fast, affordable and reliable broadband. If that means that they're going to build it themselves, they should build it themselves. If it means they're going to engage in a public private partnership and open access network, whatever they have to do, they ought to be empowered to do. I live in Chattanooga. There are incumbent providers here and there is EPB, our utility, and I pay less than $70 for gigabit symmetrical in my home. I would never be paying that much for a gigabit symmetrical in a community where there weren't overbuilt environments because there wouldn't be any competition for that, and if we think about the places where municipal broadband has been brought into place, we see the same thing happens everywhere, right? Prices go down, the service is better and the speeds are higher. So, I think government should get involved when and where they need to.
Christopher Mitchell: Yeah, I should have been more clear, and I think that answer's right. I think there's a different bar for local government investing in itself than for the federal government to put taxpayer dollars into this and designing a program in that way. So Travis, if I could put words in your mouth, Travis, I feel like you would say, "Look, where I'm operating, there's no problem." You're the second or third competitor in almost every case, Travis, but you're making an investment in rural Wisconsin right now. And now, let's say you're putting up a 50 megabit wireless system, and you committed to that investment, and then you found out the federal government was going to work with an electric co-op to put in a gigabit, would you freak out? How would you feel about that?
Travis Carter: Well yeah, because this goes back to that reoccurring theme we have of what is broadband, and I'm a strict... I mean, I think the definition of 25/3 is ridiculous, but that's-
Christopher Mitchell: That's why I picked 50. I didn't want to make it too easy.
Travis Carter: Yeah, it's an interesting question is... So, if you put a gigabit symmetrical product in any market, and actually this is becoming very eye-opening for me in Wisconsin, our uptake is actually double in the rural Wisconsin area than it is in the metro area of Minneapolis and Saint Paul. So, the economics work amazing in this rural community we're going into, but I personally would never go in with a 50 megabit wireless product. I would only put in gigabit fiber and you have to make the math work because I'm a real proponent of let's build one time. I don't know how many trillions of dollars the federal government's rolling out to all these wireless providers, but we're going to be having the same conversation three, four years from now.
Christopher Mitchell: Now, I see Brian nodding his head, but the rural business can't be that good. I mean, look at the computer you have behind you that you have to work with. That thing's ancient. You've got paper on your bookshelves. I mean, you're working with paper. You're struggling in those rural areas.
Brian Worthen: Yeah, it's interesting. That's an interesting question you just posed to Travis because when we grew up, and we started with five Hayes modems in a dial-up environment. We've been in business 26 years. We grew on our own cash, and so we automatically look to wireless as a way to bridge that gap until we're ready to put in more capital. The answer to the question is: I would be frustrated if somebody received funding to build one gig over the top of me, but I can tell you this too: In the last couple years, we've totally shifted our focus and we know we need to build fiber. We know we need to go down that capital route, and I'm in likely the same situation as Travis where we're borrowing or we're financing, we're building the investment based on a seven year ROI or a five year ROI or 10 year.
Brian Worthen: Yeah, we started building fiber in Kremmling, Colorado, La Grange, Wyoming, Yoder, Wyoming. Look those up, they are not big, and rural is very hard to answer the question because I'm in Wyoming, there are six people per square mile and I am shocked that we're still in business, but I think it's just because we're innovating and that's something that Deb covered very well is competition produces better speeds, better service, lower prices, but also you have innovation paired up with that, and that's the benefit of competition is it's forced us in a rural environment to innovate, and to think ahead and to bridge that gap.
Travis Carter: Now the question, Chris, if I could intervene is: Would I be a fan of the federal government putting money into a provider to overbuild Brian's already established fiber network? Absolutely not. That to me, would be... Because Brian and I are out here taking all the risks in the world and leveraging our debt out as far as we can to build this and somebody gets free tax dollars to come in and overbuild us? No, that would be a problem.
Christopher Mitchell: Now, I think it's worth noting we don't know of any programs that are dealing with that scenario, but if you are a provider that's rolling out, for instance, 50 megabit wireless, depending on what happens with the infrastructure bill, there may be options in which providers would get money to build a higher quality product over people that are delivering 50, even 75, 80 megabits. The way the program is written, is what they call mid-tier service, and so I think that we need to do that.
Christopher Mitchell: And this comes down to one of the questions that I have, which is even through this discussion, we framed it in this way for a specific reason, I think, and that's that this discussion is always about what's fair for the provider. It's almost never about what is best for the community, what's best for local businesses, what's best for residents. It's more about, as Brian put it, you plant that flag as an ISP in an area and maybe you took risk, maybe you took less of a risk because you had a government monopoly 50 years ago when you built it, but nonetheless, there's a sense that the overriding concern is that the person or entity that planted that flag. Deb, is that what you remember from policy conversations?
Deb Socia: Yeah, it does seem that way, and I think the frustration is that somebody may have invested money 25 years ago and not want anybody to come in and overbuild, except the product is so crappy, right? And so we want a better product, and so the only way you're going to get that is to overbuild or to replace that copper with fiber, but yes, I think that's exactly right, Chris.
Christopher Mitchell: Brian, I mean to me, you're someone who sees the world... I mean, one of the things I've loved about our conversations, it's very clear that you see the world both as someone who runs a business, but also, that's not the only way you see the world. You also see and look through the eyes of the people that need the service.
Brian Worthen: Well, I still go to Walmart and see my neighbors that have service through myself or the local cable provider, and I still have that pulse, but in a state with less than 600,000 people in the whole state, it's a big town is what it is, which is... I think one of our senators coined the phrase, "It's the big town with long roads," and everybody knows everybody and you have to be in tune, and the the interesting part about this plant the flag discussion, and in what Deb just said is ultimately, it's the provider who started there and is the incumbent, and I think this helps to answer your question earlier, Chris, have they been a good steward for that community and are they helping that community progress, ar are they just keeping their community stagnant from a broadband standpoint?
Brian Worthen: Because I can tell you this right now, in rural America, we're seeing home prices go up because people realize they can get medical care at these rural hospitals much better than in the city. This environment we're in right now and have been for the last year is such that people can work from home and some companies are already seeing that, and now we're seeing an influx into some of our markets, and the providers that have not done a good job in their community and have not kept pace with speeds and product have started to mix fiber into their portfolio are going to hinder that community from attracting a new business, a new resident.
Christopher Mitchell: Yeah, we saw that with... My colleague, Sean, wrote a story about Western Mass, and one of the communities was remarkable in terms of the turnaround of real estate once they had fiber, and they went from having really poor DSL if you were lucky, to having fiber in places that took, I think, they said months and years to sell. Places that were just sitting on the market started getting snapped up because of that kind of connectivity.
Deb Socia: And conversely, if you don't have that connectivity, you can't sell. And especially now with AT&T walking away from its DSL, if you sell your house, the next person can't even get DSL. So, it is really a problem in those rural communities that don't have connectivity.
Christopher Mitchell: One of the things that we're seeing is that government programs are designed to deal with this concern about overbuilding, so State of Minnesota, most States, probably all the States that give out broadband money have some kind of challenge process, which is the idea that someone comes in and says, "All right, I want to grab this grant or this loan, and I want to build it in this area, and it looks like there's not a lot of service here," and then the incumbent is able to challenge that and say, "Oh, no. I do provide service there." And Brian, I don't know if you're familiar with the Ridgway example out of Colorado.
Christopher Mitchell: I mean, it's one of several that we've seen where a major provider has gamed the system and basically a town that had poor service, the incumbent basically laid claim to it, planted that flag and rather than getting a gigabit at an affordable price, the CenturyLink says, "Oh, we're going to do this really awesome DSL that's going to be the super deluxe 2020 version of DSL," and so you have much fewer commitments, and yet they get that territory. And this is something that just infuriates me because I also think that it then, for someone like you, Brian, you're doing these grants to... You're investing time to come up with a plan to go to a community that needs a service, and then someone who's already there, and has refused to invest year upon year, gets to basically say, "Nope, all that work you did was for nothing."
Brian Worthen: Yeah, that's interesting to think about too because when CAF came out, and there was that challenge window, we had a big discussion here internally about do we challenge some of the areas where we actually provide service, because as you know, 477 data is not published by the FCC for up to a year, right? So, it's actually not representative of what people have been investing in for the last year or 13 months or 14 months, and we had a big discussion here internally, we said, "If we challenge for CAF II in some of these areas, we will be viewed as a bad guy trying to hold the communities back." And what was interesting is there was a wireless provider in the Rockies that wound up challenging the CAF II area that was approved, and they got fried in the marketplace, "What are you doing trying to hold these communities back?"
Brian Worthen: So, there's that aspect of you do what's right for the community and for people and to have choice because I can tell you this: The challenge process is all about defense, right? When we looked at the RDOF challenge, the CAF challenge, even after the results, we didn't sit there and challenge it or talk about somebody overbuilding us, and I can tell you that people receiving money in areas where we've invested my money and my brother's money personally, right? That's the frustrating part. However, we're not frustrated about it. We didn't spend time looking at this defense plan. We're on offense, right? We're out there trying to do the right thing and stay ahead of it.
Brian Worthen: And so the example you describe in Ridgway is the example of CenturyLink taking a copper plant and try to milk another few years out of it, and I don't blame them. If you had a Toyota Tacoma with 200,000 miles on it, you said, "If I put this $3,000 in it and get another 100,000 miles out of it? I will." So from a business standpoint, I get it. Is it going to hold the community back? Yes. It comes back to what Travis said earlier is 25 meg's not good enough. Everybody in broadband should be saying that every day. We're writing legislation right now still around 25 by 3.
Christopher Mitchell: Although, I think it's almost gone. I mean, I do think we're going to see a new standard, and I'm very curious. I was just telling my team today that one year from today... And Travis, I'll bet you a plate of wings, which if I lose, would be the first time I've ever bought you anything, but I'll bet you a plate of wings that in one year, the definition of broadband is much better.
Travis Carter: Oh, hold on. You left that kind of open. What do you mean much better?
Christopher Mitchell: Oh, I think it'll be minimum... Okay. I think Comcast is betting it's going to be 55. I mean, they upped their Internet Essentials.
Travis Carter: 55? That's not much better.
Christopher Mitchell: 50 by 5. It's not much better. Canada actually adopted 50/10 just, I believe, two or three years ago as their target.
Travis Carter: I don't think this is-
Brian Worthen: I'll add to the wing bet, but I would only respect 100 meg by 10 meg.
Christopher Mitchell: Okay, so it'll be really interesting to collect, but I'm going to look forward to that. So let me just lay this out and we'll get the stakes, and Deb, you can get in on it too. So, Jessica Rosenworcel, among others on the FCC have called publicly for 100 megabits symmetrical. Today, several senators, including Senator Bennet from Colorado, who I think has been a real leader on this, have called for 100 megabits symmetrical. I think it may depend on the chair because I don't think this is going to get resolved until there's a new FCC chair, and it might depend on that. I don't know that I want to stick my winning bet on 100/100. So, I feel like I want to go low and say 50/10, but you all can call me chicken.
Travis Carter: Hold on. Let me understand the bet. I'm going to buy the wings-
Christopher Mitchell: If it's 25/3. So, if it's 25/3, you're buying the wings. No, no, no.
Travis Carter: I buy them all the time, so there's a chance if it goes to 50/10, I don't buy it.
Brian Worthen: For the next 12 months, right? You're saying that it's going to stay 25/3 for the next 12 months?
Christopher Mitchell: So, if it stays 25/3, then I have to buy wings for Travis and I should do something else that's nicer too.
Travis Carter: Yeah. No, I don't think because I think the cellular providers have too much power, and that's who's controlling to keep this down.
Christopher Mitchell: So, let's hear what Deb has to say.
Travis Carter: Yep.
Deb Socia: So, I'm going to stick my neck out and go with 100 symmetrical. I just really think we are in a position at this point where that's going to end up being necessary. I think what has pushed the upload speeds really has been the pandemic and how that has impacted people's capacity to work and learn from home. The upload speeds have been really a problem.
Christopher Mitchell: I think 100 symmetrical solves this overbuilding issue, because at that point, you really can only put money into fiber to beat that. I mean, we'll see what the FCC says about this gigabit wireless stuff. And Brian, you deal with wireless stuff a lot. I don't know that I believe that you can deliver 100/100 wireless regularly to everyone in a given area with a wireless product today, and so at that point then it seems to me we may have just gotten to the point of fiber.
Travis Carter: No, you forgot about 6 gigahertz, Chris. Remember.
Christopher Mitchell: 6G, not 6 gigahertz.
Travis Carter: The 6 gigahertz band has opened up now.
Brian Worthen: Travis is right.
Travis Carter: A lot more wireless spectrum for rural area.
Christopher Mitchell: How far is six-
Brian Worthen: Here's the best way to answer this, and we're joking about it, but here's the truth of it, and as a wireless provider, we understand this. We've been doing our own small cells for a long time. If you're going to offer that kind of speed, you're talking about a tower every eighth of a mile. Are these communities going to tolerate that? Are people going to tolerate that? Is the competitive environment between satellite which you still use as frequency... As cellular and a broadband provider, I'm going to contend... And a lot of my revenue's derived from wireless. I'm going to contend, you're exactly right. The way to ensure competition in the future and our funding should be built around fiber.
Christopher Mitchell: Travis, let's just wrap this up. The 6 gigahertz, would you agree with Brian that you have to build so many towers at that point. I don't understand how that works. You still have to send people out with trucks every time the wind blows too hard.
Travis Carter: Yeah, but if you can have 160 megahertz or 320 megahertz channel... Again, it's a stop gap. I like Brian's approach, and he's probably using a similar approach that I use is we started with wireless, we leveraged that income and EBITDA to put debt on the business to then reinvest in fiber. Wireless was a tip of the spear, I just think with six gigahertz becoming available, it sharpens that tip, but if we don't redefine the definition of broadband, if 25/3 is satisfactory, then I get free wings in a year. I mean, it's just literally... Honestly, we've had the same conversation for how many years now? We're just going to have it next year.
Christopher Mitchell: I'm so strong about this. No, no. I'm going to go out and say that I will buy all of the wings next year after March until December.
Travis Carter: Whoa! Pump the breaks, big shooter. Now are you sure? Yeah, I think there'll be so much lobbying from the cellular companies, and we're going to have a whole year of distraction from Starlink now as being the new 6G.
Christopher Mitchell: That's a question that just came up, and I do want to come back to overbuilding. There's a lot to talk about, and I think this is even related. Tell us what you think about Starlink, Brian and Deb. I want to know if you're thinking on it has changed as much as mine over the past several months. Brian, does Starlink keep you up at night?
Brian Worthen: It makes me think about being better, which is good, right? I have to keep sharp and somebody has to keep me sharp. And they're recipient of RDOF funds. The potential there is exactly what Travis described as a stopgap. Wireless technology as a whole is a solution in rural America and in some quasi-rural areas for a period of time until something else can be figured out. We're doing the same thing with Starlink. It's a stopgap until something better comes out. Is there going to be a gigabit? Is it going to be two gigabit, 10 gigabit in the future? It's all limited by frequency and by how many satellites are in the sky? I think what's happened is we have chosen, and I say, "We," as members of our society here, have chosen to let the FCC hand out money to Starlink that's not going to wind up as invested fiber in the ground in any one of these markets.
Christopher Mitchell: Yeah, I want to toss it to Deb in a second, but there's a point I always have to make with this, which is that I don't mind Starlink getting money. I think the government can invest in these sorts of technologies that could have a major difference. Starlink is going to serve just about everyone, and some parts of the United States are no longer eligible for funding for a terrestrial solution, while others are, despite the fact that there's no differentiation in the service based on whether Starlink got that territorial money. That's just terrible policy. So Deb, what's your feelings about Starlink more generally?
Deb Socia: I wasn't thrilled they got as much money from RDOF as they did. I'm also always skeptical, and so I want to see it working, I want to see it working well. I want to see it working with low latency, high speeds, high uploads, and then I will step back. I wouldn't have minded if the government invested in it in a smaller way to prove the concept, but I just don't feel like we're there yet. So, I would have liked to have seen those aren't RDOF dollars gone into fiber.
Christopher Mitchell: And Travis, what do you think about Uncle Sam putting money into Elon Musk, which is how some of my friends put it, which I think is distracting.
Travis Carter: Well I mean, it's interesting. If you've ever tried to use cellular internet, I think it's a good alternative. It's actually going to be a great alternative to cellular internet, I always just think about my RV travels. So, imagine having a Starlink antenna on the roof, it would be ideal, but if I had the option of having gigabit symmetrical fiber coming into my home, I wouldn't think twice about it. So, it's a better 5G, I guess is what I'll say.
Christopher Mitchell: It's 5.5G?
Travis Carter: But again, it's just wireless at the end of the day. Everyone thinks it's going to be this great miracle, and instead of it being run on one of Brian's towers over maybe on a grain leg, it just happens to be over your head. I mean, it's really nothing different.
Christopher Mitchell: There is a better line of sight directly over my head, which is nice.
Travis Carter: Yeah, until it goes behind trees or I mean, have you ever used a satellite dish? [crosstalk 00:34:47], but it's not going to be... There's going to be challenges with it.
Christopher Mitchell: There are going to be challenges with it. I'll just say that I found it remarkable when I spoke with people from the Ho tribe about the experiences they're having with limited sky coverage, and the limited number of birds already up there. They were having quite good results, it seemed like. Don't buy one and put it on your RV because I think they're currently geo-locked as they're building the fleet, so you cannot drive around with it. Travis, we'll do that together as we sample the wings of the West in a future without COVID.
Christopher Mitchell: One other question: Overbuilding, is this purely about a better technology or are there other reasons? Let me pick on Frontier. If Frontier was providing fiber that barely worked... I think their fiber is not nearly as good as other people's fiber from what I've heard, but nonetheless, in rural areas, if they already had a decent technology, but they're still crap. Or a real example Suddenlink in Eastern North Carolina, a bunch of mayors are writing to the Attorney General because Suddenlink claims to have high speed, but it works three days a week and it's just awful. What are the considerations should go into whether or not the government decides to try to bring a competitor into an area?
Deb Socia: I think customer response is number one, I mean, and you mentioned it. If I as a customer can't get good service, it's not reliable, it's not fast enough, it's not affordable, then I think the government should get engaged.
Travis Carter: Yeah, it's interesting to think about that question because you're saying somebody has to be vocal, and in a competitive environment where competitors are keeping each other sharp in a truly capitalistic fashion, there's no need for people to be vocal because the provider has to step up. So, what we're talking about is this protected monopoly environment still.
Christopher Mitchell: One of my hobby horses right now is price issues with this whole overbuilding concept because in Washington right now, we have public utility districts, some of whom have invested significantly in rural fiber optics. Some providers use those to extend. So, a provider might pick up a fiber optic line from the Public Utility District and extend that, although some think it's more likely they have extended wirelessly to offer a service, and the public utility districts, not all of them, some of them are seeking retail authority because currently they have to wholesale their service to a provider that would then have the relationship with customers.
Christopher Mitchell: And in the Senate, we see a real reluctance to allow public utility districts to do this, and they've created another challenge process in which if a public utility district wanted to build gigabit fiber and be a retailer, then the existing providers in that area would get to say, "Oh, no. I have a plan to do 100 megabit by 20 megabit, and so I can block that gigabit fiber." There's no language about pricing, and so I could come in and say, "I'm going to offer $150 wireless connection for 100 megabits, and I get to block potentially a $70 gigabit fiber coming into an area." To me, this is ridiculous.
Brian Worthen: Are we talking about rural markets, because I have connections. I buy from Ponderay PD in Eastern Washington, we own a building in Spokane. We have services from Franklin PD, and others-
Christopher Mitchell: So, you're one of the ones that may challenge them.
Brian Worthen: They're a great people. The underlying issue is... And I thought a lot about this over the last couple of years. In fact, I think two years ago, Chris, I told you that utility is going to win this game, and here's why: They can borrow money on a 20 year note from RUS. I can't borrow money on a 20 year note, Travis can't borrow money a 20 year note, and if he can, I need to talk to Travis, right? He's [crosstalk 00:38:30].
Christopher Mitchell: Let's be clear about this. So, what you're saying is that investors don't trust most private companies to do that long of a term of financing? Is that what that translates to?
Brian Worthen: Right, because the utility companies start as a co-op, and they needed that ROI to be long to justify building electrical connectivity out to the hinterlands, and we're talking about the same utilities now that have the same funding mechanism, and their ROI is different.
Christopher Mitchell: And now you're saying that as a matter of fact, do you view that as a threat to the American way of life?
Brian Worthen: No, it's a great opportunity. I mean, in the end, who has... I told you this two years ago: There's only one entity that already has a line into these homes, and that's utility, right? So, over-lashing or running fiber along those same lines, it makes a lot of sense. However, when you're talking about Washington and others in retail authority, Washington set up the PDs to be open access in the hopes that competition will come in, and so what I think what they found is, and this is what we need to be talking about is it's easy to say competition makes everybody sharper. I say the same thing. But in a town of 700 people, or let's use mass 600, so I can divide it easily by three. That's 200 homes, right?
Brian Worthen: Once you have one provider in there with fiber, nobody else that builds fiber is going to go in there, and so that's the issue you're outlining is whoever plants their fiber flag first, can really set the prices. And who in their right mind is going to go invest in fiber in that market and hope to gain 33% of the market, and leave the rest to cable and the lack and people that are fine with DSL. So, there's a lot to unwrap there because in rural America, where these PDs are in Washington, there's not enough population of where the PDs were able to sign up a lot of providers. We're a provider on some of those networks, and it's just difficult, but this inability to sell retail keeps them from further developing that platform, and so I can see the quandary there.
Christopher Mitchell: Yes, and I think just to spell that out, one of the things that I get the sense of is that some investors are reluctant to give them a 20 year note if they do not know who's going to be providing the services. That seems to have been an issue, at least with Kitsap, which got an exemption that was very narrowly tailored in the past. So Deb, have we touched on most of the overbuilding stuff that you'd want to touch on? Are there any points you want to just raise up?
Deb Socia: No, I would just say that I am a proponent of allowing local communities and utilities to build their own, and so I would just say one of the frustrating things that I've seen is that when people are disallowed to help solve their own broadband issues, we're creating a situation in which the private entities have all the power, and the consumer has none, and I wish we would think a little bit more about making some of these decisions in a consumer-focused way.
Christopher Mitchell: I believe you mean subscriber-focused way. My ears are screaming at me, Deb.
Deb Socia: Okay.
Christopher Mitchell: People participate in the Internet, they do not consume it, as you know is my-
Deb Socia: I'll take your message. And do you capitalize I in Internet? Just asking.
Christopher Mitchell: You know it, and I correct other people. You were the executive director. You could have required that we did that all those years. The worst fight we ever had at Next Century Cities when we were working together was over capitalizing Internet. It was a pretty amicable time.
Deb Socia: And I'm an educator, so I went with what the education scene said.
Christopher Mitchell: She double-crossed me. Travis, I'm curious. Have you seen anything in your work in Wisconsin that changes the way you feel about any of these topics, or has it more reinforced your priors?
Travis Carter: Well, the thing that I keep thinking of myself is, "Why are there not more Brian's out there in these markets?" We always talk about government, government, government, government, but-
Christopher Mitchell: Well, that's because you're with me.
Travis Carter: Yeah, I know. Totally right. I never think about the government unless I'm getting a speeding ticket, paying my taxes, or talking to you, but the fact of the matter is is what hinders individuals like Brian and I from developing these networks in these communities, because as we went into those Wisconsin area, I mean, we got 80% uptake day one. Substantially better than we get in the metro area here at day one. The appetite was so strong for this competitive service, but it made me think, "Why did we have to go there? Why wasn't there any sort of local?" And Brian touched on it. It's access to capital and is anybody willing to risk everything they have, their house, their future, their college, their kids' college-
Christopher Mitchell: Their brother's money.
Travis Carter: Yeah, brother's money. Seriously, because that's what Brian and I have to do, and then you build up a network and now the government comes in and gives free money away to people to overbuild you? Yeah, it kind of rubbed the guy wrong if that was the case, but there's so much handouts, I don't know why we're not promoting more individuals getting into this industry and building up their own networks, not relying on the city to do it.
Christopher Mitchell: You've answered it, and here's proof that I listened to you while I'm licking my fingers, cleaning up whatever sauce, and that's that there's a lot of people who get into this thinking it's about getting two wires to talk to each other or getting the tech to work, and there's just not nearly as many people who have the business sense and know how to talk to the banks, and that sort of thing. Is that your sense, Brian, of how you'd answer that question?
Brian Worthen: Yeah, and there's another group of people... That's true, because there's no manual for this, right? The big companies have been doing this for years and they just entered the broadband market. We were first to offer DSL in Douglas, Wyoming and Cody, Wyoming. We beat the phone company to offering DSL. We put equipment in their CO. There's no book for that. There's no college class for that. I didn't go to college for that. And so it comes down to who's willing to... We're the equivalent of the hackers in the '60s that were hacking pay phones and whatnot. And you have to push. I learned how to read bills this year, and look at the omnibus bill and compare it to previous versions.
Brian Worthen: Not everybody's willing to do that, but there's also another group out there that I don't think we're talking about, and that is the people that have one or two communities. They've got servers in one or two communities. They don't show up on anybody's radar because they don't know they should have filed 477s. They don't know what really what they don't know, and they're supported at their local community, and they're out there. There's a guy in Wamsutter, Wyoming called Gary. There's a guy in Rock Springs called Lance, right? Wheatland, there's a guy named BJ. I can list them off, right? And I go through Colorado, and there's people that are not on anybody's radar out there just building. What's troublesome about that is... And I've been in county meetings lately where I've turned to the local provider and said, "You should file a 477. I'm telling you take half a day, twice a year and file your 477."
Brian Worthen: And the community hears me saying that and they're like, "Well, Brian's not the big bad wolf after all," and the provider hopefully hears that. And I know we had a meeting in the last part of last year with a provider and he says, "How do you get access to your right of way?" And I said, "You go get your CPCN with the state of Colorado," and we see him filing now for that CPCN. There's a need to bring these people up because they're out there, and nobody knows they're out there, and so in the example of Wheatland, Wyoming. Great example. CAF was handed out there, RDOF was handed out there, CARES was handed out there right on top of this guy because he's not filing his 477. We're not doing anything to identify and then bolster these folks that have those local relationships, that are known by their local utilities people, that the community loves and support, and they're totally downtrodden with these programs.
Christopher Mitchell: Deb, I feel like that description also fits the local governments that are trying to solve this in many ways.
Deb Socia: Yeah, and as I was listening to Brian, I was thinking about the fact that of all the communities I've spoken with, not one of them really wants to get into the broadband business. They would much rather have somebody come in and provide them good service at a good price, but when it doesn't work, somebody's got to do it and local communities are. I'm guessing there are some. In fact, I know of a few where they aggressively pursued putting in fiber to the home when they had some sort of decent service, but I think that's rare. I think most of our communities are overwhelmed for all the reasons that a small local provider would be overwhelmed.
Deb Socia: There's so much to know, there's a lot of legal wrangling, a lot of legal language, a lot of technical language that a local small mom and pop organization or a local small municipality, they'd prefer not to deal with, but I think you're right. If we could find a way to bring people up and teach them what they need to know, we probably find a lot more of that happening, and always, it comes down to funding too. How do we make the pathway for funding easier and more tenable for those small local organizations?
Christopher Mitchell: I want to ask both of you what your right of way experiences have been. If you listen to a lot of Republicans, a lot of the industry-funded think tanks, even some of the ones that I think position themselves as being more moderate, they would say that the key to better broadband mostly has to do with making it easier to deal with the permitting process, and so Travis, you and I have talked about the fun you had over the years with Minneapolis. What were your experiences in Wisconsin?
Travis Carter: I appreciate the smaller community. It's substantially easier to work with. Now, I'll say Minneapolis is really easy to work with now. They put a new permitting system in and we usually get permits in 24 or 48 hours. It's just you've got to build that relationship with that community, and the reality is once you start getting momentum in the area, the Public Works people are not going to stand in your way. It's doing all the homework on the front-end, which can be very frustrating when you have no revenue coming in, you're paying debt service, and you're trying to scramble around, no fiber providers will talk to you all because there's a shortage of everything and you're scrambling trying to make something happen. I would say the permitting is probably the least of the concerns nowadays. It's relatively easy to navigate through that.
Christopher Mitchell: Brian, you operate in a bunch of States. What's your reaction to a focus on permitting as... And also, I'll just say, I really sympathize anytime you have to cross federal lands. I have a whole rant about that, but let's focus on local permitting to start.
Brian Worthen: I think that Travis hit on it. The smaller the town, the easier it is to build a relationship with the utilities department and the engineering department. Right of way is difficult, and what we're finding is it's easy to go into town... Again in my state, the biggest community's 60,000 people. So, when we go into a town of 1200 or 2200 people the issue is the town does not have a full-time attorney, and so I've actually been suggesting at a state level that state funds be used to find a telecom attorney to assist these communities because what we're finding is the same thing as Travis. We're investing a lot of time, getting behind the wheel of a Subaru, driving in the middle of the winter to these meetings and showing them that we're real people and trying to build that trust, and it's hard because inherently, communications companies are distrusted, right?
Brian Worthen: So, we have to bridge that gap first and then we have to go through the education process of what right of way looks like, can we get a franchise agreement, can we be treated as a telecom company? We have to go through that in every community we go to and so there's a lot of legwork involved, and I think there's a way to bridge that gap where some fundings available for communities to actually have access to some sort of telecom support. Just companies farm out HR, this would be this farming out of telecom support because every community, they understand cell towers, they understand water, sewer and whatnot, but when it comes to fiber right away, they're like, "We already have somebody here." It's a lot of time to invest. It's crazy.
Christopher Mitchell: Does anyone have any last questions? I want to ask, in a second, a question about what one thing you might change at the state or federal level to get more competition.
Brian Worthen: I've thought a lot about this. Are you ready?
Christopher Mitchell: Yeah. Yeah, go right ahead. Give other people a chance to think.
Brian Worthen: We've been talking about federal programs, and I think that the federal programs are just a stopgap and they're not really creating true investment at a local level, and you look at the winners of RDOT, and they're big companies or nationwide companies or people that want to be big, and they're covering multi-States, and [inaudible 00:51:58] create the relationship with the communities that Travis and I just talked about. I'd like to create a Lindbergh's solo flight across the Atlantic contest, or Oklahoma Sooner contest, where maybe there's two providers funded in a market and whoever gets to 200 subscribers first with gigabit gets additional funding. Let's look at this a little differently and a little more creatively because we have private spaceflight now because of a competition, correct? So, the canned food is now available because Napoleon created that for his troops as a competition. We're not running this like a contest. We're running it like a handout.
Christopher Mitchell: Let me just push back for a second because I think my friends at a place like NTCA would say, "You can't be serious because if you do that contest, and then I beat you to 200 homes, and then you get money to finish your build out, then I've just wasted that effort in that area and I've put in that system for nothing."
Brian Worthen: NTCA is representative of local acts, and they've already got the relationship with the community. They've got the home court advantage.
Christopher Mitchell: Well, I think in many cases, they're also the ones that are going out to the nearby communities, and so this would be, in theory, a new place that they were expanding to, I would think, but I think the argument is more that if you start that way, aren't you kind of screwing the company that loses? Why would you want to take that because if you lose, and you don't get more money then haven't you lost some of that investment that you put in to get to those homes?
Brian Worthen: It's totally flawed, and it's just repeating it differently, but I can tell you this too: In preparation for this, I spent 25 minutes and I found five census blocks that we've been reporting on 477 for, for four or five years now, and still we had a competitor receive money on top of those blocks. Five different communities, took me 25 minutes to find. So, I'm trying to be more objective than defensive, right?
Christopher Mitchell: No, and you do a great job of it. I said recently, and I feel in love with this so I'm just going to repeat it all the time because I love myself, that the FCC, if it evaluated devices as well as it tracks where broadband is, none of our consumer devices would work. Not a single one. For some reason, the FCC can be really good at some things, and just awful at other things. Deb, what would you change?
Deb Socia: I would love to have, obviously, much better data at the address level, what's available, and also just really thinking about if we're going to invest in a community, let's invest for the long-term, right? I would much prefer to see us building incrementally out into the more rural areas with fiber than continually trying to upgrade old DSL.
Travis Carter: So, what I would do is I would offer the equivalent of the 1040EZ form. The federal government, they can file your tax. I'd have a form that any provider who's going to deploy fiber in an area could initially get a $250,000 grant to run a small pilot project in their community because I would guarantee you over 75% of those pilot projects would turn into viable fiber business that they could then turn and leverage with a senior debt lender to continue the momentum, and after 10 years from now, you'd have all these communities would be fully fiber-covered, and all it cost the government was $250,000 grant to get in.
Travis Carter: And worst case, if they screw up, you got 250,000 worth of fiber in that the next person can come in and leverage. It's getting these entrepreneurs out of the gate. Once you get them out of the gate, the business runs. The revenue runs. Every 30 days, you get more money. You just got to get them started, and that's the hardest step because every pilot project we've run has turned into a network. But you can't bog them down with this much paperwork quagmire. You asked me about this new thing that came out from the $50-
Christopher Mitchell: Emergency Broadband Benefit.
Travis Carter: I got four people trying to figure out and decode how that's going to work.
Christopher Mitchell: Just contract with a nonprofit called the Institute for Local Self-Reliance. We'll make it really easy on you.
Travis Carter: These guys overcomplicate everything. It's just make it easy for your average small entrepreneur to run a pilot project, but only for fiber.
Christopher Mitchell: So, let me say this: I think one of the things about that paperwork, the FCC should, and I think this is incomprehensible given the way... Government at some point will figure out how to procure software, but every ISP should be able to log into an account for their 477 and update it as they wish rather than refiling a document that has 40 freaking pages of information. We can make it easy to track this information in a nice dashboard rather than the ridiculous way it is currently. This has been really fun. Brian, I think you probably have made a mistake and then I'm going to be pestering you to come back. Just like I'll be pestering Deb to return.
Ry Marcattilio-McCracken: That was Christopher talking with Travis Carter, Deb Socia and Brian Worthen. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at firstname.lastname@example.org with your ideas for the show. Follow Chris on Twitter, his handle's @communitynets. Follow muninetworks.org stories on Twitter, the handle's @muninetworks. Subscribe to this and other podcasts from ILSR, including Building Local Power, Local Energy Rules, and the Composting for Community Podcast. 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 newsletter at ILSR.org. While you're there, please take a moment to donate. Your support in any amount keeps us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons. This was Episode 451 of the Community Broadband Bits Podcast. Thanks for listening.