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Spanish Fork Network Brings a Generation of Savings and Community to Utah - Community Broadband Bits Podcast 416
This week on the Community Broadband Bits Podcast Christopher talks with John Bowcut, Director of Information Systems and Network Director for Spanish Fork Community Network in Spanish Fork, Utah. As John approaches the end of his career he reflects on the network's founding, its success over the last two decades, and the missed opportunities which stemmed from a 2001 law limiting municipal networks.
That Spanish Fork has achieved an impressive level of success is revealed by the numbers. In 2013, the utility had already paid off the majority of its debt and enjoyed a take-rate of 60% of the community of 35,000. In 2015, it began a fiber buildout to replace the hybrid fiber-coax neighborhood by neighborhood. By refusing to take on any new debt and focusing on neighborhoods with the most interest, the network was able to spend about a million dollars a year over the last five years, and is close to completion. Today SFCN enjoys a take-rate of 78% on its Internet service in the city of 40,000, with some neighborhoods subscribing at a rate of almost 100%. It continues to save Spanish Fork over $3 million a year, adding to the tens of millions it has already saved the community.
To what does John attribute their success? Community. Finding qualified, passionate people to build a network dedicated to the needs of people and businesses in the surrounding area. He highlights the utility's customer service and responsiveness to its users needs. Christopher and John consider the success of SFCN in the context of the the long-term consequences of HB 149, which in 2001 installed signficant new hurdles by preventing new municipal from providing services directly to residents and businesses like SFCN does. Finally, Christopher and John talk the importance of marketing, and using it as a way of forging community connections and creating messaging that fosters dialogue.
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John Bowcut: We have built our success on that sense of community. Everything we do, every time we open our mouth, we hope we talk about that sense of community and what our network contributes to that sense of community.
Jess Del Fiacco: Welcome to episode 416 of the Community Broadband Bits Podcast. This is Jess Del Fiacco, communications manager here at the Institute for Local Self-Reliance.
Jess Del Fiacco: Today, Christopher talks with John Bowcut, director of information systems and network director for Spanish Fork, Utah. Spanish Fork's network is one of the best municipal broadband success stories. It's now 20 years old and more than 80% of community members take at least one service from it. The network is also debt free, and it's been almost completely upgraded from cable to gigabit fiber.
Jess Del Fiacco: Christopher and John discuss how a Utah law stopped a lot of communities from building fiber networks, and they note what a missed opportunity that has been. They also talk about how to market community broadband networks by making them a true community enterprise. Now here's Christopher talking with John Bowcut.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits Podcast. I'm Christopher Mitchell at the Institute for Local Self-Reliance in Minneapolis, Minnesota. Only I'm still coming from my new office and my home in Saint Paul, Minnesota.
Christopher Mitchell: Today, I'm talking to someone we haven't checked in on too long, but a multiple previous guest, John Bowcut the director of information systems and the Spanish Fork community network director out of Spanish Fork, Utah.
Christopher Mitchell: Welcome back to the show, John.
John Bowcut: Thanks so much, Chris. It has been too long.
Christopher Mitchell: Yes. I could not believe it's been five years since we talked. You were just getting started with an update to your network. But what's the 30 or 45 second history of what you've done in Spanish Fork over 20 years?
John Bowcut: Well, we started back in 2000. Really, it was born because there was no high speed Internet in Spanish Fork, Utah. So we built a hybrid fiber-coax system throughout the town. And then five years ago, we started converting that over to a Fiber-to-the-Home system, and we're just about done. We have just a few more nodes to complete and then it'll be finished.
Christopher Mitchell: When we talked last, you had a take rate of 80% of the community, and you estimated it was saving the community cumulatively about $3 million every year in aggregate savings. What's the situation today?
John Bowcut: The situation is better. We are over 80% penetration for one of our services. Our Internet service runs about 78% penetration for Internet. So 78% of the homes in Spanish Fork take our service. Especially in greenfields, because we're there for... So a new subdivision, something like that, we're having right about 100% take rate.
Christopher Mitchell: Wow. Is there any change in the cumulative savings? I'm assuming prices have gone up in neighboring communities that don't really have a local option.
John Bowcut: It is. It's still well over $3 million a year that we save our residents. Most of that savings is on the Internet side, and we don't see a huge increase. I think we help keep those prices very competitive in our markets. So we don't see a huge increase. Cable television, there just isn't a lot of money in that either way.
Christopher Mitchell: How many people are in Spanish Fork nowadays?
John Bowcut: We have about 45,000.
Christopher Mitchell: All of Utah has been growing, but do you feel like the network has helped Spanish Fork to grow a little bit faster?
John Bowcut: It's a tremendous asset for Spanish Fork. This happens to me on a regular basis, people who move out of Spanish Fork and then they come back for whatever reason. I was meeting with a builder, another program that we have for our local builders. He said, "I moved out and I can't believe how much different it is and how much I miss SFCN." That's the kind of thing where you build a reputation, and that reputation just helps you across the board with your community.
Christopher Mitchell: Well, let's talk about that reputation with regard to enterprises, businesses in the city. We certainly run across networks where they have a tremendously high residential take rate, but they're not as well connected in the business area. Although, the businesses they connect are often remarkably appreciative. How are you doing with businesses?
John Bowcut: The last point is very true. They are remarkably appreciative. But we have a new business district that has grown up since we built our network. We have just been very, very successful in those areas with our fiber to the business network. In those areas, we're getting about 90% take rate and just highly successful. The customers are very happy with the performance and how the system is operating for them.
Christopher Mitchell: Let me just ask, I mean, is this something that... Is there something magical about what you've done to have... We're going to talk more about the marketing, and so I'm just... Is this something special about Spanish Fork? What do you attribute your success to?
John Bowcut: Chris, the main thing for us really has been a sense of community. We're operated by the city. The people who are on our network, on our community network, they see us all the time. They see us at the grocery store, they see us at church, they see us on a regular basis. They understand that this network is a part of our community. We really emphasize that.
John Bowcut: When businesses call, they want to be part of the community. They will mention that, the fact that they've talked to other people and they say, "Yes." What you do is you become part of the community network. So it has been highly successful for us to get this sense of community out there for our network.
Christopher Mitchell: We're going to come back to talk about that at the end. Because I think this is crucial for others that want to see this level of success to understand that in some ways, it's not as much about the technology as it is about how you present yourself and how you enmesh yourself in the community.
Christopher Mitchell: But I want to ask you, when we talked to you before also, I think you had just paid off all of the original debt, and then you were embarking on the Fiber-to-the-Home project. If I remember correctly, I think you were trying to avoid taking out new debt. How has that gone?
John Bowcut: We did not take out any new debt and we are going to complete the project with no new debt. So for us, that was our goal is that we want to be able to roll out a Fiber-to-the-Home project. Fiber-to-the-Home with no installation charge, and no increase in prices, and no additional debt. We've done it.
Christopher Mitchell: I think that's remarkable. There's always a trade-off. I think that trade-off in your case was time. I wish more communities would understand that. I think there's communities that use the excuse that, "It's too expensive. We don't want to take on this debt." They don't appreciate that you can make these things work if you're willing to do it over a longer time horizon. But the trade-off then is... Are there people who are frustrated that they're going to be the last nodes to be connected in the next year or so?
John Bowcut: Yes, but that's always the case, Chris. You always fight that battle. We knew that from the very beginning back in 2000 when we started our project, and we certainly knew it when we started our Fiber-to-the-Home change. But that is always the case.
John Bowcut: Yes, it did take us a little bit longer, but we looked at our resources and said, "Hey, this is what we can afford. We can spend about a million dollars a year to make this conversion." We just had to stay within that budget line. Most people understand that.
John Bowcut: Honestly, unless we're going to go out and just hire builders to just build this for us, and that's something we didn't want to do, we really weren't going to be able to move much faster anyway. There's just a finite amount of supervisory employees you have and things that you can do with equipment. That was just about as fast as we could go.
John Bowcut: And we already had a system. So it wasn't like they didn't have Internet service. They had a good cable modem service already to their house. They just had to be patient. Almost everyone was fine with that. We get a little pushback.
John Bowcut: I had one council member, as a point, who still doesn't have the fiber to his house. He's one of the last three nodes that is being built. We were building based on the demand in each node. He understands that, but boy, I'll tell you, I've taken a lot of ribbing over that.
Christopher Mitchell: I'm sure. Although, it must burnish his credibility that he's obviously not very corrupt.
John Bowcut: Certainly, certainly. It's obvious he didn't pull any strings, right?
Christopher Mitchell: Right. Now, as you mentioned, you still have the coax out there. As, again, a reminder to folks, we talked about this in the last podcast we did. But what are you doing with the old coax?
John Bowcut: The old coax is carrying our cable television. We looked seriously at an IPTV type of transition, but there is just so little net profit in cable television that we just couldn't see an ROI to replace all our set-top boxes and change out all the equipment and middleware that would have to be installed. For us, the best answer, and still is the best answer, is to just to continue to use the coax exclusively for the cable television service.
Christopher Mitchell: Are people also taking over the top video services like YouTube TV to sort of competing with your cable product? Or what kind of usage are you seeing from people using video streaming products?
John Bowcut: It's huge. I mean, and we know that. I mean, that's what they're doing. We have cord-cutters and we see this decrease in customers on our TV side all the time. We call it affectionately the ski slope, because if you project out what's going to happen to our customers, it's a nice little slope that you could ski down.
John Bowcut: But we encourage that. We think that that is a good way, a good delivery method for your entertainment to your house. When we ask people why they're disconnecting from our service, almost all of them is because they simply can't afford to pay the rates for cable television any longer.
John Bowcut: That's coming from a company like us that hasn't... We have rate increases, but our rate increases only cover our cost increase. We don't protect our margin, we don't do anything. It is literally to the penny. The amount that our cost goes up is what our rates are going up. We still are just too expensive. That product is just too expensive.
Christopher Mitchell: Are you looking forward to the day when you can just turn it all off? Not all of it, but when you can turn off the linear TV system.
John Bowcut: Yes. It's funny, because the city manager of Spanish Fork who was here for years and years, he's now retired, but he used to ask me, "When are we going to get out of the cable television business?" Because it really is a horrible business, by the way. He said, "When are we going to get out of the cable television business?" I looked him in the eye and I said, "We are, slowly."
John Bowcut: So there'll come a point when we won't have enough customers to even justify the effort. It's a few years away still, but it's not decades away.
Christopher Mitchell: We're recording this now. It's been 20 years since you began building the network. A few years... Well, right around the time that you started building it and then a few years after I think it finally passed, the Utah legislature began kicking around an idea that it felt that what you're doing was too risky. So it was going to put in a new law, which I believe was at the time referred to as HB 149. That was a law that was going to protect the taxpayers.
Christopher Mitchell: So the network that was built before they decided to monkey with the system, you're debt free, you've... This is one of the most remarkable track records of success. And then the network since then, iProvo and UTOPIA, principally, iProvo got out of the business ultimately and UTOPIA is having much more success now after a long string of challenges and problems. But nonetheless, I think it's clear that that law really harmed Utah, frankly. It slowed investment, it seems like. And it made projects more risky. I'm just curious if you can tell me more about what you've seen on the ground from that.
John Bowcut: In my opinion, it's been a tragedy. There was an opportunity at the turn of the century for us to really start building municipal networks in Utah that would have saved all of the community's money. It would have brought higher speeds, more access to the Internet. There was no better way to do that than to have municipalities, especially municipalities that already ran... They run water systems in Utah. They run electric systems. They already have experience running these sophisticated systems, and they could also have run, because we show that they can be done, they can run their own broadband systems, their own fiber systems.
John Bowcut: It has been, to me, personally, just because I'm coming to the end of my career, but it has been disappointing that Utah... In my opinion, they simply capitulated to the powers that be, the incumbent providers. They passed a law that really limited the ability for cities and municipalities to go out... And other types of entities to go out and build these networks and make them successful.
John Bowcut: They love to say, "Well, we didn't stop it entirely." It's true. You can still do it, but it is much more difficult than it was for us, because of the hoops that you have to jump through, the watermarks that you have to reach. It can be very difficult.
John Bowcut: It's a real shame, because the people that have suffered are the residents of Utah. If they hadn't passed that law, we would be in a better place. Sometimes people are shortsighted, and that was... Especially now 20 years later, I can see just how amazingly shortsighted that was.
Christopher Mitchell: One of the things that I find fascinating about Utah is the social cohesion. I feel like municipal broadband has a much greater chance of success. I say that as someone who recognizes that some projects have not worked out. I try to be very realistic about municipal broadband. Most networks have done well. Many of them have also been very difficult.
Christopher Mitchell: What I see in Utah is in part I think because of the power of the church, the fact that people see themselves as closer to their neighbors than they do I think in some other states, I feel like municipal broadband could have really taken root in the ways you're describing. So I think it is worth noting, I mean, Utah is a... It's a very technologically sophisticated state, as far as things go. The state government is almost always ranked quite highly from a technical, IT perspective. Do you think that's a part of it as well of your regret is that... If you just picked a different state, I don't think there would have been as much promise 20 years ago as we see in Utah.
John Bowcut: I think that's very true. I also think that the window is closing. Let me explain that. Utah, because of the Mormons that lived here, they are used to cooperatives. In fact, Utah was based on cooperatives when they first started. So that concept is not foreign to Utah, and the idea of having a bunch of us getting together, building a cooperative, and then bringing in a service or a product that we need to have.
John Bowcut: So the opportunity was there for these communities to go ahead and build these cooperatives. Because that's what I run. I run a cooperative. I don't take tax dollars. On the contrary, I give money back to the municipality. But it was an opportunity that I think may be closing, because as these communities grow and expand and they lose some of that sense of community, it becomes harder for these types of networks to really catch on.
John Bowcut: They're such an amazing asset. It is necessary and it is an amazing way for a community to build on itself and build the infrastructure that is needed.
John Bowcut: These cities, if they would just realize that this is a utility. It's just like water. It's just like electricity. It's just like natural gas. This is a utility that everyone needs in their home. Instead, they've just had to pawn this off on private entities that will grow at their rate and when they want to. They had an opportunity, and maybe they still have an opportunity. I think they do. But it is getting more difficult and the window starts to close. These communities have to act while they can, or it'll be too late.
Christopher Mitchell: We do see the UTOPIA model expanding, but I want to give you a chance to defend the retail model, which you are very partial to. Now, you, as the city, your department directly delivers the services. It's your branding. I would have said, before I spoke with you most recently, that Utah law more or less has foreclosed that retail model. But you still see a path through the thicket of challenges.
John Bowcut: Well, that's one of the things we've been trying to do is to show that there is a path. That you can maneuver through House Bill 149 and you can come out on the other side with a retail model.
John Bowcut: Yes, I have a great deal of respect for the people at UTOPIA. We work very closely with them. They are seeing degrees of success.
John Bowcut: But I think as a community, as a community network, what we do is wholly different and far superior for our community. Would it work everywhere? I don't know. But in Spanish Fork, it works brilliantly. The whole retail model is one of the things that makes this really, really work.
John Bowcut: I saw struggles with other systems that we tried to help, just because they were reliant upon somebody else to handle their customer service, for instance. The ISPs would be involved and would be responsible for the customer service. Well, when I took out millions of dollars of debt to build this system, I couldn't imagine sleeping at night if somebody else was responsible for the customer service of my customers. That just couldn't be that way.
John Bowcut: That was a real problem with some of these other wholesale models. It's something that we got to avoid, and we have built our name on customer service. They know that, "Hey, when we call, these guys are going to come out, they're going to take care of us and this service." Because everybody has problems. You can't avoid that. But you can avoid getting a bad name because you simply don't take care of your customers.
John Bowcut: That's been one of my things that I have seen. One of my concerns about the wholesale model is how good are the ISPs, because that will make or break you. If you don't control that, it can be a really dangerous situation for these networks.
Christopher Mitchell: I want to roll into the discussion about marketing and the community approach to marketing you've taken. But I have one last question that may even lead us in there. That's when I talk to people that are good at doing this sort of a thing, managing a network like this, they often seem fairly nonchalant. I think you need a mix of technical savvy, of business sense, but also to still have that sense of community and how important it is to build that. I think when you have those things, you look around and you say, "Well, this isn't so hard. Anyone can do it." In my experience, it's not true that anyone can do it.
Christopher Mitchell: So as you said, you're looking at the end of your career. You're closer to the end than the beginning in this work. As you're thinking about who takes over for you, let's say, and I don't want to... I don't know if that's all lined up or anything. But just in a hypothetical situation in which you don't have any sense of who's taking over for you, what job skills, what are you looking for in a person to be able to carry this forward?
John Bowcut: I don't know how hypothetical it is. Yes, I hired the person who's going to take over for me 10 years ago. He's worked for me and is an amazing engineer. Just an incredible engineer. He's a better engineer than I am. That's not easy to admit.
John Bowcut: But yeah, it is. I mean, it is a skillset that you have to find. But it's worth the effort, because it is critical to the success of the networks. You need somebody who has an engineering understanding, a networking understanding, and so that they can make sure that this is on the right path, that you have the right technology.
John Bowcut: But also, you need someone who understands the community. I went to high school here, I grew up here. I know this community. So I have an understanding of what this community is. That helps build that sense of community. We have built our success on that sense of community. Everything we do, all the advertising that we do, every time we open our mouth, we hope we talk about that sense of community and what our network contributes to that sense of community.
Christopher Mitchell: When we spoke about this before, you made a claim that I would like to believe and I want you to defend it. That's that most communities have a person like you in them that you could find that would have this set of skills. You don't think it's as rare as I may think it is.
John Bowcut: That is so true. I still say that. I have met with several cities, many cities, over the last six months, and they always ask me the same thing. How do we find somebody? How do we find somebody like you? How do we find somebody who can build and run this network? The answer is he's there. He's in your community.
Christopher Mitchell: Or she.
John Bowcut: There are people there now. Or she. Yes, absolutely. They are there in the community, and you just have to look. You will find that they can step up and they can take over and they can build this system and make it a great success.
John Bowcut: I honestly and sincerely believe that is true. The person who is going to take over my position in 20 days is a person out of our community. He has lived here for longer than the network has existed. He helped me start. In the very beginning, he was in our ad hoc committee of residents and business owners when we very first started thinking about building a system. He was involved back then and he's been involved at different levels ever since then.
John Bowcut: So we have two? No, actually we have more than two that can build these networks. They are in your community. You just have to look. Be careful, but look, because they're there and they can build it successfully.
Christopher Mitchell: As we turn to marketing, I feel like it's true that almost anyone can build a network. Before you can establish a reputation, you could probably get 10 to 20% of people just merely based on the fact that people are so frustrated with their existing options. But to really make your network successful, you need to get well beyond the people who are so furious with the existing providers. So let's talk about this from the ground up. What do you do to market a community network well?
John Bowcut: You have to be able to tap into that sense of community. You have to find it and then you have to stay on target, so you know that everything that you put out there, all the advertising that you use, all of the posts that you do talk about that sense of community, the fact that this is their community network. And you have to be committed to that, because advertising firms will want you to go in different directions and do this or that. But that is really the fundamental difference between you and every other network that exists on the face of the earth is that this is their network. This is your community, and you want to help build both of those things.
John Bowcut: So then you do everything else. I mean, from the very beginning, you involve the community. You don't build this in a dark room by itself and come up with the idea behind it and then spring it on everybody and go, "Look, we built this for you." No, from the very beginning, you involve the community. We had church leaders, and business leaders, and local residents, and everybody that we could come and talk about what we should build and what this would do for us. So that they're vested.
John Bowcut: Then we got very vested with the local school district. We went to the local school district and said, "Hey, we want to help you build fiber to every single school." That's not something they had, and so they were very excited about that. But again, that's building the community.
John Bowcut: Then we go out and we film all of the local sports from the two high schools that we have here in town. We put all of that on the air and we give everyone, again, a window into our community. We highlight businesses.
John Bowcut: A lot of those things... I mean, if you look at just the ROI for doing that type of work, it's terrible. It's terrible, Chris. But what you have to understand is that what you're building is that sense of community, and that window into the sense of community, and the integration of the network into that community.
Christopher Mitchell: Have there been decision points where you remember having to deal with some issue that you were looking at? I mean, for instance, when you were deciding to go into the phone business long after you'd been doing the Internet and cable television, did you, again, sort of go out to talk to people about it? Is there an instance in which you can recall where you had to figure out how to message something and you can share that?
John Bowcut: The phone service, as an example, it was just... We were getting a lot of conversation about why we didn't offer a phone service. That was coming from the community.
John Bowcut: I honestly wasn't really excited about being in the phone business. I knew that the take rates were going to be substantially lower. I mean, you only had to see my kids and the fact that none of them had landlines. They all just rely on their cell phones. So it was pretty obvious even back in 2006, that... This is a service that I wasn't super excited about.
John Bowcut: But we had customers who were saying, "Why don't you help us with this? This can enhance our community network." We looked at that, we talked to a lot of people before we made the decision that, "Yeah, this is something that we could do."
John Bowcut: Honestly, Chris, we limited our capital investment in it, because we do have a partner for that. We are not a CLEC, and so we tried to limit that because we knew it had limited potential also, just because of the changing world.
John Bowcut: So yes, you do face those kinds of decisions. And yes, you do go back. I mean, the Fiber-to-the-Home project, we talked to a lot of community members and residents to talk about what this would be, what we could build, what the needs are. When you're already integrated into the community though, it happens naturally. You don't have to make a huge effort to go out and get this information. We did originally when we started our project. But once we're integrated, we're talking to our customers on a regular basis. So it was fairly simple for us to get feedback and help them understand what we were building. And of course, you have web pages and those kinds of things to put out information of how important this is to our community.
Christopher Mitchell: Do you ever have instances in which you get feedback and you just think, "I'm just not that interested."? I mean, to some extent, I think there's a fear that if you open yourself to feedback, you might get feedback you're not interested in or you don't like. How do you deal with that?
John Bowcut: I don't get feedback that I don't like. It doesn't mean that I agree with every piece of feedback that we get. But yeah, no, I want to hear from every way I can possible. I mean, we still have to do some analysis on that and find out where that might be coming from.
John Bowcut: But I mean, sometimes it can be scary. I mean, you're going to open yourself up a little bit. Usually, the feedback that is negative... And it is rare, but when it does happen, it's very specific about a problem that we have. To us, every problem is an opportunity. So we try to treat it that way.
John Bowcut: Yeah, kind of. I mean, I get that. It can be a little bit spooky, but we have to be able to listen to our customers. We have to be different. We have to be better. We have to be better than our competition. That's what we do.
Christopher Mitchell: Yes, and we haven't mentioned it, but you face competition from national providers. It isn't like you're just sitting there all alone. You have a determined foe that has a lot of resources. So your success rate is all the more impressive.
John Bowcut: Oh my goodness, yeah. Yeah, yeah. Yeah, we compete directly against one of the largest corporations in the United States.
Christopher Mitchell: Well, you're doing it well. I hope more people take a lesson on how you've been doing it. But thank you once again for your time today, John.
John Bowcut: Chris, it was a pleasure. I always enjoy talking with you. It was great.
Jess Del Fiacco: That was Christopher talking with John Bowcut. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits.
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Jess Del Fiacco: Thank you to Arne Huseby for the song, Warm Duck Shuffle, licensed through Creative Commons.
Jess Del Fiacco: This was episode 416 of the Community Broadband Bits Podcast. Thanks for listening.