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Transcript: Community Broadband Bits Episode 160
Thanks to Jeff Hoel for providing the transcript to Episode 160 of Community Broadband[no-glossary] Bit[/no-glossary]s Episode with Brandon Bowersox Johnson and Levi Dinkla on the Urbana-Champaign Big Broadband network, open access, and their partnership with iTV-3. Listen to this episode here.
Brandon Bowersox Johnson: It was just a natural fit. And we've been thrilled to now have iTV-3 take over operations of the existing core network and backbone that we had built, and to be expanding it into more neighborhoods with this gigabit fiber-to-the-home service.
Lisa Gonzalez: Hello. This is the Community Broadband[no-glossary] Bit[/no-glossary]s Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
In Urbana-Champaign, Illinois, the UC2B project received a federal stimulus award to build an urban fiber-to-the-home network. When the deployment was finished, in 2013, the UC2B board began looking for a private partner to manage future operations. They found iTV-3, a subsidiary of Illinois-based Family Video. In this episode, Chris interviews Brandon Bowersox Johnson, Chair of the UC2B board, and Levi Dinkla, Vice President and Chief Operating Officer of iTV-3. They share more information about the partnership between UC2B and iTV-3, and describe how that partnership came about. We apologize for the quality of the audio this week. Chris had some difficulties during recording, and it's not up to our usual standards. We'll be back up to par next week, we promise. Now, here are Chris, Brandon, and Levi.
Chris Mitchell: Welcome to another edition of the Community Broadband[no-glossary] Bit[/no-glossary]s Podcast. I'm Chris Mitchell. Today, I'm speaking with Brandon Bowersox Johnson, the UC2B Board Chair. Welcome to the show.
Brandon Bowersox Johnson: Good afternoon. It's great to be here.
Chris: I'm also speaking with Levi Dinkla, Vice President and Chief Operating Officer of iTV-3. Welcome to the show.
Levi Dinkla: Thank you for having me.
Chris: So, I'm really excited to discuss this public private partnership. We're going to start, in a second, doing a refresher on the UC2B partnership, which is in Urbana-Champaign. It's a fascinating partnership: a publicly-owned network, expanding fiber, with a local private company. Maybe we can get a little bit of history of what UC2B is, Brandon. Why don't you start off by telling us what the acronym "UC2B" means.
Brandon: Yeah. Absolutely. "UC2B" stands for Urbana-Champaign Big Broadband. And we started with the BTOP broadband stimulus when there was federal funding available to help build fiber-optic Internet, and, you know, bring next-generation, world-class connectivity to different parts of America with fiber optics, and help bridge the digital divide. And we won a round of funding there, from the BTOP federal program, to be able to build, in partnership with our two city governments, and our university, the University of Illinois, to be able to build a fiber-optic network -- a metro network -- all around Urbana-Champaign, Illinois, here. We're the home of the University, a few hours south of Chicago. And so, we build seven rings, all over the community, and wired up, in the process, about 200 anchor institutions -- places like schools and fire stations and churches and homeless shelters and social service agencies. And we also, in about 10 percent of the community, we were able to do fiber-to-the-home, in neighborhoods that were considered -- by the federal definition -- considered as "underserved." So, we did all that with a mix of federal, state, and local financing. And started as that government-driven project. And now, in this new phase, have formed a partnership ...
Chris: All right. This is a great opportunity to talk about what iTV-3 is now. Levi, why don't you tell us about the history of your company?
Levi: iTV-3 stands for Internet, television, and voice. And the "3" represents the triple-play of all three services. We -- actually, we're a family-owned company. And we've been doing business in the state of Illinois since the 1940s. We started out as Midstates Appliance, and then became Family Video, which is today the largest video rental chain in North America. And back in the 1990s, we had a dial-up service called Family Online. We grew that to about 30,000-35,000 subscribers, realized that dial-up was not going to be a good, long-term connectivity solution, and that fiber would be. But the cost of the electronics and -- this would have been in like 2004 -- fiber, it wasn't economical to do. So, we sold our dial-up business and waited for an opportunity to get into the fiber-to-the-home business. Which, in 2009, that opportunity presented itself. We acquired a telephone company and a competitive local exchange carrier license in the state of Illinois. And our intention was to build out a fiber-optic network throughout central Illinois. Which is where we also -- we own a lot of property, and thought it would be a good fit. These were a lot of cities that had been overlooked by either the Verizon FiOS or the AT&T U-Verse roll-outs. So, these were markets like Pekin and Morton and Peoria, Illinois, where it was deemed that they were not big enough sized, or -- you know, we're not eligible to get the big upgrades. As a matter of fact, Verizon shortly thereafter sold off that to Frontier. From 2009 up until -- let's see -- even though today, we've been building out our footprint in central Illinois. Just about a year and a half ago, though a banking relationship, actually, we came to be in discussions with UC2B. Very quickly, we realized that our interests and, you know, our core philosophies fit very well with the folks over at UC2B and that community. Champaign and Urbana are two communities that we've been doing business in since the 1980s. So, a lot of things just lined up. And we thought it made sense to partner with UC2B to bring fiber optics to the greater Champaign-Urbana area.
Chris: I'm curious about how you guys started to negotiate. Let me push back briefly. Because there's a common belief that, outside of major metro areas, the business of building fiber-to-the-home networks is challenging, without good profits. And also, nobody goes to video rental stores anymore. And so, it seems like you're swimming up against two different currents, as a company.
Levi: Well, first of all, I'll talk about the video business. You know, the pie is smaller, but nobody's left at the table. Back when I started with this company in 2001, there was a tough competition in video rentals. It was a very big industry. Certainly it's an industry that is not as large as it once was, but there's just no competition left. It's -- specifically no brick-and-mortar video rental competition. And people still enjoy renting movies. We also own the vast majority of our real estate, which is one of the things that -- a competitive advantage that we have. We've always focused on customer service. We, instead of having a lot of rules that would negatively impact customers and customer service, our philosophy was to hire smart people, and give them good information, and let them make decisions. And they should never have to ask -- you know, tell a customer that they have to ask a manager in order to solve a customer's problem. And that is relevant because, in the fiber-to-the-home business, you know, fiber optics -- you know, just the technology, it can't be beat. But somebody could come in and put fiber, and they could compete with us, and could have, technically, the same service. We really saw the opportunity for the business was on the customer service side. Because you had people that were being treated, largely, by monopolies, as if they did not have a choice, for many years. And we thought that if we could bring our view on customer service into the telecom/cable state, that people would really, really appreciate that. And knowing that we're an overbuilder. So everywhere we go, we have to compete for your business. So that keeps us sharp, hopefully. And always keeps us in a position where we know we have to fight for our customers' business every day. And we have to outcompete and outserve our competitors.
I think it comes back to -- customer service is really the thing that, between the two companies, really, we thought could define and provide that opportunity, and give us maybe just a little bit better margin than some of the other players that are trying to do it.
Chris: All right. Well, that gives me a better sense of why UC2B works with you, why you're such an interesting partner. Brandon, why don't you tell us about how you went about find- -- going to find a partner. How did you pick iTV-3? And maybe you can note for people that Gigabit Squared was very popular at the time you were looking for a partner. They were working with Chicago and Seattle. They had a lot of excitement around them. But maybe you can just tell us why you chose to work with a LOCAL company.
Brandon: UC2B was driven by our local government, the cities of Urbana and Champaign, and the University of Illinois, who, you know, were appointing representatives to a board, and really driving the grant project, and getting the fiber in the ground, you know, overseeing the contractors, and the whole BTOP build-out. And as that phase of the build-out came to an end, we did visioning about where do we want to be in the future? What's the next phase of this? And we chose to put out an RFI -- a Request For Information -- and seek private partners who would be interested in expanding this network, offering more fiber-to-the-home service, and meeting some of our community's values. And there were a handful of responses from potential private partners. And when we met Family Video, it was just clear that they, of all the other companies, really best met the criteria that our community had defined.
So, we put out this Request For Information and talked to a number of parties -- Gigabit Squared and a number of others. And we have three main criteria, that ultimately drove us to choosing iTV-3 as the partner that made the most sense for our community.
Number one, we really wanted there to be the chance for every neighborhood to be a part of this build-out. And iTV-3 was willing to meet that goal by letting anybody in the community sign up, and making a commitment that if a certain threshold of people signed up online and said, yes, I want service, that they were willing to start construction and build that neighborhood. And so, really, instead of redlining, and some of the things that we see in the rest of the industry, iTV-3 was saying, look, anyone in this whole community who says they want this, and talks to their neighbors and convinces them, we're willing to bring service to your neighborhood.
Our second criteria was that it really had to be all-fiber and gigabit. And iTV-3 already had been in the fiber-to-the-home business, and really knew how to do that, and made a commitment to do that, and even to do underground fiber construction. So we really knew this network was going to be high-quality, a gigabit network -- we'd be a gigabit community -- and that it would be fast. And that they were really experienced operators at running a network and serving customers, with great customer service.
And, thirdly, our last criteria was that the network remain open access. So we, obviously, had the BTOP rules, that had applied to open access already. And we already had fiber on the network that was, through dark fiber agreements, used by our local governments and other public sector entities, and also by private providers, who were offering service over the network. And so, iTV-3 made a commitment to continuing open access, so that it wouldn't just be like -- you know, like one provider was the only provider in town, but that they would continue to collaborate and participate with making the capacity of this network available, so that others could use it as well.
So, iTV-3, after -- you know, after conversations about how they could meet those three goals of our community, they really stood out, not only for that, but for the fact that they were Illinois-based, family-owned -- you know, we could see that they had community values. And they already had three Family Video stores. They had a history of, you know, being in our community, running a good business, hiring local people, and managing it well. And when we talked with the customers, we -- you know, we knew their customer service was real. So, it was just a natural fit. And we've been thrilled to now have iTV-3 take over operations of the existing core network and backbone that we had built, and to be expanding it into more neighborhoods with this gigabit fiber-to-the-home service.
Chris: Levi, how did you evaluate that UC2B was attractive to work with? You know, what specific things were they doing?
Levi: Well, it came down to the people. We could see a lot of passion. We knew that we had a strong partner, not just somebody looking for, you know, us to come in and do the heavy lifting. And we were almost ready when we met them. We were in the final stages of planning a roll-out in Bloomington, Illinois. And, you know, not just the network assets that were there, but especially the -- you know, the people, and the passion that they had for this project led us to go, OK, let's take a second look at Champaign-Urbana, and see if this is something that's really going to be a good fit. And ultimately it was.
Chris: Brandon mentioned that you're available to anyone in any neighborhood. Walk us through what they would have to do in neighborhoods to qualify.
Levi: To qualify, all they've got to do is sign up for service. You know, we've got a -- it's www.theperfectupgrade.com -- where people can go and sign up. They can also check and see how many their neighbors need to sign up before we'll build. To our knowledge, I don't know anybody else that's doing that out there. And we're sharing that with the public, so they can see exactly how many neighbors we need to sign up. But, you know, they just go there, sign up for service. And when we start getting close to getting enough people, then we'll send our salespeople in. They'll usually work with, like, a neighborhood volunteer, that will help us to get, you know, that last hump to get over the finish line, that we can go ahead and build.
Chris: Well, what happens in the areas that don't get built out? You know, how does the open access part of this network work?
Brandon: Yeah. I mean, the open access, in part, is already still ongoing, in the sense that other private and public entities are using this fiber as well, and iTV-3 took over operating the network and administrating all of that. So, whether it's our -- you know, our public bus route, or sanitary district, or local governments, or another local CLEC, which is a private partner that has strands on the network, all of that open access continues. And iTV-3 is, you know, willing to -- willing to talk to other entities that want to use the fiber. But in terms of, like, on a neighborhood by neighborhood level, I hope that -- our goal is that the whole community gets fiber-to-the-curb infrastructure, and get the chance to be plugged into gigabit fiber. That that's the future. It's where education and health and jobs are all going online. And the way that -- you know, our devices consume more and more bandwidth, and more and more hi-def and things means that, really, America needs to be in this technology, just like Europe and Asia have figured out how to be in the fiber and gigabit technologies. So, I hope that full build-out is in our future, even though it -- you know, it may take a few years of time to do all the rallying, and construction crews moving down every street. And we'll continue to rally for that, and to help drive the community, and get -- you know, get folks excited, and make sure every neighborhood knows about this opportunity. And, ultimately, you know, because of the open access rules, it's true that other providers can use the network. And so, you know, we'll see over time, sort of, how big iTV3's footprint gets. And -- you know, really, we want the whole community to be a gigabit community, where these next-generation tools and technologies are available. So, we'll -- you know, we'll keep working to support this project and get this community there.
Chris: Levi, can you tell us how much interest in this approach out there? You know, how excited are people to get these services? And maybe you can remind our listeners how long you've been already working on this.
Levi: I would say things are going really well. And they're gaining momentum. We're -- already, I think we're finishing up the construction of the first neighborhood. It's been awfully wet this year, here in central Illinois. And that's probably put it back a little bit on construction. But we're really coming along now. Other neighborhoods are getting online. So, you know, at least right now, it looks like we're going to be very busy throughout the remainder of this year and next year.
And, to Brandon's point, you know, the goal is to get the entire community. There's two things, I think, will help with that, you know. One is that, as you mentioned, the 10 percent of the community that was already built as part of the BTOP grant would be the 10 percent that would be the least likely to sign up by a traditional drive that we're doing now. And so that really helps there. And then, also, you know, we here are a very strong word-of-mouth company. So as we're getting more people onto the network, what we've seen in other communities -- 'cause, you know, we serve a much larger area than just Champaign-Urbana. But usually, you know, it starts out slow and steady. And then when people find out that we're not just talk, that we actually walk the walk, and treat them like humans, and have a good, you know, service, then usually people -- there's no shortage of people that are lining up to -- to dump their cable company -- let's just say that.
Chris: Well, I'm really appreciative of that. When you get the sense that you can get a great service at a fair price, many people want to sign up. That shouldn't be too much of a surprise.
One last question about open access, though. In the new areas that iTV-3's building, are those connections open access as well?
Levi: That was one of the things that, like, Brandon said, it was very important to UC2B. And I think that that was something that would be very hard for a traditional telco to swallow. And I've had many people in our industry that have commented to me about that. So, we look at our fiber optics just like real estate. And so, if a customer is better served by another company using the fiber optic, it's just like our real estate. When we have excess real estate, we lease it out to other companies. So that's the way we look at it. We're excited to be open access. And we welcome any company that wants to come in and provide service, and we will make our whole footprint throughout Champaign-Urbana available to them.
Chris: That shows real pride of customer service, I think. You know, when you're building a network that's open to competitors, and you're basically saying, you know, we think that you're doing -- that we're doing such a great job that we're willing to throw it open and let others have access to our customers, rather than just locking them in with a monopoly, as we've seen the existing companies do.
Last thoughts, Brandon?
Brandon: No. I mean, I'll just say, I started as a City Council member, and, you know, got onto the board -- the UC2B board -- when the project started, that it has been an amazing ride, through being this public-grant-driven body to help try to quickly build this network, and to now get to see it turn into this long-term partnership that really has us and iTV-3 both aligned, on the same page, of how do we -- you know, how do we make this a gigabit community? And it's been real exciting to forge this partnership, and to get to see it move through these phases. So, this year it's been wonderful to see construction of more gigabit neighborhoods kick off. And we're really excited for this continued relationship.
Chris: And, Levi, do you have any last thoughts?
Levi: No. Just to echo what Brandon said there. It's -- so far -- and everything, and, really, in every aspect, we feel like we've had a really strong partner with the communities. Ah, you know, it is a community project. And even though it's private money going in now, people in Champaign-Urbana really do get it. We've got really strong leadership in both communities. They know that this is important. And even though we are the new guy in town, I feel like we've got a lot of ownership in what iTV-3 is doing. Both at the governmental level, and then also just that the people in general are very educated. UC2B has done an excellent job of getting the word out in the community. So, we're just -- like Brandon said, we're just excited to get more and more neighborhoods up and going. And we feel like this could be a pretty good model for other communities moving forward.
Chris: Well, thanks for taking the time to discuss the project and your partnership. I really appreciate it.
Levi: All right. Thank you.
Brandon: Thanks, Chris.
Lisa: We want your ideas for the show. E-mail us at email@example.com . You can follow us on Twitter. Our handle is @communitynets . You can also find us on Facebook. Search for "Community Broadband Networks." Once again, we want to thank bkfm-b-side for their song, "Raise Your Hands," licensed through Creative Commons. And we want to thank you for listening. Have a great day.
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