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Transcript: Community Broadband Bits Episode 248
This is the transcript for Community Broadband Bits Episode 248. Brian Kelly of MAW Communications and Patrick Hopkins of Lancaster, Pennsylvania, join the show to discuss how the city and MAW are collaborating in a public-private partnership. Listen to this episode here.
Brian Kelly: Each of the communities that invests in Community Broadband Solutions is going to be slightly different. It's going to be about negotiating those very specific local conditions that will make the project successful.
Lisa Gonzalez: This is episode 248 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. In March, we shared the news about Lancaster, Pennsylvania's, public private partnership with MAW Communications on MuniNetworks.org. This week, Christopher interviews Patrick Hopkins, Business Administrator for the city, and Brian Kelly, Operations Director at MAW Communications. In the interview, you'll hear about the long and detailed planning for the Fiber to the Home project. You'll also hear about how both the city and this local provider found some ways to overcome specific challenges relating to the project. They each explain what drew them to this approach and some of the added benefits of Fiber to the Home in Lancaster. Check out the project website at LanCity Connect and learn about MAW Communications at MAWcom.com. Now here's Patrick Hopkins and Brian Kelly talking with Christopher about the LanCity city Connect project.
Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell, and today I'm speaking with Patrick Hopkins, the Business Administrator for the City of Lancaster. Welcome to the show.
Patrick Hopkins: Thank you for having us.
Christopher Mitchell: And we also have Brian Kelly, the Operations Director at MAW Communications, a small private company that serves the region. Welcome to the show.
Brian Kelly: Thanks so much for having us.
Christopher Mitchell: So, Patrick, I thought I'd ask you first to just give us a short version of what's happening in Lancaster with this arrangement.
Patrick Hopkins: Sure. Well, we're excited to finally, I'll say -- and I'm sure we'll get into some of the history on this -- but working with MAW Communications on a community fiber broadband system call LanCity Connect. We're actually beginning the roll out of residential connections, Fiber to the Home connections beginning, I believe, at the beginning of May. Those are being scheduled right now. We've been undergoing a beta testing program since about early November, I believe it is, with about 60 customers. We've gotten MAW, LanCity connect has gotten great feedback from those customers, and we're excited to get this thing rolling.
Christopher Mitchell: Wonderful. And Brian, do you have anything to add in terms of a short overview of what we're going to be talking about here?
Brian Kelly: No, I think Patrick summed it up. It's a really exciting time with the launch of LanCity Connect and the possibilities and the buzz that's happening locally around this has been really encouraging. These folks are really interested in being part of a local broadband solution.
Christopher Mitchell: I want to paint a little picture for our listeners that haven't been out there as I told you, Patrick, I played my first soccer tournament in Lancaster growing up in the Lehigh Valley. So, for people that haven't been there, what's Lancaster like?
Patrick Hopkins: The city of Lancaster -- we've got a population of about 60,000, very compact. We're officially about 7.4 square miles, so 60,000 people in that small area, but actually most, probably 95% of the residents are within about a four square mile area. Nice, compact, very urban city just in terms of, again, about 90% of our homes are row homes or just barely disconnected homes. We'll probably talk about it later but it's a real advantage when we're talking about rolling out fiber backbone across the city, but we're about 75 miles west of Philadelphia. Lancaster County itself has a population of about 530,000. So, the city is about 10% of the total population of the county. We're surrounded by, I guess, a metro area of about, probably, 150, 175 thousand. But the city itself is 60,000 people
Christopher Mitchell: And aside from MAW, you have, I presume, cable and DSL service?
Patrick Hopkins: Yes, we do.
Christopher Mitchell: Okay, I always like to establish that because sometimes people assume communities that are engaging in either their own investment or partnerships, have nothing. But you already have something. You're looking for something better, I would guess.
Patrick Hopkins: Yes, that is Correct.
Christopher Mitchell: Let's turn to Brian and learn a little bit about -- What's MAW's background?
Brian Kelly: So, MAW Communications is in it's 19th year of business. We're a registered Pennsylvania public utility here in the state of Pennsylvania, and for most of the beginning of our existence, we focused on larger institutional clients, governmental healthcare, education, larger enterprises with multiple locations that needed to be connected. So, this emerging partnership with the city is an expansion of that core broadband service, and looking into the expansion to residential services.
Christopher Mitchell: So is serving a lot of homes and even smaller businesses something that's kind of new to you then?
Brian Kelly: Yes, for MAW communications that's part of what the whole partnership with the city of Lancaster has been is actually scaling up that component of the partnership.
Christopher Mitchell: Well, let's talk a little bit about how that partnership began. Patrick, can you give us a little bit of background?
Patrick Hopkins: We've been talking with MAW communications for probably about ten years. I think probably our first conversation with Frank Wiczkowski as the president of MAW Communications dates back to sometime in 2006 or early 2007. So, we've had sort of on and off again conversations about various fiber possibilities, anything from providing public Wi-Fi in public spaces in public parks, and then sort of over a period of years as the city got some things in order both financially and operationally, more recently those conversations turned to doing a fiber broadband throughout the city, and really what we're doing is leveraging some investment that we knew to make anyway in an automatic meter reading system. We also provide water services to the city of Lancaster and the surrounding suburban area. So, we had some other investment that we were looking to do in terms of interconnection of traffic signals and this automatic meter reading system. That conversation continued to grow into what's now the creation of LanCity Connect, sort of a bit of an offshoot of some of this other fiber infrastructure that we talked about.
Christopher Mitchell: And Brian, I would love to hear if there's any other details about the working together with the city, how it came to be, that you would like to contribute.
Brian Kelly: Yeah, the partnership has been going well, and as Patrick mentioned it's really been evolving over time. One of the things that is really nice about this is that there's multiple needs that are being met through this, and that is one of the things MAW really likes to pride itself on is stop looking at "Oh, so we're looking at the automated meter infrastructure, we're looking at the traffic signals, we're looking at potentially Wi-Fi hotspots." All of this integration and then looking at, "Oh, well once we're already investing there, there's really only marginal additional cost in connecting residents, how can we get the most bang for our buck, if you will, in this infrastructure investment." So, we've been really pleased with being able to work with the city in helping to develop this.
Christopher Mitchell: Brian, I'm curious if you just can say a few words about what it's like to be working with the city, perhaps pros and cons. I'm sure that no one's going to pretend anything is all easy. But the reason I ask is, a lot of telecommunications carriers, the larger ones especially, some of the smaller ones, are reluctant or prefer not to work with cities, and I'm just curious if you can tell us why you thought it might be a good idea to and how that's working out.
Brian Kelly: Yeah, there's definitely pros and cons to that type of relationship, and I think one of MAW's reasons for entering into an arrangement like this is more of our ethic, which is we're not interested in being what we consider a jack, just another carrier. We are interested in what is the innovation in this industry and what is the added value to the communities in which we operate. So we're based in Pennsylvania, we're going to be specifically in Southeastern Pennsylvania, and our focus is on trying to make sure that we have as much added value as possible. And, so, working with the city to solve it's multiple dilemmas is an engineer's dream. We like to consider ourselves problem solvers. The problem that we're solving is often figuring out how to get data moving from one point to another, but a much bigger way, especially in the information age. We're excited about this process of how that is really moving society forward. In terms of working with cities, I think one of the really great ways that I've seen that the city of Lancaster -- They're actually together as a unit moving something forward. So, I've worked in a couple of other cities outside of my relationship with MAW, and oftentimes with the municipalities, you can see a lot of discord internally and kind of competing policy objectives. So, one thing that's been nice about partnership with the city of Lancaster is they've been very clear about some of their basic ethics and policy principles in how we're rolling out LanCity and what they wanted to achieve, and that's been really refreshing on our end. I think some of the difficulties is, because it's a larger bureaucracy and those tend to be slower to change, then sometimes we want to move faster than the bureaucracy is ready to move, or as we dig a little bit deeper that means that the exact output is going to change over time. So, that's one of the kind of pluses and minuses is this evolving project.
Christopher Mitchell: That strikes a cord with what I've seen both from providers in cities, and Patrick I'm curious if you can perhaps comment on two aspects of that. The first is having a comprehensive vision in the sense of where you want to go, and the second would be, once you've had it, communicating it and sticking to it. Can you tell us anything about how the city's accomplished this?
Patrick Hopkins: Neither of them have come about easily, that's for sure. I think part of the thing that we benefit from is that Mayor Gray is our current Mayor has been in office since 2006 and really, we did start these conversations with MAW not too long after he took office. I came in at the same time, our public works director had actually been with the city of Lancaster earlier, the Mayor's Chief of Staff came in when Mayor Gray come into office, and over that time as I described the relationship we built with MAW over time, we also saw some of the things that Brian saw in terms of some of the new opportunities that we had, new challenges that we had, to try to tie together -- we've got multiple city of Lancaster locations in the city, we've got traffic signals all over the place, we have about 110 miles of city streets. We have a lot of signalized intersections. We have a county government who's main operation is about three blocks away from us, and we actually have a Shared Services agreement with them for file serving and our ERP system is actually located there. So we have some interconnection with the county government that's also part of this. So, over that 10 to 12 year period, it's been an evolving project, and sort of breaking down some of the silos that existed when the mayor came into office in 2006, that's frankly part of why this has taken so long. And then, the community outreach part has been much more recent, the external part of this project has been much more recent. But we've been able to keep our city council apprised all the way through the project, try to provide as much transparency in the project itself to city council and to the extent possible, also, to the public. We've built up the momentum for what has ultimately become LanCity Connect, but even the term LanCity Connect, I think, is what, Brian, about nine months old, something like that? So, nine --
Brian Kelly: Yep, that's right about nine --
Patrick Hopkins: -- months out of a ten year project.
Christopher Mitchell: Since we're just touching on some of the benefits that are coming from this, I'm wondering if you can share some of the cost savings that you've already seen and are expecting from this, and also, I just wonder how much of this would come from not just the presence of fiber that you have access to, but also from the engineering benefits that you're getting from working with MAW?
Patrick Hopkins: Obviously we have our own Internet services right now that we would have a savings that I think we're talking in total among a couple of different buildings about $35 or $40 thousand dollars a year. That's an easy one to put a number to. The more complicated stuff to put a number to is things like the interconnection of our traffic signal system. We have some interconnect with our traffic signal system now, but not nearly the benefit that we'll have out of the fiber interconnection. So, there's not necessarily a direct cost savings that I can say, "We're going to reduce cost by X," but we know that we'll be able to operate more efficiently provide better service to folks who were driving through the city, and there's a lot of them. On the AMR system, the Automatic Meter Reading system, -- Right now read our water meters for residential properties once every three months. With this AMR system, and the speed and reliability that we'll have out of the fiber interconnection, we'll be able to read meters literally by 10 or 15 times a day if we need to which means we can provide better service to customers because we can detect leaks at their property that they might not know about. So, some of this is a dollar savings, but also a lot of it is really just an improvement of services that we're going to be able to provide. So, to the extent that that, not necessarily, saves the city government a lot of money, but it can save residents an awful lot of money and heartache. The other piece of this is that we have, unlike a lot of municipalities, we have a camera system that's operated by a non profit organization that operates in the city. They have about 165 security cameras throughout the city. Part of this project has been helping to upgrade the fiber infrastructure that they have so that ultimately we can flip those cameras over to operating off of the fiber back that's been installed by MAW, and that's before we even get into the LanCity's Connect services. So, we expect with the Internet service savings, some of the staff savings that we'll have from the AMR system and others that we're going to see annual savings of probably $150 to $200 thousand dollars a year, and again, that doesn't count some of these other operational savings and efficiencies that we're going to gain.
Christopher Mitchell: Brian, do you have anything to add to that?
Brian Kelly: I think the other part of your question, though, was around the engineering component, and I think from MAW's perspective, I think that's been the most fascinating part of this is we're systems integrators in a way, and so all of these different things that Patrick just talked about could all be analyzed separately and there could be some solutions for reducing costs or improving operations, but then once we started integrating them all into one comprehensive system and looking at distributing information through a passive optical network, then it opened up new possibilities around that. So, I think that was one of the exciting things about working on this project with the city was getting to lump all of these together, and could we actually create a scaled solution.
Christopher Mitchell: So I think with some of the little bit of time we have left, I would like to just get a sense of the Fiber to the Home plan. How is it working? Let's just start with Patrick and just give us a thumbnail sketch of the moving parts, please.
Patrick Hopkins: In about, I believe, the beginning of November or so began the LanCity Connect beta program which was a connection of about 55 or 60 residential properties throughout the city. Part of it was just a proof of concept to make sure that the network speeds, the traffic, and everything was operating the way that MAW designed it -- And they ran into some hiccups along the way and some corrections that needed to be made with each of the residents who have been connected through the beta program, they've done surveys throughout. So, I think somewhere in the neighborhood of probably ten to a dozen surveys along the way for folks to test their wired speeds, their wireless speeds, and a number of other things throughout, including the customer service level of the folks who came out to make the Fiber to the Home connection to the exterior of the property, folks who came inside the property to get the fiber inside, connect the modem, and get the router and everything set up. So, through that process everybody has learned some things, and part of that was not just figuring out the networking piece and making sure that the speeds that everybody expected to be there were there, But also how best to do the installations. We've got, as I described earlier, a very compact city. We've got a lot of row homes. It makes the bang for the buck in terms of a mile of fiber goes a long way in the city of Lancaster to connect to a lot of properties, but it's also not the easiest thing in the world to work around row home properties and figuring out which is the best way to get into the property with the fiber. So, there are a lot of lessons learned throughout the last four months, I guess, and now we're at the point where MAW is scheduling LanCity Connect, is scheduling the first phase of the residential connections in two areas of the city. We've got to phase this project along. The timing of the phases is really based on the capability that will be there with LanCity Connect installation crews to roll this out throughout the city. We would love to have lit up everybody at the same time, but as you're running fiber connections to several thousand properties, that just wasn't the case. So, we have some folks who have been chomping at the bit for, I'd say, a couple of years, really since we first announced this project. They're all ready to go, and they're in phase one. Other folks are going to have to wait a little while, but I think as this starts to roll out and we get some word of mouth on the street for people who have been connected with LanCity Connect that the momentum of this will keep on growing.
Christopher Mitchell: Well, I have no doubt, because when I look at the pricing sheet, you're looking at $35 a month for 50 megabits, $50 a month for 150 megabits -- It's pretty remarkable pricing. Brian, I guess as we're talking about money, one of the things I'm curious about is, the cost of building a network like this, you're getting a loan from the city that you'll be paying back over a period of time with revenue from the network, but I presume you also have to bring in some of your own money as part of that.
Brian Kelly: Oh, most definitely. We already have several hundred thousand dollars invested in the scaling up here, and you bring up an interesting point which is that the economics of residential Fiber to the Home installations is -- it's not super promising, there's not a whole lot of people diving in because of the profit margins that can be made in that particular industry. One of the ways that this was made cost effective was because of the investment that the city was already making in a substantial amount of the fiber and then we were able to work off of that core backbone. So, that was a critical element in the success of this rollout. I think one of the other things, as Patrick mentioned, we're launching at a pretty aggressive rate, and so we're hoping to sign up about 3000 customers over the next 18 months, which is -- we consider ambitious but definitely achievable. So, we had a lot of folks who wanted to sign up, like Patrick said. We asked folks, "Well, what day would you like?". They said, "Well, the first day of installation at 8 a.m. I really want to be the first in the city to be connected." There was over 50 requests for that same day. We're like, "Well, that's not possible, but we are going, going to be lighting them up.
Patrick Hopkins: That's a problem of physics that even MAW can't overcome.
Brian Kelly: Exactly.
Christopher Mitchell: So, I just wanted to know -- We have an article on the website that we entitled Public Private Partnership Pursued in Pennsylvania. So if anyone wants to put a bunch of P's into Google or go to the --
Brian Kelly: I liked the alliteration. That was nice.
Christopher Mitchell: But we have more of the details the financing spelled out there. But I wanted to end with a question just in terms of how both of you are seeing it. From the perspective of my organization, we're always concerned in public private partnerships where we might see a situation in which the public gets invested, and then the partner ends up changing hands, being purchased by a larger company or somehow not maintaining that original great service that was promised, and I'm just curious if maybe, Brian, you can start and give me a sense of why another community that might be looking at this model should trust MAW and then we'll turn to Patrick, I think, to just get a perspective of how you're thinking about this risk.
Brian Kelly: Sure, so for other communities outside of Pennsylvania, they can make a decision to trust MAW or not, but we won't really be partnering with them, so we'll be staying in Pennsylvania. So, anyone who's in Pennsylvania and wants to contact MAW, that's a different story. Part of it is our company ethics. Right? So, the city was very clear on some of its initial policy priorities, making sure that as we continue to grow, we were going to be doing local contracting with firms in Lancaster, and then also as we've scaled up creating full-time, living wage jobs for residents in the city of Lancaster. So that's all part of their ethics and something that we consider as a local company something that's important to us as well. So, any economy is based on the interaction of all those local actors, and so, that was a really important piece, and then Patrick and the city of Lancaster in doing their due diligence was making sure that whoa, asking those exact questions that you asked. How do we know that we can trust MAW? Even though these guys seem like nice guys, lets make sure in these agreements that nothing can happen. And so there's a lot of language in the loan agreements and then also in the public private partnership that gives the city that leverage of making sure that MAW can actually turn around and walk away from the city and say, "Oh, that was a nice buy," we're looking at it as kind of this long term partnership that's being developed. But I think that, especially for anyone listening to this podcast, especially folks on the municipal side of things, those are really important questions to ask is, where is this company going? Are they just starting up? Is this a one or two year company? In which case you really want to do some serious vetting about capacity and their ability to stick around. In our case, we've been around for 18 years, we were able to consistently show and deliver to the city our various milestones, which is where they developed that kind of confidence over time, and as Patrick said, this is a process in the making. So, it wasn't that one day they said, "Oh, let's do this. Oh, MAW, that's a nice shiny organization, let's partner." Over the course of the last few years we were consistently developing that relationship and seeing how this would develop.
Patrick Hopkins: No, I think Brian covered that really well. We operate under the adage of trust but verify. So, as Brian said, we've had, over that period of years, built up a relationship, understood the capabilities that MAW had on the technical side and the engineering side of all this. Frankly, it sort of comes down to getting language in agreements that, for instance, the first agreement that we had with MAW, simply has a clause that says that if any of the infrastructure that we build in this partnership, if MAW were to be sold, the services that we built with that infrastructure -- This agreement carries forward to the buyer of MAW. So, we had to build in protections there because anything can happen at any point and time. So, we had to make sure that our attorneys reviewed -- We have attorneys, not just our city solicitor, but folks who were involved on the telecommunications law review all of the agreements to make sure that we had protections in there for the city because for the city itself and our tax payers, we're making a significant investment in this infrastructure. So, we want to make sure that we're not going to be sitting here five years down the road or eight years down the road and having made all that infrastructure investment and then be stuck with a system that is operated by somebody that we don't have a good relationship with. And then we get to the loan documentation side -- We're providing the operating capital loan to MAW to sort of ramp up the LanCity Connect operation made sense to us because the collateral that we have on that loan is the fiber infrastructure itself. So, we sort of have things locked down so that at any point in this whole operation -- Let's say for whatever reason something happens that the operation is not successful, there's a loan that we've made to MAW but the city of Lancaster has the fiber infrastructure as collateral. So, we've got a good trusting relationship that we've built over a period of years, but we think we also have the good legal documentation to back that relationship up.
Christopher Mitchell: Great. Well, is there anything that either one of you would like to add as we just conclude the show?
Patrick Hopkins: Come back and check us out six months or twelve months down the road and see how we're doing. We hope that we've got a thousand or more residential connections made and that more of our residents see the benefit of this infrastructure investment.
Christopher Mitchell: And Brian?
Brian Kelly: One suggestion, especially for other communities that might me thinking about this, is that each of the communities that are invests in Community Broadband Solutions is going to be slightly different. So, I would just encourage folks to stay open to possibilities and not think that you can just grab a model from elsewhere and put it wholesale in your own community. It’s going to be about negotiating those very specific local conditions that will make the project successful.
Christopher Mitchell: Right, I would wholly endorse those comments. Well, thank you very much, both of you, for taking all the time today to speak with us.
Brian Kelly: Sure, thank you very much, I appreciate the opportunity.
Patrick Hopkins: Yeah, sure. Thanks for having us.
Christopher Mitchell: And I look forward to talking to you in maybe a years time, maybe on MAW Fiber itself. So, thank you very much.
Patrick Hopkins: Thank you.
Brian Kelly: Thanks you, sir. Bye-bye.
Lisa Gonzalez: That was Christopher talking with Patrick Hopkins, Business Administrator for the city of Lancaster, and Brian Kelly, Operations Director at MAW Communications.
Christopher Mitchell: Hey, everyone. I just wanted to thank you for listening and helping out to create a stronger Internet ecosystem, making sure everyone has high quality access. Please tell your friends, tell others who might be interested, about this show. If you have a chance to rate us on iTunes, please do. Several people already have. We really appreciate all the comments and we really appreciate you all of the comments, and we really appreciate you taking the time to listen to us.
Lisa Gonzalez: We have transcripts for this and other Community Broadband Bits podcasts available at MuniNetworks.org/BroadbandBits. Send us your ideas for the show. Shoot us note at podcast@MuniNetworks.org Follow Chris on Twitter. His handle is @CommunityNets. You can also follow muninetwork.org stories on twitter where the handle is @MuniNetworks Subscribe to this podcast and all the podcasts in the ILSR family on iTunes, Stitcher, or wherever else you get your podcasts. We want to thank Break the Bands for the song Escape Life licensed through Creative Commons, and we want to thank you for listening to episode 248 of the Community Broadband Bits podcast.