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Transcript: Community Broadband Bits Episode 35
Thanks to Jeff Hoel for providing the transcript for Episode 35 of the Community Broadband Bits podcast with Jody Wigington on why Morristown, Tennesee built its own network. Listen to this episode here.
Lisa Gonzalez: Hi, there, and welcome to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
In Episode 35, Christopher Mitchell interviews Jody Wigington, CEO and General Manager of the Morristown Utility System in Morristown, Tennessee. MUS Fiber is one of the few networks that offer 1-gig service. The network began serving customers in the spring of 2006. Jody and Chris talk a little bit about how the community was inspired to go into telecommunications. They were fed up with continual rate increases from the incumbent cable TV provider. And community leaders also recognized the economic development potential with a fiber network. Here are Jody Wigington and Christopher.
Chris Mitchell: Thank you for joining us for another episode of Community Broadband Bits. Today we're talking with Jody Wigington, the CEO and General Manager of Morristown Utility Systems. Thank you for joining us today.
Jody Wigington: Thank you.
Chris: So, one of the things that I was fascinated about with Morristown was that you were one of the sort of famous utilities coming out of Tennessee. There's a lot of great fiber systems in Tennessee. And you launched a gigabit. You were one of the early ones -- I think third or fourth in the nation. But when you agreed to talk with me, then I started digging a little bit more, I found a lot of really interesting things to learn about Morristown. So, can you start by telling us a little bit about the community?
Jody: Yes. Morristown lies in the eastern part of Tennessee, between the Knoxville and Tri-City area. It's about 25,000 that live in the city, or maybe 29,000, and then there are about 63,000 in the full county. Morristown's got -- it's noted as a metropolitan statistical area. And, as such, we provide a lot of jobs for surrounding counties, through our manufacturing. For example, 70 percent of my system's electrical usage is consumed by industry and large commercial. So, obviously, the county of Morristown affects many people in a 30-mile radius.
Chris: And how far does your territory actually spread? Are you outside the town?
Jody: My electric service area is strictly within the corporate city limits. But I am allowed to serve broadband into the county, you know, as needed. And most of those -- most of the infrastructure is still within the city right now. But I can go to the county.
Chris: So, you -- it's been a number of years -- you were one of the earlier ones, a pioneer of the fiber-to-the-home system. Can you why you decided to invest in that technology?
Jody: City elections back in 2004 brought in a mayor and some new council members with the call from the public to do something different about the incumbent cable provider, who had consistent rate increases annually, and some poor customer service. And the city tried to negotiate -- with Charter, in this case. And without success on holding rates down. So they asked the utility -- a second time, actually -- to enter the telecommunications business. And besides just cable TV rates, there was concern around Morristown that must improve its broadband capabilities in order to support existing businesses and be able to recruit new industry. So, at that point, we filed a business plan with the state comptroller. We did some scientific surveys of customer interest. We asked for a referendum, to be sure the citizens supported borrowing the money to enter that business. And the results were overwhelming, on all those counts. So, we entered the business. And the first customer was May, 2006.
Chris: And that's actually -- can I just pause you there for a second? It's really sort of fascinating. It seems that many of the utilities that have gotten involved with this have done it first out of a sense of the benefits to the electrical utility. The plans have often come maybe from an economic development staffer or group. But this seems to have come from the elected officials, that were just very under- -- that were very excited about what an investment could do for the community. Is that -- am I understanding that correctly?
Jody: Yes. I mean, they -- in the background was economic development. It didn't get the forefront; it was cable TV rates. But the Chamber here in Morristown is a bastion for industrial -- industry in this region. And we knew that, you know, we needed to have an infrastructure that was better. In the old days -- you know, at that time, Charter really wasn't in Internet or telephone. And we had AT&T. And they were here in the local main office. But our industrial parks are built on the periphery of the city. And, you know, they could barely get T1s out there.
Chris: Um hum.
Jody: T1 is nothing compared to what broadband is today. So, a lot of industry were complaining about this. So, in the background, there was a need for advanced broadband in our industrial parks. And, you know, again, if you weren't so close to the main office, where you could get AT&T's service, then you really didn't have much of a broadband product.
Chris: OK. So, as I understand it, you had some opposition, even though you had widespread public support, there was some significant opposition of the existing cable companies.
Jody: Well, cable TV, on the state level, you know, opposes all municipal entry in Tennessee. It is legal for us to do this in our electric service area, but they -- they're the largest annual -- our largest lobbying groups, between AT&T and cable, in the total state legislature. So, they continually submit legislation that limits the ability of cities like us and communities to secure their own future. They strap you financially, or they try to limit your service areas, and things of that nature. But -- There was opposition, but our local senator and state representative both championed the cause at the national level. And it went through with flying colors.
Chris: You didn't have to deal with any lawsuits then, at least. That seems to be something that they've done to some of the others that they've opposed.
Jody: No. We submitted the plan to the comptroller. They challenged the plan, at the comptroller level. But, no, there were no lawsuits. No.
Chris: And so then you started building this network. And you decided to go with fiber-to-the-home rather than cable. I know there was -- there weren't a lot of fiber-to-the-home systems at that point. So why was that the technology choice?
Jody: Well, you know, I guess it's a no-brainer today. But at the time, you know, both technologies were still being deployed. And the first time we looked at it, in the early 2000s, we really didn't have fiber-to-the-home. And we weren't comfortable, because you couldn't have the broadband without the fiber. So when it came up this second time, fiber-to-the-home basically was a way to bulletproof the investment for the future. It's a little more expensive, but not that much more. But -- And that's already proven true. Here we are, you know, at the six year into the business, and we're upgrading to the gigabit capability. You know. And we didn't have to touch the fiber network, just change the electronics out on either end. So that pattern could be repeated, going into the future. Because the fiber's good -- it's pretty much unlimited in what it can do.
And we're a little bit less in the limelight of some of the other cities. But Morristown is a gigabit city. And so, when you do recruiting, it's imp- -- or for somebody who want to run a business out or the home, gigabit is available anywhere on the system. That's not a function of how far you are from the operation center. At the furthest point, you could have a gigabit of -- you know, if you need it.
But, I tell you, in stark comparison to the incumbents, we've only had one mild rate increase in the first six years. And the incumbents, you know, they play that game or rate match, or some sweetheart deals, for a couple years, or cut individual bills. And we just believe that the uniform rate structure, similar to what electric or water is, is best. We can assure any telecom customer that they're paying the same rate for the same product as any citizen across the street or in the city. So, we think that's the right way to do it.
Chris: So, let me just reiterate that for a second, to make sure people get it. I mean, you've had six years. You've upgraded certainly the topmost capacity to much faster potential speed. I presume you've also increased the speeds over the course of the years. But throughout all of that, you've only increased your rates one time in six years, which is -- it's incredible. You know, I sort of -- every 12 months I know I'm going to get a letter from Comcast, myself.
Jody: Well, if you're in -- you know, it makes you wonder, if we can do this here locally, and build a new network, then why was cable TV going up every year? You know. Sometimes multiple times. And, you know, we've done well. Today, we serve, you know, 44 percent of the homes passed. And even a greater percentage of the businesses in town. And so, we're cash flow net income positive, ahead of business plan. And we think -- and our board believes, too -- that the most important thing we do is to provide superior customer service. People love that personal effect of it. So we established a local call center, with technical support, right on Main Street. And we -- versus customers talking to somebody in another state or country. And we can -- can and we do -- support personal type service. But with that, we react quickly. If you need to change your product, or if you've got a new business, and -- you know, we can roll out stuff in a week or so, without any long period. So we think that the customer service was a big thing.
Chris: Yeah, absolutely. I'm always reminded of, you know, in the city, dealing with -- we only have a cable and a DSL option in St. Paul, which is a large city. And we regularly have to deal with, as a resident, you know, many days for getting service if something goes wrong. Fortunately, in the city, businesses will get a somewhat faster response time. But I've certainly heard stories in some of the rural areas, and the smaller towns, of even businesses having to wait multiple days. And if your Internet's down, boy, you really need service fast. You can't wait a week for a tech to show up. So that local service is really important.
Jody: Well, we hear -- one business told me -- I asked him, I said, what do you do when the Internet's down? And he just kind of cocked his head and he said, I just send everybody home.
Jody: I cannot function. Everybody in my business has a computer in front of them. So speed and reliability of Internet are important. And, like you said, on speeds, we probably start out 4 megabit, just because you probably had to pick a number. I think everybody's product is probably 12 megabit now. You know, it's there. I mean, you can go a gigabit, but you got to market a product at some rate. The big difference is, our products are not burstable. They're more of a guaranteed bandwidth.
Chris: Um hum.
Jody: So you don't have to worry about the kids coming home after school, or everybody getting on it at night or something. I mean, your speed's there, you know, 24/7. That's a little bit different than a shared network that's based on copper -- or cable.
Chris: So, can you tell me a little bit about how the community has -- the industrial community has benefited, or changed, because of this network?
Jody: It's -- we are getting more people looking at us because of broadband. You know, the past success of Morristown was obviously -- sorry, you've heard before, I'm sure -- But we had a major rail system pass through town. And we also have multiple interstate systems that allow us to go all directions, to give, you know, transportation logistics. So, today, you know, we see fiber as that similar infrastructure that assures that economic viability. And most all of our major businesses do take our fiber optic services. Especially for Internet. But I can't say that there's been one major industry that's solely located here because of fiber. However, I know that today's RFPs, it's much different than ten years ago, because they request detailed information on broadband, and, more specifically, whether it's fiber. So I think, better said, the lack of broadband can quickly remove you from the prospect list. And that's not a problem for us.
Chris: Right. I would -- you know, I think -- a recent conversation I had with a good friend, Geoff Daily, who is down living in Lafayette now -- Louisiana -- when we were talking about this, as well, and whether we were seeing specific businesses that came to town only because of the network. And, really, the better answer is that, you know, businesses are going to places that are well-governed. And, in 2013, being well-governed means that you can deliver affordable and reliable services via a fiber network. It doesn't necessarily have to be the city doing it. But someone has to be doing it. And it has to be a high-quality product.
Jody: You know, and today, so many of these employees work away from home sometimes, or they're -- it's very important for them to get high-speed broadband, to check things at work, and -- or maybe work from home. So, I think it speaks to the quality of life, what fiber can do. It's not just taking it to the business, but your -- the people who work at the business can, you know, log in remotely and really good speeds, and work almost seamlessly.
Chris: So, what are the -- what are some of the numbers? I mean, people always want to hear the numbers, right? I mean, what kind of savings are you seeing for the people in your community?
Jody: Let me give you a few. First, I'd say, based on what we know of the rate savings alone -- and, again, the incumbents are all over the place, with the deals, but based on their rate cards and our rate cards, we're leaving around $3 million per year in the local economy, for people to spend however they want. That's just in rate savings on products. Second -- and, by the way, that also doesn't include the savings that would occur when the incumbents would drop their rates or match those rates. That's just based on the number of customers WE have. And the rate cards.
Second thing, the electric system owns the base fiber optic network. They're the custodian of the network, to ensure utility benefits. Well, their ownership of the network has increased our in lieu of tax payments by 35 percent, to the city and county -- give them more money, you know, to help their efforts.
And, third, you know, the fiber, as an electric asset, enabled us to receive up to $4 million in grants from TVA for smart grid development. And we've already got $3 million of the 4. And that's provided a path, just to -- you know, to lower rates -- better technology.
You mentioned benefits. I guess, as a city, we also provide services to the city and county. We've connected their facilities as one network. And, again, it's -- you know, it's not individual networks. It's all on the passive optical network. They're just -- they're connected like a VLAN system. And then they've got one large connection to the Internet. It's a very efficient way of delivering services.
We have the libraries, several of the hospitals. We're now developing a new traffic control system for them. It's a pretty high-level online control of traffic during, you know, periods of high traffic. Connect fire, police, 9-1-1. And, a big thing, we have all the board of education schools, except for a couple that we don't reach, out in the county. And they're connected at either gigabit or 100 megabit connections. Also serve two of the local colleges, one two-year college, and then another four-year.
So, I think the fiber network is of really great importance to the speed and reliability, not only to them but to the utility service. It is now how we run the electric, and the water, and soon to be, probably, with the wastewater system.
So, the electric system, I mean, for example, we use this network to deploy realtime advanced metering services. It allows us to automate demand-response, that lowers our wholesale power bills, provides better services, and waste-reduced operational costs, by remote disconnect, where you don't roll trucks as much. You can recheck meter reads in a matter of seconds. And so, the network is really redefining the way our utility provides services and conducts its business. And, you know, you turn around and you go, wow, you know, the future is -- you used to think it's futuristic. But the future is upon us today.
Chris: Right. I do want to pull something out of there in particular. I mean, that's a whole lot of benefits to the community that come from a network. I think probably most of the citizens of Morristown aren't necessarily aware of just how many ways they benefit. And there's less pressure on the tax base. But it's often assumed that a municipal utility does not pay taxes. And what you were saying is, it increased the payment in lieu of taxes by 35 percent. And I just think it's important for everyone to realize that, in fact, you do pay taxes, to support the local community, to benefit local city services.
Jody: Well, let me give you an example. We consistently are the largest taxpayer to the city of Morristown -- through the in lieu of tax payment. And, ironically, TVA is second. They're in lieu of, as directed by the state. Then all of our industries and everybody else, you know. And the incumbent telecom providers, they don't pay anywhere near the amount of money that we're putting back in the city. So, it -- it's not tax-free. It's state law. And it's -- many people probably don't realize that. You're correct.
Chris: So, as we're closing out, the last thing I wanted to talk a little bit about was just what advice you may have for other communities that are looking at Morristown and are thinking, wow, how can we -- how can we do something like that here?
Jody: Well, although there's a lot of benefits, telecommunications is a tough business plan for a small community -- due just to the economies of scale. So I would advise a municipal to strongly consider the cost benefits enjoyed, what your electrical and your other services around the city can do. And, you know, in our case, I mean, we ponder now that if we were not in there, the cable rates and Internet rates would be much higher in the city. So we kind of act as the salt that prevents the incumbents from taking advantage of us. Because, to my knowledge, the incumbents have not raised cable TV prices since we entered the business. And, you know, -- And, in fact, they, too, because of our pressure, they've improved their services and their systems. And that's a win-win, you know, for the community.
But I think if you want to think to the future, you got to ask yourself some questions. And one is, is fiber optic infrastructure an investment you cannot afford in the future? Where do you see your community 20 years from now? And will broadband be a requirement for economic development? Or is it just a passing fad? So, will other cities get these businesses? Or will you? And what type of businesses will you get? So, you know, when we evaluate projects, that -- you always try to evaluate "do nothing." I don't think "do nothing" is really a good option. You know, I -- the incumbents, they were not here when needed for the community. So you ask yourself, do you want to control your own future, or allow them? Because it is now not an entertainment business. It's an essential, critical service for businesses.
So, Morristown -- I guess, you know, it wasn't my decision, but they did answer yes to those questions. So, we've joined this elite, I guess, community of gigabit-enabled cities. And it may sound sexy, but the real benefit is the day-to-day improvements that you see in the quality of life. Businesses are more profitable, there is more economic development, and there's more utility advancements.
But, I would say, it takes political will. It takes making some good decisions with vendors. And it takes some resolve. Because it's not an easy business.
And Morristown was fortunate to have a few champions of the cause, including the mayor, and some state levels, and some community leaders. So, I would say those communities probably need to start looking today, who is it out there that could champion that cause for them?
Chris: Terrific! Well, thank you so much for joining us on Community Broadband Bits. This has been a terrific explanation of why Morristown built the network, and what kinds of benefits it's seen.
Jody: Well, I appreciate the opportunity. Thank you.
Lisa: That was Jody Wigington, CEO and General Manager of Morristown Utility Systems, visiting with Chris. Be sure to check out the musfiber.net website. In addition to information about their consistent rates, you can find out more about the vision, the strategic plan, and news about the utility. You can also visit muninetworks.org and follow the "Morristown" tag.
We encourage your questions and comments. E-mail us at email@example.com. Follow us on Twitter to learn all about the most recent developments relating to community networks, broadband policy, and telecommunications. Our handle is @communitynets . This show was released on February 26th, 2013. Thanks to D. Charles Speer & the Helix for their song, "Freddie's Lapels," licensed using Creative Commons.
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