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Transcript: Community Broadband Bits Episode 373
This is the transcript for episode 373 of the Community Broadband Bits podcast. In this episode, Christopher speaks with Christy Batts of CDE Lightband about Clarksville, Tennessee's municipal fiber network. Listen to the episode, or read the transcript below.
Christy Batts: When we went in and put in his new phone system and got everything set up for him, his phone traffic more than tripled. What was happening is he was missing these calls. He's now had to hire two additional people to answer the phone, but his business is booming because of it.
Lisa Gonzalez: Welcome to episode 373 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Back in 2013, Christy Batts from CDE Lightband made her first appearance on the podcast to share the story of how Clarksville, Tennessee, chose to invest in a publicly owned fiber optic network. She's back this week to describe upgrades and changes that have kept the network at the top of its game. In addition to innovations in voice and video service, CDE Lightband has partnered with local cooperatives and continues to increase speeds throughout the community. Christopher and his guest talk about the network's new approach to improving subscriber Wi-Fi performance and the ways they plan to bring free Wi-Fi to public spaces in Clarksville. They also talk about how unexpected success has kept the network on sound financial footing that is benefiting the community in ways that aren't broadband related. Now here's Christopher and Christy Batts from CDE Lightband in Clarksville, Tennessee.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance up in Minneapolis, Minnesota. Today I'm speaking with one of our guests from our first year doing this program. Christy Batts is the broadband division director at CDE Lightband. That's a municipal electric provider that also does broadband services in Clarksville, Tennessee. Welcome back to the show, Christy.
Christy Batts: Thank you Chris. I'm glad to be back.
Christopher Mitchell: Well, it's been about six years I think, maybe a little bit more than that, and a lot has happened. You and I recently touched base and I'm really excited with all the progress, so I wanted to pull you back on this show. I think CDE in Clarksville has been in this business for 11 years now. Can you just give us a quick refresher as to what you're doing?
Christy Batts: You're correct. We've been in the business about 11 years. It has been a whirlwind 11 years. We have gone from struggling small municipality trying to get their feet wet in the broadband world to extremely successful, very pleased with how our project's turned out, gaining a lot of recognition and focus, not only regionally but throughout the state, on what we've been able to accomplish in the last 11 years. So we're very proud of what we've been able to make happen here.
Christopher Mitchell: Yeah, and you have a particularly difficult population in that it tends to move more frequently than most because of that large military base, right?
Christy Batts: We do. Clarksville is home to the Fort Campbell military installation, which is where the 101st Airborne Division air assault is stationed, and we also are home to a state university, Austin Peay State University. It's one of the fastest growing state universities in Tennessee, so that lends itself to a population that's not only very diverse but also turns over quite a bit. And we've ran up the numbers, and about 30 percent of our population turns over every year.
Christopher Mitchell: And you have more than 30 percent then that are taking your broadband services or taking services from the telecom division?
Christy Batts: We do. Yes.
Christopher Mitchell: Ordinarily, I think I would probably start more at the beginning and move forward to remind people, but I actually want to jump in and talk about some of the latest news coming out of Clarksville — some of the changes you've made recently or will complete doing — because I think that's actually just fascinating. Let's start with the hosted PBX. So first of all, for a person who's listening to this and has no idea why I just said those three letters, what is it and why is it important for your services?
Christy Batts: We offered the true triple play for our residential customers, which is the Internet, television, and phone product, but we also know that on the phone side of the business, that is declining as far as usage on the residential. Everyone's using cell phones these days. No one really has a land line. So the market for phone services is really in the commercial side of the business, and we had been providing a traditional voice over IP system with the SIP trunking for large corporations and that sort of thing on the phone side. What we ran into and what we were finding in the market is so many of our customers, while they wanted to switch to our phone services, had aging phone equipment and really didn't — especially in the small to midsize business market — didn't have the resources financially to go out and wholesale replace the entire phone system. And most of their phone systems and the services that they had didn't have the features that so many of us have come become used to with voicemail, the ability to transfer calls directly to cell phones when you've got crews or staff members in the field. So we wanted to find a solution for that, and we teamed with our wholesale phone provider — which we use Momentum for that service — and they came to the table with a really nice high state PBX product, which in turn allows us to put in a fully functional phone system for the customer. It does all their switching, all of their phone gear, their actual set. We set up everything for them, and then we deliver the dial tone to those phones. And they just lease that from us on a monthly basis, and it makes it something palatable for them to handle financially but also be able to solve some of their business needs as well.
Christopher Mitchell: And I would think that that would lead to many more small local businesses wanting to take service from you because even though, as you mentioned, the residential telephone service is in decline, most businesses still require telephone service for most of their employees to be productive.
Christy Batts: That is correct. That is correct. And it's a real interesting little story. We had in particular one customer that we were working with who'd only had about three traditional phone lines coming into the office and realized that he could possibly be missing some phone calls. When we went in and put in his new phone system — upgraded all of his phones, put in his new services, got everything set up for him — his phone traffic more than tripled. Um, and in turn what was happening is he was missing these calls. He's now had to hire two additional people to answer the phones, but his business is booming because of it.
Christopher Mitchell: Right. I'm sure that you wonder about all the missed opportunities when you're trying to fall asleep at night after you get that kind of data. So one of the other pieces of news is a streaming platform, and I guess I'm curious — how challenging is that to implement? I think most people just commonly would think that it would be available but may not have a sense of what it takes.
Christy Batts: Yeah, it has probably been one of the more difficult product lines we've ever had to embark upon. It's been a challenge to get the product up. We really looked for something to work with and to deliver to the customers, to answer not only the cord cutting that everybody's suffering from with traditional video services but also the cord nevers, the people who really only used us for their Internet service because they were using other streaming devices and other streaming services. So we partnered with our middleware providers and developed some content and some products, worked with our programming partners and got the rights to distribute the services through streaming, and now all the background technical stuff that has to happen to make that happen. We're in the testing — final testing phases of the streaming service now are going on. And once we get the clear from the engineering team that we're ready to go, then we'll be ready to soft launch that in the September timeframe and then go full force launch in October.
Christopher Mitchell: And that will allow people then to subscribe to your linear TV and also to get streaming additionally? Or is there a wrinkle to it?
Christy Batts: It's actually going to be a totally different complete service. We will still maintain our linear service. You're still gonna always have a market, I believe, of customers who want just your traditional television service with the set top box and a DVR and all those other functions, but we now will be able to offer a separate streaming package for those that want our Internet service. It's going to look very similar to a linear service, but it will be delivered over an Amazon Firestick or an Android app or an Apple app.
Christopher Mitchell: And to deliver that, you're going to be around that same time turning on a second hundred gigabit backhaul connection.
Christy Batts: That's correct. If nothing else, we've proven in the market, with the military and the university, that if there's a way to push the bandwidth expectations from our consumers, our consumers are definitely going to be the ones to do that. And since we offer our base Internet speed at 250 megs for both residential and commercial and go up to 10 gig on the commercial basis, we have consumers using our bandwidth and a lot of it, so we thought it was really important to get into the second 100 gig connection. We turned up our first 100 gig connection about 18 months ago. We'll be turning up our second one in September as well. And then, that's also going to lend us an opportunity to partner and work with some of our counterparts surrounding us beause of course you probably know, in the state of Tennessee electric co-ops are now allowed to get into the broadband business. And we've got several of those starting up services surrounding us, so we're working and partnering with some of them to wholesale some bandwidth for them as well.
Christopher Mitchell: Oh, I'm sorry. I didn't hear anything that you said after saying that your base package was 250 megabits symmetrical.
Christy Batts: Okay. Okay.
Christopher Mitchell: No, I'm just teasing. You know, I pay $95 a month to Comcast for something that's roughly similar download speed I guess and 10 megabits upload speed. So now I'm curious, do you have a sense of your network utilization? As I say that, do you see people using a lot of that upstream capacity that you have that I don't?
Christy Batts: We do. We absolutely do. We have a lot — especially on our business side, we have a lot of that capacity used, and it averages about 40 percent of our available bandwidth capacity every day.
Christopher Mitchell: Okay, wow. So the last thing in terms of this, and this isn't new for you, but we haven't talked about it on the podcast. You've switched to an indoor ONT that also can provide Wi-Fi services. I think one of the common things we've heard from ISP in recent years is that so many service calls, a majority, are often about Wi-Fi, and so this gives you visibility into those viable Wi-Fi problems. You can solve them without rolling a truck, I'm guessing. So just tell me more about that, how that happened, and what your results have been.
Christy Batts: That has been tremendous for us. We have moved to the indoor ONT, as I told you. It does have a one gigabit wireless router built into the ONT, and we had a huge, huge intake. Over 3,000 customers in the last 18 months have subscribed to that Wi-Fi device. What we've teamed it with and what I would suggest for anyone that's getting into that and looking at that as an opportunity for themselves, or even if they're doing it and still struggling with the consumer that always says "It's not my equipment, it's not my equipment," we've invested in not only the equipment but the training for our service technicians with Wi-Fi analyzers and our installation teams as well. So when we go in and we do an install and the consumer in the home says, "I want the router right here," or "I want you to connect it to my router and it's located right here" —
Christopher Mitchell: Yes. Just put it right here in this closet, right?
Christy Batts: Yes, exactly. On the third floor, you know, away from everything.
Christopher Mitchell: Right.
Christy Batts: They can go throughout the home and actually certify the Wi-Fi signal so they can tell the consumer, "You're really, really strong right here. You're not so strong right here where you're wanting to stream all your services on your smart TV." So we can actually show them the best location to locate, whether it's our router, their router, and we can show them the challenges they'll have up front. Here's where you're going to have your challenges. And so we're hopefully fielding those questions prior to having to field a phone call about it.
Christopher Mitchell: I would — you know, if you just told me that you switched to an indoor ONT I would probably think that you just place it someplace on an exterior wall in the basement, but now I assume you're going to have to figure out a different placement for it giving that it's going to be the Wi-Fi base station.
Christy Batts: Exactly. And what we're in turn doing, which makes it a lot easier for us in most cases, is we're going in directly with the fiber connection into the home, so we've got a little bit more flexibility where we place that. Obviously it has to be near a power source, but we can control where we run that fiber connection into the home as well and it makes it a little bit easier.
Christopher Mitchell: Alright. So now let's move into discussing some of the financials. When you and I talked about six years ago, it sounded like you were starting to make inroads on the debt at that point, and I'm curious how you're doing now from a financial picture.
Christy Batts: Oh, it's really going very well. You know, I used to joke, when they originally set the payment schedule for us years ago when we first started up, they set that the final loan, the $17 million at the top end of what we owed back to the electric division, and they said that the loan payment we scheduled should have it paid off in 2035. And I'm like, "Okay, well y'all come by the retirement home and tell me when it's done."
Christopher Mitchell: Right.
Christy Batts: But we will actually pay that loan off in 2023, so several years in advance. We have now paid that debt down to just that $6 million, and we're averaging making about a $2.5 to $2.8 million payment annually. So we'll have that paid off pretty quickly.
Christopher Mitchell: And yet, from what you've told me, I actually think that that's not even the beginning of, you know, the good story from the financial side. Can you tell us more about the telecom division and how it's helping the electric side in in other ways?
Christy Batts: Yeah. When we built this fiber network back in 2007, it was originally built to benefit the electric company. So it was designed to manage our automatic meter interface infrastructure so that we could remote connect and disconnect the meters throughout the city. Obviously with the turnover that we have, that's hugely important so that you're not constantly rolling trucks out to do disconnects and reconnects. That's in place. They're seeing significant savings from that, right to the tune of about $2 million a year and savings for operational costs for that piece of the business. They loaned us in turn $17 million to start up our side of the business and to maximize the availability of that fiber. In addition to paying down that, because the electric side of the business or the electric division owns the fiber network, we in turn lease that fiber network from them to the tune of almost $8 million a year and lease payments and shared costs. So that's another $8 million in addition to loan payments that we push over to the electric division annually. With that, they have in turn built three new substations and upgraded substations. So a brand new substation on average costs about $6 million. They built three new ones and upgraded two out of cash delivered to them by the broadband payments and shared costs and did not have to go to the bond market, which is the typical first place that a utility will go when they've got capital projects. They'll go borrow money on the bond market. So they've not had to do that. They've avoided three electric power rate increases because of the cash that's being brought over to them. And then, they're in the throes right now of an $8 million campus renovation for the electric division's main campus of buildings that will give them a state-of-the-art call center, additional office space for expansion, and generally a refresh of a very old 1980s building that is going to be a really nice addition in the look and feel of it to our community.
Christopher Mitchell: Well that certainly seems like a pretty good return on investment for the investment of the electric side. Now let me ask you about stories that have happened in the last few years. You know, whether that's a local business coming to town, whether it's businesses benefiting from the hosted PBX or — you know, what are the sorts of things that you're doing that makes a difference, that makes you want to jump out of bed in the morning and get to work?
Christy Batts: Well, aside from the fact that I've cut my teeth in this industry, so to speak, and I won't even say how many years because then it really makes me sound old. But you know, I love what we do here every day. I love how we're able to impact this community, not only in what we provide our consumers and our customers, but what we can do when we help small business entity that, you know, they're opening up for the first time, and they've got all of these expenses to get a business started up, and then they turn around and look at the cost possibly to have to buy a phone system. And we can come to the table with really reasonable rates for bandwidth and partner with them on their phone services and really help guide them into that process hopefully that — you know, so many of the first startup businesses fail within the first two to three years. Hopefully by helping them manage into that, with reducing those calls or making those calls more manageable from the beginning, they're able to use those limited resources they have at startup in another way to make them be successful in the longterm. We are really excited to be working with our city. Our city is developing a technology council. It's something we've needed for quite some time, and they're looking at great new ways to utilize this bandwidth that we provide in a multitude of areas. So this summer, we will do a proof of concept test for a Wi-Fi network within our parks, so that we can have some accessibility for students who want to go to the parks and study, or folks who want to be out there in the parks and enjoy the beauty of our parks but also be able to stay connected and still do some work on their lunch hours and that sort of thing. So that'll be our first proof of concept of that. We're also looking at some Wi-Fi kiosk type opportunities in our downtown and our historic areas that will allow us to not only showcase some of the things that our visitors can see when they come to our community, but also give them some access to what we think is one of the premier networks in the area. So we're looking at those opportunities with that technology council and just looking for ways where we can maximize things for public safety, communication, all of those avenues for us, and really see what this networking could deliver for the community as a whole. So we're excited to be part of that every day.
Christopher Mitchell: Okay. Yeah, I'll bet. And I'm still hung up on the 250 megabit symmetrical intro rates, which —
Christy Batts: You know, we do have — I work really closely with my friends at the Chamber of Commerce, and we really do have a nice relocation program. We'd love to have you move.
Christopher Mitchell: See, the thing is I'd like to relocate and bring winter with me, but I don't know if all your other residents would appreciate that so much.
Christy Batts: Yeah, no. And we don't do winters really well here, so you would be embarrassed. The rare moments that we have large amounts of snow, we embarrass ourselves in the way that we react.
Christopher Mitchell: Well, for the entire month of August, I might refuse to put a shirt on, so I think it would be embarrassing for me if I was to do that. I have one other note here that I wanted to add. I think I hadn't heard this before in terms of how you solved this issue, but you said that you have a good relationship with new MDUs, multi-dwelling units, apartment buildings, that are built and that you generally get in there pretty easily. So tell us how you do that.
Christy Batts: Lots of connections with folks in the community. You know, I won't say it's the sole reason, but we're really, really very focused on how we connect with folks in the community. When I left the cable industry and I went to work as our director of our Chamber of Commerce, of course, there's a natural resource there to develop relationships with folks. And then when I moved over to that, of course I built those relationships and brought them with me. But we've worked really hard at working with the home builders associations here in the community and with the developers in the community. So typically, when something's being built, if it's locally being built, if it's a developer that's doing it here locally, we're on the ground floor providing them with insight on how to wire for the buildings, providing them with the cat 5 for their construction folks to pre-wire for the buildings. And we're usually the first ones in there to get all that done and set for us. It's nice to be part of those partnerships as well.
Christopher Mitchell: And so, they do all the work? You just basically give them a spool of cat 5 cable?
Christy Batts: Yup, that's it.
Christopher Mitchell: And so, let me ask you then. I mean, you're already offering 10 gigabits today. This is an apartment building that could be around for several decades. Have you considered whether you should be doing fiber to the unit or using cat 6 cabling or something like that?
Christy Batts: We do. It depends on the location and what they're planning to put in there. So sometimes cat 6 works a lot better than cat 5. General rule is if it's just your average application with a residential type setup, cat 5 is certainly adequate. Cat 6 we've done a lot of our larger commercial developments and the like, and then as we're doing with the indoor ONTs, we're taking that fiber directly into the unit.
Christopher Mitchell: Great. Well Clarksville is one of those places that I haven't actually been to, out there in western Tennessee. I'm going to fix that one of these days. I really appreciate all of your time. You know, Christy, it really makes me definitely want to check it out. Not necessarily as a candidate for permanent relocation, but I want to see what it's like down there, and I hope others will give that a shot too.
Christy Batts: Well listen, do come visit us. We'd love to have you visit. We'd love to show off what we're doing and introduce you to some of the other folks that are doing other cool things in the market that our network will be used for that we get excited about every day.
Christopher Mitchell: Sounds good. Thank you for your time.
Christy Batts: Thank you. I appreciate it.
Lisa Gonzalez: That was Christopher and Christy Batts, broadband division director at CDE Lightband in Clarksville, Tennessee. If you want to hear our 2013 interview to learn about the early days, check out episode 51 from June 2013. Learn about the network at cdelightband.com. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at email@example.com with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. Follow muninetworks.org stories on Twitter. The handle is @muninetworks. Subscribe to this podcast and the other podcasts from ILSR, Building Local Power and the Local Energy Rules podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at ilsr.org. While you're there, please take a moment to donate. Your support in any amount helps keep us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thank you for listening to episode 373 of the Community Broadband Bits podcast.
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