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Transcript: Community Broadband Bits Episode 386
This is the transcript for episode 386 of the Community Broadband Bits podcast. In this episode, Christopher talks with folks from Medina County Fiber Network and Lit Communities about their partnership that's helping connect Ohio bussinesses and soon residents over an open access network. Listen to the episode, or read the transcript below.
Brian Snider: This is something that I think will continue to happen across the country with municipal broadband and private capital getting injected in.
Lisa Gonzalez: Welcome to episode 386 of the community broadband bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. We've interviewed guests on the podcast before that discuss different types of collaboration. This week we have three people who are here to talk about the new partnership in Ohio that centers around the Medina County Fiber Network. We've had one of them on the show before, David Corrado, CEO of the network and this time he's joined by Brian Snider and Ben Lewis-Ramirez from Lit Communities. In this conversation, we learn more about Lit Communities. David also provides a refresher on the Medina County Network's progress and why they decided it was time to bring services to residents. Christopher, David, Brian and Ben also talk about the partnership between the network and Lit communities and their new entity, Medina Fiber, and the plans they have to serve residents. We get to learn about how private capital is playing a part in this community-based project, more about the model and some of the innovative services that Medina Fiber will offer the local community. Now here's Christopher talking with David Corrado from the Medina County Fiber Network and with Brian Snider and Ben Lewis-Ramirez from Lit communities.
Christopher Mitchell: Welcome to another episode of the community broadband bits podcast. I'm Chris Mitchell at the Institute for Local Self-Reliance in sunny, if chilly, Minneapolis. Today I'm speaking with a trio of folks that are doing a pretty exciting project together. I'm going to start by introducing Brian Snider, the CEO of Lit communities. Welcome to the show!
Brian Snider: Thanks, Chris. Good to be here.
Christopher Mitchell: We also have Ben Lewis-Ramirez who is the chief marketing officer for Lit communities. Welcome to the show!
Ben Lewis-Ramirez: Pleasure to be here. Thanks for having me.
Christopher Mitchell: And we also have a returning champion who actually is a returning champion from an episode three years ago, David Corrado, the CEO of Medina County Fiber Network in Ohio. Welcome back, Dave.
David Corrado: Good afternoon, Chris. It's always nice speaking with you.
Christopher Mitchell: Well, and I've appreciated your support over the years. I know you've followed our work and supported it and done a lot of great things that we can report on. So let me start though by going back to Lit communities and asking Brian first, what is Lit communities and please, no references to marijuana. This is a family show!
Brian Snider: Yeah, you know, it was hard actually getting that domain name. It took us awhile to find the right one and it was very strategic thinking when it came to that. So now the core of Lit communities and the name is, we ultimately want to light fiber access networks and a more open access capacity. The idea of Lit communities with actually created four or five years ago when we started focusing more on municipal broadband and really trying to bring them into the 21st century for how this needs to get executed all the way from engineering to an operational standpoint. Lit communities is the group that can come in and work with municipalities to get fiber connectivity to their residents in a efficient way. And working with Dave for the past couple of years, they've been our really first project and has been really the emphasis of why Lit communities got created to show that the open access community broadband network can still come to the table through a private capital standpoint as well, which I think makes this project extremely unique.
Christopher Mitchell: Ben, let me ask you, specifically, if you want to tell us a little bit about the history of the key players in Lit communities, what projects they've worked on with this being kind of a high profile project of y'all working together for the first time.
Ben Lewis-Ramirez: Mo-t of us come from a background working in the outside plant engineering industry. We've all spent time working for some of the big, Tier 1 providers in that space like At&t, Google Fiber, Verizon, etc. And it became apparent to us, after doing that sort of work for a few years, that the smaller municipalities and more rural communities were being left behind as those big companies were making their investment into, you know, the lower hanging fruit of the denser, more urban market. And so, at the time we began a consulting practice with a previous employer where we did essentially outreach to municipalities and tried to help them navigate the process of defining their own network infrastructure, which is, as you know, is extremely complicated. Many moving parts, there's a lot to balance and we felt at the time and still feel to this day that, in some ways the consulting community has let down the municipalities in this country if I sort of perpetuating these feasibility study after feasibility study. And so, you know, our interest then as now is how do we go from knowing that demand exists in a given place and you know, we can say that with certainty about most every small community in this country — how do we go about making a network actually happen there? And how do we have to get creative about finding the financing to do it? And that really is what drew us to the open access, open application business model that we still proudly espouse. That way of looking at the network as separating it from the services that are provided on it, really allows for some creative funding sources that are not available to a network builder in a traditional operating model. So using software to find networking, we can separate layers of the network for residential service, business service. We can offer Telehealth, we can offer a backhaul for cellular providers and the wireless carriers. We can offer capacity to the community itself for smart city applications that are bandwidth heavy and we can do all of that with the same network infrastructure and we can do it in a way that's extremely consumer friendly. And so it's sort of this triple win and kind of coming from that background, doing all of that work together in the past, we knew that this would work — Our motto is it's always feasible. And we are extremely fortunate to develop a relationship with Dave Corrado and the Medina County Fiber Network, which, you know, provides that crucial middle mile component for us that makes it much easier to make a build happen in these smaller places.
Christopher Mitchell: Let's jump over to Dave to remind us about, and I want to be clear about this because it could get a little confusing later on with another entity that has a similar name, but the Medina County Fiber Network, Dave, just a quick refresher on what's happening there.
David Corrado: Sure. I'll keep it fifty thousand mile view, if you will, cause I know that your listeners have listened to us previously about the networks.
Christopher Mitchell: Just to be clear, Dave, 50,000 mile view puts you pretty far into orbit.
David Corrado: Okay, let's go 50,000 ft. , shall we?
Christopher Mitchell: Okay, let's do that.
David Corrado: So Medina County Fiber Network is a 150 mile open access network, which means that, we have our network built throughout the county and our goal is to provide a better transport model for 13 carriers that are connected to our network selling lit services. So about 90% of our revenue is lit services and 10% are Dark Fiber IRUs. We adopted this model for two reasons: one, from an economic development perspective, having a choice of carriers and having the ability for carrier diversity was a much more attractive from what we heard from businesses that were here and from businesses that were looking to come here. The second thing is we were not in the area of competing with the existing carriers, we wanted to make their product better. So we offer this high, fast, very redundant, great diversity network that they can run their services ove but we realized four years ago that we needed to move into the residential market, which is why we're on this podcast today,
Christopher Mitchell: Right, because I suspect that even though you have really great partnerships with those carriers that are providing services, that they're looking to you or some other entity to pay for extending the fiber that you have so that they can use it some more.
David Corrado: That's exactly right, Chris. We are definitely in a situation now where there were two driving factors, one to start building the network in areas we weren't, with a partner, to handle some of that commercial piece. And number two is to get to the market where we weren't and people kept asking us, which was the residential household.
Christopher Mitchell: Now, I think the next step, although, I'm willing to be overruled but probably be come back to you, Brian. And I think to explain Medina Fiber, which is, as I said, it's distinct from the Medina County Fiber Network — what is Medina Fiber?
Brian Snider: It does get a little confusing there, but we want to keep the same motto that Dave and the Medina County Fiber Network has kept going in regards to an open access community based infrastructure. So through partnership of Lit communities, peak communications, there are smart communications systems company. We'll be putting together the financing and creating Medina Fiber LLC, which will build out infrastructure connected to the middle mile network of Dave's and go to the home offering Internet voice Telehealth and smart home applications. We'll be starting, actually, our kickoff event is on December 13th, they are locally our phase one build out is roughly to 6,100 homes, including the townships and villages of Seville, Westfield center and Guilford in Medina. So we're really excited to announce the creation of that and it couldn't have come together without partnerships like Dave and what they've done at Medina County Fiber Network. It gives us the ability to actually execute this with the correct business plan. And, Dave, we've been, I guess we started this process almost a year and a half ago and it's nice to obviously see this come to fruition, but it's taken that long to get everything planned and set up the right way where we can execute the right way the first time.
David Corrado: You're exactly right. And they say time flies when you're having fun. This has been a real roller coaster ride, but in a good way. They say that when you're starting a business, the highs are extra high and the lows are extra low. But we are very happy to be partnering with Lit communities because their strategic direction works so well with what we've had in place here now for the last seven years.
Christopher Mitchell: Who should speak on the private capital approach rather than, a more traditional, revenue bond or something like that because I think that the role of private capital in this is a, it's a pretty important piece.
David Corrado: I'm gonna let Brian speak to the private capital. I'll touch on the bond just so we can set the base for your listeners so Medina County bonded approximately $15 million in 2010 to build out the entire structure for the transport rather than building a section at a time and then going for additional bonding. It was sort of both feet, jumping into the pool at once and it was basically because, in order for us to obtain the connections with all the carriers we were targeting, we had to have multiple connection points, which means we had to have the network connected and built in redundant rings. But when you get to that point as any company, the governments are the same, you can only really bond so much money that your government can support until the entity starts running. So that's where then we had to look for a partner with the private equity and I'll let Brian speak to that.
Brian Snider: Yeah, and that's where, Chris, we see more from when we started this process. Again, it was more about four or five years ago, we knew that private capital had to get injected into this model for rural infrastructure to catch up with how fast technology is changing. If it didn't, we would continue to be left behind and there'd be a bigger and bigger digital divide. And so we started pitching our model to private investors and trying to find the right partner that understand the ebbs and flows of this telecom industry world and infrastructure that we live and breathe in and that's been on our side a little challenging because our model is different. We are not the service provider that's providing the end user, the service, but we are the company that's providing the infrastructure to get you connected or that bandwidth. And once the private side and private capital has seen this more of like a, you know, it's electric energy type investment for new utility, it's now sparked, I really seen it in the past two years, a private capital looking at this type of fiber infrastructure investment differently. I think it's going to continue to happen this way and luckily, we've been able to raise the financing needed for Medina and trying to build a financial structure that gives us the ability to scale. We've raised private capital for phase one, which is roughly about $8 million in what we're estimating through the rest of the county deployment. We plan on also working with local banks to try to offset some of this with debt as well, so it'll still be a mixture of how we expand across the county but governments move at glacier speeds when it comes to to get bonds and all of this situated and like Dave said, you get to a point where you can only do so much from that side and we've seen projects just drag on for years because of that. We would rather inject the private capital to get the project going, even though it's still a community based infrastructure, then we give the ability for the towns and even Medina County later on down the road if they want to purchase back the network — it's a lot easier to do that through revenue bonds and through bonds have a different mean at that stage, so this is something that I think will continue to happen across the country with municipal broadband and private capital getting injected in.
Christopher Mitchell: I want to come back to the municipal base, but I wanted to make sure that we also spend some time on the open access portion. And Ben as the chief marketing officer, I'm guessing that you're not only marketing to potential subscribers, but you're trying to find a good mix of ISP is to operate on the network. Can you tell us what's happening on that side of it?
Ben Lewis-Ramirez: Certainly I think, the ultimate goal of people who advocate for open access is to get the big incumbent carriers to start riding the networks but you know, we're under no illusion that's gonna happen anytime soon.
Christopher Mitchell: Let me just say that some of us are very enthusiastic about open access and would prefer not to have the incumbents for complicated reasons that might be a good future show but I just wanted to throw a little monkey wrench in there.
Ben Lewis-Ramirez: Sure, certainly, I guess I say that as a way of saying that, in my mind, open access is sort of the inevitable future. And, to me, when the incumbents start to embrace it, that's when we know we've really gotten there and we've sort of passed the point of no return but that you're right, that conversation for another day.
Christopher Mitchell: Well I think that's a good, I think your measure is a good one.
Ben Lewis-Ramirez: It is, fortunately, for us, while this is sort of one of the first kind of public private ventures into the open access world that's being funded with private capital, there are examples of healthy open access network environment elsewhere in the country. I love to point out Utopia Fiber is being a great example with that and then also, to give a shout out to NoaNet in Washington state. And so, we're really fortunate in the areas of service providers and that there are kind of these high quality ISP that have already proven their ability to successfully operate a business without owning the network infrastructure themselves. And so those are sort of our first goatees, we also look at, you know, obviously at this point, I think that the relationship between fiber based infrastructure and economic development is fairly well understood. And one thing that can be observed in other markets where open access networks are the norm is that you wind up with these smaller, more grassroots companies that are able to give a local option to people. Something like in my home state of Colorado, there's something along the lines of 200 Internet service providers, most of them are with very small footprint. But if those small hungry companies who deliver great customer service, you know, who value each and every customer, extremely dearly because, you know, they have a relatively small footprint — those are the companies that are really interested in this model because it really sort of democratizes the capital expenditure that's necessary to go in and again, you know, as the open access advocate, giving consumers the ability to choose between service providers and then an app store like environment where they can just tick all at cart between different companies based purely on price and the customer service experience that they've gotten for them. I think that that's a world that we can all agree would be a lot better than the paradigm that most of us live in now.
Christopher Mitchell: Well, one of the apps that it looks like you'll be launching with and this first phase is a Telehealth and I'm curious how that might work for people who have seen all kinds of different ways Telehealth can be implemented. What's the approach of the ISP that you're working with here?
Brian Snider: Yeah, so Docity is going to be our Telehealth provider, Chris. Locally, they've also worked with EPB and Chattanooga's network and it's going to bring each resident in Medina County the ability for home health care services where we have to have the proper fiber connectivity to where they're going to have the ability to sit in front of their computer and stream a doctor's visit online. And we will build in packages that'll be based on how many visits the consumer goes through the doctor basically at home. And we'll be working with dosage of this structure packages that'll be set up for them to choose from where they could pay for per doctor visit or potentially just unlimited doctor visits that'll get set up and we're really excited about that piece being on the network day one. That'll be educational for a lot of residents there and we're excited to be teaching them how to use that. And then eventually it will evolve to where it transitions and to being able to age in place and things like that, which is going to be huge for rural areas, but even in urban areas for that matter. That's why the open access component gives the ability to bring those different services day one to the residents.
Christopher Mitchell: And yeah, it's a good opportunity to note that I kind of made a weird cryptic comment. I am, as you all know, I'm a very strong supporter of open access, although I do worry about having communities having a single physical network and so in the ideal world that I've played with is one that is somewhat inefficient from a physical point of view in that I would see that a cable provider ideally sticking around in the community and offering services distinctly so that you had competition at the physical layer, perhaps between two or three networks, but then a lot of competition and innovation within the open access layer. So we don't have to go further down my theorizing or you don't have to tell me I'm wrong in front of all my listeners but I just wanted to throw that out there rather than remaining cryptic. I do want to ask you, and I wanted to give you a little bit of a warning, I want to ask what success would look like in two years like, if you have a sense of that, but first, while you're pondering that, Brian, I want to stick with you for a second to ask about the community based approach. So, Medina fiber is gonna own the assets, right? And I'm curious how that works and you know, my preference for public ownership and so I'm just, I'm curious if you can walk us through how that works.
Brian Snider: Medina Fiber will be privately owned, again, we branded the infrastructure as Medina Fiber that we'll own it all the way to the electronics. We want to set it up though at based off of feedback from the community too. So one of the first things that we'll do when we come into Medina is we'll actually set up a demonstration center where we're going to educate the community on exactly what different services that are going to be provided across it. So the fact that we're still privately invested in the actual last mile infrastructure or the infrastructure all the way to the home in this project, it's still all community based from that perspective that eventually we want to bring on services new onto the network based on feedback from the community. The reason why we're doing this as the cause of the community needed it. The demand has been unbelievably positive and the need for better connectivity amongst the entire county, need for choices, and that was one of the reasons why we actually expanded phase one, we originally were, we expanded about 2,500 and additional homes and raise additional financing for that because the demand has been so positive there in the County. So it's structured privately from financing standpoint, but we're, we're looking at it as it's still the community's network through and through. So you're going to see Medina fiber riding around town, connecting people's homes and working through that from start to finish, so there's a really gray line, Chris, I think between this almost looking like still a public owned infrastructure project.
Ben Lewis-Ramirez: You know, in our time, working predominantly as consultants, a mindset that we encountered very frequently was that the local government, you know, despite the fact that they might offer, um, you know, electric or, or water utilities to their residents, this mindset that the local government had no business competing against the private sector. If there was a private sector company already kind of working in that space and serving the community, we were honestly somewhat surprised to encounter that mindset as frequently as we did. Because very often as you're well aware, you know, these small rural communities are treated quite terribly by their incumbent service provider. And yet, you know, there is a philosophy that says, well, you know, you let the private sector do its thing and the government should stay out of it. So that's actually what initially attracted me to the open access concept in the first place. It was like, well, okay, we're not telling you to compete with the private sector. We're telling you to build neutral infrastructure that will enable a greater degree of private sector competition but even that argument seemed to fall flat time and time again. And to be perfectly blunt, you know, maybe, overly, you know, candid here, part of the reason that we started with communities in the first place was because, we were tired of encountering that scenario and we thought, you know, look there's a clear demand here. We have a paradigm which is substantially improved. Would it be best for this infrastructure to be treated as a utility and offered by the municipality? Yeah, I would agree with that and I think there's plenty of places around the country where that's happening and happening successfully, but for political or philosophical reasons or however you want to cut it or places that are always just going to be resistant to that, those are the places that are a good set for this infusion of private capital that we're seeing with the Medina fiber project.
Christopher Mitchell: And I think one of the things that, that we'd like to celebrate here is people that get stuff done and go out and do it. So, and that's the important part is that there was a comment earlier that I think you made Ben about the sort of endless cycle of feasibility studies and, and I think that's it's depressing. Among communities that get caught in that cycle. I wouldn't put that only at the feet of consultants. I think there's reasons that that happens, but I really like that you've developed an alternative model that can work for a lot of communities. Now I want to ask you, Dave, quickly before I get to this, this final, what does success look like? It does seem like the local mayors are really enthusiastic about this and I was just curious if you can reflect on that a little bit.
David Corrado: The political landscape from the commissioners to the mayors to, you know, township councils are very excited about this because it's a great example of how a public private partnership can work. I think we've seen either ends of the spectrum where either a government owns a municipal network or we have the private carrier whose strategic direction is to make money for their company rather than really looking into the needs of the community. So we are able to blend this by taking our backbone that connects the Lit community infrastructure and deliver, as Brian mentioned, what the community really needs and all of that. I have to keep going back to economic development. I have a ton of statistics, but just one that really brings us home is that of the $400 million plus of economic development in the past three years here in Medina County, 72% of that was done by people who are using Medina County fiber. And as I mentioned, there are a lot of those statistics about employment and new jobs etc. So we know it works and, and it's just a domino effect when the companies come in and the economy rises etc. So that's why the excitement among our political individuals here because they know that we have this partnership, even though it's a private organization, the strategy is still to build a community and I think people are going to be really refreshed to see that, um, private companies and public, municipal companies and networks can really work together to put something great together.
Christopher Mitchell: Let me ask you to quickly, Brian trace the money with me for a second. So there's peak communications sets up Medina Fiber with $8 million that's used to build physical stuff, right? And then people in their homes, they connect and they pay a service provider. Presumably, I'm getting a little bit out on the thinner branches now. Some of that money goes back to Medina Fiber then to pay back that cost, some of it goes to the service provider and then that's more or less the model, right?
Brian Snider: Yeah, you nailed it on the head. So basically it's wholesale fees that the providers would be paying to us based on the service that they're providing to the residential customer. So the residents and Medina County would pay one that would be then decimated across to the providers based on what our agreements are. That and it would be the same wholesale fee for telehealth and for smart home applications and things like that that we bring onto the network. So it's almost like we're charging a toll to provide the services across it.
Christopher Mitchell: Okay, so let me ask you, I'll ask you if you have any final points we want to make, but first, what does success look like? I mean, are there things that you have in your mind like goals for instance, two years from now that will prove that you're on the right track with this approach?
Brian Snider: We do and the first thing I want to say though is we feel like we've already gotten ourselves set up for success based on the partnerships and the public private partnerships, especially that we have been able to create what Dave has been able to do to support us and Medina County Fiber Networks can't be missed or misunderstood. And the local support from the mayors, the residents, the whole community has bent over backwards to make this happen. And seeing that is what, what we get up every day trying to accomplish. And that in itself has created the ability where we know we're going to be successful in this market. And I think that can't be stated enough that the partnerships through and through, and this is what's truly gonna make it happen. And we've been able to do a good job locally in Medina to rally all the right partners from the public private standpoint to get this done. So success to this point, we've, we've already met a lot of that for two years out, Chris. I really think we want to be constructed past the 6,100 homes that we have outlined in a phase one right now that we would have fiber in front of each homes. So they would have the ability to access that and then we would also rate success by that. We're moving into the other towns throughout the county. We'd really like to get into Brunswick, Montville, the city of Medina within the next two years as well. So success is going to be getting fiber in front of all these 6,100 homes in the next two years so they can have the connectivity and choices that we're going to be able to provide and then moving across the county to hopefully have a very quick rate.
Christopher Mitchell: Dave, do you have any additional thoughts?
David Corrado: I think Brian did an excellent job, you know, talking about how the community has rallied together and I'm always open to talk with any colleagues across the country trying to do this, always love and I get calls from other States and people that have interest in this area.
Christopher Mitchell: And I do appreciate your willingness to be connected to folks. I've taken advantage of that more than once. Ben, any additional thoughts?
Ben Lewis-Ramirez: Part of the reason that we started in the area of Medina County that we did is because, you know, it is part of the more sparsely populated part of the County. And so, you know, we really wanted to prove that this model works, our whole, it's always motto, you know, being applied to the real world. And so having said that, you know, we did that really confidently because of the just tremendous groundswell of support from the community itself. And so we really want to do right by the rest of the County and, and build out to everyone, you know, hopefully within two years we will have successfully done that and we'll be already expanding the network, possibly even outside the boundaries of the county.
Christopher Mitchell: Is there anything else that we should talk about before we say goodbye?
Brian Snider: The last thing, Chris, is your Minnesota gophers have made an incredible run this year. I've been excited watching them battle through the big 10.
Christopher Mitchell: Well, you know, you're from Alabama, aren't you?
Brian Snider: But I've actually, I've got more Michigan roots than Alabama roots.
Christopher Mitchell: I've seen that on Twitter and I've been meaning to make some sort of annoying comment about it. But it is kind of funny that we may end up really seeing how good this team is if we're going up against Alabama on a bull game, which is a strong possibility right now.
David Corrado: I think that's the proof of the pudding of this whole project. We've got Brian who was a Michigan fan and we have me who's Ohio state. If we can get together and make this project work, I think anybody can.
Christopher Mitchell: Yes, yes indeed. I did want to, I did want wanna know one other thing and that's, that lit communities is not, as far as I understand putting all its eggs in the Medina basket. But also you are evaluating other projects along similar models, right?
Brian Snider: Correct. We're working in a couple other communities across the nation where we go through a process of, of the same thing that we've done in Medina, where we evaluate how much the network's going to cost, what the demand is going to look like, and then try to build a business plan and a financial model around that. And we're looking at probably going to be announcing hopefully a couple more communities first quarter of next year. So be on the lookout for that too. It's exciting times for municipal broadband and we just want to keep the momentum going.
Christopher Mitchell: Yes. And I'm, I'm excited about more open access so I'm really glad you're, you're, you're proving out this new model.
Ben Lewis-Ramirez: If we're going to Southern Medina County to prove that this works, you know, a sparsely populated rural area, you know, part of the communities that are on the wrong side of the digital divide are in our big Metro cities and you know, the sort of, underserved urban communities. And so, we'll be looking to prove our model in a market like that before we start expanding into suburbia, so they prepared for some big announcements from Lit communities. It's going to be a really exciting 2020.
Christopher Mitchell: Excellent. Well, thank you all so much for coming on the show. Thank you Dave for returning and we'll look forward to seeing what happens next.
Lisa Gonzalez: That was Christopher with David Corrado, the Medina County Fiber Network, along with Brian Snider and Ben Lewis-Ramirez from Lit communities. They were talking about the partnership between the network and the firm to bring residential service to the region via the fiber infrastructure. Learn more about the Medina County Fiber Network at www.muninetworks.org at the Medina County Tech. We have transcripts for this and other podcasts available at www.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 podcast 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 www.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 386 of the community broadband bits podcast.
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