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Transcript: Community Broadband Bits Episode 399
This is the transcript for episode 399 of the Community Broadband Bits podcast. In this episode, Christopher speaks with Mark Howell, former CIO from Concord, Massachusetts about the history and benefits of Concord's broadband project. Listen to the episode, or read the transcript below.
Mark Howell: People are much more understanding that their Internet connection is the most important part of their telecommunications package, and once they have that they can do just about whatever they want.
Jess Del Fiacco: Welcome to episode 399 of the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I'm Jess Del Fiacco, Communications Manager. For this episode, we're joined by Mark Howell, former CIO from Concord, Massachusetts. The town which celebrates its historical relevance also has the benefit of a fiber optic community network. Christopher and Mark talk about the history of the network, including why Concord decided to develop the infrastructure, how they funded it, and the local enthusiasm that drove the project.
Jess Del Fiacco: Mark also describes what it was like to enter the Internet access business and review some of the challenges they faced. Mark has words of advice for other communities considering a similar investment. You can learn more details about the network in the case study, citizens take charge. Concord, Massachusetts builds a fiber network from the Berkman Klein Center for Internet & Society at Harvard University. Now here's Christopher talking with Mark Howell, former CIO from Concord, Massachusetts.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits Podcast. I'm Christopher Mitchell with the Institute for Local Self-Reliance in Minneapolis. Today I'm speaking with someone from another M-state, not an M-city though. Mark Howell, former CIO for the town of Concord, Massachusetts. Welcome to the show Mark.
Mark Howell: Thanks Chris. I'm really happy to be here.
Christopher Mitchell: Well, I've been following from afar your progress out there in Massachusetts, one of a really good handful of municipal networks across the state, and so I'm excited to learn more about it. But let's start by just asking people to remember that Concord is a fairly important place in the history of the United States, and you could tell us a little bit about it so we have a sense of the area we're talking about.
Mark Howell: Absolutely. Concord is one of the oldest communities in the country. It was first settled in 1635. And it's located about 15 miles northwest of Boston, and it's probably best known as the destination of the midnight ride of Paul Revere in 1775 on the eve of the first battle of the American Revolutionary War. And Concord is also the home of Louisa May Alcott, the famous author of the Little Women book, now a movie as well as Ralph Waldo Emerson and Henry David Thoreau.
Mark Howell: So democracy, literature and ecology are all pretty deeply rooted in this community. It's a medium sized suburban community now about 18,000 people and 25 square miles. And it actually has some working farms that are still in operation ever since colonial times. Concord's a New England town, it features an open town meeting form of governance, which is important on our broadband mission. And there's a select board and at town meeting, which is a legislative session that's open to all registered voters. That's where all the really important decisions about the town are made.
Christopher Mitchell: It's a town with a lot of history and that's what we're about to discuss. I'll bet it felt like those copper lines dated back quite a bit as well.
Mark Howell: Yeah, we absolutely have some very old infrastructure. Some of it's been operating for a good deal of time and that definitely does play into our history with municipal utilities.
Christopher Mitchell: So let's dig into that. Why did Concord first get involved with fiber optics?
Mark Howell: So we came to it through the electric system. Concord's been operating a municipal electric utility for over a hundred years. The Light Plant as we call it, was originally coal fired generator that was used to generate enough electricity to run the pumps for the sewer system. Concord has a couple of rivers running through it and we needed to get the water out of the center of town from time to time. There were really two main reasons why the Concord Municipal Light Plant decided to build a fiber optic network and then later start an Internet service.
Mark Howell: The first was to support energy management and load control on the electric distribution grid. And the second was because we recognize that telecommunication services would help make Concord an attractive place for businesses. A number of years ago, back in the early 2000s we had run a program for electrode thermal heating and hot water controllers. And those devices were controlled using phone lines and the equipment that we used to connect those load control switches were getting obsolete and we couldn't get parts to replace it. So we started looking for a new network to enable us to replace that. And that's when the idea of building a fiber optic network came up.
Christopher Mitchell: So let's just dig into the water control system briefly to not gloss over that for people who are encountering it for the first time. What was the purpose of that and why did you need to be in communication with it?
Mark Howell: So the idea was that we would be able to use these electro thermal storage devices, which are basically just big ceramic bricks that were built into radiators and hot water heaters in people's homes. And the idea was that we could charge up that thermal storage at night using cheap electricity that we could purchase overnight and then use that heat energy during the day to keep the house warm or to heat their domestic hot water. And so we needed to be able to turn those devices on and off on demand, which requires two way communications.
Christopher Mitchell: And so you ended up replacing the old system as it aged out within a fiber optic system that was built entirely for electrical uses I guess is what I'm trying to say.
Mark Howell: Yeah, exactly. And the idea was to build a smart grid, so this was around 2008, and what we were looking forward to was the ability to be able to do those load control programs and maybe even expand them into things like thermostats. And we even had an idea about controlling pool pumps and things like that. Some of those ideas in the end it didn't work out, but we did end up building the fiber network in order to enable us control anyway.
Christopher Mitchell: Yeah, this seems like the kind of experimentation that we often associate with Chattanooga where we tend to focus on all the things that have worked very well in Chattanooga. But as we're trying to figure out how to both lower electrical costs and also green the grid so we can be more efficient. These are the sorts of experiments that we need to be trying, right?
Mark Howell: Absolutely. No doubt about it. We've learned a lot as we are in that network and discovered quite a few things about leaf cover and how far ZigBee signals will go and where wifi will reach. Because that network was somewhat complicated and involved repeaters that were on street lights that would communicate with electric meters at home as well as the load control switches. And it's still operating today for a number of smart meters. And that's how we do AMI, although we are starting to look at replacing that.
Christopher Mitchell: So when you started offering the telecommunications services and tell us how that worked?
Mark Howell: So the idea was to build a fiber network to enable us to install these gateways as we call them that would collect information from the electric grid. But in that process we overbuilt the fiber so that we ended up with fiber to the curb in front of all, well 95% of residences in Concord. And at that time the Light Plant director Dan Sack understood that it would be an option to add an Internet service over and above the smart grid. And that was going to be a way to potentially help pay for that fiber investment.
Christopher Mitchell: And how did people react to that?
Mark Howell: People wanted to do it. The cable companies of course weren't too thrilled and they came out and fought against it. We actually had to pass the authorization for the Light Plant to enter the telecommunications business through town meeting. And that required three separate votes across three different years. And the first year there was quite a bit of pushback from the industry.
Christopher Mitchell: Did that really catch on among town residents? My impression of town meeting day is that unlike for instance my city where I would say far too few people participate, that people take it seriously out in the New England area?
Mark Howell: We do. It wasn't one of the record setting town meetings in terms of tenants. That usually is reserved for things like voting bonds for school buildings. But it was certainly an important issue at that time. And there was a lot of attention paid.
Christopher Mitchell: And as you went year after year, was there a change in enthusiasm at all?
Mark Howell: Certainly the town's enthusiasm, it was just about a unanimous vote as I recall each time. And the industry basically stopped fighting it after the first vote and after they'd lost that first vote. It wasn't until several years after the vote authorize and telecommunications that the bond was actually put forward to construct the fiber network and that was actually in the 2009 town meeting.
Christopher Mitchell: So most of the construction costs were born by the electric utility. Because of the history and the need to manage demand, and then a smaller portion was for the telecom portion. What exactly did that buy? What are the, I think it was $600,000 if I read correctly in the study that David Talbot and others did through the Berkman Klein Center, 2016 study. I meant to have it in front of me, but I forgotten the title of it, but I'm sure that will be noted. Probably in the introduction through the miracle of editing.
Mark Howell: Sure. Well, I can cover that in some detail. So Concord actually applied for American Recovery and Reinvestment Act funding for the project but was denied. So the Light Plant brought a bond authorization request to town meeting for four and a half million dollars to construct the smart grid and build the fiber to the curb. 3.4 million of that was labor and materials for the backbone and distribution network and there was another 500,000 for smart grid equipment and the vehicle and engineering services and that sort of thing.
Mark Howell: So overall it cost $3.9 million to actually build that fiber network. In 2013 when we decided that we would start an Internet service, I went before town meeting and requested a borrowing authorization of $1 million. And that million dollars was startup equipment for the Internet service, specifically and it was meant to give us some working capital to fund the first couple of years of that program.
Christopher Mitchell: Let me just jump in for a second to ask you, if you remember back to that time, was that intimidating for you to be considering going into that?
Mark Howell: We did it carefully. I worked with another resident and we did some fairly careful business planning around it, but we were pretty confident that we were going to be able to get to the number of subscribers that we needed to get to, to break even. And in fact the plan that we put in place really did come through. By 2015 we had about 400, well $350,000 in revenue and that was up to 556,016, '17 we were at 700 and by 2018 we were on almost a million dollars. Now 2019 we ended up with about $1.2 million of revenue and that is well over our operating costs. So we're cashflow positive in five years and we just sort of designed our build to do a gradual construction that way.
Christopher Mitchell: And so then you actually are doing drops from the fiber pass that you built for the electric system into the home then?
Mark Howell: Exactly. The smart grid funding paid for fiber to a splice case within four or 500 feet usually of most homes. So we did, the network was designed and built to run basically one fiber strand to each parcel of property in town.
Christopher Mitchell: Now I interrupted you. Did you want to go back to the other piece of the funding?
Mark Howell: Well we did get a second authorization for a second borrowing of $1 million after we started and that was really looking at sort of the next set of capital investments. Although in the end we haven't needed to draw on that. So at this stage of the game the business is really quite self-sufficient.
Christopher Mitchell: And so I guess one of the things I was like to ask is, was it worth it and tell me how you'd convince me if I was skeptical? As you know, I'm not particularly in this case. I mean, to me it seems pretty obvious, but for someone who is skeptical, what would you tell them?
Mark Howell: Well, I would tell them that it's a lot easier than it was. At the time that I was planning this in 2013, '14 I felt like there wasn't a ton of information out there about how to do this. It was a relatively new thing. People were not streaming television for example. So when we entered the business with only high speed Internet, we got a lot of questions about what about phone service? What about video? And now a lot of those questions I think have been asked and answered. People are much more understanding that their Internet connection is the most important part of their telecommunications package. And once they have that they can do just about whatever they want.
Christopher Mitchell: You enter I think with a pretty ambitious 200 megabits symmetrical service, right?
Mark Howell: Mm-hmm (affirmative). Yes we did.
Christopher Mitchell: And then you also had a two year agreement, which is something that we don't often see among municipalities. In part because I think when they do focus groups to talk with citizens about what they want. A lot of times whoever wants to be bound by a contract, if you don't have to be? But you want to talk a little bit about the decision making that went into that?
Mark Howell: Sure. We wanted to use a fixed very simple pricing structure, so we decided on four tiers of service, which we called entry, basic, high speed and ultra. And the idea was that we would hold that price, have no ad-ons or extra fees and charge that simple pricing model to everybody at the same time. So anytime we upgraded the speed, which we did twice, we gave everybody the same new service right away automatically without changing their structure.
Mark Howell: The reason that we did charge an installation fee, it was pretty modest. You know by most standards it was $150 which was really just a fraction of what it actually cost us to connect that particular home. And our early termination or contract was written pretty well in favor of the consumers I believe. We had a $240 early term fee that went down $10 a month over your first two years. So by the time the two years ended up you would own nothing if you decided to leave.
Mark Howell: And really what we were asking people to do was to commit to about $400 in expense, which helped to ensure that we got people who were serious about taking the service at first. Because we were literally building it one customer at a time.
Christopher Mitchell: Did that give you any concerns in terms of Comcast or, I don't even know if you have, which cable company you have, but let's just say that the big cable company and the big telephone company trying to just come in and cut prices to try to deny you customers?
Mark Howell: We did have that concern. Our pricing wasn't set up to be very much less expensive than Comcast. We came in about, I believe that when, I think David Talbot did this study, but it worked out to be about 15 or 20% below and it was Comcast that was available in our market. So we had some concern about that, but we also had some people who were really interested in cutting the cord. And we found that we had a lot of very highly motivated customers at first. And that was a big part of why we were successful too. The community knew what we were doing. They knew us from the electric service that we'd been delivering to them for years and they really wanted us to succeed. So, and I think that's something that most municipal projects would find would be true for them too. People like the hometown guys.
Christopher Mitchell: We definitely see that. You mentioned the revenue targets and being well above the being able to pay your operating costs. What kind of take rate did you end up getting?
Mark Howell: So at the moment we're at about 20%. What we tended to do was set targets for how many installations we wanted to do in a year, and that was based on how much staffing we had and what we felt like we could consistently deliver on with the quality. And that number is settled into about 300 installations per year. So a little bit more than one new customer a day. In order to achieve that, we needed to do very little marketing. When we opened up our doors in effect, we send an email blast to a list of people who had indicated an interest ahead of time. We got 300 orders within the first week. So we had a year's worth of work in front of us right off the bat. And it did take us a while to get the processes running in order to do that.
Christopher Mitchell: No, that actually leads right into the challenges. And I'm curious, let's say I'm from a nearby town that you like, you're not going to give me bad advice on purpose. And I'm saying, "Hey, what do I need to know? What are the challenges I'm going to face if I want to go down this road?"
Mark Howell: Well, I think the biggest challenge that communities tend to have are challenges around whether or not a municipal administrations are really still uncertain about the success of building and running a network. And I would definitely tell you that if you're straightforward about it, select some good partners, and don't get out ahead of your skis. In other words, don't try and immediately go to a big percentage of the customers right away.
Mark Howell: Learn your business. You can do this. And there's a lot of good partners out there now. Design services are easier to get today than they used to be. The playbook of how to run an Internet services is getting much, much better defined than it was. So I would encourage a community to do that. Municipalities have a lot of good advantages. Typically they already have some database they could use, like the water system, if they don't have an electric utility already. They're used to that customer service. They know how to do horizontal construction and those services are out there.
Christopher Mitchell: Now what about the fact that, in particular in New England you have so many smaller towns and does it make sense for each of these towns to be working alone? Or one of the things we always hear is that, I'm sure you're hearing from your neighbors saying, "Hey, why don't you just build it over here?" So how do you think about the pros and cons of working together versus going in alone?
Mark Howell: So I believe that New England communities are a bit small generally. Not the cities of course, but the towns themselves to really do this on their own. I do think that it makes sense to join a cooperative or work with neighboring communities on this. Even in Concord, we have about 8,600 residential households. And even if we got 100% of those, I believe that this business would be a little bit smaller than it should be for its own good. I think that there's a big advantage in getting to some scale, particularly when we're talking about technology businesses. And so I'm actually actively working with some of the other operators around the state and we're discussing ways that we might be able to collaborate, cooperate and take advantage of the scale that's available in this kind of business.
Mark Howell: So I think you can both be local. A lot of it's about the value, some of the things that the community really was happy to see us do or to have policies around that neutrality, around privacy that would ... Around open access that would enable in a ... We were trying to serve everybody equally and I think that really makes a big difference. So it's how you approach it that gives you quite a bit of the advantage.
Christopher Mitchell: One of the things you said, it always strikes me as interesting. You know you have a state that's much wider than it is tall, and it seems to me you, you're probably considering working with towns that are a 100 miles away whereas you may have other towns that are 30 miles away but they're in New Hampshire. Is there any thought about going across state lines?
Mark Howell: I haven't given that a lot of thought. There's certainly no reason why you couldn't in those communities that are up north. When I think about it from a Concord perspective, I definitely thought about first building to those communities that are immediately adjacent to us. We already have some regional agreements around housing, around public safety, around school departments with those neighboring communities. And those are the ones that really make the most sense. We were working on some of these specifically on public safety radio, which is an application that you can easily carry on a fiber network and improve with Carlyle, which is the community just to the north of us and they happen to also be the community that shares our public access television station and our high school. So it makes a lot of sense to work with them and those are the kinds of things to do. If you happen to be on one of those northern or southern borders of Massachusetts, then sure. I don't think I'd hesitate to cross a line just to do that.
Christopher Mitchell: You're also sharing an engineer, right? With south Bedford, if I remember correctly.
Mark Howell: We are, we had a staffing need. As we were building the business, obviously it's small and stuff is expensive. So I needed a part-time engineer and Bedford needed a part-time engineer. So we shared that resource. And over time we're expecting to deepen that relationship.
Christopher Mitchell: Excellent. So is there anything else that we should be talking about? Anything I forgot to ask you about?
Mark Howell: One of the places where we experienced some really immediate success was with our commercial real estate holders in town. They recognize right off the bat that having a fiber service in their building was going to make their business properties more attractive to those clients that might want to put their offices there. So we have a fair amount of professional office space, knowledge workers and small retailers in town. All of whom were generally underserved by the commercial offerings that were available.
Mark Howell: Our first gigabit customer on the Concord network was a coworking space. That wanted to really advertise that they had gigabit Internet service in there. And so we did a custom isolation for them. We also been able to really support a lot of community institutions. We have several private schools in Concord. We were able to provide them with some private V land services. In other words, interconnect multiple buildings from the private school that were in different parts of town. We did the same thing for some daycare center operations.
Mark Howell: And really had a focus on making sure that those institutions that make the community provide community services were getting prioritized by our network. And I think that was one of the things that was really appreciated.
Christopher Mitchell: Yeah, I think it's a good reminder because, and I'm curious if you felt this pressure as the CIO that the network is inevitably evaluated based on the dollar return. You know, are you hitting the business plan, do you have the right number of customers, relatives to what you forecast and things like that? Whereas these benefits, the reasons you actually build the network, they seem that they can get lost in the shuffle.
Mark Howell: I tended to try to keep those really right in front of customers and certainly the feedback that I would get from customers was a real appreciation on that. The other thing that really set us apart, I think and one of the reasons why our churn rate is virtually nonexistent is that we did use local technicians to provide the onsite customer service and installation experience. So people really knew who we were. If we had an issue, we would come out oftentimes with the very same guy that installed that customer service to replace a piece of equipment or just troubleshoot something. And that was the level of service that we could differentiate on and people appreciate it.
Mark Howell: We were involved in things like in the video stream for town meetings and with the local PEG access station. And when we built a high school, we installed the fiber for that. So being able to prioritize that and show the community that we were working on the things that were important, not necessarily the things that we're going to drive a lot of bottom line was something that I think was really appreciated and led to a lot of goodwill.
Christopher Mitchell: Excellent. Well, thank you Mark for taking the time today to share with us your experiences and it sounds like you know, you said there's some potential for the future, so we'll look forward to future announcements.
Mark Howell: Yeah, absolutely. Chris, I really appreciate the opportunity.
Jess Del Fiacco: That was Christopher talking with Mark Howell, former CIO from Concord, Massachusetts about the community's fiber optic network. We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at firstname.lastname@example.org 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, including Building Local Power, the Local Energy Rules podcast, and the Composting for Community podcast. You can access them anywhere you get your podcasts.
Jess Del Fiacco: 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 keeps us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons. This was episode 399 of the Community Broadband Bits Podcast. Thank you for listening.
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