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Transcript: Community Broadband Bits Episode 423
This is the transcript for episode 423 of the Community Broadband Bits podcast. In this episode, Christopher Mitchell speaks with Ron Barnes, CEO of Coast Electric Power, and Jon Chambers, partner at Conexon, about the unprecedented growth of electric cooperative broadband networks in Mississippi and the state's use of CARES Act funds for broadband grants. Listen to the episode, or read the transcript below.
Ron Barnes: The bottom line for Coast Electric, and I believe for the other 14 systems that are in this CARES Act, is that it's the right thing to do for our membership.
Ry Marcattilio-McCracken: Welcome to episode 423 of The Community Broadband Bits Podcast. This is Ryan Marcattilio-McCracken here at The Institute for Local Self-Reliance. Today, Christopher talks with Ron Barnes, President and CEO of Coast Electric Power, an electric cooperative in the Biloxi, Mississippi area, and Jon Chambers, partner at Conexon, a consulting agency, working with rural electric cooperatives to bring fiber to communities around the country.
Ry Marcattilio-McCracken: They talk about how Mississippi went from having laws against electric cooperatives doing broadband to homes as recently as January of 2019 to now having 15 co-ops, getting grants from the state to build fiber immediately with CARES Act funding.
Ry Marcattilio-McCracken: They talk about how co-ops actually approached the state with the plan and took the lead in organizing to connect rural parts of Mississippi, and what that means for digital equity and inclusion since those cooperatives are required to build to all of their customers by law. Now here's Christopher talking with Ron Barnes and John Chambers.
Christopher Mitchell: Welcome to another episode of The Community Broadband Bits Podcast. I'm Christopher Mitchell at The Institute for Local Self-Reliance in Saint Paul, Minnesota, back with a repeat guest and a guest who we have not spoken with before. So let me start by introducing Ron Barnes, the president and CEO of Coast Electric Power, a rural electric cooperative in the Biloxi area of Mississippi. Welcome to the show, Ron.
Ron Barnes: Glad to be here. Thank you for having me.
Christopher Mitchell: We're excited to talk about your project and what's happening in the larger Mississippi area. But we also want to introduce John Chambers, a frequent guest talking about rural electric cooperatives and all things rural broadband, partner at Conexon, a company that works with local rural cooperatives around the nation of rural electric cooperatives. John, welcome back.
Jon Chambers: Thank you, Christopher. Good to be with you again.
Christopher Mitchell: And let's start with, ask you Ron to just tell us a little bit about the Coast Electric Power.
Ron Barnes: Glad to. Coast Electric is an electric cooperative serving three counties in South Mississippi, where as our name says, right along the Gulf of Mexico. We've been in business for over 80 years. We serve over 80,000 accounts and we're very excited about getting started with this broadband project.
Christopher Mitchell: Excellent. And the Biloxi area, I feel like I've seen different efforts from different levels, including local governments, rural economic development agencies over the past, even 10, 12 years to try to come up with a regional solution. Have you been a part of those conversations or how does this all fit together?
Ron Barnes: We were a part of that initial conversation. In fact, from that we ended up putting fiber to all of our substations and our offices. We have six offices here in South Mississippi, two in each of the three counties we serve. So we were able to benefit from some of that. And then the broadband provider that came in at the time was called InLine. They've since been purchased and they're called Uniti now.
Ron Barnes: And they primarily just wanted to serve large accounts. So they served our account and then they had some schools. But really, I don't believe it's taken off to the level that it was anticipated back when... And that effort was led by the mayor of Biloxi FoFo Gilich. So we're very excited to be bringing what we believe is a full solution to the members of Coast Electric through this broadband project.
Christopher Mitchell: That's what I'm always excited to see when people are actually being served in their homes, the hardest part. And I want to talk about one of the CARES Act, but I think which is you're one of the cooperatives that's able to move forward with this funding as a result of the pandemic. But let me start by asking John to just give us a bird's eye view of what's happening in Mississippi, maybe starting with the change in the laws last year. What's the background on Mississippi?
Jon Chambers: To get from there to here has required a lot of steps, a lot of effort by a lot of folks in state government and in industry as well, people like Ron. Up until January of last year, electric co-ops in the state of Mississippi were not permitted to get into the broadband business at all. They weren't permitted to engage in activities beyond the provision of electric services to their members.
Jon Chambers: And so, led by their statewide and a fellow named Mike Callahan, assisted by a very active public service commissioner named Brandon Presley, who I think you might know, Chris, who's now the president of NARUC. And by the speaker of the house, Mississippi passed a law last year to allow co-ops to provide broadband service. There were certain conditions that they had if they were going to get into the business, they had to provide service to all of their members, which is a no cherry picking provision. One in which I think many types of companies would hesitate over, chafe out a little bit, but it is natural for co-ops.
Christopher Mitchell: I cannot imagine AT&T accepting that. You can imagine them spending every last dollar in their lobbying budget to make sure that was not a requirement extended to them.
Jon Chambers: It is the nature of electric co-ops not just to provide service to all of their members, but to provide the same level of service, the same high quality service at the same price. So that was a sleeves from their vest of an agreed provision.
Jon Chambers: I think though that the important point of all of this is there are 25 electric co-ops in the state of Mississippi, none of whom were permitted to get into this business up until last year. And this year there are somewhere between 15 and 20 electric co-ops actively constructing operating fiber to the home networks to their members, and this gets to the CARES Act, including 15 of the 25 who applied for and received funds or are receiving funds from this other piece of legislation and passed by the legislature, which took some CARES Act money that they had been provided, made it available to those who would build world class fiber to the home networks. 15 of the 25 electric co-ops in the state stepped up, said they would take the funding in order to build in a very short timeframe, because under the CARES Act, you have to spend your money by the end of the year.
Christopher Mitchell: And the connections have to have been made too, I believe. And we'll talk more about this in a few minutes.
Jon Chambers: So within this short period of time of just being permitted to get into the business, I'd say at the time, Ron would have a better handle on this. I'd say there was wide skepticism that any more than [inaudible 00:07:22], but a few co-ops would even take this challenge on. In a state that has been one of the most poorly served states when it comes to broadband in the country, not for lack of federal funds, the federal government has spent five, $600 million in the state of Mississippi for rural broadband in the last five years alone as poorly served as it is.
Jon Chambers: I said this the other day, I'll continue to say it, if you want to see the future of rural broadband, if you want to see the future of broadband, period, look to Mississippi, look to what's going on in Mississippi today. Because CEO's like Ron and his colleagues across the state stepped up to this very real challenge in the midst of a pandemic to build networks in a rapid fashion, short period of time, leveraging some of the federal money that was provided to the state and their own money in order to do what they have traditionally done for over 80 years, served their members.
Jon Chambers: The state of Mississippi, which was the first place in the country where electric co-ops were formed and started to build electric networks. You see the same thing repeating itself now over 80 years later, where not yet all, but I expect all of the co-ops will within the next few years build or work with others to build own operate fiber networks to all of their members. It is a phenomenon, and it's one that I think the rest of the country should pay attention to.
Christopher Mitchell: I think calling it remarkable is significantly underplaying it, just to see this kind of growth. Ron, let me ask you to just take us back, if you can remember, all the way to the before times of the pandemic. Because I feel like I'd like to get a sense of what your plans were then, so then we can then talk about how things may have changed a little bit and how you made yourself ready to take advantage of the CARES Act. But what were you doing in February in terms of your planning for fiber to the home?
Ron Barnes: This bill was passed in early January, 2019. Being an electric provider, we really didn't know much about the broadband business. So we're really sad about spending most of the following year, getting ourselves ready and educated about the broadband networks and trying to find a good partner, which we found in Conexon.
Ron Barnes: Right before the pandemic started, we had just started bringing our board of directors. We have a nine member board of directors, three members from each of our three counties. We just started bringing them into understanding what we had learned on broadband. Our goal all along was to have our project started in January of 2021. And then, when we found out that there potentially could be monies available through the CARES Act, we basically moved all of our plans up and got into, I hate to use this because it's a bad pun, but we started moving at light speed, because that's what we needed to be able to get this done.
Ron Barnes: I can tell you it's been a great challenge, but we feel like we're up to the task of meeting that. We also, Christopher, and always plan to do our most rural areas first. That's maybe not the smartest business plan, but it's the area that needs it most. And we felt like that we would have the highest take rate there and also meet the need quicker. We also believe that broadband in the most rural areas will be an incredible enhancement to economic development in those areas, as well as what we learned from the pandemic, the ability to offer distance learning in telemedicine.
Christopher Mitchell: Let me ask about your territory. First of all, I will salute you for building in the areas of the greatest need first, because a lot of times we do see people delaying that and that takes another two or three years, and before the people that desperately need it the most have no options, get it. Are you going to be building then in areas to connect all your members? Do some of them already have cable networks and other higher speed forms of Internet access?
Ron Barnes: Yeah. If you look across our entire three county service area, there's some level of Internet to about 70% of the residents. But those 30% that are either underserved, or unserved, are really truly underserved or unserved. We really always felt like that it was better to go to areas that people needed it more to begin with.
Christopher Mitchell: Now, John, I wonder if you can walk us through how this CARES Act program works for a person who has only ever heard of the CARES Act. You mentioned already that money has to be spent by the end of the year, and I believe the connections have to be turned on at that time as well. But how was this program structured?
Jon Chambers: Several months ago, many states looked to the funding they were receiving through the CARES Act to see if they could use it for broadband. I won't get the specific language of the CARES Act right but it's something close to, you could use the funds if you are going to increase the capacity of broadband services to meet the needs of the pandemic, the healthcare crisis that we're in.
Jon Chambers: And that, more broadly is viewed as could watch you built be used for telemedicine, could it be used for schooling at home, could it be used for people to be able to work at home, all aspects of broadband services that assist in addressing the crisis that the country is in?
Jon Chambers: So there are states that attempted to structure a spending program using the CARES Act money. New Hampshire has a program, Oregon has a program. I just heard today of an Arkansas program, Alabama attempted something, Vermont tried something and then stopped. None really did what Mississippi did, which is the legislature, the lieutenant governor got together, and they got together with different players in the telecommunications industry. There was no restriction at the outset to electric co-ops.
Jon Chambers: But the electric co-ops once again, led by Ron, led by other CEOs in the state and by the statewide made a proposal to the legislature, made a proposal to the lieutenant governor, the legislature, the speaker of the house, and the proposal was, "We'll put up half the money if you put up half the money, we will build gigabit capable networks." Ultimately, I think the legislation says they have to be 100 megabit per second symmetrical up and down. "And we will do so this year."
Jon Chambers: The co-ops went further. They presented plans, network designs, budgets, timetables. They presented all of this in anticipation that the legislature would take something up. And so, ultimately what the co-ops presented was persuasive. And so, the legislature passed a law which takes $75 million of their CARES Act funding, apportioned $65 million to electric co-ops through an application process, and then another $10 million to everyone else who would want to do something similar.
Jon Chambers: And then the applications began, 15 of the electric co-ops submitted applications. They were all funded, they were oversubscribed, so everybody took a little bit of a haircut. With the $10 million, the applications which were submitted to the public utilities commission, I think in total, there was one and a half million dollars worth of applications for that $10 million.
Jon Chambers: So the funding, this is very recent in the last couple of weeks, the applications were reviewed and the announcements were made, and then everybody was given, you've got five months now to build networks. And we met in Southern Mississippi the week before last with Ron and with another co-op that also had won funds and we have been planning on this for some time.
Jon Chambers: So we've begun to execute those plans. We have construction crews on the ground already. We're building. We aim to meet the tight timetable, which is to say in overall, the Mississippi co-ops are going to build some 4,000 miles of fiber in the next five months for an amount of money that is equal to what the FCC is going to give to the telecommunications industry in Mississippi to offer 10 megabits per second.
Jon Chambers: So with about the same amount of money, the Mississippi co-ops are going to build infrastructure, build fiber networks, about the same amount of money as is being spent currently by the federal government in the state, but going to other providers not to build anything, but just to continue to provide 10 megabits per second down one meg up.
Jon Chambers: And I would say that some of those monies are being provided in the same areas where the Mississippi co-ops are going to receive funds. So you and I have had a lot of talks about overbuilding one of my lines, if you're going to pave a dirt road, then you're not overbuilding, you are just building.
Jon Chambers: So that's what the Mississippi co-ops are doing. They're going to build networks in five months to make service available, probably to close to 100,000 rural Mississippians who have no access to speak of today. It is remarkable in many respects, not at least in which the speed and how the co-ops have embraced the challenge.
Christopher Mitchell: It's very bold. And I'm curious, Ron, one question that pops into my head about that is, prior to the law being changed in 2019, more than 18 months ago now, was this something that was envisioned by you? Did you have a sense that there was a real pent up demand, or has the mindset of the cooperative managers and boards changed significantly over the past 18 months?
Ron Barnes: Well, maybe a little bit of both. There were certainly pent up demand. We knew that, but we also knew that we weren't allowed to be in the business. So we began talking really about midway through 2018 about how we could get this law changed, never believing that we could get it done by January of 2019. But it just goes to show, if there's a will, there's a way.
Ron Barnes: Once we got that done, then the mindset of some of the managers started to change from, "We'll never do this," to, "Well, maybe we could do this." I believe that as we've done our feasibility studies, we've worked with great partners for us like Conexon, what we found was that this is doable.
Ron Barnes: Now, I wouldn't recommend doing the rest of our system at the pace we're doing it now to meet the CARES Act. But it certainly shows that if you put your mindset to, "We're going to get this done for our membership," it can be done. And really, the bottom line for Coast Electric, and I believe for the other 14 systems that are in this CARES Act, is that it's the right thing to do for our membership. We are designed to serve our communities, and this is what the community needs and what the community was asking for, so we found a way.
Christopher Mitchell: Did you have people that were residents and businesses that were coming to you and telling you that you needed to solve this problem, or was this something that you and other on the board just recognized needed to happen?
Ron Barnes: Pretty much, we just recognized it needed to happen. We would occasionally hear either from our own employees or from other people in the community about how much real true high speed broadband was needed in rural communities. But since we weren't able to solve that problem, most people weren't coming to us to solve it.
Ron Barnes: I heard a lot of, can we get incumbent providers to solve the problem, but it was also very clear that they just weren't interested in going into the most rural areas. So that's when we started to think, well, maybe this is something that we should take up and take that mantle up and do it ourselves.
Christopher Mitchell: Now, earlier you mentioned telehealth and remote education, and I'm curious, you're already managing at breakneck speed, how to deploy the network. Are you doing anything above and beyond to try to help telehealth applications take root, or these remote education, or are you expecting that people are going to figure that out while you're just focusing on the infrastructure?
Ron Barnes: Well, I would say it's twofold. One thing we're doing, since I told you we have fiber serving our substations and offices. Now, we're going to tap that. In fact, we're doing it this week with Conexon's help and also with Uniti's help. We are actually going to put out some hotspots in the community that we're going to be serving in this CARES Act granny area, to be able to help people immediately get service until we can get the system built out to them.
Ron Barnes: The other thing that we're going to do is we've got a good staff of both community development and marketing folks that are going to be working with people in their communities, trying to make them understand how they can use this technology when it becomes available.
Ron Barnes: A lot of these people have never really had Internet service. They don't know what they're missing. So we felt it was very important for us to be able to offer that service, whether it's how to access through an Apple TV service or Roku, how to get on and do downloads and uploads. Just some basic information that we take for granted because we've been using broadband services for a long time now. There's a lot of people in these rural areas that have just never had access to it other than what they use on their telephone.
Christopher Mitchell: It seems like maybe going back to the very early days, 80 years ago, when you had people that were out teaching people how to use toasters, and refrigerators, and things like that.
Ron Barnes: Exactly. Back in the early days we sold appliances. We don't sell appliances anymore, but back in the early days of the cooperative, you needed to do that to teach people how to use the products that would consume your electricity. So that's exactly our plan. I'm glad you asked that question because we've got a very good plan already wound up. And now what we found is that the community is begging for this help. They're begging for both the service and also how can we help them to utilize it best? And we're happy to do that. We feel like it's our job.
Christopher Mitchell: I feel like you are the most exposed to weather potential delays. I have to assume your entire staff is praying for a quiet season in the Gulf with the hurricanes in particular.
Ron Barnes: Yes, every year.
Christopher Mitchell: Is that something that you feel like you'll be able to manage if there is a significant weather disruption?
Ron Barnes: Yeah. A lot of times, fiber doesn't go out, even when a pole goes down, and it's not until someone brings a bulldozer in or they bring a chainsaw in and then cut it that you lose fiber connection. We've certainly contemplated that, it's something that we realize that we are very exposed to. But we were ground zero for Hurricane Katrina. We had 10,000 poles on the ground, so we understand how to get those back up. And really, we'll put the fiber back up right along with the electric system because this fiber network that we're building is really for our internal uses as well as to offer broadband to the community.
Jon Chambers: Chris you've got me knocking on wood all over the place. We're into hurricane season. We got to build a lot of miles. We'll have crews in there and they'll build in all kinds of weather. In the past when we built during hurricane season, we'll assist the co-ops in restoring, not so much. We don't have electric linemen, but we'll help where we can replace poles, help restore electricity, and then get on with the job. There will be some disruptions because of weather, there always are, but we've got a schedule to keep. So let's hope the weather also cooperates.
Christopher Mitchell: John, let me ask you as someone who's been doing this for so long, and I'm going to just go ahead and guess you're not planning on sleeping between now and sometime after the [inaudible 00:24:50] checks are being sent out. What have I missed? What should we talk about in the last couple of minutes that's special about this story?
Jon Chambers: Since you're oriented towards self-help, towards communities helping themselves, I've maintained since back in the days when I was at the FCC, that electric co-ops are the purest expression of a community coming together to solve an infrastructure problem. That's what this is, a lack of infrastructure.
Jon Chambers: I think that what you see going on in Mississippi can take root across the country, that if the government gets one part right, and that isn't the amount of money, mainly what the government has to get right, is they have to allow local communities to make decisions about what kind of infrastructure they want, base some things on consumer choices. If the government won't set the highest standard for the nation, that was always my thing when I was at the FCC and since. That if the government were to set out fiber to the home, gigabit, two gigabit, 10 gigabit per second service, if they were to set out high standards, they'd get the rest of it right.
Jon Chambers: The other way to look at it is recognize what communities vote for with their own dollars, vote for with their pocket book, vote for for by their choices in the marketplace. Let electric co-ops do this and electric co-ops will build the right kinds of networks, because again, they are the expression of their community, they are governed democratically by a board. Ron reports to a board that is drawn from his community, they'll make the right decisions. It does take a little bit of funding, but that's the main point here. How much did you get Ron? Four million?
Ron Barnes: Six million.
Jon Chambers: Six, okay.
Ron Barnes: For a $15.3 million project.
Jon Chambers: So the government's going to put up a little bit of money. It's important and I'm not minimizing that at all, but it's putting up $6 million in Coast Electric system, which is then triggering a large scale infrastructure build in a short period of time because the lead is being taken by the co-ops not by somebody sitting on an office building in 12th in Washington, D.C.
Christopher Mitchell: Well, I think there's a lot that I would like to expand upon. But in the limited time that we have, one of the things that I know, John, you often make the point with me as well is that this is money that's being spent also to never have to be spent again. At least it's not conceivable that you will need more money to build a better broadband connection to these folks from government.
Christopher Mitchell: And so, that is one of the parts that I like the best about this approach. But Ron, the part that I'm really just heartened by is that this wasn't something where the state, feels like dangled money in front of you, this seems like something in which you and the other co-op leaders recognize that you could come to the state and offer them a good deal. And that's something we really haven't seen elsewhere. I'm curious if you can just tell us a little bit about, was your cooperative association already particularly collegial and entrepreneurial like this, or what made that happen?
Ron Barnes: I think without our statewide organization, the electric cooperatives of Mississippi led by Michael Callahan probably would have never got the law passed and we certainly would have never got this CARES money. It was really Michael and his relationship with the Lieutenant Governor, Delbert Hosemann, who were working hand-in-hand to try to solve this problem. Our lieutenant governor and our speaker both understand the need for this, through those conversations.
Ron Barnes: And I give Michael Callahan the credit because he's the one that said, "Hey, if you give the money, we'll match it." And he got an agreement from all the cooperatives and we went in, and that original meeting with the senate was open to AT&T and capable associations. We were the only one that had a plan that was ready to be worked, and that said we would gladly put our money where our mouth was, which I just told you, we have a $15.3 million project that we're getting $6 million grant for.
Ron Barnes: So obviously we're more than matching what is being offered. So it was really a good public private group coming together to try to solve this problem and coming up with an innovative solution to be able to get us started, if you would say, with some of this grant money. But yes, I really would want to say that our statewide organization has really led all the way through from getting the law passed to getting this grant opportunity.
Jon Chambers: Chris, I think you hit on something really important there, which-
Christopher Mitchell: Probably by accident.
Jon Chambers: Again, you are a community-sourced guy that these were local communities going to their state legislature to their lieutenant governor, who in turn was receptive to what they were proposing. How's that for a revolution?
Christopher Mitchell: It makes you believe in democratic government. I think everyone across the country loses faith from time to time. And this is the thing that I'm desperate to see. I hope we see more of it. But I do want to clarify Ron. If I piece together the different things that you've said, it means that you're taking basically a little more than a one-third grant to build out the highest quality network to the most rural part of your territory. And that's remarkable in and of itself.
Ron Barnes: I couldn't say it better myself, that's exactly what we're doing.
Christopher Mitchell: I think it's a reminder from all the times that John and I have talked about the money that has been wasted so far with foolish plans, low expectations, and being forced on the wrong entities. Ron, I just want to say, thank you so much for taking the time today. I wish you luck. And we're really looking forward to seeing Mississippi being the first gigabit state. And there's a lot of people who are bragging about it, but here we see folks that are planning it and making it happen.
Ron Barnes: All right. Thank you so much. I really enjoyed being on today.
Christopher Mitchell: Thank you. And thank you, John.
Jon Chambers: Thanks Chris.
Ry Marcattilio-McCracken: That was Christopher talking with Ron Barnes and John Chambers. 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.
Ry Marcattilio-McCracken: Subscribe to this and other podcasts from ILSR, including Building Local Power, Local Energy Rules, and The Composting for Community 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 and keeps us going.
Ry Marcattilio-McCracken: Thank you to Arnebhus for the song, Warm Duck Shuffle, licensed through creative comments. This was episode 423 of The Community Broadband Bits Podcast. Thanks for listening.
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