Fast, affordable Internet access for all.
Transcript: Community Broadband Bits Episode 483
This is the transcript for episode 483 of the Community Broadband Bits podcast. On this episode, host Christopher Mitchell is joined by Russ Elliot, the CEO of Siskiyou Telephone in Northern California. Listen to the podcast here or read the transcript below.
Russ Elliot: The funds that we're getting ready to see are funds that our six-year-olds are going to be paying back in about 10 to 20 years, right? And when they're paying it back, that infrastructure we placed today better be in play and robust and working. That's a whole different thought process than we've had in the past 20 years, right? We've continued to build infrastructure that is dead at the end of the subsidy.
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. Sorry, just a little confused, got off the plane late last night, still re-acclimating to my home, Minnesota. Today we're speaking with Russ Elliot, who is the CEO of Siskiyou Telephone. Welcome to the show, Russ.
Russ Elliot: Hey, thanks, Chris. I'm excited to be here.
Christopher Mitchell: I'm excited too, it's really great to reconnect with you now that you're in a new position. You were formerly the director of the Washington State Broadband Office. We talked occasionally, there are more... I should have talked to you a lot more. I feel like I constantly wanted to find ways of helping you, but then there's just so many other priorities that I just abandoned you and left you to your own devices.
Russ Elliot: You know what? You were a tremendous asset and a great phone-a-friend as I was working through that process, especially on the municipal side and the public infrastructure side with a state like that, that really started to swing really strongly into the public network side, to have people like you out there was key and I appreciated your support.
Christopher Mitchell: And before that you've been in this business quite a bit, just give us the 30 second run that you've had through working on broadband and telephone.
Russ Elliot: Yeah, well, it started in Colorado, in Southwest Colorado, where we started a company called Brainstorm down there and it was a CLEC, and we grew that business to about somewhere around 15,000 subs from all of Western Colorado and Northern New Mexico. We grabbed a lot of the anchor institutions through there plus the communities. We kind of had an approach where we would go in, get the anchor and the anchor gave us the opportunity to spread to the surrounding territories. And that was what was exciting about that work for me, is that we became endeared in communities. And we'll talk about that in a little bit, but I think it's backwards nowadays. I don't think that same kind of drive is there to where you do the anchor plus, I think it's always been anchor and then go kind of thing, but [crosstalk 00:02:21].
Christopher Mitchell: It was 20, 30 years ago? What was the timing on that?
Russ Elliot: It would've been between '99 to 2010,11. We sold it in 2013. We sold it to a company up in Denver that completed the ring and really brought a robust compliment to their company up there. And it was a great run and we got to serve a lot of tribal entities in that region and got a lot of good partnerships through there and got a lot of experience in that. And then from there I got a call from Governor Mead in Wyoming and he said, "Hey, could you come up here and help me develop a broadband office?" And I said, "I don't know what that is." And he said, "I don't either, but we need one." And so I ran up to Wyoming and was successful at starting a broadband office up there and had a great run with Governor Mead and then Governor Gordon.
Russ Elliot: And they were really proactive in the conversation. And they were very much allowing me to do what I thought was right. And in a state like that where you had 500,000 people in the state, and size one of the bigger states, land mass in the country, it became a real challenge. That's kind of how I made myself important in this space, because I started to say, "Well, you can't just say you need better broadband until you know exactly what it is you're trying to get and quantify the conversation a little bit more," and when you're so spread out, like we were in Wyoming, it became, "Okay, I need to know where you are," first of all, I need to know what kind of service you have, what technology you're doing there.
Russ Elliot: And then I'll start to research about what the opportunities are around you, what the competitors are around there, what the 477 Data is saying about that area, and then we can start to talk more intelligently about how we're going to solve the problem or come together. So it became this real community-up discussion that we really had to start to engage the people in the conversation and not allow the providers to control the conversation in a state like that. So did some real creative mapping stuff there and I think that's what got me recruited to Washington State shortly thereafter, because they saw some of the good work we were doing and how we were working with some great partners in that space. And then I went up to Washington State, started the broadband office up there and was lured up there with the promise of a hundred million dollars and a staff of many and a budget.
Russ Elliot: And I got up there and I think it was... Well, I don't think, I got up there and it was me and my budget was 250,000 bucks, "Go, build a broadband office, go, we believe you could do it." And so what I did right away is started to [inaudible 00:04:45], started really build a community-up discussion. My dear friend, and a friend of yours I know, Monica Babin, was up there and she helped on the broadband action team model stuff that we're really talking about the equity and inclusion piece. And we got a real head of steam just as a one-man shop and then I brought on a halftime person in there that really helped me start to bring my crazy head out on paper.
Russ Elliot: And then we developed a plan and it was a very compelling plan for Washington State and low and behold the pandemic comes, right? And so we were broadband before broadband was cool. And then all of a sudden I think legislators started to see that that was critical infrastructure. And just before I left there, we were awarded about 350 million dollars to establish that office and do good work. And I was putting together a team and put a nice team of 10 together. And then I got recruited out of Washington State, back into the private sector, and so I'm down here now in Siskiyou County [crosstalk 00:05:40].
Christopher Mitchell: Well, we'll talk in a second about what Siskiyou's like, but I wanted to tell you that yesterday, I was speaking on a panel at the New Jersey League of Municipalities, and one of the people that was asking questions in the audience was like, "I live in south New Jersey where there's not a lot of folks around and it's pretty rural, and I don't know if we're ever going to have a good broadband." And so I said, "Well, let me tell you something, we got broadband all across North Dakota. I was just talking with a friend of mine who's up in Siskiyou county. You know what Siskiyou county is? It's like one and a half Delaware's with nobody living there. And he's figuring it out. I'm pretty sure we can figure out South Jersey if we put our minds to it."
Russ Elliot: Yeah, no question. Yeah. And hence is the challenge. We land here at a place where I've always had a soft spot in my heart for these small incumbent telephone companies, because I believe there's a real place for them in this effort and there's a lot of work that's getting done in this space, especially with these small incumbents that's going unrecognized. And unfortunately a lot of these small incumbents get lumped in with those great big incumbents, right, that maybe are bad actors and haven't been performing in the way they should be with regard to some of the subsidies they've received and not reinvesting in their networks like they should, but it shouldn't fall foul to these good performers and these little guys that are doing great work in these very rural areas that otherwise you're never going to see broadband in these spaces, right?
Christopher Mitchell: Yeah.
Russ Elliot: This is not an attractive space for competition. I don't have a lot of people knocking on the door saying, "Hey, we'd love to come in." I'm a telephone company so I've got to wholesale my network regardless because I'm tariffed and I'm regulated, but there's nobody knocking on my door saying, "Hey, I'd like to come in and serve the 58 homes you have in Etna." It's not happening.
Russ Elliot: So it's always been an opportunity for me even as the director to recognize these small incumbents that are doing great work. Washington State had a number of them that were a hundred percent built out Fiber-to-the-Home already well before pandemic, right? So these guys were, they've been investing that subsidy they received, they do receive rich subsidies from the federal government, the state government but then they, the ones that are doing it right, take that money and wholeheartedly reinvest that back in that network and serve those people that otherwise would never get broadband service.
Christopher Mitchell: I think it's on the order of a thousand or more ISPs in the nation. And sometimes people use the term industry or incumbents to just talk about the biggest ones and then not the top 50, the top 10, and I think it's a good reminder for people not to use those terms because the vast majority of local companies like you're describing, most of them are doing a really good job. Part of the NTCA, which is the Rural Broadband group, a lot of those local companies have been investing in fiber for a long time. Some of them are co-ops, some of them are private companies, but they're living there in the community. You're one of those, California's got 10 you tell me, so you're kind of overlooked in the legislature often. But I said no one lives there, you said you got what like 8,000 or 9,000 [crosstalk 00:08:33]?
Russ Elliot: Yeah, we've got about 9,000 citizens. We've got about 45, 46 hundred sites. In a size you described it right, one and a half Delaware's, or one and a half Rhode Islands. And when you think about that, you look at the population of Rhode Island, I think you're a million there, it makes sense to go serve Rhode Island, right? It doesn't make a whole lot of sense to start running fiber when you've got homes less than two per mile. And two per mile is, that's kind of a misnomer because you've got your pockets of population in these towns, in these rural towns, but then you've got these reaches that are silly, that are out in the middle of nowhere and you got to go... Our service territory, to drive around our service territory one time, is six and a half, seven hours to drive around.
Christopher Mitchell: And you were just talking beforehand, you ain't got a lot of utility poles because they burn down and it's not like you're in Minnesota where, sure, you can drive long distances with a plow sticking out in the back of the truck and pulling along the plow to just put it in the ground. But you're not doing that a whole lot either out there.
Russ Elliot: No, we're such a granite based county that we're doing rock saws and boring and the Hammer Jack drills with the great big heavy equipment and we're blowing bits up and we're dulling saws. And it's interesting, so when you start to think about that everybody says, "Oh, yeah, it's easy to do fiber. It's 30,000 bucks a mile and you just got to do a couple poles here and there." But when you're in a place where fire takes those poles down pretty rapidly, as you have seen over the last five years in this territory, you got to take it into the ground. And when you take it into the ground, it's going to cost you somewhere between 170 to 200,000 bucks a mile, which when you're talking about houses being a mile apart, you can start to do the math pretty quick, right?
Christopher Mitchell: And not all of them are owned by billionaires.
Russ Elliot: I don't think we have any. I don't know, maybe we do. And they're probably reclused and they don't want broadband and they don't want you to know they're there. But the interesting thing is, it's such a challenge to do this, but it's an obligation that we've taken on and companies like this say, "Look, we're going to get it done. We're going to invest these subsidies that we're getting, we're going to make certain that gets done." Problem is the subsidies come in at a rate where, when you're talking about those types of monies, it's going to be a 10 year build, right? People need broadband now. And so when we start to talk about, is it affordable to do it? Well, I think we've changed the definition of affordability by seeing billions and trillions coming out of the federal government.
Russ Elliot: So I think now it's, let's get the most robust infrastructure we can to everybody we can. And I consider it's probably affordable based on the types of dollars we're getting now. So now it's just a matter of building those plans and really starting to get those last miles served. But like we talked about too, that area where the people tend to gather, that's one price, but then when you start to build outside of those areas, that's probably 10 x that price.
Russ Elliot: So most companies build to those more dense areas first because that's where they get the bigger return for their dollar just like everywhere. But then it's going to cost you 10 x to build outside of that. And that's where we're at. I think that's where a lot of its country is at right now. We're at that big exponential build cost out there and we have to take that into consideration. And again, I like the technologically agnostic conversation at times, but I also think that has to happen at the end of the exhausted fiber conversation. You have to exhaust the conversation to bring in that future proof infrastructure that will be there for decades to come and that is scalable.
Christopher Mitchell: I kind of think that's especially important for you because you have a enormous one time cost to connect a lot of those folks but then even on top of that, your service technicians in the truck, I'm going to guess they maybe can do between 5 and 10 service calls a week? And because you're in the truck for three or four hours for some of these to go one way maybe, not stuck in traffic fortunately, but you have an ISP in a more urban area, their service technicians are going to do 7, 10 calls every two days probably. So there's a real extra cost that you have that you need the fiber to make sure you're minimizing how many calls you have, but even then you're going to have some calls and so you have a lot of operating expense.
Russ Elliot: You do and that's one of the conversations that we're going to have down the road is to how do you maintain the integrity of these organizations after the infrastructure's built to ensure that these citizens can continue to receive that rich service and the critical infrastructure. And those conversations will be had here in the next decade, I would imagine, to where how do you make certain that happens? But it's just like everything else, if we believe broadband is a critical infrastructure, like we do roads and bridges and schools and libraries and those kind of things, it's just, everybody's going to have to chip in to ensure that these types of areas continue to have the ability to benefit from those services.
Christopher Mitchell: Now, one of the things that you've given a lot of thought to, the middle mile, and we see money going out right now for middle mile, and I don't think anyone would dispute that there's a significant need for middle mile in a lot of areas. But I think you're concerned about whether or not middle mile is done in a way that will kind of encourage growth and investment or not by just snatching up all of the anchor institutions. So what do you get concerned about when you just hear people rhetorically throwing out the idea that we need more middle mile?
Russ Elliot: Yeah, just from my industry experience, I've seen middle mile networks in Colorado, Wyoming, Washington, and now they're talking about a three and a half billion dollar investment in middle mile in California. And many of those middle mile networks are set up to and funded based on the fact that they're going to go chase anchor institutions in rural communities, right? So they feel like they're doing good work and it's that unintended consequences of good intention, right? And that happened in Wyoming, it happened in Colorado, it happened in Washington as well, where you've got these middle mile networks that mean good and they go out and they're intended the Obama money that was out in the [inaudible 00:14:24] time, "Hey, you got to hook up all the schools with fiber."
Russ Elliot: Well, that sounds like a great idea but when you've got these providers that are in these smaller rural areas, and you go snatch that one economic driver out of their economic model, you are crushing their ability to continue to provide service in those markets. As the CLEC in Western Colorado, I was highly dependent, and the 50 employees that I had were dependent on, our ability to maintain the integrity of our relationships with those anchor institutions. And we were doing good work and they appreciated our service and our service people. The local-ness of the service they appreciated too.
Russ Elliot: And in Colorado, I was successful at going in when they had the EagleNet model of sitting down with those folks and saying, "Wait a second, I'm going to have to let go of most of my team if you come over here and you just grab all these anchor institutions and you run away," because I grabbed an anchor institution and when I grabbed an anchor institution, I served the citizens around it. My model was if I grabbed a school, I wanted to serve the students and the teachers. This was back in 2000 and 2001, 2, 3, way before pandemic and before this was cool. Just made sense for me and you become endeared in those two communities.
Russ Elliot: And we did great work through Western Colorado in some of the most hardest to reach areas, deep canyons, 14,000 foot mountains, we're putting towers at thirteen five, [inaudible 00:15:42] broadband into Telluride. I mean, it was an amazing process, but we felt like we were committed to the communities that we served and we had that endearment and we had that obligation. We felt the obligation to serve, even though we were a competitor, we felt obligated to take care of those people.
Russ Elliot: It's kind of like you said though, Chris, you said one time, sometimes you're self-regulated. You go to church, you go to school, you go to the grocery store, you go out to eat and you're around all the people that you're serving because you live and breathe and occupy those service territories, and so you hear about it and you have just internal pressure to make certain that you're performing well. And so we really did that. And when you do these middle mile networks and you just come in and grab the anchor and you run away, you've destroyed the economics of it, you have no obligation to serve anybody outside that territory.
Russ Elliot: And in Wyoming when I talked to the CIO there, when I first got there, he said, "hey, we're doing great work because when we do this, we're paying the incumbents to build their networks out and that'll just automatically lead to more broadband of people." Well, that's what you would think but what happens is that's a big fat, juicy, ripe apple that I'm going to grab off the tree and I'm going to run away and not mess with all the green ones around. I'm going to go find another big, red ripe apple, collect that money and not have the obligation to serve all those little accounts around that big guy, so.
Christopher Mitchell: And if I just jump in for a second, I think, I mean, the issue here is that you have these anchor institutions and maybe in the mid-2000s or something like that, they're paying an inordinate amount of money. I mean, just well above market rates and maybe they're paying that to a local company, maybe they're paying that to another company. So that creates a opportunity for someone to come in and that person's going to charge an amount that's perhaps less. And the question is with all of that margin that you have, because you're charging so much more than it really costs to provide, what are you doing? Are you going to be reinvesting that in the community or not?
Christopher Mitchell: And one of the challenges I see is that when I was looking at EagleNet, some of these providers, it seemed like they were providers that they were also small companies and they might be like, the owner might be living in Miami or Las Vegas, and they're kind of sucking the juice out of the community. And that the problem is that trying to have a one-size-fits-all approach from the state doesn't really work because you can't treat all providers the same. They're different. Some of them, like you said, they have an investment, over five years, they're going to build out to every last address and others are just going to try and sit on that anchor institution and bleed it dry.
Russ Elliot: And don't forget the fact that most of those anchor institutions, especially in the educational side, are recipients to the E-rate subsidies, right? So they don't even realize it. If it was a $5,000 circuit, 90% of that was paid by E-rate. I'm only paying 500 bucks a month for 5,000 bucks, it seems like a great deal, I'm getting a T1 for two grand, back in the day for two grand, and I'm only having to pay $200 a month for that, what a win that is. And so there was a lot of that going on as well with regard to what the true economies of that model was.
Christopher Mitchell: Yeah. And so then the other piece of it is, is that if you are looking at it at an entire region that doesn't have decent Internet access and you're thinking, "Oh, I'm going to put some middle mile in here and magically, we're going to have a lot of last mile investment." It's not really how it works. I mean, you could build all kinds of middle mile in Siskiyou County and you still got to figure out like that cost of connecting those individual homes is obscene.
Russ Elliot: Yeah, you could run that middle mile right down the highway through the middle of the town, but like we said we're miles to last mile stuff. And so it perhaps starts at the last mile back to generate the middle mile. So this has to be a concerted conversation, right? These got to come together as one conversation, you can't have a middle mile group out there trying to do middle mile, middle mile, middle mile only, without some input from last mile people that say, "Hey, I need it over here."
Christopher Mitchell: Right and, "don't put it over there. We already got it over there." Let's take this resiliency on that going...
Russ Elliot: Yeah. Yeah. And a lot of this middle mile stuff needs to be put into the conversation of redundancy. There's going to be a lot of need for looping things and redundancy and so, much of that middle mile conversation should be had with the last mile players that they say, "Hey, I'm one path in. I'd love a second path out. And here's my last mile builds that I have here. I'm going out this way. I'd love to go out that way. How do I get some middle mile that'll take me out that way and maybe bring economies to my back call?" And that kind of stuff. So you can't have the conversations independently, they have to be had simultaneously.
Christopher Mitchell: So let me ask you, changing topics to the states and what they're going to be doing here. I find it pretty amazing, we're talking and you said that there's a bunch of state... I knew some of them, but a bunch of the people who have been heading up broadband for the states are leaving for personal opportunities. At the same time aren't you a little bit sad? I mean, here you are moving to face these really big challenges, you moved to Washington, you had no budget, this Washington is going to have more than a billion dollars to figure out what to do with in broadband, and you're like, "That's now someone else's problem." Aren't you a little bit like you want to divide of some of that money?
Russ Elliot: What makes me most sad is that I was invested in that effort up there and I was excited about it, and the unfortunate thing is the economics of it. You've got the billions of dollars to hand out and unfortunately the public... well, I'll just say it the way it is, the public sector doesn't pay the way private sector can now. And if you're going to be managing that type of projects and with that type of demand from public sector, private sector, legislators, congressional folks, there's a reason that these broadband directors are having mass exodus.
Christopher Mitchell: Right, it's not a 40 hour week job at the [crosstalk 00:21:31].
Russ Elliot: No, no, there was never a week that was 40 hours. And working from home was probably the biggest killer of humans in that space, because you were tied to a Zoom meeting 9 to 16 a day.
Christopher Mitchell: I don't know what you're talking about. I don't have a rut in my hardwood floor underneath this chair. After I've been living in this house for 11 years, one year, one year and I've got a rut in the floor.
Russ Elliot: Look at that mic and everything, you look like you're a DJ, you look good. So the whole process of that job and the responsibility of being good stewards and doing the great work there, there's an inequity there on the amount of work that's put on that state employee and unfortunately, because of the equitable nature of pay in state operations, there isn't a whole lot of flexibility in the ability to allow those folks to be remunerated in a way that maybe honors this added level of responsibility and stress.
Christopher Mitchell: Right now, I mean, it would not be crazy for the state of Washington or any state, especially a larger state that has all this money coming to it, it would not be crazy for them to pay $500,000 a year in salary for someone to do this work, to make sure they have the right person. And they're going to lose far more than that, because they're not going to be able to attract the people that they need right now, not forever, but for three, four years to come in and do this work.
Russ Elliot: Yeah, you lose your momentum, you lose your institutional knowledge, you lose your energy, your enthusiasm, and it's epidemic across the country, Chris, it's not just me. There are five or six or seven or more others that have been part of the grassroots effort of doing this, and we're part of the... we're responsible for a lot of the energy behind let's make broadband infrastructure critical and working with the NTIA and the State Broadband Leaders Network and we're key components to this, but all of them have chosen, "Hey, given the stress and all the responsibilities, I think there's probably something out there that's going to pay me better to do probably far less."
Christopher Mitchell: Well, let's just be clear here, right, because I think I threw out there maybe they should pay $500,000 a year. It sounds crazy, right? Well, that's nothing for an assistant coach of a football or basketball team with public dollars in the state universities.
Russ Elliot: That's so funny because that was always my argument. When I was talking with the Washington State, I said, "Well, what they take home is inequitable. They can't do that on state salaries." I said, "Well, I know a few state salaries that seem a little bit inequitable to the tune of 3 to 5 million dollars," right, a salary and you can make exceptions. There's no reason there can't be some exception there. And if this podcast can be the start of a conversation nationally around, "Can you allow for those directors in those key critical positions to be remunerated at a level that's probably equal to somebody that comes into the private sector and runs a company of similar size?" then we did something good here today, right? I really believe that and because-
Christopher Mitchell: I try not to do that.
Russ Elliot: We're all passionate. We are all passionate and if you know me, you know I'm passionate about the conversation. If you know my friend from Indiana or my friend from North Carolina, or from Tennessee, or from Colorado, if you know those folks that have left those roles, they were all extremely passionate about this topic. It's just, they've left for personal reasons because they have to take care of their families and so.
Christopher Mitchell: Yeah, I would never take that job. I mean, I don't work a 40 hour week. I do a lot of stuff, but I got a six-year-old and this is not a time for me to be ghosting my family and for a lot of folks, I think that's how they feel. So it would have to be remarkable compensation. So let me ask you though, what were some of the other challenges? So obviously that was one, but I always wonder, is it just like you get a calendar request from the national companies, the government affairs team, every minute of every day were they're trying to get on your calendar to talk to you about this, talk to you about that? Is that something that comes up?
Russ Elliot: Well, that's when you got money, it does. When I didn't have a budget, I didn't have to worry about any of those conversations. Nobody called me because I didn't have any money. Minute that they knew I was going to receive a little bit of money, yeah, the phone lines light up with regard to the folks that are representing organizations that could potentially benefit from the dollars that we see in the door. The bigger challenge though, for me, that was the easy stuff. The hard stuff for me was really making certain we were educating everybody on the challenges of this conversation and of what some of the good, best practices would be to solve those problems.
Russ Elliot: Because a lot of these people that are leading those conversations, especially in a legislative situations or legislative positions, they know it's a topic they need to talk about it, they know it's something that's critical and important, but they don't have enough information to be skillful in solving the problem. They can talk about it like nobody's business, but it's one thing to talk about it, it's another thing to actually act and solve the problem or come up with processes and strategies around that.
Russ Elliot: That is what the broadband office up in Washington did. We built a strategic plan, right, because we said, "I think we can fix this and we're just going to need some funds, and then we need to develop a strategic plan that we follow, and here's how we're going to do it." But you get a lot of legislators up, they get a lot of their constituents that got excited about something and the minute they said it out in public, they became famous because they said something that was resonating with the constituents around, "Broadband's expensive," or, "We need to have more competition," or this or that.
Russ Elliot: And they get the pulpit and they'd run with it and wouldn't really ask the questions they needed to ask in order to be intelligent in the conversation until it was too late, until there was some policy out there that was like, "Oh my God, how are we going to bring that to the middle?" Because it just, the pendulum was just swinging left and then it would swing right and it would swing left. And there wasn't a level-headed conversation around how do we come to a consensus around an approach that honors the good work that everybody's doing?
Russ Elliot: Because nobody's out there trying to screw anybody, everybody's out there trying to solve a problem. Maybe they're protecting their own interests in that but they're all part of the conversation. We need to make certain that we honor the people that are doing great work and the bad actors we need to move them on and hold them accountable and move forward. But that educating piece was the hardest part for me, is to try to get everybody speaking the same language.
Christopher Mitchell: Right. And I mean, this is something that I feel weird about because I spent years and years telling people, "Municipal broadband often works out," and I would say the vast majority of the time it works out well, cities should all have the opportunity to consider it. And then I'll see people who are like, "All cities should build their own networks," and I'm like, "No, no, no, no, no, no, that's not what I'm saying here."
Russ Elliot: It does, it swings, it swings. In Washington State, it swung real hard to the public side and it did so for a couple of good reasons and I think the outcome was good, but what it has to do, it's got to come back to the middle now with some of those doors that have been busted open now up there. They've busted the doors open, they've got a lot of that public infrastructure now that's open for retail authority, that's great, allow for that to happen, but don't just make it that. Let's make certain we allow for some of that last mile potentially good people in the equation.
Russ Elliot: There's a number of fiber companies or a number of incumbent, small incumbents up there that are a hundred percent fiber built out to everybody in their service territory. Who better to do a plus one than them, right? And they don't want to have the city of somebody owning that network when they have done a great job inside their service territory, people are moving to that area because it is 100% fiber fed. Allow them to plus one now [crosstalk 00:29:11].
Christopher Mitchell: Right, or if they're plus one-ing, maybe there's another one on the other side and they don't have the capacity to borrow because a lot of these companies are somewhat constrained as to how much they can borrow relative to their assets, maybe that town wants to build the network and lease it to them, and they're going to be closely coordinated with it, but it's not going to be on the balance sheet of that local company.
Russ Elliot: That's a great point, and that's happening in Washington State right now, as we speak, with one of those good companies, and there is that conversation going on with that community that's an adjacent community and that same type of conversation going on. You're absolutely right. I mean, all ideas have to come to the table, right? And there aren't any really, really bad ideas, there's just a lot of ideas and some of them stick and some of them don't, and I think-
Christopher Mitchell: I don't know, there's a place in Indiana where they just wrote AT&T a check for like 18 million dollars and I was thinking, "I don't know about that one."
Russ Elliot: All right. All right. All right.
Christopher Mitchell: I'm not saying AT&T's going to do nothing there, but I doubt very much they're going to get 18 million dollars worth of benefit from that.
Russ Elliot: I can't disagree with you because there are some companies that have been bad actors out there. And I think that falls back on the accountability metrics, and we just don't do a good job of holding people accountable with actual deliverables and that goes with the CALF and [inaudible 00:30:21] and all the different, big funds that go out there. There's not a realistic accountability metric in place to allow the communities to hold people accountable. And that was one of the things we found in our mapping initiatives when we did both states is we started to see where people were getting subsidies, where companies were getting subsidies and said, "Hey, what up? You've got this money."
Russ Elliot: And then you'd hear, "Well, yeah, I got the money, but I got it nationally and I have to build out to 80% of that within six years, and unfortunately your little section up there is going to be the 85 to 96% and so you'll see me sometime year six or seven." That was especially true in Wyoming, right? And that was like, "Yeah, we'll get to you but we got other things we got to do that are way more important." So then as broadband director I tried to figure out, "How do I incentivize that guy to think this is more important than that other area that he's trying to build in. Can I maybe throw some funds at him to help enhance the build and maybe expand his build so that...?"
Russ Elliot: So you always have to be creative in the thought process. So all I'm saying, a lot of ideas and they all just need to come to the table and a lot of tools in the toolbox to use.
Christopher Mitchell: So last question is, and it's not an easy one, is I was just in New Jersey, they don't have a program to distribute money, they're going to have 300 million dollars, they don't have an office set up and it's the kind of thing where we don't want them to be just throwing things together. What do you advise states that haven't yet put a plan together? It's not like they're out of time, but they do have to move quickly and they have to move strategically. What are some of the priorities in a state that doesn't have a history of acting in this area?
Russ Elliot: You have to get a champion. You got to get somebody that sleeps, eats, and drinks and wakes up to thinking broadband and that becomes their priority and primary concern. And it's one of the things that Senator Wellman in Washington State talked about, the fact that, "We want somebody to wake up and go to bed thinking broadband." Well, they got it and when you get that champion in there, they start to coordinate those efforts. But you do, you have to coordinate the efforts. In order for you to make good investment, you have to have a central location where those conversations are being had, and things are funneling through.
Russ Elliot: Otherwise, you've got disparate efforts going on around the state, because every state's got great actors that are acting with intention but a lot of times those folks aren't coming together and having those conversations, whether it's medical field, education, transportation, and they're all doing their own thing. They have to centralize that conversation in order to be the best stewards of the funds that they're going to see.
Russ Elliot: And in the end, I've said this a million times, I've got a six-year-old too, right? The funds that we're getting ready to see are funds that our six-year-olds are going to be paying back in about 10 to 20 years, right, and when they're paying it back, that infrastructure we placed today, better be in play and robust and working. That's a whole different thought process than we've had in the past 20 years, right?
Russ Elliot: We've continued to build infrastructure that is dead at the end of the subsidy. Here, we've got to take this one time, generous opportunity of future earnings and put it into that future proof, scalable infrastructure. And the only way you're going to do that is to centralize that conversation and make sure you're doing it in a way that you're being good stewards of the funds from a central location. So states that don't have some kind of a central body, I think they're going to miss this opportunity, and it's a one time in a generation.
Christopher Mitchell: That's where I always look at to the model of Maine, with the Maine Broadband Coalition.
Russ Elliot: Yeah, Peggy Schaffer. Peggy Schaffer's a fricking superstar. She's queen of the broadband.
Christopher Mitchell: Yes. And it's really wonderful that they've had the different providers, they've had local folks, local leaders, it's really been a great coalition across the board. And so if for people, if you're in one of these states, you're trying to figure it out, you could do worse than asking Peggy how they did it.
Russ Elliot: Yeah, exactly. That's exactly right. Talking to those people that have done great work. And unfortunately Peggy's towards the end of her career too, right? There's another person of institutional knowledge [crosstalk 00:34:16].
Christopher Mitchell: I just saw her. I told her she should come work for us.
Russ Elliot: I think she's probably had multiple job offers in this last year where she said she's retiring.
Christopher Mitchell: All I can give her is fun. I definitely can't outbid anyone for her, but I can tell her it would be more fun working with me.
Russ Elliot: She might be at that place where that's plenty.
Christopher Mitchell: Well, thank you so much for time today, Russ.
Russ Elliot: You bet. You bet. Thank you, Chris. It's been a pleasure.
Ry Marcattilio-McCracken: We have transcripts for this and other podcasts available @muninetworks.org/broadbandbits. Email us at firstname.lastname@example.org, with your ideas for the show. Follow Chris on Twitter, his handle's @communitynets. Follow muninetworks.org stories on Twitter. The handle's @muninetworks. Subscribe to this, another podcast from ILSR, including Building Local Power, Local Energy Rules and the Composting for Community podcast. You can access them anywhere you get your podcasts.
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