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Transcript: Community Broadband Bits Episode 87
Thanks to Jeff Hoel for providing the transcript to the episode 87 of the Community Broadband Bits podcast with Joanne Hovis on strategies for community network development and partnerships. Listen to this episode here.
Joanne Hovis: Communities can enable deployment of their own networks. They can build critical mass and infrastructure. They can build assets that are then theirs to use, over time, in whatever way they see fit.
Lisa Gonzalez: Hello. You are listening to the Community Broadband Bits Podcast, from the Institute for Self-Reliance. I'm Lisa Gonzalez.
This time on the podcast, Chris interviews Joanne Hovis, President of CTC Technology and Energy. CTC recently published a detailed study on strategies aimed at developing gigabit community networks. The study examines issues such as maximizing assets, local policies that facilitate network deployment, and working in the public-private partnership. In this episode, Chris and Joanne talk about the paper, and some of CTC's key findings. Communities interested in improving their connectivity options can learn from this and similar resources. By heeding the challenges, strategies, and victories of predecessors, communities can avoid potential mistakes and capitalize on proven tactics. Here are Joanne and Chris.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell. And today, I'm speaking with Joanne Hovis, the President of CTC Technology and Energy. Welcome to the show.
Joanne Hovis: Thanks, Chris.
Chris: Joanne, a lot of our listeners may know you as the immediate past President of NATOA, the National Association of Telecommunications Officers and Advisors, a wonderful organization on many levels. But today, we're going to talk about your private life, what you do as a business and this report that you've done, through the company. Can you start by just telling us what you do, and why you decided to do this report?
Joanne: Sure, I'd love to. So, we're a communications, engineering, and business planning consultancy. And what we've done -- we're a 30-year-old company. I've had the company for 17 years. And our area of focus is to support state, local, and tribal government and non-profits in deploying new communications networks. And 15 years ago, the focus of that was on government-use networks, for institutional and internal use. But as the years have passed, it has become more and more of a priority for localities to try to build or enable networks that serve the public, and that enable education, economic development, aging in place, healthcare -- all of the key outcomes that big broadband can enable for a community. And that's been the focus of most of our clients. So it's a huge focus of our work. And we work on municipal and county initiatives, where communities are building their own broadband networks, to meet their needs and the needs of members
public. But we also work on public-private partnerships, where communities look for strategies and ways that they can partner with the for-profit side of the world, and with nonprofits in their communities, to try and enable these outcomes. It's not a simple matter to develop these public-private partnerships. It's not always easy to figure out what the win-win scenarios are -- as between communities and for-profit entities. But, increasingly in broadband, I think there are strategies emerging that are win-win.
Chris: It's entitled, "Gigabit Communities: Technical Strategies for Facilitating Public or Private Broadband Construction in Your Community." So tell us -- give us a very brief summary of it, and why you decided to do it.
Joanne: What we've seen over the past few years is, more and more communities -- and I think they number in the many hundreds at this point -- looking at their existing fiber infrastructure and their conduit and other assets they have, and saying, well, is there something we can do with our assets? We may not build our own fiber-to-the-home network, but can these assets be used to facilitate private sector construction of fiber-to-the-home? And as that question gets asked more and more, and as communities think about leasing their excess capacity to private providers who are maybe looking at the business market or even the residential market, as they use it to incent new investment in fiber in their communities, we've seen some -- what I'll go so far as to call "best practices," or really solid strategies for things that they can do. And this paper was an attempt to collect some of those strategies, and talk about them from an engineering standpoint,
grabbing what they look like, and talk about how they might provide value to private partners. Or how they potentially move the needle for a community that's thinking that, down the road, it might operate its own network. And this is they can enable and add their own assets.
I should add, by the way, that it was Google that made it possible for us to write this paper. They provided us sponsorship. But the content is entirely ours; it's an independent work.
Chris: What is "dig once"? This is something that you go into great depth on -- and I'm glad, because a lot of times I hear about "dig once," it's just this sort of cursory overview. So, do you have a nice, concise definition for what you would describe as "dig once"?
Joanne: I will start by saying that "dig once" is the single most powerful tool I know of that a city or town or county can use to get conduit and fiber into its community. "Dig once" refers to a set of practices that would ideally be institutionalized and approved by a Council, or a mayor, or at some very high-level, so all agencies are on-board, and all community employees are on-board. That makes sure that we are realizing the efficiencies of shared construction -- that when a road is open -- or some kind of construction is happening in the public rights-of-way, or there's a capital improvement project that the community if funding, or there's private-sector construction -- under any of those scenarios -- that the community takes advantage of that opportunity to make sure that communications infrastructure is put in at the same time.
So it could be all kinds of scenarios. If you have a sewer replacement project, if you have a sidewalk replacement project, or if you're simply doing significant road repair, that is an opportunity to strategically place conduit or fiber or both, for your community, that you can then use yourselves for internal purposes or you can make available for lease to private-sector entities, who may be able to use it.
There's also another variation on this strategy. This variation is one that is purely private-sector. And what it does is, the city or town would tell the private sector, anytime a road is opened, either for public or private construction, all private-sector entities are given the opportunity to then place their own infrastructure. So they can come in, they can put in conduit, they can put in fiber. But they have to do it then. They won't have access to this road under other circumstances. And it's a motivator and incentive to enable the private sector to build when the economics are at their absolute best. The city of Hong Kong has actually been the best example of how to use this strategy. They've been wildly successful. They don't build their own fiber or conduit. That's not their model at all. But anytime a road is open, they require notification of all private-sector communications companies. And those companies, then, have to get together. They have to work together. They have to allocate costs among each other, and put in the infrastructure they need. But if they choose not to, a company that chooses not to participate when that road is open does not get to build on the road for the next two years. And in that way, Hong Kong has made sure that the companies are putting in infrastructure when the moment is right. And it's also reduced the wear and tear on the roads, the cutting and repair of roads, which is very costly, in the long run, to a community, because it shortens the life of the road. And, frankly, it also reduces the disruption in the rights-of-way, and the disruption to commerce, and all the economic negatives that come from what happens when you have major construction in a road.
Chris: You know, what I really like about your description there is, you've focused on "dig once" at the local level. And I really think it's important to note that, you know, states may want to do this, the federal government's talked about it, but really, where we need it is at that local level. That's where most of the opportunities are. And that's where I think these programs really make a difference.
Joanne: I really do agree with that. I think states and the federal government should be doing this. I think it's incredibly important that they do it, particularly since they so frequently look to localities to make infrastructure available, they should be doing the same. But this is something that a locality does not need to wait for the state or the federal government on. This is entirely within their own control. And it's not only not a cost center, I think it's a significant savings center. It's a very prudent measure that enables them to think about how to realize efficiencies through this process.
Now, I would say that it's very important that this not be done in an ad hoc way, because it's not helpful to have half a mile of conduit somewhere that's not connected to anything. You need a strategy. You need a plan. It's got to be engineered and mapped. But a plan that takes into account all the upcoming capital improvement projects that are projected now for the next ten years. And that then designs the network of conduit around those upcoming projects. That creates specifications for what that conduit or what that fiber would be, and what the construction parameters would be. And then is deployed in stages, as the opportunities arise. You can get to a pretty significant critical mass of infrastructure over time in that way. And you're doing it at almost no cost, relative to what the cost of that construction is. The incremental cost of putting in conduit when you've got the roads open for some other purpose, is really marginal. The big cost is the labor and cutting that road. The conduit itself -- very small matter. So I would call this a significant best practice, and I think that communities that have realized these benefits have made big impacts in terms of their ability to build a lot of fiber infrastructure, either for internal use or to make available to private providers over time.
Chris: There's a real importance to some areas in particular, that we have to make sure we hit. And that's bridges, areas over waterways, areas crossing railroads, along major roads, and in the core of urban areas. You know, it can be difficult in some places to get all the stakeholders together and get the conduit in, but there's some places that are just really high-cost to get conduit and fiber in. And those are areas that are listed in the report that I just identified. To close a lane on a major bridge is a big deal. And so you want to make sure that you can avoid those sorts of things. And so, at a bare minimum, you need to make sure that you hit these key areas, and you're aware of those.
Oh, and one other one, I would say, is overpasses. You want to make sure that you have some way of getting through overpasses, because those can also be difficult to navigate around.
Joanne: That's exactly right. These are THE key strategic areas that you want to try to get before the fact, rather than after. Imagine the cost -- to use your example of the overpass -- the cost of trying to come in and put in that fiber, essentially to retrofit, on -- with a construction project, and a piece of infrastructure that is that complex and that costly. But if it's done when that overpass is being built, or when it's being repaired, or when some other kind of infrastructure is being put through, then it's a much simpler matter.
Chris: Sometimes, even when it's just being painted, you can get it in there.
Joanne: Yes, exactly. Relatively simple projects can enable you to utilize "dig once" or "build once" strategies that are really cost-effective. And your example of the painting is a really good one. If you think about how difficult it's going to be to do a river crossing, if you have an emergency need to build that river crossing now, the cost could be enormous -- assuming you can get access to the bridge that goes across. But if you're thinking about it in a strategic way now, planning for the next ten years, you can take advantage of the opportunities that come along, when they do. It's a very challenging strategy if it's driven by one agency of city government. I'll use an example. So, if this is a strategy of the IT department, that's helpful; it's really wonderful; it's important. But they are going to be dependent on the help and support of the public utilities folks, of the public works department, of the city engineer, of a range of different agencies of city government. It can't just be done by one agency. I would say the most important experience I can share about "dig once" is that this should be a policy at the legislative level -- the City Council and Mayor -- to make a determination that this is a top-priority, that it need to happen, and there should be a coordinating group that includes all of the agencies I mentioned. Because they're all going to be essential. And if they're not all working on it together, then the efficiencies that come from this are going to be much harder realize -- if it's only the agenda of one agency rather than all.
Chris: This report goes into a very deep level of information, that I've rarely seen in these reports. And so I just want to note a couple of things that we don't have time to talk about. You talk a lot about what cities can do to make information available to other parties -- GIS maps and that sort of thing. You also talk about the benefits of code -- city code -- requiring, in developments, or perhaps even major retrofits, that buildings have access built into them to make it easy for service providers to gain entrance to the building, both from the right-of-way to the building and then, within the building, to the individual units within the building. And so, do you have anything that you just want to briefly touch on there? Or should we move on to the final major point I want to talk about?
Joanne: I'll say that, you know, it's the same insight as with "dig once" -- that if your community requires that when construction is underway, or a major renovation is underway, the pathways are put in, to get into the building, and within the building, for fiber optics. The same way that your code requires that pathways be put in for other utilities. If it's done during construction, or during major renovation, the incremental cost is marginal. If you have to come back and retrofit, when somebody comes and wants to build fiber-to-the-home, or you as a city want to build fiber-to-the-home yourself -- incredibly costly. So, have policies in place that make it possible to do this when it's inexpensive, and before you desperately need it, so you're not building it in a costly way, in a hurry, at the last minute, but you have it there when you need it.
Chris: So, I've done a series of posts about Seattle, and sort of the -- some lessons learned that -- from Gigabit Squared in Seattle. And, really, that was just an excuse to talk about some things that we know about, in terms of how making these investments can help make a provider. But they don't guarantee it, right? That you can do all these "dig once" policies, but fundamentally, the economics are still very difficult for providers to build networks.
In the paper, you go through a scenario that you construct, and estimate that, using a lot of these "best practices," you can reduce the capital cost to a provider that's building a network by eight percent. Now, I think that's both significant and also a little disappointing. And so, do you want to reflect a little bit on that eight percent
Joanne: These strategies are powerful and useful. They don't change the underlying economics of broadband construction, which is that the capital costs are enormous, particularly relative to the potential revenues. And that's the core problem we have with fiber-to-the-home as an industry in this country. It's just really expensive to build. And all of these strategies, even if deployed under optimal circumstances and with great competence, are really only going to have a small impact. It's not just only eight percent, in our hypothetical, but it's only eight percent of the outside plant construction costs. So it's eight percent of one element of the cost of building and deploying the fiber-to-the-home network. It doesn't deal with the interior matters, the equipment, the integration of that equipment, and so on. It's not a huge number. That said, it's a meaningful number. And it adds up in dollars. And it could be -- no guarantee, no promise -- but it could be a differentiator, if there is a provider who is thinking about where to make an investment. This might be a slightly wiser investment, all other things being equal, for that provider.
And even if there is no provider who emerges, based on these strategies, communities can enable deployment of their own networks. They can build critical mass in infrastructure. They can build assets that are then theirs to use, over time, in whatever way they see fit, whether it's private-sector provision or public-sector provision. It just adds to the choices and the options they have with time, as gigabit services -- and beyond-gigabit services -- become more important in the life of their community. They've been working toward meeting those needs. And they've been doing it through these prudent strategies, I'd say, in a very low-cost and high-impact way.
Chris: I think that one of the things that I really liked about this paper, and the way it really wrestled with these issues, is that you talk about the eight percent, but then you make a really important insight. And that is that eight percent can mean different things at different times. And one of the things that this does is, it means that if you're starting a project in a city that has undertaken these best practices, it may mean that you can start connecting customers and generating a revenue stream several months earlier. And one of the important things in business isn't the cost of things, it isn't the -- you know, it isn't a number of factors, it's timing. And I think that's something that I'm really impressed that you pulled out, which is that one of the ways that this makes a difference is that even if the costs don't change significantly, just the ability to pull in revenue more quickly can make your project more feasible.
Joanne: That's exactly right. You could see revenues flowing relatively quickly from customers who are located close to the infrastructure that the city is able to provide to that private partner. And that means that even during relatively early deployment stages, there may be some revenues that can be realized by that provider, which makes the economics of the build far more attractive, potentially.
Chris: So, I just want to finish up with sort of the reality, which is that no matter what cities do, many cities are going to find that they're in a tough position. That they don't have a partner beating down their doors. And so, one of the key points you make in this paper is that, you know, if these strategies are going to make a difference with a partner, you have to have a partner that's really going to work with you. It's not just going to be some massive cable company that suddenly decides it's going to deploy, you know, a fiber optic network in your community. One of the things I think about is that Baltimore has a massive conduit bank throughout the community, and you don't see Comcast suddenly offering better services in Baltimore than you do elsewhere. And so, as we think about some of the communities that have been doing this over a long period of time, you know, what can we say about those who have all this conduit available and we don't necessarily see partners rushing in?
Joanne: So, I would say that the most important factor in a public-private partnership is that both sides are true partners, and that they're both really willing to partner. It's not enough for the city to build assets and make those assets available and offer to support the private partner in every way it can, if the private partner is not willing and able to really invest in the city. That's a really important factor. If you don't have a partner that really is going to make a massive investment in your community -- "massive" being a relative term, relative to the scale of your community -- if you don't have that private partner on the other side, these strategies really aren't going to make a difference. There are people who have questioned the significant concessions that Kansas City, for example, made to Google Fiber, as a partner. What was done in return was extremely substantial on Google Fiber's part. And making those assets available to Google made enormous sense, because Google clearly was willing to invest in that community. I would feel very different about a situation where a community made assets and processes and so on amenable to a provider who was not investing, and who perhaps was just continuing to operate legacy systems, but was looking for something that amounted to subsidy. That's a very different situation.
Chris: A community that makes these efforts is going to be better off, regardless, because it will be in a better position then. Even if it does not find a private partner, it will be able to build its own network out, and ensure that its needs are met, by itself. You know, that even if you do all this, you may not -- it may not pay off in terms of getting a partner, but you'll be set up to do it yourself.
Joanne: Absolutely. This may not attract a partner. Unfortunately, we have not seen dozens of companies emerge in this market who are willing to invest in fiber-to-the-home in a competitive way. That's the reason why public sector action necessary -- is that the private markets are not stepping up to what we believe is the need. So there is no guarantee that a private partner will emerge. We are in the very early days of seeing what those frameworks look like, and hoping that companies who see Google's success come into this market. But even if there is no private partner, I think communities can make a big difference for themselves by building these assets, and building toward a future. I'm just more skeptical if they make assets available to an entity that may already be in a community but doesn't plan to build -- doesn't plan to invest. In that case, you know, it's considerable public subsidy. That's OK. Just make sure that your partner is actually tangoing as much as you are.
Chris: You and I talk a lot about partners. And the reason that we do is because we're aware that many local governments would prefer to work with a partner. I don't think either one of us -- I certainly know that I would not suggest that a community should have to seek a partner first. I think -- I would say that a community that wants to build a network itself should be free to do so, if that's what it chooses. But we -- I think we just recognize that many communities would prefer to work with someone. And so that's why we spend a lot of time talking about that, rather than focusing on just what communities can do, out of the gate, by themselves, if they so choose.
Joanne: We're in total agreement there. Any community that wants itself to build and operate a network -- meet the needs of the community and take its future into its own hands should be able to do so, and should be applauded for doing so. No question in my mind about that. And the only -- the ONLY people who should be empowered to make that decision are the voters and elected representatives of that community -- not those of us sitting in Washington, not anybody in the state capital, and not a company located seven states away.
Chris: Well, thank you so much for coming on the show, Joanne. I really appreciate it -- on the day that you're totally snowed in. It's wonderful that we're able to talk.
Joanne: Thanks, Chris. Great talk to you. And I'm going to go shovel now.
Lisa: You can download CTC's publication at ctcnet.us . While you're there, we encourage you to check out some of the other resources they make available to interested communities. CTC has published case studies on a variety of communities, as well as checklists and guidebooks to help you develop your approach.
We would like to hear your ideas for the Broadband Bits Podcast. If there's a topic that interests you, feel free to e-mail us. Write to email@example.com . You can follow us on Twitter. Our handle is @communitynets . This show was released on February 25th, 2014. Thank you to the group Valley Lodge for their song, "Sweet Elizabeth," licensed using Creative Commons. Have a great day.
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