Transcript: Community Broadband Bits Episode 88

Thanks to Jeff Hoel for providing the transcript of the episode 88 of the Community Broadband Bits podcast with Chris Mitchell on the overview of Stockholm's Stokab. Listen to this episode here.

00:10:

Chris Mitchell:  But I think that if we look at this over many decades of time, if you're a city that figures out how to get a lot of fiber in the ground, and you make it available on reasonable terms, over a long period of time, you're going to be really better off.

00:24:

Lisa Gonzalez:  Hi, there.  Welcome again to the Community ....

00:26:

Chris:  Welcome to the -- hey, wait a minute.

00:28:

Lisa:  Oh, oh, oh, Chris.  Hi, Chris.

00:31:

Chris:  Good morning.

00:33:

Lisa:  You weren't here, so I thought I'd, you know, just sort of take over.

00:36:

Chris:  Yeah, that works.  You'd probably do a wonderful job.  I look forward to it.

00:40:

Lisa:  Um.  Hey, everybody.  We're back at the Community Broadband Bits Podcast.  And this time we're doing something a little different.  We like to shake it up once in a while.  Chris just got back from a visit to Stockholm, Sweden.

00:52:

Chris:  I was at an event in Stockholm called "Fiber: the Key to Creating World-Class IT Regions," which followed the European Fiber-to-the-Home Council event, which is a yearly event.  It's actually incredibly large -- 6,000 people, and a very large convention center.  And it was very cool.  I spent two days getting a better sense of how Europe deals with fiber.  I had a lot of great conversations with people.  And then I finished it off by talking about fiber in North America and in the United States, and sort of what we got right, and what isn't working so well.  And did some Q&A.  And then I hopped on a long flight home.

01:31:

Lisa:  So, tell me how you found it.  Was it -- had you been there before?  Or was it the first time to Sweden?  Or -- tell me how the experience was, just for you personally.

01:39:

Chris:  Well, it was wonderful.  I mean, Stockholm was great.  It was a little warm for my taste -- right around freezing.  Whereas here, we were a lot colder than that.

01:47:

Lisa:  I'm very jealous.

01:49:

Chris:  But it was an amazing city in many ways.  And I had a --  I haven't spent much time in Europe -- any time, really, except for a few airports.  So seeing Stockholm was really eye-opening, and getting a better sense of the density there.  Benoit Felton and I -- an analyst that we've interviewed in the past, from France -- he's a good friend -- he and I did go to a photography museum and see some excellent photography, ...

02:11:

Lisa:  Oh, neat.

02:11:

Chris:  ... so that was good.

02:12:

Lisa:  Yeah, that sounds great.  Benoit Felton was there.  Did he talk about Stokab?

02:17:

Chris:  Well, he talked about Stokab, and he talked about a number of other things that are happening in Europe.  But we -- it was more the conversations that I had with Benoit over the several days that, I think, really helped to get a better sense of what's happening with Stokab, which is the city-owned municipal fiber network in Stockholm.  It's an entirely dark fiber network, where the city owns this corporation that does dark fiber -- ninety people work there.  And they don't provide any services.

02:45:

Lisa:  Oh.  OK.

02:45:

Chris:  And so there's an upper layer on top of that that has service providers.  And -- it's a little bit more complicated than that.  But it was really interesting to see.  This is their 20th anniversary.  And I think it's really powerful to see what the city can do over 20 years with smart investments.

03:02:

Lisa:  Yeah.  I saw the report, and it said that like 90 percent of households in the city are -- have the ability to use that network.

03:11:

Chris:  Right.  I talked to several people.  And, actually, I ran into my college roommate from my first year at undergrad.  And he and I hadn't spoken in a long time.  But he's in Stockholm.  I had a chance to meet with him.  And another friend from undergrad, who runs a telecommunications company out of Cyprus now.  And both of them live in Stockholm.  And I got a chance to, sort of, get a better sense of what people experience who aren't working for the network, and are pretty unbiased.  And, of all the people that I talked to, I couldn't find anyone who had a connection less than 100 megabits a second.

03:45:

Lisa:  Wow!

03:45:

Chris:  And generally, they're paying somewhere between $20 or $40 -- of U.S. dollars, effectively ...

03:49:

Lisa:  Oh my God.

03:49:

Chris:  ...  per month.  And the higher range -- like the $45-$50 -- that's if they're doing triple play with a lot of television channels.  So, you know, they have like 100 operators working on this open-access network.  And so, it's just -- there's a whole different dynamic when it comes to pricing.  And, if you or I lived there, we wouldn't necessarily have a choice between hundreds of providers.  Odds are, the building that we lived in -- because 90 percent of the city lives in multiple dwelling units, or apartment buildings -- odds are that our building would have a contract.  So we may not even have a single choice.  But the building would have chosen among an open market.  And so, there's more competition there, even if people aren't able to change their service providers on a regular basis, individually.

04:36:

Lisa:  Well, that that's interesting.  So that just puts the decision in a different set of hands.

04:41:

Chris:  Yes.  And it's effectively kept prices down.

04:45:

Lisa:  **

04:45:

Chris:  And it's definitely worked in that regard.  One of the things that I asked people -- and I think you'll enjoy this, because we've been looking at this pretty closely lately -- is, I asked a number of people if they knew of anyone who just used their 4G wireless rather than having a wired connection in their home ...

05:00:

Lisa:  [laughs]  Yeah?  Uh-huh?

05:01:

Chris:  ... and almost all of them looked at me, and they had this confused look on their face, like they were trying to translate what I had asked them, and they were thinking, he can't possibly mean what he's saying, so what does he mean?  And, in fact, Stockholm, which has four 4G wireless providers -- it's one of THE most connected cities in the world -- no one that I could find even knew of anyone that had substituted a 4G wireless connection for a home wired connection.  So, I just thought that was more evidence for -- anyone who claims that 4G wireless is a substitute for a good home wired connection is either lying or very stupid.

05:42:

Lisa:  One of the statistics that I saw was that for every -- I think it was a thousand additional users, there are 80 new jobs, thanks to that network.  Did you find out anything about economic development stories, or anything specific that you'd want to share with us?

06:00:

Chris:  We didn't really talk a lot about the economic development type stuff.  I mean, it's very clear that Stockholm is turning into a high-tech hub.  What I found interesting was getting a better sense of just the overall social benefits ...

06:13:

Lisa:  OK.

06:13:

Chris:  ... of the network.  Um.  And a study that was completed -- and we'll link to in the show notes -- had found that over two billion dollars -- of U.S. dollars -- or 20 billion in Kroner -- have been created in community benefits as a result of this network, which is three times more than the cost of building it.  And it's important to note that, like many communities in the United States, this network's paying for itself.  It's not being subsidized by taxpayer dollars, from what I could tell.  The city has loaned money, and that money is being paid back, on the schedule that was approved.  So, it's an interesting situation.  And they've done more than many U.S. cities to examine how it's benefited, in terms of -- you know, whether it's telemedicine or whether it's the higher housing prices, there's all kinds of benefits that have been identified, because Stockholm is so well connected.  And the report that I'm referencing compares it to Copenhagen, which is a similar city in many ways, but they don't have a municipal fiber network.

07:18:

Lisa:  Um-hum.  Um-hum.  Yeah.  And I understand that every school is connected with a gigabit connection ...

07:22:

Chris:  Yeah.  Not just every school, but ...

07:25:

Lisa:  Did you get to see any kids doing anything?

07:26:

Chris:  No, no.  I didn't get to see any kids.  But while I was there, I saw that they were -- they've already connected half of the preschools in Stockholm with these incredible gigabit connections.  And they're finishing that up.  It's interesting that the city has one corporation, Stokab, that provides the dark fiber; and they have a different corporation that's owned by the city that just specializes in delivering connections to schools and public facilities and that sort of thing.  So, the Internet, in the offices of Stokab, is delivered by a different corporation that's owned by the city.  And so, they negotiate, and they have, you know, discussions about what's necessary and things like that.  So it's -- they have this incredible connectivity to all of the anchor institutions and things like that.

One of the things that's interesting about Sweden is that they have, I think, 170 municipal networks, out of, maybe, 270 municipalities, something like that.  So they have an incredibly high proportion of municipalities that have built networks.  And I think many of them were inspired by Stokab, which is one of the first.  But it's also true that, as in the United States, the smaller communities -- it's a little bit harder for them to pay back the cost of building the network.  But there, they have less of a problem with the city saying, we're going to put some taxpayer dollars into it, ...

08:46:

Lisa:  Right.

08:46:

Chris:  ... and we know that we're going to get far more benefits for the community because we have this connectivity than we're paying in taxpayer dollars.  And so they seem to be making that conscious choice, to make sure that they have a very advanced network.  But it's important to note that, you know, Stokab is successful across a variety of metrics, one of which is financial.   And some of the other networks in Sweden aren't so financially successful.

09:09:

Lisa:  And -- well, they've been around for 20 years, too.  So they've been able to work out all of the kinks.

09:13:

Chris:  Right.  They got in early, and they are the de facto provider.  I mean, they're someone that a lot of the carriers use.  They have the fiber everywhere.  And so, no one else has to dig up the streets, they can just lease fiber.  And it's just crazy.  I mean, I was talking with them.  They put in these massive conduit banks.  They put in like 800 strands of fiber.  And one of the interesting tips that they said was that they always leave -- within the duct, they have multiple channels, for different fiber ribbons.  And they always leave one empty.  Because if they need to replace one of the other channels, they can put a higher-count -- strand -- through.  And then they can, sort of, migrate all those customers over.  And then they can pull that lower-count one out, and they still have an empty channel for doing that again later.  So, by always leaving them some upgrade room, they have an indefinite means of adding more fiber to the existing paths.

10:10:

Lisa:  That is really cool.  That's really smart.  So, you just had this great experience in Stockholm.  And you've learned all this new stuff about, you know, how they're doing it.  What should we take away from that, as a country?  I mean, what is it that the United States should pick up from their experiences?

10:25:

Chris:  One of the things that I think we should take away is the importance of local investments.  And having different communities able to experiment with different approaches.  Now, I think a lot of cities may look at Stokab and Stockholm and think, wow, we should do that.  This is going to be terrific.  But it's important to note, this can't be duplicated overnight.  And there's some doubt as to whether or not a city, starting today, would be able to duplicate it at all, just because of the markets change, and the way the incumbents act, and the unique regulatory environment in the United States, which is different from Sweden.  But I think that if we look at this over many decades of time, if you're a city that figures out how to get a lot of fiber in the ground, and you make it available on reasonable terms, over a long period of time, you're going to be really better off.  This is especially true in a large city that has a lot of big apartment buildings.  In Stockholm, one of the major reasons that they have so much connectivity is because the individual apartment buildings, many of which are owned by a single company, um, you know, they would be contracting, then, to expand the network and connect their buildings.  That's not something we've seen in the United States yet.  But over time, I think we WILL be seeing that.  I mean, we're going to be seeing more competition in these apartment buildings for having really high-class services.  And so they can raise their rents, and so they can charge more, and it will be a worthwhile investment for them.

I think there's multiple lessons.  There's a danger in going down that path, which is that, over time, you may see only those who have a lot of money can afford to get the dark fiber connections.  But, I think, over a longer time horizon, you'll see that it's spread out to more and more areas.  And I think we can have good public policy that once the fiber is in the ground, we find ways of making it available to everyone, so that low-income neighborhoods aren't left behind.  But, really, it's about getting a lot of fiber in the ground that's owned by the city, or owned by some sort of entity that is accountable to the community, and doesn't want to the position of power they have because of that scarce resource.

12:26:

Lisa:  And, also, taking advantage of the fiber that's already there.

12:29:

Chris:  Right.

12:29:

Lisa:  Because we know that there's fiber all over the place that is just not being used, or is not being used for this particular purpose ...

12:37:

Chris:  That's true.  A lot of that fiber is owned by private corporations, though, that are not going to lease it on reasonable terms, because of the high cost of dark fiber in the United States.  I mean, if you look at a place like Palo Alto, they have a very reasonable place for dark fiber, compared to what any private company will sell it for.  But if you look at Stockholm, their price is far lower.  And you need to get the dark fiber prices really, really low if you're going to incent that method of build-out, rather than what we've traditionally done in the United States.  And this may be what we continue to do.  It's possible that dark fiber will never catch on in a big way here, but if it will, it will only be after the price is so low that there's a fairly quick payout -- or, turnaround -- for an investment to connect an apartment building, or something like that.  So, you know, even if there's a whole lot of fiber here between Minneapolis and  St. Paul, it doesn't much matter if it's all priced too high.  And so, the point is, we need to get more fiber in, that's going to be available on reasonable terms.

13:36:

Lisa:  So, it sounds like you had a great time.  And you said something to me earlier about how you had an interesting first meal.  What was that?  Share that.

13:43:

Chris:  Well, I -- So, I got off the plane, and I took the train to the hotel, and I found my way to the conference, just in time for lunch.  And here I am, really hungry, haven't really slept, and I almost thought I was in a sort of stereotypical dream.  Because it was Swedish meatballs ...

14:00:

Lisa:  [laughs]

14:00:

Chris:  ... on the menu.  It was just perfect.  So, I found that to be pretty humorous.  Um.  They were excellent.  And the food in general was terrific -- a lot of fish, a lot of other things -- had some reindeer meat.  Yeah.  I mean, all around, it was a wonderful time.  I really look forward to being able to go back, because there's a lot of places in Sweden that are doing some interesting things that, I think, will make their way over here eventually.  Sooner or later, we're going to break the monopoly of the big cable companies.  And I think we're going to have more choice.  And it's not going to be true everywhere, but I think it will be most true where communities take their destiny into their own hands.

14:40:

Lisa:  Great!  Well, thanks for sharing your experience.

14:43:

Chris:  Thank you.

14:44:

Lisa:  There are several YouTube videos from the conference, in addition to the links we've provided.  Experts from each of the panels are highlighted for individual and group discussions.  So, if you search YouTube with the name of the conference, your search result will provide a generous list of presentations.  The name of the conference was "Fiber: The Key to Creating World-Class IT Regions."

We would like to hear your ideas for the Broadband Bits Podcast.  If there is a topic that interests you, or if you'd like to hear from a specific guest, feel free to e-mail us.  Write to podcast@muninetworks.org.  You can follow us on Twitter.  Our handle is @communitynets.  This show was released on March 4th, 2014.  Thank you to the group Valley Lodge for their song, "Sweet Elizabeth," licensed using Creative Commons.  And thanks again for listening.