West Des Moines, Iowa is a Model for Open Access Conduit Networks - Episode 573 of the Community Broadband Bits Podcast

Jamie Letzring (00:07):
And although we didn't form a utility and we're not managing a fiber service, we still view it like infrastructure, a road to your home or water or electricity, regardless of the fact that the federal government doesn't necessarily quantify it as such, that is how we view that and our residents, they also clearly view it that way.

Christopher Mitchell (00:28):
Welcome to another episode of the Community Broadband Bits podcast. I'm Christopher Mitchell with the Institute for Local Self-Reliance in St. Paul Minnesota, and today I'm welcoming back to the show two folks who are on three years ago talking about a very exciting model in West Des Moines. Jamie, lets Ring is the deputy city manager. Welcome to the show.

Jamie Letzring (00:53):
Thank you.

Christopher Mitchell (00:53):
And we also have Dave Lyons back who's the innovations consultant working with the city on this and possibly lots of other projects.

Dave Lyons (01:01):
Great to be back. Can't believe it's been three years, Christopher.

Christopher Mitchell (01:04):
Yes. And we've been really curious to know what lessons that you've learned. I'm excited to find out where we are in the project and what others can learn from this. And frankly, I'll just say off the front set, shame on the rest of the country that we don't have 10 other cities that are already doing this because I think it's a great model. I don't think it's great for everyone necessarily, but I think there's a heck of a lot of cities who should be doing this and I suspect that we will see them doing it as more cities step up and realize the power of this approach. But let me start, Jamie with a quick reminder for those who haven't listened to that episode, what is West Des Moines doing with Conduit

Jamie Letzring (01:49):
West Des Moines started a project in July of 2020. We announced a project where we were building a ubiquitous conduit network. We're a community of about 70,000 people and so we were making an investment to build just the conduit and at the time thinking that we would go to homes every home and business in utilizing our right of way. And our goal was really to build something that carriers would lease, basically a lease agreement where they would be paying per annum fee to utilize that conduit, but the city would provide all of the infrastructure. We were not interested in creating a fiber utility, and we've been busy constructing that in our right of way for the past three years. Again, I reiterate our goals were to create a system that would be available to anyone in the community and also really grant our residents and our businesses their choice of a provider. That was our ultimate goal.

Dave Lyons (03:02):
Yeah. One of the keys in West Des Moines, Christopher, you remember, is that the city realized it was really good at some things such as managing right away, putting an infrastructure, organizing opportunities for access by citizens, private sector carriers do other things really well, like create products, deliver services, handle billing, et cetera. So the vision in West Des Moines is to stay in its lane, put in all of the infrastructure and support that as a means to lower cost and speed time the market for competing carriers. And that's really proven out to be kind of a sweet spot. People are doing things for the very first time in West De Moines. Perfect example is the mediacom effort to go to multiple G systems and they chose West Des Moines simply because it was speed to market as the infrastructure was there

Christopher Mitchell (04:11):
And for people who would like to go back, it was episode 441 and for those who haven't been to the upper Midwest where we live, west Des Moines is not a part of Des Moines. It is a part of the Des Moines metro area, which is larger than you think if you've not been in the area. And so that's a little bit of background. Now you built it and as you were starting to build it, and I think Google Fiber got involved now called GFI, or I frequently call it Go Fiber, just to make fun of it a little bit. They were a partner early on with you to help with that. And then as you mentioned, mediacom is using it, but tell us where we're at and who's using it, where we're at in the build,

Jamie Letzring (04:56):
Obviously Google Fiber was our first tenant, if you will, in the system and had really made that financial commitment on a 20 year scale, which matched the terms of our bonds to fund the project. That helped really, it wasn't covering the full cost of the project, but it does help defray the cost. Certainly. We also understood, I might interject here that this, we view this as infrastructure and although we didn't form a utility and we're not managing a fiber service, we still view it like infrastructure, a road to your home or water or electricity, regardless of the fact that the federal government doesn't necessarily quantify it as such. That is how we view that and our residents in our surveys and things, they also clearly view it that way. So we went into this project with the understanding that it's possible that this may never pay for itself, but it is an essential utility or it is an essential piece of infrastructure that everyone needs to their home and business.

(06:06):
So as I said, Google Fiber was really our first tenant making a pretty hefty financial commitment on a 20 year term. And then initially we were building a fiber conduit system because we really felt like that was where the future is headed with connectivity and broadband. Mediacom has an alternate product, they disagreed. We spent about, oh, just shy of two years with some lawyers and hashing out those differences, which we really never had to go into court to deal with, but we were able to settle and actually come out with a better product. I think for both parties. Mediacom is able to put together some coax fiber hybrid product, bringing even faster speeds as advertised to our residents. And just this earlier late summer lumen, formerly CenturyLink also signed an agreement with us and they will also be joining in the conduit network system. That means that all three, both of our legacy carriers as well as Google Fiber, new to our market here in Des Moines, in the Des Moines area and in Iowa, have signed agreements to be in the system.

(07:32):
And I feel relieved. I feel very relieved that it is a testament to the fact that the system is working the way it was designed, that carriers are finding it useful, that it is, as Dave said earlier, accelerating their speed to market, their speed to the customer. It's cutting out their CapEx related to construction and it was painful to build for our residents to be at everybody's yard in their right of way. But it's one and done and now it's over with. So you also asked me about the construction and where we're at In October, early October, late September, we turned over as part of our agreement with Google Fiber, we turned over the bulk of the addresses necessary to meet that application. And so those are in testing phase with their people. Right now we are very busy with restoration, which feels like it might never be done.

Christopher Mitchell (08:32):
What is restoration for those who aren't familiar with the term?

Jamie Letzring (08:35):
Sure. So we're putting in a lot of vaults and we're boring a multid duct conduit. So the conduit itself is not creating a lot of disturbance on the grass level, but installation of vaults is. So we're obviously digging up a lot of yards and things for that. That means that we're having to go back and really with hand shovels, backfill those areas in people's yards and there are thousands of them. So it's labor intensive, it's expensive and it's never quite up to snuff. So that will still be ongoing. And then the only piece we have left is some private streets that have signed on, so we'll complete that work hopefully well in the spring of next year.

Christopher Mitchell (09:25):
We talked originally there was a goal of the city owning conduit that run all the way up to the side of homes, and that is something that didn't happen as my understanding I suspect proved infeasible and very costly and also aggravating for homeowners in some ways, perhaps Dave. What happened there?

Dave Lyons (09:41):
The original vision was infrastructure would run into the home. The problem was threefold. One, the model was is that the city would own the physical infrastructure in the right of way and the carriers would own the relationship with the customer. There were different approaches to connecting homes that the carriers had, which meant we would've had to put multiple types of connections in just wasn't feasible for the homeowner or for the financials. So we are at the curb. The second issue was is that the mechanism by which those would be expanded in the future for additional services really relies upon private infrastructure investment by the carriers. So accomplishing the universal access at the curb with activity then quickly following for the carrier of choice for the homeowner seemed to be the best solution.

Jamie Letzring (10:51):
Could I add to that also something really specific that we learned about that particular piece of the project? So one of our goals is to have a provider choice, not just only one fiber provider or broadband provider, but your choice of multiple carriers. And we feel like we have achieved that or we are achieving that, but with having the city install a conduit to the person's home and having a provider choice be one of our goals if, and I am a homeowner here, so if I decide that next month I want a different provider now who's to take out the first provider's stuff in that conduit to my house and then what are they going to do with it or what if I want to go back to them? And that was a piece, something that we learned that maybe we didn't, we're not able to really even conceive of until we got into the construction piece and the design, a very specific design of that. So when we were working on contracts and negotiations, that sounded great, but when we got into really the application of the building, we realized what happens if they really do switch providers or if they want to switch multiple times a year for whatever reason.

Christopher Mitchell (12:05):
So for people who are sort of confronting this for the first time, the quick recap is that the city owns a conduit system that runs up and down every street more or less to touch all of the homes and businesses. It is for all intents and purposes completed, although there is always work to add on and as the city grows, there will be additional challenges to incorporate that there are multiple providers that can use it and the providers are each responsible for connecting to the homes and that is something that we've seen in a couple of different places above ground. This is just below ground. So my last question sort of about the key infrastructure here then is whether or not the city itself is using some of this. This was something that in Huntsville when they actually worked with Google fiber as well for their model, the city was really enthusiastic about owning the network and having fiber to be able to do smart city type applications even if they didn't know what all those might look like today. So I'm curious, Jamie, if the city's starting to take advantage of it or thinking about that for the future.

Jamie Letzring (13:11):
We feel a lot like how you just described Huntsville. We're very excited about what that's going to look like in the future and I'll let Dave touch on a couple of those points, but we are already seeing some, I think there's some things coming at us with charging stations that I'd like to get into. There's some things with telemedicine that I'd really like to try to explore since we have so many hospitals here. We also have some public safety applications as well with a mesh network for tracking vehicles or crime as someone might travel from one suburb to the next and so on. So there's some interesting applications that our departments are starting to really realize, but there's still a few that I'm excited to check out and really see what we can do with, I'll let Dave dovetail on that.

Dave Lyons (14:01):
The city had a pretty robust fiber network of its own connecting its facilities and the schools already. So they've been able to use that for a lot of the early smart city activities. Obviously the universal network now being available and the city having capacity and that simply fills in all the gaps. It's probably more interesting right now what's happening. So the city is doing a lot of very traditional smart city things. What's really kind of the interesting phenomenon is the living lab outcomes. People who are looking to extend their relationship with existing customers, think utility companies who want to do real adjustments of your utilities in your home and sign up for up and down when the heat and cost of energy changes. Think medicine where people are needing to do a scientifically large enough number of research of folks to be able to determine what a broadband or a high-speed connection can do for a particular disease or a particular therapy. They're coming to West Des Moines because they realize that it is a universal system, but that any gaps to that universal access are also being filled. If you are low income in West Des Moines, they have a program connecting you in a concierge manner with the A C P program, American Connectivity Program, so that if you can't afford it, it is there for you and if you do not have the skills or the equipment, they have collaborated with PCs for people, a nonprofit out of, I think your hometown St. Paul,

Christopher Mitchell (16:02):
Just a few blocks away from me actually. Yeah,

Dave Lyons (16:05):
That actually provide refurbished computers and 24 7 help desk support for individuals. So you can imagine if I'm a clinician and I want to test out the ability to keep a heart patients from having to reappear in the emergency room, but I want to test it out on a scientifically comparative basis using broadband, I can do it in West Des Moines. For them it's the same as carriers. This is the fastest and cheapest way to market in the country. And so that's why they're starting to reach out and say, okay, now that this is done, how can I use it to prove out new business models that require that type of universal access that West Des Moines provides.

Christopher Mitchell (17:01):
Now you mentioned the A C P, the affordable connectivity program, and that is something that was, I think the E B B was just getting started maybe the last time we talked. And so at that time you mentioned that you had been either been a part of or aware of pilot projects in the area regarding wireless solutions for digital equity. And so I am curious what you've learned and how the conduit system may or may not be involved in efforts in West Des Moines to make sure that households that might not have been able to afford Internet access have it as well as devices and training and whatnot.

Dave Lyons (17:38):
Yeah, I think the best way to refer to this is the pilots all became bridges. So we did a pilot, if you did not the Internet at home, you could take it home with you with a hotspot. And then we followed that up with a, if you need to have the Internet, we're going to make it available in many places within your own community. So public Wi-Fi and public systems. And the third was is if you are in a facility or a low income housing unit, how do we underwrite the ability for broadband to arrive and be ubiquitously available in that building? Here's what happened. People used all of those, but the ultimate outcome is direct fiber, high speed both ways to every home, every apartment and every business is really the minimum standard for the future. So most of our pilots have begun to roll themselves into a process of meeting people where they are providing a bridge, where they are to the broadband, but eventually replacing that with a direct fiber connection, which is a hundred percent available, a hundred percent affordable and accessible because they now have access to the equipment and to the help needed to use it to its maximum extent.

Christopher Mitchell (19:13):
Who owns that fiber then? Is that usually a partner like one of the ISPs in the system or is it some other entity?

Dave Lyons (19:19):
Primarily it will be through public private relationships. So for example, if I am a resident who needs financial assistance, I can go to a city office or I can go online to the city's website, put in my address and it will call up all of the carriers who would be able to provide me broadband in that area. And it gives me also the speed, the terms, the costs, et cetera. So obviously it's all from free to upgraded as you can imagine. So those are relationships we facilitate with the private sector. When gaps need to be filled that do not have a private sector sufficient economic return such as community Wi-Fi spots around things like the community market, the city has the ability to support that off of this network. Now

Jamie Letzring (20:17):
To add to what Dave was saying about the website that you can punch in your address and see which providers are in your area. That's specifically related to the A C P program, and I'm watching right now to see how that comes out of the farm bill and things like that. But we utilized our community development block grant funds and Dave helped us find a company that is pretty successfully working with mobile carriers with the Federal Lifeline Program. We approached them early in the pandemic during this process really before construction, but when the E B B was rolling out and sort of asked if they could turn their business model slightly and use their website tools but adapted to the E B B program and they were able to do that, we did a contract with them to really be the backend for website that Dave was speaking about.

(21:19):
So using other federal dollars that we had available to us, we're connecting income eligible residents in West des Moines to other federal dollars. The website helps them to realize who in your area is an authorized carrier for a c p? What choice, like Dave was saying, what choice of service or price level price points do you have and then helps to fill out and complete paperwork that's necessary for that piece as well. So they're providing that customer service support and we're also doing some advertising to direct folks to the website to get that access if they are eligible or if they're in need at their home.

Dave Lyons (22:03):
It's a neat model. West Des Moines at each of these, whether it's availability, accessibility, affordability, et cetera, they don't allow people to get lost. So for example, you can go on the federal website and it can be a daunting occasionally on those websites, et cetera. That's why there's an online chat function with that and an 800 number or you can go to the local library and connect into this process or computers or knowledge. West Des Moines basically has a process that recognizes when people have a difficulty and then they have a solution for that.

Christopher Mitchell (22:45):
Then I'm curious about the financials earlier, Jamie, you'd noted that this is infrastructure. I didn't want to interrupt you, but I had a thought during that. The federal government you said, doesn't recognize it as such, and I think cities were building roads long before the federal government took it seriously also, and so there's a history of this, but I am curious now you have three major leassees or soon will potentially, depending on how things are going, is there a point at which you think it would pay for itself or is that even not the point and you're just focused on making sure that you're meeting people's needs?

Jamie Letzring (23:26):
If our finance director were here, I would like to say yes maybe and hopefully, but I think even he knows it's possible that it's not. And I think that that's one of the important things about the project to recognize is that we're the government. So we don't really, as Dave said earlier, we're very specifically meeting the need where private sector either can't or won't because there is not sufficient return on investment. And at no point during the exercise here over the last couple of years have we ever faulted the or criticized the private carriers from trying to turn a profit what they do, but they're also in doing so leaving behind some of our other addresses or some of our other areas of town, that was very important to us that everyone was able to have that same ubiquitous access. So will the project ever really make money? Gosh, I'd hope so, but I feel like it doesn't have to because a lot of the things that we do do not. So as long as we're comfortable with that and we kind of know that expectation going into the project, I think it is easier for our elected officials to see that and understand that as kind of our business model is to fill in those gaps that are not being met otherwise.

Dave Lyons (24:48):
Yeah. Well, I was asked about the return on investment from an economic standpoint, and I think there's really three. First of all, there are now four licensees. If you think about it, we have the licensees, everybody expected like the Google fibers. We have the licensees that are good to have because of their size and the connection to population and the legacy carriers. We also have innovators. My fiber is a perfect example that is serving some areas that were very hard coming out of a rural area and servicing some edges of the community. So we have four licensees now. I think that number will go up significantly as people figure out how to use portions of this system. So I really do think the system will cover its costs. Will it make money going forward? I don't think so because the city has established a process of reinvesting and maintaining the system and there are quite a few new requests coming in.

(26:02):
How do we get it into the next neighborhood that's going to be developed since the state of Iowa doesn't consider it essential corporate purpose yet. So the city will, I think continually see it reinvesting. But there's another piece in here that I think has a huge R O I, the federal government and state governments have played a game over the last 20 years of pushing things down to a local level. I'm going to pass a law that says you have to do this and the state will then pass a law that says then the city has to do this and the city turns around and there ain't nobody else there. So the city is doing that is where the buck

Christopher Mitchell (26:42):
Stops.

Dave Lyons (26:43):
Yeah, the cities are doing more things for more people with less money than they ever have in the past. Broadband connectivity is an incredibly smart investment for reducing the costs of digital citizen. The more I can reach people and the more they're comfortable interacting via the Internet, the lower my cost per unit of service, the more I can use one connection, the Internet to be able to talk to them about all the services the city has available so that I can fill gaps that I otherwise wouldn't see is a big return on investment. So I really think that's where the greatest value to the city will come. It will break even on its infrastructure just like it breaks even on all its other infrastructure, but the value's going to come in the fact that it will be able to organize and facilitate civic engagement and collaboration at a level I don't think anybody else in the country's really ready for yet.

Christopher Mitchell (27:51):
And then my last question is hoping that you can help me get into the minds of other elected officials because I think both of you have had a lot of experience and talked to other folks when I've talked to some people about why this arrangement may not have been as appealing to them. One of the things I get is they would like to see a private partner bring more money upfront. They're not as enthusiastic about that 20 year lease or other terms because they don't want to bond. And West Moss, I think you had had perhaps more capacity, took it more seriously. Your stakeholders, as we talked about in the last time, they were really taking this seriously. So you had the wind at your back in some ways. But I'm curious if you might hypothesize a little bit about why other cities aren't rushing to follow you with this approach and whether that's a financial concern or things like that.

Jamie Letzring (28:42):
But initially I really thought that it was likely the fact that we were amidst a legal battle. So I think that there were a lot of cities that were just sitting back and waiting and watching to see are we a test case and how does this really pan out? The fact that we never really went to trial probably leads me to believe that that question of whether or not a city is obligated to be technology neutral still remains unsettled. So part of me thinks that that might be some of the reason, or at least has been some of the reason in the last couple of years. Certainly the cost is it's a lot. Our project is coming in around $60 million for our community, our size, and you're right, we have some ability to bond without increasing taxes and bond at a lower interest rate because of our credit rating. That helps our dollar go a lot farther. So I assume that that has something to do with it as well.

Dave Lyons (29:52):
Yeah, a couple of things I've heard from the other communities. There's now a lot of competition for overbuilding out there and they're using the term a universal overbuild, but if you talk to most of the carriers, it's an 80 plus, 82%, 81%, 80% overbuild. The cities I think, are finding themselves in a kick the can process where, okay, let's see how far the private sector will go, and then I'll try to fill the gaps at the end. The problem there is they'll never get the type of return on investment for that 20% that will be anywhere near recovering their costs. It will be the hardest to serve with the most need, and it will obviously be a civic investment that does not recover funds. They can't leverage an entire system to be able to drive value, licensing value, connectivity value. Even the small cell companies coming in now and utility companies coming in and using the system, all of the revenue opportunity connectivity issues will be lost by them taking a wait and see attitude.

(31:19):
The other issue is there were one or two that were close behind that did look at the legal issue in West Des Moines and more importantly, the political issues on the statewide and national basis. They're looking at legislation every year in states and the federal level that reduces the ability for cities to manage their own right of way and to make these investments. So they're concerned that they would have a stranded asset once the local or federal government comes along and says, oh, and here's the next restriction. I think West Des Moines got far enough out ahead of that. Even in Iowa, when they look at restrictions, they go, okay, if you don't already have the system, then you have to have this restriction, but if you've already got your system and your contracts, et cetera, you're grandfathered in. So I think there was a little bit of that as well.

Jamie Letzring (32:23):
I might add to that. I think one of the things that helped us escape some of that type of legislation or retaliatory legislation, even if I may, is the fact that we were bringing a brand new provider name to the state of Iowa. And so I think that that was exciting enough for maybe, and I'm just guessing here, I dunno for certain, but it was exciting enough perhaps that no one was willing to follow our project at the risk of kicking Google fiber out of the entire state. That wouldn't be such a great look for our governor, our economic development authority. So we probably, like you said, had the wind at our back with the fact that we were bringing with a pretty exciting and brand new name to the state of Iowa. So we had that advantage as well, I believe.

Dave Lyons (33:21):
Well, and just wait for the future. I mean, we had an interesting conversation at what we call West Lab, which is a leadership advisory board here that basically says, okay, we have a ubiquitous high power fiber complete multiple carrier system in place in the community where Microsoft created its artificial intelligence programming. Okay, so what do you think might be able to happen? We can start accessing and leveraging so that it isn't six city council people or six CEOs, it's 60 plus thousand West de Moins who are basically saying, yeah, I think I know how this is going to. That's exciting,

Jamie Letzring (34:14):
And I am hoping that we'll be able to catch up on the next exciting developments next time we talk. I'm sure there's going to be several in coming years as this system is put to use, and I'm excited to follow it, and I'm really excited to have you guys come back on to show those updates.

Dave Lyons (34:32):
Thank you so much. Thank you, Christopher.

Jamie Letzring (34:34):
You take care.

Ry Marcattilio (34:35):
We have transcripts for this and other podcasts available at muni networks.org/broadbandbits. Email us@podcastmuninetworks.org with your ideas for the show. Follow Chris on Twitter, his handles at communitynets follow muni networks.org. Stories on Twitter that handles at muni networks. Subscribe to this and other podcasts from I L S R, 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@ilsr.org. While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arnie Sby for the song Warm Duck Shuffle, licensed through Creative Commons. This was the Community Broadband Bits podcast. Thanks for listening.