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Wolves in Sheep's Clothing, Trojan Horse Networks, and Flowering BUDs - Episode 561 of the Community Broadband Bits Podcast
This week on the podcast, Christopher is joined by Associate Director for Communications Sean Gonsalves to check in on the move towards a citywide open access fiber-to-the-home (ftth) network in Bountiful, Utah, an expanding institutional network in Fairhaven, Massachusetts, and widespread support among small Maine towns that public dollars should go to publicly owned networks.
Along the way, they chat about the astroturf misinformation campaign being run by the Utah Taxpayer's Association, how a city negotiated a capital fee it's using to build its own network and get out from under Comcast's thumb, and the growing momentum behind Maine's Broadband Utility Districts (BUD) and their quest to improve competition and Internet access for residents.
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Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Christopher Mitchell (00:08):
Welcome to another episode of the Community Broadband Bits podcast. It's Christopher Mitchell at the Institute for Local Self-Reliance. It's been a while since I said that we recorded so many great shows at broadband communities, and then the the Wata, the Washington Public Utility District Association meetings that just, we're kind of cruising on those. But it's good to be back and especially back talking about some topical stuff with Sean Gonsalves. Welcome back.
Sean Gonsalves (00:40):
All right, well, thank you. You said that with a lot of energy.
Christopher Mitchell (00:43):
Yeah, man, I got, I, I biked like 31 miles this morning at a brisk pace. I'm feeling pretty good. I'm looking forward to lunch, you know, so it's all good.
Sean Gonsalves (00:51):
How long does it take you to do 31 miles? It was
Christopher Mitchell (00:53):
Like two hours in 20 minutes cuz there's some stoplights and things like that. Kind of annoying. So I, I, depending on which, whether I believe my watch or my phone, I average a little more, a little less than 15 miles an hour, which is not great for people that do serious biking
Sean Gonsalves (01:10):
And wasn't Ry telling us that he's bored with biking.
Christopher Mitchell (01:13):
Yeah, he said biking super boring. I tell you what, I did two hours, 20 minutes and if I could, if I was able to run, if I didn't have these decrepit ankles that have been given me constant pain for 18 years I'd run too cuz I could have burned that many calories in probably an hour rather than two hours in 20 minutes. So I'm with him. Sean, you got a new title? What's your new title?
Sean Gonsalves (01:33):
Associate Director for Communications for the CBN Team. Sounds good. I like
Christopher Mitchell (01:39):
It. It does, it's not a promotion though, <laugh>,
Sean Gonsalves (01:41):
It's not a promotion, but it feels like one and it it rolls off the tongue a lot smoother.
Christopher Mitchell (01:45):
We renamed our positions because the old titles weren't sufficiently grandiose for the, the kind of skill that y'all bring to them. I'll
Sean Gonsalves (01:53):
Christopher Mitchell (01:54):
We're gonna talk today about three different stories and I think we're going sort of short, medium long on our takes on them. So we're gonna start off talking a little bit about Bountiful Utah. Talked about this briefly on the Connect This show that we recorded last week. As you're listening to this we're gonna talk a little bit about institutional networks and Fair Haven and Massachusetts is doing something cool, but also just led me to think it might be useful to talk a little bit about the history of institutional networks and kind of messed up incentives. And then we're gonna talk about this really great story in the daily yonder about Maine. Which where basically the argument is, is that public dollars should be used for public networks and didn't strike me as altogether crazy. So I thought we'd talk about that a little bit. Yeah,
Sean Gonsalves (02:41):
Let's do it.
Christopher Mitchell (02:42):
Sean Gonsalves (02:44):
So the, so it's a suburb of Salt Lake City, and they have been, of course, like many cities that are looking at municipal broadband, have studied this carefully over the past several years, really spurred on by the pandemic. And then at the end of May they decided to move forward and build an open access fiber network. And by the, the city council unanimously approved the issuance of 48 million in bonds that will pay for network construction. Last November, they issued a R F P Utopia Fiber ended up winning the bid, and they are working with Utopia Fiber to build this open access fiber network. And everything was humming along and everybody's excited. And lo and behold, this AstroTurf campaign pops up called Gather Utah, where apparently, you know, they're doing a lot of underhanded things, like even making it seem like they may represent the city. And they're gathering signatures for a petition with the goal of stopping the project. And it's, you know, this is something that's spearheaded by the Utah Taxpayers Association, which, you know, I, their annual, I think their annual conference is funded by Comcast and Century Link. So, you know, we kind of know about these taxpayer associations in, in different states and kind of their relationship with some of these, you know, monopoly providers. And, and here they are trying to gum up the works there. And bountiful,
Christopher Mitchell (04:14):
I'm waiting for the press release from the Utah Taxpayer Association that celebrates the Spanish Fork Municipal Fiber Network because that is saving taxpayers a bunch of money in Spanish Fork. It's like 80% of the community uses it generates so much revenue that they put some of that revenue back into the city budget. And that's money that doesn't have to come from taxes. It's a win for the taxpayers. And so do you think the Utah Taxpayer Association, which cares about taxpayers first and foremost, do you think that they would celebrate that project?
Sean Gonsalves (04:45):
No. and, and, and like, what would come first them celebrating that project or them actually saying, Hey, because we, we care about taxpayers. We also have a problem with billions of dollars going to these mega corporations billions of tax dollars, they never seem to be concerned with, with, with the funds that, that are funneled that way. Yeah.
Christopher Mitchell (05:06):
So I think we're gonna talk about this more in a, in a future show in depth, but we wanted to give people a taste. There's some interesting parts of the Bountiful project that that are quite interesting in terms of just a difference. It's a slightly different project in the Utopia footprint than, than the other Utopia projects. And but we are gonna talk more about that there. We did have Kim McKinley who's with UTOPIA she spoke about that on the Connect This show, I think it was episode 75 that we just recorded. So people can get some more content there. But we are gonna move on to Fair Haven. Fair Haven, Massachusetts, this is this is an interesting discussion. They're one of many towns in Massachusetts I feel like that has recognized that they should make some investments into themselves. Mm-Hmm.
Sean Gonsalves (05:55):
<Affirmative>. Mm-Hmm. <affirmative> Fairhaven is one about two dozen communities in Massachusetts who are frankly just sick of Comcast and their resident, their residents are clamoring for choice competition and Fair Haven is one of those towns. And so one of the selectmen in Fair Haven, Bob, and I'm gonna probably mess his last name up, Spinola, I believe is how you pronounce it. He is the founder of the Mass Broadband Coalition. And they've been meeting monthly since I think about the beginning of the year, maybe the end of last year. It's, it's an informal group. All of them have in common a desire to see competition. Many of them have interest in building their own networks, but are thinking that there may not be a lot of grant money for that. So they're very much now looking into public private partnerships and you know, what that might hold for these communities.
But in Fair Haven, as I was talking to Bob about Mass Broadband Coalition, we talked a little bit about what was going on in Fair Haven. And so in 2020 when the town was negotiating with Comcast, their, you know, the franchise agreement, the town officials were able to negotiate what they call a capital fee which I think was around 300,000 or so. And then they put in some matching funds and that helped the town build a municipal fiber loop that's now serving as the town's institutional network. So they own this network, which in many instances, I think institutional networks are very often not owned by the towns or, or, or the municipalities where they're built. So Fair Haven is in a pretty good situation there because now that they've got this fiber loop that's serving town, you know, town facilities and what have you.
Christopher Mitchell (07:33):
Yeah, police, fire probably the schools, libraries, city hall, right. Water utility, if they have that, all that sort of stuff.
Sean Gonsalves (07:41):
So they got a, they got a $250,000 grant from the, the state's municipal fiber grant program. It's a, I think it's a pretty small program, but they did get 250,000, which they want to use to extend the network to the town's housing authority. So that's something that they're looking to do. This fall last I talked to 'em about, this was probably a couple of months ago. So I believe that still they're still looking at that as they're contemplating whether or not they want to create a municipal light plant, which in Massachusetts it's like a, you know, a telecommunication utility. It get, it puts you in a position to to, to build a municipal network if, if a municipality wanted to do that. But right now they're just sort of trying to figure out the landscape, particularly, you know, how, how something like that could be financed in terms of like building out a town-wide fiber network.
Christopher Mitchell (08:27):
Yeah, and I think this is what made me wanna talk a little bit about institutional networks and you know, you might think there would be many more of these that are operating around the country, because often the single biggest telecommunications, like bill payer we should say the entity that pays more in telecommunications cost than any other entity in a city or a town is often the government. You know, you've got many different locations with high capacity needs. And so historically major source and, you know, you might ask that question of like, why are we paying someone else to do this? Especially if we're paying so much more. I mean, when Martin County Florida went through this they found that like basically building and operating their network over like 20 years would be about the same costs as like paying the incumbent cable company to do it for two years.
You know, <laugh>, it's just and it comes down to this thing of like, you know, like a a you have the benefit of, of being able to put very high capacity connections on circuits. If you have a fiber network, you know you could be paying for 10 megabits and then you gotta pay more for a hundred megabits, you gotta pay more for a gigabit mm-hmm. <Affirmative>, you pay that cost each month if you own the network, you know, you put in the equipment and then you gotta pay the electricity to run it. You gotta set money aside for fixing it when it breaks or it's for upgrades and things like that. But there's not a lot of ongoing costs typically. And in fact, when I talked with years ago I spoke with the St VRS school district, St VR Valley School district out there in, in Longmont because they had previously worked with a dark fiber provider for services and then they decided to combine that and some central link circuits that they had and and just run and operate their own network. And I said, well, how much more you know, personnel time do you have, you have like another F T E that has to be in charge of running this network? And the ccio laughed and he said, actually, it's less. And I said, how could it possibly be less? And he said, cuz when things go wrong, we have to wait on hold for like the provider to get back to us because like, there's not like a hotline, right? It's not like mm-hmm. <Affirmative>, it's not like Reagan and Gorbachev <laugh> like
Sean Gonsalves (10:42):
Right, right, right. Pick
Christopher Mitchell (10:43):
Up the phone. And there's like the Maytag man sitting there, right. <Laugh>. And so and so they're like, yeah, we have, like, when we had outages, we have a guy sitting on hold for an hour waiting for like, to find out what's going on. Now the network pretty much runs itself once it's set up and going and something goes wrong, we can fix it quickly. It is usually not that complicated. So that's just to say, why don't we see more cities operating their own networks? Well, I think it gets into the legacy of the cable television systems which is that when they gave franchises, many of which were exclusive, but and prior to 1992, there were many exclusive cable franchises. Mm. And then after 1992, that became illegal. So no city can give an exclusive franchise to a cable company to build a network, but then they wanted goodies from the cable companies. Right. Right. And and then, and that's legitimate, right? You're and this gets into the whole theory
Sean Gonsalves (11:36):
Of like, like, like, like funding, like the public access channel and things like that.
Christopher Mitchell (11:40):
Exactly. Yeah. So public access, you know, cuz like the cable company, right? Like without the franchise, which allows the cable company to build in the right of way as long as they have permits without negotiating with every landowner. Otherwise, it would be like they'd to my front door and be like, Hey, can we put a pole in your yard? And I'd say, no. And they go to my neighbor and be like, can we put a pole in your yard? And they'd be like, no, you know, <laugh>, we wouldn't have any telecommunications if we did it that way. So we have this concept of the right of way. And so the city needs to get something good in return for negotiating that. And so whether that's like a fee that it charges, which then does get passed through, I mean, I feel like people always wanna point that out, but like, so, you know, subscribers end up paying for it.
But nonetheless, one of the goodies came to be an institutional network saying to the local government, you guys are too dumb to do this, but we will set up the ability for you to run this network between your buildings and this and that, and we won't even charge you for it. And so that's the way it was for a while. And then and I saw like, particularly in like California and several places, whereas often Comcast in like the late nineties, mid two thousands, there was this transition where these are typically 10 year deals. And as they were coming up, Comcast and other cable companies were starting to say, all right, well we need you to start paying for this. Now. This is something that is, you know, it's difficult for us to provide. And, and you just get into the, what I think is the worst of all worlds.
The city didn't really have an incentive to demand a network that would meet their needs because they're getting it for free. And the cable company didn't wanna provide their high quality service or maintain it at the same level cuz they weren't making much revenue from it. Mm-Hmm. <affirmative>. And so you have this thing that actually disincentivizes the kind of networks we we need for local government. And so, you know, if you go back to like, like 2008 through 2012, you'll find a lot of local governments complaining about the lack of high quality service, like within City Hall and things like that. And so fortunately I feel like the cable company started asking for so much that more towns like Fair Haven started building their own networks. But we still don't have that legacy of the inability to know what that does. Right. Many cities and towns don't have a person that knows what it would take to build and operate a network.
Mm-Hmm. It's not as complex as it used to be. It's not electricity, like, you know, it's not easy, but like, it's within the, it's within the capabilities of any town keeping water healthy and clean and like mm-hmm. Not having lead in it is far more complicated <laugh> than than telecommunication and expensive, I feel like. Yeah. Yeah. And way more expensive. Like, I mean, I just, I don't want to say that any, anyone has an easy job, least of all the telecom folks, but like the water systems are more complicated and cities have figured out how to handle that and most of 'em do a really good job of it.
Sean Gonsalves (14:21):
No, I think I know the answer to this question, but let me ask you. So fair. Well, you know, so fair haven, they're, they're, they're looking to essentially use their, you know, municipal fiber loop as the backbone for a potential, you know, extending that and serving other parts of the town first, the housing authority and potentially building out fiber to the rest of the town, but they own the network, it's theirs. Has there ever been an instance where a, a cable company owns the institutional network and allows for our town to use that as the
Christopher Mitchell (14:50):
Backbone? Probably there's probably been one or two <laugh>, but, and most of the times that's not what happens so often, this is what happened in Santa Monica, which we wrote about many years ago, and remains one of the better stories of how a city can go about getting into this business in a reasonable way. And so they originally had, back in the adelphia days before Adelphia went bankrupt one of the many cable companies that went bankrupt because this doesn't, you know, whenever people talk about how public networks suck and, and they, they struggle, they, they, they know it's not a big issue about like, you know, the CenturyLink guys who were in jail, the Quest guys who were in jail, or the bank networks that went bankrupt, but Adelphia before it went, was run into the ground by terrible management. It's built a network for San Santa Monica as part of the franchise agreement.
And so Santa Monica owned the network, but they got it a sweet deal and they agreed never to put commercial traffic across it. So when Santa Monica decided to expand that network and then try to make, and they wanted to have a network that would allow them to connect, you know, on movie studios, businesses that wanted dark fiber and things like that, they literally, in some areas put new fiber down next to their old fiber that they had to like open the ground again or, or, or wow directional boring to put in a new network next to the old one because they did not have the legal right to put non-public traffic across it or, you know, commercial traffic or whatever. Mm-Hmm. <affirmative>. So that's the thing is that many cities actually have a network that they are using, whether they own it or not, there is a restriction on it, and it is often called conditioning.
It is conditioned that they cannot use it for commercial traffic. So in the case of smart cities where they've been very forward thinking, they have not accepted those agreements, or over time they've used other opportunities to build new links that were not conditioned around those areas. And this is something we'll see again, with public-private partnerships where in a public-private partnership, if you're working with someone, something that you should negotiate is some number of fibers in key areas. Mm. And the partner will say, okay, we'll give those to you as part of this partnership, but you have to agree to never compete with us. And if cities are smart, if, if they accept that there will be a time limit, no n never is a terrible thing. Right. If you look at the history of the railroads, like the whole, like, until the, the heat death of the universe is not a good, it's not a good end date <laugh> <laugh>.
So so yeah, I mean, I would just say there's a number of tips in there for folks, but but definitely as you're negotiating these things, you wanna, at the, if you're gonna accept bad terms, put an end date on them so that you know mm-hmm. <Affirmative> in the future mm-hmm. <Affirmative>. Cause one of the things you might wanna do with an inet if, you know sure towns don't want to go out and build a network to connect residents and deal with all that cool, but at the same time they have a they might have a desire to connect a business park or an industrial area that they're expanding to this part of town, and they wanna make sure there's, they want to, they can lure in some big firms, right? I mean, so many cases of this. And so you want to be able to use it for those sorts of circumstances, even if you don't have any ambitions of ever being an I S P
Sean Gonsalves (17:55):
Mm-Hmm. <Affirmative>. Mm-hmm. <Affirmative>. No, that makes total sense. And I think, you know, so something you just said right there town officials or city officials know this I'm sure, but in talking to folks sometimes they don't really sometimes think about how businesses choose where they're going to locate or relocate and how, how big a part of the equation in that decision, telecommunication infrastructures
Christopher Mitchell (18:19):
Sean Gonsalves (18:20):
You know, you see it, you, you hear it anecdotally quite a bit. But I don't know that it's, it's, it's well appreciated beyond, you know, the confines of like, you know, a couple folks, you know, maybe a mayor who hears, you know, from folks, you know, on a trip,
Christopher Mitchell (18:33):
Right. And it, it, it may not be enough to just know that there is fiber, dark fiber lit, fiber, whatever, you know whether it's at and t or whether it is a municipality or a county or something like that. The business might actually say, we want two different paths, right? We wanna make sure that like, in the event of some fiber seeking backhoe accident, that we have a different path.
Sean Gonsalves (18:56):
They want that redundancy.
Christopher Mitchell (18:57):
If we have an hour of downtime, it's gonna cost us, you know, like, you know, hundreds of thousands of dollars for our business or something like that, you know? And so we just can't have that. So yeah, fiber is a huge issue, and the ability to have it be reliable potentially through different providers that are in diverse paths can be really important. I think. So Maine, I'm getting back up into a little Yeah. A little further away from you, but and then New England.
Sean Gonsalves (19:20):
Not too far, but Yeah. Yeah.
Christopher Mitchell (19:22):
Gimme the scoop. So what is going on in Maine?
Sean Gonsalves (19:25):
Oh man. So much is going on in Maine.
Christopher Mitchell (19:26):
<Laugh>. Yes. What is one thing that's going on in Maine that we're gonna talk about that we agreed to 15 minutes ago? Right. <laugh>,
Sean Gonsalves (19:33):
Well, one thing that's going on in Maine of course, is that, you know, just to sort of set the table, Maine is one of the handful of states that is really taking is putting community broadband sort of front and center in terms of solving the connectivity issues there. And one of the ways in which they're doing that is by allowing for the creation similar to Vermont with the communication union districts, but in, in, in Maine, they call 'em, what is it? It's a bud be the
Christopher Mitchell (19:57):
Broadband utility, broad
Sean Gonsalves (19:58):
Broadband utility district, I guess. Yeah.
Christopher Mitchell (20:01):
Yeah, it's good. It's so smart.
Sean Gonsalves (20:03):
Right? And so there's this Waldo broadband corporation, which is made up of five volunteer directors. It's a nonprofit,
Christopher Mitchell (20:10):
Southwestern Waldo Broadband Coalition is what I'm seeing here.
Sean Gonsalves (20:14):
Yes. And it's a I think it's What about not too far from Augusta.
Christopher Mitchell (20:20):
I was just, I suddenly got caught in a Monty Python joke about how like there was the Waldo Broadband Coalition and then they splintered and now you've got the Southwestern one, the South <laugh>.
Sean Gonsalves (20:29):
Yeah. Yeah. And, and so it, it, it's an extremely rural area. You're talking about, I don't know how many towns are part of the group off, off the top of my head, I don't remember, but we're, but the towns who are members of the, this coalition or this utility district the, the, the population average is something like 31 residents per square mile. Mm-Hmm. So it gives you kind of a sense of how spread out folks are. That's
Christopher Mitchell (20:53):
East coast rural. It's not you know, Midwest or, or sorry, west of the Mississippi, rural <laugh>, but but for the standards of the east of the Mississippi. Pretty rural.
Sean Gonsalves (21:03):
Pretty rural. Yes. and so they have in, in, in late February, they got a conditional 11 million grant from so that they could use that if they could come up with a 4.6 million match to build out fiber to, to the member towns. So the daily yonder wrote a really good piece about that effort, but, but it wasn't so much about the technical aspects of it or, or what have you. It was more about the bipartisan feeling that's, that exist. And this, it's n this isn't just in Maine, I think it's elsewhere, but that public tax dollars that that, that these grant dollars you know, come from, should be given to public projects to locally owned public, you know, publicly owned, locally controlled networks. And so I really like this. It, it, it's one of the best leads that I've read in a while. I like it. Yeah. Let's
Christopher Mitchell (22:00):
Just give credit. I mean, you're a former reporter. You're gonna give credit to the daily yonder. I think we should give credit to Carolyn Campbell Yes. Who wrote the article and the title, it was Small Main Towns Say Public Broadband Money should go to Public Networks, not corporations.
Sean Gonsalves (22:13):
That's right. And she wrote a, a, a great lead to the, to that story that says a Republican libertarian and a Democrat meet over a beer in the small town of Liberty, Maine, <laugh>, you know, it's, it's, it's you know, there's people who
Christopher Mitchell (22:27):
Want us to believe that doesn't happen anymore.
Sean Gonsalves (22:29):
Right? Right. And so that in and of itself actually is, is, is, is, is, is cool. But I think what it speaks to though is that at the local level, unlike what you see at the federal level and sometimes at the state level, is that folks really think that broadband is a utility. And they don't have these really partisan debates about whether this is, you know, some socialist project or go government owned networks and things of that nature. It's like, look, this is a utility. We all need it, and it's tax dollars that are, that, that are being doled out in these grant programs. Why would we be giving those to these big corporations? They should be spent on networks that are publicly owned.
Christopher Mitchell (23:11):
Yeah. This reminds me of meeting that Ry and and I went to with Le Sueur County in Minnesota. We did a podcast talking about, you know, what we heard from different members of the public, local leaders who are talking about it. And I was, I was struck there by how many people said, I pay taxes, I pay a lot in taxes. I pay too much in taxes, maybe <laugh>. And and I don't, I don't have broadband. Why is that? And they, they link these things together that like, this is a, an essential utility. And, and that sort of a thing in ways that I feel like inside the Beltway they want you to believe that, you know, everyone is like an Ayn Randian, kind of like the private sector needs to do broadband or else this country's gonna fall off a cliff. You know, which is just not the case. <Laugh>. So,
Sean Gonsalves (23:54):
Yeah, I, and I mean, you know, to sort of bring it full circle, going back to Bountiful, I mean, my understanding, I've never been to Boun Bountiful, but from my understanding, it's a pretty conservative community. Peggy Schaffer's been working on this forever.
Christopher Mitchell (24:06):
Yeah. So that's what, that's what Peggy Schaffer, you know, chimed in to be like, basically like, I mean, from her description, it sounded like probably, you know, that Democrat at the table is like, might be the only one in town. Like this is an area that is very conservative, and, and they, you know, I, they get it, right? Like, they're not, they're not doing this as, like, they're not, they don't love government. They just recognize that for some things you need government to do it, or at least some measure of local accountability, which is what I think they're one looking to get.
Sean Gonsalves (24:32):
Right. And also, it, it's probably also a recognition that particularly in, in, in more rural areas, that the big companies, they're not coming in and building out fiber to those places. Not with, not without a ton of subsidies or something like that. Yeah.
Christopher Mitchell (24:45):
No, I mean, they're gonna get the money in some of these areas and then you know, they're, they know that they're gonna mostly have a a monopoly. And you know what, what's kind of funny is that you know, I mean, I don't know people how much they pay attention. We talked about this a lot in that episode of Connect This from last week episode 75, you know, but like the folks at Red Zone who have been all over Maine and and are very active in building wireless I mean, they really don't like me in my preference for fiber in a lot of places. But the funny thing is, is that like whenever we see like Charter and other companies getting this money, like I'm rooting for Red Zone hardcore, like I want redone to go in there and provide better service at reasonable prices and take as many of those customers as possible mm-hmm.
<Affirmative>. Right? My concern is that like, some of these companies are not able to serve everyone, and so that's why I'm not rooting for them to get the, the money necessarily. But there's a great discussion about that in the Connect this episode. But you know, this gets down to a couple of different things. The point of this article in some ways for me was that like, the problem of the match and whether or not yes, we're gonna see much money going to community entities you know, for many people who worked on developing the bead project in Congress, they wanted to make sure that local communities would have a say in this and be able to get the money to build their own networks if they wanted to. And one of the things that's standing in the way of this, there's multiple things, and I think, I think that the, the Biden administration and Ed t I a have done a they've done a great job on behalf of the cable companies of reacting barriers to that vision. Mm-Hmm. <affirmative>, even as nearly every person building that barrier actually doesn't even agree with it. Like
Sean Gonsalves (26:25):
Meaning, meaning that the, the sort of the match requirements, it's like the
Christopher Mitchell (26:29):
Match requirement, the the letter of credit, the rules in general are so significant that the big companies will take them. The big companies have the ability to comply, but they probably won't even comply because they know that they never get in trouble for not complying significantly. Right. you know, whether you look back at, at the the Connect America Fund calf and the amount of money that went to the big telephone companies, which was a reward for them not having built out. I mean, like, I just, I haven't done this rant in a minute, so I'll just note like, like the Connect America Fund was the FCC looking at the United States and saying, who are the most irresponsible companies? Let's give them more money. <Laugh>, you know, all these companies that responsibly invested in the past and built out rural networks out of high quality to people, we're not gonna give them anything. You know, they're getting some high cost support, but we're not gonna give them anything more. We wanna give money to the worst companies in America. And then those worst companies in America turned around and did a poor job building it out and didn't meet the rules of the requirement, as best we can tell. And nobody cares. Right. There's no investigation.
Sean Gonsalves (27:33):
Right. I, I suppose theoretically the argument is that, or I, I guess theoretically, the, the purpose of having sort of all of these, you know, requirements, these letter to credit and, and, and, and match requirements and so on and so forth, is, is all sort of driven by this fear I think of, of
Christopher Mitchell (27:50):
Sean Gonsalves (27:51):
You know? Yeah, exactly. Yeah.
Christopher Mitchell (27:54):
Yeah. You don't, I hope that everyone gets that reference. I mean, at this point, like you and I are too old, <laugh> <laugh>, which is not even that long ago, <laugh>,
Sean Gonsalves (28:00):
It wasn't that long ago.
Christopher Mitchell (28:01):
Yeah. The Department
Sean Gonsalves (28:01):
Of Energy. And as a matter of fact, if, if they, if they were around for calf too, they were around for Cylin,
Christopher Mitchell (28:06):
Sean Gonsalves (28:07):
Or a calf, I should say. Yeah.
Christopher Mitchell (28:08):
So, so Solyndra is where the Department of Energy gave a bunch of money to a company that was gonna revolutionize solar photovoltaics and didn't work, and big hearings and embarrassment and whatnot. And yeah. But I mean, I think, so, so one thing that is, I went down this massive rat hole, but the key thing that I wanted to hit was that like the match challenge is an issue. Now New Mexico is doing something cool, or at least talking about something cool. We are deeply concerned that where there is a match, there's a match requirement, right? So if you wanna get bead dollars, let's, let's say for a second that you got a 10 million project. You go to bead, you put in an application and you say, here's a 10 million project under the rules, you have to use 2.5 million of your own dollars are in kind, in order to be eligible for that, right?
Mm-Hmm. <affirmative>, 25% match mm-hmm. <Affirmative>. So now if you were to say, I'll do a 5 million match, then many states will prioritize you and Right, exactly. You're more likely to get the reward, which allows the state to then go out and spend the money that they saved from not having to, from the match that you brought in, that's extra mm-hmm. <Affirmative>, they can split that money to other people and get them connected. So there's a clear reason to do that. However, if you're a Pueblo in New Mexico, which is what the tribes are called there the Native American tribes they're not gonna come in and be like, I can do a 50% match. You know, they're right. They're, they're working hard to get up that 25% match in some cases. Not all pueblos are alike. Not all tribes are alike. Some have the resources to go higher, many most do not.
So one of the things that New Mexico is talking about is a, I think they're at least Sandeep who runs their the, the, the broadband office. He I forget exactly what his role is. I hope I didn't just overstate it. But congratulations on your promotion. If I did, Sandeep, who's given a lot of thought to this you know, he gave a thoughtful answer at an event we recently had where he was just like, look, we're not gonna like penalize someone that can barely do the match. If we know they're coming from a hard situation, we're gonna try to match the match right. In terms of like match an expectation with a reasonable amount. So, so the reason, whole reason I just spent all that time doing that is because New Mexico is talking about using state dollars to help provide the match funds for some of the pueblos that don't have the ability to do the 25% themselves. Right?
Sean Gonsalves (30:26):
Oh, right. That's cool. Feel like
Christopher Mitchell (30:27):
That's great. Mm-Hmm. <affirmative>, that's what we should see, right? Mm-Hmm. <affirmative> is like, the state can use other funds to match the bead requirement. That's what Maine should be doing here. Maine shouldn't be making this big requirement there.
Sean Gonsalves (30:36):
That's sort of the idea of what they
Christopher Mitchell (30:37):
Want through a revenue bond that the state would be involved in,
Sean Gonsalves (30:40):
Right? So, you know, ba and basically create this, you know, payback plan to that where they could use a portion of the subscriber fees to pay it back. Mm-Hmm. <affirmative>, you gotta get creative in trying to solve some of these problems because it ain't gonna be easy for a number of these communities, even in states where, like Maine, it's sort of set up, or at least it's favorable to a community, you know, a community broadband approach.
Christopher Mitchell (31:01):
Right. And the last thing that came to mind on this again, is that like, I feel like people are under the mistaken impression that we're all rowing in the same direction, and we are not rowing in the same direction. <Laugh>, like when the, you go back to CAF in Vermont, the state had some money and it made it of, I think it made, it gave it to EC fiber, the Central Fi Vermont fiber network. That's really just terrific inspiration. They are in an area where they compete with FairPoint, which is now consolidated at that point. It was a company called FairPoint. It's the incumbent telephone company for the area. And, and they got CAF dollars and they had to figure out where to put their, their money and where they're gonna build. And EC fiber starts building in this town, and what do they see immediately?
Fairpoint's crews are there to use the calf dollars there too, because, you know, they don't care about connecting the people that don't have a connection. They're worried about losing market share. Right. And so, like, I mean, this just goes back when, if you look at the rural electrification administration, when we started embracing cooperatives for rural infrastructure, the monopolies, the privately owned companies, they started building these things called spite lines, which were like designed to as this article that Carolyn Campbell notes. There's a history that the, in Maine, they feel of like the cable company kind of going through the middle of town, taking a lot of the, the customers that are easy to get, and then just leaving everyone else behind. That's what the electric companies did. They were called spite lines,
Sean Gonsalves (32:27):
But like, as like, I'm doing this outta spite <laugh>.
Christopher Mitchell (32:30):
Yeah. Because the idea was that you would kill a business case for a co-op Wow. By taking any of the de you just take the demand with no intention of building out the rest of the area. Like, and so I just, I think it's really important. Like I, you know, the Institute for Local Self-Reliance strongly believes in local for-profit companies. We think, we think that business is important, we wanna see competition, and at the same time, we cannot be confused by thinking that for-profit is like a cohesive ideology, right? Mm-Hmm. <affirmative>, like extractive Wall Street controlled companies that do these
Sean Gonsalves (33:02):
Sort of things, it's different than Yeah. Yeah.
Christopher Mitchell (33:03):
They're different. And so, like, we're not rowing in the same direction, like the big companies, they have people in them who do care about this, right? Like Comcast has people that care a lot about low income folks and, and Internet essentials and things like that. Mm-Hmm. <affirmative>, the company itself, it does not care about it <laugh>, right. The company's trying to figure out how do we increase our return to shareholders over time, and that's our system. They're not bad for doing that. Like,
Sean Gonsalves (33:27):
And if the, and if the CEO did not act accordingly, <laugh>, you wouldn't be there long. Yeah.
Christopher Mitchell (33:32):
It's a retirement plan. It can be as soon as you stop prioritizing the shareholders, like that's a retirement plan. <Laugh>. I mean, to say that, like, a lot of those retirements actually look pretty nice, <laugh> better than anything you or I were gonna be expecting, I'm guessing.
Sean Gonsalves (33:45):
Yeah. I I, I'm pretty certain of that.
Christopher Mitchell (33:48):
So so anyway, I think, you know, it's exciting to see that sort of a thing. You know, and, and I, and it's great as well to see that, that political mix, because I think, you know, a lot of people are frustrated with the politics of our time, and but I think at the local level often people can still talk to each other about this stuff and rage about whatever they wanna rage about. Yeah.
Sean Gonsalves (34:11):
It's actually kind of refreshing in the, in the political environment that we're in, that there are still some things that, you know, there's a a real cross section of folks, regardless of, you know, political ideology or how they may vote in terms of you know, political candidates. But when it comes to broadband at the local level, you don't see, you know, you just don't see that kind of partisan divisiveness where it's like one side is accusing the other of being, you know, evil
Christopher Mitchell (34:36):
Drinking the blood of children <laugh>
Sean Gonsalves (34:38):
Yeah. Drinking the blood of children and killing puppies or whatever.
Christopher Mitchell (34:43):
All right, man, that's a, that's a how we're gonna leave it <laugh>
Sean Gonsalves (34:46):
Oh, man. On, on killing puppies. That's, that's, that's a rough way to end.
Christopher Mitchell (34:50):
There's a, there's a lot of good stuff happening out there. We're seeing a lot of communities that are getting their getting their plans together, doing a, a good job. You know so,
Sean Gonsalves (35:00):
And, you know, in this environment with bead, I mean, c certainly it, you know, it's fueling all of this interest in, in local communities as to how they can, you know, take advantage of this moment and, and build out better broadband in their communities. And I also kind of like, we, you know, we've had a couple stories recently where there are communities that are managing to finance and build these networks even without federal grant money. Yeah. Yeah. And so I, I, it's, it, to me, it's granted, it doesn't mean that any, any and every community can do that, but it certainly does say that, you know, because I think there's some folks that I've bumped into in Massachusetts who kind of feel like if we don't get bead money, you know, there's nothing we can do, and that it's, that that's not the case. I mean, there, there are other ways to finance and build networks than, than hoping that you're gonna get a grant from
Christopher Mitchell (35:49):
Yeah. People are too focused on three years from now. Like, there's longer term plans and, you know, hey, we all want it tomorrow. But we might be able to get something out in the short term, like a fixed wireless solution that then will help build the business case for a high quality you know, higher quality fiber connection or something like that. But I, I do think people need to recognize there's a, a longer term angle of this. And frankly, when it comes to actual digital equity, you know, the tens of millions of people for whom the, they already have a network available to them mm-hmm. That is gonna take local investment. We need the states and the localities to step up, because I don't see the federal government doing much on that anytime soon. Mm-Hmm. that's really gonna be something where we need local governments to, to prioritize this in the way that they pretend they have been.
Sean Gonsalves (36:37):
No, that's a good way to end this <laugh>.
Christopher Mitchell (36:39):
All right. We hope you all have a, have a great week and we'll catch you again next time. Thank you, Shawn.
Sean Gonsalves (36:45):
All right, thanks.
Ry Marcattilio (36:46):
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