Yesterday I attended the TISP Forum at the Humphrey School of Public Affairs. Here is a description of the event from the from the invitation:
Public private broadband partnerships as a way to expand broadband in Minnesota is often repeated popular language. But what does it mean for building community-wide broadband networks? Hear the up- close and personal stories of how two private companies and two public entities are making their public private partnerships work. Each partnership aims to bring wide-ranging betterment to a whole community through a fiber optic network. But what do they do in actual practice? What lessons can be learned? What problems arise? What might be incentives for private providers in such partnerships? What motivates public participants? Join us to hear from the Farmers Mutual Telephone Company/Lac qui Parle County partnership and from the Hiawatha Broadband Communications, Inc/FiberNet Monticello partnership.
I tried to take pretty complete notes while I was there. The presenters had some valuable information to share and attendees had good questions. Usually when I take full notes I keep clear from including names because I don’t transcribe, I take notes and I don’t want to misrepresent anyone. There are times below where knowing the speaker helped with context so I did add it.
Moderator – BERNADINE JOSELYN, Director, Public Policy & Engagement Program, Blandin Foundation
OPENING REMARKS:
COMMISSIONER MIKE ROTHMAN, Minnesota Department of Commerce (on the job for 120 days overseeing 20 industry sectors)
The role of government has changed over time. Goals – Broadband access is critical. It’s a high priority with the State Administration. We need to find a way to connect people to broadband. 96% have some access; 70% use broadband. Barriers include age, location. We have broadband goals set out by 2010 Broadband Bill.
It’s important to have border to border access to broadband. But we have budgetary challenges – but we could be a focal point in bringing broadband. Commerce facilitates federal telecommunications. We are here to work with state gov, local gov and private sector.
Kids have access to smart boards in their classrooms. Healthcare is looking at broadband. Rural areas need broadband. We need telephone line, cable, wireless…We need to have a public-private partnership to get where we need to go with broadband. We have to work with private sector and businesses of all sizes, The Admin needs to hear from folks in the field.
The Governor’s top goals:
- Job creation
- Solution to the budget
- Find ways to innovate (do things better)
Monticello –
JEFF O’NEILL, City Administrator, City of Monticello
Monticello has well exceeded the state broadband goals. We are fast and affordable. The credit goes to the partnership with HBC. We worked with CCG (Doug Dawson) help to get Monticello to get connected with HBC. Few cities have done telecom.
We needed personnel management and technical skills. We need helped with policy (such as FCC regulations). We needed help with content for the video. But we had a vision ad 74% of the population supported our effort.
HBC is the primary to-go group for management. The General Management is accountable to City Manager. The City Council gets involved with budget, vision. It is a public utility with private management Work together on sales. City backed activities include installation techs and tech support. As we grow we might learn from HBC and start doing more management currently being done by HBC.
JERRY OLSON, Chief Operating Officer, Hiawatha Broadband Communications, Inc.
I have two bosses – one at the city and one at HBC. FiberNet Monticello is a department of the city. People think of us as public employees. We have a connection to the community. We are a public utility, but we are not a monopoly. (So for example another cable provider is speaking to the City Council about entering the market next week.) Our goal is not to compete on price but to compete with the local connection.
GARY EVANS, President and CEO, Hiawatha Broadband Communications, Inc.
What’s required from public side?
- No substitute for vision
- If you’re building a network to lower prices, forget it.
- If you’re building hoping the masses will come, don’t go there.
- If you found no weaknesses in your plan, look again (look at service equation)
- Recognize that there are key differences between public and private finance.
- As you begin to write your business plan, seek help. (It’s a good reason to seek a partner)
- Prepare a list of non-negotiables
- Work with your partner to define what you can measure to ascertain success
- Communicate, communicate, communicate.
- Don’t make a deal until you are convinced that you have found the right partner.
What’s required from private sector?
- Test the vision. (Does it match view of residents)
- Examine the business plan and test against your experience
- Test the fortitude of governing body
- Is there a public leader who can push the effort
- Test the focus
- Find out how prepared finance folks are to give you timely info
- Make sure you have a list of non-negotiables
- Provide helpful suggestions on success measures (Revenue growth, profitable and debt)
- Communicate, communicate, communicate.
- Recognize the early signs of trouble in a relationship. (Bad communication, changing rules)
Lac qui Parle –
PAM LEHMANN, Executive Director, Lac qui Parle County EDA
This started in 2007. Bill Coleman came to LqP in 2008 and that got us started. We have support from local County Commissioners. In late 2008 we got working and even committed $25,000 for a feasibility study for fiber. They understood that the infrastructure was as imperative as electricity and water.
We were blessed to get ARRA funding. People are asking us for line agreement forms already. We found a private partner because we had no interest in trying to run this; we had no expertise.
KEVIN BEYER, General Manager, Farmers Mutual Telephone Company
Pam contacted a few providers we thought that FTTP would be a good answer. We learned from experience (with Federated) that fiber was the way to go. Because of our experience with LqP we said we would partner. We put together a feasibility study. We got funding in round two.
The County wanted economic development – that was the driving force. We wanted to get into more rural areas. An increase in customers lowers our costs. Also we are a co-op and that drives the community focus.
We met a lot to talk about what this process would mean; that we wouldn’t be the lowest cost option. Competitors would try to speak to that aspect of service.
Questions –
Chris Gackle: How did you negotiate with program providers?
Never assume anything is going to be simple. There are barriers. There are questions about the NCTC membership. (Small providers buy content through National Membership.) There were issues around the technology. You need to be persistent. Those battles are the biggest and toughest.
You need to be able to answer the questions. Expertise is necessary. Luckily HBC has that. FiberNet leaned on HBC – although the contract is with FiberNet, not through HBC.
We continue to have discussions.
Chris Mitchell: How would this have worked without the ARRA funding?
We would have considered a partnership – but it would have been extremely expensive. We often have miles between homes. (They are getting 370 miles of fiber.)
The cost would have been prohibitive.
We were going to have to look at regulation, tax
Bernadine: Computer ownership in LqP is 38%. Is there a role in LqP to boosting computer ownership?
Through the MIRC initiative, we are working with PCs for People in Stevens County and UMVRDC to see how giving computers away in those areas to see how we can emulate success in LqP.
Also we have a program called the Computer Commuter – a tricked out bus with computers. It’s been a good way to introduce people to computers and the Internet. Everything is free to the end user.
Mike O’Connor: Is anyone tracking what’s happening at the federal level with funding?
We’re glad that so many communities did get money. Any stimulus programs will get outcry and we’re seeing it now. But I believe that the jumpstart for connectivity was essential.
Mike O’Connor: The USF is looking at change – is anyone drawing a team to address that?
Mike Rothman offers to connect with Mike. Mike points out that this is a hot topic.
Dominick Henderson (RUS) the public-private loans/grants are new to RUS. We are looking for success – but how do we define success with public-private partnerships?
In LqP we look at the following:
- Did it connect homes?
- Are they using the connection?
- Does BB penetration go up?
- Does computer ownership go up?
- Did we retain and attract businesses?
We do have to pay back the money – but it’s not how we measure success. FiberNet looks at the following:
- • Are you providing the service?
- Is it accountable to the city
- Are you performing as you said you would? (Customer service.)
- Are you delivering service ubiquitously?
- Are we breaking down barriers with fiber?
- Was there a failed market at the onset? Has the marketplace changed?
We are seeking funds through USF to rewire apartment buildings and private properties to reach people that won’t otherwise be served.
It doesn’t make sense to come up with one size fits all. Each program will have its own definition of success. Success should relate to the goals set out by the application. For us we’ve seen growth in population. That’s been a measure of success. Telecommuting is another factor.
It would be interesting to know how many jobs were created through funding.
The feds are measuring that.
Mike Riordan – there have been two BB Task Forces, What are the plans to move forward?
Rothman: Soon. I looked at what the last Task Force was about. What do we want to achieve? We have good people on staff and we’ve had discussions about how to proceed. You’ll see that folks are interested in border to border access.
Riordan: Soon would be good as it was tough last year to get anything going in time.
Mark Erickson (from Sibley) – it’s nice to see providers who are interested in the community. But that’s not the case in all counties. ILECs don’t seem to be as interested and the ILECs have gotten bigger. Any suggestions on how to get started with Frontier/CenturyLink?
LqP did approach Frontier. There was interest at the local level – but the centralized leaders were not as interested. Serving a small, rural county was not in the business plan. But keep on them. Peer pressure may have some impact too.
Evans: We need a solution that doesn’t allow the incumbents to vote no and then leave it. We didn’t get ARRA funding and we’re going into 6 new communities. If local governments want to build networks there ought to be a process that allows them to do that.
Bill Coleman: LqP is countywide. HBC is not municipal. Are you seeing interest from the county level?
When we decide on a community, we get calls from neighboring communities. The question of how to fill in the blanks in less populated areas is difficult, Maybe the USF will help fill in those holes. It may require public-private partnerships.
Coleman: Is there way to ask providers to reach minimum standards?
Rothman: Generally they are regulated. We need to make sure the public interest in addressed. But I don’t know of a specific regulation.
We need to look at how we can do better. We’re talking with folks who have done better and we’ve heard from two examples today. We need to look at the opportunities. And we may need to look at some specific regulations.
Mida Hedblom: TISP has been meeting for about 12 years. Years ago we had folks from Iowa up to talk about municipal fiber and people thought it was overkill.. The progression in Minnesota meant that pain was first felt at the municipal level. Now we’re looking at broadband being a countywide issue – and even moving to the border to border goal for broadband.
There is much to do but we’ve seen modest improvements.
And a quick note on the program’s sponsors: Blandin Foundation, League of Minnesota Cities and Minnesota Municipal Utilities Association.