Minnesota Broadband Task Force: A deep look into grant funding FTTH Rock County

Yesterday most of the Task Force made the long drive to meet in Rock County – the southwestern corner of Minnesota. The Rock County team was very generous with sharing the details of their FTTH project, which received a Round One Border to Border grant. Details include financial details. Here are just a few I thought were interesting (some learned on the bus tour, some during their formal presentation):

  • Cost per mile $23,652
  • Cost per customer (1100) $11,417
  • ROI – 9.51 years
  • Take rate – 80 percent
  • 15 percent of drops were to non-home, non-business sites (Internet of Things to be!)

We also got a tour of the area and heard from folks who have benefitted from the project. I hope the audio is good enough. While I enjoyed all of the tours – one striking point came from the local radio station. They had been paying $2000/month before the fiber install;  now they pay $85/month for a much better connection.

The ROI above is from the cooperative that did the work (Alliance Communication). It would be so interesting to find a way calculate the community ROI – a line item budget reduction from $2000 to $85 is pretty amazing.

Here are full notes and videos:

10:00 a.m. –10:15 a.m. Introductions, Approval of Minutes, Public Comments

Welcome from County Commissioner

Welcome from Senator Weber – proud to be early broadband grant recipient. The local folks have done a good job with deployment. We still have

Had a bill that didn’t go through but will keep working.

Brian Denton from SDN

  • Lives in Blue Earth. Broadband is a economic development tool. Without broadband in Blue Earth, we couldn’t live there. I get good service from Bevcomm – it’s a personal and business.
  • SDN – 17 muni, 3 coops and 1trinal community.  30,000 miles of network
  • We want to leverage existing infrastructure.
  • We partner with AT&T on issues such as FirstNet

How big is SMB?
SD, ND, MN, IA and WI

What are your ROI models?
Biggest issue – is that local business often feels like they need to work with national providers. SDN/SMB providers a larger but local solution.
Home office is a big ROI potential.

10:15 a.m. – 10:30 a.m. Alliance Communications – Rock County Broadband Alliance Grant Project Overview

Cooperative started in early 1900s. Started in SD. Bought some old US West territories in 1960s. Merged with Hills Telecom & Balkan in 2002. We are a partner in a CLEC in Mitchell. In 1981 we added cable. In 1990s we added dialup. In 2000s we upgraded to DSL. In 2000s, we went to FTTH. It took 9 years – cost millions. Rock County approached us.

We put everything we have into the communities we serve. We put money back into the small communities – we hire from those communities.

  • 2013 – project started
  • Sep 2014 – organized Rock County Broadband Alliance LLC dba Alliance Communications
  • Oct 2014 Submitted grant application for Rock County excluding Kanaranzi due to prevailing wage rules. $12.8M
  • Feb 2015 – grant winners announced
  • March 2015 – Begin filing for CLEC authority and a MN 911 CLEC plan for Rock County
  • March-Aug 2015 – Conversations occur regarding project costs, including prevailing wage projections. Rock County Commissioners vote to grant RCBA $1M for the project (to include Kanaranzi)
  • July 23 2015 – Bid letting meeting with contractors
  • Au 4 – Bid opening. Bids ranged from $10.5M to $15.6M Final contract awarded to Michaels Corp
  • Aug 15 – Marketing campaign starts
  • Sept 23 – Final grant contract signed
  • Sep 23 – Fiber ordered and marketing plan begins
  • Nov 15 – Feb 2016 – Construction plan developed
  • March 2016 – preconstruction meeting
  • April 2016 – construction starts
  • Fall 2016 – home installation begins

Question – is this much paper work usual?
Oh this plan died many deaths. This situation was unusual because of the border. RS Fiber had a lot of hoops too but for different reasons.
It takes a village to create better broadband!
One issue was that out of state cooperatives were not eligible to get grants.

We might not administer the grants (as a Task Force) but we create the policy platform upon which its built.

Rock County is so lucky to have Alliance as a partner. So many other rural communities don’t have a cooperative to help – a cooperative that will put community needs first. No profit.

Rock County has had an 80 percent take rate.

The existing customers were easy. They knew us – we just sent out a few mailings and made a few phone calls.

Marketing Plan

Rock County customers were new. We had to start from the ground up. We had to build the brand and get contact info for customers. We didn’t want to spend marketing budget until everything was approved.

  • We attended community events
  • We created yard signs
  • We had billboards
  • We did ad campaigns online – “This is a big deal”
  • Traditional marketing with postcards, letters, radio, newspaper

Pre-Construction

We had to select areas, customers and figure out how to get around the rock. (Best $1M spent to plan for 526 miles of fiber!)

  • We worked with electrical cooperative to get their maps and find a way to leverage their work but not get in their way.
  • Staking – tells you how much wire, density, terrain
  • Right of Way Work – railroad association, county public rights of way (DOT), Burlington Northern
  • Customer Service reps – take pre-orders. They use a form letter than gathers tech/engineering forms. Where is it? Is there are infrastructure (sewer, power, other)?

Construction

Michels is a big company so they can leverage their resources to get good service but the wait time for fiber at the time was 26 weeks. Can’t say enough nice things about working with Michels.

Fiber drops are 14-48 inches deep. The main line was supposed to be 36 inches deep but modified based on hardness.

Hut construction – got 5 deals working with local farmers or businesses for fiber huts. They bought rather than leased land and huts.

Line construction – fiber wheels sits in front and a tractor/cat tranches and buries. Drilling rock was as hard as you’d think. Ruined a $6,000 bit in 20 minutes! And that was a challenge.

Testimonials

“My service is spectacular and out-of-this-world. I wish my other locations had this kind of service.”

Future Opportunities

  • Business expansions
  • New startups
  • Relocations to Rock County
  • Telecommuting
  • Broadband enhances quality of life

Numbers (format is budget/actual for numbers)

Project Planning

  • Budget $15,000/Actual $17,584

Permits

  • $100,000/$99,252

Last Mile Facilities

  • $10,000,000/$10,535,215

Equipment

  • $1,145,000/$1,304,166

Installation & Testing

  • $240,000/$603,090

Total

  • $11,500,000/$12,559,307
  • Actual Cost per mile $23,652
  • Actual Cost per customer (1100) $11,417
  • Projected ROI – 9.51 years

No company can make the investment without help. Railroad permits blew the budgets.

We need to look at ROI for business and community. And the cost of not improving.

What was projected take rate? 70 percent

What is status of Luverne? Luverne isn’t in the deal because they had options. We get requests from Luverne but we aren’t looking into expanding to Luverne right now. MidCo and Mediacom are upgrading so they should be reaching Luverne.

It would be nice to get some costs in several counties to extrapolate costs of building out. We could go to the legislators with a more specific plan.

County Commissioners don’t comprehend the timeline, which can make a tough sell at the local level.

Dr. Richard Morgan (medical) Letter from doctor…

Scott Dre, John Deere Implement (farm/ag)

Tractors have computers – but you need broadband connection to make them work well.

Lower Sioux – Admin from Jackpot Systems. With helps from Blandin they have been able to upgrade what they are doing.

Remote health care for elders

Just purchased land and are working expanding fiber out to location.

Putting QR codes on trails so students can hike and learn

Powwow ground will have wifi for visitors

Connectivity at Jackpot is good but community connections vary greatly. We’d like to expand access throughout reservation. Some folks don’t have computers. We’d like to work on that. We’d like to have a long term elder health care center.

Tours stops:

  • KQAD Radio Station – Steve Graphenteen, General Mgr. (see video at top)
  • Skattum Confinement Systems – Brad Bergman, General Mgr.

  • Hills-Beaver Creek Schools – Todd Holthaus, Superintendent

  • Jim Veldkamp, Farm/Livestock Operation

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s