A Broadband Moonshot for Utah

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Lieutenant Governor Spencer Cox, as part of his campaign for governor, recently challenged Utahns to send him their best big ideas, something audacious with impact across generations. Anyone who knows me knows where I’m going immediately.

For years, I’ve harped on there being no real broadband plan in Utah. The “plan” released almost five years ago was light on specifics and deferred far too much to the incumbent operators that have left us in an underserved mess. Since then, the Utah Broadband Outreach Center appears to have mostly gone dark. Website updates are sparse and agendas are often posted weeks or months after the actual meeting happened. Maps are often outdated assuming the links still work at all. With the big focus on rural economic development and remote work, this has become a foundational issue that requires all hands on deck.

The most baseline of things that has to happen is giving UBOC the funding and authority to build an accurate and useful map of wired and wireless broadband availability. I’ve had many conversations with local government officials who discount the poor state of broadband because the voluntary and unaudited submissions from providers misrepresent what the field looks like. When you don’t know where you are and that there’s a problem to be solved, you can’t chart an appropriate course. The map needs to have wired, fixed wireless, and mobile wireless data, updated at least annually, and audited for accuracy.

With a proper map in hand, we then need to focus on four key metrics: availability, affordability, quality, and competition.

Many homes in Utah do not have broadband access, even at the FCC’s inadequate definition of 25Mbps down, 3Mbps up. Even more only have a choice of a single provider at this speed. While this is more common in rural areas, it happens in the middle of urbanized areas of Sandy and Holladay too. A map helps us identify those coverage gaps so we know where to put our efforts.

Cost of broadband is often a barrier to adoption. DSL, while dog slow and antiquated, has high adoption in low and fixed income households because it’s very cheap, in the $20-25/mo range. Many middle and upper income households target around $70/mo, the standard going rate for gigabit fiber where it is available. In many cases, the cost of access often exceeds this and leaves people either buying less broadband than they need and relying on wireless service with monthly transfer caps, throttling, and signal issues.

While speed is the most readily and easily measured indicator, it is by no means the sole metric. Broadband also needs to have low latency to support voice and video communications or it will appear to be unresponsive. It also needs to be able to deliver consistent results, both for speed and latency. Unreliable and inconsistent quality of your connection can make it ineffective.

Competition is how we make sure broadband gets and stays good. It drives down prices, has higher customer satisfaction, and provides for a better product. Open access networks like UTOPIA provide robust competitive choice among many providers and open up broadband to be a free rather than captive market.

So how do we get there?

The biggest barrier to deploying networks is and always has been cost. Despite some improvement on best practices, Google Fiber learned very quickly that deploying fiber is an expensive proposition. Fixed wireless, while cheaper, also requires fiber to the tower and doesn’t deliver the same quality level as fiber. Mobile wireless has never and likely will never be in the same class because of the technical limitations. The only real option is to focus on fiber with wireless for edge cases and the hardest to reach areas.

Colorado provides some source of inspiration for how to tackle this problem. They provide grants and low-interest loans to cover deployment costs beyond what’s within a margin of the industry average, around $3500 per home. This targets the money at locations that are not served due to cost, but I think it needs to go further with conditions. If we’re going to promote competition which addresses affordability and quality, then we need to have a requirement that any funding only go towards open access networks with a minimum of three providers. This ensures that while solving the availability problem we do not also neglect the affordability, quality, and competition ones.

If you look to who has been doing the most work on improving broadband in Utah, it’s been primarily cooperatives (like South Central Communications), small rural telecoms with access to federal funding (Beehive, CentraCom, Emery Telecom), and municipal-lead efforts (Provo, Spanish Fork, the various member cities in UTOPIA). This isn’t to say that any of them achieves the ideal or has not encountered plenty of problems along the way, but they certainly understand the marketplace better than moribund incumbents like CenturyLink and Comcast, companies whose names are often used as “farm words”. Involving them in conversations, even if they aren’t entirely on board with the bold vision of universal open access fiber, is crucial to making it all work.

I don’t exaggerate when I say that a universal open access fiber network to every corner of the state would be as transformational, economically and socially, as rural electrification was last century. If you want a big bet that outlasts everyone alive, that’s where you should be all in.

After a long hiatus, Utah Taxpayers Association once again sock puppets for incumbents

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Man, it’s been a long time since I’ve had to write about the Utah Taxpayers Association. Once Royce Van Tassell left for greener pastures, the UTA was pretty quiet about all things UTOPIA. In fact, I understand that the last time UTA and UTOPIA sat down UTA left frustrated that they couldn’t find any good ways to spin the financials into more bad news. Trust me when I say I had a smug sense of satisfaction at that piece of information.

It seems, though, that their financial overlords, uh, “members” such as CenturyLink and Comcast have sounded the klaxons to demand more sock puppeterring on their behalf. Newly hired Vice President Rusty Cannon spewed out the usual array of half-truths and flat-out lies in conjunction with Red Meat Radio host, now former (yay!) Utah State Senator, and UTA President Howard Stephenson asking all the usual leading questions. Unfortunately for them, facts aren’t even remotely on their side.

The first assertion is that both UTOPIA and UIA are both “financial disasters”. This is a curious claim to make after years of silence. In fact, let’s look at the June 30 2018 financial reports for both UTOPIA and UIA. UTOPIA is covering its operating expenditures just as they have claimed for years, a substantial improvement over the last five years. UIA is actually increasing its net position. It’s hard to see the financial disaster being claimed, especially since anyone with a grasp on accounting principles knows it’s so much hogwash.

Cannon goes on to claim that UTOPIA carries $297M in debt service, yet the latest financial statement shows only $282M in debt. Of that, just over $98.3M is in notes payable to member cities as a promise to pay them back for bond payments. Since UIA is generating revenues in excess of operating expenses, the cities can reasonably expect to be paid back as the bonds are converted into notes payable. Weirdly, Cannon also claims that UTOPIA has a shortfall of up to $2M in operating expenditures, yet the financial statements show very clearly that operating expenditures are being covered. You wouldn’t be blamed for wondering if he doesn’t know how to ready financial statements or if he’s just doing the usual UTA business of flat-out lying.

Comically, Cannon cites a widely discredited Univeristy of Pennsylvania study on municipal networks as evidence that almost none of the projects work. Both Brookings Institute and our friends at the Institute for Local Self Reliance have delved into the results of that study and found cherry-picked data, incomplete data, falsified data, and false equivalencies. Choosing such a poor resource to lean upon exposes the weakness of the argument being made. Not one to be left out of the conversation, Stephenson then chimes in about the broken promised made under Roger Black nearly two decades ago with zero admission that the direction of the agency has changed dramatically in the last five years.

Most incredibly, Cannon then tries to insinuate, just as detractors did almost 20 years ago, that fiber could be obsoleted by 5G (ha!) or some as of yet unknown technology. The claim is entirely preposterous both to anyone familiar with the telecom landscape and any halfway competent technologist not blinded by ideological arguments. Verizon has straight up said that the only way their 5G network will perform as desired is with (drumroll please)… deeply deployed gigabit or better fiber. Every year, the supposed speed limit for existing fiber strands is shattered with some new lab breakthrough. In 2018, a link topping 159Tbps (yes, terabits) was demonstrated over a distance of 1045km. The absolute fastest wireless product in a lab barely hits 10Gbps under the most ideal of conditions and at comically short distances.

So why, after years of silence, is UTA roaring back? Probably because dozens of cities are looking at municipal fiber, they’ve seen what successful models have emerged, and UTOPIA has both proven those models and their operational excellence at running the largest and most-loved fiber network in the state of Utah. This is leaving incumbents terrified that there could be a wave of new municipal fiber builds reacting to their shoddy second-rate networks, infamously poor customer service, and generally acting as awful as you expect monopolists to.

To the Utah Taxpayers Association: bring it on. I’ve wiped the floor with you before and I’m happy to do it again.

Kaysville Exploring Muni Fiber; UTOPIA is a bidder

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The muni fiber train in Utah continues to pick up steam as Kaysville wraps up a RFP to build a municipal fiber system. UTOPIA confirmed that they are a bidder on the project which calls for a public-private partnership in which the city maintains some level of ownership or control while another party handles construction and operation of the network. The city’s goal to deliver gigabit services to all homes for $80 or less per month by May 2021. The project scope also includes connecting all city buildings to the fiber network.

This is the latest example of cities finding that their options to improve broadband options and stay competitive in the marketplace can’t be left to existing incumbent providers. In addition to the 20 cities conducting feasibility studies with UTOPIA, multiple cities including Millcreek and Cedar City have heard proposals from EntryPoint Networks to construct municipal fiber systems.  This means upwards of 20% of the incorporated municipalities in Utah have built, are in the process of building, or are considering building fiber networks. That’s the kind of critical mass that can’t be undone and stands in stark contrast to how skittish many of them were even 5 years ago.

I’ve reached out to Kaysville City for more information on their proposal and will update the article as I hear back. Meanwhile, residents of Kaysville should contact their city council and mayor to make their voice heard, particularly if you have a preference as to who the city opts to partner with.

UPDATE 10/24/2018 9:19AM: I’ve been told that both Riverton and the small town of Hideout are also in the process of RFPs for fiber optic networks. Most notable is that Riverton has very clearly specified that they require an open access network and they are a non-pledging member of UTOPIA.

h/t Jonathan Karras for sending me a link to the RFP.

Expanding UTOPIA the Layton Way

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UTOPIA has never been in a better position. Revenues have exceeded operating expenditures for a considerable amount of time, new footprints are being opened for service every month, and many member cities have been finally embracing the network as a vital part of their infrastructure. While Orem has been putting in a lot of time drawing up plans, Layton actually beat them to the punch and pulled the trigger on an expansion that will take no more than 24 months to cover the rest of the city.

In many ways, this is a lot like the UIA plan where bonds are issued to be paid back by pledging subscribers. There’s a couple differences, though. For starters, UIA can now issue bonds on its own authority. This means cities no longer have to use their bonding capacity to back them. The Layton plan also has the city backing the bonds using city franchise fees. If the subscriber numbers fall below what is required to pay the bond (which, to date, has not happened in a single UIA expansion area), the city pledges to cover the difference. On the flip side, if revenues exceed the bond payments (which has happened in most UIA expansion areas), the city gets to keep a cut of that for whatever they want. This could include paying off the original UTOPIA bonds, funding other city services, or anything else, really. It’s important to note that this revenue split option is only available to cities who assumed the original debt service.

A limiting factor is the available construction crews and materials. UTOPIA has said they’re currently connecting 1500 homes per month. The current housing boom has made finding additional people to build challenging. Add in that at least 20 (currently unnamed) cities are conducting feasibility studies with UTOPIA and you can see very quickly that rapid expansion may not exactly be in the cards. The take rate barrier for new cities is a scant 30%, low enough that it makes sense to pull the trigger and get your place in line. At least 40% of currently connected customers are opting for gigabit service, hinting that the revenue streams are there and won’t be meaningfully impacted by users opting for the slower 100M or 250M tiers.

Getting municipal fiber, the EntryPoint Networks way

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EntryPoint Networks is not a household name, but their successful municipal fiber project in Ammon, ID certainly is. With 75% of served residents taking service for as low as $43/mo for 100M/100M, Ammon stands as a poster child for how to get municipal fiber right on political, financial, and technology sides. I had a chance to discuss their method with VP of Sales and Marketing Devin Cox. There’s a lot that’s very similar to UTOPIA, but enough divergence that it stands out as unique. They’re set to make their pitch to Cedar City on Wednesday June 20 at 4:30PM in the city council chambers and reportedly have more unnamed cities in the wings.

How it’s like UTOPIA

Cox had no hesitation to say that the “subscriber pays” model first adopted for UTOPIA deployment in Brigham City served as the basis for their model. Just like UTOPIA, the cost to deploy is spread over 20 years and will eventually be paid off in full. It’s an open access network that allows any provider to join and provide services. Much like UTOPIA, they have an open invitation to existing providers, including telco and cableco incumbents, to jump on the network and provide service. Most importantly, they use active Ethernet to ensure that each subscriber can get the full bandwidth of their connection.

The city is in the driver’s seat for most of the decisions. This includes how to finance the network, if subscribers will have legal ownership at the end, and who will operate, maintain, and manage it. EntryPoint sees their role as similar to DynamicCity in the early days of UTOPIA, to plan and build the network on behalf of the city they contract with. This does leave the possibility open for a city to partner with EntryPoint and UTOPIA at the same time, each of them filling slightly different roles.

And how it’s different

EntryPoint’s philosophy to network operations is to price it as low as possible to gain as much market share as possible. Since the vast majority of the cost is going to be construction and maintenance, it makes sense for them to get the actual service cost as low as possible to spread costs. In Ammon, this has driven the cost of 100M symmetrical service down to around $43/mo. UTOPIA doesn’t have this flexibility because of legacy debt, something that Payson will have paid off in a few years and cities who opted to refinance will have on the books until 2041.

Their provisioning system is also very different. Something DynamicCity was playing with was a self-provisioning portal. A customer could easily enable or disable services and switch service providers with a few clicks. This not only drives down costs, but it makes it very easy to add software-defined services as part of the package. This includes a point-to-point VPN/VPLS service that allows anyone to dynamically create and destroy private connections between any two points on the network. Examples include a route between a business and its remote workers, two gamers who want to go head-to-head, or families in the same city who want to share network resources like printers, storage, and so on.

They also bill those amounts very differently by splitting it into three buckets: network construction, network maintenance, and service provider fees. The network construction fee is the part that goes away in 20 years and is attached to your property tax bill. In Ammon, that fee has been just under $17/mo. Interestingly, they separately bill a “keep the lights on” network maintenance fee via the city’s utilities department. This is the cost to deliver service between any two points on the network, repair the network, and plan for future electronics swaps. This fee never changes no matter how many services you use or how much you use the network and currently is about the same as network construction. That bill exists as long as you use the service, but it can be suspended month-t0-month like many cable operators will do in towns with a lot of vacation homes.

The final part, the service provider fee, is paid straight to the ISP. With 100M/100M coming in around $10/mo of this, it’s hard to see that service providers actually make money at price points this low, but Cox claims that the provider costs are so low that the margins are actually quite high. UTOPIA provider SumoFiber participates on the network in Ammon as well, so I reached out for a comment. Per David Burr, they definitely make higher margins per customer, though that can vary depending on if they need to pull backhaul to interconnect or have local technicians for that market.

A way forward?

Let’s face it: the UTOPIA brand is pretty toxic politically. Even with covering operating expenses and making subscribers carry the full cost of expansion, it’s a hard sell to cities wary of the political fallout, especially when opponents will continue to harp on how things were a decade ago. In politics, facts take a back seat to whatever perceptions happen to get cemented early. UTOPIA also has its hands pretty full trying to meet the needs of existing members.

For all of these reasons, EntryPoint might be the best bet for any city who wants fiber but also wants to avoid political risk. As a resident of Cedar City, I’ll certainly be watching how it unfolds here pretty closely.

Once again, the Daily Herald completely misses the mark on UTOPIA

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It’s pretty incredible that even now newspapers can’t get stories about UTOPIA right. The Daily Herald penned a recent op-ed that managed to skip or mangle so many facts that it’s no small wonder they came to the erroneous conclusions that they did. I have to take some time to dissect the many, many ways in which they fall into decades-old failing arguments and end up doing little more than parroting the kind of tripe the Utah Taxpayers Association has shoveled since the very beginning.

First, they start off with a few paragraphs talking about 5G wireless. Remember when everyone told us that 4G LTE deployments would eradicate the need for wired Internet service at all? Or that WiFi would do the same thing? Yet here we are, two decades after 802.11 was introduced in consumer devices and nearly a decade into LTE deployments and that’s nowhere near the case. 5G will be no different. It lives on short-range frequencies that require deploying a ton of infrastructure to support. And, surprise, a big part of that is fiber to each one of the access points.

Then they declare that bonding to finish construction puts Orem in deep financial trouble. Except, well, it doesn’t. Ever since the SAA/UIA model rolled in, every bond issued is guaranteed by subscribers. It won’t even get issued until the take rates are high enough to break even. The latest news about the UIA is that it even generates revenues in excess of the bond costs, a net positive. So, seriously, where is the downside when the worst case scenario is break even?

Oddly, they then launch into concerns about Orem’s needed infrastructure spending. But what is fiber if not infrastructure? Given past results, a new UIA bond would cover some of the original bond debt and free up more money to spend on other things including roads. It’s concern trolling at its finest.

There’s one of two possibilities for the sloppy fact-omitting editorial that the Daily Herald’s board pumped out: they either are ignorant of the facts or chose to deliberately ignore them. In either case, they have acted very irresponsibly by pushing a view that doesn’t jive with reality. Hopefully they’ll be open to getting educated and publishing a “mea culpa” response.