North Dakota's Exceptional Fiber Networks - Community Broadband Bits Podcast 288

Robin Anderson: We have 18 smaller independent telcos in North Dakota 15 of those are cooperatives.

Lisa Gonzalez: You're listening to episode 288 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez unless you've been to rural North Dakota. You probably imagine white sleeping planes dotted here and there with a herd of cattle or oil rigs. What most people don't realize is that rural North Dakota has some of the most extensive fiber optic networks in the country. Rural cooperatives An independent telecommunications companies have quietly been investing in North Dakota regional networks for years. In this interview Christopher talks with Robin Anderson from National Information Solutions co-operative. One of the many that helped establish the state's incredible connectivity. Robin and Chris discuss how the rural areas of North Dakota came to have some of the best internet access in the country. The people behind the deployments and what the experience is like for a smaller independent provider who sees the wisdom of rural investment. Now here's Christopher with Robin Anderson.

Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell with the Institute for Local Self-Reliance in Minneapolis and I'm speaking with Robin Anderson, sales manager for National Information Solutions Cooperative in North Dakota. Welcome to the show.

Robin Anderson: Thanks Chris.

Christopher Mitchell: So let me just ask you briefly tell us what the National Information Solutions co-operative is before we get into how North Dakota has better internet access than the whole rest of the country.

Robin Anderson: So NIC we provide enterprise solutions for electric and telecom companies across the country actually started 50 years ago this year. And we we work with both electric utilities and telcos. And surprisingly our first three customers were electric fan and one telephone company back in the 50s who are still members of ours today but provide accounting and billing engineering software solutions for telephone cooperatives across the country are 850 members right now.

Christopher Mitchell: And the reason that I'm having you on the show to talk about North Dakota is for one thing you're a very entertaining person to talk to but you have a long history with cooperatives back in North Dakota and also your fellow Eagles fan. Thanks to Carson once the North Dakota sensation.

Robin Anderson: Absolutely. Yeah it's not too often that your boyfriend plays quarterback for the Eagles.

Christopher Mitchell: Here we are. I think if I say if I did a random calling around North Dakota I'd find a lot of his girlfriends.

Robin Anderson: Absolutely. A big fan and big eyes. And it said you know that's where I once played. But big championship game tomorrow so excited. A

Christopher Mitchell: lot yes. One of the things that I think most people are probably confused about is I just claim North Dakota has a really good Internet access. If you just asked a random person on the street they would probably think North Dakota being very low density probably has very poor internet access. So what is going on broadly in North Dakota.

Robin Anderson: Yeah so Chris I think if you ask people randomly they also say that North Dakota doesn't have indoor plumbing.

Robin Anderson: So I think the perception of our state is we have some issues that are a little bigger than just broadband but but on the broadband I think a big part of it is that while the independent telcos are about 96 percent of the geographic area of the state they serve less than 50 percent of the population. So with the majority of that population living in the highest populated areas that are served by you know the big guys lakes and create the link. They just haven't made the same investments in the infrastructure so the service in those areas I think is subpar to the to the very rural areas of the states. So naturally people think that you know if we can't we don't have great internet access in Fargo or Grand Forks markets. How could someone living in Carrington or Rame North Dakota have access to fiber to gigabit speeds.

Robin Anderson: But the truth is that North Dakota has the highest penetration I think of broadband in the country and the high percentage of fiber in the country. And you know when we started our project and a little bit of my background as I spent 13 years working for the local Telecommunications Cooperative here in Carrington and we went into a select area of Perth that was competing against class which is now CenturyLink obviously but we just we saw little or no reaction from them at the time. And I have a friend who actually worked for Quest's back in those days and he said quest was very aware of the fibre build in North Dakota. He told me that the CEO at the time had made the statement it would be cheaper and better for us to move people to Fargo than to provide them with the same level of service in those areas.

Robin Anderson: But what surprises me is we haven't really seen that embed still in those in the bigger populated areas that we have done in the in the rural areas. So you know when you talk about geographic area being 96 percent served by the telcos. That's a big part of the state. And and I think we're close to a 100 percent fibre to the home in those areas.

Christopher Mitchell: It is worth noting that a lot of the population of North Dakota is huddled up against the Minnesota border. Why yes. So when you see the North Dakota independence I'm curious for people who may not have the same background. You know there's sort of we divide the world between the big carriers like CenturyLink in North Dakota would be the major one and smaller firms that build networks basically companies that weren't a part of the AT&T Ma Bell System I guess. But the independents in North Dakota are the private companies or co-op or a combination of both.

Robin Anderson: It is a combination. We have 18 smaller independent telcos in North Dakota 15 of those are cooperatives. And then three are privately owned. And you know some of those areas that the independents are were Questor CenturyLink areas up until about in 1996 is they sold off a lot of those smaller areas to the to the co-op or the independents and just kept those major you know more urban areas of the state.

Christopher Mitchell: Why do you think that North Dakota to some extent other areas around here have been real leaders in rural fiber. Just to give you a sense when we we we just recently made a map of the co-op fiber in the country. There's a clear bias in the upper Midwest.

Robin Anderson: You know another reason that our area of the world in the upper Midwest being an early adopter and this is just the first personal thought but you know optical solutions was based out of Minnesota and it's always I was one of the first access companies to promote fibre to the home. Most people know them today as Calix they were purchased by Calix in 2006 to continue to be a leader with independent telcos and access. But Keith Carlson was the sales manager at oocyte at the time he is actually their second employee and was our sales manager at Dakotah central. And I mean I credit Keith with a lot of this too because the guy could sell ice could Eskimos.

Robin Anderson: I know I know he did because he convinced my CEO Steve Larson to do a first build.

Robin Anderson: And you know Keith Larson he's an accountant by trade I'm a sales and marketing person. I was all in and he was scared to death but I honestly don't know if our project would have happened without you know OS being really in this area and Keith's guidance and his ability to sell it on it at least not that early in the game. It might have been you know a few years later but at the time the less than 100 companies in the country building fibre to the home. And I believe less than 40 building an IPTV Hensler is a risk to say the least. But with OSFI up in this area in the Midwest and like I said it's Calix now today but they really were promoting fibre to the home and coming out and meeting with all the companies very early in the adoption of seeing fiber built across the country.

Christopher Mitchell: And my impression was that he was a salesman in the best sense of the word in that. One of the reasons that he did so well was he always was there when you had problems in the future too. He didn't just sell you and disappear. He'd work with you and make sure that the team worked with you to solve their problems.

Robin Anderson: Well absolutely and I think that comes down to just caring. Keith you know. Yes it was a business forum but you know you create friendships and I'll say this Keith is the first person who ever had a dog sleep in my house because you know you develop friendships and he'd come out and take my son hunting. But things are going to go wrong. And we had things go wrong. I'm not going to stay. It was smooth sailing. I remember after we had the first I don't know three or four businesses turned up in Jamestown and Newman signs was one of them one of the largest businesses in Jamestown. And all of a sudden their phone went down one day. And what do you do. And I called Keith and I didn't know you know where the where the issue with that but he showed up. He didn't just you know say try this. I mean him and their sales engineer Mark or PSEC at the time they showed up they drove to Jamestown. They

Robin Anderson: helped our guys. They stayed until it was up and running again. And even later when we had issues with video and nobody knew. Was it a myriad issue was it an amino set top box issue was it Calix. And again they showed up. They didn't point fingers. They just said you know what can we do to help you figure this out and I'll forever be grateful for Keith and the role he played in our project. And then you know projects across the state.

Christopher Mitchell: These are the kinds of stories I think get forgotten. People tend to think you know if you look at states have 30 percent fibre to the home access now mostly from Verizon. People tend to associate these technologies with the big companies. But it was the small folks you know the small companies with people who were going out and solving the problems and making it work that figured out how to make it work before the big companies even started picking it up. So I'm really glad that you shared that answer when we talk about how you have so much fiber investment. Is this the result of some sort of massive government program to just throw money at North Dakota. How did it come to be in so much of this was done even before the stimulus.

Robin Anderson: Right. Yeah I mean part of it was that we were seeing the demand there the need for more and better internet speeds and access a lot of the rural companies had access to low cost capital from our us as previous hours. I know for us that Dakota central when we looked at the Jamestown Project our US had just come out with the broadband loan program. So that allowed us to finance that project. We borrowed about 15 and a half million dollars from through that program and then about three and a half million dollars of cash into that project which we ended up eventually putting quite a bit more cash in because of the take rates were higher than we initially projected but we are one of the first to utilize that program. Let

Christopher Mitchell: me just jump in for a second to to note so this is in our U.S. borrowing program. So you're borrowing money but you're paying it back if there's any subsidy it's probably just on the edges. I would guess maybe a lower interest rate than you would get somewhere else or a longer term. But in general this is not free money it's your own money.

Robin Anderson: That's correct yep. Most of the money that we put into both the select and elect projects that we did at the time were through loan programs. I mean there were some stimulus grants available that and you know some combination of stimulus and loans. But but the majority of the majority of it was was loans for the co-op as well. A lot of it was just reinvesting back in the network and tightening up or co-op. So how we operate the business is a lot different than you'll see with the big guys. We're not. Our goal isn't to put money back into shareholders pockets. Our goal is to provide the best service possible and keep reinvesting in that network.

Christopher Mitchell: So right now you're talking over a fiber connection you have fiber to your home. How long have you have that.

Robin Anderson: I do. So we started with Dakota sencha we started with the CLX build first back in 2004 2005 and Jamestown and the plan there was to you know get our IPTV head in place and try and get as many customers on the network as we could before we went and build out to our eye like areas which is probably the opposite of what a lot of companies do. But I live in the rural areas so I'm six miles from the closest community and I've had fibre to the home at my house since I think about 2007. And you know basically live right next to our family ranch. And you know my husband and I both work from home. We've got a 100 meg internet connection to our house. I'm talking on a VoIP phone right now. My husband is on the other end of the house talking on his boy home for his company.

Robin Anderson: And yeah we couldn't we could not live and do the job that we'd do him as a national manager for a crop insurance company that you know covers 14 states and manage those guys in those states. And me as a sales manager for Nic it just won't be possible. You know when I look at it with and I feel alone we've got close to twelve hundred employees and a hundred of our employees are remote and most of those are in rural areas like I live just from the investment that's put in and put in with fiber.

Christopher Mitchell: And you said you had a greater take rate than was expected which results in you having to pay more. That makes sense of course because this is a large upfront investment if you have more people connecting it's probably in that time more than twenty five or three thousand dollars per home on average I mean probably a lot more than that. So but just briefly I'm curious even back then you were seeing a demand in rural areas that exceeded the again common wisdom of some people which would say that people in rural areas just don't care that much about internet.

Robin Anderson: Yeah I know at the time I think our pro forma show that we had to reach 40 percent take rate in the first five years of our buildout and being the marketing manager at the time are our process for selling the service was to pre-cell it. So we started with a marketing campaign several months before the fiber was about to go in the ground and we made a series of marketing campaigns that we went out to the to the homes with and then actually after the first three touches with those homes we had 30 percent had signed up before we put fiber in the ground and after that myself and our sales manager our county executive at the time we went around and knocked on every door before that hadn't signed up in front of in front of the plow crews and we we got another 15 percent through that door to door marketing.

Robin Anderson: So we were at 45 percent before we started putting fiber in the. Eventually I think after the first year in those first areas we built we were over 50 percent or close to 60. And I think in Jamestown today that number is in the 70 percent throughout the community. So now people you know they wanted the better service even though at the time you know the speeds were less than what we're doing now. But there was a there was a demand for it and it needs right and I think some of that too as we went around to the businesses before we started the residential build. I spent the first year just working with the commercial customers trying to get about 500 at the time we talked an access line still to get about 500 access lines signed up with the business community and the thought process was if we go off the mainline fiber route into those businesses and get get them signed up especially those that had a lot of employees that would help us in marketing it from that point forward with the employees taking it at their homes.

Christopher Mitchell: Now one of the things that I'm always interested in is some of the economics of this and my understanding is that the operating costs of the fiber networks is dramatically lower than that of the copper networks that these telephone call ups had been maintaining inso as they are paying off these loans mean that they are just really in good shape. I mean is that is that a big difference for a rural co-op.

Robin Anderson: No I think part of it is again that we just were reinvesting back in the network. That's that's the goal of cooperatives is not to pad shareholders pockets but to keep putting the money back in the network. What we saw at that time too was a lot of the telcos in North Dakota including Dakota central we had copper plant that needed to be replaced and we were trying to use that plant to deliver DSL service over it and push it further and further out. And and when you looked at it it was cheaper to replace that copper with fiber than put more copper in the ground. And obviously for long term reasons fiber was the best solution anyway with just happened to change out the electronics at the end of it as the need for more speed demands were coming. But yeah I think you know when you looked at the overall cost of the network it was better to put in fiber versus the copper that we had in the ground.

Christopher Mitchell: Well the thing that I remember and you may have still been with Dakota Central time but I remember seeing a press release touting North Dakota and I think it was a combination of DakTel and Dickey but I could be wrong - having the largest fibre to the home network in the world more than 10000 square miles.

Robin Anderson: I would say the first three in the state to really invest in fiber were Dakota Central, Dickey Rural Networks, and Bek and [Steel]. And so with Dakota Central and Dickey Rural basically we kind of border each other up to that just south of the Jamestown area. And as both of you know progressive companies and I would say statewide you see that it was you know really good cooperative leadership in the state. And having worked for Dakota central for that many years and then going to work for Pivot and now and ISP and kind of traveling the country meeting with other co-op. One thing that stood out to me over the years is that it's not not everywhere. Do you see how companies work together like we do in the upper Midwest and not just North Dakota but Minnesota South Dakota Wisconsin in our state we have meetings several times a year with different groups from every company.

Robin Anderson: So the CEO level the plant managers have a meeting where they get together a couple of times a year the marketing managers there's a lot of constant sharing of information and helping each other. And you know some of that probably comes from building and owning the Dakota carrier network or state fiber network but just good vision from the board of directors to leadership and employees buying into the projects has made a big difference. But yes that 10000 square miles from a geographic standpoint I believe it was the largest build and maybe still is today but at least at that time in the country.

Christopher Mitchell: So when you given your history in North Dakota and the fact that you do travel around the country of relationships with cooperatives everywhere when you hear people claim I'm going to make this up not quoting him specifically but it's true of the sentiment of many people out of Washington D.C. that we can't afford to bring fiber to everyone in rural America and that is just cost prohibitive. We have to go with some kind of wireless. You know how do you react based on knowing what that's already been done in North Dakota.

Robin Anderson: Yeah well I think part of it is we can't afford not to. And wireless is a great solution. In some areas but for long term best investment. I don't know that wireless has the reach or will that the needs are going to be especially for people working at home. And we start out migration in our state about the time we were doing our fiber build. I was actually interviewed for a Fargo Forum article called Saving North Dakota. I mean the reality is the young people are moving out and the elderly are dying. We were seeing Justin outflux of people now you know shortly after that we had the oil boom and we saw things happen in western North Dakota that we hadn't seen in a long time. And I talked about at that time going down to the urban areas and serving those makes the most sense.

Robin Anderson: You know what's going to happen to all these rural areas because the honest truth is where does your energy come from where does your food come from. I mean it's important that they have those same level of services that the urban area or urban areas do which was the whole purpose of universal universal service from the time it started was equal access everywhere. It can be done yes. Obviously the USF fund has helped that in reinvesting back in those networks. But I think the bigger thing is just you know having the fortitude and the guts to go out and do it and tightening up and making sure you can cash flow and part of that for our project to was not going out and hiring a lot of people. And you'll see that with some companies and especially with the bigger guys they do a project like this and go out and hire 20 30 40 people.

Robin Anderson: We doubled the size of our company and hired five employees. And you know the purpose at the time was everybody's going to have to work harder because we know it's going to be really crazy for the first you know five six seven years here. But at some point the network is going to be built and it's going to be as efficient or more efficient than it's ever been. And at that point you can't afford to have the overhead that you would have if you went out and doubled your employee based at the same time as trying to build a fibre to the home network. We asked a lot of our team and the managers. And you know everyone put in put in probably more time than even was expected but when it's done I still to this day will say it was you know will always be one of the highlights of my career.

Robin Anderson: And there's nothing more fun than seeing a project like that through from start to finish and and having it be successful.

Christopher Mitchell: That's a very good reality check to remember that you know I can do. I can look from afar and say wow look at all this that was done. But it's good to appreciate that there's a lot of hard days that people had to put in to make it happen.

Robin Anderson: A lot of hard days and a lot of help leaning on even vendor partners. I remember filling out IPTV content contracts and I didn't know what I was doing and sitting sitting at a card table in my living room you know from after the kids go to bed at

10:00 at night until midnight and actually texting or calling a vendor who is up watching hockey saying what do I do here how do I do this and you know help just walk through it. So

Christopher Mitchell: definitely it takes a team but can be done right and that's yet another good reminder as well that when people think all these things are so complicated in this that you know you can figure it out and most mistakes will be made and you'll deal with them and move along. You'll find me any network that hasn't made mistakes in being built. But I really appreciate the time you've given us to. Tell us about what's going on there. I have been long wanting to make sure people were aware that North Dakota had such incredible connectivity and just the sense that if we can build fibre to the home in North Dakota and we can build it in a number of other places as well with Cope's and such a cost effective manner this idea that we just have to abandon rural America poor broadband is clearly farcical.

Robin Anderson: Yeah I mean the long term we've got to make those long term investments and the demand for speed and capacity is going to continually increase. We know that. And if you want to provide the opportunity is like I said working remotely today both my husband and I I I don't know that we would have been able to continue to live where we live if we didn't have fibre to our house. In fact I'm confident that we couldn't. And that's what you're going to see if we don't invest in these rural areas. People are going to continue to move about to find you know what's there for them and it's not just not just the parents. Let's be honest the kids are driving a lot of this today. One my three kids are all home and they're streaming Netflix or they're doing school projects online. It doesn't seem like it seems like there isn't anything they do anymore that doesn't touch technology and so you know that need is greater today than it's ever been. It's going to continue to increase.

Christopher Mitchell: And I'll just say that even if you got people living in cities who think I just don't care those rural areas keep in mind that we have 100 senators. And if those 100 senators are broken down so that people only live in cities. That means that basically all the political power will be with the tiny minority of people who don't care about the internet who live in the middle of the country basically.

Robin Anderson: Absolutely and it is surprising today that when you look at I mean North Dakota is an example but I think we see it across the country. It is those you know urban areas. I mean the reality is we're seeing better fiber build in the rural areas than the urban areas. And you know while there are cable companies that are are picking up the slack there but we aren't seeing as big of a movement. I I speak probably for North Dakota more than anywhere. I definitely have better access rate here. And then you'll find in Fargo.

Robin Anderson: Yeah or that I can get. I can tell you that for sure. It's crazy really. Yes

Christopher Mitchell: . Well thank you for coming on the show. And we'll look forward to catching up with you again in the future. Thanks Chris.

Lisa Gonzalez: That was Christopher with Robin Anderson from National Information Systems cooperative in North Dakota. We have transcripts for this and other podcasts available at MuniNetworks.org/BroadbandBits. Email us at podcast@MuniNetworks.org with your ideas for the show. You can follow us on Twitter. His handle is @CommunityNets. You can also follow me networks at org stories on Twitter. The handle is @MuniNetworks. Subscribe to this podcast and the other ILSR podcasts- Building Local Power and the Local Energy Rules podcast. Access them on Apple podcasts, stitcher, or wherever else you get your podcasts. Never miss out on our original research. Subscribe to our monthly newsletter at ILSR.org. Thank you to Arne Huseby for the song "Warm Duck Shuffle" licensed through Creative Commons and thanks for listening to episode 288 of the community broadband bits podcast.