The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software.
Joe Coldebella:
This episode of The Broadband Bunch is sponsored by ETI Software and VETRO FiberMap.
Hello, and welcome to another episode of The Broadband Bunch. I’m Joe Coldebella, and we are at Fiber Connect 2023. Joining me is Kevin Morgan, the CMO of Clearfield, and the co-chairman of the Senior Council Committee for the Fiber Broadband Association. Kevin, welcome back to the Broadband Bunch.
Kevin Morgan:
Joe, it’s great to be here.
Joe Coldebella:
Yeah, it’s great. This was one of the first events that I went to when I first started here in the world of broadband. It’s kind of incredible just in the few years how much growth there has been. This is a massive event. How does that make you feel in terms of somebody who’s been here from the beginning and sort of building with the steps?
Kevin Morgan:
Yeah. So this is 13 years after I started as a board member. And years ago it was common that we would have maybe 1200 attendees and something like that. It was just a nice small number actually. In the last three years after COVID, it has just exploded. And we did a few things along the way as an association to bring this to bear, but also just the environment itself. The market forces have come together at the right time, and now we’re a 4,000-attendee conference. And it gives me great satisfaction having put in a lot of blood, sweat, and tears in the early days, tilling the soil, and helping to advocate for fiber-based friendly policies. And now we’re seeing all the federal funding coming around and the FCC and the NTIA and different sorts of entities fund our industry.
Joe Coldebella:
We’re sort of on the same path to Broadband Bunch. When you’re first starting out, nobody wants to listen. And then all of a sudden, it’s like, “Oh wow, these guys at the Fiber Broadband Association, they’re doing good things.” All of a sudden, this spotlight is put on you guys. It must be gratifying knowing that you were going down the right path. It is fantastic that it has come together like this with such a fantastic event.
Kevin Morgan:
I thought when I went out last year as the chairman of the board of the association that the momentum that we had was certainly one of the pinnacles of my career. And having come back and now seeing an even bigger conference. I think I need to be a part of this. But the Senior Council Committee is there to help advise the board on certain matters.
Joe Coldebella:
And you guys are there making sure that all the t’s are crossed and the i’s are dotted?
Kevin Morgan:
Yeah. So one of the things that we did after I got elected to the board years ago, we institute term limits. With the term limits, the idea was to bring fresh bodies to the board and new ideas and new companies. But with that, you lose some of the connective tissue to how you got here and what were the things you did along the way. So the Senior Council Committees is made up of former board chairs who have been there, done that, and knew where all the bodies are buried.
Joe Coldebella:
No, I love it. Yeah.
Kevin Morgan:
Yeah. It’s basically there to help out the board.
Joe Coldebella:
But that’s a great point because I think that’s one of the things that’s happening as a trend in terms of the industry as a whole. There are a lot of folks who are getting to that point where they want to step away from everyday work. But you hear operators and others say, “Listen, reach this person because they really know what’s going on. And they can shorten that time it takes to get to an answer.” And it’s invaluable.
Kevin Morgan:
Yeah. Yeah. So we’re an advisory committee, and that’s what we do.
Joe Coldebella:
And how big is the committee?
Kevin Morgan:
Just four board chairs. So we have three people out there.
Joe Coldebella:
Okay, sure. Is there anything this year’s show that you are glad they’re doing or something that you are they’re continuing?
Kevin Morgan:
I certainly am impressed with the caliber of speakers we have. I sat in the general session this morning. One of the main problems in barriers to fiber deployment is permitting. So when you have the senior person on the current administration’s staff, he’s responsible for coordinating permitting issues among all the agencies. It is very encouraging to see that we are now on their radar and that this is an important aspect of the administration. They understand that this is something that they can participate in this big fiber build-out in a meaningful way to reduce the barriers to fiber deployment.
And a lot of that, it’s just really common-sense coordination. But they volunteered to be in a really key role to help break down barriers when you cross federal lands, for example, and multiple states and different kinds of things that you can’t anticipate until you’ve tried and then have a problem.
Joe Coldebella:
In terms of the ocean of money that comes in, something as simple but as important as permitting is something that probably was not glossed over, but it wasn’t really something that folks are focused on.
Kevin Morgan:
There are several issues like that. The technology, everybody in the early days was just focused on technology because it’s so gee whiz, right? Product technology and different kinds of trends, but when you get down to rolling it out, to installing it, to trying to build out an actual network and you look at all the other problems, other barriers, non-technology is significant. And that’s where we’re seeing our customers run into problems. Companies that are privately funded don’t have funding from the government, but they’re targeting to go into these areas that are unserved according to the FCC maps, unserved, underserved, hitting roadblocks at the local municipality level because of maybe things that have been done in the past where they’ve allowed pole attachments. Or they’ve allowed access to right away, and they’ve gotten burned.
Joe Coldebella:
Sure.
Kevin Morgan:
And in that case, they’re just saying, “Hey, we’re not allowing anymore.” We can’t do that. Ultimately, the consumers are the ones that suffer. But I’ve talked to several that have had this issue, and it’s a real issue we’re trying to wrestle with in the industry.
Joe Coldebella:
Well, and my hope is that the terror that was COVID, the silver lining is that folks understand that even though things may have gone sideways before this time is different.
Kevin Morgan:
And of course, with the Infrastructure Investment and Jobs Act, Congress, bipartisan support. So across both lines, they would agree this is important. But when you get down to the individual levels, what we’ve seen, the trends are, if you’re in a larger city, you can handle the permitting issues, fine. Mid-size government, maybe county levels, fine. It’s when you get into the smaller townships and rural areas that they’re not. In many cases, they haven’t digitized their processes. They’re still operating on a fax or a paper system for allocations.
Joe Coldebella:
Oh, really?
Kevin Morgan:
Oh, yeah. And these are the areas that we’re targeting to go after unserved areas in those locations. So they’re getting overrun with access or applications for permitting for a number of reasons because of office investment that’s slowing their way. And there are things that you can do to streamline the permitting process.
For example, the South Carolina Institute has an hour-required orientation for anybody doing a broadband permitting application. And they kind of step the applicant through all of the landmines. Because when you do the build-out, you don’t have to go just to a city for their poles. In many cases, you must coordinate with the Department of Transportation, the railroads, and other civic organizations. If you cross state boundaries or if you cross county boundaries or two municipalities, these are common things that happen when you’re building out fiber. So there are ways to deal with those efficiently, and then what we see in other cases is just a stalemate.
Joe Coldebella:
Well, hopefully, one of the things that is great about these councils and the fact that you guys are engaging with the state broadband offices is that there’s collaboration and communication with everybody. Because you’ve got this great example here, and then you would hope this one maybe in Arizona who’s having the same problem can learn from that. And then all of a sudden, all 50 states are sort of rolling in the same direction. As I was prepping for this interview, for some odd reason, something that you said a year and a half ago or two years ago popped into my head. And I don’t know if you remember saying it, but you were amazed at how important politics and how important government is in terms of moving the ball, so to speak.
Kevin Morgan:
Yeah.
Joe Coldebella:
So two years later, do you feel that way?
Kevin Morgan:
I heard a quote some time ago, and I can’t repeat it word for word. But the idea is that every major technological advancement is rooted in a political decision. Think about it. Most of the advancements in technology that we have today, like the space program, drove a lot of development. Those were all politically motivated efforts. This thing that we have now, the BEAD funding, is going to drive some innovations that just haven’t been in the past. So I think there is a tie there that technological decisions and advancements are driven in large part due to political decisions somewhere along the way.
Joe Coldebella:
Yeah, it is definitely interesting as the money is sort of rolled out, how much action is being done.
Kevin Morgan:
And I’m not talking about the political people going down to the bit back level and understanding the format of the protocols or anything like that. But just the idea that we’re going to put a man on the moon. That’s a political decision that drove so many elements. The fact that we’re going to connect all Americans with broadband, high-speed broadband, will drive so much in terms of real technological advancement.
Joe Coldebella:
I’m a marketing guy. I was in marketing and advertising for 20 years before shifting into this industry, and I think that you guys did a phenomenal job putting down your stake in the ground. “If it’s not fiber, it’s not broadband.” You guys must be secretly giving high-fives because there are lots of folks doing lots of great things, but you guys basically won the day.
Kevin Morgan:
Yeah. From a technology standpoint, fiber is absolutely the end game for anyone who’s rolling out high-speed broadband. They know that regardless of the technology they’re using at the time. They would all tell you they would prefer to roll out fiber if they can. So it’s one of those easy arguments, but you do have to state it in very simple terms. One of the benefits of being at the Fiber Broadband Association when you have 500 members and 52% of them are operators, you’re not being driven by the supplier community per se. They’re big contributors in terms of sponsorship and things like that.
But we have a membership that we have to account for all across the board. Especially on the operator side, A CLEC is not going to agree with an incumbent’s practices. We’ve got both. We’ve got them by the dozens in our association. And the thing we must come back to in our advocacy positions in Washington or state levels is that we’re all about fiber, whatever’s the best. To keep fiber at the forefront, that’s what we’re going to advocate for. In many cases, it may offend one section of our members, but if we go back to the most effective, we can put the most wood behind our arrows to keep it simple. It’s all about fiber, and that’s where we’re focused.
Joe Coldebella:
Yeah, that leads me to my next area, which is the BEAD funding. I would love to get your initial thoughts. Was enough money allocated in terms of Middle Mile? Do you like the state broadband offices?
Kevin Morgan:
Yeah. I think if history is any indication when you look back at other broadband-funded programs, the way those dollars were implemented through the RDOF process, the reverse auctions, I think they learned some issues at the FCC. And so NTIA was the agency that Congress basically said, “We’re going to go this route now.”
And by the way, the eligible entities are no longer the individual service providers. It’s the states and the eligible entities of the territories. And they get to decide who the sub-grantee is. So that’s a really big improvement. But it’s also adding another 12 months to the whole top process. It’s a little bit of a lag effect, but we’re going to see.
Joe Coldebella:
So you’re saying the state broadband offices are setting aside their five-year plans.
Kevin Morgan:
Yeah.
Joe Coldebella:
We’re adding an extra layer. If you were to ask me for most things, I think that adding extra layers of bureaucracy is a bad thing. But I see this as a net benefit because I think that it allows the sort of decision-making to be taken out of Washington. After all, somebody in California or Nevada has a different perspective.
Kevin Morgan:
I think that was the aha moment they learned from the RDOF. Right? And that’s the big learning lesson. And then kudos to the government, they made a better decision. But even in the rules that the NTIA has posed, they identify that after the 20% initial proposal, you’ve got up to 12 months to identify the process and the selection process for your sub-grantees. So the service providers that get the money build the networks. If we get 20% and within 180 days of the announcement of our June 27th announcement… June 30th, that’s December 27th this year, that’s the 180 days that all the eligible entities have to provide their initial proposals. Many of them are early, but then they’ve got another 12 months to identify how that sub-grantee process is going to work.
Joe Coldebella:
And is that also the challenge period as well?
Kevin Morgan:
Yeah. All that’s boiled into it. And so ultimately, what that means is that the money that we know is coming is likely not going to get here until the end of ‘24, early ‘25.
Joe Coldebella:
All right. I know that folks want broadband as soon as possible, but I think it’s almost better that they’ve slowed down the process. It seemed like there was a locomotive train in the last 12 to 16 months. And then it’s all of a sudden it’s like we’re going to get there, but we’ve got to make sure that we do it right.
Kevin Morgan:
Yeah, absolutely. I 100% agree.
Joe Coldebella:
So do you think that AI is going to be a big part of our industry in terms of moving forward? What is your take on it in general?
Kevin Morgan:
It’s hard for me to envision how that’s going to play out. However, I’m a strong believer that that would likely increase the amount of bandwidth required in the networks. And so that’s a good thing that helps point more to fiber-based broadband.
Joe Coldebella:
Well, isn’t it crazy? I just interviewed some folks from Arkansas. Everyone thinks that they are going to have plenty of data. But you give me five; I’ll take five. You give me 10; I’ll take 10. And it’s just going to grow, isn’t it?
Kevin Morgan:
Yeah, absolutely. And we use this model to describe how this all works with basically a three-prong. If you picture a circle and you’ve got, at the noon position, let’s say the network. At the four o’clock position, you have the devices. And at the eight o’clock position, you have the applications. So if you increase the amount of network capacity or network speed, that creates an opportunity to create new devices that would take advantage of that. And then those new devices create new applications to consume all that. And then it’s just a constant cycle.
So as you increase speeds and capacities, you have new things. For example, YouTube would not function on the DSL network of 15 years ago, right? You wouldn’t be able to do any other type of video streaming network. It’s just incompatible. The network was increased. The devices increased streaming services and now apps. So that’s just a constant thing. I can only imagine what AI is going to propagate.
Joe Coldebella:
And you know what, at least for me, it’s subtle, right?
Kevin Morgan:
It is.
Joe Coldebella:
I’ve been traveling for the last three weeks, and it’s amazing how convenient the world is.
Kevin Morgan:
The world is flat.
Joe Coldebella:
Right. But if there’s a little hiccup, people complain. It’s like they have no idea of all the processes that go on behind the scenes. And so they get upset if something isn’t perfect. And it’s like you said 15, 20 years ago when DSL was fast and now it’s like people would shake their fists at you.
Kevin Morgan:
Yeah. Just can’t work.
Joe Coldebella:
What’s some of the feedback that you’re getting from your membership in terms of the next 6, 8, and 12 months, what are some of the things that they want to do as a provider, or want the organization to do?
Kevin Morgan:
So in the membership, we have different levels of members. Our premium members are the ones who drive a lot of the agenda items. We have a premium member meeting every year at the end of the year in December in which we poll the members. What are your top issues? What are the things that you’re concerned about? And what can we do as an association to help you, either advocate policies or set up programs to be able to accommodate your needs? In the last few years, it’s been about the workforce. We saw this coming. It was a mountain, not a molehill.
So we knew that this was going to be an issue. We created this workforce development committee and a lot of effort. I could see this year probably a lot more talk about permitting. Labor shortages and lack of skilled labor are still there. We’re trying to address that in the best way possible, but I think there are still some other issues that our members are going to drag us into.
Joe Coldebella:
A few years ago, the two big things were the workforce and supply chain. Obviously, it’s not perfect and there are holes. But just the last few months, I haven’t really heard people up in arms and screaming. So it seems as though everyone’s sort of addressed the issues, which is kind of good.
Kevin Morgan:
So there’s been a lot of behaviors that have been happening in the industry over the past 12 months. If you go to a year ago, everybody was just guns blazing and ordering everything they could as fast as they could and over-ordering. And with that, there’s a limit in terms of how much of that equipment can be installed in a particular time period. And that’s the function of how much labor you have. So the ability to keep up in terms of supply shortages, I think we’re over that now as an industry. Everybody’s got back down to their normal lead times, whatever they’re happy with.
But the issue of lack of labor is still there. It’s compounded because you’ve got a workforce in the telecom market, telecommunications equipment market that is aging. And some of the experienced folks are retiring. So it creates a void, and you still don’t have enough workers. So I was talking to someone in another industry adjacent to ours in the wireless industry, tower companies and things like that have crews that are kind of idle because a lot of the expected build-out in that industry is not happening.
Joe Coldebella:
Oh, really?
Kevin Morgan:
Yeah. Not as fast as they thought. And so it’d be a great time for them to jump into our industry and help us.
Joe Coldebella:
Sure. And I don’t know if the association will work on this or if it’s internal within organizations. But, obviously, folks are going to retire. But it almost seems like people become semi-retired because they’ve got so much knowledge, and you don’t want to lose that knowledge. So is there some way or some program that could be created where you could use them almost as an angel on your shoulder?
Kevin Morgan:
Yeah, for years the telcos have had this thing called a pioneer program. I don’t know if you’re familiar with that.
Joe Coldebella:
I’m not. No.
Kevin Morgan:
So this is exactly what you’re talking about. People who have retired become telephone pioneers, and then that’s knowledge you can tap into. It’s meant internally, I guess, within the telcos. But we need to have the same thing in the fiber industry.
Joe Coldebella:
That’s awesome. Hey, just a couple more things. I would love to talk a little bit about Clearfield, and then we can go from there. Obviously, you’re the CMO. What’s the thing or the point of difference in terms of what Clearfield does?
Kevin Morgan:
Yeah. Clearfield has been around since 2008, and our focus is on fiber connectivity, fiber management, and fiber delivery. I want to talk about that. That essentially means in the outside plan, an optical distribution network. We make devices that terminate the fibers, whether they’re fiber distribution hub cabinets or terminate the feeder fibers with large count fibers that get broken down to distribution fibers. Ultimately, we make terminals and fiber drop cables that go to individual users’ homes or businesses. So everything we do is about reducing the barriers to deployment. And the way we think about it is, how can we implement something in a product that requires less skilled labor, improves the connection time, and improves reliability? Those are the three things that kind of drive everything we do.
Joe Coldebella:
Sure.
Kevin Morgan:
So today at our Fiber Connect Conference, we announced a new product that we’ve been shipping in our fiber jumpers and fiber cables since March. And it’s a very novel concept, but there’s an issue in the industry that technicians routinely when they’re connecting up homes or even connecting the network, they have the opportunity to connect it right or wrong. And with this new workforce, many times they go around and try to cut corners.
What we’ve done is come out with a ClearPass Dust Cap that is shipped along with all of our jumpers and fiber cables. It’s designed to be easy to use just to peel off the foil and clean the connectors so that you can remove the dust, particles, and film to make sure you have a good clean connection. It’s a 92% first-pass yield. And there are other products on the market that do this. You know, cleaning sticks and different kinds of things. However, if a technician doesn’t have it or it’s not convenient, it may not happen. And if that happens, the cost of plugging in a dirty connector is one in which it creates a latent defect. You may be able to pass light initially, but it’s not going to meet spec. And then you have to go out with a truck roll to fix it.
Joe Coldebella:
So as a civilian, the first time I heard that I was dumbfounded, like really dust could be that big of a deal? People don’t understand just a little thing like that could mean so much.
Kevin Morgan:
Right. Actually, it’s even more of a latent defect because one of the big things about building the fiber network is that once you have the fiber in place, in order to take advantage of the newer technologies, like going from GPON, which is a one gig technology, let’s say it took 10 gigs symmetrically, all you have to do is change out the endpoints on electronics. Ultimately, a couple of three years from now, we’re going to be going into 50 gigs symmetric. Well, if you’ve got issues that are built into the network and they don’t come out until you get to the higher data rates, you’re going to be screwed. So you need to do it right the first time.
Joe Coldebella:
Sure. Okay. And then you guys primarily focus on tier two and tier three?
Kevin Morgan:
So we fortunately have a customer base of about a thousand customers, and our biggest portion is community broadband, tier three, independent local exchange carriers as well as municipalities, rural electric co-ops, and utilities. So that’s our community Broadband space. Usually, makes up more than half of our revenues. And then we have the MSO cable. MSO has become very relevant for us. And when I say cable MSO, you probably think of the Big Three, Charter, Comcast, and Cox.
The smaller the cable MSO, the more likely it is they’ve made the transition or are making the transition to all-fiber networks. So folks like Blue Ridge, Shentel, and Midcontinent (MIDCO), they’re big customers of ours. And they just decided a few years ago to go all out and go all fiber. Ultimately, that’ll happen at the larger national carriers as well, but-
Joe Coldebella:
I live in a metropolitan area with a massive population, and high population density, and everyone’s on cable. So my question to you is, will there possibly be a time when the smaller areas sort of pass the larger communities just because they almost jumped the line?
Kevin Morgan:
We are actually seeing a shift in the forecasts for our products in terms of homes passed and homes connected. The shift is happening this year and next year. You total up the total number of homes passed by the tier ones, that used to drive the industry. Right? It used to be the bellwether, But if you total up that tier-one space about how much is driving the industry versus community broadband, now we’re on par and actually passing because these are the areas that are growing the fastest. So this is a market shift where the smaller the company, the more likely the aggregate is driving fiber deployment. What’s happening now?
Joe Coldebella:
Is it because they’re more agile?
Kevin Morgan:
Just in aggregate, that’s the areas that need the most. So the big guys have already deployed where they want to go, and they add on as needed. But now the actual growth is happening at tier two and below levels.
Joe Coldebella:
Awesome. Kevin, I always enjoy talking to you and learning so much. I really appreciate your time. If folks want to learn a little bit more about Clearfield, where can they go?
Kevin Morgan:
Yeah, please visit our website seeclearfield.com. That’s S-E-E, clearfield.com.
Joe Coldebella:
Awesome. All right, well that’s going to wrap up this episode of the Broadband Bunch. Until next time, we’ll see you guys later.
