Pete Pizzutillo: Hello and welcome to another episode of The Broadband Bunch. Today we have the opportunity to speak with Dave Spencer, the CEO of NoaNet. He’s joined by Claire Ward, marketing and communications manager. They tell us more about the origins of NoaNet in the early days of open access networks. We spent some time talking about the current state of open access networks, the regulations, technology and consumer expectations that are driving wholesalers and retailers to provide broadband to the state of Washington.
Before we dig in a little bit about open access and NoaNet and what your perspectives on what’s going on in the market, it would be great just to give our listeners a background understanding of each of your personal journeys to how you ended up with NoaNet today. So Dave, I don’t know if you want to start. I think you’ve been there the longest.
Dave Spencer: I was part of the founding group back in 2000. I was doing consulting services to the mid-Columbia public utility districts and they had a vision to bridge the digital divide in their communities. They were being bypassed and I helped on the original business plan and then came over to NoaNet. And founded it back in 2000.
Claire Ward: My story is quite a bit shorter than Dave’s. I joined about five years ago and I’m actually a telecom transplant. I have my background in mental health, which we kind of joke, that’s why they hired me to kind of bring some sense to it. But no, I actually get to work on the community outreach team, which is wonderful. And we help educate communities on the ways that telecom can help them meet their goals for economic development and social goals and all kinds of things. It’s a wonderful group to be a part of.
Dave Spencer: NoaNet back in 2000 was created to bring broadband to communities that were being bypassed by the dot com boom. If you recall back and late 90s and early 2000s, the internet was booming and businesses were forming and this idea of electronic commerce was just being launched. And back then the public utility districts, which are non-profit locally controlled utility companies realize that their communities are getting bypassed. And so they banded together under one leader, Greg Marnie, the original CEO, and created NoaNet to help bridge that digital divide and bring broadband to these rural areas.
Claire Ward: NoaNet’s mission has always been to bring broadband to the rural areas. It’s been a bit of a moving target because the definition of broadband keeps changing. The technologies that are available keep changing. So that’s something that NoaNet has really strived to stay on the front end of, to make sure that we’re not just bringing the definition of broadband 10 years ago to these rural areas. We want to make sure that the rural areas have access to the same technologies and bandwidth that the urban areas have access to.
Dave Spencer: There was a real concern back then that local talent and the local economies would die on the vine, if you will, without broadband and what that represented. And there was a strong desire on the part of these communities to bring the best in healthcare, education, public safety and local economic development to these communities that looking into the future, we’re going to be suffering as a result. And back then of course it was extremely real for these communities. And fast forward in today still is in a lot of ways.
Pete Pizzutillo: That’s interesting because we talk to folks today, economic development professionals in different municipalities and there’s still in some areas that disconnect between how broadband could support not just the technology maturity of the region, but all the underlying industries that you mentioned. From healthcare, to education, to manufacturing, to telecommuting. So what was it in the NoaNet’s or that community’s DNA that you think helped them recognize that early versus the majority of the municipalities that are out there are still just starting to come to that realization today?
Dave Spencer: Back then there were a utility companies that were forward looking in terms of broadband for their own utility operations and many of these real time controls, well what they call SCADA relay work for electrical distribution systems. So there was an inherent need for advancement in technology back in 2000.And then with the challenging business plans of the private sector coming into these areas that there was talk about, well there’s not really the demand that. It’s hard to justify the return on capital and with utility companies already there with capital available could that be a way to leverage improvements to the utilities system to then serve that community with that excess capacity?
Pete Pizzutillo: So the utilities already looking at fiber to help them improve the efficiencies and bring some capabilities there. But then also marrying that up with the private concerns to figure out more holistically how everybody can benefit more greatly from this investment, we’re still seeing that today. It’s just taking some folks a while to get there. But there’s a lot of models that you guys could have employed to service those constituents, right. I mean, so in your state is a little bit different. There’s a couple of states where they have the same kind of legislative requirements. Has that been true since 2000 that you cannot provide to retail, not can be a retail provider or is that something that’s happened? What was the choice that the way NoaNet was formed, was it a consequence of the legal regulations or was that a business operation model that you guys thought was the proper way to go?
Dave Spencer: Well, back when we were formed, there were no laws restricting PDs from providing retail broadband and there were … As the momentum grew to have PDs developing local broadband systems, there was push back from the private sector on the utilities get involved in that. They hadn’t previously had authority to do that, but they had taken the excess capacity model. It seemed logical that they had helped these communities help themselves. And as a result Washington enacted a law that expressly prohibited public utility districts from providing retail telecommunications and that although they could build infrastructure. They had to offer it, if you will, to the carriers and the incumbents in order to serve the end user and provide the billing services. And hopefully and potentially their own capitalization of add on networks.
Dave Spencer: In terms of open access, we felt that the networks in order to survive had to be open access, but maybe more importantly that with the cost and often the prohibitive cost of deploying advanced telecommunication in unserved and underserved areas. That in order for the best use of that capital, the networks needed to be open to any retail provider that would want to provide service and not just local service for businesses, but regional services such as education, healthcare, public safety. That could utilize the networks but sell to a much larger, a much broader customer base.
Claire Ward: We have sightlines all across the state. We’re getting pulses and stories about what’s happening, which really allows us to think in a regional manner rather than community by community. Then I think what builds on top of that is actually the way that NoaNet that has organized it’s staff, and I think it’s unique. We have our network operations center located in Spokane, but a solid half of our staff works remotely, which actually allows us to live and work in these rural communities that we’re trying to get access to.
So when we’re talking about the economic benefits of broadband networks, this isn’t an abstract idea to us. This is something that we’re living day in and day out that jobs are … We are allowed to live and work and do the jobs that we love in communities that otherwise we would not be able to do those jobs in because of broadband. So I love that story. I love that it’s not something that’s removed from us. We’re not sitting in an office in Seattle thinking about how to solve rural broadband issues. We know deeply what it’s like when our internet doesn’t work at home.
Pete Pizzutillo: That’s good, you’re in the communities that you’re serving. And it gives you access to skills outside of the regional area that you may be, your infrastructure operations may be stood up, which is great. How do you see that helping the folks that you’re serving?
Claire Ward: I think it gives us a level of street cred. We’re not an outsider coming in. We live and work in the communities that we’re trying to serve.
Dave Spencer: Well when we founded NoaNet, we were looking at all the advanced services. Advanced internet protocol networks, carrier grade, ethernet. Yet, what we were selling in the first few years was traditional inner exchange telephone traffic, what we call TDM in the industry. And it was 80% of what we sold. I think coming into the market as a new player, there were a lot of the incumbents that needed interconnections between their very basic serving areas and so we filled an immediate need for that. Yet over time we’ve been involved in the formation of data centers in Central Washington. We’ve been part of the education revolution going from T1s to what back then, what 10 Meg and it which just seemed like all the bandwidth in the world till now. We’re into a 10 gig capabilities to schools and universities.
And so over time what NoaNet has been has changed as the market has changed. And now there’s a lot of talk about 5G and 5G come into rural areas is this still a bit of a challenge. Yeah, we are installing 5G in some of our more populous areas as the carriers roll that out. I will say that we were instrumental in bringing the 4G LTE to a number of rural areas back some years ago. And now 5G we don’t see any difference there that we’re positioned to do that. Yet, it will take some time for the capitalization of 5G networks into our serving areas.
Claire Ward: In the five years that I’ve been with NoaNet there has been a tremendous shift in the way that communities are thinking about broadband. I mean five years ago it was sort of a radical idea to call broadband a utility and I think that, that’s not shocking anymore. You really can’t live and work in a productive way if you don’t have broadband access. So being able to talk to public utilities and examine what that might look like for them to step into that is not as radical as it once was.
What we’re seeing is these rural communities are getting outcry from the people who live and work there and they’re going to their public meetings. They’re talking to their commissioners and their public utilities and their counties and their city governments. And they’re saying there’s this problem and we need you to help solve it. So NoaNet has been able to leverage everything that we’ve learned over the 20 years of serving Washington state. And formed the community broadband solutions program, which is really a way that we’re able to take our engineering teams and construction management teams and community outreach and marketing staff and go in and help formulate a unique answer to each community’s broadband problem. And work alongside them to understand what we can do to get them where they need to be.
Dave Spencer: I would add that we are offering 24 by 7 network operation center services. Once these networks get built. So the communities don’t have to stand up there on 24 by 7 network operation center that we can provide their monitoring, restoration services, call taking from providers and customers. Once they have the network up and running. So it really is community broadband solutions is a full life cycle of what it takes to stand up a community broadband network.
Pete Pizzutillo: I think there’s a lot of folks that we see in the marketplace, in the ecosystem looking for help. So bringing your expertise and experience is greatly needed. Dave, I do want to go back to something that you mentioned before when we were talking about the origins of NoaNet and looking at kind of at the DNA level and then the realization that whatever you built in 2000 needed to be open and that sharing resources and infrastructure, regionalizing that that whole approach to really help folks make sustainable systems that benefited from economies of scale. Evolved into what I guess is defined as an open access methodology today.
Pete Pizzutillo: here area couple of flavors of open access that we see both in the U.S. and Europe and I was wondering if you had a view on how you define open access and what you think … How do you think that’s going to evolve in the next few years if there’s a growing potential and what’s driving that potential?
Dave Spencer: For us, open access has been building and capitalizing infrastructure that can be utilized by any retail service provider that is interested in providing broadband access into a community. And that generally means that as a wholesaler, NoaNet has had to adapt and respond to the market needs. The idea of solving the rural broadband problem is very real to us. The state recently passed broadband legislation to move forward to get in services out to the citizens of the state and it’s basically a 10 year plan. Well, if that’s going to be real, then it’s all hands on deck. Whatever capital gets invested in rural areas needs to be open for others to use because the problem is so huge that funding a proprietary network that can’t be used by other means that there would need to be overbuilding going on. And there’s just flat, not enough capital for that.
From our perspective as we’re getting revenue from the private sector and re-investing as a nonprofit ourselves, which we are, into these networks. That we want our capital to go to areas that have not been served with high capacity service and we will buy from others that operate open access networks. So we don’t overbuild them and help them with their own business plan.
Pete Pizzutillo: What about outside of Washington? In states like Washington where there is no limitations to serving them retail or providing retail services. And you mentioned that, what I’m seeing is there’s a big rush to overbuild and not to say that there aren’t existing gaps in digital divide still, but the areas that are highly profitable. There are folks from satellites to non-traditional players to regional educational networks to municipalities, to tier one players. There’s a lot of potential overbuild that’s happening and looking back and kind of learning lessons from other industries, it just doesn’t seem sustainable. It doesn’t seem like we’re building sustainable systems. We may get the services in the short term. So the state’s unlike Washington where there’s a little less forced coordination, I would say. What your thoughts on how that’s going to play out and any recommendations to those municipalities?
Dave Spencer: Well, I think for municipalities they’re taking the long-term view that this isn’t a three to five-year capitalization-built footprint and slip, which is often what the private sector model is. That these communities are taking responsibility for the broadband utility, much like they did with bringing electricity to these areas that were being bypassed by the private sector. For the same reasons that it’s a tough business case. And so if you look at how these communities are going to help themselves, it is by taking a long-term view. It is by coordinating closely with their private sector providers, with the public safety networks, with the education networks. That this is very much a collaborative model to get the job done and all power to the public sector in areas where there is an incredible demand and high density and they can compete utilizing their own proprietary infrastructure. That’s not saying that that model isn’t working in urban areas. Yet for rural areas, it truly is all hands on deck and very much in our opinion needs to be a collaborative environment.
Claire Ward: If someone in a different state is looking for how to solve this issue, I would just suggest keeping a very open mind and doing lots and lots of research. There are so many models of how people have solved rural broadband both in the United States and overseas. Europe, open access is a given and there’s some really interesting ways that that has played out. So I would just suggest that folks, yeah, not have a total vision of what it’s going to look like at the end when they step into it. To really go in with an open mind and learn from the many different avenues folks have taken to try, and solve this very complex problem.
Claire Ward: Well, we’re just seeing an absolute spike in the bandwidth that people are using in their homes and businesses. And I’m going to echo what Dave said about rural electrification. If the electrical grid had been built to support two light bulbs per home, there wouldn’t be vacuum cleaners right. There certainly wouldn’t be computers.
If we have limited ourselves to what we thought was acceptable at the time, it would have really, really handicapped us for the future. So I think that we’re going to do our very best to make sure that there’s way more bandwidth and way more available to end users than they need at any given time. So that innovation can exist. Now that means making sure that the last mile is built well, right? They actual drop to the house, which I would call true open access. Would be that there’s many service providers all the way to the end users ONT on their home or business.
But if that’s not the case, making sure that that last mile is being managed by an internet service provider who has the same ideas, right? To make sure that they’re looking to get the very best service as possible. That are above and beyond what the end user needs at that given time. But for our middle mile, I mean that’s business as usual for NoaNet. Just making sure that we’re on the very front end of every technology we can get ahold of. To make sure that we remove that barrier for ISPs, if the backbone can be really, really strong, that is one less hurdle that they have to get over to get the best service as possible to the end users.
Pete Pizzutillo: Dave, what about from a technology perspective? We mentioned that 5G may or may not be economically feasible or at least not in a short term available to some of the more rural communities, but the expectations of smart homes and smart cities, tele-health. Those are kind of more primary expectations. Do you think the partners that you have are going to be able to or aren’t going to be able to deliver on those expectations to the business and the consumers that are looking for them? Given the technologies that you know other than 5G that you guys are providing today.
Dave Spencer: I very much think that the partners, our customers, our stakeholders in terms of the public utility districts. The rise of communities getting involved. The state funding broadband initiatives, the federal government funding broadband initiatives that collectively the answer is yes. We can bring this technology to the rural areas. And I say that because we’ve done that for 20 years. I don’t see a model where we wouldn’t continue to be successful. Some examples of that I mentioned earlier is 4G LTE. I mean that was a technology that was in the urban areas but were not in rural areas. Yet between our private sector customers, the cell carriers and their desire to move into these areas to expand their coverage and their willingness to fund at least in part some of the capital necessary. That NoaNet provided its own financing to expand footprint. And often the local providers provided some kind of capitalization and financing.
So, between the three of us we’re able to get the job done. Now if you add maybe grant funding or loan funding, ways that the government can participate, that’s yet another source of capital to fund these. Would amount to be very expensive networks. Yet once that infrastructure is in place, then these communities can be served for 40 50 years.
Dave Spencer: One of the important things for me is to realize that traditionally the rural areas have been high cost areas – that its broadband’s been very expensive. And with the ubiquity, certainly in part because of NoaNet, and our public utility district owners as well as the communities, the broadband has been made affordable and more available. And as we talked earlier, the capacities of have increased as a result and so it does level the playing field for telecommuters, for people that want to move back maybe to their hometowns and start businesses. It enables a more of a level economic playing field as we move forward.
Claire Ward: I just want to reiterate that there is no aspect of life that broadband access doesn’t touch today. I heard a great story last week about someone who had to drive eight hours each direction in order to buy cattle. When if they had had sufficient broadband access, it was available for them to hop on there and telecommute to this cattle auction to buy cows. Now it’s just not something I would have ever thought of before, but this directly translates to how expensive beef will be in our area, right.
I mean, there’s literally nothing that broadband access doesn’t touch. So it’s beyond making sure that everyone has access to the things that we have heard many times, right. That they need access to health care and education and public safety issues. Those are so important and we know that they’re so important, but what about the farmer who needs to be able to run his business efficiently. And how that translates into our life.
It’s just everywhere.
Pete Pizzutillo: I totally agree. And that comes back to my point about the consumer and the business expectations. I think outside of what is possible locally, we’re getting more and more savvy as individuals and as buyers. So that expectation, maybe if you want to buy your cows on Amazon, I’m sure that’ll happen eventually. Right? So the challenge for you all is that you’re going to have to figure out how to get those things. How to meet those expectations with the systems, the technology, the regulations, the funding that’s available. Right. And that’s always been the disconnect. And we’re visiting here today with Dave Spencer and Claire Ward from NoaNet. They’ve been sharing the origins of this very interesting company. That started back from the 2000s to help provide the state of Washington rural areas and the public utilities with broadband.
And they’ve been sharing the vision of what the state of it looks like today and where we’ll be heading. There’s a lot of challenges out there, but it sounds like it’s in the DNA of folks like NoaNet and their partners to figure out ways to make the technology and to make the funding and affordability available to people that need it. And people that need it to do their homework, to run their businesses, to run their families. So thank you for your time, Dave and Claire. It was really interesting to learn more about the mission that you all are on and it’s a pretty important mission. And I invite any other municipalities or utilities that are out there looking for ways to get started. To reach out to Dave and Claire as well as to go to NoaNet’s website. They have a lot of resources around building the broadband communities and the case for economic development and some of the other information that you need to get your journey started. So thank you Dave. Claire appreciate it.
NoaNet was formed by several Public Utility Districts (PUDs) in Washington in 2000 with the mission to bring high-speed telecommunication services to unserved and underserved communities for utility uses and use by their constituents.
NoaNet operates a fiber network totaling more than 3,300 fiber miles throughout Washington State, connecting the local PUDs anchor institutions, and other independent communications networks to each other and to the major carrier connection points in Seattle and Spokane. This network touches all of the counties in the state and connects hundreds of communities and businesses, many of whom have never before had access to advanced telecommunication services.
Learn more here: https://noanet.net/