In this episode of The Broadband Bunch, we are live from the 25th Annual Joint Conference of the Kentucky Telecom Association and Tennessee Broadband Association. We had the pleasure of speaking with the following industry leaders:
Shawn Arner: RUS was originally started as Rural Electrification Administration in 1935. It’s was a New Deal Program under the Roosevelt administration; its original mission was to provide electric service in rural areas. Then we were given the authority to provide telephone service. So, we’ve been making telephone loans in rural areas since 1949. Our mission morphed in 1995, when we changed to the Rural Utility Service, at that time we also had RUS main mission turned into more of a broadband financing type of a program, and we required all the facilities that we financed to be capable of providing broadband service in rural areas.
We have several products that we do offer to help in this process. We have two loan program, we also have two grant programs, and then finally we have a pilot program called the ReConnect Program, it’s offering $600 million in loans, grants and loan grant combos to provide broadband service in rural areas as well. Each of those programs, are very similar in certain ways, but they also do different things, so, those are our flavor of programs.
When we talk about providing broadband in rural areas, recognize that our agency, we’re not the ones that are providing the broadband service. The ones providing the broadband services are the ones that are really out in rural America, telephone utilities, cable TV companies, wireless entities, even electric co-ops, providing that are interested in providing broadband service in rural areas. We are a funding arm; we provide low interest rate loans and grants.
Craig Corbin: You’re talking about grants and loans for the past nine years, better than $6 billion to build out broadband, has been distributed, that is a phenomenal amount, and obviously already having made a big impact.
Shawn Arner: Indeed. When you think about it on a year to year basis, and then what has been done since 2010, I’m proud to work for this agency. Once again, it’s a public-private partnership. Everybody is very interested in getting a grant, but when you’re talking about loans, we have a responsibility, our mission is obviously to be the funding mechanism for entities, by broadband in rural areas, but we also have the taxpayer funds that we have to consider as well. We’re not just giving away money when we’re making a loan, we have to do a credit decision, we have to make sure that these entities can actually pay the loan back because we have a duty to be good stewards of the taxpayer money.
Craig Corbin: While there are many programs that are specific to a particular fiscal year, there are also programs I understand that would be called no-year money, that could roll over into a future fiscal year if they are not allocated in a particular year.
Shawn Arner: That’s exactly right. We have several programs that are no-year funds, meaning just like you said, if they are not utilized in a fiscal year, they can roll over and be utilized in that next fiscal year. We only have one program right now under RUS that is tied to a specific fiscal year, and that’s our Infrastructure Program. So if we don’t utilize all those funds, those funds do go away, and we have to get new appropriations from congress. But there are other programs, if they’re underutilizing, they usually are almost always used up. But in some cases, if they’re not, they can roll over to the next fiscal year to be used.
Craig Corbin: You mentioned the Infrastructure Program, as I remember, nearly $700 million available annually, with a two year principal deferral on that. And the beauty of the loan maturity is that, it is the life of the facilities that would be built plus three years, and on average it could be 16 to 20 years.
Shawn Arner: Exactly. It’s tied to the facilities that we are financing, the economic life of the facilities that we’re financing. So, if you’re getting into a cable, very cable intensive project that the cable facilities would obviously last a lot longer than some of the more electronic facilities, then it’s going to give you a longer loan term, so it can give you… and so those generally can be up to 22 years.
Shawn Arner: The Rural Broadband Access Loan Program is different than our traditional program that has been around since 1949. That program opened things up to allow us to finance many different types of entities, whereas the other program was specifically meant for rural local exchange carriers or rural telephone companies, and those are the ones that could qualify under this program. Under the Broadband Loan Program, different entities can apply, and specifically for providing broadband service in rural areas.
Craig Corbin: I understand there are bandwidth requirements for each of these programs as far as upstream, downstream, and those can vary at various parts of the program.
Shawn Arner: Yes, it can, and it depends on how those programs were set up by statute. And we do have some flexibility on changing those as we move forward in time, changing these build out and qualification requirements. Currently, under the Broadband Loan Program, what’s the definition of broadband service is considered to be 25 megabits per second down, and three megabits per second up, and that’s the minimum requirement if someone needs to be able to qualify for that program. In many cases, entities build out way much higher capacities than that.
The majority of projects that we see financed, are fiber at home projects, and obviously they have a lot higher capacity than just 25/3, but that’s the 25/3 is the minimum requirement for that particular program. Some of our other programs have a little bit lower requirement, a 10/1 requirement for eligibility purposes, but we still have that 25/1 build out requirement. And in some cases, we also try to feature proof networks by tying our build out requirements to the loan term, so that if you get a longer term loan, a longer payback period, we would have an actual higher build out requirement that you would have to meet to get that longer term loan.
Shawn Arner: The Distance Learning Telemedicine Grant Program is another program, it’s not strictly a Broadband Grant Program, but you need to have broadband normally to be able to run that program effectively from a provider standpoint. The Distance Learning Telemedicine Grant Program provides connections between schools in different places, maybe a university and a school on different places, or on the telemedicine side it can connect an urban hospital to a rural clinic. Being able to provide that remote diagnosis, so that folks don’t have to travel long, hundreds and hundreds of miles to go to that specialist. They can go to the rural clinic, and able to get that remote diagnosis locally.
Craig Corbin: And that is something that is making a direct impact on families all across the country, and it’s something that we obviously hope to see expand as we go forward. Community Connect, another area of great interest. These with grant funds for broadband service deployment, and one of the key requirements there is, they must provide a community center, and there is a competitive scoring when it comes to the applications.
Shawn Arner: In the competitive scoring process, usually on all our grant programs, since it’s not a credit decision to where we were talking about payback, how we run it is we have several different scoring criteria, that we can prioritize those grants on what we think is important to getting service out in rural areas. Generally what that means is we open up a funding window, we described several different scoring components, the applicants have to address those scoring components, we then score those applications based on what they provided, we rank them from top to bottom, and then we dole out the money, dole out the awards until all the funding that we have is gone.
Now, with respect to the Community Center, on its requirement under the Community Connect Grant Program, which is our Broadband Grant Program. The reason that’s in there is that, we want them to establish a Community Center that people can access broadband, maybe they don’t have a device or maybe they don’t have a computer at home, but enables the public that don’t have access to those types of things to be able to go somewhere, and utilize an internet connection that they wouldn’t necessarily have access to otherwise.
Hilda Legg: I think this year we have 40 million plus to put in distance learning telemedicine. And the applicant of the delivery of the service, if it’s educating people, that it has to be the education institution, and if it is a medical, that has to be in the medical institution with the exception of either your rule or electric cooperatives can apply. And what you do is simply you come in for up to a maximum of a half a million-dollar grant, and that grant is used to buy equipment. You can take a hospital that can have rural clinics and connect them, you take a rural hospital and you connect it to the Cleveland Clinic or the Mayo Clinic. You can take hospitals, and you can put in home health services where you have deployed broadband from. Our rural demographics is aging, and need more care, even checking blood pressure daily – all those kinds are possible over technology.
Craig Corbin: Another aspect of that particular program is the required 15% matching funds for participation. Is that right?
Shawn Arner: Yes. It’s like getting a little bit of skin in the game from the applicants, so we’re providing up to $3 million in grant funds under that particular program, but there is a 15% matching fund requirement by the applicant, that they have to match 15% of the grant award that would be awarded to them for the purposes of either build out, or their operation of their system, things of that nature.
Craig Corbin: I know that in fiscal year 2019, there was $33 million available, but you had 62 applications that were processed looking for a total of $100.1 million. So at this point I know that there is perhaps more interest than there is funding available, but that’s a good thing though.
Shawn Arner: That’s true, and that’s why we have these scoring criteria, so that we can have a way to evaluate those applications, and award the amount of funds that we do in fact have.
Craig Corbin: All right, to this point I believe that 12 grants had been approved, totaling $24.3 million with additional applications under consideration, pending environmental clearance issues.
Shawn Arner: One of the requirements that we have as part of a lending agency, or a granting agency, is that we have to make sure that all the environmental requirements are cleared. They have to look at the historic preservation, they have to look at threatening and endangered species. And we’re not allowed to actually make an award until those things have been addressed, very important for the environment historic. So, in these cases, not all of those clearance had been completed yet, it doesn’t mean there’s anything wrong with those projects, it’s if sometimes it can be intensive. But luckily another program, as I mentioned before, it is a No-year Funding Program, so those funding that weren’t able to be a made at the end of fiscal year 2019, which ended September 30th, they’re just going to roll over into fiscal year 2020, which we are currently in now. So once those environmental clearances do occur, and they hopefully will occur very soon, then I’m going to be able to finish up and complete those awards, therefore funding that we received in 2019.
Craig Corbin: One of the most anticipated things is the announcement of the awards, during your keynote with the group this morning when you wanted to make sure that everybody was awake, you said, “Yeah, and I’m here today to make some announcements,” and that got everybody’s attention very quickly, that is not done all at once, and they spread out.
Shawn Arner: They can be done at once sometimes, but sometimes we want to spread them out as well, and it’s a balancing act. We would like to be able to come to an overall completion on awarding these projects. But sometimes it’s not possible, we get so many applications, it’s not possible to do them all at once. So, in some cases what we’ll do is as we make awards, then we’ll make those funding announcements. So what we’re anticipating over the next couple of months, especially under our ReConnect Program, which gives us $600 million, which is for the authority for loans and grants, we’re going to expect in the next couple of months to make those award announcements in waves. So we haven’t made any announcements yet, but I fully expect we’re going to be doing those announcements soon.
Craig Corbin: You mentioned ReConnect Program, and that is a combination of 100% loan products and 50/50 loan grant products, as well as 100% grant products, talk about that variety of programs.
Shawn Arner: This is a pilot program, so we’re trying some different things here. So for example, on the loan program, it is a 100% loan that we’re offering at a flat 2% interest rate, which is a little bit different from our other loan programs. Whereas the interest rate is tied at the time of advanced, and usually it’s at the treasury rate, at which is still a pretty good rate, but 2% is even better. Under our loan and grant combo program, half the award would be grant funds, and the other half would be for loan funds, those loan funds would be actually at the treasury rate. And then of course, under the 100% grant product, it’s 100% grant, but there is a matching fund component as well.
For all these programs there is going to be reporting requirements, because we want to evaluate the success of these programs to making sure that they are being successful in getting out the broadband service in rural America, which is required, what our mission is.
Hilda Legg: We are getting ready to announce the first awardee, if you will, for $600 million across the country. But those funds are either grant or loan dollars that are focused on rural communities, very small communities who have a very limited or no access to broadband. And therefore, the cost to build those networks in our rural communities, whether it is the Plains of Montana or the Mountains of Kentucky and West Virginia, all of those geographies offer a challenge, and the cost is much more than what local communities can even envision paying to build that network. So you really need the expertise of the telecommunication companies, in working with those local officials. But we’re very excited to have that 600 million, and I can’t wait to see how many projects Kentucky and Tennessee get.
You simply cannot grow local economies in rural communities if you do not have access to the global marketplace. And the way you get access to the global marketplace is through true high-speed broadband connectivity, reliable, affordable, always on, not intermittent, not spotty, that’s how you do business with your partners, and across the globe. So when you look at our small rural communities, to in order for them to compete in the global economy, they’ve got to figure out how to build a very costly, highly regulated, a volatile in terms of change of the dynamics of what technology you use and equipment, and they’ve got to figure out how to do that, and bring that to those rural communities. And it’s a Herculean lift for local elected officials, and their Economic Development Boards to figure out how to do that.
Craig Corbin: Especially when you talk about the amount of funding that is required to undertake projects like these. But when you look at the net result, the benefit that you addressed, the ability to better educate their constituents, to increase the likelihood that many of those constituents, after they have gotten their education in college, university in whatever forms, are willing to come back to their homes to help develop those areas. That’s something where broadband has a direct impact each and every day.
Hilda Legg: Each and every day. And to families. We used to think of economic development first. Of course, we first had the farm to market roads as the infrastructure, when electricity came in, that was another huge infrastructure deployment that then helped bring those rural communities into the new age. And now it’s simply broadband, I mean, there’s nothing that could make that significant impact.
We do economic development is different today, because we used to chase factories, and manufacturing is important, do not get me wrong, distribution centers, those kinds of things where you can get 200 people and 200 jobs, where is huge in our small rural communities. But in reality today, like Kelly Services, where there’s employment screening, they are doing all of their back office through remote employees, and are contracting with folks who are going to put 200 people to work in their home on their computer and phone every day. That is the new job, and millennials like it, young people that we’re trying to keep in our rural communities, they like doing business that way.
I’m old fashioned, I like my paper, and I like my face to face. But then we got to be looking at what the new ones want, and the young families want. We had this couple, and it was in another state, but we were doing a loan to build out broadband, and I love the example because they wanted to raise their family in this rural area, trees, scenic, all that sort of thing. And they were both lab techs, and so they had built a home with a lab in the lower level, and they were really sending all those DNA and blood analysis, but they really needed high-speed because that has this a lot of data that had to go up. But here you were able to have a young couple rise a family, they were both professionals, had a good living, it had to have real high-speed broadband. And they were able to do that because one of the telephone companies had built out a network. So those are more and more of the kinds of stories that we need to hear.
One of the things we’ve been focused on is employment of the wives of our military. Especially with the young families, wives have a very hard time finding jobs, because they’re not going to stay there, they’re going to move around. But you get them hooked up with someone who is looking at that back office. It doesn’t matter where you’re at, you have your computer, you have your phone line, you can do the same job for that employer anywhere in the world. So again, it’s changing the landscape of what we think about in terms of economic development and job creation. So that’s why we have to figure out how to help our local officials build that very expensive network in our rural communities.
Craig Corbin: It has to be extremely satisfying to you both personally and professionally, to see what is developing with this series of programs in particular. Of course, now, you have been such a wonderful public servant for a long, long time. And the current administration of course, renominated you in 2017, if memory serves, you’ve served for a number of administrations, George W. Bush, George H. W. Bush. Talk about the transition in thinking from the USDA’s standpoint over those administrations to the present.
Hilda Legg: Well, and just as a point of pride, I worked in the Ronald Reagan administration, I’m very proud of that. But I will tell you in George Herbert Walker Bush’s administration, when I was at the Appalachian Regional Commission, we had the first Telecommunications Summit, and it was actually in Knoxville, Tennessee during those ’90s, the early ’90s. And we began at that point to understand, yes, we need to be focused on economic development for the 13 Appalachian States, and so, yes, we need to figure out how to deal with this.
So in some way, I was there on the beginning when it comes to rural economic development, and the role telecom plays in it. And then I was fortunate when I came back from that administration, and went to the Center for Rural Development. And I like this story because at the center, we were focused on Kentucky, and it was 43 of the Appalachian counties, of the most rural. And we built a facility in Pulaski, which was on the edge of the Appalachian Mountains, and yet we were supposed to be an economic development driver for all of Eastern Kentucky. So how did we reach out? Well, the first thing that we did is, we realized we have to have connectivity, so we put a T1 line at that time. So this is the second half of the 90 decade, we would put a T1 line in all the community colleges, and in every community.
I had a call one night and said, “If you had a chunk of change, what would you do?” And I said, “I would wire Eastern Kentucky, we put connectivity in every county.” In Congressman, and Rogers was fortunate enough to negotiate that with us, and we got it. But when I went into our rural communities, and I went to the fiscal court or the city, and I would say, “We’re bringing you a T1 line, and we’re going to help fund a facility where there’s going to be public access to computers, and your people can come in and learn how to use it, and take classes, and we’re going to hook up the fire station in the hospital, the essential services, but we’re going to connect your community.”
At that time, Solid Waste Plans was a big thing, every County was having to develop, and I said, “So you don’t even have to leave home, we’ll connect all of you county judges in four or five areas, you all can talk about what you’re doing on your Solid Waste plan and you don’t have to drop.” That was the sales pitch that we went in on this. Well, I’ve got to tell you, Craig, they sometimes would look at me with like deer in the headlight because, they didn’t know what to do with the T1 line, they didn’t. This was, and I’m not being critical of them, they just didn’t have experience, and we didn’t walk around with cell phones everywhere and all over. And so they would rather had a load of good white gravel because they knew what to do with good white rock, they had demand for that, or asphalt or whatever. So that taught me something in that, many of our rural communities really weren’t able to even know how to take advantage of the connectivity.
I was fortunate then to go to George W’s administration, and run the Rural Utility Service, we got the 2002 Farm Bill, and in that farm bill, they had $10 million to stand up a grant program. I took my experience of building out to Eastern Kentucky, you can’t just build it, you also have to help your people understand how to use it. And if you look today, and we developed the Community Connect Program, and I really base most of that on my experience at The Center For Rural Development.
Hilda Legg: Mr. Arner, one of the points he made was, the farm bill codified Community Connect. You have no idea how gratifying that is for me, because it had been funded on just an annual basis. And now, the Farm Bill, they put it in as a regular appropriation. I’m saying we did something right, but the critical piece of that, even in today’s application that we’ve reduced how long you have to keep that Community Center or how large it used to be, you had to have 10 computers, and keep it open for a period of time. Now I think you only have to have three, and keep it over two years, but there is still that element that you’ve got to help educate local people.
The other thing I had made them do, and that was, you have to keep it open either some evenings or Saturday mornings. Working people, and I take women, working women who they can’t come to your center at three o’clock in the afternoon, they have a job. But if they want to launch their own business, or they are researching a health issue that their child has, and they don’t have computers, and they don’t have access, again, this was pre our phone days, they needed a place to go and figure out how to do that, and had to be open in a community friendly timeframe.
So lots of partnerships, I’ve had Community Centers that have been opened up in farmhouses that were renovated out on a Community Connect site, that some local farmer would just give them, and we had college students come in and man it. I had one with the first ones was a cinder block building, where people used to go get their commodity products, their cheese, walked in 10 beautiful computers, this grandmother said her granddaughter wants to come with her every time she comes to get her commodities because her granddaughter can get on there. And then the guy who ran the center, put in a lot of word processing, programming, teaching word and all of that.
We have to bring the education to the community, it’s the same way today. It’s about doing jobs electronically and globally, it’s about working as an independent employee of Amazon or Prom, but you work in your home, and then how do you adjust to that environment? But again, it all comes back to having that access, and so without that access, we can’t grow that new work force of this next century.
Tyler Campbell: I’ve been a part of the Kentucky Telecom Association for the past four years, and the conference continues to grow, we have almost 400 participants in the meeting throughout the week now. And so, you can see over the last couple of years, more vendors want to be involved, more members, general managers, members from all throughout the Commonwealth of Kentucky. So all the small providers have representation here, as well as, I think a number of the companies in Tennessee. So it’s a very well attended from both Tennessee and Kentucky, make it here to Bowling Green each year. I think our vendors who come and participate, they like to have those folks in the room that can make decisions, those people are found at this meeting. And so I think that that offers a return on investment for our vendors who come to Bowling Green each year.
Each year we send out a call for speakers, and we want to get back and see what folks in the industry think could be relevant to us. But each year there’s a few of us that sit down and discuss what kind of topics would our members be interested in, and I think each year we come up with a very informative agenda, this year is no exception. I think with all the discussion now about other ReConnect Program and e-Connectivity Program, we’re waiting to see what happens with this first round of funding there from RUS. So we had a couple of different topics, one, we had the deputy assistant administrator from RUS, with their loan origination program, come and talk about the RUS process, and those funding opportunities through RUS.
Tyler Campbell: Valerie Weimer from JSI, spoke about a broadband funding opportunities, whether it’s through auctions, grants, loans, so very timely topics to our members, and they consider future funding models, what this means for their business. And then also, there’s just industry specific issues that we know impact customers, that we hear about from our customers, and we had a presentation earlier this morning about, the quest in nuisance calling in about, what’s start shaking technology, being the first step in a process to try to help consumers as we …. Really this is always the number one complaint between the FCC, AMFTC. So what we hear from our customers, our members hear it from their customers. And so again, a very relevant topic is this is being discussed and played out right now, at the federal level. So even the small carriers, it’s an issue that we’re going to be dealing with over the next couple of years. And so, I think it’s just a great opportunity to have those topics addressed in such a timely manner, again we try to be relevant anytime we engage our members here.
From a provider standpoint, you’re in the situation now where you’re looking at all approaches, not just Universal Service Funds. Several breakout sessions talked how to get new revenue streams. What are ways that you can maximize revenue streams with your customers? Right now, in the mindset is we have to be looking beyond what we’ve done in the past, and look where we can find new sources of revenue within our customer base, are there solutions that we can offer that would bring new revenue to us? And so I really believe that.
And from a funding standpoint, our companies are looking at in all of the above approach in terms of … it’s not just traditional, okay, I’m a legacy carrier, I’ve always depended on this RUS fund. Now, again we’re looking, what does the market look for us in 10 years? What does this mean? The demand obviously is going to continue to grow. The market is dictating that with the number of customers that are wanting, increase speeds for video, bandwidth is going to continue to be an issue. And so this is going to continue to be something that our members are going to have to look at, where is the market five years from now, 10 years from now. And so, I think that the sources of revenue that they look at, again, they’re really looking at holistically, they’re really having to identify other sources of revenue that they may be able to use, and incorporate into their funding stream to apply to their business model.
Craig Corbin: To your point, about the video component of the product offerings, that is radically changing as we speak and will continue to do so. That requires just what you talked about, the ability to find other revenue streams.
Tyler Campbell: Right. You’re right, the demand is there and it’s more and more streaming services come online. You’re talking just 10 years ago it was Netflix, now you’re having broadcast networks are going to their own streaming service, Disney is getting ready to launch their program and their streaming service. So you’re going to see more and more broadcasters providers, and other groups that are going to be offering their own on demand or streaming services, it’s just going to increase demand even more.
Those consumers, whether you’re in rural America and urban America, when you want something, you want it, and you want it on your terms. And so I think that’s a reality that everybody’s facing, that demand is going to continue to grow. It’s only going to continue to grow and put more stress on the infrastructure, and maintenance needs of networks. And so funding is going to be all the more important over the next few years, it’s not only just expanding broadband access to where we may not have it, that’s the ultimate goal, you want to expand as much as you possibly can, and deploy advanced broadband. But also the reality is that, as demand increases, those requirements are going to increase stress on your network for maintenance, and what you need to do there.
Craig Corbin: I’m glad that you mentioned that because everybody talks about infrastructure from the standpoint of building new additions to the plant, but nobody wants to talk about the maintenance component. That is a huge variable when you talk about expanding the footprint to be able to get fiber to the home, to the premise and whatever format. Maintaining that plant is a huge issue one that your members must deal with.
Tyler Campbell: Something that we’ve talked about it at the federal level through the Universal Service Fund, and the conversation always comes back at some point, you’re going to have to address contributions at some level. It’s a topic that not a lot of people want to weight into because that means, okay, who are you bringing in that’s not currently paying into a Universal Service Funds? But at some point there will be a breaking point with the market because, the stretch on networks providers simply aren’t going to be able to meet the demand of customers, if contributions aren’t addressed in some manner in the future. Like I said, it’s not a sexy topic a lot of people like to bring up because you’re ultimately talking about, okay, somebody is going to be paying into the system that’s not currently paying, nobody wants to do that or likes bringing that up. But it’s just the reality that as demand for video, and then that growth continues for these streaming services, your customers are going to demand it, their customers are going to demand it. That creates more and more operational and maintenance needs on existing networks. So you’re all honestly going to have to continue to refresh and upgrade your current plant, not only talking about what you’re wanting to do in the future to expand access.
Tyler Campbell: I think the demand is still going to be there. I think, when you’re talking 5G, I think you’re going to see it obviously in more urban areas first, just because of the density is going to be there, larger providers are going to be able to use that density to be able to deploy. However, I think you’re going to still see the need in rural America for this. We always say that this concept with 5G, you’re still going to need fibers there to make all of this work, so fiber is still going to be important part of your infrastructure going forward. But when you’re talking about rural America, farmers need smart ag, it’s just like you’re talking smart cars using 5G in cities. Well, rural America, you’re going to need smart farm equipment, agriculture equipment, because it’s getting more tech technology-based in farming as well.
Agriculture is a huge business, especially in the Commonwealth of Kentucky, it’s a huge business that we have here in the Commonwealth. And so, I think that the demand is going to continue to be there for them to keep up, to be able to meet the demands of their customers in the market. 5G is going to play a role in how they … and technology is going to play a role in how they advance their products to the market quicker.
Craig Corbin: The Internet of Things, the sensors that will be utilized in the world of agriculture to tell what the moisture level is in the fields, to tell them how to approach the watering, that needs to go on in right down the line. It’s amazing when you look at the wide variety, and the scope of businesses that could be impacted with that approach.
Tyler Campbell: Our members will hear from their community, these co-op members who have farmers or have clients that they serve, the demand is going to be there even in rural America, it may be a little slower than in some places obviously than an urban areas, again, just for density issues. But I don’t think that that means the demand is not going to increase. Urban American, rural America are linked by the economy, rural America provides a lot of the food, they provide a lot of services, and they demand services as well. So there’s this dichotomy in America, urban versus rural, but their economies are intertwined, and so the demand is going to be there. So 5G is going to play a role, whether you’re in an urban area or a rural area.
It may be slower to trickle out to some of the rural areas, but again, smart ag is going to be the necessity for farmers in the future. And like I said, that demand is not going to go away as long as people need to eat, and need products from farms, I think you’re going to just continue to see that demand take place.
Levoy Knowles: We were the Tennessee Telecommunications Association. Our organization started back in the 1930s, and it started as a Tennessee Telephone Association. Then we changed our name in the mid ’90s to the Tennessee Telecommunications, and now we’ve changed our name again to the Tennessee Broadband Association, and it’s really to reflect the change of focus of our members on the services they provide.
Craig Corbin: You look at how broadband has become so front and center, and the growth of areas all across the country. But, one thing that I will say from the standpoint of a Tennessee being a leader, and the movement toward embracing broadband, it’s amazing when you compare what’s been done in Tennessee versus other States around the nation. It’s amazing, how much ahead of the curve, your organization was in knowing that broadband was going to be so vital for growth.
Levoy Knowles: We’ve worked along a long time, many years actually to try to get Broadband deployed in Tennessee, actually, we’ve made huge investments. Our members over the last three years, made over $250 million in their network upgrades, and 95% of that or more was for broadband. And that’s the name of the game now, it’s our focus. Some of the companies have been changing their names, to have broadband somewhere in their name, to reflect what’s really taking place. The next three years, our members have committed to spend over $400 million, in enhancing the broadband, that’s on top of the $1.56 billion network investment they already have, so we’re going to be over $2 billion in our investment of about 2022.
Craig Corbin: Talk about what you hear from the members in your organization as far as their level of satisfaction, with having made that move long ago.
Levoy Knowles: We refer to ourselves as the rural broadband experts, and we think that anyway. But we got more experience at building networks than anyone else in the state. And over the last two, three years, we’ve allowed, electric coops to get into the broadband business. And Tennessee is also a leader in partnerships with those other companies, we’ve got several members that are partnering with electric coops, we have other members that are partnering with CDs, and we’ve that are partnering with counties, and so we’ve got a really combination of several different types of partnerships.
We have leapfrogged other states, because we’ve had a good relationship with the legislative activities in Tennessee. The legislature, the governor, most of the current and former governor was very broadband centric, and we worked with them to bring state grants to the area, in which by the way we’ve gotten over two thirds of those grants, and which didn’t hurt the calls, and we’re working on getting more money for next year’s budget hopefully.
Craig Corbin: It obviously plays a huge role, just what you touched on with regard to having the ability of the political leadership in a state realize the value of broadband.
Levoy Knowles: Exactly, exactly. From the top to bottom. That’s what started the impetus in Tennessee, was Governor Haslam five years ago, commissioned a study to see where we were heading in Tennessee compared to other States. And as you might expect that we ranked fairly low in broadband deployment, even though our members serve predominantly rural areas, but we’ve already been making the commitment, even though some of the larger companies that serve also rural areas have not. So the broadband grants, and the e-Connect grants, and other money being made available, is actually allowing our members to expand their footprint to bleed out beyond their footprint or their normal areas. And so it’s been a really good thing for our members, because they were locked into an area they couldn’t expand, they have expanded under a sea like environment. But for our broadband environment, it’s been very difficult to make the biggest plan work, well, with these additional grants and loans, it’s allowed us to move out beyond our footprint.
Craig Corbin: We heard earlier today from Shawn Arner with the USDA, who did a great job in looking at all the various components of the programs that are available. And I know that, that is something that’s exciting to your membership, knowing that there are so many ways that they can access that potential investment money.
Levoy Knowles: Absolutely, it’s great to finally be on the front page of the news of what’s happening in the nation in telecom. Traditionally, I’ve been in the business for almost 40 years, and we’ve never had a position where we’re taking the front page, we’re always in the fifth page or the third section of the paper. So it’s really good to have an interest both in the national state and local leaders, interested in what we’re doing further for the first time.
Craig Corbin: Talk about what you’ve seen in the time that you’ve been associated with the Tennessee Broadband Association.
Levoy Knowles: I been the executive director for six years and was winding down my career trying to figure out what I really wanted to do, and when I wanted to quit. And it’s ironic because we’ve had some really good wins in the legislature, we’ve had some good wins, and grant being awarded to our members. And so it’s renewed my career goals, and I’m going to decide to hang around a couple more years, and hopefully, see the industry progressive and more. It’s been an exciting industry throughout my career, but for the last six, it’s been very rewarding.
Craig Corbin: And seeing how rapidly things are changing in the industry with regard to the laser focus on the need for broadband, and band within every particular area of the country. I know that, that’s something that has to in vitalize the efforts of the organization as well.
Levoy Knowles: Absolutely. I think we’ve seen the tip of the iceberg of what broadband brings to the table, I mean, we’re going to see smart homes, you’re already seeing a little bit in the metropolitan areas, but for the rural areas, for the most part, you may have a ring doorbell or whatever, but, you’re going to see a proliferation of services that we’ve never even thought of. But the inventors or the customers to bring the servers to the table, can’t really bring it wholesale on a large market scale if they don’t have the broadband serviced, as an underlying service for the consumer, because they have to have a big enough base to sell the services. So once this proliferation gets complete, or is close to being complete, I think you’re going to be seeing services you haven’t even dreamed of.
Craig Corbin: And that’s the challenge, being able to embrace the Internet of Things, and the intense growth that will come so quickly. We know we’ve seen efforts in smart city growth, that’s something that we’re going to see expand very rapidly. I know that’s a big part of what’s on the drawing board, for many of your members as they go through, the growth that comes naturally, with serving populace all across the state. Really appreciate you spending time with us, thanks so much for being a member of the Broadband Bunch.