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my name is Michael Anderson I know most of you guys you're familiar with the tectonic Tuesday format and so welcome to what I'm calling a broadband workshop because I'm gonna ask for some things from you guys when we get towards the end so you know we've been talking about broadband in Nevada County for a really long time and there's been projects here projects there but we're still not where we really need to be and we need we need to look at the future and say okay what do we want to be where we want to be with broadband in 20 30 or even 20 50 what does it look like in Nevada County and not just an erratic County but the ruler you know the rural United States really because that's where the problem is there are problems in the cities there are holes and various places due to the incumbents maybe not serving particular areas and that more dense urban and exurban areas but role is really where where the problem is and and it's it's universally recognized and for some reason we just can't seem to figure it out well we're starting to come to some solutions the main thing is to look at broadband not necessarily as a service like something that you know you buy a car or you get a cell phone or you take an airplane ride so you just kind of choose whoever you've decide who's gonna give you that service today at the best price for the best level of service its infrastructure so you're kind of stuck with what's there what's installed and that's really what the issue is about is about the fact that it's a utility and it's not really treated as a utility in the United States at least the transport level I'm not talking about this services or the operations and maintenance just at the level of how the actual fiber or cable or copper or Wireless gets to your device your home your business whatever so if you're gonna have public infrastructure again at the transport layer then you have to have somebody that owns it and it's not a private company or it is not an entity that is beholden to somebody other than the customers now even a private company the customers you know there's a there's a relationship there but with the utility it's a little bit different so I talked to a lot of people about this presentation and one of the feed things I heard from the feedback from people was Michael you're in your head too much this is about winning hearts and minds and I totally believe that this is really easy to get into the weeds about broadband cuz there's it's a very complicated subject there's lots of layers and and players and it's it's just a big ball with lots of moving parts inside but this is about you know solving the problem and getting on board a solution that a lot of people are starting to think will work so just for the sake of argument I'm gonna bundle together a municipal owner of infrastructure utility as well as a co-op how many people here know about the Plymouth Sierra rural electric and telecommunications co-op yeah half of you so just up the road not very far from here there is a co-op that's been a functioning as a Rural Electric co-op since after World War Two and as a telecommunications co-op since the mm and they have in Quincy and Portola two small towns with not a whole lot of people less than 10,000 they have gig speeds fiber synchronous to their businesses and homes in certain areas and they're building out very very quickly and the reason they were able to do that is because they built it themselves and they decided that they were gonna do it and that's what they're doing so this is a video that's geared towards municipal ownership but just pretend it's co-op so last summer pneumatic County which you know the the Board of Supervisors been talking about fiber and and broadband for quite some time they were convinced by various folks to come up with a pilot program for a broadband grant and so they decided to do 250,000 25,000 that's being administered by the Sierra Business Council up in Truckee and I believe at the end of October when there's when they opened up the application process with a deadline of December 6 which gave basically gave you about a month maybe a month in two weeks in order to come up with a full plan for a project so that really doesn't make a whole lot of sense and Jimmy you were on that conference call and and we Jim with smarter broadband we we a lot of us said you know this timeline this deadline is is just really not very reasonable how do you expect us to put in an application and they said put it in anyways just come up with something get something in there and we'll work it out so I took that as a challenge and decided okay I'm gonna go ahead and throw something in there and see what happens and as it turned out it's the the the application was accepted and I did a presentation the city of Nevada City on January 8th and they the proposal is is I don't know if you know what what this actual project is it's called the Nevada City Fiber hub for base industry and opportunity residential project and it's basically where the old Grass Valley group buildings are on Providence mine Road and the cable will go from the fiber cable underground all on the ground the pointer presence connects at a brought a middle mile connection on Zion Street goes into the back parking lot there and building 2 and then up into the Liberty building at the top of the hill there on Providence Mine Road they'll be a knock their network operations center and then it'll be distributed throughout throughout that area picking up the old Grass Valley group buildings some anchor institutions like the fire stations and the schools between there and Zion Street and there's a development that was approved I think two years ago two and a half years ago called The Grove and there's 77 80 units in there and it would also serve that that development residential development that's right the Tech Center Nevada City Tech Center is in that area and there's a lot of pads with no buildings on them and it would also serve those areas and I did this on behalf of the northern Sierra fibre broadband co-op which I just made up out of my head and it doesn't exist you're actually all members now and you know I just said hey I'm gonna see what see if we can make this fly so it again it's been receiving a lot of support people are calling me asked me what this is what are you doing and so this evening got freed up there was gonna be a presentation and then David called me and said hey you know do you want to do something about that co-op I said okay sure why not so here we are I was told about two weeks ago that there are three finalists for the grant and this is one of them so we're we're in the running with you know there's nothing that says that it won't be accepted there was a comment period that ended on Friday we were supposed to hear today who the winning applications are and that's not gonna happen the county is not done so we won't find out until I believe it's gonna be the first week of February because they're going to present the the they'll have us Supervisors meeting on the 12th or no the 11th and that's when they're going to have us if you're if you're a winner of the grant to get up for the supervisors and you know basically get a pat on the back or whatever Isis there's three applications that are that our finalists there were three entries so I have a feeling all three are gonna get funded that's just my gut instinct the other two projects one is 40 homes up on the top a banner lava cap fiber and then there's a wireless project up in Tahoe near Boca reservoir off i-80 and that's an area was pretty remote and the the ground there is terrible and so there's in the they need to use wireless to get to those folks and that's done by a company called X wire so let's see I've got a slide presentation that I'm gonna show you and let's just go ahead and do it I'm looking at this in terms of who what when where why how right the six to six double use so what and where alright so that's the physical boundary of the proposed physical boundary of the northern Sierra fibre broadband cooperative you've got Pacific Crest Trail to the east Placerville to the South below below Placerville Chico to the north and Sacramento River Yuba County line in the Sacramento County line to the west so you can see and that's there's a lot of different reasons that I came up with these boundaries I won't go into all the details it has to do with the the the broadband consortium under the CPUC it matches some of their boundaries and there's some other reasons actually the because it's along the Pacific Crest Trail there to the right of that or to the east of that is where the Plumas Sierra broadband co-op is so you know you have these physical boundaries but you don't want to get into their territory the way this works is you can do it projects inside the boundaries anywhere you want project here project there project project everywhere so you don't have to just do the whole thing you can do little places and things that make sense and then the co-op will own the infrastructure and operate the infrastructure based in those various areas and because it's the internet a lot of the management can be done remotely you don't really need to be there they'll they'll be some truck roll issues but by and large it'll mostly be monitored over the you know using the internet when soon as possible who you so now we're out of we got four out of the six w's down we're done with those four alright so going back to talking about how broadband is essential utility infrastructure there's the one that we already know about and the other one and the other one now what's interesting about these things is that when all of these first came out they were done by private companies right they weren't necessarily considered critical infrastructure that was like a boy yeah I bring a wire over to my house so you know I'll get a lightbulb and I'll have one light bulb in the house of course once it got to the point where you put a 30 amp breaker on the house because that's how big they were back then suddenly people like oh how about a vacuum cleaner that'd be interesting so the applications came after the infrastructure was was designed and installed but it was kind of a chicken-egg so it took a little while but now the way that this is financed if you build a development and you know you're gonna have to have water sewer electricity it's required it's not optional and a vet and I mean you could go out in the woods and build whatever you want but if it's in a place in a municipality it's required to have those three things and the way that these get financed is is like a mellow ruse bond is everybody familiar with what a mellow ruse is yeah it's so it's a it's an instrument it's a financial instrument and they just sit on the shelf when the developer just comes and takes it off the shelf and says all right I'm gonna take some of this money I'm gonna build this infrastructure and then I'm gonna roll it into the mortgage or whatever the payoff mechanism and the user the end user the customer the home owner doesn't even see the cost it's just built in that's not how we do broadband we do it entirely differently so we need to add that to the mello-roos bond process is really what the coop is all about so by taking the coop and having an entity to own the infrastructure we now have somebody that could take responsibility a democratically organized entity that can take responsibility for the ownership and and operations of the infrastructure now one of the reasons that that people are looking at this coop model and you'll notice these slides are from entry point networks these are the guys that are pioneering this in the western United States and I just bumped into him Jeff Christianson was here I don't know about him two months ago three or no as long it was in September he did a presentation and talked about he has a software their company has a software product that basically what it does it's that part where I'm gonna get in the weeds here but it's where you take the layer 2 of the OSI model and you're able to provision the data plan the voice 2 content all that stuff with this software it breaks that all down yeah go ahead it's a I may be them there's a bunch of there's like a consortium of coops so I don't know the answer that question I think they had a hand in it they're doing this so that video came from a website in Quincy Massachusetts they're doing a project in Quincy Massachusetts for municipality so in a lot of places the municipality is the appropriate entity for to own and operate the infrastructure here municipalities just really don't want to get involved with that and that's one of the problems that we have in Nevada County in Northern California you know you can go talk to the supervisors and the and the staff and they're like not interested yeah we'll do solar but we will not do broadband just it's too messy and you know there's also a lot of problem with the incumbents saying you guys can't get involved in that stuff you're not allowed you're you're a municipality and you're competing with us co-op doesn't have that problem we can do whatever we want it's up to us yeah it came from T ot taxes yeah so that's and there's money there so this was 250,000 to start my guess is there's gonna they're gonna do a follow-on grant it will probably be 2.5 million so forth utility so you know we talked about open systems and closed systems so over there on the right we have the closed systems you know if you want to put a put some content on Comcast's cable plan you're gonna pay to do that right because there's gonna be a relationship of some kind but they're the ones that control that I can't just go and do that I have to talk to somebody over here on the left with the open system I can put any kind of website up I want if I can if I want to drive for lyft I just get my car I sign up and now I'm I'm in that open system all those other guys I can sell things on Amazon I can put ads on Facebook I have that option whereas over there on the closed systems I can't get in there they have a lock on it so what you typically have with the with the existing Internet infrastructure with proprietary networks not open systems is if you look over here the telephone entertainment and Internet those are the three those over there on the right that's kind of what you what you get in your bundle but there's a whole bunch of other stuff that right now it's difficult to get your your ideas on the internet you're gonna be over the top you're not gonna be able to when I say over the top that's it the application whatever layer of the OSI model again getting in the weeds but you're not be able to get down into those lower layers layers that the transport and the and the and the network layer so there's a whole bunch of other stuff that you know we we could be doing better over an open system and you've all heard about these things the increase of automation Internet of Things AI blockchain this stuff is is just getting ready to bust out and in a closed system it's you know you're gonna be looking at situations let's say we have a smart home with lots of sensors and I want to have a product that you know does all that stuff so I look at it I do the product and then you know okay I'm gonna have to charge 20 bucks a month to the user to provide that service well Comcast can say yeah I'm gonna do the same thing but I'm only gonna charge 6 bucks because I can bundle the real cost in the other part that I'm selling you for the for the bundle so by breaking it out you're basically saying this is what it costs to do the infrastructure and then the operations and maintenance and the services are separate that's where the free market gets to gets to really do its thing this is a map of some of the underground see cables and so the way the internet works is I'm gonna get into tcp/ip but but what I will say is that there's you know fir smile middle mile and last mile this is an example of some first mile connectivity major trunks going between cities and countries middle mile are like expressways okay and so you have things coming off of we have a middle mile project here run by vast networks starts in Bakersfield goes up through Fresno Highway 49 an
then back out to Colusa down 20 and that's where we would tap in for our last mile project which is where you connect to the expressway and then you put a piece of fiber to each premise or a wireless connection as well any of you familiar with the great stagnation so this is a this Tyler Cowen fella wrote a paper back in its it's almost ten years old but it's still I think quite appropriate that for the last hundred years the low-hanging fruit we we've kind of been able to take advantage of that airplanes roads cars electricity plumbing those things you know back in the mid 1800s you didn't have much you didn't have any of that stuff people are living in the mud and now a hundred years later we got people flying to the moon and stuff but those things are done and we're getting ready for another wave but it just so happens that this next wave is really dependent on this particular piece of infrastructure so this gentleman here he talked about the great stagnation saying that we've done all the easy stuff and now we've got some hard things to work on but his opinion is that the internet is just at the very beginning I totally agree with that and we'll talk about some speeds and some other things that we'll see with innovation but it the internet has not been around very long whenever I talk to people and say oh we're just at the beginning it's like well they they can't remember when they didn't have one of these things right but it wasn't that long ago that these things were not in everybody's back pocket and here's an example of how you can get confused about what the future is right so I just like that slide so this is another slide about the open network open access versus proprietary networks so let's talk about speed so there we have our DSL connection right there we have our cable one gigabit per second currently maybe we'll get to two maybe five laws of physics he'll start to really get us in the weeds on that 5g everybody's talking about 5g boy five g's gonna save the world laws of physics once again say yeah ten mega 10-gig maybe a little bit more then of course you've got the the faster you get the tighter the the millimeter waves the closer you get to the spectrum of light and and you also have a whole bunch of people that are gonna line up at your City Council meetings and talk about how it's you know killing all the bees and stuff so Wireless the thing about Wireless and I get this question constantly is why bother they're putting satellites in space we don't need fiber they're different wireless and wireline wireless and fiber are complementary they're not competitive you need both of them we're gonna be using both of them for the next hundred years and and they both have a place but they're it's one doesn't knock out the other and here's a slide that kind of talks about that there so currently you can run 25 terabytes per second done a single piece of glass that's 25 million megabits per second try doing that on a wireless connection try doing that on anything else actually the I think it was last year in the lab they had a connection at 661 terabits per second so the thing about fiber it's a fundamentally different medium and what it's going to do is once it has ubiquitous application the the new ideas of what to do with it will be invented we don't know what's gonna be on there I think one of the killer apps right away will be real video conferencing where you're sitting in a room and everybody in that room looks like just like I'm talking to you I can make eye contact and I can see that's gonna happen pretty soon it's all the technologies already there but we don't have the bandwidth but when we get bandwidth like this not a problem so this is fundamental to you know our species survival for the next hundred years we need this I don't care if you're doing art or education health care manufacturing you know every single thing that we do in the world as human beings is gonna be taking advantage of this fiber infrastructure so there's another community in the western United States that entry point has worked with and there are its operating in in Amman right now this is kind of the poster child example that we use to describe this and by the way what what entry point does is they have their software and there's other companies that do this so I'm not beholding to entry point but I really like what they're doing and they're they're acting as evangelists too so you know they provided these slides to me just said go for it go be an evangelist so they just charge like a buck 50 per user per month to build this platform that's it so that's what's in it for them so in amman idaho 30,000 people you can switch your isp in 30 seconds they offer us a 15 megabit per second internet connection synchronous for free the data plan doesn't cost you anything a gig is $9.99 a month and you can create a virtual private network a VPN if you use software you're sitting over the top again Europe up at that application later here you can provision a real like a if you call Comcast and say I have a branch office here in a branch office here I want you to put a point-to-point connection through the internet that's at layer two they'll say yeah we'll do that we'll put in our system you know a couple weeks later maybe a month if it's 18t a year and a half later they'll get something there for you here you can get into that dashboard you go boink boink boink and you're done virtual private connection at layer 2 for free this is an amp this is an amen' idaho today you're paying for the infrastructure in Amand because it's flat and because it's very low me it's very cheap it's about three thousand per premise to do the installation their model is you pay a three thousand you're done paying for the infrastructure or you can amortize it over fifteen or no that's actually five years and and then there's the operation and maintenance which is about 20 bucks and then there's the data plan now of course you're responsible for all the other stuff on top the phone you know video content home security whatever you want to put on there that's all you to but just for the data plan and and the company's viper con quick net etc all they're doing is they have wholesale bandwidth that they're reselling so that's all this is this represents I mean they're not doing much of anything there it's just a provision thing as a software quickly click boom but those are the prices so you can see again if you add this thing up in amman if you're if you're still paying off your infrastructure you're paying about 46 dollars a month for a gig connection they started building the network in July of 2016 and you can see here the change in in in what's what kind of service that they've been able to enjoy since they decided to do this they did an over build so an over build is where your this is what we have right we've got Comcast we've got 18 T and they have a day at a company called cable one and so they built their network on top of cable one cable one still in business cable one still has plenty of subscribers so they coexist and there's just some folks that just want that bundle and that's and they're perfectly fine with what they get with cable one so the thing that's interesting about this is is you don't need to worry about take rates in order to get this thing done when you do the revenue bond financing model so let's talk about how much money some of these big companies have this is this slide was done for a community mountain mountain see that up there in Idaho Mountain Home Idaho and their annual the way that they go and talk to these communities is they say well this is what your people are spending annually on broadband and so Mountain Home I I think they're six maybe ten thousand people is that about right yeah pretty small community and very spread out but they're spending you know four and a half million dollars a year on broadband the people that live there so the money's there it's just not being allocated properly we're the reason that they put these companies in here is that this zito over here is in Pennsylvania they're one of the providers in Mountain Home and there they have annual revenues of forty five million but let's look at the two big ones Comcast and AT&T Comcast has almost a hundred billion dollars in annual gross revenues 18t has almost two hundred billion dollars in the annual gross revenues and there's a lot of money coming from the people in this country who are spending it on branagh but you know we spend at least two times maybe three compared to Europe and Asia and we get about a third the service that's rough metric but we spent a lot of money on broadband we're a fairly rich country so we kind of don't pay attention to it we're used to it people from France come here and they go what the heck is wrong with you people this is insane so those are some big numbers so doesn't depend on take rates usually you look at projects that are privately financed by a company let's say race that's come in here Rea take rates are really key to the success of that project because you know the grant that they got and the money that they're putting in from from their private investment they have to take I think that you know if they're not getting at least sixty percent they're gonna be hurting so with a co-op model to take great doesn't matter subscribers of the members are partners in the coop so their owners essentially and then the success of the co-op has nothing to do with the services so we don't need to worry about you know the data plan and the video plan and all that that's taken care of by others so I put together a little glossary I don't want to spend too much time here but we talked about Wireless and the fact that we need both the first mile middle mile last mile concept the point of presence which is where the first mile middle mile and last mile connect together those are the building blocks over the top that's a layer seven of OSI open system interconnect and you know we you hear a lot about cable and cord cutting now people are getting away from the bundles and they're doing things with buying their services separately there's OSI last time I did a presentation I think was in May of last year we went quite a ways into the Rochdale principles which is when co-ops were first invented there was a it was Rochdale New York I think and anyways or no it was in the UK but there's a there's a whole set of principles and you can google that yeah and if you really want to get into there's a metal ruse but one of the reasons where you are where we are today in broadband is because of those things at the bottom the communication acts Act of 1934 Telecommunications Act in 1994 and the big one is the Telecommunications Act of 1996 and what happened in 1996 you'll see there it says title 2 basically up until 1996 started 94 but 96 is when it really said ok telephony and the Internet are gonna split telephony will remain regulated Internet not regulated Internet we need it to flourish we need you know thousands of blossoms to bloom so we're just gonna let the free market take care of that and the free market said great idea we will provide wonderful service and we'll have a ubiquitous access and we all know how that worked out not so well we do not get the ubiquitous access we're creating bond programs that will be like mello-roos for broadband specifically yeah and so there's a consortium of coops and entry points involved working with some money men money people in back east and they're just starting to get this rolling but you know money is starting to get a little bit hesitant with the stock market it's way up there so there's a lot of money that's looking for the bond market to go to and and there and the bond market is looking for solid infrastructure projects that can deliver revenue over a 20 25 30 year period of time that's that's solid that's known and they love broadband they think that broadband is a really great way to go so this gets a little busy here but basically it's it's it's talks about the different types of ownership so you have your pou that's your municipal government you have your IOU that's PG&E model where you've got a utility that's private but it's heavily regulated or attempts to be heavily regulated there's the co-op which is a 501 C 12 that's a nonprofit designation for for utilities under the federal government and then you have your private companies so I'm not gonna read all that but you can see the differences there in terms of how with a co-op you really have a great give-and-take between the owners and/or the you know everybody the members are the owners so so there's really not that that conflict that can happen the books are open you have to do a 901 disclosure for the nonprofit and the boards are is a set of directors that are elected within that territory and you know you don't like what a board members doing you can run for office yourself or help get them replaced so that's that we're almost done so there's all of the fiber network co-ops in the United States right now there's about almost 200 of them so kind of an interesting map there what you'll notice is it's mostly rural areas and in particularly in particular in a lot of red states and South and North Dakota clearly the winners and look at California or Florida or New York right so that's you can see in California there where all those little blue those are the projects that Plumas Sierra telecommunications owns those are that's the coop up there so they're right are they're our next-door neighbors and I'm actually meeting with the general manager tomorrow Bob Marshall to talk about all this driving up to up to Portola and mean with him pretty much all day but what's interesting about this map the places that don't have the blue the places that are white that's where the money is those are where the people that have money Florida along the coast to coast in California New York there's a lot of money there and you know what the reason that that that model hasn't taken off is that the big boys have really locked down the idea of democratically own infrastructure so what we'd like to attempt to do is to bust that open and we want a nice big blue spot right there in in that territory that I described earlier and I would like to see the whole Northern California with that just like in North Creek North Dakota thank you [Applause]
