The ninth Tri-State Development Summit, held Wednesday in Quincy, included an update from Damon Porter, director of MoBroadbandNow, Missouri’s public-private partnership to expand broadband Internet access in the state. Below is a transcript of his remarks.
It’s really a pleasure to be here for my, MY first Tri-State Summit. I hope this is the first of many. On behalf of Gov. Nixon & the state of Missouri, it’s really a great pleasure to be here to talk about how we, not only as the state of Missouri, but Iowa and Illinois collectively, can collaborate, partner, to strengthen our economies, stimulate this economy, grow jobs and put people back to work. And one of the most critical pieces of that, of course, is broadband. I’m really pleased to see that the Tri-State Summit has a Connectivity Task Force that’s working on this, because it’s really very important to our overall objective, which is putting people back to work.
It seems like this is the season of summits, and so I’m selfishly promoting our summit, as well, which is Nov. 17. It is free and open to the public, and those of you who live in Iowa and Illinois, we certainly would love for you to be there. It will be our second summit in Jefferson City. We will have nationally recognized speakers who will be there. One of them is Blair Levin, who was instrumental in developing the national broadband plan in Washington, DC, and is now a part of another initiative called Gig University, which the University of Missouri is one of the partners in. We also have Keith Bryars, who is a special agent for the FBI, he’s going to be talking about the connection of broadband and public safety. And Craig Settles, who is a nationally recognized broadband strategist who’s worked with lots of municipalities and counties around the country to figure out how they can deploy broadband, revitalize historic downtowns and connect schools, hospitals, libraries and other important anchor institutions. So it’s a great summit that we’re going to have, and I certainly hope to see some of you there at that summit.
Of course when we talk about broadband connectivity, the key of broadband connection is the vital economic engine of the 21st century. I always put these pictures up (railroad, highway sign, power lines) because it’s a great reminder to us that in years past, it was railroads, it was electric power lines, it was highways that really were the economic engines of some of your communities. If your town wasn’t connected with a railroad train station, if your town didn’t have an interstate highway exit, the likelihood that that community was going to survive in the future was pretty slim. And we know that broadband connectivity in the 21st century is the same as vital infrastructure projects.
Our governor has really been committed to this effort from day one. When he came on board in 2009, he made it one of his central priorities. A few things: to stimulate the economy, put people back to work, create jobs, and the central focus of that is broadband. He has been incredibly engaged in this process. He has been active from day one, out in the community at groundbreaking ceremonies, light-up ceremonies, task force meetings. He has really rolled up his sleeves and been a part of this process. And I think it’s really critical when you have a chief executive officer – whether it’s the governor, whether it’s a mayor or a county commissioner or someone else who’s a very influential stakeholder in your community – to emphasize how important it is to have broadband in your community, in the state. When you have that type of leadership, it really makes other people in the community aware of how important it is to be connected. So I’m really pleased to be working for Gov. Nixon, and he certainly sends his regards to all of you at this Tri-State Summit.
I’d also like to share a little bit of background information. When I say to folks, “Well, what is the state of broadband in the United States? What is the state of broadband in this area?” And it’s interesting, a lot of folks, as I travel around the state – and I jokingly say to people, I travel to Perryville, Maryville, Steeleville, every-ville, because I’ve been to every part of Missouri at least three times now and I’ve only been on the job nine months. So I’ve put a good 20,000 miles on my car, and I’ve enjoyed doing it. And when I ask people about broadband, a lot of people have a difference of opinions about it. Some people say, “Oh, everybody’s connected,” and I talk to other folks who say nobody’s connected. I think it’s very important for us to have some statistics to use as a model.
So where are we as a nation? Sadly, our ranking among all of the industrialized nations of the world, according to the Organisation for Economic Co-operation and Development, suggests that the United States is slipping. In 2001 we were ranked No. 4 and in 2010 we were ranked No. 14 in terms of the percentage of people connected with broadband. Now, truly the United States has the most folks of any country in the world connected, but that percentage is slipping as more industrialized nations get more homes and businesses connected. So this is a very troubling statistic. Even more troubling is the fact that the number of folks who are actually getting connected, those folks who have the opportunity to be connected but choose not to, that percentage is also slipping. So the United States now ranks No. 21 out of all the industrialized nations of the world in terms of broadband adoption. That translates to less than two out of every 100 households. At this rate, we will get to a point where there will be a net loss of new connections in the United States if we continue on the trend that we are at present.
Where do we rank in terms of the other countries in terms of speed? We talked a little bit about connection, and we talked a little bit about those folks getting adopted to broadband. From a speed perspective, this was a survey that came out in 2010… Of course, South Korea leads the way. There was a news report I saw last week, they continue to lead the way in terms of the fastest connectivity, the fastest speed. The United States, of course, now ranks No. 14. So you talk about the emerging markets of the world – China, South Korea, India, Brazil – they’re all moving much faster in terms of building the infrastructure, getting people connected, giving them the speeds that they need to build the economy, grow jobs, assist in health care, education.
What about bringing it closer to home as we talk about the Tri-State area? The New York Times put out a report about two weeks ago, which, again, is not a very good statistic for two of the three states in our Tri-State area. Iowa ranked as the sixth-slowest state in terms of speed out of 50, and Missouri ranked the 10th-slowest in terms of speed. So we have a lot of work to do right here in the Tri-State area in terms of getting more people connected.
One of the issues that impedes our progress is that we have a lot of rural communities in Iowa, Illinois, Missouri. In areas where the density is lower, where very few people lives, the cost goes up to deploy broadband, for people to get connected, the greater return for a private provider, the margins get a little thinner. So we have to figure out how we, from a technological standpoint, from a financing standpoint, from a resource development standpoint – how can we deploy broadband in a way that’s cost-effective to the provider so that he or she can make a return on their investment? How can it be attractive to banks and to other lenders to invest? And more importantly, how can we make it affordable for the end user?
One of the things that I have discovered as I’ve traveled around the state is that, for the big communities, it’s very easy. If you have 50 homes in an area of a square mile, you can get any provider to come in there and connect. But these middle areas, the middle communities, are really the big challenge, because you don’t have the private investors who are interested, and banks are a little leery. If you think about, if you’re a bank, and you go to a bank and you say, “I need $20 million to do a broadband project,” and they say, “Well, what’s your collateral?” “Well, the collateral is the fiber I’m going to put in the ground.” “Well, but if you default on the loan, you can’t pull fiber out of the ground, can you?” “Well, I guess not.” “Well, tell me, how many folks do you think you’re going to get connected?” “Well, we hope to get connected 10,000 homes, but I can’t tell you for sure how many of those homes are going to take service.” “Hmmm.” So it’s really a struggle to convince banks that they’re going to get their money back on this investment, but it’s very important in terms of the community.
In the state of Missouri, this statistic bears out even greater. Seventy-eight percent of all Missouri communities have broadband access at the minimum threshold, which is 768 kilobytes (per second) on the download. But as you can see, the communities where we get smaller households, so those communities in Missouri that have less than 15,000 households, the number drops down to 61 percent. When we drop down to 10,000 households in a community, the number’s down to 52 percent. So clearly, density matters, and the smaller the community, the less likely that they’re going to be connected to broadband.
From an economic development standpoint, however, we know that communities that are connected are the communities that will survive. Those are the communities that will thrive. Those are the communities that will succeed in the 21st century. Recent reports show, just a couple weeks ago in fact, that if you double the speed – no matter what the speed is, if you’re at dial-up and you double the speed to some type of broadband connection, or if the broadband connection’s at 3 megabytes and you double it to 6 – if you double the speed, you’re going to stimulate the economy. And this report showed about a 0.3 percent increase in the GDP. You might say, 0.3 percent doesn’t really sound like a big number in terms of the percent. But globally, that translated to $160 billion increase to the economy, just by doubling speeds. So there are some communities with faster speeds, but if we can just meet the challenge of doubling the existing speed in communities, you will see economic activity grow.
Another interesting report in terms of economic development… Communities that went from zero broadband providers to three broadband providers between 1999 and 2006 saw the fastest rate of job growth in the economy with other communities. Another thing we’re telling folks is, “Well, it’s great that you have one provider in your community, but you need to look at having more than one. It doesn’t mean they have to compete against each other for the same customer. You may have some providers that are going to provide more affordable package or service for households, you may have another provider that’s just going to work with larger businesses. There’s enough territory, enough area for more than one provider in the community to be successful, to be competitive.” Again, those communities that increase the number of those providers are going to be much more successful.
One more statistic for you on broadband and economic development. When you ask companies that are thinking about relocating, expanding their business, moving from one community to the next, the number-one contributing factor for a company’s expansion or relocation is, “Do you have fiber? Where’s the glass?” As I’ve talked to economic development councils, economic development commissions, directors… There are a lot of great amenities that communities have – great schools, great parks, great neighborhoods, great people. But from a business perspective, they want to know, before they look at anything else about a new town, they say, “If you’re not connected, the likelihood that we’re going to relocate or expand our business – pretty low.” And so the number-one factor that we need to be cognizant of is broadband connectivity.
Let’s talk a little more about MoBroadbandNow. As I said, our summit in November – our theme is “Breaking New Ground in Missouri.” That really means a lot of different things. When we talk about breaking new ground, it’s not just about turning dirt and putting fiber in the ground and building towers. That’s great. But it’s also about breaking new ground in terms of ideas, breaking new ground in terms of partnerships, breaking new ground in terms of how we collaborate together.
It was really interesting, as I got started in this project, that a lot of different sectors of our community have been talking about broadband, but only been talking about it to each other. So law enforcement has been talking about broadband in terms of how it works with other law enforcement officials. Schools have been talking about broadband from an educational standpoint. Doctors and health care professionals have been talking about broadband from a health care standpoint. But we never really put everyone in the room together to say, “How does your piece fit with this other piece?” As I travel around the state, the most important thing that we have done, in my opinion, is putting all of these folks in the room. We’ve been having a lot of “Aha!” moments. We’ve been having the light bulb go off multiple times. One of the things I would say to everyone in this room: No matter what sector of the economy or what sector of the community you represent, it’s very important for you to reach out to other folks, your peers, but reach out to other folks who are in other sectors and say, “How can we work together?” You, surprisingly, may have one sector or organization that may qualify for a grant or loan or some type of economic system or stimulus or support, and if they are able to build out part of their broadband network and they share that information, there may be someone next door that may be able to take advantage of that network. But if they’re not talking to each other, one part of the community may be succeeding, and another part of the community is failing.
We’ve talked a lot about accessibility, getting homes connected, getting businesses connected, but that’s really just the first step in terms of our broadband challenge. Availability certainly is the first step, but if people have a connection but they’re not taking advantage of it, then we have a problem. We have found in our research that in terms of adoption, we still have one-third of our population that has the ability right now to be connected to broadband but chooses not to. Some of it’s cost, but more importantly, it is an attitude of, “I don’t need it. What do I need broadband for? It’s just surfing the Internet and Facebook.” And so we have a great challenge of educating folks that if you’re not connected, you will be falling behind the other folks in your community who are connected. This is a really big challenge when you see a third of your population has the ability to be connected but chooses not to.
Of course, choice. I never use the word “competition.” A lot of folks will say, “You want more competition in the marketplace.” Well, it’s bigger than that. It’s about choice. Businesses, as we travel around, businesses will say, “I’ve got a great broadband provider, and they’re doing a great job, but I need redundancy. If the fiber gets cut and I can’t trade emails or trade information with my vendors or customers, I have to close down business all day, and I have to send people home and not pay them because our service is down. So I’m looking for choice as a redundancy issue.” So choice is very important.
Affordability is very important. Another one that’s very important is usage and user ability. It’s not good if a home is connected but the school is not connected. It’s not good if the hospital’s connected but the doctor’s not connected. So we have to have all aspects of the community connected if this is going to be a successful venture and we’re going to grow jobs.
For us, cross-collaboration is the key. Missouri, as well as Iowa and Illinois, have very diverse economies. For us in Northeast Missouri, a lot of agriculture, some industry, a lot of trade on the river. But it has to transcend all different kinds of economy. So we’re really focusing on partnerships, not just in the agricultural community, but in the health care community, education, law enforcement … and small businesses. Small businesses are really key to growing the economy for us. They are the economic engine. Large companies certainly can afford whatever cost, whatever process it takes to get connected. But those small businesses oftentimes support the larger business in their venture. If they’re not connected, not only do we see the small businesses die, but we see the larger businesses decide to move somewhere else. The small business piece is really key.
Now, what is MoBroadbandNow? MoBroadbandNow has a lot of different objectives. One of them is collecting information. Some of the statistics I shared with you came from national sources, but some of the information that we’re collecting is imported right from Missouri. We’ve been working with broadband providers in the state, and we’ve identified 113 different broadband providers in Missouri. I couldn’t believe it. When I got started I said, “There’s probably 15, 16 providers.” We have 113 providers in Missouri. When I started some eight or nine months ago, we had agreements with 41 of those providers to work together collaboratively, sharing information, sharing data. Today we now have 91 of the 113 on board. And so it’s a very important thing to get those broadband providers in your community invested in the process. A lot of times, they’re sitting on the sidelines, not part of the conversation. We need to bring those providers in early to work with all the folks in the community. At the end of the day, they’re the ones who are going to put the fiber in the ground. They’re the ones who are going to build the towers. And so we’ve got a great partnership.
Twice a year we put out a map that shows where service exists. We show speed levels, we show population density. All of this information is open and available to the public. It’s on our website, which is mobroadbandnow.com. You’ll find there all our maps that we’ve collected, all our data we’ve compiled in our residential surveys.
One of the things we did, which is pretty ambitious when you think about it… We sent out 76,000 paper surveys to homes across the state. When we think about market analysis, most of the time we look at a 1 to 2 percent return rate on unsolicited direct mail. You think about, you go to the mailbox, you pull out the mail, you put the bills on one side, you pull out all the junk mail and usually throw it in the trash. So we sent out 76,000 surveys with the hope of getting 7,000 back, which is about 10 percent. Ambitious goal, given the fact that you only get about 1 or 2 percent return. Today we’ve got about 13,000 surveys back. This is the largest scientific sample of residential broadband needs of any state in the nation, and we’re getting calls from other states saying, “Will you share your data with us? We’d like to see what the folks in your state are saying in terms of what they want, what they need and how they can be successful.”
This map here (opens as a PDF) shows the projects that are in process. Gov. Nixon was very ambitious in terms of this partnership. He brought everyone into the room and he said, “Listen, let’s not cannibalize ourselves. Let’s not compete to build out one section of the state and leave other parts of the state behind. Let’s figure out how we can, for lack of a better word, dig into the state so that all of the areas that are unserved, underserved, get connected.” During the Recovery Act (stimulus) process, we were the fourth-largest, fourth-highest awarded state in terms of awards, some $261 million doing 18 projects. The most critical part, I think, of this whole process is the blue squiggly lines on the top and the red squiggly lines on the bottom. Those two projects are building our middle-line network. They will not actually connect homes or businesses, but what’s most important is that they are building a backbone network that will allow other broadband providers to tap into their infrastructure and finish off the deployment. Why is this important? As I mentioned, density and low population drives up the cost in terms of connecting homes. If we can take a lot of the cost out of the process for the last-mile provider by building this extensive middle-mile network, we believe it will encourage existing providers who are already in the marketplace to further expand their network. It will also help a lot of small businesses, folks who have never been in this, to take the plunge and say, “I’m going to sign up and go to work.” In fact, Finally Broadband, that kind of copper-colored or rust-colored spot you see at the bottom – he’s a new entry. He’s a great guy, he’s been doing a lot of backbone work, but this is his first time in the broadband industry. He was a trucker by trade, and he saw a need in his community. He was awarded about $1.5 million to build those towers. So this, again, shows how small businesses can be creative, how this is a possibility for owners who have never been in this process to make a good living and connect people at the same time.
Lastly, I’ll tell you about our Regional Technology Planning Teams. I think this is really a success story that we’re doing in Missouri. Gov. Nixon said he did not want a top-down approach. He did not want state government or state leaders to decide what was best for everyone else. Instead he wanted a grassroots approach. He wanted it to be citizen-led. He wanted the ideas and innovation to flow up from the bottom to the top. And so we’ve created 19 regional teams. These teams have representatives from your local schools, hospitals, police fire, mayors, city council folks, city administrators, and they have been meeting over this year to develop strategic plans that will be not cookie-cutter but will be tailored for the regions they represent. As you can imagine, the regional teams that are in this area – the three that would kind of touch that Tri-State area are Boonslick, Mark Twain and Northeast – their regional plans are going to look totally different from the regional plans at, say, the Lake of the Ozarks, which is a great thing. If we had a cookie-cutter, standardized approach, certainly there would be some issues that would touch all the communities, but the fine-tuning we would miss. One of the things we found at the Lake of the Ozarks, which is a great tourist destination, we have a lot of second homes down there that folks visit on vacation. Their needs are more focused on tourism, more focused on small businesses whose headquarters presence is somewhere else but they need to connect. That’s a totally different type of model than here in Northeast Missouri, which is more focused on agriculture and more focused on using the river. We hope to have these regional strategic plans completed by January, with implementation in February. Again, I think this will help the broadband providers, the 91 that we have on board, working with them in partnership to build a bigger map of the projects that we see.
The regional teams have been very successful. We’ve had some 60 to 75 participants at each of these meetings. We’re now trying to build a statewide online conversation. We have the 75 folks attending each of the meetings, you times that by 19, if they connect with five or six of their friends, we could have five or six or 7,000 folks online in collaborative conversation about broadband. And so one of our goals is, by the end of next year, to have 15,000 Facebook friends connected and talking to each other about how broadband is working, how it’s not working, and sharing best practices. And so this is one of our kind of ambitious goals for the project.
I think my time is up, but I hope I can come back next year, because I have about 45 more slides. (laughter)