A small budget, long distances and low population density surely does not sound like the best prerequisites for a fiber network buildout. By working in a structured, but still creative way and with a good dialogue with the local community it is still feasible. It has been proven over the last six years since Kitsap PUD started to work with COS to build demand for and operate their Open Access fiber network.
To understand how this success story began, we must jump back all the way to 2003. As members of NoaNet (Northwest Open Access Network), another customer of COS, Kitsap Public Utility District (KPUD) got access to the fiber backbone that was built throughout the rural parts of Washington State. In 2003 KPUD started building a middle mile network, branching off from the NoaNet fiber ring and connected their first community anchor tenants; schools, libraries, navy facilities, but also a number of businesses. Being a water utility and not having the big budgets as some of the electric utilities in Washington State have, it was a slow but steady buildout that generated a small, but positive cash flow. An excellent starting point for any community wishing to initiate a fiber project as not only costs can be lowered to the anchor institutes, but that the revenue from those fiber connections will also stay local.
Over the coming years, the incumbent telecom companies didn’t improve their presence in the county much and not only businesses, but also residents started to ask if KPUD could expand their fiber network to reach them, as some other PUD’s in the state had done. KPUD decided to find a way to determine if there was a big interest for this and that is when they started working with COS Service Zones. Within just a few days from launching the site, the response was overwhelming with over 2000 completed surveys. The lack of high speed and quality broadband in the county was clear.
KPUD is running their network on an Open Access model and is operating it using COS Business Engine. This means they are not themselves providing the retail services but invite private sector providers to do so. Already from the start several Service providers saw the benefit of being able to reach new customers without any investments in infrastructure, even though the numbers were initially small.
So, without a big budget how were they able to expand their networks in these rural areas? The secret recipe is called LUD:s (Local Utility Districts). While the middle mile network is expanded by a mix of cash flow revenue, tax dollars and grants, the last mile connections to the homes are paid by the homeowners, but it is not a one-by-one thing. Instead, in neighborhoods or areas where KPUD has identified a high demand with COS Service Zones the total cost for the buildout is calculated and the cost per household is determined. Residents will decide if they want to participate or not and high participation obviously leads to a lower cost. Residents have the option to pay upfront, but many choose to spread the cost out over time through one of the partnerships KPUD has established with local banks that will allow a long term loan with a fixed interest rate and a lean on the property. Even if these costs can in some less densely populated areas be quite substantial, people are willing to sign up knowing it will not only provide a better internet service, but also increase their property value. Just recently the very last homeowner who didn’t opt-in initially in one of the first LUD’s decided to connect – effectively a 100% take-rate in that neighborhood, even though the last mile connection has to be paid by the homeowner. Another rural COS Open Access customer, neighboring Mason PUD3, is also using a model where customers can pay off their installation over time with a $25 monthly construction adder to the cost of their service for 12 years.
Angela Bennink, Telecom Director at KPUD, explains that the Open Access model is a big proponent of the network and the choice it offers make people more willing to sign up and connect. Subscribers know that the competition between multiple providers will ensure a good quality of service and reasonable prices. And switching between providers is made extremely easy by the self-service broadband Marketplace provided with the COS Business Engine operations platform.
“Our biggest challenge now is keeping up with demand,” says Bennink.
Especially during this Covid-19 pandemic the need for broadband has been extreme. The proximity to Seattle, across the water also makes the population grow at a rapid pace. 100 000 new residents are expected in the coming three years and KPUD is working with developers to make sure they put in conduit for fibers as they build.
“We have slowly and steadily grown and we will add close to 500 new customers this year and as many next year. We have found a model that really works with our prerequisites and the functionality to streamline the capture of interest and the operations of our Open Access network provided by COS System’s platforms has been a part of that success,” says Bennink.
“It’s been an absolute honor to have been part of KPUD’s journey from the first survey responses coming in, to the successful growth they are showing today. They have proved that with a strong localized strategy and perseverance rural fiber is possible,” says Isak Finer, Chief Revenue Manager at COS Systems.