Thank to Jeff Hoel for providing the transcript for Episode 113 of the Community Broadband Bits podcast with Peter d’Errico of Leverett, Massachusetts. Listen to this episode here.
Peter d’Errico: It certainly is true that if taxes go up in a town that has a democratic form of government like a town meeting, it means that people have decided to do it for themselves. No bureaucrat decided to do this and tax them.
Lisa Gonzalez: Hello there. And welcome again to the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I’m Lisa Gonzalez.
Peter d’Errico, a member of the Select Board in Leverett, Massachusetts, joins Chris this week. Peter’s also chairman of the town’s Broadband Committee. We first noticed Leverett, a town of only about 2,000 people, in the spring of 2012. The community was plagued by unreliable wireline telephone service and horrible cell phone coverage. Residents relied on dial-up, satellite, and DSL for Internet access. In fact, about 6% of the population had no Internet access at all. Community leaders, including Peter, knew they had to act or risk being left even further behind. Over the past two years, the town has worked toward deploying its own fiber-to-the-home network, to serve every home and business in the community.
People in Leverett decided to fund the project with a slight increase in property taxes. As Peter explains in the interview, the move will actually save money for subscribers, because current rates for inferior service are so high. This small town in Massachusetts is a powerful example of how one local community exercised its own self-reliance to establish a necessary service.
Here are Peter and Chris.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. I’m Chris Mitchell. And today, I’m speaking with Peter d’Errico, from Leverett, Massachusetts. He’s a member of the Select Board, and chairman of the Broadband Committee for an exciting project. Welcome to the show.
Peter d’Errico: Thank you. Good to be here.
Chris: I’m excited to have you on this show. We’ve been following your project for a long time. Why don’t you tell us a little bit about Leverett, in western Mass, where you’re located, and what the situation is with broadband in that area?
Peter: Basically, the town of Leverett itself is actually not dissimilar from most of western Massachusetts. It’s a little more densely populated. It’s hilly. There about 35 miles of roads, just under 2,000 people, 800 households. We have a terrain that has never been adequately served by cell towers. There’s one cell tower currently planned by AT&T that’ll serve a highway going through town. So, we’ve had very little of what people would consider normal in many other places of the country.
For regular broadband access, there’s a tiny corner of the town that had Verizon DSL service at the — about 3 megabits down and something less than a megabit up. And that was installed just as we began to be interested in broadband build-out as a municipal project. And it took us from a technically “unserved” area to a technically “underserved” area, but it certainly doesn’t serve very many people. Most people in town rely on satellite — either HughesNet or the WildBlue system. And, of course, anybody that’s used satellite knows that there’s a problem of latency, as well as the bandwidth caps. Some people still use dial-up. And, actually, there’s probably 20% of the people that don’t have any Internet access at home.
So, that’s the atmosphere, or the context, in which we began thinking about broadband, that grew out, actually, of a state investigation of Verizon voice quality, that the town was a party to. So we began saying, well, why are we stopping with just thinking about voice? We need to put the whole thing together and think about telecom. And that began a long process — now about four years or so — of us taking this on as a municipal infrastructure project. Which is where we’re now — what we’re now in the midst of, with an actual fiber-to-the-home build.
Chris: One of the things that’s challenging for a community of your size, in tackling an infrastructure project, is — you don’t really get the benefit of much larger towns of any economies of scale. So, in a second, we’ll talk about the fiber project. But first, I’m really curious, how does a town like Leverett finance something like this?
Peter: The first step was that we were part of a kind of a response to the build-out by the state of the so-called “middle-mile,” the Massachusetts Broadband Institute middle-mile, that connected the closest point of presence, which is about 30 miles away from us, to a number of different locations in town. Every town in western Massachusetts has at least one — well, I would say, probably at least two or three — called community anchor institutions, where there’s now a point of presence from that MBI middle-mile project. So that’s what made it possible for us to even conceive of this. There’s no way we would have been able to build, on our own, a 30-mile fiber link to Springfield, Mass, which is where it will connect.
So when the middle-mile was underway, we started figuring out how we would do the last mile. And we decided that it’s — looking at it as a matter of municipal infrastructure — that it should be treated the same way that we would treat roads, schools, fire department, police, etc. And that is that it’s built out of the tax base. And we did a lot of homework, a lot of community outreach. We had a committee of people with real expertise, not just cheerleaders for broadband. People who had been involved with capital projects, with telecom networks at the nearby university. People who worked for project development in large corporations. These people lived in town, and we’ve put them on a committee, and explored the way in which we could build on top of that infrastructure — that would be a tax-financed infrastructure — build a system that would be, in terms of operation and maintenance, would be paid for out of subscriber revenue.
And so that’s where we are. We had a bond — general obligation tax bond — of $3.6 million, authorized by our town meeting. We still have that real old-style open town meeting here — one of the last, actually, in the area. And the bond issue passed 90% vote — we needed three-quarters. And then, in the subsequent vote, because of tax laws in Massachusetts, 83.5% on a larger turnout. So we had strong support for the concept of broadband as infrastructure.
To jump ahead to the next piece, the Massachusetts law provides something called a municipal light plant, which has the capacity not just to product power but to construct telecom facilities. And we created such an entity, by, again, a town meeting vote. And that entity — the Municipal Light Plant, once the infrastructure is built — once the fiber optic network is built — that entity takes custody of it, and operates it and maintains it. And the cash flow there does NOT come from taxes. It comes from the people who subscribe. They pay a bill — or they will pay a bill — we’re not up and running yet — they’ll pay a bill that will include the price for services of telephone and Internet to the ISP. We will contract with an ISP, a third party. We’re not becoming an ISP. And that ISP will serve everybody. It’s not an “open access” network. But in addition to those fees, they will pay a fee that will cover the cost of running and maintaining the network. So each subscriber will get a bill that includes partly their own services and partly the shared costs of running the network. That’s the financial structure.
Chris: So as a person living in Leverett, if I’m not subscribed to the network, they I would not pay anything. But if I do take service, then I will have a bill that will have two different pieces in it.
Peter: You will pay something in your tax bill. You’ll pay for this, just like if you have no kids but you’re going to pay the taxes for the school. Or you don’t have a car and you’re going to pay taxes to keep the roads paved. So that’s what I mean by municipal infrastructure. The cost of building the network and connecting it to the Internet, and connecting it to every premise — every household — in town, that cost is borne out of the tax base. So everybody’s paying for that. But that’s not the same as paying for services. There’s no additional fee paid.
Chris: The property taxes have gone up a bit. But if you’re a subscriber to the network, then — or, you’re paying more for the cost of having built that network than your neighbor who is not getting services. Is that right?
Peter: That’s absolutely right. Yeah.
Chris: So I found that to be really interesting. And the overall property tax increase was quite low. Do you have an average number of how it impacted people?
Peter: The projections we have from the bond banker, put together with the town treasurer’s work, says that the median household property tax would go up by $300 a year for 20 years. And one of the things that allowed us to sell that was the anticipation of many people that they’re going to take the service and that what they’re going to end up with is savings on what they’re currently paying. For example, I now pay $90 a month for the highest class of satellite service I can get, and I pay about $60 a month for the phone service I have. So, a total of $150 a month. The cost of services we’re projecting is going to be somewhere less than $80 for phone and Internet, which means that I will be saving $80 a month on the services cost. And that is — I’ll be saving more than I’ll be spending on the additional tax increase. It means that if you are subscribing, and you currently have Internet and telephone service, you’re most likely going to be saving money when the end of the year comes around — the out-of-pocket for the tax being more than made up with savings on the services.
Chris: That makes a lot of sense. I think you explained it well. And I’ll just add that, I know, in western Mass, there’s been a situation with property values for those who don’t have access. And, frankly, I would expect that the benefits to that are going to be far in excess of the numbers that you’ve already talked about.
Peter: Yes. And, as a matter of fact, I think that’s one of the key issues that drove this — is that people without — well, not people, the whole town was in the same boat — the people who have apartments to rent, or whole houses to rent, or are trying to sell their homes were continually stymied by the lack of access. There are a number of people who run small apartments in town — in their — a sort of accessory apartment in their house — who have had for years a stable flow of graduate students from the university who can be tenants. But in the last few years, that has dropped markedly, because there are very, very few students who are willing to take a house that does not have Internet access — fast Internet access. So, the real estate market and the rental market are both being enhanced by this.
Chris: One of the things that I really love about Leverett is that I think it shows how a community that chooses to tax itself to build this infrastructure can go about doing it. In the sense that, a lot of times, when the opponents of these projects want to paint projects as bad, or try to get people to think negatively about them, they’ll accuse them of using taxpayer dollars. Which is frustrating, because most municipal fiber projects haven’t actually used taxpayer dollars, but I think Leverett clearly shows a way in which increasing your property taxes can materially benefit you significantly in all other aspects of your life.
Peter: Yes. I think it’s really interesting. At a time when the larger national conversation was often swamped by people saying government can’t do anything, that people in a small town — and this is — you know, there’s this Yankee conservatism, it’s not like this is a town that’s willing to throw money at everything — that we would say, we think government can do something, and we’re willing to pay for it. And it certainly is true that if taxes go up in a town that has a democratic form of government like a town meeting, it means that people have decided to do it for themselves. No bureaucrat decided to do this and tax them. And that certainly is more power over the situation than they get when they’re dealing with some corporate entity that says, well, we’re not government, we’re private, but we have total control over what you’re going to pay, and you have nothing to say about it.
Chris: And speaking of the market system, it’s interesting, there’s incentives for people to encourage their neighbors and friends to sign up, because the more people that take service, the lower everyone’s bill’s going to be, because of the way you structured how you pay for the infrastructure. And I thought that was a very interesting approach.
Peter: Yeah. In some ways, it’s similar to what the Google Neighborhood concept does. You encourage your friends to do it. And, in this case, not to actually get the thing installed, but, as you say, to reduce the costs for everybody. It becomes a more widely shared cost.
Chris: And so, to be clear, this is a network that you’ve committed to. You’ve figured out a way of financing it. Have you broken ground on building it?
Peter: We actually have. We’re in the process of installing somewhere around half of the house drops, you know, the connections from the distribution line to the house, with the optical network terminals being installed on the house. The distribution line itself has not been installed, because we’re just about a week or so away from getting the final pole licenses — from what’s called make-ready, where the pole owners — the utility company and the phone company — have got their wires moved into proper position, so there’s the code-required space for the fiber line to move through. We are very close to having the electronic shelters done. We have two points of presence we’re building in town, where the last mile network in town will connect to that middle mile I was talking about. So, yes, we’ve broken ground in a number of different ways. It’s in-process. And our aim has been to — since the beginning — get this thing lit by the end
of the year.
Chris: And every last person who’s in Leverett is able to take service if they want from the network.
Peter: Yup. Every house. We originally had thought about fiber-to-the-curb, but very quickly realized that if you build a fiber-to-the-curb, you still don’t have a working network. And if you don’t have a working network, you really don’t have any business plan, because you have no basis to get revenue. So that building fiber-to-the-home — when it’s done, you have a network that you can begin to generate revenue from.
We have a third-party ISP. We also have a third-party network operator. The town is not trying to operate this, not trying to provide the Internet services. We simply built the infrastructure, and we’re contracting with private, or third-party entities, I should say, to do the network operation and the service providing. But if you don’t have the fiber-to-the-premise, then you also don’t have any business plan — to attract those third parties. And the need for a third party to come in, when there’s no connection to the premise, means that party’s going to have to put up capital or do some kind of incenting, to say, you know, get people to sign up so they can provide them services. A lot of that design thinking, early on, when we tried to figure out the goal, when we’re done, is to have an infrastructure that’s a working network.
Chris: How did you go about attracting partners?
Peter: We did the RFP process for the ISP. We just issued requests for proposals. We evaluated them. We selected one. We interviewed people and selected one. And for the network operator, we did a kind of parallel process — this is with a Municipal Light Plan that I mentioned. The legislation in Massachusetts that allows that entity to be created also allows what’s called intergovernmental agreements. So we made an intergovernmental agreement. We negotiated with another municipal light plant in the City of Holyoke — Holyoke Gas & Electric. They have been running a fiber network for about 15 years, providing business-class service to a variety of businesses in Holyoke, Springfield, Chickopee, and various other cities and towns in the area. And they have the capacity to operate a network, and were willing to take on an additional chunk of network.
Chris: Excellent. We actually did an interview with Holyoke a number of episodes ago. You noted that you have DSL available in an area of town. And there’s no cable network. I’m curious how the National Broadband Map represented your community. Did it get an accurate picture?
Peter: My own opinion is that those maps are worthless. When we first started looking at this, we were wondering about the categories “unserved,” “underserved,” because those were affecting what kinds of funding we could expect to attract if we tried to attract it from federal money or otherwise. So an easy place to start was those maps. And immediately it became obvious that they don’t mean anything, because they said that we had broadband access all over town. And it’s just — in town, it’s sort of a joke. You know, name a rat-haul a road — strange names — Rattlesnake Gutter — these roads all show on the map as being well-covered by tel service. And, of course, you can — the name is sort of — they’re real names, but you can make a joke out of it, because there’s absolutely no way you’re going to get a communication in those places.
Chris: Well, thank you so much for coming on this show. I think there’s a lot of interesting lessons for other communities, particularly small communities. So thank you for sharing those.
Peter: Well, you’re welcome, Chris.
Lisa: For more details on the project, follow the Leverett tag at muninetworks.org. The town website also offers a large amount of information about the project.
Send us your ideas for the show. E-mail us at email@example.com. Follow us on Twitter. Our handle is @communitynets. We want to thank Waylon Thornton for the music. The song is called “Bronco Romp,” and it’s licensed using Creative Commons.