— by Gerry Lawlor —
Gerry Lawlor
I recently attended the OPALCO Annual Meeting and I left the boat with a mixture of feelings about what is in front of our community and the role OPALCO will play in the area of telecommunications. Let me say upfront I am a fervent believer in all the benefits and possibilities that come with a modern, scalable telecommunications system (environmental, economic, safety, health, education etc.). I very purposefully use the word telecommunications over broadband since this is so much more than our ability to surf the web and stream Netflix movies.
My wife and I moved just over three years ago from Manhattan to Orcas – yes, to say the least, we turned our lives upside down. I spent the majority of my career managing the development and deployment of global exchanges and risk management systems within the financial world. In short I have worked on telecommunication systems that have enabled much of the world markets to operate and function. I was involved in creating a level playing field to enable access to areas traditionally controlled by the big guys. I helped build many businesses with massive amounts of technology, deploying all manner of software, hardware and connectivity solutions.
It goes without saying that the archipelago we all have a pleasure to call home is one of the most unique places in the world, a place we need to protect and restore while at the same time enable prosperity. In all my years lapping the planet, living in numerous places and working in many more I have never been in a place that has this much community, mix of diversity, personalities and talents. What makes it so special is twofold: it is a beautiful place filled with unique people.
So where do we go from here as a community if we want to strike that balance between economic prosperity and environmental protection? For me one key answer lies in the ownership and deployment of a scalable telecommunications system. This is why in my opinion OPALCO is uniquely positioned to be a PART of this solution. It will be a sad, sad day if we are unable to take advantage of this existing and growing infrastructure.
However, after numerous public and private conversations with members of the board and management, I see massive hurdles in front of them as an organization if they are to succeed in this venture.
1. OPALCO’s DNA/Culture – I think OPALCO Co-op does an excellent job on the energy side of its business. I did not live here during the long days of outages many years ago. I was concerned when we initially moved that we would need a big generator to get through the long winter nights without power. But thankfully I haven’t purchased one and don’t expect I will since OPALCO does an excellent job keeping the lights on. Thankfully we get to take this effort for granted and importantly, much to OPALCO’s credit, they never have. The service is great, the balance sheet is very healthy and they are well positioned to meet the changing energy landscape ahead if they stay the course on the many strategic efforts in this area. In short, the Co-op model works for electric delivery.
However, while we like to lump energy and telecom into the same utility buckets they are not the same markets. The telecom market requires much more creative thinking and turn-on-a-dime reactions compared to energy. We are all shareholders AND customers of OPALCO for our energy needs. They really don’t have to win our electric business.
This will not be the case in telecom. We may well all be shareholders of a new business but we are not all going to be customers. Given this, the culture of the new entity in the telecom space has to be competitive. They will face formidable opponents; they need to win client loyalty, not just once, but day after day, year after year. We will always have other options to meet our telecom needs and it is so much easier to avail of these options as a consumer compared to electric delivery. This requires a very different type of company.
This new company will need to act more like a nimble startup versus an established enterprise. They have to deploy unique solutions for unique challenges that exist in this community if they wish to reach their stated goal of open access for all. It will require experimentation, risk taking, success and failures, but above all, perseverance. A co-op mentality will be a challenge to achieve success.
2. The topic & telling the story – Yes, this topic can get real boring, real fast. It is also very easy to go down rabbit holes when deciding a course of action. There are no black-and-white answers, lots of options and you will never be 100% comfortable you have chosen the perfect solution. Combined with my first concern this is why OPALCO is still debating this topic 10 years later.
How you market and communicate plans, strategy and direction is a real challenge. This again requires creative thinking and execution. Last year’s plan is a clear indication of this. I still see areas of concern in how they are marketing the story, a lot of mixed messages and vague statements. Statements like “Access will be offered at cost of service” versus “Open and fair access to all who want it.”
So you pay to trench a fiber line down your shared road to your house today to get access, at a cost of thousands to you. Yet six months later your neighbor wants access, do they only cover the cost of extending the line from your property to theirs for next to no cost compared to you? They can’t deny access to your neighbor but you have saddled some burden by being a first mover.
This is one of many contradictory statements I find concerning. OPALCO needs to understand that a majority of shareholders want to see something happen. Now they need to develop an achievable business case and roll out the plan. Stop asking permission to appease every scenario.
3. The new Telecom entity structure and collaborating/competing with existing local ISP’s – A simple method to promote clarity and understanding in the community will depend on how the new telecom entity is structured. I believe this effort requires very clear lines between divisions within the organization.
I would go so far as to rebrand the telecom entity to something other than “OPALCO” and even locate it in a different office (this would also help create the new culture mentioned above). In addition, I am gravely concerned about the current state of the relationship between OPALCO and the local ISP’s, in particular the relationship between OPALCO and Rock Island, the largest local ISP.
We will not succeed in this effort if this relationship is not restored and mutually constructive. I don’t mean to single out the folks at Rock Island, but there is too much experience and knowledge after 20 years of service tied up in that entity for them not to have a clear seat at the table. Let me be clear, what blame there is for the current state of the relationship is equally shared among all involved. However, it will never sit well if OPALCO stands on a mantle of wanting to help this community yet potentially be responsible for the loss of numerous well-paying jobs while also allowing CenturyLink to gain a stronger foothold in the short term.
In the early phases of this plan there is no strategic or financial reason why OPALCO needs to be a Retail ISP. There is plenty of experience in the community that can offer, grow and support this function. It is a difficult low-margin business that requires a lot of time to recoup one’s investment, both human and dollar. OPALCO would be financially prudent and wise to wait and see if local ISP’s fail in the delivery of service before jumping into an area they know little about.
I believe they should invest money directly in the local ISP’s now with a longer-term view on ownership and natural attrition. There is nothing wrong with learning from the mistakes of others before risking it all. At the moment there is only one real competitor in this long-term effort: CenturyLink. A key metric of success will be achieved when the community does not have to rely on CenturyLink service.
I say this for a couple of reasons: one, their service and support is awful; they are a third rate provider on the mainland, let alone the islands. Two, they are only getting bigger and we are getting smaller in their eyes — we will never be a priority for them. Someone will eventually buy them, like other mega-mergers in the space, and we will become even more insignificant. Please don’t be fooled into thinking they care about this problem. Our collective eye needs to remain on the ball, here in these islands — internal squabbling will pay little in return.
This has to work for so many reasons. Becoming a community that can own and control this core infrastructure will be critical for our long-term viability. I sincerely hope the OPALCO board and management can find the courage and creativity to act and be part of solution making sure all the right folks are at the table so this effort can be successful.
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Well said Gerry.
For an example of how Rural Electric Cooperatives are successfully developing and deploying fiber/broadband services for their members, see Co-Mo at: https://www.co-mo.net/Co-Mo_Connect/HomePage.html
Co-Mo has a similar competitive environment to OPALCO’s – CenturyLink, Wireless providers, in a rural territory, with lots of rocky terrain, etc.. They are innovating and competing well, with take rates over 50% and very high member satisfaction. The number of members leaving the service after using it is near .1%. They are offering internet, phone, and TV. A more complex package than OPALCO’s simpler approach.
Living in Deer Harbor / Spring Point area, I know that the our neighborhood is banding together to get connected to OPALCO broadband infrastructure, to serve the neighborhood as a whole, rather than waiting/hoping for a few early adopters with deep pockets to pay for a partial direct connection. That will keep the average cost per member in the neighborhood more reasonable, and the efficiency of deployment much higher per household.
Personally, it will be nice to have fast reliable internet alternatives to CenturyLink DSL. For several years now, I have been bumping up against the limits of CenturyLink’s aging copper infrastructure and inadequate network capacity. OPALCO’s broadband initiative has shaken CenturyLink, and I can see CenturyLink trying to upgrade some of their network, to the extent they can. But ultimately, there is only so much they can do to increase the performance of last century DSL technology.
Whatever happens in the telecommunications space, OPALCO should always remember that it’s core mission is delivering energy reliably and cheaply. That should come first, before expanding into an area in which it has much less experience.
Jay, I am certainly not saying it is not possible. What I am pointing out are the hurdles, in my opinion, in order to be successful over the long term. Yes, Co-Mo is a decent example. However, there are some difference. The vast majority of their fiber is strung out via overhead lines, only down by the Lake Ozark region do they have some underground fiber. I suspect their development cost per mile is lower than ours given the terrain but coverage area is a lot bigger, approx. 3.1x. So curious to know the overall plan cost. There population, while rural, is a lot larger than ours. They service all of Cooper, Morgan and Moniteau Counties and part of Benton so approx. 63k residents. They have also just started this build out so they are far from fully deployed. The plan is spread over the next 3-4 years. They also have next to no Local ISP’s in the area, what areas are covered (there are parts of there electric service area that have absolutely no options today) are covered by CenturyLink, ATT and Charter. Charter has started rolling out its own Fiber in the certain parts around the lake region. So they will face competition. Another key point as I suggest for Opalco, Co-Mo connect is a different division managed and run separately within Co-Mo Electric. They share first line customer support functions within the org which redirects based upon the nature of the call and need. So yes, this is a good example but some significant differences.
Michael, I don’t think anyone would argue your point. It is and will always remain the first priority. The real questions is do we as a community want to take advantage of a $15m+ investment (much of it invested already and $7.5m on the way) by creating a stand alone shareholder/community owned telecom business that if executed correctly will only be accretive to the bottom line?
I have said this before and I will repeat myself. Opalco’s plan to deliver relatively slow speeds at relatively high prices is misguided. In addition transmitting this new internet via radio waves to the end user is misguided and is not why we live here. We live here for less pollution not more. I live at the top of the Orcas Highlands. My driveway is one mile from the mailboxes at the entrance. Century Link many years ago put some form of signal booster at the base of The Highlands. We currently are being delivered 10mb speed and when I return to the island from the east coast on Thursday they are raising our speed to 25. Let me repeat 25. This is very fast for the boondocks.
The solution to our problem is to give the use of our fiber to the end providers for FREE on the condition that they put the infrastructure in every where. We already paid for the fiber for electrical reasons. The board did not see a return on investment other than to improve the electric side. The politicians would have to be on board to nudge Century Link along.
Radiation is a problem. All utilities are in complete denial as to the real harm. How many of you have cancer or know someone who has cancer? Because of our cultures cowboy capitalism where one party’s opinion is that scientists know nothing and there is no truth unless it conforms to a politically acceptable narrative. Any plan of Opalco’s to compete in broadband is misguided. I do not find Century Link’s support to be that terrible. What large company today has decent customer support anyway.