Ask Me Anything! With Darren Farnan

Drew Clark: Good afternoon and welcome to Ask Me Anything! On Broadband.Money. My name is Drew Clark. I am joined today by Darren Farnan, who is the Chief Operating Officer of United Fiber. And Darren, welcome, thank you so much for being here today.

Darren Farnan: Well, thank you, Drew. I'm excited to be here and thanks for having me on.

Drew Clark: Well, this will be one of a series we've been really excited about doing each of these, but particularly this one, because you and United Fiber speak to a very crucial audience that we, through our work with Broadband.Money, have been seeking to reach, which is the rural electric co-operatives. And we are, again, just thrilled to have someone with your experience and execution abilities on this topic. So, if you wouldn't mind, Darren, just tell us a little bit about United Fiber, about the electric co-op that you started from, and maybe about the world of co-ops in general, so that we can sort of the stage for what United Fiber has been doing in this space.

Darren Farnan: You bet. Yeah, I think it's a great story. I'll start from the higher level, I guess, and start about co-ops in general, for folks that may not be aware of it. There's just under 900 electric co-ops throughout the country, and each is an individual entity governed by a board of directors and member-owned, so all of our profits, losses, whatever it may be, go back to our members who are on the line. So, it's such a great story back in the '30s and '40s of how electric co-ops came to be for folks that were not included in electricity, they're out in rural areas, and what felt like an impossible thing was able to be done, to run electrical lines basically all over the country and get electricity to anybody that needed it. And I think that story parallels, as we've gone through this process over the last eight to 10 years, with building our fiber network of how similar that story is. Something that... Sometimes we hear from Washington, things that can't be done is being done.

Darren Farnan: So anyway, we've... I think co-ops in general, I think there's a little over 200 co-ops now of those nearly 900 that are involved in some form of broadband running fiber in the home, which is great to see the progress that's been made over the last few years. One other interesting thing, I think... So co-ops cover about 56% of the country as far as land mass, about 42% of the electric distribution lines are electric co-op lines, but the really interesting thing, these go to the most rural parts of America. I mean, this is... That's what the co-ops were built for, that's what they serve. And so, one other interesting thing, 92% of the persistent poverty counties in the United States are served by electric co-ops. So, I know it's not... We talk about availability, affordability, digital inclusion, I think it's such a big piece of that, that where we serve, we're part of the community, we're serving again some of the most rural and economically challenged areas in the country as well. So I think co-ops in general have a lot to offer on this front to get broadband, you know, true broadband service out to the most remote parts of rural America. So with that, I can start a little bit more about United if you'd like, Drew, or I can just transition.

Drew Clark: Yeah, Darren, let's unpack this just a little bit more, right? So again, I know a lot of our viewers are electric co-ops and they'll know this, but maybe some aren't as familiar with it, so just... You have alluded to the electric co-ops and the role they played historically in basically bringing electricity to so many parts of America that didn't have it before, I guess, the New Deal, right? And...

Darren Farnan: Exactly.

Drew Clark: Just talk a minute or two about the role of these electric co-ops in their communities. Like, what's different between electric co-op and a utility-owned investor, right? 

Darren Farnan: Right, absolutely. So again, by being governed and owned by the people that we serve and the people in those communities, there's a natural economic development factor, I would say, more than anything. I mean, that's one of the core electric co-operative principles is commitment to community. So, with that, we try to serve not just immediately on the electric service, but that's the reason we've gotten into these businesses, and I think others do, is because they listen to their membership, what their needs are. And like I said, in the boardroom every month, we're hearing that firsthand of here's the challenges we're facing and what can we do to help in the area. So, I think that most co-ops are really looking at quality of life issues, at other things as overall economic development, how can we help, not just not the electric needs of our membership, but the real everyday quality of life and economic impacting-type services, whether that's education, healthcare, working from home? 

Darren Farnan: These are all real issues and we've seen among some other co-ops that keeping memberships high, we see people leaving rural America or have seen that in the past. And I think this is a big piece of keeping people in place, keeping that talent in place that can work from home, that can work from local businesses or small communities and have the same, if not better, broadband to connect themselves to the rest of the world.

Drew Clark: So Darren, what would you kind of attribute the push by rural electric co-ops into the fiber broadband space? Again, speaking generally about this space, which is so important, of rural electric co-ops. What prompted them... I mean, there are of course, telephone, and have been a long time, telephone co-ops or telecommunications co-ops, and how are electric co-ops like, you know, where United Fiber came from different... From telecommunications collapse? 

Darren Farnan: So I think in general, speaking for our area at least, and I can't speak to this for everyone, but in our area, the rural telephone co-ops have done a good job of bringing fiber to the home in the areas that they serve, but unfortunately, they don't serve a big part of our electric footprint, nor do they serve a lot of the smaller communities that are adjacent to where we serve electrically. So, we felt like they're... Obviously, to the first part of your question, why do co-ops get into this and its need. We weren't looking to get into the broadband business necessarily, we got into it. We did a survey in 2010 before we apply it for our first round of funding, which was through the American Recovery and Reinvestment Act. We did a survey of our membership at that time, and found that 89% did not have access to 4 x 1 speeds, which was the definition of broadband at the time for the FCC.

Darren Farnan: So, obviously, need there. We saw that need. Like I said, we had kinda gotten into satellite services, wireless services to try to meet those needs, but we saw that that was... We didn't feel like that was a good long-term solution, applied for those RF funds, and then that's what really got us spurred into the initial look at this. So, I would say, first of all, it's always need of the membership, right? That that's what we're looking for. We are a utility, we understand how to take care of poles, lines, how to serve customers day and night, storms, whatever that may be, and then kinda that third part is the funding piece to tie that funding together, which was critical for us, because of how low density we are, but there's been a number of co-ops that have gotten into this business now to serve their memberships that have not received additional federal funding, they're just doing this out of their own pockets.

Drew Clark: You kind of just made three really brilliant points, you made them so quick, I just... I wanna unpack them a little bit, one is the local and the non-profit nature of co-ops, right? They're not for profit and was United Electric Cooperative, right? And obviously United Fiber, is it a spun off or is it still within the United Electric Cooperative? 

Darren Farnan: It's a subsidiary wholly owned by the Cooperatives.

Drew Clark: Okay. So you are local. So you understand local issues. You see your neighbors when you go to the store and they interact and they are sort of members of the co-op, so they are like shareholders. It's again, a unique form of business organization that has carved out a niche in the American economy and culture by virtue of electric electrification, but they're local. And then you said, look, we know how to deal with storms, right? I mean, you are competent, you guys know what to do when there are problems, and that sort of underpinning... I mean, I think by far, the majority of municipalities, for example, that have gotten involved in the broadband space have a local utility, right? And so, I guess by analogy, like electric co-ops who have that competence, that line knowledge, the right-of-way knowledge, you can deal with moving into a new market, but then the third piece you mentioned is the funding piece, right? 

Drew Clark: And so, I gather this has sort of maybe been a little bit of a challenge, or at least historically was a challenge. You cited the American Recovery and Reinvestment Act, of course, the 2009 plan that came in place in the Obama Administration. I have my own stories with ARRA that may interact with some of yours there, but this kind of this trifecta of locally owned competence in building wired infrastructure, and then when the funding comes is... Would you add anything to that in terms of what it takes to kind of make a successful fiber build by an electric co-op? 

Darren Farnan: Yeah, you know what? And I should address one other piece of that, it's not just knowing how to deal with the outages and the infrastructure, but it's having the infrastructure. Because what we've found is that from an aerial standpoint, when we can build on our existing plan, which granted there was... We hear the terms make ready, there were poles that had to be replaced, there's other things that had to be done. But overall that strengthened our plan, but also on the cost per mile, on a cost per passing basis, we're only two and a half meters per mile, that's a very difficult proposition for fiber to the home, right? So we are the epitome of the challenges of getting fiber access in rural America, but that additional funding obviously helped us, but we can run aerial fiber on our existing infrastructure, and about... The numbers can be a third to a half depending on how expensive the underground components are. When we go off our network obviously, we're underground primarily, but yeah, we can... At the very least we can build 50% of the rate and often less than that. So when we do have those federal dollars and other pieces that come in, we can do more with it, right? Because we can get more miles built with that same dollar. So, that's a big advantage of the co-op's rates.

Drew Clark: Darren unfortunately some of the sound problems we experienced have come back. Let's monitor this, another question or two, but I know we've got a backup plan, we may wanna deploy there if it doesn't improve. But I think I got the full answer there, and it was that the funding isn't 100% necessary from an external source, you can do it if you need to, but did you just say though, that the ARRA funding and now the Infrastructure Investment and Jobs Act funding will help make it easier? 

Darren Farnan: That's right. And are you hearing me okay? Do you wanna just double check? 

Drew Clark: Yeah, it's gotten scratchy, so...

Darren Farnan: Okay.

Drew Clark: Yeah.

Darren Farnan: Why don't I move here quickly and we'll see if that makes it better for you.

Drew Clark: Let's try that. No, a good call. And while Darren is waiting there, I just wanna tee up for our audience the really impressive... We're just about to get to the subject, right? The way that the electric co-op, the United Electric Cooperative in Missouri has pivoted from just an electric footprint to an electric and fiber footprint. So let's go ahead and include you in the picture in your new setting, new background. Can you hear me okay? 

Darren Farnan: Can you hear me now, Drew? 

Drew Clark: Oh my gosh, so much better. This is just another example of an electric co-op and the way you think about things, because you had a backup plan. We sussed this problem out before, and you realized, hey, we may have a problem here...

Drew Clark: So now we've got the backup plan, so thank you for doing that. So Darren, can you hear me okay still? 

Darren Farnan: Okay. Can you hear me now, Drew? 

Drew Clark: Yes, yes, I can hear you just fine.

Darren Farnan: Alright, thank you.

Drew Clark: I was just complimenting you on having a backup plan, but...

Darren Farnan: Well, it's good. I'm in a different office today, but yeah, we were able to figure something out. So to go back to where I was at, I think...

Drew Clark: Please, I didn't mean to interrupt you, go ahead.

Darren Farnan: I'll summarize back where I was before, but co-ops are able to build at a much less cost per mile utilizing our existing infrastructure, besides having the resources there and the background of doing that. So again, we feel like that's been very beneficial, and for United, and I threw that number out, density is a big piece, but we're only two and a half meters per mile on our existing footprint. Some of the co-ops that have been able to do this without any federal funding have been more in the six, eight, 10 meters per mile range, so we are actually the lowest density co-op in the state of Missouri. And so, our story has been a little bit unique just from the fact that we've been able to make that...

Drew Clark: Wow.

Darren Farnan: With the injection of funding. And then the other piece I'll just touch on quickly, and we can get more into this later, the other piece is, we've built... Most co-ops, when they get into this, build their existing electric plant first, which is great, 'cause they get to their membership, they get that out there and we've done that, and still continuing to do that. But also, what we've done is we've built communities. We did not anticipate when we got into this, and we turned up our first customers in 2012, went live in 2013, and the demand we received from the adjacent communities, we served hardly any communities, but we're in an area where there's a lot of communities parallel to our existing electric lines where we run just outside of the town, and the demand was overwhelming of what we were getting to come in and build the community.

Darren Farnan: So in 2016, we built our first community, which was a municipal of about 9000 people, and then another smaller community of about a thousand people just to test it, to get our board comfortable with doing this. So we kinda did this as a pilot project, and it was overwhelmingly positive, both from the community, from the financial impact that brings back to the co-op. One thing I should mention with density, we have about 3500 miles of electric plant, and that is a challenge with 7500 meters. So, it's... Or I should say members, about 10,000 meters, but we were also one of the highest cost electric co-ops in the state.

Darren Farnan: Since we've done fiber, and the success we've had of bringing revenue in not just from funding sources primarily, but actually from building these off-plant builds into the communities, again, bringing up the overall broadband quality of the region and connecting both commercial, residential and any type of subscribers together, it's had a huge financial impact on the electric co-op as being the sole member and owner. So, our outlook, not just from broadband, but our outlook on the electric side of the business has been overwhelmingly improved because of this, and so it's been a great story. Like I said, we are the only co-op I believe in the country that has more, to about three times more fiber customers than we do electric members.

Drew Clark: Well, let's talk a little bit about that. Let's unpack that. So you just mentioned 7500 members, this is of course the United Electric Co-op, and in 2012 you just underscored you got going United Fiber, wholly owned subsidiary of the co-op, and now you're serving 22,000 customers. I don't know if you call them members and customers, because some of them are your members and customers, so just talk a little bit about that dynamic. Three times the co-op membership for electric is now being served by Fiber.

Darren Farnan: Right.

Drew Clark: I mean, how has that changed your culture, if at all? 

Darren Farnan: Oh, it's huge. And I will say this, for every electric co-op I think that gets into this business, the pace and the different style of business is definitely a culture changer, but what we've found, and I've seen this with other co-ops that have gotten into it, it kind of re-energizes those original roots. It re-energizes that fact of bringing a service to our rural members and customers that they aren't getting from other providers. So, like I said, it follows that same path that we took in the '30s and '40s, but it's really been interesting, because early on we were building some of these communities before we built some areas for our members, and still, honestly, we're still reaching some of the most remote areas of our membership that don't have access to broadband, which we're trying to get wrapped up here in 2022.

Darren Farnan: But what that's done is over time, there was times when the members might say, "Hey, why are you building in this community when you haven't built to me yet?" They've really understood the value over the last few years from a rate stability standpoint, we've been able to discount... We've been able to provide rate discounts in one form or another, either rate discounts. We typically do a thing in December where we... Our service availability fee which is about $45 is removed to kinda help folks with their Christmas spending and things like that. So, we've actually been able to give back over $9 million the last three years, which is a lot for our... From what we were able to do in the previous decades, it's exponentially more money that we've been able to give back to our membership, they've been able to benefit on lower overall cost of electricity because of what we've been able to do in the fiber business.

Drew Clark: And just to be clear, this is fiber, fiber, fiber, right? I mean, there's nowhere that you're serving, no matter how remote, that is not a fiber customer. And how does that impact the thinking of people who live in rural areas to be able to get... I mean, what level of speeds are you doing, gigabit or 100 meg up, down? What's the kind of the offering you're giving out there, Darren? 

Darren Farnan: We are... Our low package is 200 megabits, and we go to a gigabit, and try to keep a fairly simple price structure, but yeah, for... I'll just tell you, $50 for 200 meg, I think which is competitive anywhere in the country, and under $100 for gigabit service. We're actually looking to up our speeds and start offering two, five and 10 gig services soon. So that's been something we've been looking at. And that's the great thing with this fiber, I mean, that's the other thing, we've done wireless, we've done satellite in the past just trying to meet those needs, but we had never felt like the... We look at it, you're funding what's a five-year asset on a, say, a wireless access point, versus a 30-year asset on fiber. So I feel when we're spending that money, we're investing long-term, but we feel like that's the right way to go for the customer, right? 

Darren Farnan: And I think it's the right way to go for us because it's, like I said, it's more CapEx less OPEX and you're not changing equipment and doing different things all the time. And what's in there it's just like that, we started off with 100 meg services, which we're now doing gigabit and soon be doing two gigabit, five gigabit services, and all we're doing is overlaying new optics. Once that fiber's in place, and we feel like that's really been the critical piece, once that fiber's in place, that capacity is there to keep expanding as needs grow because I can tell you this, not just from 2013 when we started but even pre-COVID, the average usage of a home is growing exponentially as well. So when we first rolled out gigabit, we thought nobody's gonna take this but now over 60% of our new customers either take 500 mega or gigabit service, so... And that's in, again, some of the most rural parts of Northwest Missouri so we know that the needs are there they're the same in the most remote area of Northwest Missouri as they are in Kansas City or St. Louis or whatever it may be. People are still doing the same things on the internet and needing that bandwidth and I think that's growing even more. And like I said, we've all seen it with... It was such a game changer with COVID. I mean, we thought we were busy and a lot of demand before and then that just blew the roof off.

Drew Clark: And just to be clear, when you're saying 200 megabits, 500 megabits, a gigabit, two gigabits, five gigabits, 10 gigabits, these are symmetrical, right? 

Darren Farnan: Right, that's correct.

Drew Clark: So we're not just talking about like a 250 or 300 teaser download with the crappy five meg type. You're talking symmetrical, which is really of course what drove a lot of that demand in the pandemic? Would you agree with that statement? 

Darren Farnan: Absolutely. I mean, that's where we saw people when we're trying to Zoom calls, just like we're doing today. That was a big driver. There's just more and more functionality on the web that's requiring that symmetrical level of speed. And again, it's getting the right infrastructure in place. I'm always hesitant... We talk future-proof, we never say future-proof hardly with any technology, but I think when we look 20, 30 years down the road, what's the right thing to do? I think there's no doubt that fiber's the best technology. If it's your home, right? 

Drew Clark: You want fiber. You don't want it to go somewhere else and not go to you, right.

Darren Farnan: Exactly, exactly.

Drew Clark: Well this is an Ask Me Anything, we got a good bit of questions. I'll percolate some others in here too but let's go to some questions on the page here. Here's one. What are some first steps communities should take if they are interested in starting an electrical or a broadband cooperative? Okay. So tackle that one for us Darren.

Darren Farnan: So starting an electrical cooperative would be tough because there's usually providers in the area and sometimes there's state or state stipulations, things in place where there are some places where we can serve and where we can't. Like I said, we're in Missouri. There's their own set of charters and rules with the state so there would have to be some things down there to take a look. I know there's some rules for IOUs, for investor-owned utilities. They can carry broadband in some states, potentially on some of their existing fiber 'cause electric utilities are putting a lot of fiber in for their own communications from substation down to the home level. And that's where we kinda saw this happening over the course of time, where that was going anyway. And we thought, well, this is an exciting opportunity 'cause it gives us the ability to do broadband to the home but also it helps with our overall kind of look at our electric system and how the operations are flowing, whether we're at the substation level getting automated readings from the home.

Darren Farnan: There's just more and more bandwidth requirements that we see there so it's a great mix. As far as starting an organization like that, I think that would be kind of state-based and you would have to look through that. As far as working with a co-op or another... You know, co-ops typically have a little bit more, not every state, but that's gotten better over time that more states are recognizing the benefits that electric co-ops bring to the table and in the broadband arena. And if there are rules in place in the state, then a lot of those have that the state legislatures are taking action to make sure that they're getting those cooperatives in the game, if they choose to be.

Drew Clark: Right. There were notable changes in North Carolina, for example, that barred co-ops from being in broadband that loosened that up. And you also mentioned the role of smart grid, sometimes that term is thrown out. What would you say drove, besides the Recovery Act of 2009, Darren, what drove United Fiber to say... I guess maybe on a scale of one to 10, how important was that electrical self-capacity issue versus serving your customers with residential fiber? 

Darren Farnan: Yeah, I mean the need generated from our members' need for broadband but this was like, and we might be backwards, it's for other electric utilities. It's probably the fact that they want to get that fiber out there. I'll give you an example. Right when we first started in the fiber business and got fiber into, we had about 15 of our substations. And we were doing readings at that time. Well, we've done automated reading for quite some time but there were a few of our substations that because of the bandwidth that was available and some of the connectivity that came into the substation, we were having trouble getting readings. So we were sending, usually, our lineman out to get readings in some of these locations to the tune of about 600 readings a month. So when you're looking at guys that are two guys in a truck making lineman wages going out and getting readings, it's not the most efficient thing in the world, right? So we were able to drop that.

Darren Farnan: Basically, by the time we got the fiber into all those substations, we dropped that to almost zero as far as the issues we were having. That's just one, one anecdotal story of the benefit but we're really seeing this now as we're going to demand rates and different things like getting into a little bit of the electric piece of it, but as we look at usage time and the different things that come ups and other electric providers are trying to do to shift peak usage and those type of things, electric cars, whatever that may be, there's just so much more demand for connectivity, for information. That, again, when fiber's to that house or to that meter, that gives us so much more capacity to bring information back in. Maybe looking at that you can do 15-minute reads instead of 4-hour reads of that meter and doing those type of things. So, again, it's just laying the ground work for where we know the electric business is going as well.

Drew Clark: And maybe it's the case that it was more of a factor with other co-ops than with you. You were more kind of forward thinking, present and thinking, "Hey, there really is gonna be a residential demand." So you were there because of the residential demand. Maybe others had to be dragged into it, and then they've learned that there was that demand.

Darren Farnan: Right, or that they have fiber already to their substations and they're thinking, "Well, we're kinda comfortable with this. We're doing it on the communication side. Why can't we take it to the house and give our members the service that they're requesting?" And that's what we're really seeing. And it's exciting. Like I said, when we started, looking at this back in 2010, there were only a couple of co-ops, maybe five co-ops that had kind of really started looking hard at this and had requested funds. So it's really exciting to see from what was looked at as you kinda got funny looks sometimes at the national meetings about, "You're doing what?" But as that's grown now, it's interesting when you go to a national rural electric meeting that there's probably more sessions on broadband than there is even on electric service, so it's pretty interesting how that tide has turned over the last five years.

Drew Clark: Yeah, we'll have more questions on that, but I'm gonna be getting a question from David Taut who asks, "GPON, xPON, FTTH, FTTP, MPLS." All these are buzzwords. Most of them I'm actually familiar with. Gigabit Passive Optic Internet. I'm not even sure what xPON is. Maybe it means anything about gigabit...

Darren Farnan: It's actually XGS-PON, and I don't know if I can give you that. I'm not the best technical guy here at the business. But XGS-PON and NG-PON are both the technologies that are allowed as... The traditional GPON service is two and a half gig down by 1.25 up if I have my numbers right, and whereas XGS-PON and NG-PON are allowed us to go full 10 gig by 10 gig on the PON. So depending on how many people you put, whether that's 32 people, 64 people, whatever your split rate is, it's allowing a bigger pipe. That's why I almost equate it to water. It's just a bigger pipe to provide more bandwidth.

Drew Clark: Well, the specific question, he doesn't just give acronyms. He says, "There are now so many different forms of "fiber" that it's impossible to tell what infrastructure method is best. Is there a form of fiber technology that is best for independent broadband and is there some form that is the worst? What is the guide for how to choose?"

Darren Farnan: I don't know that there's a perfect answer for that. The active view has been the case of a single fiber, single home, which obviously provides you the most capacity, but when you get into that and you're in very rural markets, it's problematic because you're running such a heavy fiber-count on your existing infrastructure and things like that, then you get into things like weight loading and all these other things on your polls that maybe you can't handle. We're excited about the GPON because just in the short amount of time we've been in the business, relatively short, over the last eight to 10 years, we've seen such an advancement in the capacity because we started off with GPON, which we thought, two and a half gig, we can share that. No problem. There'll be there's plenty of bandwidth.

Darren Farnan: And then we've got more demands, and that's why we're looking into our next steps, XGS-PON. But I think the last I saw an NG-PON connectivity, there's up to a potential right now, service for 80 gig NG-PON to where you can share that 80 gig among yourselves, whatever that is. So I think the technology, again, back to what I said before, the beauty of our system is we have our GPON units. We can overlay XGS-PON right on top of it and give the customer. If they have needs higher than gigabit service, we can make that happen on that existing fiber network. It's really back to the technology. It's really just the electronics on the end, and that's why we like the fiber so well, is because we can, as we're rolling this out, and many co-ops are already there, they can provide 10-gig service easily on an existing GPON, what we would say a PON type of network.

Drew Clark: Right, and just to be clear, if you were to change from GPON to XGS-PON, you're not having to rip up the fiber and replace it.

Darren Farnan: No.

Drew Clark: It's just an electronic change.

Darren Farnan: It's another shelf in the location, and then you basically pop those fibers into that and you're off and going, which is crazy. We knew that was gonna be the case. We hoped that was gonna be the case, but we're really seeing that happen now that, again, our existing network is operating fine, we're overlaying additional electronics and able to escalate those capacities now.

Drew Clark: There's another follow-up technical question. What is the fiber world doing to provide guidance on managing bluffer bloat? Okay, you need to define that one for me 'cause I don't know what a bluffer bloat is on, especially over subscribed GPON networks.

Darren Farnan: I think it's probably buffering potentially.

Drew Clark: Oh, my goodness, bufferbloat.

Darren Farnan: Yes, I don't know if I'm... I'm familiar with buffering. I don't know if I'm familiar with that term exactly, but yeah, I think that's really the case. It is like we are constantly monitoring our networks to see where we are seeing spikes, as I mentioned before, as demand continues to go up. That's the exciting part again, by overlaying this additional technology, we split rings. Again, I'm not the technical guy, but I can tell you that we have a number of ways to decrease capacity on individual... As rings get more saturated, we can cut those down, provide bigger middle level, kind of on the back plane of the ring, more capacity there. We've continued to add more bandwidth to our head and locations. We could go into a whole litany, a whole other series of how to do that, but the great news is, it is kind of back to the same basic principle with fiber. The option of being able to go ahead and upgrade that capacity, while with other services, if that's a satellite or wireless or whatever it is, then you're out replacing equipment at the customer level, typically.

Drew Clark: Kind of from the other perspective, another question is, how would you respond to those who say that symmetrical speeds are overblown? Okay, so this is kind of contrary to the point of view I was arguing a little bit earlier, but there are some people saying, "Look, oh yeah, maybe we need higher upstream and higher downstream speeds, but do we really need the full gig or 10 gig up as well, as down." How do you respond? 

Darren Farnan: Again, that's back to the individual home. I think it's as easy as simply saying I don't think we even... We didn't foresee the demand on this fiber network just five years ago. We're seeing the demand for upload speeds increase, again, just like the download speed is increasing exponentially, and so where are we at the next five years? I don't think we know even yet and what other services are gonna come out. But again, it gets as simple to me as that's like, what do you want at your house? Do you want the ability to do anything you need to do. It's kinda like the... I'll equate it to the electric side. If I need... Most people only need 1-10 service or whatever, they don't need three-phase at their house, but when they need it, they need it, you know type of thing. And we have to be able to provide it. So it's the same type of thing here. If you need that type of upload speed, then fiber is the way to get it.

Drew Clark: Yeah, absolutely. We have a question from Jace Wilson, he asks, "Darren, you brought low latency affordable gigabit symmetrical fiber to Northwest Missouri with the United Fiber crew starting with the BTOP, the Broadband Technology Opportunity Program 10 years ago, more than 10 years ago. Meanwhile, it's 2022 and I can't get anything but copper crap in our corner of the San Francisco Bay area, can you run a line out here? And how cool is it that there's fiber to the farm, thank you."

Darren Farnan: It might be cheaper for Jace to move, maybe, I don't know. Yeah, but it is. It's pretty exciting because I'm from the area, right. I mean, I grew up on a farm, not far from the office I'm in right now, and that is really the coolest thing when you walk in... When you go into a house that they've either been... Literally we see still we go into homes that have DSL connectivity that's less than a meg that they just...

Drew Clark: Less than a meg.

Darren Farnan: Less than a meg.

Drew Clark: Less than one one thousand of a gigabit, right? 

Darren Farnan: Right.

Drew Clark: Your standard.

Darren Farnan: When do you switch that over, when you... I mean you just opened up. And they have kids at home that have been home during COVID trying to do their homework and do things like that. And you hear the stories all the time of the McDonald's. People driving to McDonald's, it's real. I mean the unfortunate thing is, those are great stories, but they're real and it's not so fun for that family that's actually doing that, right. It's hard enough to get the homework done at home, much less trying to drive kids around 15 or 20 miles to set in a parking lot. So again, I'd probably take more satisfaction out of that. It's great to switch people over. I mean, we see really about the same take what we call a take rate. We see about the same take rate and if we're going in against a competitive copper cable provider as we do out in our rural market, so it's not so much to have a... I get a large personal gratification when we pull like a satellite out of somebody's home or you get them off of a, like I said, a less than three meg DSL connection that they can't have more than one person, they can't stream Netflix or whatever it is, so.

Drew Clark: You gotta a satellite, hey, let's take it to the Smithsonian, right.

Darren Farnan: Yeah, that's right, that's right. But it's funny because just honestly still just like six, seven years ago, we were still putting those out. I mean, that's how things have changed. So back to these other questions, I mean I think when you look at where this is going, I think if somebody can tell you where we're gonna be in five years, I don't think they really know. I never thought we would see this level of demand on our network that we've seen in just a few short years.

Drew Clark: Let's take a few questions on the electric services aspect. Interesting question from TJ York here, who wrote that profile of you on the site there, "Do you foresee any phasing out of your electric services in the future?" In other words, has your broadband kind of been the tail that's wagging the dog? What do you think about that Darren? 

Darren Farnan: That's a great question because we see... When we talk to bankers or our board, or whatever it may be, electric service in general has been seen as like one of the safest investments that can be made, right. Because you're the sole provider to that house. What we're seeing though is like with distributed generation and other factors, solar, wind, whatever that may be, there's getting to be more with battery operation. I think as battery is coming along, that even gets to be more prevalent. And so we see obviously challenges in that market moving forward to see... I think there's still the need for the poles and wires, but how does that co-exist with some of these other resources as electric cars become more prevalent, again, because we're so rural, we haven't seen it as much. But there's co-ops to our south and on the north edge of Kansas City that are seeing a lot of electric car demand. And how do you balance that demand on your system? Because it's a big piece and not drive your demand rates and electric rates up so high if everybody's trying to plug in back at night.

Darren Farnan: So I think that we're an electric co-op at heart, but obviously we are unique, that like I said, I think there's only a handful of electric co-ops that have gotten over 20,000 subscribers on broadband at this point, much, much many more are coming, but all of those are 30,000 plus meter co-ops too. So they're all... Like I said, we're unique, when you mention the tail wagging, the dog, it's a little bit unique for us because we're, like you said, three times the number of customers. And we just try not to put labels on it, right? Our mission is to basically take care of our members and take care of the region, so we just look at it that way and it really benefits all.

Drew Clark: Well, and that leads into kind of the complementarity of electricity and information, right? And Jace has another question, you now serve more than three times or nearly three times the number of electric members, what's your outlook for the future of RECs who do not follow in your footsteps and transition from energy to providers to energy and information providers? In other words, those who don't make this move, what's gonna happen to them? 

Darren Farnan: I tell you, I've been at the co-op for 25 years and 10 years ago I was getting nervous, right? Because it's like, how do we sustain this trying to continue this much plant with the way costs are going? When you look at a digger derrick truck, the cost has gone from $100,000 plus over that same amount of time to nearly $400,000 to how do you keep the people, the equipment and things you need to provide reliable, safe electric service, which is ultimately our goal at the end of the day? How do you do that long-term, whenever? We're not adding customers, as a matter of fact, we're sometimes... We saw some years with net loss of customers. I think for co-ops that are in a growing area, they're fine, they'll continue to do their electric service, they'll continue to do their different things, but I think for people in areas, especially if there's not good connectivity in that area, because I mean none of us... I mean, who's gonna buy a house now that has three meg DSL. And I think most people won't.

Drew Clark: No.

Darren Farnan: So how do you keep people in your area. It's, what was the saying? The death by 1000 cuts, but it still happens. If you can't keep people in your area, if you can't grow your electric base, or at least sustain it, it's not a good long-term outlook.

Drew Clark: Now, I mentioned to you a little bit earlier, I had an American Recovery and Reinvestment Act experience. In fact, I moved to Illinois, the neighboring state, and worked with the governor of the state to help coordinate the plan on Recovery Act Funds. Talk a little bit more, Darren, about how you've used... How you've viewed and used the Recovery Act as a lever for... Specifically, if you don't mind, how you applied, what you did to kind of get those funds rolling, and how that helped your deployment. And now how you're planning to do that to help United Fiber be one of the most outsized recipient of infrastructure investment and jobs act funds.

Darren Farnan: You bet. So yeah, it's been quite a transition. So back at that time, we were an RUS Borrower. We're not any longer on the electric side. But when those funds came out through R... That was administered by USDA and RUS. We applied at the time, not really thinking we would get it, but we thought this might be that once in a lifetime opportunity to get some funds... Especially then, that original area of those 14 substations where the service was so bad. And fortunately we were funded and that really spurred us in. And I remember thinking at the time... I think that... I'm going off memory here, but I think that passed about just a little over 5000 homes. So I thought, "Man, if we could ever get to 3000 customers, that would be such a great thing." So we went there. We've been successful as time has gone on, but that was really the key... That really was the key to get us started... That got us going, that got us the initial network built, and then, like I said, we started seeing the demand off network, off plant. I should say.

Darren Farnan: And then also, we've participated in FCC auctions, Connect America Fund. We were fortunate enough to get about 20 million through Connect America Fund. And we've also been able to get money through the rural digital opportunity... Part of the Rural Digital Opportunity Fund. We've also done a couple of small projects with the state. So we've looked at... We've tried to be... When you're small and two and a half meters per mile and all that, you scrape and call anyway you can to get what you need to make it work. And so I think that's been part of it. But between the funding, we've been fortunate to participate and get that additional funding. Which a lot of times people hear that and they think, "Oh my gosh, you got $ 20 million, you should be able to build everywhere." But those are very specific areas, very specific census blocks, and it's expensive. We spend... We invest millions of dollars a year in building plan, and much of that is not in areas where... A lot of that is self-funded now through the success we've had in other areas.

Darren Farnan: And like I said, pulling that revenue in from the more dense communities that we serve has really helped us expand further out into that rural market. So that's kind of been... Kind of the combination of the federal funding, state funding, along with, again, building those communities that have high density to help offset the cost out in the more rural areas, has really been kind of the trifecta, I guess, so to speak. And moving forward with IJA, and some of these other... It's really gotten down now to... We were seeing big areas that we needed to serve. Well, we've had such success in getting the network out. Now it's really boiling down to... It's gonna become a... It's like a micro-exercise. It's like seeing these little pockets of homes that maybe haven't gotten served already, and how do we get there. And we're working honestly with a couple of counties right now with ARPA funds, but as our state broadband office is figuring out how they're gonna deal with the funds that's gonna be coming in through the state. We're staying in close contact with them and really just figuring out how to close those gaps. Because that's the exciting thing now. It's not... We're not trying to cover the whole county, now we're trying to cover maybe 10% of the county, and trying to finish that off to where everybody is served.

Drew Clark: So I asked a question on this stream and you responded already, but just to kind of re-emphasize the three most critical elements for electric co-op to be thinking of when they enter a new market. You said, "Well, most of what we're doing is not in our electric territory." And then you said you look at a number of factors, most critical being broadband needs, availability and competition, cost per passing and funding opportunities. Would you elaborate on that, Darren? 

Darren Farnan: Sure. Well, ultimately the need is there, right? Are we getting... We do a lot of marketing, it's... We've heard they're called fiber hoods. That was, I think the Google term back in the day, but we see where that demand is coming from. We look at that across our whole footprint. We kind of evaluate that as we get ready to establish new projects. So that kind of leads us in the areas that... Where we know there's demand, and that kind of starts it. Then just from a business practice, we look at those... What makes the most sense. Obviously, we have a high priority strategic initiative to finish on our membership this year, and make sure that's done. And again, that's getting to the most difficult areas to reach, typically where we haven't received funding or anything else. So we're trying to close that in. But as we go off system, more like a traditional for-profit provider... Over builder, so to speak, we look at the areas that make sense. We've also worked with a co-op to our south, that chose not to get in the business, but they wanted us to come down there. So we have, and we're actively building in their area as well. So again it's, there's always a multitude of factors that go into it, but when I was trying to summarize it into those three, I think we start with need. Where's the need. Then you kinda have the financial equation then of what makes the most sense to start on a cost per passing and those pieces.

Drew Clark: We have a few more questions here I'd love to get in. Thank you for your questions and you can just keep sending them. This came in just a few minutes ago. Michael Ealing, asks a series... Let me tackle them all at once. Would United Fiber ever consider offering hybrid 4-5G mobile services using CBRS-band 41? So it's kind of like the wireless end there. The second question he asks, is there a difference between the penetration or take rates of homes passed between in town and more rural farmstead locations? And then the third question he asks is, has United Fiber combined fiber with smart metering and or home controls in the United Electric Cooperative footprint? So feel free to tackle all those there.

Darren Farnan: Okay, but I'll have to have you repeat... I'll start with the first one first...

Drew Clark: Sure.

Darren Farnan: So, we've not done anything specifically to the meter directly with fiber, but it has facilitated because we do use... There's a company that we use that had... That they do use wireless on the backend, but at the substation level, we've connected most of our devices, some of our reclosures and those type of things. So it's really benefited the capacity, 'cause as you drive, it's... And so, I'll kinda dovetail that into the question about the wireless piece on the CBRS. We actually do some of that 'cause we've been a wireless... We started off as a wireless company, but typically what that is, is either an overlay for a temporary area for coverage and until we can get fiber there, unless it's just... There's a place for wireless, and I see fiber and wireless being complementary. I think mobile applications, you get into agriculture and things like that. I think both have to play, but we all know that the deeper fiber is into the network, the more capacity you have on wireless. And that's what's allowed us to get our wireless speeds and capabilities up, is because we have fiber typically close to the locations that we do that. And like I said, that's been more of often temporary or just in areas that, for whatever reason, it might be off of our network that we've hit those areas on our short-term basis, and then... Well, but our long-term goal is fiber, to get fiber everywhere. And then the second... There was a middle question there, Drew you wanna...

Drew Clark: The middle question was the difference between the take rate in town and broadband... And rural areas.

Darren Farnan: So I'll say this, in... What we've seen is it's a quicker take rate in the rural markets because they have... Typically have nothing. We've seen some areas, again, we're serving some areas down just north of Kent City, if you're familiar with Kent City Airport, just north of that area, that are working off hot spots and different things that I've been amazed. Expensive sub-divisions, and we actually had one subdivision that we... I think there was... I'm trying to remember our number, I would say like roughly 125 homes, and I think 122 took our service. So...

Drew Clark: Wow! 

Darren Farnan: Amazing, crazy. But over time, what we see in our competitive markets, is it's not as fast, but over three to four years, we still get relatively close to the same take rates, because...

Drew Clark: 98% take rate, that's pretty incredible.

Darren Farnan: Yeah, it was pretty... That was definitely unique. We typically see 50 to 60% pretty over... Once we look over two to three years consistently, and that seems to be relatively consistent, maybe a few points higher than the rural markets, but not exactly... Part of the thing is too, is like, I think people in the communities where they've had... I think Jace maybe was the one that referred to "crappy copper service", quoting him, but he... But I think when people have had a taste and they want... They're used to working from home, they're used to... They want their kids to be able to game or Netflix or whatever it is they're doing, once they've had that taste, they want better. So I think that's been the thing, we offer two things, fiber, we believe is obviously the superior service, but then the other thing I think is our local service, the customer service, which sounds a little hokey, but is real.

Darren Farnan: We tell people as we go into communities, we typically have meetings with the communities or whether that's a home owners association or whatever it is, we try to have that up front. And before we ever start, and then we tell them, "Every decision maker in this organization is either in Maryville, Missouri, Savannah, Missouri or... There's no other place to go. It's a... There's no corporate office somewhere else. And that resonates with people. 'Cause they don't like... Even if a service is decent when they're on hold for hours or they can't get a hold of a local repair man, or things like that. Besides having the superior service, I think that local service is a big differentiator. We try to open local offices in the markets we serve, at least where people don't have to go more than 20 to 30 miles to see somebody face-to-face.

Drew Clark: Right. Well, Darren, we've talked a fair bit about United Fiber and the electric co-op behind it, and a bit about electric co-ops in general. We haven't talked as much about you personally and your background. Tell us just a little bit about how you came to the United Electric Cooperative, and some of the things that have shaped kind of your incredible leadership as the Chief Operating Officer of this organization, and the other roles you've had in... For the last 20-some years.

Darren Farnan: It's kinda funny, I've joked I've been at the co-op for over 25 years, and I said I probably did... I probably worked at a co-op longer to not know anything about electricity than anybody in the country. I've always started off... We actually owned DIRECTV territory when I started with the co-op and that's what brought me here. So that was kinda... This was back in the late '90s. Folks didn't have TV service, it was just big dish satellite, which was expensive. And we actually bought territory through DIRECTV, and that kinda started us off on this venture. And then we've migrated from that, and so I always kinda managed our subsidiary business. And then we've gotten into, we kinda morphed into the need for broadband, which started off as satellite, which became wireless, which became fiber. Now fiber has been by far the dominant organization, and like I said, we've been really focused on that since early 2010 when we first applied for those grants.

Darren Farnan: So that's really been the focus. I went to... I'm local, as I mentioned earlier, growing up on a farm, it's kinda funny because we were... Our farm was on the electric co-op, and I remember driving by the building all the time. I was like wondering what that was, never really knowing, kind of interesting, but... And my parents would go to the annual meeting, but whatever, I didn't really know that much about it. But again, once you got involved with it, and once... And the mission and the passion, and I think that that basis has really kinda sustained... Every day is new. We're bringing a service, it's kinda fun to come to work every day, not everyone's always happy, not all customers are always happy. I don't mean it like that, but overall, you know you're doing a good thing, you know you're bringing a much needed service to an area that needs it. Like I said, it's easy for me because I'm from the area, I know so many people and I know these communities that we're going into, so that part has been a real blessing.

Darren Farnan: And fortunately, we're in an area that... Here in Maryville, there's a university, there's two universities near each of our headquarter location, so another piece of this is talent, right? Is like finding the people that you need, and we've been blessed to have a great team. We... Especially early on, we had some great people that... Both from on our outside plant side, network side, that have really driven this whole thing. So it's really been a great team. We've been fortunate with that kind of right place, right time, and I feel like we've just listened to the demand, we've listened to the customer. And that's got us from going to what we hoped would be 3000 customers to closing in on 23,000 customers, and I think... And we've seen the growth, our fastest growth was in... We connected on average about 640 customers per month in 2021 and we see that probably growing even more in '22. So it's busy, a lot going on. And like I said... And it's taken time to get there, but it's pretty exciting.

Drew Clark: How does it feel to be able to work in the same community that you grew up in? 

Darren Farnan: It's great. I mean, unless people aren't happy. That's never fun 'cause they know right off the bat how it is. Overall it's good. You mentioned going to the grocery store and it's literally that. It's like we joke about that with our employees. We're up to about almost 50 employees now on our fiber business and starting from scratch. But it's like we always joke 'cause if you wear that United Fiber shirt to the grocery store, you're gonna hear from somebody who's like, "You're just down the road from me. Why have you not built to my house... "

Drew Clark: "Why are you not here?" Yeah. [chuckle]

Darren Farnan: It's like for no more people than there are in some of our areas, it's amazing how many locations we're within a half mile of, but it's a great thing, really. Because it's like I said, people recognize how valuable that asset is, how valuable that it's infrastructure. It's needed infrastructure, and people know and appreciate that when you bring it to them.

Drew Clark: This isn't to end on a down note, but there are so many concerns out there about supply chain. And one question we have kind of a bit tongue-in-cheek here is that, "There's been a lot of talk of fiber providers hoarding fiber like toilet paper due to supply chain issues. Has this been the case for you? If so, what recommendations can you make for smaller fiber providers to minimize the impacts?" And in our previous conversation, you said it wasn't a big issue for you. So tell us how did you manage that? How did you manage that trick, Darren? 

Darren Farnan: I would say it's not a major issue 'cause we're at a point now that we kinda know what to expect from our volume. We kinda work backwards with, "What's our goal? How much do we wanna put in?" We have standard fiber sizes that we use, so we've been able to order ahead. I will say the one challenge we had a little bit is the resin shortage. So with both, with duct, pedestals, things like that, that's been a little bit more challenging, but it would be tough starting off. I'll be honest. If you were starting today and you don't have those relationships built with some of those buying groups that we're a part of, it would be hard. We were able to thankfully forecast ahead, where like I said, we're placing orders often 18 months out at least.

Darren Farnan: And I know from the fiber side there's been some increased production, so that's starting to alleviate just a little bit. But with the way... With what we're seeing in the Ukraine just this last week, obviously world factors can come up that can impact that pretty quickly. So I say we've... And probably for us, labor is as much of an issue as anything. We're fortunate to work with our prime contractor that has been here for years and have that established relationship. But I tell you, with all the growth going on and with all the funding that's coming down from the Federal side to the States, I think labor could actually be a bigger constraint. Or I should say as big of a constraint as the physical piece, as the material.

Drew Clark: Yeah. Well, Darren, it's been wonderful to spend this hour with you, to get a perspective not only of you as a person and as a leader as the Chief Operating Officer of United Fiber, but of the incredible role that United Fiber has and obviously we expect will continue to play in Missouri, in your state. And finally, about the role that RECs, rural electric co-ops will be playing nationwide. Do you have any final thoughts you wanna share, maybe kind of particularly to other RECs out there? What should they be thinking about if they wanna be like United Fiber, like Darren Farnan? What should they be thinking about and doing in the next six months, year and so forth? 

Darren Farnan: Well, some of the... When I mentioned that handful of electric co-ops that kinda started looking at this back in 2010, there was no blueprint, there was no, "How do we do this? Will it be successful? Will it not?" I think there's enough of a blueprint there now that if there's a need in your area, you can get the help you need. The great thing about co-ops, and there's other vendors, other people that can help with these companies that specialize in it, but the great thing about co-ops is we help each other. So we've had multiple other co-ops come in here as they're looking at getting into that type of business. We've gone to other co-ops to get to share ideas. So that's the great thing is, you're not... There have been a number of successful ventures. As long as there's a need in your area, I think, and especially with the potential funding that's coming down, there's really the opportunity to do this. And I think, again, I'd say listen to your members. If they're asking for it, try to make it happen.

Drew Clark: Well, again, big thanks to you for being with us for this Ask Me Anything! On Broadband.Money. We'll see you around. We'll see you... We're back here every two weeks with this discussion. Darren, good luck to you as you prepare for your plans for implementing new funding, and thank you on behalf of Broadband.Money for being with us today.

Darren Farnan: You bet, Drew. Thank you all too, not just shining a little bit light on United Electric and United Fiber, but also just on the electric movement in general in this area, because I think it's important to close the digital divides for the country.

Drew Clark: Great. Well, take care. We'll see you later.

Darren Farnan: Alright. Thank you.

Drew Clark: Bye-bye