Why Are Some Homes In Eagle Mountain Still On Copper Instead Of Fiber?

“What is the holdup?“ asked Eagle Mountain resident Don Mallicoat recently on Facebook. This is an excellent question, which many customers in Eagle Mountain who are still on DSL (copper) connections, are probably asking. Why are some homes in Eagle Mountain still on copper, while most are being served with fiber to the home? What is preventing Direct Communications from taking fiber to every home today?

The very short answer is simply: money, and the sheer cost of the citywide upgrade.

The slightly more expanded answer is specifically: cash flow.

The more complex answer, that requires some real explanation, is government regulation of our industry, and how the business model of rural telecom works.

Firstly, let’s be clear—we wish we already had fiber to every home in Eagle Mountain. If we could wave a magic wand, we would make that happen today. Our research and data shows that fiber customers are more satisfied with their service, irrespective of the bandwidth package to which they are subscribing. Further, our data indicates that fiber customers cost less in maintenance and customer support. Our goal is to upgrade every home to fiber as quickly as possible because it is better for our customers, the community, and us.

When Directcom purchased the previously city-owned network from Eagle Mountain City in 2006, the number of houses with fiber to the home was 0.

The number of homes in Eagle Mountain with fiber to the home is now several thousand. So, we have made progress, but yes, there are still neighborhoods we need to convert from DSL to Fiber.

The company has already upgraded about half of the older subdivisions from copper to fiber; however, due to simple budget constraints, we cannot run it to everyone at once. Over the past few years, Directcom has been able to upgrade about 300 older homes a year to fiber, while at the same time kept up with fiber construction to all new subdivisions. During 2013 the company upgraded Cedar Trails, Sage Valley, and the Eagle Landing subdivisions from Copper to Fiber lines. During 2014 we are upgrading Pioneer and Mountain View. By the end of 2014 we should be completely done with the city center upgrade.

Since 2006, we have invested about $24 million into network assets. (This is public information that can be can be sought from the State Tax Commission.) This should give some perspective into the cost of building a modern fiber network. Where does all that money come from? Not from your internet bill, but keep reading, and we will answer that later.

Some background: Direct Communications bought the former Eagle Mountain Telecom in 2006, after the city had tried for many years to sell off its telephone network. The cost of building and maintaining a telephone network was driving the city slowly towards bankruptcy, and Direct Communications, a private telecom provider with a business model that works for remote areas, stepped up and offered a solution for residents of Eagle Mountain, and Directcom paid off the Municipal Bonds which had financed the City’s network. Direct Communications originally bought the network from the City for $6.3 million, and every year since then we have invested significant resources into upgrading the network plant to fiber optic lines, and upgrading switches, electronics and equipment to power the fiber.

So, what is preventing us from upgrading all the homes to fiber in the same year?

Like all businesses, we work within certain constraints. Our available budget is one constraint. Acquiring capital is a major constraint. For us, and most small businesses, managing cash flow is a major constraint. A small company can easily go bankrupt by growing too fast and not having the cash flow to keep up with growth, because of the time lag between investment and recovery on that investment. That lag needs to be financed. Most fast-growing startups must be fueled by outside investment capital, especially those with high construction costs like communications networks. Without this, they would not have the cash flow to even pay their employees because of this time lag. Directcom, essentially still a startup, must finance most of its network growth and upgrades through borrowing from banks and government entities devoted to lending to rural institutions. Borrowing the millions of dollars needed for upgrades is not easy, and very tight government regulation of our industry makes it especially challenging to acquire financing. Put simply, we just can’t get our hands on the huge amount of money needed to do all the upgrades at once.

An important piece of this puzzle is to understand that end consumers themselves could never pay for the real cost of bringing fiber to their homes under pure market forces in a community this size. Clear evidence to demonstrate this claim is that there no other wireline provider in Eagle Mountain.   However, rest assured, Eagle Mountain citizens, that we are truly the only provider who really loves you, because we are here with you and working diligently to bring fiber optic connectivity to every home and business. This is our only market, and Direct Communications Cedar Valley has no interest outside of Eagle Mountain. You are our only customers.

We should mention the need to build and scale the network in a technologically sound way.  Switching everyone all at once would drastically impact our network, resulting in months or years of chaos and a bad consumer experience for everyone in Eagle Mountain until we stabilized everything again.   We want to build it well, not just for today but for decades to come.  That along with identifying trouble/aged areas in the network is the primary determinant in where to upgrade and how to improve the network. The upgrades have to be carried out in a manageable fashion that will fit within capabilities, and our financing model.

Direct Communications makes their investment in fiber construction back over several decades. We borrow to build the network, and then during those decades of cost recovery, an FCC program pays a specified rate of return, which provides the incentive to invest in remote areas, and allows us to pay back the debt. Without this program, Eagle Mountain would not have a fiber network at all, and we would not have a viable business model. (Also worth noting is that there is a several year gap between when we put fiber into the ground and when it is allowed to start being recovered on under the FCC program.) Of course, along with this federal cost recovery program, comes federal regulation—a lot of it. In spite of the very real and genuine challenges resulting from cash constraints, burdensome government regulations, and ever increasing network demands, we are excited about the accelerated deployment of fiber to the homes that we’re pursuing in order to continue providing premier internet experiences for our customers now, and to prepare for the way people will use the internet in the future.   It is often trendy to trash government regulation and by no means are we fans of a great deal of it, but in rural communities where there is no viable business model for the deployment of fiber networks the model of a regulated monopoly makes the most economic and social sense.  It ensures a provider of a business model that incents investment and then a statewide regulatory authority regulates the monopoly to protect the consumers who have no other choice where to go for wireline services.

So, we will continue to slowly but steadily upgrade from copper to fiber as the business model allows. If you are already on fiber, know that you are enjoying the most advanced broadband technology available anywhere in the world.  If you are one of the customers still on copper, try to console yourself with the fact that you do have fiber to your neighborhood or street node. Only the last few feet through your yard to your home are actually still copper lines. We currently deploy the latest VDSL equipment to maximize the copper technology, and you can choose 20Mb DSL speeds, which is enough to stream about 3 Netflix movies at the same time. We are currently looking at increasing that copper offering to a 30Mb download to tide you over until we get fiber to your home. Someday every home in Eagle Mountain will have fiber all the way to the home, and the happiest people of all will probably be the employees of Direct Communications, your local broadband provider.

(Special thanks to Kip Wilson, General Manager, and Michael Parrish, Accounting Manager, for their contributions to this article.)

Pony Express Days Smart TV Winner Announced

Paul Talbot-TV prize winner, with Ben Hayes, Directcom account manager.

Paul Talbot-TV prize winner, with Ben Hayes, Directcom account manager.

Paul Talbot of Eagle Mountain, Utah, was the winner of the 2013 Direct Communications Pony Express Day Smart TV giveaway. Each year we give away an internet-enabled, or “Smart” TV to a current customer in Eagle Mountain, as part of our Pony Express Day celebrations. The winner is drawn on Saturday afternoon at our booth at Nolan Park. Thank you to everyone who participated  this year–perhaps next year will be your lucky year. We wish we could give a smart TV away to every one of our customers, to encourage all of our customers to stream as much video as humanly possible, because we find that the more our customers stream video, the more they like and value their Direct Communications service.

Why? We don’t cap your service. This is vital for really being able to enjoy HD streaming. All of our wireless competitors are now capping data, or throttling speeds if their customers download too much. Even Comcast is capping data,[i]  which is wonderful news for independents like us, because we can claim to be the only provider to offer unlimited data with no caps.

Online video has become more prevalent, more sophisticated and more bandwidth-intensive.  In 2012, video streaming sales surpassed hard media sales for the first time ever.[1] Netflix says on their website that HD video will use 2.3 GB per hour. A Verizon 4G customer could use up their monthly data allotment on a single HD movie. Netflix is beginning to roll out 3D streaming video and SuperHD quality, and soon we will be streaming Ulta HD, which has four times the resolution of current HD. Ultimately, in a future of video streaming, we as fiber providers with unlimited bandwidth are going to become the entertainment partner in your home.

Two years ago, a customer poll showed that two-thirds of our customers were streaming online video, after several years of us giving away streaming devices like Xbox’s, Wiis, Rokus, Apple TVs, Kindle Fires, or free year-long subscriptions to Netflix with our broadband service. We recently completed our 2013 annual customer satisfaction survey, and found that almost 99% of our customers are now streaming video, with 75.5% reporting that they are streaming video every day. This is good news for our customers, who are saving money on entertainment every month by using their broadband connection to access video rather than paying for satellite, and getting better-quality entertainment on demand, and it is good news for us as a service provider. So go ahead–watch as much as you want to–we won’t cap you.


[1]  IHS Screen Digest Broadband Media Market Insight report

Life at 100 Mb – How I Broke into the 1%

I always knew that someday I would make it into the 1%. I have been aiming to be a part of it since the day I arrived off the boat with just a suitcase in my hand. Unfortunately, I am not talking about my adjusted gross income,  which according to the IRS still puts me right amongst the riffraff, or for the true 1%, “rif et raf,” meaning  “one and all” in French.  But, now that I have 100Mb broadband speeds to my home, I can boldly claim to be part of the new 1% internet glitterati, which is almost as good.

100mb speed test result

100mb speed test result

If you don’t believe that internet speed is the new status symbol, replacing both the BMW and paid-off mortgage to let people know that you have arrived, just look at how the Washington liberal elite are making the National Broadband Plan their new priority. The current administration has looked at rural America, and seen how we fat cat country folk have been gorging ourselves on broadband, building “elite,” “premium” and “unnecessary” fiber optic networks to sparsely populated areas, while the more deserving cosmopolitans in the great cities of this nation languish on archaic, dilapidated copper networks that the Big Telecoms have not bothered to update since the 50’s. Consequently, city folk struggle to get 3Mb speeds in many cases. The average broadband connection in the United States is only 6.6 Mbps downstream, according to Akamai’s latest State of the Internet Report. To correct this gross injustice with some smart social engineering, the administration has declared, nay—decreed, that 100Mb speeds must be the goal for broadband to urban areas, but that 4Mb is good enough for simple rural folk. There may of course be political motivation behind this, due to the demographic distribution of where the current administration’s votes come from, but, regardless, it is clear that even at the very top of the Ivory Towers, they now recognize that to have arrived you must have 100Mb speeds.

It wasn’t easy for a poor immigrant like me to break into the 1%. Like many people in that other elite 1%, it may in the end have come down to a lot of luck, and being in the right place at the right time. The first thing I had to do was move to an area served by a rural telecom with the funding to build out their fiber optic network, and then unwittingly build a home so remote, so far away from the existing copper network, that the only option was to break out a strand from their main fiber backbone and bring it directly to my home. In this way my new house became the first in Idaho to have fiber to the home. This event was published in the Idaho State Journal back in 2006. At the time, I was cruising on the fastest available speed of 12Mb, which was unprecedented back then. A couple of weeks ago I ordered our newly available 100Mb speed package. But, although I now had that speed to the fiber optical network terminal on my home, my old reliable Linksys router simply could not handle the awesomeness of those speeds. The maximum output to my computer, Xbox and other direct-wired ethernet devices on my home network was only about  35Mb. As for the wireless devices like the Kindle and Droids, forget about it. Clearly the router was holding me back, so it had to go.

So, I consulted with my friend Jeremy Smith, who is also my neighbor and boss, and one of the few people I know in our small town who is a bigger internet geek than me. He showed me his Cisco E2000 router, which has the rare feature in a consumer-grade router of having Gigabit ports. I found a refurb model on Cisco’s website for only $39, so it was a no-brainer to upgrade to a new router. As an important side note, this E2000 is not Cisco/Linksys newest router—it’s an older model. They now have a lot of fancier ones with the ability to broadcast multiple guest networks at once and such, but they didn’t think to build Gig ports into them because, after all—who caters to the politically incorrect 1% anymore? But, the Gigabit ports are the key. If you are subscribing to higher speeds and not getting the full potential out of your internet—that is the first place you should look. Regular 10/100 ethernet grade ports will not get you to 100Mb. The second I plugged in my new Cisco Gig router into my network, I was able to get the full 100Mb download speeds to my wired devices. My upload speeds were only set to 5Mb on purpose, because that is the current residential upload offering here in Idaho, but in theory, over fiber, Direct Communications has the ability to deliver the full symmetrical 100Mb up and down.

My next dilemma was, now that I have arrived, what do I do with my 100 Mbps internet connection? I have faster speeds than 99% of the country—I need to do something important online. So, naturally, the first thing I did was take a screen shot of my speed test and post it to my brothers to make them jealous, because they still live in speed-deprived metropolises like San Francisco and Salt Lake City . I learned this trick from our customers on our corporate facebook page, who have shown me the importance of posting speed tests online. The thing about having obscenely fast speeds is that the speed, just like making even more money for the financial 1%, becomes an obsession—it becomes necessary to keep running speed tests just to make sure you are still in the 1%. So, that was also an obvious way to use my connection—run more speed tests and pat myself on the back each time.

The latest national report on bandwidth usage in the USA from network solutions provider Sandvine, says that the average household now uses about 52GB per month, or about 81 hours of streaming video, and that Netflix is responsible for 33 percent of all downstream traffic. As already stated, I have never wanted to be average, and over the past couple of years, I would estimate that I have been personally responsible for at least 2% of all download traffic in the USA due to my Netflix usage. We dropped out satellite years ago when we figured out Hulu was free and Netflix also had free streaming.  But, now that I am in the 1%, it’s time to step up my streaming video usage. Using my elitist training in statistics and standard normal distribution, I calculated that if the national average was 81 hours of streaming video, (guessing a generous standard deviation of 20 hours) to become part of the streaming 1%, I would only have to consume about 128 hours a month of streaming video. That is just over 4 hours a day, which really is not a lot of online video, especially by my family’s standards. I use that on my Kindle over breakfast.

So, I looked to become a little more exclusive, but even to be a one-in-a-million consumer, you only have to watch 178 hours a month, or 5.9 hours a day. Clearly, America is not watching enough online video—the bar is currently very low. Our baby alone is probably using that much up each day just watching Dora on Netflix. She is more like a one-in-a-billion consumer of internet media. This sounds good, but is probably not something to put in Parenting Magazine.  Perhaps to feel more like an elite 1%, we should do something more extreme, like put an internet-enabled TV in all of the bathrooms–luckily I already took the precaution of wiring our Jacuzzi tub with ethernet for just such an emergency.

Of course, the real advantage of more speed today is the number of devices you can connect and stream to at the same time. In my home we have an Xbox, a Wii, a Roku, two desktops, some laptops, a couple of smartphones, and a tablet. That’s only about 8 devices. I know people who have a lot more devices than that in their homes, especially if they have a lot of teenage kids. If the new primetime at home consists of Mom catching up on The Bachelor on her iPad as she runs on the treadmill, while Dad is watching reruns of Shark Week on Netflix, and the kids are on episode 103 of SpongeBob on the Xbox, that is going to require a very robust, constant feed. Family time is just not what it used to be when everybody was staring at the same screen, but multiple screens require multiple IP streams into the home, and that is where we as the 1% truly shine. I sometimes hear customers complain that they can’t watch Netflix and use their VOIP phone at the same time, and I can only shake my head in pity, because they are only subscribing to 1.5Mb speed. If I am to fulfill my responsibility as part of the 1%, I clearly need to invest in even more screens, and I need to keep them all streaming simultaneous, whether anybody is watching them or not.

I have noticed with the financial 1%, that it is difficult for them to fathom how regular folks live. After a while of being rich, they tend to assume that all people live the way they do. They will say things in conversation like: “I don’t understand why you are going camping for your family reunion. Why don’t you all just go on a cruise like a normal family?” Hopefully I will start to become that way with my elite internet service. For example, I already just assume that everyone watches ESPN3, Hulu, Netflix and orders new releases on Amazon Instant Video like I do, or at the very least make use of remote Slingbox at an undisclosed location. I question why the masses are still wasting their limited income on old-fashioned satellite, or worse—visiting that bacteria-infested Red Box. But, I recently tried to watch a BYU game on ESPN3 at a relative’s house in Salt Lake City using my remote access account, and it was an absolute nightmare—not even worth watching over their 4Mb internet connection. The resolution and quality adjusts to your internet speed, and this was so pixilated that I could barely make out the opposing teams colors. I am used to watching ESPN3 on the Xbox at home in full HD, with no buffering, and a crystal-clear picture even better than HD satellite, because they use more compression in their digital feed than our direct internet feed does.

I am probably never going to be in the financial 1%. In fact, I suspect  I don’t even know anybody who is part of that 1%. But, I am finding it’s not easy being part of any kind of 1%, and I’m beginning to feel a slight empathy for them because of our shared experience. There’s the taunts, the derision from co-workers, the protests and the whining from regular folks complaining about their lesser service, the threat of government redistribution of bandwidth hanging over our heads, and the boredom of having unlimited resources at your fingertips. I can’t even enjoy the mobile data on my cell phone anymore—it is ruined forever for me. How could I ever go back from 100Mb? I will never be able to move into a house without fiber again. My options for relocating are going to be extremely limited from now on. Sometimes I just miss the old fashioned phone—it is tiresome having to dress up for video-conferencing all the time. I’m trying to be a good representative of our elite super-broadband caste, but I don’t play games; I don’t look at porn; I don’t download or upload anything illegal. I don’t even Bit Torrent. I wonder what the proletariat would do with 100Mb? Even though it means I will just be one of the masses again, we are going to have to give 100 Mb to all of them someday. Hopefully by then I will have 1 Gig speeds.

Fully Symmetrical Fiber Broadband Speeds are Here

Now make your fiber broadband fully symmetrical for only $10 more a month.

(This means your upload speed matches your download speed.)

Gamers: send bullets as fast as they are coming at you.

Creators: upload your videos and photos in seconds instead of hours.

Everyone: Back up your precious data and hard drives to the cloud.

Fiber, fiber, burning bright

In the forests of the night,  

What aspiring geek or guy   

Could utilize thy fearful symmetry?

-With apologies to William Blake

As more and more customers work remotely from home, and even regular folks upload fearful amounts of data in the form of home movies, pictures and online back ups, the need for higher upload speeds has increased dramatically over the past couple of years. Customers have recently been asking for higher upload speeds, and we have heard you.

For example, Kyle Andelin commented on our facebook page: “100Mb download speeds are exciting, but what are the upload speeds going to be? I’m always jealous of family and friends from nearby cities who have 10 down/10 up, and we still seem to have such a limited upload speed.”

He later explained: “If you need a point as to why upload sleep is important, just think about all the online backup solutions out there. Between Mozy and other offerings, or Norton and its integrated solutions, it’s really not realistic to try to upload 25GB worth of files at 100KB/second. That’s the better part of a week to complete a backup.”

We are pleased to announce that our fiber to the home customers can now choose fully symmetrical broadband speeds!

Our network is state-of-the-art fiber optic cable.

Starting Jan 2015,  Eagle Mountain fiber customers can now Amp Up any broadband package to full symmetry for just $10 more per month. So, for example, if you are currently paying $59.95 for 30Mb down with 5Mb up, you can Amp Up to 30Mb down with 30Mb up for $10 more, so your new total would be $69.95 for 30/30 speeds. Customers who really want to create havoc online can now even choose any upload speed up to 100Mb upload, and download speeds up to 1GB.

In the past, upload speeds were limited by two major things: the engineering specs associated with ADSL, which didn’t allow much more than 1Mb upload, and NECA (national exchange carrier association) federal regulatory specs that put limits on our upload offerings. I recently asked a prominent local telecommunications engineer about this at lunch, who explained how this situation came to be. For some reason which we in marketing will never be able to understand, when the engineers who designed the electronics  that power the internet put together their specs for DSL routers and servers, they decided that people did not need as much upload as download speed. They presumed that the regular folks would always be pulling more data from big content providers than pushing it back to the cloud. That assumption went into all the manufacturing specs and for years most network electronics were built that way, until it became impossible to mass produce or order electronics that could handle symmetrical speeds. It was almost like a VHS versus BETA situation, where the inferior product ended up being the one that was mass produced and became the standard.

Upload is still more expensive than download, and probably always will be, but the good news is that fiber overcomes most of the upload technical limitations. The electronics that deliver ethernet over fiber have thankfully been designed to deliver fully symmetrical speeds to commercial customers, and residential customers are now the lucky beneficiaries of that forward thinking.

The second obstacle was the NECA tariffs, which dictated to federally-supported local exchange carriers (small telcos) like us, how much we had to charge for each megabit of speed, and how many megabits we were allowed to deliver for download and upload. We had been begging them for years to give us more options, so that we could be more competitive.

Thankfully, NECA has recently become a lot more forward-thinking, and given us more room to offer better upload speeds, which has opened up the path for new symmetrical speeds on fiber.

Unfortunately, the technical limitations on copper remain, largely due to the equipment design. VDSL gives us slightly better capabilities for customers still on copper, but sadly still not much more than 2Mb currently. There are a couple of options with copper—we could try do an entire network upgrade and replace all of the current VDSL equipment with some newer electronics that could possibly raise the upload speed. This would require hundred of thousands, even millions, of dollars. There are other creative engineering solutions like bonding several pairs of copper together, where available in a neighborhood, to deliver ethernet over copper, but that has a limited range anyway, and also requires new electronics on each end which would cost each customer several thousand dollars.

Ben Hayes, our commercial accounts manager, has been assigned to work individually with copper customers who are looking for higher upload speeds, and would work with the engineers to find these unique customized solutions. This would be a premium service though. 2Mb upload is still our regular limit for VDSL-  that is what we are comfortable advertising.

One other option copper customers will have is to use the new Wi-Fi network we are building out to blanket Eagle Mountain for upload purposes. All broadband customers will have free access  to this network for at least one device, with the option of adding as many devices as you like. Your upload speeds on this wireless network will only be limited by your device’s radio capabilities, and the available bandwidth on the tower, since it, like all wireless service, will be shared bandwidth. However, it will not be a secure network—it’s wireless, so if you are worried about uploading sensitive private data, this option may not appeal to you anyway.

The only real solution, and the current operating plan, is simply to replace all copper lines with fiber to the home, because we would rather put our investment into fiber construction than replacing our VDSL equipment. Only fiber will be able to get us all to fully symmetrical speeds over the long run, and by full symmetrical we mean speeds like 100 down and 100 up. We will convert the entire city to fiber as quickly as we can. Our crews are working around the clock to replace the copper with fiber optic cable to each home.

Amp Up your upload speed to full symmetry with your download speed

To make your speeds symmetrical today, call our office at 801 789 2800.

The Salt Lake Tribune: Eagle Mountain poised to get citywide Wi-Fi network

Directcom in the News: The Salt Lake Tribune: Eagle Mountain poised to get citywide Wi-Fi network.

Click on link to read the full story:

http://www.sltrib.com/sltrib/money/54498849-79/network-direct-eagle-mountain.html.csp

 

For more info on this product, also see http://blog.directcom.com/2012/06/19/direct-communications-to-blanket-eagle-mountain-with-wi-fi-coverage/

Eagle Mountain Fiber Construction Plan Update

We held a construction meeting yesterday to plan the fiber build to the remaining Eagle Mountain subdivisions that are still on copper lines. This year we will continue  upgrading  Eagle Point, and this winter, begin construction in Mount Airey—replacing the old copper plant with brand new fiber optic cable direct to each home.

We know that those of you still on copper in other areas are anxious to know how soon we will be bringing fiber to your neighborhood. The good news I have been authorized to share is that by the end of 2015, we plan to have the entire southern part of the city totally upgraded to fiber. We also laid out a 7-year plan to build fiber to every remaining home in the city.

This is obviously going to be an enormous project, requiring millions of investment dollars, but we feel that each person in Eagle Mountain deserves fiber to the home, despite the current federal government’s objections to remote areas having better networks than the larger urban centers. This is our community, and we are committed to ensuring the economic vibrancy of Eagle Mountain.

Directcom fiber optic cable splicers, Rod and Lani, with our fiber-splicing trailer.

The time is coming when there will be large economic opportunity gap between those who have fiber optic cable to their homes, and those without. We want you to be on the right side of that gap—the up side, the fiber haves.  Having access to unlimited broadband is the future to economic development and personal educational opportunity, and someday each home that wants to be part of the global information economy will probably require minimum speeds of 100 Mbps. Fiber is essential. Fiber is the future.

This build will be unprecedented along the Wasatch Front, especially since all public utilities are required to be buried in Eagle Mountain, so bringing fiber to every last home will require thousands of underground bores. We hope you will be patient as we roll out this plan and ensure that Eagle Mountain will always have the premier fiber broadband network in Utah.

Directcom construction crew with new reflective jackets so they won't be run over by any jogging strollers in Eagle Mountain.

Directcom construction crew, outfitted with new reflective jackets so they won’t be run over by any jogging strollers in Eagle Mountain.