People Behind the Packets

Hey, everybody. Welcome to another episode of People Behind the Packets. My name is Nitin Rao. I lead the engineering teams that help build Cloudflare's global infrastructure. And this has been a really fun show. This is the fourth episode where we have casual conversations with leaders around the world building infrastructure that the Internet relies on. And I'm honored to have as my guest today, Roger Timmerman, the CEO of Utopia Fiber. And so for the next 30 minutes, Roger is going to make us all feel incredibly bad about our Internet connections, especially if you're not already on Utopia. So thanks so much for joining me, Roger. I really appreciate it. For folks who are less familiar, can you tell us a little bit about what Utopia is and your idea of a fast Internet? Yeah, so Utopia, we're, Utopia is actually an acronym. A lot of people don't know that. It's, it's a terrible acronym. I wish to get rid of it. But it's the Utah Telecommunications Open Infrastructure Agency. And that doesn't sound very exciting. But what we do is pretty exciting. We build fiber infrastructure throughout various communities in Utah, really was the result of initially it was trying to get decent broadband from the different private sector providers. They did all sorts of incentives and, and grant opportunities to try and try, you know, whatever they could do to get companies to upgrade and provide good services. And like we see in a lot of those types of things, they don't do a lot of good like we hope they would. These cities in Utah decided that they would, since they couldn't get them to do investment in broadband, the cities created us as an interlocal. So we're a publicly owned, you know, community owned effort. We build fiber infrastructure in these cities. But something that makes us unique is that we're open access. There's there are other open access systems, but they're not very many. And we're the largest one in America. And what that means a lot of people aren't, you know, what does open access mean? It's like we build it like roads, where we build roads and but other people use roads, you know, companies compete with each other using those roads. There's a lot of different purposes of why you would drive a car on a road, whether that's for business or their pleasure or competing businesses with each other. We also build open access airports, right, we build an airport from a city perspective, and different airlines come in, and they use those. And if we had a private port, you'd have less options and higher prices, it'd be terrible, you know, so we invest in public infrastructure that enables private sector to compete and have this marketplace. And so we do fiber that way we build fiber, but you don't get Internet from us, you don't get phone, you don't get TV or security or all sorts of different services from us. We open that up. And, and various companies come in, and they use those lines, they we kind of charge a fee, so they can be on there so we can cover our costs, but they don't have to invest in the millions and millions of dollars of capital costs to build fiber throughout a community, we do that part. And then they just get to come in and provide service across that fiber infrastructure. And the beauty of, you know, this, you've probably got some technical people that are going to be watching this is, you know, we use ethernet technologies and can create virtual private networks for each one of these different providers, and actually lots of them, all with different characteristics so that they can all coexist and compete with each other on that same infrastructure. That's pretty cool. So we end up with lots of different companies competing, it keeps the prices low, keeps option, lots of options out there, the customer service is good. And that's kind of how it works. That's great. That's great. Yeah. So if you have any questions, and you're listening in, you feel free to email us at live studio at Cloudflare.tv. And we'll try to get to the questions. So Roger's really helping us all get a faster Internet connection. What's the slowest Internet connection you can possibly get if you're on Utopia? So our really, really slowest version of Utopia fiber is a 250 megabit symmetrical, unlimited connection. So that's pretty good for the slowest option. Folks who aren't as familiar, can you explain what symmetrical means? Yeah, most of the time you're dealing with, you know, you get sold a download connection, they say, here's your 100 megabits. And you say, well, that's what I'm downloading. But what about what I sent? You know, and historically, people don't send as much as they receive, you know, if you're watching Netflix, you're downloading, but you're not really uploading much. However, things like zoom are symmetrical, you know, you're sending your videos same time as you're receiving video. So there are things that require symmetrical connectivity. So when we say our connection is 250 megabits symmetrical, you can download and upload at 250 megabits. And so in aggregate, you actually have a 500 megabit connection, but we describe that as 250 megabits symmetrical. So that's our slow connection. Our middle tier is a one gigabit symmetrical connection. And our high tier is a 10 gigabit connection. And that's for residential homes. So we have, you know, about 130,000 addresses where you can sign up and get that service in 15 cities in Utah. And some of them are big cities, and some of them are little cities. Some of them are rural, rural, and some of them are, you'd think you're in Salt Lake City, but they just think we have a lot of cities that kind of boundary, you know, right next to each other. And so it works in a lot of different areas. It works for lower income, it works for higher income. You know, everybody likes broadband. You know, that's been a change. You know, this used to be considered a luxury or, you know, something for entertainment. But now it's become a critical service. We have remote work, remote education. I mean, this, this, you know, none of us knew we'd be in this weird situation we're in now. But certainly those cities that have invested in fiber infrastructure, they're in a very strong position to deal with it, compared to other areas that are a big disadvantage. So, you know, we want to want to address that disadvantage and get broadband to everybody. But it does take a lot of money and a lot of effort to build these networks. I think I think the work that utopia does is just absolutely fascinating. And just in case there's any doubt, I'm incredibly jealous. I went through the painful exercise of looking through my Internet bill just before this. And it was I think it's 100. It's, it's sold as 150. But if I if you go to speed .Cloudflare.com and run the test, really get about 100 down and I think five up. And so this is just like mark markedly, markedly better. And now and for content, and it's, it's, it's not more expensive. So if you get a 250 megabit per second Internet connection, how much are folks typically paying for that? It's $65. Roughly, you know, we don't set the prices. Again, we provide fiber, and then we charge some of that, but then these private companies come in and mark that up and have their costs. They're plus or minus a few dollars, but generally about $65 a month for 250, about $78 for the gigabit service. And there's different promotions and things like that you can get on there. But that's, that's a pretty common price point. That's pretty good. That is that is that is amazing. And so gigabits about 200 bucks a month. And that's actually that that 10 gig for $200 a month is the cheapest 10 gig anywhere in the country. So there are just a couple others, you know, we say we're the fastest in the country. And that's true. But we are tied with a couple other networks out there. But we are actually lower cost than any of the other ones. So if you want cost per bit, it's definitely it's the best cost per bit in the country. And and so like, we should we should turn this up nationwide. So what, what what what keeps other cities from from from emulating the same model? That sounds amazing. It's, it's mostly that they don't know. They don't know about it. You know, really, cities have all these different utilities that they provide, right? They usually have a water guy and a parks guy and a roads guy and you know, a department. You know, and so those are things that cities are used to dealing with is these different city services. Every city should have a, you know, I don't say guy or girl, of course, could be in charge of this effort to drive broadband infrastructure in their city. And you think about it, the city is in the perfect position to do this. You know, they have the right of ways that you need for these. And so usually, when someone's doing broadband, they're using city right away to get that to your house, and then gouging us off that service. And so the city is already in a position, they have the right of ways, they have the infrastructure and other ways. And if they would just put conduit into those right of ways, as they're doing their other projects, this would be another service that they could provide alongside any other department. And it makes sense. And it just, it's a little bit newer of an idea. It's also competitive space. And so they think, well, you know, do we really want to get into this space? Because there are other companies providing that service. But more and more cities are realizing this is so critical that we can't, we can't have these pockets in our city that have and don't have and we can't allow these private companies come in and cherry pick the good neighborhoods without providing service to the lower income areas or other areas that are difficult to serve. And that's what we see right across America is, you know, there's entire cities that are at a disadvantage. But even within a city, you'll have areas that that have much better service than others. And this isn't the luxury it used to be, we need to make sure people have that because they need it for their education, they need it for work opportunities. And so really, cities ought to say, we are getting into this. And we're getting into it in a way and this is back to that open access argument is we're getting it into a way that's good for everyone. We don't necessarily like the idea of cities getting into the Internet business. You know, there's a lot of people who would oppose that. Or even if it was states and federal government, it's like we don't want the government running the Internet. However, if we can facilitate it, that's fantastic. And so, you know, rather than replace a public private sector monopoly, which is what we have in most communities today, or maybe a duopoly, if you're lucky, still bad situation. We don't really want to replace that with a government monopoly. But if we can come in there and provide vibrant infrastructure, then rather than replace a monopoly with another, you open the floodgates to lots and lots of private sector companies to come in and innovate and compete. And some of them will fail, and some of them are successful. And it's, you know, it's, it's very capitalistic, but it works really well. And, and allows for success. And we look at that and say, Hey, this is, you know, we don't pick favorites politically, we're like, this works with Democrats, it works with Republicans, it works with independents, because it is it is pro competition, pro private sector. But at the same time, we're ensuring adequate services to all of our communities and all of our residents. And so it's, it works really well politically, works well financially, now that the demand is where it needs to be to, you know, that enough people sign up that we get enough revenue to pay for these projects. In our experience, we've got about $230 million of these projects that are completely being paid for by the revenues, there's no subsidies. You know, the funny thing is, we compete with companies like telephone companies, cable companies that do get government subsidies. And ours are actually not subsidized, we are not, you know, receivers of lifeline money or high cost money or any of the federal programs that are really designed just to prop up incumbent monopolies and by their structure, which is a huge failure, but that's the way they are. And so we are actually at a disadvantage when it comes to the revenue because of government subsidies, as ironic as it is, because we're governmental, but you know, that's where we're at. And it works. And you, like, the Utopia project started a really long time ago. And so can you talk about the early years and sort of what, how the project has changed in its 2020 versus in the early years? Yeah, it's, it's really amazing to think that back in 2002, Cities came together and said, we need to, you know, bond for a fiber infrastructure project to bring better broadband. Because if you think back in 2002, I mean, they were talking about it in 2000. And they created the agency in 2002. You know, the argument back then was, your email is just as taking too long to download those, those attachments, you know, or that software download is taking too long, or, you know, there was no video streaming back then, right? It wasn't, there was no Netflix, there was no YouTube, there was no Facebook, you know, none of those things even existed back then. So what was the argument for it? It was, well, we knew there was future technologies coming. And we knew that the, you know, dial up was not meeting it. And DSL even was just kind of limping along. And, and we knew that the technology was beyond what the broadband capabilities were. Even today, you know, we see that where you know, you have, you know, you get the latest version of the Arlo net cam, you know, Netgear cameras, and you say, wow, these are really cool, or 4k stream, and you put these cameras all over your house, and do all the storage to the cloud, you say, Oh, yeah, the technology is there to do that. But do I have the bandwidth in my house to support uploading, you know, four or five 4k video streams 24 seven to the cloud, I might, you know, and most broadband providers don't, and you'll get just killed with overage fees and all of that. But the technology is out there for the devices and the cloud services to support these technologies. And that's just one simple example. There's hundreds of these out there, that we just can't take advantage of the technology today, because the broadband isn't isn't up to par. And unfortunately, a lot of the people who make those services have to dumb them down so that they can sell them to mass market, you know, so, you know, Netflix could be out there with 8k and 16k video and higher quality, instead of, you know, they put a lot of compression and other efforts in their video, because they're trying to get them to work on all these lousy networks that are out there. So anyways, the technology is way ahead of where the average bandwidth is that people have available to them. So anyways, back to the history lesson. You know, they made that decision to create utopia and get this, this infrastructure, and then streaming came along. And, you know, at the time, we just weren't hitting enough customers on there, you know, we thought, hey, this is good. This is coming, it's coming, we're demand is increasing and growing. And over this entire history, it has consistently grown. And there's always been that argument about, well, what about wireless? What about satellite? And what about and it's like, well, the same arguments back in 2002 and 2004, about wireless technologies and satellite technologies apply today, they just applied a different factor, you know, wireless has gotten way better. And satellites gotten way better. And even the stuff being deployed right now is way better than what we saw in the past. However, the demand has outpaced all of those advancements. And so along that same time, fiber infrastructures come along, and more and more people are getting off of all the other technologies, whether it's wireless, or cable or DSL, and demand for fiber has skyrocketed. So over that time, streaming services really took off, we saw demand just take off when when people are cutting the cable, going with streaming services, and all these other things that have come along. And then now it's just through the roof with, you know, unfortunate circumstances of Coronavirus, but where now people consider it essential for remote education and remote work. We, you know, we're real, I don't want to say we're struggling, we're keeping up with the man, but it is it is pushing the limits of what we can do to keep up with all the orders coming in for service, and the additional cities seeking out to do this. How do you how do you decide? So I have a bunch of follow up questions. How do you decide where to where to prioritize going next? It seems like there's so many different locations, you could, you could expand the model. Yeah, if it was based on consumer demand, we could go to every market, literally, there, there's more than enough demand from consumers, that they would sign up for the service, and the revenues would be there to pay for the projects. As a governmental entity, though, we can't just go and build and go, you know, to every city out there and do that. If we were a business, we probably would. But we, you know, we, we are interlocal cooperation of cities. So we basically say, if your city is willing to partner with us, enter into this agreement that we have a nice little boilerplate, we will expand and build that and we actually will go in there and finance the thing on their behalf. So it's actually not new city debt. But those cities do have some skin in the game as they provide a partial guarantee into the financing of the project. And that's kind of fair so that, you know, one city isn't on the hook for the project and have a different city, they all kind of have a guarantee onto the financing of those projects. But as I mentioned, we've got over 230 million of these projects, every project we've done since 2009, has exceeded the revenues and targets it needs to pay for itself. So these cities are basically getting these million, you know, multimillion dollar infrastructure built in their city, and they're completely paying for themselves. Meanwhile, it's saving the residents and businesses an absolute fortune. You know, if you just calculate, it's about $30 a month average savings in money that people pay, when they switch to utopia, and you say, well, what other thing could you do in a city that would save every resident in your city $30 a month? I mean, that's $360 a year, just cash that you're giving your community per household. And you're not even having to pay to make that happen. That's... And not to mention all the productivity that comes from... Yeah, that's just cash savings. And meanwhile, you're improving quality of life and enabling all the benefits of the broadband itself. So to us, it's a no brainer for new cities to do this. But it's very political. I mean, you've got to have a city council who recognizes that need in their city. There's a lot of contrary effort out there, to be honest. I mean, every single politician, I think, in the state, at least it seems this way, has donations from the incumbent cable and telephone companies. And it's hard. You know, if you look at the popularity of the cable company and the phone company among the general population, we do surveys all the time. Like people absolutely hate those companies. And it's gotten worse over time. We have the data to prove it. Surveys over many years in many cities, it's like, they are really upset. And then you go talk to politicians and elected officials about it. And you're like, oh, no, we really like these companies. They're such good partners in our community. Are you nuts? Like, they're just sticking it to you guys. And guess what? You know what? We actually want to help them. We don't see ourselves as a competitor to this. We build these fiber infrastructures, and we would love to see the phone company use it. We would love to see the cable company use it, right? It is available to them just like any of these other companies. But, you know, they do like to protect the turf and their monopolies, and so they kind of oppose us generally. But, you know, for every one of those incumbent companies, we have 10, you know, local companies with local employees and local ownership that operate as a service provider on this system, and they love it. And so it's a huge benefit locally to our companies, both the users and the providers. I'd love to understand a little bit about the usage. So you said clearly usage has gone up this year, but what are, like, how is usage patterns different if you have these higher Internet speeds? So what are you seeing that, I guess, folks like me on a slower Internet connection aren't doing but might be able to do? Yeah, it's interesting. We have a lot of different ways to look at the data, you know, what went up, what went down, how have things changed. A lot of these networks are designed around the peak usage, right? When you go buy a connection or upstream or build a network interface or something, you know, between areas and cities, you know, you don't design it for average, you just got to cover the peak. And we haven't seen a huge increase in peak because the peak was between eight o'clock and midnight for video streaming. And that was the number one use. So the peak really hasn't changed. You know, during that period of time, I guess we're doing the same thing we always used to do. We sit and relax and watch TV. However, during the day, it's changed dramatically. So we see a lot more upload and we see a lot more usage during the day. So, you know, I'm not, I don't have a whiteboard to draw on my camera here or anything. But, you know, the daily graph would basically say, you know, you start the day really low. And then it picks up about eight o'clock when everybody's waking up. And then it kind of goes flat. And then it kind of picks up for some reason in the late afternoon, about three o'clock or so. Maybe that's when everybody starts really getting their work done. And that kind of levels out a little bit more. And then you have this evening peak and that goes way up. And that's where you have your evening viewership. What we've seen is that daytime usage has gone up significantly. So on our networks, it doesn't really matter because it's all unlimited use. But if you've got caps, if you're using a provider that's saying, hey, you hit your 1.5 terabyte, you know, cap, you know, you're starting to pay overages. And so that's a problem for a lot of people that even if their networks are designed around that peak capacity, they're getting gouged on those caps. So that's, again, sometimes it's not just the speed that you get offered. It's the terms of that service. And, you know, we don't like caps. We don't like paid prioritization. We don't like, you know, all that net neutrality stuff. That was a big loss to lose those protections. From our perspective, it's kind of good because it gives people more reason to seek us out compared to the other providers because they weren't forced to adhere to that. But yeah, it's still a problem for a lot of people paying those overages. How about the devices themselves, the applications that folks use? Is it really like what's the devices inside the house? Are they different? Are you more likely to purchase certain things because you have a faster Internet connection? As I think about it, I'm sure Cloudflare has a version of this data. We should probably partner and see what patterns emerge. I'm curious. Yeah, I think people, you know, they look at their consumer electronics that they're buying and it's very different for someone who has an unlimited Internet connection. You know, there's a lot more desire to get stuff. I have a very well-connected house and it's just cool. You know, I can open and close my garage doors remotely. I've got all these cameras. I can, you know, I got my Plex server at home and all this other stuff, right? And so when I've got an unlimited fiber connection in my house, you know, I like, this is fantastic. I can go buy whatever I want in the store and take advantage of all these amazing technologies. And every year, you know, I go to consumer electronics show, really sad we won't have that this year, but, you know, and just see all these really amazing things that are coming out. And, you know, if I didn't have that sort of broadband in my house, it almost be just depressing because I'd be like, oh, you know, that's not going to work very well. And I can't do that. And that's going to hit my bandwidth cap. And so I, you know, it's a very different experience for someone who doesn't have a good, solid, reliable connection to their home and one that, you know, allows remote access. It's like that. So what's your vision for what's next? Like where, what, what would you, where would you like to take the model over the next many years? So I think we are, I think cities are fed up and that's what we're seeing over this COVID situation is we've really been waiting around, expecting the private sector to come and meet the need. And generally we like to do that, right? We say, well, if there's a demand and private sector shows up with some great solution, but there's a lot working against private sector companies in the space of telecommunications infrastructure, there's a ton of red tape, there's a ton of regulation. And a lot of these programs, like I mentioned, are designed not to bring in disruptive new options, but to simply prop up and maintain the monopolies. And so I think that frustration is hitting a boiling point. And we're going to see cities just say, we're, we cannot expect the FCC to solve this. It's just every, none of these efforts are really doing anything despite the massive amounts of money that are blowing through. And so really if cities and communities take it into their own hands to put in the fiber infrastructure, they don't have to become the Internet provider, right? They, if they put the fiber and the conduit in the ground, there's different ways to make that available to private sector companies. And, you know, some companies say, well, we'll just make the conduit available. That's still a huge win. They make the conduit and fiber available. That helps a lot. If they make fiber, conduit, and managed services, meaning, you know, transport circuits, then that's even easier for a service provider. They literally plug in and suddenly have 10,000 customers on the end of virtual circuits. And so, you know, there's all a lot of different ways to approach that. It's really hard for the rural counties and rural cities out there to do this sort of thing. So I think we'll see a lot of consortiums and partnerships out there. That's kind of what we are. Our largest or our smallest city out there, we're very proud of, has about 350 homes in it. And it's really, really small. And then our bigger ones have, you know, closer to 100 ,000 homes. And so, you know, this works in a lot of places, but if, you know, that little community of 350 homes would not be able to do this on their own. But by partnering with other cities in the region, we can get to an economy of scale where it works well for everybody. So I think we'll just see a huge uptick in cities saying, that's it. We're creating a fiber department and we're going to do this. And whether we do it on our own, if we're big enough to do it on our own, fantastic. If we can find others to partner with, great. And, you know, there's a lot of people out there who know how to do this stuff. I guess that's good for our industry of tech people, that there's going to be a lot more opportunities out there in networking, you know, network engineers are, that's a good place to be these days, a lot of demand for it. But I think we'll see a big uptick in all that. It's great. I see we're coming up on time. Maybe as a final question, what surprised you the most about this year? You know, I thought, obviously, this year is weird. And it's, you know, I don't know how long this will last. But this shift to home, I was surprised how well it works, that people were able to get this crash course on technology, right? We had been preaching the benefits of teleconferencing and telework and all this stuff for a long time. And nobody was using it. So coronavirus, it's everybody has to work remotely. And it's we people figured it out. It's working really well. I think now businesses are like, we should do it this way all the time, you know, and, and I think you're gonna we're in for a long term, increased use of broadband and increased dependency on that. And those where it doesn't work, well, we're going to see increased investment in that. Thanks so much for joining us today, Roger. And thank you for helping all the communities that take advantage of utopia. This is fantastic. I appreciate getting the chance to learn more. Well, thank you for having me on. Pleasure. Thank you. Thanks, everybody. Transcribed by https://otter.ai