TDS: Success in Sun Prairie points to broader deployment

Using the city of Sun Prairie as a test case for its new broadband deployment model, TDS Telecom is in the process of preparing for the construction of high-speed fiber optic networks in several more Dane County communities, with even more possibilities down the road.

Using the city of Sun Prairie as a test case for its new broadband deployment model, TDS Telecom is in the process of preparing for the construction of high-speed fiber optic networks in several more Dane County communities, with even more possibilities down the road.

TDS President Jim Butman called the Sun Prairie project, which was delayed one week by the July 10 explosion that rocked part of that city, the springboard for other local fiber optic projects. These projects will bring up to 1 gigabit of broadband service to provide internet, TV, and phone service in one package.

“It’s really a strategy for us to pivot into what we see as a great opportunity,” Butman explains. “As you can imagine, it’s very capital intensive, but that’s something we’re not afraid of. That’s the business we’re in.”

Jim Butman, TDS president

TDS, the Madison-based subsidiary of Telephone and Data Systems, invested about $25 million to lay Sun Prairie’s fiber optic network, which has to go under “driveways, sidewalks, and everything,” Butman notes. The results give TDS confidence in its new model, which includes a pre-sale commitment of $25 from residential customers to give them some skin in the game. Business customers typically agree to a multiyear contract, but they have a dedicated fiber optic connection.

To gauge the level of community interest, TDS has a certain sales threshold for this early sign-up process, and if customers remain interested and fulfill their order, the $25 is discounted from their initial bill once service begins. If they later on decide they don’t want the service, their agreement with residents stipulates that TDS keeps the $25.

“Sun Prairie was kind of our beta test to say, ‘Can we really make this work and how will the reception be in the community?’” Butman says. “So, that went so well, we are just delighted. The community there has been supportive, as well as the city and the mayor, and that’s important in these projects.”

In Sun Prairie, Charter is the other primary provider of high-speed internet services, although lower speeds are available from Frontier Communications. Neil Stechschulte, director of economic development for the city of Sun Prairie, says having competing providers is a tremendous asset for residents and businesses. “It’s almost a requirement for communities to be competitive in economic development,” he states. “Without it, it’s very difficult to attract companies and residents who need that level of service.”

Fiber sizzles

In Butman’s words, fiber optic service and the higher broadband speeds that come with it “has sizzle,” in part because of what it means for economic development in any community. A similar early sign-up process has taken place in McFarland, Oregon, Windsor, DeForest, and Cottage Grove, and TDS now is in the process of deploying these networks. “Those communities are performing much like Sun Prairie,” Butman states. “So, we’re delighted that the communities are supporting us.”

Sam Blahnik, community development director in DeForest, has expressed his village’s support for the new fiber optic network to businesses, business parks, and residential developments, noting how its business community needs advanced broadband internet connectivity to expand technology services.

In addition to homes and businesses who have another provider to choose from, beneficiaries include telecommuters, those who need telemedicine services, students taking courses online, gamers, and those who increasingly rely on their computing devices for movies and other entertainment.

“We’ll be launching the service in those five communities starting around April or May,” Butman says. “We’ve got a lot of pent-up demand.”

Another 15 to 20 Wisconsin communities are under consideration to become part of TDS’s high-speed network, which now has 1.2 million connections, but the company plans to whittle that list down to about 10 before starting construction in 2019. Why communities outside of Madison? For one, most are fast growing, but they also are growing in terms of families with households — the prototypical broadband customer, at least for TDS.

“What we do here is create a pretty big funnel for opportunities, and that funnel then gets paired down based upon some very important criteria,” Butman explains. “Household growth and household formation is important because households buy our products. Apartments do but not the same way. They usually buy a skinny bundle, or they buy just internet and no phone service. Households with families buy our products, so we like bedroom communities. They work out better because there are a lot of residential subdivisions, and if you look at what’s going on in Greater Madison, the demographic is good.”

They don’t have to be rich, he adds. “That’s not what we look at, we just want a good household that will pay its bills. Let’s be fair, right? So, we look at a reasonable household income demographic, and we look at growth.”

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Since fiber optic deployment requires a large, upfront investment, and TDS’s payback models extend over 10 years, communities come to know the company makes long-term plays. In other words, it’s in it for the long run.

“When we went to Sun Prairie, it was interesting when we worked with the city council,” Butman recounts. “The city council, because they didn’t know us that well, we did this dance for a while, and the irony is they wanted to make sure we’re in it for the long run Well, we in turn want to make sure they were in it for the long run because we’re plopping down significant investments. We’re not going anywhere.”

In essence, TDS is taking a page out of Google’s book when the company launched its Google Fiber Cities program. “We were doing some of this in our existing territories and we said, ‘Why don’t we take advantage of this and market it and grow this?’” Butman acknowledges. “So, we’re not too proud to steal some of their ideas, and we did a lot of neighborhood-by-neighborhood marketing.”

Some communities are very welcoming, while others drag their feet, which is why TDS creates a larger funnel. If one community is lukewarm and another is enthusiastic, the company places it bet on enthusiastic. “We look for communities that will embrace us,” Butman states. “Not only do they want us to be good actors, we want them to be good actors because when we come into these communities, we are dependent upon right of ways and permitting. We’re drilling and at the end of the day, it’s not going to go perfect. We’re going to hit somebody’s sprinkler system, and they are going to call the city and be upset. They just have to realize that they are getting this state-of-the-art network, and we want to make sure they are going to be good business partners, and we’re going to be good business partners back.”

Explosive rumors

The July 10 explosion in Sun Prairie came toward the end of TDS’s fiber optic deployment, and it delayed the final stage of build out by about one week. Butman remembers the evening well, as a conference bridge was established to check on the status of employees and contractors, and to determine whether the company’s fiber deployment played a role in the explosion.

Rumors circulated to that effect, even after the company was absolved of any wrongdoing for the explosion, which destroyed several properties in the 100 block of West Main Street, claimed the life of Sun Prairie Volunteer Fire Department Capt. Cory Barr, and critically injured firefighter Ryan Welch.

TDS did not have any permit to dig or place underground lines in the area where the explosion occurred, and it had no customers in the immediate area. In that section of town, all of its fiber is on strings hanging in the air, not buried.

Following the explosion, TDS and all other utilities, including Sun Prairie municipal utilities, stopped working for one week. Once cleared of any wrongdoing, TDS resumed completing its network in other parts of the city.

“We wanted to find out whether, in fact, any of our employees may have caused this because there were rumors early on that it was us,” recounts Butman, “and I get why there were rumors because we had so many people in the area.”

According to a criminal complaint, a natural gas main was struck after a locating and marking contractor failed to properly mark the line for a contractor who was working for another communications company.

“That was a real scare to us, so going forward, we’re going to redouble our efforts on making sure that we take extreme precautions,” Butman states. “Think about what that could do to your business model. That would have been like the Tylenol [product tampering] scare in the 1980s.”

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