Glenn Sangiovanni, former Mayor of St. Cloud (pictured) and Jonathan Baltuch, president of MRI discuss St. Cloud's municipal wireless initative.
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In March this year, the city of St. Cloud, a community of 28.000, launched a citywide wireless broadband network that provides free Internet access to residents and businesses. After the network had been up and running for the first hundred days, we talked with Glenn Sangiovanni, former Mayor of St. Cloud (who pushed through the initiative), now vice-president of MRI and Jonathan Baltuch, president of MRI, the company who were consultants to the city throughout the project.
DC: Why don't you start by describing what you were planning, what you hoped to achieve and what you put in place?
Glenn: I'll start and let Jonathan jump in anywhere he things he should. Basically we started out looking at this as an initiative that was brought to us through MRI because they were helping us with economic development on another project. They went out and researched through out the country to see what this technology was all about and what the benefits of it were. And when they came back and shared it with me as an elected body, we were just so excited about it because there was an opportunity there to not only spark our local economy but also quality of life. And that was very important. We had certain surveys that we did throughout the city three years running which was handled by MRI as well. And we found that 72 percent of our community used the Internet. Then we went a step further and we started to determine what were they spending on this and also a break out of who was high speed, who was dial up and who was disadvantaged and didn't have access at all. (And we also say that dial up, they are disadvantaged as well.) So we found that other that 72 percent, there were another 28 percent that weren't getting anything. Then we started looking at the dollar figures and we found out that the average person was spending $437.00 a year on high speed Internet access. We went back and looked at their tax bill and we found out that the average tax bill, just the city portion of your tax bill was $350.00. So they were paying more for this one service, the Internet service, that for all the services that the city provided, which is public safety, parks and recreation, administration, water, all that stuff. So we said, this is crazy.
Then we looked further and we said what if we kept those dollars in the community. And we found out that that collectively, it was $4 million that was leaving our community. We tried to trace the money. Jonathan looked and tried to see if it was being spent in St. Cloud or being spent in Osceola County, and it was neither. And in most cases it was leaving the state. And we said here is a perfect economic opportunity, that if we can keep those dollars locally -- and we always say as a rule of thumb that every dollar spent locally will roll over seven times. And if that is even close, you are going to save your local economy anywhere from $4 million to $28 million every single year by doing this one project.
Jonathan: Plus you are creating the educational opportunities and social opportunities. You are connecting everybody. You are putting everybody on an even playing field. Then on top of that, we studied internal city services and we identified the system was going to cost $500,000 a
year to operate. We identified $640,000 in internal cash saving to the city both through savings on purchase of cell phone time and other things as well as productivity savings. So it became revenue neutral or actually slightly revenue positive for the city just on their own internal use, which then let them say, okay we are just going to give it to all the citizens for free.
Glenn: And when we looked at that, those were opportunities that had we not ventured out, the city would never have received. So it was a no-brainer when it came to council with the final work that MRI did with the grassroots, reaching out to the community, looking at what we call the art of the possible. We had sessions with community leaders. We had sessions with the Chamber president, the high school principals, the student body, all looking at the possibilities of this technology. And that brought in another facet. This was quality of life as well as economics.
Jonathan: And I think all of it, now that the system has been up and running for a hundred days, which is a very short period of time -- and up and running as 99.9 percent rate -- but the statistics bear it that in a hundred days, the city has a 55 percent take rate, which is unbelievable. Most broadband deployments, they are looking after 12 months of maybe a 10 to 15 percent take rate. After six months we are projecting an 80 percent take rate. The usage levels are phenomenal -- a four-hour average time. There were 500,000 sessions in a hundred days. No only is the system up and running, but it is being used into the ground. People are just all over it. And that's when you start creating social opportunity. Not only do you get it up and accessible to everybody. But they are actually using it.
Glenn: And there was an education component to this. One of the ones that I came across was that our school system not only was spending a $100,000 on T1 lines that it didn't have to do now, but also they were providing a laptop to kids who didn't have the ability or didn't have a computer at home. But the problem was that when they brought it home, they didn't have the ability to connect up. So they were still at a disadvantage. So I think there was also a one to one initiative that makes an impact.
Jonathan: Now what happens because you have ubiquitous connectivity throughout the city, now the school district says maybe we can do a one to one initiative because these kids will have the connections. So it leverages a lot of things. That's the crazy thing about municipal wireless systems. You can justify them ten times over on just the basic access and the few city services you are going to save money on. But just like the Internet was 12 years ago, who would have thought that we would be doing today what we are doing. We will be sitting around this room three years from now and none of the things we are talking about today will be the things we are talking about as the real pot of gold at the end of the rainbow. Applications and uses are going to come on that we can't even envision. It all starts with creating connectivity. Once you create the connectivity, a lot of entrepreneurs are going to come up with great add-on value things that are going to just leverage all kinds of social opportunities, economic opportunities and educational opportunities.
Glenn: And as far as the test scores in the one school that you went to in Seminal County...
Jonathan: The state of Michigan has a one to one statewide initiative, and they have seen in some subjects
as much as much as a 30 percent increase in test scores. We did visit a school in Seminal County that is a Magna school, an IT school with a one to one. In Seminole County it was the worst school they had. As a matter of fact at one point it was the school for unwed mothers. I mean it was like their stepchild. They started this program and last year they graduated their first senior class. Florida has a 67 percent graduation rate. Out of 300 graduating seniors, one did not graduate. They had a 99 percent graduation rate. It also ranks in reading and science as the highest-ranking school in Seminal County. And Seminal County is 5th out of 67 counties in the state of Florida. So it went from the worse school in the county to the best because the kids got engaged. It was fascinating to go through there. They were so involved in their education, every kid has a laptop. But it is more than just giving them a laptop. They changed the curriculum to teach on a laptop. It has the highest minority enrollment in the county. And it has the highest test scores.
Glenn: I think from an elected bodies standpoint, when we looked at this as investing in economic dollars into this, the return is incredible. And for the price of what we say is an intersection or a skateboard park, everybody is benefiting from it. And it is every single year. It is not a one-time shot like the tax relief we got a few years ago where the President did $300.
Jonathan: It is government's role and job to provide certainly public safety for its community, but also to provide opportunities for the citizens and then for the citizens to be able to take advantage of that. And it is really government's role to lead in certain areas because it doesn't get done otherwise. This is one of those areas. The United States has dropped to 16th in the world. That is shameful. We should be number one. And it is really the government's job to pull us out. You get lip service at the federal level -- "Oh, we've got to stop this." And then you get legislation that is running counter to that. So cities like St. Cloud and cities around the country are beginning to look at this and recognize this is creating opportunity and putting them back on the playing field. And it is really contrary to the stuff put out by the incumbents. It is government's job to do this. And it is totally appropriate to spend money. No one has a problem when they are building a football stadium. No one has a problem building a baseball stadium. No one has a problem building a skateboard park, a senior center, a golf course. These are all fine. All of a sudden...
DC: Or roads....
Jonathan: Yeah. And then all of a sudden, when it comes time, lets go ahead to do municipal wireless, oh my God. That's bad. Why? If it is something that the citizens of a community determine will help them and elected officials following that lead do it, it is appropriate. There is nothing that is not appropriate if it is something that the community wants. You know, it's crazy. It's not to hurt the incumbents. The job then will fall to the incumbents to go to the next level and do a 50 or 100-megabit service to bring next tier services. They will service the 30 percent premium layer which is all they want to service anyway. And everyone will be happy.
DC: This is important. I think it is very important. How much did it actually cost?
Glenn: It cost $3.1 million. And we capitalized the first year operating costs into
that. And it is estimated about $500,000 operating costs every year thereafter, which as Jonathan has already indicated, we have already generated over $640,000. So we are in the black $140,000 already. So it pays for itself.
DC: So in five or six years it is going to be making money.
Jonathan: The whole goal for a municipal system that is free -- forget the capital side. Any government can find capital for capital improvement projects. That's no problem. It is operational expenses that are always the concern. You have go to get it to a point where it is at least revenue neutral operationally. If you can make a few dollars, and roll that back, that's great. But it is not about making money. It is about creating opportunity.
Glenn: And we felt from the economics, as long as it was revenue neutral, that was fine. We didn't want the gift that keeps on giving as I always say. But also we wanted the quality of life that this is going to stir up in St. Cloud. And people who didn't have this luxury now have it.
DC: In terms of actually deploying it, were there any other technical or other issues?
Jonathan: I think -- and I can introduce you to someone at HP who was did that -- I think there were ongoing items that come up in any deployment, but I don't think there was anything insurmountable. I think if anything, there were probably less problems that were envisioned in certain areas. It is going through an optimization phase right now, which isn't even complete even with all the users it's got. It will be complete in mid-July. With that said, municipal wireless systems are very complicated and what we tell all the cities we consult with is make sure you hire an integrator that knows what they are doing. I'm not going to go get my appendices out and go hire somebody who just got out of medical school and I'm his first patient. I want to be the 30th patient. But with that said with proven technology -- and there are a whole host of companies out there that are very skilled and know what they are doing. And as long as you hire somebody that knows what they are doing, they are going to get you through the process.
DC: And whatever learning or tweaking needs to occur...
Jonathan: That's all part of the deal. That's why we also advise our communities to go with large companies as the overall integrator. They hire subs, but you want somebody whose address is not going to change on the dotted line and who, if they have to bring in resources to fix any issues, they can do it.
Glenn: Because it is so technically complicated, that was very, very important for an elected body that we were hiring the right team. In addition to that I think I would add that we covered the whole gamut of things, from soup to nuts to education, education, education in many facets. But you can't educate enough. You continue to go back to it.
Jonathan: I think that is one of the things we did learn. We did probably five times the amount of public education that anybody would have thought sane to do, and it wasn't enough. You just can't do enough. Over and over and over again you've got to keep hammering, hammering, hammering. And it's not for the masses because 89 percent of the people got on the system partly due to some amount of education without any technical support. But you've got to worry about the other 9.8 percent of them.
Glenn: And also the perception of when you go live. There is
an optimization stage of those that wasn't clear to the public. And so when we launched March 6th, they thought there would be no problems. There is a lot of tweaking that goes on. It is technically complicated. So you have to start with the awareness and education to make people aware that we are going to be doing that for the next six months, bear with us.
Jonathan: And you can't really do that optimization and fine tuning until you load the system and get people on and using it. But again, I think there have been far fewer issues than we ever anticipated. For example, the help center is a great one. We had HP prepared for hundreds of calls a day the first month. We said you are probably going to get a hundred or two hundred calls a day the first month. In the first hundred days, there has been only 1500 calls from 800 individual phone numbers. And you have to remember, this is a free help line. So it is not like people saying, oh my god. I don't want to spend the money. It's free, 24 hours a day. And still they only had 800 unique callers out of 5600 subscribers. So it really is not that complicated to get on. But for those that need the help, it's there. That's in over three months.
Glenn: So people are getting on , they are being successful, they have the vehicle to reach out and call somebody. And they are finding that they are okay.
DC: Thank you very much.