Interview Date: August 19, 2024
Interviewer: Jeff Baumgartner
Abstract
Katie Espeseth, Vice President of New Products at Chattanooga utility company EPB, talks about her career that started in telecom with South Central Bell and brought her to a power utility that is a leading provider of municipal broadband services. She describes her work with AT&T and later as a supplier with AT&T Information Systems. She discusses the impact of the 1996 Telecom Act, her mentors at AT&T and EPB, and their vision and leadership qualities. Espeseth describes the challenges, cultural and operational, of EPB expanding their role from an electric utility to a municipal broadband provider to both consumers and businesses, and EPB’s embrace of quantum computing. She touches on customer support, affordability, the role of video and mobile telephony in the bundle, and the company’s community-based approach.
Interview Transcript
JEFF BAUMGARTNER: Welcome to this edition of the Hauser Oral History Project. I am Jeff Baumgartner, and I am pleased to be here and honored to be joined by Katie Espeseth, an industry veteran who is currently with EPB, a municipal broadband company and electric distributor owned by the city of Chattanooga, Tennessee.
KATIE ESPESETH: That is correct.
BAUMGARTNER: And EPB stands for?
ESPESETH: That’s our true name, but originally it was Electric Power Board.
BAUMGARTNER: All right, while we are going to get into what you’ve done in your career along the way, thank you for doing this. First of all, as we are speaking here, this is technically the eve of the 2024 Independent Show. And I was also told that you are the first person from a municipal operator to do one of these, so you are trail-blazing.
ESPESETH: That’s a real honor. Happy to be here, thank you.
BAUMGARTNER: Before we get into what’s going on these days, let’s look back a little bit at how you got into the telecom business and eventually to the municipal side. Can we call it cable? I don’t think we can.
ESPESETH: We do offer a video service, but we don’t think of ourselves as cable, traditional cable.
BAUMGARTNER: But for you, it started at AT&T, and then municipal entered the picture. Then there were some massive mergers and things that you went through that we will get into. But at the beginning, how did your career begin and tie into your area of study? Was it a perfect fit from the beginning, or was your pursuit of telecom a little more random and fortuitous like it was for a lot of people?
ESPESETH: I don’t think anyone necessarily chooses a career that they thought they would be in when they were 18 years old. And that’s basically when I started with AT&T, or at the time, South Central Bell. I was straight out of high school and had an opportunity to begin to work for them, parts of the year. So I worked for them for six months, and then I would go to school for six months. So that helped pay for my school, basically, but oddly enough, I was a journalism major to start out with.
BAUMGARTNER: Like me, really? And you’re like, “That’s, “That’s not a career for me.”
ESPESETH: No, it was awesome. It seemed to be too fun, actually.
BAUMGARTNER: Oh, too much fun.
ESPESETH: So, as I began to speak, I was specifically wanting to write for newspapers.
BAUMGARTNER: Now, did you do some of that too?
ESPESETH: No, not professionally. I didn’t, but as an undergrad, I did work with some newspapers, and that’s when I said, “You know, maybe this is not necessarily for me.” But the love of writing and the love of creating and telling a story, I think, really carried over to a telecom career. So I found myself graduating four years later and said, “What’s the fastest path to a job?” Because of my experience with AT&T and South Central Bell, I was very fortunate to go straight into work for them full-time after I graduated.
BAUMGARTNER: Back then was it strictly voice? What was the focus on business?
ESPESETH: It was a lot of voice, but it was also equipment. And that would’ve been 1978 when we all knew that the Consent Decree and a lot of things were coming. So when they began to talk to me about going to work for them full time, it was about “we’d like for you to come in and begin this path to this fully separate subsidiary, so we want you to focus on equipment and data processing and that sort of thing.” I was fortunate to spend a lot of my early career working in some very interesting technology opportunities. I moved around the state of Tennessee a little bit and gained a lot of experience, and that’s when things really got to be fun as we began to break away and formed the AT&T Information System to sell strictly equipment, completely diverse.
BAUMGARTNER: So you’re effectively a supplier.
ESPESETH: I am working primarily with large businesses in Tennessee. So it really was a totally different career move for me, but it opened so many doors for me and really prepared me for the 30-year career that I was fortunate to enjoy at AT&T, doing a lot of different things along the way.
BAUMGARTNER: What were some of the most interesting points of your career at AT&T? That company evolved and changed over those years quite a bit through services, who they were competing with, and a lot of aspects of their business.
ESPESETH: I think competing with is a strong word in the beginning, because I don’t think there were competitors in the space. You know, looking at the 1996 Communications Act, the Cable Act, however you want to characterize it, but I do think that was a game changer for the industry, and it was a game changer for those of us who worked there. Truly, and then as you began to think about AT&T divesting from the operating companies and totally separating the lines of business. What a fabulous opportunity for people to really pivot and change their career, change what they were doing, and it really opened up a tremendous number of doors of different things you could do that I don’t think any of us really, in the early 70s or even the early 80s, thought would be imaginable.
BAUMGARTNER: What did the Telecom Act mean for you from a career standpoint, but also, what was the big game changer?
ESPESETH: It really opened up so many doors from the standpoint that now geography did not matter at that point. There were opportunities across the country. Because I was not necessarily tied to Tennessee or the Southeast, but I could learn and grow in all parts of the country. So I never had to necessarily move from Tennessee, but I was given the opportunity to work remotely from a lot of great vice presidents and GMs across the country, and I took that opportunity really to look outside of Tennessee and look outside of the southeast and really learn what was going on in other parts of the country.
BAUMGARTNER: Throughout your career, people have a lot of mentors or people who are influential in their careers. I’m sure it is probably a big list, but who were some of the people that rise to the top for you?
ESPESETH: You know, interestingly enough, the first woman vice president or general manager that I had the privilege of working for probably had the greatest impact on my career. And it wasn’t so much that she was a woman or she had different kinds of things for me to do, but it was about really her letting me see what went on behind the scenes. Letting me be part of the conversation, and bringing me into the conversation, and stressing that I could play a role. I don’t think that was gender specific to her; it just so happened to be that she happened to be a woman at the time, but she was such a great leader. I think what she demonstrated was that you can let people in, you can let people learn, and they are not a threat to you. In fact, you will make a lifelong ally, and you can do really great things together. She was probably the best example of what I saw throughout my 30-year career, although I was fortunate to meet a lot of great leaders.
But I will tell you that probably the largest visionary that I had the opportunity to work for was after I left AT&T and went to, believe it or not, a municipal electric utility. You wouldn’t necessarily think the utility, especially the electric utility, is not known for its visionary approach. Frankly, the electric grid has been in place since the 30s and 40s without a lot of changes. But this gentleman wanted his legacy to be something different and better and bigger than himself. And so he’s really the individual who had the vision of improving the electric grid and layering on broadband services for communities that were frankly very much underserved. And so that took a lot of vision on his part and, frankly, guts because he was at the end of his career. I mean, he could have left that job and still be a favorite in Chattanooga, Tennessee, and among power distributors. Instead, he really turned the industry on its side there and really kicked everyone into high gear, so interestingly enough, AT&T has a tremendous amount of great leaders, but it was in a small town in an electric utility that I think really played the biggest role in my life.
BAUMGARTNER: It’s interesting you bring that up because I think EPB was probably the first municipal operator that ever really came on my radar from a broadband standpoint. To be honest, it just seemed like a unique thing, and today, it’s a little bit different, but they were definitely on the front edge of a lot of what we’re seeing today.
ESPESETH: I think we just popped on everybody’s radar because we are the largest municipal operator for broadband. But we were actually, I think, sixth or seventh, in the state of Tennessee, of muni electric power distributors to jump into this business. So when you look at the mission of TVA distributors, it’s all about economic development and quality of life, and frankly, after you brought electrification and everybody has electricity, what is your next act? And what we realized is that we needed to be able to bring more businesses for higher-paying jobs, and we needed to be able to improve quality of life, and we thought the path to that was better, reliable, more reliable electric power and broadband services. Frankly, we just didn’t have many broadband services or service providers in our footprint at the time.
BAUMGARTNER: And what was it like in the early days? Because the whole operation had to change, we had to get experts in there and people who had to learn and integrate that into the culture. Was that the biggest challenge, or was it something else?
ESPESETH: The biggest challenge was clearly culture, changing the culture of– Frankly, we don’t have any other choice in Tennessee in the TVA footprint. You buy the power from the electric power distributor there. There are lots of different options for renewables, but if you want to be connected to the grid, you are going to be connected to, in our case, EPB. But still, we also had to flip the mindset of everyone who worked there to understand that we were going into probably the toughest competitive battle of our lives. It was the most money EPB had ever owed. It was the first time we had gone to the bond market to secure financing, so we had a lot riding on it, to be perfectly honest. But Harold DePriest, who was our CEO, decided that he wanted to build the organization from the ground up. So back in the late 90s, this before I was ever there, he had taken over a CLEC [competitive local exchange carrier] operation to provide business-to-business services, so I had some knowledge of them at that point that I was still with AT&T. I hit my 30-year mark at AT&T and said: “you know, it’s probably time to go and try to do something different.” So I stayed retired for a couple of weeks and then moved to Chattanooga from Nashville, and Mr. DePriest put together a team of four and literally put us in the basement of our main building and said, “I need you all to think about how you build a business plan, what products you’d offer, how you would pay for it, and how we are going to pay it back.”
BAUMGARTNER: And I think we’re seeing some of that today in terms of that long-term challenge. There is a lot of money, government money, going into rural broadband, and I think a lot of folks are going to be going after that money to build the network. But what do you do after it’s built? You have to operate and maintain it and turn it into a long-term business versus just being a network constructor. So, it sounds like what you went through is what we’re going to see a lot of folks going through that maybe aren’t from an incumbent standpoint somewhere else where they have that kind of business.
ESPESETH: I hope so. It can be a terrific long-term business and has tremendous upside for the communities that they serve. But you’re right; you have to make that fundamental decision: why are you doing it, who’s going to run it, and how are you going to run it? And once you get over that and make your decisions it really is a lot easier from that point forward.
BAUMGARTNER: And as we sit here in 2024, I think in the past, EPB, from the broadband side, was always associated with speed. You were always pushing the envelope at the time. Was that initially used to make sure you were differentiating yourself in the market, or were there other drivers? And then, where are you today from a speed standpoint?
ESPESETH: So we chose fiber as the underlying technology because we thought that was really the only platform that we could use to build our smart grid, control the thousands of devices on the electric grid, and bring broadband services. So, starting with fiber really opens the door to limitless bandwidth and speed options for customers. And frankly we did decide that was the way we could differentiate ourselves from the competitors in our markets. So we launched, I’m embarrassed to tell you, with less than 100 Mbps because the equipment will only go up to 100 Mbps. Fiber is not the problem, but the ONT, or network terminal on the side of the house, that port was 100 Mbps. As soon as that flipped in 2010, it went to a gig, and we rolled out with the ubiquitous gig. And as soon as that was upgraded to accommodate 10 gigs in 2015, we flipped to 10 gigs. Now we’re at 25. So anywhere in our footprint, which covers about 600 square miles, you can get 25 gig symmetrical service if that’s what you need to run your business or your home, although I’m not sure what you would do with it at your home today. So, we will continue as the network and the equipment continue to improve. We will continue to offer more speed. But for now, it’s really about providing that experience in the home and being able to control all the devices that people are using. I just left a user’s group where they talked about 79 devices being the average in a small business. 25 in a home, so it’s clear you need the same upload and download so I think you will see us continue to offer different products and services that really make people’s lives easier for them.
BAUMGARTNER: I think that’s interesting. I think we kind of get stuck on the whole speeds and feeds part of broadband and less so about the experience, particularly in the home. Fiber comes to the home, and then really, it’s Wi-Fi for the most part for people. So what have you done to– Maybe expand a little on how you’re managing that and taking ownership actually inside the home.
ESPESETH: So it’s one thing, to your point, of bringing one gig to the side of the house, but if I can’t use it inside my house if I can’t get it on my devices, it’s really useless, right? So, several years into our deployment, we decided we would take on the user experience inside the home. We have a managed Wi-Fi product today, and we advertise it as “whole home Wi-Fi.” So our goal is there’s not a dead spot in your house and that we give you the tools to manage it with an app and an easy-to-use mobile app, but more importantly, we have 24/7 tech support. Since launching fiber optic service, we have always offered 24/7 tech support, always there. Our tech support is local to Chattanooga; our call servers are in Chattanooga. We don’t charge for truck rolls; we don’t charge for coming to your home. We will walk you through your troubles on the phone, but if you say, “Hey, listen, I’d rather you come out,” we will roll a truck 24/7 to get to your house. So it really is about that user experience inside the house, and it’s about one call that really resolves your problem. If we don’t get to you right away, we’ll be there the next day. We are going to really operate on your schedule. So we call it blue bootie service, actually. That’s kind of scary, but that stands for when we first started going into people’s homes. Now, think about us as an electric utility. We never came into your house, right? We worked on your meter; we did things.
BAUMGARTNER: You see them in the yard, then they’d disappear.
ESPESETH: That’s right. Hopefully, you saw them. Hopefully, you didn’t see them because you never had to call them. But then we realized we had to go in your house and had to retrain everybody about how you act in someone’s home, and that meant we bought blue booties for you to slip your shoes on every time you came in and out of the house. So, that kind of customer service really transcends all of our customer interactions.
BAUMGARTNER: How would you compare the general culture of EPB versus AT&T? It feels like you have an entrepreneurial culture there. Not that AT&T was not, but I get the sense you could move a little bit faster. If you had put it together, what are some of the differences there?
ESPESETH: I think the difference for me is striking; it is more community-focused. Because as an electric municipal broadband supplier, we are required by state law to operate within our electric footprint. So it’s not about us acquiring other companies, not about expanding to the next community over. It’s not about that at all. It’s about how do you serve people who live in your community better? And that’s really what we are about, is how do you bring more companies there? How do you raise the standard of living for people to help them reach higher-paying jobs? How do you make sure that everybody has access to this high-speed broadband? How do you make it affordable for low-income people in your community? So it’s no good if you can’t afford to get to it, and it’s no good if you don’t know how to use it. So you really have to tackle how you bring broadband to people on all different levels.
BAUMGARTNER: Yes, it’s about digital literacy, it’s about affordability. And as we’re sitting here, we’ll see years down the road how things have evolved, but there was the ACP [Affordable Connectivity Plan] that has run its course. We will see if it comes back, but did that play a role? Did you have an offer through there?
ESPESETH: We did have an offer through there but before that, before the pandemic, we rolled out a program called HCS EdConnect. We partnered with our school system and several other foundations and corporate sponsors in Chattanooga. And what that enabled us to do was to offer 300 Mbps symmetrical, which is our entry-level product, to any family with a child in Hamilton County schools who qualifies for free or reduced lunch. So regardless of–, it would start when your child was in kindergarten, and you kept it all the way through after they graduated. So, the school system certifies that for us. We are not asking for income verification or anything like that. But no questions asked, you don’t pay anything for our Internet service, and we provide Wi-Fi in your home for that. We partner with Tech Goes Home and with the Enterprise Center, which is funded by our city, to teach digital literacy to folks who may not necessarily know what to do when they get online. So it really is about how you make it affordable and how you teach people how to use it. And so when the pandemic hit, you remember when we all went home, and I don’t think any of us dreamed that we were going to stay home for that long. Our community was in good shape. Everybody had access to our services, but, before HCS EdConnect was in place, for folks who did not necessarily subscribe to our services, we put up over 200 hotspots around town and just turned them up with 10 gig service to say, “If you don’t have Internet access at home and you need to get online and your kids need to learn, come to these 200 locations, and you are welcome to use free Internet.”
BAUMGARTNER: I want to back up a little bit about what’s happening in rural America with government subsidy dollars at an unprecedented amount coming into the market. Since you are a municipal, is BEAD [Broadband Equity, Access, and Deployment program] on your radar? Are there areas within your service area where you are like, “It’s kind of expensive to reach there; if we can have subsidy dollars, we can go there?“
ESPESETH: We don’t qualify for BEAD funding at all, and the reason is actually good that we don’t qualify. Because when we rolled out our fiber network back when we started building in 2008, we passed every home and business within two years. So we were fully built out; we are already there. So, we are not eligible, but we were able to take advantage of a smart grid grant early on in our deployment. It was $110 million to build that smart grid, so it didn’t help us build out broadband, but because we were using fiber as the infrastructure, we took a 10-year buildout plan and condensed it into two years. So what that let us do was immediately realize the good impacts of a smarter, more reliable electric grid. But it also gave us the opportunity for anyone to purchase our services in our footprint. So we began to see that revenue stream early on, in the first couple of years, in fact.
BAUMGARTNER: I want to change the topic a little bit because this one is interesting to me in part because it sounds so intriguing but yet it’s harder to grasp, at least from my standpoint. EPB has been on the leading edge of a lot of things. You also have a project with quantum computing and a commercially available quantum network. We reported on it a little bit, but I still have a hard time grasping exactly what it is or what the future benefit is going to be, so maybe just describe where things are today with that and also down the line. What is it going to mean for the future? What are the benefits of that kind of technology?
ESPESETH: I think quantum computing is transformational for the country. And frankly the United States is far behind China and others in this quest. So, if you think about the things that classical computing has done for the country, exponentially quantum is going to do so much more for the country. When you think about logistics and managing, how you route trucks and how you load trucks and how you take pharmaceuticals to market, how you shorten that testing time. I am not a physicist so I’m going to struggle here with explaining it, but the applications that are shortened and you can get to market faster with quantum processing. It is far and away where the rest of the world is headed, and we need to catch up and pass them really, because we want those new applications, those new businesses and those new improvements to really be in the U.S. And so we took a small portion of our network, overbuilt it with the same fiber but we just cleaned it up a little bit so we have a quantum network within our own footprint. We have the data center located in one of our buildings. There are three other data centers in our footprint. There’s a total of seven altogether. So, we are running experiments with third parties. Right now, maybe universities, national labs, and some private companies are available. But we are right at the forefront of quantum networking. And if you don’t have a network to test your applications or to test your equipment, it’s really going to slow down development. So there are some private networks, especially with national labs, where you can do testing, but for now, EPB is the only commercially available quantum network. In other words, you bring the application to us, we work out how the experiment is going to work, and we have people to help you with that. We have a partner, Qubitekk, is our partner in this, and they have physicists on staff that are located in our building. So, what we are trying to do is advance quantum computing for the country. And back to our original mission, it is to keep Chattanooga on the forefront and to open up opportunities for people to come to Chattanooga and do more.
BAUMGARTNER: And what kind of learning? I know it’s kind of early. But you actually have partners that are coming in, and is there a long line to get access to this?
ESPESETH: It’s not a long line; it’s a very specialized line, I will say. But we schedule time on the network, we are working with individual companies as they come in. But now it is truly the very beginning of this type of work, and so that’s where we wanted Chattanooga to be, was at the beginning.
BAUMGARTNER: One other area I wanted to talk about is video and where that fits with your strategic focus. Do you have your own pay-TV service, or do you rely on, or do the customers rely on streaming services, third-party, virtual MVPDs, and so forth?
ESPESETH: So when we launched back in 2008 and 2009, we competed, and we still do compete against a very large tier 1 carrier, who does a very good job delivering video. And if you think back to that time it was, you would not begin to be able to sell Internet unless it was paired with a traditional video offer. So yes, we did launch with an IPTV offer then. We are now sunsetting that offer, but we have moved to another third party so you can secure traditional video services through us. We have our own headend, we have all our dishes, we are a full-service provider. But we also understand that people want to watch different programming, and they may not want to be tied to those large cable packages, so we partner with a third party to help build an interface where they can choose the content that they want to watch, and it will recommend what streaming services. So our position is that however you want to consume content, what you want to watch, and how much you pay, our role is to help you find it. And if that means you use our video service, that’s great. We want our video service to compete with that tier 1, and we want it to be top-notch. But if that’s not what you’re looking for, we still think our Internet service is the best that you can get in Chattanooga. We like to think it’s the best you can get in the country, but we want to enable you to be able to stream and find that content. Whatever you want to do, we want to be that partner to get you there.
BAUMGARTNER: Interesting. These days, the cable operators are still kind of in pursuit of what’s the next big growth driver. Broadband could carry the day for quite a long time, and we are starting to see them get into the mobile arena through partnerships. Depending on the operator, some are using it to retain broadband customers and keep churn in check, maybe as an acquisition tool. Is mobile something that you are interested in? Or even on the wireless side, fixed wireless might be on your list.
ESPESETH: Well, we definitely, even though we compete against the tier 1, we are not unaffected by the mobile providers coming in and offering home Internet. That’s kind of the next frontier of competition for us. So yes, we do feel like the next hot bundle is going to be Internet service with a mobile offer. So we will go down the road trying to sort out how we get to market, we can partner with, how we can make that happen. But we do think today, mobile is as important to the Internet as maybe video was to the Internet 15 years ago.
BAUMGARTNER: Right, because everything is connectivity now, whether in the home or you are moving about. And if you can stay in the mix, that’s a good thing.
ESPESETH: You know, the more services you buy, clearly, research will tell you that you’re going to stick with that provider, and the easier that provider is to do business with, you will stay with them. So that’s where we want to be; we want to own everything in your home and everything in your hand and be happy with your service.
BAUMGARTNER: As we wrap this up, I wanted you to reflect a little bit and then maybe look forward to it as well. What are you most proud of in your career? What do you think your legacy will be?
ESPESETH: I am so proud; I feel so privileged that I have been able to work with so many different people, do so many different things, and work with different technologies. And I don’t think I ever envisioned that when I started into this industry whatsoever. I would like to think that my legacy is being part of something bigger than myself. It’s not about what I did by any stretch of the imagination, but I think what we’ve all done collectively as a team for our community. That is really how I look back and say that’s been probably the most, the biggest thing I’ve been proud of.
BAUMGARTNER: And how about the municipal arena? If you had to get your crystal ball out, what would happen? Do you think it would happen in that part of the arena, 10 years from now? Is it going to be about offering more services, smarter services? What is it going to look like in 10 years, do you think?
ESPESETH: I like to think in 10 years, we’ll all be using quantum computing in addition to classical. But from a municipal standpoint, municipals are great to coalesce around community issues. The larger providers are spread all over the country, right, they are running a huge business. They may or may not have the resources, the will, or the skill necessary to be able to collapse in those smaller communities. So I think municipals, whether they build and operate networks, whether they form partnerships with private companies, whether they build open access networks, that those people closest to customers will be the ones that will be able to solve the problems across the country.
BAUMGARTNER: Okay, Katie. Thank you so much. It was great to get a chance to meet you and learn a lot more about your career. I learned a bunch, particularly around the municipal world and everything that you are focused on. And I will be trying to keep tabs on what you are doing next.
ESPESETH: Thank you for the opportunity. I appreciate it.
BAUMGARTNER: Absolutely, thanks.
