Episode 178

Converting to Usage-Based Broadband

June 24, 2020

Episode Summary

About a year ago, Northeast Nebraska Telephone Company began switching customers over to a usage-based pricing structure that charged on data used, rather than speed. What went into that move and how has it been received?

Show Notes

Transcripts have been lightly edited for clarity and readability.

 

Andy Johns: What is it like to transition over to usage-based broadband? And what can you do to help customers during a pandemic? That’s what we’ll be talking about on this episode of StoryConnect: The Podcast. My name is Andy Johns with WordSouth, and I’m joined today by Melissa Lanzourakis, who is a marketing manager at Northeast Nebraska Telephone Company. Thanks for joining me, Melissa.

Melissa Lanzourakis: Absolutely.

Andy Johns: So we’ve got a lot to cover in this episode. But this started from a conversation about something that Melissa and the folks at Northeast Nebraska were doing as a discount during the COVID-19 pandemic. But there is a lot of other stuff to get into with usage-based broadband and the transition that they made about a year ago to move over to that. So a lot to get into. But, Melissa, let’s start with the pandemic that seems to start every conversation with everybody. If you don’t mind, tell us what have things been like there in Northeast Nebraska since the pandemic started? And what have you guys been doing to help customers?

Melissa Lanzourakis: Well, we were very proactive with COVID because we had an employee that had to go into quarantine in early March. So this was before it was even a big news story. So we already started planning for the possibility of people working from home and what that was going to look like for our staff. So we got that all in place. But then we also looked at what this was going to do to our customer base. We knew people would be working from home, doing schooling from home a lot more. We looked at what that would do to our network and the fact that we’re a usage-based billing company. If they’re using more, their bills are going to go up more. And with the schooling aspect involved and the work aspect involved, we really wanted to give back to our customer base, so to speak. So we ended up doing a school discount per child of a 30 gig credit. So for each kid in the house, they could submit a form that we had online, and they would get a 30 gig discount on their bill per kid. So we had about 1,500 discounts that we processed, which was a little painful. But you know what? It was well worth it because I think it put a lot of customers’ minds at ease when they saw that credit on their bills. And we also saw that usage had gone up. And this is — I’m talking into April now — that from mid-March to mid-April, usage had gone up probably 20, between 20-25% over last year in the same month. So what we did is we discounted everyone’s Internet bills by 25%. Now, if they were a low-end user, the discount was lower, if they’re a high-end user, it was higher.

Melissa Lanzourakis: I’m looking at handwritten notes right now that we’ve gotten from customers thanking us for the discount. And people were very positive and thankful for the discount online. We were happy to do it. For COVID, we also opened up 22 Wi-Fi hotspots in our communities. We bought extra equipment to extend the Wi-Fi signal. And we encouraged customers and non-customers to go use our Wi-Fi if they needed that Wi-Fi for work or school.

Andy Johns: Excellent. So, I would imagine, 22 different hotspots that ought to cover most of the communities across the service area.

Melissa Lanzourakis: Yeah, we did 22 hotspots, and it was across 30 communities. So I think the furthest someone might have had to drive was maybe seven miles. But yeah, we tried to get them up in all our COs.

Andy Johns: Nice. So what you had said there, and we’ll get into the discount a little bit, but it was a 30-gigabyte credit for the school-aged kids. Let’s unpack that a little bit and talk about it. If folks are not familiar with a usage-based broadband service, go ahead and give us some of the basics, if you don’t mind, on what that means and what that means to give somebody a 30 gig credit.

Melissa Lanzourakis: Sure, so we charge based on usage, not speed. So that means we’ve opened up the pipes, and everyone gets the fastest speed that we can provide to them. We’re 100% fiber, so we advertise up to a gig of speed. But we pretty much guarantee 100 up and down, up to a gig of speed. I’ve seen speed tests run, you know, in the 900s, 800s. I’ve seen some that might be a little lower, but I’ve seen over a gig as well. So it just depends on where you’re at, how close you are, who is sharing, and that kind of stuff to determine what your speed is. And it could be different at different times, too. But you pay a flat rate, and it’s rather low for the Internet, and then you pay on per gig of data that you use.

Andy Johns: Ok. So that’s obviously where folks that went from — I guess a close parallel would be like an electric bill, where you’re looking at it, that folks that were working away from home and kids were at school, all of a sudden they switched to doing all of that from home. So all their Zoom calls and any school stuff the kids are doing online, all of a sudden all of that is reflected in the usage on their bill.

Melissa Lanzourakis: Yep. You got it. And it’s just like, everyone was home, so their electric bills probably went up, their water bills probably went up, and their Internet bills probably went up. So that’s why we discounted them. And we didn’t get one complaint about that. So that’s great. 

Andy Johns: Right. I bet. So I guess part of what’s interesting, we had done an episode maybe three years ago…

Melissa Lanzourakis: Yes, I listen to it.

Andy Johns:  Ok, well, [we interviewed] Shentel over in Virginia about metered, usage-based. But as I understand it, they’ve been on it for a long time. It was not really a new thing for them if I’m remembering correctly. But this is something that you guys have just transitioned to in the last year or so, right?

Melissa Lanzourakis: Yes, June 1st marked a year when we transitioned our first two communities. And everyone was transitioned by October 1. And they weren’t given an option. This was just on our new Internet product. And this is what we were selling now. We don’t have any contracts, so if someone didn’t want to do it, they didn’t have to. But yeah, we transitioned a few communities each month. And we also do free managed Wi-Fi because we thought that if we’re going to charge by usage, we really needed the tools in people’s homes so they could use the Internet correctly, and we could help them troubleshoot if things were looking out of whack or they didn’t know where their usage was going, that sort of thing. So they’re given the option if they want to take the managed Wi-Fi or not. They don’t have to. We strongly encourage it. But we are still…COVID has slowed us down on that. You know, we had to try to get thousands of Wi-Fi routers into homes, and then all of a sudden COVID hit, so that really cut down on that. So I think we’re probably at about three-quarters of our customers having those in the homes. And we’ll have the other quarter in hopefully before the fall.

Andy Johns: That’s a big advantage to have that going and setup because fewer truck rolls and all kinds of stuff there. So good for y’all for doing that.

Melissa Lanzourakis: Yeah. We were proud of our board for okaying us to purchase that.

Andy Johns: Definitely. Definitely. Well, not meaning to get too much into your business and get it all out into podcast land, but do you mind taking us back a little bit to what some of those discussions were like when the idea of moving over to usage-based first came up? You know, was everybody concerned that the sky was going to be falling when you made those changes? Or was everybody pretty confident it would work out as well as it has? Take us back, if you don’t mind, what some of those discussions were like back when you guys were looking to implement it.

Melissa Lanzourakis: Do you mean in terms of customers or employees?

Andy Johns: Let’s start with employees if you don’t mind.

Melissa Lanzourakis: They were nervous.

Andy Johns: Sure.

Melissa Lanzourakis: We did a lot of education, and a lot of our employees live in the towns that we are at. They were concerned. It took a lot of education to our employee base about how it works and what they would need to relay to customers. I tried to get a lot of information out prior to. But, yeah, it just took a lot of education. I think our operations manager stepped in and helped with that as well. And we gave them talking points for customers, too. Like, if the customer says this, then this could be your response. You know, these are general ideas…we understand that not everyone is going to like it, but these are the reasons—X, Y, Z—of why we’re doing this because we’re a cooperative. We’ve invested a lot in our plant. We’re 100% fiber now. And we are investing more and more every year because of usage. So that’s why we decided to go to usage-based based billing. And so many of our customers were on a very low-speed plan.

Andy Johns: Yeah, I wanted to get into that too.

Melissa Lanzourakis: Yeah, you couldn’t get them to upgrade. And this kind of predates me; I’ve only been here a couple of years. But, I would say the biggest percentage of our customers were on 8 Mbps. So you can imagine what they experienced, going from 8 Mbps to at least 100 Mbps up and down. So we haven’t heard any complaints about speed. But before we did; we heard a lot of complaints about speed. But now we don’t anymore. So that’s great.

Andy Johns: Yeah, that would definitely be a good way to roll something out like that. It’s “Yeah, we’re doing this, and the billing will be a little different. But guess what? You know, we’re increasing your speed more than 10 times and you’re really going to add sometimes 100 times the speed that it was.” So, yeah, that would be a good time to do it for sure. I’m sure that helped.

Melissa Lanzourakis: Yeah, it did. And I visited all of our communities last summer. I think I put 1800 miles on the car, and I did open houses at various times throughout the day and in all of our communities; some were as late as 8:00 at night. Others were 9:00 in the morning. I gave a number…I don’t even remember how many presentations — must have been like close to 30 — and talked through this new billing process. And what uses data when you’re online, what uses the most data, and what you can do to save on data if you choose to do that. It’s really giving the customers control over their bills. You know, if they have a hardship and all of a sudden they need to save money somewhere, they can just not use their Internet. And already they’re saving a lot of money.

Andy Johns: Oh, yes. That’s interesting, and we always talk about customer education being so important. And then even before that, the employee education. I’m glad that you touched on that because we always talk about how the employee is always the first audience. We’ve got to get them on board because, like you said, they live right there in the community. And back when we could go to churches, grocery stores, ball fields, and all that, that’s where they’re going to get hit with those questions. So having them prepared for that is key.

Melissa Lanzourakis: Yeah. And when I went around to the towns, our employees came with me so that there would be a familiar face there. And they helped me answer questions, and they actually were a very supportive group. So I appreciate that.

Andy Johns: Definitely. So now that we’ve kind of unpacked a little bit about what that means to give the credits and how the usage-based system works, let’s get back into the COVID-19 discounts that you guys did. So it was anybody that had a school-age student received the 30-gigabyte credit for, was it one month? Or what were some of the other things you guys did to help folks out during the pandemic?

Melissa Lanzourakis: We actually did that. Let me think here. I think we did it for two or three months. I can’t even remember right now. I think we did it May 1 bills and April 1. We did it for two months. That was right. And yeah, we got the forms submitted, and then a group of us worked on processing each discount in our billing system. And it just showed up as a student discount. I mean, some homes got as many — I mean, we’d have like five and six kids, so they would get pretty substantial discounts for a couple of months. If families felt that their kids were using too much Wi-Fi, they could also hit up our hotspots. And those had several terabytes of data used at them, so we know people were using them. 

Andy Johns: For sure. Ok, and then on top of that, there is another discount that you guys were doing for folks as well, right?

Melissa Lanzourakis: Yes. So on May 1 bills, we implemented the 25% discount on everyone’s usage. So it was brought — we do a certain cost per gig — and we brought that down by 25% for one month.

Andy Johns: And the idea for that, you talked about earlier, just being a cooperative is certainly part of that.

Melissa Lanzourakis: You got it. And when we transitioned to usage-based billing, our number one goal was to stay revenue-neutral. It was never meant to be a money-making source. And once we get a year under our belts, you know, the price could change if usage has gone up. We could bring the price down permanently, the per gig price. We’ll have to look at that once we get a year of data under our belts.

Melissa Lanzourakis: But, yeah, we decided to do the discount and our board was 100% on board with doing that, which we were pretty excited about. You see the charts and how the usage was up. And we just thought, you know, there’s a lot of people out there without jobs right now that are going through hard times. And we want to give back to our co-op members. We have paid out capital credits for years, but we thought this would be another way to give back to them.

Andy Johns: Definitely. And I’m sure it was well appreciated for everybody. Nobody, like you said, nobody’s complaining about cheaper prices for it, I’m sure.

Melissa Lanzourakis: No, not one person. So that’s good.

Andy Johns: Well, the last thing I had for you is what advice might you have if there is somebody out there who’s considering going to usage-based broadband service? You know, maybe it’s been something they’ve talked about for a little while, or maybe it’s freshly coming to the table. What advice would you give them if they’re thinking about making that switch, any things you’ve learned along the way?

Melissa Lanzourakis: Well, get a friend that has done it. That was my number one thing. I made friends with another company that had done it two years prior, and I went to them for support quite a bit. And I still email them probably once a week because we have the same messaging that we give to customers. They do like free usage days, and we actually have one coming up this month, too. So I really got a lot of ideas, support, and feedback from them. I don’t know if you want me to say who it is. 

Andy Johns: If you’d like to, that’s fine.

Melissa Lanzourakis: It’s Mid-Rivers, and they were a great support system. So, reaching out to someone that has actually done it is a great idea. The plant side of things went really smooth. I don’t think there were any issues there. We had a small percentage of customers where we couldn’t get readings quite yet. And so, they had to go into individual homes and that kind of thing to see what was going on, but I think everyone is online now. So, yeah, it was just a lot of education for ourselves, but also really educating the customer base. Because when you go from an unlimited plan to all of the sudden — I mean, we still are unlimited. You can use as many gigs as you want; you’re just going to pay for every single gig. So we really wanted to educate our customer-base on what uses the Internet. You know, because people were like, “oh my gosh, I can’t check my email. I can’t get on Facebook anymore.” But if you go to our website, I have so many data saving tips on there that you can use if you really are conscientious of your data usage. But we had been putting the amount of data that people use on their bills for two years before we even made the announcement. You know, we are doing this now. We had talked about it at the annual meeting three years ago, and then at the next annual meeting, we talked about it again. I mean, we didn’t keep this a secret that we were going to go this way. But it always seemed like something we were going to do in the future. Well, the future came, and we did it so. And when we officially announced it, we waited a whole month. And then when we brought people on, their first month was free of data charges. So they only had that base Internet price that they had to pay for. But then they had the amount that they would have paid, you know, based on their usage. But they didn’t have to pay for usage that first month.

Andy Johns: That’s so important, you know, not springing it on people, but to give them plenty of time to kind of figure it out. And then, for that month, to see how much they’re doing. That’s a really smart move, I think.

Melissa Lanzourakis: Thank you. Yeah, that’s what we thought, too.

Andy Johns: Great. Well, I appreciate it. That was a lot to get into and unpack, but I appreciate you taking the time to share that with us, Melissa.

Melissa Lanzourakis: Absolutely, Andy, thanks for asking.

Andy Johns: She is Melissa Lanzourakis. She is a marketing manager at Northeast Nebraska Telephone Company. I’m your host, Andy Johns with WordSouth. And until we talk again, keep telling your story.

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