00:00:12,300	S1:
Welcome to Bismarck Insights with mayor Mike Schmitz, a transparent and engaging conversational dive into meaningful topics impacting local government in Bismarck, North Dakota. Bismarck Insights is dedicated to removing barriers between the city of Bismarck and the citizens we serve every day.

00:00:33,367	S2:
Hello and welcome to Bismarck Insights. I'm Mayor Mike Schmitz, and today we're going to focus on a community partner business enterprise that's here in the city of Bismarck and actually across the state. We have with us Seth Arnon for the CEO of Dakota Carrier Network. So, Seth, first, let's introduce yourself to our audience and then tell us about you, how what your role is with the Dakota Carrier Network or DCN, as many people refer to it. And then we'll talk about your organization after that.

00:01:05,167	S3:
Very good. Well, first of all, thank you for the opportunity to be on your show. Um, yeah. My name is Seth Orndorff and I'm the CEO at DCN here in Bismarck. Uh, we have facilities in Bismarck and in Fargo. I'm a North Dakota lifelong North Dakotan, originally grew up in Hettinger, North Dakota, on a farm and ranch down there. Uh, my career, just about 30 years, has all been in telecommunications and broadband, fiber based broadband access. So it's been a very exciting 30 year, you know, thinking about what communications looked like 30 years ago compared to today. And it's it's really fun right now with AI and some of the things that we're seeing in the in the industry and where we're going to be next. I think it's really exciting.

00:01:52,868	S2:
So let's talk about what is Dakota Carrier Network. Let's many people probably have no idea what you do right and what it is.

00:02:00,601	S3:
Yeah, that's very common for me to bring up Dakota Carrier Network or DCN. Um, that's one and the same. So DCN was formed back in the late 1990s. 1996 the rural broadband. Then telephone companies got together and their customers needed to get connected to this thing called the internet. And so they formed a company and they tied their fiber optic infrastructure in their service territories. And I have a map here that shows the was at 15. Most of them are co-ops. There's a couple that were family owned and one that was independently owned. But they took their fiber backbones and they tied them all together to create one statewide network. And that state network is DCN. And with that, they created the ability to create one single point of contact for the deployment of broadband services to anchor institutions like the state of North Dakota state government. So through a single RFP competitive process, the state had a had a RFP out for connectivity to all the K-12 schools, all of higher ed, all of National Guard, the state radio towers, the Public Safety Answering points, National Guard and DCN won that contract in the year 2000, and we turned the network up and have been providing service to the state since then. Other users of the the network are wireless carriers, so most people think that when you're making a cell phone call that if I call you and we're sitting in the same room, that it's going to go from my phone to yours, that's not actually what happens. Uh, the wireless traffic goes from my cell phone to this nearest cell tower, hits a DCN fiber, gets transported up via fiber to wherever the AT&T, Verizon, T-Mobile, whoever your wireless carrier is to their switch and it says, well, where is Mayor Schmitz? Well, he happens to be on the same tower. It rides that fiber optic cable back to the cell site, makes your phone ring, and our call is connected in less than 50 milliseconds. So faster than you can blink your eye.

00:04:15,000	S2:
So what? I mean, so that that kind of talks about the network and connectivity. And I'm well aware of DCN because our firm has multiple times used it depending on what, what firm I was with in particular. But you know, I know I was basically able to create a wide area network effectively by not being a wide area network between my Hazen office, my Bismarck office, and at one time I had a Bismarck. I was at an office in Fargo, and it was like I was all in one space. So that's part of what you do.

00:04:48,000	S3:
That is absolutely what we do. So I talked about the state government. We created a wide area network for the state government. We do it for the wireless. Then we also service the commercial. So the regional banks, engineering firms, hospitals for hospitals or good use cases, electronic medical records. We have all of the electronic medical records for one of the regional hospitals in North Dakota in our data center. And then we have fiber connections going out to all the branches, giving them that that same experience, regardless of where they're at in the state or in the region.

00:05:25,100	S2:
So it's instantaneous versus the old dial up that we used to be accustomed to. It would go over the telephone line. Correct. Back in the late 80s, early 90s. Yeah. Speed has become.

00:05:36,601	S3:
Speed. Uh, there's a couple factors, and we'll talk a little later about AI and some of the factors there, but there's really two factors. One is, is the capacity, you know, how much data you have to send from point A to point B. And then the second is latency. How long does it take for the data to get from point A to point B, and some of the AI applications are very latency sensitive. So the the actual application needs to reside as close to the customer, call it eyeballs as possible. Sure.

00:06:10,467	S2:
So in addition to providing this connectivity, DQN does a few other things too. Um, I know that's effectively a cloud storage, almost capacity and data centers. So let's talk about those services and what they really mean. And what is you know, people don't understand what a data center is. So let's explain that to them.

00:06:30,601	S3:
Yeah. Data center. So DQN has a data center in North Bismarck right off of 43rd. And we also have another data center in our Fargo facility. Um, 3901 Great Plains Drive in Fargo. Our data centers are more targeted at governmental and industrial or enterprise data center. They aren't a hyperscale or, uh, crypto mining. There's a lot of different data center use cases that as the public, we're going to have to really get educated on. Not all data centers are created equal. Our DCNS data center is really built and engineered around high availability and redundancy. We have for every piece of infrastructure that we have, there's another spare, active and in line and ready to go into production. In fact, we fail over to it every week. We run on one air conditioning unit one week, and the next week we switch over. We run on the next air conditioning unit to make sure that if there's a failure, that our backups are up and operational. Same for our generators. We have dual generators. We have two battery plants. We have, um, dry fire suppression. In the case of uh, equipment starting on fire that we don't want to sprinkle water on electronics. So we engineered it with dry fire suppression. Water is another data center kind of topic that that depending on the data center engineering design, some of the data centers can consume a really large amount of water. Ours is engineered with a closed loop glycol system so that we aren't using we're not using any more water than probably any other commercial business in the city.

00:08:14,167	S2:
So from the data center standpoint or the storage of business information, because that's also, I believe, part of the services. What types of things are are what types of things is your data center housing I guess, or computing and similarly a storage facility.

00:08:33,267	S3:
Yeah, that's a good question. So we have some customers that want to own and control and maintain the ownership of their hardware. So they don't want to migrate completely to the cloud. And based on that might be HIPAA compliance, you know, customer financial information. So they actually buy the servers and put them in our data center and retain ownership on them. We have security mechanisms that control the physical and logical security into their infrastructure. And then we also have customers that maybe, um, would like to truly migrate their data to the cloud. And then they put it in a DCN server in our data center. Then they're just paying for compute resources on the infrastructure that we have. It's a lot more cost effective because when I'm needing to compute, you might not be needing to. So we have the ability to create some efficiencies by by moving it to a cloud type environment. We also have customers that have a wide area network with DQN, and then they go to a national cloud services provider, whether it's Microsoft Teams or others. And so we have direct connections, fiber connections from North Dakota, connecting to those cloud services providers so that your your users and your employees experiences, you know, number one reliable. And number two, that that productivity is high.

00:09:57,100	S2:
Sure. So are there any national or or common theme type items where, you know, people might be accessing information at their home that might actually be stored here in Bismarck?

00:10:09,367	S3:
Absolutely. Um, most people are watching Netflix. Um, we have the entire Netflix library in Bismarck and in Fargo. Um, probably eight years ago, maybe more. Um, Netflix actually reached out to DQN and said, hey, we're noticing that a majority of the Netflix content is coming out of your network. We'd like to put a the entire library in your facility, and then they actually upload the the new releases, if you will. Each morning at 4 a.m. when the network isn't highly utilized. Mhm. And that what that means to an end user is before that happened and you click on a movie, you might have a ten second buffer period before that movie would start playing. And now you can switch between movies and it's almost instantaneous. It's because that content is closer to the end user.

00:10:57,801	S2:
So the what I would view as part of the amenities or benefits of having some data centers. Not as you said, not all data centers are created equal and some of it's all are constructed. Mhm. But it does create an amenity for our, our people who are residing in a proximity that's close in some ways. But it also helps businesses do a lot of things from a computational standpoint and, and creating their own data metrics. Um that's very important. Um, one of the complaints people have heard is it's noisy. Let's address that because I walk, drive and have an office real close to your facility here in Bismarck.

00:11:42,267	S3:
Well, we've we've taken a lot of effort in the engineering and the design to be a mindful, um, tenant within the city of Bismarck, I live here. My kids went to school here. Uh, it's really important that what we do, we're not going to be in any sort of a disagreement as as a, call it a a bad tenant or a bad citizen in our, in our town. So we actually built for a couple of reasons. One of them was survivability. We built our entire building is built to withstand an F4 tornado. So it's built out of concrete. And then we we enclosed the generator infrastructure and the cooling infrastructure into that hardened facility. So there's a natural noise buffer. Whenever you put something encased in concrete, then we have an error handling issue. We had to engineer around to make sure that that we had adequate airflow and adequate cooling for that infrastructure that was behind the concrete. Other data centers, they'll put the generators just right outside, set them on a concrete pad. And when they're running in that, either it's a testing phase or an actual load phase. That's when you really notice the noise and get the noise complaints.

00:12:57,701	S2:
And so from a citizen standpoint, it certainly as a community leader, one of the things I would be concerned about is how do we minimize that, that noise disturbance. Because if you're in the city of Bismarck, we don't want that noise. And I think there's multiple ways that an entity can do that. And I think they do do that. I mean, there's been some horror stories like that, but.

00:13:18,701	S3:
We have some, even in North Dakota, where a data center operator came in and didn't engage with the community prior to building the fans in the crypto, especially the cryptocurrency, um, industry, with the bitcoin miners and others, those miners are basically a turkey barn with fans, multiple GPUs and, and and computers that are open to the air, open to the exterior they're running, and they actually generate. When you get that many fans running simultaneously, there's a harmonics issue that you can you can hear it from a quarter mile away. And so I look at those deployments completely different than like a DCN data center or some of the hyperscalers that are looking at coming into the state. A lot different engineering than what we've seen in the crypto.

00:14:12,868	S2:
And so probably learn from not participating early. Some communities. Um, but that's the key. As we look at that development, we have to make sure that we are sensitive to that. And I would want to be sensitive to that as a as a city of Bismarck. But I would also be willing to look at and am encouraged to have that kind of business come here, because it can bring some very high paying jobs and certainly increased tax base.

00:14:41,167	S3:
Absolutely. It's the economic impacts of a hyperscalers coming into your state. Um, when you look at the amount of GDP that in the United States in the last 12 months that came from this sector, it was 50% of the GDP growth in the last 12 months came from the hyperscale industry. If we say data centers are bad, um, we don't want them here. We're forgoing all of that investment and growth. AI is not going away. It's going to change our our how we do our jobs, our how our kids, the jobs that they're going to have. We don't even know a lot of them yet. But to just put our head in the sand and say, you know what? We we just going to wait. Uh, I think that there's an opportunity to do it, to do it responsibly and to do it with a partner, whether it's a DQN or a different data center provider. We've worked with several of them to make sure that that they're at the table and they're here to stay. North Dakota we like doing business with those that do business with us. DCN is a North Dakota based company and we kind of take that same mentality. Are you going to have people that live here and maintain the infrastructure that you're building? How are you going to support it? Are you going to pay taxes? And I think that it's we have the resources in North Dakota from a power standpoint, from people we still have. We have people that work the data centers, we have the network, the the fiber investment that DCNS, rural broadband providers have put in 70,000 miles of fiber into every corner of the state, really positions us well. And then the last one is the policy making sure that, um, we have some parameters, whether it's setbacks or whether it's, um, tax incentives for data center providers to, to install infrastructure in our state, but to do it in a, in a way that is good for North Dakota long term, I think is going to be key. Sure.

00:16:46,367	S2:
Let's let's talk. I mean, I'm going on into data centers because it's a hot topic. And let's talk about what is a, you know, the the hyper data centers that you've addressed. You know, what are the things that that we should be aware of as we look at it in the community because it a is not going away. And B, if we really want to be moving to the next generation, how we drive economics and economy in the community, in the state, we need to participate, but we have to be responsible about that. So, you know, we've been concerned about electricity usage and how much that's going to increase rates or not. Um, and the noise and how we're responsible and, and things like that. So from your perspective, obviously you live this. So what should we be doing as we set policy? Should we be telling providers you must comply with excuse me?

00:17:38,868	S3:
Yeah. I think what we should be doing is, is having more conversations just like the one we're having today educating our policymakers, our whether it's city, county, state, federal policymakers to make sure that the the the policies we have in place are positioning North Dakota to grow and grow responsibly. Uh, as a as a citizen of North Dakota, I'm concerned with what my power, uh, kilowatt per hour rate is. I think that we can and, and I have a lot of really close stakeholders within the energy industry. I think we have the the opportunity to capture natural gas. If we can use that natural gas for hyperscale data centers, that's going to actually increase the oil production as we look into the future, um, where that natural gas pipeline is coming through the Industrial Commission, you know, just recently supported that project, looking at alternative energy, whether it's natural gas, whether it's nuclear. I think we have to be open to any and all of those and making sure we do it in a responsible way.

00:18:53,767	S2:
And we probably need to also make sure, in my opinion, that, you know, if it's an applied digital coming in to put in a facility that they're going to absorb the the cost, so to speak, of that electrical generation that may need to be coming.

00:19:08,501	S3:
Well, and I think it's not just on the power side, but it's also on the network side, the capacity that these hyperscalers are looking at, at requiring the entire DCN backbone today runs on just a couple strands of fiber interconnecting each of the rural broadband service providers. We can provide terabytes of terabytes per second of capacity across that backbone. But when we sat down with the just a few, we have maybe a dozen different entities looking at coming to North Dakota. They're looking at maybe 12 to 14 times the capacity that we currently even have across supporting every industry sector that we support today. So it's it's exponential growth. Um, who pays for that capacity and is it sustainable long term? That's that's what we're looking at as we have to continue to invest in upgrading our networks, in making sure that DCN and our owners aren't the variable that keeps the investment from coming into our state.

00:20:12,667	S2:
Sure. Again. But again, that if there's cost associated with that and there's a rate associated with that, what we don't want to happen for our citizens is them seeing a spike in their rate as a result of the company coming in to do something. So as a policy center, yep. We need to make sure we're respectful of that responsible and saying ABC, you're going to have to you're going to have to share this. You're going to have to burden it. Now maybe you need that means you need to encourage another company to come in and help share that burden.

00:20:45,667	S3:
100%. I think North Dakota ranks in the top probably 2% from access to fiber based broadband access. But I think the second most important is affordable broadband access. North Dakota has very affordable. We have competition here. I think it's great. We have access to some of the best internet for the best value in anywhere in the United States. I think it's important that as these different ventures come in and the investments are made, that that we do it in a way that doesn't negatively impact whether it's any of our anchor institutions or the residents of North Dakota. Right.

00:21:24,701	S2:
So another thing I've heard about data centers and why they want to kind of be in North Dakota is we have a very good climate for it. Is that correct?

00:21:32,167	S3:
It is. Yeah. We actually had DQN. We utilize free air cooling on any day where it's above 60 degrees. So you think about today? Uh, we're we're utilizing that and taking advantage of that with the engineering design in our facility.

00:21:48,667	S2:
So that's that's a one reason why we have people looking at us. In addition to the access to energy that is affordable. Again, we have to be responsible to our citizens. Um, what are the barriers?

00:22:03,567	S3:
So the barriers today. Um, number one is as. As and this is just my opinion. Um, number one is education. Uh, we need to educate the potential data center, real estate developers that are looking at property to make sure that they understand where we have land, where we have power, access, power, potentially where we have network connectivity and where we have people to work the data center. There seems to be an assumption. Um, as I travel around the United States, they're like, well, do you guys have internet in North Dakota? So there's a real there's a real education piece that I think, and we've worked with the Department of Commerce, um, the governor's office within our industry, our national industry association, to make sure that we're telling the story. We need to be better at telling our story across the country. We're we're very proud, I think, as North Dakotans of what we have, we're not very good baggers. And so we need to tell our story more effectively on a national platform.

00:23:05,567	S2:
And from the standpoint of, um, employees or staffing that probably like if it's a I don't know, I'll pick on the Ellendale Center because that's the one that's probably largest at this point in time scale. How many individuals are they needing to employ to run that facility? Those are people that will be here. And and I think they're pretty high paying jobs. What what's your estimate and what that takes on an ongoing basis? Number of employees.

00:23:35,868	S3:
Well, I think that there's two things that you have to look at when you look at a at a data center building infrastructure in our state. One is from the day that they sign the the purchase agreement on the land to the day that they're actually computing and processing data out of that facility and just applied. And Ellendale is a great example. They built one facility, and now they're just in the process of turning that one up. And they have two more in the in the works. So there's this construction phase that's likely going to last, um, for sure between five and maybe 10 to 15 years. Um, the, the trades, um, HVAC, uh, heating and cooling electricians, uh, they are going to be in very, very high demand. I have a 23 and a 20 year old son, and I've encouraged both of them. Like, you might want to reconsider this because wherever you want to live in the state, there's going to be opportunities for those two trades, specifically others too. I mean, when you look at just general contractors, project managers. Anything to do with construction, I think, is going to be a real demand for the next 5 to 10 years, maybe even more. Then once that data center is up and operational, then you're looking at more of the supporting of the infrastructure, replacing the the data air units within the facility, the power plant upgrades, the battery swapping. There's still it's highly trade driven. Um, we haven't even gotten into the AI element of it. This is just the infrastructure support. And then I think that from a from a IT perspective, a lot of it can be done remote. So they won't need 300 employees in Ellendale to support the AI infrastructure, but they will need a subset of that, I think just ongoing to do upgrades, swaps, replacements. The the life cycle of these GPUs is 18 to 24 months. So there's going to be this constant swapping out and upgrading of that infrastructure.

00:25:43,300	S2:
Which all by itself is going to require a certain level of staffing. That's right. Um, which is not going to be assigned to 300 employees, but if it's 50 employees or 75 employees, and in any community, I don't care what size we are.

00:25:57,467	S3:
That has an.

00:25:57,801	S2:
Impact, that has an impact positive. Yep. Because they're there for a long term.

00:26:02,367	S3:
Agreed.

00:26:03,000	S2:
So, um, let's talk a little bit about AI. You brought it up and the infrastructure around that. And you know, from DCN standpoint, what are you seeing? What's AI, what does AI even mean to people?

00:26:17,701	S3:
Well, it's changing every day, every month. Um, the adoption and the and the implementation from whether it's DQN or our industry partners, um, using the language learning models to automate and create more efficiencies in our how we provision a circuit that goes from, for example, I live in Hettinger, so to connect the the bank in Hettinger to a bank in Bismarck, we actually have an employee that logs in and provisions connectivity to each node on that network. With AI, we can actually build the intelligence into the system that all I have to do is identify the two endpoints. And if self provisions and self tests all the way through to the circuit acceptance by the customer, those types of applications are happening across every market segment. And I think that the in order for that infrastructure to work, um, we have to have that infrastructure in the state and close to our, our end users.

00:27:22,968	S2:
Sure. Well, we've covered a lot. Yeah, we probably haven't covered everything. So what? Let's look out five years from now if you're going to forecast what you see is going to happen and what DQN needs to do from an opportunity Standpoint. What do you see?

00:27:38,100	S3:
I think within no more than five years we have to as DCM. We have to upgrade the capacity of our backbone. We have the fiber, the physical fiber. What we really need to do now is increase the the electronics and the number of fiber strands on the backbone that we have in the state. And that's really going to be a big undertaking into the hundreds of millions of dollars.

00:28:03,167	S2:
Yeah. What are the challenges do you see?

00:28:05,801	S3:
Well, um, from an energy standpoint, I think it's these data center operators. These hyperscalers are looking at different areas in the United States. And I think that the opportunity for them to make that investment there, they're going to have this first wave. And if we miss that first wave, we may not be a consideration for the second wave. So I think it's important that we we fit the need right now. Uh, and like I said before in a responsible manner, but to make sure that we are considered weather, whether it's compared to Virginia, Oklahoma, um, oh, Texas. Sure. Any other states?

00:28:44,000	S2:
Well, thank you so much for joining me today, Seth. And, uh. It's been very enlightening for me. Um, I know we could cover a whole bunch more topics, because I can probably talk about this for a long time. Um, because I'm about development and and creating economics benefit for our community and our state, and knowing that we always have to have our eyes open to the future, what that might look like. And sometimes these are difficult things to manage and get through policy wise, but it's also a great opportunity for us to do it the right way.

00:29:14,868	S3:
Yeah, I think it is. I think we're living in a really exciting time too. I'm looking forward to looking back at this time and saying, boy, did we really made some strategic, um, smart decisions with all the stakeholders involved.

00:29:26,300	S2:
So thank you again.

00:29:27,300	S3:
Thank you.

00:29:39,868	S1:
Thank you for watching Bismarck Insights with mayor Mike Schmitz. If you have specific topics or questions you'd like addressed in future episodes. Email em Schmitz at Bismarck gov.

00:29:53,467	S1:
Or call the City of Bismarck at (701) 355-1300.

00:29:57,868	S1:
To learn more about the City of Bismarck, visit Bismarck gov. Or follow us on a variety of social media channels by searching Bismarck and Gov. Bismarck Insights is a collaboration between Dakota media access and the City of Bismarck. You may find Bismarck Insights episodes on government access channels two and 602, as well as on Roku, Apple TV, and fire TV devices on radio access 102.5 FM and on demand at Fretboard.