Co-ops Tackle Broadband, Overcome State Network Restrictions
The same organizations that took phone service and electricity to rural America in the 1930s are creating ways to provide digital access in the 21st century.
Back in the olden days of black-and-white TV, we’d occasionally see the cavalry come charging over the hill to pluck some unfortunate souls from impending doom. But the cavalry had a second role, which was to protect an advancing army’s flanks or to strike out as an attacking force in its own right.
Cooperatives (co-ops) definitely have the latter role with the community broadband movement and sometimes the former role in those states that have laws restricting municipal networks. As several co-ops get high-profile network buildouts underway, quite a few others are ready to join the broadband ranks.
Broadband Communities Magazine reports that there are 27 co-ops with fiber networks. Co-Mo Electric Cooperative is driving to bring gigabit service to 34,000 subscribers in rural central Missouri. The North Georgia Network is the product of two electric co-ops that teamed up to build a $42 million, 1,000-mile middle- and last-mile network, and is a success story from the federal broadband stimulus package enacted in 2009.
Co-ops are responding to the dire broadband need in rural parts of their states. Co-Mo Electric, for example, discovered 80% of their customers only have dial-up and satellite Internet connections.
Co-ops Poised to Increase Broadband
There are about 900 co-ops nationwide. If they flex their collective muscles, they can put a huge dent in the unconnected population.
Ozarks Electric Cooperative is building a fiber ring to connect their substations and offices.
“In the last year the number of co-ops pursuing broadband has increased,” said Alyssa Robert, vice president of marketing and member relations at the cooperative. “Every time I’m at a broadband workshop or on a webinar I see new faces and hear new voices.”
Telephone and electricity co-ops are well suited to enter the broadband business. “Co-ops are private entities that have to break even and put aside money to fund expansion, but they exist to maximize benefits, not maximize profits,” states Mark Erickson, Winthrop, MN EDA Director and a key champion to a project headed by RS Fiber Cooperative in Minnesota. The co-op was specifically created to meet communications needs. “There’s direct accountability to the community because members can have a say in how the network is managed and used, as well as a share in the profits.”
Long-established co-ops, some dating back to the early 1900’s, often have stable business operations, marketing and financial management expertise and a track record of customer service. This expertise and long-term relationship with the community is valuable if the co-op wants to raise money, and because members will become subscribers to the network quickly, thus helping cash flow.
Despite the media attention on gigabit networks, co-ops do not necessarily have to carry the expense of providing that much capacity in order to benefit their communities. “We might push a gig, but we have plans to heavily promote 10 Mbps and 20 Mbps services,” states Bob Hance, President and CEO of Midwest Electric Co-op in Michigan. “Executives of companies and universities often are not able to be productive working online from home, so they’ll want a gig. But for those performing basic tasks, 10 Mbps is a big deal.”
Coming to the Rescue
In those 21 states with legal restrictions on public broadband networks, co-ops enable communities to maintain control of their broadband but avoid political and potential legal challenges. North Carolina has some of the most draconian restrictions on public network. However several co-ops provide broadband in the state, including French Broad Electric Membership Corporation, Blue Ridge Mountain Electric Membership Cooperative and Lumbee River Electric Membership Corporation.
Communities may want to take a page from the Kit Carson Electric Cooperative playbook. At one time, New Mexico forbid co-ops from providing broadband. Kit Carson CEO Luis Reyes, Jr. began a systematic campaign of building local political support that rolled up into state political support.
“We started with big education campaign with elected officials at the local level,” Reyes says. “Not just mayors and city council, but anyone who ran for elected office would learn benefits by having better broadband.” The co-op also got involved with economic development projects in the three counties it services, and developed a track record of success stories.
By supporting projects that directly brought jobs to the communities, Kit Carson built strong credibility. With the support built among constituents and elected officials, the co-op generated 1000 letters of support for their broadband plans, which they leveraged with state legislators to get the restrictive law removed.
A unique partnership between RS Fiber and 10 cities is proving successful in Minnesota, which also has restrictions on public networks. The cities sold a General Obligation bond that they used to underwrite a loan to RS Fiber. The co-op leveraged the loan to raise more investment money.
RS Fiber retained Hiawatha Broadband Communications, a local ISP, to oversee all network buildout, operations and marketing. A fiber backbone will connect the 10 towns. During the three years it will take to complete the buildout, the co-op will provide 25-megabit symmetrical wireless and telephone services to the cities. In 2018 RS Fiber will ask the cities to pass another bond to finance the remaining buildout to take in surrounding farmlands. In total the entire network will cover over 600 miles and 2500 farm sites.
Expect to see more partnerships between co-ops, cities and towns. “I think this is a real possibility,” says Roberts. “I believe a cooperative in Colorado is doing just that currently. I know that other cooperatives in Michigan, Missouri and Oklahoma have all been in conversation with local communities.”
Co-Mo Electric is approached by towns not in its service area but want to be a part of the co-op’s network. “They are in the area outside of our town so we reached out to them to see what were the possibilities of them coming into our town,” states Mayor Terry Silvey of Versailles, MO. “It’s worked well so far. I couldn’t imagine any community not having it. To give our citizens faster service and other options they didn’t have before for an affordable price was the smart thing to do.”
Just as co-ops saved the day for rural America by bringing in electricity in the 20th century, co-ops can do it again in 21st century with broadband.
Craig Settles is a community-broadband consultant and author from California. He also produces a podcast, Gigbit Nation, which this week features more on the potential role of cooperatives in rural broadband.