The dearth of high-speed internet in rural America is well known. But with no federal moonshot-type program for broadband in the offing, many electric cooperatives are evolving to find solutions.
Three co-op CEOs discussed the risks, rewards and unexpected of launching retail internet projects at the Broadband Communities Driving America’s Growth Conference and Expo in Alexandria, Virginia, on Oct. 31. Brian O’Hara, NRECA senior regulatory director for broadband and telecom, moderated the panel.
Tri-County REC, based in Mansfield, Pennsylvania, is no stranger to joint ventures, acquisitions and regulations, having acquired three investor-owned utilities to better serve the north-central portion of the state.
Entering the broadband space, however, required a whole new skillset, a lot of patience and “some luck,” said Craig Eccher, the co-op’s president and CEO. With a return on investment 15 years out, he noted, “I understand why incumbents didn’t do it.”
Tri-County’s subsidiary had to obtain an “eligible telecommunications carrier” designation from the Pennsylvania Public Utility Commission and secured more than $50 million in grants, both federal and state.
But a 2017 tax law snafu has the co-op on the verge of losing its tax-exempt status, he said. “Next year we will be taxable. That will change our structure potentially forever,” said Eccher.
NRECA is working with Congress on passing a bill, the
RURAL Act, to fix the tax law, which currently counts federal and state grants as non-member income for co-ops.
Public funds also seeded the first broadband project by a co-op in southeast Virginia, where most of
Prince George Electric Cooperative’s 12,000-meter service territory lacks broadband.
Prince George County’s partnership and grant in 2017 was key, said Casey Logan, CEO of the Waverly-base co-op. “Them stepping up to the plate and putting skin in the game allowed us to roll this out.”
Tipmont Electric Cooperative in Linden, Indiana, bought a fiber internet provider, Wintek Corp., and gained 22 staff with broadband expertise to advance service to its 23,000 members.
“Broadband is a different business totally,” said CEO Ron Holcomb, who described his directors as “very courageous and engaged.”
The CEOs also noted a “culture shift” when their co-ops embarked on broadband.
Eccher recalled seeing the head engineer, operations staff and the vice president of regulatory affairs working late on broadband strategies. “We’re seeing new engagement with all levels of employees,” he said.
Logan said the biggest challenge, aside from construction, is “managing expectations.” Members want broadband now, he said, but if it will take two years, tell them upfront.
On the flipside, be ready to explain the importance of broadband service to older members, he said. “We have to make them aware of how valuable broadband is to their grandchildren.”
Holcomb told the audience about how his son, an engineer for PGEC, went to the home of a member who was struggling with their new broadband service. A half-hour later, he’d shown the family how to turn it on and they asked him to stay for dinner.
“We are here to empower the community with state-of-the-art essential services, what they need to be successful,” said Holcomb.
Explore NRECA’s resources on broadband.