It couldn’t have happened at a worse time. Representatives of Mississippi’s electric cooperatives had gathered for the statewide’s July 2021 board meeting when internet service suddenly went out.
“That was the straw that broke the camel’s back,” says Michael Callahan, CEO and executive vice president of the Electric Cooperatives of Mississippi in Ridgeland. “Our co-ops could not tell their customers why they were out, what had happened and how long it would take for service to return. I mean, they were pretty much in the dark.”
That’s when 17 electric co-ops joined forces across the state to build a middle mile broadband network.
Middle mile is the infrastructure that connects national and regional high-capacity internet providers to local networks that serve homes, businesses and other end users.
In most cases, electric co-ops that offer broadband will contract with third parties for middle mile access. But lately, many are finding ways to form statewide or regional networks that give them greater control of their broadband service and help them capitalize on efficiencies, improve retail connectivity and minimize surprise outages.
“We are seeing new business models and collaborations emerge to address the lack of, or high cost of, middle mile access for small broadband providers,” says Brian O’Hara, NRECA senior regulatory director for broadband and telecom. “By working together, distribution co-ops and generation and transmission co-ops can deploy a high-capacity fiber backbone connecting their networks together and to the broader internet ecosystem.”
Competing with the 'big guys'
Electric co-op leaders say aggregating resources to create middle mile broadband will strengthen their bargaining power with national content providers like Netflix or Google and help them avoid the high cost of purchasing access from a third party.
“What we are finding is it’s difficult to run a business when you rely on third parties to provide a vital part of your business,” says Callahan, noting that when electric co-ops call a national provider about a primetime outage, generally “a truck’s not going to roll until 8 o’clock the next morning.”
With that in mind, Mississippi co-ops in broadband recently launched MS Fiber LLC to form a middle mile network. It will require each member co-op to dedicate six fibers from their own broadband networks and help underwrite the construction of another 230 miles of fiber.
“Our No. 1 concern is to get cheap, reliable direct internet access for these 17 co-ops that are providing broadband,” says Callahan.
He sees co-op-developed middle mile as akin to when distribution co-ops created generation and transmission co-ops to produce and deliver electricity and ensure reliability and affordability.
“These statewide networks are the G&Ts of the 21st century for our broadband business,” Callahan says. “We’ve got to have middle mile if we’re going to compete with the AT&Ts, the Verizons and the big guys out there. We want to be reliant on ourselves [as in the G&T/distribution model], and we know that co-ops can do this.”
Access at a reasonable price
In Arkansas, 13 electric co-ops and their G&T formed Diamond State Networks in 2020 to unite their $1.8 billion network with a middle mile buildout that connects 60,000 miles of fiber and reaches 1.5 million consumers.
The network brings more efficient connectivity to companies at a more local level and helps reach households that big internet providers have left behind, co-op leaders say.
Business owners can connect all their regional locations “through a single relationship as opposed to having to go through multiple different providers,” says DSN CEO Doug Maglothin. “And internet service providers can get reliable, low-cost wholesale upstream bandwidth if they interconnect with our network.”
Large industrial and commercial customers are big supporters of co-ops knitting together their fiber networks, says Jeremiah Sloan, CEO of Craighead Electric Cooperative in Jonesboro where DSN is based. While big internet transport networks in Dallas, Atlanta, St. Louis and Chicago surround Arkansas, their service is costly and lacks redundancy to avoid outages.
“We were paying very high prices for wholesale internet that we knew were not sustainable into the future, and we really needed to shift this landscape that we had in terms of connectivity,” says Sloan, a co-manager of DSN. “That was really the impetus, controlling our own operating costs and making sure that we had access to the content that our members and communities needed and access in a way that was what we were used to providing as an electric cooperative—safe, reliable and affordable.”
Sloan says once consensus was reached on the project, the buildout moved quickly.
“We’re really excited about how quickly we’ve been able to stand up the network that DSN has envisioned, and we’re looking forward to continuing to add these layers of success on top of what we’ve already invested,” Sloan says. “That access to a reliable wholesale network is going to help provide high-speed internet to rural communities at a reasonable price for education, health care, business and infrastructure.”
South Central Indiana REMC entered the fiber-to-the-home space because telephone co-ops and independent service providers in its electric territory were not serving all their members. A touchy situation ensued as the incumbents feared their federal funds for rural broadband would be clawed back.
“But once we all came to an understanding that we really weren’t here to destroy their business, we actually started working together,” says James Tanneberger, president and CEO of SCI REMC.
Rather than extending the co-op’s main line fiber backbone into the local provider’s territory and building fiber twice in the same spot, “we decided to get some of our services from them to communicate with some of our substations. Everything has taken off from there,” he says.
SCI REMC quickly recognized that Indiana could benefit if existing and new providers worked together to connect their systems to create a regional network. After four years of communications and relationship building, the idea took root in 2022 as a regional middle mile network.
Today, Accord Telecommunications Collaborative LLC is owned by 24 service providers—17 electric distribution co-ops, four telephone co-ops and three independent broadband providers. It’s the first middle mile network to include electric co-ops, traditional telcos and independent ISPs, says Tanneberger, Accord’s co-founder and board chair.
Once 200 miles of ties connecting broadband networks in Indiana are completed, Accord will have 2,500 miles of middle mile and access to over 27,000 miles of member-owned fiber. Accord plans to leverage member assets in Ohio, Illinois, Michigan and Indiana and is actively pursuing partners in other states as well.
“Because the majority of the Accord members are building fiber to-the-home networks, too, we have access that goes all the way down to the home or the business,” Tanneberger says. “It’s that granular reach that makes us unique.” If middle mile is seen as a highway, its member co-ops and companies own the off ramps or last mile of fiber connecting customers to the internet.
“A small cooperative in Indiana can now serve the local bank branches because, through Accord, we can collectively serve that bank’s branches across the state and the Midwest because they have access to the highway of Accord,” says Alexandra Jones, director of state policy and broadband initiatives at Indiana Electric Cooperatives, which supports Accord’s effort in Indianapolis.
“It’s cooperation among cooperatives, and that’s what we’re trying to do here on the broadband side. The more success we’re all going to have, the more opportunity we’re all going to have, and that’s really their vision for this.”
Tanneberger agrees that co-op-created middle mile shares the bootstrap beginnings of G&Ts to meet members’ needs.
“It’s taking control of a key piece that you must have to provide the services we bring,” he says. “Those G&Ts that we created provide a lot of services to us beyond just the generation and transmission. That’s the same plan for Accord.”
That’s also the plan of a growing number of electric co-ops in the broadband space.
“Across the U.S., cooperatives are realizing that, just like we need a very robust transmission grid for electrical services, we need broadband middle mile networks for these rural communities that we serve,” says Sloan.
“And it’s not just Arkansas answering the call. It’s becoming a hot topic for all of us.
“Middle mile is the framework required to do the exciting and innovative things that we want to do both as electric utilities and as a society.”
Accord and Diamond State were among the applicants with grant requests totaling over $7 billion to the National Telecommunications and Information Administration’s $1 billion middle mile program. They did not receive funds.
“There is clearly a need for middle mile, and federal funding is imperative for these networks to serve rural America and beyond,” says NRECA’s O’Hara. “That’s why NRECA continues to advocate for additional funding.”
By controlling the broadband infrastructure, co-ops become equipped to deliver reliable and affordable high-speed internet access to their members and beyond while increasing the resiliency of their electric service, he adds.
“I expect we will see more of these cooperative middle mile partnerships emerge going forward. They’re really a win-win.”