For months, the team at
Appalachian Electric Cooperative (AEC) explored options for deploying broadband to its members but couldn't get the project to pencil out.
Then their board weighed in: Find a partner.
Would-be broadband providers have several models to choose from, but observers say the course AEC chose is becoming more common as unserved communities clamor for connectivity and turn to their co-ops for relief.
“Our board didn't like the idea of biting off the whole piece of pie," says Greg Williams, general manager/executive vice president of the New Market, Tennessee-based co-op. “We looked at the do-it-yourself option, but there is a lot of risk in that model."
Broadband partnerships can take many forms:
Arrowhead Electric Cooperative teamed with a regional telecommunications company.
Orcas Power & Light Cooperative in Washington is working with a multinational telecom giant.
Prince George Electric Cooperative joined with the state's largest investor-owned utility.
“These arrangements truly embody the saying, 'There's no one-size-fits-all,'"says Kelly Wismer, NRECA's legislative affairs director. “It's exciting to see how creative electric cooperatives are getting in their work to find broadband solutions that best serve their members."
Partnerships can be the answer for electric cooperatives who want to meet members' needs but also minimize risk, reduce operational costs, and potentially limit legal and regulatory obligations.
“A partnership strategy can also save time and money by dividing the tasks, staffing requirements, and financial risk of a new business," Wismer says.
Telco partner: 'They spoke the same language'
AEC began exploring its broadband options in 2017, immediately after the state of Tennessee acted to allow electric cooperatives to indirectly enter the market. The team analyzed a subsidiary model wherein the co-op would run everything from broadband build-out to day-to-day service, but wasn't comfortable with the risk.
AEC directors sent them back to the drawing board a couple of times before asking them to explore partnership options.
The co-op put out requests for information and heard back from seven companies. They then asked those respondents for specific details on what a joint effort would entail.
“Four came back and gave us a proposal," says Blake McNew, AEC director of fiber services. “We evaluated those over a year, brought the companies in, and, with the board, interviewed everyone multiple times."
They landed on a conglomerate of three Tennessee telephone co-ops doing business as Foursight Communications. Foursight created a subsidiary called Trilight for the partnership with AEC.
What gave them the edge?
“It's made up of co-ops. They spoke the same language we did," McNew says. “They had membership very similar to ours. There were a lot of commonalities."
“They share our value system," Williams adds. “Other folks were more profit driven."
The telephone co-ops also knew how to operate in a market competing with for-profit providers.
“They already had the bumps and bruises, so we don't have to incur those along the way," McNew says. “In this business, you can get millions of dollars in debt very quickly and not know it until it's too late. We're not perfect, but we do avoid those pitfalls by having them a phone call away."
AEC has a fiber backbone for substation communications and fiber throughout its system, which it leases to Trilight. It also provides the structure where Trilight maintains transport nodes and electronics.
For its part, Trilight provides front office service reps, electronics, and home and business installations, and it takes the trouble calls. Trilight logos and service windows are in AEC's lobby.
“Our members become their customers," Williams says. “Otherwise, we would have had to start from scratch. We felt we'd be quicker to market if we just partnered with someone who really knew the business."
To continue the project, AEC has applied for state funds, while Trilight plans to bid in the $20.4 billion Rural Digital Opportunity Fund, the Federal Communications Commission's largest reverse auction for rural broadband.
AEC in east Tennessee and Trilight's phone co-ops in the middle of the state may not share a boundary or overlap in members, but “in the world of fiber, distance doesn't matter," Williams says.
In fact, it may open doors to a greater customer base.
“They can build fiber outside our service territory," he says. “They are not bound to serve a territory like our electric co-op."
Working with an IOU
Waverly, Virginia's Prince George Electric Cooperative (PGEC) had been building broadband fiber-to-the-home from the ground up since 2017. Then came an offer it couldn't refuse.
Dominion Virginia Power, the state's largest investor-owned utility (IOU), was installing fiber-optic cable to improve the resiliency of the grid when it asked PGEC if it would be interested in leasing access to Dominion's fiber to bring broadband to unserved communities in Surry County.
The agreement, signed in early 2020, is the first of its kind in Virginia.
“We're here to serve our communities, no matter if they are a customer of Dominion Energy or a member of the cooperative," PGEC President Casey Logan says.
Under the agreement, Dominion provides the middle-mile fiber, which significantly reduces the cost and time to connect Surry County residents, he adds.
“Dominion is putting up fiber infrastructure for their electric grid; we are leveraging that fiber to make [the project] happen," Logan says. “It's hard to put a number on it, [but] it would make serving the county a lot more costly and time consuming to do if Dominion was not willing to partner with us."
The co-op, through its RURALBAND subsidiary, plans to offer high-speed internet and telephone service to Surry County's 3,600 residents by summer 2021.
Logan advises co-ops to “keep an open mind and do your homework" when looking at broadband partnerships.
“Many co-ops and IOUs don't have good relationships," he says. “However, we've had a great relationship with Dominion over the years. Now, we're coming together because it's a cause we can all get behind."
Leasing fiber to the provider
Ninety minutes south of AEC's headquarters,
Volunteer Energy Cooperative (VEC) also found a partnership that worked.
“We were looking for the best way to get internet and the quickest way to respond to the membership," says Rody Blevins, president of the Decatur, Tennessee-based co-op that serves 17 counties.
“We were concerned about doing all the contracts and legal work," he says. “We thought a partnership would work."
VEC gets phone service from
Twin Lakes Telephone Cooperative at a district office and holds a joint contract for pole attachments in four counties they both serve. Twin Lakes, one of the phone co-ops that formed Trilight, had already started running broadband fiber to its members' homes.
“Their manager and board were very interested in working with Volunteer to expand their footprint," Blevins says. “They were very receptive to working together."
VEC, which built a fiber backbone years ago, has not formed a broadband subsidiary but owns and leases fiber to Twin Lakes. Members sign up with the phone co-op for broadband, phone, or television service.
“Twin Lakes is the content provider," Blevins says. “We don't have to negotiate contracts with ESPN or legal issues with the FCC."
As for getting service quickly to its members? VEC has 118,000 meters, and Blevins anticipates half will subscribe to the broadband service over time.
“We're just getting cranked up."