Taking service to rural customers too expensive, risky

By Diana McFarland

Managing editor

Community Electric Cooperative looked into bringing broadband to its rural customers and found it was too risky and too expensive. 

The cooperative determined that it would have to spend $11.2 million and would then have to charge those who subscribed to the service $250 a month to get a return on its investment, according to Jonathan Thompson, chief operating officer with the co-op.

Thompson provided a detailed analysis of providing broadband to its Isle of Wight County customers Thursday to the Board of Supervisors. {mprestriction ids=”1,2,3,4,5,6″}

Thompson said the cooperative looked at a hybrid model using a combination of fiber and wireless technology. The co-op would use its routes, poles and transformers to install fiber and then fixed wireless to provide service to individual homes and businesses, he said.

However, with a national “take rate” of 29 percent — that is, the number of households and businesses that actually sign up for broadband if offered — it was risky, not to mention the high monthly cost to those who did, said Thompson.

Once the numbers were crunched and the 29 percent “take rate” was factored in, Thompson said the co-op was looking at 859 potential customers. 

Thompson said there are grants available, but they have many strings attached, and there was concern that loading the additional equipment on the co-op’s existing poles would stress the system. 

Thompson said the co-op went into this with an open mind, particularly since electric cooperatives in the western part of the state were doing it. However, those cooperatives were looking to provide broadband to schools and government facilities, not private homes and businesses, which changes the dynamic, he said. 

“If we could make this work, we were going to do it,” Thompson said. 

Community Electric Cooperative President and CEO Steven Harmon told the Board that the cooperative has an obligation by law to provide electricity, but not broadband. 

Because of that, the co-op has a low tolerance for risk because it has a responsibility to its members, Harmon said. 

For this to change, the co-op needs a partner willing to invest in the capital improvements, said Harmon.

“That’s more along what I’m thinking, said Isle of Wight Board of Supervisors Chairman William McCarty, adding that he would like to take any further conversation “offline.” 

McCarty later said “offline” meant possibly contacting other technology companies about being partners, but did not want to call them out publicly yet as they were not at the meeting. 

Many Isle of Wight County residents are served by Spectrum (Charter). Other methods of obtaining Internet connections include “hot spots” using a cell phone account and satellite. 

Thompson estimated that 2,962 Isle of Wight County homes and businesses currently do not have broadband access. That is nearly 18 percent of the county’s homes and businesses if using data obtained from the U.S. Census Bureau. 

Broadband is defined by the Federal Communications Commission as a system that is always on and faster than dial-up, with a download speed of 25 Mbps and uploads above 3 Mbps, according to Thompson. {/mprestriction}