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BIG Bandwidth for Rural America

I live in rural America and really love it. I’m also a proud consumer of Haywood EMC in North Carolina. They give me great electric service at a fair price. But like many of you in rural America, I also get lousy broadband service from my incumbent telephone provider. I wish Haywood EMC was in the broadband business.

Broadband service today is basic infrastructure. In my view, it only lags water and electricity in importance as a utility. It is the highway of commerce in the information age.

Several Electric Co-ops around the country are presently in the process of building fiber optic infrastructure. Most of the current builds are Federal stimulus projects using a combination of grant money and RUS loans. Co-ops like Ralls County and United Electric in MO; Kit Carson in NM; Arrowhead in MN; Lumbee River in NC; and North Alabama in AL will soon have their fiber infrastructure completed. A few other Co-ops are conducting trials of building fiber infrastructure without any Federal stimulus grant assistance – for example, Co-Mo Electric in MO.

Over the past decade, the firm I work for has been involved in dozens of fiber optic projects for electric utilities, mostly municipalities. We’ve seen some of these projects thrive and some of them struggle. We’ve seen some managers praised and some fired because of these projects. As this is the inaugural issue of Rural Communications, a publication dedicated to the advancement of electrical co-ops and their communication efforts, we thought it might be appropriate to offer some observations borne of experience to those of you that are considering building a broadband infrastructure on your electric system. So, without further ado, I am pleased to offer the following ‘truths’:

• A typical rural electric Co-op cannot build fiber optic infrastructure and make it pay for itself as a stand-alone business simply by offering CATV, Phone, and Internet service. You will have to capture the additional value of the fiber optic infrastructure to your electric system in order to make the business plan work. And fiber optic infrastructure does add tangible value to your electric system. The ability to effectively communicate with your consumer, on a real-time basis, will improve your core electric business over time with added functionality like Demand Response, Prepaid Services, Time of Use Pricing, Deferred Generation Construction, Automated Meter Reading, Revenue Assurance, Distribution Automation, Theft Detection, Successor Read Work Orders, Soft Disconnects/Reconnects, High-Low Read Resolutions, Watts Loss Improvement, Improved Outage Response Times and Improved Asset Maintenance & Utilization.

• Fiber Optic infrastructure is the right ‘big bandwidth’ technology for rural America. If you build anything else, and intend to serve your consumers with broadband, or even gather significant electric data on a real-time basis, you are simply conducting a bad science experiment. The demand for bandwidth has grown 100 fold in the past 10 years. It will grow another 100 fold in the next 10 years. Fiber optic service, ALL THE WAY TO THE HOME, is the only technology that can accommodate that kind of growth needs. Wireless has its place, but its place is mobility, not raw bandwidth capability. A 1,000 home wireless node is great for reading meters once a month, but completely inadequate for performing instantaneous polling and decision making for generation, price signaling, and load shaping. For that, you need a 2 home wireless node, with fiber very, very deep in the network. Rural America will continue to lag if we don’t embrace this fact.

• The financial structure of your fiber optic infrastructure is critical to your success. The best structure we have seen has the electric department paying for and owning the fiber optic infrastructure for internal efficiency purposes. The cost is built into the electric rates. A telecom business unit is added with separate accounting to prevent cross subsidization and this unit owns the electronics that are used to offer voice, video, and data services across the fiber network. The telecom department pays a per-service monthly fee back to the electric department for the use of the fiber optic system. Over time, as the telecom consumer base grows, this will have a tremendous positive impact on the utility.

• Operate your fiber network yourself, don’t hire a contract operator.

While you might consider a contract operator for your content (video, voice, etc.), you should operate and maintain the fiber optic infrastructure with your own crews. It’s important to realize that the addition of fiber optic services to your system is going to bring about cultural change, and you must manage it effectively or morale will plummet if employees feel overworked, undertrained, or left out. In our experience, this issue has been the biggest cause of ‘failure’ in projects that aren’t going smoothly. Train your customer service representatives on how to effectively sell your telecom services. Cross-train your linemen in how to splice fiber optic cable and install drops to homes. The ability to control your service quality, using your existing folks, is critical to your long-term success.

• Believe that your consumers will embrace this service. They already trust you, they know your level of service quality. You roll a truck when the lights go out. They feel a since of ownership as a Co-op consumer. As an electric Co-op, you will dominate the market if you offer telecom services with fiber optic infrastructure. We have seen it in just about every build we have done.

The citizens of rural America took control of their critical electric service needs 80 years ago by creating REA Cooperatives. It was a good decision. I believe these same consumers will embrace the idea of taking control of their critical broadband needs today. I’m convinced it will be a good decision if they do. Maybe we should ask them?

James H. Salter, P.E. is a former Co-op System Engineer (Walton EMC), the former Chairman of the FTTH Council and the Chief Executive Officer of Atlantic Engineering Group (http://www.aeg.cc), a design/build fiber optic firm serving electric utilities.