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North Carolina Co-op Takes Initiative to Close the Rural Broadband Gap

Despite stops and starts, a cooperative is trying to bring broadband service to five counties in North Carolina and one in Tennessee.

by Vicki Hyatt, The Mountaineer / October 23, 2017

(TNS) -- (This is the second in a multi-part series about broadband internet service in rural areas.)

Across rural areas in the Southeast, rural electric cooperatives are taking the initiative to provide internet service for their customers.

The French Broad Electric Membership Corporation, which serves the North Carolina counties of Buncombe, Cocke, Madison, Mitchell and Yancey, as well as Unicoi, Tennessee, is on its second go-around after an initial attempt to provide broadband service to customers didn’t work out so well.

Kelby Cody, the cooperative’s IT administrator, said customers in Marshall and Mars Hill have a choice of internet providers, “but anyone else is left out in the cold.

“We tried to partner with them, but they never responded,” he said of the internet providers in the region, “so we decided to try it ourselves.”

French Broad originally attempted to deliver internet through the same line as electricity, but the company providing the equipment necessary equipment went out of business. Undaunted, the cooperative regrouped and a new effort to serve customers is under way.

“We’re just getting started, and it is a slow process,” Cody said. “We surveyed our customers and are installing fiber to the home to two areas. It will be a slow process because it is so expensive.”

The cost is between $15,000 and $20,000 a mile, Cody said, and unless about 40 percent of the customers along the line agree to sign up, installing a fiber optic cable to homes won’t be cost effective.

French Broad is starting with communities closest to the office in Marshall and is going out about 10 miles or so with a line that should deliver service to about 180 customers by the end of the year, Cody said.

Once the line is near a home, installing the underground section and hooking up the service can be done in a day. There will be two levels of service — $49.95 a month for basic service and $74.95 for 100-megawatt service.

“We’re hitting the dense areas first and will move out from there,” Cody said.

The cooperative has been unsuccessful in getting grants and so has the county, Cody said.

Providing internet service isn’t the same as when the rural electric cooperatives were set up decades ago when households were almost guaranteed to sign up for service and where a 20- to 40-year payback could be counted on. With internet service, Cody said the goal is to pay off the costs within four to five years.

“A lot of people called wanting internet service, so we’re responding to our customers,” he said.

Tennessee experience

Just across the border in Erwin, Tennessee, the town has taken an even bolder step by providing internet service to its entire 9,000-customer base.

John Williams, the fiber optic engineer for Erwin Utilities, has been a water and electric utility since 1945 when it was purchased from Tennessee Valley Authority.

Unlike North Carolina, Tennessee allows cooperatives and municipalities to offer broadband service as long the service is offered to current customers.

“We’re a small community, and since 2008, there’s basically been no growth in our customer base,” Williams said. “In the past, how we grew and generated revenue was through growth.”

Because people are using less energy with the emergency of energy-saving appliances and more widespread use of fluorescent light bulbs, revenue for Erwin Utilities was actually declining.

“We wanted to come up with a way to generate growth,” Williams said, “but part of the purpose was to serve our community. Twenty-five percent of our footprint doesn’t have access to broadband or cable.”

The utility company did their research and concluded that cable television would soon be replaced by customers who preferred to get their television over the internet. That propelled the decision to aggressively install internet.

“We looked at is as another utility — something everyone will need,” Williams said of broadband. “So that’s what we decided to do.”

The build-out was divided into six phases, and so far three of the phases has been completed. That meant there was no huge investment all at once, and revenue generated during the earlier installations can defray the cost of later phases.

Williams designed the system and contractors were hired to hang the fiber at first, but now the utility’s line crew is doing the work to cut costs.

The system was designed to pay for itself with a 24-percent “take rate,” or the percentage of customers who would potentially sign up for service.

The cost per mile ranges from $20,000 for areas closer to the town to $35,000 for those farther away.

The company charges $50 a month for those who only need 25-megabits of service, and $70 a month for 100 megabits. Once the utility is able to offer a service levels at gigabit speed, the upper cost is not expected to change, Williams said.

The following case study was included in state broadband plan titled "Connecting North Carolina" regarding the aftermath of providing gigabit service in Yancey County.

"Yancey County, located in northeastern NC, has a population of almost 18,000 residents, hosts three large industrial manufacturers, and supports tourism around Mount Mitchell. However, most tourists and residents could not consistently access broadband in the county due to poor availability.

"The county found that 64 percent of people surveyed were unable to receive service and only 10.5 percent were able to stream videos. The county formed a public-private partnership with Country Cablevision, a local provider, applied for, and secured a federal grant from USDA’s Rural Utilities Service.

"The grant funded a $25.3 million fiber-to-the home broadband project in Yancey and neighboring Mitchell County. Now completed, the network can deliver service at speeds from 25 mbps to 1 gigabit upload and download to every household in the county.

"The economic and social benefits the county is now experiencing is staggering. As a result of deployment, the county is attracting telecommuters and 'lifestyle entrepreneurs' who relocate to the area because they prefer to live in the natural beauty of the western NC mountains.

"In addition, the county’s three large industrial manufacturers have improved productivity, efficiency and, increased employment. Finally, the local community college, Mayland Community College, opened the “Anspach Advanced Manufacturing School” which utilizes the new connectivity to operate an advanced prototype operation, in addition to teaching advanced mechatronics and robotics techniques."

Coming next: Haywood Electric Membership Corporation discusses challenges in providing service.

©2017 The Mountaineer (Waynesville, N.C.) Distributed by Tribune Content Agency, LLC.

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