Dickson, Tennessee (pop. 15,500) was the third municipal electric system to take power from the Tennessee Valley Authority after its creation in 1933, but the utility actually predates the regional electric generation system by almost 30 years. Today, it’s entering a new phase of life, parlaying its 117-year history of bringing affordable electric service into an $80 million fiber-to-the-home (FTTH) build that will see every household in its footprint (37,000 meters) get future-proof Internet access within the next four years.
A Cooperative in Municipal Clothing
Established in 1905, the very first Dickson Electric System (DES) customers received their power from a single 150-horsepower external combustion steam engine. DES upgraded its capacity in 1923, switching to two 150-horsepower oil-burning engines. A little more than a decade later, the TVA was established and DES took service, joining the maturing regional electric system and bringing its 650 customers and 50 miles of line into what would eventually be a group of more than 150 local power utilities almost a century later.
Today, Dickson Electric territory covers almost 800 square miles across Dickson, Hickman, Cheatham, Williamson, Humphreys, Houston, and Montgomery Counties (with the bulk of its customers in the first three), across about 2,600 miles of distribution line to 37,000 locations.
Because of this and some other factors, in many ways Dickson, Tennessee’s municipal electric system looks more like an electric cooperative than typical city-centered infrastructure, General Manager Darrell Gillespie shared in an interview. Just the fourth general manager to serve in the position since DES’ founding, Gillespie said that only 22 percent of its meters are located in the city of Dickson. The rest are spread across the seven-county footprint - many in rural areas, and including in parts or all of four other cities. In fact, DES averages just 13 customers per mile across its service area.
With a long history of providing affordable, reliable, locally accountable electric service, leadership at the utility have been talking about expanding into the fiber business for years. The onset of the pandemic in the spring of 2020 solidified what DES leadership already knew, Gillespie said: about half of DES’s customers have little or no choices for high-speed broadband. Its poorly connected customers, especially in rural areas, had few options to work, visit the doctor, or learn from home. But its journey to fiber began long before the pandemic, more than a decade ago. "Even in urban areas, there are customers that are not served" by broadband providers, he shared.
Smart Grid Brings Smart Investments
As soon as he joined DES in 2008, Gillespie began looking to the future. In the fall of 2010 the utility began hanging fiber to connect its headquarters to eight distribution substations, completing the work the following spring. In all, it added more than 160 miles to support smart grid operations and the installation of an Advanced Metering Infrastructure system. Every time DES hung fiber for grid monitoring and resiliency, however, it also included extra capacity for the future. It soon came in handy.
All those improvements that we’ll be making towards that technology are going to bring benefits to our electric customers.
In 2012 the electric system answered the call of local schools that had been using subpar fixed wireless service, and formed a partnership with Education Networks of America to construct wireline connections to support education. ENA manages the network with DES providing the infrastructure. It has allowed the school to reduce its operating costs while quadrupling speeds between locations. This and other projects like it (such as providing transport service across its territory and leasing rack space for a nearby electric cooperative that is also building a fiber network) have strengthened connectivity in the region, all while also providing DES additional revenue on infrastructure it had already placed and providing a firm groundwork to draw upon in the future.
In July of 2019, utility leadership decided to begin the process to determine what a fiber buildout might look like, how much it would cost, and what market research had to say about the user satisfaction with existing Internet Service Providers (ISPs) in its footprint. To do so it hired the National Rural Telecommunication Cooperative (NRTC) to do a feasibility study (partly because of the latter’s experience helping electric cooperatives do broadband). In early 2020, NRTC determined it could be done. The Board then launched a survey to gauge local interest; while the NRTC reports that the average positive response for rural cooperative customers is a whopping 92 percent, DES wanted to find out for itself.
That survey ran throughout the summer, with the findings presented to the Board in mid-fall: a wide range of the electric utility’s customers, from rural and urban areas alike, were very interested. Following the customer survey and the feasibility study, the Board approved the project to move forward in October of 2020. A finance plan was presented and approved the following month, and the project began to take shape.
As the calendar turned to 2021, construction started on a new facility to handle the additional employees and other operations that would go along with the broadband division. The last piece of the puzzle is securing the roughly $80 million in municipal bonds necessary to start network construction, which the city is pursuing right now. The utility plans to hire 18 new employees across both divisions to make the endeavor work.
DES anticipates building a Gigabit Passive Optical Network (GPON) that will offer a basic tier of service to subscribers at around 200 or 250 Mbps (Megabits per second) in the $50 range, $70 for Gigabit service, and a top tier of 2 Gbps for those who want it.
Officials anticipate total construction costs of around $80 million. The electric system’s assets will serve as collateral for the bonds, and an interdivisional loan will be made to the new broadband division from the electric side.
This is going to be one of the bigger economic development projects that’s been done in our county.
Total construction will take between four and five years. Municipal officials have been working to manage expectations while planning to undertake as swift a deployment as possible, and at present is planning to build in both its rural and urban footprint simultaneously. Grant funding, Gillespie shared, will help drive build areas too. The new fiber division will be doing some marketing as the network aims for an average take rate of 35 percent across its footprint, but anticipates no trouble. Neighboring electric cooperatives that have been building FTTH have been seeing 50-60 percent in rural areas, Gillespie said, so DES thinks 35 percent is well within reach.
We’re going to hire a bunch of people, and put a bunch of people to work, and then that money is going to stay right here, and be reinvested in our community.
Dickson’s return on the new fiber network investment will benefit everyone in the community for years to come. Municipal electric departments in Tennessee make payments in lieu of tax (PILOT) which is how they return money to cities and the state for their assets. Right now, DES returns about $1.3 million every year in the form of those payments for its roughly $100 million worth of electric plant. The new fiber network will add about $60 million in new electrical department assets and generate additional payments to the local governments DES serves. However, the network has sought (and as of early 2021 received) approval from every city and county to defer those payments for a period of time, before beginning and then incrementally increasing payments until they reach 100 percent after a period of 10 years. Much like TIF funds, the plan and goal is to lower initial operating costs to set the network up for success, with the recognition that it’s an asset that will return continuous community benefits and last thirty or forty years. DES also plans to go after grant funding to reduce costs. The planning reached a penultimate milestone in February 2021, with DES getting the last of the city resolutions and county governments served by the utility for its broadband project and that deferment of PILOT payments.
Smart Investments Will Pay Dividends for Years to Come
When asked, Gillespie did share that even the prospect of a new municipal network has generated some competitive response by incumbents, with existing providers laying fiber along dirt roads where they have existing infrastructure and premises are closest together, then cherry picking subscribers and locking them into multi-year contracts. “And I expected that,” he added. Either way, he said: “The community will win, because [no matter their provider] their pricing will go down.”
Gillespie emphasized the benefits that the project will bring to people in the community on all sides. This includes more affordable, higher-quality, more transparently prices broadband service from the new network for residents and businesses. It also includes the economic development that will take place both in building the network and operating it after. Finally, because Dickson is just a half-hour drive from downtown Nashville, the network will offer a new incentive for residents who don’t want to live in the expensive metropolis but need robust connectivity to work remotely.
Right now there are a lot of people that won’t locate in our community, because we don’t have that available.
“We operate differently, and we work in a different space,” Gillespie said. “And we’re going to bring that mentality to broadband in that we’re going to make it available to everybody.”