Volunteer Energy Cooperative (VEC) and Twin Lakes Telephone Cooperative began collaborating in the fall of 2017 to bring high-quality connectivity to folks in Bradley County, Tennessee. Based on the results of a successful pilot project, the cooperatives have expanded gigabit connectivity to more areas. With a recent grant award, the partners will continue to offer the service to more rural Tennessee residents and businesses.

Catching Up on the News

When we last reported on VEC and Twin Lakes, they had announced that they would be launching the pilot in Bradley County. Residents and businesses in Bradley County have long felt slighted by the state’s restrictive laws that prevent Chattanooga’s EPB Fiber from expanding into their county. Over the years, Bradley County and Chattanooga officials have searched for ways to serve Bradley County, but the state’s insistence on protecting large incumbent monopolies by preventing expansion have left Bradley County folks without fast, affordable, reliable connectivity.

VEC and Twin Lakes commenced the pilot in the Camelot subdivision of the Bigsby Creek Road area of Bradley County. In a February 2018 blog post describing the first customer’s experience, subscriber Mrs. Charles Hollifield said, “We had no problem with the installers. They were on time and friendly. We chose the 25 Mbps because we do not download much but it works well. We haven’t had it quit once since we got it.” 

Since then, the initial pilot area passed 120 homes in the first pilot area. Later in the summer of 2018, VEC passed 545 more residences in two additional communities. Last fall, VEC received $1 million from the Appalachian Regional Commission (ARC) to apply toward expanding fiber to approximately 730 premises in in Meigs and Hamilton Counties.

State Assists With Deployment

For many rural Americans, the local electric or telephone cooperative is their best hope for finally obtaining modern-day connectivity. With the support of government funding, rural cooperatives have brought electricity, telephone service, and more recently broadband access to some of the most rugged and sparsely populated places in the country.

However, recent tax code changes might prevent co-ops from connecting more rural communities. Cooperatives could potentially lose their tax exempt status if they accept government grants for broadband expansion and disaster recovery — an unintended yet foreseeable consequence of the Republican “Tax Cuts and Jobs Act” passed late last year. In a press release, Senator Tina Smith called attention to the oversight, noting, “This uncertainty has caused cooperatives significant concern and frozen some of their grant applications.”

Who’s Ready for Some Tax Policy?

As nonprofit membership corporations, rural electric and telephone cooperatives are exempted from paying taxes under section 501(c)(12) of the Internal Revenue Code (IRC). To maintain this tax exempt status, cooperatives must derive at least 85 percent of their income from members (e.g., from selling electricity). This is sometimes referred to as the the member income test or the income source test.

In May, Connecticut’s Public Utility Regulatory Agency (PURA) struck a blow at local authority when the ruled that communities could not use their protected utility pole space for municipal fiber deployment. Big cable and telephone companies cheered, broadband advocates and communities that need better connectivity decided to take action. Now, PURA faces lawsuits that challenge the decision from the Office of Consumer Counsel (OCC), the Connecticut Conference of Municipalities (CCM), and at least three local communities that just want high-quality Internet access.

Long Wait

The focus of the controversy is Connecticut’s Municipal Gain Space Law, which was first established in the early 1900s to guarantee municipalities the ability to hang telegraph wires. The municipal gain space is a location on all utility poles — publicly or privately owned — situated in the public right-of-way. After multiple law suits over the years in which cities and the state typically won, Connecticut’s legislature finally amended the language of the law to allow government entities to use the municipal gain space for “any use” in 2013.

Almost two years ago, we reported on the petition filed by the OCC and the State Broadband Office (SBO) with PURA asking for clarification on the law, which included establishing clear-cut rules on using the municipal gain space for fiber optic deployment. They felt the rules needed cleaning up because some incumbents in Connecticut were still finding ways to thwart competition and stop or delay plans for municipal fiber deployment. 

In addition to using restrictive pole attachment agreements, incumbents were exploiting the lack of definition in the statute to slow make-ready work, question who pays for make-ready work, and generally delay municipal projects. Time is money and losing momentum can drive up the cost of of a project, which in turn erodes a community's will to see it realized.

The Decision in Question

National ISPs with millions of customers are some of the most hated companies in the U.S. Poor customer service, contract tricks, and a refusal to upgrade services are only a few of the common complaints from subscribers who are often trapped due to lack of competition. Frontier Communications is proudly carrying on that tradition of deficiency in Minnesota. In fact, the company’s excellence at skullduggery has drawn the attention of the state’s Public Utilities Commission (PUC), which launched an investigation into the service quality of Frontier this spring.

So Much Going On Here

While many of us are used to some level of poor service when it comes to the big ISPs, Frontier in Minnesota accumulated so many complaints, the PUC felt they had no choice but to take action. According to Phil Dampier from Stop the Cap!, the Commission received 439 complaints and negative comments in a five-week period in early 2018. Some but not all, of the types of issues that subscribers described included:

As schools across the country look at their budgets, Janesville, Wisconsin, has decided to cut their future expenses with a fiber optic investment. This spring, the district will use E-rate funding to help finance a fiber optic local area network (LAN) in order to cut telecommunications costs by $70,000 per year.

Connecting Facilities

The school district will install 12 lines, eliminating leased lines and the associated expense. E-rate funds will pay for $1.6 million of the estimated $2 million project; the school district’s contribution will be approximately $400,700 and an additional $225,000 for engineering and project fees. School district officials calculate their contribution will be paid for in nine years. Fiber optic networks have life expectancies upwards of 20 years and in Janesville, District CIO Robert Smiley estimates this project will last for 50 years.

At a recent Board meeting, Smiley told the members that the new network will be like transitioning “to our own private Interstate.” In addition to better prices, the new infrastructure will allow the district to ramp up speeds to ten times what they current share between facilities. The system Janesville School District uses now has been in place since the 1990s.

The federal E-rate program started during the Clinton administration as a way to help schools fund Internet access and has since been expanded to allow schools to use if for infrastructure. School districts obtain funding based on the number of students in a district that are eligible for the National School Lunch Program. Funding for E-rate comes from the School and Libraries Program from the Universal Services Fund.

“Hello, Savings!”

Like many other schools that have chosen to switch to a district owned fiber network, Janesville sees a big advantage for voice communications. Due to the age of their phone system, they’ve had failures in the past. Last winter during a day of inclement weather, a large volume of incoming calls from parents overloaded the system and other parents who had signed up for emergency alerts on their phones didn’t receive them. With a new fiber network, the school district will be able to switch to VoIP.

Another rural electric cooperative is set to bring high-quality connectivity via fiber optic infrastructure. Volunteer Energy Cooperative (VEC) in Tennessee will be investing in a pilot program in Bradley County by year’s end.

A Learning Process - The Pilot

When it comes to fast, affordable, reliable connectivity via publicly owned Internet infrastructure, Chattanooga is typically the first location on everyone’s lips. Unfortunately, neighboring Bradley County has struggled with chronically poor connectivity. Even though Chattanooga would very much like to expand their reach to serve Bradley County residents and businesses, restrictive state law prevents the city from helping their neighbors.

Last summer, VEC saw an opening when the state legislature changed existing barriers that prevented electric cooperatives from offering broadband access or from applying for state grants to deploy the infrastructure. VEC is currently in the process of preparing grant applications through the state’s economic development commission. 

The purpose of the pilot, according to VEC President Rody Blevins, is to determine the level of interest in Fiber-to-the-Home (FTTH) connectivity in Bradley County. Areas VEC chose for the pilot include homes where there is no service and premises were there are more than one option.

"We are doing that to discover how many would choose our services who have no options as well as those who do have a source for broadband service already available," Blevins said. "That helps us looking at the bigger financial model."

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"If we have real low response, that's going to hurt us," he added. "We are not for- profit, so this thing has to pay for itself overtime. If I show my board it will never pay for itself, we can't do it. But, I don't think that's going to be the case."

Blevins told the Cleveland Banner that the cooperative estimates the cost to cover 75 percent of Bradley County would be approximately $40 million. He went on to say that if 50 percent of households in the pilot areas chose to sign up, “we would be in pretty good shape.” 

Chippewa Valley Electric Cooperative (CVEC) and local communications cooperative Citizens Connected are joining forces to improve Internet access in rural northern Wisconsin.

Collaborating For Connectivity

The two cooperatives recently announced that they will invest in fiber infrastructure to connect residents, businesses, and schools through a new entity called Ntera. Construction will start in Holcombe, population around 300, because it’s one of the communities with the worst Internet access within the CVEC service area. Construction in Holcombe should begin this fall.

Ntera will offer 1 Gigabit per second (1,000 Mbps) connectivity to premises in addition to voice and video. Rates have yet to be determined. CVEC’s service area includes approximately 7,500 premises within five counties. Citizens Connected has already invested in fiber infrastructure passing more than 3,200 premises.

Holcombe is a census-designated place in the town of Lake Holcombe, where the population is a little more than 1,000. Even though they’d like to, Lake Holcombe schoolteachers don’t offer devices to students because so many of them don’t have Internet access at home. Superintendent Jeff Matin says that more than half of the students don’t have Internet access because it isn’t available in their home or just too expensive.

The Lake Holcombe schools will use $80,000 in E-rate funding and state grants to connect to existing fiber in the community that will be incorporated into the larger network. Although the school district is obtaining funding to connect, the cooperatives are funding the network investment themselves. They have not yet released a final estimate for the cost of the project. School officials look forward to the educational opportunities the new fiber will bring:

Mastin is eager to have the improved broadband in the Holcombe area. Right now, there is Internet in the school building only.

“We’ll be able to have our community having easier access to the Internet,” Mastin said. “We could give (students) more devices to allow them to connect to it. It’s definitely needed for education in the 21st century.”

Vernon Communications Cooperative (VC Co-op), serving much of rural Vernon County, Wisconsin, was recently named a Certified Gig-Capable Provider by NTCA-The Rural Broadband Association. VC Co-op joins a growing list of rural cooperatives that are offering gigabit connectivity to members in places where national Internet service providers don’t want to invest in infrastructure. The certification requires that "gigabit technology is currently commercially available within 95 percent of one or more exchanges within [the provider's] serving territory and that such service can be provided without new trenching or stringing new aerial facilities."

Why Do Co-ops Always Start? To Fill A Need

VC Co-op started as a telephone cooperative in 1951 when local farmers collaborated, obtained funding from the Rural Electrification Act, and formed the Vernon Telephone Cooperative. After partnering with other telephone companies in the region to establish Internet service in the early 1990s, VC Co-op also began offering long distance voice and television services in 2001.

VC Co-op has also made a name for themselves by offering twelve community television channels that broadcast various local events, including school sports and concerts, local weather, and even radio shows.

By 2008, VC Co-op had finished upgrading their network in the county seat of Viroqua (pop. 4,400), replacing copper lines with fiber. Viroqua has taken advantage of the fiber in ways that touch almost all aspects of daily life. In addition to public safety, healthcare, and education, local businesses using fiber connectivity have been able to grow beyond the limits of Viroqua. All the while, the VC Co-op has served the community with the same spirit we see from other cooperatives.

Organic Valley, a farmers cooperative with headquarters in Vernon County, suffered a catastrophic fire in 2013. Without missing a beat, VC Co-op connected 21 temporary locations to house Organic Valley employees and established a connection for the farmers cooperative in another building.