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Perspective

Electric Cooperatives Serve as Critical Partners in the Race to Close the Digital Divide

Electric Cooperatives Serve as Critical Partners in the Race to Close the Digital Divide

Electric cooperatives (electric co-ops) have historically been recognized as community-focused, working to improve the sustainability and wellbeing of their local and surrounding communities. The tradition of banding together to implement important infrastructure change to improve the life and health of individuals, small businesses and whole towns has been honored in agricultural communities for nearly three centuries.

Electric co-ops were first established in the mid-1930s at a time when nine out of 10 rural homes had no electric service. Within the first two years of its formation in the mid-1940s, the fledgling Rural Electric Association helped cooperatives establish 53,000 miles of power lines. In 1949, an average of 700 miles of electric power lines was built each day by hardworking electric co-ops. That was a connectivity phenomenon of unparalleled success.

Today, those same electric co-ops are poised to accomplish a similarly important task: expanding fiber networks to establish reliable digital connectivity in underserved communities to propel residents into the digital age. It is, once again, an effort that requires deployment savvy to ensure that the 22.3 percent of rural Americans with currently spotty access to our digital world are afforded the benefits of 21st century technology.

Today there are 834 electric distribution co-ops in the country, with a still-impressive record of working to improve their local communities. Of these, 111 were working to build fiber broadband projects for their members in 2019. When COVID-19 restrictions forced local libraries and WiFi hotspots to close in some small towns, local co-ops responded by installing free WiFi in school parking lots, parks, churches, restaurants and co-op offices.

Those cooperatives are now positioned to lead further technology deployment in their communities. State and federal legislators are supportive of co-op efforts to expand the fiber backbone necessary for grid modernization and have, in some cases, relaxed regulations that surround broadband deployment.

According to the FCC, more than six million households have less than adequate access to high-speed internet service. Without widespread access in farming communities, small towns and rural communities, a percentage of the population falls further behind in terms of healthcare, education, economic opportunity and access to eCommerce. This leads to shrinking numbers of young people in rural areas, as they flee to cities offering better employment and lifestyle opportunities. Agricultural practices out of sync with today's innovations and streamlined production and delivery protocols will not keep pace with future food needs of a growing urban population.

Ripple effects of this rural connectivity crisis are widespread and multi-faceted. Modernizing rural electrical grids has multiple benefits not only for the cooperatives themselves but for rural and urban populations alike. The first effect is purely economic. According to the National Rural Electric Cooperative Association, grid modernization could return between $10 and $16 million in economic benefits to a 50,000-member electric co-op today, and substantially more, between $15 and $25 million, by 2027, depending on regional load and specific implementation.

Second, the effort would help close the digital divide, allowing electric co-ops to become innovation leaders in their districts and expanding fiber broadband networks across their entire service areas. Electric co-ops already have deployed thousands of miles of fiber, accounting for approximately 30 percent of rural fiber service. Because of their unique business model, they’re the ideal suppliers of such service, and understand the challenges of expanding networks over large territories. In short, they have done it before.

Additional reasons to look hopefully to rural electric co-ops to meet the connectivity challenge include the following:

  • They are member-owned, not-for-profit ventures and can tolerate an extended time period for ROI;
  • They have unique financing options available;
  • They understand the low-density business model and can operate successfully in such a climate;
  • They have the poles, equipment and right-of-way agreements to facilitate fiber deployment;
  • Existing co-op billing and customer support systems can easily be adapted to meet broadband needs; and
  • They know existing state and local regulatory requirements and procedures.

In addition, in general terms, rural electric co-ops are grounded in their individual communities and can assess and respond to local needs, preferences and contingencies. They can adapt smart grid fiber backbones as needed, lease dark fiber to outside companies or assist with community broadband with little additional effort.

Black & Veatch understands the value electric co-ops bring to fiber network expansion, as well as the complex design process involved in transitioning electric fiber to broadband use. As co-ops receive greater support as infrastructure leaders, it is important that fiber design accommodates a range of potential broadband models like utility direct retail, public-private partnership, or internet service provider leasing. With the right design and business model, electric co-ops help meet the changing needs of their citizens and establish next generation communities.

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