Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.

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10 responses to “Another Path to Rural Broadband: Electric Co-ops”

  1. I’m curious, Jim, if this is the fruit of the new technology researchers have been working on for years, where the broadband connection is through the electric service line to the house? Or is it proposed to be the old-style traditional connection through a co-axial distribution system hung on the same poles but physically separate, just like the cable companies do?

    If it’s the former, how do you, conceptually, get around the fact that this ISP service will be heavily subsidized by “free” use of the investment already made by co-op customers in their electric service infrastructure?

    And if it’s the latter, is the electric co-op proposing to allow itself to attach communications cable for free to its poles, or will it attribute the cost of attachment fees to its ISP service? That is, do the co-op’s competitors, including the local cable company, have equal access to attach to the co-op’s electric poles, at equal prices, the same as what the co-op ISP venture will pay on paper to the co-op’s electric venture (so that electric customers don’t subsidize the ISP business)?

    This is a terrific business idea and it’s a badly needed initiative in Virginia’s rural areas. Just keep an eye on who is subsidizing whom here; who has an unfair business advantage.

    1. The Fluvanna Review says that the plan is to lay 3,500 miles of fiber optic cable “parallel to existing electrical lines directly to 36,000 homes.”

      I’m guessing that means that CVEC will be using existing rights of way and customers’ property. The ability to double-up on ROW would give the co-op a significant competitive advantage over other broadband providers. I don’t know if would-be competitors have ever asked for equal access. Perhaps have never thought to.

  2. Steve Haner Avatar
    Steve Haner

    I’m no engineer but my understanding is the signal runs through the same wire as the electricity. I received earlier descriptions of this from CVEC (and hoped they’d do it) and the idea was my house at Wintergreen would need equipment to separate out the signal, but there would not be additional wiring. Perhaps the signal separation would occur out at the street box, however.

    One of the many semi-germane enactment clauses in the utility bill being discussed elsewhere directs Dominion and APCo to investigate this, as well, for their networks in rural areas. They are to report by December 1. Jim is such an expert on this legislation I’m surprised he didn’t cross reference it. A rural legislator suggested it and it lined up his vote (although all they promised is a study.)

    You make a good point however that the service, if offered, should provide fair compensation for its use of the existing distribution infrastructure. That could lead to a cut in transmission costs that might benefit ratepayers (unless the GA gives that all to the stockholders, too.)

    Jim’s reply just appeared so perhaps this technology is a different approach than the one I saw earlier in their bill inserts. But I still think the signal uses existing wiring at some point in the connection.

    1. I’m no expert, but the Fluvanna Review article seems pretty clear that CVEC would be laying parallel cable, not running the signal through electric wires.

    2. Thanks for the clarification. There are lots of potential “synergies” out there between electric service and broadband, but what is lacking is proof of concept for over-the-electric-line (broadband over power line, or BPL) connection, a success story other rural areas can point to. The technology matters a lot not only because the ‘over the power line’ method is more experimental than coax or fiber, but also because the practical and legal obstacles are completely diffferent: no pole attachments, no new last-mile wires, but decoding/splitter boxes at the customers’ premises (not unlike the ONT equipment required for fiber, but moreso), and perhaps equipment to pass the signal around some distribution transformers. So it will make a difference what broadband delivery technology the bill requires the State’s other utilities to evaluate.

  3. Steve Haner Avatar
    Steve Haner

    Looks pretty slow but that may be an old description.

    1. Good article. Keep in mind that BPL within the home (‘behind the meter’ which also means behind the final transformer) and BPL over the utility’s distribution system pose very different legal/regulatory as well as technical obstacles. I think this article fails to distinguish them adequately.

  4. LarrytheG Avatar

    Rappahannock Electric tried to do BPO 15 years ago and it never went anywhere. I never knew if the reason had to do with opposition from the traditional broadband providers or it was technical but as far as I know there are few if any areas in the US or other places around the world that are providing broadband via power lines.

    It’s such an obvious “solution” that if it’s not happening already – there must be a problem.

    And I just want to point out that all internet providers are already “subsidized” in that they are largely “given” the right-of-way rather than
    having to purchase it.

    We have on electricity provider and two broadband providers in my neighborhood and all 3 “share” the underground right of way that was created by taking the front of each property and make it a “public” right of way. Without that easement – few people would have access to broadband or if they did it would be far more expensive if the providers had to purchase the right of way from every property owner the cables went past.

    And for that matter , most all rural electric is also subsidized also.. and if it were not most of rural America would not only not have broadband but not electricity either.

    When Byrd created the State-owned road system – he also created the public right-of-way for electricity and for cable providers where the cable providers choose to provide service.

    If the rural electric coops wanted to use that same right-of-way to provide broadband – they’re just as entitled to use it as anyone else but I suspect that the economics of it are not any better for rural coops than cable providers… it’s basically how many paying customers per mile.. there’s nothing really magical about whether it’s a traditional cable provider or the rural coops.

    so .. really if folks oppose “subsidized” broadband – in principle they should also oppose rural electric coops – because they are still subsidized also.

    And the irony – as Bacon has said many times that each location should pay it’s fair share of location costs and not be subsidized but clearly rural America is subsidized with roads, electricity and telephones.

  5. LarrytheG Avatar

    I’m suspecting there are both technical and regulatory obstacles to the rural co-ops, or for that matter even the electric utilities getting into the business of broadband.

    Maybe Jim can find a knowledgeable person to write a blog on it outlining the technical and regulatory obstacles.

    Even Dominion and Appalachian power, in theory, should be able to use their own infrastructure to provide broadband to areas that broadband companies can’t justify economically by extending their own infrastructure.

    This is one of those areas where there would be , I would think, tremendous support and demand from folks who live rural – and even others who would live rural IF there was internet and yet – as far as I can tell – no utility , no REC has offered it and the current ways that rural are served is by either cell tower or proprietary wireless broadband – both of which are slow and expensive.

    I’d not be surprised that there are regulatory obstacles that are meant to protect the existing providers from “poaching” from other companies like electric utilities and CoOps.

  6. […] The Central Virginia Electric Cooperative is planning to invest $110-million to provide high-bandwidth Internet connections to all of its 36,000 co-op members. […]

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