Utility Co-op Connection

Cooperatives delivering broadband
to rural Missouri communities

By Anne Mayberry
Public Affairs
USDA Rural Development

uring the next year, hundreds of projects to deliver broadband to rural areas will break ground nationwide in an effort to provide rural consumers with the technology necessary to compete in today’s economy. Ralls County Electric Cooperative in Missouri is among the utility co-ops striving to bring broadband service to its members.

It received a $19.1 million award as part of the U.S. Department of Agriculture’s $2.5 billion in American Recovery and Reinvestment Act (Recovery Act) funding. These funds will help the Ralls co-op build more than 1,200 miles of high-speed fiber optic cable to 5,000 homes, businesses, public safety facilities and community entities in rural northeast Missouri. The work, part of a five-year initiative launched by Missouri Governor Jay Nixon, is expected to expand broadband accessibility to more than 90 percent of the state’s total population, up from the current 79.7 percent.

Agriculture Secretary Tom Vilsack noted that these broadband projects offer rural residents access to the tools they need to attract new businesses, jobs, health care and educational opportunities. “Bringing broadband to rural America provides a gateway for businesses and key anchor institutions — such as libraries, schools, public safety and community centers — to provide services to thousands of Americans.” In addition to expanding educational, health and businesses services for the area, the project is expected to create 35 to 40 new jobs in the short term and has the potential to create more than 1,300 jobs in the future.

Leveling the playing field
Ralls County Electric Cooperative Manager Dan Strode understands the magnitude of the change that highspeed Internet access can deliver.

“Broadband has so many applications for homes, schools and businesses that will help bring the future to this community. Ralls was the last county in Missouri to have a public library. It will take years to stock that with the books and publications found in urban libraries. Internet access will help level that playing field and open this county up to the world, bringing us tremendous opportunities.”

Broadband service can also play a big part in rural health care and education. “We can deliver telemedicine service from urban areas, and residents will have access to more health care information,” Strode says. “We cannot afford to hire foreign language teachers. But with the Internet, schools can visit foreign countries and learn about other parts of the world. We will be able to provide [home and business] security services for our residents. To see a movie, we now have to drive 18 miles. Broadband will change all of that.”

According to analysis released by the National Economic Council last year, overall Recovery Act investments in broadband are expected to create tens of thousands of jobs in the near term and will expand economic development and job opportunities in communities that would otherwise not benefit from the knowledge-based economy.

Recovery Act broadband projects help reduce the cost of private investment, attract Internet service providers to new areas, improve digital literacy among students and workers and create new opportunities in employment, education, health care and business.

Strode is optimistic that in addition to the increased services that broadband access routinely delivers, Ralls County may benefit from additional economic development. “Our plan is to use 10 percent of the net cash flow for economic development. We want to ensure that along with this service, we will grow businesses in our area.”

Broadband, Strode notes, allows people to work from their homes and expands access to a variety of markets and services.

“The smart grid — which right now is still a concept — will require larger capacity for data and more speed,” Strode says. “Automated meter reading and other services that require two-way communication with consumers are in our plans. This broadband project will allow us to continue to become more sophisticated and offer more applications to make more efficient use of electricity. This is how broadband will create jobs. The need for those skilled in technology, for example, will grow. Some of the uses for our economic development funds — incubator start-ups — have not yet been invented.”

Studies show impact
of broadband

Strode’s ideas are supported by studies that indicate investment in rural broadband boosts economic growth, promotes new businesses and increases the growth of existing firms. For example, USDA’s Economic Research Service notes that “rural counties with broadband Internet service in 2000 had greater subsequent employment and income growth than similar rural counties without service.”

Construction of Ralls County’s new broadband network began in March 2010 and is scheduled to be completed by May 2013. The first customers are expected to have broadband access during the first portion of 2011. “We have already had a community currently not in the planned service territory ask to be included in future build-out,” Strode says. “We want to make sure our business assumptions are realistic before we expand. And we are sharing our non-proprietary information as this project rolls out. We want to provide a model to show other counties how they might duplicate this.”

Providing telecommunications service is not entirely new to Missouri electric cooperative utilities. Barry Hart, executive vice president and CEO of the Association of Missouri Cooperatives, explains that nearly 15 years ago, the large electric cooperatives that handle generation and transmission made the decision to install fiber to help ensure communications reliability.

“A variety of businesses and organizations expressed an interest in working with the cooperatives for broadband access,” Hart says. The seventh cooperative principal, he notes, is concern for community. “The cooperation between the communities and cooperatives is what helped provide the ‘middle mile’ broadband service that today makes broadband connectivity possible in many of these areas,” Hart says.

Broadband service is also not new to Ralls County Electric Co-op. Strode recalls that in 2005, the co-op offered wireless service to members. “We had eight power locations, but could only reach one out of every four who requested service.” The region’s terrain — rocky bluffs and dense forests — limited the signal. “Seven kilobytes was typical. This project will deliver 10 megabytes, up and down,” he says.

Better service, better economy
Increased bandwidth is critical to the co-op’s operations.

“We are using broadband for distance learning,” Hart says. “Each month, we deliver our electric safety training program over the Internet. The transition has reduced statewide travel among the cooperative’s main offices and district offices.

“It’s exciting to see how this technology, which is rapidly evolving, will help us deliver better services to our members,” Hart says.

Strode explains that cooperatives work for the people in their communities and are in business to provide a vital service.

For example, a $10 million investment in an urban area might generate a 25-percent return, he notes. “That same investment in rural areas might provide a 6-percent return. And the returns we do make go to those who own us: our communities. We do not have the same profit motive, and that can make or break a lot of companies. Because we’re small and rural, being a co-op makes a difference.”

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