A lot of attention has been given to the sprawling fiber expansions announced by large operators like AT&T, Charter Communications and Frontier Communications. But there’s another rapidly growing cohort of companies quietly working to deliver broadband to some of the hardest to reach areas of the country: electric companies and cooperatives.
National Rural Electric Cooperative Association (NRECA) CEO Jim Matheson told Fierce electric co-ops haven’t always been part of the broadband equation. Back when the Federal Communications Commission (FCC) ran its Connect America Fund program, for instance, co-ops weren’t even allowed to participate, he said.
But the tide has turned in recent years. After lobbying Congress and the FCC, Matheson said co-ops were allowed to bid in the Rural Digital Opportunity Fund (RDOF) Phase I auction in 2020 and came away with a sizable chunk of money. All told, electric co-ops won $1.6 billion, with the majority of that awarded to 180 co-ops which competed as part of five different consortiums. One such group, the Rural Electric Cooperative Consortium, was the third largest RDOF winner overall, walking away with $1.1 billion in winning bids. Matheson said co-ops have also successfully secured funding from the U.S. Department of Agriculture’s (USDA) ReConnect Program as well.
Already, Matheson said around 200 of NRECA’s 900 members have or are in the process of rolling out retail broadband. He stressed that “doesn’t mean every electric co-op is going to or should go into broadband business,” especially those that serve more urban and suburban markets. But there is a significant opportunity for those in rural regions, he said.
The CEO pitched co-ops as uniquely positioned to deliver service to parts of the country the big incumbents either can’t or don’t want to reach. That’s in part because they already have a deep relationship with their customer-owners and because they’re non-profits which tend to take a longer-term view of infrastructure investments since they’re not under pressure from shareholders to generate short-term returns. But it’s also because many co-ops already have middle mile fiber assets they can tap for last mile expansions to deliver retail broadband.
“A lot of co-ops are investing in what we call a fiber optic backbone to run the electric utility system,” Matheson explained. “So, often between many substations on an electric system you’ll have fiber running between all the systems now because that’s how you run an electric utility in this century.”
The government has heavily subsidized these middle mile fiber deployments. Speaking on a recent Fiber Broadband Association (FBA) podcast, the Acting Administrator for the USDA’s Rural Utilities Service Chris McLean stated the agency’s electric program actually financed more line miles of fiber than power lines in fiscal 2020 and 2021. Last year alone, it financed 25,000 miles of fiber, a figure McLean said did not include deployments funded by the USDA’s ReConnect program.
“The modern electric grid needs to be connected. And there’s a great synergy and catalytic nature of this electric industry’s investment in smart grid with creating capacity that can also be used to spur broadband availability,” McLean said. He added the government is seeing “great interest” from the electric industry – including co-ops, investor-owned utilities and municipal utilities – in various broadband funding programs.
“It’s a very interesting new dynamic,” McLean continued, adding “we’re excited to see rural electrics get in the game.”
FBA CEO Gary Bolton told Fierce rural electric co-ops are the fastest growing segment of broadband providers. According to FBA’s data, such providers currently deliver fiber broadband to around 675,000 homes. That figure is expected to explode at a nearly 40% compound annual growth rate to reach a total of 3.6 million over the next five years, he said.
“You’d be hard pressed if you’re a rural electric co-op to not get in the broadband business,” Bolton said. “They’re just in very good position to be able to offer broadband because that’s what they do, they serve every member of their community. So that’s what differentiates them from anyone who’s publicly traded…the rural electric co-op is going to cover everybody.”
Bolton added the fiber that’s being deployed to modernize electric grid can not only be leveraged to provide residential broadband, but also smart city services (including public safety applications), 5G, education and rural healthcare.
“That’s kind of what this is really about. It’s about jobs, economic development and improving the overall quality of life,” he concluded. “That’s what a community provider does.”
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