As broadband service rolls out to rural America and to other remote and underserved areas, it is increasingly clear that utilities will have important roles to play.
Municipal, cooperative and investor-owned utilities all will have opportunities to be leaders in closing the digital divide. Many have excess capacity on existing fiber networks. Utilities also often own towers and other tall structures that could accommodate wireless equipment, and many are building out carrier-style wireless networks built to utility-grade standards for reliability. Importantly, all utilities have solid customer relationships and trust with communities built over decades of providing electricity under regulatory obligations that ensure equitable service.
Building on Histories
Rural electric cooperatives, or co-ops, have an intriguing opportunity to essentially repeat history. The National Rural Electric Cooperative Association (NRECA) is already making a case to the U.S. Congress that a nearly 100-year track record of bringing electric service to rural America, when no one else would, makes co-ops the best candidate to roll out another essential service. Indeed, many co-ops won a portion of the $16 billion available in the recent Rural Digital Opportunity Fund (RDOF) auction that provided incentives for expanding broadband access in underserved areas. Like co-ops, many municipal and investor-owned utilities also serve small towns and rural areas across America. A number of these utilities won RDOF funding as well.
Regardless of their operating structures, utilities now have two basic questions to consider:
- Should we offer commercial broadband services to our customers as a stand-alone entity?
- Is the more sensible path to partner with an existing internet or telecommunications service provider to expand broadband access?
A data-driven analysis will be key to getting to the right answers.
Disparate Sources of Data
Both the U.S. Census Bureau and the Federal Communications Commission (FCC) have extensive publicly available data repositories that can serve as a good starting point for utilities looking to evaluate their options. Census data provides the number of people living within well-defined areas, along with economic data like average incomes and both numbers and types of businesses.
Meanwhile, FCC data offers insight into the availability and quality of broadband internet service within those same areas. Keep in mind, to meet the FCC’s RDOF definition of broadband, internet service must be capable of delivering 25 megabits per second (Mbps) download and 3 Mbps upload speeds.
By overlaying information from various sources, a utility can zero in on how many of its customers have little to no broadband access and whether broadband would be affordable, particularly for customers in sparsely populated areas.
This is just a starting point, though. Much of the available information is either incomplete or dated, particularly statistics based on the 2010 Census. Depending on what a preliminary analysis shows, a utility may also want to consider conducting its own research, either through a desktop analysis using proprietary sources or via a random survey of customers.
A thorough analysis produces a road map for arriving at an accurate scope of need within a utility’s service territory, as well as for understanding the existing ecosystem of internet service providers (ISPs). The analysis should also shed light on the number of customers who may not be able to afford broadband service.
Broadband as Critical Infrastructure
Detailed data analysis will bring into sharper focus just what it means to be underserved. There are already well-established starting points.
The FCC estimates that approximately 19 million Americans — 6% of the population — do not have access to fixed broadband at threshold 25/3 Mbps speeds. Of those 19 million, more than 14 million live in rural or tribal areas. According to the FCC’s most recent update to Congress, approximately 100 million Americans do not subscribe to broadband, largely because of affordability concerns. According to the report, this lack of access produces unreliable access to healthcare, lagging educational opportunities for school children, and general economic stagnation in underserved regions.
Utilities have far-reaching infrastructure and low costs of capital, making them the ideal frontline service institutions to address affordability and access shortfalls, and enable broadband service in underserved areas. Reliable data can provide an accurate picture to evaluate a range of options including these three:
Fiber Partnership Option: For utilities that already have fiber to critical operating centers, communication facilities and substations within their service territory, some percentage of that fiber capacity is underutilized. Several business models are available to utilities under which they might choose to lease, share or even jointly develop these fiber assets with a partner, such as a retail service provider. This could provide an alternative revenue stream to offset operations costs.
Fiber and Wireless Option: Building upon the fiber partnership approach, a utility could also lease access to towers or other tall structures for installation of wireless devices that would enable wireless ISPs to provide “last-mile” broadband service to homes and businesses via fixed wireless access (FWA). This approach could mitigate the relatively high cost of installing fiber-to-the-premises across large areas with sparse populations and uses a larger fleet of assets to get closer to the customer. By combining fiber throughput with wireless connectivity, affordable broadband solutions can emerge through better asset utilization and competition for the customer.
Utility as ISP Option: Finally, becoming a stand-alone broadband ISP offers many interesting possibilities, although this option could be the most difficult for utilities to achieve. Generally speaking, most utilities already have a fiber backbone in place, and many are adding robust private long-term evolution (PLTE) networks to better monitor and control power distribution systems. Together, these two technologies could also provide an opportunity to leverage FWA service over the recently opened citizens broadband radio service (CBRS) spectrum. With incremental investment in technology, a utility may have the opportunity to enter the broadband business directly via a non-regulated affiliate.
Which Path to Choose
Utilities have an important role in enabling broadband access across underserved areas. The simplest path for utilities is to offer excess capacity on fiber, tall assets, or PLTE networks to a last-mile provider that would develop and manage internet service offerings in towns and rural areas.
Should utilities choose to become direct broadband providers, they will undoubtedly encounter a new business model that extends well beyond the traditional model of providing electric service on an equitable and affordable basis. This model has challenges that shouldn’t be ignored, as it brings utilities into customers’ homes.
Partnerships and collaboration with multiple industry players are likely to be the most reasonable path forward for utilities. What is certain is that data will be crucial in helping utilities make decisions that produce the greatest benefits for their customers.
As providers begin planning for broadband, geospatial tools can provide important insights.