Cooperatives for Broadband? A primer on an option for rural areas

Bill_ColemanCooperatives are an important part of Minnesota’s economic and cultural history and, for those in attendance at the Co-op= Community Development Conference last Friday, a path to future community vitality.  I felt lucky to attend.  Mark Ritchie, MN Secretary of State was the keynote speaker and talked about the link between Minnesota’s long standing culture of community engagement, voting, volunteerism and our standing as the land of cooperatives.  Kudos to Secretary Ritchie for sticking around and participating in small group round table discussions after his speech proving that learning is a two-way street.

Here are some key things that I learned on Friday.  As I write this, I do not have access to the agenda and don’t have full names and affiliations – sorry about that!

There is growing interest in the cooperative movement by students.  Online courses on Co-ops are now emerging.

According to Ruby, there are six myths about co-ops.

  1. Co-ops are not just hippie grocery store businesses, they are all kinds of co-op businesses.
  2. Co-ops are not non-profits, they are member owned, for profit businesses.
  3. Some say that co-ops are not scalable.  There are many large co-ops – Ace, REI, Great River Energy, Mondragon.
  4. Some say that co-ops have no structure.  Wrong, they have all kinds of structures, they all have a board.  Some have a staff and a formalized management structure.
  5. Co-ops are not just for rich white people; this is wrong on all counts.  Examples include the New Era Cooperative that was formed by workers from closed window manufacturing plant, the Federation of Southern Cooperatives that organizes rural farmers, and others.
  6. Co-ops don’t have an economic impact.  Wrong again as there are over 29,000 companies and over 2 million jobs.

In Minnesota, there are over 1,000 MN co-ops, with many in the top 100.  Minnesota has more co-ops than any other state.

Kevin Edberg says that there are some co-op basics.  Here they are:

  1. A Co-op is a business, a democratic organization controlled by its members.
  2. A Co-op must have a viable business proposition to be able to compete, be adequately capitalized and be well managed.
  3. A Co-op exists to meet the needs of its owner members.  Member satisfaction is the criterion for success, not ROI.
  4. Surplus must be generated (profits) to be reinvested and finance growth.  Some surplus is returned via patronage based on member purchases not ownership share = business loyalty=competitive advantage.
  5. A Co-op needs a compelling need to attract the time and talent of existing and prospective members.  A “nice to have” purpose is not enough motivation; the “need to have” is critical.

The Cooperative Principles are well-established.  The conference organized a neat way to illustrate these principles with a quick “Seven Principles in Seven Minutes.”  Representatives from seven co-ops each talked on one of these principles with an example from their own co-op.

  1. Voluntary and open membership
  2. Democratic member control
  3. Member Economic Participation
  4. Autonomy and independence
  5. Education, training and Information
  6. Cooperation among cooperatives
  7. Concern for community

I participated in a finance session by the Northcountry Cooperative Development Fund.  While there are a few differences, the credit analysis process seemed pretty similar to any economic development fund.  The critical difference is that consideration of owner equity and commitment is replaced by the same factors applied to the co-op board and membership.

Most new cooperatives fall into three types – Housing, Food and Worker-owned.  Of course, there are also the infrastructure co-ops that provide such great services and leadership in rural Minnesota – electric and telecom co-ops.

I learned that Wisconsin Extension Service has a strong program on co-operative development so I need to check their web site for tools and information.  I also learned that Wisconsin has some rural broadband cooperatives forming so I definitely want to learn about that.

I want to take a moment to recognize that Boreal Access is a broadband co-op located in Cook County.  Their role in providing Internet access will soon be supplanted by Arrrowhead Electric Cooperative, seemingly a very nice hand-off from wireless and copper to FTTH!  Boreal Access will continue on in new and exciting ways.

1 thought on “Cooperatives for Broadband? A primer on an option for rural areas

  1. Pingback: Broadband as a utility. What does that mean for rural areas? | Blandin on Broadband

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