Cooperative role in providing broadband – what, who, how, where and why?

The University of Wisconsin Center for Cooperatives has published an in depth report on what’s happening with broadband and cooperatives – especially in Wisconsin – but they use one Minnesota example (Arrowhead Electric Cooperative) and regardless of location, the driving factors leading to the need and opportunity for a coop to provide broadband is similar.

The report provides a number of examples of what cooperatives have done. In the end, they determine there’s no one-size-fits-all solution but I think the range of solutions included are helpful to anyone in a cooperative looking at their options or anyone looking to persuade a cooperative to look into providing services in their area.

I’m just going to outline some of their high level observations.

Why would a cooperative get involved in broadband?

There is a perceived connection between potential for future community and economic development and access to broadband. A National Agricultural and Rural Development and Policy Center publication concluded that rural median household income grew at nearly twice the rate where broadband technology was adopted in households compared to where it was not adopted. 1

Unmet infrastructure need in rural communities is the major reason both telecommunications and electric cooperatives were organized in the early part of the 20th century. The business model which drove investor-owned firms did not support the capital intensive investment required to develop infrastructure in sparsely populated rural areas. Cooperatives were developed to meet the demand for reliable utility services that, both then and now, are critical to modernization, innovation, and future economic development in rural areas.

How can it make financial sense?

According to the National Rural Electric Cooperative Association, 42 percent of the nation’s electric distribution lines are owned by electric cooperatives. These lines cover 75% of the U.S. land mass to reach just over 12 percent of the nation’s meters, an average of 7.4 customers per line mile. This is much lower than investor-owned utilities, which average 34 customers per line. Public owned utilities, or municipals, average 48 consumers per line mile.20 Because electric cooperatives are organized and operated to provide service to member-customers rather than a return to investors, they have been able to develop and maintain the infrastructure to serve rural, sparsely populated rural areas.

How does it serve the mission of an electric cooperative to provide broadband?

Electric cooperatives’ primary mission is to deliver electric service to member-owners in a financially responsible manner. Boards setting the strategic direction for the cooperative have the fiduciary responsibility to assure that mission can be met into the future. However, as the necessity of broadband access grows, the lack of high speed internet is increasingly a problem for members.

In addition, technological changes that are affecting the architecture of the electric grid increasingly are making questions about broadband access more directly relevant to the electric cooperative’s own future operations. By upgrading the communications technology that is part of the cooperative’s electric infrastructure, a “smart grid” will allow cooperatives and their members to better manage energy demand and distributed energy functions that allow customers to contribute to the grid.24

Other values may also drive a cooperative board to explore providing broadband access. Many cooperatives are guided by seven cooperative principles, one of which embraces a concern for the community. In the case of electric cooperatives, management or boards often participate on local economic development boards and committees. The cooperative’s electric infrastructure is critical to community economic activity, which in turn maintains the cooperative business and supports future growth. The overlap between the electric cooperative membership and the community aligns the service goals to members with a service orientation to community.

They have a nice graphic on the spectrum of opportunities that cooperatives have to get involved with broadband in the community…

Steps to create change that might help drive the move to provide broadband…

Kotter’s eight stages for strategic change are:

1. Create a sense of urgency

2. Build the guiding coalition

3. Form a strategic vision and initiatives

4. Enlist a volunteer army

5. Enable action by removing barriers

6. Generate (and celebrate) short term wins

7. Sustain acceleration 8. Institute change

This entry was posted in Building Broadband Tools by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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