Paul Bunyan Communications Returns Over $2.8 Million Member’s Share in Cooperative’s Success

Two years ago I looked at the community ROI of public investment in broadband. It turns out that while businesses can have a difficult time making the business case for better broadband – the community does see a return. SO it’s great to see a cooperative, such as Paul Bunyan, sharing their ROI with their customers and sharing the info with everyone…

Over $2.8 million has been returned to members of Paul Bunyan Communications, the cooperative announced today.

Paul Bunyan Communications is a not for profit company that strives to provide the highest quality service at the most affordable rates.  As a cooperative, membership in Paul Bunyan Communications includes the opportunity to share in the financial success of the company. When profits are earned they are allocated to the members based on their proportional share of the allocable revenues.  These allocations may then be returned to the individual members through capital credit retirements.

For current members with a distribution amount less than $75, a credit has been applied to your August bill. Checks have been mailed out for distributions of $75 or more.

“The state of our cooperative is very strong with over 27,600 active members throughout our 5,500 square mile service territory.  We have been very busy building one of the largest all-fiber optic rural Gigabit networks in the country, the GigaZone, which is revolutionizing the way members live, work, and play.  It is rewarding to see all those efforts continue to pay off and return these profits to our membership” said Gary Johnson, Paul Bunyan Communications CEO/General Manager.

“For over 65 years we have been providing the latest in technology at cost.  There is no membership fee to join Paul Bunyan Communications and there are no annual membership dues. All you need to do is subscribe to either one line of local phone or Broadband Internet service and you become a member. You get the latest in technology backed up by our talented team of over 130 local employees that all live and work here” added Dave Schultz, Paul Bunyan Communications Chief Financial Officer.

“In a highly competitive industry with national competitors our cooperative has been successful because we put our region and our members first.  We don’t have to worry about customers all over the place like in Sioux Falls, Fargo, Minneapolis, or anywhere else. Our investments go here, back into our network, our services, and our communities.” added Brian Bissonette, Paul Bunyan Communications Marketing Supervisor.

If you were a member of the cooperative in 2002 and/or 2018 and accrued more than $10 in total capital credit allocations, but do not receive the credit on your account or a check by September 22, please contact Paul Bunyan Communications at (218) 444-1234 or (218) 999-1234.

Rural Minnesota Cooperatives Partner to Connect Aitkin County

The Institute for Local Self Reliance recently highlighted the FTTH project in Aitkin County

The lakes and forests of Aitkin County in northern Minnesota make it an ideal location for a vacation home, but poor connectivity has historically limited days spent at the cabin to weekends and holidays. However, a new partnership between Mille Lacs Energy Cooperative (MLEC) and Consolidated Telecommunications Company (CTC) is making it possible for families to extend their trips up north by connecting lakeside cabins with high-speed Internet access.

The two co-ops are working together to build a Fiber-to-the-Home (FTTH) network, XStream Fiber, that will bring fast, reliable broadband access to homes and businesses in MLEC’s service territory. MLEC hopes that the improved connectivity will benefit the local economy by encouraging seasonal residents, who make up more than 40 percent of the cooperative’s membership, to stay in the region for longer.

It’s a tale of collaboration with the cooperatives working together spurred by a network created with support from a Minnesota broadband grant…

CTC’s role in the partnership is to provide network connectivity, Internet backhaul, and backend support while MLEC manages billing, marketing, and other subscriber services. The cooperatives coordinate technical support calls, with MLEC handling basic issues itself and pushing higher level problems to CTC. The electric co-op owns all of the fiber infrastructure within its service territory.

The Xstream fiber might not have made it into the ground the $1.76 million Minnesota Border to Border Broadband grant that MLEC received in 2016.

21 percent of MN can access fiber through a Cooperative

The Institute for Local Self Reliance has updated their 2017 report on how Cooperatives Fiberize Rural America, because…

In the 18 months from when we originally released our report on rural cooperatives, we have seen a tremendous increase in attention on cooperatives as a key approach for dramatically improving rural Internet access. Many cooperatives have become more aggressive in building next-generation networks for their member-owners and their neighbors. This updated report reflects the latest data we could gather on this essential movement.

Here are some of the high level highlights:

    • More than 140 co-ops across the country now offer residential gigabit Internet access to their members, reaching more than 300 communities.
    • Co-ops connect 70.8 percent of North Dakota and 47.7 percent of South Dakota landmass to fiber, and residents enjoy some of the fastest Internet access speeds in the nation.
    • Georgia and Mississippi have overturned state laws banning co-ops from offering Internet access, and other states, including Colorado, Maryland, North Carolina, and Texas, have implemented legislation that will further ease the way.

And  a look at what’s happening in Minnesota.

They mention a few Minnesota coops and the impact of Minnesota state grants…

In addition to federal funding sources, co-ops
are often eligible for state and local grants. The
Minnesota Border-to-Border Broadband Grant
Program has awarded funds to several
cooperatives, and multiple states looked to it as
a model for their own grant programs. Local 22
government funding for connectivity is rarer, but
in Minnesota, numerous counties have
provided loans and grants to electric and
telephone cooperatives for broadband projects,
often to supplement federal or state funding.23
For example, Cook County, Minnesota, offered
Arrowhead Electric Cooperative a $4 million
grant after the co-op was awarded $16 million
in stimulus funding.

“Fiber is the name of our game at CTC” Kristi Westbrock featured in ISE Mag

I love to see Minnesota getting broadband attention, I’m especially pleased to see a smart MN Woman featured in an interview with ISE Magazine – Kristi Westbrock, CEO at CTC. You can read about CTC and fiber…

ISE: What are your priorities in terms of fiber investments in 2019? What are the challenges you face when working with your own team and/or contractors to deploy fiber in rural Minnesota? What are some of the tactics and solutions you employ to get them expedited and completed on budget?

Westbrock: Fiber is the name of our game at CTC. While we’ve dabbled in alternate service offerings, CTC has committed that our long-term investments will be designed as FTTP.

Challenges always surround making financial models in fiber builds sustainable and eventually profitable. CTC has been using several tools to determine the feasibility in areas of high demand that serve as expansion projects for us. Knowing our committed take rates have been critical in determining the success of each build. Gaining customer commitment prior to building fiber in a neighborhood, township, or rural community, has also been critical to the return on the investment. Churn of a customer, once they have a fiber connection, is nearly non-existent for CTC, which is a testament to the service quality fiber brings.

The largest challenge in building FTTP in Minnesota is simply the weather. Our build season is short, typically May to October, and then construction is put on hold. This creates long delays when those who are anxiously awaiting Internet service in rural areas can’t get it due to the weather. Because of the short time to build, the plow needs to go into the ground as soon as the frost is out, and State and Federal permitting needs to be expedited.

And on life as a cooperative…

ISE: Share the differences and nuances about working with a telco cooperative. Why is that type of structure a strength for CTC? How can it impede network transformation?

Westbrock: The first 10 years of my career were spent working for private and publicly traded companies. Bottom line and profits drove strategy. Then I transformed to working for a Cooperative. It was a learning curve to understand the 7 Principals of a Cooperative and tying those into the short- and long-term decisions that are made.

The Cooperative has a Board of Directors that is elected by the membership, which are the owners. The overriding goal of a telecommunications Cooperative is to bring services to those that are unserved while ensuring stability for the member owners.

Being a Cooperative is the magic ingredient in what we do each day. We focus each day on members, employees, and communities, to provide life-changing technology solutions for a sustainable future. Sometimes this means that the models don’t work out to have payback in a normal business model. Serving unserved areas is and will continue to be a focus of CTC. We are thankful for programs through the RUS. We also are deeply engrained in the communities we support, therefore having high recognition of being the local provider. Recently we underwent a full customer journey study; through this we learned that customers in our communities want to purchase from a local provider with local service.

RS Fiber and HBC form Long-Term Agreement and plan expansions

Great news for folks in the area. It’s always good to hear about folks who are willing to expand fiber to rural Minnesota…

RS Fiber Cooperative (RS Fiber) has announced the formation of a long-term operating relationship with Hiawatha Broadband Communications (HBC), giving RS Fiber the opportunity to meet and expand on the original goals for the project.

 

RS Fiber hired HBC to build and operate the gigabit fiber-to-the-premise (FTTP) network when the project was launched three-years ago to bring high-speed broadband to Renville and Sibley Counties. RS Fiber and HBC recently struck a partnership agreement where HBC will provide funding for the continued operation and growth of the network.

 

To build the network, RS Fiber acquired financing through several sources. Many financial institutions deem the construction of broadband networks as high risk, resulting in higher interest rates. After the network is built and customer numbers grow, the lender risk is reduced allowing for more favorable interest rates. This past year, RS Fiber has been working to restructure its high interest loans in an effort to create a longstanding and sustainable Cooperative. The culmination of that work has resulted in an arrangement between RS Fiber and HBC that strengthens their business relationship for years to come and keeps the RS Fiber mission and vision intact.

 

“We knew we had the right vision and great support from the cities and townships in our project area,” said Kevin Lauwagie, Chairman of the RS Fiber Board of Directors. “We have held strong to the commitment we made to our patrons and residents of our region. This relationship with HBC will help us continue to provide advanced services that rural Minnesota deserves.”

 

“This network and RS Fiber’s commitment to rural broadband is right in line with HBC’s vision and values” stated HBC President, Dan Pecarina. “We are committed to small town and rural broadband deployment, so operating this

network with our RS Fiber friends provides the opportunity to advance this much needed service.”

 

RS Fiber has completed construction of gigabit FTTP networks in 10 communities located in Renville, Sibley, McLeod, and Nicollet Counties of west central Minnesota. RS Fiber has also used this rich fiber network to connect to tall structures such as towers and grain elevators to provide high speed fixed-wireless services to the rural areas of the region.

 

RS Fiber currently serves more than 2,200 customers, with plans to rapidly expand its customer base. “Fiber-Optic networks provide more speed, capacity, and reliability and those features will help drive more innovative services to RS Fiber customers,” stated Pecarina.

 

“We are already seeing tremendous economic growth within the RS Fiber communities, like the medical school coming to Gaylord” added Lauwagie, “along with education, telemedicine, and precision agriculture benefits.”

 

RS Fiber will soon be announcing several new service options for customers to enhance their video, telephone, and broadband Internet experience. RS Fiber is also looking to expand its network to bring the benefits of the high-speed broadband to more rural residents and businesses in the region.

Bipartisan Bills Introduced to Correct Tax Law Hindering Rural Co-op Broadband – led by Sen Tina Smith

It seems like my weekend is being spent catching up with smart people. Doug Dawson on 5G and now the ILSR Community Networks folks on tax laws and cooperative broadband potential.

Community Networks have been keeping up on the topic…

Last November, we reported on a change to the tax code that is deterring rural telephone and electric cooperatives from leveraging government funding to expand broadband access. We were alerted to the issue by the office of Senator Tina Smith (D-MN), who sent a letter to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig requesting that they remedy the issue and announcing her intention to introduce corrective legislation.

Good news is that changes are being proposed…

Federal elected officials have introduced such a measure, called the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act. Senator Smith together with Senator Rob Portman (R-OH) introduced the Senate version of the bill, S. 1032, in early April, followed by Representatives Terri Sewell (D-AL) and Adrian Smith (R-NE), who introduced a companion bill, H.R. 2147, in the House a few days later. The RURAL Act would ensure that co-ops, which are many rural communities’ only hope for better connectivity, could take full advantage of federal and state funding for broadband networks. …

To end the legal uncertainty that electric and telephone co-ops are now facing, the RURAL Act would explicitly exclude government funding for broadband infrastructure and other important investments from the member income test. Specifically, the bill would exclude the following funding sources from a co-op’s gross income for the purposes of determining tax-exempt status:

“any grant, contribution, or assistance provided pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act or any similar grant, contribution, or assistance by any local, State, or regional governmental entity for the purpose of relief, recovery, or restoration from, or preparation for, a disaster or emergency” or “any grant or contribution by any governmental entity . . . the purpose of which is substantially related to providing, con­struct­ing, restoring, or relocating electric, communication, broadband, internet, or other utility facilities or services.”

Senator Tina Smith Introduces Bipartisan Bills to Invest in Rural Communities

News from Senator Smith…

Senators’ Legislation Seeks to Spur Rural Broadband Expansion and Make Sure Rural Health Clinics Continue Serving Minnesotans, Americans Across the Nation

WASHINGTON D.C. [04/04/2019]— This week, U.S. Senator Tina Smith helped introduce a pair of bipartisan bills to expand investments in rural communities: one designed to help improve rural broadband, and one to improve rural health care.

Sen. Smith has been contacted by several Minnesota cooperatives—which are a vital part of the effort to build out rural broadband in the state—that are at risk of losing their tax-exempt status due to a mistake in the 2017 tax law. The mistake in the 2017 law put the tax-exempt status of co-ops at risk if they receive government grants to expand broadband or to recover from a natural disaster. The Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act, that she introduced with Sen. Rob Portman (R-Ohio) would fix that error that hinders rural broadband expansion. Their bill would ensure that co-ops can retain their tax exemptions in efforts to expand rural broadband or in providing relief from, or preparation for, a disaster or emergency.

Right now, there are 96 Rural Health Clinics in Minnesota and over 4,400 across the country, which help provide care to over 7 million people in 47 states. But these clinics are governed by a set of regulations that haven’t been updated in decades. Sens. Smith introduced the bill with Sen. John Barrasso (R-Wyo.)—called the Rural Health Clinic Modernization Act—would modernize these decades-old rules that are preventing communities from getting the best possible care at Rural Health Clinics. For example, the legislation would expand the ability of physician assistants and nurse practitioners to provide care in these clinics, and improve the ability of clinics to offer telehealth services.

“At the end of the day, it’s my job to make sure that when Minnesotans tell me what Washington needs to do in order to better work for them, they know that I’m listening and working with fellow lawmakers to get things done on their behalf,” said Sen. Smith. “So when I heard from rural Minnesota cooperatives and health clinics about fixes that need to happen, I got to work. These bipartisan bills are good for people in rural Minnesota, rural Ohio, rural Wyoming—and rural communities across the country. Democrats and Republicans alike supporting efforts to allow rural broadband to keep expanding, and to make sure rural clinics stay open, shows what we can accomplish when we come together with commonsense fixes to make life better for Americans.”

The RURAL Act would revert the tax-exempt issue back to pre-2017 tax bill rules and address longstanding issues with the tax treatment of disaster relief grants, and the Rural Health Clinic Modernization Act would:

  • Ease the physician shortage in rural areas by expanding the ability of physician assistants and nurse practitioners to provide care in Rural Health Clinics;
  • Make sure Rural Health Clinics that are not connected to a hospital—as are many in Minnesota—can still use hospitals’ lab equipment because it’s often more cost-effective for these clinics to use the hospitals’ lab equipment;
  • Increase the cap on the amount that Rural Health Clinics are able to bill Medicare for services; and
  • Remove a restriction that prevents clinicians at Rural Health Clinics from providing services via telehealth.