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Texas Co-op Power
An Online Community for Members of Texas Electric Cooperatives
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Broadband Across Texas
Co-ops keep rural communities competitive by offering high-speed internet service

Traci Daberko

Bandera might be only an hour from San Antonio, the seventh-largest city in the United States, but that was little consolation for the town’s schoolchildren. You could see them waiting in line at the library almost every afternoon because that was the only place in town where the computers had high-speed internet access.

“That’s when I knew we had to do something,” says William Hetherington, CEO of Bandera Electric Cooperative, which serves 25,000 members in seven counties in the Hill Country. “It wasn’t right that they couldn’t do their homework if they didn’t get in before the library closed in the afternoon.”

To that end, Bandera EC in 2017 started offering broadband internet service, the same kind urban residents take for granted. Those who want it will be able to purchase reliable, high-speed service delivered through fiber-optic cables, allowing students to do homework at home. With this internet access, members can apply for college loans, complete financial transactions, file taxes, run a business, video chat and shop. In other words, they can do everything that has become part of 21st-century life.

Today, internet access in rural areas is similar to electricity access before cooperatives electrified the countryside. In 1935, when only 11 percent of U.S. farms had electricity, President Franklin D. Roosevelt established the Rural Electrification Administration, which led to the formation of electric co-ops. By 1946, more than 50 percent of American farms had electricity.

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Now co-ops again are connecting the countryside to modern America—this time with broadband. Broadband is as vital today as electricity was then. Rural Texas is underserved, and the for-profit cable and telephone companies that dominate broadband delivery aren’t interested in bringing the internet to areas where there isn’t going to be a big enough return on their investment.

This is where co-ops can fit in.

“Internet service is an essential utility service these days,” says Alyssa Clemsen-Roberts, a long-time co-op advocate who has worked for several years on rural broadband issues. “There’s a huge gap that exists in rural areas, and co-ops are well-placed to fill that gap, just like they did for electricity.”

As many as 1 in 3 adult Texans don’t have access to broadband internet service, and most of them live in rural areas.

In rural areas with broadband service, the cost of a residential connection can be twice as high as in urban areas such as Dallas, Houston and Austin, and the cost of a business account also can be twice as high as business accounts in urban areas, says James Yohe, the executive director of the Nocona Economic Development Corporations in North Texas.

Nationally, about 6 in 10 city dwellers have access to three or more high-speed internet providers, while just 1 in 5 rural residents can say the same thing. This might be one reason that only 55 percent of people living in rural areas have access to the speeds that qualify as broadband, while 94 percent of the urban population does.

These days, broadband fits hand-in-glove with economic development and the education that is the 21st-century corollary to jobs and growth. Even libraries need to be connected, says Karin Gerstenhaber of the nonprofit Tocker Foundation in Austin, and most rural libraries do not have broadband. Tocker supports rural libraries in towns of 12,000 or fewer, providing grants so the libraries can offer broadband service.

The desire to foster economic development and education motivates co-ops across the country, not just in Texas, to provide high-speed service. Several Missouri co-ops offer the service, and a consortium that includes the National Rural Electric Cooperative Association; National Rural Telecommunications Cooperative; CoBank, a member of the Farm Credit System; Rural Broadband Association; and National Rural Utilities Cooperative Finance Corporation has worked to help co-ops understand and embrace the challenge and offer possible solutions.

High-speed, reliable internet is a key to getting businesses to relocate to rural areas. A call center cannot function without high-speed internet, even if it does get cheaper land, lower taxes and reduced utility costs.

“That’s totally what we’re talking about,” says Yohe. “If you don’t have access, you can’t develop current economic opportunities. There are very few industries that don’t require the service, even from a retail perspective.”

So why are rural areas underserved?

It’s the difference between the business model of for-profit cable and telephone companies, and the nonprofit co-op model. The for-profits are in business to make money for shareholders, while the latter are in business to provide service to members. The situation is no different from the need for rural electrification more than 70 years ago, when for-profit utilities might have provided electricity to rural America. Investors balked and claimed the infrastructure costs—building substations, placing poles and stringing wire—were prohibitive in areas with great distances containing few people. Substitute the idea of building high-speed internet’s infrastructure—laying cable and building massive servers—and the result is the same.

One proposed solution that didn’t work as intended was the federal government’s Connect America Fund, which offered $10 billion in subsidies to the largest telecom companies to begin offering service in unserved areas. However, the biggest companies didn’t use all the money, citing the increased costs and difficulty to make a return on their investment, even with a subsidy.

“I don’t think anyone faults the telcos and cable companies,” says Clemsen-Roberts. “They need to earn a fair rate of return on their investment, and they don’t see a way to do that in rural areas. But co-ops don’t have to worry about that immediate return on investment; cooperatives are used to making long-term infrastructure investments.”

Another difficulty in connecting rural areas is the definition of broadband service. The Federal Communications Commission sets the standard and requires companies that receive federal subsidies to meet that standard. The FCC defines broadband in terms of a connection’s speed in each direction—the number of megabits per second that it can download or upload content, such as a YouTube video.

The FCC definition of broadband is appreciably slower than what Yohe says rural residents and businesses need. Compounding the confusion is that the FCC doesn’t mandate how high-speed service needs to be delivered. Yohe says fiber-optic cable, which is used by most urban cable and telephone companies to deliver 1-gigabit connections, is the best choice. That means download and upload speeds are 1 gigabit per second. Hetherington says Bandera EC will offer gigabit connections through fiber-optic cable.

On the other hand, Guadalupe Valley EC, which has been offering some form of internet service to its almost 60,000 members in 13 south-central Texas counties since 2003, today offers a mix of fiber optic and what’s called wireless point to point, a more sophisticated version of basic Wi-Fi service. Though the latter doesn’t offer gigabit speeds, Tammy Thompson, the co-op’s communications and public relations manager, says that it still qualifies as high-speed broadband.

The other difficulty? Despite a co-op’s advantages over cable and telephone companies in building a high-speed internet system in rural areas, it can still be a risky business venture, says Hetherington. There was a sense in the 1930s and ’40s that electricity was essential and that everyone would eventually want the service—and would pay for it. There’s no such assurance with broadband, and co-ops don’t want to be stuck building costly infrastructure to provide a service that not enough of its members will use.

Although they face the same obstacles as for-profit broadband providers, cooperatives choose to find ways to overcome them for the sake of their members. Bandera EC will add fiber-optic broadband service upon request. If half of a neighborhood commits to buying the service for one year, then the company will install the infrastructure to bring service to that area. “We need density and commitment,” Hetherington says. “That’s the only way the process is economically feasible for the co-op.”

Bandera EC has had 2,500 requests for service since the first announcement last year, and it’s working on adding broadband to part of Boerne after meeting the demand commitment threshold.

“As long as we do the due diligence, we’re going to find a way to make it work,” says Hetherington.

That is why so many people think the co-op model will work to deliver high-speed internet service: Those people work together to make a project succeed.

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Learn more about writer Jeff Siegel at winecurmudgeon.com.