Electric cooperatives bridge the rural-urban digital divide
Electric cooperatives got their start back in the 1930s with the mission of bringing electricity to the far corners of rural America. Now many of those same co-ops are bringing an equally vital service to their members: broadband communications.
Internet bandwidth is critical to rural healthcare, manufacturing, education and even farming. Broadband is also vital for residents who rely on the internet to stay connected with the rest of the world.
Why are electric cooperatives providing retail broadband to rural communities?
- Deep expertise investing in long-term infrastructure
- A history of meeting unmet needs for vital services
- Strong brand recognition and a great reputation in the communities they serve
- Broadband is a natural revenue enhancement for fiber deployed for smart grid infrastructure
We laid out a five year plan but have deviated from that plan a couple years in. I think CoBank’s ability to be flexible is one of the primary reasons we’ve been so successful.
Tom Howard, CEO/General Manager, Callaway Electric Cooperative
Key industry trends and observations from our banking team
- Take rates for projects typically exceed forecasted performance with a superior and well-priced fiber product.
- Mature projects have seen strong cash flow growth and continued improvement in take rates once the initial construction is complete.
- The evolution of over-the-top and cloud-based services makes value-added services far less challenging than in the past.
- Demand for bandwidth and critical data infrastructure continues to drive significant growth.
- Even the most rural systems can achieve project feasibility by leveraging federal and state funding sources.
CoBank financed telecommunications already, so that expertise was there. We saw them more as a partner, not just a lender. That expertise was critical to us. And there is no doubt CoBank's vision and Tombigbee's vision is the same. We're here to benefit rural America.
Steve Foshee, President/CEO, Tombigbee Electric Cooperative