When privately owned utilities refused to electrify rural areas, communities established electric cooperatives to light up their homes and farms. A recently released report, Unlocking the Value of Broadband for Electric Cooperative Consumer-Members, describes how electric co-ops now have an opportunity revisit that role as they bring Internet access to their rural members nationwide.

The report, published in September by the National Rural Electric Cooperative Association (NRECA), finds that millions of people in electric cooperative service territories lack access to broadband. As the report explains, rural electric cooperatives are uniquely poised to meet their members’ needs for better connectivity. However, public investment may still be necessary to connect many rural communities.

Download the report.

Co-ops Could Meet Rural Broadband Needs

Like many rural Americans, members of electric cooperatives often find themselves unserved or underserved by the existing Internet service providers. The report’s authors estimate that more than 6 million electric co-op households — a total of 13.4 million people — don’t have access to broadband, defined by the Federal Communications Commission (FCC) as 25 Megabits per second (Mbps) download and 3 Mbps upload. Even more co-op members are likely struggling with poor connectivity because of how the FCC data overstates broadband availability and access.

There are several reasons why rural electric cooperatives are in a good position to bring modern-day connectivity to their unserved members, the report notes. Perhaps the most important advantage is that many co-ops are already investing in broadband networks to support smart grid technologies, such as advanced metering infrastructure (“smart meters”). The report points out that a broadband backbone ”not only enables the co-op’s smart grid operations, it also enables connectivity to the broader Internet backbone.” By expanding off their existing...

For many rural Americans, the local electric or telephone cooperative is their best hope for finally obtaining modern-day connectivity. With the support of government funding, rural cooperatives have brought electricity, telephone service, and more recently broadband access to some of the most rugged and sparsely populated places in the country.

However, recent tax code changes might prevent co-ops from connecting more rural communities. Cooperatives could potentially lose their tax exempt status if they accept government grants for broadband expansion and disaster recovery — an unintended yet foreseeable consequence of the Republican “Tax Cuts and Jobs Act” passed late last year. In a press release, Senator Tina Smith called attention to the oversight, noting, “This uncertainty has caused cooperatives significant concern and frozen some of their grant applications.”

Who’s Ready for Some Tax Policy?

As nonprofit membership corporations, rural electric and telephone cooperatives are exempted from paying taxes under section 501(c)(12) of the Internal Revenue Code (IRC). To maintain this tax exempt status, cooperatives must derive at least 85 percent of their income from members (e.g., from selling electricity). This is sometimes referred to as the the member income test or the income source test.

Not all sources of non-member income are included when calculating this percentage. Revenue from utility pole rentals, for instance, is exempted. In the past, rural cooperatives also excluded federal and state grants from the member income test, based on assorted rulings from the Internal Revenue Service (one example is Rev. Rul. 93-16, 1993–1 C.B. 26, which held that a federal grant given to an airport should not be considered income for tax purposes). As long as co-ops treated the government funding as a source of capital, not income, they could accept as much grant money as they wanted without the...

When Fairpoint wouldn’t give folks in Crestone, Colorado, what they needed after repeated requests, they decided to take care of it themselves. By 2012, Ralph Abrams and his band of Internet pioneers had created Colorado Central Telecom, providing affordable, dependable fixed wireless service to premises throughout the region at much faster speeds than Fairpoint could ever deliver. In this episode of the podcast, Maisie Ramsay, Marketing and Business Development from the company, tells us more about the company and their work.

Colorado Central Telecom has been delivering Internet access to subscribers for a relatively short time, but it’s clear they have the needs of the community in mind. They’ve made steady investments in their equipment in order to improve their services and have even picked up some fiber network resources. Maisie describes some of the challenges of working in a mountain geography such as the San Luis Valley and the technologies they employ to get past the hurdles Mother Nature has created.

Maisie also talks about some of the collaboration Colorado Central Telecom is pursuing. It’s clear that the company has a goal — to bring better connectivity to the people in the region — and doesn’t mind sacrificing a little as a way to improve the situation for the whole region. No wonder they were named Service Provider of the Year at the 2018 Mountain Connect Broadband Development Conference.

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This show is 23 minutes long and can be played on this page or via iTunes or the tool of your choice using this feed. You can listen to the interview on this page...

South Dakota has more cows than people — and if you live in a rural community outside of the state, it’s possible that all those bovines may have better Internet access than you do.

South Dakota Dashboard recently released a report on rural Internet access in the state. It was commissioned by the South Dakota Telecommunications Association (SDTA), whose members include cooperative, municipal, and tribal providers. The report, Connecting South Dakota’s Future: A Report on the Deployment & Impact of Rural Broadband, found that rural connectivity in the state significantly exceeds national averages, proving that high-quality Internet access is possible even in the most rural areas.

Download the report for more details.

Summary of Findings

According to the report, more than three quarters of rural South Dakotans who subscribe to Internet access from SDTA members have access to speeds of 25 Megabits per second (Mbps) download and 3 Mbps upload, which are the federal minimums for broadband. Across the country, approximately 61 percent of rural residents have access to those speeds.

Furthermore, 65 percent of people who subscribe to Internet access from SDTA members receive service through Fiber-to-the-Premises (FTTP). In contrast, only around 40 percent of rural telecommunications company subscribers nationwide are connected via fast and reliable fiber optic lines.

This is all despite the fact that, with fewer than five residents per square mile, deploying fiber costs on average $3,571 per resident in the rural regions served by SDTA members versus about $26 per resident in the more densely populated Sioux Falls.

Fast Internet Speeds Nothing New for South Dakota

In June of this year, we reported on PCMag’s annual ranking of the fastest Internet service providers (ISPs) in the country, which chose South Dakota as the state with the second...