Midwest Energy and Communications (MEC) offers Fiber-to-the-Home (FTTH) in large pockets of southeast and southwest Michigan, north central Ohio, and a sliver of north central Indiana. Recently, the small rural town of Milton, Michigan, awarded the cooperative $75,000 to deploy fiber to approximately 80 homes in the community.

That Last Five Miles

According to the South Bend Tribune, the funds are being used to install the last 5-mile stretch of fiber that will complete a larger vision to connect the township’s entire 3,800 residents to high-quality Internet access. Mostly agricultural Milton Township is located in Cass County along the Indiana border. Construction is underway and may be completed as early as this spring.

Rates from MEC include:

$49.95 per month for 25 Megabits per second (Mbps) upload and download

$59.95 per month for 50/50 Mbps

$79.95 per month for 100/100 Mbps

$119.95 per month for 1 gigabit upload and dowload (1,000 Mbps)

When the Southwest Michigan Planning Commission and Connect Michigan assessed connectivity in the region almost seven years ago, Cass County was considered “below average” for Internet access in Michigan. Since that time, the Planning Commission has provided resources and information for local communities interested in taking steps toward better local connectivity; working with electric cooperatives and providing grants and loans have helped over time.

Midwest Energy

In addition to providing Fiber-to-the-Home (FTTH) Internet access for members in their service area, MEC is also working with Lyndon Township by providing Internet access over the town’s publicly owned fiber network. MEC also offers propane, a popular form of household heat in rural Michigan.

The cooperative begin in 1937 as one of the many rural electric cooperatives formed by locals to bring lights to the families in areas unserved by private sector electric providers. The cooperative added propane service in 1998.

Check out this short video on the history of MEC:

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When Indiana’s Tipmont REMC asked members about broadband in 2017, more than half said that they couldn’t access fast, affordable, reliable connectivity. The rural electric cooperative soon began establishing plans to develop a fiber broadband network. Now, in a move to bring high-quality connectivity to members sooner, Tipmont has acquired local ISP Wintek Corporation, and plans to serve all 23,000 members within the next eight years.

A Comfortable Relationship

Wintek, headquartered in Lafayette, began in 1973 and provides connectivity to Tipmont’s headquarters in Linden, Indiana. The ISP has used the electric co-op's poles for more than 10 years to mount sections of the Wintek fiber for residential and commercial connections. According to Tipmont’s announcement on the acquisition, Wintek has also served as a consultant for IT systems to the cooperative. Tipmont leaders have already established a level of trust with Wintek and vice versa.

According to Oliver Beers, co-owner and COO of Wintek, the acquisition will allow more Wintek customers to access fiber connectivity. “We’ve done as much as we can financially afford to do,” Beers told the Journal Review.

Began as A Solo Project

When the Tipmont board unanimously decided to develop a Fiber-to-the-Home (FTTH) network, they had not intended to work with another entity. They commenced construction this past summer in Montgomery and Tippecanoe Counties, where they’ve already deployed 30 miles of fiber. In November, they connected a dozen households in Linden as test customers to work with the system for two months.

“It’s really important when you have a service that people depend on, like electric service or broadband service, that we make very sure that what we’re providing is highly reliable given the gravity of what’s being provided,” says [Tipmont REMC President and CEO Ron] Holcomb. “So since we are new...

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...