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Utilities May Be Key in Broadband Expansion to Underserved Areas

By June 15, 2021No Comments

As broadband service rolls out to rural America and to other remote and underserved areas, it is increasingly clear that utilities will have important roles to play.

Municipal, cooperative and investor-owned utilities all will have opportunities to be leaders in closing the digital divide. Many have excess capacity on existing fiber networks. Also, utilities often own towers and other tall structures that could accommodate wireless equipment, and many are building out carrier-style wireless networks that are built to utility-grade standards for reliability. Importantly, utilities have solid customer relationships and trust with communities built over decades of providing electricity under regulatory obligations that ensure equitable service.

Building on Histories

Rural electric cooperatives, or co-ops, have an opportunity to essentially repeat history. National Rural Electric Cooperative Association is already making a case that a nearly 100-year track record of bringing electric service to rural America, when no one else would, makes co-ops the best candidate to roll out another essential service. Indeed, many co-ops won a portion of the $16 billion available in the Rural Digital Opportunity Fund (RDOF) auction that provided incentives for expanding broadband access. Like co-ops, many municipal and investor-owned utilities also serve small towns and rural areas across America. A number of these utilities won RDOF funding as well.

Regardless of their operating structures, utilities have two basic questions to consider:

  1. Should we offer commercial broadband services as a stand-alone entity?
  2. Is the more sensible path to partner with an existing internet or telecommunications service provider to expand broadband access?

A data-driven analysis will be key to getting to the right answers.

Disparate Sources of Data

The U.S. Census Bureau and the Federal Communications Commission (FCC) have extensive data repositories that can serve as a good starting point for utilities to evaluate their options. Census data provides the number of people living within well-defined areas, along with economic data such as average incomes and numbers and types of businesses.

Meanwhile, FCC data offers insight into the availability and quality of broadband internet service within those same areas. Keep in mind, to meet the FCC’s RDOF definition of broadband, internet service must be capable of delivering 25 megabits per second (Mbps) download and 3 Mbps upload speeds.

By overlaying information, a utility can zero in on how many of its customers have little to no broadband access and whether broadband would be affordable, particularly for customers in sparsely populated areas.

This is just a starting point, though. Much of the available information is either incomplete or dated. Depending on what a preliminary analysis shows, a utility also may want to consider conducting its own research.

A thorough analysis can produce a road map for arriving at an accurate scope of need within a utility’s service territory. The analysis also should shed light on the number of customers who may not be able to afford broadband service.

Broadband as Critical Infrastructure

The FCC estimates that approximately 19 million Americans — 6% of the population — do not have access to fixed broadband at threshold 25/3 Mbps speeds. More than 14 million of them live in rural or tribal areas. Approximately 100 million Americans do not subscribe to broadband, largely because of affordability issues. According to the FCC, this lack of access can result in unreliable access to healthcare, lagging educational opportunities for children and general economic stagnation in underserved regions.

Utilities have far-reaching infrastructure and low costs of capital, making them ideal frontline service institutions to address affordability and access shortfalls. Reliable data can provide an accurate picture to evaluate a wide range of options, including these three:

Fiber Partnership Option: For utilities that already have fiber to critical operating centers, communication facilities and substations, some percentage of that fiber capacity is underutilized. Several business models are available to utilities that would allow them to lease, share or jointly develop these fiber assets with a partner, such as a retail service provider.

Fiber and Wireless Option: Building upon the fiber partnership approach, a utility also could lease access to tall structures for installation of wireless devices that would enable wireless internet service providers (ISPs) to provide “last-mile” broadband service via fixed wireless access (FWA). This approach could mitigate the relatively high cost of installing fiber-to-the-premises across large areas with sparse populations; it also could use a larger fleet of assets to get closer to the customer. By combining fiber throughput with wireless connectivity, affordable broadband solutions can emerge through better asset utilization.

Utility as ISP Option: Finally, becoming a stand-alone broadband ISP offers many interesting possibilities. Most utilities already have a fiber backbone in place, and many are adding robust, private long-term evolution (PLTE) networks to better monitor and control power distribution systems. Together, these technologies could provide an opportunity to leverage FWA service over the recently opened Citizens Broadband Radio Service spectrum. By making an incremental investment in technology, a utility may be able to enter the broadband business directly via a nonregulated affiliate.

Which Path to Choose

Utilities have an important role in enabling broadband access across underserved areas. The simplest path for them is to offer excess capacity on fiber, tall assets or PLTE networks to a last-mile provider that would develop and manage internet service offerings.

Should utilities choose to become direct broadband providers, they will encounter a new business model that extends well beyond providing electric service on an equitable and affordable basis.

Partnerships and collaboration are likely to be the most reasonable path forward for utilities. What is certain is that data will be crucial in helping utilities make decisions that produce the greatest benefits for their customers.



Tony Tarvin, Ph.D., is a senior data scientist at Burns & McDonnell.