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Opening the door for reliable broadband internet access through fiber-optic connections in our electric system.
Our members value the reliable electric service we provide and many have expressed interest in how we can expand our offerings to support access to high-speed broadband internet services for faster, more reliable internet speeds.
We are undergoing a Grid Communication Improvement Project where we are installing fiber optic cable on our existing power lines. This project will improve our technical communication which helps us better manage our electric grid, improves service to you, and quickens restoration times.
This project can potentially help bring broadband internet services to Northern Colorado.
Our plan is to build a portion of the broadband network called the “middle mile” – the backbone of the broadband network.
This enables us to attract and open the door for third-party broadband providers to come into our area and provide internet service.
To help bring broadband to underserved areas, we are including accommodations in our fiber construction plan that builds the middle mile backbone – without significantly impacting our finances or electric rates.
Our plan is to lease the middle mile to third-parties that have expertise and personnel we lack. Through this approach, we can utilize our resources and infrastructure to help enable broadband internet service in our region in a cost-effective manner. It’s just one of the many ways we’re looking out for you, our members, by providing added value to your lives.
PVREA contractor, MasTec, is installing fiber on existing overhead and underground power lines. Members may see bucket trucks and crews with boring equipment around their homes and/or businesses. We expect no disruption to your electric service while we’re doing this work.
Fortunately, over 90% of households in our service territory have high-speed internet today – and over 50% already have broadband. Nevertheless, we want to help address the gap in high-speed internet and broadband service – an identified need from some of our members and community leaders.
We tapped into an industry-leading consulting firm to conduct a feasibility study that incorporated member feedback and evaluation of our business model. The research showed if we provided a broadband service directly to our members it would require a $120 million capital investment in easements, labor, construction, equipment, legal, and other related costs.
Much of this cost is due to our service territory’s rugged terrain and the number of people we serve per mile of line. We only serve 10 members per mile of electric distribution line. Meanwhile, municipal utilities serving more urban environments, like our neighbors in Fort Collins, average 48 customers per mile. Because of these factors, the research showed that on a year-to-year basis, there would always be more money going out than coming in.
The “last mile” model, where we would be the broadband provider with rates competitive with other similar service providers, simply never cash flows. Starting a PVREA broadband business could likely result in future electric rate increases and conflicts with our mission to keep rates affordable.
With these results, we decided to support a path for broadband internet by utilizing our Grid Communication Improvement Project to open the door for the middle mile.
Broadband is a type of high-speed internet access that enables download speeds of at least 25 megabytes per second (mbps) and upload speeds of 3 mbps.
Broadband is vital to the economic health of any community and plays an important role in attracting and retaining businesses, residents and visitors. But in some rural areas or other areas with low population density, access to reliable broadband service is limited.
Some electric cooperatives and municipal utilities are entering the broadband business, so we’re giving special consideration to how we can support increased penetration of reliable broadband services.
We do not currently offer broadband services. Nevertheless, because our members and community leaders have expressed interest in increased access to broadband, we have explored the benefits and costs associated with offering broadband service.
We’ve taken a detailed approach to evaluate if providing broadband is in the best interest of our members, both in the short- and long-term. We partnered with an industry-leading consulting firm to conduct a feasibility study that incorporates member feedback and evaluation of our financials.
The research shows that providing residential and commercial broadband service in our area would require a significant investment, as much as a $120 million in capital costs for hiring, labor, construction, equipment, sales, marketing, etc.
With this research and analysis by a third-party expert and support from PVREA leadership and the Board of Directors, we will not pursue being an end-user provider. To be a part of the solution, we’ve developed a plan to help enable broadband service and attract retail broadband providers in an efficient and cost-effective manner.
We’re already upgrading our network by constructing fiber optic cable to our substations to improve communication and better manage our electric grid. We’ve expanded our construction plan to include the capacity that enables the middle mile – the backbone of the broadband network. Building the middle mile will help attract and open the door for third-party broadband providers, supporting the availability of service at reasonable costs for homes and businesses.
We support broadband delivery and will do our part to enable it by adding construction of the middle mile to our current build-out at a manageable cost.
As an electric cooperative owned and governed by the members we serve, we have a financial responsibility to our members to keep PVREA financially strong and to avoid subsidization of broadband by the electric service we provide.
Because of our prudent fiscal management, we can plan for construction of the middle mile backbone fiber network without placing a strain on our finances. By committing only to the construction of the middle mile, we are shielding our members from the financial risks of building and operating the last mile – the section of the network connecting the middle mile and the actual home or business to which broadband is being delivered. This will ensure our members’ electric rates are unaffected.
Not in the foreseeable future. In addition to a major investment in hiring, training and research, the feasibility study also showed the broadband business model would never generate a return on our investment – there would always be more money going out than coming in.
So, at this time, we will best serve our members by continuing to focus on our core business. We are committed to providing safe, reliable, and affordable electricity, but at this point, not broadband. We believe leasing our fiber optic backbone network to a third-party is the most reasonable approach considering retail broadband providers have the expertise and personnel we lack.
There isn’t a one-size-fits-all solution for broadband access. Some rural electric cooperatives in Colorado are in a good position to utilize new technologies and add a broadband service offering, while others have decided against pursuing broadband projects because of the costs and financial risks.
Our service territory is unique compared to other service territories because we have a lower population density – just 10 members per mile of electric distribution line. According to the Colorado Rural Electric Association, municipal utilities serving more urban environments, like our neighbors in Fort Collins, average 48 customers per mile, and therefore an investment in broadband is less risky and likely to generate a higher return.
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