MPE concludes broadband feasibility studies, opts to build fiber backbone
Access to reliable, high-speed internet is becoming increasingly important in communities across the country. Mountain Parks Electric’s (MPE’s) service area in North Central Colorado is no exception. At present, 85 percent of MPE-served households have residential internet service, up from 66 percent just 15 years ago. But much has changed since 2003, when many internet users were still using dial-up services. Today, in addition to surfing the World Wide Web, more and more businesses and consumers are relying on the internet for videoconferencing, telephone services and video streaming.
“Over the past year and a half, Mountain Parks Electric has heard from many of its members about the growing need for high-speed internet service,” said MPE GM Tom Sifers. “It affects everything from the ability to conduct business, to retaining and attracting new businesses, to real estate values, to the quality of life of homeowners, tourists and full-time residents. All of this, directly and indirectly, impacts the local economy. Our members have relayed these accessibility concerns in emails, phone calls, online surveys and even in person – at monthly board meetings and our annual meeting. The feedback they consistently provided was that high-speed internet access is sporadic in this area, and in many cases inadequate."
This sentiment was also captured in a recent survey: 87 percent of 400 MPE members randomly interviewed by telephone indicated that low-cost, high-speed internet was “very important to the future of the local economy.”
In response, The Mountain Parks Electric Board of Directors has weighed business cases for becoming a retail (“last-mile”) broadband service provider. The MPE Board’s goal during this examination was twofold: (1) to make fiber-optic internet, video and voice services available to 100 percent of its members at a competitive rate, and (2) to equip its electric utility infrastructure with fiber connectivity to meet electric consumers’ present and future needs.
Two feasibility studies followed. Both revealed that a retail broadband venture would require significant capital investment. The most detailed study estimated a cost of $95 million for MPE to form, construct and operate a last-mile service. This cost is notably impacted by the area’s rugged terrain, and by its sparse population. MPE serves 11 consumers per mile of electric service.
“After completing both studies, which were conducted by independent consulting firms, it became clear that without significant outside investment providing retail broadband service wouldn’t cash flow,” Sifers said. “More money would be going out than coming in. It’s a much different venture than forming an electric co-op.”
One obvious contrast between the two services is that when the rural electric co-ops formed, nearly 100 percent of households signed up for service. The broadband feasibility studies estimated a potential take-rate much lower than that, around 45 percent. And to make the venture cash flow, a take-rate of 89 percent would be required. Anything significantly less than that would necessitate steep electric rate increases to subsidize the cost. MPE’s Board of Directors is unwilling to do that.
But after digesting the numbers, the MPE Board remained convinced that reliable, high-speed internet service is a valid and growing need within the community. Subsequently, at its February meeting, the Board adopted a motion to help improve broadband development in a more cost-effective manner. Instead of building an expensive last-mile (retail) service, the Board moved to construct a “middle-mile system” (MMS).
“Taking this step to construct the middle-mile allows for more time to work with the communities and counties in our service area that have opted out of Colorado Senate Bill 152,” Sifers said. “This creates a possibility, going forward, for public-private partnerships. We also are hearing more talk from our state and federal governments about new rural broadband grant funds. Taking this step now puts Mountain Parks Electric in a shovel-ready position to react if these opportunities come to fruition.”
A MMS is essentially the backbone of a fiber-optic, high-speed internet network. Once constructed – over the next 12 to 24 months – it will allow for immediate electric utility operational improvements. It will also provide bandwidth capacity that existing internet providers can use to improve retail internet services throughout the area. A MMS backbone investment will not significantly impact MPE’s electric rates or financing.
For MPE’s electric utility operations, the backbone will enhance electric equipment monitoring, maintenance, and control (of substation equipment, switches and transformers), minimize the length of power outages and improve communication between the Granby office and its outposts in Walden and Kremmling. Additionally, and perhaps most importantly, the backbone will position MPE to be able to adopt technologies that may help manage future wholesale power costs, benefiting all members.