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Introduction
In the 18 months from when we originally
released our report on rural cooperatives,
we have seen a tremendous increase in
attention on cooperatives as a key approach
for dramatically improving rural Internet
access. Many cooperatives have become
more aggressive in building next-generation
networks for their member-owners and their
neighbors. This updated report reflects the
latest data we could gather on this 

essential movement.
As of December 2019, we’ve added a new
map that shows the current areas covered
by fiber networks run by cooperatives, as
well as areas they are predicted to expand
service.
Rural regions in the United States largely lack
high-quality Internet access, a fact that is well
known with various solutions publicly 

discussed at both the state and federal level.
However, too few have noticed that a 

substantial minority of rural areas actually have
Internet infrastructure that is better than what
metro regions have on average. Locally-rooted
infrastructure cooperatives have already
invested significantly in fiber optic networks
and are an under-appreciated tool for 

expanding access rapidly in a fiscally-
responsible manner across rural America.

Rural communities have solved many past
infrastructure problems by creating utility
cooperatives. In the 1930s, farmers came
together to build non-profit, member-owned
electric cooperatives. These co-ops were able
to borrow money from the federal government
to build a grid across low-density and
sometimes rugged terrain, everywhere from
Maine to southern California. Decades later,
people did the same to create 

telephone cooperatives.

Cooperatives should be the foundation for
bringing high-quality Internet service to rural

1
Cooperatives Fiberize Rural America:

A Trusted Model For The Internet Era
By H. Trostle, Katie Kienbaum, Michelle Andrews, & Christopher Mitchell
Introduction - 1
Problem: Bad Rural Connectivity - 2
The Cooperative Solution - 4
Why Fiber? - 4
Cooperative Fiber Map - 6
Growth in Area Covered by Cooperatives Map - 7
Current and Predicted Areas Covered Map - 8
Cooperative Coverage: Top 5 States - 9
The Future is Cooperative - 9
State Laws - 10
Funding for Projects - 10
Recommendations - 12
Follow on Twitter

@CommunityNets

@MuniNetworks

@ILSR
Policy Brief

Updated Dec. 2019
America. Internet service from satellite, dial-up,
and DSL is too slow and unreliable for modern

applications. Small towns and farming
communities need robust Internet service to
support their local economies, educate
themselves, and generally improve their quality

of life. Cooperatives have quietly proved that
they can build Fiber-to-the-Home networks that
are capable of speeds greater than 1 Gigabit
per second (1,000 Mbps). More than 140
cooperatives offer gigabit service to residents
or businesses. 

Urban and rural areas in the U.S. are defined
based on population density calculations
performed by the U.S. Census Bureau. Using
the areas defined as rural and the latest FCC
Form 477 data from June 2018, we found that
17 percent of people living in rural areas have
access to fiber Internet service. 31 percent of
the fiber service available in rural areas is
provided by rural cooperatives. Two things to
understand about that number: 

1. The electric co-ops that are building are
not reflected in the June 2018 data and it
will be several years before the data
catches up.
2. Only 3.1 million people live within the
historical boundaries of telephone
cooperatives and yet 56 percent of them
could receive fiber Internet access from
their co-op. 
Small Internet Service Providers (ISPs) are also
making investments in their rural communities,
but large ISPs, such as AT&T and CenturyLink,
have overlooked rural areas. This is where
cooperatives can solve the problem.

This brief explores the impact that rural
cooperatives have already made on Internet
access. It concludes with action steps and
policy recommendations for universal access to
high-quality Internet service in America.


2
Key Terms
Federal Communications Commission
(FCC) – A federal government agency 

that regulates U.S. communications laws 

and policies. 

Broadband – Defined by the FCC as 25 Mbps
(download) / 3 Mbps (upload). Generally used
as a shorthand for good Internet access.

Cooperative – A non-profit, member-owned
organization that provides a needed service.
Members pay a small fee to join and have
voting rights within the organization.

United States Department of Agriculture
(USDA) – A U.S. department that is a key
source of grants and loans for cooperatives
via its Rural Utilities Service (RUS)
department.

Fiber-to-the-Home – A type of network
technology that physically connects each
home to a fiber optic line. Fiber optic
connections work by transmitting information
as pulses of light. It has more capacity than
Cable or DSL.

“Gig” or Gigabit (Gbps) – Internet service
speeds of 1,000 Mbps (more colloquially used
to describe a connection that has no
congestion regardless of what applications 

are used).

Internet Service Providers (ISPs) –
Companies or organizations that provide
Internet access.

Form 477 – A specific FCC form to monitor
the deployment of broadband service in the
U.S. ISPs provide information at the census
block level.
Problem: Bad Rural Connectivity
Rural communities face many challenges from
dwindling populations to inaccessible health
care. The limited opportunities available in rural
homes drive many young workers to suburbs
and metro regions, causing further population
loss and further reducing opportunities for
those remaining in their rural communities. The
opportunities afforded by high-speed Internet
access can breathe new life into rural
communities, making them once again great
places to live, work, and play. 

The rural U.S. is home to just 14 percent of the
population, but as of 2017, covers 72 percent
of the land area. In 2010-2016, researchers1
witnessed the first ever overall population
decline in rural counties in U.S. history. Rural-2
urban migration is a fact of life, but this is the
first time that the rural U.S. has lost more
population than can be replaced by natural
population growth. Although rural areas
account for so little of the population, they have
been difficult to connect with broadband
Internet access. Only around 2 percent of urban
Americans lack access to broadband service
compared to 30 percent of rural Americans. 
3
Rural economies suffer without high-speed
Internet access. For small businesses, credit
card and debit card transactions are delayed by
slow connections. Potential entrepreneurs have
difficulty accessing information online and
promoting their concept without a reliable
connection. Tourist towns need high-speed
Internet access to attract visitors and
encourage them to return. In a recent survey by
statistics firm Statista, 80 percent of
respondents reported that Internet access was
crucial for hotel service—even more important
than room service. 
4
It’s not just the economy. Rural Internet access
can improve health care and education. Nearly
7 in 10 teachers assign homework that requires
Internet access. With sub-par connectivity,5
rural students are at a disadvantage when
trying to complete their homework or
independently enrich their education. High-
speed Internet access also enables more
educational opportunities, such as live
interactive STEM courses from across 

the state. 
6
Nearly 30 percent of U.S. veterans live in rural
areas, and 75 percent of them are more than 55
years old. This older segment of the7
population has unique health needs. Many rural
communities, however, lack access to
preventative services and rural communities
have higher rates of chronic illness and poor
overall health. Telehealth initiatives could8
alleviate some of these disparities by providing
access to routine, preventative care. Veterans
and the elderly can receive telehealth services
in order to stay in their communities longer and
receive more frequent care. Such a shift would
also lower the cost of providing medical care. 

Despite this opportunity, rural regions are often
stuck with dial-up, DSL, or satellite service.
These technologies are too slow and unreliable

3
Local Voices - Michigan
Before Allband Communications Cooperative
brought telephone service and broadband
access to the Robbs Creek exchange in the
2000s, residents of the rural northeastern
Michigan community couldn’t contact
emergency services. Ron Siegel, general
manager, explained: 

“It was actually a very traumatic issue
because people were dying…There was a
young boy that drowned. There was a
gentleman who had a heart attack, and the
wife couldn't call for help… By the time she
drove to Alpena and got in the ambulance
back, he had died alone on the floor.”
to support rural economies. Some states have
developed programs to subsidize rural
connections in addition to some existing
programs from the federal government.
However, none of these programs have the
scale to ensure most rural regions have modern
Internet access. Fortunately, rural cooperatives
have stepped up, some taking advantage of
these state and federal programs and others
simply finding a way to invest in the
technologies necessary to deliver better
Internet access. 

The Cooperative Solution
For nearly 100 years, rural communities have
relied on cooperatives to bring needed utilities
to their homes and businesses. In the early
20th century, private electricity companies
refused to extend service to most of rural
America. Private investors did not believe farms
and rural towns had sufficient electrical
demand and instead focused on building out to
urban areas and more specifically industrial
areas. The federal government stepped in with
the Rural Electrification Act of 1936, setting the
stage for rural utility cooperatives.

Approximately 260 telephone cooperatives and
900 electric cooperatives today serve much of
rural America. Electric cooperatives provide
reliable power to more than half of the entire
U.S. land area, nearly 2 million square miles in
47 states. More than 30 states have at least
one telephone cooperative. 

Many cooperatives provide Internet service as
a natural extension of their existing
infrastructure. Telephone cooperatives started
with Internet access by providing dial-up and
DSL service over their copper telephone lines.
Most telephone co-ops are already transitioning
to all-fiber networks, upgrading everyone in
their territory from the old copper phone lines of
50 years ago. More than 110 rural electric co-9
ops have embarked on fiber optic projects to
increase Internet access for their members, a
number that is growing rapidly from just a
handful in 2012. 
10
Why Fiber?
Fiber networks offer faster, more reliable service
than other types of networks. They have been
hailed as “future-proof” infrastructure and have
long technological lifespans. Additionally, fiber
networks support multiple uses for homes and
businesses, including Internet service,
telephone, video, and security. Fiber networks
have high capital costs initially, but lower
operating costs than many other types of
networks over the long-term. 

Many electric cooperatives may already have
fiber in place for another purpose. Several

4
Local Voices - Virginia
Central Virginia Electric Cooperative’s
experience accessing its members’ properties
to deploy fiber illustrates the community’s
desire for better connectivity. President and
CEO Gary Wood shared one story where a
member initially refused the cooperative
access to his land before realizing it was for
the broadband network:
“The crews are trying to figure out how to get
through [the locked gate], and he came up to
them and said, ‘The gate's locked, and it'll
stay locked, and you won't come on my land.
I don't allow co-op people here…’ The next
day, one of our employees went by… and
told him that we understood his issues and
we wouldn't need to get on his property
because he would've been the only one we
would've served off of that fiber… He said,
‘Wait a minute, you were coming to build the
— is this the Internet service?’ And he said,
‘Tell the crews to be out there tomorrow
morning. I'll have the gate open and coffee
waiting for them.’”
started by building fiber optic lines to
substations and large demand centers to
increase the reliability of the electric system
through better monitoring. This forms the
backbone of the network for Internet access to
businesses and residents.

Cooperative Fiber Map
The map on page 6 features the 350+
telephone and electric cooperatives or their
subsidiaries that are currently offering fiber
Internet access to homes or businesses. It is
based on data from the FCC Form 477
December 2017 v1, and it is compiled at the
census block level. This map may slightly11
overstate coverage: an ISP may claim a census
block as served if an ISP serves, or can easily
serve, at least one location in that census
block. Rural census blocks often cover larger
areas than urban census blocks.

This map includes information on projects
through December 2017; new projects that
started in 2018 will not be reflected on 

this map. 

Growth in Areas Covered by
Cooperatives Map
The map on page 7 shows the growth in areas
where cooperatives offer fiber Internet service
from 2016-2017. As with the other maps, it is
based on FCC Form 477 data at the census
block level. The areas depicted are networks
newly present in 2017 that were not in the 2016
Form 477 data.

Current and Predicted Areas
Covered by Cooperatives Map
The map on page 8 shows the current areas
where electric and telephone cooperatives offer
fiber Internet service, as well as the areas they
are predicted to expand service, based on
funding received from the Connect America
Fund II Auction. RS Fiber Co-op in Minnesota is
shown in its own category. This map is based
on FCC Form 477 data from June 2018. 


5
Local Voices - Minnesota
In Minnesota’s farm country, residents
recognized that they were being shut out of
economic and educational opportunities due
to the lack of connectivity. Jake Rieke, vice
chairman of the RS Fiber Cooperative board,
shared his story:

“I was seriously considering having to move
off the farm — a farm that was homesteaded
by my family in 1862 — and moving to a
town with better broadband access because
I felt that there was a serious possibility that I
was putting my kids at a disadvantage.”
6
See page 5 of the report for a detailed explanation of the
map’s contents
7
See page 5 of the report for a detailed explanation of the
map’s contents
8
Cooperative Coverage: Top Five
States
According to FCC statistics, 70 percent of the
landmass of North Dakota has access to fiber
optic services from cooperatives. Another 9
percent has access to fiber from local
independent companies. This table shows the
percentage of other top states in landmass
coverage by fiber from cooperatives.

The Future is Cooperative
The vast majority of organizations on this map
are telephone and electric cooperatives that
have served their communities for decades. But
we know of at least two relatively newly formed
cooperatives and have covered their stories on
MuniNetworks.org.

• In Michigan, a man wanted telephone
service for his consulting business in
the 1990s and the community needed
911 service for their families. They built
the Allband Communications
Cooperative that now manages a
Fiber-to-the-Home network and
supports rural research. 
12
• RS Fiber in Minnesota came out of a
consortium of rural towns and counties
that recognized the need for 

high-speed Internet access. 
13
Cooperative Coverage
North Dakota 50,000 sq. mi. 70.8%
South Dakota 37,000 sq. mi. 47.7%
Montana 34,000 sq. mi. 23.4%
Iowa 12,000 sq. mi. 22.2%
Minnesota 19,000 sq. mi. 21.6%

9
Resources
MuniNetworks.org – Updated daily, a
clearinghouse of information on Community
Network projects across the U.S.

• Community Connectivity Toolkit A DIY guide
on how to build local power and get started on a
community network project.

• Cooperatives Build Community Networks
Resources and information on cooperatives
building community networks, including a list of
projects across the country.
Community Broadband Bits Podcast –
Interviews on how communities are building
community networks, including: 

• Episode 288 with Robin Anderson on North
Dakota’s fiber networks.
• Episode 243 with Mel Coleman on North
Arkansas Electric Cooperative’s pilot project.

• Episode 240 with Darren Farnan on United
Fiber in rural Missouri.

• Episode 229 with Jon Chambers on rural
electric cooperatives’ potential.

Reports – In-depth research on fiber projects
for Internet access.

• RS Fiber: Fertile Fields for New Rural Internet
Cooperative (2016) A report on how
communities in rural Minnesota formed a new
cooperative to build a fiber network.
• North Carolina Connectivity: The Good, the
Bad, and the Ugly (2016) An overview of
Internet access in North Carolina and how
telephone and electric cooperatives are solving
the problem.

National Rural Electric Cooperative
Association (NRECA) – Information on
electric cooperatives in the U.S., their current
work, and relevant policy.
Rural Broadband Association (NTCA) –
Information on advocacy efforts to advance
communications services in rural America.
Forming a new cooperative is challenging,
which is why we believe the most common
solution for rural regions not currently served by
cooperatives will be for nearby cooperatives to
expand their service territory. In North Carolina,
Wilkes Telephone Cooperative is taking that
approach through its broadband subsidiary
RiverStreet Networks. After connecting its
members, the co-op began to expand outside
its service territory in both North Carolina and
Virginia by acquiring other providers, merging
with another telephone cooperative, and
seeking federal funding. Currently, RiverStreet14
is partnering with North Carolina Electric
Cooperatives to deploy pilot projects across
the state. 
15
Electric cooperatives have the potential to
connect much of rural America. Although only
10 percent of electric cooperatives in the U.S.
have a fiber Internet access project, many are 

now considering the challenge—crafting
feasibility studies, attending broadband
conferences, and collaborating with others in
their communities. We have been told it is the
most common conversation at meetings of
rural electric co-ops. 

State Laws
Since the first release of this report in 2017,
state legislatures have begun to ease
restrictions on cooperative broadband
networks. Both Georgia and Mississippi have
removed legal uncertainty by explicitly
authorizing electric cooperatives to offer
Internet access, and North Carolina has
overturned a restriction that prevented electric
cooperatives from accessing federal broadband
funding.16
Other states are going one step further by
enacting legislation to help facilitate the
deployment of cooperative broadband
networks. In 2017, Indiana passed the
Facilitating Internet Broadband Rural Expansion
(FIBRE) Act, which allows cooperatives to use
electric easements for broadband networks.17
Legislatures in Colorado, Maryland, North
Carolina, and Texas have since implemented
similar laws. In some states, opposition from18
incumbent providers limited potential
improvements for cooperatives, but these 

laws have tended to at least be steps in the
right direction. 

Funding For Projects
Fiber network projects have significant capital
expenditures at the start of their projects, and
even once completed, cooperatives may find
that they need additional funding for marketing
campaigns or computer literacy projects. A
majority of cooperatives have taken advantage
of at least one of several federal and state
funding programs to make these investments
feasible, while some have built fiber networks
without subsidies.

Some cooperative projects received grants or
loans from the federal stimulus program, the
American Recovery & Reinvestment Act
(ARRA), which included the Broadband
Technology & Opportunity Program (BTOP)
administered by the National
Telecommunications and Information
Administration (NTIA) as well as the Broadband

10
Local Voices - Missouri
In central Missouri, Co-Mo Electric
Cooperative’s fiber network saved members
approximately $20-25 per month on Internet
access and telephone service, according to
Randy Klindt, former general manager of the
co-op’s broadband network. Klindt shared:

“When this project is complete, that's about
$1-1.5 million of disposable income put back
into our member’s pockets that they can
spend on other things.”
Initiatives Program (BIP) administered by the
U.S. Department of Agriculture (USDA).

Other cooperatives took advantage of the
Federal Communications Commission’s (FCC)
Connect America Fund (CAF) Rural Broadband
Experiments Program. Grant recipients
included Allamakee-Clayton Electric
Cooperative in Iowa, BARC Electric
Cooperative in Virginia, and Paul Bunyan
Telephone Cooperative in Minnesota. In 2018,
yet more cooperatives participated in the CAF
Phase II reverse auction, which awarded $225
million in subsidies to 35 rural electric co-ops. 
19
Many of the telephone cooperatives have
wisely reinvested support from the FCC’s
Universal service fund in recent decades to
slowly expand fiber optic service across their
territories. As an example, North and South
Dakota regularly feature among the fastest
states for broadband due to their telephone 

co-ops having built so much fiber. They also20
have more square miles served by co-ops than
any other states. When the area is broken down
by census blocks, co-ops cover 70.8 percent 

of North Dakota and 47.7 percent of 

South Dakota. 

The USDA currently manages several programs
as well. Some are through its Rural Utilities
Services (RUS) division and others are through
programs like Cool & Connected, which
provides planning assistance for broadband
deployment and community development. RUS
manages the Community Connect Grants, the
Distance Learning & Telemedicine Grants, the
Farm Bill Broadband Loans & Loan 

Guarantees, the Rural e-Connectivity
(ReConnect) Pilot Program, and the
Telecommunications Infrastructure Loans &
Loan Guarantees programs. 
21
Some cooperatives initially applied for federal
grants and loans, but were not dissuaded when
rejected. Co-Mo Electric Cooperative in
Missouri applied multiple times for ARRA
funding, but each application was rejected. 

The communities still clamored for service, so 

they moved forward on their own. Co-Mo
Electric self-financed a gigabit Fiber-to-the-
Home network.

In addition to federal funding sources, co-ops
are often eligible for state and local grants. The
Minnesota Border-to-Border Broadband Grant
Program has awarded funds to several
cooperatives, and multiple states looked to it as
a model for their own grant programs. Local22
government funding for connectivity is rarer, but
in Minnesota, numerous counties have
provided loans and grants to electric and
telephone cooperatives for broadband projects,
often to supplement federal or state funding.23
For example, Cook County, Minnesota, offered
Arrowhead Electric Cooperative a $4 million
grant after the co-op was awarded $16 million
in stimulus funding.
The story of rural Internetification is just starting
to be told, but it is clear that cooperatives will
have a large role. The sooner policymakers
realize that and prioritize cooperatives as
targets for subsidy programs, the faster and
less expensive it will be to connect everyone.


11
Recommendations
Federal and state governments must recognize
that cooperatives are one of the best tools for
ubiquitous, rural, high-speed Internet access.



1. Design funding programs with
cooperatives in mind.

a. Letters of credit from the largest banks
may be hard to come by for smaller
cooperatives. 

b. Make applications as simple and easy
as possible. Staff time is limited at small
cooperatives.

c. Develop grant and loan programs rather
than creating incentives in the tax code
for infrastructure investment.

2. Encourage cooperatives by removing
barriers and encouraging partnerships.

a. Remove barriers to electric cooperatives
exploring the possibility of fiber network.
Cooperatives should not be prevented
from applying to federal grants that they
are eligible for because of malformed
state laws.

b. Encourage partnerships, including with
existing muni networks. 

3. If you live in a rural area, talk to your
neighbors, co-op manager, and board
members about the potential for Internet
networks. Successful cooperative
projects are community-led projects.
About 70 percent of electric
cooperatives have less than 10 percent
average turnout for their board member
elections. 
24
a. Co-Mo Electric Cooperative in Missouri
had excited members go door-to-door
and gave out yard signs to encourage 

folks to get involved with the project. 

Many community members also wrote
letters of support for the project.

b. In New Mexico, the local business
community voiced their needs at Kit
Carson Electric Cooperative board
meetings to encourage the co-op to
build a fiber network.

c. Delta Montrose Electric Association in
Colorado overcame an initial reluctance
to develop and Internet access project
after overwhelming demand from its
members. 
25
4. Make it clear that rural connectivity is
about more than entertainment.
Farmers, programmers, and
entrepreneurs all need high-speed
Internet access. Rural connectivity also
supports needed research.

a. Allband Communications Cooperative
started a non-profit called ACEWR,
which collaborates with universities and
research institutions across the United
States. It is a prime spot for research on
local wildlife, endangered species, and
conservation projects. The nonprofit also
has an online workforce development
program to train locals in new skills,
empowering them to succeed in the 21st
century economy.


12
About the Authors
H. Trostle is a Research Associate in the
Community Broadband Networks Initiative at the
Institute for Local Self-Reliance (ILSR). 

Christopher Mitchell is the Director of the
Community Broadband Networks Initiative at
ILSR. Follow him on Twitter @CommunityNets.

Additional ILSR staff, including Katie Kienbaum,
Research Associate, and Michelle Andrews, GIS
and Data Visualization Researcher, contributed to
updates of this report.

For up-to-date information, follow @ILSR and
@MuniNetworks on Twitter. Learn more at
MuniNetworks.org and sign up for the newsletter.
Endnotes
USDA Economic Research Services defines rural as the total population of nonmetro counties. 
1
https://www.ers.usda.gov/topics/rural-economy-population/population-migration
https://www.ers.usda.gov/topics/rural-economy-population/population-migration/recent-population-change2
The FCC uses the 2010 census block identification to estimate rural population. 
3
https://www.fcc.gov/reports-research/reports/broadband-progress-reports/2018-broadband-deployment-report
https://www.statista.com/chart/9620/hotels-just-give-me-wi-fi4
https://www.nytimes.com/2016/02/23/technology/fcc-internet-access-school.html5
https://muninetworks.org/content/community-network-services-cns-brings-stem-education-and-more-rural-6
southwest-georgia
https://www.legion.org/veteranshealthcare/ruralhealth7
https://www.ruralhealthinfo.org/topics/rural-health-disparities8
https://muninetworks.org/content/rural-cooperatives-page9
https://muninetworks.org/content/rural-cooperatives-page10
https://www.fcc.gov/general/broadband-deployment-data-fcc-form-47711
https://muninetworks.org/content/rural-telephone-cooperative-forges-its-own-path-michigan12
https://muninetworks.org/reports/rs-fiber-fertile-fields-new-rural-internet-cooperative13
https://muninetworks.org/content/north-carolina-co-ops-merge-connect-rural-communities-across-states14
https://muninetworks.org/content/co-op-cooperation-rural-north-carolina-riverstreet-working-electric-co-ops15
See http://www.legis.ga.gov/legislation/en-US/Display/20192020/SB/2, http://billstatus.ls.state.ms.us/2019/pdf/16
history/HB/HB0366.xml, and https://www.ncleg.gov/BillLookUp/2019/S310 for the respective bills
https://muninetworks.org/content/indiana-eases-easements-electric-co-ops-fibre-act17
See https://leg.colorado.gov/bills/sb19-107, https://capitol.texas.gov/BillLookup/History.aspx?18
LegSess=86R&Bill=SB14, and https://www.ncleg.gov/BillLookUp/2019/S310 for the respective bills
https://www.electric.coop/fcc-approves-220-million-33-electric-cooperatives-provide-rural-broadband/19
https://muninetworks.org/tags/tags/north-dakota20
https://www.rd.usda.gov/programs-services/all-programs/telecom-programs21
https://mn.gov/deed/programs-services/broadband/grant-program/22
https://muninetworks.org/content/minnesota-counties-help-fund-cooperative-broadband-projects-economic-23
development
https://ilsr.org/just-how-democratic-are-rural-electric-cooperatives24
https://muninetworks.org/content/dmea-co-op-serving-broadband-and-innovation-colorado-community-broadband-25
bits-podcast-314

13

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Updated Policy Brief: Cooperatives Bring Fiber Internet Access to Rural America

  • 1. Introduction In the 18 months from when we originally released our report on rural cooperatives, we have seen a tremendous increase in attention on cooperatives as a key approach for dramatically improving rural Internet access. Many cooperatives have become more aggressive in building next-generation networks for their member-owners and their neighbors. This updated report reflects the latest data we could gather on this 
 essential movement. As of December 2019, we’ve added a new map that shows the current areas covered by fiber networks run by cooperatives, as well as areas they are predicted to expand service. Rural regions in the United States largely lack high-quality Internet access, a fact that is well known with various solutions publicly discussed at both the state and federal level. However, too few have noticed that a substantial minority of rural areas actually have Internet infrastructure that is better than what metro regions have on average. Locally-rooted infrastructure cooperatives have already invested significantly in fiber optic networks and are an under-appreciated tool for expanding access rapidly in a fiscally- responsible manner across rural America. Rural communities have solved many past infrastructure problems by creating utility cooperatives. In the 1930s, farmers came together to build non-profit, member-owned electric cooperatives. These co-ops were able to borrow money from the federal government to build a grid across low-density and sometimes rugged terrain, everywhere from Maine to southern California. Decades later, people did the same to create 
 telephone cooperatives. Cooperatives should be the foundation for bringing high-quality Internet service to rural 1 Cooperatives Fiberize Rural America: A Trusted Model For The Internet Era By H. Trostle, Katie Kienbaum, Michelle Andrews, & Christopher Mitchell Introduction - 1 Problem: Bad Rural Connectivity - 2 The Cooperative Solution - 4 Why Fiber? - 4 Cooperative Fiber Map - 6 Growth in Area Covered by Cooperatives Map - 7 Current and Predicted Areas Covered Map - 8 Cooperative Coverage: Top 5 States - 9 The Future is Cooperative - 9 State Laws - 10 Funding for Projects - 10 Recommendations - 12 Follow on Twitter
 @CommunityNets @MuniNetworks @ILSR Policy Brief Updated Dec. 2019
  • 2. America. Internet service from satellite, dial-up, and DSL is too slow and unreliable for modern applications. Small towns and farming communities need robust Internet service to support their local economies, educate themselves, and generally improve their quality of life. Cooperatives have quietly proved that they can build Fiber-to-the-Home networks that are capable of speeds greater than 1 Gigabit per second (1,000 Mbps). More than 140 cooperatives offer gigabit service to residents or businesses. Urban and rural areas in the U.S. are defined based on population density calculations performed by the U.S. Census Bureau. Using the areas defined as rural and the latest FCC Form 477 data from June 2018, we found that 17 percent of people living in rural areas have access to fiber Internet service. 31 percent of the fiber service available in rural areas is provided by rural cooperatives. Two things to understand about that number:  1. The electric co-ops that are building are not reflected in the June 2018 data and it will be several years before the data catches up. 2. Only 3.1 million people live within the historical boundaries of telephone cooperatives and yet 56 percent of them could receive fiber Internet access from their co-op.  Small Internet Service Providers (ISPs) are also making investments in their rural communities, but large ISPs, such as AT&T and CenturyLink, have overlooked rural areas. This is where cooperatives can solve the problem. This brief explores the impact that rural cooperatives have already made on Internet access. It concludes with action steps and policy recommendations for universal access to high-quality Internet service in America. 2 Key Terms Federal Communications Commission (FCC) – A federal government agency 
 that regulates U.S. communications laws 
 and policies. Broadband – Defined by the FCC as 25 Mbps (download) / 3 Mbps (upload). Generally used as a shorthand for good Internet access. Cooperative – A non-profit, member-owned organization that provides a needed service. Members pay a small fee to join and have voting rights within the organization. United States Department of Agriculture (USDA) – A U.S. department that is a key source of grants and loans for cooperatives via its Rural Utilities Service (RUS) department. Fiber-to-the-Home – A type of network technology that physically connects each home to a fiber optic line. Fiber optic connections work by transmitting information as pulses of light. It has more capacity than Cable or DSL. “Gig” or Gigabit (Gbps) – Internet service speeds of 1,000 Mbps (more colloquially used to describe a connection that has no congestion regardless of what applications 
 are used). Internet Service Providers (ISPs) – Companies or organizations that provide Internet access. Form 477 – A specific FCC form to monitor the deployment of broadband service in the U.S. ISPs provide information at the census block level.
  • 3. Problem: Bad Rural Connectivity Rural communities face many challenges from dwindling populations to inaccessible health care. The limited opportunities available in rural homes drive many young workers to suburbs and metro regions, causing further population loss and further reducing opportunities for those remaining in their rural communities. The opportunities afforded by high-speed Internet access can breathe new life into rural communities, making them once again great places to live, work, and play. The rural U.S. is home to just 14 percent of the population, but as of 2017, covers 72 percent of the land area. In 2010-2016, researchers1 witnessed the first ever overall population decline in rural counties in U.S. history. Rural-2 urban migration is a fact of life, but this is the first time that the rural U.S. has lost more population than can be replaced by natural population growth. Although rural areas account for so little of the population, they have been difficult to connect with broadband Internet access. Only around 2 percent of urban Americans lack access to broadband service compared to 30 percent of rural Americans. 3 Rural economies suffer without high-speed Internet access. For small businesses, credit card and debit card transactions are delayed by slow connections. Potential entrepreneurs have difficulty accessing information online and promoting their concept without a reliable connection. Tourist towns need high-speed Internet access to attract visitors and encourage them to return. In a recent survey by statistics firm Statista, 80 percent of respondents reported that Internet access was crucial for hotel service—even more important than room service. 4 It’s not just the economy. Rural Internet access can improve health care and education. Nearly 7 in 10 teachers assign homework that requires Internet access. With sub-par connectivity,5 rural students are at a disadvantage when trying to complete their homework or independently enrich their education. High- speed Internet access also enables more educational opportunities, such as live interactive STEM courses from across 
 the state. 6 Nearly 30 percent of U.S. veterans live in rural areas, and 75 percent of them are more than 55 years old. This older segment of the7 population has unique health needs. Many rural communities, however, lack access to preventative services and rural communities have higher rates of chronic illness and poor overall health. Telehealth initiatives could8 alleviate some of these disparities by providing access to routine, preventative care. Veterans and the elderly can receive telehealth services in order to stay in their communities longer and receive more frequent care. Such a shift would also lower the cost of providing medical care. Despite this opportunity, rural regions are often stuck with dial-up, DSL, or satellite service. These technologies are too slow and unreliable 3 Local Voices - Michigan Before Allband Communications Cooperative brought telephone service and broadband access to the Robbs Creek exchange in the 2000s, residents of the rural northeastern Michigan community couldn’t contact emergency services. Ron Siegel, general manager, explained: “It was actually a very traumatic issue because people were dying…There was a young boy that drowned. There was a gentleman who had a heart attack, and the wife couldn't call for help… By the time she drove to Alpena and got in the ambulance back, he had died alone on the floor.”
  • 4. to support rural economies. Some states have developed programs to subsidize rural connections in addition to some existing programs from the federal government. However, none of these programs have the scale to ensure most rural regions have modern Internet access. Fortunately, rural cooperatives have stepped up, some taking advantage of these state and federal programs and others simply finding a way to invest in the technologies necessary to deliver better Internet access. The Cooperative Solution For nearly 100 years, rural communities have relied on cooperatives to bring needed utilities to their homes and businesses. In the early 20th century, private electricity companies refused to extend service to most of rural America. Private investors did not believe farms and rural towns had sufficient electrical demand and instead focused on building out to urban areas and more specifically industrial areas. The federal government stepped in with the Rural Electrification Act of 1936, setting the stage for rural utility cooperatives. Approximately 260 telephone cooperatives and 900 electric cooperatives today serve much of rural America. Electric cooperatives provide reliable power to more than half of the entire U.S. land area, nearly 2 million square miles in 47 states. More than 30 states have at least one telephone cooperative. Many cooperatives provide Internet service as a natural extension of their existing infrastructure. Telephone cooperatives started with Internet access by providing dial-up and DSL service over their copper telephone lines. Most telephone co-ops are already transitioning to all-fiber networks, upgrading everyone in their territory from the old copper phone lines of 50 years ago. More than 110 rural electric co-9 ops have embarked on fiber optic projects to increase Internet access for their members, a number that is growing rapidly from just a handful in 2012. 10 Why Fiber? Fiber networks offer faster, more reliable service than other types of networks. They have been hailed as “future-proof” infrastructure and have long technological lifespans. Additionally, fiber networks support multiple uses for homes and businesses, including Internet service, telephone, video, and security. Fiber networks have high capital costs initially, but lower operating costs than many other types of networks over the long-term. Many electric cooperatives may already have fiber in place for another purpose. Several 4 Local Voices - Virginia Central Virginia Electric Cooperative’s experience accessing its members’ properties to deploy fiber illustrates the community’s desire for better connectivity. President and CEO Gary Wood shared one story where a member initially refused the cooperative access to his land before realizing it was for the broadband network: “The crews are trying to figure out how to get through [the locked gate], and he came up to them and said, ‘The gate's locked, and it'll stay locked, and you won't come on my land. I don't allow co-op people here…’ The next day, one of our employees went by… and told him that we understood his issues and we wouldn't need to get on his property because he would've been the only one we would've served off of that fiber… He said, ‘Wait a minute, you were coming to build the — is this the Internet service?’ And he said, ‘Tell the crews to be out there tomorrow morning. I'll have the gate open and coffee waiting for them.’”
  • 5. started by building fiber optic lines to substations and large demand centers to increase the reliability of the electric system through better monitoring. This forms the backbone of the network for Internet access to businesses and residents. Cooperative Fiber Map The map on page 6 features the 350+ telephone and electric cooperatives or their subsidiaries that are currently offering fiber Internet access to homes or businesses. It is based on data from the FCC Form 477 December 2017 v1, and it is compiled at the census block level. This map may slightly11 overstate coverage: an ISP may claim a census block as served if an ISP serves, or can easily serve, at least one location in that census block. Rural census blocks often cover larger areas than urban census blocks. This map includes information on projects through December 2017; new projects that started in 2018 will not be reflected on 
 this map. Growth in Areas Covered by Cooperatives Map The map on page 7 shows the growth in areas where cooperatives offer fiber Internet service from 2016-2017. As with the other maps, it is based on FCC Form 477 data at the census block level. The areas depicted are networks newly present in 2017 that were not in the 2016 Form 477 data. Current and Predicted Areas Covered by Cooperatives Map The map on page 8 shows the current areas where electric and telephone cooperatives offer fiber Internet service, as well as the areas they are predicted to expand service, based on funding received from the Connect America Fund II Auction. RS Fiber Co-op in Minnesota is shown in its own category. This map is based on FCC Form 477 data from June 2018.  5 Local Voices - Minnesota In Minnesota’s farm country, residents recognized that they were being shut out of economic and educational opportunities due to the lack of connectivity. Jake Rieke, vice chairman of the RS Fiber Cooperative board, shared his story: “I was seriously considering having to move off the farm — a farm that was homesteaded by my family in 1862 — and moving to a town with better broadband access because I felt that there was a serious possibility that I was putting my kids at a disadvantage.”
  • 6. 6 See page 5 of the report for a detailed explanation of the map’s contents
  • 7. 7 See page 5 of the report for a detailed explanation of the map’s contents
  • 8. 8
  • 9. Cooperative Coverage: Top Five States According to FCC statistics, 70 percent of the landmass of North Dakota has access to fiber optic services from cooperatives. Another 9 percent has access to fiber from local independent companies. This table shows the percentage of other top states in landmass coverage by fiber from cooperatives. The Future is Cooperative The vast majority of organizations on this map are telephone and electric cooperatives that have served their communities for decades. But we know of at least two relatively newly formed cooperatives and have covered their stories on MuniNetworks.org. • In Michigan, a man wanted telephone service for his consulting business in the 1990s and the community needed 911 service for their families. They built the Allband Communications Cooperative that now manages a Fiber-to-the-Home network and supports rural research. 12 • RS Fiber in Minnesota came out of a consortium of rural towns and counties that recognized the need for 
 high-speed Internet access. 13 Cooperative Coverage North Dakota 50,000 sq. mi. 70.8% South Dakota 37,000 sq. mi. 47.7% Montana 34,000 sq. mi. 23.4% Iowa 12,000 sq. mi. 22.2% Minnesota 19,000 sq. mi. 21.6% 9 Resources MuniNetworks.org – Updated daily, a clearinghouse of information on Community Network projects across the U.S. • Community Connectivity Toolkit A DIY guide on how to build local power and get started on a community network project. • Cooperatives Build Community Networks Resources and information on cooperatives building community networks, including a list of projects across the country. Community Broadband Bits Podcast – Interviews on how communities are building community networks, including: • Episode 288 with Robin Anderson on North Dakota’s fiber networks. • Episode 243 with Mel Coleman on North Arkansas Electric Cooperative’s pilot project. • Episode 240 with Darren Farnan on United Fiber in rural Missouri. • Episode 229 with Jon Chambers on rural electric cooperatives’ potential. Reports – In-depth research on fiber projects for Internet access. • RS Fiber: Fertile Fields for New Rural Internet Cooperative (2016) A report on how communities in rural Minnesota formed a new cooperative to build a fiber network. • North Carolina Connectivity: The Good, the Bad, and the Ugly (2016) An overview of Internet access in North Carolina and how telephone and electric cooperatives are solving the problem. National Rural Electric Cooperative Association (NRECA) – Information on electric cooperatives in the U.S., their current work, and relevant policy. Rural Broadband Association (NTCA) – Information on advocacy efforts to advance communications services in rural America.
  • 10. Forming a new cooperative is challenging, which is why we believe the most common solution for rural regions not currently served by cooperatives will be for nearby cooperatives to expand their service territory. In North Carolina, Wilkes Telephone Cooperative is taking that approach through its broadband subsidiary RiverStreet Networks. After connecting its members, the co-op began to expand outside its service territory in both North Carolina and Virginia by acquiring other providers, merging with another telephone cooperative, and seeking federal funding. Currently, RiverStreet14 is partnering with North Carolina Electric Cooperatives to deploy pilot projects across the state. 15 Electric cooperatives have the potential to connect much of rural America. Although only 10 percent of electric cooperatives in the U.S. have a fiber Internet access project, many are now considering the challenge—crafting feasibility studies, attending broadband conferences, and collaborating with others in their communities. We have been told it is the most common conversation at meetings of rural electric co-ops. State Laws Since the first release of this report in 2017, state legislatures have begun to ease restrictions on cooperative broadband networks. Both Georgia and Mississippi have removed legal uncertainty by explicitly authorizing electric cooperatives to offer Internet access, and North Carolina has overturned a restriction that prevented electric cooperatives from accessing federal broadband funding.16 Other states are going one step further by enacting legislation to help facilitate the deployment of cooperative broadband networks. In 2017, Indiana passed the Facilitating Internet Broadband Rural Expansion (FIBRE) Act, which allows cooperatives to use electric easements for broadband networks.17 Legislatures in Colorado, Maryland, North Carolina, and Texas have since implemented similar laws. In some states, opposition from18 incumbent providers limited potential improvements for cooperatives, but these laws have tended to at least be steps in the right direction. Funding For Projects Fiber network projects have significant capital expenditures at the start of their projects, and even once completed, cooperatives may find that they need additional funding for marketing campaigns or computer literacy projects. A majority of cooperatives have taken advantage of at least one of several federal and state funding programs to make these investments feasible, while some have built fiber networks without subsidies. Some cooperative projects received grants or loans from the federal stimulus program, the American Recovery & Reinvestment Act (ARRA), which included the Broadband Technology & Opportunity Program (BTOP) administered by the National Telecommunications and Information Administration (NTIA) as well as the Broadband 10 Local Voices - Missouri In central Missouri, Co-Mo Electric Cooperative’s fiber network saved members approximately $20-25 per month on Internet access and telephone service, according to Randy Klindt, former general manager of the co-op’s broadband network. Klindt shared: “When this project is complete, that's about $1-1.5 million of disposable income put back into our member’s pockets that they can spend on other things.”
  • 11. Initiatives Program (BIP) administered by the U.S. Department of Agriculture (USDA). Other cooperatives took advantage of the Federal Communications Commission’s (FCC) Connect America Fund (CAF) Rural Broadband Experiments Program. Grant recipients included Allamakee-Clayton Electric Cooperative in Iowa, BARC Electric Cooperative in Virginia, and Paul Bunyan Telephone Cooperative in Minnesota. In 2018, yet more cooperatives participated in the CAF Phase II reverse auction, which awarded $225 million in subsidies to 35 rural electric co-ops. 19 Many of the telephone cooperatives have wisely reinvested support from the FCC’s Universal service fund in recent decades to slowly expand fiber optic service across their territories. As an example, North and South Dakota regularly feature among the fastest states for broadband due to their telephone 
 co-ops having built so much fiber. They also20 have more square miles served by co-ops than any other states. When the area is broken down by census blocks, co-ops cover 70.8 percent 
 of North Dakota and 47.7 percent of 
 South Dakota. The USDA currently manages several programs as well. Some are through its Rural Utilities Services (RUS) division and others are through programs like Cool & Connected, which provides planning assistance for broadband deployment and community development. RUS manages the Community Connect Grants, the Distance Learning & Telemedicine Grants, the Farm Bill Broadband Loans & Loan 
 Guarantees, the Rural e-Connectivity (ReConnect) Pilot Program, and the Telecommunications Infrastructure Loans & Loan Guarantees programs. 21 Some cooperatives initially applied for federal grants and loans, but were not dissuaded when rejected. Co-Mo Electric Cooperative in Missouri applied multiple times for ARRA funding, but each application was rejected. 
 The communities still clamored for service, so they moved forward on their own. Co-Mo Electric self-financed a gigabit Fiber-to-the- Home network. In addition to federal funding sources, co-ops are often eligible for state and local grants. The Minnesota Border-to-Border Broadband Grant Program has awarded funds to several cooperatives, and multiple states looked to it as a model for their own grant programs. Local22 government funding for connectivity is rarer, but in Minnesota, numerous counties have provided loans and grants to electric and telephone cooperatives for broadband projects, often to supplement federal or state funding.23 For example, Cook County, Minnesota, offered Arrowhead Electric Cooperative a $4 million grant after the co-op was awarded $16 million in stimulus funding. The story of rural Internetification is just starting to be told, but it is clear that cooperatives will have a large role. The sooner policymakers realize that and prioritize cooperatives as targets for subsidy programs, the faster and less expensive it will be to connect everyone. 11
  • 12. Recommendations Federal and state governments must recognize that cooperatives are one of the best tools for ubiquitous, rural, high-speed Internet access.
 1. Design funding programs with cooperatives in mind. a. Letters of credit from the largest banks may be hard to come by for smaller cooperatives. b. Make applications as simple and easy as possible. Staff time is limited at small cooperatives. c. Develop grant and loan programs rather than creating incentives in the tax code for infrastructure investment. 2. Encourage cooperatives by removing barriers and encouraging partnerships. a. Remove barriers to electric cooperatives exploring the possibility of fiber network. Cooperatives should not be prevented from applying to federal grants that they are eligible for because of malformed state laws. b. Encourage partnerships, including with existing muni networks. 3. If you live in a rural area, talk to your neighbors, co-op manager, and board members about the potential for Internet networks. Successful cooperative projects are community-led projects. About 70 percent of electric cooperatives have less than 10 percent average turnout for their board member elections. 24 a. Co-Mo Electric Cooperative in Missouri had excited members go door-to-door and gave out yard signs to encourage 
 folks to get involved with the project. 
 Many community members also wrote letters of support for the project. b. In New Mexico, the local business community voiced their needs at Kit Carson Electric Cooperative board meetings to encourage the co-op to build a fiber network. c. Delta Montrose Electric Association in Colorado overcame an initial reluctance to develop and Internet access project after overwhelming demand from its members. 25 4. Make it clear that rural connectivity is about more than entertainment. Farmers, programmers, and entrepreneurs all need high-speed Internet access. Rural connectivity also supports needed research. a. Allband Communications Cooperative started a non-profit called ACEWR, which collaborates with universities and research institutions across the United States. It is a prime spot for research on local wildlife, endangered species, and conservation projects. The nonprofit also has an online workforce development program to train locals in new skills, empowering them to succeed in the 21st century economy. 12 About the Authors H. Trostle is a Research Associate in the Community Broadband Networks Initiative at the Institute for Local Self-Reliance (ILSR). Christopher Mitchell is the Director of the Community Broadband Networks Initiative at ILSR. Follow him on Twitter @CommunityNets. Additional ILSR staff, including Katie Kienbaum, Research Associate, and Michelle Andrews, GIS and Data Visualization Researcher, contributed to updates of this report. For up-to-date information, follow @ILSR and @MuniNetworks on Twitter. Learn more at MuniNetworks.org and sign up for the newsletter.
  • 13. Endnotes USDA Economic Research Services defines rural as the total population of nonmetro counties. 1 https://www.ers.usda.gov/topics/rural-economy-population/population-migration https://www.ers.usda.gov/topics/rural-economy-population/population-migration/recent-population-change2 The FCC uses the 2010 census block identification to estimate rural population. 3 https://www.fcc.gov/reports-research/reports/broadband-progress-reports/2018-broadband-deployment-report https://www.statista.com/chart/9620/hotels-just-give-me-wi-fi4 https://www.nytimes.com/2016/02/23/technology/fcc-internet-access-school.html5 https://muninetworks.org/content/community-network-services-cns-brings-stem-education-and-more-rural-6 southwest-georgia https://www.legion.org/veteranshealthcare/ruralhealth7 https://www.ruralhealthinfo.org/topics/rural-health-disparities8 https://muninetworks.org/content/rural-cooperatives-page9 https://muninetworks.org/content/rural-cooperatives-page10 https://www.fcc.gov/general/broadband-deployment-data-fcc-form-47711 https://muninetworks.org/content/rural-telephone-cooperative-forges-its-own-path-michigan12 https://muninetworks.org/reports/rs-fiber-fertile-fields-new-rural-internet-cooperative13 https://muninetworks.org/content/north-carolina-co-ops-merge-connect-rural-communities-across-states14 https://muninetworks.org/content/co-op-cooperation-rural-north-carolina-riverstreet-working-electric-co-ops15 See http://www.legis.ga.gov/legislation/en-US/Display/20192020/SB/2, http://billstatus.ls.state.ms.us/2019/pdf/16 history/HB/HB0366.xml, and https://www.ncleg.gov/BillLookUp/2019/S310 for the respective bills https://muninetworks.org/content/indiana-eases-easements-electric-co-ops-fibre-act17 See https://leg.colorado.gov/bills/sb19-107, https://capitol.texas.gov/BillLookup/History.aspx?18 LegSess=86R&Bill=SB14, and https://www.ncleg.gov/BillLookUp/2019/S310 for the respective bills https://www.electric.coop/fcc-approves-220-million-33-electric-cooperatives-provide-rural-broadband/19 https://muninetworks.org/tags/tags/north-dakota20 https://www.rd.usda.gov/programs-services/all-programs/telecom-programs21 https://mn.gov/deed/programs-services/broadband/grant-program/22 https://muninetworks.org/content/minnesota-counties-help-fund-cooperative-broadband-projects-economic-23 development https://ilsr.org/just-how-democratic-are-rural-electric-cooperatives24 https://muninetworks.org/content/dmea-co-op-serving-broadband-and-innovation-colorado-community-broadband-25 bits-podcast-314 13