On Jan. 30, 2019, Governor Phil Bryant signed a bill into law allowing Dixie Electric and the other electric cooperatives in the state to provide broadband or high-speed internet service. We have received a number of questions about this, so I wanted to bring you, our members, up-to-date on what this means and how it affects the electric cooperatives in the state, specifically Dixie Electric.
The potential is significant. According to some reports, Mississippi ranks No. 49 in the U.S. in broadband availability. By allowing electric cooperatives to provide the service, and other companies stepping up, Mississippi could begin to move up in the rankings. Education and remote health care are just a couple of the areas that could benefit as availability is potentially expanded into the rural areas of the state.
There are obstacles, namely cost. If it were easy and inexpensive to do, the telecommunications companies would have already provided broadband service to rural areas, and the electric cooperatives would not need to get involved. But it’s not easy, nor is it inexpensive.
There are also questions. Are there enough households and businesses in our service area? How many of those will it take to make this venture feasible? If so, what type of business structure do we form? Do we create a subsidiary or form partnerships? Will we need to hire additional employees and how many? Are there people available to hire with the necessary technical skills? These are just a few of the questions that will need to be addressed as we consider moving forward with broadband.
Yet electric cooperatives are uniquely positioned in the state to take broadband further into the rural areas because we are already there. And our business model is different so we should be able to provide broadband service in a manner similar to how we provide electric service now. Over the next several months or longer, electric cooperatives around the state will begin conducting studies to answer these questions and others to determine if this is a venture that makes economic sense for the cooperative and its members. Not every electric cooperative in the state will be able to offer broadband. They simply will not have enough households or businesses who will take the service for it to be feasible.
What exactly does the new law do? It requires that electric cooperatives do a feasibility study to determine if this can be done without putting the electric cooperative at significant risk. It allows the cooperative to provide the service through several options. Cooperatives may form subsidiaries, enter partnerships, or form other types of affiliates to provide broadband service. However, the law prohibits an electric cooperative from providing the service through the cooperative itself. It must be done through a separate company, maintaining separate accounting books. A cooperative cannot use electric revenue to provide broadband service, again limiting the risk to the electric cooperative and its members.
The law also requires the cooperative, if it decides to provide broadband service, to commit to making broadband available to all its members at some point. Importantly, it does not require a cooperative to offer broadband and it prevents a cooperative from requiring a member to take the service.
What does this mean for Dixie Electric and its members? First, we think providing broadband service to our members is a worthwhile endeavor and could have immeasurable benefits. It will be very expensive. We plan to do multiple feasibility studies to ensure, to the greatest extent possible, that providing the new service can stand on its own. If the studies show that it is financially viable, we would begin developing business plans to determine the best method for deploying the service.
Finally, we will need patience from our members. The studies will take time to do and verify. It will take time to develop business plans. And it will take years to make it available to all our members if we can do it at all.