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Your Voice for Broadband Choice

 

Dear Holston Electric Members,

Thank you all for supporting our first-ever member meetings! We had amazing member attendance, over 2,000, and collected more than 1800 lbs. of food items for Of One Accord Ministries. 

We hosted these meetings to cultivate a culture of member engagement. In fact, we used the occasion to educate our members and garner feedback on Broadband Choice, which is why we asked our members to take part in a survey to learn a little bit more about how they currently use broadband.  Equally important, Holston Electric wanted to know member interest in broadband service, and our members shared a lot of valuable information through the survey.  These responses will enable Holston Electric Cooperative to make educated decisions going forward.

 

What We Learned:

Nearly 39% of Holston Electric Cooperative members do not have access to high speed internet.  Of those with current home access to broadband, nearly 27% use primarily cable connection.  However, many members, about 26%, utilize satellite internet, which include data caps.  Nearly 6 out of 10 respondants have been paying up to $100 per month for their internet service.  Unfortunately, more than 55% with existing service were dissatisfied with their provider, as cost and speed were the main culprits.  When asked what our members would use broadband for the most if they had satisfactory service, nearly 45% stated quality of life, including family connections and hobbies.  The second use would be personal finance and banking.

As Holston Electric Cooperative expected, access to quality broadband was important to around 95% of the respondents.  Nearly 80% of those who responded said they would be willing to sign a petition or pledge to be a broadband user if HEC or its preferred provider offered broadband, but only about half were able or willing to pay $75 per month if new broadband was built for all members.

 

Questions and Answers from the district meetings:

  • Why are we talking about broadband now? We’ve had this problem for last 10-20 years. What exactly is available that makes it more enticing to do it now than 10 years ago?

It is a need in our service area. It is part of the infrastructure our community needs to grow and flourish. The internet is becoming as essential to a community, a household and an individual as electricity was in the 1930s.

  • When you say broadband, what do you mean?

Primarily, this refers to the internet. As our work continues this is likely to incorporate the other elements most people think of – video and phone. For Holston Electric Cooperative, it also involves Smart Grid – a technology that uses fiber to enable our electrical systems between our substations and offices to communicate with each other.

  • If Holston offered broadband, would it include ala cart, packages or bundled services?

It is too early to say as we are at the very beginning of this broadband exploration. What we can say is, if Holston is able to participate in offering broadband, the products and programs offered would greatly depend on the commitment of our membership to signing up, and what your preferences are.  Congress has long proposed a la cart, but cable programmers like ESPN, Turner, and Disney are unwilling to embrace this delivery format.

  • Isn’t there a risk that fiber will go out of fashion?

The nature of fiber optics makes it somewhat future proof as capacity is unlimited except for the equipment required at each end.

  • Where is Holston proposing to do a pilot?

First, the proposed pilot project is for Smart Grid, a technology designed to enhance our electrical system and services. As of now, this Smart Grid pilot is still in the research phase, waiting on an outside consultant to complete his study. The location is still to be determined but likely to be in an area with no broadband access.

  • What are the options that HEC might pursue?

Holston has three options relating to broadband service.

Partner with a telephone cooperative that today can legally provide broadband service.

Find another provider that is willing to invest in getting fiber to all our rural members’ homes.

Provide broadband on our own, if sufficient funding resources are identified to make it a financially responsible project for our cooperative.

  • Do you have to have a Smart Grid meter to get broadband?

No

  • How long would it take for everyone to get service?

Holston currently is building about 15-20 miles of fiber a year for its Smart Grid backbone. With members across 1,700 miles of line, we would have to greatly increase the number of contractors to carry out this effort – with the big assumption that sufficient funding could be secured to pursue it on our own at all.

  • What about at 5G license?

When the FCC auctions off spectrum, companies spend hundreds of millions of dollars to these licenses. 

  • What about broadband over powerlines?

Broadband over powerlines proved not practical to scale. It is a very cumbersome way to do it. We don’t know of any communities that advocate for it.

  • Why have so few electric cooperatives chosen to provide broadband?

Mainly because of customer density where electric cooperatives operate as compared to municipal broadband systems such as those that have been built in Morristown, Bristol and Chattanooga.  Simply put, the more customers per mile the better chance of financial success of the broadband system.

  • Why have some electric cooperatives been able to provide broadband successfully?

Of the two dozen or so electric cooperatives that are building or have built broadband systems, each electric cooperative looked at its own unique situation, the needs of its’ membership, the merits of their broadband business plans, and were able to find sources of grants or funding capital to break even within a reasonable period of time.

  • Can Holston’s commercial customers help offset the cost of installing fiber to the home?

    • Commercial customers would be attractive broadband customers.  However, most commercial customers already have a fairly high level of data service provided by an existing provider like AT&T or Charter.  HEC or its’ partners would have to compete aggressively to win those commercial customers.

  • What would you expect to have to charge to provide internet, or the triple play?

HEC would base its’ prices and packages on what is currently being provided across our service area.  Members should keep in mind that the much-advertised triple play bundle by a well-known provider of $29 for each service is set artificially low to attract new customers.  After the first or second year, the full price of the triple play bundle goes to over $200 per month.

  • What kind of loss is Scott County Telephone Cooperative experiencing as a result of its 50 percent sign up rate?

We don’t believe SCTC is experiencing a loss in their Stanley Valley service area as they are pleased with the initial service penetration of 50%.  SCTC is optimistic the take rate will increase over time as members’ satellite contracts expire.

  • How much does Scott County charge for its services?

Information about SCTC services are available on their web site at www.sctc.org

  • Who is Scott County’s competition in Stanley Valley?

SCTC does not have a wireline broadband competitor in Stanley Valley.  However, some members, but not all, have the ability to get satellite broadband.

  • If Holston offered this service would it include 911?

E-911 services would most likely be part of a telephone service offering.

  • What’s the biggest obstacle to getting this moving?

The capital (money) needed to build a fiber optic system all over the HEC territory could be as much as $120 million.  Since there are not significant grants available, HEC would have to take on long-term debt. At this time, no lender will loan 100 percent of the money needed for construction at one time. Additionally, there is a significant financial risk to HEC if members fail to support the broadband project.

  • I have unlimited data; would Holston’s offer the same?

Most likely HEC could offer a package with unlimited data at several different levels of download/upload speed. Further, a 100 percent fiber optic system can offer symmetrical download and upload speeds as compared to typical telephone and cable company services.

  • What would you expect to have to charge to provide internet, or the triple play?

Internet pricing would most likely be $60-120 per month depending on speed and other technical features.  The triple play could be offered at $175-$225 per month.  All packages and pricing would have to be competitive with the current providers in the market.  Pricing would be set using conservative take rate estimates. If after five years or so, the HEC membership exceeded initial estimates for take rate, HEC could re-calculate rates and adjust as appropriate. Video programming costs are rising about 10 percent per year due to broadcast TV and sports programming fees. Wholesale internet and telephone costs have come down and in recent years, stabilized.

 

There are still many variables to address before we know how much or how little HEC will be involved in broadband service, but we plan to keep going until we find the right solution for our cooperative.

 

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