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What You’ll Learn
Rural broadband build-outs by electric cooperatives have been remarkably successful, according to a recent report from NRTC and NRECA. Despite rising labor and material costs, most co-ops report higher than expected take rates and a 9% internal rate of return. Notably, among the 88 co-ops surveyed, serving their community was the biggest motivational factor listed, with revenue lagging significantly behind. Two of the report’s architects share more insights in this episode. The full report is available online from NRTC.
Show Notes
Transcripts have been lightly edited for clarity and readability.
Intro: Rural Broadband Today is a production of Pioneer Utility Resources. Broadband, we need it for work and for school, for our health and our economy. What’s being done to bring broadband internet access within reach of every American? Let’s talk about it now on Rural Broadband Today.
Andy Johns: Thank you for listening to Rural Broadband Today, where we take a look at the issues and the people shaping the rural broadband story across America. I’m your host, Andy Johns, and this program is produced by Pioneer Utility Resources. Please share this episode with your network and help us tell the rural broadband story. Today, we’re going to be talking about the 2022 Rural Electric Cooperative Broadband Benchmarking Report. And I’ve got two great guests who are joining me. I’d like to welcome Rudy Tober, who is CMO of NRTC Broadband Solutions. Rudy, thanks for joining me.
Rudy Tober: Thank you for having me.
Andy Johns: And we’ve got Paul M. Breakman, who is the vice president of Cooperative Business Solutions for NRECA. Paul, thanks for joining.
Paul M. Breakman: Hey, Andy. Thanks for having me.
Andy Johns: Well, there’s a lot to dig into here. There’s a lot of meat in this report. I was glad to get in there. I think it provides a very good insight about some of the good work being done across the country from rural electric cooperatives in building out rural broadband. But Paul, let’s start with you. What is the purpose of a report like this, kind of what’s the goal, and how is NRECA and NRTC involved in making it come about?
Paul M. Breakman: Yeah. Thanks, Andy. So NRTC first published a Rural Electric Co-op Broadband Benchmarking Report back in 2020. And over the pandemic the a number of co-ops who have deployed has increased. And NRECA, we now have about 210 members who have deployed broadband on some level. And so we thought when NRTC came to us and said they wanted to do an update and would we be willing to collaborate, we took the opportunity to get involved and partner with them on this report. And so this report, this time around, it has 88 members’ data, and the goal was really to catalog the results to help co-ops that are in the business, going into the business, sort of evaluate what the different technologies are and the business cases and the success of those deployments. And so it was a great collaboration, and it was a real honor to be part of that effort that NRTC led.
Andy Johns: So we’ll dive into some of the specifics, because you touched on several of the things that I want to talk about there, but Rudy, let’s go to you. What are your top line takeaways? What’s kind of the headline? What are the things, at least for me, that I would go to the dinner table and be like, “Hey, this really interesting report came out and these are the top headlines.” And my family would not be as interested in it as I would be. But what are the big takeaways or top line things from you, Rudy, from this report?
Rudy Tober: You know, I would say, and I’ve been at this a long time working with electric cooperatives and working on broadband deployment. And I would say the top takeaway for me is that these projects are successful. I mean, there was a time years ago when I would meet with cooperatives and they would say, you know, this was before there were 200 deployments, when there were only a handful of deployments. And folks would say, “Hey, how do we know this is going to work? It’s a big financial investment. How do we know people will buy internet services from an electric cooperative? How do we know what the take rate is going to be? How do we know that we’ll be able to pay back all of the money that we’re borrowing?” And I think what this report does, and the one that we started with as Paul mentioned back in 2020, really verifies that these projects are successful. Take rates above 50% after a couple of years. Internal rates of return of 9% on average for the 88 cooperatives that participated in this project. So it’s really heartwarming for me to see this because, again, there was a time when cooperatives were very skeptical and very nervous about doing this. And I think this report and the fact that it covers the whole country and it covers many, many participants just proves that this has been a good thing to do, and it’s been very successful on a nationwide basis.
Andy Johns: Outstanding. And there’s a lot of things in there that we’ll unpack as we’re talking later. Paul, what were the big headlines for you? What was the takeaway when you look at this report?
Paul M. Breakman: So just when I read some of the results and some of the data, some things that stand out which were obvious, and we’ll talk about those as sort of the evolution of technology – where we were two or three years ago and where we’re headed now and over the next 48 months. But something that really stood out to me was – and I knew this was going to be an issue. And I don’t want to downplay the fact that workforce developments are a challenge right now and in these models, right? So staffing – members that go into the broadband business use all kinds of mixed staffing models, and there’s no right way to do it. But what we saw from the report is that, you know, outsourcing is hugely important, and partnering is hugely important on the resource side. When you talk about the business of broadband versus the traditional electric supply business, which our members have done for over 75 years, it’s a game changer. And the right folks to operate those networks are really different than the traditional folks that have operated the electricity systems. And so there are some difficulties in terms of materials procurement and hiring the right folks. And the report highlighted that, good or bad. It’s important that we acknowledge that there are challenges in this business, and they’re different than the business that we have been in.
Andy Johns: I think so.
Paul M. Breakman: Yeah.
Andy Johns: When you say, let’s define that term. You said “mixed-staff models.” You’re talking about contractors versus in-house, or partnering with other co-ops? Or it could be a number of things.
Paul M. Breakman: Right? The answer to that question, Andy, is yes. So what we saw from the data from, and I know it from talking with some of the members, but the report really highlighted it is that staffing levels will vary depending on how big your system is. And some folks will outsource on the IT side, the help desk functions, and cybersecurity functions and partnering with different vendors to help find the right workforce that’s going to support your network buildout. And there’s no right one model. And so it’s what co-ops do. You know what, we hear it a lot. You’ve talked to one co-op, and you’ve talked to one co-op, right? And it’s the same with these broadband buildouts. You know, the difficult issues tend to be a, as I mentioned, reporting and compliance and materials procurement and then the hiring piece. And in order to solve those challenges, we’ve seen all kinds of different partnerships that are successful. And some co-ops just increasing their staff and training their existing staff.
Andy Johns: I think so. Thanks for explaining that one, and kind of defining what you’ve seen there. You were saying something else, I think, before I cut you off. Did you want to go back there?
Paul M. Breakman: No, in one of the pieces that stood out a little bit is that – and in Washington NRECA spends a lot of time on the Hill and at the agencies talking about broadband and rural broadband and the initiative and how do we get funding from Washington and at the state level to the members who are deploying broadband. And so it was interesting to see the data that 92% of our 88 respondents had received at least one federal or state grant, and over 60% of those had received two or more grants. And so it’s nice to see and nice to hear about money flowing. And there’s different levels. But, you know, we’re highlighting the work, you know, from all this funding that’s going to be coming from the bipartisan infrastructure bill. And we’ve got $62 billion related to that funding effort and $42 billion that’s going to flow through the states. And so, the data we saw from this report is aligned with, hopefully, what’s going to happen over the next 36 to 48 months coming out of Washington and through the states. So it was successful deployments are tied to successful financing and funding models.
Andy Johns: It’s going to be a very interesting next few months as that starts to come out. Paul, I’d like to come right back to you, because one of the things – I don’t know that it was a surprise, but I think it’s worth noting. So the motivations to invest in broadband from the respondents to the survey, and they were asked as a “1” being least important and “5” being most important. With an average of 4.7, the community service/economic development was the number one motivation for electric co-ops to get into broadband. And then the second one was to strengthen the electric business. Things like smart grid, that got an average of 4.0. But then the revenue expansion and diversification got a 3.5 out of 5, which is still a high score, but it’s not as high as I would have thought. And I’m not surprised that just knowing electric co-ops that the motivation to serve members and serve their communities was the number one, but I am a little surprised at how different it is, because you hear a lot of folks talk about needing to diversify revenue, that sort of thing. So did any of that surprise you, or particularly the revenue diversification was a lower motivating factor?
Paul M. Breakman: So I’ve said this in other places. Co-ops first went into the electricity business 75 years ago, not because they were in love with the commodity of electricity. It’s because the challenges associated with getting those investor-owned utilities to serve rural America. And so here we are again, right? The commodity here is broadband, and it’s a way to serve our communities, and the need is addressing what’s needed in those local communities. And that’s the economic push and the business of broadband are very closely related. And so what we’ve seen – and this report really highlighted that – is that the revenue diversification, while important, certainly because you want to leverage and hedge your investments, really the things we do for our communities is based on helping our communities. Not because we love the business of broadband, although it’s exciting, but it could be anything in terms of serving. And co-ops serve their communities in many ways, not just broadband, but economic. There’s all kinds of economic pieces associated with how we are serving, whether it’s building out the deployment on the broadband side or partnering with your local community to help your schools. It can be all kinds of things. And so I wasn’t surprised at all, Andy. You know, it gives me comfort knowing that we are doing the right thing. We’re mission driven organizations, and that held true with the data. I mean, Rudy, I think you would probably agree here.
Rudy Tober: Yeah, I think, Paul, that was a great answer. And, you know, I spent a lot of time, as I think I mentioned earlier, with cooperatives directly working on their feasibility studies, know, working with them to try to figure out is this going to work, meeting with their boards, etc. And the motivation was always kind of coming up from the bottom. In other words, their board members were saying, “Hey, we have a problem in rural areas. We just can’t get good broadband service.” And 80 years ago, cooperatives came together, and they solved this problem related to electricity. And now the question is, can we find a way to solve this problem? You know, when it comes to broadband service, smart grid and all of the other things that are coming along. And for me, it was just a pleasure to see cooperatives come together and say, “You know what? We’re going to venture into these things. We’re not going into these businesses necessarily because we think we’re going to make money at it. But we are going into these businesses, or we’re going to deliver broadband, because we believe it’s going to help our community. It’s going to allow people to stay in our area. It’s going to attract businesses, jobs, etc.” And so, you know, just kind of agreeing with everything that you’re saying that that the motivation for cooperatives isn’t really a financial one. It’s one of helping their communities.
Paul M. Breakman: Yeah. And to your point, Rudy, I think the emergence of what we call the smart grid and other IT related services, it certainly provides a great opportunity for the industries to collaborate and to partner for new services and, in the co-ops’ cases, even in new revenue. But that’s certainly not always the driver for our members. It goes back to the mission – to help our communities.
Andy Johns: I think that’s tied to the next point that I had seen looking through it. If I’m reading this right, Rudy, 80% of the areas surveyed were growing in jobs and population. And that kind of goes against what you hear a lot of time – a lot of doom and gloom about rural America and population and jobs and all that. So, you know, can you tell from there, number one, am I reading that right? And then number two, were a lot of these areas are growing already? [Do] we have kind of a causation correlation thing there? Or does the data suggest that broadband is the driving factor with that? That was an exciting number for me to have 80% of these areas growing, so unpack that for us a little bit.
Rudy Tober: Yeah, and I think the question, the specific answer there, the 80% was – so the question was, did the cooperatives in building these projects see an increase in population, businesses or jobs? Any of the three. And I think when you look at this data, if you go out to the five year window, and there are now a number of broadband projects that have been in business for five years, fully 80% of those cooperative saw at least one of the three. And in most cases many saw more than one of the three. So fundamentally, to answer your question, the answer is yes, this is having a positive impact on these communities, just like they were hoping would happen. And folks are seeing people move back in. I mean, again, I go back down memory lane. I remember being in meetings where people would say, you know, “Our cooperative is actually dying.” I mean, one of the first projects we built in Missouri, which was probably now eight or ten years ago, they said, “You know what? People are moving out of our area because they can’t get good broadband service. Businesses won’t move into the community because they say, ‘You know what? Without a good internet infrastructure, we’re just not going to move that plant or that office or that business into the community.’”
Rudy Tober: And then people were literally saying, “Hey, you know, I’m starting to work from home. I need an internet connection. I’m communicating with my office on a regular basis. And I can’t just live in a community where my internet service is faulty or doesn’t work.” So that one project that I’m thinking of, in fact, I mean, that began to reverse after a few years. And the nearest community, the nearest city, that folks lived in, the cooperative when we started there, they originally said, you know, the average person lives on about 80 acres in our cooperative. So this is a very rural area. And people were moving out. And then after the broadband network was built, and they were delivering, you know, super fast symmetrical high speeds and everything that people were looking for, they literally said people were moving out of the nearby city when they realized, “Hey, I can live on 10 or 20 acres, and I can get a symmetrical gigabit internet connection at my home. And so now I can have the best of both worlds. I can live in a rural area, but I can have all of the modern conveniences of an advanced broadband network.” So, yeah, to answer your question, we are seeing that across the country.
Andy Johns: So – go ahead, Paul.
Paul M. Breakman: That’s a great point. And so, Andy, when we looked at the data, two things about it, right? So the economic impact, the data indicates it’s significant. You’re talking about an increase in electric meters, increase in population, new businesses, increase in home building and plant communities and an increase in jobs. What we saw over the, and I actually wrote a piece for NRECA early on in the pandemic that was called – I forgot – it was sort of broadband as an essential utility and how the pandemic working from home and the need for speed and all these things, really highlighted that. And the data from this report really highlights that. And not only it’s sort of, it also solidifies some work the NRECA did a few years ago in terms of broadband. It was the loss of economic value to these communities that don’t have broadband. And so we’re seeing the flip side of that. And it really solidified what we thought we knew, that connected communities are generally healthy communities.
Andy Johns: Now we let off the call talking about the top line takeaway being that a lot of these buildouts are successful. I know, Rudy, you’ve been involved in a lot of feasibility studies. NRTC does a ton of those. Most of that needed take rates that I’ve seen from working with our clients, from those feasibility studies, it’s like 40 or 45% is kind of the way that those seem to be built. What this survey indicates is that for those who have been doing it at least two years, it’s a 50%, or a little more than 50%, take rate for people signing up for service. And a 9% rate of return, like you mentioned earlier. That’s better than most folks expected from what I’ve talked to and from what I’ve heard. And I know that that varies with a lot of the folks that we work with. They may get a really high take rate in an area without any competition, and then an area with a lot of competition, it’s going to be lower. Do you think that take rate and that rate of return, do you think that holds up as buildouts continue?
Rudy Tober: Yeah, and I think, you made the point where it does vary by area, right? But I think the great news is that you pointed out that take rates are very strong right? On average, again, this is 88 cooperatives around the country. After two years, a 52% take rate, which is very strong and very solid. And like I said, I go back to a time when people would sit in meetings and say, “How can we – we see your feasibility study, and you’re saying, you know, we’re going to put a 40% take rate in here. How can we know that people will really buy broadband from us? And what if our take rate is 10% or 20%?” So I think the good news in this survey is that in 88 cooperatives, we see take rates much higher, right, than those initial projections. And I would also throw in that we, NRTC, when we do a feasibility study, we want to be a little bit on the conservative side, right? Because nobody’s unhappy when their take rate comes in higher than we projected. But the reverse might be true if it came in lower. So again, great news, really solid take rates.
Rudy Tober: But then to your point, I think the service area itself, the electric footprint where the cooperative is building the broadband network makes a difference. It makes a difference, right? More competition would lead to a more challenging environment. And that’s really why we would recommend doing a feasibility study, because you’ve got to look at all of those factors. So we said it here earlier. If you’ve seen one cooperative, you’ve seen one cooperative. It’s very important for any cooperative to look at the makeup of their service area, and if they have a portion of the service area where there’s already two or three entrenched competitors, maybe that take rate in that area is going to be a little bit lower, or maybe they don’t want to build that area, whatever. They need to make those decisions, but a good feasibility study will help them. And I think the proof is out there that the cooperative model where you’re providing a superior product with fiber to the home, you’re providing excellent service, and you’re pricing it in a fair manner, that formula is a great success formula and has worked well for cooperatives.
Andy Johns: That superior – go ahead. I was taking us towards technology, which is a dangerous spot. Go ahead, Paul.
Paul M. Breakman: No, I just wanted to add some perhaps some color commentary. When I looked at the data and saw these these take rates, I was happy, right? Because that just indicates that co-ops remain trusted partners of the communities. And, you know, this is a competitive business. And I talk about that a lot when we talk about co-ops deploying broadband. And doing things like developing revenue estimates can be tricky, and that’s especially when you’re talking about a competitive market where co-ops generally lack experience in selling services, right? We’ve never had to sell our service. And revenue estimates are built up from pricing and take rates. And so when I see a 50% and higher take rate, it’s indicative of the work that co-ops have done on the front end to make sure they’re getting these estimates and numbers right. And something I was happy to see, because a lot of times you build into these feasibility models, what we call a customer churn rate, right, which is turnover due to competition. And it happens frequently. And you’d like to see about, you can expect about a 2% month churn rate, right? And the data we’re seeing is that, as I mentioned, we are the trusted partners in those communities, and we are the first providers that the members are looking to. But that takes work, right? And so beyond deployment, you have to think about – and the data really confirms this – you have to really think about the marketing considerations and the ongoing operational considerations and things like legal risks and tax risks and all these things. And so to Rudy’s point and to, Andy, your point, that 50% seems pretty healthy. I would agree. But it’s really a testament to the work the co-ops do on the front end and remaining the trusted partners in those communities.
Andy Johns: Seeing what I do all day, every day, I do appreciate you bringing up those marketing considerations. So that’s part of – we always say before they connect to your service, you’ve got to make a connection with them. So, you know, however that may be. Communicating, building up some of that demand, so they’re ready to go. And we’ve got – none of us on here are engineers. But Rudy had mentioned the technology. One of the things that stood out to me from this report, it talks about the majority of the investment is in fiber, and there’s more uses of XGS-PON – the networks for the multi-gig service. How is that different than maybe what – Rudy, we’ll start with you – but how is that different than maybe what you expected, or what previous surveys had said? And why do you think multi-gig ready buildouts are becoming more and more common?
Rudy Tober: You know, I think my answer there would be – and remember, I’m a marketing guy, not an engineer. So I’m giving the kind of the marketing answer. But fundamentally, broadband is a continuously evolving business. And the one thing that’s been true, and I’ve been in broadband for a very, very long time since I got out of college. So, you know, I worked for the cable companies in the past, the big broadband providers, and then switched into the cooperative broadband. And it’s always been a speed race, right? So we’re always increasing speeds. And one of the surprises that came out for me in the benchmarking report was that we actually have a number of cooperatives that are offering multi-gig standard packages. So a two gigabit symmetrical internet package as standard service, and that surprised even me. And I think it’s because the demand is out there, right? Businesses are moving into cooperative areas. People are saying, “Hey, I want the fastest possible speeds. I want the best possible service.” And so to your question, I think folks are always upgrading the technology that they’re deploying. So we see it in new projects where they’re saying, hey, I’m getting ready for multi-gig internet service. And then we also see as people are rebuilding maybe an older project or extending into new areas, they’re deploying the most current technology. And I think it will always be that way. There will be a race for more speed, a race for better technology. And I think cooperatives, to their credit, are at the forefront of providing the absolute best service that they can come up with. So I think you’re seeing new technologies being adopted. I’ll also throw in that a good feasibility study, like the ones that we do, you’re always anticipating a life span for the equipment that you will be replacing, right? Maybe it’s three years, five years, seven years. And so as people replace that equipment in accordance with their financial plan, they’re buying the latest version. So I think all those things play a factor.
Paul M. Breakman: Rudy, as you’re on the marketing side and Andy, too, I can say that as a telecom and energy lawyer, I’m a very poorly trained and uncertified engineer as well. And so in terms of XGS-PON technology, we’ve really seen it become the de facto standard for meeting those multi-gigabit bandwidth needs for the residential business customers. And just [inaudible] a little bit, Andy, for your listeners XGS-PON, it stands for the ten gigabyte symmetrical passive optical network, right? So it’s the updated standard for passive optical networks, and it’s the technology that supports the ten gigabyte per second symmetrical data transfers, the downstream and upstream. And when we move into the next evolution of deployments, this has become what co-ops are investing in. And that probably over the next 36 months or more, we could even move into things like 25 G-PON and 50 G-pon and 100 G-PON. If you were to ask me, do we need this kind of speed five years ago? I would have said, for what? Are you crazy? Our systems and the technology we’re using can’t even support it. But this is really aligned with co-ops making long term investments. Invest in a robust build out, and it’s consistent with the decisions we make on the resource side, on the electricity side, investing in long term generation investments and distribution investments and transmission investments. We really spare no expense, and the same is true on the broadband side.
Rudy Tober: Yeah. And I would add if I can Andy, you know, as we move into kind of the smart grid era, right, with everything that’s going on with electric vehicles and smart data monitoring and upgrades on the electric side, having all of that capacity, having a fiber backbone that has a robust capacity to connect all of those smart grid devices to it. It’s really becoming kind of the name of the game. So it’s really moving these cooperatives to the next level as they deploy more and more devices, more and more speed, more and more things connected to their fiber backbone.
Andy Johns: Sure. And for anybody who’s listening, who is interested in hearing more about the multi-gig kind of the case for multi gig broadband, we did an episode on the StoryConnect podcast feed back in November with Matt Daniel from Mountain Telephone in East Kentucky, where he laid it out very, very smartly, I think, about kind of what folks are looking at and why multi-gig broadband is so important for rural communities. That one’s worth looking up. Going back to the the report and Paul, let’s start with you on this one. When we’re looking at pressures or challenges, obstacles ahead, the pressure for labor and material was one that was brought by a lot of the folks. That’s no surprise. Obviously, when there’s the kind of funding coming in that there has been, and so many folks getting in all of a sudden, some of the materials and folks to work with it can be kind of scarce. You mentioned workforce development there at the beginning. But how do you think those pressures for labor and material will shape deployment of fiber on a macro scale? And then what is NRECA and other partners doing to shape that?
Paul M. Breakman: Yeah, so to your point, costs are rising, right? There’s price pressure on materials and increased labor costs. And the data from the report, we saw that remain true. And the deployment costs are increasing year over year, and those are real numbers. And so all of those numbers, though, you know, when, for instance, when our NRTC does a feasibility report for the membership, those kind of estimates are built into those studies and the revenue estimates. But the pressure we’re seeing – and it’s not just in broadband. We’re seeing it on the electric side, too, the increase in materials and increase in labor. And then the supply chain shortages, those have to be built into your deployment estimates and your planning. And planning, planning, planning is so important. NRECA has a number of resources, and we work hard in Washington to address some of those specific issues. We recently rolled out the broadband tier to address the members that have specifically gone into the broadband business. As our broadband tier of services, we have about 91 members now. And so we are beefing up what we are doing, and we’re working with our partners, like NRTC on the technology side and to partner with them to provide resources. And everything from tax memos and working with our general counsel’s office on legal implications and our government relations on funding opportunities.
Paul M. Breakman: You know, there’s a lot of things available to help the membership. I’d like to start on the cooperative.com broadband page and sort of dig in. And then folks that have any questions can always reach out to me directly. And, of course, I’m going to send them straight to Rudy and NRTC. But the partnerships we have really, Andy, with our friends in the broadband space and the work we’re doing here in Washington, are intended to help the members be successful and to recognize that there’s challenges associated with building broadband. And it’s not going to be for every member. You know, I mentioned it earlier. Legal implications, tax implications, operational considerations, further to the point workforce considerations. It’s deep. So members should not go about this quickly and working with NRTC and folks to understand the need to have the right technology plan in place and the right business case in place is really important.
Andy Johns: Rudy get out your crystal ball for us. How do you see labor and material pressures shaping things going forward, and are they here to stay for a little while?
Rudy Tober: Yeah. So I think Paul gave a great answer, right? It’s just kind of the way of the world, right? Prices go up over time, and I think the way you deal with that is we talked about feasibility studies, and we talked about financial models. And it’s very important, you know, I think, that you do a very thorough feasibility study, and then you update that model on a very, very regular basis because prices do change. Sometimes they go up, and sometimes they even go down, and technologies change. And if you’re doing a very thorough feasibility study and then you’re updating that on a six month basis, a quarterly basis, you’ll have a much better chance of not getting caught short. And to Paul’s point, I would also recommend work with somebody. Work with NRECA. Work with someone like NRTC. Someone who does this on a day to day, week to week, month to month basis. Someone who sees prices rising. Someone who can help you with materials procurement, because sometimes there are supply chain issues, that can affect the price. Sometimes there are contractual issues, that can affect the price. Some folks get their materials, some folks don’t get their materials because they don’t have the right agreements and the right leverage in place. We obviously try to help folks with that with a full range of services to help people plan and design and build and operate their broadband networks. But to what Paul just said a minute ago, planning, planning, planning. And then I would add to that update, update that information with people that you can trust that have your best interest at heart and can give you the most current information that you can make decisions from.
Andy Johns: Well said. Let’s wrap it up with this question, and Rudy, we’ll go right back to you. You mentioned feasibility studies, but aside from that, what advice would you have for somebody who, or what what advice can you draw from this report for electric co-ops or utilities, more broadly speaking, who are either just starting broadband or considering it? What advice would you have for them?
Rudy Tober: Yes, so my advice would be, in a sense, I may have just answered that question, at least in my mind, which is, you know, these are big projects. And my advice would be, and again, I’ve been involved in a lot of them, like from inception to now seeing them many years later. And my advice would be methodical, right? Do a very thorough feasibility study, ask all of the questions, make sure you have a very dynamic financial model. The other thing I would recommend is now the good news is, and I think our report is proven, is these projects are successful. And there is a real track record, and there’s a real record of data that goes with it. How much does it cost to build an aerial mile, an underground mile? What kind of technologies are folks using to deploy this? So literally within every state in the country – and I don’t think there are any exceptions to that – there’s probably a cooperative in your state that has embarked on a broadband project. And I would suggest talk to those folks, go visit those folks, ask them what was hard? What was easy? What are the challenges you’re facing? What would you do differently? So, you know, it’s just being thorough in the research and looking at all of the aspects of this. How will it affect your unique cooperative situation? And the other thing is – and I think, again, our report proves this is – be confident now from all of the proof that’s out there that this can be done. Now, really just answer the question, what would it look like in my specific situation, and how can I do everything in my power to make sure it’s a success?
Andy Johns: And I think that’s been one of the really cool things to see, is folks reaching out, you know, being willing to share that information and talk to other folks as well. Paul, what advice do you take from this, or what advice would you have for co-ops and – I guess many of the co-ops – who are looking, either just starting broadband or getting into it?
Paul M. Breakman: So, I’ll just reiterate what we’ve said over the course of the last 30 minutes or so, Andy. Tread carefully and do your homework. Pick the right partners. Don’t be afraid to fail because there will be failures and challenges and recognize that once you start looking into the business of broadband, there’s many ways to be successful. There’s many technology options. There’s partnership models that work. You may decide that deployment is not right for the co-op. However, we’re going to partner in our community and find out a way to bring broadband into our territory. And it may be through a partnership and maybe owning owning the middle mile. It may be, you know, owning and leasing the middle mile, rather. And so there’s just various ways to be successful and plan, plan, plan. Again, I can’t overstate that. And then plan again, right? And I’ll leave you with this, Andy, that when we think about the business of broadband, you need to recognize that this is different from our traditional electricity service. We now go from the meter into the home. And when you go into that doorway, this is a different way of serving.
Paul M. Breakman: We’re now into our consumer/members’ households, and you’re part of that family. And that is a different business model. It is a different culture. It is an entirely different way of thinking about running the business. And so there’s a higher expectation. Really you’re closer to your consumer than we’ve ever been, and so it’s important to take those considerations as part of your analysis of whether or not you want to do this. And then make sure you’re leaning into the partners. Cooperation among cooperatives – it’s one of our principles. It’s never been more important than in the broadband space, to Rudy’s point. Talk to the folks that have done it. Talk to the folks that have succeeded. We even have some members that have went into the broadband business, and they’ve sold it. There’s just a handful of them, but find out why. Find out what was the the reasons for not going forward. But again, we’ve got a lot of very successful models, and so it’s important to do your homework.
Andy Johns: Last thing. We didn’t talk about this beforehand, but the full report is about 45 or 50 pages. I know when I got through it, it was behind the login at cooperative.com. Is that the spot that folks need to get it? Or can they reach out and request it from one of y’all? Or what’s the best way if folks want to dive in? Obviously, we couldn’t get to all 45 pages of data here on this episode, but what’s the best way, or what options do folks have to be able to see the full report?
Rudy Tober: So you, this is Rudy. You can go to NRTC.coop, and you can find it there. You can download it, or as you said, feel free to reach out, yes.
Paul M. Breakman: Yeah, it’s available on NRTC.coop. We also have it available on cooperative.com. You can also Google “NRTC NRECA benchmarking report,” and it pops up top of the search.
Andy Johns: Perfect. If it’s available without being on the login, then we’ll go ahead and include a link to the report in the show notes on this episode too, so that folks can find it there, so. Perfect. I appreciate it very much, the two of you being on here, sharing the insights. Rudy, thanks for joining me.
Rudy Tober: You’re welcome. Thank you for having me.
Andy Johns: Paul, thanks for being on.
Paul M. Breakman: Hey, Andy, thanks a lot. Great to be here.
Andy Johns: They are Rudy Tober, who is the CMO of NRTC Broadband Solutions, and Paul Breakman, who is the Vice President of Cooperative Business Solutions for NRECA. I’m your host, Andy Johns, and I have enjoyed speaking with these gentlemen, and we appreciate you listening. And we look forward to talking to you on the next episode.
Outro: Rural Broadband Today is brought to you by Pioneer Utility Resources. Rural Broadband Today is engineered by Lucas Smith of Lucky Sound Studio.