HEC's $120 million broadband plan needs 80 percent participation from members

Jeff Bobo • Mar 9, 2017 at 10:04 AM


ROGERSVILLE — Holston Electric Cooperative will need the approval of state legislation to begin offering broadband service, but without the support of its 30,445 members the proposed $120 million expansion will remain offline.

About 38 percent of them have no access to cable TV/Internet service.

On Wednesday, HEC hosted the second of three meetings being held this week for the purpose of gauging its members interest in broadband.

HEC General Manager Jimmy Sandlin told the standing room only crowd Wednesday in the utility’s main Rogersville facility that he would need at least 80 percent participation from members to make broadband installation financially feasible.

Based on those in attendance who were able to take a survey with their smart phones, about 94 percent said they would be willing to sign a petition or pledge to be a broadband user.

But only about 56 percent said they would be willing to pay $75 or more per month for the service.

Only 24 percent would be willing to pay for the service if it was $100 or more.

HEC has 1,700 miles of line in Hawkins and Hamblen counties, and the cost of extending fiberoptic cable throughout the entire system is estimated at $120 million.

A 110-mile fiber “backbone” is already under construction across the HEC system to allow the service to better communicate with its substations.

That “smart grid” is projected to cost $36 million and will have enough capacity to serve as a trunk line for residential fiber expansion throughout the system.

That leaves a cost of $84 million to bring fiber to every member of the HEC system.

“These networks are very expensive to build,” Sandlin told the crowd Wednesday. “An average of $70,000 per mile. ... We’re regulated by TVA. They regulate the use of our revenues, and they require that electric service revenues are only used for electric service purposes. We cannot use the electric revenue that we collect from you every month to provide cable TV or Internet service for you.”

Sandlin outlined options for moving forward with broadband.

The first would be to do it completely in-house, which means members would bear the cost of new infrastructure, which would take longer to install. But HEC would also control service quality and revenue.

Another option would be to partner with other services, such as Scott County Telephone Coop which expanded cable TV/Internet into Hawkins County’s Stanley Valley community about two years ago. Sandlin said Morristown Utility is also interested in a partnership.

The advantages include sharing costs, access to grants, and getting service to members faster. But the downside is losing control over quality, sharing revenue and having no control over the monthly cost to members.

“You’re at the mercy of their packages, their rates, and however they choose to do business,” Sandlin said.

However, none of the options will work if there isn’t enough participation.

“Only about 50 of the homes that (the Scott County Telephone Coop) project passed have signed up for services,” Sandlin said. “For any project that we do, we need the participation rate to be much higher. As much as 80 percent or more. That participation rate needs to be 80 percent or more over time.”

To illustrate his point, Sandlin used a quote by former Major League Baseball Commissioner Peter Ueberroth, who said, “If enough people care about something, anything is possible.”

Sandlin added, “You are those people. We work for you, and what we’re trying to do is start a conversation, look at broadband, what is lacking in the area of service in your communities, and the Holston Electric service area, and trying to find a solution that will give you better service and give you better access to broadband.”

With a $75 million annual operating budget, HEC provides electric service in Hawkins and Hamblen counties, covering 525 square miles with more than 50,000 poles holding up its 1,700 miles of line.

Currently Tennessee law prohibits rural electric cooperatives from providing broadband service to its members. In January, however, Gov. Haslam introduced the Tennessee Broadband Accessibility Act to remove that restriction.

The Tennessee General Assembly is expected to decide on that bill before the end of the month.

On Tuesday, HEC hosted a member meeting at St. Clair Elementary School, followed by Wednesday’s meeting in Rogersville. The third meeting will be Thursday beginning at 5:30 p.m. at Surgoinsville Middle School.

At the first two meetings, those in attendance with a smart phone were asked to complete a survey online. Those without a smart phone filled out a paper survey. Members who attend Thursday’s meeting will also have an opportunity to take the survey. 

HEC will compile the results from all three meetings, and assuming Haslam’s legislation is approved, use those statistics in a feasibility study before moving forward with broadband installation. A possible pilot program is also being discussed with Scott County Telephone.                                                                                  

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