The theme of Co-op Month 2018 this October is “See The Future,” which really hits home here at Mid-Rivers. It can sometimes be hard for members and others to see how the decisions we are making today are setting the stage for a vibrant rural economy in 5, 10, 15 or 20 years, but that future is what we are thinking about and planning for every day.
We hear from time to time that people think we are “not acting like a Cooperative.” This Co-Op Month, I wanted to take you through some history and background on how we got where we are today, and how the way we are operating today is – maybe more than ever – truly representative of fundamental Cooperative Principles.
Some of the area papers have recently been running news stories about the Montana Public Service Commission (PSC) “donating” or granting millions of dollars to Montana communications companies, including Mid-Rivers. Every October, the PSC votes whether or not to re-certify all the Eligible Telecommunications Carriers (ETC’s) in the State, which tells the Federal Communications Commission (FCC) which providers are eligible to receive Universal Service Funding (USF).
Is that enough acronyms for you? Too bad, here come some more. The USF we receive is our “Alternative-Connect America Model” (A-CAM) funding, which I have talked about in previous posts here, here, and here. It’s not a donation, and it’s not “new” money. It comes with an abundance of requirements and regulations, and requires us to leverage other funding sources (like customer-generated revenue). This support money originates from some of the fees you pay on your monthly phone bill. The PSC examines at the State level what providers are doing with their USF dollars, and how they plan to use their future USF dollars, to recommend who should be re-certified. We don’t take it for granted, and we appreciate that they have seen fit to certify our status for another year.
Our A-CAM funding replaced the support we had received since the break-up of the Bells in the mid-80’s for providing telephone services. In the old “rate-of-return” support world, every dollar we spent on putting telephone lines in the ground and providing telephone service to customers went into our cost base, which eventually came back to us plus an 11.25% return on that investment. That stopped for us in 2016. In its place, A-CAM provides a fixed $10 Million (approximately) per year, for a set amount of time (10 years), specifically for the purpose of building broadband to a defined group of “eligible locations.” More on that down below.
That’s a big change. A big change in the way we fund our capital expenditures and day-to-day operations. A big change to our long-term financial outlook, especially at the end of that 10 years. A big change in the focus, shifting from telephone to broadband. A big change in what that means for the services we can provide and how we provide them. Essentially, we have moved from a model that helped fund on-going operations and offered financial incentives for spending MORE (more labor, more vehicles, more equipment), to one that rewards efficiency, minimizing costs, and maximizing the reach of the dollars being provided, all with a defined time horizon. That’s not necessarily a bad thing – this is all YOUR money, remember – but it is a big change. And while it has certainly brought about a cascade of short-term changes that not everyone may like, it does not change our status as a non-profit Cooperative, our Mission, or our Values. In fact, it has required us to really focus in on that Mission of providing essential services.
The $10 Million per year for 10 years must be used to build broadband to a required number of locations in our traditional rural services areas – the areas that founded the Cooperative and those areas purchased by the Cooperative from its inception through the early 1990’s. The A-CAM dollars are funding a large portion of our long-term Fiber build-out plan, which is exclusively focused on these traditional rural service areas. We have one shot at putting this funding to work for you, and doing it right.
Not all rural member locations are “funded” locations, because the high cost to serve them exceeds the total nationwide funding available. Because of that, the goals of our current long-term fiber plan and how it is designed are two-fold:
- Meet our required A-CAM Build-out Obligation. If we don’t, we pay back support $$ with interest, and – more importantly – we leave more people without broadband or options for getting it.
- Maximize our broadband customer base – get the most populated areas served first – so that long-term, Cooperative member revenues can sustain the on-going operations of the Cooperative AND we can still get fiber to some or all of the non-funded (most remote & most expensive) locations after the $10 Million per year goes away.
This Fiber Plan, and the tough decisions that have come with it, are the epitome of what it means to be a Cooperative. Cooperatives aren’t about free services, entitlements, subsidizing things that only certain members get at the expense of all other members, or to trying to be everything to everyone. Cooperatives are about neighbors helping neighbors receive a service they need and wouldn’t otherwise have. They are about keeping dollars local and ensuring that everyone has an opportunity to benefit. They are about autonomy and independence, and concern for our communities. By focusing on building a sustainable broadband network, the long-term outlook for our rural communities can be even brighter.
This week, October 7-13, is also National 4-H Week, which is near and dear to my heart – 10 years as a member and going on five more as a volunteer leader. Where better to see the future than in the eyes of our rural youth? #InspireKidsToDo #National4-HWeek