Fiber OpticsA gigabit project from RS Fiber Cooperative and Hiawatha Broadband Communications set to kick off in Minnesota will focus on small towns and rural areas. Rural gigabit isn’t unusual, as Telecompetitor readers know. But while rural gigabit projects typically are undertaken by an incumbent service provider, this one is a complete overbuild.

HBC has been overbuilding underserved communities in Minnesota since 1999 and will operate the new gigabit network. In an interview, HBC President and CEO Dan Pecarina explained how HBC and RS Fiber Cooperative plan to make the new gigabit project economically feasible.

The RS/HBC Minnesota Gigabit Project
RS Fiber Cooperative is an entity dedicated to the new gigabit project, which will bring service to 10 towns and 17 townships across four counties in south central Minnesota. The project will be funded through two general obligation tax abatement bonds; through other federal, state and private sources; and through revenues that Pecarina expects to generate beginning this year.

HBC got involved with the RS Fiber network about a year ago when it was still in the planning phase, Pecarina explained. “When we first looked at the business case and finances, we said ‘We will be involved if we can build a financially sound business plan.’”

Initial plans for the network called for obtaining financing up front, with a total price tag of $70 million, but HBC and RS Fiber were able to cut that almost in half by planning to take financing only when the need for it arises and by “building only what we can build quickly enough to generate revenue from each year,” said Pecarina.

The plan now initially calls for deploying broadband wireless to the most rural parts of the serving area. Installers will be mounting antennas on top of water towers to support radios providing speeds up to 25 Mbps with a range of several miles.

The goal is to get paying customers onto the network quickly in order to generate revenues. “By using the history that HBC has had in acquiring customers on our network, it works,” explained Pecarina.

HBC has used the wireless equipment, which operates in licensed and unlicensed spectrum, for five years, Pecarina said.

By the end of the year, HBC expects to roll out fiber-to-the-home to two of the 10 target towns. After all 10 towns are completed, the plan is to bring fiber to the more rural homes to replace the broadband wireless.

The entire project is expected to take five to six years and will benefit from HBC’s existing infrastructure. HBC will be offering triple-play services, including video delivered from the HBC headend and voice delivered from existing HBC switches.

The network also will connect anchor institutions such as schools and government offices.

Telecompetitor would like to thank Calix for bringing the RS/HBC story to our attention. Calix will be providing active Ethernet equipment for the gigabit deployment.

Pecarina said active Ethernet was chosen because “we want to make sure it’s very future-proof.”