Partnerships between rural local exchange carriers and electric cooperatives can benefit both companies, according to a new report from CoBank Knowledge Exchange, the research unit of rural lender CoBank. For the telco, the partnership can be a way of offsetting declining regulated revenues. For the electric cooperative, a modern broadband network can support smart grid technology that can enhance electric service reliability and customer satisfaction.
At one time, telco, electric cooperative partnerships were rare, but CoBank researchers were able to interview several executives from rural telcos and electric cooperatives that have partnered with one another. The new research is based on those interviews and comes at a time when electric cooperatives increasingly are pursuing broadband deployments.
Telco, Electric Cooperative Broadband Partnerships
Telco, electric cooperative partnerships take a wide range of forms, but lessons learned were “remarkably similar” from one partnership to another, researchers said.
Key takeaways from CoBank’s research, titled “Recent Insights into Successful Broadband Partnerships,” include:
- Establishing a joint steering committee that meets as often as once a week, at least to start, is critical. The committee should include representatives from both partners, including sales, engineering, finance and operations personnel. The purpose of the joint steering committee should be to address key performance indicators such as network performance, customer service, subscriber growth and network build plans, technology roadmap, etc.
- Telcos should respect the electric cooperative’s brand equity, which is often very strong. Noting that many electric cooperatives have built trusted relationships with their customers over long time periods, the authors said “We don’t think the full value of these customer relationships is fully appreciated amongst the RLECs and should serve as one of the motivators to work with” electric cooperatives.
- Partners should consider deploying fixed wireless, which is more cost-effective than deploying fiber, as an interim technology, then upgrading to fiber later. The report points to RiverStreet Networks’ partnership with North Carolina electric cooperatives as an example of partners that are using this strategy.
- Partners should work closely with their local economic development representatives and business community to help generate broadband-driven economic opportunities, which in turn can fuel broadband revenues.
Despite the potential synergies in working with a local telco, most electric cooperatives are undertaking broadband deployments on their own, the CoBank report notes. But the authors add that “we think this has more to do with a general lack of awareness versus the notion that these partnerships don’t work.”
The authors encourage rural telcos to pick up the phone and invite their local electric cooperative to lunch.