A rural telecom service provider and a neighboring rural electric power cooperative are coming together to bring gigabit broadband to parts of rural Arkansas. The rural telco is South Arkansas Telephone (SATCO) and the power company is Ouachita Electric Cooperative (OECC). The telecom, utility partnership has formed a new company called Arkansas Rural Internet Service (ARIS) – and according to ARIS Director Mark Lundy, each owner has a 50% share of ARIS.
Plans call for deploying fiber-to-the-premises to 9500 OECC member homes and businesses, many of which have had to rely on satellite for video and broadband services. The project is expected to take three years to complete.
The incumbent carrier in the target area is one of the large price cap carriers.
The Telecom, Utility Partnership
SATCO already has deployed FTTP infrastructure supporting speeds up to a gigabit to homes and businesses in its ILEC territory and to businesses in its CLEC territory. Lundy, who comes from the SATCO side of the business, said SATCO approached OECC about a year ago about the possibility of a telecom, utility partnership because SATCO management was impressed with other initiatives OECC had undertaken – including a renewable solar farm.
OECC welcomed the possibility of working with SATCO on an FTTP deployment. “We took the fear out of the Internet for them,” observed Lundy. SATCO was able to point to its existing track record in offering a safe Internet product.
The partners are sharing costs of constructing the gigabit network and will share revenues, Lundy said.
“SATCO is doing the engineering and buildout,” although SATCO will be handling tasks such as putting in poles, said Lundy. Customer service responsibilities will be shared.
Although the economics of deploying FTTP in a rural area like south Arkansas can be challenging, the ARIS partnership had several things going for it to help minimize costs. SATCO had previously won a broadband stimulus award to install a 300-mile fiber optic artery across southern Arkansas, which should help minimize the cost of connecting to the Internet. The FTTP network also will help support a smart metering initiative for OECC – and OECC is considering offering smart metering capability for local gas companies.
In addition, because people in the target area are buying satellite broadband and video through OECC, the partners have a good idea how much revenue they might expect to generate from the new network, which will support voice and video as well as broadband service.
SATCO already offers video services, so its expertise should help there, too. Currently SATCO offers “more of a traditional cable” service, Lundy said. But the company is in the process of shifting to an IPTV approach and the plan is to use that approach for the ARIS offering.
The ARIS partnership is the latest example of how a telecom and utility company can come together to bring broadband to high-cost rural areas where it might not have been feasible for either company to tackle the task on its own. Telcos and utilities have used a variety of models in pursuing broadband goals. In Indiana, for example, broadband opportunities drove a telco and utility to merge with each other.