Spools of fiber optic cable stand ready for a network build-out to the 17,000 members of Maquoketa Valley REC beginning this month. PHOTO/MAQUOKETA VALLEY REC
By Dave DeWitte
dave@corridorbusiness.com
Anamosa-based Maquoketa Valley Rural Electric Cooperative is set to begin work on a $65 million fiber optic network that will bring high-speed internet service to many of its 17,000 members as a secondary benefit of building a smart power grid.
The REC plans to run 3,000 miles of fiber optic cable to every household on its system over the same network of poles and towers it uses to bring power to their homes.
Members are being offered unlimited data at upload and download speeds of 50 megabits per second (Mbps) for $59.95 a month.
Access to high-speed broadband in rural areas is still a challenge for Iowa, one that affects both economic development and education.
According to the most recent Connect Iowa report, 73.43 percent of the state’s households can access the internet at download speeds of 25Mbps and upload speeds of 3Mbps. However, more than 324,000 households still lack service meeting those national benchmarks for high-speed internet service, according to the 2015 report.
Selling internet service wasn’t the main objective of the project, CEO Jim Lauzon said, but it will generate revenue to pay the cost of installing fiber and meet an important need.
“We have 39 substations scattered across northeast Iowa,” Mr. Lauzon said. “To bring the smart grid into the next level, we need to get a communications path into our customers’ homes so we can monitor smart meters.”
Mr. Lauzon said the smart meters feed data back to the REC about how much power each household on its system is using, but the current data transmission system, which uses radio signals or the power grid, lacks sufficient bandwidth. As more REC members began installing solar power arrays and sending power back onto the grid, the REC needed to get real-time data on how much power was being generated and used.
The fiber optic system will allow the co-op to track how much power is being generated and used across its distribution system and balance it, Mr. Lauzon said. The system will not only improve reliability, but also help reduce customers’ overall power costs by helping the REC curtail power demand at peak times during the summer months when electricity is in short supply and very expensive.
A survey of REC members found that a high percentage lack high-speed internet access, Mr. Lauzon said, and that a “fairly high” percentage of those who do have access could save money by switching to the REC’s planned service.
The REC plans to offer broadband service to any member who wants it, and may provide service to nearby and adjacent properties if it proves economical.
The fiber build-out will begin Oct. 24 in the Dubuque County community of Peosta, and move next year in Phase II to Jones County. The REC has set up a website where members can express interest in receiving broadband service, and plans to deploy the fiber network soonest to the areas with the greatest interest. REC leaders are projecting that 6,000-7,000 of the cooperative’s 17,000 customers will subscribe.
“As of this morning we have 590 people who have expressed an interest,” Mr. Lauzon said on Oct. 7. “We haven’t asked them to physically sign a contract.”
Building out the network will offer several business opportunities for the co-op. Mr. Lauzon said Maquoketa Valley REC is applying to the Iowa Utilities Board to be licensed as a competitive local exchange carrier so that it can offer telephone service via its fiber network, and studying other possibilities.
“We’re looking to see if it would make sense for us to offer video options,” Mr. Lauzon said. “We’re thinking most people will stream the video they want to watch and personally, I think cable TV is on the way out. I think people are tired of paying for 200 channels when all they want is five.”
Some of the more-promising opportunities Mr. Lauzon sees for the high-speed broadband service are home medical monitoring and home security.
“I doubt we will go into home medical monitoring, but Jones Regional Medical Center [in Anamosa], if you have a broadband connection, can provide you with a doctor visit from home,” he noted. “I think we’re going to see that area grow significantly, and it will allow our elderly patients to stay in their homes longer because they’ll be able to have medical monitoring and security monitoring all available through broadband.”
The odds of a private business undertaking a $65 million project to extend rural broadband in Maquoketa Valley REC’s market is as remote as some of the households it serves. Mr. Lauzon said the REC’s customer density overall is only 4.5 per mile of line, which would not be enough density to entice many private providers into its market.
The REC has several things going for it that a conventional business lacks, however. It has access to low-interest federal loans for system improvements, an existing infrastructure of power poles to string its fiber optic lines and a small number of stakeholders.
“On this fiber project, I don’t need a four- or five-year return so I can pay back my shareholders,” Mr. Lauzon said. “My shareholders aren’t looking for a financial return. They’re looking for services and that’s what they’re willing to pay for.”
The biggest benefit of the fiber optic system will be in improving system reliability, which is already among the best in the state. The economics of solar power are expected to bring many privately owned solar power systems onto the REC’s system, which includes not only households but many large agricultural operations and even a Walmart store. That will make it even more important for the REC to be able to track members’ electrical production and consumption in order to keep its grid stable.
“Just imagine when it’s a sunny day and our members are generating a lot of solar power, and then a cloud system comes through,” Mr. Lauzon said. “We need to know immediately when that’s happening.”
Mr. Lauzon said one thing the REC will be able to do on the power side of the fiber optic system is monitor usage for unexpected demand patterns that might indicate power is being wasted by things like a faulty pump or a cold air leak, which may cause a furnace to run constantly in the winter. He said customers today often don’t know when they have a problem that is causing electrical waste until six weeks later when their bill comes in the mail.
“What we would like to do is become more proactive, so if a customer is wasting energy, we can tell them in three days rather than 60 days,” Mr. Lauzon said.
The fiber optic build-out will have employment and property tax benefits for Anamosa, where its headquarters is located. The co-op’s business plan anticipates 21 additional staff will be added to its current staff of 62 in Anamosa.
Maquoketa Valley REC is also looking to expand its physical presence, and is working with the city of Anamosa to acquire a city parking lot across the street from its downtown offices to build additional office space and parking. Mr. Lauzon said that for the moment the REC is considering several building options, but plans to remain in Anamosa.
