Virginia utilities pave the way for rural fiber deployment

Electric utilities and cooperatives are gaining prominence as alternative providers for rural broadband. Virginia utilities Dominion Energy and Appalachian Power have doubled down on fiber expansion – providing a roadmap for other states to tap into existing utility infrastructure to increase connectivity – per a newly published report from the Pew Charitable Trusts.

Dominion and Appalachian Power worked with state legislators to establish Virginia’s Utility Leverage Program, enabling investor-owned utilities to leverage utility-owned fiber for middle mile service.

Virginia was the first state to pass such legislation, according to Anna Read, senior officer at Pew’s Broadband Access Initiative and author of the report.

She told Fierce program participants partner with local communities and last-mile ISPs to facilitate broadband deployment in the state’s rural and unserved areas – where the cost of middle mile can be a barrier to deployment.

“This allows last mile providers to dedicate funds to last mile builds and furthers the reach of state broadband grant funds, maximizing the number of end-users connected,” Read said.

The Utility Leverage Program was launched as a pilot in 2019, and it was made permanent in March 2021. Private ISPs as well as municipal government agencies are eligible to lease excess middle mile broadband infrastructure from utilities.

Dominion last year partnered with Ruralband, a subsidiary of Prince George Electric Cooperative, to install nearly 40 miles of fiber across Virginia’s Surry County. The utility is also working on constructing over 30 miles of fiber in Botetourt County – which the company expects to complete in November.

Additionally, Dominion has a pilot project in the works in Virginia’s Northern Neck region, where it plans to build 217 miles of fiber in partnership with local counties, Northern Neck Electric Cooperative and local ISP All Points Broadband.

Meanwhile, Appalachian Power, which serves Virginia’s southwest corner, is using GigaBeam Networks as an ISP partner to construct a 238-mile fiber network in Grayson County. As of March 2022, Appalachian Power has built 157 miles of fiber in the area.

However, utilities face several potential hurdles in broadband deployment, Read noted. One is cost recovery, as middle mile builds can be expensive.

“It would be disadvantageous for utilities to build out new infrastructure for broadband with no mechanism to recover those costs,” she said. “And ambiguity on whether or not utilities can make rate adjustments to recover costs of new middle mile builds could deter them from pursuing these projects.”

States like Virginia and West Virginia have addressed this issue, Read added, by passing legislation that explicitly allows utilities to make up construction costs through service rate adjustments.

Another potential obstacle is the easement process, she said, as some states don’t allow utilities to use electric infrastructure on private land for broadband installations.

“In Virginia, state leaders addressed this challenge by passing a law that allows utilities to use existing electric easements for broadband unless such installations were explicitly banned in the easement language,” said Read.

Utility-led broadband expansion continues to gain traction. Hoosier Net and Accord Telecommunications Collaborative teamed up in June to bolster fiber deployment across rural Indiana. In Missouri, City Utilities of Springfield – with Lumen Technologies as anchor tenant – is set to complete construction of over 1,000 miles of fiber across the city later this year.

On the federal level, two U.S. senators in August introduced a bill dubbed the GRID Broadband Act, which would require the National Telecommunications and Information Administration (NTIA) to dole out funds to promote the construction of middle mile infrastructure along existing electrical grid lines.

The NTIA is overseeing the $1 billion Enabling Middle Mile Broadband Infrastructure Program, and utilities are among the entities eligible for the program’s grants. The agency recently closed program applications on September 30 and will begin processing awards in February.