Utilities Adding Fiber: A Success Story and a Startup

Fiber Optic Cable

The industry is abuzz with many municipalities and cooperatives providing fiber services to their consumers. Whether you are looking for inspiration or instruction, you’ve come to the right place. Read about a municipal utility’s fiber journey and a cooperative’s framework for starting a fiber company.

Attendees at the 2018 Daffron User Group Meeting (UGM) had the opportunity to hear Brian Taylor, General Manager, CDE Lightband, and Jeremiah Sloan, Manager of Fiber Assets, Craighead Electric Cooperative Corporation, talk about each of their organization’s journey to offering fiber.

A Success Story

CDE Lightband (CDE) is a municipally-owned electric utility serving the city of Clarksville, Tennessee, and surrounding areas. In 2006, they voted to start the process of offering fiber to their service area, which consists of 100 square miles within the municipal boundaries.

Even though they began planning in 2006, it wasn’t until 2008 that they started offering services, and it was several years later when they first made a profit on fiber services. Currently, the fiber service operates at a profit that provides over $5 million annually in income for electrical grid improvements. In addition to the benefits to the utility company, home values have increased by an average of 3% because of access to CDE’s fiber network. As of 2018, their service area now includes 892 miles of power lines and 960 miles of fiber optic cable connecting them to over 68,000 homes and businesses.

Taylor shared a lot about their goals and processes during his presentation. Here are some of the benefits to rate payers and lessons they have learned on their journey to implementing fiber service:

Benefits to Rate Payers

  • Improved customer service via
    • Pre-pay capabilities
    • Remote connects and disconnects
    • Payment kiosk functionality
  • Maintain affordable/flexible rates
    • $9 million annual payment to Electric Division
    • Avoided at least two rate increases
  • System improvements (made with cash) have included:  multiple new substations and upgraded substations, grid automation, campus upgrades, upgraded AMI and improved right-of-way expenditures

Lessons Learned

  • Have a plan and stick to it
  • Gain community leaders’ support
    • Educate Economic & Industrial Development team
  • Get buy-in from employees
  • Prepare employees & board for a competitive environment
  • Be patient

CDE worked with the Tennessee Valley Authority (TVA) and was able to issue bonds and borrow from their electric department to help fund the fiber project. That investment by the Electric Department has returned over $44.8 million already on a $17 million investment in the fiber division.

A Startup

Craighead Electric Cooperative Corporation (CECC) began serving their members in 1937 and is headquartered in Jonesboro, Arkansas. Currently, CECC serves more than 30,000 member accounts throughout parts of eight northeast Arkansas counties and maintains over 4,700 miles of line. Calling them a “Startup” may seem counter-intuitive, but they have decided to create a brand new, wholly-owned subsidiary named “empower” to deliver fiber services to their members.

Internally, CECC made the decision to build out the fiber network for the requirements of the electric cooperative and its future, including: SCADA, AMI, carrier dependency, and the current lack of network connectivity. However, the fiber network is a benefit to their members as well, because 44% lacked FCC-defined broadband access.

Sloan presented CECC’s goals for the new fiber services, as well as the lessons they have learned so far as they build a fiber service in 2018.

Lessons Learned

  • Get multiple opinions
  • Choose a solution that is right for you
  • Involve employees early
  • Utilize Vendor Managed Inventory (VMI)
  • Sales and marketing teams need to be involved as early as possible
  • Business setup takes time
  • Don’t underestimate network costs

CECC has been able to reduce their initial costs by utilizing VMI so that they pay for the inventory they use as they go, rather than needing to purchase large quantities of inventory in advance. Additionally, a combination of being an RUS borrower and successfully applying for federal grants is helping to fund CECC’s fiber initiative.

Daffron Eliminates Several Barriers to Entry

Fiber Billing and Customer Management

Daffron uses the same customer database to bill for fiber as it does for other services and companies. This means you can bill services together or separately and can leverage the fact that all your data is stored in one place, ultimately providing a better experience for your consumers. For current Daffron customers, users are already familiar with our system, adding even more benefit. Over the years, we have assisted multiple companies with the new complexities and challenges that fiber brings. We are confident we can help you, too.

Financial Management and Accounting

Daffron allows you to operate and account for your services as multiple different companies or as one company with multiple departments. Integration between all of our solutions allows you to accurately account for every part of your business. By sharing data from our Customer Information System (CIS) and Work Management System (WMS), you can see real-time data to help inform all of your financial decisions.  The systems provide the ability to leverage the shared database for efficiency while keeping the financial reporting as separate as you require.

Inventory and Work Management

As CECC pointed out, VMI can be a huge help for starting a fiber company. Our Financials and Work Management systems can integrate so you have a real-time view of all invoices and material costs.   The costs are automatically applied to the correct work orders and sent to Accounts Payable for vendor payment.

Analytics and Reporting

Visual analytics – at-a-glance charts for simple and complex reporting – brings data from all your vendors into one easy-to-understand format for your management team and board. Education and awareness are both very important when getting buy-in and support from all the required parties. Let Daffron equip you with the tools to cut through the complex data in a way that is easy to understand and effective at communicating your message.

Want to know more about offering fiber?

Contact Daffron today to get connected with the best resources to help you accomplish your goals.