Lighting Up The 21st Century – Part I

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Spotlight on Rural Connectivity | TelecomDrive.com

By Doug Mohney, Principal at Cidera Analytics, for ADTRAN

Rural America sees gigabit broadband as necessary today as electricity was in the 20th Century. It all begins with the fiber. Fiber-optic cable provides the most secure communications solution for monitoring and controlling electrical systems.

Electric utility use of fiber is perhaps best known for supervisory control and data acquisition (SCADA) for existing infrastructure, with the ability to upgrade to a true Smart Grid for reducing power outage frequency and generating less overall customer downtime. Fiber also provides a future-proofed infrastructure to incorporate renewables and power storage.

A Smart Grid delivers significant benefits to businesses and residences by mitigating downtime and shortening the length of power outages. Over a 10-year period, EPB, formerly the Electric Power Board of Chattanooga, in Tennessee, reduced the number of outages in its service area by 50 percent through its Smart Grid.

“The cost of power outages to a community the size of Chattanooga is $100 million per year,” said Katie Espeseth, vice president of new products, EPB. “That’s lost productivity. If you are keeping business up and going, you are still ringing credit cards.”

But utilities are not simply pulling fiber for electrical grid enhancement. Rural communities want the same high-speed gigabit broadband as big cities, recognizing it as an economic necessity to attract and retain businesses and return children back to the towns in which they grew up. For electric co-ops, they benefit from diversifying their revenue stream outside of a sole-source dependence on electric rates, while also being assured that fiber will provide a path for other revenue and value-added services in the future.

The economic benefits of fiber are real and documented with studies by the University of Tennessee and Purdue University. These studies show a four-to-one ratio of return on investment in rural areas deploying fiber to their communities.

Findings by the NRECA and others bear out the beneficial economic, and social impact fiber broadband provides to communities as well as the detrimental effects if broadband isn’t available. NRECA estimates more than $68 billion of lost consumer-membership value across electric co-ops due to lack of broadband. Moreover, businesses of all sizes are naturally going to stay in or move to areas based on high-speed broadband availability and reliable grid management with infrequent power outages.

Deciding to Deploy Broadband: Grid Needs + Subscriber Demands

Deployment of fiber into rural communities is an economic investment for today and the future. Electric utilities are aware of the numerous benefits fiber brings to the table for Smart Grid implementations, including a high level of physical network security, high reliability, low latency, enough bandwidth to support current and future applications, and the ability to upgrade the network through electronics replacement.

Existing copper facilities are not a viable option due to the lack of investment in what is considered by many local service providers as “legacy” infrastructure, while wireless solutions, although possible as an alternative option, are best reserved for limited, circumstances that prohibit fiber deployment.

Electric utility provider needs alone aren’t enough to justify the cost of even a limited fiber deployment for monitoring equipment. Rolling trucks, digging trenches, and putting cable on poles are expensive, with the labor being the single largest cost for fiber deployment. Implementation of a true Smart Grid complete with real-time monitoring of all key elements down to customer metering only increases labor costs and capital further without an immediate return on investment.

Every utility interviewed said customers wanted high-speed broadband with the same capabilities and speeds available in urban areas—and therein lies the compelling reason why fiber is needed.

Utility customers may not have strong feelings about Smart Grid technology, but gigabit broadband speeds are a concrete desire for nearly all. Having high-bandwidth service keeps existing businesses from leaving and attracts new businesses, bringing in more investment and generating more taxes for local governments.

An equally sound economic — yet arguably sentimental – reason for launching high-speed fiber among interviewees was to build an environment whereby college students can return to the communities in which they grew up rather than staying in the metro areas where they went to college. “Instead of moving on, they can come back home,” said Luke Johnson, operations and broadband manager of Meeker Cooperative Light & Power Association in Litchfield, MN.

Across the country, existing rural broadband options, such as satellite, cable, and incumbent telco copper DSL, oftentimes face deficiencies in speed and quality of experience. Incumbent broadband service providers in rural areas have no incentive to improve the quality of service since they are the only option available.

Each utility provider interviewed noted that despite complaints by customers to their incumbent communications providers, there was a lack of responsiveness in resolving service problems. Incumbents provided no improvements in broadband speeds, or worse, regularly increased prices without improving service quality. In every case examined, utility customers wanted broadband alternatives and competition rather than to be left at the mercy of a monopoly.

The decision for a fiber deployment is not made lightly or spontaneously, given the expense and necessary commitment for financing a project and the long-term commitment an organization will make to own and operate it. Electric utilities considering fiber projects conduct customer surveys and marketing surveys followed by studies on costs and financial viability. Issues examined include what services customers might want other than broadband, such as voice and video, customers satisfaction with existing broadband options, potential take rates for new broadband service offerings, and the action taken by existing service providers when challenged by a utility-based broadband offering.

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Next, more detailed feasibility studies are undertaken to examine where fiber will be initially deployed and how rapidly the build will be conducted. Equally important is the identification of anchor customers in the community, including business, local government, hospitals, libraries, and schools. Deployment schedules are forecasted in terms of months, if not years, depending on the size of the territory to be served, the aggressiveness of the deployment schedule, and the financial resources available to facilitate the project.

Once all the facts are gathered and reviewed, it is time for a formal vote to approve the capital for fiber deployment, a process that depends on the management structure. For example, within the electric co-op model, approval to move forward may be as “simple” as a board of directors’ vote to move forward, or it may require approval from the entire membership. “We had to do a special vote,” said Debbie Winger, telecommunications manager with Anza Electric Cooperative in Anza, CA. “It was over a 93 percent ‘Yes’ vote, the biggest turnout for any election on our history. It made it very clear what people wanted out here.”

To Overbuild or Not to Overbuild? More is Always Better

One of the most surprising findings was the decision by electric utilities to deploy the largest number of fibers strands the capital budget would reasonably allow.

“The incremental cost to go from 24 strands to 288 strands is small compared to the cost for construction,” John Lester, general manager, Clarksville Connected Utilities in Clarksville, AR stated. “It made sense to overbuild when we were at it. We ended up with a 17-mile core with 288 strands.”

Overbuilding fiber provides immediate operational flexibility in network implementation and “future-proofing” for new applications and revenue generation. Deploying 288 strands of fiber in a rural fiber project appears to be overkill, but there are numerous reasons to overbuild.

As noted earlier, the most significant cost of deploying fiber is the labor to put it in place on poles and in trenches. Having to go back later and add additional capacity along the same routes means repeating the most expensive part of the deployment – the labor involved in placing the fiber. This is also accompanied by disruptive activities such as temporarily blocking off streets to place fiber on poles and/or digging up roads to place conduit.

Once in the ground, unlit “dark” fiber has zero overhead cost beyond inventory housekeeping to keep track of where it is and how many strands are available for use. Bringing dark fiber into service requires attaching the appropriate electronics on the ends, so utilities can light it as needed based upon customer demand. With fiber electronics capabilities constantly improving while costs continue to decline, dark fiber is a flexible insurance policy for the future.

Multiple strands and bundles of fiber within a fiber cable provide the electric utility flexibility that can be tailored to the needs of the local community. For example, Clarksville is running eight different networks on separate fiber bundles within the same physical cable.

The utility’s SCADA network runs on its fiber bundle, which is physically and electronically separated from other users for a high level of security. Other dedicated fiber bundles are allocated for business users, the school system, city, county, libraries, and the local university.

Dark fiber also provides an opportunity for additional revenues from telecommunications and enterprise customers. Cable- or copper-based incumbent broadband providers wishing to improve facilities within their franchise territory to remain competitive have chosen to lease fiber from electric utilities because it is both cheaper than having to lay it themselves and is immediately available. Fixed wireless and cellular carriers are also potential customers for leasing dark fiber to incorporate into their networks.

Enterprise customers also lease dark fiber for various applications. Businesses may need something as simple as connecting a remote site to a larger corporate Wide Area Network (WAN) or something more complex such as monitoring remote facilities.

Guadalupe Valley Electric Cooperative (GVEC), based in Cuero, TX, leases its dark fiber to oil companies for Internet of Things (IoT) monitoring. “Oil fields use a lot of radio towers to collect SCADA information from pumps and need to bring it back to the main aggregation point,” said Robert Russell, executive engineer for communications technology for GVEC. “It’s very helpful to get fibers from [the co-op], it lets them run the radios themselves rather than having to send that data via VPN over an internet connection.

Keeping it Simple

Deciding and detailing what products and services will be available for customers in a fiber build is part and parcel of the initial decision process. Providers interviewed, for the most part, stuck to simple strategies of pricing and service options. With experience through operations and customer feedback, additional services and pricing options can be rolled out to meet changing expectations and new opportunities.

An electric utility provider using its fiber for internal needs also seems obvious. Fiber provides the necessary infrastructure for Smart Grid applications and delivers operational cost savings by enabling utilities to migrate internal telephone and data network functions onto utility-owned fiber instead of paying for third-party Local Area Network/WAN and voice services. Other savings can be generated by more accurate and efficient customer billing through better metering technology.

High-speed broadband offerings for residential members tend to be simple in nature, with a single price for 100 Mbps symmetrical service and a higher cost for 1 Gbps service. Like any other provider, utilities adjust pricing and speed packages based upon offerings from competitors, with incumbents typically providing triple-play bundles of data, voice, and video.

Among rural electric co-ops, voice services still appear to be a necessary component of most offerings. While mobile services are always improving and getting faster, actual cellular coverage in rural environments is never as good or widespread as it is in urban areas.

Fixed-line voice services delivered via Voice over IP (VoIP) riding over a broadband connection remain a necessary part of what co-ops must provide for their member communities.

Video service is where many electric utilities draw a line between themselves and incumbents, citing two reasons not to offer it. There are significant costs associated with deploying dedicated video services on top of a broadband network, including the purchase and installation of set-top boxes, maintenance of a video head-end, annual and always increasing content distribution rights, and updates of television guide services, just to name a few. Such initial capital costs and constant operational expenses are daunting for any electric utility, regardless of size or geography.

Over-the-Top or simply “streaming” video is a no-cost solution many utilities are embracing since it is already available and effectively turnkey for customers. Customers are encouraged to use existing streaming services because they can get access to the content they want on-demand and may opt to purchase a faster broadband plan to support higher-resolution content and multiple screens within the household.

Businesses represent another clear-cut customer segment for broadband service offerings. Broadband business services, while more demanding than residential offerings are also more lucrative. Companies expect dependable services and pay more in return.

Service guarantees of uptime and quality, or Service Level Agreements, will be required. Firms need assured access to everything from basic web services for advertising products and taking orders to cloud-based tools such as call center services with integrated Customer Relationship Management tools.


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