Money Matters: Financial Feasibility for Broadband Projects

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Estimated listening time: 25 to 30 minutes

Why This Matters for Rural Electric Co-ops

This is a candid due-diligence conversation for any co-op weighing whether to get into broadband, with the people who finance these projects. CoBank's lending team and Jeffrey Connor, chief operating officer of the National Rural Electric Cooperative Association (NRECA), walk through what financial feasibility really involves. A broadband build is an enormous capital commitment that can sharply expand, in some cases double or triple, a co-op's balance sheet, often by leveraging member reserves built over decades, and it puts the co-op into a competitive business very different from regulated electricity.

The most transferable points are about how to read a feasibility study. The hosts caution that a consultant can make almost any project look good on paper, so a board's job is to test whether the assumptions are reasonable for its own service territory, and to treat the study as a living document that gets updated as grants, partners, and opportunities change the math. A co-op can use this as a board-level due-diligence guide before committing capital.

Key Takeaways

Implementation Considerations

• Cost or Funding Requirements: The build is a major capital commitment that often leverages member reserves and can strain the balance sheet. Co-ops should map existing loan covenants and grant eligibility before committing.
• Staffing or Technology Requirements: Entering broadband means new governance, board education, employee training, and tax considerations. Co-ops should plan for the added expertise or partner with a consultant or operator.
• Time-Sensitive Information: The episode dates to September 2022 and frames the funding opportunity around the then-new $42.5 billion BEAD program and the Infrastructure Act. BEAD has since been restructured, so treat the funding specifics as dated while the due-diligence guidance still holds.

Notable Examples

• CoBank: Cooperative lender that finances broadband projects. Its managing directors lead the discussion and cite take-rate data from its own portfolio.
• National Rural Electric Cooperative Association (NRECA): Guest Jeffrey Connor, its chief operating officer, describes the governance, training, and advocacy support co-ops need to enter broadband.
• NRTC, TWN Communications, and Conexon: Named as consultants that help co-ops with broadband feasibility and deployment, each from a different angle.

Listen to Episode

Estimated listening time: 25 to 30 minutes