| Resource Type | Case Study |
| Author / Source | Eric Cody (Cody Energy Group), published by NRECA |
| Publication Date | October 2018 |
| Location | Colorado (framework applicable nationally) |
| Initiative Type | Program, Technology, Policy |
| Project Complexity | Advanced |
| Recommended For | Board, Staff |
Estimated reading time: 15 minutes
Why This Matters for Rural Electric Co-ops
This is a close look at how a co-op structures and finances a broadband business, which is what a board needs before it commits. It details how Delta-Montrose Electric Association (DMEA) set up its operation. A wholly owned, for-profit subsidiary, Elevate Fiber, leases the fiber from the co-op, which owns and operates the network for both broadband and electric uses. The two businesses share back-office functions to spread fixed costs.
What stands out is how it managed financial risk, tying construction to demonstrated demand zone by zone. A board can use the case as a working model for the structural, financial, and regulatory choices a broadband venture requires, rather than starting from a blank page. The specific 2018 figures are now outdated, but the structure still holds up.
Key Takeaways
| › | A wholly owned for-profit subsidiary leases the fiber from the co-op and shares back-office staff, spreading fixed costs across both businesses. |
| › | Building a zone only after pre-registrations hit a 25 percent take rate reduces investment risk, with mature zones reaching up to 60 percent. |
| › | As of 2018, DMEA had largely self-financed the roughly $62 million build, though substantial grant funding followed in later years. |
| › | Using electric fiber commercially raises easement and tax issues a co-op must resolve, and the subsidiary may become taxable as it turns a profit. |
Implementation Considerations
- Cost or Funding Requirements: As of 2018, DMEA had funded most of the build with its own capital. Co-ops should expect to commit significant capital up front, even where grants later play a major role.
- Regulatory or Governance Considerations: Using electric easements and fiber for commercial broadband requires perfecting easements, FCC compliance, and care to protect the co-op's tax-exempt status. Resolve these early.
- Time-Sensitive Information: The case study is from 2018, so its subscriber counts, mileage, and revenue projections are well out of date. The business model and financial structure, which are the resource's value, still hold.
Notable Examples
- Delta-Montrose Electric Association: Western Colorado co-op that built and owns the fiber network, leasing it to its subsidiary and using it for both electric operations and broadband.
- Elevate: DMEA's wholly owned, for-profit broadband subsidiary, known as Elevate Fiber in this 2018 case study, which owns the service electronics and delivers the service.
- National Rural Electric Cooperative Association (NRECA): The national association representing electric cooperatives, which produced and published this case study.
Estimated reading time: 15 minutes
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