PGEC eager to begin internet expansion following county funding recommendation

By: Michael Campbell, News Editor

PRINCE GEORGE – Supervisors unanimously, but with hints of reluctance, voted in favor of a recommendation to have $1 million from the county’s spring borrowing transferred to the county’s industrial development authority as part of a plan to help fund Prince George Electric Cooperative’s effort to expand broadband in the county.

As part of the recommendation, the county would allocate the $1 million that was earmarked for the county’s broadband expansion efforts from the spring loan proceeds to the IDA, who would then create a “Broadband Expansion Grant” that would be awarded to an LLC under PGEC, PGEC Enterprises, who would then use the funds to “help cover the overhead costs of this project.”

A contract would be created between the county, IDA, and PGEC that requires, as part of the funding, 500 customers be brought online with Internet service and speeds of a minimum of 25 Mbps by July 1, 2021, along a proposed fiber network that will criss-cross through the county, linked by the electric cooperative’s substations.

Last Wednesday’s decision came following a prior work session where supervisors were pitched the idea for the grant by deputy county administrator Jeffrey Stoke as representatives from PGEC made themselves available to answer questions, where he equated the role electric cooperatives had in expanding electric services through rural America during the early 20th century to this endeavor to do the same thing with broadband internet service, noting that big companies, such as NBCUniversal owner Comcast and communications titan Verizon, have little interest in trying to expand their offerings to Prince George due to a low return on investment.

Stoke added the number of last-mile grants, which covers the link between the fiber and broadband infrastructure and the end user, such as homes and businesses, are few, with only a few Virginia counties receiving funds to cover the costs, leaving rural communities left wondering how to expand broadband Internet services.

He went on further to point to an example of a locality working on its own to bring the internet to its customers: Surry County. While Surry has worked for a number of years to have fiber installed in the county through grant and other funding, the county’s internet service provider, SCS Broadband has yet to begin providing service to Surry locals, with the denial of Surry’s application for state grant funding for related internet service costs totaling $65,000 proving to be an additional setback the county is working to overcome.

During the May 9 work session, Stoke noted that a proposal by Blacksburg-based Design Nine to utilize nearly a dozen towers, a mix of new and county-owned towers, for wireless internet access in the county could see a price tag that would lead to the service provider reaching out to the county for some form of subsidy.

(Source: Prince George Electric Cooperative via Prince George County)

With the map of PGEC’s fiber network as a backdrop, Stoke called the cooperative’s idea “elegant,” which would see Prince George Electric Cooperative install fiber throughout the county in an effort to create a “smart grid” between its power substations, with PGEC Enterprises serving as the ISP, who would offer internet service to customers and businesses, similar to the ongoing pilot program along West Quaker Road and Prince George Drive, where over 50 homes are connected to the internet through the cooperative.

A recurring theme from the May 9 work session and last Wednesday’s meeting was concern about providing $1 million to the cooperative and their commitment to rolling out internet services to more customers once the 500 contracted customers are brought online by 2021, not including customers in the original pilot program.

According to county documents, the $1 million that was part of the spring borrowing earmarked for broadband was going to be used to construct a system “built with regional connection opportunities” based on a concept of having “the County own the assets (towers/cables) and lease space to internet service providers who will operate the service.”

As part of the proposed three-legged contract between PGECE, the county, and the IDA, that $1 million from this year’s spring borrowing would be used in a grant given to PGEC in order to “help cover the overhead costs of this project.”

The contract also stipulates those customers shall be “within 1,000 feet of a VDOT road” and receive a minimum speed of 25 Mbps download and 3 Mbps upload, with no caps on data usage.

Additionally, the contract calls for PGECE to construct and make fiber optic cable connections available to all public structures owned and operated by the county that is within 1,000 feet of a VDOT road, including schools, libraries, fire stations, and wireless communication towers, among others.

PGECE will also provide internet service to the Central Wellness Center, Prince Geroge Emergency Crew building, the Burrowsville Fire Department and the town’s community center for the residential rate of $82 per month with a leased router during the term of the agreement. When that period ends, the rate would convert to the commercial rate.

Finally, PGECE would have to return $2,000 for every connection not completed under the 500 subscription threshold outlined in the contract after the four-year period, with the company being required to provide documentation to the county and IDA annually beginning in July 2018 verifying new subscribers with a minimum of one-year subscriptions each.

At last Wednesday’s meeting, supervisors went back and forth with PGEC President and CEO Mike Malandro, who argued that providing the full $1 million would help the cooperative “hit the gas” and begin making purchases of equipment and materials for the project, adding that splitting the funding into two payments of $500,000, with the final half coming after 250 customers are connected, would slow progress.

“It’s not efficient to do it that way,” he said as county leaders listened on. “We are not going to negotiate for part of the project, we are going to negotiate for all of the project.”

For Supervisor Alan Carmichael, he saw the proposal as less of a grant and more of a loan and questioned if PGECE would consider reimbursing the county once it doubled the 500 subscriber requirement, which Malandro countered by saying the money provided by Prince George would help improve return on investment, allowing for additional margins from the expected subscriber sign-ons to be “reinvested” into the customer with the plan to expand beyond the contracted 500 customers.

Board Chairman Bill Robertson reflected on Stoke’s comparison to rural electrification during the early 20th century, noting that while he did have apprehensions about providing $1 million to the cooperative, he understood that “it’s not going to get to rural areas unless the government helps.”

Following the unanimous vote, Malandro was optimistic as PGECE now awaits a vote from the IDA, the final leg of the three-entity contract, before the funds move over to the cooperative as a grant.

He also spoke to the concerns of supervisors inside the boardroom who questioned how the funding would be used and if it could be broken into smaller payments, saying he understands their reservations.

“They are allowing taxpayer money to be spent to help subsidize us in a grant,” he said. “When we started down this road, we had reservations but I think we are seeing it very clearly now that we can make a success out of this,” projecting the 500-customer goal to be reached in 24 months, two years ahead of schedule.

He added that PGECE’s service would not be limited to the confines of Prince George’s borders, saying this project is the start of broadband development and its possible service could be offered to other areas.

Malandro went on to say that PGECE is committed to bringing more than 500 customers online during and beyond the contract’s 2021 deadline.

“Once we hit 500, we are just going to keep moving,” he said. “At that point, we will sit back and evaluate and see how fast we can move forward. When the co-op started with electricity, it took about 20 years to get electricity to all the farms in rural America. It didn’t happen overnight.”

“I don’t think that is going to happen overnight for the broadband either, but I think the cooperatives are in the best position to provide this,” Malandro continued.

For those over 1,000 people noted as potential customers in the county’s GIS data and dozens of others who may be PGEC customers that may be interested in the broadband service, Malandro has a simple message.

“Be patient. We’re coming,” he said enthusiastically.

The IDA is expected to meet sometime in June to discuss the contract matter and take action.

Copyright 2017 by Womack Publishing
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