Central Virginia Electric Cooperative intends to use its overhead power lines to deliver the internet at download speeds between 100 megabits and one gigabit per second.
The company says it will make a $10 million investment in Louisa over the next five years as part of a $110 million plan to provide broadband to 36,000 customers in 14 counties.
Gary Wood, CVEC’s president, compared the project to his company’s work in the 1930s, providing electricity to farms and homes that had been left in the dark. He unveiled the details at the Thomas Jefferson Planning District Commission’s legislative forum in Charlottesville on Nov. 29.
“If the market won’t come here, we’ll build it ourselves,” Wood said of electric cooperatives’ founding mission. “We’re a little bit back in that situation today.”
He said CVEC, a non-profit, can afford to do this because it operates on low profit margins, unlike for-profit companies that must produce windfalls to satisfy shareholders.
But, like for-profit firms, CVEC needs to focus first on areas that have the most population density or are the lowest-cost to serve, to realize enough revenue to pay for later phases of the work. That will likely mean installing fiber and competing with existing providers in areas such as Zion Crossroads that already have high-speed internet.
Wood said the company plans an “aggressive” approach during the first year of work in which it will install fiber along 15 to 20 miles of power line each week. In some locations the company will bury fiber underground.
The electric cooperative has an incentive to lay fiber throughout its service area, he said, to enable high-speed applications like smart meters which can eventually lower costs for the utility and customers.
The company announced its intent last February to explore providing internet to customers through a partnership with AcelaNet, a for-profit internet service provider that acquired Louisa-based CVALink LLC in 2016.
But Wood said Wednesday the cooperative now has a different plan. CVEC will own and install the fiber, then lease it to a subsidiary firm it is founding. That firm will then sell internet service to customers.
“We own a bunch of power lines and cleared right-of-way, so it’s a little cheaper for us,” he said.
Wood said customers would be offered 100 megabit download speeds for $49.99 per month, and 1 gigabit for $79.99 per month. Though there will be a $100 installation fee, that will be waived for people who sign up as CVEC is working in their neighborhood.
The company can break even on its investment in 11 years, Wood said. But to do that, he asked local governments to help. Between local government grants or incentives and other state and federal funding sources, the company would like to cover 20 percent of the overall project cost.
“That would help us during the first five years, which will be a sensitive period,” he said.
CVEC’s broadband initiative is one of several in the area, with the county preparing to build several towers to transmit wireless internet signals and Louisa County Public Schools burying fiber-optic lines to provide faster broadband to four elementary schools.
David Blount, TJPDC’s legislative liaison, said he would like to see state legislators act in the upcoming General Assembly session in Richmond to allocate funding for broadband service expansion.
His agency proposes raising the communication sales tax, which consumers pay on their phone or internet bill, from 5 to 5.3 percent and imposing it on new technologies that are not covered by the tax such as video streaming services. The tax increase would net the state $24 million in revenue that could be used to support rural broadband expansion.
“I think, as much attention as broadband has gotten over the past year, there’s a possibility of more money,” Blount said. “But the state will have a tough budget year as it always does.”