NCSC Helps Finance Broadband Projects in Eastern Kentucky

Like many rural areas, eastern Kentucky is trying to expand its access to high-speed broadband, but few of the large, national carriers are interested in investing the money to get it done. That’s why NCSC is proud to be providing financing to support multiple fiber-to-the-home (FTTH) broadband projects being rolled out by Peoples Rural Telephone Cooperative (PRTC) and its subsidiary, Peoples Telecom (PT).

“Where we’re located in eastern Kentucky, there’s such a great need for broadband, and we’re trying to figure out any way to help these people improve their quality of life,” PRTC CEO Keith Gabbard said. “I’m passionate about it.”

Headquartered in McKee, Kentucky, PRTC had early success rolling out FTTH projects in its two home counties of Jackson and Owsley. Residents and businesses there have enjoyed high-speed fiber broadband since 2014. With some of the fastest broadband internet connections in the country, the area around McKee was nicknamed “Silicon Holler,” and has attracted a range of tech entrepreneurs, work-from-home businesses and Airbnb properties to the area.

More recently, PRTC launched broadband projects in nearby counties. “We’re working with all the counties adjoining us,” Gabbard said. “Our two core counties are already all fiber, but other areas nearby have been coming to us asking to install fiber. Most areas are struggling if they don’t have fiber.”

Some of those areas are eligible for government grants and loans and have even already received government funding. “In some cases, we have projects where we have to match the government funding, and that’s where NCSC comes in,” Gabbard explained.

Government Funding Success

The areas where PRTC is building do not have many customers per mile, which is one reason the larger carriers are not interested in investing. 

“In our ILEC area, we have six to seven customers per mile. For the CLEC areas, we would love to have 20 or more potential customers per mile before starting a build, but in many cases, we don’t have that. Larger companies want 100 or more per mile or they won’t run service,” Gabbard said. “In our CLEC areas, we’re also competing with other companies, so that makes it harder to make a business case. So generally, we look for a government grant or other funding.”

In 2023, PRTC received an RUS Reconnect 4 50/50 Loan/Grant to deploy FTTH in two counties. The NCSC funds will be used across several different projects over the next few years.

“We’re now building in six different counties, with projects in different stages,” Gabbard said. “Some projects are underway, some are getting ready to start, some are still being planned.”

Cutting Costs by Hanging Fiber

The terrain of eastern Kentucky—which can be rocky and uneven, with mountains, forests and streams—can make broadband projects difficult to build. PRTC runs most of its fiber above ground, using electric utility poles, which is cheaper than burying the fiber. But there are still significant costs involved in hanging the lines. 

“Make-ready fees to modify or change out electric utility poles and ongoing pole attachment fees are an issue for us, especially with investor-owned utilities (IOUs),” Gabbard said. “They will charge us a lot, which can lead to higher project costs. An IOU might charge $30,000 just to look at a project.”

Fortunately, most of PRTC’s construction is in electric cooperative areas, where fees are more reasonable. “Co-ops are easier to do business with, and have a quicker response time,” Gabbard said. “Jackson Energy, whose headquarters is also in McKee, is the main electric co-op in our area, and if we’re building in their territory, they’re still charging us, but not an exorbitant rate.”

First-Time NCSC Funding

NCSC provided both a term loan and a line of credit to PRTC—the first time the cooperative has borrowed from NCSC. 

“We spoke with our industry contacts, and NCSC was mentioned as a good source of additional funding,” Gabbard said. “We also knew NCSC would work with RUS. That was important since the collateral backing the loans is shared.”

PRTC Chief Financial Officer Christine Duncan added, “I supported working with NCSC because of NCSC’s expertise in working with rural telecommunication cooperatives and understanding our industry and our specific needs.” 

She continued: “I also liked the different loan options and the flexibility that NCSC showed. I am happy with the way the loan process went, and I would certainly recommend NCSC to other borrowers.”