CFC Helps Cooperative Bring Broadband to Rural Indiana

In the middle of the COVID-19 pandemic, northern Indiana distribution cooperative Kosciusko Rural Electric Membership Corporation (KREMC) launched an ambitious project to build a new broadband internet network to serve its members. Financed by CFC, the 1,106-mile fiber-to-the-home (FTTH) project was completed earlier this year and is now operated by KREMC subsidiary Kosciusko Connect.

There were several factors that led the KREMC board of directors to greenlight the $39 million project in September 2020.

“The primary driving factor at the time was COVID-19. The world had just been thrown into chaos, and everyone was trying to figure out how to work and learn from home. We heard repeatedly about the importance of a fast, reliable internet connection for those applications,” KREMC CEO Kurt Carver said. 

A feasibility study commissioned by KREMC found that existing internet options in the cooperative’s service area were subpar—mostly digital subscriber line (DSL), satellite or fixed wireless. This reinforced the need for broadband internet.

“Once our board approved the project proposal, we were committed to working as hard as possible to build and deploy the network. The entire Kosciusko REMC and Kosciusko Connect teams were driven by their passion to provide this essential service to our members because the need was so great,” Carver said.

Fast forward to July 2023, and Kosciusko Connect has more than 7,000 customers, representing a take rate of 38% of KREMC’s roughly 18,500 members. And the forecast is for 7,800 connected customers by the end of the year. Carver says members have been very happy with the new service.

“The response has been overwhelmingly positive. We constantly hear from our members on our social media channels, during customer service calls or at events about how pleased they are with their service and what an impact it has made on their day-to-day lives,” he said. 

Broadband Improves Lives

Having a reliable connection to do business, work or learn from home, and communicate is vital for KREMC’s members. 

“We believe it will fundamentally change our local economy for years to come,” Carver said. “Our area is heavily agricultural, either in manufacturing, crops or processing of corn and soy.  Each of these businesses along with their employees will need access to reliable and affordable internet service to thrive as part of both a regional and a global economy.”

He added, “Now, our business customers have access to a team of seasoned professionals at Kosciusko Connect that can provide them with unified communications solutions. We can partner with them to help solve even the most complex connectivity challenges. Many times, depending on the business needs, we can also help lower their monthly recurring costs.”

There are also many benefits that residential members experience. 

“Having fast, reliable internet can give members access to services they could not use before. These are things like online learning, virtual medical appointments, streaming video services and the ability to work from home, to name a few,” Carver said. 

Fiber Will Help KREMC’s Smart Grid Capabilities

KREMC owns the fiber optic cable and leases it back to Kosciusko Connect, which is responsible for the communications huts and all the technical hardware to operate the network and provide service to customers.

Through this arrangement, KREMC uses a portion of the fiber network to enhance electric cooperative-related communications and other “smart grid” services.

“We will utilize a portion of our fiber network to connect SCADA devices in the field,” Carver said. “We also have some AMI solutions in place where we can utilize our network. We are currently working with our wholesale power provider, Wabash Valley Power Alliance, and our network engineers to develop a plan.”

KREMC partnered with Conexon to plan and build the network, and construction initially focused on connecting electric cooperative members to Kosciusko Connect. But with the network now rolled out to all KREMC members, the cooperative is starting to connect nonmembers.

“We felt it was extremely important to prioritize building to our membership before offering service to nonmembers,” Carver said. “We are now connecting a small number of customers that are not members of KREMC. These customers reside near our lines or where we built fiber through an area on our way to serve our own members.” 

CFC Financing, Government Grants Help Fund Network Rollout

The project received about $2.1 million of state-level funding in 2022 as part of the third round of the Indiana Next Level Connections Broadband Grant Program. Another $368,000, over a 10-year period, was won through Phase I of the U.S. Federal Communications Commission’s Rural Digital Opportunity Fund. 

KREMC tapped CFC for the balance of the financing.

“CFC has funded 100% of the build. CFC's process of borrowing was simple and easy, and kept our project moving forward,” Carver said.

KREMC is currently evaluating areas for future network expansion. Some of these plans will be influenced by what happens with the U.S. Department of Commerce’s Broadband Equity, Access and Deployment Program, which is set to allocate $42.45 billion for high-speed internet service in unserved and underserved areas across the country.

“Every dollar helps when building a network like this, and anytime we can feasibly get grant funding to build, we’ll do our due diligence to see if it works for our area and formulate a plan to obtain funding,” Carver said. 

Lessons Learned

Looking back on the past few years, KREMC has learned some valuable lessons from its broadband experience.

“We went from spending more than 80 years as an electric distribution cooperative to growing a telecom startup subsidiary company. The biggest lesson learned is that it’s not easy, and you should expect to be in a constant state of learning every step of the way,” Carver said.  

“We have been successful because of the dedication of our employees to our membership. We stayed safe, worked hard and our customers have now felt the life-changing experience provided by digital connectivity,” Carver concluded.