PEPA Members for Rural Broadband Internet created social media sites Wednesday. By Friday, the Facebook page had more than 1,800 followers.
“We have over 400 people supporting us, and we only formed two days ago,” said organizer Jackie Courson. “We hope to have at least 1,000 by the first week of May when the board meets again. “We’re not adversarial but are advocating for letting the owners get back involved.”
PEPA voted against offering broadband during a special called meeting in early April. The other 11 cooperatives in the Daily Journal coverage area have all agreed to move forward and provide internet service to rural areas. “Some just see it as a nuisance,” said Northern District Public Service Commissioner Brandon Presley. “That is Model T thinking in a Tesla world. You have to view it as an investment in the future.”
Officials with PEPA said it was not economically feasible to proceed. General manager Chuck Howell said the anticipated cost of up to $48 million to create a fiber network outweighed the limited income the system would provide.
“One study said it would only be financially feasible after 22 years, and then just marginally,” Howell said. “The other two said flat out is was not economically feasible.
“We are not going forward at this time. It might be reconsidered in the future, if the finances change, such as more grant money becomes available.”
But Courson and Presley question the sincerity of the board’s actions and their quickness to dismiss the matter. At the March PEPA board meeting, Howell reportedly said the limited survey response showed the people wanted broadband.
When Courson and another member showed up for the April 6 meeting to find out more about the third feasibility study, he said they were blindsided, twice. First, the board voted to limit discussion to just two people per topic and limited them to five minutes each.
“It was only after that we learned they had voted down broadband at a secret meeting four days before,” Courson said.
Both Courson and Presley questioned the PEPA member survey. Instead of sending it direct mail to the members or including it in the monthly power bill, the cooperative attached survey as a cover wrap on the Today in Mississippi magazine.
“That was a flawed approach,” Presley said. “Nobody looks at that. Even I throw it away when it comes in my mail.”
Howell said they sent out more than 16,000 copies of the survey and had 2,538 returned. But not everyone got a survey. Courson didn’t get one and had to seek out a survey. He said so many people did not get surveys that the board had to extend the deadline to turn them in.
Courson and Presley both questioned the wording of questions that seemed to be written in a way to get a negative response. Courson said it had “some of the most awful questions.” Presley went further.
“One of the questions presupposed every negative context,” Presley said of the question that asked if the member would be willing to put up the entire electric system as collateral for a $7 million loan to build a fiber optic network. “It didn’t account for the nature of a balance sheet.
“Yes there is an expense in a capital outlay, but you also get an asset in the network. It’s like when you buy a truck. Yes there is a debt, but you also get the truck.”
Because PEPA did not release detailed financial reasons for their decision, Courson and Presley question if officials investigated all possible options. Presley mentioned buy-back options that would allow the provider to purchase the network within the first year and the cooperative to walk away with limited losses.
“We looked at a buy back option but you don’t know if you’ll get 10 cents of the dollar or 50 cents,” said board president Larry Parker. “Nobody would spell that out. And PEPA would still have to pay back the full loan.”
Another question is pole fees. To offer broadband, PEPA would have to form a separate company. To hang fiber optic cables on the PEPA, the subsidiary would have to pay yearly pole rent, just like private companies. Officials said that $1.8 million expense was enough to doom the project.
“The electric side can loan that money right back to the broadband side as a capital investment,” Courson said. “The electric side can pay off the fiber between substations as an infrastructure upgrade to make it possible to have automatic electric meters. There are lots of different business models that were not explored.”
One report showed around 75 percent those who did respond to the survey would buy internet from PEPA. If just those 1,900 members bought the 1 gigabit service at $80 a month, it would provide more than $1.8 million in revenue per year.
But Howell said demand for the service and potential revenues were “not the primary motivator for the decision to not move forward.”
“We got comments both ways,” Howell said. “Certainly, there are people out there who want it. Others thought the board did the right thing by not exposing the association to that much financial risk.”
Parker agreed, saying “It is a very complex issue. I realize there is a demand for it. I would have loved to do it, but financially it is too much. The money wasn’t there and there are too many unanswered questions.
“We even looked at building it and leasing the system, but they only wanted to have a managerial role and not assume any liability. We truthfully tried every way possible to make it work.”
The official explanations have not satisfied Courson or the other members who were looking forward to fast, reliable and affordable internet service. The opposition group has already started working and will have meetings once the social distancing orders caused by the COVID-19 pandemic are lifted.
This fall will bring PEPA elections and the chance to put three new people on the board. But Courson doesn’t plan on waiting to force a change.
“I don’t want to wait until November to do something,” Courson said. “We need to go ahead and address this issue now.”
If the grassroots effort is not enough to convince PEPA to provide rural broadband, there is a chance another EPA could step up to the plate. There is nothing in the state law that prevents a cooperative from offering broadband outside its electric coverage area.
The managers of the adjoining Northeast Mississippi (Oxford) and Tallahatchie Valley (Batesville) EPAs said they were looking into the possibility of moving into the PEPA area further down the road.
“We have consultants looking into that,” said Keith Hayward of NMEPA. “If we can secure some (federal) money, we might be able to do that, but it would have to make financial sense.
“We hope to build a platform for our members first, but we will definitely take a look.”
And if another cooperative decided to move into the PEPA area, it would most likely get the blessing of the public service commission.
“It would be a shame and disgrace if another cooperative had to come in there and serve their member owners,” Presley said. “I have no objection to one EPA going into another’s coverage area, but I think it would work best if the community serves itself.”
©2020 the Northeast Mississippi Daily Journal (Tupelo, Miss.) Distributed by Tribune Content Agency, LLC.
