More than 70 years ago, the state’s electric cooperatives took up a mission in every corner of Arkansas, from the remotest Delta farmstead to the darkest Ozark hollow: Let there be light.
The updated command is let there be broadband.
Thirteen of the state’s distribution electric cooperatives have joined Arkansas Electric Cooperative Corp. of Little Rock in putting real money where their motto is — a $1.66 billion investment in fiber infrastructure for a new wholesale broadband provider, Diamond State Networks. And the new fiber carrying high-speed internet services will ride the same distribution infrastructure that carries electricity to co-op members.
AECC Chief Executive Buddy Hasten, citing home offices, telemedicine and remote learning, said delivering broadband is the next big deal for the nonprofit co-ops — a revenue stream for his members but a headache to telecom competitors who struggle to compete because co-ops were already building fiber networks for monitoring smart grid innovations.
“If it costs $100 to put in a batch of smart-grid fiber, it costs just $100.03 to put in extra fibers that we can use for broadband,” Hasten told Arkansas Business. “Then we take those extra fibers and sell them [as wholesale broadband capacity], so the electric customers aren’t subsidizing anything; they’re actually getting paid for the fiber. So that’s a profit opportunity.”
Hasten said when competitors claim the co-ops have an unfair advantage because they already have lines running to remote homes and businesses, he points out that co-ops and their members paid for the cables, poles and transformers long ago, and have been paying for their upkeep ever since. “When we make this fiber available for all the co-ops to connect to, we’re going to have this big, connected state. And we will be able to negotiate with big internet service providers as one big collective to cut costs.”
50,000 Miles of Fiber
Diamond State Networks, which announced itself with a news release in late May, hopes to cover 64% of the state with more than 50,000 miles of fiber lines. It involves 13 of the state’s distribution cooperatives or those co-ops’ fiber network subsidiaries. The company opened its first corporate office in Jonesboro recently, looking to eventually connect as many as 1.25 million rural Arkansans, 600,000 homes, farms and businesses. The bold goal, according to Diamond State, is to make Arkansas “the most connected state in America.”
Diamond State has co-managing members, CEO Mitchell Johnson of Ozarks Electric Cooperative in Fayetteville and CEO Jeremiah Sloan of Craighead Electric of Jonesboro.
“By bringing these co-op networks together, we’re investing to build a middle-mile network for long-term, far-reaching affordability,” Johnson said at the company’s first annual conference May 23-24 in Hot Springs. “Ultimately it will offer local internet service providers better access and capacity to deliver their services, and better opportunities to directly serve businesses with reliable connectivity wherever they are.”
Doug Maglothin, Diamond State Networks’ director of operations, said only about 20% of the $1.66 million investment came from government grants, though he expects to be eligible for funding from federal Broadband Equity, Access & Deployment (BEAD) and Middle Mile Broadband Infrastructure Program funding.
The 13 Arkansas cooperatives in the DSN project are OzarksGo, a subsidiary of Ozarks Electric of Fayetteville; Farmers Electric of Newport; Clay County Connect in Corning, an arm of Clay County Electric; Petit Jean Fiber of Clinton, a subsidiary of Petit Jean Electric; Enlightened by Woodruff Electric of Forrest City; NEXT, a subsidiary of North Arkansas Electric Cooperative; Wave Rural Connect, a subsidiary of Arkansas Valley Electric; Arkansas Fiber Network, an AECC subsidiary; Four States Fiber Internet, a subsidiary of Southwest Arkansas Electric Cooperative in Texarkana; empower by Craighead Electric Cooperative; MCEC Fiber in Blytheville, a subsidiary of Mississippi County Electric; South Central Connect, a South Central Arkansas Electric subsidiary; and Connect2First of Jacksonville, a subsidiary of First Electric.
Maglothin described Johnson of Ozarks Electric as one of the project’s visionaries.
“He suggested not just building a minimal fiber network to let the co-op check on the smart grid, but build one that was high-capacity, a robust network that connected everyone together,” Maglothin said in a telephone interview.
“That was the vision, and it was really timely. Not very long after that the distribution cooperatives really started to take on broadband projects.”
Diamond State was conceived as a “middle-mile” network, Maglothin said, “bringing together lots of different connectivity providers and tons and tons of data. We want to connect you to points around the state or around the country where upstream internet connectivity can be purchased much less expensively. This will let the co-ops connect the dots and save loads of money. Traditionally Arkansas internet service providers have been basically held hostage by the big national providers, most of whom have never really invested in rural broadband in Arkansas.”
Diamond State won’t be delivering broadband to residences; rather, its customers will be internet providers, mobile network operators and “large-enterprise businesses that want to deal with as few entities as possible,” Maglothin said. “We’re working with a large number of internet service providers outside of the cooperative family that can also benefit from better middle-mile access across a dominant state network. We’re deploying an 800-gigabit network capable of dozens and dozens of terabytes of capacity. It’s effectively a kind of interstate system for broadband. Serving remote parts of the state is very challenging unless you have access to major corridors for big-time bandwidth.”
Diamond State is building its network in two phases, largely using co-op employees to do the work. “Supply chain issues have kind of hemmed us up, but we are finishing up the Phase I network, which will be done probably by the third quarter this year,” Maglothin said. The first phase, connecting the 13 co-op partners, runs from Fayetteville east to Jonesboro, then turns southeast all the way to Texarkana, then back up to Fayetteville.
“We call it the triangle,” Maglothin said. “Phase II will leave Texarkana going east, eventually all the way to Lake Village, we hope. From there it’s north through the Delta region through Forrest City and back into northeast Arkansas around Blytheville.”
Steve Bandy, the general manager of OzarksGo, said it’s not surprising that high-speed broadband and the modern smart grid go hand in hand, strung together in the same bundles. “Where everything is headed with the internet of things, you have to have a good electric grid,” Bandy said. “And with distributed energy, electric cars and other things coming at you, you have to have some type of network to move all that data across.”
“The fiber backbone that the cooperatives have was really formed to provide information on grid stability, power outages and other data central to the electric grid of the future,” Bandy said. “Diamond State Networks will allow us to communicate from the co-ops to AECC statewide.”
The biggest struggle for the next couple of years may be keeping up with demand, Bandy said.
“Even before the pandemic broke out, it was hard enough to keep pace with demand. Then everybody was working and schooling from home; telemedicine opportunities took off. So demand has skyrocketed, and consumers want much more bandwidth than in the past.”
Jumping in on that theme, Maglothin said the number of customers taking gigabit services these days “is astronomically higher than we ever anticipated being at this point in the model. We’re implementing capacity that almost strikes you as crazy.”
Diamond State’s leaders also point out that it’s an all-Arkansas project. “When historically you want to connect to the global internet, you’re doing business with a national or international company, and that takes that money out of state,” Maglothin said. “All of the electric cooperatives are owned by Arkansas residents they provide electricity to. So Diamond State is kind of a self-fertilizing system. Cooperatives are sort of vertically aligning their costs, right? And those costs won’t be spent out of state on expensive services from national providers.
“It’s a truly Arkansas based ecosystem all the way from top to bottom.”