Arkansas city charting path for broadband

Six year ago, Clarksville's leaders invested $1.25 million of reserve funds to install a fiber optic network to connect city-owned electric, water and wastewater utilities. City officials wanted a "communications interstate" that relied on technology to monitor and control utility operations.

That initiative turned into a sweetheart of a deal and has pushed the community of about 10,000 residents to the forefront of broadband deployment in Arkansas -- an effort the city controls.

Clarksville has invested nearly $11 million, including money from a bond issue, to build a fiber infrastructure that can deliver super-fast internet – up to 10 gigabits per second if required – to homes, businesses, schools and hospitals. The Johnson County community boasts it is "Arkansas' First 2 Gig City" on a billboard posted near the Interstate 40 exit that leads to the city.

"For the last year and a half we've been building out fiber to the home," said John Lester, general manager of Clarksville Connected Utilities, which operates the broadband network. "We believe that no one can better serve the Clarksville community because we're owned by the Clarksville community."

Other communities in Arkansas have not had the same luxury as cities such as Clarksville: they are left at the mercy of broadband providers who take years to install high-speed service on their own timetable.

Arkansas consistently fares poorly in national rankings for access to broadband service, generally defined as 25 megabits per second of downstreaming speed and 3 Mbps of uploading.

BroadbandNow, an organization that analyzes Federal Communications Commission and other public data, ranks Arkansas 41st in the nation in broadband access for residents and businesses. U.S. News & World Report put the state dead last in the category.

State law also has slowed investment by prohibiting cities and counties from acting on their own to raise money and build networks.

"Arkansas is one of the most severe states when it comes to restricting local opportunities to invest in broadband," said Christopher Mitchell, director of broadband monitoring at the Institute for Local Self-Reliance of Washington, D.C.

Fueled by the covid-19 pandemic, efforts are underway to improve the state's standing and deliver broadband to rural residents.

New state legislation, combined with public and private funding, is motivating communities, electric cooperatives and communications companies to extend high-speed internet across Arkansas in the coming years.

Quick improvements could be on the way as a result of Senate Bill 74, which gained unanimous approval in the Legislature in January and is awaiting Gov. Asa Hutchinson's signature. The bill allows cities and counties to raise money and form partnerships to fund and install broadband networks.

State law has restricted communities from acting on their own to build fiber networks unless, like Clarksville, they have a city-owned utility.

Cabot is ready to raise $20 million through a public bond issue and build a fiber-to-the-home network ready to offer service by next summer. "The people of Cabot are ecstatic," Mayor Ken Kincaide said. "We'll be ready to take action quickly once the governor signs the bill."

Likewise, the bill will allow Clarksville Connected Utilities to extend its network to help five small communities in Johnson and Logan counties: Coal Hill, Hartman, Paris, Scranton and Subiaco. "All of these areas could work together to create a management entity where every community has a seat at the table," Lester said. "We've already started working on applications to get approval to expand."

Arkansas and other rural states present challenges for broadband providers. Networks in rural areas typically cost significantly more than those in densely populated areas but offer far less revenue in return

A spread-out population and challenging topography means there are higher risks associated with network investments. Densely populated areas, like Central and Northwest Arkansas, provide more potential customers and more revenue per mile of network. More customers and more revenue means less risk for the providers.

Windstream, for example, recently won $56 million in an FCC auction to expand broadband to 19,000 households in Arkansas. The company has 10 years to use the funds to deliver service under the federal agency's rules.

Subsidies are necessary to spur investments in rural communities, according to Windstream chief executive Tony Thomas.

"It wasn't economical for Windstream to build there without the subsidy," Thomas said of the areas the company plans to serve. "When you combine the subsidy with the retail revenue, we'll be able to generate a [profitable] return."

Windstream was one of the top five companies in Arkansas to win federal money through the FCC's Rural Digital Opportunity Fund auction, according to results announced in December.

In Arkansas, the auction allocated $424.2 million to provide broadband to 200,612 unserved homes and businesses over the next decade. The FCC said that nearly all auction winners will deliver speeds of at least 100 Mpbs download and 20 Mbps of upload speed. The agency also said about 90% of the unserved areas will get gigabit-speed broadband.

Arkansas' rural electric cooperatives -- established in the 1930s to deliver power primarily to farmers and ranchers in remote areas -- also were big winners in the FCC auction.

Eleven members of Arkansas Electric Cooperatives Corp., were awarded $233.7 million in the broadband auction, said Buddy Hasten, the co-op president and chief executive. The individual co-ops will help close the digital divide in Arkansas, according to Hasten.

"Co-ops were formed not just to provide electricity but to improve the quality of life for rural Americans," he said. "Broadband expansion is a big task and it's not easy but it's something we've taken on as part of our mission."

In 2018, North Arkansas Electric Cooperative's subsidiary NEXT was awarded $22.6 million in another FCC broadband auction. The utility will receive $2.6 million annually for 10 years and is in the middle of a five-year plan to offer broadband to the co-op's more than 29,000 members.

NEXT now has more than 5,000 fiber customers and connects an average of 115 new subscribers each week, company officials said.

"Our goal is to surpass 10,000 subscribers in 2021," Chief Executive Officer Mel Coleman said. "Our employees and contractors are working as quickly as possible to bring NEXT's high-speed Internet to the rest of our membership. With more people than ever working and learning from home this past year, we know the improved quality of life access to reliable, fast internet brings."

While FCC programs may provide a long-term solution, the state has used $114 million in stimulus funds provided by the federal government to expand broadband in a matter of months. Last year, the pandemic relief funds were combined with another $4.5 million in state funds to offer new broadband service to 75 rural areas.

The state, through the Commerce Department, worked with county judges and mayors on the initiative. Local officials assess the community's broadband needs, work with a provider and then apply to the state for grant money to pay for the project.

"Communities are in a far better position than we are at the state level to determine exactly what their needs are," Commerce Secretary Mike Preston said.

The state's second broadband grant was awarded to Pinnacle Telecom of Fort Smith, which received $1.9 million in July to expand broadband in Ozark.

By December, the investment was producing benefits for customers like Randy Ellis, who rents rooms to seven tenants in his Franklin County boarding house. Ellis was paying about $110 per month to receive 50Mbps from two lines provided by CenturyLink.

With Pinnacle, he pays less money -- about $90 monthly -- for one line delivering 100 Mbps. "When Pinnacle came into town, I jumped at the chance to change," Ellis said. "I only need one line and get a faster speed at a cheaper rate per month. As a business owner, the speed and the costs were better benefits for me and my tenants are happier with the service."

As much of Arkansas races to catch up to basic broadband deployment, Clarksville's leaders already are looking ahead to providing 10-gig service to residents. The infrastructure is in place and the only barrier is the cost of equipment that homeowners will need to receive the service.

"The only obstacle right now is the gateway or the router in the home -- it's at a price point that doesn't make a whole lot of sense to deploy," said Lester, leader of the project. "But we all know what happens to the price of electronics -- it's going to drop."