Gibson Connect Leverages Fiber Success for Bigger Buildout

As a new service provider, Gibson Connect has what could be called the best of both worlds: Its parent company, Gibson Electric Membership Cooperative, has years of experience running an MPLS transport network and selling dark fiber and Ethernet services, giving it a strong telecom history and base. As an electric cooperative in Tennessee, Gibson EMC also has a potential customer base of existing member-owners. And as a greenfield provider, Gibson Connect LLC can go straight to the latest generation of access technology, software-defined access, for greater efficiency and quality of service.

All that is adding up to a projection of a 40% take rate as Gibson Connect launches its first high-speed Internet access service zones in Medina and Mt. Zion, Tennessee, according to Robin McCaig, network and managed services coordinator for Gibson EMC. That's a fairly rapid turn-up for a unit that was legally born a little more than a year ago, in the wake of a new Tennessee law that lifted a ban on electric cooperatives providing retail telecom services as long as they use a separate subsidiary.

Gibson EMC is one of many electric co-ops in Tennessee expected to roll out broadband networks following that shift in state law.

McCaig tells BBWN that Gibson Connect is determined to serve every one of its member-owners with the same level of service, even those in very rural areas. That means making sure the company takes full advantage of such things as software-defined access and subscriber management from a Web interface. The company chose Calix as its access vendor and started its initial deployments with the vendor's Ethernet eXtensible Architecture (EXA) before moving to the newer AXOS platform as one-gigabit passive optical network (GPON) cards become available.

"We'll get started with the e7-20, get it mature and make sure service is robust and experience to the customer is perfect, and we will at some point in the future upgrade from EXA to AXOS," McCaig says. "We have our first shipment of AXOS cards now, but we didn't have adequate time to do testing on them."

Gibson Connect has divided its 38,000 electric member-owners into 27 zones and is choosing which to build through a crowd-sourcing process, similar to what Google Fiber did back in its early days. Customers can sign up for the service online and as each zone reaches the threshold for construction, it is scheduled.

So far, six zones are set for construction to begin this year, with ten others above the 50% line. Phase one of the plan includes the first three zones that met participation goals, plus three more in underserved Lake County that are being funded by a state grant of $1.24 million.

"We should have all of phase one finished in 12 months," McCaig says. "The timeline is that by year four, we will have the whole system built out, spanning 38,000 electric customers in two states, where we provide power in west Tennessee and west Kentucky. It's a pretty good geographic area that has to be done, so it will take some time in terms of building that out."

McCaig also anticipates applying for federal Rural Utility Service (RUS) funds or other money, or ultimately borrowing from Co-Bank, which is part of the US Farm Credit System.

But much of the funding is coming from revenues generated by its middle-mile fiber business, he notes.

"We have been doing lit transport services since 2005 and dark fiber leases," McCaig says. "We have been saving the members money and we are re-investing all that money that we had saved, and those contracts [have been] transferred to the subsidiary, so they will continue to fund our build-out."

The biggest challenge so far is getting nimble on the competitive side, preparing to price and package services in a competitive way and respond when a competing telco or cable company lowers prices. That's not something a utility company is used to doing, he admits.

"It's just a learning curve when you are going from traditional active Ethernet deployment turning up businesses for transport and you get a premium for point-to-point 1-gig line between hospitals and schools and that kind of thing and then you get into the retail space where you are having to compete against incumbents offering DSL," he says. "Your price points have to change in order to be competitive."

Gibson Connect is starting out with a 250-meg service priced at $59 a month, which is quite a speed upgrade in most of its service territory. It is also offering VoIP, and is outsourcing that and 24-7 customer service requirements to Momentum Telecom. The company is still mulling what, if anything, to do about video service. The intent there would be to find a revenue-neutral way of offering that to Gibson Connect customers as an option, he says.

He admits that not everyone is happy to see an electric coop get into the broadband business, particularly smaller cable operators with which Gibson Connect will now compete.

"We think we can beat them from a service standpoint," McCaig says. "Since we've announced and actually started building, we have had one provider try to do [fiber to the home] in the same area and a big one, AT&T, is starting to deploy fiber in some of these areas. But they are not interested in these rural markets. We will offer it to every one of our electric members over a period of years. We are going to provide uniform services across our service, and take care of our member-owners."

— Carol Wilson, Editor-at-Large, Light Reading