How one public power company created the blueprint for municipalities interested in offering more than just electricity.

As the electric industry restructures, publicly owned power utilities are lighting up communities nationwide with new possibilities: lower rates, public accountability, local decisionmaking, and… high speed Internet, telephone services, and cable TV?

A public power company providing bundled broadband may sound like an Oscar-and-Felix coupling, but an organization in Bristol, Tenn. is proving it’s really a marriage comparable to Lucy and Ricky’s.

“In our business, we provide customers with comfort, convenience, entertainment, and productivity,” said Dr. Mike Browder, Bristol Tennessee Essential Services general manager. “And we strive to do things for our citizens to create a better electric system and a better community. Cable, Internet, and telephone meet all of those criteria.”

BTES, formerly Bristol Tennessee Electric System, isn’t alone in its belief. According to the American Public Power Association, more than 700 public power systems now offer internal or external community broadband services to their communities. It’s a growing trend that has privately owned competitors crying foul as thousands of municipalities look to see how they can jump on board—and BTES is providing them with the blueprint.

High reliability, low cost
Since its inception in 1945, BTES has sought to find better ways to provide reliable electric service at a low cost. And over the years, the company’s small improvements have added up to make a big difference.

That continuous improvement mindset and adherence to the best practices in the industry have made BTES one of the most reliable power utilities in the nation. In 2005, the company achieved a long-term goal by operating at 99.991% reliability. Two years ago, the company’s peerless service was recognized by the Tennessee Center for Performance Excellence (TNCPE). BTES won TNCPE’s highest quality award—an award scored using the same criteria as the prestigious Malcolm Baldrige Award.

“Any time there is an outage, we review what happened and make changes to prevent it from happening again,” Browder said. “We bring the best practices to Bristol and implement as many of them as we can to help us achieve our goals: high reliability and low cost. And over the years, we continually get better.”

The moral of BTES’s quality story? If you’re a public power utility interested in adding broadband services, make sure you know how to do electric right first. When you are doing it right, your customers will let you know, as they did for BTES in 2005. In a preliminary marketing survey, nearly 90% of customers who responded said BTES should enter the broadband market.

“They wanted us to do this based on our reputation as an electric company,” Browder said. “The company that conducted the survey told us the community has faith in what we’re doing due to our track record. Even though we hadn’t done anything like this before, they had faith in us based on what we’d already done.”

Public versus private
As BTES discovered, the path to municipal broadband is filled with obstacles—mainly those created by cable television and telephone companies. In 2004, private companies in Pennsylvania successfully argued that municipal broadband disadvantaged or excluded competition.

As a result, the Pennsylvania legislature passed a law that requires municipalities to gain permission from their local telephone companies before proceeding with a broadband project. If the private company agrees to offer broadband at speeds the community wants, regardless of cost or quality, the municipality cannot proceed.

Then in 2005, the Supreme Court in Missouri ruled that federal law does not stop states from prohibiting municipal broadband. The ruling led to a flurry of activity as private companies in 14 states tried to persuade legislatures to create barriers blocking municipal broadband initiatives.

James Baller, principal of the Baller Herbst Law Group, which assisted municipalities in a number of these cases, described how public power companies fought back. “The fear and revulsion that the Pennsylvania law created across America enabled us to build a powerful coalition, including national and local municipal associations, consumer groups and grass roots organizations, institutions of higher learning, the elderly, and most important to many state legislators, the high-technology industry,” Baller said in the October 2006 issue of Public Power, a publication of the American Public Power Association.

“The coalition generated a wealth of new data, white papers, responses to industry myths, and the like for the benefit of federal and state legislators, the media, and the public. These materials showed that barriers to public communications initiatives are inconsistent with America’s legacy of self-help initiatives and are bad for the communities involved, bad for the private sector, and bad for America’s ability to remain competitive in the emerging global economy.”

According to Browder, the work of the coalition was instrumental in BTES’s case, and in October of 2004, the Tenessee Comptroller’s Office approved the company’s bid to provide cable TV and Internet service to its 31,000 customers.

Offering a bundle
BTES had a head start on its broadband journey; the company had already installed a fiber optic network to improve communications with its substations and better monitor and control transmission lines. Using that same fiber-optic network, the company could add bundled broadband.

In 2005, BTES partnered with Atlantic Engineering Group to manage the engineering and construction of its fiber-optic broadband system. Georgia-based AEG was founded in 1995 to serve exclusively as an advocate for municipalities interested in offering telecommunications. AEG brought BTES’s fiber-optic cable to the curb, and from there, the power utility partnered with another Georgia-based company, OFS, to bring fiber into the home.

“We outsourced for the things we didn’t have to gear up permanently for,” Browder said. “But we installed 125 miles of 216-count fiber-optic cable with our existing crews before we ever started in this other business, so we knew how to install fiber, splice fiber, and make it all work. With our engineering staff and technical people, we had the abilities required to add on these other services. That allowed us to keep our organization small.”