Arrowhead Electric Cooperative has been involved in its broadband initiative since Cook County’s first round federal grant application was unsuccessful. When a second round AECI/Pulse Broadband joint grant application was approved, Arrowhead announced that the cooperative would venture to construct a countywide fiber optic network using federal funds, without a need for funding from 1 percent tax referendum proceeds.
A mix of federal grant and loan money totaling about 16 million dollars had been awarded, with matching funds of $600,000 from AECI required to complete the funding process.
AECI management realized that the project would be more costly than anticipated and went to the county board with a request for financial assistance. The county board approved four million dollars of 1 percent tax referendum funds to aid AECI in completing the project.
Along with early planning and engineering expenses, more cost has since been incurred to purchase miles of fiber optic cable and conduit and to pay contractors for its installation over much of the west end of the county.
None of the federal funding has yet made its way into AECI hands and county 1 percent referendum monies are not to be released until the federal funds have been depleted. To keep the process moving over the past two years, AECI has been borrowing from an open line of credit @ 3.5% interest.
As AECI continues to accrue debt, it is doubtful that any broadband connectivity will occur in 2012 to generate revenue. With an unknown number of actual subscribers, likely competition from several other providers and an increasing preference for wireless connections, the future profitability of AECI fiber optic endeavors is at best uncertain.
Debt service for this project will continue well into the future before any financial gain might be realized. Fortunately AECI has a perpetually consistent source of funding…the billing statements of its members.
Bob LaMettry
Grand Marais
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