Southside cooperative expands to attract money, jobs

High-tech companies wouldn’t want to come to the region without access to broadband to send large amounts of data quickly.

Twelve years ago, Southside leaders foresaw the need for the rural region to be able to compete like this with larger cities in attracting new industry as textiles and furniture began leaving the region. And it wasn’t just localized broadband infrastructure or access to the Internet that mattered, but also direct connection to places like Washington or Atlanta and onto the world that would enable companies to compete.

To bridge the rural-urban gap in broadband, the Mid-Atlantic Broadband Cooperative started working in January 2004 to build out a robust fiber optic network across the region. In the fall of 2006 with 600 miles of fiber built, the cooperative “lit the network,” said President and CEO Tad Deriso.

Now, MBC owns and manages more than 1,500 miles of fiber and will have close to $100 million in assets by the end of the year, he said.

None of that would exist today without federal grants and Virginia Tobacco Commission money. As of Dec. 31, MBC had received $73.4 million in grants. Of that, $48.3 million came from the Tobacco Commission. Grant funding is expected to reach more than $90 million by the end of the year.

What’s the return? To date, access to broadband through MBC helped to attract $916 million in private sector capital investment, Deriso said. In 2011, private investment in the MBC footprint reached more than $322 million, with company additions or expansions creating more than 1,800 jobs, according to MBC’s annual report.

Most notably, Microsoft Corp. announced in 2010 building a data center in Boydton Industrial Park in part because of MBC’s high-speed network.

“Microsoft looked at more than 35 variables in narrowing its site selection to Boydton, including its close proximity to customers, fiber optic networks and a stable and affordable energy source,” said general manager Christian Belady of data center advanced development at Microsoft Global Foundation Services in a statement.

Deriso hopes within one to five more years that MBC can help to attract a total of $2.5 billion of private investment and 2,500 jobs.

The grant money pays for building the fiber, electronics and pilot projects. MBC earns income from 60 companies, including Danville-based Gamewood Technology Group, that use the cooperative’s infrastructure to provide retail services to their clients.

The new not-for-profit reached a milestone in December 2007 of becoming completely sustainable and “cash flow positive,” meaning the revenue from service providers covers MBC’s operational expenses.

In fact, excess revenue, about $900,000 this year, goes back into economic development incentives or helping build smaller member connections, Deriso said.

By July, MBC plans to expand with a direct connection between Atlanta and New York City through LIT Networks, a cooperative initiative between 10 members who would share fiber and revenue for the common goal of increasing access. MBC is also expanding to Hampton Roads because of federal money and a partnership with Old Dominion University.

“The more connections you have on the network, the more valuable it is to those providers,” Deriso said.

Looking back on the past decade, David Hudgins, who convinced the Old Dominion Electric Cooperative to invest hundreds of thousands of dollars to get the fiber network ball rolling, is relieved that MBC is working to attract jobs to Southside.

“Where would the Southside be without the broadband in this devastating economy that we’re in?” said Hudgins, Old Dominion Electric director of member and external relations. “ … Truly this is a gift that is going to keep on giving.”