History of MBC
In the late 1990s, with the rural economies in Southern Virginia suffering major losses in furniture manufacturing, textiles, manufacturing and tobacco production, business leaders in the region realized that the only way to stabilize the regional economy was to embrace a new way of thinking. The need for broadband services in the traditional economic development model had rapidly transitioned from a "nice to have" to a "must have it and more of it," and the region's existing telecommunications infrastructure was woefully inadequate to meet the needs of the business community. While Southern Virginia had low tax rates, available work force, transportation infrastructure, and substantial electrical power grids, the existing broadband infrastructure and lack of competitive access was a substantial roadblock in attracting new companies to the region.
Business leaders in the region, in collaboration with telecom experts, developed a blueprint for an advanced open-access fiber-optic network for Southern Virginia. Old Dominion Electric Cooperative, an electric generation and transmission cooperative in Virginia, realized the need for this critical economic development infrastructure, and provided the leadership and funding necessary for the initial business planning and strategic seed capital. The outcome was the creation of an independently operated wholesale telecommunications company.
In 2004, the Mid-Atlantic Broadband Cooperative (MBC) was formed to solve the rural telecommunications infrastructure challenge. MBC was tasked to design, build, operate, manage and maintain a state of the art, carrier-class fiber optic network that enabled retail private sector telecommunications providers to serve the region. This task would help reduce the cost of broadband services by leveling the playing field, expand the reach of broadband in more of our rural communities, and create a competitive economic advantage for southern Virginia.
With the strong support of the Virginia Tobacco Commission (VTC) and the US Department of Commerce Economic Development Administration (EDA), MBC received $12 million in capital grants to build the first phase of the network in early 2004. Additional capital grants of $24 million were awarded by the VTC in 2005 and 2006 to finish the first phase of the network.
By September 2006, the first phase was completed, which included over 600 route miles of new fiber connecting 20 counties and 4 cities to the network, 100% of all business, industrial and technology parks, and acquisition of dark fiber IRU's between Atlanta, Georgia and Washington DC/Northern Virginia to connect the regional fiber network in Southern Virginia to strategic carrier interconnection and peering points in tier 1 markets.
When the network was officially "lit" and our contractor turned over the network to MBC, Peoples Mutual Telephone Company in Gretna, Virginia (a Fairpoint Communications Company) was the first customer on the network. MBC provided a diverse layer 1 transport circuit for connecting to their upstream IP Transit provider.
Over the next few years, MBC enjoyed rapid growth in top line revenue, employees, network reach, and most importantly helped in attracting new jobs and investments to the region. One of the key drivers of the MBC business model was to operate in a financially sustainable manner. Grants were used to pay for capital expenses, and revenue from customers (private sector telecom providers) pay for operating and maintaining the network. The MBC business plan called for cash-flow break even (operating revenue exceeding operating expenses) in June of 2008. Thanks to the early embrace of the private sector telecom providers who now had a robust, open-access network to use in Southern Virginia, we experienced our cash-flow break even in December of 2007, and have never looked back.
In 2010/2011, MBC was awarded $32 million for three projects from the American Recovery and Reinvestment Act (ARRA) Broadband Stimulus Program, through the NTIA/BTOP program. $16 million was for a project to connect 100% of all K-12 schools in southern Virginia that did not already have a fiber connection. The second project was a $10 million grant to extend MBC's open-access fiber optic network through rural southeastern Virginia connecting community anchor institutions and telecom providers to the network. The third project was in partnership with the Virginia Tech Foundation for $6 million that built a new fiber route from Blacksburg, Virginia to Bedford, Virginia. Thanks to MBC's highly capable in-house project management team and our contractors, those projects were completed on-time and under budget.
In 2012, MBC took another important step forward in our continued growth as an organization. The membership of the Mid-Atlantic Broadband Cooperative voted in July of 2012 to amend our Articles of Incorporation to transition from a 501(c)(12) Cooperative to a 501(c)(4) non-profit corporation. Although our business model, pricing structure, and customer focus did not change, this was necessary to carry on our mission of bridging the digital divide, promoting economic development, and helping to revitalize rural communities. On July 23, 2012 we became known officially as the Mid-Atlantic Broadband Communities Corporation.
The MBC network has exceeded all expectations. The broadband capacity it has brought to Southern Virginia has attracted numerous companies to the region and has helped to bring more than 900 jobs and $1.3 billion of private sector investment to the region. Most notably, MBC was a critical component in securing the Microsoft data center project for Southern Virginia, which has already announced over $1.3 billion in private sector investment and 180 high-paying jobs.
One of MBC's key growth initiatives is to expand network reach through strategic partnerships with other local/regional fiber optic network operators. MBC has formed LIT Networks (Local to International Transport) to enable other fiber network providers to interconnect with MBC's extensive network and become a part of a larger network that incorporates revenue sharing as a business model. This model has proven highly successful for several years, and is now growing in size to accommodate other network providers, some of whom have received BTOP grants and are looking to generate sustainable revenues for those network investments.
We continue to look for ways to accelerate our mission of reinvesting in our communities through projects that have a social, technology and/or educational impact in Southern Virginia. Each year since 2012, we have donated over $100,000 to support all YMCA, Boys and Girls Clubs, Head Start Programs, and high school robotics programs in Southern Virginia as well as awarded five scholarships, each year, to high school seniors in Southern Virginia who are furthering their education in a STEM field at a Virginia college/university.
We are excited to be recognized worldwide as a model of how public investments in wholesale open-access broadband telecommunications infrastructure can generate economic development returns for local communities.