The Virginia town fought to get fiber, and its influence has spread -- including to Bristol, Tenn.

Bristol, a municipality with one name, two states and two separate local governments, might be considered the poster child for municipally owned fiber networks. Bristol Virginia Utilities was a pioneer of locally owned fiber networks, building its own fiber rings in 1999 and becoming a triple-play provider of voice, data and video in 2003.

Since then, BVU has spread its influence both locally and well beyond Bristol's borders. In fact, there was so much interest in the utility company's ambitious fiber plans that it created a new profit center called BVU Focus. That unit operates a consulting and management service and landed its first customer last year.

BVU has fought major regulatory battles along the way, at one point suing the state of Virginia and helping to push through a new state law. The company has faced its own critics down, including local telco Embarq, which claimed BVU was cross-subsidizing its telecom services with its electric and water revenues. Local critics persist, especially as BVU has raised electric rates in recent years, claiming the debt incurred to build a fiber optic network is the cause of higher rates — a charge BVU refutes.

But the company also has been credited as a major influence in southwest Virginia and across the Tennessee line in that section of Bristol. There, Bristol Tennessee Essential Services also built its own fiber optic network for internal communications and was encouraged by local officials to get into telecom after seeing BVU in action.

In addition, BVU's 800-mile fiber network, some of it built in partnership with the Cumberland Plateau Co. (a company 50% owned by BVU), has helped lure two new major employers to the region. Defense contractor Northrop Grumman came in 2005 with 400 jobs and specifically cited BVU's available infrastructure as a key reason for its decision to put a new facility in Russell County, Va. CGI, an IT and business-process services firm, opened its new facility in late 2007, also in Russell County — and also served by CPC Optinet, the BVU partnership.

“We had two very good success stories that happened with Northrop Grumman and CGI, which brought in 700 new jobs with average salaries of $50,000,” said Wes Rosenbalm, president and CEO of BVU. “The average salary here is $24,000 to $27,000. And we have a couple other deals we are looking at internally.”

On the consumer side, BVU has a 65% penetration rate for its triple-play services inside the city of Bristol, according to Rosenbalm. “That could be higher, but we have credit criteria,” he said. The company has about 9000 customers.

On the Tennessee side, BTES built its own extensive fiber optic network for internal communications after a 1998 ice storm wiped out the communications infrastructure and left the company without telephone service for days. In 2005, the organization rolled out data and cable TV service, later adding voice in 2007.

“We built 125 miles of fiber rings — five to six rings — that went past every substation, every school and also went past every large industrial area,” said Mike Browder, general manager for BTES. “The substations go where energy is being used. We did it out of fiber because we also figured out any time we have a lightning storm, we would lose some of our communications systems. We have not had an outage since we put our own fiber system in.”

The Bristol, Tenn., City Council urged BTES to get into cable after it saw how BVU was selling cable service at lower rates than Charter Communications, the primary local cable operator, Browder said. After going through the process of becoming a CLEC, BTES added voice service.

“The local cable company, Charter, lowered prices in Bristol, Va., after BVU started competing with them, but they wouldn't lower prices in Bristol, Tenn., so the city council sent us a petition,” Browder said.

The penetration rate of BTES is not yet that of its Virginia neighbor, but Browder said that is partially self-inflicted.

“Right now, today we have almost 25% penetration, but we have areas where we have been out there a little longer that we have over 50% penetration,” he said. “We are quickly bringing up the distribution system. We have now passed 27,000 homes. The original plan was to pass 20,000 in four years. We are hooking people up as fast as we want to, based on the fact that we want to serve every customer really well. If we did some advertising, we could bring in a lot more customers in a hurry.”

Both companies, as local utilities, were already involved in local economic development efforts and say they saw the need for communications infrastructure as well — if southwest Virginia was going to be able to attract new businesses and retain its young people. Both also conducted extensive local marketing surveys before venturing forth and were encouraged by what they found.

Their focus now is on creating advanced services for both businesses and consumers. Both offer high-definition TV — Browder says the Tennessee side has more channels — and digital video recorders. BVU offers caller ID on the television via Integra 5 technology, and in February it announced on-demand video from Cisco Systems, to be available by July.

Interestingly, only BTES is doing automatic meter reading (AMR), a common feature of many utility networks that go all the way to the home.

“A huge piece for us is what we can do with the electric system; we can read meters,” Browder said. “They do automatic power outage reporting, and it automatically reports to our dispatch. When we very first started, we had a lightning storm. Thirty-four customers were out; two were on fiber. We knew it right away. A lineman went and fixed it before we got the phone calls.”

BTES also enables some customers, who otherwise would need to make a large deposit to get electrical service because of poor credit, to pre-pay for a set amount of electricity. “We wanted a way to serve those customers better,” Browder said. “With this system, they can buy $50 of electricity, and when it goes off, it quits. It's been a great service to this particular group of people that need that. Also we have 14,000 water heaters in one area that we cycle off during peak times to save electricity. We can move that to very off-peak time by monitoring them and leave them off much longer times. If temperature drops we can turn that one back on.”

AMR is something at which BVU is still looking, said Mark Lane, director of network engineering.

“We do plan to launch an AMR pilot in July,” he said. “We waited to let the technology catch up in terms of the meters and the quality of the meters.”

For BVU, commercial opportunities continue to grow, Lane said.

“On the commercial side, one of the big offers have been Optinet LANs, using Ethernet as a T-1 and frame relay replacement,” he said. “We have seen a big interest not only in our areas, but from companies with branches out of our area. We have struck some deals to deliver Ethernet loops outside our service areas. We also had a lot of success with a hosted-PBX product to replace Centrex and key systems/PBX purchases.”