RD281 - Dominion Energy’s Broadband Feasibility Report

Executive Summary:

As set forth in Enactment Clause 13 of Section 56-585.1 of the Code of Virginia (“Enactment Clause"), Dominion Energy Virginia (“Dominion Energy" or the “Company") investigated the feasibility of providing broadband internet services using its electric distribution and transmission infrastructure. Per the Enactment Clause, the study included evaluation of barriers to such services and potential solutions to address such barriers. Dominion Energy also provided input about whether it is in the public interest and the “interest of the utility"(*1) to provide broadband services to unserved areas of the Commonwealth.

This feasibility report (“Report") outlines the current status of broadband in Virginia, which informed Dominion Energy’s analysis and conclusions pertaining to the deployment and barriers associated with enabling broadband throughout the state. Acknowledging that there is disparity within the Commonwealth as to broadband internet service accessibility, Dominion Energy undertook this analysis with a comprehensive view of broadband service levels, technologies, and existing electric infrastructure.

One reason for this disparity is the unregulated nature of the broadband services sector. Without an obligation to serve rural areas or a means to socialize the costs of creating access where it is not profitable to do so, companies providing high speed internet access have little incentive to expand their communications infrastructure into less populated areas in the Commonwealth, to the disadvantage of students, citizens and businesses located in those areas. As a regulated electric service provider, on the other hand, Dominion Energy’s duty to provide electricity to all within its service territory puts it in a unique position to bridge the current broadband gap by leveraging its infrastructure if instructed to do so.

The Enactment Clause specifically references “unserved areas in the Commonwealth," a term that is not specifically defined in the Code of Virginia.(*2) The Federal Communications Commission (“FCC"), however, defines “broadband" as 25 Mbps download speed and 3 Mbps upload speed or greater. For geographic comparison, the Center for Innovative Technology (“CIT"), in coordination with others, has developed a Virginia Broadband Availability Map(*3) that identifies at a census block level “unserved areas," defined as less than 10 Mbps download and 1 Mbps upload (“10 / 1 Mbps"), and “underserved areas," defined as greater than 10 / 1 Mbps and less than 25 / 3 Mbps.(*4) For the purposes of this Report, Dominion Energy defines “unserved" areas as those that do not have access to 25 / 3 Mbps broadband speeds. Approximately 9.5% of Virginians are included in these unserved areas, while approximately 4% of Dominion Energy customers do not have access to 25 / 3 Mbps broadband. Dominion Energy relied on CIT and FCC data to correspond the unserved and underserved areas (i.e., 25 / 3 Mbps) to Virginia localities in order to support a system-wide analysis of its service territory and existing infrastructure, consistent with the Enactment Clause. Instead of merely examining opportunities within its certificated retail service territory, Dominion Energy focused on all unserved areas in which its electric infrastructure currently exists, which includes 73 of the 95 counties in the Commonwealth. Through this comprehensive approach, Dominion Energy endeavored to meet both the letter and intent of the Enactment Clause.

During the development of this Report, Dominion Energy engaged numerous and varied stakeholders in the broadband markets to understand existing need, current initiatives, barriers to broadband expansion, and potential solutions to resolve the digital divide. This outreach confirmed that there is no clear singular solution to expand access to broadband internet services. Several electric cooperatives, as part of the electric service provider community, are also engaged in or expressed interest for broadband expansion in their respective areas.

Dominion Energy’s evaluation concludes that there are opportunities to leverage existing electric infrastructure to support expanded deployment of broadband in the Commonwealth provided that certain barriers are addressed, including corporate powers, real property rights, and cost recovery, among others. The most promising opportunity at this time appears to be leveraging both existing Dominion Energy electrical distribution and transmission infrastructure and the foundational, forward-looking telecommunications strategy and solution (the “Telecommunications Strategy") Dominion Energy proposed in its Grid Transformation Plan (“GT Plan"), authorized by the Grid Transformation and Security Act of 2018 (“GTSA").

A key component of the Company’s proposed Telecommunications Strategy includes solutions which utilize various broadband technologies to electric distribution substations that will serve as a critical communications backbone to provide real-time grid status and control. This planned communications backbone could be adjusted to support additional broadband needs beyond those directly related to the requirements of the GTSA as proposed in the Company’s GT Plan. Under this scenario, which contemplates the provision of broadband services in conjunction with the proposed GT Plan, Dominion Energy would serve as a “middle mile" broadband resource to enable other entities to reach unserved customers through their established last mile initiatives and business models. While this scenario most effectively leverages existing infrastructure and proposed plans for utility telecommunications network deployment, other scenarios involving Dominion Energy extending broadband infrastructure to, or closer to, the end-user may also benefit the public and the Commonwealth’s objectives.

To address the Enactment Clause, Dominion Energy considered several potential broadband internet service models. At one end, the Company evaluated the feasibility of serving as a “middle mile" provider and bringing fiber to one or multiple substations in an unserved area. At the other end, it evaluated the possibility of serving as a “last mile" broadband Internet Services Provider (“ISP") through both a Fiber to the Home (“FTTH")(*5) approach and a Fixed Wireless approach. The Company also evaluated several other scenarios in the Report. Each model considered different technologies and electronics to evaluate options to expand broadband coverage in Virginia.

In this Report, Dominion Energy concluded that bringing fiber to its substations located in unserved areas is the model best aligned with utility interest,(*6) public interest, existing infrastructure usage, and the Telecommunications Strategy proposed in the GT Plan. The Company’s ability to bring fiber to these substations would enable another third party (such as a cooperative or a Wireless ISP (“WISP")) to subsequently connect to this fiber backbone to provide broadband services to residents of that area. In areas where such a third party is not present, Dominion Energy may be able to provide broadband services leveraging a Fixed Wireless or FTTH approach. These approaches, however, are subject to a detailed site by site analysis, appropriate cost recovery clarity, and relevant approvals and cooperation from the State Corporation Commission (“SCC") and other stakeholders. For Dominion Energy to undertake or collaborate in these activities, several barriers would need to be addressed, including corporate powers, easements, and property rights, among others.

Dominion Energy recognizes that broadband access and adoption support economic development and social equity while simultaneously promoting public health, public safety and educational opportunities for citizens of the Commonwealth. And, like other electric service providers in the Commonwealth, Dominion Energy may be suited to assist in providing that access. The Company’s proposed GT Plan, currently pending approval by the SCC, provides a solution that could help expand broadband internet service to the unserved areas in Virginia. Should the SCC approve the Company’s GT Plan in whole and the legislature find broadband expansion in the public interest and available for full cost recovery by the incumbent electric utilities, Dominion Energy would welcome the opportunity to support the Commonwealth in its initiative to bring broadband internet service to unserved areas.
(*1) “Interest of the utility" is not a defined term in the Code of Virginia. For purposes of this report, Dominion Energy has interpreted “utility interest" to refer to an incremental value to its traditional electric utility functions.
(*2) In certain circumstances, areas with access to satellite services are excluded from “unserved area" definitions.
(*3) See https://www.cit.org/service-lines/broadband-mapping/
(*4) Because the data set defines “covered" as any census block with at least one address that has service, the overall broadband coverage data is typically overstated.
(*5) "FTTH" is the installation of fiber to end-users, both residential and commercial.
(*6) See note 1 supra.