Why we developed a DBS business and then sold it.

• Author: Chandler, Malloy
• Position: Direct broadcast satellite

Pioneer Electric Cooperative calls Greenville, Alabama its home. Greenville is forty miles south of Montgomery just east of Interstate 65. Our electric service area includes Butler, Dallas, Lowndes, and Wilcox counties. Dallas, Lowndes and Wilcox counties are located in Alabama's black belt, a region known for its rich black soil and its poverty level. Two of the counties rank in the bottom fifty nationally in per capita income. Pioneer has 4.6 members per mile of line and each member purchases 25% fewer kilowatt hours than the state average for cooperatives. The electric load is 95% residential with the largest commercial load being a 2000 KVA sawmill.

Pioneer has never been able to compete with electric rates offered by the investorowned utility or other adjacent cooperatives. In 1979, after several years of fine tuning our operations, the board and management of the cooperative realized that, although we could not compete on electric rates alone, we could effectively compete by adding value to our electric service by providing additional services to our members.

THE BUSINESS PLAN

That realization led to Pioneer constructing and operating water systems, providing C-Band satellite television programming, and financing equipment sales. Early in this process we realized the economic benefit of providing service to both members and non-members. Revenue from non-members helped reduce the cost of providing service to our members. When the National Rural Telecommunications Cooperative (NRTC) made DBS service territories available to cooperatives, we knew we had a great opportunity to provide a new service for our members.

Before making the decision to purchase DBS territory, the board and management agonized over the risks associated with the investment and our ability to develop a successful business. It was not an easy decision.

Once the threshold decision to purchase territory was made, we analyzed demographic data of our service areas to determine the optimum territory for a successful business. The fact that no adjacent cooperative was interested in purchasing a DBS franchise for their electric service area allowed us to optimize the DBS territory we purchased. The lessons we learned in developing our C-Band Satellite business were invaluable in our analysis to determine the areas to include in our DBS franchise. These included; various marketing techniques with different media sources and the cost and effectiveness of each; understanding the need for local service and maintenance in areas...