December 16, 2010

NEMR Phone Co-op Pumping $830,000 Into Local Economy With Capital Credit Refund Checks

More than $830,000 in checks began arriving in mailboxes across northeast Missouri this week. No, it isn't another stimulus package from the federal government. But, the capital credit rebate checks going out to customers of the Northeast Missouri Rural Telephone Company cannot help but have a big impact on the local economy, just in time for Christmas.

"In a small, rural community like ours, that much money being made available all at once cannot help but have an economic impact," said CEO Gary Godfrey.

Every customer of the cooperative, which offers phone, internet and cable television services to more than 5,400 members in northeast Missouri, generates capital credits based on their monthly bill.

NEMR Serves a 1,400 square mile area that encompasses 6,287 households and 487 businesses. The co-op maintains more than 6,900 active telephone lines.

Godfrey explained that the coop's board of directors annually determines how much of those credits to return to customers based on the financial status of the company.

Over the past 23 years, the cooperative has returned more than $11.8 million to its customers.

This year more than 7,500 checks were mailed out, refunding approximately $832,000.

Each customer that had service in 2009 received 20% of the accumulated capital credits in the form of a refund check. In addition, customers that had service back in 1992, also received the final installment from that year's capital credits.

"Back in 2008, the board voted to retire the 1992 capital credits over a three year process, paying out 1/3 in 2008 and again in 2009 before making the final installment this year," Godfrey stated.

Scotland County residents in the Brock (328), Tobin Creek (883) and Arbela (945) exchanges received the 1992 refunds as well as the 2009 payments that went out to all customers.

Memphis customers did not join the NEMR co-op until 2003, at which time the 465 exchange began accumulating capital credits.

The capital credits have grown over the years correlating to the cooperatives expansion of available service. Internet service was started in 1995 and in October of 2008, NEMR cable television service became available to co-op members.

Godfrey noted that of the company's 5,438 phone customers, 3,579 maintain high-speed internet service through NEMR, with the company serving approximately 1,600 customers with its cable television packages available over the phone lines.

Approximately 75% of the cut over to the company's new fiber optic lines has been completed in Memphis, which is home to approximately 900 NEMR customers.

"This is taking a little longer than we anticipated, but it is our first exchange to have fiber optics lines directly to the homes," Godfrey stated.

A similar project began in Unionville last fall, with the installation of new underground fiber optics lines to replace the old copper lines. Green City will begin the upgrade process next spring.

"Within three years we plan to have transitioned more than 50% of our service with fiber optics directly to the homes," Godfrey stated.

The general manger noted that these upgrades represent a $22 million expenditure on capital improvements. He added the challenge will be fully transitioning the entire service area to fiber.

"If you overlay a one square mile block over Memphis, it basically covers all 900 customers," he said. "If you take that same square mile block and place it over my house in the country, it encompasses four customers."

That will be one of the major challenges looming for the cooperative heading into the new decade. A more immediate need will be finding a replacement for Godfrey, who will be retiring in the spring of 2011. Godfrey started with the company in 1984 and has served as the general manager since 2006.

"In 1995 we started with dial-up internet with a 14.4K modem," Godfrey said. "By 2003 were sending out broadband service at 1.5M. So in a little more than 10 years, the file sizes of what was going out over the phone lines had grown more than 100 times bigger."

He noted that the transition to fiber optics has the company headed in the right direction to handle similar growth in years to come as customers demand more and more bandwidth for expanding video and cable services.

"I'm sure over the next decade, customers will be seeking applications that we probably haven't even thought of yet," he said.

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