Guide to Broadband Co-Ops

Broadband is a high-speed Internet connection which can carry large amounts of data at once. The Federal Communications Commission (FCC) defines broadband by data rates of 25 megabits per second (Mbps) downstream and 3 Mbps upstream. 
Broadband provides higher speed of data transmission for online video, streaming media, interactive websites and secure business applications. Broadband is always on and does not block phone lines when in use.

Any business or non-profit corporation organized under applicable law for the purpose of obtaining broadband services within a region or community. In short, a BCA is a membership organization comprised of individuals who have a common interest in doing the same type of business or in purchasing a similar type of good or service. 
A BCA divides its revenues among its members in order to reward those members for doing business together in the cooperative. Each member of the BCA has a vote on the policies and priorities of the organization to ensure that the BCA remains focused on serving the needs of its members.

As a predominately rural state, West Virginia still has many cities, towns, and other concentrated population areas which are unserved or underserved by broadband access. The lack of affordable, accessible broadband service necessitates consideration of alternative means and methods of providing these services.

Generally, cooperative associations, or co-ops, are designed to increase access to a service and to minimize the cost of that service for the consumers who are the members. The top priority for a BCA is always to spend whatever is needed to ensure access to good Internet services. If a BCA runs a budgetary surplus, it distributes that surplus back to the members as dividends as a reward for using the cooperative association. This helps keep rates low and provides financial support for BCA members.

Co-ops are popular in emerging industries, such a rural broadband, because they use the power of local markets to satisfy the limited needs of a local community that might not otherwise be served by larger companies in the same low-cost way.
Co-ops raise capital by issuing stock to members or nonmembers who want to support the co-op, which is ideal for rural and slow-growth markets where a business like a rural broadband company may not be able to generate the high returns on investment that are typical for other stockholders and investors. BCAs can cost-effectively convert existing infrastructure into capital for broadband expansion.

Identify the underserved area where you wish to offer broadband services through a co-op. Identify community leaders – private citizens and/or businesses leaders – who want access to better Internet in that area and are willing to collect a list of customers who wish to incorporate a cooperative.
Seek assistance from organizations, government, and partners willing to organize a BCA membership meeting; establish a team; and pursue a plan for exploring the BCA. This would include developing a business plan, incorporating and operating the BCA. The team should include a knowledgeable business planner, lawyer, and accountant who are available to provide advice as needed.

Broadband planning grants offered by the West Virginia Development Office through the Community Development Block Grant (CDBG) program are designed to enable local governments to conduct the assessments needed to develop effective strategies for the construction of broadband infrastructure.
Other grant funding sources include the Community Connect Program through the U.S. Department of Agriculture (USDA), the Appalachian Regional Commission (ARC) and the U.S. Economic Development Administration (EDA).

A minimum of 20 people who want to purchase Internet services from a BCA are required. Pursuant to the applicable law, those persons must be engaged in the use of Internet services, either in an individual capacity or as a business. These persons are considered “qualified persons.”

Under the terms and conditions of the bylaws adopted by the BCA, only qualified persons may be admitted as members.

The terms of membership are designed and developed by the by-laws written and adopted by the BCA. Under the terms and conditions prescribed in the bylaws adopted by it, a BCA may only admit as members, or issue common stock to, persons engaged in the use of Internet services either as individuals or as business entities.
One association may become a member or stockholder of any other association or associations organized under West Virginia law or similar laws of any state. For more information, please refer to W.Va. Code § 31G-2-5.

As a business entity, a BCA will have many powers to do all things necessary, suitable, or proper in accomplishing its purpose of providing Internet services to a community.
In the pursuit of those goals, and BCA may: engage in using or providing any Internet service; or in any activity in connection with the purchase, providing or use by its members of Internet services; or in the financing, directly, through the association of any qualified activities.
In addition, the BCA may conduct business in much the same form as any other business entity in the state such as borrow money, make payments to members, execute promissory notes, become a surety or guarantor, purchase and own stock and capital interests, borrow money and any other form of obligation, establish reserves and invest in ownership of real or personal property, and exercise privileges granted by the laws of this state to ordinary corporations. For more information, please refer to W.Va. Code § 31G-2-4.

After forming the team and developing the initial governing documents, each BCA must file its Articles of Incorporation with the West Virginia Secretary of State, Business Licensing Division, and register with other appropriate government agencies like any new business.

The Articles of Incorporation must set forth such things as the name of the BCA, the purpose for which it is formed, the place where business will be transacted, the number of incorporators and directors, rules as to capital stock or property rights and interests of members, and stock classes.

The articles of incorporation may also contain provisions managing, defining, limiting, or regulating the powers and affairs of the BCA, the directors, the stockholders or the members.
The Articles of Incorporation shall be signed and filed in accordance with law. Under certain circumstances, the articles of incorporation may be amended. For more information, please refer to W.Va. Code §§ 31G-2-6, 7.
A copy of the West Virginia Articles of Incorporation form is at the end of this document. To visit the website which has a fillable Article of Incorporation pdf form, click here.

Yes. Each BCA must, within 30 days after its incorporation, adopt for its government and management a code of bylaws not inconsistent with the powers granted to BCAs by law. For information on what may be adopted as bylaws, please refer to W.Va. Code § 31G-2-8.
It is advisable to develop articles, bylaws, membership certificates, accounting practices, and related documents, in a single, coordinated process to ensure a strong foundation for a BCA.

The key components will vary depending on the needs of the BCA. An effective set of governing documents may be easily developed in consultation with your team who can evaluate and advise the group about the risks and benefits of various approaches. The bylaws are to be developed by the membership of the cooperative through a collaborative planning process.
The bylaws govern the management of the organization as it relates to policies, voting, compensation structure, maintenance of BCA accounting, and election and removal of officers.
A BCA is managed by a board of not less than three directors, elected by the members. For further information, please refer to W. Va. Code § 31G-2-10.

Yes. In its bylaws, each BCA shall provide for one or more regular meetings annually. Other meetings may be called under certain conditions, and notice of these meetings is required to be mailed to each member under certain conditions. If the bylaws permit, such notice may also be by Class I legal advertisement in compliance with applicable law. For more information on meetings, please refer to W.Va. Code § 31G-2-9.

A BCA shall be managed by a board of directors of not less than three directors, elected by the members or stockholders. The directors shall elect from their number a president and one or more vice presidents. They shall also elect a secretary and a treasurer who need not be directors of the BCA. For more information regarding the duties of directors and officers, please refer to W.Va. Code §§ 31G-2-10, 11.

Yes. Every officer, employee, and agent handling funds or negotiable instruments or property of or for any BCA is required to execute and deliver adequate bonds for the faithful performance of his or her duties and obligations.

Yes. A BCA has the power to issue one or more classes of stock, or one or more series of stock within any class thereof, any or all of which classes may be of stock with par value or stock without par value. Different stock may have full or limited voting powers, depending upon how such rights are expressed in the articles of incorporation. There are limits on stock issuance, transfer, and ownership, as well as other issues involving such stock, which may be found inW.Va. Code § 31G-2-13.

Yes. Under certain circumstances, any member may seek the removal of an officer or director. For more information, please refer to W.Va. Code § 31G-2-14.

Yes. A BCA may take and execute marketing contracts pursuant to the provisions of W.Va. Code § 31G-2-16.

Yes. In addition to any other requirements, a BCA must prepare an annual report on forms provided by and filed with the West Virginia Secretary of State.

Yes. Upon resolution adopted by its board of directors, any BCA can enter into all necessary and proper contracts and agreements with any other cooperative corporation or associations, formed in any other state, for a more economical carrying on of its business or any part thereof. For more information, please refer to W.Va. Code § 31G-2-22.

The West Virginia Development Office can provide information which may assist in further understanding the procedure for forming a BCA.