Merger will boost local expansion of broadband access
Two of the Methow’s venerable community institutions — the Okanogan County Electric Cooperative and Methownet — are about to join forces to expedite the expansion of broadband fiber access in the valley.
OCEC and Methownet have signed a letter of intent for the nonprofit co-op to buy the privately owned internet service provider based in Winthrop. The deal is tentatively set to close in July 2024.
OCEC and Methownet are already partners in a broadband fiber project that started with a feasibility study in 2022 and was this year funded with a $12 million federal grant, through the Washington State Broadband Office, for buildout of an extended fiber optic system. (For more information, see the accompanying story on page A2.)
That partnership led to discussions about the possibility of the co-op purchasing Methownet, according to OCEC General Manager Gregg Mendonca and Methownet founders/co-owners Jeff Hardy and Maria Converse.
“The two entities have held discussions for the past year looking for efficiencies in the overall project and business to achieve the objective of delivering reliable and low-cost internet service to the community,” according to a press release.
Under terms of the agreement, Methownet will continue to operate as an independent entity, much like the co-op’s propane subsidiary, retain its downtown Winthrop office, and keep its current employees. Hardy and Converse will continue with the company for a time during the transition.
“It’s critical for us to have them [Hardy and Converse] stick around,” Mendonca said.
OCEC will operate both the wholesale and retail sides of the business in order to meet the grant requirements, according to the release. “OCEC will operate the entire business as a nonprofit just as the electric side is operated,” the release said.
In an interview, Mendonca, Hardy and Converse said the conversation about OCEC purchasing Methownet evolved as a natural consequence of the broadband project.
Hardy said the organizations are similar in having long histories in the valley as locally grown service providers that have expanded their presence over the years. Internet service “was a novelty when we started, and now it’s a utility,” Hardy said. “We [OCEC and Methownet] are in very similar businesses.”
OCEC has decades of experience owning and operating infrastructure, Mendonca said. Methownet’s “obvious expertise” in providing internet services makes the two a “natural fit,” he said.
Mendonca said the merger won’t change how Methownet operates but rather is “a bridge to where we want to go” in providing extensive internet service to the valley’s underserved areas.
“We’ve been building out fiber,” Converse said. “This will allow us to take a major step forward.”
Mendonca said the OCEC board of directors has been solidly behind the merger proposal, and the formal documents are now being drawn up. Mendonca said the deal is structured as a “purchase of assets” that will be funded out of the co-op’s revenues. He said the merger will not have any effect on electric utility rates, as the Methownet operations will be self-supporting.
“Broadband will pay for broadband,” Mendonca said.
Hardy and Converse said that Adam Glenn, a 1989 graduate of Liberty Bell High School who has years of experience in telecommunications, will manage Methownet’s broadband operations, working out of the Winthrop office. Glenn oversaw installation of Methownet’s towers on Patterson and Flagg mountains, they said.
Mendonca also noted that the merger adds more community involvement in development of internet services. “The members own it,” he said of the co-op and its subsidiaries.
Such arrangements are an emerging model for co-ops, Mendonca said.
Hardy and Converse said they have been approached in the past by privately owned companies that were interested in buying Methownet, but they resisted such offers — preferring a community-based partnership.
“It’s not a hostile takeover,” Mendonca said. “Everybody’s positive, everyone is excited.”