A Lack of Rural Fiber: Benzie County expands broadband…with help

In rural Benzie County and beyond, a small company with big goals is spreading high-speed internet service.

Four-year-old Eclipse Communications LLC has a mission to bring high-performance broadband to areas of Benzie that lack adequate options – a strategy supported by county government and driven by Eclipse’s 38-year-old president and owner, Christopher Varenhorst.

Piece by piece, Eclipse is installing a wireless network that uses communications towers it constructs or leases space on to deliver broadband signals via microwave radio links. At the backbone of the network are fiber-optic lines that connect with the towers and run throughout the county, with the longer central transport lines built recently by nonprofit Merit Network Inc.

Varenhorst, a Ludington native who started Eclipse in March 2016 as the successor to another wireless internet service provider he co-founded in 2010, sees in Benzie County both opportunity and need. A partnership with the county could bring mutual benefits.

In October, Eclipse and the Benzie County Economic Development Committee (EDC) inked a memorandum of understanding stating Benzie’s need to expand broadband connectivity and the duties that Eclipse, as an independent consultant, would carry out toward that goal.

While high-speed internet access is available in parts of Benzie through formats including cable, digital subscriber line, satellite and mobile service, County Administrator Mitch Deisch said “a significant area” of Benzie has not had adequate broadband due to factors that include the topography – an abundance of hills, trees and features that can make it challenging to lay cables or relay signals – and a lack of population density that could otherwise make more wide-scale broadband rollout financially viable for larger providers.

“And that’s really why the county is stepping in, and saying, this is a basic utility need. We look at high-speed internet, like gas, water and sewer … as a basic infrastructure need,” Deisch said.

The county’s EDC last year issued a notice of intent that Deisch said drew four or five responses that were narrowed to three finalists, with Eclipse selected. The company’s duties include: Developing and maintaining an inventory map of all fiber and wireless broadband infrastructure in the county and using the map to identify zones where there is and isn’t adequate broadband coverage, and working with the EDC to develop goals and an action plan to provide service to underserved areas. The EDC and Eclipse will also develop capital improvement budget projections.

If grants are sought for any work, the EDC or the county will act as the fiduciary on grant applications. And if local financial match is required, the EDC and Eclipse will jointly determine funding source.

Varenhorst

Varenhorst is on the EDC’s broadband subcommittee and provides it with a monthly status report. Deisch said there is no financial compensation being paid to Eclipse; it is a “cooperative partnership” that can help current and future residents and businesses, he said.

“From Benzie County’s perspective, this is pure economic development,” Deisch said.

The county partnership hasn’t been the only recent major milestone for Eclipse. In December, the company purchased a nearby wireless internet service provider and its assets, gaining infrastructure and clients that further expanded its footprint. The acquisition of Arcadia-based M-22 Internet Project advances Eclipse’s growth strategy in a few ways, Varenhorst said.

For one, M-22’s towers in Benzie and Manistee counties “increased our surface area immediately” and provide capabilities for future expansion, he said. And Eclipse gained single and overlapping tower coverage, the latter providing redundancy that Varenhorst said enables the company “to cover more homes, more businesses in a given area, than a single tower.”

The acquisition also injected new customers and cash flow into Eclipse. “I felt that … we could do more for Benzie County sooner, if we could purchase M-22 Project,” Varenhorst said.

Making the acquisition possible was Venture North Funding & Development. Venture North helped finance the deal and also provided grant funding toward professional services to assist Eclipse, including an attorney and DGN Advisory LLC, a business-consulting branch of Traverse City’s Dennis, Gartland & Niergarth public accounting firm. DGN Advisory Managing Director Brian Breneman provided technical expertise, business acumen and wisdom that “was of great importance to us in navigating this opportunity and ensuring that our interests were covered, that everything was covered,” Varenhorst said.

Venture North’s approximately $200,000 loan paid for a majority of the acquisition, with other financing coming from Eclipse and a private individual, Varenhorst said. He declined to state the total purchase price.

Galbraith

Laura Galbraith, Venture North’s executive director, said the Eclipse loan reflects a number of factors, including economic and community impact. She said Eclipse is “able to provide an important service to an economically distressed, rural community,” furthering county growth and its goal of increasing broadband access.

The loan, which boosted Venture North above the $6 million lending mark, also represents a refinement of direction in the organization’s lending policy. A federally certified Community Development Financial Institution (CDFI), Venture North revisited its lending policy in 2019, assessing “the kind of economic and community development impact that we should have in the region,” Galbraith said.

Taking a page from another CDFI’s practice of vetting deals, Venture North created a “social impact matrix” to apply to potential projects, involving key questions that include the degree of job creation, the level of wages and community impact. Points are awarded for factors that include whether a community is low-income, if the business owner is a veteran, minority or woman, if the business pays “family-sustaining” wages and offers benefits, and how the business’ project will fit the goals or master plan of the area.

“It’s just an evolution of us really trying to better assess what should our source of capital be used for in the community,” Galbraith said. “There’s a lot of sources of capital available to entrepreneurs, and we wanted to be sure that when we’re looking at a project it meets our mission.”

And if a project doesn’t check all the boxes for a Venture North loan, Galbraith said, the organization can help entrepreneurs find the right source of capital for their needs.

At Eclipse, it’s the first loan for a company that Varenhorst said has self-financed its growth. Eclipse derives revenue from three main areas: internet service to residential, small business and enterprise clients like larger businesses and government entities; information technology (IT) consulting services; and managed IT services.

Varenhorst said he expects Eclipse to reach revenue of $1 million this year and that he plans to hire additional employees, building on a roster of four full-time and two part-time employees, including one he retained in the acquisition.

He’s also looking to expand beyond Benzie’s borders toward Interlochen and the perimeter of Traverse City in the next year or so.

But, Varenhorst said, Benzie County “is always going to be our core. This is our community, we live here, work in the center of it … and invest as much as we can.”

Amy Lane is a freelance journalist and former reporter for Crain’s Detroit Business, where she covered business, state government, energy and utilities for nearly 25 years.

 

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