REEDSBURG - The Reedsburg Utility learned Friday that it will receive $5.2 million in federal stimulus money to extend high-speed Internet to surrounding rural communities.

Only 66 projects were approved nationwide in the highly competitive Recovery Act grants distributed by the U.S. Agriculture and Commerce departments. Two were awarded in the state.

“It’s something we can really be proud of,” Dave Mikonowicz, utility superintendent, said Tuesday morning. “It’s a great thing for the whole area.”

This project will extend Internet services beyond the city, Mikonowicz said, to the northern third of Sauk County. It’ll take about three years and 375 miles of fiber-optic cable.

“We picked an area we thought we could manage and keep our arms around,” he said.

Mikonowicz anticipated that an additional 310 businesses and more than 2,400 homes – in terrain that is often steep, rocky and hilly – will be able to access the utility’s services. “Ultimately, this thing has economic development written all over it,” he said.

The federal money will be supplemented by a $2.3 million loan from Community First Bank, Reedsburg, Mikonowicz said.

He said the likely addition of hundreds of new customers will help pay off the loan they will take out, as well as existing debt. “Over time, it will help us stabilize rates,” Mikonowicz said.

The funding awards are “very significant,” Barry Orton, UW-Madison telecommunications professor, said. “What this means is that in the areas this extends to, people can not only go to school faster online, and play faster online, but work faster online,” he said. “It really sets up the infrastructure for small business people who want to be able to use the Internet for supporting their various information industries.”

Orton said the Reedsburg utility, in particular, fought big telecom companies that tried to block the small, municipal utility from expanding.

In fact, Mikonowicz said Reedsburg missed out on the first round of grant money that was awarded. However, there was an opportunity in March to reapply, so they did.

“We applied to two agencies the first time,” Mikonowicz said. “This time we just went through the Rural Utility Service and were able to get it.” The broadband project would not have been possible without the grant, he added.

“This is a good use of stimulus money,” said Orton, creating jobs to install the fiber will create “infrastructure for actual economic development.”

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