July 25, 2019

Internet-based television service and more capacity for internet traffic are driving major investments at Midco.

“We’re growing. We’re changing,” said chief technology officer Jon Pederson, who is based in Sioux Falls.

“One of our philosophies we’ve adopted over the last couple years is (to be a) trailblazer.”

Midco serves almost 400,000 subscribers in six states. Increasingly, those subscribers – both commercial and residential – are seeking to stream content, store data in the cloud and accomplish all their online activity faster.

“People are using the internet way more than they did five years ago or 10 years ago, so there’s a lot more bytes flowing through the blinking lights,” Pederson said. “Things get hotter, they take more space, and when you have to cool it, it takes more space. And that takes more power.”

A $6.5 million renovation and expansion of Midco’s 3507 S. Duluth Ave. facility this year is one step toward meeting those changing needs. Staff members have transitioned out of the building, leaving it a technology-only space that now is adding 9,000 square feet for what will become Midco’s second Sioux Falls data center.

The hope is to finish construction by the end of the year and start activating equipment next year.

“That’s a slow process because you can’t shut everything off and move it. You have to duplicate the equipment and do a hot cut,” Pederson said. “There are many, many homes and businesses that run through that building. It’s sort of technology central for this region.”

The technicians who worked there have transferred to Midco’s technical operations center at 1305 N. Terry Ave., which opened in 2018.

The company also bought about an acre of land earlier this year adjacent to its other Sioux Falls data center at 5500 S. Broadband Lane for future expansion.

“A lot of internet content is being cached locally,” Pederson said. “So if you were watching a streaming movie, odds are very good – almost assured – it’s coming from a server very nearby versus Chicago or wherever. It reduces the costs and improves … speed.”

Midco also is in the beginning stages of a five-year project known as Fiber Deep that will connect fiber closer to homes.

“It doesn’t sound like a big deal, but once you get close enough, a lot of higher speeds are enabled,” Pederson said.

He estimates the company will be through about 10 percent of Sioux Falls by the end of the year. Eventually, the system is designed to support 10-gigabit internet speed, though that could be a decade away, he said.

“We offer that now to commercial customers,” he said. “Will people need it? If you had asked me if people needed (1) gigabit 10 years ago, I would have said you were crazy. But it’s not CompuServe and AOL.”

Instead, internet use had been growing up to 60 percent annually and even now is about 30 percent every year, he said.

“It’s just crazy. A good deal of that was video streaming, but it’s also things like gaming. And cloud computing is the newest thing. A lot more people are storing things in the cloud, whether it’s pictures or movies.”

Midco also will be entering the internet-based television industry next year.

“So we’ll be streaming our own content and will provide better flexibility in terms of what people can order with a video package,” Pederson said. “It’s a big project. We hope to have a sample market done this year and start ramping it through our footprint over the next two.”

Sioux Falls won’t be one of the first to be offered the service, and its timeline will be determined depending on how the pilot projects go, he said.

The Sioux Falls-based company has almost half its staff, or nearly 700 employees, in Sioux Falls and has 350 locations across its footprint, including 47 where people work. That increasingly could include employees working remotely thanks to a recently implemented policy that allows certain staff that flexibility.

The Sioux Falls main office at 3901 N. Louise Ave. is becoming squeezed for space, he said, while adoption of the collaborative-work software Webex has been good and will allow more people to work from home or elsewhere.

“We have a lot of people in a lot of different buildings, and part of the way we keep them together is through video conferencing. We use it a lot,” he said. “And it’s a particularly good fit for us since we’re the ones who own the network.”

Midco also is putting an emphasis on reaching customers in rural areas. Last year, it purchased fixed wireless internet provider InvisiMax as a way to reach rural customers in portions of North Dakota, South Dakota and Minnesota with high-speed internet.

“There’s a lot of activity in that space because everybody needs broadband, and we need to get out there and provide it to people who need it,” Pederson said. “Funding is available, and we’re uniquely positioned because we have fiber through the area and can branch from that. We’ve done a lot of work in acquiring spectrum and trying to assist the FCC with how that gets rolled out in a fair manner.”

Back in Sioux Falls, the company continues to innovate, he said. A portion of the main office is dedicated to research and development, testing products and services that eventually may find their way to the marketplace.

“We are doing all kinds of research and have had a number of first-in-the-country, first-in-the-world achievements that are way too complex to explain,” he said. “But it’s good stuff that really helps us meet the needs of the future.”