Remote Cooperative Offers Broadband, WiMax, and Wi-Fi, while Questioning FCC Changes

This past January, Cordova, Alaska, made headlines for getting 20 feet of snow in nearly as many days. The town on the edge of Prince William Sound was declared a disaster area, and utility workers and emergency personnel scrambled to keep roads open and essential services running. But Cordova's residents are used to weather-related hurdles, and for Cordova Telephone Cooperative and Cordova Wireless Communications, weather and topography is a daily consideration that effects everything from line repairs and service to the co-op's business plan. “Weather-related situations like this are common here in Cordova,” said Paul Kelly, general manager and ceo of Cordova. “We’ve learned to rise above them with ingenuity, hard work and stubbornness.”

According to Kelly, being rural doesn't mean Cordova's member companies can't provide first-rate services. In fact, the location has required Cordova to get creative in order to offer broadband connectivity, cellular services, mobile broadband through WiMax, and even internet hot spots via a newly-launched WiFi Cloud in the town of Cordova. “Being in a remote community like Cordova, we will always face challenges concerning access to facilities,” Kelly said. “We use a combination of bush planes, four-wheelers, boats, helicopters and luck to access a great deal of our territory and remote sites. We also rely on bear spray to protect us when we arrive.”

This past August, CTC completed a $12m project, three years in the making, by rolling out 100 miles of undersea fiber optic cable. Kelly said this “finally connected our rural community to the rest of the world in a reliable way.” He explained that Cordova is a remote community which, despite being on the mainland, has no road to it. “We’ve relied on satellite to fulfill our community’s internet needs for many years, but have been working toward this accomplishment for some time,” Kelly said. Now the new fiber optic cable stretches from Cordova to Valdez, and it was deployed from a 200-foot barge over a “mere three days,” as Kelly said.

Marketing and public relations director Cathy Long said that the community is now better connected to the surrounding towns and the rest of the world, thanks to the undersea cable. Member companies now “have speeds and broadband capacity second to none—even better than many places in the lower 48,” Long said.

Completion of the fiber optic line also has bigger implications for the rural Alaskan cooperative: “This accomplishment now qualifies us for the 'new rules’ that the FCC has imposed in the USF and ICC reform order, as well as allows us to deliver the Internet and wireless experiences the modern-day customer has come to expect or take for granted,” Kelly said. Until now, the cost of transport was always the co-op's biggest challenge, but with the cable connection, that burden has been lessened.

The financial reprieve couldn't come at a better time, either, as changes to rural funding make the future uncertain. “We feel we are well positioned to weather the storm we saw coming,” Kelly said, “and our investment in facilities over the past several years will protect us from a good portion of the damage this order will cause the industry. We are also filing for a waiver in hopes of protecting our wireless company.”

But the RUS/ICC changes are already having an impact. “Lost funding will result in fewer jobs at CTC and CWC, and has already resulted in less investment being made in our network,” Kelly said. “Until we are told our past and future investments are protected and recoverable we have no choice but to severely curtail investment and employment.” He said that, like other rural telecom companies, Cordova was disappointed by the FCC's rural funding changes, but says the cooperative is “positioned better than most coming into this change.” Candidly, however, Kelly said, “We do expect our revenues to be impacted in the years to come, especially on the wireless side, and intend to file a waiver with the FCC concerning this order. We feel there is pertinent information that has not been taken into account when writing this new order, and hope to be a poster-child for rural telcos providing service in remote and isolated areas.”

Long reserved her strongest comments for the new FCC order, which she said conflicts with what rural telecom has been doing for decades. “For 90 years, rural telecoms—mostly cooperatives—invested as they were supposed to, using USF and RUS loans to connect rural America at prices comparable to urban areas,” Long said. “Now the FCC commonly refers to what we have done for 90 years as waste, fraud and abuse, yet the OIG audits performed prior to the formulation of the NBP identified almost no waste, fraud and abuse of the USF system whatsoever. The telecom industry was nearly 90% broadband capable and had been building out for years in a very responsible manner. That fact was grossly ignored in the NBP [National Broadband Plan] and credit has not been given by the administration for all the great work performed leading up to the FCC order.”

Nearly 100% of Cordova's member companies have had true broadband access to their businesses or homes for the past six years—“long before any National Broadband Plan,” Long said. Now, CTC “typically provides up to a 4-to-1 meg service to the home but can provide speeds up to 100 megs if there is a need,” Long said. “Take rates are very good and getting better each day as more people discover the Roku devices and over the top TV.”

The cooperative has also been working to expand into non-traditional services through wireless broadband and its wireless subsidiary, Cordova Wireless Communications. CWC just built a 100-foot cellular tower on Naked Island, and now it can provide GSM cellular service all across Prince William Sound. Long explained that “because Cordova’s economy is primarily based on commercial fishing, and many of its residents are commercial fishermen, this is a huge and needed accomplishment” for the community.

CTC's new WiMax service also allows for mobile broadband in Cordova, with plans to expand (via the Naked Island tower) to the Copper River Flatts fishing grounds. The area is also blanketed by the company's Wi-Fi Cloud. Long said these “hotspots are able to seamlessly hand-off to each other, similar to the way cell phone towers do. All this, and we are providing both WiMAX and WiFi Cloud access to all our broadband internet customers as a free service.”

Going forward, Long and Kelly both said that future investment was uncertain, due to the precariousness of rural funding. “Until we know our past and future recovery on investment under the rules is protected, CTC has no plans for future investment in-plant, and our wireless company will soon follow,” Long said. “There is never a business case to be made for investing in the most rural of rural areas without universal support.”

Co-op Capitalizes on Region's Boom, Expands Unregulated Services to Compensate for USF Losses

For telecom providers like Consolidated Telcom in North Dakota, this century's oil and natural gas boom has made quite the impact. Whether it's devising the company business plan or competing with oil company salaries and perks, nearly everything has changed. Most importantly, however, the boom has brought an unprecedented increase in new telecom customers and lists of subdivisions and businesses eagerly awaiting connectivity.

In fact, if you consult the Dickinson Press nearly any day of the week, you will find some mention of how the oil boom in North Dakota is impacting this relatively small community. Residents are renting out rooms to oil workers for extra income. There's more trash and litter. Increased traffic has led to deteriorating road conditions. And just last week, the state of North Dakota granted $12m to improve and expand "oil patch" schools and $5m to bolster emergency services and law enforcement. And then there's the telecom needs of this drastically changing environment.  

"Unlike the rest of the nation- we are in the midst of the biggest oil boom in the history of our state and possibly in the nation,” said Rhonda Dukart, marketing and public relations manager for Consolidated Telecom, based in Dickinson, North Dakota. “We are a small agriculture community in the southwest corner of the state. In the past years we have seen thousands and thousands of people from all over the country moving to our area. We do not have the infrastructure, housing, school capacity, law enforcement, city services just to name a few of the challenges we are facing.”

But the boom has brought a new pool of subscribers, too. Dukart says that Consolidated is “very grateful” for the growth that the oil and natural gas industry has brought to North Dakota, but it would be a bit easier if they could “just control the pace a bit.” For now, Consolidated is just trying to keep up—and trying to find ways to physically get to their new customers and lay the connections. “New housing subdivisions are popping up everywhere, and of course they do not have the infrastructure anywhere nearby to allow for water, sewer, utilities, roads etc... so trying to get to all these new subdivisions has been the most challenging thing our company has ever had to face.”

Consolidated ceo and general manager Paul Schuetzler said that “new subdivisions are cropping up in the Dickinson area faster than we can find them on a map. There is a real urgency to providing these areas with services as they have few or no options for quality services from other providers.”

And Consolidated was already growing on its own, prior to the oil and gas boom. The company just celebrated its 50-year anniversary and just completed an FTTH upgrade in all of the cooperative's towns. “We are now in the process of overbuilding with fiber to all of our rural areas as well,” Dukart said. “Given 9k square miles, much of which is extremely rough terrain, and a short construction season because of weather, this is a monumental task.” But the fiber connections are robust and allow the company to provide digital TV as well. According to Dukart, the fiber connections offer “up to 100 Meg broadband packages, over 220 channels of digital television and of course telephone service.”

Dukart said that broadband is available to about 90% of Consolidated's customers, with the remaining 10% of customers able to get broadband through Wild Blue Satellite. Take rates for broadband are about 75%, Dukart said.

Of course, one boom always brings many others, and Dukart says that competition is everywhere now. “We have competition in ALL areas and ALL services,” she said. “Midcontinent [a regional cable provider] is our biggest competitor in all of our cooperative towns, Century Link is our competitor in our two CLECs, and of course all the wireless providers are competitors, now offering all services. Everywhere we turn we face competition.”

In some cases, the astounding increase in competition has also impacted Consolidated's own personnel. Dukart explained: “Along with this influx of people comes everyone scrambling to keep their employees, as oil companies pay much higher wages than most any employer in the area. We have lost several great employees to companies offering higher salaries, etc., and if they can find employees that already have a place to live, they make salary offers that are very hard to refuse.”

As a rural provider, Consolidated also expressed concern that recent USF/ICC changes will impact their business plans going forward. Bryan Personne, coo of Consolidated, said “Like all small telcos” the company would “see significant changes to its traditional revenue streams as a result of the USF/ICC funding changes” and that it will “attempt to fill the gap in lost funding by rolling out new unregulated services to its customer base.” Looking forward, Personne said that the company is looking to roll out “new supplemental services like security systems, wi-fi and mobile broadband using 700 Mhz licenses to expand its service offerings and take advantage of new technologies. We have a number of staff who are responsible for researching and developing new services for our customers.” Dukart added, “We have hired several technicians specifically for the security service and have just started the roll out of marketing materials.”

Like so many of the cooperatives we talk to, Consolidated also works in the community to support the efforts of local colleges and universities, schools, and businesses. Dukart said that one of the things Consolidated is most proud of is the recent construction of the Badlands Activity Center at Dickinson State University—a local university that the telecom company has worked with on many occasions. Dukart said that Consolidated's main effort was to build community support for the stadium's construction: “The marketing manager was a key player in getting a yes vote out of a very conservative community to use sales tax to assist in the funding of the new facility. This took about nine months of continued effort to inform the community of the benefits of tearing down a very old outdated stadium that no longer provided for the needs of both the athletes and the fans.” The end result was “a beautiful new $16m dollar facility that is a 'jewel' in our community and a tool to attract students and athletes to our college.” The Badlands Activity Center was constructed with a combination of state and local funds.

Consolidated acknowledges that the company's outlook is somewhat different than others in the industry, with greater opportunity for growth and a constantly expanding customer base. “Our situation is different than many of the telcos that I visit with on a regular basis,” Dukart said. “I am very grateful for that and we look at our enormous challenges as opportunities to shine. We have just celebrated our 50-year anniversary and I believe we can boast that we have been successful because of our commitment and dedication to our customers. We have the most outstanding employees and that is not just saying the 'right words.' It is a sincere belief that our commitment to serve is possible because of the quality of our employees.” In the end, Dukart said that the co-op's core values “is what separates us from the competition and ensures we will be here another 50 years.”