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.”