Entries in Palmetto Rural Telephone (2)

Thursday
Dec292011

2011's Broadband Bonanza Means New "Explorations" in 2012

While researching for a profile on Paul Bunyan Communications several months ago, I was struck by the cooperative's 60-plus years of underdog status—a fitting 2011 year-end metaphor for many of the companies I talk to across the country. There, in Minnesota, was a cooperative that organized in 1950 to connect underserved areas, and was helped along in its goal by federal legislation that sought to improve rural telephone service. Now, as 2011 draws to a close and we look ahead to what 2012 will bring, many companies I've interviewed this year are still trying to reach underserved areas—this time with broadband—and doing so is part of the larger, national plan to bring valuable high-speed internet connections to every home and business, in every community. With the year ending, these companies and co-ops are also hoping that broadband subs will help offset landline losses; this may be the last year for such a ying-yang balance, too, as broadband growth slows and it becomes less likely these adds will be able to offset the losses going forward.

A sweeping dedication to broadband will certainly continue into 2012, but boy has the game gotten more complex.Thanks to the recent detailed analysis offered by our own Cassandra Heyne, I won't use this space to parse out the specifics of federal funding for broadband or other regulatory hurdles facing rural providers. But I would like to reflect on what 2011 has meant for the rural service providers, cooperatives, start-ups, and advocacy groups I've spent the year researching and interviewing. Whether the goal was to tap into vertical markets, harness the potential of the cloud, or test out new services and platforms, without a question the name of the game this year was broadband—how to build-out fiber networks, how to increase speeds, how to offers services via broadband, how to pool resources and efforts through alliances and consortiums, how to share resources and infrastructure, how to get into the data storage market, and so on. Ultimately 2011 centered on a challenge and a source of opportunity; both are captured in the phrase I heard over and over again—“broadband build-out."

2011: Betting on Broadband

Just last week, new ceo of 3 Rivers Communications David Gibson summed up one of the most fitting characterizations for rural and independent companies. In an interview for the Great Falls Tribune, he said that, without a doubt, “Fiber is the way of the future... When you replace all that copper [with fiber] the service quality is better; you get much faster broadband speeds. You can offer IPTV. It's just good all around, it's where we need to be to position ourselves.” But Gibson went on to note the snags in building out rural broadband—threats to funding by “problems... in the mechanics” of the new Connect America fund and threats of stiff competition from satellite and wireless broadband, encroaching cable companies, municipal-owned broadband and others.

This year, I've talked to rural co-ops, independent providers, advocacy groups and consortiums in Kentucky, Ohio, Minnesota, Tennessee, Virginia, Georgia, South Carolina, West Virginia, Texas and the Dakotas, and for all of them, broadband was central to their goal of providing new services and connecting unserved or underserved rural communities. In some cases, broadband meant better connectivity for local high schools, community colleges or universities; in other cases, there were advances in telemedicine, improvements for tribal communities, or farming technologies. But in every case, the directors and spokespersons I interviewed insisted that broadband brought with it the possibilities for a changed community and more vibrant opportunities for rural residents and businesses. And they had examples of these improvements... many, many examples.

The question remains, however, do these broadband build-outs actually mean more stability for the ILECs and co-ops, many who find themselves in an increasingly competitive market? Will all of the federal dollars in broadband grants and build-outs in 2011 equal more advancements to rural areas in 2012? Will rural providers need to delve more deeply into new options like LTE and cloud services to remain relevant? Or will fiber as the “way of the future” actually mean subscriber retention and added revenue? These are all questions to investigate in the coming year, by talking to the experts on the front lines: the rural providers themselves.

2012: Building on Broadband, Exploring New Territory

Just recently we've seen announcements about IPTV and LTE—two services that are getting attention from rural ILECs and co-ops who consider them potential golden tickets. Most likely, 2012 will bring more in-depth look at what these services might mean for the independent communications provider industry—most specifically for the rural companies I talk to regularly. LTE's potential is up in the air (pun intended), but IPTV has already become a key talking point for ILECs who want to attract and retain customers in their communities. Earlier this year, we ran the numbers and found that, for the companies who disclosed that they provided video services, “their rate of decline in access lines... was sharply lower than those in the survey who did not provide data on video subscribers.”

Several of the companies I profiled to this year—Palmetto Rural Telephone Cooperative and Paul Bunyan Communications, to name two—named IPTV as central to their business strategy going forward. Earlier this month, Texas ILEC Valley Telephone Cooperative announced that it would offer a hybrid IPTV service that combines HDTV, DVR and cloud services through a single TV input and interface. And last month, Griswold Cooperative Telephone Company announced it would use its hefty $12.7m RUS loan, in part, to lay fiber that would support advanced services like IPTV.

As for LTE, it will be interesting to see what comes of the partnership between rural ILECs/ rural cellular providers and Verizon's Rural 4G LTE Program. Just last week, Pioneer Cellular (of Kingfisher, OK-based Pioneer Telephone) announced its first successful end-to-end data test with Verizon's 700 MHz spectrum, and so far Pioneer is just one of 13 rural providers partnering with Verizon for use of its LTE network. The goal, of course, is to provide LTE services in areas where Verizon does not plan to extend coverage, and, through the program, rural partners are allowed to build and operate their own LTE network, using some elements of Verizon's core network. Just as cooperatives and partnerships have helped bring fiber to rural areas, it's possible that partnerships between small, rural providers and the Big Guys could supplement existing services and retain customers. It's possible.

Ultimately the influence of LTE in rural areas remains to be seen, but it is a step toward spectrum use that so many rural providers have looked into but not developed. In my own discussions this year, I have heard numerous company spokespersons say that they were currently “exploring the possibilities” of spectrum for a variety of services, but had not made any definite commitments. Perhaps 2012 will bear the fruit of these, and many other, “explorations.”

Wednesday
Dec282011

Digging Deep: Palmetto Rural Looks to Bury Its Competition

When Chuck Crabtree joined Palmetto Rural Telephone Cooperative as its Director of Marketing this year, he was attracted to the co-op's commitment to broadband and advanced services like IPTV. Right now he says PRTC is making great progress towards an extensive fiber build-out that will cover most of Colleton County, South Carolina. And PRTC has been able to fund this upgrade to FTTH “without any big grants. We're mostly doing it ourselves, utilizing business loans,” Crabtree said. With many ILECs and cooperatives counting on broadband, PRTC's story may not seem like a unique one—but the provider's embrace of services like IPTV and advanced video platforms, is. According to Crabtree, PRTC is fighting “formidable competitors” like Comcast and Frontier by offering richer, dependable services through fiber. In underserved areas of the county, PRTC is the first to lay fiber and, in doing so, hopes to better serve its entire territory.

Crabtree characterized PRTC's service area as a combination of Low Country rural lands and small- to mid-sized towns. “Currently we've completed roughly 15% of our fiber build-out, but the overall fiber-to-the-home plan will take longer,” he said. “It's a lot of work. They don't call us the Low Country for nothing— we have a lot of wetlands and it can be very swampy, but we're absolutely committed to getting fiber to every home, even the most remote areas.”

Of course, fiber builds can be tricky for smaller companies and co-ops, with cost often exceeding return on investment. But Crabtree says that PRTC has taken great measures not to just provide broadband services, but to do so with media platforms that rival those from large competitors. Earlier this year, PRTC announced it was transitioning its IPTV-based video services to Alcatel-Lucent's starter pack end-to-end solution, which included the Microsoft Mediaroom 2.0 software platform. Mediaroom, created specifically for Tier 1 service providers, “helped get rid of some traditional IPTV problems, but also opens up new opportunities,” Crabtree said. “Some telcos deploy IPTV and then really aren't thrilled with what they're able to provide. But for us, Mediaroom was really a great choice for the consumer. It really is a very slick, great interface,” he said, noting that the platform makes it possible to introduce VOD, whole-home DVR, caller ID over the TV, and even remote DVR services. Right now, the co-op's IPTV services are about 10% penetrated, but Crabtree says that Mediaroom should dramatically increase marketability and will allow PRTC to “ratchet up marketing for this particular service. We're already seeing great responses, and we believe it's going to be successful.”

But for PRTC, the fiber build-out is about much more than just IPTV services alone. It's about “future-proofing,” as Crabtree put it. “The more fiber you have, the more you can do with it. Fiber-to-the-home provides almost limitless bandwidth capacity, allowing our customers to share multi-media content, watch videos on any device, and so on.” In other words, PRTC is looking to provide the bells-and-whistles that the Big Guys provide, but they plan to bring it to even the most remote areas where subscribers live and do business.

In some areas, DirecTV and Dish Network provide stiff competition, Crabtree acknowledged, but when it comes to providing the whole package of services, PRTC still maintains an edge. In Colleton County, Comcast provides TV and Internet services, but no voice service, and Frontier offers voice and broadband in small pockets of coverage. “We keep hearing rumors of improvements coming down from the Charleston area [in regard to Comcast], but right now they have a pretty standard offering. Our TV service is much richer, according to what we offer, and of course we have a whole package of services we provide.”

Crabtree noted the importance of broadband in small communities and rural areas—something that he says is threatened by recent changes to USF funding. When asked about how the Connect America fund will impact cooperatives like PRTC, Crabtree said, “We stand with everyone at NTCA and the other ILECs who have voiced their opposition to these changes. We're working fast and furious to run fiber and offer as high a service level as possible, and the cutting of USF funds hurts our efforts to do that in the fashion we'd like. We're not happy about the changes in the way they're distributing funds.”

Despite these federal battles, like most cooperatives, PRTC is committed to improving its community, Crabtree said. “We are very involved in the area, and are especially excited about the advanced services that the Colleton County Medical Center is able to offer through our broadband connection.” He explained that, in the past, the facility had to rely on its sister hospital in Charleston for difficult diagnoses, advanced technologies, and specialist services. This often included transporting patients via helicopter or a one-and-a-half hour drive. But now, in seconds, doctors at CCMC can send data to physicians in Charleston and get a detailed diagnosis right away. Doctors at CCMC are also making use of iPads to collect patient information; hospital management will soon rely on “hot boards” to streamline providers and get physicians to the hospital when demand increases, and the hospital website will offer online updates on emergency room wait times. Crabtree said, “These are super patient-friendly services and, while they've had our [PRTC's] broadband for years, they're now really expanding the utilization of its functionality.”

In addition to medical services, Crabtree said that PRTC's broadband has been “a real game-changer” for Colleton County High School and Colleton Preparatory Academy. “We offer broadband connections to each school in a way that fits their needs very well... and we partner with the local schools all the time—to sponsor athletic departments and support recreational teams. We really try to have a local presence in a variety of ways,” Crabtree said, explaining that PRTC also provides telecommunications services to the police and fire departments and sponsors fundraisers for March of Dimes. “That personal connection is really important,” he said.

One of PRTC's smaller business divisions is its wireless service, which Crabtree said is branded PRTC Wireless but also accesses one of the largest networks in the country. PRTC has offered wireless for the last 2-3 years and hopes to more aggressively promote “a quad play in the future,” Crabtree said. “It's not an easy business to grow in, but we're doing it, slowly but surely.”

As for the regional area surrounding PRTC's base in Walterboro, South Carolina—the county seat of Colleton County—there is plenty of growth to go around. PRTC's service area sits outside the main competitive markets of the Charleston area, but the county enjoys growth from nearby economic expansion. Early this month a new aerospace company, Colleton Aerospace LLC, announced it would construct a $15m plant in the county, bringing 300 jobs to the area and hopefully spurring development in the Low Country. PRTC is already scheduled to be the telecommunications supplier to Colleton Aerospace, and Crabtree noted that this was just one of the ways that the area is continuing to see growth in jobs, residential expansion, and population increases. Recently Boeing opened a new facility in North Charleston and tire manufacturers Bridgestone, Continental, and Michelin have all made significant investments in the surrounding area. Likely this growth will spill into PRTC's service area, and Crabtree says the company has already been active in Charleston media markets. “We can't help but think our region's growth will help us, and we hope to enjoy some of its success.”