Fighting for the Last Mile

[imgbelt img=Cablehouse.jpg]Federal stimulus funds targeted at rural America may help, but some telecommunications companies question whether it’s the best use of tax dollars.


Today’s Farmer Magazine.

Will the federal stimulus package bring affordable broadband service to unserved and underserved areas of rural America? Dan Strode thinks it will—at least for 5,000 homes and businesses served by Ralls County Electric Cooperative in northeastern Missouri.

“We took the bull by the horns, and I can’t tell you how excited we are,” said Strode, CEO and general manager of Ralls County Electric in New London.

The $20 million project assures all the electric co-op’s customers access to what the telecommunications industry calls the triple play—high-speed Internet, TV/video and voice/phone service. Over the next three years, the co-op’s technology subsidiary will construct fiber lines to each customer’s home, with the first receiving service as early as June. In addition, it hopes to bring distance learning to schools, tele-medicine to health systems, and better communications to public safety officials. Stimulus rules require that outside wholesale vendors can jump on board the network to offer competing service.

Ralls County Electric surveyed almost 500 of its members and learned that 96 percent would sign up at planned rates of $39.95 per month for 10 megabytes (MBs). A lower fee of $19.95 for 1 MB will also be offered. That’s a good deal when you consider the up-front cost—divide $20 million by 5,000 customers, and it comes to $4,000 per customer. Until now, rural networks might cost $10,000 per customer. The bargain comes through new architecture invented by Strode’s vendor, Pulse Broadband of Chesterfield, Mo.

 “We tried wireless broadband for years,” Strode says, “but we have a hardwood forest and all of the hills and valleys that come from the bluff side of the Mississippi River. We could only serve one in every four members who asked us for broadband.” 

Strode had been looking for a way to deliver more reliable broadband, but with a density of just four customers per mile of line, he couldn’t justify the expense. Even Pulse’s new architecture would take eight customers per mile to pay off. When the federal broadband stimulus came along, the chance to obtain half the up-front costs through a grant made the plan work.
Consumers in cities like Kansas City and St. Louis can choose from a variety of broadband providers, but you won’t find so many in rural areas like that around New London where challenging terrain can make it more expensive to bury fiber or string cable. A lower population also means fewer customers to pay off the investment.[imgcontainer left] [img:Digitalcable.jpg] [source]Today’s Farmer

Digital cable was the only reliable option for rural customers in Ralls County who wanted broadband. The cost of delivering the service averaged $4,000 per customer.

The American Recovery and Reinvestment Act of 2009 provided $7.2 billion to assure that all Americans can access affordable broadband. Of that amount, $2.5 billion will focus on providing broadband to unserved or underserved areas through the federal Rural Utilities Service. By early Spring, Ralls County Electric was one of just nine applicants of this type in the nation that had obtained funding, and it was the only Missouri winner. RUS provided Ralls County Electric with a $9.5 million grant and a loan for the same amount. The state pledged $950,000.

Paying for Competition?

The town of New London, population 1,001, stands at the center of a continuing broadband stimulus controversy. While Ralls County Electric’s project would serve five counties, it will also reach residents of New London, where TDS Telecommunications Corp. already provides 1.5 MB to 10 MB broadband starting at $29.95 per a month. TDS isn’t thrilled about Ralls County Electric’s receiving stimulus funds.

Andrew Petersen, director of external affairs and corporate communication for the Madison, Wisconsin-based company, says that, overall, TDS welcomes the broadband stimulus as the best way to link up rural America with much-needed broadband services. Of all “last-mile” applications—those delivering broadband to the home—nine had been funded in the early spring. TDS won two of the nine—one in Michigan and another in Alabama. TDS, which owns 121 local companies in 30 states, originally planned to apply for funding in the New London area and another project in Stoutland, MO. But TDS didn’t apply for New London in March since a network that duplicates Ralls County Electric’s plan won’t be eligible.

At TDS, a team of 30-plus people worked full time on filing stimulus applications. The team also filed challenges to applications that would compete in TDS territories. In fact, TDS filed an informational objection to the Ralls County Electric plan, highlighting that TDS already provides broadband services in greater New London.