Broadband: Country Style

Just because some people prefer to live in remote areas doesn’t mean they’re not interested in high-speed Internet access and data services.

By Tod Newcombe – Govtech.net

Swing open the doors of the horse barn at Ruby Ranch in Summit County, Colo., and you’ll find more than horses, saddles and tack. The barn also houses a digital subscriber line access multiplexer (DSLAM), which splits voice and data traffic over the same copper phone line. Along with routers, DSLAMs have contributed significantly to the expansion of broadband over copper wires.

What’s a DSLAM doing in a horse barn in Colorado’s remote, but beautiful, high country? It’s bringing broadband Internet access to Ruby Ranch, a rural community that no longer wants to be on the wrong side of the digital divide, said Carl Oppedahl, who lives on the ranch and is a member of the Ruby Ranch Internet Cooperative, a rural broadband association.

Oppedahl, a patent attorney, said he and his other neighbors who live on the sprawling former cattle ranch tried for years to convince first AT&T (the cable TV operator) and then Qwest (the regional Bell telephone company) to wire their homes for broadband.

"AT&T said they didn’t know when they would have cable-modem service available, and Qwest wouldn’t give a time frame either," he said. "So, the only option was to do it ourselves."

Remote Upgrades Expensive
Cost is clearly a major reason why the large telecom carriers are dragging their feet in bringing broadband to the rural fringe. Upgrading phone lines to broadband becomes dramatically more expensive the further the location is from the central switching office. The average upgrade cost is $493 per line, but those numbers rise to $9,328 per line in remote areas, according to phone companies surveyed by the National Exchange Carriers Association (NECA).

With 55 percent of rural phone-company switches more than 70 miles from an Internet backbone network, and 10 percent more than 200 miles away, independent telecom firms have found it difficult to provide high-speed Internet service to the edges of the telecom market.

"Remote customers are simply not profitable to serve," wrote Victor Glass, NECA’s director of demand forecasting, in an article on the subject. "They are the poster people for the digital divide."

The problem exists in a huge part of rural America. There are 15 states where the average distance from a central switch to the Internet backbone is more than 100 miles. In Alaska, the average distance is 390 miles.

Using eBay to Build Rural Broadband
Qwest never told the residents of Ruby Ranch that bringing DSL to their location was too expensive ? the company just told them to wait. Meanwhile, Oppedahl and his neighbors grew increasingly frustrated, especially when their monthly phone bill from Qwest would arrive stuffed with promotional brochures about the wonders of DSL, now available everywhere ? except, it seemed, in Ruby Ranch.

Once they made the decision to take on the job themselves, the members of the Ruby Ranch Internet Cooperative found issues concerning hardware and software rather straightforward.

"We were able to buy much of our equipment, including the DSLAM, off of eBay," Oppedahl said.

The difficult part of the process was dealing with the regulatory issues, specifically those posed by Qwest. Oppedahl said he and the cooperative’s members found the phone company quite unreasonable in establishing an interconnection agreement so Ruby Ranch could provide DSL service to its members.

Besides trying to convince Ruby Ranch to use its boilerplate agreement document, which runs more than 400 pages, Qwest insisted the cooperative purchase an $11 million insurance policy. To get around that stipulation, which would have put the cooperative out of business, Ruby Ranch used Covad, a third party wholesaler of DSL services, to complete the agreement without the enormous insurance policy.

Total startup costs were around $10,000. Cooperative members pay a $300 fee to join and must purchase a modem and router. Monthly rates are now set at $60, but Oppedahl believes those rates will drop to somewhere around $35 to $40, once some of the loans are paid off.

The Ruby Ranch Internet service has been operating since June 2002 and has 13 subscribers. Other cooperatives have also sprung up, primarily in Colorado, but also in Maryland, Ohio, North Carolina and parts of Canada.

Networking the Rural Fringe
Ruby Ranch community isn’t alone. Visit just about any rural community located on the fringe of America’s telecom network, and you’ll find plenty of people frustrated by the lack of a high-speed Internet connection. Some, like Oppedahl, have formed cooperatives and built their own high-speed access, sometimes using secondhand equipment to link their rural homes and businesses with the nation’s Internet backbone.

A number of independent and rural telephone companies are also trying to fill the void.

"We offer DSL to 78 percent of our membership," said Brian Bissonette, marketing supervisor of the Paul Bunyan Telephone Cooperative, which serves small communities in northern Minnesota. "We’re doing it because the Bell operating company said our area wasn’t financially viable."

Paul Bunyan’s roots go far back to the early days of rural, independent phone service. The cooperative was founded more than 50 years ago to bring telephone service to a remote section of northern Minnesota. Today it offers digital cable TV and Internet service, in addition to phone and wireless communications. Altogether, the cooperative serves 18,000 phone lines in the region.

Paul Bunyan began offering DSL service in 2000 in one town and will continue to roll out the service over the next several seasons ? when the weather is warm enough for workers to operate outside, Bissonette said. The customers are both residential and business, and service rates range from $39.95 per month for a 256 Kbps connection, all the way up to $89.95 for 1,000 Kbps.

"Because we’re a cooperative, we offer our services at cost," said Bissonette, explaining why Paul Bunyan’s rural rates are so reasonable.

Wyoming Looks at Options
Ruby Ranch’s well-documented success story has caught the attention of other local communities wishing to do the same, as well as the state of Wyoming, which is focusing on bringing broadband service to rural businesses. The Wyoming Business Council, a privately run but state-supported organization, has begun looking at ways to boost broadband access, which currently covers about 30 percent of the state, said Michael Stull, the council’s director of telecommunications.

The slowdown in broadband rollout can be tied to the current financial difficulties of Qwest, Stull said.

To get around the hurdle, the council is focusing on several options, including the development of state-owned fiber-optic assets, wireless services and the establishment of rural cooperatives. Though such cooperatives pose one solution, barriers remain.

"The problem with cooperatives is that they must overcome the interconnection-agreement hurdle with the local phone company," Stull said.

As Ruby Ranch discovered, this can be a time-consuming, daunting process. One solution is to form a statewide nonprofit consisting of member communities, Stull said, explaining the nonprofit organization would negotiate on behalf of members, thereby getting around the problem of having to negotiate on an individual basis.

Low Broadband Penetration
One way for these rural cooperatives to succeed is to have an anchor tenant, guaranteeing a customer for the long term. That’s a role local governments could play, Stull believes.

Finding suitable customers raises another issue plaguing the growth of rural broadband. Demand for service remains low even in urban areas, according to a study conducted last year by the U.S. Department of Commerce.

More specifically, broadband penetration in the United States stands at a miniscule 3.24 percent, according to the Organization for Economic Cooperation and Development. Korea (14 percent), Canada (6 percent) and Sweden (4.5 percent) rank higher.

A number of bills pending in Congress aim to speed up usage. Some would eliminate regulations so the Regional Bell Operating Companies could provide DSL on the same nonregulatory footing as cable-modem service.

But the small, rural phone companies, such as Paul Bunyan, believe deregulation will hurt them. Another proposed bill would offer tax credits, loans and grants ? something rural companies prefer.

Still others argue that broadband access should be included in the definition of universal service, the phone-company funded program that subsidizes low-cost phone service for hard-to-reach and low-income areas. But the funds for universal service are already stretched thin.

Some would argue that without a compelling reason to use broadband ? such as online movies or music-swapping services, like the now-defunct Napster ? consumers will continue to resist paying a higher price for faster service.

But many people in rural areas both work and live on the fringe. Oppedahl, who works close to Ruby Ranch, sees a strong need for having broadband extend into the farthest reaches of backwoods America.

"We’re just like urban Americans," he said. "We don’t want to be left behind."

http://www.govtech.net/magazine/sup_story.phtml?magid=5&id=31531&issue=12:2002