Montana Telecom head lauds state’s rural providers

By Martin Kidston/Missoula Current

When the first generation of smart phones was released 10 years ago, the devices used less than a megabyte of bandwidth, though their popularity and widespread use still crashed AT&T's network.

That, according to Geoff Feiss, resulted from basic phone calls and texting and had little to do with sharing today's high-resolution photos, surfing Facebook, or watching videos on YouTube.

“Your wireless communication is only from here to the nearest tower,” said Feiss, holding up his smart phone. “The bulk of that call is transmitted on a fiber optic or broadband network between towers. It brings up why this broadband network is so important.”

Feiss, general manager of the Montana Telecommunications Association, praised the state's rural telecom providers Monday during a presentation before City Club Missoula. But he panned a local effort to establish an open-access broadband network as something of a foolhardy dream.

Late last year and in an effort to beat back longstanding myths about the state's lack of broadband infrastructure, the Montana Telecommunications Association released a report lauding the progress rural carriers have made in extending service into the state's distant reaches.

The effort has come with an investment of nearly $250 million over the last five years, connecting more than 74,000 rural customers and nearly 13,500 businesses, according to the report. But doing so hasn't been cheap, given the challenges of distance and Montana's sparse population.

“We've got about 20,000-plus miles of fiber optics in the dirt connecting rural communities, with a density of about three customers per mile,” Feiss said. “It costs us about $30,000 per mile, in some cases more.”

With an average of three customers per mile, Feiss said, the math breaks down to roughly $10,000 per rural customer. While it costs more to lay the infrastructure in a city like Seattle, the cost per customer is actually less due to a greater population density.

“Those are the challenges of distance and density,” Feiss said. “We've spent about $250 million over the last five years deploying broadband alone. Roughly $80 million to $100 million are spent every year on a combination of capital and operating expenditures by rural telecom providers in Montana.”

Whether it's urban or rural Montana, the need for a reliable, high-speed network is the same. It provides opportunities for distance learning, telemedicine, business transactions and telecommuting, a category in which Montana leads the country.

All of it, Feiss said, relies upon broadband accessibility.

“We don't do enough to draw attention and distinguish what the broadband providers in rural Montana do for rural Montana,” Feiss said. “We did the report to point out that in a state like Montana, the challenges are different than they are in a city like Seattle. Rural broadband providers are investing as fast as they can to provide rural broadband services.”

They're also getting hefty subsidies from the Federal Communications Commission, Feiss said when asked by a member of the audience.

While he didn't name a dollar figure, he said Universal Subsidies provide between 15 percent and 50 percent of the revenue to help rural telecom providers recover costs and keep customer expenses comparable to user rates in other areas.

“If it weren't for that statute, costs would be outrageous and uneconomic in most of rural Montana,” he said. “If a telecom provider had to rely only its customers and you only have three customers per mile, that doesn't add up. The ratepayer can't afford the service.”

Over the past few years, city and county leaders in Missoula, along with the business community, have explored the possibility of creating an open-access broadband network. A report released last February by Design Nine, Inc., estimated the costs at between $6.4 million and $9.1 million.

While the effort began under the auspices of the Bitter Root Economic Development District, it has since been folded in the Missoula Economic Partnership, which is conducting its own survey on whether the system is needed and can be supported.

Advocates believe an open-access system will improve speeds and reliability, add redundancy and help local businesses compete using 21st century technology. But Feiss believes a local system is fraught with perils and isn't necessary.

“The American economy is littered with the gravesites of failed municipal broadband projects,” Feiss said. “It's very risky business. Municipalities don't build and operate telecom networks, so it's outside their area of expertise.”

Feiss said failed projects in other cities – and a similar failed effort by Google – overestimated demand and underestimated the cost of running the service. While he agreed that the “last mile” issue is a challenge, there are other ways to resolve it without putting taxpayers on the line.

“It makes common sense to leverage the facilities and the assets that you have,” Feiss said. “Cities can make it easier for existing providers to leverage their existing infrastructure to make it easier and more cost-effective for them to provide last-mile communications rather that cities thinking they can build their own telecom networks.”

Marcy Allen, who helped spearhead the local broadband study while with BREDD, accused Feiss of cherry-picking his stories of failed municipal systems. She also suggested he was pitching a private network over one that offers open access.

“If you had UPS coming to your house and you want Fed Ex to come and you have to build a whole other road to your house just for Fed Ex, that's a lot of where the costs are of creating that infrastructure,” said Allen. “When you warn against the Google story and other stories, there are a lot of successful wholesale municipal entities out there who have built a successful system.”

Contact reporter Martin Kidston at info@missoulacurrent.com