Mainstreet Radio is visiting several towns, each trying a different technique to make sure they are "wired." Just as small rural communities once competed for rail lines, now towns see telecommunications as the vital link which will keep them flourishing.
People living in rural areas have for decades depended on local rural telephone companies for telephone service. With the help of federal subsidies they provide affordable phone service to even the most remote rural areas. Those companies have staked out their territory, strung phone lines, and until recently, faced little competition. But now , in a move which could have a ripple effect across the country, a cellular phone company in North Dakota wants to start providing residential phone service.
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DAN GUNDERSEN: Regent is a quiet town of 250 nestled in the rugged hills and valleys of southwestern North Dakota. This is where Western Wireless Company has chosen to challenge the way rural telephone service has been provided for decades.
SPEAKER 1: There really is no difference. There really is no difference other than the fact that it works off cellular towers rather than your traditional landlines.
DAN GUNDERSEN: Western Wireless account executive Tammy Glasser is hooking up a box about the size of a laptop computer. A small antenna protrudes from the back. Plugging a home phone into this box transforms it into a cellular phone. Pat Candrian is one of about 50 people using the residential wireless service as part of a pilot project.
SPEAKER 2: I see our long distance phone bill dropped a good $70 to $80 a month.
DAN GUNDERSEN: Smaller phone bills are the main attraction of the wireless service. Using his rural telephone provider, Pat Candrian paid long-distance charges for nearly every call he made, even to nearby towns. The wireless service offers him a much larger local calling area. But he's not cutting off his landline connection quite yet.
SPEAKER 2: You feel somewhat of an obligation to the phone company that put these lines in. But I think as competition grows and stuff that these telephone companies land lines are going to have to become more competitive if they're going to survive.
DAN GUNDERSEN: The pressure of competition provided by this project has raised the hackles of the local rural telephone cooperative. Shortly after Western Wireless went online, the Consolidated Telephone Co-op cut off access to the wireless provider, so wireless customers could not receive incoming calls. Both sides filed lawsuits. The case is pending in federal court.
The concept of residential wireless service is so new, there's a question about who regulates it, state or federal government? The states regulate landline phone companies. The federal government regulates wireless providers. The North Dakota Public Service Commission and the Federal Communications Commission are wrestling with that question.
Western Wireless Company has also requested Eligible Telecommunication Carrier, or ETC, status from the State Public Service Commission. That would give the company access to federal subsidies for rural telephone companies. The South Dakota Public Utilities Commission denied ETC status. Western Wireless appealed to the Federal Communications Commission. Similar requests are pending in North Dakota and Minnesota.
Rural telephone companies say they have invested millions stringing phone lines to serve every rural customer. They argue it's unfair to allow wireless companies to take their customers, their source for repaying that investment. David Crothers heads the North Dakota Association of Telephone Cooperatives.
DAVID CROTHERS: We have investments of 4 or 5, $6,000 per customer out there. But it's been our government's policy that those people should have a telephone service that's affordable. And that's why there are rates of $12, $14, $16 throughout western North Dakota. That way, they can afford the telephone service. Now, wireless comes in, and they don't have any intention on serving everyone. And that's the critical, critical difference between wireless and landline telephones.
SPEAKER 3: When they say that, it, in a sense, kind of raises the hair on the back of my head.
DAN GUNDERSEN: John [? Ullman ?] is general manager for Western Wireless in North Dakota.
SPEAKER 3: They're also receiving a lot of funding from the federal government to be able to build and provide that service. So when they say, yes, we've invested a lot of money, it's also been a lot of taxpayer money. We, on the other hand, are a company that has a significant capital investment in the state of North Dakota that has zero tax dollars in it. And so that, I think, is a good smoke and mirrors approach to trying to keep out competition.
DAN GUNDERSEN: Rural telephone companies say they are not trying to keep out competition, just unfair competition. They contend wireless companies will not offer services such as high-speed internet connections and video conferencing, leaving rural telcos to provide those more expensive services to a limited number of customers.
Telephone companies now receive federal subsidies determined by complex formulas, sometimes as high as several hundred dollars a month for each customer. Those subsidies help pay back the initial cost of installing phone lines in rural areas. David Crothers of the North Dakota Association of Telephone Cooperatives says, if that customer switches to a wireless residential service, the telephone company not only loses the customer, but the subsidy, as well, and is left with miles of unused wire generating no revenue.
DAVID CROTHERS: You'll be splitting the pie. A incumbent telephone company builds a network to take care of all of their customers' needs. The wireless company still has that ability to pick and choose.
DAN GUNDERSEN: Western Wireless says it will continue pushing its way into the rural residential phone business, offering better, cheaper access for rural customers. Rural telephone companies say the end result will be less access to cutting-edge telecommunication technology. The North Dakota Public Service Commission may rule this week on whether Western Wireless should have the same status as traditional telephone companies. The Minnesota Public Utilities Commission will debate the same issue next month. Dan Gundersen, Minnesota Public Radio, Moorhead.