Broadband funding helps, but project costs could sink carriers

Some of Montana’s most remote corners could soon have access to high-speed internet.

The Montana Public Service Commission last month announced it had re-certified 26 telephone and internet carriers to be eligible for federal funding to improve rural broadband connectivity around the state. According to the commission, these companies are now eligible for about $100 million in funding from the Federal Communications Commission.

Commissioner Bob Lake, R-Hamilton, said this re-certification process is pretty routine.

“Whether it’s in the mountains of western Montana or the prairies of eastern Montana, it is very hard to maintain,” Lake said.

According to FCC data from 2014, just 3.4 percent of Montanans had access through fiber-optic cable, compared to 25.4 percent nationwide. Looking at download speeds, 22.5 percent of Montana customers had 25 megabits-per-second, compared to 85.3 percent nationwide.

“It’s a fairly long-term project,” Lake said. “The Connect America Fund is a five or six year program. In most areas, all it does is get a good start on it. Then companies can schedule how they’re going to do the next four or five years. It’s planning, making sure they got the right equipment and everything else.”

JUMPING ON board to receive Connect America funding means re-certified companies like Access Montana, a small-scale carrier based in Ronan, will have to choose between staying with the old program, which doesn’t include broadband infrastructure funding, and the Connect America Fund. The new fund requires that carriers construct infrastructure build-out to a certain percentage of their unconnected service territory.

And while receiving funds from Connect America might help get the process started, Access Montana CEO Jay Preston said building out the remaining area over 10 years might bankrupt smaller companies hoping to connect customers to internet for the first time.

“As a provider, you don’t really know what the final result is going to be,” Preston said.

Connecting rural Montanans and Americans has become one of the FCC’s focuses in recent years. The agency launched a funding mechanism in the 1930s to achieve universal telephone access, which allocated taxes from phone bills to service carriers to construct new infrastructure toward unconnected communities. The mechanism changed titles and methods several times until it became the Universal Service Fund in the late 1990s with the Telecommunications Act of 1996.

Recently, the FCC began channeling some of those funds toward the Connect America Fund, which is meant specifically for voice and high-speed broadband infrastructure.

The FCC decides where funds go based on census blocks, where the incumbent or most-used carriers have areas that still need to be connected. Access Montana, which has between 4,000 and 5,000 census blocks in its territory, which stretches from Arlee to Thompson Falls, already has two-thirds of its territory connected to high-speed internet. Preston said he has to determine whether to roll the dice and try to connect the last third, which could cost more than the business could sustain.

Montana carriers now have until early November to make the decision.

Preston predicts that areas like the Flathead won’t receive as much funding because CenturyLink is the incumbent carrier and Montana is such a small unit of its overall coverage area. Last year, the PSC took CenturyLink to court for failing to maintain its services in rural Montana. CenturyLink settled the complaint out of court, essentially agreeing to accept $91 million from the Connect America Fund and chipping some of its own funding to improve its infrastructure in rural areas.

Megan Griffin, regional market development manager for CenturyLink, told the Inter Lake the company is currently developing a plan to improve that infrastructure, but wasn’t able to specify where those improvements will land.

“It’s a five-year project and we’re part of the way through it,” she said. “We are completely committed to expanding broadband based on the Connect America plan. Our goal is to have 33,638 households connected to high-speed broadband.”

In Eureka, InterBel Telephone Cooperative has actually spent the last few years ahead of the curve, building fiber optic cable lines to customer homes. General manager Randy Wilson said that since his carrier company is going to have to stay with the legacy fund, he’s concerned funds might shrivel up for companies still on the older program.

“How many people are going to accept the (new) or the legacy program, and how many legacy program are going to aggressively build out fiber to the home?” he asked. “The more draw out to the homes, the more draw on the budget. If there’s more demand on the legacy budget, then everyone takes a shortfall.”

While Wilson said funding high-cost infrastructure projects could eventually impoverish rural carriers like InterBel and Access Montana, the mission for universal service remains a priority for rural America.

“People who live up here need those services too,” he said. “Kids come home and have to do their reports. It’s not the days of pencils and paper anymore, it has to be done on their computers. You need high-speed internet for that. You’ve got other people who are telecommuters. If they don’t have access to that then they don’t live here and you don’t have that economic development. If you don’t have any economic development, the towns will dry up and people will move out.”

The Montana Telecommunications Association next week is expected to a release a new report on broadband connectivity in Montana.

Reporter Seaborn Larson may be reached at 758-4441 or by email at slarson@dailyinterlake.com.