Iowa Public Television


Independent Telephone Companies Bridge Rural Divide

posted on June 18, 2004

Auditors of a federal program designed to connect schools and libraries to the Internet say it's a big target for abuse and fraud. Financed through phone charges, the $2.25-billion-a-year program provides discounted Internet access and internal connection gear. But FCC audits of the program have uncovered examples of wasted equipment, improper or falsified purchases, and poor oversight.

The government has run into problems with other big money programs to help people connect to the Internet, including one to help bridge the digital divide for rural Americans. The problem there is only a handful of requests for funding have been processed.

Funding for technology expansion, however, is NOT the problem in Iowa, where independent telephone companies have invested millions to deploy not just a high-speed connection to the Web, but opportunities for economic development. John Nichols explains.


Independent Telephone Companies Bridge Rural Divide

Mike Willer represents the fourth generation of his family to farm the rolling hills of northwest Iowa. In some ways though, Willer farms differently than his predecessors. His 60 head of cattle are raised naturally, without the aid of sub-therapeutic antibiotics or hormones. And, in an effort to attract more customers, Willer direct markets his beef on the Internet.

Mike Willer: "I use it more as a marketing tool. A lot of the hits are coming from local and I can also tell that they're coming from the Omaha area and also from overseas, they are coming from different countries and it's kind of exciting to see that."

Willer enjoys high-speed internet services provided by his local telephone company, the only such provider in his region.

Nationally though, access in some rural areas to high-speed internet connections, commonly known as "broadband," can be problematic.

According to a study by the Pew Research Center, 36% of the online population in urban areas utilize a broadband connection -- compared to rural areas where only 19% of the online population connect via broadband.

But Willer raises cattle in Iowa, and for years, the Hawkeye state has been setting the standard for innovative rural telecommunications.

Judy Pletcher, Executive Director, Rural Iowa Independent Telephone Association: "Iowa has the largest number of independent telephone companies of any state in the United States. And that came about back when the rural electrification went through. We had farmers here in the state of Iowa that were very entrepreneur in spirit and they said, we have electricity, now we want to have telephone service. And the big companies were not coming to rural Iowa and so they went together, groups of farmers in just a small location and formed small telephone companies."

Today, nearly 150 independent telephone companies serve primarily rural communities throughout Iowa, providing everything from basic telephone service to broadband internet connections and cable television.

In many cases, major carriers aren't interested in serving rural communities. But industry officials claim independent telephone companies are connecting Iowa's rural citizens.

Dave Duncan, President, Iowa Telecommunications Association: "There are a number of places I know that are in rural Iowa that are served by independent telephone companies that no matter how far out of town the customer might live, they can hook, the phone company can hook up that house, their barn, whatever, their shed with high speed Internet, no matter how far out of town they are. I know of several suburban areas in the state that don't even have access to high speed Internet right now."

A study conducted by the Iowa Utilities Board in 2003 revealed that 67.8 percent of the state's rural communities had access to broadband internet service, virtually the same as their urban counterparts.

Willer's web site utilizes a broadband connection from Western Iowa Telephone, a member-owned cooperative serving more than 3,000 rural customers.

Pam Clark, Marketing/Sales Coordinator, Western Iowa Telephone: "The major carriers are concerned with their profits. Us being a cooperative we are more concerned with giving our customers the best services for the lowest cost and the urban, large urban carriers just aren't interested in coming out in those areas because of the sparse population there. So, it's just profit is the bottom line and being a cooperative we don't worry so much about that profit."

Since the company is owned by its members, Western Iowa Telephone returns much of its profits to its customers through a dividend called capital credits. For some members, the returns are substantial.

Jack Cronin, Manager, Western Iowa Co-Op: "Western Iowa Telephone has given capital credits back every year for as long as I can remember. I believe this past year ours were a little over $7000 here."

Jack Cronin manages the Western Iowa Co-Op. He claims the capital credits have been good for his grain elevator and, consequently, good for his community. .

Jack Cronin, Manager, Western Iowa Co-Op: "They are very financially sound and they are a cooperative and I guess they're local and we want our customers to do business locally and we're going to do business locally."

Pam Clark, Marketing/Sales Coordinator, Western Iowa Telephone: "This year we paid back over a million dollars to about 2900 customers, so it averaged almost $300 per customer."

Beyond profit sharing, Western Iowa Telephone invests in local communities in other ways.

In Moville, Iowa the cooperative donated funds to train local firefighters. Down the street at the library, the co-op provides free high-speed internet access lines and a similar donation was made to the local high school.

Norman Washburn, Technology Coordinator, Lawton-Bronson High School. "We have a connection to the outside world through what is called a T1, which is a very high-speed wide connection. And we also have a T1 between our facility here in Lawton and our facility in Bronson. So, between those we have excellent connectivity. Western Iowa Telephone pays for both of those lines, which saves us roughly $3000 a year per line."

In addition to helping the school save money, Western Iowa Telephone's high speed internet service gives rural Iowans a link to the outside world.

Still, some officials claim there is a "digital divide" between Iowa's rural and urban citizens.

Dave Duncan: "Well, I do believe that there is a digital divide and in fact, I think the digital divide goes the other way. I think that rural Iowa, to a great extent, has better access to services, to high speed Internet and advanced telephone services than urban Iowans do, especially if the rural Iowans we're talking about are served by local, independent telephone companies.

For Market to Market, I'm John Nichols.


Tags: agriculture digital Internet news rural technology