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Elkhart, Kansas
Small telecommunications service providers can face a daunting task when looking at whether and how to deliver broadband services to consumers. What services do their consumers want? What can the provider afford? Should companies build broadband infrastructures themselves or contract the work to outside parties?
Epic Touch Co., a tiny telecommunications provider in Elkhart, Kan., nestled in the southwest corner of the state, has chosen to go it alone. It's a decision they've never regretted.
The telephone/cable company launched ADSL service in 1997, and now counts 150 subscribers across 1,100 homes. Epic also counts 900 cable subscribers and 300 dial-up Internet access subscribers. And just last month it launched PCS service.
"We never considered anyone else doing this. What sets us apart is quality of service," says Trent Boaldin, vice president of operations at Epic Touch Co., who's the third generation of Boaldins who've run the telephone/cable company in Elkhart.
Elkhart is a stone's throw from the Oklahoma and Colorado borders, with an economy based on ranching, farming and natural gas. Amarillo, Tex., 100 miles to the south, is the closest interstate highway to Elkhart.
But Epic's made sure the broadband information superhighway runs through its town. With ADSL penetration above 10 percent, Epic could be the envy of other telephone companies. "We are actually ahead of the larger companies," Boaldin says.
Epic launched dial-up Internet access service in 1995 and actually deployed cable modems soon after, before switching to ADSL in 1997. The company runs a separate coaxial cable plant for its 900 cable subscribers and twisted pair for its telephony services.
"We had cable modems running and it filled a short time window," Boaldin says. "But it wasn't a very reliable service," he says, primarily because of problems in the return path. Boaldin adds that the area's extreme temperature swings along with the cable interdiction plant in place inhibited quality cable modem service.
In 1997, Epic turned its high-speed efforts to DSL, installing one DSLAM at its lone central office with equipment from AG Communications. It began migrating subscribers over from the cheaper dial-up service to DSL. Epic connects Internet traffic to an SBC Internet Service trunk line that runs to an Internet backbone switch in Wichita some 250 miles away.
DSL subscriber growth has climbed steadily since 1997. Although Boaldin says DSL hasn't broken into the black (customers pay $50 a month if they sign up for two years of service), he considers it a competitive advantage.
"Our company has come a long way in forming itself for a competitive market," he says. The proliferation of wireless phones helped spur Epic to launch PCS service in October.
PCS also allowed Epic to expand its market. Instead of 2,400 people, Epic's PCS service crosses six counties including two in Oklahoma, reaching 55,000 potential customers. "That was a big thing," Boaldin says.
Epic's Web site and the local broadband content and links are worthy of any larger city efforts. Epic's pipe capacity is three megabits, and it's gotten clogged at times as users download broadband content. Through time, Boaldin's added enough customers that he's had to tweak the system to improve speed. "We use a proxy server to store content locally," he says. The local content Epic creates also is stored on the server.
Boaldin plans to start pushing e-commerce over the next year and he's approaching businesses about getting modems. He plans to offer Web site creation and hosting services. He's already connected the county government, schools and local hospital through Epic's network.
"The market's not saturated," he says. Fall and winter is a good selling season because it's cold and the days are shorter, he says.
Because it's a small town, most homeowners live within 17,000 feet of the central office. But Boaldin is exploring the possibility of installing digital loop carrier technology for those who live beyond the central office. "It costs too much, but it's the nature of operating in a rural market," he deadpans with Midwest honesty. "You have to operate differently."
Over the next several years, Boaldin's looking to merge the cable and telephony services together. With advancements in video over DSL, the twisted pair looks like it will be the survivor. "We will build on the twisted pair," he says. "VDSL is almost here and the price is coming down."
Even in a small town, competition is knocking on the door. "Our subscribers make it clear to us they want a choice," he says, even though most choose Epic in the end. But satellite dishes and wireless phones are proliferating. "We know that with direct competition, it's not a matter of if, but when," says Boaldin, as he finds himself leading the family legacy into the broadband era.
Annandale, Minnesota
Is Lake Dale Communications a 52-year-old, small, Minnesota-based incumbent local exchange carrier serving six communities with voice, analog cable and DSL Internet service or a competitive local exchange carrier serving 10 communities with voice and high speed Internet access services?
The answer is both.
Under CEO Gene South, Lake Dale is transforming itself from yesterday's telephone company to tomorrow's broadband telecommunications company inside and outside its core territory.
Based in Annandale, Minn., which is nestled between St. Cloud to the north and Minneapolis to the southeast, Lake Dale began offering high speed DSL service as an ILEC in 1997. It deployed DSL using two topologies, laying fiber to neighborhood nodes built by AFC and using copper phone lines to those same nodes. In South's 10-year plan, its entire platform will be interconnected in fiber rings.
AFC has built 26 nodes for Lake Dale in its ILEC territory. Those nodes boost the speed and reliability of DSL service. The speed consumers receive depends on the firepower in the modem they buy, South says.
The AFC nodes house anywhere from 70 to several hundred 56 kilobits cards, South explains. A normal card can operate with speeds between 28 kbps and 48 kbps, he says. But if a customer wanted a T1 line, Lake Dale could insert a T1 card and provide 1.5 megabit speeds. When VDSL arrives, video cards would be inserted to deliver 6 to 8 Mbps speeds.
Lake Dale is a typical AFC customer. "We provide digital loop carrier products for lower line size customers," says Frank Puglia, director of global marketing and communications for AFC.
AFC offers an E-MAX retrofit product and a D-MAX product line for new installations. Basically, AFC helps smaller telcos install digital loop carrier technology and DSL cards at remote terminals. "It pops into the rack and you have broadband to a host of subscribers you never had before," Puglia says. Installations can be done in less than a day, AFC says, without adding more cabinets to existing terminals.
South developed a unique marketing twist for his DSL service: there's no difference in price for residential and business users.
For $10.50 a month, subscribers get access to Lake Dale's digital local loop, dialtone, touch tone and a choice of customized calling features. For an additional $9.95, subscribers receive 20 hours a month of local Internet access service. It's DSL equivalent speeds, again depending on the modem, for just over $20 a month.
Subscribers can purchase 60 hours of service for $12.95, for instance, and 120 hours for $16.95 a month.
South began forming Lake Dale's CLEC strategy in 1997 and launched service in 1998 after receiving approval from the state PUC. Lake Dale now is offering CLEC services in 10 communities. It's part of a multifront CLEC strategy that includes statewide CLEC services and partnerships with electrical utilities and other ILECs.
"As a CLEC, we made the decision to go into a city and totally overbuild every dwelling," South says. By using fiber optics in the central plant, electronic nodes and twisted pair, "we can offer two platforms: voice and data."
"Fibering allows broadband vehicles closer to the dwelling units. With the electronic nodes and twisted pair, the loop becomes shorter. We don't even put in a central office in a community anymore."
That's because the data and voice traffic generated by Lake Dale's CLEC company is routed through its sister ILEC class 5 switch in Annandale.
The Lake Dale CLEC, although it offers facilities-based services, is building its own network for CLEC services. "There's very little money in resale," South says.
That CLEC is connected to a 500-mile fiber backbone network that runs from Plymouth, Minn., northeast to Hinckley, and northwest to St. Cloud and Moorhead. The fiber is owned by Shal, a carrier's carrier owned by Lake Dale and several utilities that sell its excess fiber capacity to other carriers.
Lake Dale has branched out into other areas. The company operates its own long distance service. South boasts he has more subscribers using more minutes of long distance in his ILEC territory than any other long distance provider, including AT&T. "Ninety-four percent of subscribers that inquire about long distance take my service," he says. DSL subscribers also receive price breaks if they are long-distance subscribers.
Asked about more value-added services and South demurs. "I'd like to go into some more things but I'm not giving away my trade secrets to other competitors." Suffice it to say South seems to be doing just fine, even as he declines to divulge access line figures for his ILEC or CLEC businesses.
"As a CLEC I go into town and build every dwelling. I look at their rates and quality of service and I make my rates lower than theirs and my quality of service tens of times higher and I grab customers. Where there are black holes for enhanced services, it's easy to be a CLEC in those towns."
At the same time, South wears his ILEC hat, albeit still wanting to deliver enhanced services. "I have an obligation to provide a suite of ultimate services at the lowest rate to my customers and still make money."
For instance, advances in VDSL technology will allow South to switch out his analog cable plant to deliver video services over his phone plant in the near future. He's planning to deploy VDSL as a CLEC in one city. And he'll eventually switch his less than 1,000 coaxial cable analog video subscribers over to VDSL via copper in his ILEC territory. "I don't intend to replace the analog equipment. I will do (video) in a VDSL approach."
South is buying VDSL equipment from NextLevel Communications. He maintains it's economically viable because he'll enter into partnerships with electrical utilities and even other ILECs to share the costs to deliver VDSL service.
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