By Katy Spence
It’s often said that technology removes geography as a barrier to running successful tech companies, but infrastructure still provides challenges in the most rural states. Montana is the fourth largest state in the US, but it ranks at 48 in terms of population density. Connecting people in sparsely-populated areas through fiber, broadband, and phone service is an ongoing objective for both utility companies and the tech companies who use their services.
In April, a group of Montana executives gathered in the new Nemont Billings Office (formerly Parsec Data Management under Diamond BTS) to discuss the state and future of telecommunications in rural Montana.
Broadband: “Challenges of distance and density”
According to Broadbandnow.com, Montana is ranked at 48 in terms of connectivity with 77 percent of the state having access to broadband. While that number is up from its rank of 50 in 2018, Geoff Feiss, General Manager of the Montana Telecommunications Association (MTA), wants it go up even more.
“I have two goals at MTA,” Feiss said. “Removing barriers to deployment, that’s one, and accelerating and facilitating the deployment of broadband infrastructure.”
MTA works on behalf of independent rural telecommunications service providers in Montana. In addition to supporting deployment of high-speed internet in rural areas, MTA also lobbies at the state and federal levels, performs public policy analysis, and holds annual meetings and educational opportunities for its members.
Feiss said MTA member companies have deployed 25,000 miles of high-speed fiber optic cable in Montana. The main fiber “backbone” is owned by Vision Net, a consortium collectively owned by nine MTA member companies.
While MTA companies are investing more $100 million each year in rural infrastructure, Montana’s low population density means there are few customers, and they don’t live near each other in rural areas. The number of customers averages out to fewer than three households per square mile.
“We got a whole lot of distance between lightbulbs, as Conrad Burns used to say,” Feiss said.
MTA estimates that it costs an average of $30,000/mile to dig and install fiber, with fluctuations depending on terrain.
“It costs a lot of money, and we don’t get a lot in return because there’s not a whole lot of customers,” Feiss said. “[However], at the end of 2016, nearly 28 percent of our customers are connected by fiber.”
Feiss added that some of his member companies have provided fiber optic internet connections to more than 80 percent of their customers, compared to a national average of 25 percent connectivity.
Cell coverage: “not acceptable”
Not only is high-speed internet access a challenge in rural Montana, but even maintaining a phone call on I-90 travelling east out of Billings can be nigh impossible, said Mike Kilgore, CEO of Nemont Communications.
“In my opinion, that’s not acceptable,” he said.
Based in Scobey, Montana, Nemont Telephone Coop was founded in 1950 as Montana’s first telephone cooperative. In 1995, Nemont saw the writing on the wall and began investing in cell phone infrastructure. Today, Nemont serves 14,000 square miles of eastern Montana, North Dakota, and Wyoming, and operates five companies.
Kilgore said that licensing issues involving national carriers such as Verizon, AT&T, and T-Mobile make it difficult for local carriers to get access to some coverage areas. Despite the national carriers’ market control, Kilgore said local carriers have about three to four cell sites per every one constructed by a national carrier in Montana.
“Just in northeast Montana alone, Nemont has about 80 towers,” Kilgore said. “Verizon has three. AT&T has zero, and T-Mobile… managed to put 12 towers up there.”
Customers of some of those networks, however, can still benefit from Montana-constructed cell towers.
“When Verizon and Sprint customers come to northeast Montana to do hunting or fishing or visit friends or travel through, whatever the case may be, their phones still work,” Kilgore said. “Not because of their network, but because of the network built by a small Montana company.”
With Nemont’s purchase of Parsec Data Management in Billings, Kilgore said it’s indicative of the company’s dedication to serving more Montanans and improving existing connectivity.
“You gotta get beyond the city limits and the county line and think longer term,” Kilgore said. “We have a greater responsibility than just the community scope…. What if the state of Montana was the best connected state in the country?”
Policy, adaption, and the future
The need for improved broadband is well-known in the Big Sky State. In 2013, Governor Steve Bullock launched the Main Street Montana project, a non-partisan initiative designed to provide actionable steps to improve Montana’s economy. One of the Key Industry Networks convened as part of the project centered on Interconnectivity and Telecommunications. Feiss said several states have broadband plans, and the recommendations laid out by business leaders for the Main Street Montana project could be a good first step to getting more robust broadband policy in Montana.
With ever-increasing demand for bandwidth and coverage, telecom companies are also looking for ways to invest in expensive infrastructure while remaining profitable.
Broadband providers make money through three main sources: selling services to customers, selling access to other telecom providers who want to connect to their network, and subsidies through the universal service fund established by the Telecommunications Act of 1996. Often called “support fees” on a customer’s bill, these subsidies can comprise between 35 and 50 percent of the revenues that small companies get, Feiss said.
The fee supports schools, libraries, rural health providers and low-income individuals by reducing their broadband bills. It also provides subsidies to telecom companies, both large and small, to invest in infrastructure and maintain a high-cost network in rural areas.
Kilgore said Nemont recently became eligible to receive universal service funds for the purpose of building out wireless coverage in rural Montana.
However, the subsidy only applies to what the FCC defines as telecommunication services: voice traffic, long-distance calls, and international voice calls. With fewer customers subscribing to these traditional utilities, companies are seeing a decrease in how much they receive from the support fees, about 19 percent of which ultimately go into the universal service fund. Feiss pointed out that large companies like Google and Apple don’t have to pay into the fund because video conferencing isn’t a traditional telecommunication service under the FCC’s definition.
“There’s got to be a better way to structure support for companies that are able and willing to serve rural, abandoned underserved areas,” Feiss said.
One solution executives discussed was better partnership among local stakeholders.
Aaron Ramage, VP of Projects & Administration at Diamond BTS, pointed to a project that his company is doing in Ross, North Dakota, where it needed to have fast, reliable internet access, as well as dependable backups in case of a connection failure.
Diamond BTS built out the fiber connection around the site and established a partnership with a local internet co-op. If all else failed, local cellular providers had the area covered.
“Sophisticated and highly reliable systems, they are possible in these rural areas,” Ramage said. “And it’s because of the fiber that’s available there and the cell service provided there.”
Jason Pond, CEO of Bitterroot Valley-based Grizzly Broadband, said his goal is to partner with co-ops so as not to overbuild on already-existing fiber networks. Kilgore added that he hopes all carriers can someday work together.
“One of our long-term solutions is to have a more equitable sharing of the expenses of building rural infrastructure among all of those who benefit,” he said.
Feiss added that Nemont’s purchase of Parsec Data Management could be a good indication of another adaptation strategy: diversify.
“By moving into Billings and buying Parsec, it shows that [telecommunications companies] can diversify and should diversify,” Feiss said.
About the Author: Katy Spence is the Communications Director for the Montana High Tech Business Alliance. She worked previously with the Missoula Current and Treesource, and has an Environmental Journalism Master’s Degree from the University of Montana.
About the Publisher: Launched in 2014, the Montana High Tech Business Alliance is an nonpartisan nonprofit association of more than 370 high tech and manufacturing companies and affiliates creating high-paying jobs in Montana. For more information, visit MTHighTech.org or subscribe to our biweekly newsletter.