HELENA — With the help of $70 million in federal stimulus money, Montana could have a new fiber-optic network snaking across the state, bringing cheaper high-speed Internet service to the remotest corners of the state.
But the proposal from Bresnan Communications has been blasted by existing rural telecom firms and co-ops, which are asking questions: Who will pay to operate this network, and what will its true economic impact be?
They say the Bresnan network, financed by government money, will cut into their limited customer base and make it harder for all rural telecom providers to survive and still offer affordable service.
“It hurts the incumbent providers, and we’ll have little or no investment incentive, and then have this white elephant that we have to clean up after,” said Geoff Feiss of the Montana Telecommunications Association, predicting that the Bresnan network won’t be able to sustain itself financially.
Federal officials are expected to decide by next month whether the Bresnan proposal gets Montana’s initial share of stimulus funds for expanding high-speed Internet networks — or if the money goes to other projects in Montana.
Bresnan, which already provides cable TV, Internet and telephone service to parts of Montana, has a long track record of building and sustaining fiber-optic networks in rural areas — without government subsidies, its executives say.
“The whole point is, there is a need for this network,” said Shawn Beqaj, vice president of communications for Bresnan in Purchase, N.Y. “We were asked to fill a need, to meet a perceived need from seven Indian reservations. We created that (proposal), and we’re willing to stand by what we created.”
Yet even Bresnan officials have said the 1,880-mile line that would go to Montana’s Indian reservations and points in between doesn’t pencil out financially unless the government fronts $70 million in construction money. Bresnan says it will provide another $6 million.
What comes after the construction is what concerns the other telecoms. The Bresnan network will need to build a customer base in rural Montana and somehow generate enough money not only to operate the network but also to extend “last-mile” service from the network hubs to homes and businesses in remote areas.
Industry insiders say it’s hard to imagine that happening without Bresnan taking customers away from smaller urban areas served by existing telecom providers, which already rely on federal subsidies to help them exist and keep their rates affordable.
Rural telecoms also fear that Bresnan could seek those federal subsidies as well, further diluting that pool of money.
Beqaj said Bresnan has no plans to seek federal subsidies for operating the network. But the company does plan to compete with existing telecoms in some areas, such as the reservations, offering services for prices that are comparable to what Bresnan offers in the major Montana cities it serves, such as Billings, Helena and Missoula, he said.
“This network, if built, will provide a competitive alternative,” he said. “Where there is overlap, we’ll keep them honest on their prices.”
However, he also said the network may not build hubs at locations where existing companies are providing the “last-mile” hookup to customers, because the aim is to target areas where those last miles are scarce or nonexistent.
Bresnan also has talked about partnering with the tribes to operate portions of the network or the last-mile hookups on the reservations.
“This would be a long, big string of fiber,” he said. “All of it will be owned, operated and used by various people. We anticipate being partners with the tribes.”
Rob McDonald, spokes-man for the Confederated Salish and Kootenai Tribes on the Flathead Indian Reservation, said the tribes have no desire to harm local telecoms that already serve the reservation.
Yet there are areas on the Flathead Reservation unserved by high-speed Internet, and local calling doesn’t exist from one end of the reservation to the other, he says.
“We want a more streamlined way to get things done (on telecom service),” McDonald said. “It will provide the tribes and other reservations with alternatives that do not exist today.”
The tribes may have to handle the last-mile hookups, possibly as a joint venture with Bresnan, but nothing has been decided or even proposed to the tribal council, he says.
Walter White Tail Feather, director of economic development for the Fort Peck Tribes in northeast Montana, said his reservation is “tired of being held hostage by these small co-ops” and looks forward to having a cheaper broadband alternative that works well, for homes and businesses.
“They know if this happens, they’re going to lose their monopoly,” he said of the existing telecoms. “One of the great things about this Bresnan proposal was that we were actually asked, at the beginning, ‘Do you want this thing?’
“It was a nice thing to be at the table, instead of, ‘Oh, yeah, what about the Indians?’ We’re tired of being an afterthought.”
Existing telecoms, however, remain convinced that the Bresnan proposal is little more than an “overbuild” of existing network that doesn’t really bring Internet to the unserved or underserved customers.
“If an area is unserved, prove it and spend the money on that,” said Feiss of MTA. “But don’t spend $70 million on an overbuild network that’s going to deprive investment from existing networks and leave behind collateral damage that we’ll never recover from.”