The Story of Medicine Bow (Part 2 of 8) – The Telco Shell Game

The Telco Shell Game

The local phone company in Medicine Bow is CenturyTel  – now CenturyLink.    A description of the Wyoming properties in the CenturyTel brochure includes the following corporate creed:

“CenturyTel champions Fairness, to ensure a level playing field for all consumers;  Affordability, to keep rates affordable for everyone; and Access, to give every American access to the latest modern technology, no matter where they choose to live.”

Link:  http://interapp.centurytel.com/documents/about/field_news/wyoming.pdf

The locals are nearly universal in their distaste for CenturyLink, which has neglected Medicine Bow for years.    This is despite the fact that CenturyTel receives massive subsidies from the Universal Service Fund to maintain and improve communications facilities in rural areas such as Medicine Bow.

A basic phone line in Medicine Bow, with call waiting and line maintenance service on it, costs $42/month.   This is with no long distance.   Anecdotal evidence infers that CenturyTel is receiving approximately $500/year per phone line in support from the USF.   That totals up to about $1000/year in revenue for each phone line in the town.  There are about 200 land lines in Medicine Bow, according to the phone book, so CenturyTel takes in about $200,000/year in gross revenue from Medicine Bow.   I can only guess as to what their expenses are, but they have to be minimal by telco standards.   The copper plant has been in place for a long time, and the entire town gets its connectivity through a microwave hop to Union Telephone’s network.    Assuming minimal maintenance expenses, the trunk costs and other direct expenses should leave at least a 25% profit margin on the town, possibly more.

The residents of Medicine Bow have been asking for broadband Internet for several years.   There was some interest back in 2003, when I first got involved in the ISP business in Laramie, but the first indication of real desperation came in a phone call from a Medicine Bow resident in the summer of 2007.   She had a collection of signatures from 60 people who were interested in getting high speed Internet, at least 256K.   The nearby towns of Rock River and Hanna, both serviced by a different phone company, now had high-speed DSL – 128K for $30/month and 256k for $50/month – not including the DSL modem rental which brought the cost of “high speed” up to $60/month.   That set of speeds looks pitiful even by the standards of 2007, but it still represented an improvement over the dialup or satellite that represented the only connectivity available in Medicine Bow.

I started doing some feasibility studies after her first phone call, but about a month later, she emailed me to let me know that they were going to get DSL soon, and that most everyone there was going to switch over to it as soon as it was turned on.    Fair enough.   I had enough experience with these little towns to know that whoever delivers broadband first is probably going to get the majority of the customers.    Considering that Medicine Bow is also a full three and a half hour drive from our home office, I was just fine letting them go so I could work on other projects closer to home.

Surprisingly enough, I got another email from in 2008.   Nine months later and after more promises from CenturyTel, there was still no DSL.    The Wyoming Public Service Commission had a public hearing in August 2008, where local CenturyTel customers attending the hearing “expressed their concern about phantom calls, blocked calls, inability to make 911 calls and inability to access high-speed Internet service.”   (link:  http://psc.state.wy.us/htdocs/telco/telco09/teleco2009.pdf )   Not long after this hearing, CenturyTel again made the promises that there would be DSL in Medicine Bow, and that the locals should just hold on a little longer.

The final straw with CenturyTel and the people of Medicine Bow, happened in the spring/summer of 2009.   I attended a town meeting, and gave them a description of the services that we offered and the technology that we could use to bring connectivity to town.   I also mentioned that there might be some government programs that they could look at that would help subsidize the construction and maintenance of a broadband network to service the town.   The Broadband Stimulus package had been recently announced and the climate looked favorable for government assistance to get broadband in every home, especially since Medicine Bow was a perfect example of a place that had been left out.   Even pre-stimulus grant programs such as the USDA Community Connect program would be available and Medicine Bow qualified.   After the meeting, everyone felt positive that we would be able to come up with a solution.

I checked in with the town council the next month to start the process of information gathering and technical work needed to build out, and was quite surprised to hear that they no longer needed us.   CenturyTel had heard about the meeting and decided to make an application for a grant through the USDA Community Connect program.   They rented a room at the Virginian Hotel and had a big presentation for the townfolk that talked about how they would bring in DSL, buy and refurbish a building into a community center with computers for public use and generate new jobs through the community center.  They also talked about how wireless was unreliable and insecure – ironic statements considering that they fed the entire town with a wireless microwave link.   They could deliver on all of these promises but there was a catch.    The town had to make sure that no other broadband came into town, or the grant would be in jeopardy.

The city elders were faced with an unpleasant choice, but it seemed clear to them that they should support CenturyTel and deny me access to the city facilities where I could install our wireless access equipment.    I wasn’t intending to put in a community center full of computers and provide jobs for locals, so my proposal was not good enough.   And if I did bring broadband to town, I was going to disrupt their chances of getting jobs and a community center, so I was told to stay away.   I was familiar enough with the Community Connect grant to know that the jobs and community center were requirements, and although they were fully funded by the government I was not comfortable with the responsibility of trying to figure out how to run a community center from 200 miles away.    I also knew that the paperwork was going to be more of a burden than actually installing the network, so it looked like it was time for me to back off.

I was very frustrated at this point.   It was obvious to me that CenturyTel had been blowing these people off for years, but was now in a position to get $200,000 to $300,000 in government money to put in a DSL system with a maximum capacity of 1.5 megabits for the entire town, and average end users speeds of 512k.    Considering that CenturyTel is also getting $100,000 or more per year in government subsidies to provide the POTS service in town, it looked like their formula for success was very simple:  provide the bare minimum of service to qualify for USF, get government money to pay for the upgrade costs of the plant and do everything possible to keep others out of the market so that there would be no competition.   If we start in 2003, the point where I was made aware that they wanted DSL service, the timeline and estimated subsidy breakdown looks like this:

• 2003 – No DSL, $100,000 USF subsidies
• 2004 – No DSL, $100,000 USF subsidies
• 2005 – No DSL, $100,000 USF subsidies
• 2006 – No DSL, $100,000 USF subsidies
• 2007 – No DSL, $100,000 USF subsidies, DSL “Coming Soon”
• 2008 – No DSL, $100,000 USF subsidies, Wyoming PUC hearing
• 2009 – No DSL, $100,000 USF subsidies, potential Community Connect grant application if no other competition

Since 2003, CenturyTel received an estimated $700,000 in USF support for the town of Medicine Bow, but made no significant upgrades to the local infrastructure and did not install broadband.   According to the 2008 Wyoming PUC hearing, even the landline service got worse.

Great for the phone company bottom line, but terrible for taxpayers that are funding the government programs, terrible for the landline customers across the country that are paying 2-5% of their total phone bill to support USF and especially terrible for the people in Medicine Bow that are stuck with poor service, no broadband and no choices.

Any hope of broadband in Medicine Bow was going to have to come from somewhere other than the telephone company.