Rural phone

technology

ready for

business

By FRITZ BUSCH

Journal Staff Writer

NEW ULM -- The notion that rural Minnesota is a vast wasteland with no technology remains an issue, according to a state rural telecommunications official.

Minnesota Association for Rural Telecommunications Executive Director Randall D. Young was in New Ulm Wednesday visiting with city officials about promoting the idea that most of rural Minnesota, including New Ulm and the area, have the telecommunications technology available to attract new business and industry.

Young said he continues to battle supporters of Gov. Jesse Ventura's telecommunications reform bill that he said would have been devastating to rural communities.

The Administration's Rural Telecommunications Bill died the last two sessions, but Young sees another challenge in St. Paul next year.

Concerns with Ventura's plan included a dramatic increase of regulations on small telephone companies, access charge revenue reductions that would drastically decrease small telephone company revenues and skyrocket local rates, the imposition of a new $150 million tax on local and long-distance phone bills, cable TV bills and direct satellite TV bills.

The creation of a state universal service fund would be economically and politically unworkable, Young said, because the Legislature would have to appropriate the money each year.

The Ventura administration states on its web site that it is committed to ensuring there is no gap between the technology "haves" and "have nots" in Minnesota ... through competition in the telecommunications marketplace.

Young said that the Administration seeks to force at least two phone companies to compete in all markets, which he said would not be profitable, particularly in small markets.

The Journal called the Minnesota Department of Commerce, Telecommunications Division in St. Paul Wednesday. Nobody answered the phone.

Last year, 39 percent of rural phone customers had Digital Service Line (DSL) service. By the end of this year, two-thirds of rural customers will have it, according to construction plans.

Young said some rural areas have more high-technology than the metro area.

"I can get more high-speed Interset service at my cabin in Crow Wing County than in my home in south Minneapolis," Young said. "There are some black holes in rural Minnesota -- towns that don't have advanced services. They are usually served by large holding companies, not independent companies like New Ulm Telecom. A lot of these towns are getting new services as companies come in with new infrastructure."

Another problem with the rural wasteland notion is that private sector decision-makers don't consider rural Minnesota if they're looking for a facility site that needs high-technology services.

A board member of the Minnesota High-Tech Association, Young said he often hears from large and small Twin City high-tech firms that they can't find workers. As many as 5,000-10,000 jobs were going unfilled before the recent economic downturn.

"A lot of those jobs could be done anywhere in Minnesota where high-technology was available," Young said. "Trouble is, some people don't even know what phone company is serving them or what technology is available."

Young said the State of Minnesota has a new program called "E-Commerce Ready" that includes a special web site designation for communities that have advanced Internet technology.

"I encourage cities to be aggressive about getting the designation," Young said.

The Minnesota Department of Trade and Economic Development (DTED) web site has an online application for cities to apply for the program. The program was created a year ago by the Minnesota Legislature.

Young said MART partnered with DTED and created a tool kit that was sent to all rural telephone companies instructing them to talk to city managers or mayors about getting their town certified if the technology is in place.

Local telephone companies have kept their rates low with access charges (fees long distance companies pay local phone companies to use their network) to complete long distance calls. The average access charge is seven cents a minute, Young said.

The state wanted to reduce access charges to one cent per minute, which would have been a huge windfall for long distance companies, according to Young.

"It would have been money that left Minnesota's economy," Young said. "Regulators have no authority to make long distance companies pass the savings on to the customer. They probably would have taken the money and ran. They have a history of doing that at the state and federal level."

Young said the access charges enable local phone companies to offer basic service for $12-$13 per month. Otherwise, it could cost $40-$60 per month considering city and rural subscribers."

Young said under the state plan, small phone company rates would rise, enticing a competitor to come in. At that point, a universal service fund would be used to reduce rates to the statewide average of $25-$35 per month.

"It would still mean doubling or tripling the cost of rural phone service." Young said.

Under last year's proposal, the universal service fund would have been a 10 percent tax on everybody's phone bill. This year, it would have been a 6 percent tax on all telephone company charges including telephone, TV cable and Internet connections.

That could have raised $250,000, which eventually would have been diverted from rural areas to metro needs, according to Young.

"It's another metro-rural issue we have to fight," Young said. "Increasing rates for no good reason, politicizing affordable telephone rates in rural areas and the false notion that all towns need two phone companies is a bad bill for rural Minnesota."

Young agrees there should be telephone company competition, but it should be driven by the market instead of controlled by state regulators.