PETROLEUM DIRECTORY: From party lines to broadband

ASTAC’s goal: the North Slope, 100 percent connected

Susan Braund

Petroleum Directory Contributing Writer

Affordable, high quality telecommunications services are increasingly seen as an American right.

Long-standing national policy and legislation have recognized that it is in the best interest of the nation to have fundamental universal telecommunications service and to make sure rural areas are served. At the Economic Summit held last year in Waco, Texas, President Bush stated, “in order to make sure the economy grows we must bring the promise of broadband technology to millions of Americans.”

Since the 1920s, electricity, telephone, water and waste disposal services have been taken for granted in American cities, but rural areas have lagged well behind. To overcome this disparity, the government, through the U.S. Department of Agriculture, launched some of its most successful initiatives, working with rural cooperatives, nonprofit associations, public bodies and for-profit utilities, to bring modern utilities to rural areas.

The Arctic Slope Telephone Association Cooperative is one such cooperative. As recently as 20 years ago, each North Slope village had only one telephone, providing limited access to the ‘outside world’ but no local service. Now, in addition to basic single-party telephone service throughout all nine exchanges across the North Slope’s 92,000 square miles, ASTAC provides local access Internet in every community, cellular service in five exchanges with coverage across the Prudhoe Bay oil patch, long distance service, wireless data links, and a great variety of special circuits — 5,600 total access lines.

“Telephone cooperatives are on outgrowth of the Rural Electrification Act of 1936 which established the Rural Electric Administration. First the act brought electrification to rural America, then enabled rural phone service under the same guidelines. The act provided for the creation of rural telephone service companies including co-ops and for low interest loan funding,” says ASTAC General Manager Dave Fauske. “It has been one of the most successful government programs ever… the loan default rate is almost zero and the economic and social benefits have been enormous.”

In 1996, Congress amended the original act, further defining the Universal Service Policy to promote the availability of advanced telecommunications services to all consumers at rates comparable to urban areas. Today the USDA Rural Utilities Service carries on this Rural Electric Administration tradition.

Co-op beginnings

Fauske worked for the Arctic Slope Regional Corp. at that time and was assigned to help research a telephone system for the region. “Since none of the major telephone companies with interests in the North Slope wanted to also serve the villages,” he says, “the business case that made sense was to start a co-op.”

The fact that a properly formed co-op could qualify for a low interest Rural Electric Administration start-up loan with a long-term payback, convinced the regional corporation to seed fund an engineering feasibility study. The co-op idea gained momentum. The North Slope Borough provided basic central office buildings in the villages. Oilfield contractors responded to the formation of the fledgling co-op with opposing petitions to the Public Utilities Commission. This opposition, however, was quickly dropped when it became clear that the co-op, under its tariff structure, would provide phone lines for under $12 a month.

“In a co-op, there is a direct relationship between service receiver and service provider — no external corporate layer with other economic interests. Co-ops are self-regulating. Because the subscribers are the owners, they won’t run up rates.” In Alaska, as in many other states, statutes say that the co-op owners can elect to deregulate from economic regulation by the utility commission. ASTAC is in this position in all the exchanges except Barrow which was recently acquired from GTE-Alaska.

Keeping Pace

The biggest challenge is keeping pace with the technology, according to Fauske. “Co-op members in all the communities are taking an interest, especially recently, with the new technologies evolving — wireless, internet and broadband. Because of the increasing amount of information conveyed by streaming video and high level graphics as well as real-time interactive activities on the internet, the demand is more and more for broadband.”

Initially, the country was considered well served when a high percentage of citizens could communicate by voice telephone, but evolving technology keeps upping the ante. First it was connectivity to voice, then party telephone lines, then private lines. Now it’s basic internet access … and soon broadband. All nine of the North Slope villages now have local dialup internet access, with no long distance fee, thanks to a Rural Utilities Service grant to ASTAC.

“The problem in much of rural Alaska is the lack of access to terrestrial network links,” says Fauske. “The land is like a big ocean, and the villages are little islands which are dependent on satellite. In rural Washington state, for instance, a full T-1 terrestrial circuit connecting two communities would cost $700-800 a month. In a rural Alaska village of 200 people you might have 10 to15 internet customers sharing a fraction of a T-1 circuit via satellite at $3,000-5,000 per month for one-fourth of the service capacity.”

A rural village served by ASTAC uses the same local internet equipment package and wireline plant as a rural Montana community. Montana has access to large capacity fiber or microwave links, but in Alaska, for less bandwidth, we must use the much more expensive satellite link.

Bandwidth is more than a web-surfer’s luxury however; it is becoming essential for commerce, public safety, education and health services support.

“Sen. Stevens is making efforts to mitigate this situation by encouraging an Alaska consortium which would cooperatively buy bulk capacity on a satellite and provide it to all communities and local providers on a competitively neutral platform.” says Fauske. “This may be the only way to get affordable bandwidth. Satellite owners are not compelled to lower rates and certainly launching and maintaining satellites in orbit is not cheap ... Alaskans will need to cooperatively figure out a solution to this rural Alaska problem.”

Cooperative action

“The symbiotic dynamic between the oil industry and the village subscribers is good — as ASTAC is pressed to implement technologies to serve the oil patch, it is able to better serve the villages,” reflects Fauske.

Nothing’s static in either the oil patch or the telecommunications industry. There is selective competition and, despite the economics, efforts by regulators to create competition.

“Congress, the FCC, the Regulatory Commission of Alaska and the Alaska Legislature are all struggling with issues that will affect the national policy of universal service and its funding,” reads the co-op’s Annual Report. “ASTAC’s status will be affected by these decisions. Our mission will not change, though ... our sole purpose is to provide our owners with the reliable modern low cost services they need.”

Meanwhile, they will keep doing what they do best.

“There’s a new telecommunications theory, scheme or product that surfaces every day,” says Fauske. “But, at the end of the day, we still try to operate on the telephony ‘five-nines’ principle: 99.999 percent of the time it works. Good telephone companies live by this mantra. We look carefully at the new developments, do our best to keep pace, but if it’s not broken, we don’t jump to the latest fad. That’s part of our reliability factor.”

Arctic Slope Telephone Association Cooperative

4300 B Street, Suite 501

Anchorage, Alaska 99503

907-563-3989

800-478-6409

www.astac.net

Editor's note: Susan Braund owns Firestar Media Services in Anchorage, Alaska.