Taking a wrong turn in the vast wilderness of Alaska can be disastrous -- or it can lead you to a place like this

GPS: Robe Lake, Alaska

LATITUDE: 61.07270 N

LONGITUDE: 146.16334 W

ELEVATION: 0 miles

Probably a mediocre landscape to the locals who know better, Robe Lake, six miles outside of Valdez, was good enough to make this city boy 30 minutes late for his interview with Copper Valley Telephone. Not only is this a gorgeous setting, it was, at least for that moment, perhaps the quietest place on earth. I couldn't tear myself away. However, the people who live in Alaska and work in the telecommunications industry probably look at lakes like this differently — at least during the week when they wear their hard hats. Where I see serenity, they see an obstacle to get over or under or around somehow. Where I see vistas that stretch farther than the width of my own home state, their minds calculate the miles of fiber it would take to reach the people secluded on the other side. And where I see that as insurmountable, they see it as just another day at the office. Given enough money, they'll find a way.

The two companies featured in the following pages, Yukon Telephone and Copper Valley Telephone Cooperative, are both finding a way, come hell or high water, to serve their neighbors with the best communications technology possible. Having proved they can conquer the elements, rural providers such as these have only Washington, D.C., to contend with now — along with the competitors it is allowing to change the game.

Above the mud in Copper Valley

Valdez, Alaska, has been famous to fishermen, hunters and other outdoors enthusiasts since the Klondike gold rush 110 years ago. Its breathtaking landscape alone should have been enough to bring it fame around the world (although it does have a lot of competition in that regard from its neighbors). However, its notoriety in the lower 48 didn't come until 1989, thanks to a drunken sailor working for Exxon Corp. But that's all history now — and all but buried beneath a few inches of rock.

Valdez itself sits at the far end of the Valdez Narrows, an inlet off Prince William Sound, and nestled there between the Trans Alaska Pipeline and the Chugach Mountains is the Copper Valley Telephone Cooperative. Copper Valley's history is still being made, and the only thing getting buried these days is some fiber optic cable.

The company was founded in 1960 to serve the Copper Valley Basin. Its customer base grew to 6500 by the turn of the millennium and has since slid back, like most telcos, to 5415 as of June 30.

The company's goal is simple, said Jim Gifford, chief operating office: extend DSL to all. “As we get broadband out there,” he said, “we help the community grow.”

While the philosophy is simple and commendable, getting it out there is no easier in this part of Alaska than any other. Rocks and mud and mountains and valleys and ice and water hundreds of fathoms deep make terrestrial infrastructure a bit rough.

When Dave Dengel, CEO and general manager, came on board in May 2005, he wasn't looking to change much, just to accelerate it.

“It's the environment that changed,” Dengel said. “Before I came on board, competition didn't exist. All of a sudden, it's here. So we accelerated our fiber build, and instead of seven to eight years, we're doing it over two so we can get it done and start generating some revenue.”

Copper Valley has five Class 5 end offices, and in addition to Valdez, it serves Chitina, Glennallen, McCarthy and Tatitlek with voice and broadband services. Part of its accelerated fiber project is adding a 10-mile stretch of glass to Chitina. And although the project was accelerated and the people of Chitina are screaming for their broadband, including the local college, the project has slowed and is in danger of being pushed off until the spring.

“Our contractor is way behind schedule,” Dengel said. “We have a pool going on whether they will get it done this year or not. It was supposed to be done this month, but will probably be closer to the end of the year.”

If the contractor completes the trenching in the next four to six weeks, they should get the project done before Mother Nature brings it to a halt. However, a simple trenching machine won't do the trick; this isn't Kansas after all. Although an explanation for the headline “Above the mud” will come later, this is a case where Copper Valley has to stay below the mud — something there is a surprisingly large amount of in Alaska. Contractors often must use directional boring to go under rivers, lakes or underground canyons. It's laborious work and not as much fun as blowing up rock with dynamite.

“They had to bore under a small river, and they have a big bore where they have to go under a deep rock canyon. It's a six-to-eight-week deal just to complete that bore,” Dengel said.

Copper Valley also plans to bring an OC-3 into Tatitlek using microwave radio. But perhaps its most significant project in terms of innovation is an EV-DO Rev A upgrade to bring wireless data to Prince William Sound (and then perhaps into Tatitlek and elsewhere later). This is another project Dengel lit a fire under.

“Our CDMA was lagging a bit, so I felt we had to do something — either shut it down or go to the next level. We went to the next level,” he said.

People say that innovation comes from the rural markets, and Dengel agrees, especially considering his company is providing a test bed for ZTE USA's all-IP CDMA2000 1X Voice and EV-DO Rev A systems. Announced in September 2006 with an anticipated launch date in the first half of 2007, this project also is moving slower than Dengel hoped. But he says he's just anxious.

“I ask my guys all the time if we made the right decision, and they say ‘yes,’” Dengel said. “From a technology perspective and an equipment perspective, absolutely, their stuff is superior; it's just difficult at this stage. When they get it all put together, their stuff will work anywhere in the country.”

Dengel said they would probably go commercial with Rev A by the end of the year. Demand, he said, comes from the oil and fishing industries: people out in Prince William Sound with no other access to high-speed data. “There are also a lot of transient people on business tours, and they expect to get access to a data network,” he said.

One industry expert said time will tell if it was the right move, but upgrades like this are necessary to stay relevant as a wireless provider — something that remains a challenge for small telcos. “I think Copper Valley is doing everything it can to capture all the revenue it can, including [Universal Service Fund], and redeploying that revenue back into the network,” the expert said.

And that's where Dengel says his company stays above the mud. In this case, mud is figurative and refers not to the mounds of mineral-rich glacial sludge, but to the dirt of politics and the abuse of regulatory systems designed, no matter how imperfectly, to help companies build the infrastructure to bring cutting-edge communications service to otherwise unserviceable areas. Dengel echoes Yukon's Don Eller in his sentiments about USF abusers.

“We use USF for its intended purpose, which is to build out the network. If not for us, people in the outer areas wouldn't have service at all,” Dengel said, frustrated that some competitors are not being held to the same rules.

He points to GCI, an Alaska-based provider of voice, video and data communication services to residential, commercial and government customers. It also provides cable TV service, and it's coming to Valdez. Dengel says it's just coming for the USF funds.

“We have six exchanges, and GCI has only submitted to enter the Valdez exchange,” Dengel said. “They are certified to provide service in those other areas but have chosen not to, and I don't think they will; there's no money in it. It's too far out. They would have to send a technician to Tatitlek on a small plane or a boat, and they're not going to do that.”

This is a huge bone of contention for rural providers who have to play by the Carrier of Last Resort rules and provide service to all comers where new competitors don't. Dengel said that two years ago, when regulators were working on a major rewrite of the Telecom Act, rural providers tried to get language added about permanent exemptions for underserved markets. “There was lots of talk, lots of rhetoric, but nothing happened,” he said. “All blow and no go.”

Copper Valley's motto is “everything you need from the people you know.” It is one of the few companies that lists all its employees on its Web site — not just the muckety-mucks, which, appropriately, is a term with roots in the pidgin trade language that developed in the Pacific Northwest from the aboriginal language of the Chinook people. What word might they have come up with to describe trade in 21st-century Alaska, where e-commerce is conducted wirelessly from a cruise ship in the middle of Prince William Sound?

Yukon Telephone: Living free

It's hard to figure when it all began. It would be easy to say Yukon Telephone started in 1960 after Cliff and Paula Eller did what people did in remote Alaska back then when asked to do something: go right out and do it, and learn as you go.

But you could just as easily say it started two years earlier with their unlikely meeting in a river town called Tanana. Even today, just over half of its residents over the age of 15 have never been married. Slim pickins, they say. Or maybe you could say it goes back to the days Cliff Eller spent as an Army radio operator, knowledge that had Alaskans looking to him when it came time to bring phone service to the small town where the Tanana and Yukon rivers meet, 293 miles north of Anchorage.

But then again, formal training is overrated, said Don Eller, current company general manager and son of Cliff and Paula. After all, he was trained as a civil engineer — skills still evident in the new building he and his employees built for the company in Wasilla — and has a master's degree in management science.

“I learned this business by doing it,” he said. “Growing up and being a part of it all your life, you come to know the industry.”

Don Eller grew up in Tanana and saw firsthand that the motive for bringing phone service to the then-isolated village was not profit. Now that the company also serves Ruby and Whittier as a cooperative, that ideal hasn't changed much.

“We are not in this for the profitability per se,” Eller said. “We are driven a little differently. It's more about the customer and our relationship with the customers. I am probably one of the few owners that can recognize almost 100% of his customers by voice.”

Tanana is about 500 miles north of Wasilla (known both as the starting point of the Iditarod and the end of the highway system). It is much longer if you could drive there, which is not recommended. Ruby can be found a couple of hundred miles west of Tanana by paddling down, or perhaps up, the Yukon River. Eller prefers to travel by air in his Piper Cherokee 6.

Whittier is in the opposite direction, and it is as close to the mainstream as Yukon Telephone gets. It is only 62 road miles from Anchorage and is the launch point for Gulf of Alaska cruises into Prince William Sound. Yukon has 390 regular subscribers there, but that balloons to 500 or more during tourist season. In contrast, Tanana has 188 subscribers, and Ruby has 127.

At the time Yukon began serving Whittier in 1984, no one else wanted it. “The exchange was mostly military stuff from the early '50s, but [we] rewired it, put in a digital switch and turned it into a nice little operation,” Eller said.

Much of the fiber that comes into Alaska terminates in Whittier. That's one reason why Eller recently reconfigured his network and made Whittier his centralized switching center with gear from MetaSwitch. Yukon is able to provide Class 5 features and other services all from this central switching location using its own broadband network for signaling. Prior to putting the MetaSwitch gear in Whittier, Ruby and Tanana had their own switches.

It would be reasonable to think, given the distance between service areas and their general inaccessibility, that terrain would be among Yukon's biggest concerns. It isn't.

Leaving regulation — and the turmoil its uncertainty is causing for rural providers everywhere — aside for the moment, the biggest concern for Yukon is the cost of satellite backhaul. “All of Alaska is hamstrung by the problems with the expense of satellite backhaul,” Eller said.

He believes that by replacing the satellite links with cost-effective terrestrial links, service quality goes up and cost goes down. For example, a T-1 link over satellite costs Eller about $13,000 per month; a 56 kb/s circuit is $1800 per month. “Spreading that out over 200 access lines just isn't very cost-effective,” he said.

Contributing to this problem is a misunderstanding — primarily by regulators — that while Alaska itself is immense and people are hundreds, even thousand of miles apart, the service areas are actually fairly dense. According to Mark Begich, mayor of Anchorage, who spoke at the OPASTCO summer conference in Anchorage in July, 43% of the state's population lives in Anchorage, yet there are 200 villages or small towns that are accessible only by plane, boat or snowshoe.

These 200 villages can be individually wired fairly easily by companies such as Yukon because they are actually densely populated; the people are clustered. “Our subs per square mile are actually relatively high,” Eller said.

But the backhaul just doesn't cut it. Eller said he is working on getting off the satellite backhaul but wouldn't elaborate yet on how that will happen. He believes that Alaskan networks need to be tied together terrestrially, something analysts say may never happen.

The satellites served their purpose, but its time for the ILECs to get together and get it done, he said. The independent streak in independent LECs sometimes prohibits such cooperation, but Eller said it is time for that to end. “People are very opinionated and have certain beliefs about the direction they're going, regardless of what others are doing, but in the long run, that will have to go away as the economies of scale make it necessary,” he said.

A prime example of the lack of cooperation among the rural providers is Eller's current project to install a new remote power system for Tanana, despite the fact that another independent company spent $500,000 in Universal Service Fund (USF) money to create a remote site that it lets others draw power from — but not Yukon, which is somehow seen as a threat. Eller's solution will cost only around $20,000.

“I know the day of reckoning is coming for those who have and continue to abuse the system,” Eller said.

Despite being one of the smallest providers in the state, Eller said his company is a net contributor to the state USF. Alaska is one of the few states with its own USF program. He sees USF from both sides and agrees it is both necessary in some places and evil in others. He cited a case where he brought broadband to one community using hard dollars, and later an independent operating carrier came in with DSL using USF financing. “I don't want to compete against an entity that has subsidized funds, but at the same time, there are places where USF is necessary, and we serve them,” he said.

This takes us back to regulation, which Eller and others agree is a bigger challenge for them than terrain, climate, backhaul or powering remote locations. These obstacles can be overcome with guts and ingenuity, but regulators just don't get it. However, Eller expects that technology will eventually sort things out and make regulation obsolete.

“That's a fact,” he said. “Look what's going on in the network today. You can download a telephone switch off the Internet. That's a pretty good start.”

Citing services such as MSN, Skype and Yahoo! as examples of the way people are getting around traditional voice service, Eller said that any time he can stay out of the regulated market he will and provide alternative solutions instead. “If we have some sort of infrastructure in place, we will use that first and foremost. But if there's a choice, we go with non-regulated infrastructure, and if you don't have any of that, you use wireless,” he said.

Eventually, he said, broadband and voice over IP will be the saviors of Alaskan telecommunications because they will drive costs down and put less demands on USF.

Making regulation obsolete through technology also may help reinforce Eller's vision of Alaska itself: the only place in the world where you can be truly free.