People talk about Montana being Big Sky country, but to this first-time observer, it's more about the land. It's the land, at once beautiful and brutal, that sweeps out across the wide miles to meet that big sky and support its fragile blue dome. It's the land that, as you cross it, lifts you effortlessly toward the dome and at times pulls you gently down and away — or on a whim pushes you over a cliff. The land, not the sky of Montana, anchors you to this immense earth. It humbles you.

It humbles in a way that demands respect, but gives some in return. It humbles not by crushing one's confidence, but by building it. This phenomenon is reflected in the people of 3 Rivers Communications, whose approach to big challenges is both humble and quietly confident.

The leader of 3 Rivers for the last three years, General Manager Darren Moser, is a prime example. Asked what his greatest accomplishments were at his previous stint at Dickey Rural Networks in North Dakota and what his greatest asset is to 3 Rivers, he says they're one in the same.

“I guess I know how to put the right people in place,” he said. Mostly, those are people who are not comfortable with the status quo.

An accountant by trade, a bow hunter by choice, Moser lets others make the technical decisions and run with them. That includes his management team as well as the board of directors.

“These aren't short-term board members who are in and out in three years,” Moser said. “They understand that the work we are doing, the network, is where the future is.”

That future looks very different today than it did three years ago when Moser took over, but the work environment looks very much the same: busy, very busy.

We're not talking beehive busy here. It's not as if you travel the extremely quiet 37 miles up Route 89 from Great Falls passing prostrate cattle and horse/mule hybrids whose tail-swishing is lazy and half-assed at best and then cross the trickling Mill Coulee Creek — which, it turns out, was not named after the bald producer from the Dick Van Dyke Show — and make your way past the ageless buttes, the barley fields and the solitary elk farm only to walk through the doors of 3 Rivers Communications and get bowled over by engineers rushing network maps into messy conference rooms filled with impatient board members or by the sound of ringing phones and customer service reps doing their best to remain pleasant through the onslaught. It's not as if trucks overloaded with gear and cables are filing out of the garage one after another with gold-rush fever to get fiber laid and dishes erected.

No, we're talking Montana busy here, where the people Moser has in place are quietly and confidently making progress on select fiber overbuilds, upgrading the copper plant, checking off circuit-switch replacements one by one, trialing a new 3RTV service, extending the company's WildBlue satellite service, expanding its CLEC business, evaluating wireless data options and voice over IP, supporting current customers, educating them, training their people and adjusting to life without a wireless division.

People like Stephen Krogue, operations manager for telephone, Internet and long-distance; Bonnie Mayer, operations manager of the satellite division; and Ron Warnick, the company's technologies operation manager and strategist, whom Moser coaxed from Vision Net — a group that provides network management and other back-office functions for several telecom cooperatives in the area — is helping to transform 3 Rivers into the full-service communications and entertainment company it needs to be.

“You can choose to be a bandwidth provider or choose to be a competitor. We choose to be a full-featured competitive service provider,” Warnick said. “And in order to compete, telephone companies that have had well-defined services will have to become more entertainment companies.”

Today, 3 Rivers Communications is a 53-year-old telephone cooperative with 20,000 access lines and 185 employees. It has 29 exchanges serving 75 communities across approximately 16,500 square miles. Its current customers are spread out over an average of 1.4 miles each. However, to describe the company this way would be like Meriwether Lewis and William Clark discovering the confluence of the Missouri and Yellowstone Rivers and choosing to explore only the Yellowstone.

3 Rivers may be a co-op, but it is also a broadband DSL provider, a CLEC in Shelby, Conrad and Great Falls where it serves another 3300 lines, a satellite broadband Internet provider, a satellite -fed TV provider and an equity investor in an IPTV service start-up called Auroras.

Like many rural communications companies, 3 Rivers is also a strong supporter of its community. It contributes more than $100,000 annually to local programs such as scholarships for each high school, grants for local fire departments as well as the Special Olympics, Big Brothers and Sisters and local 4-H clubs.

So it is easy to see why the people at 3 Rivers are busy. As Moser said, they've always been busy. “When I got here, we were doing lots of different things, not unlike today. But what we have been able to do since then is determine if some of the things we had been doing made sense from a long-term perspective,” he said.

Not everything did, so Moser and company made some changes. “We put it all under a different magnifying glass,” he said.

Perhaps one of the more dramatic changes was to divest itself of its wireless business. This was done both to extricate 3 Rivers from a losing proposition and to re-allocate resources.

Moser said that although wireless substitution does occur in his serving area, wireless is more of a complementary service. As such, it is less important for 3 Rivers to own and operate its own wireless network.

Besides, he said, “We were playing against the big hitters, and it became a liability; it was draining our resources, and we decided our resources would be better used for our wireline network.”

3 Rivers, along with Blackfoot Telephone, sold their wireless assets to newly formed Chinook Wireless last summer (see story on page 4).

Beyond the sale and the subsequent transition of some employees to Chinook, there doesn't appear to be much of an ongoing relationship between the companies. Chinook is performing a wholesale swap of its existing CDMA infrastructure to GSM, and 3 Rivers is evaluating other wireless options. The company may go the mobile virtual network operator route or resell services from a national player. It may do nothing at all.

Other projects reflect change on the growth front. The company is pursuing a wireless data local area network service, but its biggest projects are fiber to the home (FTTH), the subsequent IP-based TV service and the ongoing softswitch migration.

Whereas maintaining a wireless network — even if it was the first to bring digital service to Montanans — required significant justification, which it eventually lost, Warnick said the fiber buildout was basically a no-brainer, especially in greenfield opportunities and where the copper plant needed an upgrade anyway.

“The cost of deploying any technology is more in the construction than the materials, so if you're going to do a new install, it makes sense to do fiber,” he said. “There's no justification needed.”

Warnick's job, as he describes it, is to move the company into the data world. The most exciting place in telecom, he calls it. The only problem with creating such excitement is that it creates something else.

“Co-ops have been leaders in providing broadband, but what that also did was build the pipes that bring in competition,” Warnick said, and it's that competition, or the desire to head it off, that drives these ambitious projects.

Warnick may be planning for the future, but Moser never lets the company get too far ahead of itself. He says they have a 10-year plan, but only publicly discloses plans out to three years.

“This allows us to adjust as the financial picture changes or the regulatory picture changes. Because to get behind a crystal ball in this environment doesn't make much sense,” Moser said. “It's about not over-committing, but knowing your commitment is in the network. It's like hedging your own bets.”

The network for new subdivisions and developments in 3 Rivers territory will be all fiber. There is currently one under development in Ennis and two in Big Sky in 3 River's southern district. Converting existing facilities will begin in its hometown of Fairfield. The company expects to have plows in the ground about the time this magazine hits your desk.

3 Rivers also tied its southern and northern districts together with fiber that comes through the capital city of Helena. It has partnered with a developer to provide FTTH to a subdivision there as well.

The driver behind FTTH is obviously video services. 3RTV — thus named because as Steve Krogue said, “People think of IPTV as TV over the Internet, and they don't have a good sense of the Internet being as good as TV” — is now under trial in three 3 Rivers locations. The trial includes the new Auroras IPTV service, in which 3 Rivers has an equity stake.

Auroras provides what it and its independent customers call a HITS, or headend in the sky. Using a combination of its own headend in Atlanta, TeleSat's satellite transport facilities and an IPTV gateway — which it sells to telcos for about $300,000 — Auroras aggregates video content, encodes and encrypts it and sends it to telcos for delivery on their own fiber, DSL or other broadband mechanism.

“This replaces the expense of having to build a video headend themselves, which could be anywhere from $3 million to $7 million,” said Diane Smith, CEO of Auroras.

It also gets them out of being serious video headend operators. “In rural America, there aren't a lot of video satellite broadcast engineers, so having that burden lifted from their shoulders and allowing them to deploy more resources toward marketing is a very cost-effective thing to do,” Smith said.

Trials will continue for about 60 more days. Auroras hopes to offer general availability of its products and services by September. 3 Rivers hopes to be switching on customers around the same time, offering them more than 200 national cable channels, standard and high-definition MPEG-4, video-on-demand and network digital video recorder among other functionality.

Warnick said the cost of the Auroras solutions was about one-third of other options for getting video content. He also said the company invested in Auroras because it was technically ahead of others with similar solutions.

Whether that is true from a functionality or feature standpoint will be determined over the next couple of months given that the National Rural Telecommunications Cooperative announced recently it will go live this fall with its IP PRIME service along with partner SES Americom and the Valley Telephone Cooperative in South Texas (see story on page 28). IP PRIME is also a centralized, satellite-based TV distribution system for rural telcos.

Warnick said the NRTC product was credible but a little behind. Smith said one of the big differences was that Auroras was “all IPTV all the time,” and the NRTC has other interests.

Smith reminds us that IPTV is still a start-up industry and that a lot of integration work remains. She said a lot of the components are mature, but the industry isn't. However, she is very happy with the quality and capability of MPEG-4-encoded video.

“We're also lucky to have a company like 3 Rivers help us with the business case. It's a real indicator of faith and understanding of the marketplace and a desire to have a really good solution,” Smith said.

It's also a good way to get out of its current DirecTV relationship, although nobody at the company directly said that this was a goal.

In 1994 when 3 Rivers first began doing business with DirecTV, it owned the customer relationship. That changed two years ago, said Bonnie Mayer. “We could make choices then, but we sold our customers back to DirecTV, and we became a retailer,” she said. “So the business itself changed dramatically.”

One gets the impression that 3 Rivers would like those customers back.

Another indicator of faith in the near readiness of this technology is that Auroras has begun building a sales team. “I have ridden this rodeo before with start-up industries, and I am very sensitive to overheating the market with promises that aren't ready,” Smith said. “So when we're putting a sales team out there, the product will be ready.”

Moser believes there still may be short-term issues with both the NRTC and Auroras getting content. He said it is becoming a challenge partly because content providers, traditionally tied to cable companies, have kind of closed their doors to telcos because they are seeing the competitive threats.

“But as part of a rural group, Auroras understands this, and they will take a more proactive approach in helping develop community access channels,” Moser said.

The other satellite-based project being juggled by the people of 3 Rivers is WildBlue broadband Internet. With FTTH and DSL, one would think 3 Rivers didn't need another Internet access play. However, this is where the land of Montana steps in again with its buttes and mountains and size to humble the mighty backhoe. Some places are just off limits to terrestrial solutions.

WildBlue is 3 Rivers' answer to that challenge. It allows the company to reach otherwise unreachable customers and to reach those outside of its service area. WildBlue came out of the blue about one year ago and to 3 Rivers less than that, but already 3 Rivers has almost 1100 customers (see story on page 8).

“WildBlue is not the end all and be all for us. It has latency issues, which is not good for gamers,” Moser said. “But we are using it to go into areas where other ILECs aren't providing DSL.”

Showing how complicated relationships can get in the independent market, 3 Rivers gets its WildBlue service directly from the NRTC, of which it is a member and with which it also will be competing in the HITS market through its interest in Auroras.

Despite all the new services being initiated and the technologies being deployed, 3 Rivers has not lost sight of its traditional telecom infrastructure and is upgrading that as well. Unfortunately for its traditional telecom infrastructure provider, which does appear to have lost its sight, 3 Rivers is upgrading without them.

Nortel Networks' DMS switches are being replaced by CopperCom's Converged Switching eXchange. 3 Rivers bought five of the switches and has turned up two of them to handle tandem traffic. The rest will be deployed through the company's cap and grow strategy.

Along with new CopperCom switches, other next-gen vendors such as Calix and Pannaway recently squeezed into the already stuffed 19-inch racks of 3 Rivers' evaluation lab. Warnick said that maintaining two networks can't go on forever and expects to have its convergence work completed within five years.

Moser said that in 2006, the company will burst the bubble on capex spending, and he expects that to continue for the next couple of years.

When all is said and done, 3 Rivers is still a telephone company at heart, and as the company literature says, a co-op at its core. But as the company expands into new areas and new services and a new generation of customers makes up its base, Moser said that, sadly, the concept of the co-op gets watered down.

“The co-op philosophy has a very good purpose, but the new generation doesn't necessarily see that. It takes a certain level of education,” he said. “But now that we are out there delivering next-generation technologies, often before someone else, it's the best way we can show them that the philosophy still has a purpose, still has a point.”

Like all independent rural telcos, 3 Rivers can't do all this investing without help. And to them, it's a triple-edged sword. With Universal Service Funds declining, the company must invest to find new sources of revenue, and new sources of revenue often means growing your number of access lines, which in turn can reduce your USF funds even further.

By the end of 2006, the company will have lost more than $1 million in total USF support over the last three years.

“USF is vital for continued investment in the network without question, but it does not cover it all, absolutely not,” Moser said. “We need to invest far beyond any USF dollars. When experts are saying we'll need 100 Mb/s to locations, you can't wake up 10 years down the road and expect it to be there. You have to start growing the network today.”

It will be interesting to see which is more humbling, the expanse and terrain of Montana or the power and potential indifference of regulators who control those USF dollars.