‘Digital Divide’ Needs Bridged Link Is Essential To Keep Rural And Urban Areas Connected

Fiber-optic cable may determine the course of economic development in the 21st century much the way railroad tracks did in the 19th and highways did in the 20th.

And the digital switch will become the junction or exit ramp rural communities in the West need to survive the transformation to an information-based economy.

But there is no guarantee they will get one or, even if they do, that technology won’t have leapfrogged further ahead.

The information superhighway, now more often referred to as “bandwidth,” will forever be a work in progress.

“You’re never going to get as much as you want,” an aide to outgoing Rep. Rick White, R-Seattle, said at a conference in Spokane last week.

Dan Horowitz told a group surveying the “digital divide” that rural areas will have to accept telecommunications services a step or two removed from the state-of-the-art urban networks.

“Bridging the digital divide is impossible,” Horowitz said.

Some link is essential. A recent study by the Corporation for Enterprise Development placed Washington among the worst states for disparity in economic health between urban and rural areas.

And urban areas are getting all the attention of new telecommunications providers. Even a medium-sized market like Spokane has attracted a multitude of cable-based services, and overlapping wireless services besides.

But the revolution in technology has barely breached the county line. Although Internet service has reached most communities, the capacity to handle really high-tech stuff like two-way video remains limited.

Those services require more bandwidth, which can be likened to a pipeline. The bigger the pipe, the more information can be moved through it.

Fiber-optic cable is the preferred digital pipeline, but new software and other advances in technology have also enhanced the capability of older copper cable.

For the most part, though, technology is not the issue. Cost is.

For the past year, Washington telephone companies, their customers and state regulators have argued over how best to equalize access to advanced telecommunications by creating a universal service fund that would replace subsidies that have been built into consumer bills for decades.

The Washington Utilities and Transportation Commission concluded current rates include $125 million in supports for high-cost lines.

The cost of service in Northport may be $185, while a Seattle household can be connected for $15, but residents in both communities have paid the same basic rate.

Competitors picking off the low-cost customers have undermined that system. Federal and state lawmakers recognized the market transformation, but legislation enacted to resolve the tensions have been snarled in litigation.

The commission released its proposed blueprint for universal service early this month, and immediately ignited a firestorm likely to play out in the Legislature.

Among its recommendations:

Subsidize all lines to a residence or business, as is the case now.

Maintain existing rates.

Make all technologies, including cellular telephone, pay into a fund.

Set a minimum data transmission speed of 28.8 kilobits.

Companies will pay into the universal fund according to their share of total revenues in the state - about $3 billion - and withdraw according to the cost of serving rural area customers.

Withdrawals must be matched by reductions in their overall rates. And if the withdrawals squeeze returns on investment, companies can file applications for rate increases.

For U S West Communications, said Vice President C. Scott McClelland, it’s more of the same, but worse.

Setting rates according to return on capital is a relic of the past discarded by most states, he said. In Washington, the result has been low rates, but also the poorest return on investment in its 14-state territory.

Those returns aren’t going to encourage further spending for new equipment, McClelland said.

Better, he said, to cap the cost of services the company now provides and let it charge what the market will bear on new services like those its competitors are selling.

And include on consumer bills a line showing how much they pay to support universal service, he adds.

Commission spokesman Tim Sweeney said the regulators tried to create a plan that would encourage all providers, not just U S West, to enter outlying markets.

In the early 1990s, he said, the commission crafted an incentive program that rewarded U S West for operating more efficiently.

The result was layoffs, less investment and soaring consumer complaints, Sweeney said.

Gary Gardner heads the Washington Association of Internet Providers, an industry lobby group.

He said the commission’s plan, by offending virtually everyone, will probably kick the problem back to the Legislature.

He’s not optimistic about the outcome once lobbyists representing the major telecommunications carriers and customer groups start haggling over the measure.

“There’s nobody speaking out for Aunt Jane on East Sprague,” Gardner said.

He said he’s more comfortable working with the commission, which has the expertise to balance competing interests.

The bottom line, he said, should be some declaration that consumers have the same right to data traffic that they do to a dial tone.

State Rep. Larry Crouse, R-Spokane, who will co-chair the House Technology, Telecommunications and Energy Committee, said the universal fund should underwrite basic services, no more.

“I don’t believe we should use universal service as a tool for economic development,” he said.

If the state wants to foster the installation of new equipment that will serve rural areas, Crouse said, lawmakers should create tax credits to encourage such construction.

“The real barrier to entry is capital,” said Chad Skidmore, director of engineering for Northwest Nexus in Spokane.

He said many counties may get the service they want by partnering with the private sector. Some public utility districts with cable in the ground could lease excess capacity to telecom providers, he said.

In Newport, the Pend Oreille County PUD and Pend Oreille Valley Network, an Internet provider, are working together now, said network owner Tom Walton.

But their system remains an island cut off from either Sandpoint or Spokane.

Walton said GTE responded to a request for a high-speed Internet connection with a requirement that he recruit 750 clients, an impossibility in a dialing area with only 12,000 subscribers.

“They’re real reluctant to come into an area like this,” he said, adding sometimes a threat to string his own cable is the only way to get action.

“They don’t want to lose control of that infrastructure,” he said.

Walton said GTE has also demanded $2,400 a month to link Newport’s hospital with those in Spokane via Inland Northwest TeleHealth Services.

TeleHealth could build its own connection and, after two years of amortizing the cost, save money, he said.

With that kind of hookup, Walton added, local doctors might be able to do emergency consultations with specialists who could see video of a severe wound and direct repairs.

That might be an extreme example.

TeleHealth links Spokane’s six hospitals and 10 in rural communities. Director Denny Lordan said the network is used primarily as a teaching medium.

Its video capability enables doctors, particularly those in the more remote areas, such as Republic, to stay current on new developments in medicine without sacrificing hours for travel, he said.

As diagnostic applications increase, Lordan added, patients who might have come to Spokane for treatment could remain in their communities.

But full development of the system may ride on finding ways to reduce line charges of $900 a month to some towns, he said.

Colfax entrepreneur Tom Kneeland also laments the cost of connectivity, but just as frustrating is the loss of control that working through an Internet provider in Moscow imposes on his consulting business.

“You pay somebody else to serve up your data for you,” he said.

Kneeland, a trustee of the Community Colleges of Spokane, has formed the Center for Rural Information and Economic Resources to help small towns gain access to high-speed communication by “clustering”’ their unique services.

And though a town may never attract an Amazon.com, he said, a company that needs cheap warehouse space might find a Colfax a good place to relocate.

But none of this will happen without a link through or around GTE and U S West, Kneeland said. “Rural communities have been left out in the cold.”

Spokane’s Robert Glatzer is a member of the Governor’s Small Business Council, which will send its own package of proposals for encouraging rural business to the Legislature.

Members did not look at technology in depth, he said, but concluded country towns need the same data capability as cities.

“Rural areas should not be punished for being rural,” Glatzer said.