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MINNESOTA TELEPHONE ASSOCIATION Minnesota Telecommunications Guide March 2000 Rural Minnesota Telephone Companies’ High-Tech Capacity is Key to Local Economic Development
"One of the keys for success is that the communications infrastructure has to be in place." This quote — by Bill Wolff, co-CEO and president of Cross Consulting Group, Inc., which recently set up a computer software maintenance office in Sebeka with the help of the West Central Telephone Association — states exactly what small towns and rural areas must have to participate in the world’s burgeoning digital economy. The stakes — providing good-paying jobs so people aren’t forced to move away — are huge for areas beset by problems in agriculture and burdened by the loss of manufacturing jobs and small businesses. But while electronic connections have made location less of a factor in business decisions, all bets are still off if business doesn’t find the high-tech, high-speed lines and equipment it needs already there. In Minnesota, businesses are finding what they need there because the state’s private telecommunications companies and cooperatives had the foresight to install it. In fact, Minnesota telcos have put in over 20,000 miles of high-speed fiber-optic cable and replaced thousands of analog switches with the faster, higher-capacity digital variety. Local telcos are also taking the lead in partnering with their communities to help them stay viable in the new information economy. To highlight the economic development successes of small rural phone companies, here’s a look at the efforts of three typical companies. West Central Telephone Association By converting entirely to fiber optic cables starting in 1996 and by putting every customer within 12,000 feet of one its 88 new digital loop carriers, West Central Telephone was readying its 602-square mile service area for the jobs of the future. And three companies — Diamond Tool, Inc., Northwest Financial Group and Cross Consulting — are taking advantage. By year’s end, the three are projected to have created a total of more than 200 new jobs. "Our investment in infrastructure allows us to offer state-of-the-art technology," notes Anthony Mayer, the cooperative’s general manager. "As a result, we’ve recruited three new businesses that would otherwise not have been attracted to this rural area. It’s the biggest development here in 25 years." Cross Consulting’s arrival in Sebeka shows that high-tech employers can consider rural areas. After the town was featured in an April, 1998 newspaper article comparing the low unemployment and scarcity of technical workers in the Twin Cities with the higher unemployment and underemployment outstate, Northwest Airlines asked Cross Consulting to look into setting up a rural facility to maintain the airline’s mainframe legacy software systems (used for high-transaction areas like World Perks and pensions). Cross hired area people with no computer experience, brought in experienced programmers who wanted to return to a small town lifestyle, and opened an office by September, 1998. "West Central was upgrading their system and spent a lot on infrastructure so we could tie directly in with Northwest’s mainframes and office," says Cross’s Wolff. "West Central helped us define how we’d do things from a communications standpoint. They were very responsive and have always been there to help us out." Cross now employs 34 and plans to expand with other corporate clients, hiring area residents and helping create its workforce through internship programs with high schools and Bemidji State. "If we can create jobs for people there, they can stay where they prefer to live," explains Wolff. Like many other rural telcos, West Central provides long-distance service, cellular phones, Internet and cable TV to various customers in addition to local phone service. The co-op also provides interactive TV for area schools. The 50-year old association plans to continue living up to its motto -- "community partner and technology leader" — from its new headquarters by adding new services, including higher-speed Internet access through DSL technology. It will also continue to be a key player in ensuring economic development for its communities. Its $80,000 match of a $400,000 Rural Utilities Service (RUS) grant created a revolving zero-interest loan fund that area towns will continue to use to maintain their utilities. Pine Island Telephone Company After 103 years in business, Pine Island Telephone is not standing still. In fact, it’s "part of a new renaissance of small town main streets," according to Abraham Algadi, director of the Pine Island Economic Development Authority. "We have resources we’d never have access to without them. We don’t have to sell them on helping. They ask us what they can do." The company has done a lot. It has provided the EDA with rent-free offices since the authority’s founding in 1993. The company pays the utility bills and provides free office support, too. And Pine Island put $70,000 into an EDA revolving loan fund. Its first results were a new road for the industrial park (that also diverted heavy traffic from main street), a wetland replacement program and refurbishment of the city’s water tower. Company sponsorship of a $400,000 RUS loan led to the doubling in size of Progressive Tool and Manufacturing and 100 new jobs for the town. Pine Island Telephone is also working on a video telemedicine project with the Mayo Clinic that allows the elderly and disabled to stay in their homes. But if Pine Island Telephone hadn’t installed up-to-date fiber optic cables, the city couldn’t have gained 10 good-paying jobs and Minnetonka-based Help Systems, Inc. would have lost some valuable employees. Frustrated by their long commute to Help Systems’ Twin Cities office, computer programmers and software engineers living in the Rochester area were ready to leave the company. But because Pine Island was "wired," Help Systems set up a satellite office in the town. Everyone benefits. "Help Systems wouldn’t be here if we hadn’t invested in the information superhighway," says Rick Keane, Pine Island Telephone’s general manager. "Because we could provide the high-speed facilities Help Systems needed at a competitive cost, the company kept highly-skilled employees and our area gained a business with environmentally-clean operations that attracts well-paid people and keeps a downtown building occupied." And by having Pine Island connect Help Systems’ building with state-of-the-art lines, the company saved money, Keane adds. Arvig Communication Systems Arvig Communication Systems (ACS), parent company of East Otter Tail Telephone and two other small phone companies, is both an incumbent provider in its own service area and a competitor elsewhere. In addition to serving about 17,000 customers in a 1,600-square mile area in Minnesota’s west central lake country, ACS is competing with the incumbent provider for local service, cable TV and Internet in Detroit Lakes, Henning and Battle Lake. It’s doing the same in Park Rapids in partnership with West Central Telephone. A thriving operation with 300 employees and a new Perham headquarters, ACS is "an example of a company," according to Perham EDA director Bryce Anderson, "whose leadership makes small towns like Perham viable communities. Without Arvig, we couldn’t accomplish the things we have. They’re particularly important because access to high-tech is the key to rural development and growth. Without such tools, we’re at a big disadvantage compared to our metro cousins." ACS’ high-tech connections certainly influenced Northwest Technical College when it moved its administrative offices to Perham. Those connections enable the college president and other staff to interact easily with the institution’s five campuses (Moorhead, East Grand Forks, Detroit Lakes, Wadena, Bemidji). "Having Arvig and its helpful services was definitely one of the advantages of Perham’s proposal," says Carla Braaten, the college’s director of institutional relations. ACS has another connection with the college — an apprenticeship program. Students start working for ACS as high school seniors. They’re paid for 40 hours but work 32, spending the other eight in class. Students who complete the program earn an A.A. degree, apprenticeship certification from the Minnesota Department of Labor, and an ACS technician’s job with a starting salary in the $25,000-$30,000 range. Matching separate $330,000 grants from the U.S. Dept. of Agriculture and RUS with two $66,000 grants of its own is another example of ACS’ community involvement. The two funds built the recently-completed Perham Community Technology Center and the Perham Area Emergency Services Center. The latter consolidates fire, police and emergency medical services under one well-wired roof. The tech center helps "new or developing businesses find the resources they need to bring their product to the next level," explains Anderson. "It’s a business incubator in a professional environment." The center, currently with three "incubator" clients, also hosts a workforce training program and the Perham-Dent School District’s "Together for the Future" program, a school-to-work program that provides students with exposure to real-world careers. The telecommunications infrastructure that Minnesota towns and cities need to compete today already exists. Rural telcos, always partners with their communities, made sure they were connected so they wouldn’t be left behind.
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