Rural connector

A Q&A with Joe Franell, CEO of Eastern Oregon Telecom.

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After 10 years in the army, Joe Franell decided in 1996 it was time to get out.

“They wanted me to be a military diplomat to Russia, but I had a wife and young daughter, and they could only guarantee two years accompanied.” Equipped with “awesome transferable skills,” Franell for the next nine years worked in telecommunications in Georgia and Florida.

A move west to be closer to family led to an IT director position with the city of Ashland. The 55-year-old Franell then relocated again to Hermiston, where he has helmed Eastern Oregon Telecom for the past eight and a half years.

EOT provides internet, voice and business services in Hermiston, Umatilla, Irrigon and Boardman; the company claims 40% of commercial business and 36% of the residential market. Last year, EOT started providing high-speed fiber service to residents in the Hermiston area, beating out yet-to-be connected neighborhoods in Portland.

Franell, who chairs the governor-appointed Oregon Broadband Advisory Council, talks about telecommunications and economic development, the digital divide and why even public utility commissioners have trouble understanding what a gigabit means. (Interview excerpts have been edited for clarity.)

Describe the circumstances behind EOT’s founding.

Sixteen years ago, the members of the Umatilla Electric Cooperative were frustrated with incumbent telephone companies because they weren’t bringing in enhanced telecommunications, which at that time was email, dial-up. They realized those things were important if the area was going to move forward economically. The cooperative leadership went to the incumbents and asked if there was any way to bring services. They weren’t interested in having the conversation. This was the same story that happened over and over across the country.

So the cooperative formed a coalition to create EOT.

This is incredibly visionary. UEC, the Douglas Electric Cooperative and four to five independent telephone companies built this coalition. We’ve been providing service for more than 15 years. [UEC is a majority owner of EOT.]

Your national competitors, Century Link, for example, receive a federal subsidy. EOT does not. Why?

Subsidies always come with additional burdens and hooks. I am deliberately trying to demonstrate that robust broadband delivery in rural, rural remote and frontier markets doesn’t necessarily have to require subsidies. There is a profitable business model that works. It is more difficult, not impossible.

How do you make independent telecommunications service pencil out in rural areas?

Use a hybrid approach. Deploy high-speed gigabit fiber to the business and home initially only in dense population centers. Use less expensive DSL, which is copper-based, not fiber, and cable modem service in less dense portions of the market. Then reach the remote addresses with fixed wireless. The intent is to use cash flow to expand fiber deeper into the market, while recognizing that there may never be a business model that gets fiber to the very remote locations.

Many rural areas pin their hopes on broadband.

If the Colt 45 was the great equalizer of the 1800s, broadband is this century’s great equalizer. Broadband positively impacts people’s lives with distance education. It brings advanced health care into people’s homes. It allows people who feel disenfranchised to engage with government. It improves energy management, public safety. And then there’s entertainment.

Yet many remote areas remain disconnected.

I had a conversation with one of Oregon’s representatives last week: Is there a way to encourage private-public partnerships [like EOT] in rural markets? Look at Douglas Fast Net; it’s a private company, but a wholly owned subsidiary of Douglas Electric Cooperative. So the broadband side has a relationship where they can use DEC’s poles. The partnership expedites broadband build-out. They have one of the best private fiber to the home networks in Oregon. This is in a rural remote county.

Tactics 2

Beyond public-private partnerships, what other financial mechanisms encourage rural broadband adoption?

We need to figure out how to subsidize infrastructure. The FCC did an infrastructure study in high-cost areas. They said they would subsidize 80% of an infrastructure build to get services to schools or libraries. But say you’ve got a school in Antelope. It’s a $2 million build, and the feds will pay 80%. How does the town afford to come up with the rest? So the FCC said: If the state kicks in 10%, we’ll match.

Oregon is kicking in?

We got permission to do a beta test last year. They’ve got six projects going right now. We’re hoping the legislature will continue to provide matching funds. Despite state budget challenges, there is a lot of discussion and greater awareness about broadband. [The Oregon Department of Education is matching funds for service to schools in Paisley, Sherman County, Dufur, South Wasco, Santiam Canyon and Glendale.]

Closing the urban-rural divide is a political priority.

It’s more than a rural urban divide. It’s a digital divide. In Kansas City, the digital divide is worse today than before Google. Google fiber built in nice neighborhoods; the poorer neighborhoods have been disenfranchised. I’m always careful to say it’s not just a rural problem. There are areas of Portland that have been left behind as well.

What patterns emerge in rural broadband adoption?

When we did our fiber beta test two and a half years ago, we deliberately picked a representative demographic. We passed apartments, lower-income, middle- income and upper-income homes. I expected the fancy homes to jump on gigabit. But the fastest were lower income homes. Why? It represents more of their world and a greater opportunity.

The rollout of high-speed service in Portland is taking a different path.

Cities like Portland — they provided tax exemptions tailor made for Google, which maddens me. Here I am doing heavy lifting in the toughest markets, and you’re catering to this giant.

Everyone wants gigabit service, but how many people really understand what it is?

I spoke at an annual conference three years ago about gigabit broadband. One of the panelists, a special interest lobbyist, said: Everybody needs gigabit. I said: How many of you know how much a gigabit is? These are PUC commissioners. None of them knew it’s a thousand megabits per second. Let’s talk about what that means in your home. It you’re streaming Netflix off one TV, that’s about six to 12 megabits per second. If you’ve got a second TV streaming, and you’re on an iPhone and iPad, you’re still somewhere around 100 megs. Not 1,000! So the idea that everyone needs 1,000 megabits is not supported.

What’s next for EOT?

We still have quite a bit in Boardman to build out. We need to put up a few more wireless towers to try and cover areas that are underserved — where there is no broadband and the only option is cellular or satellite.

Is there another move in your future?

I was approached by the economic development wing of the Irish government, trying to recruit me on the west side of Ireland. I don’t think I’m going to do that. I spoke at a global economic summit in Washington, D.C., talking about how we connect the next billion people to internet. The summit was all about economics. The reason they flew me out is because the lessons learned in Eastern Oregon can be applied in Africa. If we can make it work here, can make it work there.

A version of this article appears in the May issue of Oregon Business magazine

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