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May 23

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5/23/2013 2:31 PM  RssIcon

Towers of power: Statewide effort aims to tie loose ends of the Net

Gus Goodmonson
Gus Goodmonson bolts equipment to water towers, grain silos – anything high enough to help spread high-speed wireless Internet service throughout rural West Michigan.

As Guy Goodmonson scaled the 150-foot-tall water tower to reach the top platform that had no handrails, he questioned his sanity more than once. 

But his drive to offer high-speed wireless Internet service through a swath of rural Newaygo County proved stronger than his fear of heights. After bolting equipment on the water tower, 100-foot grain silos and anything else high enough to radiate a good radio signal during the past five years, Goodmonson is selling his home-based West Michigan business, Inc. in Grant, to a larger entity and hanging up his ladders. 

Michigan has many more Guy Goodmonsons. They have been the first wave of entrepreneurs to penetrate what could be considered the state's Internet wilderness -- sprawling tracts of homes, businesses and public agencies spread so far apart that established high-speed carriers were hard-pressed to make a profit. 

Soon, a second and much larger wave will hit Michigan. Fed by projects such as a 2,300-mile fiber-optic trunk line that spans from Ironwood in the western end of the Upper Peninsula across the Mackinac Bridge and down to Monroe at the bottom of the Lower Peninsula, companies that provide the last mile of Internet service to smaller communities are bracing for strong growth -- or consolidation like Goodmonson'

The $130 million project, overseen by Ann Arbor-based Merit Network Inc., is the tip of an iceberg. But it serves as a guidepost of things to come for rural communities.

Better than half of Merit's superhighway system was completed last month, and the remainder is expected to be completed early next year. Experts say the system, serving more than 60 percent of Michigan's counties, will light up the state in ways no one can predict. 

In the offing: lower cost and faster Internet speeds for all the nooks and crannies of Michigan, stronger rural businesses that can tap worldwide markets, and better educational opportunities everywhere. 

"It may take a year or more (after completion) before we begin to see all the things that it can do for Michigan," said Elwood Downing, vice president of member relations and communications for Merit Network. "But you can compare this to the changes that a rural community sees when the interstate freeway system is built nearby." 

Cruisin' down the highway 

While the interstate highway system generally serves population centers and bypasses rural areas, Merit's information superhighway doesn't. 

Merit's system makes stops in more than 36 U.P. cities and small towns throughout the Lower Peninsula, including Escanaba, Oscoda, Tawas City, Posen, Mio, Houghton Lake, Charlevoix, Beulah and Manistee. 

To take the freeway analogy one step further, it will be up to public and private entities to provide their own on and off ramps -- called laterals -- to the main fiber-optic trunk lines being laid by Merit and its corporate partners. 

This opens opportunities to a bewildering array of more than 150 last-mile providers that serve Michigan. They provide Internet through telephone lines, coaxial cable, radio signals to fixed antennas and mobile devices and, infrequently, fiber-optic cables. 

No one knows exactly how many last-mile providers are in the state, due in good part to the fact that fixed wireless Internet providers are largely unregulated. The best list has been compiled by Connect Michigan in Lansing, and that organization still gets surprised when its field technicians survey an area. 

Eric Frederick
Eric Frederick

"It's not uncommon when we go out to validate some of the information that known Internet providers are giving us that we find a wireless spectrum that we didn't recognize before," said Eric Frederick, program manager for Connect Michigan, a federally funded program charged with developing a map of broadband Internet service in the state. 

Fixed wireless Internet providers can use small bands of the radio spectrum without registering with the Federal Communications Commission.

"In a rural area, we may find a guy who sees a need for broadband because DSL is not coming out or cable is not coming out, and he will put some equipment on a tower," Frederick said. "Because it's a fairly low capital outlay to become a provider compared to DSL and cable, they may rent space on a tower, put up equipment and serve handfuls of households." 

While no one knows exactly how the dispersion of broadband Internet by Merit will affect the communities it serves, everyone agrees the landscape will never be the same. 

Following the lines 

The biggest fiber-optic cable that Merit and its partners is stringing on utility poles and burying underground throughout Michigan is less than three-fourths of an inch in diameter. Yet a single such cable theoretically can carry 1,000 gigabytes of information or more a second depending on the equipment used to send and receive the light beams that carry digital data. 

Hoping to bring fiber-optic and wireless Internet to public-sector entities and small communities, the federal government allocated $4.7 billion to the U.S. Department of Commerce's National Telecommunications and Information Administration to expand access and use of broadband services as part of the stimulus package, passed in 2009.

As part of that package of grants for projects in all 50 states, Merit received two grants to bolster the state's "middle mile" backbone with fiber-optic cables. It completed round one of the $33.3 million phase of theREACH Michigan Middle Mile Collaborative, which laid 1,017 miles of cable in the Lower Peninsula last month. (REACH stands for rural, education, anchor, community and health care.) The lion's share runs from Monroe directly west to Berrien Springs, then moves north along the Lake Michigan shoreline all the way to Mackinaw City. 

Jackson Community College in Jackson expects to improve Internet access to students and pay significantly less for potentially 100 times more Internet capacity now that the REACH-3MC lines pass through Adrian, Hillsdale and Jackson, said James Jones, the college's information technology director.

At a cable dedication ceremony in Hillsdale in February, Jones was quoted as saying he paid about $32,000 a year for two Internet services of not more than 12 megabytes per second from the college's main campus in Jackson to its satellite Lenawee Center in Adrian. With the new link, he expects to spend about $1,000 a year for the connection fee for bandwidth that has the potential to reach 1,000 megabytes per second. The college also has a satellite campus in Hillsdale. 

"The multiplication of the opportunities here is just immense," Jones said. "We also see that there is the extreme value of our students being able to connect with low-cost, rural ISP connections. Many of our offerings are online. 

"Actually, one of our largest campuses, if you'd like to call it that, would be the online campus, and it's continuing to grow." 

Elwood Downing
Elwood Downing

The advantage for Jackson Community College and other educational members of the Merit network is that they pay access fees that aren't dependent on the mileage of the circuits, as some for-profit, point-to-point services are, Downing said. 

Downing said it's a bit tricky to estimate how much savings Merit members will reap after they begin using the new network because some technologies have different upload and download speeds. Overall, though, they should see at least a 40 percent reduction in cost for comparable services. 

Based in Ann Arbor and owned and governed by Michigan universities, the nonprofit Merit provides network services to more than 270 members, including K-12 schools, libraries, museums, governmental organizations, universities and nonprofit health agencies throughout the state. 

Jones hinted at another advantage in his comments in Hillsdale: Everyone living in rural communities served by new Merit lines is automatically gaining better access to broadband Internet. 

The three subrecipients in round one of the REACH-3MC project are in Lansing, Lynx Network Group LLC in Kalamazoo and TC3Net in Adrian. 

Because it is being built largely with federal funds, the Merit project has a high public profile, said Frederick of Connect Michigan, who also works with smaller communities to encourage their understanding and use of the information tsunami. 

"You can see what Merit is doing on a map, but what you don't see is that AT&TUS SignalCenturyLinkand others all have fiber throughout the state they have built for their own use," he said.

Grand Rapids-based US Signal has one of the largest fully deployed fiber-optic networks in the Midwest, having laid more than 5,000 miles of cable since 2000 for a total of more 14,000 miles of lit cable and fiber-optic rings. 

While US Signal has not been involved in REACH-3MC, the recent announcement that the project has completed construction and is in the final process of lighting those fiber routes is good news for Michigan, said Barbara Boshoven, the company's vice president of corporate affairs. 

"The availability of services that utilize fiber-optic transmission for high-bandwidth applications into underserved markets will create new economic opportunities for Michigan businesses, consumers and the businesses that support them," Boshoven said. 

But other telecommunications and cable TV companies see the Merit project as unfair competition and "are pretty mad," Frederick said. 

"Whenever I meet with them, they always say, 'Well, we didn't use government subsidies.' " The cable industry is often vocal about the competition because it installed extensive fiber networks throughout the state without government funding, he said. 

"Merit and others are today offering services primarily to educational facilities and government agencies and not to the residents and businesses of Michigan," said Christine Reap, communications manager in the Washington, D.C., offices of Frontier Communications Corp., the Stamford, Conn.-based company that in 2010 bought Verizon Communications' land line exchanges in Michigan. 

"Frontier has lost some school districts and government agencies as customers to Merit since they are able to offer below-market pricing. In addition, their capital costs to deploy broadband have been subsidized by federal NTIA grants. 

Frontier, which serves nearly half of the land area of the Lower Peninsula, has invested about $134 million in Michigan since 2010, largely for equipment and facilities to enable broadband expansion. 

"As a result, 85 percent of households and business now have access to land-based broadband serviced by our new, state-of-the-art, redundant fiber backbone network," Reap said. 

A grain silo helps broaden broadband in West Michigan.

What's in it for me? 

When he talks about what the future may bring, Frederick at Connect Michigan looks beyond the couple of hundred broadband Internet providers in Michigan to the millions of users of Internet in the state. 

Frederick points to companies such as Getz's Clothiers in Marquette and Klever Innovations LLCin Grand Haven as examples of what broadband can do for economic development. And he sees much room for improvement, as only about two-thirds of Michigan small businesses subscribed to broadband Internet service last year.

Getz Inc., the parent of Getz's Clothiers and its online business, is one of the top five stand-alone retailers of Carhartt work apparel and activewear in the nation, according to a Connect Michigan video featuring John Spigarelli, former vice president of marketing and e-commerce at Getz's. Much of that is due to the company's Internet sales, which accounted for about 65 percent of revenue in 2011. 

"The Internet has made it so much easier to communicate with people," said Spigarelli, estimating the online chat line system instituted more than two years ago by the retailer reduced phone volume 80 percent from where it was five years ago. 

Orville Crain, who founded Klever Innovations in 2005 with Jeff Kempker and Matt Jacobs, said the manufacturer of safety box-cutters and other industrial products relies heavily on the Internet to market its products to international markets. When an accident with an open-blade cutter occurs at a company, the safety supervisor often does an Internet search under the terms "safe box cutter" and will "find us every time on the Internet," Crain said. 

He credits the brand awareness and presence that Klever Innovations has painstakingly cultivated on the Internet with helping boost revenue past $3.5 million last year. Some techniques include posting safety videos and a professionally produced website. 

Ironically, Goodmonson launched because he couldn't get Internet service five years ago in Grant to transmit the blueprints for metal stamping dies he designed at home as metal-forming engineer. 

"I would have to drive to Newaygo -- probably about 20 minutes away -- with a CD, and I would upload my designs on a dial-up connection I was buying," Goodmonson said. "By the time I got back home, there would be changes on the designs, and I would have to do it all over again." 

Borne out of his own need for better Internet connections, Goodmonson launched the sideline business with his wife, Margaret, that now serves about 250 customers. 

"But I think it is time to get out," said Goodmonson, 63. "The company is getting so big that I need to go a lot bigger and hire several people to service everyone, but then the profitability is going to go down." 

He sold his business to Newaygo County Advanced Technology Services in Fremont, an educational telecommunications network of the Newaygo County Regional Education Service Agency that already serves about 600 customers.

Goodmonson said it's likely consolidation will occur in the wireless Internet industry among companies like his that are facing the economies-of-scale problem. 

"I wouldn't have done this if I could've paid somebody $50 a month to get reliable Internet," he said with a laugh. "I have other things to do." 

Matthew Gryczan: (616) 916-8158, Twitter: @mattgryczan

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