The Challenges of Rural Broadband in Texas, With Mark Seale and Craig Cook

Texas has seen great strides in expanding broadband infrastructure across the state. However, challenges with changing legislation, geography, supply chain issues and funding are hindering the important work.

In this episode, Mark Seale, executive director of the Texas Telephone Association, and Craig Cook, general manager at HCTC, discuss these challenges that Texas is facing in deploying rural broadband and how they hope to overcome them.

What is Rural Broadband Today?

Rural Broadband Today is a new podcast focused on one of the most important issues facing Rural America. It tells the stories of those working to bring broadband internet access within reach of every citizen. This interview-style show presents conversations with elected officials, industry experts and business leaders at the forefront of America’s efforts to solve the rural broadband challenge.

Intro:
Broadband.

We need it for work and for school, for our health and our
economy.

What's being done to bring broadband internet access within
reach of every American?

Let's talk about it now on Rural Broadband Today.

Andy Johns:
Hello, my name is Andy Johns.

I'm your host for this episode of Rural Broadband Today, filling
in for Stephen Smith.

And I've got a couple of guests.

We're going to be talking about what you need to know about
broadband in Texas.

So we've got two of the folks that know that better than anybody
joining me on this episode.

I'm joined today by Mark Seale, who is the Executive Director of
the Texas Telephone Association.

Mark, thanks for joining me.

Mark Seale:
Thank you, Andy. Appreciate it.

Andy Johns:
And I'm also joined by Craig Cook, who is the Chief Executive
Officer at HCTC.

Thanks for joining me.

Craig Cook:
Yeah. Thanks, Andy. Good to be here.

Andy Johns:
We are at the epicenter of rural broadband this week here at the
NTCA RTIME event in Dallas, Texas.

And so since we're here in Dallas, I wanted to be sure that we
spend a little bit of time with the Rural Broadband Today podcast

just learning a little bit about where the fiber buildout, where
you know, broadband expansion in the rural areas of Texas is

going. And Mark, that's pretty much what you're talking about
all day, every day.

Mark Seale:
That's true, Andy, and I appreciate you taking the time to have
us.

Broadband in Texas in rural areas actually is in a fairly good
place.

We have many companies like Craig's that have spent a lot of
time building out fiber networks, especially in small

communities around them.

So we have places in Texas, in rural Texas, where you can get
gigabit service today, fiber to the home because they've taken

the time and made the plans to build it out over many years.

Now we're addressing the places that are underserved or not
served at all.

And so in the last legislative session, we passed House Bill 5,
which gives a framework for our broadband office to deliver

funding, offer grants and low interest loans to companies that
want to serve those underserved areas.

That will affect us greatly.

We have in our areas, we're about 60% copper and 40% fiber.

So we are, but those numbers change every day as we build up
more robust networks.

So we're excited about where we're going, and we feel like our
rural providers are going to be able to connect rural Texas even

better going forward.

Andy Johns:
Excellent. And Craig, from where you're sitting, what are some of
the challenges and opportunities?

You know, I know everybody here at this conference faces some of
the same challenges, but I don't know if there's anything

particular to Texas or to.

Obviously, there's a lot of land to cover with fiber.

That's a lot of miles.

But what are some of the challenges and opportunities that you
see for fiber deployment here in Texas?

Craig Cook:
Andy, I think the biggest issue for most companies in the state
of Texas, especially those rural companies, whether it be a co-op

or commercial company, is the fact that our geography is very,
you know, diverse in the state.

As you mentioned, this is a huge state, and we have companies
who are in positions where maybe the soil is very forgiving.

I can tell you that for Hill Country and a lot of a lot of the
companies out in our portion of the state, you know, we are

looking at construction costs that can range anywhere from $
30,000-35,000 for an aerial mile of fiber

deployment. And most recently, we've looked at deploying fiber
in some of our more northern territories where there is a

lot of granite, a lot of rock and there it's running $90,000 for
a mile of fiber.

And I think that continues to be the biggest issue that we deal
with, is just the cost of deploying that network.

Andy Johns:
That takes a lot of $80 a month subscription payments to pay
something like that off and see any kind of return.

Craig Cook:
Well, that's absolutely right.

And you know, frankly, that's why our Universal Service support,
whether it be on the federal side or the state side, is so

critical to us because frankly, in a lot of these areas, there
is not a business case to providing broadband.

If we had to do it on our own, you know, you're looking at a
payback period in many cases of, you know, 20-25 years before you

even break even on your investments, so it's critical that we
continue to receive USF support.

And it's, you know, I think we're all very pleased with the
newfound attention that we're getting for rural broadband,

especially that being shown by the FCC and NTIA and regulators
in Washington that are, you know,

really focused on rural broadband at this point.

And hopefully we're going to see a lot of benefit from some of
these new programs and the infrastructure bill, the BEAD Program

that we've heard a lot about here in Dallas this week.

You know, over $40 billion you know that will be making it to
rural markets here in the near future, so we're excited about

that.

Andy Johns:
You mentioned the USF, and I want to come back to that with Mark
in just a second, but without naming any names or throwing

anybody under the bus, how are the supply line, contractor,
labor, how is that going for you at Hill Country

as you're looking at it to get it built, even if everything else
was cleared?

In terms of supply and labor, how are things going?

Craig Cook:
Well, that's a great question.

You know, we deal with and are struggling with supply chain
issues just like everyone right now.

And it seems like every sector and not just telecom or
broadband.

But yeah, I can tell you that for right now, you know, fiber
orders, we're looking at, you know, well over a year before an

order we placed today would be received.

So we're putting in orders now for deliveries that we won't see
until 2023.

So that's definitely a challenge.

Again, it's great to see some additional focus on the issue and
additional money, hopefully making it out to these rural areas.

But frankly, that's going to be an issue is getting the
materials we need to build the networks.

Andy Johns:
Mark, let's come back to the USF, because whenever I'm in Texas
or at conferences in Texas, the State Universal

Service Fund is always a little unique, a little different than
than what most folks you know across the country are working

with. How does that play a role or not play a role in this
broadband expansion, having that statewide USF?

Mark Seale:
Well, the network that our companies provide to their customers
also connects the rest of Texas to the rest of the

world. And that network is a hybrid network.

It carries — a piece of fiber, doesn't know if it's carrying
data or voice.

And our networks carry all of that traffic, be it from cell
phone towers or connecting to other places.

If I make a cell phone call on my AT&T phone from Dallas, Texas,
to Austin, Texas, that's routed through East Texas to an Atlanta

switch, and then it goes back to Austin.

So every single time an AT&T customer touches their phone, it's
going out of the state network

into another network and coming back.

Our companies provide that pathway.

So, and USF supports that.

So the 80% reduction that we are now seeing in USF for the last
year has dramatically affected our local

companies in rural areas.

In fact, we have two of our companies that have just moved to
deregulate almost 100 exchanges, which will mean that

250,000 customers will no longer be guaranteed phone service if
they ask for it in those areas, because the state has refused to

live up to its end of the contract that they made with our
member companies in 1987 and going forward.

So we are now in Appeals Court on a lawsuit to challenge the
state of Texas on this because the law

basically says you shall fund the Universal Service Fund.

Because when we created it, we wanted to make sure that customers
in rural areas had prices commensurate with customers in urban

areas, and that is still the policy of the state.

We had 180 legislators out of 181 that supported us in our
efforts to fix this

problem in the last legislative session.

But unfortunately, the Public Utility Commission at the time
because they were running out of money in the fund, decided that

it was going to be better to cut back our payments than to raise
the assessment that they were making on customers

statewide. And that is a policy discussion we are still having
and now is a legal discussion we are still having.

We hope it'll be rectified soon, but this is going, if it
continues much further — and Craig can tell you this — it is

going to cause ...

we cannot come back from the chasm that we will be in if this
funding shortfall continues.

Andy Johns:
Wow, and that's so interesting to juxtapose that against all of
the funding that's just flooding in.

How do you tell that story when folks are hearing all the time,
"rural broadband money is coming in, rural broadband is coming

in," but you're faced with telling that story of, well, we're
losing this other piece?

Mark Seale:
Well, it's been difficult.

And a lot of times when our public policymakers talk about
broadband

funding, they say, "Look, here's this pot of money we're going
to give you." But what they don't tell the constituents that are

hearing that is, it takes a lot of money and a lot of time to
build a rural or any phone network, much less in an area like

Craig's, where he's pulling through cedar trees and granite all
the time.

So the buildout for this will take a while, but it's really two
different things.

Broadband funding for the most part is going to be grant or low
interest loans to cover construction.

Universal Service guarantees not only construction, but
maintenance and operation over a long period of time.

And so that's the money that keeps these networks alive and
keeps rates from, we have an exchange in Texas in Orla

that costs our phone company $600 a month per customer just to
keep live.

And so without universal service, those folks won't have any
connection, and there's nobody that's going to serve them, even

satellites can't reach them.

So it is an ongoing problem and Universal Service has to
continue to be a fundamental tenet of telecom policy in this

country and in the state of Texas.

Andy Johns:
And, Craig, whether it's with local officials or state officials,
lawmakers, are you telling that story as well?

Do you feel like a lot of your fellow general managers are y'all
beating that drum and how have you found some ways to explain

that? Because I know I've been in the industry about 10 years,
and USF is can still get confusing.

So I imagine, you know, it's a little bit of a task to get
people to understand.

Craig Cook:
You know, it is, but I think we've had a real success story in
terms of being able to successfully communicate our

story. And as Mark alluded to, we've had a vast majority of our
legislators in Austin who

understand our plight and have, I think, really just over the
last couple of years come to understand that the networks that

we're deploying all this money that's used to put fiber in the
ground, it is a ubiquitous network.

It's, you know, and as Mark alluded to before, it's not just for
broadband, but it's for voice services.

And so we do have resonance in rural America and rural Texas
that still require voice services.

And yes, broadband is getting all the attention and we
understand why and we appreciate that.

But the fact of the matter is and again, as we talked about
before, there really isn't a business case to deploy these

networks in some of these territories.

I can tell you for Hill Country for 2021, with this State USF
issue, we lost $3.7 million,

and that's a huge hit to us in terms of really restricting our,
you know, our

plans and our ability to get the network extended further, you
know, and to meet our rural residents needs.

So it's a real problem.

Andy Johns:
We've heard a lot of that at this conference.

You know, Shirley Bloomfield mentioned yesterday that the NTCA
working to not just get the networks built, but make sure there's

funding to keep them running.

One of the other things we've heard a little bit about here is
partnerships and for telcos to work with, whether it's

municipalities, electric co-ops, you know, whoever some of those
other partners might be.

You know, that's something that has been the right path forward
for some folks.

Mark, tell me if you don't mind, have you seen any of those
those partnerships work in Texas, or what kind of climate is

there for, you know, whatever that other partner may be?

Have you seen any of that be the right answer for folks in your
state?

Mark Seale:
Yes, we actually, there are a couple of examples in East Texas.

We built what has been termed LoopNet, which ran around all of
the anchor institutions in East Texas through four

of our rural phone companies that got together and provided a
fiber network to hospitals, universities

and to public education facilities.

And that has been in place for years.

We also just recently, a good example, a little East Texas town
was not happy with the service that they had, and they reached

out to one of our providers, and they were able to have a public
private partnership with the Economic Development

Council in this small town.

Each side put up a million dollars.

They ran a fiber truck there.

They've now connected the university and the hospital and the
Home Depot and a couple of other large customers.

And they're going to pay back the Economic Development Council
over the next 10 years and net them 10% profit, and all of that

area will be wired.

You know, we have pockets in in Texas, I know Craig has these
pockets, where you can get gigabit service right now.

In a little town called Goldthwaite, Texas, which is 2,200 people
in, it's not in the middle of nowhere, but you can see it from

there. You can get gigabit service today.

And when COVID hit, a lot of people left Austin and drove the
hundred miles out to Goldthwaite and resettled there because the

service was so good.

I cannot get gigabit service in Austin, Texas, but yet you have
an Goldthwaite, and that's because providers like Craig have

spent the time to build the networks and build them right.

And now we are seeing the fruits of that.

All of that was helped by USF over the years.

In the 40s, we had a phone divide, not a digital divide.

And it was the policy of the state that everybody should be able
to call into town for help.

That model has worked for almost a 100 years now, and it is
important that we understand that if you're going to build these

networks that you want people to stay connected, you have to
build them and then fund them and help them operate and pay off

the debt to build them.

And that is why Universal Service, and whatever broadband
funding looks like going forward, is so important.

Andy Johns:
Craig, let's end on this.

It's easy to get lost in all the policy and the funding
mechanisms and funding mechanisms, but at the end of the day, the

broadband networks that you guys are building has a real impact
on real people.

So I don't know if you have a moment just to share one or two
examples, or just how you're seeing those pockets where the

network that you guys are building is really making a
difference.

Craig Cook:
Sure. Now thanks, Andy.

That's a great point.

You know, at the end of the day for us, and I would say for all
rural providers, it really is about serving our customers.

That's what we're there for. And I think that's what makes us so
much different than the large national providers.

You know, we've been in these rural areas.

We've been working hard to deploy these networks to assist, you
know, our neighbors, our friends, those who you know,

we share communities with.

And so for us, it's not just about, you know, the dollar
investment.

It's not just about the physical network, it's about serving
those members.

But you know, what really comes to mind to me really are
probably two things first and foremost.

And one of those is our local schools.

In our territory, which spans over 3,000 square miles, you know,
we have fiber to every school that we serve.

And so, you know, gigabit services are available.

We do have a number of schools who are using that level of
service.

And it's critical, you know, for their connectivity, for
education.

And really, you know, our view has been, you know, is the way
the schools go in our communities, that's where the community is

going to go. So, you know, the more we can support our schools
and our students, that's really, you know, speaking to the

successful future of these rural areas.

Secondly, small businesses, you know, it really, and I think
COVID has shown this to us is that this is a global economy

and people don't necessarily have to be working out of a metro
high rise in downtown Dallas to do

business anymore.

It's we have a number of people in our area that have, you know,
moved out of Houston or San Antonio

or had retirement places in our community where they chose to
start conducting their business.

And so for us to be able to provide them the high level of
connectivity that that they need to run their

business is really being critical.

And so we're really pleased that we're able to provide that.

And as Marc said before, in many cases provide service that is
superior to that, you know, that they could find in larger

metro areas.

Andy Johns:
I think that's a good spot to end it.

Mark, anything to add there?

Mark Seale:
Andy, we appreciate you.

We appreciate the work that you do for the industry, and we're
excited to move into the future.

And our companies are still going to be here providing broadband
service and all the other services we provide to the communities

that we connect.

Andy Johns:
Excellent. He is Mark Seale, the Executive Director with the
Texas Telephone Association.

You also heard Craig Cook, who is the CEO of HCTC.

I'm your host, Andy Johns with WordSouth and Pioneer.

And until we talk again, keep telling your story!

Outro:
Rural Broadband Today is a production of WordSouth, a content
marketing company.