Village Scale Internet Service Business Background Paper
BBNA Media Services

7 April 2004
Fritz Johnson (x-317)
Ralph Andrew (x-362)

Summary

Several vendors of telecommunications equipment say it’s possible to establish village-owned Internet Service Provider (ISP) businesses robust enough to provide the level of Internet service required by rural Alaska schools, health clinic, and the general public for $50-$100,000 in up-front (hardware and installation) costs. Profits from the sale of Internet services, vendors maintain, could quickly pay back the initial investment, earn a profit for the village, create jobs and pave the way for a variety of new rural economic opportunities.

In Southwest Alaska villages, the biggest customers of Internet and related services are schools and health clinics. The biggest supplier of those services is GCI. GCI’s revenue from Bristol Bay’s 29 clinics and two dozen school sites schools is estimated at $5 to $6 million annually (90 percent of which is subsidized by federal “e-rate” grants).

Independent telecommunications equipment vendors maintain, however, that identical or even improved services could be delivered by a tribally-owned ISP for half that cost, suggesting that a regional consortium of tribally owned and operated ISPs could earn $2 to $3 million a year from school and clinic business alone.

Telecommunications Equipment Vendors

BBNA’s Media Services has identified four vendors advertising the kind of telecommunications equipment needed to establish an ISP as described above.

• Village Telecom Management Services, LLC: (907) 575-8918, Anchorage, Jim Stevens, President. Stevens says his firm was recently involved in a demonstration project in Chevak. As of March 15, Chevak village officials had yet to make a decision on whether or not to proceed, he said. Stevens estimates start-up hardware costs at $90-$100,000, plus variable monthly connect fees.

• Borealis Broadband, (907) 632-0025, Anchorage, Horst Poepperl (http://www.borealisbroadband.com). Borealis estimates start-up hardware costs at “less than” $50,000, plus monthly connect fees (up to $4000 per month, depending on connection speed requirements).

• Telalaska, (907) 563-2003, Anchorage. http://www.telalaska.com. At a meeting in Anchorage March 25, Telalaska representatives confirmed that the hardware and installation costs described here are in line with their projections. In addition to phone, internet and cable TV services in and around Anchorage, Telalaska provides communication services, including video-conferencing, to the Aleutians East Borough.

• TAMSCO (Technical and Management Services Corporation) (www.tamsco.com). Offices in Poulson, MT. TAMSCO provided no specific estimate of hardware start-up costs, but company representatives agree those costs could be recouped from operating revenues. In addition to technology hardware, the company offers technical and business mentoring to tribes, and assistance in securing government data processing contracts and jobs for tribal members. Notable tribal partnerships include (1) a $50 million contract in Nov. 2003, to Tlingit and Haida Technology Industries in Juneau for accounting work in the class action lawsuit filed against the U.S. Dept. of the Interior on behalf of American Indian trust account holders, and (2) a $350 million contract to Salish Kootenai Technologies (Flathead Reservation, Montana) to track vendors and parts for customers of F-15 aircraft (http://www.certredearth.com/Redearth/Tribal/salish1.html). Last fall TAMSCO contracted with the Yukon-Kuskokwim Health Corp. to provide telecommunications services.