Episode 9

Building Rural Broadband with the ReConnect Program

October 5, 2020

Episode Summary

Karen Jackson-Furman, COO of Ardmore Telephone, discusses Ardmore’s recent receipt of a USDA ReConnect grant-loan combo, along with creative ways rural broadband providers can operate more efficiently while improving customer service.

Show Notes

Transcripts have been lightly edited for clarity and readability.

 

Stephen Smith: Welcome. I’m Stephen Smith, and thank you for tuning in to Rural Broadband Today. My guest on this episode is Karen Jackson-Furman. Karen is the chief operating officer for Ardmore Telephone Company that serves portions of Tennessee and Alabama.

Stephen Smith: Ardmore recently won a sizable grant-loan combo from USDA’s ReConnect program, and we’re going to dive into the specifics of that. Karen has more than two decades of experience in the telecom industry. She has served in roles such as chief information officer, CFO, and now the COO of Ardmore Telephone and its parent company. Some of the takeaways from my interview with Karen include the nature of Ardmore’s Telephone service area from considerably rural in some parts to a metro bedroom community. Listen, in particular as Karen explains the ownership and the management model of Ardmore Telephone and how that has led to greater efficiency and better customer service. And lastly, there’s a lesson for all broadband providers, I think, in our story today, but particularly for small operators who may doubt their ability to tackle major projects because of their size. So let’s dive right into my interview with Karen Jackson-Furman with Ardmore Telephone Company.

Stephen Smith: Well, welcome to the podcast, Karen, thanks for joining us.

Karen Jackson-Furman: Well, thanks for having me, Stephen. I’m excited to be here.

Stephen Smith: You guys got some really good news recently with the ReConnect funding. Congratulations on that.

Karen Jackson-Furman: Thank you. Yeah, we did. Ardmore Telephone was successful in their application, and we’re really, really excited about that, too.

Stephen Smith: Well, tell us a little bit about the communities that that project will serve. Now, I know Ardmore Telephone Company actually has customers in Ardmore, Alabama, and Ardmore, Tennessee. If you’ve ever been there, you’re in Alabama, and you drive under the overpass, and you’re in Tennessee. So you have a customer base on both sides. Tell us about the area that this grant will serve.

Karen Jackson-Furman: Ok, yes. There’s actually two areas — they’re not connected — there’s two areas in Tennessee that this grant is going to help us build to. The first areas in Benton County, Tennessee, which is actually a CLEC area for Ardmore Telephone. It’s located east of Paris, Tennessee, over toward the Tennessee River. It’s very rural. We’ll pass about seven locations per mile of fiber that we plow or 654 total locations in the entire build. There are some light communities, so it is a rural build. Then the second area is mostly in Lincoln County, Tennessee; it spills over a little bit into Giles County. But that area is in our Mcburg exchange, which is part of our ILEC area that Ardmore Telephone serves today. This area sits due east of Pulaski, Tennessee. It’s rural too, passing about eight locations per mile of fiber that we plow. And that total build will pass about 1,004 total locations.

Stephen Smith: So you have seven to eight customers per mile of line. How does that compare to the rest of the Ardmore Telephone service area in terms of density?

Karen Jackson-Furman: Ardmore Telephone is denser than what I’ve just described to you. We actually sit just north of Huntsville, Alabama, and it’s an area of growth. Huntsville’s subdivisions and bedroom communities are actually growing up into the southern exchanges of Ardmore Telephone. So I don’t have a number, and I’m not sure what our number of locations per linear mile are right now, but it’s much denser in our traditional ILEC area than where we’ll be building. Now, of course, I’m referring to Benton County because that’s a new build for us. Mcberg, we currently serve now with copper facilities. It’s a little more rural than the southern part of our territory, which is closer to Huntsville.

Stephen Smith: And all this new build will be fiber to the home?

Karen Jackson-Furman: Yes.

Stephen Smith: And I believe that in addition to serving residential areas, you’re going to pick up some businesses and maybe some other key institutions.

Karen Jackson-Furman: Yes, we hope to. Probably not as many businesses — again, it’s very rural — but there’s always a few peppered around the area, mostly residential communities, though.

Stephen Smith: Well, the ReConnect grant, of course, is quite a process. Any time you go to the federal government and apply for a program that they’re going to be loaning or granting some money and one of this size — which we’ll get into in a moment — certainly there’s just a lot involved. A lot of work goes into that. And just to get to the point of making the decision that as a company, we’re going to dedicate resources to applying for this and then actually going through with that. Talk to us a little bit about what that’s about, especially for those companies that may be listening to this and they’re thinking about one of the rounds of ReConnect and some other grant opportunities that may be available. What all is involved in that?

Karen Jackson-Furman: Yeah, as you know, the process is long and a lot of work goes into putting together the application. We actually applied for these areas in the first round of ReConnect, but our application was turned down. So we tweaked the area just a little bit, reapplied, and we were successful in the second round. So our efforts were about a year and a half in the making. We did a lot with regard to community support. We deployed people out into the grant areas that we wanted to build to gather data and gather letters of support for the grant application. There was a lot of engineering, cost calculations, and financial analysis. Now that we’ve been awarded the grant and loan combination, we still have a lot to do. We have an environmental analysis that takes time, and we have to take care of all the post-award red tape before construction can actually begin. So it is a long process and there’s a lot of documents and information that has been gathered for submission. It’s a very comprehensive process. There’s a lot to it. This is, as you know, federal grants. The state grants tend to be a little more straightforward and a little faster to pull together. And the timelines to announce awards is quicker on the stateside. But the federal process is quite a process.

Stephen Smith: And what was the total? Yours was a grant-loan combo, is that correct?

Karen Jackson-Furman: That’s correct, yes. We received an award of $4.9 million in grant funds and a $4.9 million loan. So it was a 50/50 application. The Lincoln-Giles build is actually the bigger of the two. It’s 125 miles, while Benton county is 90 miles. But it was a 50/50 split to cover both of the builds.

Stephen Smith: And it’s not like when they send you a notification, they send you a check for all that money, right? I mean, you have to be prepared to really float that work.

Karen Jackson-Furman: That’s right. You have to build it first, and then there’s an application process where they reimburse you for eligible funds spent. So the reporting requirements — not only is the application process itself cumbersome but then there’s a lot of reporting and a lot of requisition and things like that on the backside to actually pull down the grants and loan funds as you complete the build.

Stephen Smith: I think there’s a couple of important points there that we can pull out. One, if a company is looking at doing this, they need to know that there is a lot of work and a lot of financial resources that they’re going to have to bring to the table to be prepared to expend before the money comes in. But the flip side of that is some smaller companies may look at the process and say that’s just too much work for us to be able to manage. But Ardmore Telephone is not a big company, right?

Karen Jackson-Furman: No, it’s not a big company. It’s a subsidiary of the WK&T. So the management team here at WK&T, we can we also manage Ardmore Telephone. And that was a project we took on, and we do a lot of the work internally. It is a drain on resources. It takes a lot of time. But we have outside resources as well. Our engineering firm and our consulting company helped us along the way. And so it’s really a big joint effort for sure.

Stephen Smith: Yeah, and I think that’s one takeaway is that a smaller company can look at this and say, you know, we can do that. I mean, we can pursue these funds. Of course, now with so much emphasis on solving the rural broadband issue, you know, now’s the time for providers of all sizes to be looking at those opportunities and pursuing those. I think prior to the pandemic, we certainly had a continual building of momentum for solving the rural broadband issue. But I think the spotlight has been shown very brightly on just how important and how vital broadband connectivity is. And I would say even especially in rural areas where just the general remoteness of being located away from metropolitan areas, health care facilities, and job opportunities. And now that we’re out there working from home, going to school from home, doctor visits from home, and all these things, it’s become even more important.

Karen Jackson-Furman: Oh, I agree. It is important for sure. The need is greater than ever. For Ardmore Telephone itself, what this build is going to help us achieve is growth for the company and a much-needed growth to remain viable well into the future. Now, I think everybody listening on the podcast, I’m going to guess, understands the business benefits of fiber connectivity. So for the residents and the businesses that we’ll be able to serve with fiber when this build is complete, this is where I could recite the laundry list of benefits. You know, it’s the entertainment component — the streaming services, TV streaming, and downloading movies. It allows people to keep connected with loved ones that are located across the country or across the world even. Working from home, and in light of the pandemic, working from home and the transition there has been huge for folks. And they need a reliable, fast broadband connection in order to be able to successfully work from home. Virtual classrooms for online learning — we’re seeing so much of that. Many of the school systems even have options. If they’re not 100% virtual, the option is usually given for the family to either send the child to the school or to stay home. And a lot of college classes are online and virtual too. Shopping — of course, I hear reports all the time, especially from some of the more at-risk population with regard to COVID, they’re doing a lot of online shopping: ordering groceries and things for a quick parking lot pick-up, things like that. Telehealth — doctors’ offices. Here in the last few months haven’t been really the place people wanted to visit in person if they didn’t have to, so telehealth. And then also there’s the increased property value component. I read a study — and I’m not going to be able to name the study — but earlier this year, if a home or business has fiber connectivity and has a gig connection available to them — and that’s what we offer, we offer packages all the way up to a gig, symmetrical service — those property values increase by an estimated 7%. So it’s really beneficial for everybody that we hope to serve in the future.

Stephen Smith: Great points. You touched on something earlier that I want to backtrack to here. Ardmore Telephone is in a bit of a unique situation in that it is a small company serving a mixed area with very rural [areas] and then some with some greater densities, as you mentioned, the bedroom community of the major metropolitan area in Huntsville, Alabama. So you’ve got a diverse customer base there. But several years ago, Ardmore Telephone was purchased by WK&T Telecommunications Cooperative, located in the western part of Kentucky. And that’s a bit of a unique situation that you don’t see happen a lot around the country, where a cooperative has purchased an independent company. And that has really allowed Ardmore to take advantage of some synergies there and really leverage the benefits of a larger company. And you mentioned some of the sharing of management. Talk to us a little bit about how Ardmore and its customers have benefited from that relationship with the cooperative.

Karen Jackson-Furman: Well, I think that — and this is my opinion — but I feel like the industry right now, we’re in growth mode. I know we are personally as an individual company, WK&T and Ardmore, are in growth mode. And I think that that’s something that all companies need to be looking at to remain a growing concern. The markets are getting more competitive. Right now, there seems to be a lot of broadband initiatives and funds being made available for expansion and upgrading facilities. So everybody needs to be taking advantage of that, in my opinion. We certainly are. Ardmore — and I wasn’t here whenever it was purchased by WK&T — but I know that over the years that I have been with WK&T, which is five years now, I’ve seen Ardmore grow. I’ve seen the bottom line strengthened, and I have seen it be able to take advantage of more opportunities than perhaps it could have if it would have been a standalone company. So the support that WK&T and the staff here at WK&T, the integration and the synergies that we’ve been able to recognize and efficiencies that have been implemented, have really allowed Ardmore and put Ardmore in a great position for future growth. We can’t ignore the proximity to Huntsville and the inherent growth, the organic growth, the company is seeing from just the explosive growth in Huntsville itself that’s spilling over into the Ardmore territory. But the resources at WK&T have really enabled Ardmore to capitalize on all those opportunities.

Stephen Smith: Just the management structure alone, a company the size of Ardmore would still have to have a lot of the management structure that you’re able to share between the two organizations, right?

Karen Jackson-Furman: Yes, that’s right. And we’re able to use the same management staff to manage all the properties. And that’s just been a huge benefit and a huge cost savings to Ardmore. And not only do we share a management team, but as time passes and as we implement new processes and procedures, we always evaluate what historically has been done at Ardmore in comparison to what historically has been done at WK&T, and we continually try to move those processes closer together, so it’s seamless. And as we do that, we’re able to share more and more staff, not just management staff. A good example of that would be sales staff. Our sales staff could, if needed, travel between the two companies and help out on different projects. Customer service. Right now, our phone systems are fully integrated, and if all of the customer service representatives that Ardmore are unavailable or tied up on the telephone, those calls roll to the customer service staff at the WK&T. And we’re able to help that customer rather than placing them on hold or sending them to a voicemail box for a callback. And that happens in reverse, too. WK&T’s calls roll to the staff at Ardmore should there not be anybody available up here to take care of that customer whenever they call in. So we’ve had a couple situations where we’ve had power outages and different things, and we’ve been able to continue at one location, but not the other. And the location that’s still operational has been able to pick up the slack and take care of the customers at the other organization. So there’s a lot of benefits beyond just cost-sharing for Ardmore Telephone. There’s also the benefits of being able to provide interrupted service to the customer should there be issues on their end or the other end. It’s really a great arrangement, and it works nicely for both companies.

Stephen Smith: So we’re not talking about only operational efficiencies that might help the bottom line. We’re talking about better service to the end customer, aren’t we?

Karen Jackson-Furman: Oh, absolutely. Yes. It’s something that keeps the lights on when the lights would perhaps go off if that makes any sense. That wasn’t a very good way to frame that. But yeah. I mean, it is an increased customer benefit, and it’s seamless. And the customer may not recognize it because they don’t know that the phone call has rolled to the company in West Kentucky or vice versa. But they know at the end of the day, a live person is picking up that telephone, and they’re able to answer their questions or help them with the services that they need.

Stephen Smith: And they appreciate that. Let’s take a step back and look at a little higher level, Karen. Do you think — you’ve been in this industry for quite some time — do you think we are doing enough as a nation to solve this rural broadband issue?

Karen Jackson-Furman: Well, broadband deployment is certainly an area of focus. It’s a hot ticket item right now, everything from the FCC, USDA, Congress. We have candidates that are up for reelection or running for the first time, and it’s a big part of their platforms. Many states like Tennessee and Alabama have rolled out broadband programs. Tennessee has really been a leader in that space, too. I want to make note that I think that they’ve done a phenomenal job. We’re doing a lot as a nation. However, I think sometimes the mapping data and its lack of granularity can be an inhibiting factor as well as some of the programs allow for carriers to kill eligibility of many census blocks or census block groups by quickly throwing up a fixed wireless solution that meets the bare minimums that make the area appear to be served for purposes of eligibility for some of these grant programs. But I know there are initiatives to fix things like the mapping issues, and the FCC continues to evaluate the definition of broadband. And that’s up to 25 Mbps down and 3 Mbps up now is, as we all know, and they continue to look at that to see if it needs to be moved higher. But until things like that are addressed, I think we’re always going to have those pockets where the folks lack the connectivity they need for their businesses or even for their homes.

Karen Jackson-Furman: So I think that we’re doing a lot, like I said, we’re doing a lot as a nation. I will throw in here that Ardmore not only was a recipient of this ReConnect grant-loan combination, but we were also recently approved for a $20.3 million USD loan to continue to build fiber out into all five of the incumbent exchanges. So everybody’s working very hard at both the state and federal levels to make resources available so that we can continue to push broadband further and further out into the rural areas. It’s a process. I think it’s going to take time. I think that as these programs are rolled out, areas of deficiency are identified. And as long as we continue to address those and work to get better, I think eventually we’ll get there. And I don’t have a crystal ball to say how many years that’s going to take. But right now, the biggest concern that I can see personally is these small pockets of people that are being served, according to Matt, but aren’t really. And I think that eventually, we’re going to have to figure out how to cast the light on that and provide the clarity and the resources we need to get to those people.

Stephen Smith: That is a great point, and you mentioned in your comments there about fixed wireless, with the RDOF auction coming up with the FCC next month, starting out — we hear about a lot of different types of technology to connect people, fixed wireless is there. And, you know, there’s probably going to be some satellite deployment that’s going to win some money in that auction and that sort of thing. Do you think from your experience and what you’re seeing on the ground that there is a substitute, a better answer than fiber to the home?

Karen Jackson-Furman: I don’t think so at this point. I think that a lot of folks in the industry have a lot of hope for 5G. I think that that’s a viable technology. I’m not an expert in the technical field or with wireless technologies that are available out there by any means. I just read the industry information that comes out like so many others. I think that there’s a lot of hope being cast on 5G. I think that the application for rural areas might have a little way to go. So right now, I would put my money on fiber. Fiber connectivity is proven. It’s scalable. It’s been called future proof. I mean, nobody can conceive what the future holds 30, 40, 50 years from now. But I think that if anything is future proof, it would be fiber connectivity right now.

Stephen Smith: Yeah, well said. Does Ardmore or WK&T plan — are you pursuing any of the RDOF funds? 

Karen Jackson-Furman: WK&T is looking at a broad scope. We’re trying to fish through all the data, and there’s a lot of considerations when you’re looking at a reverse auction. There’s always a risk in whatever business model you put together. Ardmore Telephone, we’re still evaluating our RDOF opportunities for Ardmore as well, but I think probably the focus is going to be with WK&T in the RDOF auction. However, Ardmore, it’s safe to say that for Ardmore Telephone, whatever additional funds or grant opportunities that are made available, we’ll be evaluating it, pursuing it, if it fits our business model and if it’s good for the folks we serve and good for the folks that we hope to serve in the future.

Stephen Smith: Well, Ardmore still has a good bit of copper in its network, right?

Karen Jackson-Furman: Yes, it does.

Stephen Smith: Do you see a day when you have a complete fiber network there as a small…

Karen Jackson-Furman: Yes, absolutely. You know, as I mentioned, we recently secured the $20.3 million loan and then that along with, we’ve been successful in the state of Tennessee. And then also the $4.9 million grant, the $4.9 million loan. So we’ve got more than $30 million recently that we plan to put into the ground in the form of fiber. So that’s our goal here. In the next few years, we expect to have almost all, if not all, of Ardmore Telephones’ ILEC area 100% fiber-connected.

Stephen Smith: Well, I think the lesson to take away from that is, regardless of the size provider that you are and the size of the community, you can do it. It takes a lot of work, and if you dedicate yourself to it like you guys have and pursue those grants and work hard to make it happen, that rural broadband is a possibility in those areas. Even with a smaller company and not as much density as you sure would like. So definitely hats off to the hard work and the success that you’ve had there at Ardmore.

Karen Jackson-Furman: Well, thank you. Thank you. We appreciate that, and we’re excited about what the future holds. We’re excited about all the different initiatives that we’ve got on the table and all the future opportunities that we’ll be taking a close look at.

Stephen Smith: That’s exciting. Well, Karen, thanks so much for joining us on the podcast today. It’s been a pleasure to get your story here.

Karen Jackson-Furman: Well, thanks, Stephen. It’s been fun. And I do appreciate you inviting me to be on your podcast.

Stephen Smith: And thank you for listening to Rural Broadband Today, where we take a look at the people and the issues shaping the rural broadband story across America.

Stephen Smith: I’m your host, Stephen Smith. The program is produced by WordSouth — A Content Marketing Company. Please share this episode with your network and help us tell the rural broadband story. Thanks for listening.

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