Why 43 customers are worth a battle at the PUC

Millions of dollars, personal vendettas, vast ranches, powerful attorneys and at bottom, a corporate vs.

cowboy struggle.

The situation has all the trappings of a TV drama as it plays out in sparsely populated Lander County in central Nevada.

And at the center of the drama are 43 customers for telephone service.

They live on remote ranches, widely scattered over rugged topography.

Currently, their phone service is delivered by wireless transmission,much the way cell phones are served.

But sometimes, the connection cuts out.

Ranching is a business now conducted primarily by phone and Internet, says Jana Lee Murray, deputy district attorney for Lander County, so the bad service is more than a social inconvenience.

Any attempt to provide phone service over landlines to such an area is an expensive proposition.

SBC Communications told the Public Utilities Commission of Nevada it would require 63 miles of fiber, plus cable, plus maintenance, at a cost of nearly $3 million, or about $1,000 a month, to serve each customer.

Ranchers now pay $30 a month for basic service, but have been promised a $13- a-month bill by Beehive Telephone Co., a competitor that badly wants the business.

So why are the competitors Western Wireless Corp.

(with SBC in its corner) and Beehive Telephone (with Lander County in its corner) engaged in a year-long fight to win the right to serve such a tiny market? Western Wireless Corporation, under contract to SBC to serve the area, already has invested $1 million in wireless equipment, says its attorney, Steve Tackes of Crowell, Susich, Owen & Tackes, Ltd.

of Carson City.

He quotes an official at the Public Utilities Commission who said,"We never saw any company work so much as Western Wireless." It built a new transmission tower, replaced antennas, cabling and equipment at resident locations, all without charge.

But Beehive Telephone, which uses federal grants and subsidies to serve remote areas, thinks the debate is the result of a vendetta against Art Brothers, its founder and president.

"Art Brothers is an iconoclast, a cowboy," says Chuck McCown, the company's general manager.

"For years he wrote a column for an industry publication; he used that bully pulpit to toss darts and name names, so he has made a lot of enemies.

Art has poked pointy sticks in the eyes of SBC and even took pokes at the PUC."

The upshot? "Beehive Telephone is the ugly red-haired stepchild of the industry," he says.

Beehive has specialized for more than 40 years in bringing landline phone service to remote areas, often with cobbled-together solutions, says McCown.

It operates in Elko and White Pine counties in Nevada, plus pieces of nine counties in Utah.

"The U.S.

Department of Agriculture provides a system of grants that allow us to do that,"McCown says.

The federal Universal Access Fund, a fee charged to every phone customer, pays to subsidize service to remote areas.

Beehive would qualify for the funds to serve the 43 customers in Lander County if it were named as the provider of last resort.

But first,Nevada Bell would need to be decertified as provider of last resort.

SBC, the parent of Nevada Bell, is too big to qualify for the federal Universal Service Fund.

The contract to serve the ranches was put out to bid in 1992 when Nevada Bell (before it was acquired by SBC) said it wanted to sell rather than invest $2.3 million for landlines, says Murray, the deputy district attorney in Lander County.

"We didn't know Lander County existed," says McCown."But the tradition of Beehive is we never turn anything away.Usually we operate at a loss anyway; subsidies help us out of the hole.

So we put in a bid of one dollar.

Turns out it was the only bid."

Instead, Cellular One hooked residents up to the antenna in 1994 and has not updated the technology since,Murray says.

Cellular One today is a subsidiary of SBC.

About half the residents of the remote area filed a complaint asking to decertify Nevada Bell as the provider of last resort.

That's about 30 people in portions of Antelope Valley and the Reese River Valley who get spotty phone service.

Very spotty, says Murray, who cited "frequent and severe outages." Residents pay a $30 monthly fee for basic service, plus 5 to 35 cents a minute for a longdistance call when a connection can be had.Adding to the frustration: Incoming calls can't always find their way to the exchange, she says.

They got the county government in Battle Mountain to join their fight.

"It's very unusual for a county to go after Nevada Bell," says Murray.

So unusual that several private entities donated tens of thousands of dollars worth of in-kind services toward the fight.

Lander County paid about $8,000 in out-of-pocket costs to file the June 2004 complaint against SBC Nevada.

The county also pays the salary of Murray,who began work on the issue in January.

In addition to county outlays, a former Utah state official has provided another $30,000 in donated expert services to testify on federal law, while an attorney from the Washington, D.C.

firm Bennett & Bennett provided services valued at $30,000 after being paid $7,500, says Murray.Why? "They were amazed we were doing this," she says.

But Tackes says Western Wireless replaced a troublesome analog system with a new digital system last year.

"This is a rare opportunity for Lander County residents to get wireless service, better than landline service," he says.

Art Brothers promised residents fiber optics to their ranches for $13 a month even though experts say that's not possible, says Tackes.When the true costs come due, he says, residents could conceivably see phone rates in the area of $500 a month.

Not so, says McCowan.

Beehive's rate of return is regulated by law.

Both sides have commissioned surveys sent to the residents.

Predictably, the results of each found respondents partial to that survey's side of the issue.

In testimony, Rich Hackman, manager of the consumer complaint resolution division of the PUC said,"I found that although customers are still experiencing problems, overall the majority of customers to whom I spoke had positive things to say about their service." Nancy Wencel, hearing officer for the PUC, heard testimony, took the issue under advisement and pending the next progress report from Western Wireless, should issue a procedural order within a month, says Rebecca Wagner, spokesperson for the PUC.