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Photos by Cathie Rowand | The Journal Gazette
Steve Garza, left, and Will Frye are technical support staff at OnlyInternet, which challenged a federal grant to Frontier.

Rural Internet service fends off Frontier

Challenges FCC grant for Uniondale

Williams
David Bass of OnlyInternet technical support helps customers.
Associated Press

OnlyInternet was enough.

That was the opinion of the Federal Communications Commission in November when the agency sided with Bluffton-based OnlyInternet Broadband & Wireless in denying government funds to one of its competitors, Frontier Communications Corp.

OnlyInternet, through its parent company Great American Broadband, challenged Frontier’s application to snag a grant through the Connect America Fund, a program meant to help expand broadband Internet service into rural areas. Since OnlyInternet already provides wireless Internet in that area, it filed a challenge with the FCC – and won.

Officials at OnlyInternet initially likened the victory to David versus Goliath as they successfully defended their turf in Wells County’s Uniondale – where Frontier wanted to come in and join the providers who offer high-speed Internet to the town of about 300 residents.

“(Frontier) is a business, and they were doing what companies do, and that’s try to grow,” said Greg Williams, vice president and chief operating officer of Great American.

“The way the mapping looked to them was that the area was being underserved as far as upload speeds, but that wasn’t the case,” he said.

Founded in 1995, OnlyInternet serves Adams, Allen, Blackford, Delaware, Elkhart, Grant, Howard, Huntington, Jay, LaGrange, Madison, Randolph, Tipton, Wabash, Wells and Whitley counties. The company also is in parts of Ohio and Michigan. The company has between 2,000 and 3,000 customers who use a Dish-like antenna to get wireless reception.

OnlyInternet listed more than $2 million in revenue in 2013, about a 3 percent increase from 2012.

Frontier, by comparison, dwarfs that with customers in 27 states and revenue of $5 billion. And unlike wireless Internet providers, major cable and fiber-optic service companies may apply for Connect America funds.

Rick Harnish is executive director of the Wireless Internet Service Providers Association in Ossian. He once owned OnlyInternet but sold it in 2008. Harnish said his organization is a watchdog for smaller firms that are overmatched financially.

“We have to look out for the interests of our members,” said Harnish, whose group alerted OnlyInternet of Frontier’s FCC filing for rural dollars. “The Connect America Fund is a subsidy program set up for phone companies, which is why wireless providers are left out. We continue lobbying for equitable treatment, but we’re a small voice compared to the bigger companies.”

Nationwide, Frontier will use the Connect America dollars to implement broadband services in 22 states, including Indiana, Iowa, Illinois, Michigan and Minnesota. Last year, Frontier applied for $71.5 million from Connect America but received $61.3 million.

The reduced amount is an indication that other rural Internet companies are challenging their larger peers. In doing so, they are preventing the big fish from swimming in small ponds, Harnish said.

Frontier feels differently.

“High-speed Internet is a highly competitive business and the fact remains that there is still only one Internet provider in (Uniondale),” said Dana Berkes, a company spokeswoman. “We feel competition is healthy” and can result in better prices for customers.

In Indiana, Frontier said it received $3.6 million in Connect America money in an attempt to reach nearly 6,000 rural households. It must do so in the next three years.

In northern Indiana, the company can use the federal money to offer services in Huntington, Jay and Wells counties.

And while Uniondale was the only Hoosier community where it was denied Connect America dollars, that doesn’t mean Frontier won’t one day decide to go it alone and invest without the aid of federal money. The company, however, wouldn’t disclose the costs associated with such an expansion.

According to the U.S. Department of Agriculture, rural households are still less likely to subscribe for Internet services than residents living in urban areas. By 2010, 62 percent of the nation’s rural homes had Internet subscriptions, compared with 73 percent in cities.

Williams said OnlyInternet expects to attract new customers.

Uniondale homemaker Marlene Lesh may be on his hit list.

“I don’t really see the need for Internet,” the 61-year-old said. “I go to my kids if I need something like that. I don’t know, but the Internet scares me a little. It seems like it’s mostly scams. It is frustrating sometimes because everything is done online nowadays.”

Williams hopes that frustration leads to more customers.

“We are growing, but we do feel like we’re on an uneven playing field,” he said. “That’s why we got involved. We offer speeds that people are looking for. Our core strength is rural Indiana.”

pwyche@jg.net

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