NORTH LIBERTY– In a new initiative, South Slope Communications will spend approximately $10 million every year over the next five or six years to install fiber optic cable throughout its coverage area, greatly increasing the company’s ability to provide high speed broadband Internet to its customers.
First stop – North Liberty.
South Slope CEO J.R. Brumley delivered this news to cooperative members during an update of company operations at the annual South Slope Cooperative meeting Saturday, Feb. 27. Brumley said with declining revenue from fewer and fewer land lines, expanding into broadband is the only way for communication companies to survive.
“What we need to do is to get into the broadband business,” Brumley said. “Fiber optics is our future.”
The South Slope Cooperative Communications Company is a 51-year-old local telecommunications co-op with its headquarters located in North Liberty. South Slope serves an area spanning several communities, including Amana, Ely, Fairfax, Newhall, North Liberty, Norway, Oxford, Solon, Shueyville, Tiffin, Watkins, Walford, Western, south Cedar Rapids and parts of Coralville.
While South Slope formerly had been installing new fiber optic connections mostly in new developments in its coverage area, Brumley said the goal of the project is to bring the fiber optics directly to homes. He said he hopes to build on the 60 percent of South Slope customers who currently have broadband, and to also give customers the option of faster Internet with even higher bandwidth.
“The more we make available, the more people take it,” Brumley said.
The project kicked off at the beginning of January in North Liberty, and Brumley said it could take two years to complete there. When finished in North Liberty the project will spread to other South Slope communities in phased installments.
“Is it a huge investment? Yes. Is it going to be really difficult the next few two years? Yes,” Brumley said. “But it’s where the world is going.”
Even if the world wasn’t going there, it’s where South Slope is going due to a huge decline in long distance revenue. According to company numbers, South Slope’s long distance revenue dropped from $9,132,387 in 2008 to $7,785,907 in 2009, a decrease of nearly $1.35 million dollars.
Brumley said the cause of this drop is two-fold – the continual decline of land line users due to increased wireless use, and a decision by the Iowa Utilities Board that limited the amount companies like South Slope can charge large long-distance providers such as AT&T.
“We’ve not had a good run with the Iowa Utilities Board the last five years,” Brumley said. “They appear to favor the big companies.”
Brumley said the hit the company took from this gap in revenue was the reason for a rate increase to land line customers put into effect at the beginning of the year.
The loss in long distance revenue was also offset by growth in Internet, video and wireless services. South Slope finished 2009 with $21,785,745 in revenue, down from $22,598,490 in 2008. Brumley said that, because of a difficult year, the company had also cut back on expenses, and has been able to end the year with a positive net margin of $379,397.
“I was tickled that we ended up in the black,” Brumley said.
Finally, as a sign of an increasingly competitive market, Brumley struck out against telecommunications companies– such as Mediacom– that have been producing negative marketing against South Slope.
“We have to charge what we do because we have to, not because we can,” Brumley said.
In contrast to the other companies, Brumely added, South Slope offers local, high-quality 24/7 customer service, something he said the competitors can not claim.