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Wait for high-speed Internet hinders business in Iowa towns



By THE ASSOCIATED PRESS

CUMMING (AP) - Ed Jones runs a business known around the world for selling antique jukeboxes, but his expansion plans have run into a major roadblock - a lack of high-speed Internet access.

With a dial-up modem the only way to access the Internet in this small town, Jones struggles to buy and sell 1940s jukeboxes and their parts through online auction services and send pictures to prospective buyers.

Jones says his business, Jukebox Junction, is ready to do more on the Web, but high-speed Internet service is not available to him.

It recently took co-owner Kim Koepnick more than 15 minutes to e-mail three photos of a jukebox to a client.

"It takes forever and a day ...'' she said. "You have to wait. If your business is buying or selling, that's a huge fault.''

According to a new Iowa Utilities Board report, 330 Iowa towns lack high-speed Internet service. Among them is Cumming, a hamlet of 162 people just southwest of Des Moines and hometown of Iowa Sen. Tom Harkin, a leading champion of expanding broadband access.

Economic development officials say the lack of service drives away residents and businesses, much in the same way areas that were not connected to the electrical grid in the 1940s suffered.

Their plight has drawn attention from local officials all the way to President Bush, who has said that broadband Internet access should be universal by 2007.

Companies insist they must wait until demand is sufficient to pay for the costly service.

"The expense might be prohibitive in those very rural cases where to wire up the community would just not be profitable,'' said Bruce Leichtman, an industry analyst who runs Leichtman Research Group. "It is a distinct minority that does not have access - but I wouldn't want to be in that minority.''

Dave Duncan, president of the Iowa Telecommunications Association, said the state's 150 independent phone companies are expanding as quickly as demand grows, but he acknowledged the wait can be frustrating.

He said many companies were updating their lines "even before there is a ton of demand there. They're preparing for the future.''

The Federal Communications Commission said last month that the number of residents and small businesses with high-speed Internet connections had surged by 15 percent in the first six months of 2004 to 32.5 million.

That report showed Iowa second only to South Dakota in the percentage of ZIP codes where no company offers high-speed service.

But state officials say the recent report from the utilities board shows Iowa has come a long way in just four years.

The report found that 73 percent of Iowa communities offered some form of high-speed Internet access - DSL, cable modem or wireless - as of July 2004. That was an increase from 2000, when only 42 percent of cities and 28 percent of rural communities had access.

"The progress we've made in the past few years is impressive,'' said Tina Hoffman, spokeswoman for the Iowa Department of Economic Development. "We have 73 percent of our state where entrepreneurs can get this kind of access from their home if they want to start a business.''

About a third of the remaining communities are expected to have high-speed Internet access by July 2005, according to the report. That growth is largely fueled by Newton-based Iowa Telecom, which plans to offer DSL service in all of its service areas by July 2005.

Company spokesman Dan Eness said the $17.4 million initiative was being paid for by an increased rate in telephone services. The company charges $35 a month for basic DSL, he said.

He said the expansion would help the company keep its network current so that new services could quickly be offered in the future.

"It's really an investment that will pay returns later on,'' he said Friday, as the company notified seven more Iowa communities that DSL service was available. "If our communities are experiencing economic growth...that ends up being good for the company. We want those communities to thrive.''

Leichtman said Iowa's largest local telephone service provider, Qwest, has lagged behind its rivals in deploying DSL service as it dealt with an accounting scandal.

"With that said, they have made some significant leaps in the last six to nine months,'' the analyst said. "They're playing catch up.''

Leichtman said the solution in some areas might be satellite Internet service, just as satellite TV has reached rural areas that cable companies refused to serve.

At Kaufman Construction in Cumming, the company bought a satellite dish to get the Internet, but is dissatisfied with the service.

"When we got this, we were told that it was our only option,'' said general manager Scott Spetman. "I don't imagine it's any faster than a dial-up connection.''

He said the dish often cannot receive a signal on cloudy or snowy days and the service cannot handle the size of some construction drawings.

Regulators cannot force companies to serve any area, but Sen. Harkin, a Democrat, helped secure $2 billion in federal loans in the 2002 farm bill to dole out to companies interested in offering the service.

Harkin has complained that the U.S. Department of Agriculture has poorly managed the program with "tightfisted lending policies,'' and about $1.4 billion is still available for companies. Only two Iowa companies have received aid under the program, his office said.

Harkin said last week through a spokesman that he's frustrated his hometown, just minutes southwest of the sprawling Des Moines suburbs, is being left behind.

"It takes me less than half an hour to drive to Des Moines from my home in Cumming, yet folks in Cumming do not have access to broadband technology,'' Harkin said. "The lack of broadband access in many parts of Iowa is hindering our ability to foster economic development and growth and leaving many rural areas of Iowa behind.''

Jones said two small businesses who wanted to rent space from him declined to do so after learning of the lack of high-speed Internet.

"It's the 21st Century version of rural electrification, only now it's high speed linking to the rest of the world,'' he said.


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