By Alan Prendergast
By Michael Roberts
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By Melanie Asmar
In 1995, Ken Swinehart realized that US West's neglect of the San Luis Valley had given him a good business opportunity. Although the gigantic phone company was busy installing fiber-optic lines to provide high-speed Internet access and other services along the Front Range, it couldn't be bothered to do the same thing in the San Luis Valley. There were too few customers to make the service profitable there, claimed the company.
Swinehart knew that many of his neighbors in Alamosa and other parts of the valley were frustrated by the long waits they experienced when using the Internet. The aged telephone wires that served the area were never intended to carry the massive amounts of information made available online, and trying to use the technology that was transforming the world was a humiliating experience for rural Coloradans. Even worse, rural business owners feared that they wouldn't be able to conduct business over the Internet -- a possible threat to their economic survival.
With a background in engineering, Swinehart figured that if someone could offer high-speed Internet access to the valley, many people would be willing to pay extra for the service. That someone was him.
Over the next few years, Swinehart rented space on US West's wires and installed his own system of servers, which allowed him to offer high-speed Internet access to people who lived within a few miles of each server. His Alamosa-based company, Amigo.net, now has 5,000 customers and serves a far-flung territory that includes Leadville, Salida, Cañon City, Steamboat Springs and Craig. Recently, the company started building a wireless network that will offer even more high-tech services to rural areas. Amigo's customers pay $60 to $80 per month for the Internet access.
"The lack of concern from the big corporations was a benefit to us," Swinehart says.
But now he believes that the state of Colorado, acting in concert with US West's successor Qwest, may be about to put him out of business.
Last year, Governor Bill Owens made a splashy announcement that the state would initiate a public-private partnership to bring high-speed Internet access to every county in Colorado. Plans call for the state to invest $37 million in a "multi-use network" to link rural schools, hospitals and courts with broadband lines being installed by Qwest. As part of the deal, Qwest and its partner, Cisco Systems, are adding $60 million of their own money to build the system. The state will use about 20 percent of the new line's capacity when it is completed in about two years, while Qwest will market the rest to private users.
"They're saying: 'We're going to bring high-speed Internet access to the San Luis Valley,'" says Swinehart. "But we've had it for four years."
Ironically, just as Qwest is stringing its new cables around the state, it's also selling off many of its rural territories, including the San Luis Valley, to other phone companies. But Swinehart says that whoever winds up owning the local phone lines will be able to offer DSL and other high-tech services at half of what he charges.
"When the state gives $40 million to Qwest, that capitalizes my competitor," says Swinehart. "You're giving it to the wolf who's going to eat up all the chickens in the henhouse."
State officials acknowledge that the new network may affect small companies like Amigo. But they say they want rural residents to have the same services as urban residents, and at a similar cost.
"There's probably not an area of Colorado that can't get some kind of connectivity if they're willing to pay the price," says Jerry Smith, deputy director of the state Department of Local Affairs. "It probably is factual to say the state is bringing a new level of competition to communities, but I don't think the state is determining winners and losers. It's not dissimilar from large stores competing with mom-and-pop stores. Local customers will have more options."
Smith says offering affordable telecom service to rural areas is vital, and will help lure new jobs to parts of Colorado that have missed out on the decade-long economic boom. Many employers cite the lack of sophisticated telecom services in rural areas as affecting their decisions to expand along the Front Range rather than in more remote spots. "In the future, there will be more incentive for bigger companies to enter local areas," predicts Smith.
He also notes that the program was approved by state legislators, many of whom represent rural Colorado. "This was a policy decision made by elected officials. There are ramifications to any public policy."
That's little comfort to Swinehart, who grew so disenchanted with the political decisions being made in Denver that he ran for a seat in the state house last fall. Though he lost, he had an interesting encounter with Owens, a fellow Republican, during the course of the campaign.
He says Owens visited Alamosa to tout the high-speed Internet service. "I got up at a meeting and unrolled a map and I said 'Governor, this is the non-existent network you're talking about.' He said, 'Sometimes you have to do what's good for society, and some companies may have to fail.'"