Building a new cooperative.

Author:Zager, Masha

Deep in the Michigan woods, 300 families are preparing to celebrate the arrival of telephone service. After years of trying to persuade telephone companies to run lines into their unserved area, residents finally decided to take matters into their own hands and form a telephone cooperative. Their new company, Allband Communications cooperative (Hillman, Mich.), is one of only a handful of cooperatives created since the 1950s.

Starting a new telephone company was no simple task. John Reigle, the driving force behind the cooperative and now its president, said it was just slightly easier than quitting smoking. Reigle has been working on the project since 1998, when he discovered that GTE, the incumbent provider, would not provide phone service for the house he had just built inside GTE's service area, and that his only option was wireless service, which was far too unreliable to use for his home-based consulting business.

Frustrated because he had relied on GTE's assurance of phone service, Reigle filed a complaint with the Michigan Public Service Commission (MPSC). He learned that the area he lived in--177 square miles with plenty of pine trees but no towns--was the hole in the doughnut of GTE's service area and one of about 30 unserved areas in the state of Michigan.

MPSC had been working for years to convince large carriers to extend phone service into remote areas by offering incentives or support. However, when persuasion failed, as it did in this case, the agency could not force a company to provide service. Instead, it put Reigle in touch with Ron Choura, who has taught in Michigan State University's (MSU) telecommunications program for nearly three decades. Choura suggested that Reigle start his own phone company.

Reigle began attending Choura's classes at MSU on evenings and weekends, learning all he could about telecommunications. His quest became a class project; over several semesters, Choura's students created a business plan and strategy for the new company.

The first step of the strategy was to find seed capital. In 2001, the Michigan Economic Development Corp. LinkMichigan initiative offered MSU a $212,000 grant to study communications in eight rural counties. MSU set up a research center called M-SITE (Michigan State University Site for Information and Telecommunications Experimentation) and assigned students and faculty to work on several projects. One of M-SITE's first projects included the engineering, accounting and legal...

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