Native American Net Play - Company Business and Marketing

Industry Standard, The, Nov 20, 2000 by Tim Mccollum

On a reservation south of Phoenix, one woman heads a small tribal telco struggling to compete in the Internet Economy.

PAULA UGALDE REMEMBERS WAKing up her neighbors in the middle of the night to call the hospital when her youngest daughter suffered a seizure last year. Ugalde, a single Native American mother of three, had lost her phone service because she fell behind on her long-distance bill, and she depended on friends and the nearby community center in her village of Santan, Ariz., to make phone calls to doctors and her children's school.

"When I lost my service, I didn't know what I was going to do," says Ugalde, who lives on the Gila River Indian reservation southeast of Phoenix. "On weekends, it was hard because the center's not open and there were no pay phones nearby."

Last year, Ugalde got her phone back through a second-chance program offered by Gila River Telecommunications, a local telephone company owned by the Gila River Indian Community. GRTI, as it's known, is one of a handful of Native American telecommunications companies in the western United States bringing phone service to some of the last unwired corners of North America.

Now, GRTI is trying to push Gila River into the Internet era. Metropolitan Phoenix is spilling onto the reservation, bringing high-tech companies -- and their demand for high-speed connections -- to the community.

"Gila River is in a prime location," says GRTI general manager Belinda Nelson. "So GRTI is in a great position to deal with the many opportunities that are going around."

To take advantage of those new opportunities, however, the tiny 40-employee GRTI must overcome tribal infighting, scarce resources and its own limitations. Throughout its 12-year history, this small telco in Indian country has relied on federal subsidies and loans to provide phone service to the community, but that's not enough to build a profitable 21st century telecommunications business. Now, GRTI is going to find out if it can compete in the Internet Economy.

Driving along Maricopa Road on the reservation's northern border with Phoenix, Nelson points out the cars and charter buses that fill the parking lot at the Wild Horse Pass Casino, one of two casinos owned and operated by the Gila River community. Fueled by approximately $100 million in casino profits, Gila River is developing an economic oasis that encompasses Wild Horse Pass, the sprawling Lone Butte Industrial Park and a $10 million golf and hotel resort scheduled to open next year.

Turn off the main road, though, and Gila River's oasis gives way to fiat, sandy desert spotted with tiny rural settlements where more than 11,000 Pima and Maricopa Indians live. A decade ago, before the casinos opened, scarcely 600 homes in Gila River had phone service.

Nelson was GRTI's first employee after the tribe started the company in 1988. Now, she's the boss. A small, quiet but forceful woman, Nelson is charged with leading GRTI's transformation from rural phone company to modern telecommunications provider, driven by the Internet and Gila River's growing business community. "Economics is the main issue we face here," Nelson notes. "Most of our community members don't have the money to spend on telephone service."

GRTI extended phone service throughout the reservation, building a business that now serves 3,500 subscriber lines, nearly half of which serve business customers. It's also Gila River's sole Internet provider and satellite television company, and it owns a minority stake in a cellular business serving the Interstate 10 corridor between Phoenix and Tucson, 110 miles to the south.

In the process, GRTI has become both a lifeline to residents and the linchpin of the community's economic development efforts, creating a symbiotic, sometimes uneasy relationship between the company and Gila River's tribal government, which is GRTI's owner, regulator, largest customer and controller of the tribal budget.

"From our standpoint, we expect GRTI to provide services to the community," says Gila River's governor, Donald Antone. "But we're also saying at some point you have to be self-sufficient."

Gila River is typical of Indian reservations in the West, where many Native American households still lack phones and many communities lack emergency communications services. US West, the region's largest carrier, claims it can't recover the high cost of building facilities in many remote locations on Indian lands; over the years, the company has sold off more than 400 local telephone exchanges in its 14-state service area to rural telephone companies such as GRTI.

Frustrated with the lack of service on the reservation, Gila River leaders started GRTI in a joint venture with rural telephone-holding company National Telephone Companies, Natelco, in Oklahoma City; acquiring the US West facilities using loans from the federal Rural Utilities Service. GRTI bought out Natelco's interest in 1997.

GRTI took on more than it bargained for in its deal with US West, inheriting crumbling 1950s-vintage telephone facilities that were riddled with nondigital switches and decaying copper cable, and subject to frequent outages during heavy rains or floods.