BusinessReport.com

It’s been more than two years since a Federal Communications Commission rule change forced Gonzales-based EATEL to abandon East Baton Rouge Parish, scoring a win for the enemies of competition and depriving EATEL of 50,000 new customers.

The trauma has largely subsided, while EATEL—which still maintains its Sunshine Pages directory service in EBR—has managed not only to survive but also make strides. The company’s revenue figure of $91.6 million for the 2006-07 fiscal year exceeds the previous year’s revenues of $90.7 million.

EATEL’s secret weapon, which really isn’t a secret, is the fiber optic network it continues to develop in Ascension Parish and lower Livingston Parish. The company has invested around $54 million so far in this state-of-the-art network, which provides fiber access to roughly 74% of the homes and businesses in Ascension and 6% in Livingston.

EATEL President Robert Burgess says Livingston, which has been sparsely populated historically, is becoming a more attractive market as development south of Interstate 12 heats up. EATEL doesn’t offer video service in Livingston yet, though it does offer phone and high-speed Internet.

“We just got approval from the banks to add more some more (capital expenditures),” Burgess says. “We’re going to start putting some fiber into Livingston Parish. We’re still expanding. We’ve been busy.”

EATEL is one of only two fiber networks in the state. The other serves a small residential community in North Louisiana. Burgess says roughly 1% of the fiber-connected customers in the country reside in Ascension Parish, while only 300 or so fiber networks exist nationwide.

“Not everybody can do it because it’s extremely expensive,” he says. “You’ve got to bet a considerable amount of your assets that it’s going to work, and you know what you’re doing.”

The fiber gamble seems to be paying off for EATEL’s owners, the Scanlan family of Gonzales.

“They pretty much bet the farm that this was the right future choice for them,” Burgess says. “They’ve got a history of doing that. They take very prudent financial risks. It was definitely a good move. It really helps anchor us for the future.”

Harris Miller, EATEL’s manager of switch engineering, says making the big jump from copper to fiber optics has been a learning process both for the EATEL’s technology people and the companies that make the equipment.

“We’ve worked closely with a lot of these manufacturers,” he says. “Maybe things look good in a lab or on a drawing board, but when you actually deploy it in the field you discover it’s not suited for South Louisiana’s humidity or temperature.”

Miller says EATEL feels “future-proofed” with its choice of fiber as a medium. While things like encoding and compressing information will continue to evolve, the fiber in the ground will be serviceable for a long time.

Meanwhile, the FCC ruling that giant telecom companies—the Baby Bells—could stop leasing phone lines to smaller companies like EATEL at wholesale in order to stimulate competition has made it much tougher on those smaller companies, known as Competitive Local Exchange Carriers.

“You just don’t see any more CLECs spring up like you used to,” Burgess says. “A few have stayed in the game, and they’re all struggling.”

If EATEL ever decides to again venture outside its traditional franchise territory or into other parishes, it will have to do so with its own facilities instead of renting them from BellSouth, now AT&T, a practice that became untenable after the rule change.

Does this mean we can expect EATEL to challenge Cox Communications in the Baton Rouge market again someday?

“We tell ’em just don’t forget our name,” Burgess says. “We may show up one day.”

On the other hand, don’t hold your breath. Burgess says the company’s immediate plans are concentrated on serving the two fastest-growing parishes in the state, while anything concerning EBR is far, far down the road—if it ever happens at all.

EATEL, in the meantime, continues to do its best to annoy Cox, one of the nation’s largest cable providers, by continuing to exist. Cox is doing its best to chip away at EATEL’s customer base on its home turf of Ascension Parish, while EATEL is doing everything it can to foil Cox’s aims.

That’s business. And that’s why, according to EATEL’s sales and marketing director, Brad Supple, “the network is everything.”

“We’re not going to compete on price,” he says. “They have deeper pockets to go out and promote heavier than we can. But we have our stronger network, and we try to educate our consumers.”

Being the little guy may be a disadvantage when it comes to things like marketing budgets, though it comes in handy in terms of agility, Burgess says.

“We can react quicker to market trends and competitive threats that we see,” he says. “For us, it’s a matter of survival. If Cox walked out of Ascension Parish today, it wouldn’t make a decimal point in their financial statement. I don’t have that luxury.”