Thinking outside the box — in this case, above the box — has helped Jeff Nielsen and Larry Stayner turn their companies into high-speed Internet providers with an important agricultural twist.

Nielsen and Stayner, who manage multi-location co-ops, have mounted radio-based Internet antennas atop their elevators so that their companies and their communities can take advantage of the possibilities offered by high-speed Internet communications.

Until their co-ops began providing Internet services, their communities were stuck on the slow side of the digital divide. That term — digital divide — is technology-speak for the reality that Internet services are limited to slow dial-up connections in many rural communities. The lack of high-speed access is becoming a competitive disadvantage, especially for businesses and individuals who need to rapidly transmit large amounts of data.

Nielsen, who manages United Farmers Co-op in Lafayette, MN, faced the issue every day as the 14-location co-op attempted to work as a cohesive unit. The product of several mergers over the past dozen years, the co-op is spread across seven communities in four counties in south-central Minnesota.

“One of the purposes of consolidation is to gain efficiencies by combining accounting and other systems,” says Nielsen. “You have to be able to communicate to do that.”

Feeding into a centralized accounting system was expensive and time-consuming. It required dedicated high-speed phone lines, FM radios and “the pony express, literally driving between locations,” adds Nielsen.

After being approached by a technology company trying to set up a regional high-speed Internet network, the co-op decided to tie its facilities together through the wireless, radio-based network, which was up and running in mid-2001.

“We had the vertical real estate, so placing the antennas was relatively inexpensive,” says Nielsen. “Our initial motivation was to improve internal communications. Based on our savings over land lines and FM radios, if all we did was put this up for internal needs, it would be less than a 10-year payback.” Providing Internet services to others would be gravy.

Stayner, who manages Farmers' Co-op Exchange in Prairie City, IA, is in much the same situation as Nielsen, with seven retail locations within a 65-mile radius from a central Iowa home base. The locations were — and still are — connected primarily with dedicated phone lines (one has a dial-up connection) costing about $2,000 a month.

When the co-op was approached by Prairie iNet in mid-2000 to use its elevators as antenna locations, Stayner could envision the possibilities for the co-op and the community by partnering with the nation's largest wireless Internet provider.

“We had several motivations,” says Stayner. “In small-town Iowa, we're not the number one target for high-speed Internet from the large providers. They look at us and say we are not worth their time. We were more excited about getting the service into the community than making a profit.”

Stayner had community relations in mind. “An elevator company can get a black eye because of dust and nuisance, so we wanted to balance that by bringing in technology that no one else is interested in providing. We want to be a good neighbor because agriculture's image isn't always the greatest.”

As a Prairie iNet reseller, the co-op has desktop information kiosks in each of its locations. It also has hosted Prairie iNet's demonstration bus to educate potential customers about high-speed Internet access and promotes high-speed Internet in its monthly newsletter.

“We are not making a large amount,” says Stayner. “But it requires less than a half percent of my time to market it, and we have pretty much zero investment. Prairie iNet handles all the installation and technology support.”

Stayner is considering linking at least some co-op sites through a secure Internet-based Virtual Private Network (VPN) later this year, which would allow the co-op to reduce use of dedicated land lines. (A VPN uses sophisticated encryption and other technologies to assure data security and to limit access to the network.)

“I am not cutting-edge when it comes to technology,” says Stayner. “Before we commit to this, we want to make sure it is the right technology for us as far as security, reliability and speed. I am leaning toward using a combination of technologies, including high-speed Internet.”

In Lafayette, Nielsen is pleased with the performance of his company's VPN, as well as the acceptance of high-speed Internet in the community, although there was a minor glitch when the co-op's technology partner filed for bankruptcy this winter.

“If we do not take a credit for the internal cost savings, we need about 400 outside users to break even,” says Nielsen. “We have about 200 users after marketing the service for about six months. We anticipated breaking even after two years, but we will break even within 12 months. It is spreading by word of mouth. The kids are really helping market this.”

Although marketing efforts have been low-key, the co-op has invested in a 10-computer training room to help educate customers on computer and Internet use — and stimulate customer interest. The training room and discounts for “early adopters” were paid for in part with a $165,000 grant from the Minnesota Department of Trade and Economic Development, which is attempting to bridge the technology gap between rural and urban areas.

“Our goal was not only to provide wireless broadband, but to provide training and information to help people use it,” says Nielsen.

The co-op's Internet business is run through a non-patronage subsidiary, Rural Technology Solutions (RTS). RTS coordinates sales and marketing, installation and technical assistance. Several co-op employees have been trained to handle service and installations, which has helped better utilize them during non-peak work periods. RTS also sells Dell Computers through an online store.

Long term, Nielsen sees tremendous potential for the co-op's high-speed Internet business.

“I think the profit potential is so great that it could be the number one profit center down the road” for the co-op, which has annual sales of $60 million, says Nielsen. “It expands us from the shrinking ag market to the entire community.”

Part of Nielsen's vision is tied to several pilot projects that use the network's information transfer capabilities. The co-op has begun experimenting with using the network for real-time transfer of yield data from customers' combines, which could help it better utilize variable-rate fertilizer technology during the busy fall season. It also has experimented with remote monitoring of grain bins and has been approached by a medical technology company about a pilot program to use its wireless technology to help improve rural medical care.

“Right now we are at the ‘this is cool’ stage,” Nielsen says. “We think we may be able to develop ways to use a communications network that we can sell to our customers and businesses outside our area in the future.”

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© 2007 Penton Media, Inc.