Created in Palmer in 1953, MTA has grown from a small local phone exchange into a multimillion-dollar moneymaker for its 38,000 members, CEO Greg Berberich told the Journal in a recent interview.

"We still follow the core mission statement," he said. "To provide affordable, reliable state-of-the-art telecommunications to our member owners."

MTA was born when a group of valley residents realized that none of the major telephone companies in Alaska at the time were willing to provide service to the remote reaches of the Matanuska and Susitna valleys north of Anchorage, Berberich said.

MTA's service area encompasses 10,000 square miles, stretching from Eagle River north to the town of Anderson and Clear Air Force Base just south of Nenana, and east along the Glenn Highway as far as Glacier View, near the Matanuska Glacier.

The cooperative employs about 350 people, including 40 to 50 temporary construction workers during the summer. MTA's capital budget for construction runs between $16 million and $20 million a year, Berberich said.

And it turns a profit.

In 2002 the margin of revenues over expenses was $8 million, he said.

Those profits eventually are distributed to current and former members of MTA.

"As a cooperative, we are required to return the 'patronage capital,'" he said. "We are currently on a 20-year rotation, so we take the margins that we earn and return those in the form of capital credit checks. Besides the 20-year margins, we also return some of the current year also."

In the past year the cooperative distributed an all-time record $3 million in capital credits, accrued from 1983 and a small percentage of current year earnings, he said.

MTA is also fairly heavily subsidized, through contributions from the federal Universal Service Fund. The USF is that bit of change that comes out of everyone's phone bill in America for distribution to rural telecommunications service providers.

"The government made that a mandate, in the Telecommunications Act of 1996, to provide universal service in high-cost areas," Berberich said. "That lets the folks in rural areas receive service at a rate comparable to the urban areas. And it's really a way to help keep the whole network alive."

Universal Service Fund payments accounted for 31 percent of MTA's revenue in 2002, totaling $19.7 million. The cooperative's net operating revenues for 2002 were $62.8 million and net operating expenses were $51.9 million.

The cooperative's balance sheet shows total assets and liabilities of $168.2 million.

'We know they're coming'

While it remains an old-fashioned local telephone cooperative, these days MTA is busy trying to stave off a plethora of competitors.

The past decade has seen the advent of high-speed Internet, satellite television dishes and a variety of cellular telephone options for consumers in MTA's market.

The cooperative has invested in developing a network and selling wholesale access to its connections to several wholly-owned subsidiaries, Berberich said.

In the telecommunications world, those are call "non-regulated" enterprises and MTA has five of them: Wireless (cellular service), long distance, Internet, business network services and digital television (DTV).

MTA is aggressively promoting DTV and a new feature coming up this year, Video on Demand, which allows subscribers to rent movies over the system.

The DTV package includes 195 channels and the Video on Demand will include "an extensive collection" of movies, said MTA public relations manager Jackie Whitstine.

Consumers will be able to rent a movie for 48 hours, but the price for the service is still being evaluated, she said.

"Those costs haven't been nailed down yet," Whitstine said. "But it will be comparable to going to a video store, and the convenience is much greater."

Berberich said the push to digital services is a natural part of MTA's evolution.

"What we're doing there is just leveraging our existing network," Berberich said. "I think MTA was a little ahead of the curve in terms of understanding where the industry was going with data and broadband."

He credited some "bright engineers" who developed MTA's cable and fiber optic system 15 years ago for MTA's current infrastructure. The company recently upgraded its high-speed Internet DSL service to 512k upload and download velocities.

But they are not the only game in town. Berberich said he is aware of moves by General Communication Inc. to develop a new product offering for local consumers.

"We recognize that GCI can compete anywhere they want today," he said. "They can go out and build facilities.

"I know they are working on their telephone over cable facilities, they can come out and do that today."

In 2001 GCI purchased Rogers Cable Inc., a cable TV provider serving Palmer and Wasilla. The system serves approximately 7,300 subscribers and offers 55 channels.

Ironically, MTA built the original cable system that was later sold to Rogers and eventually acquired by GCI in a $19 million deal.

And then there is the possibility that GCI will request to compete directly with MTA for basic, local telephone service.

Currently MTA has an exemption from such competition under provisions of the Telecommunications Act of 1996 because it is listed with the government as a rural service provider. But given the burgeoning population and demand for services in the region, that exempt status could change. Berberich said the next move is up to GCI.

"GCI would make a bona fide request to us to ... lift that exemption and enter into negotiations for interconnection, which is something we are anticipating very soon," he said.

At press time, GCI officials had not responded to requests from the Journal for comment on this story.