HOLLAND PATENT — In October 1904, Ellis Jones convinced 10 of his friends and neighbors to start a telephone company. The purpose was to follow the upcoming U.S. presidential-election results in real time by hooking up a small network. On Nov. 8, Teddy Roosevelt soundly defeated Alton B. Parker. In June 1905, the original concept
HOLLAND PATENT — In October 1904, Ellis Jones convinced 10 of his friends and neighbors to start a telephone company. The purpose was to follow the upcoming U.S. presidential-election results in real time by hooking up a small network. On Nov. 8, Teddy Roosevelt soundly defeated Alton B. Parker. In June 1905, the original concept serendipitously morphed into the Oneida County Rural Telephone Company (OCRT), which was incorporated in Holland Patent with Jones as the manager. In 1926, the same year that Westinghouse, General Electric, and RCA created the NBC radio network with 24 stations, Peter E. McCarthy bought the telephone company.
Fast forward 91 years to 2017. OCRT still offers phone service to its Oneida County customers, but Lily Tomlin, in her role as Ernestine on Rowan and Martin’s “Laugh-In,” is no longer at the switchboard. The company’s 21st-century automated phone system is now complemented by sister companies: Dreamscape Online, LLP, Northland Telephone, LLP, and Northland Network — all under the d/b/a umbrella of Northland Communications.
Northland Communications offers network services, such as fiber, Ethernet, and business broadband. It also offers voice for business lines; cloud services which include co-location, virtual servers, and web and email hosting; business phone systems; network design and consulting; and construction and cabling.
“What once was a rural-phone system is today a telecommunications-solution provider,” says Jim McCarthy, the enterprise president and the third generation of McCarthys to run the business with his sister Maureen McCarthy Tracy. “The company services customers in an area that stretches from Herkimer to Syracuse and includes more than 600 miles of fiber-optic cable laid by Northland to more than 1,000 unique building locations. Our consolidated companies now employ 100 people with 30 located in our 8,500-square-foot Syracuse office and 70 in our Holland Patent location, of which 15,000 square feet is dedicated to the office and another 12,000 square feet to a garage.”
The McCarthy family owns the stock in all of the Northland companies and is the majority shareholder in OCRT. Consolidated revenues this year are projected to top
$26 million.
“Our growth over nine decades has been largely organic,” continues McCarthy, “but we did make two acquisitions [during that period]. In 1995, the company bought the controlling interest in Dreamscape Online, the first ISP (Internet-service provider) in New York state to install DSL (digital subscriber line). This allowed us to provide converged services (voice channels and Internet connectivity over a single connection) to small businesses. Dreamscape also pioneered new technologies, including wireless Internet, remote-hosted virtual email domains, and SMTP (a technique used to store and forward communications at a later time). In 2001, we acquired Gaffney Communications, which added the company’s customers and Nortel’s product line and equipment to our sales division.”
Competition
Northland Communications is a David competing with Goliaths such as Spectrum and Verizon as well as cloud-based companies and competitors which pop up from time to time. Spectrum is the brand name promoted by Charter Communications, an American telecommunications company providing services to more than 25 million customers in 41 states. In 2016, Charter scooped up Time Warner Cable and Bright House Networks in a $71 billion deal that made the acquiring company the second-largest cable operator in the U.S.; the third-largest, pay-TV operator; and the fifth-largest telephone provider based on residential subscribers. Last year, Charter generated $29 billion in revenue. Verizon’s consolidated income statement for 2016 lists operating revenue of about $126 billion, of which $89 billion was generated from wireless revenue. The telecommunications giant covers 322 million people in the U.S., more than 98 percent of the population, spread over 2.4 million square miles. Since 2000, Verizon has invested $111 billion into its network infrastructure.
“We are able to compete with companies such as Spectrum and Verizon by focusing on integrating all of our services,” notes Maureen McCarthy Tracy, the company’s director of community relations/senior account executive. “This product bundling offers the customer … [one-stop] shopping without the need to deal with multiple vendors. Northland also focuses on certain vertical industries, such as the financial, health-care, and education sectors. In addition, the company is responding to the wireless-industry’s need for more small-cell [tower] technology. (Mobile network operators are adopting small-cell to place radios closer to users.) With the exploding demand for bandwidth, our strategy is to be fiber-rich. Our growth is focused on developing additional business from those geographic cluster areas where the company already has a strong presence and finding ‘anchor tenants’ which can serve as a base for further expansion.”
She continues, “But it’s more than bundling and smart marketing; it’s also emphasizing the personal contact available from a company with 100 employees versus one with 100,000 employees. Call our company and one of our staff answers the phone, directing the caller immediately to those who can solve the customer’s problem or question.”
Jim McCarthy stresses the company’s investment in expanding its fiber network. “Just in the past decade, Northland has spent $12 million to expand our cable capacity, most of which was self-funded,” avers the company president. “Thanks to a $3.29 million grant to OCRT from New York State’s Broadband Program Office, we are also converting a large portion of our Oneida County copper wire to fiber in order to bring high-speed, Internet service to rural areas in our 125-square-mile, telephone-service area. The project will be completed by the end of 2018.” OCRT has committed an additional $821,000 to the build-out.
Investing in employees
“Our investment in capital improvements is vital to Northland’s ability to compete,” opines McCarthy. “But just as important is our investment in people. Our strategy has been to promote largely from within, because we know the individual’s capabilities from … [his/her] track record. The employee also understands the ‘company proposition’ and how we operate. Fortunately, finding talented people here in the Mohawk Valley has not been a challenge to our growth. Judging by the longevity of the staff and recognition as a three-time award winner for Best Companies to Work for in New York state, Northland provides a great environment in which to work. The company also invests continually in ensuring that our employees are properly certified for the multiple functions they perform. Recently, we added emphasis on leadership development. Working closely with Ralph Simone of Emergent and the company’s Lead/Forward program, our goal is to create a bridge between organizational development and individual development to help our transition from a small business. Driving change at the leadership level leads to change in thinking and behavior at both the organizational and individual levels. The program has been instrumental in effecting change as we grow to a more sophisticated and complicated company.”
Industry trends
The main driver of the growing fiber industry is the insatiable demand for more bandwidth. Driving this growth are Web 2.0 companies’ large-scale data centers with worldwide, interactive websites; cloud computing; increasing mobile usage; medical imaging; the development of 5G networks; and the Internet of Things. The U.S. fiber market is responding to the demand based on the high number of broadband subscribers and low percentage of fiber connections. For example, in Japan, 73.3 percent of subscribers have fiber connections; in the U.S. the ratio is just 11 percent. Companies in the fiber sector recognize that the U.S. is in an early stage of the fiber-investment cycle. Corning, the world’s largest fiber-optic manufacturer is building a new $176 million plant and expanding another plant. This year, Verizon Communications, hedging against a possible shortage of fiber supply, signed a deal with Corning agreeing to buy $1 billion of cable. The deal also calls for Corning to sell Verizon up to 12.4 million miles of cable each year from 2018 through 2020. The contract requires Verizon to purchase a minimum of $1.05 billion annually.
The cloud currently stores more than 1 exabyte of data (1.1 trillion megabytes). Over the next five years, mobile-data consumption is expected to grow seven-fold, according to data provided by Cisco. The main driver is mobile-video consumption, projected to increase by 870 percent during the same period. The growing network of mobile devices, called the Internet of Things (IoT), is projected to reach 30 billion by 2020. The increase data traffic puts pressure on the cloud. For example, one connected-car transmits 25 gigabytes of data every hour. Engineers are currently developing fifth-generation networks (5G) capable of handling billions-of-bits per second from the current millions-per-second. The 5G-deployment will drive more demand for fiber-optic cable. “Trends in Telecommunication Reform 2016,” published by the Internal Telecommunications Union, reports that capital investment in fiber-optic infrastructure is expected to top $144 billion between 2014 and 2019.
Jim McCarthy, a native of Barneveld, is a 1993 graduate of Siena College and earned his master’s degree in telecommunications from SUNY Polytechnic Institute in 2001. He joined Northland in 1993, and as president focuses on strategic planning and development. He resides in Fayetteville with his family. Maureen McCarthy Tracy received her bachelor’s degree in 1996 from the Roy H. Park School of Communications at Ithaca College. She joined Northland upon her graduation. McCarthy resides in Marcellus with her family.
Despite competing with behemoths, the McCarthys are optimistic about Northland’s future. “In the past few years, we’ve been growing at an annual rate of 8 to 9 percent,” asserts the company president. “The key is to listen to our customers and understand their needs. Northland also needs to continually invest in a fiber-rich network that meets our customers’ demand. And finally, we need to be acutely aware that our success is built on long-term relationships with our customers, vendors, and staff.” With rising demand and a focused strategy, Northland is well-positioned for sustained growth.
