Pine spent $32 million to upgrade its network with Huawei equipment, allowing Whisenhunt to expand wireless phone and Internet service to thousands of new users. The investment provided a vital boost to the local economy, helping launch new businesses and a vibrant tourism industry in a region suffering from a downturn in the timber industry.
Pine’s purchase is looking like a bad bet now, however. The U.S. government has called Huawei a threat to national security, saying the Chinese government could tap into Huawei equipment to spy on the West or disrupt critical infrastructure.
In May, President Trump signed an executive order prohibiting U.S. companies from purchasing telecom equipment from high-risk entities subject to the jurisdiction of a foreign adversary, a move widely seen as targeting Huawei. And last year, the Federal Communications Commission unveiled a proposal to block U.S. telecom and Internet companies from receiving federal subsidies if they buy foreign equipment that poses a security threat. Pine and other rural companies rely on those subsidies to make ends meet.
U.S. officials have provided few public details to back up their concerns about Huawei equipment, which Huawei says are unfounded. But the restrictions will prevent Pine from buying replacement parts from Huawei or accepting software upgrades, making the existing equipment unusable over time, Whisenhunt said.
Huawei remains a key sticking point in a larger trade dispute between the United States and China. Beijing has insisted that any settlement include relief for Huawei. Despite calling Huawei a threat, Trump has suggested that the United States could ease up on the company as part of a larger deal. Trade talks are expected to begin Thursday.
Whisenhunt says he trusts the government’s view that Huawei is a security risk but also believes the restrictions on doing business with Huawei could prove catastrophic for his business and the community.
“I believe the United States has the best spies, the best spooks,” Whisenhunt said from a windowless control room at Pine’s 1960s-era headquarters, where racks of Huawei computers direct the region’s phone calls and Internet searches. “If they say it, I’ve got to believe it. But if I rip this out, all these people here are not going to have Internet.”
Other rural telecom companies face a similar predicament. About a dozen small rural carriers have purchased gear over the years from Huawei or ZTE, another Chinese company that has raised security concerns, according to their trade group, the Rural Wireless Association. The carriers often bought the equipment with U.S. government subsidies intended to help bring Internet service to sparsely populated areas that larger telecom companies deemed unprofitable.
Replacing the gear would cost roughly $1 billion, the association says, and Pine and other small companies are calling for federal funding to help. “If not, rural America takes a hit,” Whisenhunt said, adding that it would take Pine years and tens of millions of dollars to strip its Huawei equipment off more than 140 cell towers.
At an FCC hearing in June, Commissioner Geoffrey Starks, a Democrat appointed to the commission by Trump, agreed that the government would need to help finance the work if a “rip-and-replace approach” is required. Bipartisan groups of legislators have introduced bills in the House and Senate to cover the cost. The Senate Commerce Committee approved a bill in July that would authorize $700 million for the work.
Huawei is attempting to counter the U.S. allegations with a public relations push. At a U.S. wireless convention last month, Huawei sponsored a discussion titled “Let’s Collaborate to Make America’s Communication Networks Safer.” Huawei also filmed a video at LHTC Broadband, a small telecom company in Pennsylvania, about the importance of rural Internet and is circulating the video around trade associations, according to LHTC chief executive Jim Kail.
Pine has been the main wireless provider in this corner of southeastern Oklahoma for decades, after AT&T, which laid many of the region’s copper landlines, declined to make the large investments in cellular infrastructure needed to bring wireless service to the area.
Pine dates to the early 1900s, when S.B. and Florence Callaham moved to the area to work for a network that eventually became Southwestern Bell Telephone Company. In 1911, they borrowed $500 to start their own telephone exchange in Broken Bow, a town founded the same year on land previously owned by the Choctaw tribe. Residents drawn by the burgeoning timber industry named the town after Broken Bow, Neb.
The next generation of the Callaham family turned the venture into Pine Telephone Company. Whisenhunt married into the clan and took over as general manager in the 1980s. “I’m an outlaw,” he jokes. His brother-in-law is chief executive, and his mother-in-law runs the front office.
The complexity and expense of running the network grew significantly in the late 1990s and early 2000s, as cellphones and the Internet took off. Far-flung homes waiting for service grew impatient. Some residents installed satellite dishes on their rooftops to get connected, but the signal often conked out.
Michelle Finch, co-owner of a local wine store and bottling operation called Girls Gone Wine, remembers the inconvenience of poor Internet service in those days. Her mother, she recalls, sometimes couldn’t send her pacemaker status report to her doctor through the glitchy home-satellite service she had at the time. “She had to take herself and her machine somewhere else to do it,” Finch said.
Around 2010, Pine decided it was time to upgrade the core equipment in its telecom network, which it had purchased from the Canadian company Nortel in the mid-1980s. Nortel filed for bankruptcy in 2009, so Pine started looking elsewhere.
Other big equipment makers, including Ericsson and Nokia, Huawei’s primary rivals, were focused on selling to larger telephone companies and didn’t offer low-cost deals to firms with relatively few users, Whisenhunt said. A former Nortel salesman who had moved to Huawei told Pine about the Chinese company, which offered substantially lower prices, Whisenhunt said. An Ericsson spokesman said the company offers “competitive” pricing. In an emailed statement, Nokia said: “We understand that some competitors have priced their offering very attractively to gain market share with rural operators in the U.S. We are not proactively offering to swap other vendors out but we are of course interested to work with the rural operators.”
Pine spent $32 million to buy a new system from Huawei, borrowing about half the money from the Rural Utilities Service, or RUS, an arm of the Agriculture Department that helps finance infrastructure projects. RUS, which also provided grant funds to Pine, signed off on Pine’s contract with Huawei, Whisenhunt said. RUS at the time generally required funding recipients to buy American gear but provided waivers “based on cost or unavailability,” the USDA said in a statement.
The impact of the new equipment was enormous for residents such as Jonathan Callaway, an entrepreneur who helps fellow members of the Choctaw Nation establish small businesses. Callaway uses Pine’s wireless Internet at work, via a WiFi hotspot device that taps into Pine’s cellular network.
The connection is fast enough to allow him to be online alongside his entrepreneurs, who stop by to draw up business plans and strategies for marketing their wares online. Pine’s service is “connecting us to the outside world,” he said.
Kelsie Jackson, who opened a local clothing boutique last year, said she depends on Pine cellular service to run her business. Jackson uses her cellphone to post photos of new merchandise to Facebook and Instagram, helping her reach customers in California, Colorado, Kansas and Texas.
Pine’s Huawei network also helped the region build a thriving tourism business that draws thousands of wilderness seekers annually from the Dallas area, a three-hour drive away. New restaurants, bars and cabin-rental businesses have sprung up to serve visitors, who come for the fishing, kayaking and hiking. Tourism has helped the region recover from a mid-2000s downturn in the timber industry that shuttered two local mills and left 12 percent of the population unemployed, according to Jimmy Westbrook, a commissioner for McCurtain County, where Broken Bow is located.
The $30 million tourism industry in the county is marketed mostly online, Westbrook said. “With social media and Facebook, in five minutes you can have something advertised all over the United States,” he said.
Trent Brown, a high school principal in the village of Battiest, Okla., population 250, makes extra money running a cabin-rental business out of his home, using a WiFi hotspot to book most of his reservations. “Without it, I wouldn’t be able to operate,” he said. Brown also took online courses to get his master’s degree. Pine charges up to $120 a month for wireless Internet, depending on the plan.
In an English class at Brown’s school, most of the students said they use Pine’s wireless Internet at home, though one girl lives in such a remote area that her family still relies on a satellite dish. “If it’s cloudy or kind of rainy, it’s gone,” she said of the service.
The cellphone tower serving Battiest is perched on a hillside a short drive from the school. On a recent afternoon, Whisenhunt steered his Ford pickup along a narrow dirt road to check on the site. Atop the tower, and inside a locked cabin at its base, sat $150,000 worth of Huawei computers, antennae and other gear. To Whisenhunt’s consternation, a family of ladybugs had made itself at home on the cabin floor.
The equipment transmits cellular service known as fourth generation, or 4G. An expensive software upgrade would allow Pine to update the system to 5G, a type of super-fast connection being rolled out in major cities. But instead of upgrading, Whisenhunt said he’s facing the likelihood of ripping out the gear.
“There’s no money left to replace it with,” he said. “I can’t go borrow another $30 million and still pay on the old $30 million. I’m broke.”