Give Us Visibility

With over 650 telecommunications’ operators behind last week’s letter that was sent to the FCC and their elected representatives, the rural telecom industry is as united as it ever has been. In the words of the letter,

“This letter is…clear and unambiguous notice of our collective concerns with the ‘regression analysis’ based caps on Universal Service Fund (USF) support that were adopted in the FCC’s November 2011 ‘Transformation’ Order and finalized in an order the Wireline Competition Bureau released in April 2012,”

In a nutshell, a central point of their argument reflects what economists call, The Permanent Income Theory of Consumption. That is, people or corporations consume or invest based on what they believe their future income streams will be. When the future is cloudy and income streams less clear, investors will tend to make fewer investments that require a long-term horizon.

In our travels this past year, we have heard anecdotes from the many rural operators that they have indeed cut back on capital expenditures due to the uncertainty and concern about how the rules could change in the future, so this letter isn’t too surprising.

“Moreover, this unpredictability, together with a concern that the ‘rules of the game’ can change so easily midstream, also will hinder our ability to access capital on reasonable terms.”

Whether the words in this letter and the continuing push by the rural associations and its member will affect legislative and regulatory change, particularly in an election year, remains to be seen.

Author Ken Pyle, Managing Editor

By Ken Pyle, Managing Editor

Ken Pyle is Marketing Director for the Broadband Forum. The mission of this 25+-year-old non-profit “is to unlock the potential for new markets and profitable revenue growth by leveraging new technologies and standards in the home, intelligent small business, and multi-user infrastructure of the broadband network.”

He is also co-founder of Viodi, LLC and Managing Editor of the Viodi View, a publication focused on the rural broadband ecosystem, autonomous vehicles, and electric aviation. He has edited and produced numerous multimedia projects for NTCA, US Telecom and Viodi. Pyle is the producer of Viodi’s Local Content Workshop, the Video Production Crash Course at NAB, as well as ViodiTV. He has been intimately involved in Viodi’s consulting projects and has created processes for clients to use for their PPV and VOD operations, as well authored reports on the independent telco market.

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2 replies on “Give Us Visibility”

Good article Ken. Wonder how many RLECS are out there now. Seems I recall there were around 1,000 a decade or so ago. If there are more than 650, curious why all did not sign up for this petition. Looked at the list and noticed my provder (One Source
Communications) was not on it. Also, the petition letter implied some RLECS have gone away (absorbed by another)due to CAPS…if so that letter should have listed them.

Keep up your good work Ken!

William (Bill) Fielding

Thanks Bill for the comment and the words of encouragement.

The last time I looked at the number of telcos in any detail, it was near 700. so getting 650 to sign a letter is an accomplishment. There have been quite a few mergers and acquisitions and, unfortunately, quite a few people have left the industry as a result. Some have suggested that the future may include some bankruptcies depending upon how the USF-CAF/Intercarrier compensation goes.

Much of this consolidation is taking place due to the need to reduce operating costs. Still, the long-term repercussions are hard to measure, as when the local telecom people are gone, what is lost are those people who have an understanding of the community and will fight to make sure their telecommunications’ infrastructure remains on par with urban areas.

I remember seeing this first hand as I toured a rural area with a telco employee that was part of rural ILEC/CLEC the late ’90s. The incumbent telco had centralized its engineering to a location a 1,000 miles away and no longer had “feet on the street”.

This former engineer, who had been downsized in favor of a centralized approach, took his local knowledge to the independent telco and together they built a new infrastructure. Given their distance from their customer and their indifference to their customers’ needs, customers were quick to move from the incumbent operator.

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