“People do business with People” was the common sense wisdom that Nancy White provided at the 2016 IP Vision Conference and Expo. In this single sentence, White, who is president CEO of rural TN broadband provider North Central Telephone Cooperative (NCTC), summed up one of the major threads of this multi-day event. That is, collaboration is important in developing new lines of business and revenue.
In White’s case, she explained how her company’s relationship with the local electric cooperative went from “bad to ugly to good.” By meeting regularly with their electric cooperative counterparts, she and her team changed the arc of what was a somewhat adversarial relationship to one where they have found common ground to bring broadband to a rural area outside NCTC’s existing service territory.
Mike Knotts, Director of Government Affairs of the Tennessee Electric Cooperative Association, explained how the electric grid is going through a transformation perhaps even bigger than what is happening in the telecom world. In simple terms, the grid is evolving from a one-way to a two-way network with a signaling system to control the flow of power generated from many sources at the distribution edge (e.g. wind, solar), instead of solely relying on central large power sources (e.g. coal fired plants).
The electric grid is also facing changes because of the regulatory environment (EPA emissions control on the aforementioned coal-fired plants) and these changes are forcing the entire grid ecosystem to adapt. These industry disruptions may represent opportunity for broadband operators as Knotts pointed out that the electric industry has access to capital and needs telecommunications expertise to sail through the rough waters of change.
Regulatory challenges and technological innovations are also driving change in the health care industry. Gerald Ackerman, Director of the Nevada State Office of Rural Health, suggested that there are opportunities for operators to tap into capital for building broadband networks that help health facilities deliver better care. Bringing the perspective of the service provider, Mendi Alexander, Economic Development Specialist for Nex-Tech, pointed out that their efforts to improve the local and regional health care helps their economic development efforts.
Again, panelists agreed local relationships, both at the management and board level, are a key to identifying and seizing new opportunities with other community-based organizations, such as hospitals, the aforementioned electric cooperatives and educational institutions. Ackerman suggested being proactive in this regard by joining organizations, such as state rural broadband associations. By having a regular dialogue, it will be easier to collaborate when sources of capital, such as RUS grants, become available.
Along these lines, panelists and vendors offered ideas for how to partner with 3rd parties to offer services ranging from managed video services over broadband to trucking logs to better bill collections. None of these are necessarily the “killer application”, but as JSI EVP, Leo Staurulakis, said in closing panel, “four back-to-back singles is the same as one home run.”
Geoff Burke, Senior Director of Calix Corporate Marketing, suggested that, instead of looking at the over-the-top as death by 1,000 cuts, operators should look at their broadband networks as creating an opportunity for 1,000 blooms. Along those lines, his central message of taking a customer-centric approach to business and owning the customer relationship will be important if operators are going to capture the full value from their access networks.
Understanding how rural networks will receive cost recovery under the FCC’s new rules for its High Cost Program for Rate-of-Return Carriers rules was thoroughly examined in multiple panels prior to the start of the show. This three-hour session provided an excellent deep-dive into the various aspects of the order and notice of further proposed rulemaking.
An important take-away from those panels is that it will be a scramble for the rest of 2016 as operators, working with their consultants, determine the best way forward with either a rate of return or Alternative-Connect America Cost Model (A-CAM) approach.The general consensus from the panelists was that between 30 to 200 operators will elect the model route of funding.
Still, there are many questions surrounding around the order, such as:
- how can broadband be defined differently depending upon density (with broadband being defined as low as 10 Mb/s downstream, 1 Mb/s upstream in areas with less than 10 homes/square mile, while it is 25/3 in more dense areas)?
- similarly, will the support level be sufficient if too many operators elect A-CAM?
Because of those and many other questions, the full impact of the order probably won’t be known for many years or even decades. One thing that is clear is that groups, like NTCA, and conferences, like IP Vision, will continue to foster the sort of industry collaboration necessary to ensure that rural areas have access to the same level of broadband as urban areas have.