The highly-anticipated industry consensus plan for USF Reform, the America's Broadband Connectivity Plan (ABC Plan) was filed today by a group of the nation's large- and mid-sized ILECs with the support of USTelecom. RLEC Associations NTCA, OPASTCO and WTA approve the plan (although they have not "signed on" specifically), which is a USF reform solution for price-cap carriers, but some rural carrier groups such as the Rural Broadband Alliance and the Rural Telecommunications Group are much less enthusiastic about it. The Rural Associations are hoping that the ABC Plan will work in conjunction with the RLEC Plan submitted back in April, and they were involved in the negotiations for the ABC Plan--the ideal outcome would be for the ABC Plan to apply to the large- and mid-sized carriers, while the RLEC Plan would apply to RLECs. While I expected that the industry plan would not satisfy all members of the rural telecom industry, I hope that the dissenting groups are able to work with the FCC and industry in the coming months in order to reach a more inclusive consensus. My take is that the groups who were not directly included in drafting the ABC Plan feel underrepresented despite the fact that they indeed represent very important members of the rural broadband industry.
I am not going to rehash the details of the ABC Plan today, but rather I just wanted to take a minute to express my first impressions and overall perspective on this plan. I encourage you to read the plan yourself and generate your own opinions as well. In an industry of over 1,000 rural telecom providers, I do not expect that everyone is going to feel the same way, and some companies may see it as a huge loss while others see it as a victory, especially compared to some of the alternative proposals (like the FCC's original NPRM). I personally fall in the latter category--I believe that the ABC Plan is a win in the sense that it could be much worse.
By avoiding a "hard cap" on the high cost fund and by retaining Rate of Return (albeit at a slightly lower rate) and the current levels of high-cost funding for RLECs, I believe that RLECs will be able to transition smoothly into the future without some of the drastic, "end of the world" outcomes that have been described during this rulemaking process. Under the assumption of using the ABC Plan in tandem with the RLEC Plan, I would not expect widespread stranded investment, rural communities "going dark," or private lenders fleeing from the industry. I think the two plans together allow for at least some certainty going forward, while also controlling the size of the fund and encouraging rural companies to focus on broadband deployment. I am very pleased that reverse auctions are not recommended as the primary means of support distribution--I consider this a significant victory.
The biggest loss in my opinion is the eventual transition to an industry-wide, uniform $.0007 access charge rate. Allegedly, the large carriers would not budge on this recommendation, but the rural carriers may have a longer transition time frame. I do not think that this rate accurately compensates rural telecom providers for use of their networks, but this is probably just going to be one of the things that RLECs will have to adjust to in order to survive. I do not feel as though RLECs who receive over 50% of their revenues from ICC and USF are especially sustainable long-term, and I hope that if these companies know that they will eventually be losing a significant chunk of ICC revenue and they will look into other innovative sources of non-regulated revenue in emerging technologies (kind of a "wake-up call" of sorts). After attending the Telecom 2018 Workshop yesterday, I am well-convinced of the trend towards all-IP networks and I believe that RLECs need to embrace, rather than reject, the ultimate demise of the circuit-switched PSTN. However, those IP-networks still must be payed for with initial and ongoing capital, and RLECs must have investment recovery certainty in order to upgrade to all-IP infrastructure. I am not sure that the $.0007 access rate will provide much investment recovery certainty.
This is by no means a complete perspective on the ABC Plan, but these are my initial reactions. I am still contemplating the proposal for a second, smaller Advanced Mobility/Satellite Fund (AMF)--on first glance, this component of the plan seems insufficient and detrimental to small rural wireless carriers. I really don't have much to say about the large ILEC's desire to use the forward-looking cost model. It appears as though at least approximately $1.9b of the high-cost fund will be dedicated to RLECs with the remainder for price-cap carriers. Overall, I am pleased with the apparent recognition in the ABC Plan that RLECs and price-cap carriers have drastically different investment strategies, competitive objectives, funding sources and customer needs; and there needs to be separate USF mechanisms for large and small carriers.
The ABC Plan framework is available to read here, and there are several supplemental attachments about the forward-looking cost model, the .0007 access rate, and the FCC's legal authority as well.
Have a great weekend!
Friday, July 29, 2011
Wednesday, July 27, 2011
If USF Reform was on Facebook, its status would definitely be “It’s time to come to an end,” as FCC Wireline Competition Bureau Deputy Chief Carol Mattey said today. My status says something to the effect of “I guess I won’t be sleeping in August.”
The OPASTCO summer conference was in Minneapolis this week, and as much as I wanted to make the trip out to my former homeland, it was just not in the cards for me this year. However, I was able to listen in via conference call to one of the general sessions today (July 27)—I was especially curious about Carol Mattey’s “Update on NPRM and Broadband Deployment” (meaning the USF NPRM, of course). We are currently at the point in time that I am obscurely calling the end of the beginning of the end. An industry consensus plan by large carriers will be submitted by the end of the week, ensuring that I will have a wonderful weekend. According to Mattey, the FCC is already working on the final draft Order for USF Reform. There will be a short window of time in August for companies to file comments on a Public Notice outlining alternative plans from the industry, and then the FCC will quickly move on the final rules. Mattey said “we will move forward this fall, I’m confident.” So RLECs, get your lawyers ready!
Much of what Mattey said has been covered to death on Rural TeleCommentary, so I’ll try to focus on new developments and interesting perspectives from the Wireline Competition Bureau’s Deputy Chief. She compared the efforts to resolve USF reform to the current situation in Congress with the debt crisis—both resolutions require shared sacrifice, a realistic attitude about the economy, recognition that we are running out of time, and knowing that “a decision is better than no decision.” She mentioned that the fact that Congress is considering raiding $1b from USF for the debt signals the critical need for fiscally responsible USF reform. On that point, I agree with her. If the entire USF fund was utilized efficiently and fiscally responsible, Congress might not even look at it as a stack of cash hidden under the mattress. However, I still don’t think that the members of Congress who made this recommendation actually understand anything about how USF works, so in my opinion the entire idea is still bogus and far-fetched. She definitely made a good point about the need for shared sacrifice and realizing that any decision is better than no decision though. I feel like I have had a pretty realistic attitude about USF reform since the beginning, despite being highly biased in favor of RLECs. I know that not every RLEC is a model of fiscal responsibility and efficiency, and I know that not every RLEC is evolving with the times and technologies. But these types of characterizations can be found in any industry, sector, city or community; and it is not ideal public policy to punish an entire subset of an industry just because a few players aren’t living up to their potential. Anyway, “shared sacrifice” does not need to be sacrifice shared only by the RLECs. VoIP providers, large carriers, content providers and even consumers need to suck it up and do their part to make sure that every American has broadband.
Mattey talked about the inherent problems with the current system, and I breathed a sigh of relief when she did not mention that rural telecom provides are rife with waste, fraud and abuse. I guess she knew her audience! She actually focused more on the abuse and arbitrage in ICC, which I am glad someone is talking about. She said that there are new forms of arbitrage popping up all the time, and “the status quo of uncertainty [over ICC] will only get worse.” Without going into detail, I have been very troubled by some recent new arbitrage schemes and I feel like there are malicious companies out there who are basically seeing the FCC’s delay on reform as an open window for arbitrage. The refusal to terminate calls in rural areas is one issue that has drawn attention lately, and there are others as well. Mattey said, “doing nothing is not an option,” and she insisted that ICC will be reformed in one fail swoop along with USF. For me, ICC is one of the most mind-boggling aspects of telecom policy in general, and it has taken me quite a while to really even become comfortable writing about it. I completely agree with Mattey that things are going to get worse if the status quo is maintained, and I definitely agree that any decision on ICC is better than no decision—however I do not want the ICC decision to include .0007 or bill-and-keep. I guess this is where the “shared sacrifice” comes in—RLECs may have to move to a .0007 rate in the future, but we may also get the security of not having to deal with those brutal arbitrage schemes. I personally don’t know if not worrying about arbitrage is a big enough positive force to overcome the millions in lost access revenue, but this is where USF/ICC compromise gets dicey and why every single sector of the telecom industry is involved and why there are so many vastly differing opinions on what the outcome should be.
Mattey talked about the possible framework for the final USFUSF support. She referenced the Joint Board’s proposed separate Mobility Fund, but I wasn’t clear on whether or not she thought it was going to be part of the proposed final rules. She thinks the FCC will eliminate the Identical Support Rule, and she indicated that reverse auctions are still “on the table” for mobile broadband. Is this good news? Again, I was unclear on that. She specifically said reverse auctions for mobile broadband, which is an idea that I have reluctantly gotten used to ever since last year’s Mobility Fund NPRM. I really wished that the concept of reverse auctions had never been invented, but in an effort to keep with the spirit of “shared sacrifice,” I have surrendered to the fact that they are most likely going to be used in some capacity under this new USF regime.
Moving on, Mattey said that there will be ongoing support for areas that need it, and that Rate of Return should be improved and enhanced rather than eliminated. I heard a few weeks ago at the Save Rural Broadband press conference that RoR has been saved, at least for now, and that definitely makes me happy. How will the FCC “improve” RoR? That is still unknown, but Mattey said the FCC is looking at all of the various alternative plans that were submitted by the Rural Associations, Joint Board and industry.
So, what’s the deal with the highly anticipated industry consensus plan? I’ve been on pins and needles all week waiting to hear more about it, but so far I haven’t been very optimistic about the few tidbits I have received. Connected Planet ran this helpful story yesterday: Financial Analysts: Large Carriers will Recommend Cost Model for Broadband Universal Service Program. The proposal is apparently the baby of AT&T, CenturyLink, Frontier, Windstream, FairPoint and USTelecom and it includes the dreaded .0007 access charge reduction over the next 5 years (bad), making VoIP pay access charges (good), “creating an access charge replacement mechanism for rural telcos” (good), keeping the High Cost Fund at the current level (bad), phasing out high-cost support for wireless carriers (bad for them), and “shifting much of that funding toward high-cost areas where the incumbent is one of the larger telcos (really bad). The Connected Planet article noted that “if the large carriers’ USF reform proposal materializes in the form anticipated, it will be at odds with a previous proposal filed by several rural carrier organizations.” The Rural Associations want a longer transition for phasing out access charges, they want a “restructure mechanism” to partially replace lost revenue, and “the rural telco groups do not want broadband Universal Service funds allocated on a cost model or a reverse auction basis, but instead want it to be calculated in a manner similar to how high-cost areas are funded today.”
I’ll stop short of commenting further on the industry plan until I actually read it, but it definitely sounds like it is better than the FCC’s proposal but not as good (for RLECs anyway) as the Rural Association or Joint Board proposal. The good news is that RLECs will have the opportunity to comment on the industry plan (quickly anyway) and then hopefully we can move towards the actual end of this whole ordeal and finally get some regulatory certainty established. Take note RLECs: Mattey said that the FCC does not want to see a “general rehashing” of the arguments that have already been submitted in comments and ex parte filings, so start thinking creatively and coming up with new ideas.
There is a lot of debate about whether or not regulatory uncertainty is worse than a really bad outcome on USF reform rules. I personally think that regulatory uncertainty is worse, because at least rural telecom providers can try to adapt to changes once the rules are released. Hanging out in USF Limbo is becoming more and more expensive, challenging and dangerous with each passing day. If the final rules are indeed the “worst case scenario” for RLECs, it will be necessary for these companies to start thinking with a “survival of the fittest” mentality.
I am really excited about an event I will be attending tomorrow: the Telecom 2018 Workshop, about the proposed end date for the PSTN. I’m really looking forward to some great technical, policy and economic debates about this highly controversial recommendation! There was also a really great event yesterday in Rudd, Iowa: RUS Administrator Jonathan Adelstein visited this rural farming community in North Central Iowa to talk about the importance of rural broadband for agriculture, health care, education and the future of rural communities. He commended the progress of OmniTel Communications, an Iowa RLEC which is currently undergoing a $35m FTTH expansion project funding in part by RUS loans. I listened to Adelstein's speech and found it very empowering for rural broadband providers--he is definitely a wonderful advocate and I am really proud of the Iowa Telecom Association, The Great Disconnect (the Iowa version of Save Rural Broadband), and OmniTel Communications for bringing such a great leader to rural Iowa for this event.
P.S. I’m still looking for someone to submit an interesting story about the history of their rural telecom company! It is a great opportunity to inform people about the rich and diverse background of the rural telecom industry, the challenges we have faced over the last 130 years, and why small local telecom providers are important for rural communities.
Saturday, July 23, 2011
A few weeks ago I came across a hidden gem that is probably not well known outside of the Iowa RLEC circle- Lines Between Two Rivers: A History of Telephony in Iowa. This 600-page book was compiled in 1991 by the Iowa Telecom Association (ITA), and dedicated “to those Telephone Company Pioneers who gave their blood, sweat and tears in order to provide an outstanding telephone system to the citizens of the great State of Iowa.” I actually learned about it from a footnote in ITA comments, and I immediately looked for it online where I found a used copy via Amazon.com. It looks like the copy I ended up with came from the Keosauqua Public Library and was marked “Discard” which makes me feel lucky to have ended up with it. In the back, it says that it was a gift for Van Buren Telephone (also in Keosauqua) in August, 1992. There are a few copies available on Amazon still, so I encourage you to grab one if this book sounds interesting (price ranges from $34-$95). If you love history and particularly telecom history (like me), definitely get it.
Lines Between Two Rivers include short histories of every rural telephone company in Iowa—almost 150 companies in 1991. The stories were submitted by the companies, and include extremely interesting and amazing tales of the early days of telephony going back to the late 1800s. I’ve been trying to read a couple stories every night, so it will probably take me awhile to get through the entire book. Meanwhile, I thought maybe I would put my B.A. in History to good use by investigating and publishing historical accounts from other rural telephone companies outside of Iowa. RLEC readers: I would like to hear stories about how your company was started, the early challenges that it faced, how it grew, technology milestones, and how you managed to stay in the business for 100+ years. I know there have to be some great stories about battles with AT&T in the old days—my own company’s history has proved that, as well as some stories in my favorite book The Master Switch. I’m really interested in family-owned RLECs and the “extremely rural” companies that laid it all on the line (literally) to provide telephone service in the most daunting geographic areas of the country. I’d love to see pictures, maps, old bills, anything! Please e-mail me at firstname.lastname@example.org if you would like me to share your RLEC’s history on Rural TeleCommentary. In addition to your history, I would like to know your future—how is your company going to evolve in order to stay in business as our industry faces increasing and intimidating regulatory, financial and competitive challenges?
I think that posting histories of rural telecom companies will tie into my advocacy efforts here on Rural TeleCommentary by helping to personalize the companies—I know I have readers “inside the Beltway” who have possibly never visited a truly rural area and who would (maybe) love to learn more about the background of the RLEC industry. I hear criticism of DC-based telecom regulators and lobbyists all the time; that they don’t really know what a rural area means because they never go any further than the Greater DC Area. Why not help them understand rural telecom better by depicting the challenges RLECs have gone through to bring telephone and broadband service to the most rural and remote people in America? I also have a more sinister goal here, which is hopefully not too grim of an analogy, but I see this as a way to “humanize the victim.” People are told that if they are ever in the unfortunate situation of being kidnapped or attacked, they should blurt out information about themselves (I’ve seen it on TV anyway, and Silence of the Lambs), in order for the attacker to see them as real people. RLECs are under attack from the FCC and now Congress, as well as competitors, so maybe if we let them know that we are more than just wasteful, inefficient pieces of technology scattered around rural backwaters, they will be more understanding. It’s a long shot, but it might be fun to try at least.
Meanwhile, here are some excerpts from Lines Between Two Rivers that I have been particularly impressed with.
- Ace Telephone Association (now Ace Communications, Houston, MN) came together as a collection of smaller farmers’ telephone companies in 1949 to improve telephone service in the area: “The biggest single reason for the local enthusiasm at this meeting was the recent amendment of the REA Act of 1936.” Apparently, not much has changed since 1950 regarding business incentives to build communications networks in rural areas: “The tremendous cost of bringing telephone service to the hilly, rural, area in southeastern Minnesota and northeastern Iowa had taken all the initiative out of the private telephone companies as well as the Bell system.” My favorite part of Ace’s story was that the switchboards were actually located in the home of the operator, and “manned 24 hours a day and seven days a week.” Area residents would actually come to the operator’s home to make calls—can you imagine? That is definitely true customer service.
- Amana Society Service Company indeed has a rich history, which I assumed it might. The Amana Colonies were settled in the 1855 by German Pietists, and telephone service came fairly shortly thereafter: “When news of Bell’s 1876 invention reached the community, they could see the practicality of telephones in the villages. The Amana people decided to build their own telephone system. They often copied or modified national brands for their own use, rather than purchasing them. So, in 1880, after studying the subject of telephony, Friedrich Hahn Sr. (1843-1917) of Middle Amana, a cabinet and clock maker, build a magneto telephone. He built the walnut cabinet, as well as the generator, switch hook, ringer movements and induction coils inside the cabinet.” He built all of this himself! Next time I am in Iowa (October probably) I am definitely going to make a point of visiting the Amana Colonies Heritage Society Museum to check out this phone, and eat some delicious German food.
- Arcadia Telephone Cooperative (Arcadia, IA) started in 1884, and in the early 1900’s their telephone switch was located in the front room of a funeral parlor.
- Ayrshire Farmers Mutual Telephone (Ayrshire Communications, Ayrshire, IA) struggled during the Great Depression: “Wages of employees were reduced and much emphasis was put on past bills. Also a new rule was made, ‘When toll bill reaches the amount of $2.00 service will be discontinued until too bill is paid.’” Things turned around eventually, and the company “entered the 80’s with a very comfortable feeling—digital office, all buried, one party service, owned toll facilities to and beyond our boundary lines, recently converted to a cost company so the revenues were good. Yes, a real tranquil time!” Ayrshire noted that after the AT&T breakup, they were “bombarded with consultant classes, seminars, etc., all hoping to re-educate the company staff members to a new and different telephone world.”
- Barnes City Cooperative Telephone Co. (which appears to be no longer in existence) described the multi-faceted role of the telephone operator: “It was not unusual for the telephone operator in the days of the magneto or common batter switchboard to be the central point of information about how to cook certain things or have recipes to share about baking, etc.” During WWII, the operator also had to deliver the news to families when a soldier died in the war.
- Butler-Bremer Mutual Telephone Company (Butler-Bremer Communications, Plainfield, IA) shared an interesting story about small vs. Bell in the 1930s. The company’s secretary for 30 years, Senator J. Kendall “Buster” Lynes, “formulated the strategy which enabled the company to virtually force the Northwestern Bell Telephone Company to sell its telephone equipment in Tripoli to the Butler-Bremer Mutual Telephone Company. This is probably one of the only cases on record of such an occurrence—the giant of the telephone industry being defeated by a tiny David!”
- The location of early switchboards was really interesting. So far I have read of switchboards being located in candy stores, ice cream parlors, grocery stores, funeral homes, banks, feed mills, meat markets, the operator’s home, post offices, and basically anywhere you can think of in a small rural town.
I will definitely continue to share exceptional stories from Lines Between Two Rivers here as I read through the book. I hope that some of my readers take the time to submit their own stories because I think it would make a really great addition to Rural TeleCommentary.
Hopefully everyone has survived the heat wave this week!
Tuesday, July 19, 2011
July 13-19, 2011. Washington, DC: 7 days, 3 great events, and one exhausted blogger!
There is no denying that basically every stakeholder in the telecom industry has strong feelings on USF, but as we move closer to a rulemaking there are still very few indications that the industry agrees on anything except the overall goal of USF reform: bringing broadband to all Americans and transitioning away from a PSTN-focused subsidy mechanism. One of the things that I love most about living in DC is the easy access to wonderful telecom industry conferences, seminars and events—most of which are usually free or very low cost considering the quality of participants. Apparently USF is the hot topic during this wretchedly hot month, and I have had the privilege of attending two panel discussions and one press conference at the Senate in the past week. As much as I have enjoyed listening to the differing perspectives on USF from across the industry, I am still deeply concerned about how these rules will impact RLECs. Anyway, most of you know how I feel about USF reform, so here’s a recap on the events of this past week.
Wednesday, July 13: The Free State Foundation, “Universal Service and Intercarrier Compensation: Will the FCC Finally Bite the Reform Bullet?”
Panelists: James Assey (EVP, National Cable & Telecommunications Association), Jerry Ellig (Sr. Research Fellow, Mercatus Center), Randolph May (President, Free State Foundation), Mike Romano (SVP, NTCA), Deborah Taylor Tate (Sr. Fellow, Free State Foundation and Former FCC Commissioner), Tom Tauke (EVP, Verizon).
Confession time: I’m a libertarian/fiscal conservative by most standard definitions. I try really hard not to let my personal politics interfere with my telecom industry perspectives, but sometimes it is very hard to separate the two as the FCC becomes less and less “independent” with each passing administration. Since I started this blog, I have tried to instill a principle of political neutrality in my writing, because as a libertarian, my political orientation is none of anyone’s damn business. Anyway, my political orientation finally became relevant to my writing as this event was sponsored by a highly libertarian organization. I had a lot of anxiety going into this event because I didn’t want to be faced with the ugly truth that my political party is not in favor of my USF reform desires. When this type of situation occurs—where I am caught in the middle of politics and telecom policy—I tend to go into what I like to call “existential crisis mode.” Anyway, I ended up being very impressed with the Free State Foundation event. I honestly thought it was better than all of the FCC’s USF Reform Workshops because the panelists really dug deep on almost all of the USF topics without just complaining about the NPRM being unfair or insisting that whatever company they represent is the best positioned to provide broadband in unserved areas (ahem, WildBlue in the 3rd Workshop). The result was a very compelling discussion on fund caps, reverse auctions, funding prioritization and contributions reform. The Free State Foundation supports a free-market oriented USF that is economically sound and market-defined, and they believe that Lifeline/Linkup is a good model for “a post high-cost fund 21st Century.” Yes, the Free State Foundation wishes to see the High Cost Fund eliminated completely, which is the precise point where my political orientation and my telecom policy perspective sever painfully.
Here are some highlights from this discussion:
- James Assey described the current USF and specifically ICC thusly: “even the weeds have weeds.” He argued that there should be 4 elements to USF reform: controlling the size of the fund, building on the success of USF for voice and the success of broadband deployment, making sure the money goes to areas that currently have no broadband, and addressing the fact that ICC is not rational or fair at all right now. He argues that USF is about consumers, not about companies; and a cap on the fund may result in more efficient companies.
- Mike Romano provided some great commentary about the perpetual accusation that the High Cost Fund is rife with waste, fraud and abuse, and has experienced “rampant” growth. He pointed out that the HCF has only grown at about 3% per year, which is by no definition “rampant growth.” He insists that we need to answer the question: “Why is the 2010 level appropriate,” before we can move forward with a workable solution. Romano warns that we should not make assumptions about caps, because we do not know what the future holds or where the money will be needed over time—it is possible that the need for USF subsidies will decrease in the future just as it is possible that the need will increase. Either way, we shouldn’t impose an arbitrary limitation that challenges the statutory requirement of “sufficiency.”
- Jerry Ellig provided the colorful comment, “GREED IS BAD” when subsidies are on the table. He is concerned that some companies are trying to go beyond what is basic and necessary—and what should be covered by subsidies—and getting greedy with USF. He pointed to voice service as an example, stating that we went from a sensible system that supported one line per household to a system that pushes for landline and wireless lines for everyone. He sees the same thing happening with broadband, and he clearly supports a very basic definition—he even thinks that 4/1 Mbps is too high because it is beyond the capabilities of satellite and 3G. Ellig asked, “Why pay a per-line subsidy over $30?” where technologies (like wireless) are available for that cost.
- Deborah Taylor Tate talked at length about the alleged “consensus” on USF reform during her time at the FCC—she actually read notes that she had taken in 2008 detailing an FCC consensus on reverse auction pilot programs, traffic pumping, eliminating identical support, and so on. “As a fiscal conservative and republican,” Tate argued that Lifeline and Linkup are great examples of government programs that do what they are supposed to do, as they have strict eligibility criteria and are consumer-focused. Tate also supports regular audits, strong oversight of eligibility, and the use of experimental pilot programs to test new ideas.
- Tom Tauke argued that we need a last-mile wireline infrastructure because wireline is inherently more robust, reliable and secure. He shared that the current 5 funds should be transitioned into 2 funds: CAF and a recovery mechanism (RM) for ICC replacement. Together, these two funds should not exceed the total of the 5 funds today—we should redistribute USF but not increase the fund, with a focus on the consumer. Tauke is hopeful that there will be an industry consensus by the end of the month, which should have considerable support from a broad cross section of the industry.
Thursday, July 14: Rural Associations Launch “Save Rural Broadband” Campaign on Capitol Hill
Participants: Representatives from NTCA, OPASTCO and WTA; Senator Mark Begich (D-AK), Representative Lee Terry (R-NE), RLEC Executives Mark Gaily (Totah Telephone Company), Nancy White (North Central Telephone Cooperative), and Catherine Moyer (Pioneer Communications).
I won’t go into much detail on this event because I covered it on JSI Capital Advisor’s Blog—please read my article there if you are interested. I am so thankful to the Rural Associations for inviting me to attend this event; it was very exciting for me to participate in a press conference on Capitol Hill. Save Rural Broadband is a terrific advocacy campaign focused on educating rural consumers about the threats of the FCC’s USF reforms, and I really hope that this campaign is successful. It has been getting a lot of buzz this past week, so it looks like they are gaining momentum. At the press conference, I was very inspired by Rep. Terry, who actually seemed really optimistic about USF reform—I know, shocking. Both Terry and Begich pointed to the growing bipartisan support in both the House and Senate for reasonable USF reform, and we all know that bipartisan support is a rare bird these days. It is comforting and empowering to know that RLECs have allies on the Hill—30 Senators and 39 Representatives have signed a letter to the FCC warning that USF proposals could have unintended negative consequences. I definitely encourage my readers to check out Save Rural Broadband and do whatever you can to spread the message! Here is a picture I took at the press conference: “Begich Serious about Rural Broadband in Alaska.”
Tuesday, July 19: Broadband Breakfast Club, “Making the Universal Service Fund into a Universal Broadband Fund.”
Panelists: Russell Hanser (Wilkinson Barker Knauer, LLP), Hank Hultquist (VP Federal Regulatory, AT&T), Joshua Seidemann (Director of Policy, NTCA), Michael Spead (Sr. Technical Specialist, ICF International), Darrell West (VP, Brookings), moderated by Jonathan Charnitski (Editor, BroadbandBreakfast.com).
I’ve wanted to attend a Broadband Breakfast Club event for a while, but I’ve always had a scheduling conflict with previous events of interest hosted by this group. Like the Free State Foundation event, I thought Broadband Breakfast did an excellent job selecting participants who were willing to dig really deep on the big issues, and the panelists all provided interesting perspectives ranging from technology to policy and everything in between. The discussion started out with a bang—Charnitski asked how we will transition the current POTS-based “loophole-ridden wasteful spending program” known as USF to a Universal Broadband Fund. Here’s my recap of the debate:
- Russell Hanser, arguing from the mid-sized and wireless carrier perspective, agreed that some current USF spending is wasteful. He supports reducing ICC rates and making USF less complicated. Hanser thinks that “we got into this mess” because the fund grew but contributions declined. When the discussion turned to reverse auctions, as USF panels inevitably do, I actually thought Hanser expressed a rather logical analysis in support of reverse auctions. He made some rational arguments about various pitfalls of rate-of-return and cost models, and deducted that reverse auctions could be attractive because they will allegedly reveal the true cost of build-out (I tend to disagree here, but it was still refreshing to hear a rational argument supporting reverse auctions rather than blind acceptance of an untested and defective methodology that hasn’t really worked anywhere). If bids would actually reflect true costs—with no “risk premiums” tacked on or below-cost bidding to exclude smaller competitors—then I can see where Hanser is coming from. However, at this point there have not been any reverse auction proposals that ensure bad actors will be disqualified.
- Michael Spead represented the viewpoints of states and carriers. He argued that we need to look at the impacts of USF reform on a state level. Spead argued that the fund growth is unsustainable, and the original USF regulations have been outpaced by technology. He made a great point that states and carriers need to be prepared for USF change, and they need to get in front of the changes rather than waiting around and then reacting, at which point it may be too late to secure an advantageous position in the market. Regarding broadband speeds, Spead suggested that broadband definitions could be revisited prior to each new round of reverse auctions. I have some problems with this idea—I think it could result in gaming, but I am still mulling over my response to this recommendation.
- Josh Seidemann, voicing the RLEC perspective, argued that USF has worked great so far but some adjustments are definitely needed for broadband. He argued that “waste, fraud and abuse” is not an RLEC problem—RLECs are subject to strict auditing and costs are rarely recovered for at least two years; furthermore, the HCF has only grown at about 3% per year, so accusations that the HCF is out of control are unfounded. Seidemann echoed the Rural Association’s argument from the Save Rural Broadband press conference that there must be a “surgical” approach to USF reform. I was very happy that Seidemann addressed the House recommendation to take $1b from USF for the deficit—he emphasized that USF does not come from general tax revenue, and taking it for deficit reduction would be like “reaching into an envelope never intended for that purpose.” This was a good visualization for me, because I actually used to keep cash in envelopes that were marked for specific purposes. I tried really hard not to open the “groceries” envelope if I wanted to buy shoes, but I also wasn’t bound by Congressional mandates to use specific envelopes for specific purposes. USF is a Congressionally-mandated “envelope” specifically for telecom service; it is not an envelope of “mad money” that can be tapped whenever the country is behind on its bills. I don’t know how much clearer I can be about this, but unfortunately some people still think that USF is a treasury tax. Guess what? The IRS won’t come after you if you don’t pay your phone bill. You can opt out of paying USF by opting out of phone service. Not. A. Tax. Anyway, sorry for the rant, but this is an especially menacing issue right now—thankfully most telecom stakeholders are voicing opposition and some of the House Republicans, like Lee Terry, are also opposed to this nonsense proposal.
- Hank Hultquist from AT&T commented that “whole forests have been felled spelling out AT&T’s position on USF”—he is not kidding, trust me. AT&T has been extremely vocal in the USF proceedings, and if you have read some of my comment summaries then you will know that I am pretty intimidated by their proposals and their lobbying prowess. I thought Hultquist made a good point about how there are “wild variations in technology” even within one segment of the broadband market, like wireline; furthermore, there is “great diversity of business models.” This variation and diversity must be considered in USF reform, where one size clearly does not fit all. Unfortunately, Hultquist and AT&T believe that reverse auctions are the best solution. He added that there will always be “the person who lives on the mountain top” who is too difficult and too expensive to serve. As a result, there will be many broadband choices for most Americans; but for the rest, we should just do the best we can do. I disagreed with Hultquist’s comments about what broadband speed should be supported by CAF—he argued that policymakers should first figure out what applications people are using, then figure out what is affordable, and then the industry needs to respond within these bounds. I find this to be a troublesome perspective because we do not know what broadband applications people are going to be using 6 months from now, let alone 6 years from now—binding broadband speeds within today’s budget and today’s demands means that tomorrow’s broadband users might be disadvantaged and innovation might be stifled. However, he later added that the FCC should not make a permanent decision on broadband speeds—the definition of broadband should be modified and expanded as needed. My concern here is regulatory lag—by the time the FCC figures out that they need to modify the definition of broadband, it could be too late, and the industry will be in a perpetual state of suspended animation as the FCC continually plays catch-up to technology.
- Darrell West argued that we have to increase broadband access, and address access disparities by income, race and location. I thought West’s best point was that we are headed for a “new digital divide,” where consumers are divided into low-speed and high-speed—I completely agree with this argument and I strongly feel that the National Broadband Plan recommendation of 100 Mbps for 100 million people and 4 Mbps for everyone else is the foundation for this new digital divide.
This panel concluded with the moderator asking each participant to name the most important consideration of USF Reform. Here’s what they said:
- Spead: state governments and carriers need to assess the impact of CAF, and the winners “will get in front of” the changes
- Hanser: get consumers what they want and need without paying too much
- Seidemann: “get it done right” and preserve private capital incentives
- Hultquist: have a sense of humility about not knowing the “perfect business model;” put USF in the context of a transition to broadband communications
- West: public policy needs to catch up with technology innovation
So there you go—a diverse array of perspectives on USF but still no consensus on any of the finer points. I can’t wait to see the highly anticipated “industry consensus plan” that should be forthcoming in the next few weeks. While I try to make sense of all the different perspectives on USF, it is really hard to imagine that an industry consensus is actually close to being completed. Clearly, some stakeholders are going to be bulldozed and some stakeholders will be doing the bulldozing—who exactly will fall in these fortunate or unfortunate positions still remains to be seen.
Meanwhile, I’m exhausted but I am really happy to have had the opportunity to attend these events. I am also very happy about the response that my Open Letter to the FCC has received—it was featured on Daily Yonder last week and it has been read at least 250 times on Rural TeleCommentary! Thank you to everyone who tweeted, emailed and shared my letter! I’m also inspired by all the local news stories about Save Rural Broadband and USF reform threats to rural companies and consumers—be sure and check my USF Reform Headquarters for links to articles. Stories have been rolling in constantly the last few days so I’ve been trying to update the links on a daily basis.
Stay cool everyone!
Monday, July 11, 2011
Dear FCC Commissioners and Staff:
With a decision on Universal Service Fund reform drawing near, I want to take a moment to share my feelings on this highly important issue in a public forum, with hopes that my message will be heard by a diverse audience in addition to its intended recipients: telecom regulators at the FCC. I have been involved in the rural telecommunications industry my entire life, as I come from a family-owned rural telecom business (Walnut Communications) that has been operating in rural Iowa for nearly 100 years. I have been a student of telecommunications for five years, and I have spent the last six months almost exclusively focused on USF reform—I have read nearly every filing in this proceeding, attended conferences, lobbied Congressional offices, written dozens of articles analyzing different aspects of the reforms, talked to various stakeholders about the potential impacts, and I intend to do my Master's thesis on the outcomes of the reforms on the RLEC industry once the rules are finalized. I am extremely pleased with how vocal the RLEC industry has been about the critical threats that the Commission's USF proposals, as described in the February 9, 2011 NPRM, pose to these small, independent, cooperative and family-owned businesses—businesses which are each unique and important to their rural communities as employers, carriers of last resort and contributors to local economies. Although I am proud of my colleagues in the RLEC industry for their extremely hard work in this proceeding, I am scared for them as well.
Against all odds in the early 1900s, my great-great uncle, my great-grandfather, and a group of farmers built the foundation for Walnut Telephone Company. It was truly a community effort, for famers and volunteers offered assistance, equipment and even their own wagons to help build the phone lines miles outside of town. Over the years, the company faced great adversity, survived the Great Depression, and even earned the respect of AT&T during a time when AT&T stopped at nothing to squash competition, including destroying farmers' telephone equipment and ripping out lines. Now, Walnut Telecommunications faces its greatest challenge yet—surviving the directives of the National Broadband Plan. I care very much for my family's business and the rural area that I came from, and I cannot ignore four generations of ancestors who have poured their lives into providing telecommunications in a very small community in Iowa—a community that has little growth, an aging demographic, few high-income residents or large businesses. Despite these demographic and geographic challenges, Walnut Communications has historically been a leader in advanced telecom technologies, installing the first digital switch in Iowa, offering the first cellular service in Iowa, upgrading all customers to DSL in the 1990s, and most recently, deploying high-speed Fiber-to-the-Home to rural homes and businesses.
Walnut Communications and hundreds of other RLECs have been able to make these groundbreaking investments and provide advanced telecommunications services at rates reasonably comparable to urban Americans because of the financial stability that the current rate-of-return and USF facilitate. USF enables these companies to take risks on technologies and secure private capital for critical investments in broadband infrastructure, despite being located in economically challenged and sparsely populated high-cost regions. Yet, the FCC contends that RLECs are wasteful, inefficient, and apparently not worthy of ongoing USF subsidies to continue providing telephone and broadband service in rural areas. In my analysis of the USF reform proceeding, I have personally found very little evidence to suggest that RLECs are in any way wasteful and inefficient—sure, there are likely a few "bad actors" in the industry, but the bad actions of the few should not be used to penalize the RLEC industry as a whole. Large companies like AT&T, Verizon and Windstream echo the FCC's accusations against RLECs, but provide no evidence to suggest that they are actually willing to provide service in extremely rural high-cost, low-return areas. If these companies wanted to serve rural areas, they could have done it already with their billions of dollars in revenue—but they haven't, because of the fundamental economic principles of investor-owned public companies, where low-return investments are scrapped in favor of higher return ventures. The RLEC industry is not a high profit game; RLECs provide outstanding service to their rural communities because they care about the communities. 100 years ago, AT&T did not want to provide service in extremely rural areas, and today, they still don't. RLECs were established to help prevent an urban-rural divide in telephone service, and yet here we are 100 years later facing the same problem with broadband service.
I do believe that USF should be modernized for a broadband era—there are certainly aspects of USF, and Intercarrier Compensation in particular, which are in dire need of modernization and simplification. However, there is no need for the FCC to achieve USF reform by causing irreparable harm to thousands of companies, and there is absolutely no excuse for the FCC to create broadband black holes in rural areas by excluding RLECs from future USF support for broadband. I strongly urge the FCC to look at alternative plans submitted by Hargray Telephone Company, the Rural Associations (NTCA, NECA, OPASTCO and WTA), and the Federal State Joint Board on Universal Service. Each of these alternative plans include compromises, meet the FCC's four objectives for USF reform, will keep the RLEC industry viable in the long term, and will help increase broadband deployment in rural areas. Of the proposed USF reforms in the NPRM and the National Broadband Plan, I am most concerned with proposals to cap the High Cost Fund (there is no need if contributions are expanded), reverse auctions (which are unproven, untested and would favor large carriers), and eventually eliminating rate-of-return (why fix what's not broken?). I deeply fear that these three actions together would sign the death certificate for the RLEC industry.
I am also particularly concerned with FCC sentiments that RLECs should consolidate—there is no evidence to support the argument that consolidation would yield positive impacts on rural broadband deployment and adoption. Rather, it is an ignorant conclusion based on "bigger is better" attitudes. Bigger is not always better, especially in rural areas, where small, locally-owned businesses are actually important. Just because every sector of the information and telecommunications industry is moving towards consolidation—and borderline monopolization—does not mean that it is the best outcome for everyone. Rural cultures value small local businesses, and forcing consolidation in the industry will result in a devastating loss to many vibrant rural communities. Furthermore, actions that force RLECs to consolidate (or worse, go out of business) will result in thousands of lost jobs and opportunities for rural Americans.
I felt that comments by Warinner, Gesinger and Associates best described this situation, and specifically reflect my own personal feelings about possibly moving back to a rural community after leaving rural America at a young age to receive a world class education in a major city. They explain, "The FCC would limit a small rural company's ability to attract personnel with advanced degrees, by limiting their corporate expenses or capping the amounts they can recover. Limiting or eliminating these expenses would put an immense strain on a company's ability to attract and keep qualified employees for a specialized industry. In fact, it could be counter-productive because many of the students in rural areas that go to urban colleges and universities would lose the opportunity that the telephone company would provide in offering a job that allows the individual to work in the rural area from which they came or a rural area that provides the benefits of living in a small close-knit community" (at pg. 21-22). As America slowly begins to emerge from the worst economic crisis in decades, the government should not be preventing any small business from attracting, hiring, and paying skilled workers—workers who could help revitalize rural economies and cultures, contribute to local tax revenue, and start families of their own in rural communities; which in turn will help revitalize rural schools and businesses, and possibly even help change the urban world's perspective of rural America. I highly recommend a recent study by Wichita State University Center for Economic Development and Business Research, which describes how the FCC's USF proposals would impact Kansas RLECs. The outcome is not good—between 2012 and 2016 Kansas RLECs could lose a total of $143m in USF funding, 367 direct and indirect jobs would be lost, and the state would lose around $5m in combined income, property and sales tax revenue. This study is a perfect example of why the FCC needs to look at the "bigger picture" before hastily implementing USF reforms based on a shaky foundation and unsubstantiated conclusions. It isn't just the rural telecom industry that will suffer, it is ancillary businesses, equipment vendors, state and local governments; and most of all—rural communities. In addition to the Kansas RLEC study, there are dozens of comments and ex parte filings that demonstrate the financial impact of the FCC's reforms on RLECs, and some filings even include letters from community schools, hospitals, businesses and public safety entities who all provide testimony about the benefit of RLECs and broadband to their local communities—benefits that will undoubtedly disappear if RLECs disappear as a result of USF reforms.
FCC, please take seriously the overwhelming amount of evidence that your USF proposals will harm RLECs and rural communities as you move forward with the final rules. There is no reason to change the game so dramatically that companies will actually go out of business as a result of overly aggressive and intrusive government actions, especially when there are very reasonable alternative proposals available. I fully recognize that every USF stakeholder will have to make some compromise and sacrifices going forward in order to transition USF into the broadband era. However, sacrificing entire companies will not achieve the end goal of deploying broadband to 100% of the country—it will have the exact opposite effect. RLECs have been leaders in providing broadband to rural Americans since before broadband was even considered an important service, and there is no reason to take funding away from these companies in order to give it to companies that will not serve extremely rural areas simply because their investors won't profit from it. Ensuring that all Americans have access to, and utilize, high-speed broadband is an extremely admirable vision, but the path to achieve this lofty goal should not be hastily planned or build upon an unstable foundation. There is simply too much at stake—from the viability of small businesses to the opportunities for extremely rural Americans to participate in the global Internet ecosystem—to implement rules without considering the full spectrum of short and long term outcomes for each stakeholder. RLECs have depicted a bleak future as a result of the proposed reforms, and I sincerely hope that the FCC can conceptualize and implement an alternative suite of USF reforms where RLECs have a bright and profitable future, and where all rural Americans have access to broadband.
Cassandra Heyne, Rural TeleCommentary
Sunday, July 10, 2011
Back in April I flagged the FCC NOI on Network Reliability and Resiliency in part because it seemed interesting, and in part because it made for a good debate over how far the FCC should push regulation in arenas that are, in my opinion, best served by market forces and innovation. This issue is also especially timely following the devastating tornadoes and flooding in the Midwest this summer. Anyway, in my post about the NOI back in April, I commented that although network reliability and resiliency are of the utmost importance, the FCC should not be imposing intrusive regulations in this area—the market should determine the best technologies and solutions, and companies should have the flexibility to adopt technologies and solutions that fit their specific needs and budgets. Furthermore, I don't trust regulatory lag to keep pace with new challenges that arise by way of natural and man-made disasters that threaten networks. I also don't see a specific problem that requires regulatory intervention—telecom service providers know that network reliability and resiliency is important, and there is definitely no lack of technology or innovation that would indicate a need for regulatory intervention. Those are my thoughts, but let's see what the industry has to say about it.
The following comments are in response to the FCC's April 7 Notice of Inquiry on Network Reliability and Resiliency: PS DN 11-60, PS DN 10-92 and EB DN 06-119.
Comments of the Telecommunications Industry Association (TIA)
TIA's comments were very in sync with my own opinions on this issue—TIA supports the goal of ensuring that networks are reliable and resilient ("R&R"), but they do not agree that regulation is necessary to achieve this goal. TIA recognizes that there are an unlimited number of potential threats to network R&R, and "no network, no matter the planning or regulation, can be designed and implemented to withstand every possible source of failure" (pg. 4). As new challenges arise, networks and technology evolves to meet these challenges, and unfortunately innovation is sometimes reactionary when something bad happens—however, this prevents network operators from getting complacent with certain technologies and solutions, so they continually strive to improve based on new challenges. TIA notes that the ongoing transition to an all-IP communications networks will help address some R&R challenges because single points of failure "will increasingly become a problem of the past" (pg. 5). TIA also understands that R&R challenges are different for every single network operator, and "these operators routinely make hyper-local decisions on how to address resiliency challenges based on direct knowledge of unique threats and priorities guided by already existing industry standards and best practices" (pg. 5-6).
TIA does not believe that the FCC should take regulatory action on network R&R, rather the FCC should just encourage voluntary, consensus-based solutions and best practices, in a very technology-neutral way, and the FCC should publicly praise network operators who go above and beyond on network R&R. TIA argues that market incentives have worked thus far, and "each operator has been able to make the most responsible decision to address [R&R concerns] in the most efficient manner" (pg. 7). TIA warns that regulatory intervention could derail infrastructure improvements that are currently underway, including improvements funded by BTOP, BIP and TLIP; furthermore, there could be a negative impact on smart grid deployment, and in general it is not right to force capital investments where they may not be necessary or appropriate. TIA also argues that it is too difficult to impose minimum standards for everyone, "as requirements vary from node to node" (pg. 10). I basically agree with all of TIA's recommendations, I think they hit it right-on: the FCC should not intervene in a market that has no failure, and the FCC should not impose sweeping requirements where there is so much differentiation from network to network.
Comments of the Edison Electric Institute (EEI)
EEI took a very different approach to the R&R NOI than TIA, and I felt that EEI's comments were very interesting even if they didn't echo my exact opinions. Basically, EEI thinks that commercial communications networks are not good enough for utilities, and therefore the FCC should take steps to adopt R&R standards so that commercial networks are more capable of supporting utility communications—but, the FCC should not take any actions that would make it a challenge for utilities to rely on private networks. I learned a great deal about utility communications architecture in my Smart Grid class last semester, and yes, these networks are quite different than the commercial telecom architectures. Utilities love redundancy and their networks are not always what we in the telecom industry consider "modern." Utilities like networks that have no extra bells and whistles, and networks that have extremely high reliability, obviously. I believe that part of the reason why the utility-telecom smart grid synergies (which I have written about here, here, and here) are slow-moving is because utilities do not trust commercial telecom networks. So, it is not really surprising that EEI is calling for the FCC to step in and push commercial networks to a higher level of R&R—if this were to happen, it is possible that more utility providers would utilize commercial networks for smart grid operations. Although I am all for utility-telecom collaboration, I'm still not convinced that regulatory intervention is necessary.
EEI points out the problems with commercial networks: "In particular, carriers do not provide sufficient network capacity during emergencies, and lack network priority routing necessary to support critical applications. Further, carriers do not provide levels of service restoration or variable latency needed by electric utilities, and current networks lack adequate back-up power and redundancy. These problems are of great consequence to electric utilities from the end-use perspective" (pg. 2). EEI also adds that utilities have unique public safety needs, "which often requires electric utilities to design their communications networks to different standards and practices than commercial networks" (pg. 2). Electric utilities need specific levels of R&R for "maintenance, remote control and monitoring, dispatch of field crews in service territories, and communications with customer meters;" as well as a multitude of internal communications categories (pg. 4). The network must have sufficient capacity and coverage under any dire situation, and comply with NERC and FERC standards. Basically, EEI just doesn't think commercial networks are good enough—they are too susceptible to backup power failure, have insufficient backhaul redundancy, have frequent failures during emergencies, and are often very slow in service restoration. EEI argues that "commercial networks are not designed to provide levels of reliability, survivability and coverage necessary to meet all utility communications needs, particularly in times of emergency" (pg. 5). I don't really disagree with any of EEI's claims based on my knowledge of utility networks and commercial networks, but I think that any commercial telecom network who wants to collaborate with a utility provider will make the investments necessary to bring the network up to utility standards without the need for regulatory intervention. Not all commercial network operators want to be utility network operators, and those who do are free to modify their networks utilizing existing and future technologies and solutions. EEI's comments are definitely worth reading if you are interested in utility network requirements, especially if you are a rural telecom provider who is looking at collaborating with a utility on smart grid deployment—you will want to know what the utility provider needs and expects in terms of network R&R, and then determine whether or not your company can meet these requirements.
Comments of the United States Telecom Association (USTelecom)
USTelecom also disapproves of regulatory intervention for network R&R. They argue, "USTelecom member companies have voluntarily spent hundreds of millions of dollars and countless hours preparing for disaster recovery in order to support continued quality service to their customers, even during emergencies" (pg. 1). USTelecom believes that the efforts of their members illustrate that regulatory intervention is not necessary, and they argue that their members have made significant progress in recent years to increase network R&R. USTelecom cites examples of very few network overloads, better traffic management, and the emergence and adoption of remote access capabilities as evidence that telecom providers are taking network R&R seriously, despite the high costs involved. Rather than regulatory intervention, USTelecom argues in favor of Public-Private Partnerships (PPPs), where the FCC would have an important role in facilitating industry-government collaboration. USTelecom argues that PPPs have a good track record of success and are better suited to this particular challenge than all-out regulation. They argue, "A regulatory approach to network survivability would likely inhibit the ability of companies to respond quickly to new types of threats, and reduce the effectiveness of public-private partnerships already under way" (pg. 6). USTelecom noted that its members widely adopt industry best practices, and "member companies implemented remarkably successful procedures, technologies and precautions to support survivability—without regulatory requirements that they do so" (pg. 8).
Basically, I agree with pretty much everything USTelecom said—I definitely agree that there is no one-size-fits-all solution for network R&R standards, and if voluntary adoption is successful, why fix what's not broken?... But, this IS the FCC we are talking about, and they definitely have a tendency to try to fix things that aren't broken—this should be their motto: "FCC: Fixing What Isn't Broken Since 1934."
I thought these three stakeholders provided a nice range of viewpoints covering network technology vendors/manufacturers, the utility industry, and telecom providers. I would like to say that I don't think regulatory intervention is likely on this issue, but I don't think the idea will be "off the table" either. I don't expect much to happen with this NOI any time soon, however. There weren't a whole lot of comments filed and there is definitely no clearly demonstrated, impending and severe industry or market failure at hand. I agree that the utility industry needs better R&R from commercial networks if the two industries are to collaborate on the smart grid, but I definitely don't think regulatory intervention is the right way to achieve these goals.
Monday, July 4, 2011
Life has taught me that it is important to celebrate and acknowledge personal and professional accomplishments and milestones, and I think that Rural TeleCommentary's success in just 6 short months definitely deserves recognition! At the end of last year, I was facing a somewhat uncertain future. I had just ended a very rewarding internship and I was on the verge of completing my coursework for my telecommunications Master's degree at University of Colorado. I knew I was facing the very daunting task of starting and completing my thesis in a reasonable period of time, and I was hesitant to look for a "serious" job with that responsibility looming over me. I've dedicated 10 years of my life to my higher education, and I do not want to become one of those people who pour years of time and hundreds of thousands of dollars into an education only to get swept up by a lucrative career before completing a thesis. Anyway, the challenge that I faced at the end of 2010 was finding a way to keep myself involved in the telecommunications industry where I could focus on things that interested me, at my own pace and on my own schedule, but still have time to finish my degree and keep one eye on my future career. At first, I wasn't sure about blogging. I didn't think people really took bloggers seriously. I didn't think I would get very many readers since I haven't had years of professional experience to build up my name and credibility. However, there seemed to be virtually no risks, or cost, to starting a blog. Additionally, there seemed to be a lack of blogs focused entirely on rural telecommunications policy issues (although I have found some good ones since I launched Rural TeleCommentary). My writing style and personal philosophy is very detail-oriented and highly analytic, and I really felt that the rural telecommunications industry could benefit from my unique perspective coming from a small family owned rural telecom provider combined with my extensive education in telecom business, economics, engineering and policy. As a result, Rural TeleCommentary:
Perspectives on the Rural Telecommunications Industry was born on December 30, 2010, with my first official post on January 12, 2011.
In the first two months, I focused primarily on building up a nice array of content. I did not have many readers—primarily just previous co-workers and a small group of select individuals who I counted on for feedback and testing out ideas. In January and February, I only had about 100 page views each month. I purposely delayed promoting the blog until I had about 10 posts, because once I started promoting, I wanted new readers to see that I was taking the blog seriously and capable of writing consistently on a wide variety of pertinent topics. In March, I started sending e-mails to individuals at rural telecommunications associations, law firms and consulting firms, as I intended these people to be my primary audience. I received quite a bit of positive feedback, and I was even featured in a blog post on Connected Planet, which I thought was really cool. I got a great opportunity to promote my blog at the NTCA Legislative and Policy Conference in March, where I passed out letters describing my blog to NTCA members and the Iowa Congressional staff that we visited during the conference. By the end of March, my page views per month had grown to over 300.
In terms of readership, April was definitely my biggest growth month. I attended a conference on Smart Grid Policy where I gained some new readers, and I got two big breaks with the AT&T/T-Mobile merger and USF Reform comments. At the beginning of this project, I knew I wanted to make comment analysis a major component of my blog, and the USF reform proceeding was definitely the best opportunity I could have asked for to showcase my critical analysis skills on an issue that is of the utmost importance to the rural telecom industry. Another big growth opportunity came in April as a result of joining Twitter to share my articles and "micro-blog" about issues that arise on a daily basis but may not warrant an entire blog post. Twitter was a slow process at first. I found that it was hard to gain followers, and you have to do a lot more than just follow people and re-tweet to get noticed on Twitter. I found that it was important to respond to tweets with meaningful commentary, not just "I agree" or "nice" or whatever. However, that can be difficult to do in only 140 characters. Anyway, I am very happy with my decision to join Twitter and now it has become an important part of my blogging process and a critical resource for most of the telecommunications news that I read on a daily basis. Twitter has helped me learn about companies, websites, blogs, and people that I possibly would not have known about otherwise, and for that I am thankful. As a result of my ongoing blog promotion activities and joining Twitter, I had over 1,000 page views in the month of April.
The growth continued in May and June. I was extremely focused on USF Reform issues in these months, which certainly helped me gain a lot of readers. I have been very impressed with the number of Google searches on USF Reform where readers are directed to Rural TeleCommentary. I'm glad that so many people are trying to learn about this issue, and I hope my analysis has been helpful. I have received quite a bit of positive feedback from readers about how helpful my USF comment summaries have been, so I am pleased to know that all the work has been valuable to other people. In mid-May, I ramped up my presence on LinkedIn. Prior to the LinkedIn IPO, I never really found that site to be very useful and I couldn't figure out how to take advantage of it properly. Anyway, since mid-May, I have managed to increase my connections from 4 to almost 180 and my efforts on LinkedIn helped me land a job as a blogger for JSI Capital Advisors. So yes, LinkedIn is a very valuable social network and I am extremely happy that I gave it a shot after years of finding it pretty uninviting. On the other hand, Facebook has not been a very valuable source of readership for Rural TeleCommentary. I have only gotten about 30 page views from Facebook since I started the blog, and I post links to every article I write. I don't really find this surprising, as my Facebook community consists primarily of people that I haven't talked to in over 5 years and a large number of people that I don't even know why I'm "friends" with—I think this is a pretty common sentiment about Facebook as people are starting to realize that there are better networks for professional activities. Anyway, I don't think many of my Facebook friends care very much about the rural telecom industry, but I will continue to post links to my articles there anyway because there is nothing to lose by doing so. Between Facebook, LinkedIn and Twitter, social networking has without a doubt become as big of a component of Rural TeleCommentary as the blog itself, and I am still learning the best ways to take advantage of social networking to increase readership.
As of the beginning of July, I now have over 5,700 page views, far beyond what I ever expected to receive by this point. When I started Rural TeleCommentary, I honestly thought I would be lucky if I got 20 readers a month. Although I can't tell by the Google Statistics what percentage of readers are "dedicated" versus what percentage are just stopping by, I can determine that I have a nice number of dedicated readers, which I hope continues to grow. As much as it kills me to say this, I owe a lot to the Google monster for directing traffic to my blog. However, it is up to the end user to actually click on my links, so I'm clearly doing something right. Also, the highest number of readers sourced from Google searches have searched for the phrase "rural telecommentary," followed by "Cassandra Heyne" (which definitely creeps me out). Other popular Google searches include "USF Reform," "arbitrage rural telecom," "AT&T-Mobile," "small rural carriers" and "telecom smart grid." My most popular post by far has been Smart Grid Synergies for Rural Electric Co-ops and Telecom Providers, largely due to a rush of traffic from France over the last few weeks. My most popular USF Reform post is the comment summaries from the price cap carriers, followed by the reply comments by rural telecom organizations. My posts on the AT&T/T-Mobile merger have been very popular, not surprisingly.
What has been surprising is the continuous number of international readers that come to Rural TeleCommentary. So far, readers have come from over 60 countries. A couple of months ago I posted that I planned to include more articles on international telecom policy, and unfortunately I have not had as much time to dedicate to this task as I originally anticipated. However, I still plan to post on international issues from time to time—I'm working on something right now on Pakistan's USF system thanks to a reader telling me that their system has been successful. The following chart shows my page views as of July 4 from the top 10 countries—as I mentioned above, there has been a large influx of traffic from France recently specifically for my Smart Grid Synergies article.
So, what have I learned so far in this project? First, aggressive promotion is very, very important. If you want readers, you can't just sit back and expect them to come to you. I was very nervous at first to send strangers e-mails and hand letters to people and bring up my blog in basically any conversation, but over time I think I have become more confident as I continue to get positive feedback. I know it is very challenging to try to take up time in someone's day, and most people are already overwhelmed by e-mails, articles and other news. I tend to write long articles, and I realize that I am dealing with limited attention spans and competing with a bombardment of content from all over the web; however, I feel that most of the topics I write about warrant considerable detail and high-level analysis, which is what helps my blog stand out from the crowd. So, the second lesson is that it is important to offer a fresh perspective on popular topics. Everyone in the rural telecom industry knows that the FCC's USF reforms are scary, and everyone everywhere knows that the AT&T/T-Mobile merger is a disaster in the making—I try to go deeper than the prevailing opinions and offer interesting analysis from my unique perspective on the industry. Thirdly, time management is really important and an ongoing challenge especially now that I have two blogs to write for—I try to stick to a strict schedule where some days I work on articles for JSI and some days I work on articles for Rural TeleCommentary. I've had to shelve some ideas to focus on more pressing matters, and I definitely cannot write about every single topic that interests me or I would literally not have time to sleep, ever. Lastly, I have learned that blogging is indeed a very fun and rewarding process, but it definitely requires dedication and commitment. I think I have been lucky that I have not encountered any significant challenges yet in terms of harsh criticism, and even critics of my perspectives have generally offered polite and constructive feedback. I am an avid reader of fashion and beauty blogs, and I know those bloggers get some extremely harsh criticism sometimes (why someone would make hurtful, mean comments about nail polish, I have no idea; but it goes to show that in an anonymous Internet environment, some people have no boundaries or common courtesy). Passions definitely run high about most of the issues covered on Rural TeleCommentary, so I'm thankful that I haven't encountered too much negativity yet—hopefully I won't in the future. The only aspect of blogging that I have been disappointed with it the lack of comments on my posts. However, since I started using Twitter, I have definitely engaged in conversations and debates related to my blog content, so I suppose that fulfills one of my initial goals of active reader participation. I also know from my own experience as a blog reader that people rarely comment on blogs in general. There are blogs that I have read every day for years and never commented on, so I have definitely learned that a lack of comments does not necessarily mean that people don't care. Also, I get a fairly steady stream of e-mail responses which indicates that some people simply aren't comfortable posting their thoughts in a public forum.
What's next for Rural TeleCommentary? Hopefully, there will many more months of increasing readership and interesting articles. I am trying very hard to post 2 articles per week on both Rural TeleCommentary and the JSI blog, but this can be a pretty aggressive goal especially when the articles involve reading hundreds of pages of regulatory filings! I am hoping to flex my engineering muscles a little in the near future. I haven't had much of a chance to write about technical issues, and I feel like I should before I forget everything I learned in my engineering classes. I could also use some practice with technical writing. I'm hoping to write some articles on rural LTE and FTTH, and I definitely have some ideas stored away on these topics. I will continue to do comment summaries on select proceedings, and there will definitely be no shortage of articles on USF reform as the rulemaking draws near and after the rules are released—indeed, that is where the real work will begin (and when I will finally have to write my thesis).
I want to personally thank each and every person who has read even one post on Rural TeleCommentary, and I especially want to thank those of you who have shared my blog with your colleagues and have continuously read my articles since the very beginning. I welcome any and all feedback about how to improve this blog for the benefit of my readers, so please do not hesitate to contact me with suggestions.