As I reflect back on last week's NTCA Legislative & Policy Conference, there are a couple of issues that have really stuck with me as particularly noteworthy. The first, inspired by the speech given by Secretary of the US Department of Agriculture and former Governor of Iowa Tom Vilsack, is that rural America is not widely understood by lawmakers (or by anyone who isn't actually from a rural area for that matter). The important role that rural America plays in the nation's economy, culture and national security is often overlooked; therefore it is of critical importance that we do our best to educate decision makers in the government about our communities, small businesses, economic potential, and quality of life in rural America. The second thought that has stuck with me from the conference is that the highly fragmented rural telecommunications industry--consisting of hundreds of companies across the country ranging in corporate structure and sized from a few hundred customers to over one hundred thousand--is firmly united regarding the challenges our industry faces in the upcoming Universal Service Fund reforms set forth in the Connect America Fund/National Broadband Plan NPRM (also called USF Reform NPRM). This united front is unprecedented, at least in the years that I have been involved in rural telecommunications. During our visits to Iowa Congressional staff, members of the Iowa group stressed how the USF Reform issues take priority over all of the other issues the industry is facing right now--net neutrality, data roaming, reverse auctions, etc.--and our concerns demand the attention from lawmakers who support and understand the importance of rural America and delivering high speed broadband to rural Americans.
Although today I am going to focus more on the first issue--understanding the importance of rural America--these two issues are indeed intertwined. Without continual and predictable USF support for small telecommunications providers, rural Americans will not continue to enjoy the vast benefits of advanced telecommunications services that these companies have worked so hard to deliver to their communities. Without access to advanced telecommunications services, rural America will not flourish, it will not become an attractive place for families and businesses to live and work in, and educational and health care goals for rural areas will not be achieved. Although the proposed Connect America Fund promises to increase broadband availability and adoption in rural areas (which is good), the concern is that the funding mechanisms that have supported small rural telecom providers for many years will be transitioned to support for "market incentive" based funding mechanisms targeted at larger price-cap carriers. Large broadband providers may have the money and economies of scale, but they are not well equipped to provide telecom services to small communities in deeply rural areas, and they have traditionally ignored these areas in favor of investing in densely populated--and therefore profitable--geographic areas.
As a city dweller with deeply rural roots, I constantly find myself missing things like clean air, dark nights, and not hearing ambulance sirens every 15 minutes. I also find myself spending way too much time thinking about where my food comes from and how I can find and recapture the flavors of fresh fruits, vegetables and meats that travel about 50 feet from source to table instead of across the country or world (fun fact: I am also a raging advocate for organic, non-GMO, natural, locally grown, raw and unprocessed foods). The obvious solution would probably be for me to pack up and leave K Street and return to the farm, but that type of decision is clearly difficult, and in the end I don't think I would be willing to give up my city life. Without digressing even further into minutia about my personal life, I will say the rural vs. urban life debate has been an ongoing source of internal conflict for me for several years, and probably will be until I become successful enough to own two properties on diametrically opposite positions along the rural-urban spectrum.
Anyway, back to the point: many people do not understand the importance and value of rural America because they have never experienced it nor do they want to experience and learn about it. It literally astonishing to me when I hear that children do not know where food comes from or know the difference between an onion and a potato, but I also don't expect everyone to flee cities and become farmers for a few days just to learn about food sources (even though that would be really great). What I do expect is for lawmakers to attempt to understand the importance of small businesses in rural communities, and to craft laws and regulations that reflect this tautology. Vilsack's speech made me think about how the misunderstanding of rural America impacts the FCC rulemaking process, and the regulatory treatment of rural providers in particular. Rural telecom providers are welcome to submit comments and set up ex parte meetings during FCC rulemakings and visit members of Congress to communicate our concerns, but rural telecom providers do not have hundreds of highly paid lobbyists nor do they contribute tens of millions of dollars to political campaigns (I'm talking about you, AT&T!), so I have to question the impact that our voice makes even though the processes in the FCC and Congress are *supposed* to be open and unbiased.
What needs to happen in order for law and policy makers to gain a better understanding about rural America? During the NTCA conference and hill visits, I learned that it is really beneficial to inform the decision makers exactly how proposed laws and policies will directly impact rural communities. Do not just tell them "This policy will be bad for my company and community." Tell them exactly why--in terms of job loss, financial instability, community hardship, etc. It also helps to vividly describe the benefits that rural telecom providers have bestowed on their communities in terms of improved education and health care, new businesses in the communities, local economic growth, community culture and arts, and increased population. Rural telecom companies do not just care about profit--they actually care about the communities that they serve and have a significant stake in seeing their communities flourish in the future as a result of their investments in broadband and other advanced telecom services. Congress and the FCC need to understand the vital role that rural telecom providers play in their communities, and the corresponding vital influence that rural communities have on rural telecom providers.
The book The Next Hundred Million: America in 2050 by Joel Kotkin (2010) depicts the U.S. with a population of 400 million people--which is expected to occur within most of our lifetimes. Kotkin believes that there will be a "resettling of the American Heartland;" as cities become too crowded and environmentally uncomfortable--the wide open spaces of rural America will become more and more attractive for families and businesses. It may be difficult to see this now, with rural communities suffering from aging and declining populations, but I firmly believe that broadband can help change this outlook on the future of rural communities. With state-of-the-art broadband infrastructure in place coupled with opportunities for property ownership and entrepreneurialism, rural America can easily experience a surge of revitalization in the upcoming decades. Kotkin is optimistic about the power of rural America as the nation's population grows: "According to recent surveys, as many as one in three American adults would prefer to live in a rural area--compared with the 20-odd percent who actually do. Most Americans perceive rural America as epitomizing traditional values of family, religion, and self-sufficiency and as being more attractive, friendly and safe, particularly for children" (Kotkin, 2010). Kotkin acknowledges that the Internet has broken the perspective of rural areas as isolated, culturally deficient and not profitable for businesses. Furthermore, we are already starting to see major technology and manufacturing businesses move to rural areas to take advantage of everything from cheap real estate to prime weather conditions (such as computer server farms in states like North Dakota). Broadband infrastructure in rural areas brings new businesses which bring new residents, families, cultures, ideologies and economic growth to rural areas, and this is why it is so critically important that lawmakers "get it right" when it comes to USF reform. There is a ripple effect from small communities to state economies and ultimately the national economy that literally starts with rural telecom providers being able to continue offering reasonably comparable broadband in rural areas with sufficient and predictable subsidies. Take these subsidies away from small telecom companies, and the national economy will feel the aftershock eventually.
Cassandra Heyne
ruraltelecommentary@gmail.com
Monday, March 28, 2011
Should Rural TeleCommentary Join Twitter?
As a 20-something young adult whose BlackBerry is actually starting to fuse to the skin on hand and who has usually been considered an "early adopter" of technology and applications for many years, it is with some embarrassment that I admit that I do not use Twitter nor have I ever really even checked it out. However, I have been mulling over starting a Twitter feed for Rural TeleCommentary, to complement the blog itself (not substitute or compete with it). You may have noticed from some of my previous posts, I really like to write...a lot...sometimes too much even (at least according to a handfull of graduate school professors who live and die by enforcing page limits to projects). I am well aware that readers' attention spans for things like blogs and online news are very short, but with my highly specialized subject matter and educated audience, I have faith in my readers to spend an entire 15-20 minutes reading a whole article of 3-5 paragraphs without being dazzled midway through by something shiny and distracting on the Internet. Thus, Twitter has never really appealed to me because I usually have a lot more to say than can fit in 140 characters. So, if I start a Twitter feed, it will be primarily to alert followers of new blog posts as well as to quickly communicate important telecom news or recommend other articles, books, blogs, etc. I am also interested in establishing more two-way communication with my readers, which Twitter may (or may not--I honestly don't know) help facilitate.
I opened a poll which can be found under the headline banner and above my bio to the right of the screen. The question is: Would You Follow Rural TeleCommentary on Twitter? Please take a second (literally, it will take one second) to vote. The poll will be open for 2 months, during which I will study the idea further and try to figure out if it is worthy of my time or not. According to the ever-reliable Wikipedia, 40% of Twitter posts are "pointless babble," which is primarily why I have never invested much effort into this platform for social, educational, professional or entertainment purposes. But--I'm hoping to change my attitude towards it because clearly Twitter is becoming an important (and necessary) tool for businesses and news sources especially. It might be fun, and it might be a good learning experience for me, but I am hesitant to start it unless I actually have committed readers lined up in advance--so please vote!
If any of my readers have experience with Twitter that they would like to share--please share it! If you have any ideas about how I could take advantage of Twitter for the benefit of my audience, please share that as well!
Cassandra Heyne
ruraltelecommentary@gmail.com
Edit 4/3/2011: I removed the Twitter poll because it was causing anomalies in my traffic statistics (not a big deal, but it was bothering me). If you have an opinion about Rural TeleCommentary joining Twitter, please leave a comment or e-mail me. I still plan to consider the possibilities and make a decision in a couple of months.
If any of my readers have experience with Twitter that they would like to share--please share it! If you have any ideas about how I could take advantage of Twitter for the benefit of my audience, please share that as well!
Cassandra Heyne
ruraltelecommentary@gmail.com
Edit 4/3/2011: I removed the Twitter poll because it was causing anomalies in my traffic statistics (not a big deal, but it was bothering me). If you have an opinion about Rural TeleCommentary joining Twitter, please leave a comment or e-mail me. I still plan to consider the possibilities and make a decision in a couple of months.
Wednesday, March 23, 2011
Photos from NTCA 2011 Legislative & Policy Conference
This week, hundreds of managers, directors, employees and advocates from rural telecom providers across the country stormed Capitol Hill for the 2011 The NTCA Legislative & Policy Conference. I attended the conference and participated in the Hill visits to Congressional staff members with a wonderful group from Iowa! I will provide a detailed review of the activities later this week, but for now I wanted to post some pictures that I took at the various events.
Larry Strickling, US Department of Commerce Assistant Secretary of NTIA kicked off the conference on Monday. Strickling discussed the new National Broadband Map (including the controversial inaccuracies), broadband adoption in the US, and the importance of connecting anchor institutions with high-speed broadband in rural communities. Pictured below is Strickling with NTCA CEO Shirley Bloomfield:
Attendees were treated to a special appearance by FCC Chairman Julius Genachowski before lunch on Monday, March 21. Genachowski answered questions asked by Ms. Bloomfield about the principles of Universal Service, the Universal Service NPRM, the National Broadband Plan, market concentration, and infrastructure investment challenges. A moment of this candid conversation is shown below:
Also notable was the Tuesday, March 22 breakfast session with Secretary of the US Department of Agriculture and former Governor of Iowa, Tom Vilsack. Vilsack delivered an empowering speech about the importance of rural America, emphasizing that rural areas are the source for the nation's foods, fibers and fuels. Vilsack shared our concerns about aging and declining rural populations and the economic challenges in rural communities that rural telecom providers strive to overcome by expanding access to broadband Internet. Vilsack commented that rural America is not widely understood by lawmakers, and it is necessary to advocate and educate others about the relevance and importance of rural communities to our nation's culture and economy. Vilsack, pictured below with Bloomfield, is truly tuned in to the needs of rural communities, and his speech was very empowering, motivating and memorable:
The conference concluded with visits to House and Senate staff members (the Congressmen and women unfortunately were on recess this week). The Iowa delegation had a very successful day of lobbying, and I believe we really made an impact on the Congressional staff members that we met with throughout the day. We primarily focused on our concerns related to the Universal Service Reform USF and the National Broadband Plan, as these are immediate issues that will have significant long term ramifications on rural telecom providers in Iowa. We provided the staff members with information about our unique companies and communities, and emphasized that rural telecom providers have been extremely successful in providing high-speed broadband to rural areas under the current USF regime--but some of the proposed changes to USF may prevent future infrastructure investments and threaten the financial security of our companies. I really hope our message was heard! Shown below is the entire Iowa group in front of Bullfeathers restaurant on Capitol Hill, and me with my father (Bruce Heyne, CEO of Walnut Communications) in front of the Longworth House Office Building.
Finally, I was really pleased that the Cherry Blossoms were already starting to bloom! I live in DC but I don't usually take the time to go down to the National Mall and see them (too many tourists!), so I happily took a few pictures of the trees by the Hart Senate Building.
Stay tuned for a more detailed article about the issues that rural telecom providers are facing in the USF NPRM and several other critical issues that were discussed at the conference!
If you are a new reader who I met at the conference and you would like to learn more about Rural TeleCommentary, I encourage you to read New Reader? Welcome to Rural TeleCommentary! and About Rural TeleCommentary and The Author.
Cassandra Heyne
ruraltelecommentary@gmail.com
Larry Strickling, US Department of Commerce Assistant Secretary of NTIA kicked off the conference on Monday. Strickling discussed the new National Broadband Map (including the controversial inaccuracies), broadband adoption in the US, and the importance of connecting anchor institutions with high-speed broadband in rural communities. Pictured below is Strickling with NTCA CEO Shirley Bloomfield:
Attendees were treated to a special appearance by FCC Chairman Julius Genachowski before lunch on Monday, March 21. Genachowski answered questions asked by Ms. Bloomfield about the principles of Universal Service, the Universal Service NPRM, the National Broadband Plan, market concentration, and infrastructure investment challenges. A moment of this candid conversation is shown below:
Also notable was the Tuesday, March 22 breakfast session with Secretary of the US Department of Agriculture and former Governor of Iowa, Tom Vilsack. Vilsack delivered an empowering speech about the importance of rural America, emphasizing that rural areas are the source for the nation's foods, fibers and fuels. Vilsack shared our concerns about aging and declining rural populations and the economic challenges in rural communities that rural telecom providers strive to overcome by expanding access to broadband Internet. Vilsack commented that rural America is not widely understood by lawmakers, and it is necessary to advocate and educate others about the relevance and importance of rural communities to our nation's culture and economy. Vilsack, pictured below with Bloomfield, is truly tuned in to the needs of rural communities, and his speech was very empowering, motivating and memorable:
The conference concluded with visits to House and Senate staff members (the Congressmen and women unfortunately were on recess this week). The Iowa delegation had a very successful day of lobbying, and I believe we really made an impact on the Congressional staff members that we met with throughout the day. We primarily focused on our concerns related to the Universal Service Reform USF and the National Broadband Plan, as these are immediate issues that will have significant long term ramifications on rural telecom providers in Iowa. We provided the staff members with information about our unique companies and communities, and emphasized that rural telecom providers have been extremely successful in providing high-speed broadband to rural areas under the current USF regime--but some of the proposed changes to USF may prevent future infrastructure investments and threaten the financial security of our companies. I really hope our message was heard! Shown below is the entire Iowa group in front of Bullfeathers restaurant on Capitol Hill, and me with my father (Bruce Heyne, CEO of Walnut Communications) in front of the Longworth House Office Building.
Finally, I was really pleased that the Cherry Blossoms were already starting to bloom! I live in DC but I don't usually take the time to go down to the National Mall and see them (too many tourists!), so I happily took a few pictures of the trees by the Hart Senate Building.
Stay tuned for a more detailed article about the issues that rural telecom providers are facing in the USF NPRM and several other critical issues that were discussed at the conference!
If you are a new reader who I met at the conference and you would like to learn more about Rural TeleCommentary, I encourage you to read New Reader? Welcome to Rural TeleCommentary! and About Rural TeleCommentary and The Author.
Cassandra Heyne
ruraltelecommentary@gmail.com
Sunday, March 20, 2011
AT&T-Mobile: Here Comes the Wireless Duopoly
I will surely write more on this subject as this groundbreaking yet not totally surprising potential merger progresses, but I wanted to get my initial reaction and predictions out there quickly. A few weeks ago there was buzz about Sprint and T-Mobile possibly merging, my response was "didn't they learn their lesson about merging incompatible wireless technologies with Nextel?" Yet, the failures of history are doomed to be repeated, or so they say--definitely true in telecommunications anyway. So, at least from the technological perspective, AT&T + T-Mobile makes sense. From a market concentration perspective, it is the beginning of the end of any slight resemblance of a competitive wireless market. If the FCC and DOJ approve this merger, it will pave the way for Verizon to go after Sprint-Nextel, which will result in a duopoly by its truest definition--nearly equal market power divided between two behemoths, where no competitors can come close to realizing the same economies of scale or attract customers with the best handsets, plans and prices. What will happen next--AT&T/T-Mobile will merge with Verizon/Sprint-Nextel; then we will relive the 1980s with a subsequent anti-trust suit and divestiture, where the wireless monopoly will be broken into a half dozen or so Regional Wireless Operating Companies, and the cycle of consolidation will start over once again.
It has been clear for awhile now that small rural wireless carriers will not fare well in the future with customer demands for iPhones and the gigabytes of data used per month per customer expected to continue to skyrocket. The regulatory system has not been favorable to rural wireless carriers who want to acquire spectrum, and auctions typically price small carriers out of the running. Difficulties securing roaming arrangements and exclusive handset deals with the Big 4 also push small wireless carriers to the fringes of the market. How can any regional (or smaller) wireless carrier compete with a network that has 100 million customers? The networks with 50 million customers become the small carriers and the carriers with 1 million or less customers are wiped away; swallowed whole; obliterated by an increasingly anti-competitive market.
It isn't all bad news for small wireless carriers though--the rural providers who are lucky enough to still own cellular holdings (RSA's, other partnerships and the rare sole proprietors), are sitting on gold mines in terms of spectrum assets. One of the Big 4 or Big 3 or Big 1 will pay--and pay a lot--to eliminate small carriers for no better reason than to be rid of having to deal with contractual obligations and lack of total control over the airwaves. Since future funding for rural telecom providers is so uncertain, those who own wireless assets can practically be assured that they will be able to reap a sizable amount of money for these assets that can then be funneled into FTTH and other crucial broadband deployment projects and network upgrades.
I will be following this merger process very carefully as it develops, and I cannot wait to hear the response from the FCC and DOJ. Those of you who have read The Master Switch will be able to see the telecom industry cycle's great migration back to a monopoly--which is definitely scary and troubling from the small rural company perspective. However, wireless has been moving in this direction for years now without much significant opposition.
Stay tuned for my commentary about the NTCA Legislative Conference which I am attending this week! There is an amazing selection of speakers at this conference (Genachowski included), which I am very excited about.
Cassandra Heyne
ruraltelecommentary@gmail.com
It has been clear for awhile now that small rural wireless carriers will not fare well in the future with customer demands for iPhones and the gigabytes of data used per month per customer expected to continue to skyrocket. The regulatory system has not been favorable to rural wireless carriers who want to acquire spectrum, and auctions typically price small carriers out of the running. Difficulties securing roaming arrangements and exclusive handset deals with the Big 4 also push small wireless carriers to the fringes of the market. How can any regional (or smaller) wireless carrier compete with a network that has 100 million customers? The networks with 50 million customers become the small carriers and the carriers with 1 million or less customers are wiped away; swallowed whole; obliterated by an increasingly anti-competitive market.
It isn't all bad news for small wireless carriers though--the rural providers who are lucky enough to still own cellular holdings (RSA's, other partnerships and the rare sole proprietors), are sitting on gold mines in terms of spectrum assets. One of the Big 4 or Big 3 or Big 1 will pay--and pay a lot--to eliminate small carriers for no better reason than to be rid of having to deal with contractual obligations and lack of total control over the airwaves. Since future funding for rural telecom providers is so uncertain, those who own wireless assets can practically be assured that they will be able to reap a sizable amount of money for these assets that can then be funneled into FTTH and other crucial broadband deployment projects and network upgrades.
I will be following this merger process very carefully as it develops, and I cannot wait to hear the response from the FCC and DOJ. Those of you who have read The Master Switch will be able to see the telecom industry cycle's great migration back to a monopoly--which is definitely scary and troubling from the small rural company perspective. However, wireless has been moving in this direction for years now without much significant opposition.
Stay tuned for my commentary about the NTCA Legislative Conference which I am attending this week! There is an amazing selection of speakers at this conference (Genachowski included), which I am very excited about.
Cassandra Heyne
ruraltelecommentary@gmail.com
Wednesday, March 16, 2011
Rural Broadband Usage: To Cap or Not To Cap?
...The question is, should rural broadband providers start thinking about implementing monthly consumer data usage caps? Possibly... One thing is for sure, a new pricing model is necessary so that rural providers can increase revenue and return on investment, and possibly even reduce financial reliance on government subsidies (which might be gone soon anyway).
AT&T's big decision this week to start capping wireline broadband at 150 GB for DSL customers and 250 GB for premium U-verse customers is certainly worth a hearty debate between broadband customers and broadband providers. On one hand, customers have grown accustomed to unlimited broadband use from basically all providers, and it has really only been the wireless providers who have made headlines recently for taking away the precious unlimited plans--primarily in response to the explosive growth of smart phones and corresponding strains on network capacity. Wireless broadband is a relatively new technology for many consumers, so the "shock factor" of taking away unlimited plans is not as severe as it is with DSL, cable or fiber-based broadband, where consumers have never even considered anything less than unlimited use. On the other hand, there are no rules saying that broadband providers must provide unlimited broadband capacity to all consumers, and a company that invests millions (or billions) of dollars into state-of-the-art broadband infrastructure for the benefit of consumers has the right to recoup those costs and make a reasonable profit. Unlimited plans were a wonderful way to attract consumers and get people excited about using the Internet, but the business and technology cycle is at a point now where it is not practical or sustainable to continue unlimited plans indefinitely. There are very few practical businesses where customers can consume a product or service on an unlimited basis forever (example: utilities). Increasing broadband capacity is very expensive for providers, and continual capacity increases cannot go on indefinitely every few years without some significant changes in the pricing strategy. The obvious solution is that the more you use, the more you pay (within reasonable limits of course).
One problem is that consumers and content sources are acting as though the transmission pipe in between is not as important as it actually is, and the content industry is going directly for the consumer's dollars and cutting the transmission provider out of the equation. Netflix is the obvious example--rural providers may experience nearly 1/4 of their peak time capacity going to consumers watching Netflix movies; yet the provider is not compensated proportionally by consumers nor content provider. Online video is only going to grow exponentially in the near future, so why can't broadband providers start reaping the benefits considering they enable the transaction between consumer and content to occur in the first place?
Consumers are going to be angry about data caps at first, but in reality caps probably won't even impact most consumers' bills at all. Internet capacity is not proportionally used by all customers; there are usually only a few percent that use a tremendously high volume of capacity on a regular basis. According to a FierceIPTV article, the AT&T caps will probably only impact about 2% of customers and most average customers only use about 18GB per month. Still, the idea of "unlimited" has a certain appeal and provides a sense of security and care-free attitude of entitlement for consumers. Providers may assume that implementing caps will cause churn, but this need not be the case.
There are also some key issues regarding customers' access to information and basic knowledge about broadband capacity and usage. There aren't any labels on websites saying "You are using X megabytes by looking at this website," like calorie and nutritional information on food and beverages. A consumer has to be fairly tech-savvy to even understand data usage and figure out how to monitor their own consumption, and then they have to actually care enough to make the effort to pay attention (also like food labels, you can put it there but ultimately it is up to the customer to read it, process the information, and make a good decision about consumption). I admittedly have a cynical attitude towards the "normal" Internet consumer. I literally would not expect a "normal" consumer to even know what a gigabyte means, or know the difference between DSL and cable Internet. The engineering behind telecommunications is mysterious and confusing even for me sometimes, and I'm supposedly getting a telecommunications engineering master's degree. By this logic, I would not expect the average consumer to have any clue how much data capacity they consume each month. I know my wireless data usage is usually around 150-300 MB per month, and I think I use my wireless data quite a bit. I actually don't know how much DSL data I use each month, but I am going to try to find out soon because I am curious to see if I would fall into the "over 150 GB per month" category. I watch my classes online, so I would bet my usage is high, although I don't think it is 150 GB. As pointed out in a FierceIPTV article, "You'd have to be rolling an HD movie a day, every day of the month, through Netflix to even tickle the 150 GB cap."
How does this impact rural broadband providers? .
I cannot stress how important it is for rural providers to start "thinking outside the box" for new sources of revenue with the impending threat of USF and access charges being taken away, as well as the inevitable transition away from per-minute voice pricing. It is a scary statistic that some rural providers receive over 50% of their annual revenue from subsidies, and it is a sad fact that some of these companies will not survive if those subsidies are taken away. This just illustrates how important it is to do some planning and experimenting now with new ways to generate income, before it is too late. Will customers like data usage caps? No, they will not. However, rural telecommunications providers have the unique benefit of being intimately involved in the lives of most of their consumers, where managers of rural telephone companies can take the time to sit down face-to-face and explain new pricing models to concerned customers. Rural providers can educate consumers about how they can monitor their broadband data usage, and notify consumers before the limit is reached to avoid those angry visits or phone calls from customers claiming they "didn't know." Due to the tight-knit provider-customer relationship in rural areas, rural customers may be likely to listen and ask questions, rather than just getting angry at a large faceless corporation and fleeing to a competitor. Finally, price differentiation can actually be a winning strategy for many companies who come up with new and creative ways to charge for services, so it is not unreasonable to think that some rural companies could even capitalize on a capped usage pricing strategy somehow and gain a strategic competitive advantage.
For further reading:
FierceIPTV: "AT&T Set to Roll Out Internet Usage Caps in May," Jim O'Neil
The Wall Street Journal: "AT&T Web Customers Face Data Caps," Roger Cheng
Connected Planet: "AT&T Set to Roll with DSL, U-verse Broadband Usage Caps," Dan O'Shea (Interestingly, if you look at the comments on this last article, you will see exactly how customers are reacting to the caps, with comments like "I will promptly cancel my AT&T service," and "If AT&T can't handle the bandwidth, then get out of the business." Unlimited broadband capacity is not a right, it is a priviledge that broadband providers have extended beyond its useful and profitable lifespan--so consumers: get used to changes in broadband pricing!)
Edit: There is a great post on the Innovation Policy Blog sponsored by the Information Technology & Innovation Foundation (ITIF) that really clearly explains how a consumer would literally have to watch Netflix online for 7 hours a day every day in order to exceed AT&T's cap, which makes the criticism about this pricing strategy seem really unnecessary and unwarranted. Additionally, I wrote last month about my disdain for digital piracy and the costs it imposes on broadband networks, and I believe that capped usage strategies will not only send a message that digital piracy will not be overlooked by network providers, but that consumers who engage in this behavior will pay for their actions. Since the appeal of digital piracy is free content, it is possible that some people may even abandon large scale digital piracy rather than pay overage charges to ISPs. Here's hoping anyway...
Cassandra Heyne
ruraltelecommentary@gmail.com
AT&T's big decision this week to start capping wireline broadband at 150 GB for DSL customers and 250 GB for premium U-verse customers is certainly worth a hearty debate between broadband customers and broadband providers. On one hand, customers have grown accustomed to unlimited broadband use from basically all providers, and it has really only been the wireless providers who have made headlines recently for taking away the precious unlimited plans--primarily in response to the explosive growth of smart phones and corresponding strains on network capacity. Wireless broadband is a relatively new technology for many consumers, so the "shock factor" of taking away unlimited plans is not as severe as it is with DSL, cable or fiber-based broadband, where consumers have never even considered anything less than unlimited use. On the other hand, there are no rules saying that broadband providers must provide unlimited broadband capacity to all consumers, and a company that invests millions (or billions) of dollars into state-of-the-art broadband infrastructure for the benefit of consumers has the right to recoup those costs and make a reasonable profit. Unlimited plans were a wonderful way to attract consumers and get people excited about using the Internet, but the business and technology cycle is at a point now where it is not practical or sustainable to continue unlimited plans indefinitely. There are very few practical businesses where customers can consume a product or service on an unlimited basis forever (example: utilities). Increasing broadband capacity is very expensive for providers, and continual capacity increases cannot go on indefinitely every few years without some significant changes in the pricing strategy. The obvious solution is that the more you use, the more you pay (within reasonable limits of course).
One problem is that consumers and content sources are acting as though the transmission pipe in between is not as important as it actually is, and the content industry is going directly for the consumer's dollars and cutting the transmission provider out of the equation. Netflix is the obvious example--rural providers may experience nearly 1/4 of their peak time capacity going to consumers watching Netflix movies; yet the provider is not compensated proportionally by consumers nor content provider. Online video is only going to grow exponentially in the near future, so why can't broadband providers start reaping the benefits considering they enable the transaction between consumer and content to occur in the first place?
Consumers are going to be angry about data caps at first, but in reality caps probably won't even impact most consumers' bills at all. Internet capacity is not proportionally used by all customers; there are usually only a few percent that use a tremendously high volume of capacity on a regular basis. According to a FierceIPTV article, the AT&T caps will probably only impact about 2% of customers and most average customers only use about 18GB per month. Still, the idea of "unlimited" has a certain appeal and provides a sense of security and care-free attitude of entitlement for consumers. Providers may assume that implementing caps will cause churn, but this need not be the case.
There are also some key issues regarding customers' access to information and basic knowledge about broadband capacity and usage. There aren't any labels on websites saying "You are using X megabytes by looking at this website," like calorie and nutritional information on food and beverages. A consumer has to be fairly tech-savvy to even understand data usage and figure out how to monitor their own consumption, and then they have to actually care enough to make the effort to pay attention (also like food labels, you can put it there but ultimately it is up to the customer to read it, process the information, and make a good decision about consumption). I admittedly have a cynical attitude towards the "normal" Internet consumer. I literally would not expect a "normal" consumer to even know what a gigabyte means, or know the difference between DSL and cable Internet. The engineering behind telecommunications is mysterious and confusing even for me sometimes, and I'm supposedly getting a telecommunications engineering master's degree. By this logic, I would not expect the average consumer to have any clue how much data capacity they consume each month. I know my wireless data usage is usually around 150-300 MB per month, and I think I use my wireless data quite a bit. I actually don't know how much DSL data I use each month, but I am going to try to find out soon because I am curious to see if I would fall into the "over 150 GB per month" category. I watch my classes online, so I would bet my usage is high, although I don't think it is 150 GB. As pointed out in a FierceIPTV article, "You'd have to be rolling an HD movie a day, every day of the month, through Netflix to even tickle the 150 GB cap."
How does this impact rural broadband providers? .
I cannot stress how important it is for rural providers to start "thinking outside the box" for new sources of revenue with the impending threat of USF and access charges being taken away, as well as the inevitable transition away from per-minute voice pricing. It is a scary statistic that some rural providers receive over 50% of their annual revenue from subsidies, and it is a sad fact that some of these companies will not survive if those subsidies are taken away. This just illustrates how important it is to do some planning and experimenting now with new ways to generate income, before it is too late. Will customers like data usage caps? No, they will not. However, rural telecommunications providers have the unique benefit of being intimately involved in the lives of most of their consumers, where managers of rural telephone companies can take the time to sit down face-to-face and explain new pricing models to concerned customers. Rural providers can educate consumers about how they can monitor their broadband data usage, and notify consumers before the limit is reached to avoid those angry visits or phone calls from customers claiming they "didn't know." Due to the tight-knit provider-customer relationship in rural areas, rural customers may be likely to listen and ask questions, rather than just getting angry at a large faceless corporation and fleeing to a competitor. Finally, price differentiation can actually be a winning strategy for many companies who come up with new and creative ways to charge for services, so it is not unreasonable to think that some rural companies could even capitalize on a capped usage pricing strategy somehow and gain a strategic competitive advantage.
For further reading:
FierceIPTV: "AT&T Set to Roll Out Internet Usage Caps in May," Jim O'Neil
The Wall Street Journal: "AT&T Web Customers Face Data Caps," Roger Cheng
Connected Planet: "AT&T Set to Roll with DSL, U-verse Broadband Usage Caps," Dan O'Shea (Interestingly, if you look at the comments on this last article, you will see exactly how customers are reacting to the caps, with comments like "I will promptly cancel my AT&T service," and "If AT&T can't handle the bandwidth, then get out of the business." Unlimited broadband capacity is not a right, it is a priviledge that broadband providers have extended beyond its useful and profitable lifespan--so consumers: get used to changes in broadband pricing!)
Edit: There is a great post on the Innovation Policy Blog sponsored by the Information Technology & Innovation Foundation (ITIF) that really clearly explains how a consumer would literally have to watch Netflix online for 7 hours a day every day in order to exceed AT&T's cap, which makes the criticism about this pricing strategy seem really unnecessary and unwarranted. Additionally, I wrote last month about my disdain for digital piracy and the costs it imposes on broadband networks, and I believe that capped usage strategies will not only send a message that digital piracy will not be overlooked by network providers, but that consumers who engage in this behavior will pay for their actions. Since the appeal of digital piracy is free content, it is possible that some people may even abandon large scale digital piracy rather than pay overage charges to ISPs. Here's hoping anyway...
Cassandra Heyne
ruraltelecommentary@gmail.com
Friday, March 11, 2011
Rural TeleCommentary Goes Public with Exciting Results!
When I sent out e-mails to the rural telecommunications industry yesterday announcing Rural TeleCommentary, I had no idea that within 24 hours a major telecom news website would be writing about my blog and my post about the National Broadband Map in particular!!! Needless to say, I nearly screamed with delight when I was scrolling through Facebook on my Blackberry earlier and came across a headline from Connected Planet that sounded vaguely familiar:
Newly Minted Law School Grad Questions Accuracy of National Broadband Map, by Joan Engebretson
When I saw my name in the article, I think I really did scream with excitement! Engebretson is an independent telecom writer on Connected Planet who I respect greatly. I follow her articles and blog posts on Connected Planet and I always look forward to what she has to say about the rural telecom industry. She also writes about how FCC decisions and other events impact the rural telecom industry specifically, and we all know that the rural voice is often not heard at all on major news outlets--making her voice quite valuable to me and many others. I am extremely grateful and excited about being featured on one of the best and most reliable news sources for the telecommunications industry! I feel very honored and I hope that this publicity will help attract even more readers to Rural TeleCommentary!
Thank you to everyone else who has e-mailed me and visited Rural TeleCommentary since yesterday! I am really excited about having a larger audience and it will definitely motivate me to keep writing about important issues in the rural telecommunications industry! I will be attended the NTCA Legislative Conference next week, which I am really looking forward to. I have not attended this conference in 7 or 8 years (OK, now I feel old), and I am excited about going back with the additional knowledge and insight I have gained about the telecom industry in the last few years. It is sure to be a valuable experience that will hopefully make an impact on some of the upcoming and troubling government decisions in the industry.
Welcome to all my new readers, and thank you for the great feedback!
Cassandra Heyne
ruraltelecommentary@gmail.com
Newly Minted Law School Grad Questions Accuracy of National Broadband Map, by Joan Engebretson
When I saw my name in the article, I think I really did scream with excitement! Engebretson is an independent telecom writer on Connected Planet who I respect greatly. I follow her articles and blog posts on Connected Planet and I always look forward to what she has to say about the rural telecom industry. She also writes about how FCC decisions and other events impact the rural telecom industry specifically, and we all know that the rural voice is often not heard at all on major news outlets--making her voice quite valuable to me and many others. I am extremely grateful and excited about being featured on one of the best and most reliable news sources for the telecommunications industry! I feel very honored and I hope that this publicity will help attract even more readers to Rural TeleCommentary!
Thank you to everyone else who has e-mailed me and visited Rural TeleCommentary since yesterday! I am really excited about having a larger audience and it will definitely motivate me to keep writing about important issues in the rural telecommunications industry! I will be attended the NTCA Legislative Conference next week, which I am really looking forward to. I have not attended this conference in 7 or 8 years (OK, now I feel old), and I am excited about going back with the additional knowledge and insight I have gained about the telecom industry in the last few years. It is sure to be a valuable experience that will hopefully make an impact on some of the upcoming and troubling government decisions in the industry.
Welcome to all my new readers, and thank you for the great feedback!
Cassandra Heyne
ruraltelecommentary@gmail.com
Thursday, March 10, 2011
New Reader? Welcome to Rural Telecommentary!
Time for Rural TeleCommentary to go public!
Well, Rural TeleCommentary has been moving right along in the cyber world for about two months now, and so far I am quite pleased with it. I have finally decided that it is time to start expanding my readership beyond a very small group of family and past co-workers (thank you all so much for your support so far, your suggestions have been very helpful and I really appreciate when people leave comments on my posts too!). However, the time has come to bring in more readers from the rural telecom industry. For the last few weeks I've been working on compiling a list of names of people from rural telecom associations, law firms, consulting firms, and state associations--all of whom I respect greatly for the work that they do to preserve and advocate the rural telecom industry. So, I will be sending e-mails to these select individuals (if you are a new reader and reading this post right now, then you are probably a recipient of this email). So, for my new readers, I have prepared some information that you may find useful to understand the meaning of this project.
"So, what is Rural TeleCommentary anyway?"
Rural TeleCommentary is a project I started back in January where I write about interesting and important current events in the telecommunications industry, and I analyze how the event (such as an NPRM or a new technology) will impact rural telecommunications providers. I am also hoping to do a series of comment summaries on the USF Reform proceeding, and I just started writing a series about business opportunities for rural utility co-ops and rural telecom providers to collaborate to reach smart grid and broadband deployment goals. These are just a few examples, but if you scroll down you will see articles on a variety of other topics including Federal funding for broadband, digital piracy, the National Broadband Map, and a book review of a truly outstanding book on the telecommunications industry. Some of my topics will be extensions from classes I am taking, and others are reviews of conferences I attend. If you would like to read my first official post, you can learn more about me, my credentials, and my goals for Rural TeleCommentary. You can jump there right now!
"I like it! Do I need to do anything other than just check in and read it every so often?"
You can read and enjoy this blog in any way that works best for you, but I may offer a few suggestions regarding reader participation. Of course, you are in no way obligated to participate but increased participation will certainly make it more interesting and beneficial for everyone!
The fastest way for you to find out when I post new articles is to get on my e-mail list. I send an e-mail alert as soon as I post an article. If you want to be on my e-mail list, just send me an e-mail with your preferred e-mail address and you will be added to the list. I do not want to unintentionally spam anyone, so this is why I am requesting an opt-in e-mail list option. I write articles approximately once per week, so you will not be bombarded with e-mails, I promise!
Alternatively, I've been posting links to new articles on my Facebook. You are more than welcome to "friend" me on Facebook and then you will be informed when a new article is posted.
Otherwise, you can just bookmark the website and check in whenever you want.Or not. It is totally up to you!
"I like it but... I have a few suggestions for how you could improve the site."
Great!! All feedback is really appreciated. This is a learning experience for me, so feedback is really a necessary part of the process. I am also open to taking suggestions for things to write about.
I think that about covers the basics. I invite you to scroll through my articles and I hope you enjoy Rural TeleCommentary!
Cassandra Heyne
ruraltelecommentary@gmail.com
Well, Rural TeleCommentary has been moving right along in the cyber world for about two months now, and so far I am quite pleased with it. I have finally decided that it is time to start expanding my readership beyond a very small group of family and past co-workers (thank you all so much for your support so far, your suggestions have been very helpful and I really appreciate when people leave comments on my posts too!). However, the time has come to bring in more readers from the rural telecom industry. For the last few weeks I've been working on compiling a list of names of people from rural telecom associations, law firms, consulting firms, and state associations--all of whom I respect greatly for the work that they do to preserve and advocate the rural telecom industry. So, I will be sending e-mails to these select individuals (if you are a new reader and reading this post right now, then you are probably a recipient of this email). So, for my new readers, I have prepared some information that you may find useful to understand the meaning of this project.
"So, what is Rural TeleCommentary anyway?"
Rural TeleCommentary is a project I started back in January where I write about interesting and important current events in the telecommunications industry, and I analyze how the event (such as an NPRM or a new technology) will impact rural telecommunications providers. I am also hoping to do a series of comment summaries on the USF Reform proceeding, and I just started writing a series about business opportunities for rural utility co-ops and rural telecom providers to collaborate to reach smart grid and broadband deployment goals. These are just a few examples, but if you scroll down you will see articles on a variety of other topics including Federal funding for broadband, digital piracy, the National Broadband Map, and a book review of a truly outstanding book on the telecommunications industry. Some of my topics will be extensions from classes I am taking, and others are reviews of conferences I attend. If you would like to read my first official post, you can learn more about me, my credentials, and my goals for Rural TeleCommentary. You can jump there right now!
"I like it! Do I need to do anything other than just check in and read it every so often?"
You can read and enjoy this blog in any way that works best for you, but I may offer a few suggestions regarding reader participation. Of course, you are in no way obligated to participate but increased participation will certainly make it more interesting and beneficial for everyone!
- I would love for new readers to introduce themselves in the comments section of this post so I can get a better idea of who my audience is, which will help me pick topics that might be particularly interesting to my readers.
- Do you have a Google account? Gmail? Already a blogger yourself? If you have a Google account, you can click on the "follow" icon on the right side of the screen below my profile and archive. My feelings won't be hurt if you don't--I'm pretty sure the "follow" feature is just a popularity contest anyway. If you have a Google blog too, there is presumably some way we can link to each others blogs.
- I really, really encourage you to leave comments on my posts. One of my goals for this project is to engage in lively debates and intellectual conversations on the topics I write about. If you are an expert in a topic I have written about, please share your knowledge with us as well.
The fastest way for you to find out when I post new articles is to get on my e-mail list. I send an e-mail alert as soon as I post an article. If you want to be on my e-mail list, just send me an e-mail with your preferred e-mail address and you will be added to the list. I do not want to unintentionally spam anyone, so this is why I am requesting an opt-in e-mail list option. I write articles approximately once per week, so you will not be bombarded with e-mails, I promise!
Alternatively, I've been posting links to new articles on my Facebook. You are more than welcome to "friend" me on Facebook and then you will be informed when a new article is posted.
Otherwise, you can just bookmark the website and check in whenever you want.Or not. It is totally up to you!
"I like it but... I have a few suggestions for how you could improve the site."
Great!! All feedback is really appreciated. This is a learning experience for me, so feedback is really a necessary part of the process. I am also open to taking suggestions for things to write about.
I think that about covers the basics. I invite you to scroll through my articles and I hope you enjoy Rural TeleCommentary!
Cassandra Heyne
ruraltelecommentary@gmail.com
Thursday, March 3, 2011
Business Opportunities Beyond Traditional Telecom Services: The Smart Grid
The Smart Grid is a hot topic right now, and I'm planning to write several articles about smart grid opportunities for rural telecom providers in the near future, focusing on different aspects of this idea. I have personally been interested in the Smart Grid for a year or so, and then I had the pleasure of doing several smart-grid related projects for my previous job and in the Wireless Communications engineering class I took last semester. My focus has primarily been on using wireless networks for smart grid components, and which type of wireless networks are most appropriate for different utility operations--from smart meters to SCADA to critical infrastructure communications (smart meters in particular). Naturally, I was very excited when a new class was added to the University of Colorado Interdisciplinary Telecommunications Program this semester: Energy Communications Networks, focusing on all different communications aspects of the Smart Grid. I did not actually need to take this class for the credit hours or as a requirement, but that did not stop me from registering anyway because I am so interested in the topic. I would actually like to become somewhat of an expert in Smart Grid communications, for reasons I will explain momentarily. So far the class has been very interesting and I have been gaining some valuable knowledge about utility systems in general, a topic that is relatively new to me. There are just so many interesting aspects of utility communications, and the convergence of digital data communications with something as "old fashioned" and entrenched as the utility grid promises literally unlimited possibilities for utility providers and consumers, and new business opportunities rural telecommunications providers.
Yes, and telecommunications providers. Traditionally, the utility industry has not been very trustworthy of commercial telecommunications network providers. Utility providers want communications networks that promise the highest levels of reliability, security and resiliency, and this usually means building their own private networks specifically tailored to specifications and strict requirements in these areas. Utility providers want to have priority use of the network if "something bad happens," and utility providers also need network coverage in the deepest, darkest, most rural corner of their service territory--places that even the best telecom network providers may not reach easily or profitably with broadband. Although not every type of commercial telecommunications network is an attractive option for utility providers, I do believe that rural telephone companies and rural utility cooperatives should break down some of the traditional barriers between these two critical industries. Rural telecom providers are the most likely type of commercial telecom company to have broadband service that reaches far and wide in rural areas that are not considered profitable for larger telecom providers. It is a well known fact among the rural telecom advocates that rural companies provide far better broadband service in rural areas than their larger competitors, which has been an issue of contention in may recent FCC proceedings and will surely be brought up again in the CAF/USF Reform comments coming out next month. I suspect, and would like to further investigate, that many rural utility cooperatives and rural telephone companies and cooperatives have very similar service areas, where some real exciting business opportunities could exist for network sharing and shared investment in broadband facilities.
It is also a well known fact in the rural telecom industry that rural companies need to start looking at ancillary businesses and considering new ways to utilize existing infrastructure to increase profitability. With USF funding and access charges facing a dark and uncertain future, there is going to be a "survival of the fittest" situation in the rural telecom industry. The "fittest" are going to be the ones who jump on new business opportunities, possibly outside the scope of normal telecom services. Applications and content, particularly in video and social networking, are two obvious choices for expanded business models in hot current markets, but may not be practical or ideal for small rural companies. There is considerable pressure for utility companies to upgrade to smart grid capability--afterall, a frightening percentage of technology in the utility grid is already years past its expected useful lifespan of 30-40 years. Similarly, there is a huge push for telecom providers to upgrade to 4G, FTTH, and other broadband-capable technologies. See where I am going here? Utilities need to upgrade communications networks to broadband + Telecom providers cannot survive unless they upgrade to broadband = Business Opportunity for both parties.
There are many challenges facing any type of collaboration between rural utility and rural telecom providers. The lack of trust that utilities harbor towards telecom is clearly an issue, but I think there would be more potential for mutual agreement in a rural area, where the manager of the rural utility co-op and the manager of the rural telecom operator are probably neighbors, have kids on the same football team, or at least run into each other on a regular basis. This is one of the benefits of keeping rural services (be it telecom, utility, or grocery stores) owned and operated by members of the community. The business culture itself is more appropriate for collaboration across lines that are traditionally not crossed in corporate America, and each provider has a significant stake in the future of the community as members of the community themselves. The other major challenge is technology. Utility providers are implementing any and all types of communications networks in the migration to the Smart Grid, and often there are different communications technologies used by one utility provider for different segments of the grid. In general, wireless seems to be one of the best options. In the project I did for my wireless class last semester, I looked at the benefits and drawbacks of using public vs. private and licensed vs. unlicensed wireless networks. In a "perfect world" scenario, utility providers would probably want private licensed spectrum for most Smart Grid applications, but in a realistic world, there are actually many possibilities for using commercial and/or unlicensed wireless in areas of the grid that require lower bandwidth, less security, and low priority data transmission. Smart meters (or Advanced Metering Infrastructure-AMI) are an attractive candidate for using commercial spectrum because of these factors (low bandwidth, etc.). One possibility for a rural utility-rural telco partnership is in wireless broadband. A rural telco who already has (or is planning to deploy) a local wireless network like WiFi or WiMax could work with a rural utility co-op on network planning and capacity requirements, and could possibly even share the capital cost of the investment. Collaboration on network planning could be very beneficial to both sides, and it could ultimately allow the telecom provider to reach more customers with wireless broadband.
Basically, rural telecom providers need to start looking for new business opportunities in the face of adversity and a harsh regulatory regime. In an industry where the actual service providers are being shadowed by devices, applications and content, rural telecom providers need to be getting the most out of their infrastructure investments or risk an unprofitable future in terms of reduced long distance revenue and customer migration coupled with USF uncertainty. There may still be many challenges to overcome before commercial telecom providers and utility providers are best friends on a crusade to increase broadband availability in rural areas in a mutually beneficial way, but I think the time has come for these two industries to look into convergence possibilities wherever possible. I am planning to do more research on this topic soon and will add more information and ideas about smart grid business opportunities for rural telecom providers.
Edit 3/8/2011: I was so excited to see this article today in Connected Planet: NRTC Lands Two New Smart Grid Product Offerings, about some new technologies that will provide infrastructure synergies for rural utility cooperatives and rural telecommunications providers. I am planning to investigate the technologies mentioned in the article from Sensus and Efacec as well as the potential for rural utility-telecom collaboration for a project in my Energy Communications class. The article also mentions that one rural utlity and telco have merged some operations to achieve Smart Grid goals, and I am very curious to learn more about this partnership-- Who is it? Have they been successful? What challenges have they overcome?
Cassandra Heyne
ruraltelecommentary@gmail.com
Yes, and telecommunications providers. Traditionally, the utility industry has not been very trustworthy of commercial telecommunications network providers. Utility providers want communications networks that promise the highest levels of reliability, security and resiliency, and this usually means building their own private networks specifically tailored to specifications and strict requirements in these areas. Utility providers want to have priority use of the network if "something bad happens," and utility providers also need network coverage in the deepest, darkest, most rural corner of their service territory--places that even the best telecom network providers may not reach easily or profitably with broadband. Although not every type of commercial telecommunications network is an attractive option for utility providers, I do believe that rural telephone companies and rural utility cooperatives should break down some of the traditional barriers between these two critical industries. Rural telecom providers are the most likely type of commercial telecom company to have broadband service that reaches far and wide in rural areas that are not considered profitable for larger telecom providers. It is a well known fact among the rural telecom advocates that rural companies provide far better broadband service in rural areas than their larger competitors, which has been an issue of contention in may recent FCC proceedings and will surely be brought up again in the CAF/USF Reform comments coming out next month. I suspect, and would like to further investigate, that many rural utility cooperatives and rural telephone companies and cooperatives have very similar service areas, where some real exciting business opportunities could exist for network sharing and shared investment in broadband facilities.
It is also a well known fact in the rural telecom industry that rural companies need to start looking at ancillary businesses and considering new ways to utilize existing infrastructure to increase profitability. With USF funding and access charges facing a dark and uncertain future, there is going to be a "survival of the fittest" situation in the rural telecom industry. The "fittest" are going to be the ones who jump on new business opportunities, possibly outside the scope of normal telecom services. Applications and content, particularly in video and social networking, are two obvious choices for expanded business models in hot current markets, but may not be practical or ideal for small rural companies. There is considerable pressure for utility companies to upgrade to smart grid capability--afterall, a frightening percentage of technology in the utility grid is already years past its expected useful lifespan of 30-40 years. Similarly, there is a huge push for telecom providers to upgrade to 4G, FTTH, and other broadband-capable technologies. See where I am going here? Utilities need to upgrade communications networks to broadband + Telecom providers cannot survive unless they upgrade to broadband = Business Opportunity for both parties.
There are many challenges facing any type of collaboration between rural utility and rural telecom providers. The lack of trust that utilities harbor towards telecom is clearly an issue, but I think there would be more potential for mutual agreement in a rural area, where the manager of the rural utility co-op and the manager of the rural telecom operator are probably neighbors, have kids on the same football team, or at least run into each other on a regular basis. This is one of the benefits of keeping rural services (be it telecom, utility, or grocery stores) owned and operated by members of the community. The business culture itself is more appropriate for collaboration across lines that are traditionally not crossed in corporate America, and each provider has a significant stake in the future of the community as members of the community themselves. The other major challenge is technology. Utility providers are implementing any and all types of communications networks in the migration to the Smart Grid, and often there are different communications technologies used by one utility provider for different segments of the grid. In general, wireless seems to be one of the best options. In the project I did for my wireless class last semester, I looked at the benefits and drawbacks of using public vs. private and licensed vs. unlicensed wireless networks. In a "perfect world" scenario, utility providers would probably want private licensed spectrum for most Smart Grid applications, but in a realistic world, there are actually many possibilities for using commercial and/or unlicensed wireless in areas of the grid that require lower bandwidth, less security, and low priority data transmission. Smart meters (or Advanced Metering Infrastructure-AMI) are an attractive candidate for using commercial spectrum because of these factors (low bandwidth, etc.). One possibility for a rural utility-rural telco partnership is in wireless broadband. A rural telco who already has (or is planning to deploy) a local wireless network like WiFi or WiMax could work with a rural utility co-op on network planning and capacity requirements, and could possibly even share the capital cost of the investment. Collaboration on network planning could be very beneficial to both sides, and it could ultimately allow the telecom provider to reach more customers with wireless broadband.
Basically, rural telecom providers need to start looking for new business opportunities in the face of adversity and a harsh regulatory regime. In an industry where the actual service providers are being shadowed by devices, applications and content, rural telecom providers need to be getting the most out of their infrastructure investments or risk an unprofitable future in terms of reduced long distance revenue and customer migration coupled with USF uncertainty. There may still be many challenges to overcome before commercial telecom providers and utility providers are best friends on a crusade to increase broadband availability in rural areas in a mutually beneficial way, but I think the time has come for these two industries to look into convergence possibilities wherever possible. I am planning to do more research on this topic soon and will add more information and ideas about smart grid business opportunities for rural telecom providers.
Edit 3/8/2011: I was so excited to see this article today in Connected Planet: NRTC Lands Two New Smart Grid Product Offerings, about some new technologies that will provide infrastructure synergies for rural utility cooperatives and rural telecommunications providers. I am planning to investigate the technologies mentioned in the article from Sensus and Efacec as well as the potential for rural utility-telecom collaboration for a project in my Energy Communications class. The article also mentions that one rural utlity and telco have merged some operations to achieve Smart Grid goals, and I am very curious to learn more about this partnership-- Who is it? Have they been successful? What challenges have they overcome?
Cassandra Heyne
ruraltelecommentary@gmail.com
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