Incumbent Turf War

1:45 PM -- I was just thinking of the Recovery Act today and wondering: How will incumbent service providers defend their turf when some other carrier asks the government for grants and loans to build a network to serve customers in their territory?

The answer could be that the incumbent simply has to provide "better" data or a more thorough look at its capabilities than its potential competitor.

According to the Notice of Funds Availability (NOFA), the Rural Utilities Service (RUS) and National Telecommunications and Information Administration (NTIA) will post a Public Notice of the proposed funded service areas of each funding application made for a 30-day period. "The Public Notice will provide existing service providers an opportunity to submit to the agencies information regarding their service offerings," the NOFA states.

Indeed, the incumbents will have one final chance to chase off competitors. The NOFA continues: "If the information submitted by an existing service provider demonstrates that the applicant's proposed funded service area is not unserved, both RUS and NTIA reserve the right to reclassify the application: If the information submitted by an existing service provider establishes that the applicant's proposed funded service area is not underserved, both RUS and NTIA may reject the application."

That passage interests me because incumbent carriers actually do have the resources to contest every little affront made to their turf. They also have the lobbying power and influence to change the government's mind on policy matters, when it suits them.

So it will be interesting to see how much effort the incumbents -- and their cable counterparts -- put toward empire preservation.

Spending their own money on their own network in a rural area is one thing (and not a very attractive thing, given the state of incumbent telco DSL in most rural communities). But I wonder if these telcos will stand for having some government-backed competitor come along and offer a better service at a better price.

What do you think?

— Phil Harvey, Editor-in-Chief, Light Reading

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