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NTCA CEO: US Needs 1 Rural Network Entity

Carol Wilson
10/25/2013

LAS VEGAS — TelcoVision 2013 — The time has come for small telcos in the US to band together in a national entity, not only for the economies of scale in buying and deploying next-gen network gear, but also to be able to bid against bigger players for significant contracts from the federal government and others.

That's according to Shirley Bloomfield, CEO of the NTCA - The Rural Broadband Association , which is co-sponsoring this event.

In an interview following her keynote speech here, Bloomfield identified Indatel as one entity likely to create this national network, though she also said the many statewide fiber optic networks have a role to play.

    There are 30 statewide fiber optic networks that my members are part of. These are incredibly valuable assets, but we need to move faster to monetize them. Even a statewide network is challenged when you are talking about big contracts that go across multiple state boundaries. We need to take that next step.

Rural telcos are in position to serve many government agencies, such as the Veterans' Administration (with hospitals in rural areas) and the US Department of Agriculture (with offices across the country). However, these companies generally don't get a chance to bid on those government contracts, because they operate as separate entities. "For contracts of that size, you need one throat to choke. No agency or company is going to want to call 800 little companies or even 30."

Already, rural telcos are banding together in dealing with vendors to get better pricing on equipment through higher-volume deals, she said, but more of that needs to happen.

In some ways, Bloomfield's comments echoed those made a day earlier by Vince Tyson, COO of the New Mexico telco Plateau Communications, who urged independent rural telcos to band together to achieve more scale. (See: Rural Telcos Admit Major Changes Are Needed.)

A number of those participating here were quick to agree with Bloomfield about the need to create a national footprint for rural telcos, even though they also pointed out challenges. James Taylor, CEO of CHR Solutions Inc. , which sells white-label cloud services to the rural market, said in a panel discussion and in a later interview that rural telcos haven't set up their networks to make interconnection or cooperation easy. When he asked the TelcoVision audience how many of them had MPLS networks, dozens of hands went into the air. But when he asked if they had set up their MPLS networks with standard naming conventions that would enable interconnection with neighboring telcos' MPLS operations, very few hands went up.

Because of the way the networks have been set up, he said, even those telcos that have invested in next-generation gear will be treated as "dumb pipes" by the bigger players that are looking to deliver services to their customer locations in rural areas.

Steve Gleave, senior vice president of marketing at Metaswitch Networks , said that's why it's important for the rural players to look not just at upgrading their networks, but also at changing the way they do business. "It will take a few people to stand up and lead it. If the right people stand up, others will follow."

Companies are making efforts to create a national look and feel for services. Alianza Corp. teamed up with Level 3 Communications Inc. (NYSE: LVLT) to create a national footprint for a cloud-based wholesale VoIP offering that rural telcos can deliver. And there have been many efforts (few unsuccessful) to create a nationwide content acquisition platform that lets small telcos negotiate with video content owners as a group for better prices. (See: Voice Crunch Elevates Alianza.)

Bloomfield envisions a concerted effort to better market what rural telcos have already built, including extensive fiber optic networks to many anchor institutions in their communities, and to help them add to what's there, both in terms of physical networks and next-generation services, in a more cost-effective manner.

"We need a single entity that can work across state lines," she said. "If you look at where our networks are, we are in places where nobody else is, and what we can offer is an umbrella service offering to reach those locations."

— Carol Wilson, Editor-at-Large, Light Reading

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sam masud
sam masud
10/30/2013 | 2:37:19 PM
Another challenge for rural telcos
I did a study of rural telcos back in 07, and one of things that came up more than once is that whenever a telco decide to expand in any way (e.g. offering broadband Internet access or IPTV), that's when the big guys would wake up (e.g. Comcast, ATT) and muscle in on the rural telco. I don't imagine that game has changed.

Banding together might be a good idea, but it may take more than that for these telcos to stay relevant.

 
Carol Wilson
Carol Wilson
10/27/2013 | 11:41:21 AM
Re: A merry band of carriers?
One of the rural companies' challenges is to try not to be commoditized and dark fiber is definitely a commodity. So I think that's a last resort option, if still an option. 
Liz Greenberg
Liz Greenberg
10/25/2013 | 9:28:04 PM
Re: A merry band of carriers?
Exactly!!  Or they could just lease some dark fiber for interconnect.
Carol Wilson
Carol Wilson
10/25/2013 | 8:39:40 PM
Re: A merry band of carriers?
Hmm, Dan, intriguing thought. But I'm guessing "all their money" would fall short of what Level 3 would expect in a takeover.

Shirley Bloomfield highlighted Indatel - http://www.indatelgroup.org/ -- which is already building wholesale connections to rural America. 

 

More on them to come.
DOShea
DOShea
10/25/2013 | 7:53:12 PM
Re: A merry band of carriers?
Ok, this is when all the rural telcos put all of their money together and make a bid to acquire Level 3 Communications.
Carol Wilson
Carol Wilson
10/25/2013 | 6:52:12 PM
Re: A merry band of carriers?
They would need to have a national fiber backbone network that connects the 30 state fiber networks and other local fiber networks -- that's the key for the rural telcos, because they want the traffic going over their existing facilities and the ones they hope to be able to build. 
DanJones
DanJones
10/25/2013 | 6:50:36 PM
Re: A merry band of carriers?
Should be interesting, I bet the CCA would *like* to take on that role.
Carol Wilson
Carol Wilson
10/25/2013 | 6:29:58 PM
Re: A merry band of carriers?
I don't think so - despite the name change, I think most small telcos would still view the CCA as a wireless group.  What Shirley Bloomfield and others are discussing is a national network that ties together rural telcos, some of which have wireless spectrum and wireless subsidiaries, but many of which don't. 

 
DanJones
DanJones
10/25/2013 | 6:21:09 PM
Re: A merry band of carriers?
Wouldn't the CCA fufil that function already?
Carol Wilson
Carol Wilson
10/25/2013 | 2:49:23 PM
Re: A merry band of carriers?
A lot of rural telcos don't own spectrum, so the wireless piece is harder thing to do. ki think what Shirley is talking about is more the wireline folks, who need new revenues to monetize the networks they've already built and fund the ones they want to build. 
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