Communications

Reports

Broadband partnerships between Rural Local Exchange Carriers (RLEC) and Electric Distribution Cooperatives (EDs) are uncommon, but when done right, can benefit all involved.

The wireless industry is embarking on a new unlicensed spectrum sharing business model that will help the likes of wireless internet service providers (WISPs), rural local exchange carriers (RLECs), and electric distributor co-ops build fixed wireless networks in rural America.

As organizations look for cost-effective ways to manage their IT operations, the hybrid cloud offers an attractive alternative to on-premise data centers.

Wireless operator margins are being pressured and cost management is under the microscope as the mobile market matures. As a result, the legacy tower business model with its annual escalators and amendment fees are becoming a problem for operators. 
Investments in U.S. fiber networks have become an area of focus for infrastructure funds looking to take advantage of the industry’s secular tailwinds and strategic buyers who want to diversify their business and/or gain operating leverage.
Many rural local exchange carriers, or LECs, face secular headwinds in their core business thanks to declining regulated revenues. These revenues have been under pressure for years given a variety of factors, particularly with the shift away from landline service in favor of wireless. 

FirstNet will enable rural wireless operators to evolve their business model with AT&T to a co-locate/backhaul structure versus just a roaming relationship, which opens the door to new long-term recurring revenue opportunities.

As rural telecom operators look for cost-effective ways to bridge the digital divide, 5G FWA has been identified as a potential solution. The issues deploying widespread fiber networks in rural markets are numerous and well documented, which has led to an estimated 25 million consumers without broadband access.

CoBank spoke with Sean Friend, director of finance of Co-Mo and Tom Howard, CEO of Callaway, to understand how the partnership developed and what the two very similar businesses bring to the table.

CoBank spoke with Bruce Purdy, NAEC’s general manager, and John Drake, IT manager and network administrator at Great Western Products, to better understand the impact of the recent service expansion within each company and the community.

CoBank sat down with Ty Thompson, vice president and deputy general counsel for director and legal services, and Jessica Healy, assistant general counsel, both of the NRECA, to discuss some of the high-level legal issues that co-ops must understand before moving into broadband.

CoBank sat down with Foster Hildreth, OPALCO’s general manager, and Gerry Lawlor, vice president, Fixed Broadband with T-Mobile to discuss how this unlikely broadband partnership began and the benefits it has provided.

CoBank spoke with Bill Miller, CPA, a tax partner with the firm of Bolinger, Segars, Gilbert & Moss, LLP to get a perspective on the accounting, tax and other issues that surround both creation of a broadband venture and an exit strategy.

CoBank met with Jenny Kartes, finance and administration manager with Arrowhead and Kristi Westbrock, CEO and general manager of CTC, to better understand this non-traditional union and explore its benefits and challenges.

CoBank sat down David Girvan, COO of United Electric Cooperative, and Jasper Schneider, vice president of member and industry at NISC, to discuss the challenges they faced and how they dramatically improved the co-op’s entire customer service function.

Broadband Partnerships

September 2018

Broadband communications is coming to rural America, and the pace of progress remains slow. But there is good news in several areas.

Over the past two decades, the rise of the Internet and the development of wireless smartphone technology have upended the conventional regulatory distinctions between the rural and urban telecom networks. Today, telecom users in rural communities access the valuable content and applications they need to remain well-informed and competitive in the knowledge economy via a complex telecom network that spans both rural and urban areas.
The Universal Service Fund (USF)  provides subsidies to telecommunications providers as a means of increasing the availability and affordability of advanced telecommunications services. In 2011, significant reform was introduced, including the creation of the Connect America Fund (CAF), to help modernize the USF and promote support of these telecom services in the nation’s high-cost areas. Now in 2016, additional reform has been announced to further transition the CAF from supporting the provision of voice services to the provision of broadband services.
Universal Service remains a central tenet of U.S. telecom policy. Its premise is that all Americans, including those who live in rural communities, should have equal access to advanced telecommunications and information services. However, despite the Federal Communications Commission’s (FCC) many initiatives, the rural/urban digital divide persists, to the detriment of rural businesses and residents.
Rural and urban Americans differ in one critical respect – unequal access to high-speed broadband and wireless technologies. At the heart of this inequality is the drastic difference in infrastructure costs when weighed against the number of subscribers.
In the era of “big data,” farming is undergoing yet another technological revolution. This leap into the new age of farming includes, but extends far beyond, the latest GPS-guided farm machinery. Along with the crops they grow, farmers are also harvesting data – mindboggling amounts of it as U.S. agriculture pushes faster into the information age.
Modern, high-speed broadband access is just as vital to the economic health of rural America as it is to the wellbeing of urban America. No longer is the Internet a novelty or luxury. Rural Americans have less access to high-speed broadband connectivity than their urban counterparts. The Federal Communications Commission (FCC) documented that broadband deployment in rural America is “failing to keep pace.”
Home automation could be the next billion dollar consumer segment within the cable industry. The industry is well positioned to use its existing infrastructure to add home automation as its fourth product offering to complement its existing offerings of voice, video and data – thereby converting the industry’s triple play into a homerun.
After years of debate and discussion about reforming the Universal Service Fund and the Intercarrier Compensation system, the FCC issued its Transformation Order in November 2011. It reflects the FCC’s attempt to refocus support away from voice service and towards broadband service, as well as a reorientation of subsidies away from intercarrier access charges and towards direct financial support.
New competitive threats including rising programming costs and over-the-top (OTT) offerings such as Netflix have altered cable television’s landscape in recent years. Now facing a battle similar to the one that telecom companies confronted in the early 2000s with the decline of the telephony market, cable managers are trying to avoid comparable losses of video subscribers.
Consumers and businesses today can access their data anywhere, anytime, and on any device thanks to the convergence of communications services, data, and entertainment. This extraordinary development is largely the result of cloud computing, or the use of highly scalable computing resources that are provided as a service via the Internet on a pay-as-you-go basis.
In March 2012, analysts at Gartner Inc., a research consultancy, predicted that the personal cloud would replace the personal computer (PC) by 2014. Although this statement brings forth visions of individuals tossing their laptops into the nearest dumpsters, this is not what the analysts had in mind. A more accurate headline would have highlighted the demotion of the PC to just another device, as consumers switch to the personal cloud as their computing hub.
Many companies have concluded that outsourcing IT infrastructure is the most cost-effective and secure method of managing the enterprise IT function. Business models for data centers vary widely, but all of them share two fundamental features – a substantial investment in fixed assets, and a predictable, recurring revenue stream.
CoBank hosted its 14th annual Communications Industry Executive Forum on August 16-19. This year’s forum was organized around the theme of how rural telecommunications providers have adapted to the telecom revolution.