of operating in very rural areas—from which companies could
then make their own decisions. The focus then became how
best to seek out new forms of ongoing revenue and ways of
reducing reliance upon regulatory cost recovery where possible.
For many companies represented on the task force, that has
meant being open to working with others, introducing new services, and placing a greater emphasis on sales and marketing.
Pineland, for example, recently reviewed an opportunity to
provide logistical support to FedEx deliveries in its serving territory. Durden laughed when asked if delivering physical packages
has any similarity to delivering digital packages, but being open
to new opportunities is becoming a way of life for Pineland and
other telcos looking to diversify their balance sheets.
“It may not be the home run to replace the USF, but if we hit
enough singles we can at least offset some of the threat” of any
reductions, said Durden.
A Mix of challenges and opportunities
As the task force moved from regulatory challenges to other
challenges and opportunities, it quickly became clear that there
are too many to easily list. Because of this dynamic and the
diversity of the membership, they decided to create a matrix
that categorizes key challenges and opportunities for future telcos according to several qualifiers, such as overall density of
areas served, market size and total revenues. Michael Romano,
NTCA senior vice president of industry affairs and business
development, facilitated the task force’s work in creating the
matrix, which is included in the report.
The matrix is intended to help members self-select the characteristics they think best reflect their respective operations,
and then to consider challenges and opportunities arising in
regulatory roller coaster
It’s hard to talk about the future without reflecting on the past.
According to interviews with several members of the task
force, much of the group’s discussions focused on how telcos
have dealt with—or should be dealing with—a regulatory roller
coaster that started with a declining ability to depend reliably
upon access revenues for cost recovery, continued through the
National Broadband Plan of 2010, and has extended to present-day Universal Service Fund (USF) shortfalls. Over the years,
some telcos have seen the amount of regulated support they
count on to pay for network construction and ongoing operations diminish, calling into question the predictability of that
support going forward.
“We spent a lot of time talking about if there was no [USF]
support, what would happen and what would your telco look like?”
said Kristi Westbrock, general manager of Consolidated Telephone
Co. (CTC; Brainerd, Minn.). “The idea that we are living in a very
tumultuous time, with all these government programs … that
was probably a major piece of what all of us took away from it.”
This is not to say that the task force thought that cost-
recovery mechanisms would not exist, as they clearly recog-
nized both that the law requires support and that, in many rural
areas, there is simply no business case whatsoever for invest-
ment and operations in the absence of such recovery. But the
task force nonetheless thought it would make for a useful
“thought exercise” at a time when politics in Washington are as
unpredictable as ever to consider the premise of what compa-
nies might focus upon to seek out greater sustainability.
To this end, the task force sought to help guide discussions
toward what it would take to view regulated cost-recovery mechanisms as a “foundation”—a way of normalizing for the costs
30 rurAL teLecoM Summer 2018
“It may not be the home run to replace the USF,
but if we hit enough singles we can at least offset
some of the threat [of any reductions].”
Pineland Telephone Cooperative, Inc.