Telecompetitor ran an interesting article last week on the new rural super carriers. Telecompetitor contends that the big guys aren’t interested in rural markets. Recent news that Frontier is buying Verizons lines (mostly rural) for $5.3 billion would help back up Telecompetitor’s assertion. The super providers they list include CenturyTel, Embarq, Windstream, FairPoint, Frontier, TDS, and maybe Qwest.
Cor Wilson sent me a great article last week (25 Year Analysis of Key Financial Indictors for the Bell Companies) and I’m trying to use it to decide what I think about the top guys shifting their role away from rural and the buildup of these super rural providers.
The report is pretty damning; it indicates that the big 3 providers (AT&T, Verizon & Qwest) saw a revenue increase of 220% from 1984 to 2008. Here’s what they said about broadband:
• By 2010, virtually ALL of the US households, accounting for 117 million homes, should have been rewired with a fiber-based service. Today, there is virtually no broadband service in the US that meets the standards of 45mbps in both directions set in 1991.
• America is 15th in broadband because AT&T and Verizon failed to deploy and pocketed an estimated $300 billion dollars by 2009 and counting.
• Combined, Verizon and AT&T’s FiOS or U-Verse had approximately 3 million upgraded TV homes as of 2008. These networks do not match the previous commitments as they are not open to competition, not ubiquitous, and do deliver 45mbps in both directions.
• Harm to the Economy. According to Bell-funded reports, $500 billion annually would be added to the GNP of the US if broadband was fully deployed. Thus, America lost $6.5 trillion dollars because of a lack of high-speed broadband.
Quick aside: Here’s a bit about what I could find on the authors (New Networks Institute) form their own web site: “Since 1992, in the public’s interest, [Bruce] Kushnick and his associates have helped to establish class action suits, filed complaints with the FCC, and various public service commissions, requested investigations by the IRS, and has help to create of the Broadband Bill of Rights, a proposed piece of legislation.)
Back to the rural super providers, I think the report indicates that a larger list of super rural provider would be better than 3 national providers; except that I don’t know that a larger list of medium sized providers is going to buy us more competition- because they cover different areas. I think some of the super providers are good and are invested in the communities they serve. I think some are invested in getting their own piece of that 220% increase in profit. I don’t think that’s unique to the telecommunications industry.
I suspect that the rural super providers will be lining up for federal stimulus dollars. It seemed early on as if the big guys were going to leave that money alone because of the potential of strings attached. Maybe the NTIA and RUS will be wise about those strings and I hope they read the 25 Year Analysis. It seems to me that if you get federal money to play that you play by federal rules. The 25 Year report doesn’t just indicate, is accuses the big providers of not doing that.
Another recent article outlines the risk of certain strings: How “Buy American” Could Ruin Broadband Stimulus Plans. It’s tough but there’s got to be a smart way to balance a goal of stimulating the American economy with American capitalism/profitability and more, better broadband. I’m afraid that in the of those three, broadband speeds are going to suffer.