Life becoming difficult for rural operators

Times are getting tough for the rural operator community. Within the last few months the Rural Carrier Association (RCA) and the Rural Telecommunications Group (RTG) have run to the FCC asking it tackle issues that would help the survival of these group of operators. As the country's nationwide operators get bigger, their ability to effectively compete in the markets they serve becomes more and more difficult. Rural operators are no longer making a nice revenue from roaming as larger operators increase their coverage and encroach on the areas of rural operators. Rural operators now find themselves competing with large operators that have more resources and better economies of scale.

RCA recently asked the FCC to deny the proposed merger between Clearwire and Sprint Nextel's WiMAX business. The RCA said that under "these unique circumstances there is a manifest need for the commission to recognize the impact of both transactions upon consumers and act to promote carrier-to-carrier network interoperability, including automatic roaming for voice and data, notably for wireless broadband services."

Earlier this month, the RTG, whose members include independent mobile carriers, petitioned the FCC asking that it impose a spectrum cap to curb the growing market presence of Tier One operators Verizon Wireless and AT&T [1]. The RTG says that without a spectrum cap, Verizon and AT&T's growth will adversely impact rural operators.

In May, the RCA asked the FCC to investigate and adopt rules, if necessary, to stop operators from negotiating exclusive handset deals with manufacturers. The RCA says that this arrangement is unfair, decreases competition and violates the Communications Act. The association says that these types of deals make it impossible for many consumers, particularly those in rural areas, to get some of the best-selling handsets such as AT&T's iPhone and Verizon's LG Voyager. The RCA listed more than 50 handsets that are exclusive to the top five U.S. operators.

Can and should rural operators rely on the FCC to help them become more competitive? I don't believe the FCC will be denying mergers or lifting spectrum caps to satisfy the needs of rural operators. On the other hand, the FCC is keen on seeing a third party come in to bridge the digital divide in the broadband world, which is why it is pushing the idea of the AWS-3 auction that would require the winning bidder to provide free broadband service alongside paid service. Perhaps the rural operator community should band together and make their relevance known to the FCC in accomplishing such a goal. And with operators such as Verizon and AT&T looking to roll out LTE in the 700 MHz, couldn't rural operators play a roll in helping to expand coverage?

The proposition Cyren Call Chairman Morgan O'Brien offered to rural operators in May is interesting. During their annual convention, he urged these operators to band together and bid on the D-block 700 MHz band the FCC wants to re-auction [2]. O'Brien said rural operators would gain by being able to offer advanced services to their end users, serving a new customer base via public safety, bypassing roaming deals with big operators and competing better against nationwide operators.

Earlier this year, the FCC's auction failed to raise the $1.3 billion reserve price for the D Block of spectrum, which was set aside for a public-private network that would solve public safety interoperability problems nationwide. Cyren call is the Public Safety Spectrum Trust's adviser. The PSST is an organization chosen by the FCC to serve as the national public-safety licensee for 700 MHz broadband services. Cyren Call was tapped to settle the commercial/public-safety details.

I'd hate to see the rural operator community become irrelevant, which is why it needs to get creative to keep that from happening and not rely solely on the FCC to ensure their survival. --Lynnette [3]