USF legislation could be a game-changer for broadband innovation - page 2

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The Boucher-Terry draft reflects this digital age thinking in many ways. For example, all broadband technologies proposed by any data or traditional voice communication service providers are eligible for funding. It establishes the minimum speed of broadband to be 1.5 Mbps. Not excellent, but a far cry better than the speed NTIA/RUS is using to define broadband, plus the FCC is required to review the speed every two years to see if they need to raise the baseline. Its authors, however, may want to consider giving companies a lot less than five years to meet this minimum requirement. Five years is about eight or nine cycles of digital innovation.

You have to fight a never-ending battle to make sure legislation transitions to innovation. The small and regional telcos, though, ultimately are key to reaching this goal.

Rural telcos have to do the heavy lifting in innovation

For service providers, the distinction between telecom services and data services is soon to be obsolete. Rural telcos accepting this reality will understand they are now in the digital data communications business. Telcos can (should) revamp their operations to reflect this reality so great ideas come to life that significantly improve rural communities.

In urban areas, consumers are quickly abandoning landline telephones. BlackBerries, iPhones, Android phones, et al are digital communicators. Tens of thousands of consumers are doing away with landlines. It's all about communicating sans wires. The PBX, that steel and wire monstrosity that lived in the closet, controlled the entire business phone operations and devoured huge amounts of energy resources 24/7 are so last century. Software sitting on a PC can do all that PBX stuff now, and so much more. 

Individuals and businesses living in rural areas want to take advantage of these same telecommunication trends and developments. What's more, they want to reap all the benefits of accessing Web apps, cloud computing, social and professional networks, telemedicine and online personal economic development resources.

A rural teleco with an innovative management team will look at these customer needs and technology advancements, then figure out how to use USF reform to capitalize on this new digital world order. I received a call last week from the president of Loretto Telephone Company in Tennessee. Mr. Passerella was none too happy about the thought of organizations winning stimulus grants to come in and compete with his Internet services. The company has a couple of fiber rings, but extending those to homes and businesses is very costly. Applying for stimulus money seemed to be a reach.

 My advice to him and other rural telcos is to advocate for a USF reform bill that fosters a total digital communications approach for rural communities. Then partner with the necessary software, infrastructure and related vendors to create business and consumer services that make you eligible for funds, and also enable you to expand your customer base. The proposed legislation allows on-going funding of network operations, but your stronger financial and competitive position for the long haul is to use innovative services to insure your business sustainability.

In a recent position paper I wrote supporting net neutrality, I make the point that innovation rarely happens at the hands of giant corporations. They're too busy, as Accenture points out, worrying about quarterly earnings and mucking with the competitive landscape. True innovation almost always comes from the small businesses, the entrepreneurs in their garages. The task for the smaller telcos, therefore, is to take this move for USF reform and use it to reinvent themselves as purveyors of digital communication innovations.

Craig Settles, president of, is an industry expert who helps private and public organizations develop broadband business strategies.

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