Post-World War II, the airplane had evolved from a Wright brothers novelty to serious transportation vehicle that moved lots of people, mail and packages much faster than trains. While railroads tried to figure out how to make trains faster and more comfortable, airlines were making greater technological advances and market advances. No matter what improvements railroads could make, those trains would never fly. Because railroads could not adapt effectively to this reality, their world today is relatively small.
We find ourselves on the verge of a similar story with the incumbents. How can I spout off such blasphemy? Google. I don't expect Google to become a national ISP. In the scheme of things, Google is more like the Concorde or the space shuttle. Entire communities that really dislike their carriers see Google and go, "Hot damn, we can go to infinity and beyond!? We gotta get us some of that."
Have you actually looked at how many government leaders from big cities to small towns have gone gaga for Google? Google hints at spending money for just a handful of projects, and they're about to be over-subscribed with applications by magnitudes greater than NTIA and RUS. Yet cash-starved local governments are making money and staff available to support their RFI efforts. And if they don't win the Google lottery? They plan to make their dreams reality anyway with or without you.
Maybe you missed the grassroots Google mania. Dozens of Facebook groups for towns everywhere have sprung up, each with thousands of fans. These aren't teens, but responsible adults who pay the bills. When was the last time your marketing produced this level of bottom-up enthusiasm? Everyone knows their community has a snowball's chance in hell of winning. But in people's minds, the options they have now, or the ones being promised, suck. Google is telling people they can fly, at Concorde speed. And guess what, people really want to freakin' fly! (See this one city map showing demand for Google broadband.)
Denial is not just a river in Africa. I say Google, someone fires back, "Nobody needs a gigabit! Who's going to use a gigabit? No one's asking us for a gigabit. I can't believe any community asked for high-speed service and didn't get it." I heard these comments with my own ears last week. That's like the railroad guys who said, "If God meant for man to fly, He would have created him with wings." Or the industry exec who said in the ‘90s, "56K is all the speed anyone will ever need."
You should listen to the hundreds of local leaders, public administrators and community network operators I've spoken to over the past five years. You bring these communities 100 megs or a gig, they'll buy it (see this list of high bandwidth counties). Maybe not all of that today, but much sooner than you think. Some providers, such as Verizon, Comcast and Cablevision, seem to get it as they push the FiOS and DOCSIS 3.0 envelopes, though it doesn't appear this will reach parts of the country that need it the most. But let's give credit where credit's due.
So, you can spend a fortune telling people what you want them to buy, or go into the communities to actually listen and respond to what they need. You can abandon markets by dumping copper, or capture markets by dumping technology that you believe only can be profitable by capping and metering its use.
Small telcos can do yourselves a big favor by embracing the fact voice and data are irreversibly intertwined as digital communications and require newer business models than from the days when telecom was "mature" and datacom was new. You can continue to fight local governments that want to build what their market-constituents--want, or do like Google and let them take the lead as business partners. You can continue to tinker with making train technology and train business models work, but people want to fly.