It's difficult to see the potential diamonds of innovation in the rough phase our current economy, but proposed legislation to reform the Universal Service Fund could result in broadband innovations - if people with vision see the light. The challenge, of course, will be in getting from here to there once the light bulb goes off.
This is a good time to talk about innovation. The big incumbent telcos have been pushing that button hard as part of their anti-net neutrality campaign. "If you pass net neutrality rules, Internet innovation will die on the vine because we'll stop spending billions to innovate." To hear them tell it, you'd think without incumbents we'd still be in Dark Ages of Internet advancement.
Then earlier this month this headline pops up in an industry media outlet, "Telecom Lagging in Innovation Approach, Successes." Accenture, neither a slouch in research, nor an entity vested in net neutrality, released a report that reveals 42 percent of telecom executives said their innovation focus was on small alterations, such as changing price points. As Adi Alon, a senior executive in Accenture's Growth and Innovation practice states, "That doesn't lead to breakthroughs in new business or service models." The report goes on to paint a picture of an industry sorely lacking in innovation.
Last week, there was a legislative hearing to discuss a draft for legislation from House Representatives Rick Boucher (D-Va.) and Lee Terry (R-Neb.) to reform the Universal Service Fund (USF). The USF collects money from telcos and distributes it into programs to bring communication services to rural areas where it is otherwise cost prohibitive to do so. Boucher and Terry want to divert a portion of the USF, anticipated to cap at $7 billion, to support broadband projects in these areas.
Universal Service Fund Reform could be a game changer
The High Cost Fund is the specific USF program that would support the broadband funding. Currently it provides vital telephone services (and occasionally some broadband projects are funded) for which many are thankful. But there probably isn't much resulting from this you'd call innovative. This can change if creative people are willing to influence the hearts and minds of those writing and eventually voting on the reform bill, as well as inspire the business thinking of rural telecom companies that are intended fund recipients.
Congress should change the High Cost Fund into a Digital Communication Enhancement Fund. Just nuke once and for all this concept that there are separate worlds of voice communication and data communication. It's a digital world now, folks! Voice can be reduced to 0's and 1's similar to everything else we use to communicate information. Our legislation and rules for grants need to reflect and reinforce this reality.
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.
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USF legislation could be a game-changer for broadband innovation
Source: Fierce Broadband Wireless
Date: 11/20/2009
