Rugged individualism may have built and sustained much of rural America over the past few centuries, but as the Dust Bowl days proved, sometimes even the most rugged individualists must turn to their brothers and sisters for help

A close examination of rural communities across America reveals that another human quality — one with less plot appeal for a classic John Ford film than rugged individualism, but just as important — underlies their continued success. It is their willingness and ability to pull together and collaborate with others in their communities in the face of adversity. This is not always their first instinct; sometimes, proud and self-sufficient people are slow to recognize when that need arises.

The same rugged individualism that settled the wilderness and built communities also built and sustained thousands of rural telephone companies over the last 100 years. Now, in light of growing competition and changes in funding and compensation, two guys at the National Telecommunications Cooperative Association are asking these companies to entertain the notion that the need for collaboration has arisen again.

Kevin McGuire, vice president of business and technology, and Dan Mitchell, vice president of legal and industry affairs, have picked up the torch of an idea that has flickered for years among leaders within the rural ILEC community. They are strongly urging independent phone companies to join forces and collaborate on the construction of regional and national networks that would help them compete for the business of national corporations, reduce dependence on national carriers and give them some of the swagger that comes with scale.

And, oh yeah, “ensure our future,” McGuire said.

It is not always easy to see when a threat has reached the stage where it threatens one's survival, but that's where McGuire and Mitchell — and those who agree with them — believe the state of telecommunications competition is today. So they're suggesting, as Woody Guthrie did in the dire days of the Dust Bowl that:

We all work together
with a wiggle and a giggle,
We all work together
with a giggle and a grin.

Guthrie was seldom this light-hearted, and most people in rural America today probably wouldn't agree with his politics, but his overall message — such as his support for the Grand Coulee Dam project that helped get the country moving again — was to dream big and pull together for the common good. Things aren't near as dire as they were in the 1930s. In fact, they're not dire at all, comparatively. But the trick in the telecommunications industry in these early days of the 21st century is to stay a step ahead of catastrophe. And these days catastrophe comes in the form of competition.

McGuire acknowledges that some rural providers have looked into building or becoming part of state and regional networks before and dismissed it for various reasons. He is adamant about making it clear that the idea — as promising as it may be — is not his own. He and Mitchell have simply resurrected the idea because they feel circumstances have now changed in its favor.

“I would suggest that it is now time to look at the issue again because today we are in a much different world that just a few short years ago,” McGuire said.

One of the changes in this new world is the uncertainty of once dependable sources of revenue. In a presentation called “Partners for Prosperity” at the NTCA's winter meeting in early February, McGuire and Mitchell laid out the realities of losing those sources. They explained that the Federal-State Joint Board on Universal Service Support is considering new high-cost Universal Service Fund (USF) distribution mechanisms that would give USF to the lowest bidder, which has the potential of stripping rural providers of that support. They drove home how the impact of the shift to IP-based networks would further erode revenue from voice access charges. They are already losing 10% to 30% of that revenue to phantom calling, McGuire said.

The move to IP also is driving the introduction of video services, which rural providers are valiantly, if not profitably, delivering to customers ahead of the big carriers. However, affordable access to content to deliver over their networks is further hurting their ability to compete. And another form of access is being curtailed by consolidation among the major carriers: Internet access and access to long-haul networks.

Half the respondents to a recent survey of its members by the NTCA said they have two or fewer special access transport providers to choose from for Internet backbone access. This has a detrimental effect on the purchasing power and pricing structure for rural providers.

“When there is only one or two providers offering special access transport service … the market rate is what the monopoly or oligopoly, multi-billion dollar, vertically integrated, mega-corporations say it is,” McGuire said. He added that without statewide and regional networks, rural carriers will be held hostage by the large carriers.

That's why McGuire, who is the driving force behind the initiative, said: “It is time to work toward removing dependence on large, vertically integrated companies providing transmission and Internet backbone capacity to rural carriers. It is time to use the resources of our rural communications carrier family to control our destiny.”

What makes the timing especially good are two factors. The first, which will be explored later, is that statewide networks have come a long way since the last time people looked at building regional or national networks. The second addresses, in part, what Mitchell says is one of the main obstacles to building these networks: funding.

There is money burning a hole in the FCC's pocket, which they have been trying to give away to rural health care providers so they can establish broadband connectivity to the broader heath-care community nationwide. It is called FCC's Pilot Program for Enhanced Access to Advanced Telecommunications and Information Services: A Rural Health Care Support Program. (The program is described in detail on page 28.)

But as McGuire continued, “Health care professionals are not network managers, especially in rural areas. So this is a way we can help our own communities.”

So the NTCA has backed his mission to include this program as a potential incentive to help rural carriers help their rural health care brethren. Basically, the program will fund up to 85% of the cost of constructing regionwide networks used to provide telehealth and telemedicine services nationwide. Although the health care providers themselves must apply for the funds, rural telcos can approach them in their communities and become part of the process, hopefully tapping into that funding to begin to build their networks on the back of the stated need for health care connectivity.

The FCC has earmarked as much as $400 million per year for the program. Mitchell, whose mission, as he puts it, is to watch regulatory proceedings and pilot programs with an eye toward how they can help the greater goals of NTCA members, brought this particular program to the attention of McGuire, who was looking for a way to resurrect the idea of a national network.

“Kevin is focused on structuring this thing from a business perspective, while I look for positive regulatory avenues to assist in that goal,” Mitchell said.

He has about six years more at the NTCA under his belt than McGuire and is careful to set the right expectations. His first note of caution is about the members themselves, and it goes back to the idea of rugged individualism. “We have to work with strong personalities and egos and have to work through all that when trying to do a project of this significant magnitude,” Mitchell said.

Such is the greatest lament of those who have watched the rural ILEC market over the years. They can't let go of the go-it-alone attitude and often miss out on opportunities such as in wireless spectrum, where they would be better off cooperating with neighboring telcos.

However, Mitchell believes that circumstances may have softened people somewhat for the good and made them more open to cooperating — maybe even with a wiggle and a giggle.

“With the rapid changes over the last few years, I think people are willing to put all that aside and focus on this because they truly understand it could help them in the future,” Mitchell said.

Like any federal program that provides money, Mitchell cautioned: “You can't just walk in the door and say, ‘I am a telecom provider and see you have this money to connect health care facilities. Give me a check.’”

Unfortunately, that's the attitude of at least a few good old boys who attended a session on the pilot program subsequent to McGuire's and Mitchell's presentation. They sat near the back elbowing each other in the ribs, laughing, and saying exactly what Mitchell dreaded, “Hey, just gimme my check.”

It will take a lot more patience and persistence than that, Mitchell said. He has been working this year on educating the rural telco community about what the program is, how to tap into it and what to expect. There are lots of rules.

First and foremost, the application for funding must come from the health care provider. This means that within the rules of engagement and fair practice set forth by the FCC, telcos could approach them in a consultative mode to help them understand what it would take to ultimately connect to either the Internet backbone network or the National LambdaRail network (see story on page 28). The FCC is unclear at this point on the limitations of such consulting and typically tries to avoid applications that would rig the project in favor of a particular network supplier. Once an application is accepted, the project must go out for public bid.

“We realize it's not a slam dunk, but if you go through the process, you could win, and there would be funding available that wasn't available before,” Mitchell said.

Since the FCC is fuzzy on the exact implementation of this project (probably waiting to see what sort of filings come in) it is allowing for the application of certain waivers. It also allows for the opportunity to influence the direction the project takes.

“Let's step up to the plate and be the main participants in this pilot program and assist the FCC and the United States in reaching its public policy goals, which will benefit all Americans,” Mitchell said.

The health care pilot program is but an incentive to get people moving. McGuire said the rural community should move forward with building regional networks and continue working on the dream of a national network, with or without the program.

In fact, the work has already begun, which brings us to the second reason that the timing may be right for this idea to bear fruit. There are already 20 or more statewide networks now in place that are the result of cooperation among the rural providers in those states. And many states already have fiber connectivity between them.

One of those statewide networks is the Wisconsin Independent Network. Seven independent local telephone companies in northwestern Wisconsin formed it in 1997. It now has a 640-mile OC-48 Sonet ring between Minneapolis and Eau Claire and Superior, Wis., with seven points-of-presence in between.

Scott Hoffmann is WIN's executive director, but he also is vice president of The Independent Alliances Telecom Group (INDATELgroup). INDATELgroup already has the makings of a regional organization. Today it is focused primarily on managing joint marketing efforts for its 20 statewide network members (see map). It drives potential customers looking for bandwidth in a member state to that state's rural network. It also serves increasingly as a forum for its statewide company members, such as Iowa Network Services, Syringa Networks, Texas Lone Star Network and Vision Net, Hoffman said.

Hoffman, like Dave Duncan, president of the Iowa Telecommunications Association, are supportive of the NTCA's initiative. However, they and others may need to get as fired up as McGuire and Mitchell for this thing to take off. Their support for the idea was sincere, their concerns and hopes in line, but their enthusiasm was lukewarm, bordering on noncommittal.

Hoffman said one of his missions is to do whatever it takes to make his independent telcos viable long into the future. “And as this unfolds, if it does turn out that some kind of national network is in the interest of independent telephone companies, we'd certainly like to support that,” he said.

He added that, “Nowadays, we have to do our due diligence and find anything possible to help local companies, and if connecting them together across the country is one way to make them viable, then, yes, we should take a look at that.”

Hoffman was part of an introductory meeting between various interested parties. No formal committee was solidified, but he said there was a “general agreement” that the idea was worthwhile. “We are very much at the beginning stages,” he said. “NTCA has done a fantastic job over the years supporting independents, so we are interested in sitting down and kicking ideas around.”

Hoffman did say that he and his organization always felt there would be a time when something like this made sense. “And this is potentially that time,” he said, primarily because of the number of statewide networks now in place.

Iowa Network Services was one of the first statewide networks. Its roots go back to 1984 when it was the Iowa Switch Co. It was formed to address an issue driving this initiative today: equal access. In 1998, 128 rural telcos joined to form Iowa Network Services.

Unfortunately, the state of Iowa decided to build its own network, the Iowa Communications Network (ICN), to support universities and government entities, and the two have clashed ever since, making it unlikely the INS would bother getting involved in the health care pilot. Whereas INS is a privately funded, statewide network, ICN is a state-owned government network. It was approved in 1989 and built in the early ‘90s.

“It was opposed by our industry when it was proposed because we already had a network, but they did it anyway,” Duncan said.

He said that besides the political and competitive tension between INS and ICN that others have mentioned, Iowa wouldn't need funding from a pilot program such as the FCC's because the state network is well-established. As for the benefits of a national network, he said, “I would have to look at that. Our industry is changing, and our companies need to change and adapt,” Duncan said. “They are looking to offer a more broad scope of services. So it all merits discussion.”

With one month to go before deadlines to file with the FCC for its pilot program for 2007, the idea might have to merit more than that from some telcos and their associations.

Another association leader and rural telephone company head who endorses the concept is Pat Riordan, chairman of the Rural Cellular Association and CEO of Nsight Telservices. His endorsement comes with a caveat.

“As long as it is done in a collaborative fashion, it's a good thing,” Riordan said. “When independents get together, it is good as long as independents are able to hang on to their independence.”

Riordan is concerned with a national organization trying to take over operations of portions of a company's network. “As long as you continue to have the ability to manage your company and operate to benefit your company, it's a good thing.”

The operational details are something a committee, when it is formed, must address. Because there are so many nuances in different regions, it may be best to let the states build their state networks and let larger groups lease from them, McGuire said.

For now, he said, “We need to keep driving the message home. To not have constructive dialogue would be a disservice to our community.”

And to not take the FCC up on its pilot program might be a lost opportunity by rural telcos to make a government project work to their advantage — the type of opportunity not lost on Woody Guthrie in “Grand Coulee Dam”:

Uncle Sam took up the challenge
in the year of ‘thirty-three,
For the farmer and the factory
and all of you and me,
He said, “Roll along, Columbia,
you can ramble to the sea,
But river, while you're rambling,
you can do some work for me.”