Dear Mr. President:
Rural Telephone/Nex-Tech, Lenora, Kansas, is in the final months of completing its $101 million broadband expansion project in western Kansas, as a successful applicant in the American Recovery and Reinvestment Act (ARRA) program. While we are proud to provide broadband service to individuals, businesses and institutions in a 9,300 square mile sparsely populated rural area, we have ambivalent feelings concerning our future ability to build and maintain broadband and modern telecommunication services in light of the recent FCC policy decisions that will drastically impact our company and other high-cost rural providers like us.
Going back to 1951, Rural Telephone/Nex-Tech has a rich history of providing telecommunication services, in a high-cost rural area, that other providers simply would not serve. Rural Telephone/Nex-Tech began providing broadband service in 1998, and with the assistance of RUS broadband loans, we expanded broadband service in rural areas of Kansas that neither AT&T nor any other provider at that time would commit to serve. Many jobs were created as the broadband network was being built and maintained.
While some policymakers underestimated the need or demand for broadband in rural areas, the excitement and customer ‘take rates’ underscored the importance of broadband as a valuable competitive tool in commerce, education, health care and quality-of-life for people living in non-urban areas.
In spite of our efforts to expand broadband availability with RUS funding and equity funds, in 2010 many remote rural areas remained unserved simply because of the economic realities prohibiting construction in these high-cost locations. Thus, the aforementioned ARRA program provided us the opportunity to extend broadband to farmers, ranchers and businesses in rural western Kansas that otherwise would have no reasonable, feasible broadband alternative.
With less than six months remaining in our ARRA broadband construction project, the high-speed network initiative remains our grandest dream, and our worst nightmare; thus the ambivalent feelings.
On the surface the construction program is an unqualified success. When completed, this expanded network will provide high-speed services to nearly 23,000 households and businesses within the Rural Telephone and Nex-Tech footprint, including 335 community anchor institutions such as schools, libraries, hospitals, clinics, county health agencies, law enforcement agencies, senior and disability centers.
However, the FCC’s USF and ICC policy reforms have essentially changed the rules near the end of the project, casting a dark economic shadow on an otherwise shining beacon of telecommunications progress. The FCC’s action is misguided in the belief that reallocating USF dollars to the large carriers will incent them to build broadband networks in rural areas, when it was precisely these very same entities that ignored the region in the first place.
Mr. President, while we choose to pursue our entrepreneurial spirit, roll up our sleeves, and continue to provide the best service possible to our constituents, the fact remains that USF and ICC policy reforms will have a devastating effect on Rural Telephone/Nex-Tech, as well as many other rural independent carriers in the form of lost jobs, evaporating revenue streams, and an uncertain ability to meet RUS debt payments. While we plan to complete the broadband expenditure associated with the ARRA Program, we have literally no investment planned for the future because of the uncertainty that the FCC’s Order has caused.
The bottom line is, if we are not able to survive, who will serve these customers? What provider will meet the increasing demand for bandwidth in rural Kansas? Some suggest wireless technology will bridge the gap. However, the increasing bandwidth requirements of the wireless industry cannot be met without the corresponding robust fiber network built and maintained by Rural Telephone/Nex-Tech and other independent rural carriers.
While the impact of USF and ICC policy reform continues to be debated, the impact of previously unavailable broadband service in western Kansas is indubitable. To better understand the impact, please see the associated video testimonials linked below.
In closing, we are convinced that in our ARRA broadband project, we have accomplished the very goals which you set forth; however, with the unforeseen changes prescribed by USF and ICC policy reforms, we are being financially blindsided with a radically transformed cost-recovery landscape.
With respect to the future of sustainable, affordable and competitive broadband service in our high-cost rural areas, we will continue to hope for the best, plan for the worst, and pray that policymakers better understand the meaning of universal service, and the history of those companies who have actually been providing it.