High-Speed Access For All

By Richard Thayer, PhD

First Appeared in the Bandwidth Desk, November 18th, 2002

The subject of how "last mile" issues thwart broadband access in rural areas has been a frequent topic in telecom circles over the last few years. More recently, business opportunities in Tier 3 and 4 markets have become popular as the telecom industry struggles for market share in the larger, overcrowded major markets.

But the unique approach of a not-for-profit coalition of community based organizations in the Appalachian Mountains is shedding light on the business potential of these remote areas, as well as the societal value of high-speed access for everyone. Its findings may come as a surprise.

The 23 westernmost counties of North Carolina comprise one of the most geographically isolated and economically disadvantaged areas in the southern region of the Appalachians, if not the country. Nonetheless, creative, community-minded leaders in these counties have addressed head-on a problem that has constrained economic and social progress there, as it has in other rural areas throughout the US.

The problem: lack of broadband access for small and mid-size companies located outside large urban areas. Three years ago, there was no high-speed access at any price in many parts of these counties; in other cases, it was so high-priced as to be out of reach for most small and mid-size businesses and virtually all consumers. Lack of access was crippling the region and destroying any hopes for growth or prosperity.

The western North Carolina region's isolation contributed to a precipitous loss of more than 85,000 manufacturing jobs from 1999 until 2002, to a weakening of the traditionally strong agricultural sector, low wages coupled with high housing costs for many families, high rates of illiteracy and the loss of talented people, emigrating to other areas. The picture was bleak.

But the high-speed access solution these counties came up with could provide a model for rural communities elsewhere. In some areas, cable TV companies have launched advertising campaigns offering high-speed access at initially discounted rates, and this has helped spark similar efforts by local telephone carriers, offering discounted DSL service.

The geography of the region presents many challenges. But three years ago, the Western North Carolina Knowledge Coalition - a group of local community colleges - the Education and Research Consortium and other partners recognized that affordable broadband access could make an important difference. They've been working toward that end through the Appalachian Access Initiative (AAI), designed to gain a full understanding of the telecom broadband access bottleneck and seek a possible solution.

The initiative has the potential to provide a truly vital link to new resources and opportunities throughout the US and the world for local colleges, universities and schools, medical and healthcare facilities, government and social institutions, and local businesses. Small manufacturing companies, for example, could actively participate with major companies in today's advanced distributed manufacturing operations.

Broadband access has been studied again and again by telecom service providers and network equipment providers, but the approach taken by AAI - led by the Southwestern Community College and managed by the non-profit professional research and strategy development group The Institute at Biltmore - was truly original. The wide coalition of community-based organizations knew that cost was a major reason for the limited access. Early on, they found, as many already suspected, that a business in a rural community in the western part of the state might pay 10 times as much for high-speed service as a counterpart in Greensboro, for comparable access.

AAI also knew that aggregate demand was critical; service providers invested where dollars would bring a good re-(INPERSPECTIVE from page 3) turn to shareowners.

Under a plan directed by The Institute at Biltmore, AAI collected and analyzed data on all aspects of telecom services, identified and then aggregated existing, pent-up and projected future demand. It then explored cooperative approaches for providing needed services at affordable prices.

AAI had expected that a fair-profit solution for all involved- which they favored - might prove unworkable in the last-mile connection to homes and businesses. But instead, AAI found that reducing rates for the last-mile connections actually would not significantly affect the overall cost of service. That cost would be addressed at the link between the telephone central office and regional network access points (NAPs),as well as in the long-haul backbone between NAPs and the Tier 1 and Tier 2 junctures.

Surprising as this finding was, it opened a door to develop negotiated agreements with service providers, replacing the take-it-or-leave-it charge plans that service providers had traditionally offered.

The negotiated agreements would be developed mutually by the customer cooperative and an accepted Strategic Alliance Partner. The agreements would include, on the cooperative side, urban and rural customers as interdependent partners who would receive the same level and quality of service and pay the same for comparable service

.As negotiations with one interested provider neared conclusion at the beginning of 2001, the economy and the telecom industry in particular were just edging into a slippery slope decline that quickly caused concerns about the economic viability of the intended agreement. Eventually, the decision was made to establish a not-for-profit cooperative to build and maintain the rural infrastructure, leasing capacity and rights of use primarily to a carefully selected Strategic Alliance Partner and, in due course, to other providers and customers as well. All customers pay equally for access, which is maintained with equal quality for all.

AAI and The Institute at Biltmore have taken our understanding of broadband access from the level of generalities to the very specific. The data and insights they have gathered over the past several years have opened the arcane secrets of infrastructure capital and operations costs to public scrutiny. That alone is an important step toward more prompt and satisfactory provision of the high-speed access customers want.

Our company, Telecommunications & Technologies International, is partnering with The Institute at Biltmore to conduct a new study that will expand the focus of the high speed access availability concern, perhaps nationwide. TTI will identify and develop detailed information on specific broadband applications in manufacturing and other industries that without high-speed access would not be possible. And that should be enlightening for all.

Richard Thayer is President & CEO of Telecommunications & Technologies, International, Inc. (www.ttinetwork.com), a market intelligence firm in Chevy Chase, MD. Contact by email: rt@ttinetwork.com or phone: 877.913.2883.
Copyright 2002, TTI and Scudder Publishing Group, LLC. www.scudderpublishing.com.