Monthly commentary of the Montana Telecommunications Association (MTA) – Broadband Deployment Trends

Below is the monthly commentary of the Montana Telecommunications Association (MTA) http://www.telecomassn.org. This month, we review “Trends 2007” a just-released report by the National Exchange Carriers Association (NECA) which describes broadband deployment in rural America.

Despite the formidable challenges facing rural telecom providers in deploying state-of-the-art networks, Rural telecom providers generally, and rural Montana companies are doing well. In fact, Montana ranks #1 in the nation in terms of deploying optical network transmission (SONET) technologies; 10th in the nation in deployment of ATM digital packet transmission technology; and 16th in deployment of Ethernet in our networks.

Wishing you a very joyous holiday season and a happy, productive New Year!

Geoff Feiss
Montana Telecommunications Association
406.442.4316 (office)
406.594.0424 (mobile)

Serving Montana’s telecommunications industry for over 50 years

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MTA Commentary: Broadband Deployment Trends
December 26, 2007

This is the time of year for looking back on past accomplishments and looking forward to future goals. In this vein, the National Exchange Carriers Association, or NECA, has just published its latest research report, called, “Trends 2007.” NECA’s publication is filled with information about the state of broadband telecommunications deployment in rural America. The report provides a sort of “glass is half full” outlook, wherein rural consumers in general, and rural consumers in Montana particularly, are doing quite well in terms of gaining access to broadband services. On the other hand, there are various challenges that continue to confront rural telecom providers.

Rural telecom markets of course are different than their urban counterparts. Rural providers continue to serve a small percentage of the total U.S. telecom market. There’s over a thousand rural telecom providers nationwide, serving only 3.5% of the telephone lines in the nation. But their service territories cover more than 40% of the total U.S. land mass. Rural telecom providers do not enjoy the economies of scale afforded their large non-rural counterparts. More than 25% of these companies, such as most of Montana’s rural telcos, serve fewer than 5 customers per square mile. In contrast, larger, urban telecom providers serve thousands of customers per mile. Serving small populations over large geographic expanses requires extensive cable facilities, additional transmission equipment and lots of initiative. This drives up the cost of delivering both basic and advanced communications services like DSL and other broadband technologies.

Despite these challenges, rural telecom providers have continuously deployed broadband capacity in their networks. In 2000, 151 NECA rural telecom members provided 20,000 DSL lines to customers throughout the nation. Now, there are 1,054 NECA members providing over one million DSL lines. I should note this number represents actual subscribership, as opposed to access to DSL. Rural telcos have upgraded their networks to provide the vast majority of their customers with access to broadband Internet services. In Montana, several rural telcos have 100% DSL capability throughout their networks. However, not everyone, yet, actually subscribes to broadband service. Every year sees continued improvement in this regard, though. More and more people are subscribing to Internet services, and well over half of those subscribers use broadband service. The days of the dial-up Internet access are quickly fading away.

And broadband Internet service, of course, is great fuel for the economy. The commercial, educational, health care, and personal benefits derived from reliable broadband access to the World Wide Web are immeasurable. Every year there are more examples of new health care networks, new businesses, and wonderful sources of information that people are developing on the Web. And of course, the more people who use and demand faster Internet access, the more incentive there is to deploy even faster broadband service. In fact, many rural telcos already are deploying next-generation service measured in megabits and even gigabits.

NECA’s Trends report notes that more than 400 of its members, including some in Montana, now are deploying more than 20,000 fiber-to-the home connections, and over 70,000 fiber-to-the-curb circuits. Currently, 45 percent of the NECA members nationally have deployed Ethernet technologies in their networks with gigabit capacity. Montana ranks 16th in the nation in terms of network Ethernet deployment. And Montana is the leading state in the nation in deployment of state-of-the-art fiber optical network signaling, called SONET, an industry standard capable of transmitting multiple digital signals of varying capacities on a fully redundant fiber optic network. And Montana ranks 10th in the nation in providing digital packet technology that allows for high-speed transmission of voice, video and data over a common network infrastructure. This technology, called ATM, is particularly well suited for large, high-speed data needs.

Looking ahead, NECA notes that many industry sources project a need for 100 megabit per subscriber bandwidth in the U.S. within the next few years to accommodate consumers’ growing appetite for new services. This will require increasing fiber deployment to customers’ premises. Currently, only about 2% of American households have direct fiber connections.

A number of challenges remain on the horizon, especially for small rural telecom providers. Access to bandwidth from faraway places, and the cost of getting bandwidth capacity to rural consumers are continuing barriers. Access to entertainment content and providers is another, particularly given the near-monopoly control over video content exercised by cable companies.

Notwithstanding these challenges, the trend line looks good. As more people realize the benefits of broadband communications in their commercial and personal lives, companies will continue to invest in advanced network technologies. And that’s good news for Montanans!

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Contact:

Geoff Feiss, General Manager
Montana Telecommunications Association
406.442.4316
[email protected]