Federal plans to boost rural telecom threaten to disable it

The Montana Telecommunications Association is concerned that recent broadband stimulus funding awards announced by the U.S. Departments of Commerce and Agriculture confirm our worst fears that the federal broadband stimulus program may lead to negative consequences from which it will be difficult for rural broadband telecommunications providers and the communities they serve to recover.

Many grants and loans awarded under the broadband program duplicate existing network facilities. Rural broadband providers have built telecommunications networks in markets that are more expensive to serve and less densely populated than more urban markets. Suddenly these rural providers can find themselves facing a new, government-funded provider in the market. But unlike all the existing private networks in the market, the new provider has little or no capital expense, since the stimulus program (i.e., taxpayer) paid for the new network. The government-funded network will undercut private networks in the market, thereby displacing revenues needed to operate current networks, displacing jobs, discouraging any further private investment in broadband deployment and threatening increased rates for rural consumers. If the Recovery Act was supposed to create jobs and stimulate economic development, duplicating existing broadband networks is hardly the answer.

Geoff Feiss is general manager for Montana Telecommunications Association http://www.telecomassn.org in Helena, his e-mail is [email protected].

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