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February 21, 2013

Regulatory Uncertainty Prompts Rural Telecom Carriers to Delay Network Upgrades

By Ashok Bindra, TMCnet Contributor

A recent survey conducted by the National Telecommunications Cooperative Association (NTCA (News - Alert)) finds that more than 100 small, independent telecommunications carriers have either postponed or cancelled plans to upgrade their network infrastructure as a result of regulatory uncertainty.

More than two thirds of participating rural telecommunications providers have taken this step because of uncertainty surrounding the FCC’s (News - Alert) ongoing Universal Service Fund and intercarrier compensation reform.

 Members have reportedly expressed repeated concerns in particular regarding new caps based on volatile, untested models and over the threat of additional cuts, caps and constraints on cost recovery still being considered by the FCC.

The study indicates that 185 NTCA member companies responded to the survey. Participants were asked if they have postponed or cancelled network upgrades, and if so, to apply a dollar value to the investment subject to postponement or cancellation.

Sixty-nine percent of the respondents indicated they have postponed or cancelled projects, and 101 respondents provided investment values totaling more than $492 million. 

In a statement, NTCA chief executive officer Shirley Bloomfield said, “The results of this survey reaffirm what we’ve known for quite some time: That limiting rural carriers’ ability to recover the cost of bringing high-speed broadband to our country’s most hard-to-serve areas is hindering efforts to plan and execute necessary network upgrades, resulting in millions of dollars in lost or postponed investments.” 

“Ultimately,” she said, “this troubling trend will mean fewer dollars flowing to communities for economic development and jobs, as projects continue to be put on hold or are delayed indefinitely.”

Further commenting on the results of this survey, Bloomfield added, “This is precisely the wrong direction our country needs to be taking to stimulate our economy, and it undermines the national objective of making high-quality, affordable broadband available to every American through sustainable infrastructure investments.” 

Similar surveys conducted by two state telecommunications associations also indicate that a majority of their members were cancelling or delaying plans to deploy fiber in their service areas as a result of the new policies.

Edited by Braden Becker
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