Rural ISPs Still Fear The ILEC

When providing an innovative service requires extensive research and the adoption of new technology just to circumvent the Regional Bell Operating Company (RBOC), rural communities pay the price.

by Max Smetannikov [Decemeber 20, 2002]

The TractorCam broadcasting 24/7 from a combine during the harvest is probably the service that says it all about the state of rural ISPs: frustrated by the familiar gamut of issues ranging from high bandwidth prices to prohibitive RBOC fees delaying introduction of new services, many have chosen to rely on new technologies that enable revolutionary services.

Attaching a Web camera to farm equipment was Carl Garaffa's idea. Garaffa, of AxtellTech in Nebraska, started experimenting with wireless technologies several years ago only and was excitied by what he found.

Unlike ISPs in large metropolitan areas, rural ISPs have to pay an additional long haul charge to interconnect their networks with carrier POPs located in major cities. Thus, many can't afford connectivity more exotic than a T-1, since the pipe has travel far, sometimes hundreds of miles.

The economics are exacerbated by the fact that rural areas failed to become telecom battlegrounds during the boomb because population in rural areas is sparse by definition. Thus, the companies providing services have not changed much in the last 100 years, and the only telecom game in a small country town is the local ILEC.

However, in some regions small telephone companies do manage to compete successfully with incumbent phone operators.

"In America, the situation is such that incumbent Bell operating companies tend to spend money to beef up their metro and business line services at the expense of neglecting maintenance and care for rural properties," said Dennis Coutre, Nortel Networks rural product marketing manager. "People in some of the smaller towns served by these carriers are saying the service sticks, that they can't get anything new and they beg these companies to come in and fix it."

CLECs that answer the call, such as East Otter Tail (EOT) Telephone Company in Minnesota, enjoy penetration bordering on 90 percent, Coutre says. Such companies also fuel long term business development initiatives such as construction of regional SONET rings that "bring the city to the country," or rather help set up POPs that make point to point leased line connectivity less of a cash drain on rural ISPs. But Coutre couldn't point to any specific examples of such fiber rings built, suggesting such projects, as attractive as they might be, are still very much white board material. Large infrastructure builds are hard to justify in the country, since the upsell from dialup is believed to be minimal.

"There is less disposable income available to people in the country, we are talking 3 percent to 4 percent [broadband] penetration of Internet population of the town," Coutre said.

No wonder ISP operators like Garaffa started thinking outside of the box. What's less expensive than a wireline broadband network, what can compete with dialup on price, and what can be deployed rapidly?

Garaffa went with wireless and never looked back.

"We can do a business plan where we pipe in a T-1 into the community and then shoot wireless from the tallest building for 100 or 150 customers," Garaffa said.

Indeed, Garaffa's AxtellTech can sustain high speed, non line of sight wireless links for distances between nine and 16 miles. The end result is communities wired with a variety of access methodologies, and TractorCam-style applications. The key to Axtelltech's success is the ISP-turned-systems integrator's ability to deliver wireless broadband at a price point of about $50 a month, about the same a farmer would pay for a separate $30- a month telephone line for dialup Internet access, plus $20 for unlimited ISP access.

However, not everybody is cheering for wireless, even in Garaffa's home state of Nebraska.

"We started looking at wireless and found it lacking," said Linda Aerni, chief executive of Nebraska-based ISP Megavision. "Security breakins into the 2.4 GHz system were too common to sell services to businesses that want credibility and reliability."

Besides selling in communities as small as 200 people and as big as 20,000, Megavision supports a number of mid-size business clients with leased line services, which demand a better network.

Megavision has to work the system without the benefit of new technologies that would allow them to circumvent the RBOCs. It's hard work, and operators are frustrated with the way they are treated in the current regulatory climate.

"Internally, we call the fees we have to pay the RBOC to initiate the talks to colocate equipment in its central office a bribe," Aerni said. "You pay somebody $500 to connect two wires."

Expenses associated with colocating broadband equipment within RBOC central offices overshadow even the cost of this equipment, Aerni said, and put a big dent in broadband deployment plans in sparsely populated areas. If, to service 5,000 people with broadband, you'd have to pay $5,000 just for the right to be considered to put the equipment in, that business stops making sense pretty quickly, she said.

Nevetheless, broadband has a long way to go in the country—Aerni said the latest trend she noticed were people disconnecting broadband in favor of dialup for financial resons—few people can justify an big extra bill for service they are barely using.

Either way, Megavision's experience with its local RBOC is far from being unique, said Sue Ashdown, executive director of the American ISP Association. If anything, Megavision's Bell-related problems are tame compared to what other ISPs are trying to work with.

"We are receiving complaints that Bells are charging ISPs for traffic on different channels of PRI lines," Ashdown said. "And that Verizon is spearheading a campaign to shut down virtual Nxx access that allows ISPs to port access numbers to one physical location."

From Ashdown's point of view, rural ISPs have more than a few regulatory fights ahead of them before they can focus on things more near and dear to their hearts, creative services like TractorCams.

— End