Regulatory News – Billions Needed to Put Broadband into Rural Areas

Posted:  08/2000

Regulatory News

Billions Needed to Put Broadband into Rural Areas
By Kim Sunderland

It will cost $10.9 billion to deploy broadband facilities to rural areas throughout the United States, according to a new marketing study the National Exchange Carrier Association Inc.
( recently released.

The study estimates the dollar investment of making upgrades to 3.3 million access lines served by rural camers.

The implementation cost of network upgrades is so significant because of the large size of exchange areas, low-line density and scattered distribution of telephone customers, NECA says.

Graphs: Distribution stats

“Now that we know the cost, the question is, what will regulators and Congress do with this information?” asked Robert Anderson, NECA’s president, during a Washington press briefing in June to announce the study’s release. “They must consider setting in place policies that would produce rapid broadband deployment.”

( formed NECA in 1983 to administer universal service and access charge programs, among other things, for its member telecom companies.

The association says the market study shows that rural telcos rapidly are deploying a broadband-capable network.

“This is a big price tag; but make no mistake about it, the rural carriers are meeting the challenge,” says Victor Glass, director of NECA’s demand forecasting and rate development, and the point man on this study.

While rural carriers are meeting the challenge, the carriers say they need more government assistance for their part in reducing the “Digital Divide.”

Because Section 706 of the Telecommunications Act of 1996 requires all companies to make advanced services available to all- Americans, rural carriers are bound by law to get broadband out to even their remotest customers.

“We have said time and again that our rural telco members are in the forefront of the broadband revolution but that completing the all important last mile in all areas will require a commitment from government,” says Michael E. Brunner, CEO of the National Telephone Cooperative Association

The FCC, in partnership with state regulators, launched this summer a national, interactive website
( for local communities to share information about their broadband deployment projects. The site is maintained by the National Regulatory Research Institute
(, which is part of the National Association of Regulatory Commissioners

The site includes a survey to gather details for a future searchable database of broadband deployment projects. The FCC will use the information to prepare reports that help inform consumers and policy makers at the state and federal levels of the status of deployment of broadband services.

The impetus for the corresponding NECA study came from the
NTCA, the National Rural Telecom Association (NRTA), the Organization for the Promotion and Advancement of Small Telecommunications Companies
(, and the United States Telecom Association

“Essential to arriving at the right public policy decisions to attack the digital divide is the compiling of data to identify the magnitude of the problem,” explains Roy M. Neel, president and CEO of USTA.

“The NECA study demonstrates that it would be extremely costly for the federal government to ‘fund’ efforts to bridge the digital divide. Deregulation, which will allow market forces to drive down costs, is the obvious first option for the American taxpayer.”

Specifically, the study examines rural telcos that cover more than a third of the land area of the 48 contiguous states and serve roughly 6 percent of households.

For a summary of the NECA Rural Broadband Cost Study, visit

CDOSA: central dial office serving area,
which is the area directly surrounding a CO. Source: National Exchange Carrier Association Inc.

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