New NTCA president: "Don't take advantage of us"

Connected Planet talked this week with Sandy Vandevender, who was recently elected president of the National Telecommunications Cooperative Association, about his priorities for the NTCA for the upcoming year. Vandevender is also executive vice president and general manager of Five Area Telephone Cooperative, a telco based in rural Texas.

Connected Planet: What are the biggest challenges for small telcos today?
Vandevender: Maintaining our customer base is a very big thing. Rural America has changed so much. What was a 400-acre farm is now a 6,000-acre farm, and that takes 10 homes out of the picture. We want to provide for our customer base as best we can.

Something is always changing. There’s the threat of [another service provider] overbuilding our networks, as well as changes in the Universal Service fund and recovery programs--and the increasing number of customers that are cutting the cord and going to handheld devices.

USF reform
Connected Planet: This is an important time for NTCA members, with the FCC set to make broad changes to Universal Service and the access charge programs. What would the NTCA like to see happen there?

Vandevender: We understand the programs and the services the programs support are evolving. We have been tremendously successful in ensuring that rural areas have access to the same services that metro areas have enjoyed. Our charge is to help the FCC and legislators push broadband further and further and make sure the plan is manageable and sustainable.

The recent NPRM has taken a step forward from the National Broadband Plan. It’s more surgical. But the NTCA is still concerned about inter-carrier compensation reform. The proposals still remain pretty vague.

We also understand [the FCC] wants to address concerns it sees in the current program. [But] we’d encourage the FCC not to throw out what has worked so well in the past. We urge them to build on the rate-of-return cost recovery that has [been successful] and not to disrupt our ability to recover prior investment or deter carriers from investing responsibly.

Special access
Connected Planet: One of the challenges for small telcos is the cost of special access circuits to connect last-mile broadband networks to the Internet. Do you have any data on how important reasonable special access pricing is?

Vandevender: It’s one of the biggest obstacles. We want to make sure [there is an] affordable facility to connect us to the Internet, what you know as the middle mile. A company like ours could have the most state-of-the-art network but if the middle mile is too expensive, consumers won’t recognize the benefits. And a lot of the middle mile consists of special access circuits that we have to [buy from an incumbent carrier.]

We recently did a survey to help understand this. The typical respondent was 128 miles from their primary Internet connection—and 89% of those who recently switched providers did so because of cost.

For Five Area Telephone Cooperative, I’m 20 miles from the Texas-New Mexico state line and my connection to the Internet backbone is in Dallas. I have to lease that connection from somebody.

We all are going to need additional broadband capacity within one and a half years, maybe sooner. I recently gave one of our directors a broadband connection and he said, “I will be such a hero because now my kids can download Netflix movies.”

Connected Planet: What would you like to see happen with regard to special access pricing?

Vandevender: [We would like to have] the FCC’s help in keeping costs as low as possible. . . We’re not against anyone making a profit. But don’t take advantage of us because [we may] only have one way out. We need to make sure legislators and the FCC understand that.

Stimulus update
Connected Planet: Some of your members won broadband stimulus funding. How are those projects coming along?

Vandevender: That depends on which one you’re talking to. Any program of this magnitude may experience some bumps. Most people are well into the program by now and are trying to meet the timeline constraints. But I’m aware of one state where the permitting process [has been slow]. And when you have [deadline] requirements it can cause problems.

Everyone is trying to get going as fast as they can, and there are a lot of record-keeping requirements that they haven’t experienced before.

Connected Planet: Did you have any members decline to accept stimulus funding that they won and if so, what were their reasons?

Vandevender: Some declined. The reasons run the full gamut. Some couldn’t make it work the way it was supposed to. . . Stimulus funding is accounted for as zero cost dollars, which means you have zero depreciable assets and nothing to recover on. That’s OK and some people are [working with it]. But in other cases, the lack of a work force or the fear of losing control . . . have kept some people away from it.

Personal goals
Connected Planet: What would you like to achieve during your tenure as NTCA president?
Vandevender: There’s a lot I would like to see and I have been so encouraged over the last six to eight months that I’ve seen such an upswing in the energy of the organization. A lot of that has to do with our new CEO. Companies are very interested in what’s going on and are not sitting back and saying “What will be will be.”

It’s important for people to see the connectivity in the middle between [rural suppliers] and what comes out the back door of their Safeway. For suppliers to sell milk they need to be online. To be part of the Milk Producers Association has its own [connectivity] requirements.

It’s important for D.C. that rural America has a [strong] economy. People deserve fair workable sustainable broadband that will allow them to move forward, and that’s what we hope to achieve.

I would like to see a good plan where everybody survives and we push ahead. We have the work force, the experience and the know-how. Just point us in the right direction and let us go.