RUS will no longer maintain approved equipment list

In a cost-saving measure, the Rural Utilities Service announced this week that effective immediately it will no longer maintain or rely on an approved vendor list in connection with the low-interest loans the organization makes to rural telcos. For many years, inclusion on that list has been a requirement for equipment used in any project receiving RUS funding.

As an alternative to using an approved equipment list, the RUS said it will transition to a new approach that will be incorporated into its review of individual projects and the approval of loan advances.

“In this new technology environment, Rural Development must operate efficiently and effectively under current budgetary constraints,” wrote RUS Administrator Jonathan Adelstein in an open letter posted on the RUS web site. “Maintaining the List of Materials, which includes a product by product review, simply cannot be sustained under our current budget and with our limited staff.”

Faster time to market
The new approach should help rural telcos deploy new telecom equipment sooner, said Geoff Burke, senior director of corporate marketing for Calix, a manufacturer of access network equipment that sells heavily into the rural telco market.

The RUS initiated the approved equipment list as a means of mitigating the risk involved with making hundreds of millions of dollars a year in rural telco loans, Burke said. The approval process required a manufacturer to work with a rural telco to install a new product and use it successfully for several months before the product could be added to the list.

“As the industry has picked up in terms of innovation and rate of change, a simplified process might be a better way to get new products to market faster,” said Burke.

Until now, RUS approval has been critical to manufacturers targeting rural carriers. Historically about 20% of Calix’s business has been for projects funded through the RUS loan program, Burke said. He added, though, that the percentage may have changed as a result of the company’s acquisition of Occam Networks last year.

Buy American requirements not relaxed
Despite the new changes, the RUS does not plan to discontinue Buy American requirements, Adelstein said in his letter.
Those requirements aim to ensure that a certain portion of the telecom equipment manufacturing process occurs in the U.S. or in a country with which the U.S. has a treaty, Burke explained. Traditionally only companies that had met Buy American requirements could be on the RUS approved equipment list, Burke said.

Now that the list will no longer be part of the loan approval process, Burke speculated that the RUS may require service providers to attach documentation from vendors to their loan applications confirming that products meet Buy American requirements.