Calls for unity at CoBank conference

Acknowledging the strength in numbers, independent and cooperative telecom companies and their financiers spoke this week at the 2006 CoBank Executive Forum in Beaver Creek, Colo., about the need for a more unified front to regulators and equipment vendors.

Despite proceeding with fiber, IPTV and other next-generation deployments, telcos said they are having a tough time making the business case for them. Some, such as Bruce Herman, president and CEO of PrairieWave Communications in South Dakota, said his company would not move forward with some projects such as fiber-to-the-home until the business case was proved. But others, particularly smaller companies, are feeling forced to deploy in the face of competition from cable providers.

Video services are proving the most troublesome for rural telcos as they deal not only with questionable business cases, but also the high cost of obtaining content, and sometimes the inability it. Even Embarq, the largest of the rural telcos, is opting to stick with its satellite-based solution for now.

"It's interesting that even a company with the scale of Embarq can't find a way to make video work," said Frank Gallagher, managing director of investment banker Stifel Nicolaus.

However, Gallagher said just because the business case doesn't work today, that doesn't mean it won't work in 12 to 24 months. He said companies need to do joint ventures to make the business case work.

J.R. Brumley, CEO of South Slope Cooperative Communications Co., pointed to his state's Iowa Network Services as an example of the success of such ventures. Other states have done the same, such as South Dakota with the South Dakota Network.

However, the call for cooperation to boost the power of small telephone companies through sheer scale seemed to extend beyond the state level as calls for a CableLabs-type effort and a unified voice in Washington increased.

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