Tuesday, July 13, 2010

Rural phone companies that took the broadband plunge dislike grants that float competition

The economic stimulus package designated $7.2 billion to provide affordable broadband to unserved or underserved areas, with $2.5 billion of that going to the Rural Utilities Service in the Agriculture Department. Now New London, Mo., is becoming the center of an emerging conflict between RUS and rural telecommunication companies, Nancy Jorgensen writes in the Daily Yonder.

Ralls County Electric got a $9.5 million grant and matching loan from RUS to provide broadband service to five counties, but the service area includes New London, which already has broadband access. TDS Telecommunications Corp., which  provides 1.5 MB to 10 MB broadband starting at $29.95 per a month to New London residents, says it challenges all applications that would compete with existing TDS territories and is the leading challenger of stimulus awards.

"We filed the most challenges of any telecommunications company in the U.S.—over 130," Andrew Petersen, director of external affairs and corporate communication for TDS, told Jorgensen. "Funding duplicative networks is not a good use of federal dollars and not what Congress intended." The company got broadband stimulus grants in Michigan and Alabama.

"About 1,300 small telecommunications companies, both member- and family-owned, serve rural America," Jorgensen writes. Many of those companies, most much smaller than TDS, are worried that the stimulus may hurt them because they have already invested millions in broadband development. "We’re all for bringing broadband to rural America," Bill Rohde, manager of Mark Twain Rural Telephone Co. in Hurdland, Mo,. told Jorgensen. "But we don’t think our government should provide tax dollars to companies that would compete with us. Costs here are too high, and subscribers too few to justify it." Now Rhode feels RUS, which "brought service to rural areas where for-profit companies would not go, and now RUS is undercutting the successful telecoms it helped create," Jorgensen writes. (Read more)

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