Western Wireless Chief Tells Rural LECs They Have Same Goals
Las Vegas -- Western Wireless CEO John Stanton came before an audience filled with hundreds employed by rural ILECs -- his company’s traditional enemies -- to tell them he thought wireless technology can serve rural areas better than wireline carriers and to urge them to work with him to get rid of unproductive regulation. “We're all a part of the same industry,” he said at the opening Tues. session of USTA’s Telecom 04 conference, adding that “wireless communications can provide a more economic way to meet telecommunications needs in rural areas.” Stanton also told them his company provided service in Pine Ridge, S.D., because it wasn’t served well by its rural ILEC. “It’s essential to have wireless for rural communities to get on the information superhighway,” he told the ILECs: “Businesses are making critical decisions on whether to locate in rural areas. Without wireless, businesses won’t come and jobs won’t come.” Western Wireless has aggressively sought eligible telecom carrier (ETC) status in order to get universal service support in rural areas over the past few years, presenting the first competition for some rural telcos.
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Stanton said rural ILECs and their wireless competitors agree on a number of things, such as the challenge of bringing new technology to rural customers. “What divides us? Regulation,” Stanton said: “I believe competition precludes the need for any federal, state or local regulation for wireline or wireless. Our company has proposed the abolition of rate of return regulation, something your industry associations opposed. I believe you should be able to set prices and deliver content services. We simply want to compete. Should that divide us? I don’t think so.” However, some issues do bring about divisions, he said; for example: “I believe universal service is anachronistic” and should either be phased out or restructured in a fairer way. The “system is broken” because it creates disincentive to create more cost efficiency, among other things, he said. It “retards innovation and artificially inflates the cost of telecommunications.” Universal service is “unnecessary and ought to be phased out,” he told the group, which gave him polite applause at the end.
The ILEC group gave a more enthusiastic welcome to AllTel CEO Scott Ford, but he also gave them straight talk about the effect of technology on their businesses. “IP technology disintermediates everything it touches, like rust or water, changing the fabric of everything,” said Ford, whose company has 3 million wireline and 8 million wireless customers. This technology change introduces new forms of competition and substitutions, which put pressure on “the regulation and subsidies used by many of your companies, including mine” he said. Rural ILECs have to “start thinking about megabits instead of MOUs [minutes of use],” he said. “I think you are going to evolve to 2 business models access providers and content manufacturers.”
New technology and a changing role for telcos means “we've got to modernize those rules” that have guided the telephone industry and “actively participate in getting a common set of rules” for all providers, Ford said. “Universal service is an abysmal model,” he said. AllTel is a recipient of universal service funds for its rural wireline company and “we would have never built it… and we would never have maintained it” without those funds, he said: “I understand.” But the fund has “grown 33% just last year and wireless companies pay in 27% and draw out 3%.” The way it works doesn’t make sense in a world with many different types of technology providing similar service, he said. Asked about how intercarrier compensation affects rural telephony, Ford said his view on that also may be hard to swallow because his company is planning for a “gradual move to bill-&-keep” to replace current carrier payment systems, including access charges, a rural mainstay. “We have to plan for that” because the company thinks compensation schemes will evolve to bill-&- keep, he said.