SDN Blog

Rural telecoms advance despite uncertainties in federal support

Posted on Wednesday, April 16, 2014 in Member Communities , Broadband Internet

Blog written by

Alliance Communications

Despite financial uncertainties in the future level of federal support for broadband services in rural America, small telecommunications companies serving South Dakota and neighboring states continue to improve their networks for customers.

Alliance Communications is a great example.

Alliance is based in Garretson, S.D. and has branches in the nearby South Dakota communities of Baltic and Brandon. It is also one of the 17 independent telecommunications companies that own Sioux Falls-based SDN Communications, the region’s premier broadband service provider for businesses and institutions.

Alliance serves its own customers in 17 communities in South Dakota, Iowa and Minnesota with Internet, cable TV and phone services on a top-notch, recently improved network. All Alliance customers are now connected to SDN’s core line with fiber rather than lower-quality wiring.

“We have just completed our fiber-to-the-home project, so now our network is 100 percent fiber,” says Amy Ahlers, marketing supervisor for Alliance. “We rewired more than 13,000 homes and businesses for that.”

Work on the project began in 2006 and was completed in late March. The overall cost was nearly $66 million, Ahlers says.

“Alliance customers do not suffer from a digital divide,” she says. “Now there’s really no limit on what we can offer. As new technologies come out, we will be able to offer them. Before, we might have had to say our network can’t handle it.”

Completion of the Alliance project “is a really big deal,” says Rich Coit, executive director and general counsel of the South Dakota Telecommunications Association.

“Once you get fiber to the premise, you have very robust broadband service,” he says.

Challenges unfolding

Broadband connectivity is important to the vitality of communities of any size. However, in many cases, companies in rural areas have to work harder and smarter to provide state-of-the-art connections because of eroding, budget-related federal support for the principle of universal telecommunications service.

A white paper on Universal Service Funding published in June 2013 by the national consulting firm Balhoff & Williams LLC puts in clear perspective the unfolding era of investment challenges that threatens rural telecommunications companies.

The study points out that customers in rural, high-cost areas rely on broadband networks for economic opportunity, education, health care, public safety, emergency management, and social benefits. But without sufficient investment support built into federal laws and regulations, telecommunications companies are likely to focus their businesses on population centers and reduce services to higher-cost customers.

Rural areas rely on broadband for

“Federal and state regulators and legislators stand on the threshold of a new era as they survey their direct and complicated responsibility for the welfare of citizens who live in a vast expanse – most of the land mass – of this country,” Michael Balhoff and Bradley Williams write at the beginning of their firm’s study.

The firm specializes in providing financial and regulatory advice to communications and energy industries.

A little background is in order.

The federal Telecommunications Act of 1996 put a burden on states as well as the federal government to help provide communications services to areas that are economically difficult to serve. However, regulatory reforms are shifting more of the financial burden to end users. Federal support provided by carrier fees is declining.

The report encourages states to analyze what is happening and identify options to partner with companies and help provide and preserve good services in hard-to-serve areas.

Despite the shifting foundation of rural telecommunications, Alliance and other companies continue to move ahead, at differing paces, with expansions and improvements in technology, Coit says. A lot of companies are working on fiber-to-the-premise deployments.

In the meantime, the state association and other organizations are urging the Federal Communications Commission, Congress and the Legislature to preserve industry funding mechanisms that help provide and maintain telecommunications services in largely rural areas.

Coit contends that the value of deploying broadband technologies in rural areas far exceeds the cost of government investment.

“I truly believe it’s becoming more and more apparent to everyone what broadband can do to rural areas. I really believe that’s it’s becoming more and more apparent how important it is,” Coit says. “People are starting to realize broadband is essential, if you want to give everyone a chance.”

For more information about Alliance Communications and other SDN member companies, visit the SDN Communications About Us page.