While many people lament the fact that Ma Bell is essentially reassembling herself to the glassy-eyed stares of well-lobbied regulators, one thing's standing in her quest to re-coagulate: rural America. Both telcos and cable operators are starting to shed more rural markets, unwilling to invest the time and resources into markets that deliver a lower return on investments. This of course creates opportunities for smaller carriers.
Fairpoint now owns Verizon's New England networks, Frontier will soon own Verizon's rural networks most everywhere else, and Cenurytel and Embarq are fusing to create a new operator. Our friend Bernie Arnason at Telecompetitor
explores the rise of the "rural super carrier," and wonders about AT&T and Qwest's next move:
That leaves AT&T and Qwest to reveal their rural plans. Will AT&T shed their rural assets as well? They have a lot to shed. The wildcard among the RBOCs may be Qwest, because they have an opportunity to become the rural 'super' carrier themselves. There has been speculation that Qwest would divest itself of its long distance and enterprise units and basically morph back into its US West heritage.
Our question as a consumer-focused website remains squarely on what happens to these customers when they're offloaded. As Fairpoint's struggles
highlight, there's a real risk of these carriers biting off too much too soon, something that usually results in horrible customer service (see Fairpoint or even Comcast). Smaller, debt-loaded carriers dealing with the lower ROI of rural markets during a recession also raise a lot of questions about when exactly rural Americans will see next-generation broadband upgrades.
There's also the question of how exactly these carriers hope to compete with cable. Cable operators serve many of these rural markets due to the since-gutted local franchise reform laws, and although such reports may be overly optimistic, many analysts peg DOCSIS 3.0 penetration at close to 100% in just a few years
. There are competitive reasons Verizon is offloading many of these markets, and smaller operators (with less cash and fewer lobbyists) may not find the row any easier to hoe.
All of this of course leads into exactly what Uncle Sam has planned when it comes to shoring up the nation's coverage gaps. It's pretty clear that rural America is going to need some help.