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MINNESOTA TELEPHONE ASSOCIATION Telecommunications Guide May 8, 2002
Inside Minnesota's Telecommunications
Industry Craig Gunderson, state vice president of Frontier, A Citizens Communications Company, is beginning a two-year term as president of the Minnesota Telephone Association. Walter S. Clay, president, CEO and chairman of the board of Hutchinson Telephone Company, was recently elected as MTA’s vice president. Both industry veterans offered their thoughts on the state’s telecom industry in a recent interview with Telecommunications Guide. Q. Telecommunications Guide: What are the biggest issues facing Minnesota’s telecommunications industry? A. Gunderson: One big issue is the attention being paid to the deployment of broadband/DSL services in rural areas. There’s a mismatch between expectations and actual consumer demand. There’s a high cost to deploy these advanced services but only a relatively low number of people are choosing them. We’re ahead of the curve in deployment, but it needs to be done in an organized, rational manner that reflects the adoption of these services by our customers. Another important issue is the perception that all telcos are the same, which as recent news accounts have shown, is not very positive. It’s unfortunate that all telecommunications companies get lumped together with a few carriers that have received attention for financial or service problems, especially when many companies – many of our member companies – provide exceptional service. We shouldn’t all be painted with the same brush. Headlines are driving calls for greater regulation when we should be relaxing it. Lastly, there’s the changes in competition we face and its growth over the past few years. And it’s not only from competitive local exchange companies (CLECs), it’s from wireless companies and service substitutions by consumers. Local phone companies face a pretty significant loss of revenue because more people are using wireless phones as their second lines, sometimes even as their only phone. With wireless companies offering hundreds of long distance minutes as part of their monthly fees, local phone companies lose an important portion of their income. Clay: The only thing I’d add is how incumbent carriers are regulated. Most competitors do not have to play by the same rules that we do. And, having to compete with the state for telecommunications services – while at the same time being regulated by the state and paying taxes to support the state’s efforts – is a huge issue for our members. Q. What should the telco industry be doing now and what is MTA’s role? A. Gunderson: It’s important for our industry and the MTA to make sure the legislature, state leaders and the public understand the extent to which advanced services have been deployed in Minnesota and the level and quality of those services. We must do a better job of communicating that. We need to work more on the whole issue of DSL deployment with legislators and regulators. We need to figure out how to match the economics of deployment with the desire to deploy DSL nearly everywhere. We also need to work with communities to encourage demand for DSL services. Clay: MTA must lead, aid and guide our members. We’re our members’ voice at the state Capitol, so we must spearhead legislation to level the competitive playing field. It’s tough for telcos to compete against other industries, especially in cable TV, for example. If an incumbent cable provider donates a considerable amount of money to a municipal cable commission, the incoming competitor can be asked to match the amount. The local regulators say that’s treating everyone fairly, but it’s tough to spend a lot of money when you don’t have any customers yet. We also have to tell our story better. We are the white knights when it comes to the services we provide and the benefits we bring our communities. For example, our company donated bulletproof vests to the Hutchinson police because it wasn’t in their budget. We’ve contributed to numerous local charities for a long, long time. So when one of our shareholders told me we didn’t do much for the community, I realized that all of us are too shy about taking credit for everything we do. We need to start publicizing our contributions so the public knows we’re good corporate citizens who take helping our communities seriously. Gunderson: I agree with Walt. Our company emphasizes safety and education. We work with local schools, donate bikes and sponsor bike rodeos, among other things. We also ask our local managers to find out what’s important in their towns and then help do something about it. Q. What do you see as government’s role in telecommunications? A. Gunderson: Government will play an important role in how we migrate from today’s regulated climate to a deregulated one that encourages more investment rather than deters it. Moving us to a market-based landscape will also involve the federal level, but state government-owned networks and municipal companies are an issue, too. Rather than competing with us, government should work with our industry by becoming an anchor tenant or by creating an economic model that helps rural customers connect to the advanced technologies that are often already there. Clay: The state doesn’t need to stir the pot for local carriers seeking rate increases by sending news releases to local newspapers asking people for complaints. The majority of our member companies have very reasonable rates that have been constant for years. And companies are already required to report service problems quarterly. I also think funding needs to be more long-term. The TARP and TAG programs are examples of this. We don’t know what’s going to happen with those programs because of the state’s budget problems. The programs shouldn’t have to depend so much on how the economy’s doing. Q. How would you change Minnesota’s telecommunications legislation? A. Gunderson: First, we need to streamline the regulatory process. This includes eliminating promotional requirements and expediting 9-1-1 approvals, interconnection agreements and certification requests. We also need to reduce agency overlap. But what’s really necessary is deregulation, with a transition plan to get from a regulated to a deregulated industry. Clay: We need to convince the legislature that we must be deregulated to compete. Being regulated but being told to be competitive is like trying to skydive, but without a parachute. Right now there seems to be no incentive for the state to get out of the regulation business, so it’s going to take a big effort to change it. Q. What challenges does the MTA face in the next two years? A. Gunderson: We have a very diverse association. Representing the needs of everyone when the economy and industry are impacted by the dot-com bust is a real challenge. We’re working on representing our members’ interests to lawmakers and regulators in a clear, organized fashion. Clay: We have to speak with one voice. It’s very confusing for government to hear multiple voices from one industry. Our goal is to find out how to do a better job of representing the interests of members that blend together better now than they did before. Gunderson: Walt’s right. Our membership includes small and large companies, rural and metro, incumbent and competitive, non-profit and private, but we still need to come to a consensus. Our vision is to fully understand and represent our members’ needs so we can speak with one voice. Q. What are MTA companies doing currently to meet the future needs of their customers? A. Clay: I think a lot of companies are looking at what additional services they can provide to their customers. In many cases where advanced technology is already there, companies are looking at deploying more. Gunderson: Our members have already deployed voice, video and data capabilities in an industry-leading way. We’ve deployed DSL infrastructure in markets with less than 300 people. MTA companies have made a tremendous investment to deploy advanced services in Minnesota, even in some very rural areas, and the state should be very proud of that effort. But our investments are not moneymaking ventures yet, they’re forward-looking investments, so we have to balance being a good corporate citizen with what we can afford. We can’t always put DSL in first, but we can work with our communities to help them grow and make some short-term investments that are easier to justify financially.
More information about the Minnesota Telephone Association can be found online at www.mnta.org.
(c) 2002 Minnesota Telephone Association
Published by the Minnesota Telephone
Association (MTA) |