#336. Can We Keep Local Telephone and Broadband Service?

A few weeks back, we ran a series on the importance of community banks and the invaluable service and “product” they provide to smaller, rural communities. We received a note from Lonnie Stieben, Community Economic Development Manager for SKT, a rural telephone company in Kansas. Lonnie stated, “most of the 37 independently owned rural telephone companies in Kansas (and many of the 800 plus national independents) are facing a similar threat today that community banks faced with deregulation and branch banking.”

According to Lonnie, the FCC, in attempting to adopt a National Broadband Plan, has found it to apparently be in the best interest of rural broadband deployment to propose a shift of a fairly substantial amount of the Universal Service Funding, $15.5 billion, beginning in 2012 through 2016, to larger, corporate providers. In Kansas, as in most states with a high percentage of rural landscape, the independent Rural Local Exchange Carriers (RLEC) have been the very companies that have already provided broadband to almost all of their customers while the larger corporate providers have chosen not to invest in rural markets.

A recent study by Wichita State University’s Center for Economic Development and Business Research evaluated the economic impact the proposed changes in Universal Service Funding would have on the Kansas RLEC’s. In Kansas, there are 37 RLEC’s providing services to 104 of the 105 counties in the state. In general, the areas served by the RLEC’s have lower average annual incomes, a declining population base, and the lowest population densities of the state. The RLEC’s serve more than 50% of the geographic area and less than 10% of the telephone customers in Kansas.

The study concluded that the loss of funding to the Kansas RLEC’s will cause a reduction in services and associated staff, with a total employment impact to be a loss of 367 jobs by 2016 and a total wage impact of over $51 million over a five-year period.

Lonnie Stieben concludes, “The highly probable loss of funding to support our rural companies will just add to another layer of loss for support for rural communities, many communities of which the local bank has been closed since the 1980’s or at least is now just a branch with a bigger bank elsewhere.”