This is a copy of a letter sent to President Clinton in response to his recent American tour exposing the lack of wireless telephony and Internet access to rural and underserved America. I noticed an article on the subject in your May 8 edition.
Dear President Clinton:
This letter is in response to an article that appeared in the April 27 edition of the Los Angeles Times captioned, “President continues to campaign to promote high-speed Internet access for rural areas with trip to southeastern North Carolina.”
As a “Greenfield” telephone company that is a product of the Telecommunications Act of 1996, which you signed into law, our company, United Calling Network Inc., has strived to differentiate itself from all of the incumbent telecommunications carriers.
UCNI has designed its business model with an eye on becoming a true competitive telecommunications choice for the people. The road has not always been easy, particularly since the investment community has been conditioned to respond to traditional approaches and business models of servicing the public as the incumbents have been doing for over 100 years.
You have been visiting rural areas, including an Indian reservation in New Mexico, talking about bring ing wireless solutions to rural and underserved areas. Your campaign about bringing wireless solutions to the underserved strikes very close to UCNI’s home. UCNI has been researching these rural and underserved target markets seeking viable telecommunication services to these markets. It is not coincidental that last year, UCNI, with the help of Lucent Technologies’ NetworkCare division, developed a business blueprint for a wireless network specifically targeting selected American Indian reservations in Arizona and New Mexico. Unfortunately, the small population and vast coverage area made the project unprofitable for UCNI to consider.
Mr. President, I know that you have heard all of the excuses from the incumbent telecom companies as to why they are not currently serving these areas. The bottom line is and always will be money! If it were a profitable proposition, all telecom companies would be providing service. However, recognizing that our American Indian population continues to be one of most telecommunications-deprived segments of our society, UCNI sought to bring a viable and cost-effective method of servicing some of these areas.
In the business blueprint prepared by Lucent, the cost of building a wireless infrastructure is extremely cost-prohibitive to an emerging telecommunications company such as UCNI. Our numbers were only based on two selected American Indian reservations and the capital requirement, if privately equity funded, was estimated at $240 million. We were advised that federal government grants and subsidies existed for these rural and underserved populations. Factoring in a conservative amount for subsidy or grant of $70 per subscriber, per month, the project would not become profitable until after the 10th year operating the network. These profit-and-loss figures could not justify UCNI undertaking such a project, even with projected subsidy and grant funds.
Your goal to bring all Americans online and to have equal access to high-speed communications and information is applauded. We at UCNI see the major obstacle to getting to the finish line is “how” are these rural and underserved areas going to get access.
Mr. President, as a FCC-licensed radio engineer and having been involved in telecommunications for the past 15 years, I can only see one reasonable solution to this problem. Cooperation. The underserved areas are too vast and diverse across the country for one entity to bring a viable and cost-effective solution. To solve the problem will take a concerted effort among telecommunications carriers, equipment manufacturers and government.
There are provisions within the Telecommunications Act of 1996 that will allow this change to occur. Cities, counties and states are now allowed to become partners with the utilities (telecommunications) company. Such cooperative efforts will allow the initial capital requirements for infrastructure to be met and the cost of the project can be amortized. Infrastructure deployment is the main cost. Once the infrastructure is in place, it will only require upgrades and maintenance. In return, the local authorities receive a portion of the utility’s revenue. UCNI recognizes that with the shift to wireless telecommunications, the existing tax base (for wireline utility taxes) is being eroded. A partnership will guarantee that the local authorities have a continuing revenue source.
As a product of the Telecom Act of 1996, UCNI had hoped that competition in the local markets would blossom. Unfortunately, deregulation led to the opposite result, less competition.
The reality of change is such that if it is not started soon, it may never occur. But the government cannot point a blaming finger at the private sector for lack of infrastructure in rural and underserved areas. No company is going into a project knowing that it has absolutely no way of turning a profit without public support.
Mr. President, you have the vision of a better America. For that vision to come completely into focus, cooperation is needed from both private organizations and government authorities (at all levels). UCNI does not view this as any different than the building of interstate highways, only in this project the government will not have to fund the entire project and the revenues will be shared proportionally between public and private. It is a win-win situation and, above all, the people will benefit by having access to communications and information.
Phillip Van Miller
Chief Executive Officer
United Calling Network Inc.
