5 Ways To Boost Your Billing Returns Now

||||| Number 02
5 Ways To Boost
Your Billing
Returns Now
Quality of Service &
Quality of Experience
How Aurora Networks Delivers Both
In A Tech-Savvy World
WHITE PAPER:
Sjoberg’s BIP Funding Lessons
ISTOCKPHOTO
The view from Sjoberg’s
corner of Minnesota.
USDA Farm Bill
Loan Program
Reborn, But Is It
Cable-Ready?
How VoIP Will
Make Your
System More
Profitable
CONTENTS
SJOBERG’S CABLE
Atlantic Engineering Group was founded in 1996 to serve municipal utilities, electric co-ops, and other new
entrants in the emerging telecommunications market. From conception to completion, AEG offers end-to-end
services designed to transform our client’s telecommunications vision into a successful reality. Please feel free to
contact us for your fiber and smart grid deployment needs!
Features
Editorials
4 A Note From the Editor & the Publisher
6 Bullied by the Big Guys
Who we are, what we’re doing and how we plan to cover the
rapidly growing field of broadband technology.
“Ralls County Electric Cooperative broke ground in August 2010 and chose Atlantic as our FTTH
construction partner for the deployment of our network based on their extensive experience within the
industry. They have been an integral part in helping our project to succeed and in helping us accomplish
our goals of finishing the project on time and on budget.”
Dan Strode, General Manager
Ralls County Electric Cooperative, Ralls County, Missouri
PO Box 790 Braselton, GA 30517
706-654-2298 www.aeg.cc
10 USDA Farm Bill Loan Program:
Reborn, But Is It Cable-Ready?
Pressured by Public Needs and Budget Constraints, the USDA
Modified its Farm Bill Loan Program for Broadband.
Written by Liz Zucco
12 5 Ways To Boost Your Billing Returns Now
Sometimes, looking at your loss is the best way to
make more profit Written by Art Coutcher & Grayson Hill
16 Voice Over Internet Protocol
What it is, what it does, and how it will help your system be
more profitable Written by Justin J. Junkus & Grayson Hill
20QoS & QoE
Delivering Quality of Service and Quality of Experience
in a technologically savvy subscriber world
Written by John Dahlquist & Grayson Hill
A
Publication
Rural broadband efforts will be eliminated or
set back years as the Department of Justice and
Federal Communications Commission side wtih
big corporations Written by Shannon Clark
8 Meet the Society of Cable
Television Engineers
The name may feel anachronistic, but their
offerings are cutting-edge Written by Rex Clark
302012 Will Be A Wild Ride
5 trends that are bound to upset the applecart
this year Written by Liz Zucco
White Paper
26Sjoberg’s Cable of Minnesota
How a mom-and-pop appliance seller reinvented
itself into a private, rural broadband company,
and how it plans to compete in today’s market
Written by Rex Porter & Grayson Hill
ISSUE 02 | RURAL COMMUNICATIONS
3
Broadband in the Heartland:
The Rural Communications Message
F
rom design, construction and maintenance to financial, marketing, advertising, programming, customer-service and IT issues, Rural Communications looks at all the places in
which key purchasing, financial and operational decisions are made daily in the front office,
in middle management and in the field.
This edition of Rural Communications tracks the evolution of Sjoberg’s Cable from a
small cable TV operator in Thief River Falls, Minn., to a multimedia powerhouse that delivers service to 33 northwestern Minnesota communities, thanks, in part, to a loan from the
U.S. Department of Agriculture’s Broadband Initiative program.
Elsewhere in this issue:
n Liz Zucco reviews the USDA’s modifications to the farm bill loan program for broadband
and whether the federally funded effort has maintained its viability.
n Billing Tree points out five ways to improve billing returns.
n Aurora Networks’ white paper focuses on how to boost bandwidth for broadband subscribers in the effort to deliver speedier and more-reliable service.
n Jay Junkus peels apart Voice Over Internet Protocol technology – what it is and what it
does – and how it can increase broadband system profitability.
As Rural Communications looks at the core and tangential issues tied to broadband’s rollout
in America’s heartland, there’s no doubt that its development is continuing at a rapid clip.
Case in point: In its outlook for 2013, the University of Colorado’s prestigious Leeds
School of Business states that rural communications is one of Colorado’s top seven growth
areas. Indeed, seven separate broadband-buildout projects are 46% to 91% complete, according to the Broadband Technology Opportunities Program administered by the U.S. Commerce
Department’s National Telecommunications and Information Administration. The price tag
on the largest Centennial State project: $100 million. In all, the seven Colorado initiatives account for federal grants totaling $12.2 million, loans of $13.4 million and 120 jobs statewide.
All of that said, let us know if there’s a cable or broadband system, a subject or a theme
that you think should be the focus of Rural Communications’ coverage. Send a note to
editor Bob Diddlebock at diddlebock@pcisys.net or to publisher Paul Levine at plevine@
ruralcommag.com.
Today’s pace of technological change and innovation continues to advance at a
lightning-fast pace. That’s why you need Rural Communications. It knows broadband …
and it means business.
BOB DIDDLEBOCK, SENIOR EDITOR
PAUL R. LEVINE, PUBLISHER
PAUL R. LEVINE
Publisher
BOB DIDDLEBOCK
Senior Editor
ADVERTISING INQUIRIES
Paul R. Levine, Publisher
PLevine@TransmitMagazine.com
REX PORTER
Technical Editor
GRAYSON HILL
Editor
SEMIOTIC
Art Direction
NICK LEVINE
Account Executive
Rural Communications is printed on
20% recycled (10% post-consumer
waste) paper using only soy-based
inks. Our printer meets or exceeds
all federal Resource Conservation
Recovery Act (RCRA) standards
and is a member of the Forest
Stewardship Council.
EDITORIAL
Rural Broadband Efforts To Be
Set Back Years Or Eliminated
Shannon Clark
Guest Columnist
6
RURALMAG.COM | ISSUE 02
AT A TIME WHEN RURAL AMERICANS desperately
need reliable broadband, the U.S. Department of Justice
(DOJ) and the Federal Communications Commission
(FCC) have dealt a death blow to future efforts.
Many small rural telephone cooperatives across
the United States have been working diligently to
build out digital subscriber line (DSL) to all of their
members, and some are even upgrading from DSL to
Fiber-to-the-Premise (FTTP). They are doing it while
maintaining their cooperative principals and not-forprofit motives. They are offering triple-play services
– those that include voice, internet and video – at very
low to non-existent margins. They are getting these
vital services out there because they are cooperatives
concerned about their members, or locally owned
companies serving their friends and neighbors.
Small telephone providers typically serve very
sparsely populated areas, in some cases less than one
subscriber per mile of line; but many also serve the
villages, towns and cities that serve as the hub of their
rural community. In these more populated areas they
have the same benefit as any utility: higher density
which helps to make their whole mission possible.
Small cable TV companies used to serve alongside the
co-ops, but most are gone now, too… in many cases
gobbled up by large national operators.
Enter wireless. Mobile communications are at least
as valuable in rural areas as more populated centers.
But the costs of wireless build-out and spectrum in
rural areas are often prohibitive. That’s why Verizon
and AT&T dominate any conversation about wireless
service. Mega-companies, with few exceptions, own
this market. Ironically, the continuing existence of
smaller players has been, at times, a net benefit to the
Big Two. When facing regulators questioning their
profits and practices, the Big Two could always plead
competition. But at the end of the day, small, locally
owned companies simply cannot compete in spectrum
auctions for the few customers they can serve.
Now, in a move that will harm rural America,
the DOJ and FCC have agreed to a deal that will pit
two industries that clearly don’t care at all about those
folks on a gravel road – large cable television providers
and large wireless carriers – against small broadband
providers. Small town America isn’t a lucrative place
for Verizon, as demonstrated by the sale
of most of its assets there. But large cable
companies, with their infrastructure
already deployed, can make a pretty good
buck in the heartland, and send it back to
Wall Street investors.
Small telephone companies, many
cooperatively owned, depend on these
small communities and the sales they can
achieve there. They have competed against
cable companies quite successfully — until
now. The decision to allow Verizon, in
exchange for spectrum previously held by
cable companies, to cross-sell or bundle up
their wireless service with wire-line or fiber
broadband provided by the cable companies, creates an enormous competitive
advantage that seriously threatens rural
providers.
Keep in mind: up until this agreement,
these large telecom operators never saw fit
to serve the people who are out feeding the
world every day.
It gets worse. The number of ways
large organizations can tailor services to
their advantage are legion. Verizon, for
example, will package their voice product with the broadband carrier. But, that
doesn’t mean customers will get access to
mobile data — at least not without punitive
caps. After all, the voice came bundled
with the cable broadband: use that. Having
chased out the competition, the big players
will leave rural customers with few if any
ways to deal with the lack of services.
The DOJ and FCC deal has the potential to make rural deployments even less
likely. Live out of town? Tough luck.
It’s time we consider what happens
– or in this case won’t happen – in
our rural communities when the big
players come in looking for profits
instead of a place to call home.
GETTY IMAGES
DOJ and FCC side with big corporations
The lack of broadband services to the remote regions of America is
already a major disadvantage, not only for those who live there, but for all
Americans. Rural residents without broadband are less efficient at supplying
the rest of America with food, fuel, timber and minerals. Lower efficiency in
the heartland becomes higher store prices in the cities, higher heating bills,
higher costs of home building, more pain at the gas pump. Rural efficiency is
the foundation for growth in the U.S. and others nations — it should be where
we solve the problems our country faces. Instead, the DOJ and FCC deal essentially will be cutting it off.
It’s time we consider what happens, or in this case won’t happen, in our
rural communities. Because without these roots, the rest of our country will
likely not survive. |||||
Shannon Clark is CEO & General Manager for Richland Electric Cooperative,
located in Richland Center, WI. Richland has been providing Internet access for
nearly 20 years and has been working with two local telephone cooperatives to
build out vital telecommunications services to unserved rural areas.
A
Publication
BACKGROUND
In December 2011, Verizon Wireless came to an
agreement with SpectrumCo – a conglomerate of
Comcast, Bright House Networks and Time Warner
Cable – and a separate agreement with Cox Communications to purchase excess advanced wireless
system (AWS) spectrum.
Verizon has been abandoning its DSL and FiOS
(fiber-to-the-home) systems in favor of wireless LTE
development, which is cheaper to build out and
easier to maintain. The deal makes it easier to drive
DSL customers into cable company arms, and at the
same time, push LTE services either from the outset
or at a later date. In the meantime, rural customers
may either get pinched between low service and high
bundled cable costs, or abandoned altogether.
The FCC signaled its approval of the deal
pending the DOJ’s sanction, which was given in August.
ISSUE 02 | RURAL COMMUNICATIONS
7
EDITORIAL
Society of Cable Television Engineers:
The Name May Feel Anachronistic,
But Their Offerings Are Cutting-Edge
Rex Porter
8
RURALMAG.COM | ISSUE 02
EVERY TECHNICIAN AND ENGINEER working
in broadband today knows how difficult it is to stay
on top of the latest technology. And every system
owner should. Though the nationwide transition
from analog transmission systems to more powerful
and efficient digital systems is almost complete, the
breakneck pace of broadband technological innovation continues unabated.
With so much change, a unique problem presents
itself: how do you actively learn new skills if you don’t
even know what skills need to be learned?
To deal with that issue, our industry relies
heavily on the Society of Cable Telecommunications
Engineers (SCTE). Formed by a group of engineers
in 1969, the SCTE remains dedicated to its mission
of developing technical standards and training and
certifying people to perform to those standards.
SCTE provides certification, training courses, onsite
seminars and events which give members a chance
to present papers to, as well as jawbone and network
with, their occupational fellows.
SCTE’s flagship professional development
programs involve partnerships with leading universities. The Cable College at the prestigious Rochester
Institute of Technology delivers a comprehensive
educational program for telecom techs and engineers.
For managers, SCTE partners with Georgia Tech for
its management development program, and helped develop the SCTE-Tuck Executive Leadership Program
at the world-renowned Tuck School of Business at
Dartmouth College.
SCTE also practices its new-technology preaching
with SCTE Live Learning, a series of Webinars offered
the third Wednesday of every month free to SCTE
members, and just $29 for non-members. Recent Webinars covered coax drop network fundamentals, trends
in leveraging DOCSIS and HFC Access Networks to
support business service applications, and IPv6 security in home and access networks. It’s serious stuff.
For a learn-at-your-pace approach, SCTE keeps
itself well-stocked with training manuals, books, tapes
and DVDs in its online store – many of which are published by SCTE, and cannot be found anywhere else.
SCTE is probably best known for the technical
and professional development offered at its more than
SUPPORTED
MAKING CONNECTIONS, DELIVERING RESULTS
seventy local chapters across every state
in the nation. These chapters encourage
broadband engineers to share ideas and
skills with their co-occupationists. Yearly
meetings converge at the annual SCTE
Expo, hosted in a different city each year
out of respect for the different parts of
America from which SCTE members hail.
(This year’s took place April 17-19 in Henderson, NV.)
TE and our Distribution partner Power & Tel are uniquely
positioned to provide network solutions tailored to your
individual needs. TE Connectivity’s range of products and
Power & Tel’s commitment to providing these products at the
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EASY INSTALLATION
SCTE.org
Compared to their urban counterparts,
rural broadband techs and their companies
are at something of an information disadvantage. We want all the same technology
available in the urban areas, but knowledge
is harder to come by. Yes, there’s the Internet,
and yes, there’s now this publication, but
nothing beats face time with colleagues
for gaining deep institutional knowledge.
In a world where the learning organization
rules, SCTE is an invaluable ally for those
organizations willing to invest time and
resources in it. |||||
Rex Porter began his career in the early
days of telecom as a microwave engineer.
Rex built up several small cable MSOs, and
later became Editor-in-Chief for Communications Technology, the official journal of the
SCTE and is a member and past Vice
Chairman of the NCTA Cable Pioneers. Rex is
Rural Communications’ Technical Editor.
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314136
Reborn
,
But Is It Cable-Ready?
Pressured by Public Needs and
Budget Constraints, the USDA
Modified its Farm Bill Loan
Program for Broadband.
But Is the Program Still Viable?
Liz Zucco
10
RURALMAG.COM | ISSUE 02
AFTER THE GREAT
federal budget battle of late-2011, the USDA
Rural Utilities Service found itself stuck between the proverbial rock and a
hard place. On the one hand, approximately 26 million Americans living in rural
areas are in need of broadband access. On the other hand, money is tight.
To find a way between those obstacles, the USDA Farm Bill Loan Program
focused the $18 million in funding it received from the federal government
away from grants and into loans. What’s the difference? Grants don’t get repaid.
With the economy and tax revenues being what they are, the fewer dollars
that get given away, the better. Because these low-interest loans – made to
non-telco borrowers – have a very low default rate, RUS expects to be able
to fund approximately $325 million in projects by reissuing parts of the $18
million in funding as repayments are made.
To date, the rural cable community has not often used these loans, but
slowly, operators are accessing these funds to make needed upgrades so that
they can provide next-generation voice, video and data services for new and
existing customers.
We asked Matt Polka, President of the American Cable Association
(ACA), and Jim Slade, Vice President of Global Channel Sales at Arris Group,
Inc. what they thought about how the program relates to the small cable operator. Both men support the continuation of the program, but feel there are
some very specific impediments surrounding it.
According to Polka, the ACA is concerned with rules dating back some
70 years. For example, both the Telecom Program and the Farm Bill Loan
Program fund the same markets. Thus, the telecommunications borrowers
that have had loans in place for decades can shut out a small cable operator
SEMIOTIC
USDA Farm Bill Loan Program:
in their territory, even if the telecom does
not provide adequate broadband. We see
this in many areas of South Georgia, Texas,
and other states that needed funding to
bring telephony to areas of the country in
the middle of the last century.
Polka also says that overbuilding
and competition on the part of incumbent
borrowers has increased the risk that
ACA members will not be able to find the
funding they need. He notes that because
designated monies were not always placed
where they were most needed, the program is now being more heavily scrutinized in Congress.
“The goal and the idea of the Farm
Bill Loan Program is one that we support,”
states Polka Who reiterated the ACA’s desire that the rules governing the Farm Bill
Loan Program should be geared toward
new entrants rather than favoring existing
borrowers.
Out-of-date policy questions also
are slowly being addressed. For example,
past rules allowed for the funding of 256
“The more funds made available, the
more we can improve the standard
of living for people in these communities. If Congress were to eliminate
the Farm Bill Loan Program, it
would really hurt them.”
~ Jim Slade, Arris Group
Kbps networks — a laughably outdated
standard. Even if the funds to build out
a 256 Kbps network are used efficiently,
they would provide little marginal value
to users given today’s data-heavy online
content, but would crowd out systems that
would have put the money to better use.
Now, the rules favor buildouts spec’d to
operate at a minimum of 5 Mbps, which
puts a system just on the inside of the
FCC’s current minimum standard for
broadband of 4 Mbps downstream and 1
Mbps upstream. (Canada’s minimum standard is 5 Mbps downstream.) For the cable
loans currently in development, speeds are
spec’d at 20 Mbps, with the ability to go to
100 Mbps when necessary.
Further, the Farm Bill discourages
start-up companies in the market, by
discounting revenue requirements by 50%.
A
Publication
The new ruling has the effect of keeping out less
capitalized companies and favors long-standing
profitable companies, such as rural cable operators.
Arris’ Slade agreed with Polka on the issues
facing operators who want to access the program.
While monies are available, his belief is that the
paperwork is cumbersome, and there is little expertise available to help operators streamline the
processes and avail themselves of the loan packages. This has prevented operators from updating
local technology and increasing subscribers.
In response to these and other shortcomings in the marketplace, Arris developed a number
of processes to help their clients succeed in spite
of the uncertainties. First, Arris works with their
channel partners in small markets to get the word
out about the Farm Bill Loan Program. It then helps
interested organizations get more educated about
the program’s ins and outs. When organizations
choose to pursue a loan, Arris deploys consultants
to help them write a successful loan application,
and works with their legal and contracts departments to reduce bureaucratic burden throughout
and after the loan process.
“Obviously, the more funds that are made
available, the more we can improve the standard
of living for people in these communities,” states
Slade. “If they [Congress] were to eliminate the
Farm Bill Loan Program altogether, it would really
hurt them.”
Fortunately, the ACA and Arris are not alone
in their fight. In a recent letter to the Subcommittee
on Rural Development of the House Committee
on Agriculture, US Telecom President and CEO
Walter B. McCormick, Jr. pleaded, “… it would be
premature to further amend the Broadband Loan
program at this time… The investment in the most
modern and sophisticated equipment available
at the premises of businesses, schools, or clinics
is wasted if the local communications provider
cannot afford to build the facilities that quickly
transport the large amounts of voice, video, and
data these entities generate.” |||||
Liz Zucco is President and Chief Strategist of
MarketSYS USA, Inc., which publishes RUSList.us.
MarketSYS privatized the management of The List
with the help of numerous
industry organizations. The
latest List of Acceptable
Materials can be found at
RUSList.us, and reflects the
list of manufacturers who
have satisfied technical and
“Buy American” compliance
for 2012.
WHO ARE
THESE GUYS?
American Cable Association
Founded in 1993 to represent
small- and medium-sized cable
operators before various federal
agencies, the American Cable
Association has grown to
represent nearly 900 organizations that work to bring deliver
communications services to
more than 7 million households
nationwide. AmericanCable.org
Arris
Arris helps communications
companies identify their
complex network and IP needs,
supplies the right technology
and tools to build out and
maintain the network, then
provides top-drawer after-sales
support. Arris maintains sales
and support offices and R&D
facilities around the world,
including its captive HFC
network which emulates a
180,000-home cable system.
NASDAQ: ARRS. ArrisI.com
US Telecom
US Telecom is, according to
their site, “the nation’s premier
trade association representing
service providers and suppliers
for the telecom industry,”
ranging from publicly-traded
corporations to small, private
co-ops. They provide yearround professional development
opportunities and invaluable
industry resources.
USTelecom.org
ISSUE 02 | RURAL COMMUNICATIONS
11
5Ways
To Boost Your
Billing Returns Now
Sometimes The Best Way
To Make More Profits Is To
Look At Your Loss
Art Coutcher & Grayson Hill
C
ompared to their Urban Counterparts,
operators covering rural areas face unique challenges when
collecting ongoing and defaulted subscriptions. Often, vast
distances between customers and operator make the cost of
door-to-door payment collection unreasonable. Collecting payments – particularly late or delinquent ones - can be time-consuming and expensive. But
if you can shave even a small percentage off your collection costs, you may
significantly improve your organization’s margins.
The cable industry has been resiliant – even successful – in recent
years. In 2011, the industry pulled in an estimated revenue of $18 billion, and
is showing an annual growth rate of 5.2% (IBISWorld). But if the industry
wants to continue its profitable streak in the teeth of the worst economy in
generations, it will need to look beyond sales, toward the other end of its financial operations. Every dollar of loss is a dollar off the bottom line. Which
makes comprehensive collection policies an increasingly important part of a
healthy balance sheet.
We asked Art Coutcher at BillingTree – one of the nation’s most innovative loss management companies – to share with us his five best ways cable
operators can improve their collection efforts.
1.
SOLOMONHILL
Offer customers multiple payment options. Believe it or not,
some folks still write checks. Others use electronic fund transfers,
money orders, online payment systems like PayPal, pre-funded
and escrow accounts, as well as credit and debit accounts. More businesses
and government entities use the Automated Clearing House than you might
imagine. By offering customers payment options that suit their preferences,
operators can help customers keep their accounts out of the red and reduce
churn. Just remember: every extra processing channel costs money.
Sometimes it makes sense to incentivize your customers to move to
a more efficient payment method. If it costs more for you to take payments
online, for example, consider charging the customer a small fee to cover the
costs involved, including labor. You’ll want to keep the fee small enough that
it doesn’t feel punitive, but large enough to nudge the customer toward more
preferred payment methods, even if it takes a few months.
12
RURALMAG.COM | ISSUE 02
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ISSUE
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thank her for her business. Because these notices are
instant and repeatable, they give your customer more
flexibility to meet both her needs and yours.
4.
2.
Go paperless to reduce billing and collection costs. A basic
rule of the new economy is that digital transactions have lower
marginal costs than tangible transactions. Paper checks have very
tangible costs. You have to print the invoice, the mailing letter and return
envelope, pay the fulfillment house to label the mailing and then pay for the
postage — both ways. Then there’s the waiting. Days matter, and customers
have a way of getting their payments in right after the due date. Holidays throw
off the mail, and with the announcement that the United States Postal Service
may be cutting Saturday deliveries out of the schedule, you’re probably going
to lose another 4-5 days every month to get your receipts in the door.
Fortunately, electronic bill presentment and payment systems (EBPP)
solve these problems. Sometimes called e-invoicing, e-billing, or e-payment
systems, they allow customers to pay online with credit and debit cards, or
set up automatic bill paying through their banks.
Extra tip: A lot of consumers – particularly younger ones – are using mobile applications (apps), .mobi versions of companies’ normal Websites, and
short message service (SMS)/text applications to pay their bills.
3.
Nudge your customers. Since electronic
transactions get in line before paper-based
transactions, automated check representment (the process of handing checks back to the
banks for a claim) help you move cash through your
accounts receivables faster, and helps ensure that
you’re at the trough first. Pre-funded accounts (deposits) can give your customers a chance to catch up on
an invoice without putting you out of cash.
Here, again, mobile devices can help you keep
your cash flow tidy. Inexpensive text services let you
send timely notices to a customer informing her that
a bill is ready, due or past-due, and even offer various
calls to action. When she pays, you can use the same
systems to immediately confirm the transaction to
14
Electronic
billing and
payments have
evolved into
powerful tools
to increase
efficiencies
and reduce
costs, writeoffs and
collections.
SOLOMONHILL
5 Ways To Boost Your Billing Returns Now
Seize Revenue Opportunities
Virtually collect when customers have
stopped paying. When a customer’s debt
status begins to drop from “delinquent”
to “loss,” automated, agentless negotiation can dramatically improve your debt collection. It may seem
counter-intuitive – we’re used to the complaint that
people want a real human on the phone – but when
you’re negotiating a debt settlement, taking a live representative out of the equation can reduce language
and cultural barriers as well as embarrassment on the
part of the debtor — all useful features if you’re trying to help him come to an amicable solution. An interactive voice response system (IVR) with touchtone
input can guide your debtors through a bill paying or
problem-solving process, freeing up your resources
for operations. You’ll need to let your customers know
that they can call 24 hours per day, but studies have
shown that these systems can boost debts collected
by as much as 20 percent.
...and dozens more
5.
Pre-verify the account before you do
business. This might seem obvious, but
sometimes businesses can get so hungry
for sales they fail to do their due diligence. By checking on a potential customer’s credit worthiness, you
can create a win-win situation for you and the customer. If the customer has a good credit history, you
can let the customer know that you were able to open
an account for them without any security fees. If the
customer’s credit history isn’t as shiny, you can offer
to set up a pre-paid deposit account that still gives
him the opportunity to use your service while helping
to shield you from loss.
If you’re properly tracking the account as it ages,
you’ll better understand your customer’s payment
history. That information can help you gauge the
likelihood of late or bounced payments, and offer
alternative payment methods to improve the timeliness of his bill-paying.
Some of these tactics are less costly to implement than others, or have higher or faster adoption
rates. It’s a numbers game, so run them. As you adopt
each tactic, it may be a good idea to roll savings from
one into the technology to start the next. But the
faster you begin to adopt any or all of these tactics,
the sooner you’ll begin to keep more of your hardearned revenue. |||||
Art Coutcher is the Utilities Sales Manager at Billing
Tree . Previously, he was Vice President of Sales for
Intelligent Contacts.
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RURALMAG.COM | ISSUE 02
20
YEARS of QUALITY
(800) 587-4638
www.trinetcom.net
What It Is, What It Does, and How It Will Help
Your System Be More Profitable
Justin J. Junkus & Grayson Hill
Infographics by Semiotic
FIGURE 01: A) A signal is sampled. B - C) The signal is quantized.
D) The information is encoded, E) then converted from decimal to binary,
F) then grouped into data units called packets.
I
n the world of telecommunications, there are few surviving applications older than a simple landline phone call. Despite all the alternatives,
such as social networking, instant messaging, texting, and email, there
are a lot of reasons why “voice” remains in the communication mix.
For example, none of those other media capture the tone of mom’s
voice on Mother’s Day, or the apprehension in a client’s conversation
that begs for more explanation before a sale can be made.
When most of us think of digital data – the stuff that runs today’s communications technology – we think of email or the Internet. But digital data
is driving a lot of our phone calls. The trick is to make this new technology
support and enhance the richness of voice telephony.
Voice over Internet Protocol, also known as VoIP or IP telephony, is
how this is being done. Internet Protocol, or IP, is a technology used to send
digital information over data networks, including the public Internet and
privately managed communications networks. There are multiple standards
and vendor implementations of VoIP, but some generalizations are useful to
understand how VoIP differs from conventional telephony.
VoIP begins with digitizing a conversation. This process is the same
as the one used to record music in a data file or on a CD, and involves three
steps. A combination of hardware and software called a codec implements
this process, which is shown in Figure 1.
The first step is sampling. Years ago, a mathematician and engineer
named Harry Nyquist proved that the intelligence in any signal is completely
preserved if samples of that signal are taken at twice its highest frequency
component. The full range of human hearing is between 20 hertz (Hz) and
20 kilohertz (kHz). So the minimal sampling rate to cover the range is 40 kHz.
For that and a few other reasons, 44.1 kHz was chosen for compact discs.
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In telephony, the sampling rate of 8 kHz captures
a telephone-quality voice signal in its entirety. (Our
voices only span a certain range of audible sounds,
and there are hardware limitations for telephone
recording and playback.) The result of the sample is a
number that represents the signal level at the time of
the sample.
Quantizing, is the technical term for the next
step, but most people would call it rounding. The
signal level of the sample is rounded to the nearest of
a predetermined set of integer values. Telephony typically uses a scale with 256 possible values.
Finally, the quantized value is converted from
the counting system of 10 digits used by humans to a
system of two digits, called binary, used by machines.
The two digits are “1” and “0.” For movement from one
point to another, these 1s and 0s are grouped into data
units called packets. A full conversation can require
literally thousands of these packets to be moved to
and reassembled at the called party’s location in the
same order in which they were sent.
T
he movement of the voice call packets, or
getting the VoIP conversation from caller to
called party, is known as call routing. The way
VoIP does this is another major change from conventional telephony. As shown in Figure 2, incumbent
telephony systems use a technology called circuit switched telephony to
set up a call though a dedicated path across a number of switches in the
Public Switched Telephone Network (PSTN). This process is initiated when
a calling party closes an electrical circuit by lifting a handset and going “off
hook.” A physical, wired path for the call connection is then determined by
the dialed digits and availability of switches. Once set up, the path remains
intact for the duration of the call.
For VoIP, the call routing process is as shown in Figure 3. Subscriberside equipment integrated with the codec detects an off-hook condition, signals
a call server in the network to begin receiving dialed digits, and converts
dialed digits to binary form for the call server. The call server, rather than
being connected to a network of telephone switches, is connected to a digital
network, generally the Internet. It works with a gateway to convert dialed
phone numbers to the Internet address of another gateway which can connect
to the called party. Unlike conventional telephony, once the destination gateway has been determined, there is no fixed path between gateways. Instead,
individual packets of the voice conversation each find a path through the
Internet to the terminating gateway. Because some paths may be shorter than
others, it’s likely that packets arrive out of order. The terminating gateway
must therefore reassemble packets in the same order they went out.
Let’s summarize what differs and what remains the same as technology
moves from circuit switched telephony to VoIP. The new equipment for VoIP
in the service provider network is the call server and the gateway. Also, at
the customer premises, there must be a codec, which is often part of a new
network interface device (like a modem). The customer’s telephone set can
remain the same as before; however, some vendors integrate a codec into a
telephone set, rather than putting it into the network interface. In this case,
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IF DIGITAL IS SO GREAT,
WHERE DID ANALOG COME FROM?
Human voices travel in continuous waves through a
medium — usually air, but sometimes other things, like
two metal cans and the fibers of a length of string.
Fortunately, electricity also travels in continuous
waves. It was Thomas Edison’s stroke of genius to put
the two together in an analogous fashion (hence,
analog) – turning sound into electrical current, then
back into sound. The machine he built around this
process was the phonograph.
For decades, we transmitted signals through
analog technology. But analog signals get noisy, break
up over distance and don’t compress well, which is
important if you’re trying to get a lot of signals out into
the world. Digital data solves all of those issues.
Technically, an analog signal has infinite
resolution. Digital audio signals match analog signals
imperfectly, but near the limits of human interpretation. Digital audio signals are easier to compress and
clean up when they get noisy, and can be reproduced
perfectly from one point in the world to another.
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VoIP
JARGON
Telephony
First the science of translating sound into
electrical signals, then back to sound.
Later came to include the engineering and
equipment required to perform these tasks
as well as all of the services – such as
voice and fax – that run on that equipment.
Today, the term covers Internet calling,
video conferencing and mobile.
Codec
Software program or hardware that codes
and decodes a signal or digital data stream.
(“Co-Dec.”) Codecs are optimized for
various tasks. For example, some are
designed to produce high-quality video
with relatively lower-quality audio (and vice
versa), others sacrifice overall quality for
reduced file size.
Sampling
The process of reducing a continuous
signal (in our case, analog voice) to a
discrete signal (digital voice).
FIGURE 02, CIRCUIT-SWITCHED TELEPHONY: A)
Physical circuits route electrical signals to the Public Switched
Telephone Network (B), which routes the call through a dedicated
path (C) that remains open for the duration of the call.
the phone set needs to be changed out. Subscriber interaction
with the phone remains unchanged, but when the subscriber’s
conversation goes through the service provider network, it does
so as groups of 1s and 0s, rather than as a recognizable voice.
T
CONTACT
Liz Zucco, President
404-454-5477
http://www.
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RURALMAG.COM | ISSUE 02
.net
his may all seem like a lot of trouble to achieve the same
result as Plain Old Telephone Service, but there are advantages that can far outweigh the inconvenience of change.
For a service provider, perhaps the most valuable result of
a switch to VoIP is that telephony and data can now share one
network and its administration, rather than needing separate
equipment and staff. There are still differences between telephone and data architectures, but the majority of what’s involved
in setting up a connection and routing information becomes the
same for both.
Routing is also less expensive with VoIP. Conventional
telephony required dedicating an end-to-end call path for the
duration of the call. VoIP shares paths, both with other telephone
calls and data, resulting in less resource commitment per call.
This directly translates to lower cost per minute of calling.
VoIP’s call servers also provide an easier way to add new
revenue-generating features than the methods used with circuit
switches. Essentially the call server is a special purpose computer
that can interface with other computers called feature servers.
During various stages of the call, these feature servers can be
accessed to expand the capability of the telephony connection,
FIGURE 03, VoIP: A) Subscriber-side equipment sends the call in binary format to a
call server, which is connected to an Internet gateway. B) The gateway locates another
gateway that can reach the receiver’s phone number. C) The data packets that make of
the call follow a disordered path of least resistance through the Internet, and D) are
re-ordered at the terminating gateway into a comprehensible phone call.
making possible new services, such as landline-to-mobile handoffs
during a call.
Even the basic process of analog to digital conversion
opens possibilities for new services. VoIP typically samples at
8 kHz. Engineers are developing newer codecs that sample at
higher rates, which will enable high-fidelity digital voice calls
when coupled with enhanced telephone sets.
There’s always a caveat, and for VoIP, a major one is that
gateways still require negotiated interconnect agreements for
calls to complete into the national Public Switched Telephone
Network. Often it is difficult or expensive for smaller service
providers to negotiate all of the necessary interconnects. In this
case, partnerships with service providers in other markets are
a possible solution, since gateways do not need to be co-located
with call servers. Both parties need to decide on revenue splits
and responsibilities. One of my clients began a VoIP offering by
working with a service provider in a different market who had
excess gateway capacity, creating a win-win scenario for both. |||||
Justin J. Junkus is the President of KnowledgeLink, Inc., which
provides telecommunications consulting and training. He has
assisted several service providers with their entry into the VoIP
telephony market. Additionally, he authored two textbooks on digital
communications and has been adjunct faculty at graduate, undergraduate, and technical level academic institutions. Mr. Junkus may
be contacted by email: JJunkus@KnowledgeLinkInc.
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For a service
provider,
perhaps the
most valuable
result of a
switch to VoIP is that
telephony and
data can now
share one
network and
its administration, rather
than needing
separate
equipment and staff.
Intelligence
The specific information in a signal.
Frequency Component
Oversimplified, any of the sine waves that
make up a signal. In the case of Nyquist’s
work, the frequency components at the
extremes matter most, because they define
the limits of the sampling needed to
accurately translate voice input into transmission data, then back into voice output.
Signal Level
In rock-bottom layman’s terms, the signal
level is the amplitude of a signal, generally
expressed as the height of the waveform
Quantizing
Waveforms like sound have infinitely fine
resolution (there’s no limit to the number
of points you can plot on the side of a
curve, like a circle or sine wave). But
digital signals have discrete – specific –
values. Quantizing maps discrete values
on top of a waveform and plucks out
those values that do not fall within the
boundary of the waveform.
Hertz (Hz)
Unit of frequency, the number of cycles per
second. The speed of a rotating wheel can
be expressed in Hz, but the term is usually
applied to waveforms like electrical current
or sound. Kilohertz (kHz) are 1,000 cycles
per second.
MEETING QOS & QOE DEMANDS
WITH ADVANCED TECHNOLOGY
For telecom providers, QoS and QoE are both very
closely linked to dedicated capacity-per-subscriber.
Providing enough bandwidth to support the business
is crucial; but providing too much too soon can prove
very costly. Advances in full-spectrum, multiwavelength technology have paved the way for
operators to mine more from their existing fiber plant
without the need for expensive and time consuming
construction. Full spectrum multi-wavelength “O”band systems enable operators to multiply up to
eight times the narrowcast capacity of their 1310 nm
plant. Further development resulted in the introduction of similar technology for the “C”-band window.
Now, with up to 40 wavelengths and both directly
modulated and externally modulated full spec-
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RURALMAG.COM | ISSUE 02
JARGON
COURTESY AURORA NETWORKS
W
hile Quality of Service (QoS)
is an industry expectation and
tends to be based on technical
metrics, operators have found
that the Quality of Experience
(QoE) a subscriber receives is
highly dependent upon the current technical environment. This in turn has raised customers’ expectations
in the QoS and QoE received from service providers
as a result of the interactivity and growth of today’s
combination of linear and non-linear services.
This advent of new and innovative services has
resulted in universal acknowledgement that in order
to reduce customer churn and maintain customer
satisfaction, operators must install processes and
systems that monitor both QoS and QoE. In addition, there are risks operators may face if this is not
implemented, ranging from negative publicity, to high
customer churn and decreased ROI in new services
and technology.
Maintaining QoS and QoE in the upstream poses
key challenges for cable operators. Usually, cable
operators focus on the downstream speed. We sell the
ability to watch videos online, or the speed at which
Websites download. But the increasing number of online services that focus on the sharing of photos and
videos, such as YouTube and Facebook, have bloated
the need for upstream speed. Delivering online content
is still a big problem, but now millions of people want
to be able to push user-generated content up to the
Web. These file types are heavy, and operators who
want to maintain customer satisfaction must also
plan for their use.
The perception is that if operators do not take action
to ensure that the proper processes and systems are
in place to monitor QoS and QoE, they quickly will
find themselves in a vicious spiral that may include a
loss of customers and funding.
JARGON
Advanced Metering
Infrastructure
A complex hardware and
software system that collects,
measures and analyzes energy
usage by communicating with
various metering devices and
appliances on request or on a
schedule.
Automated Meter Reading
A set of technologies that
allows the remote collection of
consumption, diagnostic and
status data from a meter.
Automated meter reading is
particularly useful in rural areas,
where the manual collection of
meter data can be very
time-consuming, due to a
dispersed population, or very
difficult (for example, in
snow-bound terrain).
Delivering Quality of Service and Quality
of Experience In A Technologically Savvy
Subscriber World
John Dahlquist
Jargon by Grayson Hill
trum multi-wavelength solutions commercially available, operators have
the option to select exactly what makes best sense for their network. And of
course, with a broadcast/narrowcast overlay architecture, operators have
the ultimate in flexibility – up to 40 narrowcast wavelengths available, over
extended distances.
The upstream continues to be a larger challenge for operators. Inherently,
the return path is limited and the demands placed upon it continue to grow.
With the growth of faster and more reliable bi-directional applications,
cable operators have really started to challenge the upstream. No longer is it
just about capacity, it’s also important to have high performance. More and
more operators are deploying digital return as their gold standard. They
have seen that this is the only technology that provides both the performance
and the future flexibility that is required in networks. No one wants to deploy
a solution today that will need to be “ripped and replaced” when upstream
speeds need to be increased, or whatever other new service may be demanded.
And the latest digital return platforms are truly future-proof, with simple upgrades
to support the increased return, 5 to 85 MHz (and even higher), support for
1024-QAM and achieving throughput up to 700 Mbps.
The perception has sometimes been that digital return is more expensive
than analog. This is not true. Recent generations of digital return have driven
the cost of the link down. With a single return digital link now on par with an
FIGURE 01: Magic in a box. Innovation in telecom hardware is moving along at a breakneck pace.
Node QAMs like Aurora Network’s NC4000 series Optical Node Platforms are helping operators
squeeze every last dime out of their networks.
analog link, and a dual return (for a segmented node) much cheaper than analog,
digital return is now a very cost-effective
solution. It’s a “set-it and forget-it” platform, resulting in low, on-going operating
costs. With no-cost, built-in monitoring
and management, and the use of SFPs in all
units to minimize parts and replacement
costs, choosing digital return is an even
easier decision.
Segmenting (or node-splitting) can
only take a network so far. Experience has
demonstrated that Fiber Deep and RFoG
are the architectures of choice for operators who need to make that next step. As
shown in studies, Fiber Deep is the more
cost-effective solution to deploy in urban
and suburban areas but RFoG is optimized
for rural settings.
RFoG is the cable-friendly Fiber to
the Home (FTTH) solution. Yes, it does
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involve running fiber all the way to the subscriber but
with RFoG, an operator can continue to make use of
all the installed headend equipment – including all the
investment in DOCSIS equipment and the back-office
provisioning systems. The subscriber will receive
the same services as those on the traditional coax
network, albeit over fiber.
Leveraging some of the newer technologies that
help optimize the network is another way to confront
the challenge. One such technology is distributed
edge QAM technology or node QAM. �
The node QAM can deliver up to 158 channels
of QAM-RF modulation in the node. This technology
supports the goals of the Converged Cable Access
Platform (CCAP) initiative underway at CableLabs
and is a very cost-effective solution. Moreover, as
existing edge QAMs reach capacity, cable operators
will no longer need to deploy bulky, power-hungry
headend gear to accommodate growth. Using node
QAM modules, QAMs can be allocated and configured
on a node-by-node basis, as service needs arise and
Centralized Optical
Splitter Network
An efficient network configuration for high-density areas,
centralized splitter networks
are generally easier to monitor,
diagnose and maintain than
networks with multiple taps.
The startup costs of a
centralized optical splitter
network can be much higher
than other types, especially in
rural communities.
Fiber-to-the-Home (FTTH)
Fiber to the x (FTTx) is a
generic term for any broadband
network where fiber is used to
replace metallic cables within
the last mile. FTTH designates
an implementation that travels
from the central distribution
point all the way to the
boundary of a living space.
G-PON
Or, GPON. A passive optical
network standard capable of
gigabit-level transmission. The
current industry practice yields
2.488 gigabits per second
(Gbit/s) downstream and
1.244 Gbit/s upstream. Also
known as ITU-T G.984.
ISSUE 02 | RURAL COMMUNICATIONS
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Delivering QoS & QoE Through Better Hardware
COURTESY AURORA NETWORKS
MORE JARGON
Bi-Directional Application
Technology designed to
transmit and amplify signals
both up- and downstream.
Digital Return
A return path built on digital
components; it offers greater
bandwidth and flexibility.
1024-QAM
Quadrature Amplitude
Modulation; a scheme that
works by varying the carrier
signal’s amplitude (magnitude)
and phase (timing). 64-QAM
and 256-QAM are mandated
for digital cable. 1024-QAM
provides “room” for future
bandwidth needs.
54 pt
FIGURE 02: Sensible solutions that deliver strong experiences. As we all know, rural
communities can have spotty requirements. Main street can be as dense as the big city, but reaching the
folks way down the road can be cost prohibitive. RFoG systems allow you to leverage the copper
infrastructure you have in place to deliver the bandwidth-intensive services everyone wants, while you
make incremental upgrades that will allow you to provide quality services in the future.
Fiber Deep
Extensive use of fiber optic
from the headend to the home.
Fiber Deep tends to be most
cost-effective in greenfield
(unconstrained), urban and
suburban buildouts.
RFoG
Radio Frequency over Glass;
allows for deep fiber optics
without having to replace or
upgrade legacy technology
and provisioning systems.
Often used in rural and
brownfield buildouts.
DOCSIS
Data Over Cable Service
Interface Specification: a
standard that allows operators
to provide high-speed Internet
access to CATV systems.
Node QAM
An optical node that can operate
various QAM functions, such
as delivering targeted services
to a multi-dwelling unit.
Unified PON
A Passive Optical Network
able to work with a variety of
network standards.
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QoE
Segmented Node
An optical node where the fiber
has been split to allow greater
reach to more households while
holding down costs.
QoS
While Quality of Experience
requires some level of Quality
of Service, it’s possible to have
one, both or neither.
Delivering dial-up Internet
well counts as good service;
but if your customers were
hoping for streaming video,
they’re experience is poor. In the end, their experiences
keep your lights on.
shift. Operators have the flexibility to react to growth
regardless of whether it is IPTV, data, high-definition
content, or on-demand video.
Unified PON technologies (EPON and GPON)
are another key solution that enables cable operators
to deliver QoE and QoS, optimized for the demanding
commercial subscriber. These technologies support
highly lucrative business services applications with
ultra high-speed headend, hub and node-based PON
technologies over a single unified network. With
PON modules designed for the node platform, cable
operators can selectively target commercial subscribers, resulting in a staged, cost-effective rollout of a
potentially new revenue stream.
ACHIEVING CUSTOMER SATISFACTION
The growing popularity of cutting-edge services has
resulted in customers becoming increasingly QoEsavvy, with expectations growing regarding the QoS
and QoE received from service providers. Since overall
quality directly touches customers, it is important for
cable operators to use solutions that deliver the highest
standards of QoS and QoE. Cable operators need to continue to deliver and increase bandwidth-per-subscriber
in order to thrive, providing capacity scalability and
flexibility, in the most cost-effective manner. |||||
John Dahlquist is Vice
President of Marketing at Aurora
Networks. Mr. Dahlquist has
more than 40 years experience
in telecom products and services,
including senior positions at
Philips Broadband Networks, Harmonic, and General Instrument.
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ISSUE 02 | RURAL COMMUNICATIONS
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SJOBERG’S
RURAL COMMUNICATIONS WHITE PAPERS: No.
00003
Leveraging Department of Agriculture Resources
to Improve Broadband Access in Rural
Northwest Minnesota
REX PORTER, TECHNICAL EDITOR, RURAL COMMUNICATIONS
GRAYSON HILL, PRESIDENT, SEMIOTIC
RICHARD SJOBERG, PRESIDENT, SJOBERG’S CABLE, Contributor
NEED: Sjoberg’s operates in a geographically large and diverse region of
the country that is spottily populated and facing low population growth.
For the last 50-plus years, Sjoberg’s has been keeping pace with changes in
technology, growing its channel list from a mere four channels to more than
two-hundred, for example. But the burdens of broadband and the need to
reach the last corners of their market drove Sjoberg’s to look for low-interest
capital. With the help of an advisor, they were able to find it.
When Sjoberg’s Inc. got into the cable TV
business in 1962, they saw the future as many
other visionary companies did at the time:
in hardware. Sjoberg’s was an appliance
dealership right on Main Avenue, and they had
televisions to sell.
Of course, it’s now well-known that less
tangible products, such as software, data
and entertainment are the primary sources
of value in technology – that’s why Microsoft
trumped IBM. By 1978, around the time when
Sjoberg’s was serving cable television to 4,500
homes in northwestern Minnesota, the little
appliance shop in Thief River Falls had gotten
out of the appliance business and moved fullsquare into the cable operator business.
Since then, Sjoberg’s business has grown
to 33 towns and townships in the (distant)
surrounding area, where they provide HDTV
broadcasts, high-speed Internet via DOCSIS
3.0 modems, point-to-point fiber optic con-
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RURALMAG.COM | ISSUE 02
nectivity and telephony. As all small operators
have discovered, future growth depends on
providing better Internet service to connect
households and businesses. To handle the
increased demand, Sjoberg’s is currently
upgrading their antiquated 2.5 gigabits-persecond (Gbs) backbone to 20 Gbs.
While Sjoberg’s business has been steady,
it’s not quite lucrative enough that capital
upgrades are made lightly, particularly in
some of the sprawling rural areas in which it
operates, with their uneven and sometimes
scant population densities.
Near their offices in Thief River Falls and
Roseau, for example, are areas with small and
large farms, small businesses, upscale homes
and mobile home parks. Upgrading that demographic mix is incredibly difficult using conventional financing — normal three to five-year
loans are just too short to fund a low-density
buildout. So, these areas remained underserved.
According to Connect-
Minnesota.com, almost 96 percent of homes within the
state have access to the Internet.
The challenge lies in reaching that last 4 percent.
One might wonder what access to highspeed networks does for a farming community.
Farmers are do-it-yourself, independent
people, after all. But they still need repair
manuals for their equipment, all of which is
online. Advice from state extension offices
is online. All of a farmer’s interaction with
the USDA happens online. Grain and other
commodities markets are online. Wall Street
and Silicon Valley get most people’s attention,
but commodities trading is as high-speed and
high-stakes as it gets. Fractions of pennies on
a pound translate into serious money when
you're talking bushels and tons. Not only are
commodities markets online, but farms literally live and die by them.
In a globalized economy, dial-up is a
serious handicap to rural businesses, whether
they’re farm or non-farm industry.
“It is our current plan,” says Richard Sjoberg,
“to place our laser frequencies such that we
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can move from a point-to-point fiber-to-thepremise (FTTP) system to a passive optical
network (PON) backbone as the demand for
bandwidth grows — particularly the demand
for upstream capacity. By moving customers
who have high bandwidth usage to PON, we
will be able to unload our current cable modem
termination systems (CMTS) and give our
customers a better Internet experience.”
In 2010, Sjoberg’s approached MarketSYS
USA, a consulting firm that helps organizations
navigate USDA funding programs. MarketSYS
informed Sjoberg’s that The USDA’s Broadband
Initiatives Program (BIP) might be able to supply
a lower-rate loan with a longer maturity horizon.
Enter The Broadband Initiatives Program
Administered by the USDA Rural Utilities
Service (RUS), BIP was established in 2009 to
furnish loans, grants, and loan/grant combinations to accelerate the expansion of broadband
services throughout rural America. By October
Figure 1:
The Start Of A New Thing
Sjoberg’s first work truck – a
Dodge Econoline van – helped
them offer a whopping 9 channels
of color, cable television first
to their appliance customers in
Thief River Falls, MN, and then
to their growing cable clientelle
in surrounding areas.
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27
00003
Sjoberg’s Country:
2010, BIP awards totaled more than $3.5 billion
in 45 states and 1 U.S. territory. Of those funds,
more than $3 billion went to last mile projects
— probably the most pressing infrastructure
issue for rural broadband concerns.
Government lending programs don’t
operate under the same incentives as private
lending. For a government lender, profit is less
of a priority. But with budget concerns hitting
every sector of the economy, accountability
still has its place of importance. And that’s
where government’s primary method of cost
containment comes into play: paperwork.
Applying for, and getting funding out of
BIP or other RUS programs can take a good
lawyer, a great accountant, patience, perseverance, and quite possibly a Plan B.
There are audit and environmental
requirements, financials, deep and thorough
cost estimates, American Recovery and
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Reinvestment Act requirements… piles of
documentation. When it’s all put together, the
legal and accounting fees can be worrying, and
compliance can be time-consuming, which is
a particular bugbear for overstretched rural
systems that sometimes lack the manpower of
their metropolitan counterparts.
That’s why a Plan B can be useful. Plan B
can keep a company moving and motivated
through the long process of getting Plan A to work.
MOVING AHEAD WITH BIP FUNDING
Despite a process that was at times complex
and frustrating – a process that sometimes
put a no-nonsense small business culture up
against a culture whose ways can seem literally
Byzantine – with Marketsys’ help, Sjoberg’s
was able to get the BIP funding it needed.
After more than two years, RUS notified
Sjoberg’s that they had won their award in
RURAL COMMUNICATIONS WHITE PAPERS: No.
HOOD CANAL COMMUNICATIONS
RURAL COMMUNICATIONS WHITE PAPERS: No.
While the territory Sjoberg’s
covers has some notable water
hazards (or pasttime opportunities, depending on your view),
the area is sparsely populated.
Development, therefore, is
highly constrained by a lack of
opportunities of scale.
August, 2010, but the Department of Labor was
still working out the rules to satisfy DavisBacon requirements. So, it was only in the
early summer of 2012 that Sjoberg’s was able
to receive its first draw-down.
All told, the process worked for Sjoberg’s.
The BIP award allowed Sjoberg’s to upgrade the
headend to DocSIS 3.0 as well as make other
improvements on two of four project parts. As
a result of those competitive upgrades, they’re
now able to install FTTP at every destination
within those two project areas, including several
greenfield projects that have been a success.
For much of its build-out, Sjoberg’s chose
Commscope’s BrightPath line of products
for its technical performance specifications,
including its durability in extreme weather
conditions. At the headends, they chose Arris
equipment. “Everyone knows that it gets cold
in northern Minnesota (down to -45°F), but
most don’t realize that it can hit 100° in the
summer,” says Sjoberg. “With temperature
swings of that magnitude, the more fiber you
have, the fewer headaches you have.”
A
Publication
00003
Sjoberg’s could use fewer headaches. The
average cost per passing will be about $3,500,
which includes the cost of installing fiber,
the headend equipment and the equipment in
their customers’ locations. The BIP program
provided Sjoberg’s funding with a 3-to-1 grantto-loan mix, lowering Sjoberg’s effective cost
to approximately $875 per passing — similar
to the cost of a cable build in a more urban
setting. Sjoberg’s expects that the lower operating costs of the FTTP system will offset the
higher cost often associate with low-density
penetration.
Despite the effort and time it took to
achieve their fundraising goals, Sjoberg’s
doesn’t seem to regret it. “In the end, we’re
very happy with the results. We see great
value in the RUS programs that are allowing
us to provide high-speed Internet service to
previously under-served rural areas.” |||||
This paper was researched and written by
Rex Porter and Grayson Hill.
JARGON
Rural Utilities Service (RUS)
RUS is one of three agencies
that fall under the US
Department of Agriculture
Office of Rural Development.
RUS’ roots come out of the
New Deal era Rural Electrification Administration (REA)
which was primarily designed
to provide resources to
cooperatives in areas where
private companies were unable
to provide services at prices
that would make electrification feasible. REA’s functions
were folded into Rural
Development with the passing
of the Federal Crop Insurance
Reform Act of 1994 and
Department of Agriculture
Reorganization Act.
Today, RUS also is
concerned with rural broadband, providing more than
$30 billion in funds, as well
as technical and standards
assistance. RUS is currently
overseen by Acting Administrator John Padalino, who
reports to Under Secretary of
Agriculture for Rural Development Dallas Tonsager. A list
of state service centers may
be found at Offices.SC.eGov.
USDA.gov/Locator
Davis-Bacon Act
Passed in 1931, and modified
a number of times since, the
Davis-Bacon Act sets wage
price controls for various types
of government sponsored
construction and repair projects
on public properties valued
over $2000 to an estimated
prevailing local wage.
Davis-Bacon is overseen
by the Department of Labor
(DOL). In the third quarter of
each year, the DOL’s Wage
and Hour Division (WHD)
plans and conducts surveys
around the country. WHD
branches then sift through
the collected, self-reported
data and make rulings for the
area. These reports can take
almost 2.5 years to reach the
public, and have been gamed
by various interested parties.
You can find a compliance
guide at DOL.gov/Compliance
ISSUE 02 | RURAL COMMUNICATIONS
29
LAST SIGNAL
Strap In: 2013 May Offer A Wild Ride
Liz Zucco
While we believe that the current Farm Bill Loan Program and the
Telecommunications Loan
programs need to stay in
place, we don’t believe
more federal dollars are
the solution.
IN THE PAST FEW YEARS we have seen many efforts
to change the broadband landscape. The USDA and
the National Telecommunications and Information
Administration dumped more than $7 billion into
the US telecommunications markets to increase and
improve rural broadband. Most of this money was
given out in rural areas that had little or no previous
broadband service.
Not all of it stuck, but a lot did. Since then,
there are new trends that could change the broadband
landscape for rural Americans even more than the
federal government’s billions.
We see the following key trends impacting
delivery of services to constituents, and moving great
wealth around for those who get it right.
1. Verizon and AT&T have announced that they will
divest their rural landline assets over the coming years
and go to an all wireless platform. Unfortunately,
there does not seem to be a single entity large enough
or interested enough to buy all of one portfolio, let
alone both portfolios within a year of one another.
Besides the obvious possibility that this may
strand huge numbers of Verizon’s and AT&T’s soon-tobe-former rural customers, a lot of competitive local
exchange carriers (CLECs) and other companies depend on Verizon’s and AT&T’s assets for transport and
to providing last-mile service to their own customers.
2. More than 100 co-operatives are asking for waivers
to the new ruling that migrates to the industry from
the old telephony-centered Universal Service Fund
(USF)to the new Connect America Fund (CAF, in the
industry). Some co-ops and carriers that depend on
USF underwriting say that if they do not continue to
receive the assistance, they will no longer be financially viable and could be forced out of business.
3. Small cable operators who have not yet upgraded
their systems may have about a one to three year
window to do so and save their systems from being
overbuilt by better capitalized providers who can
capture market share and put the nail in their coffins.
These mom-and-pop cable companies are central to
the philanthropic needs of their communities. It is not
at all certain that larger corporations will value civic
30
RURALMAG.COM | ISSUE 02
engagement in rural communities to the
same degree.
4. Rural electric co-operatives are getting
in to the broadband game. With federal
regulators pushing everyone to reduce
energy costs and implement “smart grid”
technologies, rural electric companies are
looking at what else they can do with all of
the fiber they’re being driven to install.
5. Lastly, and certainly the icing on the cake,
Time Warner announced on January 8, 2013
that they will be offering 300 channels
“over the top” to any home in America
whether or not they are in a Time Warner
franchise area. This brings live cable TV
content to anyone in America that has
a Broadband connection fast enough to
stream it. And with no head-end investment, the broadband business to deliver
media content just got even more lucrative.
Enter the money. No, we do not believe
that the federal government needs to dump
more stimulus dollars into rural America.
We do believe that the current Farm Bill
Loan Program and Telecommunications
Loan programs need to stay in place. But
that’s not nearly enough money to do the job.
With everything happening in the
rural landscape in the broadband industry,
we believe that smart investors will begin
to hold their power and wait for these
events to begin to shake out opportunities.
The promise of having even one or
two of these events occur over the next few
years is exciting. But having all five hit at
the same time is the perfect storm for private equity to pick up the slack and bring
rural America the broadband it needs,
while making a tidy profit for those who
have the wherewithal to get in the game. |||||
ISTOCKPHOTO
5 Key Trends That Will Upset
The Broadband Applecart This Year
covers the world of broadband technology and
the role that electric cooperatives are playing in
its fast-paced development.
A glossy, four-color monthly, Rural Communications explores every
phase of broadband network development, from design, construction
and maintenance to marketing, advertising, programming, customer
service and IT – all the places where key purchasing and operational
decisions are made daily by the front office, middle management and
people in the field.
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Phone: 303-694-2697
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Signature
Date
Name (Please Print)
Title
Company
Address
City
Email
Phone
PLEASE CHECK YOUR COMPANY’S PRIMARY BUSINESS
N 01 Cooperative
N 04 Wireless
N 02 MSO
N 05 Advertising Interconnect
N 03 Independent Cable TV System N 06 Network Service Provider
PLEASE LIST YOUR JOB FUNCTION
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Liz Zucco is President and Chief Strategist
of MarketSYS USA, Inc., which publishes
RUSList.us.
A
State
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N 08 Manufacturer N 11 Programmer
____________________
N 09 Satellite
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N C. Engineering Management N E. Marketing Management
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N F. Sales Management
ISSUE 02 | RURAL COMMUNICATIONS
31