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Barrier 4: Limited But Great Needs

While there may not be a great demand in rural areas for communications in terms of numbers and volume, there is a great demand for communications, and data communications in particular, due to the travel distances and the need to be competitive with urban areas. Rural areas strive to expand employment and increase economic development, and providing up-to-date communications is imperative for high-technology jobs and is needed to attract business to rural areas.

There is no solution to the problem of travel distances and the need for communications in rural areas beyond providing for the basic communications needs of rural customers.

Barrier 5: High Cost Due to Poor Economies of Scale

The average OPASTCO member company serves approximately 6,000 customers, and the average exchange or wire center has approximately 1,200 access lines; compare that to a population of 100,000 or even 250,000, which is necessary for some data packet network providers to invest in a node. The high minimum cost of investment coupled with comparatively few customers and a low volume of data traffic make the cost per customer or volume of traffic much higher than in urban areas. In addition to the high cost of investment in equipment and transport, an even higher cost may be required for test equipment, training for maintenance staff, and training and staffing for customer support. In addition to the training of support staff, an additional cost or barrier to marketing data network technology in rural areas is educating customers to the benefits and general use of computers.

One partial solution would be standardized modular node equipment manufactured in volumes large enough to reduce the cost per node. Again, if single network and regional hubs were implemented, the costs per customer could be reduced. Shared networks and even a shared pool of test equipment and support personnel could further reduce costs.

Continued application of dial equipment minutes (DEM) weighting and further application to data networking equipment are existing mechanisms for recovering the cost of investment and keeping the costs to rural customers at an affordable level.

Recommendations and Summary

Standards development, standard equipment, regional hubs, and a single common data network are partial solutions to the problems of providing affordable data network access to rural areas. Further, an evolving definition of universal service and the continued or expanded application of the USF coupled with continued or expanded DEM weighting are necessary to provide affordable information services to rural America.

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