Telcos and Electric Cooperatives Working Together

An Interview with Fred Johnson, CEO & General Manager at Farmers Telecommunications Cooperative in Rainsville, Alabama

Transcripts have been lightly edited for clarity and readability.

Episode Summary

At RTIME, Fred Johnson was called on to articulate NTCA’s position on electrics getting into the broadband business. He joined the podcast after his address to share his thoughts.

Andy Johns:

What can your telco do to establish good partnership relationships with your electric counterparts? That's what we'll be talking about on this episode of StoryConnect: The Podcast. My name is Andy Johns. I'm your host with WordSouth, and I'm joined on this episode for the first time, oddly enough, by Fred Johnson, CEO and General Manager at FTC right there in Rainsville, Alabama. Fred, thanks for joining.

Fred Johnson:

That's my pleasure, Andy.

Andy Johns:

Now, FTC has been working with WordSouth for more than 20 years. I think they were our second customer. So it's kind of crazy we have not had you on before, but I appreciate you taking the time here at RTIME. I should say that we are recording live at the center of the rural broadband universe this week in Phoenix, Arizona, NTCA's RTIME Conference. And Fred was nice enough after he addressed the crowd this morning to take some time to talk with us. So your topic, Fred, was looking at electrics and telcos working together. And I thought you had a really good way of putting all that together, based on some of what you've learned from legislators and just your experience.

Fred Johnson:

That's correct, Andy. I was actually tasked with the responsibility of sharing with our membership the approach the board has taken with formulating our response to the emergence of electric providers into the broadband marketplace, which is something that we, quite frankly, think is an opportunity and not a crisis. And it was important to share with our membership the approach the board is taking in that regard.

Andy Johns:

Definitely. We'll start like you did with your presentation with the numbers, because the numbers overwhelmingly suggest that there needs to be a way for NTCA members to partner.

Fred Johnson:

That's absolutely correct. You have to remember that there are 327 million Americans, according to our most recent population estimates. Approximately 97% of the land mass is rural, and that encompasses about 60 million people, not 60 million households, but 60 million people. The challenge that we face is that out of that 60 million, only about 13 million are actually reached by members of NTCA or what we would traditionally refer to as telephone cooperatives and independent small community based providers. That leaves 47 million Americans living in rural America that do not have access to the services of a truly rural-based provider. And we cannot ignore that as an association. We have to understand that, and let that fact help us understand where the market is headed and the challenges that are before us.

Andy Johns:

Because that 47 million those are the folks that are not reached, like you said by NTCA folks, and there may be many of those that would never be the opportunity for NTCA folks to reach them on their own.

Fred Johnson:

That's right. And that does not portend the presence of evil people. Please understand. That's 47 million Americans that are living in areas of the country that have traditionally been served by the large price cap carriers, such as AT&T. And you have to remember that they have telephone service. All of America ultimately had telephone service because of a carefully formulated public policy that dates all the way back to the early 1930s. That policy has changed. The marketplace has changed. And the rules and principles that applied in a monopolistic era with heavy state and federal regulation just don't work any longer. That doesn't mean the companies that are serving those areas are evil people or evil companies. They just don't have a business case to do that. But that does put 47 million Americans at risk of not having a world-class broadband, provided by a provider that is based in their community.

Andy Johns:

I thought it was interesting how you outlined the history there between NTCA and NRECA. This is not a new concept that the telecommunications folks and electric folks will be working closely together, because, I believe you said, there's a lot more in common than in contrast.

Fred Johnson:

There absolutely is. You go all the way back to the 1950s. Actually you go all the way back to the 1940s, it was NRECA that advocated for changes in the Telecom Act or the REA Act that gave birth to the telecom industry as we know it today. And NRECA also gave birth to NTCA itself, housed their offices for many years. And we've enjoyed a long and productive relationship. At the end of the day, we're all about the same mission.

Andy Johns:

I thought it was interesting, you talked about the moral high ground, and I thought that was a nice way to put that. You know, a lot of the co-ops can claim to take that moral high ground. But as you mentioned, a lot of the electric cooperatives are on some of that same space.

Fred Johnson:

Absolutely. By and large, the NTCA membership, almost without exception, is either telephone cooperatives or it is comprised of small community-based, community-minded, independent companies. And whether you're a cooperative or one of those independently owned companies, if you have a true commitment to the community and to the customers, you do have a certain amount of high ground that you can claim. It's not just a business case at that point. But absolutely, rural electric cooperatives across the country are taking care of people the same way, you know, cooperatives in the telecoms side of things have as well. And they have a right to claim that ground as well.

Andy Johns:

Sure. Now as you talked about it a little bit more, you mentioned some good examples of people who are doing it right. I think you mentioned CTC and Pineland and a few others. But where do you see this going? What is the model that you would like to see? You know, hoping that down the road becomes more and more common.

Fred Johnson:

Well, can we take just a moment to talk a little bit about some of the advocacy principles we strongly believe in? First of all, we absolutely promote collaboration and cooperation wherever that is geographically possible. At the same time, we are very cautious and encouraging public policy that does not take scarce resources. Think tax payer or consumer dollars, and give it to folks just to artificially fund competition where it doesn't make sense or to overbuild duplicative networks. That just does not make sense from a public policy perspective. But, at the same time, we acknowledge the need of all rural Americans, not just the ones that are part of our membership. And we encourage cooperation in reaching those as much as possible. The only other thing that we're not the least bit apologetic [for], I've been making a point about, is that people should still act responsibly and invest wisely. And if you don't do that, there's always the possibility absent effective ...