NECA Announces Results of Rural Broadband Cost Study Report Sheds New Light on 'Digital Divide' Debate.

Business and Technology Editors

WASHINGTON--(BUSINESS WIRE)--June 21, 2000

The National Exchange Carrier Association, Inc. (NECA) today released the results of a new study estimating the dollar investment needed to upgrade rural area telephone lines to broadband capability. This first-of-its-kind survey also offers insight into the pace of technological change among rural telephone companies and helps to quantify many issues surrounding the ongoing "Digital Divide" debate.

The FCC and several members of Congress have suggested the need for a targeted initiative aimed at deploying advanced telecommunications services in rural America. However, a key concern is the ability to provide broadband capability in rural areas. Here, the cost of implementing necessary telephone network upgrades is expected to be significant because of the large size of exchange areas, low line density and scattered distribution of telephone customers.

"The results confirm two widely held beliefs about wiring rural America for broadband service that appear contradictory at first glance," says Bob Anderson, President, NECA. "The results demonstrate that the financial commitment needed for completing the job is very large, about $10.9 billion dollars. It also shows that rural telephone companies are rapidly deploying a broadband capable network."

According to the study's respondents, about 65 percent of rural lines will be capable of providing broadband service by 2002. This fact, coupled with the ambitious rollout of data-network services documented in NECA's Access Market Survey, which illustrates broadband and advanced services deployment by rural companies, show that rural telcos are working hard to meet their customers' needs for high-speed lines.

"Whether the pace is quick enough for policy makers, or the targeted penetration rates are high enough for them to accept, will determine the funding needed to reach public policy objectives," says Victor Glass, Director, Demand Forecasting and Rate Development, NECA.

The impetus for the study came from telco associations including the National Telephone Cooperative Association (NTCA), the National Rural Telecom Association (NRTA), the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) and United States Telecom Association (USTA). These organizations identified the need to quantify the costs of bringing broadband services to rural Americans.

The study examines rural telephone companies in NECA's Common Line pool. These companies cover more than a third of the land area of the 48 contiguous states and serve just under six percent of households based on 1990 census data.

Included in the study estimates are plant upgrades on the customer side of the switch. Not included are investment expenditures on DSL equipment, switch and backbone transport to other service areas or the ongoing maintenance of the upgraded network necessary to provide broadband services.

For a summary of NECA's Broadband Cost Study visit the NECA Web site at www.neca.org or contact:

David Lauerman

NECA

80 South Jefferson Road

Whippany, NJ 07981

[phone]

NECA administers the FCC's access charge plan, as well as other government-mandated and private programs for the telecommunications and electrical industries. Its expertise ranges from compiling industry-wide databases to forecasting and rate development, to tariff, code, and billing and collection administration, to operating national and regional funds. NECA is headquartered in Whippany, New Jersey, and maintains offices throughout the country.