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Don Bond is none too happy about the “few bigs” that have come to dominate the telecom debate. For years Bond, a third-generation operator of his family’s rural telecom business, the Georgia-based Public Service Telephone Co., has looked to the United States Telecom Association for political muscle in Washington. But that’s all changed. “It used to be a great organization, but now a few bigs run the place,” says Bond, who broke with the USTA a while ago, back in 2003. “Who pays the most dues has the most say, and they run it. They will say they represent all the telephone companies in the nation, but that’s not true.” Bond’s concerns are similar to those of several small telecom providers that have become frustrated in recent years by what they see as a shift in USTA priorities, one that focuses on industry giants such as AT&T and Verizon instead of looking out for the rank-and-file. And for them, it couldn’t come at a worse time. The smaller telecoms are facing the legislative fight of their lives, as Congress is likely to reform the Universal Service Fund, the mechanism that hands out federal funds to rural telecommunications providers such as Bond’s. That has them looking in another direction — to other trade associations — and away from the telecom association for help on Capitol Hill. For its part, the USTA says that it remains committed to all telecom providers, including rural ones, and that it will focus its energies this year on a variety of legislation that is of concern to the industry as a whole. “We have never established as our mission only to represent one sector of the industry,” says Walter McCormick Jr., president of the USTA. “Instead, our mission is to try to bring together the diverse interests within our industry and to come together behind consensus provisions that would provide to policy-makers a broad consensus view as to where the appropriate balance may lie.” REWIRING THE USTA The grumbling among rural telecom providers became louder last December when the USTA, long the pre-eminent voice on telecom issues in Washington, trimmed its 50-member board to 18 members. The lion’s share of small companies, such as All West Communications and Ben Lomand Rural Telephone, didn’t make the cut. McCormick says that the association, which boasts 1,000 active members, undertook a yearlong review process to examine the changes in the industry. At the end, he says the membership voted to restructure the board by a margin of more than 10-to-1. The group also has had turnover within its executive ranks with its senior Democratic lobbyist, Edward Merlis, leaving in February and general counsel James Olson also exiting. Merlis remains an outside consultant. Both men left to pursue separate consulting businesses. The reorganization led companies such as Lincolnville and TideWater Telephone Cos. to leave the USTA and focus on other trade associations, such as the National Telecommunications Cooperative Association, which focuses exclusively on rural telecom issues. While the USTA sees the membership movement as simply the ebb and flow that visits any large trade organization, Barry Moore, president of the BKM Group, a lobbying and consulting shop for rural telephone companies in Oklahoma, sees it differently. Moore says the two groups have diverging interests and that at some point, a conflict will occur, especially on the issue of reforming the Universal Service Fund. “It’s unavoidable,” he says. “You have large companies that serve Dallas, Atlanta, and New York City, and then you have small companies representing rural Oklahoma and Montana. They can’t all have the same interests. There will be a collision at some point on ideas and what should transpire.” SMALL BALL When AT&T acquired BellSouth last year, it gained a number of rural telecom companies under the BellSouth umbrella. Verizon, however, has begun selling off some of its rural carriers in recent weeks. How these two companies would approach the issue of controlling the fund has made many former USTA members uneasy. “Ideally, Verizon and AT&T should come together with a balanced approach to this, but you really don’t know that will be the case,” says Al Pedersen, the general manager of Sandwich Isles Communications in Hawaii. While the USTA maintains that it continues to represent the industry as a whole, several disfranchised rural telecom companies have taken to Congress to make sure their voice is heard. In March, Pedersen, along with 20 rural carriers, drafted a letter to congressional leaders on the House Energy and Commerce Committee, which has jurisdiction over telecom matters, noting the recent USTA board restructuring. The letter states that the USTA no longer represents the interests of rural carriers and that lawmakers should take notice of other associations more closely aligned with rural America, particularly the NTCA and the Organization for the Promotion and Advancement of Small Telecommunications Companies. Shirley Bloomfield, vice president of government affairs and association services at the NTCA, says the letter was an independent effort and did not have the NTCA’s stamp of approval. The associations have worked together in the past on video-franchise reform efforts, according to the USTA. Bloomfield says her association has added six new members since the USTA restructuring. She notes that, on average, the NTCA gains about 10 to 15 members annually. The association, which does not admit companies with more than 50,000 access lines, is currently trying to attract new members. One of the draws, notes Bloomfield, is an extensive benefit plan inclusive of health and life insurance that is offered to members, making the NTCA “a more full-service association.” The association boasts 600 active members. Bloomfield says the NTCA’s relationship with the USTA has run hot and cold over the years. But the two organizations are not working together on the Universal Service Fund issue. But even some of the rural telecom providers that have decided to devote their limited resources to the NTCA can’t help but acknowledge the force and influence the USTA has in Washington. “If NTCA wasn’t there, I’d be a member of USTA in a heartbeat,” says Greg Anderson, the general manager of Bledsoe Telephone Cooperative, which is no longer a member of the USTA. Still, he says, “the NTCA is more in tune with our concerns.” GEARING UP FOR REFORM With a rapidly evolving industry, divisions between the small and rural carriers, and a Democratic Congress that will push for greater federal oversight, this is the USTA’s moment to prove its mettle. If it can’t, an increased peeling off of smaller companies appears likely. Making the chore tougher is that there likely won’t be a comprehensive telecommunications bill this term. The Bell companies have been successful at securing cable-franchise reform on the state level. Last year, the telecom industry pushed hard for a federal video-choice bill designed to expedite the competitive entry of cable companies into the market. The measure passed the House but stalled in the Senate when former Majority Leader Bill Frist (R-Tenn.) refused to take it up. The telecom industry no longer needs to push for a federal solution, however. More than 22 states now have some version of the national effort that the USTA was trying to achieve last year. Additionally, any Hill conversation over a national cable-franchising bill will inevitably involve a revival of the debate over network neutrality, the b�te noire for many telecom companies and the reason the bill was killed in the Senate — although net neutrality happens to be one of the issues that roundly unites the telecom industry. Beyond its internal resources, the USTA maintains a stable of outside lobbyists, including Mattoon & Associates, Wunder & Lilley, and Quinn Gillespie & Associates. The association is also looking to secure its Democratic contacts. Recently, they brought on Alan Roth at Lent, Scrivner & Roth. “With all the changes that went on this year, USTA is definitely being observed and being watched carefully to see if they do deliver on what they have the potential to deliver on,” says Trent Boaldin, chief innovation officer for Epictouch, a communications provider based in Kansas. “USTA has a great opportunity to deliver on USF and bring the smaller companies back into the fold they’ve lost. If they don’t deliver, it’s only going to get worse.”
Joe Crea can be contacted at [email protected].

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