Moving Forward: Observations from the NTCA EXPO

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Whenever I think of the yearly NTCA EXPO, which took place last week in usually warm and sunny San Diego (not so much this time), I always think of two things:

1. What a fantastic opportunity this is for Calix to touch base with hundreds of our customers at one event and get an unfiltered view of the current North American cooperative state-of-mind.
   
   
2. The fact that this will be another year where I’ll have to conceive of a “make-up plan” to compensate for missing Valentine’s Day with my wife yet again (couldn’t they schedule it at least once so it was not on Valentine’s Day? But I digress – let’s focus on the first item…)

Similar to the OPASTCO meeting in late January, the predominant area of discussion was the changing regulatory environment and what this would mean to the rural service provider. Also like OPASTCO, there was a wide range of perspectives on the severity of this issue relative to its impact on individual service providers.

Some had been investing in their networks for years and weaning themselves systematically off USF subsidies. Although they still expected to take a hit in revenues, these service providers saw a path to continued network and business transformation and long-term success. Others who still had significant exposure to proposed subsidy changes took a different view. Many wondered aloud what might happen if they went bankrupt – and who in their often remote, rural, and socially disadvantaged areas the FCC assumed that they were going to hand-off the keys to (the implication, of course, being that the government couldn’t let them fail). The most discouraged group, however, was among the companies who had recently invested heavily in broadband, only to see the rules that they had counted on to recoup their investment change. Rightly so – they felt they had done the right thing, and in fact were encouraged to do so by the government , but now had to dramatically revamp their plans. This group was very vocal – primarily because they still had potential to affect FCC decisions in this area that were still undergoing review and likely to be solidified this summer.

However, even among this group, there was the acknowledgement that while performing their necessary lobbying for a fairer shake from the FCC, there was little choice but to forge ahead – and in many cases accelerating their plans for transformation. Why? Because these companies are cooperatives – owned and operated by the subscribers that they service – and their respective communities count on them to not only be their lifeline to the outside world, but to provide the opportunities that keep their communities vibrant, relevant, improving, and growing.

So what is next? On the OPEX side of the equation, a lot of talk about partnerships and centralized management services to create economies of scale, leveraging shared headends, switching, NOCs, and common areas of expertise. On the revenue side, a lot of discussions around “geek squads,” home management and monitoring, business services, and video. There was also a wide realization that cooperatives as a whole had to get more aggressive to survive, and that using their funds to CLEC adjacent territories may be a new and necessary step.

Even though a lot of dust has yet to settle in the IOC space, it’s clear that the NTCA membership understands that standing still is not an option. Challenging times are often the crucible for innovation and change, and we are all in this together. Throughout 2012, Calix will be closely monitoring its over 1000 customers and sharing detailed accounts of best practices and transformation success stories – so stay tuned. Additionally, our Network Transformation Roadshow will be coming to a town near you this spring. The Roadshow will provide a firsthand vision into how transformation in your network can lay the foundation for a complete business transformation in the future. We look forward to seeing you at one of these events.

In the meantime – we look forward to your thoughts and suggestions.