4/23/99

Contacts:
Pete Korsching, Sociology, (515) 294-8322
Barbara McManus, Agriculture Information, (515) 294-0707

LOCAL PHONE COMPANIES ANSWER RURAL NEEDS BEST, ISU RESEARCHER SAYS

AMES, Iowa -- Iowa's small locally owned phone companies are more responsive to the needs of rural communities than larger, absentee-owned companies, according to an Iowa State University sociologist.

"The large absentee-owned companies service rural communities, but their primary service areas are urban," Korsching said. "They tend to focus their capital investments on the markets with the best return on the dollar."

Iowa has about 150 locally owned phone companies, more than any other state in the nation. For the past five years a research team led by Korsching has conducted several surveys in communities with locally owned services about the role phone companies play in rural development. Respondents included both telephone company managers as well as community representatives such as farmers, business owners and economic development directors.

The survey results are important, Korsching said, because the federal 1996 telecommunications act opened up competition in the local loop. Small rural companies are exempt from competition until a competitor can show that the exemption is hurting customers.

Even with that protection, some competitors, such as cellular phone companies, are currently threatening rural exemption provisions. Cellular phone technology isn't covered in the 1996 act. Korsching said local phone companies are fearful this loophole will let competitors "cherry pick" or target the most profitable customers in their service areas.

The surveys show that locally owned companies are more willing to provide technologies that benefit customers. "Small companies see the relationship as more symbiotic, and providing services not only helps the community, it also helps the company," Korsching said. For example, Kalona's phone company has increased technology options for its customers by installing fiber optics throughout the community.

In one survey locally owned telephone companies were asked to assess the importance of technical advances in economic development. A majority of the 134 respondents believed advances in technology would help revitalize rural communities and 80 said advances in technology are important to economic development.

The phone companies surveyed were almost equally divided between private owners and cooperatives or mutuals. More than half of the companies surveyed promoted economic development using the following methods:

• Recruiting business or industry
• Developing public services
• Consulting with new or existing businesses about telecommunication needs
• Retaining or expanding programs for existing businesses
• Developing local infrastructure other than telecommunications

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