There are some recent technological developments which provide exciting prospects for new digital wireless technologies to come to the rescue for some rural services, however, the government needs to pay more attention to spectrum allocations for rural radio services in order for these to fulfill their promise 3 . Because the cost characteristics of such technologies are not nearly as sensitive to the physical distances involved, these technologies hold special promise for rural applications, but will likely not be deployed in rural areas until well after they appear in dense urban and suburban markets. Much of rural America is served by small independent telephone companies. The rest serve mostly rural areas with a relative handful of subscribers. Increased competition has added considerable uncertainty to the traditional revenue flows derived from these sources.
Market competition is the natural enemy of cross subsidies.
While direct competition for telephone subscribers may be long in coming to many rural areas, the competitive erosion of cross subsidies currently provided by toll calling, business and high profit residential market segments is surely going to proceed rapidly. Naturally, the political lobbies for competitive network operators do not want to provide any subsidies for rural development. At the same time however, small telephone companies want the government to assure that the rural network infrastructures and individual subscriber service in rural areas is affordable and equivalent to that available in urban and suburban areas 4 . The reality, of course, is that the outcome for the future will be similar to that of the past, namely, that rural network infrastructures will lag behind urban areas in terms of advanced service capability. In order to prevent the erosion of rural subsidies from newly competitive services, a number of federal and state initiatives are under way with the goal of preserving subsidy flows, usually under the rubric of so-called Universal Service Objectives.