Getting Rural Utilities Service (RUS) certification for telecom products up until now has been a rubber stamp approval which vendors that wanted to sell to small rural service providers accepted. Now, the agency has decided to do away with this certification.
In an open letter, Jonathan Adelstein, Administrator RUS, said that the reason RUS is discontinuing the program comes down to cost and the rapid changes taking place in the telecom industry.
"In this new technology environment, Rural Development must operate efficiently and effectively under current budgetary constraints," he said in the letter. "Maintaining the List of Materials, which includes a product by product review, simply cannot be sustained under our current budget and with our limited staff."
Adelstein added that "this new approach will give our customers increased flexibility to find and deploy technology that meets the specific needs of their customers."
Geoff Burke, senior director of corporate marketing for Calix (NYSE: CALX), a major supplier to Tier 2-3 telcos, including many that have won broadband stimulus grants from the NTIA and RUS, concurred that the IOC industry has changed to the point that can turn to a group of vendors that can take a hands on approach to network deployments.
"Since this all got established, the industry has changed a lot with a number of established players and maturation in terms of technology and the processes to make sure that the equipment you deploy actually works," he said. "Although this process was put in place to protect the RUS loans allows, it was also put in place to protect the service providers themselves."
Burke added that "if this does indeed simplify the processes to bring market innovation and products to market faster" it will enable IOCs to more effectively respond to cable and wireless competition with new services such as fiber-based data and IPTV.
Prior to this new rule change, vendors like Calix had to conduct work with an IOC customer to test out the product in their network before they could get added to the RUS list.
Of course, there's the obvious question of how IOCs will deal with existing RFPs that included the bill of materials requirement.
RUS said service providers have two options: They can cancel their bid for products or extend the bid data or clarify the bidding terms based upon the List of Materials no longer being available. Or, they can require that vendors responding to RFPs for telecom equipment continue to follow the List of Materials that was included in the existing contract.
While the RUS is doing away with the bill of materials certifications, it will maintain the Buy American rules it set for telecom product purchases.
"Although the agency is ending the publication of the list, it is not ending its insistence that infrastructure financed by taxpayers through our program conform to the highest technical standards," Adelstein said. "It is also not altering its statutory Buy America obligations."
- see the RUS letter (pdf)
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