I completely support rural broadband network deployments.  Rural broadband network deployments will facilitate the growth of the economy and promote the education of our youth. For every downside to an issue there is an upside.  Rural broadband has its pluses and its minuses. To make the rural market attractive the investors need an exit strategy. 

The answer to successfully investing in the rural space centers around ROI(OTN:TNWKQ) over a 2 to 3 year period, deal size, and lack of exit strategy.  If investment bankers cannot get a substantial ROI in a short period of time on a deal size that is in the billions of dollars, then the “Street” has no interest.  Bottom line, the deal cannot generate sufficiently large transaction fees to get any brokers interested.  As for the exit strategy component, investors simply want to know who they can sell out to when they want to move on.  I am not being critical; it is what it is.  Investors do not buy stock in companies unless they can be assured of either some kind of continual return (i.e., dividends) or continual growth in stock price.

ROI and deal size are important.  People want to make as much money as quickly as possible. If you can make as money investing in a savings account versus investing it in a publicly traded company, you would go to the nearest bank and plunk down cash in a savings account.  I understand the fundamental goals of the investor.  However, the rural market has the potential for generating cash flow.  Some rural markets are long term investment plays.  That being said why even bother investing in rural the answer is that the rural markets are the glue for the connecting urban centers across the country.  The rural markets’ value is in the potential exit.

The exit strategy for investors in rural broadband networks lies with “contiguous networks”.

Contiguous network building is a page from the network rollup playbook.  Imagine, investing in contiguous rural networks.  Now imagine a Verizon(NYS:VZ) wanting to connect its pockets of services using contiguous rural networks as the glue.  For a Verizon type of carrier it is preferable to buying an established well constructed and sufficiently advanced network rather starting from scratch and doing it yourself.  Contiguous network rural networks are an exit strategy for all rural investors.  Rural investors cannot own just one rural network but a group of them.  By building out contiguous rural markets the rural investor will be manufacturing the glue the Verizon’s and AT&T’s will need to connect their urban markets.  You now have an exit strategy for rural investors.

Instead of walking away from the rural market, investors need to figure out how to monetize a sector of the telecom industry that will never go away.  There is money to be made in the rural market.  If it was easy everyone would be doing it and then it would have zero value.