[Senate Hearing 110-1172]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1172
THE STATE OF BROADBAND IN ARKANSAS
=======================================================================
FIELD HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
AUGUST 28, 2007
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
_____
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman
Virginia JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
Christine D. Kurth, Republican Staff Director and General Counsel
Paul Nagel, Republican Chief Counsel
C O N T E N T S
----------
Page
Hearing held on August 28, 2007.................................. 1
Statement of Senator Pryor....................................... 1
Witnesses
Adelstein, Hon. Jonathan S., Commissioner, Federal Communications
Commission..................................................... 7
Prepared statement........................................... 10
Ahlen, John W., President, Arkansas Science and Technology
Authority...................................................... 36
Prepared statement........................................... 37
Allis, Edward K., Executive Director, Governmental Affairs, AT&T
Arkansas....................................................... 56
Prepared statement........................................... 57
Ashcraft, Greg, CFO, South Arkansas Telephone Company............ 68
Prepared statement........................................... 69
Bailey, Claire, Director, Department of Information Systems,
State of
Arkansas....................................................... 34
Prepared statement........................................... 35
Bassett, Daryl E., Commissioner, Arkansas Public Service
Commission..................................................... 16
Burdick, David, Director, Pine Bluff/Jefferson County Library
System; on Behalf of Arkansas Public Libraries................. 19
Prepared statement........................................... 20
Copps, Hon. Michael J., Commissioner, Federal Communications
Commission..................................................... 3
Prepared statement........................................... 6
Cunningham, Maryce, Secretary, Arkansas Broadband Advisory
Council; Government Relations Manager, MidSouth Region,
Suddenlink Communications...................................... 63
Prepared statement........................................... 64
Davis, Jr., Lawrence A., Chancellor, University of Arkansas at
Pine Bluff..................................................... 30
Prepared statement........................................... 31
Dozier, Matt, President and CEO, The EAST Initiative, Inc........ 43
Joint prepared statement..................................... 44
Ford, Scott T., President and CEO, Alltel Communications, Inc.... 49
Prepared statement........................................... 50
Gardner, Jeff, President and CEO, Windstream Corporation......... 53
Prepared statement........................................... 54
Gibson, Dean, Vice President, Operations, Pinnacle Communications 73
Prepared statement........................................... 74
Jones, John F., Vice President, Regulatory and Government
Relations, CenturyTel, Inc..................................... 65
Prepared statement........................................... 67
Lowery, Jr., M.D., Curtis L., Chairman, Department of Obstetrics
and Gynecology; Director, Center for Distance Health,
University of Arkansas for Medical Sciences (UAMS)............. 21
Prepared statement........................................... 23
Massaglia, Gary, Vice President and General Manager, Comcast
Corporation--Arkansas.......................................... 72
Prepared statement........................................... 73
Mays, Andrew, Student, Mineral Springs High School............... 46
Joint prepared statement..................................... 44
Mjartan, Dominik, Vice President, Southern Financial Partners.... 27
Prepared statement........................................... 29
Neal, Michelle, Student, Saragtoga High School................... 45
Joint prepared statement..................................... 44
Nelson, Rex, Alternate Federal Co-Chairman, Delta Regional
Authority...................................................... 17
Prepared statement........................................... 18
Pitcock, Len, Executive Director, Arkansas Cable
Telecommunications Association................................. 70
Prepared statement........................................... 71
Sivley, Lila, Student, Ashdown High School....................... 47
Joint prepared statement..................................... 44
Smith, Robert V., Provost, Vice Chancellor for Academic Affairs,
University of Arkansas, Fayetteville........................... 31
Joint prepared statement of Robert V. Smith, Provost, David
Merrifield, Chief, Technology Officer, Department of
Computing Services, and Amy Apon, Professor, Computer
Science and Computer Engineering, University of Arkansas,
Fayetteville............................................... 32
Tart, Trisha, Graduate, Ashdown High School...................... 47
Joint prepared statement..................................... 44
Waits, R. Paul, President, Ritter Communications................. 60
Prepared statement........................................... 61
Walls, C. Sam, CEO, Arkansas Capital Corporation................. 38
Prepared statement........................................... 39
Winningham, James, Organizing Chair, Arkansas Broadband
Initiative (ABI)............................................... 40
Prepared statement........................................... 41
Zega, Kelly Hale, State Manager, Public Affairs, Cox
Communications, Arkansas....................................... 75
Prepared statement........................................... 76
Appendix
Hultquist, Henry G., Vice President, Federal Regulatory, AT&T,
prepared statement............................................. 85
Supplemental material provided by David Burdick.................. 87
THE STATE OF BROADBAND IN ARKANSAS
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TUESDAY, AUGUST 28, 2007
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Little Rock, AR.
The Committee met, pursuant to notice, at 10 a.m., in the
Main Library of the President Clinton Presidential Library, 100
Rock Street, Little Rock, Arkansas, Hon. Mark Pryor, presiding.
OPENING STATEMENT OF HON. MARK PRYOR,
U.S. SENATOR FROM ARKANSAS
Senator Pryor. Let me go ahead and, since I don't have a
gavel, oh, wait--I'll use my BlackBerry. Let me thank everyone
for being here. This is an official hearing of the Senate
Commerce Committee. And I want to thank Chairman Inouye and
Vice Chairman Stevens for allowing us to do this in Little Rock
today. And let me just thank all of the participants.
You all notice that we have a very large panel of
witnesses, and that really underscores the importance of
broadband. When we start talking about this, maybe, you think,
hey, we're going to have, you know, a few phone companies or a
few of this or a few of that, but the truth is that broadband
touches so many people in so many different ways that once we
really got into this, we realized we needed a very broad
spectrum of input. One of the goals today is just for--to allow
the United States Senate through the Commerce Committee to hear
about some of the challenges and some of the successes in
trying to get broadband out to a rural state, some of the work
that has been accomplished, and some of the work that is still
left to do.
And also it's a great honor to have two FCC commissioners
here with us today. It is unusual for any state or any city to
be able to host two commissioners at the same time. These
gentlemen are very, very busy. The FCC has a very, very full
plate. The industries here that are represented, that have
business before the FCC, they understand how many things are
going on at the Federal Communications Commission. And to have
two commissioners here to take time out of their schedule, I
really appreciate that. And they've been bragging, just to let
you know--they've been bragging on Arkansas and on Little Rock
for really rolling out the red carpet for them. So I want to
thank everyone for that and being very, very gracious hosts and
hostesses for them.
I want to thank everyone here for helping us examine the
state of broadband in Arkansas. In some ways, Arkansas is a
microcosm of the country, because we have some areas that are
urban, say Little Rock and some of the more densely-populated
areas. We have lots of small towns, as you all know. And then
we have a big percentage of people in this state that actually
live outside of city limits and live out in counties. And so we
get the full range of challenges when it comes to broadband.
But I will say, we've come a long way in a short time. Last
night, we went to the Clinton Library, and one of the alcoves
is devoted to technology. And you could see the progress that
was made in the 1990s when it comes to technology, but we have
made so much more progress since then. This is a very rapidly
changing and rapidly moving development for our country. In
little more than a decade, broadband technology has evolved
really from just its roots for computer enthusiasts into a
broadly-used platform that is now the foundation of
communications and commerce in the Information Age. Today
broadband technology is driving innovation in fields like
telemedicine--we're going to hear that today, helping to
provide quality health care in remote parts of our Nation. It's
transforming education, allowing our children to access ideas
and information far beyond what the shelves of any school or
public library might be able to hold.
In fact, this morning, I went to a convenience store, and
the store clerk knew we were having this hearing today. And she
told me that she lives in rural Pulaski County, which is this
county we're in right now, and that all they have is dial-up
and that she home-schools. And it is very, very hard for her to
access the information that they need and they want to home-
school their children. And so the point of that is, there are
just so many applications. It's really endless the applications
that broadband can have in the way it impacts people. And it's
transforming our workforce, increasing productivity, creating
new economic opportunities for consumers and businesses. In
fact, you all probably heard me tell this story before, because
I've told it several times. But up in north Arkansas, there is
a little mom and pop fishing resort that was teetering on
having to go out of business, because it just didn't have
enough volume to keep the doors open. And the local phone
company, which is a small phone company up there, a few years
ago said, ``hey, let us design a website, we'll get you some
high-speed Internet access, and let's see what happens.'' And
it has totally transformed their business.
Now, you have to book them a year in advance, but it's
because of the interconnectivity of all that. For people who
like to trout fish and like to small mouth bass fish, they can
now come to Arkansas. It's not--not only creating jobs, but
showcasing our state.
But with all this promise that we're talking about here,
and all the upside, over the past seven years, the U.S. as a
nation has dropped from number four to number fifteen in the
world broadband rankings. Closer to home here in Arkansas, even
though it's very, very difficult to know exactly where Arkansas
stands because of the way statistics are kept, but under the
current method of keeping statistics, Arkansas is 47th out of
50 states in broadband penetration. So I know that there is a
serious commitment with the governor, with the legislature,
with all the elected officials, and the business community to
try to move Arkansas forward. And that's what we are trying to
do. Arkansas like many other parts of the Nation--we need to go
further, we need to go faster, and we need to ensure that all
Americans can reap the benefits of a robust and also affordable
broadband technology.
So there are a lot of people in this room who have been
working on this, some for a short time, some for a long time.
Hopefully, today's hearing will help us clarify issues that are
important, and we will keep in mind that common goal of making
Arkansas the leader in broadband deployment, and the spreading
of the benefits of this technology to all of our citizens.
So now, let me introduce our two Federal Communications
Commissioners, that's Michael Copps and Jonathan Adelstein. Let
me start with Commissioner Copps. He's a leader in seeking
deployment of affordable broadband throughout America. He was
one of the first to call for a national broadband strategy. In
addition, most of you know him as a champion for consumers,
because he's been working on those issues for a long, long
time. He has a very impressive public service career. He's
served at the FCC since 2001. Under the Clinton Administration,
Commissioner Copps served as Assistant Secretary of Commerce
for Trade Development at the U.S. Department of Commerce, and
Deputy Assistant Secretary of Commerce for Basic Industries.
The Commissioner came to Washington in 1970, joining the staff
of Senator Ernest ``Fritz'' Hollings of South Carolina, and
serving for over a dozen years as his Chief of Staff.
Commissioner Adelstein is an old friend of the Pryor
family. He worked for my father on the Senate Aging Committee.
And he was born in South Dakota, and he is very--that makes him
very, very aware of some of the challenges that rural providers
face when trying to deploy broadband out in remote areas. And
also there is a closely-guarded secret about him that I'll let
you in on. He was a roommate at one point of our Lieutenant
Governor, Bill Halter. So if we need the scoop on Bill Halter,
we have the resource right here--and it may go both ways,
though. But he was sworn in as a member of the FCC on December
3, 2002, and he was sworn in for a new five-year term on
December 6, 2004. Before joining the FCC, he was in the Senate
in terms of staff, and maybe committee staff or personal staff,
in the Senate for about 15 years. He used to work with Senator
Daschle, and my father, Senator Reid, and Senator Don Riegle,
so he has a long experience in Washington, so--Commissioner
Copps, if you want to lead off--well, what we're going to do
here is we're going to give them five to ten minutes each, and
then we'll introduce the panel.
STATEMENT OF HON. MICHAEL J. COPPS, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Commissioner Copps. Well, thank you, Senator, for that nice
introduction, I don't get to be on this side of the table of
the Senate hearings very often. It's not bad. I think I like
it. But I am happy to be here for many reasons. First, as the
Senator said, I worked in the Senate for many years, and
getting to spend some quality time with the leaders of the
Senate office, something I jump at doing, especially with
someone like Senator Pryor who epitomizes the best of the
Senate in terms of understanding the issues that confront
Arkansas, the issues that confront the country, and then in
knowing the Pryor family tradition, how to work with his
colleagues and to cross the aisle to get good things done.
So I'm happy to be here for that reason. We had a wonderful
evening, and thanks to the hospitality of a lot of folks in
this audience last night at the Clinton Library, and having
worked in the Clinton Administration, and that brought back a
lot of memories for me, and meant a lot to me, so I am very
grateful for that.
Last night, I was thinking about that ``don't stop thinking
about tomorrow'' that we were all singing about back in 1993.
And really, that's what this hearing is all about. It's about
tomorrow. Where are we heading in this still new 21st century,
and what role are telecommunications going to play in charting
our future? And my answer to that is that they are going to
play an absolutely huge role, and that the future is going to
belong to those who learn best how to deploy these new
technologies and services, and my answer is also that we have
to get this right for America. And part of my answer
unfortunately is that right now, we're not quite where we need
to be. And I know we've got a lot of new gizmos and gadgets,
and advanced telecommunications like broadband have already
brought us some pretty fundamental changes right here in
Arkansas, too, thanks to the efforts of a lot of you folks in
this room.
But I also know as the Senator has said that other
countries are eating our lunch in getting high-speed
telecommunications out to their citizens and building their
communications infrastructure. And I believe that our country
at the national level--its lack of a concerned strategy to get
broadband out to all of our people is like playing Russian
roulette with our future. We've got to do better in getting
telecommunications out to all of our people. And when I say
that ``all,'' I always underline that word, because that means
everybody. We can't afford to leave anybody behind in this new
age of high-speed communications. And that means those who live
in rural America, those who live in the inner city, those who
live on tribal lands. It means not just the affluent and the
privileged, but it means those who are economically
disadvantaged and people with disabilities. Each and every
citizen of this country has to have access to the windows of
communication. And I'm not talking about that from some kind of
``social do-gooder'' kind of perspective. I'm talking about not
doing--I'm talking about doing America a favor. That's--that's
what we've got to look at this as. I'm talking about making
sure that our citizens have the wherewithal to compete in this
highly-competitive global economy that we're in. I'm talking
about potential small business success stories right here in
Arkansas that aren't going to happen--that are not going to
happen unless we wake up now and get a national strategy.
I think broadband is really the great infrastructure
challenge of our time. And if you course back through the
annals of America's past, it's--every generation seems to have
some kind of a infrastructure challenge. We go back to when we
settled this country. And the first job was, well, how do we
get the produce and the products of the settlers to market. So
we found a way as a country, government and business working
together, to build roads and turnpikes and regional railroads
and canals and harbors and all the rest. Then after the Civil
War, we're all of a sudden a big continental nation. How do you
bind that nation together? Again, we found a way. Government
and business and communities working together to build the
transcontinental railroads. Even in our own time, we had the
interstate highway system to bring cities, suburbs, and country
together.
And my point is--first of all, in all of these great
infrastructure build-outs, there has always been a critical
role for having a national strategy and then having government
and business and communities work together. We didn't just
throw up our hands and say ``let somebody else do it'' or ``the
market itself is going to accomplish all of this stuff.'' We
work together. That's really how we've built the United States
of America. And to me, the broadband networks we're talking
about are the roads and the highways and the canals of the 21st
century. And we all know what happened in the last century. If
the railroad didn't come to your city, bypassed your city, your
city didn't thrive, and sometimes it didn't even survive. So
it's a matter of really getting a strategy, bringing America
into the game. And it's not just the international context that
I'm looking at.
I'm looking at the gap within our country between rural and
urban America. We had in the last century a gap even within the
basic telecommunications until close to the end between rural
and urban America. If we don't get this broadband right, we're
going to have a bigger gap between rural and urban America in
the 21st century with all this fantastic new technology and all
the promise that it holds than we had in the days of plain old
telephone service in the last century. I don't think we can
afford to wait for that.
The world's not going to wait for Arkansas or rural America
or the United States to catch up. We've got to do that
ourselves, so I'm delighted to be here today to learn from your
experience. I don't know that there is any ``one size fits
all'' solution to broadband--cities are different than the
country, mountainous areas are different than the deltas, and
there are a lot of individual problems that we need to grapple
with. The key, to me, is getting a strategy and with everybody
working together to make that happen.
Just some ideas that I will just very quickly throw out,
then I'll be quiet, because I think part of strategy would be
having a Universal Service Fund that really has broadband as
its core mission. I think that would be good. I think it would
really help get this technology out. And I think that the folks
on the business end would understand what the national strategy
is. Business can't operate with a question mark as Senator
Hollings used to tell me when I worked for him. So everybody
needs to know what the strategy is. And it means having a much
more active Federal Communications Commission than we have
right now. We're not collecting the data. We're still calling
broadband 200 kilobits up and down. We're still saying if there
is one subscriber in a Zip Code, ergo everybody must have
broadband. That's like saying if one person drives a Cadillac
in town then that must mean everybody's got a Cadillac. That's
the same kind of silly logic.
And then we have to have an FCC that's crafting innovative
solutions with the authority it has. And then beyond the FCC,
it means government coming up with solutions that may include
tax incentives, more loans for rural utilities service,
encouraging a municipality in local and regional innovations.
Those are just some of the thoughts I would have. I want to
thank everybody for being here today, and sharing your
experiences. And I know when I go back, I will have this
valuable information to put into my calculator as we try to
write rules that make sense for the future. So thank you,
Senator, very much for inviting me here today.
[The prepared statement of Commissioner Copps follows:]
Prepared Statement of Hon. Michael J. Copps, Commissioner,
Federal Communications Commission
Good morning and thank you Senator Pryor for inviting me to be here
with you and so many good Arkansans this morning. I'm happy to be here
for many reasons. First, I worked in the U.S. Senate for many years and
getting to spend some quality time with our Senate leaders is always
exciting for me--especially when it's someone who epitomizes the best
of the Senate--mastering the issues, knowing how to work across the
aisle to get things done, and having an expansive vision for this great
country of ours. Like your father before you, you add luster to the
Senate. I'm also glad to be here because of the proximity of the
Presidential Library. I had the honor of serving President Bill Clinton
as Assistant Secretary of Commerce for Trade Development and I am so
proud of what he accomplished for America both at home and around the
world and proud of the opportunity he gave me to serve.
``Don't stop thinking about tomorrow,'' Bill Clinton told us. And
that's what this hearing is all about--tomorrow. Where are we heading
in this still-new twenty-first century and what role are
telecommunications going to play in shaping our future? My answer to
that is that the future will belong to those who learn best how to
deploy all these new technologies, products and services. My answer is
we have to get this right for America. And part of my answer,
unfortunately, is that right now we're not where we need to be. Oh, I
know we all have lots of new gizmos and gadgets and that advanced
telecommunications like broadband have brought us some pretty
fundamental changes, including right here in Arkansas. But I also know
that other countries are eating our lunch in building their
communications infrastructures and I believe that America's lack of a
concerted national strategy to get back in the lead is tantamount to
playing Russian roulette with our future.
Let me begin by saying that my overriding objective since going to
the FCC in 2001 has been to bring the best, most accessible and cost-
effective communications system in the world to all of our people--and
I mean all of our people. We can't leave anybody behind in this great
new age of high-speed communications. That means those who live in
rural America, those who live in the inner city and those who live on
tribal lands; it means not just the affluent and privileged, but those
who are economically disadvantaged and those with disabilities. Each
and every citizen of this great country should have access to the
wonders of communications. I'm not talking about doing all these people
some kind of feel-good, do-gooder favor by including them; I'm talking
about doing America a favor. I'm talking about making certain our
citizens can compete here at home and around the world with those who
are already using broadband in all aspects of their lives.
The way I see it, broadband is really the great infrastructure
challenge of our time. If you course back through the annals of
America's past, you will find that just about every major era
confronted a stark infrastructure challenge. In the early days, as we
settled new lands, the need was to get the produce and products of our
settlers to market--so we built roads and turnpikes and ports and
canals to get the job done. Then, as we became a continental,
industrial power, we needed railroads to bring the Nation together, so
we laid a railway grid across the country, climaxed by the great saga
of the transcontinental railroads. Closer to our own era, in the
Eisenhower years, came the Interstate Highway System, to bind city and
state and nation. Even in telecom, we found ways to get telephone
service out to most of our citizens. And here's my point: in all of
these great infrastructure build-outs, there has always been a critical
role for business, local community organizations and government to work
together toward a great national objective. We didn't just throw up our
hands and say ``Leave it to somebody else,'' or ``the market will
automatically get it all done.'' No, these things were the business of
the people. That's how we looked at these challenges. That's how we
overcame them. That, my friends, is precisely how we built this great
country of ours. We pulled together and worked together. You know, we
all rightly value that great Declaration of Independence and that
glorious fight for freedom, but in reality it was millions of Americans
making a declaration of interdependence, one upon the other, that won
us our freedom and allowed us to build the greatest nation in history.
To me--and I believe this deeply--the broadband networks are the
roads and canals and railways and highways of the Information Age. Our
future will be decidedly affected by how we master, or fail to master,
advanced communications networks and how quickly and how well we build
out high-speed communications connectivity. If we succeed, we will
create millions upon millions of new educational and economic
opportunities. We will see new local businesses--and local governments,
too--providing tremendous value-added services everywhere in the
country. We will advance medical care through the development and
delivery of new health services. We will ensure that schools and
libraries are huge digital resources for their communities. We will
give that aspiring small business person in any number of rural
Arkansas communities a level field on which to compete with folks in
the city and competitors around the globe.
Those who get access to high-speed broadband will win. Those who
don't will lose. It's as simple as that. I want to help make sure we
all get there, and that America's rural communities get there as soon
as everyone else. I'll tell you this with confidence: if high-speed
broadband is permitted to be primarily an urban phenomenon, the digital
gap in this country that already separates urban and rural America will
grow still wider and rural America will be relatively worse off in the
twenty-first century of modern communications than it was in the days
of plain old telephone service in the last century. We can't let that
happen. This competitive world of ours is not going to make time for
rural America to catch up. That may sound harsh, but it's also true.
The important question, of course, is what can we do about all
this? Now I don't happen to think there is a one-size-fits-all
broadband solution for this country. The Ozarks in northern Arkansas
will likely require a different tact than the flat expanses of the
Delta along the eastern border. And surely whatever plans we have for
dense urban centers like Austin or Denver are not going to be the
ticket for success in our rural communities. There are great
differences--in population, culture and topography across this vast
land of ours. So we need to embrace all kinds of solutions if we have
any chance of succeeding.
I think that means we need a Universal Service Fund that has
broadband as its core mission. It means encouraging communities to
develop innovative solutions to getting broadband out. It means having
a Federal Communications Commission that provides the hard data we all
need to understand exactly where we are--basic things like who actually
has broadband, what it is costing, and how fast it is. It means having
an FCC that is committed to deploying its expertise and assistance much
more proactively than has been the case in recent years. It means
government coming up with solutions that might include tax incentives,
more Rural Utilities Service loans, public-private partnerships, and
encouraging some old fashioned competition. And it means having
government at all levels implementing a creative, comprehensive and
well-funded strategy.
I look forward to getting your thoughts today. I want to understand
better where you are and where you think we should be heading. So thank
you all for coming here today--providers, local officials, educators,
entrepreneurs, technologists, consumers and citizens who understand the
real challenges and promise in your home state. I have no doubt that
what I hear today will help shape my views as I work back in Washington
to craft policies that can bring broadband to all Americans. And I am
optimistic that everyone here, pulling and hauling together, can make
sure that in the broadband revolution of our time no community--and no
Arkansan--is left behind.
Senator Pryor. Commissioner Adelstein.
STATEMENT OF HON. JONATHAN S. ADELSTEIN, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Commissioner Adelstein. Thank you, Senator Pryor and Mr.
Chairman today for inviting me to discuss this common goal that
we have of making sure we deploy broadband everywhere in this
country, including to the rural parts of this state and rural
America. I certainly want to thank you all for the warm
southern hospitality. Reminded me of back when I visited in the
days of when your father was a senator. What a wonderful place
this is. What a beautiful state it is. And what a wonderful
bunch of people that know how to get together and do things. We
certainly have a fine set of panelists, and we thank you all
for sharing your insights with us today.
I certainly commend you, Mr. Chairman, for your leadership
on this issue. I know that in Washington, you're seen as one of
the leaders on technology and telecommunications issues, not
only as a function of being on the Commerce Committee, but as a
Co-Chairman of the Senate Democratic High-Tech Task Force. You
really recognize the importance of promoting these innovative
technologies and promoting broadband deployment, and how
important that is as you've explained this morning. I mean,
your focus as you've said on broadband is so important, because
it really does change and revolutionize the way that our
economy works, the health care opportunities for our people,
public safety, which relies on broadband technology,
educational opportunities, and even the very social and
democratic opportunities for people to participate in our
government.
Broadband is creating whole new opportunities by connecting
entrepreneurs to millions of customers as we've mentioned is
the case in northwest Arkansas facilitating telecommuting,
allowing communities to attract skilled workers and increasing
productivity for business and government of all sizes. I think
coming from South Dakota as you said and having worked for this
state for six years, I certainly think that broadband is
critical for the rural economic development of this state and
really for all of rural America. We have a challenge on our
hands, and it's a real problem if we don't allow the full
potential of people to be realized, that they'll fall even
further behind.
So here we have an opportunity for enormous progress, but
there is actually peril on the other side, because as other
countries and other parts of the country are expanding and
advancing in technology, if rural America falls behind and--or
continues to remain behind, the gap could get even larger. And
that's tragic, because the upside is so amazing. Think about
distance learning in telemedicine and how it's transforming the
way we educate and care for our citizens, and robust broadband
services are critical in times of disaster as we saw in the
Katrina situation. It conveys enormous amounts of information
to public safety, it also enables citizens to reach each other
in a time of need and it helps first responders. All these
applications that you can go on and on about, and we're only
scratching the surface. Now, in this age of global
competitiveness where we're competing with Bangalore, India, I
think we've got to tap the potential of all of our citizens, no
matter where they live, to reach our full level of economic
growth. We need to prevent outsourcing of jobs overseas by
promoting the insourcing of jobs right here in the U.S. by
companies within our own borders.
For a long time, particularly under the leadership of one
of Arkansas' own, whose library we enjoyed the hospitality of
last night, the U.S. was the world leader in
telecommunications. And there was a real focus--regular
meetings at the White House--real national leadership on this
issue. And we need more of that kind of leadership in the
Federal, state, and local levels. I have been encouraged that
with the changes in Congress, the Senate Commerce Committee has
heightened its attention to this issue over the past year as
evidenced by this hearing today.
Now, this is the first Congressional hearing--I've been in
the FCC for five years, and this is the first time I've been
invited to a state to focus on the impact of broadband in that
particular state. And that's a real testament of the kind of
leadership we have here, and that Senator Pryor brings
nationwide and certainly Arkansas needs that, and so does every
state.
We need to learn more about the challenges in Arkansas, and
I'm glad we're going to hear from you today, so we can forge
together a path forward to make progress here. This is the kind
of attention and importance that an issue like this deserves.
And we've made some progress, and we're going to hear some
positive lessons from each of you here this morning. I remain
concerned though as a nation that we are failing to keep pace
with our global competitors. My colleagues here talked about
how we're slipping down in the international rankings of
broadband penetration. But the real important statistic to me
is that citizens of other countries are getting a better
broadband deal--more megabits for less money than Americans.
And that's not just a PR problem which some of my
colleagues fight back at The Wall Street Journal and other
places, say, ``oh, don't--don't look at the statistics.''
That's a real productivity problem for our economy. We've got
to do better. I am concerned also that the lack of a coherent
broadband plan is one of the reasons that we're falling behind.
Every other country that has a national plan is the--are the
ones that are beating us. And we need a comprehensive national
broadband strategy that targets the needs of every part of this
country. It should incorporate benchmarks, deployment
timetables, and measurable thresholds that gauge progress. We
need to set ambitious goals, shooting for affordable high-speed
broadband. We should start by getting better data, so we can
ascertain where the problems are and develop solutions.
The FCC should be able to give Congress and consumers a
clear sense of the price per megabit, just as we look at the
price per gallon as an indicator of economic welfare.
Now, an important tool for mapping broadband availability,
which would enable the public and private sectors to work
together to target under-served areas is something that you're
talking about doing here in Arkansas, this Connect Arkansas,
which the legislature recently approved and the governor
signed. That kind of initiative is something I look forward to
hearing more about. It worked well in Kentucky, and I certainly
think it can work well here in Arkansas. And as we look at a
national broadband strategy, I think we've got to increase
incentives for investment, because the private sector is going
to be the primary driver of growth. We've got to promote
competition, because ultimately that's the most effective
driver of both innovation and lower prices for consumers. Now
Federal universal service plays a vital role in maintaining and
improving rural networks, it's a big source of--of funding here
in Arkansas as voice becomes just one application along with
data and video over broadband pipes, I think we need to ensure
that universal service evolves as Congress intended to promote
ubiquitous broadband. We should make broadband the dial tone of
the 21st century.
One of the best opportunities for promoting broadband also
is through spectrum-based or wireless opportunities. We've got
to assess the latest technological developments and get
spectrum into the hands of operators that are ready and willing
to serve at the most local levels. We have this upcoming 700
megahertz auction, which is of the old television bands. We
have an historic opportunity there to facilitate the emergence
of a third broadband platform. That's the kind of competition
we need. So this is the biggest and most important auction that
we're going to have for many years to come. And while the rules
for the upcoming auction reflect a compromise, not everything I
wanted, but I hope there will be opportunity there for a
diverse group of licensees and we can put in the most
aggressive build-out requirements in the history of the FCC.
That should benefit consumers everywhere in the state,
including the rural areas. Unlicensed broadband services are
also an important avenue for a lot of underserved communities.
Unlicensed spectrum is free and lightly used in rural areas,
and it can be accessed immediately, so the equipment is
relatively cheap, because there is a good national market for
it.
So we're working at the FCC to make more unlicensed
spectrum available at higher power levels. There's a lot more
Congress can do, too, as part of the national broadband
strategy outside of the scope of the FCC, such as adequate
funding for the rural utility service, broadband loans and
grants, and making sure that those loans and grants are
properly targeted to areas that really need it and not just
subsidizing competition.
There can be tax incentives for companies that invest in
broadband to underserved areas. We can devise better
depreciation rules for capital investments and targeted
telecommunications services. We need to invest in basic science
research and development to spur further innovation in
telecommunications. We need to improve math and science
education. And also we need to make sure we get computers in
the hands of all of our citizens who want one but can't afford
one. So if you don't have a computer, broadband doesn't mean
anything to you.
One other idea I think is ripe for consideration now is
perhaps it's time for a national summit on rural broadband
initiated at the Federal level involving state, local, and
tribal governments along with the private sector who's going to
drive this to forge a consensus and show the kind of leadership
we need around developing a national strategy. I certainly look
forward to hearing from all the impressive panelists here
today. I thank you for inviting me to testify and for holding
this hearing.
[The prepared statement of Commissioner Adelstein follows:]
Prepared Statement of Hon. Jonathan S. Adelstein, Commissioner,
Federal Communications Commission
Thank you, Senator Pryor, for inviting me to testify about one of
the critical challenges confronting our Commission and the country:
ensuring the deployment of affordable, high-speed broadband
infrastructure to every corner of this country. I would also like to
thank Governor Mike Beebe, the Arkansas Chamber of Commerce, the many
fine panelists who will share their insight, and the citizens of
Arkansas for welcoming us to your state today.
Senator Pryor, I want to commend you and the Committee for the
vital leadership role you have taken on broadband and technology
issues, which is evidenced through convening this hearing and also
through your work in Washington, D.C. As Co-Chairman of the Senate
Democratic High-Tech Task Force, you have recognized the importance of
promoting technological innovation and advanced telecommunications for
providing good jobs and enhancing our standard of living.
I appreciate your focus on these concerns, which are so critical to
the economic and social prosperity of our communities. You understand
the need to maximize the potential of every citizen to contribute to
our social, cultural and economic life through communications. We must
tap the talents of everyone in America, whether they live in cities or
in rural areas, whether they are Native Americans living on tribal
lands or residents of economically challenged sections of our inner
cities, whether they live with disabilities, whether or not they speak
English, and regardless of their income level. I would like to talk to
you today about why I believe this is such an important guiding
principle for communications policy and some of the ways we at the FCC,
you in Congress, and all of the participants here today can achieve
this ambitious goal.
We must engage in a concerted and coordinated effort to restore our
place as the world leader in telecommunications by making available to
all our citizens affordable, true broadband, capable of carrying voice,
data and video signals. An issue of this importance to our future
warrants a comprehensive national broadband strategy that targets the
needs of all Americans.
The Role of Broadband for our Nation's Communities
We are only scratching the surface of the opportunities that
broadband can bring. We stand at the threshold of a revolution in the
applications that will ride over broadband infrastructure. By expanding
the reach of advanced communications technologies, we can bring new
hope to many communities where it is in short supply.
For a long time, the U.S. was the undisputed world leader in
communications technology. Yet, in recent years, we have tumbled out of
our historic global position. I am particularly concerned that we give
our communities the tools that they need to compete in a more global
era. We need greater leadership on this issue at the Federal, state,
and local levels. I am encouraged that the Senate Commerce Committee
has heightened its attention to this issue over the past year.
Hearings like this play a key role. Since I joined the Commission,
I have traveled across the country and seen the impact of broadband on
the economic, health, public safety, education, social and democratic
opportunities of our citizens. Yet, this is the first time I have ever
been invited to a Congressional field hearing that focuses on the
impact of broadband on a particular state. That is testament to the
kind of leadership that can propel Arkansas forward to the front ranks
of broadband deployment. Every state, and the Nation as a whole, needs
this kind of initiative by its leaders.
I am pleased to share some of my thoughts, and am also looking
forward to hearing the testimony of the many Arkansas state and local
government officials, your regional leadership, representatives of the
educational and telemedicine communities, providers, and others who
will testify today. Together, we can learn more about the opportunities
and challenges faced here in Arkansas and forge the path toward
progress.
Right now, broadband is creating economic opportunities that were
previously unattainable, and the potential is even greater. Broadband
can connect entrepreneurs to millions of new distant potential
customers, facilitate telecommuting, and increase productivity. Much of
the economic growth we have experienced in the last decade is
attributable to productivity increases that have arisen from advances
in technology, particularly in telecommunications. These new
connections increase the efficiency of existing business and create new
jobs by allowing news businesses to emerge and new developments such as
remote business locations and call centers. The opportunities for rural
areas that have seized the initiative are enormous.
Broadband technologies are being harnessed in ways that folks back
inside the Beltway might never have imagined. For example, at auction
houses across the Midwest, entrepreneurs are using broadband
technologies to conduct real time cattle auctions over the Internet.
Ranchers from across the country can log in, watch real time video of
the livestock and make purchases without leaving their ranches. By
putting their livestock up for bid in cyberspace, these auction houses
have been able to bridge remote locations, expand their potential
markets, and cut the costs of reaching their customers.
Broadband can also unlock transformational opportunities through
distance learning and specialty classes that might otherwise be
confined within the physical walls of a traditional school. Similarly,
telemedicine applications are giving rural Americans access to
diagnostic services, like mobile mammography and emergency services
that had been unavailable because of distance, cost, weather, or
geography.
As we saw in events like the devastation of Hurricane Katrina,
communications services become even more critical in times of disaster
or national emergency, whether as a means of conveying critical
information to the public, enabling citizens to communicate with their
loved ones, or providing an essential tool for our first responders.
Broadband networks are essential to any plan to make emergency networks
robust and redundant enough to survive and function in the face of such
disasters in the future.
Broadband technologies have the potential to improve the quality of
life in even some of our most remote and economically challenged
communities. I have seen communities leveraging broadband
infrastructure to bring jobs: opportunities that serve not only as
important sources of employment, but also as training grounds for the
young people of the community. In almost every small community I visit,
I hear how hard it is to develop a workforce with sufficient training
in technology. Yet without such workers, it is hard for a small town to
develop and oversee cutting edge communications systems.
We want people to be able to stay, work, and thrive in the
communities where they grew up. The problem I often hear that it is
harder to keep young people in rural areas these days because they
sense a palpable lack of local opportunities. Broadband communications
can benefit our communities in many ways, perhaps most of all by
restoring the sense of opportunity that first made Americans venture
forth and settle the more remote areas of this country. Broadband can
help our young people who want to live where they grew up, and enjoy
that quality of life, have new opportunities for work and advancement.
Efforts to draw attention to the importance of high-speed Internet
access are critical. I understand that Arkansas recently adopted a
unique public-private partnership--Connect Arkansas--to enhance
broadband availability and subscribership. Such public-private
partnerships can play an important role, educating businesses and
consumers about the importance of broadband and aggregating demand so
that there will be incentives for providers to build. It worked well in
Kentucky, and it can work well in Arkansas.
Broadband and Global Competitiveness
Keeping our communities connected and ensuring that the latest
technologies reach all Americans, including those in remote and
underserved areas, are principles that are enshrined in the
Communications Act. Meeting these goals will be more important than
ever as we enter a new age of global competitiveness.
Even as consumers are increasingly empowered to use broadband in
newer, more creative ways, the stage on which we all must compete is
also evolving into a global one. New telecommunications networks are a
key driver of this new global landscape. They let people do jobs from
anywhere in the world--whether an office in downtown Manhattan, a home
on the Mississippi Delta, or a call center in Bangalore, India. This
trend should be a wake-up call for Americans to demand the highest
quality communications systems across our nation, so that we can
harness the full potential, productivity and efficiency of our own
country. We must give all our towns the tools they need to compete in
this new marketplace. If we fail in this, be assured, our competitors
around the world will take full advantage of us.
We've made progress, many providers are deeply committed, and there
are positive lessons to draw on. Yet, I am increasingly concerned that
we have failed to keep pace with our global competitors over the past
few years. Each year, we slip further down the regular rankings of
broadband penetration. While some have protested the international
broadband penetration rankings, the fact is the U.S. has dropped year-
after-year. This downward trend and the lack of broadband value
illustrate the sobering point that when it comes to giving our citizens
affordable access to state-of the-art communications, the U.S. has
fallen behind its global competitors.
There is no doubt about the evidence that citizens of other
countries are getting a much greater broadband value in the form of
more megabits for less money. A recent OECD report ranked U.S. 12th in
broadband value. According to the ITU, the digital opportunity afforded
to U.S. citizens is 21st in the world. For small businesses, those in
rural areas, and low income consumers, the problems can be even more
acute. This is more than a public relations problem. It is a major
productivity problem, and our citizens deserve better. Indeed, if we do
not do better for everyone in America, then we will all suffer economic
injury. In this broadband world, more than ever, we are truly all in
this together and we need to tap all of our resources.
Some have argued that the reason we have fallen so far in the
international broadband rankings is that we are a more rural country
than many of those ahead of us. If that is the case, and since
geography is destiny and we cannot change ours, we should redouble our
efforts and get down to the business of addressing and overcoming this
challenge.
I am concerned that the lack of a comprehensive broadband
communications deployment plan is one of the reasons that the U.S. is
increasingly falling further behind our global competitors. Virtually
every other developed country has implemented a national broadband
strategy. This must become a greater national priority for America than
it is now. We need a strategy to prevent outsourcing of jobs overseas
by promoting the ability of U.S. companies to ``in-source'' within our
own borders. Rural America and underserved urban areas have surplus
labor forces waiting to be tapped. No one will work harder, or work
more efficiently, than Americans but many are currently without
opportunities simply because the current communications infrastructure
is inadequate to connect them with a good job. That situation must
improve.
A National Broadband Strategy for All Americans
A true broadband strategy should incorporate benchmarks, deployment
timetables, and measurable thresholds to gauge our progress. We need to
set ambitious goals and shoot for affordable, truly high-bandwidth
broadband. We should start by updating our current anemic definition of
high-speed of just 200 kbps in one direction to something more akin to
what consumers receive in countries with which we compete, speeds that
are magnitudes higher than our current definitions.
We must take a hard look at our successes and failures. We need
much more reliable, specific data than the FCC currently compiles so
that we can better ascertain our current problems and develop
responsive solutions. The FCC should be able to give Congress and
consumers a clear sense of the price per megabit, just as we all look
to the price per gallon of gasoline as a key indicator of consumer
welfare. Giving consumers reliable information by requiring public
reporting of actual broadband speeds by providers would spur better
service and enable the free market to function more effectively.
Another important tool is better mapping of broadband availability,
which would enable the public and private sectors to work together to
target underserved areas. Legislation under consideration by leaders in
both the House and the Senate would enable us and other agencies like
the Census Bureau to make enormous progress on this front. The Connect
Arkansas initiative will help in this state, and a similar approach
should be adopted nationwide.
We must redouble our efforts to encourage broadband development by
increasing incentives for investment, because we will rely on the
private sector as the primary driver of growth. These efforts must take
place across technologies, so that we not only build on the traditional
telephone and cable platforms, but also create opportunities for
deployment of fiber-to-the-home, fixed and mobile wireless, broadband-
over-power line, and satellite technologies. We must work to promote
meaningful competition, as competition is the most effective driver of
innovation, as well as lower prices. Only rational competition policies
can ensure that the U.S. broadband market does not devolve into a
stagnant duopoly, which is a serious concern given that cable and DSL
providers now control approximately 96 percent of the residential
broadband market. We must also work to preserve the open and neutral
character that has been the hallmark of the Internet, in order to
maximize its potential as a tool for economic opportunity, innovation,
and so many forms of public participation.
There also is more Congress can do, outside of the purview of the
FCC, such as providing adequate funding for Rural Utilities Service
broadband loans and grants, and establishing new grant programs
supporting public-private partnerships that can identify strategies to
spur deployment; ensuring RUS properly targets those funds; providing
tax incentives for companies that invest in broadband to underserved
areas; devising better depreciation rules for capital investments in
targeted telecommunications services; investing in basic science
research and development to spur further innovation in
telecommunications technology; and improving math and science education
so that we have the human resources to fuel continued growth,
innovation and usage of advanced telecommunications services.
What is sorely needed, but fortunately in evidence here today, is
real leadership at all levels of government, working in partnership
with the private sector, to restore our leadership in
telecommunications. This type of attention is needed today on a
national scale. Much as we focus on Arkansas, today, a National Summit
on Broadband--or a series of such summits--mediated by the Federal
Government and involving the private sector, could focus the kind of
attention that is needed to restore our place as the world leader in
telecommunications.
Two other critical steps toward a national strategy, elaborated
upon below, are properly channeling universal service toward broadband
and promoting spectrum-based services for Rural America.
Universal Service: Evolving for the Broadband Age
Congress and the Commission recognized early on that the economic,
social, and public health benefits of the telecommunications network
increase for all subscribers with the addition of each new subscriber.
Federal universal service continues to play a vital role in meeting our
commitment to connectivity, helping to maintain high levels of
telephone penetration and increasing access for our Nation's schools
and libraries. With almost a decade behind us since the 1996 Act, the
FCC is re-examining almost every aspect of our Federal universal
service policies, from the way that we conduct contributions and
distributions, to our administration and oversight of the fund. As this
review has gone forward, I have worked hard to preserve and advance the
universal service programs as Congress intended.
We need to make broadband the dial-tone of the 21st century.
Ensuring the vitality of universal service will be particularly
important as technology continues to evolve. Increasingly, voice,
video, and data will flow to homes and businesses over broadband
platforms. In this new world, as voice becomes just one application
over broadband networks, we've got to have ubiquitous broadband pipes
to carry the most valuable Internet Protocol (IP) services everywhere.
Without such broadband networks, IP services can't reach their full
audience or capability. The economic, public health, and social
externalities associated with access to broadband networks will be far
more important than the significant effects associated with the plain-
old-telephone-service network, because broadband services will touch so
many different aspects of our lives. So, it is important that the
Commission conduct its stewardship of universal service with the
highest of standards and that we ensure that universal service evolves
to promote advanced services, which is a priority that Congress has
made explicitly clear.
Wireless: A Critical Source of Broadband Services
One of the best opportunities for promoting broadband, particularly
in rural areas, and providing competition across the country, is in
maximizing the potential of spectrum-based services. The Commission
must do more to stay on top of the latest developments in spectrum
technology and policy, working with both licensed and unlicensed
spectrum. Spectrum is the lifeblood for much of this new communications
landscape. The past several years have seen an explosion of new
opportunities for consumers, like Wi-Fi, satellite-based technologies,
and more advanced mobile services. We now have to be more creative with
what I have described as ``spectrum facilitation.'' That means looking
at all types of approaches--technical, economic or regulatory--to get
spectrum into the hands of operators ready to serve consumers at the
most local levels possible.
Of course, licensed spectrum has and will continue to be the
backbone for much of our wireless communications network. We are
already seeing broadband provided over satellite, new wireless
broadband systems in the 2.5 GHz band, and the increasing deployment of
higher speed mobile wireless connections from existing cellular and PCS
providers.
During our review of the bandplan in advance of the auction last
year of 90 MHz of new spectrum for the Advanced Wireless Service, I
pressed for the inclusion of smaller blocks of licenses. I thought that
smaller license blocks would improve access to spectrum by those
providers who want to offer service to smaller areas, while also
providing a better opportunity for larger carriers to more
strategically expand their spectrum footprints. Our decision to adopt
smaller license blocks was well received by a number of carriers and
manufacturers.
The Commission now has a historic opportunity in the upcoming 700
MHz auction to facilitate the emergence of a ``third'' broadband
platform that will ensure consumers everywhere the benefits of a high-
quality wireless broadband network. This is the biggest and most
important auction we will see for many years to come. While the
Commission recently adopted auction rules that reflect a compromise
among many different competing interests, I am hopeful that there will
be opportunities for a diverse group of licensees in the 700 MHz
auction and that our more aggressive build-out requirements will
benefit consumers across the country. We also put in place a new
approach to spectrum management by adopting a meaningful, though not
perfect, open access environment on a significant portion of the 700
MHz spectrum. This decision represents an honest, good faith effort to
establish an open access regime for devices and applications that will
hopefully serve consumers well for many years to come.
Unlicensed broadband services are an intriguing avenue for many
underserved communities because unlicensed spectrum is free and, in
most rural areas, lightly used. It can be accessed immediately, and the
equipment is relatively cheap because it is so widely available. I have
also worked closely with the Wireless Internet Service Provider (WISP)
community, which has been particularly focused on providing wireless
broadband connectivity in rural and underserved areas.
But we can always do more for rural WISPs and other unlicensed
users. I have heard from operators who want access to additional
spectrum and at higher power levels. And the Commission has been doing
just that. We have opened up 255 megahertz of spectrum in the 5 GHz
band--more spectrum for the latest Wi-Fi technologies--and are looking
at ways to increase unlicensed power levels in rural areas.
I also have pushed for flexible licensing approaches that make it
easier for community-based providers to get access to wireless
broadband opportunities. We adopted rules to make spectrum in the 3650
MHz band available for wireless broadband services. To promote interest
in the band, we adopted an innovative, hybrid approach for spectrum
access. It makes the spectrum available on a licensed, but non-
exclusive, basis. I have spoken with representatives of the Community
Wireless Network movement, and they are thrilled with this decision and
the positive impact it will have on their efforts to deploy broadband
networks in underserved communities around the country.
We have also made spectrum available in the 70/80/90 GHz band for
enterprise use. While you may not be familiar with this spectrum block,
it can be used to connect buildings with gigabit-speed wireless point-
to-point links for a mile or more. Instead of digging up streets to
bring fiber to buildings, licensees can set up a wireless link for a
fraction of the cost--and the spectrum is available to anyone holding a
license. While others supported an auction, I successfully argued
against them in this unique case, because I was concerned that auctions
would raise the price of access and shut out smaller licensees. In
fact, one company now is installing five links for the City of Sioux
Falls in my home state of South Dakota. The links will be used for a
number of city services, including public works, police and fire
departments, as an alternative to fiber.
Conclusion
Congress has charged the Commission with ensuring that the American
public stays well-connected, directing us in the very first section of
the Communications Act with making available to ``all the people of the
United States'' rapid, efficient nationwide communications services.
That starts with a continuing commitment to connectivity, for all our
citizens. For the sake of ourselves, our children, and this great
country, we must be bold and successful in this endeavor. So, thank you
for your leadership on this important issue, for inviting me to
Arkansas to hear from this impressive line-up of witnesses, and for the
opportunity to testify before you today.
Senator Pryor. Well, thank you. Thank you both for being
here. I appreciate your words of wisdom there. Let me tell you
what we're going to do now. I'm not even going to introduce
everybody. I'm going to let everybody just introduce themselves
very quickly, and then--Daryl, from you all the way over here,
we're going to do three minutes per statement, then some
students are going to have a ten, fifteen minute presentation.
And then on this side of the room, we're going to do two
minutes. And if we do the math on that, we're running well over
an hour there. So if everybody could keep their comments brief
and stay within their allotted times, it would be very helpful.
And we may ask questions if something comes up, something you
say triggers a question, and I want the two commissioners to
feel free to ask a question of some of the witnesses. That
would be great. But we're going to save most of our discussion
for later. Once everybody's had a chance to do their opening
statement, then that's when the real discussion will start. And
because there are so many--and again, this issue touches
everybody in many different ways. This is going to be much more
of a round table-type discussion rather than a traditional
Senate hearing.
You know, in the Senate, we get the witnesses there, and we
start pounding on them--as the two Commissioners can testify
to. We'll get them over there, and we start pounding on them.
That's not going to be the nature of this. This is going to be
much more of a discussion. I love your thoughtful comments,
your impressions--just things that you're seeing out there
around the state and things we need to do, challenges, good
ideas, and whatever it may be. And we'll have that discussion
after everyone does their opening statements. But please bear
in mind the two Commissioners and myself--we may ask questions
of the witnesses as we go. So Daryl, if you wouldn't mind just
to state your name and what you do and give your three minutes,
and we'll go around the room.
STATEMENT OF DARYL E. BASSETT, COMMISSIONER, ARKANSAS PUBLIC
SERVICE COMMISSION
Mr. Bassett. I'm Daryl Bassett. I'm the Commissioner,
Arkansas Public Service Commission. Senator Pryor, I want to
thank you for this historic opportunity to discuss broadband.
Commissioners Copps and Adelstein, welcome to Arkansas.
First question, with regard to broadband--it readily
presents itself since there is near universal agreement about
the benefits of broadband deployment--is why aren't we there
yet? Why are we short of full deployment? And I think the
question there lies--it's a question of policy. I think as
policymakers, we have to move closer or look closer at the
metrics that the Federal Government currently uses in
determining broadband usage in the country.
Commissioner Copps touched on the fact that we need to pay
more attention to the fact of the broadband bar, 200 kilobits
per second is laughable when you consider the speeds that are
available today. I think that any oversight committee should
contemplate a review of that policy as well as the policy--the
zip code policy. That says that if anyone within a zip code is
served by broadband, then everyone is served by broadband. I
think at the very least, we need to start looking at perhaps a
zip code+four idea. That approach would certainly lend quality
and credibility to our data collection activities. I think the
Broadband Data Improvement Act that recently unanimously passed
the Senate Commerce Committee goes a long way, rather, to
closing that loophole. I support that initiative primarily,
because I think the FCC should be directed to come up with a
new metric for the second-generation broadband. And I think
that second-generation broadband definition should be the
minimum speed needed to string full-motion, high-definition
video.
The second question regards our regulatory philosophy. I
think we have to understand that the service providers are
spending billions of dollars right now trying to expand the
Internet's carrying capacity and its speed. And I think we need
to be very careful as regulators to not practice any
anticipatory regulation that might prevent those incentives
from coming to bear. Getting dispersed areas such as what we
have in Arkansas served by broadband is tough, it's risky.
Often these companies have no idea of what a take rate they're
going to have once they get out there. We need to look at
incentivizing that kind of broadband deployment. And as a
regulator, I'm particularly sensitive to any regulation that
would prevent that kind of investment, particularly in rural
areas. I'm going to run out of time very quickly, but I just
really want to stress the importance of continuing the process
of increasing the radio spectrum that Commissioner Adelstein
spoke on. I also would encourage you to continue your
investigation into possibly subsidizing deployment in the areas
that are considered marginal.
Senator Pryor. Good. Thank you.
STATEMENT OF REX NELSON, ALTERNATE FEDERAL
CO-CHAIRMAN, DELTA REGIONAL AUTHORITY
Mr. Nelson. Thank you Senator Pryor, Commissioner Copps,
Commissioner Adelstein. We appreciate this opportunity. I'm Rex
Nelson. I'm one of President Bush's two appointees to the Delta
Regional Authority, which serves 240 counties and parishes in
parts of Arkansas, Alabama, Illinois, Kentucky, Louisiana,
Mississippi, Missouri, and Tennessee. And as you hit on,
sometimes when you're a presidential appointee and you get
called before a Senate committee by a member of the Majority,
it's not always a pleasant thing.
So I appreciate this pleasant opportunity today, Senator.
In fact, I'm convinced not once will I have to say, ``I have no
recollection of that, Senator,'' today.
[Laughter.]
Mr. Nelson. Senator Pryor and I have basically known each
other since childhood, so he realizes he could put me under at
any time, Mr. Commissioner, anyway. But as we look at the rural
South, the area of the country that we cover, after World War
II, we saw tremendous gains in this region in closing that huge
gap in average per capita income between the rural South and
the rest of the country. And I can point to three, among other
reasons, for that. That is we started paving our roads. We got
electricity in the rural areas. And because we got electricity
in the rural areas, we got air conditioning in the rural areas.
So suddenly in those years after World War II, we got out of
the mud, we got out of the dark, and we got out of the heat.
Can you imagine having this hearing today with no air
conditioning in this room? And we did it in large parts of the
rural South because of something that were a magic three
letters around the region called the REA, the Rural
Electrification Administration.
Now, if you look at the past ten to fifteen years, you will
see that we have stopped making progress in the rural South in
closing that gap. We have not successfully in our region made
the transformation into the Information Age. And I would
contend a lot of it is because we are not delivering broadband
to our people. And I would also contend that having access to
broadband in even the most rural areas of our country is just
as important as getting that electricity to them, and therefore
that air conditioning to them was back in the 1940s and the
1950s and for some even up into the 1960s.
So, Commissioner Copps, when you talk about a broad
national strategy, I could not agree more. I think we have to
work together with the private sector, in the public sector, to
have a public/private strategy to make sure that the rural
areas of our country aren't left behind, because if we don't,
in this Information Age, not only will we not keep closing that
per capita income gap, we're going to see that gap start to
grow and continue to grow. And in essence, we're going to be
back where we were in the rural South before World War II.
Thank you for the opportunity.
[The prepared statement of Mr. Nelson follows:]
Prepared Statement of Rex Nelson, Alternate Federal Co-Chairman,
Delta Regional Authority
Senator Pryor, Commissioner Copps, Commissioner Adelstein: It is an
honor to be asked testify this morning. We are happy to be a part of
this important discussion. The Delta Regional Authority is a Federal-
state partnership that serves 240 counties and parishes in parts of
Arkansas, Alabama, Illinois, Kentucky, Louisiana, Mississippi, Missouri
and Tennessee. We operate a highly successful grant program in each of
the eight states we serve. This program allows cash-strapped cities and
counties to leverage money from other sources. The DRA also has
expanded its regional initiatives the areas of information technology,
transportation and health care.
Earlier this year, the Delta Regional Authority unveiled an
information technology plan for the region. This plan, which has been
presented to the President and Congress, was developed in conjunction
with Southern Growth Policies Board. We hope to build information
technology access and utilization in Arkansas and the other states we
serve. The plan is titled ``iDelta: Information Technology in the
Delta,'' and its goals are to improve education, enhance
entrepreneurship and improve health care through the use of information
technology.
Southern Growth Policies Board is a public policy think thank based
in Research Triangle Park in North Carolina. Formed by the region's
Governors in 1971, Southern Growth Policies Board researches and
develops economic development policies. The region is provided with
authoritative research, discussion forums and pilot projects in the
areas of technology and innovation, globalization, workforce
development, community development, civic engagement and leadership.
The plan developed by DRA and Southern Growth Policies Board
includes numerous recommendations. An estimated 15 percent of zip codes
in the DRA region lack high-speed Internet services, compared with 12
percent nationally. In rural areas of the Delta, the lack of services
grew to almost 18 percent.
What we've tried to accomplish with this plan is to provide a map
for expanding information technology in the region. Information
technology is as critical to the advancement of the Delta as good
highways. We would never dream of limiting the access of drivers to
publicly funded highways. By the same token, we must make sure people
have access to the information highways. There are, of course,
differences between highways and information technology. The nation and
the states have large agencies dedicated to the planning, funding,
construction and maintenance of highway systems. No such unified system
exists for telecommunications access. Responsibility is widely
scattered.
We also teach driving skills in this country. But we don't exhibit
the same drive to teach technology skills. And roads don't come in as
many radically different forms as is the case with telecommunications
access. People can choose from a telecommunications menu that consists
of cable, home lines, wireless, satellite and more.
Only 15 percent of local governments in the region have a website,
compared with 24 percent of U.S. municipalities. Delta school districts
with a website lag the national rate, 54.2 percent to 62.2 percent.
Only 13 percent of the 240 counties and parishes have schools with
community technology centers available after school hours. Just 37
percent of communities in the region have public technology centers
outside of schools and libraries.
One of our key recommendations is the creation of a DRA iDelta
Center that will act as an organizing entity for information technology
initiatives in the region. This recommendation is based on successful
models that already exist in the South. Other iDelta recommendations
include funding telecommunications projects to connect the region with
critical assets in health, education, workforce training, e-commerce
and entrepreneurship; conducting a public affairs campaign on the value
of technology; and funding local development districts to use GIS
systems to support the DRA's regional initiatives.
During a planning retreat in February 2005, the DRA board voted to
make health care, transportation and information technology the
agency's major policy development areas. Last year, the DRA launched
the Healthy Delta initiative, http://www.healthydelta.com. In Feburary,
we unveiled plans for the Delta Development Highway System. The
proposed system consists of 3,843 miles of roads throughout the region.
The estimated cost to complete the planned improvement projects for
these roads is $18.5 billion. In April, we released a detailed study
that identifies sites in the region where oil refining facilities can
be placed. Such a facility has not been built in this country since
1976. Taken together, the highway plan, our health care initiative, the
oil refinery plan and the information technology plan provide a
blueprint for the economic revitalization of the region. We take our
role as a regional planner, coordinator and advocate seriously. The
release of this information technology plan is a major step in the life
of the authority.
The DRA would like to be a unifying force in this region when it
comes to information technology. This fits into our mandated role as a
regional coordinator. No one is doing this for information technology
in the region. We want to step up and help fill that gap. A wave of
information technology investment is as necessary for the future of the
Delta as great highway construction projects.
For more than a decade, economic development officials have been
ringing the alarm about the region's lack of information technology
access. To change this conversation and the region's reality, there
must be significant new strategic investments in information
infrastructure and resources. Our iDelta plan will provide a tool for
guiding the development of such efforts. Hopefully, we can craft
Federal interagency agreements that will allow our proposed DRA iDelta
Center to articulate and fund the vision of universal access and usage.
Thank you again for the opportunity to testify.
Senator Pryor. Thank you. Mr. Burdick, before you say a
word, I will note that on my way in, we stopped in this
library. We saw computers after computer there. And I know the
librarians around the state made a serious commitment to
technology in providing public access to the Internet and to
technology generally, so go ahead.
STATEMENT OF DAVID BURDICK, DIRECTOR, PINE BLUFF/
JEFFERSON COUNTY LIBRARY SYSTEM; ON BEHALF OF
ARKANSAS PUBLIC LIBRARIES
Mr. Burdick. Thank you for noting that. Senator Pryor,
Commissioners, I'm honored to come before you today and
appreciate the opportunity to speak on behalf of the public
libraries in Arkansas. My name is Dave Burdick. I'm the
Director of the Pine Bluff/Jefferson County Library System.
Pine Bluff is located 45 miles southeast of Little Rock where
the pine trees end and the delta farmlands begin. We have five
public libraries serving a population of 82,000 people. Fifty-
five percent of the population is black. Twenty percent of the
population is below the poverty line.
Although nearly all public libraries in Arkansas are
connected to the Internet, there are many of the small rural
libraries where this connection is through dial-up, a dedicated
56k line, a DSL line, or a connection through a local cable
television network.
Today, public libraries are a technological center for many
of our citizens who either cannot afford to own a computer or
afford to pay for a high-speed connection to the Internet. The
Pine Bluff libraries are typical of many of the public
libraries in Arkansas. One out of three people who walk through
our doors use a public computer work station. The important
thing is this: The public library is their gateway to the
world. We offer this gateway to everyone. Yet in many cases,
we're letting our citizens down by not offering a fast and
reliable connection to meet their needs. In our two smaller
branches, both located in towns of approximately a thousand
people, we have a 56k connection for the three public work
stations and two staff work stations. This is not adequate,
and, unfortunately, it's typical of small, rural libraries
throughout Arkansas.
In Pine Bluff, the infrastructure is such that many
citizens cannot get DSL. Numerous times in the past few years,
the Internet connection at one of our libraries has gone down
simply because the phone company plugged in another new user
into antiquated equipment, which was not intended to carry this
type of load.
Pine Bluff is an impoverished community compared to other
major cities in Arkansas. And the payback to the investment in
the infrastructure is just not there as it is in other markets.
It is like this throughout the rural areas of Arkansas,
especially in the Delta region. It is my belief that the
government must step in and offer incentives to help improve
the infrastructure of these poor and rural areas. I envision
the day when every public library throughout the state is
connected to the Internet at a speed which will provide all of
our citizens access to video-conferences, live online
educational programs, live classroom instruction, and other
resources which take a great deal of bandwidth. Internet
sessions should be dependent on the current speed of the
Internet and not the speed of the network which connects the
citizens to the Internet. When we talk broadband as it pertains
to public libraries, we should be talking about speeds which
can reach 100 megabits per second. We need to move away from
frame relay and move towards a long distance Ethernet or fiber
optics network, so that our citizens can have quick access to
our educational institutions.
You are here today because we all recognize that Arkansas
is far behind the rest of the country in broadband services.
Let's just be sure that everyone agrees that the public
libraries of Arkansas must be included in all discussions and
that solutions are found to bring Arkansas and Arkansas public
libraries up to speed. Thank you.
[The prepared statement of Mr. Burdick follows:]
Prepared Statement of David Burdick, Director, Pine Bluff/Jefferson
County Library System; on Behalf of Arkansas Public Libraries
Senator Pryor, Commissioners, I am honored to come before you today
and appreciate this opportunity to speak on behalf of the Public
Libraries in Arkansas.
My name is Dave Burdick; I am the Director of the Pine Bluff/
Jefferson County Library System. Pine Bluff is located 45 miles
southeast of Little Rock, where the Pine Trees end and the Delta Farm
Land begins. We have five public libraries serving a population of
nearly 82,000 people. Fifty-five percent of our population is Black;
twenty percent of the population is below the poverty line.
Although nearly all Public Libraries in Arkansas are connected to
the Internet, there are many of our small rural libraries where this
connection is through dial-up, a dedicated 56k line, a DSL line, or a
connection through the local cable television company.
Today, Public Libraries are a technological center for many of our
citizens who either cannot afford to own a computer, or afford to pay
for a high-speed connection to the Internet.
The Pine Bluff Libraries are typical of many of the Public
Libraries in Arkansas. One in three people who walk through our doors
use a Public Computer Workstation. The important thing is this . . .
the Public Library is their gateway to the world. We offer this gateway
to everyone.
Yet in many cases, we are letting our citizens down by not offering
a fast and reliable connection to meet their needs. In our two smaller
branches, both located in towns of approximately a thousand people, we
have a 56k connection for the 3 public workstations and 2 staff
workstations. This is not adequate, and unfortunately is typical of
small, rural libraries throughout Arkansas.
In Pine Bluff the infrastructure is such that many citizens cannot
get DSL. Numerous times in the past few years the Internet connection
at one of our Libraries has gone down simply because the phone company
plugged another new user into antiquated equipment which was not
intended to carry the load.
Pine Bluff is an impoverished community compared to other major
cities in Arkansas, and the payback to the investment in the
infrastructure is just not there as it is in other markets. It is like
this throughout the rural areas of Arkansas, especially in the Delta
Region. It is my belief that the government must step in and offer
incentives to help improve the infrastructure in these poor and rural
areas.
I envision the day when every Public Library throughout the state
is connected to the Internet at a speed which will provide all of our
citizens access to video conferences, live on-line educational
programs, live classroom instruction, and other resources which take a
great deal of bandwidth. Internet sessions should be dependent on the
current speed of the Internet, and not the speed of the network which
connects our citizens to the Internet.
When we talk broadband as it pertains to Public Libraries, we
should be talking about speeds which can reach 100 Mbps (megabits per
second). We need to move away from frame relay, and move toward a long-
distance Ethernet or fiber optics network so that our citizens can have
quick access to our educational institutions.
You are here today because we all recognize that Arkansas is far
behind the rest of the country in broadband services. Let's just be
sure that everyone agrees that the Public Libraries of Arkansas must be
included in all discussions, and that solutions are found to bring
Arkansas and Arkansas Public Libraries up to speed.
Thank you.
Commissioner Copps. Can I ask a quick question?
Mr. Burdick. Yes, please.
Commissioner Copps. Do you have any figures or data on what
percentage of libraries maybe are on dial-up? You know, we have
the E-Rate program for schools and libraries. We're all very
proud of that, and I'm a strong supporter of it. There are
those who say, well, you've got 93 percent of the classrooms in
the United States connected, but a lot of them are dial-up,
aren't they?
Mr. Burdick. The data that I've seen lately is a little old
because the state library does collect that, but because so
many are starting to move out away from the state-offered
services, it's really hard to know exactly where each of those
are. I do know by talking to other librarians that they have
branches in these small areas, which are definitely on dial-up.
I have no idea how--or what the number is.
Commissioner Copps. That's a lot to expect our kids to
compete on a dial-up connection with folks everywhere else that
have high-speed.
Mr. Burdick. That is correct.
Senator Pryor. Dr. Lowery?
STATEMENT OF CURTIS L. LOWERY, JR., M.D., CHAIRMAN,
DEPARTMENT OF OBSTETRICS AND GYNECOLOGY;
DIRECTOR, CENTER FOR DISTANCE HEALTH, UNIVERSITY OF
ARKANSAS FOR MEDICAL SCIENCES (UAMS)
Dr. Lowery. Thank you. And thanks for the opportunity to
present this very important issue. I'm first a practicing
healthcare provider, but I'm also Director of the Center for
Distance Health at UAMS and Chairman of the Department of
Obstetrics and Gynecology. And I'll start by saying, where you
live should not determine whether you live or die. That is the
case. And as a healthcare provider, it's my mission to
eliminate this disparity. It's unacceptable, and we should
eliminate it. Information is available and needs--your
information and special care can eliminate many of these
deaths. So every day that we don't do this, there are people
dying unnecessarily. So that's why I think it's really
important.
Arkansas is the sixth poorest state in the Nation. We are
among the worst nationally for stroke mortality, women's
health, obesity, health insurance coverage, cardiovascular
deaths, and overall health. And unfortunately, there is a long
list of other problems we have. While we have made progress in
the last few years in improving this, there is a lot more room
for improvement. A few months ago, we formed Arkansas
Telehealth Network. And this is an historical alliance of 16 of
Arkansas' leading health care organization, has been realized
as Arkansas formed the Arkansas Telehealth Oversight and
Management Board--ATOM.
ATOM is called to the duty to fully connect, tactically
expand, and officially manage the statewide telehealth system
that builds upon the state's educational and clinical efforts.
You may wonder why that's important to do this as a healthcare
provider. And I'll tell you that 73 of the 75 counties in
Arkansas are considered medically under-served. With that,
Little Rock is the home to the vast majority of the state's
only subspecialists making subspecialists' care concentrated
away from the rural areas where they're most needed. This is
true of many states, not just Arkansas, as well. It's hard to
get subspecialists to go to rural areas.
Unique to Arkansas, all hospitals throughout this state are
wired and ready for the telehealth network due to bio-terrorism
grants that we got. So I want to make a pitch for the FCC
grant--we should get that, we need it very much. We could make
dramatic improvements in a very short time. ATOM identifies and
leverages existing resources to make the most efficient use of
funding and technology since we already have the, sort of the
infrastructure in place. ATOM plans to update, expand, and
connect all hospitals and other health care organizations to
build a unified state virtual telehealthcare network that
includes all hospitals and all providers. By doing this
subspecialty support through telehealth enables us to oversee
every patient transition from point-of-care from rural areas,
to the cities, and back and forth, so that the patient is not a
patient in the large hospital, but is a patient of everybody in
the state. So if you transfer a patient, it's still your
patient, and vice versa.
We can expect more cost savings and a diversity of
disciplines as a result of this. Reaching telemedicine to rural
Arkansas can stimulate workforce development, keeping
telehealth dollars in rural towns that need them the most. We
may be poor and we may not have a good health care standing as
other states. What we do have is a network of telehealthcare
providers focused on improving Arkansas through a unified
statewide initiative.
Arkansas is rich in one area: a passion to overcome our
shortcomings with the intellectual and technological
infrastructure required to implement the Arkansas Telehealth
Network. The support of the FCC, and you, Senator Pryor, can
make this vision for the future come to fruition. Thank you for
your desire to make Arkansas a better and eventually the best
state in the Union for telehealth. Thank you.
[The prepared statement of Dr. Lowery follows:]
Prepared Statement of Curtis L. Lowery, Jr., M.D., Chairman, Department
of Obstetrics and Gynecology; Director, Center for Distance Health,
University of Arkansas for Medical Sciences (UAMS)
University of Arkansas for Medical Sciences (UAMS)
Presentation to the Legislature
Arkansas Telehealth Network
(FCC WC Docket No. 02-60)
Overarching Theme
Where you live should not determine whether you live or die. That
sentiment resounds in the mission of Arkansas' healthcare providers. In
a state where 73 of 75 counties are considered medically underserved,
healthcare access is the most overwhelming reason for Arkansas' poor
health standing. Faced with a statewide crisis in nearly every
measurable healthcare category, an alliance of healthcare providers has
sought to demonstrate that through collaboration and technology
Arkansas is a place to live--not die.
How do we plan to achieve this?
In response to the FCC Rural Health Care Pilot Program, the State
of Arkansas, in a historical feat, has allied its major healthcare
service organizations and stakeholders, building the framework for a
fully-connected, tactically-expanded, and efficiently-managed statewide
telehealth system. This partnership of healthcare organizations is
realized through the Arkansas Telehealth Oversight and Management
(ATOM) Board, with a current membership of 16 organizations and an open
invitation to all others interested in improving Arkansas' telehealth
resources. With FCC assistance, ATOM will create the Arkansas
Telehealth Network.
ATOM is comprised of a diverse group of Arkansas healthcare
organizations operating statewide, including the following agencies:
University of Arkansas for Medical Sciences.
Arkansas Department of Health and Human Services.
Baptist Health.
Arkansas Center for Health Improvement.
Arkansas Department of Finance and Administration.
Arkansas Department of Information Systems.
Arkansas Foundation for Medical Care.
Arkansas Hospital Association.
Arkansas Office of Information Technology.
Arkansas Research & Education Optical Network.
Community Health Centers of Arkansas.
DaySpring Behavioral Health.
Delta Regional Authority.
Mental Health Council of Arkansas.
St. Vincent Health System.
Training, Research in Aging and Children Services (TRACS).
And others as they choose to join.
As selected by the ATOM Board, the University of Arkansas for
Medical Sciences (UAMS) serves as the legal and financial applicant
seeking FCC funding. Through an innovative management plan and
statewide collaboration and support, this pilot program will
revolutionize the composition, interoperability, and management of
Arkansas' telehealth efforts. A total request of $5,054,988 and an
accompanying hard cash match of $837,300 will achieve goals of
consolidation, expansion, and management of the Arkansas Telehealth
Network.
Why Arkansas?
Arkansas is in the state of need. Results from the United Health
Foundation's 2006 survey of national health standings reveal Arkansas
currently ranks in the bottom five states in the Nation. Measuring a
gamut of risk factors on personal behaviors, community environment,
public and health policies, and health outcomes, Arkansas is 46th out
of 50 states in overall health status. To complicate matters, Arkansas'
status continues to hover in a declining pattern, having dropped from
45th placement in 1990. Among Arkansas' measured qualities, the
following health outcomes contribute to this extremely poor ranking,
while dually serving the purpose of highlighting Arkansas' need for
improved medical services and interventions:
Arkansas ranks 46th out of 50 states in premature death;
years lost per 100,000 population: 9,587.
Arkansas ranks 41st out of 50 states in infant mortality;
deaths per 1,000 live births: 8.1.
Arkansas ranks 44th out of 50 states in cardiovascular
death; deaths per 100,000 population: 376.4.
Arkansas ranks 44th out of 50 states in obesity; percent of
population: 28 percent.
Arkansas ranks 44th and 45th out of 50 states for poor
physical health days and poor mental health days respectively;
days in previous 30 days: 4.1 in poor physical health and 3.7
in poor mental health (Unitedhealthfoundation.org, 2006).
The University of Arkansas' Division of Agriculture explains in its
2005 Rural Profile of Arkansas 63 of Arkansas' 75 counties are
considered non-metropolitan and consequently rural. As the report
further highlights, the 2000 Census identified 48 percent of Arkansans
as rural, compared to the nation, where only 21 percent were considered
rural at the time of the 2000 census. Arkansas is also experiencing a
boom in the state's Hispanic population, with the U.S. Census Bureau
reporting a 337 percent increase between the 1990 and 2000 Census.
According to the Urban Institute, Arkansas' Hispanic population grew 48
percent between 2000 and 2005, the fastest growth of any state in the
Nation. As home to significant, growing populations from Mexico,
Central America, and the Marshall Islands, there is a need for language
translation services. Ranked 7th in the Nation for percent of people
living at or below poverty in 2005, Arkansas is not only rural; it is
poor.
Arkansas must expand and improve its telehealth resources to better
serve its rural population. Concerns related to building and expanding
the existing network encompasses problems in affordability of
telehealth connectivity. Regarding the current telehealth networks,
several issues exist to prompt the need to enhance network
interoperability. Presently, Arkansas is home to three statewide
telehealth networks: DHHS, UAMS, and Baptist Health, among a number of
smaller, private networks. These three telehealth networks represent
all areas of the state, serving consumers on a variety of levels
including emergency preparedness (earthquake, pandemic flu, chemical
spill, etc.), high-risk pregnancy consultation, diabetes self-
management, health care education, home health, cardiology, psychiatry,
and a number of other diverse medical applications. The networks also
serve to educate providers across Arkansas, with health care meetings,
continuing education opportunities, and other collaborative uses of
teleconferencing. The co-existing networks have served many patients
throughout Arkansas, yet these networks all function separately from
one another, serving the same target population with needed services.
The current telehealth network's greatest flaws are their inability to
easily communicate with one another and lack of a centralized,
scheduling and management system. Through this initiative, ATOM will
seek to overcome these flaws.
The proposed statewide telehealth network will be created through
three methods: (1) Consolidation of sites that currently exist on
separate networks, (2) Update and Addition of sites in need of
increased bandwidth and improved accessibility, and (3) Expansion of
the network to include access to Internet2 and the Arkansas Interactive
Video Network.
What deliverables are expected?
The ATOM Board proposes several related efforts and resultant
deliverables through this pilot program proposal, each aimed at
aggregating the needs of the state's health care providers and
leveraging existing technology. These efforts are explained below.
Effort 1: Consolidate Arkansas' existing public and private
non-profit telehealth networks into one statewide Arkansas
Telehealth Network.
Deliverable: Cohesive statewide telehealth network.
Effort 2: Expand the Arkansas Telehealth Network to
strategically enhance access to rural, underserved areas and
populations of Arkansas to include a special emphasis on the
Delta region.
Deliverable: A more comprehensive statewide telehealth network.
Effort 3: Unite the Arkansas Telehealth Network to Arkansas'
Educational Video Network.
Deliverable: Interoperability between the state's educational
(520 endpoints) and telehealth resources ( 270 endpoints).
Effort 4: Connect the Arkansas Telehealth Network to
Internet2 and Arkansas' fiber backbone.
Deliverable: A fully connected statewide telehealth network
with statewide access to the latest technologies and
applications.
Effort 5: Manage and schedule the 24/7 needs of the Arkansas
Telehealth Network.
Deliverable: A well-communicative network, with ease in
scheduling and troubleshooting to encourage continued and
frequent telehealth use.
Effort 6: Evaluate the success of the proposed initiatives
on a scheduled and continual basis.
Deliverable: Evidence of the success of the pilot program for
dissemination, publishing, and further replication of a model
program.
How will this effort be managed?
The management plan of this initiative stems from a collaborative
approach between ATOM Board members. The ATOM Board is currently
comprised of 16 partnering health care organizations, and other
governmental or private, non-profit health or technology organizations
are invited to join the Board.
Membership in the ATOM Board is open to any health or technology-
related organization (governmental, private non-profit, or private-for-
profit). Membership is intended to promote broad access and advocacy
for telehealth services. Members elect representation to the ATOM
Advisory Committee. UAMS will work under the direction of ATOM members
through the ATOM Board. All members will participate in decision-making
and management.
What are our past successes?
ATOM's day-to-day operations will be led by three organizations:
the University of Arkansas for Medical Sciences, Baptist Health, and
the Arkansas Department of Health, each with extensive telemedicine
histories. As depicted below, each organization has been instrumental
in bringing telemedicine to rural Arkansas.
UAMS (University of Arkansas for Medical Sciences)
Pioneered Arkansas' first telehealth system in 1991.
Created an award-winning, cost-efficient Medicaid-funded
obstetrical telehealth program.
Delivers telehealth consultation in genetics, oncology,
neonatology, psychology, education, etc.
Baptist Health
First in Arkansas and region to implement an eICU providing remote
monitoring of Critical Care patients (2005).
Constructed a home health telehealth program for patient
monitoring.
Provides remote teleradiology and sleep study patient assessment
and consultation to rural hospitals.
DHHS (Arkansas Department of Health and Human Services)
Operates Arkansas' emergency preparedness telehealth system.
Supplies clinical and educational telehealth to providers and
patients.
Launched a telehealth network serving rural health clinics,
critical access hospitals, and the state's hospitals.
The University of Arkansas for Medical Sciences will provide the
overall management of the ATOM effort, while also acting as the legal
applicant for FCC Rural Health Care Pilot Program funding. Thus, this
organization's qualifications are explained in greater detail. UAMS has
years of experience in developing and managing telemedicine programs.
Technical and organizational ability to implement this pilot program is
evidenced by the fact that the UAMS Statewide Telehealth Network has
grown to include more than 50 self-sustaining sites. As an overview of
UAMS' programmatic achievements in telemedicine, UAMS' Rural Hospital
and Antenatal & Neonatal Guidelines, Education and Learning System
(ANGELS) programs are explained. These two programs led the
University's and consequently the state's efforts in telehealth.
Further, leaders from both organizations will continue to play
instrumental roles in this pilot program effort through ATOM.
The UAMS Rural Hospital Program (RHP) led the state's efforts in
telehealth when it was established in 1991 with two sites, having grown
to include 50 rural hospital, Area Health Education Center (AHEC), and
clinic sites across the state. The primary aim of the network is to
share UAMS resources to increase timely access to specialty services
and information in rural settings that would not otherwise be
available. The program has extended telehealth services into some of
the most rural and needy regions of Arkansas. With over 15 years of
experience creating telemedicine sites, training facilitators, and
developing compressed video programs and presentations, the RHP has
worked with numerous communities and a variety of facilities throughout
Arkansas to develop the statewide network. In 2006, RHP held 272
different continuing education programs over telemedicine, serving
5,820 attending healthcare professionals. Further, RHP offered 34
different consumer education programs broadcasted through telemedicine
in 2006, with 614 consumers in attendance.
The ANGELS program is an innovative Medicaid-funded, telehealth
consultation and education service established in 2003 for a wide range
of physicians including family practitioners, obstetricians,
neonatologists, and pediatricians in Arkansas. Utilizing interactive
compressed video and Level II ultrasonography, telemedicine conferences
enable physicians to confer with Maternal-Fetal Medicine specialists
regarding high-risk pregnant patients. Clinical telemedicine
consultations allow patients, local physicians, and UAMS physicians to
consult and review ultrasonography results in real time, bringing the
state's only certified Maternal-Fetal Medicine subspecialty support
directly to hometowns. In support of its telemedicine services, ANGELS
established a call center to direct 24/7 support to patients and
providers needing evidence-based triage and guidance. In 2006, ANGELS
performed 891 consultations through ANGELS telemedicine, a marked
increase from its pre-implementation rate of 174 consultations in 2002.
What long-term consequences may result?
Through implementation of Arkansas Telehealth Network, rural
Arkansas can overcome the distance barrier that separates its rural
residents from the subspecialty care they need. This network provides
the very foundation required to build a comprehensive plan to tackle
the state's laundry list of health adversities. A centrally-managed,
comprehensively-collaborative telehealth network will allow
opportunities to build any number of programs: behavioral health
services, telepharmacy programs, emergency-based stroke networks, and a
continuing list of possibilities. What may result? Arkansas may
transcend its poor health standing. Arkansans will have increased
access to the care they need to prevent, maintain, and improve their
health. This project builds upon relationships, technology, and support
within the healthcare community, with one unifying theme held by all
the ATOM membership: Help Arkansas help itself.
Mr. Adelstein. Chairman, a quick question. I know about the
grant. We're going to give it--we're going to take a hard look
at it. We have an ongoing program, as you know, that Congress
enacted in the rural telehealth program, part of universal
service. I'm wondering if ATOM is participating in the FCC's E-
Rate program for some help.
Dr. Lowery. Yes, we do, but many of the hospitals aren't
really eligible for it. We already get a good rate in the state
already--the telehealth companies, so it ends up not really
saving a lot of money for us in this state.
Mr. Adelstein. Is there something we need to do to make it
more helpful in the ongoing program?
Dr. Lowery. Well, yes, I mean, I guess it would be to make
it so that more hospitals could apply for it and take advantage
of it, I guess, would be the issue. I mean, you know, $500
doesn't seem like a lot of money, but for small hospitals that
are barely making it, it's $500. So the more hospitals we have
onboard, the better off that we are. We've had--in our network
at UAMS many of the hospitals dropped off because of the costs
of the T-1 lines. I know that seems strange, but that's the
reality.
Senator Pryor. And just by way of background for the two
Commissioners, UAMS is the University of Arkansas for Medical
Sciences, part of the University of Arkansas system, so it's
our medical school. They do a lot of medical research there,
and they're very plugged in a lot of different ways. And it's a
great asset to the state, because in many specialty areas, you
can get state-of-the-art care throughout the state. Now, it
also has a hospital, so it's a large hospital as well, and it
has what we call the AHEC system, which is sort of distance
clinics. I'm not quite sure----
Dr. Lowery. Yes, that's right.
Senator Pryor.--how you describe it, but clinics around the
state. And the idea was years ago to try to get some of those
specialties and some subspecialties out into rural Arkansas
where folks can get, again, world-class care, and have access
to world-class physicians.
Dr. Lowery. The population density just won't support a
pediatric nephrologist in Mena, Arkansas, but you can have this
information available through these technologies to consult
with guys in the rural areas that need this resource. So it's
sort of like the Internet of health care in a way, right?
Senator Pryor. Yes. And also UAMS works very, very closely
with Arkansas Children's Hospital and also to a large extent
with the VA Hospital, which is right on the edge of the parking
lot, really. They almost share space. But that's the way
Arkansas has approached health care. It has been a real pillar
in our healthcare system here for a long time.
Dr. Lowery. I want to make one thing clear, though, that
this proposal, the ATOM group is made up of other hospitals----
Senator Pryor. Right.
Dr. Lowery.--Baptist, St. Vincent's, and all the hospitals
around the state. And I don't think that this network should be
limited, and in no way we've ever said that to just UAMS. This
is designed to be a virtual health care network for all
hospitals to participate, and that's the way it should be.
Senator Pryor. Yes. I think that's a great point. But other
states may do it differently, right? That's the way Arkansas
has done it. Here again, one size fits all may not work for us,
because we've taken a certain approach, which has been great
for our state. And we were very collaborative. Our approach
here in Arkansas was to always work with each other and try to
help any way we can. That may not be true in other states,
bigger cities, whatever, but that has certainly been our
approach. Mr. Mjartan?
STATEMENT OF DOMINIK MJARTAN, VICE PRESIDENT, SOUTHERN
FINANCIAL PARTNERS
Mr. Mjartan. Commissioners, Senator--I want to thank you
for allowing me this opportunity to briefly testify about the
dire need for broadband in our rural areas. I serve as Vice
President of Southern Financial Partners, a very comprehensive
community development organization that's affiliated with
Southern Bancorp, the largest rural development bank in
America.
And our primary mission and our focus is to help revitalize
rural communities, which we've been doing for about 20 years.
So from that perspective, I'm going to talk about our
experience with trying to bring broadband into some of our
communities that are really very small and distressed. Our
flagship project is in Phillips County, Arkansas, which is the
poorest county in the state of Arkansas. It has about a 30
percent poverty rate. And one of the greatest obstacles we've
seen in reaching the outlying areas in Phillips County has been
really a lack of the digital infrastructure and a problem that
really makes these communities competing in the 21st century,
global knowledge-based economy impossible. And one example that
I gave to the Commissioner last night was when I drive to the
Delta and want to visit with some of our communities--the best
example is the mayor of Lakeview. I can send her a fax, or I
can drive there on our asphalt infrastructure that's been
developed. But to borrow Rex's analogy, I cannot use the
digital infrastructure. So we've done a great job building
asphalt physical infrastructure, but in the 21st century, we
feel that the digital infrastructure is just as important as
the physical asphalt and concrete infrastructure of the 20th
century.
One of the programs that we have some experience with that
has been widely successful I would argue in other parts of the
country has been the USDA's Community Connect Broadband
program. And this program has served many communities, but not
a single community in Arkansas has successfully applied and
received this grant. And I'd like to use this venue to make two
recommendations that I think would make it much more likely for
Arkansas communities to benefit from this fantastic program.
One of them is eligibility criteria, which some of you have
referred to it as zip code requirement, but it's a similar
issue that really excludes many communities that have a single
household with broadband access disqualified. So what we would
like to propose is to change the requirement that at least 50
percent of the households in a community must have access to
broadband in order to be disqualified from receiving this
grant. And number two, you know, we've run into this challenge
most recently where for-profit providers in geographically-
dispersed rural areas really cannot make this project under the
grant sustainable past a two-year cycle.
So what we would like to propose is to extend the cycle to
give these for-profit providers a chance to gain enough
customer base and start recovering the very high fixed costs
that they incur in bringing broadband to rural areas.
And then finally I have a third point here. I've found out
recently that the USDA has been very responsive and answered
this challenge, which was an income requirement that was based
on national income. Now it's based on state median income, and
we're very pleased to see that the USDA is so responsive to our
needs.
So finally I just want to conclude by really summarizing
what everyone has said that we really feel that without high
quality digital infrastructure, our communities will be unable
to survive and compete in the global economy of the 21st
century. And I really thank you for your leadership in coming
to Arkansas, discussing this, and I applaud you for seeking
additional ways that we can provide all of our citizens a
chance to improve their lives, to learn to prosper and compete
in the 21st century. Thank you.
[The prepared statement of Mr. Mjartan follows:]
Prepared Statement of Dominik Mjartan, Vice President,
Southern Financial Partners
Thank you for allowing me the opportunity to testify about the dire
need for improved digital infrastructure in our rural areas. My name is
Dominik Mjartan, and I serve as Vice President of Southern Financial
Partners, a comprehensive community development organization affiliated
with Southern Bancorp (``Southern''), the largest rural development
bank in America. We operate in several targeted communities, but our
flagship operations are in Phillips County, Arkansas.
With a poverty rate of 30 percent, Phillips County is the poorest
county in Arkansas and exemplifies the problems faced by rural areas
throughout the state. It has suffered significant economic and
population declines over the past several decades, as the agricultural
economy has undergone fundamental changes. Phillips County has
experienced a host of other problems ranging from crumbling
infrastructure to poor educational outcomes that make successfully
competing in the 21st century knowledge-based economy difficult. Access
to high-speed Internet offers a bridge between past challenges and
future success.
However, most rural areas are completely cutoff from the digital
world due to lack of broadband. The result is a digital divide that
further worsens poverty and related issues. The most relevant and
successful Federal program that addresses the need for increased
broadband access in rural areas is the USDA's Community Connect
Broadband program. The Community Connect program has successfully
brought broadband service to communities in other parts of the country,
but so far not a single Arkansas community has received a grant under
Community Connect. While the overall structure of the program has the
potential to benefit the struggling Arkansas communities Southern
serves, these communities face several difficulties accessing the
program:
A key eligibility criterion for the grant is that no
household in the community has access to a broadband service.
This requirement excludes many communities that have only
minimal broadband coverage, or whose coverage only includes
higher-income neighborhoods. This also means that broadband
providers can install a single switch in a community to pre-
empt an attempt by a competitor to bring coverage to an area
with help from the USDA program, leaving the community without
real broadband coverage and unable to access the USDA's
program.
Community Connect awards points based on the economic need
of the targeted rural area in a way that does not fully
acknowledge the extreme income disparities that exist in many
rural communities. The program awards points based on per
capita income, instead of other measures, such as poverty rate
or median income, which better reflect the economic hardship of
the community. A community like Lake View in Phillips County
scores only 15 out of 30 possible points in the ``economic
need'' category, despite having a poverty rate of 45 percent,
an unemployment rate of 30 percent, and a median income of
$15,500. It is worth noting that the USDA has responded to this
challenge and accordingly modified the rules for the upcoming
2008 grant cycle.
For-profit service providers are required to apply for
Community Connect grants, but the grants don't adequately cover
the costs of bringing broadband to many rural communities--
particularly the smallest and most at-risk communities, which
are unable to provide a substantial source of revenue to make
the project sustainable beyond the term of the grant. As a
result, service providers lack the confidence to make long-term
commitments. Extending the grant period beyond 2 years would
improve the cash-flow of these projects.
These proposed changes would go a long way toward leveling the
playing field for Arkansas communities. Overall, more funding is
needed, through this program or other Federal programs, to fulfill the
urgent need to bring broadband services to rural areas.
Senator Pryor. Thank you. Dr. Davis is next. And Dr. Davis,
thank you again for hosting me on your campus earlier this
month. It was great and for you all in the audience, he gave me
a great history lesson on UAPB, and there are some phenomenal
things that have happened there over the years. And some of the
highlights of that history and it is one of the premiere
historically black colleges and universities sites in this
country. So we're certainly proud to have him here today.
STATEMENT OF LAWRENCE A. DAVIS, JR., CHANCELLOR, UNIVERSITY OF
ARKANSAS AT PINE BLUFF
Dr. Davis. Thank you very much, Senator. And I appreciate
the opportunity to be here today. And certainly, I recognize
the distinguished Commissioners for being with us today. I'm
happy to have an opportunity to make comments on what I
consider a great challenge and yet a great opportunity. I'm
Lawrence A. Davis, Jr., I'm the Chancellor at the University of
Arkansas at Pine Bluff. We are the second oldest state-
supported institution of higher education in Arkansas. We are
one of two land-grant institutions. And we are the only state-
supported HBCU. And our business is the production of human
capital, and we've been in that business over 134 years. We
label ourselves as the flagship of the Delta.
Primarily because of our historic mission, providing
opportunities and making a difference in the Delta, not only in
terms of educational services, but economic development, and I
don't want to go into all of that today. But as you're aware,
Arkansas has the dubious distinction of being ranked in the
bottom tiers of several quality education indicators: student
achievement on national examinations, workforce availability,
percentage of college graduates, reduction in the illiteracy
rate, and the list goes on. And in my opinion, part of the
reason that we remain in that position is because we have not
been able to take advantage of broadband technology. Now,
Columbus proved that the world was round, but technology has
made the world flat. You know what we mean by saying that.
Those of us who are not able to step up to the contemporary
levels in technology will continue to occupy the lower echelons
of educational achievement and the associated retarded economic
development.
Now, although Arkansas ranks low in broadband deployment,
it is encouraging to note that visionary leadership has
developed a plan in Arkansas to move us to a more competitive
position, at least, the four-year public institutions. We have
a proposed ARE-ON (Arkansas Research and Education Optical
Network) that will move the four-year public institutions to a
position of equity with other states in terms of research, the
ability to deliver online instruction, and other functions.
Especially will this be a significant achievement for the
University of Arkansas at Pine Bluff. Not only will it locate
us on the frontiers of technology, but also it completes our
multi-million dollar investment of past years in IP technology.
At UAPB a few years ago, ten years or so ago, we made a major
investment, so our security cameras, our PCs, and our
telephones all travel along the same Internet Protocol lines.
And, of course, this will ensure UAPB continues to be one of
the few HBCUs in the Nation; Senator, that we can say does not
have a technology gap. And as you know, that's an issue in
Washington for many of our colleagues.
Also, our university will be able to expand the services
and opportunities for citizens, especially in the Delta, which
is a region, as I pointed out, most challenged in our state in
terms of educational achievements and economic growth. Now
certainly, technology is not a panacea, but it will accelerate
our progress. When you think about what it's going to cost,
reflect on where our Nation would be if we had not invested in
the interstate highway system. Where would we be today? We
wouldn't be able to move from here to there as rapidly as we
currently do. So I think that costs have to be associated with
how much it will cost us if we don't do it. I believe that a
move into broadband technology; Senator, is critical to the
future of our state.
[The prepared statement of Dr. Davis follows:]
Prepared Statement of Lawrence A. Davis, Jr., Chancellor,
University of Arkansas at Pine Bluff
Arkansas has the dubious distinction of being ranked in the bottom
tiers of quality education indicators: student achievement on national
examinations, workforce availability, percentage of college graduates
and reduction of illiteracy rates. Included in this list, which may be
contributing to the previously identified negatives, is the state's
ranking of 47 out of 50 states for broadband deployment.
The world has become flat because of the explosive development of
technology and those who have not achieved contemporary technology
levels will continue to occupy the lower echelons of educational
achievement and the concomitant retarded economic development.
Although Arkansas ranks low in Broadband deployment, it is
encouraging to note that visionary leadership has developed a plan to
move Arkansas to a more competitive position. The proposed ARE-ON
(Arkansas Research and Education Optical Network) will move the four-
year public education institutions to a position of equity with those
in other states. Especially will this be a significant achievement for
the University of Arkansas at Pine Bluff (UAPB). Not only will it
locate us on the frontiers of technology, but also it completes our
multi-million dollar investment of past years in IP technology. UAPB
will be among the few HBCUs not having a technology gap. Also, the
University will be able to expand its services and opportunities for
citizens in the Delta of Arkansas, a region much challenged in the
areas of educational achievement and economic growth. An investment in
ARE-ON is critical to the future prosperity of the state of Arkansas.
Senator Pryor. Thank you. Dr. Smith, I know that the
University of Arkansas years ago made a big commitment to
distance learning.
STATEMENT OF ROBERT V. SMITH, PROVOST,
VICE CHANCELLOR FOR ACADEMIC AFFAIRS,
UNIVERSITY OF ARKANSAS, FAYETTEVILLE
Mr. Smith. Well, thank you, Senator. Good morning to
Senator Pryor and Commissioners Copps and Adelstein. I'm Bob
Smith. I serve as the Provost and Vice Chancellor for Academic
Affairs at the University of Arkansas in Fayetteville. Joining
me today is David Merrifield, who's Chief Technology Officer in
the Department of Computing Services at the University. I hope
David will stand up for one moment. Along with David, Amy Apon
is here. She's a University of Arkansas Professor of Computer
Science and Computer Engineering, and is director of High
Performance Computing at the university. The great English
novelist and playwright, John Galsworthy said, ``If you don't
think about the future, you won't have one.'' And clearly you
won't have one if we don't plan well.
And clearly, there has been a leadership team involving the
University of Arkansas at Fayetteville, the University of
Arkansas Medical Sciences Center that the Senator has so aptly
described, and the University of Arkansas at Little Rock have
gotten together, working with state agencies, most notably the
Arkansas Science and Technology Authority among others, with
private corporations, and with our sister institutions in the
state of Louisiana, and have developed, as Chancellor Davis
noted, the Arkansas Research and Education Optical Network, or
ARE-ON. This serves the advanced computing needs in Arkansas,
and is appropriate for the 21st century, meeting the
educational and economic development needs, particularly in
rural areas of our state. I have provided copies to the
Committee of written testimony, but I want to offer just very
briefly some specific observations and conclusions. And my
colleagues are here to help answer any questions that you have.
In our written testimony, we note that ARE-ON is on
schedule with completion anticipated in late Summer of 2008.
Red Diamond, a 256-processor, parallel super computer funded by
the National Science Foundation has been functional at the
University of Arkansas at Fayetteville for two years, but now
is at capacity. The UALR is in the process of obtaining a
similar parallel processing super computer funded by NSF and
EPSCoR. And NSF has additionally funded the University of
Arkansas at Fayetteville to more than double the size of Red
Diamond by an award of $800,000.
We are now in the process of identifying vendors and
possibly leveraging that award. The plan is to connect the two
sets of parallel processing units when we are all on ARE-ON.
And in October, a group of high-performance computer experts
will visit Arkansas to help with a state-wide plan and to help
us recapture a position among the 500 advanced computing
operations in the world. And we note as the Commissioners and
the Senator have noted, it's always a moving target, and we
tend to move in the reverse sometimes, but we're going to pick
up the pace, and hopefully get back into that position. We do
appreciate this opportunity to offer testimony on contributions
of the state's major institutional partners in advancing
computer technology. We look forward to answering questions
that you may have, and Mr. Merrifield and Dr. Apon are here to
help us with that. Thank you, Senator, and thank you,
Commissioners.
[The joint prepared statement of Mr. Smith, Mr. Merrifield
and Dr. Apon follows:]
Joint Prepared Statement of Robert V. Smith, Provost, Vice Chancellor
for Academic Affairs; David Merrifield, Chief, Technology Officer,
Department of Computing Services; and Amy Apon, Professor, Computer
Science and Computer Engineering, University of Arkansas, Fayetteville
Arkansas Partnership for Advanced Computing
The University of Arkansas (UA), Fayetteville, the University of
Arkansas at Little Rock (UALR), and the University of Arkansas for
Medical Sciences (UAMS) are partnering with state industrial affiliates
currently including representatives from Acxiom and Accelerate
Arkansas, and state government representatives currently including the
Arkansas Science and Technology Authority and the Arkansas Department
of Information Systems, to leverage the Arkansas Research and Education
Optical Network (ARE-ON) in a vision and plan to execute that vision
for the state of Arkansas in high-performance computing for research,
education, and business infrastructure. We believe that the
availability of high-performance computing infrastructure will be
essential to the economic development of any state in the 21st century.
High-performance and advanced computing capabilities and technology for
the understanding and solution of complex problems in science,
engineering, and industry are critical to scientific leadership and
economic competitiveness in the state of Arkansas. This is in keeping
with the findings of the report from the President's Information
Technology Advisory Committee (PITAC) (http://www.nitrd.gov/pitac/
reports/20050609_computational/computational.pdf).
The debut of the Arkansas Research and Education Optical Network
(ARE-ON) is a clear indicator that the state of Arkansas is taking a
fresh and energetic approach to high performance computing for
educational benefit and economic development. ARE-ON came online to the
University of Arkansas, Fayetteville, in December 2006, and has already
been instrumental in UAF participation in a collaborative course with
Louisiana State University (LSU) this past spring. This is one example
of one type of educational activity that ARE-ON will support. ARE-ON
represents a statewide initiative that already puts Arkansas ahead of
some other states.
Just as ARE-ON is a statewide effort for connectivity, the Arkansas
Partnership for Advanced Computing recognizes that there needs to be a
complementary statewide effort to support computational infrastructure.
Three additional indicators show that the timing and support are right
for such an effort:
1. This growing partnership between UA, Fayetteville, UALR, and
UAMS and several statewide industrial and government partners
provide a solid foundation for a state vision for high
performance computing.
2. Legislative support of the Arkansas Science and Technology
Authority (ASTA) may provide funding potential that is an
opportunity to gain seed funding for an initiative.
3. Funding from the National Science Foundation (NSF) provided
for the purchase and deployment of the first supercomputer in
Arkansas, Red Diamond, on the UA, Fayetteville, campus, in
February 2005. Additional funding from the National Science
Foundation and EPSCoR in 2006 to UALR and from the NSF in 2007
to UA, Fayetteville, is enabling the significant expansion of
high-performance computing infrastructure. With coordination
between the researchers on both campuses it will be possible to
double the size of Red Diamond at UA, Fayetteville, and to
establish a complementary cluster at UALR. ARE-ON will provide
the link to connect the supercomputing facilities as a
nationally-competitive high-performance computing grid that is
accessible to researchers across the state.
Fundamentally, this initiative for high-performance and advanced
computing is about quality, quantity, and the diversity of an emerging
workforce. The workforce includes:
The current student body.
Importing of new workers who are attracted to our state
because of technology opportunities and jobs, and
The reinvention of older workers who can be trained in new
technologies.
There are several statewide goals:
Increase the college graduation and retention rate.
Increase the high school graduation rate.
Attract new industry.
Enhance existing industry, and
Catalyze startup companies and invention
To achieve these goals requires a statewide commitment to
modernization and technology--a move to the 21st century. With these
indicators and goals, a plan has been made that is economically sound
that will move rapidly toward the goals, with modest risk. The plan
will reach the goals with minimum cost, with the maximum likelihood of
success, and will mix external expertise with internal experts and
leaders in the state. This is a three-pronged attack:
1. With support from UAF, UALR, ASTA, and the National Science
Foundation, we have formulated a high performance computing
External Advisory Committee (EAC) to look at the requirements
and needs of the state. This external experience base will make
recommendations, and provide guidelines and milestones. Dr.
Thomas Sterling, Professor, LSU has provided some initial
guidance on our current status and has recommended that this is
the fastest way to get the high-quality insight necessary to
leap-frog our current position. Dr. Dan Reed, director of the
Renaissance Computing Institute in North Carolina, Chancellor's
Eminent Professor and member of the PITAC committee, has agreed
to be the Chair of the EAC.
The external advisory committee will visit Arkansas over a 3-
day period in October. They will conduct a series of brief
interviews with stakeholders in the state, spending a day each
in Little Rock and Fayetteville. The deliverable of the EAC is
a strategic plan that describes the scope and a roadmap for
developing high performance computing infrastructure in the
state of Arkansas.
2. We have implemented a standing Internal Review Committee
composed of experts within the state of Arkansas. This
committee consists of approximately two dozen participants from
the state of Arkansas, and an additional one, two, or three
external participants. The Internal Review committee will
refine the statement of goals that the External committee has
developed. This committee will be an interface to the academic
community, K-12, and industry.
3. We will be in partnership with the state legislature, the
Governor, and key leaders across the state to develop a
sustainable funding model.
Industrial partners from Acxiom and Accelerate Arkansas have been
participating in this discussion for over a year. One thing that will
help to drive this effort is the identification of one or more ``Killer
Applications'' (ones that grab the attention of funding agencies) that
ARE-ON and the computational infrastructure can facilitate, and these
may originate from industry, agriculture, or academics. For example, in
Louisiana, ``Killer Applications'' include: (1) modeling of storm surge
to avoid damage and save lives during hurricanes and other storms, (2)
modeling of depleted oil wells and seismology studies that can help to
avoid wild cat digging that wastes millions of dollars and harms the
environment, (3) modeling of the preservation and ecological changes to
wetlands, and (4) education as a first-class application, to improve
the competitiveness of Louisiana as a state.
High performance computing must be a synergy of education,
industry, and research and is a requirement for ensuring that all
Arkansans can fully participate in the digital world.
Senator Pryor. Thank you. Ms. Bailey?
STATEMENT OF CLAIRE BAILEY, DIRECTOR, DEPARTMENT OF INFORMATION
SYSTEMS, STATE OF ARKANSAS
Ms. Bailey. Good morning. I am Claire Bailey. I am your
Director of the Department of Information Systems for the State
of Arkansas. I apologize for my voice this morning. I lost it
somewhere between my flight home from Minneapolis at a
telecommunications conference to Little Rock. I got in about
midnight, but I am very excited to be here today and to have
the opportunity to address you and my colleagues. I wanted to
open by describing our state network in place today, and I've
provided a couple of graphical representations.
The State of Arkansas Department of Information Services
brokers and manages the public sector network. We have one
state network for state agency boards and commissions. We also
provide our public school network, and we partner with our
groups in higher education as well. The second map represents
our digital radio system that we are very happy about and
appreciate the support of Senator Pryor and the FCC and other
state partners. The Arkansas Wireless Information Network is
our public safety network. I wanted to start back and talk a
little bit about what we do at the department. We manage a
wired network that includes over 1,900 edge points and we work
very closely with our public and private sector partners. The
integration of these networks also is how we provide our
Internet access. And if we step back in time, in 1994, just a
few years ago, we were so excited. Our Internet capacity for
the state network was nine megs. There is an industry trend on
networks that Internet capacity doubles about every 18 months.
Today, we are slightly behind that average. We have doubled
every 19 months. And we stand at 990 MB capacity today. In just
a little over a month at the University of Arkansas at Pine
Bluff, we will take our network, Internet Point of Presence to
over one gig. And we are very excited about that.
Our statewide video network provides and supports distance
education, e-learning. We have over 520 systems in our
educational network. And we average over 19,000 conference
hours a month, which means that we provide that type of
learning and opportunity for 92 subjects with over 500 courses.
That snapshot of what we have today in many ways showcases that
the state has become what we define as the anchor tenant in our
communities. As public services that we deliver continue to
drive our network capacity needs, as an anchor tenant, the
funding provides or can provide an economic incentive for our
private sector partners to be able to continually improve their
infrastructure in support of the public sector needs.
There are partnerships with private sector. Our city, our
counties, our state and Federal groups, we all share a common
goal. Everyone in this room has a united vision to continue to
advance the technology environment to be able to provide for
our most precious people, our children, and we thankfully have
some to address us today, the ability to access the best and
newest learning tools and the current technology to be able to
maximize it. Everyone in this room also has the ability to
impact societal change in our Arkansas. Whether you live in the
northwest region of our state or our Delta, your ability to
have access to the services, the research, and the jobs of
tomorrow, we want to ensure that no Arkansan is left behind.
As I close, I wanted to leave you with a quote from our
Governor's State of the State Address from this past January:
``When people look to Arkansas, they should see a leader in the
Nation, in the world, and say: We want to do what they did in
Arkansas.'' And through the collaborative efforts of everyone
in this room, we are champions to help Arkansas in every way we
can. Thank you for this wonderful opportunity to address you
today, and I look forward to any questions you may have.
[The prepared statement of Ms. Bailey follows:]
Prepared Statement of Claire Bailey, Director,
Department of Information Systems, State of Arkansas
Thank you so for the opportunity to address you at this U.S. Senate
Commerce Committee field hearing. It is truly an honor to be a part of
this event.
I would like to open by describing our state network in place
today. We have provided a hand-out which showcases our wired and
wireless sites for the state of Arkansas Public Sector Network. We at
DIS provide management and systems integration of these networks which
includes 1,900 `edge' devices of the Arkansas Public Sector Network.
To showcase our history of state access, our state Internet
capacity in 1994 was nine (9) megabits per second. The industry
standard for doubling Internet capacity is that it is doubled every
eighteen (18) months. In Arkansas on our Public Sector Network, we are
slightly behind this standard. We double every nineteen (19) months,
and we stand at 990 megabits per second soon to be just over one (1)
gigabit per second of capacity with our latest implementation at our
Internet Point of Presence (POP) at our shared services location at the
University of Arkansas at Pine Bluff.
Our statewide video network supports approximately 520 systems in
our education environment and averages over 19,000 conference hours a
month with over 92 subjects and over 500 courses.
That is a snapshot of what we have today. In many ways the state
becomes the `anchor tenant' in a community. The demand for public
services our state delivers continues to drive network capacity needs.
As an anchor tenant for communities, the funding the state provides
impacts the economic incentives for our private sector partners to be
able to continually improve their infrastructure in support of our
state's needs.
Through our partnerships with the private sector, city, county,
state and Federal groups, we all share a common goal--a united vision--
to continue to advance the technology environment to be able to provide
our most precious people--our children--the ability to access the best
and newest learning tools and the technology to maximize it.
Everyone in this room has the ability to impact true societal
change in Arkansas. Whether you live in the Northwest region of our
state or our Delta, your ability to have access to public services--the
research--the jobs of tomorrow--we want to ensure no Arkansan is left
behind.
As I close, I wanted to leave you with a quote from our Governor's
State of the State address from this past January: ``When people look
to Arkansas--they should see a leader in the nation--in the world and
say, `We want to do what they did in Arkansas.' ''
Through collaborative efforts of everyone in this room, we are
championed to help Arkansas in every way we can.
Thank you for this wonderful opportunity to speak this morning and
for being here to hear our state's vision for tomorrow.
Senator Pryor. Thank you. Now, John, before I introduce
you, I need to say that during the last legislative session,
the Arkansas legislature enacted Act 602 legislation to create
and operate a Connect Arkansas, nonprofit organization. The
bill was sponsored by Senator John Paul Capps of Searcy. The
bill created a public/private partnership aimed at increasing
the broadband coverage for health, industry, education, and
general economic development, and John Paul Capps is here
today. Thank you for doing that, John Paul. Mr. Ahlen?
STATEMENT OF JOHN W. AHLEN, PRESIDENT,
ARKANSAS SCIENCE AND TECHNOLOGY AUTHORITY
Mr. Ahlen. Thank you, Senator, Commissioners. My name is
John Ahlen. I'm president of the Arkansas Science and
Technology Authority, an instrumentality of the State of
Arkansas that has the mission of bringing the benefits of
science and advanced technology to the people of the state of
Arkansas. We know a lot about what the problems are.
We know that in a world where markets are dynamic, global,
and networked, locations without affordable broadband are
disconnected and at an economic disadvantage. We know this is
especially true in an information age, knowledge-based economy.
Locations that do not have affordable knowledge-carrying
infrastructure are both at a disadvantage informationally and
again economically where talent and innovations are the driving
influences. I appreciate your interest and leadership in
addressing the issue of affordable broadband deployment in
rural places and would suggest the following, and you're very
much aware of these things.
Use a robust definition of broadband to accommodate future
applications. Develop a better mapping tool to measure and
guide broadband deployment decisions. We know what worked in
the past, and we might consider broadband deployment incentives
for service providers, such as grants and investment tax
credits, universal service fund models that we used for
telephone deployment, the co-op model that was used for the
deployment of electric power, and federal/state cost sharing,
which is the model used in transportation infrastructure
deployment.
And lastly, I hope you'll take action now. The future of
rural communities depends on it. The state can do some things
for itself, and Connect Arkansas, which my two colleagues who
follow will talk about, will be very helpful in providing
broadband to business and industry to entrepreneurial
businesses, and in enabling people at work, at home, and on the
go to access all manner of digital resources wherever and
whenever they need. But we need your help to make that
possible. Thank you.
[The prepared statement of Mr. Ahlen follows:]
Prepared Statement of John W. Ahlen, President,
Arkansas Science and Technology Authority
Good morning Senator Pryor and Commissioners, my name is John W.
Ahlen. I am president of the Arkansas Science & Technology Authority,
an instrumentality of the state of Arkansas whose mission is to bring
the benefits of science and advanced technology to the people and the
state of Arkansas.
We know that in a world where markets are dynamic, global, and
networked, locations without affordable broadband are disconnected and
at an economic disadvantage.
We know this is especially important in an information-age
knowledge-based economy; locations that do not have affordable
knowledge-carrying infrastructure are at both an informational
disadvantage and an economic disadvantage where talent and innovations
from research and development are driving influences.
I appreciate your interest and leadership in addressing the issue
of affordable broadband deployment in rural places, and would suggest
the following:
Use a robust definition of broadband to accommodate future
applications and
Develop a better mapping tool to measure and guide broadband
deployment decisions.
We know what has worked in the past. Consider broadband deployment
incentives service providers such as:
grants and investment tax credits,
the universal service fund model that was used for telephone
deployment,
the co-op model that was used for electric power deployment,
and
the Federal-state cost sharing model that is used in
transportation infrastructure deployment.
Lastly, I hope you'll take action now, the future of rural
communities depends on it. The state can do some things for itself--
like Connect Arkansas--but we also need your help.
* * * * * * *
Affordable broadband access is an economic development issue, which
can be addressed along four dimensions: broadband deployment,
technology, the urban-rural split, and time.
Broadband Deployment. What is it? It is information-carrying
capacity (measured in bits per second), and the demand for capacity by
applications keeps going up. Definitions of broadband include 256
kilobits per second (OECD) and 384 kilobits per second (Connect
Arkansas), with experimental capacity in research domains exceeding
gigabits per second. Other countries and some states are concluding
that broadband capacity delivered by fiber to the home should be the
minimum. Recommendation: use a robust definition of broadband.
Where is it? Broadband availability is typically shown by postal
zip codes, which is not a very informative way to discriminate between
locations that do or do not have access. The EAST students today will
show a much more useful way to map broadband availability and inform
deployment decisions. Recommendation: develop a better mapping tool to
measure and guide broadband deployment.
Technologies. Broadband technologies vary and their deployment is
influenced by competing business models and regulatory structures. As
more content is digitized--and digitization is the key technology
driver in the new economy--any of the competing technologies can
provide content previously considered the proprietary domain of other
competitors, leading to a kind of regulatory convolution, if not
gridlock. The market success of all of the business models is measured
in terms of the return on the deployment investment, which is much more
favorable in areas where the customers are densely packed. If equal
broadband access is the American goal, then market forces have failed
to deliver, just look at broadband deployment in the Mississippi River
Delta. Recommendations: consider incentives for service providers that
address areas without affordable broadband; base incentives on
independently compiled deployment data; and use more refined mapping
tools.
Urban-rural. The least favorable locations for broadband deployment
are rural, where customers are few and separated by long distances and
where deployment cannot be justified by the return on investment. With
markets dynamic, global, and networked, locations without affordable
broadband are disconnected and at an economic disadvantage. State
government provides broadband for education, health care, and other
government services--often supported by Federal grants--but broadband
deployment is about economic growth, so it is about business and
industry; entrepreneurship services; and enabling people at work, at
home, and on the go to access all manner of digital resources wherever
and whenever they need. If we were talking today about electric power
instead of broadband, we would be saying that students can have lights
at school, but have to read in the dark at home. Recommendation:
consider broadband deployment incentives such as grants and investment
tax credits, the universal service fund model for telephone deployment,
the cooperative model for electricity deployment--including Federal
subsidy, and the Federal-state cost sharing model used in
transportation infrastructure deployment.
Time. The clock is ticking for rural Arkansas and rural America.
According to a report by the Organization for Economic Co-operation and
Development, the United States has the largest number of total
broadband subscribers in the OECD, but on the basis of broadband
subscribers per 100 inhabitants, the U.S. ranks 15th in the OECD at
19.6. A report today indicates that China will have ``the world's
largest Internet population in just 2 years.'' Recommendation: Take
action now, the future of rural communities depends on it.
Senator Pryor. Thank you very much.
Mr. Winningham. Senator, if we possibly could, could we let
Mr. Walls go first?
Senator Pryor. Sure. That'd be great. That'd be great.
Mr. Winningham. That'd be great. That'd be great.
STATEMENT OF C. SAM WALLS, CEO,
ARKANSAS CAPITAL CORPORATION
Mr. Walls. Thank you, Senator. I'm Sam Walls, and I'm the
Chief Executive Officer of the Arkansas Capital Corporation.
We're a 50-year-old private, nonprofit business development
corporation that was named in the Connect Arkansas legislation
to be the entity to form the Connect Arkansas nonprofit
organization. To my left is James Winningham. He is the
Chairman of the Arkansas Broadband Initiative. And collectively
with Dr. Ahlen, we're here representing Connect Arkansas.
Connect Arkansas is a private and public sector
collaborative effort to bring broadband Internet access to all
Arkansans. We're going to focus on three key activities. The
first activity will be to accurately map where connectivity
truly exists in Arkansas and at what speeds. This will require
working with numerous entities, primarily the service providers
that operate here in Arkansas. Because Connect Arkansas is
designed to encourage collaboration, it will work with
providers on getting the relevant information to accomplish
this task. The second activity of the effort will be to survey
communities throughout the state to better determine either why
they choose to use broadband or conversely, why they have
chosen not to. And this complements the third activity of the
effort--working with leadership in every county of Arkansas to
develop a strategy to educate the populace on the value and
need for broadband in their personal and professional lives.
This preparing of people and organizations to take advantage of
the benefits of broadband is perhaps the most important part of
our effort. Without preparation, broadband is in danger of
being a very powerful economic and social tool, but without
people and businesses with the necessary skills and insight to
take advantage of it and ultimately without enough demand to
sustain it. Connect Arkansas is a delivery platform-neutral
entity.
And by that I mean that it will not seek to advocate for
one broadband Internet delivery system over another. Its only
focus is to drive market demand in the belief that once a
market can be demonstrated, the private sector will step in to
meet that demand. Connect Arkansas' success will in large part
be driven by the ability of the private and public sector to
work together to accomplish this vital task. There is no
question in my mind, however, that creating statewide broadband
connectivity is the single most important activity that we can
be involved in. At the Federal level, there is a need for our
leaders to elevate this issue as a top priority.
Unfortunate recent events in Minnesota have drawn the
Nation's attention once again to the deteriorating
infrastructure of the United States and for good cause. The
inadequacy of our technology infrastructure, however, should be
of equal concern. Just as the Federal Government provided
incentives and capital to pave and light rural America in the
last century, ultimately it will most likely take delivery
mechanism-neutral incentives to extend broadband Internet
access to those same areas.
To conclude, it is time for everyone to publicly
acknowledge that high-speed broadband Internet access is not a
luxury but a basic necessity. As a nation, lack of broadband
puts us at an unacceptable competitive disadvantage. The United
States relies a great deal on the innovation and creativity of
its populace to maintain our dominant strategic and economic
position in the global community. We jeopardize that position
by allowing other countries to move further and further ahead
of us in the availability and usage of broadband. At the state
level, rural states like Arkansas will never be able to
effectively develop and improve without access to this
indispensable utility. For many, the education, health, and
social benefits that can be derived from broadband access is
their only chance to better their lives and the lives of their
children. Thank you.
[The prepared statement of Mr. Walls follows:]
Prepared Statement of C. Sam Walls, CEO, Arkansas Capital Corporation
Good Morning. My name is Sam Walls, Chief Executive Officer of
Arkansas Capital Corporation. With me is Mr. James Winningham, Chairman
of the Arkansas Broadband Initiative, and Dr. John Ahlen, President of
the Arkansas Science and Technology Authority. We are here today
representing Connect Arkansas, a private and public sector
collaborative effort to bring broadband Internet access to all
Arkansans.
Connect Arkansas is based on principals derived from models in
other parts of the country that faced similar obstacles that we here in
Arkansas are dealing with. Connect Arkansas will focus on three key
activities. The first activity will be to accurately map where
connectivity truly exists in Arkansas and at what speeds. This will
require working with numerous entities, primarily the service providers
that operate here in Arkansas. Because Connect Arkansas is designed to
encourage collaboration, it will work with the providers on getting the
relevant information to accomplish this task.
The second activity of the effort will be to survey communities
throughout the state to better determine either why they choose to use
broadband or conversely why they have chosen not to. This compliments
the third activity of the effort, working with leadership in every
county of Arkansas to develop a strategy to educate the populace on the
value and need for broadband in their personal and professional lives.
This preparing of people and organizations to take advantage of the
benefits of broadband is perhaps the most important part of our effort.
Without preparation, broadband is in danger of being a very powerful
economic and social tool, but without people and businesses with the
necessary skills and insight to take advantage of it, and ultimately
without enough demand to sustain it. Our goal is not just to move
Arkansas forward, but to also to move all of its people forward with
it.
Connect Arkansas is a ``delivery platform neutral'' entity. By that
I mean that it will not seek to advocate for one broadband Internet
delivery system over another. Its only focus is to drive market demand
in the belief that once a market can be demonstrated, the private
sector will step in to meet that demand. Connect Arkansas's success
will in large part be driven by the ability of the private and public
sector to work together to accomplish this vital task.
Arkansas Capital Corporation has been involved in economic
development in Arkansas for 50 years, the last 18 of which I have been
with the organization. Today, we are involved in a number of activities
related to improving the economic environment of Arkansas including
Access to Capital, Business Development, and Education. There is no
question in my mind, however, that creating statewide broadband
connectivity is the single most important activity that I and my
organization have been involved with.
After World War II, Federal and state leaders realized that for
rural states like Arkansas to prosper, they must have good roads and
access to reliable and affordable electricity. Later, phone lines were
considered a requirement. For this century, broadband Internet access
is the absolute necessity without which these people, who are already
more often than not at a disadvantage, are left further and further
behind. It is literally this era's ``interstate highway system''. Look
at the various obstacles that many rural states face, inadequate
healthcare, below standard educational opportunities, and lack of
business development. As the states try to address these issues the
solutions invariably involve broadband Internet access.
At the Federal level, there is a need for our leaders to elevate
this issue as a top priority. Unfortunate recent events in Minnesota
have drawn the Nation's attention once again to the deteriorating
``infrastructure'' of the United States and for good cause. The
inadequacy of our technology infrastructure, however, should be of
equal concern. Just as the Federal Government provided incentives and
capital to pave and light rural America in the last century, ultimately
it will most likely take ``delivery mechanism neutral'' incentives to
ultimately extend broadband Internet access to those same areas.
To conclude, it is time for everyone to publicly acknowledge that
high-speed broadband Internet access is not a luxury but a basic
necessity. As a nation, lack of broadband puts us at an unacceptable
competitive disadvantage. The United States relies a great deal on the
innovation and creativity of its populace to maintain our dominant
strategic and economic position in the global community. We jeopardize
that position by allowing other countries to move further and further
ahead of us in the availability and usage of broadband. At the state
level, rural states like Arkansas will never be able to effectively
develop and improve without access to this indispensable utility. For
many, the education, health and social benefits that can be derived
from broadband access is their only chance to better their lives and
the lives of their children.
Thank you for your time.
Senator Pryor. Thank you. Mr. Winningham?
STATEMENT OF JAMES WINNINGHAM, ORGANIZING CHAIR, ARKANSAS
BROADBAND INITIATIVE (ABI)
Mr. Winningham. Senator, Commissioners--good morning.
Senator, thank you for your flexibility. Thank you for your
leadership in bringing this subject to Arkansas. My name is
James Winningham. I am the Organizing Chair of the Arkansas
Broadband Initiative, a group of educators, government people,
and industry to promote broadband in Arkansas. ABI is the group
which worked with Senator John Paul Capps to draft this year's
Connect Arkansas Act. Why is Connect Arkansas so important to
our state? This year in his State of the State Address,
Governor Beebe said that ``in today's world, just learning to
type on the keyboard won't suffice. Our kids deserve broadband
infrastructure that connects them to the Internet and provides
technology equity.'' It never has been about the keyboard, of
course. That's just part of the computer. And the computer age
has never really been about the computer.
The computer age has always been about the data, the
information. Data is information. And information is power. And
broadband is information on steroids.
[Laughter.]
Mr. Winningham. Broadband is the power for a U.S. Senator
in Washington to coordinate a meeting in his home state in a
fraction of the time it would take with dial-up data service.
Broadband is the power for a student to find a thousand related
articles for a homework assignment in a fraction of the time it
would take to find even one article in the school library,
unless that school library has broadband. A student with
broadband at home has several hours of broadband to research in
any given day, whereas a student that only has library
broadband may have one hour if it's the right day of the week
and if that student can get one of the computers.
Broadband is the power for that student's mom to find that
student two pairs of jeans she can afford instead of one pair
she can't afford. And she can find those two pairs in a
fraction of the time it takes to find that one. Broadband is
the power for that single mom who can't leave her child to take
night classes. Broadband is the power for that school to offer
night classes, midnight classes to a thousand such moms across
the country instead of offering 7 p.m. to 9 p.m. classes to
five or six moms who live within 20 miles. Broadband could be
the power of that child to stay here in Arkansas with his
broader family instead of having to be exported somewhere else
where there are jobs that are commensurate with their
abilities. Broadband is the power for a small business in rural
Arkansas to offer its products to people all across the United
States and across the oceans instead of offering them to only
the 1,500 residents in their town. I suggest to you that
Governor Beebe's words are not only true for Arkansas, but
they're also true for every child in the United States.
And that true technology equity is not had, as long as
there is another nation with better broadband than the United
States--that's why Connect Arkansas is so important to
Arkansas, because we have moms, we have children, we have small
businesses. We need a Federal economic environment that is
broadband-friendly, because we need technology equity for our
children, for our state, and for our Nation. Thank you for your
time and attention.
[The prepared statement of Mr. Winningham follows:]
Prepared Statement of James Winningham, Organizing Chair,
Arkansas Broadband Initiative (ABI)
Mr. Chairman and Members of the Committee, good morning.
My name is James Winningham. I am the Organizing Chair of the
Arkansas Broadband Initiative (ABI). ABI is the group which worked with
Senator John Paul Capps to draft this year's Connect Arkansas Act.
Why is Connect Arkansas so important to our state? This year in his
State of the State address, Governor Beebe said that ``in today's
world, just learning to type on the keyboard won't suffice. Our kids
deserve broadband infrastructure that connects them to the Internet and
provides technology equity.''
You see, it has never been about the keyboard. That's just part of
the computer, and the computer age has never been about the computer.
It has always been about the data.
Data is information, and information is power, and broadband is
information on steroids. Broadband is the power for a U.S. Senator in
Washington to coordinate a meeting back in his home state in a fraction
of the time it would take with dial-up data service.
Broadband is the power for a student to find a thousand related
articles for a homework assignment in a fraction of the time it would
take to find even one article in the school library . . . unless that
school library has broadband.
A student with broadband at home has several hours of broadband
research time in a day, whereas a student that only has library
broadband may have 1 hour, if it is the right day of the week.
Broadband is the power for that student's mom to find that student
two pairs of jeans she can afford, instead of one pair she can't
afford, and in a fraction of the time it takes to find the one.
Broadband is the power for that single mom who can't leave her
child to take night classes.
Broadband is the power for that school to offer night classes . . .
midnight classes . . . to a thousand such moms across the country,
instead of offering 7 p.m. to 9 p.m. classes to five or six moms who
live within 20 miles.
Broadband is the power for a small business in rural Arkansas to
offer its products to people all across the United States and across
the oceans instead of offering them only to the 1,500 residents of
their town.
I suggest to you that Governor Beebe's words are not only true for
Arkansas, but also true for every child in the United States, and that
true technology equity is not had as long as there is another nation
with better broadband than the United States.
That's why Connect Arkansas is so important to Arkansas, because we
have moms, and children, and small businesses. We need a Federal
economic environment that is broadband-friendly, because we need
technology equity for our children, for our state, and for our Nation.
Thank you for your time and attention.
Commissioner Copps. Can I ask a quick question?
Mr. Winningham. Yes, please do.
Commissioner Copps. Have you advanced to the point with
Connect Arkansas that you have some time frames in mind for
getting the mapping data and just who has what, at what speed,
and all?
Mr. Winningham. Commissioner, we really have done our
planning, essentially based on--well, really on two things.
ConnectKentucky is one model that we've looked at. And another
model is one that has been used in California and a couple of
places, but this is a very new effort. We do have a draft plan
in place, but we really haven't finalized plans at this point.
Mr. Walls. That's correct. We have, as James said, a
preliminary business plan that's been completed and which the
governor's advisory board has been appointed. And we are in the
process of electing our board of directors for the effort. The
mapping would be the first step that follows this.
Commissioner Copps. I would just like to stress the
importance. You will be collecting data, I guess, from a lot of
providers. Sometimes that's a challenge to do that, but I get
the impression in this state that folks are used to working
together. And I hope that that will happen here, because it
really is vital that you get a better handle on deployment than
we've been able to get so far at the FCC.
Mr. Walls. Commissioner, that's written into Act 604.
That's one of the provisions for Connect Arkansas is to set
forth a process for broadband providers to report that. We also
have another ace in the hole that you'll hear about later from
our EAST students.
Commissioner Copps. Thank you.
Senator Pryor. Thank you. Next, we have Matt Dozier, and he
has some students with him, and, if possible, the students can
come forward and go ahead and get set up while I introduce
them. This is The EAST Initiative. These students are from
Ashdown, Mineral Springs, and Saratoga High Schools. EAST is an
educational initiative that allows students to tackle real
problems facing their communities. These students are involved
in the EAST Rural Broadband Project in a collaborative effort
between The EAST Initiative and the Arkansas Science and
Technology Authority that is engaging students and communities
in the ArkLaTex where you--for you all who are uninitiated,
that's Southwest Arkansas and Delta region--that's east
Arkansas--to address issues related to entrepreneurial
development, broadband, high-speed Internet in rural areas of
the state. With Tricia Tart and Lila Sivley from Ashdown High
School, Michelle Neal from Mineral Springs, and Andrew Mays
from Saratoga.
Mr. Mays. I'm from Mineral Springs. She's from Saratoga.
Senator Pryor. I'm sorry. Matt, why don't I introduce you,
and you can take over here.
STATEMENT OF MATT DOZIER, PRESIDENT AND CEO,
THE EAST INITIATIVE, INC.
Mr. Dozier. Thank you so much, Senator, Commissioners. Good
morning, and we are so excited about the opportunity to speak
with you today. My name is Matt Dozier, and I head an
educational nonprofit group that delivers training and support
on an educational program that has been named a national model
by the Federal departments of Education and Labor. This program
is called EAST, and it was started here in Arkansas in 1996 and
has since grown to schools across the country. In a nutshell,
EAST is an educational program that addresses 21st century
educational needs by combining local service projects and high-
end technology with a student-centered approach that allows our
students to take responsibility for their own learning and
their projects in a very real world fashion.
Last year, we were approached by the Arkansas Science and
Technology Authority (ASTA) about using EAST students to
develop and deploy a project looking at broadband access in
rural Arkansas. With funding from ASTA and the Winthrop
Rockefeller Foundation, we recruited student teams from ten
schools in two of the southern regions of our state to
participate in this project. And I am pleased to have
representatives from this regional working group here today.
They are eager to explain the things that they have done, and
how they have made a difference in their communities. Andrew--
Michelle.
[The joint prepared statement of Mr. Dozier, Ms. Neal, Mr.
Mays, Ms. Sivley and Ms. Tart follow:]
Joint Prepared Statement of Matt Dozier, President and CEO, The EAST
Initiative, Inc., Michelle Neal, Student, Saragtoga High School, Andrew
Mays, Student, Mineral Springs High School, Lila Sivley, Student,
Ashdown High School, Trisha Tart, Freshman, The University of Arkansas
Matt Dozier
Good morning and thank you for the opportunity to speak today. My
name is Matt Dozier and I head an educational non-profit group that
delivers training and support on an educational program that has been
named a national model by the Federal Departments of Education and
Labor. This program is called EAST and it was started here in Arkansas
in 1996 and has since grown to schools across the country. In a
nutshell EAST is an educational program that addresses 21st century
educational needs by combining local service projects and high-end
technology with a student-centered approach that allows our students to
take responsibility for their own learning and their projects in a very
real world fashion.
Last year we were approached by the Arkansas Science and Technology
Authority about using EAST students to develop and deploy a project
looking at Broadband access in rural Arkansas. With funding from ASTA
and the Winthrop Rockefeller Foundation we recruited student teams from
10 schools in two of the southern regions of our state to participate
in this project and I am pleased to have representatives from this
regional working group here today. They are eager to explain the things
that they have done and how they have made a difference in their
communities.
Andrew Mays
Hello! My name is Andrew Mays of Mineral Springs High School, where
I am currently a sophomore in my 6th semester of EAST which stands for
Environmental and Spatial Technology.
This past year, as one of my EAST projects, I represented the
Mineral Springs School District, in collaboration with students from 9
other schools in 6 different counties, to gather information about the
usage of Broadband throughout the state of Arkansas. In the beginning
phase of the project, we decided to change the phrasing in order make
the survey more comprehensible to the general public. Broadband was
such a new and foreign concept, that many households in our area were
unfamiliar with the terminology originally used in the surveys. After
we finished rewriting the surveys, we distributed them to students and
businesses in our designated areas, eventually gathering 2,500 usable
surveys from the counties of Howard, Little River, Ashley, Bradley,
Drew and Lincoln. The survey's questions ranged from as simple as, ``Do
you own a computer?'' to as difficult as, ``Is DSL available in your
area?'' Upon receiving the returned information, we began diligently
downloading the results into our own schools databases. Then students
from each of the counties met in Monticello and compiled their area's
information, along with ours, into one database. While in Monticello,
we were assisted by professors of both the University of Arkansas at
Monticello and the University of Hope. With their help we created a map
using ESRI mapping software. This map is currently on display before
many today. In working on this project, we the EAST students of South
Arkansas have realized the need for the expansion of broadband
availability to all of our state's citizens, not only for educational
purposes, but also for economic growth, and the advancement of our
state into technology of the 21st century. I thank you for your time.
Michelle Neal
Hi, my name is Michelle Neal and I am a junior at Saratoga High
School. I started working on the Rural Broadband Project with the EAST
Initiative organization in the 2006 school year. We went and handed out
surveys to our local businesses and people in our community. Basically
we wanted to get a picture of who had broadband and who wanted it but
couldn't get it. Broadband is important simply because of the fact of
education. Future college students could go online and take classes if
they had access to the Internet. E-mail is also an important source of
communication in today's society. Broadband would be beneficial to
parents also because most parents don't realize that you can go online
and check their child's grades, test scores, and progress of what
they're doing in school; and most parents don't know this because they
can not get Internet in their area. Our research shows that most people
don't even have a computer and we believe this could be because of the
broadband issue.
Lila Sivley
Hey everyone! I'm Lila Sivley. I'm with the Ashdown High School
EAST lab. EAST is Environmental and Spatial Technology. I've been a
part of EAST since August 2006 and have been on the EAST Broadband
Project since January 2007. It's a huge priority to us and our class
plans to see the finish of this project. When I was asked to come here
Ms. Glaze said that you were looking for personal testimony.
Every morning when I get ready I use hairspray! Well how much does
one use? I would have to start getting ready 2 hours earlier if I
wanted to get on the Internet and check the weather since I have dial-
up. Dial-up Internet is so incredibly slow and I would mimic the noise,
but it's extremely embarrassing.
Right now Arkansas is in a box, we have our limits. It is time for
rural Arkansas to get out of that box. Broadband is not a convenience,
but a source of technology that will move us forward with the rest of
the world.
I'm also a senior in high school and I take several classes that
are concurrent with college. It's almost impossible to check online
grades and rankings at home. Even at school, where time is limited, the
Internet isn't much faster.
Thank you for letting us come and speak to you today.
Trisha Tart
I am Trisha Tart a freshman at the University of Arkansas. I
graduated from Ashdown High School in May of 2007 where I had been
working on this project for almost 2 years. I am proud to be one of the
founding members of Ashdown EAST's Rural Broadband team. It is so hard
to describe to outsiders dial-up in the rural community. It was really
only after I had arrived at college and experienced the campus high-
speed network that I myself completely understood what I had been
missing and how hard it was to access information back home.
In this project, we conducted surveys and had a lot of fun helping
to educate people about having broadband. Often, they don't know what
broadband really is or the effects it can have on them. What I think is
really important for you to know, is that everyone here realizes that
people in rural Arkansas need this. It is really important. What we
need to do is make it available in the rural areas because that is the
only way we are going to advance. These kids are going to college and
all the scholarships and applications online are impossible unless you
do them at school . . . and our school Internet isn't even that fast
and it's difficult to get on a computer but, it is really important
that everyone here understand that this would have such a positive
effect on everyone's education. The people of Arkansas, they're going
to love it . . . it's great. If high school students are this excited--
we worked so hard surveying--everyone is going to see that. Once the
adults realize what broadband can offer their communities, and how it
is going to affect everyone then they will absolutely want it. It's
great and we love it.
Matt Dozier
As you can see, there is a great deal of capacity in our local
communities and within our youngest citizens to engage in real work
that can address local needs. What we believe we have demonstrated
through this project is that a ``local engagement'' strategy is the
best way to not only educate people on larger issues, but also to allow
them to be part of the solution rather than outsiders looking in,
waiting for someone else to solve their problems. Students like these
are typical of EAST students, and indeed all students. They are
creative, intuitive, adaptable, and ready to serve in their
communities. We all benefit when we don't stand in their way, but
rather stand behind them and provide them with the tools they need to
take on challenges.
Just as we brought electricity and telephone service to all of
Arkansas in an effort to keep pace with the needs of the modern world,
we can bring broadband access to every community to allow it to become
a larger part of the wider world. This issue strikes at the core of
communities of students like these. This is truly an area where, if we
fail to act, we will leave a generation behind. The EAST Initiative is
dedicated to helping our students find within themselves the abilities
that will serve them and us well through their adult careers. They need
your help as well. Thank you.
STATEMENT OF MICHELLE NEAL, STUDENT,
SARATOGA HIGH SCHOOL
Ms. Neal. Hello, everyone. My name is Michelle Neal, and I
am a junior at Saratoga High School. I started working on the
rural broadband project with The EAST Initiative organization
in the 2006 school year. What we did was we went out and handed
out surveys to local businesses and people in our community to
see who had broadband or who wanted broadband, but couldn't get
broadband because they lived in such rural areas. I think this
would be beneficial to everyone for the simple fact of
education, because people who want to go to college--future
college students could go online and take classes if they had
access to the Internet. Also, another important aspect is e-
mail. E-mail is a really good source of communication in
today's society.
And parents would benefit from this also, because most
parents don't know that you can go online and look at your
child's test scores and grades and progress in school. Most
parents don't know this, because they can't get Internet in the
rural areas.
Also, our research shows that most people don't even have a
computer, and we think that this could be because of the DSL
issue. And all of us that are in EAST, most of our projects
are--almost all of them have to have work on the Internet. And
since we live in such rural areas, we can't get Internet. We
have to wait until we get to school to do homework, and we
think that this would be beneficial in our work.
STATEMENT OF ANDREW MAYS, STUDENT,
MINERAL SPRINGS HIGH SCHOOL
Mr. Mays. Like was said earlier, I am Andrew Mays, from
Mineral Springs High School, and I am a sophomore working in my
sixth semester of EAST. And this past year, as one of my EAST
projects, I actually represented Mineral Springs School
District in collaboration with students from nine other schools
in six different counties, around the equivalent of 19
students, in order to gather information about the usage of
broadband throughout the state of Arkansas. In the beginning
phase of the project, we actually decided to change the wording
in order to make the survey more comprehensible to the people.
Since broadband was such a new and foreign concept, many
households in our area were unfamiliar with the terminology
originally used in our surveys. So after we finished rewriting
the surveys, we distributed them to the students and businesses
in our designated areas, eventually gathering 2,500 usable
surveys from the counties of Howard, Little River, Ashley,
Bradley, Drew, and Lincoln. The survey's questions ranged from
as simple as: Do you own a computer? To as difficult as: Is DSL
available in your area? Upon receiving the returned
information, we began diligently downloading the results into
our own schools' databases.
The students from each of the counties then met in
Monticello and compiled their area's information along with
ours into one large database. While in Monticello, we were
assisted by professors of both the University of Arkansas at
Monticello and the University of Hope. With their help, we
created a map using ESRI mapping software. This map is
currently on display before many today. In working on this
project, we, the EAST students of South Arkansas, have realized
the need for the expansion of broadband availability to all of
our state's citizens, not only for educational purposes, but
also for economic growth and the advancement of our state into
the technology of the 21st century. Thank you for your time.
STATEMENT OF LILA SIVLEY, STUDENT,
ASHDOWN HIGH SCHOOL
Ms. Sivley. Hey everyone, I'm Lila Sivley. I'm from
Ashdown. I help out in the EAST lab. EAST is Environmental and
Spatial Technology. We help a lot in our communities, and
broadband is our main priority, in ours I know it is. I've been
with this project since January this year, and we've been
working really hard. We've got the marketing plan and it was
after ConnectKentucky, and we're trying to get it to be Connect
Arkansas, as everyone must know. One of the big deals that Mr.
Pryor needs to know is how's it going to help us. Well, me, I
wake up every morning. I put hair spray in my hair. How much,
you may think. Well, you get on the Internet, and if I don't
get up two hours early, then I have no chance of getting on the
computer. Do you realize how long it takes for dial-up? I would
mimic the noise, but it's embarrassing. It's so slow. And if I
wanted to do homework, absolutely impossible. Unless it's
calculator and pencil, no help. I do essays and I'm a senior--
if I didn't say that. I don't know if I did. But I am going to
go to college, and a lot of classes that I take this year as a
senior are concurrent with college credits. So if I was to want
to get on-line, I'd have to do it at school. It's simply
impossible to do it where I live. And I'm only about ten
minutes out of town. But I just want everybody to realize, it's
a must-have. It's time for Arkansas to not be limited. We're in
a box. We need to step out of that and really get out there.
Get out in the world. But I'm going to let Trish talk now.
Thanks.
STATEMENT OF TRISHA TART, GRADUATE,
ASHDOWN HIGH SCHOOL
Ms. Tart. Hi, I am Trish Tart. I'm a freshman at the
University of Arkansas. I graduated from Ashdown last year, and
I've been working on this for almost two years now. I was one
of the founding members. And it's so hard to describe dial-up
in a rural area until you go somewhere else and you have
broadband. I'm in college now and I have it, and I just
realized how difficult it was. You know, we did do the surveys.
We had a lot of fun with that, going through and seeing the
ignorance that a lot of people have about having broadband.
They don't know what it is, and they don't know what, you know,
the effects it can have on them. But I think what's really
important is that everybody here realizes people in rural
Arkansas need this. You know, it's really important.
All we need to do is get it out and get it to those people,
because that's the only way anybody's going to advance. Now
these kids are going to college, and all the scholarships and
applications you have to do are online. It's impossible unless
you do it at school. And our school Internet's really not even
that fast. It's difficult to get on a computer. But it's really
important that everybody here realizes that it's going to have
such a positive effect on everybody's education. And the people
in Arkansas, they're going to love it. It's great.
So if high school students are this excited--we worked so
hard surveying everybody, I think people are going to see that.
And if students are this excited, once the adults realize what
it is and how it's going to help everybody, everybody is going
to want it. So I think it's great, and we love it.
Senator Pryor. We have a question or two.
Commissioner Copps. I just wanted to ask, and those were
wonderful presentations. Thank you for sharing them. Is there a
generation gap, do you think? With some of the folks we've
talked about, a lot of people don't understand the potential of
this. But don't most young people really get it, or do you
really see a problem even among your peers--they that don't
understand the potential of this stuff?
Mr. Mays. Actually, whenever we first started doing the
surveys, we actually ran a test on our school to see how
realistic it would be to them. And in our actual school itself,
we had to go around the class and actually explain what every
word was to them. So, I mean, there is a very small gap between
the actual generations. But there is still a gap. I would love
for everyone to be able to know what it is exactly, but there
is still a lot of lack of knowledge like she said.
Commissioner Adelstein. Those are great buttons. Where'd
you get those ``Got Broadband'' buttons?
Ms. Sivley. We made them. We have some--we may have more.
Commissioner Adelstein. That's marketing.
Ms. Sivley. Do you want one? You can have mine.
Commissioner Adelstein. No, thank you, though.
Ms. Sivley. Thank you.
Senator Pryor. Matt----
Mr. Dozier. As you can see, there is a great deal of
capacity in our local communities and within our youngest
citizens to engage in real work that can address local needs.
What we believe we have demonstrated through this project is
that a local engagement strategy is the best way to not only
educate people on larger issues, but also to allow them to be
part of the solution rather than outsiders looking in, waiting
for someone else to solve their problems. Students like these
are typical of EAST students.
Believe me, they are typical of EAST students. But, indeed,
they are typical of all students. They are creative, intuitive,
adaptable, and ready to serve in their communities. We all
benefit when we don't stand in their way, but rather stand
behind them and give them the tools to take on challenges. Just
as we brought electricity and telephone service to all of
Arkansas in an effort to keep pace with the needs of the modern
world, we can bring broadband access to every community to
allow it to become a larger part of the wider world. This issue
strikes at the core of communities of students like these. This
is truly an area where if we fail to act, we will leave the
generation behind. The EAST Initiative is dedicated to helping
our students find within themselves the abilities that will
serve them and us well through their adult careers. They need
your help as well. Thank you.
Senator Pryor. Thank you. Well, now we're getting to the
point in our panel, you know the old saying: Save the best for
last. Well, we didn't do that. I'm just kidding. I'm kidding.
No, we really did. We've talked a lot about the need for
broadband, and the application of broadband, and the promise
and potential, the great things, the reason Arkansas needs to
be where it needs to be.
But the next panel is where the rubber meets the road. And
these are the companies that provide broadband. And they want
to talk about some of the challenges that they have in trying
to deploy broadband, some of the things that they are doing,
some of the innovations, the investments that they're making in
our state, and I know that because I've talked to many of them
on previous occasions, and today as well. I know that we're
going to hear a lot of good news about broadband, but we're
also going to hear some about the challenge, and the reality is
that it is a challenge to these companies that have investors
that expect a great return on their investments, it's a
challenge for them to make investments sometimes if there is
not some sort of public/private partnership.
Universal Service Fund is something that I'm very
interested in, something like a rural utility service loan is a
concept that we're beating around up in Washington to see if
that might work. But this next panel really is, in my view,
really where the rubber does meet the road, because we need to
help these companies deploy broadband and increase the
penetration of broadband around the state. One of the things I
said in the beginning is I do have a concern about two
Americas, a rich America, a more densely-populated America that
has access to broadband, and then a part of America that's left
behind. Rural America that just because they don't have the
population density, maybe they don't have the wealth or the
capital to cover other needs that employ broadband.
So the two commissioners who have talked about this--this
is very similar to maybe what we saw in the 1920s, 1930s, with
electricity, maybe what it was like in the 1930s with
telephones. We need to help in any way we can and make sure
that broadband gets out to every sector of the state of
Arkansas, and, for that matter, every section of the country.
So what I'd like to do now is again, say, two-minute statements
from here on. First, I'd like to introduce Scott Ford.
STATEMENT OF SCOTT T. FORD, PRESIDENT AND CEO,
ALLTEL COMMUNICATIONS, INC.
Mr. Ford. Thank you, Senator. I'm going to take one minute
and just say thank you to the Commissioners and to yourself for
coming down and hosting this. I don't know that everybody on
the panel gets the chance to appear before you as regularly as
I do, and so I really just want to, for the benefit of the
group, make sure that they know what an honor it is that you
two would come to Arkansas. Your time is under great demand,
you have enormous issues beyond even telecommunications and
broadband that you have to deal with. This is not an easy time
to be an FCC Commissioner, from the best I can tell from
looking from the outside in, and it's great that you would take
the time to come down here. We greatly appreciate it. You have
been, particularly the leaders, making sure that companies that
serve America serve all of America.
As you know, at Alltel we're the largest rural provider in
the wireless business in the country. We compete for capital
against companies like Verizon and T-Mobile and companies who
generally only serve metropolitan areas and the freeway. So
it's difficult to attract shareholder capital to put in rural
America. And the reforms that have been in place, through
allowing wireless companies to tap in as an ETC through the USF
funds, has been an enormous help to building cell sites and to
providing connectivity. Arkansas just this year, early this
year, under Governor Beebe's leadership, enacted--and the
Public Service Commission--adopted rules that allow wireless
companies in Arkansas to tap into USF. And we will be taking
that money and building cell sites into rural America.
So we are slowly making progress through all that. I must
also say, Commissioner Copps, that progress was going to be
killed by the wireline companies until you kind of singularly
voted on the Federal-State Joint Board to put a halt to that. I
don't think that you, particularly, were perfectly pleased with
everything that was involved in that in terms of how it came
out. And I know you want overall reform, and I know that
everybody wants to see USF reformed on a holistic basis. Not
throwing the wireless business under the bus was a good step to
actually bringing everybody to the table to reform that, and we
appreciate it. Senator Pryor, I'll throw out three things. As
you guys think about take-aways from this--first of all, we are
grateful that you came. Second of all, think about mobility and
broadband. Mobility and broadband are what the American
consumer wants, it's what they pay for, and it's what they
want, even those that can't afford it.
The second thing I ask you take away is the thought that as
you add customers and you incur the expense of adding
customers, you ought to gain subsidy for that. You shouldn't
gain subsidy for losing customers regardless of what Mr.
Gardner's going to tell you next. We used to get along great.
Now we're just arguing.
[Laughter.]
Mr. Ford. That's an attempt at humor.
The third thing is, if you look at broadband, it's not a
road. You don't build it and then just come back and check on
it every now and then for maintenance and potholes. Broadband
requires 24-hour monitoring. It is very expensive to provide,
once we build it. If you look at the wireline telephone system,
a great amount of subsidy flows through to the actual retail
user. The retail user only pays about half of what it costs to
provide service to them. Whereas in the wireless business,
customers pay in the 97 to 98 percentile. Just a couple of
other things for you to think through as you think about the
fact that wireless pays in $2.5 billion into the USF and only
takes $1 billion out. Thank you very much for coming. We do
appreciate the time.
[The prepared statement of Mr. Ford follows:]
Prepared Statement of Scott T. Ford, President and CEO,
Alltel Communications, Inc.
Senator Pryor, Commissioners Copps and Adelstein, ladies and
gentlemen, I would like to welcome you to Little Rock, and to thank you
for conducting this important field hearing here in our home town. I
appreciate your invitation to participate today, and am pleased and
honored to discuss ways to sustain and promote the deployment of fixed
and mobile broadband services, here in Arkansas and across the country.
Alltel provides leading-edge, digital mobile wireless services to
nearly 12 million wireless customers in 35 states, including several
hundred thousand here throughout virtually all of Arkansas. We operate
the Nation's largest wireless network in terms of geographic area
served, but our customer base is smaller than those of the larger
carriers. This is because we are one of the few major wireless
operators to focus on serving the mid-size and smaller cities, as well
as rural and more sparsely populated areas.
We offer our customers a range of mobile broadband services that
are increasingly important parts of our product mix. A majority of our
handsets, including nearly all of our newly launched devices, support
wireless broadband. Alltel is rapidly deploying network facilities that
support EV-DO-based AxcessSM Broadband service that provides
average speeds of 400-700 kilobits per second with bursts up to 2.4
megabits per second. These technologies support web-based e-mail, text
and photo-messaging, mobile game and ring-tone downloads, mobile music
and video, and Internet access services for individual consumers. In
addition, we offer enterprise mobile data solutions used by government,
public safety agencies, and industries as diverse as agriculture,
education, finance, health care, and manufacturing.
We provide these high-speed, advanced services in over 100
communities covering 44 million people across our 35-state footprint.
Here in our home state of Arkansas, we will provide access to these
services to nearly 62 percent of the households by the end of this
year. We are constantly building out broadband facilities and offering
advanced services to additional communities.
As you know, consumers increasingly demand higher-bandwidth
services: across the country, purchases of broadband lines increased by
52 percent from 2005 to 2006, according to recent FCC reports,
including an increase from fewer than 400,000 wireless broadband lines
in 2005 to over 11 million in 2006. Through innovative service features
and plans, wireless carries are bringing additional competition to the
broadband marketplace and offering American consumers unique ways to
stay connected to information. Broadband services--both fixed and
mobile--are absolutely vital for the 21st century economy. But clearly
much more needs to be done to bring broadband services out to
consumers. According to the latest FCC high-speed report, fewer than 13
percent of Arkansas residents had broadband service as of June 30,
2006.
Consumers also increasingly need and depend on mobile wireless
services of all kinds, for voice as well as data. Over the past 5
years, the number of mobile wireless subscribers has grown by 86
percent, from 118 million in June 2001 to 219 million in June 2006.
According to FCC data, mobile wireless service across the country has
grown by 50 percent during the 3 years ending in December 2005, and
consumers now use more wireless than wireline phone lines. Here in
Arkansas, Alltel's mobile wireless customer base has grown by 24
percent over the past 3 years. U.S. Department of Health and Human
Services conducted a survey and found that over 12 percent of
households in the country are using wireless as their only phone
service. And among consumers with more than one connection, a
substantial proportion now use wireless as a primary means of
communications. Without question, wireless communications is the
``lifeline'' of today's consumers.
Rural consumers have the same interests in obtaining access to
high-speed technologies and mobile services, and are demonstrating
changes in demand that parallel those of consumers across the country.
If anything, mobile wireless services may be even more important to
rural consumers than to those in urban areas. People in rural areas
often spend more time than their urban counterparts on the road. For
example, an entrepreneur may need to reach contacts when driving from
one end of a large county to another for business; a parent may need
access to telecommunications while driving children to and from
relatively distant schools; and a farmer may need access to data on
agricultural prices while working on a remote part of his or her
property. Wireless broadband is often the only means of high-speed
access in many high-cost areas and is playing a major role in bridging
the ``broadband divide.''
Rural residents and public safety ``first responders'' particularly
value their mobile wireless services in emergency situations. Mobile 9-
1-1 and E-911 are vital health and safety services, especially for
people who frequently have to travel long distances--and more than
240,000 wireless E-911 calls are made every day. But they cannot be
provided unless adequate infrastructure and service is available. But
due to the relatively high costs of deploying wireline and wireless
networks in many rural areas, we all need to do more to make sure
consumers in rural areas have access to these services. In our state,
the 86th General Assembly of the Arkansas legislature passed a bill
last year to create the ``Connect Arkansas'' program and the Arkansas
Broadband Advisory Council, which are working to monitor, educate,
promote and facilitate the deployment and adoption of broadband
Internet services. Several members from this initiative are here today
and I congratulate them for their efforts to bring advanced
telecommunications services to our state.
Senator Pryor, I would like to commend you for your strong
commitment to ensuring that citizens of rural parts of Arkansas and
across the country have access to high-quality fixed and mobile
broadband services, as well as other mobile wireless services. The
important legislation that you co-sponsored with Senators Smith and
Dorgan--S. 711, the ``Universal Service for the 21st Century Act'' of
2007--wisely recognizes that any technology, including wireless, can be
included in the definition of ``broadband communications service,'' as
long as it operates at the specified high-speed and enables users to
originate and receive high-quality voice, data, graphics, and video
communications. Your forward-thinking legislation also recognizes the
importance of universal service funding to support and extend both
broadband services and mobility to unserved and underserved rural
areas. Until just recently, only a negligible amount of universal
service funding was going to support the deployment of wireless service
to high-cost areas--even though consumers in those areas desperately
need and want wireless technology and networks. Of the $25 billion
spent on high-cost universal service since 1996, only about $2 billion
has gone to wireless carriers and other competitors. Even today, less
than 25 percent of universal service high-cost funds go to support the
deployment of wireless service, even though there are now more wireless
subscribers. At the same time, wireless contributes more than twice the
amount into the universal service fund than it receives out of the
fund.
The 1996 amendment to the Communications Act making non-wireline
carriers eligible for universal service support has made possible a
tremendous expansion of wireless service into rural areas. With
universal service support, Alltel and other wireless carriers are
building facilities deep into rural areas, not just along major
highways, and delivering service to consumers where they live and work.
According to the FCC, wireless penetration rates went up from 41
percent in 2001 to 68 percent in 2005 in the most sparsely populated
areas with fewer than 100 residents per square mile.
America is getting a great return on its investment in wireless
universal service. It's true that support for wireless has increased
over the past few years. But that has come with a tremendous expansion
of wireless service into rural areas. In the past, many wireless
companies were building cell sites only along major highways and
population centers. Now, with universal service support, we are
building facilities deep into rural areas and getting service out to
consumers who live and work there. For example, on the Pine Ridge
Reservation in South Dakota, the Tribe estimated that less than 30
percent of the population had telephone service prior to Alltel's entry
into the market as a wireless universal service provider. Today more
than 80 percent of the population on the Pine Ridge reservation has
access to wireless telephone service. The vast majority of these
consumers are eligible for and receiving a discounted Lifeline service
of only $1 per month. This is the true meaning of universal service.
We are concerned with short-sighted views that fail to recognize
the importance of wireless universal service. Support for rural
wireless is not a problem--and an anti-competitive proposal to reduce
universal service funding for wireless consumers is not the answer.
Alltel appreciates the letter that you submitted to the Federal-State
Joint Board on Universal Service, jointly with Senators Rockefeller,
Dorgan, Klobuchar, and Smith, opposing the plan to restrict universal
service funding for wireless carriers by imposing a cap exclusively on
competitive eligible telecommunications carriers.
We share your hope that the Joint Board and the FCC abandon
counter-productive ``interim measures.'' Instead, they should follow
the lead of the Senate Commerce Committee, and turn their attention to
equitable and sensible comprehensive reform of the universal service
program. Rather than continuing to target funds mainly to the
traditional voice telephone services of the last century, the Universal
Service Fund should be realigned to promote the services that consumers
most need and demand going forward: broadband and mobility.
Senator Pryor, in your letter to the Joint Board, you said that
long term universal service reform should result in a competitively
neutral system, promote accountability in how the funds are used, and
promote the build-out of advanced services in rural regions through
effective targeting of funds to high cost areas. Alltel firmly agrees.
But we find it puzzling that some still argue that ``universal service
is not about competition.'' Ever since the adoption of the
Telecommunications Act of 1996, our Nation's policy has been to favor
competition for all communications services, in all markets.
Competition is the best way to assure high quality services, rapid
advancement and deployment of new technologies, and low prices. Why
would anyone want to take away the benefits of competition from
consumers in rural areas?
The FCC's policies up to now have correctly attempted to promote
both universal service and competition at the same time, by moving
toward a system of funding portability. Some argue, however, that
portability and competitive neutrality are inappropriate. We disagree.
The purpose of universal service is to benefit customers, not carriers,
so high cost support should be directed to the services that customers
decide to buy. Providers should have to show that they are using the
support for its intended purpose in order to receive funding; they
shouldn't retain funds when they are losing consumers. Some components
of today's overall Federal universal service funding system are fully
portable, but others are not. Under the non-portable funding
mechanisms, certain carriers continue to receive universal service
funding even when customers no longer want to buy service from them.
This makes no sense and is causing unnecessary increases in the size of
the fund. Wireless carriers, in contrast, lose support when they lose
customers. To protect consumer choice, accountability, and an efficient
use of funding, this Committee should exercise its oversight over the
FCC to ensure that the universal service system moves toward greater
portability--not less. Portability will ensure the steady deployment of
basic and advanced services to rural consumers. We fear that the Joint
Board's current drive toward moving wireless carriers to a ``cost
based'' system will overlook the fundamental flaws with the current
incumbent-biased funding system. We look forward to helping you,
Senator Pryor, to make sure that sensible and equitable long-term
reforms are implemented instead of ones whose practical effect is to
inoculate incumbent carriers from any and all form of the competitive
pressures that wireless carriers like Alltel and others face daily.
In sum, Alltel applauds this Committee's emphasis on promoting
universal access to both broadband and mobility services in rural
America. A reformed, pro-competitive universal service fund could be
one of the most effective tools to achieve these twin objectives. We
look forward to working with this Committee, the Joint Board, and the
FCC to advance the objective of promoting the deployment of both fixed
and mobile communications technologies and services on a competitive
basis in all parts of the country.
Thank you.
Senator Pryor. Thank you.
Mr. Ford. Should I give him this?
Senator Pryor. Yes. Please do.
Mr. Ford. Mr. Gardner, your rebuttal?
[Laughter.]
STATEMENT OF JEFF GARDNER, PRESIDENT AND CEO,
WINDSTREAM CORPORATION
Mr. Gardner. Good morning, Senator Pryor, Commissioner
Adelstein, and Commissioner Copps, and other distinguished
guests. I am Jeff Gardner, President and CEO of Windstream, the
largest local exchange company in the country focused on
serving rural America. On behalf of our more than 8,000
employees, I am proud to extend a warm welcome to Little Rock,
the home of our headquarters, and to Arkansas where we provide
communications and entertainment services to more than 160,000
customers.
Windstream has more than 3.2 million voice customers and
more than 750,000 broadband customers across the 16 states we
operate in. As a result of our aggressive deployment of
broadband services, 83 percent of our voice customers can
purchase high-speed Internet access services. Remarkably, we
have achieved these high levels of accessibility and
penetration in rural America while receiving less than one
percent of our annual revenue from Federal Universal Service
High-Cost support. With an average density of slightly more
than 20 customers per square mile, we clearly understand the
many geographic and economic challenges that must be overcome
to increase our country's broadband service adoption rates. But
while many are calling for expansion of the Federal Universal
Service program, to support broadband build-out, I would urge
policymakers to consider other alternatives before making a
decision.
As you know, the existing universal service program is in
dire need of comprehensive reform. We are encouraged by the
policymakers' recent focus on this reform. While increasing
broadband adoption rates is an important national goal, it
should only be considered in tandem with comprehensive reform.
Any Federal program including universal service designed to
increase broadband adoption rates should address the consumers'
ability to afford broadband service. As stated in my pre-filed
testimony, policymakers may want to consider funding to offset
the cost of broadband access for low income consumers and
allocating funds to increase personal computer ownership. I
applaud your efforts to organize this hearing.
I thank you for taking the time to come to Arkansas, and
look forward to working productively in partnership with the
policymakers to move Americans and Arkansans to their rightful
place at the forefront of broadband service adoption race.
Thank you.
[The prepared statement of Mr. Gardner follows:]
Prepared Statement of Jeff Gardner, President and CEO,
Windstream Corporation
Thank you, Senator Pryor and the Senate Commerce Committee, for the
invitation to speak at the hearing today. I also would like to extend
an Arkansas welcome to Commissioners Copps and Adelstein.
My name is Jeff Gardner. I am the President and CEO of Windstream
Corporation, a wireline telecommunications company that provides voice,
broadband, and entertainment services to primarily rural communities in
Arkansas and 15 other states. The company, which is headquartered here
in Little Rock, has approximately 3.2 million access lines.
Windstream has been an active participant in developing Federal
broadband policy. For example, Windstream supports the U.S. Senate
Commerce Committee's broadband mapping efforts. We worked closely with
Senate staff to encourage broadband subscription mapping at a census
tract level, and we are pleased to see that census tract mapping is
included in the latest version of the bill. Using census tracts as a
common denominator, broadband maps will provide greater insight into
the relationship between broadband adoption rates and other
socioeconomic factors tracked by the U.S. Census Bureau.
We at Windstream share Senator Pryor's desire to ensure all
Arkansans--and all Americans for that matter--can fully participate in
the digital world. Deployment of broadband service is a strategic
imperative for our company. In 2006 alone, we grew the number of our
broadband customers by 46 percent to more than 656,000 customers, and
as of second quarter this year, we have approximately 753,000 broadband
customers nationwide.
We are continuing to upgrade our networks and increase the
percentage of our customers with broadband access. This year alone we
expect to spend between $350 and $380 million on capital expenditures,
of which a significant portion is devoted to broadband. Now more than
80 percent of our voice customers can purchase wired broadband service
from us, and as the Internet becomes more important to our customers,
they are using a rapidly increasing amount of bandwidth. Our
subscribers' bandwidth usage doubled over the last year.
Windstream's broadband investments extend to Arkansas. Windstream
is the third largest ILEC in the state. We serve predominantly rural
areas, from Elaine in the Delta to Wilmot in southeast Arkansas, but
also some larger exchanges, such as Harrison. Harrison actually was our
company's first exchange to offer DSL.
In Arkansas, we offer broadband at speeds of 1.5 Mbps, 3 Mbps, and
6 Mbps. Prices of these services may range from $19.99 to $29.99, when
a customer bundles broadband service with voice or digital TV.
Windstream also has CLEC operations in central and northwest
Arkansas. As a CLEC, we provide critical communications services,
including broadband data services, to Arkansas hospitals and the state
government.
Windstream will continue to offer DSL deeper in our markets and at
faster speeds. In Arkansas and other states, we are upgrading our
network to enable us to introduce broadband speeds of 10 to 12 Mbps,
and we expect to complete this effort late this year or early next
year.
But these build-out efforts are only one piece of ensuring all
individuals can fully participate in the digital world. Broadband
subscribership rates depend not only on a consumer's geographic access
to broadband, but also on a consumer's economic access to and awareness
of the benefits of broadband. Consumer economic factors include both
the affordability of broadband service and the ability to purchase a
personal computer. Pulling a variety of different levers is necessary
to increase broadband adoption rates broadly and effectively.
I believe that many are overly focused on pulling one lever:
obtaining Federal funds to help offset the cost of constructing their
broadband networks. However, there are three notable problems with
advocating this solution in isolation.
First, if the goal is 100 percent terrestrial broadband deployment
and subscription at affordable rates, achievement of this goal will
require the Federal Government to spend considerable resources to
offset the high cost of network build-out. Windstream, like other
broadband service providers, has found that its costs increase
exponentially as we attempt to provide broadband access to our
remaining unserved customers.
As we reach into our unserved areas, we face a number of
challenges: We may need to shorten the, often significant, distance
between potential customers and the closest DSLAM, the point where a
digital subscriber line is connected to the Internet. We also may need
to lease transport from other carriers to connect our facilities, which
in some cases can be very isolated, to the national Internet backbone.
The potential number of broadband customers may not sustain these
additional investments.
Here's a rough sketch of our predicted capital costs for deploying
broadband service to the rest of our customers: It will cost Windstream
a considerable sum to provide broadband service to an additional 5
percent of our customer base. To provide broadband to the next 5
percent slice of our customers, we expect it will cost us approximately
two times that amount. For 5 percent more, approximately four times
that amount. Deploying broadband to the next 5 percent of our unserved
customers, in other words, will cost us approximately twice as much as
what it cost us to deploy to the last 5 percent of our unserved
customers. And as these customers demand higher speeds, our expenses
increase still further as we upgrade our networks to support greater
bandwidth.
Sponsoring universal build-out of terrestrial broadband networks
would undoubtedly cost many billions of dollars. Providing exclusive
attention to ensuring universal terrestrial broadband deployment--as
opposed to increasing subscribership where broadband is already
available--may drain Federal resources that could be focused on other
factors that might have a greater impact on our Nation's adoption
rates.
For some consumers, it may make more sense to invest in other
technological solutions, which may be more affordable. Diverse
technologies--such as satellite broadband--are providing new paths
around geographic obstacles.
Second, focusing solely on broadband build-out costs overlooks the
significance of the accompanying operating costs. Yet any successful
broadband deployment strategy must properly account for both capital
and operating expenditures.
Just because a functioning broadband network is built, does not
automatically mean that it would make economic sense for a provider to
operate that network. Indeed, in many areas, including some of our
smaller exchanges in Arkansas, we have determined that we would not
likely obtain enough broadband subscribers at affordable rates under
current conditions to cover our incremental operating costs. So in
order to keep broadband service affordable, providers likely will need
additional funding to help cover ongoing operating expenses.
Third, even if sufficient funding could be devoted to creating a
fully operational broadband network throughout the United States, it
still does not mean all Americans would be able to purchase broadband
service. A deployment-focused solution, without more, assumes ``if you
build it, they will come.''
But clearly that is not the case. Overall broadband adoption, in
part, is a function of geographic access, but as I noted before, it
also is a function of economic access and consumer awareness of the
benefits of advanced technologies. Many recent press reports on the
fate of municipal wireless networks have observed that multiple factors
ultimately are responsible for consumers' broadband adoption rates.
So where does this assessment leave us? For Windstream, this
analysis has made us look more carefully at the other levers that may
be pulled to increase broadband adoption rates. While we aggressively
deploy new facilities, we continue to think about new and innovative
ways in which we can increase broadband adoption where we have already
deployed the service.
Public-private partnerships, such as Connect Arkansas, may further
promote low-income consumers' broadband usage. Windstream was an active
participant in the Arkansas Broadband Initiative, which led to the
development of Connect Arkansas. We anticipate that Connect Arkansas
will be able to leverage resources of a wide variety of stakeholders to
bring more Arkansans online. We have witnessed the importance of cross-
sector partnerships as a longtime board member of ConnectKentucky.
In particular, our experience has underscored the importance of a
non-geographic factor that contributes to broadband adoption rates:
affordability. The gap between those consumers who are online and
offline more and more is defined by their economic, rather than
geographic, conditions.
Focusing on affordability is important and in many cases actually
may be the basis for more economically efficient policies to increase
broadband adoption rates. As such, in addition to dedicating funds to
aid deployment in unserved areas, policymakers should (a) devote
funding to provide support for low-income consumers' broadband access
and (b) allocate funds to increase computer ownership.
With respect to making broadband service more affordable, the
Federal Government should strongly consider the use of general
revenues, instead of universal service funds, to subsidize broadband
service for low-income consumers. But if policymakers conclude it is
appropriate to use universal service funds, they should consider
extending Lifeline/Link-Up to assist low-income consumers' purchase of
broadband services.
Addressing economic access to broadband will help a significant
percentage of Arkansas consumers that remain offline. According to the
U.S. Census Bureau, only 12 percent of Arkansas residents that live in
households earning less than $15,000 per year use the Internet at
home.\1\
---------------------------------------------------------------------------
\1\ U.S. Census Bureau, Current Population Survey: Computer and
Internet Use 2003, special tabulation by the U.S. Department of
Commerce. Calculation by The Children's Partnership.
---------------------------------------------------------------------------
In addition, Windstream recommends that the Federal Government
consider providing some funding for low-income individuals' personal
computer ownership. If consumers cannot afford a computer, they will
not be able to use broadband in their homes--no matter how reasonably
priced that broadband service may be.
Among the 50 states and the District of Columbia, Arkansas ranks
last, 50th, in the percentage of households with a personal
computer.\2\ And personal PC ownership, like Internet usage, is highly
correlated with household income: 83 percent of households in Arkansas
earning less than $15,000 per year do not own a computer, compared to
38 percent of all households nationally.\3\
---------------------------------------------------------------------------
\2\ Id.
\3\ Id.
---------------------------------------------------------------------------
At Windstream, we are experimenting with ways in which we can help
more of our customers afford household computers. For example, this
month we launched a pilot program to offer discounted computers to
qualified new broadband customers who purchase broadband service from
our company.
Although there is much private industry can do, the private sector
on its own cannot resolve issues around low-income consumers' ability
to afford computers. Policymakers should give serious consideration to
what role the government can play in addressing computer affordability.
Going forward we're going to need to wade into the details of how
these various proposals could best be implemented. Windstream is
committed to devoting resources to these ideas, and we look forward to
partnering with the Federal Government to develop new and innovative
ways to boost broadband adoption in Arkansas and throughout the United
States.
Thank you for allowing my company and me to participate in this
hearing.
Senator Pryor. Thank you. Mr. Allis?
STATEMENT OF EDWARD K. ALLIS, EXECUTIVE DIRECTOR, GOVERNMENTAL
AFFAIRS, AT&T ARKANSAS
Mr. Allis. Thank you, Senator. I don't use hair spray, but
I'm thinking about starting. I appreciate the EAST labs
presentation. I think that was a real bright spot for us today.
My name is Ed Allis, Executive Director of Governmental Affairs
for AT&T. A field hearing like this is a unique experience I
think for most of us, and we do appreciate the opportunity to
provide a local perspective on the issues before the Committee.
Perhaps the main thing I'd like to do today is to lend AT&T's
endorsement to Connect Arkansas and EAST labs. And I will talk
about that in just a minute.
First, just a bit about AT&T. We are the state's largest
and oldest provider. We've been around for almost 130 years.
And while we serve most of the metro areas in the state, we
maintain a very significant rural presence. Of AT&T's 102
exchanges across the state, fully 40 of them have less than a
thousand access lines. Sixteen have fewer than 500 access
lines. One of our exchanges, Arkansas City, has only 100 lines.
So we are familiar with the challenges of serving rural
Arkansas. This fact-finding hearing comes not a moment too
soon. Arkansas must catch up.
Senator Pryor, you said Arkansas ranks 47th in the Nation
right now, and that's certainly a challenge for all of us. But
there are areas where progress has been made. I think all the
presenters can talk about some of their success stories. For
AT&T's part, we can also point to progress. We are expanding
the availability of our wireline DSL in our footprint. And, in
fact, we expect to have all of our exchanges equipped for DSL
by the end of next year, 2008. We are also proud of our
affiliation with Distance Learning that was mentioned by Ms.
Bailey. She covered that, and I won't talk about it in any
great detail other than from an educational perspective, we
have 80 higher ed sites on that system, and over 300 K through
12 sites. AT&T provides network facilities and maintains
network facilities for that system. That is a tremendous asset,
I think, to rural Arkansas and to rural school districts.
But as everyone agrees, there is much to be done. And while
AT&T is committed to proceeding with its broadband initiatives,
we have become convinced that Connect Arkansas may very well
hold the key for the most rapid advancement of broadband
deployment in the state. With their mapping capabilities in
conjunction with EAST, their formation of e-committees,
educational efforts, and demand stimulation programs, they hold
promise for some benefits that could be substantial and very
tangible.
Connect Arkansas, I think, would tell you that they can
create over 8,000 jobs in the state and that they can add $2.6
billion to the state gross domestic product annually. So it's
something that we all need to pay attention to. As with all
things of that sort, funding is the issue. At least initially,
Connect Arkansas will have to operate with private funding
only.
So I think Federal funding either from the Congressional
side or the FCC side is desperately needed both for Connect
Arkansas and for providers. And I know as policymakers, you all
have to make decisions about how much money to spend and where
it's going to go and to set the priorities. And as you're doing
that, please, please remember Arkansas, keep us on your radar
screen. If you do fund us, we'll make you proud of the
investment. Thanks.
[The prepared statement of Mr. Allis follows:]
Prepared Statement of Edward K. Allis, Executive Director,
Governmental Affairs, AT&T Arkansas
Introduction
My name is Ed Allis. I am the Executive Director--Governmental
Affairs for AT&T in the state of Arkansas. My biographical summary was
previously submitted for the record. AT&T extends a warm welcome to
Commissioners Adelstein and Copps. A field hearing such as this is a
unique experience for those of us involved in the telecommunications
industry and all of us are appreciative of this opportunity to provide
a local perspective on ``The State of Broadband in Arkansas.''
AT&T Arkansas traces its roots back to the state's first
switchboard in 1879, right here in Little Rock--almost 130 years ago,
just 3 years after Alexander Graham Bell invented the telephone. Today,
AT&T is the state's oldest and largest provider; serving 102 local
exchanges across the state. In addition to landline service, we offer
high-speed broadband Internet access, wireless and satellite TV service
to communities large and small. AT&T's commitment to rural Arkansas
should be apparent.
This fact finding hearing comes not a moment too soon. Along with
most others from whom you will hear today, AT&T considers the timing
critical for Arkansas' future. I believe we have come to recognize that
we are in a race, not just with other states--but with other nations as
well. Simply stated, Arkansas must first catch up before it can surpass
others. By now you are aware of Connect Arkansas and the broadband data
collection activities in which it has engaged. According to Connect
Arkansas, Arkansas ranks:
47th in the deployment of broadband.
49th in the percentage of the population online.
41st in the percentage of farmers using computers online.
30th in the use of information technology to deliver state
government services.
Despite those statistics, the Committee should note that Arkansas
has made significant progress in bringing technology to rural parts of
the state. Some of the presenters today have outlined some of that
progress in their areas of knowledge or will shortly.
AT&T
For its part, AT&T has demonstrated a fundamental commitment to
rural America and rural Arkansas in a number of ways. While there may
be some that believe AT&T is a company that provides telecommunications
services only to urban areas of the country, that's simply not the
case. In fact, AT&T is the single largest provider of telephone service
to rural America--we serve over 7 million rural customers.
In Arkansas, of AT&T's 102 exchanges, 57 have fewer than 3,000
access lines; 40 have fewer than 1,000 access lines and 16 have fewer
than 500. One exchange, Arkansas City, has just 100 access lines.
Beyond doubt, AT&T is a rural provider in Arkansas and across America
and has demonstrated a commitment to those areas.
For example, in the past 2 years AT&T has contributed grants of
$4.6M to support the needs of various rural communities throughout the
country. It is expanding the availability of broadband over satellite
(provided by WildBlue) across its 22 state wireline footprint. At the
same time, AT&T has deployed additional wireline broadband in Arkansas
this year and plans additional deployment in 2008. AT&T anticipates
that every Arkansas exchange will have broadband capability by the end
of 2008.
In Arkansas, AT&T is particularly proud of its involvement in
distance learning. AT&T provides and maintains network facilities used
by the State of Arkansas for VNet, a fully interactive video
conferencing network used for education, healthcare and state
government. There are approximately 520 interactive video sites on
VNet, including:
78 higher education.
301 Kindergarten through grade 12.
Usage has grown to over 20,000 conference hours per month. More
than 400 courses are being taught using the technology, giving students
access to an enriched curriculum and college preparatory courses and
providing professional development opportunities and instructional
resources for teachers and administrators. Both AT&T and the state have
garnered numerous awards for VNet.
AT&T was one of the first major providers to commercially launch
fixed wireless broadband using wireless and other technologies. Fixed
wireless offers the potential to deliver broadband Internet to areas
where wireline high-speed Internet or cable modem services are not
available today.
Setting aside the consumer segment for a moment it should be noted
that regardless of location, most businesses in Arkansas generally have
access to high-speed Internet access. Through high capacity facilities,
even remotely located businesses generally can obtain high-speed
Internet access, but it's at prices that only a business can reasonably
be expected to pay.
Yet, despite the strides that have been made there is still much to
be done. If the provision of broadband in rural Arkansas was easy, it
would be there today. However, significant hurdles stand in the way in
many areas. That's why AT&T is committed to helping to develop
collaborative, innovative solutions at both the state and local level.
While AT&T intends to continue its pursuit of its own broadband
initiatives, AT&T is convinced that Connect Arkansas holds the key for
the most rapid acceleration of broadband deployment by all providers.
Connect Arkansas
Connect Arkansas is an entity that is uniquely equipped to
coordinate all of the various resources in the state for a common
purpose.
It is common knowledge that Connect Arkansas has used
ConnectKentucky as a model. There are good reasons for this as
statistics from Kentucky demonstrate.
Before ConnectKentucky, approximately 60 percent of that state had
access to broadband service. Today:
Over 93 percent of the state has broadband access.
Over $600M of private capital has been invested in broadband
related telecommunications.
Broadband usage has increased by a nation leading 73
percent.
ConnectKentucky anticipates the creation of over 15,000 jobs
and the addition of over $5B to the Gross State Product
annually.
Connect Arkansas was established by Act 604 (sponsored by Senator
Capps) passed by the 86th General Assembly earlier this year. Among
other things it is designed to map broadband availability in Arkansas
and stimulate demand through education of users regarding the benefits
of broadband. Much of this education will be coordinated through county
officials and volunteers. Since Connect Arkansas is a private non-
profit entity, it will be able to enter into non-disclosure agreements
with all providers so that proprietary competitive data can be
collected and analyzed. That will be a key component of the mapping
process.
Connect Arkansas' efforts will be technology neutral.
Recommendations and proposals for individual underserved areas of rural
Arkansas may depend on an analysis of which technology appears to be
most suitable. While an approach like this will require extraordinary
cooperation among all participants, it is a cornerstone of the Connect
Arkansas program and inherent in Act 604.
If Connect Arkansas is successful, the state as a whole will reap
substantial and tangible benefits. Connect Arkansas has estimated that
8,200 jobs will be created and over $2.6B will be added to the Gross
State Product annually.
Funding
For the time being Connect Arkansas is without the public funding
that could be used for educating consumers, establishing e-committees
and training county officials, providing grants, etc. The initial
source of funding must come from private sources and perhaps state
government agencies and educational institutions that have the
available resources.
Ideally, Connect Arkansas would be funded through a tri-partite
partnership of Federal funds, state funds and private funding. While
the Arkansas General Assembly will likely be asked to make state
funding available in the future, it will be helpful if sources of
Federal funds could be found. All of the involved parties in Connect
Arkansas would be willing to work with Senator Pryor's office and other
members of the Committee in order to facilitate an investment of this
type in Arkansas' future.
The FCC as well has the capacity to influence the economic future
of this state. In July of this year, AT&T submitted an ex parte
presentation to the FCC in which it suggested a pilot project designed
to accelerate the deployment of broadband to rural America. It would
provide funding on a technology neutral basis while long term reform of
the Federal Universal Service Fund is being debated. Additional
information regarding the pilot project is being submitted to the
Committee for inclusion into the record.
Long Term
If all of the collaborative efforts planned for the state come to
fruition and broadband becomes a reality in all parts of rural
Arkansas, what we will have is a beginning--an important beginning. It
will be a first step; but, the reason you take a first step is so you
can take additional steps. We must not lose sight of the long term
needs of Arkansans. More bandwidth and more availability is
inextricably tied to Arkansas' ability to compete for economic
development, jobs, educational opportunities and a quality of life that
Arkansans deserve.
Commissioner Adelstein. I know that AT&T's making a lot of
efforts nationwide to upgrade your infrastructure to be able to
carry video to provide some badly-needed competition to cable,
I wonder how is that going here in Arkansas for AT&T?
Mr. Allis. We are--Commissioner Adelstein, we have made a
lot of progress in securing agreements with individual cities
and municipalities. Deployment of the U-verse technology and
the provision of the service, we are still a number of months
away from that, but I think next year you'll see it take off.
Senator Pryor. Thank you. Mr. Waits?
STATEMENT OF R. PAUL WAITS, PRESIDENT,
RITTER COMMUNICATIONS
Mr. Waits. My name is Paul Waits, the president of Ritter
Communications out of Jonesboro, Arkansas. We must be a
relatively newcomer to the state compared to Ed here.
[Laughter.]
Mr. Waits. We've only been in the telephone business here
101 years. The world is flat, and it's getting flatter. The
Internet has indeed leveled the field of play, if one is
connected to that field. And I think that has been the point
that has been reiterated across the panel so far. If you're a
wireline company like us, broadband is your future. It is the
business we are in, and we must be totally committed to. We
totally agree, too, that there is a linkage that's growing
stronger between broadband access to the public Internet and
economic health, as well as vitality across all spectrums of
human interaction, collaboration, education, medical care,
governmental services, creative endeavors, as well as business
communications.
We, too, appreciate the fact that you are here having this
hearing, a step toward necessary and lucid assessment of
availability and need. We agree with the comments to expand the
definition of dial tone, a basic service, to include broadband
access, to create an expanded focus for the universal service
fund, but one that targets high-cost areas, based on the cost
to serve those areas. We also would encourage the Commission if
it does so, to recognize an evolving definition of broadband.
Prognosticators in our industry predict that by 2012,
broadband would be defined as 100 megabits per second, not 200
kilobits per second. The big driver behind that, of course, is
video and the emerging forms of communication and collaboration
that are evolving at a very rapid pace. Our company serves some
very, very rural areas of the state, some throbbing
metropolises like Jasper, Osage, Alpena, Western Grove, the
mountainous area. We also serve some very depressed areas in
the state in the East of I-55, as they say. Our coverage though
is pretty strong. Ninety percent of our very rural residents
have access to broadband. Ninety-eight percent are incumbent
telephone company customers that have access to broadband. A
hundred percent of our cable customers have access to
broadband. We are as large in cable TV as we are in incumbent
telephone services. We also have CLEC.
And we also share in wireless partnerships with Alltel.
That makes us a bit bipolar when we consider what our position
is on some issues.
[Laughter.]
Mr. Waits. Alltel solved their problem. They divested part
of it.
[Laughter.]
Mr. Waits. We don't have such a luxury. We still have to
weigh these issues internally. And I guess the parting words we
have in that regard, to try to keep my comments brief, is that
as we weigh those issues internally, we discover that if we
look beyond the pecuniary interests, and look at the customers
and what's in their long-term interests, the different segments
of customers, they provide a pretty good guide to us as for
what's in our long-term business interests. So that would be
our best advice to policymakers to look beyond pecuniary
interests and the short-term shrill needs of publicly-traded
stockholders, and look to the long-term needs, assessed
lucidly, of their customers. Thank you.
[The prepared statement of Mr. Waits follows:]
Prepared Statement of R. Paul Waits, President, Ritter Communications
Introduction
My name is Paul Waits. I am President of Ritter Communications,
based in Jonesboro, Arkansas, and I manage a company that provides a
wide variety of communications services across Northeast and North
Central Arkansas. On behalf of our company and our communities, we
welcome Commissioners Adelstein and Copps, and are encouraged by the
interest this hearing reflects regarding the future of broadband
services in Arkansas.
Ritter Communications
Last year, Ritter Communications celebrated its 100-year
anniversary as a telephone company, having its roots in providing basic
telephone service in Poinsett and Mississippi Counties. Since that
time, the company has grown and diversified, and presently owns and
operates other incumbent telephone operations in Boone and Newton
Counties, cable TV franchises across Northeast and North Central
Arkansas, competitive communications and business integration services
in Jonesboro, as well as a number of wireless partnerships with Alltel.
All of these varied business interests are sufficient in scale to cause
us to weigh among and balance competing interests internal to our
company, e.g., cable versus telephone, wireless versus wireline, in
formulating and advocating positions on policy issues. We think this
puts us in a unique position to offer observations and recommendations
that balance such disparate interests.
In the context of the current availability and future of broadband
services, our greatest concern is the needs of the most rural areas we
serve, specifically the sparsely-populated areas of Newton and Boone
Counties, and the rural agricultural communities of Northeast Arkansas.
Some of these areas present extraordinary economic challenges related
directly to the cost of deployment, as well as the general level of
computer literacy and ownership. We estimate that we have the
capability to provide high-speed Internet access services to about 90
percent of our telephone company customers in the mountainous areas of
North Central Arkansas, and about 98 percent of our telephone company
subscribers in Northeast Arkansas. All central offices and remote
terminals are equipped with DSL technology, but distance limits of DSL
prevent availability to the most remote customers. In our cable TV
areas, we can provide high-speed Internet access to virtually 100
percent of the homes passed in these hybrid fiber-coax systems. The
percentage is greater for cable because such systems typically do not
extend to areas with low subscriber density.
Universal Broadband Service
As a nation, we have virtually achieved universal telephone service
as a direct result of the long-standing public policy of promoting
universal telephone service through implicit and explicit rate
averaging across the country. Governmental programs such as the Federal
Universal Service Fund (Fund) have been instrumental in supporting the
investment required for rural telephone services, and such is still
needed for many areas too sparsely populated to economically justify
either wireline or wireless coverage. To get a first-hand view of the
rural needs and challenges, we invite and would welcome members of the
Committee to tour our rural service areas.
Today, high-speed Internet access is fast becoming indispensable to
basic communications and commerce, just as the telephone has been for
many decades. This is true across all spectrums of human interaction,
including education, medical care, governmental services, creative
endeavors, as well as business communications and collaboration. We
believe the FCC and Congress must take the first step to affirm a new,
expanded policy of universal service, one that defines basic service to
include broadband access to the public Internet.
In doing so, we must be careful not to legislate an Internet access
speed, i.e., not to cast in bureaucratic stone the definition of what
we mean as broadband. Instead, we should allow the definition of
broadband to evolve as technology and its application evolves. Internet
video applications that are emerging at a rapid pace will fuel consumer
demand for faster connections, just as distributed computing and
software hosting will drive demand for faster, more reliable
connections for businesses large and small.
In recent years, Ritter Communications has been deploying fiber-to-
the-premise services to the medical community in Jonesboro, in direct
response to demand for very high bandwidth to support video
applications used for remote diagnostics. The gigabit-per-second level
bandwidth required could only be provided today by direct fiber
connections, since wireless and other wireline technologies lack this
ability. We believe this trend will continue and extend to other
business applications and activities, and there will be a diverging
standard that will emerge between mobile and fixed technologies in
recognition of the limitations of mobile technologies to support high-
definition video applications.
Funding
We believe that current Federal funding for universal service is in
jeopardy, and warrants reformation to ensure sustainable and
predictable support for rural communications services, which is
rendered more imperative by the need to expand such funding for
broadband access services. The amount of funding for rural support is
eroding as the base for such support is attriting because of the
transition, ironically, to Internet-based telephony, which does not
collect universal service fund fees. Support for rural carriers is also
adversely affected by the transition of telephony minutes and access
services from wireline to wireless services, which do not contribute
support in the form of carrier access charges. It is imperative that
the FCC focus on these issues to ensure that rates and services are, in
the words of the Telecom Reform Act of 1996, ``reasonably comparable
between urban and rural areas of the Nation.''
We consider it unfortunate that the Federal universal service
program has become a political target because of some confusion
regarding its purpose, e.g., whether its mission is to promote rural
competition, and/or to provide for comparable rural services and rates
in high cost areas. These twin goals are now at odds. The fund has
grown in scale and scope to the point that there is a growing concern
that it should be better targeted to the needs of the rural public. We
share this concern. This will be particularly true if the fund is
transitioned to promote and support the funding of rural broadband
services. In this context, we believe the identical support rule,
allowing competitive carriers to receive support based on the incumbent
carrier's costs, has created some burdens on the fund, with
questionable benefits for the public. Although some of Ritter
Communications' business interests benefit from this rule, we are
concerned about the long-term sustainability of the Fund, and the
continued viability of the most rural areas of the State of Arkansas.
We believe a better long-term policy is to continue to target high cost
areas, with funding solutions based on each provider's actual costs to
serve those areas.
Conclusion
We are indeed encouraged by the interest this hearing represents,
and share a concern regarding the need for a proactive policy on the
assessment and support of broadband services, especially in the most
rural areas of the state. As a company actively engaged in providing
broadband services in a wide variety of locales, using a variety of
technologies, to a broad mix of customers and customer types, we
believe we have some unique perspectives to offer to this conversation.
We respectfully recommend that Federal policy first be augmented to
redefine and expand basic service to include broadband access services.
In the pursuit of this goal, such policy should provide for an evolving
definition of broadband access services, and that policy's primary
focus should be to ensure, at a minimum, that the most rural, high-cost
areas of the state are not left out of the digital age.
Senator Pryor. Thank you. Ms. Cunningham?
STATEMENT OF MARYCE CUNNINGHAM, SECRETARY,
ARKANSAS BROADBAND ADVISORY COUNCIL;
GOVERNMENT RELATIONS MANAGER, MIDSOUTH REGION,
SUDDENLINK COMMUNICATIONS
Ms. Cunningham. Thank you, Senator. My name is Maryce
Cunningham. I am the Secretary of the Arkansas Broadband
Advisory Council and the Government Affairs Manager for the
MidSouth Region of Suddenlink Communications. Our 276 Arkansas
employees take great pride in offering broadband and other
advanced services to secondary markets in rural communities in
Arkansas from the size of Jonesboro to College City with fewer
than 300 residents.
However, despite our best efforts to take broadband to the
state's smallest communities, we know there are still some
areas with no broadband service, and these typically have only
a few dozen residents and very low population densities. To
take broadband to them, several things need to be done. In our
extended testimony for the record, Suddenlink suggests four
steps for your consideration. In our limited time today, I'll
address two of those.
The first step is to develop a comprehensive map, which has
been mentioned so many times today, where broadband service is
available in Arkansas and where it is not. As Senator Pryor
knows, Congress is considering a national broadband mapping
bill. Meanwhile, in West Virginia the state government is
marshaling resources to produce a detailed map of the
availability of broadband there. We believe such an effort is
likewise critical in Arkansas so that any future resources
devoted to the issue here can be productively focused.
The second step is to make sure that private enterprises
which have already worked hard to take broadband to rural
Arkansas, have a fair and level playing field to continue their
efforts. Our companies market power is dwarfed by certain
entities with which we are required to negotiate.
In that environment, the electrical cooperatives are
threatening to charge exorbitant pole rental fees, while large
media conglomerates are threatening excessive retransmission
consent fees. And if realized, these threats will divert funds
that could otherwise be used for additional broadband
deployments. Accordingly, we and others recommend policies that
inject public interest goals like the extension of broadband to
rural areas into these market processes like retransmission
consent, and pole attachment negotiations. Especially where
these negotiations are controlled by powerful entities with
economic interests that may frustrate or hinder the public
interest.
Again, I offer more detail on these and other steps in the
written testimony that we provided for the record. And in the
interest of time, I'll conclude my remarks by expressing our
gratitude to Senator Pryor and his staff, to Commissioners
Copps and Adelstein and their staffs. And thank you for being
here, and allowing us to participate in this hearing today.
[The prepared statement of Ms. Cunningham follows:]
Prepared Statement of Maryce Cunningham, Secretary, Arkansas Broadband
Advisory Council and Government Relations Manager, MidSouth Region,
Suddenlink Communications
Thank you, Mr. Chairman. My name is Maryce Cunningham. I'm both the
Secretary of the Arkansas Broadband Advisory Council and the Government
Relations Manager for the MidSouth Region of Suddenlink Communications.
This region of our company includes the state of Arkansas, of which I'm
delighted to be a resident, along with 275 of my Suddenlink colleagues.
Suddenlink is a top 10 U.S. operator of cable broadband systems. We
support the information, communication, and entertainment needs of
approximately 1.4 million total customers across the country, roughly 9
percent of which are in Arkansas.
Here, as elsewhere, our employees take great pride in serving
secondary markets and rural communities. We are equally proud that, in
a growing number of those communities, we offer advanced services that
are comparable to what you would find in the largest metropolitan
areas, such as digital TV, competitive phone service, and of course,
high-speed Internet or broadband service.
In fact, Suddenlink's story is the story of how private enterprise
has already done a great deal to close much of the digital divide that
separates smaller communities from urban centers.
In early 2003, our management team took over the operation of what
was then known as Classic Communications. At the time, roughly 30
percent of the company's customers had access to broadband service. By
2005, we had more than doubled that percentage. And today, we are at 99
percent, rapidly moving to 100 percent, covering markets all the way
from Jonesboro with 60,000 residents to College City in Lawrence
County, with a population of fewer than 300 people.
All told, counting our past and current operations in Arkansas, we
and our predecessors have invested nearly $225 million in this state
since 2003, to help take broadband to areas where it previously was
not.
And we're not finished yet: Even as I speak, we're rolling out
lightning-fast connections to mid-size and smaller markets alike,
offering download speeds of up 10 megabits per second (Mbps). Until
now, those speeds were unheard of outside the largest metro areas.
As demonstrated by this list of accomplishments, our collective
effort to bring broadband to Rural America is indeed a success story of
the first degree, for both our company and our industry. However, we
recognize that--as much as our industry has already done to connect
Rural Arkansas--there are areas of the state that still do not have
broadband access.
Furthermore, it is our impression, based on our experience in
serving secondary and rural markets, that the remaining, unconnected
areas of the state--by and large--do not have populations of several
thousand or even several hundred people. To the contrary: Today's
unconnected communities typically have only a few dozen people living
in them, with population densities that are often 10 homes per mile or
less.
To reach those areas, we believe several things need to be done.
The first and most important step is to develop a comprehensive map
of precisely where broadband service is available in Arkansas and where
it is not. We understand the data maintained by the FCC only looks at
zip codes and that it designates a zip code as ``served,'' even if only
one home in that zip code has broadband available to it. Unfortunately,
in geographically large and sparsely populated zip codes, such data is
not useful.
Accordingly, as Senator Pryor knows, Congress is considering a
national broadband mapping bill, which was recently passed out of the
Senate Commerce Committee. Meanwhile, in West Virginia--home to Senator
Pryor's senior colleague on the Commerce Committee, Senator
Rockefeller; and also home to more than 600 Suddenlink employees and
more than 200,000 Suddenlink customers--the state government is
currently marshalling resources to produce a detailed map of the
availability of broadband there.
In short, mapping efforts have both precedent and momentum, and we
believe such an effort is critical in Arkansas, so that any future
resources devoted to the issue here can be most productively targeted.
We further believe such mapping efforts should help determine home-
PC penetration in rural areas, in addition to the availability of
broadband services. Current data suggest that PC penetration is often
quite low in rural and economically depressed areas and thus broader-
scale efforts may be needed to help lower-income families secure a home
computer before broadband service is relevant to them.
After broadband mapping, we believe the second critical step is to
make sure private enterprises like our company--which have already done
much to take broadband service to Rural Arkansas--have a fair and level
playing field on which to continue our efforts.
Despite Suddenlink's rank among the top 10 U.S. cable operators, we
remain a relatively small company and our market power is dwarfed by
several entities with which we are required to negotiate contracts,
including electric cooperatives and media conglomerates.
Without government intervention, the electric cooperatives have
made it very clear they will charge exorbitant pole-rental fees,
tripling if not quadrupling our costs. The result: Our company and
others will have less capital to deploy broadband to remote areas.
On a similar note, without government intervention, large media
conglomerates have made it clear they will continue to seek excessive
retransmission-consent fees, likewise diverting funds that could
otherwise be used for broadband deployment.
At our current size, Suddenlink does not have the negotiating
leverage to resist those threats and the resulting diversion of
precious resources.
In short, we need the careful application of government programs
that inject public-interest goals, like extension of broadband to rural
areas, into market processes like retransmission-consent and pole-
attachment negotiations. That is especially true when these
negotiations are effectively controlled by large, powerful entities
with clear economic interests that will frustrate or hinder the public
interest by significantly driving up the costs of broadband providers
as they seek to extend service into areas of low-population density.
The third step in the process is to carefully review technology
alternatives. For instance, ours is primarily a wireline business, but
we recognize that wireline broadband will not always be the most
economical option for reaching the most remote and rural areas.
Instead, wireless broadband (over licensed spectrum) may ultimately
represent the best combination of reliability and economics to reach
those areas.
Fourth and finally, we believe the process of bridging the last
span of the digital divide will involve carefully targeted government
subsidies--subsidies that rely on the aforementioned maps and analysis
of alternative technologies.
In making this recommendation, I want to be very clear: We do not
believe subsidies should be granted in the form of low-cost loans. At
low-population, low-density levels, it's all-but-impossible for a
broadband company to develop a viable business plan, even with the most
favorable loan terms.
That's a lesson the U.S. Department of Agriculture's Rural
Utilities Service (or RUS) has learned the hard way. Directed by
Congress to prioritize low-cost broadband loans to companies that
propose extending service to un-served areas, the RUS has received very
few loan applications from those areas.
Why? Because the loan applicants, even on preferential, cost-of-
money terms, cannot develop a viable business model that would allow
them to pay back the money. Instead, the RUS has received and approved
loans to companies that propose to serve areas where broadband is
already available, often from three or more incumbent providers,
defeating the purpose of the original legislation.
For that reason, we believe the process of closing the final inches
of the digital divide will require direct government support. That
said, knowing government funds are scarce, I want to reiterate that a
broadband subsidy program should not be designed until the prior steps
I've discussed (such as the mapping project) are undertaken. Only then
can we ensure that subsidies are carefully and appropriately targeted
to the few remaining areas with no service option.
Thank you for your time, today. We look forward to working with our
peers on the Arkansas Broadband Advisory Council, Senator Pryor and his
staff, Commissioners Copps and Adelstein and their respective staff,
and others to carefully examine and act upon these and similar
recommendations.
Senator Pryor. Thank you. Mr. Jones?
STATEMENT OF JOHN F. JONES, VICE PRESIDENT,
REGULATORY AND GOVERNMENT RELATIONS,
CenturyTel, INC.
Mr. Jones. Being at this end of the table, I'm reminded by
something Commissioner Adelstein told a group of us when we
were debating inter-carrier compensation reform with about 40
of us in the room, and he said: Everything about this subject
has been said. It's just everyone has not said it yet.
[Laughter.]
Mr. Jones. Good morning. My name is John Jones, and I'm
Vice President of Regulatory and Government Relations for
CenturyTel. I appreciate the opportunity to testify today, and
I think that hearings like this are both timely and important,
as all of us grapple with advancing technologies and customer
demands. You'll find that despite many commonalities associated
with broadband deployment, each state also has challenges,
opportunities, and characteristics unique to their population
and geography.
In 2000, CenturyTel purchased more than 200,000 access
lines in Arkansas from what was then GTE. Since that time, our
company has invested approximately $1 billion in infrastructure
to bring broadband services to these markets, where before,
they had very few options like that. Today, we serve
approximately 220,000 customers, and 82 percent of those
customers have broadband availability.
In Arkansas and mostly rural markets in 24 other states,
CenturyTel is introducing a variety of new broadband services
at speeds up to ten megabits per second. We're delivering those
services with our core wireline network and alternative
broadband access technologies such as mesh Wi-Fi hot spots and
point-to-point wireless broadband into strategic areas. As part
of our testimony today, we want to leave you with three key
points relating to providing broadband to rural areas.
Number one, in rural markets, affordability, lack of
customer density, and PC availability are the biggest obstacles
to increased broadband's subscribership.
Number two, reaching the remaining unserved customers in
rural markets that do not have broadband today would require
significant additional investment.
And number three, efforts by the Joint Board and FCC to
stabilize the Universal Service Fund are critical to a long-
term viability of the Fund, and consequently the goal of
universal broadband access for all.
In most of our operating states, we are working with our
state governments to identify broadband challenges, and
engaging in public/private partnerships, such as Connected
Nation and Connect Arkansas, to help all providers to deploy in
unserved areas. We believe customer broadband expectations
revolve around faster speeds, lower prices, and competitive
service bundles. Also, we've seen some really great success
stories out of this state in areas like Forks, Washington, that
lost its economy due to the timber business and reinvented
itself with broadband connectivity and Bayou La Batre, Alabama,
which was cleaned off the map by Hurricane Katrina, and
bringing broadband to that area and how they in two short years
have basically put themselves back on the map through economic
development and broadband outreach.
In closing, CenturyTel believes that rural customers are
speaking loudly about what their telecom needs are. It is not
necessarily about wireless or wireline voice service because,
they have that in most of the cases. It's about broadband,
affordable broadband, and faster broadband. We look forward to
working with other Arkansas stakeholders to strengthen the link
between broadband availability and broadband subscribership,
and continue in meeting their evolving telecom needs for
Arkansas citizens. And, again, I thank you so much for inviting
us here today, and appreciate the opportunity.
[The prepared statement of Mr. Jones follows:]
Prepared Statement of John F. Jones, Vice President, Regulatory and
Government Relations, CenturyTel, Inc.
Senator Pryor and distinguished guests, my name is John Jones, and
I am Vice President of Regulatory and Government Relations for
CenturyTel, Inc. I submit this testimony as part of the above
referenced proceeding, and thank you for allowing our company to
participate. We believe hearings of this type are both timely and
important as the industry works to keep pace with evolving technologies
and an ever-changing marketplace. You will find that despite many
commonalities associated with broadband deployment, each state also has
challenges, opportunities and characteristics unique to their
population and geographic area.
In 2000, CenturyTel purchased more than 200,000 access lines in
Arkansas from what was then GTE. Since that time, our company has
invested approximately $1 billion in this state and located our
Southeast Regional Office in Cabot. The changes we brought to the
former GTE customers from a telecommunications perspective were
dramatic. In nine short months, we intensified efforts and through a
disciplined investment strategy brought broadband and dial-up Internet
services to rural markets that had few if any such options. Today,
CenturyTel serves approximately 220,000 customers in the State of
Arkansas, with more than 82 percent having access to DSL services.
In Arkansas and in various rural markets in 24 states, CenturyTel
is introducing new services such as broadband TV, personalized
broadband content and broadband access speeds up to 10 Mbps. In
addition, we are deploying alternative broadband access technologies
such as mesh Wi-Fi ``hot spots'' or ``hot zones'' and ``point-to-
point'' wireless broadband in strategic areas.
As part of our testimony today, we want to leave you with three key
points relating to providing broadband in rural areas:
1. In rural markets, affordability, a lack of customer density
and PC availability are the biggest obstacles to increased
broadband penetration;
2. Reaching the remaining unserved customers in rural markets
that do not have broadband today will require significant
investment and cost, with few, if any, business cases to
support that investment; and
3. Efforts by the Joint Board and FCC to stabilize the
universal service fund are critical to the long-term vitality
of the fund and, consequently, the goal of universal broadband
access for all Americans. Americans in all parts of the country
are sending the message that their telecom and economic future
depends on robust broadband deployment. In the years ahead,
global economic competition will require increasingly
sophisticated networks that deliver unprecedented levels of
speed at much lower costs. Reform of USF must account for this
central public policy goal.
In most of our operating states, we are seeing an increasing
interest in ``last mile'' broadband solutions. Like other providers, we
are working with our state governments to identify broadband challenges
and engaging in public-private partnerships, such as Connected Nation
and Connect Arkansas, to help all providers deploy in unserved areas.
We believe customer broadband expectations revolve around faster
speeds, lower prices and competitive service bundles. It is our view
that with the doubling of Internet traffic every year, capacity and
speed will be the key differentiators as the high-speed data market
continues to evolve and be driven by customer demand.
As you know, broadband connections and the services they deliver
will be the core strategic product for our future growth. Eventually,
all voice, data and entertainment services will ride the broadband
pipe. Also, from a consumer acquisition and retention perspective,
broadband is becoming the consumer linchpin for the bundling, pricing
and marketing of other services. To that end, price and speed are
becoming the key drivers of customer demand.
Despite remarkable success in deploying broadband services in some
very rural areas, subscribership rates in rural markets remain
relatively low because of issues with affordability and PC
availability. The main point I want to make about this is that even
though a customer in a rural market has broadband available to them,
other important factors will ultimately impact their decision on
whether to become a broadband subscriber or not.
CenturyTel recognizes that deploying broadband to the remaining
unserved or underserved areas will be an expensive undertaking. If the
Nation's telecom policy goal should become ubiquitous or nearly
ubiquitous broadband availability, ultimately some form of broadband
support will be needed to help offset the cost drivers for rural
service. There are several categories of costs that CenturyTel believes
are not addressed today.
As an example, most of the monthly recurring inter-office transport
and backhaul costs between rural local exchange areas and the nearest
tandem switch or urban Internet access point, which may be hundreds of
miles away, are not expressly covered by the Federal high-cost programs
today. This backhaul infrastructure is also relied upon by ISPs,
wireless providers, VoIP providers and others sending traffic to or
receiving traffic from rural customers.
CenturyTel believes that targeted universal service funding for the
highest cost areas will be needed in conjunction with other support
mechanisms such as grants, tax investment incentives and low interest
loans. Regardless of the funding source established, the key will be to
properly define what is meant by ``broadband'' and ``support for
broadband'' on the front end of the process. In light of the rapid
technological changes taking place, the new definition must be flexible
to accommodate evolving technology. Therefore, it will be important for
policymakers to revisit and update the standard periodically in order
to keep affordable bandwidth speeds in rural areas comparable to those
in urban areas.
This hearing today would not be as worthwhile if the witnesses did
not offer potential solutions to help expand the availability of
advanced services into underserved and unserved areas. CenturyTel
believes that a limited, but clearly defined, separate broadband
program for unserved high-cost areas would be a good first step.
Funding for such a program might come from the restructure of some
existing USF elements. For example, limiting support to only one
wireless CETC per market should produce significant savings. In
addition, we support the recent Federal-State Joint Board
recommendation to place an interim cap on CETC support at 2006 levels.
This recommendation is a logical and rational first step toward
meaningful reform.
I want to leave you with a broadband success story from Mountain
Home, Arkansas. Miles and Michelle Riley moved from Mississippi to
Arkansas in 1998 to start a small family business offering guided
hunting, fishing and nature trips on the White and Buffalo Rivers to
customers from around the Nation. CenturyTel installed high-speed
Internet at the Riley's remote location shortly before Memorial Day in
2005. Since that time, the Rileys have basically remained booked solid
and can offer their customers the ability to book their guided outings
via the Internet and check their e-mail and stay connected to their
business via a wireless router. The Rileys maintain they could not
maintain their business at the level they do without the broadband
connection. This is just one example of the tremendous economic impact
broadband can bring to rural America.
In closing, CenturyTel believes that rural consumers are speaking
loudly about what their telecom needs are. It is not about wireless or
wireline voice service because they have that in most cases. It is
about broadband, more broadband and faster broadband. In the years
ahead, global economic competition will require increasingly
sophisticated networks that deliver unprecedented levels of speed at
much lower costs.
We look forward to working with other stakeholders to strengthen
the link between broadband availability and subscribership and continue
meeting the evolving telecommunications needs of Arkansas citizens.
Again, thank you Senator Pryor for giving us the opportunity to
provide input on such an important public policy.
Senator Pryor. Thank you. Mr. Ashcraft?
STATEMENT OF GREG ASHCRAFT, CFO,
SOUTH ARKANSAS TELEPHONE COMPANY
Mr. Ashcraft. Senator and Commissioners, thank you for
bringing the field hearing to Arkansas. I appreciate it. And
thank you for the opportunity to speak before the Committee. My
name is Greg Ashcraft. I am CFO for South Arkansas Telephone
Company. South Arkansas Telephone Company is a rural incumbent
local exchange carrier in south Arkansas with 3,900 customers.
I'm here today representing South Arkansas Telephone Company
and 14 other rural independent telephone companies. These
companies understand the importance of broadband to the
medical, educational, social, and economical needs of Arkansans
and Americans. These companies have been working very hard on
the deployment of broadband in their service areas. The
following percentages are a year old, but it is evidence of
their hard work.
Broadband is available in a hundred percent of the
exchanges of these rural ILECs. Broadband is available to 82
percent of the customers of the rural ILECs. And 11 percent of
the customers had subscribed to broadband as of a year ago.
This level of deployment of broadband has been accomplished due
to the dependability, reliability of the revenue stream from
the Universal Service Funds and NECA pools. We feel it's
important to protect these pools to ensure the availability of
broadband to the rural systems in the future. This deployment
has also been to some of the most remote and most rural areas
of the state of Arkansas.
For instance, South Arkansas Telephone Company has two
subscribers per route mile of cable, and the other 14 companies
have similar statistics. These companies are working hard in
deploying broadband to the remaining 18 percent of the
customers. The problem is this last deployment will be the most
difficult to accomplish and the most expensive. These companies
are dedicated to making broadband available to 100 percent of
their customers.
So in closing, the rural telephone companies of Arkansas
feel we've made great steps in the deployment of broadband, but
there is still work to do. And the last deployment will be the
most expensive, most difficult. This is one of the main reasons
why we are just as committed to help stabilize the USF, to
continue to support broadband through the USF, and to help
protect the long-term viability of the USF. Thank you.
[The prepared statement of Mr. Ashcraft follows:]
Prepared Statement of Greg Ashcraft, CFO,
South Arkansas Telephone Company
Hello, my name is Greg Ashcraft and I am the CFO for South Arkansas
Telephone Company and a member of the Arkansas Broadband Advisory
Council. South Arkansas Telephone Company is a small incumbent local
exchange carrier (ILEC) in south Arkansas with 3,900 customers. I am
here today representing South Arkansas Telephone Company and 14 other
small independents that are not represented on this panel. I work
closely with these 14 companies on policy development.
The small rural Arkansas telephone companies understand the
importance of Broadband to the medical, educational, social and
economic needs for rural Arkansans and Americans.
The small telephone companies in Arkansas have worked very hard in
recent years to deploy broadband to their customers. Evidence of our
work is included in this data that is over a year old:
Broadband service is available in 100 percent of the
exchanges of these companies.
Broadband had been made available to 82 percent of the total
customers of the rural ILECs.
Approximately 11 percent of the customers of the rural ILECs
had subscribed to broadband.
The cost of service is reasonable and the companies are working
hard to finish providing broadband to the remaining 18 percent that
they had not reached a year ago and to encourage more households to
subscribe to broadband service.
The benefit of ILEC broadband service includes:
the historical reliability of service.
the community based owners and the adherence of these
companies of public service commission customer service rules
that protect customers and allow a supervised complaint process
in event of dispute.
The broadband available through these small companies is backed-up
by power generators and by engineered lines that are programmed to
allow alternate facilities to be used to maintain service, in the event
of any disaster or attack.
The broadband deployment in these rural companies should be
understood as service to some of the most rural areas of Arkansas. For
instance South Arkansas Telephone Company has 2 customers per route
mile of cable and many of the other 14 companies have similar
statistics. The 82 percent availability of broadband is not because of
population density, but in spite of population density. This wire-line
service has been provided to these rural customers with the reasonable
reliability of revenue streams, such as the Federal Universal Service
and NECA pools. These services will continue to be provided on a fair,
reasonable, affordable and community basis in the coming years. One of
the problems is that making broadband available to the remaining 18
percent of these companies customer base will be the most expensive
deployment; however the rural ILECs are dedicated to providing 100
percent deployment.
The rural companies are leaders in deploying broadband to rural
areas due to the reliability and dependability of Federal Universal
Service and NECA pools in the past. It is important that these pools be
protected to ensure continued availability of broadband to the rural
citizens in the future.
We would urge this Committee to join the efforts of the rural
telephone companies in Arkansas, and the efforts of the Joint Board and
the FCC, to stabilize the USF, continue to support broadband in the USF
and protect the long-term viability of the USF.
Senator Pryor. Thank you. Mr. Pitcock?
STATEMENT OF LEN PITCOCK, EXECUTIVE DIRECTOR,
ARKANSAS CABLE TELECOMMUNICATIONS ASSOCIATION
Mr. Pitcock. Thank you, Senator. And welcome again on
behalf of all of us. I'm Len Pitcock, the Executive Director of
the Arkansas Cable Telecommunications Association. We're
headquartered here in Little Rock, and we represent about a
dozen of the state's broadband and cable providers. Our
membership ranges from some of the countries largest multi-
system operators serving our state to some of the smaller
family-owned companies with a few hundred subscribers. We also
have two municipally-owned cable operators in our membership.
Broadband deployment in Arkansas has played a pivotal role in
the growth of our industry over the past ten years. Our
membership has connected Arkansans to the rest of the world
through private investments we've made in our businesses. From
the fastest growing metropolitan areas of our state in the
northwest to central Arkansas to the smallest communities in
the Delta, many Arkansans are taking full advantage of the
technology available to them today.
Haynes, Arkansas, is a prime example of the Arkansas cable
industries commitment to rural broadband deployment. This small
Delta farming community of 187 residents is miles from the
nearest population base. Yet cable's investment in the area has
resulted in 18 high-speed Internet customers. That's ten
percent of the community, and I think that's up for debate
whether or not ten percent of the community is a good thing or
a bad thing. The broadband investment in Haynes like almost all
across the state was made with no government assistance
whatsoever.
As I am sure many of you have heard before, the cable
industry, it takes great pride to think that we have
collectively invested over $100 billion in private capital
deploying broadband across this country in recent years. Here
in Arkansas, we've easily spent a half billion dollars in that
same time period. These expenditures result in jobs, tax
revenues, and many other economic factors contributing to our
state's financial well-being.
This is not to say we're done, however. One Arkansas
community without access to broadband is one too many. The
cable industry is not and never has been opposed to government
incentives for the deployment of broadband. In many cases, we
recognize policy measures are the only avenue available to
further deploy broadband to portions of the state that might
not realize it any other way. Our position has been and remains
today that government assistance should be closely monitored
and should only be available to areas where no service exists.
Government-subsidized competition occurs when incentives are
available to providers to deploy broadband in areas that
already have it. This is our fear--the availability of tax
breaks, low interest loans, and other economic benefits
provided by the government for others to enter the market where
we've already made private investment, we and others have made
private investment.
Broadband deployment in Arkansas is important. We--the
cable industry--recognize that we are one of the leading
providers of broadband in the state and we take our role very
seriously. We were there on the front end, and we will continue
to assist Arkansans in our collective, and when I say
collective, all of us in this room are collective efforts to be
a member of the global community. This concludes my testimony.
[The prepared statement of Mr. Pitcock follows:]
Prepared Statement of Len Pitcock, Executive Director,
Arkansas Cable Telecommunications Association
I'm Len Pitcock, Executive Director of the Arkansas Cable
Telecommunications Association. We are an industry organization
comprised of a dozen cable and broadband operators here in the state.
Our membership ranges from several of the country's largest multi-
system operators, to smaller family-owned companies with a few hundred
customers. The Association also has two municipally-owned cable systems
included in its membership.
Broadband deployment in Arkansas has played a pivotal role in the
growth of our industry over the past 10 years. Our membership has
connected Arkansans with the rest of the world through the private
investments we've made in our businesses. From the fastest growing
metropolitan areas of our state in Northwest and Central Arkansas, to
the smallest communities in the Delta, many Arkansans are taking full
advantage of the technology available to them today.
Haynes, Arkansas is a prime example of the Arkansas cable
industry's commitment to rural broadband deployment. This small Delta
farming community of 187 residents is miles from the nearest population
base. Yet cable's investment in the area has resulted in 18 high-speed
Internet customers. That's 10 percent of the entire community.
The broadband investment in Haynes, Arkansas, like almost all
across the state was made with no government assistance whatsoever. As
I'm sure many of you have heard before, the cable industry takes great
pride in the fact that we have collectively invested over 100 billion
dollars in private capital deploying broadband across the country in
recent years. Arkansas companies have easily spent over a half billion
dollars. These expenditures result in jobs, tax revenues and many other
economic factors contributing to our state's financial well being.
This is not to say we are done however. One Arkansas community
without access to broadband services is one too many.
The cable industry is not, and never has been, opposed to
government incentives for the deployment of broadband. In many cases,
we recognize policy measures may be the only avenue available to
further deploy broadband to portions of the state that might not
realize it any other way. Our position has been, and remains today,
that government assistance should be closely monitored and available
only to areas without service. Government subsidized competition occurs
when incentives are available to providers to deploy broadband in areas
that already have it. This is our fear--the availability of tax breaks,
low interest loans, or other economic benefits provided by the
government for others to enter the market and compete with those who've
already invested there.
Broadband deployment in Arkansas is important. The cable industry
of the state takes its role as one of the leading providers very
seriously. We were there on the front end and will continue to assist
Arkansans in our collective effort to be a member of the global
community. This concludes my testimony.
Senator Pryor. Thank you. Mr. Massaglia?
STATEMENT OF GARY MASSAGLIA, VICE PRESIDENT AND GENERAL
MANAGER, COMCAST CORPORATION--ARKANSAS
Mr. Massaglia. Thank you, Senator and Commissioners. My
name is Gary Massaglia. I'm the Vice President of Operations
for Comcast Corporation here in Arkansas. We serve basically
two geographic areas in the state: around the Little Rock area
here and in the West Memphis area up into more of the northeast
section of the state. We have over the past years invested
about $60 million as Mr. Pitcock mentioned of privately-raised
capital into building our broadband network, so that we can
provide all of the products and services that our customers are
looking for in those two geographic areas.
As we prepared that network, we have spent that money so
that we could bring not only all of our video products but also
broadband Internet and now telephony. We're doing this because
there is a customer demand in the communities and neighborhoods
that we serve. And because of this investment, all of our
customers have access to the myriad of products and services.
Those include 250 all digital video channels, multiple high
definition channels, high-speed Internet, On Demand
programming, and now with telephony products also available
facilities-based. We offer speeds on our high-speed Internet up
to 12 Mbps today. Those are constantly growing, so the
investment never stops. We invested that $60 million as I
mentioned, that continues to grow because you have to keep up
with the demand for more bandwidth, not only from our
residential customers, but also from the business community.
What's interesting to think about is just ten years ago, most
Americans used dial-up, which we've heard mentioned by some of
the students earlier.
Most of us as Americans used dial-up Internet, and we paid
expensive per minute charges, and quite frankly, I think we all
thought it was pretty neat. Today, we think it's very archaic,
so it's amazing how fast that technology is changing and moving
forward. The same network as I've mentioned that we've built
allows us to offer an alternative to local exchange telephone
service, delivering facilities-based broadband choice for
telephone. Comcast offers Arkansas customers a digital voice
service with a broad array of features and capabilities at very
competitive prices. We have invested significantly to bring
facilities-based telephone competition to Arkansas, and we are
pleased to state that our products and services, digital video,
high-speed Internet, and telephone are available to 100 percent
of the homes that we pass. That concludes my testimony, and I
would be glad to answer any questions.
[The prepared statement of Mr. Massaglia follows:]
Prepared Statement of Gary Massaglia, Vice President
and General Manager, Comcast Corporation--Arkansas
Thank you Mr. Chairman. My name is Gary Massaglia and I'm the Vice
President and General Manager for Comcast's cable operations in
Arkansas.
We serve approximately 90,000 customers in the Little Rock and West
Memphis areas of the state.
My comments today will focus primarily on our experience in
offering Broadband to our central Arkansas customers.
Comcast has invested approximately $60 million dollars in private
capital without any government incentives to prepare our network to
offer our customers the variety of products and services made capable
by a complete Broadband network. This includes a $6 million dollar
state-of-the-art technical center currently being built in Little Rock.
We've done this because there is a customer demand in the communities
and the neighborhoods we serve.
And because of this investment, all of our customers have access to
a myriad of products including:
Over 250 all digital video channels; multiple High
Definition channels with plans to offer many more as quality HD
channels become available; over 8,000 different On Demand
programs available for our customers to choose what they want
to watch, when they want it and start and stop the programs at
their convenience.
Also, as a result of our Broadband network, Comcast
customers can experience the best the Internet has to offer. We
offer speeds up to 12 Mbps and a very video rich and easy to
navigate Comcast portal.
What's interesting to think about is that just over 10
years ago, most Americans used dial-up access to the
Internet and paid expensive per minute charges for service
and received what today would be considered incredibly slow
speed and very little content.
This same network allows Comcast to offer an alternative to
local exchange phone service, delivering real facilities based
choice to consumers. Comcast offers our Arkansas customers a
digital voice service with a broad array of features and
capabilities at very competitive prices.
We have invested significantly to bring facilities-based telephone
competition to Arkansas and we are very pleased to state that our
products and services; digital video, high-speed Internet and our phone
service are available to 100 percent of the homes we pass here in
central Arkansas. Not one neighborhood is excluded.
Thank you and I will be pleased to answer any questions.
Senator Pryor. Thank you. Mr. Gibson?
STATEMENT OF DEAN GIBSON, VICE PRESIDENT, OPERATIONS, PINNACLE
COMMUNICATIONS
Mr. Gibson. Thank you once again, gentlemen, for coming
today. We appreciate your time and your effort in making it to
our state. I just want to give you a perspective this morning
from a family-owned telephone business in Lavaca, Arkansas. In
Lavaca, we are a wireline company that has been in business
since 1960, and we've been providing quality, we think,
telephone services to those customers since that time.
We, today, service over 1,500 customers in rural western
Arkansas. And I think two points I'd like to discuss today--one
that has been covered quite a bit, the other one maybe that has
not. I remember years ago my grandmother would work a
switchboard in a home where she and my grandfather lived. And
it was one of these things that I just grew up to know. But
another thing I grew up to know was this term ``carrier of last
resort.'' And I think somewhere in all of this, we've got to
remember the fact that during the early days of telephone, as
an incumbent local telephone company, we provided service to
everyone in our area. No one was left out. Our company, four
years ago, decided that with the aging of our copper plant and
the demand of the services, advanced services from the people
in our community that we were going to deploy a fiber-to-the-
home network in our entire exchange. And after three long years
and more than 165 miles of fiberoptic cable in the ground,
today, at the end of this year, every customer, all 1,500 plus,
will have access to a fiberoptic network, which will allow them
to have the state-of-the-art services that come, and broadband
especially. No longer is dial-up acceptable to people, I don't
think, in Arkansas and anywhere else. You might ask the
question on how can they afford do that. And I answer that
question by those three letters we've heard over and over
today, and that's USF.
The Universal Service Fund has provided, along with a NECA
of pooling, have provided us the ability to move forward and
make this commitment in this investment into Arkansas. And with
that, we want to say as Pinnacle Communications, maybe other
rural companies, that we applaud the Joint Board's
recommendation to put a cap upon the USF until it can be
reworked and it can be updated to be something that services
everyone who has the need. Like I said, we've been servicing
customers in Lavaca since 1961. We depend upon a lot of things
to make our business go.
One of that is service to the customer. The other thing is
the fact that we rely upon the USF, and we want to see a long-
term stable USF. We honestly believe that's a way to deploy
broadband to the areas that are high-cost. And we, in closing,
think that those customers in the high-cost areas deserve the
same products and services that those in the low-cost, urban
areas deserve. And that's our mission. Thank you.
[The prepared statement of Mr. Gibson follows:]
Prepared Statement of Dean Gibson, Vice President, Operations,
Pinnacle Communications
My name is Dean Gibson and I am Vice President of Operations for
Pinnacle Communications in Lavaca, Arkansas. Our company provides
landline voice and Internet access to over 1,500 customers in rural
western Arkansas. In the short time we have today, I would like to
focus my comments on two points which I think are important to our
discussion today.
My first point is carrier of last resort. Pinnacle Communications
is a carrier of last resort; by that I mean as an incumbent local
exchange company (ILEC), Pinnacle Communications is required to provide
service to all customers within its exchange boundary. We have applied
that policy not only to the telephone services we provide but to our
deployment of broadband services. I guess it has just become `a way of
doing business'. If the person closest to the office can receive the
service, why shouldn't the customer fifteen (15) miles out be able to
receive the service? That is where the old phrase `easier said than
done' comes into play. About 4 years ago, we realized that our aging
outside plant needed to be upgraded or replaced if we were going to
continue to provide quality, reliable services. Customers in our most
rural areas were demanding faster Internet speeds. Dial-up Internet was
no longer satisfactory to them. Taking that into consideration along
with the fact that Congress, the Governor, and the Arkansas Legislature
were all looking for ways to get broadband services to the rural
customers, we decided to replace our copper cable system with a state-
of-the-art fiber system. It has been a long, tough road but by the end
of this year (2007), we will have completed a `Fiber-to-the-Home'
rebuild of our Lavaca, Arkansas exchange. That means that every
customer in our service area will be able to receive not only
exceptional phone service but high-speed Internet access. You may ask,
``How can they afford to do that''? I am glad you ask because that
leads me to my second point.
Our decision to make the investment in rural Arkansas, as a carrier
of last resort, was based entirely on future NECA settlements and USF
support, commitments we rely upon for our company's survival. The
purpose of USF is to ensure that Americans in high cost rural areas
have communications services comparable to those in low cost areas. It
was never meant to subsidize competition between multiple carriers all
providing the same service. Pinnacle Communications believes the
recommendation by the Joint Board to put a cap on the dollars
distributed to competitive eligible telecommunications carriers (CETCs)
by the USF represents a necessary and responsible step as the FCC and
Congress develop a long term solution to stabilize the fund. The Joint
Board's recommendation will help bring run-away, excessive funding for
CETCs under control, which is indispensable to modernizing the USF. And
by the way, wireline companies like mine have had a cap on the growth
on USF payments for years so we are not advocating something that we do
not already have to abide by.
In closing, our company wants desperately to continue to provide
our rural customers with the quality services they have been accustomed
to since 1961, the year Pinnacle Communications first borrowed money
from REA to provide telephone service to areas that, up to that time,
had no service. We have undertaken considerable risks, investing in
plant and equipment to provide broadband to customers no one else wants
to serve because it doesn't fit their business plan. Rural customers in
Arkansas and across America need carriers of last resort to insure that
everyone has access to affordable broadband services. Those carriers
can only survive if we protect the long-term viability of the Universal
Service Fund.
Commissioner Adelstein. First, I just want to commend you
for building a fiber network out in rural Arkansas. I think
that's fantastic, and I'm glad to hear that USF helped with
that. Of course, it doesn't directly support broadband but we
have a ``no barriers'' policy that allows you to invest in
network that can carry broadband. I'm wondering, would it be
helpful to you if Universal Service explicitly made broadband a
supported service?
Mr. Gibson. Well, I don't know. In our case, we could see
an aging telephone network, and we still believed--because
there are places in our service area, believe it or not, that
are not serviced by a wireless telephone. And so not only were
we allowed to use or able to upgrade broadband into these rural
areas, but also the telephony, or the telephone usage, was also
upgraded and provided to those areas. So I honestly believe
that the USF can be a mechanism of which we can use to help
deploy that into those areas.
Senator Pryor. Ms. Zega?
STATEMENT OF KELLY HALE ZEGA, STATE MANAGER,
PUBLIC AFFAIRS, COX COMMUNICATIONS, ARKANSAS
Ms. Zega. Well, I guess I get to wrap this up. One final
welcome to Arkansas. We're just so pleased to be able to be
part of this dialogue. And so I would like to share a few
comments with you. I'm here today representing Cox
Communications. And from Green Forest to Fort Smith, Cox
Arkansas provides 99 percent of the communities we serve with
state-of-the-art broadband fiber technology. Our customers
experience a digital world that we believe is second to none in
64 rural and urban towns. And we invest over $25 million of
private-risk capital every year in Arkansas, expanding our
bandwidth capacity, and our communications infrastructure,
rendering the fastest Internet speeds available to residential
and business customers. The philosophy of our 400 Cox
Communications Arkansas employees is really to make a
difference in the towns that we serve. Annually, we provide
more than 360 free cable connections to K through 12 schools,
educational access channels valued at more than $3.6 million,
and we donate over $1 million in air time every year to
nonprofit organizations through PSAs. We don't just limit our
consideration to deploying the best in broadband, though. We
also are concerned with the appropriate use of that asset. One
of the most significant things we do for our communities, truly
relates to the grass roots implementation of our national
program called Take Charge!, which is an initiative designed to
increase customers' awareness and use of the parental controls
and content-filtering tools now available for the cable,
Internet, and telephone services found in the digital home.
This program puts content management into the hands of the
individual consumer, allowing them to set the guidelines that
they deem appropriate for their own homes.
Our seriousness about helping families navigate the top
technology that we provide extends beyond our Take Charge!
website, the PSAs that we run, the Internet safety workshops,
and partnership that we have with The National Center of
Missing and Exploited Children. Cox has also begun forging
local, meaningful partnerships with regional law enforcement
agencies in support of Internet Crimes Against Children
investigative units through two technology grants recently
through Cox Communications to support specialized equipment and
training. The Fayetteville Police Department has identified,
apprehended, and seen multiple Internet child predators
successfully sentenced. Each time the news of arrests of this
kind becomes public, we know the financial investment that we
make to support the ICAC program means that dozens or more
young people will be safer from exploitation.
Our employees are proud to know that not only is Cox
Communications bringing the world into our customers' homes
through our products, but we're also giving critical support to
the people who help make that world a little bit safer. Thank
you so much for the opportunity to make these comments, and I
would be pleased to answer any questions.
[The prepared statement of Ms. Zega follows:]
Prepared Statement of Kelly Hale Zega, State Manager, Public Affairs,
Cox Communications, Arkansas
Mr. Chairman, Senator Pryor, Commissioners Copps and Adelstein, I
appear before you today on behalf of Cox Communications. We welcome
this dialogue on the The State of Broadband in Arkansas.
From Green Forest to Fort Smith, Cox Arkansas provides 99 percent
of the communities we serve with state-of-the-art broadband fiber
technology. In short, our customers experience a digital world that is
second to none in 64 rural and urban towns. We invest more than 25
million dollars of private risk capital each year in Arkansas expanding
our bandwidth capacity and communications infrastructure, rendering the
fastest Internet speeds available to residential and business
customers.
The philosophy of our 400 Cox Communications Arkansas employees is
to make a difference in the towns we serve and in which we live. We
provide more than 360 free cable connections to K-12 schools,
educational access channels valued at more than $3.6 million every
year, and annually donate over $1 million in airtime to non-profit
organizations through the broadcast and production of public service
announcements.
One of the most significant things we do for our communities
relates to the grass roots implementation of our national program Take
Charge!, an initiative designed to increase customers' awareness and
use of the parental controls and content filtering tools now available
for the cable television, Internet and telephone services found in a
digital home. This program puts the content management of television
and Internet into the hands of the individual customer, allowing them
to set the guidelines they deem appropriate for their own homes.
Our seriousness about helping families safely navigate the
technology we provide extends beyond our information-packed Take
Charge! website, public service announcements, Internet safety
workshops and partnership with the National Center for Missing and
Exploited Children. Cox has also begun forging meaningful partnerships
with regional law enforcement agencies in support of Internet Crimes
Against Children investigative units. Through two initial technology
grants from Cox to support specialized equipment and training, the
Fayetteville Police Department has identified, apprehended and seen
multiple Internet child predators successfully sentenced. Each time the
news of an arrest of this kind becomes public, we know the financial
investment to support the ICAC program means dozens or more young
people will be safer from exploitation. Our employees are proud to know
that not only is Cox Communications bringing the world into our
customers' homes through our products--we're also giving critical
support to the people who make that world a little safer.
Thank you for the opportunity to present these brief comments and I
would be pleased to answer questions you may have.
Senator Pryor. Thank you. This wraps up our statements, and
I appreciate all the witnesses for trying their best to stay
within the time limits and time constraints that we have. I
have a few questions, and I think the Commissioners may have a
few questions as well. Let me, if I may, start with you, Mr.
Gibson. You mentioned this idea of carrier of last resort. I
guess I have a couple of questions there about the idea of
carrier of last resort for broadband. That idea includes this
concept that no matter what happens at the end of the day, your
company has to provide telephone service for people who live in
that area.
Mr. Gibson. Correct.
Senator Pryor. Do you think that we should adopt a Federal
policy that there should be a carrier of last resort status for
broadband? Are you willing to go that far? And also you talked
about the USF, and basically--essentially you said that you
could not have done your investment in the fiber network
without USF dollars. Sounds like you just didn't have the
revenue locally, to do it because you had to draw from USF to
do that, and how important that is, so if you could comment on
both of those.
Mr. Gibson. You know, as we've talked today, a lot of
people have said that we're moving from the dial-tone age to
the broadband age. And if that is in fact the case, in 1960
when I was only providing telephone service--as a child, my
parents were providing at that time service, I guess, to the
area, we felt the need for a carrier of last resort so that
everyone not only had electrical service, but that everyone in
my service area had telephone service. If we're going to move
from the dial-tone age to the broadband age, I can see there
would be a tie there between those two. And maybe there is a
need for there to be someone to provide service to those that
are the farthest out that are the highest cost that some of
these other wireline people have talked about today that are in
the rural mountains and the other areas. So I'm not sure that's
not a good idea.
The second part, the USF question that you had is the fact
that we couldn't have done it. And we can't sustain it without
the USF. If we want these type of services in the rural areas,
then there will have to be some help, because those people
would pay hundreds and hundreds of dollars a month to provide
the facilities in those areas that we're trying to deploy. And
so I think everyone in the room would agree that without some
sort of help, whether it's tax incentives or USF money or
whatever, that it just won't get done. It just won't, because I
can tell you their business plans just won't work it out.
There's not a business plan today without an extreme cost to
those customers. And that would work.
Senator Pryor. It's like Mr. Ashcraft said, the last group
is the most expensive one. It's easy to come up with a business
plan to provide the service in an urban or densely-populated
area. But the further you go out, the harder it is to make it
work.
Mr. Gibson. And you know the case about that is, Senator,
is the fact that we've spent our money up front. We spent our
money. We made the commitment to the people in our communities,
and we spent it. And now we rely upon the reliability of that
fund to sustain us. And it is, someone mentioned earlier, that
it's not only putting it into the ground, it's not only getting
it to the house, it's maintaining and keeping that updated to
make it effective.
Senator Pryor. Mr. Waits, let me ask you if I may. You gave
some statistics about access that people in your geographical
area have access, and they were very strong statistics, but one
question I have is the actual adoption by your customers of
those services that you offer. And I'm not trying to get into
your company's private information or whatever that may be if
it's aware that they did this for proprietary, but I am curious
about access versus adoption rate generally, and your thoughts
on why some people do not access those services. Is it an
affordability issue? Is it just a lack of interest issue? If
you could talk about that.
Mr. Waits. My short answer is yes, but would have to say
that in really rural mountainous areas--like low income areas
like Boone County and Newton County, as I mentioned before, out
of the 6,500 access lines that we have and we can make
available broadband to 90 percent of them. Our take rate there
is probably on the order of 15 percent. Now----
Senator Pryor. So 15.
Mr. Waits. Fifteen percent. Now anecdotally we think that's
because of low computer ownership, computer literacy. That
number has grown, by the way, considerably in just the last 12
months--12 to 18 months, there has been a big spike in DSL
demand in those rural areas. Part of it is because there is a
different demographic moving into these areas. They're actually
growing in the sense that there are people moving from
California and other places that want to get a different
quality of life in these beautiful mountainous areas around
Jasper and the Buffalo River. In east Arkansas, anecdotally
speaking, we have 98 percent availability in some of the poor
Delta towns, and once again, 10 to 15 percent take rate there.
In our cable TV areas, we have 100 percent availability on
those we pass and a take rate's probably closer to 40 percent
in those areas I can only guess at why I think, there, too, it
is dependent upon those areas that have a different socio-
economic makeup, lower incomes, lower level of education,
typically translated into lower penetration levels for
broadband access. But also a very, very high penetration levels
for digital TV ironically, being a very cheap form of
entertainment.
What we believe though is that there is going to be
dramatic change as the delivery of video services evolves over
the public Internet. And that entertainment and access to
broadband are going to be more and more synonymous. So whatever
it is today, we believe it is going to change dramatically or
has at least that potential. I'm sure cost is a factor, but I
suspect that the demographics, age of the people in these areas
and little education in these areas are a part of the factor.
Mr. Gardner. Senator Pryor, if I could, just to add to
that. I can give you some color about our penetration into
Arkansas. We cover about 73 percent of our customers in
Arkansas. It's a little bit below our national average. It's a
less dense state, about 11 access lines per square mile in our
property, 28 percent of all of our lines.
So those penetration rates are pretty good, but our
experience is it definitely gets to be an affordability issue.
As you look at the Nation and the fact that about 50 to 55
percent of our consumers have broadband today, the fact is when
you get into this second group, the second 45 percent, you're
looking at people who have lower income levels, more challenge
from a credit perspective. We've tried repeatedly to make some
adjustments to make that more accessible to this group of
customers that we need to reach. And I think that's going to be
a big issue, and we talk about that a great deal in our
testimony, on the affordability issue.
Dr. Lowery. I want to make a pitch for the fact that we're
thinking traditionally about this, and the healthcare stuff
hasn't even begun to hit this yet. And as it does, then it
changes the demographics dramatically, because now, you're in a
situation to where it's not as much about entertainment, it's
not as much about computer stuff which old people will probably
never do. But they do need health care and they need to have
nursing visits in their home, they need to have their medicine
adjusted in their home, and these sort of things are right on
the doorstep. We're on the doorstep of this stuff, and then the
demographics and the economics of the whole things change by
this, I think.
Senator Pryor. Mr. Ford, let me ask you. You mentioned
something. You told us to think about three different things,
and one of them was mobility in broadband. Could you elaborate
on that a little bit? I know we are very limited on time, but
could you elaborate on that a little bit, what you mean by
mobility in broadband and the way you see the industry moving,
technology moving?
Mr. Ford. Yes, sir. I'll be very brief. I think if you look
at the questions that we're dealing with today, which is not
only accessibility in terms of how do you get facilities in
place to reach the consumer, but also provide a bandwidth speed
that is appropriate for at least certainly most of the
applications that are envisioned for usage today. You're going
to see that the cheapest way to deploy broadband is actually
through mobility.
Now, the USF is going to have to get resettled. No one's
arguing that. When you start to look at what's it really going
to cost to provide the next generation of services to rural
America, over the next five to ten years, you're going to see
that the wireless business is going to be able to provide
several hundred ``K'' data speeds. They're never just
physically going to be able to give a hundred megabytes, so you
have to be careful about getting kind of caught up in a
definition like that.
But we will be able to provide several hundred ``K'' of
data speeds to the most rural areas in the state. And what
we're trying to fight through right now is what is the right
way to take care of commitments to last provider status. And
also so that everybody can know that the investments that
they've made in the wireline business, and this group has all
run great wireline businesses across the state. We are blessed.
This is kind of the Mecca of rural ILEC companies in the
country, and the best-run one in the country is the one Mr.
Gardner runs. But the smaller carriers in Arkansas have long
histories of a hundred years plus of being able to provide
great service here. I think as you look forward, there is a
place for protection of their money in USF for the investments
that they've made. And I think there is also a place
particularly because wireless customers now provide almost a
third of the Fund.
Well, they don't provide it through wireless service
because they don't use wireless service, they provide it as a
customer of wireless. So customers are moving to wireless. And
I think they're going to expect that subsidy to flow back into
the products that they were originally funding the USF from in
the first place. And how we wrestle through that is frankly
going to take someone with your kind of demeanor that doesn't
get emotionally caught up in it and doesn't make it partisan to
kind of wade through the ``puts'' and ``takes'' of how you come
up with legislation around that and regulations in the FCC,
they propagate, to make sure that nobody gets blown up and that
the customers actually get the benefit of what we're all
talking about.
Senator Pryor. Did you have a question?
Commissioner Adelstein. It's a follow up to your question.
I think that this is just the kind of dialogue that's needed to
bring this group together to talk about an issue of such
urgency for the future of the state or all of rural America
really. Given this group, among the questions you've talked
about affordability, we have a certain two themes going through
today: There's availability and how to get it to everybody. And
if you do get it out to them, affordability--how do we make
sure they can afford it. And what strikes me as a major concern
is that if it is more expensive in rural areas, that is a major
hurdle where you already have greater poverty issues in the
rural part of the state. If the price of broadband is more
expensive there, then that's sort of a double hurdle, and I'm
concerned about that. Dominik and I last night talked a little
bit about what's going on in the Delta and some of the problems
that you're having even building out let alone getting people
to be able to afford broadband. I'm just curious. Are the
prices higher in rural Arkansas than in the urban parts where
there is more competition and it's cheaper to serve and what
can we do about that?
Mr. Mjartan. I can comment a little bit on the pricing.
We've looked at some prices, for example, in Helena/West Helena
the rural area in Phillips County and the prices are about the
same as in the more urban areas for the larger providers. But
the challenges that we're seeing is with some of the satellites
and that's maybe what Mr. Ford was talking about in some of the
more mobile broadband access Internet via satellite, it's
really cost-prohibitive.
So there are some options like that that would be available
to a community like Lakeview, Arkansas, but it is cost
prohibitive. And we have a lot of experience with low income
programs and various asset-building programs. So we have, an
idea of what an average family in the Delta can afford to spend
a month and when we were looking at the options, we realized
very few of them would be able to afford a $40 a month
subscription fee or even $20 a month, might be cost-
prohibitive. Commissioner Adelstein, any other thoughts on
pricing and what we can do to make sure prices are----
Mr. Winningham. I'm sorry. But if I could say, we're only
talking about two dimensions of a problem that's got at least
three dimensions to it. We could put broadband into the home
and organization--of every home and organization in the state,
and we would not get the blessings that we want for our state
from that. We need to prepare this state to make the most of
broadband. We're in a global economic competition with the rest
of the world. I have a brother-in-law in his late seventies--
there is no age limit, by the way, on the blessings of
broadband--in his late seventies. Five years ago I don't think
he had ever touched a computer. Now, he's an avid eBay user.
And it's because he had somebody in the family that
understood that he could get something at a better price. We
need to not only show the people of Arkansas. And broadband is
not like a road or it is a little more like electricity. If you
want to run electricity to my house and I'd never heard of it
before, I don't really care, especially if it's going to cost
me money. But if I can understand that it will make the lights
stay on after dark, then I can become interested in that. If
grandparents can understand that they can communicate with kids
in college, if businesses can understand that they can market
outside of Arkansas, outside of the United States--if we can
prepare people, then we'll get the blessings that we need for
the state.
And if we look to--we have a lot of intellect, a lot of
understanding of this technology in our state in the form of
EAST labs and high school students that grandparents will come
to listen to talk about this kind of thing, but preparation is
the big part. If we can make people understand the value of it,
there will be a lot more broadband around right now.
Preparation is the key, and that's got to be followed by
deployment, and affordability is also essential.
Mr. Gardner. If I could on that affordability issue, across
our footprint, which I said earlier was 16 states, there are
not huge differences, Commissioner, in prices from a more urban
area to a more rural area, maybe $19.99 on the low end in our
markets to $29.99, $34.99 on the high end. So I think it gets
much more to this affordability issue as you'll see big
differences in average income across those markets.
Senator Pryor. Did you have something you wanted to add?
Mr. Waits. I did. The vehicle we used for many, many years
to keep rates and services comparable between urban and rural
areas as mandated in the Telecom Reform Act of 1996, was some
form of cost averaging, and we're averaging across urban and
rural areas. I think we all have seen the USF or other forms
implicitly do that. So if you want to maintain that
comparability in services and rates then some form of averaging
continues to be required. This idea of a obligation of last
resort that we had that we inherited also came with it an
exclusive right to serve. And so there may be an option there
to reinstate some exclusivity in terms of support and response
for some obligations to serve. And that might be a way to more
predictably and more reliably enact some form of rate
averaging.
Commissioner Adelstein. As long as there is an influential
member of Congress here, I think it goes outside the FCC but I
learned recently, talked about, if you get broadband to
everybody and they're not ready for it, it's not going to make
a difference. I learned recently that somewhere in South Korea
they provide a computer to anybody for--if they're low income,
they go to their local library, and for a dollar or two a
month, they can rent a computer. And how much of an issue is it
in the lower income areas, people that don't have computers at
all, and should the government do more to get computers in the
hands of people so they can take advantage of the broadband
that is available.
Mr. Winningham. It's a big issue, again, that the person,
the student who has broadband in the home has got several hours
a day to use that. The student who has to go somewhere else has
got an hour or two if they can get to one of the computers. But
there is a difference between computer education and broadband
education. Computer education is--you have to have it. But
broadband education is what you really have to have to see this
state and this Nation spring forth the way it needs to.
Senator Pryor. Did you have a question?
Commissioner Copps. Well, this is something you just
mentioned that is really going to be a priority of the Connect
Arkansas, that is the broadband education.
Mr. Winningham. Yes, sir. What we need is we need
broadband, not just at the end of the street, we need it at the
other end of the cotton field if somebody lives there. But we
need to help that person understand how to use it. If they
don't do that then the demand won't be there. These folks won't
be able to provide someone to maintain it. The story just gets
worse and worse. But if you prepare people ahead of time, once
you've used broadband, it's hard to get loose from it.
Commissioner Copps. I don't want to open up any other
subjects, but I just would like to make a general comment. A
number of people have mentioned comprehensive reform of the
Universal Service system, and I think we get in the mind-set
where we think, well, this is taking so long, it's never going
to happen. But I'm a member of the Universal Service Joint
Board, and I think these issues are being teed up. I think
there is tremendous support on the Joint Board for including
broadband in the Universal Service system. I think there is a
wide-spread support to look at a rational cost and
reimbursement system and doing something in the identical
support rule that is there. Chairman Martin has expressed an
interest in reverse auctions. I'm not going to ask about that,
because that would take us a long time. But all I want to say
is I think that these things have a possibility of being teed
up sooner, actually, rather than later. And I would just like
to solicit your ongoing input and your ongoing comment to our
offices at the FCC on all of these issues as they become teed
up in the months ahead.
Senator Pryor. Well, listen, both of our Commissioners have
to catch planes this afternoon, so I know that a few of you
want to have just a few moments to mix and mingle with them.
And I want to thank them for coming to Arkansas. It's taken two
days out of their schedules, very, very busy schedules, as
Scott Ford mentioned a few moments ago. But thank you all for
being here. We really enjoyed having you here in the state,
enjoyed hosting you, and I hope you will always consider this
your second home, and always know that you're welcome back and
we want to help in any way we can.
The other thing on housekeeping I just want to say is that
for all of you all who have prepared written testimony that
will be made part of the record. We will leave the record open
for seven days in case someone wants to add something. I
noticed some maps, etc. We can include those in the record. If
you want to do that, we'll leave that open for seven days. And
also if anyone wants to add some written comments on some of
the discussion you've heard today, it will be open for seven
days, so if you want to go back and work on some of that.
I would say that some of the take-aways that I have is that
from our statements today is that our students and our state
know that expansion of broadband in Arkansas is essential, that
we need to think big, that we have tremendous opportunities for
broadband in this state, in this country, whether it's health-
related matters, whether it's information, education, just
general quality of life, economic opportunities.
We have tremendous opportunities here in this state and in
this country, in rural America, to utilize broadband in a very,
very positive and productive way. We need to look at changes in
the USF, and look at funding mechanisms to make sure we can get
broadband out there, if there is access. And as we've said,
it's more complicated than just an access question.
The other thing is--I think that Commissioner Copps said in
the very beginning--is we need a national strategy. We can't
really do this just in a vacuum or just think, hey, this idea
might be good. Let's try that idea--might be good. We really
need to sit down, all of us, the people in this room, members
of Congress, the FCC, the President--all need to sit down and
work through a national strategy. We've talked about those
statistics, how the U.S. is losing its position globally.
That's not acceptable. And we have to acknowledge that's not
acceptable and do something about it. You all, I appreciate
your comments. I appreciate your preparation, your time, for
being here. This has been a very informative and productive
hearing. And, again, I want to thank everyone for
participating. So, in lieu of the gavel, I once again gavel the
closing with my Blackberry. Thank you.
[Whereupon, at 12 p.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Henry G. Hultquist, Vice President,
Federal Regulatory, AT&T
Policymakers have before them an opportunity to bring one of the
20th century's most important telecom policy initiatives--universal
service--into the 21st century. During the last century, Federal and
state universal service programs and policies largely succeeded in
making narrowband voice telecommunication services available in rural
areas across the country. Federal and State policymakers now face a new
challenge: to maintain the commitment to affordable basic service in an
increasingly competitive and technologically sophisticated marketplace
while also encouraging investment in the broadband and wireless
networks necessary to provide the services that consumers and
businesses require today.
As recent Congressional hearings made clear, there is growing
consensus that the existing Federal universal service fund (USF) high-
cost support mechanisms are deeply flawed. There is almost an equally
strong consensus that further extending broadband and wireless
deployment into rural areas is a critical national policy goal.
However, simply adding broadband and wireless to the USF mix without
fundamental reform of the high-cost support regime will only increase
the strain on this already broken system and doom to failure efforts to
promote additional broadband and wireless infrastructure investment in
rural areas.
Rather than adapting the current high-cost mechanisms to achieve
its broadband and wireless deployment objectives, AT&T has urged the
FCC to address broadband and wireless deployment needs directly and
outside of the current mechanisms. AT&T has recently proposed broadband
and wireless pilot programs designed specifically to promote network
investment in rural areas quickly while also, and critically, enhancing
our understanding of whether and/or how best to use USF to support this
objective over the longer term. The proposed pilots are modeled after
the FCC's rural healthcare pilot program and would utilize the
expertise of both Federal and State regulators to create a streamlined
and focused initiative that could be operational within a year. While
both pilots are important to the future of USF, this testimony will
focus on the broadband pilot.
The AT&T Rural Broadband Pilot
AT&T has proposed that the FCC establish a two-year Rural Broadband
Pilot Program to support deployment of broadband infrastructure in
underserved rural areas. Under the Pilot, applications would be
submitted to the FCC and State Commissions and funding would be
distributed to approved applicants to support new capital investment in
infrastructure necessary to provide consumers in such areas access to
advanced telecommunications and information services. Participation in
the Pilot Program by providers would be purely voluntary, with
providers free to choose whether to apply for funding based on their
own evaluations of the final program requirements. The key features of
the AT&T Broadband Pilot fall into the three steps outlined below.
Step 1
The FCC would determine in advance the fundamental parameters of
the Pilot such as the available funding, geographic scope, supported
service, definition of underserved, and other eligibility criteria.
a. Funding: The FCC would specify the Pilot funding level, such
as $1 billion per year for 2 years and the source of funding.
(AT&T, which is one of the largest contributors to the Federal
USF, recognizes that the size of the fund may need to increase
to meet all the goals policymakers have outlined.) Providers
whose applications are chosen for support will receive a one-
time grant of funds to cover their proposed project.
b. Providers: The Pilot would be open to all service providers
that are capable of providing the supported service. Providers
would not be required to be ETCs to apply for Pilot funding but
would be required to meet certain Pilot requirements and thus
to become a Broadband Eligible Provider or BEP.
c. Geographic Area: The general area eligible for Pilot funding
should be identified by the FCC and should be based on rural
Census Block Groups. The FCC should define ``rural'' as that
term is used in the 2000 Census.
d. Underserved: The FCC should issue a standard definition of
``underserved'' for use by states in evaluating applications.
Underserved should be defined as areas where the supported
service is not substantially available to households within the
rural service area for which the applicant seeks funding. The
FCC would also establish a specific criterion or other measures
for determining ``substantially available,'' such as, for
example, that 85 percent of the households in the service area
do not have access to the supported service.
e. Supported Service: The FCC should define in advance that the
supported service is broadband Internet access service that
meets the definition of ``Advanced Telecommunications
Capability'' as set forth in Section 706 of the 1996 Act. The
FCC should also define other parameters such as minimum
downstream and upstream transmission capability, as well as any
other applicable service parameters.
f. Eligibility Requirements: The FCC should identify basic
eligibility requirements that all applications for funding must
meet, such as: financial qualification criteria; deployment
schedule that does not exceed 2 years; commitment to provide
service at an affordable rate; commitment to provide supported
service throughout the application area for a minimum of 5
years following completion of project; information that
indicates the project area is ``underserved''; and type of
facilities and equipment, and resulting coverage, that will be
deployed.
Step 2
Interested providers would submit applications to the relevant
State Public Service Commissions who would determine eligibility based
on FCC-defined parameters.
a. Application Frequency: To minimize administrative and
transaction costs, applications for the Pilot could be accepted
and processed in one round prior to the start of the first
program year.
(That is, the FCC would identify winning applicants for both
funding years prior to the first year, but disburse no more
than $1 billion in each program year.)
b. Application Process: An interested service provider submits
an application to the relevant State Public Service Commission
in which it identifies a specific rural area that it believes
is ``underserved'' by broadband and for which the service
provider seeks funding to deploy facilities to provide the
supported services. The provider presents a project proposal,
amount of new capital investment for which funding is
requested, and supporting documentation.
c. State Review: States are responsible for (1) verifying that
the area covered by the application meets the FCC's definition
of ``underserved,'' and (2) determining that the application
meets all other FCC-defined eligibility requirements. States
have the local knowledge to verify whether the applicant-
identified service area is underserved and this simple process
is a time and resource efficient method of targeting funding to
rural areas that are in most need of support. States could use
various methods for such verification including putting
applications out for public comment.
Step 3
States would submit all qualified applications to the FCC which
conducts the final review and selects a single provider in each
geographic area in which applications were submitted.
a. Application Ranking: If the Pilot is oversubscribed, the FCC
should rank applications by number of households to be served
and give highest ranking and higher priority to projects that
result in the greatest number of households receiving the
supported service. Deployment timelines may also help guide the
ranking process with preference given to shorter time to
market.
b. FCC Review Criteria: The FCC should establish general
selection criteria in advance of the Pilot launch. These
criteria will be used by the FCC to guide its selection of
applications that will receive funding, especially in the event
a service area has multiple applications or the Pilot is
oversubscribed. To enhance the learning from the Pilot, the FCC
should fund a variety of projects (large and small) and in
different regions to achieve some geographic balance and
maximize experience with broadband deployment in disparate
topographies.
c. Number of Grants: The FCC should limit funding to only one
provider in any particular area even if more than one provider
applies for funding. If only a single application is submitted
for an area the Commission should not be compelled to grant
funding if the application does not meet the selection
criteria.
In a final step, the FCC should report on the results of the Pilot
and launch a proceeding to consider whether the program or some
modified version should be continued. AT&T believes that the Rural
Broadband Pilot Program can have a measurable impact on broadband
deployment in underserved rural areas while at the same providing both
Federal and State policymakers with valuable real-life information on
how to effectively support broadband deployment in rural areas. Equally
important for rural America, establishing both the Broadband and
Wireless pilots will help clear the way for fundamental reform of the
existing high-cost support mechanisms and thus ensure that the
Universal Service program can meet the challenges of the new 21st
century telecommunication landscape.
______
Supplemental Material Provided by David Burdick
Commissioner Michael Copps asked me a question about how many
libraries in Arkansas are still on dial-up Internet access. The State
Library provided me the following information:
As of January, 2007, 10 (ten) libraries were still on dial-up, 137
were on DSL, and 38 were on cable. It is unknown how many are on
dedicated 56k lines. The rest are on T-1 or partial (386) T-1 lines.
There are 7 libraries which do not have Internet access at all.
In the discussion there were comments made, particularly from James
Winningham and Sam Walls, which said something like: ``Kids need access
at home because libraries close . . .'', and ``We need to get a
computer and Internet access into the hands of all Arkansans. . . .''
As a librarian, I agree with both statements, but I also know that
the Public Library will need to offer services to those who don't have
access. People have had the option to buy books for a few hundred years
now. But Public Libraries still circulate millions of books because
people either can't afford, or wish not to spend their money on books.
Public libraries offer all types of services to anyone and everyone
who walk through the doors. Most libraries allow people to use the
computer workstations regardless of whether or not they live within the
Library's jurisdiction. In Pine Bluff, we allow anyone to use the
computers.
Two years ago Hurricane Katrina hit New Orleans and the Mississippi
Gulf Coast very hard. In Pine Bluff, as in many public libraries
throughout Arkansas, our public computers were used by Katrina victims
to communicate with relatives, find lost loved ones, file FEMA forms,
and in at least one case, a Lawyer who came to Pine Bluff, keep a
business going. We also set up a wireless network to allow people who
had their own laptops access to the Internet.
We serve travelers who are passing through. We serve people who
just moved into the community. We serve students from the two local
colleges. We serve those who come to the library from the nearby
Salvation Army. A large number of people don't own a computer or don't
have Internet access, but there are those who just want to come to the
library to use our resources. For instance, there is a elderly man who
can afford his own computer, who can afford Internet access, who comes
in two or three times every day. I asked him once why he didn't just
buy his own computer, and his reply was, ``Dave, I just enjoy coming in
and seeing all the friendly people who work at the library, and the
people who are using the computers in the lab. I just enjoy the
company. . . .''
There will always be those who simply don't own a computer, or even
want to own a computer. It is my belief that public libraries will be
offering computer services for a long time to those who simply don't
have access any other way.