    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

     THE NATIONAL BROADBAND PLAN: DEPLOYING QUALITY BROADBAND SERVICES TO
                                 THE LAST MILE

    =======================================================================

                                    HEARING

                                   BEFORE THE

          SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE

                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 APRIL 21, 2010

                                   __________

                               Serial No. 111-111

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                          HENRY A. WAXMAN, California
                                     Chairman
    JOHN D. DINGELL, Michigan            JOE BARTON, Texas
      Chairman Emeritus                    Ranking Member
    EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
    RICK BOUCHER, Virginia               FRED UPTON, Michigan
    FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
    BART GORDON, Tennessee               NATHAN DEAL, Georgia
    BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
    ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
    BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
    ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
    GENE GREEN, Texas                    STEVE BUYER, Indiana
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
      Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
    LOIS CAPPS, California               MARY BONO MACK, California
    MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
    JANE HARMAN, California              LEE TERRY, Nebraska
    TOM ALLEN, Maine                     MIKE ROGERS, Michigan
    JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
    HILDA L. SOLIS, California           JOHN SULLIVAN, Oklahoma
    CHARLES A. GONZALEZ, Texas           TIM MURPHY, Pennsylvania
    JAY INSLEE, Washington               MICHAEL C. BURGESS, Texas
    TAMMY BALDWIN, Wisconsin             MARSHA BLACKBURN, Tennessee
    MIKE ROSS, Arkansas                  PHIL GINGREY, Georgia
    ANTHONY D. WEINER, New York          STEVE SCALISE, Louisiana
    JIM MATHESON, Utah
    G.K. BUTTERFIELD, North Carolina
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana
    DORIS O. MATSUI, California
    DONNA M. CHRISTENSEN, Virgin
        Islands
    KATHY CASTOR, Florida
    JOHN P. SARBANES, Maryland
    CHRISTOPHER S. MURPHY, Connecticut
    ZACHARY T. SPACE, Ohio
    JERRY McNERNEY, California
    BETTY SUTTON, Ohio
    BRUCE L. BRALEY, Iowa
    PETER WELCH, Vermont
          Subcommittee on Communications, Technology, and the Internet

                             RICK BOUCHER, Virginia
                                     Chairman
    EDWARD J. MARKEY, Massachusetts      FRED UPTON, Michigan
    BART GORDON, Tennessee                 Ranking Member
    BOBBY L. RUSH, Illinois              CLIFF STEARNS, Florida
    ANNA G. ESHOO, California            NATHAN DEAL, Georgia
    BART STUPAK, Michigan                JOHN SHIMKUS, Illinois
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
    MICHAEL F. DOYLE, Pennsylvania       MARY BONO MACK, California
    JAY INSLEE, Washington               GREG WALDEN, Oregon
    ANTHONY D. WEINER, New York          LEE TERRY, Nebraska
    G.K. BUTTERFIELD, North Carolina     MIKE FERGUSON, New Jersey
    CHARLIE MELANCON, Louisiana
    BARON P. HILL, Indiana
    DORIS O. MATSUI, California
    DONNA M. CHRISTENSEN, Virgin
        Islands
    KATHY CASTOR, Florida
    CHRISTOPHER S. MURPHY, Connecticut
    ZACHARY T. SPACE, Ohio
    JERRY McNERNEY, California
    PETER WELCH, Vermont
    JOHN D. DINGELL, Michigan (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Rick Boucher, a Representative in Congress from the
      Commonwealth of Virginia, opening statement....................     1
        Prepared statement...........................................     4
    Hon. Cliff Stearns, a Representative in Congress from the State
      of Florida, opening statement..................................     6
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     7
        Prepared statement...........................................     9
    Hon. John Shimkus, a Representative in Congress from the State of
      Illinois, opening statement....................................    11
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, opening statement.................................    11
    Hon. Parker Griffith, a Representative in Congress from the State
      of Alabama, opening statement..................................    12
    Hon. Edward J. Markey, a Representative in Congress from the
      Commonwealth of Massachusetts, opening statement...............    13
    Hon. Robert E. Latta, a Representative in Congress from the State
      of Ohio, opening statement.....................................    13
        Prepared statement...........................................    15
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, opening statement...............................    17
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................    17
        Prepared statement...........................................    19
    Hon. Cliff Stearns, a Representative in Congress from the State
      of Florida, opening statement..................................    20
    Hon. Lee Terry, a Representative in Congress from the State of
      Nebraska, opening statement....................................    20
    Hon. G.K. Butterfield, a Representative in Congress from the
      State of North Carolina, opening statement.....................    21
    Hon. Peter Welch, a Representative in Congress from the State of
      Vermont, opening statement.....................................    22
    Hon. Kathy Castor, a Representative in Congress from the State of
      Florida, opening statement.....................................    22
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................    23

                                   Witnesses

    Sharon Gillett, Chief, Wireline Competition Bureau, Federal
      Communications Commission......................................    25
        Prepared statement...........................................    28
    David Villano, Assistant Administrator, Telecommunications
      Program, Rural Development, U.S. Department of Agriculture.....    31
        Answers to submitted questions...............................   291
    Joe Garcia, Regional Vice President, National Congress of
      American Indians...............................................    32
        Prepared statement...........................................    35
        Answers to submitted questions...............................   297
    S. Derek Turner, Research Director, Free Press...................    48
        Prepared statement...........................................    50
    Mark Dankberg, Chairman and CEO, ViaSat, Inc.....................    63
        Prepared statement...........................................    66
        Answers to submitted questions...............................   306
    Austin Carroll, General Manager, Hopkinsville Electric System....    89
        Prepared statement...........................................    91
        Answers to submitted questions...............................   312
    Jeffrey A. Eisenach, Managing Director and Principal, Navigant
      Economics LLC..................................................   111
        Prepared statement...........................................   113
        Answers to submitted questions...............................   315

                       Submitted Materials for the Record

    Report entitled ``The Broadband Availability Gap,'' April 2010,
      by the Federal Communications Commission.......................   141
    Article entitled ``The FCC's Visible Hand,'' March 21, 2010, in
      The Washington Post............................................   290

     THE NATIONAL BROADBAND PLAN: DEPLOYING QUALITY BROADBAND SERVICES TO
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                           WEDNESDAY, APRIL 21, 2010

                  House of Representatives,
    Subcommittee on Communications, Technology,
                                      and the Internet,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The Subcommittee met, pursuant to call, at 10:05 a.m., in
    Room 2322 of the Rayburn House Office Building, Hon. Rick
    Boucher [Chairman of the Subcommittee] presiding.
        Present: Representatives Boucher, Markey, Rush, Eshoo,
    DeGette, Doyle, Inslee, Butterfield, Christensen, Castor,
    Space, Welch, Dingell, Waxman (ex officio), Stearns, Upton,
    Shimkus, Buyer, Terry, Blackburn, Griffith, and Latta.
        Staff present: Roger Sherman, Chief Counsel; Tim Powderly,
    Counsel; Amy Levine, Counsel; Shawn Chang, Counsel; Greg Guice,
    Counsel; Sarah Fisher, Special Assistant; Bruce Wolpe, Senior
    Advisor; Phil Barnett, Staff Director; Mitch Smiley, Special
    Assistant; Elizabeth Letter, Special Assistant; Neil Fried,
    Minority Counsel; Will Carty; Minority Professional Staff;
    Garrett Golding, Minority Legislative Analyst.

      OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

        Mr. Boucher. Good morning to everyone. We are conducting
    this morning the second in a series of hearings focusing on the
    National Broadband Plan, and I want to commend the members of
    the Federal Communications Commission and their staffs for the
    truly outstanding job that they have done in compiling this
    plan sorting through thousands of comments that have been
    received from the public and providing very thoughtful work and
    good recommendations to the Congress. The United States stands
    16th today among developed nations in broadband usage and for
    the benefit of our national economy and for our national
    quality of life, we need to do better.
        In preparing the National Broadband Plan the Commission has
    made a major contribution to our effort to evaluate our
    national standing to a far higher number, and we are appreciate
    to the Commission for that work. Broadband in the 21st Century
    is as important as telephone service or electricity service
    were when they were first introduced more than a century ago.
    Today's hearing focuses on how best to deploy broadband to
    areas that are unserved and underserved so that all Americans,
    including those in the rural regions of our nation, may benefit
    from this truly essential infrastructure. We want to ensure
    that everyone has access to broadband and we also want to
    ensure that everyone has access at meaningful speeds and at
    truly affordable prices.
        The National Broadband Plan reports that 95 percent of
    American homes have access to terrestrial fixed broadband
    infrastructure capable of supporting actual download speeds of
    at least 4 megabits per second, leaving approximately 7 million
    homes unserved. I have serious concerns about the accuracy of
    that number and the methodology that was employed in order to
    derive it. It is my understanding that for cable modem service
    the broadband team looked at maps of where every cable operator
    is authorized to provide service. The broadband team assumed
    that a cable operator should have built out to its entire
    service territory. It also assumes that each provider was using
    at least DOCSIS 2.0 technology, which would mean that every
    home within the service area could get broadband speeds of at
    least 4 megabits per second downstream and 1 megabit per second
    upstream.
        Unfortunately, not every cable operator has deployed
    service throughout its franchise area, and not every cable
    operator has upgraded to DOCSIS 2.0 technology. For DSL service
    offered by phone companies, the broadband team relied on
    broadband maps from states that have already completed those
    maps. The team calculated where homes should be able to receive
    DSL service of at least 4 megabits per second downstream, 1
    megabit upstream based on where those maps indicated there is a
    broadband infrastructure in place. The team also estimated that
    homes within a certain number of feet of central offices should
    be able to receive broadband. The team then extrapolated those
    figures to the entire nation.
        Unfortunately, I think the experience is very different. In
    my own example with my constituency in Virginia the broadband
    map that was provided in my home state of Virginia has proven
    to be less than satisfactory as a genuine predictor of where
    broadband can be found. The map is based on data provided by
    the telephone companies and it over reports the availability of
    broadband in my district, and I am sure elsewhere. I frequently
    hear complaints from constituents who live in communities that
    the Virginia broadband map indicates are served, yet these
    constituents are persistently asking for broadband service
    because today they have none.
        To the extent that the team extrapolated data from the
    Virginia broadband map and others like it, I can't, based on my
    experience, consider those projections to be reliable. I
    appreciate that Ms. Gillett will testify in her testimony today
    that the 95 percent figure is intended to be an estimate of
    homes that should have access to broadband based on what is
    estimated about where incumbent providers have deployed the
    infrastructure. It does not mean that someone in an area the
    broadband plan predicts would have broadband service could
    actually pick up a phone and call their service provider and
    receive broadband service. That is an important clarification
    and one that I hope all members will keep in mind as we develop
    policies that are based on the assumptions of broadband
    availability.
        As we will hear from other witnesses on today's panel,
    there remain many areas of our nation without access to
    broadband or with access to broadband only at slow speeds and
    at high prices. It is far too soon to declare mission
    accomplished with respect to the goal of making broadband
    available to all Americans. I want to thank our witnesses for
    joining us this morning. We look forward to your testimony. And
    at this time, I am pleased to recognize the gentleman from
    Florida, Mr. Stearns.
        [The prepared statement of Mr. Boucher follows:]

        [GRAPHIC] [TIFF OMITTED] 76566A.001

        [GRAPHIC] [TIFF OMITTED] 76566A.002

     OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Mr. Stearns. Good morning, and thank you, Mr. Chairman.
    First of all, Mr. Chairman, I would like to welcome Bob Latta
    from Ohio. He is on our committee and will recognize him and
    welcome him to this great subcommittee. His predecessor Bill
    Gilmore and I came in together, and he served on this committee
    too, so we are delighted to have you. I think all of us in this
    room and all of the folks on the committee would agree that
    there is tremendous benefits from broadband. Reaching 100
    percent on the present broadband is a laudable goal. Most of us
    wonder what is the best way to do it, and I think a lot of us
    think that it can be done through private investment, much like
    we see either the iPhone or the iPad or the iTunes or the
    multiple of devices just pick up and everybody has them whether
    you are in rural or urban areas because the incentives are
    there.
        For the United States to achieve this ubiquitous broadband
    deployment, I believe the private sector will have to show the
    bulk of the financial burden, and our policies on this
    committee should reflect that. As you mentioned, according to
    the broadband plan, approximately 290 million Americans or 95
    percent, as you mentioned, Mr. Chairman, the population have
    access to at least 4 megabits per second broadband service
    while approximately 2/3 of all Americans, about 200 million
    people, subscribe to broadband.
        This is up from 8 million 10 years ago, so you can see that
    it is moving forward. All these numbers demonstrate our free
    market pro-investment approach to broadband that it is working.
    Even if the government took no action the broadband plan
    concludes that private sector investment will provide 90
    percent of the country with access to peak download speeds of
    more than 50 megabits per second by the year 2013. Now if the
    past decade of broadband investment is any guide, the private
    sector will likely take us the rest of the way to the broadband
    plan goal of reaching 100 million households with 100 megabytes
    per second service by 2020 simply letting the private
    investment pursue its way.
        Although reaching that goal will cost approximately $359
    million, the cable, telephone, and wireless industries have
    been investing $60 billion a year in broadband, suggesting we
    could hit the investment target within 6 years. That is $350
    billion. The recent D.C. Circuit ruling that struck down the
    FCC attempt to regulate Comcast network management of internet
    congestion should further caution straying from our
    deregulatory approach. Even after the decision, the FCC still
    has plenty of explicit authority to implement the broadband
    plan that they put out. In rejecting the FCC's argument, the
    D.C. Circuit explained ``statements of congressional policy can
    help delineate the contours of statutory authority.'' Congress
    issued such a policy statement in 1996 when it added Section
    230 to the Communications Act.
        My colleagues, that section makes it the policy of the
    United States to ``preserve the vibrant and competitive free
    market that presently exists for the internet and other
    interactive computer services unfettered by federal or state
    regulations.'' So whether to revisit that legislative policy
    which the broadband plan data confirms has worked so well is a
    matter for Congress and not the FCC's position. This does not
    mean, of course, that the government has no role. If we are
    going to subsidize broadband deployment it makes sense to
    concentrate on the 5 percent of the population, about 7 million
    homes, that do not have access to broadband, not the 95 percent
    that already do. We can target the unserved homes with an FCC
    universal service program that has been significantly reformed
    perhaps along the lines outlined in the broadband plan.
        We can also use wireless and satellite services that might
    better reach those hard to serve places, including tribal
    lands. Government intervention is only appropriate, however, to
    target those homes that are otherwise uneconomic for the
    private sector to reach out and serve. To do otherwise would
    force the private sector to compete against the government or
    government-funded entities. Such skewing of market forces will
    only harm investment and innovation in the long run. What
    Congress and the FCC must do is not revert to failed regulatory
    ideas that were designed for old technologies in a monopoly ear
    marketplace.
        Imposing network neutrality, for example, forcing access to
    facilities and regulating rates are the surest way to deter the
    investment we need to reach the broadband plan's goal. The
    benefit of quality of broadband, I think is obvious to all of
    us. It is important that all Americans, whether in a big city,
    a rural community or tribal land have access to this
    technology. That I agree. The question remains how do we get
    there? I don't think we should let this opportunity pass us by.
    Mr. Chairman, I think there is a great opportunity with these
    witnesses, and I look forward to hearing their opening
    statements. Thank you.
        Mr. Boucher. Thank you very much, Mr. Stearns. The chairman
    of the Energy and Commerce Committee, the gentleman from
    California, Mr. Waxman, is recognized for 5 minutes.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you very much, Mr. Chairman. Thank you
    for holding this hearing on deploying broadband service to
    unserved and underserved communities across the nation. Because
    broadband is critical to future economic growth and job
    creation every American must have the opportunity to access
    high quality, high speed broadband from a variety of providers.
    The plan provides a blueprint on how the public sector policies
    can promote deployment to both unserved and underserved
    communities. It also speaks to ways in which the private sector
    can act. By utilizing all the tools the public and private
    sectors have at their collective disposal, we could achieve a
    primary goal of the National Broadband Plan, 99 percent access
    to high speed broadband within 10 years.
        While there are a number of proposals in the plan, I would
    commend the FCC staff for their thoroughness, and I would like
    to take a moment to highlight a couple that I find to be
    promising. For example, the plan recognizes that substantial
    cost savings can occur from better planning and coordination
    among government resources and recommends that all federally-
    funded rights-of-way projects include a broadband conduit at
    the time of construction. This proposal is similar to
    legislation introduced by Congresswoman Eshoo, of which I am a
    co-sponsor.
        Greater access to rights-of-way at reduced cost can help
    spur the deployment of advanced facilities, not only in urban
    areas but also deeper into rural areas. The plan also
    highlights specific ways in which the federal universal service
    system can be reformed, and I am very encouraged by these
    proposals. The obvious goal is to transform the fund to support
    broadband networks so that all Americans have access, and I am
    encouraged that the FCC is initiating the first of these
    proceedings in its open meeting that is occurring this morning.
    I am also encouraged that Chairman Boucher is working on draft
    legislation to help achieve this goal, and I am supportive of
    his efforts.
        The plan also recommends addressing the data roaming issue.
    Consumers will be well served by common sense reform in this
    area. And, finally, I would like to commend the FCC for putting
    forward a proposed time line of its implementation schedule for
    the many proposals in the plan. This is the first time the FCC
    has so clearly outlined its work schedule, and I think that
    this approach is consistent with the chairman's view that the
    FCC should be as open and transparent as possible. Thank you
    again, Mr. Chairman, for holding this hearing, and I look
    forward to the testimony of our witnesses.
        [The prepared statement of Mr. Waxman follows:]
        [GRAPHIC] [TIFF OMITTED] 76566A.003

        [GRAPHIC] [TIFF OMITTED] 76566A.004

        Mr. Boucher. Thank you very much, Chairman Waxman. The
    gentleman from Illinois, Mr. Shimkus, is recognized for 2
    minutes.

      OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Shimkus. Thank you, Mr. Chairman. I appreciate this
    hearing. I appreciate the panel, and hopefully I will get a
    chance to sit in to a lot of the discussion. I am personally
    conflicted about the broadband plan. I will try to be a little
    more calm than I was when the FCC was sitting before us. And
    there are a couple of issues. Whether the number is 7 million
    or whether it is larger, the real issue is before we deploy we
    ought to map, and we didn't do that, so we have the cart before
    the horse, so that is issue one. I have been talking numerous
    times about let us define what the goal is that we are trying
    to achieve and what speed is going to be the standard, whether
    it is 4, 100, whatever, let us get a definition so that we know
    what we are trying to achieve.
        We ought to roll out--government intervention is only
    appropriate when we want to target those homes that are
    otherwise uneconomic for the private sector to serve. I reject
    this argument that it is government's role to provide a variety
    of providers, and what we see going on is with government
    taxpayer dollars, we are overbuilding in areas creating a
    competitive market against incumbent providers already when we
    have at a minimum 7 million people who don't have access. So
    those of us who represent rural areas who may be on dial-up,
    the appropriate place for government money is like we do in the
    Universal Service Fund to use government help to roll out to
    areas that are not economic for an individual entity to do, not
    to overbuild and compete with other traditional providers right
    now.
        So we have a long way to go. We are wasting time and we are
    wasting money to get deployment out to rural America. So, Mr.
    Chairman, it is timely, and we will be watching this process as
    it moves forward. Thank you.
        Mr. Boucher. Thank you very much, Mr. Shimkus. The
    gentleman from Michigan, Mr. Dingell, Chairman Emeritus of the
    Energy and Commerce Committee, is recognized for 5 minutes.

    OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Dingell. Mr. Chairman, I thank you for convening
    today's hearing on the last mile broadband development. It is
    very important. I fully support the important cause of
    providing all Americans with access to broadband
    communications. All the same, we must ensure that such federal
    program implemented to do so is based on accurate date and
    grounded in appropriate statutes. There seems to be some
    confusion concerning the actual level of last mile broadband
    infrastructure deployment and adoption across the United
    States. I would remind my colleagues that deployment and
    adoption are not synonymous with one another, and welcome any
    clarification on this matter our witnesses can provide. As many
    of them have rightly noted, accurate data is invaluable to the
    proper design and functioning of any future broadband support
    mechanism. It is also dispensable to proper administration by
    the agencies concerned.
        We must also ascertain whether existing statutes are
    adequate to the task of establishing new and functioning
    support mechanisms to ensure that all Americans have access to
    broadband communications. I note that the National Broadband
    Plan recommends broadening of the Universal Service Fund
    contribution base. I hope our witnesses, especially Ms. Gillett
    of the Federal Communications Commission, will provide the
    members of this subcommittee with their candid opinions
    concerning the extent to which the commission's statutory
    authority currently permits this. Should it not, I again remind
    our witnesses that the Congress is the sole progenitor of the
    commission's authorities and should be consulted if new powers
    are to be conferred or exercised.
        In closing, I would like to thank the witnesses for
    appearing before us this morning to allow the members of the
    subcommittee to avail themselves of the expertise of our
    witnesses. To our witnesses' dismay, I am sure, I will submit
    my questions, many of them yes or no, for the record, and ask
    unanimous consent at this time, Mr. Chairman, that I be
    permitted so to do. I also look forward to continued debate on
    this matter and other matters related to the implementation of
    the National Broadband Plan. I thank you for the courtesy that
    you extended me this morning, Mr. Chairman. I commend you for
    the hearing, and I yield back the balance of my time.
        Mr. Boucher. Thank you very much, Chairman Dingell. The
    gentleman from Alabama, Mr. Griffith, is recognized for 2
    minutes.

    OPENING STATEMENT OF HON. PARKER GRIFFITH, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF ALABAMA

        Mr. Griffith. I would like to thank the chairman and
    ranking member for calling this hearing today and also thank
    all of the witnesses for your willingness to testify before
    this committee. Currently 95 percent of Americans have
    broadband access and only 5 percent do not. We on this
    committee realize that this is an issue of unserved versus
    underserved. I am here today to advocate for deployment of
    broadband to he unserved areas of our country and assure that
    we properly qualify unserved and underserved. It is imperative
    that any policies we discuss foster competition.
        In today's business market, access to broadband is vital
    from the boardroom to the farm, and everywhere in between. I
    believe that we have been moving in the right direction with
    the deployment of broadband. Free market principles and pro-
    investment policies have yielded 200 million subscribers, up
    from 8 million over just the last decade. Over the last 10
    years private industry has invested over $500 billion in
    broadband deployment. That is a staggering number and one that
    confirms that those investments were vital to reaching the
    current 200 million subscribers. If we stay on this path and
    work together, I believe we can meet the goal of providing the
    remaining 100 million homes with access to broadband service by
    2020. Again, I thank you for your time today, and I look
    forward to hearing your testimony.
        Mr. Boucher. Thank you, Mr. Griffith. The gentleman from
    Massachusetts, Mr. Markey, is recognized for 2 minutes.

    OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
            CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

        Mr. Markey. Thank you, Mr. Chairman. Thank you for having
    this very important hearing. Welcome, Bureau Chief Gillett. I
    have admired your work in Massachusetts over the years, and I
    am very proud to have you now take on this great national
    responsibility. As the lead House sponsor in 1996 of the E-Rate
    provision, I call it the E-Rate, I was going to call it the E-
    Rate but I didn't think I could get away with it, so I just
    call it the E-Rate, it is important for us to recognize that
    the children, that adults without broadband should have access
    in schools and in libraries, but increasingly because according
    to the FCC 14 to 24 million Americans do not have broadband
    accessible to them at all and another 93 million Americans have
    chosen not to purchase broadband even if it is available to
    them, we need strategies that can ensure that broadband does
    reach them.
        And so this is a huge issue for us. The OECD has said that
    we have dropped to 15th in world rankings in broadband
    deployment, so what I think we have to do is relying upon this
    National Broadband Plan to have this discussion. We have to
    devise ways that we harness new advances in technologies,
    insist on administrative efficiencies inside of the programs in
    order to drive down costs and to create savings wherever
    possible, and we need to shift over time to a more rational,
    stable source of funding while embracing broadband as a service
    that all Americans should be entitled to. It will become the
    indispensable infrastructure for the 21st Century in our
    country and around the world. It will be a proxy for economic
    growth in all sectors, energy, health care, education, all
    parts of the American economy.
        If we want to be number 1 for the 4 percent of our
    population as opposed to the other 96 percent of the world, we
    just have to decide if broadband is going to be at the center
    of that national strategy. This hearing will go a long way
    towards helping us to establish a long-term plan. Thank you,
    Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. Markey. The chair
    would like to add its welcome also to the gentleman from Ohio,
    Mr. Latta, as a new member of our subcommittee. We look forward
    to working with you, and you are recognized for 2 minutes.

    OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Mr. Latta. Thank you very much, Mr. Chairman. It is an
    honor for me to be on this subcommittee. I look forward to
    working with you and the other members on the subcommittee. I
    represent one of the most rural areas in the State of Ohio, and
    I am keenly aware of the importance broadband deployment plays
    in the economic development and in the nexus that this axis has
    the job creation. I feel very strongly that the country's free
    market private investment approach to broadband expansion has
    been very successful. It is also my understanding that
    according to the National Broadband Plan 95 percent of the
    population has at least 4 megabyte per second broadband
    service. I believe that the remaining 5 percent for service
    should be spent on the unserved areas where areas do not have
    access to broadband.
        We need to carefully look at how to expand service to
    ensure that there is not an unfair advantage to one entity,
    especially in light of the fact that private industry has
    invested billions of their own capital to expand services.
    Additionally, I am concerned how the FCC will define
    competition with the structure of the plan. Furthermore, the
    plan has called for greater collection analysis of the
    competition data. This is a bit worrisome as companies are
    essentially being asked to hand over their proprietary data and
    potentially fuel competition to their services by the
    government or their private sector counterparts.
        There must be safeguards put in place and an assurance that
    the government does not get in the business of competing with
    this already hyper competitive industry. It is important that
    while serving to reach this remaining 5 percent of the unserved
    household, that jobs are indeed created. I am critical of
    increasing bureaucratic red tape through any government
    initiative when the free market can do better. We need to
    assure that any of the requirements are not detrimental to job
    creation in Ohio or across the country. Broadband expansion can
    help the economy by creating new jobs related to the deployment
    of necessary infrastructure, as well as by giving unemployed
    workers access to tools that will help them find and prepare
    for new jobs.
        It is my hope that the FCC does indeed focus on broadband
    deployment which will bring jobs and economic development to
    rural areas and not focus on policy or if the FCC has
    questionable authority. I want to thank the chairman again for
    this opportunity. I look forward to hearing the testimony from
    the witnesses. I yield back.
        [The prepared statement of Mr. Latta follows:]
        [GRAPHIC] [TIFF OMITTED] 76566A.005

        [GRAPHIC] [TIFF OMITTED] 76566A.006

        Mr. Boucher. Thank you very much, Mr. Latta. The gentle
    lady from California, Ms. Eshoo, is recognized for 2 minutes.

     OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Ms. Eshoo. Thank you, Mr. Chairman, for scheduling this
    hearing to continue to explore options for deploying broadband
    in ways that all Americans, not just some, but all Americans
    will have access to it. The National Broadband Plan makes
    inclusion an essential priority with a goal of reaching, as we
    know, 100 million households with 100 megabits per second
    service by 2020. I think that this is an ambitious plan, and I
    think it is just what we need to do. We need to be ambitious
    given, as you stated earlier, our 16th position in the world.
    We can't afford to leave some Americans in the dust while
    others move ahead with broadband access in a way that turns the
    underserved and the unserved regions of our nation into virtual
    reality ghost towns.
        I am pleased that the National Broadband Plan contains
    ideas already offered by members. I introduced one that would
    require broadband conduit to be installed for federal highway
    projects. It is the dig once concept, which is what I call it
    anyway, and I think it makes sense from the financial and
    administrative sense. We can guarantee the infrastructure that
    goes where our highway system goes and reap the cost savings of
    doing a 2 for 1 dig. And so I hope to see this move. I think it
    is smart. I think it makes sense. It is pragmatic, and I look
    forward to seeing it happen.
        Inclusion and access can't be achieved without funding, and
    I think that we need to update the Universal Service Fund to
    recognize broadband as a primary communications tool.
    Certainly, Representative Matsui's bill moves in that
    direction. I support it. Mr. Markey's bill, which takes the E-
    Rate program to the next level, I am proud to support. So I
    think that we need to build in these pieces of legislation in
    order to keep moving ahead. We are only going to reach the last
    mile, in my view, with a unified sense of purpose. As I look
    out at the witnesses here today there is a diverse range of
    interest, and I am looking forward to hearing how you see us
    reaching and serving the last mile in a way that is inclusive
    and affordable. So thank you, Mr. Chairman, for continuing this
    series of hearings. They are most valuable, obviously, on the
    broadband plan, and I can't wait for the implementation phase.
    I yield back.
        Mr. Boucher. Thank you very much, Ms. Eshoo. The gentle
    lady from the State of Tennessee, Ms. Blackburn, is recognized
    for 2 minutes.

    OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF TENNESSEE

        Ms. Blackburn. Thank you, Mr. Chairman, and I thank you for
    the hearing and for the focus that we have on this issue. And I
    want to say welcome to all of you who are before us today. We
    are glad you are here. I will tell you if we had been doing our
    work in the manner in which we should have been, you would not
    have to be here today. We do need to put our attention on the 7
    million people that do not have access to broadband, and that
    should be the focus of our attention. But we should have gone
    about our mapping processes first and then we should have
    issued the definitions of what unserved and underserved were
    going to be. Instead, this committee after much discussion,
    decided that that would be booted to the FCC who then decided
    they would boot it on to others.
        So we need to look at where we are placing the ability to
    determine what this is. Now do local governments have a role to
    play in this? They do, but they don't need to be competing with
    private companies. That is why we need to be looking at these
    definitions, and then making a determination how we go about
    with completing the rest of this broadband access but not
    driving up costs for the consumer. I am looking forward to
    hearing what you all have to say, and welcome to the committee.
    Mr. Chairman, I yield back.
        [The prepared statement of Ms. Blackburn follows:]
        [GRAPHIC] [TIFF OMITTED] 76566A.007

        Mr. Boucher. Thank you very much, Ms. Blackburn. The gentle
    lady from the Virgin Islands, Ms. Christensen, is recognized
    for 2 minutes.

     OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Mrs. Christensen. Thank you, Chairman Boucher, and Ranking
    Member Stearns for this second hearing on the National
    Broadband Plan. As a representative of a district that is
    second to last in broadband penetration the implementation of
    the last mile is very important to my constituents as it is to
    tribal areas and many communities of color who I am sure make
    up much of the 14 to 24 million Americans to whom broadband is
    unavailable or the 93 million or more who are not using it.
    These communities are at a health, educational, and economic
    disadvantage, and so the optimal deployment of the last mile as
    well as the middle mile and efforts to increase adoption are
    critical if our communities are to thrive and our nation is to
    remain competitive.
        I think that the National Broadband Plan's recommendation
    to expand universal service program to cover broadband and the
    expansion of the Community Connect program are a great start. I
    look forward to the discussions on these and other
    recommendations during this hearing, and while I recognize that
    this hearing is not specifically on BTOP or BIP they represent
    an immediate investment opportunity to the territories, many of
    which are long distances from the mainland and depend greatly
    on broadband deployment. To date only 2 grants were awarded to
    the territories in round one. It is my hope they will do better
    in round two because it is important that we get the funding to
    these areas. I would also like to welcome our witnesses and
    look forward to their testimony and the discussion on broadband
    funding and deployment today. Thank you.
        Mr. Boucher. Thank you, Ms. Christensen. The gentleman from
    Nebraska, Mr. Terry, is recognized for 2 minutes.

       OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEBRASKA

        Mr. Terry. Thank you, Mr. Chairman, for holding this
    hearing, and I look forward to the series of hearings that we
    will have on the National Broadband Plan. That said, I do hope
    that the actual last mile wired line and wireless providers
    will be able to testify in future hearings. They are doing an
    excellent job according to the plan, which states that
    approximately 290 million Americans, 95 percent of the
    population, have access to at least 4 megabits per second
    broadband service. If we are going to meet the goals set out in
    the plan then it makes sense to have federal programs like the
    Universal Service Fund concentrate on the small 5 percent of
    the unserved population that do not have access to broadband.
        These homes are primarily in very rural areas in which it
    is otherwise uneconomic for the private sector to serve. As we
    have seen by the massive investments made over the last decade,
    the private sector is more than willing to provide service to
    the rest of the country. It should come as no surprise to
    anyone in this room when I say I truly hope this committee will
    have the opportunity to advance a much-needed USF reform bill,
    and which the chairman and I have worked so hard on over the
    years. Again, I think you, Chairman Boucher, for holding this
    hearing and look forward to future hearings. I yield back the
    rest of my time.
        Mr. Boucher. Thank you very much, Mr. Terry. The gentleman
    from Pennsylvania, Mr. Doyle, is recognized for 2 minutes.
        Mr. Doyle. Thank you, Mr. Chairman. I waive.
        Mr. Boucher. Thank you. The 2 minutes will be added to your
    time for questioning our witnesses. The gentleman from North
    Carolina, Mr. Butterfield, is recognized for 2 minutes.

    OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE STATE OF NORTH CAROLINA

        Mr. Butterfield. Thank you, Mr. Chairman, for holding this
    hearing today on deploying broadband to the last mile. While
    the majority of Americans enjoy access to a fast broadband
    connection there is a significant segment that does not, and so
    my comments today will be for those who do not have access to
    broadband. Those who fall into that category either use dial up
    or simply go without the technology that connects us to the
    internet. These unserved and underserved regions should be of
    the highest concern to those who are charged with fulfilling
    Congress' intent of nationwide and universal broadband
    deployment and accessibility. I am concerned of the amount of
    BTOP and BIP funds that have been awarded to date. Out of the
    $7.2 billion appropriated to NTIA and RUS, only a little more
    than $2 billion has been awarded.
        With a tremendous need, particularly in rural areas like
    mine, more must be done to expeditiously award qualified
    applicants. More than a dozen applications came from my
    district, yet only 1 statewide middle mile infrastructure
    project has been funded. That award will benefit my state by
    connecting anchor institutions, hospitals, and libraries, but
    will not benefit my constituents that still lack a home
    connection. The National Broadband Plan also recommends that
    municipalities lacking access to affordable broadband fill the
    void through a municipally-owned operator. This is already
    happening in a municipally-owned city in my district, Wilson,
    North Carolina, where Green Light, the city's municipally-owned
    broadband, is providing fiber to home for every customer at an
    affordable cost.
        The city applied for round 1 of BTOP funds and was not
    funded and it does not qualify for BIP second round funding.
    Having invested $30 million of their own money, the city has
    built a successful world class system only to be denied federal
    assistance for its continued operation. Wilson is lucky to have
    been able to sustain themselves for so long, but other regions
    of the district simply go without access to the tools that we
    all take for granted. Mr. Chairman, my time has expired. I want
    to thank you for your leadership on this issue. I look forward
    to hearing from the witnesses. I yield back the balance of my
    time.
        Mr. Boucher. Thank you, Mr. Butterfield. The gentleman from
    Vermont, Mr. Welch, is recognized for 2 minutes.

      OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF VERMONT

        Mr. Welch. Thank you very much, Mr. Chairman, and Ranking
    Member Stearns. Vermont is intimately familiar with the
    challenges of last mile broadband deployment. We have got close
    to 20 percent of Vermonters currently lacking access to high
    speed broadband, and the majority of Vermont lacks access to
    state of the art communication tools like Wi-Fi and town
    centers and mobile television services, so we have got a long
    way to go. And, of course, in this day and age access to
    broadband is no longer a luxury, it is a necessity, and for
    Vermont and other states like Vermont to compete in the 21st
    Century, we have got to take greater strides towards achieving
    universal access, and to fail in this effort would be to fail
    large slots of rural America, including Vermont.
        So that is why I support the National Broadband Plan
    proposed reform of the Universal Service Fund and expansion of
    the Community Connect program. We have got to reach that goal
    of deploying broadband facilities capable of actual download
    speeds of 4 megabits upload speeds of 1 megabits to 99 percent
    of the unserved population by 2020. I am hoping to learn more
    today. I appreciate you being here and all of the work that you
    are doing and look forward to getting from where we are to
    where we need to be as quickly as possible. And I yield back.
        Mr. Boucher. Thank you, Mr. Welch. The gentle lady from
    Florida, Ms. Castor, is recognized for 2 minutes.

      OPENING STATEMENT OF HON. KATHY CASTOR, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Ms. Castor. Thank you, Chairman Boucher, for calling this
    hearing, and welcome to our witnesses. Since the Comcast
    BitTorrent case, many people have been wondering what is in
    store for the National Broadband Plan. The plan's overarching
    mission is very important, and that is to bring the tremendous
    power of the internet to all Americans, rural or urban, rich or
    poor, young or old. So in my view the last mile is not just
    about geography. There are millions of Americans, many of them
    in well-served communities like mine, who simply do not have
    the resources to take advantage of the world at their
    fingertips. In addition, the Universal Service Fund has served
    many telephone users well over the years but it is time for an
    update, and the plan aims to reform the USF and bring it into
    the broadband age, and I am supportive of these efforts.
        Many of you have heard me mention before that Floridians
    over time have paid into the USF much more than we have
    received back and we need reform. I want to make sure that the
    funds are intended for broadband and adoption in the new
    versions of the USF are distributed more evenly across
    communities in the last mile in the truest sense of that
    phrase. I would also like to hear what the witnesses have to
    say about the FCC's ability to reform the USF in the post-
    Comcast BitTorrent world. We need to figure out if the FCC has
    the authority it needs to make changes to how we pay into the
    USF and expand it to include broadband.
        Regulatory uncertainty is not good for business and it is
    not good for consumers, so now it is time for Congress and the
    FCC to dig in and do what it takes to bring the real world
    infrastructure that gets us to the last mile. Thank you all,
    and I look forward to your testimony. I yield back.
        Mr. Boucher. Thank you, Ms. Castor. The gentleman from
    Illinois, Mr. Rush, is recognized for 2 minutes.

     OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Rush. Thank you, Mr. Chairman. I want to thank the
    ranking member and say good morning and welcome to each one of
    our witnesses here today. I want to thank you for appearing to
    offer your views on the program as well as your recommendations
    on how to best deploy broadband to individuals and families in
    unserved and underserved areas. In 1989 there was a blockbuster
    movie produced and directed by Kevin Costner called the Field
    of Dreams, and Kevin Costner plays an Iowa corn farmer, Ray
    Kinsella, who hears voices that tell him to build--if he would
    build it, he would come or they would come. Going on blind
    faith and his interpretation of what those voices have
    commanded of him, Ray invests extraordinary measures of times
    and resources to construct a baseball diamond in his corn
    field.
        Nearly a year later, and following the jeers of neighbors
    and impending bankruptcy, his vision becomes manifest when the
    ghosts of Chicago White Sox, including the infamous Shoeless
    Joe Jackson, appear literally out of thin air to practice and
    play on that corn field diamond. The top leaders and management
    of communication companies have not only told us but are
    showing us time and time again that they are not like Ray
    Kinsella. Unlike Mr. Kinsella, they are not novices in
    business. Unlike Mr. Kinsella, these business leaders are
    driven by the prospects of generating hard cash assets and
    handsome returns for their shareholders. And, unfortunately,
    unlike Ray, some of these companies have lost touch with the
    vision of their own founders to be content with modest profits
    while erring on the side of consistently growing their networks
    through all economic cycles.
        Just a generation or two ago, a large percentage of these
    companies and even public utilities were owned by a wider basis
    of shareholders. Many of these shareholders held but a few
    shares of stock in a given company and were content to know
    that their investment would provide them with predictable
    income and stable dividends. These wide bases have strengthened
    increasingly over the years and some of these companies have
    been reorganized so as to avoid or to minimize their public
    interest obligation and duties under the law. They are now
    comprised of smaller and smaller groups of extremely wealthy
    individuals and giant financial institutions whose interest in
    expanding their networks are inseparable from what the last few
    sets of quarterly profits on these companies' income statements
    show. Therein lies the rub, Mr. Chairman, and members of the
    subcommittee. How can we find that swing spot where network
    expansion and broadband deployment intersect with the motives
    of emerging and mature communications companies alike.
        And I will be listening intently to what the witnesses have
    to say today in their testimony, and during the question and
    answer period to hear how best Congress can promote the goal of
    the National Broadband Plan, deploying broadband facilities to
    99 percent of the unserved population by the year 2020. We are
    in 2010 now. Ten years isn't a lot of time. Let us start
    talking and start working and start making it happen. Thank
    you. I yield back the balance of my time.
        Mr. Boucher. Thank you very much, Mr. Rush. The gentleman
    from Washington State, Mr. Inslee, is recognized for 2 minutes.
        Mr. Inslee. Thank you. I just want to note where the
    longest last mile is, which is in the tribal communities, and
    hope that we can discuss ways to advance finishing that longest
    last mile. We have got infrastructure challenges. We have got
    government relationship challenges. We have got some good
    progress with 57 tribes out in Washington. I think there are
    things we can do, and I hope we will talk about ways to get
    that done today. Thanks.
        Mr. Boucher. Thank you, Mr. Inslee. The gentle lady from
    Colorado, Ms. DeGette, is recognized for 2 minutes.
        Ms. DeGette. Mr. Chairman, these are obviously concerns
    that we share even in urban districts as I discussed at the
    last hearing. And with that, I will submit my opening statement
    and look forward to the testimony.
        Mr. Boucher. Thank you very much, Ms. DeGette. We will add
    2 minutes to your time for questioning our panel of witnesses.
    We turn now to our panel, and I want to welcome each of them. I
    will say just a brief word of introduction about each, and then
    we will be very pleased to hear from you. Sharon Gillett is the
    Chief of the Wireline Competition Bureau at the Federal
    Communications Commission, and was a participant in the
    construction of the National Broadband Plan. David Villano is
    the Assistant Administrator of the Telecommunications Program
    at Rural Development at the U.S. Department of Agriculture. Joe
    Garcia is the Regional Vice President for the National Congress
    of American Indians. Derek Turner is a Research Director for
    Free Press. Mark Dankberg is the Chairman and CEO of ViaSat,
    Inc. Austin Carroll is the General Manager of the Hopkinsville
    Electric System from Hopkinsville, Kentucky. And Jeffrey
    Eisenach is the Managing Director and Principal for Navigant
    Economics LLC.
        We welcome each of you this morning, and without objection
    your prepared written statements will be inserted in the
    record. We would welcome your oral summaries and ask that you
    try to keep those to approximately 5 minutes. Ms. Gillett, we
    are glad to have you here. Congratulations on the fine work
    with the broadband plan, and we look forward to hearing from
    you.

       STATEMENTS OF SHARON GILLETT, CHIEF, WIRELINE COMPETITION
       BUREAU, FEDERAL COMMUNICATIONS COMMISSION; DAVID VILLANO,
      ASSISTANT ADMINISTRATOR, TELECOMMUNICATIONS PROGRAM, RURAL
       DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE; JOE GARCIA,
    REGIONAL VICE PRESIDENT, NATIONAL CONGRESS OF AMERICAN INDIANS;
    S. DEREK TURNER, RESEARCH DIRECTOR, FREE PRESS; MARK DANKBERG,
        CHAIRMAN AND CEO, VIASAT, INC.; AUSTIN CARROLL, GENERAL
      MANAGER, HOPKINSVILLE ELECTRIC SYSTEM; JEFFREY A. EISENACH,
         MANAGING DIRECTOR & PRINCIPAL, NAVIGANT ECONOMICS LLC

                      STATEMENT OF SHARON GILLETT

        Ms. Gillett. Thank you, Chairman Boucher, Ranking Member
    Stearns, and members of the subcommittee for the opportunity to
    testify today about broadband deployment as described in the
    National Broadband Plan. I am also submitting a technical paper
    that the FCC is publishing on the topic, and I request that it
    be made part of the record.
        Mr. Boucher. Without objection.
        [The information appears at the conclusion of the hearing.]
        Ms. Gillett. Thank you. As you know, the plan stems from a
    Congressional directive to ensure that all people in the U.S.
    have access to broadband capability. To meet that objective,
    the FCC needed to size the gap between current broadband
    deployment levels and the goal of deployment to everyone. Given
    the limited state of available data on broadband deployment,
    sizing the gap was not a simple task. It involved considerable
    effort to gather the best available data and incorporate it
    into a comprehensive model of the current status of broadband
    deployment. This model considers a housing unit to have access
    to broadband capability if it is close enough to today's
    telephone or cable network infrastructure such that a service
    provider can deliver broadband at actual speed of 4 megabits
    per second download and 1 megabit per second upload today.
        The model estimates that 95 percent of the housing units in
    the U.S. can be served from today's infrastructure, meaning
    that about 14 million Americans cannot be served. Just because
    a housing unit can be served, however, does not mean that it
    is. There is no guarantee that a provider makes a retail
    service available to every home that its network is capable of
    serving. As a result, the actual number of citizens who cannot
    purchase broadband service is likely higher than 14 million.
    Limitations in the model data sources also contribute to
    sensitivities in the 95 percent estimate.
        For example, we relied on public cable industry data, which
    estimates that 90 percent of housing units are reachable with
    cable-based broadband. This data attributes cable broadband
    availability to entire cable franchise areas if any part of the
    franchise area is served with two-way capability. This
    attribution is accurate in most, but not all, cases, and
    accordingly the 90 percent figure may be an overstatement. The
    plan's estimate of an additional 5 percent of housing units
    that are reachable only through telephone-based broadband is
    similarly based on limited data. The model relied on data for a
    number of states as an input to a statistical regression
    analysis that allowed us to adapt the conclusions from these
    states to the rest of the nation.
        And I will add that exactly because of the kinds of
    concerns raised by Chairman Boucher, we did not rely on
    Virginia data as one of the states. As is generally the case
    though with statistical extrapolation there is also estimates
    rather than exact figures. As a complement to the broadband
    infrastructure modeling effort, we also analyzed FCC broadband
    subscribership data recognizing that such analysis is an
    imperfect means of assessing broadband availability. This
    analysis suggests that 92 percent of Americans live in areas
    where broadband service is offered, meaning that as many as 24
    million Americans live in areas where broadband service is not
    offered.
        Based on these 2 methods of sizing the broadband deployment
    cap, we conclude that broadband is unavailable to approximately
    14 to 22 million Americans. The model developed for the plan
    also estimates the financial commitments needed to reach
    unserved homes and the likely resulting revenues. This
    financial modeling shows that for today's unserved homes, which
    are largely located in low density rural areas. The private
    sector business case to reach them simply does not add up.
    While the market has done a great job of getting broadband to
    much of America, market incentives alone will not be enough to
    reach the homes that remain unserved today. Just as the current
    Universal Service Fund was instrumental in ensuring the
    availability of telephone service to over 99 percent of
    Americans, so too will a financial commitment to universal
    broadband service be necessary to ensure that broadband
    availability surpasses 95 percent in the future.
        Two helpful developments should improve data on the
    unserved. First, as a result of the Broadband Data Improvement
    Act, states are now gathering data about broadband deployment
    and by next February this data will be integrated into a
    national broadband map. Second, later this year the FCC will
    propose revisions to its broadband data gathering methodology
    consistent with recommendations in the plan. We look forward to
    working with Congress, industry representatives, and public
    interest advocates to fashion a new regime of broadband data
    collection that will provide Congress and the FCC with the
    relevant data we need while respecting industry's concerns
    regarding data that is legitimately competitively sensitive.
        Allow me to conclude by sharing with you that when I served
    as a state commissioner, lack of broadband availability was the
    top constituent complaint for legislators from rural districts,
    and now such complaints are the most frequent correspondence I
    receive from members of this august body. The addresses are all
    over the country but the issues are the same. In homes without
    broadband children are at an educational disadvantage. Parents
    are shut out from jobs that require online applications and no
    one can access critical government information and services
    online. If you live in one of those homes, it matters little to
    you whether broadband is available to 90, 92 or 95 percent of
    Americans. What matters most is that broadband is not available
    to 100 percent of the home that you live in.
        Solving that problem lies at the heart of the National
    Broadband Plan and reflects the very core of the FCC's mission
    in the 21st Century to work to make sure that America has
    world-leading high speed broadband networks. Thank you again
    for inviting me to testify and I will be happy to address any
    questions.
        [The prepared statement of Ms. Gillett follows:]
        [GRAPHIC] [TIFF OMITTED] 76566A.008

        [GRAPHIC] [TIFF OMITTED] 76566A.009

        [GRAPHIC] [TIFF OMITTED] 76566A.010

        Mr. Boucher. Thank you very much, Ms. Gillett. Mr. Villano.

                       STATEMENT OF DAVID VILLANO

        Mr. Villano. Thank you. Chairman Boucher, Ranking Member
    Stearns, members of the committee, thank you for the
    opportunity to discuss the Department of Agriculture's
    broadband program, specifically USDA's Community Connect Grant
    Program, administered by our Rural Utilities Service. We
    appreciate the work and support you and members of Congress
    have provided to help build a strong, dependable and affordable
    broadband infrastructure in rural areas. Rural development is
    truly committed to the future of rural communities. Throughout
    my 33-year career with rural development, I have worked in
    virtually all the programs, including business, housing,
    community facilities, and most recently our Telecommunications
    Program.
        My career began in the field and since coming to our
    national office in Washington, D.C., I have seen firsthand the
    tremendous impact that our investments made in rural
    communities. In my current position, I am responsible for all
    rural development telecommunication programs, and I can think
    of no program more fundamental to the future of rural America.
    The expansion of advance telecommunication network strengthens
    our nation's economy and its growth. Yet, in our rural
    communities internet use trails that of urban areas. At RUS, we
    view modern broadband infrastructure investment and rural
    economic competitiveness as a fundamental building block of
    sustaining economic development.
        Communities lacking access to modern broadband service are
    at a severe disadvantage. During the past 60 years, RUS has
    provided nearly $19 billion in loans and grants to build
    communication infrastructure in rural communities across the
    United States. Since 1995, all RUS financed telecommunication
    facilities have been broadband capable. Our broadband loan
    program created by the 2002 Farm Bill has provided over $1.1
    billion in loans to more than 90 broadband projects in rural
    communities spanning 42 states. Our distance learning and
    telemedicine program, also part of the 2002 Farm Bill, provides
    loans and grants for educational opportunities and health care
    services such as computer networks, telemedicine capabilities,
    electronic medical records, and interactive educational
    facilities to rural communities.
        To date, our distance learning and telemedicine program
    have funded nearly 1,000 projects in over 40 states totaling
    $400 million. In 2009, the American Recovery and Reinvestment
    Act provided an additional $2.5 billion for broadband loans and
    grants. The Recovery Act allows USDA to provide a flexible mix
    of loans, grants, and loan-grant combinations similar to our
    water and community facility programs, which will make more
    project in unserved areas feasible and eligible for funding.
        Our Community Connect grant program was created in 2002 to
    meet the needs of totally unserved areas. Community Connect
    provides grants to eligible applicants to establish broadband
    service on a community-oriented connectivity basis. Broadband
    service funded through the program must foster economic growth
    and deliver enhanced educational, health care, and public
    safety services. Community Connect has provided more than $98
    million funds to provide broadband services in 197 unserved
    communities, including some of the lowest income, neediest, and
    often highest cost to serve areas in the nation. Twenty-five
    percent of them have gone to tribal areas. The demand for our
    Community Connect program has been considerable. Last year
    alone, RUS received over 200 applications requesting over $200
    million for the $13 million that we had available.
        An excellent example of the impact of the Community Connect
    program is the grant awarded to Sacred Wind Communications.
    This $436,000 Community Connect grant made in 2005 funded
    broadband service for the community of Huerfano, New Mexico, on
    the Navajo reservation. Today, Navajos of all ages come to the
    center to use the computers to check their e-mail, perform
    searches, job hunt, do homework assignments, play educational
    games, apply to college, and to meet with others for social and
    e-commerce business purposes. In October of 2009 American
    Express announced that Sacred Wind Communications was voted the
    most aspiring small business in America in the company's Shine
    a Light contest. This is but one example of how Community
    Connect serves a catalyst for sustainable broadband adoption in
    rural areas.
        There is no single solution to the complicated mission of
    bringing advanced telecommunication services to every citizen.
    Government incentives, cost support mechanisms, changes in
    technology, and private investment all play a role. The $98
    million invested through our Community Connect program is just
    one tool in the toolbox to achieve the Administration and
    Congress' broadband policy goals. As the most longstanding
    direct federal grant program to promote rural broadband
    Community Connect is worthy of further study to draw lessons
    learned, not only in terms of broadband deployment but in the
    impact on economic development, health care opportunities,
    education, and other key indicators of the vibrancy of local
    communities. These lessons can be applied to the analyst of
    much larger investments now being undertaken through the
    Recovery Act to promote broadband throughout the United States.
        Rural communities will always face challenges in competing
    economically but they are stronger today because or the
    partnership forged at USDA's Rural Development. It is an honor
    and a privilege to work with you and our federal partners
    throughout the Obama Administration to make affordable
    broadband service widely available throughout rural America.
    Thank you again for inviting me here to testify. I will be glad
    to address any questions you may have.
        [The prepared statement of Mr. Villano was unavailable at
    the time of printing.]
        Mr. Boucher. Thank you very much, Mr. Villano. Mr. Garcia.

                        STATEMENT OF JOE GARCIA

        Mr. Garcia. Good morning. I am Joe Garcia, and I am the
    current chairman of the All Indian Pueblo Council in New
    Mexico, and also the vice president representing the National
    Congress of American Indians, also former president of the
    National Congress. Chairman Boucher, Ranking Member Stearns,
    and members of the committee, thank you for the opportunity to
    provide this testimony on the great potential of the National
    Broadband Plan to serve Indian country. Today, some 90 percent
    of Native Americans living in Indian country do not have
    affordable or reliable high speed access to the internet. The
    economic, cultural and human significance of that fact cannot
    be underestimated. Connecting Indian country with the world can
    reverse centuries of isolation and neglect.
        In the National Broadband Plan, however, Indian country was
    not an afterthought. Concepts such as a tribal-centric
    deployment models and core community institutions are now
    becoming part of the FCC's vocabulary. The FCC now understands
    that carriers have often stopped at the borders of Indian
    country and why tribes often find themselves as the only ones
    willing to make the commitment to provide these services to
    their citizens. These lessons have taught us an important fact
    about telecom and Indian country. Deployment must be
    sustainable before it can ever hope to be profitable.
        The submission of the plan to Congress is only the
    beginning of this process. This morning, I would like to
    highlight 5 recommendations. Our written testimony also expands
    beyond the comments here today. First and foremost, the plan
    recommends that Congress establish a tribal broadband fund to
    bring services to tribal headquarters and other anchor
    institutions, as well as assisting tribes in deployment
    planning, infrastructure build out, feasibility studies,
    technical assistance, business plan development and
    implementation, digital literacy, and outreach. Only a new
    separate fund will ensure that broadband is actually deployed
    in Indian country.
        The existing BIP and the BTOP programs funded at $7.2
    billion will not be sufficient to close the broadband
    availability gap. While a handful of tribal projects receive
    funding from the Recovery Act, it will take an additional $1.2
    billion to $4.6 billion specifically targeted for the tribal
    broadband fund to begin to close the digital divide. Second,
    and equally important, is the creation of the FCC Office of
    Tribal Affairs. To be credible and effective, the FCC must give
    the office sufficient resources, authority, and jurisdiction
    over communication issues affecting Indian country. Congress
    must increase funding for the FCC's Indian telecom initiatives
    so that it can genuinely develop and drive a tribal agenda.
    This new office should be an effective instrument of the FCC
    and voice for tribal nations in Washington.
        Third, the universal fund should be reformed with a special
    emphasis on the unique nature of Indian country. For instance,
    a library in Indian country may be different from what a
    library looks like elsewhere, but that is no reason to deny
    support. Indian schools need support not only for their
    classrooms but also for their dormitories where children need
    the internet to study. As sovereign nations, tribes need a seat
    at the table for ETC designations for USF support. In changing
    USF, however, Congress not inadvertently cut the only wire
    going into Indian country. The current analog telephone High
    Cost and Tribal Lifeline and Link-Up programs are vital to
    Indian Country and must not be negatively affected. To assist
    with this transition, we also urge Congress to establish a
    tribal seat on the USF Federal-State Joint Board.
        Fourth, tribes need spectrum, spectrum that is often in the
    hands of licensees that have not used it to bring service to
    Indian country. The FCC should reclaim dormant spectrum and
    make it available to tribes who actually deliver services. This
    must be more than just unregulated or White Space spectrum. It
    must consider dormant licensed spectrum as well. Finally, we
    urge congressional support for the adoption of a Tribal
    Priority to address the many barriers to entry. The Tribal
    Priority that was recently adopted by the FCC for broadcast
    spectrum is well grounded in strong constitutional principles
    based on the political status of tribal nations as sovereign
    entities.
        A new tribal priority should be used with reclaim spectrum
    to ensure that it is actually used for broadband services to
    tribal lands but it should also be used by the FCC beyond
    spectrum to barriers across the commission's rules. At this
    point, I would like to just say that at Ohkay Owingeh--Ohkay
    Owingeh is the Place of the Strong People. We live 25 miles
    from the state capital of New Mexico, Santa Fe. The Los Alamos
    National Lab, where I retired from, exists just 25 miles away,
    and yet our little community had no access to the internet. A
    phone company was there but it only brought DSL services, and
    my brother lived less than 1/8 mile away from where I lived. He
    had DSL. I didn't have DSL. But we took that opportunity to say
    we need access. And so we went and did a proposal to USDA some
    years ago. We got funded, and now we have wireless service in
    our community thanks to our own efforts and to the funding from
    USDA.
        But that is really what life is about in this country is
    that if you live in the rural areas and remote areas that is
    where the non-access is the biggest culprit for America. While
    new congressional funding actions are essential, there will be
    a strong return on your investment by engaging tribal
    governments and community institutions, by taking a tribal-
    centric approach to deployment, by digging once and by sharing
    infrastructure efficiently. Federal funding will produce a
    bountiful return and will actually save money in the long run.
    In closing, there is one important benefit that I cannot fail
    to mention and that is the sense of empowerment that broadband
    can bring. The ability to shape one's own future to provide a
    better world for new generations is an important part of what
    we mean by tribal sovereignty.
        The National Congress of American Indians looks forward to
    continuing our mutually beneficial relationship with the FCC
    and Congress as we all work to implement effectively the
    National Broadband Plan while finally moving Indian country to
    the forefront of technology. Thank you so much.
        [The prepared statement of Mr. Garcia follows:]
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        Mr. Boucher. Thank you, Mr. Garcia. Mr. Turner.

                      STATEMENT OF S. DEREK TURNER

        Mr. Turner. Chairman Boucher, Ranking Member Stearns, and
    members of the committee, I thank you for the opportunity to
    testify today on the important issue of the FCC's National
    Broadband Plan. I am the research director for Free Press, a
    public interest organization dedicated to public education and
    consumer advocacy on communications policy. We have for years
    worked to ensure that the principles and goals in the
    Communications Act are translated through the public policy
    process into a reality for all Americans. Thus, we welcome the
    call for the FCC to produce a National Broadband Plan and we
    were very pleased that Congress requested the plan contain an
    evaluation of the status of broadband deployment. Good data is
    a requirement for good policy, and as Congress has recognized
    for too long policymakers have not had the right data to
    understand the problems in our broadband market.
        But as important as quality data is, it is equally
    important that the information be presented in a way where all
    the caveats, assumptions, and uncertainties are made extremely
    clear. Congress asked that the National Broadband Plan evaluate
    the status of broadband deployment and despite a valiant
    effort, I think that the information presented to Congress in
    the plan, particularly the way it is presented, overstates the
    actual availability of broadband service in America. In
    particular, the information presented in the plan serves to
    understate the magnitude of the underserved broadband problem,
    implying that high quality services are offered in most rural
    areas when we know that they probably are not. This is partly
    the result of some questionable assumptions that underlie the
    data but at a high level it is the result of an unfortunate
    presentation of the information that can be misleading.
        The National Broadband Plan reports that 95 percent of U.S.
    housing units have access to broadband infrastructure capable
    of supporting actual download speeds of at least 4 megabits per
    second and actual upload speeds of at least 1 megabit per
    second, a service quality threshold which is the plan's
    national availability target. This finding is presented
    prominently in this map and the broadband plan, a figure with
    the title availability of 4 megabits per second capable
    broadband networks in the United States. Now when I hear the
    word availability or am told that something is available, I
    think that means that I could get the item or service because
    someone is offering it. But the plan's 95 percent available 4
    megabit finding is not supported by data on what services are
    actually being offered.
        The finding is largely based on the assumption that where
    cable services are such infrastructure is capable of delivering
    broadband service at this quality, but this is like saying if I
    build a grocery store on top of a mountain that is served by a
    forest road, bread is therefore available in my store because
    that forest road gives me the capability of bringing bread
    there. But if I had no bread on the shelf or if the bread is
    stale the customers won't much care that I have the capability
    of getting it there. The problems with this estimate only serve
    to highlight the fact that the FCC currently lacks adequate
    information on the actual state of broadband availability
    despite years of public and congressional pleas for better
    data. This need not be the case.
        The commission has for nearly 2 years failed to act on its
    own proposal to collect broadband availability data and now
    despite the fact that the National Broadband Plan strongly
    recommends that the FCC finally gather this data, the
    commission has signaled its intent to delay the matter even
    further by starting another proceeding all the way at the end
    of this year. As I said at the start, good data is a
    requirement for good policy, but so too is a strong commitment
    to efficiency and good ideas in the face of entrenched
    interests. The National Broadband Plan does set out a plausible
    vision for modernizing the Universal Service Fund, one that
    Free Press generally supports. However, this USF transition
    plan still leaves in place many of the more problematic aspects
    of the existing subsidy system, including the lack of a
    determination of where subsidies are actually needed to keep
    rates at a quality and a reasonably comparable rate.
        Also, the plan proposed to bring unserved areas 2010 era
    technology but not until 2020. This raises concerns whether
    these networks will be scalable to reach future universal
    service goals. If we follow such a path, we may ultimately end
    up just replacing one form of the digital divide with another
    where urban Americans have world-class quality networks while
    rural America is stuck with second class access. In closing, as
    Congress moves forward with the oversight of the National
    Broadband Plan and with its own ideas on universal service
    reform it should be aware of all the caveats in the data.
    Policymakers need the right information to ensure our broadband
    infrastructure challenges are met in the most efficient manner
    possible. I thank you for your attention and look forward to
    your questions.
        [The prepared statement of Mr. Turner follows:]
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        Mr. Boucher. Thank you very much, Mr. Turner. Mr. Dankberg.

                       STATEMENT OF MARK DANKBERG

        Mr. Dankberg. Good morning, Chairman Boucher, Ranking
    Member Stearns, and the members of the committee. Thank you
    very much for the opportunity to present. I am Mark Dankberg. I
    am co-founder of ViaSat, Inc. It is a company I started in my
    house about 24 years ago. It has grown to have about 2,000
    employees all around the country. And for the last 10 years, we
    have been very focused on bringing broadband to America by
    satellite. We are close to a billion dollar company and we
    provide this technology all around the world. We were investing
    about $1 billion starting 2 years ago to do this, and I wanted
    to cite a famous American, Will Rogers, who, believe it or not,
    is a broadband expert. When Will Rogers said it is not the
    things that you don't know that will hurt you. It is the things
    you think are so but--what you think is true but ain't so--so
    let us go back. I am going to tell you 3 things that you think
    are so--that you think are true and ain't so.
        One is that lack of availability of broadband is primarily
    a rural problem. I am going to show you evidence from our
    subscribers where they are that it is actually--there are more
    people in Ohio, Virginia, New York, California without
    broadband then there are in Wyoming and Montana. There are
    higher percentages in the rural states but more people in the
    developed states. Number 2, that we think it is good business
    to serve people who don't have broadband available. That is
    what we are doing. We are investing in it. And, third, that
    satellite actually can provide a very good service. It is not a
    second rate service. So the first thing is this map. Here we
    show the State or Virginia. The green areas are areas that are
    mapped to have availability of one or more terrestrial
    broadband services.
        Yet, WildBlue, which has over 400,000 subscribers, more
    than half of our subscribers in the State of Virginia are in
    areas that are supposed to have broadband available. It is
    strong empirical evidence that shows exactly what we have been
    talking about that the availability of broadband does not
    extend to all people. These people--90 percent of our
    subscribers tell us that they can't get terrestrial broadband,
    even those people that are in these areas that are green. Now
    this means that it is a much tougher problem. It is not a
    problem just in rural areas. It is a problem around cities. The
    next map shows Ohio, and you can see it is almost the same
    thing. The green areas, all the blue dots are subscribers who
    have gotten satellite because they can't get terrestrial
    broadband even in those areas.
        So you can imagine that if we think we are going to try to
    serve all these unserved people, we would essentially be
    building out infrastructure throughout the State of Ohio, not
    just in the rural areas. So satellite is actually an excellent
    way to provide broadband to these scattered people, whether
    they are in rural areas or around metro areas. This next chart
    shows basically how people use the internet, and I wanted to
    make that point. See if we can move on to the next chart,
    please. It is a pie chart, and it shows data from Cisco Systems
    that shows what the applications are that people use on the
    internet, and you can see it is dominated by 3 things, video,
    web and e-mail, and peer to peer. For those services, which
    make up 95 percent of internet access, satellite is actually
    excellent service. We also can provide gaming services. We can
    provide voice and video services.
        And to correct sort of misperceptions, I would like to show
    a quick 40-second clip. I wish we could demonstrate it here.
    But this is just 40 seconds slice of clip of an actual
    satellite internet session showing people doing voice-video
    communications and web browsing that I think will be really
    illuminating. If we could move it out, please. I think we might
    have to adjust the volume a little bit. Will you turn up the
    volume, please?
        [Video shown.]
        Mr. Dankberg. The point being is it just looks like an
    internet session, and it is. It is just like any internet
    session that you would have on cable or fiber optics except
    that it is done over satellite. And the point that we are
    trying to make is that this is far, far more effective. The
    next slide just shows where people talk about thousands of
    dollars to build out or tens of thousands of dollars to build
    out services. Using satellite is basically $5 is the cost to
    make satellite available to any place in our coverage area. We
    provide service at $49 a month and if people elect service the
    service quality that you saw on that video clip, which we
    believe is very, very comparable to cable or terrestrial
    broadband would cost less than $1,000 to provision at the level
    that you saw in that video clip.
        We also make that available on a wholesale basis for less
    than half that $49 price to retailers, including DISH TV,
    DirecTV, the National Rural Telecom Cooperative, Quest, and
    AT&T. We think the FCC properly noted that this can be a good
    service. What they said is satellite with these next generation
    satellites such as the ones that we are offering can make
    service available to any American. All they question is whether
    this is a scalable solution. I want to point out it would take
    about 7 satellites, that is 7 next generation satellites to
    make that service available to 7 million subscribers anywhere
    in the United States. There are already 5 first generation
    satellites that are up. They are not as good as the one that we
    are launching now but they indicate the level of investment
    private industry has already made. Go to the next slide,
    please. There are 2 of these next generation satellites
    currently under construction. The others will be available 1
    year from now and will make the level of service that you saw
    available to approximately 1 to 1\1/2\ million people in our
    coverage area. And just by comparison there is 25 existing
    satellites just for satellite TV over the United States today.
        So the main 3 points I would like to make at the end is we
    do believe private industry can deal with this. If the
    government feels though that the subsidy should be used what we
    would say is that it should be technology neutral to let this
    very cost-effective technology be one of the alternatives. We
    recommend that it be competitive, that the way you compete is
    to provide equal service at the lowest cost and that the other
    important point is that the consumer should have a choice, that
    they shouldn't be forced to get service from a particular
    subscriber because one company has been chosen as the
    designated entity in that area. And if you look at it----
        Mr. Boucher. Mr. Dankberg, you are well over your amount of
    time here. Can you just wrap up quickly, please?
        Mr. Dankberg. I was just going to say the 30 million
    satellite homes that get TV in the U.S., nobody would think
    people would use satellite for TV.
        Mr. Boucher. Thank you very much, Mr. Dankberg.
        [The prepared statement of Mr. Dankberg follows:]
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        Mr. Boucher. Mr. Carroll.

                      STATEMENT OF AUSTIN CARROLL

        Mr. Carroll. Good morning, Chairman Boucher, Ranking Member
    Stearns, and members of the committee. Thank you for allowing
    me to be here. My name is Austin Carroll. I am general manager
    of Hopkinsville Electric System in Hopkinsville, Kentucky, and
    I am testifying today on behalf of the American Public Power
    Association where I serve on the board of directors and the
    Kentucky Municipal Utilities Association, as well as my
    position at Hopkinsville Electric System. APPA is a national
    service organization that represents the interests of more than
    2,000 publicly-owned, not-for-profit electric utilities located
    in all states except Hawaii. Exhibit 1 in your materials is a
    map showing the location of the APPA members nationwide. Many
    of these utilities developed in communities that were literally
    left in the dark during the era when the United States was
    electrified as private sector electric companies pursued
    opportunities in larger population areas.
        State and local governments, therefore, undertook the
    effort to ensure that residents of their communities were
    served by their own power systems in recognition of the fact
    that electricity is critical to the economic development and
    educational opportunities and quality of life for its
    residents. Currently, over 70 percent of APPA's members are
    communities with less than 10,000 population, and approximately
    45 million Americans receive their electricity from public
    power systems. Many of the public power systems were
    established primarily as the large utilities were unwilling to
    serve smaller communities and rural areas, which were then
    viewed as unprofitable. In these cases, communities formed
    public power systems to do for themselves what the private
    sector was either unable or unwilling to do at a fair price.
        The same trend is occurring today in the area of broadband
    and advanced communications. Many public power systems are
    meeting the new Age demands of their communities by providing
    broadband services where such services are unavailable,
    inadequate or too expensive. These services, provided with high
    quality and affordable prices, are crucial to the economic
    success and quality of life of communities across the nation.
    Nationwide, 700 public power utilities provide broadband
    services to school districts, local governments, hospitals, and
    almost 200 provide internet services to the residents.
    Municipal utilities are nonprofit and do not provide dividends
    for stockholders. In Kentucky they pay wages that are
    comparable to that paid by the State of Kentucky. Many public
    power systems have secured loans or utilized municipal bonds to
    invest in infrastructure for broadband. Municipal utilities are
    locally owned and operated utilities that are governed by
    elected municipal councils or independent utility boards
    appointed by elected mayors. Thus, unlike large private sector
    broadband providers, municipalities' sole focus is the needs of
    their own small territories, and they are responsive to their
    residents through the electoral process.
        It is not my purpose to criticize private sector telephone
    and cable companies' broadband investment, deployment and
    pricing decisions, but rather to illustrate the differences
    between these companies and municipal/public power utilities
    that deploy broadband services. This testimony focuses on
    broadband services provided by Kentucky municipalities, which I
    think will provide a particular useful example of the important
    role public power utilities have to play in making broadband
    available nationwide. And I have included a map of Kentucky so
    you can see the municipalities in Kentucky and the ones
    providing broadband services.
        In May of 1998, our community board of directors agreed to
    run fiber optic cable to our substations around town in order
    to monitor the substations for electric outage prevention. Then
    in '99, we had ringed our city on the basis of ringing these
    substations with fiber optic infrastructure. At that time,
    broadband was not available in Hopkinsville. Recognizing the
    need for our community to participate in the global economy and
    have available all educational opportunities, HES elected to
    use our fiber infrastructure to provide broadband services to
    local businesses, industries, government entities and others
    needing high-speed communications.
        We formed a subsidiary, EnergyNet, to manage that and we
    keep separate books on the EnergyNet side as opposed to the
    electric side. Bandwidth at reasonable prices quickly became a
    popular entity in our community. Kentucky Derby Hosiery, an
    international sock company, was our first customer. And after
    that, city building, emergency operations center, fire
    stations, police stations were connected. All schools were
    connected as well, and by becoming a USAC-approved provider of
    E-Rate services, we were able to reimburse the school system 80
    percent of its cost of connectivity so major businesses in town
    are now connected over our system.
        We have now also employed a mass network of radio
    transmissions across our city and that is our solution for the
    residential sector of Hopkinsville. We have continued to grow.
    We have built a network operations center that is a very
    hardened facility unlike anything else in our community, and we
    have several of our industries, hospital, and so forth, that
    locate their service there for security. Hopkinsville was
    initially handicapped because we didn't have a point of
    presence for a long distance company, and so it was very
    expensive to try to get broadband at wholesale prices into our
    community. We have now constructed a line to Bowling Green,
    Kentucky, where there was a point of presence, and we dropped
    our megabit cost from $125 to $20, which that savings had been
    passed along to our consumers.
        But we now have a world-class system in Hopkinsville. We
    can provide broadband at prices that are competitive with major
    cities. I call them NFL cities. And we are hoping to be able to
    attract a large data center to our community because we have
    got all the resources to do so. So it is not only a service to
    our existing businesses and industry but as an economic tool as
    well. And I appreciate your allowing me to make these comments,
    and I look forward to your questions.
        [The prepared statement of Mr. Carroll follows:]
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        Mr. Boucher. Thank you, Mr. Carroll. Mr. Eisenach.

                     STATEMENT OF JEFFREY EISENACH

        Mr. Eisenach. Mr. Boucher, Mr. Stearns, members of the
    subcommittee, thank you for having me here today. I will move
    quickly to stay on time. The first point I would like to make
    is that America's current broadband policies are by and large
    succeeding. Availability is increasing, prices are falling,
    adoption is rising, and high rates of investment and innovation
    ensure that these trends will continue. Our policies can be
    improved and the National Broadband Plan contains some good
    ideas for doing so, but we could also make things worse, in
    particular, by imposing radical and unwarranted new
    regulations. I will circle back to these policy issues in a
    minute, but first let me describe what I consider to be some
    clear indicators that our broadband policies are producing good
    results.
        I have got some slides. We can go ahead and put the first
    one up. First, as the National Broadband Plan itself points
    out, approximately 19 out of 20 American households have access
    to one or more wireline providers today, and even more, all but
    about 2 percent have access to one or more providers offering
    3G wireless services. Second, and as the next slide shows,
    broadband prices are dropping and speeds are increasing. Most
    importantly, from the perspective of broadband adoption, the
    price per megabit for entry level plans has fallen by about 75
    percent since 2004. I will pause for a second and emphasize the
    price of entry level broadband services per megabit in the
    United States has fallen by 74 percent in the last 5 years.
    That is a success story.
        Third, as the next slide shows, broadband adoption in the
    U.S. has reached nearly 70 percent of households and is
    continuing to expand, and as the next slide shows, and,
    importantly, adoption is rising most rapidly in the demographic
    groups where it has been lowest in the past. With adoption
    rates rising by 58 percent among those aged 65 or above, 40
    percent for low income households, and 21 percent for rural
    households between 2008 and 2009. Now these positive results,
    as the next slide suggests, are a function of the high levels
    of mainly private investment of America's broadband
    infrastructure. Between 2008 and 2014 analysts estimate that
    private firms will invest over $450 billion in America's
    communications infrastructure of which more than half, $244
    billion, will be dedicated to broadband.
        In fact, as the next slide indicates, perhaps the strongest
    indicator that our broadband policies are working lies in the
    fact that investment and communications equipment has performed
    quite strongly even during the recent recession. Whereas
    private fixed investment overall is down nearly 25 percent
    since 2006, investment in communications equipment is up by
    nearly 10 percent. These data are important because they refute
    the story line some interest groups are pushing which is that
    our policies have failed and are in need of radical change in
    the form of massive new regulatory schemes known as Net
    Neutrality and mandatory unbundling. Complete discussion of
    these issues would take more time than we have here today, but
    let me be clear about this. Whatever else one thinks about
    these proposals, there is simply no question that they would
    reduce investment and slow deployment of broadband
    infrastructure, which is what we are here talking about today.
        Now let me turn to the National Broadband Plan's proposal
    for expanding broadband availability and reforming the
    universal service program, the thrust of which I strongly
    support. In particular, the commission is in my view absolutely
    right to focus universal service subsidies on areas where there
    is not in the absence of a subsidy a viable business case for
    private sector deployment. That is, areas which would otherwise
    be unserved. Further, the commission's proposal to save about
    $15.5 billion by phasing out funding to competitive eligible
    telecommunications carriers and reducing funding to other high-
    cost programs are long overdue.
        I would also suggest the commission take a hard look at
    areas where cable firms offer unsubsidized voice service. If a
    cable company can offer telephone service at reasonable rates
    without a subsidy then a phone company ought to be able to do
    so as well. My own research suggests the commission could save
    another $6 billion to $10 billion over the next decade by
    simply eliminating subsidies to telephone companies where
    unsubsidized cable companies are providing service in the same
    areas. The commission also, in my view, needs to take out a
    sharper pencil when it comes to new spending. Its estimate of a
    $24 billion availability gap is based on 2 assumptions that
    deserve a very hard look. First, this figure apparently assumes
    that 4G wireless deployment will not count as meeting broadband
    availability goals even though the commission says it believes
    4G systems will cover 5 of the 7 million currently unserved
    housing units.
        Second, it also assumes that we will extend terrestrial
    broadband capacity to the 250,000 most costly to serve housing
    units in the U.S. for a total cost of $14 billion. That is an
    average of $56,000 per housing unit. Is that something we are
    really going to do? It may be more than the houses are worth.
    When these factors are taken into account, it would appear that
    the broadband availability gap is far smaller and the
    opportunity for savings from current USF programs is far
    greater than the plan currently suggests. And this suggests in
    turn, to go to my final slide, that the plan's current
    objective of merely not increasing the USF contribution factor,
    which as this slide shows, stands at an all time high of 15.3
    percent, is not sufficiently ambitious.
        Let me close by complimenting the commission on its
    commitment to a data-driven fact-based approach to policy
    making and by urging it to continue that approach as it moves
    forward. As a start, I know we are all anxiously awaiting the
    release of the underlying analyses upon which the plan's
    recommendations are based, and I gather some of those may have
    been released, at which point it may make sense to revisit much
    of what is being discussed here. Mr. Chairman, that completes
    my opening remarks. I look forward to your questions.
        [The prepared statement of Mr. Eisenach follows:]
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        Mr. Boucher. Thank you very much, Mr. Eisenach, and thanks
    to all of our witnesses for sharing their views with us here
    this morning. I was very pleased to note that the broadband
    plan endorses expanding the Community Connect program. And I
    was glad to hear you testify about that, Mr. Villano, during
    your presentation. Community Connect, I think, has done a
    terrific job in making broadband available in communities that
    for whatever reason the private sector has found it to be
    uneconomic to serve. Oftentimes these are remote communities
    where the cost of providing the middle mile connection in order
    to bring broadband into that community is prohibitive for the
    private sector when considering the number of subscribers who
    might be there to pay for those very large costs.
        And Community Connect has filled that gap very well. The
    problem is the program, as useful as it is, only had $13
    million to spend for the entire country in the course of the
    last year. I have seen the benefits of that program in my
    district. I was glad to hear Mr. Welch mention in his opening
    statement that the program has benefitted Vermont, and I know
    it has benefitted other countries. The broadband plan endorses
    it and says it ought to be expanded. Can you suggest, Mr.
    Villano, ways in which that could be done, and specifically let
    me begin by asking you if there are currently any statutory
    limitations on your ability to expand it apart from just having
    adequate appropriations? In other words, if more money were
    appropriated for this program could you spend that or would you
    have to have some amendment to your authorizing statute in
    order to enable you to do so?
        Mr. Villano. Thank you, Chairman Boucher. No, I don't
    believe that there are any statutory impediments to increasing
    the funding for the program. A lot of what we are doing under
    the broadband initiative program through the Recovery Act
    serves a lot of these same unserved communities, so there isn't
    anything statutorily that would do that.
        Mr. Boucher. And do you have the capability should
    additional appropriations be provided for Community Connect to
    spend those funds effectively?
        Mr. Villano. I definitely believe so, that we have that
    capability. We are delivering $2\1/2\ billion through the
    Recovery Act right now. Once we get through those funds, we
    would be more than able to handle an increase in any
    appropriation under Community Connect.
        Mr. Boucher. Is the methodology of Community Connect in any
    manner assisting you in expending your broadband funds through
    the stimulus program?
        Mr. Villano. We have many tools in our toolbox. We have our
    existing broadband program, the Farm Bill program, our
    infrastructure program, so certainly many of the lessons that
    we learned in Community Connect were brought forward to the
    broadband initiatives program. And if we do receive increased
    appropriations for Community Connect, we would want to look at
    some of the requirements that we do have for the program.
        Mr. Boucher. Thank you very much. I appreciate that. I
    think there is a general consensus on the part of most of the
    witnesses today that the 95 percent estimate that the broadband
    plan makes about the availability of broadband nationwide is
    somewhat optimistic, and that number in all likelihood is lower
    than that. What can we do to get better data than the
    commission had when it made that projection? Mr. Turner, you
    alluded to some possible approaches. Would you like to expand
    on that?
        Mr. Turner. Certainly. Mr. Chairman, right now the FCC
    collects very, very detailed subscribership data broken down by
    speed tier, residential versus business from every single
    broadband provider in the country and they collect that twice a
    year, and they have been collecting such data, similar data,
    for almost a decade now. But during that process, they have
    failed to actually ask the service providers please define your
    service territory areas and tell us what quality services are
    available where. And this is a much easier effort than filing
    the subscribership data every 6 months because basically once
    they define their service territory they only need to go back
    and change that when their service territory changes.
        So in 2008 the FCC made a decision, a tentative decision,
    to collect such data but that was never acted upon, and it sat
    on the table for the past 2 years. And I think it was rather
    unfortunate because had they acted then, we might not have had
    to run the BTOP and BIP program in the dark the way we did.
        Mr. Boucher. And so what immediate steps would you
    recommend?
        Mr. Turner. I believe the record is quite complete on this
    issue of availability data, and I think the commission should
    immediately move to an order on the issue and reform form 77 to
    require service providers to detail their availability in
    service quality areas.
        Mr. Boucher. Does anyone else have comment on that? Ms.
    Gillett, would you like to comment or would other witnesses
    care to comment on what kinds of approaches we might take in
    order to obtain better data on the extent of real availability?
    Mr. Garcia.
        Mr. Garcia. Mr. Chairman, I think it is important to know
    if when we speak percentages we got to have a baseline number
    to get that percentage so when we say 95 percent, 90 percent,
    the three A's that we all have to keep in mind are
    accessibility, affordability, and availability. They could
    really muddy up the statistics that we provide, but I think if
    we don't know how many families, for instance, in our rural
    area, if we don't know how many families could have that
    service and we only take data on the one that has service there
    is no way to gain a percentage and so the percentage number of
    serviced areas would be fictitious. So I think it is important
    to realize that the data gathering concept ought to be kind of
    re-evaluated and look at how can we best get the data.
        Mr. Boucher. All right. Thank you. Mr. Dankberg.
        Mr. Dankberg. Yes. The other thing I would add is that one
    of the points in the FCC National Broadband Plan was that the
    actual speeds that were delivered are in many cases much lower
    than the advertised speeds, and in order to collect this data
    and make it useful it seems like the size of just the
    availability of broadband there ought to be some definition of
    what that service actually is besides just the advertised
    speed.
        Mr. Boucher. All right. Thank you very much. My time has
    expired. The gentleman from Florida, Mr. Stearns, is recognized
    for 5 minutes.
        Mr. Stearns. Thank you very much, Mr. Chairman. Mr.
    Dankberg, I just appreciate your Will Rogers quote. I am
    reminded of another quote that Will Rogers said is be thankful
    that we are not getting all of the government we are paying
    for, which I think goes to my question to you. You are saying
    today that you don't need a subsidy. You don't think we need a
    subsidy to go ahead and push broadband.
        Mr. Dankberg. Yes. I think there has been a point made when
    we talk about unserved and underserved, and there is a lack of
    definition, and the thing that we would really strongly
    advocate is that if there were a definition of what broadband
    is that I believe that satellite could qualify and that we made
    a business of providing that level of service, whatever it is
    to be defined, without government subsidies, yes.
        Mr. Stearns. Ms. Gillett, you seemed to hedge a little bit
    on the figures here. The chairman mentioned that he thought the
    figures were too optimistic and I think in your opening
    statement you talked about that, in fact, the figures could be
    wrong, and I think you went ahead and talked about new figures
    which would indicate that it went from 7 million households
    being unserved to 12 million households. Is that correct?
        Ms. Gillett. No, but almost. I wouldn't say the figures are
    wrong. I would say the figures are all of necessity estimates
    because we don't have perfect data about any of this and that
    is one of our goals is to improve the data about it.
        Mr. Stearns. In your opening statement, though, I think you
    actually used some figures here that we wrote down.
        Ms. Gillett. Yes. The figures are that we approached size
    in the gap from 2 directions. We tried 2 different methods to
    reach both imperfect types of data. One of them is a model and
    that tells us 7 million households----
        Mr. Stearns. Not so much the process, I am just saying
    quoting your data I still get----
        Ms. Gillett. 14 to 24.
        Mr. Stearns. Yes. I still get about 92 percent of
    Americans----
        Ms. Gillett. That is right. That was what I said in my
    testimony.
        Mr. Stearns. So the bottom line is that is a pretty good
    figure still.
        Ms. Gillett. It still means 24 million people without any
    broadband service.
        Mr. Stearns. But I think Mr. Dankberg is saying that maybe
    some of these people are not in the rural areas, that they are
    in areas that are in urban areas, which is going to what his
    original statement was from Will Rogers. Another question for
    you is that----
        Ms. Gillett. I don't disagree with him on that.
        Mr. Stearns. OK. In my opening statement, I talked about in
    the year 2000 there were 8 million people that had broadband
    and 10 years later there is 200 million. Isn't it possible
    that, and this is a question, I am just going to go down all,
    is it possible based upon those figures if we are going from 8
    to 200 million that without any government doing anything in
    the next 10 years by the year 2020 that we will have complete
    universal ubiquitous broadband? Do you think that is true
    without any government? Just yes or no.
        Ms. Gillett. No, I don't.
        Mr. Stearns. Do you, Mr. Villano?
        Mr. Villano. No, I don't.
        Mr. Stearns. And Mr. Garcia?
        Mr. Garcia. No.
        Mr. Turner. No.
        Mr. Dankberg. I think it is possible, yes. I do think it is
    possible.
        Mr. Stearns. Mr. Carroll?
        Mr. Carroll. No.
        Mr. Stearns. Mr. Eisenach?
        Mr. Eisenach. I think we are very close with being here
    today so the answer is yes.
        Mr. Stearns. OK. So you folks are saying that the private
    market cannot go cover this ubiquitously without the government
    stepping in doing something except for Mr. Eisenach and
    Dankberg. Now I say to the rest of you, Mr. Dankberg meets a
    payroll, started out in his garage and built a business to $1
    billion, so I would say if I put you guys all on a scale, I
    would say he would certainly have as much credibility as all of
    you on the other side of the scale just because he has done it,
    and I admire him for starting this company and getting to a
    billion dollars. And he showed us graphs that obviously there
    are some urban areas that don't have it, and he is saying
    through his video that by and large we can do it. So I think we
    all have to be careful to be careful that perhaps the market
    can do it on its own.
        Mr. Dankberg, the 5 percent of homes that have no broadband
    access are likely in parts of the country that are high cost
    and low population density. So sometimes there is little
    incentive for private companies to deploy there so I am just
    being the devil's advocate with you here. Does this mean that
    you could still get into those through satellite broadband in
    these areas, notwithstanding that most companies, telephone
    companies and cable companies won't go in because it is so
    rural?
        Mr. Dankberg. Yes, all the terrestrial technologies depend
    on the distance between homes and some central anchor point.
    The good thing about satellite communications is that it is
    distance insensitive so the real issue is just can you
    economically deliver enough bits, enough bandwidth, to those
    people and that is really a technology and economics problem.
        Mr. Stearns. OK. Ms. Gillett, just if you could just answer
    yes or no. Does Section 230 make it the policy of the United
    States to preserve the vibrant and competitive free market that
    presently exists for the internet and other interactive
    computer services unfettered by federal and state regulations,
    isn't that true, Section 230?
        Ms. Gillett. I believe that is what the statute says, yes.
        Mr. Stearns. And striking the FCC attempt to regulate
    network management, didn't the D.C. court just explain that the
    statements of congressional policy can help delineate the
    contours of statutory authority? I think the answer is yes to
    that. And so I just caution the FCC, and my point is to go
    ahead and get involved with either Net Neutrality or ancillary
    authority to augment it through regulation, and that is my only
    point. Thank you, Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. Stearns. The
    gentleman from Massachusetts, Mr. Markey, is recognized for 5
    minutes.
        Mr. Markey. Thank you, Mr. Chairman. And again let me just
    restate that I do believe that the FCC has the authority to be
    able to act notwithstanding the court decision. Obviously from
    1996 after the Telecommunications Act passed all the way up
    until Chairman Powell, they implemented all of the provisions
    that created this broadband revolution. Remember, not one home
    in America had broadband in February of 1996 when the
    Telecommunications Act was signed. Not one home had it, so
    those changes in policy obviously had to be implemented by the
    FCC in order to create this new environment that makes all of
    this conversation even possible. So I do believe that the FCC
    has this authority and I ask them to explore the various means
    by which they can reach the point where they can implement the
    recommendations of the broadband plan that has been put
    together.
        What I would like to do is to focus on the Broadband Data
    Improvement Act that we passed out of this committee about 3
    years ago. We based it upon Connect Kentucky. How is that plan
    going? How is the data collection going under that law, Ms.
    Gillett, and is it helpful to the FCC?
        Ms. Gillett. Extremely. That program is administered by the
    NTIA, and they have given grants to all of the states at this
    point who are all collecting data according to a protocol that
    the FCC consulted. We provided technical consultation with the
    NTIA on that, and the data is coming in and the maps will start
    being assembled next month.
        Mr. Markey. Now the information as you can see it at this
    particular stage, does it indicate that there are gaps across
    the country and do you think that this mapping is going to help
    us to move beyond kind of anecdotal to actual factual basis for
    making new policies here in the country?
        Ms. Gillett. I am totally certain that maps will be helpful
    and the data will be helpful. It is just coming to come in, so
    it is too early to say much about it, but I am sure it will be
    very helpful.
        Mr. Markey. So we will wind up with much more specificity
    than we have had in the past?
        Ms. Gillett. Yes.
        Mr. Markey. And we will be able to deal with what the
    chairman is talking about in terms of finding out what actually
    is going on in Virginia and not have it be based upon a company
    just sending in information without it being corroborated.
        Ms. Gillett. Well, there is an elaborate protocol for
    collecting the information, some of it from industry, but also
    one of the nice things about having states administer these
    grants is often there is a lot of local knowledge of people of
    what is actually going on in their territory and we are hopeful
    that that will help improve the quality of these maps.
        Mr. Markey. OK, great. Now let me ask you about the E-Rate.
    Let me move over to that for a second. The FCC, you know, has
    been looking at expanding E-Rate, looking at after school hours
    as well, dealing with the reality of how children actually live
    their lives. Could you talk a little bit about that and the
    funding streams necessary to make sure that we actually deal
    with the real world 2010 life of a child at school in America?
        Ms. Gillett. Absolutely. One of the recommendations for the
    plan was to look at learning as a continuous process and not
    just confined to the school laws. In February the commission
    passed a waiver order and a proposed permanent rule change to
    allow community use of school E-Rate-funded facilities after
    hours, so that is one example. Another is that the plan
    discusses the use of wireless connectivity. Kindle and other
    kinds of electronic books require wireless connectivity.
    Students can take them home and that brings them broadband to
    the home where they may not otherwise have it, the many
    innovative uses we could make of the E-Rate program, and we are
    starting to implement exactly those proposals at this point.
        Mr. Markey. Within a very small number of years half the
    children in our country are going to be minorities and we just
    have to deal with the fact that we need a broadband plan for
    all those children to give them the portable skill set that
    they are going to need in order to compete for jobs in our
    economy as it unfolds, and unless we think of the E-Rate as a
    flexible tool to deal with this ever expanding need for kids to
    have the skill set then I think, you know, ultimately it will
    come back to really haunt our economy, so I thank you for that
    testimony. And, again, I just want to come back to this point.
    We just can't have a national plan put together alone by a
    small handful of communications colossi. We need to ensure that
    we have a wide ranging entrepreneurial Darwinian paranoia-
    inducing internet world out there, broadband world, where
    everyone is given a shot here at providing the leadership for
    our country, and if we step aside and just allow a couple of
    companies to decide the pace at which new gadgets, new
    applications, who is going to have access to it, then we are
    going to be the losers because China, India, and other
    countries will just blow right past us with their plans to
    capture these sectors.
        We just should not be looking at the outsourcing of jobs as
    each year goes by because the skills are here because the
    technologies haven't been developed here. That is our real
    opportunity here. That is what the National Broadband Plan
    gives us as a national challenge. When America has a plan,
    America wins. When we don't, we lose. We have not had a plan.
    We have dropped from 2nd to 15th in the world. We just have to
    implement something and we cannot delay that implementation.
    Thank you, Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. Markey. The gentleman
    from Illinois, Mr. Shimkus, is recognized for 5 minutes.
        Mr. Shimkus. Thank you, Mr. Chairman. I really do love this
    committee. We are behind Lichtenstein. I just--to remind my
    people keep using that or Mordova or the Netherlands. So I will
    be patient. Can't we get off this comparing us to Lichtenstein
    just for a minute? What the FCC did if you really want paranoid
    people competing to fill the broadband space, you need to
    deregulate. What the FCC did based upon the telecom bill was
    deregulate. They didn't re-regulate. That is what the FCC is
    trying to do now. What they want to do is since they failed in
    the courts now they want to re-regulate. They want to go back
    to the dial up phone so, anyway, you can see there is divergent
    opinions here on the committee, and I love Mr. Markey, and I
    learned all my interactions from him. I keep reminding him of
    that so when he disapproves of my line of questioning, I just
    learned it from the best, so it is a tribute to him.
        Mr. Turner, do you believe the analysis in the broadband
    plan that 95 percent of the country to have access to broadband
    is flawed?
        Mr. Turner. If you define broadband as on or off meaning
    something or nothing, I think it is close to being correct.
    Ninety-two to 95 percent have something. If you were talking
    about broadband at a level that they defined it at 4 megabits
    per second, I think it is overstating the level of
    availability.
        Mr. Shimkus. So you would say it is flawed in your second
    definition?
        Mr. Turner. Yes, that is right.
        Mr. Shimkus. Do you believe the FCC currently lacks
    adequate information on the actual state of broadband
    availability?
        Mr. Turner. Yes, I do.
        Mr. Shimkus. Do you think the FCC should collect better
    data on broadband deployment?
        Mr. Turner. Yes, sir.
        Mr. Shimkus. Then shouldn't we refrain from taking action
    on the broadband plan until the FCC has that data?
        Mr. Turner. Well, sir, I think if you look at the calendar
    of items that will be proceeding the agency is certainly one
    that is thorough but it doesn't move very quickly, so I think
    we should, yes, immediately move to start collecting that data
    as the proceedings and debate----
        Mr. Shimkus. The roll out of the money. I mean this has
    been a constant debate that we have had since the stimulus
    money saying don't roll out until you know the need.
        Mr. Turner. Well, I agree, and I think if you look at the
    calendar they probably won't be spending a single dollar of new
    USF money on the new broadband Connect America fund at least
    until 2012.
        Mr. Shimkus. But that is USF money. There are millions of
    dollars going out the door right now, billions.
        Mr. Turner. It is rather unfortunate that, as you said
    earlier, the cart was put before the horse in that case.
        Mr. Shimkus. Thank you. Mr. Villano, you do permit grant
    money to be used even if the majority of households covered by
    a project in non-rural areas and even if they already are
    served by one or more providers, is that correct?
        Mr. Villano. In our Community Connect program?
        Mr. Shimkus. Right.
        Mr. Villano. The area has to be totally rural and no one in
    that community----
        Mr. Shimkus. Yes, I know, only in the RUS program. We have
    several programs in the stimulus and I am talking about era and
    that is kind of the connection----
        Mr. Villano. We require that the community be unserved or
    underserved and we send our field staff out there before any--
    --
        Mr. Shimkus. Well, let us talk about Hays, Kansas for a
    second. You understand that the Kansas broadband map shows that
    all but 200 of the over 11,000 households in Hays already have
    broadband from one or more providers, including a small
    employee-owned business. Is that really a good use of
    government funds?
        Mr. Villano. In Hays, Kansas, we did provide a BIP award to
    a Kansas-based company----
        Mr. Shimkus. You can stop there. Mr. Garcia, is that a good
    use of government funds if we are providing money to providers
    in an area that there is already competing broadband deployment
    when, you know, I like the way it was put, 10 percent of the
    Indian tribal areas have access which means 90 percent do not.
    Don't you think it would be a better use of money to send that
    to areas where there is no coverage?
        Mr. Garcia. I believe it would, but the complexities of how
    these proposals are applied for is what drives the funding and
    where the funding is----
        Mr. Shimkus. Well, I disagree that there are very complex
    at all. I would say either a person has service or they don't.
    Mr. Turner, you used the example of the grocery store. Either
    they have a defined broadband speed and they can get access to
    it or they don't and shouldn't we then going back to the first
    question know who has service before we send money to people
    who may have competing broadband applicants?
        Mr. Turner. I think it is absolutely for the benefits of
    efficiency and the benefits of maximizing the money, it is
    important to have the right data. However, I understand what
    this body was trying to do in the context of stimulus, and I
    defer to the collaboration judgment of this body in making that
    decision.
        Mr. Shimkus. My time has expired, and that is where we
    disagree. I think we spent money and we put people who are
    already providing broadband, we empower competitors to compete
    against with government-subsidized dollars in the broadband
    field, and that is a failure of what we have done. And, Mr.
    Dankberg, I do support technicologically neutral in competition
    for services.
        Mr. Boucher. Thank you very much, Mr. Shimkus. The
    gentlelady from the Virgin Islands, Ms. Christensen, is
    recognized for 5 minutes.
        Ms. Christensen. Thank you, Mr. Chairman. I would like to
    ask Ms. Gillett, having followed the Comcast case, do you
    anticipate that the Comcast decision of April 6 would affect
    your analysis of these universal service issues or the
    recommendations in the National Broadband Plan in any way, and
    if so, why and how?
        Ms. Gillett. Our general counsel is assessing the impact of
    the Comcast decision on our authority to support broadband by
    USF.
        Ms. Christensen. And, Mr. Villano, as you may have gleaned
    from my opening statement the U.S. Virgin Islands has not
    received grants under ARRA funds or broadband infrastructure.
    One of the things that I am concerned about is that the
    existing landline telephone service provider by Telcos is
    considered the incumbent borrower and is a troubled entity. To
    what extent, if any, do you think this would affect other
    entities in the Virgin Islands from receiving ARRA funding, the
    fact that the incumbent is a problem?
        Mr. Villano. We just closed the second NOPA and there
    weren't any applications from the Virgin Islands for a second
    round of funding. I don't know the reasons why but there
    weren't any applications for a second round of funding.
        Ms. Christensen. That surprises me because I thought we had
    applied. OK. Well, also----
        Mr. Villano. They could have applied under the NTA BTAL
    program for a middle mile project but there were no last mile
    projects under the BIP program at RUS.
        Ms. Christensen. Just to continue on the concern that Mr.
    Shimkus was raising. Is it true that RUS does allow grant money
    to be used in non-rural areas regardless of whether that area
    includes a majority of households covered by a project and is
    already served by one of the major providers, and, if so, is
    there an appeals process in place that one of the companies
    that are already there----
        Mr. Villano. The award in question was made under our first
    NOFA, and we have a definition of unserved and underserved
    areas. In that particular case, 95 percent of the service
    territory had not broadband service. It was just 5 percent of
    the geographic area that was covered by the loan grant
    combination that the applicant was awarded did some terrestrial
    based service.
        Ms. Christensen. OK. So is there a process for appealing?
        Mr. Villano. No, there is no process for appeal.
        Ms. Christensen. I guess I will ask you also again, Mr.
    Villano, will NTIA and RUS collaborate on broadband
    infrastructure awards and what effect will that have on
    applicants who have submitted multiple applications?
        Mr. Villano. Definitely, we will continue our
    collaboration. We have separate NOFAs at this time. I can tell
    you we are in constant communication and coordinating our
    efforts. Under the second NOFAs, RUS is focusing on last mile
    and NTIA is focusing on middle mile, but we are working very
    closely together to make sure that we get the best bang for our
    buck.
        Ms. Christensen. So you are saying then that it won't have
    any effect on applicants that have submitted multiple
    applications. It will be coordinated in some way?
        Mr. Villano. Under our first NOFA, we allowed for joint
    applications and it did complicate the process for some
    applicants. That is why we went with separate NOFAs and
    separate application processes go round, so we will look to
    make sure that there aren't any overlaps. If they are proposing
    to find a project and we are in a particular area, we want to
    make sure that we get the money to the most areas.
        Ms. Christensen. Thank you, Mr. Chairman. I yield back.
        Mr. Boucher. Thank you, Ms. Christensen. The gentleman, Mr.
    Buyer, is not here. The gentleman from Alabama, Mr. Griffith,
    is recognized for 5 minutes.
        Mr. Griffith. Thank you, Mr. Chairman. The FCC, as it rolls
    out the National Broadband Plan in an attempt to deploy to the
    remaining 5 percent, are we concerned about adoption or how we
    are going to measure adoption rates? Is that a problem or is
    that a concern that we have?
        Ms. Gillett. Adoption is very important. It is a very
    central part of the plan as to take steps that increase the
    adoption of broadband. I would say that our data on adoption is
    actually better than our data on availability because that is
    what we collect is subscribership data, and we are now
    publishing ranges of adoption data in our semi-annual reports.
        Mr. Griffith. Thank you. One other question. As we look at
    the FCC's recommendation for deployment for national broadband,
    has the exemption for the electric cooperatives from FCC pole
    attachment regulations been considered?
        Ms. Gillett. I am sorry. Was it in the National Broadband
    Plan, was that issue based?
        Mr. Griffith. Right.
        Ms. Gillett. Yes, it was raised in the National Broadband
    Plan that poles are an essential--access to poles is essential
    for deploying broadband and there isn't a uniform national
    framework, and that is a congressional question for Congress to
    consider.
        Mr. Griffith. Are we suggesting that we will continue with
    that exemption for the----
        Ms. Gillett. It is currently part of the statute so Section
    224, that is how it is set up that there are separate
    frameworks for how those are regulated, and that would be up to
    Congress to decide if that is the right framework to continue
    or not.
        Mr. Griffith. So that is really a question for me. Thank
    you very much. OK. Mr. Villano, the second round of broadband
    initiative program allocates $100 million to satellite projects
    to provide broadband services to unserved areas. Most U.S.
    satellites have a national footprint. How is RUS determining
    what is an unserved satellite area?
        Mr. Villano. We will be posting maps of the service areas
    that we fund and NTIA funds under the broadband initiative and
    the BTOP program, and the satellite component, we have an RFP
    that will be published later this month that will make that
    money available. We are dividing the country into 8 regions and
    we will let competition dictate how we award those funds, but
    those would be areas that have no broadband service and not be
    able to receiver service under the Recovery Act.
        Mr. Griffith. In light of some of the data or some of the
    comments that we have heard today about what we believe is true
    and what is actually true in unserved areas are we reviewing
    what we think is true and what is actually true?
        Mr. Villano. I can tell you for every award that we have
    made under our broadband initiative program, we send actual RUS
    staff out to the field to verify the information that was
    provided by the applicant, and we also post all the maps of the
    proposed service territories so incumbent service providers can
    comment on that whether they do provide service. We look at the
    comments. We look at the application. We send feet on the
    ground to ensure that those areas meet the definitions of the
    NOFA.
        Mr. Griffith. OK. Thank you. Mr. Dankberg, I understand
    that satellite broadband services offer an opportunity to reach
    U.S. consumers in otherwise unserved areas. When the FCC
    imposes conditions on license transfer applications that limit
    the business models of satellite operators, does that make it
    more difficult or less difficult to raise money to continue
    satellite services?
        Mr. Dankberg. The only thing I can talk about is our
    experience, and we have had fantastic support from the FCC in
    approving our licenses and being innovative in spectrum and in
    assuming and approving a transfer of licenses when required so
    it has not really been a concern. The FCC from our perspective
    has been very supportive, sir.
        Mr. Griffith. Thank you, Mr. Chairman.
        Mr. Boucher. Thank you, Mr. Griffith. The gentleman from
    Pennsylvania, Mr. Doyle, is recognized for 7 minutes.
        Mr. Doyle. Thank you, Mr. Chairman. The residents and small
    businesses in my district in Pittsburgh have contributed to the
    tens of billions of dollars worth of subsidies to support
    telephone service in rural areas and for low income people. In
    2010 these dollars are still being used for telephones, not
    broadband. Now the FCC has outlined a Universal Service Fund
    reform in the National Broadband Plan, and I would like to just
    start with Mr. Garcia and work down through the end of the
    panel. Number 1, do you support that plan, what you like about
    it, and how you would improve it, and if each could just do
    that briefly, I would appreciate it. Mr. Garcia.
        Mr. Garcia. We support the fact that the universal service
    has to be reformed but we also caution that the services that
    are part of that plan right now not be restricted or diminished
    but there has got to be more accountability in terms of why--
    that fund has been around for a long time and so why do we
    still have a lot of areas that have not benefitted from that
    very fact, and so we need to employ that a little bit harder
    and be more deliberate in how that service funds are used for
    that, so we don't want to diminish what is there, but in
    addition to what we just testified upon, we need to build on
    those opportunities so we need to keep that though.
        Mr. Doyle. Thank you. Mr. Turner.
        Mr. Turner. We are generally supportive of the framework
    certainly of a transition. We think it is time to modernize the
    fund. We do have some concerns about what is going to happen
    during the transition, particularly issues that Dr. Eisenach
    has raised that we do have areas where there are unsubsidized
    providers, either cable or wireless companies that are
    competing against the subsidized telephone provider, and that
    may not be the best use for our resources. We are also
    concerned that even some subsidized providers themselves where
    no other un-subsidized providers exist have already deployed
    broadband and could be self-sustaining if all their revenue
    streams are taken into account but today only the regulated
    streams are taken into account while the recovery and the cost
    of their full infrastructure, so we are concerned that the FCC
    should address some of those as we do the transition.
        Mr. Doyle. Thanks. Mr. Dankberg.
        Mr. Dankberg. I think the major issue that we have is the
    artifacts of where unserved people are in a broadband
    environment is much different than where unserved people are in
    a voice environment. We have networks that were built for
    voice. You can support long loop lines. That leaves by
    definition, that is what you seen on the map, people who are
    well served by voice that are not served by broadband. And so
    the notion that you can segregate the areas of served and
    unserved people like you can with voice, I think is not a good
    starting point for building policy.
        Mr. Doyle. Mr. Carroll?
        Mr. Carroll. The American Public Power Association doesn't
    have a position on that but from my position at Hopkinsville
    Electric System, I think broadband could be expanded by using
    those funds. I think we need to ensure that the different
    entities out there that provide services have access to those
    funds universally and not just the telephone company.
        Mr. Doyle. Dr. Eisenach?
        Mr. Eisenach. I would just say 2 things. I think the plan
    doesn't go far enough fast enough as described. Talking about
    saving $15 billion out of 45 or so over the course of a decade
    implies that $30 billion during that period of time is still
    going to get spent on what we are spending money on now. My
    second point would be I think the commission has known for a
    decade and so has most people in Congress that this is a failed
    program. This docket was initiated--the docket number under
    which all this is considered is 9645. It was opened in 1996 and
    has been going on since with 250,000 or so final comments. The
    commission has tried heroically half a dozen times at least to
    reform it and it has failed. So my point to this committee
    would be if you want that money going to broadband you ought to
    keep a very close eye on the commission's success or failure in
    implementing these reforms as proposed.
        Mr. Doyle. Thank you. Ms. Gillett, I have heard some
    concerns that the Universal Service Fund reform would mean that
    some people's phones would be turned off. Is that the case, and
    if it is not the case would you state why it is or why it
    isn't?
        Ms. Gillett. It is not the case and it would not be the
    case because the plan's recommendation is that the funding
    should be shifted from voice only networks to networks that
    provide both broadband and high quality voice.
        Mr. Doyle. OK. I think that is important to get out. Mr.
    Dankberg, in light of what you said to Mr. Stearns, Mr. Villano
    from the Rural Utility Service has set aside $100 million for
    satellite broadband. I assume your company won't be taking a
    cent of that money. You are not interested in any of that
    money?
        Mr. Dankberg. If there is money to be made in subsidies
    then we will use it. I think we will use it far more
    efficiently.
        Mr. Doyle. OK. So you would take some government
    assistance? It sounded like you told Mr. Stearns that you
    weren't interested in that and you didn't need it.
        Mr. Dankberg. I am just from a free enterprise perspective
    if I am competing with other carriers who are subsidized, am I
    supposed to compete on an unsubsidized basis with companies
    that are given thousands of dollars per home served? I don't
    know how to respond to that.
        Mr. Doyle. I am not asking you to. I just thought that is
    what you told Mr. Stearns and I just wanted to get
    clarification on it that if there is money there you will take
    it. And maybe just finally since I still have a minute and 30
    seconds in the remaining time, you heard what Ms. Gillett said
    about whether or not this Universal Service Fund reform would
    result in people losing their telephones or not, does anybody
    have any further comments on that, and generally I take it you
    all support reform. You just think it needs to go a little
    quicker and a little further than it is going right now. Is
    that accurate? OK. All right. Well, I think I have asked
    everything I want to, Mr. Chairman. Thanks.
        Mr. Boucher. Thank you very much, Mr. Doyle. The gentlelady
    from Tennessee, Ms. Blackburn, is recognized for 5 minutes.
        Ms. Blackburn. Thank you, Mr. Chairman. I want to thank all
    of you for your patience with us today. Mr. Turner, I want to
    be sure that I understood you to say that you did think it was
    unfortunate that we had put the cart before the horse when it
    came to not doing the mapping and not doing our definitions.
    Did I understand that right? Yes or no is sufficient.
        Mr. Turner. Yes.
        Ms. Blackburn. OK. Thank you for that. And, Mr. Garcia, I
    appreciate that you appreciate the fact that the fund has been
    around for a long time but the money doesn't seem to get out
    very quickly. I think that is the frustration whenever you see
    government step in to what the private sector has done. And,
    Mr. Chairman, I want to ask unanimous consent to enter for the
    record an editorial from the Washington Post that indicates
    that heavy regulation is unnecessary in light of the broadband
    plan's analysis that 95 percent of the country has access to
    broadband, and we have gone from 8 million broadband
    subscribers to 200 million in the last 10 years.
        Mr. Boucher. Without objection, that will be made a part of
    the record.
        [The information appears at the conclusion of the hearing.]
        Ms. Blackburn. Thank you, Mr. Chairman. Dr. Eisenach, my
    question is to you. Doesn't this suggest that our deregulatory
    approach is working and that we should focus any government
    effort just on the 5 percent or the 7 million homes that are in
    an area that does not receive the private sector access to the
    broadband services?
        Mr. Eisenach. Absolutely.
        Ms. Blackburn. And I appreciate your answer on that. I also
    had another question I wanted to ask you. When we look at the
    issues of Network Neutrality, unbundling, compelled
    wholesaling, rate regulation, is there any economic validity to
    the arguments that these issues, Network Neutrality,
    unbundling, compelled wholesaling, would encourage broadband
    deployment to the last mile and wouldn't regulating broadband
    just chill the investment innovation that we have seen over the
    past 10 years that has led to 200 million homes being
    connected?
        Mr. Eisenach. In 2 respects, and the first respect is a
    matter of economics. These issues have been very fully studied.
    Last week, I was one of 21 economists, very broad-based group,
    former CAB chairman Alfred Kahn among us, filing comments with
    the Federal Communications Commission specifically on the plan
    of the Net Neutrality and PRM, and our conclusion, simply put,
    is that the economic evidence simply does not support those
    proposed rules and indeed that those proposed rules, if
    adopted, would reduce innovation, reduce investment, reduce
    deployment in the way that we are talking about here today. The
    same set of data, I think, or the same economic facts are there
    on the issue of unbundling, and, indeed, there is a lot of
    evidence in the FCC's National Broadband Plan----
        Ms. Blackburn. If I can ask one additional question. I
    guess the same would apply to the reclassification?
        Mr. Eisenach. Well, absolutely, because the
    reclassification is simply a precursor and would be seen in the
    marketplace as a precursor to imposing this sort of heavy-
    handed regulation. The second issue is the commission has laid
    down a very ambitious agenda. As I implied earlier, it will be
    interesting to see how well it does keeping to the schedule
    that it has laid out. If it were to embark on these major new
    rulemakings, already in the middle of one of them on Net
    Neutrality, on reclassification, unbundling, and so forth, I
    simply question whether or not universal service won't once
    again as it has for 15 years fall to the back of the pack in
    terms of priority, and we will end up sitting here a decade
    from now saying why are we still spending now $8 billion of
    high cost subsidized telephone service.
        Ms. Blackburn. Thank you. I appreciate that. Ms. Gillett, I
    have got just a few minutes left, but I want to go back to
    something. Mr. Markey said when we have a plan, we win, when we
    don't, we lose. And we all believe that, but we think we got
    the cart before the horse on this one. It looks like there are
    many on the panel that agree with that. And so we do have
    concerns about how you all will go about as you assess the data
    that you say is now beginning to come in, and you are saying
    you think you are going to have sufficient data to address what
    you term the broadband gap and by early next year. So as you do
    this, how are you going to look at that and address this gap
    but make certain that existing consumers are not going to see
    their rates go up, that they are not going to see additional
    taxes, additional fees, that they are not going to see their
    rates go up because one of the concerns we hear is that they
    are concerned that if you all get involved in this, then
    consumers who like the plan they have got right now, they are
    going to see their rates elevated. So what is your plan to
    address that?
        Ms. Gillett. A couple of things. First of all, the premise
    of the plan is that the universal service stays at the size it
    is so the burden would not go up on consumers. And, secondly,
    about the data point, between the BDIA map and the better data
    that the FCC is proposing to collect by the time, as Mr. Turner
    says, by the time we are able to implement these--I just
    received word that the first proceeding on the universal
    service reform was just adopted by the commission this morning,
    so we are on our way doing that, but by the time we get new
    rules in place and new money flowing the new data will be in
    and available for use.
        Ms. Blackburn. OK. I am out of time. Yield back.
        Mr. Boucher. Thank you, Ms. Blackburn. The gentleman from
    Illinois, Mr. Rush, is recognized for 5 minutes.
        Mr. Rush. Thank you, Mr. Chairman. My question is for Mr.
    Villano. Mr. Villano, last year Senator Menendez and I sent a
    letter to your agency and also to the NTIA expressing concerns
    about the number and the amount of stimulus grants that have
    been awarded to small and minority applicants in your initial
    round of decision. I would like to know what you have done to
    improve those numbers. What percentage of total awards to date
    have been made to these types of applicants, and are there any
    additional improvements on the table in terms of increasing the
    number of approved applicants?
        Mr. Villano. Thank you for the question. We did take those
    concerns very seriously when we developed our second NOFA. I
    think if you read the second NOFA, you will see that we tripled
    the number of points that we afford to socially disadvantaged
    businesses and their applications. We also award non-socially
    disadvantaged businesses extra points if they provide lower
    cost service to socially disadvantaged businesses in the
    service areas. Do we publish the NOFAs? We did 10 workshops. We
    had planned to do 10 workshops. One of them was shut down
    because of the snowstorms we had here in Washington. But we did
    9 outreach and training sessions throughout the country, and at
    all those sessions we had special outreach sessions for
    minority and native applicants for the program. In NOFA 2,
    about 8 percent of the applications that we received under the
    BIP program are from socially disadvantaged businesses.
        Mr. Rush. Can you quantify the number of grants?
        Mr. Villano. Under our second NOFA which just closed on----
        Mr. Rush. The first one and the second one.
        Mr. Villano. Under our first NOFA, we made 68 awards and
    one of those awards was to a socially disadvantaged business
    that was Revada Sea Lion up in Alaska. Under NOFA 2, we have 61
    applications from socially disadvantaged businesses.
        Mr. Rush. Those have been approved. All right. And are you
    satisfied with the level of applicants and the process and the
    level of outcome in terms of your productivity?
        Mr. Villano. We are pleased with the results under NOFA 2.
    We have a total of 776 applications for $11 billion in funding.
    We have a little over $2 billion available this round, and we
    are in the process of reviewing those applications and hope to
    have awards out this summer.
        Mr. Rush. Thank you, Mr. Chairman. Yield back.
        Mr. Boucher. Thank you very much, Mr. Rush. The gentleman
    from Washington State, Mr. Inslee, is recognized for 5 minutes.
        Mr. Inslee. Thank you. Ms. Gillett, could you respond to
    Mr. Garcia's suggestions about improving the relationship, the
    government relationship, to tribes in this context and how that
    might work and how we can make it work?
        Ms. Gillett. Certainly. The plan, as you know, makes many
    recommendations, including a number that Mr. Garcia spoke
    about, including, for example, the Office of Tribal Affairs at
    the FCC, a seat on the USAC board, and so forth, and we look
    forward to implementing those and would be happy to--our
    Consumer and Governmental Affairs Bureau will be implementing
    those recommendations, and I would be happy to have them get
    back to you with further information about how that is
    proceeding. And we also recently made public our implementation
    schedule, which has the dates and quarters of addressing a
    number of those recommendations on it.
        Mr. Inslee. Well, that is encouraging, and if we can help
    you at all, let us know. We appreciate that.
        Ms. Gillett. Thank you.
        Mr. Inslee. We think that is very important. Mr. Turner, I
    wanted to ask you about FCC authority in light of this case
    that came down. The FCC has identified several areas that could
    be impacted of this that people may not think of including
    cyber security efforts, universal service reform, access for
    disabled Americans, and consumer privacy. There is a whole list
    of things that could be affected. If the FCC does nothing in
    response to this decision, what will happen to the FCC's
    ability to advance those policy goals?
        Mr. Turner. It is casting serious doubt. I think if you
    look at the statute and look at how the statute was developed,
    Congress at the time clearly treated and wanted to treat the
    wires that bring us these services differently from the
    services themselves, and this was the heart of 230B, hands-off
    approach to the internet services, but a light regulatory touch
    where needed on the wires. And I have a lot of trust in the
    deliberative wisdom of Congress on the shelf life of these laws
    because they are based on principles like universal service,
    nondiscrimination interconnection, competition, and reasoned
    deregulation. The path Congress gave the FCC for the regulation
    was Section 10. Chairman Powell chose to do a different path
    through the re-definition process, and I think, you know, in
    the words of Justice Scalia, this was sort of a Mobius Strip
    type of reasoning that ignored the statute.
        I think Chairman Powell thought he could stand up all the
    other principles of interconnection, universal service, non-
    discrimination, disability access, all of that on this
    ancillary authority theory, and the court case has shown that
    that is not going to be able to be the case, so the move
    towards reclassification doesn't have to be seen as a radical
    move. It simply will be a move that puts the FCC's regulatory
    framework back in harmony with the law, and I guarantee you it
    will come with some type of heavy forbearance on all the rules
    that are intended to apply to monopoly telephone networks. They
    certainly will not be applied to broadband networks.
        And we must remember that today the enterprise broadband
    market that serves the biggest businesses in the country is
    currently regulated under Title 2 and that is one of the most
    competitive markets and they are not screaming for deregulation
    and there is heavy investment going on there.
        Mr. Eisenach. If I could just jump in very quickly and say
    at least with respect to the Net Neutrality regulations that
    are proposed the non-discrimination provisions are not less
    restrictive on broadband than what was put in place on
    telephone networks in the past. They are more restrictive. The
    non-discrimination provisions that were in place on telephone
    networks in the past permitted just as reasonable
    discrimination. The proposed Net Neutrality regulations
    explicitly reject that approach and say there will be no
    discrimination of any kind. To suggest that the private sector
    could have any confidence that the regulations that would be
    imposed under a Title 2 classification are less restrictive
    than what had been imposed in the past is just violated by the
    proposed rules we have in front of us today.
        Mr. Inslee. Well, I just point out that I think it is even
    a dicier gamble to have any confidence that if we don't do
    something about Net Neutrality there won't be marketplace
    efforts to restrict access to content, and I think it is clear
    we need action on here. And I appreciate Mr. Turner's views in
    this regard. Thank you.
        Mr. Boucher. Thank you, Mr. Inslee. The gentleman from
    Ohio, Mr. Space, is recognized for 5 minutes.
        Mr. Space. Thank you, Mr. Chairman. This map is a map of
    the State of Ohio, and, as you can see, in the southwestern
    corner, which is the green area which would indicate the
    unserved area pursuant to the work done by Connect Ohio, which
    is modeled on Connect Kentucky, and I have a lot of faith in
    the work that they have done in trying to decide or determine
    just where access to broadband exists and where it doesn't
    exist. And the effect that that is having on the people of
    southeastern Ohio is significant. If you look at the
    unemployment rates in these counties, 5 of them are above 15
    percent, 1 above 18 percent right now. That represents the
    unemployment rate doesn't even factor in the tens of thousands
    of people that are fully employed but are working in poverty.
        This is a significant problem that hampers economic
    development. It limits our already limited access to health
    care, education. We see the role of broadband and its
    integration in health care delivery, educational delivery
    systems as in its infancy right now going nowhere but up, and
    it longer it takes for us to obtain this access the farther
    behind we are going to fall. That also happens to correspond
    almost identically with my congressional district. And we are
    working hard to see what we can do to provide access to this
    very important technology. And one of the questions I have for
    the panel, and I am going to ask a number of you specifically
    to just give, if you can, because our time is limited, a 2 or
    3-sentence response to this question. Ms. Gillett, I am going
    to ask you first. What is it that we can do, Congress can do,
    to facilitate extension of that last mile to maybe it is 5
    percent of the population, maybe 7 percent, I don't know, but I
    know that percentage is a lot bigger in areas like this, what
    can we do as a Congress to facilitate the extension of that
    last mile to those people who don't have any access right now?
        Ms. Gillett. I would suggest 3 things. First, would be to
    work with us on the universal service reform so that we can
    target the funds to the places that are unserved. It is a
    complicated system, as Mr. Eisenach mentioned. Reform has been
    tried many times. There is lots of people in the current system
    so it is complicated, and we would appreciate your support with
    that. Second is we propose to do it in the plan with no
    additional funds but the plan does also pose an option for
    Congress to consider an appropriation which could help make it
    go faster. And the third thing is I think your point about you
    got the data, you know where these places are. That is great.
    The cooperation of industry in making sure we have accurate
    availability data is key.
        Mr. Space. Thank you. Mr. Villano.
        Mr. Villano. Certainly. I would suggest that anybody that
    you have that is looking for service in those areas would
    contact their field representative to determine if they could
    apply for one of our programs. Under the broadband initiative
    program we made 4 awards in the State of Ohio under NOFA 1.
    Under NOFA 2, we have 21 pending applications for $193 million.
    I hope that some of those are in your district.
        Mr. Space. They are.
        Mr. Villano. And that they will filter their way up to the
    top. But it would be most important for applicants to contact
    RUS and the Rural Development state office to see which
    programs that we have that may be of assistance to those
    communities.
        Mr. Space. Thank you. Mr. Eisenach, I want to ask you for
    maybe your perspective on how we bridge that last mile in
    places like this.
        Mr. Eisenach. First of all, I think doing something is
    important. I don't think it is going to entirely solve itself.
    I do think that satellite service is my earlier answer to the
    question where will we be in 10 years. I do think that
    satellite for a lot of purposes is going to solve a lot of
    people's problems. I don't think it is going to solve the high
    capacity issue in terms of what you want in a hospital or what
    you want in a government office and areas like that. What
    works? What I have seen work is what is working in Virginia, a
    state where I have spent a lot of time looking closely and I
    know is working in other places around the country, and that is
    looking at local solutions. So what we have in the State of
    Virginia, something called the Mid-Atlantic Broadband Council,
    I have been involved with that, the Southwestern Virginia
    Technology Council. The chairman has been intensely involved
    with that.
        And what those local groups are able to go is pull together
    businesses, government, public non-governmental organizations,
    and solve problems. These are not problems of rocket science.
    These are problems of digging a ditch and putting some fiber in
    or putting up a tower, and often those problems just take the
    business community getting together with funding, with funding,
    but often it is a question of people getting together and
    saying we need to put a tower up here. Let us get it done.
        Mr. Space. Sure. And the problem, however, is in areas like
    this the local community governments and many of the businesses
    are struggling to survive, and they don't have the means.
        Mr. Eisenach. I am for funding those efforts. Just to be
    clear, those efforts in Virginia have been funded by a tobacco
    fund, and I think the RUS has been active in funding those
    efforts. Those are good efforts. Those efforts ought to be
    funded in my view.
        Mr. Space. I know I am over time, but the chairman is busy
    and not paying attention to my time. Mr. Chairman, may I have
    just 1 more minute?
        Mr. Boucher. Yes, sir. Go ahead, Mr. Space.
        Mr. Space. Mr. Dankberg, the issue has to do with satellite
    availability in areas like this, and the problem as I see that
    is the capacity in the cost and the quality don't--you
    testified that you feel they are comparable, but as we move
    forward it is all about speed and it is all about quality and
    capacity, and I question whether or not the technology is there
    for satellite.
        Mr. Dankberg. I understand that. I am an engineer. We just
    designed a new satellite that has 20 times the capacity of the
    best satellite ever. I think it is a question of economics. And
    what we would say just set us a target. If you set a target of
    5 megabits, 10 megabits, we will figure out what the economics
    are. We can deliver 5, 10, 15, 20. Set a number that you would
    like and then have a competition, and if we can't meet that
    number we are happy to see it go somewhere else.
        Mr. Space. Thank you, Mr. Dankberg. My time has expired.
        Mr. Boucher. Mr. Space, if you would yield to me just a
    second the balance of your time which will be extended as much
    as is necessary. I wonder, Mr. Dankberg, if you would make a
    project of what the retail cost per customer is going to be for
    that new high capacity satellite that you intend to launch.
        Mr. Dankberg. I think one of the main points that was made
    was the price of broadband coming down. Our new satellite, we
    will offer--we probably are going to offer plans just like we
    do now, which are $50, $60 or $80. We will increase the speeds
    that we offer by a factor of 4, and the amount of congestion,
    which is really the reason that people perceive delay, will go
    enormously.
        Mr. Boucher. So if you can afford $50, $60 or $80, that is
    fine. If you are among that category of individuals who can't,
    it becomes a problem.
        Mr. Dankberg. What we would say is we are completely fine
    with the idea of using subsidies to reduce prices for people
    who can't afford it. We are absolutely OK with that. That can
    absolutely apply to satellite, and we proposed to the RUS a
    satellite system that would make life line broadband service
    available at $8 per month wholesale at 768 kilobits a second.
    All we want to do is have an opportunity to compete at whatever
    speed, and if subsidies are used, we just want to compete to
    provide service to all of Ohio for the same price that might
    serve one small village at whatever level of service is
    specified.
        Mr. Boucher. OK. Thank you very much, Mr. Dankberg. Mr.
    Stearns, I will just recognize you. Mr. Space's time has
    expired.
        Mr. Stearns. Thank you, Mr. Chairman. I just want to ask,
    what speed would that be? You say 4 times. What would that
    speed be?
        Mr. Dankberg. The speeds for our new satellite, we expect
    to offer 2, 4, and 8 megabits per second as the speeds for our
    service at those retail prices. Our wholesale prices are about
    half of that. The retailers are the ones that mark it up by
    about a factor of 2.
        Mr. Boucher. Thank you. Mr. Dankberg. Let me say thank you
    to each of our witnesses today. We appreciate very much your
    taking this time and sharing your insights with us. I am going
    to leave the record of this hearing open for approximately 3
    weeks during which period of time there probably will be some
    written questions propounded to you by the members of the
    subcommittee. When you receive those questions, I hope you will
    respond promptly, and we will make your responses part of the
    record of this hearing. And the gentleman from Florida is
    recognized.
        Mr. Stearns. Just to ask unanimous consent for all members'
    statements to be included in the record.
        Mr. Boucher. Without objection. With that, this hearing is
    adjourned with the thanks of the subcommittee.
        [Whereupon, at 12:38 p.m., the Subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]
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