[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE NATIONAL BROADBAND PLAN: DEPLOYING QUALITY BROADBAND SERVICES TO
THE LAST MILE
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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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76-566 WASHINGTON : 2012
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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
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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.]
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