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



 
 THE NATIONAL BROADBAND PLAN: DEPLOYING QUALITY BROADBAND SERVICES TO 
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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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                    COMMITTEE ON ENERGY AND COMMERCE

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

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

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

                               Witnesses

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

                   Submitted Materials for the Record

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


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                       WEDNESDAY, APRIL 21, 2010

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

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

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

    [GRAPHIC] [TIFF OMITTED] 76566A.001
    
    [GRAPHIC] [TIFF OMITTED] 76566A.002
    
 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

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

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

    Mr. Waxman. Thank you very much, Mr. Chairman. Thank you 
for holding this hearing on deploying broadband service to 
unserved and underserved communities across the nation. Because 
broadband is critical to future economic growth and job 
creation every American must have the opportunity to access 
high quality, high speed broadband from a variety of providers. 
The plan provides a blueprint on how the public sector policies 
can promote deployment to both unserved and underserved 
communities. It also speaks to ways in which the private sector 
can act. By utilizing all the tools the public and private 
sectors have at their collective disposal, we could achieve a 
primary goal of the National Broadband Plan, 99 percent access 
to high speed broadband within 10 years.
    While there are a number of proposals in the plan, I would 
commend the FCC staff for their thoroughness, and I would like 
to take a moment to highlight a couple that I find to be 
promising. For example, the plan recognizes that substantial 
cost savings can occur from better planning and coordination 
among government resources and recommends that all federally-
funded rights-of-way projects include a broadband conduit at 
the time of construction. This proposal is similar to 
legislation introduced by Congresswoman Eshoo, of which I am a 
co-sponsor.
    Greater access to rights-of-way at reduced cost can help 
spur the deployment of advanced facilities, not only in urban 
areas but also deeper into rural areas. The plan also 
highlights specific ways in which the federal universal service 
system can be reformed, and I am very encouraged by these 
proposals. The obvious goal is to transform the fund to support 
broadband networks so that all Americans have access, and I am 
encouraged that the FCC is initiating the first of these 
proceedings in its open meeting that is occurring this morning. 
I am also encouraged that Chairman Boucher is working on draft 
legislation to help achieve this goal, and I am supportive of 
his efforts.
    The plan also recommends addressing the data roaming issue. 
Consumers will be well served by common sense reform in this 
area. And, finally, I would like to commend the FCC for putting 
forward a proposed time line of its implementation schedule for 
the many proposals in the plan. This is the first time the FCC 
has so clearly outlined its work schedule, and I think that 
this approach is consistent with the chairman's view that the 
FCC should be as open and transparent as possible. Thank you 
again, Mr. Chairman, for holding this hearing, and I look 
forward to the testimony of our witnesses.
    [The prepared statement of Mr. Waxman follows:]
    [GRAPHIC] [TIFF OMITTED] 76566A.003
    
    [GRAPHIC] [TIFF OMITTED] 76566A.004
    
    Mr. Boucher. Thank you very much, Chairman Waxman. The 
gentleman from Illinois, Mr. Shimkus, is recognized for 2 
minutes.

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

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

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

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

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

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

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

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

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

    Mr. Latta. Thank you very much, Mr. Chairman. It is an 
honor for me to be on this subcommittee. I look forward to 
working with you and the other members on the subcommittee. I 
represent one of the most rural areas in the State of Ohio, and 
I am keenly aware of the importance broadband deployment plays 
in the economic development and in the nexus that this axis has 
the job creation. I feel very strongly that the country's free 
market private investment approach to broadband expansion has 
been very successful. It is also my understanding that 
according to the National Broadband Plan 95 percent of the 
population has at least 4 megabyte per second broadband 
service. I believe that the remaining 5 percent for service 
should be spent on the unserved areas where areas do not have 
access to broadband.
    We need to carefully look at how to expand service to 
ensure that there is not an unfair advantage to one entity, 
especially in light of the fact that private industry has 
invested billions of their own capital to expand services. 
Additionally, I am concerned how the FCC will define 
competition with the structure of the plan. Furthermore, the 
plan has called for greater collection analysis of the 
competition data. This is a bit worrisome as companies are 
essentially being asked to hand over their proprietary data and 
potentially fuel competition to their services by the 
government or their private sector counterparts.
    There must be safeguards put in place and an assurance that 
the government does not get in the business of competing with 
this already hyper competitive industry. It is important that 
while serving to reach this remaining 5 percent of the unserved 
household, that jobs are indeed created. I am critical of 
increasing bureaucratic red tape through any government 
initiative when the free market can do better. We need to 
assure that any of the requirements are not detrimental to job 
creation in Ohio or across the country. Broadband expansion can 
help the economy by creating new jobs related to the deployment 
of necessary infrastructure, as well as by giving unemployed 
workers access to tools that will help them find and prepare 
for new jobs.
    It is my hope that the FCC does indeed focus on broadband 
deployment which will bring jobs and economic development to 
rural areas and not focus on policy or if the FCC has 
questionable authority. I want to thank the chairman again for 
this opportunity. I look forward to hearing the testimony from 
the witnesses. I yield back.
    [The prepared statement of Mr. Latta follows:]
    [GRAPHIC] [TIFF OMITTED] 76566A.005
    
    [GRAPHIC] [TIFF OMITTED] 76566A.006
    
    Mr. Boucher. Thank you very much, Mr. Latta. The gentle 
lady from California, Ms. Eshoo, is recognized for 2 minutes.

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

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

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

    Ms. Blackburn. Thank you, Mr. Chairman, and I thank you for 
the hearing and for the focus that we have on this issue. And I 
want to say welcome to all of you who are before us today. We 
are glad you are here. I will tell you if we had been doing our 
work in the manner in which we should have been, you would not 
have to be here today. We do need to put our attention on the 7 
million people that do not have access to broadband, and that 
should be the focus of our attention. But we should have gone 
about our mapping processes first and then we should have 
issued the definitions of what unserved and underserved were 
going to be. Instead, this committee after much discussion, 
decided that that would be booted to the FCC who then decided 
they would boot it on to others.
    So we need to look at where we are placing the ability to 
determine what this is. Now do local governments have a role to 
play in this? They do, but they don't need to be competing with 
private companies. That is why we need to be looking at these 
definitions, and then making a determination how we go about 
with completing the rest of this broadband access but not 
driving up costs for the consumer. I am looking forward to 
hearing what you all have to say, and welcome to the committee. 
Mr. Chairman, I yield back.
    [The prepared statement of Ms. Blackburn follows:]
    [GRAPHIC] [TIFF OMITTED] 76566A.007
    
    Mr. Boucher. Thank you very much, Ms. Blackburn. The gentle 
lady from the Virgin Islands, Ms. Christensen, is recognized 
for 2 minutes.

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

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

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

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

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

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

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

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

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

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

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

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

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

                  STATEMENT OF SHARON GILLETT

    Ms. Gillett. Thank you, Chairman Boucher, Ranking Member 
Stearns, and members of the subcommittee for the opportunity to 
testify today about broadband deployment as described in the 
National Broadband Plan. I am also submitting a technical paper 
that the FCC is publishing on the topic, and I request that it 
be made part of the record.
    Mr. Boucher. Without objection.
    [The information appears at the conclusion of the hearing.]
    Ms. Gillett. Thank you. As you know, the plan stems from a 
Congressional directive to ensure that all people in the U.S. 
have access to broadband capability. To meet that objective, 
the FCC needed to size the gap between current broadband 
deployment levels and the goal of deployment to everyone. Given 
the limited state of available data on broadband deployment, 
sizing the gap was not a simple task. It involved considerable 
effort to gather the best available data and incorporate it 
into a comprehensive model of the current status of broadband 
deployment. This model considers a housing unit to have access 
to broadband capability if it is close enough to today's 
telephone or cable network infrastructure such that a service 
provider can deliver broadband at actual speed of 4 megabits 
per second download and 1 megabit per second upload today.
    The model estimates that 95 percent of the housing units in 
the U.S. can be served from today's infrastructure, meaning 
that about 14 million Americans cannot be served. Just because 
a housing unit can be served, however, does not mean that it 
is. There is no guarantee that a provider makes a retail 
service available to every home that its network is capable of 
serving. As a result, the actual number of citizens who cannot 
purchase broadband service is likely higher than 14 million. 
Limitations in the model data sources also contribute to 
sensitivities in the 95 percent estimate.
    For example, we relied on public cable industry data, which 
estimates that 90 percent of housing units are reachable with 
cable-based broadband. This data attributes cable broadband 
availability to entire cable franchise areas if any part of the 
franchise area is served with two-way capability. This 
attribution is accurate in most, but not all, cases, and 
accordingly the 90 percent figure may be an overstatement. The 
plan's estimate of an additional 5 percent of housing units 
that are reachable only through telephone-based broadband is 
similarly based on limited data. The model relied on data for a 
number of states as an input to a statistical regression 
analysis that allowed us to adapt the conclusions from these 
states to the rest of the nation.
    And I will add that exactly because of the kinds of 
concerns raised by Chairman Boucher, we did not rely on 
Virginia data as one of the states. As is generally the case 
though with statistical extrapolation there is also estimates 
rather than exact figures. As a complement to the broadband 
infrastructure modeling effort, we also analyzed FCC broadband 
subscribership data recognizing that such analysis is an 
imperfect means of assessing broadband availability. This 
analysis suggests that 92 percent of Americans live in areas 
where broadband service is offered, meaning that as many as 24 
million Americans live in areas where broadband service is not 
offered.
    Based on these 2 methods of sizing the broadband deployment 
cap, we conclude that broadband is unavailable to approximately 
14 to 22 million Americans. The model developed for the plan 
also estimates the financial commitments needed to reach 
unserved homes and the likely resulting revenues. This 
financial modeling shows that for today's unserved homes, which 
are largely located in low density rural areas. The private 
sector business case to reach them simply does not add up. 
While the market has done a great job of getting broadband to 
much of America, market incentives alone will not be enough to 
reach the homes that remain unserved today. Just as the current 
Universal Service Fund was instrumental in ensuring the 
availability of telephone service to over 99 percent of 
Americans, so too will a financial commitment to universal 
broadband service be necessary to ensure that broadband 
availability surpasses 95 percent in the future.
    Two helpful developments should improve data on the 
unserved. First, as a result of the Broadband Data Improvement 
Act, states are now gathering data about broadband deployment 
and by next February this data will be integrated into a 
national broadband map. Second, later this year the FCC will 
propose revisions to its broadband data gathering methodology 
consistent with recommendations in the plan. We look forward to 
working with Congress, industry representatives, and public 
interest advocates to fashion a new regime of broadband data 
collection that will provide Congress and the FCC with the 
relevant data we need while respecting industry's concerns 
regarding data that is legitimately competitively sensitive.
    Allow me to conclude by sharing with you that when I served 
as a state commissioner, lack of broadband availability was the 
top constituent complaint for legislators from rural districts, 
and now such complaints are the most frequent correspondence I 
receive from members of this august body. The addresses are all 
over the country but the issues are the same. In homes without 
broadband children are at an educational disadvantage. Parents 
are shut out from jobs that require online applications and no 
one can access critical government information and services 
online. If you live in one of those homes, it matters little to 
you whether broadband is available to 90, 92 or 95 percent of 
Americans. What matters most is that broadband is not available 
to 100 percent of the home that you live in.
    Solving that problem lies at the heart of the National 
Broadband Plan and reflects the very core of the FCC's mission 
in the 21st Century to work to make sure that America has 
world-leading high speed broadband networks. Thank you again 
for inviting me to testify and I will be happy to address any 
questions.
    [The prepared statement of Ms. Gillett follows:]
    [GRAPHIC] [TIFF OMITTED] 76566A.008
    
    [GRAPHIC] [TIFF OMITTED] 76566A.009
    
    [GRAPHIC] [TIFF OMITTED] 76566A.010
    
    Mr. Boucher. Thank you very much, Ms. Gillett. Mr. Villano.

                   STATEMENT OF DAVID VILLANO

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

                    STATEMENT OF JOE GARCIA

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

                  STATEMENT OF S. DEREK TURNER

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

                   STATEMENT OF MARK DANKBERG

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

                  STATEMENT OF AUSTIN CARROLL

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

                 STATEMENT OF JEFFREY EISENACH

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