[Senate Hearing 111-1166]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 111-1166
 
                  CONNECTING MAIN STREET TO THE WORLD:

        FEDERAL EFFORTS TO EXPAND SMALL BUSINESS INTERNET ACCESS

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


                                HEARING

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 27, 2010

                               __________

    Printed for the Committee on Small Business and Entrepreneurship


         Available via the World Wide Web: http://www.fdsys.gov




                  U.S. GOVERNMENT PRINTING OFFICE
71-699                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED ELEVENTH CONGRESS

                              ----------                              
                   MARY L. LANDRIEU, Louisiana, Chair
                OLYMPIA J. SNOWE, Maine, Ranking Member
JOHN F. KERRY, Massachusetts         CHRISTOPHER S. BOND, Missouri
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
TOM HARKIN, Iowa                     JOHN THUNE, South Dakota
JOSEPH I. LIEBERMAN, Connecticut     MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington           JOHNNY ISAKSON, Georgia
EVAN BAYH, Indiana                   ROGER WICKER, Mississippi
MARK L. PRYOR, Arkansas              JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland
JEANNE SHAHEEN, New Hampshire
KAY HAGAN, North Carolina
           Donald R. Cravins, Jr., Democratic Staff Director
              Wallace K. Hsueh, Republican Staff Director


                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Snowe, Hon. Olympia J., Ranking Member, and a U.S. Senator from 
  Maine..........................................................     4
Kerry, Hon. John F., a U.S. Senator from Massachusetts...........     6
Wicker, Hon. Roger, a U.S. Senator from Mississippi..............    10
Hagan, Hon. Kay, a U.S. Senator from North Carolina..............    16
Vitter, Hon. David, a U.S. Senator from Louisiana................    16

                               Witnesses

Genachowski, Hon. Julius, Chairman, Federal Communications 
  Commission.....................................................    17
Strickling, Hon. Lawrence E., Assistant Secretary, Communications 
  and Information, National Telecommunications and Information 
  Administration, U.S. Department of Commerce....................    25
Adelstein, Hon. Jonathan, Administrator, Rural Utilities Service, 
  U.S. Department of Agriculture.................................    47
Walthall, Susan, Acting Chief Counsel, Office of Advocacy, U.S. 
  Small Business Administration..................................    62
Greene, Sean, Associate Administrator for Investment, U.S. Small 
  Business Administration........................................    79
Smith, Hon. Gordon H., President and Chief Executive Officer, 
  National Association of Broadcasters...........................    95
Largent, Hon. Steve, President and Chief Executive Officer, CTIA-
  The Wireless Association.......................................   118
Huval, Terry, Director of Utilities, Lafayette City-Parish 
  Consolidated Government........................................   124
Gerke, Thomas A., Executive Vice Chairman, Centurylink...........   143
Friedman, Steve, Chief Operating Officer, Wave Broadband and 
  Chairman, American Cable Association...........................   150

          Alphabetical Listing and Appendix Material Submitted

Adelstein, Hon. Jonathan
    Testimony....................................................    47
    Prepared statement...........................................    50
Cameron Communications
    Prepared statement...........................................   212
Cameron Telephone Company
    Prepared statement...........................................   213
Commerce Department Recovery Act Broadband Funding
    Press Release................................................   196
Cox Greater Louisiana
    Letter.......................................................   219
Eagle Communications
    Letter.......................................................   222
Friedman, Steve
    Testimony....................................................   150
    Prepared statement...........................................   152
    Responses to post-hearing questions..........................   189
Geiger, Jim
    Prepared statement...........................................   216
Genachowski, Hon. Julius
    Testimony....................................................    17
    Prepared statement...........................................    20
    Responses to post-hearing questions..........................   170
Gerke, Thomas A.
    Testimony....................................................   143
    Prepared statement...........................................   145
Greene, Sean
    Testimony....................................................    79
    Prepared statement...........................................    81
    Responses to post-hearing questions..........................   180
Grivner, Carl J.
    Prepared statement...........................................   235
Hagan, Hon. Kay
    Testimony....................................................    16
Hutchinson/Mayrath
    Letter.......................................................   224
Huval, Terry
    Testimony....................................................   124
    Prepared statement...........................................   126
    Responses to post-hearing questions..........................   190
Kerry, Hon. John F.
    Testimony....................................................     6
    123 Document.................................................     8
Landrieu, Hon. Mary L.
    Testimony....................................................     1
    Chart: Percentage of U.S. Small Businesses that Export.......    85
Largent, Hon. Steve
    Testimony....................................................   118
    Prepared statement...........................................   120
Medical Business Resources, Inc.
    Letter.......................................................   225
Moulton, William
    Letter.......................................................   234
National Cable & Telecommunications Association
    Prepared statement...........................................   229
Smith, Hon. Gordon H.
    Testimony....................................................    95
    Prepared statement...........................................    97
    Responses to post-hearing questions..........................   194
Snowe, Hon. Olympia J.
    Testimony....................................................     4
Strickling, Hon. Lawrence E.
    Testimony....................................................    25
    BTOP map and distribution charts.............................    26
    Prepared statement...........................................    33
    Responses to post-hearing questions..........................   187
Tydingco, Daniel
    Prepared statement...........................................   226
Vitter, Hon. David
    Testimony....................................................    16
Walthall, Susan
    Testimony....................................................    62
    Prepared statement...........................................    64
    Responses to post-hearing questions..........................   185
Wicker, Hon. Roger
    Testimony....................................................    10
    Prepared statement...........................................    12
Yancey, Jr., W. Kenneth..........................................
    Prepared statement...........................................   207


 CONNECTING MAIN STREET TO THE WORLD: FEDERAL EFFORTS TO EXPAND SMALL 
                        BUSINESS INTERNET ACCESS

                              ----------                              


                        TUESDAY, APRIL 27, 2010

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room 428A, Russell Senate Office Building, Hon. Mary L. 
Landrieu, Chair of the Committee, presiding.
    Present: Senators Landrieu, Kerry, Hagan, Cantwell, 
Shaheen, Snowe, Vitter, Wicker, and Risch.

 OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chair Landrieu. Good morning, everyone, and welcome to the 
Small Business Committee hearing, ``Connecting Main Street to 
the World: Federal Efforts to Expand Small Business Internet 
Access.'' We are excited about the two panels that we have this 
morning and anxious to hear both the testimony and respond to 
the Committee's questions.
    We should have a good attendance on our side this morning. 
As you can see, the room is packed because there is a 
tremendous amount of interest in how small businesses, both in 
urban areas, suburban areas, and in rural and sometimes 
underserved areas, can benefit from the new technologies and 
partnerships that are emerging on this issue. I am pleased to 
begin today's hearing in our newly renovated space, and 
hopefully you all will enjoy the benefits of that today.
    I would like to begin by thanking our witnesses. We have a 
distinguished first panel, which I will introduce in a minute. 
I want to say that I understand our witnesses have had a full 
congressional dance card in recent months. You have testified 
individually before a variety of committees, but this is the 
first time that all of your representative agencies have shared 
one Committee panel to discuss broadband. Federal coordination 
will be key moving forward as each of you have unique 
resources, expertise, and authority.
    For our business panel, it is critical that we hear from 
providers to small businesses so that we can make informed 
legislative decisions. Many have traveled from across the 
country to be here, several from Louisiana. I want to 
especially recognize them.
    I also encourage any business or business association not 
able to testify today to submit a written statement for the 
record. We will complete a full Committee report on this 
subject, and the record will be open for the next 2 weeks.
    In the same way that our interstate highway system 
connected America by reducing travel time and facilitating 
commerce, broadband has minimized the barriers that separate 
small businesses from geographically distant consumers. One 
company that has been able to do this in my home state, just 
for an example, is the Louisiana Network Foundation 
Technologies (NFT), a company started by two Louisiana Tech 
graduates. I had the opportunity to tour NFT last year in one 
of my visits to the state. NFT has developed a technology that 
allows live streaming video over the Internet without using 
large amounts of bandwidth. In partnership with Louisiana Tech, 
NFT pumps signals for various sporting events throughout the 
country and around the world. So from Ruston, Louisiana, a mid-
sized rural town in north Louisiana, this small business is 
developing because of access to this new highway.
    This is a great example of how the public and private 
sectors can join to form meaningful partnerships in providing 
and utilizing advanced technology. NFT also shows that 
broadband technology can create high-paying jobs, usually only 
associated with other more famous high-tech corridors, of 
course, in California, Massachusetts, or right here in Northern 
Virginia.
    Broadband has not only impacted small high-tech businesses. 
This technology has changed traditional business models that 
all small business owners once relied on. As such, it is 
particularly important that small businesses have access to 
broadband technology so that they can compete on a global 
level. This Committee has long understood that small businesses 
come in all shapes and all sizes and occupy a wide range of 
different industries. With this in mind, we do not want to just 
connect Main Street. We also want to connect every street, 
every side alley, and every country road so that all small 
businesses, whether they are in traditional farming interests 
or Internet start-ups out in these less populated areas, have 
the same technological opportunities.
    So while we must expand access to these services, at the 
same time we must ensure broadband is affordable for these 
entrepreneurs. According to reports from the FCC, businesses 
with 25 employees or less pay two times more per employee for 
broadband than those with more than 25 employees. We want to 
explore this fact today.
    Education is the key. We need to provide small business 
with the tools they need to understand the benefits of 
broadband and the challenges associated with not having access. 
We need to show small businesses how to utilize this technology 
to make their businesses more efficient, to gain access to new 
markets, and ultimately to reduce operating costs so that small 
businesses can be the engines that they are, or the best 
engines that they can be, as they lead our country out of this 
recession.
    Our Committee has received data on the importance of small 
broadband providers who offer service to rural and other 
underserved and unserved areas. Innovative, nimble small 
businesses are key to finding cost-effective ways to serve 
rural and underserved communities.
    Today our Committee will hear about small business 
participation in network build-out projects funded under the 
Recovery Act. Just last night, I understand there was an 
additional $1.2 billion announced in grants throughout the 
country under the BTOP Program, adding to the $1.2 billion that 
was previously issued.
    Expanding broadband access and adoption is not just the 
FCC's job. We all have a role to play. That is why I believe it 
is important to hear from each of the Federal agencies today.
    Chairman Genachowski, we are here to work together to 
ensure that our national broadband plan fosters robust 
competition among all broadband providers as a means to deliver 
truly universal broadband service at higher speeds and lower 
prices. There is a lot of work to be done.
    In this spirit, the staff of our Committee and other 
Subcommittees have been active in conducting outreach to 
various broadband providers interested in further connecting 
their communities. My staff has created a Broadband Guide to 
help small businesses. We are directing this guide to be 
distributed today. I am very proud of the work that the Small 
Business Committee has done in this regard. The guide can be 
accessed on our website and hard copies will be made available.
    I am also pleased that a number of small business 
recommendations from this Committee have been incorporated in 
the national broadband plan. Many of these provisions are 
included in the broadband bill that I plan to introduce in the 
coming weeks. I hope my colleagues on the Small Business 
Committee will join me as cosponsors of this bill. Both Ranking 
Member Snowe and former Chairman of this Committee, Senator 
Kerry, have done a tremendous amount of work on broadband in 
the past, and I want to acknowledge them both for their 
leadership in this regard.
    Finally, through the Broadband Data Improvement Act of 
2008, which I cosponsored, along with the American Recovery and 
Reinvestment Act, many Federal agencies were given a renewed 
focus on broadband and small business issues.
    First, the Federal Communications Commission and the SBA's 
Office of Advocacy were tasked with collecting better data on 
broadband and small business broadband usage.
    Second, Rural Utilities Services and National 
Telecommunications and Information Administration were directed 
to set up broadband grant guidelines that would encourage small 
business participation, especially participation from socially 
and economically disadvantaged small businesses. Unfortunately, 
my State of Louisiana ranks towards the bottom of technology 
penetration. I would like to see that changed, and I am 
aggressively working towards that end.
    Third, in these sets of bills, the Federal Communications 
Commission was given the challenging task of crafting our 
national broadband plan. At 360 pages and 17 chapters, Mr. 
Chairman, you and your team have provided us with a blueprint 
of how to move forward.
    I want just in closing to thank you all again. I will be 
introducing the panelists in just a minute, but at this time, I 
would like to turn it over to Ranking Member Olympia Snowe for 
her comments and, again, thank her for her really extraordinary 
leadership in this area, both as a former Chair of this 
Committee and a member of the Commerce Committee.
    Senator Snowe.

OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, RANKING MEMBER, AND 
                   A U.S. SENATOR FROM MAINE

    Senator Snowe. Thank you, Chair Landrieu, for holding this 
hearing, and I appreciate your advocacy and championing of the 
critical Federal efforts that are necessary to enhance 
affordable, high-speed Internet services for small businesses.
    I join the Chair in recognizing our distinguished 
panelists, including FCC Chairman Genachowski, Administrators 
Adelstein and Strickling, Acting Chief Counsel for the SBA for 
Advocacy, Susan Walthall, and SBA Associate Administrator Sean 
Greene.
    I also want to recognize two of my friends and 
distinguished former colleagues who will be testifying on the 
second panel.
    Senator Gordon Smith, who is now the President and CEO of 
the National Association of Broadcasters, Senator Smith and I 
served for many years both on the Commerce Committee and the 
Finance Committee, where we worked together on so many 
different initiatives across the spectrum, and I certainly 
value his perspective here today.
    I am also pleased to acknowledge former Congressman Steve 
Largent, who now heads up the CTIA-The Wireless Association, 
who can also provide a unique point of view in having managed 
his own small advertising, marketing, and consulting firms. 
Actually, they are both Hall of Famers. One is a pro football 
Hall of Famer and the other one is in the Frozen Food Hall of 
Fame.
    [Laughter.]
    So I thank all of our witnesses for taking the time to join 
us today to discuss an issue that has wide-ranging impact for 
our constituents and our entire system of commerce. There are 
currently two herculean initiatives under way. The FCC has 
commissioned the National Broadband Plan and the Economic 
Recovery Act broadband stimulus funding programs, both of which 
will have far-reaching implications for small businesses across 
the country. I look forward to discussing the efficacy of these 
measures and am eager to explore other ways the Federal 
Government can encourage private investment and allow wireless 
and wireline companies to compete fairly in the broadband 
market while balancing the fact we must avoid creating an undue 
burden through excessive government regulation.
    As both Ranking Member of this Committee and as a member of 
the Commerce Committee, on which I have worked with Senator 
Kerry on spectrum inventory--and I was pleased to join him in 
that critical legislation--I have heard countless stories from 
entrepreneurs in my home State of Maine and across the country 
that have used the Internet to transform the way they do 
business. Just last week, in fact, I was contacted by an owner 
of a small business animation studio who depends on fast and 
reliable broadband connection as a matter of basic business 
survival. But he is struggling for increased access and speed 
because his business is located in rural Maine. In his own 
words, and I quote, ``My needs for broadband are expanding, but 
the limited access and market in Maine is putting a stress on 
my business. In my industry, clients rarely have time to deal 
with delays or technical problems, and would move to my 
competition the moment our ability to deliver is compromised.''
    So as much as this entrepreneur and his family enjoys the 
Maine way of life, he now faces the gut-wrenching reality of 
possibly relocating his business to New York or Los Angeles--
not because he wants to, he clearly does not, but because he 
has to due to the lack of broadband capacity in his area.
    So I find this deeply disconcerting, yet regrettably 
millions of Americans and small firms are facing a similar 
unlevel technological playing field and either do not have 
access to, cannot afford, or are not aware of the very 
technology that has created such opportunities for so many 
others. The Internet is not only a tool for increasing 
efficiency and productivity, it is necessary for 
competitiveness and job creation capacity for businesses large 
and small. Unfortunately, it remains an untapped resource for 
approximately 93 million Americans who do not use broadband 
today. The FCC estimates that 14 million American households 
lack access to broadband. Most live in rural communities and 
inner cities, the very areas that have the most to gain from 
broadband availability, which provides better access to jobs 
and education. So I applaud Commissioner Genachowski for 
plotting a course through the FCC's recently released National 
Broadband Plan. We had hearings, in fact, in the Commerce 
Committee--on a very important issue--to eliminate the digital 
divide that exists within these areas.
    This morning, I certainly hope to explore the plan with our 
panelists to ensure that the recommendations in this plan will 
achieve everything that is so desperately required for rural 
small businesses. With unemployment remaining stagnant at 
nearly 10 percent, and our nation undergoing what appears to be 
a ``jobless'' economic recovery, it is paramount that we leave 
no stone unturned in fostering an entrepreneurial environment 
in which small businesses can harness new technology and invest 
in the future to preserve and create more jobs.
    As Congress considers the dimension of issues that can help 
small businesses start hiring again--and I will repeat it, as I 
did last week, and the Chair and I agree on this--we need to 
pass long overdue small business job creation legislation. I 
hope that what will be considered in that legislation is a 
proposal that I have also recommended to increase the Small 
Business Development Centers funding by $50 million. I think 
that money could be used for training and outreach of small 
businesses and broadband applications, which is such an 
imperative if we are going to make sure that small businesses 
are on par in trying to not only access this technology but 
also in terms of how to use it.
    We must ensure our small entrepreneurs have every tool at 
their disposal, including accessible and affordable broadband. 
A recent Brookings report concluded that broadband capital 
expenditures helped create nearly half a million jobs in 2009 
alone. The availability of broadband undoubtedly contributes to 
business expansion and employment growth. The Brookings report 
estimates that a $5 billion increase in broadband investment 
will successfully increase broadband penetration by 7 percent 
and result in 2.4 million new jobs throughout the economy.
    Astoundingly, the United States, which has long been the 
world's leader in technological innovation, ranks 15th globally 
in broadband adoption, 14th in broadband pricing, and 28th in 
broadband speeds--not very impressive for the country that 
invented the Internet. But there is a significant impact that 
these poor rankings have, and that is in the technological 
innovation leadership. Broadband, the Internet, and information 
technology are catalysts to spurring innovation. Without 
greater availability and adoption our competitiveness will be 
significantly hindered.
    The Recovery Act has done many things, including providing 
grants for so many projects that are under way, certainly in my 
State of Maine, including the Three-Ring Binder Network to help 
increase broadband access. I will be interested in hearing from 
the Administrators today on how this is working and making sure 
the money is disseminated fairly among small businesses in 
rural communities.
    I am also eager to hear today from SBA on its plans as 
Administrator Mills recently attended a joint event with 
Chairman Genachowski to partner with the FCC on the National 
Broadband Plan. It is my hope and expectation that the SBA will 
be anything but a silent partner because our Nation's nearly 30 
million small businesses are counting on the agency to stand up 
loudly and aggressively on this seminal issue.
    The FCC's National Broadband Plan recommends that the SBA 
engage its resource partners--for instance, Small Business 
Development Centers and Women's Business Centers--in training 
and supporting small business broadband use and applications. I 
support these basic recommendations, but the SBA must leverage 
the entirety of its resources and fully utilize all the core 
programs so we can maximize their technological potential 
through enhanced rural broadband deployment.
    So, Madam Chair, again, thank you very much for hosting 
this critical hearing today.
    Chair Landrieu. Thank you, Senator Snowe.
    Senator Kerry.

 OPENING STATEMENT OF HON. JOHN F. KERRY, A U.S. SENATOR FROM 
                         MASSACHUSETTS

    Senator Kerry. Madam Chair, thank you very much. First of 
all, let me congratulate you on the many innovations that you 
have brought to the Committee, not the least of which is this 
grand new dais that we all get to sit at. And I notice all 
these little green bottles around here. We have moved south. 
The Mountain Valley spring water from Arkansas, you got as 
close as you could----
    Chair Landrieu. As close as I could to Louisiana.
    Senator Kerry. When I was Chairman, we had Poland Springs, 
Ranking Member.
    Senator Snowe. I recall those good days.
    Senator Kerry. I know.
    Chair Landrieu. And we are probably moving to Kentwood, 
Louisiana, very soon.
    [Laughter.]
    Senator Kerry. So I just want to stay close to the Ranking 
Member. We need her.
    But, no, seriously, I really do congratulate. I think you 
have brought terrific energy and terrific focus to the Chair, 
and we all appreciate it. And I really strongly support your 
effort to focus on ensuring that our small businesses are able 
to be the best connected in the world. And it is shocking that 
in this year 2010, after all of the promises of 2004 and 
beyond, we are still strikingly disconnected in the United 
States. You can go other places, all over the world--in fact, 
coming in here, I think Constitution Avenue is one of the most 
disconnected places in the world. I think your phone calls drop 
about three times per 500 yards.
    We have got to get this connected. We have got to get going 
here. You can go to other countries and sit in a field far from 
anywhere and download at the fastest rate possible complicated 
and long communications from your headquarters or elsewhere. 
Here in our country we cannot do it.
    I believe personally that the stimulus grants are working. 
I support the National Broadband Plan. I think Chairman 
Genachowski has brought some strong leadership to that effort. 
But we have a long way to go, and I just want to focus very 
quickly, as the Senator from Maine did, on Massachusetts for a 
moment. I want to put a chart up here. This is a map of western 
Massachusetts, and those broad red swaths there are all areas 
that are either unserved completely or underserved. There is a 
small line going up through Pittsfield up to North Adams, 
Williamsburg, and so forth, where we have, you know, the 
highway connection, but we have got 123 towns there that are 
completely disconnected and those folks left behind, which is 
why the Governor, local leaders, State legislators, and 
business leaders have constructed a broadband stimulus 
application that I think is the best in its class called 
MassBroadband 123. And it is named after the 123 towns that 
remain disconnected or poorly connected to the Internet.
    I would ask unanimous consent to insert in the record the 
123 document that outlines the benefits for small businesses.
    Chair Landrieu. Without objection.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.001
    
    Senator Kerry. Now, Madam Chair, thousands of my 
constituents have written in support of that. Let me just share 
a couple of observations.
    Arnold Wenger from Lee, Massachusetts, writes: ``My 
computer is my enemy. It can take me an hour to do something 
that should take 10 minutes on a high-speed connection.''
    Laura Stravino from Ashfield, Massachusetts, writes: ``It 
is completely insane that we are using dial-up Internet here at 
our home in the United States in 2010.'' She goes on to say: 
``I am at a disadvantage compared to my colleagues who have 
high-speed Internet at home, and my work is less efficient.''
    Lisa Kirschner writes: ``I run a small graphic design 
business from my home in Peru, Massachusetts. I presently have 
dial-up Internet access because I do not have access to 
broadband. It is not unusual for a photo upload to take hours, 
and, of course, I cannot talk on the phone to my customers 
while I am connected to the Internet.''
    The MassBroadband 123 proposal will build an open broadband 
backbone to which private providers can connect and link homes 
and small businesses to speeds that they only dream about 
today. And that means that you do not have to be an employee 
who is actually at work to be working. You could be at home and 
work. You could be at a remote location and be working. And it 
also means that just because you live in western Massachusetts, 
it does not deprive you of the opportunity to reach customers 
in Western Europe or elsewhere.
    The National Broadband Plan has laid out a comprehensive 
strategy, and I appreciate it particularly from my role as 
Chair of the Communications Technology Subcommittee on the 
Commerce Committee. And we are working with the Chair and 
others to really get this out as fast as possible.
    The FCC strategy, which I support, will combine the 
modernization of the Telephone Universal Service Fund with pro-
competition wireless policies and enhanced consumer access to 
information that will generate new investments, and it is going 
to drive innovation, and it is going to drive job creation at 
the same time.
    Also, we have just embarked on an ambitious health care 
reform effort, and as we do so, health providers, including 
small practices in remote rural areas and elsewhere, we have 
got to remember that it is a vital piece of effective health 
IT. Without high-speed Internet, it is almost impossible to 
download and transfer patient files from provider to provider. 
And as we explore new ways to use technology to reach 
underserved communities, initiatives such as consultations via 
Web video and distance learning for professional development, 
all of these things just do not work without adequate Internet.
    The Broadband Plan calls for releasing more spectrum in 
order to encourage wireless broadband competition, making more 
information about their service accessible to consumers, and it 
also protects an open Internet, which many of us believe is 
very important. It suggests modernizing the Universal Service 
Fund and investing in a wireless network that police and 
firefighters can access and rely on to safeguard vital 
communications during emergency situations. And all of these 
will result in investments in rural broadband that are going to 
ensure that radio collapses that occurred in the wake of 9/11 
and Hurricane Katrina are not repeated again.
    I support all of those initiatives, and, Madam Chair, I 
really appreciate this hearing. It is very, very important. You 
know, we always talk about how small business is the engine of 
our economy. You always hear in every political speech about 
how 98 percent of America's business is small business. It 
rarely gets the kind of focused attention it deserves, and you 
are to be congratulated for helping to do that today.
    Chair Landrieu. Well, thank you, Senator Kerry, as a former 
Chair of this Committee, but we are very focused, and I thank 
all of the members, both Republicans and Democrats. We want to 
get capital into the hands of small business, but we also want 
to give them access to the high-speed Internet, both of which 
are critical to lifting them forward and to moving our country 
forward.
    We have got three other members I am going to recognize 
quickly and ask if you could limit your opening statement to 1 
minute, submit the rest to your record, starting with you, 
Senator Wicker.

  OPENING STATEMENT OF HON. ROGER WICKER, A U.S. SENATOR FROM 
                          MISSISSIPPI

    Senator Wicker. Well, thank you, and I appreciate being 
limited. In a moment of weakness that I really do not recall, I 
agreed to appear off the Hill at 10:30. My staff assures me 
that I actually agreed to this, so I am going to have to tear 
out of this meeting.
    [Laughter.]
    But let me say it is good to have panel number one here. I 
particularly appreciate my two former colleagues, Steve Largent 
and Gordon Smith, agreeing to come here today and be on panel 
two. Perhaps I will be able to come back in time for their 
testimony.
    But, clearly, Madam Chair, the National Broadband Plan is a 
broad analysis of the marketplace. Not every proposal is 
unanimously agreed to. But I recognize the plan is flexible and 
a road map that provides many options to ensure important 
goals, two of which are relevant to our discussion today. 
First, we must assure that the telecommunications industry is 
competitive in the global marketplace. And, second, broadband 
access can help make our small and rural businesses competitive 
locally, regionally, and nationally.
    I hope today we get into discussions of the level of 
Government intervention that might be necessary in certain 
areas, and while we do that, we need to ensure that it is 
accomplished with a light touch and clear recognition that 
private investment is essential.
    We will also discuss the Universal Service Fund, very 
important to the Chair's State of Louisiana and to my State of 
Mississippi, as well as other rural areas. And then, of course, 
we will get into a discussion of spectrum. We need to ensure 
that we efficiently and effectively utilize this finite 
resource.
    The success of small businesses is essential for economic 
growth. In my State of Mississippi, small businesses make up 
the majority of our state's employers. They deserve quality and 
affordable access to the Internet to help them compete in the 
marketplace.
    I ask that my opening statement be included in its 
entirety.
    Chair Landrieu. Thank you, Senator, for being so 
cooperative, and that will happen, without objection.
    [The prepared statement of Senator Wicker follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.002
    
    [GRAPHIC] [TIFF OMITTED] 71699.003
    
    [GRAPHIC] [TIFF OMITTED] 71699.004
    
    [GRAPHIC] [TIFF OMITTED] 71699.005
    
    Chair Landrieu. The reason that we are having to do this is 
we have two panels, ten witnesses, this morning, and it is 
really a very full hearing.
    Senator Hagan.

OPENING STATEMENT OF HON. KAY HAGAN, A U.S. SENATOR FROM NORTH 
                            CAROLINA

    Senator Hagan. Thank you, Madam Chair. I just, too, want to 
echo you are great to put this Committee together, and 
certainly the testimony of the witnesses, we are looking 
forward to hearing what you have got to share with us.
    In North Carolina, we do have a lot of rural counties. 
Eighty-five of our counties are rural. One of the issues that I 
hear over and over again is the lack of high-speed broadband 
that these farmers can use. There is a farmer in Camden County 
who provides many potatoes to Lay to make potato chips. This 
contract is great, but one of the issues is he has to report 
daily what he harvests, and he does not have high-speed. He has 
to literally go from his farm back to his home, where he only 
has dial-up, in order to provide that information on a daily 
basis. Think of the amount of time and energy that he wastes 
because he does not have broadband. So we need this 
desperately, and I just look forward to the testimony.
    Chair Landrieu. Thank you, Senator Hagan.
    Senator Vitter.

  OPENING STATEMENT OF HON. DAVID VITTER, A U.S. SENATOR FROM 
                           LOUISIANA

    Senator Vitter. Thank you, Madam Chair. I want to welcome 
everyone. I look forward to the discussion that I can stay for. 
In particular, I want to welcome two folks on our second panel.
    Terry Huval of the Lafayette Utilities Service, is an 
important witness. The City of Lafayette is doing amazing work 
in terms of bringing tremendous broadband capability to that 
community, and congratulations on that work, Terry, and I look 
forward to a continuing update.
    Secondly, I am also excited a representative of CenturyLink 
is here. They have just announced a new acquisition of Qwest 
that will bring this once small Louisiana company--certainly 
not small anymore--into 37 States with great access through 
that network. So I welcome them, and I look forward to the 
discussion.
    Chair Landrieu. Thank you.
    Let us begin our panel this morning, and let me do just 
very brief introductions.
    Chairman Genachowski from the Federal Communications 
Commission has two decades of experience in public service and 
the private sector. Prior to his appointment, he spent more 
than 10 years working in the industry as an executive and 
entrepreneur. We thank you for your leadership, Mr. Chairman.
    Larry Strickling from the Department of Commerce. Mr. 
Strickling is a technology policy expert with more than two 
decades of experience. He was also Chief of the Common Carrier 
Bureau for the FCC. We welcome you.
    Jonathan Adelstein joins us today from the U.S. Department 
of Agriculture. He is the 17th Administrator of the USDA's 
Rural Utilities Service. He previously served as Commissioner 
of the Federal Communications Commission. We thank you as well.
    Susan Walthall from the SBA. She serves as Acting Chief 
Counsel for Advocacy. Of course, that position is still vacant. 
We are working hard to get it filled, and we hope to get that 
done soon. In the absence of the Chief Counsel, she is here to 
testify on behalf of the Office of Advocacy, U.S. Small 
Business Administration.
    Lastly, we have Sean Greene, also with the SBA, serving as 
Associate Administrator for Investments and Special Adviser. 
Karen Mills could not be here with us today, so we are very 
grateful to have Mr. Greene.
    So let us begin with our opening statements, and, Mr. 
Chairman, if we can begin with you, I am pleased that this 
Administration has made a broadband policy for this nation a 
priority. There have been billions of dollars invested so far 
and a tremendous amount of interest, and thank you for being 
with us this morning.

    STATEMENT OF HON. JULIUS GENACHOWSKI, CHAIRMAN, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Genachowski. Thank you, Chair Landrieu, Ranking Member 
Snowe, Senator Vitter. Thank you for calling this important 
hearing. I have submitted a statement for the record, and if I 
may, I will deliver a shorter opening statement that focuses on 
broadband and small businesses.
    Broadband communications is rapidly becoming an essential 
platform, if not our most essential platform for job creation 
and economic growth in the 21st century and necessary for the 
global competitiveness of the U.S. Our National Broadband Plan, 
as you know, stems from a congressional directive to the FCC to 
prepare a National Broadband Plan to achieve universal 
broadband and to tackle important issues such as 
entrepreneurial activity, investment, job creation, and 
economic growth.
    Now, small businesses really are our nation's indispensable 
driver of job creation and economic growth, and the evidence is 
clear that broadband connectivity and associated online tools 
can be powerful factors in small businesses, reaching new 
markets, increasing productivity. Together, wired and wireless 
broadband can bring small businesses new revenue from new 
customers and lower operating costs by using business tools 
available in the Internet cloud. That is a formula for more 
profit, more investment, more economic growth, and more jobs on 
Main Street.
    The President has said, ``We need to expand broadband lines 
across America so that a small business in a rural town can 
connect and compete with their counterparts anywhere in the 
world.'' I could not agree more. Broadband can have 
transformative economic effect in both rural and urban areas.
    Consider Blue Valley Meats in Diller, Nebraska, which has 
used its website and e-commerce and online marketing tools to 
reach new customers outside of Diller, creating new jobs in 
Diller.
    Consider Cake Love, a bakery here on 14th Street in D.C. 
which has expanded from one to seven stores, with its 
entrepreneurial stating that broadband has been as important as 
his recipes in the growth of his business, empowering him to 
reach his customers ``where they are, online and on mobile,'' 
while keeping his costs in check.
    I met a farmer in Erie, Pennsylvania, who told me that all 
his life he thought computers had no relevance at all to his 
business except that now he realizes that without computers, 
without smart phones, without high-speed access, you cannot be 
a farmer in 21st century America.
    The FCC's work on the Broadband Plan not only confirmed 
broad opportunities for small businesses for broadband; it 
revealed several significant challenges to seizing them.
    First, too many small businesses operate in regions of our 
country that still do not have access to high-speed broadband 
infrastructure at all.
    Second, in areas with high-speed connectivity, too many 
small businesses find too few marketplace choices, a lack of 
adequate speeds, or prices that are too high. Today small 
businesses pay an average of three times more per employee than 
large businesses for broadband service.
    Third, small businesses too often do not have a sufficient 
understanding of broadband--what we call ``digital literacy.'' 
The result is that in most rural counties in America, fewer 
than half of small businesses have broadband access, and 
overall, fewer than a quarter of small businesses even today 
use e-commerce tools to grow and expand their businesses.
    The FCC's Broadband Plan recommends taking concrete actions 
to tackle those challenges:
    To improve availability, particularly in rural areas, the 
plan proposes a once-in-a-generation transformation of the 
Universal Service Fund, shifting support from plain old 
telephone service to broadband communications. It recommends 
steps to make available sufficient spectrum so that we can lead 
the world in mobile and so that we can benefit small business 
productivity which relies increasingly on mobile 
communications.
    To boost marketplace choices and affordability for small 
businesses, the plan recommends promoting competition in 
broadband, including removing barriers to municipal networks 
and increasing transparency about the speed of service to all 
broadband consumers, including small businesses.
    To improve digital literacy, the plan calls for increased 
training and outreach to small businesses. I am pleased to say 
that this effort officially kicked off earlier this month when 
SBA Administrator Karen Mills and I announced a public-private 
partnership to provide broadband tools, training, and support 
for small businesses. And as you mentioned, the plan includes a 
number of recommendations working with the SBA to enhance 
existing resources so that they can provide training and 
outreach to small businesses as quickly as possible.
    I am pleased by our collaboration at the FCC with the 
Commerce Department, particularly with the NTIA, Administrator 
Strickling, also with RUS, Administrator Adelstein. Interagency 
coordination is vital when it comes to this horizontal 
technology, and I look forward to continuing to work well 
together.
    In implementing our efforts at the FCC, our focal point is 
our Office of Communications Business Opportunities led by 
Director Tom Reed. OCBO is central to the Commission's mission 
to support and encourage the development of small and diverse 
businesses in the telecommunications industry, taking advantage 
of broadband.
    At the FCC, we are moving with urgency to implement the 
National Broadband Plan. We released about 10 days ago an 
Implementation Action Plan unprecedented in its scope and 
transparency, with target dates for over 60 Commission actions 
over the next year to implement what the country needs to do to 
lead the world in broadband.
    Supporting small businesses and entrepreneurs must be a 
national priority of paramount importance. By arming small 
businesses with broadband and encouraging digital literacy, we 
can help ensure that broadband fulfills its promise as a 
transformative tool for small businesses and America's economy.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Genachowski follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.006
    
    [GRAPHIC] [TIFF OMITTED] 71699.007
    
    [GRAPHIC] [TIFF OMITTED] 71699.008
    
    [GRAPHIC] [TIFF OMITTED] 71699.009
    
    [GRAPHIC] [TIFF OMITTED] 71699.010
    
    Chair Landrieu. Thank you very much.
    Mr. Strickling.

STATEMENT OF HON. LAWRENCE E. STRICKLING, ASSISTANT SECRETARY, 
COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND 
    INFORMATION ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Mr. Strickling. Chairwoman Landrieu, Ranking Member Snowe, 
and members of the Committee, thank you for the opportunity to 
testify today about NTIA's efforts to expand small business 
Internet access. As you pointed out, we have testified on many 
previous occasions to previous Committees. This is, I think, 
the seventh time that Administrator Adelstein and I have 
appeared. Up until now, it has always been as a duet, but today 
we welcome three new members to the band, and we look forward 
to the continued discussion.
    What I would like to focus on in my testimony this morning 
is what specifically NTIA has accomplished since the passage of 
the Recovery Act to expand broadband availability and adoption 
and specifically how we have engaged small businesses in those 
efforts.
    The Recovery Act directed NTIA to create and administer a 
grant program totaling $4.7 billion, with four purposes: to 
build broadband infrastructure, to increase broadband adoption, 
to expand public computer centers, and to develop a national 
broadband map. We have now completed the first round of 
funding, and I am pleased to report that as of today, NTIA has 
awarded 136 Recovery Act grants totaling approximately $1.3 
billion. This includes 54 grants for mapping totaling about 
$100 million and 82 projects for broadband totaling more than 
$1.2 billion. All told, these projects will add 25,000 miles of 
new or upgraded broadband networks, will directly connect 
nearly 7,000 community anchor institutions, including schools, 
libraries, hospitals, community colleges, government 
facilities. We are investing in more than 1,000 new or upgraded 
public computer centers, accounting for more than 10,000 new or 
improved public computer workstations.
    I have provided a map this morning to each of you that 
shows the geographical distribution of our round one grants.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.025
    
    [GRAPHIC] [TIFF OMITTED] 71699.026
    
    [GRAPHIC] [TIFF OMITTED] 71699.027
    
    [GRAPHIC] [TIFF OMITTED] 71699.028
    
    [GRAPHIC] [TIFF OMITTED] 71699.029
    
    We were able to award grants in over 30 states, although 
some of our awards impact more than one state. Nonetheless, as 
we head into our second round of funding, we are very cognizant 
of our obligation under the act to award at least one grant in 
each state, to the extent practical.
    Small businesses have been direct beneficiaries of these 
grants. Of the 20 awards to private businesses in round one, 
eight went to small businesses, one of which is a socially and 
economically disadvantaged business. These grants total over 
$73 million. Moreover, nearly 40 percent of the 82 broadband 
grants awarded in round one include socially and economically 
disadvantaged businesses as project partners. And beyond these 
direct awards to small business, hundreds of thousands of small 
businesses will benefit from our program through increased 
high-speed Internet availability for themselves and their 
consumers.
    Let me give you just a few examples.
    In Puerto Rico, Critical Hub Networks, a socially and 
economically disadvantaged business, will build a wireless 
broadband network that reaches every municipality in Puerto 
Rico and offers speeds of over 100 megabits per second to more 
than 1,500 schools and local Internet service providers.
    In Maine, we awarded $25 million to a small business to 
build a fiber optic network extending to the most rural and 
disadvantaged areas of the state, which will improve the 
overall level of facilities in the state and enable last-mile 
service providers to offer services to homes and businesses 
throughout the state.
    And in one of our multi-state projects, Mission Economic 
Development Agency is using our public computer center grant of 
almost $4 million to create or expand 17 computer centers in 10 
states in partnership with Latino-serving economic development 
organizations. They will focus not just on delivering computer 
literacy training to Hispanic communities, but also to deliver 
specific educational programs to Latino micro-entrepreneurs 
interested in starting or growing their own businesses.
    Those are just some of the examples of the types of 
projects we funded in round one, and while we are pleased with 
the response of small businesses in round one, we redoubled our 
efforts in round two to encourage and facilitate participation 
by small businesses and entrepreneurs.
    As a key element, we developed an online tool called 
Broadband Match, or as we call it, eHarmony for broadband, 
which allowed interested parties to register online and find 
potential project partners. More than 1,400 entities signed up 
for Broadband Match, including many small businesses and SDBs. 
When the application window closed for the second round of 
funding last month, more than 450 organizations and individuals 
with profiles on Broadband Match had either submitted an 
application or were involved as a key partner on a round two 
application.
    Additionally, we conducted workshops across the country to 
educate potential applicants on round two funding rules, 
including six pre-workshop events focused specifically on the 
issues of small businesses attempting to participate in our 
program. And as set out in our round two rules, we will be 
giving extra consideration to an application that includes an 
SDB either as the applicant or as a project partner.
    We saw the effects of these efforts on our round two 
application pool. Those have just come in. We are in the 
process of reviewing them. But we received a total of nearly 
900 applications requesting $11 billion in grants; 21 percent 
of these applicants are small businesses; 24 percent of the 
applicants are either socially disadvantaged and economically 
disadvantaged businesses or have partnered with an SDB in their 
application, an increase from 14 percent in round one.
    Our deadline to award round two grants is September 30, 
2010. As you know, the Recovery Act does not provide authority 
or funding for administration or oversight of our projects 
beyond that date. Yet to realize the benefits of our program 
and to avoid waste and fraud, it is critical that we monitor 
and oversee these grants while they are being built and put 
into operation. For this reason, the President's fiscal year 
2011 budget includes authority and funding for NTIA to continue 
to administer and monitor the these projects, and I urge 
members of this Committee to support expeditious funding for 
oversight beyond September to ensure that these projects 
deliver the benefits they promise and to protect the investment 
taxpayers have made for these projects.
    Thank you again for the opportunity to testify, and I will 
look forward to your questions.
    [The prepared statement of Mr. Strickling follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.011
    
    [GRAPHIC] [TIFF OMITTED] 71699.012
    
    [GRAPHIC] [TIFF OMITTED] 71699.013
    
    [GRAPHIC] [TIFF OMITTED] 71699.014
    
    [GRAPHIC] [TIFF OMITTED] 71699.015
    
    [GRAPHIC] [TIFF OMITTED] 71699.016
    
    [GRAPHIC] [TIFF OMITTED] 71699.017
    
    [GRAPHIC] [TIFF OMITTED] 71699.018
    
    [GRAPHIC] [TIFF OMITTED] 71699.019
    
    [GRAPHIC] [TIFF OMITTED] 71699.020
    
    [GRAPHIC] [TIFF OMITTED] 71699.021
    
    [GRAPHIC] [TIFF OMITTED] 71699.022
    
    [GRAPHIC] [TIFF OMITTED] 71699.023
    
    [GRAPHIC] [TIFF OMITTED] 71699.024
    
    Chair Landrieu. Thank you very much.
    Mr. Adelstein.

  STATEMENT OF HON. JONATHAN ADELSTEIN, ADMINISTRATOR, RURAL 
       UTILITIES SERVICE, U.S. DEPARTMENT OF AGRICULTURE

    Mr. Adelstein. Thank you, Chair Landrieu, and thank you for 
all your leadership on broadband issues. I enjoyed announcing 
that Louisiana project together with you recently and all that 
you have done to make sure Louisiana is second to none in terms 
of broadband connections.
    And, Senator Snowe, Ranking Member Snowe, it has been great 
to work with you over the years. I appreciate your leadership 
on schools and libraries and on broadband generally, both as a 
member of the Commerce Committee and former Chair here.
    And, Senator Hagan, thank you for your leadership as well. 
I was just in Asheville, North Carolina. I think the President 
followed me shortly thereafter. But I saw both the beauty and 
the needs of rural North Carolina for broadband service, and we 
are committed to serving that area.
    We certainly are glad to be here. It is great to have a 
broader band to testify with. I am especially honored to be 
with the Chairman of the FCC, Chairman Genachowski, who has 
done such an outstanding job of leading the Commission, both in 
terms of the National Broadband Plan and so many other fronts, 
and, of course, to be with my friend Larry Strickling, who has 
been such an outstanding partner in the stimulus broadband 
effort. And it is great to partner also with our friends from 
the SBA, and we are looking to working with them. And Cheryl 
Johns, who we work with at the FCC, is your person here on the 
Committee. It is good to see you here.
    We certainly are committed, the Obama Administration, as 
you have heard, to getting broadband out, and Secretary of 
Agriculture Vilsack has put this at the very top of his agenda, 
one of the pillars that he sees as critical for the future of 
rural America, making sure that broadband is everywhere. And we 
appreciate your guidance as we implement this major 
undertaking.
    Broadband connectivity can help new and small businesses to 
thrive. Rural business, farmers, ranchers, need broadband to 
expand markets and compete in the global economy. USDA studies 
have clearly shown that rural employment growth and wages 
increase with broadband availability. And RUS knows how to work 
with small businesses and entrepreneurs, and we know how to do 
it in our broadband program. Nearly all of our borrowers under 
the farm bill broadband loan program have been small 
businesses; 35 percent are start-ups. So we have been doing 
this for many years. And the same is true under the Recovery 
Act. Small businesses have played a big part in both of our two 
Notices of Funding Availability, or NOFAs, for the RUS program.
    Under the first NOFA, a very large number of applications 
came from small businesses, minority-owned firms, Indian 
tribes, and Native Alaskan and Native Hawaiian organizations. 
In that round, RUS awarded over $1 billion for 68 broadband 
projects. That will connect over half a million households, 
nearly 100,000 rural businesses, and anchor institutions such 
as schools, libraries, and community facilities. These 
broadband projects span 31 states and 1 territory, and they 
include 17 tribal lands in rural communities.
    Funding was awarded also to a very diverse group of 
providers--from very small telecommunications companies, 
wireless providers, rural electric and telephone cooperatives 
to cable providers--to build out our rural networks and create 
urgently needed jobs in rural America.
    Funds were awarded to small and disadvantaged businesses 
and Indian tribes, and these projects also feature a very wide 
array of technologies, from DSL broadband to coaxial cable to 
fiber optics to wireless. In fact, 37 percent of our awardees 
had a wireless component.
    The experience RUS gained from the first NOFA, as well as 
feedback from this Committee and others, has informed a number 
of improvements that we made in the second round of funding. 
For NOFA II, is offering a 75-percent grant, 25-percent loan 
combination, with incentives for higher loan components. We 
eliminated the category for remote projects. We instead offered 
flexibility to increase the grant up to 100 percent for the 
most rural areas and those with low median income and high 
unemployment.
    USDA is going to focus in this round on last-mile projects, 
which directly connect to homes, businesses, and community 
anchor institutions. USDA will continue to finance middle-mile 
projects, primarily for current RUS borrowers and grantees.
    The second NOFA also allows satellite providers to compete 
for around $100 million to provide service to rural customers 
that remain unserved after all other funds have been obligated. 
Awardees of both NOFAs and applicants under NOFA II can apply 
for technical assistance grants for the development of a USDA-
approved Regional Broadband Plan. Awardees under either NOFA 
can also apply for grant funds to provide broadband 
connectivity to rural libraries that were funded by our 
community facilities program. We expect to announce the ground 
rules for these programs very shortly.
    And we continue to focus on rural and unserved areas for 
economic development in terms of eligibility. While we are in 
the process of reviewing the applications for the second NOFA, 
we are thrilled at the level of response. RUS received about 
776 applications for nearly $11.2 billion in funding. That is 
over five times the amount available. About 60 percent of the 
applications were companies that identified themselves as small 
businesses and disadvantaged firms. Nearly 76 percent of 
applications were submitted by for-profit corporations. Around 
4 percent of the applications were by public entities. And we 
got 21 applicants that were Indian tribes.
    We believe our 60 years of experience in providing 
telecommunications at USDA will help us prepare to deliver 
broadband and encourage development of locally owned 
businesses. Our goals are to modernize the Nation's 
infrastructure, create or save jobs, and work towards rural 
economic development. We certainly welcome input from members 
of this Committee as we are reviewing this next round of 
applications. It is an honor to work with you and with our 
partners throughout the Obama Administration to make affordable 
broadband service widely available throughout America.
    Thank you for inviting me to testify, and I welcome any 
questions you might have.
    [The prepared statement of Mr. Adelstein follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.030
    
    [GRAPHIC] [TIFF OMITTED] 71699.031
    
    [GRAPHIC] [TIFF OMITTED] 71699.032
    
    [GRAPHIC] [TIFF OMITTED] 71699.033
    
    [GRAPHIC] [TIFF OMITTED] 71699.034
    
    [GRAPHIC] [TIFF OMITTED] 71699.035
    
    [GRAPHIC] [TIFF OMITTED] 71699.036
    
    [GRAPHIC] [TIFF OMITTED] 71699.037
    
    [GRAPHIC] [TIFF OMITTED] 71699.038
    
    [GRAPHIC] [TIFF OMITTED] 71699.039
    
    [GRAPHIC] [TIFF OMITTED] 71699.040
    
    [GRAPHIC] [TIFF OMITTED] 71699.041
    
    Chair Landrieu. Thank you very much.
    Ms. Walthall.

 STATEMENT OF SUSAN WALTHALL, ACTING CHIEF COUNSEL, OFFICE OF 
          ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION

    Ms. Walthall. Chair Landrieu, Ranking Member Snowe, Senator 
Hagan, good morning, and thank you for the opportunity to 
appear before you today. I am Susan Walthall, Acting Chief 
Counsel for the Office of Advocacy at the U.S. Small Business 
Administration. In the interest of time, I will summarize my 
prepared testimony and ask that the full statement be included 
in the record.
    Congress established the Office of Advocacy in 1976 to 
represent the views of small businesses before Federal agencies 
and Congress. As Advocacy is an independent office, the views 
expressed in this testimony do not necessarily reflect the 
position of the administration or the SBA.
    On a personal note, Chair Landrieu, I was able to spend 
several months in New Orleans immediately after Hurricane 
Katrina through my work with the SBA. That experience 
reinforced to me the importance of broadband communication to 
small businesses and communities.
    The Office of Advocacy has been and continues to be active 
on a number of small business broadband issues. On behalf of 
small businesses, we have filed comment letters on the 
guidelines for the Broadband Technologies Opportunities Program 
and the Broadband Initiative Program, the FCC's role, and the 
national rural broadband strategy. A listing of our numerous 
comment letters is included in Appendix A to my written 
testimony. We were pleased to work with NTIA on the Recovery 
Act's BTOP program and be part of the efforts to include small 
and socially and economically disadvantaged businesses. We were 
happy to hear that survival businesses chose to partner with 
SDBs.
    In addition, we have advocated for increased access to 
spectrum by small businesses through the FCC's Designated 
Entity Program, special access reform, and a competitive 
regulatory approach to the U.S. telecommunications industry.
    Today I will highlight two key areas: first, I will explain 
the challenges faced by small business providers; second, I 
will discuss the study that my office is conducting on 
broadband and small business as directed by this Committee.
    My office works closely with small broadband providers to 
understand the unique barriers they face. We recently visited 
the offices and field operations of MetroCast, a small 
independent cable operator in St Mary's County in rural 
Maryland. We saw firsthand the difficulties MetroCast was 
facing in connecting service areas separated by inaccessible 
terrain. Our visit helped us understand what a true mom-and-pop 
broadband provider looks like and why they are so important to 
many of our communities.
    Two problems for small business providers are special 
access and acquisition of spectrum. Small carriers have 
continuously reported increased rates for special access. The 
current price of special access specifically demonstrates a 
lack of competition in the market. Incumbents are able to raise 
prices without losing customers. The combination of high prices 
and few alternatives creates a difficult burden for these small 
business providers. Advocacy is committed to working with the 
FCC to ensure that small entities are able to acquire spectrum.
    The 2006 revision to these rules has encumbered small 
business participation in FCC spectrum auctions. Advocacy urges 
the FCC to consider amending its designated entity rules 
allowing smaller computers to compete in spectrum auctions with 
the use of bidding credits.
    The Broadband Data Improvement Act of 2008 directed 
Advocacy to conduct a study to evaluate broadband availability 
for small businesses. I want to thank Senators Landrieu, Snowe, 
and Kerry for spearheading this important study. This study, 
due in the fall, will provide valuable information on broadband 
options currently available to small businesses. It will 
provide a baseline against which the success of the broadband 
grant and loan programs can be evaluated. Results will 
geographically highlight small businesses that are in 
underserved areas and determine just how limited their service 
choices are and how this affects the price of broadband. The 
study will match service availability with small business 
location, allowing small service providers to enter the market 
and offer innovative products to these regions.
    Broadband allows small businesses throughout the U.S. to 
access customers, fostering greater small business contribution 
to economic growth and job creation. We are ready to work with 
everyone here to make universal broadband a reality. Thank you 
for allowing me to present these views. I will be happy to 
answer any questions.
    [The prepared statement of Ms. Walthall follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.042
    
    [GRAPHIC] [TIFF OMITTED] 71699.043
    
    [GRAPHIC] [TIFF OMITTED] 71699.044
    
    [GRAPHIC] [TIFF OMITTED] 71699.045
    
    [GRAPHIC] [TIFF OMITTED] 71699.046
    
    [GRAPHIC] [TIFF OMITTED] 71699.047
    
    [GRAPHIC] [TIFF OMITTED] 71699.048
    
    [GRAPHIC] [TIFF OMITTED] 71699.049
    
    [GRAPHIC] [TIFF OMITTED] 71699.050
    
    [GRAPHIC] [TIFF OMITTED] 71699.051
    
    [GRAPHIC] [TIFF OMITTED] 71699.052
    
    [GRAPHIC] [TIFF OMITTED] 71699.053
    
    [GRAPHIC] [TIFF OMITTED] 71699.054
    
    [GRAPHIC] [TIFF OMITTED] 71699.055
    
    [GRAPHIC] [TIFF OMITTED] 71699.056
    
    Chair Landrieu. Thank you very much, and it is good to know 
that not only do we have the Small Business Administration 
advocating on behalf of small business, but the actual Office 
of Advocacy that can give a more independent view as well. I 
know the small businesses in our country appreciate that.
    Ms. Walthall. Thank you.
    Chair Landrieu. Mr. Greene.

     STATEMENT OF SEAN GREENE, ASSOCIATE ADMINISTRATOR FOR 
         INVESTMENT, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Greene. Thank you, Chair Landrieu, Ranking Member 
Snowe, for inviting me here to this important hearing. I am 
honored to be here.
    Broadband technology brings extraordinary opportunities to 
America's small businesses, regardless of industry size or 
geographical location. There are two critical factors to 
consider when it comes to broadband and small business: first, 
small businesses would benefit from broadband being accessible 
and affordable; and, secondly, better tools and training 
targeted to small businesses would help maximize broadband's 
potential.
    The immediate challenge is relatively simple. Access to 
affordable broadband service is not yet available to all small 
business owners, especially those located in unserved and 
underserved parts of the country. Let me give you some concrete 
examples of how small businesses are taking advantage of the 
Internet as a sales and marketing platform.
    Take Becky Collins, or Granny B, an Internet entrepreneur 
selling her homemade children's clothing from Homer, Louisiana. 
After her friends and family taught her how to use eBay, she 
made the leap into creating her own business and her own 
website and is now generating orders from Japan, Canada, 
England, and Italy.
    Or Northern Outdoors, an adventure tour operator running 
whitewater rafting trips on the Kennebec and Penobscot rivers 
in Maine. Northern Outdoors recognized a long time ago how to 
use the potential of the Internet to bring new customers to 
their business. Now they market their trips through a 
customized website. They do search engine optimization and 
keyword buying on Google. They integrate with Twitter and 
Facebook to reach new customers and actually take bookings 
online as well.
    Then, finally, Open Table provides one more example of the 
importance of broadband for small businesses, in this case 
serving as a platform for an innovative high-growth business to 
use the Internet to serve other small businesses as customers. 
Open Table allows consumers to book restaurant reservations in 
real time via the Internet. In turn, using a broadband 
connection, restaurants use Open Table software as their 
reservation management system, getting updates on reservations 
real time far more efficiently than answering lots of phone 
calls and booking everything on paper. The company, initially 
funded by a small business investment company, went public last 
year and now employs over 300 people.
    But despite such success stories, more work still needs to 
be done. For instance, once a small business gets access to 
affordable broadband, the challenge lies in adopting the 
technology and leveraging it to its fullest potential.
    Which leads me to the second key area: Small businesses 
need better tools and training to maximize broadband's 
potential. This is where SBA and its partners can play a key 
role. That is why the SBA and its resource partners are 
focusing on increasing digital literacy. We want to broaden the 
knowledge base of small businesses to take advantage of such 
areas as e-commerce, online markets, social media, on-demand 
software, and much more.
    I will give one recent example. Via our partnership with 
SCORE, we have a cadre of 12,000 volunteers who are executives 
that actively counsel and mentor entrepreneurs and small 
businesses owners. Earlier this month, SCORE announced the 
partnership with technology companies that will develop 
training materials to inform, educate, and support small 
businesses interested in using broadband. The SCORE leadership 
team is working to develop these ``train the trainers'' 
materials, and they have already brought on board another one 
of SBA's key resource partners, our 110 Women's Business 
Centers.
    SBA will continue worked with all of our resource partners 
on similar efforts, including the possibility of delivering 
additional training through our network of Small Business 
Development Centers.
    As today's hearing clearly shows, broadband access, 
adoption, and utilization can play a critical role in 
supporting the strongest engine of our economy--small 
businesses. SBA and our partners can help small business owners 
gain the knowledge and skills they need to harness the strength 
of this powerful new technology. If we can accomplish that, we 
know that small businesses will grow and create even more good 
American jobs that will lead us toward economic recovery.
    Thank you for your leadership in this crucial area and for 
holding this important hearing today. I am happy to take any of 
your questions.
    [The prepared statement of Mr. Greene follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.057
    
    [GRAPHIC] [TIFF OMITTED] 71699.058
    
    [GRAPHIC] [TIFF OMITTED] 71699.059
    
    Chair Landrieu. Thank you very much, Mr. Greene, and we do 
have a series of questions that we will ask you now. I want to 
say this will probably go for another 15 or 20 minutes, and 
then we will start with the second panel to give them notice. I 
have quite a few questions, and I know that Senator Snowe does 
as well.
    I would like to call your attention, all of you, to one of 
my favorite charts.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.060
    
    We use it often in this Committee because we like to put a 
picture with the statement when we talk about opportunities for 
growth for small businesses. Mr. Greene, you hit on this, and 
thank you for highlighting a small company in Homer, Louisiana, 
that is now, because of access to high-speed Internet, able to 
sell products not just in the surrounding northwestern part of 
Louisiana, Arkansas, or Texas, which would be in previous 
times, 20 years ago, her only market possibilities. Today she 
can sell those products in China and in other places that you 
mentioned.
    This is how few small businesses in America export: 1 
percent, Mr. Chairman, of our businesses in America, small 
businesses, are exporting, when the bulk of the market of the 
world lies outside of the territory of the United States of 
America. To export, not only do they need ships and trains and 
trucks and ports, they need communication and they need fast 
communication to do that. That is in large measure what this 
hearing is about, not just exports, but it is interesting to 
think about when you look to see this jobless recovery where 
the jobs may come from. Here is a big space, and I want you all 
to address that. Large businesses are exporting 42 percent. 
They, of course, have opportunities as well. But this is going 
to be the lifeblood for firms in Maine and firms in Louisiana. 
But, again, they just do not need the highway going to their 
business. They need the super fast highway of the interstate--I 
mean of the--not just the interstate, but of high-speed 
broadband.
    So let me ask you again, Mr. Chairman, if you could--and I 
have read a summary of your broadband report which was issued, 
I think the first one in our nation's history, most 
comprehensive one, 2 months ago. Again, could you hit the 
highlights of how this plan is really going to open up 
opportunities for small business, not just to export to other 
places in the world, but to give them the capacity to grow the 
jobs we desperately and urgently need in this country today?
    Mr. Genachowski. Well, first I would say this is a perfect 
visualization of one of the huge opportunities if we get 
broadband policy and strategy right in the country, and you 
look at it, it is not just an opportunity, it is a necessity.
    The strategies that we recommend pursuing flow from the 
challenges that we see with small businesses. One, many small 
businesses live in areas where they just do not have access to 
broadband at all. There are deployment issues. Second, there 
are digital literacy issues where they do not understand the 
full benefits of what can be accomplished on broadband. And, 
third, affordability issues.
    There are a number of steps that we are taking. Some are 
broad steps that will disproportionately benefit small 
businesses. Some are small business targeted steps. So 
transforming our Universal Service Fund to make sure that wired 
and wireless broadband communications is extended everywhere. 
So a small business that is in a small town getting by has the 
opportunity to connect to high-speed broadband and whether it 
is a meat company or a clothing company, sell its products to 
the next town, the next State, to the next country. Making sure 
that mobile broadband is truly available everywhere in the 
country, we have challenges as a country to achieve that. 
Tackling the training and tools issue, and this is where I 
think interagency coordination will become particularly 
important. The resources at the SBA are something that we 
focused on in the plan, and together with SBA kicked off a 
program to mentor and train small businesses.
    Finally, we have to tackle competition issues that many 
small businesses, and the panel as well, are keeping prices too 
high and choices too few for small businesses in broadband.
    Chair Landrieu. Okay. I am going to ask each of you, 
starting with you, Mr. Strickling, to say what comes to your 
mind as the number one strength or one of the important 
strengths of the plan, and also what you see potentially as a 
weakness relative to small business being helped by the 
Broadband Plan. Just off the top of your head, what do you 
think one of the strengths of the National Plan is in that 
regard, and what are either the shortfalls or weaknesses?
    Mr. Strickling. Right. Well, I think the Chairman gave a 
very thorough listing of the opportunities and the 
recommendations in the plan. In terms of reaching small 
business, I think first and foremost probably the most 
important single issue is the reform of the Universal Service 
Program because that, I think, will provide a lasting mechanism 
to ensure that these facilities get built out to all reaches of 
the country.
    The Recovery Act provided us nearly $5 billion to get 
started on this effort, and the RUS has received an additional 
$2.5 billion to do it. But to succeed long term, to make this 
happen everywhere in the country, we are going to need 
universal service reform. So I would say that is probably the 
top one in terms of having an impact on small business.
    I have no shortfalls to identify from the plan. I think it 
is a very thorough and complete effort on the part of the FCC, 
and they should be very proud of the work they have done.
    Chair Landrieu. Thank you.
    Mr. Adelstein.
    Mr. Adelstein. I also think it is an outstanding plan. A 
lot of efforts went into it. What is really important is that 
it really sets a high goal, 100 megabits per second for 100 
million homes, for example, that our rural areas, our small 
businesses are going to need that kind of bandwidth. Other 
countries, like Korea, have that already to almost every 
household, and this country finally under this administration 
has taken the leadership in saying we are going to do that, 
too, we are not going to let other countries around the world, 
make sure that their rural populations, that their people have 
access to very high bandwidth and ours do not. So they really 
said that.
    I think the big challenge is--this is not a weakness, but 
there are a lot of issues in front of the Commission in dealing 
with competition policy and universal service policy and 
fleshing that out I think is something that this Commission 
under this able leadership is very able to do. There is a great 
deal of work yet ahead. We have set a brilliant blueprint, and 
now it is where the rubber meets the road as how do you 
translate that into new policy.
    Chair Landrieu. Ms. Walthall.
    Ms. Walthall. Chair, it is usually our small business 
providers that provide this access in the rural areas, and so 
we have got to ensure that there is really a level playing 
field for the small business providers.
    Chair Landrieu. Mr. Greene.
    Mr. Greene. From SBA's perspective, I think a critical 
component of the plan that the FCC got right is that, in 
addition to getting the access, the importance of the training 
and the digital literacy to reach out to the small businesses 
to train them in how to take advantage. The FCC's focus on that 
I think was critical, and from our perspective our ability to 
leverage our footprint via all our resource partners to help 
train the small businesses is spot on.
    Beyond that, the administration as a whole, and SBA as 
well, is looking to say how do we use the report as a starting 
point to develop more broadly a perspective on additional ways 
that we can also serve our respective missions within the 
context of the Broadband Plan.
    Chair Landrieu. Okay. I am going to recognize Senator 
Snowe, and then we will come back for a second round of 
questioning, because I think it is important. There are a few 
more that I want to ask. But, you know, as Senator Snowe and I 
reviewed the budget for the SBA as proposed by the 
administration, we are both recommending--while we are proud 
that the administration has supported a more robust budget than 
in years past, and this agency was weakened considerably 
because of past budgets, we both are recommending somewhere 
between $50 million and $100 million in addition. But it 
reminds me when I think about--when you say the footprint, 
think about a pair of shoes without shoelaces. You cannot run 
very fast in them.
    And so when I think about the footprint of the SBA, I hope 
we are spending a little bit of money purchasing those laces 
necessary to get that footprint really moving when it comes to 
broadband. And, yes, we have small business centers out there, 
we have minority business centers, we have SCORE chapters. We 
have the banks themselves, 5,000 banks that give technical 
assistance. You know, there are about 1,200 lenders but 5,000 
community banks in this country, not to mention credit unions, 
et cetera. That is where small businesses go to get capital. We 
need to think about that footprint and getting access to high-
speed Internet and technology, closing that digital divide.
    Senator Snowe.
    Senator Snowe. Thank you, Madam Chair, and I thank all of 
you for being here today. I think it is critical to have the 
collaboration that is represented here today among all the 
agencies, and I think, along with the FCC spearheading the 
whole effort to create a national plan for broadband 
deployment, without a doubt this is the way it is going to come 
about, through all of the agencies and departments working in 
tandem and in concert to get this done, because it is going to 
be multidimensional.
    It is great to see you here, Administrator Adelstein, for 
your long-time work at the FCC for many years on the E Rate. 
You mentioned Secretary Vilsack. I had the opportunity to speak 
with him yesterday, and I certainly can attest to his advocacy 
and his passion for rebuilding rural America. One essential way 
of doing that is through broadband deployment, he was 
mentioning to me, and I think that is absolutely right. And we 
have to be concerned about what is happening in our rural 
economies all across this country. And, clearly, they need the 
infrastructure that broadband is going to provide for 
sustaining those economies and making the transition that I 
know many of my small towns in Maine are making and the loss of 
thousands of manufacturing jobs over the last few years. So I 
commend all of you for working this way in unison, because that 
is what it will require.
    Chairman Genachowski, thank you for your plan and for, I 
think, recognizing how it is going to have to work with other 
agencies and in tandem with SBA. Is it going to be enough in 
terms of what the SBA resources have, for example? I know you 
talked about partnering with SCORE, which is great, but I 
mentioned Women's Business Center as another example, and the 
Small Business Development Centers. I think we really do have 
to use all the resources of SBA to make this possible for small 
businesses.
    And I know that Administrator Mills was testifying before 
this Committee last week and said that they had the extensive 
bone structure within the SBA, but I am not so sure it is all 
being utilized in terms of your recommendation in Chapter 13 of 
your plan.
    Mr. Genachowski. Well, I can tell you from my experience 
firsthand, the leadership of the SBA is very focused on this, 
and they really have a two-part challenge. This goes a little 
bit to the shoelace issue. One is taking advantage of the 
opportunity to leverage existing resources that are all over 
the country to help small businesses, but there is an earlier 
challenge which I know that the SBA has taken quite seriously, 
which is training the trainers in the new tools and the new 
technologies. I would not comment on the level of resources 
other than to say that that alone is a very significant 
challenge, and without the resources to tackle that, it will 
not be possible to leverage the resources that are on the 
ground that have relationships with small businesses across the 
country.
    So it is an important challenge. I know they are taking it 
very seriously.
    Senator Snowe. Mr. Greene, why aren't all the resources, 
all the agencies being used in this regard?
    Mr. Greene. The plan as discussed is to use all of the 
resource partners. We kicked off the initial event with SCORE, 
who was very excited and moving very quickly, but our 
fundamental commitment is let us take advantage of all of our 
resource partners, including the Women's Business Centers, who 
just signed up for a comparable program in the SBDCs as well.
    On the resource issue, we do agree that there is an 
important opportunity to train the trainers. Additional 
resources will be required to do this in a fully effective way. 
In their Broadband Plan, the FCC made a specific recommendation 
on the budget to do that. We are reviewing that, and we do not 
have a perspective on whether that is the right number yet or 
not, but we do think a commitment to this area will require 
additional resources to our resource partners.
    Senator Snowe. Well, I think it would be important to know 
exactly what it will require from SBA so that we do not learn a 
year from now or 2 years from now. I say that because there is 
so much potential opportunity, and I still think that small 
business is being underutilized in this economic recovery. That 
is an understatement, frankly, in terms of what is not 
happening that should be happening to leverage small business.
    I see this in this regard when it comes to broadband 
deployment and technological innovation. There is a widening 
gap. They mentioned this in a release back in January, and it 
is astonishing. The U.S. trade gap is widening in advanced 
technologies. In one of the papers that was released, it is 
more than $55 billion calculated over a year period. It is 
widening in terms of how much we are importing versus what we 
are exporting in terms of advanced technology. And the 
incubation for that development of technology is going to occur 
with small businesses, so we are not doing enough R&D, we are 
not nurturing them.
    So what can we do in that regard? Is anybody able to answer 
that question?
    Mr. Genachowski. Well, I would say, Senator, this is one of 
the driving reasons for objectives of the plan to make sure 
that the U.S. is the world leader in innovation in the 21st 
century so that both small and large businesses are creating 
the technologies here, marketing them, distributing them, and 
that that continue. A world-class broadband infrastructure 
available everywhere is necessary for that, and it is a serious 
subject of concern and a driver of the Broadband Plan.
    Senator Snowe. So what can we do about that? I mean, that 
is a huge gap and a missed opportunity.
    Mr. Genachowski. I think there are many things to do, but 
transforming USF so that it supports broadband everywhere at 
high speeds; second, unleashing spectrum so that we lead the 
world in mobile. Mobile broadband will be a huge platform for 
economic growth in the 21st century for innovation here, 
technological innovation that we can then export, and a second 
major objective that we need to pursue.
    Senator Snowe. I would be interested in having a timeline 
about when this should all be happening, which is in 
conjunction also with the grants that are issued by both of 
your departments, Administrator Adelstein and Administrator 
Strickling. Why can't we have a timetable for all this in terms 
of broadband penetration, not only for broadband but obviously 
for many businesses that are indicating they may not even try 
to get high-speed Internet, for example, because they use it 
primarily for basic applications.
    Could we have some sort of timetable that we envision this 
will happen throughout this country in terms of providing this 
deployment across the country?
    Mr. Genachowski. Yes. We have set in the plan 5- and 10-
year goals for the country, and one of our next steps is to 
fill out all the milestones along the way, so we look forward 
to working with you.
    Senator Snowe. Is that with respect to spectrum allocation 
or is that with everything?
    Mr. Genachowski. Yes, and, in fact, in the action plan that 
we released a couple of weeks ago, we outlined exactly the 
steps that we will take in the next 12 months to move all of 
these forward. So we would be happy to follow up with you on 
that.
    Senator Snowe. Thank you.
    Chair Landrieu. Thank you, Senator Snowe.
    I want to recognize Senator Cantwell, who has joined us, in 
a minute and has been a great leader on this issue. But before 
I recognize her, I just want to submit to the record prices 
broadband per month to some of our competitors around the 
world. Sweden is about $10.80; Denmark is about $11 a month; 
the U.S. is $15. We are in the ball park, still high, and we 
are fourth in the world. But this is what is worrisome. The 
penetration of households--I do not have penetration of 
businesses, but we are going to get that hopefully and submit 
it for the record as well. The U.S. ranks not first, not 10th, 
but 20th. We only have 60-percent penetration in households. 
South Korea, which ranks first, has 95 percent.
    But this is really startling. In speed, megabytes per 
seconds, Japan is 94 megabytes per second, number one. The U.S. 
is 14th, but at only 9 megabytes per second. So we have a 
tremendous challenge before this country, and I know there are 
jurisdictional issues and controversial issues. We see these 
hearings playing out in the Commerce Committee over the last 
several years. But this Committee is going to stay focused like 
a laser on small businesses in America and their access to 
affordable, high-speed connections, which is not just their 
safety net but our Nation's safety net and line out of this 
recession.
    Senator Cantwell.
    Senator Cantwell. Thank you, Madam Chair, and thank you for 
holding this important hearing, and the impact on small 
businesses, and to Senator Snowe for her attendance because it 
really is an important issue for small business and for rural 
communities. And we have many parts of the State of Washington 
that have invested in broadband delivery as an economic 
strategy. We have beautiful places to live, and now that people 
can live there and get great access, they can operate many 
different kinds of businesses. So it has been a very successful 
strategy.
    I wanted to ask Chairman Genachowski if--you know, the FCC 
recently eliminated the home roaming exclusion from mobile 
voice and is looking at whether to extend that obligation to 
data services such as the mobile broadband and Internet 
services. So with the coming of 4G services, you know, the 
intensity of data usage by small business is really going to be 
a big issue. I mean, they have to have continuity. It is 
essential that the networks relied on by small business have 
that ever present seamless coverage or else, you know, there 
will not be able to locate into these areas.
    So how will this impact the small businesses, the recent 
decision?
    Mr. Genachowski. Well, there were two parts to the 
decision. I completely agree with your premise that consumers, 
whether individual consumers or small businesses, expect to 
have seamless connectivity around the country, whether it is 
voice or data. As you said, we removed that particular 
exemption in connection with voice. At the same time, we 
launched the proceeding to determine rules on broadband data 
roaming with the goals of making sure that American consumers 
and small businesses can have seamless connectivity and at the 
same time incentivizing the maximum possible investment in the 
networks and the fastest possible deployment.
    So that proceeding is under way, and we are taking public 
comment.
    Senator Cantwell. How do you think some of the revenue that 
was part of the American Recovery Act will teach us about some 
of these deployments in rural communities? Do you think that is 
going to give us good data and information about the demands 
and needs?
    Mr. Genachowski. I think it should give us very helpful 
information. To the Chair's point, it is one of the reasons--
and Senator Snowe's point--for ongoing collaboration, 
information sharing. The nature of this technology and the 
nature of our plan is such that the technology and the plan 
will always have to change to accommodate what we learn, how 
technology changes. We approach it in that spirit, and we will 
continue to have very strong collaboration to look at what is 
working, what is not.
    I would say one other thing. In the plan, there are a 
number of areas where we suggest pilot projects. We reached a 
level of certainty that it makes sense to invest and 
experiment, but we do not know enough yet to commit to a large 
program. An example is rural health care for--sorry, telehealth 
for rural clinics and hospitals around the country. We have a 
small program at the FCC. We are going to expand it smartly 
with a series of pilot projects around the country. We are 
going to learn from it. Our hope is that it will work, and we 
will be able to come and say we need to invest more in this 
program to make sure that rural doctors and clinics and 
hospitals are connected so that we can get the full benefits 
everywhere of electronic health care records, the cost-savings 
benefits and the improved health care benefits.
    Senator Cantwell. I definitely appreciate that. You know, 
we have--because we have Inland Northwest already doing this 
telemedicine--unbelievable results because of the large 
geographic area that people have to serve and the lack of 
physicians or pharmacists or what have you to serve them, have 
done, you know, an amazing jobs, and we have seen how these 
infrastructure investments--again, because we have been able to 
play off of the Bonneville Power Administration's redundancy 
and backbone into solving some of these issues.
    I think the results are there, and so I hope that we are 
able to take those results, Madam Chair, because, you know--I 
do not know--I have been here 10 years now, and it seems that 
we are always running up against basic business models that do 
not just--that just do not quite get us there. And yet we know 
for sure the economic return on this investment is huge.
    I appreciate the Chair having this hearing, and I hope that 
we can continue to push ideas that will allow for this 
deployment to take place in a much more rapid fashion. So I 
thank Chair.
    Chair Landrieu. Thank you, Senator Cantwell.
    Senator Shaheen you are next, and then we are going to move 
to the second panel. Thank you all very much.
    Senator Shaheen. Thank you, Madam Chair, and I will be very 
brief. And if you have already responded to this question, I 
apologize, but one of the things that we have heard from some 
folks in New Hampshire about the funds that were in the 
Recovery Act that are going out now across the country in 
grants is that there has been duplication from the RUS and NTIA 
for some of those grant awards and that they have funded 
projects that are competing with providers who are already on 
the ground. Does anybody want to comment on--I suppose that 
would be you, Mr. Strickling.
    Mr. Strickling. I think that we have heard the criticism at 
Commerce, and I think Administrator Adelstein probably has 
heard it at RUS.
    Speaking for our program, I think that those are not 
serious objections. Our projects are designed to reach unserved 
and underserved parts of the country. We focus on where we can 
bring the most benefits. An underserved area by definition is 
an area that has a certain amount of service, but we look to 
see how widespread the service is, what the speeds are of the 
service. Many places that may see fairly slow consumer speeds 
may not be providing the high-speed Internet that the anchor 
institutions like the schools and the hospitals and the 
Government facilities need. So we are focused on projects that 
will bring additional benefits to a given area based on what is 
there today.
    The idea of funding competitors, though, that is not the 
business we are in. The facilities that we are funding at the 
Department of Commerce are facilities that are open network 
facilities. They are available to anyone. We also have focused 
on what we call comprehensive community projects where we are 
really trying to bring what we call the middle mile, the high-
speed pipe that may serve a community or a series of 
communities. Our projects do not deliver too many services 
directly to homes and businesses. We are leaving that to 
private industry to do.
    But what happens is when we put that high-speed facility 
into a community, because of the open network nature of our 
projects, it is available to everybody, including the 
incumbent. So we are reducing costs potentially not just for 
the person who receives our grant money, but also for anybody 
who would already provide service in an area or who might wish 
to provide service in an area because there are these 
interconnection and non-discrimination obligations that make 
that Government-funded pipe available to all providers. And in 
that sense, we think that we are bringing a benefit certainly 
to the community, but also to every provider who might serve 
that community, whether it be an existing incumbent or a new 
entrant.
    Senator Shaheen. Mr. Adelstein, do you want to respond 
also? And maybe you could also in your response--and, I do not 
know, Mr. Strickling, if you want to add to this. But as we are 
thinking about doing this in the future, funding these kinds of 
grants, should we be thinking about better coordinating how 
that is done and maybe instead of doing it through both 
agencies, think about how to put some sort of a working group 
together or maybe giving responsibility for one agency to fund 
those kinds of projects?
    Mr. Adelstein. Well, on that question I think we are very 
closely coordinated now. We work almost daily--actually, we do 
work daily on our staff level, and we talk almost daily about 
these programs. We very clearly distinguish between our program 
and the NTIA program in this second round, where we are doing 
last mile, they are doing primarily the comprehensive community 
middle mile. We have separate NOFAs. So I think, you know, 
there is no overlap. We have not overlapped on one grant 
application. We are very careful to ensure that we go to 
certain places, they go to others, so there has not been one 
example of any overlap between us.
    Now, in terms of the overbuild issue, maybe the best way--I 
think that Secretary Strickling laid it out very clearly, but a 
good way to illustrate that is what is happening in your State 
of New Hampshire, something you are familiar with. We are very 
committed to going to the most unserved remote parts of the 
country, and New Hampshire is no exception. Our grant in New 
Hampshire to Bretton Woods, which you are very familiar with, 
is more than 50 miles away from any city or town, a very remote 
area in northern New Hampshire, in the White Mountains, that 
today does not have any broadband, according to the broadband 
service definition that we have, the kind of broadband speeds 
that we need. And here Bretton Woods came to us, we provided a 
grant so they can provide fiber there.
    Now this, as you know, is a very devastated part of New 
Hampshire with relatively low incomes, high unemployment for 
the State--the highest unemployment in the State, probably, 
because the paper mills shut down. What are the jobs of the 
future? I mean, there is tourism, there is second homes. But 
somebody who is coming to a second home in that beautiful part 
of New Hampshire cannot stay there, if they are from New York 
City, if they do not have broadband. So how are we going to 
bring money into that community for those service jobs, for 
everybody building it? We are creating jobs there to an area 
that does not have any broadband today. They are going to have 
broadband second to none with fiber to the home, more than 20 
megabits per second in an unserved part of New Hampshire. And 
we have tried to focus on those areas throughout the country 
and to go to those areas first. Some areas that are underserved 
by definition there might be some pockets of service there, but 
we are trying to bring them all up and really bridge the 
digital divide between the more populated areas and the less 
populated areas, and that involves a comprehensive approach to 
funding the entire service area.
    Senator Shaheen. Thank you.
    Thank you, Madam Chair.
    Chair Landrieu. Thank you. You all have been very good, and 
let us move to the second panel. Again, thank you all for your 
testimony. We appreciate it.
    As the second panel comes forward, just to save time, I am 
going to just go forward with their introductions as they are 
taking their seats. Again, thank you all so very much.
    Our first panelist will be Senator Gordon Smith, who has 
been welcomed here by many of his former colleagues. He now 
represents the National Association of Broadcasters as 
President and CEO. Welcome back, Senator.
    Next is former Congressman Steve Largent. He served in the 
House of Representatives for any number of terms between 1994 
and 2001. He is now President of CTIA-The Wireless Association 
and brings a little different perspective, of course, than 
Senator Gordon Smith. We are happy to have him.
    We have from Lafayette, Louisiana, Terry Huval at my 
request to testify today. He is Director of Lafayette Utilities 
Service. In addition, Mr. Huval speaks fluent French and 
requested that we conduct the hearing in French. On all of our 
behalf, I declined so it will be Mr. Huval in English today. We 
are thrilled to have you.
    Next we have Mr. Tom Gerke, Executive Vice Chairman of 
CenturyLink. Mr. Gerke brings years of industry and legal 
expertise to this company. He was in private practice before 
CenturyLink. He is headquartered in Monroe, Louisiana. We are 
extremely proud of this company as it has grown and expanded, 
and most recently signed an agreement to purchase Qwest, which 
puts them in the top among industry leaders in this country.
    And, lastly, we have Steve Friedman, who is currently Chief 
Operating Officer for Wave Broadband, a Kirkland, Washington-
based company that serves more than 170,000 customers located 
in communities in the states of Washington, Oregon, and 
California.
    I think we have had our change-out conducted, and we are so 
happy to have everyone here on the second panel. Senator Smith, 
we will begin with you.

    STATEMENT OF HON. GORDON H. SMITH, PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF BROADCASTERS

    Mr. Smith. Thank you, Madam Chair. In the interest of time 
and in respect of your schedule, I will put my extended remarks 
in the record and speak briefly to a few points.
    Chair Landrieu. Thank you. Without objection.
    Mr. Smith. Madam Chair, local broadcasters bring together 
communities with information that entertains them, information 
that often is life-saving. From Lake Charles, Louisiana, to 
Bangor, Maine, local broadcasters take great pride in providing 
America's families with local news, weather, sports, emergency 
information, and other highly valued programming. Broadcasters 
strongly support expanding access to high-speed broadband to 
every American and believe we can play an important role in 
helping to achieve that national goal.
    Due to the complex nature of this plan, I believe that 
Congress should have and take the time to fully scrutinize and 
dissect its recommendations. I thank Senator Snowe and Senator 
Kerry for the introduction of S. 649, the spectrum inventory 
legislation. It is imperative that we get all the facts so that 
we do this right.
    Local broadcasters are small businesses, and they rely on 
other small businesses for advertising and for serving your 
constituents. We must not jeopardize this fragile 
communications ecosystem with policy solutions that jeopardize 
this.
    It is important to remember, Senators, that we are not even 
a year into the digital transition. And at the direction of 
Congress, local broadcasters successfully transitioned to 
digital TV, giving back more than a quarter of the spectrum 
that TV broadcasting had. The Government spent nearly $3 
billion getting converter boxes. Broadcasters have spent $15 
billion making the digital transition. The American consumers 
have spent untold billion dollars getting new digital TVs. 
Local broadcasters are now offering hyperlocal, multi-casting 
programs in high definition, and they look forward to providing 
consumers with mobile digital television so you can see live 
stuff right here on your phone, and 3-D television in the 
future. That is the promise that was made to the broadcasting 
spectrum and to American consumers.
    I thank you, Chairwoman Landrieu, for your help in 
facilitating local broadcasters as first responders. In times 
of disasters, local broadcasters run towards the problem, not 
away from it. We stayed on the air during the Gulf Coast 
hurricanes, and when Washington was blanketed by two back-to-
back blizzards, essential emergency information was supplied to 
the residents of this national capital area. And in a day of 
terrorism, it is important to recognize that broadcasting is 
the one signal that literally could be the difference of life 
and death for people confronted with terrorist actions.
    I would like to put on the record, Madam Chair, how much 
broadcasters appreciated Chairman Genachowski coming to the NAB 
show in Las Vegas and stating that this Broadband Plan would 
never evolve from voluntary to compulsory. I would also like to 
say that, contrary to a report in the trades, the Chairman and 
I never reached any deal. What he said is what he said, and we 
are prepared to work with him.
    On the issue of voluntary, however, there is one piece of 
the plan that is of great concern to broadcasters, and that is, 
the spectrum fees that are proposed for broadcasters. We are 
concerned that this is a mechanism to force broadcasters, small 
businesses, especially who are small business broadcasters, 
that will force them off of the air. Make no mistake. Such a 
punitive measure, such a fee would be a devastating blow to 
small businesses that I represent in the broadcast industry and 
the communities that they serve and who serve your 
constituents.
    While not a part of the Broadband Plan, I cannot help but 
say that Congress should also resist shifting the scales of the 
fair market-based system of retransmission consent. The FCC 
should encourage the deployment of fixed wireless broadband 
services in rural areas using empty broadcast channels. If done 
the right way, this service has the ability to greatly increase 
rural penetration for hard-to-reach constituencies without 
taking spectrum from broadcasting. The NAB is pleased to be 
part of the discussion about the future of American 
communications, and simply put, any notion that we are looking 
at a world of broadband versus broadcast is false. It is a 
false choice. There are ways that we can help, and there are 
certainly ways that the broadband users today can build out 
their networks without compromising the essential service that 
broadcasters provide to the American people.
    [The prepared statement of Mr. Smith follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.062
    
    [GRAPHIC] [TIFF OMITTED] 71699.063
    
    [GRAPHIC] [TIFF OMITTED] 71699.064
    
    [GRAPHIC] [TIFF OMITTED] 71699.065
    
    [GRAPHIC] [TIFF OMITTED] 71699.066
    
    [GRAPHIC] [TIFF OMITTED] 71699.067
    
    [GRAPHIC] [TIFF OMITTED] 71699.068
    
    [GRAPHIC] [TIFF OMITTED] 71699.069
    
    [GRAPHIC] [TIFF OMITTED] 71699.070
    
    [GRAPHIC] [TIFF OMITTED] 71699.071
    
    [GRAPHIC] [TIFF OMITTED] 71699.072
    
    [GRAPHIC] [TIFF OMITTED] 71699.073
    
    [GRAPHIC] [TIFF OMITTED] 71699.074
    
    [GRAPHIC] [TIFF OMITTED] 71699.075
    
    [GRAPHIC] [TIFF OMITTED] 71699.076
    
    [GRAPHIC] [TIFF OMITTED] 71699.077
    
    [GRAPHIC] [TIFF OMITTED] 71699.078
    
    [GRAPHIC] [TIFF OMITTED] 71699.079
    
    [GRAPHIC] [TIFF OMITTED] 71699.080
    
    [GRAPHIC] [TIFF OMITTED] 71699.081
    
    [GRAPHIC] [TIFF OMITTED] 71699.082
    
    Chair Landrieu. Thank you very much, and that was an 
excellent statement. Let me ask you all if you could try to 
keep your comments to about 3 minutes each. We will submit your 
entire statement for the record, and then Senator Snowe and I 
both have a series of questions along with Senator Shaheen, and 
I am going to ask Senator Snowe to go first for the questions 
because she has got a 12 o'clock meeting and I have got a 
little bit more time.
    Mr. Largent. Congressman.

STATEMENT OF HON. STEVE LARGENT, PRESIDENT AND CHIEF EXECUTIVE 
             OFFICER, CTIA-THE WIRELESS ASSOCIATION

    Mr. Largent. On behalf of CTIA, I want to thank Chairwoman 
Landrieu and Ranking Member Snowe and all the Senators on the 
Committee for the opportunity to participate in today's hearing 
on the National Broadband Plan and its impact on small 
business.
    CTIA's members include wireless carriers, network equipment 
builders, handset manufacturers, integrators, application 
developers, each of which contributes to making the United 
States the most competitive, innovative wireless marketplace in 
the world. Large or small, CTIA's members are focused intensely 
on helping to provide wireless services and products that 
benefit every American consumer and business.
    CTIA's membership believes that the National Broadband Plan 
represents a significant opportunity to expand broadband 
Internet access to reach all Americans. This is especially true 
with respect to the spectrum and the need to address what the 
FCC Chairman has termed a ``looming spectrum crisis.'' Thus, we 
are excited by the plan's intensive focus on the need to make 
additional spectrum available for mobile broadband services. 
Accomplishing that goal quickly is critical.
    As the plan's author, Blair Levin, said last week, ``if we 
get the implementation of the mobile piece of the plan right, 
we can precipitate a massive private investment boom and build 
a world-leading broadband ecosystem. And if we get it wrong, we 
will cause our economy to suffer.'' We agree with Blair, and we 
are focused on helping to get it right.
    With adequate spectrum and continued significant private 
investment and innovation, we can ensure that every American 
has access to broadband at home, at work, at school, and in our 
public institutions. We believe that continued evolution 
towards always on, always available, high-speed wireless 
broadband has profound implications for every segment of our 
society, including America's small businesses.
    I am going to skip over some of my statement here and 
submit it for the record. But implementation of the spectrum 
recommendations in the plan, aided by the enactment of Senator 
Kerry and Snowe's Radio Spectrum Inventory Act will enable all 
of these companies and others to grow, while also helping to 
promote continued U.S. leadership in the wireless industry.
    Beyond addressing the looming spectrum crisis, policymakers 
can enhance small businesses' ability to succeed by reforming 
the Tax Code to better reflect the realities of our 
information-driven economy. Mobile devices are no longer a 
luxury for business; they are a necessity. The Tax Code must 
reflect this shift. And Senator Kerry's MOBILE Cell Phone Act 
would make a much needed change in the Tax Code by eliminating 
the outdated recordkeeping obligations devised in a day and age 
when the wireless device was called a car phone and a minute of 
air time cost an order of magnitude more than a minute of use 
does today. Requiring every person with an employer-provided 
device to comply with detailed call-by-call recordkeeping 
requirements might have made sense in the late 1980s, but it 
sure does not make sense today.
    I will just say the wireless industry looks forward to 
working with Congress, the FCC, and other stakeholders to 
ensure that every American consumer and business has access to 
robust mobile broadband service. By adopting the National 
Broadband Plan's spectrum recommendations, updating our tax 
policies, and continuing a strong commitment to encouraging 
private investment, we can make that vision a reality.
    I appreciate the opportunity to share these thoughts, and I 
look forward to your questions.
    [The prepared statement of Mr. Largent follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.083
    
    [GRAPHIC] [TIFF OMITTED] 71699.084
    
    [GRAPHIC] [TIFF OMITTED] 71699.085
    
    [GRAPHIC] [TIFF OMITTED] 71699.086
    
    Chair Landrieu. Thank you very much.
    Mr. Huval.

  STATEMENT OF TERRY HUVAL, DIRECTOR OF UTILITIES, LAFAYETTE 
              CITY-PARISH CONSOLIDATED GOVERNMENT

    Mr. Huval. Bonjour, Madame La Presidente. I could not pass 
it up. ``Madam Chair'' in French is ``Madame''----
    [Laughter.]
    Chair Landrieu. I told you he would do it if I did not----
    Mr. Huval. I thought you would enjoy that. I also want to 
thank Ranking Member Snowe. In the Northeast, of course, we 
share a very common heritage between--from my ancestors.
    My name is Terry Huval. I am the Director of Utilities for 
the Lafayette utility system, and I had some prepared remarks, 
but in consideration of time and what I have heard so far, I 
have something to share with you.
    The things that were being espoused during the first panel 
today are what we are doing in Lafayette today. We are 
providing 100 megabits per second of connectivity to our entire 
city. We do not discriminate between one side of town or the 
other. Everyone, the poor and the rich and the small 
businesses, all have access to the system. And we did not do it 
with $1 of Federal Government funds, State government funds, or 
local taxes. We did it because people in our community said 
they are willing to allow us to borrow the money to move 
forward with this initiative. And you would think that that 
would be, you know, a pretty easy place for us to go because we 
are not borrowing money--not having to get tax dollars. But I 
will tell you, the challenge has been great.
    The 1996 Telecommunications Act provided language that said 
that any entity could provide telecommunications services. 
Local governments perceived that as meaning that they could 
provide that type of service. We found out later on that 
through cases that went to the U.S. Supreme Court, a State 
could prevent or adjust the ability for local governments to 
get into this kind of business. And so in Louisiana, the Local 
Fair Competition Act, Local Government Fair Competition Act was 
passed in 2004, which, despite its label--its label has been 
anything but--excuse me, I have a cold--has been anything but a 
fair act. It provides numerous costs and challenges for us to 
overcome to provide these services to our customers, and 
continued intimidation by Cox Communications and Bell South 
over the years to try to make it more difficult and more costly 
for us to provide these services.
    We believe that the simple measure of trying to get 
complete shackles off of local governments to provide these 
services will have the greatest impact on getting broadband 
out, because then you will have a truly competitive option that 
companies who decide not to make those investments, even though 
they are requested to. In Lafayette, we asked the cable 
company--the telephone company to provide these services. They 
said no, Lafayette was too small, they were not going to make 
that kind of investment. But yet when we try and do it 
ourselves, they oppose us.
    So if you have local governments able to provide these 
kinds of services, then the private companies will get it. They 
will either decide they are going to do it, or they are going 
to allow local governments to provide the services.
    We could do this ourselves. Since 1896, Lafayette and many 
other public power systems have built and operated complex 
electrical utility systems, and we can do this. And we are 
doing it already in Lafayette.
    My written testimony has much more complete stories about 
what we went through, but suffice it to say that our statement 
is--we have the solution to this problem.
    [The prepared statement of Mr. Huval follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.087
    
    [GRAPHIC] [TIFF OMITTED] 71699.088
    
    [GRAPHIC] [TIFF OMITTED] 71699.089
    
    [GRAPHIC] [TIFF OMITTED] 71699.090
    
    [GRAPHIC] [TIFF OMITTED] 71699.091
    
    [GRAPHIC] [TIFF OMITTED] 71699.092
    
    [GRAPHIC] [TIFF OMITTED] 71699.093
    
    [GRAPHIC] [TIFF OMITTED] 71699.094
    
    [GRAPHIC] [TIFF OMITTED] 71699.095
    
    [GRAPHIC] [TIFF OMITTED] 71699.096
    
    [GRAPHIC] [TIFF OMITTED] 71699.097
    
    [GRAPHIC] [TIFF OMITTED] 71699.098
    
    [GRAPHIC] [TIFF OMITTED] 71699.099
    
    [GRAPHIC] [TIFF OMITTED] 71699.100
    
    [GRAPHIC] [TIFF OMITTED] 71699.101
    
    [GRAPHIC] [TIFF OMITTED] 71699.102
    
    [GRAPHIC] [TIFF OMITTED] 71699.103
    
    Chair Landrieu. Thank you very much, and I am glad that you 
are here to testify, and I wanted you to be because I know this 
is a very controversial issue that has come before the Commerce 
Department particularly. I think these views are important to 
be heard by small businesses that may be in towns that have 
municipal providers as this debate goes on to have a voice at 
the table to see how we work through it. We are extremely 
proud, actually I am, of Lafayette for being one of the first 
parishes in the whole country to have virtually universal high-
speed service. How you got there is a different subject, but 
the results are, you know, very impressive, and I want to thank 
you for being here.
    Mr. Gerke.

    STATEMENT OF THOMAS A. GERKE, EXECUTIVE VICE CHAIRMAN, 
                          CENTURYLINK

    Mr. Gerke. Good morning, Madam Chair, Ranking Member Snowe, 
and members of the Committee. Thanks for the opportunity to 
testify today on these Federal efforts to expand broadband 
across America for all of our small businesses.
    CenturyLink is one of the nation's leading rural providers 
of voice, broadband, data, and video services with about 7.2 
million customers spread across 33 States. Small businesses and 
entrepreneurs are an important part of our past, our present, 
and our future. In fact, CenturyLink began as a small business 
in rural northeast Louisiana. In 1930, our founders, Clarke and 
Marie Williams, bought a small family telephone business for 
$500, with just 75 paid subscribers and a switchboard set up in 
their front parlor. Today, of course, we have a national 
footprint operating in hundreds of rural communities, but our 
core values and our commitment to service, including service to 
small businesses, has not wavered.
    CenturyLink serves over 414,000 small businesses, including 
nearly 12,000 in Louisiana alone. We understand how important 
broadband is to small businesses, especially in rural 
communities, where it is a central component of economic 
development and reach.
    As just one example, a small tree nursery that we serve in 
rural central Louisiana was able to extend its sales from a 
purely local market into a much larger multi-state region, 
growing the business, bringing economic development and jobs to 
the community.
    Just as traditional phone service was critical to linking 
to the rest of the world, in today's environment broadband is 
now the key enabler for communications, entertainment, and 
commerce.
    The National Broadband Plan sets out an important framework 
for reforming Federal policies and regulations that impact both 
the availability and affordability of broadband. We appreciate 
Chair Landrieu's leadership in highlighting the need for the 
plan to focus on small businesses, especially in rural areas.
    For small businesses in rural communities, perhaps the most 
important recommendation in the National Broadband Plan is to 
reform universal service and intercarrier compensation. Both 
issues have a tremendous impact on the economic case for 
bringing broadband to rural communities, especially because all 
telecom providers rely on rural carriers, carriers of last 
resort like CenturyLink, to carry voice and data traffic in the 
sparsely populated areas where cable and wireless competitors 
often do not serve.
    Universal service and intercarrier comp payments deliver 
the support necessary for carriers to provide service quality 
and rates comparable to those in large urban areas. This is one 
of the key mechanisms that helps keep broadband and other 
services affordable for small businesses.
    As the nation focuses on broadband deployment, we believe 
our fiber-rich core wireline networks offer the best, fastest, 
and most economical hope to meet the rapidly increasing demands 
of small businesses. As the FCC considers its open Internet 
proceedings, we urge its leaders to work closely with broadband 
providers and companies that have committed to continue 
providing a positive Internet experience. We urge the FCC and 
Congress to avoid a heavy-handed regulatory approach that would 
impose legacy voice telephone regulations on modern networks.
    In summary, I am pleased to share with you last week our 
announcement of the actual of Qwest. We believe this 
combination is an important, positive transaction not only for 
consumers but also for the small businesses. The combined 
networks offer incredible potential to accelerate deployment 
and improve broadband services. Our goal is to provide the 
highest quality and affordable voice and broadband services for 
our customers. We trust the members of this Committee and the 
FCC will see the strong public interest benefits of this 
merger, its great potential, and join us in gaining the 
necessary state and federal approvals as promptly as possible.
    We look forward to your questions.
    [The prepared statement of Mr. Gerke follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.104
    
    [GRAPHIC] [TIFF OMITTED] 71699.105
    
    [GRAPHIC] [TIFF OMITTED] 71699.106
    
    [GRAPHIC] [TIFF OMITTED] 71699.107
    
    [GRAPHIC] [TIFF OMITTED] 71699.108
    
    Chair Landrieu. Thank you.
    Mr. Friedman.

 STATEMENT OF STEVE FRIEDMAN, CHIEF OPERATING OFFICER OF WAVE 
       BROADBAND AND CHAIRMAN, AMERICAN CABLE ASSOCIATION

    Mr. Friedman. Thank you. As an association representing 
small and medium-sized independent cable operators, we bring a 
unique perspective on the broadband marketplace. Our members 
have historically served communities where the ``big guys'' 
find it unattractive to serve, ranging from rural parishes in 
Louisiana to more urban and suburban markets in all 50 States.
    Today cable offers access to high-speed broadband service 
to 95 percent of the country, the vast majority of which 
receives speeds of at least three megabits per second, faster 
than most DSL providers.
    As a result, small businesses are increasingly turning to 
cable for broadband. Cable is the best technology in the ground 
today to meet the administration's goals of delivering 100 meg 
broadband speed to all. With the advent of DOCSIS 3.0, cable 
operators can deliver these speeds over their existing cable 
network without the need for Government funding.
    However, still has an important role to play. ACA 
recommends that Congress and the FCC address four items.
    First, many focus on the need to upgrade last-mile 
infrastructure, the final network connection to the user; 
however, more attention needs to be paid to the middle mile, 
that part of the network that runs between a broadband 
provider's system and the Internet backbone. For ACA members, 
the middle-mile links available are often high-cost, low-
capacity pipes creating a bottleneck that slows data speeds to 
our customers. ACA members have considered constructing their 
own middle-mile links, but the construction is cost 
prohibitive. We are pleased by the NTIA's focus on the middle 
mile in the second round and the FCC's focus on the issue in 
the National Broadband Plan. The key now is to ensure the FCC 
acts quickly on its recommendations.
    Second, for a smaller cable operator with limited network 
capacity to provide DOCSIS 3.0 speeds, the provider must come 
up with additional bandwidth. For many operators, the most 
cost-effective way of doing this is by transitioning analog 
channels to digital. To ensure that cable operators' 
subscribers do not lose access to the new digital programming, 
the cable operator must provide a digital set-top box for each 
of its subscribers' TVs. ACA is pleased that the FCC recently 
recognized the benefits of allowing smaller operators to 
purchase and deploy low-cost, low-functionality HD set-top 
boxes. This modification will free up channel capacity needed 
to offer customers broadband speeds of up to 100----
    Chair Landrieu. If you could just wrap up in 30 seconds.
    Mr. Friedman. Okay. Finally, we support the 
administration's goals of providing more broadband services to 
consumers in populated areas of the country. However, we are 
disappointed that RUS and NTIA have funded projects in the 
first round that would overbuild ACA members and others who 
have already invested private capital to deploy broadband in 
their communities.
    On behalf of ACA, we appreciate what Congress, the FCC, and 
the funding agencies are doing to support broadband expansion 
and growth in smaller markets and rural areas.
    Thank you for your time and attention, and I welcome your 
questions.
    [The prepared statement of Mr. Friedman follows:]
    [GRAPHIC] [TIFF OMITTED] 71699.109
    
    [GRAPHIC] [TIFF OMITTED] 71699.110
    
    [GRAPHIC] [TIFF OMITTED] 71699.111
    
    [GRAPHIC] [TIFF OMITTED] 71699.112
    
    [GRAPHIC] [TIFF OMITTED] 71699.113
    
    [GRAPHIC] [TIFF OMITTED] 71699.114
    
    [GRAPHIC] [TIFF OMITTED] 71699.115
    
    [GRAPHIC] [TIFF OMITTED] 71699.116
    
    [GRAPHIC] [TIFF OMITTED] 71699.117
    
    Chair Landrieu. Thank you.
    Senator Snowe.
    Senator Snowe. Thank you. Thank you all very much for your 
excellent testimony on what is a very complex subject, 
depending on your perspective and vantage points, so it is 
important for us to get it right as we continue to spend the 
billions of dollars that are already embedded in the stimulus 
plan, for example, and going forward, the FCC's National 
Broadband Plan.
    Senator Smith, I will start with you and then move to 
Congressman Largent. On the question of spectrum allocation--
because I think that is obviously a crucial issue that 
unfortunately I did not get to this morning with the FCC 
Chairman. Obviously, your association prefers it to be a 
voluntary approach, so exactly how do you think we should 
implement the spectrum allocation in terms of using vacant 
broadcast channels? Is that one way of being able to accomplish 
that goal? Are there innovative ways of leveraging many 
possibilities without going the route that is being proposed 
and suggested under the FCC's plan?
    Mr. Smith. Senator Snowe, one of two things can happen to 
make sure this does not become compulsory. But first it has to 
be recognized that broadcasting is a highly efficient use of 
spectrum. It is one to everyone. Broadband is one to one, and 
it is spectrum hogging. To utilize their space more 
effectively, they just simply have to invest the capital to 
make these connections, these last-mile connections. That can 
be done without invading the essential services of broadcasting 
to the American people and take away the promise of multi-
casting, HD, 3-D, all of these things that we think are 
valuable to the American people still so it is not a choice of 
one or the other. So they can either build it out and use their 
space more effectively, or give broadcasters your blessing to 
utilize that space and lease it to those who want to be in the 
broadband business. Either way, that will satisfy most of the 
land mass of America.
    Where you run into problems is in big urban centers where 
there is a shortage.
    Senator Snowe. And do you think the spectrum inventory 
legislation that Senator Kerry and I have introduced will be 
one way of determining how the existing spectrum is being used 
and by whom and so forth? Do you think that should be first or 
is it possible to have it occur simultaneously? It is going to 
take multiple years and also determine how we should 
reallocate.
    Mr. Smith. Well, given the importance of broadband and 
broadcast to the American people, it does seem to me that the 
inventory ought to occur first so that you decisionmakers in 
the Congress have actually the facts as to what is being used 
and what is not, what space is being occupied and serving the 
American people and what could be obtained.
    But, again, the broadband space, if they invest the 
capital, triple the number of the towers, you are going to fix 
most of the problem that is out there.
    Senator Snowe. Congressman Largent, to this point, how much 
spectrum does your membership believe you need?
    Mr. Largent. Well, we made a filing at the FCC for 800 
megahertz, and that was based upon some information that we had 
gotten, what other countries are doing, how they are allocating 
spectrum for wireless purposes in their space. And the 
interesting thing is that in most other countries, they do not 
have nearly the number of competitors that we have in this 
country. In the wireless industry, there is a lot of 
competition, and so that divides up the spectrum even more so.
    But we think that there is spectrum that is available, you 
know, whether it is broadcasters or satellite or other 
spectrum, it has already been lined up to be auctioned. But we 
are just saying that we need the spectrum brought to auction as 
quickly as possible. The thing is that the last two auctions 
that have occurred at the FCC in the last 3 or 4 years, that 
spectrum took somewhere between 10 and 14 years from the time 
it was identified to the time it was auctioned. And we cannot 
afford to wait for spectrum to be auctioned, you know, 10 or 14 
years in order to keep up with the pace of competition that we 
have in this country.
    Senator Snowe. Well, do you think that it is going to be 
important for all industries to be working together to 
determine how best to allocate or to use it because there are 
so many users of the spectrum with specific reference to 
Federal agencies, for example? Is it possible that all the 
industries can work together on this in partnership with the 
FCC, and obviously Congress being a catalyst in this regard? 
Because I wonder if we have really a true understanding of how 
much allocation is really necessary. You mentioned 800, but it 
could be 500--I know FCC has proposed 500 over 10 years and 300 
within 5 years.
    Mr. Largent. Yes, I think the spectrum inventory bill is a 
great step in the right direction. We supported the spectrum 
inventory bill, and we do today. But I think that gives us a 
good start on knowing where the spectrum is, what is available, 
what is being used, and the potential for the future.
    Senator Snowe. Thank you.
    Thank you, Madam Chair.
    Chair Landrieu. Thank you very much.
    Mr. Gerke, let me start with you. The former panel, Larry 
Strickling from Commerce, responded to a question by one of the 
panelists--I think it was Senator Shaheen--that said we have 
gotten some pushback in our states as these grants have gone 
out over the issue of potentially unfair competition between 
the Government funding certain projects in rural or underserved 
areas and then the private sector competing.
    Could you comment from your perspective as now potentially 
one of the largest servers of rural areas, do you see a way 
forward for the Government and the private sector to work 
together to get this job done for America? Or do you think it 
should be done only by the private sector or only by the 
Government? Is it possible to work this partnership in an 
effective way? And if so, how would you suggest we go forward?
    Mr. Gerke. I think a couple of things on that point. It is 
a very good question. First is I think with the comments that 
have been received by the Administrators, hopefully they have 
got the right level of sensitivity that this project or this 
funding is not about building bridges next to bridges, but 
bridges for those who cannot yet cross the digital divide, and 
so I think that type of sensitivity. We will be working very 
closely with them, as will many others in the industry, to make 
sure we identify areas of duplication so, frankly, with their 
best intentions, they can avoid those things.
    I think the focus and keeping the focus primarily on the 
unserved and being a little careful not to use underserved 
definitions that allow you to overbuild in areas where they are 
there. There is a risk of overbuilding and taking anchor 
institutions from fragile business plans in rural America, and 
if you take the schools and the courthouse and a few other 
things away, the ability to serve the farmlands and the truly 
rural and the most difficult and the last to be served can 
collapse.
    So I think there is definitely a place for funding, but 
through proper sensitivity, to not overbuilding, is 
understanding the fragile economic business model that exists, 
and it is a keen focus of constantly saying who does not have 
that bridge yet, you must build a single bridge for those folks 
to cross the divide.
    Chair Landrieu. Thank you. I will come back with a second 
question in just a minute, but, Mr. Huval, I know that you all 
went through several years of this debate both in the Louisiana 
Legislature and then through the court system to finalize 
basically your plan. The FCC is going to be considering 
potential regulatory either barriers, maybe burdens to 
municipalities to deploy.
    What would your extended comments be for another minute or 
two about what you would like to see either included or not 
included in that plan? And be as specific as you can.
    Mr. Huval. Well, as things stand today in Louisiana, for 
example, a municipal utility system can choose to expand its 
assets to serve either existing growth or new territories, 
simply by going to its city council, making a case, and having 
the city council support that and moving forward with it. The 
same opportunity should be available for local governments to 
deploy telecommunications services.
    And so our perspective is a hands-off approach. Let the 
local governments who are listening to the people on the 
ground, the business people on the ground, small businesses, 
the residential customers make those decisions and move forward 
with it without having any of the things that strap you back.
    You know, when we negotiated this Local Government Fair 
Competition Act, we spoke very candidly with the telephone 
companies and the cable companies at the table during the 
negotiation as to how we would go about doing that. Once the 
act was passed, they all got a severe case of amnesia and 
started suing us on things that we had already agreed upon in 
principle because the A's and the I's were not quite exactly 
what we had previously agreed to in their perspective. 
Ultimately the Supreme Court 3 years later, and $4 million 
later, supported our position. But lesser communities would 
have said, ``I give up.'' And, in fact, no city in Louisiana 
has tried to do what we have done even though the law is there.
    So, clearly, it is not an enabling legislation. It is 
something that limits entities from doing what they need to do. 
And I think that the best thing that could happen is to remove 
all those State barriers and let local governments do what 
local governments do best: respond to their constituency.
    Chair Landrieu. There is a very important question, you 
know, before the country right now as to how to get this 
accomplished. We have gone through this many times before, when 
electricity was invented, and the question is how would we get 
electricity to every home and to every business, whether you 
lived in a mansion in a big city or whether you lived on a farm 
150 miles away from anyone. Of course, we know the history.
    The same thing, I would imagine, with telephones. To some 
degree we still have the same issue with roads, whether they 
are private roads that can be built and supported by tolls, or 
they are generally supported with general tax dollars to places 
that there are not enough cars going down the road to support 
it by tolls. Do we build it or do we leave people without 
access to a road?
    We have been through this issue in this country before, and 
it is going to be interesting to see how it turns out. That is 
not technically the jurisdiction of this Committee, as you 
know. Commerce will be deciding or recommending more specific 
legislation to all of us.
    What is the jurisdiction of this Committee is how fast, how 
cheaply, and how quickly we can get broadband Internet service 
to the small businesses in this country to help them create the 
kind of jobs necessary to be successful. I recognize among you 
at the table--I really appreciate, Mr. Gerke, your brief 
history of Century Telephone, and I actually knew Mr. Clarke, 
as many of us did personally, who started the company, that 
you, too, once were a small business with a $500 investment and 
a few employees. To honor and acknowledge that among those 
providing the service at one time were extremely small 
businesses that have grown and to honor, of course, you, 
Senator Smith, with your commitment to small broadcasters, many 
of whom are still very small businesses around the country. So 
we want to be sensitive.
    Let me ask you, Mr. Gerke--and we are going to have to 
probably close out with one more question to everyone. This 
merger that is pending, how--I mean specifically--is it going 
to help, and if there are ways that you think you are going to 
be challenged to provide better service at lower cost to the 
businesses now and, what is it, a 33-state area? How is this 
merger specifically going to help, in your view?
    Mr. Gerke. Senator, I think that is a very fair question, 
and especially as it relates to small businesses as we expand 
from the 33 to what will be a 37-state footprint.
    First, that additional reach of combining the two networks, 
including the long-haul network of Qwest, will cause us to be a 
more formidable competitor to the two large long-haul carriers; 
and, therefore, for regional businesses and other small 
businesses, being able to offer them additional competition, 
very viable, very seamless.
    Second, we have been at the forefront of bring IP TV to 
markets. We have brought it to three markets. We are rolling it 
out to five additional markets at CenturyLink. The network 
within Qwest is well suited to continue rolling out video, 
facilities-based competition and providing consumer choice 
between not only the cable company but another facilities-based 
video provider. So two strong points of additional competition.
    Our COO, Karen Puckett, has a proven ability to implement a 
local go-to-market basis where we put general managers and 
regional vice presidents much closer to our small businesses 
and customers to be much more responsive. As a result, we have 
seen increased broadband penetration and great success by being 
close.
    The scale and scope will allow us to add offerings that 
complement our existing offerings, such as data hosting, to 
help small businesses have the kind of, you know, Web-based and 
Internet capabilities necessary to continue to grow their 
company on a by-the-drink basis without having to make large 
capital investments.
    So when you combine that with, you know, no new data, 
proven track record, a mix of the two companies, I think it is 
a compelling case both for small businesses and it is a very 
compelling case of public interest for prompt approval.
    Chair Landrieu. Okay. I am going to ask each of you, 
starting with you, Senator, to finish up with just 30 seconds 
or 1 minute of something you want to put on the record that we 
have not had the time--of course, we have been so pressed for 
time--to ask you this morning. Then I do want to say this 
hearing has been very illuminating and instructive. I am going 
to call a roundtable in about 3 weeks to hear from small 
business owners that use broadband Internet service. We are 
going to have a panel of small businesses. I am going to ask 
the staff to identify whose business model has been greatly 
enhanced by their ability to get high-speed quality service. 
Then I am going to include a panel of businesses that are not 
yet connected to hear what challenges they are finding and what 
they think in terms of how we should move forward. So we are 
going to give a voice to small businesses at this roundtable, 
and I will announce when that will be, but it will be sometime 
in the next 2 to 3 weeks.
    Mr. Smith.
    Mr. Smith. Chair Landrieu, I would simply want to emphasize 
that the choice is not broadband versus broadcast. That is a 
false choice. The American people, if you ask them, would tell 
you they want both. There is a way to get both, and it is 
through investment and a lot of hard work, stripping away some 
of the rules that impede the investment or allowing 
broadcasters to have the opportunity to volunteer to help fix 
this problem without compulsion and without taxes and fees that 
are designed to put small businesses, small broadcasters out of 
business. That is not in the American interest in a day of 
natural and human-caused tragedies. Broadcasting represents an 
enormous service and an enormous value to the American people 
still.
    Chair Landrieu. Thank you.
    Congressman Largent.
    Mr. Largent. Chairwoman, I would say that I represent the 
industry that brings broadband to the person, not broadband to 
the home, not broadband to the business, but broadband to the 
person. And in that vein, I would say and emphasize again that 
my testimony here today is to say we are going to need 
additional spectrum resources in the near future, not 20 years 
from now but in the next 5 to 10 years. We are going to need 
additional spectrum resources to enable us to bring that 
broadband to the person all over the country.
    Chair Landrieu. Whether that person is sitting in a tractor 
out in the middle of a field or whether they are standing on 
Fifth Avenue in New York.
    Mr. Largent. You bet.
    Chair Landrieu. You want to be able to do that, and for 
American businesses, they need that to happen, or business 
people, they need that to happen.
    Mr. Huval.
    Mr. Huval. Yes, in Lafayette, we are offering 10 megabits 
per second, upload and download, for 29 bucks for residential 
customers and 100 megabits per second for $200. The upload is 
an extremely important aspect here because many times 
businesses that need to upload high-intensity files cannot do 
so or it is very frustrating to do so because typically upload 
fees are about one-tenth what the download fee is. So a company 
like golfballs.com in Lafayette, which conducts its business 
all over the world, cannot upload videos to show customers how 
to use their prospective products without having an upload 
speed that is significant.
    We already are talking to health care providers about 
having MRIs be able to be seen by doctors in their homes 
instead of a doctor having to be called out to the hospital. We 
already had a live teleconferencing between San Francisco 
students and Lafayette students to collaborate on a project. 
The motion picture industry has already seen the value of this 
type of infrastructure in place.
    So the thing is that this is a huge entrepreneurial 
opportunity that brings entrepreneurs out of their home, when 
they are in their home, or a small business to do some really 
great and positive things. It is an enabler. It is not a 
limiter. And so our major point is that this type of 
infrastructure is what we need to have. We need to all set the 
target and say here is where we want to be and then ask 
everybody at the table and say, ``Who is going to get us there 
fastest?'' And if the private sector can, we believe that they 
should. But if the private sector decides to play games with 
the system, as we have seen so many of them--not all of them, 
but so many of them do it in the past. That should not count 
anymore.
    Chair Landrieu. Mr. Gerke.
    Mr. Gerke. I think of the three-legged stool that supports 
our ability as a carrier of last resort to serve small 
businesses and consumers in rural America. The first leg is the 
reasonable and appropriate access charges to use the network. 
The second is universal service funding. And the third is the 
old blended business plans between the more dense market and 
the less dense market. All three of those legs of the stool are 
under serious attack, so I applaud the National Broadband 
Plan's approach to not abruptly changing things that would end 
our access to the necessary capital to deploy broadband to 
small business. Looking at 10-year transition periods I think 
is very important. And then continuing to understand that there 
has to be the foundation as these different legs of the stool 
change, that there still has to be a solid foundation to 
support the one carrier that has to and has that carrier-of-
last-resort obligation to serve every consumer, every small 
business in the footprint regardless of how far down the farm 
road they are.
    Thank you.
    Chair Landrieu. Mr. Friedman.
    Mr. Friedman. Well, I continue to believe that if you want 
to deploy broadband, our members are the ones that are 
deploying it every day. We are continuing to build our network 
out, and from the standpoint of my company, we have upgraded 
our system so that we are in a position where, with additional 
spectrum available on our system, we will be able to offer 100 
meg service to our customers.
    We have worked very hard to make sure we have the middle 
mile available because that is the part that clogs the network, 
that prevents customers from really achieving these speeds.
    So I continue to believe that our members are the ones who 
are going to continue to reach out and edge our and serve the 
unserved areas. And the way we can do that with help from 
Government is to really remove the exemptions that make it 
difficult for us to build to the small businesses that we need 
to reach out to, by removing exemptions from the pole 
attachments from municipalities, removing additional costs and 
burdens that are given to us such as retransmission consent, 
which affects all the services we offer, and yet impacts the 
amount of capital we have available to build out to serve these 
areas.
    Chair Landrieu. Thank you all very much. It has been very, 
very informative, and again, I look forward to our second 
series on the roundtable where we are hearing from small 
businesses that use these services and how critical they are. 
We could not do this fast enough, in my view, to help this 
economy grow.
    Thank you, and the meeting is adjourned.
    [Whereupon, at 12:17 p.m., the Committee was adjourned.]
                      APPENDIX MATERIAL SUBMITTED

                              ----------                              

[GRAPHIC] [TIFF OMITTED] 71699.118

[GRAPHIC] [TIFF OMITTED] 71699.119

[GRAPHIC] [TIFF OMITTED] 71699.120

[GRAPHIC] [TIFF OMITTED] 71699.121

[GRAPHIC] [TIFF OMITTED] 71699.122

[GRAPHIC] [TIFF OMITTED] 71699.123

[GRAPHIC] [TIFF OMITTED] 71699.124

[GRAPHIC] [TIFF OMITTED] 71699.125

[GRAPHIC] [TIFF OMITTED] 71699.126

[GRAPHIC] [TIFF OMITTED] 71699.127

[GRAPHIC] [TIFF OMITTED] 71699.128

[GRAPHIC] [TIFF OMITTED] 71699.129

[GRAPHIC] [TIFF OMITTED] 71699.130

[GRAPHIC] [TIFF OMITTED] 71699.131

[GRAPHIC] [TIFF OMITTED] 71699.189

[GRAPHIC] [TIFF OMITTED] 71699.135

[GRAPHIC] [TIFF OMITTED] 71699.136

[GRAPHIC] [TIFF OMITTED] 71699.137

[GRAPHIC] [TIFF OMITTED] 71699.138

[GRAPHIC] [TIFF OMITTED] 71699.139

[GRAPHIC] [TIFF OMITTED] 71699.140

[GRAPHIC] [TIFF OMITTED] 71699.141

[GRAPHIC] [TIFF OMITTED] 71699.142

[GRAPHIC] [TIFF OMITTED] 71699.143

[GRAPHIC] [TIFF OMITTED] 71699.144

[GRAPHIC] [TIFF OMITTED] 71699.145

[GRAPHIC] [TIFF OMITTED] 71699.188

[GRAPHIC] [TIFF OMITTED] 71699.147

[GRAPHIC] [TIFF OMITTED] 71699.148

[GRAPHIC] [TIFF OMITTED] 71699.149

[GRAPHIC] [TIFF OMITTED] 71699.150

[GRAPHIC] [TIFF OMITTED] 71699.151

[GRAPHIC] [TIFF OMITTED] 71699.152

[GRAPHIC] [TIFF OMITTED] 71699.153

[GRAPHIC] [TIFF OMITTED] 71699.154

[GRAPHIC] [TIFF OMITTED] 71699.155

[GRAPHIC] [TIFF OMITTED] 71699.156

[GRAPHIC] [TIFF OMITTED] 71699.157

[GRAPHIC] [TIFF OMITTED] 71699.158

[GRAPHIC] [TIFF OMITTED] 71699.159

[GRAPHIC] [TIFF OMITTED] 71699.160

[GRAPHIC] [TIFF OMITTED] 71699.161

[GRAPHIC] [TIFF OMITTED] 71699.162

[GRAPHIC] [TIFF OMITTED] 71699.163

[GRAPHIC] [TIFF OMITTED] 71699.164

[GRAPHIC] [TIFF OMITTED] 71699.165

[GRAPHIC] [TIFF OMITTED] 71699.166

[GRAPHIC] [TIFF OMITTED] 71699.167

[GRAPHIC] [TIFF OMITTED] 71699.168

[GRAPHIC] [TIFF OMITTED] 71699.169

[GRAPHIC] [TIFF OMITTED] 71699.170

[GRAPHIC] [TIFF OMITTED] 71699.171

[GRAPHIC] [TIFF OMITTED] 71699.172

[GRAPHIC] [TIFF OMITTED] 71699.173

[GRAPHIC] [TIFF OMITTED] 71699.174

[GRAPHIC] [TIFF OMITTED] 71699.175

[GRAPHIC] [TIFF OMITTED] 71699.176

[GRAPHIC] [TIFF OMITTED] 71699.177

[GRAPHIC] [TIFF OMITTED] 71699.178

[GRAPHIC] [TIFF OMITTED] 71699.179

[GRAPHIC] [TIFF OMITTED] 71699.180

[GRAPHIC] [TIFF OMITTED] 71699.181

[GRAPHIC] [TIFF OMITTED] 71699.182

[GRAPHIC] [TIFF OMITTED] 71699.183

[GRAPHIC] [TIFF OMITTED] 71699.184

[GRAPHIC] [TIFF OMITTED] 71699.185

[GRAPHIC] [TIFF OMITTED] 71699.186

[GRAPHIC] [TIFF OMITTED] 71699.187



                                  
