[Senate Hearing 114-556]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-556

                    ENSURING INTERMODAL USF SUPPORT 
                           FOR RURAL AMERICA

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

                                HEARING

                               BEFORE THE

    SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, INNOVATION, AND THE 
                                INTERNET

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 4, 2016

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                  Adrian Arnakis Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
                                 ------                                

        SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, INNOVATION, 
                            AND THE INTERNET

ROGER F. WICKER, Mississippi,        BRIAN SCHATZ, Hawaii, Ranking
    Chairman                         MARIA CANTWELL, Washington
ROY BLUNT, Missouri                  CLAIRE McCASKILL, Missouri
MARCO RUBIO, Florida                 AMY KLOBUCHAR, Minnesota
KELLY AYOTTE, New Hampshire          RICHARD BLUMENTHAL, Connecticut
TED CRUZ, Texas                      EDWARD MARKEY, Massachusetts
DEB FISCHER, Nebraska                CORY BOOKER, New Jersey
JERRY MORAN, Kansas                  TOM UDALL, New Mexico
DAN SULLIVAN, Alaska                 JOE MANCHIN III, West Virginia
RON JOHNSON, Wisconsin               GARY PETERS, Michigan
DEAN HELLER, Nevada
CORY GARDNER, Colorado
STEVE DAINES, Montana
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 4, 2016.................................     1
Statement of Senator Schatz......................................     1
    Prepared statement of Hon. Roger F. Wicker, U.S. Senator from 
      Mississippi................................................     1
Statement of Senator Wicker......................................    17
Statement of Senator Moran.......................................    43
Statement of Senator Heller......................................    45
Statement of Senator Manchin.....................................    47
Statement of Senator Gardner.....................................    50
Statement of Senator Daines......................................    53
Statement of Senator Blunt.......................................    55
Statement of Senator Klobuchar...................................    60
Statement of Senator Ayotte......................................    62

                               Witnesses

Darrington Seward, Managing Partner, Seward & Son Planting 
  Company........................................................     3
    Prepared statement...........................................     5
Steven K. Berry, President and Chief Executive Officer, 
  Competitive Carriers Association...............................    10
    Prepared statement...........................................    12
James G. Carr, CEO, All Points Broadband, on behalf of the 
  Wireless Internet Service Providers Association (WISPA)........    17
    Prepared statement...........................................    19
Michael Rapelyea, Vice President for Government Affairs, ViaSat, 
  Inc............................................................    26
    Prepared statement...........................................    28
LeRoy T. Carlson, Jr., Chairman, United States Cellular 
  Corporation....................................................    34
    Prepared statement...........................................    35

                                Appendix

Response to written questions submitted to Darrington Seward by:
    Hon. Roger F. Wicker.........................................    65
Response to written question submitted to Steven K. Berry by:
    Hon. Roger F. Wicker.........................................    66
    Hon. Dan Sullivan............................................    67
Response to written question submitted to James G. Carr by:
    Hon. Deb Fischer.............................................    67
    Hon. Dan Sullivan............................................    68
    Hon. Cory Booker.............................................    69
Response to written question submitted to Michael Rapelyea by:
    Hon. Deb Fischer.............................................    69
Response to written question submitted to LeRoy T. Carlson, Jr. 
  by:
    Hon. Deb Fischer.............................................    70
    Hon. Dan Sullivan............................................    72

 
                    ENSURING INTERMODAL USF SUPPORT 
                           FOR RURAL AMERICA

                              ----------                              


                       THURSDAY, FEBRUARY 4, 2016

                               U.S. Senate,
       Subcommittee on Communications, Technology, 
                      Innovation, and the Internet,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:38 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Roger Wicker, 
Chairman of the Subcommittee, presiding.
    Present: Senators Wicker [presiding], Blunt, Ayotte, 
Fischer, Moran, Sullivan, Heller, Gardner, Daines, Schatz, 
Klobuchar, Blumenthal, Booker, and Manchin.

            OPENING STATEMENT OF HON. BRIAN SCHATZ, 
                    U.S. SENATOR FROM HAWAII

    Senator Schatz. Good morning. This hearing will come to 
order.
    Senator Wicker is on his way back from the Prayer 
Breakfast, so he asked that I gavel in and get us started. 
Senator Wicker's opening statement will appear in the record.
    [The prepared statement of Senator Wicker follows:]

     Prepared Statement of Hon. Roger F. Wicker, U.S. Senator from 
                              Mississippi
    Alongside my good friend and colleague Ranking Member Schatz, I am 
glad to convene the first hearing of 2016 in the Subcommittee on 
Communications, Technology, Innovation and the Internet.
    As we all know, consumer demand for broadband, across many 
different technological platforms, continues to grow. While positive 
strides have certainly been made across the country, deployment to 
rural and hard-to-reach areas still lags behind.
    Applications such as precision agriculture, which we will hear 
about today, are revolutionizing crop production. Without wireless 
connectivity however, farmers aren't able to take advantage of new 
technologies in the field that not only speed up production, but can 
also reduce environmental impact.
    I'm glad to have Mr. Darrington Seward, a 4th generation farmer 
from Louise, MS, with us here today to talk about the impact of 
wireless expansion in the Mississippi Delta. Mr. Seward was kind enough 
to meet with me yesterday to discuss all of the innovative work he and 
his team are doing in the Delta.
    Ensuring rural America has the same access to technology as its 
urban counterparts has long been a priority of mine. While the state of 
Mississippi provides fertile ground for innovation in areas like 
telehealth and precision agriculture, without the connective services 
required to run such technology, Americans living in areas without 
advanced services continue to be left behind.
    We are here today to talk about ways to close this gap. The goal in 
creating the Universal Service Fund (USF) as part of the 1996 Act was 
to ensure ubiquitous, reliable communications services for all 
Americans. A lot has changed in the past 20 years. We witnessed 
unparalleled advancements in technology and a new competitive 
landscape.
    The era we live in today raises new questions about how the 
original goal of universal service is achieved. In recent years, the 
FCC has made a number of reforms to the USF aimed at transitioning the 
Fund to support broadband, but more needs to be done to reach rural 
areas.
    The FCC's 2011 USF Transformation Order set up a two-phase process 
for both the Mobility Fund and Connect America Fund (CAF), but delays 
in implementing the plan set forth by the Commission stand in the way 
of continued deployment to areas that are uneconomical to serve.
    Today, we want to hear from our witnesses about what they are doing 
to help close the digital divide and how best to target high-cost USF 
support to achieve Congress and the Commission's goal of universal 
service, regardless of the technology used.
    I would like to welcome all of our witnesses and thank them for 
testifying this morning. Our panel today represents a number of 
technologies serving rural and urban areas alike and also those who 
rely on this technology every day.
    I look forward to the testimony from our distinguished panel. I 
will now turn it over to my colleague, Mr. Schatz.

    Senator Schatz. We will start with my opening statement and 
then the testimony.
    On behalf of Senator Wicker, I want to thank Senator 
Manchin for drawing the Subcommittee's attention to these 
important issues.
    The Universal Service program was created to make sure that 
all Americans have the security and the opportunities that come 
with being connected. Just like that landline phone was 
necessary in the past, everyone needs a broadband connection to 
fully participate in today's society to perform the most common 
tasks like applying for a job, doing homework, or accessing 
government services. It is no longer enough to ensure that 
every American has access to quality voice service. Being a 
citizen today means being connected to the Internet.
    The Connect America Fund is the biggest program in the 
Universal Service system, investing nearly $4 billion across 
the country to support the build-out of broadband connectivity 
and voice service to high-cost areas. This fund makes up almost 
half of the USF program funding. It is, therefore, critical 
that we use it wisely to reach the most people possible. Like 
any USF program, we must ensure that we remain vigilant against 
waste, fraud, and abuse. The FCC must continue reforms that 
stress transparency and accountability.
    Second, all stakeholders must work with the FCC to ensure 
that we have effective distribution mechanisms and that support 
only goes where no unsupported service is offered to ensure 
that money is being spent wisely. The Connect America Fund is 
especially important to enable rural connectivity where 
building out a network, especially last-mile connections, has 
always been a unique challenge. Rural areas often have low 
population density which makes it difficult for carriers to 
make a business case to invest the necessary capital. This, 
coupled with mountainous or difficult terrain, can make it 
challenging to provide voice or broadband services without 
government support. This high-cost CAF support is essential to 
ensure access to all Americans regardless of geography.
    Unfortunately, the FCC's most recent broadband progress 
report finds that rural areas and especially tribal lands are 
being left behind. In fact, millions of Americans in rural 
areas lack access to high-speed mobile and fixed broadband 
services.
    Considering these disparities, the FCC should be nimble in 
its approach in disbursing these funds. It is essential that 
Connect America consider all options to close the gap in our 
rural and native communities. That is why today's hearing is so 
important to hear from stakeholders and to discuss the 
advantages and disadvantages of potential solutions and 
technologies.
    As the FCC moves forward with the CAF II reverse auction, 
it needs to weigh the costs and benefits of using different 
technologies, including fiber, mobile wireless, fixed wireless, 
and satellite services to reach everyone. And the Mobility Fund 
must remain a top priority as well to ensure dedicated funding 
for wireless-specific connectivity.
    Finally, recognizing that some of the areas connected by 
CAF investments may never be financially viable enough purely 
through private means, we need to ensure that funds are 
available to build out new users but also to maintain the 
infrastructure once it is built. CAF must provide certainty. 
Without it, service providers will not invest in the most 
remote areas and those consumers living in those areas will 
lose out. Everyone must have reliable and robust voice and 
broadband services. However, our country is diverse and our 
policies must accommodate that diversity. If done well, the 
Universal Service program can continue to empower every 
American with the broadband access that they need to 
participate economically, socially, and politically in the 21st 
century.
    And with that, we will introduce the testifiers and move on 
with the testimony. First, we have Darrington Seward, Managing 
Partner of Seward & Son Planting Company; Steven K. Berry, 
President and CEO of Competitive Carriers Association; Jimmy 
Carr, CEO, All Points Broadband testifying on behalf of 
Wireless Internet Service Providers Association, WISPA; Michael 
Rapelyea, Vice President of Government Affairs for ViaSat, 
Incorporated; and Ted Carlson, President and CEO of U.S. 
Cellular Corporation. And we will start with Mr. Seward.

STATEMENT OF DARRINGTON SEWARD, MANAGING PARTNER, SEWARD & SON 
                        PLANTING COMPANY

    Mr. Seward. Ranking Member Schatz and members of the 
Subcommittee, my name is Darrington Seward. With my father 
Byron, I manage Seward & Son Planting Company and Seward & 
Harris Planting Company, our family farming business in and 
around Louise, Mississippi. We manage about 22,000 acres of 
cotton, corn, soybeans, and rice at the southern end of the 
Mississippi Delta. We could not do this productively or 
profitably without the extensive use of precision agricultural 
technologies.
    Our main goal in precision agriculture is to farm as many 
acres as we can while minimizing inputs and increasing our 
yields in an environmentally sustainable way. We depend on 
reliable and speedy broadband connections. Without reliable 
broadband, our production practices would be completely 
compromised. We would suffer yield losses, decreased 
productivity, and reduced profitability in an industry with 
ever tighter profit margins.
    As you know, farming operations in the U.S. today are 
substantial businesses that drive significant economic 
activity. If high-speed broadband services are not extended out 
to where agricultural activity takes place on croplands and 
ranchlands, the full economic potential of precision 
agriculture will be missed.
    We are an example of some of the progress that has been 
made, but the job is by no means finished. I would like to 
share some of the examples of what broadband can do when 
deployed in farming operations.
    Managing the fertility of the soil is critical to any 
farming operation, and each soil type in the field may require 
a different amount of nutrients. A fixed rate application of 
fertilizer could lead to over-application and wasted nutrients. 
Precision Ag steps in with variable rate nutrient application 
to deliver in each part of the field the exact amount of 
nutrients called for. This process depends on high-speed 
broadband connections to upload fertilizer data, to transfer 
tailored prescriptions to the machine, and to build application 
maps from the machine.
    Another example of the value of precision agriculture is in 
planting. The process of planting has changed dramatically in 
recent years. To maximize yields, planter technologies can vary 
the amount and spacing of planted seeds within a field based on 
prescriptions that recognize the different soil types within 
that field. Wireless broadband allows seeding prescriptions to 
be transferred to the planter and also allows real-time 
monitoring of each individual row on the planter to make sure 
it is planting correctly. This is critical for quality control, 
especially with new technologies that have dramatically 
increased our planting speeds.
    Come harvest time, these same monitoring applications give 
us the ability to check a combine's performance in real time. 
We can analyze data while harvesting the crop and make 
decisions about grain drying and storage operations. We can get 
a real-time look at crop yields, which helps us determine the 
exact amount of grain we will have available to market and 
evaluate the current crop varieties planted on our farm. Since 
next year's seed has to be booked soon after this year's 
harvest, this data allows us to plan early and take advantage 
of seed pricing discounts.
    The telematics information we receive wirelessly from our 
fleet of tractors, sprayers, combines, cotton pickers, and fuel 
trucks is essential to our day-to-day operations. With the 
amount of equipment and acreage that we farm, our efficiencies 
would be completely undermined if I could not track the 
location and performance of each machine at any time from 
anywhere on the farm.
    Our machines also feature equipment diagnostics that detect 
problems and provide warnings, typically well before a 
breakdown occurs. With over $15 million of investment in 
farming equipment, these communications reduce machine down 
time and avoid costly delays in field activity.
    These are all examples of what broadband can deliver to 
agriculture and to rural development. But they also show where 
opportunities will be lost if reliable broadband is not made 
available to all producers in Mississippi and across the 
country.
    We do, in fact, have disruption in continuous monitoring of 
tractors, sprayers, irrigation pivots, and wells based on 
spotty service. For our equipment, I would estimate a minimum 
of 10 to 15 percent loss of operating efficiency when 
connections are disrupted. Lost coverage means the machines 
cannot send or receive data, seeding prescriptions cannot be 
downloaded, quality control is lost, or planting has to be 
delayed. Our losses are measured in reduced crop yields. Any of 
these events could amount to a 5-bushel loss per acre, or 
$20,000 per day, of lost revenue to our business based on 
current prices.
    Without wireless monitoring, we are unable to receive 
alerts of malfunctioning irrigation units. For a single pivot 
that irrigates 450 acres, one lost day in the growing season 
would cost our operation 30 bushels per acre in lost yield. 
That amounts to a $50,000 loss at current crop prices from a 
mere 2 percent of our total acreage. The failure of multiple 
irrigation pivots, if not detected quickly through wireless 
monitoring, would be catastrophic.
    Loss of connections also impacts the amount of nutrients, 
herbicides, and pesticides we use. As noted, inputs are placed 
exactly where grid soil samples call for them to be in the 
field. This is for two good reasons. It leads to increased 
yield and uses less nutrients, pesticides, and herbicides. 
Chemical applications on the farm are tailored to optimize 
their effectiveness and minimize environmental impacts.
    As a farmer and businessman, I can assure you that I am no 
expert on telecommunications policy, but in my view anything 
you can do to promote more rural investment in broadband 
infrastructure should be pursued. This should include keeping 
and improving programs like the Connect America Fund and the 
Mobility Fund to address the needs of agriculture. There are 
several steps you could take that would make a difference.
    First, programs should be updated to directly support 
specifically to where farming occurs in areas of cropland and 
ranchland. These are areas of intense economic activity with 
growing demand for broadband services. Program eligibility, 
data collection, and other rules should be revised to account 
for underserved and unserved cropland and ranchland areas.
    Senator Schatz. Mr. Seward, if you could begin to summarize 
your testimony so we can move along, that would be----
    Mr. Seward. OK.
    Senator Schatz. Thank you.
    Mr. Seward. Well, pretty much everything is on file, and if 
you have any questions, I would be happy to answer them. Sorry 
I ran over.
    Senator Schatz. Not at all. That was a quicker summary than 
I needed.
    [Laughter.]
    Mr. Seward. I appreciate the opportunity to speak as a man 
of few words.
    [The prepared statement of Mr. Seward follows:]

      Prepared Statement of Darrington Seward, Managing Partner, 
                     Seward & Son Planting Company
    Chairman Wicker, Ranking Member Schatz and members of the 
Subcommittee:

    Thank you for the opportunity to speak with you today. My name is 
Darrington Seward. With my father Byron, I manage Seward & Son Planting 
Company and Seward & Harris Planting Company, our family farming 
business in and around Louise, Mississippi. Currently, we manage about 
22,000 acres, mostly within a 10 mile radius of Louise in Humphreys, 
Yazoo, Sharkey, and Holmes counties at the southern end of the 
Mississippi Delta. We farm cotton, corn, soybeans, and rice. We could 
not do this productively or profitably without extensive use of 
precision agricultural technologies.
    Each year, we rotate the 12,000 sandier acres that are devoted to 
cotton and corn in a 50 percent cotton/50 percent corn rotation. Of the 
other 10,000 acres of heavier ground, which are dedicated to growing 
soybeans and rice, we rotate 1,000 acres of rice annually among the 
other 9,000 acres of soybeans production.
    Our family began planting its roots in agriculture during the Great 
Depression, when land acquisition was very affordable. Early on, the 
land was farmed by sharecroppers, with two commissaries in the 
neighboring towns of Louise and Midnight providing the supplies needed 
for tenants to live on and farm the Seward family's land. As farming 
became more mechanized in the years following World War I, our family 
took over farming the land itself. Originally, Seward & Son was 
comprised of 2,000 acres and Seward & Harris encompassed 4,000 acres. 
It was about 25 years ago that we began expanding. Expansion came in 
waves as older farmers began to retire, and as absentee landowners 
sought to cash out by selling their farms.
    With the expansion of our operation came growing pains. But as more 
precision ag technology became available, farming this larger acreage 
became more manageable. Our main goal in precision agriculture is to 
farm as many acres as we can, minimizing resources and inputs, while 
simultaneously increasing our yields. Much of the technology has 
evolved to depend on reliable and speedy rural broadband. Without the 
availability of reliable and fast broadband, our production practices 
and efficiencies in large-scale production agriculture would be 
completely compromised. We would suffer yield losses and decreased 
productivity that would greatly affect our profitability, in an 
industry that continues to see tighter and tighter profit margins.
    As Chairman Wicker knows, agriculture is the major driving factor 
behind the State of Mississippi's economy. This is no doubt true for 
many rural states represented on this Subcommittee. It is certainly the 
driving factor for the economies of the counties where we farm. Without 
agriculture, these rural counties would dry up completely, and send 
already high poverty levels through the roof.
    Our business has invested heavily in precision and data-enabled 
technologies to make our operations more productive, efficient, and 
profitable. They come into play in almost everything we do. But for 
these technologies to actually deliver, we have to be connected. We 
depend on reliable, high-speed broadband connections out in the field--
where our machines and employees operate. We have been recognized for 
our embracement of precision agriculture technologies and the 
conservation of resources they allow on several occasions. We received 
the 2013 Precision Ag Award of Excellence from the Precision Ag 
Institute. We were recognized as the Precision Agriculture Farmers of 
2011 by the National Conservation Systems Cotton & Rice Conference. 
And, my father, Byron Seward, was recognized by the Delta Council of 
Mississippi as The Conservation Farmer of the Year for 2009-10.
    As you know, significant economic activity occurs every day on 
America's farm and ranchlands. Agriculture represents almost 5 percent 
of the Nation's annual GDP, much more than that in rural communities. 
Farming operations today are substantial businesses that drive 
significant commercial activity and rural prosperity. Broadband 
services that are provided to commercial businesses in urban and 
suburban areas must also be provided to support production agriculture 
in rural areas. If high-speed, wireless broadband services are not 
extended out to where agricultural activity takes place--on croplands 
and ranchlands--the full economic and commercial potential of precision 
agriculture will be missed. I'd like to share some real examples of how 
broadband can help meet this enormous potential.
Soil Management and Health
    Managing the fertility of soil is critical to any farming 
operation. We may have upwards of 15 different soil types in any given 
field; each requires differing amounts of nutrients. If a blanket, 
fixed-rate application of fertilizer is programmed into a machine, 
nutrients will be wasted by over-application where they are not needed. 
Precision ag steps in with variable-rate application of nutrients that 
ensure each spot in the field receives exactly the proper amount of 
nutrients called for.
    Our fields are sampled on a 3-year cycle by a local soil lab, 
Pettiet Agricultural Services, Inc. out of Leland, Mississippi. Samples 
are taken from every field in a referenced 2.5 acre grid--a very 
thorough and precise soil sampling by today's standards. Dr. Clinton 
Pettiet and his lab team then analyze these samples and provide all 
data on nutrient concentrations in the soil, and the recommended amount 
of nutrients to be added in order to produce a varying array of crops. 
We upload this data into the web-based software product of our seed and 
chemical retailer Sanders, Inc. This software tool, OptiGro, already 
contains the boundaries of all of our farms and fields. So the new, 
geo-referenced soil sample data is simply spatially sorted into our 
farms and field data in OptiGro. Mind you, this data transfer is all 
taking place in either our office in Louise, Mississippi, or in our 
pick-up trucks in the field where our equipment and crops are 
continuously monitored. This cannot happen without reliable, mobile 
wireless broadband connections.
    With the OptiGro tool, I can chose the farm and fields I want to 
fertilize, for any particular crop we want to plant there in that 
particular year. I then choose my macronutrients, phosphorus and 
potassium, that I need to apply. I also choose my micronutrients, 
sulfur and zinc, that might be called for. I write this tailored 
prescription, which can then be applied to the field through a host of 
machines that all have access to controller files from a simple drop 
down menu.
    To apply these prescriptions, we utilize a GVM 4 bin ground 
machine, or an Air Tractor 802 airplane during rainy spells. The 
controller files are transferred directly to the GVM machine's 
controller via wireless broadband. Wireless broadband also provides the 
means to e-mail the controller files to my pilot who can quickly load 
them in his plane for application. Since all the data are geospatially 
referenced, the fertilizer application (whether by ground or air) is 
completely automated by the machine's mechanical controllers. It knows 
exactly where the machine is in the field, and exactly which products 
are called for and in what amounts. This process also generates 
application maps, which are key to understanding the effectiveness of a 
specific prescription on improving yields, and provides a check for 
quality control.
    The same methods are employed for our application of nitrogen in 
the production of corn and cotton. Nitrogen is a crucial nutrient in 
the production of those crops. We apply nitrogen in a split-season 
application. This means we apply the first half of our soil sampling 
recommendation right at planting, and the second application, the 
variable rate portion, early in the growing season. We can also apply 
nitrogen either by ground machine or airplane variable rate.
    I want to emphasize again that each of these critical steps, from 
uploading the fertilizer data, writing the fertilizer file, 
transferring it to the machine wirelessly, and collecting application 
maps from the machine, are dependent upon high speed rural broadband. 
Only with wireless connectivity are the benefits of reduced input 
costs, better land stewardship, and improved yields fully realized.
Planting
    Another example of the value of precision agriculture is in 
planting. The process of planting has changed dramatically in recent 
years. Planters now include hydraulic drives and rate controllers that 
govern the amount and spacing of planted seeds in a field. The rate 
controller can be told exactly how much seed should be planted and 
where, based on a prescription that can be wirelessly transferred into 
an onboard computer in the machine. This allows, for example, more seed 
to be planted underneath a pivot circle where irrigation can maximize 
yield, and less in the field's corners where the pivot cannot not 
reach. Also, different seeding rates can be assigned to, and planted 
on, different soil types within a field to maximize yield. High speed 
broadband allows the transfer of these seeding prescriptions to the 
machine, and allows real-time monitoring of each individual row on the 
planter to make sure it is planting correctly. From the office or pick-
up truck, we can see the exact seed monitor that our operator in the 
tractor sees, along with more comprehensive data--all in real time. 
This is imperative for quality control, especially with new 
technologies that have dramatically increased our planting speed. 
Today, we are easily planting 1,000 acres a day, and spending upwards 
of $50,000 an hour on planting and tillage applications.
Crop Harvesting
    Come harvest time, these same monitoring applications hold true for 
our ability to check a combine's performance in real time through high-
speed broadband. We are able to analyze the data in real time and make 
critical decisions about the speed and temperature at which we operate 
our Zimmerman corn tower dryer. We can make decisions about which bins 
to load into during the day, and which bins we may need to switch to in 
order to have capacity to store the entire night's supply of dried 
grain. In addition, we get a real time look at crop yields, which helps 
in determining the exact amount of grain we will have available to 
market--something that's always difficult to forecast going into a 
harvest. Real time yield data also allows us to evaluate the current 
crop varieties that planted on our farm. Since, next year's seed has to 
be booked soon after this year's harvest, this data allows us to plan 
early and take advantage of seed pricing discounts.
    In our operations, none of these management decisions can be made 
without reliable, continuous access to high speed broadband. Otherwise, 
it would not be physically possible for me to drive out to each combine 
in the field, climb up on the machine, and ride each machine for 15 
minutes or so to gather this data. With wireless connectivity, I can 
receive data at the corn dryer as I am operating it and use the 
information received to maximize the efficiency of the dryer's 
operation. Access to high speed broadband in the field allows us to 
farm more acres more efficiently with larger machines, while lowering 
costs and increasing yields.
    Broadband optimizes our operations in several other, important 
ways. Our management of grain storage capacity depends on transmission 
of real-time bin use and availability data. The bins have a plumb bob 
sensor system that drops a cable from the roof of the bin until it 
touches the grain. In this way, the system transmits how many bushels 
are currently in the bin, and how much storage capacity remains. Our 
corn dryer operates at 100,000 bushels dried per 24-hour period, which 
fills the bins to fill quickly. The sensor system allows one man to run 
the dryer from a central point, without having to step out to climb 
each bin, peer in, and guess how much grain is in it. Instead, he 
simply logs in to the web-based logistics platform that contains each 
numbered bin, prompts the desired bin to conduct a measurement, and 
uses the results to determine where to divert the grain coming out of 
the drier. Our bins also have sensors that measure the relative 
humidity outside versus inside the grain bin. Algorithms then calculate 
the relative moisture of the corn or soybeans in the bin and turn the 
exterior fans on or off, either to dry or rehydrate the grain to the 
optimal moisture for storage and sale. The bins that store our rice use 
exterior fans (equipped with heaters), combined with interior moisture 
cables, to dry the rice to a moisture level acceptable for sale and 
milling. All parameters and settings can be monitored and changed 
remotely. This data is all transferred via broadband, without which 
these systems would be useless. Broadband enables these systems to 
operate and maximize the efficiency of our operation.
Machine Communications
    The telematics information we receive from our fleet of tractors, 
sprayers, combines, cotton pickers, and fuel truck is essential to the 
daily operation of our farm. With the amount of equipment and the broad 
acreage that we farm, our efficiencies would be completely undermined 
if I didn't know--at any given time, from anywhere on the farm--where 
each piece of machinery is and how it's performing at that moment. 
Operations would grind to a halt.
    On our farm, we use almost all John Deere equipment because of its 
advanced precision ag systems and capabilities. None of the telematics 
systems on board our 22 tractors, 5 combines, 4 cotton pickers, 3 
sprayers, and 1 fuel truck would provide anywhere close to the degree 
of operational value that they do without reliable broadband 
connections. Any one of the innumerable settings on any one of these 
machines can be monitored remotely, through online platforms such as 
JDLink and MyJohnDeere.com.
    Continuous monitoring of machine performance is extremely 
important. Improperly set machines or machines experiencing technical 
issues could result in any number of costly operational problems: an 
improperly planted crop; improperly applied fertilizer, herbicides, or 
pesticides; lost efficiencies in tillage operations; lost efficiencies 
in the general equipment operation; or even yield loss during harvest 
(imagine grain being blown out of the back of the combine due to 
incorrect settings). All John Deere machines feature equipment 
diagnostics that trigger real-time warnings, typically well before an 
operational problem occurs. With over $15 million of capital investment 
in farming equipment, it is imperative we maximize these assets and 
generate the highest returns on this investment. Machine 
communications--telemetry--drive significant reductions in machine 
downtime and avoid costly delays in field activity. Without reliable 
broadband connections in the field, the benefits of machine telemetry 
in our operation would be lost.
Irrigation
    Our irrigation systems today include 25 pivots, all of which are 
monitored telemetrically. Each irrigation unit is able to report its 
position and the amount of water being applied in real time. These 
pivots can be sped up or slowed down remotely, allowing adjustments in 
the total volume of applied water from anywhere across our operation. 
They also can be shut off remotely, and will send out an alert if they 
shut down for any unexpected reason.
    In addition, the majority of our irrigation wells are powered by 
units with telematics monitoring systems, which can record the exact 
amounts of water being applied using flow meters. Each monitoring unit 
has its own modem that transmits the data to a web based management 
platform, which helps us to fulfill USDA/NRCS and local water 
management district requirements. Alerts will also be issued if wells 
shut down for unexpected reasons. All these capabilities on both pivots 
and irrigation wells allow us to efficiently manage large acreages with 
fewer men. Productivity is greatly improved through more rapid alert, 
diagnosis, and repair of irrigation unit problems.
Problems with Connectivity
    Given our reliance on precision ag technologies, our farming 
operations are susceptible to broadband coverage disruptions and 
connectivity problems. In areas where we have experienced poor 
broadband coverage, we have experienced costly disruptions in 
continuous monitoring of tractors, sprayers, irrigation pivots, and 
wells. This translates directly to less efficient operations and lost 
productivity.
    For our machines alone, I would estimate a minimum 10-15 percent 
loss of operating efficiency when connections are disrupted. Lost 
coverage means the machines cannot send or receive data during 
operations. Our inability to download seeding prescriptions in a timely 
manner results in a suboptimal crop. Or planting could be delayed, 
causing us to miss the optimum planting window. Or the quality control 
from continuous monitoring is lost, which could result in erratic seed 
placement and depth. Our losses are measured in reduced crop yields. 
For our operation alone, any of these events could amount to 5 bushels 
lost per acre, or $20,000 per day of lost revenue, based on current 
prices.
    Poor coverage has also meant temporary loss of connections to 
irrigation pivots and wells. In these instances, we have been unable to 
receive alerts of malfunctioning irrigation systems. Because of the 
size of our farmed acreage, we cannot monitor these systems by simply 
riding from pivot to pivot and well to well each day during irrigation 
season. For a single pivot that irrigates 450 acres, one lost day at a 
crucial time in the growing season would cost our operation 30 bushels 
per acre in yield loss. That amounts to a $50,000 loss at current crop 
prices, from a mere 2 percent of our total acreage. The failure of 
multiple irrigation pivots, if not detected quickly through wireless 
monitoring, would be catastrophic.
    The same is true with the inability to detect malfunctions of rice 
irrigation wells. An irrigation well typically irrigates 150 acres. At 
a rate of 30 rice bushels per acre lost, the loss would be roughly 
$22,500 at current prices.
    Loss of connections also impacts the amounts of nutrients, 
herbicides and pesticides we use. Instead of broadcasting nutrients, 
technologies allow us to place them exactly where grid soil sampling 
calls for them to be in the field. This is good for two reasons: it 
leads to increased yields and decreased use of nutrients. The same is 
true for pesticide and herbicide applications, which can be tailored to 
optimal effect and minimal environmental impact. Technology allows us 
to write and use prescriptions for the exact amount of herbicide to 
use, based on the clay content of the soil. With aerial imaging, we 
also can create zones for pesticide applications to target those areas 
with greatest insect populations.
    From these examples, I hope that you can see just how important 
reliable broadband connections are to our operations, and how even a 
temporary loss of coverage can hurt crop yields, increase operating 
costs, and undermine environmental improvements.
Policies to Support Broadband for Agriculture
    From my perspective as a business consumer, any policies that will 
promote more rural investment in broadband infrastructure--including 
where farming takes place--should be pursued. Without this support, our 
ability to keep up with and take advantage of coming technological 
advancements will be limited, especially as the competition for 
resources to expand broadband deployment is likely to increase. This 
makes the rural broadband funding programs managed by the Federal 
Communications Commission, such as the Connect America Fund and the 
Mobility Fund, all the more important to the future of production 
agriculture. I would encourage you take a fresh look at these support 
programs and consider changes that will directly foster, and eliminate 
barriers to, expanded high speed broadband deployment that agricultural 
needs today and into the future. To that end, there are several steps 
to improve these programs that would make a difference:

        First, as I have mentioned, support programs should be updated 
        to direct support specifically to where most farming operations 
        occur--areas of cropland and ranchland. These are areas of 
        intense economic activity with growing demand for broadband 
        services. Yet, they are largely overlooked in today's funding 
        programs that look only at residential population and community 
        centers to determine whether an area is ``unserved'' or 
        ``underserved'' and thus worthy of broadband funding support. 
        Program eligibility, data collection, and other rules should be 
        revised to account for underserved and unserved cropland and 
        ranchland areas--areas with low population density but with 
        highly intense economic activities vital to rural communities.

        Second, support programs should not favor, either directly or 
        inadvertently, one broadband delivery technology over another. 
        Ag producers need access to all technology options to address 
        potential uses that may vary depending on ag equipment used, 
        crops, livestock, terrain, climate, proximity to broadband 
        interconnection points and population centers, and barriers to 
        local land acquisition and access. Wireline broadband, fixed 
        wireless, or mobile--all these technologies will be needed for 
        individual carriers to design appropriate solutions to meet the 
        needs of particular agricultural operations. To this end, it 
        makes sense to continue and even expand the Mobility Fund to 
        provide specific and predictable funding for mobile broadband 
        operations. And the equal opportunity that carriers currently 
        have to bid on Connect America Funds should be maintained, 
        regardless of whether they are proposing wireline, fixed 
        wireless or mobile broadband coverage.

        Third, these support programs should also make funds available 
        for ``stand-alone'' broadband. Precision Agriculture technology 
        is data-intensive by nature. Many farming enterprises place a 
        higher priority on obtaining broadband services rather than 
        conventional voice services. My understanding of the rules is 
        that carriers that might otherwise be able to provide broadband 
        in rural communities cannot access these programs unless they 
        also provide voice services. This either forces inflexible 
        service packages onto rural consumers, including ag producers, 
        or it unnecessarily limits broadband deployment.

        Finally, the so-called ``middle mile'' facilities are just as 
        critical to expanding rural broadband deployment as last mile 
        connections. The wireless connections needed across croplands 
        rely on these ``middle mile'' facilities to tie into the wired 
        networks and the Internet. To be sure that all the needed rural 
        infrastructure can be deployed, support programs should allow 
        the smaller providers to obtain support for middle such 
        facilities. And support for middle mile facilities should be 
        allowed for connecting to facilities that link to wireless 
        broadband, not only to the last wired mile connections.
Conclusion
    I want to thank the Subcommittee again for allowing me to appear 
this morning. My message is simple: precision agriculture is fully 
integrated with our operations in Mississippi, and with agricultural 
operations across the U.S. and globally. The benefits from these 
technologies are well-known and will grow significantly in the years 
ahead. To fully capture the value these technologies can deliver, 
policies and programs that will drive investments in rural 
infrastructure must be a priority for policy makers.

    Senator Schatz. Thank you. I appreciate it. Thank you.
    Mr. Berry?

  STATEMENT OF STEVEN K. BERRY, PRESIDENT AND CHIEF EXECUTIVE 
           OFFICER, COMPETITIVE CARRIERS ASSOCIATION

    Mr. Berry. Thank you, Acting Chairman Schatz and members of 
the Subcommittee. Thank you for the opportunity and inviting me 
to testify about supporting mobile broadband in rural America. 
The job is not done. I am here today on behalf of the 
Competitive carriers Association representing almost 100 
wireless carriers and nearly 200 vendors and suppliers that 
support the competitive wireless ecosystem. My membership 
includes innovative, competitive carriers of all sizes, with 
CCA members in every state you represent.
    Most CCA members serve rural areas and have invested 
private capital, along with Universal Service support, to 
deploy mobile wireless services in some of the most difficult-
to-serve parts of our Nation.
    Congress mandated that the FCC administer the Universal 
Service Fund to provide, and I quote, ``sufficient and 
predictable support for reasonably comparable services in urban 
and rural areas.'' And to meet this statutory charge, 
``reasonably comparable'' services must include mobile 
broadband.
    The Committee, the FCC, and Chairman Wheeler himself have 
all recognized the importance of mobile broadband services. The 
most recent Mobile Competition Report, submitted to Congress 
just a few weeks ago, begins by noting ``mobile wireless 
services are an essential part of Americans' daily lives.'' We 
totally agree.
    Access to wireless services has evolved well beyond making 
and receiving voice calls. And failure to support mobile 
broadband coverage will leave rural America behind, behind in 
the dust of a new generation of innovation. Mobile broadband 
coverage impacts public safety, education, telehealth, economic 
opportunity, accessibilities, social inclusion, and yes, 
farming and agriculture.
    But we also can be jeopardized in other ways. By being 
behind this mobile digital divide, you will jeopardize the 
economic investment, productivity, jobs, and yes, even endanger 
those who live in and travel through rural America.
    While access to mobile broadband is critically important 
today, it is absolutely vital to participate in growing the 
economy of tomorrow. The Internet of Things, the all-connected 
world is just around the corner. It is time to ensure that the 
Universal Service Fund reflects this reality. Congress should 
make it clear to every commissioner at the FCC that this means 
providing adequate support to both preserve existing services 
in rural areas while incentivizing deployment of the latest 
mobile broadband services in areas that remain unserved or 
underserved. Support is needed for both preservation and 
expansion. Anything less will result in an economic loss for 
rural America.
    There are three things the FCC can do right now to support 
mobile broadband in rural America.
    First, disburse immediately the Mobility Fund Phase I 
support to winning bidders that have built networks and met the 
requirements in their bids. I have members that have, in good 
faith, spent their funds, built the networks, and have not been 
reimbursed. We cannot undo mistakes of the past, but we should 
prevent new mistakes.
    Second, do not reduce existing support until an adequate 
replacement mechanism is operational. And while the FCC stated 
in its USF Transformation Order that subsequent FCC proposals 
would be created, some of those have raised great uncertainty 
and great concern. So I commend Congress for reaffirming the 
ongoing need for support in the Consolidated Appropriations Act 
in December--thank you--directing the FCC to preserve legacy 
support as prescribed. We do not need more examples of entire 
communities losing wireless service due to the lack of USF 
support.
    Third and finally, implement the ongoing Mobility Fund 
Phase II that preserves existing services in rural areas and 
supports continued expansion of 4G and ultimately 5G mobile 
broadband. CCA has advanced a proposal that meets the FCC's 
overarching goals. It ensures universal availability of high-
speed mobile broadband where it is otherwise uneconomical. It 
puts the program on a budget, and it bases funding decisions on 
real data. I hope we can further explore ways to successfully 
implement Mobility Fund Phase II during this hearing.
    And as I said at the beginning, the job is not done. I know 
that you are acutely aware of communities in your areas in your 
states that lack sufficient coverage. Every carrier wants to 
provide a robust service to the customers. However, inadequate 
support for legacy investments will lead to reduced coverage 
and rusty towers.
    Now, I know there is strong bipartisan support in this 
committee for rural America. I look forward to working with you 
and the FCC on a bipartisan solution to preserve and expand 
mobile broadband in rural America. And I look forward to your 
questions. Thank you.
    Welcome, Chairman Wicker.
    [The prepared statement of Mr. Berry follows:]

 Prepared Statement of Steven K. Berry, President and Chief Executive 
               Officer, Competitive Carriers Association
    Chairman Wicker, Ranking Member Schatz, and members of the 
Subcommittee, thank you for inviting me to testify about supporting 
mobile broadband in rural America. I appreciate the opportunity to 
speak on an issue so critical to life in rural America, and welcome the 
Committee's continued focus on ensuring ubiquitous mobile broadband and 
the Universal Service Fund (USF). I am here today on behalf of 
Competitive Carriers Association (CCA), the Nation's leading 
association for competitive wireless providers and stakeholders. CCA 
membership comprises about 100 carrier members including small, rural 
providers serving fewer than 5,000 customers as well as regional and 
national providers serving millions of Americans. CCA also represents 
nearly 200 Associate Members--small businesses, vendors, and suppliers 
that serve carriers of all sizes. Most CCA members serve areas that are 
primarily rural in nature, and have invested significant amounts of 
private capital, along with USF support, to deploy mobile wireless 
services in some of the hardest to serve parts of our Nation. Whether 
directly or through partnerships and other strategic alliances, all CCA 
members have an interest in ensuring that Americans have access to the 
latest mobile broadband services, including those in rural and high 
cost areas.
    Congress created the USF high-cost program to provide Americans in 
rural areas with ``reasonably comparable'' services as those in urban 
areas with the help of sufficient and predictable support. In today's 
world, ``reasonably comparable'' services must include fast, affordable 
mobile broadband services. It is clear that the Federal Communications 
Commission (FCC) agrees. Just last week, as per Congressional mandate, 
the FCC released its 2016 Broadband Progress Report (Broadband Progress 
Report), which assesses the deployment of advanced telecommunications 
services in the United States. In its Broadband Progress Report, the 
Commission found that ``Americans increasingly rely on mobile devices 
as indispensable tools of daily life'' and therefore, ``the 
availability of advanced telecommunications capability requires access 
to both fixed and mobile services.'' FCC Chairman Tom Wheeler summed it 
up: ``consumers need access to both fixed and mobile broadband in 
today's world.'' Indeed, the opening paragraph of the FCC's most recent 
Mobile Competition Report, released late last year, begins by stating 
that ``[m]obile wireless services are an essential part of Americans' 
daily lives'' and notes that the mobile wireless ecosystem is ``one of 
the most important sectors in the national economy.'' The FCC's 
Universal Service policies, particularly as they relate to High-Cost 
Program funds, must reflect this reality.
Background
    Wireless service has evolved well beyond making and receiving voice 
calls. In 2016, Americans use mobile broadband services in almost every 
aspect of their daily lives. Americans rely on their mobile network to 
quickly access information on healthcare, education, and public safety, 
to manage their finances, to connect with their personal and 
professional communities through social media, and to download the 
latest season of House of Cards. All are necessary and desirable uses 
of the powerful technology enabled by modern mobile broadband access. 
Failure to support mobile broadband services in rural America will 
perpetuate the continuing digital divide between those who can use the 
latest technology to improve their lives and economic welfare, and 
those who are left behind.
    Leaving rural America on the wrong side of the digital divide can 
jeopardize economic investment, productivity, jobs, and even put lives 
in danger. The FCC has acknowledged that, ``[i]n emergency situations, 
Americans often use mobile devices to contact first-responders when a 
fixed connection is not readily available, whether at home, at work, or 
when traveling.'' Access to mobile broadband has spurred innovation in 
some of the most important economies in rural America, like precision 
agriculture advances that make farming more efficient and effective. In 
a pilot project with 2,000 farmers who have employed precision 
agricultural technology into their work, Accenture found a 56 percent 
year-over-year increase in sales and an average increase in crop 
productivity of 15 percent, including an increase of up to 30 percent 
for some cash crops.
    Mobile broadband is required for access to distance medicine and 
telehealth, which IHS, a market analyst firm, has projected to grow 
from $240 million in 2013 to $1.9 billion in 2018. This is a 56 percent 
increase in just five years. Mobile service also powers wearable 
devices. Cisco estimates this burgeoning market will grow from 109 
million in 2014, to 578 million in 2019.
    While access to mobile broadband is critically important today, it 
is absolutely vital to growing the economy through next generation, or 
5G, services and the Internet of Things (IoT). In fact, Gartner, an IT 
market research firm, projects this market will grow 30 percent over 
the next year alone, and to 21 billion devices by 2020, compared to 6.4 
billion in 2016. Rural communities should not be left out of this 
coming tide of innovation. Qualcomm estimates that there will be 5 
billion non-handset connected devices by 2018. IDC, another IT market 
research firm, says the IoT market will nearly triple worldwide from 
$655 billion in 2014 to $1.7 trillion in 2020. Additionally, Chetan 
Sharma, a technology and strategy consultant, estimated in his ``First 
Quarter 2015 Report'' that United States consumers used an average of 
2.5 GB of cellular data per month. Following this trend, Ericsson 
predicts that smartphones in the United States and Canada will average 
25 GB of mobile data traffic per month by 2021--a ten-fold increase 
just five years from now.
    According to the Pew Research Center, 88 percent of rural Americans 
have a cell phone and over 42 percent of rural adults live in a 
wireless-only household. Over half of all rural Americans now own 
smartphones, and of this group, 15 percent report their only form of 
home broadband Internet access is with a smartphone. It's clear that 
all consumers, including rural consumers, are cutting the cord.
    It is time for USF policies to reflect this reality. Rural America 
should not be excluded from meaningfully participating in a world 
increasingly powered by affordable access to rapid mobile broadband. 
This means providing adequate support to both preserve existing service 
in rural areas while incentivizing expansion of latest mobile broadband 
deployment in places that remain unserved and underserved. USF support 
is needed for both preservation and expansion--anything less will 
impede investment and keep rural Americans on the wrong side of the 
digital divide. The FCC has reported that 97 percent of rural Americans 
have LTE service. Anyone who has driven outside the city and urban 
centers knows that coverage estimate is exaggerated. If lack of 
coverage is not addressed, and support is not provided to preserve 
service available today, rural America will not have the mobile 
broadband infrastructure that it needs to support indispensable tools 
of daily life.
    Since establishment of the FCC by the Communications Act of 1934, 
Universal Service has been a core policy. In 1996, Congress codified 
specific principles for USF in the Telecommunications Act. Under FCC 
rules allowing competitive eligible telecommunications carriers 
(CETCs)--including wireless carriers and competitive local exchange 
(LECs)--to receive USF support, carriers including many CCA members, 
leveraged that support with their own investment to deploy and expand 
mobile wireless services in rural America. As the industry grew, the 
total number of cell sites nationwide nearly tripled, from 127,000 to 
nearly 300,000 over a ten-year period.
    In 2008, the FCC adopted the ``CETC Interim Cap Order,'' freezing 
support for wireless carriers in each state at the level that wireless 
carriers were eligible to receive as of March 2008. This blunt 
instrument capped overall wireless support at approximately $1.2 
billion nationwide. Despite the cap, the wireless industry continued to 
grow as a result of an increasing consumer demand for wireless service. 
Total support for wireless services through the High-Cost fund peaked 
in 2008 long before the mobile data explosion we are experiencing 
today. Despite massive growth of wireless use since 2008 and increasing 
consumer demand, support to mobile networks through the High-Cost fund 
has only decreased.
    In 2011, the FCC adopted the ``USF/ICC Transformation Order,'' 
(Transformation Order) which created the Connect America Fund (CAF) 
within the High-Cost Program, and the Mobility Fund, which is 
specifically dedicated to support mobile service in unserved and 
underserved areas. With this step, the FCC recognized that while mobile 
networks might be able to provide coverage to fixed locations under 
limited circumstances, a fixed network cannot provide true mobile 
service with the functional benefits mobility provides consumers. While 
the FCC's goals for the Mobility Fund were laudable--to support and 
close gaps in mobile coverage and broadband capacity--the total amount 
budgeted for wireless carriers through CAF and the Mobility Fund was 
significantly smaller than the amount wireless carriers received under 
previous capped High-Cost Program support.
    Under the Transformation Order, Mobility Fund support was to be 
distributed in two phases: Phase I provided $300 million in one-time 
support to expand mobile networks; and, Phase II was designed to 
provide $500 million in ongoing support to sustain and expand mobile 
voice and broadband. In the Transformation Order, the FCC explicitly 
recognized that there are areas in this country in which mobile service 
cannot be maintained or upgraded without ongoing universal service 
support. Despite the Commission's efforts to support mobility in rural 
America, the allocated funding under the Mobility Fund Phase I was not 
sufficient to accomplish the FCC's goals. By way of comparison, the 
National Broadband Plan estimated requiring at least $6.3 billion, if 
leveraging incentive-based partnerships, to $15.7 billion to buildout a 
nationwide mobile broadband network for public safety users. Demand far 
exceeded the resources made available under Mobility Fund Phase I, with 
bids exceeding the $300 million available. Further, the $500 million 
budget dedicated for ongoing support in the originally proposed 
Mobility Fund Phase II represents less than half of the approximately 
$1.2 billion wireless carriers received prior to the Transformation 
Order and one-eighth of the approximately $4 billion that wireless 
carriers contribute annually to the fund.
    The Transformation Order also began phasing down legacy support for 
wireless carriers, reducing support over five years through annual 20 
percent reductions. Fortunately, the FCC ordered that the phase down 
would be suspended if Mobility Fund Phase II, including Tribal Mobility 
Fund Phase II, was not operational by June 30, 2014. With no Mobility 
Fund Phase II in place, the legacy High-Cost Program fund continues to 
provide approximately $600 million per year for wireless services--60 
percent of previous levels. In this regard, it is very important that 
the Congress made clear that the FCC cannot, for the balance of this 
appropriations year, resume the phase down of legacy support to without 
an operational Phase II Mobility Fund. Thank you for taking this step, 
which we urge you to continue beyond September 30, 2016.
    While it is important that there are no further reductions in 
support until adequate replacement mechanisms are operational, there 
are steps that the FCC can take immediately to support mobile broadband 
in rural America through USF.
Complete Disbursements for Mobility Fund Phase I
    The FCC announced winning bidders for the Mobility Fund reverse 
auction in October 2012, with bids and proposed builds surpassing the 
amount of resources available. While CCA urged the FCC to make greater 
resources available through the auction, the awarded funding represents 
an important part of the overall investment made by winning bidders. 
Unfortunately, there are CCA members today that have built out and 
certified completion of projects, yet have not received the USF funding 
they were promised. As a result, precious capital is tied up in 
projects that may not otherwise have been economical, and carriers are 
discouraged from improving and expanding services. This is not what the 
FCC intended. I strongly encourage the FCC to release these funds to 
carriers who in good faith invested and spent their resources in 
accordance with Mobility Fund Phase I awards, but have not yet been 
reimbursed. To date, only $66.08 million has been disbursed.
    Additionally, over $70 million of Mobility Fund I awards have been 
returned to the Commission as a result of consolidation and/or 
defaults. These resources should be reinvested in expanding mobile 
access in rural areas.
No Further Reductions in Support until a Replacement Mechanism is 
        Operational
    Next, it is important for carriers to have the certainty that even 
reduced amounts of support will be predictable. Despite the 
Transformation Order's requirements to stop the phase down of legacy 
support absent an operational Mobility Fund Phase II, subsequent 
questions in the FCC's 2014 Further Notice of Proposed Rulemaking have 
caused significant concern in the industry that additional cuts may be 
made without providing for new support. This has a chilling effect on 
investment in upgrading existing and deploying new service, as carriers 
cannot confidently rely on FCC funds as they budget for maintenance and 
deployment plans.
    While not sufficient, the reduced amount of support available at 
today's 60 percent paused phase-down amount provides important 
resources to maintain services built with USF investment. 
Unfortunately, there are CCA members that have sold part or all of 
their network operations, or simply exited the market, as a result of 
already reduced support and uncertainty on what support may be 
available in the future. For example, in Ruby Valley, Montana, 
reductions in USF contributed to Cellular One exiting the market. As a 
direct result, on July 31, 2014, almost 2,000 customers in Ruby Valley 
lost all wireless service despite promises to the contrary. This 
impacts not only Cellular One customers, but all residents of Ruby 
Valley and any others that might be passing through, as customers using 
other service providers would need to roam onto Cellular One's network. 
Not only does this impact rural Montanans' quality of life but also 
safety and security--local Sheriff Dave Schenk has noted his ``major 
concerns about this in terms of public safety.''
    I commend Congress for providing some degree of certainty on this 
issue through a rider in the Consolidated Appropriations Act late last 
year. While carriers must plan network investment on longer time frames 
than a budget year, reaffirming that there will be no further 
reductions in support absent an operational replacement mechanism helps 
to provide certainty while also encouraging the FCC to focus on 
creating a sufficient Mobility Fund Phase II.
Mobility Fund Phase II Must Provide Sufficient and Predictable Support 
        for Mobile Broadband
    Looking forward, the ongoing Mobility Fund Phase II must adequately 
support both preserving existing service and expanding service to areas 
currently unserved by 4G LTE service. CCA has advanced a proposal that 
meets the FCC's overarching goals of ensuring universal high speed 
mobile broadband availability where it is otherwise uneconomical to 
continue or expand service, and supports putting the program on a 
budget, basing funding decisions on real world data. This proposal has 
two components: providing support to preserve existing mobile services, 
and supporting further upgrades and expansion of services.
    It is critical to recognize that the job of building out mobile 
broadband service in rural America is not yet done. The FCC itself 
acknowledges in its latest Mobile Competition Report that the way it 
calculates mobile service coverage overstates actual coverage. 
Describing the FCC's methodology, when the so-called ``centroid'' of a 
census block has a particular level of service, the FCC counts each and 
every person in the census block as having that service, even when 
coverage is inconsistent or weakens over distance. In rural areas, 
where census blocks are geographically much larger than in urban areas, 
it is much more frequently the case that people are counted as having a 
high level of service, when in fact they are unserved or underserved. 
Focusing on all wireless coverage (not just LTE), Dr. Raul L. Katz, 
Director of Business Strategy Research at the Columbia Institute for 
Tele-Information, Adjunct Professor in the Division of Economics and 
Finance at Columbia Business School, and President of Telecom Advisory 
Services, LLC, declared that wireless coverage in rural counties can 
range as low as 76.7 percent of the population in West Virginia, or 
86.3 percent in New Hampshire.
    And, of course, one of the great benefits of mobile service is that 
you can use it in places other than where you live or work--whether on 
or off road, or away from population centers. By the FCC's own data in 
the latest Mobile Competition Report, only 78 percent of the U.S. land 
mass is covered by any mobile wireless provider. As this Committee is 
keenly aware, 42 percent of U.S. land can contain only 1 percent of the 
population. The job is not finished, and claiming otherwise leaves 
rural Americans on the wrong side of the digital divide and outside of 
all the innovations and economic opportunities provided by mobile 
broadband coverage. And simply because an area is served today does not 
mean that it will remain served in the future without sufficient USF 
support--look no further than Ruby Valley for an unfortunate real world 
example.
    I commend several Members of this Committee and FCC Commissioners 
that have supported increased support for wireless carriers through the 
Mobility Fund. To protect scarce USF resources already invested in 
mobile broadband, the FCC should provide sufficient support so that 
towers constructed with both private and public investments remain 
operational. Congress and the FCC must preserve network diversity that 
exists in rural America, and to ensure that competitive carriers have 
access to a variety of roaming partners, regardless of the technology 
used. Anything less will leave behind rusty towers and unused 
infrastructure, reducing consumer choice and carrier innovation. 
Further, relying on a single network alone will not preserve widespread 
roaming, and will not protect against potentially high, anticompetitive 
monthly fees. This does not mean providing carriers with blank checks. 
Carriers must prove need for USF support. To appropriately guard USF 
investment, preservation funding should be based on the facts of real 
and projected expenses and revenue.
    The FCC also should provide funding for expanding mobile broadband 
services to unserved and underserved areas of the country. 
Understanding that there will not be enough resources to build mobile 
broadband services where needed all at one time, the FCC should offer 
several rounds of expansion support, disbursing resources in 
conjunction with the overall Mobility Fund Phase II budget every two to 
four years.
Other Factors Can Also Support Mobile Broadband in Rural Areas
    In addition to USF support, there are additional operational inputs 
that are critical to providing mobile broadband in rural America. 
Spectrum, for instance, is the lifeblood of the wireless industry and 
the invisible infrastructure on which networks are built. All carriers 
need access to spectrum to meet their customers' growing demands. Low 
band spectrum, with excellent propagation characteristics, is 
particularly important for expanding coverage in rural areas. Spectrum 
must be available in ways that carriers seeking to serve rural America 
can utilize this finite resource, such as through small geographic 
license sizes and with interoperable devices. I am pleased that the 
upcoming 600 MHz incentive auction will utilize Partial Economic Areas 
and require interoperability, and I thank the Committee for their 
support of these issues. And CCA will continue to urge use of smaller 
geographic license sizes, even with higher band spectrum now being 
contemplated.
    The 600 MHz auction is just the beginning of unleashing access to 
additional spectrum. As mobile broadband use continues to grow, 
additional spectrum will be required to maintain existing coverage and 
advance new technologies that promise faster, more efficient access. 
For example, deploying LTE-Advanced and LTE-U will require maximized 
use of licensed and unlicensed frequencies. We also must consider new 
ways to make unused spectrum in rural areas available for carriers 
willing to provide coverage. This is why CCA supports bills like the 
Rural Spectrum Accessibility Act, championed by Senators Fischer and 
Klobuchar, and appreciate the bipartisan support for the bill from 
other members of the Committee, including Senators Wicker, Sullivan, 
and Manchin.
    Additionally, carriers must be able to deploy physical 
infrastructure--the towers, base stations, and wires that transmit and 
carry wireless service in a timely manner to keep pace with consumer 
and network demands. Service in underserved and unserved rural areas is 
often dependent on the ability to site on Federal lands and facilities, 
yet unfortunately carriers face delays and other obstacles while 
working through the siting process. Meaningful shot clocks, established 
points-of-contact, and inventories are critical. CCA supports the 
concepts in the MOBILE NOW Act that will help carriers of all sizes 
maintain and expand mobile broadband services, through both access to 
spectrum and easing barriers to deployment, and thanks Chairman Thune 
and several members of the Committee for their leadership on these 
issues.
    All carriers must be able to provide both the devices consumers 
demand and nationwide services, regardless of their local footprint. 
For competitive carriers, that means access to the latest devices and 
reasonable roaming for voice and data services. On both fronts, CCA 
members are working hard to help themselves, and we appreciate 
Congress's and the FCC's support for these important policies where 
intervention is necessary to ensure competition in the industry.
    Finally, carriers must be able to cost effectively serve their 
customers as well as connect with each other. Like roaming, this means 
Congress and the FCC should implement policies that support reasonable 
interconnection, and ensure carriers have access to backhaul and 
special access at competitive terms and conditions. CCA is hopeful that 
the FCC will finally conclude, during Chairman Wheeler's tenure, the 
decade-long special access proceeding, providing regulatory certainty 
to carriers over these critical network components and direct benefits 
to consumers.
Conclusion
    CCA members work hard to maintain and expand mobile broadband 
service throughout the country while providing important competition 
and innovation within the industry. Despite significant efforts to 
deploy mobile broadband in rural areas, including through significant 
private investment paired with USF support, Congress and the FCC have a 
long way to go before the goal of ubiquitous mobile broadband service 
is realized. It is essential for all Americans to participate in the 
latest technological innovations and compete in the modern mobile 
economy. Universal Service policies must match this goal to fulfill 
Congress's mandate to provide reasonably comparable services in urban 
and rural areas, and USF support must be available to preserve and 
sustain service where available today and to expand networks 
nationwide.
    Thank you for your interest in these issues and holding today's 
important hearing. I look forward to continuing to work with you and 
the FCC to make these policies a reality, and welcome any questions you 
may have.

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

    Senator Wicker [presiding]. Thank you very much.
    And I want to express my appreciation to Senator Schatz for 
beginning the hearing in my absence. The National Prayer 
Breakfast ran long, and I probably needed every bit of it, but 
it did run long and I just got back. So thank you very much, my 
colleague and teammate, for getting us started.
    We will now hear the testimony from Mr. Carr. Thank you.

          STATEMENT OF JAMES G. CARR, CEO, ALL POINTS

         BROADBAND, ON BEHALF OF THE WIRELESS INTERNET

             SERVICE PROVIDERS ASSOCIATION (WISPA)

    Mr. Carr. Good morning. Thank you, Chairman Wicker, Ranking 
Member Schatz, and members of the Committee. My name is Jimmy 
Carr, and I am the State Outreach Chairman for WISPA, the trade 
association that represents wireless Internet service 
providers, or the so-called WISPs. We represent more than 800 
providers in all 50 States. I am also the CEO of All Points 
Broadband, a hybrid-fiber-wireless Internet service provider 
that serves customers in Virginia, Maryland, and West Virginia. 
I am honored to be here today to present WISPA's thoughts on 
the future of the Connect America Fund.
    The WISP industry provides fixed Internet service to 
approximately 3 million Americans. The vast majority of WISPs 
operate in rural communities that wireline providers have 
chosen not to serve. Where there is no access, a WISP can 
provide it, and where there is no competition, a WISP can 
create it.
    Our industry is one that the members of this committee and 
policymakers more generally need to know more about. In a 
nutshell, we are small businesses investing private capital 
deploying innovative technology to solve what just about 
everyone agrees is one of the most important issues facing our 
Nation, which is connecting rural America.
    Over the past few years, there have been exponential 
improvements in the fixed wireless equipment we deploy, and the 
global equipment ecosystem has never been more robust. Fixed 
wireless can, should, and with a smart regulatory framework 
will be an extremely important component of any strategy to 
connect rural America in a cost-effective way. Indeed, the vast 
majority of WISPs have built their network without the benefit 
of any Federal subsidies primarily because of the structure of 
the Communications Act. WISP networks are typically designed so 
that the so-called last mile between a customer's home and the 
global Internet is made wirelessly over transmitters at fixed 
locations. WISPs provide this connectivity primarily over 
unlicensed and lightly licensed spectrum. Taking advantage of 
available unlicensed spectrum, substantially reduces our costs 
of deployment and the timeline on which we can deploy.
    Unlike mobile wireless networks, the fixed wireless 
networks that WISPs build can offer our customers virtually 
unlimited data, enabling rural Americans to enjoy data-
intensive services such as telemedicine, teleworking, online 
education, and streaming video.
    Last year, the FCC implemented the Rural Broadband 
Experiment Program to gather real-world data on how to deploy 
next generation networks in rural areas. WISPs successfully 
competed for funding through this program, and WISPA believes 
there are several conclusions from the program that should be 
taken into account as the CAF Phase II framework is finalized. 
The most important conclusion from this process is that fixed 
wireless broadband delivered over unlicensed spectrum is a 
cost-effective way of providing universal service in rural 
America.
    Another important conclusion is that by working with 
industry, the FCC can develop reasonable gating and financial 
eligibility requirements that will promote greater competition 
in the auction from small providers without increasing the risk 
to the taxpayer. Our specific recommendations on gating 
requirements are described in my written testimony.
    WISPA believes that the principal objective of the Connect 
America Fund should be connecting as many rural Americans as 
possible in the most cost-effective way possible. To achieve 
this goal, the program should not prioritize fiber to the home 
over other technologies and it should not regulate bidders 
using unlicensed or lightly licensed spectrum to the last 
funding category. Rather, the FCC should adopt uniform speed, 
latency, and data requirements and award support to bidders who 
can meet those requirements in the most cost-effective way. 
Fiber is an excellent technology. It is also relatively 
expensive, especially in rural America, and in an environment 
where support funds are limited, the objectives of serving as 
many Americans as possible and doing as much fiber-to-the-home 
build as possible are simply mutually exclusive. That is a 
matter of plain arithmetic.
    With regard to unlicensed and lightly licensed spectrum, 
WISPs have been successfully deploying in this spectrum to 
provide service to millions of Americans for many years. It is 
a public resource that is already available to connect rural 
America and should not be excluded from the CAF toolkit.
    For the auction itself, the areas available for bid should 
be determined by the most recent information available to 
prevent subsidies from being used to overbuild privately funded 
networks. To this end, the FCC should also commence a 
proceeding to consider whether CAF support provided to price 
cap carriers should be scaled back based on post-election 
service by an unsubsidized competitor.
    Finally, WISPA urges Congress to rewrite the Communications 
Act so that functionally equivalent services are treated in the 
same way. Consider that almost half of American households 
choose not to subscribe to a fixed voice service, and yet we 
are allocating billions of dollars of subsidies on the basis of 
whether or not fixed voice and broadband are available on the 
same bill from the same provider in a particular Census block. 
This makes no sense.
    In the short term, WISPA asks this committee and the 
Congress to establish a standalone broadband fund that allows 
all providers and all technologies to compete on an equal 
footing.
    Thank you and I look forward to your questions.
    [The prepared statement of Mr. Carr follows:]

  Prepared Statement of James G. Carr, CEO, All Points Broadband, on 
 behalf of the Wireless Internet Service Providers Association (WISPA)
    Chairman Wicker, Ranking Member Schatz, and Members of the 
Committee: My name is Jimmy Carr, and I am the State Outreach Chair of 
WISPA, the Wireless Internet Service Providers Association. WISPA is 
the trade association for wireless Internet service providers, or 
``WISPs.'' WISPA represents more than 800 providers of fixed wireless 
Internet service operating in every state in the Nation. I am also the 
Chief Executive Officer of All Points Broadband, a hybrid-fiber-
wireless ISP based in Ashburn, Virginia, serving customers in Virginia, 
Maryland and West Virginia. I am honored to be here today to share with 
you WISPA's views on the future of the Connect America Fund (CAF).\1\
---------------------------------------------------------------------------
    \1\ My testimony does not address the Federal Communications 
Commission's Mobility Fund, which subsidizes mobile wireless service.
---------------------------------------------------------------------------
Background
    Some 2,500 WISPs provide fixed Internet access to approximately 
3,000,000 Americans. The vast majority of WISPs operate in rural 
communities and other sparsely populated areas that wireline providers 
have declined to serve. In many rural areas, WISPs provide the only 
source of terrestrial Internet access. Of the 48 percent of rural 
Americans that have only one option for fixed ``advanced 
telecommunications capability,'' the local WISP may well be that sole 
provider.\2\ Where there is no Internet connectivity, a WISP can 
provide it, and where there is no competition, a WISP can create it. We 
compete with Fortune 100 companies and other subsidized incumbents on 
the basis of customer service and price. Unlike the vast majority of 
large ISPs that bundle Internet access with video and entertainment 
services, most WISPs provide standalone Internet service. We provide 
the connectivity that enables rural customers to take advantage of 
teleworking, telemedicine, online education, and services like Netflix 
that are having a disruptive and consumer-friendly impact in the 
content marketplace. The principal value proposition WISPs offer 
customers is virtually unlimited data. For example, the median user on 
my company's most popular residential package downloads more than 100 
GB of data each month. This volume of data is unavailable on satellite 
services and would cost in excess of $700 per month on a mobile hotspot 
offered by a large wireless carrier.
---------------------------------------------------------------------------
    \2\ See 2016 Broadband Progress Report, FCC 16-6, GN Docket No. 15-
191 (rel. Jan. 29, 2016) at 38. The 2016 Broadband Progress Report also 
found that 13 percent of rural Americans have multiple options for 
fixed ``advanced telecommunications capability.''
---------------------------------------------------------------------------
    WISP networks are typically designed with a hub-and-spoke 
architecture, in which the spoke, or ``last-mile'' connection between a 
customer's home and a fiber-optic connection to a major data center is 
made wirelessly between transmitters at fixed locations. Though a 
number of WISPs are now deploying in licensed spectrum where it is 
available, necessary to provide quality service, and cost-efficient for 
their business, WISPs transmit primarily over unlicensed spectrum in 
various bands, including 900 MHz, 2.4 GHz, and 5 GHz, as well as the 
``lightly-licensed'' 3.65 GHz band. Using unlicensed and lightly-
licensed spectrum substantially reduces our costs of deployment and 
enables us to expand rapidly to meet consumer demand. Significantly, 
WISPs are able to provide affordable broadband service to rural and 
remote areas that cannot be cost-effectively served by wired 
technologies because the relatively low population density does not 
support the capital expense of fiber-to-the-home, cable, and other 
wireline platforms.
    Over the past few years, manufacturers of fixed wireless technology 
have dramatically increased the speed and capacity of equipment, while 
improving unit economics. The global equipment ecosystem is stronger 
and more dynamic than it has ever been. Companies like Cambium, 
Ubiquiti, Mimosa, and Adaptrum are revolutionizing the space. They are 
targeting a huge market--the 2/3rds or so of the global population who 
have never been served by a wire, and never will. Fixed wireless 
operators in America are the beneficiaries of massive global R&D 
spending on improved fixed wireless capabilities.
    Under any definition, nearly all of WISPA's members--including my 
company--are small businesses. Our smallest members are individual 
owner/operators that are providing connectivity to their friends and 
neighbors in a previously unserved rural area. America's largest WISP 
is Rise Broadband, with 800 employees serving approximately 200,000 
customers in sixteen states. My company, All Points Broadband, is 
somewhere in the middle, with twenty employees serving approximately 
3,500 customers.
    In many ways, my company is also an example of the evolution that 
is taking place in the fixed wireless industry. As a result of the 
continuous and exponential improvements in the capability of fixed 
wireless equipment over the past few years, operators can now realize 
significant economies of scale, which in turn enables us to expand our 
coverage areas and continuously reinvest in our networks. More than 
ever before, WISPs of all sizes are attracting private capital to 
address what policymakers at every level and across the political 
spectrum agree is a critical need for our nation--closing the digital 
divide.
    All Points Broadband commenced operations in the mid-Atlantic in 
November of 2014, and has invested more than $6.5 million to upgrade 
and expand our network in our first 14 months of operations. We have 
built our subscriber base through acquisitions, organic growth and 
better service, such as faster speeds that support our customers' 
desire to stream video through over-the-top services such as Netflix 
and Hulu. We serve fixed wireless customers from several hundred access 
points that are located on large commercial towers, municipal water 
tanks, commercial buildings, grain silos, and other vertical 
infrastructure. While fixed wireless is our primary access technology, 
before we make any major capital investment, All Points Broadband 
considers whether another technology, such as fiber-to-the-home will be 
cost-effective over the deployment lifetime, and we are beginning to 
install fiber in more suburban areas where our existing customer base 
and market projections justify the investment The same trend is 
occurring throughout our industry. The number of WISPs that are 
investing to convert wireless customers to fiber is growing every day.
    The vast majority of WISPs, including All Points Broadband and the 
companies we acquired, have built their networks without the benefit of 
any Federal subsidies--no Universal Service Fund (USF) support from the 
FCC, no broadband stimulus funding from NTIA or USDA, no Rural 
Utilities Service support. The primary reasons for this are three-fold. 
First, with respect to USF, the FCC has interpreted the Communications 
Act to limit eligibility to providers of ``telecommunications''--in 
other words, providers of voice service that met certain Federal and 
state requirements. Second, until recently, the FCC has made the policy 
choice to favor incumbent carriers for billions of dollars in funding. 
Third, the reporting obligations and administrative burdens associated 
with government programs have a disproportionate impact on smaller, 
entrepreneurial companies, many of which simply do not have the 
resources to participate in, and comply with, regulatory and subsidy 
schemes with origins in a bygone era when the only service was voice, 
which was only provided by wireline monopolies.
    In November 2011, the FCC transformed its USF rules. In the four 
years since those rules became effective, the FCC has pledged and 
provided billions of dollars of support to a single class of 
``telecommunications'' providers--the price cap carriers, the largest 
of the large telephone companies. The FCC's stated rationale for this 
decision was that ``[m]ore than 83 percent of the approximately 18 
million Americans that lack access to residential fixed broadband at or 
above the Commission's broadband speed benchmark [of 4 Mbps down/1 Mbps 
up] live in areas served by price cap carriers.'' \3\
---------------------------------------------------------------------------
    \3\ Connect America Fund, 26 FCC Rcd 17663, 17673 (2011) (``USF/ICC 
Transformation Order''). In the 2016 Broadband Progress Report, the FCC 
found that 34 million Americans lack access to fixed broadband speeds 
of at least 25 Mbps down/3 Mbps up. See 2016 Broadband Progress Report 
at 33.
---------------------------------------------------------------------------
    At first glance, there is logic to directing support to areas where 
upgrades were most needed; but consider the signal this sends to 
decision-makers and to the capital markets. In effect, the program is 
rewarding those multi-billion dollar, legacy monopolies for their 
unwillingness or inability to deploy fixed broadband in the very areas 
where they already have plant and customers, giving them a huge 
advantage over potential competitors. Meanwhile, smaller telephone 
companies, cooperatives, WISPs and others were left on the sidelines 
and at an even greater competitive disadvantage. The program is 
subsidizing and entrenching incumbent monopolies at the expense of 
innovation and competition.
The Rural Broadband Experiment Program
    Last year, the FCC implemented the Rural Broadband Experiment 
program that made up to $100 million in support available to broadband 
providers pledging to provide voice and broadband services to unserved 
areas of the country.\4\ The support was awarded to those companies 
that pledged to meet prescribed voice and broadband speed, latency, 
usage and pricing criteria, in the most cost-effective manner, and 
without regard to the specific access technology to be used. Of the 
nine companies that have been authorized to receive support through 
this one-time program, two were WISPs that will be deploying networks 
that use unlicensed or lightly-licensed spectrum to serve customers. 
One of these, a company called Skybeam that is part of Rise Broadband, 
has been designated to receive almost $17 million to support 10 
projects in rural, unserved areas of Illinois, Iowa, Kansas, Nebraska 
and Texas. Skybeam committed to offer voice and broadband at speeds of 
25 Mbps down/5 Mbps up over a network capable of 100 Mbps down/25 Mbps 
up. The other WISP is First Step Internet, which was awarded more than 
$400,000 to provide 10 Mbps down/1 Mbps up service in portions of rural 
Washington state and Idaho. WISPs account for more than half of the 
funds that have thus far been allocated to program recipients.\5\ Other 
recipients include small telephone companies, cooperatives and electric 
utilities.
---------------------------------------------------------------------------
    \4\ See Connect America Fund, 29 FCC Rcd 8769 (2014) (``Rural 
Broadband Experiment Order'').
    \5\ See 2016 Broadband Progress Report at 55 (noting that as of 
December 11, 2015, the FCC had authorized approximately $34 million in 
Rural Broadband Experiment support).
---------------------------------------------------------------------------
    In addition to having their technical proposals fully vetted by the 
FCC's engineers, winning bidders also had to submit letters of credit 
from an insured, investment-grade top-100 bank for the full amount of 
the support level received to date. A number of bidders were unable to 
obtain letters of credit and the FCC did not approve waivers seeking 
additional time to provide the letter of credit or to relax the 
requirements. Winning bidders also were required to apply for and be 
designated as eligible telecommunications carriers (ETCs) through a 
state approval process. By requiring only winning bidders to become 
ETCs--and thus ``telecommunications'' providers eligible for Rural 
Broadband Experiment support--unsuccessful bidders were rightly spared 
from having to spend time and money to become ETCs, and state public 
utility commissions did not have to waste administrative resources 
processing applications from unsuccessful bidders.
    The FCC intended the Rural Broadband Experiment program to provide 
real-world data that would inform future policy decisions,\6\ and 
despite some problems with eligibility requirements, the program has so 
far been a success. There are indeed several lessons from the program 
that WISPA believes should be taken into account as the FCC finalizes 
the Connect America Fund Phase II competitive bidding process. The most 
important conclusion is that fixed wireless broadband delivered over 
unlicensed and lightly licensed spectrum is a cost-effective way to 
provide universal broadband service at the FCC's thresholds. Another 
important conclusion is that by working with industry, the FCC can 
develop reasonable gating and financial eligibility requirements that 
will promote greater competition in the auction without increasing the 
risk to the American taxpayer.
---------------------------------------------------------------------------
    \6\ See Rural Broadband Experiment Order at 8770 (``We will use 
these rural broadband experiments to explore how to structure the Phase 
II competitive bidding process in price cap areas and to gather 
valuable information about interest in deploying next generation 
networks in high-cost areas'').
---------------------------------------------------------------------------
The CAF Program--Recommendations
    Before explaining our specific recommendations, I first want to 
acknowledge the FCC's Wireline Competition Bureau for their 
transparency in briefing stakeholders about their suggestions for the 
CAF auction and their willingness to work with WISPA in considering 
changes to the framework that will benefit small businesses and 
encourage greater competition. We also appreciate the engagement WISPA 
has had with the FCC Commissioners and their staff.\7\
---------------------------------------------------------------------------
    \7\ See, e.g., Letter from Stephen E. Coran, Counsel to WISPA, to 
Marlene H. Dortch, FCC Secretary, WC Docket No. 10-90 (filed Nov. 23, 
2015) (``WISPA Ex Parte Letter''). A copy of this letter is included 
with my testimony.
---------------------------------------------------------------------------
    The CAF competitive bidding process will award up to $175 million 
per year to eligible bidders to support broadband deployment in areas 
where price cap carriers have declined support, and WISPA's members 
have expressed interest in participating. We understand the FCC is 
working on an order that will establish the framework for the auction 
and will, later this year, open a proceeding to establish auction rules 
and procedures. WISPA has been engaged in the process and will continue 
to do so on behalf of our members. In considering our recommendations, 
we hope the FCC will honor the promise it made in the 2011 USF/ICC 
Transformation Order: ``If the incumbent [price cap carrier] declines 
that opportunity in a particular state, support to serve the unserved 
areas located within the incumbent's service area will be awarded by 
competitive bidding, and all providers will have an equal opportunity 
to seek USF support.'' \8\
---------------------------------------------------------------------------
    \8\ USF/ICC Transformation Order at 17731 (emphasis added).
---------------------------------------------------------------------------
Cost-Effective and Technology-Agnostic
    The principal objective of the Connect America Fund should be 
connecting as many unserved Americans as possible in the most cost-
effective way possible. That is, the limited resources available to the 
FCC should be allocated in a way that will provide a threshold level of 
broadband service to as many end users as possible that currently do 
not have access. According to the 2016 Broadband Progress Report that 
the FCC released less than a week ago, ``[t]here is also a significant 
disparity between rural and urban areas, with more than 39 percent of 
Americans living in rural areas lacking access to 25 Mbps/3 Mbps 
advanced telecommunications capability, as compared to 4 percent of 
Americans living in urban areas.'' \9\ Further, ``25 percent of rural 
Americans lack access to 10 Mbps/1 Mbps fixed terrestrial broadband 
services compared to 2 percent of urban Americans, and 19 percent of 
rural Americans lack access to 4 Mbps/1 Mbps fixed terrestrial 
broadband service compared to 2 percent of urban Americans.'' \10\ With 
a well-conceived framework for CAF Phase II, WISPs and other 
competitive providers can do more to help bridge this urban-rural 
divide.
---------------------------------------------------------------------------
    \9\ 2016 Broadband Progress Report at 33-34.
    \10\ Id. at 34 n.242.
---------------------------------------------------------------------------
    WISPA's primary concern is that the FCC's framework must not favor 
one technology over another, but rather encourage maximum competition 
among all bidders that can meet uniform thresholds for broadband speed, 
latency, usage and pricing, without regard to the specific technology 
that the bidder plans to deploy. Anything less would be inconsistent 
with the FCC's promise that all bidders will have an ``equal 
opportunity.''
    Based on information that the Wireline Competition Bureau has 
shared with WISPA and other stakeholders, we understand that FCC staff 
has recommended that CAF Phase II support be divided into three 
categories. Category 1 would be reserved exclusively for bidders 
proposing to deploy fiber-to-the-home. Category 2 would be for bidders 
whose deployments will meet, in general terms, each of the following 
three criteria: speeds of at least 25 Mbps down and 3 Mbps up, round-
trip latency of 100 milliseconds or better and high data caps, and 
whose deployments will use licensed spectrum. In the unlikely event 
there is any funding remaining from the first two categories, Category 
3 would be for bidders who use unlicensed spectrum, or who meet only 
two of three requirements for speed, latency and data set out in 
Category 2.
    WISPA has two significant concerns regarding the proposed structure 
of the reverse auction, which will be shared by anyone who believes 
that limited resources should be allocated as efficiently as possible.
    First, the proposed requirement that Category 2 bidders use 
licensed spectrum will exclude the vast majority of fixed wireless 
providers from competing in the auction and will foreclose 
participation by those who can deploy in the most cost-effective 
manner, meaning that the limited number of other bidders will receive 
more support to serve fewer unserved locations. For many years, WISPs 
have successfully used unlicensed and lightly licensed spectrum to 
provide service to millions of Americans. Most operate in rural areas 
where there is sufficient and uncongested unlicensed spectrum that can 
be used to connect Americans to the Internet. What better use of this 
public resource is there than connecting rural and unserved Americans 
in a cost-effective manner? Unlicensed spectrum is a public resource 
that is already available, and is already being used to achieve this 
public purpose. What sense does it make to exclude from the toolkit for 
the CAF auction? The funding provided by the FCC to Skybeam and First 
Step Internet in the Rural Broadband Experiment program is an excellent 
case in point. Both of these companies' technology platforms were 
vetted by FCC technical staff who concluded that unlicensed spectrum 
could be used to meet the requirement of providing 100 percent coverage 
in the relevant service areas. In fact, price cap carriers that have 
accepted CAF funds are not bound to any particular technology--they can 
deploy cost-effective unlicensed fixed wireless technology if they 
want, so long as they provide 10 Mbps down/1 Mbps up and meet other 
technology-agnostic performance criteria.\11\
---------------------------------------------------------------------------
    \11\ See Connect America Fund, 29 FCC Rcd 15644, 15649 (2014).
---------------------------------------------------------------------------
    WISPA's second concern is the possibility that the FCC will adopt a 
``waterfall'' funding structure, in which all Category 1 bids are 
awarded before any funds are made available to Category 2 bidders, and 
then all Category 2 bids are awarded before any funds are made 
available to Category 3 bidders.
    The purpose of the CAF auction should not be promoting one access 
technology over another, but rather advancing the objective of ensuring 
that all Americans have access to adequate service. Fiber is indeed an 
excellent access technology--All Points Broadband and many other WISPs 
rely on fiber to serve their customers, and are accelerating their 
fiber-to-the-home deployments. However, relatively speaking, fiber is a 
very expensive technology, and in an environment where resources are 
finite, the goal of providing service that meets the FCC's definition 
of ``advanced telecommunications capability'' to as many Americans as 
possible, on the one hand, and of providing fiber-to-the-home to as 
many locations as possible, on the other, are mutually exclusive--this 
is an undeniable economic reality. Further, a structure that 
prioritizes fiber-to-the-home may disadvantage the most rural locations 
and communities, where the economics of this technology are frequently 
the most challenging. Where ``advanced telecommunications'' as 
interpreted by the FCC can be delivered via fixed wireless or another 
technology at a lower cost than fiber, the auction structure should not 
stack the deck before bidding has even begun. Rather, the auction 
should provide support for the group of bidders that can meet the FCC's 
performance criteria and serve the most Americans in the most cost-
effective manner. The FCC successfully used this approach in the Rural 
Broadband Experiment program, and there is no reason to deviate from 
that practice.
Auction Eligibility
    Another key aspect of the competitive bidding framework is the pre-
auction eligibility criteria. The FCC staff explained that it would be 
recommending that bidders must submit audited financial statements as a 
pre-condition to participating in the auction. But, as WISPA has 
pointed out, many small businesses do not have audited financial 
statements, and should not be required to spend $25,000 or more for an 
audit on a speculative basis before the auction, just to participate. 
To address this problem, WISPA and others believe the FCC should 
establish a means by which small providers with fewer than 25,000 
broadband connections will be permitted to certify before the auction 
that they will provide audited financial statements within a certain 
period if and after being selected for support. This is similar to the 
approach that the FCC took with regard to ETC designation in the Rural 
Broadband Experiment program. WISPA agrees that winning bidders that 
are unable to provide the audited financials within a reasonable period 
of time after being selected for support should be subject to 
reasonable monetary forfeitures.
Post-Auction Financial Requirements
    The FCC required Rural Broadband Experiment recipients to submit a 
letter of credit from a federally insured top-100 bank with a BBB- 
credit rating. If a bidder defaults on a build-out or other program 
requirements, the FCC can suspend support and draw on the letter of 
credit to cover the amount of disbursed support. As a threshold matter, 
the requirement to maintain a letter of credit to protect the taxpayer 
is certainly reasonable. However, applying lessons from the Rural 
Broadband Experiment, WISPA is urging the FCC to modify the specifics 
of the letter of credit requirement for the CAF II reverse auctions.
    Letters of credit have annual carrying costs (around four percent) 
and appear as liabilities on a company's balance sheet--essentially, 
they are viewed as a loan that limits a support recipient's borrowing 
capacity on a dollar-for-dollar basis, although the winning bidder 
never receives the letter of credit proceeds. In the Rural Broadband 
Experiment program, a recipient is required to maintain a letter of 
credit for the entire amount of support it received and for the entire 
term of the support, regardless of progress towards build-out. This 
structure increases the recipient's expenses and reduces its debt 
capacity for the entire life of the funded project--despite the fact 
that the risk to the taxpayer decreases as the recipient draws support 
and satisfies its build-out requirements. Once build-out is complete, 
there is no benefit to the taxpayer by continuing to increase expenses 
and limit the borrowing capacity of a support recipient that has 
satisfied its obligations to the fund. We believe the letter-of-credit 
requirements for the CAF process should be modified to address this 
unnecessary constraint on support recipients.
    Here are WISPA's specific proposals with respect to the letter of 
credit requirement:

        First, the FCC should expand the list of eligible banks to 
        enable greater participation by smaller broadband providers in 
        a manner that does not compromise the integrity of the CAF 
        program. WISPA and the American Cable Association have 
        developed a detailed proposal and look forward to discussing it 
        with the FCC in the very near future.

        Second, the FCC should give winning bidders at least six months 
        to obtain and submit the letter of credit.

        Third, the amount required to be covered by the letter of 
        credit should decline over time as the amount of remaining 
        support declines. This will reduce the recipient's liabilities 
        and increase its borrowing power to invest in network expansion 
        and upgrades.

        Fourth, the letter of credit should not be required to be 
        maintained beyond the date on which build-out requirements have 
        been met.

    Adopting these recommendations will assure the FCC's interest in 
recovering support funds in the unlikely event of a default and will 
increase participation in the auction, especially among small 
providers.
Auction Design
    WISPA's detailed views on the design of the auction are not yet 
fully formed, but there are a few high-level principles that should 
apply. First, the selection criteria should prioritize cost-
effectiveness--which bidder can serve the greatest number of unserved 
locations in the geographic area at the lowest cost. Second, the areas 
available for bid should be determined by information reported on the 
FCC Form 477 that is as close to the beginning of the auction as 
possible. This will mitigate the problem that arises when old 
information is used and support is provided to areas that are already 
served by unsubsidized providers. If there is one thing that 
policymakers, taxpayers, and investors of private capital should agree 
on, it is that Federal subsidies should not be awarded to fund 
overbuilding of privately funded networks that are already providing 
service. Third, the bidding process should be simple and short. A 
complicated process requiring an army of economists, lawyers and game 
theorists to navigate will not promote participation by entrepreneurial 
providers, and will expose bidders to a long anti-collusion period that 
will chill transactional activity. And fourth, geographic areas should 
be right-sized--no smaller than a census block, no larger than a 
county.
    WISPA looks forward to providing its further and more specific 
input to the FCC when staff engages stakeholders to share and discuss 
their ideas and suggestions for a successful reverse auction.
Ongoing Support for Price Cap Carriers
    In August 2015, the price cap carriers made their elections to 
accept $1.5 billion annually in CAF Phase II support over the next six 
years--$9 billion in total. The areas where that support is available 
are mostly set, and the FCC generally will not alter the support over 
the six-year term even if unsubsidized carriers subsequently serve the 
areas identified for funding. This acts as a disincentive to private 
investment, network expansion and competition in the broadband market. 
Unsubsidized providers will be reluctant to expand service into areas 
designated for support, even though the subsidized incumbent may not 
intend to build out to the area for several years. And in cases where 
the unsubsidized provider does expand into funded areas, they will be 
competing with a large carrier that has the benefit of Federal support. 
The CAF program has created enough perverse incentives--it should not 
continue to perpetuate monopolies and discourage competition.
    To address these anti-competitive market effects, WISPA suggests 
that the FCC commence a proceeding to consider whether CAF support 
provided to price cap carriers should be scaled back based on post-
election service by an unsubsidized competitor. The FCC could rely on 
FCC Form 477 and re-visit its initial support determination at regular 
intervals. In lieu of funding served areas, the FCC would reclaim the 
allocated support and restore those funds to the universal service fund 
for later distribution through the Remote Areas Fund or another 
program.\12\
---------------------------------------------------------------------------
    \12\ In 2014, the FCC acknowledged that there may be variances 
between the number of unserved locations its model predicted and the 
actual number of unserved locations in a given area. See Connect 
America Fund, 29 FCC Rcd 15644, 15659 n.88 (2014). The FCC asked price 
cap carriers to inform FCC staff if it discovered any differences. 
WISPA notes and appreciates Frontier's recent letter to the FCC 
identifying supported areas where there are fewer unserved locations 
than the FCC's model, which will result in adjustment of Frontier's 
service targets and a pro rata reduction in funding. See Letter from 
Michael Golob, Frontier Senior Vice President, Network and Engineering 
Integration, to Marlene H. Dortch, FCC Secretary, WC Docket No. 10-90 
(filed Dec. 30, 2015).
---------------------------------------------------------------------------
Remote Areas Fund
    Regarding the Remote Areas Fund, in November 2011 the FCC allocated 
up to $100 million for fixed broadband deployment to ``extremely high 
cost'' areas. The FCC has taken no action to implement rules for this 
fund, which would support broadband deployment to those areas that are 
deemed to be the most expensive to serve. Through fixed wireless 
technology, WISPs are well-equipped to deploy to these areas. We urge 
the FCC to propose rules for the Remote Areas Fund at the earliest 
opportunity.
Bringing the Communications Act into the 21st Century
    Finally, the most important and effective step that could be taken 
to improve availability and competition in the broadband market, and to 
foster greater innovation, is within Congress' power. The 
Communications Act is long overdue for an overhaul. The current 
framework draws distinctions on the basis of which access technology is 
used to provide the service. In an all-IP world, these distinctions 
make no sense and create ripples in the regulatory environment that 
have unintended and illogical results, many of which are playing out in 
the Connect America Fund process.
    For example, almost half of American households choose not to 
subscribe to a landline phone service, and yet, as a society we are 
using a requirement that voice and broadband service be available on 
the same bill from the same provider to determine where to allocate 
billions of dollars of subsidies, and who will receive them. This makes 
no sense. As everyone knows, if you have an Internet connection, you 
can have phone service. What's more, if you don't like the phone 
service your ISP offers, you can use Vonage, Magic Jack, or dozens of 
other providers who are competing with one another to earn your 
business every day.
    It is time to re-write the Communications Act to eliminate these 
accidents of history and treat functionally equivalent services in the 
same way. And if rewriting the Communications Act is too much to 
achieve in the near term, WISPA asks this Committee and the Congress to 
eliminate the voice requirement or to establish a standalone broadband 
fund that does not have a voice requirement and allows all providers 
and technologies to participate on an equal footing. We stand ready to 
work with you to craft appropriate legislation.
    Thank you, and I look forward to your questions.
                                 ______
                                 
                                         Lerman Senter PLLC
                                  Washington, DC, November 23, 2015

Marlene H. Dortch, Secretary
Federal Communications Commission
Washington, DC.

 Re: Notice of Oral Ex Parte Presentation WC Docket No. 10-
                                                         90

Dear Ms. Dortch:

    On November 20, 2015, Alex Phillips, President of the Wireless 
Internet Service Providers Association (``WISPA'') and CEO of 
Highspeedlink, Jeff Kohler, Co-Founder and Chief Development Officer of 
JAB Wireless, Inc. dba Rise Broadband, Jimmy Carr, CEO of All Points 
Broadband, Jonathan Allen of Rini O'Neil, PC and undersigned counsel to 
WISPA, met with Carol Mattey, Deputy Chief of the Wireline Competition 
Bureau, and Claude Aiken, Associate General Counsel. The purpose of the 
meeting was to present WISPA's views and concerns about the proposed 
order on circulation that would establish the framework for competitive 
bidding in Phase II of the Connect America Fund (``CAF'') program.
    The WISPA representatives explained that there is significant 
interest among fixed wireless Internet service providers (``WISPs'') in 
participating in the competitive bidding process. Mr. Kohler of JAB 
Wireless, the parent of Skybeam, LLC (``Skybeam''), noted that Skybeam 
had been selected to receive $16.9 million for 10 rural broadband 
experiment projects, all of which would use unlicensed spectrum to meet 
the coverage requirements. Mr. Kohler stated that Skybeam relies on 
competitive and upgradable technology and unlicensed spectrum that can 
be quickly deployed, which had been thoroughly vetted by Commission 
staff prior to Skybeam's selection. Messrs. Carr and Phillips, who 
operate smaller companies, indicated their strong interest in bidding 
for CAF support.
    The WISPA representatives identified several specific concerns with 
the proposed framework. If not properly addressed, these issues would 
effectively preclude WISPs from competing in the competitive bidding 
process, a result that would limit participation, limit the areas 
subject to support and result in an inefficient allocation of limited 
resources to deployments of access technologies that are far less cost-
effective than unlicensed fixed wireless technology. These concerns are 
as follows:

    First, the WISPA representatives opposed any technology-specific 
funding categories and strongly objected to a requirement for Category 
2 that bidders use only licensed spectrum for their deployments. WISPs 
have a track record of successfully building fixed broadband networks 
with unlicensed spectrum in a cost-effective way--roughly one-fifth the 
cost of wireline technologies, as Mr. Kohler explained. The WISPA 
representatives explained that it would be inconsistent for the 
framework to relegate to Category 3 those service providers that deploy 
networks using unlicensed spectrum when those providers can meet all of 
Category 2's speed, usage allowance and latency criteria. Mr. Kohler 
noted that interference would be much less of an issue in rural areas 
where there is little to no contention for spectrum, and that a variety 
of technology solutions, including small cells, could be deployed to 
meet the coverage requirement, as Skybeam's rural broadband experiment 
projects demonstrated.
    Second, the WISPA representatives object to a ``waterfall'' 
competitive bidding process that would award funds first to all 
Category 1 (fiber-to-the-premises) proposals, then would award any 
remaining funds to Category 2 proposals, then would award any remaining 
funds to Category 3 proposals. Instead, the WISPA representatives 
support a technology-neutral approach that is based on cost-
effectiveness--priority should be given to the proposals that provide 
broadband meeting the speed, usage allowance and latency requirements 
to the most locations using the least Federal support.
    Third, the WISPA representatives asked the Commission to expand 
eligibility for banks issuing letters of credit to those that are 
outside the top-100 banks.\1\ Mr. Phillips explained that small WISPs 
have strong relationships with smaller, community banks that understand 
the WISP business and are familiar with their business and financial 
models. Mr. Kohler noted that some top-100 banks did not want to 
participate in the rural broadband experiment program. The WISPA 
representatives pointed out that requiring a top-100 bank to provide 
letters of support would foreclose participation from smaller 
companies.
---------------------------------------------------------------------------
    \1\ See Letter from Thomas Cohen, Counsel to the American Cable 
Association (``ACA''), to Marlene H. Dortch, FCC Secretary, WC Docket 
No. 10-90 (filed Nov. 13, 2015) (``ACA Letter'').
---------------------------------------------------------------------------
    Fourth, consistent with a proposal advanced in the ACA Letter, 
WISPA suggested that the framework include a third alternative for pre-
auction financial qualification that would allow bidders with three-
year broadband track record to post a reasonable upfront amount of 
money in lieu of audited financial statements. The upfront amount would 
be refunded if the bidder was unsuccessful; for successful bidders 
using this option, the money would be refunded and applied to funding a 
post-auction audit. Mr. Phillips explained that small broadband 
providers do not typically have audited financial statements. Mr. Carr 
explained that the cost to prepare an audit can be in the $50,000 range 
and that smaller ISPs with a three-year track record should not be 
required to pay for audits on a speculative basis as a precondition for 
competing in the auction.
    Fifth, the WISPA representatives urged the Commission to rely on 
the most current FCC Form 477 information available at the time 
competitive bidding begins to establish the final list of available 
census blocks. Doing so would encourage continued build-out by 
``unsubsidized competitors'' and obviate the need for a time-intensive 
challenge process.
    In conclusion, the WISPA representatives emphasized that the 
proposed framework would preclude participation by small broadband 
providers. In particular, any one of the first four concerns would be 
extremely problematic; collectively, the impact would be far worse for 
both WISPs that want to participate and the American public that would 
benefit from greater auction participation and cost-effective broadband 
service.
    Pursuant to Section 1.1206 of the Commission's Rules, this letter 
is being filed electronically via the Electronic Comment Filing System 
in the above-captioned proceeding.
            Respectfully submitted,
                                          Stephen E. Coran,
                                                  Counsel to WISPA.
cc: Carol Mattey
Claude Aiken

    Senator Wicker. Thank you very, very much.
    Mr. Rapelyea?

 STATEMENT OF MICHAEL RAPELYEA, VICE PRESIDENT FOR GOVERNMENT 
                     AFFAIRS, ViaSat, INC.

    Mr. Rapelyea. Chairman Wicker, Ranking Member Schatz, and 
the other members of the Subcommittee, I am Michael Rapelyea, 
Vice President of Government Affairs at ViaSat. I am pleased to 
testify about how competition can help extend broadband service 
to the 500,000 rural Americans left behind by the FCC's Connect 
America Fund. A ``fiber everywhere'' approach is not realistic 
or affordable. I am focusing here on the highlights of written 
testimony in the record.
    ViaSat is an American success story. We started in a garage 
30 years ago. We now employ over 3,000. We invested billions in 
broadband technology. We believe in disruption. We believe in 
better before cheaper. We believe in competition. Our satellite 
broadband technology has disrupted the broadband industry by 
driving down the cost per bit and driving up service quality to 
customers. We deliver bandwidth speeds to anyone anywhere. Here 
are three examples.
    First, in the airline WiFi sector, our service is on board 
hundreds of JetBlue, Virgin, and United jets. JetBlue 
passengers live stream Amazon Prime video for free. Virgin 
passengers live stream Netflix for free. With ViaSat service, 
100 passengers connect simultaneously. Before ViaSat, five 
passengers connected.
    Second, ViaSat has 700,000 home broadband subscribers. One-
third came from terrestrial solutions. These folks had choices. 
They joined us because we were better, not because we were the 
only option. We deliver high definition video streaming speeds 
of up to 25 megabits per second in some areas of the country 
today, and we will do it across the country by next year.
    Third, we deliver broadband satellite to government and 
military users. Our special operations forces rely on ViaSat. 
During Hurricane Sandy, we provided connectivity to the 
National Guard and the American Red Cross. When everything was 
down, we were up. Like most communications companies, ViaSat 
home subscribers follow U.S. population distribution. Most of 
our customer are exurbs or in heavily populated areas. Some are 
rural. In other words, we serve a blend.
    Economies of scale apply to us well. In Mississippi, for 
example, our customers cluster around Jackson, Tupelo, Oxford, 
and Hattiesburg versus rural parts of the state.
    We currently use four spacecraft and are launching more to 
keep up with demand. ViaSat's first generation of satellites 
compete well against DSL and legacy cable. Our second 
generation design competes against cable offering speeds of 25 
to 100 megabits per second. Our third generation features 
speeds approaching fiber with highly flexible bandwidth that we 
can allocate to customer demand.
    America's largest airlines, the Department of Defense, and 
almost a million Americans have given ViaSat a shot. Today we 
are asking regulators to give multiple technologies, including 
those on this panel, a shot at competing for the 500,000 homes 
simply left behind by current CAF policies. It is hard to see 
how we get there from here. It is a real head-scratcher. There 
does not seem to be enough money, and the budget shortfall 
could be as much as $750 million.
    Satellite broadband can solve this problem for three main 
reasons. Today we are competing directly with terrestrial 
technologies, and we are winning. Today we are delivering what 
customers want: speed. Today we are far more cost-effective 
than fiber.
    On top of this, we have submitted a proposal to the FCC 
that features 50 megabits per second speeds. That is double the 
25 megabit per second speeds of the FCC's benchmark.
    Despite all of this, we may not have a chance to compete 
for most of those households. The current proposals limit us to 
the costliest and hardest-to-reach households. It is really 
hard to make a business case out of that. We would like to 
compete to solve all of the problem, not just part of it. Like 
other communications companies, if we do not get critical mass 
of customers or a blend of customers, we cannot make the long-
term capital commitments needed to address all of the problem.
    Our ask is simple. Promote competition. Avoid picking 
winners and losers. Allow all broadband providers the chance to 
compete for all of those left-behind households.
    Thank you.
    [The prepared statement of Mr. Rapelyea follows:]

 Prepared Statement of Michael Rapelyea, Vice President for Government 
                         Affairs, ViaSat, Inc.
    Chairman Wicker, Ranking Member Schatz, and other Members of the 
Subcommittee, I am Michael Rapelyea, Vice President for Government 
Affairs of ViaSat, Inc. (``ViaSat''). I am pleased to have the 
opportunity to testify before you today on ViaSat's views about how 
policymakers can harness competition among service providers and 
communications technologies to ensure that limited universal service 
support is used efficiently and effectively to extend the benefits of 
broadband to rural America.
    ViaSat is a U.S.-based company started by its three founders in a 
garage in San Diego nearly 30 years ago. From those humble beginnings, 
ViaSat has grown into a global broadband services and technology 
company with over 3,000 employees. ViaSat also is a leading provider of 
communications solutions to U.S. consumers, the U.S. government, and 
the U.S. military. Simply stated, we invent, design, and build 
telecommunications networks and systems--with a particular focus on 
satellite technologies.
    We use a fleet of spacecraft to provide our Exede broadband service 
to fixed and mobile terminals. Our advanced technology has 
revolutionized the industry by reducing the ``cost per bit'' of 
delivering broadband service, providing a high-quality service to end 
users, and affording millions of Americans an effective competitive 
alternative to wired and wireless terrestrial services. We turn 
electrons into bandwidth and bandwidth into quality broadband service.
    Our satellite broadband customers include individual consumers, 
small and large businesses, government and military users, and major 
airlines such as United, JetBlue and Virgin America. ViaSat serves 
nearly 700,000 customers in their homes and offices, and provides in-
flight broadband on approximately 419 commercial, 300 business, and 400 
government aircraft.\1\ Nearly one million personal electronic devices 
connect each month to the Wi-Fi service provided through these 
broadband connections to aircraft. For example, today ViaSat technology 
can power my 10 year old son Teddy's iPad on a JetBlue flight heading 
to Disney and Netflix on my iPad on a Virgin America flight heading to 
ViaSat's California headquarters.
---------------------------------------------------------------------------
    \1\ See Press Release: ViaSat Announces Second Quarter Fiscal Year 
2016 Results (Nov. 9, 2015), available at http://investors.viasat.com/
releasedetail.cfm?ReleaseID=941679.
---------------------------------------------------------------------------
    ViaSat also provides satellite broadband service to government and 
military users for their essential missions and communications needs. 
Among other things, we provide the Department of Defense with critical 
communications capabilities providing situational awareness to 
America's warfighters on the ground, at sea and in the air. For 
example, in connection with Project Liberty we delivered secure 
communications channels to U.S. Special Forces in Afghanistan. We also 
provide critical public safety connectivity, including to the National 
Guard and the American Red Cross during Hurricane Sandy, and to law 
enforcement apprehending the Arizona sniper.
    It may surprise some, but ViaSat's customers are distributed across 
the United States in a manner that roughly follows the U.S. population 
distribution, as depicted below. So our strongest markets are more 
heavily populated areas, not just rural.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    We currently use four spacecraft to provide service, and are 
launching more to keep up with growing customer demand, expand 
capacity, and provide even better service. ViaSat-1, launched in 2011, 
supports speeds to individual users of up to 25/3 Mbps and has a total 
capacity of approximately 150 Gbps. When it was launched, ViaSat-1 had 
more than 10 times the throughput of the other Ka-band satellites in 
orbit.\2\ ViaSat's second-generation high-capacity satellite, to be 
launched within the next year, will double this throughput to over 300 
Gbps, and will support speeds well over 100 Mbps.\3\ The third-
generation ViaSat high-capacity satellites under development each will 
provide over 1 Terabit per second (1,000 Gbps) of throughput and even 
higher speeds.\4\ Our newest and most advanced satellite designs are 
highly flexible, allowing us to allocate bandwidth where it is most 
needed.\5\
---------------------------------------------------------------------------
    \2\ See ViaSat-1 FAQ, available at https://www.viasat.com/sites/
default/files/legacy/web/ViaSat-1_FAQ_3_09_V3.pdf (last visited Jan. 
27, 2016).
    \3\ See ViaSat Q2 2016 ViaSat Earnings Conference Call (Nov. 9, 
2015), available at http://investors.viasat.com/events.cfm.
    \4\ Id.
    \5\ Id.
---------------------------------------------------------------------------
    Today, in addressing the current state of the universal service 
fund (``USF''), efforts to implement the Connect America Fund 
(``CAF''), and other ongoing reform efforts, I would like to emphasize 
four key points:

  1.  Satellite technologies today are providing high-quality broadband 
        services to American consumers--and those same technologies are 
        fully available for use in connection with the CAF;

  2.  Satellite broadband technologies provide a superior end-user 
        experience that is optimized for the vast majority of Internet 
        traffic;

  3.  Satellite broadband technologies offer an extremely cost-
        effective means of serving rural and remote areas of the 
        country; and

  4.  ViaSat's network expansion plans will be influenced by CAF and 
        other USF policies.

    But current policy proposals do not provide an environment 
conducive to ViaSat making long-term commitments to step into the shoes 
of the wireline incumbents that have declined to continue to serve the 
costliest and hardest to reach parts of the Nation that are the focus 
of the final stages of the CAF.
I. Satellite Technologies Provide High-Quality Broadband Services to 
        Consumers Today
    By investing billions of dollars to develop cutting-edge 
technologies, ViaSat has fundamentally changed the broadband game. By 
significantly increasing the level of throughput (i.e., bandwidth or 
``speed'') achievable over satellite networks, and dramatically 
lowering the ``cost per bit,'' we are now attracting customers from our 
terrestrial competitors, such as 3G and 4G wireless, cable, and DSL. 
Indeed, roughly one-third of ViaSat's approximately 700,000 satellite 
broadband subscribers have switched over from terrestrial broadband 
alternatives. There is no better indication of widespread market 
acceptance of satellite broadband solutions.
    Furthermore, as shown in the following graph, ViaSat's satellite 
broadband service has an overall user satisfaction rating that is on 
par with that of leading cable and DSL-based broadband service 
providers. Notably, the reported level of satisfaction has been rising, 
and is considerably higher, since ViaSat-1 was launched in 2011.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    FTTH: FiOS, FTTN: U-Verse, Cable: average score of CableOne, 
Charter, Comcast, Cox, MediaCom, Time Warner, DSL: average score of 
AT&T, Century Link, FairPoint, Frontier, Verizon, Windstream. ViaSat 
not ranked in 2013, data point is interpolated.

    Source: Consumer Reports issues published February 2010, May 2011, 
June 2012, May 2013, May 2014, and May 2015, available at 
www.consumerreports.org.

    Things have changed dramatically for the better in the past five 
years. With due respect to Chrysler, ``We are not your father's 
satellite broadband service.''
II. Satellite Broadband is Optimized for the Vast Majority of Internet 
        Traffic
    ViaSat's broadband performance has been made possible by dramatic 
improvements in the throughput--i.e., bandwidth or ``speed''--
achievable over satellite and improvements with network equipment on 
the ground. As I described above, the satellites and network 
architecture that ViaSat plans to deploy in the coming years will 
support even higher levels of throughput and speed, translating into 
even higher-quality broadband service for consumers--service that will 
more than keep pace with the improvements implemented over time by our 
competitors.
    The quality of any broadband service depends on a combination of 
service characteristics,\6\ but bandwidth is the central value 
proposition of a broadband service and speed is the most significant 
driver of consumer satisfaction. Even a cursory examination of the 
marketing materials of leading broadband providers reflects that speed 
is one of the two most critical elements used to market service to the 
consumer (along with price).\7\ And ViaSat has found that the speed of 
an offered service has a greater impact on consumer adoption than any 
other factor.
---------------------------------------------------------------------------
    \6\ See generally Mark D. Dankberg, Thomas E. Moore, and Girish 
Chandran, Toward a National Broadband Plan: Ensuring a Meaningful 
Understanding of Broadband Capabilities and Facilitating Competitive 
Choices (Aug. 31, 2009), attached to Letter from John P. Janka, Counsel 
to ViaSat to FCC, GN Docket No. 09-51 (Aug. 31, 2009) (discussing the 
multiple dimensions of ``broadband'' service and cautioning against the 
adoption of overly restrictive performance standards that could 
artificially constrain the evolution of broadband service).
    \7\ See, e.g., http://www.verizon.com/home/fios-fastest-internet/
#plans (last visited Jan. 12, 2016) (listing Verizon FIOS plans and 
emphasizing, in bold type, speeds and prices associated with each 
offering).
---------------------------------------------------------------------------
    The reason for this is simple: The amount of bandwidth available to 
a customer has a significant and direct impact on the quality of the 
end-user experience for the most popular broadband applications, which 
account for the vast majority of Internet traffic. The following chart, 
based on data from Cisco's Visual Networking Index, shows a breakdown 
of consumer Internet traffic by application type last year:
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Notably, Internet video streaming and downloads alone accounted for 
over 60 percent of Internet traffic.\8\ These applications are expected 
to account for more than 80 percent of all Internet traffic by 2019.\9\
---------------------------------------------------------------------------
    \8\ See 2015 Measuring Broadband America Fixed Broadband Report at 
7 n.3 (citing Cisco Visual Networking Index: Forecast and Methodology, 
2014-2019 White Paper (May 27, 2015), available at http://
www.cisco.com/c/en/us/solutions/collateral/service-provider/ip-ngn-ip-
next-generation-network/white_paper_c11-481360.html (``Cisco VNI 
Paper'').
    \9\ Id.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Higher levels of bandwidth permit the transmission of higher-
quality data streams. Consequently, the quality of the end-user 
experience when using these applications is directly tied to the speeds 
available to that user.
    At the same time, higher speeds allow multiple users and devices in 
a given household to access the Internet simultaneously. Notably, 
Gartner, Inc., forecasts that over 13.5 billion consumer devices--and 
over approximately 20.8 billion total devices--will be connected to the 
Internet by 2020.\10\ This would mean roughly three devices for every 
person on the face of the Earth--and significantly more devices per 
person in America's hi-tech society.\11\ It is no surprise that Cisco 
predicts that these demands will cause average broadband speeds to 
double to 43 Mbps by 2019.\12\
---------------------------------------------------------------------------
    \10\ See Press Release: Gartner Says 6.4 Billion Connected 
``Things'' Will Be in Use in 2016, Up 30 Percent from 2015 (Nov. 10, 
2015), available at http://www.gartner.com/newsroom/id/3165317.
    \11\ The U.S. Census projects that worldwide population will exceed 
7.5 billion by 2020. See International Data Base: World Population: 
1950-2050 (last visited Jan. 28, 2016), available at ttps://
www.census.gov/population/international/data/idb/worldpopgraph.php.
    \12\ Id.
---------------------------------------------------------------------------
    ViaSat's satellite broadband network currently provides service of 
up to 25/3 Mbps in certain areas and at 12/3 Mbps everywhere else. With 
the launch of ViaSat-2 within the next year, we plan to introduce 
packages with even higher speeds. These evolving speeds ensure that our 
700,000-plus customers have access to service capable of supporting HD 
video and other in-demand applications. In contrast, many of these 
areas remain entirely unserved by incumbent providers, which might be 
able to offer 10/1 Mbps service years from now, and only with 
significant government subsidies.
III. Satellite Broadband Technologies Offer an Extremely Cost-Effective 
        Means of Serving Rural and Remote Areas
    As noted above, the advanced satellite broadband technologies 
developed by ViaSat have resulted in a ``cost per bit'' for ViaSat's 
network that is dramatically lower than legacy satellite networks. As a 
result, today's satellite broadband networks offer performance that 
meets or exceeds that of its competitors. But ViaSat also offers 
pricing for that performance that is competitive with the alternatives.
    Indeed, ViaSat's network is incredibly cost-effective compared not 
only to last-generation satellite networks, but also compared to 
existing incumbent networks (including cable and DSL)--largely due to 
the enormous capital efficiency inherent in satellite infrastructure 
(although, even for us, it still costs more to serve users in remote 
areas, due to the increased costs associated with installation and 
service calls).
    Indeed, a report commissioned by ViaSat in 2011 estimated that 
nearly half of the housing units identified as ``unserved'' by the FCC 
could be served at lower cost with satellite technologies than with 
terrestrial alternatives.\13\ And even where satellite is not the 
lowest-cost option, its participation in the CAF would spur competition 
and compel other providers to provide more cost-effective service. In 
both cases, allowing satellite broadband providers to participate fully 
and directly in the CAF would result in significant costs savings and 
better program outcomes. Conversely, excluding or limiting the 
participation of satellite broadband providers would unnecessarily 
inflate costs while undermining the universal service policies 
objectives of the CAF.
---------------------------------------------------------------------------
    \13\ See Dr. Charles L. Jackson, Satellite Service Can Help to 
Effectively Close the Broadband Gap (Apr. 18, 2011), attached as 
Exhibit A to Comments of ViaSat, Inc., WC Docket No. 10-90 (Apr. 18, 
2011). Although the data used in that report need to be refreshed to 
reflect the passage of time (e.g., cost information), we believe the 
report's basic conclusions with respect to the relative cost-
effectiveness of satellite technologies remain sound.
---------------------------------------------------------------------------
IV. ViaSat's Business Plans Will Be Influenced by Connect America Fund 
        Policies
    CAF support undoubtedly would facilitate ViaSat's ability to make 
its high-quality broadband services available to millions of additional 
consumers in locations that have been deemed ``unserved'' by the FCC. 
ViaSat is well-positioned to make long-term commitments to serve those 
consumers located in areas supported by the CAF through service plans 
offering high-quality broadband service at attractive price points, but 
ViaSat cannot do so without a fair shot at the same support its 
competitors are seeking.
    Consistent with the FCC's longstanding commitment to competitive 
and technological neutrality, ViaSat has advocated the adoption of CAF 
eligibility criteria that enable broad program participation by 
wireline, wireless, satellite, and all other service providers on the 
same terms and conditions. Stated differently, we believe that policy 
makers should give the best players a chance to compete. As ViaSat has 
explained, this approach would offer the best chance of truly bridging 
the Digital Divide and would facilitate the use of extremely limited 
CAF funding by the most efficient service providers--regardless of the 
technologies they use. This approach would minimize the contribution 
burden placed on average Americans who fund the CAF through surcharges 
on their telephone bills.
    Unfortunately, recent years have seen the adoption of CAF decisions 
and policies that favor incumbents over new entrants and certain 
``traditional'' technologies over newer, more advanced technologies--
and therefore depart from a longstanding commitment to competitive and 
technological neutrality. In effect, this approach picks winners and 
losers before the game even starts.
    First, the lion's share of available funding was earmarked for 
terrestrial incumbents. Now, competitive providers are able to seek 
only a small fraction of total available funds that those incumbents 
declined, as well as limited (and not nearly sufficient) funds 
allocated to extremely costly and hard-to-serve areas.
    Second, we have seen and continue to see restrictive technical 
eligibility thresholds that have little bearing on the quality of the 
end-user experience. For example, we're still seeing requirements that 
CAF recipients offer service with 100 milliseconds of latency or less, 
even though: (i) the vast majority of Internet traffic is not latency-
sensitive; (ii) service providers can design their networks to mitigate 
the impact of latency (e.g., through higher speeds, by using hybrid 
networks) for the narrow slice of Internet traffic that is latency-
sensitive; and (iii) it would be more neutral, efficient, and direct to 
simply require recipients to meet standards with respect to overall 
service quality. In short, these restrictions do not ensure the quality 
of service received by consumers, but do limit the participation of 
entire classes of service providers--including satellite broadband 
providers--and consequently drive up the costs of the CAF program.
    By way of example, in connection with the Rural Broadband 
Experiments auction held in late 2014, we submitted bids requesting 
support that was far less than the support levels estimated by the FCC 
wireline cost model. We also offered to use hybrid networks to carry 
latency-sensitive traffic in a way that would satisfy the 100 
milliseconds requirement, and committed to meet the FCC's voice quality 
standard. Even though we were identified as the provisionally winning 
bidder in a number of areas, all of our bids were rejected because our 
entire network would not meet the latency requirement--even though the 
vast majority of Internet traffic (over 60 percent today and over 80 
percent by 2019) is not latency sensitive, and even though we had a 
viable solution for handling latency-sensitive traffic in a way that 
would meet the Commission's standard. More than a year later, we're 
still trying to compete on a level playing field with all technologies, 
even though some of the preferred technologies would be extremely 
expensive and not even have a shot at covering all the remain CAF II 
households, once again leaving vast areas without broadband. Indeed, 
the current proposal for the CAF reverse auctions effectively would put 
us at the end of the line, and would relegate us to the most costly-to-
serve areas that terrestrial providers apparently are not interested in 
or capable of serving.
    At times, it seems that the folks crafting CAF policy are not 
taking in the complete picture, including how service providers 
actually make their business decisions. It would be a mistake to 
assume, as some apparently do, that satellite broadband providers would 
participate in the CAF on the extremely constrained basis that has been 
proposed. Participating in the CAF comes with a number of long-term 
obligations, including becoming an eligible telecommunications carrier 
(``ETC'') and taking on carrier of last resort obligations. It could 
make sense for a provider to assume those burdens if it otherwise had a 
critical mass of customers within a state, but that would not be the 
case for satellite broadband providers under the current approach.
    Stated another way, given the choice between committing capacity to 
high-volume/high-demand areas or a handful of dispersed, low-volume 
areas, a business is likely to make the same choice as the wireline 
incumbents that declined many CAF areas last year. Notably, those 
wireline companies were unwilling to participate in the CAF in those 
areas even though they would have been able to receive significant 
support on a state-wide basis and more than achieve ``critical mass.''
    Moreover, the vast majority of capacity available on the new 
satellites that ViaSat will launch in the next few years is already 
allocated to beams serving urban areas of the country, in which the 
vast majority of ViaSat's existing customers are located. We'd likely 
have to change our plans or build more spacecraft to participate fully 
in the CAF, which we're willing to do if the playing field is level. 
But the way things are going with the CAF, it would not make business 
sense to redirect capacity away from densely populated areas or away 
from service to airplanes--and foregoing associated revenue 
opportunities--or deploy new spacecraft simply to serve a limited 
number of ``extremely high cost'' areas in return for a relatively 
small subsidy.
    In short, participating in the CAF likely would make sense only if 
satellite broadband providers could do so fully and on the same terms 
as everyone else, so that they have the chance to obtain the critical 
mass necessary to support the business case for participating. For this 
reason, among others, ViaSat renews its support for the adoption of CAF 
eligibility criteria that enable broad program participation by 
wireline, wireless, satellite, and other service providers on the same 
terms and conditions. This approach would facilitate the use of limited 
CAF support by the most efficient service providers--regardless of the 
technologies they use. This approach therefore would minimize the 
contribution burden placed on average Americans who fund the CAF.
    To be clear, ViaSat does not support eligibility criteria that 
would compel some consumers to accept inferior services from certain 
types of supported providers. Rather, ViaSat supports eligibility 
criteria that can accommodate differences across technology platforms 
and facilitate service to geographic areas supported through the CAF at 
the lowest cost to contributing end users, while still ensuring that 
consumers receive high-quality broadband services.
    Thank you for the opportunity to appear before you today to discuss 
these important issues. I would be pleased to answer any questions you 
might have.

    Senator Wicker. And thank you very much.
    Mr. Carlson?

         STATEMENT OF LeRoy T. CARLSON, JR., CHAIRMAN, 
               UNITED STATES CELLULAR CORPORATION

    Mr. Carlson. Chairman Wicker, Ranking Member Schatz, and 
members of the Subcommittee, thank you for the opportunity to 
speak with you about the need to renew the commitment to 
Federal Universal Service policies that will provide rural 
Americans with leading-edge mobile broadband and the economic, 
educational, and life-improving opportunities mobile broadband 
provides.
    You may have heard some say that the job of providing 
mobile broadband to rural America is largely done. I must tell 
you otherwise. Even under the rosiest of scenarios, there is 
much still to be done. Mobile broadband is the under-
appreciated portion of the Federal Universal Service program. 
It is allocated only 13 percent of the high-cost fund, despite 
mobility's preeminent role today in Americans' lives. No amount 
of wishful thinking that current coverage meets the needs of 
rural Americans will make it so. The hard work of completing 
that mobile broadband job starts today with this hearing, and 
your recognition that the congressional directive that mobile 
services in rural America be reasonably comparable to urban 
areas is not being met.
    If we continue down the current regulatory path, the mobile 
services your rural constituents have today may be the best 
that they will ever experience. Many will never see good 
coverage beyond towns and major roads, and many may never see 
5G services that are just around the corner.
    I am encouraged by this committee's interest in mobile 
broadband and am really hopeful that your bipartisan leadership 
will help provide rural Americans the economic opportunities 
and public safety benefits from mobile that they need and 
deserve.
    Today there are countless mobile devices with far more 
computing power than ever imagined. Our rural mobile networks 
enable these devices to place calls, access the Internet, and 
run millions of vital applications, but only in areas where 
there are strong signals.
    Let me cite three examples of the power of mobile coverage.
    One, 70 percent today of 911 calls are placed from wireless 
phones.
    Two, mobile applications that diagnose, monitor, and treat 
disease are already saving and improving the quality of 
people's lives.
    And three, the Internet of Things, which depends on 
wireless, will transform numerous industries in this country 
and, indeed, may create $15 trillion of annual global GDP by 
2030.
    Now, none of what I just described will benefit rural 
Americans unless high-quality mobile broadband coverage is 
available everywhere rural Americans live, work, and travel. It 
is therefore vital for our Nation to have accurate data from 
the FCC about the quality of mobile broadband coverage in rural 
America.
    Just last week, the FCC reported that 87 percent of rural 
Americans lack access to mobile broadband at a standard of 10 
megabits per second downstream and 1 megabit per second 
upstream. 87 percent. Without knowing where rural coverage is 
deficient, Congress and the FCC cannot know how much support is 
needed to fix it. Without knowing how much it will cost to fix, 
how can Congress and the FCC know if the Mobility Fund is 
sufficient?
    The FCC has allocated only a percentage of its Universal 
Service budget to mobile broadband. This is not good 
policymaking, and the FCC needs to do better.
    The FCC should be required, first, to determine the 
coverage quality facts and then size the fund.
    Also, the FCC should solicit new ideas for how to leverage 
Federal funds, along with State funds and private investment, 
to provide incentives to invest and improve service in rural 
areas. Several states such as Nebraska, Colorado, and New 
Mexico are developing State broadband Universal Service 
mechanisms, any of which could be trialed in a joint Federal-
State pilot program, something the FCC has recently done with 
fixed service.
    In summary, compared with the standard enacted by Congress, 
rural Americans today do not have access to 4G mobile broadband 
networks that are reasonably comparable to those in urban 
areas. Congress and the FCC must move quickly to address this 
inequity.
    Thank you.
    [The prepared statement of Mr. Carlson follows:]

        Prepared Statement of LeRoy T. Carlson, Jr., Chairman, 
                   United States Cellular Corporation
    Chairman Wicker, Ranking Member Schatz, and members of the 
Subcommittee, my name is LeRoy T. Carlson, Jr., and I am Chairman of 
United States Cellular Corporation. Thank you for the opportunity to 
discuss the need for mobile broadband in our Nation's rural areas and 
the important role that the Federal Universal Service Fund can play to 
address this need.
Introduction
    U.S. Cellular provides wireless service in nearly 200 markets 
across 24 states located in regional clusters across the country, 
including many of the states represented on this Committee such as 
Missouri, New Hampshire, Nebraska, Kansas, West Virginia, Wisconsin, 
and Washington. The overwhelming majority of the geography we serve is 
rural in character. We have participated in the FCC's universal service 
program for many years, using support to construct and operate network 
facilities in small towns and on rural roads that would not otherwise 
receive service, because they would never prove to be economically 
feasible without assistance.
    In each of our company's previous appearances before this Committee 
to discuss universal service, we have made the point that Congress 
directed the FCC to ensure that rural citizens have access to modern 
telecommunications and information services that are reasonably 
comparable to those available in urban areas.\1\
---------------------------------------------------------------------------
    \1\ See, 47 C.F.R. Sec. 254(b)(3).
---------------------------------------------------------------------------
    Based on our deep experience in rural America, we have concluded 
that the current and proposed Mobility Fund mechanism lacks the 
necessary size and focus to ensure that rural communities have timely 
access to high-quality mobile broadband services needed to compete, 
here in the United States and around the world, for jobs and economic 
opportunities. We fear that policy makers have grossly underestimated 
the amount of work that remains to be done in rural America before 
mobile broadband can be deemed comparable to what exists in our 
Nation's urban areas.
    As explained below, we urge the Committee to direct the FCC to 
develop a more accurate picture of mobile coverage and mobile broadband 
availability in rural America, and to estimate how much it will cost to 
bring mobile broadband networks in rural America up to the reasonably 
comparable standard that Congress set. Once these tasks are done, 
Congress can make the policy choice as to how best to complete the 
task.
    Today, my testimony touches upon three things: (1) the critical 
role that mobile broadband plays in enabling public safety, education, 
and our rapidly expanding information economy; (2) the insufficiency of 
mobile broadband deployment in rural America today to meet stated 
goals; and (3) the need to make smart and creative policy choices to 
allocate and target scarce Federal universal service funds to rural and 
high-cost areas to maximize the value of such investments in extending 
the reach of mobile broadband service.
1. The Rise of Mobile Broadband as an Enabler of Public Safety 
        Education and 
        Economic Development
    In the 1980s, experts projected that there could be 800,000 mobile 
phones in use by 2000. They came up short by 10,000,000. Today there 
are over 350 million mobile wireless subscriptions in the U.S. In 1984, 
the first commercial cell phone sold for $3,995.00. Today, there are 
more types of mobile wireless devices than I can list, capable of 
performing thousands upon thousands of tasks, at a small fraction of 
the 1984 price, with many having far more computing power than Apollo 
11. However, looking back at how we have benefited from mobile services 
dramatically undersells the future that consumers will enjoy, because 
we're just getting started.
    At a time when consumer preferences are rapidly shifting to mobile 
broadband, policymakers must refocus universal service mechanisms to 
ensure that citizens in rural areas have access to high-quality 
service. For example, the Pew Research Center reports that adults 
living in households with a cellphone but no landline, and the number 
of households that rely solely on a smartphone for broadband have 
increased dramatically:\2\
---------------------------------------------------------------------------
    \2\ See, http://www.pewresearch.org/fact-tank/2015/01/07/pew-
research-will-call-more-cell
phones-in-2015/; and http://www.pewinternet.org/2015/12/21/home-
broadband-2015/. Another barometer of consumer preference is mobile ad 
revenue, as evidenced in Facebook's most recent quarterly report: 
``Mobile ad revenue reached $4.5 billion, up 81 percent year-over-year, 
and is now 80 percent of total ad revenue.'' See also, http://
files.shareholder.com/downloads/AMDA-NJ5DZ/1421180082x0x872005/
02B28FAD-354C-4CA0-8CDE-3ADB6F8A4734/Q415_
and_FY_2015_Earnings_Call_Transcript.pdf.


    These compelling statistics gain further meaning when you consider 
---------------------------------------------------------------------------
just a few of the many benefits that mobile services provide:

   Public Safety. The ability to use 911/E-911/Text-to-911 
        depends 100 percent on high quality coverage, to fully enable 
        location-based services.\3\ When disaster strikes, first 
        responders depend on mobile wireless and broadband networks, 
        which are the first to return to service. The value and utility 
        of FirstNet, our Nation's mobile broadband public safety 
        network, increase every time a new cell tower is constructed, 
        as it provides a place to locate critical public safety 
        communications equipment.
---------------------------------------------------------------------------
    \3\ As of November, 2015, the FCC estimates that 70 percent of 911 
calls are placed from wireless phones, and that percentage is growing. 
See, https://www.fcc.gov/consumers/guides/911-wireless-services.

   Health Care. Mobile devices and applications capable of 
        diagnosing, monitoring and treating various conditions are 
        exploding into the marketplace and revolutionizing health 
        care.\4\ These advances improve patient outcomes, and increase 
        efficient delivery of services. It is now possible for a 
        diabetic patient to continuously monitor, store, and transmit 
        glucose levels to health care providers through a mobile 
        device.\5\ Mobile video conferencing is increasingly important 
        to emergency medical services and in delivering health care to 
        remote areas where facilities are not easily accessible. These 
        applications are but a small fraction of the incredible health 
        care tools enabled by mobile broadband.
---------------------------------------------------------------------------
    \4\ A list of mobile medical applications can be found at: http://
www.fda.gov/MedicalDevices/DigitalHealth/MobileMedicalApplications/
ucm368743.htm
    \5\ http://www.dexcom.com/g5-mobile-cgm. Someday soon, patients may 
wear a contact lens that constantly measures glucose level through 
tears, transmitting the data to attending physicians. See, https://
verily.com/.

   The Internet of Things. Soon, almost any object will be 
        capable of connecting to the Internet. Gartner expects 21 
        billion devices to be deployed by 2020.\6\ According to General 
        Electric, the Industrial Internet, defined as the combination 
        of Big Data and the Internet of Things, may be responsible for 
        $15 trillion (not a typo) of worldwide GDP by 2030.\7\ Most of 
        these connected devices, numbering in the tens of billions, 
        will need the flexibility that mobile wireless provides. The 
        amount of data flowing through mobile broadband networks will 
        dwarf what we see today. Cisco predicts that, between 2014-
        2019, U.S. mobile data traffic will rise seven-fold, driven by 
        four billion new mobile connections, a 2.5X increase in 
        throughput speeds, and mobile video traffic reaching 72 percent 
        of all traffic.\8\
---------------------------------------------------------------------------
    \6\ See, http://www.gartner.com/newsroom/id/3165317.
    \7\ See, http://www.ge.com/digital/sites/default/files/industrial-
internet-insights-report.pdf
    \8\ See, Cisco VNI Global Mobile Data Traffic Forecast, 2014-2019, 
accessed at: http://www
.cisco.com/c/en/us/solutions/collateral/service-provider/visual-
networking-index-vni/white_
paper_c11-520862.pdf.

   Education. Students are increasingly using mobile devices to 
        access learning materials, do homework, create presentations, 
        and communicate with teachers. Students with connectivity 
        throughout the community are more likely to meet educational 
        goals, especially in an age where learning through the Internet 
---------------------------------------------------------------------------
        is essential.

   Agriculture. Connected tractors, irrigation systems, 
        livestock management, commodity tracking, and many more 
        applications depend upon mobile wireless connectivity.

   Low-income households. For households that cannot afford to 
        purchase a desktop computer and subscribe to both mobile and 
        fixed networks, a single mobile device is capable of meeting 
        voice communications and Internet needs.

    If the Committee takes nothing else away from these examples of how 
mobile wireless is enriching our lives, it should be this: none of the 
benefits described above will adequately benefit rural Americans unless 
high-quality mobile broadband coverage is available everywhere they 
live, work, and travel.
    In areas where emergency calls cannot connect, or where medical 
devices cannot transmit data, lives will be lost. In areas where 
tablets and laptops don't work, educational opportunities will be 
foreclosed. The enormous power of the Internet of Things cannot be 
fully realized without ubiquitous mobile broadband. As Deere & Company 
has previously noted to the FCC, a lack of connectivity on our Nation's 
farmlands costs productivity and wastes water and fertilizer.\9\ The 
lack of mobile broadband denies low-income households the opportunity 
to fully participate in our Nation's economy. Mobile broadband, which 
didn't exist thirty years ago, and was considered a luxury item just 
ten years ago, is now an essential part of our lives.
---------------------------------------------------------------------------
    \9\ See, http://apps.fcc.gov/ecfs/document/view?id=7521752479.
---------------------------------------------------------------------------
    I cannot emphasize enough how important it is for Congress and the 
FCC to foster development of robust mobile broadband networks in rural 
areas. We are in just the second inning of a huge revolution in how 
Americans live their lives, a revolution that may never come to rural 
Americans who live in areas where it is too expensive to make a 
business case to build and upgrade networks. We at U.S. Cellular 
provide our customers with access to the applications they use, because 
we enable all of them. If coverage is weak or throughput is slow, 
devices will not work as designed.
    We note that new investments in mobile broadband infrastructure 
each year will have multiplier effects, creating jobs and stimulating 
economic growth.\10\ One wireless industry job supports over six 
additional jobs in the economy, almost one and one half times higher 
than that of the U.S. manufacturing sector.\11\ Each dollar of 
investment in wireless results in $2.32 of economic activity.\12\ In 
our experience, rural areas continue to support a tremendous amount of 
manufacturing, as well as a growing distributed service economy (for 
example, call centers and medical clinics). We hear directly from our 
employees and customers that managers and educated professionals no 
longer consider rural areas that lack high-quality mobile wireless 
services to be attractive to locate to, or to stay in. I'm sure members 
of this subcommittee have heard the same thing from their rural 
constituents.
---------------------------------------------------------------------------
    \10\ See, http://www2.deloitte.com/content/dam/Deloitte/us/
Documents/technology-media-telecommunications/us-tmt-impactof-4g-
060612.pdf.
    \11\ See, Coleman Bazelon and Giulia McHenry, Mobile Broadband 
Spectrum, A Vital Resource for the U.S. Economy, at pp. 19-20 (May 11, 
2015), available at: http://www.brattle.com/sys
tem/publications/pdfs/000/005/168/original/Mobile_Broadband_Spectrum_-
_A_Valuable
_Resource_for_the_American_Economy_Bazelon_McHenry_051115.pdf?1431372403

    \12\ Id.
---------------------------------------------------------------------------
    This is not just anecdotal evidence. Rural areas have large gaps 
with urban areas, which gaps need to be closed. Data from the 
Department of Agriculture reveals that ``2010-2014 is the first period 
of overall population decline on record for rural America as a whole.'' 
\13\ The same report shows employment growth since the 2008 recession 
heavily skewing in favor of our Nation's urban areas and a persistent 
rural/urban educational attainment gap:
---------------------------------------------------------------------------
    \13\ See, USDA, Rural America at a Glance, 2015 Edition, accessed 
at: http://www.ers
usda.gov/media/1952235/eib145.pdf (revised Jan. 2016).
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    One of the best ways to stimulate economic activity, attract 
talented people to areas needing an employment boost, and to increase 
educational opportunities, is to build mobile broadband infrastructure. 
It is therefore vital for policymakers to have accurate data about the 
state of mobile deployment in rural America. As a Committee that is 
forward-looking, I urge you to consider the essential role that mobile 
broadband services will play in the future, and to ensure that the 
universal service program provides sufficient resources to realize that 
future in rural areas.
2. Mobile Broadband Deployment in Rural America is Insufficient
    Let me continue by acknowledging that we are well aware of the 
misleading claim that the job of providing mobile broadband to rural 
America is largely finished.\14\ When the FCC proposed Phase II of its 
Mobility Fund in 2014, it stated, ``According to some sources, nearly 
99.5 percent of the U.S. population today (and the road miles 
associated with that population) is covered by some form of mobile 
broadband technology.'' \15\
---------------------------------------------------------------------------
    \14\ See, http://www.theverge.com/2015/3/23/8273759/obama-
administration-passes-goal-lte-for-98-percent-of-americans.
    \15\ See, Connect America Fund, Report and Order, Declaratory 
Ruling, Order, Memorandum Opinion and Order, Seventh Order on 
Reconsideration, and Further Notice of Proposed Rulemaking, FCC 14-54, 
29 FCC Rcd 7051, 7127 (2014) (``Further Notice'').
---------------------------------------------------------------------------
    That statistic cannot be right. Based on our experience, the state 
of mobile broadband is nowhere near developed enough to conclude that 
rural Americans have access to a strong 4G LTE signal throughout the 
area where they live, work, and travel. In a recent letter to the FCC, 
Senator Manchin astutely called out problems with available mapping 
resources, stating ``the reality in my state is far different than what 
the maps indicate.'' \16\
---------------------------------------------------------------------------
    \16\ See, Letter from Hon. Joe Manchin, III to Hon. Thomas Wheeler, 
September 22, 2015, at http://www.manchin.senate.gov/public/
index.cfm?a=files.serve&File_id=D660F970-2859-46B3-8145-CFE461A47719.
---------------------------------------------------------------------------
    Senator Manchin's experience is far from an isolated case and I'm 
sure each of you know from personal experience in your own states that 
mobile broadband coverage with a strong signal is far from complete and 
dead zones remain to be covered. In testing our networks, and those of 
our competition, we can confirm that the National Broadband Map and 
other publicly available mapping resources significantly overstate 
where rural citizens can actually use their devices to access rapid 
mobile broadband service, especially on rural secondary roads and in 
agricultural areas.\17\
---------------------------------------------------------------------------
    \17\ For example, we've heard directly from Senator Tester that he 
can't get any signal on and around his working farm in Montana, and 
from Senator Brown that southeastern Ohio lacks coverage.
---------------------------------------------------------------------------
    In its recently released Eighteenth Mobile Competition Report, the 
FCC states that 25 percent of road miles and 50 percent of square miles 
in the U.S. do not have coverage by two or more carriers, and concedes 
that its data sources likely overstate coverage.\18\ This is 
significant because there continue to be two incompatible wireless 
network technologies in use today--the GSM standard and its 3G 
successors, used by AT&T, T-Mobile, and a number of other carriers, and 
the CDMA standard, used by Verizon, Sprint, U.S. Cellular, and a number 
of other carriers.
---------------------------------------------------------------------------
    \18\ See, Implementation of Section 6002(b) of the Omnibus Budget 
Reconciliation Act of 1993, Eighteenth Report, FCC 15-1487 (Dec. 23, 
2015) at p. 28, Chart III.A.3 (``Eighteenth Mobile Competition 
Report'').
---------------------------------------------------------------------------
    A person with a CDMA-only phone cannot complete a call when they 
are in an area served only by GSM, and vice-versa. As a result, the 
current reality in rural areas is a patchwork quilt of coverage by 
incompatible technologies, frustrating the goal of seamless access. 
Accordingly, for public safety, it is critical that rural Americans 
have access to wireless networks capable of connecting both kinds of 
devices, just as those who live in cities do.
    In the run up to the FCC's 2011 Connect America Fund reforms, we 
warned of universal service mechanisms that pick a single winner in the 
auction room rather than allowing consumers to pick winners in the 
market. By limiting support to a single carrier, the current mechanism 
is promoting service by one carrier and one technology, thus limiting 
consumer choice in many areas that would otherwise support competition, 
and requiring additional regulation. We urge the Committee to encourage 
the FCC to adopt universal service mechanisms that direct support to 
high-cost rural areas without picking a winner in advance.
    Last year, we inaugurated new coverage and mobile broadband service 
in Paw Paw, West Virginia, a town of 500, a project that would not have 
been possible without the Federal universal service program.\19\ There 
are many more towns similar to Paw Paw that we would like to serve or 
upgrade, if support mechanisms provide us with a reasonable opportunity 
to succeed. It is low population density and traffic levels that make 
new construction infeasible and make necessary an effective universal 
service mechanism.
---------------------------------------------------------------------------
    \19\ See, http://www.morganmessenger.com/news/2015-11-18/
Front_Page/Paw_Paw_wel
comes_arrival_of_cell_service.html.
---------------------------------------------------------------------------
    Today mobile broadband coverage and throughput speeds in rural 
America must receive a grade of ``Incomplete.'' Using the ``reasonably 
comparable'' standard set by Congress in 1996, anyone telling you that 
rural Americans have access to mobile broadband networks that are 
reasonably comparable to those in urban areas has not taken a drive 
across this great nation. And that's not a surprise--no carrier can be 
expected to invest unless there's at least the possibility of earning a 
return. If it could be done, we wouldn't need a universal service 
mechanism because it would have happened already.
    In sum, we cannot base critical policy choices on conflicting data 
and maps that the government admits overstate coverage. We must have 
accurate data in order to target funds where they are needed.
3. Allocating Scarce Federal Universal Service Funds Effectively 
        Requires Smart 
        Policy Choices
    Over the years, we have consistently advocated for a robust Federal 
universal service fund that provides rural consumers with access to 
both mobile and fixed networks. We believe the FCC's historical 
allocation of support to wireless networks has been insufficient to 
close up coverage gaps and deliver mobile broadband to many areas. As 
shown in the chart below, between 1999 and 2014 the FCC allocated over 
$50 billion in support to fixed networks and less than $12 billion to 
mobile networks.\20\ Over the next five years, fixed networks are 
projected to receive $22.5 billion in Federal funding, while mobile 
networks are projected to receive $2.5 billion, a disparity in the 
universal service mechanism going forward of nearly 90/10.\21\
---------------------------------------------------------------------------
    \20\ Source: Federal-State Joint Board Monitoring Reports, at 
https://www.fcc.gov/general/federal-state-joint-board-monitoring-
reports.
    \21\ The fixed network allocation is estimated by summing Connect 
America Fund support with projected support for rate of return 
carriers. The mobile network allocation derives from the FCC's Further 
Notice, supra.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    With wireless consumers nationwide now contributing nearly half of 
the total Federal Universal Service Fund of $9 billion (which includes 
E-Rate, Lifeline, Connect America Fund, Mobility Fund, and Rural Health 
Care)\22\ the proposed funding for mobile broadband does not accurately 
reflect consumer usage, preferences, and infrastructure needs in rural 
areas. Given rapidly expanding demand for high-quality coverage and 
fast broadband connections, the current level of funding shortchanges 
rural Americans who increasingly rely on mobile services.
---------------------------------------------------------------------------
    \22\ The most recently available FCC report from 2011 containing 
assessable carrier revenues for universal service can be accessed at: 
https://transition.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-
State_Link/IAD/quarterly_roll-upsasof050112.pdf.
---------------------------------------------------------------------------
    Nor does the FCC's proposed budget account for investments that 
mobile wireless carriers have made over the years. Many carriers, 
including U.S. Cellular, have used support to build towers in areas so 
remote that revenues are insufficient to meet ongoing operating 
expenses and to earn a reasonable return. These investments were made 
with the understanding that support for ongoing operations would be 
made available, either in the original fund, or in Mobility Fund Phase 
II.
    Although the FCC proposed to use at least some of Mobility Fund 
Phase II support to cover operating expenses on towers, it recently 
proposed to change course based on ``substantial marketplace 
developments,'' nothing more than fallacious claims by some carriers 
that the job of covering rural America is largely done.\23\ This course 
change may prove to be catastrophic for rural citizens in small 
communities, which often do not generate enough revenue to meet a 
tower's operating expenses.
---------------------------------------------------------------------------
    \23\ See, Further Notice, supra, FCC Rcd at 7126-29.
---------------------------------------------------------------------------
    In addition to our experience and the weight of data, I am troubled 
by these FCC claims of substantial marketplace developments leading 
toward a conclusion that a Mobility Fund of less than $400 million 
annually may be appropriate. When it comes to broadband, I agree that 
we as a nation should be setting big and audacious goals and working 
toward them.\24\ In last week's 2016 Broadband Progress Report, the FCC 
reported that 87 percent of rural Americans lack access to mobile 
broadband at 10 Mbps/1 Mbps:
---------------------------------------------------------------------------
    \24\ See, Separate Statement of Commissioner Jessica Rosenworcel, 
at: http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/
db0129/FCC-16-6A5.pdf.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Because the above data for LTE technology is based largely on 
advertised coverage at a single point within a census block, I don't 
agree that the job of populating rural areas with LTE technology is 
largely done. That said, if the data on 10/1 availability is even in 
the ballpark, it is beyond dispute that the job of getting to an 
adequate level in rural America is only beginning.
    Because the big carriers continue to provide their customers with 
access to many rural areas by using the networks of rural carriers, it 
is fair to conclude that the future of 10/1 Mbps service depends on a 
universal service policy that encourages rural carriers to invest, as 
well as an FCC spectrum policy that ensures rural carriers have access 
to sufficient bandwidth to deliver speeds of the future. The critical 
role of universal service is to ensure that broadband technologies 
being deployed and commonly used in urban areas are made available to 
our rural communities in a timely manner. This is no different than any 
other infrastructure, whether it be roads, electricity, or water.
    My takeaway from the past several years of uncertainty is that the 
FCC has not devoted sufficient attention to determining how best to 
maintain the investments that have already been made, how much it will 
cost to fill in slow broadband zones and dead zones, and what it will 
cost to deliver 5G services, and more, to rural citizens in the coming 
years. The Mobility Fund Phase I auction left many areas still without 
coverage, and bidders forfeited back to the FCC nearly 25 percent of 
the $300 million in original funding, for a variety of reasons. The 
Commission has yet to act on our petition to distribute forfeited 
support to ``next in line'' bidders who could move quickly to build 
towers in many states that need investment. Moreover, the amount 
projected for Mobility Fund Phase II is insufficient to do the job on a 
reasonable schedule. In sum, the Mobility Fund program has not 
fulfilled the goal of fostering ``an environment in which the widest 
possible variety of new technologies can grow and flourish.'' \25\
---------------------------------------------------------------------------
    \25\ See, https://www.fcc.gov/news-events/blog/2015/08/03/leading-
towards-next-generation-5g-mobile-services.
---------------------------------------------------------------------------
    We also believe that the reverse auction approach for distributing 
mobile broadband support did not produce equitable results across the 
Nation. Because reverse auctions allocate funds first to areas that 
cost less to serve, mountainous parts of the country are served last, 
or not served at all if funding runs out. I predict that with a reverse 
auction mechanism, many of you on this committee representing 
mountainous regions will never see your states receive meaningful 
assistance, even though the rhetoric of the program gives you false 
hope. And, we can assure members of the Committee representing flatter 
states that, based on our experience, the program is insufficient in 
those areas as well.
    In recognition of the fact that the fund is finite and consumer 
willingness to fund programs is an important factor, we suggest that 
the FCC solicit new ideas for how to leverage existing Federal funds, 
in combination with state universal service mechanisms, and private 
investment, to provide an incentive for competitors to invest and 
improve service. Several states, such as for example, Nebraska, 
Colorado, and New Mexico, have begun developing their own broadband 
universal service mechanisms, any of which could be trialed in a pilot 
program, something the FCC has recently done in the fixed service 
arena.
    We suggest that the FCC consider a grant program in which the 
combined Federal and state support funds could be used in a targeted 
way to address those areas most in need of mobile broadband coverage. 
States may be in the best position of all to know what is adequately 
covered and what is not. States that have been shortchanged by the 
legacy program (paying into the fund far more than they have drawn out 
for mobile voice, let alone mobile broadband coverage) and are willing 
to contribute state funds to the mechanism, should be given an 
opportunity to access some level of support, especially where the need 
for expanded coverage has been established. Equitable distribution of 
funding will likely not occur if the fund is administered at the 
Federal level in an auction format, which disfavors the highest cost 
rural areas.
    Separately, Congress can make all universal service fund support go 
farther by passing legislation to exclude universal service support 
from taxable income, similar to funds provided under the American 
Recovery and Reinvestment Act. By excluding support from taxation, we 
will be able to use 100 percent of the support received for investments 
in rural areas and not just the net amount after taxes.
Concluding Remarks
    Just last month, Verizon announced an intent to begin limited 
deployments of 5G technology as early as 2017, technology that will 
provide speeds perhaps 50 times faster than 4G.\26\ National carriers 
will continue to focus on urban areas, and they will invest billions 
upgrading networks to 5G. But make no mistake, these investments will 
take priority over building new coverage and upgrading rural areas that 
make less economic sense. In sum, if we fail to foster robust mobile 
broadband networks in rural areas, they will likely never have access 
to the amazing things described above.
---------------------------------------------------------------------------
    \26\ See, http://www.pcworld.com/article/3025461/mobile/verizon-
vows-to-build-the-first-5g-net
work-in-the-us.html.
---------------------------------------------------------------------------
    Having studied this industry for many years, I'm humble enough to 
know that this task is easier said than done, in part because in a 
nation of entrepreneurs and risk takers and innovation, if there were a 
business plan to cover all of rural America, the free market would have 
done it long ago. Making rural infrastructure reasonably comparable is 
a big and multi-faceted task, as evidenced by the enormous efforts the 
FCC has made in over twenty years since the 1996 Act.
    This year, we celebrate the sixtieth anniversary of Eisenhower 
administration's enduring achievement, the Federal interstate highway 
system. My sense is that broadband networks will be as important to our 
Nation's success in the next sixty years as our interstate highway 
system has been over the past sixty. Just as our highway needs have 
expanded, so too will our broadband needs, and it will be up to this 
Committee to give the FCC proper direction to ensure that rural 
Americans fully participate in modern life and remain comparable with 
their urban counterparts.

    Senator Wicker. Thank you very much, and thank you all.
    We have a lot of interest in this hearing today, and 11 
Senators have checked in. What we are going to do, with the 
consent of Ranking Member Schatz, is this. He and I will save 
our questions for later, if there is time. The order of 
questions with 5-minute rounds each will be this: Moran, 
Booker, Heller, Manchin, Gardner, Daines, Fischer, Klobuchar, 
and Sullivan. So, Senator Moran, you are recognized.

                STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. Mr. Chairman, thank you very much. 
Obviously, you learned generosity and grace at breakfast this 
morning. Thank you for deferring to me.
    Let me start with Mr. Carlson. Thank you very much for your 
testimony. One of the things that you said that caught my 
attention is the map the FCC shows us about coverage. And my 
impression is, based upon my own experience in my own state, 
that map does not accurately reflect actual service. And so I 
would ask you how do we get--in a sense I think what you are 
asking for--how do we get there? How do we get the FCC to give 
us the information that shows where there is coverage and where 
there is not coverage so we can actually see what needs to be 
accomplished?
    I also would ask you to comment. Is there such a thing as 
coverage that really is not very good coverage, and therefore, 
it could show up on a map or a diagram or a list of places that 
are covered, but we ought to recognize that is not really the 
truth?
    Mr. Carlson. Yes, thank you. Thank you for that question.
    Yes, I believe those maps do not show what good coverage 
represents, and that is from our experience with our own view 
of measuring coverage by doing drive tests of our own service 
areas. The maps that the FCC produces do not represent good 
coverage. So we need to ask the FCC--not me, but you, sir--to 
produce maps that show a quality standard of coverage level and 
produce that map rapidly so that we can get on with the job.
    Senator Moran. I think your point being that in the absence 
of that information, it is hard for us to make policy 
decisions.
    Mr. Carlson. Exactly. You cannot know what you are doing if 
you do not have a map of the road to get there.
    Senator Moran. Thank you very much for that reminder, and 
we will ask once again for accurate mapping.
    Let me turn to maybe Mr. Carr or Mr. Berry or both. One of 
the things that I have tried to pay a lot of attention to in 
the role of the Universal Service Fund is its ability to--let 
me say it this way. There seems to be a lack of coordination 
between various departments and agencies within the Federal 
Government related to reimbursement to providers from the 
Universal Service Fund. So my point being that the Federal 
Communications Commission, the FCC, makes decisions about 
reimbursements that may be contrary to the ability for that 
telephone company to repay a loan they have with rural utility 
services.
    So during the deployment of lots of dollars, stimulus 
money, the rural utility services programs to provide loans to 
those who will provide services to rural America, certain 
assumptions were made. And that would be that the Universal 
Service Fund will be there for us to repay those loans. Changes 
in the formula by which those companies are now reimbursed has 
a consequence, and there does not seem to me that there is any 
coordination, in other words, the challenge that rural utility 
services may have in getting their loans repaid.
    Do either of you have a comment on that from your member 
companies?
    Mr. Berry. Well, I can address on the wireless side, the 
mobility side. There are several different issues that I think 
you refer to.
    One is the fact that we do not have many loans on the 
mobility side from the RUS program or some of the utility type 
programs. But we have monies that were given and awarded under 
Mobility Fund I, and carriers built the network, spent their 
time, effort, and energy and money in providing service, and 
they are not reimbursed.
    We were talking about the maps. In that process, the FCC, 
the USAC, asked for drive-testing to ensure that you actually 
built out your network to where you say you were going to build 
it out. Our companies did that and spent the money, and then we 
turned back around and the FCC then required, USAC required, 
that you drive-test them again to make sure that you got the 
numbers right. Absolutely no reason whatsoever that you should 
do that twice. So there are impediments there.
    There are also impediments in actually locating and siting 
the facilities. I would say that we have carriers that received 
funds, i.e., made plans to build out, and in the middle of 
that, they get another Federal agency that says, oh, we are not 
going to give you a permit to site that facility on that 
particular piece of land, whether it is some Federal land 
manager. And the FCC has a deadline and said if you do not 
build out to a certain percentage, say, 73 percent, by a 
certain time, you will not get reimbursed.
    We have several instances where we have letters from the 
agency that did not give the permit on time telling the 
carrier, I am sorry, we messed up. And we presented it at the 
FCC, and the FCC would look at it and say, well, I am sorry. 
You are not built out. And he said but the reason why I am not 
built out is because the Federal agency just said that they 
messed up, they did not process our application.
    There needs to be some common sense come to the forefront 
on this. If you built out the network or you are trying to 
build out the network and you only lack a permit that another 
Federal agency has sole responsibility to give, why are you 
penalized? And that is what is happening. You are getting fines 
and penalties, and in some instances we have small carriers 
actually returning the money because they cannot afford the 
fines and penalties. Not a good situation.
    Senator Moran. Thank you.
    Mr. Carr. Senator, briefly I would say that from our 
industry's perspective, we have been effectively shut out from 
a lot of the programs that you have mentioned in particular 
because those programs----
    Senator Moran. You have or have not.
    Mr. Carr.--have been shut out particularly because those 
programs are not technology agnostic. And we think one of the 
things that I believe everyone on this panel agrees is that we 
should channel the support to the access technologies that are 
going to be most effective for connecting rural America.
    Senator Moran. I am pleased to give you the opportunity to 
say that one more time. Thank you very much.
    Senator Wicker. Mr. Heller, followed by Mr. Manchin.

                STATEMENT OF HON. DEAN HELLER, 
                    U.S. SENATOR FROM NEVADA

    Senator. Heller. Mr. Chairman, thank you for holding this 
hearing, and I want to thank our witnesses for being here also. 
This is a fascinating discussion that sometimes gets too far 
into the weeds, and yet, these are discussions that need to be 
had.
    I was recently at a small town in Nevada that is on the 
Utah-Nevada border. It is a small town called Ely. And I will 
be in a few more small towns this weekend, and I am going to 
hear about how poor their Internet service is. But it is 
serious business for them out there. This is about quality of 
life. This is a way that they want to improve their ability to 
move forward. But it is the basic needs that they have.
    For example, some of the residents either do or do not have 
Internet service, and if they do, it is very slow. Their 
businesses complain about a lack of service, and schools, their 
high school and middle school, are piggybacking on hospitals in 
other counties in order to get some sort of Internet service. 
Now, this is a small town, but there are 5,000 people in it. 
5,000 people. I mean, you would think in the 21st century we 
could get Internet out to 5,000 people.
    And one other. There is a medical facility in that same 
town. This local hospital had difficulty sending out X-rays. 
They have difficult with lab tests due to the need of more 
fiber.
    Again, the businesses are complaining that their Internet 
service is so weak that half the time you cannot slide a debit 
card in any of the businesses in this town.
    These are stories you have heard. And I think everybody 
here in this audience has heard the same story.
    Like Mr. Seward, I live in a small town and we grow a 
little bit of hay ourselves. But I have children that live in 
Los Angeles and they are very used to a very fast Internet 
service. They come home for the holidays and they said, hey, we 
are not coming back if you do not speed up your Internet 
service. And I want my children to come home for the holidays.
    He was trying to download something. We called our 
satellite service and upgraded, upgraded, upgraded. And they 
were watching somehow the service that was being used in the 
home. They said someone else is using it. He ran around the 
house and said nobody else is using it. Why is the service not 
working? And he ended up finding that his wife had downloaded 
Netflix and her iPad was sitting on the bed, and that is why he 
could not get through. It just fascinating.
    In fact, he has a platform now that people watch him play 
video games. Now, this is a generation I do not understand 
completely. I said who wants to watch you play Internet games. 
I do not think anybody in this room would pay somebody $5 to 
watch him. And this is what he is doing. He is on the Internet 
and they pay $5 to watch him play. I said who is paying that. 
He says, well, people watch sports. So it is a different 
thought process. But this just goes to show you the next 
generation coming up and what their needs and concerns are.
    So I am concerned about small towns like Ely, as all of you 
are, and making sure that they get the quality service that 
they need in these Internet services.
    So I guess my question, I guess for you, Mr. Carr, 
specifically is how do we make sure that these programs like 
Connect America Fund and Mobility Fund get to these small 
communities. And frankly, is the best option for a rural town 
like that to be fiber, or is there another option out there 
that would be better for them?
    Mr. Carr. Well, Senator, thank you for the question.
    I think all access technologies, fiber, wireless, 
satellite, have their pros and cons. And the reality is that 
modern networks are built using a combination of those 
technologies. And so rather than having a framework in 
particular for the next phase of CAF that favors one technology 
over another, we will get better results as a society if we let 
providers compete to meet a uniform set of threshold 
requirements, then figure out who can deploy which combination 
of technologies to serve a particular area in the most cost-
effective way. And that is fundamentally by applying 
competition and market forces. That is how we are going to get 
the most efficient bang for the buck.
    Senator Heller. What is the next round of CAF?
    Mr. Carr. The Phase III reverse auction?
    Senator Heller. Yes. OK. Is there a time certain on that?
    Mr. Carr. As I understand, the FCC has talked about putting 
out--starting a proceeding to determine the rules of the 
auction as early as this spring, and the target was by the end 
of this year to begin rolling it out. But I am not sure if they 
are on track to meet that schedule.
    Senator Heller. How will it take, once the funds are 
distributed, to get it out?
    Mr. Carr. You know, that really depends on the speed, how 
quickly the provider can deploy.
    Senator Heller. We need help today. Are we talking a couple 
years from now?
    Mr. Carr. Certainly. You know, CAF I--the build-out 
requirements were 6 years. So in some areas it could take an 
extremely long time, again depending on the access technology 
and how long it takes to deploy that particular technology.
    Senator Heller. Anybody else have any comments?
    Mr. Berry. Senator, thank you for the question.
    I think that he is exactly right. It takes a mix of 
technologies, but in rural America the Mobility Fund II was 
originally designed so it would be a follow-on to Mobility Fund 
I and we would have an opportunity to immediately begin this 
process, which is a long process of many years, in order to 
fill out those gaps in coverage.
    I think that the Mobility Fund II, should we get it 
correct--Congress got it correct when they said let us make 
sure let us have comparable service--we could immediately begin 
that process. And it is very disturbing that we have been 3-4 
years now with a legacy program that has consistently been 
reduced, and we do not have a replacement program in place. And 
that is why Congress I think most astutely suggested to the FCC 
that you do not further reduce existing support until you get a 
new replacement program operational.
    Senator Heller. Mr. Chairman, you know I am going to end 
with this question, though. You are talking 3 or 4 years. Is 
the technology up to date? I mean, 4 or 5 years in this world 
is an eternity as the change in technology occurs. Are we still 
up to date if this program started in 2011?
    Mr. Berry. I think the technology is available now. It is 
the funds that it requires to build it out. And I think Mr. 
Carlson knows that better than anyone. But if we get a Mobility 
Fund II that actually starts deploying resources, like I said 
Mobility Fund I--they have only released like $66 million in 
the entire fund. And we have got carriers, small carriers, out 
there that are sustaining that economic investment with no 
reimbursement. They cannot do it for very long. They are very 
small.
    Senator Heller. Steve, thank you. My time has run out.
    Mr. Chairman, thank you very much for holding this hearing.
    Senator Wicker. Thank you, Senator Heller.
    Senator Manchin and then Senator Gardner.

                STATEMENT OF HON. JOE MANCHIN, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. Thank you, Chairman Wicker. And to Ranking 
Member Senator Schatz, I want to thank both of you for 
answering the request I had made for this hearing. I really 
appreciate it, and I think it is much needed. And thank all of 
you for being here.
    In the 2016 broadband progress report, the FCC determined 
that fixed and mobile broadband are not functional substitutes 
for one another. They are both essential components of our 
lives today.
    We have heard a lot of discussion today about the Connect 
America Fund and the importance of allowing different 
technologies to compete for building out fixed broadband to 
homes and businesses throughout the Nation. While this is an 
important goal that I fully support, our primary responsibility 
here is ensuring that all Americans pick up their phone, call 
for help in an emergency, and the only technology that allows 
me to do that wherever I am is my cell phone.
    The concept of Universal Service, the idea that all people 
should have access to a telephone, be able to call for help in 
an emergency, has been the guiding principle in Federal 
communications regulations since they first began in 1934. 
Wireless companies contributed more than $4 billion to the 
Universal Service Fund last year. Yet, there is no dedicated 
source of funding for those companies that want to expand 
services in these high-cost areas. And they have no idea what, 
if any, long-term support they will get to maintain these 
networks once they build them.
    In June 2014, the Federal Communications Commission 
declared that over 99 percent--I cannot believe this. They 
declared that over 99 percent of the U.S. population was 
covered by some form of mobile broadband technology. And I am 
beginning to believe that some people over there believe the 
job is done. They think that they have got it done, completed. 
Unfortunately, the reality in my home state of West Virginia 
and many other places throughout this country simply does not 
fit into the FCC's narrative.
    I understand that your organization, Mr. Berry, hired Dr. 
Raul Katz to reevaluate the FCC data, and he found that 
wireless coverage in rural communities is as low as 77 percent 
in my state of West Virginia and only 81 percent in North 
Carolina.
    For those of you who have ever visited my beautiful state, 
it is beautiful but it is challenging. And we have some of the 
highest unemployment now with the dispersion of the jobs we 
have had in the energy market. So we are having a tough time. 
And if people cannot connect, I will guarantee you they will 
not stay. And you might be in Iowa and have a cell tower or 
whatever to reach certain people and you might have a 50-mile 
line of sight. In West Virginia, you are lucky to have a 50-
foot line of sight sometimes in the terrain we are in. So it is 
much different.
    And Senator Wicker and Senator Schatz, on this in some of 
our areas, it just depends. I mean, their life depends on and 
these communities depend on whether they have this service.
    If this money is disproportionately not going to the 
companies that are willing to do the job--and there is not 
going to be return on investment. I am the first to tell you 
that. I know it. But I am asking all of you. Is there any--
probably Mr. Berry--other information you can share with this 
committee about Dr. Katz's work?
    Mr. Berry. Yes, Senator, and thank you for recognizing his 
work. He has done several studies for us. The most recent--
obviously, we focused on coverage because we too believe that 
the FCC numbers are just not correct.
    Senator Manchin. Did he find other areas of discrepancies 
in his work? They made a broad statement of 99 percent.
    Mr. Berry. Actually, if you like, I also have a statement 
of declaration----
    Senator Manchin. If you would for the record----
    Mr. Berry.--the doctor made to the FCC.
    Senator Manchin. May he provide that for the record, sir?
    Senator Wicker. Without objection.
    [The information referred to follows:]

                               Exhibit A
    I, Dr. Raul L. Katz, provide the following declaration pursuant to 
47 C.F.R. Sec. 1.16:

  1.  My name is Dr. Raul L. Katz. I am President of Telecom Advisory 
        Services, LLC, an international consulting firm specializing in 
        providing advisory services in business, policy and financial 
        strategies to telecommunications and technology companies, 
        governments and international organizations. Before founding 
        Telecom Advisory Services, I was a Lead Partner at Booz Allen 
        Hamilton and CEO of Adventis, a telecommunications consulting 
        company. I am a Director of Business Strategy Research at 
        Columbia University's Center for Tele-Information, an Adjunct 
        Professor in Columbia Business School's Division of Finance and 
        Economics, and a Visiting Professor at the Universidad de San 
        Andres in Argentina. I have written three books on the 
        telecommunications industry, and have published articles in 
        journals including Telecommunications Policy, Telephony, 
        Strategy and Business, Communications and Strategies, 
        Intereconomics, America's Network and The Information Society. 
        I hold a Ph.D. in Management Science and Political Science and 
        an M.S. in Communications Technology and Policy from the 
        Massachusetts Institute of Technology (MIT).

  2.  I have been retained by Competitive Carriers Association (CCA) to 
        assemble a collection of data for a number of states to analyze 
        mobile broadband coverage at a county level for these states, 
        the quality of mobile broadband service experienced in these 
        areas, and the rigor of competitive offerings of mobile 
        broadband services in the selected sample area. This 
        examination is undertaken in response to assumptions underlying 
        the Federal Communications Commission's (Commission) recent 
        Further Notice of Proposed Rulemaking (FNPRM) with respect to 
        funding mechanisms for Phase II of the Connect America Fund and 
        Mobility Fund.\1\ I am currently researching for and drafting a 
        comprehensive report for later release, but provide some 
        preliminary data herein.
---------------------------------------------------------------------------
    \1\ Connect America Fund, Universal Service Reform--Mobility Fund, 
et al., WC Docket Nos. 10-90, 10-208 et al., Report and Order, 
Declaratory Ruling, Order, Memorandum Opinion and Order, Seventh Order 
on Reconsideration, and Further Notice of Proposed Rulemaking, FCC 14-
54 (rel. June 10, 2014) (``FNPRM'').

  3.  In the FNPRM, the Commission claims that ``according to some 
        sources, nearly 99.5 percent of the U.S. population today (and 
        the road miles associated with that population) is covered by 
        some form of mobile broadband technology,'' though the 
        Commission admits that this is likely an overstatement.\2\ My 
        initial review of available data, including the National 
        Broadband Map, Connected Nation and other crowdsourcing 
        databases, however, shows that rural wireless broadband 
        coverage, and service offerings at download speeds above 3 Mbps 
        in the states sampled often fall below 90 percent. Indeed, 
        wireless coverage in rural counties ranges as low as 76.7 
        percent of the population in West Virginia and 81.1 percent in 
        North Carolina. Furthermore service coverage at download speeds 
        at or above 3 Mbps ranges as low as 78.6 percent in Kentucky 
        and 86.3 percent in New Hampshire.
---------------------------------------------------------------------------
    \2\  FNPRM  238, n.436.

    I declare under penalty of perjury under the laws of the United 
States of America that the foregoing is true and correct. Executed on 
August 8, 2014 in Stanfordville, New York.
                                          Dr. Raul L. Katz,
                                                         President,
                                        Telecom Advisory Services, LLC.

    Mr. Berry. Thank you.
    But you are absolutely correct. The map itself--it is 
unfortunate we are using a methodology that does not accurately 
reflect the coverage. If you have a signal in a centroid of a 
Census block, then they count that area as covered. And we just 
heard in the exchange with Mr. Carlson and Senator Moran that 
just because there is a signal there does not mean it is a 
quality signal, does not mean you have coverage. But if you are 
saying anytime there is a signal there that meets that centroid 
in a population area, Census area, it is covered, then that is 
part of the problem.
    Senator Manchin. Let me segue into that to Mr. Carlson, if 
you do not mind, because my time runs pretty short very quickly 
here.
    Mr. Carlson, do you think the FCC could seek comment on 
other ways to measure the coverage? Because we do not think it 
is accurate right now. They must have missed my state 
completely.
    Mr. Carlson. Absolutely. I think there are innovative ways 
to----
    Senator Manchin. Are they asking for that from you all who 
are on the front lines?
    Mr. Carlson. They have not asked for that from us at this 
point in time.
    Senator Manchin. Anybody at this table--has FCC engaged you 
all?
    Mr. Berry. You know, I would say that we should look at 
every innovation. I mean, if we can put an advanced recon 
controller in the middle of Afghanistan----
    Senator Manchin. I am saying is the FCC engaging you all in 
your comments since you all are delivering the service to the 
people who need it.
    Mr. Berry. They have not asked for methodology.
    Mr. Rapelyea. No, sir.
    Mr. Carr. No, sir.
    Senator Manchin. You do not talk to them at all. Do you?
    Mr. Seward. No.
    Senator Manchin. I do not blame you.
    [Laughter.]
    Senator Manchin. Let me just say, Mr. Carlson, basically I 
know that companies such as yourself are willing to go into 
these areas. You cannot do it just based on economics. Is that 
correct?
    Mr. Carlson. That is correct. We need support to meet the 
needs of these small towns and rural areas and to bring them a 
high-quality signal.
    Senator Manchin. Well, the difference between you two 
sitting right here--he is coming at us from the sky. You are 
coming at us from the ground.
    Mr. Carlson. Well, he is providing a fixed location focus. 
We are providing mobility, and mobility is the future for 
Americans. I counted up the number of people in a row back here 
that were on their mobile smart phones. Four out of five.
    Senator Manchin. Well, let me ask you this. Why has the FCC 
not seen fit for the money to go where the need is? I mean, why 
are you all not participating in this?
    Mr. Rapelyea. There seems to be a preconceived notion that 
is a wireline solution. And as a matter of fact, this program 
is administered and run out of the Wireline Bureau of the 
Federal Communications Commission. So therefore, the tilt or 
the bias is that way, not for this panel here.
    Senator Manchin. So you are saying disproportionately that 
mindset is still getting a disproportionate share of the funds.
    Mr. Rapelyea. If you look at the tally of the distribution 
of the funds thus far, absolutely.
    Senator Manchin. And that is what we are trying to correct 
right here with the hearing. That is why I appreciate so much. 
Mr. Chairman, if you will allow----
    Senator Wicker. That is helpful information, Senator 
Manchin.
    Senator Manchin. Thank you.
    Senator Wicker. Senator Gardner, followed by Senator 
Daines.

                STATEMENT OF HON. CORY GARDNER, 
                   U.S. SENATOR FROM COLORADO

    Senator Gardner. Thank you, Mr. Chairman, and thank you to 
the witnesses for joining us today.
    You know, there is a lot of talk out in the countryside, so 
to speak, about red versus blue, red and blue in campaigns and 
elections. This committee has worked very hard to make sure 
that we do not focus on red versus blue. But, Mr. Seward, I 
have a hard time focusing on something in your statement. You 
talk about green in your statement and green tractors. I sell 
red tractors. So today we may focus a little bit on red versus 
green. But I will leave that out for now. Thank you.
    Mr. Seward. You have my sympathies.
    [Laughter.]
    Senator Gardner. Over the last year, we have gone around 
the state of Colorado. We have probably done--I do not know--
20-25 different roundtables focused on rural economic 
development. And we bring in business owners and county 
commissioners and city council members and small business 
owners and schools and community colleges and talk about how 
can we make rural opportunities grow to stay competitive. And 
usually before you can even start the meeting, the first 
comment you hear is, well, we need to talk about broadband. We 
need to talk about Internet, and we need to talk about 
connectivity. And then you start the meeting and that is where 
you spend most of the time talking about it.
    And so at some point, we have to realize that we have got 
to quit talking about it. We have got to start doing it so that 
the next economic roundtable that we have is not just focused 
on this one issue that every person here knows has to be the 
focus of our work.
    In Colorado, we have this great state, mountains on the 
west and flatland on the east, and it creates significant 
challenges to businesses, to companies, to funding efforts that 
we can go out to the eastern plains with the great coops that 
we have and Century Link that is working on the CAF II funds 
that they have received, 50,000 homes that they will be working 
on. We have got wireless Internet service providers, satellite 
companies that are doing great work, including the work that 
you are doing with about 350 employees out of Englewood. And 
you know, it is incredible what we have. But we have some 
significant challenges because of the mountains, some of the 
hardest places in the country to make sure that we are 
providing Internet.
    Yet, if you go to southwestern Colorado, in Durango, 
Colorado, Durango, according to some analysis, has the highest 
connectivity rates and some of the best abilities to work from 
home of anywhere in the country. And so we have been able to do 
some of these things.
    But obviously, when you go to meetings and you continue to 
hear from towns that are struggling to put it together, we have 
got to figure out a better solution.
    I am struck by the testimony today because we talk about 
all these Phase I's and Phase II's and round 1's and round 2's 
and CAF and Mobility. And then you read the statement from 
Chairman Wheeler who talked about the Connect America. This is 
a quote from him. The Connect America Fund Phase II competitive 
bidding process will be implemented in a technologically 
neutral manner to allow the participation of as many entities 
as possible. I think that statement sounds great. That is a 
great statement.
    And so then we get the testimony here, technologically 
neutral.
    Mr. Rapelyea, are we achieving that goal with the proposals 
we have seen?
    Mr. Rapelyea. No, simply put. There has been an adoption of 
the opposite where there is a thumb on the scale in a reverse 
auction, in the auction concept that has been put forth, for 
fiber solutions versus any of the other solutions on this panel 
such that if I were going to come with a bid, even though it 
met certain quality standards and performance standards, my bid 
would be scored lower.
    Senator Gardner. And so if you were laying fiber on the 
western slope of Colorado, you know, Red Mountain Pass, to try 
to get from Ouray, Colorado, over to Silverton, Colorado--and 
if you have not been there, it would be a great place to go 
spend some money. So I encourage you to be there. But that is 
going to be cost prohibitive. So how can satellite or another 
kind of technology address that challenge?
    Mr. Rapelyea. In your state to a great extent we do that 
today and in the state of Mississippi and many of the states 
around the country.
    The way that it will make business sense for a company like 
ViaSat or any other company to do that is to have an adjustable 
market that is balanced. It is a blend between populated areas 
and areas that are not so populated. If there is a preconceived 
notion that some of our technologies are solely rural and only 
allowed to compete for funds in ultra-rural places, I am afraid 
that you will not have a very effective bidding process. And 
those people frankly have already been left behind once. They 
will be left behind again.
    Senator Gardner. Mr. Berry, you talked about the $300 
million for expanding mobile networks, Mobility Fund Phase I. 
$300 million--just over $66 million has been allocated. Talk a 
little bit more about why the delay, how slow that has been 
released, and what impact it is having on other efforts.
    Mr. Berry. Yes. Thank you, Senator.
    We did have $300 million. We actually advocated that $300 
million was not enough. We had more bids to acquire those funds 
than they had funds budgeted. So there is a huge interest out 
there.
    What has happened, though, is because some small carriers 
actually went out of business, others could not see putting up 
the funds to build out the network when the legacy fund 
continues to drop, i.e., 60 percent of its original funding 
source.
    So there are two pressures. One, not enough funds. Two, 
those people that have actually built out the networks have not 
been reimbursed. And that is--I do not want to say a 
bureaucratic shortfall, but it is a slowdown in the process 
that really should not occur and it could be corrected, I 
think, very quickly. Some of the bureaucratic responsibilities 
of the USAC to, I think, over-indulge in the fact-checking has 
made it very difficult to build.
    But we are also talking about two funds, the CAF, which has 
really been focused on fixed solutions, and Mobility, which is 
MF II, Mobility Fund II, which is essentially what the FCC gave 
wireless when they decided that they were not going to have a 
technology-neutral CAF program. And that is why I think we are 
talking about two different things. We have a Mobility Fund II 
that we think we can utilize right now with a little tweak of 
existing tools. We can solve a new problem in the high-speed 
mobile broadband world.
    Remember, the high-speed mobile broadband can deliver fixed 
and mobile solutions. Fixed solutions cannot deliver mobile. I 
am glad we at least have an opportunity to make our case under 
Mobility II, but you are going to have to have more funds than 
what is currently being contemplated by the FCC. And we are 
going to have to have a lot more rapid response.
    Senator Blunt [presiding]. Senator Daines?
    I am going to wait until Senator Wicker gets back from 
voting. So I believe that we are fine on voting. So go ahead.

                STATEMENT OF HON. STEVE DAINES, 
                   U.S. SENATOR FROM MONTANA

    Senator Daines. Thanks, Senator Blunt.
    Let us think about my home state of Montana and the 
importance of connectivity. Believe me, it keeps us connected. 
You can have a fly rod in one hand and still be doing your 
business with your other.
    I was part of a cloud computing company for 12 years. We 
started up in Bozeman, Montana, grew it. It has 17 offices 
around the world, products set in 33 languages. Oracle acquired 
the company. They thought they were acquiring us for our 
software. They found out we had incredible cloud computing 
expertise.
    Today, as Oracle is putting together their global cloud 
command strategy, 24 by 7 by 365, Singapore is covering Asia. 
They hand off to London. It covers Europe, Middle East, Africa. 
And they hand off to Bozeman, Montana, for the Americas. That 
is what is going on in terms of revolution in this global 
economy.
    So I am very proud of what we have built there, but it also 
shows how world-class operations now exist in places outside of 
Silicon Valley. They have places like the Gallatin Valley.
    So thank you, Mr. Berry, also for mentioning the Ruby 
Valley there in Montana. I remember that well. I am happy to 
say that today new wireless towers have been constructed, and 
the residents of the Ruby Valley do have service again. So 
thank you.
    Mr. Berry, you also mentioned in your testimony that the 
Mobility Fund should expand services to areas currently 
underserved by 4G LTE service. I am concerned this means 
spending money upgrading customers who already have service at 
the expense of consumers who may not have any service. So 
should we not be focusing on some of these unserved communities 
and not even underserved but in some cases unserved communities 
like we have in Montana before we worry about upgrading to 4G 
LTE?
    Mr. Berry. Thank you, Senator.
    Yes, but we have to do both. A tower that has been built by 
USF support should conceivably be continued to provide service 
and supported by the Mobility II Fund if necessary. So the idea 
is if you are going to get to 4G advanced and 5G, which gets 
you to the Internet of Things and provides all of the benefits 
that they are using down here in Mississippi in the fields, you 
are going to have to do both.
    I am very fearful that you are at sort of a precipice of 
two real difficult challenges. If you do not continue to 
support existing capability, you will never get to the 4G/5G 
status. 4G and 5G provide huge increases in capabilities and 
speeds. They also are much more efficient in technologies and 
networks to run. So I think we are at that point where you have 
to do both. And expanding service--the proposal we provided to 
the FCC says support those that are necessary to continue to be 
supported and we would use that on a data-driven basis. Do you 
need support to ensure that that tower can op-ex, the 
operational cost of that tower can be maintained? And how can 
we encourage you to build out services and expand and enhance 
services as we go forward? That I think is the new challenge in 
the 4G/5G world. I do not think you just want 3G for your 
constituents. As soon as they get 3G, they are going to want 
4G.
    Senator Daines. We want 4G, 5. We want G just to start with 
as well.
    Mr. Berry. But it starts with coverage. If you do not have 
coverage, you do not even have an opportunity.
    Senator Daines. Yes.
    So I want to pivot over here and talk about WISPs. I am 
actually a WISP customer personally. Thank you. My children--
when you have children, all they care about is this anymore I 
think in terms of, Dad, is it fast or not. And so we are 
thankful that we have WISP delivering excellent service to my 
home in a rural area in Montana.
    Mr. Carr, there are certainly technical and operational 
differences between wireline service and wireless service. Some 
have questioned whether wireless providers can offer the same 
level of service in terms of quality and reliability as the 
price cap carriers. Could you address those concerns?
    Mr. Carr. Sure. Thank you for the question, Senator.
    We compete with Fortune 100 and otherwise subsidized 
carriers all day long. We compete on price, service, and 
quality. A principal value of fixed wireless is that we can get 
to areas much more cost effectively than other technologies, 
and we offer unlimited data. So in my network in Virginia, West 
Virginia, and Maryland, the average user on our networks--
excuse me--the median user consumes more than 100 gigabytes of 
data every month. And if you were going to buy that on a mobile 
hotspot, it would be $700 a month. You cannot get it on 
satellite, but you can get it in a very congested area for 
unlicensed spectrum on my network for $79 a month.
    So the advancements in fixed wireless technology over the 
last 5 or 6 years have been absolutely breathtaking. Billions 
of dollars of global R&D is going into improved wireless 
coverage. And fixed wireless, like all wireless--we benefit 
from that. Our manufacturers are designing products not for 
rural America. They are designing it for the two-thirds of the 
world's populations who have never been served by a wire and 
never will. And so American consumers and our companies--we 
benefit from all that innovation.
    Senator Daines. I lived in China for 5 years. I remember 
when one of my colleagues was getting--a Chinese colleague was 
getting service and her mother had to wait 6 months for the 
wireline, and she went downtown and got her cell phone up and 
running in 24 hours. It is a classic example of how technology 
is leapfrogging, what is going on in the world.
    I want to talk a little bit about satellite possibilities. 
This is for Mr. Rapelyea. Part of what makes our state great 
and why people want to come there is the mountains, the 
valleys. We have got a lot of topography challenges certainly, 
and that presents technological challenges.
    Is satellite service a viable solution for customers who 
live in mountainous areas like where Gardner is from or where I 
am from?
    Mr. Rapelyea. So we do have customers in your state. They 
are around the more populated areas. And then to serve less 
populated areas, we need a blend of both. A business case of 
the ultra-remote on a standalone basis is hard to close for us.
    Now, from a technological perspective, we operate today 
with four redundant satellites over the United States and more 
to come. So we will also employ hybrid networks that involve 
multiple wireless as well as satellite networks. So, yes, there 
is absolutely a technological way to do that. The business case 
is a different story.
    Senator Daines. I am excited to be elk hunting some day 
there, a long ways away, and have service there on my phone.
    Anyway, thanks much.

                 STATEMENT OF HON. ROY BLUNT, 
                   U.S. SENATOR FROM MISSOURI

    Senator Blunt. Thank you, Senator.
    Mr. Seward, I grew up on red and green tractors both. So I 
would want to specify that in case Senator Gardner is looking 
at the record here. I will admit that I have only owned green 
tractors for the last 5 or 8 years.
    And my dad, I am sure, would have preferred precision 
agriculture to some of the things I did on the tractor, driving 
the tractor from the time I was about 10 years old.
    But what about precision agriculture--clearly world food 
demand is going to double in the next 35 years. A lot of things 
have to happen. We have to be better than we have ever been. 
What is your sense of the spotty service component of what you 
are doing out there in agriculture when you have service and 
then you do not have service? Give me just a little view of 
that.
    Mr. Seward. It makes management of our farm a lot more 
difficult. We are not able to remotely monitor our machines, 
the efficiencies, you know, any data that we need to push to 
those machines to put out nutrients or to put out a seeding 
prescription. Overall, it will decrease our yield. You talk 
about feeding the world. It makes us less efficient. We are 
able to produce less crop. So it is a major issue for us.
    Senator Blunt. Can you rely on the precision agricultural 
concept if you are in a 40-acre field and you are only 
connected 90 percent of the time? What kind of problem does 
that create?
    Mr. Seward. Yes, you can. I would have to go out there with 
a thumb drive myself and introduce this data to the machine. It 
would be kind of like if I told Congress they could not use e-
mail for a day, everything had to be handwritten, hand-
delivered. It really just reduces our efficiencies. So 
precision ag still could be performed, but I do not know if it 
could be performed on a large-scale production like we are 
doing.
    Senator Blunt. Mr. Chairman, I have one more question. Let 
me thank you for letting everybody else ask their questions 
first and putting yourself at the end of the line. Most 
chairmen do not do that.
    Mr. Carlson, almost a year and a half ago, Senator Wicker 
and I and several other members sent a letter to the FCC urging 
them to finalize its rules for Phase II of the Mobility Fund. 
To the best of my knowledge, they have not done that yet. 
Actually to the best of my knowledge, they have not responded 
even to our letter yet. We do not have very good success 
encouraging the FCC to do anything or even to get a response.
    But what is your view of where we are now on Phase II?
    Mr. Carlson. To my knowledge, the FCC has not introduced 
any rules yet. We would encourage all the members of this 
committee to make sure that those rules do not reduce the fund 
and that the FCC actually not take any significant action with 
the current fund until they produce maps about the quality of 
coverage in rural America so they can know what they are doing 
because today they are blind.
    Senator Blunt. Thank you.
    Senator Wicker [presiding]. Well, thank you, Senator Blunt.
    We are currently the first in a series of two votes. Other 
Senators may actually come back and ask questions. At the last 
moment on the second vote, I think we have to adjourn this 
hearing. But you all have been great.
    Let me just ask you, Mr. Carlson. What is the best way to 
get accurate numbers for us, which you are advocating?
    Mr. Carlson. What I would advocate today, because I know it 
works for us when we measure ourselves against our competitors, 
is drive tests, and that means chartering an external 
engineering firm, other than ourselves, to drive the territory 
and to see what the actual quality of the signal strength is at 
each point along the territory, driving the State roads and the 
interstate highways. That is the way to get the job done. Now, 
you could do that on a national basis. I do not know what the 
cost is. But the cost is modest compared to the contribution 
that mobile broadband makes to the American economy. If we can 
afford to do a Census every 10 years and base our decisions on 
what we do economically as a Nation based on the Census, we 
should be able to do a census of our coverage across this 
country for mobile broadband.
    Senator Wicker. For Mr. Seward's purposes, you might want 
to include county roads. Might you not?
    Mr. Carlson. Absolutely.
    Senator Wicker. Now, who else would like to take a stab at 
that? Yes, Mr. Berry.
    Mr. Berry. If I may, sir. As I was starting to suggest to 
Senator Manchin, we ought to use all the available technology 
to do that.
    Senator Wicker. The drive-testing and what else?
    Mr. Berry. Well, you can drive-test.
    If we can put a team of recon officers in the middle of 
Afghanistan and they can determine where there is a radio 
signal, where it is from, and what channel it is on and the 
strength, we ought to be able to figure out how to figure out 
where that signal is coming in rural America. We have drone 
technology now. You could put a spectrum analyzer on the bottom 
of a drone and computerize the transit of non-populated areas 
so we could literally map the entire United States out. We have 
done drive-testing and we know it works. We have been doing 
that since analog days. There are a lot of different ways that 
we can analyze the quality of signals all over the United 
States. We ought to be looking at new ways.
    Senator Wicker. So drones and drive-testing.
    Mr. Rapelyea. Just to build on the drones comment and the 
troops on the ground, both of those applications are powered by 
satellite. So I just offer that as an aside.
    Senator Wicker. There you go, Mr. Rapelyea.
    Now, Mr. Rapelyea, Mr. Seward is not in these population 
areas that you mentioned. Do you anticipate your technology 
getting to the point where you are competing with companies 
like C Spire for his precision agricultural business over these 
far-flung areas of the Mississippi Delta?
    Mr. Rapelyea. Yes. I wanted to comment specifically about 
Mississippi.
    Senator Wicker. Well, I am all ears.
    Mr. Rapelyea. Great, great.
    We have talked a lot about the Mobility Fund. There is also 
the Connect America Fund, which is the focus here from our 
perspective. There are about 500,000--as far as we can tell, 
there are about 500,000 households that are not covered under 
the current Connect America Fund that were basically left 
behind in the first two rounds of the Connect America Fund, 1 
and 2. It looks like----
    Senator Wicker. Why was that?
    Mr. Rapelyea. Because there were telecommunications 
companies that were given the right of first refusal as to 
where they were going to serve, what households they were going 
to serve. They decided that the cost of serving these 
households was just too high. So they said we will pass. So 
that is what is left. So what we are talking about is what is 
left.
    Again, as far as we can tell, sir, out of those 500,000 
households, 92,000 are in your state.
    Senator Wicker. Well, thank you for that. So roughly a 
sixth of all the unserved households?
    Mr. Rapelyea. Yes, sir.
    And then on top of that, if you look at our business----
    Senator Wicker. That includes the mountainous West Virginia 
that you can hardly hear 50 feet, according to Senator Manchin?
    Mr. Rapelyea. Yes. Now, again, this is what is left behind 
uncovered, 92,000 households.
    Then if you look at where our customers are in your state, 
they are focused around the more populated areas of your state.
    Senator Wicker. Right.
    Mr. Rapelyea. The more rural areas are not where we are not 
because we cannot get there. Of course, we can get there. We 
are a satellite company. But we just need a balance to have 
because it costs us to acquire a customer in a rural area. It 
is much more expensive than in a more populated area. So, 
therefore, we think that the policies today--well, we know the 
current proposals at the Commission today and like we have 
mentioned several times are not technology-neutral. They are 
not technology-neutral, such that we probably would not go 
without support to cover those uncovered households in your 
state.
    Senator Wicker. And that is the principal thing, that is 
the principal change that you are advocating today. Would that 
be fair to say?
    Mr. Rapelyea. Let everybody compete. Let everybody compete. 
That is all.
    Senator Wicker. Now, Mr. Seward, you were kind enough to 
come by my office yesterday afternoon, which is a good thing 
because your testimony is the only testimony I missed coming in 
late because of the Prayer Breakfast.
    Did you have a chance to explain to this audience an 
example of how you get better yield and use less fertilizer and 
other product by getting data about these relatively small 
parcels of land?
    Mr. Seward. Yes. You know, in paring the statement down, I 
did not cover that.
    Senator Wicker. Go into that if you will because it is just 
fascinating to me.
    Mr. Seward. Just say we have a 40-acre field where we are. 
We are in the alluvial flood plain of the Mississippi Delta. We 
have a lot of different soil types. So this field might have 15 
different soil types in it. Say like I am growing a corn crop. 
It is going to grow differently on each different soil type. 
Each different soil type calls for a different amount of 
nutrients to produce a certain yield.
    So we do grid sampling, two and a half acre grids.
    Senator Wicker. And there is a company that does that. 
Right?
    Mr. Seward. Yes. Pretty much any agricultural lab would do 
it, but we use Clinton Pettiet out of Leland, Mississippi, 
Pettiet Agricultural Services. Clinton is a pretty neat guy.
    But anyway, that data is uploaded into the cloud.
    Senator Wicker. His name is in the permanent record of this 
hearing.
    Mr. Seward. It is. I will have to go back and tell Clinton. 
He will like that.
    But anyway, so it goes up in the cloud. You know, we are a 
big Sanders customer. They are a seed and chemical retailer 
there. So I can use their Web-based software----
    Senator Wicker. Another commercial.
    Mr. Seward. Another commercial. Hey, they get a free trip 
or something.
    Senator Wicker. But I digress.
    Mr. Seward. But anyway, I can write a controller file to 
put out the nutrients that each two and a half acre grid calls 
for. And then you take that controller file, which I can 
wirelessly send to a John Deere application machine, and it 
knows exactly where it is in the field via GPS and it can put 
out the exact amount of potassium that I need to grow 240 
bushels of corn in that 40-acre field, you know, every two and 
a half acres.
    Senator Wicker. So as that giant John Deere implement moves 
across this tract of land, it dispenses different amounts based 
on what it is being told wirelessly.
    Mr. Seward. Correct. It has a rate controller that controls 
the rate, yes. And it dispenses different amounts of fertilizer 
based on what it is being told wirelessly.
    Senator Wicker. Giving America better yields----
    Mr. Seward. Better yields.
    Senator Wicker.--and allowing us to put only the amount of 
fertilizer that is necessary and saving the rest of it from 
washing out into the Mississippi and Yazoo Rivers.
    Mr. Seward. You are exactly right.
    Senator Wicker. Now, Senator Klobuchar is going to be 
recognized in a couple of minutes.
    Let me just ask you all this. We are all for pro-USF 
support. We are kind of--all five of you--on the same page. But 
what differences are there among you that you would like to 
highlight based on all the questions and testimony. Is there 
anything that you would like to speak up about and clarify and 
perhaps take issue with something someone else has advocated? 
Or are we totally 100 percent on the same page? Mr. Rapelyea 
and then Mr. Berry.
    Mr. Rapelyea. Sure. Again, I think that there is room for 
everyone to compete, but I just want to make the very keen 
difference with satellite. Sir, we deliver high definition 
video streaming speeds to someone's home. We will deliver that 
same experience to someone in a plane, on a train. So this is 
where this is going today. We are competing against wireless 
and legacy cable and DSL and winning. About a third of our 
customers come from those solutions, people who have choices. 
Our next generation satellites will compete against cable. Our 
third generation satellites will be, with respect to fiber, 
just below fiber speeds. So we see ourselves as an extremely 
viable alternative within the Connect America Fund framework 
for those folks left behind.
    Senator Wicker. Mr. Berry?
    Mr. Berry. Well, I guess I would say two big differences.
    One, I guess the thing that unites is that we want to 
deliver high-speed broadband to consumers that currently do not 
have access.
    On the wireless side, it is a mobility product that we are 
providing under Mobility Fund II. That is where we would like 
to see a little more attention from the FCC and a few more 
dollars to deliver that mobility experience that you do not get 
any other way.
    We all are united by the same common challenge, which is 
how do you deliver a service in an area that is otherwise 
uneconomical to service. When you are down to three or four 
people per square mile or on the average--you know, 42 percent 
of the United States has less than 1 percent of the population. 
When you are talking about those areas, it is hard to pay for 
the network unless you have Universal Service funds, the 
Universal Service Fund, CAF II for the fixed service, whether 
it is fixed wireless or fixed wireline, and Mobility II for the 
wireless solution because it is pure mobility.
    And those are the two differences that the FCC essentially 
did in their transformation order, and we are trying to get 
them to focus on the fact that you just cannot say the job is 
done and that you think there is 99 percent coverage for the 
mobility side. That is part of the difference.
    And I feel for those other technologies that also appear to 
feel like they have been biased--the program somehow or another 
has been biased against them because, quite frankly, Mr. 
Rapelyea is right. Most of the funds go to a wireline solution 
that is predicated on a fiber solution. We are totally 
different. We want to demonstrate that and provide that service 
to rural America.
    Senator Wicker. Very good.
    Mr. Carr. Senator, I would just say about--I think a 
principal difference from the WISPs and the fixed wireless 
industry from my colleagues here on the panel is that the 
overwhelming majority of our companies are small businesses. We 
are located in the communities that we serve. The folks that we 
are serving are our friends and neighbors.
    And solving the digital divide in rural America, if there 
was a quick, one-size-fits-all solution that we could just 
blanket and drop in and have be successful, that would have 
already been done. And solving this challenge is going to 
require custom-tailored solutions for local communities based 
on a local understanding and an understanding of the needs of 
the community. And that is something that WISPs are uniquely 
positioned to provide.
    Senator Wicker. But in terms of policy coming from this 
committee, do you advocate something different from what the 
previous two witnesses have recommended?
    Mr. Carr. No. I think we all agree that we should compete 
on a technology-neutral basis to provide a standard threshold 
level of service.
    Senator Wicker. Ms. Klobuchar, the second vote has not even 
begun. So we will be in good shape. So, Ms. Klobuchar, you are 
recognized and then Senator Ayotte.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Very good. Thank you very much. Thank 
you, Mr. Chair.
    I have been working on this issue for a while. As you know, 
Mr. Berry, our state has a lot of rural areas and some of them 
extremely rural. We compete against Canada for our resort areas 
up in northern Minnesota. They tend to have better broadband I 
would say. We have got tribal areas where literally we have 
kids that go to one kid's yard to do their homework because 
they can get some WiFi off of that yard. We have farmers that 
are going to McDonald's parking lots--I have talked to them 
personally. I have seen it--to do their business as things get 
more complex with the kind of technology. Oftentimes they, of 
course, have access. They just have such slow-speed access that 
they are not able to do business in a way that is acceptable.
    And I guess I would start with you, Mr. Berry. Part of the 
problem in getting broadband to rural America is the continuing 
difficulty of deploying the physical network. And I recently 
introduced the Streamlining and Investing in Broadband 
Infrastructure Act, bipartisan, which will simplify the process 
for siting infrastructure on Federal lands.
    Mr. Berry, you mentioned that deploying infrastructure on 
Federal lands can be a time-consuming and difficult process. 
How would reducing these challenges increase the number of 
subscribers you could reach with the given level of support 
from the Universal Service Fund?
    Mr. Berry. Thank you, Senator. And yes, we are very 
strongly supportive of your efforts in that regard. Siting is 
always a difficulty, especially on Federal lands. And the shot 
clock concept and some of the initiatives that you are 
proposing will allow us to hopefully site facilities faster. 
And if you can do that at lower cost, you can provide a service 
that is economical to provide and hopefully you can get there 
so you can provide that connectivity to that tower sooner, 
faster, for more people. I think it will reduce costs. I think 
it will increase availability of services.
    And also another bill that you have also sponsored is the 
Rural Spectrum Accessibility Act and we very much appreciate 
that you and Senator Fischer have supported because we do need 
access to spectrum in rural areas so that you can ride that 
infrastructure over. And I think your bill gives us an 
opportunity to more efficiently and effectively use spectrum 
that is currently not available to the small carriers.
    Senator Klobuchar. Thank you. I appreciate Senator 
Fischer's work with me on that, and Senators Gardner and Daines 
I think were the cosponsors, as well as some other people on 
the other bill.
    You gave an example of a carrier in rural Montana, Mr. 
Berry, who was forced to exit the market because of uncertainty 
in funding. Do you think that this uncertainty in funding has 
had a disproportionate impact on rural residents?
    Mr. Berry. Yes, I do. As Senator Daines now tells me, Ruby 
Valley, Montana, now has coverage. But the small carrier that 
was servicing that area--and they put it in writing at the FCC 
why they were pulling out is because USF funding started to be 
reduced. It was down to 60 percent. And at that rate, under the 
plans that they had to roll out and sustain that service, they 
could no longer do it on their budget. They are a very small 
company that could not sustain the loss leader for a very long 
period of time. So they pulled out. I think that has happened 
in numerous areas throughout the United States, especially on 
those smallest of the small carriers, the small businesses that 
you referred to serving rural America.
    Senator Klobuchar. And what do you think the FCC could do 
to increase certainty as it moves toward the Connect America 
Fund Phase II auction, the Mobility Fund, the Remote Areas 
Fund?
    Mr. Berry. Well, we have suggested that--OK, let us try to 
address your highest priorities, which is to keep--our highest 
priorities, which is maintain and keep existing services, but 
expand services in a rational way. And we know there is not 
unlimited funds. But our suggestion is let us keep what we 
have, allow it to be enhanced, also encourage expansion in 
those areas. And I think they can do that very economically and 
with a lot of sensitivity to the need that is out there. And we 
talked and Mr. Carlson talked about the need to have better 
data and better information on the decisions they are making.
    Senator Klobuchar. One last question. Mr. Carlson, I head 
up the 911 Caucus. Do you worry that if we do not improve rural 
coverage, there could actually be a public safety divide 
between rural and urban areas? We know that more and more first 
responders, whether it is fire departments, or law enforcement, 
are getting their calls in and they are doing things by text 
and e-mail, and we are all updating how 911 works, how the data 
is worked before they go into a building, all kinds of things.
    Mr. Carlson. Yes, Senator. I believe there is a public 
safety divide today. And as new technology makes available 
video conferencing back to that ambulance or back to that 
police car, the technology divide will increase even farther. 
So to close that divide, we need accurate data on where 
services actually exist in rural America that are high-quality 
broadband mobility services, and then the FCC should be 
required by this committee to address that problem.
    Senator Klobuchar. Thank you very much.
    Senator Wicker. Thank you, Senator Klobuchar.
    Senator Ayotte?

                STATEMENT OF HON. KELLY AYOTTE, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Ayotte. Thank you, Chairman.
    Since I have been serving in the Senate and serving on this 
committee, I have been a strong voice for advocating a more 
equitable distribution from the Universal Service Fund. In 
fact, New Hampshire is 50th this year. We are a net donor by 
$21 million, but as I have said in the past, drive around my 
state with me a little bit and we will go up into Coos, 
Grafton, places in Cheshire, Carroll, and I can guarantee that 
you do not have service. So to me, this is something that we 
need to make sure that we address. And I would like to see more 
contribution reform.
    New Hampshire residents have paid into USF. We have paid 
in, but it is disproportionate to what we are getting back. 
Yet, I know that we need assistance and we need to have more 
mobile broadband coverage. So I would ask you, Mr. Carlson, if 
you could tell me--or anyone on the panel--what ideas do you 
have and how can you explain how mobile broadband carriers can 
help correct the coverage gaps and ensure those who reside in a 
rural state like New Hampshire have access to this innovation, 
which is so important especially in rural areas, whether you 
having your own business, communicating, being able to live in 
that area and have a good job. So whoever is best to answer it, 
I would appreciate it. And how do you think we could reform 
this fund to make it work more effectively for us in places 
like New Hampshire?
    Mr. Carlson. Well, let me make a couple comments, and I am 
sure my colleagues here will chip in.
    First, we need accurate maps at the FCC of the degree of 
your state that is not covered. The current maps that the FCC 
sent out appear to show that you are 98 percent covered, but 
that is not true.
    Senator Ayotte. Well, that is not true. I mean, I wish they 
would come around and drive around with me in the state. I can 
assure you we are not----
    Mr. Carlson. Right. So we need drive tests or we need 
drones to survey your state or we need items put on postal 
trucks to survey your state. We need a method to get the 
accurate data so that the FCC can hold themselves accountable, 
but so that this committee can hold them accountable. So that 
is a start because it will show that your state is not covered 
and it needs help. So that is the first thing.
    Another thing that we have recommended is that the Federal 
Government explore joint programs with states so that if your 
state were to start even a modest Universal Service mechanism 
itself, then it could apply to have matching grants from the 
Federal Universal Service Fund. So that would be a combination 
funding, and if your state were putting up more dollars, then 
you would get more dollars from the FCC Universal Service Fund. 
So that is another way to do it.
    And of course, another way to do it is to have a map of the 
whole United States so we can determine which states have the 
greatest problems. And I would not be surprised if your state 
did not have the greatest problems, along with West Virginia 
and some of the other mountain states. But the way the FCC 
constructed the Mobility Fund I is that they gave an incentive 
to serve the easiest areas to serve that were unserved, which 
meant flat states, and your state did not get anything. So we 
need reform and that kind of thinking.
    Senator Ayotte. It is really hard for me to tell my 
constituents how they are getting value out of this.
    Mr. Carlson. Right. I agree.
    Senator Ayotte. We are not. I mean, that is the problem.
    Mr. Berry. Senator, thank you for the question.
    I totally understand that by reforming the program more, we 
can actually send assistance to areas that need it more. We did 
a study and submitted information to the FCC that designated 
New Hampshire--our economists indicated it was 86.3 percent 
coverage when the FCC was saying 98, 99 percent.
    Senator Ayotte. Yes, a difference----
    Mr. Berry. Last year, your state got $131,000 out of the 
USF high-cost fund for mobility.
    Senator Ayotte. Unbelievable.
    Mr. Berry. We should direct the funds to those areas that 
actually need support and need coverage. And it is going to be 
a long process. It is not going to be done overnight. But we 
have to get it on the right track and moving forward as we 
reform USF Mobility II.
    Senator Ayotte. And what do you think exactly--as we look 
at the Mobility Fund Phase II, what is this going to have 
impact on rural America?
    Mr. Berry. Well, I hope that if we can get the rules right 
and get the structure right at the FCC, that we will be able to 
provide existing support for towers so that we do not lose our 
current coverage. So you do not want it to go backwards and 
also a mechanism that says those that are in need and those 
areas that do not have served or are highly unserved should 
actually be able to apply and receive additional funds.
    On the mobility side, I think some tweaking of the program 
could do a lot and we could do a lot better job with the funds 
that we have. On the wireline side, your state also got some 
wireline money, but again some of the most efficient and 
effective technologies that you might be able to deploy in a 
mountainous area are somewhat restricted in their ability to 
take it.
    Mr. Carr. And, Senator, I would just add on the fixed side, 
the fastest, most immediate reform to the USF program for fixed 
would be to eliminate the voice requirement. Most Americans 
choose not to have a fixed voice service, and really we should 
transform these funds into broadband funds because broadband 
enables voice if you want it. It enables telemedicine, 
telehealth, anything else you want.
    Senator Ayotte. You are absolutely right about that. I 
mean, so many of my constituents, including my own household--
we do not have a landline anymore. We are all using cell 
phones.
    Mr. Carr. And you raise a good point, and that is one of 
the reasons that you can actually direct that CAF to a fixed 
wireless broadband solution that is not dedicated to voice is 
they have an alternative. In many areas, they have an 
alternative, i.e., a cell phone. So I think they are 
complementary in many respects, and we should just get on with 
trying to accomplish the goal.
    Senator Ayotte. I think what we are talking about is making 
sure that we are updating this to what the current technology 
is and what most people need to maximize the resources we have 
here. And, of course, for my state, I am going to continue to 
fight for the fact that, you know, $21 million going out the 
door from my constituents. I cannot tell you what we could do 
with $21 million for these gaps in our State.
    Mr. Rapelyea. Senator, just to build on it to the mapping 
point. Under CAF II, I think the presumption is that your state 
is fine.
    Senator Ayotte. Well, that is the problem.
    Mr. Rapelyea. Right, and we all know that is not true.
    And then from an overall perspective, it looks like there 
is about $250 million on an annual basis, some of which your 
state is paying into, that is left to cover the balance, the 
tail end of CAF II. And then when you look at the cost model 
from the FCC of the per household cost and you add that up, it 
looks like you have got a billion dollar problem. You have got 
a budget of $250 million to cover a billion dollar problem.
    Yet, despite that discrepancy, you are not inviting all of 
us to compete. It is hard to close and kind of scratch your 
head on that one. So I just wanted to offer that as well.
    Senator Ayotte. Great. Thank you. And I think my time has 
expired.
    Senator Wicker. Senator Ayotte and I have to scurry over 
for a vote. You have all been excellent witnesses. This has 
been a most informative 1 hour and 50 minutes, most of which I 
have been able to listen to.
    I am going to, without objection, stick my opening 
statement in the record at the place where the clerk feels it 
would be appropriate.
    And thank you all. And we will continue to consider these 
matters. Thank you, and this hearing is adjourned.
    [Whereupon, at 12:20 p.m., the hearing was adjourned.]

                            A P P E N D I X

  Response to Written Questions Submitted by Hon. Roger F. Wicker to 
                           Darrington Seward
    Question 1. If you could, how would you direct the FCC to ensure 
that sufficient Universal Service Fund support remains available to 
both (1) fund the existing operations of rural wireless networks and 
(2) encourage further deployment in America's rural areas?
    Answer. Thank you for asking specifically about support for 
wireless broadband. Ag producers need access to all broadband 
technology options--wireline broadband, fixed wireless, or mobile--to 
reap the full benefits that new precision agriculture offers. We need 
the flexibility to adopt the appropriate technology solutions depending 
on ag equipment used, crops, livestock, terrain, climate, proximity to 
broadband interconnection points and population centers, and barriers 
to local land acquisition and access. Wireless services are also 
important to sustain the developing Internet of Things innovations that 
have emerged to address machine and data communication needs in the 
agricultural context.
    However, the reality is that broadband, particularly high-speed 
wireless broadband, still is not readily available in many rural areas 
including agricultural croplands and ranchlands. To ensure that 
sufficient funds are available for existing wireless operations, the 
Commission must reevaluate its programs and rules to provide ongoing 
support for wireless broadband networks that could not be maintained 
absent support. The absence of an unsubsidized competitor in a 
particular locale could be a threshold test to determine whether 
ongoing support is necessary to maintain wireless broadband. In many 
rural areas, there may not be enough subscribers to cover the ongoing 
costs of operating existing wireless networks while keeping rates 
reasonably comparable to those in urban areas. The Commission needs to 
develop a means to identify markets in need of ongoing support and 
adopt rules to calculate such ongoing support.
    Existing wireless facilities will also benefit if the FCC takes 
steps to promote middle-mile facilities to support mobile broadband, 
not just wired last mile connections. In particular, the FCC should 
amend its USF Connect America Fund rules so that smaller, rural 
providers may also receive and use CAF funds for upgrading middle-mile 
facilities.
    Further deployment of wireless networks must also be a priority 
that is reflected in the Commission's programs and rules. One important 
step toward achieving this goal is for the Commission to give special 
attention to preserving and updating the Mobility Fund. In 2011, for 
the first time, the FCC created a support fund dedicated exclusively to 
mobile services. The Mobility Fund was established to ensure the 
availability of mobile broadband networks in areas where a private-
sector business case was not supporting needed wireless services. The 
FCC's early plans contemplated a Mobility Fund Phase II but today, more 
than 5 years later, that fund is yet to become a reality. The 
Commission has since revised the program to retarget funds to support 
4G LTE mobile broadband and voice service and in 2014, the FCC asked 
for further input on how best to distribute Mobility Fund Phase II 
support. Now, after two and a half years, the FCC has not adopted rules 
to implement Mobility Fund Phase II. Instead, despite the growing 
demand for and importance of mobile services in rural areas, the 
Commission's current commitment to the Mobility Fund is in real 
question and the Commission has even suggested that it may not continue 
the fund. The Commission should confirm that expanded broadband in 
rural areas is a current priority by issuing a decision that preserves 
and even expands the Mobility Fund Phase II. Although I believe, and 
many other Ag producers would agree, that there is a need to update 
these support programs to better ensure coverage of agricultural areas, 
the Commission can and should act promptly to confirm the status the 
Mobility Fund Phase II while considering further updates.
    Another important action the Commission should take to encourage 
further deployment in rural areas is to revisit how best to distribute 
CAF support. The method by which CAF funds are distributed will 
determine whether rural families and businesses in agriculture will 
have the flexibility they require to apply the technology solution--
whether fixed or wireless or some combination of both--that best meets 
their particular needs. The ``tiered'' approach that the Commission has 
proposed would enable only wireline providers to bid in the first round 
and thereby would create significant barriers to wireless funding. That 
approach would limit the flexibility of users to employ the most 
appropriate technology solutions to meet a wide variety of 
circumstances. If a licensed or unlicensed wireless service is a 
superior option for particular areas based on the cost and other 
efficiencies that apply to the equipment, terrain, distance and other 
specific attributes of a locale to be served, then wireless providers 
should not be precluded from bidding in the first round to meet these 
needs.

    Question 2. What is the best way for the FCC to give rural 
businesses like yours and rural consumers like you and your neighbors 
in the Delta some certainty that there will be no reduction in access 
to the multiple wireless service providers your community needs to 
access healthcare, educational tools, or run your farms and businesses?
    Answer. I agree that rural consumers do need certainty about their 
continuing access to wireless services. The prospects for continuing 
access to technology is an increasingly important factor for consumers 
making decisions about where to live, go to school, and operate 
businesses. The Commission could bring more certainty to this area by 
making its commitment to expanded rural broadband services, including 
wireless services, explicit and by taking prompt, meaningful action to 
update its programs, broadband measurement mechanisms, and rules to 
make this a reality.
    There is a difference of opinion between commercial providers who 
quote very high coverage statistics and rural users whose demand for 
high speed broadband is still unsatisfied. Even Chairman Wheeler 
recently acknowledged the gap between the FCC's broadband coverage 
statistics which show nearly 99 percent coverage and the much different 
real-world experience in many rural areas where broadband is available 
to a much lower percentage of users. The rural broadband challenge is 
far from over and the mission cannot only be to avoid reduction in 
services--we must continue to actively support the expanded deployment 
of rural broadband. The Commission should consider seeking an update of 
the public record on the status of mobile broadband in rural areas and 
the specific measures that can be adopted to obtain better data on the 
coverage, quality and performance characteristics of mobile broadband. 
In addition, both the CAF and Mobility Fund should be re-evaluated to 
identify what changes are necessary to address the soaring growth in 
device-to-device communications in the Internet of Things, including in 
machine-to-machine (M2M) communications used in agricultural 
production.
    As a part of this effort, the Commission should expressly include 
broadband coverage of agricultural areas--croplands and ranchlands--in 
its Mobility Fund and CAF policy goals. However, despite some marketing 
statements declaring broadband coverage in rural America to be near 
complete, croplands and ranchlands have lagged behind in adequate 
mobile coverage. These locations are important centers of economic 
activity for many rural communities but today's support program rules 
do not adequately account for the need for broadband services in these 
areas. The FCC's rules for Mobility Fund support, as well as CAF 
support, should direct funding not just to facilities serving 
residential and business user population centers identified with 
conventional measures of population, but also to agricultural farming 
(cropland) and ranching operations that are integral to many local 
economies in rural areas. The Commission should also direct support 
from the Mobility Fund to coverage of rural roads. The evolution of the 
Mobility Fund priorities and rules would be consistent with the long 
recognized aim of the support programs to bring services to where 
``people live, work and travel.''
    Finally, to implement this step, the Commission should adopt a 
metric of broadband access in active croplands and ranchlands (and farm 
and ranch buildings) to identify areas of greatest need. ``Cropland'' 
coverage can be assessed in a variety of ways and the FCC could take 
advantage of USDA data for crop operations, the U.S. Geological 
Survey's Land Use classification, or other databases. In support of 
this plan, the FCC's program to collect broadband data also should be 
updated to ensure that broadband service to agricultural machinery is 
counted.
                                 ______
                                 
   Response to Written Question Submitted by Hon. Roger F. Wicker to 
                            Steven K. Berry
    Question. Late last year Commissioner Clyburn and members of your 
staff visited my home state to look at some of the amazing things 
Mississippi is doing to lead the way on telemedicine. They visited 
Ruleville in Sunflower County--in the middle of the Mississippi Delta, 
not too far from Mr. Seward's farm. There in rural Mississippi a 
groundbreaking telemedicine program is treating and defeating Type II 
diabetes. The program depends upon USF supported, robust mobile 
broadband connections to allow patients to interact with medical 
professionals around the clock from their home or work.
    Do you believe the FCC has done enough to ensure that sufficient 
USF support remains available to keep existing rural wireless networks 
up and running--enabling access to these critical life-saving and cost-
saving advances in medicine--especially in rural states like mine? How 
could the FCC do better?
    Answer. When the FCC adopted the 2011 USF Transformation Order, it 
included a transition mechanism from legacy identical support for 
wireless carriers to a new Mobility Fund. This fund was to be employed 
in two phases to ensure that sufficient support is available to 
preserve existing rural wireless service, like the service you mention 
in Mississippi, as well expand new mobile technologies and services. 
Importantly, the FCC added a protection mechanism to this transition. 
The FCC planned to phase down legacy support over a five-year period at 
20 percent per year. However, if the second phase of the Mobility Fund 
(Mobility Fund Phase II) was not operational by the time the phase down 
reached 60 percent by June 30, 2014, the FCC agreed to pause the phase 
down to protect rural consumers benefitting from legacy universal 
service support and to prevent a reduction or loss of wireless service. 
That pause remains in place today, providing carriers serving rural 
areas with support and consumers with ongoing wireless service.
    Going forward, it is important for the FCC to recognize and affirm 
that USF support will be made available at sufficient and predictable 
levels for wireless carriers to preserve existing rural wireless 
networks as well as expand the latest mobile broadband services in 
areas that are unserved or underserved. Support for both preservation 
and expansion of mobile broadband is necessary to meet Congress's 
mandate to provide reasonably comparable services in urban and rural 
areas alike.
    Response to Written Question Submitted by Hon. Dan Sullivan to 
                            Steven K. Berry
    Question. In your testimony, you mention carriers that have had to 
sell part or all of their operations due to uncertainty in funding. As 
you may know, some of our carriers in Alaska are nearing this point. I 
am sure you are aware of the proposal set forth by the Alaska Telephone 
Association targeted specifically to Alaska rate of return carriers. 
Can you please discuss the challenges for these carriers posed by 
uncertain funding mechanisms? Can you also discuss how CCA addresses 
the needs of Alaskan consumers?
    Answer. As CCA has told the FCC, CCA supports the adoption of the 
Alaska Telephone Association plan. The Alaska Telephone Association 
includes several CCA members that provide life-saving mobile wireless 
services in these hard-to-serve areas, and the plan is tailored to 
Alaska's unique needs and situation. Stable funding mechanisms are 
critical for all carriers to preserve, expand and upgrade voice and 
broadband services. All carriers deserve certainty regarding what 
funding mechanisms will be available so they can maintain, upgrade, and 
expand their networks, and all consumers demand certainty that services 
they rely on will be available. The Alaska Telephone Association's 
proposal would provide a fixed amount of support for 10 years to mobile 
and rate-of-return carriers in Alaska, and require them to make 
specific commitments to upgrade and maintain advanced mobile networks. 
The proposal strikes the right balance for carriers and consumers 
alike, and the FCC should adopt the proposal for the benefit of all 
Alaska carriers and consumers.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                             James G. Carr
    Question. Mr. Carr, as you may know, in March the Senate passed a 
bipartisan resolution that I introduced, along with Senators Ayotte, 
Booker, and Schatz, which stressed the importance of developing a 
national strategy to encourage the Internet of Things, and this is an 
issue that we continue to follow closely. We hear frequently about how 
mobile wireless will enable the growth of the Internet of Things, and I 
believe that is true, but I also think it is important to keep an 
expansive view of the technologies that will play a role in this 
evolution. What do you see as the role of fixed wireless service in 
growing the Internet of Things?
    Answer. Fixed wireless already plays an extremely critical role in 
the Internet of Things (``IoT''), and will play an even greater role in 
growing the IoT in the future.
    As a threshold matter, Americans who lack access to Internet 
connectivity cannot benefit from the IoT and related advancements. 
Thus, extending high-quality, high-data Internet service to rural 
America is a precondition for extending the benefits of the IoT to 
rural Americans. Fixed wireless is an extremely cost effective access 
technology that can be rapidly deployed and should be an important 
component of a national strategy to bridge the digital divide. This is 
particularly the case in rural America, where market conditions 
frequently will not support private investment in wired alternatives. 
Thus, the first role of fixed wireless in growing the IoT will be 
providing basic connectivity to communities that are presently unserved 
or underserved. This is one of the many reasons why it is so critical 
that the FCC adopt technology-neutral rules that prioritize cost 
effectiveness for the Connect America Fund (``CAF'') Phase II reverse 
auction. WISPA has recently submitted a proposal to the FCC outlining a 
technology-neutral framework for the CAF Phase II reverse auction which 
we believe would foster greater competition and a more efficient 
allocation of limited public resources.\1\
---------------------------------------------------------------------------
    \1\ This proposal is set forth in the Letter from Stephen E. Coran, 
WISPA Counsel, to Marlene H. Dortch, FCC Secretary, WC Docket No. 10-90 
(filed March 4, 2016), a copy of which is attached to this response.
---------------------------------------------------------------------------
    Fixed wireless will also reduce the cost of IoT applications. This 
is because the cost per unit of data transmitted over a fixed wireless 
network typically is substantially lower than the cost per unit of data 
transmitted over a mobile wireless network. For example, in Loudoun 
County, Virginia, All Points Broadband's customers can transmit 100GB 
of data over a fixed wireless network for $79 per month. On the mobile 
wireless network of a national carrier, the monthly cost of this same 
amount of data would be $710. While All Points Broadband's unlimited 
data plans begin at $99 per month, data plans that are truly unlimited 
are not available from national mobile carriers.
    The impact of fixed wireless' relative cost efficiency will 
continue to grow as end-user data demands continue to increase. For 
example, America's largest fixed-wireless Internet service provider, 
Rise Broadband, indicates that its average user presently transmits 
94GB of data per month, and that data usage is rising by more than 40 
percent each year.
    A large proportion of the ``things'' that will be connected to the 
IoT are stationary devices such as smart meters, irrigation controls, 
and surveillance cameras. For example, many water and sanitation 
authorities are already using fixed wireless networks to conduct water 
and flow metering, and real-time video surveillance, telemetry and 
alarming at remote locations. Fixed wireless enables a large proportion 
of modern precision agriculture techniques, and fixed wireless networks 
also support electric utilities' ``smart grid'' metering programs, 
railroads' remote monitoring of at-grade crossings, and operators' 
monitoring of tank levels and operating temperatures at remote oil 
wells. Given the relative cost efficiency of fixed wireless networks, 
fixed wireless will be the preferred access technology for many IoT 
devices. The reduced cost access made available by fixed wireless 
networks will spur innovation and benefit the entire IoT ecosystem.
    Fixed wireless networks can also provide service where there is no 
mobile coverage. In many areas of rural America, mobile wireless 
networks are unavailable or unreliable. Using fixed wireless 
technology, operators can efficiently expand coverage to specific 
remote locations where connectivity is required to support IoT 
applications.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Dan Sullivan to 
                             James G. Carr
    Question. In your testimony, you discuss the Remote Areas Fund, 
which is intended for ``extremely high-cost areas''. Most, if not all, 
of Alaska would fit this profile. Can you tell me what you would like 
to see from the FCC regarding rules for the Remote Areas Fund?
    Answer. WISPA will urge the FCC to adopt rules for the Remote Areas 
Fund (``RAF'') that are technology neutral. That is, the rules should 
set minimum requirements for the characteristics of the end-user 
experience (i.e., speed, latency, data limits and time to complete 
build-out), and require bidders to compete on cost--awarding support to 
the bidder offering the most cost effective solution. Rules that 
encourage bidders to use any combination of access technologies (such 
as terrestrial fixed wireless, wired fiber-optic technologies, and 
others) would maximize participation in the competitive process. This 
competition would ensure that limited public resources are allocated as 
efficiently as possible, and thus maximize the number of Americans who 
can be connected with the limited funding that is available.
    WISPA has recently submitted a proposal to the FCC outlining a 
recommended, technology-neutral framework for the CAF Phase II Reverse 
Auction (the ``WISPA CAF II Framework'').\2\ The concepts underlying 
the WISPA CAF II Framework will form the basis of WISPA's approach to 
the RAF rules.
---------------------------------------------------------------------------
    \2\ This proposal is set forth in the Letter from Stephen E. Coran, 
WISPA Counsel, to Marlene H. Dortch, FCC Secretary, WC Docket No. 10-90 
(filed March 4, 2016), a copy of which is attached to this response.
---------------------------------------------------------------------------
    It is also critical that the RAF rules not preclude bidders 
proposing to use unlicensed spectrum to deploy wireless networks to 
provide Internet connectivity. Unlicensed spectrum is a public resource 
that is already available to connect rural Americans, and wireless 
Internet service providers have been deploying over unlicensed spectrum 
to successfully connect millions of rural Americans and businesses for 
many years. The remote and sparsely populated areas where RAF funding 
will be available are the same areas where unlicensed spectrum is most 
available and least congested. RAF rules that preclude or disadvantage 
wireless Internet access deployments over unlicensed spectrum will 
increase the cost of connecting rural America in an amount that 
dramatically exceeds the corresponding public benefit of this 
additional cost. By increasing the per-connection cost of providing 
connectivity, such rules would limit the number of Americans who can 
benefit from the RAF.
    WISPA is in ongoing discussions with other industry associations to 
seek a consensus approach for allocation of the funding, if any, 
remaining after the CAF competitive bidding process ends. In order to 
achieve consensus, WISPA's position may evolve.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Cory Booker to 
                             James G. Carr
    Question. Mr. Carr, you state in your written testimony that access 
to more licensed and unlicensed spectrum is critical to meeting the 
growing demand for broadband service that we see across the country. I 
agree that finding and freeing more spectrum is absolutely critical to 
continued growth and innovation in the telecommunications industry, and 
I have worked with Senator Rubio on legislation that would help us meet 
this goal. How important is it that any new spectrum legislation from 
Congress take a balanced approach in freeing up both licensed and 
unlicensed spectrum to meet today's connectivity needs?
    Answer. It is critically important that Congress take a balanced 
approach to spectrum policy. In particular, Congress needs to find and 
free more spectrum for use on an unlicensed basis.
    When there is adequate unlicensed spectrum in multiple frequency 
bands, wireless Internet service providers can rapidly and cost 
effectively deploy last-mile networks. These networks provide 
connectivity where none is available and create choice and competition 
in areas where competition is limited. Deploying on unlicensed spectrum 
enables operators to provide service and competition in areas where 
additional networks using licensed spectrum are uneconomical, including 
low-income urban areas and much of rural America.
    The public benefit of allocating significant spectrum for 
unlicensed use dramatically outweighs the potential one-time proceeds 
that would be obtained through sale of spectrum to a licensee.
    For example, a 2014 report found that technologies operating in 
unlicensed bands in the United States generated a total annual economic 
value of $222 billion and contributed $6.7 billion to the Nation's 
GDP.\1\
---------------------------------------------------------------------------
    \1\ Telecom Advisory Services, LLC, ``Assessment of the Economic 
Value of Unlicensed Spectrum in the United States'', February 2014, 
page 8.
---------------------------------------------------------------------------
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                            Michael Rapelyea
    Question. Mr. Rapelyea, as you state in your testimony (page 9), it 
is estimated that by 2020, there will be over 20 billion connected 
devices worldwide. As you may know, in March the Senate passed a 
bipartisan resolution that I introduced, along with Senators Ayotte, 
Booker, and Schatz, which stressed the importance of developing a 
national strategy to encourage the Internet of Things, and this is an 
issue that we continue to follow closely. We hear frequently about how 
mobile wireless will enable the growth of the Internet of Things, and I 
believe that is true, but I also think it is important to keep an 
expansive view of the technologies that will play a role in this 
evolution. What do you see as the role of satellite in facilitating the 
growth of the Internet of Things?
    Answer. The Internet of Things (IoT) brings together advancements 
in computing, networking and communications technologies. Among the 
many things IoT promises are economic growth, increased productivity 
and new market opportunities. Growth estimates for the 20 developed and 
emerging economies that generate over 75 percent of the world's 
economic output is $10.6T added to their cumulative GDP over the next 
15 years. Increased productivity results from closer tracking of high 
valued assets and improved visibility into supply chains that when 
combined with data analytics provide greater operating efficiencies and 
higher return on invested capital.

   Engine telemetry transmitted from an aircraft, locomotive, 
        or oil rig predicts engine failure, isolates the part and 
        alerts service personnel to reduce engine downtime.

   Power line sensor data transmitted to a control center 
        detects changes that signal a power demand by a community.

   Truck or delivery vehicle sensor data and camera snapshots 
        ensure driver safety and proper vehicle operation. Data 
        security is a key component of the machine-to-machine (M2M) 
        communications inherent in IoT. Security requirements vary for 
        wired and wireless connections. A bank ATM machine uses a 
        dedicated wired connection to the bank network. An ATM in a 
        mobile vehicle in remote areas uses wireless connection. In 
        order to ensure transmissions cannot be intercepted, data link 
        encryption is employed.

    Satellite delivers secure, wireless M2M communications. Satellites 
provide coverage to serve areas that are not cost effective to build 
out terrestrial wired (e.g., fiber) or wireless (e.g., WiFi or 
cellular) networks. For in-flight aircraft and locomotives traveling in 
remote areas satellite can be the only option since most terrestrial 
systems elect to direct antennas toward the greatest number of existing 
subscribers. When terrestrial service is available, satellite increases 
reliability by providing a redundant communications link. This is 
especially important when terrestrial systems become damaged or 
inoperable due to a natural or man-made disaster.
    ViaSat Mobile Satellite Services (MSS) leverages Internet Protocol 
(IP)-based satellite technologies developed for the U.S. DOD's Blue 
Force Tracking network to improve battlespace communications to reduce 
casualties due to friendly fire. MSS features and benefits include:

   Data link encryption superior to wireless networks

   Real-time position tracking

   Low user service cost

   Rapid deployment

   Open standards-based IP applies to multiple market verticals

    In service since 2013, the DOD network has an installed base of 
over 70,000 users. ViaSat launched MSS as a separate, commercial 
variant of the DOD network. This response to the satellite technology 
for communications mirrors the potential growth of IoT.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                         LeRoy T. Carlson, Jr.
    Question. Mr. Carlson, in your written testimony, you mention that 
states, including Nebraska, have their own state universal service 
funds. You propose that those states could participate in a pilot 
program to see how to leverage state funding, along with the Federal 
universal service program and private investment, to support mobile 
broadband. The state of Nebraska is doing great work with their 
universal service program, to make sure that all Nebraskans have access 
to vital communications services. Can you provide more detail on how 
you see a pilot program being carried out, and what the role of states 
like Nebraska would be?
    Answer. Senator Fischer, thank you for the question and the 
opportunity to talk a little more about an idea we recently presented 
to the FCC for consideration. In our view, and the view of many 
participants that we have spoken to, the FCC's Mobility Phase I reverse 
auction process has failed to deliver mobile broadband as widely as 
everyone had hoped. Moreover, the Federal universal service fund, which 
is now committed to annually providing approximately $2 billion to 
small landline carriers, $2 billion to large landline carriers, $2 
billion for schools and libraries, $1.5 billion for Lifeline, and $275 
million for rural health care, is a finite resource. The FCC originally 
committed only $500 million for its Mobility Fund Phase II, and has 
subsequently proposed reducing that amount, despite overwhelming 
evidence that citizens living in rural America want and need high-
quality modern mobile voice and broadband services. With these 
limitations, creating a mobility fund of $1 billion annually, which we 
believe to be the absolute minimum needed to ``move the needle'' in 
rural America, requires some creativity.
    Our idea flows from the Congressional declaration in the 1996 Act 
that universal service is a responsibility to be shared between the 
Federal and state governments. That shared responsibility has taken the 
form of Federal universal service funds being generated from interstate 
telecommunications service revenues, while state universal service 
funds have been generated from intrastate telecommunications service 
revenues. Over the years, the Federal Government has assumed an 
increasing share of the overall funding, as well as assuming greater 
control of the program. In the mobility arena, we believe that states 
are better positioned to know where mobile coverage and broadband 
availability is lacking, and to monitor investments to ensure that 
rural citizens get the benefits that program funds were intended to 
deliver.
    Furthermore, we believe that state contributions through matching 
funds will increase program leverage. And, having states administer and 
monitor fund usage will increase accountability and the likelihood of 
success, as state commissioners are closer to the ground, they 
understand better where investments are needed, and they are more 
directly accountable to constituents. In addition, a grant program will 
force carriers to submit applications that are targeted to the right 
areas and make the most efficient use of program dollars, otherwise 
they will not qualify for a grant.
    Under a pilot, the FCC would select one or more states willing to 
participate in a one-year trial of a program that would provide grants 
to carriers willing to construct mobile broadband infrastructure in 
unserved and underserved areas. As described in more detail below, key 
principles of such a program would include a state's agreement to 
contribute matching funds to those provided by the Federal Government, 
adoption of a simple Federal grant program rule, and a state's 
willingness to decide where funds should be invested and monitor 
program participants so that funds are invested as proposed.
    For purposes of a pilot, the FCC would allocate an amount of 
Federal universal service support to participating states. To obtain 
valid and fulsome data, we would recommend a total Federal commitment 
of $25-50 million, divided among as many as five states willing to 
participate. Funds would be allocated based on any number of available 
metrics, such as unserved/underserved road miles or census blocks.
    States would be required to provide matching funds of up to 50 
percent of Federal funding. So for example, if the FCC allocates $1.00 
and a state contributes $0.50, the FCC will increase the Federal 
funding amount to $1.50, making $2.00 available for the state mobility 
fund. This mechanism will provide program leverage to accelerate 
investment and promote the sharing of universal service burdens.
    There would be a simple rule to be implemented, which limits the 
``unfunded mandate'' problem. State investment in the process would be 
limited to selecting participants, administering the program, and 
oversight, not developing new program rules.
    Eligible carriers would submit applications for funding that meet 
the rule requirements, explaining to the state PUC where new services 
are needed. We believe carriers are best positioned to know where their 
networks require investments that would not otherwise be made, and PUC 
commissioners are in a better position than the FCC to know where 
services in their respective states are lacking. Carriers would be 
encouraged to submit statements from local communities as to the need 
for mobile broadband services, which are easily verified by state 
commissions.
    The application for funding must be self-scoring, to simplify 
review.
    PUCs would review applications, verify compliance, and ensure that 
services are provided as promised.
    Funds must be used for capital expenditures to build or upgrade 
facilities, or to fund ongoing operations in remote areas.
    Carriers must deliver mobile broadband service consistent with 
then-existing FCC requirements (e.g., throughput and coverage).
    In a pilot setting, states would do one year of funding, with both 
the state and participating carriers required to submit a report to the 
FCC at year-end, describing what worked, and what did not work, so the 
program could be refined when it is rolled out on a larger scale.
    We have drafted a proposed rule that could be refined for use with 
a pilot program, and a summary providing a brief overview, both of 
which are attached for your reference.
    We must mention the substantial work done by Nebraska, which has 
informed our thinking. Our entire proposal was based in large part on 
the successful Nebraska state broadband fund, which we participate in 
each year. We believe a large part of Nebraska's success flows from the 
fact that the commissioners are engaged and share a common belief that 
a high-quality mobile broadband infrastructure are critical to the 
state's long-term success at providing public safety, education, health 
care, and economic opportunity. U.S. Cellular is one of several mobile 
carrier participants that has constructed substantial infrastructure in 
the state that would not have been built otherwise, to our company's 
benefit, but more important to the benefit of rural Nebraskans.
    With respect to your last question, the role of Nebraska in a 
federal-state broadband grant program, we offer this thought. If the 
FCC were to adopt a federal-state grant program along the lines of what 
we have proposed, we would advocate giving Nebraska the option to 
continue on with its current and fully formed grant program, but 
expanded with the addition of new Federal funding. Alternatively, 
Nebraska could opt to use the Federal rule for future grants to 
eligible carriers.
    In closing, we are committed to each community we serve, and fully 
understand that the robust infrastructure we have in the U.S., 
including electricity, water, gas, and telephony, could only be built 
in remote areas with the assistance of public funding. We believe that 
a grant program, which requires carriers to identify areas of need, for 
local communities to support it, for state public utility commissions 
to oversee and manage it, and for the Federal Government to provide 
funding and an efficient program for awarding funds and overseeing 
their use, is the best way to accelerate broadband infrastructure 
investment in rural areas.
    Accordingly, we believe that a pilot program along the lines 
described above, would be the best way to learn how best to build a 
successful mobility fund. We would be happy to come in to discuss this 
with you further, or assist in any way in efforts you may undertake to 
convince the FCC to adopt such a pilot program.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Dan Sullivan to 
                         LeRoy T. Carlson, Jr.
    Question. In your testimony, you discuss how the current mobility 
fund lacks the size and focus to ensure rural communities have timely 
access. One idea you propose is a grant program combining state and 
Federal support funds. Can you elaborate on this further? Are there any 
programs in existence that resemble your proposal?
    Answer. Senator Sullivan, thank you for the opportunity to talk 
about a federal-state broadband grant program, which we believe holds 
great promise for improving mobile broadband service in America's rural 
areas. While we would like to see the FCC embrace this idea 
immediately, we have also suggested a brief pilot project that would 
validate the concept and permit participants and regulators to figure 
out what works, and what does not, to improve it before implementing it 
throughout the Nation.
    Let me respond to your last question first. Several states have 
mobile broadband universal service funds, including Nebraska, Colorado, 
and now New Mexico (although the latter is the subject of a court 
challenge to the state statute). Perhaps Nebraska's grant program has 
had the most success, as it has been in place for a number of years and 
has had multiple carriers, including our company, apply for and draw 
funds and construct mobile broadband infrastructure in remote parts of 
the state.
    As you probably know, it is our view and the view of many 
participants that we have spoken to, that the FCC's Mobility Phase I 
reverse auction process has failed to deliver mobile broadband as 
widely as everyone had hoped. Moreover, the Federal universal service 
fund, which is now committed to annually providing approximately $2 
billion to small landline carriers, $2 billion to large landline 
carriers, $2 billion for schools and libraries, $1.5 billion for 
Lifeline, and $275 million for rural health care, is a finite resource. 
The FCC originally committed only $500 million for its Mobility Fund 
Phase II, and has subsequently proposed reducing that amount, despite 
overwhelming evidence that citizens living in rural America want and 
need high-quality modern mobile voice and broadband services.
    With these limitations, creating a mobility fund of $1 billion 
annually, which we believe to be the absolute minimum needed to ``move 
the needle'' in rural America, requires some creativity. To date, we 
have advocated to the FCC that it would be a mistake to create a fund 
of any size without first developing an estimate of how big the task 
is. For example, if the job of providing high-quality coverage and 
mobile broadband to rural America will cost $20 billion in universal 
service funding, then one can look to available resources to determine 
how much can be devoted each year, and how long it will take to 
complete the task.
    At this point, nobody knows with any real accuracy where specific 
areas of the Nation lack high-quality coverage and 4G LTE service, how 
much it might cost to provide it, and what is a reasonable time frame 
to complete the task. Nor is any planning underway to support 5G 
development in rural areas. Until the FCC undertakes these fundamental 
steps, the size of its Mobility Fund cannot be said to be properly tied 
to measurable goals or a budget for completing the task.
    What we do know is that in Mobility Fund Phase I, where the FCC 
allocated $300 million, the areas amount of geography that saw new 
coverage was very small, and the reverse auction methodology has proven 
to be so challenging that nearly one-third of the funding has been 
forfeited back to the FCC by carriers. We participated in that process 
and, even for a relatively large rural carrier, have found it to be 
daunting, despite our relative level of success in building out.
    What we can safely conclude is that since it takes over $4 billion 
per year to maintain and upgrade our Nation's existing rural wireline 
networks, providing about 12 percent of that amount to rural wireless 
networks, where new coverage must often be established, is not enough. 
And that is why we are working on creative ideas to leverage Federal 
program dollars to expand the amount that can be invested in America's 
rural areas.
    Our idea flows from the Congressional declaration in the 1996 Act 
that universal service is a responsibility to be shared between Federal 
and state governments. That shared responsibility has taken the form of 
Federal universal service funds being generated from interstate 
telecommunications service revenues, while state universal service 
funds have been generated from intrastate telecommunications service 
revenues. Over the years, the Federal Government has assumed an 
increasing share of the overall funding, as well as increasing control 
of the program. In the mobility arena, we believe that states are 
better positioned to know where mobile coverage and broadband 
availability is lacking, and to monitor investments to ensure that 
rural citizens get the benefits that program funds were intended to 
deliver.
    Accordingly, we believe that states contributing matching funds 
will increase program leverage. Having states administer and monitor 
fund usage will increase accountability and the likelihood of success, 
as state commissioners are closer to the ground, they understand better 
where investments are needed, and they are more directly accountable to 
constituents. In addition, a grant program will force carriers to 
submit applications that are targeted to the right areas and are the 
most efficient use of program dollars, otherwise they will not qualify 
for a grant.
    The FCC could conduct a pilot, to allow several states to 
participate for one year and file a report that would inform the FCC 
and states on what a nationwide program would look like. Our proposal, 
as described in more detail below, would include a state's agreement to 
contribute matching funds to those provided by the Federal Government, 
adoption of a simple Federal grant program rule, and a state's 
willingness to decide where funds should be invested and monitor 
program participants so that funds are invested as proposed. Federal 
funds would be allocated among the states based on any number of 
available metrics, such as unserved/underserved road miles or census 
blocks. It is possible that a separate fund would be created to address 
Alaska's unique needs, but that is beyond the scope of our initial 
thinking.
    States would be required to provide matching funds of up to 50 
percent of Federal funding. So for example, if the FCC allocates $1.00 
and a state contributes $0.50, the FCC will increase the Federal 
funding amount to $1.50, making $2.00 available for the state mobility 
fund. This mechanism will provide program leverage to accelerate 
investment and promote the sharing of universal service burdens.
    There would be a simple rule to be implemented, which limits the 
``unfunded mandate'' problem. State investment in the process would be 
limited to selecting participants, administering the program, and 
oversight, not developing new program rules or engaging in litigation 
that often follows.
    Eligible carriers would submit applications for funding that meet 
the rule requirements, explaining to the state PUC where new services 
are needed. We believe carriers are best positioned to know where their 
networks require investments that would not otherwise be made, and PUC 
commissioners are in a better position than the FCC to know where 
services in their respective states are lacking. Carriers would be 
encouraged to submit statements from local communities as to the need 
for mobile broadband services, which are easily verified by state 
commissions.
    The application for funding must be self-scoring, to simplify 
review.
    PUCs would review applications, verify compliance, and ensure that 
services are provided as promised.
    Funds must be used for capital expenditures to build or upgrade 
facilities, or to fund ongoing operations in remote areas.
    Carriers must deliver mobile broadband service consistent with 
then-existing FCC requirements (e.g., throughput and coverage).
    In a pilot setting, states would provide one year of funding, with 
both the state and participating carriers required to submit a report 
to the FCC at year-end, describing what worked, and what did not work, 
so the program could be refined when it is rolled out on a larger 
scale.
    We have drafted a proposed rule that could be refined for use with 
a pilot program, and a summary providing a brief overview, both of 
which are attached for your reference.
    Our proposal is based on the work of state commissions that have 
created mobile broadband funds, in large part on the successful 
Nebraska program, which we participate in each year. We believe a large 
part of Nebraska's success flows from the fact that the commissioners 
are engaged and share a common belief that a high-quality mobile 
broadband infrastructure are critical to the state's long-term success 
at providing public safety, education, health care, and economic 
opportunity. We are one of several mobile carrier participants that 
have constructed substantial infrastructure in the state that would not 
have been built otherwise, to our company's benefit, but more important 
to the benefit of rural Nebraskans. We think such a model can work 
throughout the Nation.
    In closing, we are committed to each community we serve, and fully 
understand that the robust infrastructure we have in the U.S., 
including electricity, water, gas, and telephony, could only be built 
in remote areas with the assistance of public funding. We believe that 
a grant program, which requires carriers to identify areas of need, for 
local communities to support it, for state public utility commissions 
to oversee and manage it, and for the Federal Government to provide 
funding and an efficient program for awarding funds and overseeing 
their use, is the best way to accelerate broadband infrastructure 
investment in rural areas.
    Accordingly, we believe that a program along the lines described 
above, would be the best way to build a successful mobility fund. We 
would be happy to come in to discuss this with you further, or assist 
in any way in efforts you may undertake to convince the FCC to adopt 
such a pilot program.

                                  [all]

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