[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


        IMPROVING BROADBAND DEPLOYMENT: SOLUTIONS FOR RURAL AMERICA

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

                                 HEARING

                               BEFORE THE

             SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JUNE 22, 2017

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                              

            Small Business Committee Document Number 115-026
              Available via the GPO Website: www.fdsys.gov
              
              
                               __________
                               

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25-857 PDF                  WASHINGTON : 2017                     
          
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                  HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                           RON ESTES, Kansas
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Rod Blum....................................................     1
Hon. Brad Schneider..............................................     2

                               WITNESSES

Mr. Mike Romano, Senior Vice President, Industry Affairs & 
  Business Development, NTCA--The Rural Broadband Association, 
  Arlington, VA..................................................     5
Mr. Dave Osborn, CEO, VTX1, Raymondville, TX, testifying on 
  behalf of the Western Telecommunications Alliance..............     7
Mr. Tim Donovan, Senior Vice President, Legislative Affairs, 
  Competitive Carriers Association, Washington, DC...............     8
Mr. Chris Allendorf, Vice President of External Relations and 
  General Counsel, Jo-Carroll Energy, Inc. (NFP), Elizabeth, IL..    10

                                APPENDIX

Prepared Statements:
    Mr. Mike Romano, Senior Vice President, Industry Affairs & 
      Business Development, NTCA--The Rural Broadband 
      Association, Arlington, VA.................................    28
    Mr. Dave Osborn, CEO, VTX1, Raymondville, TX, testifying on 
      behalf of the Western Telecommunications Alliance..........    48
    Mr. Tim Donovan, Senior Vice President, Legislative Affairs, 
      Competitive Carriers Association, Washington, DC...........    60
    Mr. Chris Allendorf, Vice President of External Relations and 
      General Counsel, Jo-Carroll Energy, Inc. (NFP), Elizabeth, 
      IL.........................................................    69
Questions and Answers for the Record:
    Question from Hon. Don Bacon to Mike Romano..................    77
    Question from Hon. Don Bacon to Dave Osborn..................    79
    Question from Hon. Don Bacon to Tim Donovan..................    82
    Question from Hon. Don Bacon to Chris Allendorf..............    84
Additional Material for the Record:
    None.

 
      IMPROVING BROADBAND DEPLOYMENT: SOLUTIONS FOR RURAL AMERICA

                              ----------                              


                        THURSDAY, JUNE 22, 2017

                  House of Representatives,
               Committee on Small Business,
    Subcommittee on Agriculture, Energy, and Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Rod Blum 
[chairman of the Subcommittee] presiding.
    Present: Representatives Blum, Chabot, King, Leutkemeyer, 
Comer, Bacon, and Schneider.
    Chairman BLUM. Good morning. I call this hearing to order.
    Thank you for all being here today as we assess how our 
Nation is doing at building out broadband services to our rural 
areas. And do not let lack of attendance here indicate to you 
in any way lack of interest. As Ranking Member Schneider and I 
were just saying, it is a very, very busy day and a lot of 
things going on this morning. So everybody, maybe more so than 
usual, is being pulled in multiple directions. But rest assured 
it is a very serious issue. And I am from a rural district and 
it is talked about every time I am back in the State of Iowa.
    As we have all witnessed in the last decade, modern 
communications technology has provided endless opportunities to 
small businesses, and particularly new and exciting ones to 
small firms located in rural America. The growth of the 
telecommunications industry and the advances in the way we 
communicate with each other in recent history has been nothing 
less than astonishing.
    Because of this rapid advancement, we have seen a 
revolution of sorts for small businesses as well. Small firms 
can communicate now with potential buyers around the world. 
Family farmers are using wireless technologies to monitor and 
maximize their crop production. Entrepreneurs can launch a 
website or an application from their living room or from just 
about anywhere. I own a small technology company and we sell 
around the world, and we could not do it without the internet. 
And with the use of now commonplace smartphones, we can accept 
payments from just about anywhere there is a wireless signal. 
Most importantly, these new technologies provide the gateway 
and opportunity for economic growth and job creation, 
particularly in rural areas.
    One of the most important tools the internet offers to 
small business is the ability to access the national and global 
electronic marketplace. From 2005 to 2015, electronic commerce 
in the United States, also known as online sales, grew from 
$291 billion to $342 billion. It is an average increase of 15.3 
percent from 2012 to 2015. Phenomenal growth. And this will not 
slow down anytime soon; I am sure you would agree.
    Our small businesses, particularly ones in rural areas, 
depend on new telecommunications technologies to compete across 
town and across the globe. Our witnesses today represent a 
critical part of the infrastructure that allows them to do just 
that. The Nation's small telecommunications providers are the 
ones that traditionally supply the bulk of broadband services 
to the most rural parts of America, and that is no easy task.
    For instance, it is certainly worth the investment when you 
connect broadband to a densely populated urban area with homes, 
apartments, businesses, and people all converging in a 
relatively small area. It is not uncommon to have hundreds, if 
not thousands, of potential subscribers in a 1 square mile 
area. In rural areas, where family farms dot the landscape, 
acres and acres and acres apart from each other, in towns with 
populations of 300 representing the center of the community, 
the bang for the investment buck is not quite as large. 
Unfortunately, the simple geographic fact of population density 
has led to a rather large disparity of 39 percent of our rural 
Americans not having access to high-speed telecommunications 
capacity--39 percent--compared to only 4 percent of Americans 
who live in urban areas. We have been making progress over the 
past few years, but more needs to be done to put rural America 
on par with urban America.
    This issue is a double-edged sword in that we have small 
telecommunications companies serving the greater rural, small 
business sector at large with no small responsibility. We here 
in Congress must ensure that our Federal Government's 
regulatory regime is supporting and fostering growth in the 
telecommunications industry, not penalizing and limiting it, as 
we have seen in recent years. We have a new administration and 
new leadership at the Federal Communications Commission, or the 
FCC as most of us know it by, and other regulatory bodies that 
have a significant say about how and when broadband services 
can be delivered to rural areas in the United States. And I 
remain hopeful for continued, positive change.
    Again, I want to thank everyone for being here, 
particularly our panelists. And I now yield to our ranking 
member, Mr. Schneider, for his opening remarks.
    Mr. SCHNEIDER. Thank you, Mr. Chairman. I want to welcome 
the chairman of the overall Small Business Committee, Mr. 
Chabot. I'm pleased to join you both at this very important 
hearing today.
    Technology is a major contributor to the U.S. economy and 
the engine for modern American economic growth. Last year 
alone, the internet created 10.4 million jobs across all 50 
States and contributed to 6 percent of the total U.S. GDP, 1.2 
trillion dollars. At a time when technology holds the key to 
remaining competitive in a globalized economy, it is worrisome 
that the United States is ranked number 16 in the world in 
broadband access. Let me repeat that, the United States is 
ranked 16th in the world in broadband access.
    For those of us fortunate enough to have access to 
broadband, we have seen the benefits of technology and how it 
affects our daily lives. From being able to make decisions 
based on real-time data, to being able to work remotely from 
any location, internet access has changed the face of business. 
Yet 34 million Americans still lack access to high-speed 
internet, 39 percent of which live in rural communities. This 
is simply unacceptable.
    Even though broadband subscriptions have progressively 
increased, rural and low-income community access is being 
outpaced by the rest of the country due to a lack of network 
deployment. Unfortunately, the digital divide may further widen 
without adequate support for broadband deployment. The truth is 
that expanding access in hard-to-reach and sparsely populated 
areas usually comes with a high price tag and significant 
challenges.
    The government plays a large role in ensuring all Americans 
have access to 21st century technology, and that is why we are 
holding this hearing, to learn just how we in Congress can 
improve broadband adoption. Eliminating the digital divide will 
not only assist rural communities; it will help our Nation's 
job creators. By enabling small business access to the global 
electronic marketplace, we encourage job creation and 
innovation. Thus far, Federal loan and grant programs have 
helped rural communities gain access to high-speed internet, 
but we need to do more. Substantial and direct funding to 
improve broadband nationally is critical to enabling both small 
telecom carriers and small consumers to thrive.
    In the wake of a larger infrastructure package, we have an 
enormous opportunity to upgrade America's digital blueprint. We 
must harness the potential of robust technologies and find the 
sweet spot between government oversight and technological 
advancements, all without hindering business opportunities.
    I look forward to today's discussion on improving broadband 
access in order to strengthen rural communities and small 
businesses. The insights gathered today will allow us to 
evaluate the performance of the FCC and supporting network 
deployment.
    I would like to thank all of the witnesses for being here 
today and providing us your insight. And with that I yield 
back. Thank you.
    Chairman BLUM. I would now like to explain opening 
statements, how that works and timing.
    If Committee members have an opening statement prepared, I 
ask that it be submitted for the record.
    I would like to take a moment to explain once again the 
timing lights for you. You will each have 5 minutes to deliver 
your testimony. The light will start out as green. When you 
have 1 minute remaining, it will turn to yellow. And finally, 
at the end of your 5 minutes, it will turn to red. And we ask 
that you please try to the best of your ability adhere to that 
timeframe.
    Now I would like to introduce our distinguished panel 
today. Our first witness today is Mike Romano, Senior Vice 
President of Industry Affairs and Business Development for 
NTCA, the Rural Broadband Association. In his role, he directs 
public policy, government affairs, business opportunities, and 
community initiatives for the nearly 850 small rural 
telecommunications providers it serves. Mr. Romano previously 
worked with the Bingham McCutcheon Law Firm and has had a 
diverse range of position within the telecommunications 
industry, including Founding Vice President and General Counsel 
of GTT Communications, following a merger between Global 
Internetworking, Inc., and European Technologies and 
Telecommunications. He has also held various positions with 
America on Line and Level 3 Communications. Thank you for being 
here with us today, Mr. Romano.
    Our next witness is Dave Osborn, CEO of VTX1 in 
Raymondville, Texas, testifying on behalf of the WTA, Advocates 
for Rural Broadband. Mr. Osborn has been in his current 
position for 12 years, prior to which he had already worked in 
the telecommunications industry, holding various positions with 
multiple companies for more than 4 decades. Mr. Osborn began 
his career in the industry in 1970 with Southwestern Bell in 
Dallas, Texas, eventually climbing the corporate ladder to find 
himself at AT&T's corporate headquarters in Morristown, New 
Jersey, in the mid-1980s. He is now at his current position at 
VTX1 and also sits on the board of directors of the WTA. Thank 
you for being here with us today, Mr. Osborn.
    Up next is Tim Donovan, Senior Vice President of 
Legislative Affairs for the Competitive Carriers Association, 
otherwise known as the CCA. We have a lot of acronyms in 
Washington, D.C., that is for sure. Mr. Donovan previously 
served as Manager of Government Affairs for the Direct 
Marketing Association, where he is responsible for supporting 
the advocacy goals of the direct marketing community. In his 
current capacity, Mr. Donovan is tasked with presenting the 
association's legislative advocacy before policymakers on 
issues impacting wireless telecommunications providers, 
including broadband deployment, universal service, access to 
spectrum, devices, broadband policy, roaming, and other issues 
that affect the policy of these carriers. Does everyone 
understand all of that? Thank you for being here with us today, 
Mr. Donovan.
    And now I yield to Ranking Member Schneider for their 
introduction of our final witness.
    Mr. SCHNEIDER. Thank you. It is my pleasure to introduce 
Mr. Chris Allendorf. Mr. Allendorf has served as the vice 
president of external relations and general counsel for Jo-
Carroll Energy since 2015. Joe-Carroll Electric Cooperative is 
located in my home State of Illinois and was founded with the 
goal of bringing electricity to rural residents not reached by 
investor-owned utilities. Since then, the cooperative has 
transformed to meet the needs of rural communities in modern 
times by providing other essential services, including 
broadband internet. Mr. Allendorf has transitioned from 
corporate counsel to other roles in the cooperative. As general 
counsel, Mr. Allendorf oversees legal and regulatory matters 
involving the cooperative's three business areas: electric, 
natural gas, and broadband internet. Mr. Allendorf also 
oversees the cooperative's economic development initiatives.
    Mr. Allendorf holds a B.S. degree from Western Illinois 
University and received his J.D. from Northern Illinois 
University in 2012. Mr. Allendorf is a lifelong resident of 
rural northwest Illinois. He also serves on the Board of the 
Galena Area Chamber of Commerce and the Tri-County Economic 
Development Alliance. Welcome, Mr. Allendorf.
    Chairman BLUM. Very good. Very good. Thank you, Mr. 
Schneider.
    And now I would like to recognize our first witness, Mike 
Romano, for 5 minutes.

  STATEMENTS OF MIKE ROMANO, SENIOR VICE PRESIDENT, INDUSTRY 
   AFFAIRS & BUSINESS DEVELOPMENT, NTCA--THE RURAL BROADBAND 
 ASSOCIATION; DAVE OSBORN, CEO, VTX1; TIM DONOVAN, SENIOR VICE 
      PRESIDENT, LEGISLATIVE AFFAIRS COMPETITIVE CARRIERS 
   ASSOCIATION; CHRIS ALLENDORF, VICE PRESIDENT OF EXTERNAL 
  RELATIONS AND GENERAL COUNSEL, JO-CARROLL ENERGY, INC.(NFP)

                    STATEMENT OF MIKE ROMANO

    Mr. ROMANO. Thank you, Mr. Chairman, Ranking Member 
Schneider, and members of the Subcommittee for the chance to 
testify on the importance of rural broadband to the U.S. 
economy and how sound policies can promote the deployment and 
sustainability of broadband in rural America.
    NTCA's 850 members are small businesses, most based in the 
rural communities they serve. They rose to the original 
challenge of unserved areas, answering the call and getting 
telephone service at the time to rural America. Today, these 
small businesses and cooperatives deliver cutting-edge 
broadband critical to the well-being of rural America, 
translating into economic development and job creation. And the 
payback of these investments comes in economic activity that 
accrues mostly to the benefit of urban areas.
    Small rural carriers have led the charge in deploying 
future-proof networks, with 71 percent of their customers 
having access to 25 megabits down speed that the FCC has 
defined as the access standard today.
    But there is much more to do. With the remaining customers 
being harder to reach and with many rural areas served by other 
providers suffering from an even greater lack of access and 
even where networks are built, the job is not done. It is not 
just about the one-time act of getting broadband out there; it 
makes little sense to declare victory if the service is too 
expensive or if the network cannot keep pace with consumer 
demand.
    Unfortunately, the business of rural broadband is hardly a 
money-making proposition. Distance, density, and topography 
undercut the business case in rural America. This is why direct 
support from the High Cost Universal Service Fund is essential. 
Without sufficient USF, it is difficult, if not impossible, to 
justify rural broadband loans or to charge reasonable rates for 
rural service. USF is perhaps the best example of a public-
private partnership in the broadband space, having helped to 
justify construction loans and private network investments that 
total tens of billions of dollars today.
    But the USF program has been badly damaged. While the FCC 
took much-needed steps to update the program last year, the 
reforms also revealed more clearly than ever how insufficient 
the Universal Service Fund is. A flat budget in place since 
2011 that is now enforced by a firm control will deny $173 
million in USF support for small rural carriers over the next 
12 months. That is $173 million for broadband investments 
already made, forcing them to respond by hiking rural consumer 
rates, cutting jobs, and slamming the brakes on future 
investments. The fact that the budget control changes 
unpredictably only further undermines their ability to borrow 
or invest in long-term network assets.
    A survey that NTCA just completed and that we will actually 
be releasing today indicates that two-thirds of our members are 
pulling back on investments because of this problem, 
translating potentially to hundreds of millions of dollars in 
suspended investments and possibly hundreds of thousands of 
rural Americans locked in at lower speeds.
    Tack on another $110 million in shortfalls to fund a 
support model the FCC developed last year and this translates 
to lower speeds, higher prices, and less broadband network 
expansion across 40 percent of the U.S. landmass. This outcome 
undermines the great progress that has been enabled and 
achieved by these small companies leveraging the universal 
service program to date. It is contrary to the universal 
service mandates of current law. Fortunately, 170 members of 
Congress, including members of this Subcommittee, have already 
expressed concern to the FCC about how this affects rural 
consumers and communities, particularly prices for rural 
broadband that can remain twice as high as what urban consumers 
and businesses pay, if not even higher.
    We hold out hope, just like our members do, in continuing 
to try to build where they can, that Congress and the FCC will 
work together to make sure the promise of last year's USF 
reforms will be realized by the millions of Americans who badly 
need them to work.
    Given these impacts and the sustainability and 
effectiveness of the USF program is a top priority, but there 
are other issues of importance, too. For example, as 
policymakers consider promoting infrastructure deployment, 
streamlining and standardizing access to Federal lands would 
help greatly, especially for small businesses that lack the 
staff and resources to navigate multiple layers of Federal 
agency process.
    Right size regulation is important, too. A survey NTCA did 
in 2016 showed that our small business members have only 40 
employees on average, but face just under 600 hours of burden, 
73 workdays per year in Federal telecom regulatory reporting. 
We need to strike a better balance between heavy-handed 
regulation, and, on the other hand, a complete lack of rules of 
the road that could put important goals, like universal service 
and interconnection at risk.
    Finally, better compliance across Federal agencies with the 
Regulatory Flexibility Act could help, too. All too often, 
agencies undertake cursory RFA analyses that do not recognize 
the realities of operating as a small business. We see great 
promise in several bills that the Full House has taken up, and 
we are eager to see those bills provide the guidance necessary 
to improve the RFA process and result in savings for small 
companies.
    We look forward to working with you on these important 
public policy initiatives and building upon the many successes 
these small businesses have had to date in deploying broadband 
in rural America.
    Thank you again for holding this hearing, and I look 
forward to your questions.
    Chairman BLUM. Thank you, Mr. Romano.
    I would like to recognize our next witness now, Mr. Osborn. 
You are recognized for 5 minutes.

                    STATEMENT OF DAVE OSBORN

    Mr. OSBORN. Thank you, Chairman Blum, Ranking Member 
Schneider, and members of the Subcommittee. I appreciate the 
opportunity to testify today on improving broadband deployment 
in rural America.
    I am the chief executive officer for the VTX1 Companies, a 
rural telecommunications provider based in Raymondville, Texas. 
Detailed information on my company and my personal work history 
have been submitted with my written testimony. Today I am 
representing our national association, WTA, Advocates for Rural 
Broadband, on whose board of directors I serve.
    I intend to focus on three main areas where I think 
Congress can work with the regulators to facilitate broadband 
deployment in rural America.
    First is universal service policy. Without the support we, 
and other rural telecom providers, receive from the Fund, our 
cooperative members would never be able to afford the services 
we provide. For many years, the FCC has tried to modernize the 
Universal Service Fund, first with the National Broadband Plan 
in 2010, which recommended freezing support at 2010 funding 
levels. These reform efforts culminated in a March 2016 order, 
which resulted in companies like ours seeing their support 
reduced because of a budget reflecting the 2010 funding levels. 
We believe this approach attacks the problem from the wrong 
angle. Instead of setting the goal for broadband in rural 
America and attempting to determine what it would cost, the FCC 
has set an outdated budget and essentially said, ``See what you 
can do with this.''
    Our Federal USF from last year is down approximately a half 
a million dollars, with greater reductions anticipated in light 
of the caps and constraints the FCC has placed on the high-cost 
fund. These Federal support reductions have reduced our capital 
expansion within our Valley Telephone service areas and slowed 
the conversation to fiber optic. It is important to upgrade our 
networks to fiber because a fiber network will have a service 
life several times that of a copper one and the maintenance 
costs of a fiber network are much less than with copper. 
Additionally, serving the needs of cellular carriers with their 
forthcoming 5G LTE traffic will be very important. Instead of 
caps and cuts, the USF high cost program needs at least an 
inflationary adjustment so that high-quality broadband can be 
pushed further into rural America.
    Second is streamlining our permitting processes for 
existing rights of way. Congress should review and reform the 
permitting process for access to Federal lands and other right-
of-ways. We wait several months and spend many thousands of 
dollars on projects for environmental, archaeological, and 
historical preservation reviews. Many have little value.
    For example, in 2010, VTX1 received a Broadband Technology 
Opportunity Program, BTOP, grant to construct a fiber-optic 
infrastructure for our universities. Our shovel-ready project 
had to wait 9 months to get environmental approvals needed to 
bore underneath the gravel right-of-way along two U.S. Federal 
highways.
    Third, regulatory reporting burdens. We are concerned with 
the increased quantity of reporting obligations and burdens 
placed upon us involving regulatory reporting to the FCC, USAC, 
NECA, and other Federal agencies when the recovery of these 
costs has been capped. VTXI performed a detailed wage analysis 
in 2016 and found that we spend around 3,200 hours completing 
just the Federal reporting requirements placed upon us. This 
costs us about $100,000 a year in wages and another $50,000 a 
year in benefit costs alone, with none of these dollars being 
recovered by any Federal support. A copy of our spreadsheet and 
study with our wage analysis is attached to my written 
testimony.
    Our conclusions are straightforward. First, the high-cost 
fund component of Federal USF needs to continue in remote-
serving areas in the rural communities, as well as having a 
cost-of-living escalator to keep the fund viable during periods 
of inflation. An increase in high-cost fund money should be 
considered as well to speed up broadband deployment.
    Second, permitting timelines should be greatly reduced in 
areas and the long roads where the land has been previously and 
continuously disturbed.
    Third, regulatory reporting should be streamlined and 
limited to items that have a significant, measurable benefit to 
broadband deployment in America.
    That concludes my testimony. I await your questions. Thank 
you.
    Chairman BLUM. Thank you, Mr. Osborn.
    Next, I would like to recognize Mr. Donovan, for 5 minutes.

                    STATEMENT OF TIM DONOVAN

    Mr. DONOVAN. Thank you, Chairman Blum, Ranking Member 
Schneider, and members of the Subcommittee. Thank you for 
inviting me to testify about improving mobile broadband 
deployment in rural America.
    This hearing is timely, Mr. Chairman, following the 
President's emphasis on rural broadband in your district 
yesterday. It is great to hear that you were able to join in 
person in 5G meetings at the White House today.
    CCA represents nearly 100 wireless carriers and nearly 150 
vendors and suppliers. The vast majority of CCA's members are 
small businesses whose employees are the same consumers that 
live and work in the communities they serve.
    Mobile broadband use continues to increase exponentially. 
Ericsson recently forecasted a greater than five time increase 
in mobile data consumption over the next 5 years. Yet, a 
persistent digital divide continues to plague certain rural 
areas, leaving a subset of the Nation trailing behind their 
urban counterparts on the road to 5G, including small 
businesses and entrepreneurs.
    As FCC Chairman Pai noted last week, we do not bemoan the 
digital divide because some people cannot play games like Candy 
Crush. Internet connectivity is vital to full participation in 
modern life, and as he articulated at the inaugural Rural 
Prosperity Task Force meeting, these policies are important for 
demonstrating that the Federal Government cares about rural 
America.
    Access to mobile broadband is not only a telecommunications 
issue; it is a jobs issue, an education issue, public health 
and safety issue, and an issue of America's competitiveness on 
the international stage. Simply put, the future of rural 
economic, and so, small business growth, and leading the world 
in 5G is directly tied to the availability of mobile broadband.
    CCA's members are proud to serve rural and remote parts of 
the country with the latest mobile broadband technologies. That 
means preserving and expanding 4G LTE today and upgrading to 
5G.
    Policymakers can support rural broadband deployment through 
three key issues. First, the FCC plans to distribute nearly $5 
billion for mobile deployment over the next decade through the 
Mobility Fund. But before the final eligible areas are set, we 
need better data. The current data is not standardized, nor 
useful, for determining where coverage gaps persist. Carriers 
know this, Congress has recognized this, and the FCC's website 
even acknowledges it.
    It boils down to coverage, and you know better than anyone 
else where in your district you have coverage and where you do 
not, but bad data means that your district could be ineligible 
for support through the Mobility Fund. And as an accurate 
coverage picture is developed, policymakers should ensure that 
the Fund is sized to preserve and expand mobile broadband 
ubiquitously and ultimately meet Congress's mandate.
    Second, carriers must navigate a regulatory maze to deploy 
broadband infrastructure, meaning the towers, base stations, 
antennas, and wires, that are the skeleton for mobile service. 
It is critical to support carriers' abilities to expand and 
densify their networks for uses like precision agriculture, an 
important technology for this Subcommittee; telework 
opportunities and economic growth for America's small 
employers. Yet the obstacles continue to multiply. In fact, 
each step on the chart you have before you highlights potential 
costs and delays for businesses.
    The bottom line is this: if we want to expand broadband 
throughout rural America and connect small entrepreneurs to the 
global economy, siting processes must be streamlined at the 
local, State, and Federal Government levels. The same 
regulations for 400-foot towers should not apply to modern 
small cells.
    This Committee should be a leader to ensure that policies 
enhance small businesses who have limited resources. To that 
end, the FCC deserves credit for establishing the Broadband 
Deployment Advisory Committee in which CCA participants. This 
stakeholder group should work alongside Congress to produce 
uniform policies that advance infrastructure deployment.
    Finally, spectrum is the lifeblood of wireless networks, 
meaning that carriers must have access to low-, mid-, and high-
frequency bands. In addition to deploying physical cells, 
carriers can enhance their network capacity by adding to their 
spectrum portfolios. The FCC recently completed the first-ever 
incentive auction where carriers bid nearly $20 billion for 600 
megahertz band spectrum voluntarily relinquished by 
broadcasters. Around 30 of the winning bidders are CCA members. 
Now, the FCC must act expeditiously to repack the band and make 
the spectrum available to the winning carriers so they can put 
their investment to use now and certainly before the 39-month 
transition deadline.
    Carriers need greater access to spectrum at all frequencies 
to continue to innovate and invest in mobile solutions. While 
low-band spectrum is necessary to address network coverage 
gaps, especially in rural America, the capacity needed for 5G 
and next generation technologies, which will be the foundation 
for transformative services, requires the use of mid- and high-
band spectrum resources as well. Small businesses in rural 
American can no longer afford to be on the fringe of the 
industry's shift to next generation networks, and policymakers 
are at the helm of this transition and can ensure that 
consumers in unserved and underserved areas are part of the 5G 
world.
    Policies established by Congress and implemented by the FCC 
determine whether small businesses in rural America have access 
to the latest services or are left behind modern mobile 
economy. Competitive carriers want to be part of the solution.
    Thank you again for holding today's hearing. And I welcome 
any questions.
    Chairman BLUM. Thank you, Mr. Donovan.
    I now recognize Mr. Allendorf for 5 minutes.

                  STATEMENT OF CHRIS ALLENDORF

    Mr. ALLENDORF. Thank you, Mr. Chairman, Ranking Member 
Schneider, and members of the Committee, for the opportunity to 
address you regarding Jo-Carroll Energy's experience with rural 
broadband deployment.
    Our company was founded as an electric cooperative in 1939 
as a result of the Rural Electrification Act. Today, we are a 
natural gas, broadband, and electric cooperative serving 
thousands of rural accounts across northwest Illinois. We are 
part of a broader electric cooperative industry that serves 
more than 40 million members nationwide over lines that cover 
more than half of our Nation. Most of these members and lines 
are in rural America. Rural utility cooperatives are not-for-
profit, private businesses that operate under democratic 
principles serving our members at cost.
    The goal of the REA was to bring electricity to rural 
Americans to ensure they enjoyed the same quality of life as 
those in urban areas when others could not see a business case 
to do so. There is a similar situation happening right now with 
broadband in rural America. We serve fewer customers spread out 
over greater distances than more urban investor-owned 
utilities. Low customer density is important to keep in mind 
when considering large scale deployment of broadband in rural 
America.
    In 2009, Jo-Carroll began providing internet access to our 
members from a fixed wireless broadband system that we were 
utilizing for our electric and gas operations. Our hope was to 
bring higher speed broadband to rural subscribers than what was 
available, if anything, by leveraging our existing 
infrastructure. Our topography is challenging. We cover the 
highest terrain in Illinois down to river basins and all of it 
through dense forests.
    We have not been able to reach as many people as we had 
hoped or offer the speeds that they need. Later, we transferred 
our internal network to fiber due to the need for reliable, 
high speed broadband for our utility operations. Fiber provided 
low latency and consistent high speeds unaffected by our 
topography. Most importantly for us, it is scalable to meet our 
future utility demands.
    We sought to provide the same benefits to our members. Cost 
prohibited us from rolling out fiber to our entire service 
area, so we identified Galena, Illinois, as an ideal site for a 
fiber pilot project. It is a rural town of 3,500 amid farmland 
near the Mississippi. It is the second-most visited tourist 
attraction in Illinois after Chicago. That has created a robust 
hospitality and retail sector. Galena faces the same challenges 
as other rural areas regarding access to broadband. Service was 
only provided by cable companies or telcos over aging copper 
lines. Speed and reliability were big issues.
    Completed in 2016, our fiber project utilized existing 
overhead and underground utility infrastructure. Our take rate 
is over 60 percent among businesses in the project area. I have 
provided a few testimonials, but in summary, fiber has allowed 
businesses in the area to be more productive, more efficient, 
and increase sales; therefore, creating the potential to expand 
their business. It is now common to see merchants in Galena 
using mobile Bill Pay and other productivity applications which 
were not options before fiber broadband.
    For rural residents, high-speed broadband is not just about 
pastimes like Netflix, but more importantly, it is about a 
chance at a better living. Small businesses and farms are able 
to engage in commerce beyond their local area, which is a 
necessity in our global economy. It means rural students have 
the same access to high-quality education as their urban peers. 
It is critical for rural hospitals and clinics to provide 
modern patient care, and with experience in economic 
development, I can say it is one of the first things that 
businesses look at when deciding to locate in our area.
    Studies have shown that greater broadband connection in 
rural areas result in higher income and lower unemployment. 
Without reliable broadband, these businesses and farms are at a 
competitive disadvantage. It has become as much of a necessity 
as the gas and electric services that we provide.
    The President's stated goal of a large infrastructure 
program is laudable, but we need broadband as much, if not 
more, than roads and bridges in rural America. Rural broadband 
access needs a place of special importance in these 
discussions.
    Chairman Pai comes from a small Kansas town, and he has 
stated that government needs to rewrite regulations to cut red 
tape. He has created the Broadband Deployment Committee 
presumably to do just that. As you consider proposals to spur 
broadband deployment, we believe that all potential providers, 
including electric cooperatives, should be eligible to 
participate in open and inclusive processes to compete for 
funding opportunities. We urge policymakers to consider the 
scope of capital needed to bring broadband to rural America. 
Along with our density challenges, access to capital is a major 
issues for a small company like us. We need more grant funding 
to make large-scale deployment viable in rural areas.
    Bringing electricity to rural America was a task of epic 
proportion and our success in doing so has been called one of 
America's greatest achievements over the last 80 years. The 
government created a strong, lasting partnership with rural 
cooperatives to accomplish that goal, which resulted in the 
same high quality of life for all Americans, regardless of 
economics and location. Jo-Carroll has seen that broadband 
access is essential for the continued success and well-being of 
rural America. It is our hope that Congress and this 
administration will build upon that partnership with support 
for the no less audacious goal of providing rural Americans 
with access to broadband service.
    Thank you for your time.
    Chairman BLUM. Thank you, Mr. Allendorf.
    I am going to recognize myself for 5 minutes of questions 
and answers.
    The first question I have is, anyone on the panel can jump 
in, but as a technological, somewhat neophyte, I am continually 
amazed at the capacity of the system or the pipeline--I do not 
know if I am using the right terms. I live in a rural area and 
we have Netflix, we have Hulu, we have some of these other 
downloadable, on-demand services coming via the pipeline out 
there. My question is, reaching the capacity of what it can 
handle, is that an issue that we are bumping up against 
continually? And the second part of the question is, is it an 
even bigger issue in rural areas, this capacity, as more people 
want to download TV services like Netflix and Hulu? Whoever 
wants to jump in. And please keep it in terms I can understand.
    Mr. ROMANO. Thank you, Mr. Chairman. I will take a first 
crack at that.
    Chairman BLUM. Is your microphone on?
    Mr. ROMANO. It should be. It is.
    Chairman BLUM. All right.
    Mr. ROMANO. There we go. So thank you. So the challenge we 
face is there is this tension between getting service to areas 
that are unserved and making sure that services are sufficient 
and robust enough to meet the challenges of broadband over the 
long haul. And that is a tension. It is a tough choice. It is 
not an easy one for policymakers or industry to work through. 
However, I think what you raise is a good point. As we are 
looking at this as an infrastructure challenge, one of the 
things we have to think about is building--these are assets 
that are intended to last for decades. And so if I were 
building a road and I had anticipated a level of traffic that 
was going to be coming across that road over the life of that 
asset, I would not build it as a two-lane road and then a few 
years come back and make it a four-lane road, then an eight-
lane road. I would have to go through all the permitting that 
CCA's chart I think demonstrates well, all over again. You 
would have to go through all these different challenges. So 
building a network upfront for anticipated demand over the life 
of that asset, we would submit, represents the most efficient 
use of resources to handle the kinds of capacity demands that 
you are expecting both now and into the future. Designing a 
network for 10-1, for example, when you know that just a few 
years ago it was 4-1 was the speed that was used and today is 
25-3 going to 100 megabits or a gigabit worth of speed and 
capacity over the use of that network, that sort of challenge 
is something that you have to engineer a network for up front 
to handle not only video and Netflix and things like that, but 
distance learning, telemedicine, all these applications that 
depend upon a robust network to make sure that you are going to 
attract healthcare, education, high commerce businesses to 
these communities.
    Chairman BLUM. In your analogy, it probably makes it 
tougher because that eight-lane highway you mentioned has not 
been invented yet. So you have to design a system, if you are 
trying to design it for 15 years from now and things have not 
even been invented that are going to be here 10 years from now, 
7 years from now, 12 years from now, correct? I mean, it is a 
heck of a challenge.
    Mr. ROMANO. It is. It is. One of the benefits, I think, of 
some of the systems we are moving towards with both fiber and 
5G, which I see as actually very integrated pieces of the 
puzzle because 5G is driven in large part, the capacity of the 
promise of 5G is driven by a densified fiber network. If you 
have fiber and you are moving towards 5G, you are starting to 
build for the ability to adjust, upgrade the network, scale it 
over time to respond to the kinds of demands. So you may not 
have invented that electronics yet that will deliver the speeds 
that we might see in the future, but you have at least laid the 
groundwork, the foundation to scale it for the things that 
might come to be in the best position to answer those calls.
    Mr. ALLENDORF. Yes, Mr. Chairman. We need fiber as a 
building block to all of these technologies that are being 
talked about today, like 5G. Rural areas simply do not have the 
infrastructure to utilize these technologies, like 5G. And as 
we have seen firsthand, we need a robust fiber infrastructure 
to, as Mr. Romano made the analogy, plan for the future and be 
able to handle the demands that will come from that. We have 
seen that firsthand.
    Chairman BLUM. The future is fiber? Is it ever going to get 
to the point where we do not need something buried under the 
ground? Where we do not even need the fiber? Or is that, well--
--
    Mr. ALLENDORF. It is hard to imagine that, but----
    Chairman BLUM. It is.
    Mr. ALLENDORF. The future is, in part, built on fiber. I 
will say that.
    Mr. DONOVAN. The consumer is not going to plug into 
something is where the future is going. The delivery vehicle is 
going to be wireless. And to add capacity to wireless network 
it is twofold. It is building more towers, and that is where 
all of the challenges and red tape in deploying the 
infrastructure are a big issue, but it is also adding spectrum 
to your network.
    And for your question on rural areas specifically, that is 
why this incentive auction spectrum is so important. It covers 
a very long distance. Think wherever you could pick up a 
broadcast TV signal, that is the same bandwidth that has been 
repurposed for wireless use. That is going to be 5G in rural 
areas. We need to make sure that carriers that bid and won that 
spectrum can put it to use to serve your constituents.
    Chairman BLUM. How much was raised in that auction?
    Mr. DONOVAN. Nearly $20 billion. So about $10 billion of 
that goes to the Treasury for deficit reduction. About $12 
billion went to the broadcasters to compensate them for moving 
off the spectrum.
    Chairman BLUM. You just answered my next question. Thank 
you very much.
    My time is up. And, oh, go ahead, Mr. Osborn.
    Mr. OSBORN. I was just going to make a point. You mentioned 
what do you do when you run out of bandwidth? At any given time 
of day, we run between 40 and 50 percent of our traffic is 
either Netflix or Amazon Prime. The internet is not about email 
anymore; it is about video. And video takes massive amounts of 
bandwidth, particularly when everyone does it at the same time. 
We buy more. We have between three and five upstream tier one 
internet providers that we connect to so that we are never 
down, but we are selling 10 times what we did 5 years ago.
    When I took this job in 2005, a meg and a half of internet 
was a big deal. That was big stuff. We offer gigabit service in 
our fiber exchanges. That is a thousandfold and they are 
talking petabyte for fiber in 2020, and I thought, wait a 
minute, something is missing. Terabyte. What happened to 
terabyte? They are skipping that. So this 25-3, my god, we can 
do that with a tin can and a string.
    It is fiber. Fiber. The capacities of fiber are unknown. 
You ask any engineer and they will tell you they do not know 
what the capacities are; they are that vast. Wireless is 
applied physics, and when you take that down and say no matter 
how fast the wireless go, theoretically, the fiber will always 
go faster. So we see it as both. We offer fixed wireless 
service, and we can give up to 50 megabits on wireless with a 
dish on top of your roof. But we see it as the future of both.
    We need the wireless to reach customers that it is not 
economical to build to, and they need us to transport these 
huge amounts of data because 5G LTE is going to have, depending 
on how far you are from the tower, up to a gigabyte worth of 
service. That is huge. Absolutely huge.
    Chairman BLUM. Tin can and a string. Now it is something I 
can understand. Thank you for bringing it down to my level and 
probably a few folks out there as well. Thank you so much.
    I would now like to recognize our ranking member, Mr. 
Schneider, from Illinois. You have 5 minutes.
    Mr. SCHNEIDER. Thank you. And again, thank you to the 
witnesses for our insightful testimony.
    Mr. Romano, you used the term that I want to focus on a 
little bit which is future proof, because the rate of 
technology is changing, and Mr. Osborn, you just touched on 
something. There is a leapfrog effect. Well, it is not really a 
leapfrog. Going from mega to giga to peta, skipping tera. Just 
the pace is so fast. Fiber is a connection, but we need to have 
the ability to keep it up to date across the rural communities.
    We're talking 5G. What is the life expectancy of each 
generation? Because we've already gone through 1, 2, 3, and 4G?
    Mr. ROMANO. Yeah. This is the thing, especially, both on 
the wireline and the wireless side, I think we are seeing 
massive amounts of disruption and the technology, the 
electronics change, the uses of the spectrum change in a way 
that could not be predicted years ago. I mean, think about it. 
You know, 15 years ago, actually, I worked at America On Line. 
AOL used to get those disks, right? I mean, things moved by DVD 
and CD at that point. Now we are moving at a pace that is 
unimaginable.
    But I think to your question, we cannot anticipate exactly 
what will come, but I know that 5G--we have not even seen what 
5G is yet. The standards for it are still being developed. 
People are talking about deploying 5G. They are kind of 
guessing and marketing what 5G is, but we actually do not know 
what those standards are. The best thing we can do is get 
networks into place that are scalable. If we have a limited, 
finite pool of resources, what is the best use we can make of 
those resources? We could try to spread them thinly and hope 
that the networks we build will keep up, or we could try to 
think through how do we make the best use of these so that over 
time those networks where they are built, they are not just 
there for the one time act of getting broadband there; it is 
keeping it there and keeping it useful and enabling 5G, 
enabling terabyte service, and greater over time.
    Mr. SCHNEIDER. Real briefly, just because we're so tight on 
time, Mr. Donovan, you used a word that caught my attention 
which is densify. As we move to these next generations, does it 
mean that we are going to have to increasingly densify the 
modular parts of the networks, the towers, everything else?
    Mr. DONOVAN. Yes. So thank you for the question. 
Densification means bringing the transmitters for the wireless 
network closer to where the users are. So it is a lot fewer of 
the 400-, 500-foot towers and more and more cell sites that 
are, you know, about this big that you could put up on the side 
of a building, on existing light poles, and using existing 
infrastructure. That is what is going to be a big part of 5G, 
to fill up on kind of the generational shifts in wireless 
technology. You know, 5G is not a replacement for 4G services, 
and that is why it is so important that we have a base layer of 
4G rolled out today while industry is still working on the 
standards for 5G. In rural areas, there are still 2G networks 
that are operational because people are still using those. So 
it is not that one technology replaces the other; it is that we 
keep evolving and adding on top. And it is important for rural 
America to keep up with their Gs if we want to keep giving them 
the latest services.
    Mr. SCHNEIDER. And let me just add to that as we broadly 
think about rural America. It is the breadbasket of our 
country. It provides a vast quantity of our food. It is where 
we are developing new technologies. It's not that these are 
backwaters. It defines who we are as a country.
    And Mr. Allendorf, I want to turn to you because you grew 
up where you work. You've seen the impact of broadband. Can you 
tell us a little bit about some of the effects you've seen and 
the opportunities created by bringing broadband to a community 
like where you live?
    Mr. ALLENDORF. I did not have experience with broadband 
until I went to college in the early 2000s. Before that we had 
dial-up. And so getting to college and seeing what broadband 
can do for the first time was pretty eye-opening.
    What we have seen is, anecdotally, businesses are able to 
do more with the resources they have at hand. They are able to 
utilize productivity software, like I mentioned. It has really 
enabled them to truly compete in a global economy. You know, 
they do not have to drive to the nearest really good site for a 
broadband connection to transact business or something like 
that. And it has just increased their productivity overall. And 
so the effects that we have seen, especially in our fiber pilot 
project area are immense compared to what was there before. And 
I would say that they did not know what they had until they had 
it because it was not an option before. And now that they do 
they are finding new and creative ways to be more productive.
    Mr. SCHNEIDER. As my time winds down, not having broadband 
until college, I will tell you I got to college with card 
decks. So you can overcome these challenges in life. But that 
is the rate of our technology.
    I will also share that I, early in my career, worked on 
developing software, initially for the oil and gas industry. We 
migrated it to agriculture into these rural communities. This 
was back in the 1980s. We saw the revolutionary impact it was 
having then. Today, with broadband, as you well know, these 
communities, to be able to bring technology for agriculture, 
for medicine, for education, distance learning, the future is 
unlimited. But it cannot be unlimited unless we provide the 
resources to these communities.
    So thank you very much. And with that I yield back.
    Chairman BLUM. Thank you.
    Now I would like to recognize the gentleman from Kentucky, 
Mr. Comer, for 5 minutes.
    Mr. COMER. Thank you, Mr. Chairman.
    I represent a very rural district in Kentucky. It is a very 
poor district. We have a very high Medicaid population. I want 
to see people get off Medicaid and get into the workforce. To 
do that in my rural district, we are going to have to create an 
environment where we can attract better paying jobs that 
provide benefits. One of the biggest issues for me as a 
freshman member of Congress is to try to help improve broadband 
in my rural district, so I am very interested in this subject.
    Mr. Allendorf, since your primary focus has been delivering 
electricity, can you talk a little bit about the regulatory 
obstacles that other folks on the panel may not have when 
building out their broadband capacity? Because we are going to 
have to do that I would assume through the electric 
cooperatives and the rural electric cooperatives in our 
district.
    Mr. ALLENDORF. First let me say that with our fiber 
project, we were able to utilize existing infrastructure much 
more than we were with fixed wireless solutions. So it requires 
less permitting, which is always a concern, both locally and 
from the State. So being able to use our overhead and 
underground infrastructure is a huge benefit.
    Regulatory challenges we face, pole attachments, something 
that always comes up, that is an issue. There is a Federal case 
out of Missouri that dealt with pole attachments for fiber use 
by a cooperative. I believe that is currently on appeal. We are 
anxiously waiting to see what the result of that is to see what 
barriers there may be going forward to deploying broadband over 
our existing infrastructure.
    Mr. COMER. Okay. Mr. Donovan, what kinds of reforms could 
help alter the outlook for a company interested in deploying 
broadband?
    Mr. DONOVAN. Thank you for the question.
    You know, in Kentucky, carriers like Bluegrass Wireless and 
Appalachian Wireless----
    Mr. COMER. My cellular carrier.
    Mr. DONOVAN. That is a great company out of Elizabethtown 
there. We are proud to have them as a member.
    One challenge that wireless carriers are facing now is the 
FCC's mobility fund has a lot of opportunity in making 
resources available to make that last piece, the economic case, 
to serve these rural areas. The biggest problem we have right 
now is the data. The map that they show on their website 
overstates coverage. And you have to take my word for it. It 
says at the bottom, ``These coverage calculations have certain 
limitations that result in overstatement of the extent of 
mobile coverage.'' Looking at it quickly, it looks like all of 
Iowa, most of Illinois, most of Kentucky, on down the line, are 
fully served. I think you know that is probably not the case or 
else we would not be here today talking about how we can get 
service out there.
    Before we decide how $5 billion is going to be spent over 
the next decade and lock those areas out, we need to make sure 
that we are acting on sound data so that the unserved parts of 
your district are eligible to bid in that auction and gain 
support.
    Mr. COMER. If Congress moves on an infrastructure bill with 
money for broadband, should that money go through the high-cost 
fund or through other programs or agencies such as RUS or NTI?
    Mr. DONOVAN. So we have structures that are put in place 
through the FCC, like the Mobility Fund. I think there is 
unanimous agreement of the panel that USF is not fully funded 
today, so this could be a great opportunity to plus that up. 
The thing to also consider is making sure that however the 
funds go out, that carriers that are receiving those can have 
some long-term certainty that those are going to be available, 
that you are not subjected to some of the fits and starts of 
the appropriations process moving forward.
    Mr. COMER. Okay. Very good.
    Mr. Romano, one last question here for you. Would it be 
better to get everybody connected even if it is at lower 
speeds? Or should we focus on the future and invest more in 
developed technology? What is the right balance on that?
    Mr. ROMANO. Thank you, Mr. Comer. That is the challenge 
that we face, as I mentioned earlier, the tension that we face 
between trying to get as many of the unserved covered as 
possible. However, if you are building a dirt road to everybody 
when you think you are going to have a lot of traffic there, 
you are potentially wasting resources. So we think it is best 
to try to strike a balance where you look to get the most 
future proof networks you can. Aim for the highest networks you 
can to as many people as possible. It may take a little bit of 
time, but the more we build for the future, the more we are 
going to attract the kinds of jobs and businesses that you were 
talking about. Somebody is not going to relocate a plant to a 
district connected to DSL.
    Mr. COMER. Thank you. Mr. Chairman, I yield back.
    Chairman BLUM. Thank you, Mr. Comer.
    I would now like to recognize for 5 minutes the gentleman 
from Missouri, Mr. Luetkemeyer, who is also the Vice Chairman 
of our full Small Business Committee. You are recognized for 5 
minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman. And thank you to 
the guests who are here today.
    Like the other members of the Committee, I come from a 
very, very rural part of my State. In fact, I always tell 
people I live so far out that I am in the middle of nowhere, 
but when you get there you are finally somewhere. So when I 
have discussions with telecom companies, I always tell them, 
you know what? I live so far back, if you can get me broadband 
and that sort of stuff, then you come talk to me. Until then, I 
have got a lot of constituents who have got problems. If you 
cannot serve me and them, we do not need to talk. So this is a 
very, very important hearing, and I appreciate the chairman's 
indulgence here.
    Also, in my county, our county seat sits right square in 
the middle of our county, and until about a year ago it did not 
even have cell phone service. Can you imagine that? We did not 
even have cell phone service in our county seat. So the 
sheriff, obviously, he had no ability to contact his deputies 
on a regular cell phone and had to find other ways to 
communicate with them with his other phones, which is fine, 
but, I mean, it just shows the difficulty that some of us in 
the rural parts of the country live through.
    So I guess my question would be to each of you, what can we 
do as a Committee to help promote or do whatever we need to do 
to help all of you provide the broadband and the 
telecommunications services that our people, our businesses, 
our health providers in our part of the world need to be able 
to do their job and protect our citizens? And I guess the first 
question is how do you speed up the regulations? And I know 
more money is always added. But when you do that, I want to 
know how do you estimate the return on your investment? Because 
I can tell you, you know, I grew up a long, long time ago. I 
remember the old TV show, ``Get Smart.'' And the guy had a 
phone in his shoe and today I have got two phones sitting right 
here that when I grew up that was a fantasy. How can you have a 
phone without a line to connect it to the rest of the world? 
And yet today it is a convenience we cannot live without.
    So I understand the difficulty that you have in predicting 
the future, which you talked about, and how you make that 
investment, how you figure out that return investment. If you 
could kind of go into some of that, I would appreciate it.
    And then I would like to go to Mr. Donovan, I believe, with 
regards to the data. So let me stop and let you answer some 
questions.
    Mr. DONOVAN. Thank you. It sounds like the county seat 
would be a perfect place for some small cells to go up on some 
of the existing poles build out service in there. The problem 
in these rural areas, as this Committee knows, is the margins 
are already very tight for small carriers to serve them. And 
the opportunity costs of fees that you pay to site them, 
especially on small cells, if it is the same fees you are 
paying to build a massive tower, it could be enough to make it 
so it is no longer economical to provide that service. So 
anything we can do to streamline the process to get some of 
those fees in line is going to help us be able to expand 
service in areas like that.
    Mr. LUETKEMEYER. Okay. How do you figure your return on 
your investment? How do you work the numbers on that? Do you 
figure 5 years, 10 years, 15, 20, 25? What kind of timeframe do 
you look at when you figure out the return on your investment?
    Mr. DONOVAN. So it does vary carrier to carrier. One thing 
that is exciting in the wireless world is that the future 
customers may not be, yourself sitting here with two phones, 
two lines of service, but it could be your tractor in the 
field, each head of cattle that is out there that is being 
remotely monitored, you know, there is a new internet of 
things, customers that are changing the equation that you do 
for your cost-benefit analysis, but that is only going to 
happen if we have the networks in place to support that. 
Otherwise, the investment is going to flow elsewhere. If you do 
not streamline how we can invest in those areas, then those 
areas are going to miss and it is going to go to places that it 
is easier to make those deployments.
    Mr. LUETKEMEYER. Does anybody else want to comment? Mr. 
Romano?
    Mr. ROMANO. Yes. I will jump in. Thank you. Thank you, 
Congressman.
    So I think the challenge, or one of the things I think the 
panel has in common actually, is we all represent or all are 
associated with community-based providers. So one of the things 
that is interesting when you look at ROIs, if you live in that 
community, if you are based in that community, you have a 
different view perhaps of ROI than if you are investing from 
far away because if you are investing from far away or you have 
allegiance or you have fiduciary duties to faraway 
shareholders, that creates a very different circumstance than 
when, you know, you have got to get your money out because you 
have got capital in. In this case, some of these loans these 
folks are taking out are 20-year loans, so, therefore, the ROI 
is very different. They are also, again, headquartered in the 
community. They might be cooperatives that actually their 
members are their owners.
    Mr. LUETKEMEYER. Okay. One more quick question before I 
lose my time here.
    Mr. Donovan, you talked about the study to make sure that 
you have the data there to be able to make sure you disburse 
funds where it is needed. Number one, who does the study? And 
number two, who pays for it?
    Mr. DONOVAN. Thank you. So the data, it is required by the 
FCC to be submitted by carriers. So far, so good. The problem 
is the FCC does not tell carriers how to standardize that data. 
So you could have one carrier that is reporting at a signal 
strength that varies dramatically from another carrier. The 
calculation that they do, we will not go into----
    Mr. LUETKEMEYER. So you need some better direction from the 
FCC then on the reporting of this data, is that what you need?
    Mr. DONOVAN. We need to make it standardized.
    Mr. LUETKEMEYER. Standardized. Okay. Very good.
    Thank you, Mr. Chairman. I appreciate it. I yield back.
    Chairman BLUM. Thank you, Mr. Luetkemeyer.
    I now recognize the gentleman from the great State of Iowa 
for 5 minutes, Mr. King.
    Mr. KING. Thank you, Mr. Chairman. I appreciate you holding 
this hearing and taking the lead on this issue. I was just 
listening to the remarks of my friend, the neighbor to the 
south, Mr. Luetkemeyer, whose district I have visited and he 
lives in the middle of nowhere and I live in the center of the 
hub of the wheel in the middle of nowhere. I have cell phone 
coverage; he does not. And so I am sitting here listening 
thinking why is that the case for me and not for Mr. 
Luetkemeyer and many of his constituents?
    One is hills. The degree of difficulty is a lot greater if 
you have got hoops and valleys rather than the flatter 
countryside that predominates a lot of the great State of Iowa. 
That is part of it.
    But another part of it, I think, and I wanted to ask the 
question, whoever wants to volunteer to answer it, is that in 
Iowa we had, the last time I kept track, about 142 independent 
telcos. And I know that they are more personally connected with 
their customers than the more remote larger companies. And the 
map says that Iowa is in pretty good shape. There are 
exceptions there. Mr. Donovan, you pointed that out. But how 
much impact has it had to have a large number of competitive 
independent telcos that are neighborhood telephone companies 
using everything they can to make that pipe as big as possible 
for the long-term future of their neighbors and relatives?
    Mr. DONOVAN. It is critically important, Congressman. And 
like my colleague, Mr. Romano, mentioned, being in the 
community makes a difference as you make decisions about where 
you are going to invest and where you are going to serve. When 
you have to see your consumers, not just in the office when 
they come to your store, but in the grocery store and around 
the community. So that changes how you make your investment 
decisions.
    One success story in Iowa is that rural carriers like 
iWireless have been able to band together some of those 
smaller, independent operators so that you can have some scale, 
so that you can gain access to buy devices. If you do not get 
to some of those scale levels, like across many issues for 
small businesses, if you cannot deliver enough scale, then you 
cannot get access to economically priced resources that you 
need. For wireless service, that is the devices. It is the 
network infrastructure. It is the things you have to build to 
provide that service.
    Mr. KING. And so at least in my theory, if other States 
were beneficiaries of a lot more competitive, a lot of times 
family-owned telcos, we might have seen a better buildout here 
on broadband.
    So the resources have been there for everybody equally? Was 
that true?
    Mr. DONOVAN. Not always the case, unfortunately. In the 
wireless world, so spectrum is our primary resource. You are 
not making any more of them. You need to get it from license 
from the government. Different spectrum bands are made 
available differently. One thing that is important for small 
businesses, if the license size is not sufficiently small for a 
small business to be able to bid on it, win it, and provide 
service, then they are not going to be able to get access to 
that critical resource and they will not be able to provide 
service.
    Mr. KING. And the license size applies. And then also the 
ability to have the infrastructure built that can handle the 
capacity into the future. A narrative popped into my head when 
I heard that. As I recall, I had a construction office in town 
for a number of years and it was fed by a 3/4-inch water line 
underneath the highway, a very wide highway with a long boring 
project to replace it. I went to the city and said I cannot 
provide water out of my place to the blacksmith who is next 
door to me and he is trapped if I do not get it to him. We need 
to expand this water line. I made a powerful case they should 
do that.
    I finally sold them on the idea and they let me go up to 1-
inch from 3/4. So I finally, out of frustration, said I will 
put the water line in, and I bought the 2-inch line and now 
everybody is living happily ever after on that one. That is how 
I equate with what you are talking about. Let's, well, 
overbuild this because the actual cost of the equipment is 
minimal in comparison to the cost of the labor to do the 
installation process.
    I wanted to turn to Mr. Romano and give you an opportunity 
to say whatever you need to say, but I also have a question. I 
have some neighbors, and myself included, that use cell phone 
boosters in our homes. Is there a future for that or are they 
minimal in their ability to have impact?
    Mr. ROMANO. No, I think they will have impact. Wireless and 
wired services are I think, in many respects, complementary 
both at the network level and the access level. You know, a lot 
of times you see people talk about how much mobile data 
consumption there is. People are using tablets more to connect 
to devices. A lot of times those mobile tablet devices are 
actually, in fact, hopping onto a wired network, a Wi-Fi 
network. These are complementary integrated networks that are 
going to need each other, I think, to thrive and survive and 
serve the needs of a community like you are talking about.
    I did want to come back to the one point you made about 
local community interest, ownership, family-owned businesses, 
cooperatives working together. We have actually started an 
initiative with a number of folks trying to get telcos and 
electric co-ops who have a shared interest in serving these 
communities together. Bring broadband expertise together with 
the assets, the community interest of the electric cooperatives 
and municipalities, and tribal entities even. Think about 
different ways of tackling these so we can make the most 
efficient, most effective use of resources on the ground level.
    Mr. KING. To anybody that wants to answer this, is it our 
future that everybody in America eventually will have access, 
not only in the undefined broadband is for me, I did not hear 
that, but is there a future that we will be able to do 
livestream HD anywhere, anytime, for anybody with a cell phone 
or sitting in their home with their television? Is that where 
we are going to end up with an unlimited capacity beyond our 
imagination? Today, I should say, not unlimited, to go beyond 
that if need be?
    Mr. ROMANO. It could be, but what you are going to need is 
the small cell deployment that is robust enough, fed by fiber 
networks that are robust enough, and spectrum assets that are 
robust enough to hit those small cells. Again, while I say it 
is all integrated, but it could be there. But you are going to 
need those small cells every few hundred feet, which is a big 
challenge in rural America, with robust enough spectrum or 
fiber capacity behind them to feed the kind of demands that you 
are talking about. But that is the dream at least.
    Mr. KING. We can get there. And they would have loved to 
have this on Apollo 13.
    Mr. Chairman, I appreciate the hearing, and I yield back 
the balance of my time.
    Chairman BLUM. Thank you, Mr. King.
    I would like to start the second round of questioning, if I 
could.
    Somebody mentioned having, I guess, transmitters on phone 
poles, telephone poles. It kind of reminds me of the concept of 
the democratization of electrical grid, that if each home in 
America, or particularly in rural America, could generate our 
own electricity, we could sell some of that electricity back to 
the power companies. In essence, we would be democratizing the 
electrical grid. This concept fascinates me. Could this 
possibly be an answer in rural America for wireless is to have 
every farm, every home, my home for example could not only 
receive, but could also maybe send, transmit to the next home--
not back to the tower, but to the next home--and we would have 
this interrelated network? Because I have heard of this very 
thing for aircraft. And if every aircraft that is in the air, 
we know their position, and if they can communicate with each 
other, then we have this grid. And so there would be no dark 
spots or black spots over the ocean, for example, that 
currently we cannot capture with radar. It fascinates me the 
concept. Could you comment on that?
    Mr. DONOVAN. Absolutely, Mr. Chairman. And you are right, 
that we are going to need the cell sites brought that close to 
you so you can have that kind of mesh network that does not 
have any gaps. The problem right now----
    Chairman BLUM. Mesh network? Is that what that is called, 
mesh network?
    Mr. DONOVAN. That is. It is mesh networking. But right now 
you probably are not going to go through the process to work 
with a carrier to put up a cell site on the side of your house 
if it means that you are going to have to do a new 
environmental review to see whether you disturbed anything when 
you built that house, to go through a new historical review. We 
need to cut through some of that.
    Chairman BLUM. Remove the word ``probably.''
    Mr. DONOVAN. Well, exactly. And that means that you will 
not have that cell site available. So we need----
    Chairman BLUM. Well, today, in today's environment. That is 
what it would entail?
    Mr. DONOVAN. That is right. You would have to go through 
every step of this in order to put that cell site up on the 
side of your building.
    Chairman BLUM. But a fascinating concept nonetheless?
    Mr. DONOVAN. Absolutely. And the densification that we need 
to provide that service going forward.
    Chairman BLUM. And my second and last question is for Mr. 
Osborn. And Mr. Donovan just mentioned the regulations. 
Regulatory burden is a big topic in Washington, D.C.
    I would like to ask you, Mr. Osborn, with the change in 
leadership at the FCC with Chairman Pai coming in, have you 
seen any indications that the FCC is serious about reducing the 
regulatory burden in this industry, particularly as it relates 
to rural areas?
    Mr. OSBORN. Yes, we have. The first few months have been 
very encouraging. What Chairman Pai seems to be very sensitive 
to is the red tape and the regulations. And I mentioned the 
permitting process that we were involved with, and understand 
there is a Bill S604 that would essentially give a categorical 
exclusion to environmentals along operational rights of way. 
That type of legislation would help quite a bit in removing 
some of the regulatory issues that I call environmental 
regulatory. But that would speed things up greatly, reduce 
cost, and I think make things more efficient in laying fiber.
    Once you lay fiber, it is there forever. We lay our fiber 
in double plow ducts, undisturbed. We go down as far as we can, 
6 feet, 8 feet if we can, and we run it. Once it is there, we 
can replace it without having to dig. So that investment, we 
can look at that as a 20-year rate of return. We have to 
replace the electronics every 3 to 5 years. So that is the one 
where we have got to get our money out of that quickly. The 
wireless, the same thing.
    So the rate of returns that we are trying to work toward 
varies largely by the technology. But the regulatory issues 
more faces with the terrestrial piece of it. I mentioned the 
reports that we have to do. If we saw value in this, I think it 
would be different.
    Mapping is a big part of our business. We have maps of 
everything in our serving area. It is about 10,000 square miles 
of serving areas. And to deal with the FCC's requirements to go 
down to the census block, I can show you those census blocks in 
my map. I should not have to do a separate report and 
essentially duplicate what I have paid hundreds of thousands of 
dollars for in a software system to come up with a report. I 
have the information; all they have to do is ask for it. And 
that would help greatly in terms of moving things along.
    Chairman BLUM. Thank you very much.
    I would now like to recognize the gentleman from the great 
State of Nebraska, Mr. Bacon, for 5 minutes.
    Mr. BACON. Thank you. I apologize for coming in just a 
little bit late, but two other simultaneous meetings. So I am 
running around.
    I used to be raised on a farm until 1985, joined the Air 
Force, but my main problem of getting some kind of linkage 
prior to 1985 was finding that AM radio so I could listen to 
the Chicago Cubs play at 120. In the military, too, we are 
starting to do every aircraft, you know, receiving and sending 
various links. And what has impressed me is now I am out of the 
Air Force and I am starting with the ag community again, and 
talking to my family, it is just so impressive that all the new 
combines, all the new tractors all have these links. Our 
irritation systems are doing the same. Just phenomenal.
    And you may have already mentioned this, and I may have 
missed it, so I apologize if you did, what is the actual scope 
of investment that we need nationwide to field this the way we 
want to? And I will just open it up to whoever can respond.
    Mr. OSBORN. Thank you, Congressman. It is an evolving 
level. We need to make sure we are keeping up with everything, 
but you hit on an important point. There has been a lot of talk 
in D.C. recently about connected cars. Well, on farms we have 
had those for a while. They are combines and they are tractors, 
but they are using those connections. So Cost Quest has done 
one model of what it would take to have wireless coverage 
across the country to power all those things and they came in 
at about $25 billion.
    Mr. BACON. Twenty-five billion?
    Mr. OSBORN. With a B. With about another billion in 
operational costs once you have it built just to keep it going 
in areas that private capital will not sustain.
    Mr. BACON. And that gives us the capability for all of our 
newest equipment to be able to communicate with maintenance 
facilities? And so, I mean, all that networking that is going 
on. So you would get that capability. What other capability 
would that provide our agriculture?
    Mr. OSBORN. So the combines, the tractors are connected. 
You know their maintenance schedules. They tell you before they 
break down that you need to get someone out there. You can more 
efficiently use resources. You know, what fields need water? 
What needs what going on? But you also have real-time 
connections to markets and you know when it is time to harvest 
certain amounts of the yields. So your productivity goes up 
overall as well as profitability of the farm.
    Mr. BACON. Right. I think that is incredible.
    Are there certain portions for our country right now that 
need this more than others? Are there areas that are more 
advanced? Is there some portions of the country that were 
falling behind?
    Mr. OSBORN. You know, I think for different use cases, we 
need this nationwide. You probably are not going to be using a 
tractor on a mountain, but you still are going to want to be 
connected so you can take part in other educational and 
business opportunities.
    Mr. BACON. Okay. Thank you very much. I appreciate the 
time. And I can just second the importance of it because my 
family that is still involved in the farming, when you go out 
there and they are using a GPS. I had the most curveous rows 
when I was a 16-year-old out there. Now you do not have to 
drive it at all. It is perfectly straight.
    Well, thank you so much. I yield back.
    Chairman BLUM. Thank you, Mr. Bacon.
    I now recognize our ranking member, Mr. Schneider, from 
Illinois, for 5 minutes.
    Mr. SCHNEIDER. Thank you. And I will not be long and take 
the full time. I just want to wrap up on a couple of things.
    You do use tractors on a mountain. I grew up in Colorado. 
Ski areas are, seriously, using those for maintaining their 
slopes during the winter. So this is something that affects us 
all across the country.
    And Mr. Donovan, I will go back to something else you said. 
You talked about the idea, the Internet of things they did. 
Every head of cattle will have a device that is sending back 
information about that individual cattle, which means their 
food will be healthier, our cost to produce that food will be 
lower, and the impact it has, again, across the whole Nation.
    So I really just want to give each of you a last chance for 
a reflective comment, perhaps. As we talk about providing rural 
communities with broadband access, which was the subject of 
this meeting, this is something that I believe really is of 
national interest. It don't affect just our rural communities; 
it affects all of us regardless of where we live. And so start 
with you, Mr. Romano, just a last word of why this is important 
to our Nation and why it deserves a national investment.
    Mr. ROMANO. Thank you, Congressman.
    The Hudson Institute did a study a couple of years ago 
showing that the payback from investment in rural broadband, 
just from the active investment in rural broadband, not the 
follow-on effects of rural broadband, were $24.1 billion in 
2015 to the national economy with much of that accruing back to 
urban areas actually because of the vendors and contractors 
that are hired to build this stuff and the tower manufacturers 
and what have you. So there is that direct impact.
    There is the indirect impact, of course, of the mission of 
universal service first sort of thought of last century and 
embodied in different forms throughout, but the network effect 
in our country is stronger and better and more efficient and 
effective if every American is connected. And that is one of 
the things that I think is important in the concept of 
universal service. We have a lot of folks who focus on let us 
connect this type of institution, this type of customer, this 
type of user. We need community-wide access to all of them. To 
focus on any one type of user and silo it in that way I think 
undercuts the notion of universal service. We should be asking 
the folks who are out there building to build to every user, 
irrespective of what kind of user they are, so that everybody 
gets the benefit of that network effect, which is why we are 
building these networks in the first place.
    Mr. OSBORN. Thank you. Just a quick word on the Hudson 
Institute study. It did not come as a great surprise to us 
because we have communities where it is an hour, hour and a 
half to the nearest Walmart, hour and a half to the nearest 
Best Buy, you name it. So boy, you can get on there to go to 
Amazon. Two days, right? And buy and purchase. So rather than 
run into town, people, that is how they do their commerce is 
get on that internet and make purchases. And that adds up.
    Mr. SCHNEIDER. I am going to date myself. I used to work at 
Sears Catalogue.
    Mr. OSBORN. Oh, my. You get it. You totally get it. You 
totally get it.
    The other topic, though, you know, we are part of a world 
economy and somebody mentioned we are number 16. I think that 
is pitiful.
    Mr. SCHNEIDER. That was me.
    Mr. OSBORN. Of course, number 1 through 15, the 
telecommunications infrastructure is probably owned by the 
government. That is the common model. The U.S. is the exception 
to that with the formation of AT&T 100 years ago. If we are 
going to be competitive with India, with China, with the rest 
of the world, we are going to have to kick it up a notch and we 
are going to have to bite the bullet and put some money in it, 
not just in rural. But you are going to have to put the money 
everywhere and get us competitive. And it needs to flow out to 
the rural areas because they are doing some important stuff. 
That is where food, water, and oil come from that we need.
    Mr. SCHNEIDER. Fair point.
    Mr. Donovan?
    Mr. DONOVAN. Well, I have to associate myself with my 
colleague's comments on the economic impact. It is incredible 
to see what a multiplier it is bringing broadband services out 
to these areas.
    I guess Congress got it right, you know, directing the FCC 
that we will have policies for reasonable comparable----
    Mr. SCHNEIDER. Will you just repeat that again?
    Mr. DONOVAN. On Universal Service Fund, in 1996, Congress 
got it right directing the FCC to have reasonably comparable 
services and an evolving standard in urban and rural areas. We 
need to make sure we are putting policies in place to make sure 
that that is the case on the ground.
    Mr. SCHNEIDER. And the last word to you, Mr. Allendorf?
    Mr. ALLENDORF. Thank you, Congressman.
    Building on Mr. Donovan's comments, Congress got it right 
with rural electrification as well. And it is going to take 
that kind of commitment from Congress, from the administration, 
to bring broadband to rural areas. And it is going to take 
partnerships with many different industries to do that. And I 
would encourage that kind of broad thinking as you have done 
today in achieving rural broadband deployment. Thank you.
    Mr. SCHNEIDER. Great. Thank you. I'm going to steal a few 
extra seconds if that's okay just to reflect on your comments, 
because I think as we are here talking about what broadband can 
do and the comments you made, three things jump out at me. If 
we get this right again, we can grow our economy. At a time of 
great division in our country, broadband can unite us. And it 
is necessary, Mr. Osborn, what you said. If we are going to as 
a Nation lead the world, lead the world economically in a 
global economy, lead the world with information, lead the world 
with our values, this is a step towards that. So I just want to 
thank the witnesses again and thank the chairman for having 
this hearing. Thanks very much.
    Chairman BLUM. Thank you, Mr. Schneider. I noticed today 
you mentioned you used to carry around punch cards and worked 
for Sears Catalogue. So I must say I think you are younger 
looking than obviously you are. But thanks for sharing that 
with us. It makes me feel better.
    I would now like to recognize Mr. Luetkemeyer for 5 minutes 
from Missouri.
    Mr. LUETKEMEYER. I am fine.
    Chairman BLUM. Fine? Are there any further questions anyone 
has?
    If not, then I would like to thank each of our panelists 
for taking the time today to testify. It is truly fascinating.
    As this hearing comes to a close, I hope that we have 
opened some eyes--certainly have opened mine--and educated a 
few folks about how important advanced telecommunication 
services are to our Nation's rural small businesses and how 
important it is to create a positive regulatory environment for 
the businesses represented on our panel. I am heartened to hear 
that the FCC has begun to make things a little more user-
friendly for folks like our witnesses today, but more must be 
done. These small businesses are ready, willing, able, and 
frankly, itching, to get out there and build these networks, if 
only Washington, D.C., would get out of their way.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    And without objection, so ordered.
    And we are adjourned. Thank you very much.
    [Whereupon, at 11:17 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                    Statement of Dave Osborn

                    Chief Executive Officer

                         VTX1 Companies

          Before the House Small Business Committee on

         Subcommittee on Agriculture, Energy and Trade

                         June 22, 2017

    Chairman Blum, Ranking Member Schneider, and Members of the 
Subcommittee, thank you for the opportunity to testify today on 
the important topic of improving broadband deployment in rural 
America.

    Introduction

    I am the Chief Executive Officer of the VTX1 Companies, a 
rural telecommunications provider based in Raymondville, Texas, 
which is about 35 miles north of the US border with Mexico on 
US-69E. I have served in this position for over 12 years, and 
prior to that worked for several large telecommunications 
equipment manufacturers. My beginning in the industry dates 
back to July, 1970, when I started with Southwestern Bell in 
downtown Dallas, Texas. I progressed with them in jobs of 
increasing responsibility in Dallas, St. Louis, Ft. Worth, 
Kansas City, Houston, and finally Morristown, NJ, at AT&T's 
company headquarters. Thirty plus years later, after leaving 
AT&T in the mid-1980s, I now reside in the Texas Rio Grande 
Valley in my current position. Today, I am representing WTA - 
Advocates for Rural Broadband, a national trade association, on 
whose board of directors I serve.

    VTX1 got its start as Valley Telephone Cooperative, Inc., 
or ``VTCI'', in April 1952, when a group of local farmers and 
ranchers formed a non-profit telephone cooperative under the 
Texas Telephone Cooperative Act of 1946. They did so because 
Southwestern Bell and General Telephone of the Southwest, GTE, 
had refused to bring telephone service out to the rural south 
Texas communities due to the enormous expense of doing so. With 
the help of several loans from the U.S. Department of 
Agriculture, our cooperative finally began providing service in 
1957 after laying cables and establishing equipment switching 
centers. We began with four brand new ``exchanges'', or 
geographic service areas, and grew by continued construction 
and by purchasing exchanges from General Telephone. By 1979, we 
had 17 exchanges within 19 counties in deep South Texas that 
comprised a total of 7,300 square miles. Our current density is 
only .7 access lines per square mile which is one of our 
state's lowest density ratios.

    In the late 1980's, VTCI saw an opportunity with 
transporting long distance up from Mexico and back and 
partnered with AT&T in this endeavor. An unregulated, for-
profit, subsidiary VTX Communications, LLC, was formed in 
December, 1987, to provide carrier transport services for 
almost a dozen Mexican carriers through fiber-optic bridge 
crossings at Laredo and Hidalgo, Texas. Long distance service 
was added around 1991, fixed-wireless broadband service in 
2004, then finally television entertainment service in 2005. 
VTX Telecom, LLC, a for-profit subsidiary, was formed in 
December 2000, after the Telecommunications Act of 1996 was 
signed into law to provide telephone, and now internet and 
television service to underserved communities outside of the 
VTCI communities. VTX Telecom receives a nominal amount of 
Federal support (i.e., federal Universal Service Fund (FUSF) 
support) and some Texas USF funds (TUSF); VTX Communications is 
not eligible to receive either FUSF or TUSF because, as stated 
above, it is an unregulated entity. The primary recipient of 
FUSF support is the original cooperative entity, Valley 
Telephone Cooperative. Utilizing a very complex accounting 
system of cross charges for work-time and other expenses, we 
are able to run our company efficiently as a single entity, and 
to avoid confusing customers with all the different company 
names, we took the name VTX1 Companies in 2012.

    Through expansion, diversification, and acquisitions, VTX1 
now provides broadband internet access, television, security, 
and voice telephone service to approximately 16,000 residents, 
businesses, schools, libraries, government buildings, and other 
anchor institutions in a 10,000 square mile service area--the 
boundary is loosely defined by Laredo, San Antonio, Corpus 
Christi, and Brownsville, Texas. We have just under 200 
employees, around 120 buildings and around 150 service trucks 
and vehicles. Our impact on the South Texas economy is 
significant.

    Solutions for Rural America

    I intend to focus on three main areas where I think 
Congress can work with regulators to encourage broadband 
deployment in rural America.

    1. Universal Service Policy

    Serving rural America is incredibly costly, and we couldn't 
do it in the rural areas we serve without the federal Universal 
Service Fund (USF). The principle of universal service, that 
every American, regardless of where he or she lives, should 
have access to communications technology, has its roots in the 
Communications Act of 1934. The USF, as we know it today, was 
created by the Telecommunications Act of 1996. Without the 
support we and other rural telecommunications providers receive 
from the fund, our cooperative members would never be able to 
afford the services we provide. According to the Telecom Act, 
USF support is supposed to be ``predictable and sufficient'' to 
the task of providing ``advanced telecommunications and 
information services...in all regions of the Nation.'' 
Unfortunately, the principle of sufficiency seems to become 
less and less important to federal policymakers over time.

    For the past several years, the Federal Communications 
Commission (FCC) has labored to modernize USF, most recently 
after the release of the National Broadband Plan in 2010, which 
recommended freezing support for small, rural broadband 
providers at 2010 funding levels. The reform efforts culminated 
in an Order in March of 2016, which has resulted in companies 
similarly situated to VTX1 seeing their support reduced because 
of a budget target reflecting 2011 funding levels. 
Incidentally, the 2011 support levels were based on support for 
voice networks as opposed to broadband networks, which is what 
the reformed USF would focus on post-2011. This approach 
attacks the problem of getting broadband to rural America from 
the wrong angle. Instead of setting a goal for broadband in 
rural America and attempting to determine what that would cost, 
the FCC has arbitrarily set a budget and essentially said ``see 
what you can do with this.''

    So far, VTX1's USF reimbursement from mid-2016 to June 2017 
is down approximately a half million dollars on an annualized 
basis with grater reductions anticipated in light of the caps 
and constraints the FCC has placed on the overall High Cost 
Fund to stay under its self-imposed budget cap. This despite 
the fact that we have had to increase our fiber to the home 
investments in fiber, electronics and maintenance fees to meet 
the FCC's goals of no less than 10 mbps down with a preferred 
25 mbps down broadband service. In the last two and a half 
years, VTCI has spent almost $27 million in capital expense 
(CAPEX) dollars that had been previously committed to as part 
of our five-year CAPEX plan to bring high-speed broadband 
service to our rural cooperative members. These federal support 
reductions have now reduced our capital expansion within our 
VTCI service areas and slowed the conversion to fiber-optic 
technology. It is important, and necessary, to upgrade all 
terrestrial networks to fiber because, while it does cost money 
to upgrade to a fiber-optic infrastructure, a fiber-optic 
network will have a service life several times longer than that 
of a copper one--plus the maintenance costs of a fiber-optic 
network are much less than a copper infrastructure. 
Additionally, serving the needs of our national cellular 
companies to ``backhaul'' their soon to be deployed 5G LTE 
traffic from their towers to their regional switching centers 
will be very important. Because of the speeds involved, 
cellular carriers will be hard pressed to backhaul their 
traffic by radio technology alone.

    Instead of caps and cuts to support, the High Cost Program 
within USF needs to be fully funded so that carriers can 
upgrade their networks to deploy broadband further throughout 
their service territories. If that cannot be done at the very 
least an inflationary adjustment to the High Cost Program is 
warranted so that high-quality broadband can be pushed further 
out into rural America. If the country wants to get serious 
about catching up with the rest of the world's broadband 
deployment, the High Cost Program support should actually be 
increased.

    2. Streamlining the Permitting Process for Existing Rights 
of Way

    If Congress wants to improve the efficiency by which USF 
dollars are put to use, it should review and reform the 
permitting process for access to federal lands and other rights 
of way. Small companies like mine wait years and spend hundreds 
of thousands of dollars per project on environmental, 
archaeological, and historical preservation reviews. It is not 
uncommon for small companies like mine to experience delays of 
up to 18 to 24 month in getting broadband projects going 
because of these types of review. This is particularly 
problematic in parts of the country that have shorter 
construction seasons than Texas.

    While some of these reviews are necessary and important, 
particularly when it comes to previously undisturbed ground, it 
makes little sense to require extensive reviews for projects 
that make use of existing and operational rights-of-way. I'll 
share an anecdote from my own experience, which is not 
atypical.

    VTX1 received both a Broadband Initiatives Program (BIP) 
loan/grant combination from the Department of Commerce and a 
Broadband Technology Opportunity Program (BTOP) grant from the 
Department of Agriculture to construct a fiber-optic 
infrastructure as part of the American Recovery and 
Reinvestment Act (ARRA) stimulus program. The intent of these 
projects was to be shovel-ready, and ours was but for the fact 
that we had to wait nine months for our environmental reviews 
needed to bore underground within 20 feet of ``center line'' 
along a U.S. federal highway.

    Obtaining environmental permits to use rights-of-way that 
have been and are continually being disturbed should be fast-
tracked for approval.

    3. Regulatory Reporting Burdens

    We continue to be concerned with the increased quantity of 
reporting obligations and reporting burdens placed upon us 
involving regulatory reporting to the FCC, the Universal 
Service Administrative Company (USAC), and the National 
Exchange Carriers Association (NECA) and other federal agencies 
when the recovery of those costs has been capped by not only 
the FCC's Corporate Operations cap but the maximum $250 per 
line per month cap. VTCI performed a detailed labor study in 
2016 and found that we spend around 3,200 hours completing just 
the federal reporting requirements placed on us. This costs us 
about $100,000 a year in wages and another $50,000 a year in 
benefit costs alone with none of these dollars being recovered 
by any federal support. A copy of our spreadsheet showing the 
regulatory burden wage analysis is attached. Total benefit cost 
was estimated at fifty percent of wage cost. While we recognize 
the need to justify all of our support expenditures and 
requests, we believe the FCC must take all necessary steps to 
ensure that high cost rural companies such as VTCI are allowed 
to recover every dollar of these regulatory burden expenditures 
from the high cost support mechanisms. Without such assurances, 
small rural companies such as ours may very well be squeezed by 
having ever increasing reporting requirements while receiving 
ever smaller support due to caps and constraints on the high 
cost fund.

    Conclusion

    Our conclusions are straightforward:

           The High Cost Fund component of Federal USF 
        needs to continue in remote rural serving areas as well 
        as having a cost of living escalator to keep the fund 
        viable during periods of inflation. An increase in High 
        Cost Fund monies should be considered as well to speed 
        up broadband deployment;

           Permitting timelines should be greatly 
        reduced in areas and along roads where the land has 
        been previously and continuously disturbed;

           Regulatory reporting should be streamlined 
        and limited to items that have a significant, 
        measurable impact on broadband deployment in America.

    This concludes my testimony. Thank you for your attention 
and I look forward to answering any questions you may have.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

  Improving Broadband Deployment: Solutions for Rural America

                    Testimony of Tim Donovan

           Senior Vice President, Legislative Affairs

                Competitive Carriers Association

                           before the

   United States House of Representatives Committee on Small 
                            Business

         Subcommittee on Agriculture, Energy, and Trade

                         June 22, 2017
    Chairman Blum, Ranking Member Schneider, and members of the 
Subcommittee, thank you for inviting me to testify about 
improving broadband deployment in rural and remote areas and 
its impact on small businesses throughout the United States.

    I am testifying on behalf of Competitive Carriers 
Association (``CCA''), the nation's leading association of 
competitive wireless carriers. CCA is made up of nearly 100 
carrier members ranging from small, rural providers serving 
fewer than 5,000 customers to regional and national providers 
serving millions of customers. CCA also represents nearly 150 
associate members--small businesses, vendors, and suppliers 
that serve carriers of all sizes. The vast majority of CCA's 
members are small businesses.

    Consumer demand for mobile broadband has increased 
exponentially, and studies show it will continue to grow at an 
astounding rate. For example, Ericsson's latest Mobility Report 
forecasts a greater than five-time increase in mobile data 
consumption over the next five years. To meet these demands, 
Congress and the Federal Communications Commission (``FCC'' or 
``Commission'') must tackle broadband deployment challenges 
today to meet needs of our connected economy.

    A persistent digital divide continues to plague certain 
rural areas that remain less likely to have access to, or 
choices for, broadband, smartphones, and other devices. Pew 
Research Center reports that ``[d]espite recent gains in 
digital technology adoption, rural adults remain less likely 
than urban and suburban adults to have and use these 
technologies. For example, rural Americans are 7 to 12 
percentage points less likely than those in urban and suburban 
areas to say they have a smartphone, traditional computer or 
tablet computer.'' As a result, while rural areas may be more 
connected today than in the past, substantial segments of rural 
America still lack the infrastructure needed for high-speed 
internet, and the service deployed in these areas may be slower 
than that of their urban counterparts. Policymakers must 
therefore implement targeted policies to ensure that even the 
most remote Americans remain connected in today's mobile world.

    Last week, FCC Chairman Pai participated in the inaugural 
Rural Prosperity Task Force meeting, where he outlined the 
importance of policies that support broadband availability in 
rural areas. As he articulated, providing connectivity 
nationwide is at the core of why the FCC was created in 1934. 
Chairman Pai shared examples of economic growth powered by 
broadband with the task force, including remote monitoring in a 
meat processing plant in Nebraska, cattle feed lot monitoring 
in Kansas, connected combines in Maryland, and healthcare, 
education, and job creation advances all made possible by 
broadband.

    These examples are not purely anecdotal. The Hudson 
Institute recently found that the investments and ongoing 
operations of small rural broadband businesses contribute $24.1 
billion annually to the nation's gross domestic product, with 
66 percent ($15.9 billion) of that amount benefiting urban 
areas. The same report also found that an estimated 70,000 jobs 
can be attributed directly to economic activity of small, rural 
broadband providers, underscoring how broadband is an important 
driver of job growth. A separate report found that when a 
county gains access to broadband, there is approximately a 1.8 
percentage point increase in the employment rate, with larger 
affects in rural areas. In testimony before a Senate 
subcommittee last year, a Mississippi farmer estimated a 
minimum ``10-15% loss of efficiency when connections are 
disrupted'' for their machines alone. New telehealth services 
can save a rural hospital more than $100,000 a year in 
healthcare and community costs. Secondary education, technical 
training, and even university degrees are available online, but 
only accessible for Americans with broadband services that 
support delivery of materials and facilitate interactive 
classes. It's clear: the future of rural economic and small 
business growth is directly tied to the availability of mobile 
broadband.

    It is not just important for today's economy; mobile 
broadband is vital to tomorrow's economic development through 
next generation or 5G services and the Internet of Things 
(``IoT''). The majority of CCA's members live and work in the 
communities they serve, and therefore share in the potential 
success of ubiquitous mobile broadband service and the 
deployment of next-generation technologies in their hometowns. 
As this Committee continues to focus on improving broadband 
deployment, particularly in rural areas and for small 
businesses, we urge you to ensure reasonably comparable 
services are available in urban and rural areas with sustained 
federal support in targeted areas, streamline policies to 
deploy, maintain, and upgrade mobile broadband networks, and 
provide all carriers with opportunities to access finite 
spectrum resources.

    Accurate Data is Necessary to Define Areas Where Federal 
Funding Can Preserve and Expand Mobile Broadband Deployment

    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. Section 254(b) of the Communications 
Act provides that the FCC shall base policies on ``statutory 
principles established by Congress,'' including the provision 
of ``advanced telecommunications and information services'' to 
consumers ``in all regions of the Nation,'' at ``just, 
reasonable, and affordable rates,'' and of services that are 
``reasonably comparable'' to those provided in urban areas. In 
today's world, `reasonably comparable'' service is synonymous 
with fast, affordable mobile broadband technology. Yet, to this 
day, numerous members of Congress attest to the unfortunate 
reality of insufficient and inaccessible wireless coverage 
throughout the United States, both as public servants 
responding to their constituents and as consumers in the mobile 
wireless ecosystem. Committee hearings recently held in both 
the House and Senate find members lamenting the consistent, 
uniform availability of mobile broadband throughout their 
districts.

    CCA applauds action on the FCC's Mobility Fund II. The FCC 
adopted the Order in March of this year which to dedicate $4.53 
billion over the next decade to close ``coverage gaps.'' 
However, without coverage data that accurately reflects 
consumers' on-the-ground experience, decisions that determine 
areas eligible for Mobility Fund II support will be misguided 
and scarce resources will be squandered. The underlying data 
that the FCC currently uses to make funding and other policy 
decisions, known as the Form 477 data, relies on carrier-
reported information lacking standardization. The FCC's own 
presentation of the data includes a disclaimer that ``coverage 
calculations ... have certain limitations that likely result in 
an overstatement of the extent of mobile coverage.'' Prior to 
allocating Mobility Fund II support, the Commission must use 
standardized data including a challenge process that is 
efficient, eases burdens on smaller entities, and generates 
accurate determinations of where qualifying coverage exists and 
where Mobility Fund II must target support. The Commission is 
about to distribute $4.53 billion in funds over the next ten 
years for mobile broadband deployment, and it must do so in a 
fiscally responsible way that accurately bridges the digital 
divide to preserve and expand mobile services.

    The need for accurate data and analysis is an 
uncontroverted, bipartisan principle under current leadership 
at Congress and at the FCC. Specifically, on-the-ground 
experience, including coverage data obtained by driving across 
the country, makes clear that mobile wireless service is not 
yet available everywhere, much less on a competitive basis as 
required by statute. Congress stands in bipartisan agreement on 
this point, and has continuously noted that a strong foundation 
based on data that accurately reflects consumers' on-the-ground 
experience is critical to advancing economic decisions. CCA 
applauds this Congressional support, including letters to the 
FCC and recent legislation that recognize that From 477 mobile 
coverage provides an inherently unreliable account of mobile 
broadband coverage, particularly in rural areas. We must begin 
with concrete, factual data to adequately address gaps in 
effective competition across the mobile wireless market.

    CCA supports current legislation before the House of 
Representatives, H.R. 1546, The Rural Wireless Act of 2017, 
introduced by Congressman Dave Loebsack (D-IA) which would 
direct the FCC to establish a methodology for mobile wireless 
coverage data that reflects actual consumer connectivity 
experience. Additionally, Congressmen David McKinley (R-WV) and 
Peter Welch (D-VT) introduced the bipartisan H.R. 2903, the 
Rural Reasonable and Comparable Wireless Act of 2017, which 
would direct the FCC to implement regulations that establish a 
national standard to determine whether rural areas have access 
to mobile broadband services comparable to their urban 
counterparts. CCA commends each piece of legislation seeking to 
identify remote and rural areas that are still unserved and 
underserved.

    Streamlined Infrastructure Siting Policies are Critical to 
Robust Mobile Broadband Networks

    Competitive carriers must be able to timely and efficiently 
deploy physical infrastructure. Carriers must increase the 
number of towers, base stations, antennas and wires, often 
within public rights-of-way, to support the advanced wireless 
services necessary to keep pace with consumer and network 
demands, yet carriers continue to face prohibitive delay and 
cost issues while working through the federal, state, and local 
siting process. Carriers must pass through a regulatory maze, 
as demonstrated in the attached chart, to gain approval to 
serve their communities, with potential costs and delays at 
each step. These longstanding obstacles are getting worse as 
industry moves towards deploying dense small cell networks and 
fiber. Most CCA members serve rural areas and have invested 
significant private capital, along with USF support, to deploy 
wireless services in some of the hardest to serve parts of our 
nation. However, expanding service to underserved and unserved 
rural areas depends on the ability to efficiently site 
facilities, including on federal lands.

    Congress, the FCC, and industry have acknowledged that 
achieving true 5G connections will depend on government's 
ability to update the applicable regulatory frameworks, and 
make them more predictable. While critically important for 5G, 
these are not issues for future action--they also affect 
deploying today's technologies and policymakers must act 
immediately. CCA supports Chairman Pai's Broadband Deployment 
Advisory Committee (``BDAC''). The BDAC's recommendations on 
how to accelerate broadband deployment will directly support 
the Commission's statutory mandate to facilitate high-speed 
broadband for all Americans. Congressional efforts also are 
needed. Congress should pass legislation that improves the 
process for deploying facilities on federal lands, and 
streamlines state and local barriers to deployment. Strong 
national siting standards, including shot clocks, reasonable 
restraints on state and local infrastructure-related fees, and 
modifications to current historic preservation and 
environmental compliance siting processes, will relieve 
carriers and state and local review offices from resource 
burdens, and will improve connectivity for consumers. In 
addition to reducing state and local barriers, Congress should 
work with the FCC to address in the short term its current 
framework for complying with the National Environmental 
Protection Act (``NEPA'') and the National Historic Protection 
Act (``NHPA''), including section 106 review.

    Siting on Federal Lands

    CCA members often express frustration about the hurdles 
they face when filing an application to deploy or upgrade 
facilities on federal lands. These experiences include lost or 
missing applications, applications that languish for years, 
inconsistent or undisclosed rules across and within agencies, 
redundant historical or environmental reviews, and inconsistent 
denials. In other words, unnecessary bureaucratic red tape 
regularly prevents competitive carriers from providing high-
quality mobile broadband service in rural America. In many 
cases, carriers stall and sometimes abandon plans to buildout 
in these areas. This is not an acceptable outcome. The BDAC 
includes a Working Group dedicated to streamlining the federal 
siting process; I encourage this Subcommittee to pay attention 
to the Working Group's efforts as part of any effort to address 
federal lands siting issues.

    State and Local Barriers to Broadband Deployment

    CCA and its members are deeply engaged in policymaker's 
ongoing work to address state and local barriers to broadband 
deployment. At the FCC, for example, CCA serves on the BDAC's 
Removing State and Local Regulatory Barriers Working Group, 
alongside many other stakeholders, including municipal 
representatives. When it comes to state and local siting 
processes, imposing reasonable restraints on state and local 
infrastructure-related fees and making sure applications are 
timely reviewed under clear rules will allow competitive 
carriers to make a better business case for deployment. It also 
will reduce the need to lobby individual local authorities or 
States to adopt broadband-favorable rules. Broadband deployment 
is an investment in the local economy, and while local 
authorities often resist a ``one size fits all'' solution, most 
industry requests for national standards are administrative and 
structural and can appropriately respect local issues.

    Congress Must Implement Durable Infrastructure Solutions

    The FCC can quickly move to address some of these 
infrastructure challenges, but Congress must act to provide 
long-term certainty. Congress should include support for mobile 
broadband deployment and services in any infrastructure bill. 
There is bipartisan support from House and Senate leadership to 
find solutions to bridge the digital divide. Democrats on the 
House Energy and Commerce Committee as well as Senate Democrats 
have proposed broad infrastructure plans that include 
designated funding for broadband infrastructure. House Energy 
and Commerce Subcommittee on Communications and Technology 
Chairman Marsha Blackburn has confirmed her commitment to 
include broadband in any infrastructure proposal, and Senate 
Commerce, Science and Transportation Committee Chairman John 
Thune has held numerous hearings on the importance of mobile 
broadband infrastructure. Similarly, the Administration's 
Fiscal Year 2018 budget proposal prioritizes improvements in 
broadband deployment, and includes ``$200 billion in outlays 
related to the infrastructure initiative,'' which could support 
broadband deployment. Policymakers must be mindful that small 
rural and regional providers have limited resources, and 
continue to face challenges securing adequate capital for 
wireless siting projects, an issue where this Committee plays a 
critical leadership role.

    CCA also supports legislation like S. 19, Making 
Opportunities for Broadband Investment and Limiting Excessive 
and Needless Obstacles to Wireless Act, or the MOBILE NOW Act. 
The MOBILE NOW Act would contribute to streamlining federal 
siting and deployment policies, as well as repurposing federal 
spectrum for commercial use. Combined with FCC efforts, 
Congress is poised to provide relief to carriers seeking to 
serve the most challenging areas of the United States. Sound, 
unified infrastructure policies will create jobs and drive 
economic development. This will play a significant role in 
ensuring the United States leads the world in 5G.

    Access to a Myriad Spectrum of Resources is Critical to 
Deploying Ubiquitous Mobile Broadband Networks

    The wireless industry is on the brink of a tectonic 
technological shift. While many carriers in rural areas still 
maintain 2G networks, other wireless providers are currently 
transitioning from 3G to 4G networks and other providers are 
turning down their 2G and 3G networks altogether. Carriers are 
now looking forward to deploying 5G next-generation 
technologies. To make this important jump, competitive carriers 
must have access to low-, mid-, and high-band spectrum to 
deploy next-generation mobile broadband and, eventually, 5G 
networks. This will determine viability of smaller carriers as 
the demand for data increases.

    Building on the trend to next-generation technologies, 
Congress should support efforts to allocate additional spectrum 
resources for mobile broadband use, including low-, medium-, 
and high-band spectrum, both licensed and unlicensed. 
Additionally, Congress should work alongside the Commission to 
prevent attempts to encroach on mobile carrier operational 
rights throughout the millimeter (``mmW'') spectrum. 
Competitive carriers already are using these licenses for 
point-to-point and critical backhaul services across rural and 
urban communities, enabling broadband connectivity for local 
municipalities, schools and businesses in these areas. Congress 
and the FCC should continue to facilitate carriers' use of this 
spectrum to provide all consumers with the most advanced 
services.

    A varied spectrum portfolio is necessary to meet consumers' 
increasing demands, and the birth of unlimited plans and data 
services on a variety networks. The Commission's first ever 600 
MHz incentive auction closed successfully on March 30, 2017, 
with a gross revenue totaling nearly $20 billion. Importantly 
for this Committee, based on Congressional direction, the FCC 
took many steps to support participation by smaller businesses, 
including building interoperability into the rules, providing 
sufficiently small geographic license sizes, and ensuring all 
carriers had a fair and equitable opportunity to participate.

    CCA commends Congress for its critical role in authorizing 
the incentive auction, which is the second largest spectrum 
auction in FCC history with 84 MHz of reallocated spectrum, 70 
MHz allocated for mobile broadband use, and $7 billion provided 
to the Treasury for deficit reduction. Broadcasters won $10.05 
billion in revenue and eligible broadcasters will have access 
to $1.75 billion in reimbursement payments for the repack. The 
auction itself topped the charts in FCC auction history--
garnering a whopping $19.8 billion in gross revenues, second 
only to the AWS-3 auction, And, the nearly $20 billion in gross 
revenue from the 600 MHz incentive auction is the capstone for 
an estimated total of about $66.5 billion in gross revenue 
generated by the 2012 Spectrum Act.

    Once put to use, this 600 MHz spectrum will be vital to 
expanding mobile broadband coverage into unserved areas. What's 
more, the Congressionally based 39-month repack timeline also 
will provide an engine for economic stimulation and job 
opportunities across rural America. For these reasons, Congress 
and the FCC should promptly dismiss any attempts to introduce 
delay and uncertainty in the repack process, and instead, focus 
on completing the post-incentive auction transition within the 
statutorily-based timeline or sooner. Any delay would be a 
detriment to competition, the public interest, and the economy.

                                   --

    CCA members are proud to serve rural and remote parts of 
the country, but there is a long way to go for ubiquitous 
connectivity. Indeed, the majority of CCA's members live and 
work in the communities they serve. As a result, competitive 
carriers share both a professional and personal stake in 
ensuring ubiquitous mobile broadband service is available to 
all consumers in their communities. The coming year will be a 
time of significant transition in the wireless market as 
regulatory and technological changes take hold, and as carriers 
move toward 5G and ioT technologies. During this transitional 
and often uncertain time, Congress must continue to identify 
and remove structural barriers to mobile broadband deployment 
in rural and remote areas of the United States, providing 
greater opportunities and certainty for small business and the 
consumers they serve. Mobile broadband is a critical economic 
driver, and its role in economic development will be magnified 
following the evolutionary leap to 5G technologies. Consumers 
expect their service and devices to connect wherever they live, 
work or travel; yet competitive carriers struggle to access the 
resources required to build out robust mobile broadband 
networks. Policies established by Congress and implemented by 
the FCC will play a significant role in whether rural America 
has access to the latest services or languishes behind the 
modern economy. CCA looks forward to continued work with 
policymakers to ensure legislation and policies support 
ubiquitous mobile wireless service and innovation for all 
consumers.

    Thank you for your attention to these issues and for 
holding today's important hearing. CCA looks forward to 
continuing to work with you, your colleagues, and the FCC to 
make these policies a reality, and I welcome any questions you 
may have.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Written Testimony of Christopher Allendorf

         V.P. of External Relations and General Counsel

                 Jo-Carroll Energy, Inc. (NFP)

   Before the Subcommittee on Agriculture, Energy, and Trade

  Improving Broadband Deployment: Solutions for Rural America

    Electric Cooperatives and Rural Broadband

    Thank you for the opportunity to address this committee 
regarding efforts to increase access to high-speed broadband 
internet in rural America. As a natural gas, broadband, and 
electric cooperative serving thousands of rural accounts across 
four counties in Northwest Illinois, Jo-Carroll Energy is part 
of a broader electric cooperative industry that serves 
approximately 42 million consumer-owners (members) who own 
approximately 42% of electric distribution lines that cover 56% 
percent of our nation. Considering that most of those members 
and lines are in rural America, these numbers are critical to 
identifying and understanding how electric cooperatives serve 
as an established, sensible partner in developing programs and 
rules that will increase rural access to broadband internet. In 
our rural areas, we serve an average of four consumer-owners 
per mile of line, which is higher than many cooperatives, but 
significantly less than the thirty or more consumers per mile 
average for investor-owned and municipal utilities in urban 
areas. Low customer density is an important statistic to keep 
in mind when considering how best to help facilitate deployment 
of large-scale broadband access in rural America.

    Jo-Carroll Energy was founded in 1939 as a result of the 
Rural Electrification Act of 1936 (REA) by a small group of 
farmers who saw the immense business benefits of electricity, 
though none of the existing utilities found it economically 
viable to serve them. This small group of farmers pooled their 
resources, with critical funding provided under the REA, to 
construct the necessary infrastructure and energized their 
first lines in 1940. With electricity provided by their local 
cooperative, these rural Americans were able to enjoy the same 
comforts as their urban peers. There is a parallel situation 
happening right now with broadband deployment.

    Utility cooperatives like Jo-Carroll Energy are private, 
not-for-profit businesses owned and governed by their 
consumers. Two principles under which utility co-ops operate 
are democratic governance and operation at cost. Specifically, 
every consumer-owner can vote to select local board members who 
then set rates and oversee the co-op. Revenue received by the 
co-op that is in excess of the amount it takes to provide 
services must be returned to consumer-owners as capital 
credits. Under this structure, utility co-ops provide economic 
benefits to their local communities, rather than distant 
stakeholders, by ensuring profits stay it the hands of the 
local consumers, not stockholders.

    Why is Jo-Carroll Energy in the Wireless Broadband 
Business?

    Locally-owned cooperatives, as a result of their governing 
principles, are more attuned to the needs and requirements of 
those they serve. It has become apparent that the need for 
access to high speed broadband service is no less important for 
the success and survival of rural areas today than electricity 
was more than 75 years ago. Can you imagine large swathes of 
the inhabited U.S. without electricity today? We have to ask 
ourselves the same question now about rural areas without 
broadband access.

    Recognizing this reality, Jo-Carroll Energy's board of 
directors decided to begin offering wireless broadband service 
to our members in 2009, based on feedback the individual 
directors received from their constituents that they either had 
no access to internet or were limited to dial-up connections. 
This lack of internet service was impeding everything from 
expansion of small, local businesses, to students not being 
able to perform necessary coursework at home.

    At that time, there were two local, for-profit, wireless 
internet service providers (WISP) within our service area, a 
major telco, and a regional cable company providing service. 
Their services were limited to larger rural towns and villages. 
None had a business motivation to serve our more rural areas, 
unless a person/business could afford to make it feasible for 
them by shouldering significant costs of construction 
themselves, which is the opposite of how utility cooperatives 
have operated for 80 years. We have since acquired one of those 
WISPs, which otherwise would have ceased operating, so that 
numerous rural residents would continue to have access to 
fixed-wireless broadband. Others continue to operate for-profit 
broadband businesses in areas with more concentrated 
populations.

    What we found over the course of the next six years, 
however, was that fixed-wireless broadband systems are a 
rapidly aging technology that struggles to keep up with the 
ever-increasing speed and bandwidth demands of users. 
Additionally, the rural nature of our business created 
geographical challenges to large-scale deployment of fixed-
wireless internet. Our service area has several types of 
topography, from the tallest point in Illinois, through dense 
forests, to innumerable valleys and river basins. Fixed-
wireless proved to be more difficult to deploy due to our 
terrain and we ended up constructing costly towers in order to 
somewhat compensate. The resulting service that we could 
provide was a lifeline to remote users who likely never would 
have received service from a for-profit company, but it is far 
from ideal.

    Over the course of time, as our utility operation demands 
changed, we converted our utility communications, including our 
offices and links between substations and meters, over to a 
fiber-based loop. Fixed wireless broadband for our utility 
operations faced the same geographical challenges as our 
consumer-owners were experiencing and it could not continue to 
provide the increasing reliability and capacity needs for our 
own utility operations. Eventually, we nearly eliminated our 
internal use of the fixed-wireless component, except as a 
redundancy. Since then, we have seen the benefits of fiber 
broadband firsthand in our utility operations.

    We continue to serve roughly 1600 wireless broadband 
accounts, but the technology is increasingly expensive to 
construct and maintain, with most of the equipment having a 5-
year useful life. Fiber infrastructure, on the other hand, has 
an exponentially longer useful life and few bandwidth 
constraints. It is also cheaper to construct because we can 
better utilize our existing overhead and underground utility 
infrastructure rather than having to construct towers. The 
cooperative business model allows us to provide utility service 
to the most remote areas in our service territory, but it also 
means that costs must be shared equally among consumer-owners 
and broadband is no different for us. Cooperatives' electric 
utility business took nearly two decades to develop 
incrementally in order to eventually provide service to 
everyone. Rural America, especially our businesses, cannot 
afford to wait that long, at a competitive disadvantage, for 
broadband to develop in the same fashion.

    Why Do We Believe That Fiber is the Solution for our 
Territory and Rural America?

    After seeing for ourselves internally how much of an 
advantage fiber provided, we saw fiber as a technology that 
could provide reliable, fast broadband to rural America and one 
that would allow us to better utilize existing overhead and 
underground conduit infrastructure, free from the geographical 
constraints of fixed-wireless technology. Several companies, 
including some with government fund grants, had laid ``middle-
mile'' fiber throughout our area, but it is still up to other 
companies to establish ``last-mile'' infrastructure for end-
users.

    As a result, while increased middle-mile infrastructure 
meant that fiber became a technology option for us to provide 
retail broadband service, it would still require significant 
capital to bring fiber to our rural users. In addition to local 
businesses, one area that stood out to us as demonstrating the 
urgent need for last-mile fiber construction was rural schools 
and students. Several of our rural schools were able to connect 
to the middle-mile fiber network, allowing them to provide the 
benefits of fiber broadband at school. However, the students 
were left with whatever internet service they had at home to 
research, complete, and submit their assignments, which often 
requires broadband internet. Very rural students were left at a 
competitive disadvantage because of a lack of access to 
reliable broadband compared to their peers who lived in towns 
and villages with more internet options.

    Fixed-wireless broadband had not proven to be a feasible 
solution for connecting our rural consumer-owners and in 2015, 
Jo-Carroll Energy began planning a fiber pilot project in one 
of the rural towns we serve, Galena, Illinois. The feedback we 
heard from our consumer-owners, along with the countless 
articles and research we read, all demonstrated that reliable 
broadband was a necessity for quality of life and economic 
development in rural areas. It is difficult for rural 
businesses to remain competitive without high-speed broadband. 
The global economy requires rural areas to have the same access 
to reliable broadband as their urban peers in order to remain 
viable.

    We felt that Galena was the perfect testing ground for our 
first fiber deployment. Galena, a town of 3500 near the 
Mississippi River, has very diverse population and business 
demographics. It is the second most visited tourist spot in 
Illinois after Chicago. Tourism has created a large retail and 
service industry in Galena and the surrounding area. Outside of 
tourism industry needs, Galena represents the needs of any 
other small, rural towns. Galena businesses told us they needed 
reliable broadband service to ensure they could process credit 
cards in a timely fashion, take online reservations, provide 
high-speed wireless to customers, and much more.

    We believed a fiber system could meet the needs of Galena 
businesses and we saw Galena as the perfect starting point for 
a fiber system that could meet the same needs eventually 
throughout our service area.

    Jo-Carroll Energy's Galena fiber pilot project was 
completed in 2016. We utilized a mixture of existing overhead 
and underground infrastructure to place the fiber bundles. We 
estimate that there are approximately 460 possible accounts 
within the footprint of the project. I have attached 
testimonials from several of our fiber-connected businesses 
that demonstrate how crucial fiber broadband has been to their 
success. Our take rate among businesses is over 60%. Many of 
these users previously had cable or fixed-wireless broadband. 
The success of businesses using our fiber internet service in 
the pilot project area has convinced Jo-Carroll Energy that 
fiber internet provides the most stable, reliable platform for 
rural internet and that it is a critical component for economic 
development.

    Residential demand has not been as high as we anticipated 
and cost is a factor. Though we are working on bringing costs 
down, our fiber packages are currently more expensive than 
options offered by other providers, but these other services 
are subject to latency, reliability, and usage allowance 
restrictions. We hope that as our fiber-connected businesses 
continue to tout the benefits of fiber, more residential users 
will take note.

    A major factor leading to our higher costs is the lack of 
access to capital in sufficient amounts to cover the high 
expense of initial construction and deployment. As a 
cooperative, we operate at cost and our access to capital is 
limited by what we ask consumer-owners to contribute through 
rates. As our density figures shows, we have a smaller group of 
consumers over which we can spread costs. Therefore, more 
government grant funding to reduce the upfront capital 
investment would help create the financial incentive for local 
cooperatives to expand high-speed internet access beyond what 
we are able to undertake on our own.

    Another contributing factor to our fiber pilot project also 
came about because for-profit entities were abandoning 
broadband in our service area. The major telco providing 
broadband within our project area is not connecting new users 
and existing users are constrained by limited infrastructure 
and slower speeds; much like traditional phone lines, its 
broadband system has been left to wither on its own.

    Regardless of whether broadband service is provided by a 
for-profit telco or cable company, their offerings are only 
available to residents who live in towns and villages, where 
higher customer density provides profit incentives; profits 
play a large role in determining what areas are served. 
Additionally, we are offering a superior product with fiber. 
The existing service options are subject to bandwidth 
restrictions and high latency during peak demand times which 
are more acute in rural areas because of weak signals due to 
topography. All of this frustrated local businesses.

    Jo-Carroll Energy has seen firsthand that fiber integrates 
relatively seamlessly with existing overhead and underground 
utility infrastructure, making permitting easier to obtain, 
which is otherwise a concern for any company. We have found 
that fiber is also much more scalable at a lower cost than 
fixed-wireless. As bandwidth demand increases and new users are 
connected, only relatively minor investments in fiber 
infrastructure are needed to meet both challenges, which we 
have not found to be the case with fixed wireless.

    Utility cooperatives are uniquely positioned to partner 
with the government to provide this service because of the 
existing infrastructure we have in place to serve rural 
America. Together with a governance model that is favorable for 
rural internet users because there is no profit motivation and 
consumer-owners have a direct say in the service being 
provided. Utility cooperatives will remain serving these areas, 
long after other companies have reduced the quality of their 
service or abandoned areas altogether and fiber is the robust, 
scalable technology we need to provide it.

    How Can Government help Provide Reliable Broadband Service 
to Rural America?

    We applaud Chairman Pai and the Federal Communications 
Commission for creating the Broadband Deployment Advisory 
Committee (BDAC) to take look at the barriers to providing 
broadband access to rural areas of our country. We were 
especially pleased that Jim Matheson, CEO of our national trade 
association, NRECA, was appointed to serve on the committee and 
bring the voice of non-traditional providers, like electric 
cooperatives to the table for these important discussions. Mr. 
Matheson will undoubtedly make sure that the voice of our 
consumer-owners in rural America is heard in conservations 
about expanding broadband access. The BDAC is expected to make 
recommendations later this year on how to spur greater 
deployment of broadband service.

    Congress has worked with previous Administrations to 
provide funding for broadband projects through the Federal 
Communications Commission, the Rural Utilities Service at USDA, 
and the National Telecommunications and Information 
Administration at the Department of Commerce. These programs 
have had both success stories and challenges in pursuit of 
bridging the digital divide for rural America. I hope we can 
use the knowledge gained from those programs to make sound 
investments in the future.

    As Congress and the Administration discuss plans for 
reauthorization of the Farm Bill and an Infrastructure funding 
package in the coming months, increasing deployment of 
broadband service in rural America through grants and direct 
construction contributions must be one of the top priorities in 
those packages. As you consider proposals to spur broadband 
deployment, we believe that all potential providers, including 
electric cooperatives, should be eligible to participate in an 
open and inclusive process that allows providers the ability to 
compete for funding opportunities. In addition, we urge 
policymakers to consider the scope of capital needed to make 
the upfront capital investment to extend broadband service to 
rural America and allocate the monetary resources needed to 
meet this expansive challenge. We hope that our experience with 
what has and hasn't worked for deploying broadband in rural 
areas will also provide insight for these discussions.

    Looking to the Future for Rural America

    Bringing electricity to rural America 80 years ago was a 
task of epic-proportion. The federal government created a 
strong, lasting partnership with rural utility cooperatives to 
accomplish that goal. That partnership provided the same high 
quality of life to all Americans, regardless of economics and 
location. The investments made over 80 years in utility 
infrastructure shines as an example of what can be done when 
you are willing to think outside the box to meet a goal. Today, 
the challenge to bring robust broadband service to rural 
America is as difficult as it was to bring electricity, but Jo-
Carroll Energy has seen that it is no less important for the 
continued success and well-being of rural America. It is our 
sincere hope that Congress and this Administration will 
continue to reinforce their partnership with rural utility 
cooperatives to bring electricity to rural America and build 
upon that partnership in the 21st century with continued 
support for the no-less audacious goal of providing rural 
Americans with high-speed broadband service.

    Thank you for taking the time to allow me to share our 
experiences.
  Testimonals from Galena Businesses with Jo-Carroll Energy's

                         Fiber Product

     Note: Jo-Carroll Energy's broadband internet 
service is marketed as Sand Prairie Wireless to differentiate 
it from our other utility services. It is a fully integrated 
business unit.

    Paul, Owner of a Galena business

    We were really excited when we heard that fiber was coming 
to downtown Galena. Our business specializes in selling things 
for people...in our case here, I have eight listing stations. 
To sell on e-bay you have to upload pictures, create 
descriptions, and research items. All of that is done on the 
cloud - or the internet. All of our business is cloud based, so 
when we had the opportunity to go to a fiber system that 
offered the speeds that the fiber does, we could not wait.

    We went from doing 5x2 to 50x7. The bottom line is that was 
a huge increase in speed. What that means for us is an increase 
in productivity. Fiber means we can work faster and we can list 
more; that means my business can grow, I can employ more 
people, I can sell more things, and I can help more people find 
value in the things they have.

    If you use the internet from a business standpoint, you 
need the speed of fiber. It is the way of the future; it is why 
this install in downtown Galena makes Galena a more viable 
place to do business. Having a consistently high internet 
connection is crucial. You need that high-speed connection and 
you need it to be consistent.

    Fiber optic in downtown Galena gives business owners the 
opportunity to grow their business utilizing the power of the 
internet. With that consistent speed, you can grow your 
business to a whole different level outside of just Main 
Street.

    The investment in downtown Galena for the fiber network is 
incredible from the standpoint of the business community. Very 
few communities of our size have that kind of a connection. 
They're working with much slower speeds and connections that 
are not consistent. To have that investment in downtown Galena 
just brings us to another level. Galena is already a great 
place to visit; Galena is a great place to come shop, to eat, 
and just enjoy the beautiful Main Street that we have. Now as 
business owners, we can go beyond that by utilizing the power 
of fiber internet. The investment made in the infrastructure 
makes it easy for any business on Main Street to do business 
internationally with the speed of light. It is just phenomenal.

    Cory, General Manager of a Galena restaurant.

    Chose to go with Sand Prairie Fiber for the fast internet 
speeds. It is one of the first companies to offer speeds that 
are beneficial for our restaurant. The fast internet speeds 
allow our wait staff to give our guests the best service 
possible by using tablets to enter orders and also to accept 
credit card payments. With the fast speeds we are receiving 
credit card transactions are instant and online reservations 
are made and confirmed in real time. I would highly recommend 
it. The speeds are blazing fast. The installation process went 
seamlessly.

    Dan, President of a Galena Business

    My company uses the Sand Prairie Fiber service for our 
daily connectivity to our third-party data center and has six 
people on the connection throughout the day. We are very happy 
with the speed and stability of the connection. High-speed 
broadband service was very badly needed here in Galena for the 
entire business community and we are very happy Jo-Carroll 
Energy and Sand Prairie have committed to providing this 
valuable service.
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    Question from Representative Bacon:

    ``With the technological advances of agricultural equipment 
requiring grater connectivity, rural broadband development can 
greatly improve the productivity and efficiency of our 
agricultural economy in states like Nebraska. Production 
agriculture operations are significant businesses that drive 
growth outside of just rural communities. How can we 
specifically streamline the regulatory requirements so rural 
providers can spend less on compliance and focus more capital 
on deploying infrastructure to communities that have tremendous 
need for this kind of connectivity?''

    VTX1 Response:

    The last several yeas have seen a lot of what our company 
sees as change in direction for regulatory reporting, and with 
all these changes it has created a whirlwind of activity. The 
FCC 477, to include HUBB reporting and 481 reports and their 
formats, seemed to be evolving constantly over the last several 
years. Inclusion of a detailed five-year plan and yearly 
updates was very time consuming for our company because it had 
to be in the right format for our consultants. It was 
questionable whether anyone ever looked at the data submitted 
for the five-year plans, and we understand the five-year plan 
is no longer a requirement.

    We were also required to submit electronic boundaries in a 
specific format for our exchange boundaries (study area 
boundaries) to identify and rectify boundary overlaps/conflicts 
with other LECs. Historically these boundaries had been 
maintained and documented by the Texas PUC. For us this was 
very time consuming, and we did reach out to other small LECs 
and get some boundary overlaps identified. As it turned out the 
larger companies such as Verizon (now Frontier) and AT&T were 
somehow given a waiver and were not required to submit their 
boundaries due to confidentiality agreements so those were 
never addressed. The majority of our study area boundaries 
border these two companies, so for us this seemed like a big 
waste of time and resources. We are already reporting our areas 
by census blocks via the 477 process. See the link below.

    https://www.fcc.gov/reports-research/maps/study-area-
boundaries/

    This year NECA has asked us to provide data for each work 
order we issue that is ``similar'' to FCC 477 data already 
being submitted. So that process has been implemented.

    Our yearly activities related to documenting and updating 
records, maps and CPR related to our annual cost study is very 
time consuming. Although we realize this is important, it still 
takes time and often results in questions from the consultants 
for clarification.

    In 2016 we instructed our engineering records groups just 
to document the number of hours we spent on the FCC 477 and 
study area boundary projects alone and it exceeded over 700 
employee hours for this group alone. The number did not include 
all the other reports and data we compile for regulatory.

    For small companies all this reporting can be overwhelming.

    There is a need for some regulatory oversight for obvious 
reasons, but for the EPA regulators to prohibit performing 
engineering activity in conjunction with environmental activity 
is a waste of time and money. These two activities could have 
been performed concurrently, by two different entities, thus 
reducing the time to deliver service to customers. 
Environmental approvals can take as long as six months to a 
year. Ours took 9+ months and delayed our project start almost 
a year. Our view is that there were wasteful delays.

    We also spend an inordinate amount of time submitting forms 
to NEPA (National Environmental Policy Act) that includes the 
following: the US Fish & Wildlife, TCNS (Tribes), FCC, FAA, and 
SHPO (State Historic Preservation Office) Archaeology. There 
are many others, too many to list. The point being that all of 
the information submitted to all of these agencies is almost 
the same information and it can take months to hear back from 
each one. This led to even more delays. This is compounded when 
you add wireless towers to the list.

    If a floodway is to be crossed, then the State and Local 
agencies must approve. State and local Agencies have 
jurisdiction over U.S. Floodways and Waterways. Often the local 
representative is only available 2-1/2 days a week so this 
builds in delays that takes weeks to overcome. These agencies 
and agents are not flexible at all. If the state says it's ok 
to cross a floodway, and you don't get local approval, the 
local representative will make you redo the entire crossing at 
your expense, even if the project is 100% compliant with the 
state and local regulations.

    After all of this, the demand for reports to the agencies 
like USDA, NTIA, etc... is never ending.

    In the event there is a need to cross a water boundary (Rio 
Grande River), then the U.S. International Boundary & Water 
Commission (IB&WC) gets involved. In our case, both Mexico 
(CILA) and the USA (IB&WC) have to agree on the project needs. 
Approval can take from months to a year.

    By working under the thumb of our Federal Program Officer 
and trying to meet the 67% completion date by the end of year 
two requirement, we spent approximately $1M-$2M which we could 
have spent on putting fiber in the ground. We went over budget 
by approximately this amount which was booked against our 
annual capital budget.

    This was caused by the way the federal government defined 
project completion: percentage of completion status was based 
on how many dollars we had drawn down from the BTOP pool to pay 
contractors. The more dollars you spend, the faster you reach 
project completion. The percentage of completion had to 
relation to how much of the actual project construction had be 
completed. No private sector organization I know of would 
utilize this type of criteria to determine the percentage of 
project completion.

    We were also required to follow Davis-Bacon guidelines for 
wages on our projects. This is a federal framework that 
determines wages and weekly wage payments for all workers--
contractors and employees. We had to wait weeks and months to 
get approvals from our regulators confirming that a certain job 
required a certain pay depending on the county in which the 
work was being performed. In all cases our prevailing wages 
were over the Davis-Bacon minimums, so all of this effort was 
unnecessary and a waste of precious time.

    The heart of the question in our minds is how can we 
specifically streamline the regulatory requirements so rural 
providers can spend less on compliance and focus more capital 
on deploying infrastructure to communities that have tremendous 
need for this kind of connectivity. Our recommendations are as 
follows:

          1. Shorten the EPA approval cycle. EPA requirements 
        are complex and take months to complete and usually 
        require the expertise of an EPA consulting firm which 
        adds cost to the process. Delays due to EPA 
        environmentals cost money and serve little practical 
        purpose in furthering the EPA's goals to protect the 
        environment.

          2. Focus environmental impact studies to areas where 
        it is useful. Requiring environmentals on public 
        highway rights of way where people drive cars in 
        addition to pulling over and stopping there is 
        unnecessary. The right of way land is continuously and 
        frequently disturbed thereby making it highly unlikely 
        that protected and endangered plant and animal species 
        will be found and harmed.

          3. Scale back the reporting - much of which is on 
        information that is available elsewhere. We have 
        submitted similar information to multiple government 
        agencies (NECA, RUS, FCC, USAC for example) whose 
        computer systems cannot share data. Our cost to create 
        and submit reports for the federal government alone 
        amount totals to around $100,000 per year in salaries - 
        not counting the overhead that goes with those salary 
        dollars. This is excessive and could be lowered by 
        significant amounts with more reasonable reporting 
        requirements.

    Representative Bacon, thank you for the opportunity to 
respond to your very relevant question.
    REP Don Bacon (R-NE-02): ``With the technological advances 
of agricultural equipment requiring greater connectivity, rural 
broadband development can greatly improve the productivity and 
efficiency of our agricultural economy in states like Nebraska. 
Production agriculture operations are significant businesses 
that drive growth outside of just rural communities. How can we 
specifically streamline the regulatory requirements so rural 
providers can spend less on compliance and focus more capital 
on deploying infrastructure to communities that have tremendous 
need for this kind of connectivity?''

    Across all levels of government, streamlining the network 
deployment process is critical. As noted in my testimony, the 
current regulatory steps necessary to deploy mobile 
infrastructure are burdensome and rife with opportunities for 
delay and additional costs. These barriers stifle network 
investment and ultimately thwart carriers' ability to provide 
service that meets consumers' coverage and capacity needs. 
Streamlined siting policies are critical to expanding mobile 
broadband service to unserved areas today and leading the world 
in 5G in the years ahead.

    Congress and the Federal Communications Commission 
(``FCC'') must simplify infrastructure processes and procedures 
to facilitate more effective mobile broadband deployment. 
Mobile data traffic will grow an estimated five times--from 
approximately 5 gigabits per month per smartphone in 2016 to an 
estimate d25 gigabits per month per smartphone by 2022--and 
carriers are working to deploy the infrastructure needed to 
innovate and keep up with consumer demands, especially those in 
rural areas. Expanded infrastructure supports new services, 
creates jobs, inspires innovation, and powers for economic 
opportunities, especially in rural America.

    CCA offers the following recommendations for Congress and 
the FCC to achieve the mutual goal of streamlining regulatory 
deployment requirements for competitive providers.

           Amend the Communications Act to streamline 
        state and local siting processes, including prohibiting 
        moratoria;

           Improve access and increase certainty with 
        regard to deploying mobile broadband infrastructure on 
        federal lands;

           Amend the National Historic Preservation Act 
        (``NHPA'') to clarify that small wireless deployments 
        are not a federal undertaking;

           Streamline mobile network deployment under 
        the NHPA and National Environmental Preservation Act 
        (``NEPA'') processes, including common-sense exclusions 
        for small wireless equipment or structure deployed on 
        previously disturbed grounds;

           Reduce burdensome fees and delays in the 
        local, state, and federal siting processes by enforcing 
        meaningful ``shot clocks'' and employing ``dig once'' 
        and ``deemed granted'' policies;

           Improve access to municipal poles and reduce 
        attachment fees.

    Additionally, carriers must have long-term certainty with 
regard to support from the High Cost program of the Universal 
Service Fund, and eligible areas for support from Mobility Fund 
Phase II must be based on reliable coverage data.

    CCA looks forward to continued work with Congress and 
policymakers to ensure siting policies facilitate innovation 
and foster ubiquitous mobile broadband service across the 
United States.
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