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The Broadband Divide: Rural Access Lags Far Behind Cities

Testimony before the Agriculture Subcommittee on Appropriations

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Imagine that there is a way to bring the advantages of the city to the country. Imagine that you can lead a life that is slow and peaceful and full of the sounds and fresh air of the country but in an instant you can be in the city. In an instant you can get the latest information about prices, or talk with international sellers, or show your products to Wall Street traders. Imagine that you can make a good living in the small town your parents grew up in and still make sure your parents see the best doctors even though they are far away at the Mayo Clinic or Johns Hopkins. Imagine that your children can also live in that small town but can take advantage of the best schools and libraries and museums . . . maybe even Harvard and the Smithsonian and the Library of Congress. This is the rosy promise of the digital age.

The ugly nightmare of the digital age is that new information technologies will increase the advantages of urban and suburban America and deepen the disadvantages of small towns and rural America. The ugly nightmare is that you can live on a farm only 50 miles from the nearest big city, say New York or Chicago, and be unable to compete as effectively for business as somebody sitting in a skyscraper. The ugly nightmare is that your children will simply not have educational options equal to others, that your parents will not have access to the best care available.

Whether we realize the dream or the nightmare will not be because of computer engineers or the free market. Public policy makers will choose either the promise or the nightmare. Public

policy makers will choose between a widening digital divide or an investment in our small towns and country lanes.

Trust but Verify

In the mid-1990s I served on the board of the Alliance for Public Technology and worked with Barbara O’Connor and Henry Geller and Sam Simon to promote what became Section 706 of the 1996 Telecommunications Act. This apparently forgotten section of legislation required the FCC to "regularly initiate a notice of inquiry [to] determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. If the Commission’s determination is negative, it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market."Congress defined advanced telecommunications capability as "high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications."[1]

The bipartisan hope was that competition in the telecommunications market would ensure that all Americans would have access to what we now call broadband. But the independent expert agency, the Federal Communications Commission, overseeing the telecommunications industry would verify that this hope was being realized on a timely basis. One of former President Reagan’s favorite sayings sums it up: "trust but verify."

Let’s be clear, the FCC has never met the obligations of Section 706. Not only is the FCC asking the industry about speeds and service that will not enable "users to originate and receive high-quality voice, data, graphics, and video telecommunications."The FCC is asking the industry whether one subscriber in a five-digit zip-code is being provided 200 kilobits per second in one direction, what I call slowband. This so-called zip code data is useless, particularly in rural America. But a government report that the goal of Section 706 "is being met"is very useful, if you want to avoid the inconvenient truth: the ugly nightmare of the digital divide.[2] Despite the requirement for regular reports, the current FCC has not reported to Congress since 2004. The current FCC Chairman Kevin Martin likes to cite a Pew Internet and American Life Project finding that "from March 2005 to March 2006, overall broadband adoption increased by 40%."[3] What Martin fails to note is that the Pew study is based on a telephone survey of roughly 4,000, half of whom do not have internet service. Eighty percent of those who do have internet service admit they have no idea how fast their service is. In other words they don’t know whether it’s broadband or slowband, and neither do we.[4]

Trust the market but verify that it is actually working to provide the critical services needed by all Americans. That’s what Congress called for. Unfortunately, the FCC has bent to the will of the most powerful market players who like being trusted but don’t like answering the questions required to "verify."

So the truth of the matter is that over 10 years after the 1996 Telecommunications Act we don’t really know where advanced telecommunications services are deployed in America. What we know is that independent international studies, particularly the Organization for Economic Co-operation and Development studies that are not influenced by the U.S. cable and telecommunications industry, suggest that since 1996, the United States is falling behind other industrial nations. While the United States has the largest total number of broadband subscriptions, the strongest per-capita subscriber growth comes from Denmark, Australia, Norway, the Netherlands, Finland, Luxembourg, Sweden, and the United Kingdom. Each country added more than six subscribers per 100 inhabitants during the past year. Canada continues to lead the G7 group of industrialized countries in broadband penetration.[5] When the OECD first collected this data in 2001, the United States ranked fourth among the 30 nations surveyed, we now rank 15th.

Defenders of the U.S. broadband deployment note that the United States is not a highly populated dense nation or a small island nation. But note that both Sweden and Canada are more rural than the United States and both provide better speeds to more subscribers per capita than the U.S. The big difference, both have national policies aimed at promoting broadband deployment, with a particular emphasis on service to rural areas.

But the problem is not merely penetration or deployment. U.S. subscribers typically pay more money for less speed. French citizens pay less than half for speeds easily twice as fast as the U.S. speeds. The Japanese pay less than one-tenth of what we pay for broadband speeds that are 10 times as fast. Again, it is not that we in the U.S. don’t adapt to new technology as fast as our neighbors to the north or our friends overseas. The problem is a lack of federal leadership. But I suppose it is easy to dismiss numbers. As Mark Twain said, there are lies, damned lies and statistics. How about a few real life stories?

Broadband Stories from Rural America

In 2003 Doris Kelley studied the impact of a 1996 broadband communications investment by the small Iowa town of Cedar Falls and compared the economic development of that town with the nearby community of Waterloo. Waterloo, with the area’s major private employers, is double the population of Cedar Falls, but Waterloo depended solely on private telecommunications providers while Cedar Falls built their own fiber-based network. The difference was soon reflected in new construction valuation for the two communities.[6]

Despite the clear successes of Cedar Falls investment, the telecommunications and cable industries have worked to limit the ability of Iowa municipalities to make similar investments to protect the viability of their small communities. The private industry succeeded in getting bills introduced in the Iowa legislature that would have severely restricted the ability of the local community to study, fund, and deploy a competitive publicly owned communications system.[7]

Last year, we at the Center for American Progress joined with Free Press and brought in Mayor William Graham of the small town of Scottsburg, Indiana. Mayor Graham said, in the past, he went home in the evenings, it took him about an hour to get online, and then he would be kicked off after about five minutes. He said he thought the whole world lived that way. In 2001 while working with the colleges and universities in Indiana on economic development, he was inspired to look into his town’s telecommunications infrastructure. What he found was that the cost of an advanced telecommunications line, a T-1 line, about 29 miles away in Louisville, Kentucky was $350 a month, but in Scottsburg it was $1350 a month. He found out that the Chrysler dealer was going to move because there was no access to broadband in Scottsburg. And, as he put it, the loss of 60 jobs in a town of 6,000 is a big deal. Mayor Graham initiated a process to establish high-speed wireless service in Scottsburg. Not only are old businesses not moving out, but new businesses are moving in, young people are staying, and the municipal buildings and courthouses and fire and police stations are all connected.[8]

The response to this success was the introduction of legislation in Indiana

to restrict municipalities from initiating or extending broadband service. Fortunately, Mayor Graham worked with other small towns in Indiana to block this legislation.

The telecommunications and cable industries have strong incentives to limit local investment in broadband. It is perfectly understandable for the industry to squeeze as much out of their old infrastructure or to delay investment in high-cost areas until they can be certain of an adequate return. This is smart, efficient business. And if we were considering the distribution of hula hoops or video games we would applaud this approach. But we are not concerned about a market in trifles. We are concerned about the health, education, economic viability, and public safety of our nation. We need national leadership to establish a national broadband policy.

Mapping Broadband and Setting Standards

A bi-partisan bill led by Rep. Ed Markey (D-MA) is an important first step. In its current form, "The Broadband Census of America Act,"would require the FCC to report on deployment information detailing a wide range of data-rate speeds with at least the detail of nine-digit zip codes.[9] And Senator Inouye has introduced S.B. 1492: The Broadband Data Improvement Act. Section 3 of that act would "establish a new definition of second generation broadband to reflect a data rate that is not less than the data rate required to reliably transmit full-motion, high-definition video."[10] These are both improvements over the current state, but I admit a preference for Senator Inouye’s approach, with one caveat. I would add two terms: real-time and interactive.

We want advanced telecommunications service that will allow real time robust two-way communication of full-motion, high definition video. And let me emphasize that we should demand this not because it will allow us to play better games or share pictures of our children or upload cool dance and animation videos. We want real time two-way interactive transmission capability because it will help visiting nurses in homes and emergency technicians in the field communicate effectively with doctors in big city hospitals hundreds of miles away.

The problem with not setting some clear bar to define broadband is that too many Americans today are sold something called broadband that does not even meet the definitions Congress expressed in 1996. We need a truth in advertising standard. When a consumer buys something called broadband but they are not able to send or receive quality video quickly, they don’t really have broad bandwidth. It may be something running on the information superhighway, but it’s not close to being an advanced telecommunications service.

U.S. DSL speeds average half a megabit per second. Is that broadband? Well, not exactly. Cable modem service is a little better at an average of 1.5 megabits per second, but it doesn’t really compare to the 5 or 10 megabits offered in Canada. Or the 50 to 100 megabits offered in Europe and Asia. Sure, what we’ve got here is faster than dial-up, but is it broadband? Not exactly. We want high speed two-way interactive transmission because communication in the digital age should be from each to all.

There is a lot of conversation about the data collection of a non-government group called ConnectKentucky. I am all in favor of non-governmental entities gathering data and mapping broadband service. What ConnectKentucky does not do is establish just what broadband is. Is it fast broadband, slow broadband, barely broadband? We don’t know. And because this project is supported by the so-called broadband providers, we are not likely to find out.

Let’s set a standard for advanced telecommunications services worthy of our country and relevant to our needs and challenge the telecommunications companies to meet that. Let’s stop setting standards and designing public policy based on what the private telecommunications and cable companies can do today and what the private companies are willing to tell us.

Closing the Digital Divide in Rural America

Setting the proper standards and collecting data is just the start. Let us assume we have a digital divide and gaps to fill in rural America. We must reinstate the Technology Opportunity Program the Bush administration eliminated. Encouraging public-private partnerships to both deploy and develop new applications for advanced communications technologies was smart policy. Canada largely adopted that policy while we cut back. That’s how they jumped ahead of us. In New Brunswick, a largely rural Canadian province, the Canadian government provided up to $16.5 million, the Government of New Brunswick invested $12.5 million, and the telecommunications company invested $15.6 million in the New Brunswick Broadband Initiative. They finished six months ahead of schedule and are reporting that 90 percent of New Brunswickers in 327 communities have access to truly high-speed broadband service.[11]

In addition, we must continue to protect and advance the universal service program. Despite the chicken little cries of "uncontrolled growth,"the universal service program is working to connect schools and libraries and hospitals and small business in rural America. Capping that program as the FCC and the Universal Service Administrative Corporation have done is, as Senator Ted Stevens has argued, "an ostrich approach."[12]

Joel Lubin, Vice President for Regulatory Planning and Policy at AT&T testified before the Senate Commerce Committee on June 13 that there has been "too much attention placed on the so-called Ôidentical support’ rule."[13] This rule allows all competitive eligible telecommunications carriers to receive the same per line support that the Incumbent Local Exchange Carrier (as in Bell legacy company) receives, regardless of the costs, service territory, or circumstances faced by the competitive carrier. The challenge faced by the high-cost rural service fund cannot be fixed by modifying this rule alone. The big problem is that the FCC, the Universal Service Administrative Corporation, the states, and the other responsible regulatory bodies fail to identity the areas where support is most needed. As a result some rural areas receive no support at all, and others receive enough support for half a dozen or so carriers. The identification of areas is not simply a geographic problem, that is, one that pits rural areas against urban or suburban communities. Rather, it is a problem in the identification of service options. We must identify the most appropriate services to support. Why continue to invest in multiple wireline service providers? Why not shift to expand support to a wider range of advanced wireless technologies?

Despite the ongoing attacks on the so-called Gore Tax, the Universal Service program is one of the few parts of the 1996 Telecommunications Act that actually works. But 50 years before the 1996 Act, the Rural Utilities Service and the Rural Telephone Bank were working effectively to ensure service to rural communities ignored by the big telecommunications carriers. Universal Service needs to be extended, not capped. We need to make sure that broadband is provided not only through traditional wireline, but through wireless terrestrial and satellite service.

Connecting all Americans to the most advanced communications service is important for business, health care, education, our public safety, and especially for civic participation. We should be concerned about connecting rural Americans not because of some soft idealized dream of country life and not because rural Americans represent a need. Our federal policies should recognize the very real contributions rural Americans make to our nation, and the fact that we must find a way to continue to tap into this vital resource for our own collective good. And just as extended mail service, the highways, and electric service paid off for America, we must extend high-speed telecommunications service so that the world has an opportunity to see and hear and benefit from rural America.

[1] Telecommunications Act of 1996, Section 706, Pub. LA. No. 104-104, 110 Stat. 56 (1996).

[2] New Figures Show Broadband Deployment Accelerating in the U.S., FCC Adopts Fourth Report On Broadband Availability, September 9, 2004 at click here.

[3] Written Statement of Federal Communications Commission Chairman Kevin J. Martin,

Before the Committee on Energy and Commerce U.S. House of Representatives,

March 14, 2007 at click here..

[4] Home Broadband Adoption 2006, Pew Internet and American Life Project, May 28, 2006 at http://www.pewinternet.org/pdfs/PIP_Broadband_trends2006.pdf

[5] OECD Broadband Statistics to June 2006, available at www.oecd.org/sti/ict/broadband

[6] Doris J. Kelley, "A Study of the Economic and Community Benefits of Cedar Falls,"Iowa’s Municipal Telecommunications Network, October 2, 2003, available at click here.

[7] State Broadband Battles, Public Power Magazine, American Public Power Association, Sept.-Oct. 2006, available at click here.

[8] "Let There be WI-FI,"available at click here.

[9] Broadband Mapping and VOIP E911 Bill Pass Telecom and the Internet Subcommittee, October 10, 2007 available at http://markey.house.gov/index.php?option=com_content&task=view&id=3141&Itemid=46

[10] Joelle Tessler, "Fall Agenda: High-Speed Internet Access"CQ Today – Technology & Communications, Sept. 12, 2007 at click here.

[11] Successful broadband program completed ahead of schedule, Bell Canada Enterprises, June 29 2006 at click here.

[12] Lawmakers grill FCC commissioner, TheHill.com, June 12, 2007 at click here.

>[13] Statement of Joel E. Lubin, "UNIVERSAL SERVICE FUND: ASSESSING THE RECOMMENDATIONS OF THE FEDERAL –STATE JOINT BOARD", June 12, 2007 at click here.


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