The State of Broadband in Arkansas

The Committee will hear testimony regarding the accessibility and affordability of broadband in Arkansas and the impact that broadband can have on improving consumer welfare by expanding opportunity and access to services like telemedicine, education, and business development.

Testimony

The Honorable Jonathan S. Adelstein

Administrator

Rural Utilities Service, U.S. Department of Agriculture

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Honorable Michael J. Copps

Commissioner

Federal Communications Commission

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Witness Panel 2

Mr. Bob Smith

Provost

University of Arkansas
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Witness Panel 2

Mr. Bob Smith
Arkansas Partnership for Advanced Computing

Presented to the U. S. Senate

Committee on Commerce, Science, and Transportation

Little Rock, AR

August 28, 2007

by

Robert V. Smith (Provost), David Merrifield (Chief Technology Officer, Department of Computing Services), and Amy Apon (Professor, Computer Science and Computer Engineering), University of Arkansas, Fayetteville, AR 72701

The University of Arkansas (UA), Fayetteville, the University of Arkansas at Little Rock (UALR), and the University of Arkansas for Medical Sciences (UAMS) are partnering with state industrial affiliates currently including representatives from Acxiom and Accelerate Arkansas, and state government representatives currently including the Arkansas Science and Technology Authority and the Arkansas Department of Information Systems, to leverage the Arkansas Research and Education Optical Network (ARE-ON) in a vision and plan to execute that vision for the state of Arkansas in high-performance computing for research, education, and business infrastructure. We believe that the availability of high-performance computing infrastructure will be essential to the economic development of any state in the 21^st Century. High-performance and advanced computing capabilities and technology for the understanding and solution of complex problems in science, engineering, and industry are critical to scientific leadership and economic competitiveness in the state of Arkansas. This is in keeping with the findings of the report from the President's Information Technology Advisory Committee (PITAC) (http://www.nitrd.gov/pitac/reports/20050609_computational/computational.pdf).

The debut of the Arkansas Research and Education Optical Network (ARE-ON) is a clear indicator that the state of Arkansas is taking a fresh and energetic approach to high performance computing for educational benefit and economic development. ARE-ON came online to the University of Arkansas, Fayetteville, in December 2006, and has already been instrumental in UAF participation in a collaborative course with Louisiana State University (LSU) this past spring. This is one example of one type of educational activity that ARE-ON will support. ARE-ON represents a statewide initiative that already puts Arkansas ahead of some other states.

Just as ARE-ON is a statewide effort for connectivity, the Arkansas Partnership for Advanced Computing recognizes that there needs to be a complementary statewide effort to support computational infrastructure. Three additional indicators show that the timing and support are right for such an effort:

1) This growing partnership between UA, Fayetteville, UALR, and UAMS and several statewide industrial and government partners provide a solid foundation for a state vision for high performance computing.

2) Legislative support of the Arkansas Science and Technology Authority (ASTA) may provide funding potential that is an opportunity to gain seed funding for an initiative.

3) Funding from the National Science Foundation (NSF) provided for the purchase and deployment of the first supercomputer in Arkansas, Red Diamond, on the UA, Fayetteville, campus, in February, 2005. Additional funding from the National Science Foundation and EPSCOR in 2006 to UALR and from the NSF in 2007 to UA, Fayetteville, is enabling the significant expansion of high-performance computing infrastructure. With coordination between the researchers on both campuses it will be possible to double the size of Red Diamond at UA, Fayetteville, and to establish a complementary cluster at UALR. ARE-ON will provide the link to connect the supercomputing facilities as a nationally-competitive high-performance computing grid that is accessible to researchers across the state.

Fundamentally, this initiative for high-performance and advanced computing is about quality, quantity, and the diversity of an emerging workforce. The workforce includes:
- The current student body
- Importing of new workers who are attracted to our state because of technology opportunities and jobs, and
- The reinvention of older workers who can be trained in new technologies
There are several statewide goals:
- Increase the college graduation and retention rate
- Increase the high school graduation rate
- Attract new industry
- Enhance existing industry, and
- Catalyze startup companies and invention
To achieve these goals requires a statewide commitment to modernization and technology—a move to the 21^st century. With these indicators and goals, a plan has been made that is economically sound that will move rapidly toward the goals, with modest risk. The plan will reach the goals with minimum cost, with the maximum likelihood of success, and will mix external expertise with internal experts and leaders in the state. This is a three-pronged attack:

1) With support from UAF, UALR, ASTA, and the National Science Foundation, we have formulated a high performance computing External Advisory Committee (EAC) to look at the requirements and needs of the state. This external experience base will make recommendations, and provide guidelines and milestones. Dr. Thomas Sterling, Professor, LSU has provided some initial guidance on our current status and has recommended that this is the fastest way to get the high-quality insight necessary to leap-frog our current position. Dr. Dan Reed, director of the Renaissance Computing Institute in North Carolina, Chancellor’s Eminent Professor and member of the PITAC committee, has agreed to be the Chair of the EAC.

The external advisory committee will visit Arkansas over a three day period in October. They will conduct a series of brief interviews with stakeholders in the state, spending a day each in Little Rock and Fayetteville. The deliverable of the EAC is a strategic plan that describes the scope and a roadmap for developing high performance computing infrastructure in the state of Arkansas.

2) We have implemented a standing Internal Review Committee composed of experts within the state of Arkansas. This committee consists of approximately two dozen participants from the state of Arkansas, and an additional one, two, or three external participants. The Internal Review committee will refine the statement of goals that the External committee has developed. This committee will be an interface to the academic community, K-12, and industry.

3) We will be in partnership with the state legislature, the Governor, and key leaders across the state to develop a sustainable funding model.

Industrial partners from Acxiom and Accelerate Arkansas have been participating in this discussion for over a year. One thing that will help to drive this effort is the identification of one or more “Killer Applications” (ones that grab the attention of funding agencies) that ARE-ON and the computational infrastructure can facilitate, and these may originate from industry, agriculture, or academics. For example, in Louisiana, “Killer Applications” include:

1) modeling of storm surge to avoid damage and save lives during hurricanes and other storms,

2) modeling of depleted oil wells and seismology studies that can help to avoid wild cat digging that wastes millions of dollars and harms the environment,

3) modeling of the preservation and ecological changes to wetlands, and

4) education as a first-class application, to improve the competitiveness of Louisiana as a state.

High performance computing must be a synergy of education, industry, and research and is a requirement for ensuring that all Arkansans can fully participate in the digital world.
Mr. David Burdick

Director

Public Library of Pine Bluff and Jefferson County

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Witness Panel 2

Mr. David Burdick

Testimony of

David Burdick

Arkansas Public Libraries

to the

United State Senate

Committee on Commerce, Science, and Transportation

August 28, 2007

Little Rock, Arkansas

Senator Pryor, Commissioners, I am honored to come before you today and appreciate this opportunity to speak on behalf of the Public Libraries in Arkansas.

My name is Dave Burdick; I am the Director of the Pine Bluff/Jefferson County Library System. Pine Bluff is located 45 miles southeast of Little Rock, where the Pine Trees end and the Delta Farm Land begins. We have five public libraries serving a population of nearly 82,000 people. Fifty five percent of our population is Black; twenty percent of the population is below the poverty line.

Although nearly all Public Libraries in Arkansas are connected to the Internet, there are many of our small rural libraries where this connection is through dial-up, a dedicated 56k line, a DSL line, or a connection through the local cable television company.

Today, Public Libraries are a technological center for many of our citizens who either cannot afford to own a computer, or afford to pay for a high speed connection to the Internet.

The Pine Bluff Libraries are typical of many of the Public Libraries in Arkansas. One in three people who walk through our doors use a Public Computer Workstation. The important thing is this…the Public Library is their gateway to the world. We offer this gateway to everyone.

Yet in many cases, we are letting our citizens down by not offering a fast and reliable connection to meet their needs. In our two smaller branches, both located in towns of approximately a thousand people, we have a 56k connection for the 3 public workstations and 2 staff workstations. This is not adequate, and unfortunately is typical of small, rural libraries throughout Arkansas.

In Pine Bluff the infrastructure is such that many citizens cannot get DSL. Numerous times in the past few years the Internet connection at one of our Libraries has gone down simply because the phone company plugged another new user into antiquated equipment which was not intended to carry the load.

Pine Bluff is an impoverished community compared to other major cities in Arkansas, and the payback to the investment in the infrastructure is just not there as it is in other markets. It is like this throughout the rural areas of Arkansas, especially in the Delta Region. It is my belief that the government must step in and offer incentives to help improve the infrastructure in these poor and rural areas.

I envision the day when every Public Library throughout the state is connected to the Internet at a speed which will provide all of our citizens access to video conferences, live on-line educational programs, live classroom instruction, and other resources which take a great deal of bandwidth. Internet sessions should be dependent on the current speed of the Internet, and not the speed of the network which connects our citizens to the Internet.

When we talk broadband as it pertains to Public Libraries, we should be talking about speeds which can reach 100 Mbps (megabits per second). We need to move away from frame relay, and move towards a long-distance Ethernet or fiber optics network so that our citizens can have quick access to our educational institutions.

You are here today because we all recognize that Arkansas is far behind the rest of the country in broadband services. Let’s just be sure that everyone agrees that the Public Libraries of Arkansas must be included in all discussions, any that solutions are found to bring Arkansas and Arkansas Public Libraries up to speed.

Thank you.

The following is additional Testimony of David Burdick given before the United State Senate Committee on Commerce, Science, and Transportation Field Hearing in Little Rock, Arkansas, August 28^th, 2007.

Part One – In response to Question asked by Commissioner Copps:

Commissioner Michael Copps asked me a question about how many Libraries in Arkansas are still on dial-up Internet Access. The State Library provided me the following information:

As of January, 2007, 10 (ten) Libraries were still on dial-up, 137 were on DSL, and 38 were on Cable. It is unknown how many are on dedicated 56k lines. The rest are on T-1 or partial (386) T-1 lines

There are 7 Libraries which do not have Internet Access at all.

Part Two – In response to comments made in the discussion which followed the Testimony of Wittnesses:

In the discussion there were comments made, particularly from James Winningham and Sam Walls, which said something like: “Kids need access at home because Libraries close…”, and “We need to get a computer and Internet Access into the hands of all Arkansans….”

As a Librarian, I agree with both statements, but I also know that the Public Library will need to offer services to those who don’t have access. People have had the option to buy books for a few hundred years now. But Public Libraries still circulate millions of books because people either can’t afford, or wish not to spend their money on books.

Public Libraries offer all types of services to ANYONE and EVERYONE who walk through the doors. Most Libraries allow people to use the computer workstations regardless of whether or not they live within the Library’s jurisdiction. In Pine Bluff, we allow anyone to use the computers.

Two years ago Hurricane Katrina hit New Orleans and the Mississippi Gulf Coast very hard. In Pine Bluff, as in many Public Libraries throughout Arkansas, our Public Computers were used by Katrina Victims to communicate with relatives, find lost loved ones, file FEMA forms, and in at least one case, a Lawyer who came to Pine Bluff, keep a business going. We also set up a wireless network to allow people who had their own laptops access to the Internet.

We serve travelers who are passing through. We serve people who just moved into the community. We serve students from the two local colleges. We serve those who come to the Library from the nearby Salvation Army. A large number of people don’t own a computer or don’t have Internet access, but there are those who just want to come to the Library to use our resources. For instance, there is a elderly man who can afford his own computer, who can afford Internet Access, who comes in two or three times every day. I asked him once why he didn’t just buy his own computer, and his reply was, “Dave, I just enjoy coming in and seeing all the friendly people who work at the Library, and the people who are using the computers in the lab. I just enjoy the company…”

There will always be those who simply don’t own a computer, or even want to own a computer. It is my belief that Public Libraries will be offering computer services for a long time to those who simply don’t have access any other way.

Dr. Curtis Lowery

Chairman, Department of Obstetrics and Gynecology

UAMS

Dr. Lawrence A. Davis

Chancellor

University of Arkansas at Pine Bluff

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Mr. Dominik Mjartan

Vice President

Southern Financial Partners

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Mr. Rex Nelson

Alternate Federal Co-Chairman

Delta Regional Authority

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Witness Panel 2

Mr. Rex Nelson

TESTIMONY OF REX NELSON

ALTERNATE FEDERAL CO-CHAIRMAN

DELTA REGIONAL AUTHORITY

PRESENTED TO THE U.S. SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION

LITTLE ROCK, ARK., FIELD HEARING

AUG. 28, 2007

Sen. Pryor, Commissioner Copps, Commissioner Adelstein: It is an honor to be asked testify this morning. We are happy to be a part of this important discussion. The Delta Regional Authority is a federal-state partnership that serves 240 counties and parishes in parts of Arkansas, Alabama, Illinois, Kentucky, Louisiana, Mississippi, Missouri and Tennessee. We operate a highly successful grant program in each of the eight states we serve. This program allows cash-strapped cities and counties to leverage money from other sources. The DRA also has expanded its regional initiatives the areas of information technology, transportation and health care.

Earlier this year, the Delta Regional Authority unveiled an information technology plan for the region. This plan, which has been presented to the president and Congress, was developed in conjunction with Southern Growth Policies Board. We hope to build information technology access and utilization in Arkansas and the other states we serve. The plan is titled "iDelta: Information Technology in the Delta," and its goals are to improve education, enhance entrepreneurship and improve health care through the use of information technology.

Southern Growth Policies Board is a public policy think thank based in Research Triangle Park in North Carolina. Formed by the region's governors in 1971, Southern Growth Policies Board researches and develops economic development policies. The region is provided with authoritative research, discussion forums and pilot projects in the areas of technology and innovation, globalization, workforce development, community development, civic engagement and leadership.

The plan developed by DRA and Southern Growth Policies Board includes numerous recommendations. An estimated 15 percent of zip codes in the DRA region lack high-speed internet services, compared with 12 percent nationally. In rural areas of the Delta, the lack of services grew to almost 18 percent.

What we've tried to accomplish with this plan is to provide a map for expanding information technology in the region. Information technology is as critical to the advancement of the Delta as good highways. We would never dream of limiting the access of drivers to publicly funded highways. By the same token, we must make sure people have access to the information highways. There are, of course, differences between highways and information technology. The nation and the states have large agencies dedicated to the planning, funding, construction and maintenance of highway systems. No such unified system exists for telecommunications access. Responsibility is widely scattered.

We also teach driving skills in this country. But we don't exhibit the same drive to teach technology skills. And roads don't come in as many radically different forms as is the case with telecommunications access. People can choose from a telecommunications menu that consists of cable, home lines, wireless, satellite and more.

Only 15 percent of local governments in the region have a website, compared with 24 percent of U.S. municipalities. Delta school districts with a website lag the national rate, 54.2 percent to 62.2 percent. Only 13 percent of the 240 counties and parishes have schools with community technology centers available after school hours. Just 37 percent of communities in the region have public technology centers outside of schools and libraries.

One of our key recommendations is the creation of a DRA iDelta Center that will act as an organizing entity for information technology initiatives in the region. This recommendation is based on successful models that already exist in the South. Other iDelta recommendations include funding telecommunications projects to connect the region with critical assets in health, education, workforce training, e-commerce and entrepreneurship; conducting a public affairs campaign on the value of technology; and funding local development districts to use GIS systems to support the DRA's regional initiatives.

During a planning retreat in February 2005, the DRA board voted to make health care, transportation and information technology the agency's major policy development areas. Last year, the DRA launched the Healthy Delta initiative. In Feburary, we unveiled plans for the Delta Development Highway System. The proposed system consists of 3,843 miles of roads throughout the region. The estimated cost to complete the planned improvement projects for these roads is $18.5 billion. In April, we released a detailed study that identifies sites in the region while oil refining facilities can be placed. Such a facility has not been built in this country since 1976. Taken together, the highway plan, our health care initiative, the oil refinery plan and the information technology plan provide a blueprint for the economic revitalization of the region. We take our role as a regional planner, coordinator and advocate seriously. The release of this information technology plan is a major step in the life of the authority.

The DRA would like to be a unifying force in this region when it comes to information technology. This fits into our mandated role as a regional coordinator. No one is doing this for information technology in the region. We want to step up and help fill that gap. A wave of information technology investment is as necessary for the future of the Delta as great highway construction projects.

For more than a decade, economic development officials have been ringing the alarm about the region's lack of information technology access. To change this conversation and the region's reality, there must be significant new strategic investments in information infrastructure and resources. Our iDelta plan will provide a tool for guiding the development of such efforts. Hopefully, we can craft federal interagency agreements that will allow our proposed DRA iDelta Center to articulate and fund the vision of universal access and usage.

Thank you again for the opportunity to testify.
Ms. Claire Bailey

Director

Department of Information Systems

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Witness Panel 2

Ms. Claire Bailey

Thank you so for the opportunity to address you at this U.S. Senate Commerce Committee Field Hearing. It is truly an honor to be a part of this event.

I would like to open by describing our state network in place today. We have provided a hand-out which showcases our wired and wireless sites for the state of Arkansas Public Sector Network. We at DIS provide management and systems integration of these networks which includes 1900 ‘edge’ devices of the Arkansas Public Sector Network.

To showcase our history of state access, our state internet capacity in 1994 was nine (9) megabits per second. The industry standard for doubling internet capacity is that it is doubled every eighteen (18) months. In Arkansas on our Public Sector Network, we are slightly behind this standard. We double every nineteen (19) months, and we stand at 990 megabits per second soon to be just over one (1) gigabit per second of capacity with our latest implementation at our Internet Point of Presence (POP) at our shared services location at the University of Arkansas at Pine Bluff.

Our statewide video network supports approximately 520 systems in our education environment and averages over 19,000 conference hours a month with over 92 subjects and over 500 courses.

That is a snapshot of what we have today. In many ways the state becomes the ‘anchor tenant’ in a community. The demand for public services our state delivers continues to drive network capacity needs. As an anchor tenant for communities, the funding the state provides impacts the economic incentives for our private sector partners to be able to continually improve their infrastructure in support of our state’s needs.

Through our partnerships with the private sector, city, county, state and federal groups, we all share a common goal – a united vision – to continue to advance the technology environment to be able to provide our most precious people – our children – the ability to access the best and newest learning tools and the technology to maximize it.

Everyone in this room has the ability to impact true societal change in Arkansas. Whether you live in the Northwest region of our state or our Delta, your ability to have access to public services - the research – the jobs of tomorrow – we want to ensure no Arkansan is left behind.

As I close, I wanted to leave you with a quote from our Governor’s State of the State address from this past January: “When people look to Arkansas – they should see a leader in the nation – in the world and say, “We want to do what they did in Arkansas.”

Through collaborative efforts of everyone in this room, we are championed to help Arkansas in every way we can.

Thank you for this wonderful opportunity to speak this morning and for being here to hear our state’s vision for tomorrow.
Mr. Daryl Bassett

Commissioner

Arkansas Public Service Commission

Witness Panel 3

Mr. C. Sam Walls

CEO

Arkansas Capital Corporation

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Witness Panel 3

Mr. C. Sam Walls

Good Morning. My name is Sam Walls, Chief Executive Officer of Arkansas Capital Corporation. With me is Mr. James Winningham, Chairman of the Arkansas Broadband Initiative, and Dr. John Ahlen, President of the Arkansas Science and Technology Authority. We are here today representing Connect Arkansas, a private and public sector collaborative effort to bring broadband internet access to all Arkansans.

Connect Arkansas is based on principals derided from models in other parts of the country that faced similar obstacles that we here in Arkansas are dealing with. Connect Arkansas will focus on three key activities. The first activity will be to accurately map where connectivity truly exists in Arkansas and at what speeds. This will require working with numerous entities, primarily the service providers that operate here in Arkansas. Because Connect Arkansas is designed to encourage collaboration, it will work with the providers on getting the relevant information to accomplish this task.

The second activity of the effort will be to survey communities throughout the state to better determine either why they choose to use broadband or conversely why they have chosen not to. This compliments the third activity of the effort, working with leadership in every county of Arkansas to develop a strategy to educate the populace on the value and need for broadband in their personal and professional lives. This preparing of people and organizations to take advantage of the benefits of broadband is perhaps the most important part of our effort. Without preparation, broadband is in danger of being a very powerful economic and social tool, but without people and businesses with the necessary skills and insight to take advantage of it, and ultimately without enough demand to sustain it. Our goal is not just to move Arkansas forward, but to also to move all of its people forward with it.

Connect Arkansas is a “delivery platform neutral” entity. By that I mean that it will not seek to advocate for one broadband internet delivery system over another. Its only focus is to drive market demand in the belief that once a market can be demonstrated, the private sector will step in to meet that demand. Connect Arkansas’s success will in large part be driven by the ability of the private and public sector to work together to accomplish this vital task.

Arkansas Capital Corporation has been involved in economic development in Arkansas for 50 years, the last 18 of which I have been with the organization. Today, we are involved in a number of activities related to improving the economic environment of Arkansas including Access to Capital, Business Development, and Education. There is no question in my mind, however, that creating statewide broadband connectivity is the single most important activity that I and my organization have been involved with.

After World War II, federal and state leaders realized that for rural states like Arkansas to prosper, they must have good roads and access to reliable and affordable electricity. Later, phone lines were considered a requirement. For this century, broadband internet access is the absolute necessity without which these people, who are already more often than not at a disadvantage, are left further and further behind. It is literally this era’s “interstate highway system”. Look at the various obstacles that many rural states face, inadequate healthcare, below standard educational opportunities, and lack of business development. As the states try to address these issues the solutions invariably involve broadband internet access.

At the federal level, there is a need for our leaders to elevate this issue as a top priority. Unfortunate recent events in Minnesota have drawn the nation’s attention once again to the deteriorating “infrastructure” of the United States and for good cause. The inadequacy of our technology infrastructure, however, should be of equal concern. Just as the federal government provided incentives and capital to pave and light rural America in the last century, ultimately it will most likely take “delivery mechanism neutral” incentives to ultimately extend broadband internet access to those some areas.

To conclude, it is time for everyone to publicly acknowledge that high-speed broadband internet access is not a luxury but a basic necessity. As a nation, lack of broadband puts us at an unacceptable competitive disadvantage. The United States relies a great deal on the innovation and creativity of its populace to maintain our dominant strategic and economic position in the global community. We jeopardize that position by allowing other countries to move further and further ahead of us in the availability and usage of broadband. At the state level, rural states like Arkansas will never be able to effectively develop and improve without access to this indispensable utility. For many, the education, health and social benefits that can be derived from broadband access is their only chance to better their lives and the lives of their children.

Thank you for your time.
Mr. James Winnigham

Organizing Chair

Arkansas Broadband Initiative

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Witness Panel 3

Mr. James Winnigham

Mr. Chairman and Members of the Committee, good morning.

My name is James Winningham. I am the Organizing Chair of the Arkansas Broadband Initiative (ABI), which worked with State Senator John Paul Capps to draft this year’s comprehensive Arkansas broadband legislation, Act 604, the Connect Arkansas Act.

Today I am here to help represent Connect Arkansas, and my message is simple: Arkansas is ready.

This year in his State of the State address, Governor Beebe said that “in today’s world, just learning to type on the keyboard won’t suffice. Our kids deserve broadband infrastructure that connects them to the Internet and provides technology equity.” I suggest to you that Governor Beebe’s words are not only true for Arkansas, but also true for every child in the United States, and that true technology equity is not had as long as there is another nation with better broadband than the United States.

Connect Arkansas is a non-profit organization created to centrally manage and support an effort to help make broadband available to every home and organization in Arkansas.

A centrally-managed statewide effort is essential because broadband backbones ultimately run from one state border to another; because left to themselves broadband providers have difficulty remaining competitive when investing in more sparsely populated rural areas; and because without a centrally-managed statewide effort it is difficult to establish the dynamics necessary to induce providers to share information regarding existing coverage, and that information is essential to efficiently and rapidly cover an entire state (or nation) with broadband.

A statewide effort must focus on counties rather than communities because community planning typically ends at the city limits or not far beyond them, while county efforts encompass the rural areas of the county, and therefore combine to address the needs of the rural population of a state as well as its urban population.

Arkansas is ready, but Arkansas and the nation need Federal commitment to reach our full broadband potential. Broadband service providers can’t survive unless they invest where there is a sound business case. In some areas of our state and this nation building a sound business case will not be a problem after providing broadband education and determining where existing coverage areas are. However, for other areas these efforts will not be enough because of severe economic depression. For those we need a national commitment and national incentives to guarantee that every home and every organization in this nation will have broadband available for subscription at its location, and that every child will have economic assistance if necessary to have broadband in his or her home. Such a guarantee is essential if we are to have true technology equity for all of America’s children.

Thank you for your time and attention.
Mr. John Ahlen

President

Arkansas Science and Technology Authority
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Witness Panel 3

Mr. John Ahlen
Broadband in Arkansas

August 28, 2007

Summary Statement

Good morning Senator Pryor and Commissioners, my name is John W. Ahlen. I am president of the Arkansas Science & Technology Authority, an instrumentality of the state of Arkansas whose mission is to bring the benefits of science and advanced technology to the people and the state of Arkansas.

We know that in a world where markets are dynamic, global, and networked, locations without affordable broadband are disconnected and at an economic disadvantage.

We know this is especially important in an information-age knowledge-based economy; locations that do not have affordable knowledge-carrying infrastructure are at both an informational disadvantage and an economic disadvantage where talent and innovations from research and development are driving influences.

I appreciate your interest and leadership in addressing the issue of affordable broadband deployment in rural places, and would suggest the following:
- Use a robust definition of broadband to accommodate future applications and
- Develop a better mapping tool to measure and guide broadband deployment decisions.
We know what has worked in the past. Consider broadband deployment incentives service providers such as:
- grants and investment tax credits,
- the universal service fund model that was used for telephone deployment,
- the co-op model that was used for electric power deployment, and
- the federal-state cost sharing model that is used in transportation infrastructure deployment.
Lastly, I hope you’ll take action now, the future of rural communities depends on it. The state can do some things for itself – like Connect Arkansas – but we also need your help.

* * *

Affordable broadband access is an economic development issue, which can be addressed along four dimensions: broadband deployment, technology, the urban-rural split, and time.

Broadband Deployment. What is it? It is information-carrying capacity (measured in bits per second), and the demand for capacity by applications keeps going up. Definitions of broadband include 256 kilobits per second (OECD) and 384 kilobits per second (Connect Arkansas), with experimental capacity in research domains exceeding gigabits per second. Other countries and some states are concluding that broadband capacity delivered by fiber to the home should be the minimum. Recommendation: use a robust definition of broadband.

Where is it? Broadband availability is typically shown by postal zip codes, which is not a very informative way to discriminate between locations that do or do not have access. The EAST students today will show a much more useful way to map broadband availability and inform deployment decisions. Recommendation: develop a better mapping tool to measure and guide broadband deployment.

Technologies. Broadband technologies vary and their deployment is influenced by competing business models and regulatory structures. As more content is digitized – and digitization is the key technology driver in the new economy – any of the competing technologies can provide content previously considered the proprietary domain of other competitors, leading to a kind of regulatory convolution, if not gridlock. The market success of all of the business models is measured in terms of the return on the deployment investment, which is much more favorable in areas where the customers are densely packed. If equal broadband access is the American goal, then market forces have failed to deliver, just look at broadband deployment in the Mississippi River Delta. Recommendations: consider incentives for service providers that address areas without affordable broadband; base incentives on independently compiled deployment data; and use more refined mapping tools.

Urban-rural. The least favorable locations for broadband deployment are rural, where customers are few and separated by long distances and where deployment cannot be justified by the return on investment. With markets dynamic, global, and networked, locations without affordable broadband are disconnected and at an economic disadvantage. State government provides broadband for education, health care, and other government services – often supported by federal grants – but broadband deployment is about economic growth, so it is about business and industry; entrepreneurship services; and enabling people at work, at home , and on the go to access all manner of digital resources wherever and whenever they need. If we were talking today about electric power instead of broadband, we would be saying that students can have lights at school, but have to read in the dark at home. Recommendation: consider broadband deployment incentives such as grants and investment tax credits, the universal service fund model for telephone deployment, the cooperative model for electricity deployment – including federal subsidy, and the federal-state cost sharing model used in transportation infrastructure deployment.

Time. The clock is ticking for rural Arkansas and rural America. According to a report by the Organization for Economic Co-operation and Development, the United States has the largest number of total broadband subscribers in the OECD, but on the basis of broadband subscribers per 100 inhabitants, the U.S. ranks 15^th in the OECD at 19.6. A report today indicates that China will have “the world's largest Internet population in just two years.” Recommendation: Take action now, the future of rural communities depends on it.

Respectfully submitted by

John W. Ahlen, President

Arkansas Science & Technology Authority

www.asta.arkansas.gov

Witness Panel 4

Mr. Matt Dozier

President and CEO

The EAST Initiative

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Witness Panel 5

Ms. Kelly Zega

State Manager Public Affairs

Cox Communications

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Witness Panel 5

Ms. Kelly Zega

Presented By: Kelly Zega

State Manager Public Affairs, Cox Communications Arkansas

U.S. Senate Committee on Commerce, Science, and Transportation Field Hearing

The State of Broadband in Arkansas

August 28, 2007

Mr. Chairman, Senator Pryor, Commissioners Copps and Adelstein, I appear before you today on behalf of Cox Communications. We welcome this dialogue on the The State of Broadband in Arkansas.

From Green Forest to Fort Smith, Cox Arkansas provides 99% of the communities we serve with state-of-the-art broadband fiber technology. In short, our customers experience a digital world that is second to none in 64 rural and urban towns. We invest more than 25 million dollars of private risk capital each year in Arkansas expanding our bandwidth capacity and communications infrastructure, rendering the fastest internet speeds available to residential and business customers.

The philosophy of our 400 Cox Communications Arkansas employees is to make a difference in the towns we serve and in which we live. We provide more than 360 free cable connections to K-12 schools, educational access channels valued at more than $3.6 million every year, and annually donate over $1 million in airtime to non-profit organizations through the broadcast and production of public service announcements.

One of the most significant things we do for our communities relates to the grass roots implementation of our national program Take Charge!, an initiative designed to increase customers’ awareness and use of the parental controls and content filtering tools now available for the cable television, Internet and telephone services found in a digital home. This program puts the content management of television and Internet into the hands of the individual customer, allowing them to set the guidelines they deem appropriate for their own homes.

Our seriousness about helping families safely navigate the technology we provide extends beyond our information-packed Take Charge! Web site, public service announcements, Internet safety workshops and partnership with the National Center for Missing and Exploited Children. Cox has also begun forging meaningful partnerships with regional law enforcement agencies in support of Internet Crimes Against Children investigative units. Through two initial technology grants from Cox to support specialized equipment and training, the Fayetteville Police Department has identified, apprehended and seen multiple Internet child predators successfully sentenced. Each time the news of an arrest of this kind becomes public, we know the financial investment to support the ICAC program means dozens or more young people will be safer from exploitation. Our employees are proud to know that not only is Cox Communications bringing the world into our customers’ homes through our products—we’re also giving critical support to the people who make that world a little safer.

Thank you for the opportunity to present these brief comments and I would be pleased to answer questions you may have.
Ms. Maryce Cunningham

Manager, Community and Government Relations

SuddenLink

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Witness Panel 5

Ms. Maryce Cunningham

SUDDENLINK COMMUNICATIONS

WRITTEN TESTIMONY

Thank you, Mr. Chairman. My name is Maryce Cunningham. I’m both the Secretary of the Arkansas Broadband Advisory Council and the Government Relations Manager for the MidSouth Region of Suddenlink Communications. This region of our company includes the state of Arkansas, of which I’m delighted to be a resident, along with 275 of my Suddenlink colleagues.

Suddenlink is a top-10 U.S. operator of cable broadband systems. We support the information, communication, and entertainment needs of approximately 1.4 million total customers across the country, roughly nine percent of which are in Arkansas.

Here, as elsewhere, our employees take great pride in serving secondary markets and rural communities. We are equally proud that, in a growing number of those communities, we offer advanced services that are comparable to what you would find in the largest metropolitan areas, such as digital TV, competitive phone service, and of course, high-speed Internet or broadband service.

In fact, Suddenlink’s story is the story of how private enterprise has already done a great deal to close much of the digital divide that separates smaller communities from urban centers.

In early 2003, our management team took over the operation of what was then known as Classic Communications. At the time, roughly 30 percent of the company’s customers had access to broadband service. By 2005, we had more than doubled that percentage. And today, we are at 99 percent, rapidly moving to 100 percent, covering markets all the way from Jonesboro with 60,000 residents to College City in Lawrence County, with a population of fewer than 300 people.

All told, counting our past and current operations in Arkansas, we and our predecessors have invested nearly $225 million in this state since 2003, to help take broadband to areas where it previously was not.

And we’re not finished yet: Even as I speak, we’re rolling out lightning-fast connections to mid-size and smaller markets alike, offering download speeds of up 10 megabits per second (Mbps). Until now, those speeds were unheard of outside the largest metro areas.

As demonstrated by this list of accomplishments, our collective effort to bring broadband to Rural America is indeed a success story of the first degree, for both our company and our industry. However, we recognize that – as much as our industry has already done to connect Rural Arkansas – there are areas of the state that still do not have broadband access.

Furthermore, it is our impression, based on our experience in serving secondary and rural markets, that the remaining, unconnected areas of the state – by and large – do not have populations of several thousand or even several hundred people.   To the contrary: Today’s unconnected communities typically have only a few dozen people living in them, with population densities that are often 10 homes per mile or less.

To reach those areas, we believe several things need to be done.

The first and most important step is to develop a comprehensive map of precisely where broadband service is available in Arkansas and where it is not. We understand the data maintained by the FCC only looks at zip codes and that it designates a zip code as “served,” even if only one home in that zip code has broadband available to it. Unfortunately, in geographically large and sparsely populated zip codes, such data is not useful.

Accordingly, as Senator Pryor knows, Congress is considering a national broadband mapping bill, which was recently passed out of the Senate Commerce Committee. Meanwhile, in West Virginia – home to Senator Pryor’s senior colleague on the Commerce Committee, Senator Rockefeller; and also home to more than 600 Suddenlink employees and more than 200,000 Suddenlink customers – the state government is currently marshalling resources to produce a detailed map of the availability of broadband there.

In short, mapping efforts have both precedent and momentum, and we believe such an effort is critical in Arkansas, so that any future resources devoted to the issue here can be most productively targeted.

We further believe such mapping efforts should help determine           home-PC penetration in rural areas, in addition to the availability of broadband services. Current data suggest that PC penetration is often quite low in rural and economically depressed areas and thus broader-scale efforts may be needed to help lower-income families secure a home computer before broadband service is relevant to them.

After broadband mapping, we believe the second critical step is to make sure private enterprises like our company – which have already done much to take broadband service to Rural Arkansas – have a fair and level playing field on which to continue our efforts.

Despite Suddenlink’s rank among the top-10 U.S. cable operators, we remain a relatively small company and our market power is dwarfed by several entities with which we are required to negotiate contracts, including electric cooperatives and media conglomerates.

Without government intervention, the electric cooperatives have made it very clear they will charge exorbitant pole-rental fees, tripling if not quadrupling our costs. The result: Our company and others will have less capital to deploy broadband to remote areas.

On a similar note, without government intervention, large media conglomerates have made it clear they will continue to seek excessive retransmission-consent fees, likewise diverting funds that could otherwise be used for broadband deployment.

At our current size, Suddenlink does not have the negotiating leverage to resist those threats and the resulting diversion of precious resources.

In short, we need the careful application of government programs that inject public-interest goals, like extension of broadband to rural areas, into market processes like retransmission-consent and pole-attachment negotiations. That is especially true when these negotiations are effectively controlled by large, powerful entities with clear economic interests that will frustrate or hinder the public interest by significantly driving up the costs of broadband providers as they seek to extend service into areas of low-population density.

The third step in the process is to carefully review technology alternatives. For instance, ours is primarily a wireline business, but we recognize that wireline broadband will not always be the most economical option for reaching the most remote and rural areas. Instead, wireless broadband (over licensed spectrum) may ultimately represent the best combination of reliability and economics to reach those areas.

Fourth and finally, we believe the process of bridging the last span of the digital divide will involve carefully targeted government subsidies – subsidies that rely on the aforementioned maps and analysis of alternative technologies.

In making this recommendation, I want to be very clear: We do not believe subsidies should be granted in the form of low-cost loans. At low-population, low-density levels, it’s all-but-impossible for a broadband company to develop a viable business plan, even with the most favorable loan terms.

That’s a lesson the U.S. Department of Agriculture’s Rural Utilities Service (or RUS) has learned the hard way. Directed by Congress to prioritize low-cost broadband loans to companies that propose extending service to un-served areas, the RUS has received very few loan applications from those areas.

Why? Because the loan applicants, even on preferential, cost-of-money terms, cannot develop a viable business model that would allow them to pay back the money. Instead, the RUS has received and approved loans to companies that propose to serve areas where broadband is already available, often from three or more incumbent providers, defeating the purpose of the original legislation.

For that reason, we believe the process of closing the final inches of the digital divide will require direct government support. That said, knowing government funds are scarce, I want to reiterate that a broadband subsidy program should not be designed until the prior steps I’ve discussed (such as the mapping project) are undertaken. Only then can we ensure that subsidies are carefully and appropriately targeted to the few remaining areas with no service option.

Thank you for your time, today.   We look forward to working with our peers on the Arkansas Broadband Advisory Council, Senator Pryor and his staff, Commissioners Copps and Adelstein and their respective staff, and others to carefully examine and act upon these and similar recommendations.
Mr. Paul Waits

President

Ritter Communications

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Witness Panel 5

Mr. Paul Waits

TESTIMONY OF

R. PAUL WAITS

ON BEHALF OF RITTER COMMUNICATIONS

Before the

U.S. SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION

AUGUST 28, 2007 FIELD HEARING

LITTLE ROCK, ARKANSAS

INTRODUCTION

My name is Paul Waits. I am President of Ritter Communications, based in Jonesboro, Arkansas, and I manage a company that provides a wide variety of communications services across Northeast and North Central Arkansas. On behalf of our company and our communities, we welcome Commissioners Adelstein and Copps, and are encouraged by the interest this hearing reflects regarding the future of broadband services in Arkansas.

RITTER COMMUNICATIONS

Last year, Ritter Communications celebrated its 100-year anniversary as a telephone company, having its roots in providing basic telephone service in Poinsett and Mississippi Counties. Since that time, the company has grown and diversified, and presently owns and operates other incumbent telephone operations in Boone and Newton Counties, cable TV franchises across Northeast and North Central Arkansas, competitive communications and business integration services in Jonesboro, as well as a number of wireless partnerships with Alltel. All of these varied business interests are sufficient in scale to cause us to weigh among and balance competing interests internal to our company, e.g., cable versus telephone, wireless versus wireline, in formulating and advocating positions on policy issues. We think this puts us in a unique position to offer observations and recommendations that balance such disparate interests.

In the context of the current availability and future of broadband services, our greatest concern is the needs of the most rural areas we serve, specifically the sparsely-populated areas of Newton and Boone Counties, and the rural agricultural communities of Northeast Arkansas. Some of these areas present extraordinary economic challenges related directly to the cost of deployment, as well as the general level of computer literacy and ownership. We estimate that we have the capability to provide high speed internet access services to about 90% of our telephone company customers in the mountainous areas of North Central Arkansas, and about 98% of our telephone company subscribers in Northeast Arkansas. All central offices and remote terminals are equipped with DSL technology, but distance limits of DSL prevent availability to the most remote customers. In our cable TV areas, we can provide high speed internet access to virtually 100% of the homes passed in these hybrid fiber-coax systems. The percentage is greater for cable because such systems typically do not extend to areas with low subscriber density.

UNIVERSAL BROADBAND SERVICE

As a nation, we have virtually achieved universal telephone service as a direct result of the long-standing public policy of promoting universal telephone service through implicit and explicit rate averaging across the country. Governmental programs such as the Federal Universal Service Fund (Fund) have been instrumental in supporting the investment required for rural telephone services, and such is still needed for many areas too sparsely populated to economically justify either wireline or wireless coverage.   To get a first-hand view of the rural needs and challenges, we invite and would welcome members of the Committee to tour our rural service areas.

Today, high speed internet access is fast becoming indispensable to basic communications and commerce, just as the telephone has been for many decades. This is true across all spectrums of human interaction, including education, medical care, governmental services, creative endeavors, as well as business communications and collaboration. We believe the FCC and Congress must take the first step to affirm a new, expanded policy of universal service, one that defines basic service to include broadband access to the public Internet.

In doing so, we must be careful not to legislate an internet access speed, i.e., not to cast in bureaucratic stone the definition of what we mean as broadband. Instead, we should allow the definition of broadband to evolve as technology and its application evolves. Internet video applications that are emerging at a rapid pace will fuel consumer demand for faster connections, just as distributed computing and software hosting will drive demand for faster, more reliable connections for businesses large and small.

In recent years, Ritter Communications has been deploying fiber to the premise services to the medical community in Jonesboro, in direct response to demand for very high bandwidth to support video applications used for remote diagnostics. The gigabit-per-second level bandwidth required could only be provided today by direct fiber connections, since wireless and other wireline technologies lack this ability. We believe this trend will continue and extend to other business applications and activities, and there will be a diverging standard that will emerge between mobile and fixed technologies in recognition of the limitations of mobile technologies to support high-definition video applications.

FUNDING

We believe that current federal funding for universal service is in jeopardy, and warrants reformation to ensure sustainable and predictable support for rural communications services, which is rendered more imperative by the need to expand such funding for broadband access services. The amount of funding for rural support is eroding as the base for such support is attriting because of the transition, ironically, to Internet-based telephony, which does not collect universal service fund fees. Support for rural carriers is also adversely affected by the transition of telephony minutes and access services from wireline to wireless services, which do not contribute support in the form of carrier access charges. It is imperative that the FCC focus on these issues to ensure that rates and services are, in the words of the Telecom Reform Act of 1996, “reasonably comparable between urban and rural areas of the nation.”

We consider it unfortunate that the federal universal service program has become a political target because of some confusion regarding its purpose, e.g., whether its mission is to promote rural competition, and/or to provide for comparable rural services and rates in high cost areas. These twin goals are now at odds. The fund has grown in scale and scope to the point that there is a growing concern that it should be better targeted to the needs of the rural public. We share this concern. This will be particularly true if the fund is transitioned to promote and support the funding of rural broadband services. In this context, we believe the identical support rule, allowing competitive carriers to receive support based on the incumbent carrier’s costs, has created some burdens on the fund, with questionable benefits for the public. Although some of Ritter Communications’ business interests benefit from this rule, we are concerned about the long-term sustainability of the Fund, and the continued viability of the most rural areas of the State of Arkansas.   We believe a better long-term policy is to continue to target high cost areas, with funding solutions based on each provider’s actual costs to serve those areas.

CONCLUSION

We are indeed encouraged by the interest this hearing represents, and share a concern regarding the need for a proactive policy on the assessment and support of broadband services, especially in the most rural areas of the State. As a company actively engaged in providing broadband services in a wide variety of locales, using a variety of technologies, to a broad mix of customers and customer types, we believe we have some unique perspectives to offer to this conversation.

We respectfully recommend that federal policy first be augmented to redefine and expand basic service to include broadband access services. In the pursuit of this goal, such policy should provide for an evolving definition of broadband access services, and that policy’s primary focus should be to ensure, at a minimum, that the most rural, high cost areas of the State are not left out of the digital age.
Mr. Scott Ford

CEO

Alltel Corporation

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Witness Panel 5

Mr. Scott Ford

U.S. Senate Committee on Commerce, Science, and Transportation

Field Hearing on the State of Broadband in Arkansas.

Little Rock, Arkansas

August 28, 2007

Testimony of Scott T. Ford

President and Chief Executive Officer

Alltel Communications, Inc.

Senator Pryor, Commissioners Copps and Adelstein, ladies and gentlemen, I would like to welcome you to Little Rock, and to thank you for conducting this important field hearing here in our home town. I appreciate your invitation to participate today, and am pleased and honored to discuss ways to sustain and promote the deployment of fixed and mobile broadband services, here in Arkansas and across the country.

Alltel provides leading-edge, digital mobile wireless services to nearly 12 million wireless customers in 35 states, including several hundred thousand here throughout virtually all of Arkansas. We operate the nation's largest wireless network in terms of geographic area served, but our customer base is smaller than those of the larger carriers. This is because we are one of the few major wireless operators to focus on serving the mid-size and smaller cities, as well as rural and more sparsely populated areas.

We offer our customers a range of mobile broadband services that are increasingly important parts of our product mix. A majority of our handsets, including nearly all of our newly launched devices, support wireless broadband. Alltel is rapidly deploying network facilities that support EV-DO-based Axcess^SM Broadband service that provides average speeds of 400-700 kilobits per second with bursts up to 2.4 megabits per second. These technologies support Web-based e-mail, text and photo-messaging, mobile game and ring-tone downloads, mobile music and video, and Internet access services for individual consumers. In addition, we offer enterprise mobile data solutions used by government, public safety agencies, and industries as diverse as agriculture, education, finance, health care, and manufacturing.

We provide these high-speed, advanced services in over 100 communities covering 44 million people across our 35-state footprint. Here in our home state of Arkansas, we will provide access to these services to nearly 62 percent of the households by the end of this year. We are constantly building out broadband facilities and offering advanced services to additional communities.

As you know, consumers increasingly demand higher-bandwidth services: across the country, purchases of broadband lines increased by 52% from 2005 to 2006, according to recent FCC reports, including an increase from fewer than 400,000 wireless broadband lines in 2005 to over 11 million in 2006. Through innovative service features and plans, wireless carries are bringing additional competition to the broadband marketplace and offering American consumers unique ways to stay connected to information. Broadband services – both fixed and mobile – are absolutely vital for the 21st century economy. But clearly much more needs to be done to bring broadband services out to consumers. According to the latest FCC high-speed report, fewer than 13 percent of Arkansas residents had broadband service as of June 30, 2006.

Consumers also increasingly need and depend on mobile wireless services of all kinds, for voice as well as data. Over the past five years, the number of mobile wireless subscribers has grown by 86%, from 118 million in June 2001 to 219 million in June 2006. According to FCC data, mobile wireless service across the country has grown by 50% during the three years ending in December 2005, and consumers now use more wireless than wireline phone lines. Here in Arkansas, Alltel’s mobile wireless customer base has grown by 24 percent over the past 3 years. U.S. Department of Health and Human Services conducted a survey and found that over 12 percent of households in the country are using wireless as their only phone service. And among consumers with more than one connection, a substantial proportion now use wireless as a primary means of communications. Without question, wireless communications is the “lifeline” of today’s consumers.

Rural consumers have the same interests in obtaining access to high-speed technologies and mobile services, and are demonstrating changes in demand that parallel those of consumers across the country. If anything, mobile wireless services may be even more important to rural consumers than to those in urban areas. People in rural areas often spend more time than their urban counterparts on the road. For example, an entrepreneur may need to reach contacts when driving from one end of a large county to another for business; a parent may need access to telecommunications while driving children to and from relatively distant schools; and a farmer may need access to data on agricultural prices while working on a remote part of his or her property. Wireless broadband is often the only means of high-speed access in many high-cost areas and is playing a major role in bridging the “broadband divide.”

Rural residents and public safety “first responders” particularly value their mobile wireless services in emergency situations. Mobile 911 and E-911 are vital health and safety services, especially for people who frequently have to travel long distances – and more than 240,000 wireless E-911 calls are made every day. But they cannot be provided unless adequate infrastructure and service is available. But due to the relatively high costs of deploying wireline and wireless networks in many rural areas, we all need to do more to make sure consumers in rural areas have access to these services. In our state, the 86th General Assembly of the Arkansas legislature passed a bill last year to create the “Connect Arkansas” program and the Arkansas Broadband Advisory Council, which are working to monitor, educate, promote and facilitate the deployment and adoption of broadband Internet services. Several members from this initiative are here today and I congratulate them for their efforts to bring advanced telecommunications services to our state Senator Pryor, I would like to commend you for your strong commitment to ensuring that citizens of rural parts of Arkansas and across the country have access to high-quality fixed and mobile broadband services, as well as other mobile wireless services. The important legislation that you co-sponsored with Senators Smith and Dorgan – S.711, the “Universal Service for the 21st Century Act of 2007” – wisely recognizes that any technology, including wireless, can be included in the definition of “broadband communications service,” as long as it operates at the specified high speed and enables users to originate and receive high-quality voice, data, graphics, and video communications. Your forward-thinking legislation also recognizes the importance of universal service funding to support and extend both broadband services and mobility to unserved and underserved rural areas. Until just recently, only a negligible amount of universal service funding was going to support the deployment of wireless service to high-cost areas – even though consumers in those areas desperately need and want wireless technology and networks. Of the $25 billion spent on high-cost universal service since 1996, only about $2 billion has gone to wireless carriers and other competitors. Even today, less than 25% of universal service high-cost funds go to support the deployment of wireless service, even though there are now more wireless subscribers. At the same time, wireless contributes more than twice the amount into the universal service fund than it receives out of the fund.

The 1996 amendment to the Communications Act making non-wireline carriers eligible for universal service support has made possible a tremendous expansion of wireless service into rural areas. With universal service support, Alltel and other wireless carriers are building facilities deep into rural areas, not just along major highways, and delivering service to consumers where they live and work. According to the FCC, wireless penetration rates went up from 41% in 2001 to 68% in 2005 in the most sparsely populated areas with fewer than 100 residents per square mile.

America is getting a great return on its investment in wireless universal service. It’s true that support for wireless has increased over the past few years. But that has come with a tremendous expansion of wireless service into rural areas. In the past, many wireless companies were building cell sites only along major highways and population centers. Now, with universal service support, we are building facilities deep into rural areas and getting service out to consumers who live and work there. For example, on the Pine Ridge Reservation in South Dakota, the Tribe estimated that less than 30% of the population had telephone service prior to Alltel’s entry into the market as a wireless universal service provider. Today more than 80% of the population on the Pine Ridge reservation has access to wireless telephone service. The vast majority of these consumers are eligible for and receiving a discounted Lifeline service of only $1 per month. This is the true meaning of universal service.

We are concerned with short-sighted views that fail to recognize the importance of wireless universal service. Support for rural wireless is not a problem – and an anti-competitive proposal to reduce universal service funding for wireless consumers is not the answer. Alltel appreciates the letter that you submitted to the Federal State Joint Board on Universal Service, jointly with Senators Rockefeller, Dorgan, Klobuchar, and Smith, opposing the plan to restrict universal service funding for wireless carriers by imposing a cap exclusively on competitive eligible telecommunications carriers.

We share your hope that the Joint Board and the FCC abandon counter-productive “interim measures.” Instead, they should follow the lead of the Senate Commerce Committee, and turn their attention to equitable and sensible comprehensive reform of the universal service program. Rather than continuing to target funds mainly to the traditional voice telephone services of the last century, the Universal Service Fund should be realigned to promote the services that consumers most need and demand going forward: broadband and mobility.

Senator Pryor, in your letter to the Joint Board, you said that long term universal service reform should result in a competitively neutral system, promote accountability in how the funds are used, and promote the build out of advanced services in rural regions through effective targeting of funds to high cost areas. Alltel firmly agrees. But we find it puzzling that some still argue that “universal service is not about competition.” Ever since the adoption of the Telecommunications Act of 1996, our nation’s policy has been to favor competition for all communications services, in all markets. Competition is the best way to assure high quality services, rapid advancement and deployment of new technologies, and low prices. Why would anyone want to take away the benefits of competition from consumers in rural areas?

The FCC’s policies up to now have correctly attempted to promote both universal service and competition at the same time, by moving toward a system of funding portability. Some argue, however, that portability and competitive neutrality are inappropriate. We disagree. The purpose of universal service is to benefit customers, not carriers, so high cost support should be directed to the services that customers decide to buy. Providers should have to show that they are using the support for its intended purpose in order to receive funding; they shouldn’t retain funds when they are losing consumers. Some components of today’s overall federal universal service funding system are fully portable, but others are not. Under the non-portable funding mechanisms, certain carriers continue to receive universal service funding even when customers no longer want to buy service from them. This makes no sense and is causing unnecessary increases in the size of the fund. Wireless carriers, in contrast, lose support when they lose customers. To protect consumer choice, accountability, and an efficient use of funding, this Committee should exercise its oversight over the FCC to ensure that the universal service system moves toward greater portability – not less. Portability will ensure the steady deployment of basic and advanced services to rural consumers. We fear that the Joint Board’s current drive toward moving wireless carriers to a “cost based” system will overlook the fundamental flaws with the current incumbent-biased funding system. We look forward to helping you, Senator Pryor, to make sure that sensible and equitable long-term reforms are implemented instead of ones whose practical effect is to inoculate incumbent carriers from any and all form of the competitive pressures that wireless carriers like Alltel and others faces daily.

In sum, Alltel applauds this Committee’s emphasis on promoting universal access to both broadband and mobility services in rural America. A reformed, pro-competitive universal service fund could be one of the most effective tools to achieve these twin objectives. We look forward to working with this Committee, the Joint Board, and the FCC to advance the objective of promoting the deployment of both fixed and mobile communications technologies and services on a competitive basis in all parts of the country.

Thank you.
Mr. Dean Gibson

Vice President

Pinnacle Communications

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Witness Panel 5

Mr. Dean Gibson

WRITTEN TESTIMONY FOR U.S. SENATE COMMERCE COMMITTEE FIELD HEARING

August 28, 2007

Little Rock, AR

Witness:       Dean Gibson, VP-Operations

                        Pinnacle Communications

                        PO Box 230

                        Lavaca, Arkansas   72941

My name is Dean Gibson and I am Vice-President of Operations for Pinnacle Communications in Lavaca, Arkansas. Our company provides land line voice and internet access to over 1500 customers in rural western Arkansas. In the short time we have today, I would like to focus my comments on two points which I think are important to our discussion today.

My first point is carrier of last resort. Pinnacle Communications is a carrier of last resort; by that I mean as an incumbent local exchange company (ILEC), Pinnacle Communications is required to provide service to all customers within its exchange boundary. We have applied that policy not only to the telephone services we provide but to our deployment of broadband services. I guess it has just become ‘a way of doing business’. If the person closest to the office can receive the service, why shouldn’t the customer fifteen (15) miles out be able to receive the service?   That is where the old phrase ‘easier said than done’ comes into play. About four years ago, we realized that our aging outside plant needed to be upgraded or replaced if we were going to continue to provide quality, reliable services. Customers in our most rural areas were demanding faster internet speeds. Dial-up internet was no longer satisfactory to them. Taking that into consideration along with the fact that Congress, the Governor, and the Arkansas Legislature were all looking for ways to get broadband services to the rural customers, we decided to replace our copper cable system with a state-of-the-art fiber system. It has been a long, tough road but by the end of this year (2007), we will have completed a ‘Fiber to the Home’ rebuild of our Lavaca, Arkansas exchange. That means that EVERY customer in our service area will be able to receive not only exceptional phone service but high speed internet access. You may ask, “How can they afford to do that”? I am glad you ask because that leads me to my second point.

Our decision to make the investment in rural Arkansas, as a carrier of last resort, was based entirely on future NECA settlements and USF support, commitments we rely upon for our company’s survival. The purpose of USF is to ensure that Americans in high cost rural areas have communications services comparable to those in low cost areas. It was never meant to subsidize competition between multiple carriers all providing the same service. Pinnacle Communications believes the recommendation by the Joint Board to put a cap on the dollars distributed to competitive eligible telecommunications carriers (CETCs) by the USF represents a necessary and responsible step as the FCC and Congress develop a long term solution to stabilize the fund. The Joint Board’s recommendation will help bring run-away, excessive funding for CETCs under control, which is indispensable to modernizing the USF. And by the way, wireline companies like mine have had a cap ON THE GROWTH on USF payments for years so we are not advocating something that we do not already have to abide by.

In closing, our company wants desperately to continue to provide our rural customers with the quality services they have been accustomed to since 1961, the year Pinnacle Communications first borrowed money from REA to provide telephone service to areas that, up to that time, had no service. We have undertaken considerable risks, investing in plant and equipment to provide broadband to customers no one else wants to serve because it doesn’t fit their business plan. Rural customers in Arkansas and across America need carriers of last resort to insure that everyone has access to affordable broadband services. Those carriers can only survive if we protect the long-term viability of the Universal Service Fund.
Mr. Ed Allis

Vice President

AT&T Arkansas
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Witness Panel 5

Mr. Ed Allis
TESTIMONY OF

EDWARD K. ALLIS

ON BEHALF OF AT&T ARKANSAS

Before the

U.S. SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION

AUGUST 28, 2007 FIELD HEARING

LITTLE ROCK, ARKANSAS

INTRODUCTION

My name is Ed Allis. I am the Executive Director – Governmental Affairs for AT&T in the state of Arkansas. My biographical summary was previously submitted for the record. AT&T extends a warm welcome to Commissioners Adelstein and Copps. A field hearing such as this is a unique experience for those of us involved in the telecommunications industry and all of us are appreciative of this opportunity to provide a local perspective on “The State of Broadband in Arkansas.”

AT&T Arkansas traces its roots back to the state’s first switchboard in 1879, right here in Little Rock – almost 130 years ago, just three years after Alexander Graham Bell invented the telephone. Today, AT&T is the state’s oldest and largest provider; serving 102 local exchanges across the state. In addition to landline service, we offer high speed broadband internet access, wireless and satellite TV service to communities large and small. AT&T’s commitment to rural Arkansas should be apparent.

This fact finding hearing comes not a moment too soon. Along with most others from whom you will hear today, AT&T considers the timing critical for Arkansas’ future. I believe we have come to recognize that we are in a race, not just with other states – but with other nations as well. Simply stated, Arkansas must first catch up before it can surpass others. By now you are aware of Connect Arkansas and the broadband data collection activities in which it has engaged. According to Connect Arkansas, Arkansas ranks:
- 47^th in the deployment of broadband.
- 49^th in the percentage of the population online.
- 41^st in the percentage of farmers using computers online.
- 30^th in the use of information technology to deliver state government services.
Despite those statistics, the Committee should note that Arkansas has made significant progress in bringing technology to rural parts of the state. Some of the presenters today have outlined some of that progress in their areas of knowledge or will shortly.

AT&T

For its part, AT&T has demonstrated a fundamental commitment to rural America and rural Arkansas in a number of ways. While there may be some that believe AT&T is a company that provides telecommunications services only to urban areas of the country, that’s simply not the case. In fact, AT&T is the single largest provider of telephone service to rural America -- we serve over 7 million rural customers.

In Arkansas, of AT&T’s 102 exchanges, 57 have fewer than 3,000 access lines; 40 have fewer than 1,000 access lines and 16 have fewer than 500. One exchange, Arkansas City, has just 100 access lines. Beyond doubt, AT&T is a rural provider in Arkansas and across America and has demonstrated a commitment to those areas.

For example, in the past two years AT&T has contributed grants of $4.6M to support the needs of various rural communities throughout the country. It is expanding the availability of broadband over satellite (provided by WildBlue) across its 22 state wireline footprint. At the same time, AT&T has deployed additional wireline broadband in Arkansas this year and plans additional deployment in 2008. AT&T anticipates that every Arkansas exchange will have broadband capability by the end of 2008.

In Arkansas, AT&T is particularly proud of its involvement in distance learning. AT&T provides and maintains network facilities used by the State of Arkansas for VNet, a fully interactive video conferencing network used for education, healthcare and state government. There are approximately 520 interactive video sites on VNet, including:
- 78 higher education.
- 301 Kindergarten through grade 12.
Usage has grown to over 20,000 conference hours per month. More than 400 courses are being taught using the technology, giving students access to an enriched curriculum and college preparatory courses and providing professional development opportunities and instructional resources for teachers and administrators. Both AT&T and the state have garnered numerous awards for VNet.

AT&T was one of the first major providers to commercially launch fixed wireless broadband using wireless and other technologies. Fixed wireless offers the potential to deliver broadband internet to areas where wireline high speed internet or cable modem services are not available today.

Setting aside the consumer segment for a moment it should be noted that regardless of location, most businesses in Arkansas generally have access to high speed internet access. Through high capacity facilities, even remotely located businesses generally can obtain high speed internet access, but it’s at prices that only a business can reasonably be expected to pay.

Yet, despite the strides that have been made there is still much to be done. If the provision of broadband in rural Arkansas was easy, it would be there today. However, significant hurdles stand in the way in many areas. That’s why AT&T is committed to helping to develop collaborative, innovative solutions at both the state and local level.

While AT&T intends to continue its pursuit of its own broadband initiatives, AT&T is convinced that Connect Arkansas holds the key for the most rapid acceleration of broadband deployment by all providers.

CONNECT ARKANSAS

Connect Arkansas is an entity that is uniquely equipped to coordinate all of the various resources in the state for a common purpose.

It is common knowledge that Connect Arkansas has used Connect Kentucky as a model. There are good reasons for this as statistics from Kentucky demonstrate.

Before Connect Kentucky, approximately 60% of that state had access to broadband service. Today:
- Over 93% of the state has broadband access.
- Over $600M of private capital has been invested in broadband related telecommunications.
- Broadband usage has increased by a nation leading 73%.
- Connect Kentucky anticipates the creation of over 15,000 jobs and the addition of over $5B to the Gross State Product annually.
Connect Arkansas was established by Act 604 (sponsored by Senator Capps) passed by the 86^th General Assembly earlier this year. Among other things it is designed to map broadband availability in Arkansas and stimulate demand through education of users regarding the benefits of broadband. Much of this education will be coordinated through county officials and volunteers. Since Connect Arkansas is a private non-profit entity, it will be able to enter into non-disclosure agreements with all providers so that proprietary competitive data can be collected and analyzed. That will be a key component of the mapping process.

Connect Arkansas’ efforts will be technology neutral. Recommendations and proposals for individual underserved areas of rural Arkansas may depend on an analysis of which technology appears to be most suitable. While an approach like this will require extraordinary cooperation among all participants, it is a cornerstone of the Connect Arkansas program and inherent in Act 604.

If Connect Arkansas is successful, the state as a whole will reap substantial and tangible benefits. Connect Arkansas has estimated that 8,200 jobs will be created and over $2.6B will be added to the Gross State Product annually.

FUNDING

For the time being Connect Arkansas is without the public funding that could be used for educating consumers, establishing e-committees and training county officials, providing grants, etc. The initial source of funding must come from private sources and perhaps state government agencies and educational institutions that have the available resources.

Ideally, Connect Arkansas would be funded through a tri-partite partnership of federal funds, state funds and private funding. While the Arkansas General Assembly will likely be asked to make state funding available in the future, it will be helpful if sources of federal funds could be found. All of the involved parties in Connect Arkansas would be willing to work with Senator Pryor’s office and other members of the Committee in order to facilitate an investment of this type in Arkansas’ future.

The FCC as well has the capacity to influence the economic future of this state. In July of this year, AT&T submitted an ex parte presentation to the FCC in which it suggested a pilot project designed to accelerate the deployment of broadband to rural America. It would provide funding on a technology neutral basis while long term reform of the Federal Universal Service Fund is being debated. Additional information regarding the pilot project is being submitted to the Committee for inclusion into the record.

LONG TERM

If all of the collaborative efforts planned for the state come to fruition and broadband becomes a reality in all parts of rural Arkansas, what we will have is a beginning – an important beginning. It will be a first step; but, the reason you take a first step is so you can take additional steps. We must not lose sight of the long term needs of Arkansans. More bandwidth and more availability is inextricably tied to Arkansas’ ability to compete for economic development, jobs, educational opportunities and a quality of life that Arkansans deserve.
Mr. Len Pitcock

Executive Director

Arkansas Cable Telecom Association

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Mr. John F. Jones

Vice President, Regulatory-Government Relations

CenturyTel

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Witness Panel 5

Mr. John F. Jones

Senator Pryor and distinguished guests, my name is John Jones, and I am Vice President of Regulatory and Government Relations for CenturyTel, Inc. I submit this testimony as part of the above referenced proceeding, and thank you for allowing our company to participate. We believe hearings of this type are both timely and important as the industry works to keep pace with evolving technologies and an ever-changing marketplace. You will find that despite many commonalities associated with broadband deployment, each state also has challenges, opportunities and characteristics unique to their population and geographic area.

In 2000, CenturyTel purchased more than 200,000 access lines in Arkansas from what was then GTE. Since that time, our company has invested approximately $1 billion in this state and located our Southeast Regional Office in Cabot. The changes we brought to the former GTE customers from a telecommunications perspective were dramatic. In nine short months, we intensified efforts and through a disciplined investment strategy brought broadband and dial-up Internet services to rural markets that had few if any such options. Today, CenturyTel serves approximately 220,000 customers in the State of Arkansas, with more than 82 percent having access to DSL services.

In Arkansas and in various rural markets in 24 states, CenturyTel is introducing new services such as broadband TV, personalized broadband content and broadband access speeds up to 10 Mbps. In addition, we are deploying alternative broadband access technologies such as mesh Wi-Fi “hot spots” or “hot zones” and “point-to-point” wireless broadband in strategic areas.

As part of our testimony today, we want to leave you with three key points relating to providing broadband in rural areas:

1.      In rural markets, affordability, a lack of customer density and PC availability are the biggest obstacles to increased broadband penetration;

2.      Reaching the remaining unserved customers in rural markets that do not have broadband today will require significant investment and cost, with few, if any, business cases to support that investment; and

3.      Efforts by the Joint Board and FCC to stabilize the universal service fund are critical to the long-term vitality of the fund and, consequently, the goal of universal broadband access for all Americans. Americans in all parts of the country are sending the message that their telecom and economic future depends on robust broadband deployment. In the years ahead, global economic competition will require increasingly sophisticated networks that deliver unprecedented levels of speed at much lower costs. Reform of USF must account for this central public policy goal.

In most of our operating states, we are seeing an increasing interest in “last mile” broadband solutions. Like other providers, we are working with our state governments to identify broadband challenges and engaging in public-private partnerships, such as Connected Nation and Connect Arkansas, to help all providers deploy in unserved areas. We believe customer broadband expectations revolve around faster speeds, lower prices and competitive service bundles. It is our view that with the doubling of Internet traffic every year, capacity and speed will be the key differentiators as the high-speed data market continues to evolve and be driven by customer demand.

As you know, broadband connections and the services they deliver will be the core strategic product for our future growth. Eventually, all voice, data and entertainment services will ride the broadband pipe. Also, from a consumer acquisition and retention perspective, broadband is becoming the consumer linchpin for the bundling, pricing and marketing of other services. To that end, price and speed are becoming the key drivers of customer demand.

Despite remarkable success in deploying broadband services in some very rural areas, subscribership rates in rural markets remain relatively low because of issues with affordability and PC availability. The main point I want to make about this is that even though a customer in a rural market has broadband available to them, other important factors will ultimately impact their decision on whether to become a broadband subscriber or not.

CenturyTel recognizes that deploying broadband to the remaining unserved or underserved areas will be an expensive undertaking. If the Nation’s telecom policy goal should become ubiquitous or nearly ubiquitous broadband availability, ultimately some form of broadband support will be needed to help offset the cost drivers for rural service. There are several categories of costs that CenturyTel believes are not addressed today.

As an example, most of the monthly recurring inter-office transport and backhaul costs between rural local exchange areas and the nearest tandem switch or urban Internet access point, which may be hundreds of miles away, are not expressly covered by the federal high-cost programs today. This backhaul infrastructure is also relied upon by ISPs, wireless providers, VoIP providers and others sending traffic to or receiving traffic from rural customers.

CenturyTel believes that targeted universal service funding for the highest cost areas will be needed in conjunction with other support mechanisms such as grants, tax investment incentives and low interest loans. Regardless of the funding source established, the key will be to properly define what is meant by “broadband” and “support for broadband” on the front end of the process. In light of the rapid technological changes taking place, the new definition must be flexible to accommodate evolving technology. Therefore, it will be important for policymakers to revisit and update the standard periodically in order to keep affordable bandwidth speeds in rural areas comparable to those in urban areas.

This hearing today would not be as worthwhile if the witnesses did not offer potential solutions to help expand the availability of advanced services into underserved and unserved areas. CenturyTel believes that a limited, but clearly defined, separate broadband program for unserved high-cost areas would be a good first step. Funding for such a program might come from the restructure of some existing USF elements. For example, limiting support to only one wireless CETC per market should produce significant savings. In addition, we support the recent Federal State Joint Board recommendation to place an interim cap on CETC support at 2006 levels. This recommendation is a logical and rational first step toward meaningful reform.

I want to leave you with a broadband success story from Mountain Home, Arkansas. Miles and Michelle Riley moved from Mississippi to Arkansas in 1998 to start a small family business offering guided hunting, fishing and nature trips on the White and Buffalo Rivers to customers from around the nation. CenturyTel installed high-speed Internet at the Riley’s remote location shortly before Memorial Day in 2005. Since that time, the Rileys have basically remained booked solid and can offer their customers the ability to book their guided outings via the Internet and check their email and stay connected to their business via a wireless router. The Rileys maintain they could not maintain their business at the level they do without the broadband connection. This is just one example of the tremendous economic impact broadband can bring to rural America.

In closing, CenturyTel believes that rural consumers are speaking loudly about what their telecom needs are. It is not about wireless or wireline voice service because they have that in most cases. It is about broadband, more broadband and faster broadband. In the years ahead, global economic competition will require increasingly sophisticated networks that deliver unprecedented levels of speed at much lower costs.

We look forward to working with other stakeholders to strengthen the link between broadband availability and subscribership and continue meeting the evolving telecommunications needs of Arkansas citizens.

Again, thank you Senator Pryor for giving us the opportunity to provide input on such an important public policy.
Mr. Garg Massaglia

Vice President

Comcast
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Witness Panel 5

Mr. Garg Massaglia
Testimony of Gary Massaglia, Comcast

Field Hearing – Arkansas Broadband

August 28, 2007

Thank you Mr. Chairman. My name is Gary Massaglia and I’m the Vice President and General Manager for Comcast’s cable operations in Arkansas.

We serve approximately 90,000 customers in the Little Rock and West Memphis areas of the State.

My comments today will focus primarily on our experience in offering Broadband to our central Arkansas customers.

Comcast has invested approximately $60 million dollars in private capital without any government incentives to prepare our network to offer our customers the variety of products and services made capable by a complete Broadband network. This includes a $6 million dollar state of the art technical center currently being built in Little Rock. We’ve done this because there is a customer demand in the communities and the neighborhoods we serve.

And because of this investment, all of our customers have access to a myriad of products including:
- Over 250 all digital video channels; multiple High Definition channels with plans to offer many more as quality HD channels become available; over 8,000 different On Demand programs available for our customers to choose what they want to watch, when they want it and start and stop the programs at their convenience.
- Also, as a result of our Broadband network, Comcast customers can experience the best the Internet has to offer. We offer speeds up to 12Mbps and a very video rich and easy to navigate Comcast portal.
- This same network allows Comcast to offer an alternative to local exchange phone service, delivering real facilities based choice to consumers. Comcast offers our Arkansas customers a digital voice service with a broad array of features and capabilities at very competitive prices.
We have invested significantly to bring facilities-based telephone competition to Arkansas and we are very pleased to state that our products and services; digital video, high speed Internet and our phone service are available to 100% of the homes we pass here in central Arkansas. Not one neighborhood is excluded.

Thank you and I will be pleased to answer any questions.
Mr. Jeff Gardner

President and CEO

Windstream

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Witness Panel 5

Mr. Jeff Gardner

Written Testimony of Windstream President and CEO Jeff Gardner

U.S. Senate Committee on Commerce, Science, and Transportation Field Hearing:

The State of Broadband in Arkansas

August 28, 2007

Thank you, Senator Pryor and the Senate Commerce Committee, for the invitation to speak at the hearing today. I also would like to extend an Arkansas welcome to Commissioners Copps and Adelstein.

My name is Jeff Gardner. I am the President and CEO of Windstream Corporation, a wireline telecommunications company that provides voice, broadband, and entertainment services to primarily rural communities in Arkansas and 15 other states. The company, which is headquartered here in Little Rock, has approximately 3.2 million access lines.

Windstream has been an active participant in developing federal broadband policy. For example, Windstream supports the U.S. Senate Commerce Committee’s broadband mapping efforts. We worked closely with Senate staff to encourage broadband subscription mapping at a census tract level, and we are pleased to see that census tract mapping is included in the latest version of the bill. Using census tracts as a common denominator, broadband maps will provide greater insight into the relationship between broadband adoption rates and other socioeconomic factors tracked by the U.S. Census Bureau.

We at Windstream share Senator Pryor’s desire to ensure all Arkansans – and all Americans for that matter – can fully participate in the digital world. Deployment of broadband service is a strategic imperative for our company. In 2006 alone, we grew the number of our broadband customers by 46 percent to more than 656,000 customers, and as of second quarter this year, we have approximately 753,000 broadband customers nationwide.

We are continuing to upgrade our networks and increase the percentage of our customers with broadband access. This year alone we expect to spend between $350 and $380 million on capital expenditures, of which a significant portion is devoted to broadband. Now more than 80 percent of our voice customers can purchase wired broadband service from us, and as the Internet becomes more important to our customers, they are using a rapidly increasing amount of bandwidth. Our subscribers’ bandwidth usage doubled over the last year.

Windstream’s broadband investments extend to Arkansas. Windstream is the third largest ILEC in the state. We serve predominantly rural areas, from Elaine in the Delta to Wilmot in southeast Arkansas, but also some larger exchanges, such as Harrison. Harrison actually was our company’s first exchange to offer DSL.

In Arkansas, we offer broadband at speeds of 1.5 Mbps, 3 Mbps, and 6 Mbps. Prices of these services may range from $19.99 to $29.99, when a customer bundles broadband service with voice or digital TV.

Windstream also has CLEC operations in central and northwest Arkansas. As a CLEC, we provide critical communications services, including broadband data services, to Arkansas hospitals and the state government.

Windstream will continue to offer DSL deeper in our markets and at faster speeds. In Arkansas and other states, we are upgrading our network to enable us to introduce broadband speeds of 10 to 12 Mbps, and we expect to complete this effort late this year or early next year.

But these build-out efforts are only one piece of ensuring all individuals can fully participate in the digital world. Broadband subscribership rates depend not only on a consumer’s geographic access to broadband, but also on a consumer’s economic access to and awareness of the benefits of broadband. Consumer economic factors include both the affordability of broadband service and the ability to purchase a personal computer. Pulling a variety of different levers is necessary to increase broadband adoption rates broadly and effectively.

I believe that many are overly focused on pulling one lever: obtaining federal funds to help offset the cost of constructing their broadband networks. However, there are three notable problems with advocating this solution in isolation.

First, if the goal is 100 percent terrestrial broadband deployment and subscription at affordable rates, achievement of this goal will require the federal government to spend considerable resources to offset the high cost of network build out. Windstream, like other broadband service providers, has found that its costs increase exponentially as we attempt to provide broadband access to our remaining unserved customers.

As we reach into our unserved areas, we face a number of challenges: We may need to shorten the, often significant, distance between potential customers and the closest DSLAM, the point where a digital subscriber line is connected to the Internet. We also may need to lease transport from other carriers to connect our facilities, which in some cases can be very isolated, to the national Internet backbone. The potential number of broadband customers may not sustain these additional investments.

Here’s a rough sketch of our predicted capital costs for deploying broadband service to the rest of our customers: It will cost Windstream a considerable sum to provide broadband service to an additional 5% of our customer base. To provide broadband to the next 5% slice of our customers, we expect it will cost us approximately two times that amount. For 5% more, approximately four times that amount. Deploying broadband to the next 5% of our unserved customers, in other words, will cost us approximately twice as much as what it cost us to deploy to the last 5% of our unserved customers. And as these customers demand higher speeds, our expenses increase still further as we upgrade our networks to support greater bandwidth.

Sponsoring universal build out of terrestrial broadband networks would undoubtedly cost many billions of dollars. Providing exclusive attention to ensuring universal terrestrial broadband deployment – as opposed to increasing subscribership where broadband is already available – may drain federal resources that could be focused on other factors that might have a greater impact on our nation’s adoption rates.

For some consumers, it may make more sense to invest in other technological solutions, which may be more affordable. Diverse technologies – such as satellite broadband – are providing new paths around geographic obstacles.

Second, focusing solely on broadband build-out costs overlooks the significance of the accompanying operating costs. Yet any successful broadband deployment strategy must properly account for both capital and operating expenditures.

Just because a functioning broadband network is built, does not automatically mean that it would make economic sense for a provider to operate that network. Indeed, in many areas, including some of our smaller exchanges in Arkansas, we have determined that we would not likely obtain enough broadband subscribers at affordable rates under current conditions to cover our incremental operating costs. So in order to keep broadband service affordable, providers likely will need additional funding to help cover ongoing operating expenses.

Third, even if sufficient funding could be devoted to creating a fully operational broadband network throughout the United States, it still does not mean all Americans would be able to purchase broadband service. A deployment-focused solution, without more, assumes “if you build it, they will come.”

But clearly that is not the case. Overall broadband adoption, in part, is a function of geographic access, but as I noted before, it also is a function of economic access and consumer awareness of the benefits of advanced technologies. Many recent press reports on the fate of municipal wireless networks have observed that multiple factors ultimately are responsible for consumers’ broadband adoption rates.

So where does this assessment leave us? For Windstream, this analysis has made us look more carefully at the other levers that may be pulled to increase broadband adoption rates. While we aggressively deploy new facilities, we continue to think about new and innovative ways in which we can increase broadband adoption where we have already deployed the service.

Public-private partnerships, such as Connect Arkansas, may further promote low-income consumers’ broadband usage. Windstream was an active participant in the Arkansas Broadband Initiative, which led to the development of Connect Arkansas. We anticipate that Connect Arkansas will be able to leverage resources of a wide variety of stakeholders to bring more Arkansans online. We have witnessed the importance of cross-sector partnerships as a longtime board member of ConnectKentucky.

In particular, our experience has underscored the importance of a non-geographic factor that contributes to broadband adoption rates: affordability. The gap between those consumers who are online and offline more and more is defined by their economic, rather than geographic, conditions.

Focusing on affordability is important and in many cases actually may be the basis for more economically efficient policies to increase broadband adoption rates. As such, in addition to dedicating funds to aid deployment in unserved areas, policymakers should (a) devote funding to provide support for low-income consumers’ broadband access and (b) allocate funds to increase computer ownership.

With respect to making broadband service more affordable, the federal government should strongly consider the use of general revenues, instead of universal service funds, to subsidize broadband service for low-income consumers. But if policymakers conclude it is appropriate to use universal service funds, they should consider extending Lifeline/Link-Up to assist low-income consumers’ purchase of broadband services.

Addressing economic access to broadband will help a significant percentage of Arkansas consumers that remain offline. According to the U.S. Census Bureau, only 12 percent of Arkansas residents that live in households earning less than $15,000 per year use the Internet at home.[1]

In addition, Windstream recommends that the federal government consider providing some funding for low-income individuals’ personal computer ownership. If consumers cannot afford a computer, they will not be able to use broadband in their homes – no matter how reasonably priced that broadband service may be.

Among the 50 states and the District of Columbia, Arkansas ranks last, 50th, in the percentage of households with a personal computer.[2] And personal PC ownership, like Internet usage, is highly correlated with household income: 83 percent of households in Arkansas earning less than $15,000 per year do not own a computer, compared to 38 percent of all households nationally.[3]

At Windstream, we are experimenting with ways in which we can help more of our customers afford household computers. For example, this month we launched a pilot program to offer discounted computers to qualified new broadband customers who purchase broadband service from our company.

Although there is much private industry can do, the private sector on its own cannot resolve issues around low-income consumers’ ability to afford computers. Policymakers should give serious consideration to what role the government can play in addressing computer affordability.

Going forward we’re going to need to wade into the details of how these various proposals could best be implemented. Windstream is committed to devoting resources to these ideas, and we look forward to partnering with the federal government to develop new and innovative ways to boost broadband adoption in Arkansas and throughout the United States.

Thank you for allowing my company and me to participate in this hearing.

[1] U.S. Census Bureau, Current Population Survey: Computer and Internet Use 2003, special tabulation by the U.S. Department of Commerce. Calculation by The Children’s Partnership.

[2] Id.

[3] Id.
Mr. Greg Ashcraft

CFO

South Arkansas Telephone Company
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Witness Panel 5

Mr. Greg Ashcraft
Hello, my name is Greg Ashcraft and I am the CFO for South Arkansas Telephone Company and a member of the Arkansas Broadband Advisory Council. South Arkansas Telephone Company is a small incumbent local exchange company (ILEC) in south Arkansas with 3,900 customers. I am here today representing South Arkansas Telephone Company and 14 other small independents that are not represented on this panel. I work closely with these 14 companies on policy development.

The small rural Arkansas telephone companies understand the importance of Broadband to the medical, educational, social and economic needs for rural Arkansans and Americans.

The small telephone companies in Arkansas have worked very hard in recent years to deploy broadband to their customers. Evidence of our work is included in this data that is over a year old:
- Broadband service is available in 100% of the exchanges of these companies
- Broadband had been made available to 82% of the total customers of the rural ILECs
- Approximately 11% of the customers of the rural ILECs had subscribed to Broadband
The cost of service is reasonable and the companies are working hard to finish providing broadband to the remaining 18% that they had not reached a year ago and to encourage more households to subscribe to broadband service.

The benefit of ILEC broadband service includes:
- the historical reliability of service
- The community based owners and the adherent to these companies of public service commission customer service rules that protect customers and allow a supervised complaint process in event of dispute.
The broadband available through these small companies is backed-up by power generators and by engineered lines that are programmed to allow alternate facilities to be used to maintain service, in the event of any disaster or attack.

The broadband deployment in these rural companies should be understood as service to some of the most rural areas of Arkansas. For instance South Arkansas Telephone Company has 2 customers per route mile of cable and many of the other 14 companies have similar statistics. The 82 % availability of broadband is not because of population density, but in spite of population density. This wire-line service has been provided to these rural customers with the reasonable reliability of revenue streams, such as the Federal Universal Service and NECA pools. These services will continue to be provided on a fair, reasonable, affordable and community basis in the coming years. One of the problems is that making broadband available to the remaining 18% of these companies customer base will be the most expensive deployment; however the rural ILECs are dedicated to providing 100% deployment.

The rural companies are leaders in deploying broadband to rural areas due to the reliability and dependability of Federal Universal Service and NECA pools in the past. It is important that these pools be protected to ensure continue availability of broadband to the rural citizens in the future.

We would urge this Committee to join the efforts of the rural telephone companies in Arkansas, and the efforts of the Joint Board and the FCC, to stabilize the USF, continue to support broadband in the USF and protect the long-term viability of the USF.


Pioneered Arkansas’ first telehealth system in 1991.	First in Arkansas and region to implement an eICU providing remote monitoring of Critical Care patients (2005).	Operates Arkansas’ emergency preparedness telehealth system.
Created an award-winning, cost-efficient Medicaid-funded obstetrical telehealth program.	Constructed a home health telehealth program for patient monitoring	Supplies clinical and educational telehealth to providers and patients.
Delivers telehealth consultation in genetics, oncology, neonatology, psychology, education, etc.	Provides remote teleradiology and sleep study patient assessment and consultation to rural hospitals.	Launched a telehealth network serving rural health clinics, critical access hospitals, and the state’s hospitals.

Hearings

Testimony

The Honorable Jonathan S. Adelstein

Honorable Michael J. Copps

Witness Panel 2

Mr. Bob Smith

Mr. David Burdick

Dr. Curtis Lowery

Dr. Lawrence A. Davis

Mr. Dominik Mjartan

Mr. Rex Nelson

Ms. Claire Bailey

Mr. Daryl Bassett

Witness Panel 3

Mr. C. Sam Walls

Mr. James Winnigham

Mr. John Ahlen

Witness Panel 4

Mr. Matt Dozier

Witness Panel 5

Ms. Kelly Zega

Ms. Maryce Cunningham

Mr. Paul Waits

Mr. Scott Ford

Mr. Dean Gibson

Mr. Ed Allis

Mr. Len Pitcock

Mr. John F. Jones

Mr. Garg Massaglia

Mr. Jeff Gardner

Mr. Greg Ashcraft