tom koutsky on minnesota brnational broadband policy and implications for minnesota

National Broadband Policy DevelopmentsMinnesota Broadband Summit

Tom KoutskyChief Policy Counsel

Connected [email protected]

November 16, 2011

mailto:[email protected]

Broadband in Minnesota

• 1.1 million Minnesotans – 28% – do not subscribe to broadband• More than one-in-four of these non-adopters are low-income• The majority of low-income, Hispanic and senior households in

Minnesota do not subscribe• Not all community anchor locations are ready for future

bandwidth needs• Mobile broadband is a significant economic opportunity yet

challenges in widespread deployment, capacity and overall adoption remain

“The future is here. It’s just not widely distributed yet.”

William Gibson

From Broadband Gaps to Chasms

• 80% of Fortune 500 companies post job openings online only – and require online applications

• 50% of today’s jobs require technology skills – growing to 77% in by 2020

• Federal Reserve: students with computer and broadband at home 6-8% more likely to graduate high school

• And yet…adoption has stalled as the economy has stalled

• The federal ACCESS subsidy system is changing dramatically• Broadband ADOPTION has stalled – with profound impact upon the

economy and opportunity• USE of broadband by many businesses and institutions is improving

– but more needs to be done to improve connectivity options and use by schools, libraries, health care institutions

2011 © Connect Minnesota ® All Rights Reserved. Do Not Copy Without Written Permission.

National Broadband Policy is shifting towards a multi-faceted approach

that encompasses ACCESS, ADOPTION, and USE

National Broadband Policy is shifting towards a multi-faceted approach

that encompasses ACCESS, ADOPTION, and USE

Shift in National Broadband Policy

“Universal Service”…in which the success of a policy is judged

by the speed of the wireline network that reaches all residents – even the most rural

“Universal Service”…in which the success of a policy is judged

by the speed of the wireline network that reaches all residents – even the most rural

“High Performance America”…in which all “troubling gaps and unrealized

opportunities” in broadband technology ACCESS, ADOPTION, and USE are closed

“High Performance America”…in which all “troubling gaps and unrealized

opportunities” in broadband technology ACCESS, ADOPTION, and USE are closed

The Shift

Subsidies for Providers

Subsidies for Providers

Results for CommunitiesResults for

Communities

Comparable Service at

Comparable Rates

Comparable Service at

Comparable Rates

Innovative Devices and Networks,

Digital Literacy, Broadband

Value

Innovative Devices and Networks,

Digital Literacy, Broadband

Value

Established Business and Government

Practices

Established Business and Government

Practices

New Applications

that Drive Adoption and

Access

New Applications

that Drive Adoption and

Access

Broadband Policy Areas

• An increased focus on Mobility and Spectrum Policy• Infrastructure Policy• Connect America Fund: Transforming subsidies that support

voice service in rural, “high cost” areas to a program that supports broadband directly

• Affordability and adoption initiatives• Efforts to maximize the benefits of broadband both directly and

indirectly– Education– Healthcare– Public Safety– Government Operations

Spectrum Policy

• President’s Wireless Innovation Initiative– Reach 98% of Americans with high-speed “4G”

wireless infrastructure– Reallocate broadcast spectrum through incentive

auctions ($27.8 billion projected)– Divide auction revenue between deficit reduction,

subsidies to ensure universal availability, and construct public safety network

• Bipartisan support for auction framework

Infrastructure

Many of these often-hidden infrastructure costs can have

disproportionate impact in rural areas

Many of these often-hidden infrastructure costs can have

disproportionate impact in rural areas

As much at 20% of costs of fiber construction are related to

cost of pole access, permits, rights-of- way, and related charges

More than half of the cost of trenching fiber can be shared or avoided through “dig once,” open-trenching, or conduit policies

Pole Attachments Costs…before the Plan

Source: FCC, National Broadband Plan, Figure 6-A

…and after FCC April 2011 Order

Source: FCC, Report and Order, FCC 11-50 (April 2011)

Shifting Federal Universal Service Program to

Broadband

$4.6 billion for network

deployment to high-cost areas

$1.2 billion in discounts for

basic telephone service for low-income persons

$2.7 billion in subsidies to

connect schools and libraries

$214 million in subsidies for

rural health care communications

Federal Universal Service Fund2010 projected outlays

Current subsidies aimed at providing

voice service ubiquitously at

relatively uniform and affordable rates



















No money for digital

literacy

















literacy

Most spent on dialtone

















literacy

Most spent on dialtoneNo money for

applications or telemedicine equipment

















literacy

Most spent on dialtoneNo money for

applications or telemedicine equipment

Multiple wireless companies receive funds -- but not for

areas without wireless

Most of this money does not

go to areas without

broadband

Federal Universal Service Fund2010 Outlays in Minnesota

$105.7 million for network deployment to high-cost areas

$3.125 million in subsidies for rural health care communications

$22 million in subsidies to connect schools and libraries

$6.35 million in discounts for basic telephone service for low-income households


Minnesota carriers receive $9M more from the federal

USF every year than Minnesota customers pay

into the fund

Minnesota carriers receive $9M more from the federal

USF every year than Minnesota customers pay

into the fund

FCC’s Connect America Fund

• FCC announced shift of its USF program on October 27, 2011 – details still forthcoming

• Shifts voice-only subsidies to broadband networks that provide 4 Mbps down/1 Mbps up and voice service in areas that need subsidy

• Creates Mobility Fund to subsidize ubiquitous Mobile Broadband

– $300 million allocated in 2012-13 via competitive bidding – which will reward communities that are organized

– $500 million per year thereafter

– Specific additional funding ($50M initially, then $100M per year) for Tribal Wireless Fund

• Provides a pathway for anchor institutions to receive enhanced network connectivity

• Program will be on strict budget2011 © Connect Minnesota ® All Rights Reserved. Do Not Copy Without Written Permission.

Significant Changes in Approach

• Broadband mapping information and ongoing tracking/reporting will be used to target subsidies efficiently

• Phased and targeted approach, designed to build infrastructure quickly

• Subsidies for multiple voice networks in high-cost areas will be eliminated ($22M/year in Minnesota)

• Providers will not receive subsidy to provide service in an area in which broadband and voice are available from an “unsubsidized competitor”

• FCC will not subsidize more than $3000 per location per year

• Rural carriers immediately required to provide 4 Mbps down/1 Mbps up upon “reasonable request” as condition of receiving current voice subsidies ($69M/year in Minnesota)

• Dec. 2011: FCC will announce funding for public/private Broadband Adoption Pilots targeted at low-income population, as part of reform of $1.2 billion Lifeline/Link-Up program


Target Subsidy Areas


Where are the Opportunities?

• Fostering Ubiquitous Mobile Access

• Application Development: healthcare, USIgnite, energy

• Job and Workforce Training focused on Skills Gap

• Community Empowerment and Engagement

• Technology Penetration programs

• Local Gigabit Testbed networks

• Research & Education Networks


Opportunities for Minnesota

Minnesota Communities that are organized now have the opportunity to affect the flow of federal broadband subsidies to their areas, through…

– Infrastructure policy innovation

– Anchor institution engagement and partnerships

– Adoption and digital literacy training programs

– Expanded use and applications by government and institutions


Creative approaches executed properly can lower the federal subsidy needed to expand broadband in Minnesota – and that

will speed the deployment and adoption of broadband in Minnesota

Creative approaches executed properly can lower the federal subsidy needed to expand broadband in Minnesota – and that

will speed the deployment and adoption of broadband in Minnesota

Thank YouThank You

Tom Koutsky Tom Koutsky [email protected] (202) 674-8409(202) 674-8409


tom koutsky on minnesota brnational broadband policy and implications for minnesota

Technology

basic telephone

affordable

high school

affordable

demographic

provide 4

1 mbps

written permission