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Once again I want to thank Senator Durbin for developing and promoting this innovative exchange of ideas. The discussion has certainly been lively, informative, and full of passion.
On Tuesday, I presented a broad outline of CWA's Policy Proposal for Universal High Speed Internet. Tonight, I want to provide some thoughts on how we'll build and pay for a universal system. This is a very complex area, but an essential one. The hallmark of our communications policy since the Communications Act of 1934 has been a commitment to universal service. Until recently, that meant affordable voice service. In today's world, we must expand our definition of universal affordable service to high-speed broadband.
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| We sometimes forget that it took public policy to ensure that (almost) all Americans had access to telephone service at a reasonable rate. After World War II, half of our population still did not subscribe to telephone service. But in the late 1940s, the FCC and the monopoly Bell system agreed to a system of cross-subsidies from business and lower-cost urban customers to keep rates of basic telephone service affordable for rural and residential consumers. Some of these subsidies persist in geographic rate averaging and access charges.
With the break-up of the Bell system, we adopted a more explicit Universal Service Fund financed through charges on long-distance calls to support telephone service to high-cost rural areas. We also implemented a system of targeted subsidies, known as Lifeline and Link-Up, to reduce the cost of voice service for low-income households. In the 1996 Telecom Act, Congress added subsidies to schools, libraries, and rural health care providers for Internet access. Although the system is not perfect, it has helped us achieve a 93 percent telephone penetration rate, and boosted Internet connections to schools and libraries.
Now, as we turn to broadband, we face multiple challenges. The issue is not only affordability, but also build-out of high-speed networks, not only "first generation" broadband such as cable modems and DSL, but "second generation" high-capacity networks that can deliver 25 to 100 megabits per second (mbps) downstream like in Japan. This is an expensive proposition. Doing a "back of the envelope" calculation, analysts calculate that Verizon's fiber-to-the-home build in urban/suburban areas costs about $1,500 per home. There are about 105 million households in America. My quick arithmetic says we're talking about an investment of several hundred billion dollars. [Please take these numbers as a starting point for discussion. I know that there are other technologies: AT&T's U-Verse compresses more data over the copper last-mile, and is less expensive, as are wireless technologies.] My point is: we are talking about a lot of money.
We need a menu of solutions to address these multiple challenges. CWA has discussed these in more detail in our policy report: Speed Matters: Affordable High-Speed Internet for America. We need to look at what Japan did to lower the cost of capital for its telecom company, NTT, to build its fiber network: accelerated depreciation, subsidies, and low-interest loans.
Here I want to focus on two policies that are on the top of my list:
- Create Public-Private Partnerships in Each State. The model is Connect-Kentucky which created a state broadband map, and then supported local technology teams in each county to develop a local technology plan. Together, representatives of community-based organizations, schools, libraries, health care providers, businesses, telecom companies, unions, and others demonstrated that there was a market for broadband in their communities. As a result the private sector accelerated deployment. Connect Kentucky also helped communities aggregate demand, apply for Rural Utilities Service low-interest loans and subsidies to accelerate deployment in very high-cost areas. As a result of this public-private partnership, broadband deployment in Kentucky increased 17 percentage points in two years.
- Universal Service Reform. The current Universal Service Fund (USF) supports voice telephony, but not broadband. It is long past time to upgrade the program to support high-speed Internet. While the devil is in the details, here are some principles that should be the basis of any USF reform:
- Include broadband in the definition of Services allowed to receive Universal Service Fund support.
- Require USF recipients to provide broadband in order to receive USF funding.
- Ensure equitable and efficient distribution of USF. All companies that serve customers in high-cost rural areas should be eligible for USF support at the same level. Under current FCC rules, AT&T, Verizon, and Qwest - which serve twice as many rural customers as the smaller telcos - receive only one-sixth of the USF support that these smaller telcos receive.
- Ensure a broader, more stable and equitable USF funding structure. Today, USF contributions are based on long-distance voice revenues. But in today's telecommunications world, it is no longer possible to differentiate between local and long-distance, voice or data. Every provider of telecom services should be required to contribute based on phone numbers, connections, and capacity.
- Protect and stabilize the E-rate program of subsidies to schools, libraries, and rural health care providers for Internet access. This is a wildly successful program with 93% of classrooms and 95% of libraries connected, compared to only 3% of classrooms and 27% of libraries before the program went into effect. Each year, application for E-rate funds exceed the amount available. The program must be preserved and strengthened.
We need high-speed Internet for our schools, hospitals, public safety, homes, and workplaces. Not for some people, but for everybody. Let's roll up our sleeves and join together to work for affordable high-speed Internet for all Americans. |
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