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Federal Document Clearing House
Congressional Testimony
March 28, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 6120 words
HEADLINE:
TESTIMONY March 28, 2000 BOB ROWE SENATE COMMERCE, SCIENCE AND
TRANSPORTATION COMMUNICATIONS INTERNET SERVICE DISTRIBUTION
BODY:
UNITED STATES SENATE COMMITTEE ON COMMERCE,
SCIENCE AND TRANSPORTATION SUBCOMMITTEE ON COMMUNICATIONS HEARING ON BROADBAND
TECHNOLOGY Statement of Bob Rowe March 28, 2000 INTRODUCTION - THE
TELECOMMUNICATIONS ACT TOOLBOX Mr. Chairman, Members of the Committee: I am Bob
Rowe. I am a Montana Public Service Commissioner and President of the National
Association of Regulatory Utility Commissioners. I serve on the Federal-State
Joint Board on Universal Service, the Federal-State Joint Conference on
Broadband Access (which I will describe), and as Chairman of the thirteen-state
Operations Support System Collaborative now working with U S WEST and a wide
range of competitive providers. Until last November I chaired NARUC's
Telecommunications Committee. I am here today speaking on my own behalf I thank
the Members of this Committee for your thoughtful approach to competition,
universal service, and technology deployment. I am sincerely honored to be here
today. Senator Burns, I particularly commend you for your vision and for your
leadership. I distinctly remember meeting with you in 1995 when you first
described to me your vision for what would become Section 706. You challenged me
that we must do more than provide good quality voice grade service to Montana
and America. You were thinking about high speed Internet access and other
services. You "got it" (as the techies say). Your current work on the "Digital
Dozen" bills, as well as your continued work on competition, universal service,
and technology deployment confirms that you still "get it." The
Telecommunications Act is a cooperative federalist document. You appreciate the
crucial role of states as partners implementing your vision, and you gave us
tall orders. I am pleased to report that state commissions and the FCC have
forged a better, more productive partnership than existed several years ago. You
helped make that happen. For example, tomorrow the FCC and NARUC are
cosponsoring a workshop on consumer-friendly billing practices that will involve
a wide range of providers and consumers. Technology deployment is another key
area for federal- state cooperation. State commissions and state governments are
using many strategies to promote access to advanced technology. Attachment I is
an article, "Strategies to Promote Advanced Telecommunications Capabilities,"
published in the Federal Communications Law Journal in March. The article
outlines why these issues are so important to state economic and community
development. It also summarizes some approaches states are taking and the basis
for the "cooperative federalist" approach I will describe today. Fortunately, in
addition to tall orders Congress gave us good tools. I will start by suggesting
that there are many digital divides, not just one. I will then describe the good
work of Montana's rural cooperatives and independent telecommunications
companies, which give us examples of strategies that are currently working and
the barriers they face. Then I will describe the tools in the Telecommunications
Act toolbox. I will focus on Section 706, but will also mention the competition
and universal service tools in the toolbox. II. NOT ONE DIVIDE BUT MANY Over the
last several years, I've become convinced there is no one "Digital Divide."
Rather, there are many digital divides, and they may occur where least expected.
The Section 706 Joint Conference will help us understand the specific nature of
the broadband access problems in communities all across the country. Based on
what I've learned so far, I look at the "digital divides" on two axes: First, by
layer of the network (from Network Access Points all the way down to the
customer). In a particular situation, is the concern backbone or transport
facilities? Internet points of presence? Is it switching? Is it loop facilities
(of whatever type)? What are the relationships between layers of the network
(switching and backhaul, for example), or the trade offs between investing in
improved signal processing and investing in new distribution plant? On the
customer level, is the problem access to customer premises equipment or other
network devices? Is it absence of appropriate applications? Or is it a question
of human capital, possibly addressable through technical support? On the other
axis, I think about the types of problems faced at the particular network layer.
Is the concern the physical absence of facilities in a particular layer? This is
certainly an issue in some areas. Is the problem congestion or exhaustion of
facilities? Is the problem the price to use existing facilities? This is a real
problem in some areas - distance still costs money. Or, is the concern quality?
(For example, outages, slow or incorrect provisioning, difficulty handling a
complex order, or insufficient technical support.) Quality problems are big
concerns in some areas, and for some customers. They can directly affect
investment decisions by businesses considering where to locate or whether to
expand. All the disparate issues I just summarized have been described to me by
customers complaining specifically about what they (not me) labeled as the
"digital divide." It may also be useful to think of digital divide issues based
on the density of the customer base and the level of demand for advanced
services. In a high-density area with high demand (for example a commercial
core), competition solutions may solve any problems quickly. If a good business
opportunity exists, the market will respond. In a high-density/low-demand area
(perhaps a lower income urban neighborhood) community and economic development
strategies may make the most sense. These might include community access points,
training programs, or even loaning laptops to schoolchildren, as has been done
successfully. In a low-density/high-demand area (possibly a rural area with a
high level of dial-up Internet use) universal service, aggregation (taking
advantage of competitive opportunities), and new technology may all help solve
the problems. Perhaps something like an Agricultural Extension Service for
technology could help overcome demand-side barriers. In a low-density/low-demand
area the full panoply of strategies might be required. Education and other
creative approaches may be needed to promote demand in order to justify
expensive deployments in some areas. The bad news is that there is no one
strategy that will bridge all the digital divides. The good news is that there
are a multitude of approaches, each appropriate to address specific problems,
and - in combination - to bridge the many digital divides. The good news is that
there are enormous opportunities for creativity. The good news is that we can
work together to solve real problems in real communities. III. SUCCESSES ON
WHICH TO BUILD - SOME STORIES FROM BIG SKY COUNTRY Montanans are excited about
advanced technology. They're using what they have, and eager for faster and more
robust access. Investment in telecommunications infrastructure, it is now
agreed, leads to greater economic activity generally. I Streaming Solutions,
Inc. (www.ss-i.com), based in Cut Bank, is a premiere provider of audio and
video streaming systems. It has developed a range of strategic partnerships, and
is eager to pursue global opportunities that will require good connections to
the rest of the world. Based in Missoula, HealthDirectory.com
(http://healthdirectory.com) provides the nation's fastest growing database of
Medical Society members' web pages, and provides innovative web-based health
information to consumers around the nation. Stream International, which provides
Internet and voice-based customer support services for world-class technology
companies and e-businesses, recently opened a customer and technical support
center in Kalispell that may eventually employ 500 people. Their decision was
based in significant part on the quality of telecommunications available in from
Century Tel, which will provide redundant Sonet Ring technology and two way
access out of the Flathead Valley.
(http://www.stream.com/Stream.nsf/18ab8bdOdle8cf8l8525663cOOl342e
d/Od72dfc5cOO7ec938 52568abOO4e9304?QpenQocument). Dynamic community-based
networks include the KooteNet in Libby (http://www.libby.org) and Dillon-Net
(http://www.di11on- net.orq/), both of which play valuable roles in these rural
communities. At each level of the network, it's possible to point to tremendous
successes. Those successes should be our models. I will focus on the good work
of Montana's rural telephone cooperatives and companies, which don't get their
story told often enough. I'm pleased that Montana-based Touch America will be
participating in today's hearing. They also have a great story to tell. U S WEST
has all digital switches and interoffice facilities, and has deployed Frame
Relay. It has also deployed DSL in Helena. AT&T has begun
providing high-speed cable service in Billings. Several national carriers,
including Avista and PSINet are also providing service in Montana. Montana's
rural providers have massively rebuilt their local networks, with crucial
support from universal service mechanisms and, in some cases, Rural Utility
Service loans. These networks are of sufficient quality to support provision of
wide-band for those customers close enough to be directly served from the
central office. Almost all Montanans now have dial up Internet access. A Montana
a consortium of rural cooperatives and small telcos has built the ATM-based MAIN
(Montana's Advanced Information Network) network, which will finish looping most
of Montana this year. Together, these companies have deployed over 5,000 miles
of fiber. (Attachment 2 is a map of the MAIN network.) A related consortium,
Vision Net, 3 connects approximately ninety switched video studios, mainly in
rural Montana and including a number of studios on Indian Reservations.
(Attachment 3 includes video studios connected to the Vision Net network.) Many
rural providers are committed to providing DSL and other
services to their members over the coming year. These efforts are important, but
may be risky. And, the further out access is deployed, the more expensive and
therefore risky it becomes. For example, the Jordan exchange, served by
Mid-Rivers Telephone Cooperative, includes 790 access lines in an area of 4025
square miles. The capital cost of providing DSL to the 397
customers served directly from the central office will be only $38 per customer,
and Mid-Rivers will make this investment. In cold contrast, the average capital
cost to provide DSL to the 390 customers too far away to be
served directly from the central office is nearly $32,000 per customer. It is
impossible to make a business case to recover all of these costs. Once
high-speed service is deployed locally, that traffic must be carried to the
backbone network. A high-speed information side street is of little value if it
connects to a washboard- surfaced country road at the edge of town. The presence
of good capacity networks such as MAIN is essential to complete the link. Vision
Net is also developing ways to provide cost-effective Network Access Point (NAP)
connections using a combination of existing and new facilities. Skyland
Technologies, Inc., also a consortium project recently opened a "fiber hotel" in
Billings. The facility provides high-quality interconnection (caged or cageless)
with redundant access to multiple networks, for a variety of national and
regional carriers. Attachment 4, provided by Montana Independent Telephone
Systems, describes MAIN, Vision Net, the Network Access Point peering proposal,
the Skyland fiber hotel, and also several carriers' work to provide
DSL and to improve service on the Crow Indian Reservation.
These examples raise questions: - What kind of support do successful efforts
need to thrive? - How can they be replicated in other areas? - How can we build
on or better these accomplishments? IV. THE COMPETITION TOOLS The competition
tools involve opening up local networks (I think of them as "hub networks")
through tools such as interconnection under Sections 251 and 252. It has been a
challenge for the FCC, state commissions, and (unfortunately) the courts to set
the right balance between incumbents and competitors over the past four years.
As Justice Stephen Breyer remarked, "It is in the unshared, not in the shared,
portions of the enterprise that meaningful competition would likely emerge." I
am pleased to report that "line sharing," through which a competitor can lease
the unused high frequency of a local loop to provide Digital Subscriber Loop
(DSL) will be a successful competitive tool in Montana. US WEST
and competitive providers are currently negotiating a multi-state
DSL agreement, that I expect to be finalized soon. I expect to
see Montana-based companies use their own DSL facilities over
shared lines to provide DSL in several Montana towns. This will
likely trigger a healthy competitive response from U S WEST. That's just how
competition is supposed to work, and just what Congress intended in opening
local markets. Section 271 is another critical competition tool you gave us. The
nuts and bolts work to open markets, which you laid out in the competitive
checklist, is not an easy task for anyone. Success requires absolute commitment
and focus. Fortunately, four years after the Act passed, parties on both sides
have moved past the posturing and are hard at work to succeed. The structure of
Section 271 creates two especially important roles for state commissions:
developing a thorough record, and - especially - working with the Bell Operating
Company and its competitors to solve problems and implement systems that work.
State commissions including New York and Texas have devoted substantial
resources (including lots of creativity) to using the Section 27i tool to
construct the framework for competitive local markets in their states. Where
that tool is used well, as in New York and Texas, the FCC should give especially
great weight to state commission decisions. That is what occurred in New York.
That is what should occur in Texas. Thirteen commissions in states served by U S
WEST are working together on a collaborative effort to conduct independent,
third party testing of the Operations Support Systems (OSS) that are critical to
the success of local competition. That process is open to all competitors, with
all documents available on the Web (http://www.nrri.ohio-state.edu/oss.htm).
Both U S WEST and the competitors are working together seriously and in good
faith. Issues associated with the ability of competitors to provide
DSL are an important part of the Regional OSS Collaborative.
(While the pending U S WEST-Qwest merger presents many serious issues now being
examined by state commissions including Montana's, it is my persona belief that
one result of the merger has been to focus U S WEST much more clearly on opening
its local market.) There are several bills currently pending before the House
and Senate that seek to accelerate the deployment of advanced broadband
services, a goal I strongly support. However, I do not support weakening
incentives to comply with Section 271, or blunting the 271 tool. Current
telecommunications law does not prevent Bell companies from providing broadband
services to customers, if such broadband services do not cross LATA boundaries.
In fact, Bell companies have already deployed this very same broadband
technology in their home markets where new competitors are offering competing
services. It is exactly this type of competition that has propelled the
deployment of advanced services in many of our communities. Data traffic already
comprises roughly half of all telecommunications traffic today. Our goal should
be an integrated network ( a "network of networks"). In March, NARUC adopted a
resolution affirming its support for the 1996 Act; opposing legislation that
would permit the Bell Operating Companies to provide data services across LATA
boundaries without first fully opening their local markets to competition as
required under the 1996 Act; or, that would limit the ability of public utility
commissions to fulfill their obligation to regulate core telecommunications
facilities used to provide both voice and data services and to promote
deployment of advanced telecommunications capabilities. We took this action
because Section 271 is a valuable tool that states are using effectively to open
markets, which in turn is helping to spur deployment of new services. I would
like to see, as I am now seeing, all parties focused on doing what Congress told
them to do. The first result will be competitors able to compete. The next
result will be Bell companies able to use their networks end- to-end. The
ultimate result will be more choice, and new and better services for Americans.
V. THE UNIVERSAL SERVICE TOOLS I was recently appointed by FCC Chairman Kennard
to the Federal- State Joint Board on Universal Service. (Attachment 5 is my
statement at the March 6, 2000 Joint Board meeting.) Over the next year, the
Joint Board will be considering an appropriate high cost fund mechanism for the
hundreds of small companies that provide generally excellent service throughout
rural America. We will be paying particular attention to the reports and
recommendations of the Rural Task Force. In Section 254(b)(2) you instructed us
that, "Access to advanced telecommunications and information services should be
provided in all regions of the Nation." In Section 254(b)(3) you declared that
residents of rural and insular areas should have access to "reasonably
comparable" services, including advanced services, at prices that are reasonably
comparable to those in urban areas. In Section 254(c)(1) you directed us to
consider the "evolving level" of universal service, taking into account whether
services are "subscribed to by a substantial majority of residential customers."
I hope the Joint Board will be considering all these issues. Additional FCC
proceedings, including those concerning the cap on the size of the high cost
fund for rural providers and the consideration of bandwidth that will be
supported by high cost fund are also relevant. These present complex questions
with often conflicting objectives among parties. The outcomes, however, will
directly affect the provision of high quality basic and advanced services to
many parts of this country. I will not comment on whether "Eligible
Telecommunications Carriers" should be required to provide all customers
advanced services in order to receive high cost fund support. However, it is
significant that perhaps as many as seventy percent of all customers are within
18,000 feet of the central office, which is currently considered the maximum
reasonable distance for most DSL service. It has been estimated
that as much as eighty percent of the loop enhancements necessary to provide
DSL could be funded under the current system but for the high
cost fund cap. VI. THE SECTION 706 TOOLS Section 706 demonstrates how far
sighted Congress truly was. Its champions, especially including Senator Bums,
told us "do more, don't be satisfied." NARUC passed a resolution two years ago
saying Section 706 is an opportunity to "gab the brass ring of new technology,"
not an invitation to pick the low-lying fruit." Last Summer NARUC submitted to
the FCC a detailed proposal for a Section 706 Joint Conference. Specific
functions set out in the NARUC proposal included monitoring deployment through
regional hearings, studies, and other efforts; Agfiygfin stakeholders;
coordinating efforts by seeking synergies, removing barriers, and transferring
implementation to stakeholders; and disseminating information to those best able
to use it. The proposal also discussed coordinated deployment, for example
through "Section 706 zones." As we developed the Section 706 Joint Conference
proposal last year, we particularly benefited from the efforts of the Alliance
for Public Technology, which proposed a Section 706 Joint Board two years ago.
The Joint Conference's success, in my opinion, will depend on the continued
involvement of citizens' organizations, providers, users and potential users at
the community level. Through the regional field hearings, site visits and other
efforts, I hope we will emphasize the importance of these direct contributions.
Depending on the location, the customer, and the specific circumstances, a
particular Digital Divide issue may have a competition answer, a universal
service answer, or an answer that involves supporting state and local economic
development efforts, for example through training efforts. The Rural Utility
Service and NTIA also have important contributions to make. As federal and state
commissioners, we don't have all the answers, the resources, or the legislative
direction to answer all these questions. And we shouldn't! I hope through the
Joint Conference we will be able to assist in bringing together the parties who
can help assemble the pieces in the kinds of creative, new combinations that are
the essence of entrepreneurialism. Within the constraints of federal law, the
FCC worked hard to be faithful to the NARUC proposal. Created in October, the
Federal State Joint Conference on Broadband Services is intended as a forum to:
- examine how to accelerate deployment of affordable advanced services to rural
and under-served citizens; - conduct an on-going cooperative dialogue regarding
deployment of advanced services; - promote an exchange of information between
and among state and federal jurisdictions; and, - explore regulatory and
deregulatory mechanisms that will facilitate the widespread availability of
advanced services. Chairman Kennard and his four fellow commissioners will all
participate in the Joint Conference. Each will join with state commission
members as co-hosts of regional field hearings. The opening hearing, held
Washington on March 8, included a very lively kickoff and also a site visit
focusing on broadband deployment in inner cities. An April 17th hearing in
Anchorage will focus on the relationship between advanced services deployment
and economic development. An April 19th hearing in Sioux City, Nebraska, will
emphasize cable and fixed wireless deployment and rural deployment. A May 22nd
hearing in Lowell, Massachusetts, will concern public/private partnerships,
deployment in remote areas, and data gathering initiatives. On June 9th, a
hearing in Miami will focus on deployment to rural and urban multicultural
communities, fixed wireless deployment, and public private partnerships. On June
23d, a hearing in Cheyenne, Wyoming (with a Montana segment on June 2l')10 will
focus on speeding deployment via community demand aggregation, deployment in
rural areas and Indian Territory, and data gathering initiatives. Information
about the Joint Conference is available at its web page,
www.fcc.gov/joinLconference. The Joint Conference is an exciting project. It
will help move us beyond the "Telewars" the armies of lawyers and advocates have
been fighting, and focus us instead on what we can accomplish together. The most
exciting and important work, however, will not occur in public hearings. It will
take place in the big cities, in the small towns, and on the "frontiers" (as we
say in Montana), where people are working diligently and creatively to solve
real problems.
LOAD-DATE: April 2, 2000, Sunday
