Before the

DEPARTMENT OF COMMERCE

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

Washington, D.C. 20230

 

 

 

 

Deployment of Broadband Networks                            )
and Advanced Telecommunications                              )               Docket No. 011109273-1273-01

 

 

 

 

COMMENTS OF TCA, INC.

 

 

 

 

 

Karen Twenhafel

Regulatory Consultant

1465 Kelly Johnson Boulevard

Suite 200

Colorado Springs, Colorado 80920

(719) 266-4334

 

Dated: December 19, 2001

Introduction

Telcom Consulting Associates (TCA) submits these Comments in response to the National Telecommunications and Information Administration’s (NTIA) Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications published in the Federal Register November 19, 2001[1].

 

TCA is a management-consulting firm providing financial and regulatory services for over fifty small, rural local exchange carriers (LECs) throughout the United States.  A large majority of TCA’s clients are rural carriers and currently provide or are planning to provide broadband services to their customers.  As such, TCA’s clients have a direct interest in this proceeding and offer the following comments regarding governmental policy and the provision of broadband services, with a specificity toward rural areas.

 

The majority of TCA’s clients provide, or will provide in the near future, broadband-capable services and facilities.  In this manner, TCA’s clients mirror the rural incumbent local exchange company (ILEC) industry.  The National Telephone Cooperative Association (NTCA) recently conducted a survey of its membership, consisting of rural telephone carriers, regarding the provision of broadband services to their customers.  NTCA found that 60% of the customers of survey respondents have available broadband services at a minimum speed of 200 kbps downstream.[2]  These numbers have a longer tale to tell. The majority of rural ILECs, while providing broadband services to some customers, are unable to provide such services to all customers. Without some type of support mechanism, access to advanced services will simply not be available to many rural Americans.

 

The 1996 Telecommunications Act Requires that All Regions of the Nation have Access to Advanced Services.

The Telecommunications Act of 1996 (the Act) is a federal law.  All federal agencies have a responsibility to uphold and implement federal laws.  Through this Request, and previous attempts to formulate broadband policy, the NTIA has acknowledged its responsibility toward the Act and the policy mandates set out by Congress in the Act.  One such mandate is that universal service should be preserved and advanced by, in part, providing “access to advanced telecommunications and information services… in all regions of the Nation.”[3]  The Act further states that such services made available in rural and high-cost areas should be “reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.”[4]  The Act adopts as a goal for the federal government “access for all” to broadband services.  The NTIA, along with other federal agencies including the Federal Communications Commission (FCC), now has the responsibility to meet that goal set five years ago.

 

The Act also requires that the FCC and each State commission “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans…” [5] Plainly, not only does the federal government have the responsibility to ensure all Americans have access to advanced services, but the state regulatory commissions also share in this responsibility.  Any policy decisions NTIA makes regarding access to advanced services must take into account the states’ role in encouraging deployment of the necessary infrastructure provisioning such services.  TCA believes a national policy, to be carried out by the states, should be adopted by NTIA and the FCC.  Furthermore, the responsibility for any universal advanced service support mechanisms found necessary to carry out this national policy should be shared between the state and federal governments.

 

 

The Request recognizes the goal as stated in the Act when it asks for primary policy considerations in formulating national broadband policy[6].  The Request lists as potential primary policy considerations: “access for all; facilities-based competition; minimal regulation; technological neutrality; intra-modal competition; and inter-modal competition.”[7]  While TCA would support all of the listed considerations as laudable, the primary policy consideration is clearly “access for all,” as stated within the Act.  No other policy consideration may be placed before access to advanced services is available for all Americans, regardless of geographical location.  To do so would violate the Congressional mandate given to all federal agencies.

 

Some Form of Support Mechanism Must Be Adopted in Order to Provide Access to All Regions of the Nation.

By listing the goal of access to advanced services (including information services) as a principal of universal service[8], Congress indicated its approval for some form of support mechanism for advanced services in rural and high-cost areas.  Frankly, as past experience proves, without some type of support, the federal government will not meet the goal as set out in the Act. 

 

Reminiscent of providing telephone service to all areas, relying solely on the marketplace to achieve policy goals will simply not work.  As stated earlier, the NTCA Survey found that 60% of the customers of survey respondents (rural ILECs) have made available to their customers broadband services at a minimum speed of 200 kbps downstream.  Current take rates, however, average only 2.5% over all technologies.[9]  When asked what factors hindered offering broadband services, carriers listed loop length and cost of deployment.[10]  Clearly, in order to provide access to advanced services to the remaining 40% of the rural customer base, the federal government must step in and provide a form of support.  Assistant Secretary Victory recognized as much in a recent speech before the Competition Policy Institute.  In listing guideposts steering the formulation of broadband policy, Assistant Secretary Victory stated that the federal government “should be mindful that the market might not always work as well or at the same pace in all areas, particularly in rural and certain urban areas.[11]”   TCA agrees with the Assistant Secretary in stating that, in certain areas, competition is not the best way to ensure investment in necessary broadband services.  The NTCA Survey noted that 81% of survey respondents reported only one or zero competitors in their service area. 

 

An important distinction between access to broadband services and actual broadband services must be made.  Any support mechanism must not penalize the provider for factors beyond its control.  The mechanism must focus on the needed investment to provide the services, and not on the decisions of the consumer to ultimately consume (or not) such service.  As broadband services could very well be an answer to the continuing problem of economic development in rural areas, this focus is particularly significant in rural and high-cost areas.  Support mechanisms for advanced services should incent investment to the “last mile” to provide access to all Americans.  In addition, any support mechanism targeted for access to advanced services should recognize the Carrier of Last Resort responsibility of all rural ILECs and the value placed on such responsibility as it relates to universal service.

 

Current Regulatory Policy is Impeding the Availability of Broadband Services in All Regions of the Nation.

The FCC, the main regulator of advanced services, ruled that xDSL is an interstate service.  Such a ruling ensures that consumer take rates of xDSL service in rural areas will have difficulty rising above the current anemic levels.  By making this ruling applicable to rural ILECs, the FCC halted any flexibility that a rural carrier would have in setting rates and terms to best provides for its customers’ needs.  The average price currently charged for bandwidth above 200 kbps is $69.66 in rural areas[12].  By allowing rural ILECs to tariff broadband services at the state level or on a non-regulated basis, some flexibility could be had in order to provide a better business case for the remaining 40% of the rural customer base.

 

Current universal service regulations, now ambiguous, need to be clarified in order to provide specific and predictable support for broadband investment.  The Act charged the FCC and the Federal-State Joint Board on Universal Service to base universal service policies, in part, on the principle of providing access to advanced information services to all regions of the country.   Clarifying the current rules would aid in meeting that goal.

 

Finally, the definition of “broadband” must be standardized and broadened.  Currently, federal policy concentrates on speed of data transmission.  The FCC defines a broadband service as having the speed of a minimum of 200 kbps.  The Rural Utilities Service loans funds for broadband investment based on 1.5mbps transmission rate.  As Assistant Secretary Victory stated, “[c]onsumer wants and needs often cannot be anticipated… and government often can’t react quickly enough.”[13]  TCA would submit, that instead of continually playing “catch-up” to technology, the federal government should establish minimum downstream speeds for the various market sectors.  TCA suggests that minimum broadband speeds should be defined separately for residences and small business.  For example, 200 kbps downstream could be considered as “broadband service” for residential customers and 500 kbps could be the definition for small business customers.  These floors could be periodically reconsidered as needed.

 

Conclusion

Access for all Americans to broadband services must be seriously considered as the next step in the universal service debate.  However, too often, the significant universal service goal of access to advanced services is not discussed among policymakers.  Certainly, rural ILECs have finished the lion’s share portion of meeting the goal set by the Act.  Sixty percent of the rural customer base has access to broadband services.  These carriers have amply demonstrated their commitment to the communities they serve by achieving this significant rate while battling against a tenuous business case.  It is now time for the federal government to aid these carriers and meet the challenge set out five years ago.

 

Respectfully submitted,

                                                                                                TCA, Inc. – Telcom Associates

                                   

                                                                        By: [electronically filed]

                                                                       

                                                                        Karen Twenhafel                           

                                                                                                Regulatory Consultant

TCA, Inc.-Telcom Consulting Associates

                                                                        1465 Kelly Johnson Blvd., Suite 200

                                                                        Colorado Springs, CO  80920

                                                                        (719) 266-4334          

December 19, 2001