Statement of

**Jonathan S. Adelstein**

**Commissioner, Federal Communications Commission**

**BEFORE THE**

**Subcommittee on Rural and Urban Entrepreneurship**

**SMALL BUSINESS Committee**

**united states house of representatives**

**MaY 9, 2007**

Mr. Chairman, Congressman Fortenberry, and members of the Subcommittee,
thank you for inviting me to testify about one of the seminal challenges
confronting our Commission and the country: ensuring the ubiquitous
deployment of affordable, high speed broadband infrastructure to every
corner of this country.

We need to maximize the potential of every citizen to contribute to our
social, cultural and economic life through communications, whether they
live in major cities or in rural, insular or other high-cost areas,
whether they are Native Americans living on tribal lands or residents of
economically challenged sections of our inner cities, whether they live
with disabilities, whether or not they speak English, and regardless of
their income level. I would like to talk to you today about why I
believe this is such an important guiding principle for communications
policy and a few of the ways we at the FCC and you in Congress can and
must work to achieve this ambitious goal. We need to make broadband the
dial-tone of the 21^st^ Century.

I am particularly honored to be here because \-- as a fourth generation
South Dakotan and the first FCC Commissioner from my state, and even
from the entire upper Midwest \-- I am naturally interested in the
important role of broadband as a tool for promoting economic development
in Rural America. Early in the last century, my grandfather became an
engineer and founded a company that built roads throughout our state.
The motto of our family company was "Builders of Better Bridges and
Highways." I keep that spirit in mind in my work at the FCC. Just as
roads and bridges provide physical links between our communities, our
communications networks now bring people together in ways that my
grandfather never could have imagined, but that, I'm sure, would have
made him smile in wonder.

In some areas of the country, our communications tools have already
surpassed the reach of the physical infrastructure to overcome the
limits once immovably fixed by distance. I have visited the Bush region
in Alaska, above the Artic Circle, where satellite technology, funded
through universal service support, connects even some of the most
isolated villages to the health and educational facilities of hub
cities, even though no roads connect these towns. As we upgrade our
nation's communications networks to provide broadband functionality and
advanced communications services everywhere, our children will integrate
these tools into their lives in ways that we are only beginning to see.

**The Role of Broadband for Rural America**

By expanding the reach of advanced communications technologies, we can
bring new hope to many communities where it is in short or diminishing
supply. We are only scratching the surface of the opportunities that
these technologies can bring. We stand at the threshold of a revolution
in the applications that will ride over this infrastructure. These
opportunities hold enormous potential for consumers and workers in small
towns and Rural America.

Broadband can connect entrepreneurs to millions of new distant potential
customers, facilitate telecommuting and increase productivity. These new
connections can create new jobs by allowing businesses to set up remote
locations and call centers. Since I have joined the Commission, I have
traveled across the country and seen broadband technologies harnessed in
rural areas in ways folks back inside the Beltway might never have
imagined.

For example, at auction houses across the Midwest, entrepreneurs are
using broadband technologies to conduct real time cattle auctions over
the Internet. Ranchers from across the country can log in, watch real
time video of the livestock and make purchases without leaving their
ranches. By putting their livestock up for bid in cyberspace, these
auction houses have been able to bridge remote locations, expand their
potential markets, and cut the costs of reaching their customers.

Broadband can also unlock transformational opportunities through
distance learning and specialty classes that might otherwise be confined
within the physical walls of a traditional school. Similarly,
telemedicine applications are giving Rural Americans access to
diagnostic services, like mobile mammography and emergency services that
had been unavailable because of distance, cost, weather, or geography.
As we have seen through events like the devastation of Hurricane
Katrina, our communications services become even more critical in times
of disaster or national emergency, whether as a means of conveying
critical information to the public, enabling citizens to communicate
with their loved ones, or providing an essential tool for our first
responders. Broadband networks are essential to any plan to make
emergency networks robust and redundant enough to survive and function
in the face of such disasters in the future.

Broadband technologies have the potential to improve the quality of life
in even some of most remote and economically challenged communities. On
Native American lands, I have seen tribally-owned providers using
broadband infrastructure to bring jobs to their communities that serve
not only as important sources of employment, but also as training
grounds for the young people of the tribes. In almost every small
community I visit, I hear how hard it is to develop a workforce with
sufficient training in technology. Yet without such workers, it is hard
for a small town to develop and oversee cutting edge communications
systems. We want people to be able to stay, work, and thrive in the
communities where they grew up, yet I often hear that it is harder to
keep young people in rural areas these days because they feel a palpable
lack of local opportunities. Broadband communications can benefit Rural
America in many ways, perhaps most of all by restoring the sense of
opportunity that first made Americans venture forth and settle the more
remote areas of this country.

As consumers are increasingly empowered to use broadband in newer, more
creative ways, the stage on which we all must compete is also evolving
into a global one. New telecommunications networks are a key driver of
this new global landscape. They let people do jobs from anywhere in the
world \-- whether an office in downtown Manhattan, a home on the
Cheyenne River Indian Reservation, or a call center in Bangalore, India.
This trend should be a wake-up call for Americans to demand the highest
quality communications systems across our nation, so that we can harness
the full potential, productivity and efficiency of our own country. We
must give all our towns the tools they need to compete in this new
marketplace. If we fail in this, be assured, our competitors around the
world will take full advantage of our failure.

**Rural America and Global Competitiveness**

Keeping our communities connected and ensuring that the latest
technologies reach all Americans, including those in remote and
underserved areas, are principles that are enshrined in the
Communications Act. Meeting these goals will be more important than ever
as we enter a new age of global competitiveness.

We've made progress, and there are many positive lessons to draw on, but
I am increasingly concerned that we have failed to keep pace with our
global competitors over the past few years. Each year, we slip further
down the regular rankings of broadband penetration. For small
businesses, those in rural areas, and low income consumers, the problem
can be even more acute. According to one recent report, seventy-six
percent of small businesses in rural areas report no access to
terrestrial broadband services. Even more troubling, there is growing
evidence that citizens of other countries are getting a much greater
broadband value in the form of more available megabits for less money.
According to the ITU, the digital opportunity afforded to U.S. citizens
is not even near the top: in fact, it is 21st in the world! This is more
than a public relations problem. It is a major productivity problem, and
our citizens deserve better. Indeed, if we do not do better for everyone
in America on this score, then we will all suffer economic injury as a
result. In this broadband world, more than ever, we are truly *all* in
this together.

Some have argued that the reason we have fallen so far in the
international broadband rankings is that we are a more rural country
than many of those ahead of us. If that is the case, and since geography
is destiny and we cannot change ours, rather than merely curse the
difficulty of addressing rural communications challenges, we should
redouble our efforts and get down to the business of addressing and
overcoming them.

I am concerned that the lack of a comprehensive broadband communications
deployment plan is one of the reasons that the U.S. is increasingly
falling further behind our global competitors. Virtually every other
developed country has implemented a national broadband strategy. This
must become a greater national priority for America than it is now. We
need a strategy to prevent outsourcing of jobs overseas by promoting the
ability of U.S. companies to "in-source" within our own borders. Rural
America and underserved urban areas have surplus labor forces waiting to
be tapped. No one will work harder, or work more efficiently, than
Americans, but many are currently without opportunities simply because
the current communications infrastructure is inadequate to connect them
with a good job. That situation must improve.

**A National Broadband Strategy for All Americans**

We must engage in a concerted and coordinated effort to restore our
place as the world leader in telecommunications by making available to
all our citizens affordable, true broadband, capable of carrying voice,
data and video signals. An issue of this importance to our future
warrants a comprehensive national broadband strategy that targets the
needs of all Americans, including those in Rural America. A true
broadband strategy should incorporate benchmarks, deployment timetables,
and measurable thresholds to gauge our progress.

We need to set ambitious goals and shoot for real high-bandwidth
broadband deployment. We should start by updating our current anemic
definition of high-speed of just 200 kbps in one direction to something
more akin to what consumers receive in countries with which we compete,
speeds that are magnitudes higher than our current definitions.

We must take a hard look at our successes and failures. We need much
more reliable, more specific data than the FCC currently compiles so
that we can better ascertain our current problems and develop responsive
solutions. Giving consumers reliable information by requiring public
reporting of actual broadband speeds by providers would spur better
service and enable the free market to function more effectively.

We must redouble our efforts to encourage broadband development by
increasing incentives for investment, because we will rely on the
private sector as the primary driver of growth. These efforts must take
place across technologies, so that we not only build on the traditional
telephone and cable platforms, but also create opportunities for
deployment of fiber-to-the-home, fixed and mobile wireless, broadband
over power line, and satellite technologies. We must work to promote
meaningful competition, as competition is the most effective driver of
innovation, as well as lower prices. Only rational competition policies
can ensure that the U.S. broadband market does not devolve into a
stagnant duopoly, which is a serious concern given that cable and DSL
providers now control approximately 95 percent of the residential
broadband market.

There also is more Congress can do, outside of the purview of the FCC,
such as providing adequate funding for Rural Utilities Service broadband
loans and grants; ensuring RUS properly targets those funds; providing
tax incentives for companies that invest in broadband to underserved
areas; devising better depreciation rules for capital investments in
targeted telecommunications services; investing in basic science
research and development to spur further innovation in
telecommunications technology; and improving math and science education
so that we have the human resources to fuel continued growth, innovation
and usage of advanced telecommunications services.

Two other critical steps toward a national strategy, elaborated upon
below, are properly channeling universal service and promoting
spectrum-based services for Rural America.

**Universal Service: Evolving for the Broadband Age**

Congress and the Commission recognized early on that the economic,
social, and public health benefits of the telecommunications network
increase exponentially for all subscribers with the addition of each new
subscriber. Federal universal service continues to play a vital role in
meeting our commitment to connectivity, helping to maintain high levels
of telephone penetration and increasing access for our nation's schools
and libraries. With almost a decade behind us since the 1996 Act, the
FCC is re-examining almost every aspect of our federal universal service
policies, from the way that we conduct contributions and distributions,
to our administration and oversight of the fund. As this review has gone
forward, I have worked hard to preserve and advance the universal
service programs as Congress intended.

Yet, broadband take rates remain comparatively low in Rural America.
Among households connected to the Internet, roughly 44 percent of urban
households make use of broadband access. In contrast, only 25 percent of
rural households with connections to the Internet use broadband. This
disparity -- confirmed as well by GAO in a 2006 report on broadband \--
is perhaps not surprising given that rural residents tend to be less
likely to use the Internet, regardless of the technology. The Pew
Foundation has suggested that this may be due in part to presence of
older and less wealthy populations in Rural America. If this is true, we
may expect the same factors to affect the roll-out of broadband in rural
areas. But, even if slow broadband uptake truly is only a symptom of
them today, we must not allow the lack of broadband access to become an
affirmative *cause* of the "graying" and relative impoverishment of
Rural America in the future.

Ensuring the vitality of universal service will be particularly
important as technology continues to evolve. Increasingly, voice, video,
and data will flow to homes and businesses over broadband platforms. In
this new world, as voice becomes just one application over broadband
networks, we've got to have ubiquitous broadband pipes to carry the most
valuable IP services everywhere. Without such broadband networks, IP
services can't reach their full audience or capability. The economic,
public health, and social externalities associated with access to
broadband networks will be far more important than the significant
effects associated with the plain-old-telephone-service network, because
broadband services will touch so many different aspects of our lives.
So, it is important that the Commission conduct its stewardship of
universal service with the highest of standards and that we ensure that
universal service evolves to promote advanced services, which is a
priority that Congress has made explicitly clear.

**Wireless: A Critical Source of Broadband Services**

One of the best opportunities for promoting broadband, particularly in
rural areas, and providing competition across the country, is in
maximizing the potential of spectrum-based services. The Commission must
do more to stay on top of the latest developments in spectrum technology
and policy, working with both licensed and unlicensed spectrum. Spectrum
is the lifeblood for much of this new communications landscape. The past
several years have seen an explosion of new opportunities for consumers,
like Wi-Fi, satellite-based technologies, and more advanced mobile
services. We now have to be more creative with what I have described as
"spectrum facilitation." That means looking at all types of approaches
-- technical, economic or regulatory -- to get spectrum into the hands
of operators ready to serve consumers at the most local levels possible.

Of course, licensed spectrum has and will continue to be the backbone
for much of our wireless communications network. We are already seeing
broadband provided over satellite, new wireless broadband systems in the
2.5 GHz band and the increasing deployment of higher speed mobile
wireless connections from existing cellular and PCS providers.

During our review of the bandplan in advance of the auction last year of
90 MHz of new spectrum for the Advanced Wireless Service, I pressed for
the inclusion of smaller blocks of licenses. I thought that smaller
license blocks would improve access to spectrum by those providers who
want to offer service to smaller areas, while also providing a better
opportunity for larger carriers to more strategically expand their
spectrum footprints. Our decision to adopt smaller license blocks was
well received by a number of carriers and manufacturers.

The Commission has a historic opportunity in the upcoming 700 MHz
auction to facilitate the emergence of a "third" broadband platform that
will ensure consumers everywhere the benefits of a high-quality wireless
broadband network. As we finalize our rules for the 700 MHz auction, the
biggest and most important auction we will see for many years to come,
it is critical we build on the lessons learned from our previous
auctions to provide a diverse group of licenses so that all bidders have
an opportunity to obtain licenses that best match their business plan.
While I have supported rules to facilitate the secondary market for
spectrum rights and licenses, I think we are best served by providing a
wide variety of license sizes at the initial auction when appropriate.

I have also worked closely with the Wireless Internet Service Provider
(WISP) community, which has been particularly focused on providing
wireless broadband connectivity in rural and underserved areas. I even
had the opportunity to host an extraordinary FCC event in my home town
of Rapid City a few years ago to highlight the potential of rural WISPs.
Unlicensed broadband services can be a big part of the rural solution.
Unlicensed spectrum is free and, in most rural areas, lightly used. It
can be accessed immediately, and the equipment is relatively cheap
because it is so widely available.

We can do even more for rural WISPs and other unlicensed users. I have
heard from operators who want access to additional spectrum and at
higher power levels. And the Commission has been doing just that. We
have opened up 255 megahertz of spectrum in the 5 GHz band -- more
spectrum for the latest Wi-Fi technologies -- and are looking at ways to
increase unlicensed power levels in rural areas.

I also have pushed for flexible licensing approaches that make it easier
for community-based providers to get access to wireless broadband
opportunities. We adopted rules to make spectrum in the 3650 MHz band
available for wireless broadband services. To promote interest in the
band, we adopted an innovative, hybrid approach for spectrum access. It
makes the spectrum available on a licensed, but non-exclusive, basis. I
have spoken with representatives of the Community Wireless Network
movement, and they are thrilled with this decision and the positive
impact it will have on their efforts to deploy broadband networks in
underserved communities around the country.

We have also made spectrum available in the 70/80/90 GHz band for
enterprise use. While you may not be familiar with this spectrum block,
it can be used to connect buildings with gigabit-speed wireless
point-to-point links for a mile or more. Instead of digging up streets
to bring fiber to buildings, licensees can set up a wireless link for a
fraction of the cost \-- and the spectrum is available to anyone holding
a license. While others supported an auction, I successfully argued
against them in this unique case, because I was concerned that auctions
would raise the price of access and shut out smaller licensees. In fact,
one company now is installing five links for the city of Sioux Falls.
The links will be used for a number of City services, including public
works, police and fire departments, as an alternative to fiber.

We are now even looking to allow unlicensed operations in unused
television spectrum bands -- the so-called "white spaces." It is a
challenging proposal, but one that could allow for unlicensed use of
spectrum that has exceptional propagation qualities, which can be
particularly useful in rural areas. We have an obligation to look at the
interference implications of such a proposal, and it will be a major
proceeding at the Commission this upcoming year.

**Conclusion**

Congress has charged the Commission with ensuring that the American
public stay well-connected and well-protected, directing us in the very
first section of the Communications Act with making available to "all
the people of the United States" rapid, efficient Nation-wide
communications services. That starts with a continuing commitment to
connectivity, and nowhere is this more important than in Rural America.

If the horse and wagon were the key tools that allowed my ancestors to
settle the west, broadband networks will be a big part of maintaining
and restoring the vitality of our rural communities in the future. Let
us face this new frontier of silicon and fiber as bravely and
resourcefully as they did the original frontier of forbidding forests
and vast prairies. If we do, I know we will experience similar success
and the proper place in the history of American progress. For the sake
of ourselves, our children, and this great country, may we be as bold
and successful in our own pioneering endeavor as they were in theirs.
Thank you for your leadership on rural broadband and for the opportunity
to testify before you today.