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25–857 2017

IMPROVING BROADBAND DEPLOYMENT: 

SOLUTIONS FOR RURAL AMERICA 

HEARING 

BEFORE THE

SUBCOMMITTEE ON AGRICULTURE, 

ENERGY, AND TRADE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JUNE 22, 2017 

Small Business Committee Document Number 115–026 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RON ESTES, Kansas 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Rod Blum ......................................................................................................... 1 

Hon. Brad Schneider ............................................................................................... 2 

WITNESSES 

Mr. Mike Romano, Senior Vice President, Industry Affairs & Business Development, NTCA—The Rural Broadband Association, Arlington, VA ................ 5 

Mr. Dave Osborn, CEO, VTX1, Raymondville, TX, testifying on behalf of 

the Western Telecommunications Alliance ........................................................ 7 

Mr. Tim Donovan, Senior Vice President, Legislative Affairs, Competitive 

Carriers Association, Washington, DC ............................................................... 8 

Mr. Chris Allendorf, Vice President of External Relations and General Counsel, Jo-Carroll Energy, Inc. (NFP), Elizabeth, IL .............................................. 10 

APPENDIX 

Prepared Statements: 

Mr. Mike Romano, Senior Vice President, Industry Affairs & Business 

Development, NTCA—The Rural Broadband Association, Arlington, 

VA ................................................................................................................... 28 

Mr. Dave Osborn, CEO, VTX1, Raymondville, TX, testifying on behalf 

of the Western Telecommunications Alliance ............................................. 48 

Mr. Tim Donovan, Senior Vice President, Legislative Affairs, Competitive 

Carriers Association, Washington, DC ........................................................ 60 

Mr. Chris Allendorf, Vice President of External Relations and General 

Counsel, Jo-Carroll Energy, Inc. (NFP), Elizabeth, IL .............................. 69 

Questions and Answers for the Record: 

Question from Hon. Don Bacon to Mike Romano .......................................... 77 

Question from Hon. Don Bacon to Dave Osborn ........................................... 79 

Question from Hon. Don Bacon to Tim Donovan ........................................... 82 

Question from Hon. Don Bacon to Chris Allendorf ....................................... 84 

Additional Material for the Record: 

None. 

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(1) 

IMPROVING BROADBAND DEPLOYMENT: 

SOLUTIONS FOR RURAL AMERICA 

THURSDAY, JUNE 22, 2017 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE, Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building, Hon. Rod Blum [chairman of 

the Subcommittee] presiding. 

Present: Representatives Blum, Chabot, King, Leutkemeyer, 

Comer, Bacon, and Schneider. 

Chairman BLUM. Good morning. I call this hearing to order. 

Thank you for all being here today as we assess how our Nation 

is doing at building out broadband services to our rural areas. And 

do not let lack of attendance here indicate to you in any way lack 

of interest. As Ranking Member Schneider and I were just saying, 

it is a very, very busy day and a lot of things going on this morning. So everybody, maybe more so than usual, is being pulled in 

multiple directions. But rest assured it is a very serious issue. And 

I am from a rural district and it is talked about every time I am 

back in the State of Iowa. 

As we have all witnessed in the last decade, modern communications technology has provided endless opportunities to small businesses, and particularly new and exciting ones to small firms located in rural America. The growth of the telecommunications industry and the advances in the way we communicate with each 

other in recent history has been nothing less than astonishing. 

Because of this rapid advancement, we have seen a revolution of 

sorts for small businesses as well. Small firms can communicate 

now with potential buyers around the world. Family farmers are 

using wireless technologies to monitor and maximize their crop production. Entrepreneurs can launch a website or an application from 

their living room or from just about anywhere. I own a small technology company and we sell around the world, and we could not 

do it without the internet. And with the use of now commonplace 

smartphones, we can accept payments from just about anywhere 

there is a wireless signal. Most importantly, these new technologies 

provide the gateway and opportunity for economic growth and job 

creation, particularly in rural areas. 

One of the most important tools the internet offers to small business is the ability to access the national and global electronic marketplace. From 2005 to 2015, electronic commerce in the United 

States, also known as online sales, grew from $291 billion to $342 

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2 

billion. It is an average increase of 15.3 percent from 2012 to 2015. 

Phenomenal growth. And this will not slow down anytime soon; I 

am sure you would agree. 

Our small businesses, particularly ones in rural areas, depend on 

new telecommunications technologies to compete across town and 

across the globe. Our witnesses today represent a critical part of 

the infrastructure that allows them to do just that. The Nation’s 

small telecommunications providers are the ones that traditionally 

supply the bulk of broadband services to the most rural parts of 

America, and that is no easy task. 

For instance, it is certainly worth the investment when you connect broadband to a densely populated urban area with homes, 

apartments, businesses, and people all converging in a relatively 

small area. It is not uncommon to have hundreds, if not thousands, 

of potential subscribers in a 1 square mile area. In rural areas, 

where family farms dot the landscape, acres and acres and acres 

apart from each other, in towns with populations of 300 representing the center of the community, the bang for the investment 

buck is not quite as large. Unfortunately, the simple geographic 

fact of population density has led to a rather large disparity of 39 

percent of our rural Americans not having access to high-speed 

telecommunications capacity—39 percent—compared to only 4 percent of Americans who live in urban areas. We have been making 

progress over the past few years, but more needs to be done to put 

rural America on par with urban America. 

This issue is a double-edged sword in that we have small telecommunications companies serving the greater rural, small business sector at large with no small responsibility. We here in Congress must ensure that our Federal Government’s regulatory regime is supporting and fostering growth in the telecommunications 

industry, not penalizing and limiting it, as we have seen in recent 

years. We have a new administration and new leadership at the 

Federal Communications Commission, or the FCC as most of us 

know it by, and other regulatory bodies that have a significant say 

about how and when broadband services can be delivered to rural 

areas in the United States. And I remain hopeful for continued, 

positive change. 

Again, I want to thank everyone for being here, particularly our 

panelists. And I now yield to our ranking member, Mr. Schneider, 

for his opening remarks. 

Mr. SCHNEIDER. Thank you, Mr. Chairman. I want to welcome 

the chairman of the overall Small Business Committee, Mr. 

Chabot. I’m pleased to join you both at this very important hearing 

today. 

Technology is a major contributor to the U.S. economy and the 

engine for modern American economic growth. Last year alone, the 

internet created 10.4 million jobs across all 50 States and contributed to 6 percent of the total U.S. GDP, 1.2 trillion dollars. At a 

time when technology holds the key to remaining competitive in a 

globalized economy, it is worrisome that the United States is 

ranked number 16 in the world in broadband access. Let me repeat 

that, the United States is ranked 16th in the world in broadband 

access. 

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For those of us fortunate enough to have access to broadband, we 

have seen the benefits of technology and how it affects our daily 

lives. From being able to make decisions based on real-time data, 

to being able to work remotely from any location, internet access 

has changed the face of business. Yet 34 million Americans still 

lack access to high-speed internet, 39 percent of which live in rural 

communities. This is simply unacceptable. 

Even though broadband subscriptions have progressively increased, rural and low-income community access is being outpaced 

by the rest of the country due to a lack of network deployment. Unfortunately, the digital divide may further widen without adequate 

support for broadband deployment. The truth is that expanding access in hard-to-reach and sparsely populated areas usually comes 

with a high price tag and significant challenges. 

The government plays a large role in ensuring all Americans 

have access to 21st century technology, and that is why we are 

holding this hearing, to learn just how we in Congress can improve 

broadband adoption. Eliminating the digital divide will not only assist rural communities; it will help our Nation’s job creators. By enabling small business access to the global electronic marketplace, 

we encourage job creation and innovation. Thus far, Federal loan 

and grant programs have helped rural communities gain access to 

high-speed internet, but we need to do more. Substantial and direct 

funding to improve broadband nationally is critical to enabling both 

small telecom carriers and small consumers to thrive. 

In the wake of a larger infrastructure package, we have an enormous opportunity to upgrade America’s digital blueprint. We must 

harness the potential of robust technologies and find the sweet spot 

between government oversight and technological advancements, all 

without hindering business opportunities. 

I look forward to today’s discussion on improving broadband access in order to strengthen rural communities and small businesses. The insights gathered today will allow us to evaluate the 

performance of the FCC and supporting network deployment. 

I would like to thank all of the witnesses for being here today 

and providing us your insight. And with that I yield back. Thank 

you. 

Chairman BLUM. I would now like to explain opening statements, how that works and timing. 

If Committee members have an opening statement prepared, I 

ask that it be submitted for the record. 

I would like to take a moment to explain once again the timing 

lights for you. You will each have 5 minutes to deliver your testimony. The light will start out as green. When you have 1 minute 

remaining, it will turn to yellow. And finally, at the end of your 5 

minutes, it will turn to red. And we ask that you please try to the 

best of your ability adhere to that timeframe. 

Now I would like to introduce our distinguished panel today. Our 

first witness today is Mike Romano, Senior Vice President of Industry Affairs and Business Development for NTCA, the Rural 

Broadband Association. In his role, he directs public policy, government affairs, business opportunities, and community initiatives for 

the nearly 850 small rural telecommunications providers it serves. 

Mr. Romano previously worked with the Bingham McCutcheon 

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Law Firm and has had a diverse range of position within the telecommunications industry, including Founding Vice President and 

General Counsel of GTT Communications, following a merger between Global Internetworking, Inc., and European Technologies 

and Telecommunications. He has also held various positions with 

America on Line and Level 3 Communications. Thank you for being 

here with us today, Mr. Romano. 

Our next witness is Dave Osborn, CEO of VTX1 in Raymondville, 

Texas, testifying on behalf of the WTA, Advocates for Rural 

Broadband. Mr. Osborn has been in his current position for 12 

years, prior to which he had already worked in the telecommunications industry, holding various positions with multiple companies 

for more than 4 decades. Mr. Osborn began his career in the industry in 1970 with Southwestern Bell in Dallas, Texas, eventually 

climbing the corporate ladder to find himself at AT&T’s corporate 

headquarters in Morristown, New Jersey, in the mid-1980s. He is 

now at his current position at VTX1 and also sits on the board of 

directors of the WTA. Thank you for being here with us today, Mr. 

Osborn. 

Up next is Tim Donovan, Senior Vice President of Legislative Affairs for the Competitive Carriers Association, otherwise known as 

the CCA. We have a lot of acronyms in Washington, D.C., that is 

for sure. Mr. Donovan previously served as Manager of Government Affairs for the Direct Marketing Association, where he is responsible for supporting the advocacy goals of the direct marketing 

community. In his current capacity, Mr. Donovan is tasked with 

presenting the association’s legislative advocacy before policymakers on issues impacting wireless telecommunications providers, 

including broadband deployment, universal service, access to spectrum, devices, broadband policy, roaming, and other issues that affect the policy of these carriers. Does everyone understand all of 

that? Thank you for being here with us today, Mr. Donovan. 

And now I yield to Ranking Member Schneider for their introduction of our final witness. 

Mr. SCHNEIDER. Thank you. It is my pleasure to introduce Mr. 

Chris Allendorf. Mr. Allendorf has served as the vice president of 

external relations and general counsel for Jo-Carroll Energy since 

2015. Joe-Carroll Electric Cooperative is located in my home State 

of Illinois and was founded with the goal of bringing electricity to 

rural residents not reached by investor-owned utilities. Since then, 

the cooperative has transformed to meet the needs of rural communities in modern times by providing other essential services, including broadband internet. Mr. Allendorf has transitioned from corporate counsel to other roles in the cooperative. As general counsel, 

Mr. Allendorf oversees legal and regulatory matters involving the 

cooperative’s three business areas: electric, natural gas, and 

broadband internet. Mr. Allendorf also oversees the cooperative’s 

economic development initiatives. 

Mr. Allendorf holds a B.S. degree from Western Illinois University and received his J.D. from Northern Illinois University in 

2012. Mr. Allendorf is a lifelong resident of rural northwest Illinois. 

He also serves on the Board of the Galena Area Chamber of Commerce and the Tri-County Economic Development Alliance. Welcome, Mr. Allendorf. 

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Chairman BLUM. Very good. Very good. Thank you, Mr. Schneider. 

And now I would like to recognize our first witness, Mike Romano, for 5 minutes. 

STATEMENTS OF MIKE ROMANO, SENIOR VICE PRESIDENT, 

INDUSTRY AFFAIRS & BUSINESS DEVELOPMENT, NTCA—THE 

RURAL BROADBAND ASSOCIATION; DAVE OSBORN, CEO, 

VTX1; TIM DONOVAN, SENIOR VICE PRESIDENT, LEGISLATIVE AFFAIRS COMPETITIVE CARRIERS ASSOCIATION; 

CHRIS ALLENDORF, VICE PRESIDENT OF EXTERNAL RELATIONS AND GENERAL COUNSEL, JO-CARROLL ENERGY, 

INC.(NFP) 

STATEMENT OF MIKE ROMANO 

Mr. ROMANO. Thank you, Mr. Chairman, Ranking Member 

Schneider, and members of the Subcommittee for the chance to testify on the importance of rural broadband to the U.S. economy and 

how sound policies can promote the deployment and sustainability 

of broadband in rural America. 

NTCA’s 850 members are small businesses, most based in the 

rural communities they serve. They rose to the original challenge 

of unserved areas, answering the call and getting telephone service 

at the time to rural America. Today, these small businesses and cooperatives deliver cutting-edge broadband critical to the well-being 

of rural America, translating into economic development and job 

creation. And the payback of these investments comes in economic 

activity that accrues mostly to the benefit of urban areas. 

Small rural carriers have led the charge in deploying future-proof 

networks, with 71 percent of their customers having access to 25 

megabits down speed that the FCC has defined as the access 

standard today. 

But there is much more to do. With the remaining customers 

being harder to reach and with many rural areas served by other 

providers suffering from an even greater lack of access and even 

where networks are built, the job is not done. It is not just about 

the one-time act of getting broadband out there; it makes little 

sense to declare victory if the service is too expensive or if the network cannot keep pace with consumer demand. 

Unfortunately, the business of rural broadband is hardly a 

money-making proposition. Distance, density, and topography undercut the business case in rural America. This is why direct support from the High Cost Universal Service Fund is essential. Without sufficient USF, it is difficult, if not impossible, to justify rural 

broadband loans or to charge reasonable rates for rural service. 

USF is perhaps the best example of a public-private partnership in 

the broadband space, having helped to justify construction loans 

and private network investments that total tens of billions of dollars today. 

But the USF program has been badly damaged. While the FCC 

took much-needed steps to update the program last year, the reforms also revealed more clearly than ever how insufficient the 

Universal Service Fund is. A flat budget in place since 2011 that 

is now enforced by a firm control will deny $173 million in USF 

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support for small rural carriers over the next 12 months. That is 

$173 million for broadband investments already made, forcing 

them to respond by hiking rural consumer rates, cutting jobs, and 

slamming the brakes on future investments. The fact that the 

budget control changes unpredictably only further undermines 

their ability to borrow or invest in long-term network assets. 

A survey that NTCA just completed and that we will actually be 

releasing today indicates that two-thirds of our members are pulling back on investments because of this problem, translating potentially to hundreds of millions of dollars in suspended investments 

and possibly hundreds of thousands of rural Americans locked in 

at lower speeds. 

Tack on another $110 million in shortfalls to fund a support 

model the FCC developed last year and this translates to lower 

speeds, higher prices, and less broadband network expansion across 

40 percent of the U.S. landmass. This outcome undermines the 

great progress that has been enabled and achieved by these small 

companies leveraging the universal service program to date. It is 

contrary to the universal service mandates of current law. Fortunately, 170 members of Congress, including members of this Subcommittee, have already expressed concern to the FCC about how 

this affects rural consumers and communities, particularly prices 

for rural broadband that can remain twice as high as what urban 

consumers and businesses pay, if not even higher. 

We hold out hope, just like our members do, in continuing to try 

to build where they can, that Congress and the FCC will work together to make sure the promise of last year’s USF reforms will be 

realized by the millions of Americans who badly need them to 

work. 

Given these impacts and the sustainability and effectiveness of 

the USF program is a top priority, but there are other issues of importance, too. For example, as policymakers consider promoting infrastructure deployment, streamlining and standardizing access to 

Federal lands would help greatly, especially for small businesses 

that lack the staff and resources to navigate multiple layers of Federal agency process. 

Right size regulation is important, too. A survey NTCA did in 

2016 showed that our small business members have only 40 employees on average, but face just under 600 hours of burden, 73 

workdays per year in Federal telecom regulatory reporting. We 

need to strike a better balance between heavy-handed regulation, 

and, on the other hand, a complete lack of rules of the road that 

could put important goals, like universal service and interconnection at risk. 

Finally, better compliance across Federal agencies with the Regulatory Flexibility Act could help, too. All too often, agencies undertake cursory RFA analyses that do not recognize the realities of operating as a small business. We see great promise in several bills 

that the Full House has taken up, and we are eager to see those 

bills provide the guidance necessary to improve the RFA process 

and result in savings for small companies. 

We look forward to working with you on these important public 

policy initiatives and building upon the many successes these small 

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businesses have had to date in deploying broadband in rural America. 

Thank you again for holding this hearing, and I look forward to 

your questions. 

Chairman BLUM. Thank you, Mr. Romano. 

I would like to recognize our next witness now, Mr. Osborn. You 

are recognized for 5 minutes. 

STATEMENT OF DAVE OSBORN 

Mr. OSBORN. Thank you, Chairman Blum, Ranking Member 

Schneider, and members of the Subcommittee. I appreciate the opportunity to testify today on improving broadband deployment in 

rural America. 

I am the chief executive officer for the VTX1 Companies, a rural 

telecommunications provider based in Raymondville, Texas. Detailed information on my company and my personal work history 

have been submitted with my written testimony. Today I am representing our national association, WTA, Advocates for Rural 

Broadband, on whose board of directors I serve. 

I intend to focus on three main areas where I think Congress can 

work with the regulators to facilitate broadband deployment in 

rural America. 

First is universal service policy. Without the support we, and 

other rural telecom providers, receive from the Fund, our cooperative members would never be able to afford the services we provide. 

For many years, the FCC has tried to modernize the Universal 

Service Fund, first with the National Broadband Plan in 2010, 

which recommended freezing support at 2010 funding levels. These 

reform efforts culminated in a March 2016 order, which resulted in 

companies like ours seeing their support reduced because of a 

budget reflecting the 2010 funding levels. We believe this approach 

attacks the problem from the wrong angle. Instead of setting the 

goal for broadband in rural America and attempting to determine 

what it would cost, the FCC has set an outdated budget and essentially said, ‘‘See what you can do with this.’’ 

Our Federal USF from last year is down approximately a half a 

million dollars, with greater reductions anticipated in light of the 

caps and constraints the FCC has placed on the high-cost fund. 

These Federal support reductions have reduced our capital expansion within our Valley Telephone service areas and slowed the conversation to fiber optic. It is important to upgrade our networks to 

fiber because a fiber network will have a service life several times 

that of a copper one and the maintenance costs of a fiber network 

are much less than with copper. Additionally, serving the needs of 

cellular carriers with their forthcoming 5G LTE traffic will be very 

important. Instead of caps and cuts, the USF high cost program 

needs at least an inflationary adjustment so that high-quality 

broadband can be pushed further into rural America. 

Second is streamlining our permitting processes for existing 

rights of way. Congress should review and reform the permitting 

process for access to Federal lands and other right-of-ways. We 

wait several months and spend many thousands of dollars on 

projects for environmental, archaeological, and historical preservation reviews. Many have little value. 

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For example, in 2010, VTX1 received a Broadband Technology 

Opportunity Program, BTOP, grant to construct a fiber-optic infrastructure for our universities. Our shovel-ready project had to wait 

9 months to get environmental approvals needed to bore underneath the gravel right-of-way along two U.S. Federal highways. 

Third, regulatory reporting burdens. We are concerned with the 

increased quantity of reporting obligations and burdens placed 

upon us involving regulatory reporting to the FCC, USAC, NECA, 

and other Federal agencies when the recovery of these costs has 

been capped. VTXI performed a detailed wage analysis in 2016 and 

found that we spend around 3,200 hours completing just the Federal reporting requirements placed upon us. This costs us about 

$100,000 a year in wages and another $50,000 a year in benefit 

costs alone, with none of these dollars being recovered by any Federal support. A copy of our spreadsheet and study with our wage 

analysis is attached to my written testimony. 

Our conclusions are straightforward. First, the high-cost fund 

component of Federal USF needs to continue in remote-serving 

areas in the rural communities, as well as having a cost-of-living 

escalator to keep the fund viable during periods of inflation. An increase in high-cost fund money should be considered as well to 

speed up broadband deployment. 

Second, permitting timelines should be greatly reduced in areas 

and the long roads where the land has been previously and continuously disturbed. 

Third, regulatory reporting should be streamlined and limited to 

items that have a significant, measurable benefit to broadband deployment in America. 

That concludes my testimony. I await your questions. Thank you. 

Chairman BLUM. Thank you, Mr. Osborn. 

Next, I would like to recognize Mr. Donovan, for 5 minutes. 

STATEMENT OF TIM DONOVAN 

Mr. DONOVAN. Thank you, Chairman Blum, Ranking Member 

Schneider, and members of the Subcommittee. Thank you for inviting me to testify about improving mobile broadband deployment in 

rural America. 

This hearing is timely, Mr. Chairman, following the President’s 

emphasis on rural broadband in your district yesterday. It is great 

to hear that you were able to join in person in 5G meetings at the 

White House today. 

CCA represents nearly 100 wireless carriers and nearly 150 vendors and suppliers. The vast majority of CCA’s members are small 

businesses whose employees are the same consumers that live and 

work in the communities they serve. 

Mobile broadband use continues to increase exponentially. 

Ericsson recently forecasted a greater than five time increase in 

mobile data consumption over the next 5 years. Yet, a persistent 

digital divide continues to plague certain rural areas, leaving a 

subset of the Nation trailing behind their urban counterparts on 

the road to 5G, including small businesses and entrepreneurs. 

As FCC Chairman Pai noted last week, we do not bemoan the 

digital divide because some people cannot play games like Candy 

Crush. Internet connectivity is vital to full participation in modern 

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life, and as he articulated at the inaugural Rural Prosperity Task 

Force meeting, these policies are important for demonstrating that 

the Federal Government cares about rural America. 

Access to mobile broadband is not only a telecommunications 

issue; it is a jobs issue, an education issue, public health and safety 

issue, and an issue of America’s competitiveness on the international stage. Simply put, the future of rural economic, and so, 

small business growth, and leading the world in 5G is directly tied 

to the availability of mobile broadband. 

CCA’s members are proud to serve rural and remote parts of the 

country with the latest mobile broadband technologies. That means 

preserving and expanding 4G LTE today and upgrading to 5G. 

Policymakers can support rural broadband deployment through three key issues. First, the FCC plans to distribute nearly $5 billion for mobile deployment over the next decade through the Mobility Fund. But before the final eligible areas are set, we need better 

data. The current data is not standardized, nor useful, for determining where coverage gaps persist. Carriers know this, Congress 

has recognized this, and the FCC’s website even acknowledges it. 

It boils down to coverage, and you know better than anyone else 

where in your district you have coverage and where you do not, but 

bad data means that your district could be ineligible for support 

through the Mobility Fund. And as an accurate coverage picture is 

developed, policymakers should ensure that the Fund is sized to 

preserve and expand mobile broadband ubiquitously and ultimately 

meet Congress’s mandate. 

Second, carriers must navigate a regulatory maze to deploy 

broadband infrastructure, meaning the towers, base stations, antennas, and wires, that are the skeleton for mobile service. It is 

critical to support carriers’ abilities to expand and densify their 

networks for uses like precision agriculture, an important technology for this Subcommittee; telework opportunities and economic 

growth for America’s small employers. Yet the obstacles continue 

to multiply. In fact, each step on the chart you have before you 

highlights potential costs and delays for businesses. 

The bottom line is this: if we want to expand broadband throughout rural America and connect small entrepreneurs to the global 

economy, siting processes must be streamlined at the local, State, 

and Federal Government levels. The same regulations for 400-foot 

towers should not apply to modern small cells. 

This Committee should be a leader to ensure that policies enhance small businesses who have limited resources. To that end, 

the FCC deserves credit for establishing the Broadband Deployment Advisory Committee in which CCA participants. This stakeholder group should work alongside Congress to produce uniform 

policies that advance infrastructure deployment. 

Finally, spectrum is the lifeblood of wireless networks, meaning 

that carriers must have access to low-, mid-, and high-frequency 

bands. In addition to deploying physical cells, carriers can enhance 

their network capacity by adding to their spectrum portfolios. The 

FCC recently completed the first-ever incentive auction where carriers bid nearly $20 billion for 600 megahertz band spectrum voluntarily relinquished by broadcasters. Around 30 of the winning 

bidders are CCA members. Now, the FCC must act expeditiously 

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to repack the band and make the spectrum available to the winning carriers so they can put their investment to use now and certainly before the 39-month transition deadline. 

Carriers need greater access to spectrum at all frequencies to 

continue to innovate and invest in mobile solutions. While low-band 

spectrum is necessary to address network coverage gaps, especially 

in rural America, the capacity needed for 5G and next generation 

technologies, which will be the foundation for transformative services, requires the use of mid- and high-band spectrum resources as 

well. Small businesses in rural American can no longer afford to 

be on the fringe of the industry’s shift to next generation networks, 

and policymakers are at the helm of this transition and can ensure 

that consumers in unserved and underserved areas are part of the 

5G world. 

Policies established by Congress and implemented by the FCC 

determine whether small businesses in rural America have access 

to the latest services or are left behind modern mobile economy. 

Competitive carriers want to be part of the solution. 

Thank you again for holding today’s hearing. And I welcome any 

questions. 

Chairman BLUM. Thank you, Mr. Donovan. 

I now recognize Mr. Allendorf for 5 minutes. 

STATEMENT OF CHRIS ALLENDORF 

Mr. ALLENDORF. Thank you, Mr. Chairman, Ranking Member 

Schneider, and members of the Committee, for the opportunity to 

address you regarding Jo-Carroll Energy’s experience with rural 

broadband deployment. 

Our company was founded as an electric cooperative in 1939 as 

a result of the Rural Electrification Act. Today, we are a natural 

gas, broadband, and electric cooperative serving thousands of rural 

accounts across northwest Illinois. We are part of a broader electric 

cooperative industry that serves more than 40 million members nationwide over lines that cover more than half of our Nation. Most 

of these members and lines are in rural America. Rural utility cooperatives are not-for-profit, private businesses that operate under 

democratic principles serving our members at cost. 

The goal of the REA was to bring electricity to rural Americans 

to ensure they enjoyed the same quality of life as those in urban 

areas when others could not see a business case to do so. There is 

a similar situation happening right now with broadband in rural 

America. We serve fewer customers spread out over greater distances than more urban investor-owned utilities. Low customer 

density is important to keep in mind when considering large scale 

deployment of broadband in rural America. 

In 2009, Jo-Carroll began providing internet access to our members from a fixed wireless broadband system that we were utilizing 

for our electric and gas operations. Our hope was to bring higher 

speed broadband to rural subscribers than what was available, if 

anything, by leveraging our existing infrastructure. Our topography is challenging. We cover the highest terrain in Illinois down 

to river basins and all of it through dense forests. 

We have not been able to reach as many people as we had hoped 

or offer the speeds that they need. Later, we transferred our interSBREP-219A with DISTILLER

11 

nal network to fiber due to the need for reliable, high speed 

broadband for our utility operations. Fiber provided low latency 

and consistent high speeds unaffected by our topography. Most importantly for us, it is scalable to meet our future utility demands. 

We sought to provide the same benefits to our members. Cost 

prohibited us from rolling out fiber to our entire service area, so 

we identified Galena, Illinois, as an ideal site for a fiber pilot 

project. It is a rural town of 3,500 amid farmland near the Mississippi. It is the second-most visited tourist attraction in Illinois 

after Chicago. That has created a robust hospitality and retail sector. Galena faces the same challenges as other rural areas regarding access to broadband. Service was only provided by cable companies or telcos over aging copper lines. Speed and reliability were 

big issues. 

Completed in 2016, our fiber project utilized existing overhead 

and underground utility infrastructure. Our take rate is over 60 

percent among businesses in the project area. I have provided a 

few testimonials, but in summary, fiber has allowed businesses in 

the area to be more productive, more efficient, and increase sales; 

therefore, creating the potential to expand their business. It is now 

common to see merchants in Galena using mobile Bill Pay and 

other productivity applications which were not options before fiber 

broadband. 

For rural residents, high-speed broadband is not just about pastimes like Netflix, but more importantly, it is about a chance at a 

better living. Small businesses and farms are able to engage in 

commerce beyond their local area, which is a necessity in our global economy. It means rural students have the same access to highquality education as their urban peers. It is critical for rural hospitals and clinics to provide modern patient care, and with experience in economic development, I can say it is one of the first things 

that businesses look at when deciding to locate in our area. 

Studies have shown that greater broadband connection in rural 

areas result in higher income and lower unemployment. Without 

reliable broadband, these businesses and farms are at a competitive disadvantage. It has become as much of a necessity as the gas 

and electric services that we provide. 

The President’s stated goal of a large infrastructure program is 

laudable, but we need broadband as much, if not more, than roads 

and bridges in rural America. Rural broadband access needs a 

place of special importance in these discussions. 

Chairman Pai comes from a small Kansas town, and he has stated that government needs to rewrite regulations to cut red tape. He 

has created the Broadband Deployment Committee presumably to 

do just that. As you consider proposals to spur broadband deployment, we believe that all potential providers, including electric cooperatives, should be eligible to participate in open and inclusive 

processes to compete for funding opportunities. We urge policymakers to consider the scope of capital needed to bring broadband 

to rural America. Along with our density challenges, access to capital is a major issues for a small company like us. We need more 

grant funding to make large-scale deployment viable in rural areas. 

Bringing electricity to rural America was a task of epic proportion and our success in doing so has been called one of America’s 

SBREP-219A with DISTILLER

12 

greatest achievements over the last 80 years. The government created a strong, lasting partnership with rural cooperatives to accomplish that goal, which resulted in the same high quality of life for 

all Americans, regardless of economics and location. Jo-Carroll has 

seen that broadband access is essential for the continued success 

and well-being of rural America. It is our hope that Congress and 

this administration will build upon that partnership with support 

for the no less audacious goal of providing rural Americans with access to broadband service. 

Thank you for your time. 

Chairman BLUM. Thank you, Mr. Allendorf. 

I am going to recognize myself for 5 minutes of questions and answers. 

The first question I have is, anyone on the panel can jump in, 

but as a technological, somewhat neophyte, I am continually 

amazed at the capacity of the system or the pipeline—I do not 

know if I am using the right terms. I live in a rural area and we 

have Netflix, we have Hulu, we have some of these other 

downloadable, on-demand services coming via the pipeline out 

there. My question is, reaching the capacity of what it can handle, 

is that an issue that we are bumping up against continually? And 

the second part of the question is, is it an even bigger issue in 

rural areas, this capacity, as more people want to download TV 

services like Netflix and Hulu? Whoever wants to jump in. And 

please keep it in terms I can understand. 

Mr. ROMANO. Thank you, Mr. Chairman. I will take a first 

crack at that. 

Chairman BLUM. Is your microphone on? 

Mr. ROMANO. It should be. It is. 

Chairman BLUM. All right. 

Mr. ROMANO. There we go. So thank you. So the challenge we 

face is there is this tension between getting service to areas that 

are unserved and making sure that services are sufficient and robust enough to meet the challenges of broadband over the long 

haul. And that is a tension. It is a tough choice. It is not an easy 

one for policymakers or industry to work through. However, I think 

what you raise is a good point. As we are looking at this as an infrastructure challenge, one of the things we have to think about is 

building—these are assets that are intended to last for decades. 

And so if I were building a road and I had anticipated a level of 

traffic that was going to be coming across that road over the life 

of that asset, I would not build it as a two-lane road and then a 

few years come back and make it a four-lane road, then an eightlane road. I would have to go through all the permitting that CCA’s 

chart I think demonstrates well, all over again. You would have to 

go through all these different challenges. So building a network upfront for anticipated demand over the life of that asset, we would 

submit, represents the most efficient use of resources to handle the 

kinds of capacity demands that you are expecting both now and 

into the future. Designing a network for 10-1, for example, when 

you know that just a few years ago it was 4-1 was the speed that 

was used and today is 25-3 going to 100 megabits or a gigabit 

worth of speed and capacity over the use of that network, that sort 

of challenge is something that you have to engineer a network for 

SBREP-219A with DISTILLER

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up front to handle not only video and Netflix and things like that, 

but distance learning, telemedicine, all these applications that depend upon a robust network to make sure that you are going to attract healthcare, education, high commerce businesses to these 

communities. 

Chairman BLUM. In your analogy, it probably makes it tougher 

because that eight-lane highway you mentioned has not been invented yet. So you have to design a system, if you are trying to design it for 15 years from now and things have not even been invented that are going to be here 10 years from now, 7 years from 

now, 12 years from now, correct? I mean, it is a heck of a challenge. 

Mr. ROMANO. It is. It is. One of the benefits, I think, of some 

of the systems we are moving towards with both fiber and 5G, 

which I see as actually very integrated pieces of the puzzle because 

5G is driven in large part, the capacity of the promise of 5G is driven by a densified fiber network. If you have fiber and you are moving towards 5G, you are starting to build for the ability to adjust, 

upgrade the network, scale it over time to respond to the kinds of 

demands. So you may not have invented that electronics yet that 

will deliver the speeds that we might see in the future, but you 

have at least laid the groundwork, the foundation to scale it for the 

things that might come to be in the best position to answer those 

calls. 

Mr. ALLENDORF. Yes, Mr. Chairman. We need fiber as a building block to all of these technologies that are being talked about 

today, like 5G. Rural areas simply do not have the infrastructure 

to utilize these technologies, like 5G. And as we have seen firsthand, we need a robust fiber infrastructure to, as Mr. Romano 

made the analogy, plan for the future and be able to handle the 

demands that will come from that. We have seen that firsthand. 

Chairman BLUM. The future is fiber? Is it ever going to get to 

the point where we do not need something buried under the 

ground? Where we do not even need the fiber? Or is that, well—— 

Mr. ALLENDORF. It is hard to imagine that, but—— 

Chairman BLUM. It is. 

Mr. ALLENDORF. The future is, in part, built on fiber. I will say 

that. 

Mr. DONOVAN. The consumer is not going to plug into something is where the future is going. The delivery vehicle is going to 

be wireless. And to add capacity to wireless network it is twofold. 

It is building more towers, and that is where all of the challenges 

and red tape in deploying the infrastructure are a big issue, but 

it is also adding spectrum to your network. 

And for your question on rural areas specifically, that is why this 

incentive auction spectrum is so important. It covers a very long 

distance. Think wherever you could pick up a broadcast TV signal, 

that is the same bandwidth that has been repurposed for wireless 

use. That is going to be 5G in rural areas. We need to make sure 

that carriers that bid and won that spectrum can put it to use to 

serve your constituents. 

Chairman BLUM. How much was raised in that auction? 

Mr. DONOVAN. Nearly $20 billion. So about $10 billion of that 

goes to the Treasury for deficit reduction. About $12 billion went 

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to the broadcasters to compensate them for moving off the spectrum. 

Chairman BLUM. You just answered my next question. Thank 

you very much. 

My time is up. And, oh, go ahead, Mr. Osborn. 

Mr. OSBORN. I was just going to make a point. You mentioned 

what do you do when you run out of bandwidth? At any given time 

of day, we run between 40 and 50 percent of our traffic is either 

Netflix or Amazon Prime. The internet is not about email anymore; 

it is about video. And video takes massive amounts of bandwidth, 

particularly when everyone does it at the same time. We buy more. 

We have between three and five upstream tier one internet providers that we connect to so that we are never down, but we are 

selling 10 times what we did 5 years ago. 

When I took this job in 2005, a meg and a half of internet was 

a big deal. That was big stuff. We offer gigabit service in our fiber 

exchanges. That is a thousandfold and they are talking petabyte for 

fiber in 2020, and I thought, wait a minute, something is missing. 

Terabyte. What happened to terabyte? They are skipping that. So 

this 25-3, my god, we can do that with a tin can and a string. 

It is fiber. Fiber. The capacities of fiber are unknown. You ask 

any engineer and they will tell you they do not know what the capacities are; they are that vast. Wireless is applied physics, and 

when you take that down and say no matter how fast the wireless 

go, theoretically, the fiber will always go faster. So we see it as 

both. We offer fixed wireless service, and we can give up to 50 

megabits on wireless with a dish on top of your roof. But we see 

it as the future of both. 

We need the wireless to reach customers that it is not economical 

to build to, and they need us to transport these huge amounts of 

data because 5G LTE is going to have, depending on how far you 

are from the tower, up to a gigabyte worth of service. That is huge. 

Absolutely huge. 

Chairman BLUM. Tin can and a string. Now it is something I 

can understand. Thank you for bringing it down to my level and 

probably a few folks out there as well. Thank you so much. 

I would now like to recognize our ranking member, Mr. Schneider, from Illinois. You have 5 minutes. 

Mr. SCHNEIDER. Thank you. And again, thank you to the witnesses for our insightful testimony. 

Mr. Romano, you used the term that I want to focus on a little 

bit which is future proof, because the rate of technology is changing, and Mr. Osborn, you just touched on something. There is a 

leapfrog effect. Well, it is not really a leapfrog. Going from mega 

to giga to peta, skipping tera. Just the pace is so fast. Fiber is a 

connection, but we need to have the ability to keep it up to date 

across the rural communities. 

We’re talking 5G. What is the life expectancy of each generation? 

Because we’ve already gone through 1, 2, 3, and 4G? 

Mr. ROMANO. Yeah. This is the thing, especially, both on the 

wireline and the wireless side, I think we are seeing massive 

amounts of disruption and the technology, the electronics change, 

the uses of the spectrum change in a way that could not be predicted years ago. I mean, think about it. You know, 15 years ago, 

SBREP-219A with DISTILLER

15 

actually, I worked at America On Line. AOL used to get those 

disks, right? I mean, things moved by DVD and CD at that point. 

Now we are moving at a pace that is unimaginable. 

But I think to your question, we cannot anticipate exactly what 

will come, but I know that 5G—we have not even seen what 5G 

is yet. The standards for it are still being developed. People are 

talking about deploying 5G. They are kind of guessing and marketing what 5G is, but we actually do not know what those standards are. The best thing we can do is get networks into place that 

are scalable. If we have a limited, finite pool of resources, what is 

the best use we can make of those resources? We could try to 

spread them thinly and hope that the networks we build will keep 

up, or we could try to think through how do we make the best use 

of these so that over time those networks where they are built, 

they are not just there for the one time act of getting broadband 

there; it is keeping it there and keeping it useful and enabling 5G, 

enabling terabyte service, and greater over time. 

Mr. SCHNEIDER. Real briefly, just because we’re so tight on 

time, Mr. Donovan, you used a word that caught my attention 

which is densify. As we move to these next generations, does it 

mean that we are going to have to increasingly densify the modular 

parts of the networks, the towers, everything else? 

Mr. DONOVAN. Yes. So thank you for the question. 

Densification means bringing the transmitters for the wireless network closer to where the users are. So it is a lot fewer of the 400- 

, 500-foot towers and more and more cell sites that are, you know, 

about this big that you could put up on the side of a building, on 

existing light poles, and using existing infrastructure. That is what 

is going to be a big part of 5G, to fill up on kind of the generational 

shifts in wireless technology. You know, 5G is not a replacement 

for 4G services, and that is why it is so important that we have 

a base layer of 4G rolled out today while industry is still working 

on the standards for 5G. In rural areas, there are still 2G networks 

that are operational because people are still using those. So it is 

not that one technology replaces the other; it is that we keep evolving and adding on top. And it is important for rural America to 

keep up with their Gs if we want to keep giving them the latest 

services. 

Mr. SCHNEIDER. And let me just add to that as we broadly 

think about rural America. It is the breadbasket of our country. It 

provides a vast quantity of our food. It is where we are developing 

new technologies. It’s not that these are backwaters. It defines who 

we are as a country. 

And Mr. Allendorf, I want to turn to you because you grew up 

where you work. You’ve seen the impact of broadband. Can you tell 

us a little bit about some of the effects you’ve seen and the opportunities created by bringing broadband to a community like where 

you live? 

Mr. ALLENDORF. I did not have experience with broadband 

until I went to college in the early 2000s. Before that we had dialup. And so getting to college and seeing what broadband can do for 

the first time was pretty eye-opening. 

What we have seen is, anecdotally, businesses are able to do 

more with the resources they have at hand. They are able to utilize 

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productivity software, like I mentioned. It has really enabled them 

to truly compete in a global economy. You know, they do not have 

to drive to the nearest really good site for a broadband connection 

to transact business or something like that. And it has just increased their productivity overall. And so the effects that we have 

seen, especially in our fiber pilot project area are immense compared to what was there before. And I would say that they did not 

know what they had until they had it because it was not an option 

before. And now that they do they are finding new and creative 

ways to be more productive. 

Mr. SCHNEIDER. As my time winds down, not having 

broadband until college, I will tell you I got to college with card 

decks. So you can overcome these challenges in life. But that is the 

rate of our technology. 

I will also share that I, early in my career, worked on developing 

software, initially for the oil and gas industry. We migrated it to 

agriculture into these rural communities. This was back in the 

1980s. We saw the revolutionary impact it was having then. Today, 

with broadband, as you well know, these communities, to be able 

to bring technology for agriculture, for medicine, for education, distance learning, the future is unlimited. But it cannot be unlimited 

unless we provide the resources to these communities. 

So thank you very much. And with that I yield back. 

Chairman BLUM. Thank you. 

Now I would like to recognize the gentleman from Kentucky, Mr. 

Comer, for 5 minutes. 

Mr. COMER. Thank you, Mr. Chairman. 

I represent a very rural district in Kentucky. It is a very poor 

district. We have a very high Medicaid population. I want to see 

people get off Medicaid and get into the workforce. To do that in 

my rural district, we are going to have to create an environment 

where we can attract better paying jobs that provide benefits. One 

of the biggest issues for me as a freshman member of Congress is 

to try to help improve broadband in my rural district, so I am very 

interested in this subject. 

Mr. Allendorf, since your primary focus has been delivering electricity, can you talk a little bit about the regulatory obstacles that 

other folks on the panel may not have when building out their 

broadband capacity? Because we are going to have to do that I 

would assume through the electric cooperatives and the rural electric cooperatives in our district. 

Mr. ALLENDORF. First let me say that with our fiber project, 

we were able to utilize existing infrastructure much more than we 

were with fixed wireless solutions. So it requires less permitting, 

which is always a concern, both locally and from the State. So 

being able to use our overhead and underground infrastructure is 

a huge benefit. 

Regulatory challenges we face, pole attachments, something that 

always comes up, that is an issue. There is a Federal case out of 

Missouri that dealt with pole attachments for fiber use by a cooperative. I believe that is currently on appeal. We are anxiously waiting to see what the result of that is to see what barriers there may 

be going forward to deploying broadband over our existing infrastructure. 

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Mr. COMER. Okay. Mr. Donovan, what kinds of reforms could 

help alter the outlook for a company interested in deploying 

broadband? 

Mr. DONOVAN. Thank you for the question. 

You know, in Kentucky, carriers like Bluegrass Wireless and Appalachian Wireless—— 

Mr. COMER. My cellular carrier. 

Mr. DONOVAN. That is a great company out of Elizabethtown 

there. We are proud to have them as a member. 

One challenge that wireless carriers are facing now is the FCC’s 

mobility fund has a lot of opportunity in making resources available to make that last piece, the economic case, to serve these rural 

areas. The biggest problem we have right now is the data. The map 

that they show on their website overstates coverage. And you have 

to take my word for it. It says at the bottom, ‘‘These coverage calculations have certain limitations that result in overstatement of 

the extent of mobile coverage.’’ Looking at it quickly, it looks like 

all of Iowa, most of Illinois, most of Kentucky, on down the line, 

are fully served. I think you know that is probably not the case or 

else we would not be here today talking about how we can get service out there. 

Before we decide how $5 billion is going to be spent over the next 

decade and lock those areas out, we need to make sure that we are 

acting on sound data so that the unserved parts of your district are 

eligible to bid in that auction and gain support. 

Mr. COMER. If Congress moves on an infrastructure bill with 

money for broadband, should that money go through the high-cost 

fund or through other programs or agencies such as RUS or NTI? 

Mr. DONOVAN. So we have structures that are put in place 

through the FCC, like the Mobility Fund. I think there is unanimous agreement of the panel that USF is not fully funded today, 

so this could be a great opportunity to plus that up. The thing to 

also consider is making sure that however the funds go out, that 

carriers that are receiving those can have some long-term certainty 

that those are going to be available, that you are not subjected to 

some of the fits and starts of the appropriations process moving forward. 

Mr. COMER. Okay. Very good. 

Mr. Romano, one last question here for you. Would it be better 

to get everybody connected even if it is at lower speeds? Or should 

we focus on the future and invest more in developed technology? 

What is the right balance on that? 

Mr. ROMANO. Thank you, Mr. Comer. That is the challenge that 

we face, as I mentioned earlier, the tension that we face between 

trying to get as many of the unserved covered as possible. However, if you are building a dirt road to everybody when you think 

you are going to have a lot of traffic there, you are potentially 

wasting resources. So we think it is best to try to strike a balance 

where you look to get the most future proof networks you can. Aim 

for the highest networks you can to as many people as possible. It 

may take a little bit of time, but the more we build for the future, 

the more we are going to attract the kinds of jobs and businesses 

that you were talking about. Somebody is not going to relocate a 

plant to a district connected to DSL. 

SBREP-219A with DISTILLER

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Mr. COMER. Thank you. Mr. Chairman, I yield back. 

Chairman BLUM. Thank you, Mr. Comer. 

I would now like to recognize for 5 minutes the gentleman from 

Missouri, Mr. Luetkemeyer, who is also the Vice Chairman of our 

full Small Business Committee. You are recognized for 5 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. And thank you 

to the guests who are here today. 

Like the other members of the Committee, I come from a very, 

very rural part of my State. In fact, I always tell people I live so 

far out that I am in the middle of nowhere, but when you get there 

you are finally somewhere. So when I have discussions with 

telecom companies, I always tell them, you know what? I live so 

far back, if you can get me broadband and that sort of stuff, then 

you come talk to me. Until then, I have got a lot of constituents 

who have got problems. If you cannot serve me and them, we do 

not need to talk. So this is a very, very important hearing, and I 

appreciate the chairman’s indulgence here. 

Also, in my county, our county seat sits right square in the middle of our county, and until about a year ago it did not even have 

cell phone service. Can you imagine that? We did not even have 

cell phone service in our county seat. So the sheriff, obviously, he 

had no ability to contact his deputies on a regular cell phone and 

had to find other ways to communicate with them with his other 

phones, which is fine, but, I mean, it just shows the difficulty that 

some of us in the rural parts of the country live through. 

So I guess my question would be to each of you, what can we do 

as a Committee to help promote or do whatever we need to do to 

help all of you provide the broadband and the telecommunications 

services that our people, our businesses, our health providers in 

our part of the world need to be able to do their job and protect 

our citizens? And I guess the first question is how do you speed up 

the regulations? And I know more money is always added. But 

when you do that, I want to know how do you estimate the return 

on your investment? Because I can tell you, you know, I grew up 

a long, long time ago. I remember the old TV show, ‘‘Get Smart.’’ 

And the guy had a phone in his shoe and today I have got two 

phones sitting right here that when I grew up that was a fantasy. 

How can you have a phone without a line to connect it to the rest 

of the world? And yet today it is a convenience we cannot live without. 

So I understand the difficulty that you have in predicting the future, which you talked about, and how you make that investment, 

how you figure out that return investment. If you could kind of go 

into some of that, I would appreciate it. 

And then I would like to go to Mr. Donovan, I believe, with regards to the data. So let me stop and let you answer some questions. 

Mr. DONOVAN. Thank you. It sounds like the county seat would 

be a perfect place for some small cells to go up on some of the existing poles build out service in there. The problem in these rural 

areas, as this Committee knows, is the margins are already very 

tight for small carriers to serve them. And the opportunity costs of 

fees that you pay to site them, especially on small cells, if it is the 

same fees you are paying to build a massive tower, it could be 

SBREP-219A with DISTILLER

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enough to make it so it is no longer economical to provide that 

service. So anything we can do to streamline the process to get 

some of those fees in line is going to help us be able to expand service in areas like that. 

Mr. LUETKEMEYER. Okay. How do you figure your return on 

your investment? How do you work the numbers on that? Do you 

figure 5 years, 10 years, 15, 20, 25? What kind of timeframe do you 

look at when you figure out the return on your investment? 

Mr. DONOVAN. So it does vary carrier to carrier. One thing that 

is exciting in the wireless world is that the future customers may 

not be, yourself sitting here with two phones, two lines of service, 

but it could be your tractor in the field, each head of cattle that 

is out there that is being remotely monitored, you know, there is 

a new internet of things, customers that are changing the equation 

that you do for your cost-benefit analysis, but that is only going to 

happen if we have the networks in place to support that. Otherwise, the investment is going to flow elsewhere. If you do not 

streamline how we can invest in those areas, then those areas are 

going to miss and it is going to go to places that it is easier to 

make those deployments. 

Mr. LUETKEMEYER. Does anybody else want to comment? Mr. 

Romano? 

Mr. ROMANO. Yes. I will jump in. Thank you. Thank you, Congressman. 

So I think the challenge, or one of the things I think the panel 

has in common actually, is we all represent or all are associated 

with community-based providers. So one of the things that is interesting when you look at ROIs, if you live in that community, if you 

are based in that community, you have a different view perhaps of 

ROI than if you are investing from far away because if you are investing from far away or you have allegiance or you have fiduciary 

duties to faraway shareholders, that creates a very different circumstance than when, you know, you have got to get your money 

out because you have got capital in. In this case, some of these 

loans these folks are taking out are 20-year loans, so, therefore, the 

ROI is very different. They are also, again, headquartered in the 

community. They might be cooperatives that actually their members are their owners. 

Mr. LUETKEMEYER. Okay. One more quick question before I 

lose my time here. 

Mr. Donovan, you talked about the study to make sure that you 

have the data there to be able to make sure you disburse funds 

where it is needed. Number one, who does the study? And number 

two, who pays for it? 

Mr. DONOVAN. Thank you. So the data, it is required by the 

FCC to be submitted by carriers. So far, so good. The problem is 

the FCC does not tell carriers how to standardize that data. So you 

could have one carrier that is reporting at a signal strength that 

varies dramatically from another carrier. The calculation that they 

do, we will not go into—— 

Mr. LUETKEMEYER. So you need some better direction from 

the FCC then on the reporting of this data, is that what you need? 

Mr. DONOVAN. We need to make it standardized. 

Mr. LUETKEMEYER. Standardized. Okay. Very good. 

SBREP-219A with DISTILLER

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Thank you, Mr. Chairman. I appreciate it. I yield back. 

Chairman BLUM. Thank you, Mr. Luetkemeyer. 

I now recognize the gentleman from the great State of Iowa for 

5 minutes, Mr. King. 

Mr. KING. Thank you, Mr. Chairman. I appreciate you holding 

this hearing and taking the lead on this issue. I was just listening 

to the remarks of my friend, the neighbor to the south, Mr. 

Luetkemeyer, whose district I have visited and he lives in the middle of nowhere and I live in the center of the hub of the wheel in 

the middle of nowhere. I have cell phone coverage; he does not. And 

so I am sitting here listening thinking why is that the case for me 

and not for Mr. Luetkemeyer and many of his constituents? 

One is hills. The degree of difficulty is a lot greater if you have 

got hoops and valleys rather than the flatter countryside that predominates a lot of the great State of Iowa. That is part of it. 

But another part of it, I think, and I wanted to ask the question, 

whoever wants to volunteer to answer it, is that in Iowa we had, 

the last time I kept track, about 142 independent telcos. And I 

know that they are more personally connected with their customers 

than the more remote larger companies. And the map says that 

Iowa is in pretty good shape. There are exceptions there. Mr. Donovan, you pointed that out. But how much impact has it had to have 

a large number of competitive independent telcos that are neighborhood telephone companies using everything they can to make 

that pipe as big as possible for the long-term future of their neighbors and relatives? 

Mr. DONOVAN. It is critically important, Congressman. And like 

my colleague, Mr. Romano, mentioned, being in the community 

makes a difference as you make decisions about where you are 

going to invest and where you are going to serve. When you have 

to see your consumers, not just in the office when they come to 

your store, but in the grocery store and around the community. So 

that changes how you make your investment decisions. 

One success story in Iowa is that rural carriers like iWireless 

have been able to band together some of those smaller, independent operators so that you can have some scale, so that you can 

gain access to buy devices. If you do not get to some of those scale 

levels, like across many issues for small businesses, if you cannot 

deliver enough scale, then you cannot get access to economically 

priced resources that you need. For wireless service, that is the devices. It is the network infrastructure. It is the things you have to 

build to provide that service. 

Mr. KING. And so at least in my theory, if other States were 

beneficiaries of a lot more competitive, a lot of times family-owned 

telcos, we might have seen a better buildout here on broadband. 

So the resources have been there for everybody equally? Was 

that true? 

Mr. DONOVAN. Not always the case, unfortunately. In the wireless world, so spectrum is our primary resource. You are not making any more of them. You need to get it from license from the government. Different spectrum bands are made available differently. 

One thing that is important for small businesses, if the license size 

is not sufficiently small for a small business to be able to bid on 

it, win it, and provide service, then they are not going to be able 

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to get access to that critical resource and they will not be able to 

provide service. 

Mr. KING. And the license size applies. And then also the ability 

to have the infrastructure built that can handle the capacity into 

the future. A narrative popped into my head when I heard that. As 

I recall, I had a construction office in town for a number of years 

and it was fed by a 3/4-inch water line underneath the highway, 

a very wide highway with a long boring project to replace it. I went 

to the city and said I cannot provide water out of my place to the 

blacksmith who is next door to me and he is trapped if I do not 

get it to him. We need to expand this water line. I made a powerful 

case they should do that. 

I finally sold them on the idea and they let me go up to 1-inch 

from 3/4. So I finally, out of frustration, said I will put the water 

line in, and I bought the 2-inch line and now everybody is living 

happily ever after on that one. That is how I equate with what you 

are talking about. Let’s, well, overbuild this because the actual cost 

of the equipment is minimal in comparison to the cost of the labor 

to do the installation process. 

I wanted to turn to Mr. Romano and give you an opportunity to 

say whatever you need to say, but I also have a question. I have 

some neighbors, and myself included, that use cell phone boosters 

in our homes. Is there a future for that or are they minimal in 

their ability to have impact? 

Mr. ROMANO. No, I think they will have impact. Wireless and 

wired services are I think, in many respects, complementary both 

at the network level and the access level. You know, a lot of times 

you see people talk about how much mobile data consumption there 

is. People are using tablets more to connect to devices. A lot of 

times those mobile tablet devices are actually, in fact, hopping onto 

a wired network, a Wi-Fi network. These are complementary integrated networks that are going to need each other, I think, to 

thrive and survive and serve the needs of a community like you are 

talking about. 

I did want to come back to the one point you made about local 

community interest, ownership, family-owned businesses, cooperatives working together. We have actually started an initiative with 

a number of folks trying to get telcos and electric co-ops who have 

a shared interest in serving these communities together. Bring 

broadband expertise together with the assets, the community interest of the electric cooperatives and municipalities, and tribal entities even. Think about different ways of tackling these so we can 

make the most efficient, most effective use of resources on the 

ground level. 

Mr. KING. To anybody that wants to answer this, is it our future 

that everybody in America eventually will have access, not only in 

the undefined broadband is for me, I did not hear that, but is there 

a future that we will be able to do livestream HD anywhere, anytime, for anybody with a cell phone or sitting in their home with 

their television? Is that where we are going to end up with an unlimited capacity beyond our imagination? Today, I should say, not 

unlimited, to go beyond that if need be? 

Mr. ROMANO. It could be, but what you are going to need is the 

small cell deployment that is robust enough, fed by fiber networks 

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22 

that are robust enough, and spectrum assets that are robust 

enough to hit those small cells. Again, while I say it is all integrated, but it could be there. But you are going to need those small 

cells every few hundred feet, which is a big challenge in rural 

America, with robust enough spectrum or fiber capacity behind 

them to feed the kind of demands that you are talking about. But 

that is the dream at least. 

Mr. KING. We can get there. And they would have loved to have 

this on Apollo 13. 

Mr. Chairman, I appreciate the hearing, and I yield back the balance of my time. 

Chairman BLUM. Thank you, Mr. King. 

I would like to start the second round of questioning, if I could. 

Somebody mentioned having, I guess, transmitters on phone 

poles, telephone poles. It kind of reminds me of the concept of the 

democratization of electrical grid, that if each home in America, or 

particularly in rural America, could generate our own electricity, 

we could sell some of that electricity back to the power companies. 

In essence, we would be democratizing the electrical grid. This concept fascinates me. Could this possibly be an answer in rural 

America for wireless is to have every farm, every home, my home 

for example could not only receive, but could also maybe send, 

transmit to the next home—not back to the tower, but to the next 

home—and we would have this interrelated network? Because I 

have heard of this very thing for aircraft. And if every aircraft that 

is in the air, we know their position, and if they can communicate 

with each other, then we have this grid. And so there would be no 

dark spots or black spots over the ocean, for example, that currently we cannot capture with radar. It fascinates me the concept. 

Could you comment on that? 

Mr. DONOVAN. Absolutely, Mr. Chairman. And you are right, 

that we are going to need the cell sites brought that close to you 

so you can have that kind of mesh network that does not have any 

gaps. The problem right now—— 

Chairman BLUM. Mesh network? Is that what that is called, 

mesh network? 

Mr. DONOVAN. That is. It is mesh networking. But right now 

you probably are not going to go through the process to work with 

a carrier to put up a cell site on the side of your house if it means 

that you are going to have to do a new environmental review to see 

whether you disturbed anything when you built that house, to go 

through a new historical review. We need to cut through some of 

that. 

Chairman BLUM. Remove the word ‘‘probably.’’ 

Mr. DONOVAN. Well, exactly. And that means that you will not 

have that cell site available. So we need—— 

Chairman BLUM. Well, today, in today’s environment. That is 

what it would entail? 

Mr. DONOVAN. That is right. You would have to go through 

every step of this in order to put that cell site up on the side of 

your building. 

Chairman BLUM. But a fascinating concept nonetheless? 

Mr. DONOVAN. Absolutely. And the densification that we need 

to provide that service going forward. 

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23 

Chairman BLUM. And my second and last question is for Mr. 

Osborn. And Mr. Donovan just mentioned the regulations. Regulatory burden is a big topic in Washington, D.C. 

I would like to ask you, Mr. Osborn, with the change in leadership at the FCC with Chairman Pai coming in, have you seen any 

indications that the FCC is serious about reducing the regulatory 

burden in this industry, particularly as it relates to rural areas? 

Mr. OSBORN. Yes, we have. The first few months have been 

very encouraging. What Chairman Pai seems to be very sensitive 

to is the red tape and the regulations. And I mentioned the permitting process that we were involved with, and understand there is 

a Bill S604 that would essentially give a categorical exclusion to 

environmentals along operational rights of way. That type of legislation would help quite a bit in removing some of the regulatory 

issues that I call environmental regulatory. But that would speed 

things up greatly, reduce cost, and I think make things more efficient in laying fiber. 

Once you lay fiber, it is there forever. We lay our fiber in double 

plow ducts, undisturbed. We go down as far as we can, 6 feet, 8 

feet if we can, and we run it. Once it is there, we can replace it 

without having to dig. So that investment, we can look at that as 

a 20-year rate of return. We have to replace the electronics every 

3 to 5 years. So that is the one where we have got to get our money 

out of that quickly. The wireless, the same thing. 

So the rate of returns that we are trying to work toward varies 

largely by the technology. But the regulatory issues more faces 

with the terrestrial piece of it. I mentioned the reports that we 

have to do. If we saw value in this, I think it would be different. 

Mapping is a big part of our business. We have maps of everything in our serving area. It is about 10,000 square miles of serving 

areas. And to deal with the FCC’s requirements to go down to the 

census block, I can show you those census blocks in my map. I 

should not have to do a separate report and essentially duplicate 

what I have paid hundreds of thousands of dollars for in a software 

system to come up with a report. I have the information; all they 

have to do is ask for it. And that would help greatly in terms of 

moving things along. 

Chairman BLUM. Thank you very much. 

I would now like to recognize the gentleman from the great State 

of Nebraska, Mr. Bacon, for 5 minutes. 

Mr. BACON. Thank you. I apologize for coming in just a little 

bit late, but two other simultaneous meetings. So I am running 

around. 

I used to be raised on a farm until 1985, joined the Air Force, 

but my main problem of getting some kind of linkage prior to 1985 

was finding that AM radio so I could listen to the Chicago Cubs 

play at 120. In the military, too, we are starting to do every aircraft, you know, receiving and sending various links. And what has 

impressed me is now I am out of the Air Force and I am starting 

with the ag community again, and talking to my family, it is just 

so impressive that all the new combines, all the new tractors all 

have these links. Our irritation systems are doing the same. Just 

phenomenal. 

SBREP-219A with DISTILLER

24 

And you may have already mentioned this, and I may have 

missed it, so I apologize if you did, what is the actual scope of investment that we need nationwide to field this the way we want 

to? And I will just open it up to whoever can respond. 

Mr. OSBORN. Thank you, Congressman. It is an evolving level. 

We need to make sure we are keeping up with everything, but you 

hit on an important point. There has been a lot of talk in D.C. recently about connected cars. Well, on farms we have had those for 

a while. They are combines and they are tractors, but they are 

using those connections. So Cost Quest has done one model of what 

it would take to have wireless coverage across the country to power 

all those things and they came in at about $25 billion. 

Mr. BACON. Twenty-five billion? 

Mr. OSBORN. With a B. With about another billion in operational costs once you have it built just to keep it going in areas 

that private capital will not sustain. 

Mr. BACON. And that gives us the capability for all of our newest equipment to be able to communicate with maintenance facilities? And so, I mean, all that networking that is going on. So you 

would get that capability. What other capability would that provide 

our agriculture? 

Mr. OSBORN. So the combines, the tractors are connected. You 

know their maintenance schedules. They tell you before they break 

down that you need to get someone out there. You can more efficiently use resources. You know, what fields need water? What 

needs what going on? But you also have real-time connections to 

markets and you know when it is time to harvest certain amounts 

of the yields. So your productivity goes up overall as well as profitability of the farm. 

Mr. BACON. Right. I think that is incredible. 

Are there certain portions for our country right now that need 

this more than others? Are there areas that are more advanced? Is 

there some portions of the country that were falling behind? 

Mr. OSBORN. You know, I think for different use cases, we need 

this nationwide. You probably are not going to be using a tractor 

on a mountain, but you still are going to want to be connected so 

you can take part in other educational and business opportunities. 

Mr. BACON. Okay. Thank you very much. I appreciate the time. 

And I can just second the importance of it because my family that 

is still involved in the farming, when you go out there and they are 

using a GPS. I had the most curveous rows when I was a 16-yearold out there. Now you do not have to drive it at all. It is perfectly 

straight. 

Well, thank you so much. I yield back. 

Chairman BLUM. Thank you, Mr. Bacon. 

I now recognize our ranking member, Mr. Schneider, from Illinois, for 5 minutes. 

Mr. SCHNEIDER. Thank you. And I will not be long and take 

the full time. I just want to wrap up on a couple of things. 

You do use tractors on a mountain. I grew up in Colorado. Ski 

areas are, seriously, using those for maintaining their slopes during the winter. So this is something that affects us all across the 

country. 

SBREP-219A with DISTILLER

25 

And Mr. Donovan, I will go back to something else you said. You 

talked about the idea, the Internet of things they did. Every head 

of cattle will have a device that is sending back information about 

that individual cattle, which means their food will be healthier, our 

cost to produce that food will be lower, and the impact it has, 

again, across the whole Nation. 

So I really just want to give each of you a last chance for a reflective comment, perhaps. As we talk about providing rural communities with broadband access, which was the subject of this meeting, this is something that I believe really is of national interest. 

It don’t affect just our rural communities; it affects all of us regardless of where we live. And so start with you, Mr. Romano, just a 

last word of why this is important to our Nation and why it deserves a national investment. 

Mr. ROMANO. Thank you, Congressman. 

The Hudson Institute did a study a couple of years ago showing 

that the payback from investment in rural broadband, just from 

the active investment in rural broadband, not the follow-on effects 

of rural broadband, were $24.1 billion in 2015 to the national economy with much of that accruing back to urban areas actually because of the vendors and contractors that are hired to build this 

stuff and the tower manufacturers and what have you. So there is 

that direct impact. 

There is the indirect impact, of course, of the mission of universal service first sort of thought of last century and embodied in 

different forms throughout, but the network effect in our country 

is stronger and better and more efficient and effective if every 

American is connected. And that is one of the things that I think 

is important in the concept of universal service. We have a lot of 

folks who focus on let us connect this type of institution, this type 

of customer, this type of user. We need community-wide access to 

all of them. To focus on any one type of user and silo it in that way 

I think undercuts the notion of universal service. We should be 

asking the folks who are out there building to build to every user, 

irrespective of what kind of user they are, so that everybody gets 

the benefit of that network effect, which is why we are building 

these networks in the first place. 

Mr. OSBORN. Thank you. Just a quick word on the Hudson Institute study. It did not come as a great surprise to us because we 

have communities where it is an hour, hour and a half to the nearest Walmart, hour and a half to the nearest Best Buy, you name 

it. So boy, you can get on there to go to Amazon. Two days, right? 

And buy and purchase. So rather than run into town, people, that 

is how they do their commerce is get on that internet and make 

purchases. And that adds up. 

Mr. SCHNEIDER. I am going to date myself. I used to work at 

Sears Catalogue. 

Mr. OSBORN. Oh, my. You get it. You totally get it. You totally 

get it. 

The other topic, though, you know, we are part of a world economy and somebody mentioned we are number 16. I think that is 

pitiful. 

Mr. SCHNEIDER. That was me. 

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26 

Mr. OSBORN. Of course, number 1 through 15, the telecommunications infrastructure is probably owned by the government. That 

is the common model. The U.S. is the exception to that with the 

formation of AT&T 100 years ago. If we are going to be competitive 

with India, with China, with the rest of the world, we are going 

to have to kick it up a notch and we are going to have to bite the 

bullet and put some money in it, not just in rural. But you are 

going to have to put the money everywhere and get us competitive. 

And it needs to flow out to the rural areas because they are doing 

some important stuff. That is where food, water, and oil come from 

that we need. 

Mr. SCHNEIDER. Fair point. 

Mr. Donovan? 

Mr. DONOVAN. Well, I have to associate myself with my colleague’s comments on the economic impact. It is incredible to see 

what a multiplier it is bringing broadband services out to these 

areas. 

I guess Congress got it right, you know, directing the FCC that 

we will have policies for reasonable comparable—— 

Mr. SCHNEIDER. Will you just repeat that again? 

Mr. DONOVAN. On Universal Service Fund, in 1996, Congress 

got it right directing the FCC to have reasonably comparable services and an evolving standard in urban and rural areas. We need 

to make sure we are putting policies in place to make sure that 

that is the case on the ground. 

Mr. SCHNEIDER. And the last word to you, Mr. Allendorf? 

Mr. ALLENDORF. Thank you, Congressman. 

Building on Mr. Donovan’s comments, Congress got it right with 

rural electrification as well. And it is going to take that kind of 

commitment from Congress, from the administration, to bring 

broadband to rural areas. And it is going to take partnerships with 

many different industries to do that. And I would encourage that 

kind of broad thinking as you have done today in achieving rural 

broadband deployment. Thank you. 

Mr. SCHNEIDER. Great. Thank you. I’m going to steal a few 

extra seconds if that’s okay just to reflect on your comments, because I think as we are here talking about what broadband can do 

and the comments you made, three things jump out at me. If we 

get this right again, we can grow our economy. At a time of great 

division in our country, broadband can unite us. And it is necessary, Mr. Osborn, what you said. If we are going to as a Nation 

lead the world, lead the world economically in a global economy, 

lead the world with information, lead the world with our values, 

this is a step towards that. So I just want to thank the witnesses 

again and thank the chairman for having this hearing. Thanks 

very much. 

Chairman BLUM. Thank you, Mr. Schneider. I noticed today you 

mentioned you used to carry around punch cards and worked for 

Sears Catalogue. So I must say I think you are younger looking 

than obviously you are. But thanks for sharing that with us. It 

makes me feel better. 

I would now like to recognize Mr. Luetkemeyer for 5 minutes 

from Missouri. 

Mr. LUETKEMEYER. I am fine. 

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Chairman BLUM. Fine? Are there any further questions anyone 

has? 

If not, then I would like to thank each of our panelists for taking 

the time today to testify. It is truly fascinating. 

As this hearing comes to a close, I hope that we have opened 

some eyes—certainly have opened mine—and educated a few folks 

about how important advanced telecommunication services are to 

our Nation’s rural small businesses and how important it is to create a positive regulatory environment for the businesses represented on our panel. I am heartened to hear that the FCC has 

begun to make things a little more user-friendly for folks like our 

witnesses today, but more must be done. These small businesses 

are ready, willing, able, and frankly, itching, to get out there and 

build these networks, if only Washington, D.C., would get out of 

their way. 

I ask unanimous consent that members have 5 legislative days 

to submit statements and supporting materials for the record. 

And without objection, so ordered. 

And we are adjourned. Thank you very much. 

[Whereupon, at 11:17 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

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Statement by 

Michael R. Romano 

Senior Vice PresidentIndustry Affairs & Business Development 

NTCA-The Rural Broadband Association 

Arlington, VA 

Before the 

United States House of Representatives 

Committee on Small Business 

Subcommittee on Agriculture, Energy, and Trade 

Improving Broadband Deployment: Solutions for Rural America 

Washington, DC 

June 22,2017 
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NTCA Mike Romano 

June 22, 2017 

Page 2 of20 

INTRODUCTION 

Chairman Blum, Ranking Member Schneider, and members of the subcommittee, thank you for 

this opportunity to testify about the importance of rural broadband, the small businesses that deploy 

advanced telecommunications throughout rural America, and the investment and operating barriers 

that these companies confront daily. I'm Mike Romano, Senior Vice President for Industry Affairs 

and Business Development at NTCA-The Rural Broadband Association. My remarks today are on 

behalf of NTCA as well as our nearly 850 rural, community-based member companies that provide 

broadband and other telecom services in 46 states. 

NTCA members and companies like them serve just under five percent of the U.S. population 

spread across approximately 37 percent of the U.S. landmass; in most of this vast expanse, they are 

the only fixed full-service networks available. Small telecom providers connect rural Americans 

with the world- making every effort to deploy advanced networks that respond to consumer and 

business demands for cutting-edge, innovative services that help rural communities overcome the 

challenges of distance and density. Fixed and mobile broadband, video, and voice are among the 

services that many rural Americans can access thanks to our industry's networks and commitment 

to serving sparsely populated areas. These technologies serve as a small business incubator in rural 

areas that would otherwise see entrepreneurial activity gravitate toward the urban areas with greater 

resources. 

Robust broadband service enables new business ideas to take root and grow in rural America and 

attracts small companies able to use the broadband to access the "big city" resources and markets to 

meet their growing needs. In rural America, that translates into economic development that 

produces jobs, not only in agriculture, energy and other industries with a strong rural presence, but 

in the health care sector, and just about any other retail industry that requires broadband to operate. 

RURAL BROADBAND DEPLOYMENT BENEFITS AND PROGRESS 

Rural Broadband Benefits the Entire U.S. 

Investing in rural broadband has far-reaching effects for both urban and rural America, creating 

efficiencies in health care, education, agriculture, energy, and commerce, and enhancing the quality 

of life for citizens across the country. A report released last year by the Hudson Institute in 

conjunction with the Foundation for Rural Service found that investment by rural broadband 

companies contributed $24.1 billion to the economies of the states in which they operated in 2015. 1 

Of this amount, $17.2 billion was the direct byproduct of the rural broadband companies' own 

operations while $6.9 billion was attributable to the follow-on impact of their operations. 

t "The Economic Impact of Rural Broadband'" {2016), The Hudson Institute, Washington, D.C. 
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NTCA- Mike Romano 

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The Hudson study also determined that while small telcos provide a range of telecommunications 

services in rural areas, much of the benefit goes to the urban areas where the vendors, suppliers, 

and construction firms that rural telcos use are based. Only $8.2 billion, or 34 percent of the $24.1 

billion final economic demand generated by rural telecom companies accrues to rural areas the 

other 66 percent or $15.9 billion accrues to the benefit of urban areas. 

Additionally, the report found that the rural broadband industry supported nearly 70,000 jobs 

nationwide in 2015 both through direct employment and indirect employment from the purchases 

of goods and services generated in connection with broadband deployment and operations. Jobs 

supported by economic activity created by rural broadband companies are shared between rural and 

urban areas, with 46 percent in rural areas and 54 percent in urban areas. 

Immense Benefits for Consumers and Communities 

Beyond the direct impacts of investment activity for job creation, the broader socioeconomic 

benefits of broadband for users cannot be ignored. A Cornell University study, for example, found 

that rural counties with the highest levels of broadband adoption have the highest levels of income 

and education, and lower levels of unemployment and poverty.2 Access to healthcare is a critical 

issue for rural areas, where the lack of physicians, specialists, and diagnostic tools normally found 

in urban medical centers creates challenges for both patients and medical staff. Telemedicine 

applications help bridge the divide in rural America, enabling real-time patient consultations and 

remote monitoring, as well as specialized services such as tete-psychiatry. One study found that 

doctors in rural emergency rooms are more likely to alter their diagnosis and their patient's course 

of treatment after consulting with a specialist via a live, interactive videoconference. 3 

In Hawkinsville, Georgia, rural provider ComSouth partnered with the county public school system 

to deploy telehealth equipment to connect the school nurses' offices with physicians at Taylor 

Regional Hospital. Working with the Georgia Partnership for Telehealth, the hospital, the school 

system, and ComSouth facilitate better health care for students who might not otherwise be able to 

be seen by a physician in an area where parents can ill afford to miss a half or full day for a doctor 

visit. This is a very simple but elegant telehealth solution- the technologies (broadband and the 

monitoring equipment) are not new, but ComSouth helped put the pieces together to improve 

student health and save everyone time and money. 

Other benefits accrue in the form of things like distance learning and commerce. There is also a 

shortage of teachers in many areas of rural America and those public-school districts rely on highspeed connectivity to deliver interactive-video instruction for foreign language, science and music 

2 .. - Broadband's Contribution to Economic Health in Rural Areas'' (2015). Community & Regional Development Institute, 

Cornell University. 3 ·'Tdemedicine Consultations and r>.Iedication Errors in Rural Emergency Departments'' (2013), Center tOr Healthcare Policy 

and Research and Department of Pediatrics, University of California Davis. 
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NTCA- Mike Romano 

June 22, 20 !7 

Page4 of20 

classes. Broadband networks also enable fanners and ranchers to use the Internet to employ 

precision agriculture tools and gain access to new markets. 

Retail e-commerce has benefited tremendously from sales in rural America as well, where 

consumers may lack access to local retail outlets, but through the availability of rural broadband 

networks, can access a variety of shopping options. According to the Hudson Institute, rural 

consumers generated $9.2 billion in online sales in 2015 and if all rural Americans had access to 

broadband networks, the authors estimate that Internet sales would have been $1 billion higher.4 A 

recent Pew Study further finds that among those Americans who have looked for work in the last 

two years, 79 percent used online resources in their most recent job search and 34% say these 

online resources were the most important tool available to them5 

Indeed, job creation appears to abound when fast, high-capacity broadband is deployed in a rural 

area. In Sioux Center, Iowa, a major window manufacturer recently built a 260,000 square-foot 

plant to employ 200 people. The company considered more than 50 locations throughout the 

Midwest, but selected Sioux Center in part because the rural broadband provider enabled this plant 

to connect with its other locations throughout the U.S. using a sophisticated "dual entrance" system 

that could route traffic to alternate paths, ensuring that the main headquarters 250 miles away and 

other facilities would remain connected. In Cloverdale, Indiana, a rural broadband provider met 

with developers and helped bring an industrial park to its service area. Powered by this provider's 

broadband, the facility brought more than 800 jobs to the area. In Havre, Montana, a rural 

broadband provider is partnering with a tribally-owned economic development agency to create a 

Virtual Workplace Suite and Training Center that is expected to create about 50 jobs. These stories 

are repeated throughout NTCA member service areas. 

Unique Rural Challenges 

Building broadband networks is capital-intensive and time-consuming; building them in rural areas 

involves a special further set of obstacles. The primary challenge of rural network deployment is in 

crossing hundreds or thousands of miles where the population is sparse and the terrain is diverse. 

Especially when crossing federal lands or railroad rights-of-way in rural America, small, rural 

providers must address environmental and historical permitting concerns or contractual obligations 

that can delay projects and increase their already high costs. Then, where networks are built, they 

must be maintained over those hundreds or thousands of miles this requires technicians who 

regularly travel long distances to make service calls and customer service representatives trained to 

deal with questions about router and device configurations in ways that were unimaginable for 

"telephone companies." 

4 "The Economic fmpact of Rural Broadband'' (2016), The Hudson Institute. Washington, D.C. 5 ··Searching iOr Work in the Digital Era" {2015), Pew Research Center, Washington, D.C. 
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And even the best local networks in rural markets are dependent upon "middle mile" or long-haul 

connections to Internet gateways dozens or hundreds of miles away in large cities. Reaching those 

distant locations is expensive as well, and as customer bandwidth demands increase - moving from 

Megabytes to Gigabytes to Terabytes of demand per month per customer- so too does the cost of 

ensuring sufficient capacity to handle customer demand on those long-haul fiber routes that 

connect rural America to the rest of the world. 

Consumer Demand, Fiber, and Future-Proof Networks 

Despite these unique rural challenges, NTCA members have made remarkable progress in 

deploying advanced communications networks in their communities. Based in the communities 

they serve, these companies and cooperatives are committed to improving the economic and social 

well-being of their hometowns through technological progress wherever possible. Indeed, in the 

face of these challenges, rural telcos like those in NTCA' s membership have truly led the charge 

within the telecom industry toward ensuring that every consumer in the rural areas they serve has 

the chance to access broadband and other communications services that are as robust and reliable as 

anything an urb'\fi American consumer would expect. 

A survey ofNTCA members conducted last year found that 49 percent of respondents' customers 

are served via fiber-to-the-home (FTTH), up 20 percent from 2013. Twenty-nine percent of 

customers are served via copper loops, 15 percent cable modem, 6 percent fiber-to-the-node 

(FTTN), 0.5 percent fixed wireless, and 0.1 percent satellite. 6 Due in no small part to increased 

fiber deployment, rural customers have access to faster broadband speeds. Per last year's survey, 

85 percent ofNTCA members' customers can purchase broadband at speeds of l 0 Mbps or higher. 

Seventy-one percent can now access speeds above 25 Mbps. 

This growth in rural fiber deployment is even more remarkable given the regulatory instability of 

recent years, with USF reforms and budget shortfalls having challenged the business case for many 

deployments or undermined the sustainability of networks already in place. As I will discuss later 

in this testimony, changes in the programs that have enabled such significant success to date are 

now putting this progress in peril and undermining incentives to keep investing. Nonetheless, 

policies that encourage sustainable future-proof networks will be most efficient in responding to 

consumer demand over the lives of those networks, particularly when compared to short-term 

strategies that focus on getting lower-speed broadband deployed quickly only to find that consumer 

demands outpace the capabilities of such low-speed networks in a few short years. 

6 NTCA 2015 Broadband/Internet Availability Survey Report (20 16), NTCA-The Rural Broadband Association. Arlington, VA. 
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Much Progress, but Much More Work to Do 

Despite the progress discussed above, many parts of rural America still need fiber or other robust 

networks. Fifteen percent ofNTCA member customers don't have access to even 10/1 broadband. 

In a country where the Federal Communications Commission (FCC) has indicated that 90 percent 

of Americans already have affordable access to 25/3 Mbps service and many urban consumers and 

businesses benefit from 100 Mbps or Gigabit speeds, broadband access in rural America lags 

behind urban areas despite the best efiorts, innovation, and entrepreneurial spirit ofNTCA' s 

members. 

And the cost of broadband for the consumer must be considered too. As I will discuss later in this 

testimony, it does little good to have a network built in a rural area and even to have high-speed 

services available atop it if consumers must pay far in excess of what an urban customer would pay 

for the same service. Federal law recognizes this by mandating that the federal Universal Service 

Fund (USF) ensure reasonably comparable services are available at reasonably comparable rates in 

rural and urban areas alike. Yet, in many of the rural areas served by smaller providers today, this 

is not happening, as the combined effect of recent USF reforms and USF budget cuts have resulted 

in standalone broadband prices that are tens or even hundreds of dollars more per month for rural 

Americans than urban consumers. 

Finally, once a network is built, it is not self-effectuating, self-operating, or self-sustaining. 

Services must be activated and delivered atop it, maintenance must be performed when troubles 

arise, and upgrades must be made to facilities or at least electronics to enable services to keep pace 

with consumer demand and business needs. In addition to these ongoing operating costs, networks 

are hardly ever "'paid for" once built; rather, they are built leveraging substantial loans that must be 

repaid over a series of years or even decades. 

All of these factors make the delivery of broadband in rural America an ongoing effort that requires 

sustained commitment, rather than a one-time declaration of"success" just for the very preliminary 

act of connecting a certain number of locations. Particularly when one considers that even where 

networks are available many rural Americans pay far more for broadband than urban consumers, it 

becomes apparent that the job of connecting rural America- and, just as importantly, sustaining 

those connections- is far from complete. The rural broadband industry has a great story of success 

but also much more work to do- and this is where public policy plays such an important role in 

helping to build and sustain broadband in rural markets that would not otherwise justify such 

investments and ongoing operations. 
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THE FCC'S UNIVERSAL SERVICE FUND HIGH COST PROGRAM 

The High Cost Program Budget and Universal Service Reform 

Providing robust, scalable, and sustainable broadband in rural areas is not the kind of endeavor that 

tends to attract substantial capital from multiple private lending sources or tends to excite Wall 

Street. For small carriers like those in NTCA's membership, there are very few lenders that even 

look to work in this space- the Rural Utilities Service under the U.S. Department of Agriculture, 

CoBank, and the Rural Telecommunications Finance Cooperative represent the primary lenders to 

whom such small rural network operators might look in borrowing investment capital. 

Moreover, even where capital may be available, it can be difficult, if not impossible, to justify 

loans for investment in rural areas without a better business case than the rural area provides on its 

own. The costs of deploying networks and maintaining the service are considerable, and the few 

customers gained (typically less than seven per mile, and often less than one per mile) cannot 

afford to pay hundreds of dollars a month for broadband to cover those costs. 

Direct support from the federal USF High Cost program is therefore essential to make the business 

case for rural broadband. In fact, it is the primary, if not the only, tool to ensure that- as mandated 

by the Communications Act- rural consumers can purchase telecom service reasonably 

comparable to what urban Americans receive, at rates reasonably comparable to what urban 

consumers pay. 

Put another way, USF does not "pay for" networks; instead, the USF program ensures that rural 

consumers can pay reasonable rates for their use of services atop networks, thereby allowing 

consumers to buy such services and operators to justify the business case for investments in those 

networks in the first instance. USF is thus perhaps the best, most successful example of a publicprivate partnership that exists in the broadband space, having helped to justify the business case for 

private network investments that totaled approximately $29 billion (in terms of gross plant then in 

service) just for smaller rural carriers as of2015. 

Enabling the business case for delivery of advanced telecom services across rural America is a big 

job for a program, and yet the High Cost USF has been wedged under the same budget (without 

even just an inflationary adjustment) since 2011 even as small, rural carriers have sought to 

deliver more robust networks that will scale to meet the anticipated enormous consumer demands 

for bandwidth in the future and last over the lives of the loans taken out to build them. 

No justification is available for why the cap on the High Cost budget is the appropriate level of 

funding to meet the program's goals beyond a judgment in 2011 that 2010 support levels were the 

"right" amount. In fact, precisely because they have tried to keep investing where possible in 
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broadband, small rural carriers are now facing cuts to USF support for investments already made 

revealing how much the High Cost program is woefully underfunded to do the job that the law 

requires and that Congress wants in terms of making robust, affordable broadband available in rural 

America. 

While the FCC thankfully took steps to provide some level of additional funding earlier this year 

within the fixed overall USF budget for a subset of small carriers that elected model-based HighCost USF support, this funding was insufficient to achieve the goals of the model the FCC 

designed. An additional $110 million per year is actually needed to fund an alternative model that 

the FCC created to promote broadband deployment. Because of this limit, tens of thousands of 

rural consumers will see lower speeds or no broadband at all- precisely what the reforms were 

intended to alleviate. 

And the concerns are just as significant, if not greater, for rural areas served by those small carrier 

recipients of High-Cost USF that could or did not elect model support. The FCC tried last year to 

update these "non-model" (actual cost) mechanisms to enable consumers access to more afiordable 

standalone broadband. But under a new budget control mechanism that was included with those 

reforms, small operators will see their support slashed by 12.3 percent on average over the next 12 

months, meaning that hundreds of small rural network operators will be denied recovery of a total 

of $173 million in actual costs for private broadband network investments that they have already 

made. This means that small rural network operators and the customers they serve now must 

somehow come up with $173 million to pay for broadband investments that the USF program 

would have supported prior to the adoption of a harsh budget control mechanism last year. 

Because of these support cuts, many rural network operators cannot charge affordable standalone 

broadband rates for rural consumers - the very issue the FCC was trying to fix in the reforms last 

year- and smaller rural operators are also cutting back on future broadband infrastructure 

investments. For example: 

• One NTCA member company in the Southeast has indicated that it cannot justify seeking a 

$26 million loan to build high-speed broadband infrastructure due to the US F cuts; a project 

that would have delivered approximately 1,000 miles of fiber to over 7,000 rural customers 

is now on indefinite hold. 

• Similarly, due to the USF budget cuts, a cooperative in the upper Midwest is on the cusp of 

cancelling 2018 construction projects worth several million dollars; these projects would 

have upgraded or delivered broadband for the first time to approximately 500 rural 

consumers and businesses, but the company now needs to scale back future investment 

because the USF cuts are taking away millions of dollars that were counted upon for 

investments already made in the past. 
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• In Mississippi, a small rural provider has been forced to hold otT indefinitely on plans for 

future investments in communities like Fulton and surrounding rural areas due to the USF 

budget concerns, instead making minimal investments just to keep existing network plant 

operational rather than upgrading that network for higher-speed broadband that would help 

those areas thrive. 

• In Nebraska, a small company with only 12 employees that just recently completed a 

significant fiber-to-the-home project has declined to fill four open positions effectively 

cutting its workforce by 25% because of concerns with declining USF support and its 

impact on the ability to pay for the network construction already completed. 

• In Iowa, a small carrier has not been able to lower its prices for standalone broadband 

because the USF budget cuts are effectively wiping out any support for such connections, 

despite the intention of the reforms and the repeated calls for such a fix from Congress. 

Moreover, the USF budget control can and will vary from period to period, undercutting the kind of 

predictability that is mandated by law and needed when evaluating long-term future investments. 

For the last 4 months of last year, the budget control was 4.5% on average; for the first six months 

of this year, it rose to 9.1% on average. Now, as of July I of this year and for the twelve months 

after that, the budget control will on average reduce USF support for small businesses by 12.3%. 

This kind of unpredictability is particularly challenging, if not defeating, for smaller operators 

seeking access to loans and trying to identify the business case for sizeable, fixed long-term 

investments. 

Fortunately, it is not just NTCA that is concerned about the USF budget shortfall. In May 2017, 

nearly 170 Members of Congress including Representatives Blum, Comer, King, Luetkemeyer, 

Marshall, and Velazquez wrote to the FCC expressing serious concern about how the USF budget 

shortfalls will undermine private infrastructure investment and consumer rates. This letter 

demonstrated the sizeable and shared bipartisan interest in prompt action on this issue, and a 

window of opportunity exists. We are hopeful that with continued congressional interest and 

leadership we can see these issues addressed, and the promise of last year's USF reforms can be 

realized by the millions of rural consumers served by smaller rural network operators. 

In short, as NTCA summarized in a recent filing with the FCC, "while much effort may have gone 

into rebuilding 'the engine' of non-model USF reforms, the ongoing lack of'gasoline in that 

engine' (in the form of sufficient budget resources) risks rendering its operation inefficient at best 

and utterly ineffective at worst." This budget crisis- captured in the form of the new budget 

control mechanism is undennining further deployment as small telcos will factor estimated 

support reductions into future planning efforts and scale back investments. Some small companies 
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are already reporting cancelled construction projects and loan applications for upgrades due to the 

insufficient High Cost budget. 

Remedying this USF budget concern is imperative to the sustained delivery of affordable, highquality broadband service to consumers and small businesses that this subcommittee and so many 

other members of Congress hope to see in rural America. At a time when the focus is increasingly 

on deploying better infrastructure faster, the continued imposition of this USF budget cap at sevenyear-old levels translates to a contrary result of lower-speed broadband to fewer locations at higher 

rates. The FCC has taken steps to tinally adopt and implement reforms as discussed above, but 

there is still much more work to be done to make sure the reforms and programs actually work as 

intended. Whether Congress or the FCC acts to provide funding to make up for these High Cost 

shortfalls, inaction is not an option ifwe'trulywant to see the goal of universal service realized and 

investment in broadband sustained in rural America. 

The Connect America Fund II Auction 

In 2011, the FCC undertook steps to reform High Cost USF support in rural areas served by the 13 

large "price cap" carriers as well, rebranding the High Cost program in these areas as a "Connect 

America Fund'' (or CAF). Under a cost model developed over the following several years, these 

large carriers were extended "offers" of model-based USF support that provided a certain amount 

of funding in exchange for "state-level" commitments to deploy broadband to a specified number 

of locations. While many of these state-level commitments were accepted by the larger "price cap" 

companies, this was not unanimous- and the FCC also excluded very high cost portions of their 

serving areas from the offers of model support in the first instance. As a result, some rural areas 

served by these larger companies will go up for ''auction" pursuant to rules now under 

development. 

The FCC is currently implementing a "reverse auction" to determine which carrier will receive 

USF High Cost support through the CAF to serve these remaining price cap areas. Providers that 

demonstrate ability to offer reliable voice and broadband will be allowed to bid in the "CAF ll 

auction." For each area, the FCC will set a reserve price, or ceiling, that represents the maximum 

amount of support a carrier will receive to serve an area on a per location, per month basis, and the 

lowest bidders in a national auction will receive USF support for ten years in exchange for a 

commitment to build broadband to locations within their bid-upon areas within six years. 

In keeping with the Communications Act principle that mandates the availability of reasonably 

comparable services in rural and urban America alike, the FCC established a framework of bidding 

weights that recognizes what sorts of services are generally available in urban areas and the value 

of networks that will scale to meet anticipated increases in demand over time. NTCA had 
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advocated for weights that recognize greater value in "future-proof" networks that will not be 

obsolete before the decade is up. 

A traditional infrastructure analogy may resonate: if one projects that car traffic is doubling every 

few years on a single-lane road, one likely does not rebuild the new highway with only two lanes 

and then go back to add two more lanes a few years later and yet two more lanes a few years after 

that. Instead, given the relatively high costs of infrastructure deployment and the disruption 

involved in repetitious construction, one builds the highway "the right way" the first time. 

NTCA believes the same should be true of our broadband networks. We should look for a 

balanced approach to reach as many locations as possible, but not at the societal and economic cost 

of deploying networks that in only a few years' time will look obsolescent and inadequate for the 

users consigned to them. 

The areas that will be served by CAF II auction winners have some of the worst broadband service 

in the country- some even still use dial up. It has taken six years just to get to the point of being 

on the cusp of the auction. It is time to move forward with the auction finally. 

Yet, even as the FCC turns its attention to finalizing the auction procedures, a handful of interests 

are looking to relitigate the bidding weights in favor of services with slower speeds and higher 

latency. Although the CAF II weights that the FCC adopted are not what NTCA would have 

wanted, the FCC's decision with respect to CAF II auction weighting represents a consumeroriented compromise after all interested parties had opportunity to comment. 

The FCC's rules strike a reasonable balance between technological neutrality and service quality, 

taking appropriate account, for example, of the fact that the auction winner may be the only voice 

provider for that rural area and the need for networks that will be sustainable and respond to 

consumer demand over the next decade. We hope that the FCC will proceed f01ward with the 

promise of the CAF II auction, rather than taking a step backward now to revisit auction rules that 

are already years in the making. 

The Mobility Fund 

The FCC's 2011 USF reforms also created the Mobility Fund, a universal service mechanism 

dedicated to supporting mobile service in high cost areas. Mobility Fund support will also be 

distributed through a reverse auction, so determining which areas need the support is key. Like the 

CAF program, Phase II of the Mobility Fund represents the long-term promise of a long-running 

effort to modernize how mobile networks and services are supported and target support to rural 

areas in need. 
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The FCC is currently considering how to stmcture a challenge process that would reveal which 

areas need support, but suggested beginning with carrier-submitted data containing known 

inaccuracies. This data likely overstates coverage- and therefore risks that areas will be 

erroneously declared ineligible for funding- because carriers use their own standards when 

claiming that an area is served and because the level of data (the granularity) is less than precise. 

The FCC must begin with accurate data to ensure that support goes where it is most needed. 

Providers claiming to serve an area competitively should bear the burden of validating their data 

and actual coverage as a starting point in this process- putting the burden on others to "prove a 

negative" (i.e., to claim that another provider does not actually serve a claimed area) makes little 

sense and is highly inefficient. NTCA hopes that the FCC will place the burden of validating 

purported coverage where it belongs- on the party in the best possession of the information needed 

to make that validation. 

Finally, it cannot go without saying that wired and wireless broadband work in concert to provide 

consumers with the full broadband experience- access to data on the go, and a robust connection 

when at a fixed location such as a home or office. Further, the demands on the wireless network 

are so great that meeting them requires that a fiber -connected tower or small cell be near the mobile 

user at all times, meaning an extensive fiber network is essential to bringing the world of mobility 

to life for every consumer. 

For mral consumers to tmly have a reasonably comparable and affordable broadband experience, 

the FCC must budget accordingly and implement the new USF mechanisms with great care and 

precision. Placing too much hope on mobility alone without recognizing "wireless needs wires" is 

a recipe for failure, particularly in mral areas where distance and topography can challenge and 

fmstrate the widespread deployment of mobile networks and services. 

Contributions- How All This Gets Paid For 

Of course, the long-term sustainability of these initiatives ultimately depends on updating a 

contributions framework that is not built for a 21st century communications ecosystem. While 

there are many difTering views on how this should be done, the basic notion that those who make 

usc of communications networks should contribute to the well-being and universal availability of 

those networks is hard, if not impossible, to argue. 

Nonetheless, all of the important initiatives discussed above are supported by a shrinking base of 

legacy services that do not represent the majority users of our communications networks- we are 

building and trying to sustain universal broadband on the backs of telephone services that are 

declining over time. This would be like trying to recover the costs of building a highway system 

based upon assessments on only horseshoes and buggy wheels. Assuming all agree that universal 
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service is an important public policy- and Congress long ago said it is by statute - rationalizing 

and reforming contributions requirements is essential to firm up the foundation of universal service 

for the 21'1 century. 

INFRASTRUCTURE INVESTMENT AND BARRIERS TO DEPLOYMENT 

This Administration has already recognized the importance of advanced communications 

infrastructure as a policy priority, having included "telecommunications" within an initial list of 

infrastructure priorities even prior to taking office. Since then, Secretary of Commerce Wilbur 

Ross and Secretary of Transportation Elaine Chao have both stated that broadband buildout is an 

"essential part" of infrastructure. And on Capitol Hill, nearly 160 members of Con!,>ress sent a 

letter in January to the President urging him to include broadband within any broader infrastructure 

initiative. 

Including a broadband component in any infrastructure plan can play an integral part- and is an 

essential part- in getting broadband deployed to unserved areas and sustaining networks where 

they already exist. As Congress works with the Administration on an infrastructure package, 

NTCA offers a few key objectives for consideration, building upon suggestions first outlined in a 

December 20161etter to the National Governors Association when that group was evaluating 

infrastructure priorities in collaboration with the Presidential transition team. 

First, any infrastructure proposal should at least account for, if not specifically leverage, what is 

already in place and has worked before. Creating new programs from scratch is not easy, and if a 

new broadband infrastructure initiative conflicts with existing efforts, that could undermine our 

nation's shared broadband deployment goals. For these reasons, strong consideration should be 

given to leveraging- and supplementing the existing High Cost Federal Universal Service Fund 

programs as a primary means of implementing a broadband infrastructure initiative. 

The USF programs have been in place for years, and as explained above, the Commission has 

recently reoriented them under the "Connect America Fund" banner to promote broadband in highcost rural areas. With additional resources but with very little additional "heavy lifting," these 

programs could "hit the ground running" and yield immediate, measurable benefits for rural 

consumers. 

Other options could include alternative grant or capital infusion programs, comparable to what 

several State haves used to address "market failure areas"- places where the business case for 

investtnent is difficult, if not impossible, to make without additional resources. However, creating 

such programs would require more administrative effort than leveraging existing programs. 
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Another benefit of leveraging the reformed High Cost programs in some manner is that these 

programs now compel significant accountability. There are multiple levels of caps on operating 

expenses, caps on capital investment expenses, and measures to ensure that support goes to where 

it is needed rather than overbuilding other networks built without support. Atop that, there are 

requirements to gcocodc locations where broadband is installed, so policymakers and the public 

alike will be able to track where broadband has been extended via the programs. There arc also 

multiple compliance checks as well as frequent and detailed audits and reviews that are comparable 

in many respects to IRS audits. 

Second, "future-proof" networks represent the best means to ensure robust and affordable 

broadband will become and remain available throughout our country. While a short-term view 

might result in investing in cheaper technology upfront, precious public and private resources are 

likely to be wasted when tho~e broadband investments need to be rebuilt in only a few years to 

keep pace with the kinds of services that both urban and rural consumers demand. lt is therefore 

important that any supplemental resources that may be made available through a broadband 

infrastructure initiative deliver the best, most balanced payback for both the American taxpayer and 

the users of the networks both in the ncar-term and over the life of that infrastructure. 

Third, infrastructure investment depends not only upon financing but also upon prompt acquisition 

or receipt of permissions to build networks. Barriers or impediments to broadband deployment 

must also be addressed as part of any holistic plan to promote and sustain infrastructure investment. 

Such roadblocks, delays, and increased costs are particularly problematic for NTCA members, each 

of which is a small business that operates only in rural areas where construction projects must 

range across wide swaths of land. 

Permitting and access, particularly with respect to federal lands, can present a significant 

impediment to the deployment of rural broadband infrastructure. Navigating byzantine application 

and review processes within individual federal land-managing and property-managing agencies can 

be burdensome for any network provider, but particularly the smaller network operators that serve 

the most rural40 percent of the U.S. landmass. The review procedures can take substantial 

amounts of time, undermining the ability to plan for and deploy broadband infrastructureespecially in those areas of the country with shorter construction seasons due to weather. 

The lack of coordination and standardization in application and approval processes across federal 

agencies further complicates the deployment of broadband infrastructure. While not specifically 

regarding federal lands, the terms oflocal franchises, pole attachments, and railroad crossings can 

also create substantial costs and concerns in deploying broadband infrastructure. Govermnent at all 

levels- state and local, counties, tribal lands, and Federal- should work collaboratively to 

harmonize their process to expedite placement offacilities. 
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These issues are very real and affect broadband network operators and consumers. In Wyoming, 

the Bureau of Land Management state office adopted a unique bonding policy and application 

process that appeared to equate deployment of telecom facilities with installation of pipelines 

transporting hazardous substances, increasing dramatically the application burdens and the 

potential costs. In South Dakota, a small rural provider's multimillion-dollar fiber deployment 

requiring U.S. Forest Service approval encountered permitting holdups delaying completion more 

than a year. 

We have seen much agreement for some time now on solutions to simplifying the administrative 

barriers to deployment. The standardization of application, fee and approval policies and 

procedures across federal land-managing and property-managing agencies to the extent possible 

should be a high priority for executive order. The MOBILE Now legislation contains changes that 

should be considered for near-term implementation on federal lands, sueh as improved "shotclock" measures, while the FAST Act included sounds reforms that should be extended to smaller 

projects as well. Such actions would enable smaller operators to remain focused on providing 

high-quality broadband service to their customers rather than dealing with onerous regulations. 

BROADBAND REGULATION 

IP Interconnection 

The so-called "net neutrality" (or "Open Internet" or "Internet Freedom") debate is of course the 

hottest topic in communications policy these days. This debate has broad and important 

implications for small businesses and consumers alike- but it is also not a "black and white" 

debate. As with anything so complex, there are nuances that make the question of how we want 

broadband networks to work something that requires careful thought, and may ultimately require 

congressional clarification. 

With all the heated rhetoric that often surrounds 'Title 1 vs Title II," the practical issues that 

underpin the net neutrality debates in the first place can get lost in the shuffle. Nonetheless, NTCA 

has consistently focused on the practical balance between "right-sized" rules and what can happen 

in the absence of any rules at all. We do not need- the broadband marketplace does not needheavy-handed, one-sided regulation that favors certain segments or gets in the way of innovative 

offerings for consumers. At the same time, without some basic "rules of the road" to guide how 

companies interact with one another in the communications marketplace, there is the potential for 

chaos that will adversely affect rural consumers and smaller providers who need clarity and 

certainty to overcome the challenges of their markets. 

When people ask why NTCA takes such a "middle ground" in the net neutrality debates, we ask in 

response what would have happened if the FCC lacked authority to address concerns about rural 
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call completion. For those on these subcommittees not familiar with this issue, over the past 

decade we have seen a segment of the industry decide from time to time that it is not worth the 

time, effort, or cost to make sure calls reach rural America. No one has disputed that this is a 

problem, and the FCC has helped put rules into place intended to find the sources of the problem 

and discourage (and even punish) such behavior. 

Translate that now into a broadband environment where, say, a massive online video streaming 

service could decide in the future that it is too much trouble to deliver its data to selected rural 

markets, or a major backbone/transit provider might decide to increase substantially the prices for 

(or deny altogether) interconnection with small businesses in rural America. If that happens- and 

while it might seem a remote risk, who would have thought someone might decide to stop 

delivering phone calls to rural America either?- there needs to be someone to turn to make sure 

that rural America can stay connected with the rest of the world. 

This is what drives NTCA' s "middle ground" view on net neutrality questions on behalf of our 

small business membership. A basic "regulatory backstop" that ensures that data can flow 

seamlessly across networks of all kinds- and that a "cop on the beat" is there if and when things 

break down- is essential. Without some fundamental framework in place, what can help to ensure 

interconnection and universal service in a broadband world? 

To be clear, we do not want a heavy-handed regulatory framework; as I will discuss momentarily, 

we have seen where that leads, and it has harmed small businesses and the broadband marketplace. 

A light-touch "regulatory backstop" is very different than the heavy-handed retail regulation that 

we saw in the wake of the Open Internet Order. Instead of basic "rules of the road" and principles 

to make sure data flows seamlcssly, we saw an aggressive regulatory platform that favored certain 

segments by applying one-sided interconnection rules and other burdensome requirements only to 

retail Internet Service Providers. 

Broadband Privacy 

Fortunately, we have seen efforts to "correct" this heavy-handed approach for the benefit of 

consumers and the small businesses that serve them. Earlier this year, both houses of Congress 

invoked the Congressional Review Act (CRA) to block implementation of the FCC's privacy rules, 

which were adopted last October under the previous Administration. In its privacy Order, the FCC 

had required broadband Internet access service providers to obtain "opt in" consent from customers 

before using or sharing customer information, such as geolocation, financial and health data, web 

browsing and app usage history, and the content of communications. The order also subjected such 

providers to requirements to provide customers with certain notices about how their data could be 

used. 
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Prior to the congressional action, NTCA filed comments at the FCC and joined a successful 

petition for stay that requested suspension of the rules pending resolution of reconsideration 

petitions. Throughout the FCC proceedings, NTCA urged the Commission to be guided by the 

Federal Trade Commission (FTC) policies that govern edge and application providers, which 

would ensure a consistent standard of care across the broadband marketplace. NTCA noted that 

there was no logical justification to subject network operators to unique, more onerous standards, 

and that the Commission could have instead more effectively used any authority it had to mirror the 

FTC approach and foster a seamless and level user experience across the broadband ecosystem. 

The burdensome rules would have imposed considerable costs on smaller operators. 

By successfully invoking the CRA, Congress effectively barred the FCC from issuing another rule 

in substantially the same form as the disapproved Order and forced the unwinding of the changes 

adopted in the privacy Order. Since these rules had largely never taken effect to begin with, the 

practical effect is that nothing has changed. But NTCA stands by its statements in the proceeding 

at the FCC- its members are committed to preserving and protecting the privacy of their 

customers, and they are interested in consistent standards of care and duties to protect information 

for all actors in the broadband marketplace. We are hopeful that the FCC and FTC can work 

together to consider frameworks that achieve a more consistent and holistic outcome that protects, 

rather than confuses, consumers without placing unreasonable, lopsided burdens on any one 

segment of the broadband marketplace. 

Enhanced Transparency Requirements 

The FCC's broadband classification in 2015 also obligated broadband service providers to include 

"enhanced" disclosures of information to customers about packet loss and other network 

performance metrics and practices, such as data caps and allowances, and prices and promotional 

rates. Because the new requirements were viewed as potentially burdensome for smaller operators 

such as those in NTCA' s membership, the FCC thankfully granted those with I 00,000 or fewer 

subscribers an exemption from the requirements until December 15, 2015, and then extended the 

exemption for another year. Despite a stay request filed by NTCA and others, the issue remained 

unresolved during the transition between administrators, and the burdensome "enhanced 

transparency" rules teclmically became effective on January 17, 2017. 

Throughout this nearly two-year winding road, Senator Steve Daines and Representative Greg 

Walden pursued a legislative response by introducing bills that would have extended the exemption 

for another five years for providers with 250,000 or fewer subscribers. The bills also called upon 

the FCC to issue a report determining whether the exemption should be made permanent and if the 

small business definition should be modified. The full House of Representatives passed its bill in 

January and the Senate legislation is currently awaiting committee consideration. And in February, 

the FCC adopted an Order relieving providers with 250,000 or fewer connections from the 
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enhanced transparency requirements unti12022. Small carriers are counting on Congress to remain 

engaged in these issues to ensure regulatory certainty that promotes investment and even-handed 

regulation that accounts for the challenges small companies face. 

We are grateful to the leaders in Congress and at the FCC who have helped to address the concerns 

of heavy-handed, one-sided regulation in the name of an "Open Internet." At the same time, 

NTCA emphasizes the continuing importance for consumers in rural areas and the small businesses 

that serve them of having some basic "rules of the road" to ensure those markets stay 

interconnected and that the goals of universal service are not undermined in a broadband world. A 

complete regulatory vacuum will not serve rural consumers or small service providers well. 

THE REGULATORY FLEXIBILITY ACT 

Congress passed the Regulatory Flexibility Act (RF A) in 1980 to direct federal agencies, when 

promulgating rules, to incorporate analysis of more flexible regulatory approaches that account for 

the unique challenges that small businesses face. The RF A's goals are worthy and necessary to 

prevent "one-size-fits-all" rulemaking with inherent costs that only large companies have the 

resources to readily absorb. Though the RF A has helped small businesses save money, agencies 

are all too often able to satisfy the law's requirements with cursory, rote mentions of the RFA in 

rulemaking documents. 

Indeed, the DC Circuit ruled in 2004 that the RFA's requirements are "purely procedural" and 

require only that an agency explain a rule's impact on small businesses- and courts generally defer 

to these explanations, including explanations of why a rule's impact is reasonable. Because the 

RFA requires little to nothing more in substance, it is incumbent upon agencies of their own 

volition to follow the spirit and the letter of the RF A for small businesses to benefit from the 

additional analysis and that has rarely been the case at the FCC in the past. 

Close adherence to the purpose of the RF A would benefit small, rural broadband providers 

tremendously, which in tum would promote broadband investment in rural areas. For example, 

several items mentioned above could have been improved or avoided with better RF A analysis- be 

it the hard cap on the High Cost program budget (which is rescinding 12.3% ofUSF support over 

the next twelve months for hundreds of small businesses), the broadband privacy rulemaking, or 

the Open Internet Order's "enhanced transparency requirements" that technically applied to small 

providers for a period of time earlier this year. 

One can imagine how this practice of"see saw" rulemaking leaves small companies in a constant 

state of uncertainty and thereby distracts them from their core business of investing in broadband. 

Robust compliance with the intent and letter of the RFA would benefit everyone by making the 

regulatory process more certain for small businesses. 
46 

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Insert offset folio 46 here 25857.019

NTCA- Mike Romano 

June 22, 2017 

Page 19 of20 

We sec promise in various bills under consideration in this Congress to improve the RF A and force 

agencies to come into greater compliance with the law's intent. For example, early in this session 

Congress passed the Regulatory Accountability Act (HR 5), Title III of which contains much of the 

Small Business Regulatory Flexibility Improvements Act (HR 33). Section 304(d) ofHR 5 would 

require an economic assessment to accompany any agency certification that a rule will not have a 

significant economic impact on a substantial number of small entities. Moreover, involving the 

Small Business Administration (SBA) to a greater degree in the rulemaking process would improve 

RF A compliance, and thus we see real promise in Sec 305(a), which would empower the SBA to 

issue rules standardizing and governing agency compliance with the RF A. 

Further, Sec 306 would require all agencies to incorporate "SBREF A panels" into their rulemaking 

processes, which, prior to rule publication, would require agencies to supply SBA with rulemaking 

materials and information on a rule's potential impact on small companies. SBA would then accept 

input on the proposed rule from affected small businesses and convene a review panel with 

representation from SBA and the agency making the rule. After analyzing the proposed rule and 

accepting input, SBA would report on the rule's impact on small businesses and propose 

alternatives. The rulemaking agency would then be required to respond to the SBA report in the 

rulemaking. 

We commend the Rouse for passing this legislation as part of HR 5 earlier this year, we were 

encouraged to see the Senate report a similar bill out of committee a few weeks ago, and NTCA 

urges you to ensure these improvements are signed into law in this Congress for the sake of 

providing a more fair and certain regulatory environment for small companies. 

CONCLUSION 

Robust broadband must be available, affordable, and sustainable for rural America to realize the 

economic, healthcare, education, and public safety benefits that advanced connectivity offers. The 

High Cost USF program is key to helping rural America get and remain "online" with the rest of 

the world, but the Communications Act principle of reasonably comparable services and rates 

cannot be realized under an outdated High Cost budget that is insufficient to support just those 

broadband investments already made. If the FCC fails to address the shortfalls in the High Cost 

budget, even perfectly-designed support mechanisms cannot and will not ensure that consumer 

demand for robust broadband is met, nor will a comprehensive package of tax incentives, bonds, 

and loans where the basic business case for investment is so lacking. 

In addition to the significance of the High Cost USF for small business network operators in rural 

areas, other measures are important to facilitate their operations, to allow them to focus on the 

business of serving the communities in which they live and work, and to enable them to deploy 
47 

SBREP-219A with DISTILLER


Insert offset folio 47 here 25857.020

NTCA - Mike Romano 

June 22, 2017 

Page 20 of20 

broadband-capable networks across rural America. Federal permitting reforms such as 

standardizing application and approval processes across agencies and revising loan sequencing 

regulations to allow costly environmental and historical reviews to come after funds are obligated 

are important pieces of the rural broadband puzzle too for smaller network operators. Greater 

agency adherence to the purpose of the RF A would help as well, freeing up essential time and 

resources for small, rural-based broadband providers to achieve their mission of delivering robust 

broadband rather than focusing upon compliance with "one-size-fits-all" regulations that do not 

reflect the unique challenges of being a small business in rural America. 

NTCA thanks the subcommittee for its leadership on and interest in small business issues, and we 

look forward to working with you on behalf of our hundreds of small operator members and the 

millions of rural Americans they serve. 
48 

Statement of Dave Osborn 

Chief Executive Officer 

VTX1 Companies 

Before the House Small Business Committee on 

Subcommittee on Agriculture, Energy and Trade 

June 22, 2017 

Chairman Blum, Ranking Member Schneider, and Members of 

the Subcommittee, thank you for the opportunity to testify today 

on the important topic of improving broadband deployment in rural 

America. 

Introduction 

I am the Chief Executive Officer of the VTX1 Companies, a 

rural telecommunications provider based in Raymondville, Texas, 

which is about 35 miles north of the US border with Mexico on US69E. I have served in this position for over 12 years, and prior to 

that worked for several large telecommunications equipment manufacturers. My beginning in the industry dates back to July, 1970, 

when I started with Southwestern Bell in downtown Dallas, Texas. 

I progressed with them in jobs of increasing responsibility in Dallas, St. Louis, Ft. Worth, Kansas City, Houston, and finally Morristown, NJ, at AT&T’s company headquarters. Thirty plus years 

later, after leaving AT&T in the mid-1980s, I now reside in the 

Texas Rio Grande Valley in my current position. Today, I am representing WTA - Advocates for Rural Broadband, a national 

trade association, on whose board of directors I serve. 

VTX1 got its start as Valley Telephone Cooperative, Inc., or 

‘‘VTCI’’, in April 1952, when a group of local farmers and ranchers 

formed a non-profit telephone cooperative under the Texas Telephone Cooperative Act of 1946. They did so because Southwestern 

Bell and General Telephone of the Southwest, GTE, had refused to 

bring telephone service out to the rural south Texas communities 

due to the enormous expense of doing so. With the help of several 

loans from the U.S. Department of Agriculture, our cooperative finally began providing service in 1957 after laying cables and establishing equipment switching centers. We began with four brand 

new ‘‘exchanges’’, or geographic service areas, and grew by continued construction and by purchasing exchanges from General Telephone. By 1979, we had 17 exchanges within 19 counties in deep 

South Texas that comprised a total of 7,300 square miles. Our current density is only .7 access lines per square mile which is one of 

our state’s lowest density ratios. 

In the late 1980’s, VTCI saw an opportunity with transporting 

long distance up from Mexico and back and partnered with AT&T 

in this endeavor. An unregulated, for-profit, subsidiary VTX ComSBREP-219A with DISTILLER

49 

munications, LLC, was formed in December, 1987, to provide carrier transport services for almost a dozen Mexican carriers through 

fiber-optic bridge crossings at Laredo and Hidalgo, Texas. Long distance service was added around 1991, fixed-wireless broadband 

service in 2004, then finally television entertainment service in 

2005. VTX Telecom, LLC, a for-profit subsidiary, was formed in 

December 2000, after the Telecommunications Act of 1996 was 

signed into law to provide telephone, and now internet and television service to underserved communities outside of the VTCI communities. VTX Telecom receives a nominal amount of Federal support (i.e., federal Universal Service Fund (FUSF) support) and 

some Texas USF funds (TUSF); VTX Communications is not eligible to receive either FUSF or TUSF because, as stated above, it is 

an unregulated entity. The primary recipient of FUSF support is 

the original cooperative entity, Valley Telephone Cooperative. Utilizing a very complex accounting system of cross charges for worktime and other expenses, we are able to run our company efficiently as a single entity, and to avoid confusing customers with all 

the different company names, we took the name VTX1 Companies 

in 2012. 

Through expansion, diversification, and acquisitions, VTX1 now 

provides broadband internet access, television, security, and voice 

telephone service to approximately 16,000 residents, businesses, 

schools, libraries, government buildings, and other anchor institutions in a 10,000 square mile service area—the boundary is loosely 

defined by Laredo, San Antonio, Corpus Christi, and Brownsville, 

Texas. We have just under 200 employees, around 120 buildings 

and around 150 service trucks and vehicles. Our impact on the 

South Texas economy is significant. 

Solutions for Rural America 

I intend to focus on three main areas where I think Congress can 

work with regulators to encourage broadband deployment in rural 

America. 

1. Universal Service Policy 

Serving rural America is incredibly costly, and we couldn’t do it 

in the rural areas we serve without the federal Universal Service 

Fund (USF). The principle of universal service, that every American, regardless of where he or she lives, should have access to 

communications technology, has its roots in the Communications 

Act of 1934. The USF, as we know it today, was created by the 

Telecommunications Act of 1996. Without the support we and other 

rural telecommunications providers receive from the fund, our cooperative members would never be able to afford the services we 

provide. According to the Telecom Act, USF support is supposed to 

be ‘‘predictable and sufficient’’ to the task of providing ‘‘advanced 

telecommunications and information services...in all regions of the 

Nation.’’ Unfortunately, the principle of sufficiency seems to become less and less important to federal policymakers over time. 

For the past several years, the Federal Communications Commission (FCC) has labored to modernize USF, most recently after 

SBREP-219A with DISTILLER

50 

the release of the National Broadband Plan in 2010, which recommended freezing support for small, rural broadband providers at 

2010 funding levels. The reform efforts culminated in an Order in 

March of 2016, which has resulted in companies similarly situated 

to VTX1 seeing their support reduced because of a budget target 

reflecting 2011 funding levels. Incidentally, the 2011 support levels 

were based on support for voice networks as opposed to broadband 

networks, which is what the reformed USF would focus on post2011. This approach attacks the problem of getting broadband to 

rural America from the wrong angle. Instead of setting a goal for 

broadband in rural America and attempting to determine what 

that would cost, the FCC has arbitrarily set a budget and essentially said ‘‘see what you can do with this.’’ 

So far, VTX1’s USF reimbursement from mid-2016 to June 2017 

is down approximately a half million dollars on an annualized basis 

with grater reductions anticipated in light of the caps and constraints the FCC has placed on the overall High Cost Fund to stay 

under its self-imposed budget cap. This despite the fact that we 

have had to increase our fiber to the home investments in fiber, 

electronics and maintenance fees to meet the FCC’s goals of no less 

than 10 mbps down with a preferred 25 mbps down broadband 

service. In the last two and a half years, VTCI has spent almost 

$27 million in capital expense (CAPEX) dollars that had been previously committed to as part of our five-year CAPEX plan to bring 

high-speed broadband service to our rural cooperative members. 

These federal support reductions have now reduced our capital expansion within our VTCI service areas and slowed the conversion 

to fiber-optic technology. It is important, and necessary, to upgrade 

all terrestrial networks to fiber because, while it does cost money 

to upgrade to a fiber-optic infrastructure, a fiber-optic network will 

have a service life several times longer than that of a copper one— 

plus the maintenance costs of a fiber-optic network are much less 

than a copper infrastructure. Additionally, serving the needs of our 

national cellular companies to ‘‘backhaul’’ their soon to be deployed 

5G LTE traffic from their towers to their regional switching centers 

will be very important. Because of the speeds involved, cellular carriers will be hard pressed to backhaul their traffic by radio technology alone. 

Instead of caps and cuts to support, the High Cost Program within USF needs to be fully funded so that carriers can upgrade their 

networks to deploy broadband further throughout their service territories. If that cannot be done at the very least an inflationary adjustment to the High Cost Program is warranted so that high-quality broadband can be pushed further out into rural America. If the 

country wants to get serious about catching up with the rest of the 

world’s broadband deployment, the High Cost Program support 

should actually be increased. 

2. Streamlining the Permitting Process for Existing Rights 

of Way 

If Congress wants to improve the efficiency by which USF dollars 

are put to use, it should review and reform the permitting process 

for access to federal lands and other rights of way. Small compaSBREP-219A with DISTILLER

51 

nies like mine wait years and spend hundreds of thousands of dollars per project on environmental, archaeological, and historical 

preservation reviews. It is not uncommon for small companies like 

mine to experience delays of up to 18 to 24 month in getting 

broadband projects going because of these types of review. This is 

particularly problematic in parts of the country that have shorter 

construction seasons than Texas. 

While some of these reviews are necessary and important, particularly when it comes to previously undisturbed ground, it makes 

little sense to require extensive reviews for projects that make use 

of existing and operational rights-of-way. I’ll share an anecdote 

from my own experience, which is not atypical. 

VTX1 received both a Broadband Initiatives Program (BIP) loan/ 

grant combination from the Department of Commerce and a 

Broadband Technology Opportunity Program (BTOP) grant from 

the Department of Agriculture to construct a fiber-optic infrastructure as part of the American Recovery and Reinvestment Act 

(ARRA) stimulus program. The intent of these projects was to be 

shovel-ready, and ours was but for the fact that we had to wait 

nine months for our environmental reviews needed to bore underground within 20 feet of ‘‘center line’’ along a U.S. federal highway. 

Obtaining environmental permits to use rights-of-way that have 

been and are continually being disturbed should be fast-tracked for 

approval. 

3. Regulatory Reporting Burdens 

We continue to be concerned with the increased quantity of reporting obligations and reporting burdens placed upon us involving 

regulatory reporting to the FCC, the Universal Service Administrative Company (USAC), and the National Exchange Carriers Association (NECA) and other federal agencies when the recovery of 

those costs has been capped by not only the FCC’s Corporate Operations cap but the maximum $250 per line per month cap. VTCI 

performed a detailed labor study in 2016 and found that we spend 

around 3,200 hours completing just the federal reporting requirements placed on us. This costs us about $100,000 a year in wages 

and another $50,000 a year in benefit costs alone with none of 

these dollars being recovered by any federal support. A copy of our 

spreadsheet showing the regulatory burden wage analysis is attached. Total benefit cost was estimated at fifty percent of wage 

cost. While we recognize the need to justify all of our support expenditures and requests, we believe the FCC must take all necessary steps to ensure that high cost rural companies such as VTCI 

are allowed to recover every dollar of these regulatory burden expenditures from the high cost support mechanisms. Without such 

assurances, small rural companies such as ours may very well be 

squeezed by having ever increasing reporting requirements while 

receiving ever smaller support due to caps and constraints on the 

high cost fund. 

Conclusion 

Our conclusions are straightforward: 

SBREP-219A with DISTILLER

52 

• The High Cost Fund component of Federal USF needs to 

continue in remote rural serving areas as well as having a cost 

of living escalator to keep the fund viable during periods of inflation. An increase in High Cost Fund monies should be considered as well to speed up broadband deployment; 

• Permitting timelines should be greatly reduced in areas 

and along roads where the land has been previously and continuously disturbed; 

• Regulatory reporting should be streamlined and limited to 

items that have a significant, measurable impact on broadband 

deployment in America. 

This concludes my testimony. Thank you for your attention and 

I look forward to answering any questions you may have. 

SBREP-219A with DISTILLER


Insert offset folio 53 here 25857.021SBREP-219A with DISTILLER

Summary of Regulatory Burden Analysis for VTCI 

Reporting Entity Total Hours Total Cost 

USAC 260 $8,024 

NECA 678 $20,923 

FCC 1,791 $55,270 

RUS 162 $4,999 

Other Federal 302 $9,320 

Grand Total 3,193 $98,536 

Insert offset folio 54 here 25857.022SBREP-219A with DISTILLER

Financial data Billing data Other data total hours total hours to Subtotal Frequency total hours II of filings Grand Total loaded 

FCC Form 499A 2,0 o.o 0.0 2 5.0 7 4.0 2.0 1.0 30 

ICLS liAS USE Certification o.o 0.0 0.0 0 2.0: 2 1.0 1.0 1.0 

TUSF Remittance Worksheet 0.0 3.0 0.0 3 3.0 6 12.0 z.o 12.0 96 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 

0 0 0 0 0 0 

0 0 

0 0 0 0 0 0 0 0 0 0 0 

0 0 0 

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 

0 0 0 0 0 0 

0 0 0 

0 0 0 

Insert offset folio 55 here 25857.023SBREP-219A with DISTILLER

CAM/Part 64 (Cost Study) 

Company Services Questionnaire 

Cost Study Prior Year 

EC1050 Settlement DME & OMA 

FCC Form 5-07 & 1.3 Loop Data Rpt & Certification 

Form 508 - ICLS Common Une Projections 

Form 509 1CLS Common Line Actua!s 

TRP Forecast 

Financial data Billing data 

().f) 3.0 

8.0 U(J 

2.0 3,0 

0.0 

0.0 0.0 

1.0 0.0 

8.0 0.0 

Other data total hours total hours to Subtotal frequency total hours #of filings Grand Total loaded 

$30.8

1.0 4.0 ;27.0 31 1.0 16.0 1.0 47 $30.8

6.0 27.0 101.0 128 155,0 1.0 283 $30.8

0.0 5,0 3:0 8 12.0 2.0 12.0 120 $30.8

1.0 1.0 2.0 3 4.0 1,0 4.0 16 $30Jl

2.0 2.0 2.0 4 1.0 1.0 1.0 5 $30.8

o.o 1.0 2.0 3 1.0 1.0 1.0 4 $30J

0.0 8.0 8.0 16 1.0 2.0 1.0 18 $30.8

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 [) 

0 0 0 

Insert offset folio 56 here 25857.024SBREP-219A with DISTILLER

Financial data BiUlng data Other data total hours total hours to Subtotal frequency total hours #of filings Grand Total Loaded 

CPNl Certification M 2.0 2.0 2.0 4 1.0 3J) 1.0 7 $30.86 

ETC Newspaper- Public Notice 2.0 4.() 6 1.0 8.0 1.0 14 $30.86 

fxch Boundary Maps- Re"Cert!fkation 0.0 o . .o 5:0 5.0 36.0 41 1.0 58.0 1.0 99 $30.86 

fCC Form 395 0.0 0.0 3.0 3.0 6 1.0 4.0 1.() 10 $30.86 

FCC Form 477 8.0 11.0 49.0 156.0 205 2.0 454.0 2.0 1318 $30.86 

FCC Form 481 - 5 Yr Plan 58.0 18.0 94.0 96.0 190 1.0 239 $30.86 

FCC Form 5-55 o.o 2.0 2.1) 4 t.O 2.0 1.0 6 

FCC Reform -l/S Rate Increase- Benchmark Rvw 2.0 4.0 7 1.0 2.0 Ul 9 

Form 159 - Regulatory Fees o.o 0.0 0.0 2.0 2 1.0 2.0 4 $30.86 

International Traffic Data Rpt 0.0 0.0 0.0 0.0 4 2.0 1.0 6 $30.86 

JXC Geographic Rate Avg Cert 0.0 3.0 4.0 7 1.0 2.0 LO 9 

Ufellne Public Not lee 2.0 2.0 4.0 LO 14 $3(t86 

Record Keeping & Contact Info Compliance Cert o.o 0.0 0.0 3.() 3 ;LO 2.0 1.0 5 $30.86 

Rate Survey 0.0 HI 3.0 5.0 8 4.0 4,0 2.0 40 $30.86 

0 0 

0 

0 0 0 

0 0 0 

0 

0 

0 0 0 

0 0 

0 0 

0 0 

0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

Insert offset folio 57 here 25857.025SBREP-219A with DISTILLER

Financial data Billing data Other data hours total hours to Subtotal Frequency total hours # ol filings Grand Total Loaded 

RUS Non¥Discrimination- Public Notice 2,0 0.0 2.0 6 1.0 s.o 1.0 14 

RUS Operating Report Submission 0.0 0.0 OJ) 0.0 3 1.0 2.0 1.0 

0 0 0 

0 0 0 

0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 () 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

0 0 0 

Insert offset folio 58 here 25857.026SBREP-219A with DISTILLER

Emergency Operations Drill 

Eminent Domain Report 

Form 502 NANPA 

HUB Report 

Lifeline UDA Data Exports & Imports 

Municipality Access Report (MARs) 

NTCA Federal Regulatory Reporting Burden Survey 

PUC Earnings Mon!toring Rpt 

Quality of Svc Rpt 

SPCOA & COA !LEC/!XC/CLEC Re-registration 

State Agency Utilities Rpt 

Stat-ewide Average Access MOU 

TUSF Fund Rcpts Project No. 41120 & 36163 TUSF Support Fund Receipts 

Workforce Diversity Report 

Financial data Billing data 

0,0 M 

O.!l M 

IJ,O 

(),() 

o.o OJ; 0.0 2.0 o.o 0.0 

1.0 0.0 

0.0 2.0 

0.0 0.0 0.0 2.0 

2.0 

0.0 0.0 

0.!) o.o 

Other data total hours total hours to Subtotal Frequency 

0.0 0.0 s:o 5 

M 0,0 2 1,() 

2.0 4.() 10 2.0 

1.0 1.0 4.0 5 1.0 

1.0 1.0 2.0 3 12.0 

(),0 2.0 2.0 4 4.0 

&.() 8.0 4.0 12 1.0 

1.0 2.0 3 

o.o 2.0 9 4.0 

OJJ 0.0 3.0 3 1.0 

0.0 2.0 2,() 4 

8 1,0 

QD 0.0 2.0 2 1.£) 

2.0 2.0 4 4.0 

2.0 2.0 5 

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 

0 0 

0 0 

0 

total hours #of filings Grand Total Loaded 

$30,$

M 13 $3CU

!.() 3 $30.8

3.0 2.0 26 $30.8

!.0 6 $30.8

12.0 48 $30.8

24 $30.8

0.0 1.0 12 $30.8

1.0 1.0 37 $30.8

5.0 56 $30.8

3.0 1.0 6 $30.8

1.0 2.0 10 $30.8

4.0 2.0 16 $30.8

1.0 3 $30.8

4.0 24 $30.8

9 

0 

0 0 

0 

0 0 0 0 

0 

0 

0 

0 

Insert offset folio 59 here 25857.027SBREP-219A with DISTILLER

Notes: 

Master List of Regulatory Reports to various reporting entities was provided by 

Senior Billing & Business Compliance Manager, Paula Smith 

Met with Senior Manger to identify the various point of contacts from the different departments 

to reach out to as contributors of data to complete the regulatory reports. 

Created a template to send to contributors to complete the number of hours needed to: 

download, analyze, prepare, review and submit data for designated Regulatory Reports 

Requested from Payroll a Corporate Loaded Labor Rate to be used to determine the internal cost 

to complete the identified Regulatory Reports 

Created Master Regulatory Contributor Template to accumulate all data to complete the 

2016 Regulatory Burden Analysis 

Resources: 

*List of Regulatory Reports from Business Compliance 

*Time Studies from the following groups: 

Regulatory 

Billing 

Switch 

Network Services 

Accounting 

Plant Services 

Human Resources 

Records 
60 

Improving Broadband Deployment: Solutions for Rural America 

Testimony of Tim Donovan 

Senior Vice President, Legislative Affairs 

Competitive Carriers Association 

before the 

United States House of Representatives Committee on Small Business 

Subcommittee on Agriculture, Energy, and Trade 

June 22, 2017 

SBREP-219A with DISTILLER

61 

Chairman Blum, Ranking Member Schneider, and members of 

the Subcommittee, thank you for inviting me to testify about improving broadband deployment in rural and remote areas and its 

impact on small businesses throughout the United States. 

I am testifying on behalf of Competitive Carriers Association 

(‘‘CCA’’), the nation’s leading association of competitive wireless 

carriers. CCA is made up of nearly 100 carrier members ranging 

from small, rural providers serving fewer than 5,000 customers to 

regional and national providers serving millions of customers. CCA 

also represents nearly 150 associate members—small businesses, 

vendors, and suppliers that serve carriers of all sizes. The vast majority of CCA’s members are small businesses. 

Consumer demand for mobile broadband has increased exponentially, and studies show it will continue to grow at an astounding 

rate. For example, Ericsson’s latest Mobility Report forecasts a 

greater than five-time increase in mobile data consumption over 

the next five years. To meet these demands, Congress and the Federal Communications Commission (‘‘FCC’’ or ‘‘Commission’’) must 

tackle broadband deployment challenges today to meet needs of our 

connected economy. 

A persistent digital divide continues to plague certain rural areas 

that remain less likely to have access to, or choices for, broadband, 

smartphones, and other devices. Pew Research Center reports that 

‘‘[d]espite recent gains in digital technology adoption, rural adults 

remain less likely than urban and suburban adults to have and use 

these technologies. For example, rural Americans are 7 to 12 percentage points less likely than those in urban and suburban areas 

to say they have a smartphone, traditional computer or tablet computer.’’ As a result, while rural areas may be more connected today 

than in the past, substantial segments of rural America still lack 

the infrastructure needed for high-speed internet, and the service 

deployed in these areas may be slower than that of their urban 

counterparts. Policymakers must therefore implement targeted 

policies to ensure that even the most remote Americans remain 

connected in today’s mobile world. 

Last week, FCC Chairman Pai participated in the inaugural 

Rural Prosperity Task Force meeting, where he outlined the importance of policies that support broadband availability in rural areas. 

As he articulated, providing connectivity nationwide is at the core 

of why the FCC was created in 1934. Chairman Pai shared examples of economic growth powered by broadband with the task force, 

including remote monitoring in a meat processing plant in Nebraska, cattle feed lot monitoring in Kansas, connected combines in 

Maryland, and healthcare, education, and job creation advances all 

made possible by broadband. 

These examples are not purely anecdotal. The Hudson Institute 

recently found that the investments and ongoing operations of 

small rural broadband businesses contribute $24.1 billion annually 

to the nation’s gross domestic product, with 66 percent ($15.9 billion) of that amount benefiting urban areas. The same report also 

found that an estimated 70,000 jobs can be attributed directly to 

economic activity of small, rural broadband providers, underscoring 

SBREP-219A with DISTILLER

62 

how broadband is an important driver of job growth. A separate report found that when a county gains access to broadband, there is 

approximately a 1.8 percentage point increase in the employment 

rate, with larger affects in rural areas. In testimony before a Senate subcommittee last year, a Mississippi farmer estimated a minimum ‘‘10-15% loss of efficiency when connections are disrupted’’ 

for their machines alone. New telehealth services can save a rural 

hospital more than $100,000 a year in healthcare and community 

costs. Secondary education, technical training, and even university 

degrees are available online, but only accessible for Americans with 

broadband services that support delivery of materials and facilitate 

interactive classes. It’s clear: the future of rural economic and 

small business growth is directly tied to the availability of mobile 

broadband. 

It is not just important for today’s economy; mobile broadband is 

vital to tomorrow’s economic development through next generation 

or 5G services and the Internet of Things (‘‘IoT’’). The majority of 

CCA’s members live and work in the communities they serve, and 

therefore share in the potential success of ubiquitous mobile 

broadband service and the deployment of next-generation technologies in their hometowns. As this Committee continues to focus 

on improving broadband deployment, particularly in rural areas 

and for small businesses, we urge you to ensure reasonably comparable services are available in urban and rural areas with sustained federal support in targeted areas, streamline policies to deploy, maintain, and upgrade mobile broadband networks, and provide all carriers with opportunities to access finite spectrum resources. 

Accurate Data is Necessary to Define Areas Where Federal 

Funding Can Preserve and Expand Mobile Broadband Deployment 

Congress created the USF high-cost program to provide Americans in rural areas with ‘‘reasonably comparable’’ services as those 

in urban areas with the help of sufficient and predictable support. 

Section 254(b) of the Communications Act provides that the FCC 

shall base policies on ‘‘statutory principles established by Congress,’’ including the provision of ‘‘advanced telecommunications 

and information services’’ to consumers ‘‘in all regions of the Nation,’’ at ‘‘just, reasonable, and affordable rates,’’ and of services 

that are ‘‘reasonably comparable’’ to those provided in urban areas. 

In today’s world, ‘reasonably comparable’’ service is synonymous 

with fast, affordable mobile broadband technology. Yet, to this day, 

numerous members of Congress attest to the unfortunate reality of 

insufficient and inaccessible wireless coverage throughout the 

United States, both as public servants responding to their constituents and as consumers in the mobile wireless ecosystem. Committee hearings recently held in both the House and Senate find 

members lamenting the consistent, uniform availability of mobile 

broadband throughout their districts. 

CCA applauds action on the FCC’s Mobility Fund II. The FCC 

adopted the Order in March of this year which to dedicate $4.53 

billion over the next decade to close ‘‘coverage gaps.’’ However, 

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without coverage data that accurately reflects consumers’ on-theground experience, decisions that determine areas eligible for Mobility Fund II support will be misguided and scarce resources will 

be squandered. The underlying data that the FCC currently uses 

to make funding and other policy decisions, known as the Form 477 

data, relies on carrier-reported information lacking standardization. The FCC’s own presentation of the data includes a disclaimer 

that ‘‘coverage calculations ... have certain limitations that likely 

result in an overstatement of the extent of mobile coverage.’’ Prior 

to allocating Mobility Fund II support, the Commission must use 

standardized data including a challenge process that is efficient, 

eases burdens on smaller entities, and generates accurate determinations of where qualifying coverage exists and where Mobility 

Fund II must target support. The Commission is about to distribute $4.53 billion in funds over the next ten years for mobile 

broadband deployment, and it must do so in a fiscally responsible 

way that accurately bridges the digital divide to preserve and expand mobile services. 

The need for accurate data and analysis is an uncontroverted, bipartisan principle under current leadership at Congress and at the 

FCC. Specifically, on-the-ground experience, including coverage 

data obtained by driving across the country, makes clear that mobile wireless service is not yet available everywhere, much less on 

a competitive basis as required by statute. Congress stands in bipartisan agreement on this point, and has continuously noted that 

a strong foundation based on data that accurately reflects consumers’ on-the-ground experience is critical to advancing economic 

decisions. CCA applauds this Congressional support, including letters to the FCC and recent legislation that recognize that From 477 

mobile coverage provides an inherently unreliable account of mobile broadband coverage, particularly in rural areas. We must 

begin with concrete, factual data to adequately address gaps in effective competition across the mobile wireless market. 

CCA supports current legislation before the House of Representatives, H.R. 1546, The Rural Wireless Act of 2017, introduced by 

Congressman Dave Loebsack (D-IA) which would direct the FCC to 

establish a methodology for mobile wireless coverage data that reflects actual consumer connectivity experience. Additionally, Congressmen David McKinley (R-WV) and Peter Welch (D-VT) introduced the bipartisan H.R. 2903, the Rural Reasonable and Comparable Wireless Act of 2017, which would direct the FCC to implement regulations that establish a national standard to determine 

whether rural areas have access to mobile broadband services comparable to their urban counterparts. CCA commends each piece of 

legislation seeking to identify remote and rural areas that are still 

unserved and underserved. 

Streamlined Infrastructure Siting Policies are Critical to 

Robust Mobile Broadband Networks 

Competitive carriers must be able to timely and efficiently deploy 

physical infrastructure. Carriers must increase the number of towers, base stations, antennas and wires, often within public rightsof-way, to support the advanced wireless services necessary to keep 

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pace with consumer and network demands, yet carriers continue to 

face prohibitive delay and cost issues while working through the 

federal, state, and local siting process. Carriers must pass through 

a regulatory maze, as demonstrated in the attached chart, to gain 

approval to serve their communities, with potential costs and 

delays at each step. These longstanding obstacles are getting worse 

as industry moves towards deploying dense small cell networks and 

fiber. Most CCA members serve rural areas and have invested significant private capital, along with USF support, to deploy wireless 

services in some of the hardest to serve parts of our nation. However, expanding service to underserved and unserved rural areas 

depends on the ability to efficiently site facilities, including on federal lands. 

Congress, the FCC, and industry have acknowledged that achieving true 5G connections will depend on government’s ability to update the applicable regulatory frameworks, and make them more 

predictable. While critically important for 5G, these are not issues 

for future action—they also affect deploying today’s technologies 

and policymakers must act immediately. CCA supports Chairman 

Pai’s Broadband Deployment Advisory Committee (‘‘BDAC’’). The 

BDAC’s recommendations on how to accelerate broadband deployment will directly support the Commission’s statutory mandate to 

facilitate high-speed broadband for all Americans. Congressional efforts also are needed. Congress should pass legislation that improves the process for deploying facilities on federal lands, and 

streamlines state and local barriers to deployment. Strong national 

siting standards, including shot clocks, reasonable restraints on 

state and local infrastructure-related fees, and modifications to current historic preservation and environmental compliance siting 

processes, will relieve carriers and state and local review offices 

from resource burdens, and will improve connectivity for consumers. In addition to reducing state and local barriers, Congress 

should work with the FCC to address in the short term its current 

framework for complying with the National Environmental Protection Act (‘‘NEPA’’) and the National Historic Protection Act 

(‘‘NHPA’’), including section 106 review. 

Siting on Federal Lands 

CCA members often express frustration about the hurdles they 

face when filing an application to deploy or upgrade facilities on 

federal lands. These experiences include lost or missing applications, applications that languish for years, inconsistent or undisclosed rules across and within agencies, redundant historical or environmental reviews, and inconsistent denials. In other words, unnecessary bureaucratic red tape regularly prevents competitive carriers from providing high-quality mobile broadband service in rural 

America. In many cases, carriers stall and sometimes abandon 

plans to buildout in these areas. This is not an acceptable outcome. 

The BDAC includes a Working Group dedicated to streamlining the 

federal siting process; I encourage this Subcommittee to pay attention to the Working Group’s efforts as part of any effort to address 

federal lands siting issues. 

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State and Local Barriers to Broadband Deployment 

CCA and its members are deeply engaged in policymaker’s ongoing work to address state and local barriers to broadband deployment. At the FCC, for example, CCA serves on the BDAC’s Removing State and Local Regulatory Barriers Working Group, alongside 

many other stakeholders, including municipal representatives. 

When it comes to state and local siting processes, imposing reasonable restraints on state and local infrastructure-related fees and 

making sure applications are timely reviewed under clear rules will 

allow competitive carriers to make a better business case for deployment. It also will reduce the need to lobby individual local authorities or States to adopt broadband-favorable rules. Broadband 

deployment is an investment in the local economy, and while local 

authorities often resist a ‘‘one size fits all’’ solution, most industry 

requests for national standards are administrative and structural 

and can appropriately respect local issues. 

Congress Must Implement Durable Infrastructure Solutions 

The FCC can quickly move to address some of these infrastructure challenges, but Congress must act to provide long-term certainty. Congress should include support for mobile broadband deployment and services in any infrastructure bill. There is bipartisan support from House and Senate leadership to find solutions 

to bridge the digital divide. Democrats on the House Energy and 

Commerce Committee as well as Senate Democrats have proposed 

broad infrastructure plans that include designated funding for 

broadband infrastructure. House Energy and Commerce Subcommittee on Communications and Technology Chairman Marsha 

Blackburn has confirmed her commitment to include broadband in 

any infrastructure proposal, and Senate Commerce, Science and 

Transportation Committee Chairman John Thune has held numerous hearings on the importance of mobile broadband infrastructure. 

Similarly, the Administration’s Fiscal Year 2018 budget proposal 

prioritizes improvements in broadband deployment, and includes 

‘‘$200 billion in outlays related to the infrastructure initiative,’’ 

which could support broadband deployment. Policymakers must be 

mindful that small rural and regional providers have limited resources, and continue to face challenges securing adequate capital 

for wireless siting projects, an issue where this Committee plays a 

critical leadership role. 

CCA also supports legislation like S. 19, Making Opportunities 

for Broadband Investment and Limiting Excessive and Needless 

Obstacles to Wireless Act, or the MOBILE NOW Act. The MOBILE 

NOW Act would contribute to streamlining federal siting and deployment policies, as well as repurposing federal spectrum for commercial use. Combined with FCC efforts, Congress is poised to provide relief to carriers seeking to serve the most challenging areas 

of the United States. Sound, unified infrastructure policies will create jobs and drive economic development. This will play a significant role in ensuring the United States leads the world in 5G. 

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Access to a Myriad Spectrum of Resources is Critical to Deploying Ubiquitous Mobile Broadband Networks 

The wireless industry is on the brink of a tectonic technological 

shift. While many carriers in rural areas still maintain 2G networks, other wireless providers are currently transitioning from 3G 

to 4G networks and other providers are turning down their 2G and 

3G networks altogether. Carriers are now looking forward to deploying 5G next-generation technologies. To make this important 

jump, competitive carriers must have access to low-, mid-, and 

high-band spectrum to deploy next-generation mobile broadband 

and, eventually, 5G networks. This will determine viability of 

smaller carriers as the demand for data increases. 

Building on the trend to next-generation technologies, Congress 

should support efforts to allocate additional spectrum resources for 

mobile broadband use, including low-, medium-, and high-band 

spectrum, both licensed and unlicensed. Additionally, Congress 

should work alongside the Commission to prevent attempts to encroach on mobile carrier operational rights throughout the millimeter (‘‘mmW’’) spectrum. Competitive carriers already are using 

these licenses for point-to-point and critical backhaul services 

across rural and urban communities, enabling broadband 

connectivity for local municipalities, schools and businesses in 

these areas. Congress and the FCC should continue to facilitate 

carriers’ use of this spectrum to provide all consumers with the 

most advanced services. 

A varied spectrum portfolio is necessary to meet consumers’ increasing demands, and the birth of unlimited plans and data services on a variety networks. The Commission’s first ever 600 MHz 

incentive auction closed successfully on March 30, 2017, with a 

gross revenue totaling nearly $20 billion. Importantly for this Committee, based on Congressional direction, the FCC took many steps 

to support participation by smaller businesses, including building 

interoperability into the rules, providing sufficiently small geographic license sizes, and ensuring all carriers had a fair and equitable opportunity to participate. 

CCA commends Congress for its critical role in authorizing the 

incentive auction, which is the second largest spectrum auction in 

FCC history with 84 MHz of reallocated spectrum, 70 MHz allocated for mobile broadband use, and $7 billion provided to the 

Treasury for deficit reduction. Broadcasters won $10.05 billion in 

revenue and eligible broadcasters will have access to $1.75 billion 

in reimbursement payments for the repack. The auction itself 

topped the charts in FCC auction history—garnering a whopping 

$19.8 billion in gross revenues, second only to the AWS-3 auction, 

And, the nearly $20 billion in gross revenue from the 600 MHz incentive auction is the capstone for an estimated total of about $66.5 

billion in gross revenue generated by the 2012 Spectrum Act. 

Once put to use, this 600 MHz spectrum will be vital to expanding mobile broadband coverage into unserved areas. What’s more, 

the Congressionally based 39-month repack timeline also will provide an engine for economic stimulation and job opportunities 

across rural America. For these reasons, Congress and the FCC 

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should promptly dismiss any attempts to introduce delay and uncertainty in the repack process, and instead, focus on completing 

the post-incentive auction transition within the statutorily-based 

timeline or sooner. Any delay would be a detriment to competition, 

the public interest, and the economy. 

— 

CCA members are proud to serve rural and remote parts of the 

country, but there is a long way to go for ubiquitous connectivity. 

Indeed, the majority of CCA’s members live and work in the communities they serve. As a result, competitive carriers share both a 

professional and personal stake in ensuring ubiquitous mobile 

broadband service is available to all consumers in their communities. The coming year will be a time of significant transition in 

the wireless market as regulatory and technological changes take 

hold, and as carriers move toward 5G and ioT technologies. During 

this transitional and often uncertain time, Congress must continue 

to identify and remove structural barriers to mobile broadband deployment in rural and remote areas of the United States, providing 

greater opportunities and certainty for small business and the consumers they serve. Mobile broadband is a critical economic driver, 

and its role in economic development will be magnified following 

the evolutionary leap to 5G technologies. Consumers expect their 

service and devices to connect wherever they live, work or travel; 

yet competitive carriers struggle to access the resources required to 

build out robust mobile broadband networks. Policies established 

by Congress and implemented by the FCC will play a significant 

role in whether rural America has access to the latest services or 

languishes behind the modern economy. CCA looks forward to continued work with policymakers to ensure legislation and policies 

support ubiquitous mobile wireless service and innovation for all 

consumers. 

Thank you for your attention to these issues and for holding today’s important hearing. CCA looks forward to continuing to work 

with you, your colleagues, and the FCC to make these policies a reality, and I welcome any questions you may have. 

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Written Testimony of Christopher Allendorf 

V.P. of External Relations and General Counsel 

Jo-Carroll Energy, Inc. (NFP) 

Before the Subcommittee on Agriculture, Energy, and Trade 

Improving Broadband Deployment: Solutions for Rural America 

Electric Cooperatives and Rural Broadband 

Thank you for the opportunity to address this committee regarding efforts to increase access to high-speed broadband internet in 

rural America. As a natural gas, broadband, and electric cooperative serving thousands of rural accounts across four counties in 

Northwest Illinois, Jo-Carroll Energy is part of a broader electric 

cooperative industry that serves approximately 42 million consumer-owners (members) who own approximately 42% of electric 

distribution lines that cover 56% percent of our nation. Considering 

that most of those members and lines are in rural America, these 

numbers are critical to identifying and understanding how electric 

cooperatives serve as an established, sensible partner in developing 

programs and rules that will increase rural access to broadband 

internet. In our rural areas, we serve an average of four consumerowners per mile of line, which is higher than many cooperatives, 

but significantly less than the thirty or more consumers per mile 

average for investor-owned and municipal utilities in urban areas. 

Low customer density is an important statistic to keep in mind 

when considering how best to help facilitate deployment of largescale broadband access in rural America. 

Jo-Carroll Energy was founded in 1939 as a result of the Rural 

Electrification Act of 1936 (REA) by a small group of farmers who 

saw the immense business benefits of electricity, though none of 

the existing utilities found it economically viable to serve them. 

This small group of farmers pooled their resources, with critical 

funding provided under the REA, to construct the necessary infrastructure and energized their first lines in 1940. With electricity 

provided by their local cooperative, these rural Americans were 

able to enjoy the same comforts as their urban peers. There is a 

parallel situation happening right now with broadband deployment. 

Utility cooperatives like Jo-Carroll Energy are private, not-forprofit businesses owned and governed by their consumers. Two 

principles under which utility co-ops operate are democratic governance and operation at cost. Specifically, every consumer-owner 

can vote to select local board members who then set rates and oversee the co-op. Revenue received by the co-op that is in excess of the 

amount it takes to provide services must be returned to consumerowners as capital credits. Under this structure, utility co-ops provide economic benefits to their local communities, rather than distant stakeholders, by ensuring profits stay it the hands of the local 

consumers, not stockholders. 

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Why is Jo-Carroll Energy in the Wireless Broadband Business? 

Locally-owned cooperatives, as a result of their governing principles, are more attuned to the needs and requirements of those 

they serve. It has become apparent that the need for access to high 

speed broadband service is no less important for the success and 

survival of rural areas today than electricity was more than 75 

years ago. Can you imagine large swathes of the inhabited U.S. 

without electricity today? We have to ask ourselves the same question now about rural areas without broadband access. 

Recognizing this reality, Jo-Carroll Energy’s board of directors 

decided to begin offering wireless broadband service to our members in 2009, based on feedback the individual directors received 

from their constituents that they either had no access to internet 

or were limited to dial-up connections. This lack of internet service 

was impeding everything from expansion of small, local businesses, 

to students not being able to perform necessary coursework at 

home. 

At that time, there were two local, for-profit, wireless internet 

service providers (WISP) within our service area, a major telco, and 

a regional cable company providing service. Their services were 

limited to larger rural towns and villages. None had a business motivation to serve our more rural areas, unless a person/business 

could afford to make it feasible for them by shouldering significant 

costs of construction themselves, which is the opposite of how utility cooperatives have operated for 80 years. We have since acquired 

one of those WISPs, which otherwise would have ceased operating, 

so that numerous rural residents would continue to have access to 

fixed-wireless broadband. Others continue to operate for-profit 

broadband businesses in areas with more concentrated populations. 

What we found over the course of the next six years, however, 

was that fixed-wireless broadband systems are a rapidly aging 

technology that struggles to keep up with the ever-increasing speed 

and bandwidth demands of users. Additionally, the rural nature of 

our business created geographical challenges to large-scale deployment of fixed-wireless internet. Our service area has several types 

of topography, from the tallest point in Illinois, through dense forests, to innumerable valleys and river basins. Fixed-wireless 

proved to be more difficult to deploy due to our terrain and we 

ended up constructing costly towers in order to somewhat compensate. The resulting service that we could provide was a lifeline 

to remote users who likely never would have received service from 

a for-profit company, but it is far from ideal. 

Over the course of time, as our utility operation demands 

changed, we converted our utility communications, including our 

offices and links between substations and meters, over to a fiberbased loop. Fixed wireless broadband for our utility operations 

faced the same geographical challenges as our consumer-owners 

were experiencing and it could not continue to provide the increasing reliability and capacity needs for our own utility operations. 

Eventually, we nearly eliminated our internal use of the fixed-wireSBREP-219A with DISTILLER

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less component, except as a redundancy. Since then, we have seen 

the benefits of fiber broadband firsthand in our utility operations. 

We continue to serve roughly 1600 wireless broadband accounts, 

but the technology is increasingly expensive to construct and maintain, with most of the equipment having a 5-year useful life. Fiber 

infrastructure, on the other hand, has an exponentially longer useful life and few bandwidth constraints. It is also cheaper to construct because we can better utilize our existing overhead and underground utility infrastructure rather than having to construct 

towers. The cooperative business model allows us to provide utility 

service to the most remote areas in our service territory, but it also 

means that costs must be shared equally among consumer-owners 

and broadband is no different for us. Cooperatives’ electric utility 

business took nearly two decades to develop incrementally in order 

to eventually provide service to everyone. Rural America, especially 

our businesses, cannot afford to wait that long, at a competitive 

disadvantage, for broadband to develop in the same fashion. 

Why Do We Believe That Fiber is the Solution for our Territory and Rural America? 

After seeing for ourselves internally how much of an advantage 

fiber provided, we saw fiber as a technology that could provide reliable, fast broadband to rural America and one that would allow us 

to better utilize existing overhead and underground conduit infrastructure, free from the geographical constraints of fixed-wireless 

technology. Several companies, including some with government 

fund grants, had laid ‘‘middle-mile’’ fiber throughout our area, but 

it is still up to other companies to establish ‘‘last-mile’’ infrastructure for end-users. 

As a result, while increased middle-mile infrastructure meant 

that fiber became a technology option for us to provide retail 

broadband service, it would still require significant capital to bring 

fiber to our rural users. In addition to local businesses, one area 

that stood out to us as demonstrating the urgent need for last-mile 

fiber construction was rural schools and students. Several of our 

rural schools were able to connect to the middle-mile fiber network, 

allowing them to provide the benefits of fiber broadband at school. 

However, the students were left with whatever internet service 

they had at home to research, complete, and submit their assignments, which often requires broadband internet. Very rural students were left at a competitive disadvantage because of a lack of 

access to reliable broadband compared to their peers who lived in 

towns and villages with more internet options. 

Fixed-wireless broadband had not proven to be a feasible solution 

for connecting our rural consumer-owners and in 2015, Jo-Carroll 

Energy began planning a fiber pilot project in one of the rural 

towns we serve, Galena, Illinois. The feedback we heard from our 

consumer-owners, along with the countless articles and research 

we read, all demonstrated that reliable broadband was a necessity 

for quality of life and economic development in rural areas. It is 

difficult for rural businesses to remain competitive without highspeed broadband. The global economy requires rural areas to have 

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the same access to reliable broadband as their urban peers in order 

to remain viable. 

We felt that Galena was the perfect testing ground for our first 

fiber deployment. Galena, a town of 3500 near the Mississippi 

River, has very diverse population and business demographics. It 

is the second most visited tourist spot in Illinois after Chicago. 

Tourism has created a large retail and service industry in Galena 

and the surrounding area. Outside of tourism industry needs, Galena represents the needs of any other small, rural towns. Galena 

businesses told us they needed reliable broadband service to ensure 

they could process credit cards in a timely fashion, take online reservations, provide high-speed wireless to customers, and much 

more. 

We believed a fiber system could meet the needs of Galena businesses and we saw Galena as the perfect starting point for a fiber 

system that could meet the same needs eventually throughout our 

service area. 

Jo-Carroll Energy’s Galena fiber pilot project was completed in 

2016. We utilized a mixture of existing overhead and underground 

infrastructure to place the fiber bundles. We estimate that there 

are approximately 460 possible accounts within the footprint of the 

project. I have attached testimonials from several of our fiber-connected businesses that demonstrate how crucial fiber broadband 

has been to their success. Our take rate among businesses is over 

60%. Many of these users previously had cable or fixed-wireless 

broadband. The success of businesses using our fiber internet service in the pilot project area has convinced Jo-Carroll Energy that 

fiber internet provides the most stable, reliable platform for rural 

internet and that it is a critical component for economic development. 

Residential demand has not been as high as we anticipated and 

cost is a factor. Though we are working on bringing costs down, our 

fiber packages are currently more expensive than options offered by 

other providers, but these other services are subject to latency, reliability, and usage allowance restrictions. We hope that as our fiberconnected businesses continue to tout the benefits of fiber, more 

residential users will take note. 

A major factor leading to our higher costs is the lack of access 

to capital in sufficient amounts to cover the high expense of initial 

construction and deployment. As a cooperative, we operate at cost 

and our access to capital is limited by what we ask consumer-owners to contribute through rates. As our density figures shows, we 

have a smaller group of consumers over which we can spread costs. 

Therefore, more government grant funding to reduce the upfront 

capital investment would help create the financial incentive for 

local cooperatives to expand high-speed internet access beyond 

what we are able to undertake on our own. 

Another contributing factor to our fiber pilot project also came 

about because for-profit entities were abandoning broadband in our 

service area. The major telco providing broadband within our 

project area is not connecting new users and existing users are constrained by limited infrastructure and slower speeds; much like 

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traditional phone lines, its broadband system has been left to wither on its own. 

Regardless of whether broadband service is provided by a forprofit telco or cable company, their offerings are only available to 

residents who live in towns and villages, where higher customer 

density provides profit incentives; profits play a large role in determining what areas are served. Additionally, we are offering a superior product with fiber. The existing service options are subject to 

bandwidth restrictions and high latency during peak demand times 

which are more acute in rural areas because of weak signals due 

to topography. All of this frustrated local businesses. 

Jo-Carroll Energy has seen firsthand that fiber integrates relatively seamlessly with existing overhead and underground utility 

infrastructure, making permitting easier to obtain, which is otherwise a concern for any company. We have found that fiber is also 

much more scalable at a lower cost than fixed-wireless. As bandwidth demand increases and new users are connected, only relatively minor investments in fiber infrastructure are needed to 

meet both challenges, which we have not found to be the case with 

fixed wireless. 

Utility cooperatives are uniquely positioned to partner with the 

government to provide this service because of the existing infrastructure we have in place to serve rural America. Together with 

a governance model that is favorable for rural internet users because there is no profit motivation and consumer-owners have a direct say in the service being provided. Utility cooperatives will remain serving these areas, long after other companies have reduced 

the quality of their service or abandoned areas altogether and fiber 

is the robust, scalable technology we need to provide it. 

How Can Government help Provide Reliable Broadband 

Service to Rural America? 

We applaud Chairman Pai and the Federal Communications 

Commission for creating the Broadband Deployment Advisory Committee (BDAC) to take look at the barriers to providing broadband 

access to rural areas of our country. We were especially pleased 

that Jim Matheson, CEO of our national trade association, 

NRECA, was appointed to serve on the committee and bring the 

voice of non-traditional providers, like electric cooperatives to the 

table for these important discussions. Mr. Matheson will undoubtedly make sure that the voice of our consumer-owners in rural 

America is heard in conservations about expanding broadband access. The BDAC is expected to make recommendations later this 

year on how to spur greater deployment of broadband service. 

Congress has worked with previous Administrations to provide 

funding for broadband projects through the Federal Communications Commission, the Rural Utilities Service at USDA, and the 

National Telecommunications and Information Administration at 

the Department of Commerce. These programs have had both success stories and challenges in pursuit of bridging the digital divide 

for rural America. I hope we can use the knowledge gained from 

those programs to make sound investments in the future. 

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As Congress and the Administration discuss plans for reauthorization of the Farm Bill and an Infrastructure funding package in 

the coming months, increasing deployment of broadband service in 

rural America through grants and direct construction contributions 

must be one of the top priorities in those packages. As you consider 

proposals to spur broadband deployment, we believe that all potential providers, including electric cooperatives, should be eligible to 

participate in an open and inclusive process that allows providers 

the ability to compete for funding opportunities. In addition, we 

urge policymakers to consider the scope of capital needed to make 

the upfront capital investment to extend broadband service to rural 

America and allocate the monetary resources needed to meet this 

expansive challenge. We hope that our experience with what has 

and hasn’t worked for deploying broadband in rural areas will also 

provide insight for these discussions. 

Looking to the Future for Rural America 

Bringing electricity to rural America 80 years ago was a task of 

epic-proportion. The federal government created a strong, lasting 

partnership with rural utility cooperatives to accomplish that goal. 

That partnership provided the same high quality of life to all 

Americans, regardless of economics and location. The investments 

made over 80 years in utility infrastructure shines as an example 

of what can be done when you are willing to think outside the box 

to meet a goal. Today, the challenge to bring robust broadband 

service to rural America is as difficult as it was to bring electricity, 

but Jo-Carroll Energy has seen that it is no less important for the 

continued success and well-being of rural America. It is our sincere 

hope that Congress and this Administration will continue to reinforce their partnership with rural utility cooperatives to bring electricity to rural America and build upon that partnership in the 

21st century with continued support for the no-less audacious goal 

of providing rural Americans with high-speed broadband service. 

Thank you for taking the time to allow me to share our experiences. 

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Testimonals from Galena Businesses with Jo-Carroll Energy’s 

Fiber Product 

• Note: Jo-Carroll Energy’s broadband internet service is marketed as Sand Prairie Wireless to differentiate it from our other 

utility services. It is a fully integrated business unit. 

Paul, Owner of a Galena business 

We were really excited when we heard that fiber was coming to 

downtown Galena. Our business specializes in selling things for 

people...in our case here, I have eight listing stations. To sell on ebay you have to upload pictures, create descriptions, and research 

items. All of that is done on the cloud - or the internet. All of our 

business is cloud based, so when we had the opportunity to go to 

a fiber system that offered the speeds that the fiber does, we could 

not wait. 

We went from doing 5x2 to 50x7. The bottom line is that was a 

huge increase in speed. What that means for us is an increase in 

productivity. Fiber means we can work faster and we can list more; 

that means my business can grow, I can employ more people, I can 

sell more things, and I can help more people find value in the 

things they have. 

If you use the internet from a business standpoint, you need the 

speed of fiber. It is the way of the future; it is why this install in 

downtown Galena makes Galena a more viable place to do business. Having a consistently high internet connection is crucial. You 

need that high-speed connection and you need it to be consistent. 

Fiber optic in downtown Galena gives business owners the opportunity to grow their business utilizing the power of the internet. 

With that consistent speed, you can grow your business to a whole 

different level outside of just Main Street. 

The investment in downtown Galena for the fiber network is incredible from the standpoint of the business community. Very few 

communities of our size have that kind of a connection. They’re 

working with much slower speeds and connections that are not consistent. To have that investment in downtown Galena just brings 

us to another level. Galena is already a great place to visit; Galena 

is a great place to come shop, to eat, and just enjoy the beautiful 

Main Street that we have. Now as business owners, we can go beyond that by utilizing the power of fiber internet. The investment 

made in the infrastructure makes it easy for any business on Main 

Street to do business internationally with the speed of light. It is 

just phenomenal. 

Cory, General Manager of a Galena restaurant. 

Chose to go with Sand Prairie Fiber for the fast internet speeds. 

It is one of the first companies to offer speeds that are beneficial 

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for our restaurant. The fast internet speeds allow our wait staff to 

give our guests the best service possible by using tablets to enter 

orders and also to accept credit card payments. With the fast 

speeds we are receiving credit card transactions are instant and online reservations are made and confirmed in real time. I would 

highly recommend it. The speeds are blazing fast. The installation 

process went seamlessly. 

Dan, President of a Galena Business 

My company uses the Sand Prairie Fiber service for our daily 

connectivity to our third-party data center and has six people on 

the connection throughout the day. We are very happy with the 

speed and stability of the connection. High-speed broadband service 

was very badly needed here in Galena for the entire business community and we are very happy Jo-Carroll Energy and Sand Prairie 

have committed to providing this valuable service. 

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T lllc IH:!L\ L 

BHOADBA!'D 

ASSOC!ATJO'i 

U.S. House Small Business Committee 

Improving Broadband Deployment: Solutions for Rural America 

.June 22,2017 

Mike Romano 

NTCA-The Rural Broadband Association 

Answers to Questions for the Record 

Representative Bacon 

QUESTION: 

With the technological advances of agricultural equipment requiring greater connectivity, rural 

broadband development can greatly improve the productivity and efficiency of our agricultural 

economy in states like Nebraska. Production agriculture operations are significant businesses that 

drive growth outside of just rural communities. How can we specifically streamline the regulatory 

requirements so rural providers can spend less on compliance and focus more capital on deploying 

infrastructure to communities that have tremendous need for this kind of connectivity? 

ANSWER: 

While right-sizing of regulatory requirements is an important part of removing barriers to 

investment in rural areas, there are many rural areas to which investments simply will not flow in 

the absence of a better business case. Thus, as an initial matter, efforts to right-size and rationalize 

regulations must be paired with programs like a right-sized Universal Service Fund (USF) High 

Cost budget as discussed in my testimony to promote etTcctive broadband deployment in rural 

America. 

Nonetheless, it is absolutely correct that the best-funded, best-planned networks may never deliver 

fully on their promise (or even get built in the first instance) if they face the prospects of regulatory 

red tape and needless delay. While regulatory approvals serve important purposes, we have seen a 

consensus for some time now on the issue of simplifying the administrative barriers to deployment, 

at least in part by coordinating processes across federal agencies. 

Chairman Thune's MOBILE NOW Act (S 19), for example, includes helpful provisions on 

streamlining and simplifying the process for securing easements, rights-of-way, and leases on 

federal land and other property regardless of which agency owns it. Further, the bill addresses the 
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pressing concern of ensuring spectrum in rural areas is used for wireless deployment. The 2015 

Highway Bill (HR 22, the "FAST ACT") contained several provisions to streamline the process for 

securing National Environmental Policy Act (NEPA) permits across federal agencies, but only for 

projects ·'likely to require a total investment of more than $200,000,000." We would like to see this 

threshold lowered to accommodate more broadband deployments, especially by smaller providers in 

rural areas where projects of such size are rare. Also, federal loan processes could be improved by 

allowing environmental and historical reviews to be conducted after funds are obligated, but prior lo 

disbursement. 

Federal Communications Commission (FCC) Chairman Pai's Digital Empowerment Agenda offers 

helpful ideas for incentivizing carriers to part with unused spectrum or partner with providers to 

build out in rural areas the plan also proposes shot clocks for deployment to minimize delays due 

to regulatory barriers. Moreover, FCC reporting requirements often overestimate the utility of 

reporting and underestimate the time and cost of compiling information. The FCC, possibly 

through the newly-proposed Office of Economics and Data, should consider performing a better 

assessment of the burdens that both existing and newly proposed reporting requirements place on 

providers~~ especially smaller· providers with limited resources. Finally, the FCC should act to 

remove barriers and instead encourage transactions for the sale of rural properties that larger 

carriers may be uninterested in but smaller carriers view as growth opportunities. 
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Question from Representative Bacon: 

‘‘With the technological advances of agricultural equipment requiring grater connectivity, rural broadband development can greatly improve the productivity and efficiency of our agricultural economy in states like Nebraska. Production agriculture operations are 

significant businesses that drive growth outside of just rural communities. How can we specifically streamline the regulatory requirements so rural providers can spend less on compliance and focus 

more capital on deploying infrastructure to communities that have 

tremendous need for this kind of connectivity?’’ 

VTX1 Response: 

The last several yeas have seen a lot of what our company sees 

as change in direction for regulatory reporting, and with all these 

changes it has created a whirlwind of activity. The FCC 477, to include HUBB reporting and 481 reports and their formats, seemed 

to be evolving constantly over the last several years. Inclusion of 

a detailed five-year plan and yearly updates was very time consuming for our company because it had to be in the right format 

for our consultants. It was questionable whether anyone ever 

looked at the data submitted for the five-year plans, and we understand the five-year plan is no longer a requirement. 

We were also required to submit electronic boundaries in a specific format for our exchange boundaries (study area boundaries) to 

identify and rectify boundary overlaps/conflicts with other LECs. 

Historically these boundaries had been maintained and documented by the Texas PUC. For us this was very time consuming, 

and we did reach out to other small LECs and get some boundary 

overlaps identified. As it turned out the larger companies such as 

Verizon (now Frontier) and AT&T were somehow given a waiver 

and were not required to submit their boundaries due to confidentiality agreements so those were never addressed. The majority of 

our study area boundaries border these two companies, so for us 

this seemed like a big waste of time and resources. We are already 

reporting our areas by census blocks via the 477 process. See the 

link below. 

https://www.fcc.gov/reports-research/maps/study-area-boundaries/ 

This year NECA has asked us to provide data for each work 

order we issue that is ‘‘similar’’ to FCC 477 data already being submitted. So that process has been implemented. 

Our yearly activities related to documenting and updating 

records, maps and CPR related to our annual cost study is very 

time consuming. Although we realize this is important, it still 

takes time and often results in questions from the consultants for 

clarification. 

In 2016 we instructed our engineering records groups just to document the number of hours we spent on the FCC 477 and study 

area boundary projects alone and it exceeded over 700 employee 

hours for this group alone. The number did not include all the 

other reports and data we compile for regulatory. 

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For small companies all this reporting can be overwhelming. 

There is a need for some regulatory oversight for obvious reasons, but for the EPA regulators to prohibit performing engineering activity in conjunction with environmental activity is a waste 

of time and money. These two activities could have been performed 

concurrently, by two different entities, thus reducing the time to 

deliver service to customers. Environmental approvals can take as 

long as six months to a year. Ours took 9+ months and delayed our 

project start almost a year. Our view is that there were wasteful 

delays. 

We also spend an inordinate amount of time submitting forms to 

NEPA (National Environmental Policy Act) that includes the following: the US Fish & Wildlife, TCNS (Tribes), FCC, FAA, and 

SHPO (State Historic Preservation Office) Archaeology. There are 

many others, too many to list. The point being that all of the information submitted to all of these agencies is almost the same information and it can take months to hear back from each one. This 

led to even more delays. This is compounded when you add wireless towers to the list. 

If a floodway is to be crossed, then the State and Local agencies 

must approve. State and local Agencies have jurisdiction over U.S. 

Floodways and Waterways. Often the local representative is only 

available 2-1/2 days a week so this builds in delays that takes 

weeks to overcome. These agencies and agents are not flexible at 

all. If the state says it’s ok to cross a floodway, and you don’t get 

local approval, the local representative will make you redo the entire crossing at your expense, even if the project is 100% compliant 

with the state and local regulations. 

After all of this, the demand for reports to the agencies like 

USDA, NTIA, etc... is never ending. 

In the event there is a need to cross a water boundary (Rio 

Grande River), then the U.S. International Boundary & Water 

Commission (IB&WC) gets involved. In our case, both Mexico 

(CILA) and the USA (IB&WC) have to agree on the project needs. 

Approval can take from months to a year. 

By working under the thumb of our Federal Program Officer and 

trying to meet the 67% completion date by the end of year two requirement, we spent approximately $1M-$2M which we could have 

spent on putting fiber in the ground. We went over budget by approximately this amount which was booked against our annual capital budget. 

This was caused by the way the federal government defined 

project completion: percentage of completion status was based on 

how many dollars we had drawn down from the BTOP pool to pay 

contractors. The more dollars you spend, the faster you reach 

project completion. The percentage of completion had to relation to 

how much of the actual project construction had be completed. No 

private sector organization I know of would utilize this type of criteria to determine the percentage of project completion. 

We were also required to follow Davis-Bacon guidelines for wages 

on our projects. This is a federal framework that determines wages 

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and weekly wage payments for all workers—contractors and employees. We had to wait weeks and months to get approvals from 

our regulators confirming that a certain job required a certain pay 

depending on the county in which the work was being performed. 

In all cases our prevailing wages were over the Davis-Bacon minimums, so all of this effort was unnecessary and a waste of precious 

time. 

The heart of the question in our minds is how can we specifically 

streamline the regulatory requirements so rural providers can 

spend less on compliance and focus more capital on deploying infrastructure to communities that have tremendous need for this kind 

of connectivity. Our recommendations are as follows: 

1. Shorten the EPA approval cycle. EPA requirements 

are complex and take months to complete and usually require 

the expertise of an EPA consulting firm which adds cost to the 

process. Delays due to EPA environmentals cost money and 

serve little practical purpose in furthering the EPA’s goals to 

protect the environment. 

2. Focus environmental impact studies to areas where 

it is useful. Requiring environmentals on public highway 

rights of way where people drive cars in addition to pulling 

over and stopping there is unnecessary. The right of way land 

is continuously and frequently disturbed thereby making it 

highly unlikely that protected and endangered plant and animal species will be found and harmed. 

3. Scale back the reporting - much of which is on information that is available elsewhere. We have submitted similar information to multiple government agencies (NECA, RUS, FCC, 

USAC for example) whose computer systems cannot share 

data. Our cost to create and submit reports for the federal government alone amount totals to around $100,000 per year in 

salaries - not counting the overhead that goes with those salary dollars. This is excessive and could be lowered by significant amounts with more reasonable reporting requirements. 

Representative Bacon, thank you for the opportunity to respond 

to your very relevant question. 

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REP Don Bacon (R-NE-02): ‘‘With the technological advances of agricultural equipment requiring greater 

connectivity, rural broadband development can greatly improve the productivity and efficiency of our agricultural 

economy in states like Nebraska. Production agriculture operations are significant businesses that drive growth outside 

of just rural communities. How can we specifically streamline the regulatory requirements so rural providers can 

spend less on compliance and focus more capital on deploying infrastructure to communities that have tremendous 

need for this kind of connectivity?’’ 

Across all levels of government, streamlining the network deployment process is critical. As noted in my testimony, the current regulatory steps necessary to deploy mobile infrastructure are burdensome and rife with opportunities for delay and additional costs. 

These barriers stifle network investment and ultimately thwart 

carriers’ ability to provide service that meets consumers’ coverage 

and capacity needs. Streamlined siting policies are critical to expanding mobile broadband service to unserved areas today and 

leading the world in 5G in the years ahead. 

Congress and the Federal Communications Commission (‘‘FCC’’) 

must simplify infrastructure processes and procedures to facilitate 

more effective mobile broadband deployment. Mobile data traffic 

will grow an estimated five times—from approximately 5 gigabits 

per month per smartphone in 2016 to an estimate d25 gigabits per 

month per smartphone by 2022—and carriers are working to deploy the infrastructure needed to innovate and keep up with consumer demands, especially those in rural areas. Expanded infrastructure supports new services, creates jobs, inspires innovation, 

and powers for economic opportunities, especially in rural America. 

CCA offers the following recommendations for Congress and the 

FCC to achieve the mutual goal of streamlining regulatory deployment requirements for competitive providers. 

• Amend the Communications Act to streamline state and 

local siting processes, including prohibiting moratoria; 

• Improve access and increase certainty with regard to deploying mobile broadband infrastructure on federal lands; 

• Amend the National Historic Preservation Act (‘‘NHPA’’) to 

clarify that small wireless deployments are not a federal undertaking; 

• Streamline mobile network deployment under the NHPA 

and National Environmental Preservation Act (‘‘NEPA’’) processes, including common-sense exclusions for small wireless 

equipment or structure deployed on previously disturbed 

grounds; 

• Reduce burdensome fees and delays in the local, state, and 

federal siting processes by enforcing meaningful ‘‘shot clocks’’ 

and employing ‘‘dig once’’ and ‘‘deemed granted’’ policies; 

• Improve access to municipal poles and reduce attachment 

fees. 

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Additionally, carriers must have long-term certainty with regard 

to support from the High Cost program of the Universal Service 

Fund, and eligible areas for support from Mobility Fund Phase II 

must be based on reliable coverage data. 

CCA looks forward to continued work with Congress and policymakers to ensure siting policies facilitate innovation and foster 

ubiquitous mobile broadband service across the United States. 

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