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87–280 2014

FIELD HEARING IN NEW YORK: EXPANDING 

BROADBAND ACCESS AND CAPABILITIES TO 

SMALL BUSINESSES IN RURAL NEW YORK 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH AND TECHNOLOGY 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

MARCH 20, 2014 

Small Business Committee Document Number 113–061 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

BLAINE LUETKEMEYER, Missouri 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JAIME HERRERA BEUTLER, Washington 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

DAVID SCHWEIKERT, Arizona 

KERRY BENTIVOLIO, Michigan 

CHRIS COLLINS, New York 

TOM RICE, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

YVETTE CLARKE, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRAD SCHNEIDER, Illinois 

RON BARBER, Arizona 

ANN McLANE KUSTER, New Hampshire 

PATRICK MURPHY, Florida 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Chris Collins ................................................................................................... 1 

WITNESSES 

Mr. Mark Meyerhofer, Director, Government Relations, Northeast-Western 

New York, Time Warner, Lancaster, NY ........................................................... 3 

Ms. Jill Canfield, Director, Legal & Industry and Assistant General Counsel, 

NTCA, The Rural Broadband Association, Arlington, VA ................................ 5 

Mr. Robert Smith, General Manager, Frontier Communications, Dansville, 

NY ......................................................................................................................... 7 

Ms. Kendra Lamb, Owner, Lamb Farms Inc., Oakfield, NY, testifying on 

behalf of the New York Farm Bureau ................................................................ 9 

APPENDIX 

Prepared Statements: 

Mr. Mark Meyerhofer, Director, Government Relations, Northeast-Western New York, Time Warner, Lancaster, NY ............................................. 19 

Ms. Jill Canfield, Director, Legal & Industry and Assistant General 

Counsel, NTCA, The Rural Broadband Association, Arlington, VA ......... 23 

Mr. Robert Smith, General Manager, Frontier Communications, 

Dansville, NY ................................................................................................ 32 

Ms. Kendra Lamb, Owner, Lamb Farms Inc., Oakfield, NY, testifying 

on behalf of the New York Farm Bureau .................................................... 34 

Questions for the Record: 

Questions and Responses from Hon. Chris Collins to Hon. Tom Wheeler, 

Chairman, Federal Communications Commission ..................................... 38 

Additional Material for the Record: 

None. 

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(1) 

EXPANDING BROADBAND ACCESS AND 

CAPABILITIES TO SMALL BUSINESSES IN 

RURAL NEW YORK 

THURSDAY, MARCH 20, 2014 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON HEALTH AND TECHNOLOGY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., at Orleans County Legislature, 3 South Main Street, Albion, New York, 

Hon. Chris Collins [chairman of the Subcommittee] presiding. 

Present: Representative Collins. 

Chairman COLLINS. The hearing is called to order. 

Good morning. First of all, I want to thank David Callard, the 

chairman of the legislature here, and all the legislators from Orleans County, for hosting us on this first day of spring, or it will be 

in 2 hours and 57 minutes, according to the exact position of the 

sun and the moon. 

But really, we are all appreciative of Albion hosting us for what 

we think will be a very appropriate topic as we are up here in a 

rural area. 

You hear the numbers, 97 percent coverage, and you go, well, 

that sounds great, until you understand that 3 percent of 700,000 

people is 21,000. So the 27th Congressional District is 105 towns. 

The average town just a little over 6,000 people. It is rural America. It is agriculture that is our primary economic driver. And 3 

percent of 700,000 people is 21,000. 

You don’t want to be one of those 21,000 that doesn’t have access 

to broadband. 

So while a statistic like that may sound encouraging, in the 27th 

District, it is not as much so as you might otherwise think. So that 

is something to keep in perspective. 

But again, I want to thank everyone who has joined us today. We 

have a full house. That is great. And again, I want to thank our 

four witnesses for taking time out of their busy day to schedule 

their testimony, which is focused on expanding broadband access to 

small business, which is the definition of all of our farms in rural 

areas of Western New York. 

Access to broadband service has the potential to transform the 

way small businesses and organizations fundamentally operate. 

Small firms can sell their products to buyers around the world. 

Family farmers can utilize precision mapping equipment to inSBREP-219 with DISTILLER

2 

crease their productivity. And entrepreneurs can launch a Web site 

or application from their living room. 

As a small-business owner, I fully understand the benefits and 

the necessity of having access to affordable broadband to run a successful business. Most importantly, broadband provides a gateway 

and opportunity for economic growth and job creation, especially in 

rural areas. 

Last month, the House Committee on Small Business held a 

hearing regarding the innovation and growth around wireless technology. Thousands of entrepreneurs are developing dynamic products and services that utilize broadband to improve the way we 

live. 

According to a McKinsey study, over 1 trillion devices can be connected through wireless technology by 2025, resulting in a potential economic impact of $36 trillion. 

This means thousands of new jobs created by small, innovative 

firms, in a variety of industries, as well as new tools for small businesses to improve their operations. 

While it is easy to understand the limitless benefits of broadband 

Internet, those capabilities would not be available if not for the 

contributions of providers like those represented here today. 

To keep up with the growing demand, private sector enterprises 

have invested billions of dollars to upgrade their networks to provide faster and more reliable services. It is because of these investments that we can enjoy broadband at the workplace or on a wireless device. 

Currently, there are a variety of Federal initiatives aimed at providing broadband to everyone in the United States, 100 percent, 

not 97 percent. When considering these policies, we must first ensure that the regulatory changes do not diminish the incentive for 

private sector investment in broadband infrastructure. This is especially important for small Internet providers who don’t have the resources or the time to comply with the onerous regulations. 

Without private sector investment in broadband infrastructure, 

many small businesses in rural areas, like those here in Western 

New York, will be disconnected from one of the most powerful tools 

of our generation. And that would hamper the success of these 

small businesses and put them at a significant disadvantage in our 

increasingly connected economy. 

We have a distinguished panel of witnesses here today, and I do 

look forward to hearing your thoughts on the importance of 

broadband and how best to provide broadband to small businesses 

across New York and the United States. 

Now, we have a clock here, a timer, and when we are in Washington, we have the green light, and the testimony, we generally 

try to keep to 5 minutes. And then when the time is running down, 

the yellow light turns on. And then at 5 minutes, the red light. 

Today, we will have the lights on, but we are not going to be banging the gavel, if you run over. That is the luxury of having a field 

hearing like this. Afterwards, we have questions from the members. Since I am the only one, we will let you carry on. 

I think, too, it is be probably important for those here, when we 

say broadband, what does that mean? It really refers to the upload 

and download speed of what you can do on the Internet. In a broad 

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3 

definition, it is 4 MB on the download and 1 MB of upload, so that 

you can get things off the Internet at 4 MB per second versus loading back up into it at 1 MB. So that is the broad definition of 

broadband. Because there are cases where people are connected to 

the Internet, God forbid, I hope it is not through dial-up, but they 

may be able to connect but they are not really able to send data 

back and forth. So it is the 4 and the 1, the 4 coming down and 

the 1 going back up, that is the general thing we are talking about 

here today. 

So our first witness is Mark Meyerhofer. He is the director of 

government relations of Northeast-Western New York for Time 

Warner Cable. Time Warner Cable provides a variety of Internet 

options for small businesses, including speeds ranging from 2 MB 

per second up to 100 MB per second. I want to thank you, Mr. 

Meyerhofer, for being here. We look forward to your testimony. 

STATEMENTS OF MARK MEYERHOFER, DIRECTOR, GOVERNMENT RELATIONS OF NORTHEAST-WESTERN NEW YORK, 

TIME WARNER, LANCASTER, NEW YORK; JILL CANFIELD, DIRECTOR, LEGAL & INDUSTRY AND ASSISTANT GENERAL 

COUNSEL, NTCA, THE RURAL BROADBAND ASSOCIATION, 

ARLINGTON, VIRGINIA; ROBERT SMITH, GENERAL MANAGER, FRONTIER COMMUNICATIONS, NEW YORK, 

DANSVILLE, NEW YORK; AND KENDRA LAMB, OWNER, LAMB 

FARMS INC., OAKFIELD, NEW YORK 

STATEMENT OF MARK MEYERHOFER 

Mr. MEYERHOFER. Thank you. Good morning, my name is Mark 

Meyerhofer. I am the government relations director in the Northeast-Western New York region for Time Warner Cable. Thank you 

for inviting me to testify today regarding rural broadband. 

Time Warner Cable is among the largest providers of video, highspeed data, and voice services in the United States, connecting 

more than 15 million customers to entertainment, information, and 

each other in 29 States, employing over 50,000 people across the 

U.S. 

Based on year-end 2013 data, Time Warner Cable has approximately 11 million residential high-speed data subscribers and 

517,000 business high-speed data services subscribers. Time Warner Cable is the leading broadband provider in New York State, offering reliable, affordable, high-speed broadband to over 2.3 million 

customers. 

We have invested $25 billion to $30 billion of private at-risk capital since 1996 to deploy broadband across our footprint, and $2 billion in New York State, in the last 4 years alone. In the 27th Congressional District in 2012 and 2013, we built over 335 miles of 

new lines, passing over 1,000 businesses and nearly 3,000 homes. 

This investment of private at-risk capital has resulted in our 

company passing approximately 96 percent of homes and businesses in our New York State footprint. Access to broadband for 

New Yorkers is higher than the national average, with 95 percent 

generally having access. 

These investments were made, and this success achieved, in a 

regulatory environment that encourages innovation and investSBREP-219 with DISTILLER

4 

ment. However, it remains extremely challenging to extend 

broadband to the most rural areas of the State where geographic 

isolation and topographic issues make it economically infeasible for 

companies to reach these areas. Investment simply cannot be recouped before it is time to reinvest. 

Time Warner Cable believes government has a role to play in 

helping to meet broadband needs in these unserved areas and that 

properly structured programs or partnerships can help achieve 

rural broadband deployment goals if guided by core principles. 

First, such programs and partnerships must be focused on 

unserved areas so taxpayer dollars are not wasted duplicating existing privately funded networks. When taxpayer funds are used to 

overbuild an existing provider, the result is unfair competition for 

a limited number of customers. 

Government should not pick winners and losers in this competitive environment, but instead focus limited taxpayer funds on 

unserved areas that need it the most. 

Second, government programs need to focus on last-mile services, 

which is the most difficult and costly part of deployment. 

Third, programs should be technology and provider neutral so all 

providers and technologies are eligible to participate. 

Fourth, the cost of these programs should be broadly shared, 

rather than paid for by a tax or fee on a specific set of consumers 

or taxpayers. If rural broadband deployment is the public policy 

goal, the cost should be borne as broadly as possible, and the deployment costs to the individual consumer should be as low as possible. 

Finally, to encourage the broadest possible private participation 

in any government-sponsored program, any funding or incentives 

should come with no strings attached, so companies can own and 

operate the new networks and integrate them fully into their existing infrastructure and business plans. 

New York State’s Connect NY program created by Governor 

Cuomo is a good example of an effective and well-structured publicprivate partnership program. Time Warner Cable received the largest Connect NY grant and is now investing $7.1 million in partnership with New York State to provide rural broadband for 52 

projects in 22 counties and more than 40 towns across the State. 

Our Connect NY project will connect more than 4,100 previously 

unserved homes, businesses, and community institutions to highspeed broadband. 

While the government’s role in spurring broadband deployment 

and unserved areas remains limited, we believe there is a broader 

role for government in broadband adoption. Roughly one-third of 

Americans and 30 percent of New Yorkers with access to a 

broadband connection choose not to get connected at home. 

Further, adoption is not consistent across groups, where senior 

citizens, people with lower incomes, and lower economic status 

adopt at much lower rates. Aging populations, lower socioeconomic 

status, and lower educational attainment can often characterize 

New York’s rural areas. 

The principal reason cited for not adopting broadband are digital 

literacy and relevance. We should all work together to encourage 

adoption, and Time Warner Cable has participated in numerous 

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5 

adoption programs, which I am happy to collaborate on during 

Q&A. 

A small investment in educating consumers about why 

broadband is relevant to them can be highly effective in increasing 

adoption rates, especially in low adopting areas. 

Thank you for the opportunity to testify today. I am happy to answer any questions you might have. 

Chairman COLLINS. Thank you. Right to the second. That is pretty good. 

Our next witness is Jill Canfield. She is the assistant General 

Counsel for NTCA, which is the Rural Broadband Association, so 

she is representing a variety of different interests here. The Rural 

Broadband Association represents 900 independent telecommunications companies in rural and small towns throughout the United 

States. They provide support for both wired line and wireless carriers. 

Jill is a native of Derby, New York. She earned her B.A. and J.D. 

from Syracuse University and is a member of the Federal Communications and American Bar Association. 

Are you watching the March madness now? 

Ms. CANFIELD. I have my brackets. 

Chairman COLLINS. Welcome back to New York, and we look forward to your testimony. 

STATEMENT OF JILL CANFIELD 

Ms. CANFIELD. Thank you. Thank you for the invitation to participate in today’s discussion on expanding broadband access and 

capabilities to small businesses in rural New York. My remarks 

today are on behalf of NTCA, the Rural Broadband Association, 

and the Small Company Coalition. 

Small rate of return rural telecom providers, commonly called 

RLECs, serve only about 5 percent of the U.S. population but 

roughly 40 percent of its land mass. These companies deploy and 

upgrade cutting-edge networks in rural and tribal areas, where no 

other carrier could find a business case. 

As anchors in the communities they serve, rural providers use 

their networks to connect rural Americans to the health care, educational, economic, and public safety benefits of the broadband 

economy. 

Moreover, these small businesses are at the forefront of the 

broadband and Internet protocol, or IP, evolution, deploying advanced networks that respond to consumer and business demands 

for cutting-edge services. Fixed to mobile broadband, voice, and 

video are among the numerous telecom services that rural New 

Yorkers can access thanks to the rural telecom industry’s commitment. 

Nearly all small rural carriers in New York have deployed 

broadband to 99 percent or more of the rural service areas and 

have a brilliant track record of collaborating to build fiber networks 

that benefit wide swaths of rural New York. The AdirondackChamplain Telemedicine Information Network, or ACTION, now 

delivers up to 1 Gb connections to 49 hospitals and health care facilities from Massena to Plattsburgh, from Glens Falls to Hoosick 

Falls. Subsidiaries of RLECs like Champlain Telephone Company, 

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Nicholville Telephone Company, and Chazy Westport Communications. Each provide service to the individual locations. 

The Independent Optical Network, or ION, was founded on vision of 15 small rural telecom providers. This Albany-based statewide fiber network connects more than 100 Upstate New York communities and their surrounding rural areas. 

Through a recently completed $50 million project that included 

a significant Federal investment supplemented with State investments, ION can serve more than 300 anchor institutions and make 

broadband more readily available to 250,000 households and 38,000 

businesses. 

Projects are underway in Allegheny, Cortland, and Otsego Counties to leverage the ION fiber backbone. 

Broadband facilitates greater interconnection of the community’s 

resources and can enable citizens’ participation in the global economy, all key to rural population growth. IP, wireless, and other 

technological advances are changing the marketplace in ways 

unimagined even a few years ago. But technology alone will not 

overcome the high cost of deploying the networks that enable these 

technologies. 

Though small, rural providers are leaders in broadband investment, law and policy changes are necessary. Reforms must be guided by the Communications Act’s core principles of consumer protection, competition, universal service, and public safety. 

Unfortunately, the FCC’s 2011 USF reforms appeared to have 

missed the mark in serving these principles. And as a result, millions of investment dollars were sidelined while Congress pressed 

the agency to update the USF program the right way and get rid 

of opaque, unpredictable USF caps. 

Small rural carriers still await a program designed to promote 

broadband investment while the legacy fund they currently use 

forces customers to take regulated voice service just to make 

broadband affordable. All the while, USF is funded by assessing a 

shrinking pool of long-distance voice revenue. This de facto cap on 

the USF will handicap our Nation’s ability to stay seamlessly interconnected. 

Sound reforms will also ensure that USDA’s Rural Utilities Service has sufficient certainty to continue financing rural telecom 

projects. 

The wireless industry also anxiously awaits an opportunity to bid 

on the 600 MHz spectrum, but the spectrum must be auctioned in 

a manner that provides a realistic opportunity for small wireless 

providers who have the incentive and interest in serving rural 

areas. 

To that end, NTCA, the Rural Wireless Association, and the 

Competitive Carriers Association just announced a consensus proposal for the use of small geographic licensing areas. 

Strict adherence to the spirit of the Regulatory Flexibility Act is 

important. It would have produced better USF reforms and freed 

more resources for broadband investment. 

Numerous, costly, and sometimes redundant reporting requirements also divert resources away from the network operation and 

customer service. 

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Thankfully, the Regulatory Flexibility Improvement Act of 2013 

would help by involving SBA throughout the rulemaking process. 

The Federal Government has played a key role in promoting delivery of advanced telecom services to all Americans, but more 

work is needed to deliver broadband to the unserved and ensure 

that networks already built remain in place and are upgraded to 

keep pace with the IP evolution. 

The House Small Business Committee’s commitment to bringing 

about an environment conducive to broadband investment and 

small-business growth is always appreciated. 

It is an honor to join you back home in Western New York, and 

I look forward to the discussion and your questions. 

Chairman COLLINS. Thank you very much. 

Our next witness is Robert Smith. Robert is general manager for 

Frontier Communications located up in Dansville, New York. Frontier Communication provides both voice and Internet service for 

small businesses. They also provide cloud and cybersecurity options 

to help small firms protect their network operations. 

Thank you for being here. We look forward to your testimony. 

STATEMENT OF ROBERT SMITH 

Mr. SMITH. Thank you, Mr. Chairman. I appreciate you inviting 

Frontier to be here at this important meeting. 

My name is Bob Smith, and I am general manager for Frontier 

Communications. I oversee Frontiers’ service area in Western New 

York State. I am honored to be here representing Frontier. 

Frontier is the largest communications service provider focused 

on rural America, providing broadband voice and video services to 

more than 3 million residential and business customers across 27 

States. 

The communications business has changed dramatically since 

Frontier began as a local exchange carrier, a provider of POTS, 

plain old telephone service, in 1935. But our commitment to providing customers with reliable and affordable products and services 

remains constant. 

Over the past decade, Frontier has transformed from a 20th-century phone company to a 21st-century broadband company. We 

have made it our mission to deliver the life-changing benefits of 

broadband technology to rural communities across our footprint. 

Broadband is a key driver for economic growth in America in the 

21st century. Broadband availability in rural America offers more 

than simple entertainment and communications. It translates into 

increased economic development, employment and educational opportunities, and improved health care. 

In July 2010, we completed a transformative transaction acquiring millions of rural and suburban communication lines from 

Verizon. As part of this acquisition, we committed to providing 

high-speed broadband access to hundreds of thousands of homes 

previously unserved. 

The wire-line broadband services that we provide ensure that our 

customers and your constituents have unlimited opportunities for 

the future. 

Frontier is relentlessly deploying and upgrading broadband to 

the communities that we serve, from midsize cities such as RochSBREP-219 with DISTILLER

8 

ester, small towns like Dansville, my favorite, and to rural areas 

others consider too difficult to serve, like the hamlet of Wyoming, 

New York. 

Since 2010, we have invested more than $2.2 billion in company 

funds to increase broadband access to improve infrastructure and 

also an additional $133 million from the FCC’s Connect America 

Fund that supports broadband deployment exclusively to unserved 

high-cost areas. 

We have significant operations in New York State, having acquired the former Rochester Telephone Company in 1995. We now 

have 2,300 employees serving more than 275,000 customers of New 

York in major cities of Rochester, Gloversville, Johnston, and Middletown. 

In New York State alone, we have invested more than $200 million in network enhancements and capital investments for operations over the past 2 years. We have been able to accept just recently $9 million in the Connect America Fund Phase 1 process to 

provide broadband to more than 15,700 previously unserved locations in New York State. 

It is interesting to note that our costs to deploy that $9 million 

worth of grant will exceed the $9 million, so we continue to make 

that private investment. 

Efforts to deploy throughout New York State do not stop here. 

We recently worked with local governments and New York State 

economic development councils to ensure that areas most in need 

of broadband are getting access. We recently assisted Hamilton 

County in receiving a $2.2 million New York State broadband 

grant to upgrade the data transfer backbone in Eastern New York 

from Gloversville to Eagle Bay. Upon completion, all of Hamilton 

County, which is in the Adirondacks, with very challenging geography and sparsely populated, will have access to broadband 

speeds of up to 10 MB. 

Most recently, we worked with Wyoming County and New York 

State Senator Patrick Gallivan on broadband capacity for that 

county and also assisted in confirming their agricultural center will 

have the broadband capacity required to serve their needs. 

Access to broadband in our rural counties provide farmers and 

spinoff agribusiness with access to world markets, expanding their 

products and services for markets from local to global. We are 

proud to be a provider of services to these rural communities and 

working with Senator Gallivan on this initiative. 

We continue to seek out ways to work collaboratively with State 

and local governments and organizations to provide businesses and 

residents with the broadband services they need. 

Like you, we know that high-speed broadband connectivity is lifechanging and absolutely critical to our country’s economic recovery 

and prosperity. 

Communities with access to the Internet are ripe for economic 

development and job creation. We are modernizing facilities and 

services, because we believe that our time and treasure, the old 

cable lines as well, is best used by extending robust broadband and 

networks to these communities. That means giving communities 

access to high-speed Internet services. 

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Broadband technology offers rural America untold economic, educational, and social opportunities, and we consider it our job to deliver that access. 

Thank you very much for inviting Frontier to this hearing, and 

as always, we look forward to answering any questions. 

Chairman COLLINS. Good, thank you very much. 

Our final witness today, before the Q&A, is Kendra Lamb. She 

is public relations manager of Lamb Farms in Oakfield, New York. 

Lamb Farms is a family dairy operation with three milking facilities. They rely extensively on broadband Internet to operate their 

businesses, including the monitoring of milk output, managing 

their equipment, and various social media activities. 

Ms. Lamb is testifying on behalf of the New York Farm Bureau. 

Thank you for being here. We look forward to your testimony. 

STATEMENT OF KENDRA LAMB 

Ms. LAMB. Thank you to the Committee on Small Business and 

to Subcommittee Chairman Chris Collins for inviting me to testify 

before you today on broadband access and its impact on small businesses here in rural New York. 

My name is Kendra Lamb, and my husband and his family own 

Lamb Farms, a dairy based in Oakfield with three milking facilities and a methane digester. We are a third-generation farm family 

with a passion for producing quality milk while providing excellent 

care to our cows and the land. 

I am also speaking on behalf of the New York Farm Bureau, the 

largest general farm organization in the State, with 25,000 members representing all commodities, all production methods, and living in all corners of the State. 

It might be hard for some people to imagine, but New York State 

has some very rural locations, and we have large gaps where 

broadband access is just not available, including here in Western 

New York. 

In today’s age, with access to the Internet, a small business can 

operate from anywhere, but it is hard to imagine a small business 

surviving and thriving in a rural area if it cannot be competitive 

in a world marketplace. The lack of reliable broadband access is a 

major barrier to growth in our rural areas, and we need the Federal Government to help solve this problem. 

According to a 2013 survey conducted by the USDA, 31 percent 

of farms in New York, or more than 11,000 operations, do not currently have Internet access. A 2010 study conducted by the Small 

Business Administration found that rural businesses pay significantly higher prices than metro businesses for the same bandwidth, and small businesses in metro regions have access to higher 

bandwidth services than rural businesses do at higher costs. 

These kinds of inequities cannot continue if rural businesses are 

expected to compete with their counterparts in more developed 

areas. 

We are lucky that our main farm location has a broadband connection through our cable provider, and my home has DSL through 

our telephone service provider. Without access to this kind of reliable Internet service, our farm wouldn’t be able to do many of the 

key things we do to educate and reach out to the community. 

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We have found that, working in animal agriculture, it is becoming increasingly important to be able to educate the community on 

what we are doing on the farm and to answer their questions in 

an honest and direct manner. 

I am responsible for many of the public relations and outreach 

efforts of our farm. We have a Facebook page that I use to reach 

the community and educate consumers on our food supply. 

Without high-speed Internet, I wouldn’t be able to update this 

page with the large picture and video files that help us tell our 

story. We also have a farm Web site that we update ourselves and 

take requests from those who wish to visit the farm. 

We also use the Internet across many business applications to 

take advantage of the latest technologies to collect and analyze 

data, and ultimately to make better decisions. We track the 

amount and quality of milk that we ship each day through our 

milk cooperative’s Web site. We use dairy-specific software to help 

with recordkeeping, like tracking the milk production of each of our 

cows, which we download as large files off the Internet. 

Similarly, we are able to monitor our methane digester, which 

uses waste on the farm to create energy, and get remote assistance 

from Pennsylvania, all over the Internet. 

We grow most of the feed for our animals, and all of our crop recordkeeping is through Internet-based programs. These help us keep 

track of soil types, waterway locations, setbacks, and nutrient recommendations. 

Much of our banking is done online now, and our employee time 

clocks and payroll software are Web-based programs linked directly 

to our bank. Even our employee benefits are updated and communicated through Web programs, so our workers have easy access to 

comprehensive information. 

Businesses like our dairy need high-speed, affordable Internet to 

stay on top of the research and innovation that is available in our 

industry. As farm managers, we need to understand changes in 

trade and world markets, and in consumer demands, so we can 

make informed business decisions. 

In addition, more and more Federal and State agencies are relying on electronic reporting by farms in order to comply with regulations. Efforts are afoot to make environmental and employee safety 

and health reporting electronic, completely getting rid of paper submissions. This places extreme burdens on farms and other small 

businesses that don’t have reliable access to the Internet. 

It is important that the Small Business Committee push back on 

electronic-only reporting requirements until all businesses have access to reliable broadband that is not cost-prohibitive. 

While our farm does not direct market to consumers, many farms 

in rural areas do, especially fruit and vegetable growers through 

farm stands, farm markets, or CSAs. Web sites, social media, and 

online directories are invaluable tools for these farms to reach their 

customers. 

Farmers looking for new outlets or monitoring a constantly 

changing marketplace must use the Internet to learn and explore 

new business models that can lead to success. 

Rural areas can also feel isolated without broadband. Combined 

with fewer education and health care options, these locations beSBREP-219 with DISTILLER

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come less attractive places to live for the young people, families, 

and innovators who help drive economic vibrancy. But broadband 

can bring distance learning, telemedicine, and the world to anyone’s door. 

In conclusion, access to broadband is essential for farms and 

other rural small businesses to manage efficient and successful operations, to reach their communities and customers, to stay on the 

cutting edge of their industry, and for our rural communities to be 

attractive places to live for our employees, customers, and the next 

generation to run our businesses. 

We can’t do this on dial-up or undependable Internet connections. 

Thank you again for the opportunity to speak with you today. I 

would be glad to take any questions you may have. 

Chairman COLLINS. Thank you very much. That was great. 

For all of you, I think, as we are here in the 27th District, and 

there is no question agriculture is the primary economic driver of 

our area, I was especially taken with your number 31 percent of 

the farms don’t have access. So again, when we talk about this 

broad coverage, our rural parts, the farms, can be quite substantial, and there may not be many people exactly living on the farm. 

But that is actually a number I haven’t heard. That is a pretty 

staggering number. 

To help everyone here understand, I would like to maybe first 

talk about the regulatory burden a little bit. We always hear regulations are stifling the economy in the United States, an impediment to job creation. In fact, sometimes regulations result in job 

losses, and that is very good at the 30,000-foot level. And I think 

we heard some of that here today from Mr. Meyerhofer, Ms. Canfield, and Mr. Smith. 

But could you give us an example of perhaps one or two regulations that, in particular, are a thorn in the side that you have, and 

I think we may hear more about the USF here in a second? 

But also, how that may have impacted you, in particular, with 

jobs at the businesses you represent or within the association, 

where someone would say, ‘‘Because of this regulation and the 

costs, I had to lay people off. I have done this or that,’’ to try to 

bring home for this group a couple of particulars, especially come 

down off the 30,000-foot level, if you have something. That is fine, 

if not. 

Mr. Meyerhofer? 

Mr. MEYERHOFER. Well, as I stated in the testimony, in terms of 

the regulations themselves, the good part is, is it somewhat of a 

hands-off approach, in terms of how broadband is operated in this 

country and how we have grown, particularly on the cable side of 

it. 

But what often comes up with these programs, particularly 

through Rural Utility Services, is the need to meet the unserved 

areas. That is not always at the top of the list. 

And as the country has looked more and more to get to that last 

mile, if you will, I think there has been a change of mindset with 

FCC and RUS to do that, to focus on the unserved area instead of 

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ready another company in there, yet government programs continue to bring in an additional service to that area. 

And as I said in my testimony, our focus as a company is really 

to look at those unserved areas. 

So I think there is starting to be a change at the Federal level 

that we are seeing more and more as these programs go on. And 

I think that Connect NY, and maybe Bob can speak to Connect 

America, we are looking at that program as well. Maybe they are 

heading in the right direction in terms of that. 

Chairman COLLINS. All right, thank you. 

Ms. Canfield? 

Ms. CANFIELD. Well, from our perspective, the Universal Service 

Fund is really the lifeblood of the independent telephone providers, 

telecommunications providers. And what happened in the last couple of years is the FCC did a major overhaul of the fund. The fund 

allows providers who serve the most rural areas to keep the rates 

comparable to what they are in urban areas. 

But with this overhaul, they created a lot of uncertainty, and 

that uncertainty meant that our members no longer knew that 

they would be able to meet their commitments. 

So we had members, without going into the specifics of the 

changes the FCC made, we had members who canceled broadband 

buildout fiber deployment plans. We had members who returned 

grants that they had received, that they decided there wasn’t 

enough certainty for them to go ahead and use the grant to provide 

the broadband to the rural communities. We had members who laid 

off. We had one member who had to lay off 20 employees as a result of that uncertainty and the inability to move forward and not 

have that sort of guaranteed revenue stream going forward. 

So it had a very dramatic impact on the rural carriers. 

Fortunately, we are starting to see a change in the way it is 

being approached. Some things have been rolled back a little bit. 

They have been given a little bit of breathing room. There are still 

changes that we are waiting for. 

The independent telephone providers do not have a Connect 

America Fund that allows them to have supportive broadband services to rural areas. In order to get broadband, rural consumers 

have to also get the voice service. 

So that ensures that the small business cannot be competitive if 

there is a cable provider in the area that can offer a standalone 

broadband product. Our members are not able to do that. 

And even in areas where there is not a competitor, we have very 

progressive consumers who don’t want necessarily a landline telephone anymore. They want to move to an all-mobile product for 

their voice service, and to have the broadband connection to the 

home, so they no longer see that need. And our members are not 

able to meet that need right now. 

Chairman COLLINS. Thank you. 

Mr. Smith? 

Mr. SMITH. Ours is very simple and very old. Frontier continues 

to be saddled with an outmoded regulatory structure designed to 

govern old-fashioned telephone service. 

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Regulations for ILECs in this country, particularly with switched 

access for telecommunications, it hurts us from a competitive 

standpoint, particularly against cable and wireless providers. 

We must be able to compete on a level regulatory field, particularly in our urban areas, so that we can use that capital that would 

be saved from those regulations in order to expand our footprint in 

the rural areas. 

Chairman COLLINS. Good. 

I will come back maybe in a minute and ask a little bit more 

about spectrum, but, Ms. Lamb, because I know it is a staggering 

number, how many cows are on your operation? 

Ms. LAMB. Between the three farms, we milk about 6,000 cows. 

Chairman COLLINS. Yes, I think it was important to get that out. 

We sometimes talk about the definition of a large dairy farm being 

over 200. And in fact, in the farm bill that was just passed, there 

are some sections of the farm bill that deal with what we call the 

small dairy farms with under 200 cows. 

Well, 6,000 is not only large but a very, very significant operation, and we should point out it is a 24/7 operation. You basically 

don’t go on vacation. And every cow has to be milked at least twice 

a day. I don’t know, you may have some that are three times. If 

you want the most milk production, you go to three times a day. 

That is almost a mind-numbing kind of operation. And the fact 

that you are utilizing technology as you do, that is what I would 

like to talk about a little bit. 

To the 31 percent of farms, as you indicate, and you are representing the Farm Bureau, that don’t have access to broadband, 

versus your operation, can you give us even just a rough idea of 

what that means to Lamb Farms, bottom line or otherwise? Or 

could you even operate today the way you do with 6,000 cows and 

not have broadband? 

Ms. LAMB. I don’t think we could operate without having the 

broadband for our business. So truly, we still are a family operation, we just have a lot more family involved. 

So in order to really put together all the information for this, I 

had to go and ask my husband, in what ways are you using the 

Internet for herd management? And to Jim Veazey, who manages 

our cropping, how does the Internet play into our environmental 

plans? And to his wife, Marlene, Marlene, how are you using the 

Internet for our bookkeeping and for our payroll? 

And that was when it really all came together. And it is just incredible the way that it is such an integral part of our business. 

We could not do all of this without the Internet. 

I should say I grew up on a small 70-cow dairy operation in the 

Catskills, and I still have family members in that area who milk 

cows, who have small dairy farms, and they do not have broadband 

Internet. And when I think about the impact to them, and the disadvantage they are at, it is significant. 

Chairman COLLINS. I would imagine growth, at some point, if 

you don’t have Internet, there is a point you just can’t grow because just like any business, the more complex your business becomes, the more you need the tools of today—computers, technology, and the like—to be able to manage that growth, or things 

get out of control. 

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Ms. LAMB. Exactly. 

Chairman COLLINS. So now, as you are looking at where you are 

going next, where do you think the Internet is going to help you 

save money, become more productive, et cetera, et cetera. Do you 

have an idea of where you are heading in the next year or 2 or 3? 

Ms. LAMB. That is a good question. It does seem like more and 

more is coming available online. 

So one of the newer things that we are going to be trying out for 

the first time this year is incorporating GPS and some of the satellite services that can actually, in the field, the person who is running the planter can give an exact coordinate to the next guy, so 

that they can see exactly where—these tractors can line up perfectly. 

So we can, with that same amount of land, be even more efficient 

with the crops that we are growing on that land. So that is a major 

technology that is just coming out this year. But the tractors are 

almost going to be talking to each other, and it is going to take out 

some of that possibility for human error, so that will be really neat 

to see. 

Some of the unique things that I thought of after I did my testimony, but Mr. Smith was mentioning some of the farms use Internet now for surveillance. So on our farm, just for employee management and also for security, we do have surveillance cameras, 

and my husband can log on at home. If they are saying that maybe 

the parlor stopped running, he can log on and see what is going 

on without actually having to go into the farm. That is something 

that is unique. 

We also have a registered dairy sale every other year, and we 

have a live Internet feed so that people can bid from Japan or from 

anywhere around the world. They can watch the sale online and 

bid from there. 

So those are all things that we have an advantage over someone 

who doesn’t have broadband. 

Chairman COLLINS. Yes, I think you put that in very good perspective. Thank you for that. 

So, Ms. Canfield, back to the spectrum issue again, there is always the argument of breaking it into small chunks, which would 

allow the rural carriers to bid on and be able to be competitive bidding on a small piece of spectrum. And then there is the thought 

of well, let’s just package it all up. 

For the purpose of this hearing, could you maybe even just give 

the pros and cons of what you have heard—small, how small is too 

small versus packaging to where your carriers can’t bid because 

they have no use for it? 

Ms. CANFIELD. Right, the first thing I want to mention is that 

it is important to remember that wireless is not a substitution for 

wired communications, because communications don’t hop from 

tower to tower to tower until they make it to your phone. They rely 

on that wired network. So I just wanted to put that out there. 

The wireless, though, is incredibly important in rural areas, partly for a lot of applications that she’s talking about over here, Ms. 

Lamb is talking about, and also, just to have mobile service in 

rural areas. Very often, the large carriers don’t provide mobile 

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service in the most rural communities, so we rely on small, independent telecommunications providers to do that. 

And when you are talking about a small telecommunications provider, these companies—very often are family-owned businesses, 

very often cooperatively owned businesses—are serving communities. They are not serving the entire State. They are not serving 

the entire Northeast, like someone like Verizon or AT&T actually 

serve the whole country. 

So they are looking for spectrum licenses that allow them to 

serve the community. Now the way that the spectrum licenses are 

put out to carriers is that they are auctioned. At an auction, everyone who is interested signs up and then bids. 

One of the difficulties is that when the FCC decides that they are 

going to auction the spectrum according to large geographic areas, 

you are taking the small companies completely out of the picture. 

They have neither the interest nor the resources to compete 

against someone like AT&T or Verizon to obtain the whole State 

of Wyoming, for example, or New York State. 

So we have advocated as an association very often for cellular 

market areas, CMAs. There are 730-some-odd CMAs in the country, so the country is broken up into 700 areas for licensing. 

The upcoming spectrum auction, which is a 600 MHz spectrum, 

is a really, really good spectrum. It has great propagation for rural 

areas, in particular. And it also allows the larger companies to relieve congestion in the urban areas. There is a tremendous amount 

of interest in the spectrum. 

The FCC originally proposed auctioning that spectrum according 

to economic areas. There are 176 in the country. Again, way too 

large for any small business to participate in that auction. 

So we have been advocating hard for the CMAs. We were told by 

the FCC that this particular auction is way too complicated for 700 

times four auctions. So we have worked with all the other rural associations and also with AT&T and Verizon, Sprint, T-Mobile, to 

come up with an alternate plan that is an in-between plan. We call 

them PEAs, Partial Economic Areas. There is a lot of discussion 

about what to call them, PEA Pods. 

But there are 416 right now, and we just presented that to the 

FCC as a compromise proposal that we think will provide a realistic opportunity for small businesses who are interested in serving 

the rural areas to obtain that spectrum and be competitive in providing not only a mobile product, but also a fixed wireless product, 

which is an essential way to get to the very most rural areas, that 

very last mile, the way out ranches and farms. It is an economic 

way to get broadband to that last mile. 

Chairman COLLINS. I think, too, for the purpose of the hearing, 

we hear about gridlock in Washington, and that we don’t get along, 

and we get nothing done. I would like to point out, certainly, on 

the Small Business Committee, even more so than most, there is 

unanimity when it comes to providing the tools small business 

needs. It is not a Democrat/Republican issue. When we talk about 

regulatory burdens, again, it is not a Republican/Democratic issue. 

The concerns are, how do help small business grow? How do we 

get out of the way of small business? And so, again, hearings like 

SBREP-219 with DISTILLER

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this, there is no partisanship in this. It is trying to seek ways the 

Federal Government can assist, can get out of the way. 

Spectrum is a huge issue, because if it is not done properly, we 

won’t get to those 31 percent of farms that need it. We won’t get 

to the last mile. 

So there is absolute agreement that we need to work together on 

this. So it is actually nice to be part of a Committee and chair a 

Subcommittee where we don’t have the political infighting that 

goes on. We are actually looking to do what is best for America. 

And I think it is sometimes important to point some of that out. 

We keep hearing last mile, last mile. And I think we all have a 

great picture. It is a good visual. 

But, Mr. Smith, do you have any numbers on what it costs to go 

that last mile, to that last house, either cost per foot or per mile? 

And I am assuming, more than not, are we talking fiber when we 

are talking about that last mile for cable? 

Mr. SMITH. Actually, there is this misconception, and Ms. Canfield’s discussion there on the spectrum was very interesting and 

very exact. And I think it is a misnomer for people with the wireless telephone, that it is magically through the sky and satellites 

in the sky. But that is totally untrue. It is a wire-line connection. 

Wire-line capabilities exist today. A telephone passes nearly 

every home in the country, and the technology that exists today, 

it is there that would allow a DSL signal or, for my worthy competitor, Mr. Meyerhofer, a coaxial signal. 

The issue, as you just pointed out, is that cost per last mile. In 

some cases, with the CAF funding and the analysis that we did, 

each home past, and that is how we measure the cost per last mile, 

how many homes are we passing in order to provide that service, 

in some cases, those costs exceed $500 per person, per household, 

just to get to that last mile. In many cases, it is even larger than 

that when you are in a sparsely populated area. 

But it varies. Again, it depends on how many homes are within 

the last mile. 

But to extend that technology, it exists today. And it doesn’t have 

to be fiber. I think that is another misconception that people have. 

Technology that exists in our world, in our central offices and in 

our field remotes, is capable of providing people the Internet speed 

they need. The issue is the cost to deploy that equipment in order 

to provide that service to those people. 

Chairman COLLINS. I think that there are so many 

misperceptions when we say ‘‘broadband.’’ And again, starting with 

what is it, and it is the 4 MB down and the 1 MB up. But we go 

into much larger chunks as well. 

The other point is, for our kids, we talked about small business, 

and that is the focus of this committee. But we hear a lot about 

Common Core, and we can agree or disagree with whether that is 

a good thing or how it is rolling out. But the fact is, our kids today 

rely on broadband to do homework assignments, to get homework 

assignments. And if someone is on living on one of the farms, 31 

percent of which don’t have access to broadband, we are leaving 

those kids behind. 

And that is why I think, again, it is a national priority to get 100 

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cent, because then you start doing the math across 300 million 

Americans, and that is too many being left behind. 

So the purpose is to get it to 100 percent. The Federal Government does have a role to play in making sure we have a level playing field, and we are not picking winners and losers, and that regulations aren’t standing in the way. Best efforts aside, that is, again, 

what we are looking at in the hearing. 

I think we have pretty much covered what we wanted to cover. 

And the issues are well-understood. They are not partisan. These 

are bipartisan issues looking for solutions that we can initiate. 

It is always nice to hear that the State has their programs and 

that some of those are working. The Federal Government, though, 

when it comes to spectrum, is the one that is controlling that. 

And, certainly, the Universal Service Fund, that is a Federal program and it dates back to the days before wireless, before 

broadband. And so it has to be tweaked. It is understood it has to 

be tweaked. It is in the process of doing that, and hopefully in a 

way, again, that doesn’t pick winners and losers, and helps us get 

to that last mile. 

So as we bring the hearing to a close today, I just again want 

to thank all the witnesses for coming in. And I, certainly, have 

found your testimony—I always say if you learn something every 

day, that is a good day. 

And, Ms. Lamb, the 31 percent really puts this in perspective. 

And, certainly, I think what we heard about the spectrum is very 

useful. 

And, Mr. Smith, your comments about wireless isn’t magical, 

there are wires connecting it. I have to think, when people talk 

about cloud computing, I mean, I hate to say it, but there are people who think there is something in the clouds. They don’t understand that it is the concept that it is not onsite, the server is not 

onsite. It is somewhere else, but it is really not in the clouds. 

I am, certainly, today a little disappointed that the FCC, the 

Federal Communications Commission, and the Rural Utilities Service—we talked about the Department of Agriculture and their 

role—were not able to provide a witness today. I am sure if we 

were in D.C., they probably would have. But it is disappointing 

that they are not here. 

But what we are going to do is, Andy, who is on the Small Business Committee—and thank you for your assistance. To the extent 

this went smoothly, it has nothing to do with me. It has everything 

to do with Andy and has preparation and his binder. And again, 

I can’t say enough for my staff as well. 

But we are going to send them a letter, and we are going to summarize today’s hearing. And as we got some very specific questions, 

we are going to ask those questions and look for answers. And they 

will be forthcoming with answers. They generally don’t ignore a letter from a congressional hearing. So we will be able to get those 

and then share those with those who are here. 

So as I move forward, as the chairman of the Subcommittee on 

Health and Technology, which today is technology, it was delightful 

to have a field hearing. With budget crunches in Washington, last 

year we did not have them. The sequester we all heard about, and 

likewise, there was a lot of turmoil in Congress. We didn’t know 

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budgets, what they were going to be, and so forth. With a two-year 

budget now, the discretionary budget in place, we do know with 

certainty what monies we are going to have, and we are very careful in how we spend it. 

But I think sometimes it is very beneficial to come out into a district. And as chair of this Subcommittee, I have some latitude in 

where we have it. And I am very, very pleased we are able to hold 

this in Albion, which represents rural aspects of this district. And, 

certainly, the attendance today shows how concerned we all are, 

and this is quite an appropriate issue. 

So with that, I want to thank everyone for coming and officially 

say this hearing is now adjourned. 

[Whereupon, at 10:55 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

TESTIMONY OF MARK MEYERHOFER 

DIRECTOR, GOVERNMENT RELATIONS, NORTHEASTWESTERN NEW YORK 

TIME WARNER CABLE, INC. 

on 

Broadband Deployment and Adoption 

before the 

Committee on Small Business 

Subcommittee on Health and Technology 

Albion, New York 

March 20, 2014 

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Good Morning. My name is Mark Meyerhofer, Government Relations Director in the Northeast-Western New York region for Time 

Warner Cable. Thank you for inviting me to testify today regarding 

rural broadband. 

Time Warner Cable was formed in 1989 through the merger of 

Time Inc.’s cable television company, American Television and 

Communications Corp., and Warner Cable, a division of Warner 

Communications. Time Warner Cable offers residential video, 

broadband, digital phone and home monitoring and security services throughout its New York State footprint; as well as data, video 

and voice services to businesses of all sizes, cell tower backhaul 

services to wireless carriers, information technology solutions and 

cloud services. The Company also provides customers with exclusive, local, all-news TV channels in New York, North Carolina and 

Texas that provide viewers with content targeted to their community interests and concerns. 

Time Warner Cable is among the largest providers of video, highspeed data and voice services in the United States, connecting 

more than 15 million customers to entertainment, information and 

each other in 29 states, employing over 50,000 people across the 

U.S. Based on year-end 2013 data, TWC has approximately 11 million residential high-speed data subscribers and 517,000 business 

high-speed data services subscribers. Time Warner Cable is 

headquartered in New York City. 

Rural Broadband Deployment in New York 

Time Warner Cable is the leading broadband provider in NYS, 

offering reliable and affordable high speed broadband to over 2.3 

million customers. We also provide video service to 2.6 million customers and voice service to 1.2 million customers, as well as Intelligent Home security and monitoring. Time Warner Cable also 

serves approximately 120,000 businesses across the state. We are 

a major employer with roughly ten thousand employees and a local 

presence in communities throughout the state. We pay approximately $450 million annually in employee wages, and our state and 

local taxes and fees exceed $270 million each year. 

Investing $25–30 billion of private ‘‘at risk’’ capital since 1996, 

Time Warner Cable has deployed broadband infrastructure 

throughout its footprint. We continue to enhance our infrastructure 

to benefit our customers and the communities we serve, investing 

$2 billion in New York State in the last four years alone. In the 

27th Congressional District in 2012 and 2013, we built over 335 

miles of new lines, passing over 1,000 businesses and nearly 3,000 

homes. 

Time Warner Cable’s substantial and sustained investment of 

private, at-risk capital has resulted in our company passing approximately 96% of the homes and businesses in our New York 

State footprint. Access to broadband for New Yorkers is higher 

than the national average, with 95% generally having access and 

two-thirds of New York residential customers choosing cable 

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broadband. These investments were made, and this success 

achieved, in a regulatory and statutory environment that encourages innovation and investment. However, it remains extremely 

challenging to extend broadband to the most rural areas of NYS, 

where geographic isolation and topographic issues make it economically infeasible for companies to reach these areas—investment 

simply cannot be recouped before it is time to reinvest. 

Government’s Role in Spurring Deployment in Unserved 

Areas 

Time Warner Cable believes government has a role to play in 

helping to meet broadband needs in these unserved areas, and that 

properly structured programs or partnerships can help achieve 

rural broadband deployment goals. 

Any government-sponsored program or partnership should be 

guided by core principles. First, such programs and partnerships 

must be focused on unserved areas so taxpayer dollars are not 

wasted duplicating existing, privately funded networks. When taxpayer funds are used to overbuild an existing provider, the result 

is unfair competition for a limited number of customers. Government should not pick winners and losers in this competitive environment but instead focus limited taxpayer funds on unserved 

areas that need it the most. Second, government programs need to 

focus on last mile services, which is the most difficult and costly 

part of deployment. Third, programs should be technology and provider neutral, so all providers and technologies are eligible to participate. Fourth, the costs of these programs should be broadly 

shared rather than paid for by a tax or fee on a specific set of consumers or taxpayers. If rural broadband deployment is the public 

policy goal, the cost should be born as broadly as possible and the 

deployment cost to the individual consumer should be as low as 

possible. Finally, to encourage the broadest possible private participation in any government-sponsored program, any funding or incentives should come with no strings attached, so companies can 

own and operate the new networks and integrate them fully into 

their existing infrastructure and business plans. 

NYS’s ConnectNY program created by Governor Cuomo is a good 

example of an effective and well-structured public-private partnership program. Time Warner Cable received the largest ConnectNY 

grant and is now investing $7.1M in partnership with New York 

State to provide rural broadband for 52 projects in 22 counties and 

more than 40 towns across the state. Our ConnectNY project will 

connect more than 4,100 previously unserved homes, business and 

community institutions to high speed broadband. We expect to complete these projects by the end of 2014. ConnectNY has a strong 

focus on unserved areas and a robust review process to prevent 

overbuilding; the costs are shared broadly through state bonds; it 

is provider and technology neutral; and there are few if any strings 

attached to network operations. 

Time Warner Cable also supports the NYS Rural Broadband Deployment Act (S. 5481–A) advanced by state Senator George 

SBREP-219 with DISTILLER

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Maziarz (NY SD 62, Newfane) because it focuses on unserved 

areas, is provider and technology neutral, and the costs are shared 

broadly through the state’s general fund. This bill would create a 

100% refundable tax credit for rural broadband deployment available to residents and small businesses. Deployment expenses are 

refunded over five years and available for unserved areas only. The 

tax credit program would be technology and provider neutral and 

the provider contribution is not eligible for the credit. This bill 

passed the state Senate unanimously in June 2013. 

Rural Broadband Adoption in New York 

While the government’s role in spurring broadband deployment 

in unserved areas remains limited, we believe there is a broader 

role for government in broadband adoption. New York’s adoption 

rate of 70% is higher than the national average of 66%. Roughly 

one-third of Americans (and 30% of New Yorkers) with access to a 

broadband connection choose not to get connected at home. Further, adoption is not consistent across groups, where senior citizens, people with lower incomes and those with less education 

adopt at far lower rates. Aging populations, lower populations, 

lower socio-economic status and lower educational attainment can 

often characterize NY’s rural areas. 

The principle reasons cited for not adopting broadband are digital literacy and relevance. We should all work together to encourage adoption and Time Warner Cable has participated in numerous 

adoption programs, as noted in the attachment. A small investment 

in educating consumers about why broadband is relevant to them 

can be highly effective in increasing adoption rates, especially in 

low-adopting populations. 

Conclusion 

Time Warner Cable believes that private investment has resulted 

in remarkable deployment success in NYS and in the US. This investment has fueled innovation and the tremendous growth of 

broadband networks and services that we see today. As a general 

principle, we believe that government programs designed to address the needs of unserved areas in rural NYS and America must 

contain the guiding principles highlighted above. We also support 

government efforts to increase broadband adoption. 

Time Warner Cable looks forward to working with this committee on this issue. Thank you for the opportunity to testify today. 

I am happy to answer any questions you might have. 

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TESTIMONY OF ROBERT SMITH 

GENERAL MANAGER, FRONTIER COMMUNICATIONS 

BEFORE THE 

U.S. HOUSE COMMITTEE ON SMALL BUSINESS 

SUBCOMMITTEE ON HEALTH AND TECHNOLOGY 

FIELD HEARING: EXPANDING BROADBAND ACCESS AND 

CAPABILITIES 

TO SMALL BUSINESSES IN RURAL NEW YORK 

***** 

MARCH 20, 2014 

Good morning Chairman Collins and Members of the Subcommittee. Thank you for including Frontier Communications in 

this important hearing. 

My name is Bob Smith. I am the General Manager for Frontier 

Communications, overseeing Frontier’s service area in western 

New York State. I am honored to be here representing Frontier 

Communications, the largest communications service provider focused on rural America, providing broadband, voice and video services to more than 3 million residential and business customers in 

27 states. 

The communications business has changed dramatically since 

Frontier began business as a local exchange carrier—a provider of 

POTS, plain old telephone service—in 1935, but our commitment to 

providing customers with reliable and affordable products and services remains constant. Over the past decade, Frontier has transformed from a 20th Century phone company to a 21st Century 

broadband company, and we have made it our mission to deliver 

the life changing benefits of broadband technology to rural communications across our footprint. Broadband is a key driver for economic growth in America in the 21st Century. Broadband availability in rural America offers more than simply entertainment and 

communications capabilities. It translates into increased economic 

development, employment and educational opportunities, and improved health care. In July 2010, Frontier completed a transformative transaction, acquiring millions of rural and suburban 

communications lines from Verizon. As part of this acquisition, we 

committed to provide high speed broadband access to hundreds of 

thousands of homes previously unserved. The wireline broadband 

services Frontier provides ensure that our customers—your constituents—have unlimited opportunities for the future. 

That is why Frontier is relentlessly deploying and upgrading 

broadband to the communities we serve; to mid-sized cities such as 

Rochester, to small towns like Dansville, and to rural areas others 

consider too difficult to serve like Wyoming, New York. Since 2010, 

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we have invested more than $2.2 billion in company funds to increase broadband access and improve infrastructure, and an additional $133.2 million from the FCC’s Connect America Fund (CAF) 

supports broadband deployment exclusively to unserved high-cost 

areas. 

Frontier has significant operations in New York State, having acquired the former Rochester Telephone Company in 1995. Frontier 

now has 2,300 employees serving more than 275,000 residential 

customers in New York, and major offices in Rochester as well as 

Gloversville, Johnstown and Middletown. In New York State alone, 

Frontier has invested more than $200 million in network enhancements and capital investments for operations over the past two 

years. Frontier has been able to accept $9 million in the Connect 

America Fund’s Phase One process to provide broadband to more 

than 15,750 previously unserved households in New York State. 

Our efforts to deploy broadband throughout our New York service area do not stop there. We have worked with local governments, 

as well as with the New York State Economic Development Councils, to ensure that areas most in need of broadband are getting access. We have assisted Hamilton County in receiving a $2.2 million 

New York State Broadband grant to upgrade the data transport 

backbone in eastern New York State, from Gloversville to Eagle 

Bay. Upon completion, all of Hamilton County—which includes the 

Adirondacks, challenging geography and sparsely populated in 

some places—will have access to broadband and speeds of 10 Mbps. 

Most recently, we have been working with Wyoming County and 

New York State Senator Patrick Gallivan on broadband capacity in 

that County and to assist with confirming that their Agriculture 

Center will have the broadband capacity required to serve their 

needs. Access to broadband in this rural county provides farmers 

and spin-off agri-business with access to world markets, expanding 

their product and services market from local to global. Frontier is 

proud to be the provider working with Senator Gallivan on this initiative. 

We continue to seek out ways to work collaboratively with State 

and local governments and organizations to provide businesses and 

residences the broadband services they need. 

Like you, we know that high-speed broadband connectivity is life 

changing and absolutely critical to our country’s economic recovery 

and prosperity. Communities with access to the Internet are ripe 

for economic development and job creation. Frontier is modernizing 

facilities and services because we believe that our ‘‘time and treasure’’ is best used by extending robust broadband networks to these 

communities. Today, that means giving customers access to highspeed Internet service. Broadband technology offers rural America 

untold economic, educational and social opportunities and we consider it our job to deliver that access. 

Thank you for giving me and Frontier the opportunity to participate in this hearing. 

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Thank you to the Committee on Small Business and to Subcommittee Chairman Chris Collins for inviting me to testify before 

you today on broadband access and its impact on small businesses 

here in Rural New York. My name is Kendra Lamb and my husband and his family own Lamb Farms, a dairy based in Oakfield, 

N.Y., with three milking facilities and a methane digester. We are 

a third generation farm family with a passion for producing quality 

milk while providing excellent care to our cows and the land. I am 

also speaking on behalf of New York Farm Bureau, the largest general farm organization in the state with 25,000 members representing all commodities, all production methods and living in all 

corners of the state. 

It might be hard for some people to imagine, but New York State 

has some very rural locations and we have large gaps where 

broadband access is just not available, including here in Western 

New York. In today’s age, with access to the internet, a small business can operate from anywhere. But similarly, it’s hard to imagine 

a small business surviving and thriving in a rural area if it cannot 

be competitive in a world marketplace. The value of businesses in 

rural areas is recognized by New York State, which has been focusing on economic development in our Upstate communities where 

farms and small businesses are often the primary drivers of jobs 

and economic opportunity. But the lack of reliable broadband access is a major barrier to continued growth and we need the federal 

government to help solve this problem. 

According to a 2013 farm computer usage survey conducted by 

the U.S. Department of Agriculture, 69 percent of farms in New 

York have internet access. This leaves 31 percent of our farms— 

or more than 11,000 operations—that do not currently have internet access. 

But access is not the only problem, so is affordability and bandwidth. A 2010 study conducted by the Small Business Administration found that ‘‘rural small businesses pay significantly higher 

prices than metro small businesses for the same bandwidth, and 

small businesses in metro regions have access to higher bandwidth 

services than rural businesses do (at higher costs).’’ These kinds of 

inequities cannot continue if rural businesses are expected to compete with their counterparts in more developed areas. Congress 

must work through sufficient funding of the Rural Utilities Service 

and the Universal Service Fund, combined with any tax incentives, 

grants or regulations that are appropriate, to help increase access 

and affordability of broadband services in rural areas. 

We are lucky that our main farm location has a broadband connection through our cable provider and my home has DSL through 

our telephone service provider. Without access to this kind of reliable internet service our farm wouldn’t be able to do many of the 

key things we do to educate and reach out to the community. We 

have found that working in animal agriculture, it has become increasingly important to be able to educate the community on what 

we are doing on the farm and answer their questions in an honest 

and direct manner and we like to be on the leading edge of communication. 

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I am responsible for many of the public relations and outreach 

efforts of our farm. We have a Facebook page that I use to reach 

the community and educate consumers on our food supply. Without 

high-speed internet, I wouldn’t be able to update this page with the 

large picture and video files that help us tell our story. We also 

have a farm website that we update ourselves and take requests 

online from those who wish to visit the farm. Twice a year we publish a farm newsletter for all our neighbors; moving this file back 

and forth across the internet while we perfect it would be impossible with a slow internet connection. 

But we don’t just use high-speed internet for our communication 

initiatives. Like most other businesses, we use the internet across 

many business applications to take advantage of the latest technologies, to collect and analyze data, and ultimately, to make better 

decisions. 

Our farm takes advantage of the internet to connect our multiple 

locations and provide better management for our herd and employees. We log on each day to our milk cooperative’s website to check 

on the amount and quality of milk that we have shipped so we can 

monitor any changes. We also use dairy-specific software to help 

with record-keeping, like tracking the milk production of each of 

our cows, which we download as large files off the internet. Like 

any software, sometimes there are problems, so we can get remote 

technical support from the technology company that is located two 

hours away in Ithaca, N.Y. If a technician had to visit our farm 

each time there is a problem, we would lose valuable hours of work 

and it would be expensive to get that on-site assistance. Similarly, 

we are able to monitor our methane digester, which uses waste on 

the farm to create energy, and get remote assistance from Pennsylvania—all over the internet. 

We grow most of the feed for our animals and all of our crop 

record-keeping is through internet-based programs. These programs help us keep track of soil types, where waterways are located, setbacks and nutrient recommendations as well, which helps 

keep us in compliance with our CAFO permit and better oversee 

our environmental stewardship plan. 

Much of our banking is done online now and our employee time 

clocks and payroll software are web-based programs linked directly 

to our bank. Many of our vendors have gone paperless, so web applications allow us to view invoices online and keep our payments 

up to date. Even our employee benefits are updated and communicated through web programs so our workers have easy access to 

comprehensive information. 

It would be hard to imagine our business, which has multiple 

moving parts from animal care to growing crops to human resources management, being as successful as we are without the efficiency and organization we gain from these internet-based systems. 

Businesses like our dairy need high-speed, affordable internet to 

stay on top of the research and innovation that is available in our 

industry. As farm managers, we need to understand changes in 

trade and world markets and in consumer demands. This helps us 

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make business decisions from how many cows to milk, to what risk 

management tools we need to investigate. 

In addition, more and more federal and state agencies are relying 

on electronic reporting from farms in order to comply with regulations. Efforts are afoot to make environmental and employee safety 

and health reporting electronic, completely getting rid of paper submissions. This is an untenable requirement that places extreme 

burdens on farms and other small businesses that don’t have reliable access to the internet. While electronic reporting certainly can 

help streamline the work of government agencies, it is important 

that the Small Business Committee push back against exclusive 

electronic reporting requirements until all businesses have access 

to reliable broadband that is not cost-prohibitive. 

While our farms does not direct market to consumers, many 

farms in rural areas do, especially fruit and vegetable growers 

through farm stands, farmers markets or CSAs. Websites, social 

media and online directories are invaluable tools for these farms to 

reach their customers. Today’s local food movement means that 

farms are connecting with consumers in completely new ways and 

the marketplace is constantly changing as suburban and rural families evolve in the way that they seek product. Farmers looking for 

new outlets are exploring home delivery programs, buying cooperatives and community-based farmers markets—the internet is how 

they learn and explore new business models that can lead to success. 

For many farms and small businesses in rural New York that 

are not connected to the world through the internet, they can face 

a feeling of rural isolation. This makes our rural areas less attractive places for people to live, spurring the brain drain and economic 

decline some of our formerly thriving small towns in rural New 

York have experienced. It is no secret that rural areas don’t have 

the same access to education and health care as more densely populated areas. So rural broadband offers the opportunity for distance 

learning and telemedicine that can help make our communities 

even more attractive and viable places for young people, families 

and seniors to live. A large part of ensuring that our rural areas 

remain viable and contribute to economic development is making 

sure every citizen has access to broadband service. 

In conclusion, access to broadband is essential for farms and 

other rural small businesses to manage efficient and successful operations, to reach their communities and customers, to stay on the 

cutting edge of their industry, and for our rural communities to be 

attractive places to live for our employees, customers and the next 

generation to run our business. We can’t do this on dial-up or undependable internet connections. 

Thank you again for the opportunity to share why reliable and 

affordable broadband access is important to rural New York and 

our farms and small businesses. I would be glad to take any questions you may have. 

### 

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Expanding Broadband Access and Capabilities to Small Businesses 

in Rural New York 

Committee on Small Business 

Subcommittee on Health and Technology 

U.S. House of Representatives 

March 20, 2014 

Questions for the Record 

The Honorable Chris Collins 

1. The FCC recently stated their intention to modify the formula 

for how the Universal Service Fund (USF) is distributed to carriers 

to expand broadband. How do you plan to update the USF in a way 

that accounts for the unique challenges of small carriers operating 

in diverse rural areas and allows all consumers the option of purchasing only broadband from their provider? 

Response: In April, the Commission voted to move forward with Phase II of the Connect America Fund. We also 

took several steps to improve the climate for broadband investment in areas served by incumbent rate-of-return carriers. In a Further Notice of Proposed Rulemaking, we seek 

comment on establishing a Connect America Fund for rateof-return carriers. Specifically, the Commission proposes to 

adopt a standalone broadband funding mechanism for rateof-return carriers, and seeks comment on how to support 

the deployment of broadband-capable networks by rate-ofreturn carriers within the current budget for the program. 

We welcome a dialogue regarding how a standalone 

broadband mechanism could be structured to provide support consistent with the $2 billion budget for rate-of-return 

territories. The Commission is focused on updating the universal service program to ensure that we are delivering the 

best possible voice and broadband experiences to rural 

America within the Connect America budget, while providing increased certainty and predictability for all carriers 

and a climate for increased broadband expansion. 

2. Many small wireless carriers have stated they are unable to 

participate in spectrum auctions that only make spectrum available 

in large geographic sizes/blocks. Can you provide details on the 

steps the FCC is taking to ensure that small wireless carriers have 

an opportunity to participate and obtain spectrum from upcoming 

auctions? 

Response: It is a priority of mine to ensure that wireless 

providers of all sizes are able to participate in upcoming 

auctions. The Commission has historically made spectrum 

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available in block sizes that vary by both geography and 

frequency to meet the needs of providers of all sizes. 

On May 15, the Commission adopted service rules for the 

600 MHz Band, which will be subject to competitive bidding 

in the forward auction component of the broadcast television spectrum incentive auction. The 600 MHz Band Plan 

is comprised of paired 5 +5 megahertz building blocks to facilitate the rapid deployment of networks, including by 

small carriers and new entrants. In addition, the Commission adopted Partial Economic Areas (PEAs) (416 license 

areas) as the service area for the 600 MHz Band, to permit 

entry by providers that contemplate offering wireless 

broadband services on a localized basis. 

Earliers this year, the Commission also adopted service 

rules for the AWS-3 Bands, which will be auctioned this 

Fall. The 1695–1710 MHz band will be available in 5 and 10 

megahertz unpaired blocks on an economic area basis (176 

license areas). The 1755–1780/2155–2180 MHz band will be 

made available in a 5 + 5 megahertz paired block on a cellular market area basis (734 license areas), two 5 + 5 megahertz paired blocks on an economic area basis, and one 10 

+ 10 megahertz paired block on an economic area basis. 

Making these bands available in licenses that vary in both 

frequency and geography will meet the spectrum needs of 

providers of all sizes. 

In addition, the Commission has historically administered 

an effective bidding credit program that promotes auction 

participation by designated entities, including small businesses. For the AWS-3 auction and the forward auction component of the incentive auction, the Commission adopted 

bidding credits of 15 percent for small businesses (entities 

with average gross revenues for the preceding the 3 years 

not exceeding $40 million), and 25 percent for very small 

businesses (entities with average gross revenues for the preceding 3 years not exceeding $15 million). The Commission 

will initiate a proceeding in the coming months to review 

its designated entity program to ensure that it continues to 

ensure that qualified small businesses can participate meaningfully in spectrum auctions. We will implement any appropriate changes prior to the incentive auction. 

3. At the hearing, both carriers and users voiced concerns over 

the authenticity of the National Broadband Map (NBM). Even 

though the NBM showed they have access to broadband, the local 

carriers and residents explained how they were no access to 

broadband in that area. Considering that the FCC and policy makers use the NBM to direct funding, including through the Connect 

America Fund, what is the FCC doing to ensure that we’re allocating funding to the most appropriate areas? And what is the FCC 

doing to ensure that carriers are not being passed over in funding 

opportunities because of errors in the NBM? Finally, how are you 

working with state and local communities to collect and analyze 

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the NBM data to ensure it reflects the most accurate rate of service? 

Response: The Commission uses the National Broadband 

Map as the starting point for determining which census 

blocks are unserved, but it also has adopted a challenge 

process to allow all interested stakeholders, including incumbent providers, competitors, state regulators, and local 

communities, to provide evidence on whether a particular 

census block in fact is unserved. Commission staff undertakes a thorough review of all evidence submitted in the 

challenge process before making any determination. 

4. On the day of the hearing, the FCC announced in a public notice that the Rate Floor, which requires small rural carriers to increase their telephone voice service rates to avoid losing universal 

service support, could increase from $14 to $20.46 in a few months. 

These rate hikes could lead to consumers dropping voice service 

which, under current Commission rules, could lead to a 2 to 3 

times rate hike on broadband service. Does the Commission plan 

to take action on this issue to avoid these rate hikes? 

Response: In the 2011 USF/ICC Transformation Order, the 

Commission unanimously adopted reforms to make universal service a fairer system for all consumers and businesses. The Order includes a phase-out of excessive subsidies for basic phone service, which allowed some phone 

companies to charge their customers as little as $5 a month 

while average urban, suburban, and even some other rural 

consumers were paying over three times that amount. The 

Commission determined it was inappropriate to use limited 

federal high-cost support to subsidize local rates beyond 

what is necessary to ensure reasonable comparability between urban and suburban rates, and rural rates, as required by Congress. The reforms adopted in the 2011 Order 

gradually eliminate these excessive subsidies to level the 

playing field for all consumers and contain the cost of the 

program, which is funded by universal service fees paid by 

consumers. 

Importantly, the Commission’s rules do not require carriers to raise their local rates. Nevertheless, the Commission 

has recognized concerns over potentially sizable rate increases and possible difficulties some carriers may experience in making any rate adjustments at the state level in a 

short period of time. To address these concerns, the Commission adopted an order on April 23, 2014 that delays any 

potential universal service support reductions for lines that 

remain below the rate floor until January 2015. In addition, 

the universal service support reductions that go into effect 

in January will only be for those lines with rates below $16, 

with no further increases until July 2016, at which time reductions in universal service support will be limited to an 

increase of no more than $2 annually. 

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5. Is it true that FCC rules effectively force some rural consumers to purchase regulated voice service in order to make 

broadband affordable? That is—the customer’s broadband rates go 

up if they choose to stop buying voice service because the rules provide USF support for a line only when the customer actually purchases voice? 

Response: Some small carriers have suggested that they 

should be able to receive support for delivering standalone 

broadband services (i.e., without providing a voice service). 

Our current rules don’t allow for this. However, as noted 

above, in a Further Notice of Proposed Rulemaking adopted 

last month, the Commission proposes to adopt a standalone 

broadband mechanism to provide support consistent with 

the $2 billion budget for rate-of-return territories. 

a. Doesn’t a policy that increases local voice rates more or less 

push people over time to take only broadband—why would we have 

a rule that leads broadband rates to increase when that happens? 

Response: Although concerns regarding increased 

landline rates because of the increased rate floor are understandable, we have seen minimal impact on consumers since 

the Commission implemented this rule in 2012. The rate 

floor increased from $10 in 2012 to $14 in 2013, a 40 percent 

increase. However, consistent with our rules, many carriers 

continue to report lines with rates well below the $14 rate 

floor, suggesting that they may have made a business decision to grandfather the lower rates for those customers and 

accept the associated support reductions. In 2013, carriers 

in 34 study areas in 16 states were still reporting a number 

of lines with residential local service charges of $5 or less, 

further reinforcing that individual carriers may choose not 

to raise rates in response to the current rate floor. 

As noted above, the Commission has adopted both a delay 

until January 2015 and a phase-in of the reductions in universal service support resulting from not meeting the 2014 

rate floor. This will minimize any impact on service providers and customers. 

Æ 

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