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CONNECTING MAIN STREET TO THE WORLD: 

FEDERAL EFFORTS TO EXPAND SMALL BUSINESS 

INTERNET ACCESS 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND 

ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

APRIL 27, 2010 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED ELEVENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

OLYMPIA J. SNOWE, Maine, Ranking Member 

JOHN F. KERRY, Massachusetts 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

JOSEPH I. LIEBERMAN, Connecticut 

MARIA CANTWELL, Washington 

EVAN BAYH, Indiana 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY HAGAN, North Carolina 

CHRISTOPHER S. BOND, Missouri 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

MICHAEL B. ENZI, Wyoming 

JOHNNY ISAKSON, Georgia 

ROGER WICKER, Mississippi 

JAMES E. RISCH, Idaho 

DONALD R. CRAVINS, JR., Democratic Staff Director 

WALLACE K. HSUEH, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Snowe, Hon. Olympia J., Ranking Member, and a U.S. Senator from Maine .... 4 

Kerry, Hon. John F., a U.S. Senator from Massachusetts ................................... 6 

Wicker, Hon. Roger, a U.S. Senator from Mississippi .......................................... 10 

Hagan, Hon. Kay, a U.S. Senator from North Carolina ....................................... 16 

Vitter, Hon. David, a U.S. Senator from Louisiana .............................................. 16 

WITNESSES

Genachowski, Hon. Julius, Chairman, Federal Communications Commission .. 17 

Strickling, Hon. Lawrence E., Assistant Secretary, Communications and Information, National Telecommunications and Information Administration, 

U.S. Department of Commerce ........................................................................... 25 

Adelstein, Hon. Jonathan, Administrator, Rural Utilities Service, U.S. Department of Agriculture ....................................................................................... 47 

Walthall, Susan, Acting Chief Counsel, Office of Advocacy, U.S. Small Business Administration ............................................................................................. 62 

Greene, Sean, Associate Administrator for Investment, U.S. Small Business 

Administration ..................................................................................................... 79 

Smith, Hon. Gordon H., President and Chief Executive Officer, National 

Association of Broadcasters ................................................................................. 95 

Largent, Hon. Steve, President and Chief Executive Officer, CTIA–The Wireless Association .................................................................................................... 118 

Huval, Terry, Director of Utilities, Lafayette City-Parish Consolidated Government ................................................................................................................. 124 

Gerke, Thomas A., Executive Vice Chairman, Centurylink ................................. 143 

Friedman, Steve, Chief Operating Officer, Wave Broadband and Chairman, 

American Cable Association ................................................................................ 150 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Adelstein, Hon. Jonathan 

Testimony .......................................................................................................... 47 

Prepared statement .......................................................................................... 50 

Cameron Communications 

Prepared statement .......................................................................................... 212 

Cameron Telephone Company 

Prepared statement .......................................................................................... 213 

Commerce Department Recovery Act Broadband Funding 

Press Release .................................................................................................... 196 

Cox Greater Louisiana 

Letter ................................................................................................................. 219 

Eagle Communications 

Letter ................................................................................................................. 222 

Friedman, Steve 

Testimony .......................................................................................................... 150 

Prepared statement .......................................................................................... 152 

Responses to post-hearing questions .............................................................. 189 

Geiger, Jim 

Prepared statement .......................................................................................... 216 

Genachowski, Hon. Julius 

Testimony .......................................................................................................... 17 
Page

IV 

—Continued 

Prepared statement .......................................................................................... 20 

Responses to post-hearing questions .............................................................. 170 

Gerke, Thomas A. 

Testimony .......................................................................................................... 143 

Prepared statement .......................................................................................... 145 

Greene, Sean 

Testimony .......................................................................................................... 79 

Prepared statement .......................................................................................... 81 

Responses to post-hearing questions .............................................................. 180 

Grivner, Carl J. 

Prepared statement .......................................................................................... 235 

Hagan, Hon. Kay 

Testimony .......................................................................................................... 16 

Hutchinson/Mayrath 

Letter ................................................................................................................. 224 

Huval, Terry 

Testimony .......................................................................................................... 124 

Prepared statement .......................................................................................... 126 

Responses to post-hearing questions .............................................................. 190 

Kerry, Hon. John F. 

Testimony .......................................................................................................... 6 

123 Document ................................................................................................... 8 

Landrieu, Hon. Mary L. 

Testimony .......................................................................................................... 1 

Chart: Percentage of U.S. Small Businesses that Export ............................. 85 

Largent, Hon. Steve 

Testimony .......................................................................................................... 118 

Prepared statement .......................................................................................... 120 

Medical Business Resources, Inc. 

Letter ................................................................................................................. 225 

Moulton, William 

Letter ................................................................................................................. 234 

National Cable & Telecommunications Association 

Prepared statement .......................................................................................... 229 

Smith, Hon. Gordon H. 

Testimony .......................................................................................................... 95 

Prepared statement .......................................................................................... 97 

Responses to post-hearing questions .............................................................. 194 

Snowe, Hon. Olympia J. 

Testimony .......................................................................................................... 4 

Strickling, Hon. Lawrence E. 

Testimony .......................................................................................................... 25 

BTOP map and distribution charts ................................................................. 26 

Prepared statement .......................................................................................... 33 

Responses to post-hearing questions .............................................................. 187 

Tydingco, Daniel 

Prepared statement .......................................................................................... 226 

Vitter, Hon. David 

Testimony .......................................................................................................... 16 

Walthall, Susan 

Testimony .......................................................................................................... 62 

Prepared statement .......................................................................................... 64 

Responses to post-hearing questions .............................................................. 185 

Wicker, Hon. Roger 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 12 

Yancey, Jr., W. Kenneth .........................................................................................

Prepared statement .......................................................................................... 207 
(1) 

CONNECTING MAIN STREET TO THE WORLD: 

FEDERAL EFFORTS TO EXPAND SMALL 

BUSINESS INTERNET ACCESS 

TUESDAY, APRIL 27, 2010 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:04 a.m., in Room 

428A, Russell Senate Office Building, Hon. Mary L. Landrieu, 

Chair of the Committee, presiding. 

Present: Senators Landrieu, Kerry, Hagan, Cantwell, Shaheen, 

Snowe, Vitter, Wicker, and Risch. 

OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, 

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good morning, everyone, and welcome to the 

Small Business Committee hearing, ‘‘Connecting Main Street to the 

World: Federal Efforts to Expand Small Business Internet Access.’’ 

We are excited about the two panels that we have this morning 

and anxious to hear both the testimony and respond to the Committee’s questions. 

We should have a good attendance on our side this morning. As 

you can see, the room is packed because there is a tremendous 

amount of interest in how small businesses, both in urban areas, 

suburban areas, and in rural and sometimes underserved areas, 

can benefit from the new technologies and partnerships that are 

emerging on this issue. I am pleased to begin today’s hearing in 

our newly renovated space, and hopefully you all will enjoy the 

benefits of that today. 

I would like to begin by thanking our witnesses. We have a distinguished first panel, which I will introduce in a minute. I want 

to say that I understand our witnesses have had a full congressional dance card in recent months. You have testified individually 

before a variety of committees, but this is the first time that all of 

your representative agencies have shared one Committee panel to 

discuss broadband. Federal coordination will be key moving forward as each of you have unique resources, expertise, and authority. 

For our business panel, it is critical that we hear from providers 

to small businesses so that we can make informed legislative decisions. Many have traveled from across the country to be here, several from Louisiana. I want to especially recognize them. 
2 

I also encourage any business or business association not able to 

testify today to submit a written statement for the record. We will 

complete a full Committee report on this subject, and the record 

will be open for the next 2 weeks. 

In the same way that our interstate highway system connected 

America by reducing travel time and facilitating commerce, 

broadband has minimized the barriers that separate small businesses from geographically distant consumers. One company that 

has been able to do this in my home state, just for an example, is 

the Louisiana Network Foundation Technologies (NFT), a company 

started by two Louisiana Tech graduates. I had the opportunity to 

tour NFT last year in one of my visits to the state. NFT has developed a technology that allows live streaming video over the Internet without using large amounts of bandwidth. In partnership with 

Louisiana Tech, NFT pumps signals for various sporting events 

throughout the country and around the world. So from Ruston, 

Louisiana, a mid-sized rural town in north Louisiana, this small 

business is developing because of access to this new highway. 

This is a great example of how the public and private sectors can 

join to form meaningful partnerships in providing and utilizing advanced technology. NFT also shows that broadband technology can 

create high-paying jobs, usually only associated with other more famous high-tech corridors, of course, in California, Massachusetts, 

or right here in Northern Virginia. 

Broadband has not only impacted small high-tech businesses. 

This technology has changed traditional business models that all 

small business owners once relied on. As such, it is particularly important that small businesses have access to broadband technology 

so that they can compete on a global level. This Committee has 

long understood that small businesses come in all shapes and all 

sizes and occupy a wide range of different industries. With this in 

mind, we do not want to just connect Main Street. We also want 

to connect every street, every side alley, and every country road so 

that all small businesses, whether they are in traditional farming 

interests or Internet start-ups out in these less populated areas, 

have the same technological opportunities. 

So while we must expand access to these services, at the same 

time we must ensure broadband is affordable for these entrepreneurs. According to reports from the FCC, businesses with 25 

employees or less pay two times more per employee for broadband 

than those with more than 25 employees. We want to explore this 

fact today. 

Education is the key. We need to provide small business with the 

tools they need to understand the benefits of broadband and the 

challenges associated with not having access. We need to show 

small businesses how to utilize this technology to make their businesses more efficient, to gain access to new markets, and ultimately to reduce operating costs so that small businesses can be 

the engines that they are, or the best engines that they can be, as 

they lead our country out of this recession. 

Our Committee has received data on the importance of small 

broadband providers who offer service to rural and other underserved and unserved areas. Innovative, nimble small businesses 
3 

are key to finding cost-effective ways to serve rural and underserved communities. 

Today our Committee will hear about small business participation in network build-out projects funded under the Recovery Act. 

Just last night, I understand there was an additional $1.2 billion 

announced in grants throughout the country under the BTOP Program, adding to the $1.2 billion that was previously issued. 

Expanding broadband access and adoption is not just the FCC’s 

job. We all have a role to play. That is why I believe it is important 

to hear from each of the Federal agencies today. 

Chairman Genachowski, we are here to work together to ensure 

that our national broadband plan fosters robust competition among 

all broadband providers as a means to deliver truly universal 

broadband service at higher speeds and lower prices. There is a lot 

of work to be done. 

In this spirit, the staff of our Committee and other Subcommittees have been active in conducting outreach to various broadband 

providers interested in further connecting their communities. My 

staff has created a Broadband Guide to help small businesses. We 

are directing this guide to be distributed today. I am very proud 

of the work that the Small Business Committee has done in this 

regard. The guide can be accessed on our website and hard copies 

will be made available. 

I am also pleased that a number of small business recommendations from this Committee have been incorporated in the national 

broadband plan. Many of these provisions are included in the 

broadband bill that I plan to introduce in the coming weeks. I hope 

my colleagues on the Small Business Committee will join me as cosponsors of this bill. Both Ranking Member Snowe and former 

Chairman of this Committee, Senator Kerry, have done a tremendous amount of work on broadband in the past, and I want to acknowledge them both for their leadership in this regard. 

Finally, through the Broadband Data Improvement Act of 2008, 

which I cosponsored, along with the American Recovery and Reinvestment Act, many Federal agencies were given a renewed focus 

on broadband and small business issues. 

First, the Federal Communications Commission and the SBA’s 

Office of Advocacy were tasked with collecting better data on 

broadband and small business broadband usage. 

Second, Rural Utilities Services and National Telecommunications and Information Administration were directed to set up 

broadband grant guidelines that would encourage small business 

participation, especially participation from socially and economically disadvantaged small businesses. Unfortunately, my State of 

Louisiana ranks towards the bottom of technology penetration. I 

would like to see that changed, and I am aggressively working towards that end. 

Third, in these sets of bills, the Federal Communications Commission was given the challenging task of crafting our national 

broadband plan. At 360 pages and 17 chapters, Mr. Chairman, you 

and your team have provided us with a blueprint of how to move 

forward. 

I want just in closing to thank you all again. I will be introducing 

the panelists in just a minute, but at this time, I would like to turn 
4 

it over to Ranking Member Olympia Snowe for her comments and, 

again, thank her for her really extraordinary leadership in this 

area, both as a former Chair of this Committee and a member of 

the Commerce Committee. 

Senator Snowe. 

OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, RANKING 

MEMBER, AND A U.S. SENATOR FROM MAINE 

Senator SNOWE. Thank you, Chair Landrieu, for holding this 

hearing, and I appreciate your advocacy and championing of the 

critical Federal efforts that are necessary to enhance affordable, 

high-speed Internet services for small businesses. 

I join the Chair in recognizing our distinguished panelists, including FCC Chairman Genachowski, Administrators Adelstein 

and Strickling, Acting Chief Counsel for the SBA for Advocacy, 

Susan Walthall, and SBA Associate Administrator Sean Greene. 

I also want to recognize two of my friends and distinguished 

former colleagues who will be testifying on the second panel. 

Senator Gordon Smith, who is now the President and CEO of the 

National Association of Broadcasters, Senator Smith and I served 

for many years both on the Commerce Committee and the Finance 

Committee, where we worked together on so many different initiatives across the spectrum, and I certainly value his perspective 

here today. 

I am also pleased to acknowledge former Congressman Steve 

Largent, who now heads up the CTIA–The Wireless Association, 

who can also provide a unique point of view in having managed his 

own small advertising, marketing, and consulting firms. Actually, 

they are both Hall of Famers. One is a pro football Hall of Famer 

and the other one is in the Frozen Food Hall of Fame. 

[Laughter.] 

So I thank all of our witnesses for taking the time to join us 

today to discuss an issue that has wide-ranging impact for our constituents and our entire system of commerce. There are currently 

two herculean initiatives under way. The FCC has commissioned 

the National Broadband Plan and the Economic Recovery Act 

broadband stimulus funding programs, both of which will have farreaching implications for small businesses across the country. I 

look forward to discussing the efficacy of these measures and am 

eager to explore other ways the Federal Government can encourage 

private investment and allow wireless and wireline companies to 

compete fairly in the broadband market while balancing the fact 

we must avoid creating an undue burden through excessive government regulation. 

As both Ranking Member of this Committee and as a member of 

the Commerce Committee, on which I have worked with Senator 

Kerry on spectrum inventory—and I was pleased to join him in 

that critical legislation—I have heard countless stories from entrepreneurs in my home State of Maine and across the country that 

have used the Internet to transform the way they do business. Just 

last week, in fact, I was contacted by an owner of a small business 

animation studio who depends on fast and reliable broadband connection as a matter of basic business survival. But he is struggling 

for increased access and speed because his business is located in 
5 

rural Maine. In his own words, and I quote, ‘‘My needs for 

broadband are expanding, but the limited access and market in 

Maine is putting a stress on my business. In my industry, clients 

rarely have time to deal with delays or technical problems, and 

would move to my competition the moment our ability to deliver is 

compromised.’’ 

So as much as this entrepreneur and his family enjoys the Maine 

way of life, he now faces the gut-wrenching reality of possibly relocating his business to New York or Los Angeles—not because he 

wants to, he clearly does not, but because he has to due to the lack 

of broadband capacity in his area. 

So I find this deeply disconcerting, yet regrettably millions of 

Americans and small firms are facing a similar unlevel technological playing field and either do not have access to, cannot afford, 

or are not aware of the very technology that has created such opportunities for so many others. The Internet is not only a tool for 

increasing efficiency and productivity, it is necessary for competitiveness and job creation capacity for businesses large and small. 

Unfortunately, it remains an untapped resource for approximately 

93 million Americans who do not use broadband today. The FCC 

estimates that 14 million American households lack access to 

broadband. Most live in rural communities and inner cities, the 

very areas that have the most to gain from broadband availability, 

which provides better access to jobs and education. So I applaud 

Commissioner Genachowski for plotting a course through the 

FCC’s recently released National Broadband Plan. We had hearings, in fact, in the Commerce Committee—on a very important 

issue—to eliminate the digital divide that exists within these areas. 

This morning, I certainly hope to explore the plan with our panelists to ensure that the recommendations in this plan will achieve 

everything that is so desperately required for rural small businesses. With unemployment remaining stagnant at nearly 10 percent, and our nation undergoing what appears to be a ‘‘jobless’’ economic recovery, it is paramount that we leave no stone unturned 

in fostering an entrepreneurial environment in which small businesses can harness new technology and invest in the future to preserve and create more jobs. 

As Congress considers the dimension of issues that can help 

small businesses start hiring again—and I will repeat it, as I did 

last week, and the Chair and I agree on this—we need to pass long 

overdue small business job creation legislation. I hope that what 

will be considered in that legislation is a proposal that I have also 

recommended to increase the Small Business Development Centers 

funding by $50 million. I think that money could be used for training and outreach of small businesses and broadband applications, 

which is such an imperative if we are going to make sure that 

small businesses are on par in trying to not only access this technology but also in terms of how to use it. 

We must ensure our small entrepreneurs have every tool at their 

disposal, including accessible and affordable broadband. A recent 

Brookings report concluded that broadband capital expenditures 

helped create nearly half a million jobs in 2009 alone. The availability of broadband undoubtedly contributes to business expansion 

and employment growth. The Brookings report estimates that a $5 
6 

billion increase in broadband investment will successfully increase 

broadband penetration by 7 percent and result in 2.4 million new 

jobs throughout the economy. 

Astoundingly, the United States, which has long been the world’s 

leader in technological innovation, ranks 15th globally in 

broadband adoption, 14th in broadband pricing, and 28th in 

broadband speeds—not very impressive for the country that invented the Internet. But there is a significant impact that these 

poor rankings have, and that is in the technological innovation 

leadership. Broadband, the Internet, and information technology 

are catalysts to spurring innovation. Without greater availability 

and adoption our competitiveness will be significantly hindered. 

The Recovery Act has done many things, including providing 

grants for so many projects that are under way, certainly in my 

State of Maine, including the Three-Ring Binder Network to help 

increase broadband access. I will be interested in hearing from the 

Administrators today on how this is working and making sure the 

money is disseminated fairly among small businesses in rural communities. 

I am also eager to hear today from SBA on its plans as Administrator Mills recently attended a joint event with Chairman 

Genachowski to partner with the FCC on the National Broadband 

Plan. It is my hope and expectation that the SBA will be anything 

but a silent partner because our Nation’s nearly 30 million small 

businesses are counting on the agency to stand up loudly and aggressively on this seminal issue. 

The FCC’s National Broadband Plan recommends that the SBA 

engage its resource partners—for instance, Small Business Development Centers and Women’s Business Centers—in training and 

supporting small business broadband use and applications. I support these basic recommendations, but the SBA must leverage the 

entirety of its resources and fully utilize all the core programs so 

we can maximize their technological potential through enhanced 

rural broadband deployment. 

So, Madam Chair, again, thank you very much for hosting this 

critical hearing today. 

Chair LANDRIEU. Thank you, Senator Snowe. 

Senator Kerry. 

OPENING STATEMENT OF HON. JOHN F. KERRY, A U.S. 

SENATOR FROM MASSACHUSETTS 

Senator KERRY. Madam Chair, thank you very much. First of all, 

let me congratulate you on the many innovations that you have 

brought to the Committee, not the least of which is this grand new 

dais that we all get to sit at. And I notice all these little green bottles around here. We have moved south. The Mountain Valley 

spring water from Arkansas, you got as close as you could—— 

Chair LANDRIEU. As close as I could to Louisiana. 

Senator KERRY. When I was Chairman, we had Poland Springs, 

Ranking Member. 

Senator SNOWE. I recall those good days. 

Senator KERRY. I know. 

Chair LANDRIEU. And we are probably moving to Kentwood, Louisiana, very soon. 
7 

[Laughter.] 

Senator KERRY. So I just want to stay close to the Ranking Member. We need her. 

But, no, seriously, I really do congratulate. I think you have 

brought terrific energy and terrific focus to the Chair, and we all 

appreciate it. And I really strongly support your effort to focus on 

ensuring that our small businesses are able to be the best connected in the world. And it is shocking that in this year 2010, after 

all of the promises of 2004 and beyond, we are still strikingly disconnected in the United States. You can go other places, all over 

the world—in fact, coming in here, I think Constitution Avenue is 

one of the most disconnected places in the world. I think your 

phone calls drop about three times per 500 yards. 

We have got to get this connected. We have got to get going here. 

You can go to other countries and sit in a field far from anywhere 

and download at the fastest rate possible complicated and long 

communications from your headquarters or elsewhere. Here in our 

country we cannot do it. 

I believe personally that the stimulus grants are working. I support the National Broadband Plan. I think Chairman Genachowski 

has brought some strong leadership to that effort. But we have a 

long way to go, and I just want to focus very quickly, as the Senator from Maine did, on Massachusetts for a moment. I want to put 

a chart up here. This is a map of western Massachusetts, and those 

broad red swaths there are all areas that are either unserved completely or underserved. There is a small line going up through 

Pittsfield up to North Adams, Williamsburg, and so forth, where 

we have, you know, the highway connection, but we have got 123 

towns there that are completely disconnected and those folks left 

behind, which is why the Governor, local leaders, State legislators, 

and business leaders have constructed a broadband stimulus application that I think is the best in its class called MassBroadband 

123. And it is named after the 123 towns that remain disconnected 

or poorly connected to the Internet. 

I would ask unanimous consent to insert in the record the 123 

document that outlines the benefits for small businesses. 

Chair LANDRIEU. Without objection. 

[The information follows:] 
8 
9 

Senator KERRY. Now, Madam Chair, thousands of my constituents have written in support of that. Let me just share a couple 

of observations. 

Arnold Wenger from Lee, Massachusetts, writes: ‘‘My computer 

is my enemy. It can take me an hour to do something that should 

take 10 minutes on a high-speed connection.’’ 

Laura Stravino from Ashfield, Massachusetts, writes: ‘‘It is completely insane that we are using dial-up Internet here at our home 

in the United States in 2010.’’ She goes on to say: ‘‘I am at a disadvantage compared to my colleagues who have high-speed Internet at home, and my work is less efficient.’’ 

Lisa Kirschner writes: ‘‘I run a small graphic design business 

from my home in Peru, Massachusetts. I presently have dial-up 

Internet access because I do not have access to broadband. It is not 

unusual for a photo upload to take hours, and, of course, I cannot 

talk on the phone to my customers while I am connected to the 

Internet.’’ 

The MassBroadband 123 proposal will build an open broadband 

backbone to which private providers can connect and link homes 

and small businesses to speeds that they only dream about today. 

And that means that you do not have to be an employee who is actually at work to be working. You could be at home and work. You 

could be at a remote location and be working. And it also means 

that just because you live in western Massachusetts, it does not deprive you of the opportunity to reach customers in Western Europe 

or elsewhere. 

The National Broadband Plan has laid out a comprehensive 

strategy, and I appreciate it particularly from my role as Chair of 

the Communications Technology Subcommittee on the Commerce 

Committee. And we are working with the Chair and others to really get this out as fast as possible. 

The FCC strategy, which I support, will combine the modernization of the Telephone Universal Service Fund with pro-competition 

wireless policies and enhanced consumer access to information that 

will generate new investments, and it is going to drive innovation, 

and it is going to drive job creation at the same time. 

Also, we have just embarked on an ambitious health care reform 

effort, and as we do so, health providers, including small practices 

in remote rural areas and elsewhere, we have got to remember that 

it is a vital piece of effective health IT. Without high-speed Internet, it is almost impossible to download and transfer patient files 

from provider to provider. And as we explore new ways to use technology to reach underserved communities, initiatives such as consultations via Web video and distance learning for professional development, all of these things just do not work without adequate 

Internet. 

The Broadband Plan calls for releasing more spectrum in order 

to encourage wireless broadband competition, making more information about their service accessible to consumers, and it also protects an open Internet, which many of us believe is very important. 

It suggests modernizing the Universal Service Fund and investing 

in a wireless network that police and firefighters can access and 

rely on to safeguard vital communications during emergency situations. And all of these will result in investments in rural 
10 

broadband that are going to ensure that radio collapses that occurred in the wake of 9/11 and Hurricane Katrina are not repeated 

again. 

I support all of those initiatives, and, Madam Chair, I really appreciate this hearing. It is very, very important. You know, we always talk about how small business is the engine of our economy. 

You always hear in every political speech about how 98 percent of 

America’s business is small business. It rarely gets the kind of focused attention it deserves, and you are to be congratulated for 

helping to do that today. 

Chair LANDRIEU. Well, thank you, Senator Kerry, as a former 

Chair of this Committee, but we are very focused, and I thank all 

of the members, both Republicans and Democrats. We want to get 

capital into the hands of small business, but we also want to give 

them access to the high-speed Internet, both of which are critical 

to lifting them forward and to moving our country forward. 

We have got three other members I am going to recognize quickly and ask if you could limit your opening statement to 1 minute, 

submit the rest to your record, starting with you, Senator Wicker. 

OPENING STATEMENT OF HON. ROGER WICKER, A U.S. 

SENATOR FROM MISSISSIPPI 

Senator WICKER. Well, thank you, and I appreciate being limited. 

In a moment of weakness that I really do not recall, I agreed to 

appear off the Hill at 10:30. My staff assures me that I actually 

agreed to this, so I am going to have to tear out of this meeting. 

[Laughter.] 

But let me say it is good to have panel number one here. I particularly appreciate my two former colleagues, Steve Largent and 

Gordon Smith, agreeing to come here today and be on panel two. 

Perhaps I will be able to come back in time for their testimony. 

But, clearly, Madam Chair, the National Broadband Plan is a 

broad analysis of the marketplace. Not every proposal is unanimously agreed to. But I recognize the plan is flexible and a road 

map that provides many options to ensure important goals, two of 

which are relevant to our discussion today. First, we must assure 

that the telecommunications industry is competitive in the global 

marketplace. And, second, broadband access can help make our 

small and rural businesses competitive locally, regionally, and nationally. 

I hope today we get into discussions of the level of Government 

intervention that might be necessary in certain areas, and while we 

do that, we need to ensure that it is accomplished with a light 

touch and clear recognition that private investment is essential. 

We will also discuss the Universal Service Fund, very important 

to the Chair’s State of Louisiana and to my State of Mississippi, 

as well as other rural areas. And then, of course, we will get into 

a discussion of spectrum. We need to ensure that we efficiently and 

effectively utilize this finite resource. 

The success of small businesses is essential for economic growth. 

In my State of Mississippi, small businesses make up the majority 

of our state’s employers. They deserve quality and affordable access 

to the Internet to help them compete in the marketplace. 

I ask that my opening statement be included in its entirety. 
11 

Chair LANDRIEU. Thank you, Senator, for being so cooperative, 

and that will happen, without objection. 

[The prepared statement of Senator Wicker follows:] 
12 
13 
14 
15 
16 

Chair LANDRIEU. The reason that we are having to do this is we 

have two panels, ten witnesses, this morning, and it is really a 

very full hearing. 

Senator Hagan. 

OPENING STATEMENT OF HON. KAY HAGAN, A U.S. SENATOR 

FROM NORTH CAROLINA 

Senator HAGAN. Thank you, Madam Chair. I just, too, want to 

echo you are great to put this Committee together, and certainly 

the testimony of the witnesses, we are looking forward to hearing 

what you have got to share with us. 

In North Carolina, we do have a lot of rural counties. Eighty-five 

of our counties are rural. One of the issues that I hear over and 

over again is the lack of high-speed broadband that these farmers 

can use. There is a farmer in Camden County who provides many 

potatoes to Lay to make potato chips. This contract is great, but 

one of the issues is he has to report daily what he harvests, and 

he does not have high-speed. He has to literally go from his farm 

back to his home, where he only has dial-up, in order to provide 

that information on a daily basis. Think of the amount of time and 

energy that he wastes because he does not have broadband. So we 

need this desperately, and I just look forward to the testimony. 

Chair LANDRIEU. Thank you, Senator Hagan. 

Senator Vitter. 

OPENING STATEMENT OF HON. DAVID VITTER, A U.S. 

SENATOR FROM LOUISIANA 

Senator VITTER. Thank you, Madam Chair. I want to welcome 

everyone. I look forward to the discussion that I can stay for. In 

particular, I want to welcome two folks on our second panel. 

Terry Huval of the Lafayette Utilities Service, is an important 

witness. The City of Lafayette is doing amazing work in terms of 

bringing tremendous broadband capability to that community, and 

congratulations on that work, Terry, and I look forward to a continuing update. 

Secondly, I am also excited a representative of CenturyLink is 

here. They have just announced a new acquisition of Qwest that 

will bring this once small Louisiana company—certainly not small 

anymore—into 37 States with great access through that network. 

So I welcome them, and I look forward to the discussion. 

Chair LANDRIEU. Thank you. 

Let us begin our panel this morning, and let me do just very 

brief introductions. 

Chairman Genachowski from the Federal Communications Commission has two decades of experience in public service and the private sector. Prior to his appointment, he spent more than 10 years 

working in the industry as an executive and entrepreneur. We 

thank you for your leadership, Mr. Chairman. 

Larry Strickling from the Department of Commerce. Mr. 

Strickling is a technology policy expert with more than two decades 

of experience. He was also Chief of the Common Carrier Bureau for 

the FCC. We welcome you. 

Jonathan Adelstein joins us today from the U.S. Department of 

Agriculture. He is the 17th Administrator of the USDA’s Rural 
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Utilities Service. He previously served as Commissioner of the Federal Communications Commission. We thank you as well. 

Susan Walthall from the SBA. She serves as Acting Chief Counsel for Advocacy. Of course, that position is still vacant. We are 

working hard to get it filled, and we hope to get that done soon. 

In the absence of the Chief Counsel, she is here to testify on behalf 

of the Office of Advocacy, U.S. Small Business Administration. 

Lastly, we have Sean Greene, also with the SBA, serving as Associate Administrator for Investments and Special Adviser. Karen 

Mills could not be here with us today, so we are very grateful to 

have Mr. Greene. 

So let us begin with our opening statements, and, Mr. Chairman, 

if we can begin with you, I am pleased that this Administration 

has made a broadband policy for this nation a priority. There have 

been billions of dollars invested so far and a tremendous amount 

of interest, and thank you for being with us this morning. 

STATEMENT OF HON. JULIUS GENACHOWSKI, CHAIRMAN, 

FEDERAL COMMUNICATIONS COMMISSION 

Mr. GENACHOWSKI. Thank you, Chair Landrieu, Ranking Member Snowe, Senator Vitter. Thank you for calling this important 

hearing. I have submitted a statement for the record, and if I may, 

I will deliver a shorter opening statement that focuses on 

broadband and small businesses. 

Broadband communications is rapidly becoming an essential 

platform, if not our most essential platform for job creation and 

economic growth in the 21st century and necessary for the global 

competitiveness of the U.S. Our National Broadband Plan, as you 

know, stems from a congressional directive to the FCC to prepare 

a National Broadband Plan to achieve universal broadband and to 

tackle important issues such as entrepreneurial activity, investment, job creation, and economic growth. 

Now, small businesses really are our nation’s indispensable driver of job creation and economic growth, and the evidence is clear 

that broadband connectivity and associated online tools can be powerful factors in small businesses, reaching new markets, increasing 

productivity. Together, wired and wireless broadband can bring 

small businesses new revenue from new customers and lower operating costs by using business tools available in the Internet cloud. 

That is a formula for more profit, more investment, more economic 

growth, and more jobs on Main Street. 

The President has said, ‘‘We need to expand broadband lines 

across America so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.’’ 

I could not agree more. Broadband can have transformative economic effect in both rural and urban areas. 

Consider Blue Valley Meats in Diller, Nebraska, which has used 

its website and e-commerce and online marketing tools to reach 

new customers outside of Diller, creating new jobs in Diller. 

Consider Cake Love, a bakery here on 14th Street in D.C. which 

has expanded from one to seven stores, with its entrepreneurial 

stating that broadband has been as important as his recipes in the 

growth of his business, empowering him to reach his customers 
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‘‘where they are, online and on mobile,’’ while keeping his costs in 

check. 

I met a farmer in Erie, Pennsylvania, who told me that all his 

life he thought computers had no relevance at all to his business 

except that now he realizes that without computers, without smart 

phones, without high-speed access, you cannot be a farmer in 21st 

century America. 

The FCC’s work on the Broadband Plan not only confirmed broad 

opportunities for small businesses for broadband; it revealed several significant challenges to seizing them. 

First, too many small businesses operate in regions of our country that still do not have access to high-speed broadband infrastructure at all. 

Second, in areas with high-speed connectivity, too many small 

businesses find too few marketplace choices, a lack of adequate 

speeds, or prices that are too high. Today small businesses pay an 

average of three times more per employee than large businesses for 

broadband service. 

Third, small businesses too often do not have a sufficient understanding of broadband—what we call ‘‘digital literacy.’’ The result 

is that in most rural counties in America, fewer than half of small 

businesses have broadband access, and overall, fewer than a quarter of small businesses even today use e-commerce tools to grow 

and expand their businesses. 

The FCC’s Broadband Plan recommends taking concrete actions 

to tackle those challenges: 

To improve availability, particularly in rural areas, the plan proposes a once-in-a-generation transformation of the Universal Service Fund, shifting support from plain old telephone service to 

broadband communications. It recommends steps to make available 

sufficient spectrum so that we can lead the world in mobile and so 

that we can benefit small business productivity which relies increasingly on mobile communications. 

To boost marketplace choices and affordability for small businesses, the plan recommends promoting competition in broadband, 

including removing barriers to municipal networks and increasing 

transparency about the speed of service to all broadband consumers, including small businesses. 

To improve digital literacy, the plan calls for increased training 

and outreach to small businesses. I am pleased to say that this effort officially kicked off earlier this month when SBA Administrator Karen Mills and I announced a public-private partnership to 

provide broadband tools, training, and support for small businesses. And as you mentioned, the plan includes a number of recommendations working with the SBA to enhance existing resources 

so that they can provide training and outreach to small businesses 

as quickly as possible. 

I am pleased by our collaboration at the FCC with the Commerce 

Department, particularly with the NTIA, Administrator Strickling, 

also with RUS, Administrator Adelstein. Interagency coordination 

is vital when it comes to this horizontal technology, and I look forward to continuing to work well together. 

In implementing our efforts at the FCC, our focal point is our Office of Communications Business Opportunities led by Director 
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Tom Reed. OCBO is central to the Commission’s mission to support 

and encourage the development of small and diverse businesses in 

the telecommunications industry, taking advantage of broadband. 

At the FCC, we are moving with urgency to implement the National Broadband Plan. We released about 10 days ago an Implementation Action Plan unprecedented in its scope and transparency, with target dates for over 60 Commission actions over the 

next year to implement what the country needs to do to lead the 

world in broadband. 

Supporting small businesses and entrepreneurs must be a national priority of paramount importance. By arming small businesses with broadband and encouraging digital literacy, we can 

help ensure that broadband fulfills its promise as a transformative 

tool for small businesses and America’s economy. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Genachowski follows:] 
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Chair LANDRIEU. Thank you very much. 

Mr. Strickling. 

STATEMENT OF HON. LAWRENCE E. STRICKLING, ASSISTANT 

SECRETARY, COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE 

Mr. STRICKLING. Chairwoman Landrieu, Ranking Member 

Snowe, and members of the Committee, thank you for the opportunity to testify today about NTIA’s efforts to expand small business Internet access. As you pointed out, we have testified on many 

previous occasions to previous Committees. This is, I think, the 

seventh time that Administrator Adelstein and I have appeared. 

Up until now, it has always been as a duet, but today we welcome 

three new members to the band, and we look forward to the continued discussion. 

What I would like to focus on in my testimony this morning is 

what specifically NTIA has accomplished since the passage of the 

Recovery Act to expand broadband availability and adoption and 

specifically how we have engaged small businesses in those efforts. 

The Recovery Act directed NTIA to create and administer a grant 

program totaling $4.7 billion, with four purposes: to build 

broadband infrastructure, to increase broadband adoption, to expand public computer centers, and to develop a national broadband 

map. We have now completed the first round of funding, and I am 

pleased to report that as of today, NTIA has awarded 136 Recovery 

Act grants totaling approximately $1.3 billion. This includes 54 

grants for mapping totaling about $100 million and 82 projects for 

broadband totaling more than $1.2 billion. All told, these projects 

will add 25,000 miles of new or upgraded broadband networks, will 

directly connect nearly 7,000 community anchor institutions, including schools, libraries, hospitals, community colleges, government facilities. We are investing in more than 1,000 new or upgraded public computer centers, accounting for more than 10,000 

new or improved public computer workstations. 

I have provided a map this morning to each of you that shows 

the geographical distribution of our round one grants. 

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We were able to award grants in over 30 states, although some 

of our awards impact more than one state. Nonetheless, as we head 

into our second round of funding, we are very cognizant of our obligation under the act to award at least one grant in each state, to 

the extent practical. 

Small businesses have been direct beneficiaries of these grants. 

Of the 20 awards to private businesses in round one, eight went 

to small businesses, one of which is a socially and economically disadvantaged business. These grants total over $73 million. Moreover, nearly 40 percent of the 82 broadband grants awarded in 

round one include socially and economically disadvantaged businesses as project partners. And beyond these direct awards to 

small business, hundreds of thousands of small businesses will 

benefit from our program through increased high-speed Internet 

availability for themselves and their consumers. 

Let me give you just a few examples. 

In Puerto Rico, Critical Hub Networks, a socially and economically disadvantaged business, will build a wireless broadband network that reaches every municipality in Puerto Rico and offers 

speeds of over 100 megabits per second to more than 1,500 schools 

and local Internet service providers. 

In Maine, we awarded $25 million to a small business to build 

a fiber optic network extending to the most rural and disadvantaged areas of the state, which will improve the overall level of facilities in the state and enable last-mile service providers to offer 

services to homes and businesses throughout the state. 

And in one of our multi-state projects, Mission Economic Development Agency is using our public computer center grant of almost 

$4 million to create or expand 17 computer centers in 10 states in 

partnership with Latino-serving economic development organizations. They will focus not just on delivering computer literacy training to Hispanic communities, but also to deliver specific educational programs to Latino micro-entrepreneurs interested in 

starting or growing their own businesses. 

Those are just some of the examples of the types of projects we 

funded in round one, and while we are pleased with the response 

of small businesses in round one, we redoubled our efforts in round 

two to encourage and facilitate participation by small businesses 

and entrepreneurs. 

As a key element, we developed an online tool called Broadband 

Match, or as we call it, eHarmony for broadband, which allowed interested parties to register online and find potential project partners. More than 1,400 entities signed up for Broadband Match, including many small businesses and SDBs. When the application 

window closed for the second round of funding last month, more 

than 450 organizations and individuals with profiles on Broadband 

Match had either submitted an application or were involved as a 

key partner on a round two application. 

Additionally, we conducted workshops across the country to educate potential applicants on round two funding rules, including six 

pre-workshop events focused specifically on the issues of small 

businesses attempting to participate in our program. And as set 

out in our round two rules, we will be giving extra consideration 
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to an application that includes an SDB either as the applicant or 

as a project partner. 

We saw the effects of these efforts on our round two application 

pool. Those have just come in. We are in the process of reviewing 

them. But we received a total of nearly 900 applications requesting 

$11 billion in grants; 21 percent of these applicants are small businesses; 24 percent of the applicants are either socially disadvantaged and economically disadvantaged businesses or have 

partnered with an SDB in their application, an increase from 14 

percent in round one. 

Our deadline to award round two grants is September 30, 2010. 

As you know, the Recovery Act does not provide authority or funding for administration or oversight of our projects beyond that date. 

Yet to realize the benefits of our program and to avoid waste and 

fraud, it is critical that we monitor and oversee these grants while 

they are being built and put into operation. For this reason, the 

President’s fiscal year 2011 budget includes authority and funding 

for NTIA to continue to administer and monitor the these projects, 

and I urge members of this Committee to support expeditious funding for oversight beyond September to ensure that these projects 

deliver the benefits they promise and to protect the investment taxpayers have made for these projects. 

Thank you again for the opportunity to testify, and I will look 

forward to your questions. 

[The prepared statement of Mr. Strickling follows:] 
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Chair LANDRIEU. Thank you very much. 

Mr. Adelstein. 

STATEMENT OF HON. JONATHAN ADELSTEIN, ADMINISTRATOR, RURAL UTILITIES SERVICE, U.S. DEPARTMENT OF 

AGRICULTURE 

Mr. ADELSTEIN. Thank you, Chair Landrieu, and thank you for 

all your leadership on broadband issues. I enjoyed announcing that 

Louisiana project together with you recently and all that you have 

done to make sure Louisiana is second to none in terms of 

broadband connections. 

And, Senator Snowe, Ranking Member Snowe, it has been great 

to work with you over the years. I appreciate your leadership on 

schools and libraries and on broadband generally, both as a member of the Commerce Committee and former Chair here. 

And, Senator Hagan, thank you for your leadership as well. I 

was just in Asheville, North Carolina. I think the President followed me shortly thereafter. But I saw both the beauty and the 

needs of rural North Carolina for broadband service, and we are 

committed to serving that area. 

We certainly are glad to be here. It is great to have a broader 

band to testify with. I am especially honored to be with the Chairman of the FCC, Chairman Genachowski, who has done such an 

outstanding job of leading the Commission, both in terms of the 

National Broadband Plan and so many other fronts, and, of course, 

to be with my friend Larry Strickling, who has been such an outstanding partner in the stimulus broadband effort. And it is great 

to partner also with our friends from the SBA, and we are looking 

to working with them. And Cheryl Johns, who we work with at the 

FCC, is your person here on the Committee. It is good to see you 

here. 

We certainly are committed, the Obama Administration, as you 

have heard, to getting broadband out, and Secretary of Agriculture 

Vilsack has put this at the very top of his agenda, one of the pillars 

that he sees as critical for the future of rural America, making sure 

that broadband is everywhere. And we appreciate your guidance as 

we implement this major undertaking. 

Broadband connectivity can help new and small businesses to 

thrive. Rural business, farmers, ranchers, need broadband to expand markets and compete in the global economy. USDA studies 

have clearly shown that rural employment growth and wages increase with broadband availability. And RUS knows how to work 

with small businesses and entrepreneurs, and we know how to do 

it in our broadband program. Nearly all of our borrowers under the 

farm bill broadband loan program have been small businesses; 35 

percent are start-ups. So we have been doing this for many years. 

And the same is true under the Recovery Act. Small businesses 

have played a big part in both of our two Notices of Funding Availability, or NOFAs, for the RUS program. 

Under the first NOFA, a very large number of applications came 

from small businesses, minority-owned firms, Indian tribes, and 

Native Alaskan and Native Hawaiian organizations. In that round, 

RUS awarded over $1 billion for 68 broadband projects. That will 

connect over half a million households, nearly 100,000 rural busi-
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nesses, and anchor institutions such as schools, libraries, and community facilities. These broadband projects span 31 states and 1 

territory, and they include 17 tribal lands in rural communities. 

Funding was awarded also to a very diverse group of providers— 

from very small telecommunications companies, wireless providers, 

rural electric and telephone cooperatives to cable providers—to 

build out our rural networks and create urgently needed jobs in 

rural America. 

Funds were awarded to small and disadvantaged businesses and 

Indian tribes, and these projects also feature a very wide array of 

technologies, from DSL broadband to coaxial cable to fiber optics to 

wireless. In fact, 37 percent of our awardees had a wireless component. 

The experience RUS gained from the first NOFA, as well as feedback from this Committee and others, has informed a number of 

improvements that we made in the second round of funding. For 

NOFA II, is offering a 75-percent grant, 25-percent loan combination, with incentives for higher loan components. We eliminated 

the category for remote projects. We instead offered flexibility to increase the grant up to 100 percent for the most rural areas and 

those with low median income and high unemployment. 

USDA is going to focus in this round on last-mile projects, which 

directly connect to homes, businesses, and community anchor institutions. USDA will continue to finance middle-mile projects, primarily for current RUS borrowers and grantees. 

The second NOFA also allows satellite providers to compete for 

around $100 million to provide service to rural customers that remain unserved after all other funds have been obligated. Awardees 

of both NOFAs and applicants under NOFA II can apply for technical assistance grants for the development of a USDA-approved 

Regional Broadband Plan. Awardees under either NOFA can also 

apply for grant funds to provide broadband connectivity to rural libraries that were funded by our community facilities program. We 

expect to announce the ground rules for these programs very shortly. 

And we continue to focus on rural and unserved areas for economic development in terms of eligibility. While we are in the process of reviewing the applications for the second NOFA, we are 

thrilled at the level of response. RUS received about 776 applications for nearly $11.2 billion in funding. That is over five times the 

amount available. About 60 percent of the applications were companies that identified themselves as small businesses and disadvantaged firms. Nearly 76 percent of applications were submitted by for-profit corporations. Around 4 percent of the applications were by public entities. And we got 21 applicants that were 

Indian tribes. 

We believe our 60 years of experience in providing telecommunications at USDA will help us prepare to deliver broadband and encourage development of locally owned businesses. Our goals are to 

modernize the Nation’s infrastructure, create or save jobs, and 

work towards rural economic development. We certainly welcome 

input from members of this Committee as we are reviewing this 

next round of applications. It is an honor to work with you and 
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with our partners throughout the Obama Administration to make 

affordable broadband service widely available throughout America. 

Thank you for inviting me to testify, and I welcome any questions you might have. 

[The prepared statement of Mr. Adelstein follows:] 
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Chair LANDRIEU. Thank you very much. 

Ms. Walthall. 

STATEMENT OF SUSAN WALTHALL, ACTING CHIEF COUNSEL, 

OFFICE OF ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION 

Ms. WALTHALL. Chair Landrieu, Ranking Member Snowe, Senator Hagan, good morning, and thank you for the opportunity to 

appear before you today. I am Susan Walthall, Acting Chief Counsel for the Office of Advocacy at the U.S. Small Business Administration. In the interest of time, I will summarize my prepared testimony and ask that the full statement be included in the record. 

Congress established the Office of Advocacy in 1976 to represent 

the views of small businesses before Federal agencies and Congress. As Advocacy is an independent office, the views expressed in 

this testimony do not necessarily reflect the position of the administration or the SBA. 

On a personal note, Chair Landrieu, I was able to spend several 

months in New Orleans immediately after Hurricane Katrina 

through my work with the SBA. That experience reinforced to me 

the importance of broadband communication to small businesses 

and communities. 

The Office of Advocacy has been and continues to be active on 

a number of small business broadband issues. On behalf of small 

businesses, we have filed comment letters on the guidelines for the 

Broadband Technologies Opportunities Program and the 

Broadband Initiative Program, the FCC’s role, and the national 

rural broadband strategy. A listing of our numerous comment letters is included in Appendix A to my written testimony. We were 

pleased to work with NTIA on the Recovery Act’s BTOP program 

and be part of the efforts to include small and socially and economically disadvantaged businesses. We were happy to hear that 

survival businesses chose to partner with SDBs. 

In addition, we have advocated for increased access to spectrum 

by small businesses through the FCC’s Designated Entity Program, 

special access reform, and a competitive regulatory approach to the 

U.S. telecommunications industry. 

Today I will highlight two key areas: first, I will explain the challenges faced by small business providers; second, I will discuss the 

study that my office is conducting on broadband and small business 

as directed by this Committee. 

My office works closely with small broadband providers to understand the unique barriers they face. We recently visited the offices 

and field operations of MetroCast, a small independent cable operator in St Mary’s County in rural Maryland. We saw firsthand the 

difficulties MetroCast was facing in connecting service areas separated by inaccessible terrain. Our visit helped us understand what 

a true mom-and-pop broadband provider looks like and why they 

are so important to many of our communities. 

Two problems for small business providers are special access and 

acquisition of spectrum. Small carriers have continuously reported 

increased rates for special access. The current price of special access specifically demonstrates a lack of competition in the market. 

Incumbents are able to raise prices without losing customers. The 
63 

combination of high prices and few alternatives creates a difficult 

burden for these small business providers. Advocacy is committed 

to working with the FCC to ensure that small entities are able to 

acquire spectrum. 

The 2006 revision to these rules has encumbered small business 

participation in FCC spectrum auctions. Advocacy urges the FCC 

to consider amending its designated entity rules allowing smaller 

computers to compete in spectrum auctions with the use of bidding 

credits. 

The Broadband Data Improvement Act of 2008 directed Advocacy 

to conduct a study to evaluate broadband availability for small 

businesses. I want to thank Senators Landrieu, Snowe, and Kerry 

for spearheading this important study. This study, due in the fall, 

will provide valuable information on broadband options currently 

available to small businesses. It will provide a baseline against 

which the success of the broadband grant and loan programs can 

be evaluated. Results will geographically highlight small businesses that are in underserved areas and determine just how limited their service choices are and how this affects the price of 

broadband. The study will match service availability with small 

business location, allowing small service providers to enter the 

market and offer innovative products to these regions. 

Broadband allows small businesses throughout the U.S. to access 

customers, fostering greater small business contribution to economic growth and job creation. We are ready to work with everyone 

here to make universal broadband a reality. Thank you for allowing me to present these views. I will be happy to answer any questions. 

[The prepared statement of Ms. Walthall follows:] 
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Chair LANDRIEU. Thank you very much, and it is good to know 

that not only do we have the Small Business Administration advocating on behalf of small business, but the actual Office of Advocacy that can give a more independent view as well. I know the 

small businesses in our country appreciate that. 

Ms. WALTHALL. Thank you. 

Chair LANDRIEU. Mr. Greene. 

STATEMENT OF SEAN GREENE, ASSOCIATE ADMINISTRATOR 

FOR INVESTMENT, U.S. SMALL BUSINESS ADMINISTRATION 

Mr. GREENE. Thank you, Chair Landrieu, Ranking Member 

Snowe, for inviting me here to this important hearing. I am honored to be here. 

Broadband technology brings extraordinary opportunities to 

America’s small businesses, regardless of industry size or geographical location. There are two critical factors to consider when 

it comes to broadband and small business: first, small businesses 

would benefit from broadband being accessible and affordable; and, 

secondly, better tools and training targeted to small businesses 

would help maximize broadband’s potential. 

The immediate challenge is relatively simple. Access to affordable broadband service is not yet available to all small business 

owners, especially those located in unserved and underserved parts 

of the country. Let me give you some concrete examples of how 

small businesses are taking advantage of the Internet as a sales 

and marketing platform. 

Take Becky Collins, or Granny B, an Internet entrepreneur selling her homemade children’s clothing from Homer, Louisiana. After 

her friends and family taught her how to use eBay, she made the 

leap into creating her own business and her own website and is 

now generating orders from Japan, Canada, England, and Italy. 

Or Northern Outdoors, an adventure tour operator running 

whitewater rafting trips on the Kennebec and Penobscot rivers in 

Maine. Northern Outdoors recognized a long time ago how to use 

the potential of the Internet to bring new customers to their business. Now they market their trips through a customized website. 

They do search engine optimization and keyword buying on Google. 

They integrate with Twitter and Facebook to reach new customers 

and actually take bookings online as well. 

Then, finally, Open Table provides one more example of the importance of broadband for small businesses, in this case serving as 

a platform for an innovative high-growth business to use the Internet to serve other small businesses as customers. Open Table allows consumers to book restaurant reservations in real time via the 

Internet. In turn, using a broadband connection, restaurants use 

Open Table software as their reservation management system, getting updates on reservations real time far more efficiently than answering lots of phone calls and booking everything on paper. The 

company, initially funded by a small business investment company, 

went public last year and now employs over 300 people. 

But despite such success stories, more work still needs to be 

done. For instance, once a small business gets access to affordable 

broadband, the challenge lies in adopting the technology and 

leveraging it to its fullest potential. 
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Which leads me to the second key area: Small businesses need 

better tools and training to maximize broadband’s potential. This 

is where SBA and its partners can play a key role. That is why the 

SBA and its resource partners are focusing on increasing digital literacy. We want to broaden the knowledge base of small businesses 

to take advantage of such areas as e-commerce, online markets, social media, on-demand software, and much more. 

I will give one recent example. Via our partnership with SCORE, 

we have a cadre of 12,000 volunteers who are executives that actively counsel and mentor entrepreneurs and small businesses owners. Earlier this month, SCORE announced the partnership with 

technology companies that will develop training materials to inform, educate, and support small businesses interested in using 

broadband. The SCORE leadership team is working to develop 

these ‘‘train the trainers’’ materials, and they have already brought 

on board another one of SBA’s key resource partners, our 110 

Women’s Business Centers. 

SBA will continue worked with all of our resource partners on 

similar efforts, including the possibility of delivering additional 

training through our network of Small Business Development Centers. 

As today’s hearing clearly shows, broadband access, adoption, 

and utilization can play a critical role in supporting the strongest 

engine of our economy—small businesses. SBA and our partners 

can help small business owners gain the knowledge and skills they 

need to harness the strength of this powerful new technology. If we 

can accomplish that, we know that small businesses will grow and 

create even more good American jobs that will lead us toward economic recovery. 

Thank you for your leadership in this crucial area and for holding this important hearing today. I am happy to take any of your 

questions. 

[The prepared statement of Mr. Greene follows:] 
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Chair LANDRIEU. Thank you very much, Mr. Greene, and we do 

have a series of questions that we will ask you now. I want to say 

this will probably go for another 15 or 20 minutes, and then we 

will start with the second panel to give them notice. I have quite 

a few questions, and I know that Senator Snowe does as well. 

I would like to call your attention, all of you, to one of my favorite charts. 

[The information follows:] 
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We use it often in this Committee because we like to put a picture with the statement when we talk about opportunities for 

growth for small businesses. Mr. Greene, you hit on this, and 

thank you for highlighting a small company in Homer, Louisiana, 

that is now, because of access to high-speed Internet, able to sell 

products not just in the surrounding northwestern part of Louisiana, Arkansas, or Texas, which would be in previous times, 20 

years ago, her only market possibilities. Today she can sell those 

products in China and in other places that you mentioned. 

This is how few small businesses in America export: 1 percent, 

Mr. Chairman, of our businesses in America, small businesses, are 

exporting, when the bulk of the market of the world lies outside of 

the territory of the United States of America. To export, not only 

do they need ships and trains and trucks and ports, they need communication and they need fast communication to do that. That is 

in large measure what this hearing is about, not just exports, but 

it is interesting to think about when you look to see this jobless recovery where the jobs may come from. Here is a big space, and I 

want you all to address that. Large businesses are exporting 42 

percent. They, of course, have opportunities as well. But this is 

going to be the lifeblood for firms in Maine and firms in Louisiana. 

But, again, they just do not need the highway going to their business. They need the super fast highway of the interstate—I mean 

of the—not just the interstate, but of high-speed broadband. 

So let me ask you again, Mr. Chairman, if you could—and I have 

read a summary of your broadband report which was issued, I 

think the first one in our nation’s history, most comprehensive one, 

2 months ago. Again, could you hit the highlights of how this plan 

is really going to open up opportunities for small business, not just 

to export to other places in the world, but to give them the capacity 

to grow the jobs we desperately and urgently need in this country 

today? 

Mr. GENACHOWSKI. Well, first I would say this is a perfect visualization of one of the huge opportunities if we get broadband policy 

and strategy right in the country, and you look at it, it is not just 

an opportunity, it is a necessity. 

The strategies that we recommend pursuing flow from the challenges that we see with small businesses. One, many small businesses live in areas where they just do not have access to 

broadband at all. There are deployment issues. Second, there are 

digital literacy issues where they do not understand the full benefits of what can be accomplished on broadband. And, third, affordability issues. 

There are a number of steps that we are taking. Some are broad 

steps that will disproportionately benefit small businesses. Some 

are small business targeted steps. So transforming our Universal 

Service Fund to make sure that wired and wireless broadband communications is extended everywhere. So a small business that is in 

a small town getting by has the opportunity to connect to highspeed broadband and whether it is a meat company or a clothing 

company, sell its products to the next town, the next State, to the 

next country. Making sure that mobile broadband is truly available 

everywhere in the country, we have challenges as a country to 

achieve that. Tackling the training and tools issue, and this is 
87 

where I think interagency coordination will become particularly important. The resources at the SBA are something that we focused 

on in the plan, and together with SBA kicked off a program to 

mentor and train small businesses. 

Finally, we have to tackle competition issues that many small 

businesses, and the panel as well, are keeping prices too high and 

choices too few for small businesses in broadband. 

Chair LANDRIEU. Okay. I am going to ask each of you, starting 

with you, Mr. Strickling, to say what comes to your mind as the 

number one strength or one of the important strengths of the plan, 

and also what you see potentially as a weakness relative to small 

business being helped by the Broadband Plan. Just off the top of 

your head, what do you think one of the strengths of the National 

Plan is in that regard, and what are either the shortfalls or weaknesses? 

Mr. STRICKLING. Right. Well, I think the Chairman gave a very 

thorough listing of the opportunities and the recommendations in 

the plan. In terms of reaching small business, I think first and 

foremost probably the most important single issue is the reform of 

the Universal Service Program because that, I think, will provide 

a lasting mechanism to ensure that these facilities get built out to 

all reaches of the country. 

The Recovery Act provided us nearly $5 billion to get started on 

this effort, and the RUS has received an additional $2.5 billion to 

do it. But to succeed long term, to make this happen everywhere 

in the country, we are going to need universal service reform. So 

I would say that is probably the top one in terms of having an impact on small business. 

I have no shortfalls to identify from the plan. I think it is a very 

thorough and complete effort on the part of the FCC, and they 

should be very proud of the work they have done. 

Chair LANDRIEU. Thank you. 

Mr. Adelstein. 

Mr. ADELSTEIN. I also think it is an outstanding plan. A lot of 

efforts went into it. What is really important is that it really sets 

a high goal, 100 megabits per second for 100 million homes, for example, that our rural areas, our small businesses are going to need 

that kind of bandwidth. Other countries, like Korea, have that already to almost every household, and this country finally under 

this administration has taken the leadership in saying we are 

going to do that, too, we are not going to let other countries around 

the world, make sure that their rural populations, that their people 

have access to very high bandwidth and ours do not. So they really 

said that. 

I think the big challenge is—this is not a weakness, but there 

are a lot of issues in front of the Commission in dealing with competition policy and universal service policy and fleshing that out I 

think is something that this Commission under this able leadership 

is very able to do. There is a great deal of work yet ahead. We have 

set a brilliant blueprint, and now it is where the rubber meets the 

road as how do you translate that into new policy. 

Chair LANDRIEU. Ms. Walthall. 

Ms. WALTHALL. Chair, it is usually our small business providers 

that provide this access in the rural areas, and so we have got to 
88 

ensure that there is really a level playing field for the small business providers. 

Chair LANDRIEU. Mr. Greene. 

Mr. GREENE. From SBA’s perspective, I think a critical component of the plan that the FCC got right is that, in addition to getting the access, the importance of the training and the digital literacy to reach out to the small businesses to train them in how to 

take advantage. The FCC’s focus on that I think was critical, and 

from our perspective our ability to leverage our footprint via all our 

resource partners to help train the small businesses is spot on. 

Beyond that, the administration as a whole, and SBA as well, is 

looking to say how do we use the report as a starting point to develop more broadly a perspective on additional ways that we can 

also serve our respective missions within the context of the 

Broadband Plan. 

Chair LANDRIEU. Okay. I am going to recognize Senator Snowe, 

and then we will come back for a second round of questioning, because I think it is important. There are a few more that I want to 

ask. But, you know, as Senator Snowe and I reviewed the budget 

for the SBA as proposed by the administration, we are both recommending—while we are proud that the administration has supported a more robust budget than in years past, and this agency 

was weakened considerably because of past budgets, we both are 

recommending somewhere between $50 million and $100 million in 

addition. But it reminds me when I think about—when you say the 

footprint, think about a pair of shoes without shoelaces. You cannot 

run very fast in them. 

And so when I think about the footprint of the SBA, I hope we 

are spending a little bit of money purchasing those laces necessary 

to get that footprint really moving when it comes to broadband. 

And, yes, we have small business centers out there, we have minority business centers, we have SCORE chapters. We have the banks 

themselves, 5,000 banks that give technical assistance. You know, 

there are about 1,200 lenders but 5,000 community banks in this 

country, not to mention credit unions, et cetera. That is where 

small businesses go to get capital. We need to think about that 

footprint and getting access to high-speed Internet and technology, 

closing that digital divide. 

Senator Snowe. 

Senator SNOWE. Thank you, Madam Chair, and I thank all of you 

for being here today. I think it is critical to have the collaboration 

that is represented here today among all the agencies, and I think, 

along with the FCC spearheading the whole effort to create a national plan for broadband deployment, without a doubt this is the 

way it is going to come about, through all of the agencies and departments working in tandem and in concert to get this done, because it is going to be multidimensional. 

It is great to see you here, Administrator Adelstein, for your 

long-time work at the FCC for many years on the E Rate. You 

mentioned Secretary Vilsack. I had the opportunity to speak with 

him yesterday, and I certainly can attest to his advocacy and his 

passion for rebuilding rural America. One essential way of doing 

that is through broadband deployment, he was mentioning to me, 

and I think that is absolutely right. And we have to be concerned 
89 

about what is happening in our rural economies all across this 

country. And, clearly, they need the infrastructure that broadband 

is going to provide for sustaining those economies and making the 

transition that I know many of my small towns in Maine are making and the loss of thousands of manufacturing jobs over the last 

few years. So I commend all of you for working this way in unison, 

because that is what it will require. 

Chairman Genachowski, thank you for your plan and for, I think, 

recognizing how it is going to have to work with other agencies and 

in tandem with SBA. Is it going to be enough in terms of what the 

SBA resources have, for example? I know you talked about 

partnering with SCORE, which is great, but I mentioned Women’s 

Business Center as another example, and the Small Business Development Centers. I think we really do have to use all the resources of SBA to make this possible for small businesses. 

And I know that Administrator Mills was testifying before this 

Committee last week and said that they had the extensive bone 

structure within the SBA, but I am not so sure it is all being utilized in terms of your recommendation in Chapter 13 of your plan. 

Mr. GENACHOWSKI. Well, I can tell you from my experience firsthand, the leadership of the SBA is very focused on this, and they 

really have a two-part challenge. This goes a little bit to the shoelace issue. One is taking advantage of the opportunity to leverage 

existing resources that are all over the country to help small businesses, but there is an earlier challenge which I know that the 

SBA has taken quite seriously, which is training the trainers in the 

new tools and the new technologies. I would not comment on the 

level of resources other than to say that that alone is a very significant challenge, and without the resources to tackle that, it will not 

be possible to leverage the resources that are on the ground that 

have relationships with small businesses across the country. 

So it is an important challenge. I know they are taking it very 

seriously. 

Senator SNOWE. Mr. Greene, why aren’t all the resources, all the 

agencies being used in this regard? 

Mr. GREENE. The plan as discussed is to use all of the resource 

partners. We kicked off the initial event with SCORE, who was 

very excited and moving very quickly, but our fundamental commitment is let us take advantage of all of our resource partners, 

including the Women’s Business Centers, who just signed up for a 

comparable program in the SBDCs as well. 

On the resource issue, we do agree that there is an important opportunity to train the trainers. Additional resources will be required to do this in a fully effective way. In their Broadband Plan, 

the FCC made a specific recommendation on the budget to do that. 

We are reviewing that, and we do not have a perspective on whether that is the right number yet or not, but we do think a commitment to this area will require additional resources to our resource 

partners. 

Senator SNOWE. Well, I think it would be important to know exactly what it will require from SBA so that we do not learn a year 

from now or 2 years from now. I say that because there is so much 

potential opportunity, and I still think that small business is being 

underutilized in this economic recovery. That is an understate-
90 

ment, frankly, in terms of what is not happening that should be 

happening to leverage small business. 

I see this in this regard when it comes to broadband deployment 

and technological innovation. There is a widening gap. They mentioned this in a release back in January, and it is astonishing. The 

U.S. trade gap is widening in advanced technologies. In one of the 

papers that was released, it is more than $55 billion calculated 

over a year period. It is widening in terms of how much we are importing versus what we are exporting in terms of advanced technology. And the incubation for that development of technology is 

going to occur with small businesses, so we are not doing enough 

R&D, we are not nurturing them. 

So what can we do in that regard? Is anybody able to answer 

that question? 

Mr. GENACHOWSKI. Well, I would say, Senator, this is one of the 

driving reasons for objectives of the plan to make sure that the 

U.S. is the world leader in innovation in the 21st century so that 

both small and large businesses are creating the technologies here, 

marketing them, distributing them, and that that continue. A 

world-class broadband infrastructure available everywhere is necessary for that, and it is a serious subject of concern and a driver 

of the Broadband Plan. 

Senator SNOWE. So what can we do about that? I mean, that is 

a huge gap and a missed opportunity. 

Mr. GENACHOWSKI. I think there are many things to do, but 

transforming USF so that it supports broadband everywhere at 

high speeds; second, unleashing spectrum so that we lead the world 

in mobile. Mobile broadband will be a huge platform for economic 

growth in the 21st century for innovation here, technological innovation that we can then export, and a second major objective that 

we need to pursue. 

Senator SNOWE. I would be interested in having a timeline about 

when this should all be happening, which is in conjunction also 

with the grants that are issued by both of your departments, Administrator Adelstein and Administrator Strickling. Why can’t we 

have a timetable for all this in terms of broadband penetration, not 

only for broadband but obviously for many businesses that are indicating they may not even try to get high-speed Internet, for example, because they use it primarily for basic applications. 

Could we have some sort of timetable that we envision this will 

happen throughout this country in terms of providing this deployment across the country? 

Mr. GENACHOWSKI. Yes. We have set in the plan 5- and 10-year 

goals for the country, and one of our next steps is to fill out all the 

milestones along the way, so we look forward to working with you. 

Senator SNOWE. Is that with respect to spectrum allocation or is 

that with everything? 

Mr. GENACHOWSKI. Yes, and, in fact, in the action plan that we 

released a couple of weeks ago, we outlined exactly the steps that 

we will take in the next 12 months to move all of these forward. 

So we would be happy to follow up with you on that. 

Senator SNOWE. Thank you. 

Chair LANDRIEU. Thank you, Senator Snowe. 
91 

I want to recognize Senator Cantwell, who has joined us, in a 

minute and has been a great leader on this issue. But before I recognize her, I just want to submit to the record prices broadband 

per month to some of our competitors around the world. Sweden is 

about $10.80; Denmark is about $11 a month; the U.S. is $15. We 

are in the ball park, still high, and we are fourth in the world. But 

this is what is worrisome. The penetration of households—I do not 

have penetration of businesses, but we are going to get that hopefully and submit it for the record as well. The U.S. ranks not first, 

not 10th, but 20th. We only have 60-percent penetration in households. South Korea, which ranks first, has 95 percent. 

But this is really startling. In speed, megabytes per seconds, 

Japan is 94 megabytes per second, number one. The U.S. is 14th, 

but at only 9 megabytes per second. So we have a tremendous challenge before this country, and I know there are jurisdictional issues 

and controversial issues. We see these hearings playing out in the 

Commerce Committee over the last several years. But this Committee is going to stay focused like a laser on small businesses in 

America and their access to affordable, high-speed connections, 

which is not just their safety net but our Nation’s safety net and 

line out of this recession. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Madam Chair, and thank you for 

holding this important hearing, and the impact on small businesses, and to Senator Snowe for her attendance because it really 

is an important issue for small business and for rural communities. 

And we have many parts of the State of Washington that have invested in broadband delivery as an economic strategy. We have 

beautiful places to live, and now that people can live there and get 

great access, they can operate many different kinds of businesses. 

So it has been a very successful strategy. 

I wanted to ask Chairman Genachowski if—you know, the FCC 

recently eliminated the home roaming exclusion from mobile voice 

and is looking at whether to extend that obligation to data services 

such as the mobile broadband and Internet services. So with the 

coming of 4G services, you know, the intensity of data usage by 

small business is really going to be a big issue. I mean, they have 

to have continuity. It is essential that the networks relied on by 

small business have that ever present seamless coverage or else, 

you know, there will not be able to locate into these areas. 

So how will this impact the small businesses, the recent decision? 

Mr. GENACHOWSKI. Well, there were two parts to the decision. I 

completely agree with your premise that consumers, whether individual consumers or small businesses, expect to have seamless 

connectivity around the country, whether it is voice or data. As you 

said, we removed that particular exemption in connection with 

voice. At the same time, we launched the proceeding to determine 

rules on broadband data roaming with the goals of making sure 

that American consumers and small businesses can have seamless 

connectivity and at the same time incentivizing the maximum possible investment in the networks and the fastest possible deployment. 

So that proceeding is under way, and we are taking public comment. 
92 

Senator CANTWELL. How do you think some of the revenue that 

was part of the American Recovery Act will teach us about some 

of these deployments in rural communities? Do you think that is 

going to give us good data and information about the demands and 

needs? 

Mr. GENACHOWSKI. I think it should give us very helpful information. To the Chair’s point, it is one of the reasons—and Senator 

Snowe’s point—for ongoing collaboration, information sharing. The 

nature of this technology and the nature of our plan is such that 

the technology and the plan will always have to change to accommodate what we learn, how technology changes. We approach it in 

that spirit, and we will continue to have very strong collaboration 

to look at what is working, what is not. 

I would say one other thing. In the plan, there are a number of 

areas where we suggest pilot projects. We reached a level of certainty that it makes sense to invest and experiment, but we do not 

know enough yet to commit to a large program. An example is 

rural health care for—sorry, telehealth for rural clinics and hospitals around the country. We have a small program at the FCC. 

We are going to expand it smartly with a series of pilot projects 

around the country. We are going to learn from it. Our hope is that 

it will work, and we will be able to come and say we need to invest 

more in this program to make sure that rural doctors and clinics 

and hospitals are connected so that we can get the full benefits everywhere of electronic health care records, the cost-savings benefits 

and the improved health care benefits. 

Senator CANTWELL. I definitely appreciate that. You know, we 

have—because we have Inland Northwest already doing this telemedicine—unbelievable results because of the large geographic 

area that people have to serve and the lack of physicians or pharmacists or what have you to serve them, have done, you know, an 

amazing jobs, and we have seen how these infrastructure investments—again, because we have been able to play off of the Bonneville Power Administration’s redundancy and backbone into solving 

some of these issues. 

I think the results are there, and so I hope that we are able to 

take those results, Madam Chair, because, you know—I do not 

know—I have been here 10 years now, and it seems that we are 

always running up against basic business models that do not just— 

that just do not quite get us there. And yet we know for sure the 

economic return on this investment is huge. 

I appreciate the Chair having this hearing, and I hope that we 

can continue to push ideas that will allow for this deployment to 

take place in a much more rapid fashion. So I thank Chair. 

Chair LANDRIEU. Thank you, Senator Cantwell. 

Senator Shaheen you are next, and then we are going to move 

to the second panel. Thank you all very much. 

Senator SHAHEEN. Thank you, Madam Chair, and I will be very 

brief. And if you have already responded to this question, I apologize, but one of the things that we have heard from some folks in 

New Hampshire about the funds that were in the Recovery Act 

that are going out now across the country in grants is that there 

has been duplication from the RUS and NTIA for some of those 

grant awards and that they have funded projects that are com-
93 

peting with providers who are already on the ground. Does anybody want to comment on—I suppose that would be you, Mr. 

Strickling. 

Mr. STRICKLING. I think that we have heard the criticism at 

Commerce, and I think Administrator Adelstein probably has 

heard it at RUS. 

Speaking for our program, I think that those are not serious objections. Our projects are designed to reach unserved and underserved parts of the country. We focus on where we can bring the 

most benefits. An underserved area by definition is an area that 

has a certain amount of service, but we look to see how widespread 

the service is, what the speeds are of the service. Many places that 

may see fairly slow consumer speeds may not be providing the 

high-speed Internet that the anchor institutions like the schools 

and the hospitals and the Government facilities need. So we are focused on projects that will bring additional benefits to a given area 

based on what is there today. 

The idea of funding competitors, though, that is not the business 

we are in. The facilities that we are funding at the Department of 

Commerce are facilities that are open network facilities. They are 

available to anyone. We also have focused on what we call comprehensive community projects where we are really trying to bring 

what we call the middle mile, the high-speed pipe that may serve 

a community or a series of communities. Our projects do not deliver 

too many services directly to homes and businesses. We are leaving 

that to private industry to do. 

But what happens is when we put that high-speed facility into 

a community, because of the open network nature of our projects, 

it is available to everybody, including the incumbent. So we are reducing costs potentially not just for the person who receives our 

grant money, but also for anybody who would already provide service in an area or who might wish to provide service in an area because there are these interconnection and non-discrimination obligations that make that Government-funded pipe available to all 

providers. And in that sense, we think that we are bringing a benefit certainly to the community, but also to every provider who 

might serve that community, whether it be an existing incumbent 

or a new entrant. 

Senator SHAHEEN. Mr. Adelstein, do you want to respond also? 

And maybe you could also in your response—and, I do not know, 

Mr. Strickling, if you want to add to this. But as we are thinking 

about doing this in the future, funding these kinds of grants, 

should we be thinking about better coordinating how that is done 

and maybe instead of doing it through both agencies, think about 

how to put some sort of a working group together or maybe giving 

responsibility for one agency to fund those kinds of projects? 

Mr. ADELSTEIN. Well, on that question I think we are very closely coordinated now. We work almost daily—actually, we do work 

daily on our staff level, and we talk almost daily about these programs. We very clearly distinguish between our program and the 

NTIA program in this second round, where we are doing last mile, 

they are doing primarily the comprehensive community middle 

mile. We have separate NOFAs. So I think, you know, there is no 

overlap. We have not overlapped on one grant application. We are 
94 

very careful to ensure that we go to certain places, they go to others, so there has not been one example of any overlap between us. 

Now, in terms of the overbuild issue, maybe the best way—I 

think that Secretary Strickling laid it out very clearly, but a good 

way to illustrate that is what is happening in your State of New 

Hampshire, something you are familiar with. We are very committed to going to the most unserved remote parts of the country, 

and New Hampshire is no exception. Our grant in New Hampshire 

to Bretton Woods, which you are very familiar with, is more than 

50 miles away from any city or town, a very remote area in northern New Hampshire, in the White Mountains, that today does not 

have any broadband, according to the broadband service definition 

that we have, the kind of broadband speeds that we need. And here 

Bretton Woods came to us, we provided a grant so they can provide 

fiber there. 

Now this, as you know, is a very devastated part of New Hampshire with relatively low incomes, high unemployment for the 

State—the highest unemployment in the State, probably, because 

the paper mills shut down. What are the jobs of the future? I 

mean, there is tourism, there is second homes. But somebody who 

is coming to a second home in that beautiful part of New Hampshire cannot stay there, if they are from New York City, if they do 

not have broadband. So how are we going to bring money into that 

community for those service jobs, for everybody building it? We are 

creating jobs there to an area that does not have any broadband 

today. They are going to have broadband second to none with fiber 

to the home, more than 20 megabits per second in an unserved 

part of New Hampshire. And we have tried to focus on those areas 

throughout the country and to go to those areas first. Some areas 

that are underserved by definition there might be some pockets of 

service there, but we are trying to bring them all up and really 

bridge the digital divide between the more populated areas and the 

less populated areas, and that involves a comprehensive approach 

to funding the entire service area. 

Senator SHAHEEN. Thank you. 

Thank you, Madam Chair. 

Chair LANDRIEU. Thank you. You all have been very good, and 

let us move to the second panel. Again, thank you all for your testimony. We appreciate it. 

As the second panel comes forward, just to save time, I am going 

to just go forward with their introductions as they are taking their 

seats. Again, thank you all so very much. 

Our first panelist will be Senator Gordon Smith, who has been 

welcomed here by many of his former colleagues. He now represents the National Association of Broadcasters as President and 

CEO. Welcome back, Senator. 

Next is former Congressman Steve Largent. He served in the 

House of Representatives for any number of terms between 1994 

and 2001. He is now President of CTIA–The Wireless Association 

and brings a little different perspective, of course, than Senator 

Gordon Smith. We are happy to have him. 

We have from Lafayette, Louisiana, Terry Huval at my request 

to testify today. He is Director of Lafayette Utilities Service. In addition, Mr. Huval speaks fluent French and requested that we con-
95 

duct the hearing in French. On all of our behalf, I declined so it 

will be Mr. Huval in English today. We are thrilled to have you. 

Next we have Mr. Tom Gerke, Executive Vice Chairman of 

CenturyLink. Mr. Gerke brings years of industry and legal expertise to this company. He was in private practice before 

CenturyLink. He is headquartered in Monroe, Louisiana. We are 

extremely proud of this company as it has grown and expanded, 

and most recently signed an agreement to purchase Qwest, which 

puts them in the top among industry leaders in this country. 

And, lastly, we have Steve Friedman, who is currently Chief Operating Officer for Wave Broadband, a Kirkland, Washington-based 

company that serves more than 170,000 customers located in communities in the states of Washington, Oregon, and California. 

I think we have had our change-out conducted, and we are so 

happy to have everyone here on the second panel. Senator Smith, 

we will begin with you. 

STATEMENT OF HON. GORDON H. SMITH, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, NATIONAL ASSOCIATION OF 

BROADCASTERS 

Mr. SMITH. Thank you, Madam Chair. In the interest of time and 

in respect of your schedule, I will put my extended remarks in the 

record and speak briefly to a few points. 

Chair LANDRIEU. Thank you. Without objection. 

Mr. SMITH. Madam Chair, local broadcasters bring together communities with information that entertains them, information that 

often is life-saving. From Lake Charles, Louisiana, to Bangor, 

Maine, local broadcasters take great pride in providing America’s 

families with local news, weather, sports, emergency information, 

and other highly valued programming. Broadcasters strongly support expanding access to high-speed broadband to every American 

and believe we can play an important role in helping to achieve 

that national goal. 

Due to the complex nature of this plan, I believe that Congress 

should have and take the time to fully scrutinize and dissect its 

recommendations. I thank Senator Snowe and Senator Kerry for 

the introduction of S. 649, the spectrum inventory legislation. It is 

imperative that we get all the facts so that we do this right. 

Local broadcasters are small businesses, and they rely on other 

small businesses for advertising and for serving your constituents. 

We must not jeopardize this fragile communications ecosystem 

with policy solutions that jeopardize this. 

It is important to remember, Senators, that we are not even a 

year into the digital transition. And at the direction of Congress, 

local broadcasters successfully transitioned to digital TV, giving 

back more than a quarter of the spectrum that TV broadcasting 

had. The Government spent nearly $3 billion getting converter 

boxes. Broadcasters have spent $15 billion making the digital transition. The American consumers have spent untold billion dollars 

getting new digital TVs. Local broadcasters are now offering 

hyperlocal, multi-casting programs in high definition, and they look 

forward to providing consumers with mobile digital television so 

you can see live stuff right here on your phone, and 3–D television 
96 

in the future. That is the promise that was made to the broadcasting spectrum and to American consumers. 

I thank you, Chairwoman Landrieu, for your help in facilitating 

local broadcasters as first responders. In times of disasters, local 

broadcasters run towards the problem, not away from it. We stayed 

on the air during the Gulf Coast hurricanes, and when Washington 

was blanketed by two back-to-back blizzards, essential emergency 

information was supplied to the residents of this national capital 

area. And in a day of terrorism, it is important to recognize that 

broadcasting is the one signal that literally could be the difference 

of life and death for people confronted with terrorist actions. 

I would like to put on the record, Madam Chair, how much 

broadcasters appreciated Chairman Genachowski coming to the 

NAB show in Las Vegas and stating that this Broadband Plan 

would never evolve from voluntary to compulsory. I would also like 

to say that, contrary to a report in the trades, the Chairman and 

I never reached any deal. What he said is what he said, and we 

are prepared to work with him. 

On the issue of voluntary, however, there is one piece of the plan 

that is of great concern to broadcasters, and that is, the spectrum 

fees that are proposed for broadcasters. We are concerned that this 

is a mechanism to force broadcasters, small businesses, especially 

who are small business broadcasters, that will force them off of the 

air. Make no mistake. Such a punitive measure, such a fee would 

be a devastating blow to small businesses that I represent in the 

broadcast industry and the communities that they serve and who 

serve your constituents. 

While not a part of the Broadband Plan, I cannot help but say 

that Congress should also resist shifting the scales of the fair market-based system of retransmission consent. The FCC should encourage the deployment of fixed wireless broadband services in 

rural areas using empty broadcast channels. If done the right way, 

this service has the ability to greatly increase rural penetration for 

hard-to-reach constituencies without taking spectrum from broadcasting. The NAB is pleased to be part of the discussion about the 

future of American communications, and simply put, any notion 

that we are looking at a world of broadband versus broadcast is 

false. It is a false choice. There are ways that we can help, and 

there are certainly ways that the broadband users today can build 

out their networks without compromising the essential service that 

broadcasters provide to the American people. 

[The prepared statement of Mr. Smith follows:] 
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Chair LANDRIEU. Thank you very much, and that was an excellent statement. Let me ask you all if you could try to keep your 

comments to about 3 minutes each. We will submit your entire 

statement for the record, and then Senator Snowe and I both have 

a series of questions along with Senator Shaheen, and I am going 

to ask Senator Snowe to go first for the questions because she has 

got a 12 o’clock meeting and I have got a little bit more time. 

Mr. Largent. Congressman. 

STATEMENT OF HON. STEVE LARGENT, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, CTIA–THE WIRELESS ASSOCIATION 

Mr. LARGENT. On behalf of CTIA, I want to thank Chairwoman 

Landrieu and Ranking Member Snowe and all the Senators on the 

Committee for the opportunity to participate in today’s hearing on 

the National Broadband Plan and its impact on small business. 

CTIA’s members include wireless carriers, network equipment 

builders, handset manufacturers, integrators, application developers, each of which contributes to making the United States the 

most competitive, innovative wireless marketplace in the world. 

Large or small, CTIA’s members are focused intensely on helping 

to provide wireless services and products that benefit every American consumer and business. 

CTIA’s membership believes that the National Broadband Plan 

represents a significant opportunity to expand broadband Internet 

access to reach all Americans. This is especially true with respect 

to the spectrum and the need to address what the FCC Chairman 

has termed a ‘‘looming spectrum crisis.’’ Thus, we are excited by 

the plan’s intensive focus on the need to make additional spectrum 

available for mobile broadband services. Accomplishing that goal 

quickly is critical. 

As the plan’s author, Blair Levin, said last week, ‘‘if we get the 

implementation of the mobile piece of the plan right, we can precipitate a massive private investment boom and build a world-leading broadband ecosystem. And if we get it wrong, we will cause our 

economy to suffer.’’ We agree with Blair, and we are focused on 

helping to get it right. 

With adequate spectrum and continued significant private investment and innovation, we can ensure that every American has 

access to broadband at home, at work, at school, and in our public 

institutions. We believe that continued evolution towards always 

on, always available, high-speed wireless broadband has profound 

implications for every segment of our society, including America’s 

small businesses. 

I am going to skip over some of my statement here and submit 

it for the record. But implementation of the spectrum recommendations in the plan, aided by the enactment of Senator Kerry and 

Snowe’s Radio Spectrum Inventory Act will enable all of these companies and others to grow, while also helping to promote continued 

U.S. leadership in the wireless industry. 

Beyond addressing the looming spectrum crisis, policymakers can 

enhance small businesses’ ability to succeed by reforming the Tax 

Code to better reflect the realities of our information-driven economy. Mobile devices are no longer a luxury for business; they are 
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a necessity. The Tax Code must reflect this shift. And Senator 

Kerry’s MOBILE Cell Phone Act would make a much needed 

change in the Tax Code by eliminating the outdated recordkeeping 

obligations devised in a day and age when the wireless device was 

called a car phone and a minute of air time cost an order of magnitude more than a minute of use does today. Requiring every person with an employer-provided device to comply with detailed callby-call recordkeeping requirements might have made sense in the 

late 1980s, but it sure does not make sense today. 

I will just say the wireless industry looks forward to working 

with Congress, the FCC, and other stakeholders to ensure that 

every American consumer and business has access to robust mobile 

broadband service. By adopting the National Broadband Plan’s 

spectrum recommendations, updating our tax policies, and continuing a strong commitment to encouraging private investment, 

we can make that vision a reality. 

I appreciate the opportunity to share these thoughts, and I look 

forward to your questions. 

[The prepared statement of Mr. Largent follows:] 
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Chair LANDRIEU. Thank you very much. 

Mr. Huval. 

STATEMENT OF TERRY HUVAL, DIRECTOR OF UTILITIES, 

LAFAYETTE CITY-PARISH CONSOLIDATED GOVERNMENT 

Mr. HUVAL. Bonjour, Madame La Presidente. I could not pass it 

up. ‘‘Madam Chair’’ in French is ‘‘Madame’’—— 

[Laughter.] 

Chair LANDRIEU. I told you he would do it if I did not—— 

Mr. HUVAL. I thought you would enjoy that. I also want to thank 

Ranking Member Snowe. In the Northeast, of course, we share a 

very common heritage between—from my ancestors. 

My name is Terry Huval. I am the Director of Utilities for the 

Lafayette utility system, and I had some prepared remarks, but in 

consideration of time and what I have heard so far, I have something to share with you. 

The things that were being espoused during the first panel today 

are what we are doing in Lafayette today. We are providing 100 

megabits per second of connectivity to our entire city. We do not 

discriminate between one side of town or the other. Everyone, the 

poor and the rich and the small businesses, all have access to the 

system. And we did not do it with $1 of Federal Government funds, 

State government funds, or local taxes. We did it because people 

in our community said they are willing to allow us to borrow the 

money to move forward with this initiative. And you would think 

that that would be, you know, a pretty easy place for us to go because we are not borrowing money—not having to get tax dollars. 

But I will tell you, the challenge has been great. 

The 1996 Telecommunications Act provided language that said 

that any entity could provide telecommunications services. Local 

governments perceived that as meaning that they could provide 

that type of service. We found out later on that through cases that 

went to the U.S. Supreme Court, a State could prevent or adjust 

the ability for local governments to get into this kind of business. 

And so in Louisiana, the Local Fair Competition Act, Local Government Fair Competition Act was passed in 2004, which, despite its 

label—its label has been anything but—excuse me, I have a cold— 

has been anything but a fair act. It provides numerous costs and 

challenges for us to overcome to provide these services to our customers, and continued intimidation by Cox Communications and 

Bell South over the years to try to make it more difficult and more 

costly for us to provide these services. 

We believe that the simple measure of trying to get complete 

shackles off of local governments to provide these services will have 

the greatest impact on getting broadband out, because then you 

will have a truly competitive option that companies who decide not 

to make those investments, even though they are requested to. In 

Lafayette, we asked the cable company—the telephone company to 

provide these services. They said no, Lafayette was too small, they 

were not going to make that kind of investment. But yet when we 

try and do it ourselves, they oppose us. 

So if you have local governments able to provide these kinds of 

services, then the private companies will get it. They will either de-
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cide they are going to do it, or they are going to allow local governments to provide the services. 

We could do this ourselves. Since 1896, Lafayette and many 

other public power systems have built and operated complex electrical utility systems, and we can do this. And we are doing it already in Lafayette. 

My written testimony has much more complete stories about 

what we went through, but suffice it to say that our statement is— 

we have the solution to this problem. 

[The prepared statement of Mr. Huval follows:] 
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Chair LANDRIEU. Thank you very much, and I am glad that you 

are here to testify, and I wanted you to be because I know this is 

a very controversial issue that has come before the Commerce Department particularly. I think these views are important to be 

heard by small businesses that may be in towns that have municipal providers as this debate goes on to have a voice at the table 

to see how we work through it. We are extremely proud, actually 

I am, of Lafayette for being one of the first parishes in the whole 

country to have virtually universal high-speed service. How you got 

there is a different subject, but the results are, you know, very impressive, and I want to thank you for being here. 

Mr. Gerke. 

STATEMENT OF THOMAS A. GERKE, EXECUTIVE VICE 

CHAIRMAN, CENTURYLINK 

Mr. GERKE. Good morning, Madam Chair, Ranking Member 

Snowe, and members of the Committee. Thanks for the opportunity 

to testify today on these Federal efforts to expand broadband across 

America for all of our small businesses. 

CenturyLink is one of the nation’s leading rural providers of 

voice, broadband, data, and video services with about 7.2 million 

customers spread across 33 States. Small businesses and entrepreneurs are an important part of our past, our present, and our 

future. In fact, CenturyLink began as a small business in rural 

northeast Louisiana. In 1930, our founders, Clarke and Marie Williams, bought a small family telephone business for $500, with just 

75 paid subscribers and a switchboard set up in their front parlor. 

Today, of course, we have a national footprint operating in hundreds of rural communities, but our core values and our commitment to service, including service to small businesses, has not 

wavered. 

CenturyLink serves over 414,000 small businesses, including 

nearly 12,000 in Louisiana alone. We understand how important 

broadband is to small businesses, especially in rural communities, 

where it is a central component of economic development and 

reach. 

As just one example, a small tree nursery that we serve in rural 

central Louisiana was able to extend its sales from a purely local 

market into a much larger multi-state region, growing the business, bringing economic development and jobs to the community. 

Just as traditional phone service was critical to linking to the 

rest of the world, in today’s environment broadband is now the key 

enabler for communications, entertainment, and commerce. 

The National Broadband Plan sets out an important framework 

for reforming Federal policies and regulations that impact both the 

availability and affordability of broadband. We appreciate Chair 

Landrieu’s leadership in highlighting the need for the plan to focus 

on small businesses, especially in rural areas. 

For small businesses in rural communities, perhaps the most important recommendation in the National Broadband Plan is to reform universal service and intercarrier compensation. Both issues 

have a tremendous impact on the economic case for bringing 

broadband to rural communities, especially because all telecom providers rely on rural carriers, carriers of last resort like 
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CenturyLink, to carry voice and data traffic in the sparsely populated areas where cable and wireless competitors often do not 

serve. 

Universal service and intercarrier comp payments deliver the 

support necessary for carriers to provide service quality and rates 

comparable to those in large urban areas. This is one of the key 

mechanisms that helps keep broadband and other services affordable for small businesses. 

As the nation focuses on broadband deployment, we believe our 

fiber-rich core wireline networks offer the best, fastest, and most 

economical hope to meet the rapidly increasing demands of small 

businesses. As the FCC considers its open Internet proceedings, we 

urge its leaders to work closely with broadband providers and companies that have committed to continue providing a positive Internet experience. We urge the FCC and Congress to avoid a heavyhanded regulatory approach that would impose legacy voice telephone regulations on modern networks. 

In summary, I am pleased to share with you last week our announcement of the actual of Qwest. We believe this combination is 

an important, positive transaction not only for consumers but also 

for the small businesses. The combined networks offer incredible 

potential to accelerate deployment and improve broadband services. 

Our goal is to provide the highest quality and affordable voice and 

broadband services for our customers. We trust the members of 

this Committee and the FCC will see the strong public interest 

benefits of this merger, its great potential, and join us in gaining 

the necessary state and federal approvals as promptly as possible. 

We look forward to your questions. 

[The prepared statement of Mr. Gerke follows:] 
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Chair LANDRIEU. Thank you. 

Mr. Friedman. 

STATEMENT OF STEVE FRIEDMAN, CHIEF OPERATING OFFICER OF WAVE BROADBAND AND CHAIRMAN, AMERICAN 

CABLE ASSOCIATION 

Mr. FRIEDMAN. Thank you. As an association representing small 

and medium-sized independent cable operators, we bring a unique 

perspective on the broadband marketplace. Our members have historically served communities where the ‘‘big guys’’ find it unattractive to serve, ranging from rural parishes in Louisiana to more 

urban and suburban markets in all 50 States. 

Today cable offers access to high-speed broadband service to 95 

percent of the country, the vast majority of which receives speeds 

of at least three megabits per second, faster than most DSL providers. 

As a result, small businesses are increasingly turning to cable for 

broadband. Cable is the best technology in the ground today to 

meet the administration’s goals of delivering 100 meg broadband 

speed to all. With the advent of DOCSIS 3.0, cable operators can 

deliver these speeds over their existing cable network without the 

need for Government funding. 

However, still has an important role to play. ACA recommends 

that Congress and the FCC address four items. 

First, many focus on the need to upgrade last-mile infrastructure, the final network connection to the user; however, more attention needs to be paid to the middle mile, that part of the network that runs between a broadband provider’s system and the 

Internet backbone. For ACA members, the middle-mile links available are often high-cost, low-capacity pipes creating a bottleneck 

that slows data speeds to our customers. ACA members have considered constructing their own middle-mile links, but the construction is cost prohibitive. We are pleased by the NTIA’s focus on the 

middle mile in the second round and the FCC’s focus on the issue 

in the National Broadband Plan. The key now is to ensure the FCC 

acts quickly on its recommendations. 

Second, for a smaller cable operator with limited network capacity to provide DOCSIS 3.0 speeds, the provider must come up with 

additional bandwidth. For many operators, the most cost-effective 

way of doing this is by transitioning analog channels to digital. To 

ensure that cable operators’ subscribers do not lose access to the 

new digital programming, the cable operator must provide a digital 

set-top box for each of its subscribers’ TVs. ACA is pleased that the 

FCC recently recognized the benefits of allowing smaller operators 

to purchase and deploy low-cost, low-functionality HD set-top 

boxes. This modification will free up channel capacity needed to 

offer customers broadband speeds of up to 100—— 

Chair LANDRIEU. If you could just wrap up in 30 seconds. 

Mr. FRIEDMAN. Okay. Finally, we support the administration’s 

goals of providing more broadband services to consumers in populated areas of the country. However, we are disappointed that RUS 

and NTIA have funded projects in the first round that would overbuild ACA members and others who have already invested private 

capital to deploy broadband in their communities. 
151 

On behalf of ACA, we appreciate what Congress, the FCC, and 

the funding agencies are doing to support broadband expansion and 

growth in smaller markets and rural areas. 

Thank you for your time and attention, and I welcome your questions. 

[The prepared statement of Mr. Friedman follows:] 
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Chair LANDRIEU. Thank you. 

Senator Snowe. 

Senator SNOWE. Thank you. Thank you all very much for your 

excellent testimony on what is a very complex subject, depending 

on your perspective and vantage points, so it is important for us 

to get it right as we continue to spend the billions of dollars that 

are already embedded in the stimulus plan, for example, and going 

forward, the FCC’s National Broadband Plan. 

Senator Smith, I will start with you and then move to Congressman Largent. On the question of spectrum allocation—because I 

think that is obviously a crucial issue that unfortunately I did not 

get to this morning with the FCC Chairman. Obviously, your association prefers it to be a voluntary approach, so exactly how do you 

think we should implement the spectrum allocation in terms of 

using vacant broadcast channels? Is that one way of being able to 

accomplish that goal? Are there innovative ways of leveraging 

many possibilities without going the route that is being proposed 

and suggested under the FCC’s plan? 

Mr. SMITH. Senator Snowe, one of two things can happen to 

make sure this does not become compulsory. But first it has to be 

recognized that broadcasting is a highly efficient use of spectrum. 

It is one to everyone. Broadband is one to one, and it is spectrum 

hogging. To utilize their space more effectively, they just simply 

have to invest the capital to make these connections, these lastmile connections. That can be done without invading the essential 

services of broadcasting to the American people and take away the 

promise of multi-casting, HD, 3–D, all of these things that we think 

are valuable to the American people still so it is not a choice of one 

or the other. So they can either build it out and use their space 

more effectively, or give broadcasters your blessing to utilize that 

space and lease it to those who want to be in the broadband business. Either way, that will satisfy most of the land mass of America. 

Where you run into problems is in big urban centers where there 

is a shortage. 

Senator SNOWE. And do you think the spectrum inventory legislation that Senator Kerry and I have introduced will be one way 

of determining how the existing spectrum is being used and by 

whom and so forth? Do you think that should be first or is it possible to have it occur simultaneously? It is going to take multiple 

years and also determine how we should reallocate. 

Mr. SMITH. Well, given the importance of broadband and broadcast to the American people, it does seem to me that the inventory 

ought to occur first so that you decisionmakers in the Congress 

have actually the facts as to what is being used and what is not, 

what space is being occupied and serving the American people and 

what could be obtained. 

But, again, the broadband space, if they invest the capital, triple 

the number of the towers, you are going to fix most of the problem 

that is out there. 

Senator SNOWE. Congressman Largent, to this point, how much 

spectrum does your membership believe you need? 

Mr. LARGENT. Well, we made a filing at the FCC for 800 megahertz, and that was based upon some information that we had got-
162 

ten, what other countries are doing, how they are allocating spectrum for wireless purposes in their space. And the interesting thing 

is that in most other countries, they do not have nearly the number 

of competitors that we have in this country. In the wireless industry, there is a lot of competition, and so that divides up the spectrum even more so. 

But we think that there is spectrum that is available, you know, 

whether it is broadcasters or satellite or other spectrum, it has already been lined up to be auctioned. But we are just saying that 

we need the spectrum brought to auction as quickly as possible. 

The thing is that the last two auctions that have occurred at the 

FCC in the last 3 or 4 years, that spectrum took somewhere between 10 and 14 years from the time it was identified to the time 

it was auctioned. And we cannot afford to wait for spectrum to be 

auctioned, you know, 10 or 14 years in order to keep up with the 

pace of competition that we have in this country. 

Senator SNOWE. Well, do you think that it is going to be important for all industries to be working together to determine how best 

to allocate or to use it because there are so many users of the spectrum with specific reference to Federal agencies, for example? Is it 

possible that all the industries can work together on this in partnership with the FCC, and obviously Congress being a catalyst in 

this regard? Because I wonder if we have really a true understanding of how much allocation is really necessary. You mentioned 

800, but it could be 500—I know FCC has proposed 500 over 10 

years and 300 within 5 years. 

Mr. LARGENT. Yes, I think the spectrum inventory bill is a great 

step in the right direction. We supported the spectrum inventory 

bill, and we do today. But I think that gives us a good start on 

knowing where the spectrum is, what is available, what is being 

used, and the potential for the future. 

Senator SNOWE. Thank you. 

Thank you, Madam Chair. 

Chair LANDRIEU. Thank you very much. 

Mr. Gerke, let me start with you. The former panel, Larry 

Strickling from Commerce, responded to a question by one of the 

panelists—I think it was Senator Shaheen—that said we have gotten some pushback in our states as these grants have gone out over 

the issue of potentially unfair competition between the Government 

funding certain projects in rural or underserved areas and then the 

private sector competing. 

Could you comment from your perspective as now potentially one 

of the largest servers of rural areas, do you see a way forward for 

the Government and the private sector to work together to get this 

job done for America? Or do you think it should be done only by 

the private sector or only by the Government? Is it possible to work 

this partnership in an effective way? And if so, how would you suggest we go forward? 

Mr. GERKE. I think a couple of things on that point. It is a very 

good question. First is I think with the comments that have been 

received by the Administrators, hopefully they have got the right 

level of sensitivity that this project or this funding is not about 

building bridges next to bridges, but bridges for those who cannot 

yet cross the digital divide, and so I think that type of sensitivity. 
163 

We will be working very closely with them, as will many others in 

the industry, to make sure we identify areas of duplication so, 

frankly, with their best intentions, they can avoid those things. 

I think the focus and keeping the focus primarily on the 

unserved and being a little careful not to use underserved definitions that allow you to overbuild in areas where they are there. 

There is a risk of overbuilding and taking anchor institutions from 

fragile business plans in rural America, and if you take the schools 

and the courthouse and a few other things away, the ability to 

serve the farmlands and the truly rural and the most difficult and 

the last to be served can collapse. 

So I think there is definitely a place for funding, but through 

proper sensitivity, to not overbuilding, is understanding the fragile 

economic business model that exists, and it is a keen focus of constantly saying who does not have that bridge yet, you must build 

a single bridge for those folks to cross the divide. 

Chair LANDRIEU. Thank you. I will come back with a second 

question in just a minute, but, Mr. Huval, I know that you all went 

through several years of this debate both in the Louisiana Legislature and then through the court system to finalize basically your 

plan. The FCC is going to be considering potential regulatory either 

barriers, maybe burdens to municipalities to deploy. 

What would your extended comments be for another minute or 

two about what you would like to see either included or not included in that plan? And be as specific as you can. 

Mr. HUVAL. Well, as things stand today in Louisiana, for example, a municipal utility system can choose to expand its assets to 

serve either existing growth or new territories, simply by going to 

its city council, making a case, and having the city council support 

that and moving forward with it. The same opportunity should be 

available for local governments to deploy telecommunications services. 

And so our perspective is a hands-off approach. Let the local governments who are listening to the people on the ground, the business people on the ground, small businesses, the residential customers make those decisions and move forward with it without 

having any of the things that strap you back. 

You know, when we negotiated this Local Government Fair Competition Act, we spoke very candidly with the telephone companies 

and the cable companies at the table during the negotiation as to 

how we would go about doing that. Once the act was passed, they 

all got a severe case of amnesia and started suing us on things that 

we had already agreed upon in principle because the A’s and the 

I’s were not quite exactly what we had previously agreed to in their 

perspective. Ultimately the Supreme Court 3 years later, and $4 

million later, supported our position. But lesser communities would 

have said, ‘‘I give up.’’ And, in fact, no city in Louisiana has tried 

to do what we have done even though the law is there. 

So, clearly, it is not an enabling legislation. It is something that 

limits entities from doing what they need to do. And I think that 

the best thing that could happen is to remove all those State barriers and let local governments do what local governments do best: 

respond to their constituency. 
164 

Chair LANDRIEU. There is a very important question, you know, 

before the country right now as to how to get this accomplished. 

We have gone through this many times before, when electricity was 

invented, and the question is how would we get electricity to every 

home and to every business, whether you lived in a mansion in a 

big city or whether you lived on a farm 150 miles away from anyone. Of course, we know the history. 

The same thing, I would imagine, with telephones. To some degree we still have the same issue with roads, whether they are private roads that can be built and supported by tolls, or they are generally supported with general tax dollars to places that there are 

not enough cars going down the road to support it by tolls. Do we 

build it or do we leave people without access to a road? 

We have been through this issue in this country before, and it 

is going to be interesting to see how it turns out. That is not technically the jurisdiction of this Committee, as you know. Commerce 

will be deciding or recommending more specific legislation to all of 

us. 

What is the jurisdiction of this Committee is how fast, how 

cheaply, and how quickly we can get broadband Internet service to 

the small businesses in this country to help them create the kind 

of jobs necessary to be successful. I recognize among you at the 

table—I really appreciate, Mr. Gerke, your brief history of Century 

Telephone, and I actually knew Mr. Clarke, as many of us did personally, who started the company, that you, too, once were a small 

business with a $500 investment and a few employees. To honor 

and acknowledge that among those providing the service at one 

time were extremely small businesses that have grown and to 

honor, of course, you, Senator Smith, with your commitment to 

small broadcasters, many of whom are still very small businesses 

around the country. So we want to be sensitive. 

Let me ask you, Mr. Gerke—and we are going to have to probably close out with one more question to everyone. This merger 

that is pending, how—I mean specifically—is it going to help, and 

if there are ways that you think you are going to be challenged to 

provide better service at lower cost to the businesses now and, 

what is it, a 33–state area? How is this merger specifically going 

to help, in your view? 

Mr. GERKE. Senator, I think that is a very fair question, and especially as it relates to small businesses as we expand from the 33 

to what will be a 37–state footprint. 

First, that additional reach of combining the two networks, including the long-haul network of Qwest, will cause us to be a more 

formidable competitor to the two large long-haul carriers; and, 

therefore, for regional businesses and other small businesses, being 

able to offer them additional competition, very viable, very seamless. 

Second, we have been at the forefront of bring IP TV to markets. 

We have brought it to three markets. We are rolling it out to five 

additional markets at CenturyLink. The network within Qwest is 

well suited to continue rolling out video, facilities-based competition and providing consumer choice between not only the cable 

company but another facilities-based video provider. So two strong 

points of additional competition. 
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Our COO, Karen Puckett, has a proven ability to implement a 

local go-to-market basis where we put general managers and regional vice presidents much closer to our small businesses and customers to be much more responsive. As a result, we have seen increased broadband penetration and great success by being close. 

The scale and scope will allow us to add offerings that complement our existing offerings, such as data hosting, to help small 

businesses have the kind of, you know, Web-based and Internet capabilities necessary to continue to grow their company on a by-thedrink basis without having to make large capital investments. 

So when you combine that with, you know, no new data, proven 

track record, a mix of the two companies, I think it is a compelling 

case both for small businesses and it is a very compelling case of 

public interest for prompt approval. 

Chair LANDRIEU. Okay. I am going to ask each of you, starting 

with you, Senator, to finish up with just 30 seconds or 1 minute 

of something you want to put on the record that we have not had 

the time—of course, we have been so pressed for time—to ask you 

this morning. Then I do want to say this hearing has been very illuminating and instructive. I am going to call a roundtable in 

about 3 weeks to hear from small business owners that use 

broadband Internet service. We are going to have a panel of small 

businesses. I am going to ask the staff to identify whose business 

model has been greatly enhanced by their ability to get high-speed 

quality service. Then I am going to include a panel of businesses 

that are not yet connected to hear what challenges they are finding 

and what they think in terms of how we should move forward. So 

we are going to give a voice to small businesses at this roundtable, 

and I will announce when that will be, but it will be sometime in 

the next 2 to 3 weeks. 

Mr. Smith. 

Mr. SMITH. Chair Landrieu, I would simply want to emphasize 

that the choice is not broadband versus broadcast. That is a false 

choice. The American people, if you ask them, would tell you they 

want both. There is a way to get both, and it is through investment 

and a lot of hard work, stripping away some of the rules that impede the investment or allowing broadcasters to have the opportunity to volunteer to help fix this problem without compulsion and 

without taxes and fees that are designed to put small businesses, 

small broadcasters out of business. That is not in the American interest in a day of natural and human-caused tragedies. Broadcasting represents an enormous service and an enormous value to 

the American people still. 

Chair LANDRIEU. Thank you. 

Congressman Largent. 

Mr. LARGENT. Chairwoman, I would say that I represent the industry that brings broadband to the person, not broadband to the 

home, not broadband to the business, but broadband to the person. 

And in that vein, I would say and emphasize again that my testimony here today is to say we are going to need additional spectrum 

resources in the near future, not 20 years from now but in the next 

5 to 10 years. We are going to need additional spectrum resources 

to enable us to bring that broadband to the person all over the 

country. 
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Chair LANDRIEU. Whether that person is sitting in a tractor out 

in the middle of a field or whether they are standing on Fifth Avenue in New York. 

Mr. LARGENT. You bet. 

Chair LANDRIEU. You want to be able to do that, and for American businesses, they need that to happen, or business people, they 

need that to happen. 

Mr. Huval. 

Mr. HUVAL. Yes, in Lafayette, we are offering 10 megabits per 

second, upload and download, for 29 bucks for residential customers and 100 megabits per second for $200. The upload is an extremely important aspect here because many times businesses that 

need to upload high-intensity files cannot do so or it is very frustrating to do so because typically upload fees are about one-tenth 

what the download fee is. So a company like golfballs.com in Lafayette, which conducts its business all over the world, cannot upload 

videos to show customers how to use their prospective products 

without having an upload speed that is significant. 

We already are talking to health care providers about having 

MRIs be able to be seen by doctors in their homes instead of a doctor having to be called out to the hospital. We already had a live 

teleconferencing between San Francisco students and Lafayette 

students to collaborate on a project. The motion picture industry 

has already seen the value of this type of infrastructure in place. 

So the thing is that this is a huge entrepreneurial opportunity 

that brings entrepreneurs out of their home, when they are in their 

home, or a small business to do some really great and positive 

things. It is an enabler. It is not a limiter. And so our major point 

is that this type of infrastructure is what we need to have. We need 

to all set the target and say here is where we want to be and then 

ask everybody at the table and say, ‘‘Who is going to get us there 

fastest?’’ And if the private sector can, we believe that they should. 

But if the private sector decides to play games with the system, as 

we have seen so many of them—not all of them, but so many of 

them do it in the past. That should not count anymore. 

Chair LANDRIEU. Mr. Gerke. 

Mr. GERKE. I think of the three-legged stool that supports our 

ability as a carrier of last resort to serve small businesses and consumers in rural America. The first leg is the reasonable and appropriate access charges to use the network. The second is universal 

service funding. And the third is the old blended business plans between the more dense market and the less dense market. All three 

of those legs of the stool are under serious attack, so I applaud the 

National Broadband Plan’s approach to not abruptly changing 

things that would end our access to the necessary capital to deploy 

broadband to small business. Looking at 10-year transition periods 

I think is very important. And then continuing to understand that 

there has to be the foundation as these different legs of the stool 

change, that there still has to be a solid foundation to support the 

one carrier that has to and has that carrier-of-last-resort obligation 

to serve every consumer, every small business in the footprint regardless of how far down the farm road they are. 

Thank you. 

Chair LANDRIEU. Mr. Friedman. 
167 

Mr. FRIEDMAN. Well, I continue to believe that if you want to deploy broadband, our members are the ones that are deploying it 

every day. We are continuing to build our network out, and from 

the standpoint of my company, we have upgraded our system so 

that we are in a position where, with additional spectrum available 

on our system, we will be able to offer 100 meg service to our customers. 

We have worked very hard to make sure we have the middle 

mile available because that is the part that clogs the network, that 

prevents customers from really achieving these speeds. 

So I continue to believe that our members are the ones who are 

going to continue to reach out and edge our and serve the unserved 

areas. And the way we can do that with help from Government is 

to really remove the exemptions that make it difficult for us to 

build to the small businesses that we need to reach out to, by removing exemptions from the pole attachments from municipalities, 

removing additional costs and burdens that are given to us such as 

retransmission consent, which affects all the services we offer, and 

yet impacts the amount of capital we have available to build out 

to serve these areas. 

Chair LANDRIEU. Thank you all very much. It has been very, 

very informative, and again, I look forward to our second series on 

the roundtable where we are hearing from small businesses that 

use these services and how critical they are. We could not do this 

fast enough, in my view, to help this economy grow. 

Thank you, and the meeting is adjourned. 

[Whereupon, at 12:17 p.m., the Committee was adjourned.] 

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