U.S. GOVERNMENT PUBLISHING OFFICE

28–783 WASHINGTON : 2018

DISCONNECTED: RURAL BROADBAND AND THE 

BUSINESS CASE FOR SMALL CARRIERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH AND 

TECHNOLOGY 

JOINT WITH

SUBCOMMITTEE AGRICULTURE, 

ENERGY, AND TRADE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

MARCH 6, 2018 

Small Business Committee Document Number 115–060 

Available via the GPO Website: www.govinfo.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RALPH NORMAN, South Carolina 

JOHN CURTIS, Utah 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Aumua Amata Coleman Radewagen ............................................................ 1 

Hon. Al Lawson ........................................................................................................ 2 

Hon. Rod Blum ......................................................................................................... 3 

Hon. Brad Schneider ............................................................................................... 4 

WITNESSES 

Ms. Erin Fitzgerald, Regulatory Counsel, Rural Wireless Association, Inc., 

Washington, DC ................................................................................................... 5 

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

Carriers Association, Washington, DC ............................................................... 7 

Mr. Paul Carliner, Co-Founder, Bloosurf, LLC., Salisbury, MD ......................... 9 

Mr. Derrick Owens, Senior Vice President of Government & Industry Affairs, 

WTA—Advocates for Rural Broadband, Washington, DC ................................ 11 

APPENDIX 

Prepared Statements: 

Ms. Erin Fitzgerald, Regulatory Counsel, Rural Wireless Association, 

Inc., Washington, DC .................................................................................... 32 

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

Carriers Association, Washington, DC ........................................................ 41 

Mr. Paul Carliner, Co-Founder, Bloosurf, LLC., Salisbury, MD .................. 56 

Mr. Derrick Owens, Senior Vice President of Government & Industry 

Affairs, WTA—Advocates for Rural Broadband, Washington, DC ........... 61 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

NTCA - The Rural Broadband Association .................................................... 76 

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(1) 

DISCONNECTED: RURAL BROADBAND AND 

THE BUSINESS CASE FOR SMALL CARRIERS 

TUESDAY, MARCH 6, 2018 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON HEALTH AND TECHNOLOGY, 

JOINT WITH THE

SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE, 

Washington, DC. 

The Subcommittees met, pursuant to call, at 10:03 a.m., in Room 

2360, Rayburn House Office Building, Hon. Aumua Amata Coleman Radewagen [chairman of the Subcommittee on Health and 

Technology] presiding. 

Present from the Subcommittee on Health and Technology: Representatives Radewagen, Brat, Marshall, and Lawson. 

Present from the Subcommittee on Agriculture, Energy, and 

Trade: Blum, Comer, Curtis, and Schneider. 

Also Present: Representative Chabot. 

Chairwoman RADEWAGEN. Talofa. Good morning. This hearing 

will come to order. 

First, I would like to thank our witnesses for taking the time to 

share their thoughts with us today. I look forward to your testimony. 

I would also like to thank Chairman Blum for co-leading this important discussion. 

Today’s joint hearing of the Subcommittee on Health and Technology and the Subcommittee on Agriculture, Energy, and Trade 

will focus on challenges facing small internet service providers deploying broadband to rural high-cost areas. This hearing expands 

upon past conversations started in Committee and recently continued in a hearing led by Chairman Blum a few short weeks ago. 

This topic is of particular significance to the people of American 

Samoa as our telecommunications and internet connectivity is severely lacking, especially in the wake of Tropical Cyclone Gita. 

As our world becomes increasingly dependent on a robust telecommunications service and wireless internet, the lack of it in 

places like American Samoa and rural America becomes even more 

glaring. These high-cost areas depend upon the industriousness 

and commitment to deploying robust, accessible broadband by 

small, rural, and regional internet service providers. 

However, challenges facing these carriers in obtaining adequate 

financing can impede forward progress, further exacerbating the 

disparities between urban and rural communities. 

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Having this connectivity is critical, not only to stimulate economic growth, but also to ensure a basic level of connectivity for 

our citizens, such as the ability to place a call to loved ones and 

first responders in the event of an emergency or a disaster. 

As we begin to examine the current state of America’s infrastructure and take steps to improve our Nation’s highways and buildings, we need to ensure that broadband is at the front and center 

of all infrastructure discussions. 

I now yield to Ranking Member Lawson for his opening statement. 

Mr. LAWSON. Thank you, Madam Chair. 

Today’s hearing will offer the opportunity to examine the many 

changes of broadband development. The technology and telecommunications sector is a major contributor to the U.S. economy 

and a lifeline for small business connecting with customers all over 

the world. 

With the potential to create new jobs and keep millions of employees at work in the broadband sector, some carriers stand ready 

to capture the economic gains brought on by this technology. More 

small businesses are embracing broadband than ever before and it 

is rapidly changing the way business is conducted. 

Consumers have seen the benefit broadband technology can bring 

to our daily lives in a variety of ways, yet the percentage of rural 

and small businesses without access to broadband is twice as high 

than in urban areas. 

Even though broadband subscriptions have steadily increased, 

rural and low-income communities are being outpaced by the rest 

of the country due to a lack of network development. Unfortunately, the adoption gap may further widen without adequate support of broadband deployment. 

This is especially true for small carriers in the forefront of the 

buildout in rural areas. Federal loans and grant programs have 

helped economically disadvantaged communities gain access to 

high speed internet, resulting in attracting businesses, low unemployment rates, and skilled workers. 

However, there is an estimated 200 million shortfall in the Universal Service Fund program, the primary funder for rural development efforts. Among other funding challenges for small, rural carriers are declining roaming charges and broken promises to include 

rural broadband development in the infrastructure package. Instead, President Trump gave the States $50 billion of the $200 billion to States’ rural infrastructure. 

Let’s be clear. This will likely mean bridges and roads and not 

broadband investment. While I agree to the improvement to our 

Nation’s transportation infrastructure is necessary, so is our investment in ensuring everyone, especially those in rural communities, have access to adequate internet access. Omitting clear 

funding language to broadband infrastructure hurts our communities who need it the most. 

In advance of the testimony, I want to thank all our witnesses 

for traveling here today for both their participation and insight into 

the important topic. 

Thank you, and I yield back. 

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Chairwoman RADEWAGEN. I now yield to Chairman Blum for 

his opening statement. 

Chairman BLUM. Thank you, Chairman Radewagen. 

And welcome to our panelists today. I appreciate you all being 

here. 

Today’s joint hearing focuses on a topic that is particularly important to many Iowa family farmers and rural community members I represent back in my home district of northeast Iowa. While 

rural broadband was touched upon at the last hearing I chaired in 

February, I thank the chairwoman for the opportunity to take a 

deeper dive into the specific challenges facing rural broadband deployment in our conversation today. 

It is easy to recognize the importance of seamless and robust 

internet and telecommunications service connecting rural America 

to the rest of the country. However, it is critically important that 

we fully understand how to get to that point and how we can continue to nurture that growth. 

Small, rural internet service providers shoulder a heavy burden 

deploying broadband across hundreds of miles of diverse and 

sparse terrain. The significant investment required to deploy, 

maintain, update, and continually service these high-cost rural 

areas should not be taken lightly. It is imperative—imperative— 

that we identify and help mitigate the difficulties identified by 

small, rural carriers in deploying broadband so we can begin to 

close the urban and rural digital divide. 

The ability to deliver a high quality of life to rural Americans, 

spur job growth and job creation, improve access to education, 

health services, and innovation in the agritech sector are all dependent on the ability to transmit data and communication information quickly, efficiently, and at low cost. 

Echoing the sentiment expressed by the chairwoman, as we look 

ahead at plans to improve our Nation’s infrastructure we need to 

make sure that rural broadband is part of that conversation. The 

progress of our Nation depends on it. 

I look forward to the testimony of our witnesses to identify the 

challenges for small, rural carriers and potentially uncover solutions that Congress may consider to ensure that the mobile wireless marketplace is competitive and fair for all businesses. 

Madam Chairwoman, I yield back the balance of my time. 

Chairwoman RADEWAGEN. I now yield to Ranking Member 

Schneider for his opening statement. 

He is not here, so we will continue. 

If Committee members have an opening statement prepared, I 

ask that they be submitted for the record. 

I would like to take a moment to explain the timing lights for 

you. You will each have 5 minutes to deliver your testimony. A 

light will start out as green. When you have 1 minute remaining, 

the light will turn yellow. Finally, at the end of your 5 minutes, 

it will turn red. I ask that you try to adhere to that time limit as 

much as possible. 

I would now like to formally introduce our witnesses. 

Our first witness is Ms. Erin Fitzgerald, regulatory counsel to 

the Rural Wireless Association, or RWA. Ms. Fitzgerald has extensive experience on a wide range of issues, including broadband deSBR002 with DISTILLER

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ployment, universal service, spectrum auctions, data roaming, and 

wireless licensing. 

Erin advocates in rulemaking and policymaking proceedings on 

behalf of the RWA and frequently appears before the Federal Communications Commission. 

We look forward to hearing from you today. 

Our second witness today is Mr. Tim Donovan, senior vice president of legislative affairs for the Competitive Carriers Association, 

or CCA. 

Mr. Donovan advocates on the CCA’s behalf on issues impacting 

wireless telecommunications providers, including broadband deployment, universal service, access to spectrum roaming, and other 

issues that affect the businesses of these carriers. 

Mr. Donovan has previously appeared before the Committee in 

the same capacity, and we welcome you back today. 

Our third witness is Mr. Paul Carliner, cofounder and CEO of 

Bloosurf, LLC. Bloosurf is one the fastest growing independent 

rural high speed internet companies in the State of Maryland. 

Prior to cofounding Bloosurf, Mr. Carliner served nearly 20 years 

in the Federal Government, both on the Hill as a Senate staffer 

and later as a consultant. 

I now yield to Ranking Member Lawson to introduce our final 

witness. 

Mr. LAWSON. Thank you, Madam Chair. 

It is my pleasure to introduce Mr. Derrick Owens, senior vice 

president of government and industry affairs at WTA, which advocates for rural broadband. 

Prior to joining WTA, he worked at the U.S. Department of Commerce’s National Telecommunications and Information Administration. 

Mr. Owens has a master’s degree in public policy from the University of Maryland School of Public Policy and received his bachelor’s degree in political science from Allegheny College in Pennsylvania. 

Welcome, Mr. Owens, to the Committee. 

Chairwoman RADEWAGEN. Thank you. 

Before the witnesses start their testimony, I would like to yield 

to Mr. Schneider, who is with us. 

Mr. SCHNEIDER. Thank you, Madam Chairwoman. 

And thank you for joining us today to the witnesses. 

It is an important hearing today. As a powerful tool for both consumers and entrepreneurs, the internet serves small businesses in 

a multitude of ways. 

Unfortunately, 34 million Americans still lack access to high 

speed internet, of which 39 percent live in our rural communities, 

compared to just 4 percent of those in urban communities. 

With more than 3.2 billion people online worldwide, internet use 

has increased almost sevenfold in the last 15 years. However, for 

small firms in rural areas, the lack of broadband access too often 

means trouble attracting new businesses, creating jobs, or breaking 

into new markets. 

Time and again we have seen how the internet can connect companies large and small with new markets and new customers, 

something especially important for rural small businesses. 

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The internet has helped small businesses across the country 

grow, and we want to ensure that rural small businesses are not 

left behind due to poor connectivity or an unreliable network. 

This is why we must support the expansion of broadband infrastructure in rural areas. All of America’s entrepreneurs deserve a 

level playing field regardless of where they are based. 

Today we will hear more about how we can help small businesses 

connect to high speed internet. On that note, I want to thank today’s witnesses for being here, and I look forward to hearing your 

testimony. 

Chairwoman RADEWAGEN. Ms. Fitzgerald, you are now recognized for 5 minutes. 

STATEMENTS OF MS. ERIN FITZGERALD, REGULATORY COUNSEL, RURAL WIRELESS ASSOCIATION, INC., WASHINGTON, 

DC; MR. TIM DONOVAN, SENIOR VICE PRESIDENT, LEGISLATIVE AFFAIRS, COMPETITIVE CARRIERS ASSOCIATION, 

WASHINGTON, DC; MR. PAUL CARLINER, CO-FOUNDER, 

BLOOSURF, LLC., SALISBURY, MD; AND MR. DERRICK 

OWENS, SENIOR VICE PRESIDENT OF GOVERNMENT & INDUSTRY AFFAIRS, WTA—ADVOCATES FOR RURAL 

BROADBAND, WASHINGTON, DC 

STATEMENT OF ERIN FITZGERALD 

Ms. FITZGERALD. Chairmen Radewagen and Blum, Ranking 

Members Lawson and Schneider, and members of the Subcommittee, thank you for this opportunity. I am Erin Fitzgerald, 

regulatory counsel for RWA, which represents wireless carriers 

with fewer than 100,000 subscribers. Our members are passionate 

about ensuring that rural America is not left behind. 

RWA members operate in areas where low population density, 

extreme weather conditions, and difficult terrain make doing so an 

expensive and challenging task. Insufficient spectrum access, a 

dysfunctional data roaming market, and declining universal service 

support exacerbate these challenges. 

Nevertheless, networks operated by small, rural-based wireless 

service providers promote public safety and encourage innovation 

and economic development each and every day. 

I want to start by briefing discussing Mobility Fund Phase II, the 

Universal Service Fund program designed to support mobile 

broadband network deployment and maintenance in areas where 

there isn’t a business case for unsubsidized coverage. 

At top of mind for RWA members is the Commission’s recently 

released initial eligible areas map. RWA is concerned that the 

Commission’s process has failed to yield an accurate picture of mobile wireless service throughout the country. Issues regarding a 

too-low support budget, an onerous challenge process, and costs imposed by letter of credit requirements are also cause for concern. 

I would like to talk a bit about some of the business issues at 

play in the marketplace. Rural carriers make every effort to offer 

robust coverage throughout their entire service area, unlike larger 

carriers which tend to focus coverage on towns and major highways. 

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The decision to offer robust coverage results in additional capital 

expenses in the form of more network equipment, towers, and 

backhaul facilities. Operational expenses are higher as well, and 

small carriers typically pay higher per-unit prices for the latest and 

greatest mobile devices because they are seldom offered volume discounts. 

Unlike nationwide providers, small rural carriers are not able to 

average the costs of their rural sites with more return-on-investment-friendly urban and suburban sites. 

I would like to turn your attention now to spectrum. Spectrum 

access promotes marketplace competition, and Section 309(j) of the 

Communications Act requires the FCC to ensure that spectrum is 

available to rural telephone companies and small businesses. 

When designing future spectrum auctions, the FCC should ensure that it uses appropriately sized geographic licenses and bidding credits that will encourage auction participation by small providers. 

The secondary spectrum market is frequently touted as a silver 

bullet to address small and rural carrier spectrum needs. But leasing and partitioning do not provide small and rural entities with 

the spectrum needed for targeted local deployments. In fact, the 

secondary market works for consolidating spectrum in the hands of 

a few rather than dispersing spectrum among many. 

In order to keep spectrum in rural areas from lying fallow, RWA 

supports a keep-what-you-serve approach to spectrum licensing 

where if a licensee is not providing service to 90 percent of its geographic license area after a 5-year post-renewal period, any 

unserved area should be made available for relicensing to providers 

who wish to serve it. 

This approach provides an incentive for existing licensees to continue to invest in market buildout and also promotes the rapid deployment of wireless services in rural America. 

Roaming issues are also of serious concern to RWA’s members. 

The country’s nationwide carriers often refrain from offering their 

own subscribers roaming on small carrier networks even when 

their own coverage is inferior or nonexistent. 

While the FCC’s roaming rules allow this practice, it is harmful 

to American consumers who are unable to access rural networks, 

networks those same consumers have supported through contributions into the Universal Service Fund. 

Further, this practice could threaten public safety. In the event 

of debilitating failure of one carrier, an untold number of consumers, including frontline public safety users, would be unable to 

communicate without bilateral roaming in place. 

Another problem lurking is the issue of VoLTE roaming. VoLTE, 

which stands for Voice over LTE, is the ability to make a telephone 

call over a 4G LTE network. Nearly all the Nation’s mobile carriers 

are using 4G LTE networks. The country’s nationwide carriers are 

also actively shutting down their circuit-switched 2G and 3G networks. 

What will happen when all mobile wireless carriers are LT only 

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phone call because large carriers refuse to enter into VoLTE roaming agreements? 

There is anecdotal evidence to suggest that this is happening 

now, and action must be taken before 2G and 3G networks are 

shut down to make sure that all wireless consumers in America 

can make VoLTE voice calls when roaming. 

As I discussed earlier, universal service support is tremendously 

important to rural broadband network deployment and maintenance. The FCC is preparing to hold two reverse auctions for Universal Service Fund support. Before a winning bidder can receive 

support, it must obtain an irrevocable standby letter of credit. 

RWA and its members are concerned that obtaining the necessary letter of credit will be a burdensome and costly process. 

RWA has worked with the National Association of Surety Bond 

Producers and the Surety and Fidelity Association of America to 

explore the possibility of utilizing surety bonds as an alternative. 

Also, RWA has suggested that the FCC eliminate its LOC requirement entirely. The FCC has all the security it needs with respect to Commission licenses: the threat of revocation, or nonrenewable license should a universal service recipient commit any 

misconduct. 

On behalf of RWA, your interest in the challenges facing rural 

wireless carriers is greatly appreciated. Thank you for inviting me 

to be with you today. I look forward to your questions. 

Chairwoman RADEWAGEN. Thank you, Ms. Fitzgerald. 

Mr. Donovan, you are recognized for 5 minutes. 

STATEMENT OF TIM DONOVAN 

Mr. DONOVAN. Thank you, Chairwoman Radewagen, Ranking 

Member Lawson, Chairman Blum, Ranking Member Schneider, 

and members of the Subcommittee. Thank you for inviting me to 

testify on rural broadband and the business case for small carriers. 

I am here on behalf of CCA representing nearly 100 wireless carriers as well as the companies that make up the wireless ecosystem. The vast majority of CCA’s members are small businesses 

who employ the same consumers that live and work in their communities. 

Since I testified before your Committee last June, the Rural 

Prosperity Task Force has found that e-Connectivity is essential, 

and the administration, Congress, and the FCC have all proposed 

steps to support the business case to close the digital divide. This 

Committee’s hearing just a few weeks ago on restoring rural America underscored the importance of rural broadband access, and 

today we will talk about policies to make that happen. 

Mobile broadband use continues to increase exponentially. In 

2016, Americans consumed 1.8 exabytes of data per month using 

wireless connections. That is 1.8 billion gigabytes—or, put another 

way, more than 7,000 times the total of all information stored in 

the Library of Congress each month—and data use will grow another five times over the next 5 years. 

This staggering data consumption reflects the ways that mobile 

broadband powers every aspect of life, from jobs and economic 

growth to public health and safety. Amidst talk of infrastructure 

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for the next century, including broadband, areas without mobile 

coverage cannot be left behind. 

Tech companies recently announced plans to deploy 4G mobile 

broadband on the moon. Yet too many in rural America are 

unserved or underserved despite millions invested by CCA members in their communities. 

With my full statement in the record, I would like to focus on 

three key issues that directly impact small carriers. 

First, you cannot manage what you cannot measure. Reliable 

coverage data is critical to determine where funding should flow, 

including the FCC’s $4.5 billion for Mobility Fund Phase II through 

the Universal Service Fund and any new funding made available 

by Congress to improve infrastructure. 

While progress has been made since we discussed this issue last 

year, the underlying map for areas deemed initially eligible for Mobility Fund II support, released just last week, could prevent your 

districts from being eligible for support dollars. 

The updated data should have reduced overstated coverage and 

allow carriers to challenge claim service in those areas. It is now 

clear that the parameters selected by the FCC were not sufficient 

to produce a map that reflects the experience you have as you travel your districts. 

This is an acute problem for small carriers who do not have the 

time and resources to drive test vast geographic areas. Any areas 

that are presumed to be served and are not challenged, regardless 

of the consumer experience on the ground, will not be eligible for 

a decade of USF support. 

Second, rural areas suffer when small carriers must navigate a 

regulatory maze to deploy infrastructure. Application review 

delays, burdensome fees, and redundant studies increase uncertainty and make it more expensive to upgrade and expand service. 

And while technology has evolved, these rules have not. Today 

the same review process applies to deploy a small cell the size of 

a backpack as it does to build a tall tower. 

Congress has dozens of bills pending, including bills sponsored by 

members of this Committee, to streamline deployment, and CCA 

urges swift action. 

This hearing is timely as last week the FCC announced that it 

will vote on March 22 to make sure the U.S. is 5G ready. This is 

important, not only for the future, but for deployments of all base 

stations, technologies, and sizes today. 

To be clear, carriers are deploying small cells in urban and rural 

areas alike. In fact, today FCC Commissioner Carr is in Edinburg, 

Virginia, a town with no stoplights, viewing the economic benefits 

of smaller-scale network deployments in a rural area with CCA 

member Shentel. 

Third and finally, small carriers must access the resources all 

carriers need to provide service. This includes invisible resources 

like spectrum. Carriers need greater access to spectrum at high, 

mid, and low bands. 

Congress can support small carriers in this regard by first enacting the Spectrum Auction Deposits Act to eliminate a roadblock 

currently preventing the FCC from holding any spectrum auctions. 

Second, keeping the 600-megahertz incentive auction repack on 

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time so that carriers can use this spectrum to serve consumers. 

And third, ensuring that all carriers can access spectrum in higherfrequency bands. 

The largest two carriers have a head start in these spectrum 

bands, and to catch up, Congress must push for rapid auction of 

all bands ready for wireless use. 

Beyond spectrum, carriers must also have reasonable access to 

equipment both for their networks and the devices consumers demand. This is not only a competitive issue, but a lack of access to 

devices and equipment can make it harder or impossible to follow 

regulatory mandates premised on the latest technology. 

Bottom line, this issue disproportionately affects small carriers 

who lack the economies of scale enjoyed by the largest companies. 

Policies established by Congress and implemented by the FCC 

determine whether small businesses in rural America have access 

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

Competitive carriers want to be part of the solution. 

Thank you again for holding today’s hearing, and I welcome any 

questions. 

Chairwoman RADEWAGEN. Thank you, Mr. Donovan. We appreciate your testimony. 

Mr. Carliner, you are recognized for 5 minutes. 

STATEMENT OF PAUL CARLINER 

Mr. CARLINER. Thank you, Chairwoman Radewagen, Chairman 

Blum, Ranking Member Lawson, and Ranking Member Schneider. 

I am Paul Carliner, cofounder and CEO of Bloosurf, and I want to 

thank you for the opportunity to appear before you today. 

Bloosurf is a rural high speed internet service provider 

headquartered in Salisbury, Maryland. Our company was founded 

in 2009 with the goal of providing affordable and sustainable high 

speed internet service on the lower Eastern Shore of Maryland. We 

provide services to homes, businesses, schools, hospitals, even to 

residents living on an island in the middle of the Chesapeake Bay. 

In 2010, our company was awarded $3.2 million by the U.S. Department of Agriculture’s Rural Utility Service to build a new 

state-of-the-art fixed wireless LTE network covering approximately 

100,000 households across three rural Maryland counties on the 

lower Eastern Shore. 

I want to thank the Rural Utility Service’s Telecommunications 

Program, particularly Mr. Ken Kuchno and Mr. Rick Gordon, who 

were so instrumental in helping our company and many others 

build out the rural infrastructure, as well as the State of Maryland 

and the Maryland Broadband Cooperative, two critical partners in 

our ability to bring rural high speed internet service. 

I would like to share with you our experiences and lessons 

learned as a small rural ISP. 

First, I think it is clear that the only way that rural America will 

cross the digital divide is through a sustained public investment by 

the local, State, and Federal governments. Without public investment, rural high speed internet companies will be limited in their 

ability to grow and sustain service over the long-term. If a rural 

community has a higher percentage of unserved households, the 

need for public investment is even greater. 

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I want to applaud the FCC for moving forward with the Connect 

America Fund II Reverse Auction to allocate up to $2 billion for 

rural broadband this year. This will be a very critical and important step to help the buildout of the infrastructure. 

Without public investment, the case for private investment in 

rural broadband is extremely difficult. Capital expenditures are 

very high and revenue and the subscriber base are low. This market structure is very unfavorable to traditional debt financing, and 

there is a limit to the amount of equity financing that a small business can accommodate. This is why public investment is so essential. 

Each community needs a customized solution because each rural 

area is different. Small rural ISPs understand and know the territory they operate in and are able to customize solutions that both 

work from a technologically as well as from a business standpoint. 

Second, any Federal strategy to expand rural high speed internet 

service must focus on the last mile, that part of the network that 

actually brings service directly into the home and business. 

Previous public investments focused heavily on the middle mile, 

that fiber or cable under the county road or county highway, and 

after a decade or more of public and private investment in the middle mile, we believe the Federal Government should focus now on 

how to monetize that investment and actually provide service into 

the homes and businesses. These rural communities have paid for 

this infrastructure through their tax dollars, and we believe it is 

time they actually get the service from it. 

Federal funds should be used also to encourage local and State 

governments to adopt comprehensive last mile strategies that work 

with local internet service providers that combine both middle mile 

and last mile solutions into a sustainable and affordable solution 

for high speed internet service to rural communities. 

Onerous financial requirements for accessing Federal funds 

should be revised. These onerous requirements, such as large lines 

of credit, as Ms. Fitzgerald mentioned, arbitrary operating margins, debt-to-equity ratios are not always the most important criteria in assessing an ISP’s liability, and nor do they offer much 

guidance in judging future performance. Instead, emphasis should 

be on past performance metrics and not exclusively on traditional 

financial metrics. 

Access to spectrum is another issue that was mentioned that is 

also critically important. Our company uses licensed spectrum, and 

it makes a huge difference in the quality of our service and the coverage area that we are able to achieve. We hope that the FCC— 

as mentioned, both Mr. Donovan and Ms. Fitzgerald mentioned, 

that access to the spectrum, a dedicated spectrum for the rural 

ISPs, such as Bloosurf, is very, very important. 

Finally, I think there should also be a mechanism to share information between the Federal Government and ISPs on things such 

as cybersecurity. Oftentimes small companies like ours who are 

critical network operators don’t always access the latest information or data when it comes to cybersecurity, and having a formal 

mechanism with Federal agencies to do that to keep us up to speed 

will be very, very helpful. 

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Access to affordable internet service is critical for all rural communities to attract jobs, improve education, and provide basic services such as medical care. Rural ISPs are at the forefront of this, 

and we local companies are enjoying great popularity as we expand 

our service. 

And with companies like ours, there is a multiplier effect in the 

communities that you don’t have with the large national carriers. 

We hire local companies, local contractors, sales and marketing 

people, and there is a multiplier effect in communities with companies like ours that simply is not always there with some of the 

larger companies. 

Finally, I encourage Federal agencies to adopt policies that encourage incentivized rural internet service providers to invest and 

grow in the marketplace and work with companies like Bloosurf to 

expand that coverage. 

Thank you, Madam Chairman. 

Chairwoman RADEWAGEN. Thank you, Mr. Carliner. We appreciate your testimony. 

Mr. Owens, you are recognized for 5 minutes. 

STATEMENT OF DERRICK OWENS 

Mr. OWENS. Thank you. 

Good morning, Chairwoman Radewagen, Chairman Blum, Ranking Member Lawson, Ranking Member Schneider, and members of 

the Subcommittee. Thank you for the opportunity to testify today. 

I am Derrick Owens, senior vice president of government affairs 

and industry affairs for WTA—Advocates for Rural Broadband. 

WTA represents more than 340 small, rural telecommunications 

providers from across the country. Our members provide voice, 

broadband, and video-related services to some of the most rural 

high cost areas in the Nation. 

Imagine having to provide communication services to 3,900 subscribers across 3,200 square miles. This is the reality for Golden 

Belt Telephone Association based in Rush Center, Kansas. 

Why do small companies build in these remote areas? Because 

decades ago larger providers didn’t build there because it was too 

difficult to make a business case to do so. 

This is the reason why small, rural local exchange carriers, 

RLECs, came into existence, and why without them rural America 

would be left behind in this digital age. 

I would like to highlight a few areas where policymakers can 

make a difference when it comes to helping our member companies 

deploy broadband in rural America. 

First, there must be stability and predictability with the Universal Service Fund. The Communications Act requires universal 

service support to be sufficient and predictable. 

In 2011, the FCC adopted a $2 billion budget for the RLEC portion of the USF High Cost Program. To remain under budget, a 

budget control mechanism was adopted that reduces support automatically if the budget is exceeded. 

While the FCC approves several other cuts and constraints, the 

BCM, as we call it, is probably the most onerous. Last year, a WTA 

member testified before this Committee about the importance of 

USF and how the frozen support level, as well as the cap on the 

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High Cost Program and the imposition of the BCM, was making it 

difficult to invest. 

In the last year alone, a member company in Kansas and one in 

Illinois have seen their USF support reduced by over $400,000 and 

$800,000, respectively, because of the BCM. These are just two examples. There are a couple more in my testimony. These unpredictable year-to-year support reductions are certainly proving to disrupt and discourage investment. 

We are beginning to see a change in that direction, however. A 

proposal by FCC Chairman Ajit Pai before his fellow commissioners is a step in the right direction, in our opinion. It seeks to 

restore some of the cuts in USF support while asking important 

questions about the overall sufficiency and size of the USF budget 

going forward. We greatly appreciate the work several members of 

this Committee have done to help get us to that point. 

Point two. It is encouraging to see much attention being placed 

on rural infrastructure in Congress and within the administration. 

WTA supports the $20 billion that is called for in the February 

budget agreement, and we support the $50 billion in the President’s infrastructure outline presented to Congress a few weeks 

ago. 

However, these proposals don’t go far enough. There needs to be 

dedicated funding for rural broadband infrastructure. 

We should also do more to ensure the broadband infrastructure 

needs in Tribal areas are being met. WTA supports a proposal by 

the National Tribal Telecommunications Association that would increase an RLEC’s USF high cost support if those companies actually serve Tribal areas. We understand a variation of this proposal 

is being considered at the FCC and may be part of Chairman Pai’s 

proposal. 

Finally, when it comes to government regulation there is no argument that government needs to keep track of where and how 

Federal funds for broadband and USF dollars are being used. The 

debate is not about regulation and reporting versus no regulation 

and reporting, but how much, how often, and what kind. 

Regulation can often be helpful when it comes to ensuring small 

businesses that lack market power can compete against much larger companies. For example, our members benefit from regulations 

requiring large providers to interconnect with smaller ones so our 

communications networks function properly. 

Our member companies can also benefit from updated video regulations. Again, at times, regulations can enhance competition. 

There is also the case that some regulations are unnecessarily 

burdensome. Several of our companies have analyzed how much 

time and money they spend completing filings for the FCC, RUS, 

and other entities, estimates that run around $80,000 to $90,000 

annually. Environmental and historical preservation reviews are 

also costly and add significant cost for small businesses. 

While some rules, regulations, and reviews are necessary, others 

can be eliminated or reduced without any significant adverse impact to the public. For instance, all regulated telecommunications 

providers are required to complete the FCC’s Local Competition 

and Broadband Report, known as the Form 477. That is twice a 

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year. The data are used to produce an annual report to Congress 

and to update the national broadband map. 

The FCC estimates the average company will spend 387 hours 

per semi-annual filing, or 774 hours per year. WTA believes this 

proposal can be completed annually. 

WTA has been supportive of several bills that would provide regulatory relief to small carriers. For example, a bill introduced by 

Representative Curtis would expedite environmental reviews for 

broadband projects using existing operational rights of way on Federal lands. 

Our member who testified last year had to wait 9 months to get 

an environmental approval to install fiber along a Federal highway 

after receiving a Federal stimulus grant/loan combo. Another company who wanted to lay conduit along a Forest Service road was 

forced to pay for an environmental impact assessment even though 

the road is regularly repaved and the area around the road is 

sprayed with herbicide. These types of reviews add 18 to 24 months 

to the length and 10 to 20 percent to the cost of broadband projects. 

In closing, WTA members work hard and under difficult circumstances to bring broadband to their communities. Government 

has an important role to play here. Predictable support and smarter rules and regulations will help rural telcos put their limited resources to best use. 

Thank you for this opportunity to testify. I look forward to answering your questions. 

Chairwoman RADEWAGEN. Thank you, Mr. Owens. 

Now we will begin the first round of questioning. I now recognize 

myself for 5 minutes. 

This question is for all the witnesses. What does it take for a 

small carrier to develop broadband in isolated areas, such as American Samoa, Puerto Rico, the various islands of the Marianas, or 

some of the most remote parts of Alaska? These are places that you 

can’t drive to. You have to take a boat or fly to. 

Mr. DONOVAN. Well, Chairwoman, one thing that is important 

in serving remote areas like Alaska, like your home district, is 

making sure that you have certainty around the timelines when 

you need to use helicopters and boats and other mechanisms that 

you don’t need to use to deploy services in places like Washington, 

D.C. You need to be able to schedule that ahead of time. 

This has really been seen with some of the recent natural disasters in several areas, including American Samoa, about how certainty about what you can do and when you can bring equipment 

in needs to be lined up with the permitting process and streamline 

that, especially as you are looking to expand coverage or restore 

service where it has been out so that you can actually provide service in some of these very remote areas where it is already very high 

cost to serve. 

Chairwoman RADEWAGEN. Ms. Fitzgerald. 

Ms. FITZGERALD. I agree with that. I also think that, you 

know, we talked about the business case here, and in some of these 

very remote, very rural places you lack subscribers. There are not 

enough subscribers to make the business case. 

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And so in that case, universal service is critical. Adequate and 

reliable universal service support is what makes or breaks those 

networks. 

Chairwoman RADEWAGEN. Mr. Carliner. 

Mr. CARLINER. I certainly agree with that, that for a solution 

for an island, for example, is going to require really competitive 

planning and bringing the stakeholders together. It is going to be 

a mix of technologies, a mix of areas and communities. 

And I would say the most important thing, from our experience, 

is to make sure that the engineering and the technology matches 

with the business plan. They have to go together, and it is important that they fit together to make it both sustainable as well as 

affordable for the community. 

So proper planning and bringing the elements together, technology and business and the stakeholders together, is, I think, the 

most important first step. 

Chairwoman RADEWAGEN. Mr. Owens. 

Mr. OWENS. Thank you. 

I would add that, again, sufficiency and predictability and universal service is by far one of the biggest issues, because those dollars are actually used to build networks. And without the underlying infrastructure in place, you are not going to get some of the 

other technologies that you would use to complement the services 

that you are bringing to very rural and remote areas. 

Chairwoman RADEWAGEN. Ms. Fitzgerald, can you discuss 

what geographic area size might be attractive to small and regional 

providers as they compete for spectrum at auction and provide 

some background on why the FCC may have chosen not to employ 

smaller geographic area licenses in past spectrum auctions? 

Ms. FITZGERALD. Sure. 

In terms of spectrum auctions, geographic license size is always 

a point of contention, usually between large nationwide carriers 

and small rural providers. 

RWA has largely supported an area called a cellular market 

area, or a CMA, which is a subdivision. They go as large as nationwide and they go as small as census tract. So we tend to favor sizes 

around the CMA area. There are, I believe, a little over 700 of 

those nationwide. We have also supported, for instance, in the current CBRS proceeding, support county size or census tract license 

sizes. 

And, generally, if I am a small carrier, I have maybe a two- or 

three-county service area, first of all, I can’t afford a nationwide license. I can’t even afford licenses significantly smaller than nationwide. I want a license size that I can afford that I am going to be 

able to utilize to provide support to these service areas and a license size that I can afford to build out. Obviously there are buildout requirements tied to licenses won at auction. So if you win one 

of those licenses, you need to be able to build it out. 

From a nationwide carrier, smaller licenses mean more administrative minutia. And so it also means you have to compete in more 

markets to win licenses to cover the territory you want to cover. 

So we support smaller license sizes because it increases the number of bidders in an auction and it doesn’t depress auction turn out. 

Chairwoman RADEWAGEN. Thank you. 

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I am running out of time here. So, Mr. Donovan, what is your 

current view of the FCC’s approach to mitigating overstated coverage areas on the broadband map? And can you elaborate on the 

disproportionate impact this might have on small carriers? 

Mr. DONOVAN. Sure. Thank you for the question. 

So the map that is out right now for the initial eligible areas for 

Mobility Fund II was supposed to have a better starting point, 

looking more like coverage on the ground. 

I think if you looked at the map, you would be surprised, Dr. 

Marshall, that most of the Big First has coverage of 4G LTE across 

just about the entire district. 

For Ranking Member Schneider, that St. Elizabeth is served, and 

you have to drive hundreds of miles to find a dead spot based on 

this initial area. 

The problem there is that if these areas are not challenged by 

a small carrier that wants to seek support in this area, and that 

means go buy a phone, go buy a plan, drive-test it, submit that 

data to the FCC for the chance to participate in an auction, which 

is costly in itself, then these areas we are going to keep going on 

marked as served, and support will not be eligible for them. 

Chairwoman RADEWAGEN. Thank you. 

I now recognize Mr. Lawson. 

Mr. LAWSON. Thank you, Madam Chair. 

And I am going to start with Mr. Owens. And I preface this by 

saying that I know that the administration, any administration, 

starts to look at cuts that they could make in the 2019 budget, but 

the broadband cuts that have been sent are by 15 percent of the 

cuts to 23 million in the distance learning program, and then 10 

percent to 24 million. 

How would these cuts affect rural wireless carriers and the Rural 

Wireless Association that are recommended by the administration. 

Mr. OWENS. So thank you for the question. 

Our association, we represent the wired portion of companies. We 

don’t necessarily represent them on the wireless side. 

But I will say this. Obviously, the cuts in programs are going to 

be extremely onerous on a company’s overall business opportunities, whether they offer just voice, landline, broadband, fixed service, or wireless service. 

So the cuts, we wouldn’t be supportive of them, because if you 

are trying to get broadband out and you are looking at all the 

modes and ways to do that, in some areas wireless is going to be 

a complementary service to a fixed service just because it is going 

to be extremely costly to try to wire an area, where if you can use 

wireless service to do so, we see that as, again, a complementary 

service. So having cuts to that part of the program is probably not 

beneficial. 

Mr. LAWSON. Mr. Carliner. 

Mr. CARLINER. I would agree, Mr. Ranking Member. I think 

that for many small rural ISPs, these grant programs are very important in helping them build out their networks. 

And we certainly benefited from that in 2010. It was critical for 

us launching our network. And I think that for many other communities around the country, a sustained Federal investment in these 

grant programs, even small ones, is really, really important. People 

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forget sometimes how small these communities are and how small 

the companies are. 

Mr. LAWSON. Mr. Donovan. 

Mr. DONOVAN. Thank you. 

So I think the bigger point with your question that is important 

in the infrastructure debate going on right now is, what kind of a 

country do we want to be? Do we want to be a country that has 

mobile broadband available across the entire Nation, including 

these rural areas, or do we only want to focus on some and let 

some areas fall behind? 

If we want to have service nationwide, ubiquitous mobile 

broadband coverage, then we need to actually look at the problem 

and then size a solution to fit that and meet the needs. Small ISPs 

are going to be a critical part of serving that, but we need to take 

a step back and look at what the overall need is. 

Mr. LAWSON. Ms. Fitzgerald. 

Ms. FITZGERALD. I agree with the previous witnesses. I think 

that these broadband loan and grant programs are crucial. It is 

particularly true for small and rural companies because of the difficulties that they sometimes have in getting financing. And so 

these Federal programs really meet a need that doesn’t get met 

anywhere else. 

Mr. LAWSON. Okay. And anyone can respond to this. I don’t 

have much time. 

When the President recommended giving to the States $50 billion of the $200 billion for infrastructure, do you think that is going 

to all go to roads and bridges and so forth, which is it was really 

needed. How would that affect you? Anyone care to respond. 

Mr. OWENS. If I may, I definitely want to answer this question. 

Yeah, we have a concern with these dollars being block-granted 

to the States. Clearly there are some States who may have 

broadband operations or consortiums in the State that the governor 

could say, okay, these are going to be the folks who are actually 

going to decide where our money goes. 

But we have a concern that, again, as I said in my testimony, 

rural infrastructure for broadband needs to be identified so that 

that doesn’t happen, where those dollars don’t go just for roads and 

bridges but they actually do go to build rural broadband infrastructure. 

Mr. LAWSON. Anyone else? I have about 36 seconds. 

Mr. DONOVAN. Sure. 

So part of that is recognizing—we appreciate that the administration’s proposal would allow governors to use up to 100 percent 

of those rural funds for broadband. Is that likely to be the case? 

Probably not. And encourage for Congress to step in there and 

make sure that there are funds particularly dedicated for use for 

broadband purpose. 

Mr. LAWSON. I yield back, Madam Chair. 

Chairwoman RADEWAGEN. I now would like to recognize Mr. 

Blum, Chairman of the Subcommittee on Agriculture, Energy, and 

Trade. 

Chairman BLUM. Thank you, Chairwoman Radewagen. 

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I would also like to take this opportunity to recognize Chairman 

Chabot, who is Chairman of our full Small Business Committee. 

Thank you for being here today. 

Mr. Carliner, in your testimony, you said in 2010 your company, 

Bloosurf, was awarded $3.2 million by the U.S. Department of Agriculture to do a project. In the next paragraph in your testimony, 

it says, and this is kind of unbelievable, you built the network on 

time and returned $1 million to the government. 

Mr. CARLINER. Yes. 

Chairman BLUM. What went wrong? You are to be commended 

for returning $1 million. We don’t often see that type of testimony. 

Mr. CARLINER. Thank you, Mr. Chairman. 

I will say that we were very fortunate in that we made a decision—and this is an example of how technology changes so rapidly—our original design was a mix of WiFi and WiMAX. But what 

happened is, as time went on, LTE came out as a new standard 

for wireless communication. We reengineered our network very 

quickly to adopt this new technology, and that helped lower the 

cost of our network. And, fortunately, with USDA’s approval, they 

approved our redesign, and we ended up saving a million dollars 

to the government. We are very proud about that. 

Chairman BLUM. Congratulations. You are to be commended. 

I just have a quick technological question before I get into the 

other questions I want to ask you all. 

Mesh networks. I have heard about mesh networks. Mr. Donovan, you are grinning. And I know a little bit about them to be 

dangerous. Is this part of the solution? Is this not going to be part 

of the solution as far as rural goes? 

Mr. DONOVAN. So, Mr. Chairman, since we talked about this 

last year, I have gone back and made sure I did my homework before coming back before you, appreciating your focus on mesh networking. 

To have the mesh you need to have cells close enough to each 

other. So in order to facilitate this, this really is a focus on streamlining deployment of small cells or smaller telecommunications 

equipment so that you can have overlapping areas. To do that, 

there currently are significant barriers to being able to deploy and 

that increase the cost, environmental review, et cetera. 

I think last time we talked about how you could deploy a small 

cell on the side of your house if you were willing to go through an 

environmental assessment, historical review, pay the associated 

fees. And you made it very clear that you were not going to do that. 

And that is the case facing carriers who are working to densify networks today. 

Chairman BLUM. Is it a technologically limited type of an issue? 

Is it an equipment limited issues? Or, in theory, does a mesh network make sense? In theory. In theory. 

Mr. DONOVAN. In theory, I mean, the technology is evolving, 

and that is where we are going. You do still need to be able to 

bring that network back to backhaul access to fiber. And so that 

depends on permitting on how may hops away you can get from 

that until you truly have a mesh network. 

Chairman BLUM. It is an intriguing idea. That is why I asked. 

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The hearing title today is ‘‘Rural Broadband and the Business 

Case for Small Carriers.’’ And we get it, the business case is not 

typically good. The income per square mile, when there is not a 

dense population, is low, and the cost to get the service there because of the square mileage we are talking about is high. Typically 

not a good model for small business. 

So I only have like a minute and a half here, but I would like 

to get from each of you quickly. What is the number one thing that 

Congress can focus on to help make the business case for small 

providers in rural areas? What is the number one thing we should 

focus on? 

Ms. FITZGERALD. I talked plenty about USF, so I will turn my 

attention to roaming. 

Data roaming is incredibly important, and rural carriers are seeing their roaming revenues decline because the large carriers are 

simply unwilling to pay it. That leaves nationwide customers often 

without service in rural areas, and it also impacts the rural carriers’ ability to make a business case for serving your area. 

Chairman BLUM. Thank you. 

Mr. Donovan. 

Mr. DONOVAN. So I think in rural areas we are seeing an evolving business case. At your hearing a couple weeks ago, I appreciated one of your witnesses compared farm ag tech to right now 

with the mobile networks, that it rides on driving a Ferrari down 

a gravel road. 

That is not good enough. There are going to be new applications, 

particularly Internet of Things and narrow band Internet of Things 

in rural areas. Right now the role for Congress is how do we make 

sure that we can do the ‘‘if you build it’’ side of the ‘‘if you build 

it, they will come’’ equation. 

Chairman BLUM. Mr. Carliner. 

Mr. CARLINER. I would say, Mr. Chairman, the most important 

thing to be able to do would be to use Federal funds to provide direct grants for capital construction for the last mile. That is the 

most difficult nut to crack in rural broadband. And if we had assistance, direct grant assistance, to small rural ISPs to help do the 

construction element over the last mile, then you would make the 

operating plan sustainable. 

Chairman BLUM. Thank you. 

Mr. Owens. 

Mr. OWENS. Mr. Chairman, I would say predictability and universal service, again, is important. Our companies need that predictability and stability. The high cost fund needs to be—the size 

of it needs to be increased as well. 

Chairman BLUM. Thank you. And my time has expired. 

I would now like to recognize the gentleman from Illinois, Mr. 

Schneider, for 5 minutes. 

Mr. SCHNEIDER. Thank you, Mr. Chairman. 

Again, thanks for your testimony today and your perspective and 

insights on this issue. 

I want to pick up a little bit on the mesh networks for a second. 

Looking forward, I think, Mr. Donovan, you mentioned just in passing 5G. 5G is not available today, but it is on the horizon. What 

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will be the implications for 5G as we are looking at getting 

broadband into rural communities? 

Mr. DONOVAN. Sure. So 5G is not just one thing, which is what 

is so exciting about it right now, that it is many things. And in 

rural areas, it is everything from precision agriculture to monitoring cattle on ranchlands to the ultra high speed distance learning and telehealth applications. 

All of those are built on 4G networks. So as we are talking about 

policies to deploy 5G, it is not just a future issue. This is something 

that we really need to focus on today. 

At CCA we have a saying of you have to keep up with your G’s 

as you go from 2G, 3G, 4G. And if we can’t keep up with our G’s, 

then these rural areas will be left behind as we are in a global race 

for 5G dominance. 

Mr. SCHNEIDER. Ms. Fitzgerald. 

Ms. FITZGERALD. I also wanted to note it is important to remember that 5G applications use—small cell applications are very 

useful in certain applications. But I think the business case for 5G 

in rural America is still really evolving. You can’t cover hundreds 

of thousands of square miles with small cells. It doesn’t work like 

that. 

So 4G LTE, those LTE technologies are still incredibly important 

in terms of building out the wide spaces that exist in rural America. 

Mr. SCHNEIDER. Well, I think it will be important, as we move 

to 5G, that that bridging technology is protected, and that is a role 

I think the Federal Government will have a say in. 

Anyone else want to add? 

Mr. CARLINER. Yeah. 

Mr. SCHNEIDER. Mr. Carliner. 

Mr. CARLINER. One thing I want to mention is that we currently have the ability, we have a fixed wireless provider, we are 

not in the mobile space, and we have the ability to deliver 100 

megabits per second to a customer if they so desire. Even with that 

capability in our rural area, we have not had one customer come 

to us and ask for 100 megabit per second service. The vast majority 

of our customers are looking for 10 to 25 megabits per second into 

their territory. 

So I think it is terrific to push the envelope of technology and 

to keep the rural areas with their urban, suburban counterparts, 

but I would not want to see that come at the expense of providing 

much more affordable basic service to people who need it. Twentyfive megabytes per second is a great, is a robust high speed capability in most homes and businesses, and that, I think, is the first 

hurdle we all need to meet before we leap too much into new technology. 

Mr. SCHNEIDER. Again, picking up on something that Mr. 

Donovan said, I want to get it right, the implication of rural communities falling behind. 

What are the implications? Because with each G—and after 5G, 

there may be 6G, Apple skipped 9G on their telephone. But technology is constantly moving forward. As that moves forward without the investment, what happens to the communities, rural communities? 

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Mr. DONOVAN. So I will pick up on a theme, again, that your 

Subcommittee talked about a couple weeks ago in restoring rural 

America, that it is not only important for some of the ag tech and 

exciting innovations that are taking place on farmlands and ranchlands in rural areas, it also has to do with the quality of life where 

you have families and individuals that want to be able to participate in the modern economy but also want the quality of life of 

growing up where—or staying where they grew up and raising a 

family there. Being able to connect them means that it is not only 

about the farms and ranchlands, but it is about everything else 

that goes on in those communities. 

Mr. CARLINER. I will give two anecdotal examples in the area 

we serve, which is we have been told that, by economic development officials on one of the counties we serve, a company wanted 

to build a warehouse facility and bring jobs to that particular county. When they found out they would not have the internet service 

they required, that was the deal breaker. They would not invest 

there. 

The second example is we have heard actually from real estate 

agents in some of our territory that the biggest barrier to selling 

a home in these areas now is lack of high speed internet to the 

home. If there is no internet service to the home, the property values actually decline and it takes much longer to sell the home. 

Mr. SCHNEIDER. Ms. Fitzgerald. 

Ms. FITZGERALD. I also, in my testimony, mention this move 

from 2G and 3G voice service to 4G LTE. I mean, this is a change 

that could really decimate voice roaming in areas, which means 

that if that is not your home carrier, you may not have voice service, you couldn’t make an emergency phone call. We want to make 

sure that the level of service is preserved as these technologies 

move forward. 

Mr. SCHNEIDER. In the last couple of seconds, in the half 

minute I have, it also affects education, telehealth, things that are 

moving throughout the country will affect rural communities, if 

they are left behind it will make it harder for people to go back 

home, as you said. I think it is important that we maintain that. 

Mr. Carliner. 

Mr. CARLINER. I would say we have one school district in an 

area near where we serve where the kids at night, the parents 

drive them to the parking lot of the school at night to get the free 

WiFi because they don’t have internet service at home, and they 

do their homework in the car in the parking lot. 

Mr. SCHNEIDER. Well, thank you. 

With that, my time has expired. I yield back. 

Chairman BLUM. Thank you, Mr. Schneider. 

I would also like to mention that Mr. Schneider is the Ranking 

Member on our Subcommittee on Agriculture, Energy, and Trade. 

I would now like to recognize the gentleman from Utah, Mr. Curtis, for 5 minutes. 

Mr. CURTIS. Thank you, Mr. Chairman. We know a little bit 

about rural in Utah. 

And I would like to thank our witnesses for being here today. 

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Mr. Owens, you were kind enough to refer to my Rural 

Broadband Permitting Efficiency Act of 2018. And I would like to 

just go back to that for just a minute. 

Is it your experience that Federal reviews and permitting requirements are a major challenge? And especially if you think 

about the West, where I have some counties that are 90 percent 

Federal land. 

And would you mind just expressing your opinion on that? And 

will this bill help? 

Mr. OWENS. Yeah. Thank you for the question. 

We believe this bill will help expedite the processes. As you alluded to and as I indicated in my testimony, we had some of our 

members that took many, many more months and almost a couple 

of years before they could actually get a project approved. So we 

think this will be helpful going forward. 

We do want to talk a little bit more about the State permitting 

authority, to understand that a little bit more. But we ultimately 

believe the bill is a good one. 

Mr. CURTIS. Thank you. 

I must admit, as I listened to the four of you, I formed a picture 

of David and Goliath in my mind. And you must feel at times as 

if you have little pebbles, right, that you are throwing at this big 

monster. 

I guess one of the questions I have for you is, can we get there 

from here? And you have got some fundamental building blocks. 

You have got subscriber revenue. You have got the USF fund and 

roaming revenue. You have all brought up some flaws, especially 

with the latter two of those. 

Are you comfortable that we have the model in place to help you 

be successful? 

Mr. Donovan, you are ready to answer that question. 

Mr. DONOVAN. Yeah. So I think if you set the right policies, 

then David has got a fighting chance here. 

With respect to your bill and your work with Senator Hatch on 

this, thank you for those efforts. One of our members, Union Wireless in Wyoming and parts of Utah, when I visited them last summer, on their yard they had rows and rows of conduit that were 

waiting to go in. They were waiting to bring service to cell towers 

that will bring LTE service, but because of Federal permitting to 

deploy this fiber along a highway, the conduit was just sitting 

there in their yard. 

So some of these policies to streamline deployment, if I can leave 

one point, it is not only talking about downtown urban areas, that 

it is critical to providing service in all these rural parts. And with 

regard to your bill, especially, that being able to deploy the fiber 

assets is a critical part of the wireless delivery that consumers 

enjoy today. 

Mr. CURTIS. Good. 

Ms. FITZGERALD. I will echo that. And Union Wireless is also 

a member of ours, so they are well represented here. 

I think streamlining, permitting, all of those issues are tremendously important. And let’s not forgot the cost that goes into 

what—you know, they have the spectrum. They are paying for the 

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spectrum. They have all of these plans. And they are just waiting 

to put them in place. 

And so the cost involved with the permitting process and the 

waiting is tremendous. And so to the extent that we can move that 

process along, and I think your bill is helpful in doing that, more 

the better. 

Mr. CURTIS. Thank you. 

Ms. Fitzgerald, you talked about letters of credit. I am pretty 

sure that anybody that put a requirement for a letter of credit in 

has never had to apply and get a letter of credit. 

So I would just like to take this time to emphasize your point 

that that is hugely problematic. Oftentimes when we require a letter of credit it takes the same capital to hold that letter of credit 

that we are asking for. And so no doubt very problematic. 

I would also like to highlight and emphasize a point that at least 

two of you made, maybe more, that we have a flawed map. And I 

don’t know if any of you would like to revisit that again and talk 

about it. 

I know, Mr. Donovan, you talked about we are stuck with this 

for 10 years. And if we have a model that is tough enough as it 

is for you, right, and then we introduce something that is a flawed 

map that makes it very, very difficult, if not impossible for some 

of you to be successful, where do we go with that? 

Mr. Owens. 

And then, Mr. Donovan, if you will follow up. 

Mr. OWENS. Thank you. 

We actually polled our membership after the map came out and 

asked them what were some of the difficulties or if the map was 

actually accurate. And we got from a good number of our folks saying the service areas were highly inaccurate, the map was inaccurate, the map didn’t reflect the most recent broadband bandwidth increases that they had had or their fiber to the home locations. 

We believe the map is important, and you need to have a map 

to show where service is. But, again, with the 477 data, that needs 

to be updated and have more accurate data there. 

Mr. CURTIS. Mr. Donovan, I am out of time. But let me just end 

my comments with a big exclamation point behind your concerns, 

and let’s make sure this hearing recognizes that that is a major 

problem. 

Chairman BLUM. Thank you, Mr. Curtis. 

I now recognize the gentleman from Kansas, Mr. Marshall, for 5 

minutes. 

Mr. MARSHALL. Okay. Thank you, Chairman. 

Mr. Owens, you mentioned Rush County, Rush Center, Kansas. 

And I think sometimes we just don’t paint a good picture. I think 

most of us understand why the people in Rush County, Kansas, 

need internet, high speed internet access. 

Why does the rest of the world care? Why would the rest of the 

world care about Rush Center. 

And two businesses come to mind there. One is the Mid-State 

Farmers Co-Op in Rush Center and one is the LaCrosse Livestock 

Market. 

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Why would the rest of the world even care? I think that they understand. I can paint this picture that I need a train to get those 

goods to California and then ship to Japan, who pays a premium 

for this good Kansas beef we have. And everybody wants our high 

protein wheat as well. 

So why would the rest of the world even care that we have high 

speed internet in Kansas, in rural America? 

Mr. OWENS. Dr. Marshall, thank you for the question. 

Because it could mean—again, I think, as Mr. Donovan said, it 

is the quality of life. You don’t have to move to a city in order to 

live out on a farm. You can sell your products and goods across the 

world, not just locally. And you can do it at a cost that is probably 

much cheaper than actually going and having to do this in an 

urban environment. 

So those are some of the reasons why it is important to have 

high speed broadband connectivity in these rural areas. 

Mr. MARSHALL. And, Mr. Donovan, I know you have got quite 

a presence as well, in my district as well. And I am trying to understand your map here. I was looking at the little map you were 

talking about. 

Does it drive the cost down for consumers, the fact that La 

Crosse, Kansas, has high speed internet, I hope? 

Mr. DONOVAN. So I think you are right in talking about how 

the world wants the products that are created in Kansas. 

And a lot of these products are more efficient. We talked a little 

earlier about how you can have higher yields and use less resources if you have precision agriculture technology. There is a lot 

of focus now on self-driving vehicles. Well, rural America has had 

those for years. They are just made by John Deere, Case, and others. 

Those don’t work if you don’t have the mobile network that actually provides them that, then, in turn leads to greater productivity, 

drives down the cost for these goods for consumers all around the 

world while also increasing profitability for your constituents. 

Mr. MARSHALL. So describe, for the world that doesn’t know 

what today’s farmer looks like, how technologically dependent they 

are. You know, a farm that used to have—maybe it would take 20 

or 30 people to run it. Now it has got one or two. What does today’s 

farm look like? 

Mr. DONOVAN. I mean, today’s farmer is more of an agriculture 

engineer than what you think of, of a blue jean wearing out in the 

field. 

Everything is connected. And if you don’t have the network that 

powers those connections, everything from soil monitoring, that you 

can now have an application that ties together the seeds that you 

have in the ground with the weather forecast telling you how many 

pounds of products you need to put on what parts of your farm, because rain is coming, you are not going to be able to get there. 

How do we make sure that that is available to today’s farmer so 

that they can continue to compete in a global economy? 

Mr. MARSHALL. Right. And I know my farmers are so ecologically minded today, and they always have been. They have been 

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servation issues going on in Kansas and we try to protect the environment by putting less fertilizers on. 

Ms. Fitzgerald, do you want to talk a little bit? How does today’s 

farmer use technology for water conservation and maybe decreasing the input? It is not just to drive the cost down, but also to help 

ecology. 

Ms. FITZGERALD. Sure. We say that supporting rural America 

strengthens all America. And I think that is especially true when 

it come to the case for ag tech and things like that. I mean, certainly anything that the farmers out there can use to make them 

more efficient and certainly take steps to preserve the land, I think 

that they are more than happy to do so, but they need the 

connectivity to do it. 

And I will remind the Committee that those connections don’t 

occur right next to the road all the time. And so it is really important that those networks spread into pastures, into fields, and are 

able to connect with the machines that are available out there. 

Mr. MARSHALL. Yeah. I have shared this story before, but my 

mother was raised on a farm where she was the last farm on a 

dead-end road that didn’t have electricity until eighth grade. And 

I am just trying to imagine what that farm would be like from a 

production standpoint without electricity. 

And this is the 21st century. Getting electricity to that last farm. 

And we are blessed to live in a country where we spend 8 percent 

of our domestic product on groceries, on food, where most world 

leaders are spending 18, 25 percent. And I can’t help but think that 

this high speed internet is part of that solution to why we can do 

that. 

Mr. Carliner, do you want to add anything to that? Give you a 

pulpit. 

Mr. CARLINER. No question. In our service area, Dr. Marshall, 

the Delmarva area is a large poultry processing, poultry growing 

region. And we have heard from poultry processors and farmers 

who are desperate for high speed internet for remote sensing, monitoring chicken houses. Farmers are a group that demands the 

internet more than any other group, I think, in our area. We hear 

from farmers all the time for precision agriculture, monitoring, remote sensing. It is as important to them now, as you just mentioned, as electricity in the 1930s, and then phone service. Internet 

service is a critical utility to a farmer today as anything I can engine. 

Mr. MARSHALL. Yeah. And for the record, it was the 1940s. I 

don’t want to make my mom older than she is. She is going to turn 

80. Let me see, what is today’s date? I think it is tomorrow or the 

next day. Whenever March the 8th is. 

Thank you, Chairman. I yield back. 

Chairman BLUM. Thank you, Dr. Marshall. 

The gentleman from Kentucky, Mr. Comer, is recognized for 5 

minutes. 

Mr. COMER. Thank you, Mr. Chairman. 

My first question is for Mr. Donovan. 

You describe in your testimony recent actions by policymakers to 

alleviate some of the administrative burdens to deployment of rural 

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broadband. Are there administrative burdens that policymakers 

have not yet addressed? 

Mr. DONOVAN. Thank you for the question. And as a table setting, it is an important issue for all carriers. Recently a group of— 

the leaders from several of my members, 24 non-nationwide carriers, including Bluegrass Cellular in your district, weighed in on 

just how important this is. 

It is spring training, so maybe I will take it that maybe we don’t 

need to swing for the fences and hit a home run. We can score a 

lot of runs with singles. And so where the FCC can act this month 

to start streamlining that process, they should. Where there are 

other spaces for Congress to act, like some of the bills that we have 

discussed today, that is another great opportunity. 

There are several pain points. And so we have prepared a flowchart that is going to be way too small for you to see on all the 

steps to site infrastructure. I am happy to provide it for the Committee. 

All of those are pain points that there are opportunities for relief 

from policymakers so that we can actually spend these dollars and 

time on getting broadband out into your communities instead of 

spending it on a team of lawyers in D.C. and trying to navigate 

through this maze. 

Mr. COMER. Good answer. 

Mr. Carliner, from your perspective as cofounder of a small internet service provider, can you walk us through your calculus as you 

determine whether the business case is strong enough to justify deploying broadband in rural, high cost areas? 

Mr. CARLINER. Yes, sir. 

When we look at an area where we are going to deploy internet 

service, two things are critical, or three things. The first is, what 

infrastructure already exists? Do we have access to a fiber network 

somewhere? Are there existing tower assets somewhere? And, finally, what is the population density? 

And we match the capital cost of construction versus what we 

anticipate the revenue stream will be. We assume a very low penetration rate, a very low subscriber rate, so we have to make the 

case each site to be sustainable and profitable for each tower, each 

site. 

And if we are able to do that, then we will go ahead and make 

that investment. But we make that calculation literally per tower 

per site. 

Mr. COMER. At what point are the costs too high to justify investing in these rural areas? 

Mr. CARLINER. I think it goes back to sort of the long-term of 

the return on investment and how long it takes to get that return 

on investment. If it is going to be many, many years to get that 

investment, we won’t make that investment. We look for a return 

on investment that is in a reasonable timeframe that we can support, and that really is the issue. It is the time and the return on 

the investment. 

Mr. COMER. Let me follow up. This will be my last question. 

What happens if you are unable to offset your expenditures? 

Mr. CARLINER. If we can’t offset our expenditures, then we will 

probably have to shut down that site. It simply costs us too much 

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money. It is a loss. So we would probably be in a position where 

we would eventually just turn off the site and not provide that 

service. 

Mr. COMER. Have you ever had to do that in any area? 

Mr. CARLINER. Thus far, fortunately, we have not. But there 

have been cases where we almost did, and it would have been a 

mistake. But we are very, very careful in how we do that. 

We were careful in our business plan that we made the case to 

USDA and to others that our goal is not necessarily to cover 100 

percent of a territory or a county, but to cover 80 percent of the 

population. And that is a critical difference. When you start with 

that basic, you make it affordable. If you try and cover an entire 

territory on a map, that last 20 percent blows your business case. 

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

Chairman BLUM. Thank you, Mr. Comer. 

Before I give my closing statement, I just have one further question. Dr. Marshall took one of my questions about the importance 

of rural broadband for ag, and that is a good question. 

I would like to have whoever feels qualified to give an answer to 

how important is rural broadband, tell the rest of the country here 

in terms they can understand for healthcare. And where do you see 

telemedicine? Where do you see the healthcare market going? 

Because in rural counties, and I have 17 of them, of my 20 counties, are rural, folks have to drive a long way to receive healthcare. 

Veterans have to drive a long way. 

And just in layman’s terms, how important is rural broadband to 

the healthcare market? 

Ms. FITZGERALD. I think it is tremendously important. You see 

rural markets that have a difficult time attracting and retaining 

healthcare professionals. So to the extent that you can do video 

exams for minor cases, to the extent that you can utilize that technology to help folks that have a difficult time making sometimes 

very long trips, it is tremendously important, and it helps keep the 

costs down as well. 

Chairman BLUM. Mr. Donovan. 

Mr. DONOVAN. I would just add on to that that it matters in 

the day-to-day as well. An important aspect of telehealth is some 

of the monitoring programs. And one of our rural carriers that 

serves Sunflower County in the Mississippi Delta has already 

saved the State Medicare program hundreds of millions of dollars 

from a remote diabetes monitoring program. That has reduced the 

need to go visit hospitals, and it is transforming these patients’ 

lives, so it is important. 

Chairman BLUM. Where is that at, Mr. Donovan? 

Mr. DONOVAN. In Sunflower County in the Mississippi Delta. 

Chairman BLUM. Has saved how much? 

Mr. DONOVAN. Has saved the State of Mississippi over $100 

million so far just on monitoring. So these are real dollars and real 

changes in patients’ lives. 

The comparison to electricity is an adequate one and one that the 

CEO of Qualcomm had made earlier this year, that 5G is going to 

be just as transformational as electricity or the automobile. That 

means that it affects every other industry that it touches, including 

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healthcare. So it is that important to make sure that these areas 

have access to these services. 

Chairman BLUM. You are right, that is real money, even in 

Washington, D.C. 

Mr. Carliner. 

Mr. CARLINER. I would also say, Mr. Chairman, that it is also 

important, people don’t realize in urban areas how important rural 

areas are in this field. For example, being in a rural area, it allows 

us to be a test-bed for new technologies and new approaches that 

you simply can’t do in an urban area. 

For example, in our lifetime, we are going to see drones become 

regular parts of our lifetime. Drones are going to need networks to 

connect to. And I think rural areas are going be to the test-beds 

for drones and for this new world in the IoT and Internet of 

Things, that rural areas provide great test-beds, telemedicine, telelearning approaches and technologies and services that can be validated in a rural area that don’t lend themselves to the urban area 

first. 

So I would say to folks who are living in the cities why rural 

areas are so important is because a lot of the technologies and 

services that have just been talked about start in the rural area 

first and then are adopted in the urban area. 

Chairman BLUM. Interesting. 

Mr. Owens. 

Mr. OWENS. I would agree exactly with that point. Our companies are definitely innovators. They bring a lot of these new technologies to life early on, and then they get expanded upon and 

made better when they come to the cities. So I would totally agree 

with that. 

I would also add that it is important that we talk about fiber 

building in order for these services to work, especially for medical. 

When you talk about digital imaging and things of that nature, you 

need fiber in the ground in order for those pictures and those diagrams and x-rays and things of that nature to actually go as quickly as possible, because in many instances you may have life-ordeath circumstances. 

And I am sure you probably remember when AOL first came out, 

how long it took for you to actually download a picture. With fiber 

you are able to now do that instantaneously. 

So I don’t want us to lose sight that you need to have a fiber 

backhaul and fiber in the ground to make even medical imaging 

work properly. 

Chairman BLUM. Thank you very much for those insightful answers. 

I would like to recognize Dr. Marshall for as much time as he 

may need. 

Mr. MARSHALL. Well, thank you so much, Chairman. My eyes 

lit up to talk about telemedicine and how important this is. 

I represent 63 counties. I think I have been to every hospital. 

People often ask me, what are rural hospitals of tomorrow going to 

look like? And they are going to be centered around this emergency 

room. 

If you think about a rural healthcare, you think about trauma 

and you think about strokes and heart attacks. Those are probably 

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the three main reasons that people come to a healthcare facility in 

a rural community. 

Colby, Kansas, Citizens hospital, little Colby, Kansas, but they 

have an ER that is connected 24/7 to a trauma center. And we now 

have heart protocol and stroke protocols in place. So when a person 

presents, it is so important in that first 30-minute window to give 

them a blood thinner, a tPA drug, that can literally save their life. 

From a healthcare cost efficiency, if you prevent that stroke, 

think how much stroke patients cost to rehab, and they spend 

maybe 60, 90 days in a hospital, and then months in a facility. 

So having access to that and just having a nurse on the other 

line 24/7, there are big complications from tPAs. You don’t want to 

give it to the wrong patient have them bleed out on you. 

And then the second thing I am seeing that is incredible is in the 

veterans health. We have a minibus that goes from community to 

community, stopping at State fairs, focused on veterans health 

issues. And they are able to hook up with telemedicine back to the 

VA center where the psychologists or the psychiatrists are, the 

counselors. 

We are losing 22 veterans a day to suicide. Those folks aren’t 

going to drive 300 miles to the VA center from rural America. This 

is a minivan going out to them and asking how they are doing. 

When it comes to telemedicine, what special needs are there for 

this minivan versus the ER versus, maybe, what, a farmer? Is it 

the same needs or is it different? 

Ms. FITZGERALD. I think in many ways it is the same. I mean, 

any time you are doing sort of realtime video, you need a strong 

mobile network, particularly in the vans that you mentioned. You 

know, they may be parked in a parking lot somewhere. So you really do need strong download and upload speeds, strong network to 

convey that realtime back-and-forth data. I mean, that is the trick. 

Mr. MARSHALL. Yeah. The realtime is the thing. I don’t quite 

understand what that would take. 

Mr. Donovan. 

Mr. DONOVAN. I think the one biggest distinction between 

when you are at a fixed location like a hospital versus the van is 

by its very nature it is mobile. And so you need access not just to 

the strong fiber connections, but to strong enough mobile signals 

that you can actually still maintain that connectivity over the wireless network. You are not going to be able to drive very far if you 

have to haul the fiber behind you as you are driving around the 

State. 

Mr. MARSHALL. We try to. 

Mr. Carliner, do you have anything to add? 

Mr. CARLINER. Yeah, I would agree. And, also, I think we are 

living in a world where wearable technology now, the wearable devices are going to put further and further pressure. And also great 

opportunities. As these devices become better and better, the need 

for that connectivity with hospitals is going to be even more important. 

So I think the technology is going to drive the demand for these 

services even more than it is, than it is right now. And I think 

more critical, we serve an island in the middle of the Chesapeake 

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Bay. And before we were able to get internet service, they had no 

connectivity. 

So now they have connectivity. It makes a big difference to be 

able to have a teleconference with a local hospital than have to get 

in a boat in the middle of winter and cross that bay. 

There are thousands of other examples like that around the 

country. But the wearables technology I think is going drive this 

demand even more. 

Mr. MARSHALL. Sounds great. 

Mr. Owens, what is going on in my district with healthcare and 

telemedicine that you know about? 

Mr. OWENS. Unfortunately, I can’t comment too much on that. 

But I know Golden Belt Telephone is doing its best to make sure 

that the hospitals are connected with fiber connections and working with other carriers to make sure, as you heard Mr. Donovan 

say, ensuring mobility as well. 

Mr. MARSHALL. They all do a great job. All the carriers, the 

rural carriers, just are very committed to doing the right thing. 

Love working with them. Think that their heart is in the right 

place. We just have to empower them to do their job. 

Thank you. 

Chairman BLUM. Thank you, Dr. Marshall. 

Now I would like to recognize the Ranking Member, Mr. Lawson, 

for as time as he may take. 

Mr. LAWSON. I won’t take too much, Mr. Chairman. 

Mr. Donovan, there are numerous recommendations for promoting broadband infrastructure deployment, as we discussed 

today. And then there are many who have proposals to create new 

Federal programs in various departments to make capital available 

for broadband infrastructure. 

What are your views on these proposals? And are any better suited to address the needs of rural areas? 

Mr. DONOVAN. Thank you for that question. 

I think part of it goes back to making sure that agencies that 

have an understanding of how these carriers operate and where 

service is available is a fundamental part of it. That is, of course, 

premised on having accurate data available to those agencies. 

So if any funding coming available, there is not enough Universal Service Fund support, just full stop. But for any of the programs, I think my colleagues on the panel would agree with that, 

anything to provide additional resources to those carriers is important. 

We also, in that same vein, the Universal Service Fund is not an 

appropriated budget item, and we don’t want it to become one. It 

is hard to build out with a certainty that you may have through 

a couple-week continuing resolution, that you need to have longterm certainty in order to deploy in these networks. Goes back to 

Congress, in creating the fund, Congress directed reasonably comparable services, and we have heard before today with sufficient 

and predictable support. So how can we make sure that that happens? 

Mr. LAWSON. Okay. Anyone else care to comment on that? 

Mr. OWENS. I would just add, obviously, any moneys that are 

appropriated should be targeted to make sure that we are able to, 

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again, make the most use of those dollars in building out the networks and using those dollars to work with the Universal Service 

Fund. As Mr. Donovan said, it is not appropriated dollars for USF, 

but any appropriated dollars that do come, I think it would help 

make it easier and better to build out additional broadband. 

Mr. LAWSON. I grew up in a very rural community. And when 

I was a kid my brother and I were fascinated when the electricity 

finally came. And when the light came on in the area, we stayed 

up all night trying to see when it was going to go out because we 

had never seen it before. 

In the rural area now with broadband, it kind of reminds me of 

people who don’t have access, how extremely important it was for 

us to get electricity because they didn’t bring it out there. It was 

the rural electrics who brought it out there. 

Do you see a similar type situation with broadband in the rural 

areas similar to what I am speaking of? 

Mr. DONOVAN. So we hear time and time again from customers 

served by rural wireless carriers how it is a breath of fresh air 

when you go from having unreliable mobile broadband coverage or 

constant dead spots to being able to seamlessly connect. So I think 

that experience is being enjoyed now. We need to make sure that 

more and more Americans are able to have that breath of fresh air. 

Ms. FITZGERALD. I agree. It really is a matter of quality of life. 

It is your kids being able to do their homework. It is you being able 

to be driving on a road at night and calling 911 if you need to. It 

is about public safety. It is about all of those things. Starting a 

small business. It is really about the quality of life that we want 

our citizens to have throughout the country and also in rural areas. 

Mr. CARLINER. And also, Mr. Lawson, we have found that even 

areas where there was no internet service, people were using their 

cell phones. And their cell phone bills every month were $400, $500 

a month because they were blowing through their data limits because they had no other alternative. 

When high speed internet arrives, that goes down to $40 or $50 

a month as opposed to $400 or $500 a month. So there is real immediate impact even beyond the need for the service itself. 

Mr. OWENS. Yeah. I would add that as wireline broadband providers are carriers, when they get a certificate area for service, 

they have to serve that whole area. So they just can’t pick and 

choose where they are going to serve. 

And we have carriers who are saying customers at the far extreme of their service territory are extremely happy when they get 

broadband. It may not be the full 25/3. It could be 4/1 or 10/1. But 

they are extremely excited once they get it, because they have not 

had it before. 

Mr. LAWSON. I yield back, Mr. Chairman. 

Chairman BLUM. Thank you, Mr. Lawson. 

You may not have had electricity, but I will bet you had a basketball hoop. 

Mr. LAWSON. Oh, yeah. Absolutely. 

Chairman BLUM. I would like to thank our witnesses today for 

your excellent testimony. Make sure you stay in touch with the 

members of this community, because I think everyone would agree 

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it is the most important issue, especially for those of us who represent rural counties. 

We have heard just how difficult it can be for small rural carriers 

and new entrants to maintain a viable and sustainable business. 

As with any small business, access to capital and adequate financing is the key to stability and success. 

We are reminded that should these carriers become unable to 

sustain their business models, the outcome most likely would be 

disastrous. The end result is that our communities and our citizens 

located in these high cost rural areas pay the price. 

The path to a comprehensive infrastructure plan should include 

solutions to improve rural broadband in fair competition for our 

small carriers. Our family farms, our rural entrepreneurs, small 

towns, and the next generation of innovators depend on it. 

I ask unanimous consent that members have 5 legislative days 

to submit statements and supporting materials for the record. 

Without objection, so ordered. 

We are adjourned. 

[Whereupon, at 11:28 a.m., the Subcommittees were adjourned.] 

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Testimony of Paul Carliner 

Co-Founder of Bloosurf LLC before a Joint Hearing of the 

House Small Business Committee Subcommittee on Health and 

Technology 

and the Subcommittee on Agriculture, Energy and Trade 

March 6, 2018 

Chairman Chabot, Ranking Member Velazquez and members of 

the Committee, I am Paul Carliner, co-founder and CEO of 

Bloosurf. Thank you for the opportunity to appear before you today. 

Bloosurf is rural high-speed internet service provider located in 

the Salisbury, Maryland. Our company was founded in 2009 with 

the goal of providing affordable and sustainable high-speed internet 

service on the lower Eastern Shore of Maryland. We provide service 

to homes, businesses, schools, hospitals and even to residents living 

on an island in Chesapeake Bay. 

The digital divide between urban and rural America is growing 

and getting worse. As major urban and suburban areas continue to 

see robust capital investment in internet infrastructure, including 

the rollout of new 5G mobile service later this year, rural America 

is struggling with providing basic internet service. 

In 2010, Bloosurf was awarded $3.2 million by the U.S. Department of Agriculture’s Rural Utility Service to build a new, state of 

the art fixed wireless LTE network covering approximately 100,000 

households across three rural Maryland counties on the lower Eastern Shore. 

We built our network on time and returned over $1 million to the 

government. We designed, built and now operate a state of the art 

last mile network covering three counties for $2.2 million. We have 

validated a new low-cost model for providing high speed internet 

service to rural areas. As a small rural internet service provider 

(ISP), I’d like to share with you our experience, lessons learned and 

recommendations for the future. 

We are grateful to the Rural Utility Service’s Telecommunications Program in particular Ken Kuchno and Rick Gordon who 

were instrumental in helping us and so many other companies 

build out the rural broadband infrastructure. Their leadership and 

hard work has brought internet service to thousands of rural 

homes and businesses for the first time. 

The state of Maryland and the Maryland Broadband Cooperative, 

in particular Pat Mitchell and Drew Van Dopp, have been critical 

in helping our company provide internet service to the rural communities we serve. As a state chartered cooperative, Maryland 

Broadband provides a public fiber network that connects to 

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Bloosurf’s wireless last mile network. It is a national model of local 

public-private partnerships that combine middle mile assets with 

last mile solutions to serve rural communities. 

First, it is abundantly clear that the only way rural America will 

cross the digital divide is with sustained public investment by the 

local, state and federal governments. Without public investment, 

rural high-speed internet companies will be limited in their ability 

to grow and sustain service over the long term. If a rural community has a high percentage of unserved households, the need for 

public investment is even greater. 

We applaud the Federal Communications Commission (FCC) and 

Chairman Pai for moving forward with the Connect America Fund 

II Reverse Auction to allocate up to $2 billion for rural broadband 

expansion this year. This auction will be a critical step in furthering the build-out of rural broadband infrastructure for many 

rural communities across the country. 

Without public investment, the business care for private investment in rural broadband is poor. The capital expenditures are high 

and the revenue stream is low. The median income of many rural 

areas is often well below their urban and suburban counterparts, 

further limiting revenue. This is why large national wireless companies and cable companies do not invest in the rural market. The 

market structure is unfavorable to debt financing and there is a 

limit to the amount of equity financing that a small business can 

accommodate. This is why public investment is so essential. 

The most effective and efficient form of public investment would 

be in direct capital grants to assist small rural ISPs in building the 

last mile infrastructure. By covering the capital costs including design and construction it allows a small ISP to provide high speed 

internet service to a small subscriber and revenue base. This is one 

of the most effective incentives for promoting the expansion of 

rural high-speed internet. 

Small rural internet service providers are key to building the 

rural broadband infrastructure. Rural ISPs know their communities, have existing relationships with local and state governments 

and can engineer local solutions that meet each community’s 

unique needs in a way that large national corporations can’t. When 

it comes to providing high speed internet service in rural communities, we know from experience that one size does not fit all. Every 

rural community is different. Some communities have hills and 

mountains, some are surrounded by water, some are completely 

flat and population densities vary widely. Engineering a solution 

that works for each community and that is affordable and sustainable for each community is what rural ISPs do best. 

Each community needs a customized solution that uses the correct technology solution appropriate and sustainable for that community. In some communities, fiber to the premises may be a viable option, but in other areas, fixed wireless or satellite may be 

more appropriate or a combination of all three. The companies best 

suited to make these decisions are already working in these communities but need the support of all levels of government to help 

provide high speed internet service to this hard to reach market. 

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Second, any federal strategy to help expand rural high-speed 

internet service must focus on the last mile—that part of the network that actually brings internet service directly into the home 

and business. 

Previous public investments focused heavily on the middle mile— 

the fiber or cable under the highway or county road. After a decade 

or more of public and private investment in the middle mile, the 

federal government should focus on how to monetize that investment by actually providing service into homes and businesses. 

Rural communities paid for this infrastructure through their tax 

dollars, now it’s time they actually get service. 

Federal funds should be used to encourage local and state governments to adopt comprehensive last mile strategies with local 

internet service providers that combine the middle mile and last 

mile into sustainable and affordable high-speed internet service for 

rural residents. Some states have already started on this path. 

Delaware is one of the state leading this effort. Last year under 

the leadership of Gov. John Carney, the Delaware Department of 

Technology and Information initiated a pilot project to demonstrate 

the feasibility of fixed wireless technology as a cost effective last 

mile solution for rural areas. Bloosurf participated in this effort 

and the data being collected will help shape a larger statewide initiative to provide affordable and sustainable high-speed internet 

service to all rural residents and businesses in Delaware. 

Several counties in Virginia have established broadband authorities to build last mile networks and the state of Maryland under 

Gov. Hogan’s leadership established a rural broadband task force 

to explore options to expand high speed internet service to all rural 

parts of the state. The federal government should follow the lead 

of these states and focus on the last mile as the cornerstone of any 

new national rural broadband initiative. 

Third, federal agencies must adopt policies and regulations that 

encourage and incentivize rural internet service providers to invest 

and grow in the rural marketplace. This beings with looking at 

ways to lower the barrier to entry in this market by making it easier for small rural ISP’s to access critical federal funds. 

Onerous financial requirements for accessing federal funds such 

as large lines of credit, arbitrary operating margins and debt to equity ratios are not the most important criteria in assessing an ISPs 

viability and do not offer guidance in judging future performance. 

Instead, these requirements, although well intentioned, simply discourage small ISP’s from participating in the first place. The emphasis should be on past performance metrics and not exclusively 

on traditional financial metrics. Through monitoring and oversight, 

the federal government can protect the taxpayer interest instead of 

setting a financial bar so high that rural ISP’s can’t compete. 

One option to ensure financial viability and protect taxpayer investment would be to simply require a performance or construction 

bond, rather than a complex set of financial requirements. This 

would ease the path to participate for the ISP, protect the taxpayer 

investment and reduce the workload on the federal government. 

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Access to affordable licensed spectrum for small rural ISPs is another critical element to providing affordable and sustainable 

broadband service in rural areas. Licensed spectrum has two important benefits to rural ISPs. For the consumer, it means greater 

speeds and faster service. For the ISP, it means lower operating 

costs and higher margins. Licensed spectrum lowers the cost for 

ISPs because it allows wireless service to travel much farther than 

unlicensed spectrum. Bloosurf uses licensed spectrum and we’ve 

seen the results. We have a business customer nineteen miles away 

from a tower that’s getting 10 Mbps of service—more than enough 

to stream video and search the web. 

Achieving that level of service can only be done with licensed 

spectrum. It only took the construction of one tower to reach that 

customer. If Bloosurf did not have licensed spectrum, we could not 

have reached the customer or we would have had to build additional towers which would have made it too expensive. The FCC 

must find a way to allocate licensed spectrum in rural areas to 

local ISPs that is affordable to those companies. 

Bloosurf partnered with three public universities in our service 

area, Salisbury University, WorWic Community College and the 

University of Maryland Eastern Shore to sublease their licensed 

spectrum in exchange for providing high speed internet service to 

the university communities and sharing revenue generated from 

that service. We are grateful to all three universities for the leadership in their communities and for this partnership that has 

brought high speed internet service to rural communities in Maryland that previously had little or no access to affordable internet 

service. 

Small rural ISPs are also laboratories of innovation for implementing new approaches and the latest technologies to provide 

high speed internet service. Our company uses commercial off the 

shelf components, open source software and partnerships with 

manufacturers and local and state governments to improve the 

quality of service while reducing costs. Technology, particularly 

wireless technology is changing rapidly. ISPs can adapt new technologies quickly and serve as incubators for innovation in this 

space. 

Finally, there should also be a mechanism to share and exchange 

information between the federal government and rural ISPs when 

it comes to issues such as cybersecurity. A network is only as 

strong as its weakest link. Many ISPs do not have the expertise 

and resources to invest in the latest cybersecurity technology and 

are often forgotten when setting national policies or allocating federal resources. There should be a program, policy and mechanism 

to assist rural ISPs in meeting basic cybersecurity protocols and 

updating them as necessary. 

Access to affordable high-speed internet service is critical for 

rural communities to retain and attract new jobs, improve the 

quality of education and provide basic services such as medical 

care. Rural ISPs are at the forefront of this effort and have been 

for some time. Unlike the large national cable and wireless network companies, we are local companies employing local residents 

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and hiring local companies. There is a multiplier effect with a rural 

ISP that you simply do not get with a large national company. 

I hope that sharing our experience will assist you and this Committee in its important work in helping small businesses and improving the lives of rural residents by ensuring that they have access to affordable high-speed internet service. The digital divide between urban and rural America is growing. The solution is easy. 

We just need the will to move forward. 

Thank you. 

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