Telecommunications: Broadband Deployment Plan Should Include Performance Goals and Measures to Guide Federal Investment
Published: 2009-05-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States ranks 15th among the 30 democratic nations of the Organisation for Economic Co-operation and Development (OECD) on one measure of broadband (i.e., high-speed Internet) subscribership. The Federal Communications Commission (FCC) has regulatory authority over broadband, and several federal programs fund broadband deployment. This congressionally requested report discusses (1) the federal broadband deployment policy, principal federal programs, and stakeholders' views of those programs; (2) how the policies of OECD nations with higher subscribership rates compare with U.S. policy; and (3) actions the states have taken to encourage broadband deployment. To address these objectives, GAO analyzed the broadband policies of the United States and other OECD nations, reviewed federal program documentation and budgetary information, and interviewed federal and state officials and industry stakeholders.
section_title: What GAO Found
paragraphs: According to federal officials, the federal approach to broadband deployment is focused on advancing universal access. Federal officials said that historically the role of the government in carrying out a market-driven policy has been to create market incentives and remove barriers to competition, and the role of the private sector has been to fund broadband deployment. Under this policy, broadband infrastructure has been deployed extensively in the United States. However, gaps remain, primarily in rural areas, because of limited profit potential. Eleven federal programs help fund telecommunications infrastructure deployment, particularly in rural areas, and two of these programs, administered by the Department of Agriculture's Rural Development Utilities Program (RDUP), focus specifically on broadband infrastructure deployment. Industry stakeholders credit federal programs with helping to increase broadband deployment, particularly in rural areas, but told GAO that because of the high cost and low profit potential of providing broadband services in rural areas, the federal government will likely need to provide additional funding to achieve universal access. The American Recovery and Reinvestment Act of 2009 provides more than $7 billion to the Department of Commerce's National Telecommunications and Information Administration (NTIA), FCC, and RDUP, to map broadband infrastructure in the United States, develop a plan for broadband deployment, and issue loans and grants to fund broadband access and availability in rural areas. This funding will greatly increase the potential for achieving universal access, but overlap in responsibilities for these new broadband initiatives makes coordination among the agencies important to avoid fragmentation and duplication. Current administration officials said they are still formulating their telecommunication agenda. In comparison to the policies of several other OECD countries with higher broadband subscribership rates per 100 inhabitants, the U.S. policy lacks elements identified by the Government Performance and Results Act of 1993 as essential to achieving effective and efficient policy outcomes. Specifically, according to officials of these countries' governments, several of the OECD nations with higher rankings have written broadband policies, action plans, goals, and performance measures. A number of these other countries also have provided financial support, created financial incentives, or taken other steps to promote broadband. In interviews with state officials, GAO learned that states vary in their actions to encourage deployment. Officials in more than half the states cited gaps in broadband deployment and said their states were considering or had taken actions to address these gaps. Officials in 12 states said they had mapped their states and 13 more said they had plans to map; officials in 12 states said they have broadband deployment plans; and officials in 14 states said they have provided some type of financial support for broadband deployment.

section_title: Letter
paragraphs: Universal access to the Internet via broadband technologies—commonly  referred to as broadband Internet access—is considered a critical  economic engine, a vehicle for enhanced learning and services, and a  central component of 21st-century news and entertainment. For example,  broadband technology makes it possible for patients to go to clinics near  their homes and receive medical attention from specialists hundreds of  miles away; allows students to access information not available from their  local libraries; and gives school systems a means of using one teacher to  provide advanced courses to students in multiple schools. The  Telecommunications Act of 1996 directed the Federal Communications  Commission (FCC) and state public service commissions to encourage the  deployment of advanced telecommunications capability, including  broadband. Additionally, in 2004, President Bush stated as a national goal  that there should be universal, affordable access to broadband technology.  Similarly, in January 2009, President-elect Obama spoke of expanding  broadband lines across rural America.
Despite the importance Congress and past and current administrations  have placed on access to broadband, the United States has not achieved  universal access to broadband technology and lags behind other countries  in terms of subscribership. For example, the United States slipped from  4th in 2001 to 15th in 2007 and 2008 among the 30 democratic nations that  make up the Organisation for Economic Co-operation and Development  (OECD) in the number of broadband subscribers per 100 inhabitants.  Although this measure is only one of five criteria for evaluating broadband  markets, the decline of the United States in OECD’s rankings caught the  attention of policy makers.  In October 2008, the Broadband Data  Improvement Act initiated a variety of measures to improve the quality of  federal and state data regarding the availability and quality of broadband  services and to promote the deployment of affordable broadband services  to all parts of the nation.  In February 2009, the American Recovery and  Reinvestment Act of 2009 (Recovery Act) authorized $7.2 billion for the  development of a national broadband plan, the nationwide mapping of  broadband availability, and the deployment of infrastructure to unserved  and underserved areas.
Most federal programs that help fund broadband focus on improving  broadband deployment—that is, building the infrastructure on which  broadband services can be provided—because the infrastructure must be  built before the services can be delivered. You asked us to examine these  federal efforts. Accordingly, this report discusses (1) the current federal  broadband policy, the principal federal programs that support the  deployment of broadband infrastructure, and stakeholders’ views of those  programs; (2) how the policies of those OECD nations currently ranked  ahead of the United States in terms of subscribership compare with the  U.S. policy; and (3) actions the states have taken to encourage broadband  deployment.
To address these issues, we analyzed relevant laws, regulations, policies,  and programs pertaining to broadband deployment; interviewed federal  officials about the policies and programs supporting broadband  deployment; and obtained information from officials and from Web sites of  some of those OECD nations currently ranked ahead of the United States  in terms of subscribership about their nations’ broadband policies and  programs. We reviewed federal programs identified by the Congressional  Research Service (CRS) as funding some kind of domestic assistance  related to telecommunications that have provided federal funds to deploy  broadband infrastructure. To compare the current federal broadband  policy to the policies of those OECD nations that currently rank ahead of  the United States in terms of subscribership, we assessed the extent to  which each incorporated such elements as a written policy, an action plan,  and measurable goals. For more information on OECD rankings, see  appendix I. To obtain the views of stakeholders and states, we interviewed  representatives of U.S. broadband provider associations and consumer  organizations and interviewed the Chief Information Officer (or his or her  designee) in 48 of the 50 states and the District of Columbia. We  conducted our work from March 2008 through May 2009 in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives. See appendix II for more information about our scope  and methodology.
subsections: section_title: Background
paragraphs: The Internet became widely accessible to U.S. households by the mid- 1990s. For a few years, the primary means to access the Internet was a  dial-up connection, in which a standard telephone line is used to make an  Internet connection. A dial-up connection offers data transmission speeds  of up to 56 kilobits per second (kbps). Broadband access to the Internet  became available by the late 1990s. Broadband differs from a dial-up  connection in certain important ways. First, broadband connections offer  a higher-speed Internet connection than dial up. For example, some  broadband connections offer speeds exceeding 1 million bits per second  (Mbps) both upstream (data transferred from the consumer to the Internet  service provider) and downstream (data transferred from the Internet  service provider to the consumer). These higher speeds enable consumers  to receive information much faster and thus enable certain applications to  be used and content to be accessed that might not be possible with a dial- up connection. Second, broadband provides an “always on” connection to  the Internet, so users do not need to establish a connection to the Internet  service provider each time they want to go online. The higher transmission  speeds that broadband offers cost more than dial up, and some broadband  users pay a premium to obtain very-high-speed service.
Consumers can receive a broadband connection to the Internet through a  variety of technologies, including, but not limited to, the following:    Cable modem. Cable television companies first began providing  broadband service in the late 1990s over their cable networks. When  provided by a cable company, broadband service is referred to as cable  modem service. Cable modem service is primarily available in residential  areas. Cable modem service enables cable operators to deliver broadband  service by using the same coaxial cables that deliver pictures and sound to  television sets. Most cable modems are external devices that have two  connections, one to the cable wall outlet and the other to a computer.  Although the speed of service varies with many factors, download speeds  of up to 6 Mbps are typical. Cable providers are developing even higher- speed services.
DSL. Local telephone companies provide digital subscriber line (DSL)  service, another form of broadband service, over their telephone networks  on capacity unused by traditional voice service. To provide DSL service,  telephone companies must install equipment in their facilities and install  or provide DSL modems and other equipment at customers’ premises and  remove devices on phone lines that may cause interference. Most  residential customers receive older, asymmetric DSL (ADSL) service with  download speeds of 1.5 Mbps to 3 Mbps. ADSL technology can achieve  speeds of up to 8 Mbps over short distances. Newer DSL technologies can  support services with much higher download speeds.
Satellite. Three providers currently offer broadband service in the United  States. These providers use geosynchronous satellites that orbit in a fixed  position above the equator and transmit and receive data directly to and  from subscribers. Satellite companies provide transmission from the  Internet to the user’s computer and from the user’s computer to the  Internet, eliminating the need for a telephone connection. Typically a  consumer can expect to receive (download) at a speed of about 1 Mbps  and send (upload) at a speed of about 200 kbps. Transmission of data via  satellite causes a slight lag in transmission, typically one-half to three- fourths of a second, thus rendering this service less suitable for certain  Internet applications, such as videoconferencing. While satellite broadcast  service may be available throughout the country, it generally costs more  than most other broadband modes and its use requires a clear line of sight  between the customer’s antenna and the southern sky. Both the equipment  necessary for service and recurring monthly fees are generally higher for  satellite broadband service, compared with most other broadband  transmission modes.
Wireless. Land-based, or terrestrial, wireless broadband connects a home  or business to the Internet using a radio link. Some wireless services are  provided over unlicensed radio spectrum and others over spectrum that  has been licensed to particular companies. In licensed bands, some  companies are offering fixed wireless broadband throughout cities. Also,  mobile telephone carriers—such as the large companies that provide  traditional cell phone service—have begun offering broadband mobile  wireless Internet service over licensed spectrum—a service that allows  subscribers to access the Internet with their mobile phones or laptops in  areas throughout cities where their provider supports the service. A  variety of broadband-access technologies and services also are provided  on unlicensed spectrum—that is, spectrum that is not specifically under  license for a particular provider’s network. For example, wireless Internet  service providers may offer broadband access in particular areas by  establishing a network of subscriber stations, each with its own antenna  that relays signals throughout a neighborhood and has a common interface  to the Internet. Subscribers place necessary reception equipment outside  their homes that transmits and receives signals from the nearest antenna.  Also, wireless fidelity (Wi-Fi) networks—which provide broadband service  in so-called “hot spots,” or areas within a radius of up to 300 feet—can be  found in cafes, hotels, airports, and offices. Hot spots generally use a  short-range technology that provides speeds up to 54 Mbps. Some  technologies, such as Worldwide Interoperability for Microwave Access  (known as WiMAX), can operate on either licensed or unlicensed bands,  and can provide broadband service up to approximately 30 miles.
Fiber. This technology, also known as fiber optic, is a newer technology  for providing broadband service. Fiber optic technology converts  electrical signals carrying data to light and sends the light through  transparent glass fibers about the diameter of a human hair. Fiber can  transmit data at speeds far exceeding current DSL or cable modem speeds,  typically by tens or even hundreds of megabits per second. Fiber optic  technology may be provided in several ways, including fiber to a  customer’s home or business or to a location somewhere between the  provider’s facilities and the customer. In the latter case, the last part of the  connection to the customer’s premises may be provided over cable,  copper loop, or radio technology. Such hybrid arrangements may be less  costly than providing fiber all the way the customer’s premises, but they  generally cannot achieve the high transmission speed of a full fiber-to-the- premises connection.
Although broadband often is referred to as a singular entity, a variety of  data speeds—ranging from 768 kbps to greater than 100 Mbps—are  defined as broadband. FCC’s new categories for collecting data on  broadband Internet access service are provided in table 1.
FCC has primary responsibility for regulating broadband. Section 706 of  the Telecommunications Act of 1996 directs FCC to encourage the  deployment of advanced telecommunications capability, which includes  broadband, to all Americans. Under this authority, FCC has established a  minimal regulatory environment for broadband Internet access services,  stating that less regulation will promote the availability of competitive  broadband services to consumers. FCC, through a number of proceedings,  classified broadband Internet access (regardless of the platform) as an  information service—a classification that reduces regulatory requirements  applicable to broadband. FCC does not have explicit statutory authority  to regulate the provision of information services; however, FCC has the  authority to impose regulations under what is termed its ancillary  jurisdiction to regulate services that are reasonably related to its existing  statutory authority. FCC has concluded that it has ancillary jurisdiction  to promulgate regulations on broadband through its rule-making  procedures, but it has not yet exercised this authority. FCC also has the  authority to adopt broadband regulations to ensure that broadband  providers are capable of providing authorized surveillance to law  enforcement agencies.
As part of its responsibilities, FCC has periodically issued a report to  Congress on the status of advanced telecommunications capability in the  United States. To assist in the preparation of this report, in 2000, FCC  adopted a semiannual reporting requirement for facilities-based  broadband Internet service providers. In November 2004, FCC modified  its rules on filing this information, and the revised rules went into effect  for the companies’ second filing in 2005. Specifically, FCC removed  existing reporting thresholds, and companies were required to report their  total state subscribership by technology. In 2006, we reported that the  approach FCC then used to collect data on broadband deployment, which  counted broadband service providers with subscribers at the ZIP code  level, resulted in inadequate information about broadband deployment.  Subsequent to our recommendation, in March 2008, FCC acted to increase  the precision and quality of its broadband data by revising its methodology  and requiring that broadband providers report the number of broadband  connections in service by Census Tract. Furthermore, the Broadband  Data Improvement Act calls for additional actions to improve the quality  of data available on broadband deployment. Among other things, the Act  directs FCC to  (1) shift its assessments of broadband deployment from a periodic basis to  an annual basis;  (2) periodically survey consumers to collect information on the types of  technologies used by consumers to access the Internet, the applications or  devices used in conjunction with broadband service, and the actual  connection speeds of users;  (3) collect information on reasons why consumers have not subscribed to  broadband services;  (4) determine certain demographic data for geographical areas not served  by any provider of advanced telecommunications capability (i.e., areas  where broadband has not yet been deployed); and  (5) provide information on the speed and price of broadband service  capability in 25 other countries.
Two other federal agencies have responsibility for telecommunications  policies. The Office of Science and Technology Policy (OSTP) within the  Executive Office of the President has a broad mandate to advise the  President and the federal government on the effects of science and  technology on domestic and international affairs and has led interagency  efforts to develop science and technology policies and budgets. The  Department of Commerce’s National Telecommunications and  Information Administration (NTIA) is the President’s principal  telecommunications and information adviser and works with other  executive branch agencies to develop the administration’s  telecommunications policies.
section_title: Market-Based Federal Approach to Broadband Deployment Focuses on Achieving Universal Access
subsections: section_title: Current Market-Driven, U.S. Broadband Policy Was Articulated in Multiple Sources
paragraphs: Agency officials we spoke with during the Bush Administration told us  that the market-based U.S. policy on broadband deployment could be  found in, or had been shaped by, various statutes, presidential speeches,  regulations, and reports. For example:    Congress passed the Telecommunications Act of 1996 to encourage the  deployment of advanced telecommunications capability, which includes  broadband, “ preserve the vibrant and competitive free market that  presently exists for the Internet and other interactive computer services,  unfettered by Federal or State regulation.”
In a speech delivered in March 2004, President Bush stated “that there  should be universal, affordable access to broadband by 2007 and that, as  soon as possible thereafter, the country should make sure that consumers  have got plenty of choices for their broadband carriers.”
In 2004, FCC modified regulations applicable to local telephone companies  in order to expand incentives for them to invest in network upgrades. In a  series of orders, FCC ruled that incumbent local telephone companies did  not have to make certain elements of their fiber networks serving  residential customers available to competitors at cost-based rates.
A 2008 NTIA report reaffirmed President Bush’s vision of universal  broadband access by noting, “rom its first days, the   Administration has implemented a comprehensive and integrated package  of technology, regulatory, and fiscal policies designed to lower barriers  and create an environment in which broadband innovation and  competition can flourish.”
The Broadband Data Improvement Act of 2008 was enacted to “improve  the quality of Federal and State data regarding the availability and quality  of broadband services and to promote the deployment of affordable  broadband services to all parts of the Nation.”
Officials at OSTP, FCC, and NTIA during the Bush Administration told us  that the current federal broadband policy was market-based; OSTP told us  that the Bush Administration had implemented fiscal, technology, and  regulatory policies based on the recognition that a competitive  marketplace provides the best environment for achieving the United  States’ broadband goals, and competitive markets should be deregulated;  an official at FCC characterized FCC’s broadband policy in recent years as  one that reduced barriers to entry, lessened regulation of broadband, and  encouraged investment; and NTIA told us that federal broadband policies  of the past few years flow from an early speech made by President Bush  that emphasized the deployment of broadband, and that NTIA has  executed initiatives to remove economic disincentives.
Furthermore, according to these officials, the role of the government in  carrying out this policy was to create market incentives and remove  barriers to competition; the role of the private sector was to fund the  deployment of broadband. Accordingly, FCC, OSTP, and NTIA officials  told us they took a number of steps to open markets and encourage  competition. OSTP officials told us their agency has played the leading  role in crafting and coordinating the administration’s broadband policy,  including federal efforts to support new wireline and wireless broadband  technologies. Moreover, OSTP has recommended policies to make  additional spectrum available for new wireless broadband technologies.  In addition, FCC, through a number of proceedings, classified broadband  Internet access (regardless of the platform) as an information service. This  classification reduces regulatory requirements applicable to broadband,  which FCC stated would encourage broadband deployment and promote  local competition. NTIA also took action to encourage broadband  deployment by increasing the amount of spectrum available for advanced  services and by clearing away regulatory obstacles to promote investment.
Under this market-based policy, broadband infrastructure has been  extensively deployed in the United States. Representatives of broadband  providers told us this market-based approach to deployment has  encouraged investment in broadband infrastructure and has been  instrumental in getting this technology deployed to most of the homes in  the United States. Although a precise assessment of broadband  deployment in the United States is not possible because of data  limitations, federal officials and industry representatives estimate that  about 90 percent of American homes now have access to broadband.  However, gaps remain, primarily in rural areas, because the market does  not support private broadband infrastructure investment in low-density  areas. For example, officials from several states said that rural areas in  their states often lack broadband service. Representatives of both a  provider association and a consumer organization told us that these areas  lack broadband infrastructure because they offer little profit potential. To  ensure broadband access to all Americans, in the Food, Conservation, and  Energy Act of 2008 (the Farm Bill), Congress required FCC to develop, in  consultation with the Secretary of Agriculture, a comprehensive rural  broadband strategy. FCC must submit a report to Congress by the end of  May 2009 that describes a comprehensive rural broadband strategy. The  report is to include, among other things, recommendations on how to  coordinate federal rural broadband initiatives and how federal programs  can best respond to rural broadband requirements and overcome  obstacles that currently impede rural broadband deployment.
In March 2009, FCC and NTIA officials told us that the federal policy on  broadband deployment is changing as a new administration and Congress  form their telecommunications agenda and as federal agencies work to  implement recent legislation. As evidence of this change in focus, FCC and  NTIA officials highlighted the new funding and responsibilities the  Recovery Act has given to federal agencies to increase broadband  availability, including developing a national broadband plan. The Recovery  Act broadband provisions will be discussed later in this report.
section_title: Multiple Federal Programs Support Telecommunications Infrastructure Deployment, Primarily in Rural Areas, with Two Programs Specifically Funding Broadband
paragraphs: Eleven federal programs administered by six federal agencies help fund  telecommunications infrastructure deployment, but just 2 of these  programs—Rural Broadband Access Loans and Loan Guarantees program  and the Community Connect Grant program—focus specifically on  broadband infrastructure deployment. Both programs are administered by  the Department of Agriculture’s Rural Development, Utilities Program  (RDUP). In 2008, these 2 programs provided a combined total of about  $300 million for broadband infrastructure deployment. The remaining 9  programs provided over $7 billion for the deployment of various types of  telecommunications infrastructure, including broadband, in 2008.  However, because these 9 programs fund telecommunications  infrastructure deployment generally, and not broadband specifically, the  responsible federal agencies do not systematically track the amount of  funding provided for broadband infrastructure deployment. Most of these  11 federal programs focus on helping deploy telecommunications  infrastructure, including broadband, to rural areas. For example, the  largest program at FCC, the Universal Service High Cost program, and the  largest program at RDUP, Telephone Loans and Loan Guarantees program,  help incumbent local exchange carriers pay for the installation of and  upgrades to telecommunications infrastructure, such as poles, lines, and  switches, in rural areas. Table 2 provides additional information about all  11 programs.
Although several federal programs provide funding for the deployment of  telecommunications infrastructure, including broadband, there are  processes and procedures in place to help coordinate agency efforts. One  of these is the Office of Management and Budget’s financial status report  form, which must be completed by all applicants for federal funding and  requires applicants to disclose sources of funding. Another is the agency  application process, such as the one used by the U.S. Department of  Agriculture (USDA)/RDUP, which states that applicants must list on their  application all sources of federal funding they are currently receiving.  Agencies also work closely together, keeping each other informed of  current programs and applicants. For example, officials at the Economic  Development Administration (EDA) told us that EDA coordinates with  RDUP to help establish connections between broadband infrastructures  deployed in rural areas, which RDUP can fund, while EDA itself funds  infrastructure in more urban areas, which RDUP is prohibited from  supporting. Another example of cooperation between agencies is evident  in the Web sites. One site dedicated to broadband opportunities in rural  America is a joint initiative of FCC and USDA. This site, hosted by FCC,  lists programs overseen by USDA as well as FCC, both of which provide  funding for broadband deployment in rural areas. Another Web site, used  by the Appalachian Regional Commission, provides information about the  numerous federal agencies with which the Commission works in the  process of administering grants.
In addition to these 11 programs that fund the deployment of  telecommunications infrastructure, other federal programs fund various  aspects of broadband technology or use, but do not specifically support  the deployment of infrastructure. For example, the Department of  Education as well as the Institute of Museum and Library Services have  programs that provide financial assistance for telecommunications  development, but program officials told us these programs are used to  develop training for using broadband or to purchase content requiring  broadband access, not for broadband deployment. (App. III provides  information on these other federal programs.) Finally, other federal  agencies fund broadband infrastructure deployment, but this  infrastructure is not for public access. For example, the Department of  Defense developed its own nonpublic broadband communications  network.
section_title: Stakeholders Credit Federal Programs with Advancing Broadband Deployment, but Said More Investment Is Required to Reach Goal of Universal Availability
paragraphs: Industry stakeholders credit federal programs with helping to increase the  deployment of broadband infrastructure throughout the United States. In  particular, stakeholders noted that FCC’s Universal Service High Cost  Program and its Universal Service Schools and Libraries (E-Rate)  Program, as well as all of RDUP’s loans and grants programs have been  critical in increasing broadband deployment, especially in rural areas. For  example, one industry representative credited FCC’s Universal Service  High Cost program with helping to finance fiber deployment in rural areas;  two industry representatives credit RDUP’s programs with helping to  deploy broadband, with one representative crediting RDUP’s programs  with increasing broadband deployment by lowering broadband costs. State  officials we interviewed expressed similar views on these programs. For  example, Arkansas officials said that federal assistance from RDUP had  been useful in deploying broadband to rural and economically challenged  areas of their state.
Despite the gains achieved through these programs, provider  representatives and consumer advocates both told us that additional  federal investment—through such mechanisms as loans, grants, or tax  incentives—will likely be required to make broadband universally  available. Industry representatives estimate that roughly 90 percent of  Americans now have access to broadband at home, work, or through other  community access points. However, getting broadband to the remaining 10  percent will be expensive, primarily because they live in rural areas.  Representatives of provider companies told us that the cost of deploying  broadband infrastructure in rural, low-density areas is the reason some  homes do not have access. According to one representative, providing  wireline service to the last 5 percent of homes will be too expensive; in  low-density areas, he said it would make more sense to provide service via  some type of community access program or wireless infrastructure.  Although a lack of detailed information on the current state of deployment  makes it difficult to determine the costs of deploying broadband  infrastructure to unserved or underserved areas, estimates range from  under $10 billion to over $30 billion. Several factors can influence the  cost of deployment, including the terrain, speed of the service provided,  and technology employed (e.g., wireline or wireless technology). Because  companies may not earn a sufficient return on their investment, some  industry representatives and state Chief Information Officers (CIO) told us  the federal government would likely need to subsidize broadband  deployment to certain unserved or underserved areas to achieve universal  access.
Additional federal investments in broadband deployment, however, do not  necessarily guarantee increased adoption. Representatives from four  organizations that provide broadband told us that between 80 percent and  90 percent of the residences in their service areas had access to  broadband, but fewer than 60 percent subscribed; for some providers, the  subscribership rate was less than 40 percent. A recent study on broadband  subscribership found similar patterns. Specifically, the Pew Internet and  American Life Project found that 75 percent of Americans use the Internet;  57 percent use the Internet at home through broadband, 9 percent use the  Internet at home through dial-up connections, and 8 percent use the  Internet from work or the library. The report also found that some  Americans, particularly elderly or low-income persons, choose not to use  the Internet, even when broadband technology is available. The Pew  report identified several reasons why people choose not to use the  Internet, including cost and lack of interest.
section_title: The Recovery Act Provides Funds to Increase Broadband Availability and Establishes New Requirements for FCC and NTIA
paragraphs: The Recovery Act provides $7.2 billion to increase broadband availability  in the United States and establishes universal access to broadband  capability as a national goal. More specifically, the Recovery Act provides  funding for (1) NTIA to develop a broadband inventory map; (2) FCC to  develop a national broadband plan; (3) NTIA, in consultation with FCC, to  establish a grants program—referred to as the Broadband Technology  Opportunities Program—to expand broadband services to rural and  underserved areas and improve access to broadband by public safety  agencies; and (4) RDUP to issue loans, loan guarantees, and grants to  increase rural broadband availability. The Recovery Act further requires  that FCC, in developing the national broadband plan, include benchmarks,  a detailed strategy for achieving affordable broadband service, and an  evaluation of the progress of projects funded through the Recovery Act.  Although the Recovery Act assigns lead responsibilities among the  agencies for these different broadband initiatives, these responsibilities  are not mutually exclusive. The agencies will need to take each other’s  efforts into account while carrying out their individually assigned tasks.  For example, NTIA’s broadband inventory data will enable FCC to identify  the areas with the largest unserved or underserved populations, allowing  FCC to tailor the plan it develops accordingly.
Given their overlapping responsibilities, it will be important for FCC,  RDUP, and NTIA to coordinate their efforts. We have previously reported  on the importance of coordinating federal efforts, especially when these  efforts target the same population, to prevent duplication and  fragmentation of effort. This potential for overlap and fragmentation  underscores the importance for the federal government of developing the  capacity to more effectively coordinate crosscutting program efforts.
Furthermore, we have noted that agencies can enhance and sustain their  collaborative efforts by developing a strategy that includes necessary  elements for a collaborative working relationship, such as defining and  articulating a common outcome; identifying and addressing needs by  leveraging resources; agreeing on roles and responsibilities; establishing  compatible policies, procedures, and other means to operate across  agency boundaries; and developing mechanisms to monitor, evaluate, and  report on results. In commenting on a draft of this report, OSTP stated that  the current administration recognizes the need for extensive coordination  among the agencies.
section_title: The Broadband Policies of a Number of Other OECD Nations with Higher Broadband Subscribership Are More Detailed Than U.S. Market-Based Policy
paragraphs: A number of the OECD nations that lead the United States in  subscribership have broadband policies that are more detailed than the  U.S. policy and often include timelines, action plans, and some  performance metrics. For example:    South Korea’s 2006 E-Korea Master Plan has established a goal that every  household, regardless of income, is to be equipped with access to the  Internet, with a minimum transmission speed of 1 Mbps. The plan created  the following objectives: (1) maximize the ability of all citizens to use  information and communication technologies to actively participate in the  information society, (2) strengthen global competitiveness , (3) realize a  smart government structure with high transparency and productivity by  increasing the use of information and communication technologies, (4)  facilitate continued economic growth by promoting the information  technology industry and advancing the information structure, and (5)  become a leader in the global infrastructure by taking a major role in  international cooperation. South Korea’s plan also established timelines  for online services to be expanded to include all civil services and  customized digital civil services by 2006, policy plans to achieve a 90  percent penetration rate for the entire population by 2006, and an  evaluation system that measured the information utilization and  communications technology needed to meet those objectives. Embassy  officials noted that as of 2008, 99.82 percent of households in Korea have  broadband access.
Finland’s National Broadband Strategy calls for making broadband  available to 93 percent of the country’s residents by 2009 and established  the following goals: (1) promote competition within and between all  communications networks, (2) promote the provision of electronic  services and content to stimulate demand for broadband services, and (3)  continue and develop special support measures in those areas in which  there is insufficient demand for the commercial supply of broadband  facilities. Finland’s written policy also identified 50 individual measures  with timelines and responsible agencies for use as metrics for assessing  progress in achieving the defined goals. For example, the Ministry of  Education was responsible for ensuring that all schools have access to  reasonably priced and efficient telecommunications by 2008. Embassy  officials noted that except for the most remote schools in the far north, all  schools have broadband access.
In contrast, the current U.S. policy, which is articulated in multiple  sources, does not include performance measures and an action plan for  implementation. The attributes of the other nations’ written policies align  with the framework set forth by Government Performance and Results Act  of 1993 (GPRA). GPRA stresses the importance of having clearly stated  objectives, strategic and performance plans, goals, performance targets,  and measures in order to improve a program’s effectiveness,  accountability, and service delivery. Specifically, performance measures  allow an agency to track its progress in achieving intended results.  Performance measures also can help inform management decisions about  such issues as the need to redirect resources or shift priorities. In addition,  stakeholders, such as telecommunication providers and consumer groups,  can use performance measures to hold agencies accountable for results. In  commenting on a draft of this report, OSTP said it was working with  several other agencies to develop such metrics.
Several countries such as South Korea, Canada, and Sweden have  provided financial support to spur broadband deployment in rural or  underserved areas, provided incentives to private companies to build  networks, and enacted a number of efforts to increase broadband  subscribership and digital literacy. For example, the South Korean  government established several agencies to promote broadband access in  both the public and the private sector by, for instance, providing training  to all citizens, including the elderly and disabled, to increase their “digital  literacy” (i.e., knowledge needed to use the Internet). Canada, in 2002,  provided support for rural access through the Broadband for Rural and  Northern Development (BRAND) program, with funding of $80 million to  eligible communities for broadband infrastructure projects. BRAND  recommended that the government complement market forces with well- targeted government initiatives, particularly focusing on communities in  areas that the market is unlikely to serve. Similarly, Sweden provided  subsidies for broadband infrastructure development through grants and  tax relief, including funding for rural broadband deployment. In addition,  the Swedish government increased demand for broadband through digital  literacy programs for small and medium-sized businesses, libraries, and  schools.
section_title: States Vary in Their Approaches to Increasing Broadband Deployment
paragraphs: Officials from 48 states and the District of Columbia reported wide  variation in their approaches to increasing the level of broadband  deployment in their states. More than half of the state CIOs (or their  designees) we spoke with told us they were aware of gaps in broadband  deployment within their states. To address these gaps, CIOs said they were  considering or had taken a variety of actions, including mapping, planning,  and allocating funds.
Mapping broadband deployment. Twelve state CIOs reported that their  states have mapped broadband deployment, and 2 of these states,  California and Massachusetts, have each mapped both the speed and the  availability of broadband in their state and placed the information on their  state’s Web site. CIOs from another 13 states told us they were planning to  map their states in the near future.
Developing broadband deployment plans. Twelve state CIOs told us their  states have publicly available broadband deployment plans, some of which  include strategies to increase deployment. For example, Utah’s plan  provides grants to providers to increase the deployment of broadband in  rural areas. Vermont has created the Vermont Telecommunications  Authority, designed to build public-private partnerships with service  providers, and is working on cellular and broadband models with the goal  of 100 percent access by 2010. Lastly, Maryland has defined regions of the  state in need of broadband and has provided some funding to the  Maryland Broadband Cooperative for the installation of fiber backbone  infrastructure. In addition to these existing plans, CIOs from 6 states said  they are in the process of developing broadband deployment plans.
Allocating funds for broadband deployment. Fourteen state CIOs told us  their states had provided some type of financial support to local providers,  state cooperatives, or state agencies for broadband deployment, ranging  from bonds to grants to appropriations from state budgets. In addition,  some states have provided tax incentives to local providers for the  provision of broadband, particularly in unserved or underserved areas. For  example, Mississippi provides investment tax credits to those companies  investing in the state, ranging from 5 percent to 15 percent over 10 years,  and gives the highest credits for investment in the least populous areas of  the state.
Stimulating demand for broadband. CIOs in several states expressed  concern about the low level of broadband subscribership in their states  and have taken action to stimulate demand. For example, Nebraska is  providing information and training to people in rural communities using  the Nebraska Business Information Technology mobile classroom for  high-speed technology education. South Carolina, to encourage broadband  subscribership, has a program to distribute laptops among students in  grades 9 through 12 and also offers computer training in its continuing  education classes.
section_title: Conclusions
paragraphs: With extensive private-sector investment and minimal government  intervention, some type of broadband infrastructure has been deployed to  approximately 90 percent of U.S. households. Bringing this infrastructure  to the remaining unserved or underserved regions will, by most estimates,  cost tens of billions of dollars and will likely require federal investment  because of the low profit potential in these areas. The recently enacted  American Recovery and Reinvestment Act establishes universal access to  broadband as a goal and provides federal funding to RDUP and NTIA for  grants and loans, to NTIA for mapping broadband infrastructure, and to  FCC for developing a national plan for broadband deployment. These  efforts will help guide federal involvement in deploying broadband in the  coming years. Additionally, the efforts complement each other. NTIA’s  data will allow all agencies to identify and cost-effectively target federal  funds to the areas with the largest unserved or underserved populations  and will inform the plan developed by FCC. The Recovery Act requires  that the national broadband plan include some of the elements we found  in written policies of OECD nations with higher broadband subscribership,  including goals and benchmarks. To achieve transparency and  accountability in the use of federal funds, FCC will need to include  additional elements, such as timelines, specific performance measures,  and clearly defined roles and responsibilities for the responsible federal  agencies. Increasing accountability for achieving intended results is  especially important given the potential costs of expanding broadband  deployment to currently unserved or underserved areas.
section_title: Recommendation for Executive Action
paragraphs: To increase transparency and accountability for results, we recommend  that the Chairman of FCC, in developing the national broadband plan:    consult the Secretary of Agriculture and the Assistant Secretary of  Commerce and, at a minimum, specify performance goals and measures  for broadband deployment, including time frames for achieving the goals  and   work with the Secretary of Agriculture and the Assistant Secretary of  Commerce to define the roles and responsibilities for each of these  agencies in carrying out the plan.
section_title: Agency Comments
paragraphs: We provided a draft of this report to FCC, the Department of Commerce,  OSTP, and the Department of Agriculture for their review and comment.  FCC and the Department of Commerce provided written comments, which  are reprinted in appendixes IV and V, respectively. Both agencies  emphasized the current administration’s efforts to bring broadband  technology to all Americans and discussed the role of the Recovery Act in  realizing this goal. In its written comments, FCC recognized the need for a  more definitive policy and agreed with our recommendations that  performance measures and greater coordination to define roles and  responsibilities are important to its implementation. In its written  comments, the Department of Commerce emphasized that it is working  closely with the Department of Agriculture and FCC to ensure the success  of the President’s broadband initiatives and noted that, to some extent, the  Recovery Act defined the roles and responsibilities of each agency  involved in the development and implementation of a national broadband  deployment plan. We recognize in the report that the Recovery Act assigns  lead responsibilities to the agencies for different broadband initiatives;  however, given that these responsibilities are not mutually exclusive, we  continue to believe further delineation of the roles and responsibilities is  warranted. FCC, the Department of Commerce, and OSTP, through the  National Economic Council, provided technical comments, which we  incorporated as appropriate. The Department of Agriculture responded  through RDUP that it did not have any comments on the draft report.
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If you have any questions about this report, please contact me at (202) 512- 2834 or goldsteinm@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Contact information and major contributors to this report  are listed on appendix VI.
section_title: Appendix I: Comparison of Various Broadband Organization Rankings
paragraphs: Although the Organisation for Economic Co-operation and Development’s  (OECD) rankings are an important source of information on the status of  broadband in many countries, OECD is not the only organization that  measures broadband deployment and subscribership, and the OECD  metric we have discussed—subscribership per 100 inhabitants—is not the  only available metric. Other ranking organizations include the Information  Technology and Innovation Foundation (ITIF) and Web Site  Optimization, and their metrics include the percentage of households that  subscribe to broadband and the percentage of households that have  access to broadband. In addition, OECD uses other metrics to assess the  status of broadband in many countries, such as broadband affordability  and download speeds. Figure 1 compares broadband rankings for the  United States and other OECD countries. The figure includes OECD’s  second quarter 2008 rankings of subscribership per 100 inhabitants and  ITIF’s and Web Site Optimization’s rankings. The figure shows that while  the United States ranks 15th in the number of subscribers per 100  inhabitants, it ranks 10th and 11th in the other reports in the percentage of  households that subscribe to or have access to broadband.
As the figure indicates, countries’ rankings vary with the metric used. For  example, while Japan ranks second in ITIF’s composite score of  subscribership, speed, and price, it places 17th in OECD’s June 2008  ranking of subscribership per 100 inhabitants. Similarly, South Korea,  which ITIF ranks first, with 93 percent household penetration, is 7th in  OECD’s June 2008 ranking of subscribers per 100 inhabitants. In an April  24, 2007, letter to OECD, U.S. Ambassador David Gross took issue with the  methodology on which OECD’s new ranking was based, particularly  because it does not include people who gain access to broadband services  through multiple platforms and access points, such as college students and  others who use “Wi-Fi hotspots.”
section_title: Appendix II: Scope and Methodology
paragraphs: To determine the current federal broadband policy, we interviewed  officials at the Office of Science and Technology Policy (OSTP), the  National Telecommunications and Information Administration (NTIA),  and the Federal Communications Commission (FCC), and reviewed recent  reports by FCC and NTIA. To learn about the broadband policies of those  countries that the OECD, in June 2008, ranked ahead of the United States  in broadband subscribership per 100 residents, we contacted each  country’s embassy in the United States. We requested information from  embassy officials on whether their country’s current broadband policy  included the following: a written policy, a timeline, an action plan, goals,  and performance measures. We selected these items because the  Government Performance and Results Act of 1993 (GPRA) emphasizes  these elements as important for the effective and efficient management of  government programs.
To determine the principal federal programs that support the deployment  of broadband infrastructure, we reviewed a Congressional Research  Service (CRS) report to Congress, Broadband Internet Access and the  Digital Divide: Federal Assistance Programs, updated June 4, 2008,  which lists federal domestic assistance that can be associated with  telecommunications development, including broadband deployment. This  list includes 11 federal agencies and 23 federal programs. After an initial  review of this list and some preliminary audit work, we reduced this list to  19 programs administered by a total of 8 federal agencies. We interviewed  federal officials at all 8 agencies listed by CRS and reviewed information  about their programs and determined that 5 agencies and commissions  overseeing a total of 10 programs specifically fund the deployment of  telecommunications infrastructure, including broadband infrastructure.
To obtain various stakeholders’ views on how federal programs have  affected broadband infrastructure deployment, we interviewed officials of  associations that represented wireless providers and telecommunications  and cable companies, large and small, urban and rural. We also  interviewed officials of organizations representing consumers, including  those who are economically disadvantaged. For both provider and  consumer representatives, we developed and used sets of questions about  their views on current federal policy and programs, the current status of  broadband deployment and subscribership, the level of competition, the  reasons for the lack of access to broadband in some areas, and  suggestions for improvements in the current federal programs. The  organizations and associations whose representatives we interviewed are  as follows:  Alliance for Public Technology (APT)  American Cable Association  Connected Nation  Consumer Federation of America  National Association of State Utility Consumer Advocates (NASUCA)  One Economy  Organization for the Promotion and Advancement of Small Telephone  Companies (OPASTCO)  PEW Internet Project  Rural Independent Competitive Alliance (RICA)  The Wireless Association (CTIA)  Wireless Internet Service Providers Association (WISPA)
To learn the states’ views on the federal government’s efforts to increase  broadband infrastructure deployment as well as actions the states have  taken to encourage broadband deployment, we developed a set of  questions in consultation with GAO methodologists and used them to  interview each state’s Chief Information Officer (CIO) or designee. We  interviewed the CIOs in 48 of the 50 states and the District of Columbia.  Two states were unavailable because of internal issues. We conducted  these interviews from August 15, 2008, until February 6, 2009, and sought  information on state officials’ views on the current federal broadband  policy and programs, how they could be improved, and what actions the  state governments had taken to increase broadband deployment. We  selected the CIOs as the most knowledgeable source of information about  state broadband activities based on our understanding that broadband is  not regulated by state utility commissions and our conversation with  representatives of the National Association of State Chief Information  Officers.
We conducted this performance audit from March 2008 through May 2009  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix III: Agencies That Fund Some Aspects of Telecommunications, but Not Infrastructure
paragraphs: To determine the principal federal programs that support the deployment  of broadband infrastructure, we reviewed the CRS report that identifies  federal domestic assistance that can be associated with  telecommunications development, including broadband deployment. This  report identified a total of 23 programs administered by 11 agencies. Based  on information in the CRS report and initial conversations with agency  representatives, we removed 7 programs and 3 agencies: We determined  that 2 programs should not be included because they did not provide  funding for telecommunications infrastructure that could be accessed by  any member of the public; we eliminated 3 more programs because the  agencies told us they no longer fund any telecommunications  infrastructure; lastly we removed 2 programs by subsuming them into  another program, which we added at the advice of the agency. We then  added 6 more programs for a total of 7 additions to the original list  provided by CRS. This left a total of 23 programs administered by 8  agencies. We interviewed federal officials at all 8 agencies and examined  program documentation to determine whether these programs provide  financial assistance for broadband deployment. Based on our analysis, we  determined that 11 programs administered by 6 agencies do provide such  funding, as shown in table 2 in the main report, and 12 programs  administered by 3 agencies do not (ILMS programs are listed in both  tables). Table 3 identifies the agencies and programs that do not fund  telecommunications infrastructure.
section_title: Appendix IV: Comments from the Federal Communications Commission
section_title: Appendix V: Comments from the Department of Commerce
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Nikki Clowers and Faye Morrison,  Assistant Directors; Stephen Brown; Elizabeth Curda; Sharon Dyer; Kevin  Egan; Elizabeth Eisenstadt; David Hooper; Hannah Laufe; Sara Ann  Moessbauer; Josh Ormond; Madhav Panwar; and Nancy Zearfoss made key  contributions to this report.