Telecommunications: Broadband Deployment Plan Should Include Performance Goals and Measures to Guide Federal Investment
Released: 2009-06-10T00:00:00

Letter

Background

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.

Market-Based Federal Approach to Broadband Deployment Focuses on Achieving Universal Access

Current Market-Driven, U.S. Broadband Policy Was Articulated in Multiple Sources

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.

Multiple Federal Programs Support Telecommunications Infrastructure Deployment, Primarily in Rural Areas, with Two Programs Specifically Funding Broadband

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.

Stakeholders Credit Federal Programs with Advancing Broadband Deployment, but Said More Investment Is Required to Reach Goal of Universal Availability

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.

The Recovery Act Provides Funds to Increase Broadband Availability and Establishes New Requirements for FCC and NTIA

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.

The Broadband Policies of a Number of Other OECD Nations with Higher Broadband Subscribership Are More Detailed Than U.S. Market-Based Policy

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.

States Vary in Their Approaches to Increasing Broadband Deployment

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.

Conclusions

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.

Recommendation for Executive Action

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.

Agency Comments

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.

Appendix I: Comparison of Various Broadband Organization Rankings

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.”

Appendix II: Scope and Methodology

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.

Appendix III: Agencies That Fund Some Aspects of Telecommunications, but Not Infrastructure

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.

Appendix IV: Comments from the Federal Communications Commission

Appendix V: Comments from the Department of Commerce

Appendix VI: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

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.