The Telecom Act of 1996 turns 20 in February, and while the more open path for competition that the Act accomplished has resulted in a breathtaking expansion of communications options for many, the Digital Divide still persists. The FCC and private industry are looking to modernize their approaches to rural and underserved communities in order to address this.
While the FCC has worked on many policies that have real effects on the market—notably the Open Internet Order—the Commission is now focused on crafting a broadband-led policy that translates into real benefits for consumers and for the economy, according to FCC Commissioner Jessica Rosenworcel.
E-rate 2.0: A Focus on Schools and Libraries
A first area of focus for broadband expansion is in schools and libraries. This mainly hinges on E-rate, a byproduct of the 1996 Act that is the largest education technology program in the country, run by the FCC. Funded by universal service payments, it has been enormously successful; when E-rate was established, only 14 percent of the nation's K-12 classrooms had access to the Internet. Today, virtually all schools and libraries have Internet access. But nonetheless, the program is in great need of being updated to fund ubiquitous broadband.
“We noticed that this tremendous program was frozen in an era of dial-up,” Rosenworcel said, speaking at this month’s COMPTEL PLUS event. “In a digital era when everyone and everything around us is connected via broadband, our schools have been stuck in the analog era.”
Learning is changing, she stressed: innovative digital learning technologies and the growing importance of the Internet in connecting students, teachers and consumers to jobs, life-long learning and information are creating increasing demand for bandwidth in schools and libraries. Yet in an FCC survey of E-rate recipients, nearly half of respondents reported lower speed Internet connectivity than the average American home - despite having, on average, 200 times as many users.
“When I was growing up, I needed pencil and paper and my brother leaving me alone,” she said. “But today, data suggests that seven in 10 teachers assign homework that requires broadband access.”
This has led to what Rosenworcel calls the “homework gap:” FCC data shows that only one in three households subscribe to high-speed Internet access. But out of 21 million households with school-age kids, a full 5 million of them lack Internet access. That makes broadband availability at libraries and schools that much more important.
“It strikes me as a particularly cruel part of the Digital Divide,” Rosenworcel said, “but it’s also one we can do something about. I push continually for more spectrum for Wi-Fi, and believe that we can do more with the Lifeline program, along with community-based programs. We can stitch all those things together to make a difference.”
Wi-Fi, she said, is an essential part of any modernization plan.
“There was a time not that long ago that computer programs in schools meant marching students down the hallway to the computer lab, where there was a raft of bulky equipment that had all arrived shrink-wrapped and never moved,” she said. “But that’s not the experience our kids are having, or will ever have. We need to prepare for one-to-one devices in schools, and that means embedding Wi-Fi into our schools and libraries.”
The FCC last year adopted a modernization order expanding Wi-Fi networks in schools and libraries while transitioning support away from legacy technologies. The reform will expand Wi-Fi to more than 10 million students in 2015 alone.
E-rate 2.0 also has expanded options for schools and libraries seeking to purchase wired high-speed broadband, and has adjusted the E-rate spending cap to $3.9 billion. It’s a competitive program—schools and states bid out these contracts.
“It’s a terrific way for the competitive telecom community to get involved,” Rosenworcel noted. “And having an anchor contract makes it that much less expensive for providers to then deploy further in the broader community.”
The Rural Divide
When it comes to the Lifeline program, Rosenworcell noted that this too is a legacy policy. It was first implemented in 1985 under President Ronald Reagan.
“The idea was this: If you want to participate in civic and commercial life, you are going to need a telephone,” she said. “In an emergency, you would have a way to seek help. But it’s time for the agency to consider if broadband should be included here now. We use to communicate with schools, healthcare providers, to stay in touch with community—Lifeline has already been updated so that 14 million get subsidized mobile communications. It’s worth our agency’s effort to update this program to include broadband.”
That’s especially true considering that almost half (46 percent) of the U.S. land mass is made up of farmland—but these areas are woefully underserved by broadband.
Joe Patton, vice president of sales and business development at Tower Cloud, laid out the issues facing the rural America when it comes to the Digital Divide.
“Let’s take farming as an example,” he said, speaking at COMPTEL PLUS. “Agriculture makes up 5 percent of the 2.2 million farms in America, employing 21 million Americans, which is 15 percent of the total workforce and six times what the auto industry employs. We also produce 40 percent of the world’s corn. In order for the U.S. to keep up, we must improve efficiencies in production, which is impossible to do with no bandwidth.”
Rural America is also losing population thanks to a lack of technology, which is translating into economic declines. According to the 2010 U.S. Census, about 20 percent of Americans lived in rural communities. Just five years later, it’s less than 15 percent.
“This has a huge economic impact,” Patton explained. “Businesses will abandon plans to open new plants or offices because of a lack of workers, which in turn reduces the tax base, which in turn reduces the ability to pay for new technologies. Those are technologies that allow innovation in distance-learning, healthcare, education, telemedicine and yes, the farming business.”
It’s also worth noting that the faster the broadband, the better the economic outcomes: A study from the FTTH Council found that communities with widely-available gigabit access have per capita GDP that is 1.1 percent higher than communities with little to no availability of Gigabit services.
The study examined 55 communities in nine states, finding a positive impact on economic activity in the 14 communities where gigabit services are widely available. That plays out in multiple ways, including through the direct effect of infrastructure investment and increased expenditures, as well as shifts in economic activity (e.g. job creation and occupational changes) and productivity gains.
“Gigabit communities are empowered communities,” said FTTH Council president and session panelist Heather Gold. “The study results suggest that gigabit broadband communities exhibit a per capita GDP approximately 1.1 percent higher than the similar communities with little to no availability of gigabit services. In dollar terms, this suggests that the 14 gigabit broadband communities studied enjoyed approximately $1.4 billion in additional GDP when gigabit broadband became widely available. As we look at these study results, we can clearly conclude that every community should be a Gigabit community.”
Conversely, the 41 communities in the study that didn’t have widely available gigabit broadband likely experienced forgone GDP in 2012 of as much as $3.3 billion, the study found.
Unfortunately, enticing operators to build out in these areas is a difficult proposition because of the scarce population. ROI times can be as long as five years. Tower Cloud has addressed this in its rural networking efforts in the Southeast by starting with an anchor tenant—say, a municipality—whose patronage can then provide funding for a broader deployment. And once the fiber is in the ground, selling to enterprises and other carriers accelerates the model. “You have to take a long-term view,” Patton said.
That said, the thirst for broadband is there, he added, which means opportunity for providers in the long term. “The use of connected and mobile devices is growing at the same rate as other areas of the country,” he said. “Streaming video means that bandwidth is growing exponentially in the rural market just like it is elsewhere. The drivers are the same.”
Competitive Providers Step Up to the Plate
Competitive providers are increasingly tackling the underserved populations in the U.S. For instance, taking a “strength in numbers” approach, INDATEL has announced that it has reached a membership of 500 RLECS, which together offer 90,000 route miles of fiber, more than 1,100+ POPs and 40,000+ on-net and near-net fiber-fed buildings. INDATEL is a team of wholesale carriers dedicated to providing transport connectivity via fiber optic network routes; its members, which are primarily independent rural telecom service providers, focus on rural and underserved markets. The company said that this uniquely positions INDATEL to provide a rural exchange connection to many places other providers cannot.
“I am excited about the team and tools in place to meet Ethernet access, content delivery and Internet access needs of our service provider customers,” said INDATEL COO Max Huffman.
INDATEL’s data and Internet aggregation points-of-presence (PoPs) in Chicago, Dallas, Denver and Minneapolis serve as places for traditional carriers and emerging content/service providers to access the group’s MEF 2.0-compliant Ethernet network via a single ENNI.
To make it easier to gain access to rural markets, NEF has added data from INDATEL to FiberLocator, which means that INDATEL’s nationwide fiber footprint and current lit building maps are now searchable through FiberLocator’s online subscription service. The database now has more than 300 carriers, nearly 400,000 lit building records and more than 6,800 data centers.
“We are excited to be able to provide these 27 independent, rural telecommunications carriers with an equal playing field to other nationally-known providers,” said Steve McCarthy, COO at NEF. “FiberLocator provides INDATEL’s member companies with visibility on a national scale, allowing them to be seen by audiences that may have never known of these local providers.”
Others are pitching in as well. For instance, ANPI has accelerated the growth of its Voice Application Peering (VAP) initiative, which provides ILECs with the purest direct interconnection to destinations within the ANPI footprint, for a network efficiency ratio above 98 percent. This effort to boost call quality and call completion will have a particular impact on calls to rural America, where the company has a 20-year history of partnering with rural carriers. ANPI said that it is now adding direct connections every other week, and plans to turn up an additional 20 to 25 endpoints by the end of the year.
“At ANPI, our business has always been about partnering with carriers to create greater scale,” said Randy Lemmo, ANPI’s executive vice president of strategic business. “The VAP initiative is no different. By working together to form one large network, carriers can connect to ANPI’s switching network and reach 60+ rural operating calling numbers (OCNs).”
All of this translates into real outcomes in Digital Divide communities. And Rosenworcel stressed the importance of gaining real-world feedback as the FCC looks to support initiatives like these, and on all policy initiatives around broadband.
“Washington is not a normal place, and you can get lost in policy discussions and get into pitched battles about specific word choices in a regulation,” she said. “But it’s so important to remember what those words mean on the ground. It is incredibly valuable when you can remind everyone in Washington on every issue that there are real people at the end of the line. Hearing from consumers directly is critically important.”
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