Rural Broadband Access:
Congress Finally Barks Up the Right Tree

"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man."—Mark Twain

by Patricia Fusco ISP-Planet Managing Editor [March 28, 2000]

As a part of its rural broadband initiative, the Federal Communications Commission is exceptionally active in making high-speed Internet services in rural areas a high priority. Until recently, however, regulatory attempts to bridge the nation's rural broadband service gap have reminded us of a toothless canine: they've had no bite.

Here's a quick review of regulatory and legislative initiatives launched in 1999:

The Federal Communications Commission
[February 1999] Chairman William Kennard obtained a commitment from AT&T to extend advanced communications services and equipment to rural and remote areas as a condition of regulatory approval for its TCI buyout. However, AT&T's promise to deploy broadband services to high-cost areas remains ultimately unenforceable.

[September 1999] The FCC raised the spectrum cap to 55 MHz in rural areas to spur deployment of wireless broadband access in under served remote and rural communities. But wireless companies have been slow to jump into serving less profitable rural markets.

[October 1999] The FCC made DSL deployment to rural areas one of 30 conditions applied to its approval of the SBC-Ameritech merger. Yet another ultimately unenforceable proviso from the FCC's much maligned merger-review process.

[November 1999] The FCC adopted rules to promote competition for advanced services by directing local telephone companies to share their telephone lines with providers of high speed Internet access and data services. The line sharing order was designed to flood the market with DSL services from either incumbent or competitive carriers. Naturally, DSL providers cherry-picked urban market deployments to reap maximum profits.

Congress
The FCC is not alone in its attempts to hound broadband access providers into serving less profitable rural markets. But last year's congressional initiative to promote advanced services in remote areas only produced a partisan cur that's been left to die in committee.

[May 1999] Senator Tom Harkin introduced the Rural Telecommunications Improvement Act of 1999 [S.1153]. Supported by Democratic Senators Thomas Daschle, Byron Dorgan, Max Baucus, Kent Conrad, Paul Wellstone, Tim Johnson, Ron Wyden, Reid, Robert Kerry, and John Rockefeller IV, the bill was read twice and referred to the Committee on Commerce, Science, and Transportation.

The legislative initiative was designed to create incentives for telecom companies to invest in high-speed Internet services in rural areas. The bill also sought to establish the Office of Rural Advocacy within the FCC.

Of course, it's a partisan piece of legislature that was never expected to pass through the committee chaired by Republican Senator John McCain. The dogged legislation should be taken to the pound and put out of its misery.

[September 1999] Senate Democratic Leader Tom Daschle convened a roundtable discussion among CEOs from several segments of the telecom industry to discuss different strategies for accelerating deployment of advanced services to rural areas. The Kennard-moderated "CEO Summit on Rural Telecommunications" provided industry leaders with the opportunity to let the Senators know how much it would cost to bring broadband services to rural America.

Participating executives officers Michael Armstrong of AT&T, Bernard Ebbers of MCI WorldCom, CEO Robert Knowling of Covad Communications, and 14 other industry top dogs stand to reap the greatest financial reward of any government subsidized broadband initiative.

Which leads us to the bipartisan introduction of the "Rural Telecommunications Modernization Act" last week, as announced by Senators Jay Rockefeller (D-WV) and Olympia Snowe (R- ME) at a conference of the United States Telephone Association.

The Senators said they plan to introduce legislation to create a tax credit for expanding broadband telecommunications services in rural areas.

Substituting carrot for stick?
The Senators said that the bipartisan "Rural Telecommunications Modernization Act" would ensure that all parts of the country have access to the most vital and modern services needed to succeed in the "New Economy."

This cute little puppy of a bill would offer any company that invests in broadband facilities in rural areas a 10 percent tax credit each year for three years. To make sure the credit is focused on the need that actually exists, it will only be available for certain types of investments for "broadband local access facilities" including fiber optics, DSL equipment, wireless enhancements, and cable TV network upgrades.

Only investments in rural areas qualify. The credit is restricted to investments in areas that are more than 15 miles from any town with more than 25,000 people, and resides outside of a county with a population density of more than 500 people per square mile.

Stark realities
Americans living in rural areas are lagging behind the national average in computer and Internet access. Regardless of income level, those in urban areas are 50 percent more likely to have Internet access than those earning the same income in rural areas.

The contrast between low-income rural households earning less than $10,000 annually and high-income households earning more than $75,000 in urban areas is particularly acute. Less than 3 percent of low-income rural America has access to the Internet, while more than 62 percent of high-income city dwellers are already online.

While the White House and Department of Commerce are addressing urban aspects of the "Digital Divide" like age, gender, income, and racial disparities, Congress has finally embarked on a legislative path that may successfully span the gap in rural broadband service.

Will they take the bait?
Granted, Super Bells like SBC and cable companies like AT&T and Time Warner are well positioned to reap the rewards of the proposed tax credit. Regionally, Bell Atlantic is well situated to deploy wireless broadband services in the South and Sprint's wireless service could cover other regions of the U.S.

But somebody has to get service to rural America first, even if it is the old dog incumbents. In order for Independent service providers to profit from e-commerce ventures with their clients, markets need to be expanded. Rural America represents millions of potential new e-commerce customers.

If it's a choice between no service or federally subsidized broadband access, let's hope Congress chooses to put the proposed tax credit on a fast track for approval and implementation. After all, every dog must have its day.

Statistical References:
BBC Special Report
Clinton: Digital Divide Address
Falling Thru the Net Reports

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