Broadband in Rural Areas

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building success.Your goals, our guidance,

NADO- Broadband in Rural

Dana BakerCGO of GVNW Consulting, Inc.

NREDA member & Past President

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• Organization of Rural Economic Developers• Formed in 1989• 300+ Members

• Mission– Communication

• Mentoring • Networking

– Education• Workshops• Annual Conference—November 2017

San Antonio

www.nreda.org

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REQUIREMENTS FOR BROADBAND SUCCESS• Understanding what “Broadband & Economic

Development” is and they fit together• The right leadership • A “vision” of the community’s future• An action plan (Strategic plan)• Agreement on what constitutes “success”• Understanding the community and what drives the

economy• Choosing the right strategies• Stable funding (federal/state/local/private)• Proper use of technology

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DEFINITION

“Economic development is a process by which a community creates, retains and reinvests monetary and other resources and improves the quality of life.”

David Dodson, M.D.C. Inc., Chapel Hill, NC with a modification from Phil Tate, Gallatin, MO

Economic development is really about increasing productivity (sales of products and services.)

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KEY POINTS• Economic development is about wealth creation for all.• Economic development is a process – it is occurring

all the time.• Economic diversity sustains communities and regions

throughout economic cycles.• Economic development is where public policy and free

enterprise intersect.• Positive economic development creates an

environment in which communities and citizens prosper and improve their quality of life.

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THE DEVELOPMENT PYRAMID

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LINKED PLAYERS

• Federal Communications Commission

• State Commissions• USDA / Rural Utilities Service• Department of Commerce• Rural Broadband

Company/Cooperative• Electric Broadband

Company/Cooperative

• Cable Broadband• Wireless Broadband• Schools & Library / Universities• Healthcare• Municipalities• Emergency preparedness /

disaster recovery (FirstNet)• Private networks • Etc.……………………………..

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Rural Broadband Business

Options are Many, Successes are Few

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RURAL TELECOMMUNICATION CARRIERS• Over 1,000 Telecommunication Carriers serving

in rural areas• Serves approximately 5% of U.S. population• High Costs to serve few customers• Cooperative & Private

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UNIVERSAL SERVICE FUND (USF) REFORM!!!

The goal of Universal Service is to provide all consumers access to affordable, high quality communications service and information service despite any social, economic, geographic, or demographic barriers

Why is the FCC reforming USF structure• Changing technology

– Previously data pushed over a voice network– Now voice is an ‘app’ on a data network

• Push out Broadband everywhere• Wireless• Eliminate waste• State involvement – optional?

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REFORM ORDER PRINCIPLES• Modernize USF & ICC for Broadband• Fiscal Responsibility• Accountability• Incentive-Based Policies

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FIVE GOALS

1) Preserve & advance universal availability of voice service2) Ensure universal availability of modern networks capable of

providing voice and broadband service to homes, businesses, and community anchor institutions

3) Ensure universal availability of modern networks capable of providing advanced mobile voice and broadband service

4) Ensure that rates for broadband and voice services are reasonably comparable in all regions of the nation;

5) Minimize the universal service contribution burden on consumers and businesses

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Importance of UNIVERSAL SERVICE

USF & Access account for up to 70% of small

Telco’s revenues

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UNIVERSAL SERVICE: FOUR DISTINCT FUNDSHigh Cost

Supports carriers

Low IncomeSupports low income and end users

Schools & LibrariesSupports schools and libraries with broadband connectivity

Rural HealthcareSupports rural hospitals with broadband connectivity

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CONNECT AMERICA FUND (CAF)

• Will ultimately replace all existing high-cost support mechanisms.

• Will rely on incentive-based, market-driven policies, including competitive bidding to distribute universal service funds as efficiently and effectively as possible.

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IMPACT OF ORDER ON RURAL TELCO'S: • Changes & Limitations on recovery of

existing and future cost• Urban Benchmark for Local Rates • Buildout requirement• Frozen & Eliminated Support on existing

and future customers

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LEGACY BUILDOUT PERCENTAGES

• These obligations are based on current level of 10/1 Mbps locations

• Above 80% - no buildout obligation, but must report progress on locations reached

• 40% - 80% of locations at 10/1 Mbps = 20% of projected CAF BLS over five year period



05/01/2023

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CAF BLS support percentage which must be used for deployment obligation

Existing deployment

of 10/1 mbps

Forecasted Portion 5-yr

CAF BLS support

Ex. $500,000 total CAF BLS

Ex. Cost = $1500 per

location per yr

Total Locations

over 5 years

<20% 35% $175,000 117 location

build-out obligation

585

20%-40% 25% $125,000 84 location


420

40%-80% 20% $100,000 67 location


335

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NECA & USAC

• Collects and Distributes Funds• Protects integrity of Universal Service programs• Promotes compliance among participants• Provides information about Universal Service to

Congress, FCC, public

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REVIEW OF 2011 TRANSFORMATION ORDER• Modernize USF & ICC• Acknowledged the change in technology• Voice Network or Data Network• Copper or Fiber• Speed Requirements• Rate Benchmarks• Maximum Support

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• Model vs Non-Model• Broadband Support• Competitive Overlap• Build-out Obligations• Cost Limitations• Budget Controls

REVIEW OF 3/30 2016 USF REFORM ORDER

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MODEL OR NON-MODEL?

• Will Model Additional Support Cover Build-Out Costs?• Actual Costs vs. Idealized Model Costs• Market when all Telcos building at

• Fiber Availability & Cost?• Contractor Availability & Cost?

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DATA/BROADBAND

‘As a condition of receiving federal high-cost universal service support, all ETC’s…will be required to offer broadband service in their supported area that meets certain basic performance requirements…ETCs must make this broadband service available at rates that are reasonably comparable to…urban areas’

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BROADBAND METRICS

Three core characteristics• Speed: Download 4 Mbps / Upload 1 Mbps• Latency: Must allow for real-time application,

generally less than 100 milliseconds• Capacity: If limited, should be reasonably

comparable to urban offerings, i.e. 250 Gigabytes [GB]

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URBAN RATES• All ETCs must certify that their voice service is priced no

more than 2 standard deviations above the national average urban average as announced each year by the Wireline Competition Bureau.

• Cited 2008 national average local rate of $15.62

FCC Public Notice 4/5/2016 states:• 2016 rate floor…is $21.93 and reasonable comparability

benchmark for voice services is $41.07….to the extent that an ILEC’s local rates…in 2016 are less than $18, that carrier’s high-cost support will be reduced on a dollar-for-dollar basis.

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UNSUBSIDIZED COMPETITOR

‘Broadband buildout obligations for fixed broadband are conditioned on not spending the funds to serve customers in areas already served by an unsubsidized competitor’

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FCC STILL CONSIDERING:

• Permitted Expenses• Disaggregation ideas• Ensuring compliance• Cost Allocation: Reg & Non Reg• Tribal Support• Etc.……………..

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DISAGGREGATION GEOGRAPHIC CALCULATIONS

• Study areas with a competitive ratio at or below 20% will incur no reduction in support

• Study areas with a competitive ratio above 20% will have their support reduced by a “reduction percentage” calculated as follows: • Two-thirds of a percentage point for each percentage point by

which the competitive ratio exceeds 20%, up to a maximum of twenty percentage points in reduced support; plus

• One percentage point for each percentage point by which the competitive ratio exceeds 50%, up to a maximum of thirty percentage points in reduced support; plus

• Two and one half percentage points for each percentage point by which the competitive ratio exceeds 80%, up to a maximum of fifty percentage points in reduced support.

05/01/2023

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GEOGRAPHIC REDUCTION RATIOS

05/01/2023

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Low-Cost90% locations

2% ACAM support

Hi-Cost

Hi-Cost

Hi-Cost

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OPTIONS FOR RURAL COMMUNITIES

• Maximize Options• Build strategies (be flexible)

– Long Term – 5 years or longer• What is Broadband carriers plan?• Partnerships for total community• Don’t go it alone (no community should be an

island)

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BROADBAND MAP http://www.broadbandmap.gov/

• Maximum Advertised Speed Available• Type of Technology Available• Number of Broadband Providers• Broadband Provider Service Area• Broadband Availability Demographics• Broadband Test VS Advertised• Community Anchor Institutions

http://www.broadbandmap.gov/



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TRENDING TECHNOLOGIES• Wireless

– Cellular 4G/5G– Bluetooth, Near field -

(electromagnetic)– Satellite– Spectrum Auctions

• Entertainment– IPTV– Cable Offerings– Over-the-Top’s

• Cord Cutters?– New Video Technologies– Gaming

• Home Automation

• FTTH– Google Fiber– 1Gig Fiber Options– Network Function Virtualization– Software Defined Network – TDM to IP transition

• Cloud Computing– How is it being used?– Trends?– Hosted PBX Services

• Smart Grid– Options for both Broadband &

Electic?– Smart Communities?

• Social Media

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OFFERING & TESTING EXAMPLES• Verizon testing NG-PON2 40 and 10Gbps products• Charter and TWC and Brighthouse are integrating into one company• Verizon, ATT and others are experimenting with 5G fixed wireless• Google now offering 100Mbps to residential as their intro product• Google now offering business services• Comcast offering 2Gbps service where available (1700 ft from CO)• ATT and DirecTV merger complete. Offering quad play bundles

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The Internet of Things is GrowingNew generations of “connected” devices will change home networking and bandwidth consumption

– By 2020, the average home will have 50 internet connected devices

Source: Gigaom, Parks Associates, The Wall Street Journal, stltoday.com

85% of U.S. broadband homes have home networks, 95% projected by 2016

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Are you ready to deliver what your customers want?

The Internet of Things is GrowingWorld

Population

ConnectedDevices

ConnectedDevices

Per Person

6.3 Billion

500 Million

0.08

6.8 Billion

12.5 Billion

1.84

7.2 Billion

25 Billion

3.47

7.6 Billion

50 Billion

6.58

2003 2010 2015 2020

Source: Cisco IBSG, April 2011

Moreconnected

devicesthan people

TODAY

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Consumer bandwidth driven by “connected” devices

Bandwidth: Exponential Growth

Internet of ‘things’ doubling bandwidth every two yearsConsumers will pay a premium for speed, convenience Higher speeds increase broadband value, customer satisfaction

Today – 2020 2020+

Competitive

5 Mbps12-24 Mbps

50 Mbps

100 Mbps

150 Mbps

1 Gbps

Broadband Advantage

Logarithmic – this area is a 10x bandwidth gain!

Market Leadership

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Gigabit Business Case • Offering a Gig enhances the fiber business case

• Fiber operators are showing better take rates– Instead of 30-40% take rates, some achieving

60-70%+• Gigabit continues to get consumers attention

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ELECTRIC AND MUNICIPAL BROADBAND

• US seeing an explosion of electric power companies and muni broadband providers

• Mostly being deployed in price cap carriers areas

• RUS, Co-Bank, CFC and others are loaning money for broadband deployments

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ELECTRICS• Building smart grid (sometimes)• Offering FTTH solutions• Available equity/cash & network• Respected leader in the community• Most are cooperatives (not for profit)• They have construction experience

– Technical crews– Appropriate construction equipment– Own rights of way– Own poles

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MUNICIPALS Broadband• Increasingly frustrated with many LEC’s because of lack

of broadband, so they are taking things into their own hands

• Some are building and running their own networks• Some are partnering with a Broadband / cable / electric /

other communities / private firms to build and manage the networks

• Different motives drive choices (some good..some not)• Some using bonds, other using sales tax levy to provide

funding• FCC & some States need to review regulations

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Municipal Broadband-article

• Create jobs• Attract new business• Serve existing business• Keep critical jobs in town• Support home based productivity• Advance healthcare, education, research• Initiate tech boom, incubate start-ups• Save money • Increase home value

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Municipal Broadband-article

• Fits the tradition of municipal utilities• Creates true competition• Addresses unmet needs• Boost local economic development

http://reason.org/files/municipal_broadband_lafayette.pdf




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OPPORTUNITIES WITH ELECTRIC AND MUNICIPAL ENTITIES

• Most do not want to build or manage networks• Want to be catalyst for driving the broadband• Will work with “partners” to help deliver services

to their end users• Will provide funding, rights of way, streamlined

permitting, marketing • Be ready to engage them but be careful.

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TOOLS• NTCA – Smart Rural Community (SRC)

– http://www.ntca.org/smart-rural-community/what-is-a-smart-rural-community.html

• Searchable economic development database– https://www.locationone.com/

• NTIA – Broadband Info (Bb Adoption toolkit, Federal funding, public-private partnerships, community Bb roadmap)https://www.commerce.gov/doc/national-telecommunications-and-information-administration#5/39.465/-91.147

http://www.ntca.org/smart-rural-community/what-is-a-smart-rural-community.html



https://www.locationone.com/

https://www.commerce.gov/doc/national-telecommunications-and-information-administration#5/39.465/-91.147




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ACRONYM LISTBIAS – Broadband Internet Access ServiceCAF – Connect America FundCAF-BLS – Connect America Fund - Broadband Loop SupportETC – Eligible Telecom Carrier FCC – Federal Communications CommissionICC – InterCarrier CompensationIoT – Internet of ThingsISP – Internet Service ProviderNECA – National Exchange Carrier AssociationPSAP - Public Safety Answering PointTDM- based - Time-division multiplexingUSAC – Universal Service Administrative CompanyUSF – Universal Service FundWCB – Wireline Competition Bureau

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Thank YouDana Baker

[email protected]#

830.895.7230Cell# 719.648.7360

mailto:[email protected]

Broadband in Rural Areas

Government & Nonprofit

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