Order Code RL30719
Broadband Internet Access
and the Digital Divide:
Federal Assistance Programs
Updated May 25, 2007
Lennard G. Kruger
Specialist in Science and Technology
Resources, Science, and Industry Division
Angele A. Gilroy
Specialist in Telecommunications
Resources, Science, and Industry Division
Broadband Internet Access and the Digital Divide:
Federal Assistance Programs
Summary
The “digital divide” is a term that has been used to characterize a gap between
“information haves and have-nots,” or in other words, between those Americans who
use or have access to telecommunications technologies (e.g., telephones, computers,
the Internet) and those who do not. One important subset of the digital divide debate
concerns high-speed Internet access, also known as broadband. Broadband is
provided by a series of technologies (e.g., cable, telephone wire, fiber, satellite,
wireless) that give users the ability to send and receive data at volumes and speeds
far greater than current “dial-up” Internet access over traditional telephone lines.
Broadband technologies are currently being deployed primarily by the private
sector throughout the United States. While the numbers of new broadband
subscribers continue to grow, studies conducted by the Federal Communications
Commission (FCC), the Department of Commerce (DOC), and the Department of
Agriculture (USDA) suggest that the rate of broadband deployment in urban and high
income areas may be outpacing deployment in rural and low-income areas. Some
policymakers, believing that disparities in broadband access across American society
could have adverse economic and social consequences on those left behind, assert
that the federal government should play a more active role to avoid a “digital divide”
in broadband access. One approach is for the federal government to provide financial
assistance to support broadband deployment in underserved areas. Others, however,
believe that federal assistance for broadband deployment is not appropriate. Some
opponents question the reality of the “digital divide,” and argue that federal
intervention in the broadband marketplace would be premature and, in some cases,
counterproductive.
Legislation introduced in the 110th Congress seeks to provide federal financial
assistance for broadband deployment in the form of grants, loans, subsidies, and tax
credits. Of particular note is the possible reauthorization of the Rural Utilities
Service (RUS) broadband program, which is being considered as part of the 2007
farm bill. Legislation to reform universal service — which could impact the amount
of financial assistance available for broadband deployment in rural and underserved
areas — has been introduced (H.R. 42, H.R. 2054, S. 101, S. 711), as well as other
broadband legislation (H.R. 1818, H.R. 2035, H.R. 2174, S. 541, S. 761, S. 1032, S.
1190, S. 1264, S. 1439, S. 1492).
In assessing such legislation, several policy issues arise. For example, is the
current status of broadband deployment data an adequate basis on which to base
policy decisions? Is federal assistance premature, or do the risks of delaying
assistance to underserved areas outweigh the benefits of avoiding federal intervention
in the marketplace? And finally, if one assumes that governmental action is
necessary to spur broadband deployment in underserved areas, which specific
approaches, either separately or in combination, are likely to be most effective?
This report will be updated as events warrant.
Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Broadband in Rural and Underserved Areas . . . . . . . . . . . . . . . . . . . . . 2
Federal Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
State and Local Broadband Activities . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Programs Supporting Broadband . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Universal Service Concept and the FCC . . . . . . . . . . . . . . . . . . . 10
Universal Service and the Telecommunications Act of 1996 . . . 11
Universal Service and Broadband . . . . . . . . . . . . . . . . . . . . . . . . 13
Rural Utilities Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Legislation in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Is Broadband Deployment Data Adequate? . . . . . . . . . . . . . . . . . . . . . 18
Is Federal Assistance for Broadband Deployment Premature
or Inappropriate? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Which Approach is Best? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
List of Tables
Table 1. Selected Federal Domestic Assistance Programs Related
to Telecommunications Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table 2. Selected Federal Programs Funding Broadband Access . . . . . . . . . . . . 27
Broadband Internet Access and the Digital
Divide: Federal Assistance Programs
Background
The “digital divide” is a term used to describe a perceived gap between
perceived “information haves and have-nots,” or in other words, between those
Americans who use or have access to telecommunications technologies (e.g.,
telephones, computers, the Internet) and those who do not.1 Whether or not
individuals or communities fall into the “information haves” category depends on a
number of factors, ranging from the presence of computers in the home, to training
and education, to the availability of affordable Internet access. A series of reports
issued by the Department of Commerce2 (DOC) during the Clinton Administration
argued that a “digital divide” exists, with many rural citizens, certain minority
groups, and low-income Americans tending to have less access to
telecommunications technology than other Americans.3
In February 2002, the Bush Administration’s Department of Commerce
released its first survey report on Internet use, entitled A Nation Online: How
Americans Are Expanding Their Use of the Internet.4 While acknowledging a
disparity in usage between “information haves and have nots,” the report focused on
the increasing rates of Internet usage among traditionally underserved groups:
In every income bracket, at every level of education, in every age group, for
people of every race and among people of Hispanic origin, among both men and
women, many more people use computers and the Internet now than did so in the
recent past. Some people are still more likely to be Internet users than others.
Individuals living in low-income households or having little education, still trail
the national average. However, broad measures of Internet use in the United
States suggest that over time Internet use has become more equitable.5
1 The term “digital divide” can also refer to international disparities in access to information
technology. This report focuses on domestic issues only.
2 See U.S. Department of Commerce, Falling Through the Net: Toward Digital Inclusion,
released October 2000.
3 Not all observers agree that a “digital divide” exists. See, for example: Thierer, Adam D.,
Divided Over the Digital Divide, Heritage Foundation, March 1, 2000.
[http://www.heritage.org/Press/Commentary/ED030100.cfm]
4 Department of Commerce, A Nation Online: How Americans Are Expanding Their Use
of the Internet, February 2002. Based on a September 2001 Census Bureau survey of 57,000
households. See [http://www.ntia.doc.gov/ntiahome/dn/index.html]
5 A Nation Online, pp. 10-11.
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A Nation Online: Entering the Broadband Age, published in September 2004,
was the sixth Department of Commerce report examining the use of computers, the
Internet, and other information technology. For the first time, the DOC report
focused on broadband, also known as high-speed Internet access. Broadband is
provided by a series of technologies (e.g., cable, telephone wire, satellite, wireless)
that give users the ability to send and receive data at volumes and speeds far greater
than current “dial-up” Internet access over traditional telephone lines.6 The DOC
report found that the proportion of U.S. households with broadband connections grew
from 9.1% in September 2001 to 19.9% in October 2003.7
According to the latest FCC data on the deployment of high-speed Internet
connections (released January 2007), as of June 30, 2006 there were 64.6 million
high speed lines connecting homes and businesses to the Internet in the United States,
a growth rate of 26% during the first half of 2006. Of the 64.6 million high speed
lines reported by the FCC, 50.3 million serve residential users.8 While the broadband
adoption rate stands at 28% of U.S. households9, broadband availability is much
higher. As of June 30, 2006, the FCC found at least one high-speed subscriber in
99% of all zip codes in the United States. The FCC estimates that “roughly 20
percent of consumers with access to advanced telecommunications capability do
subscribe to such services.” According to the FCC, possible reasons for the gap
between broadband availability and subscribership include the lack of computers in
some homes, price of broadband service, lack of content, and the availability of
broadband at work.10
Broadband in Rural and Underserved Areas.11 While the number of
new broadband subscribers continues to grow, the rate of broadband deployment in
urban and high income areas appears to be outpacing deployment in rural and low-
income areas. In response to a request by ten Senators, the Departments of
Commerce and Agriculture released a report on April 26, 2000, concluding that rural
6 For further information on different types of broadband technologies, including their
respective strengths and limitations, see CRS Report RL33542, Broadband Internet Access:
Background and Issues, by Angele A. Gilroy and Lennard G. Kruger.
7 U.S. Department of Commerce, Economics and Statistics Administration, National
Telecommunications and Information Administration, A Nation Online: Entering the
Broadband Age, September 2004, p. 1.
8 FCC, High-Speed Services for Internet Access: Status as of June 30, 2006, January 2007.
Available at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-270128A1.pdf]
9 U.S. Government Accountability Office, Broadband Deployment is Extensive throughout
the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas,
GAO-06-426, May 2006, p. 3.
10 Federal Communications Commission, Fourth Report to Congress, “Availability of
Advanced Telecommunications Capability in the United States,” GN Docket No. 04-54,
FCC 04-208, September 9, 2004, p. 38. Available at [http://hraunfoss.fcc.gov/edocs
_public/attachmatch/FCC-04-208A1.pdf]
11 For more information on rural broadband and broadband programs at the Rural Utilities
Service, see CRS Report RL33816, Broadband Loan and Grant Programs in the USDA’s
Rural Utilities Service, by Lennard G. Kruger.
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areas lag behind urban areas in access to broadband technology. The report found
that less than 5% of towns of 10,000 or less have access to broadband, while
broadband over cable has been deployed in more than 65% of all cities with
populations over 250,000, and broadband over the telephone network has been
deployed in 56% of all cities with populations over 100,000.12
Similarly, the February 2002 report from the Department of Commerce, A
Nation Online: How Americans Are Expanding Their Use of the Internet, found that
12.2% of Internet users in rural areas had high-speed connections, as opposed to
21.2% of Internet users in urban areas. The report’s survey also found, not
surprisingly, that individuals in high-income households have higher broadband
subscribership rates than individuals in lower income households.13
December 2005 data from the Pew Internet & American Life Project indicate
that while broadband adoption is growing in urban, suburban, and rural areas,
broadband users make up larger percentages of urban and suburban users than rural
users. Pew found that the percentage of all U.S. adults with broadband at home is
38% for urban areas, 40% for suburban areas, and 24% for rural areas.14
Similarly, a May 2006 report released by the Government Accountability Office
(GAO) found that 17% of rural households subscribe to broadband, as opposed to
28% of suburban and 29% of urban households.15
According to the latest FCC data on the deployment of high-speed Internet
connections (released January 2007), high-speed subscribers were reported in 99%
of the most densely populated zip codes, as opposed to 89% of zip codes with the
lowest population densities. Similarly, for zip codes ranked by median family
income, high-speed subscribers were reported present in 99% of the top one-tenth of
zip codes, as compared to 91% of the bottom one-tenth of zip codes.16
On the other hand, the FCC’s Fourth Report, while acknowledging that
disparities in broadband deployment exist, asserts that the gap between the broadband
“haves and have-nots” is narrowing:
[T]he Fourth Report also documents the continuation of a positive trend that first
emerged in our last report: namely, the increasing availability of advanced
12 See U.S. Depts. of Commerce and Agriculture, Advanced Telecommunications in Rural
America: The Challenge of Bringing Broadband Service to All Americans, April 2000, 80
pages. Available at [http://www.ntia.doc.gov/reports/ruralbb42600.pdf]
13 A Nation Online, pp. 40-41.
14 Horrigan, John B., Pew Internet & American Life Project, Rural Broadband Internet Use,
February 2006, Available at [http://www.pewinternet.org/pdfs/PIP_Rural_Broadband.pdf]
15 U.S. Government Accountability Office, Broadband Deployment is Extensive throughout
the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas,
GAO-06-426, May 2006, p. 12.
16 FCC, High-Speed Services for Internet Access: Status as of June 30, 2006, January 2007,
p. 4. Available at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-270128A1.pdf]
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telecommunications capability to certain groups of consumers — those in rural
areas, those with low incomes, and those with disabilities — who stand in
particular need of advanced services. Consumers in these groups are of special
concern to the Commission in that they are most in need of access to advanced
telecommunications capability to overcome economic, educational, and other
limitations, they are also the most likely to lack access precisely because of these
limitations. The Fourth Report demonstrates that we are making substantial
progress in closing the gaps in access that these groups traditionally have
experienced.17
The September 2004 Department of Commerce report, A Nation Online:
Entering the Broadband Age, found that a lower percentage of Internet households
have broadband in rural areas (24.7%) than in urban areas (40.4%), and that “while
broadband usage has grown significantly in all areas since the previous survey, the
rural-urban differential continues.”18 The report also found that broadband
penetration rates are higher in the West and Northeast than in the South and
Midwest.19 Race and ethnicity were also found to be significant determinants of
broadband use, with 25.7% of White Americans living in broadband households, as
opposed to 14.2% of Black and 12.6% of Hispanic Americans.20
Some policymakers believe that disparities in broadband access across
American society could have adverse consequences on those left behind. While a
minority of American homes today subscribe to broadband, many believe that
advanced Internet applications of the future — voice over the Internet protocol
(VoIP) or high quality video, for example — and the resulting ability for businesses
and consumers to engage in e-commerce, may increasingly depend on high speed
broadband connections to the Internet. Thus, some say, communities and individuals
without access to broadband could be at risk to the extent that e-commerce becomes
a critical factor in determining future economic development and prosperity. A 2003
study conducted by Criterion Economics found that ubiquitous adoption of current
generation broadband technologies would result in a cumulative increase in gross
domestic product of $179.7 billion, while sustaining an additional 61,000 jobs per
year over the next nineteen years. The study projected that 1.2 million jobs could be
created if next generation broadband technology is rapidly and ubiquitously
deployed.21 A February 2006 study done by the Massachusetts Institute of
Technology for the Economic Development Administration/Department of
Commerce marked the first attempt to quantitatively measure the impact of
broadband on economic growth. The study found that “between 1998 and 2002,
communities in which mass-market broadband was available by December 1999
experienced more rapid growth in employment, the number of businesses overall, and
17 Fourth Report, p. 8-9.
18 A Nation Online: Entering the Broadband Age, pp. 12-13.
19 Ibid., p. 12.
20 Ibid., p. A-1.
21 Crandall, Robert W. et al, The Effect of Ubiquitous Broadband Adoption on Investment,
Jobs, and the U.S. Economy, Conducted by Criterion Economics, L.L.C. for the New
Millennium Research Council, September 2003. Available at [http://www
.newmillenniumresearch.org/archive/bbstudyreport_091703.pdf]
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businesses in IT-intensive sectors, relative to comparable communities without
broadband at that time.”22
Some also argue that broadband is an important contributor to U.S. future
economic strength with respect to the rest of the world. According to the
International Telecommunications Union, the U.S. ranks 16th worldwide in
broadband penetration (subscriptions per 100 inhabitants as of December 2005).23
Similarly, data from the Organization for Economic Cooperation and Development
(OECD) found the U.S. ranking 15th among OECD nations in broadband access per
100 inhabitants as of December 2006.24 By contrast, in 2001 an OECD study found
the U.S. ranking 4th in broadband subscribership per 100 inhabitants (after Korea,
Sweden, and Canada).25 While many argue that the U.S. declining performance in
international broadband rankings is a cause for concern,26 others — including the
Administration — maintain that the OECD data undercounts U.S. broadband
deployment,27 and that cross-country broadband deployment comparisons are not
necessarily meaningful and inherently problematic.28 Finally, an issue related to
international broadband rankings is the extent to which broadband speeds and prices
differ between the U.S. and the rest of the world.29
22 Gillett, Sharon E., Massachusetts Institute of Technology, “Measuring Broadband’s
Economic Impact,” report prepared for the Economic Development Administration, U.S.
Department of Commerce, February 28, 2006 p. 4.
23 International Telecommunications Union, Economies by broadband penetration, 2005.
Available at [http://www.itu.int/ITU-D/ict/statistics/at_glance/top20_broad_2005.html].
24 OECD, OECD Broadband Statistics, December 2006. Available at
[http://www.oecd.org/sti/ict/broadband]
25 OECD, Directorate for Science, Technology and Industry, The Development of Broadband
Access in OECD Countries, October 29, 2001, 63 pages. For a comparison of government
broadband policies, also see OECD, Directorate for Science, Technology and Industry,
Broadband Infrastructure Deployment: The Role of Government Assistance, May 22, 2002,
42 pages.
26 See Turner, Derek S., Free Press, Broadband Reality Check II: The Truth Behind
America’s Digital Divide, August 2006, pp 8-11. Available at [http://www.freepress
.net/docs/bbrc2-final.pdf]
27 National Telecommunications and Information Administration, Fact Sheet: United States
Maintains Information and Communication Technology (ICT) Leadership and Economic
Strength, available at [http://www.ntia.doc.gov/ntiahome/press/2007/ICTleader
_042407.html]
28 See Wallsten, Scott, Progress and Freedom Foundation, Towards Effective U.S.
Broadband Policies, May 2007, 19 pages. Available at [http://www.pff.org/issues
-pubs/pops/pop14.7usbroadbandpolicy.pdf]
29 See Turner, Derek S., Free Press, Broadband Reality Check II: The Truth Behind
America’s Digital Divide, August 2006, pp 5-9; Kende, Michael, Analysis Consulting
Limited, Survey of International Broadband Offerings, October 4, 2006, 12 pages, available
at [http://www.analysys.com/pdfs/BroadbandPerformanceSurvey.pdf]; and Correa, Daniel
K., The International Technology and Innovation Foundation, Assessing Broadband in
America: OECD and ITIF Broadband Rankings, April 2007, 10 pages, available at
(continued...)
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Federal Role. The Telecommunications Act of 1996 (P.L. 104-104) addresses
the issue of whether the federal government should intervene to prevent a “digital
divide” in broadband access. Section 706 requires the FCC to determine whether
“advanced telecommunications capability [i.e., broadband or high-speed access] is
being deployed to all Americans in a reasonable and timely fashion.” If this is not
the case, the act directs the FCC to “take immediate action to accelerate deployment
of such capability by removing barriers to infrastructure investment and by promoting
competition in the telecommunications market.”
On January 28, 1999, the FCC adopted its first report (FCC 99-5) pursuant to
Section 706. The report concluded that “the consumer broadband market is in the
early stages of development, and that, while it is too early to reach definitive
conclusions, aggregate data suggests that broadband is being deployed in a
reasonable and timely fashion.”30 The FCC announced that it would continue to
monitor closely the deployment of broadband capability in annual reports and that,
where necessary, it would “not hesitate to reduce barriers to competition and
infrastructure investment to ensure that market conditions are conducive to
investment, innovation, and meeting the needs of all consumers.”
The FCC’s second Section 706 report was adopted on August 3, 2000. Based
on more extensive data than the first report, the FCC similarly concluded that
notwithstanding risks faced by some vulnerable populations, broadband is being
deployed in a reasonable and timely fashion overall:
Recognizing that the development of advanced services infrastructure remains
in its early stages, we conclude that, overall, deployment of advanced
telecommunications capability is proceeding in a reasonable and timely fashion.
Specifically, competition is emerging, rapid build-out of necessary infrastructure
continues, and extensive investment is pouring into this segment of the
economy.31
The FCC’s third Section 706 report was adopted on February 6, 2002. Again,
the FCC concluded that “the deployment of advanced telecommunications capability
to all Americans is reasonable and timely.”32 The FCC added:
We are encouraged by the expansion of advanced services to many regions of the
nation, and growing number of subscribers. We also conclude that investment
in infrastructure for most advanced services markets remains strong, even though
the pace of investment trends has generally slowed. This may be due in part to
the general economic slowdown in the nation. In addition, we find that emerging
29 (...continued)
[http://www.itif.org/files/BroadbandRankings.pdf].
30 FCC News Release, “FCC Issues Report on the Deployment of Advanced
Telecommunications Capability to All Americans,” January 28, 1999. [http://www.fcc
.gov/Bureaus/Common_Carrier/News_Releases/1999/nrcc9004.html]
31 Deployment of Advanced Telecommunications Capability: Second Report, p. 6.
32 Third Report, p. 5.
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technologies continue to stimulate competition and create new alternatives and
choices for consumers.33
On September 9, 2004, the FCC adopted and released its Fourth Report
pursuant to Section 706. Like the previous three reports, the FCC concluded that
“the overall goal of Section 706 is being met, and that advanced telecommunications
capability is indeed being deployed on a reasonable and timely basis to all
Americans.”34 The FCC noted the emergence of new services such as VoIP, and the
significant development of new broadband access technologies such as unlicensed
wireless (WiFi)and broadband over power lines. The FCC noted the future promise
of emerging multiple advanced broadband networks which can complement one
another:
For example, in urban and suburban areas, wireless broadband services may “fill
in the gaps” in wireline broadband coverage, while wireless and satellite services
may bring high-speed broadband to remote areas where wireline deployment may
be costly. Having multiple advanced networks will also promote competition in
price, features, and quality-of-service among broadband-access providers.35
Two FCC Commissioners (Michael Copps and Jonathan Adelstein) dissented
from the Fourth Report conclusion that broadband deployment is reasonable and
timely. They argued that the relatively poor world ranking of United States
broadband penetration indicates that deployment is insufficient, that the FCC’s
continuing definition of broadband as 200 kilobits per second is outdated and is not
comparable to the much higher speeds available to consumers in other countries, and
that the use of zip code data (measuring the presence of at least one broadband
subscriber within a zip code area) does not sufficiently characterize the availability
of broadband across geographic areas.36
While the FCC is currently implementing or actively considering some
regulatory activities related to broadband,37 no major regulatory intervention pursuant
to Section 706 of the Telecommunications Act of 1996 has been deemed necessary
by the FCC at this time.
On April 16, 2007, the FCC announced a Notice of Inquiry beginning its fifth
inquiry under Section706 of the Telecommunications Act of 1996. Under this
inquiry, the FCC will collect information on various market, investment, and
technological trends relevant to the question of whether advanced
telecommunications services is being made available to all Americans.38
33 Ibid., p. 5-6.
34 Fourth Report, p. 8.
35 Ibid., p. 9.
36 Ibid., p. 5, 7.
37 See Appendix C of the Fourth Report, “List of Broadband-Related Proceedings at the
Commission,” pp. 54-56.
38 Federal Communications Commission, Notice of Inquiry, “Concerning the Deployment
(continued...)
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Meanwhile, the National Telecommunications and Information Administration
(NTIA) at the Department of Commerce (DOC) was tasked with developing the Bush
Administration’s broadband policy.39 Statements from Administration officials
indicated that much of the policy would focus on removing regulatory roadblocks to
investment in broadband deployment.40 On June 13, 2002, in a speech at the 21st
Century High Tech Forum, President Bush declared that the nation must be
aggressive about the expansion of broadband, and cited ongoing activities at the FCC
as important in eliminating hurdles and barriers to get broadband implemented.
President Bush made similar remarks citing the economic importance of broadband
deployment at the August 13, 2002 economic forum in Waco, Texas.
Subsequently, a more formal Administration broadband policy was unveiled in
March and April of 2004. On March 26, 2004, President Bush endorsed the goal of
universal broadband access by 2007. Then on April 26, 2004, President Bush
announced a broadband initiative which includes promoting legislation which would
permanently prohibit all broadband taxes, making spectrum available for wireless
broadband and creating technical standards for broadband over power lines, and
simplifying rights-of-way processes on federal lands for broadband providers.41
The Bush Administration has also emphasized the importance of encouraging
demand for broadband services. On September 23, 2002, the DOC’s Office of
Technology Policy released a report, Understanding Broadband Demand: A Review
of Critical Issues,42 which argues that national governments can accelerate broadband
demand by taking a number of steps, including protecting intellectual property,
supporting business investment, developing e-government applications, promoting
efficient radio spectrum management, and others. Similarly, the President’s Council
of Advisers on Science & Technology (PCAST) was tasked with studying “demand-
side” broadband issues and suggesting policies to stimulate broadband deployment
and economic recovery. The PCAST report, Building Out Broadband, released in
December 2002, concludes that while government should not intervene in the
telecommunications marketplace, it should apply existing policies and work with the
private sector to promote broadband applications and usage. Specific initiatives
include increasing e-government broadband applications (including homeland
38 (...continued)
of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely
Fashion, and possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the
Telecommunications Act of 1996,” GN Docket No. 07-45, FCC 07-21, released April 17,
2007, 21 p.
39 See speech by Nancy Victory, Assistant Secretary for Communications and Information,
before the National Summit on Broadband Deployment, October 25, 2001, [http://www.ntia
.doc.gov/ntiahome/speeches/2001/broadband_102501.htm]
40 Address by Nancy Victory, NTIA Administrator, before the Alliance for Public
Technology Broadband Symposium, February 8, 2002, [http://www.ntia.doc.gov
/ntiahome/speeches/2002/apt_020802.htm]
41 See White House, A New Generation of American Innovation, April 2004. Available at
[http://www.whitehouse.gov/infocus/technology/economic_policy200404/innovation.pdf]
42 Available at [http://www.technology.gov/reports/TechPolicy/Broadband_020921.pdf]
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security); promoting telework, distance learning, and telemedicine; pursuing
broadband-friendly spectrum policies, and ensuring access to public rights of way for
broadband infrastructure.43 Meanwhile, “high-tech” organizations such as TechNet,44
the Computer Systems Policy Project (CSPP)45, and the Semiconductor Industry
Association (SIA)46 have called on the federal government to adopt policies toward
a goal of 100 Mbs to 100 million homes by the end of the decade.
Some policymakers in Congress assert that the federal government should play
a more active role to avoid a “digital divide” in broadband access, and that legislation
is necessary to ensure fair competition and timely broadband deployment. Bills have
been introduced into past Congresses (and have been introduced or are expected in
the 110th Congress) seeking to provide federal financial assistance for broadband
deployment in the form of grants, loans, subsidies, and/or tax credits.
State and Local Broadband Activities. In addition to federal support for
broadband deployment, there are programs and activities ongoing at the state and
local level. Surveys, assessments, and reports from the American Electronics
Association,47 Technet,48 the Alliance for Public Technology,49 the California Public
Utilities Commission,50 the AEI-Brookings Joint Center,51 and the National
43 President’s Council of Advisors on Science and Technology, Office of Science and
Technology Policy, Building Out Broadband, December 2002, 14 p. Available at
[http://www.ostp.gov/PCAST/FINAL%20Broadband%20Report%20With%20Letters.pdf]
44 TechNet represents over 300 senior executives from companies in the fields of
information technology, biotechnology, venture capital, investment banking, and law.
TechNet’s policy document, “A National Imperative: Universal Availability of Broadband
by 2010,” is available at [http://www.technet.org/news/release/?postId=
6265&pageTitle=TechNet+CEOs+Call+for+National+Broadband+Policy]
45 CSPP is composed of nine CEOs from computer hardware and information technology
companies. See “A Vision for 21st Century Wired & Wireless Broadband: Building the
Foundation of the Networked World,” [http://www.cspp.org/documents
/networkedworld.pdf]
46 See Semiconductor Industry Association, “Removing Barriers to Broadband
Deployment,” [http://www.sia-online.org/downloads/Broadband_Combined.pdf]
47 American Electronics Association, Broadband in the States 2003: A State-by-State
Overview of Broadband Deployment, May 22, 2003. [http://www.aeanet
.org/publications/idet_broadbandstates03.asp]
48 TechNet, The State Broadband Index: An Assessment of State Policies Impacting
Broadband Deployment and Demand, July 17, 2003, 48 p. Available at
[http://www.michigan.gov/documents/State_Broadband_Index_71282_7.pdf]
49 Alliance for Public Technology, A Nation of Laboratories: Broadband Policy
Experiments in the States, March 5, 2004, 48 p. Available at [http://www.apt.org
/publications/reports-studies/broadbandreport_final.pdf]
50 California Public Utilities Commission, Broadband Deployment in California, May 5,
2005, 83 p. Available at [http://www.cpuc.ca.gov/static/telco/reports/broadbandreport.htm]
51 Wallsten, Scott, AEI-Brookings Joint Center for Regulatory Studies, Broadband
Penetration: An Empirical Analysis of State and Federal Policies, Working Paper 05-12,
(continued...)
CRS-10
Conference of State Legislatures52 have explored state and local broadband
programs. A related issue is the emergence of municipal broadband networks
(primarily wireless and fiber based) and the debate over whether such networks
constitute unfair competition with the private sector (for more information on
municipal broadband, see CRS Report RS20993, Wireless Technology and Spectrum
Demand: Advanced Wireless Services, by Linda K. Moore).
Federal Programs Supporting Broadband
The Rural Broadband Access Loan and Loan Guarantee Program and the
Community Connect Broadband Grants, both at the Rural Utilities Service of the
U.S. Department of Agriculture, are currently the only federal programs exclusively
dedicated to deploying broadband infrastructure. However, there exist other federal
programs that provide financial assistance for various aspects of telecommunications
development. The major vehicle for funding telecommunications development,
particularly in rural and low-income areas, is the Universal Service Fund (USF).
While the USF’s High Cost Program does not explicitly fund broadband
infrastructure, subsidies are used, in many cases, to upgrade existing telephone
networks so that they are capable of delivering high-speed services. Additionally,
subsidies provided by USF’s Schools and Libraries Program and Rural Health Care
Program are used for a variety of telecommunications services, including broadband
access.
Table 1 (at the end of this report) shows selected federal domestic assistance
programs throughout the federal government that can be associated with
telecommunications development. Many (if not most) of these programs can be
related, if not necessarily to the deployment of broadband technologies in particular,
then to telecommunications and the “digital divide” issue generally.
Table 2 (also at the end of this report) presents selected federal programs that
have provided financial assistance for broadband. These programs are broken down
into three categories: first, programs that fund access to telecommunications services
in unserved or underserved areas; second, general economic development programs
that have funded broadband-related projects; and third, applications-specific
programs which will typically fund some aspect of broadband access as a means
towards supporting a particular application, such as distance learning or telemedicine.
The Universal Service Concept and the FCC.53 Since its creation in
1934 the Federal Communications Commission (FCC) has been tasked with “...
51 (...continued)
June 2005, 29 p. Available at[http://aei-brookings.org/admin/authorpdfs/page.php?id=1161]
52 For a summary of selected state broadband bills, see [http://www.ncsl.org/programs
/telecom/broadband0906.htm]
53 The section on universal service was prepared by Angele Gilroy, Specialist in
Telecommunications, Resources, Science and Industry Division. For more information on
universal service, see CRS Report RL33979, Universal Service Fund: Background and
Options for Reform, by Angele A. Gilroy.
CRS-11
mak[ing] available, so far as possible, to all the people of the United States, ... a
rapid, efficient, Nation-wide, and world-wide wire and radio communications service
with adequate facilities at reasonable charges....”54 This mandate led to the
development of what has come to be known as the universal service concept.
The universal service concept, as originally designed, called for the
establishment of policies to ensure that telecommunications services are available to
all Americans, including those in rural, insular and high cost areas, by ensuring that
rates remain affordable. Over the years this concept fostered the development of
various FCC policies and programs to meet this goal. The FCC offers universal
service support through a number of direct mechanisms that target both providers of
and subscribers to telecommunications services.55
The development of the federal universal service high cost fund is an example
of provider-targeted support. Under the high cost fund, eligible telecommunications
carriers, usually those serving rural, insular and high cost areas, are able to obtain
funds to help offset the higher than average costs of providing telephone service.56
This mechanism has been particularly important to rural America where the lack of
subscriber density leads to significant costs. FCC universal service policies have also
been expanded to target individual users. Such federal programs include two
income-based programs, Link Up and Lifeline, established in the mid-1980s to assist
economically needy individuals. The Link Up program assists low-income
subscribers pay the costs associated with the initiation of telephone service and the
Lifeline program assists low-income subscribers pay the recurring monthly service
charges. Funding to assist carriers providing service to individuals with speech
and/or hearing disabilities is also provided through the Telecommunications Relay
Service Fund. Effective January 1, 1998, schools, libraries, and rural health care
providers also qualified for universal service support.
Universal Service and the Telecommunications Act of 1996. Passage
of the Telecommunications Act of 1996 (P.L.104-104) codified the long-standing
commitment by U.S. policymakers to ensure universal service in the provision of
telecommunications services.
The Schools and Libraries, and Rural Health Care Programs. Congress,
through the 1996 Act, not only codified, but also expanded the concept of universal
service to include, among other principles, that elementary and secondary schools
and classrooms, libraries, and rural health care providers have access to
telecommunications services for specific purposes at discounted rates. (See Sections
254(b)(6) and 254(h)of the 1996 Telecommunications Act, 47 USC 254.)
54 Communications Act of 1934, As Amended, Title I sec.1[47 U.S.C. 151].
55 Many states participate in or have programs that mirror FCC universal service
mechanisms to help promote universal service goals within their states.
56 Additional FCC policies such as rate averaging and pooling have also been implemented
to assist high cost carriers.
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1. The Schools and Libraries Program. Under universal service provisions
contained in the 1996 Act, elementary and secondary schools and classrooms and
libraries are designated as beneficiaries of universal service discounts. Universal
service principles detailed in Section 254(b)(6) state that “Elementary and secondary
schools and classrooms ... and libraries should have access to advanced
telecommunications services...” The act further requires in Section 254(h)(1)(B) that
services within the definition of universal service be provided to elementary and
secondary schools and libraries for education purposes at discounts, that is at “rates
less than the amounts charged for similar services to other parties.”
The FCC established the Schools and Libraries Division within the Universal
Service Administrative Company (USAC) to administer the schools and libraries
or “E (education)-rate” program to comply with these provisions. Under this
program, eligible schools and libraries receive discounts ranging from 20 to 90
percent for telecommunications services depending on the poverty level of the
school’s (or school district’s) population and its location in a high cost
telecommunications area. Three categories of services are eligible for discounts:
internal connections (e.g., wiring, routers and servers); Internet access; and
telecommunications and dedicated services, with the third category receiving funding
priority. According to data released by program administrators, $17 billion in funding
has been committed over the first eight years of the program with funding released
to all states, the District of Columbia and all territories. Funding commitments for
funding Year 2006 (July 1, 2006 - June 30, 2007), the ninth and current year of the
program, totaled $1.9 billion as of May 16, 2007.57
2. The Rural Health Care Program. Section 254(h) of the 1996 Act requires
that public and non-profit rural health care providers have access to
telecommunications services necessary for the provision of health care services at
rates comparable to those paid for similar services in urban areas. Subsection
254(h)(1) further specifies that “to the extent technically feasible and economically
reasonable” health care providers should have access to advanced
telecommunications and information services. The FCC established the Rural Health
Care Division (RHCD) within the USAC to administer the universal support program
to comply with these provisions. Under FCC established rules only public or non-
profit health care providers are eligible to receive funding. Eligible health care
providers, with the exception of those requesting only access to the Internet, must
also be located in a rural area. The funding ceiling, or cap, for this support was
established at $400 million annually. The funding level for Year One of the program
( January 1998 - June 30, 1999) was set at $100 million. Due to less than anticipated
demand, the FCC established a $12 million funding level for the second year (July
1, 1999 to June 30, 2000) of the program but has since returned to a $400 million
yearly cap. As of March 13, 2007, covering the first nine years of the program, a
total of $183.9 million has been committed to 3,517 rural health care providers. The
57 For additional information on this program, including funding commitments, see the E-
rate website: [http://www.universalservice.org/sl/]
CRS-13
primary use of the funding is to provide reduced rates for telecommunications and
information services necessary for the provision of health care.58
The Telecommunications Development Fund. Section 714 of the 1996 Act
created the Telecommunications Development Fund (TDF). The TDF is a private,
non-governmental, venture capital corporation overseen by a seven-member board
of directors and fund management. The purpose of the TDF is threefold: to promote
access to capital for small businesses in order to enhance competition in the
telecommunications industry; to stimulate new technology development and promote
employment and training; and to support universal service and enhance the delivery
of telecommunications services to rural and underserved areas. The TDF is
authorized to provide financing to eligible small businesses in the
telecommunications industry through loans and investment capital. At this time the
TDF is focusing on providing financing in the form of equity investments and has
two funds with 5 companies in each portfolio.59 Initial funding for the program is
derived from the interest earned from the upfront payments bidders submit to
participate in FCC auctions. The availability of funds for future investments is
dependent on earning a successful return on the Fund’s portfolio. The TDF had $50
million under management and makes preferred equity investments of $500K-$2.5
million.60
Universal Service and Broadband. One of the policy debates surrounding
universal service is whether access to advanced telecommunications services (i.e.
broadband) should be incorporated into universal service objectives. The term
universal service, when applied to telecommunications, refers to the ability to make
available a basket of telecommunications services to the public, across the nation, at
a reasonable price. As directed in the 1996 Telecommunications Act [Section
254(c)] a federal-state Joint Board was tasked with defining the services which
should be included in the basket of services to be eligible for federal universal service
support; in effect using and defining the term “universal service” for the first time.
The Joint Board’s recommendation, which was subsequently adopted by the FCC in
May 1997, included the following in its universal service package: voice grade
access to and some usage of the public switched network; single line service; dual
tone signaling; access to directory assistance; emergency service such as 911;
operator services; access and interexchange (long distance) service.
Some policy makers expressed concern that the FCC-adopted definition is too
limited and does not take into consideration the importance and growing acceptance
of advanced services such as broadband and Internet access. They point to a number
of provisions contained in the Universal Service section of the 1996 Act to support
their claim. Universal service principles contained in Section 254(b)(2) state that
“Access to advanced telecommunications services should be provided to all regions
58 For additional information on this program, including funding commitments, see the
RHCD website: [http://www.universalservice.org/rhc/]
59 The TDF also provides management and technical assistance to the companies in which
it invests.
60 For additional information on this program see the TDF website at [http://www
.tdfund.com]
CRS-14
of the Nation.” The subsequent principle (b)(3) calls for consumers in all regions
of the Nation including “low-income” and those in “rural, insular, and high cost
areas” to have access to telecommunications and information services including
“advanced services” at a comparable level and a comparable rate charged for similar
services in urban areas. Such provisions, they state, dictate that the FCC expand its
universal service definition.
Others caution that a more modest approach is appropriate given the “universal
mandate” associated with this definition and the uncertainty and costs associated
with mandating nationwide deployment of such advanced services as a universal
service policy goal. Furthermore they state the 1996 Act does take into consideration
the changing nature of the telecommunications sector and allows for the universal
service definition to be modified if future conditions warrant. Section 254(c)of the
act states that “universal service is an evolving level of telecommunications services”
and the FCC is tasked with “periodically” reevaluating this definition “taking into
account advances in telecommunications and information technologies and services.”
Furthermore, the Joint Board is given specific authority to recommend “from time
to time” to the FCC modification in the definition of the services to be included for
federal universal service support. The Joint Board, in July 2002, concluded such an
inquiry and recommended that at this time no changes be made in the current list of
services eligible for universal service support. The FCC, in a July 10, 2003 order
(FCC 03-170) adopted the Joint Board’s recommendation thereby leaving unchanged
the list of services supported by Federal universal service.
Rural Utilities Service. The Rural Electrification Administration (REA),
subsequently renamed the Rural Utilities Service (RUS), was established by the
Roosevelt Administration in 1935. Initially, it was established to provide credit
assistance for the development of rural electric systems. In 1949, the mission of
REA was expanded to include rural telephone providers. Congress further amended
the Rural Electrification Act in 1971 to establish within REA a Rural Telephone
Account and the Rural Telephone Bank (RTB). Rural Telephone Loans and Loan
Guarantees provide long-term direct and guaranteed loans for telephone lines,
facilities, or systems to furnish and improve telecommunications service in rural
areas. The RTB — liquidated in FY2006 — was a public-private partnership
intended to provide additional sources of capital that would supplement loans made
directly by RUS. Another program, the Distance Learning and Telemedicine
Program, specifically addresses health care and education needs of rural America.
RUS implements two programs specifically targeted at providing assistance for
broadband deployment in rural areas: the Rural Broadband Access Loan and Loan
Guarantee Program and Community Connect Broadband Grants. The current
authorization for the Rural Broadband Access Loan and Loan Guarantee Program
expires on September 30, 2007. It is expected that the 110th Congress will consider
reauthorization of the program as part of the 2007 farm bill. For further information
on rural broadband and the RUS broadband programs, see CRS Report RL33816,
Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service, by
Lennard G. Kruger.
CRS-15
Legislation in the 109th Congress
In the 109th Congress, legislation was introduced to provide financial assistance
to encourage broadband deployment (including loans, grants, and tax incentives), and
to allocate additional spectrum for use by wireless broadband applications. Of
particular note was enactment of the Deficit Reduction Act of 2005 (P.L. 109-171),
which set a hard deadline for the digital television transition, thereby reclaiming
analog television spectrum to be auctioned for commercial applications such as
wireless broadband.
Legislation in the 110th Congress
In the 110th Congress, legislation has been introduced that would provide
financial assistance for broadband deployment. Of particular note is the
reauthorization of the Rural Utilities Service (RUS) broadband program, which is
being considered as part of the 2007 farm bill. Legislation to reform universal
service — which could have a significant impact on the amount of financial
assistance available for broadband deployment in rural and underserved areas — has
also been introduced. The following is a complete list of bills.
H.R. 42 (Velazquez)
Serving Everyone with Reliable, Vital Internet, Communications and Education
Act of 2007. Directs the FCC to expand assistance provided by the Lifeline
Assistance Program and the Link Up Program to include broadband service.
Introduced January 4, 2007; referred to Committee on Energy and Commerce.
H.R. 1818 (Matsui)
Broadband Deployment Acceleration Act of 2007. Amends the Internal
Revenue Code of 1986 to provide for the expensing of broadband Internet access
expenditures. Introduced March 29, 2007; referred to Committee on Ways and
Means.
H.R. 2035 (Herseth Sandlin)
Rural Broadband Improvement Act. Amends the Rural Electrification Act of
1936 to modify the broadband loan program at the Rural Utilities Service by
narrowing the definition of “eligible rural community” and by limiting loans awarded
to applicants proposing to serve areas that already have a broadband provider.
Introduced April 25, 2007; referred to Committee on Agriculture and to Committee
on Energy and Commerce.
H.R. 2054 (Boucher)
Universal Reform Act of 2007. Targets universal service support specifically
to eligible telecommunications carriers in high-cost geographic areas to ensure that
communications services and high-speed broadband services are made available
throughout all of the States of the United States in a fair and equitable manner.
Introduced April 26, 2007; referred to Committee on Energy and Commerce.
CRS-16
H.R. 2174 (Salazar)
Rural Broadband Initiative Act of 2007. Establishes an Office of Rural
Broadband Initiatives within the Department of Agriculture which will administer all
rural broadband grant and loan programs previously administered by the Rural
Utilities Service. Also establishes a National Rural Broadband Innovation Fund
which would fund experimental and pilot rural broadband projects and applications.
Introduced May 3, 2007; referred to Committee on Agriculture and to Committee on
Energy and Commerce.
S. 101 (Stevens)
Universal Service for Americans Act (“USA Act”). Directs the FCC to
establish Broadband for Unserved Area Areas Program to be funded by the Universal
Service Fund. Requires communications carriers to submit detailed broadband
deployment data to the FCC. Introduced January 4, 2007; referred to Committee on
Commerce, Science, and Transportation.
S. 541 (Feingold)
Rural Opportunities Act of 2007. Directs the FCC to collect more detailed
broadband deployment data and to periodically revise its definition of broadband
above 200 kbps. Directs the Secretary of Agriculture to report on the adoption or
planned adoption of the recommendations contained in the September 2005 audit
report by the Inspector General of the United States Department of Agriculture.
Introduced February 8, 2007; referred to Committee on Agriculture, Nutrition and
Forestry.
S. 711 (Smith)
Universal Service for the 21st Century Act. Expands the contribution base for
universal service and establishes a separate account within the universal service fund
to support the deployment of broadband service in unserved areas. Introduced
February 28, 2007; referred to Committee on Commerce, Science, and
Transportation.
S. 761 (Reid)
America COMPETES Act. Authorizes the National Science Foundation (NSF)
to provide grants for basic research in advanced information and communications
technologies. Areas of research include affordable broadband access, including
wireless technologies. Also directs NSF to develop a plan that describes the current
status of broadband access for scientific research purposes. Introduced March 5,
2007; placed on Senate Legislative Calendar, March 6, 2007.
S. 1032 (Clinton)
Rural Broadband Initiative Act of 2007. Establishes an Office of Rural
Broadband Initiatives within the Department of Agriculture which will administer all
rural broadband grant and loan programs previously administered by the Rural
Utilities Service. Also establishes a National Rural Broadband Innovation Fund
which would fund experimental and pilot rural broadband projects and applications.
Introduced March 29, 2007; referred to Committee on Agriculture, Nutrition, and
Forestry.
CRS-17
S. 1190 (Durbin)
Connect the Nation Act. Establishes a State Broadband Data and Development
Grant Program within the Department of Commerce to help states develop and
implement statewide initiatives to identify and track the availability and adoption of
broadband services within each state. Authorizes $40 million for each of fiscal years
2008 through 2012. Introduced April 24, 2007; referred to Committee on
Commerce, Science, and Transportation.
S.Res. 191 (Rockefeller)
Establishing a national goal for the universal deployment of next-generation
broadband networks by 2015, and calling upon Congress and the President to develop
a strategy, enact legislation, and adopt policies to accomplish this objective.
Introduced May 8, 2007; referred to Committee on Commerce, Science, and
Transportation.
S. 1264 (Coleman)
Rural Renaissance Act. Creates a Rural Renaissance Corporation which would
fund qualified projects including projects to expand broadband technology in rural
areas. Introduced May 2, 2007; referred to Committee on Finance.
S. 1439 (Roberts)
Rural Broadband Improvement Act of 2007. Reauthorizes the broadband and
broadband loan guarantee program under Title VI of the Rural Electrification Act of
1936. Introduced May 21, 2007; referred to Committee on Agriculture, Nutrition,
and Forestry.
S. 1492 (Inouye)
Broadband Data Improvement Act. Seeks to improve the quality of federal
broadband data collection and encourage state initiatives that promote broadband
deployment. Directs the FCC to reevaluate its current 200 kbps broadband standard
and to develop a new metric for “second generation broadband” capable of
transmitting high definition video content. Directs broadband providers to report to
the FCC connections within nine digit (zip+4) zip code areas. Directs the FCC to
conduct its Section 706 inquiry into the status of broadband deployment on an annual
basis. Directs the Census Bureau to collect residential broadband data. Directs GAO
to develop broadband metrics involving connection cost and capability information
that could be used to improve the process of comparing U.S. broadband deployment
with other countries. Directs the Small Business Administration to conduct a study
evaluating the impact of broadband speed and cost on small businesses. Authorizes
$40 million for each of fiscal years 2008 through 2012 to establish a State Broadband
Data and Development Grant Program within the Department of Commerce to help
states develop and implement statewide initiatives to identify and track the
availability and adoption of broadband services within each state. Introduced May
24, 2007; referred to Committee on Commerce, Science, and Transportation.
Policy Issues
Legislation in the 110th Congress will likely seek to provide federal financial
assistance for broadband deployment in rural and underserved areas. In assessing this
legislation, several policy issues arise.
CRS-18
Is Broadband Deployment Data Adequate? Obtaining an accurate
snapshot of the status of broadband deployment is problematic. Anecdotes abound
of rural and low-income areas which do not have adequate Internet access, as well
as those which are receiving access to high-speed, state-of-the-art connections.
Rapidly evolving technologies, the constant flux of the telecommunications industry,
the uncertainty of consumer wants and needs, and the sheer diversity and size of the
nation’s economy and geography make the status of broadband deployment very
difficult to characterize. The FCC periodically collects broadband deployment data
from the private sector via “FCC Form 477” — a standardized information gathering
survey. Statistics derived from the Form 477 survey are published every six months.
Additionally, data from Form 477 are used as the basis of the FCC’s (to date) four
broadband deployment reports.
The FCC is working to refine the data used in future Reports in order to provide
an increasingly accurate portrayal. In its March 17, 2004 Notice of Inquiry for the
Fourth Report, the FCC sought comments on specific proposals to improve the FCC
Form 477 data gathering program.61 On November 9, 2004, the FCC voted to expand
its data collection program by requiring reports from all facilities based carriers
regardless of size in order to better track rural and underserved markets, by requiring
broadband providers to provide more information on the speed and nature of their
service, and by establishing broadband-over-power line as a separate category in
order to track its development and deployment. The FCC Form 477 data gathering
program was extended for five years beyond its March 2005 expiration date.62
The Government Accountability Office (GAO) has cited concerns about the
FCC’s zip-code level data. Of particular concern is that the FCC will report
broadband service in a zip code even if a company reports service to only one
subscriber, which in turn can lead to some observers overstating broadband
deployment. According to GAO, “the data may not provide a highly accurate
depiction of local deployment of broadband infrastructures for residential service,
especially in rural areas.” The FCC has acknowledged the limitations in its zip code
level data.63
On April 16, 2007, the FCC announced a Notice of Proposed Rulemaking which
seeks comment on a number of broadband data collection issues, including how to
develop a more accurate picture of broadband deployment; gathering information on
price, other factors determining consumer uptake of broadband, and international
comparisons; how to improve data on wireless broadband; how to collect information
61 Federal Communications Commission, Notice of Inquiry, “Concerning the Deployment
of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely
Fashion, and possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the
Telecommunications Act of 1996,” FCC 04-55, March 17, 2004, p. 6.
62 FCC News Release, FCC Improves Data Collection to Monitor Nationwide Broadband
Rollout, November 9, 2004. Available at
[http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-254115A1.pdf]
63 U.S. Government Accountability Office, Broadband Deployment is Extensive throughout
the United States, but It Is Difficult to Assess the Extent of Deployment Gaps in Rural Areas,
GAO-06-426, May 2006, p. 3.
CRS-19
on subscribership to voice over Internet Protocol service (VoIP); and whether to
modify collection of speed tier information.64
State initiatives to collect broadband deployment data in order to promote
broadband in underserved areas are being viewed by Congress as a possible model
for governmental efforts to encourage broadband. In particular, an initiative in the
Commonwealth of Kentucky — called ConnectKentucky — has developed detailed
broadband inventory mapping which identifies local communities that lack adequate
broadband service. Kentucky is using this data to promote public-private
partnerships in order to reach a goal of universal broadband coverage in the state.65
Other states are pursuing or considering similar approaches.
On the federal level, Congress is exploring ways to support or implement the
types of broadband mapping and data collection efforts demonstrated by
ConnectKentucky. In the House, draft legislation entitled the Broadband Census of
America Act of 2007 was discussed in a hearing held by the House Subcommittee
on Telecommunications and the Internet on May 17, 2007. The draft legislation
would provide grants to states and local communities for broadband mapping, and
would require NTIA to develop an interactive map of broadband deployment
nationwide. The draft legislation also addresses issues such as: what kinds of
broadband data should be collected, the level of geographic granularity that is
necessary, and the definition of which threshold of download and upload speeds
should be considered as “broadband.”
In the Senate, S. 1492, the Broadband Data Improvement Act introduced by
Senator Inouye on May 24, 2007, seeks to improve the quality of federal broadband
data collection and encourage state initiatives that promote broadband deployment.
Specifically, S. 1492 would: 1) direct the FCC to reevaluate its current 200 kbps
broadband standard and to develop a new metric for “second generation broadband”
capable of transmitting high definition video content; 2) direct broadband providers
to report to the FCC connections within nine digit (zip+4) zip code areas; 3) direct
the FCC to conduct its Section 706 inquiry into the status of broadband deployment
on an annual basis; 4) direct the Census Bureau to collect residential broadband data;
direct GAO to develop broadband metrics involving connection cost and capability
information that could be used to improve the process of comparing U.S. broadband
deployment with other countries; 5) direct the Small Business Administration to
conduct a study evaluating the impact of broadband speed and cost on small
businesses; and 6) authorize $40 million for each of fiscal years 2008 through 2012
to establish a State Broadband Data and Development Grant Program within the
Department of Commerce to help states develop and implement statewide initiatives
64 Federal Communications Commission, Notice Proposed Rulemaking, “Development of
Nationwide Broadband Data to Evaluate Reasonable and Timely Deployment of Advanced
Services to All Americans, Improvement of Wireless Broadband Subscribership Data, and
Development of Data on Interconnected Voice Over Internet Protocol (VoIP)
Subscribership,” WC Docket No. 07-38, FCC 07-17, released April 16, 2007, 56 p.
65 Testimony of Brian Mefford, President and CEO, Connected Nation, Inc., before the
Senate Committee on Commerce, Science and Transportation, April 24, 2007. Available
at [http://commerce.senate.gov/public/_files/DC_Committeetestimony_04_23_07.pdf]
CRS-20
to identify and track the availability and adoption of broadband services within each
state.
Is Federal Assistance for Broadband Deployment Premature or
Inappropriate? Related to the data issue is the argument that government
intervention in the broadband marketplace would be premature or inappropriate.
Some argue that financial assistance for broadband deployment could distort private
sector investment decisions in a dynamic and rapidly evolving marketplace, and
question whether federal tax dollars should support a technology that has not yet
matured, and whose societal benefits have not yet been demonstrated.66
On the other hand, proponents of financial assistance counter that the available
data show, in general, that the private sector will invest in areas where it expects the
greatest return — areas of high population density and income. Without some
governmental assistance in underserved areas, they argue, it is reasonable to conclude
that broadband deployment will lag behind in many rural and low income areas.67
Which Approach is Best? If one assumes that governmental action is
appropriate to spur broadband deployment in underserved areas, which specific
approaches, either separately or in combination, would likely be most effective?
Targeted grants and loans from several existing federal programs have been
proposed, as well as tax credits for companies deploying broadband systems in rural
and low-income areas. How might the impact of federal assistance compare with the
effects of regulatory or deregulatory actions?68 And finally, how might any federal
assistance programs best compliment existing “digital divide” initiatives by the
states, localities, and private sector?
66 See Leighton, Wayne A., Broadband Deployment and the Digital Divide: A Primer, a
Cato Institute Policy Analysis, No. 410, August 7, 2001, 34 pp. Available at
[http://www.cato.org/pubs/pas/pa410.pdf]. Also see Thierer, Adam, Broadband Tax
Credits, the High-Tech Pork Barrel Begins, Cato Institute, July 13, 2001, available at
[http://www.cato.org/tech/tk/010713-tk.html].
67 See for example: Cooper, Mark, Consumer Federation of America and Consumers Union,
Expanding the Digital Divide & Falling Behind on Broadband, October 2004, 33 pages.
Available at [http://www.consumersunion.org/pub/ddnewbook.pdf]
68 See CRS Report RL33542, Broadband Internet Access: Background and Issues, by
Angele A. Gilroy and Lennard G. Kruger, for a discussion of regulatory issues.
CRS-21
Table 1. Selected Federal Domestic Assistance Programs Related to Telecommunications Development
Web Links for More Information
FY2006
[http://12.46.245.173/cfda/cfda.html]: Go to “All
Program
Agency
Description
(obligations)
Programs Listed Numerically” and search by
program
Public
National
Assists in planning, acquisition,
$19.7 million
[http://www.ntia.doc.gov/otiahome/ptfp/index.html]
Telecommunications
Telecommunications
installation and modernization of
Facilities —
and Information
public telecommunications
Planning and
Administration, Dept.
facilities
Construction
of Commerce
Grants for Public
Economic
Provides grants to economically
$158.1
[http://www.eda.gov/]
Works and Economic
Development
distressed areas for construction
million
Development
Administration, Dept.
of public facilities and
Facilities
of Commerce
infrastructure, including
broadband deployment and other
types of telecommunications
enabling projects
CRS-22
Web Links for More Information
FY2006
[http://12.46.245.173/cfda/cfda.html]: Go to “All
Program
Agency
Description
(obligations)
Programs Listed Numerically” and search by
program
Rural Telephone
Rural Utilities Service,
Provides long-term direct and
$145 million
[http://www.usda.gov/rus/telecom/index.htm]
Loans and Loan
U.S. Dept. of
guaranteed loans to qualified
(hardship
Guarantees
Agriculture
organizations for the purpose
loans);
of financing the improvement,
$420 million
expansion, construction,
(cost of
acquisition, and operation of
money
telephone lines, facilities, or
loans);
systems to furnish and improve
$175 million
telecommunications service in
(FFB
rural areas
Treasury
loans)
Distance Learning
Rural Utilities Service,
Provides seed money for loans
$54.4 million
[http://www.usda.gov/rus/telecom/dlt/dlt.htm]
and Telemedicine
U.S. Dept. of
and grants to rural community
(grants)
Loans and Grants
Agriculture
facilities (e.g., schools, libraries,
$25 million
hospitals) for advanced
(loans)
telecommunications systems that
can provide health care and
educational benefits to rural areas
CRS-23
Web Links for More Information
FY2006
[http://12.46.245.173/cfda/cfda.html]: Go to “All
Program
Agency
Description
(obligations)
Programs Listed Numerically” and search by
program
Rural Broadband
Rural Utilities Service,
Provides loan and loan
$2032
[http://www.usda.gov/rus/telecom/broadband.htm]
Access Loan and
U.S. Dept. of
guarantees for facilities and
million (cost
Loan Guarantee
Agriculture
equipment providing broadband
of money
Program
service in rural communities
loan)
$46 million
(4% loan)
$79 million
(loan
guarantee)
Community Connect
Rural Utilities Service,
Provides grants to applicants
$9 million
[http://www.usda.gov/rus/telecom/index.htm]
Broadband Grants
U.S. Dept. of
proposing to provide broadband
Agriculture
service on a “community-
oriented connectivity” basis to
rural communities of under
20,000 inhabitants.
Education
Office of Elementary
Grants to State Education
$272 million
[http://www.ed.gov/Technology/TLCF/index.html]
Technology State
and Secondary
Agencies for development of
Grants
Education, Dept. of
information technology to
Education
improve teaching and learning in
schools
CRS-24
Web Links for More Information
FY2006
[http://12.46.245.173/cfda/cfda.html]: Go to “All
Program
Agency
Description
(obligations)
Programs Listed Numerically” and search by
program
Star Schools
Office of Assistant
Grants to telecommunication
$14.8 million
[http://www.ed.gov/programs/starschools/index.html]
Secretary for
partnerships for
Educational Research
telecommunications facilities and
and Improvement,
equipment, educational and
Dept. of Education
instructional programming
Ready to Teach
Office of Assistant
Grants to carry out a national
$10.9 million [http://www.ed.gov/programs/readyteach/index.html]
Secretary for
telecommunication-based
Educational Research
program to improve the teaching
and Improvement,
in core curriculum areas.
Dept. of Education
Special Education —
Office of Special
Supports development and
$38.4 million [http://www.ed.gov/about/offices/list/osers/index.html?
Technology and
Education and
application of technology and
src=mr/]
Media Services for
Rehabilitative
education media activities for
Individuals with
Services, Dept. of
disabled children and adults
Disabilities
Education
Telehealth Network
Health Resources and
Grants to develop sustainable
$3.4 million
[http://www.hrsa.gov/telehealth/]
Grants
Services
telehealth programs and networks
Administration,
in rural and frontier areas, and in
Department of Health
medically unserved areas and
and Human Services
populations.
CRS-25
Web Links for More Information
FY2006
[http://12.46.245.173/cfda/cfda.html]: Go to “All
Program
Agency
Description
(obligations)
Programs Listed Numerically” and search by
program
Medical Library
National Library of
Provides funds to train
$65.2 million [http://www.nlm.nih.gov/ep/extramural.html]
Assistance
Medicine, National
professional personnel;
Institutes of Health,
strengthen library and
Department of Health
information services; facilitate
and Human Services
access to and delivery of health
science information; plan and
develop advanced information
networks; support certain kinds
of biomedical publications; and
conduct research in medical
informatics and related sciences
State Library
Office of Library
Grants to state library
$163.7
[http://www.imls.gov/grants/library/lib_gsla.asp#po]
Program
Services, Institute of
administrative agencies for
million
Museum and Library
promotion of library services that
Services, National
provide all users access to
Foundation on the Arts
information through State,
and the Humanities
regional, and international
electronic networks
CRS-26
Web Links for More Information
FY2006
[http://12.46.245.173/cfda/cfda.html]: Go to “All
Program
Agency
Description
(obligations)
Programs Listed Numerically” and search by
program
Native American and
Office of Library
Supports library services
$3.6 million
[http://www.imls.gov/grants/library/lib_nat.asp]
Native Hawaiian
Services, Institute of
including electronically linking
Library Services
Museum and Library
libraries to networks
Services, National
Foundation on the Arts
and the Humanities
Appalachian Area
Appalachian Regional
Provides project grants for
$62 million
[http://www.arc.gov/index.do?nodeId=21]
Development
Commission
Appalachian communities to
support the physical
infrastructure necessary for
economic development and
improved quality of life.
Delta Area Economic
Delta Regional
Grants to support self-sustaining
$7..8 million
[http://www.dra.gov/programs/information-technology]
Development
Authority
economic development of eight
states in Mississippi Delta
region.
Denali Commission
Denali Commission
Provides grants through a federal
$139 million
[http://www.denali.gov/]
Program
and state partnership designed to
provide critical infrastructure and
utilities throughout Alaska,
particularly in distressed
communities
Source: Prepared by CRS based on information from the Catalog of Federal Domestic Assistance.
CRS-27
Table 2. Selected Federal Programs Funding Broadband Access
Program
Comments
Programs Funding Access to Telecommunications in Underserved Areas
Rural Broadband Access Loan and Loan
Provides loan and loan guarantees for facilities
Guarantee Program (Rural Utilities Service, U.S.
and equipment providing broadband service in
Department of Agriculture)
rural communities.
Community Connect Broadband Grants (Rural
Provides grants to applicants proposing to
Utilities Service, U.S. Department of Agriculture)
provide broadband service on a “community-
oriented connectivity” basis to rural communities
of under 20,000 inhabitants.
Rural Telephone Loans and Loan Guarantees
Since 1995, the RUS Rural Telephone Loan and
(Rural Utilities Service, U.S. Department of
Loan Guarantee program — which has
Agriculture)
traditionally financed telephone voice service in
rural areas under 5,000 inhabitants — has
required that all telephone facilities receiving
financing must be capable of providing DSL
broadband service at a rate of at least 1 megabyte
per second.
Universal Service Fund: High Cost Program
While the USF’s High Cost Program does not
(Federal Communications Commission)
explicitly fund broadband infrastructure,
subsidies are used, in many cases, to upgrade
existing telephone networks.
Federal Economic Development Programs Funding Broadband Access
Community Development Block Grants
In Michigan, a Digital Divide Investment
(Department of Housing and Urban
Program (DDIP) combined Michigan Broadband
Development)
Development Authority loans (initially $12
million) and CDBG grant funding ($4 million) to
deploy a hybrid fixed wireless and fiber network
in two rural counties which would make
broadband affordable for low to moderate income
residents.
Indian Community Development Block Grants
In 2005, the HUD awarded the Coquille Indian
(Department of Housing and Urban
Tribe a $421,354 grant used to fund the Coquille
Development)
Broadband Technology Infrastructure Project.
The project will allow for improved connectivity
for reservation residents, improvements in rural
community access, and potentially increased
wireless Internet access for the Tribal and
surrounding communities.
CRS-28
Program
Comments
Grants for Public Works and Economic
Supports the proliferation of broadband networks
Development Facilities (Economic Development
as a key priority for regional economic growth.
Administration, Department of Commerce)
Examples: $6 million grant to a company in
Virginia for investment in 300 miles of fiber optic
cable in nine counties and three cities; $2 million
grant to companies in Vermont to help build a
424 mile fiber optic broadband network in rural
northern Vermont; and $270 thousand to support
a Rhode Island Wireless Innovation Networks
project. EDA encourages communities eligible
for RUS programs to access that first before
applying for EDA investment dollars.
Appalachian Regional Commission
The Appalachian Regional Development Act
Amendments of 2002 reauthorized ARC for five
years and created specific authority for a Region-
wide initiative to bridge the telecommunications
and technology gap between the Appalachian
Region and the rest of the United States.
Supported a telecommunications initiative ($33
million over five year period) which includes
projects such as: a regional fiber network across
northeast Mississippi; wireless demonstrations in
rural New York, Ohio, Pennsylvania, Virginia,
West Virginia, and Georgia; and a regionwide
effort in Kentucky to compile an inventory of
broadband access across the 51 Appalachian
counties and work with the private sector to
substantially increase broadband coverage. In
Maryland, a county-wide high-speed wireless
network, funded by ARC over several years, now
serves over 4,500 customers.
Delta Regional Authority
During a strategic planning retreat in February
2005, the DRA board determined that one of the
authority’s three top policy priorities would be
information technology. To support its policy
position, the authority devoted $150,000 to create
an information technology plan for the region.
Denali Commission
Funded Telecommunications Survey in 2000
which was used to determine the state of
broadband deployment in Alaska and used as
basis for applying for RUS broadband assistance.
Applications-Based Federal Programs Related to Broadband
Universal Service Fund: Schools and Libraries or
Used to fund broadband access for schools and
“E-Rate” Program (Federal Communications
libraries.
Commission)
Universal Service Fund: Rural Health Care
Used to fund broadband access for rural health
Program (Federal Communications Commission)
care centers.
CRS-29
Program
Comments
Distance Learning and Telemedicine Program
Provides seed money for loans and grants to rural
(Rural Utilities Service, U.S. Department of
community facilities (e.g., schools, libraries,
Agriculture)
hospitals) for advanced telecommunications
systems that can provide health care and
educational benefits to rural areas.
Public Safety Interoperable Communications
Provides funding to states and territories to
Grant Program (National Telecommunications
enable and enhance public safety agencies’
and Information Administration, Department of
interoperable communications capabilities.
Commerce)
Telehealth Network Grants (Health Resources
Grants to develop sustainable telehealth programs
and Services Administration, Department of
and networks in rural and frontier areas, and in
Health and Human Services)
medically unserved areas and populations.
Public Telecommunications Facilities Program
Grants for public television, public radio, and
(National Telecommunications and Information
nonbroadcast distance learning projects.
Administration, Department of Commerce)
Education technology programs (Department of
Examples include Star Schools, Education
Education)
Technology State Grants, Ready to Teach.
State Library Grants (Office of Library Services,
Grants to state library administrative agencies for
Institute of Museum and Library Services,
promotion of library services that provide all
National Foundation on the Arts and the
users access to information through State,
Humanities)
regional, and international electronic networks.
Medical Library Assistance (National Library of
Provides funds to train professional personnel;
Medicine, National Institutes of Health,
strengthen library and information services;
Department of Health and Human Services)
facilitate access to and delivery of health science
information; plan and develop advanced
information networks; support certain kinds of
biomedical publications; and conduct research in
medical informatics and related sciences.
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