COORDINATING FUTURE INVESTMENTS IN BROADBAND HEARING BEFORE THE SUBCOMMITTEE ON LIVESTOCK, RURAL DEVELOPMENT, AND CREDIT OF THE COMMITTEE ON AGRICULTURE HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION JULY 29, 2014 Serial No. 113–19 ( Printed for the use of the Committee on Agriculture agriculture.house.gov U.S. GOVERNMENT PRINTING OFFICE 88–993 PDF WASHINGTON : 2014 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Mar 15 2010 15:23 Aug 29, 2014 Jkt 041481 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 I:\DOCS\113-19\88993.TXT BRIAN COMMITTEE ON AGRICULTURE FRANK D. LUCAS, Oklahoma, Chairman BOB GOODLATTE, Virginia, COLLIN C. PETERSON, Minnesota, Ranking Vice Chairman Minority Member STEVE KING, Iowa MIKE MCINTYRE, North Carolina RANDY NEUGEBAUER, Texas DAVID SCOTT, Georgia MIKE ROGERS, Alabama JIM COSTA, California K. MICHAEL CONAWAY, Texas TIMOTHY J. WALZ, Minnesota GLENN THOMPSON, Pennsylvania KURT SCHRADER, Oregon BOB GIBBS, Ohio MARCIA L. FUDGE, Ohio AUSTIN SCOTT, Georgia JAMES P. MCGOVERN, Massachusetts SCOTT R. TIPTON, Colorado SUZAN K. DELBENE, Washington ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas GLORIA NEGRETE MCLEOD, California SCOTT DESJARLAIS, Tennessee FILEMON VELA, Texas CHRISTOPHER P. GIBSON, New York MICHELLE LUJAN GRISHAM, New Mexico VICKY HARTZLER, Missouri ANN M. KUSTER, New Hampshire REID J. RIBBLE, Wisconsin RICHARD M. NOLAN, Minnesota KRISTI L. NOEM, South Dakota PETE P. GALLEGO, Texas DAN BENISHEK, Michigan WILLIAM L. ENYART, Illinois JEFF DENHAM, California JUAN VARGAS, California STEPHEN LEE FINCHER, Tennessee CHERI BUSTOS, Illinois DOUG LAMALFA, California SEAN PATRICK MALONEY, New York RICHARD HUDSON, North Carolina JOE COURTNEY, Connecticut RODNEY DAVIS, Illinois JOHN GARAMENDI, California CHRIS COLLINS, New York TED S. YOHO, Florida VANCE M. MCALLISTER, Louisiana NICOLE SCOTT, Staff Director KEVIN J. KRAMP, Chief Counsel TAMARA HINTON, Communications Director ROBERT L. LAREW, Minority Staff Director SUBCOMMITTEE ON LIVESTOCK, RURAL DEVELOPMENT, AND CREDIT ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas, Chairman BOB GOODLATTE, Virginia JIM COSTA, California, Ranking Minority STEVE KING, Iowa Member RANDY NEUGEBAUER, Texas MIKE MCINTYRE, North Carolina MIKE ROGERS, Alabama DAVID SCOTT, Georgia K. MICHAEL CONAWAY, Texas FILEMON VELA, Texas GLENN THOMPSON, Pennsylvania MICHELLE LUJAN GRISHAM, New Mexico SCOTT DESJARLAIS, Tennessee PETE P. GALLEGO, Texas CHRISTOPHER P. GIBSON, New York WILLIAM L. ENYART, Illinois REID J. RIBBLE, Wisconsin CHERI BUSTOS, Illinois JEFF DENHAM, California KURT SCHRADER, Oregon RICHARD HUDSON, North Carolina RICHARD M. NOLAN, Minnesota TED S. YOHO, Florida JOE COURTNEY, Connecticut (II) VerDate Mar 15 2010 15:23 Aug 29, 2014 Jkt 041481 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 I:\DOCS\113-19\88993.TXT BRIAN C O N T E N T S Page Costa, Hon. Jim, a Representative in Congress from California, opening state- ment ...................................................................................................................... 3 Crawford, Hon. Eric A. ‘‘Rick’’, a Representative in Congress from Arkansas, opening statement ................................................................................................ 1 Prepared statement .......................................................................................... 2 WITNESSES Padalino, John C., Administrator, Rural Utilities Service, U.S. Department of Agriculture, Washington, D.C. ........................................................................ 5 Prepared statement .......................................................................................... 7 Supplementary material .................................................................................. 53 Zimmerman, Lang, Vice President, Yelcot Communications, Mountain Home, AR; on behalf of NTCA—The Rural Broadband Association ............................ 17 Prepared statement .......................................................................................... 19 Cohen, David, Vice President, Policy, United States Telecom Association (USTelecom), Washington, D.C. .......................................................................... 24 Prepared statement .......................................................................................... 26 Hance, Robert L., President and Chief Executive Officer, Midwest Energy Cooperative, Cassopolis, MI; on behalf of National Rural Electric Coopera- tive Association .................................................................................................... 29 Prepared statement .......................................................................................... 30 Guttman-McCabe, Christopher, Executive Vice President, CTIA—The Wire- less Association, Washington, D.C. ..................................................................... 39 Prepared statement .......................................................................................... 40 (III) VerDate Mar 15 2010 15:23 Aug 29, 2014 Jkt 041481 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 I:\DOCS\113-19\88993.TXT BRIAN VerDate Mar 15 2010 15:23 Aug 29, 2014 Jkt 041481 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 I:\DOCS\113-19\88993.TXT BRIAN COORDINATING FUTURE INVESTMENTS IN BROADBAND TUESDAY, JULY 29, 2014 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON LIVESTOCK, RURAL DEVELOPMENT, AND CREDIT, COMMITTEE ON AGRICULTURE, Washington, D.C. The Subcommittee met, pursuant to call, at 10:05 a.m., in Room 1300 of the Longworth House Office Building, Hon. Eric A. ‘‘Rick’’ Crawford [Chairman of the Subcommittee] presiding. Members present: Representatives Crawford, Rogers, Conaway, Thompson, Gibson, Costa, McIntyre, Scott, Vela, Lujan Grisham, Enyart, Nolan, and Courtney. Staff present: DaNita Murray, Mike Dunlap, Nicole Scott, Skylar Sowder, John Konya, Andy Baker, Liz Friedlander, and Riley Pagett. OPENING STATEMENT OF HON. ERIC A. ‘‘RICK’’ CRAWFORD, A REPRESENTATIVE IN CONGRESS FROM ARKANSAS The CHAIRMAN. Good morning. This hearing of the Subcommittee of Livestock, Rural Development, and Credit to coordinate future investments in broadband, will come to order. Good morning, and welcome to this hearing to review broadband deployment in rural America. In this modern age, it is surprising to know that there are some parts of the country where the live video feed from this hearing is not viewable by our rural constitu- ents due to a lack of broadband access. In a time when commerce, leisure, and a transparent government rely on robust networks, we still find communities which are not connected through high-speed broadband. There are many communities still struggling to recover from a poor economy to attract new businesses and to connect new, critical services not otherwise offered in remote areas. The key to unlocking these opportunities lies in greater access to services which are readily available in larger rural communities and in urban areas. It is important to note that broadband can add tremendous edu- cational opportunities to small communities. The ability to access online courses, study materials, research, and online lectures afford students some of the most efficient and cost-effective avenues for not only continuing their education but turning their curiosity into careers. And these opportunities are supported through several programs which provide resources to local facilities such as schools and libraries. (1) VerDate Mar 15 2010 15:23 Aug 29, 2014 Jkt 041481 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 I:\DOCS\113-19\88993.TXT BRIAN 2 However, none of these opportunities can exist if the community itself is not connected with a robust high-speed network. Getting the most rural areas connected, much like the Rural Electrification Act accomplished for telephone service, remains a priority of this Committee. When the farm bill was reauthorized this year, several provisions were included to continue making these critical invest- ments in small towns and cities. I know in my district I too often visit towns and communities who have been waiting patiently for years for full access to the information superhighway. I know a lot has been done to bring access to rural communities, but it is my goal and the goal of this Committee to be able to do more than just tell people to wait a little longer. With us today we have representatives from USDA and industry who are on the front lines of expanding broadband service. The loan and grant programs provided through USDA and reauthorized in the 2014 Farm Bill are specifically designed to target the most rural and unserved areas in the country. While the focus of this hearing is on the deployment of broadband through RUS programs, these programs are not oper- ated in a vacuum. In the discussion today I believe it will be help- ful to review those changes in the recent farm bill in light of the FCC’s changes to how rural telecom companies receive assistance. The efforts by the FCC to reform the USF have a direct impact on smaller rate of return carriers who both rely on USF support to provide service and RUS loans to expand their coverage areas. As the FCC transitions into providing telecommunications access beyond traditional voice service, a careful coordination among the responsible agencies is critical to ensure funds are not wasted and the taxpayers receive the greatest return on these investments. Co- ordination across