Transportation & Telecommunications Committee Chair Senator Annette Dubas, district 34 LR 343 Report Resolution http://www.nebraskalegislature.gov/FloorDocs/Current/PDF/Intro/LR343.pdf ONE HUNDRED THIRD LEGISLATURE FIRST SESSION LEGISLATIVE RESOLUTION 343 Introduced by Dubas, 34; Brasch, 16; Hadley, 37; McCoy, 39; Price, 3; Watermeier, 1. PURPOSE: To study the existing policy to supplement federal universal service support mechanisms and ensure that all Nebraskans, without regard to their location, have comparable accessibility to telecommunications services at affordable prices, recognizing the importance of broadband access for the state's economy to remain competitive, and to review changes to universal service at the federal level and changes in technology. This study shall investigate the universal service and intercarrier compensation systems to maintain telecommunications services and extend broadband-capable infrastructure. Input shall be solicited from the Public Service Commission, regulated entities, broadband and telecommunications carriers, service users, and the public. Study topics may include, but not be limited to, the following areas: (1) Modernization of the existing framework for contribution to and use of the Nebraska Telecommunications Universal Service Fund (NTUSF); (2) The progress or results of the NTUSF broadband pilot program, dedicated wireless program, and broadband mapping grant project; (3) Ability of Nebraska citizens, schools, businesses, and health care services to access Internet services; (4) Effects on Nebraska of recent reforms to the federal Universal Service Fund and intercarrier compensation by the Federal Communications Commission; (5) Other possible funding mechanisms for statewide broadband access ensuring comparable rates for all users; and (6) Other states' approaches to fund affordable broadband access. Hearings Scottsbluff, John N. Harms Advanced Technology Center - Thursday, October 24th, 2013 Aurora, Bremer Center - Monday, October 28th, 2013 Lincoln, State Capitol hearing room - Tuesday, October 29th, 2013 Findings Nebraska’s Telecommunications Universal Service Fund (USF) works in conjunction with the Federal Universal Service Fund to ensure comparable telecommunications services for comparable rates for all Nebraskans. State laws can be found at Neb. Rev. Stat. 86-101 to 86-165. A history of USF is available in the annual report of the Nebraska Public Service Commission (PSC). An important aspect of universal service is the requirement for eligible telecommunications carriers to offer services that are supported by the fund to everyone in their service area, also known as the “carrier of last resort” mandate. New challenges to universal service come from the rapidly changing technologies of advanced telecommunications, specifically high speed broadband Internet. “Advanced Telecommunications” are defined by the Federal Communications Commission as download speeds of 4 Mbps and upload speeds of 1 Mbps or greater (see www.fcc.gov/document/fcc-launches-ninth-inquiry-broadband-availability). Reliability, redundancy, and security are all overarching themes to consider when evaluating the quality and types of advanced telecommunications. It appears most Nebraskans have access to Internet service, it is the quality of their connection that varies widely by geography. According to the Nebraska Telecommunications Association every incorporated city in the state has access to broadband. Some very rural residents are limited in their options of service providers to satellite or a fixed wireless solution. Recent changes to the Federal USF by the Federal Communications Commission (FCC) will result in a decrease in overall funding, especially to high-cost rural areas. A panel of Federal Telecommunications experts testified before the Committee to provide a context for the recent changes that resulted in the phasing out of Universal Service support and a new funding mechanism called the Connect America Fund. According to Harold Furchtgott-Roth, Nebraska should not rely on the Federal government for funding to rural areas. The decrease in Federal support affects investments by telecommunications providers in unserved and underserved areas in rural Nebraska. Due to a lack of confidence in lenders, rural-serving carriers are already unable to make infrastructure investments because of the uncertainty in future funding. Michael Balhoff commented that those unserved areas will become an economic wasteland without access to advanced telecommunications. Cheryl Perrino applauded the Nebraska Legislature and PSC for setting up and administering a state Universal Service Fund that works well to distribute limited funds to those who need services most. The oversight and accountability by the PSC ensures user fees are used appropriately and not abused. If changes are made to the contribution or payment methods, it was recommended that the PSC and Legislature first calculate expected costs to deploy telecommunications services universally, to all Nebraskans, and estimate economic benefits to the state under any changes. Economic benefits of universal service were highlighted in the hearings by local businesses and farmers, rural customers and Eric Thompson with the University of Nebraska Lincoln, Bureau of Business Research. The CEO of the Aurora Coop explained how important high speed Internet is to his company, ensuring world class telecommunications services allows businesses to stay on top in global markets. A farmer from Henderson expressed his need to have crop reports download quickly to allow him to make decisions on buying and selling his products in the online exchange. Rural residents testified about their ability to move back to their rural hometowns after living in Denver, Chicago and San Jose, because broadband Internet allowed them to telecommute or start up their own companies. Dr. Thompson presented a report showing a correlation between the availability of broadband services and increased business income, higher education, and the presence of young adults in rural Nebraska. The Nebraska Statewide Telehealth Network is also funded by the NUSF. Testifiers emphasized that without this funding, thousands of Nebraska patients would not have been seen and the telehealth field would not have advanced. It was suggested that the Legislature could improve telehealth in Nebraska by mandating insurance coverage parity and allowing remote patient monitoring. The Broadband mapping program was also discussed. Currently data is gathered voluntarily from service providers. Attempts are being made to gather data from users rather than providers to determine actual speeds rather than advertised speeds. More information is available online at http://broadband.nebraska.gov/. A concern from some service providers was that the fund inappropriately “subsidizes” certain technologies over others creating an unlevel playing field. Committee members asked these providers if they received Universal Service funds and the response was that they could but chose not to accept such funding, or were unsure of their eligibility. The requirement by the PSC that USF recipients provide a voice component allows Voice Over Internet Protocol (VOIP) to satisfy that eligibility requirement. The PSC administers the fund in a technology neutral way to allow for innovation and advanced technologies that are not yet developed. In addition to highlighting the importance of high speed Internet to rural Nebraskans, testimony offered ideas for alternative ways to fund advanced telecommunications. One idea was an infrastructure bank that makes loans instead of grants. The USDA report accompanying this report comments on the infeasibility of loans replacing grants where the high upfront investment costs are unlikely to be recovered. Reports Public Service Commission annual report 2013 State USF White Paper by Balhoff & Williams Highlights of NACO Broadband Survey Highlights of NEDA Broadband Survey Economic Impacts of Rural Telecommunications Firms by Eric Thompson Economic Benefits of Broadband Deployment in Rural Areas by USDA ANNUAL REPORT TO THE LEGISLATURE ON THE STATUS OF THE NEBRASKA TELECOMMUNICATIONS INDUSTRY NEBRASKA PUBLIC SERVICE COMMISSION September 30, 2013 Nebraska Public Service Commission 300 The Atrium 1200 N Street P.O. Box 94927 Lincoln, NE 68509-4927 (402) 471-3101 (800) 526-0017 www.psc.nebraska.gov 2013 ANNUAL REPORT TO THE LEGISLATURE Nebraska Public Service Commissioners Anne C. Boyle Frank E. Landis 2nd District 1st District Omaha Lincoln Chair Vice-Chairman Tim Schram Rod Johnson Gerald L. Vap 3rd District 4th District 5th District Gretna Sutton McCook General Administration Staff Steve Meradith-Executive Director John Burvainis-Deputy Director Shanicee Knutson- General Counsel & Deputy Director of Policy & Law Angela DuVall Melton-Legal Counsel Nichole Mulcahy-Legal Counsel Tyler Frost- Economist Brenda Wicken-Business Manager Amy Kavan-Accountant I Kathy Lahman-Executive Assistant Janae Sulzle-Receptionist/Administrative Support Communications Department Staff Gene Hand-Director John Burvainis-Accountant Steve Stovall-Accountant Don Gray-Telecom Analyst Cullen Robbins-IT/Telecom/GIS Analyst Cheryl Elton-Consumer Affairs Advocate/IT Support Deena Ackerman-Administrative Assistant Susan Horn-Administrative Assistant Telecommunications Infrastructure & Public Safety Department Staff Sue Vanicek-Director Laurie Casados-Telehealth Coordinator/Policy Analyst Joan Raffety-E911 Coordinator Angela DuVall Melton-Policy