As MPR reports…

Bemidji-based Paul Bunyan Communications, which provides service to some 28,000 phone customers, is slowing down an aggressive expansion of fiber optic cable because the Federal Communications Commission is shifting how it allocates money in what is known as the Universal Service Fund.

The company could receive from $3 million to $5 million less from that fund each year as more money flows instead to such large carriers as AT&T and Verizon, a company spokesman said.

I’ve heard the same sentiment from other folks, such as at the CLE Day on Broadband last week. The Local Exchange Carriers (LECs) feel as if they are paying into a system from which they can’t make a withdrawal. At that meeting Joseph Cavender from the FCC explained that the recent changes are the first of several phases, indicating that the next round of changes may help LECs. I think that feels like cold comfort right now – first because it doesn’t help today. Second, because that just leads to more uncertainty and it’s difficult to build (or sustain) a business plan or make investments based on uncertainty – as seems to be the case with Paul Bunyan.

It’s hard on the companies; it’s hard on the communities as well. A recent report from the University of Minnesota Extension (Economic Contribution of Telecommunications Companies Serving Greater Minnesota) indicates that the total economic contribution of the telecommunications industry serving Greater Minnesota in 2011 was an estimated $1.3 billion. So anything that hampers growth will hamper the economic impact. Also with the negative impact and uncertainty communities are not getting broadband.

David W. Collins, Executive Director of Hubbard County Regional Economic Development Commission has sent a email to several folks outlining the potential problems with these changes on his community and asking policymakers and community leaders to consider the impact…

We need your help!

The Hubbard County Regional Economic Development Commission (HCREDC) for several years has been trying to bring high speed broadband services to ALL of our rural areas. Approximately 4,000 homes and businesses within the Park Rapids (MN) phone exchange currently are not served, and have to rely on satellite or dial up service. These options are unacceptable. Bringing state of the art, underground fiber optic cable to these areas is vital to our future economic growth for numerous reasons, a few of which are:

1) the ability for consultants and others to operate / manage their business from home;
2) students / parents / teachers / schools being able to communicate and student being able to complete assignments (they are currently at a disadvantage compared to other students);
3) resorts being able to take reservations and market themselves, plus the ability of guests to communicate while visiting;
4) people want to live in this area, but are choosing to purchase real estate only where broadband is available;
5) medical care / monitoring plus emergencies;
6) the list goes on and on.

After communicating with several industry providers in our area, the HCREDC partnered with Paul Bunyan Communications (cooperative, based in Bemidji) and supported efforts to obtain a Rural Utility Service loan (RUS loan) thru the United States Department of Agriculture (USDA). This effort was successful and Paul Bunyan Communications was awarded a $17 million loan in September 2011 to build out fiber to each home in the Park Rapids area. It was expected that work would begin immediately with fiber going into the ground beginning Spring of 2012, with project completion estimated to be early 2014.

HOWEVER, in late October and again in November, the Federal Communications Commission issued an order to “reform” universal service fund (USF) and intercarrier access compensation. This “reform” would cost local telecoms millions of dollars annually in lost revenue. It would dramatically change the business model for these telecoms from a system that has worked and been in place for years. The “reform” would significantly reduce their annual revenues and in almost all cases eliminate their ability to invest in rural broadband / phone infrastructure. It is my understanding that one of our local area telecoms stands to lose over $3 million annually due to this “reform”, which would be implemented over the next 9 years. This “reform” will make it extremely difficult for these businesses to repay existing loans, let alone invest in further developing a broadband infrastructure in rural areas.

This is not just a Hubbard County problem. It is not just a Minnesota problem. It is a problem for rural areas nationwide!! This “reform” will negatively impact the development of rural broadband infrastructure nationwide. Imagine if rural areas did not have land phone lines or electricity? We are basically talking about the same issue for our times! And this is much more important than keeping rural post offices open!!!

But back to Hubbard County. The build out of fiber in our area has been for the most part “put on hold” because of the “reform” and its impact locally. Tough for Paul Bunyan Communication (or anyone else in our area) to build out a $17 million broadband infrastructure when the revenue model is being so drastically changed.

So, we are asking that:

1) our congressional delegation (Senator Klobuchar, Senator Franken, Congressman Colin Peterson & Congressman Chip Cravaack) make this issue a top priority; [See note from Klobuchar/Franken]
2) we need our congressional delegation work to have the FCC order nullified or reversed or amended in a way that our project could proceed;
3) and we may need our congressional delegation to extend the deadline for using the $17 million dollar RUS loan authorization. Time is ticking away on us as this issue is being “discussed” in Washington. The “reform” issue needs to be resolved, but when that happens we still need to be able to access the $17 million RUS loan;
4) the Association of Minnesota Counties to actively become involved in this issue. Perhaps by asking each county to pass a resolution of support, and by actively engaging their Minnesota and Washington lobbyists and political action network;
5) Bill Richards, Richards Policy Group, representing Governor Dayton & Minnesota, become actively involved in resolving this issue;
6) Impact 20 / 20 (Northwest Minnesota Foundation) to become involved and mobilize their network;
7) Blandin Foundation Broadband Initiative become involved and mobilize their network;
8) Governor Dayton and his staff to make this a priority and communicate the same to the Richards Policy Group and entire MN Congressional delegation;
9) that the Rural Broadband Alliance (based in Washington, D. C.) continue to work with us towards a satisfactory solution.

Apparently challenges to the “reform” have been, or will shortly be, filed in the 10th Circuit Courts (Denver). However, this route to remedy the situation could take years at best. Congressional action is needed and needed now. The intent of the USDA’s RUS program is solid, the FCC needs to keep its USF and inter-carrier access fees in line with and supportive of that intent.

I offer the content of his email almost in its entirety as a roadmap for anyone who has similar concerns.

• The focus is on consumer savings, jobs and economic development
• The FCC is aware that changing funding mechanisms presents issues for incumbents and other businesses. That’s why they are trying a gradual approach. But there are winners and losers (although who they are depends on who you ask).
• The last chapter of FCC has yet to be written and that’s making it difficult for businesses to plan
• There is still a focus on the US and comparing Minnesota to other states. Folks weren’t asking a lot about international perspective.
• Privacy was one issue where international perspective came up. The EU and other areas puts a premium on privacy; the US does not.
• Minnesota is unique in that broadband has become a county-level issue.

Full Notes…

Broadband Perspectives from the Dayton Administration

Members of Governor Dayton’s Sub-Cabinet on Telecommunications will discuss the creation of the Sub-Cabinet, the goals of the Sub-Cabinet and the goals of their respective Departments.

Commissioner Rothman – Dep of Commerce

Top goals for Governor

• Job creation
• Border to border broadband

We have regulatory job at Dep:

• Wireless
• Cable
• Telecommunications

We think this is critical:

• Monitor broadband development across MN
• Issues in Aug
  • Task Force – charged with doing analysis and comprehensive action plan by end of this year.
  • Establish a subcabinet: Rothman, Phillips & Parnell
  • Created a BB development office in Commerce

We have high goals for Minnesota. We need everyone to work together.

Commissioner Phillips – DEED

Lots of studies that indicate that communities with broadband have an economic development advantage. We work with site selectors. Broadband is now lumped in with common infrastructure such as sewer.

• California did a study saw 6 percent advantage for areas with broadband.
• Dep of Commerce found that broadband was an advantage to businesses especially for IT
• Online sales is $6.2 billion industry
• Broadband is a great equalizer especially for rural areas.

ARRA Investments

• 18 programs received $229 million in MN
• We’re going to need to see more programs like this
• We’re going to need to get creative.
• We’ll have to consider options – maybe FTTH doesn’t make sense.

QUESTIONS – none

Practice Perspectives from the Federal Communications Commission
Hear an insider’s perspective on the practice before the FCC.
– Joseph Cavender

Practice Perspectives from the FCC – Joseph Cavender

USF supports 4 areas:

1. High Cost
2. Low Income (Lifeline/Link Up)
3. Schools & Libraries (E-Rate)
4. Rural Health Care

Why reform?

System was designed to support PSTN – not broadband networks. Led to waste and inefficiency. Caused disputes and left hidden costs to consumers.

Objectives:

• Advance universal service
• Fiscal responsibility
• Business realities

Policy Innovations:

• No subsidy for areas served by unsubsidized competitor
• Dedicated support for high cost areas
• Dedicated support for mobile service
• Competitive bidding (reverse auctions) for the first time to award universal service support
• Explicit accountable public interest obligations
• Budget for CAF support

Connect American Fun $4.5 billion annual budget

1. Remote Areas Fund
2. Fixed Locations
   1. CAF Phone I in Price Cap areas
   2. CAF Phase II in Price Cap areas
   3. Rate of Return carriers
   4. Mobility Fund
      1. Phase I (including tribal areas
      2. Phase II (exclusively tribal)
      3. ICC Recovery

CAF I

• Existing legacy high-cost support to price cap carriers is frozen
• Additional $300 million in CAF funding in 2012
• Carriers have 90 days to accept funding; carriers electing to receive Phase I incremental support will be required to deploy broadband to 1 unserved location for each $775 in support accepted

CAF II

• No support for
  • Areas with unsubsidized competitor
  • Low cost areas
  • Extremely high cost areas
  • Incumbent price cap carriers may receive support if they commit to serve support locations within their service territories

Rate of Return Carriers

• Support continued broadband investment, while increasing accountability and incentives for efficient use of public resources
• Think 500 carriers will see increased support
• Reducing support artificially low consumer rates – may have an impact on rural areas that charge low costs

For Mobile Carriers

• For first time Commission recognizes mobile voice and broadband service as an independent goal of universal service
• Phase I; $300 to upgrade areas with no 3G
• Phase I (tribal) Additional $50 million
• Phase II: Ongoing annual support for areas that depend on USF for service up to $500M/year & $100M/year for tribal

What was wrong with ICC?

• Quite complex
• Carriers faced declining revenues
• Uncertainty related to VoIP traffic
• Arbitrage led to phantom traffic
• Consumers were ultimately bearing the burden

ICC Reforms

• Adoptions rules to deter access stimulation
• Adopts bill-and-keep methodology
• Adopts prospective default for VoIP-PATN traffic
• Created a recovery mechanism for incumbent LECs Access Recovery Charge (ARC)

Further Rule Making

• Bringing remaining rate elements to Bill-and-Keep
• Bill-and-Keep implementation
• Reform end user charges and CAF
• IP-to-IP interconnection

Connect America Fund Panel
The new Transformation Order fundamentally changed the allocation of high cost support and intercarrier compensation. This panel will discuss the impact of the Order on ILECs, CLECs and wireless carriers. It will also review the pending appeals.
– Joseph Cavender
– Philip Schenkenberg
– Jim Campbell
– Dan Lipschultz
– Shannon Heim, moderator

CONNECT AMERICAN FUND PANEL

CLEC need the following:

• Pricing of network elements (unbundled or special access) is still open issue
• CLEC are denied access to fiber networks (old FCC issue)
• No compensatory measure for CLEC
• CLECs pay into CAF, but cannot get money out

What do CLECs get? Lower revenue, no compensation, required to pay into a fund, can’t get fiber.Are we funding our own demise?

Silver lining? There are pending issues that may change this situation. They are taking graduated approach.

CenturyLink

• Maybe a winner, maybe we loser with CAF. (Depends on decisions moving forward)
  • Hope to get some funds.
  • We do lose a lot of access revenue
  • We are debating CAF Phase I funding mechanism
  • Entitled to $89.9M – must decide by July 24
    • But includes significant obligations (need to get to unserved customers for every $775 et al)
    • Need to decide where to spend money
      • CAF shoots for low hanging fruit
      • 83% of unserved are in Price Cap carrier territory so it made sense to go to the source
      • CAF II – need to serve remainder of eligible unserved areas (4/1Mbps) – by state
        • Cost model is important – too low will slow down process

 WIRELESS

• By USF – yes we were winners
• Large wireless providers have already seen shrinking USF (via merger permissions)
• Can anyone put together a business plan to take CAF?
• In 1996, FCC recognized wireless as emerging business
  • Policies were friendly to all technologies, esp wireless
  • There were 44 million wireless connections (in 1996) – now we have more connections than people
  • We are coming closer to 100% coverage)
  • ICC – we’re happy with bill-and-keep, we’ve always worked that way
  • ICC – we’ve had agreements with incumbents – but is there still a need?

 RURAL CARRIERS

• We have high cost areas
• We have pushed out phone service, via USF
• Now we’re transitioning to broadband
• Esp rate-or-return are getting cut
  • It will hurt some help others – but dice are still rolling
  • Hoping to maintain budget
  • Stranded investment is a very big deal
    • Investments have been made based on old rules
    • How do we continue to serve these loans

 QUESTIONS

Are CLECs funding their own demise?

FCC answers – it’s true everyone contributes. Some people get more out of it than others. Wireless providers might say the same. Interconnected VoIP have been paying too –without hopes of recovery.

CLECs are in line for possible support in Phase II. (Without taking full state commitment.)

The Commission is no longer supporting duplicative service in any one area (Mobile being different.) If there isn’t support for one provider, tax payers should not have to support a second provider.

 If you win funding in Phase I – are you ineligible for Phase II? If you get money to build – can you still get money for operating funds?

Phase II is not set in stone yet – but that is not the plan.

It’s tough to accept Phase I when we don’t know the rules for Phase II. Tough to create a budget plan with so many unknowns. DO how can one bid on the reverse auction?

The FCC understands the issue. Phase I is no designed to bring Phase I everywhere. It’s meant for areas that really just need one short of support. Most areas see that it’s an OPEX issue, not a CAPEX. But the folks who need CAPEX are the best case scenario for Phase I.

The wireless bureau did an analysis of 2G areas that would be ready for 3G. There were enough areas that would benefit from one-time investment to move this forward.

How are Mobility Phase I areas being identified?

Done on a census block area – there’s a map on FCC of qualifying areas.

Reverse auction for high cost areas is new (planned for Sept 27). What are the thoughts?

Know about it from Spectrum. Haven’t been very involved but seemed effective with Spectrum. Like it in terms of land lines.

What did FCC not allow common (aggregate) bidders?

To prohibit collusion.

Unfortunately it does make it more difficult for small providers to participate.

Who does reverse auction favor?

Favors whoever can most efficiently provide service.

Carrier of last resort. Will our notion change?

CenturyLink – we tried to get the FCC to lose the idea of carrier of last resort. That obligation has largely been addressed. If you’re going to focus on broadband – getting rid of carrier of last resort will help folks move forward. Funding is required for broadband carrier of last resort.

If you maintain carrier of last resort –the regulators should support those networks. However if there is no carrier of last resort, do we leave it to end user?

The rural folks are more supportive of carrier of last resort. We maintain the last resort connections, and we get support for it.

Sometimes our problem (in rural area) is the middle mile.

Generally people will build where they can make money – and that’s an issue for building out to areas of last resort. So carrier of last resort forces regulators to look at how to build out to those last resort areas.

IP-to-IP will be another issue.

What’s the process that FCC provides guidance to USAC? Any efforts to make current process more transparent to public?

We’ve talked about it. We’ve been trying to formalize the process and make it more transparent. We’ve issued guidance documents to USAC.

We do work near each other and there is less formal communication as well.

They are the repositories of info – and we occasionally ask them for info.

There’s a sense that there’s a lot of chatting that we don’t know about. There’s speculation on how much happens.

Artificially low rates – how do you factor in calling scope? IN rural areas I might only be able to call 900 people, in urban areas phone users can call thousands of people.

FCC looked at rates and they varied greatly. We thought that folks should be paying comparable rates. We ask about rates; we don’t ask about calling areas. Traditionally we’ve looked at areas where rates have been “too high”, looking at rates that are too low.

Other issues

Transition to Bill-and-keep

Two legal issues:

• Does FCC have authority to step into state areas
• Does FCC have authority to do bill-and-keep

Broadband in Minnesota
Update on broadband enrollment and deployment progress in Minnesota and a review of the impact of BTOP and BIP grants in the state of Minnesota.
– William Hoffman
– Lyle MacVey
– Christopher Sandberg, moderator

BROADBAND IN MINNESOTA

Bill Hoffman on Connect Minnesota

Primary Program Components

• Data Collection & Mapping
• Survey & Research
• Planning
• Program Development

Statewide Availability – Percentage of households reaching MN Broadband Goals:

• In Oct 2011 57.4
• In April 2012 59.92 (not yet confirmed or published, will be released within the week)

 Lyle MacVey – NESC

• Working on ARRA-funded Middle Mile – Regional Network serving Community Anchor Institutions in Northeast Minnesota.
• Working with Cook County and Lake County for last mile services

ARRA Funded Projects

• Anoka
• Carver
• LqP
• SMBS (Southwest Minnesota)
• Lake County
• Arrowhead Electric
• NESC

Other projects in Development

• Sibley County
• Todd County
• Cloquet Valley
• Redwood County
• Kanabec County
• City of Prior Lakes

We are looking at possible impacts of CAF and ILEC/CLEC response

In rural areas – you can build FTTH if you have the density. It’s the long haul (to TCs, to Chicago) that is expensive.

Trends in Projects

• Movement to Countywide projects
• Movement to public-private partnership
• Majority of projects fiber based
• Projects are rural in nature
• Looking for ways to bypass referendum requirements
• Biggest challenge is lack of funding sources other than bonding

Rate Trends

Consumer and Small Business (DSL/FTTH)

• Baseline holding steady – rates not falling
• Multiyear contract incentives

Carrier & Large Enterprise (Middle Mile)

• Greater Competition
• Prices in rural markets state to fall
  • 100 Mbps @ $675/month
  • Price matching and network leveraging

Challenges

• NTIA/USDA funding releases slower than expected
• Construction costs higher due to David_Bacon impacts
• Changes in Design or Scope
  • Result in lengthy reviews and project delays
  • Transparency difficult to assess both in terms of access to and release of; MN Data Practices Act (have had 5 intentional fiber creaks)
    • Business plan, rate structures

Result

• Projects falling short of original milestones and scope

Opportunities

• Technical Assistance Survey Results
• Leveraging Community Assets
  • Tower leases and public lands
  • Equal Opportunity and Access
    • Establishing Ground Rules
    • Public Common Carrier VS ISP
    • Education
      • Understanding FCC rules.

 QUESTIONS

How are people answering question about computer ownership? They aren’t counting smartphones and tablets.

Connect MN will change the question.

You mention engineering as project issue and 20% over cost. Can you say more?

It’s primarily in underground topology in NE Minnesota. Part of engineering is also inspection – and that can take longer.

How does Minnesota compare to other states?

Mid pack. Working on adoption would help.

Keynote Address: Assessing Broadband in Minnesota
The former Speaker of the House of Representatives and current Chair of the new Minnesota Broadband Task Force will provide her perspective of the state of broadband in Minnesota
– Margaret Anderson Kelliher

NextGen 911
The shift to broadband and IP is changing the way 911 services are used and delivered. With the explosion of mobile devices and data services, calls for emergency response are not just coming from telephones anymore. In this panel we’ll hear about what is happening at the national and state level regarding how emergency response networks must change to become next generation emergency response networks.
– Trey Forgety
– Anthony Mendoza, Moderator

NextGen 911

Tony Mendoza

• Need to access and locate different types of media – VoIP & Text
• Legislation was raised (didn’t pass) concerning all IP 911 network

Trey Fogarty at the 911 Association

• Primary standards development organization for 9-1-1 systems and service processes.
• 7000+ public safety and 9-1-1 industry  members
• The only professional organization solely focused on 9-1-1 policy, technology…

How we communicate

• By 2014, most Internet traffic will be mobile
• Voice communications account for only 1/3 of mobile usage; 2/3 are apps, test & video
• Approximately 32% of adults and 36% of children live in wireless-only households
  • Exception – folks will get the phone if it gets bundled with broadband
  • More than 8 trillion texts were send last year
  • Teens text 5,500 times per month
  • 35 million Americans who are deaf or hard of hearing rely on texting
  • IP-based messaging services such as iMessage are beginning to displace SMS

What’s driving NG9-1-1?

• The need to mainstream 911 technology
• Needed improvements in survivability
• The critical need to improve interoperability and information sharing
• A desire to increase competition and innovation in public safety technology

Built-In Interoperability

NG911 is:

• An open standards-based platform
• Using modern, flat IP Architecture
• With robust security and resilience features
• Based on Commercial Off the Shelf (COST) technology
• Designed to be originating-service agnostic

NG911 Responder Benefits

• Allows seamless flow of data from consumer to call-taker to dispatcher to responder
• Leverages existing national standards for interfaces and data structures
• Provides an adaptable platform to meet future responder needs

Recent Legislation – http://www.nena.org/?page=Standards

• Now is the time to start thinking about NG9-1-1

QUESTIONS

What kind of consumer education do you see happening?

The FCC asked in the rulemaking – should we do something now to deal with Americans communicating via text? The answer was yes – especially for folks with disabilities.

Text to 911 mandate may appear this summer – with a 3-5 year expectation.

If you’re a carrier a best practice – text back to people who text 911 to tell them to call 911. In the long term, start planning. Verizon is doing a text to 911 rollout.

Municipal Broadband
A review of municipal broadband projects in the state of Minnesota.
– Milda Hedblom
– Christopher Mitchell

Municipal Broadband: Milda Hedblom & Chris Mitchell

How did National Broadband Plan support municipal network?

States had the right to tell communities that they couldn’t build a networks and/or put stipulations on building the network. But the NBP gave a clearer sense that it wasn’t’ the case.

How does MN fit in compared to other states?

Minnesota is unique in that there’s a focus on counties.

You have looked at exemplar projects (such as Bristol, Chattanooga). Are there lessons to learn?

Chris just released a paper on the topic. They all of Gig to anywhere in the city. Here are some characteristics they share:

• Municipal electric department (only 2000 cities have this)
• They were prepared to act as a business (get, take customers)

Comment on counties…

Minnesota wants to be one of top 5 states by 2015. Counties have found that it’s hard to run a modern business without broadband. Folks with good access are often getting it from coops. Groups of people in the county are realizing that if they don’t act, they will be left behind.

Minnesota’s counties are looking at public-private partnership, community networks, working with private providers.

USF reforms will be interesting but so far seems insufficient.

There is no one-size-fits all solution. Different counties have different assets. Almost all counties are looking for partners of one form or another.

Ramsey County has aspirational plans. Sibley County has now made a commitment via Joint Power with ambitious goal of bringing fiber to farms.

JoAnne Johnson – U-reka update

1. Did feasibility for Todd County. We’re meeting with community and updating them. There was about 1 year between first meeting and completion of report. They are working with Arvig to match Blandin support.
2. We’re finding more enthusiasm from private partners. And more trust from public partner to work with private partners.
3. Working with Kanabec County – approved last night. It will be a marketing survey, 10 year financial study…
4. We’ve seen success with Middle Mile project – and now we’re investigating access to the home.

There are obstacles for public participation…

• There are 19 states with some form of barrier for private sector getting into providing/building broadband service.
• Municipal network has barrier of super majority referendum  for providing phone services – maybe it makes sense to make that 50%

Monticello – it went into operation with an overhang of debt (due to lawsuits). It’s been a huge obstacle. Perhaps we need to judge them not based on economics alone.

Serving the Underserved
A review of the legal requirements and programs designed to serve low-income families with broadband services. The programs of Comcast and CenturyLink will be featured.
– Karly Baraga Werner
– Jim Campbell

SERVING THE UNDERSERVED

Comcast

• The digital divide is a real problem and it is growing. 92% have access only 65% have adopted broadband
• Half of non-adopters are low-income families
• So we need to focus on low income families
• Big barriers – Internet Essentials was developed with FCC to address all issues
  • Cost (36%) – connectivity and equipment
  • Digital Literacy (22%)
  • Relevance (19%)

What has the FCC done?

• Supporting Connect to Compete (piloted in California right now)
• Feb 2012 – FCC released the Lifeline Reform Order
  • Permit eligle customers to apply Lifeline discounts to bundles that include voice and broadband
  • Creates a Pilot Program to study application to the adoption challenge of a subsidy for the price of BB service.

Details on Internet Essentials – http://www.internetessentials.com/default.aspx

• $9.95/month – XFINITY Internet Economy Service (currently 3 Mbps down)
• Option sot purchase computer for $149
• Free Internet training
• Can remain on program as long as kids are in school and qualify for free lunch

We’re trying to get the word out.

CenturyLink

Internet Basics – http://www.centurylink.com/home/internetbasics/?rid=internetbasics

• Service discount $9.95
• Equipment discount ($150 notebook)
• Training – and 24/7 tech support
• Committed to spend $2 million on the project over next 2 years
• We focus on families and seniors

QUESTIONS

How is enrollment?

It was slow to start. But we’re seeing an uptick and we (CenturyLink) will be working with school next year.

Comcast is at 5% of eligible students.

Is childcare assistance a qualification for CenturyLink?

Not sure.

What issues were there in Minneapolis (for Comcast)?

We found that when we can get a brochure in a backpack, we have success. But there are some reservations with some schools to have an appearance of supporting one business. And principals are busy.

Making the parallel between reduced lunch programs and reduced broadband rates helps.

Comcast has brochures in 13 languages. And we have a partnership with Hmong American Partnership.

Are there avenues to reach seniors that have been successful?

Going to where the seniors are has been helpful. Also we can direct mail to phone customers. And we’ve gone back to paper – we bring paper applications to meetings.

Privacy/E-Commerce
Our speakers will provide an update on developments in privacy law, including a discussion of the new FTC Privacy Report, the EU Privacy Directive, Google’s new privacy policy, the Obama Consumer Privacy Report and the impact of recent developments on mobile applications.
– Jamie Nafziger
– Professor William McGeveran
– Brad Bolin

PRIVACY / E-COMMERCE

Dorsey Whitney – Ways that our data is getting collected

• Fear of privacy may be holding back adoption

This is the info an App Developer can access

• Unique Device Identifier
• Contacts in your address book
• Current GPS coordinates
• Photos in your photo gallery
• Email account info
• Phone info
• Videos watched and searched.
• Web search history
• Keyboard cache

Facebook OpenGraph Apps (Frictionless Sharing)

• What you read
• Songs you listen to
• TV shows you watch
• Movies your watch (outside US)
• Your exercise results
• What you cooked
• What you are wearing
• What you want
• Where you are traveling

Ad Network/Data Broker

• Age
• Gender
• Income
• Ethnicity
• Sexual Orientation
• Political Views
• Parental status

Best Buy –

Think about the power that a business has in terms of having all of your info – but also understanding relationships based on info and that the business has the ability to feed you info when they choose it.

UMN Law School Professor –

We have a class to give our students an edge.

A lot of this is driven by what info can be gathered but also the algorithms that give even more info.

There aren’t a lot of laws out there now. But the Future Privacy forum are active.

• Slow movement towards increased federal role in regulation (FTC report and Obama/Commerce report)
  • Both reports pretty much say – there’s a lot to think about
  • They are looking for best practices
  • They are inclined to ask for privacy by design
    • Set defaults
    • They don’t want to kill the goose that lays the golden egg
• The rest of the world is proceeding in a different direction – data protection (not privacy)
  • Looking into right to be forgotten
  • Providing end users with access to info
  • Changing from guidelines to regulation
• Emerging US privacy strategy

QUESTIONS

Differences between EU & US have been ongoing. EU have made information a right. If agreements are 20 years long – is that part of US companies’ strategy to avoid stricter rules for a while?

The gulf between EU and US is growing.

One key concern is that less certainty is not good. The agreements led to more certainty.

There is drive in US policymakers to try to increase harmony between US and other places.

The powerful companies will hold out for US rules are long as possible.

On right to be forgotten – is it like right of withdrawal?

Loosely, yes. The US has longstanding rule on freedom of speech. And we prioritize that. We’re kind of libertarian on it.

EU countries see rights differently. They also have identity rights, rights of attribution, right of withdrawal.

Is common law developing on shrink wrap agreements?

Yes in FTC – mostly Section 5 deception trade practices.

According to ComputerWorld…

The Mobility Fund, created in 2011 as part if the FCC’s revamp of telephone subsidies under the Universal Service Fund, will award up to $300 million to mobile providers that bring service to new areas. Winning bidders must deploy either 3G service within two years or 4G service within three years of the award. …

The FCC will award the funds in a reverse auction, in which mobile providers will compete to be the lowest-priced provider to bring service to an area. Bidders will compete both with others that may be seeking support in the same area, but also with carriers bidding for support in other areas.

The FCC on Wednesday released a public notice detailing the procedures for Phase I of the Mobility Fund. The window for filing short-form applications opens on June 27 and closes on July 11. The auction will be a single-round, sealed-bid auction, and the FCC will require that the winning bidders provide coverage to at least 75 percent of the road miles in each census tract for which they win support.

In addition to the Phase I funding, the FCC will also offer an additional $50 million in one-time support to tribal lands and $500 million each year for ongoing support of mobile services.

Larson and Wetzel [Kevin T. Larson, CEO/general manager, and Mike Wetzel, Consolidated Board director] urged their congressional delegates to help them continue to provide the services their community needs at an affordable rate by removing regulatory uncertainty and urging the Federal Communications Commission (FCC) to reconsider the deep cuts and other extreme modifications it is proposing to impose on the Universal Service Fund (USF). Larson and Wetzel said cuts to this important fund could put existing investment in rural broadband at risk and discourage future investment in new broadband-capable networks by small companies, leading to increased rates for telephone, broadband and other services.

In February, The Middle Class Tax Relief and Job Creation Act of 2012 was signed into law. It included a section that opened the door to the First Responder Network Authority (FirstNet).

Title VI – Public Safety Communications and Electromagnetic Spectrum Auctions

Sec. 6101-6703 – Spectrum Auction. This provision grants the FCC the authority to hold voluntary incentive auctions, allocates necessary spectrum for a nationwide interoperable broadband network for first responders, provides $7 billion for public safety broadband network build out, and provides up to $1.75 billion for relocation costs for broadcasters. This provision is estimated to raise $15 billion over the next eleven years.

The FirstNet plan is to build a broadband network for police, firefighters, emergency medical service professionals, and other public safety officials. FirstNet is really just getting going – but there are some plans. First plan is for FirstNet to work with state, local and tribal governments. A goal is to create an interoperable, cohesive, countrywide network. That being said, states can opt-out of FirstNet. Apparently the plan (and I’m gleaning this from the webcast) is for FirstNet to come to the states with an assessment of what the state has and what they need. And RFP will be created from these assessments.

The webcast included folks from all corners of the project (commercial, utilities, local governments (well NATAO – the National Association of Telecommunications Officers and Advisors). It was nice to hear each perspective. The need for a Public Safety Net was emphasized. I think many of us have heard the stories of different branches of first responders and/or first responders from different areas running into troubles communicating with each other because of technology. So change seemed to be welcome across the board – especially change that meant interoperability!

Sustainable was another theme. One thing that I always remember from the 700 Mhz Auctions in 2008 was that the Public Safety spectrum was the one auction that did not meet its minimum. No one wanted to build the public safety network back then. So what’s changed? I think it’s the greater opportunity for corporate carriers to ride on the network and the opportunities for commercial providers to take advantage of network sharing and roaming.

If sustainability is an issue, it makes sense to get the carriers involved. But I think it’s important to maintain an open source sort of network. One of the issues noted in the webcast was the failure of the current network is the proprietary nature of some many (or many portions) of the public safety network. Another point made by the utilities and local governments is that they have a lot of infrastructure in place already, suggesting that maybe that could help defray costs to build.

It sounds as if network will be 4G LTE. (I guess that would be more meaningful to be if there more stringent standards on what that meant.) One inherent issue they mentioned in the webcast was lack of voice capabilities on 4G LTE. However there is a budget for NIST (National Institute of Standards and Technology) to develop a solution and until there’s a solution, t-band spectrum (for voice) could be made available. (I should say someone asked about that – and the answer was that t-band availability would depend on NIST developments.)

So there’s movement forward. Some of the budget and spectrum are apparently still up in the air and will be based on the reverse auctions that are planned. (There is up to $7.3 billion in funding for network from future FCC incentive auctions but the NTIA can borrow $2 billion up front.) Also there’s a lot of discussion on who will be selected for the various FirstNet boards. With $7 billion dollars at stake and so many stakeholders in the game, those decisions will be critical to how FirstNet continues to move forward.

There are a couple other issues that I find intriguing – but will have to wait for another day: Text-to-911 and Commercial Mobile Alert System, which sounds like tapping into commercial cell phone carriers to broadcast “emergency broadcast system” type messages. (I think most readers will remember watching those as kids when the remote control was maybe a slow younger sibling.) I think the idea of “delivering geographically-targeted alerts to wireless consumers” could be lifesaving – but also opens the door to a lot of privacy concerns.

Overview:  On February 6, 2012, the FCC released its Order reforming and modernizing the Lifeline and Link Up Programs.  The Order makes comprehensive changes to the Lifeline Program and eliminates funding for Link-Up in non-tribal areas.  The Order establishes a uniform, interim Lifeline support amount of $9.25.  It also requires all states to utilize, at a minimum, the income and program eligibility criteria currently utilized in federal default states for initial and continuing eligibility.  ETCs will not be able to seek reimbursement unless it receives a certification of eligibility from the prospective Lifeline subscribers.  Annually, ETCs will be required to conduct recertifications of their entire customer base on a rolling basis throughout the year by either (1) querying the appropriate eligibility or income databases (to be established), or (2) obtaining a signed certificate from the subscriber.

The revised rules will become effective April 1, 2012 with additional deadlines throughout the upcoming year as outlined below.  As more information becomes available, MTA will provide further updates.

March 2012

• Last month ETCs may claim support for non-tribal Link-Up support on Form 497

April 1, 2012

• Link-Up support is eliminated.
  • Action Item:  Tariff Updates
  • Action Item:  Billing Changes

April 2, 2012

• Flat-rate support of $9.25 for Lifeline becomes effective for non-tribal customers.  Discount applies to SLC first, then intrastate charges. Tribal discount for Lifeline is $25.00 is maintained for ETCs currently receiving high cost support; $1 minimum charge is eliminated.
  • Action Item:  Tariff Updates
  • Action Item:  Billing Changes
  • Action Item:  Customer Notice.  Lifeline credit amount is being reduced, which results in a cost increase for the customer.
  • Note:  TAP credits (and surcharges) remain unchanged at this time.
• Toll-blocking and toll control support begin phase out over 3 years.  No support beginning April 2012 for customers that have a Lifeline calling plan that includes a set number of calling minutes.
  • Action Item:  Reimbursement limited to $3 per month until 12/31/12.

June 1, 2012

• Order requires ETCs to obtain eligibility proof from customers.  Customers no longer able to self-certify.  Lifeline support limited to one per household.  MTA anticipates working with the Minnesota Public Utilities Commission and Minnesota Department of Commerce on the policy, process and procedures related to this change.
  • Action Item:  ETCs are required to establish and document policies and procedures for the review of documentation provided as proof of program-based or income-based eligibility.
  • Action Item:  ETCs must also have process in place for keeping accurate records detailing how the customer demonstrated his or her eligibility.
  • Action Item:  ETCs required to communicate new certification processes to customers.
  • Note:  MN DoC,  MN PUC , and MTA will need to determine if existing Lifeline application and verification forms will continue to be used, and if so, what changes are needed. Regardless of whether the forms are updated, companies are now required to collect SSN and date of birth from all Lifeline applicants/customers.
• Form 497 transition from reporting payments based on projected Lifeline subscriber counts to actual Lifeline subscriber counts.
  • Action Item:  ETCS must notify USAC which study area codes to transition from projected to actual claims during each month.
• Deadline for ETCs to notify USAC of which study area codes to transition from projected to actual Lifeline customer counts for each month on Form 497.
• ETCs must recertify all of their Lifeline subscribers as of June 1, 2012
  • Action Item:  Complete recertification of all Lifeline customers as of June 1, 2012 by December 31, 2012
  • Action Item:  Report recertification results to FCC, USAC, MN PUC and tribal government by Jan. 31, 2013.

July 1, 2012

• Form 497 reporting due.  USAC begins implementation of transition of payments based on actual Lifeline subscribers.  Implementation date for one year rolling deadline for ETCs to submit claims, shortened from 15 months.

October 2, 2012

• Deadline to update Lifeline outreach and marketing materials to incorporate changes in the Order related to eligibility, required documentation, limitation of the program, penalties, etc.
  • Action Item:  ETCs should review and update all print, audio, video and Internet marketing materials (e.g., brochures, pamphlets, bill inserts, websites, directories, newspaper ads, radio/television ads, etc.)

And here’s the map that tracks:

• FCC Mobility Fund Eligible Areas Already Served by Mobile Networks
• Unserved Areas Not Eligible for FCC Mobility Auction
• Areas Subject to FCC Mobility Fund
• Auction Confirmed to be Unserved

I think the final paragraph with be of greatest interest to readers here so are probably better well versed on the need for subsidies and broadband…

So far, so promising, but the devil, as always, is in the detail—and many of the details are missing. Stuart Polikoff, vice-president of regulatory policy for OPASTCO, a trade group representing around 460 rural telecom companies, fears his clients will end up losing money when the FCC redirects intercarrier-compensation rates (fees one carrier pays to another on whose lines a portion of a call is carried). Dave Osborn, who heads the Valley Telephone Cooperative, which provides high-speed broadband to 4,600 people spread across 7,300 square miles of south Texas, predicts that change will deprive him of $1.5m a year. The large telecoms companies stand to gain: the FCC says they can reach 83% of the 18m Americans without service. Then there is the question of use: one survey found that nearly half of non-internet users in America saw no need for it. That is a problem that infrastructure alone cannot solve.

I’m going to take adoption off the table for this post, because in the areas they describe, greater adoption is not going to help make the business case. The question becomes – will the subsidies go to the right people who will maintain broadband connectivity in rural areas?

On the one hand, you have to think that the bigger providers can compensate the loss off serving lower population density areas with urban counterparts. On the other hand, the local provider usually has a greater investment in the rural community. Who is the better bet?

As always with broadband articles in mainstream press, the comments are as interesting as the article. A few folks not so interested in supporting rural areas. A few folks with very specific perspective (one seems to promote LightSquared, one includes a link to their wireless service and some question the adoption issue.

AT&T‘s proposed merger with T-Mobile has gotten a big thumbs down from the Federal Communications Commission. In a conference call with reporters, FCC officials said the agency has concluded that the proposed transaction would significantly diminish competition and results in an unprecedented concentration in the wireless industry.

This is the second significant blow to the proposed $39 billion merger. Back in August the U.S. Department of Justice filed an antitrust lawsuit to block the deal. This FCC order essentially agrees with the DOJ. FCC officials said that if the DOJ prevails, its suggestion of a trial-like hearing would be moot.

…

The next step is a hearing before an administrative law judge that will, apparently, be very much like a typical trial and should include witnesses from both sides of the debate. The judge would deliver a decision on the merger, but that would not be the end of it. The judge’s decision would then be considered by the FCC commissioners.

Want to gauge the general public’s view of the setback? Check out the comments on the Mashable article. When I looked the only pro-merger comment I saw came from someone who was called out from another commenter for working at AT&T. It will be interesting to see if more industry views come through after the holidays.

Executive Summary -

The plan is to move to the Connect American Fund (CAF) which will allocate a $4.5 billion budget annually for rural, insular and hard cost areas.

One the transition is complete that will mean up to $2 billion for rate of areas with return carriers; $2.8 billion for price cap carriers; $500 million for wireless and mobile voice services – including up to $100 million for tribal areas and at least $100 million for remote areas fund.

CAF recipients will be required to send reports to state and federal overseers. The State Commissions will work with carriers of last resort and ETCs (eligible telecommunications carriers).

Price cap – CAF will support broadband in two phases:

• Legacy cost support will be frozen & subject to broadband obligations ($300 million to commit broadband deployment to areas)
• Creates a framework to provide support on forward looking price model. Incumbents will need to overtake statewide commitment (Except very high cost areas and areas with competitors). When incumbents says no – there will be a bidding mechanism for all ETCs)

Rate of return

• Changes rules to support continued broadband deployment/investment
• Allows them predictability of continued funding but requires more stringent monitoring
• Looks to reduce interstate compensation 11.25%

Mobile

• Eliminates identical support rule
• Phases down existing support

More on mobile

• Phase I $300 million and $50 million in tribal areas and reverse auctions with a goal of 4G
• Phase II $500 million per year to extend and support mobile networks ($100 million to tribal areas) in high costs areas

ICC

• Arbitrage – combating phantom traffic
• Billing key methodology for all ICT traffic with unified national framework
• Caps all interstate and most intrastate effective on date of this order and establishes a transition path for the reduction
• Some carriers will be eligible to receive cap support
• VoIP/PSTN – will be subject to transitional ICC; will be considered equal; expect all carriers to act in good faith for IP calls

Copps Comments:

Re: USF

• I would have much preferred a higher budget for the Fund—a budget that I believe consumers would accept because of its importance to putting the nation back to work and providing our kids with the tools they need for their futures.
• The course we adopt today has two auction phases, with the second installment of mobility support dependent upon further Commission decision-making. Understanding the need for maximum predictability throughout these transitions, we will halt reductions in legacy support if for some unlikely and unanticipated reason the second auction phase does not take place as planned.

Re:ICC

• My enthusiasm here is tempered by the fact that end-user charges (under the label of “Access Recovery Charges”) are allowed to increase, albeit incrementally, for residential consumers.
• While I understand the need for predictability in an ICC regime, I am pleased that my colleagues have retained a key role for states, including arbitrating interconnection agreements; monitoring intrastate access tariffs during the transition to bill-and-keep; and helping to implement our Universal Service Fund as well as, in many cases, their own state universal service funds.
• There is inherent inequity in a system that funds the deployment of broadband off of assessments on interstate telephony. Once we ensure that double, triple and quadruple play services that benefit from Universal Service bear their fair share, we will not be subject to the unnecessary financial constraints that our current approach imposes. We also need
• spectrum management decisions that avoid putting still more spectrum in too few hands. Among other good results, that would drive better mobility auctions.

McDowell Comments 

• Also, today we are only addressing the high cost program of the distribution side of the Universal Service Fund. We are not addressing the entire Universal Service Fund, which currently distributes over $8 billion per year. To put that figure in context, USF is larger than the annual revenues of Major League Baseball. In separate proceedings, we will also reform the other USF spending programs. I cannot stress enough that all of the fiscal efficiencies that we will realize in the wake of today’s reforms will be lost if similar fiscal discipline is not applied to all Universal Service programs as well.
• It is no secret that for years I have been pushing for contribution reform to be carried out at the same time as distribution reform. Obviously, that is not happening today; therefore we must act quickly. The contribution factor, a type of tax paid by consumers, has risen each year from approximately 5.5 percent in 1998 to an estimated 15.3 percent in the fourth quarter of this year. This trend is unacceptable.

Clyburn Comments

• As you all know, I have a deep connection to rural America. Without comparable modern communications services enjoyed by their urban counterparts, those citizens will never adequately compete in our global economy. They need and deserve reliable fixed as well as mobile broadband in order to thrive. Without this critical broadband infrastructure, rural Americans would be forever left behind.
• Most importantly, we have provided for replacement funding as intrastate access rates decline as a result of our reform which relieves the financial burden that would have been on states in their own attempts at reform. To that end, we also have carefully balanced ICC revenue replacement for providers, with the important goal of not burdening consumers with significant increases in their bills or overburdening the USF which is ultimately paid for by consumers.
• Although the reforms we adopt today are extremely important for ensuring that basic and advanced communications services are physically available to all Americans, those services cannot be
• truly available, if consumers cannot afford to purchase them, the devices they need to access them are not available, or if they cannot obtain the skills they need to know how to use these services. I appreciate those who have called for us to address these consumer needs today, and I agree with you that we need to do more in this area. Our broadband adoption task force is working diligently to find solutions to these issues, and I fully expect that we soon will be addressing the proposal in our Lifeline proceeding to adopt pilot projects for broadband adoption to benefit low-income Americans who qualify for the Lifeline program.

Genachowsi Comments

• Over the next year, the Connect America Fund will bring broadband to more than 600,000 Americans who wouldn’t have it otherwise. Over the following five years, millions more rural families will be connected. And today’s Order puts us on the path to get broadband to every American by the end of the decade – to close the broadband deployment gap which now stands at close to twenty million Americans. We are also extending the benefits of mobile broadband coverage to tens of thousands of unserved road-miles, areas where millions of Americans work, live, and travel.
• Today’s action will help connect anchor institutions, which can play a vital role – for example, in expanding basic digital literacy training – in a world where broadband skills are necessary to find and land jobs.
• We did not rubber stamp or adopt wholesale the proposals of any stakeholder or group of stakeholders. Instead, we made our decisions on what’s right for the American people and our economy based on facts and data gathered in one of the most extensive records in FCC history, including hearings and workshops across the country, and more than 2,700 substantive comments totaling tens of thousands of pages.