Today I attended a full day of Continuing Legal Education sessions on Broadband. It was very interesting. I tried to take full notes (below); I will also try to give some general impressions:

• 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.