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1 THE RURAL BROADBAND CONNECTION – WILL THE HINTERLAND DRIVE BROADBAND? THE REGULATORY CONTEXT Stefan M. Lopatkiewicz, Esq. Dorsey & Whitney LLP Washington,

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Presentation on theme: "1 THE RURAL BROADBAND CONNECTION – WILL THE HINTERLAND DRIVE BROADBAND? THE REGULATORY CONTEXT Stefan M. Lopatkiewicz, Esq. Dorsey & Whitney LLP Washington,"— Presentation transcript:

1 1 THE RURAL BROADBAND CONNECTION – WILL THE HINTERLAND DRIVE BROADBAND? THE REGULATORY CONTEXT Stefan M. Lopatkiewicz, Esq. Dorsey & Whitney LLP Washington, D.C.

2 2 THE TELECOMMUNICATIONS ACT Establishes goal of broadband (“advanced”) telecommunications and information services for all sectors of country, including rural communities Section 254, Universal Service Includes “access to advanced telecommunications and information services … in all regions of the Nation” “Consumers in all regions... including... rural... areas” should have access to advanced services “reasonably comparable” to those provided in urban areas and at “reasonably comparable rates”

3 3 THE TELECOMMUNICATIONS ACT (cont’d) Section 706, Advanced Telecommunications Incentives The FCC and each state PUC shall “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans” Defined, “without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics and video telecommunications”

4 4 THE TELECOMMUNICATIONS ACT (cont’d) Section 309(j), Use of Competitive Bidding When using auctions to award spectrum licenses, Commission should establish a “competitive bidding methodology” to 1.promote development and rapid deployment of “new technologies, products and services” for the benefit of the public, including rural area residents 2.assure “new and innovative technologies” are accessible through dissemination of licenses among a wide variety of applicants, including “rural telephone companies”

5 5 PRINCIPLE OF COMPETITIVE NEUTRALITY In its implementation of the universal service statute, the FCC has adopted the principle of “competitive neutrality” In defining advanced telecommunications services, FCC recognizes satellites as a potential provider Focus of Commission in recent years on broadband for rural communities, however, has been on terrestrial delivery means, rather than satellites

6 6 IMPACT OF COMPETITIVE BIDDING RULES One reason for this has been substantial attention paid to implementing the rural directives of Section 309(j) Small business bidding credits Denial of special credit for rural telcos Designation of various sizes of geographic areas for spectrum licenses Geographic partitioning and spectrum disaggregation Special construction performance requirements

7 7 FCC CONCERN WITH SATELLITE CAPABILITIES Advanced services defined as providing greater then 200 Kbps both upstream and downstream In its 2000 Order, the FCC determined availability of advanced services is highly correlated to population density Though geographically “pervasive,” no existing satellite service met definition of advanced services due to inability to provide upstream capacity

8 8 FCC CONCERN WITH SATELLITE CAPABILITIES (cont’d) Focused on encouraging facilities-based competition on middle mile, last mile and last 100 feet collocation rules unbundling and resale of advanced services line sharing for DSL removed eligibility restrictions for rural LMDS over-the-air reception devices (OARD) rule

9 9 CONTINUING FOCUS ON TERRESTRIAL SOLUTIONS “Great disparity” in access for rural communities still seen in 2002 Order Satellite services growing, but none yet meets advanced services definition “New generation” (Ka-Band) of satellites is seen as potential significant provider due to broad coverage

10 10 CONTINUING FOCUS ON TERRESTRIAL SOLUTIONS (cont’d) FCC encouragement of new services remains focused on terrestrial since MHz clearance 3G spectrum Inclusion of fixed wireless in OARD Advanced wireless service (actually took spectrum from MSS) Award of additional Ka-Band licenses (not recognized in 2000 Order) Possible removal of restrictions on ancillary use of DBS spectrum

11 11 CONTINUING FOCUS ON TERRESTRIAL SOLUTIONS (cont’d) Planned activities are focused on encouraging cable deployment and freeing ILECs from regulatory constraints Cable Modem NOI Broadband NPRM Incumbent LEC Broadband Services UNE Triennial Review

12 12 POTENTIAL FOR UNIVERSAL SERVICE SUPPORT FCC is not convinced rural communities can gain comparable access to advanced services through market mechanisms alone Is now considering whether advanced services should be included in “core services” for universal support purposes This is an argument rural telcos have been making for some time

13 13 RURAL SPECTRUM-BASED SERVICES NOI FCC’S preoccupation with terrestrial wireless applications is reflected in new NOI issued in December 2002 NOI recognizes that satellite services “may, in the future, play a critical role in bringing telecommunications services to rural America” But only asks for public input on terrestrial wireless services and how regulatory obstacles to them can be relieved

14 14 RURAL SPECTRUM-BASED SERVICES NOI (cont’d) Could serve as vehicle for telephone coops to secure reconsideration of attribution rule that makes it difficult for them to qualify for small business credits Also could be an opportunity for FCC to respond to Sen. Baucus legislative initiative last year to clarify 309(j) Make it easier for rural providers to compete for spectrum Enforce monitoring of rural build-out requirements

15 15 OTHER LEGISLATIVE INITIATIVES Farm Security and Rural Investment Act of 2002 Five-year Department of Agriculture program encouraging deployment of broadband services through loans and guaranties Technologically neutral, but who is using?

16 16 OTHER LEGISLATIVE INITIATIVES (cont’d) Broadband Internet Access Act (proposed) Would amend Internal Revenue Code to permit expensing of equipment delivering current or next- generation broadband services to rural areas Satellite providers and lessees are eligible, but launch costs are excluded Would establish five-year window within which to inaugurate service

17 17 CONCLUSIONS Regulatory framework is officially neutral regarding delivery of broadband services to rural areas As a practical matter, numerous support mechanisms and incentives exist which could favor terrestrial wireline and wireless solutions in the near term FCC has exhibited relative indifference to the role of satellites in filling this niche


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