FCC PUBLIC HEARING - 3/23/99 2 1 OPENING STATEMENTS 2 Opening statement by Chairman Kennard ................ 6 Opening statement by Commissioner Ness .............. 12 3 Opening statement by Commissioner Furchtgott-Roth ... 15 Written statement of Commissioner Tristani .......... 17 4 Statement by Christopher McLean 5 Rural Utilities Service ........................ 19 6 PANEL I 7 Statement by Governor Mary Thomas 8 Gila River Indian Community .................... 27 9 Statement by J.D. Williams Cheyenne River Sioux Telephone Authority ....... 32 10 Statement by Nora Helton 11 Fort Mojave Indian Tribe ....................... 40 12 Statement by Charles Wiese Tohono O'odham Utility Authority ............... 47 13 Statement by President Ivan Makil 14 Salt River Pima-Maricopa Community ............. 52 15 Statement by Vernon James San Carlos Apache Tribe ........................ 59 16 17 PANEL II 18 Statement of Jeff Olson GTE ............................................ 82 19 Statement by Aloa Stevens 20 Citizens Communications ........................ 88 21 Statement by Carl Artman Airadigm Communications, Inc. .................. 98 22 Statement by Richard Watkins 23 Smith Bagley, Inc. (Cellular One) ............. 106 24 Statement of Rhonda McKenzie MTG, Inc. and Aircom Consultants .............. 116 25 GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 3 1 PANEL II (Cont'd.) 2 Statement by David Siddall Verner Liipfert Bernhard McPherson and Hand ... 123 3 Statement of Walter Purnell 4 American Mobile Satellite Corporation ......... 131 5 PANEL III 6 Statement by Jim Irvin 7 Arizona Corporation Commission ................ 143 8 Statement by Madonna Yawakie Minnesota American Indian 9 Science & Engineering Society ................. 151 10 Statement by Alison Hughes Arizona Telemedicine Program .................. 160 11 12 PUBLIC COMMENT 13 Statement by David Redick .......................... 166 14 Statement by Edward Groenhout Northern Arizona University ................... 168 15 Statement by Herman Laffoon, Jr. 16 Colorado River Indian Tribes .................. 169 17 Statement by Laura Lo Bianco Iridium North America ......................... 171 18 19 CLOSING STATEMENTS 20 Statement by Commissioner Ness ..................... 172 21 Statement by Commissioner Furchtgott-Roth .......... 172 22 Statement by Chairman Kennard ...................... 173 23 24 25 GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 4 1 BE IT REMEMBERED that a public hearing in the 2 matter of "Overcoming Obstacles to Telephone Service to 3 Indians on Reservations" was convened before the Federal 4 Communications Commission at 5550 West Wildhorse Pass, 5 Chandler, Arizona, commencing at 8:25 a.m. on the 6 23rd day of March, 1999. 7 8 COMMISSIONERS: 9 Mr. William E. Kennard, Chairman Ms. Susan Ness 10 Mr. Harold Furchtgott-Roth 11 RURAL UTILITIES SERVICE: 12 Mr. Chris McLean, Deputy Administrator 13 14 PANEL I: 15 Governor Mary Thomas, Gila River Indian Community, Gila River Telecommunications, 16 Inc.; 17 Mr. J.D. Williams, General Manager, Cheyenne River Sioux Telephone Authority; 18 Ms. Nora Helton, Chairperson, Fort Mojave 19 Indian Tribe, Fort Mojave Telecommunications, Inc.; 20 Mr. Charles Wiese, General Manager, 21 Tohono O'odham Utility Authority; 22 President Ivan Makil, Salt River Pima-Maricopa Community; 23 Mr. Vernon James, San Carlos Apache Tribe. 24 25 GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 5 1 PANEL II: 2 Mr. Jeff Olson, Director, Regulatory Planning & Policy for Issues Integration/Planning & 3 Strategy, GTE; 4 Ms. Aloa Stevens, Director, External Affairs-West, Citizens Communications; 5 Mr. Carl Artman, Executive Vice President and 6 General Counsel, Airadigm Communications, Inc.; 7 Mr. Richard Watkins, General Manager, 8 Smith Bagley, Inc., Cellular One of Northeast Arizona; 9 Ms. Rhonda McKenzie, Managing Partner, MTG, Inc., 10 and AirCom Consultants, Inc.; 11 Mr. David Siddall, Attorney at Law, Verner Liipfert Bernhard McPherson and Hand; 12 Mr. Walter Purnell, President and CEO, 13 American Mobile Satellite Corporation. 14 PANEL III: 15 Mr. Jim Irvin, Chairman, Arizona Corporation 16 Commission; 17 Ms. Madonna Yawakie, Minnesota American Indian Science & Engineering Society; 18 Ms. Alison Hughes, Associate Director, Arizona 19 Telemedicine Program. 20 21 22 JULIE HEDELSON, RPR Court Reporter 23 24 25 GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 6 1 CHAIRMAN KENNARD: Good morning, and 2 welcome to the second Federal Communications Commission 3 hearing to examine the lack of telephone service on 4 Indian reservations in our country. My name is Bill 5 Kennard. I'm Chairman of the Federal Communications 6 Commission. I am joined today by my two colleagues from 7 the FCC, Commissioner Susan Ness and Commissioner Harold 8 Furchtgott-Roth. 9 I see some familiar faces from Washington 10 as well, and I'm glad to see that we have a good turnout 11 this morning. We're going to start today with some 12 opening comments from our visitors from Washington, and 13 then we're going to hear from the people we really came 14 to hear from most, and that is the people who are here 15 in Arizona who are addressing the problem, the serious 16 problem in our country, of underserved areas on Indian 17 reservations. 18 I want to especially thank the Gila River 19 Tribal Authority and its very impressive leader, 20 Governor Thomas, who we'll hear from a little bit later 21 today, for hosting us. We had the privilege yesterday 22 of visiting Gila River and also the Salt River 23 Pima-Maricopa communities, and I was awed not only by 24 the beauty of this country but also by a lot of the 25 progress that is being made, particularly by Gila River GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 7 1 Telecommunications and also by Saddleback 2 Communications. Both of those companies are doing some 3 very impressive things to bring service to Indian 4 communities here, and we want to hear from them today, 5 and we're pleased that we'll have that opportunity. 6 The success of Gila River and Saddleback 7 Communications shows that, with determination and 8 intelligence, we can succeed in bringing telephone 9 service to reservation residents. And that's why 10 today's hearing is called "Overcoming Obstacles To 11 Telephone Service for Indians on Reservations." We're 12 not here to just examine. We're not here to monitor. 13 We are here to overcome. We want real solutions to real 14 problems, because I and my colleagues on the Commission 15 are determined to find a way to bring basic phone 16 service and all of the advanced services that Americans 17 are beginning to enjoy in this country to all Americans, 18 including not only Americans in our cities and our more 19 affluent suburbs but also to our rural areas, Indian 20 reservations, inner-city communities. 21 In our country today, 95 percent of 22 Americans have telephones. That's the national average. 23 That's an impressive number. It's an impressive number 24 because people in industry and government have worked 25 together to create a universal service system that has GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 8 1 worked for most Americans in this country. We have a 2 telecommunications system in America that's literally 3 the envy of the rest of the world, and that's a 4 wonderful thing. But it is shameful that as we enter 5 the 21st Century there are communities in our country 6 that don't enjoy those high numbers of penetration. And 7 as we looked around to determine where those people are, 8 what populations are still waiting for a basic dial-tone 9 phone, we found that our Indian peoples are the most 10 distressed population in America. That's why we're 11 here. That's why we went to New Mexico last month, 12 myself and Commissioner Gloria Tristani. That's why 13 myself, Commissioner Ness, and Commissioner 14 Furchtgott-Roth are here today. We're here to find 15 solutions. 16 In our hearing last month in New Mexico, in 17 Albuquerque, we heard firsthand how this digital divide, 18 the divide between people who have technology and those 19 who don't, has affected peoples' lives. We heard from 20 families who paid basic rates between $20 and $35 per 21 month for basic phone service but had typical bills in 22 excess of $100 because most calls were toll calls. 23 People were living in remote areas, and they'd get a 24 phone for a few months, but then their toll rates would 25 go up so high that they couldn't afford to maintain GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 9 1 service. 2 Well, yesterday when we talked to the 3 people who were leading the Gila River 4 Telecommunications Company, we found that on that 5 reservation people can call anywhere on the reservation, 6 and it's a local call. And so we didn't see here the 7 same problems that we saw in New Mexico, with people not 8 being able to manage their long-distance phone bills. 9 And that's a model that we think should be replicated in 10 other reservations around the country. 11 In New Mexico we met with people who didn't 12 have phones, a lot of people who didn't have phones, and 13 people who were -- and they talked to us about the 14 challenge of not having a phone at home and how they 15 couldn't call the doctor or get in touch with their 16 children's schoolteachers. We learned how this divide 17 particularly affects Indian children in New Mexico. 18 They told us about the Pinon Public School District 19 Number 4 on the Navajo reservation, which is here in 20 Arizona, where 1500 school children actually have 21 computers. The problem is not getting computers in that 22 school district; it's getting them hooked up to the 23 Internet. 24 And already our visit to New Mexico last 25 month has helped people there. Shortly after we had GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 10 1 that meeting in New Mexico, I met with the Chairman and 2 CEO of US West, which serves a lot of the pueblos in 3 New Mexico, and I talked to him about what I'd seen in 4 New Mexico. And I asked him why people in his service 5 area in New Mexico were not getting service on Indian 6 reservations, and we talked about that. And we talked 7 about the Picuris Pueblo, which we visited in 8 New Mexico, which has been almost completely bypassed by 9 US West in that community. And I'm pleased to report 10 today that tomorrow US West is going to that pueblo, the 11 Picuris Pueblo, and they're going to spend several hours 12 tomorrow afternoon signing up subscribers for telephone 13 service in that pueblo. 14 And we're going to continue to work with 15 US West and other carriers to help highlight some of the 16 problems that we are seeing, to work with them to get 17 service to those communities, and we're going to work 18 with all of the carriers. I notice that there are some 19 wireless carriers here today. I'm very interested to 20 hear how some of the wireless solutions are bringing 21 telephone service where it wouldn't exist with the 22 wireline solution. 23 As we travel around the country, we're also 24 highlighting some of the programs that are already in 25 place that we're finding people don't know about. We at GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 11 1 the FCC administer what we call the Lifeline program and 2 the Link-up program, which are ways to make sure that 3 our lowest-income Americans have access to telephone 4 service. Well, when we went to New Mexico last month, a 5 lot of people had never heard of these programs. And so 6 we are here to tell you about those and hope that, 7 working with you, the tribal leaders, and the local 8 state regulators, that these programs can get better 9 known. 10 But this is only a start. We are here to 11 find solutions, real solutions, to make sure that as we 12 enter the information age, we enter it together as a 13 nation and no one is left behind. And hopefully we'll 14 hear not only what people see as barriers today but 15 also, most importantly, what they see the solutions to 16 be. I want to hear today from the six tribes that have 17 taken control of their telecommunications destiny and 18 formed partnerships with non-Indians to better serve 19 their reservations and understand how we can help them 20 succeed and replicate that success around the country. 21 So, again, I want to thank Governor Thomas 22 for hosting us, having us here today, and for that 23 wonderful tour of Gila River yesterday. It was really a 24 wonderful time. And I want to thank my colleagues for 25 being here with me today, including our colleague from GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 12 1 the RUS, who we'll hear from in a minute. 2 Commissioner Ness, opening statement? 3 COMMISSIONER NESS: Thank you, Chairman 4 Kennard. It is a pleasure to be here with you today. 5 It is so necessary that we get outside of the 6 Washington, D.C., environment and talk with and see what 7 is really going on in the rest of this great land. We 8 had an opportunity to do it yesterday, and it was an 9 extremely meaningful experience. 10 First, I too want to thank Governor Mary 11 Thomas. I want to thank her for her graciousness, her 12 leadership, and for the opportunity to visit a number of 13 different areas within the community yesterday. She 14 sets a wonderful example of someone who is committed to 15 bringing the newest technology, the best services to her 16 people. She knows how to lead and knows how to do it in 17 a manner that creates enthusiasm within the communities. 18 And it was delightful to visit the Gila 19 River telco and to see all of the ideas that they have 20 for developing new services and, earlier, to visit 21 Saddleback Communications and, once again, to see the 22 ideas they have for developing new services to be able 23 to speed up service to the population, to try out 24 wireless services, in the case of Saddleback, where 25 wired service is such an expensive undertaking. All of GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 13 1 these ideas and the enthusiasm and the pride that we saw 2 in being able to advance telecommunications services to 3 people who have tried and tried and tried to get service 4 before, unsuccessfully. This was very encouraging. 5 There's a lot yet to be done. The 6 opportunity to see the reservations tells us a lot about 7 not just the fact that these are rural areas that are 8 extremely difficult and expensive to serve. These are 9 problems that we face in many areas of the United 10 States. And some of the solutions that are being tried 11 here or that could be tried here or that we'll be 12 talking about today are applicable not just to this area 13 but also to other high-cost areas of the United States. 14 But what makes this visit so special is the 15 opportunity to better understand and, therefore, for us 16 to better address the unique problems involved in 17 providing deployment of affordable telephone service for 18 the Indian populations. And why? Because there are 19 some unique questions here. The tribes are sovereign 20 nations. They don't always fit neatly into the 21 federal-state structures that have evolved over time. 22 And we need to take that into account as we develop our 23 universal service programs, in particular, as the 24 Chairman mentioned, our Lifeline and Link-up programs. 25 So I think highlighting on some of these GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 14 1 issues is very useful. These are things that we may 2 very well be able to address. And I think that this has 3 been an extremely helpful opportunity for us to have 4 these conversations on these kinds of issues. 5 It is frustrating when you can't get basic 6 telephone service, especially in a world that is moving 7 towards broadband communications which will provide a 8 wealth of new opportunities, including the opportunity 9 to start businesses at home, using Internet technology 10 to expand one's horizons, and the like. I look forward 11 to this hearing to determine or to see or to hear some 12 creative ideas as to how we can leapfrog technology. 13 Yes, we need to provide basic telephone service, but 14 let's not have blinders on and stop there. Let's think 15 about how we can leapfrog technology and provide new and 16 innovative services that will be able to provide a great 17 deal of economic growth for this area and for the local 18 populations. 19 So I'm delighted to be here. I want to 20 thank you again, Governor, for your kindness in hosting 21 this hearing. I look forward to hearing from our 22 speakers today. 23 CHAIRMAN KENNARD: Thank you, Commissioner 24 Ness. 25 Commissioner Furchtgott-Roth. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 15 1 COMMISSIONER FURCHTGOTT-ROTH: Thank you. 2 Mr. Chairman, Commissioner Ness, I'd like to echo your 3 comments to Governor Thomas, to the governors of the 4 other tribes, to the chairmen and presidents of the 5 other tribes who are present. I'm deeply honored to be 6 here today, deeply humbled to be here at this meeting. 7 As a federal official, we often have difficult problems 8 before us. One of the most important things the 9 government can do is not just to decide but to listen. 10 And we have come here today to learn, to understand 11 better issues that we do not understand well in 12 Washington. 13 I grew up in east Tennessee in a city 14 called Knoxville. My mother grew up in the hills of 15 western North Carolina in a place called Jackson County. 16 Her father, my grandfather, was a doctor there, the only 17 doctor in the county. At the edge of the county was a 18 Native American Indian reservation. We went to visit my 19 grandfather once a month when I was growing up. We 20 crossed the Smoky Mountains, and we'd drive through 21 Cherokee. And Cherokee was a town that at the time made 22 a lot of its money through tourism. Everything was 23 gaily painted. From the outside it looked very pretty, 24 very compelling, very attractive. I always had a very 25 distinct memory, though, when we drove through Cherokee, GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 16 1 that my parents did not smile. They would see someone, 2 and they would say, "That's a very poor man." My 3 parents knew a lot of difficulties growing up. They 4 always sided with the underdog, and they had a great 5 deal of empathy for the people of Cherokee. My 6 grandfather was a doctor at the BIA clinic at Cherokee 7 for many years. 8 When I was growing up, the poverty that I 9 knew was not an urban poverty. Knoxville, I thought, 10 was the center of all wealth in the world. The poverty 11 that I saw was the poverty in the rural areas when you 12 drove from Knoxville to western North Carolina, to this 13 sort of forgotten valley. And the area around Cherokee 14 was perhaps as poor as any that I'd ever seen. 15 So I'm very humbled to be here today. I 16 know the federal government has done many good things in 17 the past 200 years, but I'm not sure that listening to 18 the problems of Native Americans has been a strong suit 19 of the federal government, and I'm sure that all of us 20 here today would like to do a better job of that. 21 Thank you, Mr. Chairman. 22 CHAIRMAN KENNARD: Thank you very much, 23 Commissioner. 24 Now I would like to read a statement from 25 Commissioner Gloria Tristani, who would very much like GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 17 1 to be here today, was with us in New Mexico, but 2 unfortunately, because of a pressing family matter, was 3 not able to join us today. But she did ask me to convey 4 her greetings to you, and also I wanted to read the 5 statement that she has asked to be put in the record 6 today. 7 Commissioner Tristani writes: 8 "I regret that I cannot join you this 9 morning for this important field hearing on access to 10 telecommunications by Indians on reservations. As you 11 may know, I joined the Chairman in New Mexico a few 12 weeks ago for a field hearing on this issue. I was 13 moved by the stories we heard about life without basic 14 telephone service, and I was greatly impressed by the 15 creative ideas proposed by those testifying as to how we 16 can get at this problem. 17 "I hope this morning's hearing will be just 18 as fruitful. I know that with the participation of the 19 Chairman, Commissioner Ness, and Commissioner 20 Furchtgott-Roth, the FCC is well represented. 21 "When I looked over the list of people 22 giving testimony this morning, I was struck by the 23 quality and diversity of views that are represented. I 24 have no doubt that today's hearings will build upon the 25 first hearing we held and will produce additional GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 18 1 insights and potential solutions. 2 "The New Mexico hearing energized me to 3 find ways to improve access to telecommunications on 4 Indian lands. I hope today's hearing will have the same 5 effect on my colleagues, and I very much look forward to 6 working with them on this issue when they return. 7 "Best wishes for a successful hearing." 8 I would note that Karen Gulick, an advisor 9 to Commissioner Tristani, is here today, and I'm sure 10 that she will get a full and complete and comprehensive 11 briefing from Karen about what happened today. 12 Next I'd like to introduce someone who has 13 been a very good friend of the FCC and a friend of all 14 people in the country who are working to bring 15 telecommunications access to rural Americans. His name 16 is Chris McLean. Chris is the Deputy Administrator of 17 the Rural Utilities Service and Deputy Governor of the 18 Rural Telephone Bank. 19 I didn't know you had that title as well, 20 Deputy Governor. 21 MR. McLEAN: It's wonderful. Whenever the 22 governor, who is the administrator of the Rural 23 Telephone Bank, is gone, I get to be acting governor. 24 So I call mom and tell her that her son is the acting 25 governor on those two days. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 19 1 CHAIRMAN KENNARD: That's pretty cool. We 2 have two governors here today. 3 Prior to joining RUS, Chris worked on 4 Capitol Hill for 15 and a half years. He was a founding 5 member of the Senate staffers known as the Farm Team who 6 helped craft the universal service and rural provisions 7 of the Telecommunications Act of 1996. The RUS helps 8 finance rural electric, telecommunications, and water 9 projects and administers a distance learning and 10 telemedicine loan and grant program. 11 Just as an aside, when we visited the 12 telecommunications facility yesterday at Gila River, 13 Darrell Gerlaugh, who we'll hear from later -- he's here 14 somewhere -- was talking about all of the various 15 agencies that supported him in pulling together a very 16 successful telecommunications company, and RUS was on 17 that list. 18 So we're happy to have you here, Chris. 19 MR. McLEAN: Thank you very much. 20 Mr. Chairman, Commissioners, Governor, distinguished 21 panelists, it is a great pleasure to be here today. And 22 in visiting Gila River you get to see what is so 23 wonderful about my job. I am perhaps the luckiest 24 person at this panel because I get to see, day after 25 day, how rural Americans and Native Americans are able GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 20 1 to pull their resources together and conquer some very 2 difficult problems. 3 This year in 1999 is the 50th anniversary 4 of President Truman signing the Rural Telephone Act, and 5 I can think of no better way of celebrating that 6 anniversary than celebrating the accomplishments of the 7 RUS Native American borrowers. 8 Improving the quality of life for Native 9 Americans is a priority for President Clinton, 10 Vice President Gore, Secretary Glickman, and the Rural 11 Utilities Service. In telecommunications the Rural 12 Utilities Service is making very significant investments 13 in tribal communities. While my remarks will focus on 14 the key issues involved in establishing and operating 15 successful tribally-owned telecommunications companies, 16 I do not want to underemphasize the work of the 60 17 nontribal RUS borrowers who serve Native American 18 communities. They too are heroes in the RUS success 19 story. 20 I also encourage the Commission to remember 21 that the problems we see in tribal areas are, in many 22 cases, extreme magnifications of problems with high-cost 23 rural service throughout the nation. These problems 24 cannot be solved without a predictable and sufficient 25 universal service support system. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 21 1 The RUS has made loans to five tribal 2 entities, most of whom are represented on the panel 3 today, and they speak volumes of the success. I mean, 4 they're our best example of the success of the Rural 5 Utilities Service program. Those five borrowers provide 6 service to about 8,000 Native American subscribers, and 7 the 60 nontribal borrowers also provide service to about 8 27,000 Native Americans. In addition, this year we 9 anticipate two new loans to tribal entities new to the 10 RUS program. And we're having very detailed discussions 11 with tribal entities in California, Arizona, New Mexico, 12 Colorado, and North Dakota. 13 In addition, we administer a distance 14 learning and telemedicine loan and grant program and 15 have provided financial assistance totaling $5.8 million 16 in grants and $247,000 in loans for improved educational 17 and medical services on reservations. 18 RUS has also enhanced its tribal outreach 19 efforts in recent years, and I'm very pleased to 20 announce today that the Rural Utilities Service has just 21 agreed to participate in a summer intern program with 22 students from Native American tribal colleges. 23 We are particularly proud that RUS 24 involvement with tribal borrowers has resulted in 25 substantial improvements in telecommunications services GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 22 1 on reservations. At the five tribal entities in the RUS 2 family, initial penetration rates for telephone service 3 before RUS involvement averaged about 28 percent. Those 4 rates have risen to 78 percent today, and we anticipate 5 even higher penetration rates as several borrowers are 6 still completing construction of facilities. 7 But one fact is critically important. 8 Forming a new telecommunications company in today's 9 environment is a very formidable task. The Rural 10 Utilities Service provides advice and assistance in 11 formulating plans for designing and constructing plant 12 and financial requirements for obtaining RUS loans. I 13 am pleased to share with the Commission the advice that 14 we give to tribal entities interested in establishing 15 their own telecommunications companies. Based on our 16 experience in rural telephony with 850 borrowers across 17 this great nation, we recommend three distinct areas 18 that should be carefully considered. 19 First, the quality of existing service. Is 20 there a carrier in your community that may be able to 21 extend service to unserved areas? Is there existing 22 infrastructure in your community that you can take 23 advantage of? 24 Secondly, the type of service that you wish 25 to provide. Are you going to be providing just basic GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 23 1 telephone service, or are you going to look forward to 2 providing broadband services that include data, voice, 3 and video? 4 And also, third, the availability of 5 utility expertise, qualified management, and human and 6 financial resources. And perhaps that third element is 7 one of the most important factors in success for any 8 telecommunications company. It is essential that a new 9 company have management with telecommunications 10 experience. In today's environment, almost every 11 decision can have far-reaching consequences on revenues 12 and expenses. 13 A tribal authority may also wish to 14 consider partnership of private-sector nontribal 15 telecommunications companies. Two of our five RUS 16 tribal borrowers did this. The tribe was, therefore, 17 able to gain broad management experience and financial 18 resources very quickly. And in one of these examples, 19 which you'll hear today, one of our borrowers has 20 negotiated for full ownership of the company for the 21 tribal authority. 22 Other key elements that we think are very 23 important to success of tribal entities is, one, that 24 the operation of the telephone company be independent 25 from the tribe's financial accounting. It's important GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 24 1 that the telephone company not have their resources 2 swept into the tribe's general resources and vice versa. 3 The tribe also needs to consider that 4 start-up problems should not be underestimated. It is 5 not an easy thing to start a tribal telephone company, 6 as our witnesses will tell you. 7 And tribal communities also have to 8 consider all of their financing options, including RUS 9 and lenders that are often closely linked with RUS, like 10 the Rural Telephone Finance Corporation and CoBank. 11 And the tribe must have access to 12 experienced consultants. In many ways the availability 13 of consultants and the reliability of consultants are 14 the places where you can make your decisions that have 15 far-reaching consequences. It's a source where if you 16 make the wrong decision, you could spend a lot of money 17 and get nowhere fast. So you have to have a high degree 18 of confidence. 19 My time is up here. I just want to point 20 to the couple of recommendations that we have from the 21 RUS to the Commission to look at on how to solve tribal 22 problems. There are no easy solutions, but first the 23 Commission could look to simplifying and clarifying its 24 rules as to tribal authority. 25 Secondly, we find that there are GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 25 1 significant problems with rights of way. The Commission 2 could help coordinate rights of way between federal and 3 state authorities, because we have seen delays in rights 4 of way, due to arguments between Bureau of Indian 5 Affairs, Bureau of Land Management, and even our own 6 Forest Service at times within the Department of 7 Agriculture. 8 The carrier of last resort provisions of 9 the Telecommunications Act should be implemented in a 10 way that works for tribal jurisdictions. 11 And the universal service support 12 mechanisms are absolutely essential to success to have 13 affordable rates here, particularly when you're looking 14 at taking over existing exchanges from current 15 telecommunications providers. The support mechanisms 16 should not penalize you from acquiring an exchange from 17 one of the larger telecommunications companies. 18 Lifeline should be enhanced for tribal 19 areas. We strongly support Gila River's petition to 20 waive state match for Lifeline. 21 And spectrum should be made available to 22 provide workable broadband services in rural and remote 23 areas. 24 And then, finally, we encourage the 25 Commission to experiment with solutions for communities GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 26 1 without service, such as perhaps allowing "in kind" 2 universal service contributions, providing for buydowns 3 of high-cost infrastructure and support for connection 4 charges. 5 Thank you, Mr. Chairman. 6 CHAIRMAN KENNARD: Thank you very much, 7 Chris. 8 Since we have a lot of witnesses today, and 9 we are on kind of a tight schedule, I'm going to ask 10 Eric Jensen to get the witnesses' attention and sit in 11 the front row there and give the high sign or hold up a 12 sign or something when time is up. There's Eric. He's 13 always moving. 14 All right. Thank you. Our next witness 15 will be Governor Mary Thomas. As Commissioner Ness 16 mentioned earlier, we had the opportunity to spend a few 17 hours with Governor Thomas yesterday, and we learned a 18 little about -- we learned a lot about the tribe, and we 19 learned a little about her life and how she came to lead 20 the tribe. And I must say that listening to her really 21 exemplified, in my mind, the very best about public 22 service and why we are in government to serve the 23 people. 24 So, Governor Thomas, thank you again for 25 being here. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 27 1 GOVERNOR THOMAS: Thank you. Thank you, 2 Mr. Chairman. I want to say that it was a delight to 3 have you come visit Gila River, and we are glad to be 4 your host. It was so easy because you were there with 5 no preconceived notions about Gila River itself. And 6 when you saw firsthand what we are facing here on Gila 7 River, it was just so easy to relate to you, and you 8 understood, and you made a commitment to helping us do 9 something about these issues. 10 The Gila River Telecommunications Company 11 was set up because we were facing some challenges at the 12 time, and that was the cost of installing basic 13 telephone services to the community residents. They 14 were getting so out of hand and requiring us to come up 15 with a large sum of money in order to get hooked up, 16 even though the telephone poles were really close by. 17 And one of these was one of the original founders of the 18 Gila River Telecommunications Company, and that was 19 former Governor Thomas White. He was the one who 20 started this whole process about inquiring why US West 21 was not serving our community in the way it should have 22 done. So we decided to undertake this challenge and set 23 up our own telecommunications service, with the help of 24 another company in Oklahoma called NATELCO. 25 After we took over the services, we were GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 28 1 appalled as to the condition that the telephone lines 2 were in. And we were amazed at how our 3 telecommunications services were handled through 4 antiquated lines, through brittle lines, and how they 5 barely met the standards. So we took that under our 6 control as a self-determined nation. And we have made 7 great strides, but we are still below the average. As 8 Commissioner Kennard mentioned, over 90 percent of this 9 country is hooked up to some sort of telephone service. 10 On most reservations, and particularly mine, it's down 11 to 34 percent. So we are making great strides in that, 12 in offering low-cost telephone hookup lines to the 13 residences who do need them. 14 It is ironic that this country has treated 15 the American Indians so differently and put us on 16 reservations, and our earliest form of communications 17 was to have relay runners crisscross the reservations to 18 bring us the news, to bring us emergency situations, and 19 just things in general, even the death of family 20 members. And these were done through runners that 21 crisscrossed the reservation. Now we are in a high-tech 22 age. We are looking at improving the most modern 23 technologies or using modern technologies in order to 24 network and to communicate. And I also want to mention 25 the communication efforts during the wars when the GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 29 1 Navajo code talkers were used, using their own native 2 language to relay information. I think that's so 3 significant and what contributions the American Indians 4 do make in regards to telecommunications. 5 One of the problems that we face here is 6 the universal service funding. There is a threat now 7 for redistribution of those funding efforts. And I 8 believe 75 percent is targeted for state funding, and 9 that will reduce our funding which we now enjoy at 10 100 percent down to 25 percent. We hope that the FCC 11 will give full consideration of any proposal that may 12 adversely impact the current funding mechanism. 13 One of our other barriers is public safety 14 frequencies as utilized by our law enforcement, fire, 15 and other emergency operations. It is critical to our 16 community because of the tremendous growth in our law 17 enforcement and fire departments. 18 And we have faced many difficult issues 19 regarding emergency situations. As you know, we have a 20 dry riverbed now running through here. Once it was 21 running annually, but when there is a potential for 22 flooding because of the heavy rains that occur in the 23 mountainous areas, most of the water will flow down by 24 gravity through this reservation. We have been 25 predicted to have hundred-year floods on this GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 30 1 reservation, and within the past 10 years we have 2 received two hundred-year floods. And so that created a 3 new and unusual effort to try to communicate to our 4 residents how hazardous it was for them and that they 5 need to evacuate certain areas. We found that our 6 frequencies were not adequate enough. 7 We only have two frequencies here on Gila 8 River, and we have been working with the State 9 representatives to try to get us onto more frequencies. 10 Sometimes our frequencies become so loaded, because 11 other reservations are using them, that they get tied up 12 and bogged down because of the response that is needed. 13 And so we face that, and we would ask that you strongly 14 consider allocating frequencies directly to Indian 15 communities. 16 Basic services, advanced services, and new 17 technologies. It's our goal to provide our community 18 members with basic telephone service. We also have 19 goals to broaden our services, including expanded 20 wireless service. I believe the mountains surrounding 21 our reservation create a great potential in order for us 22 to do this, and with your help we may be able to 23 accomplish this in the next few years. We ask that the 24 digital microwave broadcast solution be approved for use 25 as soon as possible. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 31 1 And in our goals to provide the 2 best-quality services to our community members, it will 3 greatly help us if the FCC would approve or adopt a 4 policy statement recognizing the sovereign status of 5 federally-recognized Indian tribes. It is in line with 6 the memorandum sent out by the President in the past 7 three years for a government-to-government relationship 8 with Indian tribes and recognize them as sovereign 9 governments so that we can form policies together in 10 order that we can help each other out. So we need to 11 conduct necessary discussions and negotiations with 12 tribes on that basis. 13 Mr. Chairman and the Commissioners, I 14 believe we have made great progress in having you come 15 visit us and becoming our friends, because it was stated 16 by the Dalai Lama at one time that when you make a 17 friend once, you have a friend for life. And I hope 18 this is the case. 19 We have come a long way, but we still have 20 a long way to go. And with the situations in the Indian 21 communities across this country, the relay of messages, 22 as I once mentioned earlier in my statement, is still 23 ongoing in some of the remotest areas across Indian 24 country. And sometimes it is preferable on a 25 face-to-face contact, but with the technology coming up GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 32 1 we just want to be a part of that. We want to become 2 part of mainstream America and enjoy those quality 3 services and, I guess, just assure you that we are 4 looking out for each other, as a self-determined nation, 5 and we want to also expand out to the communities 6 surrounding our nations and become true partners in what 7 America is all about. Thank you. 8 CHAIRMAN KENNARD: Thank you very much, 9 Governor. That is not too much to ask. 10 Our next witness is Chairman Siyuja, Thomas 11 Siyuja, Jr., who is Chairman of the Havasupai tribe. 12 He's not here. Oh, I'm sorry. We will 13 call his name later and hope that he appears. 14 Then next we'll go to J.D. Williams, 15 general manager of the Cheyenne River Telephone 16 Authority. 17 MR. WILLIAMS: Thank you, sir. On behalf 18 of the Cheyenne River Sioux Tribe and its tribal 19 Chairman, Greg Bourland, I am happy to be here to 20 represent them and also to thank Governor Thomas for the 21 hospitality, and GRTI and Darrell Gerlaugh, that we are 22 always treated as family down here, and it's a great 23 feeling to be here. Today we bring our comments to this 24 meeting in hopes that it helps some way that Native 25 Americans can benefit in the world of technology. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 33 1 Our tribe is located in north central South 2 Dakota. We have a population of just over 11,000 people 3 in a 4600-square-mile area about the approximate size of 4 Connecticut. Our reservation comprises 2.8 million 5 acres, very rural. 6 Our business began in 1958 and enjoys the 7 distinction of probably being the oldest 8 Native American-owned telco in the United States, and so 9 we have a deep history in being involved in technology. 10 It is one of the major employers in our local economy. 11 And with that long history, our penetration rate is now 12 only at 75 percent. We don't believe that's acceptable 13 when the rest of the United States is 90-plus percent. 14 We've got a lot of people out there that do not have 15 connectivity, and we hope that solutions from today's 16 meeting will increase that penetration rate. 17 Our reservation residents enjoy a lot of 18 things that come from the telco operation that's owned 19 by the Cheyenne River Sioux Tribe. We are a RUS 20 borrower. That relationship began in 1974 and has grown 21 into a diversified business operation since that time. 22 Today we offer digital switching, a fiber backbone that 23 carries our toll transmission, digital carrier service 24 that goes out to most of our residents across the 25 reservation. It's underground one-party service that's GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 34 1 very important in our area because of the blizzards and 2 the severe conditions that we face in rural South 3 Dakota. We also offer paging. We just started up 4 Lakota Networks, which is a reservationwide Internet 5 service provider. And along with those diversified 6 operations on the telecommunications side, we also have 7 a subsidiary that has an office supply retail business. 8 We also offer cable television and direct broadcast 9 satellite to the entire reservation. And we also 10 operate a retail propane company across the reservation. 11 In relation to that, also, we've just 12 recently formed a subsidiary called Lakota Technologies, 13 Inc., which in December was approved by the Small 14 Business Administration as an 8(a) firm, and it is a 15 data processing company. We hope to build that into a 16 high-technology job creation business. 17 And, as a matter of fact, as we got on the 18 plane yesterday, the USDA department called and said, 19 "How would you like to become a hot site for USDA?" And 20 they envision creating five to ten jobs in Eagle Butte, 21 South Dakota, basically emulating their data processing 22 center out of Kansas City, but it looks like a 3 to 23 5 million dollar potential project over a five-year span 24 and the creation of five to ten jobs. And we're totally 25 excited about what that future may involve, but the GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 35 1 reason that happens is because we're doing it ourselves 2 and we have technology that's available. And so it's 3 just great news, and the enthusiasm is high in our area. 4 What we think that has to come from this 5 meeting and our solutions that need to be offered I 6 think are many, and it comes from the experience that 7 we've had to live and deal with. 8 We believe that, first of all, the drive to 9 excel and to promote this has to come from within the 10 tribe. That's where it needs to start. And we, as 11 Indian telephone companies and Indian tribes that have 12 been in this business, need to educate. Tribal 13 governments must recognize the responsibilities of 14 sovereigns in this area. And tribes must examine the 15 issues and really educate themselves about the problems 16 and potential solutions. 17 The FCC has offered its hand in the spirit 18 of a government-to-government relationship, and tribes 19 must now meet this challenge by working with the FCC to 20 ensure that Indian communities will have access to the 21 mere basics and, perhaps later, advanced technology in 22 the telecommunication area. The FCC must establish a 23 government-to-government relations policy concerning 24 Indian tribes. That is not there today. This policy 25 should be implemented in the FCC's rules so that any GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 36 1 action by a carrier, a state government, or by the FCC 2 that potentially affects an Indian nation, the action 3 will be addressed in a manner that's consistent with the 4 Federal Trust responsibility by individuals versed in 5 tribal issues and federal Indian law. The FCC now is 6 just learning about what us Indians are about, and we 7 are happy about that, but it's a very detailed process 8 that this must go through. 9 The following are a few specific examples 10 that CRST Telephone and the tribe believe that the 11 application would fit within such a policy. 12 Number one is that the federal portion 13 universal service should be 100 percent. Companies are 14 staying away from Indian country because it's a 15 high-cost area and the ruralness of many of these Indian 16 reservations. Universal service in the future we 17 believe will be a key element that will stimulate 18 telecommunication companies to consider investing in the 19 infrastructure in these areas. Without it, it's going 20 to be even a bigger struggle for folks to even look at 21 and folks to stay in the business. 22 We believe a consideration is the 23 continuance of the hardship funds under the Rural 24 Utilities Service and perhaps even designed for the 25 specific needs of Indian country. All telecommunication GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 37 1 companies serving these areas would have access to these 2 funds, and these low-cost interest funds under this 3 program would remain as an incentive for investment in 4 these high-cost areas. 5 We believe that there should be 6 consideration by the FCC to provide for a specific 7 allocation of spectrum that will benefit Indian country. 8 As a general rule, Indian tribes have not been involved 9 in any part of this concerning the spectrum auctions. 10 And there are specific cases that wireless technology 11 will work to provide basic and advanced service to 12 Indian country. Saddleback Communications right here in 13 the Salt River reservation is a great example of what 14 new technology will do for Indian country. In addition, 15 the FCC could consider a specific waiver process that 16 would eliminate -- that would allow for specific 17 allocation or specific applications of the wireless 18 technology to certain situations in Indian country. 19 We, as CRST Telephone, promote service 20 affordability within Indian country. Affordability 21 comes into jeopardy with the FCC reviewing access charge 22 reform and its proposal to shift the common carrier line 23 element to the local rate portion. Many reservations 24 are considered to be some of the poorest sections in 25 America. Our reservation has a constant 60 percent GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 38 1 unemployment rate, and this fits many of our 2 reservations. Significant local rate increases will 3 mean that Indians will not be able to afford a telephone 4 even if it's right there in their house. Right now we 5 have -- of the 2900 access lines, the Link-up program, 6 we have 240 people that qualify under that program. 7 That's going to nearly come to a 10 percent level of our 8 total access lines. And so that gives a significant 9 review of how poor our country is. I mean, that 10 10 percent is an awful lot. 11 The Telecommunications Act of 1996 needs to 12 apply across the board to all telecommunications 13 companies in America. The FCC recently addressed the 14 Consolidated Telephone Cooperative versus Western 15 Wireless, Inc., issue -- that is located 160 miles to 16 the north of our company -- with the statement that it 17 would be on a "rocket docket" to guarantee competition. 18 Indian telecommunication issues before the FCC need to 19 be dealt with in the same expeditious manner. 20 The FCC in this federal policy needs a 21 recognition of tribes, tribal lands, and tribal laws. 22 That must be included in future involvement with the FCC 23 and possible development of those Indian policies. 24 Carriers should be required to clarify any modification, 25 reduction of services, or discontinuance of common GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 39 1 carrier telecommunications services. Any and all 2 transfers of control of telephone exchanges that are 3 located on tribal lands should require prior notice to 4 and approval of the local tribal government. Today many 5 tribes wake up and an exchange will be sold, and it will 6 be a couple years before they even realize that perhaps 7 something has changed. They never had one notice or one 8 opportunity to participate in those bidding processes. 9 The FCC should explicitly notify tribal 10 governments of actions to be taken with respect to 11 services provided on tribal lands by all carriers. 12 Sufficient advance notice should be provided to permit 13 meaningful consultation with those tribes. 14 We believe that this is just a mere 15 sampling of what issues and concerns that, at least from 16 the Cheyenne River Sioux Tribe, we believe are on the 17 table and that we must start communicating with the FCC. 18 We also believe that connectivity to the super 19 information highway needs to happen in Indian country 20 because there is going to be developing disparity 21 between the have's and the have not's. And we, as 22 Native Americans, sure do not want to see us as the have 23 not's and to continue on as the forgotten Americans. 24 So with that, I appreciate the opportunity 25 to address you. Thank you. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 40 1 CHAIRMAN KENNARD: Thank you very much. 2 Next we will hear from Nora Helton. 3 Chairman Helton is the chairperson of the Fort Mojave 4 Tribe. 5 CHAIRPERSON HELTON: Good morning. Before 6 we get started, I just want to thank our Creator for 7 giving us this day and allowing us to come together as 8 tribal governments and nations to represent the 9 interests of our people regarding telecommunication. 10 Mr. Chairman and Commissioners, I'm very 11 honored and pleased to be here before you today to 12 present testimony on behalf of the Fort Mojave Indian 13 Tribe and also Fort Mojave Telecommunications, 14 Incorporated. My name is Nora Helton. I am the 15 chairperson for the Fort Mojave Indian Tribe. 16 The Fort Mojave Telecommunications Company 17 was formed back in 1988, and the basic reason for 18 establishing telephone and cable service on the 19 reservation was to provide comprehensive service to our 20 people. Before our telephone service, we paid a high 21 rate just to connect to service in general. We have two 22 reservations -- actually three reservations in 23 California, Arizona, and Nevada. Two of those villages 24 where we provide living space for our people are in 25 Arizona and California. The Fort Mojave Tribe is GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 41 1 composed of 1,040 tribal members. So already you see 2 dealing with three different states, counties, and 3 different representatives, commissioners, within the 4 reservation already makes it a difficult task to try to 5 accomplish any type of governmental cooperative 6 agreement with those entities that have had the monopoly 7 for over 35 years. 8 When the Fort Mojave Tribe decided to 9 undertake and follow in line with our brothers and 10 sisters from Gila River, we also entered into an 11 agreement with the Dobson Communication telco company, 12 who is a communication service out of Oklahoma City who 13 had over 50 years of telecommunications experience. And 14 with the tribe's small population and also not having 15 that type of expertise, we thought it was in the best 16 interests of our tribe to go ahead and follow and go 17 along with someone that did have the experience. 18 The Fort Mojave Tribe currently has a 19 network which is switched by a Nortel DMS-10 and three 20 remote Nortel offices. The network is connected with 21 26 miles of fiberoptic cable and terminal equipment. 22 The Fort Mojave Tribe is proud of its network 23 flexibility. By means of add/drop optic equipment and 24 digital line carrier, total digital service can be 25 established efficiently and quickly to anywhere on the GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 42 1 reservation. 2 I want to note that the area on the Arizona 3 portion of our reservation is checkerboarded, so every 4 other mile is tribal/nontribal. So we've had the 5 difficulty of rights of way and dealing with the powers 6 that be that don't want to allow you to have access to 7 provide that service on portions of the reservation that 8 are remote and don't have service. Prior to that, in 9 1972 the reservation itself was not totally developed, 10 and those nontribal interests developed on those other 11 areas in portions of the reservation. Where currently 12 now the tribe has become more of the developer in 13 developing its resources. We have a number of 14 businesses and other projects that we've undertaken and 15 provided service to. And so that was one of the other 16 reasons why we wanted to establish service on the 17 reservation was to control growth of the reservation and 18 provide service to our people. Fort Mojave 19 Telecommunications returns to the more customer-service 20 oriented manner of doing business and provides 24-hour, 21 7 days a week emergency service. 22 The Fort Mojave Telecommunications Company 23 is staffed with qualified personnel, nine, and a 24 majority of those are tribal members. We currently 25 serve four exchanges: two in Arizona, one in Nevada, GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 43 1 and the other in California, which we just recently took 2 over, in California, in September. Fort Mojave 3 Telecommunications currently serves 680 active service 4 lines. 5 We are looking to try to attempt to receive 6 interconnect services. We do have to go through another 7 company to provide that service. I think the other 8 thing about it is locally we can have that service 9 provided on our own exchange, but when we make calls off 10 like into Laughlin, Nevada, which is only five or seven 11 miles up the road, it's a long-distance call for us. 12 And we have that same problem when we try to call into 13 Arizona or into California off reservation. We get 14 charged a toll fee for that. But if it's on 15 reservation, we don't have that charge. 16 We are governed by a seven-member board. 17 Five are from the tribe itself, and two are from 18 NATELCO. 19 I don't want to go over and reiterate some 20 of the other items that were brought up by the members 21 that were here, but we do echo those same concerns and 22 comments on the reservation that we provide service to. 23 We also have a number of people on the reservation 24 that are nontribal members. We have two projects: one 25 in Arizona; the other in Nevada. And so that service to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 44 1 them is something that they also look forward to the 2 tribe to providing good service to them. Internet is 3 something that they all want to tie into, but currently 4 we're unable to do that only because we can't find a 5 provider without paying a high price to provide that 6 service to the reservation. 7 Just some general comments I'd like to make 8 in reference to overcoming some obstacles that we've 9 noted during our experience in working in this industry 10 for such a short time, but yet it's an experience that I 11 think will help other people understand the struggles 12 that we've gone through to provide service to our 13 reservation. 14 First of all, we want to encourage RUS and 15 other funding mechanisms that must continue to be made 16 available to Indian tribes who choose to become their 17 own providers of service on reservation. 18 Each tribal reservation has the exclusive 19 right to provide telephone service to their sovereign 20 nation. The nation's legal system should not hinder 21 this. 22 Initial construction charges should not 23 have to be borne entirely by the customer wanting 24 service. 25 Along these same lines, alternative methods GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 45 1 of services, i.e., wireless, should be given serious 2 consideration. 3 To combat the high cost of toll, there 4 should be a concerted effort to provide lower-cost 5 calling throughout each reservation. 6 Federal universal service programs must 7 allow the unconnected to get connected. Tribal areas 8 have by far the most unconnected potential customers in 9 the country. 10 Indian reservations should have first 11 choice at receiving the wireless spectrum rights for 12 their areas. The FCC has auctioned off the reservation 13 areas without prior approval of the tribes. 14 State commissions must give reservations 15 the ability to use their tribal councils as their state 16 governing body for most issues, like we've already set 17 up on our reservation. 18 Reservations should be allowed to tap into 19 state high-cost funds if they abide by the state's 20 high-cost fund rules or a more relaxed set of rules for 21 the reservations, addressing the concerns of the 22 reservation itself. 23 Technology is not the problem. It is the 24 cost of providing service that is the problem. We can 25 get service to these customers if we want, but the GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 46 1 challenge has been either recovery of costs, or for the 2 larger providers it has sometimes been neglect. They 3 have other areas that are more lucrative, so they 4 concentrate their efforts there. 5 Emergency services and education will be 6 enhanced with higher penetration rates. 7 Some current providers have been receiving 8 tens of thousands of dollars of USF monies for 9 reservation areas, yet the service in these areas 10 continues to suffer. 11 Installation times are high. 12 With those comments that I've made, I think 13 taking on the responsibility of providing that service 14 on reservation, not only in the area of 15 telecommunication and cable service, has really 16 strengthened the tribe's self-determination and tribal 17 sovereignty on reservation by exercising its inherent 18 right to provide service to the reservation. I know we 19 hear oftentimes of people or companies who look at 20 competition, and they look at the win-win situation when 21 they go out and do business, on a reservation it's a 22 little bit difficult when you're having to pay these 23 high prices and having to deal with people who don't 24 understand the setup of the tribes, the sovereign 25 rights. We have to provide for our people in the best GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 47 1 way that we know how based on our culture, our heritage, 2 and the way that we believe our people should be 3 treated. 4 With those comments, I just would like to 5 thank you for providing us this time this morning to be 6 here to echo our concerns and contributing to hopefully 7 some meaningful consultation with your Commission. 8 In dealing with RUS, we've had a very good 9 relationship with them. Since we started, most of our 10 funding has come from them to establish our service in 11 Arizona and in Nevada. We're currently looking at 12 California right now and finding ways to cross the river 13 to pick up those areas as well. And it's just a small 14 portion, but yet it's something that has contributed to 15 the success of our tribe, and it's allowed us to 16 continue to provide the best service that we can to the 17 reservation. Thank you. 18 CHAIRMAN KENNARD: Thank you, 19 Chairperson Helton. 20 Our next witness is Chuck Wiese, who is the 21 general manager of the Tohono O'odham Telecommunications 22 Company. 23 MR. WIESE: Thank you, Mr. Chairman, 24 Commissioners. We appreciate this opportunity to give 25 our perspective on this issue. We think the TOUA has GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 48 1 enjoyed some measure of success in accomplishing this 2 goal in part due to the existence of federal programs 3 which advance universal service objectives. 4 TOUA is the utility authority for the 5 Tohono O'odham Nation, a federally recognized tribe. In 6 addition to telecommunications service, we also provide 7 electric, water/wastewater, and propane service to the 8 Nation. The reservation consists of four separate 9 reservation lands in the Sonoran Desert and covers a 10 total area about the same size as the state of 11 Connecticut. The largest, known as the Tohono O'odham 12 reservation, stretches 90 miles across Pima County and 13 extends to the Mexican border. We have three smaller 14 reservations: the Gila Bend reservation, the San Xavier 15 reservation near Tucson, and Florence Village. 16 TOUA is the oldest tribal telephone company 17 in Arizona. Following the August 1987 purchase from 18 US West of old facilities serving 390 subscribers across 19 more than 4,000 square miles of Tohono O'odham 20 reservation, TOUA established and implemented a plan to 21 provide initial and improved service for all the 22 residents of the reservation. Today TOUA serves nearly 23 eight times the number of subscribers served by US West 24 in 1987. It translates into an increase in the 25 residential penetration rate from less than 20 percent GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 49 1 to over 70 percent today. This progress I think is a 2 testament to the commitment of the tribal authorities to 3 ensure that tribal residents are afforded access to 4 basic services. 5 TOUA was the recipient of a community block 6 grant, the proceeds of which were used to finance the 7 purchase of the facilities from US West and to provide 8 start-up operating funds. TOUA is a Rural Utilities 9 Service borrower and has utilized these funds to 10 construct the facilities required to provide service 11 throughout the reservation. Through the years of 12 operation, we have also been the recipient of federal 13 universal service funds which have assisted in the 14 defrayal of capital costs of improvements and also 15 assisted in maintaining affordable access rates. 16 Currently TOUA subscribers pay a monthly residential 17 rate of $10.36 per month. Our business rates are $21.80 18 per month. The community has experienced economic 19 growth over the past decade largely because of the 20 existence of a service infrastructure that supports the 21 development. 22 We have also assisted the community by 23 contributing to the provision of safety, health, and 24 educational services. The Nation, assisted by TOUA, is 25 the recipient of a RUS grant for distance learning, and GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 50 1 we have assisted the schools in our service territory in 2 applying for telecommunications discounts. We have 3 assisted the police department in establishing the 4 enhanced 911 system and assisted in the establishment of 5 the telecommunications infrastructure to support their 6 emergency services. Two years ago we launched an 7 Internet service for the residents of the reservation. 8 Encouraged by this progress so far, we are 9 now embarking on the next steps, ensuring that the types 10 and quality of service available to the reservation is 11 equivalent to that enjoyed by citizens in other areas of 12 this country. TOUA is in the process of accepting bids 13 for a new switch which will provide for equal access 14 capability and CLASS functionality. Upon deployment, 15 subscribers will be able to enjoy the ability to reach 16 an interexchange carrier of their choice on a 1+ dialing 17 basis, and they will have access to Caller ID, automatic 18 callback, and other CLASS features. 19 In addition, the population of the tribal 20 lands is increasing rapidly, requiring constant 21 augmentation and upgrading of facilities. We have 22 budgeted $5 million over the next 36 months to meet the 23 needs of this community. We take all of our proceeds 24 from operations and our margins and plow them back into 25 upgrading existing service, extending service where it's GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 51 1 requested, and providing advanced services where 2 economically feasible. We don't enjoy a lot of 3 economics of scale. We only have 4.4 customers per 4 route mile. That's -- we have less than one access line 5 per square mile. Our progress thus far is directly 6 related to the availability of predictable sources of 7 funding. The maintenance and enhancement of these 8 funding sources is critical to our success. 9 It's a fact that the reservations do not 10 present commercially attractive service areas. The 11 sparse population and low penetration rates are reasons 12 that larger companies have all but abandoned tribal 13 lands. The service is expensive, and the rate of return 14 per subscriber is lower. Accordingly, continued 15 investment in operations must be encouraged by 16 demonstrating commitment to the Congressional 17 requirement that the universal service support be 18 predictable and sufficient. Given that the majority of 19 the Authority's revenues are comprised of access charges 20 and universal service funds, it's clear that substantial 21 changes to the mechanisms could jeopardize our 22 accomplishments and impede any further progress in 23 achieving universal service. Accordingly, our major 24 obstacle is the uncertainty regarding funding sources. 25 And I thank the Commission for allowing us GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 52 1 to testify. 2 CHAIRMAN KENNARD: Thank you very much. 3 Our next witness will be Ivan Makil, who is 4 president of the Salt River Pima-Maricopa Community. 5 PRESIDENT MAKIL: Thank you, Commissioners 6 and Chairman Kennard. And I guess I'd like to start 7 off by first thanking you for this hearing and the 8 opportunity to speak with all of you today, but also I 9 would like to commend you, Mr. Chairman, and your 10 staff on what I consider this very historic and 11 significant event in Indian country, because I think 12 it's a first step in establishing the kind of 13 government-to-government relationship that is critical 14 for tribes to have with the FCC. It's been something 15 that, I think you've heard already, has been, I think, 16 long overdue for many reasons. The benefits I think no 17 one can speak enough about, but I think one thing that 18 is important to say here is that one of the benefits is 19 particularly in this day and age where 20 telecommunications has become an integral part, a very 21 basic fundamental part of infrastructure that is 22 necessary for developing communities. 23 You know, whenever we see and we talk about 24 our communities, Indian communities, and developing and 25 how they will develop, we have to look at the various GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 53 1 components that are necessary for development. Salt 2 River is located in an area that's surrounded by the 3 Phoenix metropolitan area. We're surrounded on our 4 western and northern boundaries by the city of 5 Scottsdale. We're surrounded on the southwest by the 6 city of Tempe, on the southern border and a portion of 7 our eastern border by the city of Mesa, and even the 8 community of Fountain Hills to our northeast. So we're 9 right here in the middle of a metropolitan area. 10 We have about 6200 people, enrolled 11 members, in the tribe, and like many other tribes 12 approximately half or 50 percent of our population is 13 under the age of 19. That means that we have a very 14 young population. And with this young population, as we 15 all know, particularly in this day and age, you have a 16 very video-oriented generation. You know, technology 17 for this younger generation is really important. And so 18 the process of learning and when we talk about 19 developing communities, we're talking about producing 20 young people or people that can be productive citizens. 21 And so that's all a part of this whole developing 22 community concept. Producing productive citizens is 23 giving them the tools that they need to be able to be 24 productive citizens, to learn, to grow. And so access 25 to things like basic telephone service are not enough. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 54 1 They must be able to have access to Internet services. 2 You know, this generation is e-mailing each other all 3 across the country, and that's how our young people are 4 learning. So if we are going to produce productive 5 citizens, then we have to have that as a basic 6 fundamental infrastructure in anything that we do for 7 our communities. So this relationship and the 8 understanding of how it impacts Indian communities I 9 consider a very positive step. 10 You know, historically our people were 11 farmers. And while we still maintain agricultural lands 12 in Salt River, we've made every attempt to diversify 13 because we know that in developing communities we must 14 create economies. And so we've invested in a number of 15 different enterprises, everything from cement to golf 16 courses to frozen yogurt. You know, Salt River just 17 happens to own and produce Miss Karen's frozen yogurt, 18 which is, although they've been on a losing streak, the 19 official yogurt of the Phoenix Suns. I wasn't sure if 20 we had any Suns fans here today, but they haven't been 21 doing as well as we would like for them to do, but we're 22 still selling yogurt anyway. 23 Some of the problems that we've had are not 24 only just, as I said, not having service but what that 25 service means in terms of, particularly, elderly folks. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 55 1 And, as you know, in Indian country healthcare has not 2 been the best, and so, you know, 911 accessibility not 3 only for emergencies like police emergencies but for 4 health emergencies. Many people are, particularly in 5 our community, are diabetic, and so they need access to 6 phone service for health purposes so that when things 7 don't go well for them that they have the ability to get 8 that assistance that's needed. Right now, even though 9 we're right in the middle of the Phoenix metropolitan 10 area, there are some -- a number of areas that still 11 aren't served by what used to be the current service. 12 So, you know, people have to go distances to get 13 service. 14 It's hampered, also, our ability to grow 15 economically. While we're right in the center, we have 16 the potential for economic development projects, but, of 17 course, you know, business does not want to locate where 18 there isn't basic infrastructure. And basic 19 infrastructure, again, is not just telephone service or 20 providing, you know, a dial tone. It's service that 21 provides, you know, fiberoptic cabling, that type of 22 thing. That's what's necessary to attract business that 23 will be quality business, that will really produce 24 revenue, that can be a stable source of revenue for 25 tribes. Because, again, in developing communities I GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 56 1 think what the federal government has learned in its 2 experience with even dealing with Third World countries 3 is that if you can create a stable economy, that in turn 4 is what produces and stabilizes government. And so that 5 becomes critical as well. 6 In 1997 we moved to charter and license 7 Saddleback Communications, which is our company. We 8 invested at least what we considered significant dollars 9 in a state-of-the-art system. And today it's proven to 10 be very successful. There is a lot of happy people in 11 Salt River because of what has happened. But, again, 12 understanding that we had limitations as a tribe because 13 tribes don't have all the expertise that we need to be 14 able to accomplish many of these things, that we 15 partnered with Mountain Telecommunications. And in that 16 partnership what we found was the expertise that was 17 necessary to not only get our system going and off the 18 ground but to make it a viable economic tool for the 19 future. Now we are in a position to be able to provide 20 service to any business, as well as our residents, that 21 will be located within the boundaries of our community. 22 This partnership, I think it can really 23 serve as a model for the future. And I would encourage 24 that because, you know, those types of arrangements are 25 the kinds of things that the FCC can really be helpful GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 57 1 in encouraging other companies to partner with tribes on 2 these types of efforts. The example is here. 3 And I do appreciate and I apologize for not 4 being able to greet you when you did come to Salt River. 5 We hope you enjoyed the visit. And we feel like we've 6 done a good job there, and we've worked hard at it. And 7 we've got some good people working there, and we've got 8 a number of our tribal members employed there, too, that 9 are learning there. A lot of young people there, and 10 that's exciting because now they're -- the word travels 11 very fast, you know. They used to call it the moccasin 12 telegraph, you know, but now it's Saddleback 13 Communications, I guess. 14 It's still important that you all will 15 continue to provide the regulatory incentives that will 16 encourage incumbent local exchange companies and 17 competitive local exchange companies to work directly 18 with tribes. That is critical. We hope that you will 19 continue to review the regulatory barriers to tribal 20 entry into the telecommunications market. For example, 21 the competitive local exchange carriers should not be 22 limited to the universal service support that an 23 incumbent local exchange carrier receives for providing 24 service within tribal lands. This is especially true if 25 the tribe's CLEC services are provided to formerly GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 58 1 unserved residents. 2 It's also important that there is support 3 for new advanced technologies that address the last-mile 4 problem in rural areas, because, you know, so many times 5 examples that are good examples and models that can be 6 used in Indian country are representatives of examples 7 that can benefit rural communities as well. One thing 8 that we've learned in Salt River is that, you know, just 9 like the dollar, communications and crime knows no 10 boundaries, that telecommunications doesn't have 11 boundaries either. So that usually when there is 12 something that benefits an Indian community, it usually 13 benefits the surrounding communities as well. And there 14 is growth from that, and we encourage that. 15 Saddleback and Mountain Telecom have 16 petitioned the Commission to adopt fixed wireless access 17 as one possible solution. Although we cannot go into 18 the merits of that petition, Salt River wishes to stress 19 that the petition should receive serious consideration 20 in the near future. And we'd also like to clarify that 21 the Commission will support modifications or waivers of 22 technical rules that limit the ability of a given 23 technology to serve areas with low population density. 24 I guess, in closing, I again would like to 25 thank you all for being here, for giving us this GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 59 1 opportunity to express some of the issues that are of 2 concern to us as tribes, and appreciate the 3 government-to-government relationship that you are 4 establishing. It is critical to our growth. 5 And I would also ask that you not be 6 distracted by the kinds of stopgap measures that 7 sometimes people will offer. Access, as I said earlier, 8 to basic dial tone is not sufficient. If we're not 9 given access to the advanced telecommunications and data 10 services that are enjoyed by others, we will not be in a 11 position to produce the productive citizens that are 12 important to not only the future of our tribes but to 13 the future of this country, because a productive citizen 14 in Salt River or in Gila River or in Cheyenne River or 15 anywhere else ends up being a productive citizen to the 16 county, to the state, and to this country. 17 And I thank you very much for this 18 opportunity. 19 CHAIRMAN KENNARD: Thank you very much. 20 Our next witness is President Vernon James, 21 who is president of the San Carlos Apache 22 Telecommunications Utility Company. 23 MR. JAMES: Good morning. My name is 24 Vernon James, and I'm with the San Carlos Apache Tribe. 25 I am an enrolled member of the tribe, and I bring you GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 60 1 greetings from the tribe. I want to thank the 2 Commissioners who are here, the Chairman, and the tribal 3 representatives and the audience. I am honored to be 4 here to present testimony on behalf of the San Carlos 5 Apache Tribe regarding the need for telecommunications 6 not only within our tribe but for other tribes. 7 The San Carlos Apache Tribe has a 8 membership of over 10,000 enrolled members. The 9 reservation is roughly 28,000 square miles. The 10 reservation is located east of here about 200 miles. 11 It's located 20 miles east of Globe, a mining town, 12 between Globe and San Carlos, which is, oh, I guess 13 about 20 miles -- I take that back -- 30 miles -- I take 14 that back again -- 50 miles from the community of Bylas. 15 Bylas and San Carlos are separated by 30 miles. They 16 are two major population centers. We have a third one 17 which is about 15 miles east of Globe that's rapidly 18 developing. Because of infrastructure development, such 19 as water, electricity, and now telecommunications, 20 people are just moving in. And it's an area of growth 21 that is really good to see because it's predominantly 22 young people who are buying homes and moving into the 23 area, who are building homes and moving to the area, 24 indicative of growth in our human potential. 25 The telecommunication industry came to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 61 1 San Carlos with the development of its board in March of 2 1995. The board consists of five members. The tribe 3 has a consulting firm that it was working with or it 4 still continues to work with, Hicks & Ragland, very well 5 renowned in the telecommunications industry. At the 6 recommendation of the consulting firm, San Carlos went 7 on a nationwide search for members of its board. It 8 selected three members from the country, countrywide. 9 One of the members is from Mesa. He's a retired vice 10 president in finance for telecommunications. Another 11 member is from Texas, who was a vice president for field 12 operations of Southwestern Bell. The other member is a 13 retired general manager for a private communications 14 company in the panhandle area of Oklahoma. The fourth 15 member is a tribal member, who serves as the 16 secretary/treasurer. He's also a tribal planner for the 17 tribe. Given the expertise of the individuals from the 18 telecommunications industry, we have been guided to 19 develop what we feel is something that we're very proud 20 of. 21 For San Carlos, telecommunications 22 represents development. It represents a leap into the 23 21st Century, as you've heard many speakers say. It 24 brings promise of communications with the outside world. 25 It also brings promise of economic development, as GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 62 1 you've heard spoken about. It also brings promise of 2 improved health and safety aspects of the reservation as 3 it relates to 911 and EMS and law enforcement. 4 And, also, it brings a promise of 5 telemedicine to the communities of San Carlos and Bylas. 6 And with that, that could represent hours of discomfort 7 in coming down by vans to referral centers in 8 metropolitan Phoenix and Tucson. It takes a whole day 9 for perhaps a confirmation on surgery to be made for a 10 person from San Carlos. It's even longer if that person 11 is from Bylas. So telecommunications brings that 12 promise. 13 Human development. Telecommunications 14 brings human development, the promise and the 15 opportunities for human development. Our schools, for 16 example, can now be networked to the world through 17 Internet. And for employees, our employees, it means 18 personal growth and development. It means it will allow 19 employees who lack maybe a few hours to receive their 20 degree, but who are working, they can now accomplish 21 that through distance learning. It's amazing the 22 opportunities telecommunications can bring. 23 Government development. For San Carlos 24 government, it means development of infrastructure not 25 only throughout its programs but also for the boss to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 63 1 check with his staff through networking. And with 2 further development in the area of video, we can even 3 have video conferencing one day. You know, I just 4 shudder at the idea. I mean, there's already so many 5 meetings. Just think, e-mail and video conferencing. 6 My goodness, you know, there's going to have to be more 7 of me. 8 Right now San Carlos has taken that step 9 into the 21st Century. It has bought US West's 10 facilities and has just gutted those facilities. The 11 facilities that US West had were archaic to say the 12 least. It was a Western Electric 355-A electromagnetic 13 step-by-step switch. State of the art back in 1960 when 14 it was installed, but a dinosaur by today's standards. 15 That switch is being replaced by a state-of-the-art 16 digital Siemens switch. It has capacities that we can't 17 even tap with our existing requirements. That Siemens 18 switch will be turned on tonight at 11 p.m. 19 For us it's a step into the 21st Century, 20 and we want to thank RUS for bringing this about. 21 Without RUS, the monies wouldn't be there. Without the 22 hardship loan, we wouldn't have this opportunity. So I 23 encourage RUS to continue that aspect of its program for 24 tribes so that they can tap into that resource and also 25 into the 21st Century. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 64 1 And I encourage the FCC to listen to all 2 the statements made by tribal representatives in the 3 development of that government-to-government 4 relationship, which this is a representation of, but FCC 5 needs to go further. It needs to go into a formal 6 consultation process, as Governor Thomas said. That 7 formal government-to-government process and consultation 8 process will allow tribes to voice their concerns and be 9 heard, and it will also allow FCC to learn of the 10 problems as it is now learning about problems in Indian 11 country. As the FCC has heard, the socioeconomic 12 condition on reservations is appalling by our country's 13 standards today. 14 For San Carlos, our present system, 15 existing telephone lines, there are 770 lines in the 16 San Carlos community. 400 are residential. We have 17 1500 held orders. In the community of Bylas, there are 18 12 lines. Four are residential. There are 425 held 19 orders. 20 On May 25th Bylas will also come into the 21 21st Century. The community will have a link to the 22 outside world. The community of Bylas -- let me just 23 give you an example of the excitement that's going on 24 there. While we were laying lines in the community and 25 giving out numbers, people were exchanging their GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 65 1 telephone numbers, "Call me in May." They have their 2 telephone numbers posted on their refrigerator doors. 3 They have those numbers memorized. They're already 4 carrying an address book with telephone numbers in it. 5 It's really amazing. And, you know, it was really sad 6 because our representatives had to teach people about 7 the telephone, what the telephone could do. Not only 8 did they have to learn about what the telephone can do, 9 but the features that they never heard of or couldn't 10 imagine, such as call forwarding, call waiting, voice 11 mail, these are terms they've never heard. And it's 12 just an exciting feeling, the feeling of the children, 13 especially the adolescents. I mean, you know, they're 14 going to tie up that whole system, I'm sure. 15 San Carlos will have its turn on June 15th. 16 On that day the entire reservation will be linked, and 17 the San Carlos Apaches will have entered the 18 21st Century. The San Carlos Apaches will have taken 19 that first step. What an exciting moment this is for 20 us. 21 I want to encourage tribes who are thinking 22 about developing their telecommunications system to go 23 for it. Even though there are what seems to be 24 insurmountable problems, they can be worked out. Find a 25 consultant who will give you your money's worth, one who GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 66 1 has the concerns of maybe having met rural needs. They 2 can bring their expertise, and they can bring tribes 3 into the 21st Century as well. 4 I also want to encourage those tribes, even 5 though they may not have the telecommunications system 6 as far as ownership goes, to support those tribes who 7 are trying to encourage government legislation to be in 8 favor of tribes. 9 I guess with this I'll conclude my 10 statements. I want to thank, again, the FCC and the 11 federal government for the opportunity to voice these 12 comments. And if you need help in developing that 13 consultation process, I'm available, as well as anybody 14 else here. I mean, we're willing to help. Thank you. 15 CHAIRMAN KENNARD: Thank you very much, 16 Mr. James. When you picked up the microphone and your 17 booming voice filled the room, it reminded me of when I 18 first got into communications. I started on a pathway 19 to this job by getting into college radio, as I know 20 Commissioner Ness did as well, and you have what they 21 used to call in that business a radio voice. Very nice. 22 And congratulations on your switch. 23 And congratulations to you, Chris, for 24 helping to make that possible. 25 Well, we have a few minutes, before we GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 67 1 break, for questions. And I wanted to take the time we 2 have to focus on solutions, what we can take away from 3 this day, take back to Washington, and implement to help 4 solve some of the problems we've heard about today. 5 When we first started educating ourselves 6 about this issue, we looked around and tried to find 7 people who were really on the cutting edge, the leaders 8 in thinking about particularly some of the legal and 9 policy issues. And so last year we had a very wonderful 10 discussion in Washington about how we could better 11 understand the relationship we should have between 12 tribal governments and the FCC, and we invited 13 Ambassador Blackwell. Charles Blackwell was there, who 14 is also here today. And Jim Casey was one of our tutors 15 in that session. And one thing that came out of that 16 session and what we heard in New Mexico and what we 17 heard today is a call for the FCC to establish a 18 government-to-government relationship with tribal 19 governments. And I'd like to ask this question. 20 If we were to do that, what are the single 21 one or two or three most important things that could 22 come out of that consultation that the FCC could 23 implement to advance the cause of bringing 24 telecommunications and advanced telecommunications 25 services to Native American populations? Anyone who GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 68 1 wants to answer that question? 2 GOVERNOR THOMAS: As you know, there are 3 several regulations and ordinances and even acts passed 4 by Congress regarding dealing with the problems of 5 Indian reservations that have escalated throughout the 6 years, and I think the barriers we face are with the 7 bureaucratic system itself. They have given the 8 opportunities for states to have more control over 9 their -- the areas that they serve, and that has not 10 been afforded the Indian tribes themselves. We still 11 have to go forward and beg for this leeway for us to 12 govern ourselves. That's how we were set up, and that's 13 the status of the sovereignty that we so desperately all 14 try to bring out all the time. It was a word given to 15 us by the English colonists who settled this area. And 16 so we exercise the sovereignty by providing ourselves a 17 true destiny for Indian tribes to follow and to have 18 that self-determination to utilize what has been given 19 to us in the past by the federal government itself. 20 So it's the bureaucracy system that we face 21 all the time. And I think if we dialogue with the FCC 22 and bring you these issues, you will get a better 23 understanding. But there are new avenues now being 24 opened up, and I am very pleased that this is just one. 25 You've taken that major step, and I think that's what GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 69 1 we're trying to do with all the government agencies. 2 There are now policies coming out from the Army, from 3 the different agencies that we deal with, the Energy 4 Commission. So they are turning around. They are 5 making those efforts, and we are so pleased that you are 6 here making that attempt. And the more you hear, the 7 more you will understand. 8 CHAIRMAN KENNARD: That's very encouraging. 9 Any other comments? Mr. Makil? 10 PRESIDENT MAKIL: Sure. I think that, as 11 Governor Thomas has said, you know, the barriers to 12 tribal entry to the telecommunication market are 13 important, but also, you know, to reduce or remove the 14 limitations of any particular technologies that allow 15 for that. Because, you know, while there are some 16 proven solutions, as we're now discovering, that, you 17 know, that kind of encouragement with incumbent local 18 exchange carriers as well as the competitive local 19 exchange carriers, that we work together too. And there 20 are incentives provided so that we can partner. 21 Because, you know, the costs of these systems, you know, 22 it gets to be major, a major cost for tribes, which 23 we're not able to really handle in a lot of cases. And 24 in some cases where there are, as Mr. James mentioned 25 from San Carlos, where there are outdated systems that GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 70 1 need to be replaced, and sometimes it's a whole grid 2 system, you know, all of a sudden that becomes very 3 expensive, and it becomes prohibitive for a tribe to be 4 able to get involved in any type of situation. 5 So, you know, those kinds of partnerships 6 and removing those limitations for other advanced 7 technologies I think will really go a long ways, 8 particularly on reservations where distances are major 9 issues, and there are many. 10 CHAIRMAN KENNARD: Thank you. 11 MR. JAMES: I'd like to expand on what 12 Governor Thomas said about the process itself. One 13 aspect of that consultation process will allow tribes to 14 be given the opportunity to review proposed changes in 15 existing laws and existing regulations. For many years, 16 historically, tribes have never had the opportunity to 17 have input as to those changes. As a result, those 18 changes came about, and tribes were at a loss as to how 19 to implement them or at a disadvantage because of the 20 implementation. So the executive orders that charge 21 federal agencies to deal on that 22 government-to-government basis with tribes specifically 23 identifies that particular need, and it's that need that 24 tribes require in order to keep in step with those 25 changes. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 71 1 CHAIRMAN KENNARD: Thank you. 2 Commissioner Ness, did you have questions? 3 COMMISSIONER NESS: I was struck by some 4 statistics that were mentioned, by I think Mr. Williams. 5 If I'm correct, did you say that you had about 6 60 percent unemployment? 7 MR. WILLIAMS: Correct. 8 COMMISSIONER NESS: Okay. And did you also 9 say that only 10 percent of your subscribers qualified 10 for the Link-up program, or did someone else say that? 11 MR. WILLIAMS: We have 10 percent currently 12 under the Link-up program of the 2900 access lines 13 that -- 14 COMMISSIONER NESS: But more could qualify? 15 MR. WILLIAMS: It is growing as -- we 16 implemented that January 1st of this year, and it's 17 amazing how it's caught on like wildfire. So I don't 18 know where that will stop, but as I came down here it 19 was right at 237 customers hooked up already. 20 COMMISSIONER NESS: Okay. So it wasn't 21 that there's a problem specifically with the structure 22 of the Link-up program or the qualifications for the 23 Link-up program. It's now being used as people learn 24 about it? So it's more an education process? 25 MR. WILLIAMS: Correct. And the problem GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 72 1 with that, though, and it's a real positive, but what 2 we're finding out so quickly is that when you originally 3 go into these, the engineering process with RUS, which 4 is predominantly structured about rural nonIndian 5 communities, is that when we move out to the Indian 6 country with these type of applications -- our 7 engineering process originally sets for the established 8 amount of customers plus a growth rate of approximately 9 10 percent. When we implement these type of programs, 10 the growth, combined with growth of young populations on 11 rural Indian reservations, as in our case, we outgrow 12 the facilities. I have three areas right now that 13 because of this growth factor that's been promoted by 14 the Link-up program, we're full. So now I have to go 15 and rebuild or implement fiber construction to 16 accommodate for growth out in these rural areas. 17 So, on the positive side, we're building 18 for the growth that allows connectivity, but we also 19 have the problem of full facilities in at least three 20 areas that we're in. 21 COMMISSIONER NESS: If anyone wants to 22 answer the question focusing, again, on the Lifeline and 23 Link-up programs specifically, I understood from 24 Governor Thomas and some others that we do have a 25 problem in that with Lifeline the full benefits cannot GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 73 1 be realized because the existing structure assumes some 2 distribution from the state to get the full amount. And 3 that's something I certainly want to look at as we go 4 along. I think that's a very important point that was 5 mentioned. 6 I think someone else mentioned the question 7 as to whether or not there is an ability to get some 8 state universal service funds, to qualify for those. 9 Can anyone comment on the specific Lifeline and Link-up 10 programs and state universal service, what specifically 11 we could do to ensure that you have the resources needed 12 for those programs? 13 Chris. 14 MR. McLEAN: I'll be glad to take a stab at 15 that. First, the petition that Gila River and other 16 tribal telephone companies have filed has to do with 17 waiving the state match. I think in the intent of 18 Congress, particularly when you look at Senator McCain's 19 amendment to the Telecom Act giving the FCC the 20 authority to designate eligible telecommunications 21 carriers in jurisdictions that are not subject to state 22 authority, that the Commission has the power to do that. 23 And the bottom line is Lifeline, Link-up, high-cost 24 support, universal service support, they are all sources 25 of revenue that make the services affordable. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 74 1 And the Commission might even want to 2 consider the unique federal responsibility that we have 3 to tribal communities to even further enhance the 4 Lifeline program. Because the biggest impediment to 5 service, we find, is poverty. And it's a chicken and 6 egg kind of thing. When you have modern infrastructure, 7 you can have economic development. But if you have poor 8 communities, it's hard to build the feasibility into 9 building that infrastructure that fosters the economic 10 development. So if we can fulfill the promise of the 11 Telecom Act both in Lifeline, Link-up, and predictable 12 sufficient support for unserved communities, I think we 13 can accomplish the goal of bringing tribal 14 subscribership up to the national average. 15 Another area that is of critical importance 16 is as the large telephone companies put their exchanges 17 up for sale, many of them are in tribal communities, 18 universal service rules shouldn't penalize the acquiring 19 company of those exchanges through the operations of the 20 national cap and the per subscriber line cap that are in 21 the current transition rules. The people that should be 22 held harmless are those consumers. And it should be of 23 no difference to the federal universal service system 24 whether a subscriber is a former customer of one of the 25 large telecommunications companies that did not receive GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 75 1 either significant universal service support or any 2 universal service support. 3 COMMISSIONER NESS: Those are very good 4 observations. On universal service, there is a 5 disparity as to the numbers or the percentage of 6 subscribers that are receiving universal service support 7 in the different communities. Is that a function of 8 information? Perhaps we need to do a better job of 9 getting the information out. I'm delighted to see that 10 you've increased the subscribership so much, as you've 11 formed your own tribal-owned telephone systems. Perhaps 12 this is partly as a result of getting the information 13 out about Lifeline and Link-up. Can anyone comment on 14 that? 15 MR. WIESE: Well, I'd like to comment. 16 Primarily by universal service when we did our 17 feasibility study, the sources of revenue were very, 18 very well defined and very predictable, and thus we can 19 make a business case for going into the business. As a 20 matter of fact, our financial consultants did a six-year 21 forecast, and after six years we looked down at our 22 operating revenues versus the forecast, and they were 23 less than a thousand dollars off. Just amazing. Having 24 that predictability allows us to go ahead and invest in 25 the infrastructure. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 76 1 COMMISSIONER NESS: You're absolutely right 2 on that. 3 Wireless technologies. Most of the tribes 4 represented here have very sparse populations and some 5 mountainous populations or folks living in mountainous 6 terrain. To what extent have you tried to use 7 wireless -- fixed wireless systems -- as a less costly 8 means to be able to deploy telephone service? Anyone 9 want to comment on that? 10 MR. WIESE: Well, we have a very sparse 11 population, and we are using BETRs radios for some of 12 our very remote areas. Most of the BETRs are actually 13 going to people that don't even have power extended to 14 them. One of our small communities is 20 miles from the 15 nearest power line, and so we've been able to use BETRs 16 successfully. We're also partnering with Cellular One 17 to provide cellular service out there, and we've been 18 able to enhance the coverage. 19 GOVERNOR THOMAS: I want to bring to your 20 attention that the FCC established a Public Safety 21 National Plan in 1987, and the plan established 55 22 planning regions in 1988, and Arizona was established in 23 Region 3. During the planning, they conducted public 24 hearings for the state of Arizona public safety 25 representatives, and there were only two Native American GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 77 1 community representatives involved. And this is what we 2 mean by consultation. During our discussions there was 3 never any allocation made for Native American 4 communities in this region. It's a little -- I guess 5 you can't understand it when the Arizona tribes in 6 Arizona own 23 percent of the state land here in the 7 state of Arizona. 8 We started looking into improving our 9 existing 450 megahertz UHI frequency back in '97. We 10 now hold two licenses to two frequencies, but other 11 Native Americans, as I mentioned, in this area are using 12 that. The community then turned on to the 800 megahertz 13 band of public safety spectrum. So when we did our 14 research, we became aware of the limited amount of 15 800 megahertz frequency that was available. And we have 16 never been allocated any other frequencies during the 17 regional planning, as I mentioned. 18 Right now we did a survey, and we need 19 1,000 subscriber units. These are the mobile units that 20 we now use in order to communicate across this 21 reservation. We identified an additional need for 700 22 subscriber units in three to five years based on the 23 growth of our community. And the design criteria 24 indicated that the community will need 15 of the 25 800 megahertz frequencies to handle the radio traffic GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 78 1 and air time for the community. We were advised there 2 were 122 of the 800 megahertz public safety frequencies 3 that were unlicensed. So we had our representatives 4 still take part in the ARRC, and the information that 5 came down was that there were only seven available 6 frequencies that were available to Gila River to apply 7 for. 8 So we are pursuing that avenue, but, as we 9 indicated earlier, this need is so great because of our 10 potential for hazards on this reservation regarding 11 materials that are dumped on the reservation or other 12 disasters that occur, and we have to get in touch with 13 the Red Cross as soon as possible, our roads department, 14 our public works, as well as the fire and police. So 15 these are some of the blocks that we are facing in 16 trying to meet the situation of our emergency operations 17 center. We had to set that up because of the ongoing 18 emergency situations on the Gila River. 19 COMMISSIONER NESS: Thank you. 20 PRESIDENT MAKIL: Mr. Chairman, 21 Commissioner Ness, if we could, I would like to ask 22 Mr. Casey to respond on behalf of Salt River. 23 CHAIRMAN KENNARD: Mr. Casey. 24 MR. CASEY: I know you guys are probably 25 getting tired of hearing from me, but President Makil GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 79 1 just wanted me to respond on that technical issue 2 regarding the use of wireless. Many of the wireless 3 systems are proving -- without further development, 4 without further exploration into what they can do, 5 they're not proving useful or effective for the kind of 6 services that we've been stressing here. You may in 7 many cases get a dial tone out there -- BETRs can 8 provide a dial tone -- and that may be a sufficient 9 stopgap kind of measure, but it doesn't provide the kind 10 of future-looking services that tribes are going to 11 need. And so you look to BETRs, you look to these 12 other -- you look to licensed, unlicensed frequencies. 13 What about unlicensed spectrum? When it only goes a 14 mile or so, in a highly disbursed area that's not going 15 to work. 16 So there need to be solutions developed and 17 explored perhaps through technical waivers of power 18 limitations at cell sites, other possibilities that can 19 be used to allow new technologies, such as the proximity 20 that Salt River is now using through the auspices of 21 your experimental license that's been granted. These 22 are all things that need to be explored. And wireless 23 may very well be a solution, but it's not, under most of 24 the services, it's not currently a solution to the kinds 25 of needs that tribes have to look for to make sure that GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 80 1 their children now and future generations have access to 2 the kinds of technologies that they have to have to 3 survive in this world. 4 CHAIRMAN KENNARD: Thank you, Jim. 5 Appreciate that. 6 Commissioner Furchtgott-Roth. 7 COMMISSIONER FURCHTGOTT-ROTH: Thank you, 8 Mr. Chairman. I came today very honored and humbled to 9 be here, and after the presentations I'm even more 10 honored and more humbled than when I came. I came 11 painfully aware of my ignorance of a lot of these 12 issues, and I've learned a lot today, but I must say I'm 13 even more painfully aware of my ignorance of a lot of 14 the issues before us. We have a lot more learning to 15 do, and I look forward to that. I have no questions at 16 this time, Mr. Chairman. 17 CHAIRMAN KENNARD: Thank you, Commissioner. 18 With that, we're going to take about a 19 10-minute -- 20 MR. JAMES: Mr. Chairman? 21 CHAIRMAN KENNARD: Oh, yes. 22 MR. JAMES: I'd like to speak to the 23 question that Commissioner Ness asked a couple -- maybe 24 three questions ago about the State. 25 CHAIRMAN KENNARD: Okay. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 81 1 MR. JAMES: Going back to the request for 2 the development of a consultation process between FCC 3 and tribes, this particular consultation process could 4 facilitate the State's understanding of tribal problems 5 and how tribes can better interact with the State 6 Commission. One of the reasons for this would be 7 because of the tribe's trust relationship it has with 8 the federal government. And based on that relationship, 9 the FCC could have the role of reaching to the states 10 and bringing the states to the table. They would have 11 perhaps a better opportunity to accomplish this. When 12 states go to -- when tribes go to states and ask for 13 some type of meeting, it is with great difficulty that 14 that meeting gets established, but this consultation 15 process could facilitate that process. 16 CHAIRMAN KENNARD: Thank you very much. 17 COMMISSIONER NESS: Thank you. 18 CHAIRMAN KENNARD: We'll take a five-minute 19 break, and then we're going to come back and hear from a 20 panel of industry representatives to talk about this 21 topic. 22 (A recess ensued from 10:22 a.m. to 23 10:31 a.m.) 24 CHAIRMAN KENNARD: Could everyone take 25 their seats, please, so we can get started. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 82 1 Our second panel of the day includes 2 representatives from telecommunications companies and 3 some experts, people who have been working out there in 4 the field who know a lot about how to deliver 5 telecommunications services particularly to people in 6 remote areas of the country. 7 So we're pleased to begin our second panel 8 with our first witness, Jeff Olson, who is director of 9 regulatory planning and policy issues for integration 10 planning and strategy for GTE. 11 Mr. Olson. 12 MR. OLSON: Good morning, Chairman Kennard, 13 Commissioner Ness, Commissioner Furchtgott-Roth, and all 14 of our distinguished guests here today. It's a pleasure 15 to be in Arizona this morning. Thank you for the 16 opportunity to be here. 17 My name is Jeff Olson. I'm director of 18 regulatory planning and policy for GTE. My written 19 statement will address a number of topics. I'd like to 20 touch on two of them with you here today. But first, as 21 background, GTE provides service to about 8,000 22 customers in Arizona, including the Colorado River 23 Indian Tribe in western Arizona and the neighboring 24 California area. We also provide service to several 25 other tribal nations outside of Arizona. We believe we GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 83 1 have a very good relationship with the people of the 2 CRIT reservation, and I'm glad to be here with you 3 today. 4 Let me give you just some short specifics. 5 The Poston Arizona exchange is one of the GTE exchanges 6 that serves the Colorado River Indian Tribe. That 7 exchange covers about 289 square miles and serves 8 approximately 140 business lines and about 470 9 residential customers, a total of about 610 lines. That 10 equates to a density of telephone lines of roughly two 11 lines per square mile. By contrast, a GTE exchange in 12 Los Angeles has a density of about 24,000 lines per 13 square mile. The comparison is a density ratio of about 14 12,000 to 1. 15 This points out a well-known fact, that 16 there are financial and operational challenges in 17 providing affordable telecommunications services to 18 sparsely populated areas. Using wireline technology, 19 these areas have the higher costs caused by much longer 20 loops and feeder and distribution plant. 21 In unserved areas, the challenge is 22 similar, to develop an infrastructure that can 23 efficiently serve distant or rough terrains in locations 24 where there only may be a single customer per square 25 mile or fewer. Technologies that have the potential to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 84 1 serve these areas are starting to become commercially 2 available. These include wireless local loops, PCS, and 3 the low-orbiting satellites of providers such as Iridium 4 and Teledesic, but we're not entirely there yet. 5 How can these and other potentials be 6 harnessed to deliver services to underserved or unserved 7 areas? GTE believes that we should rely, in part at 8 least, on auction mechanisms to bring services to 9 sparsely populated areas. A purely market-based price 10 for the delivery of telecommunications services to rural 11 and insular areas may not be within the financial reach 12 of the customers in these areas. As a result, there are 13 policy issues, like affordability and the specification 14 of certain service obligations, that enter the picture. 15 Thus, the solutions are apt to be a mixture of policy 16 decisions and market-based mechanisms. 17 Our proposed solution is a combination of 18 policy decisions regarding affordability and universal 19 service support and a market-based auction. GTE 20 proposes that any interested carrier which, by its bid, 21 indicates that it needs the lowest amount of financial 22 support be given the authority to serve the area. And 23 that can include a tribal telephone company. 24 In the interest of time, I won't try to 25 explain auctions in detail. There are a few important GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 85 1 points, however, about such an auction. 2 First, the auction would rely on 3 competitive bidding, not on detailed cost study debates, 4 which have proven to be highly contentious and resource 5 intensive. Second, the auction would be technology 6 neutral. It would not prejudge the technology and, as a 7 result, would encourage innovation. And we've heard 8 some wonderful discussions of innovation already this 9 morning. Third, it would not advantage any one group of 10 carriers or companies over another. Instead it would 11 leave the selection process to the market. 12 An auction can be used to address issues 13 regarding underservice. Many factors can contribute to 14 underservice, including low income levels, the relative 15 affordability of customers' total bills, the inability 16 of customers to control long distance costs, and the 17 inability of the provider to obtain right of way 18 permission to improve service quality and capabilities, 19 and other factors. 20 Policymakers must determine the causes for 21 underservice in order to design a required service 22 package and carrier obligations that correctly address 23 these causes. And that's no small task, given the 24 complexity of these problems. 25 As an example, policymakers might determine GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 86 1 that the inability of customers to control long distance 2 bills is a primary reason that customers drop off the 3 network. In that case, the authorities could define a 4 package of telephone services to be supported by a fund 5 that includes some forms of toll restriction services 6 and possibly customer education on how to use these 7 capabilities. 8 These requirements come at a cost. 9 Increasing the items included in a service package 10 necessarily increases the support amounts that bidders 11 would require to provide these required services. This 12 increases funds needed and raises the burdens on payers 13 into the fund. 14 An auction proposal can also be used for 15 unserved areas. There are mechanics associated with 16 nominating an area for an auction that will be discussed 17 in my written statement. 18 The key to success of an auction is the 19 ability to attract bids from firms that are ready, 20 willing, and able to provide service, the same services 21 that authorities designate as eligible for support. 22 Presumably, the auction must allow the support amount to 23 rise to a sufficient level to attract a bidder. 24 Importantly, with affordability levels already 25 determined, a higher bid by a carrier does not increase GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 87 1 the costs to customers served in an area. Prior to 2 announcing an auction for an area, the authorities could 3 make a judgment about what the maximum fund that society 4 is willing to have for the carrier to provide these 5 defined services. This requires a balancing between the 6 public interest benefits from having a carrier of last 7 resort in the area and the costs of the fund necessary 8 to attract a firm willing to undertake these defined 9 responsibilities. 10 Once these policy determinations have been 11 made, the authorities could open the area for bidding. 12 If no bids are received, it may be desirable to repeat 13 the process with a higher maximum support amount, 14 attempting to elicit a bid. 15 There may be a point at which policymakers 16 conclude that the public interests of having a carrier 17 of last resort serve an area are outweighed by the high 18 costs that would have to be paid to attract a bidder, 19 but I presume that would rarely be the case. 20 Thus, GTE believes that a properly 21 structured auction is an ideal mechanism to attract 22 qualified bidders to provide telecommunications service 23 in underserved and unserved areas, including certain 24 tribal reservations. 25 Now I'd like to share a brief related GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 88 1 suggestion. The FCC could consider using the spectrum 2 in the 3650 to 3700 megahertz band for providing service 3 to rural Americans. If used for rural service, these 4 auctions most probably should be for geographic regions 5 that are smaller than a basic trading area or BTA. This 6 is because the BTA geography coverage is larger than 7 what is needed to address most rural concerns. Also, 8 we'd need to work with equipment manufacturers. 9 However, this could be a cost-effective wireless 10 solution for rural telephone service and deserves 11 further examination. 12 GTE stands ready to help the FCC and tribal 13 authorities with our expertise in any of these and other 14 areas. Thank you. 15 CHAIRMAN KENNARD: Thank you very much, 16 Mr. Olson. 17 Now we'll hear from Aloa Stevens, who is 18 director of external affairs west for Citizens 19 Communications. 20 MS. STEVENS: Thank you, Chairman Kennard, 21 and Commissioners, for being here and for the 22 opportunity that we have to present our statements. 23 Citizens feels fortunate to be able to participate in 24 the New Mexico hearings. Participating in that hearing 25 and now this one, I've learned a tremendous amount, and GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 89 1 I know I'll learn a lot more before this day is through. 2 Citizens Communications serves customers in 3 13 states. We serve the Navajo reservation, the 4 Hualapai Indian reservation, and the White Mountain 5 Apache Tribe reservation here in Arizona. 6 In most settings in this country, telephone 7 service penetration is at very high levels. Only in 8 sparsely populated rural areas do we find significant 9 pockets of unserved potential customers. The low 10 density of households in these areas and their distance 11 from the telephone company switching offices tend to 12 complicate the extension of reasonably priced service. 13 It is simply uneconomical to invest in the extension of 14 plant facilities into remote areas without formal 15 customer commitment to subscribe to services at the 16 levels necessary to pay for the needed construction. 17 One simply cannot assume that every remote household 18 represents a potential demand for our services. Nor can 19 we assume that if service were brought to every door 20 there would be financial means to support the universal 21 service deployment. 22 Great strides have been made toward the 23 achievement of universal service. There are numerous 24 programs, supported by both state and interstate 25 funding, to foster wide availability of reasonably GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 90 1 priced communications capability. We must acknowledge 2 that the Lifeline and Link-up programs and other USF 3 funding have been a major factor in the achievement of 4 today's penetration levels, particularly in the rural 5 areas of our country. However, the last remaining 6 unserved areas, such as those found on many of the 7 Indian reservations, represent a real challenge to the 8 serving companies. 9 At a time when access reform is shrinking 10 and the support that telephone companies receive for 11 their common line investment, and being faced with 12 unknown future USF treatment for rural companies, it's 13 difficult to contemplate large new expenditures to drive 14 service capability out into the areas with low customer 15 density and unknown demand. I think you visited such an 16 area on the Navajo reservation last month and probably 17 felt firsthand the distances that we're looking at when 18 it comes to putting facilities in place. 19 These circumstances seem to suggest that 20 some extension of the existing support programs should 21 be created to explicitly address high-risk low-density 22 line extension projects. Lifeline supports the monthly 23 exchange rates for those in need. Link-up pays the 24 tariffed nonrecurring charges for ordering and service 25 initiation. But except for the endangered and somewhat GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 91 1 arguable implicit support buried within the interstate 2 USF, there's no specific support for the extraordinary 3 risk associated with rural line extension projects to 4 unserved areas. 5 We believe there are worthwhile social 6 benefits to be gained by addressing most unserved areas. 7 Citizens will be happy to meet with tribal 8 representatives to discuss their desires for plant 9 extensions. However, there are real risks of higher 10 costs for all telephone users unless some form of 11 explicit subsidy can be created to support deployment of 12 plant into areas with unknown potential demand. 13 The number of access lines served by 14 Citizens Communications and NCC, or Navajo 15 Communications, as of December 31st is as follows. On 16 the Navajo Nation, we serve 22,727 subscribers, with a 17 penetration rate of only about 22.5 percent. In the 18 White Mountain Apache Tribe area we serve 2,421 19 customers, with a penetration of about 17.9 percent. On 20 the Hualapai Indian reservation we serve 441 customers, 21 which is an approximate penetration of 24.5. 22 Citizens Communications' and NCC's central 23 office switches are now 100 percent digital. Customers 24 are offered a myriad of services, including call 25 forwarding, call waiting, message center, better known GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 92 1 as voice mail, and conference calling. Customers have 2 access to both intraLATA and interLATA exchange 3 carriers. Local Internet access is available within 4 several exchanges serving the Navajo Nation and the 5 White Mountain Apache Tribe. Internet access is also 6 available to the Hualapai Indian reservation via their 7 long distance carrier. NCC has installed a frame relay 8 switch at St. Michael's, and we're on schedule to 9 provide frame relay service in the near future. When 10 this project is complete, this service will be available 11 to about 40 of the 45 BIA schools on the reservation. 12 And this morning you spoke about the Pinon School. 13 CHAIRMAN KENNARD: Pinon School, yes. 14 MS. STEVENS: That school will also be 15 served by frame relay once it's installed. 16 CHAIRMAN KENNARD: That's wonderful. 17 MS. STEVENS: Frame relay service is also 18 now available in the White Mountains and on the Hualapai 19 Indian reservation. 20 Enhanced E 911 service has also been 21 deployed in the exchanges serving the White Mountains 22 Apache Tribe and the Hualapai Indian reservation. NCC 23 is unable to deploy E 911 service due to a rural 24 addressing system not being in place for the 25 reservation. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 93 1 Since 1996 Citizens Communications and NCC 2 have committed to investing over $32.1 million in 3 capital expenditures to upgrade the networks on all 4 three of these reservations with digital technology, 5 deployed advanced calling services, and we've also 6 expanded our services and facilities to new customers. 7 In my presentation, Attachment A depicts 8 the recurring and nonrecurring rates that Citizens 9 Communications and NCC charge for single-party basic 10 exchange service. Citizens Communications and NCC are 11 not licensed to provide cellular service within its 12 service territories. However, we've identified the 13 following wireless providers operating in our serving 14 areas. On the Navajo Nation we have identified Cellular 15 One, Alltel, Commnet Cellular, and Triadd Cellular as 16 being providers. And in the White Mountains we have 17 Cellular One. We have not been able to identify any 18 provider, as of today anyway, on the Hualapai 19 reservation. There may be somebody that we're not aware 20 of. 21 Impediments to telephone line extension on 22 tribal reservations are -- there are several that I'm 23 going to cover and then offer some solutions. 24 Securing right of ways within the Navajo 25 reservation has become a complicated and time-consuming GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 94 1 process. Both the federal government and the Navajo 2 Nation have imposed stringent requirements that must be 3 met before any right of way is granted. A right of way 4 acquisition for small line extension or cable 5 reinforcement may take anywhere from 60 days to 6 12 months to obtain. Right of way acquisitions to 7 provide service in an unserved area can take two to 8 three years to obtain and may cost several hundred 9 thousand dollars just to secure the right of way. I 10 have provided an Attachment B in my written statement 11 that gives you a flow chart describing the process is 12 for right of way on the Navajo reservation. 13 In the Navajo and White Mountains areas the 14 applicant for service is given an allowance of a half a 15 mile free line extension footage from our existing 16 facilities. In the case of Citizens Rural Company, 17 which serves the Hualapai reservation, Citizens extends 18 its lines to reach the applicant without charge, 19 provided the cost of constructing the line extension 20 does not exceed seven times the estimated annual revenue 21 from that applicant. If the line extension requirements 22 of the applicant exceed the above, a construction charge 23 will be made for facilities in excess of the allowances 24 specified and have to be paid in advance. Special 25 construction charges can range anywhere from 1500 to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 95 1 $157,000, depending upon the length of the extension. 2 In Arizona it's estimated there are 3 approximately 177,000 low-income customers that qualify 4 for Lifeline and Link-up programs available in Arizona, 5 and many of these customers are located on reservations 6 or in reservation service areas. Because many of these 7 low-income customers are unable to pay the construction 8 charges, they are unable to take advantage of Lifeline 9 and Link-up programs. 10 Another impediment to providing 11 telecommunications service is the rugged and remote 12 terrain. Regardless of the technology deployed, the 13 very nature of the terrain in these unserved areas makes 14 construction and maintenance of facilities costly and 15 difficult to maintain. Theft and vandalism at remote 16 equipment sites is common and dramatically increases the 17 cost of service. In fact, I was informed this morning 18 that one of our very remote sites has been vandalized 19 again, making the total amount of repair for these sites 20 just this year, about half a million dollars. 21 The federal access reforms have reduced our 22 funding for carrier common line investments. And with 23 unknown universal service fund treatment for rural 24 companies in the future, it's difficult to contemplate 25 large expenditures to increase service capability into GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 96 1 our areas. 2 We have some suggestions. These 3 suggestions need to be a combination of cooperation 4 between the FCC, the state, the serving companies, and 5 the reservations. 6 One of them would be to reduce the BIA and 7 tribal right of way requirements within the Navajo 8 Nation and the Hualapai Indian reservation to allow 9 blanket right of ways on all publicly traveled roads 10 through a local road permit. Citizens has been very 11 successful in working with the White Mountain 12 reservation's tribe to make right of way issues less 13 onerous. 14 Second one would be to allow the Historic 15 Preservation Department to issue blanket clearances on 16 all previously disturbed public roadways. In the event 17 of a discovery, all construction activities would cease, 18 and the Historic Preservation Department would be 19 notified. 20 Third, support the Arizona Corporation 21 Commission's proposal of setting aside a fixed amount of 22 federal USF funds to particularly offset the special 23 construction charges required to serve customers living 24 in remote unserved areas. 25 Fourth, expand existing or create an GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 97 1 additional federal and/or state fund to explicitly 2 address high-risk low-density line extension projects. 3 Encourage the Arizona Corporation 4 Commission to consider expanding the existing Arizona 5 universal service fund to partially offset special 6 construction charges for customers residing in unserved 7 areas. 8 Encourage the Arizona Corporation 9 Commission to facilitate workshops for improving access 10 to right of ways on federal, Navajo Nation, and Hualapai 11 Indian reservation lands. 12 Encourage the federal agencies and tribal 13 members to participate in workshops and public forums 14 such as this to make everyone aware of the problems and 15 participate in the solutions. 16 And, finally, to encourage the Navajo 17 Nation to approve and establish the necessary funding 18 mechanism to implement a rural addressing system and 19 enhanced 911 services there. 20 In conclusion, I'd like to thank you for 21 taking the time to try to understand the complexities of 22 providing telecommunications service to unserved areas, 23 and I look forward to working with the appropriate 24 federal, state, and local representatives in finding 25 solutions to these very, very important issues. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 98 1 CHAIRMAN KENNARD: Thank you very much, 2 Ms. Stevens. 3 The next witness will be Carl Artman, who 4 is with Airadigm PCS, an investor in Airadigm PCS. 5 MR. ARTMAN: Mr. Chairman, Commissioners 6 Ness and Furchtgott-Roth, thank you for holding this 7 hearing on this very important but often understated 8 problem in our nation. My name is Carl Artman. I am 9 the executive vice president and general counsel of 10 Airadigm Communications, and I am also a member of the 11 Oneida Nation. 12 Every time we pick up a newspaper or 13 magazine, an article extols the virtue of the 14 information age. We are one of the most connected 15 nations in the world. In fact, our telecommunications 16 industry stumbles over itself to offer new ways to 17 connect people to voice and/or data communications, DSL, 18 ADSL, PCS, cellular, LMDS, satellites, miles and miles 19 of new fiberoptic plant. One must wonder why, with all 20 this occurring, we're holding this hearing today to 21 discuss the problems of telecommunications access to our 22 nation's reservations. 23 There is a long and sometimes bitter 24 history which has led to the current dismal state of 25 services afforded to Indian reservations. And it's GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 99 1 refreshing to see that the FCC has taken an interest in 2 ensuring that history will not rewrite itself as we 3 continue forth into the information age. However, it 4 will take more than the research and policy directives 5 to ensure that substantive steps forward towards the 6 goal of delivering basic and next-generation services to 7 Indian reservations occur. 8 As you are intimately aware, the 9 telecommunications industry is driven by capital. It's 10 needed to deploy the services, to market and deliver the 11 services, and it must be assured that it will be 12 multiplied at a date certain. And unless the federal 13 and state governments are willing to afford relief or 14 benefits to those who supply the equipment or service, 15 then we may be back here in 10 to 15 years pondering the 16 same questions. I doubt the federal government will 17 want to fully fund the deployment of numerous networks, 18 nor do I believe anyone is asking for that. 19 The Oneida Tribe realized this and decided 20 to embark upon a path which would allow them to be in 21 control of their own destiny. Oneida is a gaming tribe 22 that invested its revenue back into community projects 23 which would benefit the community as a whole instead of 24 paying out per capita payments. Airadigm was one of 25 those projects. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 100 1 The Oneida reservation is located adjacent 2 to Green Bay, the third largest city in Wisconsin. 3 Nevertheless, it found that it was underserved by the 4 two cellular companies and the three wireline companies 5 whose markets intersected the reservation. Oneida had 6 investigated buying its own wireline phone company. It 7 investigated creating its own wireline phone company. 8 Finally, it settled on wireless communications because 9 of its lower cost of deployment and maintenance. 10 It decided to participate in the C-block 11 auctions in 1995. To the surprise of Oneida, it had to 12 find a partner to be the controlling entity since it 13 could not own more than 49 percent of a company which 14 qualified as a designated entity in the auctions. The 15 FCC had prohibited gaming tribes from having a 16 controlling interest in a designated entity. Therefore, 17 it became the minority partner in a partnership which 18 later became Airadigm Communications. It successfully 19 won the right to build out 15 BTAs in the C and F Block 20 auctions, which encompass all of the state of Wisconsin 21 and part of Iowa, well beyond its own reservation 22 boundaries. Airadigm has deployed service to the 23 majority of its population. It serves individual 24 customers in a manner similar to other wireless 25 operators, in a retail environment. However, it's gone GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 101 1 a step further. It also focuses on serving the business 2 customer with a large-scale wireline system replacement 3 offering, essentially a wireless centrex. As this same 4 service is offered to communities, it's more akin to a 5 wireless local loop. 6 Airadigm Communications has replaced the 7 wireline services of numerous companies in its service 8 area. The companies range from five lines to over 1,000 9 lines, and the industries range from insurance to 10 morticians to lumber and paper mills. It has begun to 11 replace the wireline systems within the Oneida Nation 12 and for many other Wisconsin residents. 13 After little more than a year, 500 phones 14 have been activated on the reservation. This is just 15 under a 10 percent penetration level. One of our most 16 enterprising efforts to date has been supplying the 17 Oneida Nation Police Department with these phones. 18 Prior to this, the police department did not have 19 two-way communications. In the near future, entire 20 departments within the tribal organization, such as the 21 Department of Public Works, will convert to wireless. 22 As new buildings are built, such as the health clinic or 23 the elderly home, wireless will be the primary source 24 for communications. This will exponentially increase 25 the penetration level. Many of the current individual GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 102 1 users on the reservation use only the Airadigm service 2 for their home and business phone. 3 The Oneida Nation was also concerned about 4 access to data. It wanted to combine reliable data 5 access with mobility in order to create efficiency in 6 people's lives. The digital wireless capabilities allow 7 users to access both internet and intranet databases. 8 The reservation will also serve as the beta site for 9 future cellemetry applications for monitoring specific 10 utilities throughout the reservation. 11 These activities have resulted in increased 12 awareness of the residents' needs by the competitors to 13 Airadigm, the people who were underserving. Their 14 prices have fallen. Their services have improved. 15 Airadigm Communications currently charges below them by 16 charging the Oneida member slightly less than 10 cents a 17 minute for usage, as part of a bundled package. This 18 rate decreases as we look forward to corporate bundles. 19 Oneida's investment in a wireless 20 infrastructure to serve itself and to generate revenue 21 from users throughout the region could be held up as a 22 model for other tribes to follow, except that not all 23 tribes have the ability to divert their own capital into 24 a multimillion dollar business venture. Not even all 25 gaming tribes have this ability, for not all gaming GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 103 1 tribes are successful, contrary to the expert opinion of 2 Andy Rooney from 60 Minutes. 3 We must always come back to the base issue 4 of financing the deployment. Even if the tribes were 5 given the spectrum, they would still need to buy the 6 equipment and hire the expertise to harness the 7 spectrum. They would still need to educate, market to, 8 and bill their customers, even if they are their fellow 9 tribal members. The tribes and the state and federal 10 governments cannot by themselves solve the problems we 11 discuss here today. Any solution must include two other 12 entities, the infrastructure vendors and the finance 13 community. And the latter may include tribes which have 14 benefited from gaming to date. 15 One solution that I envision is a 16 cooperative made up of all tribes, state and federal 17 governments, infrastructure vendors, and the finance 18 community. The tribes would be the end-users and the 19 partial owners of the cooperative. The vendors and the 20 financiers would also become partial owners until their 21 shares could be purchased from the revenues generated by 22 the end-users. The state and federal governments would 23 clear obstacles that the entity would encounter, such as 24 acquiring spectrum or influencing potential 25 participants. The cooperative would create a national GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 104 1 phone network with a mission based on serving Indian 2 communities. 3 While this may seem broad in its scope, it 4 actually helps to tackle another problem associated with 5 financing, that is, lowering the capital expenditures 6 and taking advantage of the economies of scale 7 associated with a phone network. If we believe that the 8 best solution for Indian tribes is one in which they 9 participate so they can control their own destiny, then 10 we have to believe that they must control their own 11 network in order to guarantee service where and how they 12 need it. But it's impossible for every tribe to have 13 its own billing system and its own network operations 14 center. It would be pointless for each to negotiate for 15 its infrastructure equipment, handsets, interconnection 16 and long-distance rates. The economies of scale just do 17 not exist for the small communities which make up a 18 reservation. By pooling their numbers, resources, and 19 potential pops, and by centralizing their operations, 20 Indian tribes have a better opportunity to create a cost 21 efficient network which serves their needs. By creating 22 a cooperative entity, each tribe would have a vote in 23 the construction and service priorities. And each tribe 24 would share in the benefits of a shorter break-even time 25 and, thus, the benefits of a positive cash flow. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 105 1 However, this is only one potential idea of the many 2 which we've heard so far and which I'm sure will 3 continue to result from these hearings. 4 In closing, Mr. Chairman and Commissioners, 5 many people talk about the problems which need to be 6 addressed in Indian country. However, there have been 7 relatively few improvements. Reservations have been 8 immune to the benefits of the telecommunications 9 revolutions in the large part. This will prevent them 10 from experiencing the benefits of the information 11 revolution. In a world which will define its have and 12 have not's not by material wealth but by intellectual 13 wealth, a tremendous delta is growing between Indian 14 country and the rest of our nation. Third World nations 15 have surpassed our own Native Americans, who live in the 16 richest nation in the world. It will take a concerted 17 effort by all parties in order to correct this problem. 18 Any solution which dictates will atrophy. Only the 19 solutions which solicit and encourage participation from 20 all facets will succeed. 21 Thank you for your time. 22 CHAIRMAN KENNARD: Thank you very much, 23 Carl. Well done. 24 A few weeks ago, after we had held a field 25 hearing in New Mexico, Commissioner Ness called me up GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 106 1 one day and said she had talked to some folks who had 2 some solutions for us, some ways that we can create more 3 phone penetration for Indians in Arizona. And out of 4 that conversation evolved a meeting that we had with 5 Smith Bagley and its partner Richard Watkins, who is 6 working here in Arizona to deliver wireless service in 7 northeast Arizona. So we're delighted that you took us 8 up on our challenge to help us, and we're glad that you 9 are here, Mr. Watkins. 10 MR. WATKINS: I'm also glad to be here. I 11 think I have a very good story to tell. And after 12 listening to Carl's presentation, while that's certainly 13 a revolutionary idea, he's going to be excited to hear 14 what we're doing, and it's on its way. 15 I'm Richard Watkins, the general manager of 16 Smith Bagley, Inc., and we hold A-band cellular 17 telephone licenses in northeast Arizona and northwest 18 New Mexico, operating as Cellular One. It's certainly a 19 privilege to present testimony at this hearing on behalf 20 of our company. I'm hoping that this hearing will be a 21 productive step toward increasing telephone 22 subscribership among Native Americans, which, as we have 23 already heard in about 14 different terms, is the 24 nation's lowest. 25 The purpose of my testimony is twofold. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 107 1 First, because I'm sure most of you have never heard of 2 us, I want to highlight for you who we are, what we do, 3 and describe how and why we are ready, willing, and able 4 to assist the FCC and the public utilities commissions 5 in meeting the communications needs of every person 6 within our authorized service area, which is about 7 60 percent Native Americans. Second, I want to suggest 8 that we think about the universal service problems 9 facing Native Americans in different and unique ways and 10 innovative ways and offer a few ideas in this area. 11 Let me briefly describe our company. We 12 operate facilities in a number of small markets in 13 northeast Arizona and northwest New Mexico, as I said, 14 as well as vast rural areas in the region. Our coverage 15 in Arizona alone is over 21,000 square miles. Our 16 reliable service area on the Navajo Nation alone is 17 roughly as large as the State of West Virginia. That's 18 just our coverage area on their nation today. The 19 largest town in Arizona we serve is Show Low, with a 20 population of approximately 7480 people. So we're truly 21 rural in every sense of the word. An average of six 22 persons live in each square mile that we cover. Over 23 the past eight years, we have aggressively grown our 24 subscriber and revenue base to permit us to expand 25 beyond the highways and to the point where we now cover GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 108 1 over 90 percent of the service area originally licensed 2 by the FCC or our CGSA. 3 We provide usable signal to four Native 4 American reservations today. One is the Navajo Nation, 5 as Citizens talked about earlier, the Hopi Nation, the 6 White Mountain Tribe, and the Pueblo of Zuni. The 7 collective service area of these four reservations right 8 now is 15,577 square miles. Our best guess is that, 9 geographically, we serve approximately 85 percent of the 10 Navajo Nation, 75 percent of the Hopi nation, 95 percent 11 of the White Mountain Apache Tribe, and 95 percent of 12 the Pueblo of Zuni. We provide all of our customers 13 with free calls to emergency numbers, including 911, as 14 well as all the public health and safety agencies, and 15 we offer toll-free calling throughout our entire 16 footprint. 17 We have recently made a decision to replace 18 our current switch and all transmission sites, which is 19 the precursor for us to adding channels at each cell 20 site and eventually upgrading the network with digital 21 capacity. As you know, with the evolution of 3-G and IP 22 protocol, this switch will be able to handle high-speed 23 Internet access, data transfer, and eliminate the 24 stopgap we heard about today about just delivering basic 25 dial tone. We believe delivering basic dial tone to be GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 109 1 very important. However, we think delivering those 2 integrated data and Internet services is just as 3 important in the future, and that's why we're taking 4 that step. We're not taking that step in two years from 5 now. We start in about 30 to 45 days to replace our 6 switch in all our transmission sites in all these 7 reservations. Given the vast size of our authorized 8 service area, the relatively low income demographics, 9 and extremely low population density, we are very proud 10 of the speed within which we have built and expanded our 11 network. 12 We market our services to all four of the 13 Native American reservations. We believe our 14 relationship with the tribes to be excellent. We have 15 worked very hard to honor the procedures that are in 16 place on each reservation for locating transmission 17 facilities on Native American property and to work with 18 each tribe to develop methods for increasing telephone 19 subscribership. For example, we have developed rate 20 structures and prepaid plans that enable many people to 21 obtain their first telephone. Additionally, the size of 22 our home footprint enables our Native American customers 23 to move throughout our service area without incurring 24 any roaming charges or any toll charges. We also offer 25 different rate plans, some of which include no roaming GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 110 1 charges throughout the State of Arizona and within those 2 areas we serve now in New Mexico. So you can see 3 already how progressive our product is on the 4 reservations. 5 Since most of our Native American customers 6 are prepaid, we must track replenishments, calling 7 patterns, and date of activations in order to estimate 8 usage. We believe the average customer now spends 9 approximately $40 per month. Our Native American 10 customers generate very few roaming minutes. It is 11 apparent to us that the vast majority of phone usage is 12 at or near home. 13 As we have expanded our footprint into 14 remote areas within our market, the need for universal 15 service support has now come into focus. Here are the 16 hard facts about one of the tribes that we serve. And 17 it's already been mentioned, but I think it's worth 18 repeating. While landline phone penetration nationwide 19 is approximately 95 percent, I agree with Citizens, it's 20 about 23 to 22 percent on the Navajo reservation. 21 That's right. 77 percent of the people have no 22 telephone. The per capita income of the Navajo Nation 23 is approximately $4,100 per year. The 1990 census 24 showed 57.4 percent of the Navajo families live below 25 the poverty line. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 111 1 And the obvious question that's begged is, 2 "What are you guys thinking, trying to make a business 3 up there?" And I'm going to try to answer that for you. 4 For many areas of the country, the 5 universal service problem is one of access. That is, 6 people currently live in or move to remote areas where 7 it costs literally thousands of dollars to string a hard 8 wire. In our area, the access problem has been largely 9 solved. We do not need financial assistance to 10 construct facilities. In many of these remote areas the 11 signal quality for a home user is comparable to a 12 wireline facility and, believe it or not, more reliable 13 in these areas. The problem is simple. The vast 14 majority of Native Americans who do not have a phone 15 simply cannot afford one. They cannot afford a phone, 16 and the basic cost of any carrier providing that 17 customer with basic service is well above what they can 18 afford. Unless universal service support is made 19 available to wireless carriers, our company has no hope 20 of ever serving the vast majority of the Native American 21 population in our service area. 22 Rather than spend my few minutes talking 23 about the nuances of costs and rate structures and 24 wireless cost structure models and telephone accounting, 25 I believe it's much more productive to touch on our GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 112 1 company's vision for universal service on Native 2 American lands. We see Native American lands as unique. 3 The levels of telephone subscribership and income 4 require bold solutions. The good news in our particular 5 situation is that experimenting with a bold solution 6 does not require any significant capital outlay for new 7 infrastructure. We believe that the system we have in 8 place is the perfect platform to build a model universal 9 service system for Native Americans, which can be 10 studied, improved, and eventually exported across the 11 country. 12 Let me give you one way to think about 13 this. The problem for nearly 100,000 Native American 14 people in our service area is phonelessness. 15 Phonelessness is different from unserved, because an 16 unserved customer could not use a phone even if it was 17 available. A phoneless person has access to service; it 18 is simply not affordable. Our company has the front end 19 of the equation, the access part, we have that under 20 control. It is the affordability problem we want to 21 attack, and we want to attack it today. 22 We recognize that the current regulatory 23 structure for universal service requires us to become an 24 Eligible Telecommunications Carrier or ETC. Although we 25 have some hope that Section 214 of the Communications GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 113 1 Act may allow the FCC to make that designation, we have 2 prepared applications to become an ETC in Arizona and 3 New Mexico. However, the process is expensive, 4 time-consuming, and often adversarial. We have delayed 5 filing these applications for a short time, as these 6 hearings have developed quickly, in the hope of finding 7 some way to shortcut the process. We believe that an 8 experimental program focused on Native Americans is in 9 order. 10 We propose for your consideration a new 11 program for first-time users, and this would allow 12 persons living on Native American lands to obtain their 13 first telephone. Under such a program, a carrier -- and 14 that would include all carriers of telephone service, 15 wireless carriers, wireline carriers, anybody who wants 16 to provide the service and wants to put the 17 infrastructure in place to do that. Under that program, 18 a carrier would offer local service at a fixed price. 19 Given what we know about demographic and usage patterns 20 in these areas, as discussed before, we believe that a 21 relatively wide local calling area would provide users 22 with virtually all of their basic telecommunications 23 needs. 24 An experimental program such as "First-Time 25 User" can be developed and quickly rolled out on a GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 114 1 limited scale, enabling both the carriers and regulators 2 to learn about calling patterns and usage. From our 3 perspective, phonelessness is so widespread on Native 4 American lands, it's nearly impossible to predict which 5 of many possible programs will best serve people without 6 exploding the universal service fund. An experimental 7 program, as we propose, which develops and adjusts 8 proposed solutions over time based on real data will 9 best serve the public while enabling the government to 10 assess its costs and contain them before the program is 11 ruled on nationwide. 12 Our company finds itself in a unique 13 position to be able to support an experimental program. 14 The capital investment is in place, and we seek no 15 reimbursement for our embedded network. We have 16 successfully worked through the initial phases of 17 operating on Native American lands with all four tribes 18 that we serve. The importance of that factor alone 19 should not be discounted, because each tribe has its own 20 culture, its own governmental regulations and practical 21 problems, such as site acquisition procedures. 22 Everybody in this room in the telecommunications 23 business who has gone to a tribe or reservation in order 24 to secure transmission site facilities, they know the 25 process sometimes can be arduous and long. We have GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 115 1 battled and won that battle. We have our sites located 2 on all the reservations at this time. 3 In closing, as I expressed earlier and 4 reemphasize now, the problem for over 100,000 Native 5 Americans in our area is not one of unserved area. The 6 system is already built. The problem is a lack of 7 income to afford telephone service. What is needed is 8 an imaginative program to support first-time users of 9 telephones. We would be happy to participate in a 10 program pursuant to which wireline and wireless carriers 11 compete for these new customers, and we stand ready to 12 work with the FCC and the state utility commissions to 13 design a model innovative new program for universal 14 service that will guarantee every Native American in our 15 service area telephone access. 16 The timing of our systems development 17 coinciding with the current push to overcome these 18 obstacles is fortuitous. The Native American people 19 have waited a long time to receive telecommunications 20 service, and we believe a pilot program could be 21 developed and rolled out within months, not years. It 22 is my hope that all of the regulatory bodies represented 23 here recognize this unique opportunity which has 24 surfaced due in large part to Chairman Kennard, 25 Commissioner Ness, and the other Commissioners and the GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 116 1 task force. 2 On behalf of Smith Bagley, Inc., I want to 3 offer my sincere thanks for the opportunity to tell my 4 story. Thank you. 5 CHAIRMAN KENNARD: Thank you for your 6 story. Excellent. 7 Our next witness is Rhonda McKenzie, who is 8 managing partner of Aircom Consultants, Inc., and she's 9 going to tell us about LMDS, among other things. 10 MS. McKENZIE: I'm sorry? 11 CHAIRMAN KENNARD: Among other things. 12 MS. McKENZIE: Among other things. 13 Thank you, Chairman and Commissioners, and 14 thank you, Governor Mary Thomas and the community, for 15 so graciously hosting this event. 16 I'm going to try to approach my 17 presentation a little differently than directly off of 18 my testimony. I've been in this industry for 25 years. 19 I began in 1974, right out of college, when there was 20 only one phone company. I've been involved with 21 delivering telecommunications services to tribal 22 communities since 1974. I've also been involved in 23 wireless as a director of network engineering on the 24 wireless side for many wireless companies. I've owned 25 my own companies as a PCS carrier and an LMDS carrier GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 117 1 and a turnkey developer and consulting firm. 2 The reason I'm telling you this is because 3 it's very important. Over the last 25 years I have 4 focused on really becoming quite acquainted with many 5 tribal members, and I have the greatest respect for 6 these people. I have also consulted overseas, and some 7 of the Third World conditions in Ecuador and Sri Lanka 8 are not unlike what I've seen on some of our tribal 9 lands. There is one tribe, I won't disclose the name, 10 for obvious reasons, but there is one tribe that has 11 only one phone line. They are begging us to assist them 12 to try to get federal grants for telemedicine and 13 distance learning, and we're going to try to get them 14 some help. 15 We're currently involved with 23 LMDS 16 licenses with our strategic partners. We cover 17 El Centro to Brownsville, Texas, all of Arizona and 18 New Mexico, portions of Oregon and Washington, and we're 19 negotiating other strategic alliances as we go along. 20 Our intent is to create a hybrid system, cooperating 21 with RBOCs or whoever the regional Bell operating 22 company is within each of those areas, or the 23 alternatives, CLECs, the wireless carriers, whether 24 they're cellular or PCS, to provide basic voice service. 25 We will augment the basic voice services with our LMDS GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 118 1 licenses, providing an emphasized focus on telemedicine 2 and distance learning. We currently have six tribes 3 identified for a test bed. I cannot identify these 4 tribes at this point, for obvious proprietary reasons. 5 There are two other elements that I'd like 6 to add to Carl's suggested consortium of a cooperative 7 consulting group, and that would be to add the medical 8 communities and the educational communities. We have 9 done this. We're in the process of applying for a 10 federal grant or, actually, six federal grants to 11 provide these tribes with basic telecommunications 12 service. That would be one-half of the activity. The 13 second half would be split between the medical 14 communities and the educational communities. We're 15 currently working in Arizona with Arizona State 16 University, the Mayo Clinic, St. Joseph's Hospital, 17 Samaritan Hospitals, Northern Arizona University, and 18 the University of New Mexico. 19 Our intent is to carry high-speed Internet 20 and video conferencing into the reservations for two 21 purposes. First of all, realtime telemedicine. I get 22 really excited about this. You can get LMDS to the 23 remote locations bypassing the sacred burial grounds. 24 From my experience, it is very disrespectful to even ask 25 to try to tear across a sacred burial ground or a GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 119 1 ceremonial ground. 2 The other thing is you should be very 3 conscious of the individual cultures of each of the 4 tribes. Each of these people have very sacred beliefs, 5 just as we do. They do not, in most cases that I've 6 found, do business quite at the pace as we in the 7 traditional American setting. One should also be 8 conscious of the prayer ceremonies that are frequently 9 involved during business meetings. One should be 10 conscious of the rituals and the cultures and beliefs, 11 as well as the value of the land. 12 So, what our LMDS system is going to do is 13 to apply for a federal grant so that we can tie in 14 higher-level educational institutes, higher-level 15 technology institutes to bring direct education into the 16 tribes with basic phone. We would use legacy plant 17 infrastructure as much as we can. This would be like 18 aligning with a PCS carrier who overlaps with our BTAs 19 or an AMPS carrier. PCS is personal digital 20 communications service, and AMPS is the cellular 21 service. Or if there is fiber in the ground because of 22 the soil being conducive to easy trenching, and there 23 are no sacred burial grounds or the terrain is not 24 rugged, then we would try to go with a fiber line. But, 25 as Governor Thomas indicated, we don't want to use old GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 120 1 antiquated systems. We don't want to use old degraded 2 copper lines. We want these people to have the same 3 level of standards that we have in the United States 4 metropolitan areas. 5 As an outside plant engineer in my past 6 life, we used to size, in 1974, for the residential 7 communities, three lines per residential home. Three 8 lines: one for basic telephone, one for a backup or 9 spare in case it went bad, and then the third for a 10 secondary line. Our long-range planning had already 11 projected there was going to be this type of demand. 12 Now we are sizing five lines per residential home in 13 metropolitan areas. We are designing for modems, teen 14 lines, dedicated fax, and a primary line, and in many 15 cases a secondary line. But here, we are talking about 16 one line per residence on the tribal lands. 17 LMDS, in conjunction with the CLECs, RBOCs, 18 PCS, and AMPS companies, we will be able to offer these 19 people the same high-speed Internet capabilities, 20 distance learning, and telemedicine as metropolitan 21 areas. One thing I want to emphasize. I know for a 22 fact that today PCS cannot provide the high-speed 23 Internet that these people need. You cannot do it. You 24 need to use high band widths like LMDS to provide the 25 high-speed Internet. Today PCS can only go to 28,800 at GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 121 1 best, and that's expected to be by the end of this year. 2 LMDS can go the equivalent of an ISDN line or a SONET 3 ring. We want these people to have the same level of 4 high-speed Internet, high-speed telemedicine, and 5 high-speed distance learning that we have in our 6 communities in the metropolitan area. 7 This can be provided at very reasonable 8 rates to the tribal communities through RUS funding and 9 federal money reserves through the Department of 10 Agriculture. We have applied for these federal grants. 11 The main thing that I want to emphasize is the LMDS 12 A-band can be used for the video conferencing, and the 13 technology is here now, very economically priced. And 14 we can actually transmit, from a remote clinic, a 15 laparoscopic view of an eye or inside an ear from a 16 remote clinic through a wireless application into 17 Phoenix Barrow's Neurological Institute, realtime, the 18 doctor can advise a specialist at that remote clinic or 19 nurse or doctor at the clinic what the diagnosis is just 20 by looking at the eye, the throat, ear, x-rays. This 21 technology is here now. It's very inexpensive, and it 22 can be provided right away. 23 What the FCC can do to help us is help us 24 understand how we can process the federal grants and the 25 RUS funding more expeditiously. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 122 1 You wanted solutions. I'll offer two for 2 you, as a licensee. I know for a fact that there are 3 many C Block licensees that are still alive and also 4 many, many LMDS licensees that are more than willing to 5 partition their spectrum to these tribes if you would 6 give some compensation for that portion that would be 7 partitioned off. Something like tax credits or the 8 like. That's one solution. Allow the tribes to own 9 their systems. 10 And I will admit to you, I feel for these 11 people. And I'll quote J.D. Williams. I received his 12 permission to quote this. I want to repeat this because 13 I think it's really important for you to know what 14 really is happening out here. Last year in Albuquerque 15 the wireless bureau came out and provided a very fancy 16 presentation on how everyone could participate in the 17 auction through the Internet. J.D very graciously said, 18 "That was a very nice presentation, but most of us don't 19 even have a basic telephone line, much less access to 20 the Internet." Their spectrum over their lands was 21 auctioned off in most cases. So this partitioning would 22 also make right for that wrong, allowing the existing 23 licensees to partition off with some tax credits. 24 The second solution I would offer you is: 25 Do not allocate another spectrum. I will tell you, it GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 123 1 requires the original equipment manufacturers to spend 2 millions on R&D to provide equipment that will be 3 interoperable with the other equipment. These people 4 need to be able to interface just like the metropolitan 5 areas with public service telephone networks. They need 6 to be able to hand off to a PCS operator that's got 7 proven Motorola or Ericsson equipment. All of these 8 carriers have equipment manufacturers with equipment 9 that operates on PCS and AMPS spectrum. You don't need 10 to have another spectrum that is not inter-operable with 11 the others. Native American Indian communities should 12 be able to do switch sharing so they can cut the costs 13 of their systems. 14 Time is up. Thank you. 15 CHAIRMAN KENNARD: Thank you very much. 16 I'm very pleased to see our next witness 17 here, David Siddall, who is very familiar with the way 18 the FCC operates because, until recently, he was an 19 advisor to Commissioner Ness and a very fine advisor at 20 that. 21 So, David, I'm delighted that you are here, 22 and we're looking to you for some real specific 23 solutions. Specific rule changes we want to hear from 24 you. 25 MR. SIDDALL: I'll try not to let you down, GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 124 1 Mr. Chairman. 2 Mr. Chairman, Commissioner Ness, 3 Commissioner Furchtgott-Roth, thank you very much for 4 having me back before you for the first time not as one 5 of your staff. These field hearings are a remarkable 6 opportunity for policymakers to assess whether the 7 theories and regulations that we rely upon back in 8 Washington are working or not working. 9 The Commission has done much to ensure the 10 availability of communications services to all, but as 11 other witnesses have said, substantial and important 12 work remains to be done. Prominently inscribed above 13 the main entrance to the United States Supreme Court is 14 the phrase "Equal Justice Under Law." If you have the 15 opportunity, Mr. Chairman, to place an inscription above 16 the main entrance to the new FCC headquarters at the 17 Portals, there would be no more worthy a phrase than 18 "Communications Available to All." Then all passing 19 through your doors would be reminded daily of why the 20 FCC exists. 21 The Chairman has called for solutions, so I 22 will take him up on that. I would like to use my time 23 this morning to try to synthesize some of the issues we 24 have heard about and to address some of the 25 considerations of the technology providing these GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 125 1 solutions. 2 I'll try not to get too abstract in doing 3 so, but I need to note that there truly have been 4 enormous achievements in the last 30 years. One of 5 these achievements is coverage. Literally anywhere I go 6 I can be reached today. Most wireline networks 7 interconnect worldwide with little delay, and I can be 8 reached by pager or by cell phone -- I have turned it 9 off for the moment. I can even take a satellite phone 10 into remote areas. This is a very different world than 11 when I was a high school exchange student in Argentina 12 over 30 years ago. I had to schedule calls to my family 13 in the States two to three weeks in advance. And 14 sometimes they went through, and sometimes they didn't 15 go through, which is why I became an even more avid ham 16 radio operator, because I used ham radio often to talk 17 to my parents. 18 I want to note in particular that in 19 addition to the worldwide coverage that exists today, 20 technological advancements call into question certain 21 traditional assumptions. One of these is that capacity 22 is limited and that cost and capacity are inextricably 23 linked. Cost and capacity in the future or even now may 24 not be linked. This is due to the confluence of 25 breakthroughs in digital technology, fiberoptics, GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 126 1 wireless transmission, and satellite transmission. It 2 costs no more to lay a fiberoptic cable than it does to 3 put down a copper cable, if you are doing so as an 4 initial matter. 5 The result of this new paradigm, if you 6 will, to use albeit a hackneyed phrase, is that insofar 7 as basic services such as voice are concerned, in the 8 near future the major cost will be to establish the 9 connection in the first instance, almost without regard 10 to the capacity. The Internet and other planned uses 11 demand so much more capacity than voice that the day 12 probably isn't too far away when voice service is a free 13 add-on to the high-capacity two-way data service that 14 people will be purchasing. 15 These breakthroughs are what some theorists 16 refer to as disruptive developments, because progress 17 happens suddenly rather than as a natural linear 18 progression. They provide the means to leapfrog 19 technologies and provide advanced services, as 20 Commissioner Ness and Chairman Kennard both suggested in 21 their opening statements. 22 For policymakers, the important aspect of 23 these technological developments is that assumptions of 24 past years may no longer be accurate predictors of 25 future developments. Understanding them as such will GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 127 1 help when crafting effective incentives and policies to 2 encourage connecting unserved areas such as Indian 3 reservations. For example, it may be less important 4 today to define which grade of voice service that must 5 be provided. What is important today is to get the 6 connection made in the first place. 7 Technology today provides a number of 8 alternatives for such connections. Wireline can be 9 combinations of fiber, copper, and microwave links. If 10 new infrastructure is being installed, laying fiberoptic 11 cable costs no more than laying copper cable. 12 As others have noted this morning, wireless 13 can save a lot of cost and is a viable alternative when 14 there are suitable tower sites within range of the areas 15 to be served. And within three to five years 16 third-generation PCS will provide e-mail and Internet 17 access to cell phones as well as voice, and it's planned 18 at 384 kilobits per second as the initial rollout 19 expected around the year 2000. 20 I also note that in a number of other 21 countries, as was noted by Jeff earlier, wireless local 22 loop access has a specific allocation in the 23 3.6 gigahertz range, and wireless local access is 24 growing rapidly in those countries. The equipment is 25 already available, but we do not have a comparable GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 128 1 spectrum allocation here in the United States. Perhaps 2 in addressing the Salt River petition -- there was an 3 earlier one by DSC in the same area -- and also in 4 addressing the open proceeding on 3650 to 3700 5 megahertz, the Commission will address wireless local 6 loop spectrum needs. 7 Finally, a new generation of satellites in 8 low earth orbit is just coming on line and beginning to 9 deliver paging and telephone handset service literally 10 anywhere in the world. 11 Iridium has rolled out such service. And I 12 think it's appropriate to note that the North American 13 gateway to Iridium is just a couple miles up Interstate 14 10 from this location in Tempe, Arizona; and much of the 15 electronics were developed by Motorola right here in 16 Chandler, Arizona. This possibility means that there 17 are people in this local community who understand 18 communications, who hopefully can join in the effort to 19 help those people who don't have service, because 20 obviously the expertise has to be here with such a 21 presence. I was also told this morning that Intel has a 22 significant presence here as well. All of these options 23 provide a variety of technological options that can be 24 put to use to bring out service to sparsely populated 25 areas. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 129 1 Cost is obviously the biggest 2 consideration, but government policies also play 3 important roles, and I'd like to address a couple in 4 particular very briefly. These concern access to 5 spectrum for wireless services, which we've heard quite 6 a bit about this morning and which a number of witnesses 7 have addressed. It is notable, for example, that 8 despite the unmatched rollout of spectrum licenses over 9 the last four years that cover all geographic areas, 10 many sparsely populated areas remain unserved, including 11 Indian reservations but not exclusively Indian 12 reservations. This is not atypical. The most pertinent 13 question to ask is whether someone would provide service 14 if they could access that spectrum. If the answer is 15 no, the inquiry is over. If the answer is yes, then a 16 way should be found to get spectrum into the hands of 17 those who will provide the service. 18 The Commission's rules do have various 19 construction requirements, and licensees also are 20 permitted to disaggregate spectrum and partition service 21 areas. And I want to note that many of these licensees 22 are new within the last five years, so there are also 23 timing considerations and perhaps tower siting issues. 24 But, of course, one would not expect all or 25 even most of these licensees to build out sparsely GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 130 1 populated areas. When all is said and done, it is 2 important in the final analysis to find a way so that at 3 least one licensee takes on this task. Therefore, given 4 the lack of service you have seen both here and in 5 Albuquerque, it might be appropriate for the Commission 6 to review its construction requirements and its 7 disaggregation and partitioning rules to assess their 8 success or lack thereof, and to consider further action 9 if service is not getting out to rural areas despite 10 there being entities who would provide service if they 11 had spectrum. And I would note that there is a record 12 at the FCC in various proceedings, including the 3650 to 13 3700 megahertz proceeding, that address this very issue. 14 Finally, I want to note that last Thursday 15 the Commission requested comment on the role of mobile 16 satellites. The responses should be very helpful in 17 evaluating the potential for those to also help to serve 18 the underserved areas. 19 I want to thank you for addressing these 20 issues here today. Success in bringing service to these 21 areas will greatly improve the quality of all lives, but 22 especially of those of our children. Thank you. 23 CHAIRMAN KENNARD: Thank you very much, 24 David. Thank you for being here. 25 The final witness on this panel is GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 131 1 Mr. Walter Purnell, who is president and CEO of American 2 Mobile Satellite Corporation. And I think the end of 3 your remarks, David, were a great segue to Mr. Purnell's 4 remarks about satellite access. 5 MR. PURNELL: I think he changed his just 6 at the end when he saw I was sitting next to him. 7 Mr. Chairman, thank you for allowing 8 American Mobile the opportunity to address these 9 problems. Every time I'm last in a speaking engagement 10 I remember something one of my graduate professors said. 11 He said, "There is no greater success in life than 12 getting the microphone last." Knowing no one gets to 13 rebut you, I guess. 14 I found, as I was sitting here this 15 morning, that I was sort of edgy in my seat, and I 16 wanted to jump up and say, "I know the answer to that 17 problem," because I think we do have some answers, not 18 some problems. Like all complex problems, the solutions 19 are typically complex as well. And in solving this 20 communication problem in rural America, the Native 21 Americans have an opportunity to do something that a 22 number of countries around the world have done, and that 23 is specifically leapfrog a generation or two of 24 technology. A number of countries around the world have 25 chosen not to put a lot of landline down but to go right GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 132 1 to wireless. And there are a number of elements of 2 wireless cellular, we've heard some of that this 3 morning, and satellite. Like all technically complex 4 solutions, one technology doesn't necessarily solve all 5 of the problems. While cellular certainly is a good 6 solution in areas that have some level of population 7 density, in the very remote areas that may not be 8 economical either. So a mix is perhaps more 9 appropriate. 10 Imagine, if you will, a solution that has 11 the following characteristics: 12 For the carrier, that's me, no investment. 13 The investment is done to serve every spot in the United 14 States. I have no additional investment. It's 15 available everywhere. The satellite is a geosynchronous 16 satellite. It sits up 23,000 miles above the earth and 17 has tons of capacity. 18 No messing up the environment. We talked 19 about sacred lands, beautiful lands. You don't have to 20 run wires. You don't have to put up poles. The beams 21 are invisible, and they're there. 22 We talked some this morning about some of 23 the other satellite providers, Iridium, Teledesic. Some 24 of them have announced rate plans. Our rate plan that 25 would be available is a tiny fraction of the rate per GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 133 1 minute of those stated rates. Affordability is an 2 important issue. 3 Expandable beyond voice. We talked about 4 getting into the 21st Century. While we provide 5 satellite voice, we also provide the capability of 6 satellite data. And moving to high-speed data and a lot 7 of the advanced features that I know are desired are or 8 will be available soon. No obstacles. 9 It's rare that I have a chance to speak to 10 a group of potential customers or business partners 11 where my solution is such a close fit for the problem. 12 American Mobile, as you may know, is a satellite 13 communication company. We also have a terrestrial 14 wireless data network that is the most expansive data 15 network in the country. It's called Ardis. But the 16 company was quite literally created by the FCC in order 17 to address just this type of problem that we're 18 discussing today. After the FCC granted us a license to 19 provide this kind of service, we fulfilled our promise 20 by spending more than half a billion dollars in putting 21 all the infrastructure in place, and we have the 22 capacity to serve anybody in the country with satellite 23 voice telephony. The partnership with the FCC continues 24 as we continue our constant fight to continue to get our 25 spectrum allocation, to continue to grow and provide GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 134 1 service. And that's been a good partnership with the 2 FCC. 3 I am pleased to say that we are today 4 working with the Navajo Nation and currently provide 5 services to their law enforcement agencies to enable 6 communications in some of the very remote areas 7 throughout the nation. I am hopeful that the service we 8 provide is accomplishing its objective of assisting law 9 enforcement, easing emergency situations, and in fact 10 saving lives. And we've put some good folks on it, and 11 one of our account execs who was here this morning was 12 telling me about how they forced her to run the trial. 13 They put her in an emergency vehicle with the lights 14 blaring and the sirens soaring, and they went through 15 two hours of dirt road, and the guy said, "And now make 16 it work here." And, of course, it did. It works 17 everywhere. 18 I'm not surprised at some of the earlier 19 testimony from earlier hearings that I read about the 20 substantial cost of putting landline into some of these 21 areas. I know it's enormous, and I know the population 22 is relatively sparse. Satellite technology, on the 23 other hand, allows for immediate cost-effective 24 solutions to these challenges. For my service, the 25 tribal lands are not a high-cost service area. They're GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 135 1 just a service area. 2 The inherent nature of the satellite 3 telephone is to stand alone and to communicate through 4 our one base station, our one antenna site that's 23,000 5 miles above the earth. We have the technology and the 6 resources today to, at the very least, place a satellite 7 telephone in every remote pueblo in order that every 8 community will at least have the ability to call for 9 help. We have solutions for a variety of additional 10 communication needs, but the need for immediate 11 emergency communication to prevent loss of life can be 12 solved immediately. Our infrastructure is in place and 13 operational even in the most remote communities. And a 14 broad-based solution across the nation can be 15 implemented in weeks or months, certainly not in years, 16 and at a relatively low price. 17 Mr. Chairman, there are numerous ways in 18 which satellite service can solve the immediate 19 emergency communication requirements on the reservations 20 today. American Mobile has supplied -- has studied many 21 ways and configurations of satellite equipment, some not 22 much larger than laptop PCs, including power supplies to 23 ensure their usability in very remote areas where there 24 might not even be electricity. I offer the assistance 25 of American Mobile in working with you and GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 136 1 representatives of the Native American community to 2 implement solutions to both short- and long-term 3 communication needs. As we participate together, I want 4 to promise you several things. 5 First, you have my personal promise that 6 American Mobile will give you the best that we've got. 7 Second, you have my personal promise that 8 we will bring you the most cost-competitive offering 9 that we can provide. Certainly by comparison with some 10 of the other satellite alternatives, I think you'll find 11 our price is extremely aggressive. 12 But I do understand some of the economics 13 within the Native American population, and that might 14 not be enough. So should any universal service funds 15 become available to support this project, you again have 16 my personal promise that they will be fully and 17 completely used to reduce the price of service to the 18 end user, because I don't need any of it for 19 infrastructure. 20 I also believe in long-term partnerships. 21 That's the way I work with my commercial customers, and 22 that's the way I like to work with my consumer 23 customers. I believe in communication. Obviously, 24 that's my business. And I believe in education. And I 25 think all three of those things go together. If we're GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 137 1 able to go forward, I will -- and I hope I get this 2 reference right; if it's not, please correct me -- but 3 if we're able to go forward, I will donate 5 percent of 4 all ongoing service revenue that American Mobile derives 5 from doing business with the Navajo Nations to the 6 American Indian College Fund and Dine College. As I 7 say, I think that reference is correct, but if it's not, 8 my promise is good, because I think these things all go 9 together. 10 It has been my pleasure to appear before 11 you today and offer my testimony. I am confident that 12 together we can find ways to offer this much needed 13 service in a very cost-effective way in the very near 14 future. Thank you. 15 CHAIRMAN KENNARD: Thank you, Mr. Purnell. 16 I'm still writing down these promises you have given 17 here, because I want to get them right. 18 MR. PURNELL: Well, someone asked for a 19 copy, so she will have it in writing. 20 CHAIRMAN KENNARD: Okay. Good. Thank you 21 again. 22 I had a couple of questions to follow up on 23 this panel, which I thought was very, very interesting 24 and useful for us here. 25 Mr. Olson, your proposal for a competitive GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 138 1 bidding process for universal service is an intriguing 2 one. I've been learning about it for quite some time 3 now, and I guess my question to you is whether you could 4 envision having a competitive bidding process for 5 universal service on maybe an experimental basis. I 6 mean, there are a lot of difficult legal and policy and 7 practical questions. 8 MR. OLSON: Sure. 9 CHAIRMAN KENNARD: And, from our 10 perspective, we're undertaking some fairly significant 11 changes in universal service for the nation. And sort 12 of making sure that those changes work out well is a 13 monumental task in itself, and to kind of put an overlay 14 of competitive bidding on that is, you know, asking the 15 nation to sort of bite off quite a big chunk at one 16 time. 17 And I might note, in that regard, that 18 Commissioner Ness chaired the Joint Federal-State 19 Universal Service Board, and Commissioner 20 Furchtgott-Roth was a member. And I was delighted to 21 watch that process from afar because I know how 22 difficult it was grappling with those questions. 23 So I guess my question is: How would you 24 envision us implementing a competitive bidding system 25 that we could do sort of on an incremental basis so that GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 139 1 the nation could get some confidence that this is going 2 to work since it's never been done before? 3 MR. OLSON: I think your idea of doing it 4 on a trial basis makes ultimate sense. And we don't 5 pretend to know all of the mechanisms that it would take 6 to effectively bid the lowest support level to serve a 7 rural area in a competitive bidding process. We have 8 certainly worked through a significant number of the 9 mechanics as we've examined it in the context of the 10 universal service proceedings, but I would be the first 11 to admit to you that we do not have all of the details 12 lined out on exactly how an auction proposal would work. 13 We do have recommendations and suggestions on many 14 aspects of the major mechanics of how it would work, 15 but, as I'm sure you are aware, there are a number of 16 issues regarding actually rolling it out that we have 17 still not addressed. So the idea of a limited 18 experiment in that regard makes ultimate sense. 19 CHAIRMAN KENNARD: Now, have you had the 20 opportunity to share your plan with any state regulatory 21 commissions to see if there might be some who are more 22 receptive than others to your plan? 23 MR. OLSON: I personally am not aware of 24 the specific preferences of the state commissions for 25 it. There are other folks at GTE who have been working GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 140 1 this issue in the state jurisdictions who I'm sure we 2 could put in touch with you and have that discussion 3 further. But we have been suggesting and working on an 4 auctions proposal both in the federal proceedings and in 5 the state proceedings for a good number of years now, so 6 I know we've verbalized it extensively in the state 7 jurisdictions. I just can't suggest here to you today 8 where would be the most appropriate test bed. 9 CHAIRMAN KENNARD: Okay. Thank you. 10 Commissioner Ness, did you have questions? 11 COMMISSIONER NESS: Thank you. One 12 question for Citizens. You receive universal service 13 high-cost support at this point, do you not? 14 MS. STEVENS: Yes, we do. 15 COMMISSIONER NESS: Do you take those funds 16 and reinvest them back in the communities for which the 17 high-cost fund was supporting additional lines or 18 additional subscribers? 19 MS. STEVENS: As I said, we've invested a 20 tremendous amount of money in the last three years in 21 these communities, a little over $31 million so far, and 22 that naturally does not -- I can't give you a balance to 23 that to the universal service draw, but I'm sure that 24 it's very near. 25 COMMISSIONER NESS: Thank you. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 141 1 On the wireless questions and the ability 2 to allocate some additional spectrum, some of you are 3 providing wireless services. What have been the 4 impediments that you have seen to the ability to get new 5 subscribers? For example, Mr. Watkins. 6 MR. WATKINS: You mean impediments from a 7 capacity standpoint or just -- 8 COMMISSIONER NESS: You don't have a 9 capacity problem at this point in time? 10 MR. WATKINS: No. 11 COMMISSIONER NESS: You're just having a 12 problem getting folks to subscribe? 13 MR. WATKINS: It's an affordability 14 problem. We would love to have a capacity problem on 15 the Navajo Nation or the Apache Nation, but the biggest 16 impediment we face today is affordability. The emphasis 17 we are putting on is we would like the consumer to be 18 economically empowered in the sense that -- it was 19 interesting to hear Walter talk about, I mean, American 20 Mobile Satellite, those types of companies. They can 21 provide this service. And if we can put the economic 22 power in the hands of the consumers, let them choose. 23 And I think his product is probably better for some 24 customers than mine, but with an array of products out 25 there, if we can get the economic power in the hands of GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 142 1 the consumer, let them choose the telephonic product 2 that best serves their needs. 3 COMMISSIONER NESS: Thank you. 4 CHAIRMAN KENNARD: Thank you. 5 Commissioner Furchtgott-Roth, did you have 6 questions? 7 COMMISSIONER FURCHTGOTT-ROTH: 8 Mr. Chairman, we've had a lot of very interesting ideas 9 this morning. In the interest of time, I will hold my 10 questions, if I can have some certainty at being able to 11 get back to these good folks at a future date, based on 12 their written testimony, as we work through these 13 various issues with dealing with the services. 14 CHAIRMAN KENNARD: Thank you very much. 15 My thanks to this panel, and we will 16 proceed with the next panel. Then I'd like to have a 17 little time at the end, if we have time, for questioning 18 from the audience. You've been patient, and I'm sure 19 you've been mulling over these issues as well. 20 Thank you again. 21 (A recess ensued from 12:03 p.m. to 22 12:07 p.m.) 23 CHAIRMAN KENNARD: I'll invite everyone to 24 please take their seats so that we can move into our 25 third and final panel. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 143 1 We're pleased now to have a very 2 distinguished panel of state regulatory commission 3 representatives, at least one, and consumer 4 representatives. And we'll begin with our counterpart 5 in the State of Arizona, Jim Irvin, who is Chairman of 6 the Arizona Corporation Commission. Jim. 7 MR. IRVIN: Thank you, Mr. Chairman. First 8 of all, I want to thank Governor Mary Thomas for the 9 facility and help putting this program together and the 10 breakfast that was hosted by the Gila Indian Community 11 here. It was very nice. And it's a pleasure to be here 12 and see all you people, as well as it was nice to 13 provide the nice weather for you folks from Washington. 14 Commissioner Ness, and Harold over there, you have to 15 enjoy this because you're going to go back to freezing 16 weather when you head back east. Enjoy it while you're 17 here. 18 I'll move quickly. A lot of the comments I 19 have, have been mentioned. I have a prepared statement 20 that's in the back there, as many of the panelists here 21 have done, and you can read in depth what we have, 22 because I know the Chairman and other Commissioners do 23 need to catch an airplane and head back to D.C. 24 The areas that I want to cover most 25 importantly -- in fact, let me also make mention that I GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 144 1 had the privilege of being at the Salt River Indian Pima 2 Community when we made the very first telephone call 3 after Mountain Telecom installed the systems there, with 4 Senator McCain. And that was really a truly exciting 5 moment to make that first call, especially since we got 6 a busy signal. No, that's not true. The call did go 7 through, and, believe me, and the people were very 8 happy, especially us. 9 But let me start by talking about the 10 climates as we've seen. We've talked about how our 11 communities we can see are growing up here and, living 12 in the community, in the Phoenix metropolitan area, how 13 we're encroaching on the Indian communities. You know, 14 scarcely a hundred years ago this was considered a vast 15 wasteland, and there was nobody out here. And today 16 it's a thriving metropolis, the sixth largest city in 17 the United States, one of the 27th, I think, 25th or 18 27th largest metropolitan communities in the United 19 States. 20 And as the Indian communities come together 21 with the nonIndian communities, we have to start to 22 understand and learn from each other something that is 23 new. And we also, just as we've done in the state and 24 the federal and in our jurisdictions between state and 25 federal, we have to learn sometimes to work together, GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 145 1 and we can't see everybody as the enemy. Regulators 2 have to recognize that American Indian communities are 3 very diverse. Private corporations have to recognize 4 this same point, that communities are very diverse. And 5 they have to recognize the differences amongst the 6 people there. And I think if we're going to promote 7 this type of atmosphere and this type of program and 8 this type of building that we have seen on the Salt 9 River Indian Community, then we will certainly be very 10 successful here in this endeavor and what the FCC is 11 endeavoring, trying to do there. 12 One of the questions that was asked to me 13 is what jurisdiction does the Arizona Corporation 14 Commission pose over Native American tribal lands and 15 tribal corporations and companies. Basically, none. 16 Our jurisdiction is only over those nontribal companies 17 that serve on tribal lands, and we have no jurisdiction. 18 However, let me encourage our Native American neighbors 19 that we are a resource and we should be used as a 20 resource to help bridge the gap between the Federal 21 Communications Commission, between the state 22 legislature, and other federal agencies. And I have 23 four members of our staff here that are in the back. We 24 have our assistant director of the utilities division, 25 David Motycka; one of his associates, Mark DiNunzia; one GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 146 1 of our legal representatives, Maureen Scott; and my 2 chief of staff, Patrick Black, he is here. And if you 3 people get the opportunity to meet them, I think you'll 4 find them also to be a resource that our Commission can 5 be for you as well. 6 Interestingly enough, we did some surveys, 7 and we were looking at this problem, and I want to use 8 just one example that I think accents the problem on 9 Native American lands. And that is the largest 10 reservation in the nation here and one of the largest 11 companies that serves them is Navajo Communications, 12 Inc., Citizens Utility. We heard from them earlier. 13 I'll call them Navajo. From the numbers I get, they 14 presently serve about 10,800 residential customers, and 15 what our staff show us additionally is another 12,544 16 households on these lands that are in their service 17 territories have electricity but do not have telephones. 18 In addition to that, there's another group of people 19 that lives on the native lands up in the Navajo Nation 20 and the Hopi Nation up there that don't have electricity 21 and do not have telephones. And there was a U.S. News & 22 World Report that only showed about 5,000 Arizonans are 23 in unserved or underserved territories, and this simply 24 is just not true. 25 But I want to also stress to the FCC and to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 147 1 all the people here that the problems serving rural 2 areas is not just a problem that we face on our Native 3 American lands. It is also a problem that we face 4 throughout the state of Arizona on nontribal lands. And 5 that is a problem of infrastructure. Another point that 6 we want to accent is Citizens Utility gave our 7 Commission numbers which I found staggering, and I 8 think, Commissioners, you will find these numbers 9 staggering as well, that facilities in 1997, the cost of 10 bringing line extensions to residents on the Navajo 11 Nation, ranged from $1,560 to $157,000 to provide those 12 extensions. And you can see how it's scarcely 13 cost-effective. And I think Governor Thomas mentioned 14 that even here it was $7,000 for a line extension 15 earlier. 16 So these costs are tremendous. Not to 17 mention we'll hear from, also on this panel, from Alison 18 Hughes. I had the privilege of addressing her group 19 earlier when they met on telemedicine and the 20 opportunities there, and we've heard some of the things 21 about that. And I'll be interested to hear her report, 22 because there's just a lot of good positive things and 23 another reason for advancing infrastructure on our 24 Native American lands as well as throughout rural 25 America. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 148 1 The problems that I see that we need to 2 do -- and I'm trying to skip through and get my remarks 3 in here as quickly as possible so everybody has the 4 opportunity to ask questions -- we can offset these 5 construction costs. I believe that these costs can be 6 offset. We can use block grants that focus on tribal 7 lands or areas, or we can use designated contributions 8 for line extensions through federal and state universal 9 funds in setting aside specific funds for construction 10 and not using all these funds, as I have stated 11 previously to your Commission, Mr. Chairman, for just 12 merely reducing recurring monthly revenue is not enough. 13 I think we have to take that in consideration, but it 14 does us no good if we reduce recurring monthly revenue 15 if nobody has a phone to get that help. We have to get 16 them that telecommunications service. 17 Another area that I think is very 18 important, we heard earlier from the wireless providers. 19 And one of the biggest problems we had with the wireless 20 providers, and it was mentioned today, is cost. One of 21 the things that we need to do there is bring those costs 22 down so they're in a competitive mode with traditional 23 wire or the hard wire and the fixed wire levels. Again, 24 we can do this through grants. We can do this through 25 universal funding and set-asides. And in exchange for GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 149 1 that, they would have to bring those costs down to make 2 phones affordable to all people concerned. 3 Another way that I have talked about or 4 I've mentioned, and one of the focuses I'd like to talk 5 about today, and we've heard about it in our first panel 6 from many of our Native American friends, and that is an 7 effective way and one of the more effective ways is that 8 of joint ventures or partnerships, partnerships through 9 government, private partnerships, partnerships between 10 our Native American sisters and brothers, and those of 11 private companies. We heard about one very successful 12 partnership, and that was -- and unfortunately Jack 13 Pleiter is not here so I can recognize him -- and that 14 was a very successful partnership between Saddleback 15 Communications and Mountain Telecommunications. They 16 are a new entity, a wholly-owned subsidiary of the Salt 17 River Pima Indian Community, that was developed and 18 formed a partnership with a privately-held for-profit 19 organization to form this communications system. And 20 now we have telecommunications throughout the Salt River 21 Indian Community. And we all know that's located right 22 next to Scottsdale. To me it's amazing that we didn't 23 have phone service sooner than that. 24 Things that we have to point out, though, 25 in developing these programs is that the Indian nations GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 150 1 must -- we must remember that the nations have a will to 2 do this, have a will for phone services. And by joining 3 the partnership, it does several things. One, I believe 4 it develops economic development, and, number two, it 5 gives pride of ownership. It gives pride of 6 accomplishment. It gives pride of giving opportunity on 7 our Native lands. And that's a goal that I think is 8 sometimes overlooked is economic development as well as 9 the opportunities. 10 We've heard about the barriers. I briefly 11 touched on those. I am not going to go back on the 12 barriers again. I think the barriers have to be broken 13 down. The private companies that want to form these 14 joint ventures must basically learn the customs and the 15 ways of the Native people in the nations they want to 16 serve if they are going to be effective in serving those 17 lands and serving those peoples, because they have their 18 special ways of doing things. And we must adapt, just 19 as we've seen our Native Americans adapt to the way 20 we've done it. 21 In closing, I would truly again echo and 22 thank the Commission for their time, the effort that 23 they've given, for listening to Arizona on these issues, 24 for taking the time to come out, looking at these 25 proposals. And I believe, Mr. Chairman and GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 151 1 Commissioners, for the first time I think the FCC is 2 truly stepping up to the plate to address these 3 problems. I only ask, because I work for all Americans 4 and particularly all Arizonans, that we take everybody 5 in consideration both on tribal lands and nontribal 6 lands, because this is a problem that stretches across 7 America. And I think together, as a country, as a 8 community, we can solve it. Mr. Chairman, 9 Commissioners Ness and Furchtgott-Roth, thank you very 10 much. 11 CHAIRMAN KENNARD: Thank you, Mr. Chairman. 12 Thank you for those remarks. 13 Before we go to our next witness, I did 14 want to announce that the Gila River Community has very 15 generously agreed to host a luncheon for all of the 16 participants here and all of our members of the 17 audience, which will commence right after the hearing at 18 the side room over here. So I hope that you will be 19 able to join us. 20 Our next witness is Madonna Yawakie, who is 21 with the Minnesota American Indian Science & Engineering 22 Society. 23 MS. YAWAKIE: Thank you, Chairman. Thank 24 you, Commissioners. And thank you to all of the good 25 people that worked so hard to bring the FCC out to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 152 1 experience Indian country firsthand. 2 My background in telecommunications 3 includes working as a market manager for US West and 4 focusing on tribal nations, and I worked as a project 5 manager for an engineering firm that specialized in 6 rural telecommunication utilities. And over the years 7 what I've grown to understand is the solutions that 8 exist are the same as those solutions that have existed 9 for all rural telephone development. And I will begin 10 my testimony. 11 Great disparity exists for Indian country 12 when comparing telephone penetration rates to the rest 13 of America. Current statistics on telephone penetration 14 rates, or number of homes with telephones, in Indian 15 country range from 25 to 95 percent. Tribes with higher 16 rates correlate with those five tribes that own, 17 operate, and provide communications services to their 18 respective communities. Telephone penetration rates for 19 the rest of the nation are approximately 94 percent. 20 The sentiment that tribal communities face the same 21 issues and concerns as the rest of rural America falls 22 short in the area of telecommunication usage. In most 23 cases, tribal nations are located in the most rural of 24 rural America, and the need for basic telephone service 25 can provide a lifeline to services that otherwise may GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 153 1 not be available in a time of need. 2 There are a number of reasons that 3 contribute to low telephone penetration rates in Indian 4 country. High unemployment and concentrated poverty are 5 major contributors to these statistics. Other major 6 contributors include the perceptions of the service 7 providers that Native Americans don't use telephones. 8 Another perception is that Native Americans are communal 9 in the use of telephones. The rationale behind this is 10 that families live in close proximity to each other and 11 tend to share the use of a single telephone. A more 12 obvious reason may be the high cost for phone service 13 for many people living in Indian country. The cost for 14 telephone hookups can range by as much as $200 to $3,000 15 or more for basic telephone service, depending upon what 16 type of service provider your community has. 17 Affordability issues arise that lead to Indian people 18 viewing telephone service as a luxury rather than a 19 basic necessity. 20 A number of factors impact the need for 21 tribal nations to begin to develop telecommunication 22 strategic plans that address the issues of low telephone 23 penetration rates. These include the economic 24 development that is occurring throughout Indian country. 25 At the base of this development is the need for GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 154 1 telephone utility improvements. Private sector and 2 federal agencies that invest in Indian country tend to 3 view each of their objectives from a single perspective. 4 In the area of telecommunications, this can mean that 5 improved services will be provided but only to those 6 facilities that are currently being constructed or 7 expanded. Telecom service providers tend to cherry pick 8 tribal economic expansion areas without considering the 9 total tribal land area, including trust land. 10 As the information age begins to play a 11 greater role in tribal communities, the need for 12 improved and affordable communication services is 13 becoming more important. Tribal telecom ownership has 14 enabled long-term infrastructure investment, creation of 15 jobs for tribal members, and provides the opportunity to 16 build a base for economic and business development 17 through the use of a sound telecommunication 18 infrastructure. 19 The role of the USDA/Rural Utilities 20 Service in rural telecommunication development. With 21 over $11 billion in approved telephone loan program 22 financing for the improvement and expansion of 23 telecommunication services across the United States and 24 its territories, RUS has been building the foundation 25 for the information superhighway for nearly 50 years. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 155 1 When the RUS telecommunication loan program began in 2 1949, only about 30 percent of the farm and rural 3 residents were receiving telephone service of any kind. 4 Since 1993 RUS's distance learning and medical link 5 grant program has provided $52 million in funding 192 6 projects in 41 states and one U.S. territory. RUS uses 7 the National School Lunch Program as an indicator of 8 financial distress and to categorize applications into 9 one of their three financing options. This is the same 10 criterion used by the Federal Communications Commission 11 for discounts to schools and libraries for 12 telecommunications service. 13 RUS loan administrators know that the 14 telephone penetration rates for Indian tribes are below 15 national standards. According to an acting assistant 16 administrator of the RUS telephone loan program, "The 17 service rates in American Indian communities are a 18 disgrace to the national telecommunications system, and 19 it is our job to do something about that." To date the 20 USDA/RUS telephone loan program has five American Indian 21 tribe borrowers out of a total of 900 small phone 22 companies that they have worked with. 23 The statistics provided to the RUS as a 24 basis for lending to each of their five tribal borrowers 25 are as follows: GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 156 1 Tohono O'odham: 13 percent was their 2 pre-loan service rate. Post-loan, 95 percent. 3 Gila River: 44 percent. Post-loan, 4 54 percent. That's according to RUS, but I know that 5 that's probably incorrect, and Gila River would be able 6 to correct that. 7 San Carlos was at 25 percent. And it 8 hasn't been determined, because that is a new loan, what 9 their post-loan rate will be. 10 Fort Mojave: 30 percent. Post-loan, 11 65 percent. 12 And Cheyenne River, because it's the 13 oldest, didn't have a pre-loan service rate that was 14 identified by RUS, but its post-loan service rate is 15 75 percent. 16 The number of customers served by these 17 tribally-owned communication companies has grown since 18 they acquired ownership. The number of access lines 19 that each of these companies has ranges from 20 approximately 600 to 3,000, and their growth is 21 continuing. The benefits that these companies have 22 provided to their communities have extended beyond 23 tribal ownership. They offer a long-term sustainable 24 business, employment opportunities for tribal members, 25 improved telephone service, increased business GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 157 1 opportunities, and the creation of a skilled 2 telecommunication work force. 3 As of December of 1994, 73 RUS borrowers 4 provided telephone service to 42,961 American Indian 5 subscribers. One of the most important elements to the 6 RUS loan process is the Area Coverage Survey, or ACS, 7 requirement that must be completed by RUS borrowers. 8 This process requires a comprehensive assessment of the 9 proposed service area that includes housing, businesses, 10 healthcare, education, and governmental institutions. 11 Once this assessment is completed, the cost to design 12 and construct the network is included in the loan for 13 the proposed service area. Thus, the RUS process 14 enables the initial cost of network construction to be 15 borne by the service provider rather than the customer. 16 As a result of the Telecommunication Act of 17 1996, universal service support programs were authorized 18 by Congress and designed by the Federal Communications 19 Commission. New programs include the Schools and 20 Libraries Corporation and the Rural Healthcare 21 Corporation, which provide financial support for 22 telecommunications service access to rural and high-cost 23 service areas. 24 CHAIRMAN KENNARD: Excuse me, Madonna. I'm 25 going to have to ask you to wrap up. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 158 1 MS. YAWAKIE: Okay. All of our schools, 2 bureau schools, tribal schools, and the public schools, 3 fall under the criteria of the Schools and Libraries 4 Corporation. All of the entities that reside in a 5 tribal community are all in line with all of the 6 universal service program's eligibility criteria that 7 are supported by the FCC and administered by NECA. 8 What I'd like to say is that the 9 "Telecommunications Technology and Native Americans," 10 OTA report, identified eight key findings: Four of the 11 findings include integrating infrastructure development; 12 two develop Native American entrepreneurial activity; 13 three, develop interagency strategy and funding; four, 14 develop telecommunications policy that recognizes 15 sovereignty and self-determination that enables tribes 16 to access universal service funds and that provides for 17 and supports strategic partnerships. 18 And I'll wrap up as quickly as I can. The 19 issues of right of way and easements policies definitely 20 impact the penetration rates that have been identified 21 over and over again today. And, also, the FCC should 22 consider that individual tribal nations and any 23 adjoining trust land be considered a cost study area to 24 assure that tribal nations begin to access universal 25 service supports. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 159 1 The answers to improved service levels for 2 Indian country are found in existing public and private 3 telephone loan programs and by accessing universal 4 service support mechanisms. These programs must provide 5 assurances that all Americans benefit, including 6 American Indians residing in Indian country. 7 Policymakers must assure that tribal service improvement 8 plans comply with industry standards, are technically 9 interoperable, and meet requirements to connect to the 10 public switched telephone network. Tribal government 11 leadership and long-term commitment to improving 12 telephone service levels are critical to assured 13 success. 14 And while we're having the meeting in the 15 State of Arizona and with a lot of southwestern tribes 16 participating, we have to remember that this issue is 17 with all of Indian country, which includes American 18 Indians and Alaska Natives; and Native Hawaiians face 19 similar issues. Whatever the changes are that are going 20 to impact or create opportunity for Indian country must 21 include Native Hawaiians in whatever is being planned 22 today. Basic telephone service as well as the 23 opportunities that telehealth, distance learning, 24 electronic commerce, and 911 capability have for Indian 25 country may enhance quality-of-life issues in ways that GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 160 1 were never before possible for Indian country. 2 What I have attached to the document, that 3 I provided to Eric this morning, was a final report from 4 a workshop that we had in February 1999 in San Diego, 5 from the National Tribal Telecommunication Workshop. 6 And we did a similar workshop last July, and I have 7 attached the edited transcripts from that as well. 8 Thank you. 9 CHAIRMAN KENNARD: Thank you very much. 10 Our final witness, last but not least, is 11 Alison Hughes, associate director of the Arizona 12 Telemedicine Program. 13 MS. HUGHES: There is nothing like being 14 last in an event such as this. I wish I could read as 15 rapidly as the people in the state legislature whose job 16 it is to read bills on the floor. Thank you, 17 Commissioner Kennard, Commissioner Ness, 18 Commissioner Furchtgott-Roth, for allowing the Arizona 19 Telemedicine Program to be represented. I wouldn't be 20 here if it wasn't for our own Commissioner Irvin, who 21 told me about this event back in February. Thank you, 22 Commissioner. I want to recognize Governor Thomas and 23 members of the Gila River Indian Community who are 24 hosting this event today. 25 The testimony that I'm going to present GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 161 1 concerns the delivery of healthcare to remote areas of 2 Arizona for the purpose of providing medical 3 consultations using telemedicine technologies. I will 4 limit these remarks to our experience to date in 5 providing services affecting Native American nations and 6 tribes involved in our system. 7 The Arizona Telemedicine Program was 8 established in 1996 by the Arizona State Legislature. 9 The mission of the program is to deliver telemedicine 10 consultations to remote sites in the state where the 11 population must travel long distances to receive 12 specialty care. 13 Our program has five components: 14 establishing and maintaining a statewide telemedicine 15 infrastructure; providing direct delivery of medical 16 care through telemedicine; doing telemedicine research, 17 assessment, and evaluation; and disseminating research 18 results; and, finally, educating and training 19 telemedicine personnel. 20 We have created the statewide telemedicine 21 infrastructure with service points in Nogales, 22 Patagonia, Douglas, Phoenix, Yuma, Payson, Whiteriver, 23 Springerville, Flagstaff, Cottonwood, Kingman, Tuba 24 City, and Ganado. The hub site is located in the 25 College of Medicine in Tucson, the home of the Arizona GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 162 1 Telemedicine Program. At one point our telemedicine 2 team investigated the possibility of using satellite 3 transmission but concluded that the expense and lack of 4 universal service discount eligibility would not make 5 this technology feasible for our purposes. Our network 6 is based on dedicated T-1 circuits to provide capability 7 for a 24 by 7 connectivity. 8 The program sites which serve Native 9 American communities are in Tuba City, Ganado, Payson, 10 and Whiteriver. We have been meeting with leaders of 11 the Hopi Tribe who have asked us to extend services to 12 the tribe's new health center currently being built in 13 Polacca, and we have agreed to work with them to submit 14 a grant application to the Rural Utilities Service 15 program to purchase telemedicine equipment for this 16 site. The RUS has already funded us for two sites at 17 Whiteriver and Nogales. Thank you so much, Diane 18 Jennings and Alan Stevens of Arizona's RUS, for your 19 support of these programs. 20 According to Dr. Jim Galloway, Indian 21 Health Service physician who is working at our College 22 of Medicine, diabetes is the number one problem facing 23 Native Americans, with the Gila River Indian Community 24 having the highest incidence of this disease in the 25 nation. Over 70 percent of adults over 45 suffer from GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 163 1 diabetes right here in the Gila River Indian Community. 2 Telemedicine can be an ideal solution to 3 making subspecialty care available to remote sites in 4 Native American communities. Telemedicine care is 5 possible in subspecialty areas such as endocrinology, 6 cardiology, dermatology, and podiatry. 7 We recently started to use the telemedicine 8 system to provide continuing medical education programs 9 which update healthcare providers on cardiology and 10 public health issues. These programs are transmitted to 11 sites serving Native Americans at Whiteriver, Tuba City, 12 Ganado, and Payson. 13 Another telehealth-related program 14 functioning in our state is administered by the Northern 15 Arizona Behavioral Health Authority. NARBHA has 16 connected 13 rural sites in the northern part of the 17 state and is using their telecommunications system to 18 provide psychiatry, counseling services, case 19 management, administrative and staff training meetings. 20 This architecture was developed based on whatever type 21 of facilities the local carriers had in place at the 22 time. 23 The Arizona Telemedicine Program and NARBHA 24 have both applied for subsidies under the universal 25 services discount program. To date we have not received GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 164 1 the discount. We have found the application process 2 burdensome and the local telephone carriers, especially 3 the smaller ones, often unable to answer our questions. 4 A major problem identified is this: In 5 northern Arizona, especially on the Navajo and Hopi 6 reservations, we must obtain services from interexchange 7 carriers. These carriers have to work with three 8 different local exchange carriers to provide a circuit. 9 Each interconnection between local exchange carriers 10 generates channel termination fees and interconnection 11 fees. These fees are not discounted under the universal 12 service program, since it is primarily discounting 13 mileage-based fees. Therefore, the reduction in cost, 14 even if they were eligible, is not as significant as it 15 could be. 16 Your attention is now directed to the 17 problems that our program has faced in making this 18 connectivity possible. There are limited facilities in 19 place in the northwest corner of the state, which 20 include the Navajo and Hopi reservations. Lack of 21 existing cable and switches results in slow 22 implementation of services. We waited a year to get T-1 23 service between Flagstaff and Tuba City and between 24 Flagstaff and Ganado. 25 There is no real competition in the GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 165 1 provision of services to these remote areas. In the 2 case of the Arizona Telemedicine Program, only one 3 interexchange carrier responded to our bid for basic T-1 4 services to Ganado and Tuba City. This carrier is not 5 eligible for the universal services discount. Thus, the 6 sustainability of telemedicine services to these 7 hospitals in these cities is precarious. 8 There is little business incentive for 9 carriers to establish new facilities in these areas as 10 the revenues generated for service provision do not 11 justify the cost of delivery. It may not be feasible 12 for carriers to expand services to such remote locations 13 without subsidies. The future of telemedicine services 14 to remote areas is deeply affected by these policies. 15 In summary, we are extremely committed to 16 providing telemedicine services to remote areas of 17 Arizona, and lives have already been saved utilizing the 18 services of many specialists and subspecialists now 19 available to rural areas from the College of Medicine. 20 However, we remain frustrated by the current 21 telecommunications system, as it impedes our capacity to 22 fulfill our goal of delivering specialty care to 23 Arizona's rural areas. 24 To that end, we recommend that you consider 25 the following possible solutions: Subsidize carriers to GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 166 1 expand the telecommunications infrastructure into 2 hard-to-reach rural communities. Subsidize a 3 demonstration project to install new digital microwave 4 systems dedicated to telemedicine applications, and 5 evaluate its efficacy. Allow interexchange carriers to 6 receive universal service discounts. Simplify the 7 application process for the universal services discount 8 program. And, finally, expand the coverage of the 9 universal services discount to include interconnection 10 fees for circuits that involve multiple local exchange 11 carriers. 12 Thank you so much. 13 CHAIRMAN KENNARD: Thank you very much, 14 Ms. Hughes. 15 With your indulgence, I'd like to forego 16 questioning from the Commissioners at this point so that 17 we can invite members of the audience who might have 18 some questions to come forward. We have very little 19 time, but I think we have about five minutes left for 20 questioning from the audience. If anyone would like to 21 ask a question to the Commissioners or the panelists, 22 please come forward. There is a microphone at the front 23 here. 24 MR. REDICK: David Redick from 25 San Francisco, speaking as an individual. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 167 1 Are any of you familiar with the background 2 on the allocation of spectrum over Indian reservations, 3 as to either auctions or other allocations, and the 4 extent to which this either has legal or other 5 implications? I've heard about the sovereignty of the 6 Indian reservation. I have not researched this, but it 7 came up today, so I've asked it. Has the federal 8 government ignored the sovereignty of the reservations 9 in the sale or allocation of spectrum? Can anyone 10 comment on that? 11 CHAIRMAN KENNARD: Certainly. Well, as we 12 heard earlier, there was one recommendation that the FCC 13 take these sovereignty issues into account in spectrum 14 licensing. As a general matter, though, Congress gave 15 to the FCC pretty much exclusive authority over the use 16 of commercial spectrum, and the FCC has used that 17 authority to try to maximize the ability of spectrum to 18 serve as many people as possible, and we do that through 19 a number of our licensing policies. If you have any 20 more detailed questions about this, I'm going to direct 21 you to Dale Hatfield, who is head of our Office of 22 Engineering and Technology and truly one of the nation's 23 premier specialists on spectrum policy, and he can 24 answer many more questions about this than I could. 25 Any other questions? GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 168 1 MR. GROENHOUT: Thank you very much for the 2 opportunity. My name is Ed Groenhout. I'm from 3 Northern Arizona University. Alison indicated that 4 interexchange carriage is not authorizable for E-rate 5 purposes relative to places like the Navajo reservation. 6 It's pretty clear to some of us that have quite a bit of 7 experience trying to deliver educational services, that 8 the only way to certain services are through 9 interexchange carriers. And so I would plead with the 10 FCC to give new consideration to the possibility of 11 opening up that potential so that services can, in fact, 12 be acquired that are simply not available on the 13 reservation, especially on the Navajo reservation. And 14 we think that's a very important thing. What Alison did 15 not tell you is she paid $67,000 a year for the circuit 16 between Ganado and Flagstaff and $67,000 a year for the 17 circuit between Tuba City and Flagstaff. That same 18 circuit, when I asked for an estimate in 1995, was 19 $15,000 a year. I found it remarkable that it went to 20 67,000 with the passage of the 1996 Telecom Act. 21 Thank you. 22 CHAIRMAN KENNARD: Thank you for your 23 comment. It's very useful. 24 We'll take one more question from the 25 floor. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 169 1 MR. LAFFOON: Thank you, Chairman Kennard 2 and Commissioners. My name is Herman Laffoon, Jr. I'm 3 the commercial manager for the Colorado River Tribes in 4 Parker, Arizona. I have a statement, Mr. Chairman, for 5 the record, concerning GTE. 6 CHAIRMAN KENNARD: Please be brief, sir, 7 because we're running very short on time. 8 MR. LAFFOON: The Colorado River Indian 9 Tribes would like to provide a brief statement on the 10 subject of telecommunications. We are newcomers to the 11 arena of providing telephone service to our reservation. 12 Various testimonies have been provided here as to the 13 conditions of inflated claims by the various telephone 14 providers on the Indian reservations. As landowners, we 15 should have exclusive rights to serve our reservation if 16 we choose to do so. We have attempted to exercise our 17 rights but turned away because we did not meet the 18 requirement date, and which continues on today, of the 19 bidding process. By a couple of days we missed that 20 deadline date. This, Mr. Chairman, will cause an 21 additional impact on the tribes as negotiating with the 22 other entities as the high bidder. So this will be 23 additional cost to us, Mr. Chairman. 24 So we are looking forward to maybe 25 reconsider us as a tribe providing service to our GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 170 1 community within the reservation as sovereignty. We 2 have never had this opportunity, which would be a great 3 honor for us to be proud of, telecommunications. Other 4 tribes have ventured into this, telecommunications. We 5 would like that opportunity to go back and rebid and be 6 reconsidered as a reservation telecommunications. We 7 are 90 percent of that bidding process that is taking 8 place with the GTE exchange. So, Mr. Chairman, I would 9 like to share that with you and ask you to reconsider 10 this. 11 CHAIRMAN KENNARD: Thank you for your 12 comment. It looks like you had a written statement. If 13 you would, we'd love to have that as a formal part of 14 the record. 15 MR. IRVIN: Mr. Chairman, if I could, if 16 you would like to, you could certainly use the services 17 of the Arizona Corporation Commission. We would 18 certainly work with you to see that you meet all 19 requirements of federal or state, if required there, to 20 meet and expedite your application as well. 21 MR. LAFFOON: Yes, Mr. Chairman, that was 22 also a consideration we had, being new bidders in the 23 process. 24 MR. IRVIN: If you will see the staff, we 25 are more than happy to help you. That's what we're here GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 171 1 for, as a resource and a help. 2 MR. LAFFOON: Thank you. 3 MR. IRVIN: Thank you, Mr. Chairman. 4 CHAIRMAN KENNARD: Thank you. 5 We'll take one more brief question. I'm 6 sorry I'm rushing along, but -- 7 MS. LO BIANCO: Just a brief comment, 8 Mr. Chairman. I am Laura Lo Bianco with Iridium North 9 America, the North American gateway for the Iridium 10 satellite system. I just wanted you to know that we are 11 aware of the challenges that the tribal communities are 12 facing, and we will be presenting you with written 13 comments and possible solutions that Iridium can 14 provide. Thank you. 15 CHAIRMAN KENNARD: You know, I'm really 16 glad you came forward, because when we were driving 17 around yesterday, I saw two huge Motorola facilities 18 here in Arizona, and I was thinking, as we started, 19 where is Motorola today, since we're in their backyard. 20 So thank you for your support. 21 MS. LO BIANCO: We are here, and we are 22 listening to the concerns. 23 CHAIRMAN KENNARD: Thank you. 24 Do you have a closing statement, 25 Commissioner Ness? GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 172 1 COMMISSIONER NESS: I just want to thank 2 all of the witnesses for their very helpful comments. 3 Some of the ideas, the problems, the promises, and the 4 solutions that were presented today have given us a lot 5 to think about. A lot of the solutions are useful for 6 rural areas throughout the country, and a lot of the 7 ideas are very useful for the very special and unique 8 issues and circumstances surrounding the Indian nations. 9 And I plan to take all of that into account as we look 10 at what very concrete ideas we can have to improve 11 telephone service on the Indian reservations. But I 12 also hope, as we focus on getting basic service out 13 here -- much needed, much delayed -- that we also 14 continue to think further about leapfrogging technology 15 and allowing some of the new services to flourish such 16 that we can jumpstart the economy, create jobs, 17 encourage young people to return home to productive 18 opportunities here, and improve the opportunity for 19 healthcare, which is a vital issue certainly, as we've 20 heard today. 21 So thank you all very much, and it's been a 22 great pleasure and opportunity for us to be here today. 23 CHAIRMAN KENNARD: Thank you. 24 Commissioner Furchtgott-Roth. 25 COMMISSIONER FURCHTGOTT-ROTH: Thank you, GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 173 1 Mr. Chairman. I would like to thank all of the 2 witnesses today, and I'd particularly like to thank the 3 Gila River Indian Nation for welcoming us to their land. 4 Mr. Chairman, I would also like to 5 particularly thank you and the staff and Eric Jensen and 6 everyone who's helped put this on. You and I agree on 7 most issues, but not on all, but I must commend you and 8 Commissioner Ness. I think that this is an issue that 9 needs greater attention at the FCC. Much of this is 10 within our statutory authority, and I look forward to 11 working with you both on this issue. Thank you. 12 CHAIRMAN KENNARD: Thank you very much, 13 Commissioner. I appreciate those comments. 14 We will leave here today with many good 15 memories of the time that we've spent here with you, but 16 one will always stick out in my mind, and that is the 17 visit that we made yesterday to the Mission School on 18 the Gila River reservation. We visited a wonderful 19 little school on the reservation, and we were taken on a 20 tour of the school. And most of the children had left, 21 it was pretty late in the day, but we did get to see 22 some basketball practice, and there were some young kids 23 playing basketball. It was a beautiful day yesterday 24 here. And as I was watching those kids practice 25 basketball, it occurred to me that what Governor Thomas GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 174 1 said today is so true: "We've come a long way, but we 2 have a long way to go." 3 Those kids were benefited by a lot of 4 people in the community and around the nation who have 5 stepped forward to help them. As we walked around the 6 school, we saw the computer lab there. The computer lab 7 was made possible by donations from private corporations 8 and private individuals. The Air Force had a role in 9 helping expand the school so they could have a computer 10 lab. The FCC had a role because we made E-rate funding 11 available for those computers. 12 It occurs to me that what I saw at that 13 school we're doing here today. We're bringing together 14 all these groups of people, federal government, leaders 15 at the state government level, representatives of 16 industry, lots of industry representatives, people who 17 are working in nonprofit organizations, all coming 18 together to try to make life better for those kids on 19 that basketball court at that school. So as I leave 20 here today, I will take back a lot of what we've learned 21 today, but as we go forward we should always remember 22 those kids, because all of us are in this room today to 23 make their lives better and to make sure that as we move 24 into the information age we all move together. 25 It's been an honor to be here with you. GLENNIE REPORTING SERVICES, L.L.C. FCC PUBLIC HEARING - 3/23/99 175 1 Thank you so much for helping us pull this together. 2 I'd like to thank the FCC staff. It is a lot of work 3 putting one of these hearings together, and they work 4 very, very hard. In fact, I have some notes here that 5 were given to me by the staff, and it says, "3:30 a.m. 6 Draft," so you know how hard people worked to make this 7 happen. 8 So thank you very much, and don't forget 9 the luncheon that's being hosted for everyone here. 10 (The hearing was concluded at 12:50 p.m.) 11 12 * * * * * 13 14 15 16 17 18 19 20 21 22 23 24 25 GLENNIE REPORTING SERVICES, L.L.C.