Thank you. It’s a pleasure to be back home in Albuquerque and to be with you this morning.

When Ed Spivak asked me to speak, I was delighted to accept the invitation. The topic being discussed – developing telecommunications public policy to further economic development – is significant to New Mexico’s economic future and the future of communities across the country. Indeed, many communities are considering how to best access and use all the rapidly evolving telecommunications capabilities to strengthen their economic health.

And, I always appreciate the opportunity to meet with local community leaders to learn about specific telecommunications experiences. Such knowledge informs my analysis of matters before the Commission, as the results of our efforts to promote telecom deployment occur in cities, towns and rural areas across the country. This is where the rubber hits the road.

The availability of advanced telecommunications services can have a profound effect on a community’s economy. E-commerce and broadband capability can provide opportunities to overcome traditional geographic disadvantages. Small businesses can use e-commerce to market and sell their products around the globe, while consumers can shop the global marketplace from their own homes. And access to advanced services allows smaller communities to compete with larger cities for information technology businesses.

A significant role of the FCC in facilitating the deployment of advanced telecommunications is that of a monitor. This role was assigned by Congress in section 706 of the Telecommunications Act of 1996, in which we were directed to monitor such deployment and, if necessary, to take steps to ensure that all Americans have access to such capability on a reasonable and timely basis.

Our first report on broadband deployment was released in July of 1999. Recognizing that this would be an ongoing effort, the Commission then took several steps to improve our broadband learning curve. In February of last year we issued a Notice of Inquiry seeking comment on:

• whether we needed to broaden our understanding of what constitutes advanced telecommunications capability;
• whether such capability is being deployed to all Americans;
• whether such deployment is occurring on a reasonable and timely basis; and
• what actions will accelerate such deployment.

We also convened a forum, a Federal-State Joint Conference, to develop an ongoing dialogue among the Commission, the states, and local and regional entities regarding the deployment of advanced services. For starters, the Joint Conference held a series of field hearings across the country, from Miami to Alaska, directed at gathering data on the advanced services.

We also undertook in-depth case studies of five cities and towns that represented not only diversity in size and location, but also a cross-section of various community efforts to foster broadband deployment.

We have learned many encouraging facts about the deployment of advanced services, such as:

• 33% of U S Households currently have internet access, with 92% of them using dial-up, or narrowband, connections;
• Analysts predict that the number of on-line households will more than double within the next five years, and that between a third and one-half of those connections will be high-speed; and
• High-speed lines connecting homes and small businesses to the internet increased by 57% in the first half of 2000, to a total of 4.3 million lines.

To this end, we have developed a series of “best practices” that communities can use to foster advanced services deployment. Today I will highlight several “best practices” that have been successful in diverse communities. These are:

• The use of strategic planning;
• The use of the E-Rate and Rural Healthcare programs to introduce advanced services to a community;
• Demonstrating to potential providers that existing demand will justify investment in infrastructure; and
• Local investment in telecommunications infrastructure.

Specific telecommunications needs are identified in the context of other planning efforts. For example, when looking at a community’s healthcare, education, and economic development needs, we often find that each sector has independent telecommunications needs, and that each sector will benefit from having access to advanced telecommunications services. Community leaders can use addressing these disparate concerns as an opportunity to understand the varied potential uses and demands for high-speed services. They can strategize on how to obtain the services their community requires by considering such needs in conjunction with their demographics and current infrastructure.

We have also found that the FCC’s E-Rate and Rural Healthcare programs have helped to bring advanced services to many communities throughout America. These programs provide discounts for telecommunications services for schools and libraries as well as rural healthcare.

The E-rate program provides discounts on telecommunications and internet services to K-12 schools and public libraries. This program gives priority to poor and rural schools. The Rural Healthcare Program provides discounts on telecommunications services to non-profit rural healthcare facilities. The goal is to bring their rates for services down to the levels for similar services in urban areas.

Both of these programs are designed to provide direct benefits to their recipients. Indeed, New Mexico schools and libraries have received over $66 million to date. A not-insignificant benefit of these programs, however, may be that they can also increase local demand for advanced services, improving the economics of building out necessary infrastructure. In fact, the E-Rate program has made possible a high-speed connection to the internet in an area where previously dial-up service was not even available.

In our Alaska field hearing, a representative from a remote school district testified that the E-Rate is the single largest factor responsible for connecting virtually all rural Alaska schools to the internet, most using high-speed services.

Strategic planning of a community’s telecommunications needs may facilitate the leveraging of access to advanced services that participation in the E-Rate and Rural Healthcare programs can bring.

Another key ingredient to bringing broadband to an otherwise underserved community is the ability to demonstrate to potential providers why it makes good business sense to enter the market.

In cities like Los Angeles, a, if not the most, significant reason that the residents have so many choices for the provision of advanced services is the clear existence of demand. A potential provider with a good product, good business plan, and good execution can reasonably expect to recover its investment and prosper. Smaller cities and towns have a smaller apparent demand to potential providers.

Not that demand doesn’t exist; rather, the potential providers simply don’t see the breadth of the demand and thus cannot see the business case for bringing their services to many smaller cities and towns. In this scenario, communities that want access to advanced services can further their cause by organizing and aggregating their demand to demonstrate to providers that the investment to enter their market will be a good one.

A good example of where a coordinated public and private effort to bring advanced services to smaller communities has succeeded is Berkshire Connect. Businesses were leaving Berkshire County, a rural area in western Massachusetts, due to the high cost and poor quality of advanced telecommunications services. Berkshire Connect is a consortium of business, cultural, academic and local economic development leaders that was formed with the goal of bringing advanced services to the Berkshires.

The consortium was directed to examine and assess the state of affairs and propose a strategy to enhance the region’s telecommunications and information infrastructure. The approach taken was to aggregate existing demand and further stimulate demand by increasing awareness of what an improved infrastructure could provide. An RFP was sent to potential providers, and Berkshire Connect ultimately entered into a contract with Global Crossing. In addition to the higher quality services that resulted from the investment in infrastructure, a unique aspect of this agreement is that as demand increases, the costs to all users will continue to decrease. Prior to this agreement, costs for poor service was 3-4 times higher than in urban areas. The costs for better service are now comparable to urban areas.

This coordinated effort successfully crystallized the existence of demand as an incentive to bring advanced services to smaller communities.

Another means of bringing advanced services to communities is local public investment in desired infrastructure. In many instances, municipalities, usually ones that already provide another utility service, such as cable or electricity, build their own high-speed facilities for the direct service of consumers.

An impressive example of how local investment in infrastructure can pay off is Glasgow, Kentucky. Glasgow is a town of 13,000. The citizens of Glasgow have a history of addressing problems with private utility services with municipally owned alternatives. They replaced their private electric service provider in 1962. Unhappy with the existing cable rates and service, the town went into competition with the incumbent cable provider in 1986, offering a 54-channel package for a cost-based $13.00 a month. The incumbent dropped its rates in response, but the municipally-owned cable company stayed in business. The town later added phone service to their cable network and successfully went into competition against GTE.

And in 1995, the town added high-speed internet access to their system. That is, every resident and business in this town of 13,000 could have purchased unlimited internet access at a rate of 4 megabits per second for $12.00 a month. At the time, the majority of the residents were unaware of the potential of the internet to affect their community. Today, they have a 30% penetration rate for high-speed services and while their cable rates have gone up to $16.00 a month, their cable-modem service is still available for $12.00 a month.

Such strategies have also been successful in the state of Iowa. The town of Hawarden, Iowa operated a successful electric and cable utility and was dissatisfied with the telecommunications options available to its citizens. In response, they built a hybrid coaxial cable network throughout the town. Businesses in the community that had previously feared being left behind are no longer required to relocate to gain access to the modern communications services they need. Similarly, in Orange City, Iowa, the town government partnered with its local phone company and is building a wireless system for high-speed internet service.

To sum up, what we have learned through our data collection and joint efforts with the states is that three factors generally contribute to differences in deployment of advanced services among communities. The existence of sufficient demand, the existence of competition among providers of advanced services, and local efforts to facilitate deployment.

Because such factors are community specific, the FCC’s role in facilitating deployment is one of a partnership with the states. For our part, we have taken our statutory mandate to monitor the roll-out of advanced services to all Americans very seriously. I note that we are currently considering expanding and refining data collection to improve upon this effort.

We have also taken significant steps to level the playing field to make it attractive for competitors to enter markets. And we are considering further actions, such as whether to modify our collocation rules to ensure competitive access to the remote premises of incumbent local service providers.

Additionally, as you move forward to address the needs of your communities, it’s also critical to consider the advent of new technologies and new broadband delivery systems. We’re not just talking about hardwire connections anymore. Broadband satellite and wireless services are ramping up – and doing it fast. These systems offer an opportunity to leap-frog traditional networking and strike back against barriers to broadband access – from the variable cost of new last-mile wires to the constant hardship of laying cable. Companies like DirecPC and Starband are offering two-way broadband satellite services with nationwide coverage. And on the wireless side, Sprint, WorldCom, and Nucentrix are rolling out high-speed internet access in many communities across the country.

It is clear that there is not a single means to ensure advanced services are deployed to all communities across America. By working together at the federal, state, and local level, we will find solutions that reflect the differences in the communities that will be served. I look forward to