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While Universal Service Reforms Show Promise, Politics Clouds Fund’s Future

in Broadband's Impact by

ASPEN, Colorado, August 19, 2015 – In spite of several positive efforts to reform the complex and dated rules that govern the Federal Communication Commission’s universal service fund, key decisions surrounding the $8 billion annual fund remain ineluctably political.

That was the message shared by panelists, including a commissioner at the FCC, speaking at a session on Tuesday at the Technology Policy Institute’s annual forum here.

For example, the panelists — which also include two economists, a cable industry lobbyist and the former director of the National Broadband Plan — applauded efforts to bring greater economic efficiency to telecom network construction through a system known as a “reverse auction.”

They also supported efforts to promote broadband adoption by providing income-based vouchers for the purpose of internet services.

But decisions about the allocation of funds within the USF — and the key question of how the fund is to be paid for — remain political hot potatoes.

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Moderator Scott Wallsten of the Technology Policy Institute, with panelists Mignon Clyburn, James Assey, Blair Levin, Gregory Rosston, and Bradley Wimmer.

“The electorate will decide the right size” of the USF, said Blair Levin, former director of the FCC broadband plan, referring to the 2016 presidential vote. Levin is currently executive director of Gig.U and a senior fellow at the Brookings Institution.

“Let’s put aside, for now, the question of the budget” and whether fees should be levied on internet connections to pay for the USF, said Levin. Putting that issue aside would allow the FCC to design the best policy, irrespective of how large the fund ultimately will be.

Over the past five years, each of the four main components of the universal service fund have undergone an overhaul. First was the “high-cost fund,” the largest component of the USF, which became the Connect America Fund and the Mobility Fund.

These changes include the implementation of a “reverse auction,” in which the FCC promises to support rural broadband providers based on the bidder who offers to provide broadband at the lowest cost.

The other three components of the USF are the eRate for schools and libraries — changed last year by FCC decisions in July and December – plus the health care and telemedicine fund, and the Lifeline program for low-income connectivity.

Much of Tuesday’s panel discussion, titled “”Universal Service: Towards Broadband, Efficiency and Equity,” revolved around the Lifeline program, which is currently being reviewed and potential modified by the agency.

Too frequently, commentators speak of “lifeline and universal service. Lifeline is universal service. It is one leg in a four-legged stool,” said Commissioner Mignon Clyburn, who is spearheading efforts to enhance the current Lifeline program.

Until the changes over the past five years, universal service monies could not be used directly on expenditures for broadband. That remains the case with Lifeline; although FCC Chairman Tom Wheeler has proposed changing that.

Two economists participating on the panel said that Lifeline has become an income-redistributing effort instead of a program ensuring greater access for low-income individuals.

“A lot of the money from the Lifeline program goes to households that would subscribe to telephone service even if there were no subsidy,” said Bradley Wimmer, an economics professor at the University of Nevada at Las Vegas.

Clyburn pushed back on that point.

Speaking about low-income individuals, she said that “people want to communicate, and they will make sacrifices to do so. Should they make the tradeoffs they are making to be able to communicate?”

Additionally, Clyburn said, 44 percent of those who are low-income end up having their smart phones disconnected because of economic hardships.

However, all of the panelists supported efforts to use vouchers to move the Lifeline program in a direction of allowing low-income consumers greater communications choices.

The four of USF programs are funded by a 17 percent fee on telephone communications, a number that is adjusted for cell phone users. Currently, broadband connections are not subject to the fee, but that might change.

When Congress put legislation in place to limit taxes and fees on internet connections in the 1990s, demand for such services were not “inelastic.” That economics term refers to goods, like automobile fuel, that consumers tend to purchase irrespective of how the price changes.

“Now, they are relatively inelastically demanded,” said Gregory Rosston, deputy director of the Stanford Institute for Economic Policy Research. That means that, over the past two decades, consumers have come to regard broadband as more of a necessity.

But James Assey, executive vice president of the National Cable and Telecommunications Association, countered: “At a time we want to promote broadband, why impose additional costs on broadband bills?”

Although most cable companies have not been eligible for universal service funds, Assey said that could change as FCC updates its traditional rules around the Connect America Fund and Lifeline.

Assay also said that cable companies have been among the most active in promoting connectivity through efforts like Comcast’s Internet Essentials. Initiatives designed to spur greater broadband adoption were required of Comcast, the largest cable provider, as part of conditions attached to approval of its merger with NBC Universal.

Levin said that the debate about the USF suffered from a “penny-wise, pound-foolish” mentality. “How much more efficient would government be if it knew that everyone was online?”

Being able to reconfigure government systems and make them almost-exclusively online could end up saving billions, if not tens of billions of dollars every year, he said.


Obama Follows Up State Of The Union Speech with Silicon Valley Powwow

in People/The Innovation Economy by

SAN FRANCISCO, February 17, 2011 — President Obama checked in with the U.S.’ titans of tech on Thursday in a brief swing through Silicon Valley before heading north to Oregon to visit Intel.

Obama’s visit wasn’t open to the press or the public apart from his arrival and departure.

But in a statement issued after the dinner at Silicon Valley legend John Doerr’s house in Woodside, White House spokesman Jay Carney said:

“This evening, the President joined twelve leaders from technology companies to discuss ways to work together to invest in American innovation and promote private sector job growth.

In the President’s State of the Union Address, he called on us to win the future by out-innovating and out-educating the rest of the world and increasing American competitiveness.

The President believes that American companies like these have been leading by investing in the creativity and ingenuity of the American people, creating cutting-edge new technologies and promoting new ways to communicate.

The President specifically discussed his proposals to invest in research and development and expand incentives for companies to grow and hire, along with his goal of doubling exports over five years to support millions of American jobs.

The group also discussed the importance of new investments in education and the new White House initiative Startup America, a partnership with the private sector aimed at supporting new startups and small businesses.

The President expressed his desire to continue a dialogue with the group to share new ideas so we can work as partners to promote growth and create good jobs in the United States

As a prime funder of oh, just a few little internet companies such as Google, Amazon, Intuit, Sun Microsystems, Compaq, Macromedia and Symantec, Doerr estimates that he has created 150,000 new jobs.

He’s also on the President’s Economic Recovery Advisory Board, and is a passionate advocate of most of the items on Obama’s tech and climate change policy agenda.

Convened at the Doerr’s high level “revenge of the nerds” dinner party Thursday were the CEOs of Apple, CISCO, Genentech, Google, Facebook, Netflix, Oracle, Twitter and Yahoo, reports The New York Times‘ Miguel Helft.

Also there for the power chow-down were Stanford University President John Hennessy and politico Steve Westly of the Westly Group.

But POLITICO reports that the dinner wouldn’t have been a “love-in,” given that many of the titans are disappointed with Obama’s perceived slow progress on the promised policy items on their agenda, such as making the R&D credit permanent, and boosting the number of visas for highly-skilled foreign workers.

Still, Democratic consultants say that the visit is a “grand slam” for the president.

“First, this is a part of the country that’s still creating high-paid jobs. Next, Jobs being there buys you a national audience… Next, you get to talk about the role Facebook is playing [in the Mideast liberation movements]. And it’s touching base with a group of donors who are going to be very important in next year’s election,” Chris Lehane told POLITICO’s Glenn Thrush.

No word on whether patent reform was on the menu of discussion, even most of the CEOs in attendance have a big stake in the outcome of what emerges from Capitol Hill during this session of Congress.

Several of the companies’ policy teams are against a patent bill currently under consideration in Congress that has the support of the Obama administration, Microsoft and IBM.

Those companies include Apple, CISCO, Google, and Oracle.

Still, Obama has at least a couple of tech-related agenda items he can tell the CEOs that he’s recently ticked off on the national policy to-do list.

His administration earlier this week released a budget request for a boost in funding to speed up patent applications, and it published a new report and broadband map that for the first time tracks broadband internet penetration across the United States.

Consumers Willing to Upgrade, but Slow to Embrace Super-Fast Technology

in Broadband Updates/Broadband's Impact by

WASHINGTON, October 5, 2010 – Consumers are willing to pay a large amount to upgrade their internet access speeds from slow to fast, but are more reluctant to upgrade from fast to super-fast, according to a research paper discussed at the Telecommunications Policy Research Conference last week.

Gregory Rosston of Stanford University discussed research addressing the value of consumers’ high speed internet access. Consumers are as greatly interested in reliability as they are in speed, he said. The research also found that experienced users are much more willing to pay for higher speeds while inexperienced users are willing to pay for basic access. Additionally, consumers are willing to pay for high-speed access but demand reliability over a super-fast speed.

A separate panel addressed issues surrounding network neutrality compared policies in the United States, Japan and the European Union. In the United States, there is limited competition with weak governmental authority in enforcing network neutrality principles, and there have been a number of infractions. Japan in contrast has a high level of competition at the service level and the government has put in place some non-binding principles.

Several corporate players in the media and communications industries have come together to agree on a set of rules governing net neutrality. it is important to note however that the nation’s largest internet service provider is the government-supported NTT. There have not yet been any network neutrality infractions. The European Union is unique in that it has strong competition amongst ISPs, a high level of government authority over the telecommunications sector and there have been infractions. The infractions however were privately resolved without the intervention of the government. The researchers concluded that competition prevents infractions but competition is unable to determine the necessary level of competition.

A broadband investment panel looked at how investment will proceed now that increasing capacity costs more than earlier investments. Broadband investment is a long and expensive process that appears to be declining. Verizon has announced that it will slow down its FIOS deployment. A paper by Bob Atkinson, Eli Noam, and Ivy Schultz from Columbia University shows that future investment will most likely be in wireless technologies due to their beneficial cost-to-coverage ratio.’s Experience Using the Network Diagnostic Tool as a Beta Speed Test

in Press Releases by

Experience with NDT Featured in Presentation at Joint Techs Conference in Lincoln, Neb.

Case Study

Editor’s Note: Since the launch of our beta speed test on February 21, 2008, has been using the Network Diagnostic Tool (NDT) speed test developed by the educational consortium Internet2. The following is a “case study” prepared by Internet2, with the assistance of It was distributed at the Joint Techs Workshops: an international conference of networking engineers, taking place in Lincoln, Neb., from July 19-24, 2008. Further information is available in the links below.

-Drew Clark, Editor, is a new Web service that provides the public with free information on local broadband availability, competition, speeds and service. By participating in an anonymous online census questionnaire, users can greatly contribute to the knowledge and understanding about the state of the nation’s broadband competition and services – particularly as federal lawmakers consider issues in the development of a national broadband policy.

The Challenge

A crucial component of the Broadband Census service is its beta speed test. It allows consumers all across the country to test their residential high-speed Internet connections to determine whether broadband providers are delivering the promised services.

The Solution

In order to provide this service, has deployed the NDT (Network Diagnostic Tool), an open-source network performance testing system designed to identify computer configuration and network infrastructure problems that can degrade broadband performance. NDT is under active development by the Internet2 community.

When began developing its Web service in the fall of 2007, various alternative speed tests were explored. The company selected the NDT for two principal reasons. First, NDT is a well-designed, easy to use, open-source solution that is made freely available by Internet2, an organization with goals and purposes broadly congruent with those of – namely, the advancement of knowledge about the Internet. In addition, NDT has been successfully used by other broadband mapping endeavors, including the eCorridors Program at Virginia Tech, an Internet2 member, which is working to collect data of residential and small business broadband trends throughout the Commonwealth of Virginia.

The implementation process for the beta speed test began in early 2008, after launched the first version of its site in January. Through close collaboration with both Internet2 staff and Virginia Tech colleagues, deployment of the NDT speed test was seamless and enabled the release of a beta version of the speed test weeks earlier than anticipated.

The Results

Today, utilizes four available NDT servers: Argonne National Laboratory, the University of California at Santa Cruz, Stanford University, and Virginia Tech. routes the Internet user to the closest NDT server based upon the stated ZIP code of the user. The company is looking to expand the reach to eight servers in the coming months.

Additionally, aims to implement an automatic “failover” feature that checks whether a particular NDT server is busy with another test. In doing so, the service could automatically switch the user to the next-closest server rather than requiring them to resubmit the test. Both of these features – additional servers, and the “failover” capability – will provide the necessary scalability as traffic grows on the site, putting more demand for more speed tests.

So far, has assembled thousands of speed tests, census entries and comments from everyday Internet uses. All of these are freely accessible at under its Creative Commons Attribution-Noncommercial License. The company is now working to compile its first comprehensive assessment of the speed test data obtained through the NDT tests as part of its contract, with the Pew Internet & American Life Project, to track actual and promised broadband speeds across the country.

“We are gratified that the availability of NDT has allowed us to make a robust speed test available on short notice and with a limited budget. “By shedding light on Internet speeds, we believe the service will play an important role in helping U.S. Internet users and policy makers understand the shortcomings of existing broadband services that can provide a more solid basis for making better decisions about future broadband services and policies.”

Documents and Web Sites Referenced in this Case Study:

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