1 Rural Development 1400 Independence Ave. Washington, DC Presenter: Kenneth Kuchno Director, Broadband Division Telecommunications Program NARUC Summer Meeting July14, 2007

2 More than $5.7 billion invested in rural telecommunications infrastructure Almost 2 million rural homes and businesses have received access to high-speed broadband connections More than $251 million in Distance Learning/Telemedicine grants and loans have been awarded to rural health and education providers Rural Development Utilities Programs Nationwide Investment

3 Broadband Loan Program: Status and Results Established by the 2002 Farm Bill. As of July 13, 2007, 72 loans have been made for approximately $1.25 billion to finance facilities in 40 states. –Projects proposing to serve more than 582,000 households –1,263 communities

4 Broadband Loans… Statistics 203 Applications Received Totaling $4,430,000,000 Applications Processed as of July13, Approved$1,250,000, In Review$ 963,000, Returned $2,217,000,000

5 Broadband Loan Program: Status and Results Unserved and Underserved Communities –Approximately 40% of the communities approved for funding were unserved at the time of loan approval. –An additional 15% had only one provider at the time of loan approval

6 Broadband Loan Program: Technology Neutral Broadband Loan Program: Technology Neutral As of 7/13/2007

7 The Cost to Deploy Broadband Least Expensive: Unlicensed Wireless Most Expensive: FFTH On average, when considering all the technologies funded (community populations ranging from 200 – 19,000):  $2,150 per Household Served  $990,000 per Community Served (based on estimates not actual costs)

8 Broadband Loan Program: Technology Neutral Broadband Loan Program: Technology Neutral As of 7/13/2007

9 Broadband Loan Program: Types of Organizations Funded Broadband Loan Program: Types of Organizations Funded One Size Does Not Fit All… Private/public partnerships Traditional telephone companies enhancing service offerings Local service providers serving one or a few local communities National service providers providing service to multiple communities, even multiple states Municipalities

10 Broadband… Direct Cost-of-Money Rates Amortization period from 5 – 20 years based on useful economic life of facilities funded. As of July 12, 2007

11 Definition of Broadband Currently 200 kilobits per second both upstream and downstream In the Future 1 Megabits??????? 5 Megabits??????? 50 Megabits?????? or even 100 Megabits?????

12 Raising the Speed for Rural America: Overall cost of broadband system may increase. Backbone requirements go up. Cost to consumer probably goes up. Certain technologies may no longer have the capability to deliver broadband service. The outliers may not get this service.

13 Broadband Service Offerings Wireless: 128K/128K: 512K/256K: 2M/1.5M 4M/2M HFC: 256K/256K: 3M/128K: 1.5M/384K: 2M/512K: 4.5M/640K FTTH: 512K/256K: 3M/768K: 2M/1M: 10M/10M BPL: 256K/256K: 1M/1M: 3M/3M (only 1 application)

14 Rural Broadband Access Loan and Loan Guarantee Program Proposed Rule published. Comment period has ended. 32 comments received.

15 Who submitted Comments? American Cable Ass. CTIA NRECA NRTC NCTA NTCA USTA Vermont Dept. of Public Service Nextwave Wireless Rural Telephone Service Co. Suddenlink OPASTCO QWEST Mediacom IA Telecom Service US Chamber of Commerce MidState Consultants Nextwave Wireless PCIA WTA North American Equipment Dealers

16 Broadband Success Air Advantage, LLC: Community Connect Grants: 2003: Unionville, Michigan (Pop. 605) $214, : Port Hope, Michigan (Pop. 310) $219,176 Broadband Loans: 2004: 43 communities, $1,500, : 12 communities, $1,028, : Pending application to handle addition customers, $1,000,000 Exciting Fact: Today they are serving 55 mid-Michigan communities and providing service to 3,500 rural Michigan customers with a wireless system

17 Rural America Let’s not forget the most Rural Americans and let’s strive to get all Americans Affordable, Dependable, and Quality Broadband Service.

18 Kenneth Kuchno Director, Broadband Division Telecommunications Program (202) Rural Development Utilities Programs