Before the

National Telecommunications and Information Administration

U.S. Department of Commerce

Washington, D.C. 20230

 

In the Matter of

)

 

 

Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications Services

)

)

)

)

 

 

Docket No. 011109273-1273-01

 

Comments of the Public Utility Commission of Texas

On November 14, 2001, the National Telecommunications and Information Administration (NTIA) released the Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications Services in this proceeding, seeking comment on various issues related to deployment of broadband in the United States. In addressing these questions NTIA seeks comment and input regarding supply and demand for broadband services; and the technical, economic, or regulatory barriers to broadband deployment.  The Public Utility Commission of Texas (Texas PUC), having been given general regulatory authority over public utilities within our jurisdiction in Texas, hereby submits these comments.

 

Supply and Demand for Broad Services

The data recently released by the Federal Communications Commission (FCC) reflecting deployment of advanced telecommunications capabilities as of December 31, 2000 continues to reveal steady subscriber growth, an encouraging sign.[1]  However, with broadband service providers continuing to cease operation and Regional Bell Operating Companies (RBOCs) scaling back deployment,[2] the pace of growth is likely to slow in coming quarters.

NTIA requests comment on “the primary policy considerations in formulating broadband policy for the country” and the relative importance of “access for all; facilities-based competition; minimal regulation; technological neutrality; intra-modal competition; inter-modal competition; and any other policy considerations.”  (¶ II.A.) The Texas PUC in its Report to the 77th Legislature on the Availability of Advanced Services in Rural and High Cost Areas articulated the following tenets for supporting the deployment of advanced services to rural Texas:[3]

·        Technology Neutrality – In the rapidly changing, dynamic environment of broadband, it is too early to declare a particular technology or service the winner.  Consequently, any public policy adopted should encourage deployment without reference to a particular technology.

·        Avoidance of Excessive Regulation – Excessive regulation may hamper innovation and competition.  Consequently, public policy solutions to encourage wide scale deployment of broadband services should focus on incentives.  If regulation is necessary, it should be the least intrusive means available.

·        Encouraging Local Solutions – Policies that encourage local solutions are more likely to result in the efficient use of resources and better meet the needs of individual communities, especially rural communities.

·        Avoidance of “One Size Fits All” Solutions – Differing capabilities of broadband technologies in combination with differing economic and demographic characteristics in various communities may require different policy solutions.

The Texas PUC continues to support a technology neutral, pro-competitive approach to encouraging the deployment of broadband services.  Additionally, as the pace of technological change increases, the Texas PUC believes it important to avoid policy solutions that may have the unintended effect of curtailing investment or picking a specific broadband technology solution.  The Texas PUC, also, believes a “toolkit” approach that allows communities to select the program that best fits their unique requirements may be an effective policy solution for encouraging broadband deployment.[4]

            NTIA also seeks comment on the definition of broadband. (¶ II.B.) Section 706 of the Federal Telecommunications Act of 1996 (FTA) defines advanced telecommunications capability “without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.”[5]  This definition is both descriptive of what a broadband connection should provide – high-quality voice, data, graphics, and video and is sufficiently flexible to be current both now and in the future.  The definition, however, does not provide industry with regulatory certainty or potential subscribers with a definitive description of what services meet the definition of broadband.

The Texas PUC has sought comment on a definition that provides for an information carrying capacity, in either the downstream or upstream direction, of at least 200 kilobits per second in one direction in the last mile and with a speed of at least 128 kilobits per second in the alternative direction in the last mile.[6]  These speeds generally correspond to the minimum guaranteed speeds for residential broadband offerings (i.e. ADSL, cable modem, two-way satellite).  These speeds, while certainly faster than dial-up Internet access, arguably will not support high-quality voice, data, graphics, and video telecommunications.  The Texas PUC, therefore, believes the § 706 definition properly articulates the relevant requirements for broadband access.  However, to achieve this goal would likely require advanced telecommunications services that are capable of delivering a minimum of 1 megabit per second to the end user.  At present, few providers are able to guarantee residential service to end users that would allow these high-quality services.  The Texas PUC, consistent with its comments regarding a “one size fits all” approach, believes that States are in the best position to determine any minimum broadband speed requirements.

NTIA also seeks comment on the current status of supply and demand of broadband services. (¶ II.C.)  While the supply and demand for any service may be affected by many variables, the Texas PUC believes population demographics, distance, and technology factors currently are the principle elements that impact the supply and demand for broadband services.  For example, in the Texas Advanced Services Report, the Texas PUC commented on the unique demographic and population density challenges faced in rural areas that impact provider decisions to deploy advanced services faster in urban areas.[7] Additionally, irrespective of population, “population density has been determined to be an important aspect of broadband deployment.”[8]  The Texas PUC in comments to the FCC has previously noted in regard to xDSL deployment that, “the underlying economics of the [public switched telephone] network (e.g. loop length) may provide more useful analysis of where deployment can occur”[9] than simply population density and network infrastructure upgrade costs (i.e. central office upgrades and loop conditioning).

For example, the Texas PUC in a recent report to the Texas legislature noted that 50% of loops in Texas counties with populations of less than 100,000 were within 12,000 feet of a central office and 73% were within 18,000 feet.[10]  (Attachment B).  The Texas PUC believes this type of analysis of loop length is instructive as to where xDSL deployment can potentially occur.

Further, the availability or location of a broadband capable ISP may be critical to the deployment of broadband services.  The Texas PUC has learned in discussions with providers of advanced services that the cost of “middle-mile” transport to a broadband capable ISP is a significant, if not the principle, cost driver when determining whether deployment is economical to a rural area.  For example, in the vast distances of Texas the mileage and capacity sensitive costs of “middle-mile” transport to an ATM capable switch may present cost-prohibitive hurdles to advanced services deployment to rural areas.[11]  These supply issues appear to directly impact the price charged for a given broadband product. 

Demand for residential broadband services appears closely linked to the price of the service offering.  Recent studies would suggest that in the absence of a “killer application” mass adoption of broadband capable products may not occur, or at least not as rapidly as previously thought, at current price levels.

NTIA next seeks comment on whether government should adopt as a goal “access for all” to broadband services. (¶ II. D.) While “access for all” may ultimately be necessary to achieve widespread adoption of broadband services, the Texas PUC would again caution that “one size fits all” solutions may lead to uneconomical or technically inefficient solutions.[12]  Consequently, the Texas PUC believes a universal service approach to providing advanced services is unnecessary and inappropriate at this early stage of broadband deployment. 

Barriers to Broadband Deployment

As discussed earlier, the Texas PUC believes excessive regulation of broadband services should be avoided by all levels of government.  However, the Texas PUC recognizes consistent with § 706 of the FTA that there is a role for federal, state, and local government in encouraging the deployment of advanced services to areas or persons that are unlikely to be served through marketplace forces – especially, rural areas and economically disadvantaged persons.  Consequently, the Texas PUC has undertaken to establish “a competitive forum for all retail customers in a rural area to seek advanced services from any advanced services provider”[13] consistent with the Texas policy to “ensure that customers in all regions of [the] state, . . . , have access to . . . advanced telecommunications and information services.”[14]

            NTIA also asks for comment on the extent that competitive firms have deployed their own transport, switching, and loop facilities. (¶ II.G.)  In Texas, the second state in which an RBOC gained § 271 approval from the FCC, as of December 31, 2000, competitive local exchange carriers (CLECs) have gained a 17% market share from Southwestern Bell Telephone Company through a combination of facilities-based, unbundled network element (UNE) based, and resale market entry.[15]  This is compared to a nationwide market share of 7.6 % for CLECs.  In particular, in Texas “CLECs have tended to rely heavily on [UNE platform] as an entry strategy.”[16] (See Attachment C for detailed breakdown of § 271 approved applicant market entry data). 

NTIA requests comment on problems companies may have experienced in deploying broadband services via wireless and satellite. (¶ II.I.)  While the Texas PUC is unable to provide a specific response regarding deployment problems, the Texas PUC has encouraged companies that are within its jurisdiction to partner, or investigate the possibility of partnering, with satellite providers to provide high-speed access to rural areas.  For example, in Texas, Southwestern Bell Telephone Company has committed to introduce two-way high-speed satellite Internet access “to customers in rural Texas, where Southwestern Bell Digital Subscriber Line (DSL) service is not available.”[17]  Similarly, Big Bend Telephone Company, acting as an agent for its customers, will arrange for installation and provide twelve month zero interest equipment and installation financing to lessen the burden on customers of acquiring this service.[18]  The Texas PUC believes these type business arrangements are critical to extending the availability of advanced services to rural and under-served areas.

NTIA seeks comment on whether the broadband product market should be defined and what policy initiatives would best promote intra-modal and inter-modal broadband competition. (¶ II.J.)  As discussed earlier, the Texas PUC is in the process of developing a competitive bid process to address deployment of advanced services to customers in rural areas of the state.[19]  The Texas PUC believes this type of process will encourage inter-modal competition in rural areas where intra-modal competition is least likely to exist.  The Texas PUC believes that this pro-competitive, technology neutral approach is an excellent way to encourage competition and hasten the deployment of broadband services to rural areas.

NTIA seeks comment on local issues that are affecting broadband deployment and whether they should be addressed by federal policies. (¶ II.L.) The Texas PUC continues to support the state – federal cooperative model established by the FTA.  In addition to local issues largely being unique to a particular community, the Texas PUC believes state legislatures and regulatory bodies are better situated to address local issues of national importance.  For example, in 1999 the 76th Texas Legislature passed legislation that adopted a uniform method to compensate cities for use of public rights-of-way.[20]  As a result, this uniform method to compensate cities has provided a competitively neutral means to encourage competition and reduce barriers to entry while acknowledging the unique aspects of Texas municipalities.

NTIA finally requests comment on whether regulatory changes can be made under existing authority or will additional legislation be required.  (¶ II.M.)  FTA § 706(a) charges “the [FCC] and each State commission with regulatory jurisdiction over telecommunications services” with encouraging

the deployment on a reasonable and timely basis of advanced telecommunications to all Americans . . . by utilizing in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.

Additionally, provisions of Texas law establish a state policy that advanced telecommunications and information services will be made available to all Texans “at prices that are reasonably comparable to prices charged for similar services in urban areas.”[21]  Furthermore, § 55.014 of the Utility Code, the genesis of the Texas Advanced Services Rulemaking, requires SWBT, Verizon, and CLECs that provide advanced services in urban areas to provide reasonably comparable services to customers they may serve in rural areas.  Consequently, the Texas PUC believes, at this time, that existing federal and state law and regulation in Texas are adequate to encourage the deployment of broadband services. 

Conclusion

            We appreciate the opportunity to offer our comments in this proceeding.  We invite NTIA to build on the studies and analysis done by the Texas PUC and other state regulatory agencies as it reviews the Deployment of Broadband Networks and Advanced Telecommunications Services.

Respectfully submitted,

 

Public Utility Commission of Texas

1701 N. Congress Avenue

P.O. Box 13326

Austin, Texas 78711-3326

 

 

December 19, 2001

 

 

/original signed/                                               

Max Yzaguirre

Chairman

 

 

/original signed/                                               

Brett A. Perlman

Commissioner

 

 

/original signed/                                               

Rebecca Klein

Commissioner

 

Policy Alternatives and Best Practices to Encourage

Deployment of Advanced Services

 

The Texas PUC identified the following policy solutions in the Texas Advanced Services Report that generally summarize national “best practices” to encourage the deployment of advanced services in rural areas of Texas:[22]

·        Expand telecommunications facility inventory data collection activities.

·        Encourage the use of demand aggregation and anchor tenancy.[23]

·        Encourage the development of community networks.[24]

·        Provide community Internet access and training to “at risk” populations.

·        Use economic development funds for rural telecommunications infrastructure investment.

·        Provide tax incentives for companies deploying advanced services to rural areas.

·        Deploy fiber optic cables in the state’s rights-of-way.

·        Allow private access in limited situations to the TEX-AN 2000 telecommunications infrastructure and services that is available to Texas governmental entities.

·        Provide a narrow exception to Texas law for rural municipal governments to provide advanced services.

·        Enhance statewide telecommunications strategic planning.[25]

 

 

< 12 kft

from CO

12 to 18 kft

from CO

> 18 kft

from CO

 

 

 

 

Counties with Population <5000

50,000

59%

19,500

23%

15,000

18%

 

 

 

 

Counties with Population >5000, <20000

383,000

61%

109,000

17%

133,000

21%

 

 

 

 

Counties with Population >20000, <100000

907,000

46%

487,000

25%

589,000

30%

 

 

 

 

Total

1,340,000

50%

615,500

23%

737,000

27%

 

Source: 1999 Texas Carrier Data.

 

 

Percentage of BOC Switched Lines Purchased by CLECs -- June 2001

 

 

 

 

 

Lines Purchased by CLECs

 

 

State

 

 

BOC

 

Total BOC Lines

BOC % of ILEC Lines

 

Percent Resale

 

Percent UNE-P

 

Percent UNE-L

 

Percent Total

Total CLEC Lines

Approved 271 Applicants (more than 1 year)

 

 

 

 

 

New York

Verizon

12,050,789

89%

3.0

14.5

2.2

19.6

2,365,206

Texas

SWBT

8,947,790

79%

3.3

13.3

1.1

17.7

1,586,888

Approved 271 Applicants (less than 1 year)

 

 

 

 

 

Oklahoma

SWBT

1,660,815

83%

3.2

1.5

0.3

4.9

81,690

Kansas

SWBT

1,389,742

84%

5.7

3.9

0.3

9.9

137,041

Massachusetts

Verizon

4,636,622

100%

5.8

0.6

1.8

8.2

378,294

Connecticut

Verizon

57,893

99%

3.5

0.0

0.9

4.4

2,547

Pennsylvania

Verizon

6,366,128

77%

2.0

3.7

2.4

8.1

516,057

Missouri

SWBT

2,605,726

75%

4.1

2.3

0.3

6.7

173,384

Arkansas

SWBT

1,048,587

69%

3.3

0.5

1.6

5.4

56.340

 

 

 

 

 

 

 

 

 

Nationwide

 

141,311,809

75%

3.1

3.0

1.6

7.6

10,765,430

 

Source: FCC’s ARMIS database.  BOC Performance Metric Reports (Shiman and Rosenworce, Assessing the Effectiveness of Section 271 Five Years After the Telecommunications Act of 1996)

 


[1] FCC Report: High Speed Services for Internet Access: Subscribership as of December 31, 2000 (rel. Aug. 9, 2001).

 

[2] SBC Communications Inc., Press Release: SBC Reports Third-Quarter Results (rel. Oct. 22, 2001).

 

[3] Report to the 77th Legislature on the Availability of Advanced Services in Rural and High Cost Areas at 64-5 (Jan. 1, 2001) (Texas Advanced Services Report).

[4] Id. at 65.  Additionally, the Texas PUC is partially funding a project with the University of Texas Lyndon B. Johnson School of Public Affairs to develop a “toolkit” of resources to assist rural community leaders and economic developers in bringing broadband to their communities.  See also Attachment A (Policy Alternatives and Best Practices to Encourage Deployment of Advanced Services) (these policy alternatives summarize  nationally recognized best practices for encouraging the deployment of advanced services).

 

[5] §706(c)(1) of the Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat. 56 (1996) (FTA).

[6] Texas PUC Rulemaking to Address the Provision of Advanced Services by Electing Companies, COA, or SPCOA Holders In Rural Service Areas, Project No. 21175, Proposal for Publication as Approved at the October 18, 2001, Open Meeting at 9 (Oct. 26, 2001) (Texas Advanced Services Rulemaking).  See also C.S.S.B. 1783, 77th Texas Legislature, The Texas Universal Broadband Access Act of 2001 § 2 (2001).

[7] Texas Advanced Services Report at 59.

[8] Id. at 60.

[9] Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, CC Docket No. 98-146, Texas PUC Comments at 3 (Sept. 24, 2001) (Texas PUC § 706 Comments).

[10] Report to the 77thTexas Legislature on the Availability of Advanced Services in Rural and High Cost Areas, Public Utility Commission of Texas at 61 (January 1, 2001) (Texas Advanced Services Report). <http://www.puc.state.tx.us/telecomm/projects/21166/21166arc/rpt77leg_asarcost.doc>.

 

[11] Texas PUC § 706 Comments at 3.

[12] In the Matter of Federal-State Board on Universal Service, CC Docket No. 96-45, Comments of the Public Utility Commission of Texas at 2 (Oct. 23, 2001).

 

[13] Texas Advanced Services Rulemaking at 1.

 

[14] Public Utility Regulatory Act, Tex. Util. Code Ann. § 51.001(g) (Vernon 1998 & Supp. 2002) (PURA).

 

[15] Daniel R. Shiman and Jessica Rosenworcel, Assessing the Effectiveness of Section 271 Five Years After the Telecommunications Act of 1996 at 27 (Oct. 2001) (among the UNEs recognized by the FCC is the high frequency portion of the loop that is necessary to provide xDSL service).

 

[16] Id. at 20.

 

[17] SBC and Pegasus to Extend Broadband’s Reach, SBC Press Release (May 10, 2001) <http://www.sbc.com/News_Center/1,3950,31,00.html?query+20010510-1>.

 

[18] Letter to the Honorable Susan Combs, Texas Commissioner of Agriculture, from Bill Golden, President, Big Bend Telephone Company (July 19, 2001).

 

[19] See the Texas Advanced Services Rulemaking.

 

[20] Tex. Local Gov’t Code Ann. §§ 283.001 et seq. (Vernon Supp. 2002).

 

[21] PURA § 51.001(g).

[22] Texas Advanced Services Report at 65-70.

 

[23] FCC’s Second Advanced Services Report at ¶ 245.

 

[24] Id.

 

[25] Id.