Roundtable on Selection Criteria and Weighing Priorities 

March 17, 2009, 8:00 – 9:30 p.m. 

MS. VERNATTER: Good evening. My name is Kay 
Vernatter. I am the Acting State Director for USDA Rural 
Development. It is my pleasure to welcome you to Las 
Vegas, Nevada, and a special welcome to everyone that's 
listening live on the Internet and everybody that is on the 
teleconference this afternoon. 

It is my pleasure to introduce to you Mark Seifert, 
the Senior Advisory Assistant to the Secretary of Commerce. 
Thank you. 

MR. SEIFERT: It's times like these that my 
grandfather Ignatius Loyola Mulvaney would say, happy Saint 
Patrick's Day. Being half Irish, I thought that was 
important that we start this off in the right spirit. 

Tonight's panel, the last panel for tonight, is going 
to be a panel where we discuss how you tell us how we 
should judge all these applications. And to me, this is 
one of the most important panels we'll have. And I think 
for me it seems to be the most difficult because we have so 
many different things that we have to try and figure and 
achieve, according to the congressional statute. 

So let’s first start off with our panelists. We have 
Jason Lazar, with KeyOn Communications. Jason Lazar is co-
founder and Vice President of Corporate Development and 


General Counsel for KeyOn Communications Holding Inc., one 
of the nation's largest providers of wireless broadband to 
rural and underserved markets. 

Next we have Ed Anderson, who is the Director of 
Network Services for Nevada System of Higher Education. He 
currently operates and maintains over 1,000 route miles of 
state-sponsored fiber-optic backbone infrastructure in 
Nevada on behalf of the Nevada System of Higher Education, 
the Nevada Department of Transportation, and the Nevada 
Department of Information Technology. 

Next we have Don Jackson with Tri-County Telephone in 
Basin, Wyoming. For the -- Don has had a career in telecom 
that spans 45 years, and it began as his employment –- with 
his employment as a coin collector for Mountain States 
Telephone and Telegraph Company. For the last nine years, 
Mr. Jackson has been employed by the Tri-County Telephone 
Association, T.C.T. West, located in Basin, Wyoming, the 
company serves customers in neighboring communities as well 
as sparsely populated areas of southern Montana using 
wireless Internet connections. 

Our next panel is Catherine Moyer of Pioneer 
Communications, located in Ulysees, Kansas. Ms. Moyer is 
the incoming chairperson of the Organization for the 
Promotion and Advancement of Small Telecommunications 
Companies, commonly known as OPASTCO. She’s also a member 


of the Western Telecommunications Alliance, or WTA’s, 
Public Policy Committee, and a member of the National 
Telecommunications Cooperative Association Legal Committee. 

Last, tonight, we have Mark Feest who is the Director 
of External Affairs for CC Communications in Fallon, 
Nevada. He is responsible for the company's legislative 
and regulatory initiatives and compliance as well as 
intercarrier relationships. He is also the wireless 
project coordinator and has recently been tasked with the 
company’s efforts to increase capacity to the Internet 
gateway in an economically sustainable manner. 

And so now, panel, I'm going to ask you to take 
approximately five minutes -- and I'll start to clear my 
throat and tap the microphone if you go much longer than 
that -- and give us your view of how your government should 
spend your tax dollars in deciding how to award proposals. 
And I want you to take as an assumption that we're going to 
get many more proposals than we have money to fund. And so 
we’re looking to you for -- suddenly you find yourself in 
our position. How would you in a competitive way rank 
proposals one over the other to decide how we should spend 
the money? And we'll start with you, Jason, if that’s all 
right. Thank you. 

MR. LAZAR: Good evening. I would like to thank the 
NTIA, the RUS, and the FCC for coordination of this field 


meeting in furtherance of the broadband initiatives of the 
American Recovery and Reinvestment Act. I'm truly 
appreciative for the opportunity to participate as the list 
of candidates was undoubtedly long. 

I'm here on behalf of KeyOn communications. We have 
been delivering wireless broadband to rural and underserved 
markets for over five years, and many of the goals of the 
NTIA and RUS programs are consistent with KeyOn’s mission. 
Despite much of the turmoil in the capital markets, this is 
an exciting opportunity. History will prove that the 
broadband initiatives of ARRA will be a watershed event in 
the industry, particularly in relation to deployment of 
networks in underserved, unserved, and rural areas. 

And so the members of NTIA and RUS have a challenging 
task. They have to answer what is a $7.2 billion question. 
How and to whom are they going to administer these funds so 
that the stimulus capital, our capital, is spend 
effectively and efficiently in furtherance of the stated 
goals. These agencies will be reviewing a Wide range of 
proposals that will ultimately result in an apples to 
oranges to pears comparison, and they will have to make 
those tough decisions. 

 So one of reasons we're here is to help answer the 
question: What factors should be answered considered in 
establishing the selection criteria? And while the answers 


will be the result of intense discussion, I would like to 
offer some guiding principles that will help with the task 
at hand. 

Critical to success is the creation of a comprehensive 
grading scale that can be used to measure both quantitative 
and qualitative characteristics across applications. 
Create a tool to help evaluate within the proper context 
and not in a vacuum. 

Flexibility. Flexibility – you not only consider the 
merits of a proposal in terms of its viability and 
likelihood of success, but also an evaluation of the 
applicant itself. Is this applicant credible? Can it do 
what it says? 

Speed. How quickly can this project be deployed? 
Consistent with the notion of stimulus, projects that can 
be commenced and completed swiftly should be prioritized. 
Is a particular proposal broad or narrow in scope -- in 
terms of the act’s specific goals? While neither should be 
precluded, the criteria need to be flexible to address both 
types. 

And finally, keep your eye on the ball with respect to 
the goals. This is about broadband deployment, broadband 
penetration, and job creation. Make sure that this is 
where the funds are going. Again, 

I appreciate the opportunity to be here, and I look 


forward to an interesting discussion. Thank you. 

MR. ANDERSON: Again, my name is Ed Anderson, and I 
have spoken a little bit here tonight already. And I want 
to thank all you stalwart people who have managed to sit 
through this lengthy session here. But at any rate, let me 
get started. 

I am representing the State of Nevada, its entities, 
the Nevada System of Higher Education, the Department of 
Transportation, and the Department of Information 
Technology. We've been working together to provide 
broadband to support higher ed, both K-12 and -- distance 
education, higher ed and K-12 communities, rural health 
care, public safety, transportation, and numerous other 
government entities. We have been pretty successful. 
We've been doing this for ten years or better, at least on 
the fiber broadband level, and a lot longer than that on 
just the basic telco T-one level type of service. 

We have been pretty successful at it for a few 
reasons, and I hope that we might be able to explain some 
of those and have those be factored into some of the 
decision-making here. One of them is we've been pretty 
targeted. We've talked a lot -- we've heard a lot tonight 
about some of the measures -- served, underserved, 
et cetera -- and how we measure who gets what. We've been 
targeted to the entities I've talked about which, are very 


structured markets with definable achievements and success 
indicators. So for that reason we've been able to achieve 
successes in areas that we feel give us the biggest bang 
for the buck in those areas of schools, health care, 
et cetera. We're providing those capabilities to rural 
areas and affecting very many lives in that. 

We've leveraged our assets. We've worked 
collaboratively on a lot of these projects to whatever -- 
whenever we happen to get a grant or some money that we 
didn't expect or -- and some of the times, we did plan for 
it. And a lot of times, it's not just the money. It's 
facilities, it's land, it's whatever it takes to make these 
things happen. So we've been very successful in leveraging 
those assets. 

We're also committed long-term support. The 
sustainability question has been asked over and over again 
here. And I would bring it up again if I had the time. 
But the fact that we're here for the long haul and we're 
not necessarily profit driven has allowed us to go where 
others have not gone so far. 

So getting down -- I've got my two minute warning 
here. So getting down to what I think we should do, I 
would hope, because of these successes, that part of the 
application process, some form of target market access -- 
and we've talked about this. I assume this is going to 


happen because it's been high on everybody’s list. We're 
not just going to deploy stuff because it's not there. 
We’re not going to -- I hope a bunch of the telcos aren't 
going to look at their map and say this area is going to 
get it because it doesn't have it, without any kind of 
market analysis or anything that would indicate what sort 
of potential viability for sustainability there would be. 
So I would hope that that would be part of a requirement, 
is to show some sort of a path toward sustainability. 

I would also hope that while it's desirable to partner 
and leverage with commercial service providers, that it 
wouldn't be a requirement. Like I said, we've been 
successful as a private network in targeting specific areas 
and providing quite a bit of service for -- and again this 
“bang for the buck” concept. So, again, I would hope that 
this wouldn't be a requirement. 

There's also this issue of open access to other and 
competitive -- competitive access. I would hope that -- 
for several reasons and a lot of experiences, I would hope 
that you would encourage pretty strict guidelines with 
regard to ILEC and LEC access – equal access requirements, 
and there would be severe penalties for denial or delay in 
providing requested equal access, that there would be a 
pretty strong thing there. 

As far as weighting factors go, again I would -- it is 


my recommendation that the projects demonstrate a greater 
contribution to the overall good. Merely numbers of homes 
connected to broadband, for example, schools, libraries, 
health care -- these are the kind of facilities. Middle-
mile stuff is also going to help the last mile. If you 
have a middle mile that cuts down the distance associated 
with last mile, you’ve helped both. If you just add last 
mile, you haven't helped the situation, you have only made 
it worse for the middle mile. 

Last in my mind -- or secondly, the number of jobs 
that we're going to be potentially creating here has to be 
factored in here somehow, both directly from increase in 
the service providers and the jobs associated with that as 
well as the jobs that the broadband facilities create. So 
we have to factor in some sort of job estimates. 

And finally, the last of my priority would be – you’re 
going backwards here. Give me more time. 

(Laughter.) 

Last of my priority would be blanket broadband 
deployment for the reasons I said. It's hard -- it’s very 
-- it’s inefficient and it's very hard to monitor its 
success. So with that, I will turn it over. 

MR. JACKSON: Thank you. My name is Don Jackson from 
Tri-County Telephone in Basin, Wyoming. Obviously, we 
consider this a critical thing. There are two things that 


dictate economic success and, correspondingly, the economic 
well-being of citizens. One is transportation and the 
other is communications. And to see the emphasis coming in 
the area of communications, particularly in the rural 
areas, is not only welcome but a daunting task for those 
who have to administer that. I admire it and pledge to 
help every way we can to make it successful. 

Looking at the criteria, if I were I think sitting 
there attempting to judge the applications that will come 
in, I think I would try and look at first five things. And 
these five things I suppose might be turned into something 
you could weight or score in some way, shape, or form. I 
haven't tried to do that. But I think that there is a 
ratio that could come out of this that means something in 
terms of evaluation. 

The first is consumers. How many people are going to 
be affected by what we're doing here? Whether it's the 
provision of broadband service to a group or individuals 
which is what I targeted here. How many are we going to 
affect? 

And the second thing is at what cost? What's it going 
to cost? And this gets to the “bang for the buck” term 
that I've heard thrown around. As I read the statute, as I 
have listened to people in these last three sessions, it 
seems that that is a target and probably should be woven 


into this equation. 

Coupled with consumers and their cost, what is going 
to be the bandwidth that's provided? I heard a comment in 
Washington last Tuesday that we want the most bandwidth we 
can get. And I think that has to be again a factor that's 
woven into the equation. 

The forth thing is the public benefit. To what degree 
will the project that's being proposed impact hospitals, 
education, public safety, the low-income community? It 
seems that as we design efforts to bring the broadband 
world to more and more, there is a fundamental obligation 
to see to it that there are public benefits that go beyond 
just providing broadband service to individuals. 

And the last area, the fifth area, is to what extent 
will this particular project contribute to economic 
development? That's a very meaningful thing in rural 
communities. It's a lifeline. And I suppose we could 
weave into that the number of jobs that will be created 
within that community. And I'll address it just a little 
bit more in a minute. 

There is a second area that I think we have to 
mention. And that's the viability of the firm or the 
individuals that are submitting the application. What 
experience do they have? Do they have qualified personnel? 
What is their track record? What resources do they have to 


operate and maintain and upgrade this network after the 
grant has been provided and fulfilled? It doesn't stop 
there. It goes way beyond it. It's a never-ending 
commitment. 

I offer this because I found it interesting, in 
Washington last Tuesday, at the opening of these sessions, 
while standing in line and always looking around to start a 
conversation with somebody I didn't know, I was amazed at 
the number I talked to that were brand-new at this. And I 
got to thinking, you know, there's something about the 
smell of money that seems to bring out a certain group of 
individuals that have a peculiar capability. One gentleman 
didn't even know what -- when we talked about -- when I 
talked about broadband and, you know, what kind of 
bandwidth, those were terms he didn't understand. 

In talking with others, they had just put together a 
consortium looking at whether or not they could provide 
cell phone towers. They hadn't incorporated yet, but that 
would follow. This is scary. And I think we all know some 
of the dangers that can come with projects or efforts when 
there's an awful lot of money at stake and there's an 
awfully big objective to be covered. And I think we need 
to make very sure that those who are recipients are those 
who can and will deliver. The taxpayer deserves it. And 
we have an obligation to see to it that it's fulfilled. 


The last of these things is what's the long term? 
When we take a look at these projects -- and I talk about 
the long term, we can't look -- and I have listened to the 
discussion and I know how sensitive it is. The discussion 
about how you define the underserved and the served and so 
forth. I'm sorry, but we can't look at a meg and a half. 
We can't look at some of the numbers that we've thrown 
around this evening because that isn't, by the time this 
effort is finished, what is going to be needed in rural 
communities. I can't put a number with it. But I can tell 
you that the National Exchange Carrier Association in their 
tariff -- and many, all of us belong to it and it's how the 
revenues for access are split up. They have a 50 meg 
component in their tariff today. 

Now, I'm not suggesting that by tomorrow that will be 
the requirement for everybody. But we can't build a 
network that has a limitation where we're all going to have 
to go back in the ground five years from now and plow it up 
and put more in or put in a different technology. 

Yes, we can change the electronics at each end. But 
what we put in the ground at $5 a foot means a lot. What 
we put in, in a tower means a lot. So we've got to look 
beyond. Now, that doesn't mean we shut out competition by 
any stretch. That isn't appropriate, and it shouldn't be 
part of the consideration. But maybe we need different 


standards, recognizing the fact that the different 
technologies are used in different ways by the population. 

I'd like to close with one other thing. We bandied 
around the around the economic development thing. And if I 
could just mention one thing. I heard, and I say this with 
all due respect, that we need a real program here to 
encourage people to use it, to bring in people who can take 
advantage of this network, and so forth. But I’d like to 
provide three examples very quickly of cases where you 
build it and they will come, because that has been our 
experience. 

First, we serve a very aging community. They’re 
cattle ranching people. The kids have gone on to other 
things. They're not staying at home. And these people are 
of some years now. And when I took a look at the 
penetration rates three years after broadband was put in, I 
was stunned. I couldn't believe it. It wasn't the kids in 
town; it was the geezers out on the ranches that were 
providing this, and I couldn't understand why. And when we 
had the first annual meeting after that, I decided to talk 
to them and find out just exactly why we had penetration 
rates that far, far exceed the nationwide average. And the 
answer was simple. If we found a way we can buy and sell 
cattle, buy and sell the hay, purchase whatever commodities 
we have to have and do it over the Internet, none of us go 


to the auction house anymore with a load of cattle on 
Friday. It's all done directly between us and the packing 
house, directly from here, and it cuts the shrinkage and 
gives us the competitive edge. That is -- that is a story 
that stunned me. And as I look at it and have followed up 
with, it it's a real case. 

The second thing is a neighboring community, Powell, 
Wyoming, has just finished a 100-megabit-per-second network 
to the entire town. Everybody can have that capability. 
That doesn't mean everybody does. But that is the capacity 
of that. The waiting list to get into that -- and 
incidentally that’s a municipally owned network. The 
waiting list is into July for those people to get that 
service. And they have received daily and have assigned a 
person in their City Hall to interview the people that are 
coming in, the businesses that want to settle in the 
industrial park that has that level of service. 

The third thing is in a little tiny town that is 
virtually off the map, about a mile and a half from the end 
of the earth, a fellow came in one day about three years 
ago visiting his relatives, and talked to a fellow sitting 
in a ditch looking at a map, and he said, “What are you 
doing?” And he said, “Well this town’s copper wore out. “t 
was pre-Depression. And we're going to try fiber in the 
home for everybody.” Well, where that ended up was a bunch 


of people from Korea coming over sitting in a firehouse and 
testing that network using Star Wars in Korea as a way of 
testing whether or not they could get full-motion video, 
keyboard, and voice over the same Internet arrangement. 
And the purpose was to teach Korean to -- American English 
teachers teach English to Korean people. 

That now employs, a year and a half later, 153 
teachers part time with all of their equipment paid for by 
the Korean government as well as their -- as their fee for 
teaching, employs 23 people. And that outfit is looking 
for anywhere in the United States they can continue this 
because they have a need for 40,000 teachers. 

You build it, and they will come. 

MS. MOYER: Thanks, Don. I'm Catherine Moyer with Pioneer 
Communications. I’m a company out of southwest Kansas. 
We're an ILEC. We're a cable television company. We’re a 
wireless -- mobile wireless GSM carrier and an ISP. So I 
guess we get to dabble in all of the technology, which is 
fortunate. 

I think you guys have probably all read what NTIA and 
RUS have to take into account, as listed in the statute and 
whatnot. And I think those considerations are pretty low 
level and somewhat obvious. The goal is to reach the 
greatest number of users with the highest speeds possible. 
I’ll take exception to one of the RUS considerations, which 


is to give end users a choice. I'm -- Don obviously is not 
willing to throw competition under the bus and I won't 
either. But I think that, while giving them a choice would 
be great and obviously competition should result if lower 
prices, there's an issue here with the number of dollars 
that we're talking about. There is not enough stimulus 
dollars to build out broadband to every single user that’s 
unserved and underserved. So while I'm not trying to be 
protectionist, I'm going to use some common sense and say 
the stimulus dollars first and foremost should go to 
unserved areas and then underserved areas, I mean, 
stretching broadband to every corner of the U.S. 

I believe the most important criteria to be 
considered, even before NTIA and RUS list criteria, is the 
financial stability and viability of the applicant. 
Funding established companies that are financially stable 
will lead to prudent investment of the stimulus dollars. 
Additionally, those established companies will be less 
likely to pull out their businesses once the dollars have 
been spent. This is especially important to the RUS- 
awarded dollars that will be structured as loans or loan 
guarantees with repayment schedules. It is also 
significant to NTIA, as the dollars it awards will have a 
matching requirement. 

Another company criteria that should be taken into 


account is local presence of the company in the area of the 
proposed project or the willingness of the company to 
establish and operate a local community center. The local 
presence of the company along with the community center 
could drive broadband adoption by educating and training 
local population on computers and computer literacy. 

An additional company criteria that NTIA and RUS 
should keep in mind is that the low -- the current low-
speed broadband facilities can be upgraded at a lesser cost 
than building out an entire new network to serve the 
population. For example, those companies that are 
providing broadband speeds of 256 K to 768 K would require 
less money to upgrade those facilities than a brand-new 
entrant that would be building a new network. And I do 
realize that there probably are different fee structures 
when we start talking about wireless versus wired in-the-
ground construction. 

Both NTIA and RUS will be required to look at the 
total number of end users that will be reached with the 
project. While this is imperative in order to get 
broadband speeds to as much of the U.S. population as 
possible with the $7.2 billion, it is also important to 
look at the proposed areas to be served. There may be 
applicants that will be proposing a project in which a 
large geographic area will be served, but the population 


density may be low. 

These projects are also important in covering the U.S. 
and allowing anyone to obtain broadband services no matter 
where they live or where they may be located in the future. 

Another central consideration is that of a timetable 
of the completion of the proposed project. NTIA has a 
requirement that the grant projects should be completed 
within two years of being awarded. The projects that can 
be completed quickly with an emphasis on quality network 
designed should be favored. With both NTIA and RUS 
currently proposing three funding rounds, perhaps the first 
round places more emphasis on these quick projects, with 
the second and third rounds not giving that much priority 
or as much priority to the timetable of the projects. Also 
those projects that are shovel-ready should be given 
priority, especially during the first round. 

NTIA and RUS should also contemplate the middle mile, 
an issue many of today's broadband providers face. While 
the broadband network is being extended further into areas 
where there is little or no services, many companies cannot 
afford the large middle-mile facilities to connect these 
customers to the Internet backbone. Funding should be 
available not only for end-user connections, but also for 
those backbone connection facilities, if not owned by the 
company utilizing them. Those companies that actually 


don't own those back -- those middle mile, they are facing 
pretty steep fees in order to get access to the Internet 
backbone. Stimulus dollars could be used for that expense. 
But I have a feeling that, you know, that's so ongoing, any 
stimulus dollars, at least right now, are favored as a 
one-time thing. I would assume that as the industry 
continues to talk about reform of the Universal Service 
Fund, that that's something should be included in that. 

Additionally, I've got a little bit of a laundry list. 
Projects should be expandable to provide greater speeds in 
the future. Projects that have an impact on education, 
both K-12 and secondary, should be favored. Projects that 
have an impact on economic development should be favored. 

Now, I’m going to speak from the experience of living 
in a small town of 6,000 people in rural southwestern 
Kansas. Broadband is one of the best economic development 
tools that we have. In order to convince businesses to 
locate in rural America or to allow current businesses to 
remain there, broadband is necessary. Broadband also helps 
retain and recruit population. The Facebook generation 
will not take a job and move to an area in which broadband 
is not readily available. 

Projects should create new jobs or retain current 
jobs. Projects that use U.S. companies and U.S.-supplied 
materials should be given more weight. Applications should 


note the current broadband speeds available in the project 
area, while also noting what broadband speeds will be 
available upon completion of the project. 

As we move ahead with these broadband projects funded 
by stimulus dollars, we must be cognizant of the need for 
long-term broadband strategy. The United States must 
continue to move up the worldwide broadband rankings. 
These stimulus dollars will go a long way in advancing 
broadband penetration in unserved and underserved areas. 
However, the United States must experience continued growth 
and broadband penetration to crack the top five. These 
upgrades and future speed requirements should not be 
limited by decisions that are made on the projects that 
will receive stimulus dollars today. 

MR. FEEST: Thank you, Catherine. I’m Mark Feest from 
CC communications in Fallon, Nevada. And I was happy to 
see that this time it wasn't “Nevuh-da” as we were 
introduced. Those us of us from Nevada, we appreciate that. 

You know, I could say many of the things that -- or I 
could say many things that have been said that I agree. I 
don't want to rehash those things. And I made a few more 
notes as I listened to this, and I think one thing that 
really jumps out to me and from the previous panels and 
from what has been said here today and in past meetings is 
that sometimes I feel like people are starting to get 


confused about what the Recovery and Reinvestment Act is 
and what a national broadband strategy is. And I don't 
think they're the same thing. Maybe I’m wrong there, but I 
believe we have other mechanisms which address some of the 
social issues, people not adopting when it has already been 
brought to their neighbors or choosing not to. They don't 
like the price. There might be other avenues to address 
that issue. 

But from my perspective, I think what we need here to 
get the most bang for the buck, a term that's being thrown 
around a lot, and to really get something sustainable is 
projects that would otherwise be done but for the capital 
cost. And what I'm saying is there are many phone 
companies, wireless companies, cable companies out there 
that might have their local loop in, they're getting the 
customer with good bandwidth, but they need backbone to a 
fiber hotel out to the Internet, something that's very 
costly, something that that one-time capital investment, 
one of our recurring costs, there is an initial up front 
they can't make at this time because they can't amortize 
that and collect it monthly from the customer. If it is 
also upgrading the local look, that's the same thing. Once 
it's in, do you have customers? 

And I think that's a big thing we need to start off 
with, is we look at the core of the stimulus plan, and I 


think it is about job creation and preservation. I think 
broadband is an input to that, whether it is job creation 
in the case of putting in facilities; job creation in 
hiring techs, customer service representatives at the 
provider; or if it's job creation that happens after your 
community gets broadband at a high level and is able to 
recruit businesses. But I think that really we need to 
focus on job creation and job preservation. 

And I don't think talking about temporary jobs is 
where we should be. I think it should be sustainable 
business models. And again but for that initial 
investment, they are going to recoup the money from their 
end users. And I guess you could use the example because 
it's the industry I'm in, the local telephone business. 
You have broadband customers. You have DSL customers, but 
not everywhere in your network. To upgrade a portion of 
your network in order to provide broadband to everyone or 
to most of the people in your area, that capital investment 
cannot be recouped on the monthly rate that you are able to 
charge. But you know what the rate is. It might be from 
NECA. It might be otherwise established. But you know what 
it is. You have a business model in place where, if the 
facilities are there, you can cover those recurring costs. 

Now, I think those types of applications, those types 
of grants are the ones that need to be made, because my 


concern here is that we go into a process of people 
applying for grants, they get the money, two years down the 
road they still can't collect their everyday costs from the 
end user. 

And I think I'm sensitive to an issue brought up 
earlier talking about where you have an area that it is 
deployed, but customers are not able to afford it and there 
are other barriers. I think that's part of the national 
broadband strategy quite frankly, that we need to look at 
some way of covering ongoing costs as opposed to one-time 
costs and then next year looking for more money. 

So I think the criteria for making grants needs to 
take the sustainability of the business model into account 
and, again, look to a USF form of revenue for broadband or 
-- I think we have to admit that there is some quantity of 
potential customers out there that they're not going to 
find that place at which you can provide broadband to them 
is the same place at which they are willing to pay for it. 
And I think it is dangerous to think a one-time capital 
investment is going to cure that problem because it’s not, 
and I think, in a couple years, you're going to be asking 
why we still don't have broadband penetration to these 
people. And, again, I think that's a national broadband 
strategy issue. 

One other issue I think is of importance that I'm not 


sure has been talked about enough -- it’s been talked about 
a little -- is the issue of the backbone, getting from your 
local network out to either a fiber hotel or out to the 
Internet gateway. And I think you need to understand that, 
again using an example from the RLEC industry, you get a 
new neighborhood and you put in fiber to the homes in that 
neighborhood or fiber to the neighborhood, and you get good 
bandwidth and your readings tell you you can get 15 megs to 
their house. You check that a while later between 3:00 and 
8:00 p.m., and you're not getting near that, and the reason 
is you have one way to get out to the Internet gateway or 
get to a fiber hotel, which at that point you have 
additional ways to get out to the Internet or competition 
there. And you need the ability -- I think the bandwidth 
at people's house is not just what's inside your network, 
but your ability to get to the Internet gateway. And I 
would hope that we will consider that as options for 
grants. 

I don't think these funds should be used for 
speculative ventures. We're for fostering competition. I 
think, again, that is part of a national broadband 
strategy, but if we really want to create jobs that are 
sustainable, you have areas and you just – again, we have 
to be honest that competition -- there's not enough 
customers for competition in some areas, in facilities-


based, maybe a wireless wire line and that I suppose is 
where we get into the issue of having two different 
definitions for underserved or what is broadband, depending 
on the type of carrier. 

I see that my time is up, so I will yield to our 
moderator at this time. 

MR. SEIFERT: This has actually been very interesting for 
me because when we originally put this panel together, I 
thought we were going to have a much more diverse kind of 
background. What we ended up with was four companies and 
higher education. And actually in -- I've been scribbling 
as quickly as I can. There's a lot of commonality, but 
there’s some really strong differences. And I think that's 
very interesting and I think it just again underscores the 
difficult task we have before us. 

So, never being one to be afraid to dive into 
difficult areas, let me throw some questions at you. 
Should higher speeds be prioritized over lower speeds? If 
two proposals provide the same viability, same business 
model, that sort of thing, but one provides higher speeds 
to the end user, measured at the end user, in that perfect 
world, should the one with the higher speed receive 
priority over the one with the lower speed? 

MR. FEEST: I'll answer real quickly. I think 
absolutely. In a perfect world where they were equal 


coming in, and that is the difference. Yes, but with the 
finite amount of money, at how much more cost are you going 
to get the higher speed? 

MR. SEIFERT: Okay. The rest of the panel, if you all 
-- 

MS. MOYER: And not only that cost, but also the cost 
to the consumer. I would assume that you would still have 
different tiers of service if you have somebody providing a 
higher speed, but in the same light, are those lower speeds 
that the other applicants is offering, how are those priced 
accordingly? 

MR. SEIFERT: Right, and then let me – I’m sorry. Go 
ahead. If you agree or if you disagree -- 

MR. JACKSON: I agree totally. 

 MR. SEIFERT: Okay. 

MR. ANDERSON: I guess I'm the lone dissenter here. I 
don't think it's necessarily -- I think you have to look at 
more than just speed in any of these applications. Speed 
may have some factor in it. And maybe it's -- it's 
dependent on the whole package, and I wouldn't 
necessarily – again, we've heard from a lot of people that 
anything over dial-up is coveted. And if it means not 
necessarily providing service versus something that's going 
to go at 10 or 100 meg, then I would say it's not that 
important. 


MR. SEIFERT: Well, I guess I should have done a 
better job laying out the question. When I say all things 
equal, I'm saying that the cost per unit and however you 
define the unit is basically the same, but one is going to 
provide a higher speed than the other proposal, then I 
would assume you're getting more -- I mean, we’ll wear the 
heck out of this phrase – you’re getting more bang for your 
buck if you're paying basically the same and you pay for 
higher speeds. 

MR. ANDERSON: Well, there's diminishing returns there. I 
mean, how much is enough? 

MR. SEIFERT: Those are the questions we have to figure 
out. Is -- I heard from previous panels that 100 megabits 
is kind of future looking. And I guess this is another 
question: Should we fund technologies that are current 
generation and maybe by their structure limited under 
current technologies; in other words, they will never be 
able to expand, you know, we heard from different people if 
you're going to buy things, you should buy fiber because 
it's going to last 100 years or -- and I guess the wireless 
analogue of that is doing fiber connections from the towers 
back to the central office that, you know -- and this 
strikes at the heart of some current business models. You 
know, we understand that. And so when I asked this 
question, I know it's fairly loaded. But, you know, put 


yourself into not your current business stance but you're 
spending the public's dollars and you're supposed to make a 
wise investment overall. You know, is there an answer to 
that question? And again I hope that I'm underscoring how 
difficult this is to kind of answer these questions across 
the country. 

MR. LAZAR: I would say is there an upgrade path? It 
may not be known today, but is there an upgrade path? 

MR. SEIFERT: And by I mean -- upgrade not by tearing 
it up and putting in -- that to me is not upgrade. That's – 
do over. Right. That’s do over. 

MR. LAZAR: Agreed. I think you're looking at a next 
generation technology to provide for an upgrade path. And 
I think that's similar to models that you've seen outside 
of the stimulus package. 

MR. SEIFERT: Right. Okay. So one of you touched on 
this. I thought it was very interesting. So we've been 
talking about unserved and underserved areas, and we're 
saying basically unserved is where just functionally 
there's no broadband, where people are praying for dial-up 
or better. I think a lot of people would think of that as 
unserved. And yet economics tells us, even in flush times, 
if there were capital for these sorts of projects and they 
still haven't been built, is there an economic model that 
works for an unserved area or is it by definition unserved 


because there's not an economic model? And that gets to I 
think Mark's point about, at the end of two years, what 
next? 

So we're in a place where we have access to a lot of 
folks who come from unserved areas or work with folks in 
unserved areas, and a lot of folks are telling us you 
should go there and focus there first, but then the statute 
also says we have to do sustainable models. So help me – 
help me solve that. If you could tell me how we're 
supposed to do that. And I have to tell you I don't think 
tripling the Universal Service Fund is one of those things 
that a lot of people, you know, who are looking at that are 
considering to be a workable kind of sustainable model. 

MR. ANDERSON: Well, it's a tough question to answer 
because sustainability is obviously a key factor here. You 
can't just go throw money at putting some equipment in and 
then, five to seven years later when it needs to be 
upgraded or replaced, there's no money, there's no market. 
It dries up and blows away, and that was a waste of effort. 
I've seen that in the existing NSF models. That's happened, 
and we've been doing this kind of thing for a long time. 
The Universal Service Fund, and the -- what's happened is 
they rely on things like e-rate and h-rate to maintain 
sustainability beyond it. But in the end, that's even more 
government subsidy. So it’s a tough question. 


MR. SEIFERT: Well, I think Don has pointed to three 
different projects that were sustainable where people 
probably would not have guessed sustainability would have 
occurred. I mean, I would never in 100 years have thought 
about Korean language school as a way to, you know, kind of 
reinvigorate some economic models. But, I mean, Don kind 
of unpacked that for us. You say if you build it they will 
come. How do we on the front end, if we're investing 
public dollars, how do we know something is going to work 
or how do we put that into grant guidelines to kick the 
tires, so to say? If somebody comes in with a project and 
says I want to go to this very small area, I want to you 
spend a lot of money, you'll do the cap, and here’s my 
business model that’s going to make it work, trust me I've 
seen it happen elsewhere. 

MR. JACKSON: If I were in your position, I would take 
a look at history. I would take a look at those areas 
where there has been success. I would also look at those 
areas where there have been failures and ask why. I think 
that we've had enough experience over the last decade, as 
we have evolved into the beginnings of broadband. There's 
enough broadband in the rural areas right now where I think 
we can take a look at the successes and the failures, 
figure out the reasons why, and determine what model works 
and which one doesn't. And by “model,” I just don't mean 


how many megabits per second you throw out there, but what 
is the architecture? You can build a network, begin the 
building of a network that is progressive, where you start 
and build the capability or have the capability to add to 
it as you need to. It isn't a matter of all or nothing. 

But if I were in your shoes and trying to do that, I 
don't think it would take that much of an effort. There's 
lots of data or information available. And I'm sure 
several of us could help point people in the right 
direction or even participate in an effort that would 
discern what the circumstances are that made something work 
and what the circumstances were that made it the opposite. 

MR. SEIFERT: Does anyone else have a comment? I'm 
going to keep peppering you because we have to go home and 
write this all up. That’s why this is not just a thought 
exercise for us. We actually – we have a very short amount 
of time to do it. So, Don, you said -- 

MS. MOYER: I had one thing. 

MR. SEIFERT: Go ahead. Go ahead. 

MS. MOYER: And that’s – you know, I'm the areas that 
I'm serving are tiny. I mean, I'm talking about my 
headquarter town of 6,000 people, you know, roughly 3,000 
homes. We're serving communities that have 50 homes. And 
we're serving them pretty well with our broadband. And you 
know I'm talking like a six meg product that is actually 


being taken by the majority of people, you know, upwards of 
the 60 percent range. And they're taking that. But if it 
were not for some other cost recovery – in my case, USF -- 
I couldn't have fronted those up-front costs to get to 
those people. But those people are actually paying now for 
the service they're receiving. 

So I think that there are places like Mark was talking 
about where if you can make the initial up-front dollar 
investment, that you can actually then get some revenue 
from those customers to start to cover those ongoing costs. 

MR. SEIFERT: Let me push on you that a little bit. 
Don said this and I think Ed said it about, given three 
proposals, you should see what else the proposal does, 
public benefits. Are you hooking up a hospital? Are you 
hooking up a library? And that dovetails into the open 
access concept. If the dollars are going to build a public 
highway, everybody should be able to get on, which I think 
presents some competitive issues, right? Somebody could 
come in and undercut your phone service with VoIP. And so, 
you know, there's that difficult balance about, you know, 
you support this concept of it's got to be open access but 
from a -- I guess, you know, unpack that for me about how 
you think that should be evaluated. Right? 

MR. JACKSON: I don't have any trouble whatsoever with 
open access, with a grant. If you don't want open access, 


don't apply for the grant. It's that simple. And I don't 
mean to be flippant. But I think that if the taxpayer is 
going to provide money to build or to have a network and 
the requirement is that it be open, then it should be. And 
we should structure prices and the various support 
mechanisms such that it also is a viable open network. We 
should not be manipulating to deliberately alter 
competition. I think that is absolutely unacceptable to a 
land-line company that's receiving a grant. 

MR. SEIFERT: One thought was that the more people, 
the more institutions, the more folks climbing onto the 
highway, the greater the opportunity in these maybe 
unserved or underserved areas, the greater chance there 
would be that business would expand. The folks in the 
community would say the hospital doing this, we can do it, 
we can do medical centers or -- and then if somebody fell 
who could not sustain, the other institutions that were 
using that network would provide enough funds to keep it 
flowing. 

And so the proposal to us was, you know, the more 
things you are attaching to the network or are allowing 
access from the network, the more viable that project is 
and so it should be ranked higher. Does that -- is that – 
does that sound good, sound bad? I've got 15 hospitals on 
mine and 15 libraries and three schools and all the public 


safety for my county, and so I'm better than the guy who’s 
coming in with one that only has two hospitals and, you 
know, half the county. 

MR. JACKSON: Well, as we are 

MR. SEIFERT: If you speak into the microphone – go 
ahead and speak into the microphone. Speak into the 
microphone. 

MR. JACKSON: I’m sorry. 

MR. SEIFERT: That’s all right. 

MR. JACKSON: Excuse me. As we are approaching our 
possible proposal, we very much are ruling out things that 
don't fit into those qualifications that I talked about 
earlier. 

MR. SEIFERT: Sure. 

MR. JACKSON: Not that those are by any means the only 
ones. But we talked about certain things that we think are 
very important that ought to be done. And we haven’t done 
them because of a lack of capital. But they really didn't 
do any of the things. One of them only created or closed a 
ring. That really didn't help anybody. But we've taken a 
look at the same time of saying there are other things in 
this community that are absolutely critical. We don't have 
a connection to the local -- not the local, but the 
regional hospital. We've got a lot of little clinics. But 
there's no way we can get up to Billings with anything and 


yet they're sitting there begging. What will it take to 
get to Billings? 

We have some educational situations where we without 
question could do things. And every single thing we come 
up with that would help the community would also help us. 
I mean it isn't as if we're just doing something out of the 
goodness of our heart at all. But rather it's part of a 
good healthy network. And I think that when we take a look 
at it that way, then I think we're doing what you all 
expect of us to do before we submit that application. 

MR. SEIFERT: It seems like I heard from the panel a 
lot of support for middle mile, that middle mile seems like 
a way to bridge communities, and it provided an opportunity 
for smaller communities or unserved communities to tap into 
-- basically into the long haul or into the Internet. And 
it was my estimation -- is my estimation correct, that most 
of you would support substantial amounts of these funds? We 
should look at their viable middle mile proposals, or am I 
making that up? 

MR. FEEST: Well, I certainly do. I think we can’t 
ignore that. A significant cost especially when you have 
taken the initiative to take fiber into neighborhoods, 
maybe all the way to the homes -- there's a significant 
cost in getting it off your network into a fiber hotel or 
some other method where you can get it somewhere where 


there's competition in the back haul to get to the Internet 
gateway. 

And that has to be considered when you're putting in 
the price for each of your subscribers. If you're going to 
have to put that money out and then amortize it over some 
period of time, you are going to add in some cases $10, $20 
a month to your -- end users’ charge if you were to build 
that yourself. And then your other option is to be at the 
mercy of somebody who is leasing you dark fiber. And that 
I think is a good opportunity for small phone companies and 
other providers to get together, and if they're going to 
put in conduit, put in enough conduit that everybody could 
pull a fiber through there and that would actually be 
positive for competition and the end user. 

MR. SEIFERT: Okay. Anybody else? 

MR. JACKSON: Back east where we have a dense 
population and a whole lot of backbone, this isn't quite 
that serious a problem. But out here in the west, where 
it's a long way between I 15 and I 80, I think, were the 
two that were mentioned earlier in the day, this can be a 
serious problem. Now, this isn't a problem to me because 
I've got four OC 196s appearing 25 feet behind the central 
office in a hut that belongs to a carrier that comes 
through. So I don't have this problem. 

But you should see the problem that some of these 


people that are really serving off the beaten path. And 
many, many are. And it isn't just the local telephone 
company. It's the cable companies. It's anyone who needs 
Internet access that can have this problem. It is serious. 
And it does -- it is worthy of consideration. 

MR. SEIFERT: Right. Go ahead. 

MR. LAZAR: Sure, Mark. I don't want to suggest that 
middle mile isn't a problem or -- in many cases. But I 
think if you're looking at the magnitude of the problem and 
specifically goals one and two of the act, you are looking 
at unserved and underserved areas. And in our experience 
it's the last mile that clearly is the more problematic of 
the components. And so again not trying to discount the 
importance of middle mile, but all things being equal, I 
think solutions that attack last-mile problems would be 
closely aligned with the stated purposes of the act. 

MR. SEIFERT: Okay. So we talked about cost per unit. 
And to me this is a bit of a complex issue because it's 
what are you measuring? Are you measuring the dollars 
spent per mile of fiber that reach the number of customers 
and do you use as your denominator the total number of 
customers in this one area? And how do you compare that to 
say a slightly more dense county? 

And so I'm struggling with this, and I can't even 
explain it. But if I have a county that has five people 


per square mile and I have a county that has two people per 
square mile, is it really fair to compare them just on raw 
numbers, that the county with five people per square mile 
is going to serve more people or has the possibility of 
serving more people because there are just more people 
there? That may not get to the real issue of both counties 
don't have access to broadband. And, you know, if you have 
to pick between one or the other, do you penalize the one 
that doesn't have as many people in the county just based 
on that fact or is there some sort of scale, you know, 
cost per unit to reach the people, the average cost per 
unit? 

And, again, I keep throwing these questions out to you 
because they are they're ones we have to solve. Is it a 
sliding scale? Go ahead. I mean, jump in. 

MR. ANDERSON: Well, there's a limit here, and it’s 
one of my examples that I didn’t get time to mention it. 
Esmeralda County in Nevada is about 3500 square miles and 
there’s only 600 people in it. Now, trying to deploy 
broadband to 600 people spread over 4,000 square miles is 
just never going to be totally cost-effective. There’s 
going to have to be some subsidy somewhere in order to do 
that. 

So there has to be a limit on where you draw the line 
with it, if there's even going to be any kind of 


feasibility at all. It's not everything to everybody. And 
we can't get everywhere because of these types of 
situations. And even in this particular example, even if 
all of them wanted to do it, it wouldn't be -- it wouldn't 
be financially feasible. Yet when you go and talk to them, 
a lot of these people are very off the grid, independent, 
“I don't want any government intrusion in my life” kind of 
things anyway. It's not necessarily a “build it and they 
will come” with these people. So I'm not necessarily 
convinced that build it and they will come is a universal 
truth. 

MR. SEIFERT: Okay. And Mark mentioned that he didn't 
think that the act really focused on adoption. I do want 
to say that there's actually money that Congress says we 
have to spend on demand side. It says at least 250 million 
will be spent on demand side. And I think it is a fairly 
explicit congressional statement that they believe that in 
certain communities demand side is important. We were 
talking before with Emy Tseng from San Francisco, and she 
said some of the research they find is that in some Latino 
families, that the parents are concerned that this is again 
going to affect the family. If I bring broadband in, it's 
again just another way that would separate me from my 
children. If the parents are Spanish-speaking and the 
children are both English- and Spanish-speaking, that’s one 


divider, and then the second one is that now they have this 
broadband thing which I don't understand as the parent. 
And so the concern is that if that's the operating 
assumption of the parents, then there’s a whole family 
that's missing out on the things that come from broadband. 
And that includes access to health care, access to your 
government. Much of the government is moving toward e-
government. 

So I just wanted to point that out to make sure -- and 
then to say, you know, ask the panel, do you think we 
should spend more than 250 million? How do you think we 
should spend the 250 million? If you have people giving us 
proposals, should they show some part about not only 
sustainable, but this is the training and this is how we're 
going to help folks in the community understand how they 
can use it? Should that be a consideration? 

MR. FEEST: I suppose I would say yes, I would agree 
with that. But going beyond the $250 million, frankly I 
don't think it's going to be easy for people to show how 
it's sustainable going forward. And that's my concern 
there. I don't think the focus of the Recovery Act is on 
that type of -- those types of grants, but certainly the 
mandated part would be necessary. 

MR. SEIFERT: We always try to do with what Congress 
tells us to. It makes for a much better life. 


MR. JACKSON: You know, I live in a heavy immigrant 
community, and you used Hispanics as an example, and that 
is the case. I'm stunned at the speed with which the gap 
is closing. Those kids come home and talk about what 
they've done, or mom and dad go to school and, you know, 
parents night or whatever and watch what happens there. 
And they listen to others of their peers. And I'm truly 
amazed. I think that the gap of those that have a fear is 
far less than the problem of not having money enough to buy 
equipment or something like that. I am truly amazed at how 
quickly, because of the children, that this gap is being 
closed. And I'm not sure it's as great as some of the 
other problems that we need to worry about. 

MR. SEIFERT: I have to tell you, Don, I'm really 
tempted to actually move to your neck the woods because 
everything you talk about sounds great. It sounds like 
things are really developing nicely there. 

It is 9 o'clock so it's time to turn to public comment 
and questions. So for those of you who have done this 
before, step up. Try to keep your comments or questions to 
one minute, and try to focus your questions on how grants 
should be awarded. Let's start here. 

AUDIENCE MEMBER: I'm with the California Emerging 
Technology Fund. This is a question for the panel. There 
is an inherent tension in this funding: on the one hand, an 


urgency to get this money out the door, and on the other 
hand, a greater calling for accountability and transparency 
in government funding. So for the panel, what 
recommendations do you have about building in 
accountability and transparency in the review and selection 
process of these grants? 

MS. MOYER: I'll have to say as a Universal Service 
Fund recipient, I routinely am audited and routinely 
undergo audits that come from every which branch of the 
government. I think that could be one of those things that 
could be utilized for the accountability factor. Not that 
I really enjoy going through audits. 

MR. JACKSON: I think it's terribly important with the 
money that we're talking about here and the money that 
we're talking about with the entire stimulus package. 
There is a real danger here of misuse. It's another one of 
those things that happen when people smell money. There 
has to be accountability. And we, the recipients, have to 
not only recognize that, but realize we've got one hell of 
an obligation. And if we don't, there ought to be steps 
taken to see that we do the next time. I feel quite 
strongly about that. 

It's a very necessary function. It has to take place. 
We're used to it. I can't say we don't like it sometimes. 
I can say we don't like it sometimes, and sometimes it gets 


pretty stupid. But it is necessary. It is absolutely 
necessary to the taxpayer that's footing this bill. 

MR. SEIFERT: I would recommend for those of you are 
being audited, if you have comments about how we can be 
smart in this program, the IG has $10 million in perpetuity 
basically to make sure this money is spent like the 
proposal said it was going to be spent. So please add that 
to your commentary for us. 

MR. JACKSON: Thanks for that invitation. The current 
round of U.S.F. audits. 

MR. SEIFERT: I'm far from familiar with those. We 
could spend another hour and a half. 

MR. JACKSON: I would like very much for you to do 
everything the opposite that they have done. 

MR. SEIFERT: I have heard just a little bit about 
that. 

AUDIENCE MEMBER: Thank you very much. My name is 
Jeff Hultman, and I'm CEO of Rural Network Systems. We 
were formed a week ago to target the rural broadband 
wireless business. I particularly enjoyed this panel and 
agreed with so much that you said, particularly when you 
use the terms “sustainable” and “viable.” I've been in the 
wireless industry for over 24 years, spent hundreds of 
millions of dollars building systems. And those two words 
are always what we look at when we went to look to spend 


and build systems. We had a business plan and a financial 
model. I would suggest that a business plan and financial 
model is key. In a week or two that I've been involved in 
this industry again, I find that you've got to gain skill 
in order to be viable and sustainable. A number of 7500 
customers and 26 RP gives you a start, but 18 months later, 
you're still in the red. It takes you 18 months to have 
the operations system that you need to break even if do you 
everything right. So it's very important that you look at 
viability and sustainability. 

And to that end, when you get in this discussion about 
unserved or underserved, as a businessperson I don't look 
at it that way. I want to serve the rural community. But 
in order to have a sustainable, viable business, I've got 
to take care of the underserved too. It's like pushing the 
system out. You're starting at this point moving to the 
rural area. If you move to the rural area and only try to 
serve the underserved, you're not going to have a viable 
business if you define a business that's going to be 
profitable in ten years. So I would look to offer -- 
please don't confuse and don't make it a criteria of one or 
the other. This business is blended. People have used a 
definition of a road as an example. That's how we built 
the telephone systems in the United States, the cellular 
systems, and that's how we're going to have to build this 


broadband wireless system. And that's pushing out. Serve 
the rural area, but know that you have to take business 
customers along the way and you have to do underserved 
areas. 

MR. SEIFERT: Reply or comment on that? Okay. 

AUDIENCE MEMBER: I'm Arlen Martin, and I'm from the 
technology side of building products that support some of 
the broadband infrastructure. And the company is Coterra. 
We're located in California. And I was wondering, in this 
$7 billion -- almost everybody is in the services side. In 
the $7 billion, is there room for a company that has the 
capability to design products that would take that last 
mile and perhaps extend the reach to a dozen miles? And is 
there room for a company to -- that had ideas on increasing 
the speed from a gigabit to ten gigabits in order to make 
better use of the fiber we have? Would proposals in those 
areas, and I'd like to here the panel's input, receive 
consideration? Do you think proposals like that should 
receive consideration? 

MR. SEIFERT: Thank you. Go ahead. 

MS. MOYER: I will think -- or I will say that perhaps 
that may be one of those collaborative applications that 
would be a really good manner in which somebody like 
yourself partners with somebody like me to apply for 
stimulus funds to specifically serve some of my customers 


that I couldn't reach and do it as a joint collaborative 
type of thing. That would be one way which I could see 
that working. 

MR. FEEST: If I understood you correctly, you talked 
about technology that's not currently in use, possibly some 
research, some beta testing. And I frankly would be 
uncomfortable with that. I think a little over $6 billion 
is really a small number actually when you talk about 
trying to reach everybody or a significant portion of the 
underserved and unserved. And I think a major 
consideration has to be again the likelihood of success, 
the sustainability. And if it's something that hasn't been 
deployed, I wouldn't personally feel that that's a good 
place to start invest that money. 

MR. SEIFERT: Anyone else? 

MR. ANDERSON: I would concur with that comment. But 
also not only is it a higher risk, but the time delay we're 
talking about here -- again, speed is supposedly kind of 
“of the essence here.” To go through the steps that were 
outlined in the beta testing and all the other stuff, we're 
talking about a longer time frame as well as higher risk. 
So to me that would be two areas that would be detrimental 
in the ratings. 

AUDIENCE MEMBER: Benedict with the Berlin Atlantic 
Capital Company. We are the German-funded tower developer. 


And I tried to ask this question before. I'll do it again 
to this panel. Catherine, Don, you both had remarks that 
had a lot of relevance, and Jeff too. Thank you for that. 

The issue is the up-front capital just isn't available 
for infrastructure. That's what we are here for, is to put 
the up-front capital up and actually build the 
infrastructure that you can then come on to. Towers. So 
as long as we're talking wireless deployment of broadband 
in rural areas, does the panel agree that first companies 
that have the plan in place that have ground control, for 
instance, in a certain market, that one of your carriers 
wants to go into should be receiving some preferential 
treatment? And companies that have the ability to actually 
put some capital behind it and partner up with the 
government to maybe reach the rural communities where the 
return on investment isn't as quickly reached or not at 
all, should those comes be able to receive or to be 
preferred over others that don't have the ability to put 
capital in place? What's your opinion? 

MR. FEEST: I think one requirement is that it's an 
investment that wouldn't have otherwise been made. And so 
I guess if it doesn't run afoul of that, I think it would 
be -- it should be -- the closer you have the -- more 
you've gone down the line. You have acquired land. You 
have the business plan in place, a business model. You have 


people that are going to get on your towers. They have 
established customers that will be upgrading those 
customers or adding service to those customers. I would 
think that would be looked upon favorably if it doesn't run 
afoul of the requirement that it's something that otherwise 
wouldn't have been done. 

MR. JACKSON: I concur. All right. 

AUDIENCE MEMBER: I'm sorry. You all jump in. 

AUDIENCE MEMBER: Yes. This is Ben Hewlett again, the 
owner of Motherlode Internet. We're a local provider that's 
one of the older providers on the planet. We were founded 
in 1994. So, you know, in line with the purpose of this 
Recovery and Reinvestment Act to create jobs, I want to 
second one of the suggestions of the panel there that they 
have local presence. So many of the rural areas are 
underserved or unserved because of the density requirements 
of the telco and cable companies that are national in 
nature. And we just don't meet the criteria. So I think 
that if we can somehow incorporate into the application 
criteria that local presence be recognized in the 
applicant. And that's of critical importance because of 
the secondary purpose of supporting the client and actual -
- in actually utilizing the Internet. There are so many 
variables. It's not just the provider. It's not just the 
pipe. It's the provider support team, and it's the PC and 


the network. Any one of those things break, and there's no 
Internet. 

So I want to really emphasize, if we can, somehow in 
the application process, emphasize the importance of local. 
That way, if the money does go towards a local entity, 
there's going to be more local sustainable ongoing benefit. 

Secondly, because of rural areas requiring -- you know, 
wireless is a very important technology in rural areas. I 
want to make sure that the importance of the value of 
including CPE in the funding be taken into account, on the 
eligible fundable application that you include CPE in that 
fundable amount. Some of these programs have tried to -- 
or we've had to convince them that that was needed. I want 
to make sure CPE is included. 

And then just one last comment. Whatever you can do 
to open up white space would be a huge boon for rural. 

MR. SEIFERT: I can tell you happily that I actually 
have nothing to do with white space. And I couldn't be 
happier just because I understand it's a very contentious 
issue. 

AUDIENCE MEMBER: Terry Parish and I represent the 
UTOPIA organization of 16 municipalities with fiber. 
Ms. Moyer and Mark both referred to something I think is 
very important. She went to the statute. You said you try 
to do what the people on Capitol Hill tell to you do. I 


want to put some perspective on it. First thing is there's 
a lot of smoke and haze. And you've got to differentiate 
between a “may” and a “shall.” Okay. In this the 
Assistant Secretary shall put together a deployment, an 
expansion program, a national one. And they shall do this 
in conjunction with the technology opportunity program. 
And then it says the program, the plan -- the Assistant 
Secretary will come up with -- will do a lot of things 
throughout the nation. And the program will do unserved, 
served, all of that list. And in fact there's a page and a 
half. And I have to point out that job creation is the 
last little item mentioned in this. I think they pretty 
much consider if we put in a lot of broadband, we're going 
to get a lot of jobs. And I think it's very hard for 
individual applicants to study all the data and say I'm 
going to put in six miles, so it's going to be this many 
jobs. The ability to accumulate all those jobs takes a 
real genius and all of the things that go with it. So he 
said a program that reaches unserved and underserved, a 
whole lot of different things, creates jobs. But then he 
says or the legislation on the Hill says he may consult 
with the states. But then it comes right down and it gives 
us a litmus test on what shall happen in the grants. It 
says the Assistant Secretary in awarding grants under this 
section shall, to the extent practical, consider -- there's 


not less than one grant in each state. But then consider 
whether an application to deploy construction in an area 
does one of four things -- subscribership to service to the 
greatest population of users in the area? If you make it 
affordable and you get enough subscribers, then you begin 
to meet sustainability. 

MR. SEIFERT: If I could get you to wrap up because we 
have other people. 

AUDIENCE MEMBER: The greatest population of users in 
the area -- we've talked about that. The third is if 
approved, enhanced service for health care delivery 
education or children to the greatest population. Those 
are the things -- the other one was no unjust enrichment. 
But these are the three things that the secretary “shall” 
make or consider making applications. In doing that, 
because you can't reach everybody, what has to be looked at 
is replicability. You need to find models that you can do 
the same someplace else. And the model needs to meet what 
the grants shall be given to do. Then you need to find 
something that's reputable, that's open, that meets all of 
the requirements of the statute. So I think the statute is 
your best guidance. I would go very carefully by the words 
in it. 

MR. SEIFERT: I think Congress is going to be very 
happy to hear that. They always like us to do exactly what. 


AUDIENCE MEMBER: I’m a telecommunications provider, 
and somebody this evening mentioned the viability of 
providers and the ability of that provider to not only have 
the resources and the personnel as well as the ability to 
stick around after the job is done. Well, how can we 
ensure that none of this grant money is going to be going 
to builders who are going to just come in perhaps cherry-
pick an area where they think it's most profitable and then 
make their money and leave the rest, the underserved or the 
unserved areas to other providers? 

MR. SEIFERT: So how would you put that into -- 
obviously you again feel that this is not a viable use of 
the money and you may agree or disagree. But if you agree, 
how do you put that into -- how do you put that once a 
Republican on the Commerce Committee for the House says the 
only thing worse than subsidizing competition is 
subsidizing monopolies. And I thought that encapsulated 
the problem we find ourselves in quite well. And I have to 
say it was -- it gave people fits because it's one of those 
statements that's hard to argue with. Mark Feest. 

MR. FEEST: I think with the level of money that's 
available and the amount of grants that are put in for, I 
would think that subsidizing competition would be something 
that would be quite a ways down the line. I mean are you 
going to deny an area that has been established as 


underserved or unserved in order to approve an area where 
there's competition? 

MR. SEIFERT: Well, underserved could encapsulate that 
there's a competitor there, but the competitor is not 
providing everywhere in the community or the provider is 
not providing adequate service, or it may be trapped in a 
technology that is not necessarily as forward-looking at 
something that someone else might come in with. Or you may 
have two competitors within a community. Say you have a 
wire line and a cable. And one comes in with a proposal to 
upgrade and that proposal to upgrade is going to connect 
hospitals, schools, has all the bells and whistles. So I 
think this is -- there's a real world out there where these 
proposals may come in and we actually have to make some 
decisions. Now it's your job to tell us how to do that. 

MR. FEEST: If you had two applications, I think it 
would be difficult to approve both of those and then leave 
another area unserved. 

MR. SEIFERT: So should you not approve either one? 

MR. FEEST: I don't believe that in the real world 
you're going to get two that are exactly the same. 

MR. SEIFERT: No, I'm saying a community where you 
have two providers, let's say wire line and cable. I mean, 
this is the real world we're talking about. And it's a 
community that has not very desirable speeds of broadband. 


And you know one, you know, telco company says, hey, this 
is our chance to do that upgrade that we were trying to do, 
but we don't have the capital. The cable company says that 
sounds good, and they go out and try to put their best 
proposals together. And the answers are you can fund one, 
you can fund both, you can fund none. And the question is 
which do we do? 

MR. FEEST: From my perspective, it would be no more 
than one. 

MR. SEIFERT: Then we get to some really tough issues, 
right? We are hiring so if any of you want to come and 
help me try figure this out… Let’s move on because I want 
to make sure everyone gets a chance. 

AUDIENCE MEMBER: Forbes Mercy, Washington Broadband. 
I want to thank Bedford for stealing most of my issues for 
CPE to be used, and that's a big thing because if we can 
reduce their installations, that's probably why about 60 
percent of the people decline service because our monthly 
charges are fairly low and that's the cost to us. So if we 
can have a subsidy for that, that's a good thing. That 
part of Washington did not have high-speed Internet until 
last year, 650 people. Eight miles from the city of 
Yakima. Nobody would go. The ILEC that had that place 
said that's not a density that we would provide high speed 
to. So we finally put services in. I think we're going to 


find that the density is going to stay the same, that the 
big guys aren't going to grow it, and then people that are 
all right putting it out are probably going to be the best 
benefit. And the requirement by the U.S. that 20 percent 
be mutually invested by the people that are taking the 
grant. Now, I would like to see as an option if we already 
have 20 percent of an asset that is in place because we did 
take the opportunity to deploy in the last ten years in 
mostly rural areas, and my system is 80 percent in areas 
where nobody else is because I feel an obligation go out 
there, then we should have that count towards the amount 
that would have to come out of our pockets and then allow 
us to go deeper into the rural areas. And not any money 
would come back very quickly. We say one-third of the 
people will sign up for that in that area. 

MR. SEIFERT: Let me ask the panel about that. It's 
for NTIA also that as proposals come in, you have to put 
some skin in the game. And there's a long-standing 
tradition about that. If you're putting your own dollars 
in, you tend to watch your own dollars fairly closely. So 
it will make you pay attention to the nickels and dimes as 
opposed to just letting it roll in. And you know what's 

your reaction? There are going to be a lot of people who 
offer creative ways of showing their match. 

If that's the case, one, do you think we should allow 


that? And, two, if somebody is putting cold hard cash up 
as opposed to in kind or services or that sort of thing, 
should that be valued highly or the same? And again 
welcome to our world. These are the sorts of questions we 
have to decide. 

MR. ANDERSON: I think as much creativity as possible 
is -- would be the order of the day. Based on the current 
economic status of most of the states, Nevada is no 
exception, we are facing tremendous budge cuts. The 
university system, it's been proposed 36 percent. That's 
untenable. So a lot of people can't even afford the match 
in a lot of cases. And so they may not even be able to 
participate, and you may not be able to give the money 
away. 

MR. SEIFERT: And the second and I think hard question 
is, somebody does walk in and they have somehow decided to 
spend cash they don't have a lot of, should that be valued 
more highly than someone who can afford it? 

MR. ANDERSON: I don't think so. If you're providing 
value, whether it be cash or services, facilities, whatever 
it is, it's still toward the common goal. 

AUDIENCE MEMBER: And it also shows the experience. 

MS. MOYER: That's what I was going to say. Frankly 
you're going to use the money. It shows you do have skin in 
the game, because I don't think you're going to leave 20 


percent of these dollars stranded. 

AUDIENCE MEMBER: Can I say wireless mapping is super-
important. The State of Washington says that any place 
that is rural, they're going to apply for the funding to do 
it through the government. So don't let that wireless 
mapping money go. 

AUDIENCE MEMBER: My name is Kim Kao, CEO for Logic 
Link. I heard a lot about this term “bang for the buck.” 
And obviously there's not much agreement. I think you know 
there was some discussion about possibly applying it in 
terms of broadband speed and stuff like that. What I have 
heard, however, in the panel and also here from the 
audience is economic sustainability. And so what I would 
offer is perhaps the criterion should be some type of 
economic sustainability for the dollar or for the 
investment that's involved. And that would be a broader 
type of standard that could be applied. Because 
ultimately, think of it this way: Economic sustainability 
if you measure it, it certainly can be justified with the 
development. But the middle mile would apply. And 
actually each part of the infrastructure could be 
quantified down to an economic sustainability type of 
argument. We've got to make sure that ultimately, at the 
end of this thing, it's going to continue. And I have a 
quick follow-on question. If the panel agrees. 


MR. SEIFERT: Can you sum that up? 

AUDIENCE MEMBER: Instead of saying “bang for the 
buck” and it's got to be a minimum of 1.5 meg or whatever, 
why don't you just evaluate each of the proposals on the 
economic sustainability for the dollar that's invested. 
So, for example, you know, you mentioned development. I 
mean, that's easy to say. You have that type of development 
and option. Even the middle mile, you know, if you were to 
put that investment in, there's still sustainability 
because there's an inherent need for infrastructure upgrade 
for the middle mile. Does that make sense? 

MR. FEEST: I think this makes a lot of sense, and 
really I think several people are trying to get at that 
exact thing as being very high on the priority list. This 
has to go to something that supports itself into the future 
if it's going to be valuable after those people go home who 
put in the infrastructure. 

MS. MOYER: I think it's an excellent suggestion. 

MR. JACKSON: I concur. 

MR. SEIFERT: You're batting three for three. 

MR. ANDERSON: Me too. 

MR. LAZAR: I think it's certainly a decent 
suggestion. But it's another layer and might have a little 
bit more voodoo at the end of this. In other words, what 
is the economic impact? Maybe I misunderstood. I can 


understand the viability of my project, my business case, 
and you can look at my assumptions and then understand if 
it's achievable and I can pull that off. The economic 
impact, you might be going through more levels in 
understanding that. 

MR. SEIFERT: So this you have to do in ten seconds. 

AUDIENCE MEMBER: So let me just present it very 
simply. So in terms of economics and sustainability, now 
we can essentially say broadband speed is not a hard 
criterion that we need to implement. In other words, if you 
have more specific or easier, you know, criterion to go to, 
you can say in this area, okay, we can allow these projects 
because this type of broadband speed will bring economic 
sustainability. And then in the other area we can go with 
much lower broadband speed in order to justify the economic 
sustainability. Do you see what I'm saying? So it's not 
really just a broad term that I'm using. I'm saying that 
it's an actually easier criterion to implement. 

MR. LAZAR: That might be a good metric to evaluate. 

AUDIENCE MEMBER: Mike Morris with Sirius Group. We 
serve as the technology provider especially for rural areas 
in southern New Mexico. And there seems to be throughout 
the panel here an axiomatic belief that somehow the wire 
line area carriers that are already there are somehow going 
to be more qualified to run this. In New Mexico two years 


ago, we had a company demand that our Public Regulation 
Commission relieve them of a contract they made with the 
state. So part of that sustainability is going to be how 
are they going to sustain it because the statements may 
request money or not, but we do not want anything to do 
with any further out than we are. We have small providers 
who are building out. And without looking at that, how are 
you going to support it locally? There's a possibility 
possible that you go and support people that are going to 
run right behind the ones that are already invested in the 
community by handing out money to companies who may just 
make a profit off the installations and walk away from it 
or support it with a call center in India or in Central 
America which is the case with several of the wire line 
carriers in it country now. 

MR. SEIFERT: With that, I am very sorry. We have 
folks that we need to release from their bondage. They have 
been doing this all day long. And I want to thank them for 
that. I want to first thank the panel. It was fun 
introducing you to some of the difficulties that we face. 
It was fun watching you working with it because it lets us 
know we're not on the right path, that this is difficult 
and there are a lot of things which we should consider. 

I want to thank the audience for your sustained 
involvement today. I feel like I know most of you because 


I've seen you all day long. I want to thank the folks 
joining on the Web and on the teleconference. 

And I want to mention the Web site one more time: 
ntia.doc.gov/broadbandgrants. And on that Web site, we're 
doing a joint thing between NTIA and RUS. You can file 
comments on that Web site. You also can see archived 
versions of these meetings that we're having. So even 
though you can't go to Flagstaff tomorrow, you can watch. 
We're going to be repeating this panel again in Flagstaff, 
and then we have two more meetings next Monday and Tuesday. 
And we look forward to hearing from and you submitting your 
public comments. Have a good night and happy St. Patrick's 
Day.