May 2007

Feds solicit ed-tech feedback

FEDS SOLICIT ED-TECH FEEDBACK
[SOURCE: eSchool News, AUTHOR: Laura Devaney]
The U.S. Department of Education is asking school stakeholders to comment on the use of technology in schools. While advocates of educational technology say they welcome this latest request for comments, some question whether the department will act on any of the advice it receives, given how little importance it placed on the last National Educational Technology Plan.

A Bush Brother Spreads His Vision of Computerized Teaching Programs

A BUSH BROTHER SPREADS HIS VISION OF COMPUTERIZED TEACHING PROGRAMS
[SOURCE: New York Times, AUTHOR: Diana Jean Schemo]

Keep the Books Talking

KEEP BOOKS TALKING
[SOURCE: Washington Post, AUTHOR: Editorial staff]

Physician, Upgrade Thyself

PHYSICIAN, UPGRADE THYSELF
[SOURCE: New York Times, AUTHOR: Thomas Goetz]

The richest man you've never heard of

THE RICHEST MAN YOU'VE NEVER HEARD OF
[SOURCE: USAToday, AUTHOR: Chris Hawley]
A look at Mexico's Carlos Slim Helú, the owner of Telmex among other things.
http://www.usatoday.com/printedition/news/20070530/1a_cover30.art.htm

Benton's Communications-related Headlines For Wednesday May 30, 2007

To view Benton's Headlines feed in your RSS=20
Aggregator, paste=20
http://www.benton.org/index.php?q=3Dtaxonomy/term/6/all/feed into your read=
er.

INTERNET/BROADBAND
U.S. Broadband Market On The Decline
Democrats Have an Early Lead ... in the Web 2.0 Race
Much Ado About DoubleClick

JOURNALISM
Newspaper Online Ad Growth Slows -- As Print Revenue Keeps Skidding
San Francisco Editor Quits in Wake of Staff Cuts
Tribune Co. redraws newspaper management chart
Mexico's Journalists Feel Heavy Hand of Violence

TELECOM/CABLE
Copper landlines gone by 2013
Nevada Franchise-Reform Bill Heads to Gov

ED TECH
Feds solicit ed-tech feedback
A Bush Brother Spreads His Vision of Computerized Teaching Programs

GOVERNMENT & COMMUNICATIONS
Reality, Not Rhetoric, On FISA
Hugo Chavez versus RCTV

QUICKLY -- Keep the Books Talking; Physician,=20
Upgrade Thyself ; The richest man you've never=20
heard of; Nick Shares Characters with Health-Food Partners

INTERNET/BROADBAND

US BROADBAND MARKET ON THE DECLINE
[SOURCE: InformationWeek, AUTHOR: Richard Martin]
The United States is falling further behind other=20
developed countries in broadband network=20
deployment. According to statistics released in=20
April by the Organization for Economic=20
Cooperation and Development, the United States=20
ranked 15th among the OECD's 30 member countries=20
in broadband deployment at the end of=20
2006. That's three spots below the United=20
States' place on the list a year earlier, and=20
signs point to a continuing decline: The country=20
ranks 20th in the growth rate of broadband=20
penetration. So dismal is the progress that the=20
Federal Communications Commission has launched an=20
inquiry into the state of the U.S. broadband=20
market, focusing on the question of "net=20
neutrality" -- whether big carriers and service=20
providers are prioritizing voice and data traffic=20
for some customers at the expense of others.=20
Against this backdrop, expectations for wireless=20
broadband are high. Wireless broadband is seen as=20
a "third pipe" -- in addition to DSL and cable TV=20
-- into homes and businesses, as a way to spark=20
competition between incumbents and new entrants=20
that leads to new services, and as a way get the=20
United States on par with other countries in overall broadband availability.
http://www.informationweek.com/shared/printableArticle.jhtml?articleID=3...
9701926

DEMOCRATS HAVE AN EARLY LEAD ... IN THE WEB 2.0 RACE
[SOURCE: AdAge, AUTHOR: Abbey Klaassen]
Even Republican supporters concede that the=20
Democrats have the upper hand in Web 2.0, which=20
has become the Democratic version of talk radio.=20
It's an issue that has been the subject of recent=20
debate, naturally, around the blogosphere. A big=20
part of the problem, according to Rob Bluey,=20
director of the Center for Media and Public=20
Policy at the Heritage Foundation and a=20
contributor to RedState.com, is that Republican=20
bloggers are more interested in being pundits=20
than activists. The right, perhaps, views the web=20
too much as an extension of its broadcast domination.
http://adage.com/article?article_id=3D116938

MUCH ADO ABOUT DOUBLECLICK
[SOURCE: BusinessWeek, AUTHOR: Catherine Holahan]
There was little doubt that the Federal Trade=20
Commission would thoroughly investigate Google's=20
planned acquisition of DoubleClick. Google's=20
undisputed dominance of Web searches and the=20
related $8 billion search-advertising market all=20
but guaranteed scrutiny of any move capable of=20
extending the search titan's online influence.=20
The fact that DoubleClick places ads for many of=20
the leading Web publishers made a government=20
inquiry inevitable, say antitrust experts. But,=20
there's even less doubt that the FTC will=20
eventually sign off on the $3.1 billion deal.=20
Even some who see red flags in the transaction=20
don't seriously think it will be blocked. "We are=20
not foolish enough to think the FTC will say you=20
can't buy DoubleClick," says Jeff Chester,=20
executive director of the Center for Digital=20
Democracy. His group is nonetheless concerned=20
over the combination of the leading aggregator of=20
information on who's searching for what on the=20
Web with a company that tracks Web surfing=20
behavior to help advertisers measure the=20
effectiveness of their ads. Putting the two=20
companies together leaves consumers' privacy at=20
risk, Chester says. And he's hoping the scrutiny=20
by Uncle Sam will result in some conditions placed on the transaction.
http://www.businessweek.com/technology/content/may2007/tc20070529_360181...
m?campaign_id=3Drss_tech

JOURNALISM

NEWSPAPER ONLINE AD GROWTH SLOWS -- AS PRINT REVENUE KEEPS SKIDDING
[SOURCE: Editor&Publisher, AUTHOR: Jennifer Saba]
Newspaper online advertising revenue growth is=20
starting to slow, according to the most recent=20
data from the Newspaper Association of America.=20
In Q1, advertising spending for newspaper Web=20
sites increased 22.3% to $750 million compared to=20
the same period last year. In the first quarter=20
of 2006, newspaper online ad revenue advanced=20
34.9% to $613 million. However, online=20
advertising revenue makes up more of total ad=20
revenue in Q1 versus the same period a year ago.=20
In Q1 of this year, online advertising=20
expenditures represent 7.1% of total ad revenue=20
versus 5.5% for Q1 2006. Newspaper print=20
advertising revenue fell sharply in Q1, down 6.4%=20
to $9.8 billion. The growth realized with online=20
advertising revenue did not push up total ad=20
spending. Combined, print and online advertising=20
revenue declined 4.8% to $10.6 billion in Q1.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_con...
t_id=3D1003591163

SAN FRANCISCO EDITOR QUITS IN WAKE OF STAFF CUTS
[SOURCE: Bloomberg, AUTHOR: Vivek Shankar]
Robert Rosenthal, managing editor of the San=20
Francisco Chronicle, has resigned two weeks after=20
the newspaper announced a plan to cut 25 percent=20
of newsroom jobs. Rosenthal said he was leaving=20
"without rancor or acrimony," the Chronicle said=20
yesterday in a statement. The resignation comes=20
at a time when the Hearst Corp. newspaper is=20
cutting about 80 union-covered and 20 management=20
positions, out of about 400 newsroom jobs. The=20
cuts are an effort to curb costs.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/29/AR200705...
1943.html
(requires registration)
* The decline of news
[Commentary] The Chronicle's announcement earlier=20
this month that 100 newsroom jobs will be slashed=20
in the coming weeks in the face of mounting=20
financial woes represents just the latest chapter=20
in a tragic story of traditional journalism's decline.
http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2007...
/29/EDGFKQ20N61.DTL

TRIBUNE CO REDRAWS NEWSPAPER MANAGEMENT CHART
[SOURCE: Crain's Chicago Business]
As it prepares to go private, Tribune Co. redrew=20
its newspaper organization chart Tuesday so more=20
executives report directly to CEO Dennis=20
FitzSimons. Los Angeles Times Publisher David=20
Hiller and Robert Gremillion, who now oversees=20
four newspapers, report to Mr. FitzSimons. Mr.=20
Gremillion, who has been publisher of the South=20
Florida Sun-Sentinel, becomes executive vice=20
president in charge of the Fort Lauderdale-based=20
paper, the Baltimore Sun, Hartford Courant and=20
Orlando Sentinel. Both men previously reported=20
to Tribune Publishing President Scott Smith, who=20
also has been publisher of the Chicago Tribune=20
since last fall. The number of papers under Mr.=20
Smith=92s direct supervision will fall from five to=20
two: the Chicago Tribune and Newsday in New York.=20
He=92ll also continue to run Tribune=92s syndication and national ad sales =
units.
http://chicagobusiness.com/cgi-bin/news.pl?id=3D25162

MEXICO'S JOURNALISTS FEEL HEAVY HAND OF VIOLENCE
[SOURCE: Washington Post, AUTHOR: Manuel Roig-Franzia]
Mexico is now the second deadliest country in the=20
world for journalists after Iraq. More than 30=20
journalists have been killed in the past six=20
years in Mexico. As more reporters die,=20
journalism itself is suffering. A newspaper in=20
Sonora said last week that it was temporarily=20
shutting down because of attacks and threats by=20
criminal gangs. Top editors at the two largest=20
newspapers in Monterrey, Milenio and El Norte,=20
said in interviews that they no longer ask crime=20
reporters to dig deeply on their stories. At risk=20
is the vibrancy of the free press in Mexico's=20
still developing democracy. President Felipe=20
Calder=F3n has called the intimidation of=20
journalists "an unacceptable situation," promised=20
to protect journalists and discussed possible=20
legislation to achieve that goal. But reporters=20
keep dying and news media offices keep getting attacked.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/29/AR200705...
2132.html
(requires registration)
* Severed Head Left At Doorstep Of Mexican Daily
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_con...
t_id=3D1003591391

TELECOM/CABLE

COPPER LANDLINES GONE BY 2013
[SOURCE: TelephonyOnline, AUTHOR: Ed Gubbins]
The copper =93last mile=94 line to the house won=92t=20
exist in six years, according to Tom Evslin,=20
co-founder of Internet service provider AT&T=20
Worldnet and voice-over-IP wholesaler ITXC. "By=20
2012 [there will be] no more reason to use our=20
landlines -- so we won=92t,=94 Evslin said. =93I don=92t=20
think the copper plant will last past 2012. The=20
problem is the cost of maintaining and operating=20
it when it has very few subscribers. Obviously=20
[it=92s] a huge problem for AT&T and Verizon. And=20
an important social issue as well.=94 Evslin=20
pointed to a study showing the percentage of=20
homes with landline phones declining from about=20
96% to 94% between 1998 and 2003 while cell phone=20
penetration jumped from 36% to 63%. Those trends=20
have probably accelerated since then, he argued.=20
By 2012, copper landlines will have been replaced=20
by WiFi-enabled mobile phone services like the=20
one T-Mobile will roll out nationwide this=20
summer, Evslin wrote. Such services will=20
highlight the superiority of mobile phones over=20
land lines in consumers=92 minds: mobile phones are=20
more capable (with built-in cameras, directories=20
and address books, etc.) and less expensive.
http://telephonyonline.com/home/news/copper_landlines_gone_052507/

NEVADA FRANCHISE-REFORM BILL HEADS TO GOV
[SOURCE: Multichannel News, AUTHOR: Linda Haugsted]
A bill reforming cable franchising is headed for=20
the desk of Nevada Gov. Jim Gibbons. The bill=20
unanimously passed the state Senate May 25. If=20
signed by the governor, the bill mandates that=20
franchises will now be issued by the Secretary of=20
State. That office will have up to 20 days to=20
issue the authority. Incumbent cable operators=20
may decide whether they wish to operate under=20
their current local franchises or apply for=20
state-authorizing authority, but they will have six months to make that cho=
ice.
http://www.multichannel.com/article/CA6447150.html

ED TECH

FEDS SOLICIT ED-TECH FEEDBACK
[SOURCE: eSchool News, AUTHOR: Laura Devaney]
The U.S. Department of Education is asking school=20
stakeholders to comment on the use of technology=20
in schools. While advocates of educational=20
technology say they welcome this latest request=20
for comments, some question whether the=20
department will act on any of the advice it=20
receives, given how little importance it placed=20
on the last National Educational Technology Plan.
http://www.eschoolnews.com/news/showStoryts.cfm?ArticleID=3D7095

A BUSH BROTHER SPREADS HIS VISION OF COMPUTERIZED TEACHING PROGRAMS
[SOURCE: New York Times, AUTHOR: Diana Jean Schemo]
Curriculum on Wheels (COW) is the brainchild of=20
Neil Bush, brother of the president, who is=20
president of Ignite! Learning. The company has=20
sold its science and social studies curriculums,=20
aimed mostly at middle school grades, to 2,300 of=20
the nation=92s 85,000 public schools, and is=20
seeking to expand its business to China, Japan,=20
South Korea and the Middle East. Mr. Bush=92s=20
curriculum coordinates with both the standards=20
movement sweeping states and its national=20
embodiment, No Child Left Behind, which requires=20
all children in Grades 3 to 8 to be tested each=20
year in reading and math, and once in science.=20
Some educators have criticized Mr. Bush for using=20
his brother=92s No Child Left Behind law to market=20
his product. To educators, though, a big question=20
is whether a technology-based curriculum =97 Mr.=20
Bush=92s or any of a multitude of others -- works.
http://www.nytimes.com/2007/05/30/nyregion/30education.html
(requires registration)

GOVERNMENT & COMMUNICATIONS

REALITY, NOT RHETORIC, ON FISA
[SOURCE: Washington Post, AUTHOR: Rep Silvestre Reyes (D-TX)]
[Commentary] The congressional testimony this=20
month by former deputy attorney general James=20
Comey called into question the accuracy of=20
everything I had heard before about the so-called=20
Terrorist Surveillance Program. According to=20
Comey, in the spring of 2004 President Bush=20
authorized a program of domestic surveillance=20
even though his acting attorney general was so=20
concerned about the surveillance that he could=20
not in good faith "certify its legality." I=20
believe it was the administration's cumbersome,=20
uncoordinated process and not the statutory=20
requirements that led the president to authorize=20
an end-run around FISA. The House Permanent=20
Select Committee on Intelligence will hold=20
hearings on this issue next month and will focus=20
on the following important questions: 1) What=20
surveillance activities has President Bush=20
authorized under the NSA surveillance program=20
disclosed in December 2005? What was the legal=20
basis for these activities, and how did those=20
activities change since the inception of the=20
program? What activities are occurring today? 2)=20
How does the current FISA system operate? Can=20
this system be improved? 3) Are current legal=20
authorities adequate for tracking terrorist=20
communications, or are changes to the law=20
required? 4) Do current and proposed legal=20
authorities adequately protect the Fourth Amendment rights of Americans?
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/29/AR200705...
1637.html
(requires registration)

HUGO CHAVEZ VERSUS RCTV
[SOURCE: Los Angeles Times, AUTHOR: Bart Jones]
[Commentary] Venezuelan President Hugo Chavez's=20
refusal to renew the license of Radio Caracas=20
Television might seem to justify fears that=20
Chavez is crushing free speech and eliminating=20
any voices critical of him. But the case of=20
RCTV has been caught up in a web of=20
misinformation. While one side of the story is=20
getting headlines around the world, the other is=20
barely heard. In 1998 RCTV, controlled by members=20
of the country's fabulously wealthy oligarchy=20
including chief Marcel Granier, tried to help out=20
the democratically elected leader from office.=20
RCTV's most infamous effort to topple Chavez came=20
during the April 11, 2002, coup attempt against=20
him. For two days before the putsch, RCTV=20
preempted regular programming and ran=20
wall-to-wall coverage of a general strike aimed=20
at ousting Chavez. A stream of commentators=20
spewed nonstop vitriolic attacks against him =97=20
while permitting no response from the government.=20
Then RCTV ran nonstop ads encouraging people to=20
attend a march on April 11 aimed at toppling=20
Chavez and broadcast blanket coverage of the=20
event. When the march ended in violence, RCTV and=20
Globovision ran manipulated video blaming Chavez=20
supporters for scores of deaths and injuries.=20
After military rebels overthrew Chavez and he=20
disappeared from public view for two days, RCTV's=20
biased coverage edged fully into sedition.=20
Thousands of Chavez supporters took to the=20
streets to demand his return, but none of that=20
appeared on RCTV or other television stations.=20
RCTV News Director Andres Izarra later testified=20
at National Assembly hearings on the coup attempt=20
that he received an order from superiors at the=20
station: "Zero pro-Chavez, nothing related to=20
Chavez or his supporters=85. The idea was to create=20
a climate of transition and to start to promote=20
the dawn of a new country." Would a network that=20
aided and abetted a coup against the government=20
be allowed to operate in the United States? The=20
U.S. government probably would have shut down=20
RCTV within five minutes after a failed coup=20
attempt =97 and thrown its owners in jail. Chavez's=20
government allowed it to continue operating for=20
five years, and then declined to renew its=20
20-year license to use the public airwaves. It=20
can still broadcast on cable or via satellite dish.
http://www.latimes.com/news/printedition/opinion/la-oe-jones30may30,1,53...
72.story?coll=3Dla-news-comment
(requires registration)
* Venezuela's last opposition station on notice
http://www.latimes.com/news/printedition/asection/la-fg-venez30may30,1,6...
498.story?coll=3Dla-news-a_section
* Venezuela Stations Under Fire
http://www.broadcastingcable.com/article/CA6447164.html?rssid=3D193

QUICKLY

KEEP BOOKS TALKING
[SOURCE: Washington Post, AUTHOR: Editorial staff]
[Commentary] A half-million Americans stand in=20
danger of losing their public library. They are=20
the nation's blind, and their library is Talking=20
Books, through which the National Library Service=20
for the Blind and Physically Handicapped of the=20
Library of Congress (NLS) provides 500,000=20
Americans with free audio recordings of about as=20
many books. Unlike the "books on tape" that are=20
sold at retail bookstores, these recordings are=20
unabridged, extensive and diverse -- and are=20
designed for people who have no other way of=20
reading print. NLS hopes to digitize its entire=20
library and create new players. It has spent 17=20
years researching, building and testing new=20
products, and it is ready to manufacture a fully=20
accessible flash-drive player. The Library of=20
Congress has asked Congress to appropriate about=20
$76.4 million to produce the players and digitize=20
thousands more books. But the Government=20
Accountability Office faults NLS for not=20
considering existing commercial products such as=20
CD players and iPods instead of creating a new device.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/29/AR200705...
1736.html
(requires registration)

PHYSICIAN, UPGRADE THYSELF
[SOURCE: New York Times, AUTHOR: Thomas Goetz]
[Commentary] Go into almost any medical office,=20
hospital or clinic in the United States and your=20
records will still be handled the old-fashioned=20
way =97 on paper. You can use a computer to pay=20
your taxes, to program your TiVo or to read a=20
message from your great-aunt, but your doctor has=20
to practically level a forest just to examine=20
your medical files. The cost, however, isn=92t=20
calculated in trees but in human lives:=20
Electronic medical records would reduce the risk=20
of medical errors and spare hospitals the expense=20
of missing records and unnecessary treatment.
http://www.nytimes.com/2007/05/30/opinion/30goetz.html
(requires registration)

THE RICHEST MAN YOU'VE NEVER HEARD OF
[SOURCE: USAToday, AUTHOR: Chris Hawley]
A look at Mexico's Carlos Slim Hel=FA, the owner of Telmex among other thin=
gs.
http://www.usatoday.com/printedition/news/20070530/1a_cover30.art.htm

NICK SHARES CHARACTERS WITH HEALTH-FOOD PARTNERS
[SOURCE: Multichannel News, AUTHOR: ]
SpongeBob SquarePants, Dora and Diego will all be=20
helping sell healthier foods to children.
http://www.multichannel.com/article/CA6447170.html?rssid=3D196
--------------------------------------------------------------
Communications-related Headlines is a free online=20
news summary service provided by the Benton=20
Foundation (www.benton.org). Posted Monday=20
through Friday, this service provides updates on=20
important industry developments, policy issues,=20
and other related news events. While the=20
summaries are factually accurate, their often=20
informal tone does not always represent the tone=20
of the original articles. Headlines are compiled=20
by Kevin Taglang headlines( at )benton.org -- we welcome your comments.
--------------------------------------------------------------

Time for Change: Transforming Funding for Broadband Universal Service

“Everything Over IP” Changes Universal Service

Richard D. Taylor
Palmer Chair Professor of Law and Telecommunications Studies and Law
Co-Director, Institute for Information Policy
College of Communications
Pennsylvania State University
rdt4@psu.edu
814-863-1482
ist.psu.edu/ist/directory/faculty/?EmployeeID=13

Soon voice, video and everything else will be delivered over IP networks. Former FCC Commissioner Abernathy characterized it as a move towards “Everything Over IP” (EOIP). In the world of EOIP, it all becomes just delivering packets of bits -- a commodity service. In the EOIP world, “voice” capability is being integrated into many applications, and will not manifest merely as VoIP. It will be part of messaging (IM), games, "push to talk," and likely will be a basic feature of next generation operating systems. It will be available in many ways at no separate charge. It may be ad supported, or free, or bundled. In the EOIP world, there is not a need for a separate voice network. Charging consumers based on criteria such as time of call, time of day, distance of call, local vs. long-distance, and length of conversation will no longer make sense as communication enters the global internet that is no longer usage sensitive or distinguishes between local and long distance or between voice and data.

What are some of the implications of this move to EOIP for assessing universal service fees? Assuming current clear trends continue:

There will be no distinction between local and long distance
There will be no distinction between interstate and intrastate
There will be no distinction between wireline and mobile
There will be no “basic package of services” around value added voice services (i.e., the current minimum standard “universal service” package)
There will be no meaningful class of “voice” service. There will only be a bit stream.
There will be no stand-alone PSTN. There will be a ubiquitous IP based network of which the traditional PSTN is a component.
Technology will make the network accessible anywhere by some technical means – the only barrier will be price.
There will be no meaningful “telephone numbers” in the current sense; there will still be numbers that look like telephone numbers, but will not be attached to a particular telephone or geographic location.
There will be multiple carriers delivering the same service, packets of bits, configured in similar ways.
All traditional regulatory jurisdictional boundaries will become permeable.
Customers can have their bits configured as they please, or can configure them themselves.
“Voice” in many cases will be essentially free and/or ad supported and/or provided by non-profit or municipal entities.
“Voice” in many cases will not be a separate service for purposes of billing or measurement of traffic
Regulation of the network will be federalized, with a corresponding loss of state-level control. This may happen quickly if the FCC declares all IP-enabled services to be interstate.

A value-chain analysis of the EOIP world suggests the following rough hierarchy of candidates for fair contributions to a restructured universal service fund:

Infrastructure facilities owners (may be different than carriers)
Facilities-based transport (carriers and others eligible for USF distributions), CLECs and users of unbundled services
Virtual network operators (which may own no facilities, but simply “brand” facilities operated for them by others)
Network access providers (ISPs, IAPs)
Self-identified “carrier” companies, including virtual carriers “holding out to the public”, e.g. Virtual Mobile Network Operators) whether or not facilities-based
Direct Enabling Technologies (software and hardware)
All IP-enabled services
Sellers of products and services over the Internet
Applications offered through the network
Content providers for a fee
Indirect enabling technologies

A successful advanced universal service program should:

Promote Competition

Eliminate unnecessary or counterproductive regulations
Actively promote competition
Let the market function to the maximum extent possible
Create incentives for efficiencies
Avoid distorting effective price competition
Inform potential users of availability and benefits
Prefer subsidies and incentives to price controls
Focus on network capabilities (functionalities) rather than specific technologies
Attach costs properly to services
See that those who create costs are the ones to bear them
Costs process must be transparent/fair (all see costs and allocations)
Avoid paying more than the true market price for subsidized services
Encourage technological innovation
Not subsidize inefficient, outmoded or non-competitive technologies

Be Narrowly Tailored

Target narrowly high cost and low-income subsidies
Do not subsidize technologies/services for which there is no demand
Make the subsidy as small as necessary to accomplish the goal

Be Neutral

Competitive neutrality
Structural neutrality (not favor integrated or unbundled services)
Technological neutrality
Applications and content neutrality
Geographic neutrality (not disproportionately burden any part of the country)
Transitional neutrality (no negative shocks or windfalls due to transition)
Jurisdictional neutrality (should integrate into the federal-state regulatory system)
Neutrality as between purchase of services over end-user equipment

Be Politically Attractive

No one involuntarily loses current telephone service. Those who wish to do so may keep it indefinitely. No one is forced to get a computer.
Build on existing programs
Recognize geographical differences (population density and income)
Maintain appropriate jurisdictional roles
Create a role for non-profits, community groups, co-ops, demand aggregators, public-private partnerships.
Be flexible during transition

Taylor.doc

Universal Service and Rural America

What can be done to enable rural America to keep pace with the rest of the country?

Sharon Strover
Director, Telecommunications and Information Policy Institute
Professor, Department of Radio-Television-Film
College of Communications
University of Texas at Austin
sstrover@mail.utexas.edu
512-471-5826
rtf.utexas.edu/faculty/strover/

This paper summarizes some of the economic factors that highlight the need for improved telecommunications in rural regions, framing the transformations associated with the information technologies of the past three decades as essential to cultivating economic vitality in rural areas. Rural America is far behind in its broadband access compared to urban areas -- yet stands to benefit most by bridging geography. Rural connectivity is vital to cultivating economic vitality in rural areas. But the FCC’s rural broadband data, reliant on zip codes that span vast areas in rural America, provides a poor tool for gauging the pervasiveness of broadband subscribership in rural America. Rural Americans are indeed being left behind, as are rural small businesses. Broadband in these rural and remote regions offers extraordinary benefits. Broadband can help empower people thru improved access to health care, better education, and access to more jobs -- lifting rural economies and connecting their success to the rest of the country.

Observations about universal service and telecommunications in rural areas:

The demand for “advanced” services is more uncertain in rural regions than in metro areas.
Broadband deployment data are problematic, and connectivity in rural areas is still questionable;
Although the FCC appears to believe that broadband connectivity is sufficient, it is a necessary but not sufficient element required to exploit the powers of new technologies.
Access and use data suggest rural populations do not have home or work-based access to broadband on a basis comparable to that of metropolitan regions.
Small businesses in rural areas do not incorporate access to the Internet into their operations as ably as do small businesses in metropolitan regions.
The E-rate program doubtless has benefited rural areas, but there appears to be no special advantage to rural states (those with lower population densities) in terms of garnering these funds. It remains an open question as to whether, in the absence of E-rate funds, rural schools and libraries would be able to maintain their educational technology infrastructure.

Revising universal service with rural regions in mind
A capabilities approach to universal service would alter the terms of how we think about this constellation of priorities. It implies at minimum (1) a process of ascertaining needs and localized constructions of priorities and (2) broadening the range of what could be supported under this program.

Option 1: Grants for Internet training. These could be block grants and must be outcomes-oriented and outcomes-dependent. The target populations could be not only individual users but also small businesses. Increasing small business use of the Internet could have tremendous economic impact on rural regions. Grants within states themselves could go to various entities, including non-profits, towns, county and local government units, etc.
Option 2: Universal service funds should enhance communities’ projects for extending their telecommunications capabilities. They could be used to match local investment in infrastructure, connectivity, public access and similar access technologies. Provide broadband infrastructure development and use incentives to communities that can demonstrate they are ready to develop both their own facilities/expertise as well as their abilities to use these facilities. Communities should match federal investment in some manner. Communities could purchase broadband services or develop their own infrastructures.
Option 3: Invest in community college-based Internet applications capabilities classes for individuals and small businesses. Create incentives for colleges that enroll small business owners, with some outcome-based measure being the trigger for an incentive “subsidy” or payment.
Option 4: Create “Rural Leadership Academies” that select aspiring or actual rural leaders for two-three weeks of leadership training, which would include training in not only using the Internet but also training in running computer education clinics or courses, in “nuts and bolts” of broadband infrastructure, and in resource-sharing across institutions. The Leaders would be charged with catalyzing Internet availability and use in their respective communities, leaving it to them to decide what makes most sense for their own unique circumstances.

Strover.doc

Strategies for Repairing the Universal Service Fund

Robert Frieden
Cable Pioneers Chair and Professor
The College of Communications
Affiliate Professor of Information Sciences and Technology
Pennsylvania State University
rmf5 psu.edu
814-863-7996
www.psu.edu/dept/comm/faculty/profile/frieden.shtml

This paper examines the flaws, defects, and accommodations that exist in the current universal service funding process with an eye toward proposing a new workable system that can support broadband infrastructure development. Frieden argues that consumers deserve more from their sizeable investment in the universal service program. Because of its blanket approach, USF provides financial benefits to some consumers who are entirely capable of paying the full cost of their telecommunication services while at the same time imposing contribution obligations on consumers, including the working poor and others not well equipped to absorb the financial burden. He points out that the emphasis on promoting basic telephone penetration has a negative effect on broadband penetration. The current USF system creates several constituencies keen on maintaining the status quo regardless of its efficacy and efficiency and potentially thwarting broadband goals.

The USF regime in the United States suffers from systemic design problems that have a significant adverse impact on consumers and the carriers providing service:

Marketplace Distortion: At the macro-level, the current USF system distorts the local and long-distance telephone service marketplace by creating artificial pricing signals.
Poor Calibration of Benefits and Burdens:The current regime offers a poorly calibrated mechanism to implement the principal goal of USF, which is to improve telephone subscriptions and line penetration.
Inflexibility: There has been little empirical research examining why people do not subscribe to basic telephone services and what strategies might create incentives for people to subscribe. Perhaps qualifying, but non-participating individuals, might prefer a telecommunications option other than basic dial-up voice service. With greater flexibility, a USF system might offer these non-users the option of applying the amount of the wireline voice service discount to a wireless, or high-speed data connection.
Explicitness in the Burden Triggers Avoidance Strategies: Striking evidence of the amount of USF support paid monthly has created a type of “compassion fatigue” with a growing incentive, especially for heavy interstate long distance telephone callers, to pursue self-help options that reduce or eliminate their contributions.
USF Primarily Supports Narrowband, Dial Up Service: The emphasis on promoting basic service line penetration has a negative effect on broadband market penetration.

In addition to macro-level design problems with USF in the United States, a number of specific, micro-level issues exacerbate the situation:

The Status Quo Serves the Interests of Several Powerful Constituencies: At the micro-level, the current USF system creates several constituencies keen on maintaining the status quo regardless of its efficacy and efficiency.
Accepts Costs With Few Auditing Safeguards: The USF system largely accepts as a given whatever costs carriers report regardless of whether carriers could operate more efficiently and whether new technologies might offer lower costs, possibly without significant recurring operational costs.
System Prone to Abuse: The current USF regime creates opportunities for fraud and provides incentives for carriers and e-rate beneficiaries to ignore technological innovations that would reduce their dependency, or qualifications for subsidies.
Emphasis on Service Subscriptions: Instead of promoting pure and applied research and development aimed at solving access problems, USF flows primarily to a small set of stakeholders who provide basic services and to constituencies receiving “tied aid” (i.e., funds tied to purchasing a narrow set of existing commercial services primarily from incumbents).
Potential for Substantial Future Deficits in USF Funding: Collectively, technological innovations, conflicting FCC regulatory objectives, and a recent Supreme Court case jeopardize the financial viability of the current USF regime.

Nations other than the United States consistently have proven that more progress in promoting information and communications technology (“ICT”) literacy, teledensity, and innovative uses can occur with less money, a smaller bureaucracy, and reduced marketplace distortion. The best practices share the following characteristics:

True technology neutrality coupled with a willingness to fund well articulated and community-supported projects rather than limit support to a fixed list of existing carrier services;
Capping government project funding to a percentage of total cost, thereby requiring project advocates to seek financial support from other grantors, or from bank loans;
Creating incentives for demand aggregation among government and private users, particularly for broadband and data services;
Emphasizing one-time project funding rather than recurring discounts;
Promoting innovation and creativity in projects, including technologies that provider greater efficiency and lower recurring costs;
Encouraging competition among universal service providers by auctioning off subsidy access; and
Blending government stewardship and vision with incentives for private stakeholders to pursue infrastructure investments.

Best practices in the broader goal of ICT development evidence a promotional role for government through partial funding of specific projects, while primarily emphasizing private enterprise and facilities-based competition.

A Limited and Strategic Role for Government:Unlike the United States USF support structure, governments in other nations, such as Canada, Korea and Japan consider the need to blend efforts to develop skills in using ICT technology with financial support for procurement of ICT equipment and services. Rather than limit USF and ICT development funding to a closed and specific group of constituencies, these nations offer several types of financial support (e.g., loan guarantees, grants and tax credits) to any applicant that proposes effective, efficient, and innovative ways to stimulate ICT literacy and the provision of desirable services.
Reshaping the Mission: In view of changing technologies and consumer expectations, the concepts of universal access and universal service remain in flux. The FCC should reexamine the concept of universal access, including how the Commission achieves the universal service mission articulated by the ’96 Act. Moreover, the FCC must propose an alternative to the current funding mechanism for universal service, because the status quo cannot work in an Internet-centric operating environment where carriers offer subscription-based, unlimited interstate voice traffic that may avoid any USF burden.

As a threshold matter, the FCC should consider its universal service mandate in terms of four inter-related components:

Infrastructure: the scope and nature of networks that provide users with access to basic and advanced telecommunications and information services;
Services: a revised determination of what constitutes basic “life-line” services and which other services, including broadband, the FCC should include in an expanded universal service goal;
Cost: who should support universal service objectives and who could qualify for universal service subsidization of basic and advanced services; and
Maintenance and Upgrades: which incentives regulators must create to ensure that universal service providers maintain and upgrade their networks, but do not object to innovations, including user-operated telecommunications networks, that achieve scale, efficiency, and cost savings.

With these four components in mind, Congress, the FCC, USAC, subsidy contributors, and subsidy recipients must confront an acute, short term problem: the potential for Internet-mediate telephone services and the expanding wingspan of the USF exempt information service classification to trigger a severe decline in telecommunications service revenues subject to the USF burden.

Frieden.doc

Regaining the Lead: Universal Service for a Globally Competitive America

What if Americans could choose the Universal Service most likely to serve their individual needs?

Jorge Schement
Distinguished Professor
Co-Director of the Institute for Information Policy
Department of Telecommunications
College of Communications
College of Information Sciences and Technology
Pennsylvania State University
jrs18@psu.edu
814-234-0777
http://www.psu.edu/dept/comm/faculty/schement.html

This paper proposes a policy framework for promoting American global competitiveness by establishing new standards of information and communication access for individuals. Section 254 of the Telecommunications Act of 1996, which construes an evolving standard of Universal Service, serves as the basis for a new model of Universal Service responsive to innovations in telecommunications

In order to formulate Universal Service anew, we begin with five basic assumptions:

1. Universality. Universal Service should offer interconnectedness across a range of media as an opportunity to all Americans. The goal should be to allow any American to reach any other American within a reasonable time table. The boundaries of the technology should be transparent.

2. Interactivity. Universal Service should pursue the integration of telephony, broadband, and Internet technologies, in order to allow users to communicate across platforms in a transparent environment.

3. Content. Information necessary to achieve universality and interactivity, and so enable basic democratic, economic, and social participation, should be available to all at a reasonable price.

4. Personal Choice. Americans should enjoy the freedom to choose the configuration of access technologies and information services that constitutes the optimal universal service for their individual circumstances.

5. Affordability. Use of the information infrastructure must fall within the means of all Americans. The rate structure should aim at maximizing the number of participants. Regulations should aim to facilitate staying on the network.

An Informed Choice Model of Universal Service
This model of universal service begins with the premise that individuals should choose for themselves the configuration of universal service options that best suits their particular needs. The components of that bundle -- integrating traditional telephony, access to broadband, and Internet services -- will allow individuals to organize their personal and household information environments, in order to achieve their goals as they themselves see fit. Elements of the model include:

1. Open Competition and Choice

In principle, any entity wishing to offer a basic bundle should be free to enter the market. Consumers should enjoy the widest possible range of choices, in order to maximize the value of access configurations to themselves. Clearly, if the goal is to meet the needs of individuals, as they themselves perceive these needs, then individuals must be able to choose among differentiated offerings.

2. Bundled Services
Universal Service, in order to enable basic access in a converged technological environment, should allow individuals to connect to the national network transparently across media. The bundling of telephone, broadband, and Internet services will enhance choice and enable consumers to tailor the configuration of telecommunications services to their own personal circumstances. Therefore, providers should be encouraged to offer as many bundles as they wish, in order to pursue strategies of market segmentation.

3. Setting the Price of Bundles
The pricing possibilities fall somewhere between two familiar poles. At one end, bundle providers set the price of their bundles. If they do, even under the oversight of the FCC, competition receives a strong boost. However, an open pricing regime may not provide service affordable to all Americans; some phone companies have been slow to target low income households even though those same households are high users of advanced services. In addition, new entrants providing local telephone service have largely ignored the potential in low income markets. At the other end, the FCC sets the price of the basic bundle and allows providers to compete on the content of the bundle. Such a policy offers assurances to lower income consumers that they have been remembered in the transition, but will likely be opposed by venders who will argue against being shackled to a fixed price (or prices) in such a competitive arena.

4. Protection of existing Universal Service Guarantees
As a pledge against unintentionally widening access gaps, all bundles should be required to provide existing basic telephone service at a minimum (i.e., dial tone, directory assistance, emergency assistance, local and long-distance service).

5. Leading from the Bottom Up
Agencies with an understanding of local conditions, such as state Public Utility Commissions, should be encouraged to take the lead in assessing local needs to identify specific access gaps and needs.

schement.pdf

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