April 2011

On April 5, 2011, the Senate Commerce Committee held a hearing titled Closing the Digital Divide: Connecting Native Nations and Communities to the 21st Century.

Witnesses at the hearing were:

• Geoffrey C. Blackwell, Chief, Office of Native Affairs and Policy, Federal Communications Commission
• Alapaki Nahale-a, Chairman, Department of Hawaiian Homelands
• Loris Ann Taylor, President and Chief Executive Officer, Native Public Media
• Myron P. Naneng Sr., President, Association of Village Council Presidents
• John Badal, Chief Executive Officer, Sacred Wind Communications

Committee Chairman Jay Rockefeller (D-WV) said: "Access to modern communications is not a luxury. It's a right. All people, no matter who they are or where they live, deserve access to basic telephone service, wireless service, and broadband. Without access to these services, too many of our citizens will be left on the wrong side of the digital divide and denied the kind of job opportunities, educational development, health care options, and personal safety that modern communications networks can provide. In our Native nations and communities, neither wireless service nor broadband service is on par with other parts of the country. I look forward to working with Senator Inouye and my Committee colleagues to do our part to close this digital divide and provide our Native lands with the communications infrastructure necessary to prosper and thrive in the 21st century."

"Historically Native communities have had less access to telecommunications services than any other segment of the U.S. population," noted former Committee Chairman Daniel Inouye (D-Hawaii). "The lack of good, reliable, and affordable telecommunications infrastructure impedes economic development, educational opportunities, language retention and preservation, and access to health care and emergency services. The Native people of our great nation need and deserve the same opportunities and ability to communicate that is already enjoyed by the majority of U.S. Communities. This infrastructure is long overdue and we must work to ensure that our Native communities are fully connected."

“The negative impacts of history fell particularly hard on Tribal and Native Communities, and aspects of this history resulted in an alarming lack of critical infrastructures. Broadband opportunities can do much to level this history in bringing health care, education, and jobs to Native Nations, but it must be available, accessible, and affordable to meet its promise. We have heard several recurring themes in our conversations with Native leaders ­ continue to meet with us, listen to us, and use what we tell you to bring communications on Tribal lands into the 21st century," said the FCC's Blackwell.

Loris Taylor said, "In the United States, there are 565 federally recognized American Indian Tribes and approximately 4.1 million American Indians and Alaska Natives. Thirty-two percent of this population still is without basic telephone service. Ninety percent of Native Americans have no access to high speed Internet. The absence of adequate communications services in Indian Country is no accident. Decades of failed federal policy, market forces, and the socioeconomic conditions of Native American populations located in some of the most remote areas of the country result in high build-out costs for all media. For the foreseeable future, we need your help in preserving and expanding the public broadcast system in Indian Country."

[Commentary] You can make as many arguments as you like about what AT&T stands to gain by buying T-Mobile, but in my view it boils down to just one: frequencies.

Sure, AT&T would gain another 34 million subs, it would have access to a largely built high-speed packet access plus (HSPA+) network, it would leapfrog over Verizon Wireless in scale and sheer dominance in the US market. But I think none of that justifies the huge integration headaches and costs necessary to knit their two networks and operations together (the Cingular-AT&T Wireless integration is probably still fresh in memory). However, with a single stroke AT&T would alleviate all of its spectrum worries for the next few years, giving it not only a consistent and large band over which to launch LTE but also more options than it knows what to do with when it comes to future network planning. AT&T certainly isn't hiding the fact. In multiple interviews and presentations AT&T has stressed how the deal will relieve it of having to ferret out new spectrum in the near term, while its competitors may not be feel so comfortable.

So how big exactly would AT&T’s spectrum position be post-merger? Conveniently Bernstein Research produced a handy analysis covering just such a scenario. Assuming its acquisition of Qualcomm’s 700 MHz FLO spectrum is approved as well as the T-Mobile acquisition itself, AT&T would have a whopping 132.4 MHz of spectrum on a population-weighted average per market. In comparison, Verizon Wireless and Sprint would have a combined 140.2 MHz. Clearwire, which often brags about its exalted spectral holding has an average of 100 MHz in most markets and maxes out at 120 MHz in its most license-rich markets. Of course, the Federal Communications Commission and Justice Department will most certainly make AT&T divest that spectrum in many markets. But any resulting deal will most certainly still leave AT&T with the premier spectrum position in the U.S., both in terms of quantity and quality.

Two-thirds of Americans have broadband Internet access in their homes. But because of poor infrastructure or high prices, the remaining third of Americans do not. In some areas, broadband Internet is plainly unavailable because of inadequate infrastructure: More than 14 million Americans – approximately 5 percent of the total population – live in areas where terrestrial (as opposed to mobile) fixed broadband connectivity is unavailable. The effects of insufficient infrastructure development have contributed to racial and cultural disparities in broadband access; for example, terrestrial broadband is available to only 10 percent of residents on tribal lands. America's wireless infrastructure is better developed, but many Americans still lack wireless broadband coverage. According to a recent study, 3G wireless networks cover a good portion of the country, including 98 percent of the United States population, but certain states have dramatically lower coverage rates than others. For example, only 71 percent of West Virginia's population is covered by a 3G network. Wireless providers will likely use existing 3G infrastructure to enable the impending transition to 4G networks. Unless wireless infrastructure expands quickly, those Americans that remain unconnected may be left behind.

Though America is responsible for the invention and development of Internet technology, the United States has fallen behind competing nations on a variety of important indicators, including broadband adoption rate and price. America also trails in ensuring the affordability of broadband service. The National Broadband Plan (NBP), drafted by the Federal Communication Commission and released in 2010, seeks to provide all Americans with affordable broadband Internet access. Doing so will not be cheap; analysts project that developing the infrastructure necessary for full broadband penetration will require $24 billion in subsidies and spending. President Obama’s stimulus package has already set aside $4.9 billion to develop broadband infrastructure, and some small ongoing federal programs receive an annual appropriation to promote broadband penetration. However, these funding streams will only account for one-third of the $24 billion necessary to achieve the FCC's goal of full broadband penetration. Moreover, developing infrastructure alone is not enough; many low-income Americans are unable to afford Internet access, even if it is offered in their locality. To close this funding gap and to make broadband more accessible, the National Broadband Plan proposes to transform the Universal Service Fund – a subsidy program that spends $8.7 billion every year to develop infrastructure and improve affordability for telephone service – into a program that would do the same for broadband Internet.

AT&T's bid to buy T-Mobile could be dangerous and may chill growth, according to COMPTEL. Read the full statement.

COMPTEL chief executive Jerry James:

Since divestiture in 1984, AT&T has been on a mission to regain its monopoly dominance through mergers and acquisitions – first in local and long distance telephony, and now the wireless market. Allowing a single company to control such vast market power in the landline, wireless and broadband markets will have devastating economic consequences – from the loss of jobs and fewer choices for consumers, to higher prices and less incentive to deliver innovative offerings.

In addition, the concentration of network assets in the hands of one company will have a chilling effect on the growing wholesale marketplace. The most immediate impact of the proposed merger is the impending loss of jobs as AT&T will no doubt build on its legacy of terminating tens of thousands of employees in its pursuit for market dominance. One only need to look at statements AT&T made in 2006, noting that upon closing the BellSouth acquisition the company would shed 10,000 jobs.

As regulators prepare to examine this latest mega-merger, they should consider the consequences it would have on the competitive market, as well as the negative effects on an economy struggling with nearly 9 percent unemployment. This proposed consolidation represents a clear and present danger to competition and a recovering economy. There is no question that it should be rejected. For 30 years, COMPTEL has been the trade association promoting competition in all aspects of the communications industry, including wireline, wireless and broadband. Our members promote job growth and continue to invest millions of dollars into facilities and new products and services, Consumers and businesses alike have benefited from innovation, personalized services and lower prices that are possible only because of competition. Should the AT&T-T-Mobile merger be allowed to proceed, the communications industry will take several more steps backward to the predivestiture days when ‘choice’ consisted of a single company deciding what was in the consumers’ best interests.