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Commissioner Rosenworcel's Remarks at Rural Telecom Meeting & Expo

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Released: February 4, 2013






FEBRUARY 4, 2013

Thank you, Shirley Bloomfield, for your kind introduction. Thank you also to the
National Telecommunications Cooperative Association and the Organization for the Promotion
and Advancement of Small Telecommunications Companies for inviting me to join you today in
I am excited to be here at the first Rural Telecom Industry Meeting & EXPO. When you
heard the Super Bowl MVP say last night that he would be going to Disneyworld, you may have
gotten your hopes up—but, alas, instead you’ve got me.
As Shirley mentioned, I’m relatively new to this job. But I am not new to the issues
facing rural carriers. I saw them when I worked up on Capitol Hill, down in the trenches at the
Commission, and in the private sector. In fact, I’ve been around these issues long enough to
know that as the owners, operators, and employees of the nation’s rural telecommunications
companies, you are not afraid of a challenge.
Rural carriers serve less than five percent of the nation’s access lines, but their service
areas cover more than 40 percent of the nation’s land mass. Many of you operate on tough
terrain. You provide service in difficult weather. You work under real financial constraints.
Every day you keep people connected despite these challenges. It’s no easy feat.
I know. Because in my early days as a Commissioner, I made it a priority to get out of
Washington and see communications in far corners of the country. In Alaska, at a school in a
village 30 miles north of the Arctic Circle, I saw how Internet connectivity is remaking
education, connecting students to learning opportunities world-wide. In a nearby village, I met a
college graduate able to return home and start an online business selling local products. In
Vermont, I saw how some of our most rural communities have the nation’s most advanced
systems for 911 calls. And in California I learned how telemedicine can bring improved
healthcare to the state’s rural communities—if they have the facilities and bandwidth necessary
to provide service.
So I know that your efforts have already brought communications to some of America’s
hardest-to-reach communities. In doing so, you have created new opportunities for jobs,
education, healthcare, and social and civic engagement. This is a great achievement—one you
can be proud of.
But there is no rest for the weary. Laurels are not, in fact, good resting locales. Because
communications markets are changing at a breathtaking pace. Time marches on, technology
advances, and there is work to do every day to make sure that our rural communities are not left

It’s a good thing that you are not afraid of a challenge—and neither am I. Because the
issues before the Commission are challenging and your voice is essential.
So today I want to start with two big things that I expect will occupy the Commission this
year—spectrum incentive auctions and the transition to Internet Protocol technology. Then I
want to follow up by talking more explicitly about something close to home and your hearts—
the nature of universal service.
First up, incentive auctions.
It is no secret that the demands on our airwaves are growing. Look around and the
reasons why are obvious. We are now a nation with more wireless phones than people. Add to
this that one in five households now has a tablet computer. But this is only the tip of the
proverbial iceberg. Because what is emerging is a whole new world of 50 billion wirelessly
interconnected devices—the coming Internet of Things.
This means we are facing a seismic shift in the demand for our airwaves. To understand
how we will manage this challenge going forward, it is useful to briefly look back.
For nearly two decades, the Commission has led the world with its commercial spectrum
auctions. We have held more than 80 auctions, issued more than 36,000 licenses, and raised
more than $50 billion for the United States Treasury. Our efforts are a model for wireless
providers and governments around the globe.
Going forward we have a new kind of spectrum auction on the not-too-distant horizon.
Courtesy of Congress and the Middle Class Tax Relief and Job Creation Act, the Commission
now has the ability to conduct spectrum incentive auctions. This is different. How? We are
now permitted to provide incentives to existing spectrum licensees to voluntarily return some or
all of their airwaves in exchange for a portion of the revenue from the subsequent re-auction of
those airwaves for new commercial uses.
This is a smart way to make efficient use of spectrum, which is a limited government
resource. And this is instructive. Because across the board in communications we are going to
have to look for new and creative ways to make use of scarce government resources.
But make no mistake, these auctions are an epic undertaking. They will require a special
brew of economics, law, and engineering. Our rulemaking process is just underway. It will
consume a lot of energy to do this well—and do this right.
It also will require a lot of good ideas from anyone and everyone with interest in
spectrum. I know many of you provide wireless services to your customers. I know those of you
who do not may be considering how to do so. The 600 MHz spectrum that will be available
through this auction is well-suited for rural applications. It has great propagation characteristics
because it can cover vast distances with limited tower construction. So I encourage you to give
us your best ideas and help us develop the best incentive auction policies possible.

Next, I want to talk about what Washington calls the IP transition. Today we have the
public switched telephone network and an emerging IP ecosystem. They coexist. They are
jointly responsible for carrying our communications.
But the movement from Time Division Multiplexing to IP platforms is no mystery to
you. You know that we are in transitional times. You see it at home and across the country. The
number of circuit-switched lines is declining, the number of VoIP subscriptions is growing, and
one in three households has cut the cord entirely, with their wireless phone their only phone.
The ways consumers choose to connect are growing more diverse, and so are the networks over
which our conversations and content travel.
So in a transitional time, how do we apply the law? How do we approach regulation so
that we inspire investment in the technologies that will carry us to the future? And how do we
do it so that consumers everywhere—including in rural America—have access to the full range
of opportunity that comes with that investment?
Big questions. They are squarely before the agency right now. We have a Technology
Transitions Task Force that will look broadly at these issues. We have a Technological Advisory
Committee assessing the state of the public switched telephone network. We have two petitions
before us that urge the agency to consider the TDM to IP transition. And we have similar
interest from our state counterparts, who through the National Association of Regulatory Utility
Commissioners have assembled a group to consider federalism, telecommunications, and the role
of the states. We are all wrestling with applying the laws of the present to the networks of the
future, and we must make choices that inspire confidence and private investment in our nation’s
To this end, it is important that we do not get lost in legal minutia. The evolution of our
communications networks is not simply a set of arcane legal issues before the agency. It is what
you work with every day. It is about the essential infrastructure of communications in the digital
In Washington, we will undermine digital age investment if we are not clear. So as we
develop a framework for the IP transition, let me be clear. I believe four fundamental criteria—
grounded in the law—should guide us.
First, public safety is paramount. In the very first sentence of the Communications Act,
Congress instructed the Commission to make available, “to all the people of the United States . .
. a rapid, efficient, Nation-wide, and world-wide radio and communication service” in order to
promote the “safety of life and property.” In light of this directive, any technological or network
transition must, first and foremost, be judged by its ultimate impact on public safety and network
As I mentioned just a minute ago, consumers are migrating to wireless and IP services.
That means that they are choosing to go without the independent electrical source that
traditionally powered copper plant. Our new wireless and IP technologies are dependent on

commercial power. When that goes out, so do connections. But I think that when consumers
switch to new networks, they should not have to sacrifice safety in the process.
So as I have said before, it is time for an honest conversation about network reliability in
the wireless and digital age. It is time to ask hard questions about back-up power, and how to
make sure our networks are more dependable when we need them most. We also need to make
sure that consumers understand the benefits—and limitations—of new technologies when they
reach out for emergency assistance.
On the East Coast, Hurricane Sandy demonstrated this need with painful clarity. But it
does not matter where you live. Mother Nature’s wrath knows no borders. So we must make
sure our networks everywhere help keep us strong, connected, and safe.
Second, universal access is essential. No matter who you are or where you live,
prosperity in the 21st century will require access to broadband services. The Commission’s
ongoing efforts to promote broadband deployment and adoption are built on this simple truth.
But as we transition to new technologies, we must ensure that no American is left behind.
At least ten states have enacted legislation to relieve carrier of last resort obligations. We must
understand what this means. We need to understand how it impacts rural service and rural
consumers. Because as a matter of public policy, we must make sure that modern
communications are available in urban America, rural America, and everything in between.
Third, competitive markets are fundamental. They inspire private sector investment and
innovation. But we cannot forget a key element of the Telecommunications Act that has made
our patchwork of competitive telecommunications networks work seamlessly: interconnection.
So we must monitor IP interconnection and ensure that network providers negotiate in good
Fourth and finally, consumer protection is always in the public interest. In a transitional
world, consumers rely on both old and new technologies. We need to help consumers
understand what different technologies offer and help them make good choices.
Over the long haul, as we assess changes in the public switched telephone network, I
think these four principles—public safety, universal access, competition, and consumer
protection—are good guideposts. I think we can work within this framework and promote
confidence in network investment. But the conversation in Washington about IP network
transition is only getting started. So I want to issue you an invitation—to get involved.
Finally, I want to talk about universal service.
Universal service is cherished in communications. After all, it was back in 1934 when
Congress first directed the Commission to make “communication by wire and radio” available,
“so far as possible, to all the people of the United States.” And it was Congress who expanded
on this notion by adding new principles to guide universal service policy in 1996. As a result,
today, the duty to preserve and advance universal service is the law of the land.

Technology changes, but these basic legal principles have not. So how do we preserve
and advance universal service in a transitional time? When the networks of old have multiplied,
when the ways of reaching out feel infinite, how do we honor this cherished social contract?
These are also big questions. So let me start with the Commission’s effort about a year
ago to update its high-cost universal service and intercarrier compensation system. It was
historic. Though it predated my arrival at the agency, I commend my colleagues for this effort.
They refocused the fund from last century’s technology on to the broadband and wireless
communications challenges of this century. They put it on a budget. And they increased
accountability throughout.
But as I’ve said before, I worry that our reforms to the high-cost universal service system
are extremely complex. I fear that this complexity can deny rural carriers dependent on them the
certainty they need to confidently invest in their network infrastructure. So when opportunities
arise to simplify our rules in a manner that is fiscally sound, good for rural consumers and bound
to inspire investment—we should seize them. Our policies must inspire confidence to invest in
broadband and wireless infrastructure, now, and as we develop the next phase of reform in the
Connect America Fund and Mobility Fund in the future.
On this front, I have good news to report. Some time back, I recommended adjustments
to the universal service reforms for rural carriers the Commission put in place last year.
Specifically, I called for combining the two separate capital and operating expense benchmarks
into one benchmark to simplify the regression analysis and provide carriers with flexibility to
meet our new limits. In addition, I said we should take a hard look at keeping these benchmarks
in place for a longer period of time, instead of resetting them annually. I think these kind of
adjustments will help ensure a more “predictable” and “sufficient” system—one that provides
carriers with more confidence to invest in broadband infrastructure. So I commend the
Chairman and my colleagues for approving an order last week that puts these changes in place.
It will be released soon and you will get the opportunity to judge for yourself.
Now that I’ve told you about the upcoming universal service benchmark decision, let me
tell you about one more universal service rulemaking we have on deck. It involves rural call
For some time, rural carriers have been complaining about dropped calls, missed calls,
and connections that fail. This is a problem. After all, failure to complete calls to your
subscribers can cut families of from relatives in rural areas, lead rural businesses to lose
customers, and create dangerous delays for public safety communications.
For some time, you have raised your voices to complain. You surveyed your community
and found that 80 percent of you have experienced some problem with rural call completion.
You suspected something wrong was going on. We have investigated. You are right.
So let me report some more good news. Very shortly the Commission will release a
thoughtful rulemaking addressing this problem. It proposes new record-keeping requirements.

This means that when calls fail or quality is degraded in rural areas, the Commission will have
the data necessary to go after bad actors, vigorously enforce its rules, and bring an end to this
problem. I support it, and encourage you to take a look when it is released very soon.
So there you have it. In a place where the talk is typically about a magical kingdom and a
cartoon mouse, I have loaded you down with the real-world challenges of communications
policy. Early in the morning, no less. Now these issues may not be easy, but they are important.
Because how the Commission proceeds with spectrum policy affects communications in rural
America. Because how the Commission grapples with applying its rules to new IP platforms
affects communications in rural America. Because how the Commission wrestles with the
challenges of universal service in a transitional time affects communications in rural America.
Because these issues are too important to leave only to those of us in Washington.
So speak up, get involved, and be a part of making sure that communications
opportunities in the digital age are available everywhere. I think together we can do great things.
My office is open and I welcome your input.
Thank you.

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