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Sunday
Jul102011

Tribal Carriers Propose Native Nations Broadband Fund

GRTI Objects to FCC’s USF NPRM, Warns of “Dire Consequences” for Native American Communities

Weighing in on the Universal Service Fund reform debate are a variety of Native American telecommunications providers and associations, who are generally opposed to the FCC’s NPRM and support the creation of a Native Nations Broadband Fund in order to protect and promote broadband infrastructure in these especially challenged areas.  Gila River Telecommunications, Inc. (GRTI; serving the Pima and Maricopa Tribes of the Gila River Indian Community in rural southern Arizona) has filed comments in the proceeding, as have several other Tribal Carriers and the Native Telecom Coalition for Broadband (NTCB). On June 28, 2011, individuals from Arctic Slope Telephone Association Cooperative, Copper Valley Telephone Cooperative, Inc., Interior Telephone Company, Inc., Mukluk Telephone Company, Inc., and Waimana Enterprises, represented by GVNW Consulting, met with members of the FCC to present draft rules for a Tribal/Native Broadband Fund. The cornerstone of a Tribal/Native Broadband Fund is ensuring that Tribal Carriers pass the Times Interest Earned Ratio (TIER) test, which, according to the NTCB “would ensure that government loan covenants, mainly financial performance metrics are met,” so Tribal Carriers could expand and improve broadband infrastructure in Native lands.

GRTI provided a great deal of interesting information about the economic, geographic and demographic challenges that Tribal Carriers face as they attempt to deploy broadband in Native American communities. GRTI acquired its local exchange network from US West in 1988 and it is now owned and operated by the Gila River Indian Community, with 60% of employees and the entire board comprised of Native American individuals. GRTI provides voice and broadband to an area of around 582 square miles with a population of 12,000 Native Americans. GRTI notes that, “this low population density leaves little, if any, margin for profit for GRTI after recovery of high costs of build-out operations.”

I was very impressed that GRTI has managed to increase telephone penetration from 10% in 1988 to 80% today, but I was discouraged to learn that GRTI’s broadband penetration rate is only 22%, for 1.5 Mbps/256 kbps DSL—apparently, this is a high take rate for a Tribal community. Furthermore, GRTI notes that 50% of the Gila River community is below the poverty line, and over 50% are unemployed. Adding to these challenges is the cost of broadband for consumers, which GRTI can provide at no lower than $52.90 per month due to the extraordinary costs for interstate access and middle mile transport. Add extremely low digital literacy to this list of challenges, and “the resulting low usage rate creates an economic hurdle for capital investment in enhancements to and expansion of broadband services on Tribal lands.”

The NTCB also provided some interesting commentary about the unique challenges that Tribal Carriers face. The NTCB showed concern about the FCC’s USF NPRM because of the possibility of the reforms increasing the rural-rural divide, where Tribal Lands would be the real losers especially if USF support is primarily distributed to large carriers. The NTCB explained, “Communications giants are going to serve rural America—this is the vision presented by the National Broadband Plan. However, these giants lack local presence, lack local leadership, lack local participation, and lack local accountability; all reasons why ‘scope and scale’ have failed in much of rural America today.” The NTCB goes on to explain how large ILECs have historically showed little interest in serving Tribal Lands, and “entities that might be deemed to have ‘sufficient’ resources to get the job done are not interested in building-out to these remote areas, nor do they have an appreciation for the local needs and level of commitment that is needed to fully serve Native communities (the tribe’s cultural, spiritual, economic, personal and public safety, and other unique factors to these remote areas are an integral aspect not only of network planning, but also the continuing provision of appropriate/necessary communications services and customer interface).”

I found this argument to be very thought-provoking, and reminiscent of my opinions about large investor-owned telecom carriers serving rural areas in general. However, the special characteristics of Tribal Lands are something that, in my opinion, large non-local companies are not equipped for or willing to deal with for such low return on investment. I believe this emphasizes the importance of providing support for Tribal-owned and operated broadband providers, who will likely make decisions with the best intentions for their communities.

GRTI argues that a Native Nations Broadband Fund “would encourage a meaningful incentive for the deployment of [broadband] infrastructure,” and “targeted support not only advances the Commission’s relationship with, and responsibility to, Tribes but also furthers the Commission’s policy of promoting Tribal self-sufficiency and economic development.” Absent a special Tribal USF mechanism, GRTI is deeply concerned about its ability to continue to provide voice and broadband to the Gila River Community. GRTI estimates that the FCC’s NPRM proposals would decrease the company’s revenue by $2-3m over the next four years, and result in “dire consequences for the community.”

Furthermore, GRTI provided some interesting commentary about the trouble with using the National Broadband Map to target support to unserved areas. They argue that the map does not accurately depict Tribal Carrier’s service areas, as many Tribal Carriers did not provide information for the map. Apparently, a community center in the Gila River area is listed on the map as having 3-6 Mbps service, when it actually has a 1 Gbps fiber connection—the agency who provided the input never even confirmed it with GRTI: “in fact, GRTI had no idea how [the AZ Government Information Technology Agency] obtained this incorrect data.” GRTI was offered no resources or assistance to provide input for the National Broadband Map, and the result was glaringly inaccurate data.

In their June 28 ex parte meeting, the Tribal Carriers represented by GVNW Consulting prepared draft rules for a Tribal Broadband Fund (TBF). To receive support, eligible telecommunications carriers (ETCs) would have to undergo a certification process and submit quarterly financial data in order to receive Tribal USF support. According to the draft proposal, “The TBF support amount will provide participating eligible ETCs with ‘net gap’ support sufficient to recover any revenue shortfall to the provision of regulated communications services to American Indians, Alaska Natives and Native Hawaiians.” The support would then enable Tribal Carriers to pass the TIER test which would qualify these companies for RUS loans.

I find this proposal to be reasonable and necessary—it is clear that Tribal Carriers face extremely extenuating circumstances in broadband deployment and adoption. I would be interested in seeing proposals for increasing broadband adoption in Tribal Areas too, as the situation depicted by GRTI indicates that broadband deployment is only part of the challenge. I believe GRTI’s challenge is that their Tribal community simply cannot afford over $50 per month for DSL, therefore I hope that a Tribal Broadband Fund would help alleviate some of the costs associated with deploying broadband infrastructure in Tribal Lands—as a result, the Tribal Carriers could lower their prices significantly and hopefully increase the adoption rates, digital literacy, and overall economic well being of their communities. Will the FCC recognize the importance of establishing a separate Tribal Broadband Fund, or will Tribal communities fall victim to the growing rural-rural divide if Tribal Carriers do not receive any special attention?

GRTI’s comments are available here, and the NTBC’s comments are available here. The draft rules for the Tribal Broadband Fund are available here, and the ex parte filing by GVNW Consulting is available here.

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