Emailed to: email to March 18, 2009.

Comments made by

Steve Smith

Chase 3000

Imperial, NE, 69033

308 882 3000; cell 308 883 3000

Internet Service Provider since 1996.

Table of Contents

Executive Summary – highlighting the two answers we most want to emphasize.

NTIA’s 15 primary questions and 52 sub-questions, in order

RUS’ 5 primary questions and 10 sub-questions, in order

  • NTIA/RUS primary question in black.
  • NTIA/RUS specific question in green.
  • Chase 3000 answer in blue.

Executive Summary

Chase 3000 has attempted to answer all of the questions asked by NTIA and RUS. However, the two answers we would like to emphasize the most regard the definitions of unserved and underserved as well as the criteria for judging applications. We highlight our answers to these questions here in the executive summary.

Definition of unserved and underserved. For a more detailed answer, please see our comments under 13a.

a. For purposes of the BTOP, how should NTIA, in consultation with the FCC, define the terms “unserved area” and “underserved area?”

The numbers refer to points. If your target area meets the definition, then you get the points. The points are cumulative.
Unserved –

  • 10 Any area with no provider providing more than 1 Mb down and 512 kbps up. (prorated to the portion of the homes in the target in this category)

Underserved – Any of the following with varying point scale depending on how many of the elements are met.

  • 3 To maintain computability with the FFC broadband statement, any area with only one provider of service would be considered underserved.
  • 1 Cannot receive symmetrical broadband service.
  • 3 Receives average peak time bandwidth of less than 2d/1u Mb .
  • 2 Receives minimum peak time bandwidth of less than 5d/1u Mb .

For example, if an applicant area has only one provider currently providing asymmetrical service of 3 mbps down and 1 mbps up and only does so within the city limits and 50% of the homes in the census tract or zipcode qualify as unserved then the unserved/underserved score would be
3 pts for single provider
1 pts for asymmetrical service
2 pts for less than 5 down but more than 2 up.
5 pts for more than 25% of the homes in the unserved category. (50% of 10)
So a total of 11 points on the unserved/underserved scale.
Within many census tracts and zipcodes, there will be a portion of the population that is served, underserved, and unserved. Hence, NTIA should permit an applicant to define the area to be served by the application however the applicant with a familiarity with the area feels is best. But, the applicant should also be required to report what services are available within the same zip code and census tracts as the application, even if the applicant does not propose delivering service to those other areas. The applicant should be required to map the unserved and underserved areas with all zipcode or census tracts the application covers, even if not all of the area is to be covered. This will help NTIA in its mapping project and will also highlight not only who the applicant is trying to help but also who they are ignoring.

b. How should the BTOP define “broadband service?”

(1) Should the BTOP establish threshold transmission speeds for purposes of analyzing whether an area is “unserved” or “underserved” and prioritizing grant awards? Should thresholds be rigid or flexible?

Thresholds should be flexible. If two applicants are competing within a service area for a grant or loan, the one offering the faster service should receive higher scores. Higher scores for symmetrical service. Thresholds could be based on Homes Per Square Mile (hpsm). <5 hpsm - 5 Mbs; 5-50 hpsm - 10 Mbs; 50-500 hpsm - 20 Mbs; >500 hpsm - 50 Mbs.

Suggested criteria and criteria weights. See NTIA 4b. for a more detailed list and explanation.

b. What should the weighting of these criteria be in determining consideration for grant and loan awards?

  • 20%No broadband in an area, (at least 5/1 MB);
  • 20%Lack of competition in an area;
  • 20% Applicant providing universal service throughout an area (census block?)
  • 5% Average speed at peak usage being provided to the end user;
  • 5% Population loss over the last twenty years;
  • 5% Unemployment rate;
  • 5% Financial ability of the applicant to complete project;
  • 5% Sustainability of project;
  • 20%Other factors – see 4b. for more detailed list.

NTIA:

1. The Purposes of the Grant Program: Section 6001 of the Recovery Act establishes five purposes for the BTOP grant program.

a. Should a certain percentage of grant funds be apportioned to each category?

No hard and fast percentage should be used. NTIA should use its best judgment to fairly apportion the funds.

b. Should applicants be encouraged to address more than one purpose?

Encouraged, yes; but, it should not be required.

c. How should the BTOP leverage or respond to the other broadband-related portions ofthe Recovery Act, including the United States Department of Agriculture (USDA)grants and loans program as well as the portions of the Recovery Act that addresssmart grids, health information technology, education, and transportationinfrastructure?

Projects that include these programsshould receive more consideration. However, these should be included as separate aspects of one’s grant and have communityparticipation (i.e. localhospitals would apply for IT, Smart Grids would be the local utility company, and all would come under theumbrellaof the application). The applicant should identify other complementary projects that can share costs, but NTIA should not make the approval of the IT portion contingent on other agencies or projects.

2. The Role of the States: The Recovery Act states that NTIA may consult the States (including the District of Columbia, territories, and possessions) with respect to various aspects of the BTOP.The Recovery Act also requires that, to the extent practical, the BTOP award at least one grant to every State.

a. How should the grant program consider State priorities in awarding grants?

Most State Broadband Task Forces or regulatory agencies are dominated by one segment of the communications industry. Permit the State to highlight areas of need, but directly solicit input from a variety of State sources. There are a number of broadband advocates that are not tied directly to anyone technology or industry. Provide public notice that the NTIA will consider input from any source that wants to propose a Statewide broadband strategy and priority list.

b. What is the appropriate role for States in selecting projects for funding?

State involvement should be kept to a minimum, due to heavy political influence at the State level by certain industries. A State might provide a letter of support or endorsement for projects they favor. This might give a few points toward NTIA scoring of the application.

3. Eligible Grant Recipients: The Recovery Act establishes entities that are eligible for a grant
under the program. The Recovery Act requires NTIA to determine by rule whether it is inthe public interest that entities other than those listed in Section 6001(e)(1)(A) and (B) should be eligible for grant awards.

a. What standard should NTIA apply to determine whether it is in the public interest that entitiesother than those described in Section 6001(e) should be eligible for grant awards?

Priority should be given to entities that have experience in providing broadband service, which can be determined by those that complete the FCC required form 477. If no existing broadband provider exists for an area or is unwilling to provide advanced services, then NTIA might consider any organization that proposes to provide service in such an area.

4. Establishing Selection Criteria for Grant Awards: The Recovery Act establishes severalconsiderations for awarding grants under the BTOP.In addition to these considerations,NTIA may consider other priorities in selecting competitive grants.

a. What factors should NTIA consider in establishing selection criteria for grant awards? How can NTIA determine that a Federal funding need exists and that private investment is not displaced? How should the long-term feasibility of the investment be judged?

  • No broadband in an area, (at least 5/1 MB);
  • Lack of competition in an area;
  • Applicant providing universal service throughout an area (census block?)
  • Minimum or average speed at peak usage being provided to the end user;
  • Population loss over the last twenty years;
  • Unemployment rate;
  • Financial ability of the applicant to complete project;
  • Sustainability of project;
  • Immediate Jobs created (per 1,000 population);
  • Local vs State income;
  • Long term jobs created (per 1,000 population);
  • Net neutral (if other than wireless)
  • Cost to build per MB per home;
  • End user costs;
  • Form 477 completion;
  • Private money leveraged (less than 80% from NTIA);
  • Population density;
  • Small and disadvantaged business;
  • State supported;
  • Combined with other projects;
  • Percentage of people with broadband outside of the city limits;
  • Subsidies received in the past;
  • Technology used;

Long term viability of a project should consider the cost of providing the service as compared to the estimated end user price vs expected end user adoption rate at the specified price.

b. What should the weighting of these criteria be in determining consideration for grant and loan awards?

  • 20%No broadband in an area, (at least 5/1 MB);
  • 20%Lack of competition in an area;
  • 20% Applicant providing universal service throughout an area (census block?)
  • 5% Minimum speed at peak usage being provided to the end user;
  • 5% Population loss over the last twenty years;
  • 5% Unemployment rate;
  • 5% Financial ability of the applicant to complete project;
  • 5% Sustainability of project;
  • 2% Immediate Jobs created (per 1,000 population);
  • 2% Local vs State income;
  • 2% Long term jobs created (per 1,000 population);
  • 2% Net neutral (if other than wireless)
  • 1% Cost to build per MB per home;
  • 1% End user costs;
  • 1% Form 477 completion;
  • 1% Private money leveraged (less than 80% from NTIA);
  • 1% Population density;
  • 1% Small and disadvantaged business;
  • 1% State supported;
  • 0% Combined with other projects;
  • 0% Percentage of people with broadband outside of the city limits;
  • 0% Subsidies received in the past;
  • 0% Technology used;

c. How should the BTOP prioritize proposals that serve underserved or unserved areas? Should the BTOP consider USDA broadband grant awards and loans in establishing these priorities?

Priority should be given to projects that will create backhaul infrastructure that will permit additional communities to be added. For example, if a project is in community Z and the necessary bandwidth to serve the community is available from a tier 2 provider in community Q, then by funding this project everyone between community Q and Z will benefit by the backhaul infrastructure that is created. This will lower the costs of other projects funded privately and would leverage the grant federal money to the greatest extent possible. So if the choice were between a project in community U vs Z, then Z might be preferred because it created more backhaul and leveraged the federal money the most.

d. Should priority be given to proposals that leverage other Recovery Act projects?

Coordinating multiple agency projects should be done at the agency level, as the applicant will not be able to control the timing to permit multiple focus projects on schedule.

e. Should priority be given to proposals that address several purposes, serve several of the populations identified in the Recovery Act, or provide service to different types of areas?

Whatever provides the most efficient and effective use of the money should be encouraged.

f. What factors should be given priority in determining whether proposals will encourage sustainable adoption of broadband service?

End User Price, community education, and proven track record of the applicant. Affordable prices for the end user will increase participation. While most people are able to know how to effectively use broadband, many need assistance in identifying how broadband can be best used. And, many need to be inspired with new ideas so they can create jobs for themselves. A strong community support system will help increase broadband adoption and sustainability.

g. Should the fact that different technologies can provide different service characteristics, such as speed and use of dedicated or shared links, be considered given the statute’s direction that, to the extent practicable, the purposes of the statute should be promoted in a technologically neutral fashion?

The technology that is best for the end user should be the primary determinant with a formula that reflects that if the cost exceeds $x per possible end user ($2,500?), a different technology with lower bandwidth ability may be necessary. No one technology should be preferred over another, except in that it gives the end user the best possible choice within some financial framework.

h. What role, if any, should retail price play in the grant program?

Some projects will cost much more than others to deploy. Some areas are far from a Tier 1 or 2 provider and the recurring costs will be much greater for bandwidth. In these cases, the higher retail cost is a sign of greater need for federal assistance.Cost alone should not be the determinant; however, any proposal should be reviewed for sustainability, given the projected prices. And, projects should be held to the pricing they quoted in the application toNTIA (with unforeseen but necessary changes being justified in writing to and accepted by NTIA).

5. Grant Mechanics: The Recovery Act requires all agencies to distribute funds efficiently andfund projects that would not receive investment otherwise.

a. What mechanisms for distributing stimulus funds should be used by NTIA and USDA in addition to traditional grant and loan programs?

Given the difficult credit situation, many operations will not be able to cash flow their portion of any project. A solution would be for a third party to provide grant funds on a matching basis for any approved purchase as it is made. Another option would be to permit the grant funds to be used as a loan guarantee on a commercial operating or construction type loan. For an applicant to cash flow the entire project and then get reimbursement after the fact will eliminate many otherwise excellent applicants.

b. How would these mechanisms address shortcomings, if any, in traditional grant or loan mechanisms in the context of the Recovery Act?

It would eliminate the lack of credit and ease the cash flow issue, which is one of the primary goals of the Recovery Act.

6. Grants for Expanding Public Computer Center Capacity: The Recovery Act directs that notless than $200,000,000 of the BTOP shall be awarded for grants that expand public computercenter capacity, including at community colleges and public libraries.

a. What selection criteria should be applied to ensure the success of this aspect of the program?

Look at all of the pilot programs of this type that have been funded by RUS over the years and see which were successful.Use elements from these programs to create the criteria. Also, consult with the Gates Foundation,which has operated similar programs.

b. What additional institutions other than community colleges and public libraries should be considered as eligible recipients under this program?

Communities with a high elderly-to-youth population are in the greatest need of public computer capacity, along with someone to provide education.This is where computer literacy is the lowest. Any entity that can provide long-term funding for these resources should be eligible.

7. Grants for Innovative Programs to Encourage Sustainable Adoption of Broadband Service:The Recovery Act directs that not less than $250,000,000 of the BTOP shall be awarded forgrants for innovative programs to encourage sustainable adoption of broadband services.

a. What selection criteria should be applied to ensure the success of this program?

Jacobellis v. Ohio - - Like the famous porn case - How do you define porn? The Courts say,“You know it when you see it.” Have the reviewers flag what they consider to be the most innovative proposals, then have a special group of reviewers pick the best from the flagged applications.

b. What measures should be used to determine whether such innovative programs have succeeded in creating sustainable adoption of broadband services?

Percentage of people with broadband now vs number with broadband x number of years later. Number of new businesses in the community after x years. Number of new employees after x years. Wage growth as compared to a community without broadband.

8. Broadband Mapping: The Recovery Act directs NTIA to establish a comprehensivenationwide inventory map of existing broadband service capability and availability in theUnited States that depicts the geographic extent to which broadband service capability isdeployed and available from a commercial provider or public provider throughout eachState.

a. What uses should such a map be capable of serving?

Identifying unused broadband capacity that providers can access. Who has excess capacity and at what locationsit is available. Where doesn't capacity exist? Which community can't get broadband, even if they have fiber to the premise, because there is insufficient backhaul in the region? Identifying capacity available to each home and business, using something like Google Earth or Microsoft Live Search maps. Fixed wireless providing propagation maps. Fiber providers providing fiber deployment maps, etc. Identifying which providers can provide service to a specific home or business. Permit an end user to provide speed test results for a specific location (some way of verifying accuracy would be necessary so that a hostile competitor doesn't provide false information or a compromised machine doesn't incorrectly place blame.)