PSC to FCC: We Oppose Measures to Effectuate Universal Affordable Broadband Service

A New York state goal "to ensure that every New Yorker has access to affordable, high speed broadband Internet," was articulated by former Governor Spitzer, and it looks like the current Governor also well understands the connection between broadband availability and economic development. Governor David Paterson's recently released report, Bold Steps to the New Economy: A Jobs Plan for the People of New York, affirms the state commitment to universal broadband service:

Universal broadband is the keystone to creating equal access to opportunity in the innovation economy. The pace of business in the global economy has far surpassed the age of dial-up Internet connections. Governor Paterson is taking steps to ensure broadband is universally available throughout New York.

The crafters of American Recovery and Reinvestment Act ("ARRA") also recognized the need to improve access to broadband service. Among its numerous provisions to help jump start our ailing economy, Congress, through the ARRA, directed the FCC to develop a national broadband plan to bring broadband access to all Americans.

The FCC requested public input, and more than 500 entities submitted comments, including the New York State Public Service Commission ("PSC") in conjunction with the state's Chief Information Officer/Office for Technology. While the FCC requested and received comments on a variety of issues, including data mapping (which is used to determine where broadband is lacking and to focus activities), public safety, and network diversity, the New York PSC's positions on broadband availability are worthy of note. Indeed, they are disappointing and unsupportable.

The PSC began its comments by taking a position in seeming direct opposition to Governor Paterson's public statements about the benefits of broadband deployment.

The [Federal Communications] Commission has been directed to develop a plan, but it may reasonably question the use to which the plan is to be put.... The underlying assumption seems to be that the market is not providing the appropriate level of broadband service and that government should reallocate resources so there is more broadband. More broadband means less of something else and it isn't clear that people want to consume less of that commodity and more broadband. Indeed, given that the market is free, just the opposite is true.

Is the PSC displaying its true colors here, adhering to a laissez faire deregulation approach and opposing meaningful governmental action to bring affordable broadband to all?

In addition, the State's Chief Information Officer, who signed onto the PSC's broadband comments to the FCC, stated in the New York State Universal Broadband Council's recently released Annual Report:

There has never been a more critical time in our history to invest in the future of our children, to enable us to jumpstart our economy and compete on a global level. We must continue to effectively educate our citizens on how to use technology resources and Internet applications to enrich their lives.

So, how did the PSC, a representative of the state, take positions in comments to the FCC on broadband seemingly at odds with what the Governor himself - and his Chief Information Officer - publicly stated in the "Bold Steps" document and the state's own universal broadband report?

The whole purpose of ARRA's broadband provisions is to reallocate public resources in order to make affordable broadband universally available. The current "hands off" PSC approach has been a major failure - today the U.S. has some of the world's slowest, most costly broadband (per megabit per second) and the subscribership rate has sunk from 4th to 15th in the world in recent years, even as other countries with more proactive broadband policies surge ahead. See The Broadband News Is In, but it Isn't All Good, PULP Network, June 5, 2009.

The PSC comments went on to share the Commission's antagonism to expanding universal service support for eligible low-income broadband customers:

We're concerned that decisions will be made to subsidize the supply of broadband which would in turn be funded by the Commission's Universal Service Fund. This would harm New York, a net payer into the fund. New York would subsidize states that have not undertaken the investment - an unreasonable burden.

While it is true that New York is a net payer into the Universal Service Fund ("USF"), why is this so? Perhaps a reason is the New York PSC's own deficient policies which reflect a sad lack of commitment to universal service, a lack of direction, and a failure to devote resources needed to increase universal service support to New York's low-income telephone consumers:

Over the years the PSC has passed up many opportunities to expand Lifeline eligibility criteria, advocate for increased participation to keep federal universal service dollars from leaving New York for other states, and to work with the providers and the Office of Temporary and Disability Assistance to make automatic enrollment work better, but has chosen to sit on the sidelines. As a result, everyone loses. . . . According to the FCC's most recent Universal Service Monitoring Report (with 2007 data), New Yorkers contributed $445,600,000 into the federal USF in 2007, but New York telephone companies only received $248,838,000 in return ($36 million for Lifeline). The difference - nearly half of what is contributed - goes off to help fund programs in other states, most notably Alaska, Kansas, Louisiana, Mississippi, and Oklahoma. With an increase in the number of Lifeline customers in New York, more of this money would stay in New York, with little (if any) impact on the contribution level.

See All NY Phone Customers Lose Big $$ Due to PSC Lifeline Policies, PULP Network, March 21, 2009.

So now, under PSC logic, the failure of the New York PSC to revive and roll out the low income telephone assistance program, which makes New York a net payer into the federal USF, becomes a justification not to support universal service programs that would make broadband more affordable to the poor!

The failure of the PSC to advocate for increased federal support for broadband - because New York pays more into the USF than it receives when the reason for that disparity rests at the feet of the PSC -- is disingenuous and harms low income residents. Is that a valid reason to oppose a broadband Lifeline program? Or should New York's telephone Lifeline assistance program be fixed instead. In addition, somehow, the PSC believes it deserves a pat on the back for the "success" of its automatic enrollment process ("In New York we have increased our efforts on automatic enrollment program for lifeline and worked with other state agencies to streamline the applicability process.") The automatic enrollment process is obviously broken when there are more than a million easily identifiable recipients of Food Stamps yet the number of Lifeline customers is dropping in a nose dive - from over 750,000 Lifeline customers in 1996 to under 300,000 in 2008. See Low-Income Telephone Lifeline Assistance Reaches Fewer than 300,000 New Yorkers, Lowest in 20 Years, PULP Network, June 5, 2009.

In any event, the PSC does not seem to be too concerned about low income customers - or broadband ubiquity - in its comments. The PSC wrote:

A broadband plan seeking to bring broadband immediately to 100 percent of the country may be ill-advised. A goal of 100 percent broadband deployment may not be economically rational with traditional, wired service. However, the evolution of technology, like third generation wireless, could provide more efficient and cost effective alternatives for ubiquitous broadband.

The PSC advocates this position, while asserting that 95 percent of New Yorkers have access to broadband, yet only 71 percent subscribe. Besides the fact that the U.S. census claims only 54.1 percent of New Yorkers subscribe to broadband, the PSC offers no explanation for the large gap between availability and subscribership. Why do 20 (or 40) percent of those with "access" to broadband fail to subscribe? Obviously the PSC is not seeking answers to whether the cost of broadband is affordable to those low-income households not now subscribing, or causing hardship to those who do.

Could it be the combination of a lack of digital literacy and a lack of affordability? While PULP does support the PSC's goal of bringing broadband to libraries and schools (which the PSC referred to as "community gathering places"), we do not believe that stopping there will promote broadband in the home at some later date. Yes, educating people to the benefits of broadband is vital and is a natural role for libraries and schools, but creating a broadband Lifeline program is an equally important goal that should not be pushed off until some time down the road. See Is There a Need for a "Broadband" Universal Service Fund?, PULP Network, April 23 2008 Universal broadband means the service runs to the front door and the customer can afford to subscribe. Obviously if 20 to 40 percent of New Yorkers do not subscribe when it is on their doorstep, cost is a major factor.

In these comments, the PSC may have displayed its true colors - an agency out of step with its own administration, an agency which still wishfully believes the market will take care of all when market failures are abundantly clear, and an agency which caused most of the problems it discussed but tried to present as victories. New Yorkers need and deserve better.

Lou Manuta