For release only by the
Senate Committee on Indian Affairs
Room 485,
RURAL DEVELOPMENT
RURAL UTILITIES SERVICE
Statement of
Hilda Gay Legg, Administrator, before the Committee on Indian Affairs.
Mr. Chairman, Members of the Committee, I appreciate the opportunity to
come before this committee to testify, on behalf of the U.S. Department of
Agriculture, on the Rural Utilities Service’s role in addressing the
telecommunications needs in Indian Country.
The Rural Utilities Service (RUS) is
an agency of Rural Development within the United States Department of
Agriculture, which actively supports and promotes the universal availability of
telecommunications as well as the expansion of information services in defined
circumstances in rural
While electric, telephone, and water
and waste disposal services have been taken for granted in American cities
since the 1920's and before, if you lived in a rural area only 50 years ago,
chances are you went without these necessities of modern life and the high
standard of living they make possible.
Regretfully, this is far too often true in much of Indian country
today. However, with the financing made
available through the Rural Utilities Service, this, too, is changing.
Modern utilities came to rural
As we are all aware, the building
and delivery of an advanced telecommunications network is having a profound
effect on our nation’s economy, its strength, and its growth. In discussing the importance of advanced, high-speed
access -- commonly referred to as “broadband service” -- at the Economic Forum
in
Just as our citizens in our cities
and suburbs benefit from access to advanced telecommunications services, so
should our rural residents, particularly those living in some of our most
remote rural areas, the tribal reservations.
Modern telecommunications service is important to rural
Today’s advanced telecommunications
networks will allow Native American communities to become platforms of
opportunity for businesses, both new and established, to compete locally,
nationally and globally. These networks
will help ensure that no rural resident – from students to parents and
teachers, from patients to doctors, or from consumers to entrepreneurs – will
be left behind in this new century.
USDA is proud of its contributions
to improved infrastructure services in many Native American communities. RUS has worked with telephone companies and
cooperatives serving Native Americans since the inception of our programs to
bring modern, reliable electric, telecommunications and water and sewage
systems to Native American residents. In
1961, RUS made its first loan for electric service to the Navajo Nation and in
1976, RUS financed its first tribal telephone company, the Cheyenne River Sioux
Tribe Telephone Authority in Eagle Butte, South Dakota.
Unfortunately, there are still rural communities without
access to telecommunications services. In particular, Native Americans living
on tribal reservations have some of the lowest telephone penetration rates in
the nation. This lack of telecommunications
infrastructure also contributes to high unemployment, depressed economic
conditions, reduced educational opportunities and reduced medical care.
In partnership with our small, rural
independent and cooperative telecommunications systems, USDA is making
significant investments in infrastructure in Native American communities. We have financed over 60 local exchange
carriers that serve tribal reservations.
These companies are providing telecommunications service to over 27,000
Native Americans.
We are especially proud of our
efforts working directly with tribally-owned and operated telecommunications
utilities. The Rural Utilities Service
has financed six tribally owned telecommunications companies for service
exclusively on the reservations. They
are: the Tohono O’odham Utility
Authority, in Sells, Arizona; Gila River Telecommunications, Inc., in Chandler,
Arizona; San Carlos Apache Telecommunications Utility, Inc., in San Carlos,
Arizona; Fort Mojave Telecommunications, Inc., in Mohave Valley, Arizona; the
Cheyenne River Sioux Tribe Telephone Authority, in Eagle Butte, South Dakota;
and Mescalero Apache Telecom, Inc., Mescalero, New Mexico. These six companies currently serve 15,036
Native American subscribers.
Additionally, we are having ongoing
discussions with other tribal entities about the possibility of obtaining RUS
financing. Most recently, we have met
with the Colorado Indians, the Hopi Tribe, the Navajo Tribal Utility Authority,
the White Mountain Apache Tribe; the Pascua Yaqui Tribe, the Yavapai-Apache
Tribe, and the Quechan Indian Tribe all located within the state of Arizona as
well as the, Yurok Tribe, in California.
USDA has been active in
disseminating information on its programs to those in Indian Country. We have made numerous presentations at Native
American conventions, seminars, and workshops to discuss how tribal entities
may participate in RUS programs. Our
General Field Representatives routinely visit tribal authorities who are
interested in improving telecommunications service to discuss how RUS financing
can promote these improvements. However,
many reservations are served by telephone companies that do not borrow from
RUS, and these companies do not always work with tribal authorities on matters
that may impact on service to the reservation. In such cases, it may be
necessary to form a den company before RUS can be of assistance. Therefore, in
those instances, RUS involvement will likely come from loans made to
newly-formed tribal telecommunications entities.
Forming a telecommunications company
in any rural community is a formidable task.
In today’s telecommunications market, it is even more so. There are substantial financial hurdles to
conquer and the industry is going through some difficult changes since the
passage of the Telecommunications Act of 1996.
Telecommunications companies today must be able to address a changing
environment in toll separations, access charges, plant accounting, unbundling
requirements, universal service fund issues and competitive service
issues.
The key to developing a successful
telecommunications system is a good, sustainable business plan – one that has
the support of the tribal community and meets the community’s individual
needs. Because RUS is an infrastructure
financier, we do not finance operating costs.
Therefore, it is necessary for the tribal system to have sufficient cash
reserves to meets its operating expenses, particularly during the construction
phase when subscriber take rates are low.
In certain instances, the tribal authority, itself, has infused cash
into the telecommunications system. In
other instances, the tribally-owned telecommunications system has partnered
with an independent telephone company until it was financially well established
and able to purchase the independent company’s investment interest.
Knowing the tribal community’s needs
and meeting those needs is critically important. A good business plan and marketing survey
will help the tribally-owned utility recognize the service requirements of the
community and its residents. Is the
tribe attempting to attract businesses into the reservation by having
high-speed data connections? Are the
members of the tribe attempting to establish home-based businesses from which
to market their native crafts. Is the
community attempting to enhance the learning opportunities of its young people
by connecting, through distance learning, to tribal colleges? By knowing the answers to these questions
during the initial planning phase, the telecommunications system can be
developed to meet the specific needs of its customers.
RUS can provide advice and
assistance in formulating plans for the design and construction of
telecommunications plant and for formulating a business plan that will support
a loan from RUS. We do not, however,
assist potential borrowers in the actual formation of a telecommunications
business. There are many legal,
regulatory and financial issues that must be addressed by a tribal entity
before making a decision to form a telecommunications company.
A prime example of just such a
situation is Gila River Telecommunications, Inc.
In this fiscal year alone, the RUS
has almost $660 million available for telecommunications infrastructure
financing and another $1.45 billion in broadband infrastructure financing. Native American entities are eligible to
apply for this assistance for improving the quality of life in Indian Country.
Together with RUS-financed
telecommunications systems, tribal schools and hospital can, and have, availed
themselves of our Distance Learning and Telemedicine program, or DLT as we call
it. This program provides grant funds for
end-user equipment in schools and libraries to deliver the services made
possible by E-Rate. Through these
advanced telecommunications systems, Indian schools can connect with other
tribal and non-tribal educational institutions to bring enhanced learning
opportunities to the most remote of locations.
Not only will the young people of the reservation benefit but the tribe,
as a whole, will benefit. Health care
and educational professionals can complete their necessary continuing
professional education requirements.
Adults can learn new job skills that will allow them to participate in
today’s global economy without leaving the reservation. The latest in dietary and nutritional
information can be made available to help curtail the increase in the number of
cases of diabetes, which is common among many Native American communities.
The Distance Learning and
Telemedicine Program, during its 11-year history has made more than $17 million
in grants that went to providing these critical services to Native
Americans. For this fiscal year, RUS has
$27 million in grant funds and $300 million in loan funds available.
One of RUS’ greatest success stories
for Indian Country came just last week when Secretary of Agriculture, Ann
Veneman, announced our “Community Connect” grants on Friday, May 16. The focus of this program was to literally
“connect a community” with broadband infrastructure, infrastructure that was
currently not available and because of the rurality and the current economic
situations of the community, may never be available. Grant funds were made available to deploy
broadband service to all critical community facilities, which we defined as
local schools, hospitals, medical clinics and police, fire, and rescue
services. Included in the grant was the
cost of providing broadband service, free of charge, to these facilities for
the first two years of operations. Grant
funds were also available for establishing a community “broadband” center with
a minimum of 10 computer stations where residents could come to learn about and
use the Internet and to take classes via the Internet. Once again the grant provided funds for the
cost of the broadband service to the community center for the first 2
years. Grant funds were also made
available to connect all residential and business customers wanting service in
the community.
This was the first time we offered
this program, using $20 million in funding provided by Congress and the
President. As you can well imagine, the
interest in this program was phenomenal.
We received over 300 applications totaling more than $185 million in
funding requests. In what became an
extremely competitive program, our Native American communities
submitted outstanding applications, so much so that they submitted one-fourth
of the successful applications and were awarded more than one-third of the
total funding available. Of the 40
grants awarded totaling $20,185,000, 10 grants totaling $6,270,374 were awarded
directly to Native American communities.
Another 3 grants totaling $1,949,747 were award to telecommunications
providers to exclusively serve Native American communities.
In this information age, there is an
obvious connection between telecommunications and economic growth. Establishing a new, tribal telecommunications
company is not a trivial task, with no guarantee of success. When successful, the rewards are tremendous –
the quality of service improves, penetration rates increase, a wider range of
services are offered and rates will be reasonable. The telecommunications company will also be a
source of training and jobs on the reservation and the improved infrastructure
will promote enhanced educational and medical care and additional economic
development and growth. RUS is proud to
be able to participate in this improvement in quality of life for Native Americans. Thank you, Mr. Chairman, for this opportunity
to testify before the Committee on Indian Affairs.