Wednesday, August 18, 2010

TELECONFERENCE OPERATOR: Your first speaker for today, Mr. Adam Abrams. Sir, you may begin.

MR. ABRAMS: Hi, everybody. This is Adam Abrams calling from the White House. Our call today is about Recovery Act investments in high-speed Internet access.

We have Jared Bernstein, Secretary Locke, and Secretary Vilsack here, all to make a few remarks and then sake some questions from all of you.

Jared is going to start us off.

MR. BERNSTEIN: Thanks a lot, Adam, and I wanted to thank Secretary Vilsack and Locke, Secretary Locke, for being here today. They've done a tremendous job in implementing the Recovery Act over the past year and a half, and their contributions to its implementation have been integral to the success of the Act thus far.

I'm going to make three quick points before I turn this call over to the Secretaries: first, a few words on the broad progress of the Recovery Act in helping to turn the economy around; second, some of the key economic rationales for these broadband investments we're discussing today; and third, some points on the importance of the public safety aspect of today's announcements.

To understand the impact of the Recovery Act, it's important to think back for a second to where this economy was when our administration took office in January of 2009. At that time, the depth of the recession was just becoming clear. We now know that the economy was contracting at a nightmarish rate of almost 7 percent at the end of 2008. Over the first half of last year, we were hemorrhaging jobs, ultimately shedding almost 4 million private sector jobs in the first half of last year.

Against that backdrop, President Obama signed the Recovery Act less than four weeks after taking office. Almost immediately, the rate of economic contraction and job losses began to diminish, and economists of all stripes, including the non-partisan CBO, have credited the Recovery Act as playing a key role in that reversal.

Now over the past year, GDP has grown by an average rate of over 3 percent, and we've added over 600,000 private sector jobs. We need to grow faster and we need to create more jobs, of course, but the degree and the speed of the swing here from those huge negatives to positives is historically unprecedented, and the Recovery Act's fingerprints are all over this sharp reversal.

As the Recovery Act unfolds, we're deeply into the investment phase. Initially, tax cuts, State relief, and shovel-ready products got started very quickly, but it takes more time to evaluate applications and choose the best, the biggest bang for the buck, that is, projects that are in innovative investment areas like clean energy, advanced batteries, high-speed rail, and the case of today's announcement, broadband Internet.

These investments in bringing broadband to underserved communities create jobs today, building the infrastructure, laying the cable, building communication towers, setting up new systems, but just as important, they create opportunities for tomorrow. Whether it's a kid in a library who will now have the same access to the Web as a kid in wealthy suburbia, a job seeker in a community center, or a physician researching a diagnosis, once these networks are in place and formally off-grid communities join the global marketplace, these users and their communities begin to achieve what economists call "network externalities." By connecting to information, research, business, and markets, world communities and firms expand the reach of their markets, finding new customers and attracting new clients currently beyond their reach.

Finally, there's a critically important public safety dimension to these new investments which target the longstanding need for wireless public safety broadband networks, awarding $220 million for the construction of five networks. These awards will increase interoperability and finally give first responders the tools they need to improve response times, communicate at the scene of emergencies, and have reliable access to real-time data. Ultimately, these investments will make American communities safer.

These projects constitute a vital set of demonstration projects and a head start on President Obama's commitment to support the Holy Grail of public safety networks, the development of a nationwide interoperable public safety wireless broadband network. Jobs, public safety, and building out the Middle to Last Mile connections to link world communities to the global economy, that's the Recovery Act in action.

And with that, I'll turn the call over to Secretary Locke.

SECRETARY LOCKE: Thanks a lot, Jared, and this is really a very important priority not just for the President but also for Department of Commerce.

There are really two simple goals behind these high-speed Internet grants. Number one is putting Americans back to work in the near term, managing projects, digging trenches, laying the fiber optic cable, stringing up utility poles, and building wireless transmission towers, but goal number two is to lay the groundwork for sustainable economic growth in areas of the country that for too long have been without the economic, educational, and social benefits of high-speed Internet.

Today, 36 percent of Americans are without access to high-speed Internet. That is simply unacceptable, and dial-up does not cut it. Expanding access to high-speed Internet is a 21st century version of Roosevelt's Rural Electrification Program or Eisenhower's Interstate Highway System, and our grand program is making excellent progress. The grants that the Department of Commerce is announcing today will allocate about $1.47 billion to 66 different projects in 29 States, primarily to build out the Internet infrastructure but also to fund public computing centers and to promote high-speed Internet adoption in underserved communities.

This funding is going to help build 25,000 miles of new broadband networks, directly connect some 8,000 community anchor institutions like libraries, public safety institutions, schools and hospitals, all to the high-speed Internet service, and it's going to bring new high-speed Internet fiber optic wires and wireless facilities and equipment to areas with a total of nearly 19 million households and 1.8 million businesses.

Among other things, these funds are going to enable the Nevada Hospital Association to build and operate a statewide telemedicine network and a new broadband network in California's Central Valley that will bring low-cost, high-speed Internet service to rural residents.

We're also pleased to fund some 700-megahertz public safety wireless broadband projects for the first time, and these awards are going to benefit California, Mississippi, New Jersey, New Mexico, and North Carolina and will be extremely valuable pilot projects for nationwide interoperable public safety broadband programs.

These substantial Federal investments are going to stimulate even more private sector investment. Most Commerce Department grants are extending high-speed Internet connections from the Internet back bone to communities where the private sector has been unwilling or unable to invest, and nationwide, 212 different Internet service providers have already expressed interest in building new connections directly to homes or businesses from our new federally funded networks.

So, in short, this program is a textbook example of government investment done right, where the government start-up funding catalyzes millions of dollars in additional private and local investment while enabling countless Americans to start a new business, grow a business or find a new job opportunity, or enable Americans to take courses from the best colleges located anywhere in the State, the country, and indeed in the world.

So we're really excited about the progress that we're making, and I know that a lot of you have some questions, which Larry Strickling and Jonathan Adelstein will be able or be happy to answer after we hear from Secretary Vilsack of the Department of Agriculture.

Tom?

SECRETARY VILSACK: Thanks, Gary. I want to thank you and your team at Commerce for working in partnership with us at USDA in not only making this announcement but in working together over the last year to get broadband access to many rural, remote, and unserved areas in the country.

Today, we join the Department of Commerce at USDA with the announcement of 28 new broadband projects designed to continue our effort to expand to rural communities' access to improve broadband service that will create jobs and also expand economic opportunity and provide health care and educational equity for years to come. States receiving these grants include Alabama, Florida, Georgia, Iowa, Illinois, Kansas, Kentucky, Minnesota, Missouri, Mississippi, North Carolina, New York, Oklahoma, Pennsylvania, Texas, and Vermont.

When we began this effort to expand broadband to rural and remote areas, we recognized that a substantial part of rural America simply did not have access to broadband and that folks couldn't take advantage of the opportunities that this important technology provides.

Nearly half of America living in rural America today did not have access to broadband. That's roughly 14 million Americans mostly in rural areas lacked total access to broadband services. The Recovery Act investments we're announcing today, together with those that we have previously announced, will help to bridge the gap, so that more and more rural communities will have the tools they need to create jobs and build prosperous economies for the 21st century.

The announcement we're making today of $363 million and 28 projects in the 16 States I've mentioned will add to our efforts, and when our work is completed at USDA, we anticipate that broadband will be expanded to more than 1.2 million households, nearly 230,000 businesses, and 7,800 anchor institutions like the hospitals, schools, community centers, and libraries that Secretary Locke referred to.

To date, USDA has awarded nearly $3.3 million to more than 250 broadband projects. We've helped to create over 5,000 jobs for the engineers, planners, and construction workers that Jared talked about earlier, and we see this as expanding opportunity for farmers and ranchers to have real-time information concerning commodities, markets, and weather, so they can make the best decisions for their operations. Small business owners will be able to strengthen their distribution channels, increase efficiencies, and have access to global marketplace opportunities. Schools in rural areas with limited course offerings will be able to expand and, through distance learning, advancing education and better preparing rural students to compete in a very tough 21st century economy.

First responders, as has been alluded to, in those rural communities will also have new tools to keep their communities safe, will advance rural health care as medical specialists in those rural communities will be able to use telemedicine to provide advanced diagnosis, and parents who are juggling with child care or parent care will be able to take college courses online to further opportunity.

Today's announcement includes also four broadband satellite projects which cover multiple States. When we're completed with this effort, all 50 States will receive satellite broadband where other technologies have not been funded.

We have to date funded 258 projects in 45 States and one Territory, and we look forward to awarding nearly $500 million in the very near future prior to the September 30th deadline for disbursement of Recovery and Reinvestment dollars. We will, when all is said and done, be awarding somewhere in the neighborhood of $3.5 billion to projects all across the country.

Thank you.

MR. ABRAMS: We'd now like to take some questions, Operator.

TELECONFERENCE OPERATOR: If you'd like to ask a question, please press Star/1 on your touchtone phone, and record your first and last name, so that you may be announced. In order to withdraw your question, you will press Star/2. Once again, if you'd like to ask a question, please press Star/1 on your touchtone phone.

One moment, please, for our first question.

[Pause.]

TELECONFERENCE OPERATOR: Our first question will come from Joseph DiStefano from Philadelphia Inquirer. Your line is open.

QUESTION (Philadelphia Inquirer): Hi. A lot of the applications that were made to these programs from Pennsylvania were from urban-based systems and networks, so most of the stuff that's created that I have seen in your presentations, including this one, are going into rural areas. There's a small project in Pittsburgh but mostly in rural areas. That was a part of the debate over this program as to whether it was going to be used to extend service to the many people in cities that cannot afford the existing services or whether that brought them into competition with private providers who don't want to see that happen. What did you guys ultimately decide? Has there been, will there be urban system funding, or have you avoided that because that gets in the way of the commercial providers?

SECRETARY VILSACK: Let me take a stab. This is Tom Vilsack. Let me take a stab at it from USDA's perspective.

Obviously, the charge that we had from Congress was to focus on rural and remote areas, and that meant unserved and significantly underserved areas where need was great. We partnered with the Commerce Department, for all intents and purposes, recognizing that our strength might lie in connecting the Last Mile, series of Last Mile projects, where the Department of Commerce had opportunities with their grant program to effectively involve themselves in Middle Mile projects. So most of our projects by virtue of the charge and by virtue of the Last Mile connection were in rural and remote areas, but I'm sure that Gary has something to add to that.

SECRETARY LOCKE: Gary Locke. This is Gary Locke.

As I indicated in my remarks, not only are we doing these 66 projects in the 29 States primarily to build out the Internet infrastructure and laying the fiber optic cable — and as you indicated, a lot of that is in the underserved areas like rural parts — but we are, with this grant announcement today, funding numerous public computing centers and programs for adoption in the underserved communities primarily in the urban areas where we know that the private sector does have, provide a service, but people are not familiar with the capabilities or the advantages and the possibilities of the high-speed Internet service, and so we have a lot of programs to help encourage adoption of that.

And, Larry, if you can talk about some of those projects?

NTIA ADMINISTRATOR STRICKLING: Right. So I would add, though, that we have funded a handful of infrastructure projects in urban areas, including a project announced in Washington, D.C., in wave one, but what the Secretary said, I think is the point of emphasis here, which is that we look for the level of need when we are funding these projects.

In the urban areas, there generally is not as high a level of need for new construction, but what there is a great need for is what the Secretary said, which is educating consumers, providing public computer centers for people who can't afford to have the computer in their own home, and so most of our public computer center and sustainable broadband adoption projects do have an urban focus for precisely that reason.

TELECONFERENCE OPERATOR: Our next question will come from Joel Wendland with Political Affairs Magazine. Your line is open.

QUESTION (Political Affairs Magazine): Hi. Thanks for the call.

I wanted to address this to Jared Bernstein. At the top, you talked about the positive impacts of the Recovery Act over the past year and a half, and this week, we're getting media reports that some of the Republican governors and State legislators are begrudgingly accepting some of the stimulus money just now. Is there an estimate of the impact on that kind of slowness to respond to this on the slowness of the recovery, on the slowness of recovery of jobs?

MR. BERNSTEIN: Well, I think that the Recovery Act has actually delivered in terms of jobs, saving and retaining jobs, in a very timely manner. One good way to assess that is to look at the quarterly reports that the Council of Economic Advisers has produced. I think there are three of them out now. In each case, you can track the project of jobs saved or created. At this point, we're up to about 3 million. That figure, by the way, is corroborated by outside analysts who get to the same thing.

And I think, getting to your question, it's certainly the case that if you were late to act on Recovery Act funds that were available to your community, you delayed job creation, and I think that's a very significant cost to the workforces in those communities.

We're ready for the next question.

TELECONFERENCE OPERATOR: Our next question will come from Robert Capriccioso with Indian Country Today. Your line is open.

QUESTION (Indian Country Today): Thank you.

Rural Native American Tribal communities are among the least connected to broadband in the nation, as I think you all know. Some Tribal officials feel that the funding committed under the Stimulus Act so far to Indian Country has amounted to very little in comparison to the vast need and number of Tribes that have already applied for funds. I'd love to hear from Secretary Vilsack or Secretary Locke about that issue and whether Tribes can expect to be getting a significant number of more funds under the Stimulus Act.

SECRETARY VILSACK: Well, we announced on August 4th a number of Recovery Act projects designed to address Indian Country concerns. We also are cognizant of the need to make sure that as we make decisions that we can justify the level of subsidy that's being provided by the Recovery Act, and so that's the reason why we basically focused on satellite technology as a relatively less expensive way of dealing with or upgrading opportunities in some of these remote areas where there may be very, very few people, where the costs are extraordinarily high to get the service to them, but we still wanted to make sure that we addressed their technology concerns by trying to provide them upgraded technology, so I think both in terms of specific projects we have awarded in Indian County and as well as this strategy using satellite and other technologies to basically provide an upgrade, we are trying to address the concerns.

SECRETARY LOCKE: This is Gary Locke.

I just want to say that in our Round 1 grants, 48 infrastructure grants, and so far, not counting today, Round 2, we had 18 infrastructure grants. Several of those, in fact, went specifically to projects in Indian Country, and in the grants that we are announcing today — for instance, the grant that goes to the State of Washington actually involves a collaboration with several different federally recognized Indian Tribes, so they are, in fact, of our — getting the benefits of this.

And I'd also like to go back to the first question by Joseph of the Philadelphia Inquirer. I want to indicate that in Round 1, we gave out about a billion dollars worth of infrastructure grants, but we also gave out $165 million to the urban areas for the public computing centers and for the broadband adoption programs.

TELECONFERENCE OPERATOR: Our next question will come from Grant Gross of IDG. Your line is open.

QUESTION (IDG News Service): Hi. Thank you.

I wanted to ask about the satellite grants. Are these the first satellite providers, and could you guys expand on why you're picking satellite providers at this time in this process?

SECRETARY VILSACK: Jonathan Adelstein, do you want to take a stab at that?

RUS ADMINISTRATOR ADELSTEIN: Yes. These are the first awards we've given out to satellite providers under the program. The second NOFA, we established a specific program to ensure that satellite companies could participate in this because it's an important technology to reach areas that otherwise can't be served, particularly economically, by existing providers, so we're giving out $100 million to four satellite providers nationwide that are outlined in our press release.

TELECONFERENCE OPERATOR: Our next question will come from Matt Cover with CNSNews. Your line is open.

QUESTION (CNSNews): Hi. This is a question, I guess, for both Secretaries Vilsack and Locke.

In light of the fact that the recovery is probably slower than we'd like and that we're still running a $1.2 trillion deficit, to you guys think that broadband access and adoption are sort of more of a luxury item, or are they a necessity?

SECRETARY LOCKE: This is Gary Locke. When you talk to some of the small businesses that I have come across throughout travels of America, for them a high-speed Internet service is a necessity. There are so many communities where people, even in colleges and universities who are students, are having problems with service when there's too much congestion, and they can't even basically use the Internet, communities where if one company is trying to get on the Internet, others are on hold, and they're losing orders. They're not able to market themselves. They're not able to transact with other customers or suppliers, and for them, Internet, high-speed Internet service, is just as important as electrification was to the country and to rural America in the '30s, so this is very much a necessity.

You're talking about businesses who can market themselves over the Internet to customers all around the rest of the world. You're talking about students being able to take courses that are not offered in their small rural high school or middle school, and they can take courses with credit, so that they eventually can go on to college and already have advanced placement credit and cut down on the cost of tuition.

We're seeing that without this high-speed Internet investment by the Federal Government, so many of the for-profit independent Internet service providers don't find it economical to go into these regions, and so this is really very much about job creation and helping businesses throughout America be more competitive, stronger, and more viable.

SECRETARY VILSACK: I'd just add to that two things. One, this country can't afford to have a digital divide. We already have significant challenges in rural America in terms of equity of opportunity. Failure to connect rural America to 21st century technology now will really make it much more difficult for farmers and ranchers, small business owners to have any connection to 21st century economy.

Secondly, it would be one thing if we were just competing within the United States for economic opportunity, but as Secretary Locke indicated, we are now engaged in economic competition with the rest of the world, and unfortunately, the United States lags behind, significantly behind a number of Asian countries in particular in terms of investment and the capacity of this 21st century technology, which puts us at a serious competitive disadvantage in the global marketplace.

MR. BERNSTEIN: This is Jared Bernstein. I wanted to add one quick point.

You know, when you're thinking about this kind of spending that we're talking about today, these announcements, there's a keyword here that has to do with getting this, accelerating the pace of this recovery, and that word is "investment." Clearly, the economy as it's moving from recession to recovery, consumers play a critical role, but in moving from recovery to a more accelerated dynamic recovery, tapping some of these kinds of activities that the Secretaries have been talking about, the investment agenda is critical. In fact, historically, that's how recoveries shift into a higher gear.

Now, you know there's lots of private capital sitting on the sidelines in many cases, and broadband Internet is a great example. That capital is brought off the sidelines by complementing the kinds of investments that we're talking about making today, as Secretary Locke stressed in his statement, so these are key investments targeted as accelerating the speed of recovery.

SECRETARY LOCKE: The more prosperous and competitive American companies are, the more they can sell, the more they can produce, and when they do that, they hire more people. And, of course, just the building out of this infrastructure, 25,000 new miles of broadband infrastructure from fiber optic cable that has to be put in trenches to stringing up wires on telephone poles or utility poles to building wireless transmission towers, that's jobs as well.

MR. ABRAMS: Operator, I think we'll do two more questions.

TELECONFERENCE OPERATOR: Our next question will come from Cheryl Tevis with Successful Farming Magazine. Your line is open.

QUESTION (Successful Farming Magazine): Yes, thank you. Good morning.

My question is related to local telephone companies in rural areas. There actually have been quite a few of them who have taken quite a bit of good initiative in providing the services to people in those communities, and I picked up a concern and worry about this initiative being something that's going to hurt them and their opportunities. Is there anything you might say to respond to those fears of the local telephone companies who have already been doing a good job in this area? Thank you.

SECRETARY VILSACK: Well, it's hard to understand why those local telephone companies would be concerned. I know the State of Iowa, for example, has 150 local telephone companies, and a good number of them have received some assistance and benefit from the Recovery and Reinvestment Act, allowing them to either expand service or substantially speed up the service that they provide, so I'm not sure that the fears are founded. And in point of fact, I think there has been a concerted effort to work with the private sector to leverage these recovery dollars, so that we get more job growth, more expansion, and more opportunity.

TELECONFERENCE OPERATOR: Our next question will come from Joan Engebretson with Connected Planet. Your line is open.

QUESTION (Connected Planet): Thanks.

If a company applied for funding for multiple counties or multiple States all in a single application, will you consider awarding funding for only part of those counties or only part of those States?

SECRETARY VILSACK: Jon, do you want to answer from USDA's perspective?

RUS ADMINISTRATOR ADELSTEIN: This is Jonathan Adelstein at RUS.

We only award the entire service area that was applied for. So, if it's a multiple service area application, we would either award the entire amount or none at all.

NTIA ADMINISTRATOR STRICKLING: And this is Larry Strickling from the Department of Commerce.

We have awarded several multi-State grants, so it does not trouble us if somebody applies and seeks to serve more than one State, but we do look again at whether or not the project is meeting a level of need that's adequate to justify funding. And there are cases where we have descoped a project where we don't think that part of the project area really demonstrate a high enough need for government funding.

MR. ABRAMS: This will have to be our last question.

TELECONFERENCE OPERATOR: Our next question will come from Yu-Ting Wang of Communications Daily.

QUESTION (Communications Daily): Hi. Today's grant announcement includes a handful of public safety network projects. My question is, will there be additional grants for 700-megahertz public safety networks, as many of the waiver cities are seeking BTOP funding? Thanks.

SECRETARY LOCKE: This is Gary Locke. Larry can answer part of this.

But after this round, we at the Department of Commerce have about another billion dollars available for funding that we'll be announcing over the next several weeks until about the middle of September, but I think within that billion dollars, we still have the capabilities for additional public safety grants.

Larry?

NTIA ADMINISTRATOR STRICKLING: That's correct what the Secretary said. We're still looking at public safety applications as part of the remaining dollars of funding we have available.

MR. ABRAMS: Thanks, everyone, for joining us today. The White House has put out fact sheets to our press list as well as to many State press lists. If you have any further questions, please feel free to reach out to your contacts either at the White House or at the Departments of Commerce and Agriculture. Angie, thanks for moderating, and thanks to the Secretaries for joining.

SECRETARY LOCKE: Thank you.

SECRETARY VILSACK: Thank you.

TELECONFERENCE OPERATOR: This will conclude today's conference call. You may not disconnect.

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