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Rural Development1400 Independence Ave.Washington, DC 20250www.usda.gov/rus/

Presenter:

Kenneth Kuchno

Director, Broadband Division

Telecommunications Program

NARUCNARUC

Summer MeetingSummer Meeting

July14, 2007July14, 2007

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More than $5.7 billion invested in rural telecommunications infrastructure

Almost 2 million rural homes and businesses have received access to high-speed broadband connections

More than $251 million in Distance Learning/Telemedicine grants and loans have been awarded to rural health and education providers

Rural Development Utilities ProgramsRural Development Utilities Programs

Nationwide Investment

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Broadband Loan Program: Status and ResultsBroadband Loan Program: Status and Results

• Established by the 2002 Farm Bill.

• As of July 13, 2007, 72 loans have been made for approximately $1.25 billion to

finance facilities in 40 states.

– Projects proposing to serve more than 582,000 households

– 1,263 communities

11%

53%

26%

7%3%

Completed In Progress Not Started Rescinded Defaults

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Broadband Loans…Statistics

203 Applications Received

Totaling $4,430,000,000

Applications Processed as of July13, 2007

72 Approved $1,250,000,000

21 In Review $ 963,000,000

110 Returned $2,217,000,000

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Broadband Loan Program: Status and Broadband Loan Program: Status and ResultsResults

• Unserved and Underserved Communities

– Approximately 40% of the communities approved for funding were unserved at the time of loan approval.

– An additional 15% had only one provider at the time of loan approval

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Broadband Loan Program: Technology NeutralBroadband Loan Program: Technology Neutral

TECHNOLOGIES APPROVED

1% 20%

25%18%

36%

Broadband Over PowerLine (BPL)DSL

Fixed Wireless

Hybrid/Fiber Coax

Fiber to the Home

As of 7/13/2007As of 7/13/2007

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The Cost to Deploy Broadband

Least Expensive: Unlicensed WirelessMost Expensive: FFTH

On average, when considering all the technologiesfunded (community populations ranging from 200 – 19,000):

$2,150 per Household Served $990,000 per Community Served (based on estimates not actual costs)

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Broadband Loan Program: Technology NeutralBroadband Loan Program: Technology Neutral

TECHNOLOGIES PENDING

5%

0%

38%

14%

43%

Broadband Over PowerLine (BPL)DSL

Fixed Wireless (1/2Licensed)Hybrid/Fiber Coax

Fiber to the Home

As of 7/13/2007As of 7/13/2007

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Broadband Loan Program: Types of Organizations Broadband Loan Program: Types of Organizations FundedFunded

3%

51%38%

7% 1%

Municpalies Corporations LLC's Cooperatives Tribal Authority

One Size Does Not Fit All…

•Private/public partnerships

•Traditional telephone companies enhancing service offerings

•Local service providers serving one or a few local communities

•National service providers providing service to multiple communities, even multiple states

•Municipalities

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Broadband…Direct Cost-of-Money Rates

5.26%5.09%5.02%4.98%

0%

1%

2%

3%

4%

5%

6%

5-yr 7-yr 10-yr 20-yr

Loan Term

Inte

rest

Rat

e (%

)Amortization period from 5 – 20 years based on useful economic life of facilities funded.

As of July 12, 2007

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Definition of Broadband

Currently

200 kilobits per second

both upstream and

downstream

In the Future

1 Megabits???????

5 Megabits???????

50 Megabits??????

or even

100 Megabits?????

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Raising the Speed for Rural America:

• Overall cost of broadband system may increase.

• Backbone requirements go up.

• Cost to consumer probably goes up.

• Certain technologies may no longer have the capability to deliver broadband service.

• The outliers may not get this service.

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Broadband Service Offerings

• Wireless: 128K/128K: 512K/256K: 2M/1.5M 4M/2M

• HFC: 256K/256K: 3M/128K: 1.5M/384K: 2M/512K: 4.5M/640K

• FTTH: 512K/256K: 3M/768K: 2M/1M: 10M/10M

• BPL: 256K/256K: 1M/1M: 3M/3M (only 1 application)

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Rural Broadband Access Loan and Loan Guarantee Program

• Proposed Rule published.

• Comment period has ended.

• 32 comments received.

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Who submitted Comments?

http://www.usda.gov/rus/telecom/1738-onlinefilings.htm

• American Cable Ass.

• CTIA

• NRECA

• NRTC

• NCTA

• NTCA

• USTA

• Vermont Dept. of Public Service

• Nextwave Wireless

• Rural Telephone Service Co.

• Suddenlink

• OPASTCO

• QWEST

• Mediacom

• IA Telecom Service

• US Chamber of Commerce

• MidState Consultants

• Nextwave Wireless

• PCIA

• WTA

• North American Equipment Dealers

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Broadband Success

Air Advantage, LLC: • Community Connect Grants:

2003: Unionville, Michigan (Pop. 605) $214,532

2003: Port Hope, Michigan (Pop. 310) $219,176

• Broadband Loans:

2004: 43 communities, $1,500,000

2005: 12 communities, $1,028,000

2007: Pending application to handle addition customers, $1,000,000

Exciting Fact: Today they are serving 55 mid-Michigan communities and providing service to 3,500 rural Michigan customers with a wireless system

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Rural America

Let’s not forget the most Rural Americans and let’s strive to get all Americans Affordable, Dependable,

and Quality Broadband Service.

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Kenneth Kuchno

Director, Broadband Division

Telecommunications Program

kenneth.kuchno@usda.gov

(202) 690-4673

Rural Development Utilities ProgramsRural Development Utilities Programs