White Paper: The Missing Elements for a Strategic, Statewide Broadband Plan for Indiana

August 17, 2015

The foundation’s white papers are intended to make scholarly research on Indiana issues more widely available to policy analysts and researchers. White papers represent research in progress and are published to invite comment and discussion as preparation for their submission to academic journals and other professional publications. The authors are solely responsible for the content of their research and analysis.

 

By Robert E. Yadon, Ph.D. and Barry D. Umansky, J.D.[1]

Introduction

Since 2006, Indiana has benefited from proactive telecommunication reform legislation resulting in increased competition and eliminating unwarranted legacy regulations that inhibited outside capital investment. As a result of this open, pro-competition environment, coupled with the development of a robust, fiber optic backhaul network serving much of the state, plus a few forward-thinking public/private partnerships offering last-mile broadband services, Indiana leads the Midwest in establishing a statewide broadband fiber optic infrastructure as a necessary prerequisite to further investment in both wired and wireless broadband services. To date, over $5 billion has been invested in improved wireline and wireless infrastructure in Indiana. But this isn’t the end of the story; it’s only the beginning.

According to a recent TechNet report, Indiana is currently considered an “overachiever” due to the presence of pre-existing optical fiber networks – networks essential to the buildout of wired and wireless broadband services in rural areas.[2] Yet, fiber backbone alone won’t wire middle-mile connections to cities and towns, nor last-mile connections to households, businesses, government offices and hospitals in unserved and under-served areas of our state. Nor will it encourage broadband adoption in these same areas. If Indiana is to remain a leader in broadband, clearly, a comprehensive strategy at the state level is required.

State Broadband Support

While most Indiana policymakers generally have supported the concept of a competitive broadband marketplace, Indiana has stopped short of any proactive legislation that provides a strategic roadmap or set of meaningful economic incentives for future broadband development or adoption in rural areas. As Tom Sloan, a Kansas state legislator, put it:

If broadband truly is essential in the 21^st century for economic development, health care, public safety and other societal goals, then policymakers and broadband providers must address disparities in availability, speed, bandwidth, affordability and reliability.[3]

The focus in Indiana must shift from removing regulatory obstacles to promoting and providing incentives for broadband deployment and adoption. For non-metro Indiana towns, deployment of broadband can have a significant impact on economic growth. Broadband is responsible for over 20 percent of new jobs across all businesses, and 30 percent of new jobs in businesses with fewer than 20 employees. Extending our current robust broadband backbone into rural areas by promoting middle-mile and last-mile construction can result in small business creation, job growth, economic output and increased tax revenues.

We hear a lot about the economic impact of broadband in rural areas, and the data show that high rates of broadband adoption actually do contribute to income growth, lower unemployment and other indicators of economic success. According to a 2013, study funded by the National Agricultural and Rural Development Policy Center (NARDeP), non-metro counties with the highest levels of broadband adoption are doing great – they have the highest levels of income and education, have more firms and have relatively low unemployment and poverty rates. The non-metro counties with the lowest adoption rates are doing the worst.[4]

Rural Indiana

According to the FCC’s 2015 Broadband Progress Report, 17 percent of all Americans (55 million people) lack access to 25 Mbps downstream and three Mbps upstream (25 Mbps/3 Mbps) service – the new definition for minimum “broadband” service levels adopted by the FCC in that Report.[5]   Nationally, this includes over 52 percent of rural Americans (22 million people) who lack access to 25 Mbps/3 Mbps. By contrast, only eight percent of urban Americans lack access to 25 Mbps/3 Mbps broadband. Rural America continues to be underserved at all speeds: 20 percent lack access even to service at 4 Mbps/1 Mbps, down only one percent from 2011, and 31 percent lack access to 10 Mbps/1 Mbps, down only four percent from 2011.[6]

As for Indiana, the FCC’s 2015, report entitled Broadband Availability in America[7] indicates 14 percent of Indiana’s population is without access to the minimum 25 Mbps/3 Mbps broadband service benchmark.   While only three percent lack access to 25 Mbps service in urban areas, unfortunately over 44 percent of Indiana’s rural population lack access at these speeds. In contrast, in states with the least population density (Alaska, Wyoming, Montana, North Dakota, South Dakota and New Mexico), only 37 percent of the population lack access to 25/3 Mbps. Thus, while Indiana does an adequate job of providing broadband service to urban centers, service to rural Indiana is worse than the least densely populated states and is part of the nation’s under-served and unserved digital divide.

While the basic ingredients currently exist for broadband development in rural Indiana, future investment in rural areas must focus on “middle mile” and “last mile” construction, be technology agnostic, and follow a strategic plan that overcomes Indiana’s inherent disadvantages, which include rural economies that depend less on technological advancements but more on terrain variations, and vast rural areas. These “pre-conditions” will be different for each location, which suggests that broadband strategic plans must be customized for each rural area. In short, there can be no “one size fits all” broadband solution for the state.

Indiana’s Leadership

Past legislation in Indiana matched up well in those years against efforts in other states to promote effective outcomes in terms of future rural broadband deployment.  Over the past ten years DPI has examined regulations that impact the provision of telecommunication services, competition and outside capital investment in broadband infrastructure in Indiana.

The first DPI report — in 2006[8] — provided members of the Indiana General Assembly with a necessary factual and policy foundation to support the most comprehensive reassessment of outdated telecommunication rules in over two decades. Included were recommendations for a “light” regulatory approach patterned after 1996, federal deregulation, plus predictions of the benefits of telecom reform on growth in capital investments and jobs in the state. Further, the DPI report made the case for statewide franchising of multichannel video services. The resulting legislation, HEA 1279,[9] was passed with strong bipartisan support and signed into law by the Indiana governor on March 14, 2006.

The second DPI report — in 2008[10] — took a look at the early measurable benefits of telecom deregulation in Indiana. That report highlighted Indiana’s leadership, as 20 other states subsequently passed similar telecom reform measures. During those two years, over $516 million in new capital investments were reported by Indiana’s telephone industry[11] as it built out infrastructure to provide new and expanded services after relevant risk and uncertainty were eliminated in 2006, under HEA 1279. Most telephone carriers, both large and small, plus most incumbent cable firms, subsequently opted for statewide franchising of video services in Indiana.   Similar patterns have been shown nationwide under Indiana-like statutory changes in those jurisdictions.

The third DPI report — in 2010[12] — was the presentation of an econometric model that evaluated the national impact of statewide franchising on broadband adoption. Evidence showed that statewide franchising had a significant effect on the adoption of broadband telecommunications, accounting for almost six percent of new subscriptions in those states where the market enjoyed long-time access for competing providers.

Finally, the fourth DPI report — in 2012[13]— evaluated the impact of telecom reform legislation in Indiana over the past five years, and examined the remaining administrative regulations of the Indiana Utility Regulatory Commission (IURC) that should be addressed in order to assure fairness and consistency with Indiana’s “light” regulatory approach. The net

Table 1:

Indiana Relevant Telecommunications Laws

Indiana HEA 1279-2006 [14]	2006	Eliminated public utilities commission oversight of pricing and service quality for all retail offerings, except for basic local service, which remained regulated until June 30, 2009. Also allowed statewide franchising for new multichannel video entry.
Indiana HEA 1112-2012 [15]	2012	Allowed a telephone company to withdraw as a COLR if there are at least one other service providers using any technology. Eliminated COLR requirement as of June 30, 2014.
Indiana SB 0560-2013 [16]	2013	Allows utility-related infrastructure development investors, including broadband, to receive certain property tax exemptions
Indiana SB 0492-2013 [17]	2013	Eliminated the IURC’s authority to order telecommunications carriers to report on service quality goals and performance data.
Indiana SB 396-2014 [18]	2014	Repeals the IURC’s ability to dictate the establishment of reasonable rates for telecommunication providers.
Indiana HB 1101[19]	2015	Establishes the broadband ready communities development center (center) within the Indiana economic development corporation to facilitate certain communications projects.
Indiana HB 1318[20]	2015	Establishes a uniform statewide procedure for applications for and issuance of permits for the construction and modification of structures and facilities for the provision of wireless communications service.

findings of DPI’s 2012, report were similar to the IURC’s earlier 2010, review. Both documents confirmed that new capital investments had occurred, that there were increased build-outs of infrastructure using fiber optics and other digital transmission technologies, and that consumer complaints since deregulation have been relatively non-existent.[21]

As Table I above indicates, Indiana has a strong legacy of incentivizing telecommunication infrastructure investments through adoption of a “light” regulatory touch and an array of legislative mechanisms. For example, Senate Enrolled Act 560, passed in 2013, allows utility-related infrastructure development investors, including those investing in broadband-related facilities, to receive certain property tax exemptions.[22] According to the 2014, annual IURC Report, to qualify for the property tax exemptions, the development areas must be termed “Infrastructure Development Zones” by county executives.[23] This increases the incentive for telecommunications providers to build out broadband infrastructure in these tax-exempt zones.

In early 2015, with much of the regulatory underbrush cleared away, DPI presented a fifth report[24] in the series, again focusing on how Indiana can continue its national leadership role in establishing a viable digital telecommunications ecosystem, both wireline and wireless, that promotes and helps sustain telecommunication services to all areas of the Hoosier state.   During 2015, two pieces of legislation moved Indiana farther down the road. HB 1101 established the Broadband Ready Communities Development Center (“Center”) within the Indiana Economic Development cCorporation (“IEDC”) to facilitate certain communications projects. And HB 1318 established a uniform statewide procedure for applications for and issuance of permits for the construction and modification of structures and facilities for the provision of wireless communications service. While helpful in clearing the regulatory underbrush, neither piece of legislation offered a comprehensive statewide strategy for broadband development, deployment nor represented any financial investment by the state to provide new incentives for rural broadband deployment and adoption.[25] Clearly work still needs to be done.

Broadband Access and Deployment in Indiana

Many significant events have occurred over the past 10 years that propelled Indiana to the front of the broadband “friendly” line in the Midwest. Indiana has a long history of broadband telecommunications projects and initiatives, placing the state in a well-prepared position for expanding and enhancing broadband service and coverage.

Beginning in 2007, after the passage of HEA 1279-2006^[26], Verizon added DSL capability to central offices in 69 rural communities serving 70,000 southern Indiana customers, while AT&T completed the upgrade of its remaining central offices to DSL capability in 33 rural communities across the state.

Over the past five years, the National Telecommunications and Information Administration (“NTIA’) Broadband Technology Opportunities Program (BTOP) and the Department of Commerce (under which NTIA operates), through the American Recovery and Reinvestment Act, have invested $4 billion in innovative projects that expanded access to and adoption of high-speed Internet services across the country, primarily to unserved or under-served rural areas.

For Indiana, two significant, federally-funded projects come to mind. First, Zayo Bandwidth received a federal award of $25,140,315 to provide a 626-mile fiber optic network to provide one Gbps to 10 Gbps service among 23 Ivy Tech Community College sites and the 42 Indiana colleges and universities already on the I-Light network.[27]   These connections enable online education and high speed network connectivity in areas that were previously underserved. These new connections have also enabled Zayo Bandwidth to connect other institutions to I-Light, such as Hanover College and Franklin College, giving them far better connections.

Second, Education Networks of America, a service provider, received a federal award of $14,257,172 to deploy 560 miles of fiber optics to deliver broadband Internet service to 145 public schools and libraries around the state to enhance services to an estimated 290,000 students and library patrons. In addition, this open network project proposed to offer affordable broadband Internet service to 200,000 households, 30,000 businesses, and 630 community anchor institutions.^[28]

Another fiber-based broadband success story is Smithville Communications, parent firm to Smithville Telephone, an incumbent local exchange telephone company and Indiana’s largest independent communications firm, headquartered in Ellettsville, IN. Smithville has been a significant contributor in expanding broadband supportive infrastructure throughout Indiana. The company currently serves about 23,000 businesses and residences in southern and central Indiana. Communities such as Gosport, IN, considered an “all-fiber” gigabit community at the end of 2014, as a result of Smithville’s $90 million fiber-optic, system-wide fiber upgrade. In addition, Smithville has expanded into other parts of Indiana, such as the Bloomington area, Jasper, Seymour, Evansville, Lafayette, Fishers, Indianapolis and Liston.[29]

Another broadband success story is NineStar™ Connect, the Rural Electric Membership Cooperative (“REMC”) headquartered in Greenfield, Indiana. On January 1, 2011, Hancock Telecom and Central Indiana Power merged cooperatives into what is now known as NineStar™ Connect.  The communications division serves as a telecommunications cooperative that offers services such as broadband Internet, telephone, video and security solutions to residential and business customers. The electric services division provides electric power to customers in Hancock and parts of Hamilton, Madison and Rush counties. NineStar™ Connect has approximately 14,000 customers with about 5,000 customers having services from both the communications and electric divisions.

Central Indiana Communications, Inc. (“CICI”) is the holding company for all of NineStar’s unregulated lines of communications business which includes Internet services (including DSL and Ethernet), digital IP video, cellular partnerships, long distance, phone and security systems, real estate, leasing and voicemail.

CICI also owns NineStar Communications, a company established to offer competitive local communications services, including telephone, long distance and broadband. NineStar Communications was the first competitive local exchange carrier licensed by the Indiana Utility Regulatory Commission in 1995, and currently offers local service in Greenfield,  New Castle, Rushville, Pendleton, Shirley, Wilkinson, Fortville, Knightstown, Morristown and the Mt. Comfort area. It has extensive fiber optic facilities and offers direct fiber connections to many of its customers in these towns.

CICI also has invested in joint ventures with other independent telephone companies in Indiana to increase the number of services available to NineStar’s customers as well as increase efficiencies through economies of scale; these ventures include Indiana Fiber Network.  Hancock Telecom helped establish a state-wide fiber optic network that is owned by independent telephone companies. Currently, 20 companies own the most comprehensive Dense Wavelength Division Multiplexing (“DWDM”)[30] network throughout the state, which consists of over 1,000 miles of fiber optic cable that accesses all of Indiana’s major population areas. [31]

Indiana Broadband Initiatives

Capital expenditure (CAPEX) requirements to build out middle-mile and last-mile broadband systems in rural areas are costly and often require incentives like pre-subscription of businesses customers to broadband service, loan guarantees, grants and/or establishing tax increment finance (TIF) districts.[32] Over the past ten years, a number of Indiana economic development groups have established TIF districts for their areas to attract and help fund fiber-to-the-premise (FTTP) projects. As an example, Metronet, an Evansville-based company, has worked with a number of smaller Indiana communities to establish TIF districts and establish bonds, which the firm purchases, to assist with the construction of a fiber optic network directly to households for Internet, television and phone service. The revenue bonds are then retired, at no cost to the taxpayers, from property tax revenue generated from the project.

Metronet, which began operation in 2005, has grown to offer 100-percent fiber-optic service to 14 cities statewide, including Connersville, Huntington, Madison, New Castle, North Manchester, North Vernon, Seymour, Vincennes, Wabash, Lebanon, Franklin West Lafayette/Lafayette and Crawfordsville.

Another incentive example comes from Wabash County, where the construction of a 100-percent fiber optic network serving LaFontaine was funded in 2013, using $100,000 in county economic development income tax (CEDIT) revenue as seed money.[33] According to Bill Konyha, president of the Economic Development Group of Wabash County, as a result of a partnership with Metronet and their investment CEDIT funds, “we are able to extend 21^st century technology . . . to enhance the quality of life for residents in Wabash County.”[34]

Some broadband projects get their start providing service to the business sector of a community, and then later expanding to offer fiber-based serves to residential customers. For example, AT&T recently announced “AT&T Business Fiber” in Indianapolis, a service that will initially offer between 25 and 300 megabits-per-second, with plans to support up to one gigabit-per-second in the future.[35] Other projects are simply the natural expansion of broadband into rural areas using wireless technology. For example AT&T recently announced it is expanding its 4G LTE network in west central Indiana into the Owen County community of Spencer.[36]

In Blackford County, officials from Hartford City and Montpelier recently announced a project to install more than 20 miles of fiber optics to provide high-speed connections for businesses, non-profit, and municipal facilities in those communities. The project, a partnership with BG Networking, a Nashville, Indiana private telecommunications firm, was scheduled to be completed by April 2015, and be able to handle speeds of up to one gigabit-per-second.[37]

Finally, the Indiana Metropolitan Area Network (“iMAN”) is a fiber optics network that started in Angola, serving northeast Indiana.  The project began in 2002, with contributions from local government and businesses in Angola, Indiana of $103,000. The network was expected to cost $406,000, create connections to thirty business customers within eighteen months and bring in revenue of $76,950. The team was able to raise an additional $300,000 and complete the project in 2009, at a total cost of $440,200, creating thirteen connections and bringing in $103,350 in revenue during this time. To continue expansion of the network, the Steuben County Community Foundation invested $200,000 in the network in an effort to deploy fiber to Fremont, Indiana.

The foundation contributed $2,000,000 to extend the fiber network throughout the county in 2011. The foundation contributed an additional $10,000 in 2014, to extend the network to LaGrange County and create a connection to the Global access point in South Bend, Indiana. The foundation also contributed $100,000 to complete the network expansion in Hamilton, Indiana. In total, iMAN has raised more than $3.4 million to deploy the network across 130 miles of fiber. Twenty-seven miles of the network within the towns and communities were paid for by individual, local and community dollars.  To date, the network only serves commercial businesses, government offices and K-12 education. No residential customers are currently connected to the network.[38]

Current Federal Communications Law and Policy

In determining how Indiana’s state government and Hoosier counties, cities and towns best can take steps to improve and extend broadband throughout the state, we must consider the current regulatory and legislative environment affecting broadband.   In this paper we’ve already identified and largely praised the legislative steps taken so far in Indiana.   Now we examine how federal law and policy currently affects broadband availability, technology, competition and consumer protection – relative “givens” that must be acknowledged and factored into any state law and policy initiatives.

In determining how Indiana’s state government and Hoosier counties, cities and towns best can take steps to improve and extend broadband throughout the state, we must consider the current regulatory and legislative environment affecting broadband.   In this paper we’ve already identified and largely praised the legislative steps taken so far in Indiana.   Now we examine how federal law and policy currently affects broadband availability, technology, competition and consumer protection – relative “givens” that must be acknowledged and factored into any state law and policy initiatives.

In the 1996 Telecommunication Act[39] the United States Congress enacted, among many other things, a legislative framework under which cable television and traditional telephone companies were empowered to get into each other’s traditional businesses and also encouraged to be Internet Service Providers (“ISPs”). It was deemed that both cable television and telephone companies should be empowered to compete as voice communications, video and Internet providers.

Section 706 of the Act – a section that also has been at the center of the ongoing debate on “net neutrality” (see below) – directs the Federal Communications Commission and state public utility commission – such as the Indiana Utility Regulatory Commission – to take steps that encourage the deployment of “advanced telecommunications capability to all Americans,” using a variety of regulatory and deregulatory tools to promote competition in the local telecommunications markets and to remove barriers to infrastructure investment.

Section 704 of the Act contains provisions regarding the siting of antennas and towers for wireless services. Although that section maintains local authority over such antenna siting, this provision of the federal law prohibits states and local governments from unreasonably discriminating among wireless service providers and from prohibiting the provision of such service.   It also requires state and local governments to act on such siting requests within a reasonable period time. However, and despite these federal law provisions, wireless antenna siting has remained a point of frequent dispute among local governments and wireless providers.   As such, this is an area for additional, curative legislative and regulatory reform in Indiana.

In March 2010, the FCC published its National Broadband Plan[40] – a document which has been used by that federal agency to implement the federal statutory goal of expanded broadband development in America.   Major elements of the plan seek to further the development of broadband by:

• Designing policies to ensure robust competition and, as a result, to maximize consumer welfare, innovation and investment;
• Ensuring efficient allocation and management of local assets, government controls and influences, such as spectrum, poles, and rights-of-way, to encourage network upgrades and competitive entry;
• Supporting deployment of broadband and voice in rural and other “high-cost” geographic areas, and boosting adoption and use of broadband and to ensure that low-income Americans can afford broadband; and
• Reforming laws, policies, standards and incentives to maximize the benefits of broadband in areas such as public education, healthcare and government operations.

Thus, the U.S. Congress and the FCC look to states like Indiana to play a substantive and complementary role in making broadband universally available.   Among the proceedings launched by the FCC itself to implement its National Broadband Plan are those governing the technical transitions from analog to all-Internet Protocol digital telecommunications systems and from wired to wireless infrastructure, as well as ensuring the resiliency and emergency communications operations of broadband services during weather emergencies and manmade and natural disasters.[41]   at

Much recent public attention has been given to the concept and controversies surrounding “net neutrality.”   As articulated in the FCC’s 2010, “Open Internet” decision[42], net neutrality is regulatory concept aimed at eliminating any type of discrimination in transmission and access of content on the Internet.   However, that 2010, FCC decision was the subject of a successful court challenge brought by Verizon.[43]   The appeals court, in ruling on the challenge, said that certain aspects of the FCC’s 2010, order – those calling for no blocking of websites and barring speed and priority discrimination among Internet traffic – amounted to the kind of old style telephone regulation constraints (the so-called “Title II” regulatory approach) the FCC earlier had vowed not to employ.   The court went on to suggest that the FCC recast its net neutrality rules in a fashion that would rely upon the general authority over broadband granted it by Section 706 of the Telecommunications Act.

In May of this year the FCC chose generally to follow the recommendations of the court; but it also concluded that it had the ability to supplement its authority with Title II principles that had governed the Commission’s traditional regulation of telephone companies.   However, the Commission said it chose to “forbear” imposing on broadband Internet the entire range of regulations that fall within its Title II authority from Congress.[44]

Now the FCC’s recast net neutrality rules are tied up in the federal courts.[45] The ISPs and others challenging this latest FCC net neutrality decision argue that the Commission again has exceeded its jurisdiction, that the rules were adopted with less than full notice to the public and that the rules will result in severely diminished investment in broadband infrastructure.   However, it’s worth noting that the recent proposal of Charter Communications to spend billions of dollars to acquire ISP and cable TV provider Time Warner[46] may place at least in some doubt the reduced investment argument.   Also relevant is the fact that AT&T has pledged to comply with – at least for three years after the consummation of its merger with DirecTV – the basic net neutrality rules of “no blocking” and “no paid prioritization” as part of its successful effort to gain FCC and U.S. Department of Justice approval of its effort to acquire the satellite television provider.[47]   And the FCC will be countering the procedural and substantive legal element of these latest court challenges.   The ongoing litigation, which is likely to be taken to the Supreme Court following an appeals court decision, may last up to two more years.

But, regardless of the outcome of this net neutrality court appeal, or of current federal legislative efforts to enact a modified form of federal net neutrality that would place limits on further extension of FCC authority over the Internet, the State of Indiana still has an important role to play in assuring expanded broadband availability and use throughout the state.   Indeed, the course of Indiana’s legislative and regulatory efforts in support of broadband expansion likely will feel little effect from whatever is the outcome of the net neutrality controversy.

The Dozen Needed Elements in an Indiana Statewide Broadband Policy

Within this framework of federal law, and building upon the legislative achievements already made in the state, Indiana can take steps, outlined below, to establish a more meaningful, multifaceted and effective statewide policy to stimulate consumer demand for broadband and to provide a variety of incentives for consumers, businesses and ISPs to enjoy/provide/expand high-speed broadband across the state.   This list, which is not necessarily a fully comprehensive representation of legislative and regulatory steps that ultimately should be taken, is as follows:

1. The State of Indiana should authorize and fund a survey of each Economic Development Region to ascertain the level and characteristics of demand and feasibility for broadband services across public/private stakeholders. The survey also should assess the willingness of existing providers and carriers to participate, independently or collectively, in a consortium to extend broadband services to unserved or under-served areas of the region.
2. The State should make all state-owned buildings and state-owned lands available for wireless broadband and mobile phone facility siting and for deployment of fiber, cable and other broadband-capable transport facilities. Indiana’s 2015, House Enrolled Act 1318 directed that cities and towns make their geographic areas available, in exchange for reasonable compensation, for communications facility siting.   However, no such accommodation was provided for the making available of state-owned lands or state-owned buildings for broadband and other electronic communications purposes.   The Indiana legislature should pass, and the governor should sign, legislation providing such reasonable communications access to state-owned buildings and lands.
3. In light of, and building upon the successful experience of several such existing enterprises in many Hoosier State regions, the Statewide Policy and Plan should encourage electric/telecommunications cooperatives (REMC’s) to deploy broadband in rural and other areas of the State, so as to expand and improve broadband service and create greater broadband competition throughout the State.
4. The State should encourage municipalities that can demonstrate their use of sound financial and technical plans to deploy broadband services – either as Public-Private Partnerships (”PPPs”) or otherwise – so as to expand/improve broadband service and create greater broadband competition throughout the State. In making this recommendation, we acknowledge and caution over the fact that some efforts at “municipal broadband” around the country have not succeeded financially.[48] Additionally, the State should expect that municipalities considering offering broadband, either independently or as a PPP, should consider seriously whether their spending limited financial resources on broadband might jeopardize important funding for education and for matters such roads and other infrastructure improvement.   And to aid municipalities with reasoned approaches to the provision of broadband, the State of Indiana should consider offering municipal debt financing to foster such projects and to encourage development of multi-community fiber networks, again with the possibility of these being PPPs.
5. The State also should consider, where consistent with reasoned state budget priorities, state grants and/or capital lease financing to help deploy broadband.
6. Similarly, the State should consider providing state tax credits, loan guarantees, project debt financing and “private use” tax exemptions for broadband infrastructure projects.
7. Going beyond the provisions in House Enrolled Act 1318, Indiana should consider providing state tax credits to consumers and to businesses contributing to the costs of extending broadband access to their locations.  There are situations throughout the state where potential broadband subscribers (including businesses and residential consumers) are located beyond the perimeter where ISPs might choose to extend broadband service.   This amendment to Indiana law better would enable these citizens and businesses to enjoy and contribute to the broadband economy.
8. The Indiana legislature should also consider providing tax and other incentives to consumers and businesses Investing in on-premises and mobile hardware and software to enable their full access to – and their ability to gain full benefits from – broadband.
9. Similarly, Indiana should consider the provision of tax and other incentives to broadband/Internet-related software and “app” developers within the State. By doing so the State would encourage Hoosiers’ creativity and their potential to add significantly to the State’s broadband economy.
10. As part of its statewide plan for broadband adoption/expansion, the Indiana legislature should adopt clear policies and rules that will foster the optimal mix of fiber and wireless broadband systems/technologies to serve particular geographic areas within the state.   Due to the wide variety of geographic and population density differences around the State, this flexible approach would maximize the potential for universal deployment and subscription to broadband services.
11. The State should use such an “all of the above” approach also for the deployment of a set of infrastructure paths that also could lead to the state leading the country in creating “all-Internet-Protocol” telecommunications connectivity by 2025 or some other near-term date.   Achieving such a goal also would do much to promote Indiana as a location in which businesses, communities and citizens can thrive.
12. Indiana should create, and provide sufficient state funding for, digital literacy education programs to educate Indiana residents and businesses as to the benefits and uses of broadband Internet. These steps would increase consumer/business broadband adoption rates and the demand for additional broadband deployment and competition.

Creating a Broadband Center to Implement Statewide Policy

A recommendation, included in the December 5, 2014, Final Report of the Indiana Rural Broadband Working Group (a group formed by Indiana Lieutenant Governor Sue Ellspermann), was to create a “Rural Broadband Center.”[49]   Such a Center, which we recommend be recast as an entity to address “urban” as well as “rural” broadband, would work with state, county, municipal and economic development officials.

That Center’s responsibilities would involve, among other things, the ascertainment of the levels and characteristics of local/regional broadband demand, the review of economic development broadband plans, the identification of potential partners, investors and funding mechanisms and the development of customized broadband strategic plans for each Economic Development Area in the state.     The Digital Policy Institute at Ball State University, based on its long-established national reputation and work on broadband-related issues, has offered to administer such a Center.

Conclusion

For Indiana, successful deployment of statewide broadband service is within reach. However, the state must take a proactive, leadership stance to provide the necessary incentives to bring public and private resources together to reach this goal. Failing a comprehensive state broadband strategic plan, each region would be left to the costly and time-consuming task of charting its own course independently.   Given the economic structure of the Hoosier state, failing to participate fully in promoting and using multiple funding strategies and incentives likely would delay for decades Indiana’s full participation in the information economy, let alone prevent it from becoming the national leader for broadband as well as the national leader for the transition to an “all-Internet-protocol” telecommunications system.

 

Endnotes

[1] Robert Yadon, Ph.D., is director of the Digital Policy Institute (DPI), professor of Information and Communication Sciences at Ball State University, and an adjunct scholar of the IPR Foundation. Barry Umansky, J.D., is a senior fellow of DPI, professor of Telecommunications at Ball State, and a communications attorney. DPI is an independent digital communications research and policy organization established in 2004.

[2] Horrigan J. & Satterwhite E., TechNet, TechNet’s 2012: State Broadband Index, (2012). Available at: http://www.technet.org/wp-content/uploads/2012/12/TechNet_StateBroadband3a.pdf

[3] Tom Sloan, Why States Should Support Broadband, Broadband Communities (May/June 2015), p. 76.

[4] http://www.dailyyonder.com/broadbands-impact-rural-economy/2013/08/16/6712

[5] 2015 Broadband Progress Report and Notice of Inquiry on Immediate Action to Accelerate Deployment, GN Docket No. 14-126, adopted January 29, 2015, and released February 4, 2015.

[6] See https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-10A1.doc

[7]Broadband Availability in America: With Rural Americans Looking for High-Speed Services, Adequate Broadband Speeds Remain Out of Reach for Many, FCC, January 30, 2015.

[8] Digital Policy Institute, Ball State University, The Economic Impact of Telecom Reform in Indiana: 2006, (February 14, 2006). Available at: www.digitalpolicyinstitute.org

[9] Public Law #2006-27, HEA 1279-2006. Available at: http://www.in.gov/legislative/bills/2006/HB/HB1279.3.html

[10] Digital Policy Institute, Ball State University, An Interim Report on the Economic Impact of Telecommunications Reform in Indiana (February 15, 2008). Available at: www.digitalpolicyinstitute.org

[11] Ibid.

[12] Digital Policy Institute, Ball State University, Telecommunication Deregulation: A Policy Progress Report(March 2010). Available at: www.digitalpolicyinstitute.org

[13] Digital Policy Institute, Ball State University,Telecom Regulatory Reform: Indiana Update 2012 (January 2012). Available at: https://cms.bsu.edu/-/media/WWW/DepartmentalContent/DPI/PDFs/FinalVersionofIndianaTemplate2012.pdf

[14] Indiana HEA 1279- 2006. Available at: http://www.in.gov/legislative/bills/2006/HB/HB1279.3.html

[15] Indiana HEA 1112- 2012. Available at: http://www.in.gov/legislative/bills/2012/HB/HB1112.1.html

[16] Indiana SB 0560- 2013. Available at: http://www.in.gov/legislative/bills/2013/SB/SB0560.2.html

[17] Indiana SB 0492- 2013. Available at: http://www.in.gov/legislative/bills/2013/SB/SB0492.2.html

[18] Indiana SB 396- 2014. Available at: http://iga.in.gov/legislative/2014/bills/senate/396/#

[19] Indiana HB 1101-2015. Available at: https://iga.in.gov/legislative/2015/bills/house/1101#document-016fa0ce

[20] Indiana HB 1318-2015. Available at: https://iga.in.gov/legislative/2015/bills/house/1318#document-64243d78

[21] Indiana Utility Regulatory Commission, Report to the Regulatory Flexibility Committee of the Indiana General Assembly (2010). Available at: http://www.in.gov/iurc/files/Report_to_the_Reg_Flex_Committee_2010.pdf

[22] Indiana Utility Regulatory Commission, 2014 Annual Report (August 2014). Available at: http://www.in.gov/iurc/files/Indiana_Utility_Regulatory_Commission_2014_Annual_Report_FINAL.pdf

[23] Ibid (p.100)

[24] Indiana Rural Broadband Report 2015, available at www.digitalpolicyinstitute.org.

[25] Over the last few years, 14 states have launched grant programs to encourage the buildout of broadband networks to underserved areas.

[26] Indiana HEA 1279 (2006)

[27] I-Light is collaboration among Indiana colleges and universities, state government, and private sector broadband providers. It is a high-speed fiber optic network that connects Indiana member sites to state, national and international research and education communities. Member sites connect to I-Light at speeds from one Gigabit to 10 Gigabits per second.

[28] BroadbandUSA: Connecting America’s Communities Education Networks of America, Inc. project“Broadband Access and Equity for Indiana Community Anchor Institutions,” (July 2009). Available at: http://www2.ntia.doc.gov/files/grantees/IN_EducationNetworksofAmerica_FINAL.pdf

[29] Smithville Communications, Gosport: Smithville Communications launches Indiana’s newest all-fiber Gigabit Community (2014). Available at: https://www.smithville.com/news/gosport-new-fiber-community

[30] DWDM is an optical technology used to enhance bandwidth over existing fiber optics networks.

[31] See https://www.ninestarconnect.com/

[32] IC 36-7-14 and IC 36-7-15.1

[33] IC 6-3.5-7

[34] Metronet press release, (January 30, 2013). Available at: http://www.metronetinc.com/pdf/press-releases/metronet-lafontaine_20130130.pdf

[35] Inside Indiana Business, AT&T Launching ‘Business Fiber’ in Indianapolis (n.d.). Available at: http://www.insideindianabusiness.com/video.asp?id=-1&tags=&v=3868648519001

[36] Inside Indiana Business, Indiana – AT&T Growing Wireless Network (December 3, 2014). Available at: https://www.insideindianabusiness.com/newsitem.asp?ID=68309

[37] Inside Indiana Business, Blackford County Unveils Fiber Optic Project (November 14, 2014). Available at: https://www.insideindianabusiness.com/newsitem.asp?ID=68080

[38]See http://www.imanfiber.com/.

[39] Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (Feb. 8, 1996).

[40] Connecting America: The National Broadband Plan; available at: http://www.broadband.gov/download-plan

[41] See, e.g, Report and Order, Order on Reconsideration and Further Notice of Proposed Rulemaking in GN Docket No. 13-5 and WC Docket No. 05-25, FCC 15-97, released August 7, 2015.

[42] Preserving the Open Internet, GN Docket No. 09-191, WC Docket No. 07-52, Report and Order, 25 FCC Rcd 17905

[43] Verizon v. FCC, 740 F.3d 623 (D.C. Cir.2014).

[44] Report and Order on Remand, Declaratory Ruling, and Order, Protecting and Promoting the Open Internet, 30 FCC Rcd 5601 (2015).

[45] United States Telecom Association, v. FCC and USA, Case No 15-1063 (and consolidated cases), United States Court of Appeals for the District of Columbia Circuit.

[46] Charter Communications To Buy Time Warner Cable In $55.33 Billion Deal, Huffington Post, May 26, 2015.

[47] AT&T is prepared to abide by the new net neutrality rules under the DirecTV deal, Washington Post, June 2, 2015.

[48] See, e.g., Understanding the Debate Over Government-Owned Broadband Networks, Advanced Communications Law & Policy Institute, New York Law School, June 2014.

[49]http://www.in.gov/lg/files/RBWG_REPORT_12.5.14-_FINAL_v.2.pdf

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