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Remarks by Acting Chief of Staff Wilhelm at the 2014 Broadband Communities Summit

April 14, 2014

Remarks by Anthony Wilhelm
Acting Chief of Staff
National Telecommunications and Information Administration

2014 Broadband Communities Summit
Broadband, Economic Development and Global Competitiveness
Austin, Texas

April 10, 2014

--As prepared for delivery--

I. Be “Open for Business” in the Global Economy

I am thrilled to be here with you all this morning. This is such an important conference and I commend the organizers, the Board and the sponsors who make this event possible every year.  This Summit brings together such innovative and committed broadband practitioners who are finding smart ways to bring high-speed Internet to communities that so desperately need it.  As someone who has spent my career working to close the digital divide, I feel a deep fellowship with all of you in this room in your steadfast commitment to this cause—our cause.

My message to all of you this morning is that we at NTIA and the Commerce Department want to continue to be your partner in bringing better, faster and cheaper broadband to more communities across America. We have made significant progress in recent years as detailed in a 2013 White House report, Four Years of Broadband Growththanks in no small measure to the work of all of you in this room. But we would not all be assembled here today if there weren’t a significant amount of work yet to be done.

I am very fortunate to have led a talented team in the implementation of two of the most important long-term infrastructure initiatives funded by the American Recovery and Reinvestment Act: the Broadband Technology Opportunities Program, or BTOP and the State Broadband Initiative (SBI). In my 20-year professional career, I have never been more proud than I am of the team effort at Commerce to award and oversee more than $4 billion in broadband grants and watch our recipients surpass all of the performance metrics and goals we set for them. As of the end of 2013, our grant recipients had built or upgraded more than 112,000 fiber miles, enough to go around the earth four-and-a-half times or get you half way to the moon. 

These open-access middle mile investments, in turn, are generating enormous opportunity for public and private investment in the last mile, generating more than 840 last-mile and wholesale agreements with partners that are driving the high-speed Internet service deeper into communities. Let me give just one example: Because the BTOP investment in MassBroadBand 123 has brought fiber into Franklin County, the tiny Western Massachusetts town of Leverett has seized the opportunity to leverage this investment and build its own last-mile community network in this sparsely populated community.  

Today, I am pleased to address the topic of broadband, economic development and global competitiveness. This is an incredibly important issue for the Commerce Department and it is something we have been working on tirelessly since the passage of the Recovery Act in early 2009.  Over the past six months, we have attacked the challenge with renewed vigor under the leadership of our new Commerce Secretary, Penny Pritzker, who has a laser-like focus on promoting the digital economy. In November, Secretary Pritzker launched our “Open for Business” agenda. That was followed just last month with the release of a strategic plan that, among other things, promotes pro-growth, pro-innovation policies that strengthen the digital economy. At Commerce, we understand that high-speed Internet access is a necessary engine for economic development and global competitiveness. The Internet accounts for 21 percent of GDP growth in advanced economies and facilitates $8 trillion each year in e-commerce. Broadband expansion equals economic development. 

II. A “Before and After” Broadband Success Story

Investing in broadband is investing in your community’s economic future. Let me just give you one example.  Five years ago, local officials in the foothills of the Appalachian Mountains in North Georgia were worried about what the future might bring in light of the economic crisis facing the country at the time, as well as the broader, long-term decline of the industrial economy. So when the BTOP program was announced in 2009, local leaders like Bruce Abraham brought together the local college, economic development agencies and electric cooperatives to apply for funds to build the North Georgia Network (NGN). And in December 2009, Bruce was the first grant recipient I personally called to tell him that they had received a grant to build the fiber-optic network. Later that month, Vice President Biden paid a visit to Dawsonville, Georgia, to announce that BTOP award along with a handful of others.

Dawsonville is a tiny rural town nestled in the Appalachian foothills. It is only 60 miles north of bustling Atlanta, but it is a world apart. Dawsonville is the kind of place that was in danger of being left behind in today’s knowledge-based economy. Local jobs were drying up as traditional industries such as textile mills, auto-parts factories and construction trades contracted or disappeared, and civic leaders in the region were worried about how the region would remain competitive.

Vice President Biden visited a company called Impulse Manufacturing, a metal fabrication shop that produces customized metal machine components for Fortune 500 companies. High-speed Internet access is essential for Impulse to be successful because it must be able to exchange massive data files with customers located across the globe. Before it got a fiber-optic connection from NGN, Impulse was forced to make do with slow, spotty DSL service that sometimes could not even hold a connection. Ron Baysden, Impulse’s President at the time, told us that the lack of reliable high-speed Internet became an impediment to doing business. His employees were spending too much time just dealing with network problems. Customers even resorted to delivering data files on thumb drives. At the time the Vice President visited, Impulse was desperate for better Internet service.

Last week, in anticipation of my visit down here to Austin, I checked in with Bruce and the NGN team to find out how things are going four-and-a-half years later. Bruce told me he still has the piece of paper where he jotted down my name and telephone number four and half years ago.  And he proceeded to tell me about how the twelve counties comprising the new network are being transformed.  Now that the 1,100-mile network is built and delivering high-speed Internet connections to more than 300 businesses, 42 schools, five college campuses, six libraries and dozens of other community anchor institutions, the region is more economically vibrant and more globally competitive.  Let me make three observations based on my conversation with Bruce. 

First, high-speed broadband is making local business, including manufacturers, more competitive. Impulse Manufacturing, for example, is thrilled with its broadband service. Now that it is connected to the NGN network, Baysden says: “[We just] press a button and it’s here.” Impulse Manufacturing landed a major contract to supply parts for a 1.4-million-square-foot manufacturing facility that Caterpillar is building in Athens, Georgia.  And Baysden says the new fiber-optic connection is one key reason Impulse can handle the contract.  The company is adding 150 employees to its employee base of 220 over the next few years. Impulse has even acquired smaller companies of late and is “tunneling” with them to share IT systems using the high-speed connections.

Second, the NGN network is fostering entrepreneurship and innovation. A local WISP, Appalachian Broadband Technologies, is doubling in size by infilling where the North Georgia Network couldn’t reach.  A “Gig Village” is also coming online in Dawsonville, delivering a Gig service to each of 20 tenants in a local business park - attracting companies and encouraging innovation.  

NGN has also been entrepreneurial in attracting other public dollars, securing state money to extend its network to neighboring communities and bringing high-speed fiber-optic service to the Rabun Business Park. This business park is an innovative, adaptive reuse of a former Fruit of the Loom textile manufacturing plant. It is attracting data centers and call centers, and bringing high-paying jobs.

Third, NGN is transforming education and building workforce skills. In White County, Internet speeds delivered to the school district went from 45 megabits per second shared across seven schools to a gigabit – allowing teachers to integrate online video and online testing into the curriculum. At the local middle school, every teacher now walks around class with a wireless iPad connected to a desktop computer and to a projector screen through an Apple TV box.  The NGN network also supports a new 10-gigabit education network that connects 24 school districts and 200 schools. This enables dual enrollment with the area’s community college so that high school seniors can navigate college-level courses over the network to prepare for college and work. 

NGN is a microcosm of the transformation happening across the country in communities that have seized an opportunity to deploy high-capacity broadband and integrate it into economic development and education strategies. Growth and innovation happen when communities link technology investments with human-capital development as key pillars of regional economic growth. So with all of the strategic planning and foresight of the leaders in North Georgia, Bruce made me smile when he said they are doing things with the network today that he could not have even contemplated or imagined four and a half years ago.

III. Investing in Broadband Equals Economic Development

For every North Georgia that has successfully deployed broadband, thousands of communities remain at risk of being left behind in the digital economy. Let’s zero in a little closer on the challenge. While trend lines are moving in the right direction, 43 percent of the population in 2013 still had access to only two or fewer wired broadband providers, according to the National Broadband Map.  And the gap between rural and urban is not only in choice of providers. There is also a widening gap in the broadband speed tiers available in these communities. While two out of three people in suburban communities and central cities have access to 50 Mbps service, the figure is only one out of three people living in small towns and one out of seven for folks in very rural areas. What’s more, NTIA’s Digital Nation report shows a 14 percentage point difference in household adoption rates between urban and rural residents.  Low-income rural African American households have the lowest adoption rate, with roughly 1 out of 4 subscribing to broadband. 

There is too much at stake to allow these gaps to remain.  If we zoom out from the foothills of the Appalachian Mountains to the national and global level for a minute, we get a good perspective on why broadband is so critical for communities to participate in the digital economy. 

First, getting better, faster, cheaper and more ubiquitous broadband is good for employment.  More than a half-a-million jobs have been created by “apps” since the iPhone debuted in 2007. Eighty-three percent of information-sector jobs in 2010 were located in areas where broadband with download speeds of 50 Mbps or greater was available. In short, communities need high-speed Internet to retain and attract jobs. 

Consider Utah’s UTOPIA network, the result of a partnership among 16 municipalities in the Great Salt Lake region. The network has enabled these communities to attract a number of well-paying businesses, including the Danish firm FLSmidth, which supplies equipment and services to the minerals and cement industries, with an average salary of $90,000.  Due to the influx of new businesses, Midvale City reports an upswing in average household income, as employees are choosing to live in new housing in the Bingham Junction area.

Second, broadband is good for businesses. Earlier this year, the Commerce Department released data showing that 60 percent of the services the U.S. exported in 2011 (more than $357 billion dollars) were “digitally deliverable.” This number is growing, as is the percent of imported services that are digitally deliverable. This underscores two points. First, if your community does not have high-speed access - and you are not part of the digital economy - you are increasingly less likely to be a part of the overall economy.  And, second, if your community is producing these services, then it is likely that increased competition in a global digital environment will put pressure on business to continue to out-innovate and out-compete looming rivals. 

Third, broadband is good for economic development in general.  Broadband availability, adoption and speed are all correlated with economic development.  A 10-percentage-point increase in broadband subscribership translates into a growth dividend that ranges from a .8- to 1.2-percentage-point increase in GDP.  Doubling your broadband speed will contribute to .3 percentage point growth over base year.

When you contemplate these statistics and look at the “before and after” story in North Georgia, you can see that we can’t wait to make smart broadband investments in our communities and key institutions. Communities can’t wait as the global economy goes digital. Other countries are not waiting to make significant investments in broadband infrastructure and nor should we. The stakes are too high. It’s a question of will; it’s a question of priorities; it’s a question of values. 

IV. Keeping the Momentum Going in Promoting Broadband Availability and Adoption

Given the depth and breadth of the challenge, we need to examine every opportunity to enhance community broadband development. We can leave no stone unturned. We need to be creative. At NTIA, we want to leverage the significant broadband investments we have made to date. We want to leverage our own expertise.  We want to utilize the considerable amount of data generated through the State Broadband Initiative as well as the ongoing coordination and planning underway in every state. And we want to tap the expertise across the Commerce Department and the Executive branch to tackle this challenge. Looking ahead, I trust we can engage with you to keep moving the needle on broadband.

As NTIA successfully winds down the BTOP program, we have been evaluating our strengths and considering what we can offer stakeholders like you. We are examining strategies to build on the $4 billion in BTOP investments across the country and help communities drive further economic development through the use of broadband. 

Our BTOP and SBI team members are using their combined 500+ years of experience in broadband deployment and adoption to evaluate BTOP’s successes and challenges, and are working to document best practices and lessons learned. NTIA is building on its popular Broadband Adoption Toolkit, aimed at sharing best practices developed from its broadband adoption and digital literacy projects. The toolkit leverages the experience of about 100 BTOP communities, providing practical ideas and useful examples for overcoming barriers to adoption and getting more Americans online.

NTIA also maintains an online library of the more than two dozen “how to” webinars it offers grantees. We are exploring what additional technical assistance might be helpful for communities that want expand broadband in their regions and improve their broadband preparedness. What resources might local leaders find useful? And how can we assist communities to be “Open for Business” so they are more attractive to potential private investment? I welcome your thoughts on these ideas.

So let me close by saying that we want to continue to partner with you and understand how our broadband assets and expertise can best be deployed to meet community needs. We are hard at work at the Commerce Department implementing the Secretary’s “Open for Business” agenda to promote the digital economy, the great engine of innovation and growth of the 21st century.  And we look forward to hearing from you.