The 1st meeting of the Kentucky Broadband Task Force was held on Monday, September 25, 2006, at 1:00 PM, in Room 169 of the Capitol Annex. Representative Charlie Hoffman, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representative Charlie Hoffman, Co-Chair; Senator David E. Boswell; Representative Marie L. Rader; Patsy Judd, Christopher Lilly, Daniel Logsdon, Libby Marshall, Darrell Maynard, Mark Romito, Tony Taylor, Lizabeth Thacker, James Welch, and James Watkins (via teleconference).
Guests: Brian Mefford, President and CEO, ConnectKentucky and Laura Taylor, Director of Research and Public Policy, ConnectKentucky.
LRC Staff: D. Todd Littlefield, C.S.A., Taylor Moore and Susan Spoonamore, Committee Assistant.
Minutes of the October 11, 2005 meeting were approved as amended upon, without objection, upon voice vote, on motion made by Sen. Boswell and seconded by Rep. Rader.
Brian Mefford, President and CEO, and Laura Taylor, Director of Research and Public Policy, ConnectKentucky, presented an overview of ConnectKentucky’s results of the 2006 Summer Research Series for accelerating technology in the Commonwealth of Kentucky.
Mr. Mefford stated that he was pleased to recognize three companies who were an example of illustrating the importance of the work of the Task Force in expanding technology in Kentucky: a company in Harlan called DataFutures that deals primarily with schools in developing software and tools for back office operations. DataFutures now works with schools in 40 states with clients numbering around 3,500. BKD Consulting Creative Services, located in Grant County is now a nationally recognized creative services consulting company. The company won a bid to do the creative design work and marketing work for this past year’s Academy Awards. Another company, Global Data Company, is planning to move to Carter County in order to utilize some abandoned mines to provide subterranean data storage for companies across the globe, as well as data backup along with disaster recovery.
Mr. Mefford stated that Kentucky has been given national recognition for progress in innovative technology expansion. He stated that leadership from the public sector, the Executive Branch and the Legislative Branch has helped to make a significant impact on the progress that ConnectKentucky has been able to achieve.
He stated that ConnectKentucky is about creating an environment in Kentucky that is conducive to businesses, also competitive in terms of education technology, health care technology and others.
He stated that ConnectKentucky is focused on: (1) implementing full broadband deployment by 2007; (2) dramatically improving computer use on the internet; (3) enabling and delivering on-line applications; and (4) creating e-community leadership teams in every county of the state by the end of 2006.
Mr. Mefford also stated that in the past 2 years there has been a 46 percent increase (429 households) in availability of internet service; 45 percent increase in broadband internet adoption, and 17 percent increase in home computer ownership. He stated that the e-community process is in almost all the 120 counties.
Sen. Boswell asked if county officials were being receptive to the e-community leadership teams, and what factors were preventing some areas from meeting their full potential in gaining access to technology.
Mr. Mefford stated that there has been consistent responses from local county officials. He stated that 87 percent of Kentucky households have broadband internet access. The ten counties shown on the map are sparsely populated, but they are being evaluated to see what problems exist in those areas.
Laura Taylor stated that by the end of 2006, 90 percent of all households will have availability to the broadband coverage, and by the end of 2007, 100% of all households will have access. ConnectKentucky has seen a 45 percent increase in broadband availability over the past 2 years. She said that a map (by census block) showing the density of Kentucky Households unserved by a broadband provider is available to providers. The map, which also shows proposed water lines, transportation projects, wireless towers, etc., is an excellent tool for providers.
Sen. Harris asked what was the statewide broadband adoption rate.
Ms. Taylor stated that the broadband adoption rate is 32%.
Sen. Harris asked if wireless was “line of site”.
Mr. Mefford stated some wireless companies were “line of site”. He said that Wi-Max is the leading licensed wireless service that is expanding.
Sen. Harris asked if the 200 kilobytes standard was too low?
Ms. Taylor stated that a major U.S. Senate bill, now sitting in the senate committee, does have some type of provision to request that the FCC look at that definition and to revise it as necessary.
Ms. Taylor gave a detailed synopsis of the large scale survey that ConnectKentucky conducted at the end of 2005. She said that technology usage was measured across the board among residents in every county. She said that approximately 11,000 Kentuckians participated in the survey, giving ConnectKentucky the ability to gage the technology use in every county.
Ms. Taylor stated that 32 percent of adults subscribe to broadband, which would be six out of 10 adults. She stated that over the course of a one year period, there had been a 46 percent increase in adoption of services. She said that compared to the national average of a two percent increase, Kentucky rose 8 percentage points. She explained that 60 percent of Kentuckians subscribe to either broadband or dialup services.
She said that all dial up users were asked why they did not subscribe to broadband. She stated that the biggest reason was that people did not think they needed broadband. The second reason for not subscribing to broadband was the cost factor, and the third reason was the lack of broadband access.
Ms. Taylor stated that adoption rates by congressional districts, economic regions as well as area development districts, show that adoption rates are really urban versus rural areas. She stated that the survey also showed that in rural areas, availability and costs were factors in low adoption rates.
Ms. Taylor stated that key technology statistics by age indicated that age is a significant factor in how the Internet is used. She said that household income is a significant factor: the highest wage earners ($75,000 and above) use the Internet for the widest variety of uses. The disabled, retirees and the unemployed have the lowest percentage of computers at home as well as the lowest percentage of home Internet service. Counties with high levels of broadband adoption also have low unemployment rates. According to the information gathered by gender, she said that for older women, lack of a computer is the primary reason for not accessing the Internet. For men, it is a perceived lack of need. She stated that statistics by marital and family status indicated that internet adoption was more prevalent in homes of married adults with children.
Ms. Taylor stated that ConnectKentucky is dedicated to continuing to improve access to the most advanced information technology and telecommunications services. She stated that ConnectKentucky would like to be designated at the state’s resource for:
· working with providers and relevant government agencies to ensure adequate investments in information technology and telecommunications;
· tracking technology progress and reporting regularly to the LRC; and
· serving as a consulting resource for legislators and the LRC to address constituent concerns and questions regarding information technology and telecommunications issues.
Ms. Taylor then briefly explained the recommendations contained in the report.
Chairman Hoffman asked if there were any comments or discussion on the draft report, specifically the query for CLECs and ISPs on page 5, and a similar query on page 6.
Taylor Moore explained the revisions that had been made to the draft report since the time of its mailing to the members.
Ms. Marshall stated that when the committee received the mid-point draft report, several members wrote letters and asked that they be addenda to the task force report. She asked if that had been done.
Mr. Moore stated that he was not sure.
Sen. Harris asked if the information contained in the letters had been discussed at the task force meeting. He stated that he recalled that only information discussed in the meetings would be included in the report.
Ms. Marshall stated that it was debated as to whether those items had been discussed in meetings or not, but that was at least an invitation to make certain that those points were included.
Mr. Maynard stated that he agreed with ConnectKentucky’s assessment that the spike could be attributed to both bills. He said he would like for the committee to look at Recommendation 3 and add more clarity. He added that if there was going to be any regulation or deregulation, we needed to have detailed data collected by local credible groups that could use the information to massage the data that would pinpoint the goal that the Task Force is going towards. He said it would provide the analysis needed to make sure that disparity does not happen between rural and metropolitan areas.
Sen. Harris asked if Mr. Maynard was recommending that ConnectKentucky provide additional information so that the best information will be available to legislators for future deregulation through legislation.
Mr. Maynard stated that was correct. He said that the Task Force would have to be careful in crafting regulations so everybody would be brought along at the same time.
Sen. Harris stated that one of the goals of the task force was to see if telecommunications providers were re-deploying broadband as the General Assembly thought they would, and take measured responses towards future legislation that would deregulate it further. He stated that he would not want to see legislation coming from a legislator’s perspective that would guarantee that everybody be successful.
Mr. Maynard stated that there should be nothing in legislation that should empower a company to stay in business. Deregulation is about creating a free market, but at the same time it is not the companies that ultimately lose -- rural areas are left with fewer choices and the consumer loses. The ultimate goal is to provide consumers with service.
Sen. Harris stated that he had no objection in asking ConnectKentucky for additional data that would assist the provider and help to meet the needs of the consumer as long as there is no assumption that businesses would be supported through legislation when the free market is going to drive things.
Mr. Mefford stated that ConnectKentucky was committed to collecting the data that is available. He stated that the data that had been collected to this point had been a function of the Cabinet for Economic Development as a partner to that data collection. While ConnectKentucky is supportive and committed, he said that the future data collection and future research efforts that come from Ms. Taylor’s research group are contingent on the economic development type funding.
Mr. Maynard stated that there still needed to be more clarity on where the “spikes” actually occurred. Did it happen across the whole state or was the majority of the spikes in the metropolitan area.
Ms. Taylor stated that the spikes occurred in unserved areas. We only looked at those areas that were not previously covered, but now are.
Mr. Maynard asked if that would be true for the deployment not the adoption.
Ms. Taylor stated that was correct.
Mr. Maynard stated that he was more concerned about the adoption side of it. He said that if the General Assembly enacts legislation in the next session that will start furthering the next level, which is adoption, then the Task Force needs to be careful about its recommendations.
Mr. Mefford said that tracking all the components that lead to adoption is a valuable thing to be doing and we are happy to do that. All our efforts are framed with the five A’s – Availability, Affordability, Applications, Awareness, Adoption. He stated that ConnectKentucky’s approach was now focused on awareness, which drives the perceived value.
Mr. Maynard asked if having competition helped to create a demand for broadband.
Mr. Mefford stated that the data had not been examined closely enough to be able to answer that question.
Mr. Maynard asked if a detailed map on a granular basis (county level) would help to address the real competitiveness of broadband, and help create a plan of action for adoption.
Mr. Mefford stated that it would help.
Mr. Lilly stated that one of the main barriers seemed to be that people do not own a computer. How do you address that. Do people understand that you do not need a $2,500 computer to get on the Internet with basic access.
Mr. Mefford stated that awareness is a challenge. Although No Child Left Off Line is refurbishing older computers at the Kentucky Correctional Industries and Microsoft and other companies have donated software. Lexmark matches up a new printer for each of those computers, and then they are distributed to the homes of underprivileged eighth graders.
Rep. Rader stated that utilizing the public library system would be an option for promoting computer use for students. Perhaps Kentucky could look at a program or a bill where funding could be provided to the libraries in order to make access more available by extending the hours.
Libby Marshall stated that priority should be given to those areas in the state that absolutely must have state of the art fiber optic installations. She stated that there is a real need to look at prioritization of how HB 550 funds are going to be used, and one of those priorities needs to be very sophisticated internationally competitive installations in our cities.
Mr. Mefford said that he agreed, but access was also important to the rural areas as well. Both run parallel in providing service.
Ms. Judd noted that some of the cable service provided was not listed on the maps, which was not the fault of ConnectKentucky, it was due to the cable industry’s own collection methods.
Mr. Watkins (via conference call) stated that he agreed with Mr. Maynard’s observations regarding the availability of market competition in broadband. It would be beneficial for the business community and economic development to understand what is available in the competitive market, and to understand where they are going to enjoy the ability to get competing bids for internationally competitive broadband services.
Mr. Taylor stated that he was not clear on market competition and how it related to HB 627.
Mr. Watkins recommended adding a bullet to Recommendation 6 asking that Connect Kentucky gather data on the availability of competitive broadband.
Mr. Maynard stated that he would like to add to Mr. Watkins’ recommendation that some kind of effort be made towards creating a threshold of what the competitive market really is by granular definition. He recommended that ConnectKentucky engage in an effort to identify, on the granular level, the various forms of broadband that were available.
Sen. Harris asked ConnectKentucky if they could do that.
Mr. Mefford stated that in terms of doing a regression analysis on competition or multiple providers vs. price vs. adoption vs. perceived value, it would be a fairly significant study.
The addition of language to the final report directing that ConnectKentucky provide additional information to providers relating to competition, access and availability based on funding at the county level, was approved, without objection, upon voice vote, on motion made by Sen. Harris and seconded by Ms. Thacker.
Removal of the parenthetical phrases that were listed on page 5 and 6 of the draft report were deleted, without objection, upon voice vote, on motion made by Sen. Harris and seconded by Mr. Maynard.
Inclusion of an acknowledgement, under the heading of Findings and Discussion Issues, recognizing the existing companies and agencies that led to the development of broadband was approved, without objection, upon voice vote, on motion made by Sen. Harris and seconded by Ms. Marshall.
The addition of language to the final report directing that ConnectKentucky evaluate the need in key economic areas for state of the art world class service based on emerging technologies, was approved, without objection upon voice vote, on motion made by Sen. Harris, and seconded by Mr. Maynard.
Mr. Taylor asked for changes to the language contained on page 6, under the heading of Discussion. He asked that “there appears to be little competition at the local level”, be changed to read, “some suggest there appears to be.” He also asked that the word “ILECs” be removed from the sentence that says, “some CLECs, ILECs and ISPs feel that telephone companies should continue to be required to provide access to their facilities by competitors, as indicated in the Kentucky Broadband Task Force’s October, 2005 interim report” .
Language on page 6 of the draft report, under the heading of Discussion, be changed to read as “some suggest there appears to be”, was approved, without objection, upon voice vote, on motion made by Sen. Harris and seconded by Mr. Taylor.
Subject to the Chairmen’s final approval of the additional language reflecting the amendments added to the report, the draft report was approved, without objection, upon roll call vote, on motion made by Sen. Harris and seconded by Ms. Marshall.
Meeting adjourned at approximately 3:45 p.m.