NATOA Remarks | October 1, 2010 Good afternoon! First of all: Happy Fiscal New Year!

This is the happiest one I have ever experienced, because it means we have successfully completed the award phase of the RUS Broadband Initiatives Program (BIP) funded under the Recovery Act. It is great to see so many friendly faces here. It¶s been awhile since I have spoken with this you, so I am thrilled to be back. From my days at the FCC, to my new role at RUS, NATOA continues to be a great advocate for bringing advanced telecommunications technology to rural communities across the country. And it is an honor to be here with Phil Weiser, a long-time friend of mine and someone who knows this industry inside and out. He literally wrote the book on telecommunications. We are fortunate to have a telecommunications expert like him at the White House. It is a pleasure to serve with Phil under this Administration which puts broadband expansion at the top of its agenda. At RUS, I have seen that commitment first hand, from Secretary Vilsack on down. He has made broadband the indispensible first pillar of his agenda to revitalize rural America. And as you all know, there is intense interest in how we are carrying out the Recovery Broadband program at the highest levels of the White House ± from the President, the Vice President to the very top White House officials. It is a signature program in the Recovery Act for the President. Early on, as it took time to set up the new program, I learned in a visit with VP Biden that President Obama was asking him every week or two about progress on the broadband program. At Rural Development and RUS, we view the most advanced broadband infrastructure as a fundamental pillar of sustainable economic development for every rural American. As of today, we have planted that pillar firmly into the soil of rural America. We have wrapped up our final round of Recovery Act rural broadband awards in a massive effort that matches our successful legacy in rural electrification. Under our second round of funding, in less than half the time of the first round, we have awarded nearly 4 times as many projects. And by leveraging our funding to provide loans as well as grants, we¶ve been able to stretch our $2.5 billion appropriation from Congress to over $3.5 billion dollars. To be exact, I¶m pleased to report that RUS has made 320 awards for $3.529 billion. The bulk of that ± 286 awards for $3.26 billion ± were for last mile infrastructure awards, the focus of our


program and reflecting the expertise RUS has developed over the past 60 years of connecting rural homes, businesses and community facilities to telecommunications networks. But we also had a substantial Middle Mile component, making 12 awards for $172 million. On top of that, we made four satellite awards for $100 million, and 19 technical assistance awards to develop regional broadband plans for over $3 million. All told, we expect these projects will connect well over 6 million people to state of the art broadband in 46 states and territories. And it will serve over 350,000 businesses, along with over 30,000 community anchor institutions. We have targeted these projects to the most rural areas in the country, and low-income areas. We are reaching 125 counties with persistent poverty ± 31% of all persistent poverty counties in the U.S.! And you at NATOA will be especially pleased to know that among our awardees, 13 are public sector entities like municipalities. They received $332 million, or nearly 10% of our awards. In terms of technology, these awards represent the array of options available ± from fiber to cable coax, even broadband over power line -- to wireless, from Wimax to LTE - and a wide variety of players. More than half of them will deploy fiber-based systems. And over a third of these projects have a wireless component. I know that, as leaders in your respective communities across the country, each and every one of you is committed to serving your communities by providing high-speed broadband access. By building out these networks, you are strengthening our nation¶s economy and, ultimately, its long-term growth. I have heard time and again from local leaders that when businesses are considering locating in rural communities, the first question they ask is: is broadband available here? If the answer is no, the businesses move on elsewhere. And for rural residents, who want to start new businesses where they live, they need to have broadband or they will be forced to move to where it is available. These projects will create tens of thousands of jobs in building out the networks. And once they are built, they will provide the platform for continued job creation and economic development for years to come. In terms of municipalities, I was honored recently to visit the Reedsburg Utility Commission in Wisconsin. It is truly a visionary town that has pushed the envelope to provide the best in all utility services, including broadband, to its residents. Our $5.2 million award permitted them to reach beyond the town to the rural areas outside of it. The design extends an existing municipal Fiber-to-the-Premise (FTTP) network operated by City of Reedsburg, acting through Reedsburg Utility Commission, to the surrounding rural area. It will provide affordable advanced

broadband service to residents and businesses that are currently confined to traditional dial-up, unreliable wireless, and costly satellite services. This rural area of southwestern portion of Wisconsin has been well documented as lacking broadband services due to the hilly terrain and numerous valleys which severely limits wireless and satellite service coverage. We are seeing great diversity in the types of entities funded and the technologies to be used in deploying these networks. For example, several of our RUS electric co-ops have entered the broadband fray to offer their members advanced broadband services. A few weeks ago in Moriarty, NM, I announced a $63 award to Kit Carson Electric Cooperative to build out a broadband-enabled smart grid network to serve thousands of households, schools and community facilities in northern New Mexico which is home to many chronically poor communities. Think about the transformative potential for these communities once they are wired with broadband. This new infrastructure can propel these rural towns forward by facilitating greater educational and healthcare opportunities through online education and telehealth initiatives. And entrepreneurs young and old can build businesses on top of this expanded network. I am looking forward to updates on the progress of Kit Carson¶s project and the impact it will have on the residents and the economy of Northern New Mexico, as well as on all of our projects. Under the Recovery Act, we have pushed to fund areas that are the most remote, the most unserved, and the most rural. Our criteria were strengthened even further in the second round to push us in that direction. While some of our awardees are in areas that are more remote than others, nobody understands better than you ± folks in this business ± that existing service does not follow neat lines. Sometimes, existing service in a small part of an area is a jump-off point to get to the unserved parts. That can be controversial. But understand, we at RUS have worked hard to minimize it. We have sent our field staff out to determine what was happening on the ground in each and every area before we funded it. And by and large, we have targeted the program to the most rural areas we could find that had good applications. While these dramatic Recovery Act investments by RUS and NTIA will move us forward in our mission to achieve ubiquitous broadband access, they won¶t take us all the way there. As you all know, we have a long road ahead still. We at RUS are now in the post-Recovery Act era. Leveraging our regular broadband loan program and our DLT and Community Connect programs, we want to build on what we¶ve accomplished, and continue to fill the holes in broadband coverage. And for us at USDA, it is not enough to build these networks ± we want to help build businesses on top of them. Our Rural Development mission area is committed to working with communities to finance new internet-based businesses in the communities we¶ve supported.


And even after networks are built out to every rural corner of this nation, we still face the challenge of adoption ± which, as you know, is especially difficult in rural communities. The challenge is similar to that faced by our electric borrowers in the early days of rural electrification ± they had to convince rural residents to sign up for electricity. They even sold appliances to make it worthwhile. It has become clear that the solution requires active collaboration and partnership among federal government agencies; rural telcos; state, local and tribal governments; nonprofit and for profit entities; and community leaders like yourselves. I have been asked a lot about the FCC¶s National Broadband Plan. I want to assure you that we are working very closely with the White House and the FCC to ensure it accomplishes our shared goal of promoting, not hindering, rural broadband deployment. We at RUS are meeting regularly with our colleagues at the FCC. We are establishing channels to share data ± the FCC really wants our input on what the finances of rural telcos look like ± and we have better data than anyone else. Chairman Genachowski has said he wants a data-driven process, and based on what the staff is telling us, he is absolutely following through. And the FCC has made clear to us that they want to protect our portfolio ± they don¶t want to drive current providers under. So rest assured we are working together to find ways to make this work for everyone. And we at USDA, including Secretary Vilsack, are strongly committed to doing everything we can to ensure this plan works as intended, so that rural telcos can continue to provide the outstanding service to their communities. And before I leave you today, I would like to encourage all of you to learn more about Rural Development¶s more than forty programs that are available to local and tribal governments, nonprofit and for-profit entities, and co-operatives. With programs offering low-interest financing for affordable housing, renewable energy initiatives, rural business creation, and the construction or rehabilitation of community facilities and utility infrastructure, we truly are your one-stop shop to renew and rebuild rural communities. We believe, as I¶m sure all of you do, that in order for our national economy to be strong, we must have a rural economy that is vibrant, innovative and thriving. We want to give young people in rural America an opportunity to stay and contribute to the communities they grew up in. Building out affordable 21st century broadband infrastructure is a great first step in achieving that goal. As I said, we at RUS will continue to use our existing telecommunications and broadband loan programs ± over $1 billion a year in loans and grants± to finance more broadband projects. And we want to see real businesses built on top of the new broadband networks we finance. It will take a concerted effort across USDA to leverage all of our rural development programs to

continue progress at filling gaps in coverage, expanding adoption, and building businesses that allow people to find expanding opportunities to live and work in rural America. At RUS, we see our friends in other government agencies like yours, as well as nonprofits and industry organizations as key partners in making rural America a leader in broadband deployment. We need to work with you as the real work now begins of getting these projects built. We appreciate all of your leadership and hard work, and we want to work with you to build this foundation for future economic development. Thanks again for inviting me here today, and enjoy the rest of your conference!