MTA Recommends Changes to Rural Health Care Pilot Program

Yesterday, the Montana Telecommunications Association (MTA) http://www.telecomassn.org filed comments (below) with the Federal Communications Commission recommending changes to the rules implementing the FCC’s Rural Health Care Pilot Program (RHCPP).

A comparison of two RHCPP projects in Montana illustrates MTA’s concerns. One project is funded at $1.2 million and will reach more heath care providers over a larger, less populated geographic area. It leverages existing infrastructure using a “cloud” architecture. The other project costs more than eleven times the first–$13.6 million. (They asked for $27 million!) It reaches fewer health care providers, and will construct a separate fiber network which duplicates existing broadband infrastructure.

The FCC has recognized that broadband deployment most effectively and efficiently is achieved by leveraging existing telecommunications infrastructure. On the other hand, duplication of existing network facilities is an inefficient use of resources, which discourages investment and economic development.

Based on lessons learned in Montana, MTA recommends new RHCPP rules to: 1) require any future RHCPP applications to justify why building new infrastructure outweighs leveraging existing facilities; 2) include a due diligence/public comment phase prior to filing an application; 3) prohibit the construction of duplicate broadband facilities where sufficient bandwidth exists or can be obtained without new construction; and, 4) prohibit “double dipping” federal funding to support projects in areas already funded by federal support programs.

Please feel free to call or reply if you have any questions or comments.

Best regards,

Geoff Feiss

Montana Telecommunications Association

406.442.4316 (office)

406.594.0424 (mobile)

Serving Montana’s telecommunications industry for 55 years

***

Before the

Federal Communications Commission

IN THE MATTER OF )
Health Care Delivery Elements of the )
National Broadband Plan ) Docket No. GN 09-51
)
Rural Health Care Support Mechanism ) Docket No. WC 02-60

Comments of the Montana Telecommunications Association

Submitted by
Geoffrey A. Feiss, General Manager
Montana Telecommunications Association
208 North Montana Ave., Suite 105
Helena, Montana 59601
406-442-4316
[email protected]

January 11, 2010

Table of Contents

Executive Summary 3

About MTA 4

Introduction 4

RHCPP Rules Contradict the Telecommunications Act 5

RHCPP Rules Waste Resources, Threaten Rural Broadband Investment 8

Contrasting RHCPP Projects in Montana Illustrate Benefits, Pitfalls 10

Recommendations for National Broadband Plan Health Care Elements 12

Conclusion 13

Executive Summary

• The Omnibus National Broadband Initiative recognizes that broadband deployment most effectively and efficiently is achieved by leveraging existing telecommunications infrastructure.
o Maximizing use of existing assets not only saves money in delivering broadband capacity to health care networks, but enhances the scale and scope of network facilities used by and for all consumers.

• The Telecommunications Act prohibits the sale or transfer of network capacity supported by the universal service Rural Healthcare Program.
o However, policies implementing the RHCPP encourage health care providers and pilot projects to build duplicate networks and build “excess capacity” for sale to non-healthcare related parties.

• The construction of broadband networks that duplicate existing network infrastructure is an inefficient use of resources, which discourages investment in public network infrastructure and threatens increased rates and reduced economic opportunity for rural consumers in the broadband ecosystem.

• A comparison of two RHCPP projects in Montana illustrates MTA’s concerns. One project is funded at $1.2 million and will reach more heath care providers over a larger, less populated geographic area, and leverages existing infrastructure using a “cloud” architecture. The other project costs more than eleven times the first–$13.6 million. It reaches fewer health care providers, and comprises a separate fiber network which duplicates existing broadband infrastructure.

• As a result of several lessons learned from implementation of the RHCPP in Montana, MTA recommends amending RHCPP rules to:
o Require a lease vs. build analysis by the applicant prior to project application submission, with the burden of proof on the applicant to justify why building new infrastructure outweighs leveraging existing facilities;
o Include a due diligence/public comment phase prior to application to enable parties to comment on proposed projects;
o Prohibit the construction of duplicate broadband facilities where sufficient bandwidth exists or can be obtained without new construction; and,
o Prohibit the use of universal service funds (e.g., health care) in areas already supported by universal service support (e.g., high cost), RUS or other federal funding programs.

About MTA

MTA represents both member-owned cooperatives and shareholder-owned commercial rural local exchange carriers (“RLECs”) serving business and residential consumers in Montana. MTA members have invested hundreds of millions of dollars in Montana’s telecommunications infrastructure and continue to invest tens of millions each year in new facilities and services aimed primarily at rural Montana consumers. Collectively, Montana’s RLECs have deployed over 9,000 miles of fiber optic infrastructure. They provide a state-of-the-art statewide emergency service E-911 network; and, through a consortium of RLEC members, operate a statewide middle-mile fiber backbone network, which includes nearly 200 videoconference facilities used for telemedicine, distance learning, judicial proceedings and a host of commercial purposes. MTA members provide access to broadband Internet service to over three-quarters, and in many cases nearly 100%, of their customers—while serving some of the least densely populated, hardest-to-reach, high-cost areas of the nation. Montana’s RLECs employ over 1,000 Montanans who substantially invest their time and resources in the communities in which they live and work.

Introduction

MTA agrees that “Broad use of health IT has the potential to improve population health, expand access to affordable care, increase the efficiency of care provision, reduce unnecessary healthcare costs, prevent medical errors, increase administrative efficiencies and decrease paperwork.” However, as a result of lessons learned from RHCPP implementation in Montana, MTA urges the Commission to consider the effects of particular health care projects in the context of overall broadband investment and adoption in rural America.
If done right, promoting health care IT can enhance health care delivery and stimulate broadband network deployment for all broadband consumers. If done wrong—for example, by duplicating existing hard-to-sustain rural broadband facilities—health care IT projects will discourage investment in telecommunications infrastructure, result in higher rates for high-cost business and residential consumers, and threaten rural economic development.

RHCPP Rules Contradict the Intent of the Telecommunications Act

Federal universal service law establishes a Rural Health Care (“RHC”) program, under which
A telecommunications carrier shall, upon receiving a bona fide request, provide telecommunications services which are necessary for the provision of health care services…

RHC program-supported telecommunications services provided to qualified health care institutions under this section
may not be sold, resold, or otherwise transferred by such user in consideration for money or any other thing of value.”

The conference report accompanying the Act affirms that “New subsection (h)(3) clarifies that telecommunications services and network capacity provided to health care providers, schools and libraries may not be resold or transferred for monetary gain.”
In short, the law states that telecommunications carriers shall provide services to health care providers, and such serves may not be sold or transferred for monetary gain. The law does not authorize health care providers to build telecommunications facilities, to become telecommunications network providers or to sell telecommunications services. Yet, projects funded by the RHCPP do precisely that.

In 2006, the Commission initiated the Rural Health Care Pilot Program
To examine how the rural health care (RHC) funding mechanism can be used to enhance public and non-profit health care providers’ access to advanced telecommunications and information services.

The 2006 Order outlined a number of criteria by which the Commission would select a limited number of RHCPP participants.
We expect each applicant to present a strategy for aggregating the specific needs of health care providers, including providers that serve rural areas, within a state or region, and leveraging existing technology to adopt the most efficient and cost effective means of connecting those providers.

Interested parties were requested to submit applications that addressed a number of criteria including, among others,
4) a description of “how for-profit network participants will pay their fair share of network costs;” …
11) an indication of the extent to which a proposed project “can be self-sustaining once established.”

In a subsequent 2007 Order, the Commission selected 69 RHCPP pilot project participants. (The number of projects has been reduced to 62 since the release of the 2007 Order as a result of mergers among participants.)
In discussing qualifications for selected participants in the pilot program, the 2007 Order provided little additional definition of the criteria outlined in the 2006 Order. The only discussion of “Self Sustainability” indicates that
a primary goal of the pilot program is to ensure the long-term success of rural health care networks and to prevent wasteful allocation of limited universal service funds.”

The 2007 Order cited two pilot project examples of self-sustainability. One pilot project identified “three scenarios for network sustainability…including: reliance on the existing RHC support mechanism; reliance on fees from network partners; and reduction (not elimination) of bandwidth should full funding be unavailable.” The other example was similar, adding support from a state universal service program as a sustainable funding source. There is no mention of selling services under the sole paragraph in the 2007 Order which discusses “Self Sustainability.”
“Fair share” funding was illustrated in the 2007 Order by two examples, one of which indicated that “its proposed network does not include for-profit entities,” but if it did, such entities “would be invoiced separately for each service and item and USAC would receive invoice documentation that reflects only eligible rural health care providers.” The other example provided that for-profits are not included in the first two years of the pilot project but “will later be allowed to join and will be required to pay 100 percent of their actual costs.” How that would happen is not discussed in the 2007 Order.
Importantly, the 2007 Order states that the §254(h)(3)
prohibition on resale does not prohibit for-profit entities, paying their fair share of network costs, from participation a selected participant’s network…A selected participant cannot sell its network capacity supported by funding under the Pilot Program, but could share network capacity with an ineligible entity as long as the ineligible entity pays its fair share of network costs attributable to the portion of network capacity used.

In an October 24, 2008 letter to Scott Barash, Acting CEO of the Universal Service Administrative Company (USAC), Dana Shaffer, Chief of the FCC’s Wireline Competition Bureau, responded to questions raised by RHCPP participants regarding “eligible costs, restrictions on resale, and sustainability” provisions in the 2006 and 2007 Orders. The letter reiterated the 2006 and 2007 Orders’ “fair share” policy. And then it went further:
A project that proposes to enter into a sharing arrangement for excess capacity not supported by universal services funds is not disqualified from funding [citing the “fair share” 107, above]…Participants proposing to sell or lease excess capacity must provide a tangible basis on which eligible and ineligible costs are allocated…Any participant that intends to construct excess capacity not funded by universal service funds (e.g., dark fiber) to be used by a for-profit entity or other ineligible participant (an ineligible cost), must: (i) allocate the trench costs between eligible and ineligible cost components…and (iii) identify how the party paying for the ineligible costs component was assessed a fair share amount…Although the Commission did not establish a bright line definition for fair share, participants are reminded that they have the obligation to document how fair share was determined… [Emphasis added.]

In summary, while Commission’s rules advocate prevention of wasteful spending and leveraging existing technologies the implementation of the RHCPP program effectively encourages wasteful spending, discourages leveraging existing telecommunications infrastructure, and expands the RHC program beyond the statutory prohibition against sale or transfer of healthcare telecommunications services for monetary gain.

“Fair Share” and “Excess Capacity” Policies Waste Resources, Threaten Rural Broadband Investment, and contradict Broadband Plan Direction

The “Fair Share” and “Excess Capacity” rules effectively have created a series of unintended consequences that reach beyond the narrow focus of enhancing public and non-profit health care providers’ access to advanced telecommunications and information services. Further, by authorizing projects which intend to duplicate facilities for potential sale to non-eligible entities, the RHCPP program creates a wasteful allocation of limited universal service funds that duplicates both private and public investment; discourages private broadband infrastructure investment; and threatens higher rates and diminished economic opportunity for rural consumers.
The Omnibus Broadband Initiative (“OBI”) has recognized that efficiencies are gained by leveraging existing telecommunications facilities. For example, at the Commission’s Open Meeting on September, 29, 2009, OBI analysis acknowledged that joint trenching can save as much as 78 percent of the total cost of a fiber build. At the Commission’s December 16, 2009 Open Meeting, OBI staff further reiterated the benefits of leveraging existing infrastructure, in its discussion of “Guiding Principles” for the National Broadband Plan. Specifically, the OBI presentation included among such principles:
• Build[ing] on the specific attributes of the American broadband ecosystem;
• private sector investment is essential; new funding is limited;
• better utilization of existing assets is required
• consideration of unintended consequences

MTA agrees that it is essential to consider the RHCPP in the broad context of rural broadband ecosystems. Failure to leverage private sector investment and utilize existing assets risks unintended consequences, such as disinvestment and diminished economic opportunity, as discussed above. By siphoning anchor tenant traffic off existing infrastructure, network providers are left with fixed costs, which are more difficult to recover from a smaller base. Moreover, existing providers have less incentive to commit future investment in their networks, given the entry of grant-subsidized networks and the removal of key customers, such as health care providers, from the network. Finally, existing network providers are forced to recover their costs from fewer remaining customers, forcing those remaining customers to bear a financial larger burden through higher rates. Disinvestment and higher rates are hardly keys to further economic development and broadband deployment in rural communities.
On the other hand, by using existing assets, projects can expand their scale and scope more efficiently and effectively. Existing broadband infrastructure can be enhanced not only for delivery of advanced broadband options for health care projects, but for all consumers. Anchor institutions, such as health care providers, can stimulate network investment to the benefit of the rural broadband ecosystem.
Many rural communities are served by telecommunications providers that receive universal service support from the High Cost Program. The RHCPP as currently implemented threatens to use RHC universal service support to create networks which effectively compete against networks supported by the High Cost Program. In other words, one universal service program is being used to cannibalize another universal service program.
The Rural Utilities Service (“RUS”) administers a federal rural broadband loan program as well as other rural telecom infrastructure loans. Its default rate is less than one percent. Among the primary reasons for such a low default rate is the RUS policy of forbidding loans in areas where RUS has already funded telecom projects. This policy is duplicated in the American Recovery and Reinvestment Act’s broadband stimulus program, whereby projects are ineligible for stimulus funding where RUS has already committed funds. As MTA recommends below, a similar prohibition against duplication of federal resources should be applied to the healthcare delivery elements of the National Broadband Plan.

Contrasting RHCPP Projects in Montana: FAhRM vs. HIEM

In Montana, there are two RHCPP-awarded projects. One project—the Frontier Access to Healthcare in Rural Montana (“FAhRM”)—demonstrates how the pilot program can enhance health care delivery through effective and efficient leverage of existing broadband facilities. The other—the Health Information Exchange of Montana (“HIEM”)—illustrates a number of problems, which result in waste of resources, inefficient use of broadband facilities, and a host of potentially negative consequences for consumers and economic development in rural America.
Funded at $13.6 million from the RHCPP program, the HIEM plans to build a fiber optic telecommunications network despite the fact that its members have access to, and in fact many currently are served by, fiber optic facilities capable of delivering 100 Mbps of bandwidth and more. Alleging that “access to affordable, reliable bandwidth has been a serious constraint,” HIEM proposed “a bold plan to build fiber to each member facility.” In response to how the project would be “self-sustaining,” HIEM notes it has received funding “to implement a new fiber network.” HIEM participants “will be charged the same dollar amount they are being charged at present, for T1, 500 MG and GigE services after those institutions replace these services by utilizing the HIEM network.”
HIEM’s allegations that bandwidth is unavailable to HIEM members are misleading at best. In fact, HIEM partners today have access to fiber, with capability of delivering GigE service. Moreover, the need for GigE, or even 100 Mbps bandwidth is questionable. As the Omnibus Broadband Initiative briefing of September 29, 2009 indicates, download speeds of 20 Mbps are sufficient for high definition streamed video and remote medical procedures. Indeed, according to HIEM’s own “fiber sustainability plan,” its member/partners plan to “subscribe” to the equivalent of one or two T1’s. The HIEM participant from Ronan, MT, plans to purchase 1 T1 and GigE service in year 3, and Whitefish plans 500 Mgbps in year 4 of the plan. (The rest are listed as interested in T1s only.) Both Ronan and Whitefish have access to at least one source of fiber capable of delivering such bandwidth today. In Cut Bank, another location of a HIEM partner, shared use of existing conduit was declined by the HIEM network. The intentional circumvention of existing network facilities has been repeated throughout the HIEM project.
In addition to the unnecessary, wasteful, and inefficient expenditure of limited universal service funds on the HIEM project, MTA questions whether building, operating, and maintaining a telecommunications network is a core competency of HIEM’s health care provider partners. Another advantage of using existing network facilities and providers is that operation, maintenance and upgrading facilities is included as part of the health IT relationship. By building a new, separate, duplicate fiber network, the HIEM partners need to include such long term operations and maintenance into their plans.
In contrast to the HIEM project, the FAhRM project will spend less than 10 percent of the HIEM project, while interconnecting more health care providers in a less densely populated, larger geographic area, encompassing the eastern two thirds of the state of Montana. The FAhRM RHCPP project recently awarded a contract to a consortium of existing telecom network providers to establish a healthcare network “cloud,” using interconnected circuits that enable FAhRM members to exchange large volumes of real time data. Instead of removing anchor health care institutions from high cost, hard-to-sustain rural telecom infrastructure in Montana, the FAhRM project will utilize existing facilities and enhance network infrastructure, providing efficiencies of scope and scale for both FAhRM members and rural telecom consumers in general.

Recommendations

As a result of several lessons learned from implementation of the RHCPP in Montana, MTA recommends that any health care elements in the National Broadband Plan should include the following provisions:

• Require a lease vs. build analysis by the applicant prior to project application submission, with the burden of proof on the applicant to justify why building new infrastructure outweighs leveraging existing facilities;

• Include a due diligence/public comment phase prior to application to enable parties to comment on proposed projects;

• Prohibit the construction of duplicate broadband facilities where sufficient bandwidth exists or can be obtained without new network construction; and,

• Prohibit the use of universal service funds (e.g., health care) in areas already supported by universal service support (e.g., high cost), RUS or other federal funding programs.

Conclusion

The Rural Health Care Pilot Program has provided valuable lessons which the Commission should recognize as it considers health care elements of a National Broadband Plan. While health care broadband IT is an essential element of a National Broadband Plan, it must be considered within the context of the broadband telecommunications ecosystem. MTA recommends utilizing private sector investment to the maximum possible extent and building new facilities only where private facilities cannot provide a sufficient solution.

Respectfully submitted,

Geoffrey A. Feiss, General Manager
Montana Telecommunications Association
208 North Montana Ave., Suite 105
Helena, Montana 59601
406-442-4316
[email protected]

January 11, 2010