It is likely that private investment in advanced telecommunications will be slower in rural areas as well. Objectives, Scope, and Methodology

The Chairman and Ranking Minority Member of the Senate Committee on Agriculture, Nutrition, and Forestry asked us to provide information on selected states that have started developing their telecommunications infrastructure, specifically (1) how these states encouraged private investment in improving their telecommunications infrastructure, (2) how they provided for increased and affordable access to advanced telecommunications services, and (3) what lessons their experiences could provide for others. By demonstrating that a state could build its own network, Iowa reduced some of the earlier uncertainties about cost and demand. According to participants in the projects in Nebraska and North Carolina, these long-term agreements between the states and the telephone companies benefited the companies in the following ways: Investment risk was reduced by ensuring a stream of revenues to help recover the costs of installing the hardware. States Have Provided Access to Many Local Organizations and Plan to Do More

The three states we visited agreed that making advanced telecommunications services available to public organizations was more practical than providing services to individual homes. While all three states have made progress in providing advanced telecommunications services to communities, they are still in the early stages of deploying their networks and plan to connect many more sites over the next several years. All three states found that some local sites needed assistance in paying for on-site equipment and offered such assistance using a variety of techniques. Two states—Iowa and North Carolina—are making the services more affordable by charging the same price for using the network at every location, even at remote locations that are more expensive to serve. For all three states, maps showing the connected high schools relative to the total number of high schools in each county are presented in appendix I. Their experiences illustrate the importance of building and maintaining consensus among those parties that will be involved in constructing, financing, and using the network—the telecommunications companies, anticipated users, state legislators, and state executive branch officials. Addressing the concerns of these parties can help prevent the construction delays and increased costs that result from disagreements and financial constraints. In Nebraska, the state plans to connect all elementary and high schools to the Internet by 2000.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on three states' initiatives to promote increased access and private investment in advanced telecommunications.

What GAO Found

GAO found that: (1) Iowa, Nebraska, and North Carolina encouraged telephone companies to make private investment in advanced telecommunications infrastructure by offering to become their major customers; (2) in 1987, Iowa financed and built its own network, since the telephone companies were reluctant to make the investment needed to provide these services; (3) by 1990, telephone companies in the other two states began upgrading their systems on their own and were more willing to make investments, since they realized that long-term arrangements provided a steady income and states were better customers than competitors; (4) to provide affordable access to many people, all three states are making advanced telecommunications services available through sites located in public facilities; (5) some states and federal agencies are assisting local organizations by paying some of the equipment and connection costs and reducing the rates for using these services, even at remote locations; (6) all three states plan to make these services available to many more sites over the next several years; (7) the three states have given high priority to connecting high schools to the network, but more than half of the high schools in these states remain unconnected and even more rural high schools are not connected; and (8) building and maintaining consensus among interested parties, addressing the concerns of these parties, and ensuring a stable source of funding will be important to prevent construction delays, promote present and future widespread use by local organizations, and the successful implementation of the advanced telecommunications network.