The Broadband Landscape in the State of Texas:

Transcription

1 The Broadband Landscape in the State of Texas: Assessment at a State, Regional & Local Level, and Recommendations for Broadband Expansion A Working Report by Connected Texas March 2011

2 Table of Contents Executive Summary... 3 Overview of the Broadband Market in Texas... 3 Policy Considerations... 6 Strategies to Address the Broadband Availability Gap... 6 Strategies to Address the Broadband Adoption Gap... 7 Introduction... 8 Texas Broadband Inventory and Availability Gap Broadband Availability in Texas A State Bird s-eye View Fixed Broadband Inventory Broadband Availability by Technology Platform The Rural-Urban Broadband Availability Gap Across Texas Broadband Availability by Region Across the State of Texas TARC Region Broadband Availability by Platform Broadband Availability by County County-Level Broadband Availability by Platform Facilities-Based Broadband Competition in the Texas Broadband Market Universal Service Funding Programs Across Texas Federal USF Disbursements in Texas Texas USF Program FCC and Connected Texas Availability Estimates A Comparative Analysis The Broadband Adoption Gap in the State of Texas Broadband Adopters and Non-Adopters Barriers to Adoption Broadband Applicatiaons and Uses Connectivity Across Community Anchor Institutions in Texas Broadband Stimulus Investments in Texas through the American Recovery and Reinvestment Act Policy Considerations Appendix A: List of Participating Providers in Connected Texas Broadband Inventory Appendix B: Connected Texas Connected Texas

3 Executive Summary As part of the Texas State Broadband Data and Development grant program (SBDD), Connected Texas conducted an assessment of the broadband landscape in the state of Texas. 1 This report, which will be updated as the SBDD project progresses, advances the understanding of broadband availability and use, as well as the planning projects to expand broadband use. Importantly, it demonstrates how local officials can utilize Connected Texas resources to increase broadband availability in the future. The SBDD was created by the Broadband Data Improvement Act (BDIA), unanimously passed by Congress in 2008 and funded by the American Recovery and Reinvestment Act (ARRA) in As part of the SBDD grant program, in May 2010, Connected Texas produced a map of the inventory of broadband availability to identify served and unserved areas across the state. This report analyzes the broadband inventory data in order to address various policy concerns. Connected Texas conducted survey research in the spring of 2010 to understand broadband demand trends across the state. The purpose of this research is to better understand the drivers and barriers to technology and broadband adoption and estimate the broadband adoption gap across the state of Texas. Appendix B of this report presents extensive results of this research. The demand-side survey data complements the mapping inventory information describing the state of broadband supply in Texas. This report analyzes this complementary demand- and supply-side research and contrasts the data with national benchmarks released by the Federal Communications Commission (FCC) as part of the National Broadband Plan (NBP). 3 Following the spirit of the NBP and based on the broadband availability and adoption data collected by Connected Texas, the report proposes a series of policy recommendations aimed to spur discussion and feedback among key stakeholders across Texas. Overview of the Broadband Market in Texas Texas broadband marketplace is defined by its sheer size. Large in population and geographic size, Texas is also notable for the diversity of its landmass which has a definite impact on broadband deployment to date. Much of Texas population resides in its several major metropolitan areas, but there remains a sizable number of households in less densely populated areas of the state. Therefore, this report, in order to assist readers in digesting data collected by Connected Texas, presents these data on a statewide, regional, and county-level basis. In May 2010, fixed broadband at download speeds of 768 Kbps or above was available to approximately 7.14 million households, or 96.63% of all Texan households. 4 This implies that approximately a quarter million Texan households, or 3.37%, remain unserved by terrestrial, fixed broadband. 5,6 It is further estimated that 7.05 million, or 95.30% of, households across Texas have broadband available at download speeds of 3 Mbps or above a service level now often considered necessary for effectively operating many Internet applications. This implies that approximately 100,000, or 1.3% of, households across 1 State Broadband and Development Grant Program Notice of Funding Availability, NTIA, US Department of Commerce, July 9, Broadband Data Improvement Act, P.L Connecting America: The National Broadband Plan, Federal Communications Commission, April Broadband is defined according to current NTIA and FCC definition, or 768 Kbps download and 200 Kbps upload speeds. 5 Unserved area means a proposed funded service area, composed of one or more contiguous Census Blocks, where at least 90 percent of households in the proposed funded service area lack access to facilities-based, terrestrial broadband service, either fixed or mobile, at the minimum broadband transmission speed (set forth in the definition of broadband above). A household has access to broadband service if the household can readily subscribe to that service upon request. SBDD NOFA. 6 While the NTIA definition of unserved and underserved areas encompasses all broadband platforms, including mobile wireless networks, Table 3 focuses only on fixed, terrestrial broadband infrastructure. Table 8 includes data across all terrestrial platforms. The Broadband Landscape in the State of Texas 3

4 Texas have fixed broadband service available at download speeds below 3 Mbps, or speeds that the NTIA classifies as underserved. 7 Furthermore, the percentage of Texas households with fixed broadband access available of at least 6 Mbps download speeds is estimated at 93.19% -- an important data point considering that the FCC s National Broadband Plan considers broadband at actual speeds of 4 Mbps downstream/1 Mbps upstream to be a threshold level of service for most broadband activity. Table 1 Estimate of Broadband Service Availability in the State of Texas By Speed Tier Among Fixed Platforms SBDD Download Speed Tiers Unserved Households Served Households Percent Served Households By Speed Tier At Least 768 Kbps 249,110 7,144, % At Least 1.5 Mbps 269,158 7,124, % At Least 3 Mbps 347,219 7,046, % At Least 6 Mbps 503,292 6,890, % At Least 10 Mbps 991,020 6,402, % At Least 25 Mbps 4,191,760 3,201, % At Least 50 Mbps 4,314,390 3,078, % At least 100 Mbps 7,939, % Source: Connected Texas, May The data necessary to compile these broadband inventory estimates were collected on a voluntary basis from broadband providers serving Texas. Appendix A of this report details which providers have participated so far in the creation of Texas broadband inventory map. Needless to say, statewide estimates do not necessarily reflect the reality faced by each Texas community. Connected Texas regional and county-level availability estimates reveal variances in measured broadband inventory, highlighting the importance of granular data to identify gaps in infrastructure and adoption. County-level as well as more granular, street-level broadband inventory data is available through Connected Texas interactive, online broadband inventory map at At a county level, significant variance in broadband availability across rural and non-rural counties is measured at different speed tiers or from platform to platform. For example, fixed wireless availability varies from 6.22% in 7 Underserved area means a proposed funded service area, composed of one or more contiguous Census Blocks meeting certain criteria that measure the availability of broadband service and the level of advertised broadband speeds. [ ] Specifically, a proposed funded service area may qualify as underserved for last mile projects if at least one of the following factors is met, though the presumption will be that more than one factor is present: 1. No more than 50 percent of the households in the proposed funded service area have access to facilities-based, terrestrial broadband service at greater than the minimum broadband transmission speed (set forth in the definition of broadband above); 2. No fixed or mobile broadband service provider advertises broadband transmission speeds of at least three megabits per second ( mbps ) downstream in the proposed funded service area; or 3. The rate of broadband subscribership for the proposed funded service area is 40 percent of households or less. SBDD NOFA. 4 Connected Texas

5 Anderson County, 0.0% in Dallam County, and 99.82% in Wichita County. What is important to understand when considering broadband availability in Texas is that geography, household density, and other local factors affect ongoing investment in broadband networks and the disparity of the Texas broadband market across regions or counties. Connected Texas survey research shows that 62% of Texans have a broadband connection in the home (see Figure 1). By comparison, national surveys conducted by the FCC show that 67% of American households subscribe to home broadband service. This implies an adoption gap in Texas of 38% of households, larger than the adoption gap measured by the FCC. 8 In other words, slightly more than one-third of Texas households have basic broadband available but, for various reasons, are choosing not to subscribe to the service in their home. Of the estimated 38% of Texans without a home broadband connection, 30% report a lack of interest in broadband, 27% report a lack of computer as the primary barrier to broadband, 21% say broadband is too expensive, and 12% report lack of broadband availability to their home. Figure 1: Texas Technology Adoption Summary Use dial-up from home 9% Use the Internet someplace other than home 10% Use broadband from home 62% Do not use the Internet 13% Don t know if home Internet service is dial-up or broadband 6% Connected Texas survey data also show that 19% of Texans do not own a home computer. This translates into over 3.4 million adults in Texas without a home computer, with 35% of those same adults stating that cost was the major limiting factor. FCC national data indicates that non-adopters are generally senior citizens, members of ethnic minorities, rural dwellers, people with disabilities, people of low income, and/or people with less education, and these data are largely in line with estimated adoption rates by these same demographic groups in Texas, with broadband adoption rates for seniors, low-income households, low-income households with children, minorities, those with disabilities, and rural households all falling below the statewide broadband adoption average of 62%. 9 This report also details the current impact of key components of the federal Universal Service Fund (USF) program and the Texas Universal Service Fund (TUSF) program. The FCC USF reforms currently underway at the FCC and 8 Broadband Adoption and Use in America: OBI Working Paper Series No. 1, J. Horrigan, Federal Communications Commission, February Broadband Adoption and Use in America: OBI Working Paper Series No. 1, J. Horrigan, Federal Communications Commission, February The Broadband Landscape in the State of Texas 5

6 in the U.S. Congress are likely to have important implications for Texas, and further examination of the impact of comprehensive USF and TUSF disbursements across Texas communities is recommended in order to assess the historical and ongoing impact of the federal and state programs upon the broadband market in Texas and evaluate the implications of proposed reforms. The extent of broadband stimulus funding from the American Recovery and Reinvestment Act that has been obligated to Texas is detailed in Section Five. Over $300 million was announced for projects in Texas, with an additional $145 million provided to projects serving multiple U.S. states of which Texas is one. Connected Texas broadband availability estimates are compared to county-level availability estimates derived in the FCC study The Broadband Availability Gap, part of the NBP. This study informs the national debate over Universal Service Fund reform currently led by the FCC. Connected Texas estimates that 95.30% of Texas households have broadband available at download speeds of 3 Mbps or more. The FCC estimates that nationwide, approximately 95% of households have broadband available at download speeds of 4 Mbps or more. A county-level comparison of the two studies reveals and explains disparities in broadband availability estimates, particularly in counties with lower population density. Disparities evident at the local level between the Connected Texas broadband inventory and the FCC Availability Gap simulation for Texas likely result from regional or locally specific factors not evident in the aggregated estimates of the FCC. It is important to continue gathering and validating broadband inventory and adoption data in Texas particularly in rural areas in order to accurately measure the broadband gaps across the state and inform the ongoing Universal Service Fund reform debate currently underway at the FCC. Policy Considerations The FCC s NBP recommends a series of strategies to ensure that broadband is more affordable and accessible to all Americans. The NBP recommends a holistic approach to address the availability and adoption gaps by tackling key barriers to adoption including relevance, affordability, digital literacy, and availability. The holistic approach includes programs aimed to encourage adoption in the home, as well as the strengthening of public computing and Internet access capacity at community anchor institutions (schools, libraries, hospitals, etc.). This approach is consistent with the programs that Congress unanimously mandated in the BDIA. The NBP and BDIA call for a series of principles and programs to be implemented at the federal, state, and local levels for achieving pragmatic solutions to the broadband availability and adoption gaps. Key among these are the following recommendations and activities that Connected Texas believes to be particularly relevant to Texas and its communities. Strategies to Address the Broadband Availability Gap Conduct further analysis of the impact of the Texas Universal Service Fund, and of federal Universal Service Fund & Intercarrier Compensation Rules Reform upon communities across Texas. As stated above, data suggests that the USF program has had significant impact across the state. Further research and analysis of these programs, FCC data and proposals is recommended to better understand the impact of proposed reforms. Encourage coordination at the state and local level aimed to achieve economies of scale and encourage efficiency of public investments, including comprehensive planning for broadband infrastructure projects; joint deployment of broadband conduit alongside state finance or enabled infrastructure projects; establishment of Gigabit Communities or Broadband Corridors in regions in the state; assessing the possibility of developing a set of state master contracts to expedite the placement of wireless towers on state government property and buildings. Facilitate further expansion of mobile 3G and 4G networks by evaluating whether there are opportunities 6 Connected Texas

7 for streamlining local and state rules and regulations affecting the cost and build-out speed of towers supporting these networks; encourage further development of statewide smart grids that leverage the state s broadband infrastructure, making Texas more competitive. Evaluating whether there are opportunities for promoting lower costs of access to key network inputs such as utility-owned poles, ducts, conduits, and rights-of-way. Leverage the opportunities potentially available under the extended SBDD grant program to promote public-private partnerships to address existing gaps in the network at the local level. Continue efforts to measure and map broadband inventory data. The May 2010 Connected Texas estimate of broadband inventory and mapping is a first of its kind tool that enables a clearer picture of the challenges and opportunities for broadband expansion in Texas. This report summarizes the results of this research at the county level, and concludes that when it comes to broadband, one-size-fits-all does not apply. It is not enough to evaluate statewide trends and broadband inventory. Granular data at the county level and beyond is necessary to accurately measure the challenges on the ground and develop sound, pragmatic policy to address them. Hence, continued efforts to collect, validate, and benchmark broadband inventory data across the state under the SBDD program is recommended, especially if it will be used by the public, private, and non-profit sectors to expand broadband availability. Strategies to Address the Broadband Adoption Gap Promote public-private partnerships at the state and local levels to build awareness campaigns about the benefits of broadband technology among at-risk populations. Awareness campaigns should target atrisk populations and address the concrete and pragmatic benefits that broadband technology can afford every community, neighborhood, school, library, community center, and household. Leverage the potential opportunity under the extended SBDD grant program to conduct statewide broadband awareness campaigns and local, grassroots broadband adoption stimulation strategies. Promote and facilitate local community engagement aimed to address local barriers to adoption and develop pragmatic solutions tailored to each community. Expand, improve, or create pragmatic digital literacy programs at the state and local level and leverage digital literacy resources available via the NBP proposed National Digital Literacy Program. Encourage public-private collaboration to educate consumers and families about the reality of online risks and promote online safety practices among children and citizens. Work with not-for-profits promoting online safety practices and encourage online safety practices and principles across various state departments and among educators in the state of Texas. Leverage the extended SBDD grant program s statewide broadband awareness campaign strategies. Leverage the proposed federal National Broadband Clearinghouse portal aimed to promote best practices and information sharing, as well as the federal Online Digital Literacy Portal program. Promote expansion of publicly available computing and online resources leveraging federal, state, local, and private funds. Federal resources available through programs such as the USF Schools and Libraries (E-Rate) and Rural Health Care support programs and public funding available through the federal Institute of Museum and Library Services (IMLS). Monitor and assess how the proposed reform of the Low Income Support programs under the Universal Service Fund will affect Texans. Coordinate with Texas tribal nations on broadband issues. The NBP recognizes the importance of working with tribal nations to develop programs tailored to address the particular technology adoption challenges faced by these communities. The Broadband Landscape in the State of Texas 7

8 1 Introduction The original SBDD grant program included two key components: the Broadband Mapping and Planning Programs. 10 In May 2010, Connected Texas produced an inaugural map of the inventory of broadband availability in Texas. Connected Texas collected comprehensive data from broadband providers across the state to create an inventory of the broadband infrastructure in Texas. A key goal was to identify communities and households that remain unserved or underserved by broadband service; this information is essential to estimate the broadband availability gap in the state and understand the scope and scale of challenges in providing universal broadband service to all citizens across the state. The May 2010 Connected Texas broadband map is the first comprehensive inventory of broadband infrastructure in the state. This data can be found in the interactive, online map available at The inventory will be updated twice yearly with the next upcoming update scheduled for the spring of The map in Figure 2 has been included for illustration purposes only. A high-quality version of this map is available at: ftp://ftp.connectedtx.org/ctxpublic/connected_texas_mapping/statewide_maps/tx_statewide_broadband. pdf 10 State Broadband and Development Grant Program Notice of Funding Availability, NTIA, US Department of Commerce, July 9, ( SBDD NOFA ). Available at 8 Connected Texas

9 Figure 2: To complement the broadband inventory and mapping data, Connected Texas undertook survey research to understand broadband demand trends in the state. In the spring of 2010, Connected Texas surveyed a sample of 1,221 adults about their current use of broadband and related technologies. This research helps Texas better understand the drivers and barriers to technology and broadband adoption and estimate its broadband adoption gap. Key questions the data address are: who, where, and how are Texans using broadband technology? How is this technology impacting Texas households and residents? And, importantly, who is not adopting broadband service and why? What are the barriers that prevent citizens from embracing this empowering technology? Appendix B of this report presents extensive results of this research. The research and mapping data allow Texas to compare demand-side survey data against broadband supply as described on the map. This report serves as a starting point for the state to set policy goals and strategies to expand and enhance the broadband experience for all Texans. Also, this report analyzes and contrasts Texas demand- and supply-side data with national benchmarks released by the Federal Communications Commission (FCC) as part of the National Broadband Plan Connecting America: The National Broadband Plan, Federal Communications Commission, April ( National Broadband Plan or NBP ). Available at The Broadband Landscape in the State of Texas 9

10 Section 2 of the report provides a detailed analysis of Texas broadband availability gap, including analysis of SBDD broadband inventory data, and comparison with national benchmarks. Section 3 provides an overview of broadband adoption gaps. Section 4 evaluates data on existing broadband usage by Texas community anchor institutions. Section 5 provides an overview of BTOP and BIP projects that impact Texas. Section 6 evaluates policy options to address broadband availability and adoption gaps in the state. Appendix A lists participating providers in the Connected Texas broadband inventory project. Appendix B includes the November 2010 Connected Texas Technology Assessment, which provides detailed results from Connected Texas spring 2010 residential survey research. Future iterations of this report will provide information on expanded, updated research and mapping data, including revised broadband availability figures, more in-depth assessments of residential technology adoption, and an assessment of technology use by Texas businesses, with the research undergoing a peer review process by a Texas institution of higher learning. In addition, the Connected Texas program will engage in activities designed to increase Texas broadband capacity, including the creation of local/regional technology planning teams built around the Texas Councils of Government regions, as well as special, locally oriented areas, and the convening of an annual statewide strategic broadband planning meeting. 10 Connected Texas

11 2 Texas Broadband Inventory and Availability Gap As noted, in May 2010, Connected Texas produced an inaugural map of the inventory of broadband availability across the state. The FCC s National Broadband Plan (NBP) sets six goals for the U.S. broadband market: 1. At least 100 million U.S. homes having affordable access to download speeds of at least 100 Mbps and upload speeds of at least 50 Mbps; 2. The U.S. should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation; 3. Every American should have affordable access to robust broadband service of at minimum 4 Mbps download speeds, and the means and skills to subscribe if they so choose; 4. Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals, and government buildings; 5. To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network; 6. To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption. 12 The NBP recommends measures that will help achieve these goals. This report first examines how the broadband market in Texas compares against the NBP s national goals. The Texas map can be found online at The Connected Texas spring 2010 broadband inventory and maps are the first of their kind in Texas. Data were collected from the majority of broadband providers in the state; however, there are a few broadband providers that have not participated. The measured broadband inventory provides an estimate of the true extent of broadband coverage across the state. There is a degree of error inherent in this exercise, which needs to be taken into consideration when analyzing the data. Measurement error will decrease with ongoing data validation and as the maps become increasingly more active tools for local, state, and federal stakeholders, who will be able to identify areas where the displayed coverage is under- or over-estimated. Connected Texas welcomes such feedback, which will be analyzed in collaboration with updated information from broadband providers, to correct errors identified in the maps Broadband Availability in Texas A State Bird s-eye View Fixed Broadband Inventory In 2000, Texas had approximately 7.4 million households, with a total population of million. 14 Table 2 shows estimates of the number and percentages of households across Texas having broadband available at various 12 NBP. 13 Questions regarding the maps and data collection can be directed to [email protected]. 14 National Census, 2000, US Census Bureau. Population source: 2009 Population Estimate, US Census Bureau. The Broadband Landscape in the State of Texas 11

12 download speed tiers. 15 Table 2 is based on broadband inventory data from all terrestrial, non-mobile platforms, including cable, DSL, fiber-to-the-home, and fixed wireless. Mobile broadband platforms are excluded from the fixed broadband inventory in order to represent an accurate count of the households with fixed broadband service available. In May 2010, fixed broadband at download speeds of 768 Kbps or above was available to approximately 7.14 million households, or 96.63% of all Texas households. 16 This implies that approximately a quarter million Texas households, or 3.37%, remain unserved by broadband. 17,18 An estimated 7.05 million, or 95.30% of, households across Texas have broadband available at download speeds of 3 Mbps or above. This implies that approximately 100,000, or 1.3% of, households across Texas have fixed broadband service available at download speeds of at least 768 Kbps but at or below 3 Mbps, or speeds that the NTIA classifies as underserved. 19 The percentage of Texas households with fixed broadband access available of at least 6 Mbps download speeds is estimated at 93.19%, and 86.60% of households have service available at least 10 Mbps. Availability at speeds higher than 25 Mbps in Texas drops significantly, to an estimated 43.3% of households, and only 41.65% of households have broadband available above 50 Mbps. There are no households served at speeds greater than 100 Mbps. Depending on what broadband speed definition is selected, the broadband availability gap across Texas affects 347,000 households, or 4.7%, for capacity at or above 3 Mbps. Also, there are 250,000 households, or 3.37%, who do not have broadband service available at the 768 Kbps speeds. The data also reveal an alternative broadband availability gap. While most Texas households have broadband available at lower speeds, broadband coverage at speeds above 25 and 50 Mbps is available to less than 50% of the population and, as of May 2010, no household was offered a publicly available service with capacity of at least 100 Mbps download speeds. Hence, taking into consideration the FCC s National Broadband Plan goals, there appears to be a significant gap across Texas for availability of higher-capacity broadband capable of at least 100 Mbps download speed. 15 Speed tiers are based on the tiers defined by the NTIA in the SBDD NOFA. 16 Broadband is defined according to current NTIA and FCC definition, or 768 Kbps download and 200 Kbps upload speeds. 17 Unserved area means a proposed funded service area, composed of one or more contiguous Census Blocks, where at least 90 percent of households in the proposed funded service area lack access to facilities-based, terrestrial broadband service, either fixed or mobile, at the minimum broadband transmission speed (set forth in the definition of broadband above). A household has access to broadband service if the household can readily subscribe to that service upon request. SBDD NOFA. 18 While the NTIA definition of unserved and underserved areas encompasses all broadband platforms, including mobile wireless networks, Table 3 focuses only on fixed, terrestrial broadband infrastructure. Table 8 includes data across all terrestrial platforms. 19 Underserved area means a proposed funded service area, composed of one or more contiguous Census Blocks meeting certain criteria that measure the availability of broadband service and the level of advertised broadband speeds. [ ] Specifically, a proposed funded service area may qualify as underserved for last mile projects if at least one of the following factors is met, though the presumption will be that more than one factor is present: 1. No more than 50 percent of the households in the proposed funded service area have access to facilities-based, terrestrial broadband service at greater than the minimum broadband transmission speed (set forth in the definition of broadband above); 2. No fixed or mobile broadband service provider advertises broadband transmission speeds of at least three megabits per second ( mbps ) downstream in the proposed funded service area; or 3. The rate of broadband subscribership for the proposed funded service area is 40 percent of households or less. SBDD NOFA. 12 Connected Texas

13 Table 2 Estimate of Broadband Service Availability in the State of Texas By Speed Tier Among Fixed Platforms SBDD Download Speed Tiers Unserved Households Served Households Percent Served Households By Speed Tier At Least 768 Kbps 249,110 7,144, % At Least 1.5 Mbps 269,158 7,124, % At Least 3 Mbps 347,219 7,046, % At Least 6 Mbps 503,292 6,890, % At Least 10 Mbps 991,020 6,402, % At Least 25 Mbps 419,1760 3,201, % At Least 50 Mbps 431,4390 3,078, % At least 100 Mbps 7,939, % Source: Connected Texas, May While there was no national benchmark for broadband available during the time that this report was drafted (the SBDD program generated a national broadband map in late February 2011 that can provide such a reference), measures obtained by Connected Nation (Connected Texas parent company) across 11 other states plus Puerto Rico suggest that broadband investment in Texas is on par with that of other states. Table 3 reports data collected by Connected Nation in the spring of 2010 in the following states: Alaska, Florida, Iowa, Illinois, Kansas, Michigan, Minnesota, Nevada, Ohio, Puerto Rico, South Carolina, Tennessee, and Texas. 20 Following the NTIA definition of broadband, this measure of broadband availability includes any connection providing service of at least 768 Kbps downstream and 200 Kbps upstream speeds. The data reported include broadband service by all types of platforms except for satellite and mobile wireless broadband service. 20 Research funded by the ARRA and compliant with SBDD data requirements and definitions. The Broadband Landscape in the State of Texas 13

14 Table 3 - Estimate of Available Terrestrial Fixed Broadband Service of At Least 768 Kbps Downstream Kbps Upstream Selected States Density of Households Across State Households with Available Broadband Service Alaska % Florida % Illinois % Iowa % Kansas % Michigan % Minnesota % Nevada % Ohio % Puerto Rico % South Carolina % Tennessee % Texas % Data includes all terrestrial technology platforms except for mobile broadband services. Source: Availability data from Connected Nation, Household density data from US Census, 2000, US Census Bureau. Data from Illinois, Kansas, and Tennessee dates from March Data from Florida, Michigan, Minnesota, Nevada, Ohio, Puerto Rico, and South Carolina from April Data from Iowa and Texas from May Data from Alaska from June The unweighted average of broadband household availability measured across these 13 states and territories is 94.94%. Hence, despite Texas being a relatively rural state as compared to the selected states (which can be seen with Texas low household density compared to other states/territories served by Connected Nation), broadband availability at basic speeds of 768 Kbps is relatively ubiquitous Broadband Availability by Technology Platform The spring 2010 Texas broadband inventory map is based on data from 159 fixed broadband providers. Together, these broadband providers offer service at 768 Kbps or above to an estimated 96.63% of Texas households and service at 3 Mbps or above to 95.3% of all households. The Texas broadband sector, like the Texas telecommunications sector, is characterized by a large number of providers, many of which serve small communities. According to FCC Form 477 data, Texas has among the largest number of broadband providers across any state in 14 Connected Texas

15 the nation. 21 Consistent with FCC data, research shows that the most represented technology across the state is Digital Subscriber Line (DSL), the technology most used by traditional telecommunications service providers. Table 4 below reports that there are a total of 50 DSL providers accounted for in the state of Texas broadband map serving an estimated 6.37 million, or 86.17%, households. However, cable and fixed wireless platforms are also relatively ubiquitous across Texas. There are a total of 29 cable providers reflected on the map, serving 81.45% of the state s households, and 62 independent fixed wireless providers offering service to 82.69% of households across the state. This high percentage of households served is in line with industry expectations, since fixed wireless technology is a cost effective solution in areas with flat topography and low population density, which characterizes parts of the state. By contrast, fiber penetration is considerably lower, with 18 providers offering service to the premise to only 0.78% of households. Finally, there are 5 facilities-based mobile broadband providers in Texas who collectively provide mobile broadband service in areas where 97.71% of Texas households are located. When mobile broadband service is included with fixed broadband service, Connected Texas estimates that 99.44% of the state of Texas, or an estimated 7.35 million households, has access to service at 768 Kbps or above. The breakdown of broadband penetration by technology reflects that there is a significant amount of overlap across platforms. Over 80% of households have broadband available by cable, DSL, or fixed wireless platforms, suggesting that there is a healthy degree of facilities-based competition across significant parts of the state. Table 4 - Availability Estimate by Broadband Platform in the State of Texas Platform Type Served Households (000s) Percent of Households Served Number of Providers - By Platform Cable 6, % 29 DSL 6, % 50 Fiber % 18 Fixed Wireless 6, % 62 Mobile 7, % 5 Total All Platform Except Mobile 7, % 159 Total All Platforms* 7, % 164 Source: Connected Texas, May *Total households able to subscribe to at least one provider of broadband via fixed or mobile platform The Rural-Urban Broadband Availability Gap Across Texas To better understand the rural-urban broadband inventory gap across Texas, this section analyzes two statistics, average population density across served, unserved, and underserved areas, and inventory across rural and nonrural areas. Household density (or number of households per square mile of land) is a key driver of broadband infrastructure 21 High-Speed Services for Internet Access: Status as of December 31, 2008, Industry Analysis and Technology Division Wireline Competition Bureau, Federal Communications Commission, February Available at The Broadband Landscape in the State of Texas 15

16 build-out costs and, thus, is a relevant factor in explaining the rural-urban broadband inventory gap across Texas. The average household density across Texas is 28.24, varying greatly by county (see county level analysis in Section 2.3). 22 Table 5 below presents average household density by Census Blocks that are unserved, underserved, and served, based on NTIA definitions. These measures provide an objective means to assess the challenge of infrastructure build-out in unserved or underserved areas. It also provides critical information for the debate over Universal Service Fund reform that is currently underway. These data will further assist in benchmarking the supply-side challenge faced in Texas against national data. As further data is released across states from the SBDD mapping efforts and from the National Broadband Map, it will be possible to assess this comparative analysis between Texas and other states. Further, these data provide an objective benchmark for assessing progress of infrastructure build-out moving forward, based on future SBDD data submissions. Consistent with expectations, the mapping data show correlation between density of households and infrastructure build-out across Texas. The average density of households across unserved Census Blocks where population resides is 4.15 households per square mile. The average household density among underserved Census Blocks with population is Therefore, also consistent with expectations, areas across Texas that remain unserved or underserved by broadband service are overwhelmingly rural. By contrast, the average density of households in Census Blocks with dwellings where service of least at 3 Mbps or more download speeds is offered is households per square mile, significantly above the state average of households per square mile. It is important to note, as discussed in Section 2.3 below, that an analysis of data at the county level reveals that this correlation does not hold across all counties. Table 5 - Average Household Density Across Census Blocks By Download Speeds Census Blocks with Households Below 768 Kbps - Unserved 4.15 Between Kbps - Underserved 4.33 At Least 768 Kbps At Least 3 Mbps Note: Data does not include mobile or satellite broadband. Source: Connected Texas, May According to NTIA SBDD definitions, approximately million households (or 31%), across Texas are classified as rural. 24 Of these, approximately 2.04 million (or 89.66%) rural households are served by at least one terrestrial, non-mobile broadband provider with at least 768 Kbps download and 200 Kbps upload speeds (Table 6). The number of rural households remaining unserved by basic broadband is estimated to be 235,000 or 10.34% of all rural households. The total number of households rural and non-rural estimated to be unserved across Texas is 249,000. As expected, the overwhelming majority of unserved households (94.35%) are in rural areas. 22 US Census, 2000, US Census Bureau. Household density is defined as number of households per square mile of land area. 23 NTIA defines broadband services at download speeds of between 768 and 3000 Kbps as underserved. 24 Rural Area. Any area, as confirmed by the latest decennial census of the Bureau of the Census, which is not located within: (i) a city, town, or incorporated area that has a population of greater than 20,000 inhabitants; or (ii) an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants. For purposes of the definition of rural area, an urbanized area means a densely populated territory as defined in the latest decennial census of the U.S. Census Bureau. SBDD NOFA. This analysis includes only used Census Blocks that following this definition are completely rural, and not any Census Blocks that fell within both rural and non-rural. 16 Connected Texas

17 Table 6 Broadband Service Across Rural Texas at Least 768 Kbps Download Speeds Total Households (000s) Percentage Served Households All Households 7, % Rural Households 2, % Source: Connected Texas, May Broadband Availability by Region Across the State of Texas Table 7 reports broadband availability estimates across the 24 Texas Association of Regional Councils (TARC) regions, and includes broadband inventory estimates at speeds of at least 768 Kbps and 3 Mbps. 25 Figures 3 and 4 below present this same data classifying TARC regions according to the degree of broadband coverage. Detailed information on the estimated inventory of broadband in each county can be found on the Connected Texas website at For more granular information regarding the estimated broadband inventory see the Texas online broadband inventory map at The data reveal large variances in measured broadband inventory across regions and counties, highlighting the importance of granular data in order to identify gaps in infrastructure and adoption at the community level. Such information is essential to develop pragmatic policy solutions tailored to the challenges facing each community. While the estimated statewide percentage of households served is 96.63% for speeds of at least 768 Kbps download/200 Kbps upload, and 95.3% for service available at 3 Mbps or above, a breakdown of inventory by TARC region reveals differences across the state. Out of the 24 TARC regions there are 10 where more than 96% of households are served by broadband of at least 3 Mbps download speeds. All of these, minus one, include major cities and surrounding areas across the state, such as Dallas-Fort Worth, Houston, San Antonio, Austin, McAllen- Matamoros, Corpus Christi, and El Paso. The one exception is the Permian Basin Regional Planning Commission TARC region, number 9, in Western Texas. This TARC region includes a number of rural counties with high availability estimates. In 10 of the remaining 14 TARC regions, estimates of broadband availability at 3 Mbps speeds are below 90% of households. These regions are largely rural and include the eastern part of the state (TARC regions 5, 6, 11, 13, and 14), the central regions of West Central Texas (7) and Concho Valley (10), the south regions of South Texas (19) and Middle Rio Grande (24), and the Golden Crescent Regional Planning Commission region (17). Broadband penetration throughout Texas is more extensive in urban and suburban areas and, as one would expect, the gaps in deployment are more extensive in rural areas, which tend to have lower economic activity. The following section examines these data by county, where this general pattern remains, but there are also areas where estimated deployment defies this logic. This same general pattern exists when evaluating broadband inventory across TARC regions at the 3 Mbps and 768 Kbps speed tiers, in Figures 3 and 4, respectively. 25 Based on NTIA definitions, broadband is defined as 768 Kbps download and 200 Kbps upload speeds or more. Areas with service below these speeds is deemed unserved. Areas where broadband is available at speeds between 768 Kbps download and 200 Kbps upload and 3Mbps are defined as underserved. Areas where broadband is available at 3Mbps or above are defined as served. SBDD NOFA. The Broadband Landscape in the State of Texas 17

18 Table 7 Broadband Availability by TARC Region TARC Region Number TARC Region Household Density Number of Households Percent Served Households by at least 768 Kbps Percent Served Households by at least 3 Mbps 1 Panhandle Regional Planning Commission , % 91.97% 2 South Plains Association of Governments , % 98.24% 3 Nortex Regional Planning Commission , % 90.05% 4 North Central Texas Council of Governments ,937, % 99.56% 5 Ark-Tex Council of Governments , % 76.61% 6 East Texas Council of Governments , % 80.20% 7 West Central Texas Council of Governments , % 84.17% 8 Rio Grande Council of Governments , % 97.34% 9 Permian Basin Regional Planning Commission , % 96.32% 10 Concho Valley Council of Governments , % 84.20% 11 Heart of Texas Council of Governments , % 83.30% 12 Capital Area Council of Governments , % 98.61% 13 Brazos Valley Council of Governments , % 82.06% 14 Deep East Texas Council of Governments , % 64.90% 15 South East Texas Regional Planning Commission , % 92.99% 16 Houston-Galveston Area Council ,702, % 97.63% 17 Golden Crescent Regional Planning Commission , % 81.51% 18 Alamo Area Council of Governments , % 97.98% 19 South Texas Development Council , % 86.75% 20 Coastal Bend Council of Governments , % 96.38% 21 Lower Rio Grande Valley Development Council , % 99.56% 22 Texoma Council of Governments , % 98.64% 23 Central Texas Council of Governments , % 94.64% 24 Middle Rio Grande Development Council , % 87.12% Statewide ,393, % 95.30% Source: Connected Texas, May Connected Texas

19 Figure 3 Broadband Availability in the State of Texas Percentage of Households Served by Terrestrial, Non-Mobile Broadband Service At Least 3 Mbps Download Speed Broadband Availability Statewide Availability: 95.30% in the State of Texas Percentage of Households Served by Terrestrial, Non-Mobile Broadband Service TARC Region Name At Least 3 Mbps Download Speed Statewide Availability: 95.30% Alamo Area Council of Governments: 18 Ark-Tex Council of Governments: 5 Brazos Valley Council of Governments: 13 Capital Area Council of Governments: 12 Central Texas Council of Governments: 23 Coastal Bend Council of Governments: 20 Concho Valley Council of Governments: 10 Deep East Texas Council of Governments: 14 East Texas Council of Governments: 6 Golden Crescent Regional Planning Commission: 17 Heart of Texas Council of Governments: 11 Houston-Galveston Area Council: 16 Lower Rio Grande Valley Development Council: 21 Middle Rio Grande Development Council: 24 Nortex Regional Planning Commission: 3 North Central Texas Council of Governments: 4 Panhandle Regional Planning Commission: 1 Permian Basin Regional Planning Commission: 9 Rio Grande Council of Governments: 8 South East Texas Regional Planning Commission: 15 South Plains Association of Governments: 2 South Texas Development Council: 19 Texoma Council of Governments: 22 West Central Texas Council of Governments: % 96-98% % <85% 85-90% 90-93% The Broadband Landscape in the State of Texas 19

20 Figure 4 Broadband Availability in the State of Texas Percentage of Households Served by Terrestrial, Non-Mobile Broadband Service At Least 768 Kbps Download/200 Kbps Upload Speeds StatewideBroadband Availability: 96.63% in the State of Texas Availability Percentage of Households Served by Terrestrial, Non-Mobile Broadband Service TARC Region Name At Least 768 Kbps Download/200 Upload Speed Statewide Availability: 96.63% Alamo Area Council of Governments: 18 Ark-Tex Council of Governments: 5 Brazos Valley Council of Governments: 13 Capital Area Council of Governments: 12 Central Texas Council of Governments: 23 Coastal Bend Council of Governments: 20 Concho Valley Council of Governments: 10 Deep East Texas Council of Governments: 14 East Texas Council of Governments: 6 Golden Crescent Regional Planning Commission: 17 Heart of Texas Council of Governments: 11 Houston-Galveston Area Council: 16 Lower Rio Grande Valley Development Council: 21 Middle Rio Grande Development Council: 24 Nortex Regional Planning Commission: 3 North Central Texas Council of Governments: 4 Panhandle Regional Planning Commission: 1 Permian Basin Regional Planning Commission: 9 Rio Grande Council of Governments: 8 South East Texas Regional Planning Commission: 15 South Plains Association of Governments: 2 South Texas Development Council: 19 Texoma Council of Governments: 22 West Central Texas Council of Governments: % 96-98% % <85% 85-90% 90-93% Connected Texas

21 2.2.1 TARC Region Broadband Availability by Platform Table 8 reports broadband platform inventories across the 24 Texas Association of Regional Councils (TARC) regions. This broadband inventory by platform offers insights into competition in the broadband market. In line with expectations, highly urbanized regions present extensive cable, DSL, and fixed wireless platform penetration. In regions 4, 16, 12, and 18, where cities such as Houston, Dallas-Fort Worth, Austin, San Antonio, Brownsville, and McAllen and Matamoros are located, over 85% of households have DSL, cable, and fixed wireless broadband service. This indicates a significant degree of inter-platform competition. Areas that are more rural tend to have lower service available. For example, in the Middle Rio Grande Development Council (region 24), one of the most rural regions in Texas, cable service is only available to 76% of households, DSL is available to 53.84% of households, and fixed wireless service is available to only 5.51% of homes in that region. Therefore, not surprisingly, we expect lower interplatform competition in relatively rural areas. Statewide, fiber-to-the-home is only available to an estimated 0.78% of households. However, defying the logic of network economics, where per household passed costs are lower in highly populated areas, these fiber networks are not located in the most populated parts of the state. The region with the highest penetration of fiber-tothe-home service is the South Plains Association of Governments, region 2, in the north west of the state, where Lubbock is located and just south of the city of Amarillo. Across this region, 26.37% of households have fiber-tothe-home service available. In five of the counties in this region, fiber-to-the-home is available to more than 36% of households (see county level data in the following section). It is unclear what is driving this higher penetration of fiber platforms in this relatively sparsely populated region. It is possible that retail providers in the region are able to leverage backhaul fiber routes effectively to provide service to residential consumers. Alternatively, these residential fiber networks could be the result of USF funds (see the section below discussing the impact of the federal and Texas USF programs). The Broadband Landscape in the State of Texas 21

22 Table 8 - TARC Region Broadband Availability by Platform Percentage of Households Served at Speeds of 768 Kbps or More TARC Region Household Density Cable DSL Fiber Fixed Wireless Mobile Wireless 1 Panhandle Regional Planning Commission % 86.47% 3.81% 70.21% 89.53% 2 South Plains Association of Governments % 86.75% 26.37% 97.78% 98.95% 3 Nortex Regional Planning Commission % 81.69% 0.27% 82.31% 92.05% 4 North Central Texas Council of Governments % 94.59% 0.03% 98.91% 99.66% 5 Ark-Tex Council of Governments % 55.75% 0.22% 31.06% 97.57% 6 East Texas Council of Governments % 62.86% 1.22% 42.41% 95.98% 7 West Central Texas Council of Governments % 77.03% 2.91% 58.00% 62.43% 8 Rio Grande Council of Governments % 92.70% 0.01% 8.88% 97.49% 9 Permian Basin Regional Planning Commission % 81.80% 0.12% 91.43% 97.86% 10 Concho Valley Council of Governments % 80.58% 0.00% 6.21% 75.92% 11 Heart of Texas Council of Governments % 71.63% 0.00% 60.42% 96.35% 12 Capital Area Council of Governments % 88.24% 0.01% 97.24% 99.44% 13 Brazos Valley Council of Governments % 75.58% 0.00% 78.56% 97.39% 14 Deep East Texas Council of Governments % 58.66% 0.00% 43.74% 85.85% 15 South East Texas Regional Planning Commission % 85.27% 0.00% 0.00% % 16 Houston-Galveston Area Council % 92.45% 0.00% 91.02% 99.97% 17 Golden Crescent Regional Planning Commission % 55.54% 0.01% 90.03% 89.75% 18 Alamo Area Council of Governments % 88.01% 0.86% 95.85% 99.34% 19 South Texas Development Council % 70.65% 0.55% 5.49% 98.15% 20 Coastal Bend Council of Governments % 69.47% 0.22% 88.70% 99.56% 21 Lower Rio Grande Valley Development Council % 72.29% 0.07% 98.46% 99.94% 22 Texoma Council of Governments % 68.68% 1.46% 98.72% 96.09% 23 Central Texas Council of Governments % 89.27% 0.00% 79.00% 95.42% 24 Middle Rio Grande Development Council % 53.84% 0.03% 5.51% 85.60% Statewide % 86.17% 0.78% 82.69% 97.71% Source: Connected Texas, May Connected Texas

23 2.3 Broadband Availability by County Table 9 reports estimates of broadband availability, excluding mobile wireless and satellite broadband service, across Texas counties. These estimates also may not include broadband service available exclusively to commercial customers. While the estimated statewide percentage of households served by at least 768 Kbps download/200 Kbps upload speeds is 96.63%, Table 9 reports significant differences in infrastructure build-out across counties, ranging from Tarrant and Dallas counties where all households are served, to Loving County with no fixed, terrestrial service available to any household (although Table 12 of this report shows that more than 80% of households in Loving County are able to access a mobile wireless broadband service.) Across 89 of the 254 counties in Texas, less than 85% of households are served by broadband at this basic speed tier. In 13 counties, availability estimates are under 50% of all county homes. This same pattern exists for estimates of homes served at download speeds of at least 3 Mbps. While the estimated statewide percentage of households served at speeds of 3 Mbps or more is 95.3%, county availability estimates range from Tarrant and Dallas counties, with ubiquitous broadband at 3 Mbps speeds, to counties such as Loving, Kent or Terrell, which have no households served with broadband at this capacity. Across 21 Texas counties, estimated availability of broadband service of at least 3 Mbps download speeds is below 40% of county homes. A further significant pattern is revealed when comparing county-level availability data for broadband of between 768 Kbps and 3 Mbps download speeds. While statewide there are only 1.33% of households that are underserved (broadband available at download speeds of between 768 Kbps and 3 Mbps), there are counties such as Terrell, Kenedy, Cottle, and Dickens where all or most of the broadband infrastructure available falls under this category. All these data support the notion that, as in most other things, the broadband landscape across Texas varies greatly by community. No two counties are the same, and no one policy will fit all. Detailed information on the estimated inventory of broadband in each county can be found on the Connected Texas website at For more granular information regarding the estimated broadband inventory see the Texas online broadband inventory map at interactive_map.php. The Broadband Landscape in the State of Texas 23

24 Table 9 - Estimated Availability of Broadband Service by County Terrestrial Broadband (Excluding Mobile) 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Anderson , % 72.15% Andrews , % 99.08% Angelina , % 92.53% Aransas , % 98.37% Archer , % 95.08% Armstrong % 92.00% Atascosa , % 89.33% Austin , % 73.99% Bailey , % 92.72% Bandera , % 39.26% Bastrop , % 97.84% Baylor , % 99.02% Bee , % 97.91% Bell , % 97.64% Bexar , % 99.93% Blanco , % 99.61% Borden % 30.40% Bosque , % 59.74% Bowie , % 85.38% Brazoria , % 95.47% Brazos , % 97.11% Brewster , % 75.27% Briscoe % 65.60% Brooks , % 68.70% 24 Connected Texas

25 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Brown , % 79.27% Burleson , % 45.18% Burnet , % 95.29% Caldwell , % 99.84% Calhoun , % 73.60% Callahan , % 74.84% Cameron , % 99.33% Camp , % 57.74% Carson , % 83.96% Cass , % 35.97% Castro , % 56.40% Chambers , % 75.55% Cherokee , % 61.00% Childress , % 88.86% Clay , % 93.73% Cochran , % 94.98% Coke , % 5.44% Coleman , % 56.69% Collin , % % Collingsworth , % 60.15% Colorado , % 56.00% Comal , % 99.94% Comanche , % 93.89% Concho , % 68.17% Cooke , % 98.44% Coryell , % 92.37% Cottle % 4.46% The Broadband Landscape in the State of Texas 25

26 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Crane , % 99.22% Crockett , % 74.18% Crosby , % 95.48% Culberson , % 66.18% Dallam , % 77.46% Dallas , % % Dawson , % 96.53% Deaf Smith , % 88.65% Delta , % 99.60% Denton , % % DeWitt , % 83.31% Dickens % 4.75% Dimmit , % 80.14% Donley , % 77.05% Duval , % 77.16% Eastland , % 80.66% Ector , % % Edwards % 93.37% El Paso , % 98.49% Ellis , % 99.52% Erath , % 85.70% Falls , % 69.43% Fannin , % 93.65% Fayette , % 55.59% Fisher , % 48.01% Floyd , % 99.20% Foard % 98.35% 26 Connected Texas

27 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Fort Bend , % 97.86% Franklin , % 81.30% Freestone , % 52.85% Frio , % 92.53% Gaines , % 99.49% Galveston , % 99.21% Garza , % 95.08% Gillespie , % 61.20% Glasscock % 7.37% Goliad , % 54.87% Gonzales , % 98.72% Gray , % 97.68% Grayson , % % Gregg , % 95.69% Grimes , % 78.29% Guadalupe , % % Hale , % 99.35% Hall , % 62.89% Hamilton , % 73.88% Hansford , % 73.31% Hardeman , % 66.15% Hardin , % 76.96% Harris ,205, % 99.91% Harrison , % 63.12% Hartley , % 83.91% Haskell , % 93.84% Hays , % 99.99% The Broadband Landscape in the State of Texas 27

28 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Hemphill , % 59.71% Henderson , % 85.73% Hidalgo , % 99.95% Hill , % 71.69% Hockley , % 99.78% Hood , % 99.97% Hopkins , % 87.89% Houston , % 34.96% Howard , % 98.59% Hudspeth , % 47.76% Hunt , % 99.99% Hutchinson , % 93.80% Irion % 44.77% Jack , % 66.83% Jackson , % 66.17% Jasper , % 44.53% Jeff Davis % 46.89% Jefferson , % 96.25% Jim Hogg , % 95.18% Jim Wells , % 92.94% Johnson , % 99.92% Jones , % 50.87% Karnes , % 94.65% Kaufman , % 97.50% Kendall , % 83.25% Kenedy % 0.04% Kent % 0.00% 28 Connected Texas

29 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Kerr , % 95.80% Kimble , % 54.02% King % 0.92% Kinney , % 68.23% Kleberg , % 84.40% Knox , % 99.98% La Salle , % 89.51% Lamar , % 94.37% Lamb , % 98.26% Lampasas , % 66.49% Lavaca , % 77.37% Lee , % 91.64% Leon , % 39.55% Liberty , % 61.54% Limestone , % 53.34% Lipscomb , % 71.63% Live Oak , % 99.26% Llano , % 98.44% Loving % 0.00% Lubbock , % 99.99% Lynn , % 93.37% Madison , % 58.95% Marion , % 56.33% Martin , % 45.39% Mason , % 74.95% Matagorda , % 75.82% Maverick , % 96.21% The Broadband Landscape in the State of Texas 29

30 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served McCulloch , % 98.38% McLennan , % 93.80% McMullen % 50.55% Medina , % 94.68% Menard % 52.09% Midland , % 99.62% Milam , % 96.81% Mills , % 99.92% Mitchell , % 33.57% Montague , % 65.12% Montgomery , % 97.31% Moore , % 92.91% Morris , % 57.26% Motley % 3.06% Nacogdoches , % 92.36% Navarro , % 70.68% Newton , % 10.76% Nolan , % 82.38% Nueces , % 99.93% Ochiltree , % 93.67% Oldham % 50.84% Orange , % 92.44% Palo Pinto , % 91.46% Panola , % 37.72% Parker , % % Parmer , % 81.61% Pecos , % 72.10% 30 Connected Texas

31 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Polk , % 81.83% Potter , % 96.99% Presidio , % 86.07% Rains , % 60.07% Randall , % 97.60% Reagan , % 87.40% Real , % 81.69% Red River , % 56.22% Reeves , % 85.81% Refugio , % 72.26% Roberts % 71.44% Robertson , % 58.73% Rockwall , % 99.99% Runnels , % 80.29% Rusk , % 64.16% Sabine , % 11.38% San Augustine , % 26.91% San Jacinto , % 74.74% San Patricio , % 96.30% San Saba , % 99.98% Schleicher , % 63.75% Scurry , % 83.22% Shackelford , % 64.85% Shelby , % 35.00% Sherman , % 65.43% Smith , % 96.69% Somervell , % 99.97% The Broadband Landscape in the State of Texas 31

32 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Starr , % 88.49% Stephens , % 84.63% Sterling % 74.90% Stonewall % 78.34% Sutton , % 73.37% Swisher , % 95.56% Tarrant , % % Taylor , % 98.60% Terrell % 0.00% Terry , % 99.67% Throckmorton % 39.42% Titus , % 64.24% Tom Green , % 91.25% Travis , % 99.91% Trinity , % 40.51% Tyler , % 50.46% Upshur , % 91.54% Upton , % 82.34% Uvalde , % 82.06% Val Verde , % 89.95% Van Zandt , % 65.61% Victoria , % 85.28% Walker , % 80.64% Waller , % 91.33% Ward , % 97.90% Washington , % 75.97% Webb , % 86.11% 32 Connected Texas

33 768 Kbps Download/200 Kbps Upload Speeds 3Mbps Download Speeds County Household Density Number of Households Percentage Households Served Wharton , % 65.80% Wheeler , % 91.76% Wichita , % 99.07% Wilbarger , % 93.92% Willacy , % 92.74% Williamson , % 98.56% Wilson , % 98.75% Winkler , % 99.79% Wise , % 99.56% Wood , % 79.08% Yoakum , % 99.87% Young , % 71.70% Zapata , % 84.79% Zavala , % 66.63% Source: Connected Texas, May Figures 5 and 6 classify counties according to broadband coverage at download speeds of 768 Kbps and 3 Mbps, indicating whether these are rural or non-rural (urban and suburban). Connected Texas bases its rural-urban county classification system on Metropolitan Statistical Areas (MSAs), as defined by the United States Office of Management and Budget and used by the United States Bureau of the Census. 26 Metropolitan Statistical Areas have at least one urbanized area with a population of 50,000 or more, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties. Connected Texas defines counties as urban if they include the core city of an MSA. Suburban counties are MSA counties that do not contain the core city, and rural counties include all remaining counties that are not part of an MSA The Broadband Landscape in the State of Texas 33

34 Figure 5 Broadband Availability in the State of Texas Broadband Availability in the State of Texas Percentage of Households Served by Terrestrial, Non-Mobile Percentage of Households Served by Terrestrial, Broadband Service Non-Mobile Broadband Service At Least 3 Mbps Download Speed AtRural Leastand 3 Mbps Download Speeds Non-Rural Counties* Rural and Non-Rural Counties* Dallam 100% Sherman 93.06% Hansford 79.85% Ochiltree 93.79% Lipscomb 71.63% Hartley 93.79% Moore 92.98% Hutchinson 93.89% Roberts 71.46% Hemphill 77.37% Oldham 51.16% Potter 97.12% Carson 84.14% Gray 97.68% Wheeler 91.97% Deaf Smith 88.68% Randall 97.61% Armstrong 92% Parmer 81.79% Castro 68.43% Swisher 96.41% Donley Collingsworth 78.07% 78.15% Briscoe 95.77% Hall 78.63% Bailey 92.72% Lamb 98.35% Hale 100% Floyd 99.2% Motley 86.74% Cochran 94.98% Hockley 99.85% Lubbock 100% Crosby 99.1% Dickens 89.36% Childress 94.84% Cottle 91.03% King 67.22% Hardeman 97.6% Foard 98.47% Knox 99.98% Wilbarger 96.76% Baylor 99.25% Wichita 99.99% Archer 99.24% Clay 97.29% Montague 74.25% Hudspeth 57.73% Culberson 69.17% Jeff Davis 50.21% Presidio 97.87% Rural Webb 87.87% <40% 80-90% 40-60% 90-95% 60-80% % Zapata 86.55% *Rural Counties are categorized based on Pew Research Center county classifications 34 Grayson 100% Fannin 93.77% Lamar 95.32% Delta 99.62% Red River 56.31% Bowie 85.65% Titus Hopkins 64.25% Yoakum Terry Lynn Garza Cass Kent Stonewall Haskell Throckmorton Young Hunt 98.8% Franklin Morris 99.87% 99.95% 95.05% 97.17% 36.08% 78.62% 82.31% 88.43% 97.29% 77.31% 99.99% 82.77% 57.28% Rockwall Rains Marion Upshur Wood 99.99% 99.83% 56.35% Dallas 92.03% Parker Tarrant 92.01% Gaines Dawson Borden Scurry Fisher Jones Shackelford Stephens Palo Pinto Kaufman 100% 100% 100% 99.49% 94.81% Harrison 97.9% 61.47% 84.76% 64.12% 88.28% 85.43% 64.85% 99.31% Van Zandt Gregg 72.72% 93.28% 95.69% Smith Hood Johnson Ellis 98.07% 99.97% Andrews Eastland Martin 99.92% Howard Mitchell Nolan Taylor Callahan Panola 99.52% Henderson 99.08% Erath Somervell 80.66% 72.81% 99.33% 34.14% Rusk 83.74% 98.63% 75.21% 50.54% 93.06% 93.96% 99.97% 86.4% Navarro Hill 70.99% Comanche Shelby 73.05% Cherokee Bosque Loving Ector Coke Winkler Midland Glasscock 94.67% Anderson 67.77% 46.39% Sterling Runnels 63.12% 0% 100% Freestone 75.12% 5.44% 99.79% 99.62% 15.53% Brown Coleman 74.9% 80.29% Nacogdoches San Augustine Hamilton 56.08% 86.26% 93.39% 92.47% 78.36% 28.63% Limestone McLennan Ward Mills 54.08% 95.28% Sabine Crane 97.89% 99.92% Coryell Tom Green Houston 11.39% 99.22% Upton Reagan Angelina Leon Reeves Concho 92.75% 91.37% Irion 38.57% 82.34% Falls 88.08% 92.56% 46.52% 87.07% 68.88% McCulloch 44.77% Lampasas 69.66% San Saba Trinity 75.99% 98.38% Robertson 99.98% 56.73% Bell Madison 73.7% 98.08% 68.06% Newton Tyler Schleicher Menard Polk Jasper Milam Walker 53.57% 44.53% 10.82% 63.75% 52.09% 95.73% Burnet Brazos Pecos 97.31% Crockett 80.85% Mason Llano 95.31% Williamson 99.78% San Jacinto 79.4% 74.23% 77.98% 98.44% Grimes 98.82% 89.17% Burleson 83.61% Kimble Sutton Hardin 91.56% 62.17% 77.62% Montgomery 77.01% Lee Gillespie 97.37% Travis Blanco Orange Liberty 98.51% Washington Terrell 63.06% 99.91% 99.61% 99% 92.48% 62.69% 100% Bastrop Hays Kerr Waller 99.64% Jefferson Edwards 99.99% 99.35% Austin 93.25% Harris Kendall 96.56% Fayette 96.9% Val Verde 95.48% Caldwell 99.91% 89.89% Comal 97.11% Brewster Chambers 92.36% Real 99.91% Bandera 99.98% 96.58% 75.55% 81.69% Colorado 86.71% Guadalupe Fort Bend 80.85% 100% 98.2% Galveston Gonzales Bexar Lavaca 99.61% 99.95% 99.94% Medina Uvalde Kinney Wharton 93.52% 94.7% Brazoria 84.56% 68.26% Wilson 83.1% 96.44% 99.73% DeWitt 98.01% Jackson Matagorda 89.35% Atascosa Maverick Frio Zavala Karnes 92.37% Victoria 91.19% 96.29% 97.15% 66.74% 99.81% 98.97% Goliad 87.24% Calhoun 99.7% Bee Dimmit Refugio McMullen La Salle 99.44% 80.23% 95.6% Live Oak 95.7% 97.7% 99.81% Aransas 98.47% San Patricio 99.93% Jack 82.69% El Paso 98.53% Cooke 99.35% Duval 83.19% Jim Hogg 96.97% Starr 92.93% Wise 99.82% Jim Wells 94.69% Denton 100% Collin 100% Nueces 99.98% Kleberg 90.12% Brooks 75.96% Hidalgo 99.99% Kenedy 99.97% Willacy 99.84% Cameron 99.46% Connected Texas

35 Figure 6 Broadband Availability in the State of Texas Broadband Availability in the State of Texas Percentage of Households Served by Terrestrial, Non-Mobile Percentage of Households Served by Terrestrial, Broadband Service Non-Mobile Broadband Service At Least 768 Kbps Download/200 Kbps Upload Speeds At Least 768 Kbps Download/200 Kbps Upload Speeds Rural and Non-Rural Counties* Rural and Non-Rural Counties* Dallam 100% Sherman 93.06% Hansford 79.85% Ochiltree 93.79% Lipscomb 71.63% Hartley 93.79% Moore 92.98% Hutchinson 93.89% Roberts 71.46% Hemphill 77.37% Oldham 51.16% Potter 97.12% Carson 84.14% Gray 97.68% Wheeler 91.97% Deaf Smith 88.68% Randall 97.61% Armstrong 92% Parmer 81.79% Castro 68.43% Swisher 96.41% Briscoe 95.77% Donley Collingsworth 78.07% 78.15% Hall 78.63% Bailey 92.72% Lamb 98.35% Hale 100% Floyd 99.2% Motley 86.74% Cochran 94.98% Hockley 99.85% Lubbock 100% Crosby 99.1% Dickens 89.36% Childress 94.84% Cottle 91.03% King 67.22% Hardeman 97.6% Foard 98.47% Knox 99.98% Wilbarger 96.76% Baylor 99.25% Wichita 99.99% Archer 99.24% Clay 97.29% Montague 74.25% Hudspeth 57.73% Culberson 69.17% Jeff Davis 50.21% Presidio 97.87% Grayson 100% Fannin 93.77% Lamar 95.32% Delta 99.62% Red River 56.31% Bowie 85.65% Titus Hopkins 64.25% Yoakum Terry Lynn Garza Cass Kent Stonewall Haskell Throckmorton Young Hunt 98.8% Franklin Morris 99.87% 99.95% 95.05% 97.17% 36.08% 78.62% 82.31% 88.43% 97.29% 77.31% 99.99% 82.77% 57.28% Rockwall Rains Marion Upshur Wood 99.99% 99.83% 56.35% Dallas 92.03% Parker Tarrant 92.01% Gaines Dawson Borden Scurry Fisher Jones Shackelford Stephens Palo Pinto Kaufman 100% 100% 100% 99.49% 94.81% Harrison 97.9% 61.47% 84.76% 64.12% 88.28% 85.43% 64.85% 99.31% Van Zandt Gregg 72.72% 93.28% 95.69% Smith Hood Johnson Ellis 98.07% 99.97% Andrews Martin 99.92% Howard Mitchell Nolan Taylor Callahan Eastland Panola 99.52% Henderson Somervell 99.08% Erath 80.66% 72.81% 99.33% 34.14% Rusk 83.74% 98.63% 75.21% 50.54% 93.06% 93.96% 99.97% 86.4% Navarro Hill 70.99% Comanche Shelby 73.05% Cherokee Bosque Loving Ector Coke Winkler Midland Glasscock 94.67% Anderson 67.77% 46.39% Sterling Runnels 63.12% 0% 100% Freestone 75.12% 5.44% 99.79% 99.62% 15.53% Brown Coleman 74.9% 80.29% Nacogdoches San Augustine Hamilton 56.08% 86.26% 93.39% 92.47% 78.36% 28.63% Limestone McLennan Ward Mills 54.08% 95.28% Sabine Crane 97.89% 99.92% Coryell Tom Green Houston 11.39% 99.22% Upton Reagan Angelina Leon Reeves Concho 92.75% 91.37% Irion 38.57% 82.34% Falls 88.08% 92.56% 46.52% 87.07% 68.88% McCulloch 44.77% Lampasas 69.66% San Saba Trinity 75.99% 98.38% Robertson 99.98% 56.73% Bell Madison 73.7% 98.08% 68.06% Newton Tyler Schleicher Menard Polk Jasper Milam Walker 53.57% 44.53% 10.82% 63.75% 52.09% 95.73% Burnet Brazos Pecos 97.31% Crockett 80.85% Mason Llano 95.31% Williamson 99.78% San Jacinto 79.4% 74.23% 77.98% 98.44% Grimes 98.82% 89.17% Burleson 83.61% Kimble Sutton Hardin 91.56% 62.17% 77.62% Montgomery 77.01% Lee Gillespie 97.37% Travis Blanco Orange Liberty 98.51% Washington Terrell 63.06% 99.91% 99.61% 99% 92.48% 62.69% 100% Bastrop Hays Kerr Waller 99.64% Jefferson Edwards 99.99% 99.35% Austin 93.25% Harris Kendall 96.56% Fayette 96.9% Val Verde 95.48% Caldwell 99.91% 89.89% Comal 97.11% Brewster Chambers 92.36% Real 99.91% Bandera 99.98% 96.58% 75.55% 81.69% Colorado 86.71% Guadalupe Fort Bend 80.85% 100% 98.2% Galveston Gonzales Bexar Lavaca 99.61% 99.95% 99.94% Medina Uvalde Kinney Wharton 93.52% 94.7% Brazoria 84.56% 68.26% Wilson 83.1% 96.44% 99.73% DeWitt 98.01% Jackson Matagorda 89.35% Atascosa Maverick Frio Zavala Karnes 92.37% Victoria 91.19% 96.29% 97.15% 66.74% 99.81% 98.97% Goliad 87.24% Calhoun 99.7% Bee Dimmit Refugio McMullen La Salle 99.44% 80.23% 95.6% Live Oak 95.7% 97.7% 99.81% Aransas 98.47% San Patricio 99.93% Jack 82.69% El Paso 98.53% Cooke 99.35% Rural Webb 87.87% <85% 93-96% 85-90% 96-98% 90-93% % Zapata 86.55% Duval 83.19% Jim Hogg 96.97% Starr 92.93% Wise 99.82% Jim Wells 94.69% Denton 100% Collin 100% Nueces 99.98% Kleberg 90.12% Brooks 75.96% Hidalgo 99.99% Kenedy 99.97% Willacy 99.84% Cameron 99.46% *Rural Counties are categorized based on Pew Research Center county classifications The Broadband Landscape in the State of Texas 35

36 Figures 5 and 6 above and Table 10 below illustrate a rural/non-rural divide of broadband infrastructure build-out. As was the case when analyzing data at the TARC level, Figure 5 shows high service coverage of at least 3 Mbps in urban counties and surrounding areas, including the Houston, Dallas-Fort Worth, San Antonio, Austin-Brownville, Matamoros-McAllen, El Paso, Amarillo and Wichita Falls, Corpus Christi areas. By contrast, mostly rural areas in the South West, East, Central West and Northern parts of the state have low infrastructure availability. Section above presented state-level data documenting the rural/non-rural divide across Texas. This can also be ascertained when evaluating broadband availability across urban, suburban, and rural counties. Of the 254 counties across Texas, 178 are classified as rural, 51 as suburban, and 25 as urban. Broadband inventory at the 768 Kbps and 3 Mbps or above download speeds are significantly higher in urban and suburban counties than across rural counties. While statewide 95.3% of households have broadband available at 3 Mbps, 98.99% of households in urban counties are offered that service, compared to only 77.86% in rural counties. Hence, as expected, broadband penetration is on average lower across rural counties and greatest in highly populated urban areas. As can be seen in Figure 5 and 6 and Table 10 below, showcasing county-level data, there are significant outliers across Texas, with estimates of broadband penetration in some rural counties being higher than the statewide average. Table 10 - Broadband Availability Across Rural, Suburban, and Urban Counties Type Number of Counties Percent of Households Served by at least 768 Kbps Percent of Households Served by at least 3 Mbps Rural % 77.86% Suburban % 96.47% Urban % 98.99% Statewide % 95.30% Source: Connected Texas, May County-Level Broadband Availability by Platform Table 11 below reports aggregate platform county availability estimates across rural, suburban, and urban counties. Estimates include broadband service at speeds of at least 768 Kbps download and 200 Kbps upload offered by cable, DSL, fiber, fixed wireless, and mobile wireless technologies. The results in this table once again showcase the rural-urban availability gap in the state of Texas. While cable and DSL service is available to more than 90% of households in urban counties, only 44.72% of households in rural counties have access to cable broadband, and only 61.16% have access to DSL service. Fixed and mobile wireless coverage show a similar pattern. While 88.39% of households in urban counties have fixed wireless service available, only 49.95% of households in rural counties are served using this platform. Similarly, in urban counties, mobile broadband service is almost ubiquitous, with service to 99.97% of households, whereas in rural counties mobile broadband is only available to just under 86% of households. This pattern does not apply to fiber platforms. Fiber-to-the-home penetration across Texas is low, with service to less than 1% of households. However, while still low, fiber availability is greater in rural counties, with service to 1.88% of households. It is unclear what is driving this relatively high penetration of fiber-to-the-home in rural areas. This pattern defies traditional notions of economies of density of infrastructure build-out. One factor that may explain this counterintuitive phenomenon is funding via the High Cost Universal Service Fund program, available to 36 Connected Texas

37 providers in low-density areas. Rural providers benefiting from these federal subsidies may have invested in fiber networks in their service areas, accelerating investment in fiber platforms. Table 11 - Broadband Availability by Platform for Rural, Suburban, and Urban Counties Percentage of Households Served by At Least 768 Kbps Download Speeds Type Number of Counties Cable DSL Fiber Fixed Wireless Mobile All Fixed Platforms Rural % 61.16% 1.88% 49.95% 85.95% 83.82% Suburban % 84.47% 0.38% 87.48% 98.97% 97.73% Urban % 93.02% 0.71% 88.39% 99.97% 99.22% Statewide % 86.17% 0.78% 82.69% 97.71% 96.63% As discussed in the previous section, it is important to note that urban-suburban trends do not apply across all counties. Table 12 reports estimated percentage of households served by platform type by each county, indicating counties that are classified as rural. The county-level data illustrates the rural-urban divide. Table 12 - County-Level Broadband Availability by Platform Percentage of Households Served by At Least 768 Kbps Download Speeds County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Anderson Rural 1.74% 73.93% 0% 6.22% 99.54% 75.12% Andrews Rural 89.65% 70.61% 0% 99.08% 99.99% 99.08% Angelina Rural 71.78% 91.42% 0% 72.54% 98.36% 92.56% Aransas Suburban 76.04% 61.66% 0% 94.17% 99.29% 98.47% Archer Suburban 52.24% 78.58% 0% 93.69% 97.37% 99.24% Armstrong Rural 0% 92.00% 0% 0% 26.95% 92.00% Atascosa Suburban 38.96% 37.07% 0% 87.99% 94.76% 91.19% Austin Suburban 35.28% 64.01% 0% 94.66% 99.99% 95.48% Bailey Rural 0% 78.49% 70.10% 92.72% 99.46% 92.72% Bandera Suburban 1.00% 37.60% 0% 75.56% 88.08% 86.71% Bastrop Suburban 72.22% 51.72% 0% 99.40% 94.31% 99.64% Baylor Rural 79.51% 98.98% 0% 87.58% 95.02% 99.25% The Broadband Landscape in the State of Texas 37

38 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Bee Rural 67.41% 65.15% 0% 99.36% 99.48% 99.44% Bell Urban 0% 94.49% 0% 88.50% 99.98% 98.08% Bexar Urban 96.71% 95.39% 0.14% 98.84% 100% 99.94% Blanco Rural 0% 36.89% 0.94% 99.61% 97.61% 99.61% Borden Rural 0% 30.41% 0% 56.77% 88.88% 61.47% Bosque Rural 18.98% 53.08% 0% 36.35% 86.68% 63.12% Bowie Urban 84.00% 63.59% 0% 0% 99.95% 85.65% Brazoria Suburban 84.22% 86.69% 0% 89.27% 99.98% 96.44% Brazos Urban 94.61% 91.41% 0% 96.19% 99.98% 99.78% Brewster Rural 4.33% 84.18% 0% 71.20% 76.29% 96.58% Briscoe Rural 0% 95.50% 0% 4.83% 3.32% 95.77% Brooks Rural 66.63% 9.03% 2.06% 0% 99.91% 75.96% Brown Rural 0% 65.92% 0% 84.19% 0% 86.26% Burleson Suburban 50.11% 31.62% 0% 90.68% 96.35% 91.56% Burnet Rural 30.85% 44.66% 0% 94.71% 99.34% 95.31% Caldwell Suburban 65.03% 53.23% 0% 99.81% 93.95% 99.91% Calhoun Suburban 73.66% 3.42% 0% 99.54% 92.09% 99.70% Callahan Suburban 0% 68.50% 0% 36.23% 85.10% 75.21% Cameron Urban 87.35% 78.27% 0% 96.43% 99.85% 99.46% Camp Rural 52.44% 45.52% 0% 0% 100% 57.75% Carson Suburban 41.01% 70.17% 0% 69.37% 91.20% 84.14% Cass Rural 7.69% 33.85% 0.22% 0% 89.84% 36.08% Castro Rural 49.51% 57.36% 0% 0.11% 99.91% 68.43% Chambers Suburban 60.17% 62.40% 0% 18.21% 98.98% 75.55% Cherokee Rural 39.63% 27.07% 0% 7.07% 96.95% 67.77% Childress Rural 83.51% 88.86% 0% 90.81% 0% 94.84% Clay Suburban 36.41% 56.60% 0% 93.78% 79.82% 97.29% Cochran Rural 0% 63.59% 0% 94.98% 99.76% 94.98% 38 Connected Texas

39 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Coke Rural 0% 5.46% 0% 0% 9.14% 5.44% Coleman Rural 0% 79.67% 0% 84.78% 0% 93.39% Collin Suburban 86.67% 96.06% 0% 100% 100% % Collingsworth Rural 73.96% 59.41% 0% 0.80% 4.00% 78.15% Colorado Rural 51.38% 64.17% 0% 48.24% 99.74% 80.85% Comal Suburban 85.09% 87.37% 11.60% 99.49% 100% 99.98% Comanche Rural 17.17% 85.60% 0% 58.34% 0.42% 94.67% Concho Rural 0% 67.15% 0% 11.78% 0.38% 68.88% Cooke Rural 61.66% 63.58% 7.26% 99.02% 98.29% 99.35% Coryell Suburban 66.04% 92.01% 0% 69.78% 98.90% 92.75% Cottle Rural 4.63% 90.80% 0% 0.32% 0% 91.03% Crane Rural 93.09% 89.07% 0% 96.67% 100% 99.22% Crockett Rural 0% 74.28% 0% 5.00% 0.20% 74.23% Crosby Suburban 0% 84.26% 0% 95.70% 99.80% 99.10% Culberson Rural 0% 69.23% 2.00% 0.23% 90.82% 69.17% Dallam Rural 76.41% 91.07% 8.93% 0% 3.64% % Dallas Urban 95.81% 98.55% 0% 100% 100% % Dawson Rural 0% 80.77% 0.76% 97.85% 99.97% 97.90% Deaf Smith Rural 78.13% 74.04% 88.22% 84.85% 98.72% 88.68% Delta Suburban 0.67% 79.41% 6.21% 99.21% 99.81% 99.62% Denton Suburban 87.57% 95.11% 0% 100% 100% % DeWitt Rural 49.81% 62.47% 0% 96.50% 75.41% 98.01% Dickens Rural 0.51% 88.81% 0% 4.75% 31.99% 89.36% Dimmit Rural 71.90% 64.09% 0% 0% 83.38% 80.23% Donley Rural 8.68% 47.38% 0% 71.35% 0% 78.07% Duval Rural 29.98% 72.90% 4.54% 37.43% 99.72% 83.19% Eastland Rural 59.13% 68.28% 0% 0.26% 83.76% 80.66% Ector Urban 81.79% 87.53% 0% 100% 100% % The Broadband Landscape in the State of Texas 39

40 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Edwards Rural 0% 93.37% 0% 69.20% 0.19% 96.90% Ellis Suburban 37.98% 69.43% 0% 99.24% 99.72% 99.52% El Paso Urban 96.25% 93.42% 0% 7.94% 99.93% 98.53% Erath Rural 0% 82.40% 0% 89.71% 80.22% 93.96% Falls Rural 2.34% 52.59% 0% 24.51% 99.89% 69.66% Fannin Rural 33.51% 47.39% 0% 93.44% 79.00% 93.77% Fayette Rural 36.32% 88.95% 0% 80.99% 98.86% 97.11% Fisher Rural 35.91% 56.44% 0% 2.72% 33.56% 64.12% Floyd Rural 49.08% 69.74% 0% 99.20% 98.29% 99.20% Foard Rural 0% 98.45% 0% 74.00% 2.74% 98.47% Fort Bend Suburban 90.17% 77.25% 3.00% 94.12% 99.93% 98.20% Franklin Rural 34.42% 49.19% 0% 18.35% 100% 82.77% Freestone Rural 0% 56.12% 0% 0% 71.19% 56.08% Frio Rural 76.96% 81.93% 5.47% 80.10% 99.18% 97.15% Gaines Rural 61.62% 65.96% 0% 99.49% 99.71% 99.49% Galveston Suburban 95.04% 93.58% 0% 81.52% 99.93% 99.61% Garza Rural 0% 59.43% 54.80% 92.51% 99.50% 97.17% Gillespie Rural 56.58% 39.95% 0% 3.18% 88.57% 63.06% Glasscock Rural 0% 0% 0% 15.53% 39.36% 15.53% Goliad Suburban 0% 44.87% 0% 50.67% 90.17% 87.24% Gonzales Rural 38.11% 15.34% 8.00% 99.94% 98.57% 99.95% Gray Rural 73.43% 94.42% 0% 97.67% 94.43% 97.68% Grayson Urban 76.08% 75.83% 0% 100% 99.81% % Gregg Urban 94.74% 73.88% 0.21% 54.22% 100% 95.69% Grimes Rural 42.34% 75.69% 0% 43.81% 99.95% 83.61% Guadalupe Suburban 86.74% 79.46% 0% 100% 98.25% % Hale Rural 68.68% 86.13% 0% 99.34% 99.99% % Hall Rural 2.07% 78.38% 0% 0% 0% 78.63% 40 Connected Texas

41 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Hamilton Rural 0% 78.21% 0% 1.44% 84.39% 78.36% Hansford Rural 56.86% 66.32% 0% 61.91% 99.77% 79.85% Hardeman Rural 65.62% 60.79% 5.53% 92.11% 95.63% 97.60% Hardin Suburban 71.00% 64.46% 0% 0% 99.99% 77.01% Harris Urban 98.11% 97.54% 0% 99.40% 100% 99.91% Harrison Rural 52.65% 60.48% 0.23% 0% 98.51% 72.72% Hartley Rural 64.47% 93.79% 0% 0% 12.74% 93.79% Haskell Rural 0% 72.23% 64.05% 66.39% 0% 97.29% Hays Suburban 87.63% 71.68% 0% 98.89% 99.73% 99.99% Hemphill Rural 67.81% 52.57% 0% 7.15% 95.28% 77.37% Henderson Rural 31.02% 86.94% 0% 36.79% 99.64% 93.06% Hidalgo Urban 84.95% 70.52% 7.00% 99.94% 100% 99.99% Hill Rural 0% 52.00% 0% 58.45% 92.81% 73.05% Hockley Rural 0.14% 73.42% 51.29% 99.78% 100% 99.85% Hood Rural 73.83% 69.39% 0% 99.97% 99.39% 99.97% Hopkins Rural 51.83% 61.16% 0% 98.37% 99.99% 98.80% Houston Rural 13.14% 34.98% 0% 0% 97.95% 38.57% Howard Rural 86.46% 62.31% 0% 99.26% 99.99% 99.33% Hudspeth Rural 0% 56.72% 1.00% 17.31% 10.63% 57.73% Hunt Suburban 48.70% 70.74% 0.12% 99.99% 99.09% 99.99% Hutchinson Rural 81.07% 75.52% 0% 66.71% 99.97% 93.89% Irion Suburban 0% 44.79% 0% 0% 23.09% 44.77% Jack Rural 48.22% 72.67% 0% 21.00% 81.22% 82.69% Jackson Rural 52.69% 70.61% 0% 26.49% 87.06% 89.35% Jasper Rural 25.51% 38.72% 0% 0% 99.28% 44.53% Jeff Davis Rural 38.48% 32.24% 0.13% 0% 1.95% 50.21% Jefferson Urban 93.20% 91.56% 0% 0% 100% 96.56% Jim Hogg Rural 0% 84.41% 8.72% 94.38% 45.24% 96.97% The Broadband Landscape in the State of Texas 41

42 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Jim Wells Rural 73.90% 60.40% 0.59% 73.12% 99.93% 94.69% Johnson Suburban 45.83% 74.90% 0.98% 99.92% 97.21% 99.92% Jones Suburban 32.95% 50.78% 0% 58.53% 37.82% 88.28% Karnes Rural 0% 66.57% 0% 99.74% 98.30% 99.81% Kaufman Suburban 47.90% 80.94% 0.28% 92.29% 98.11% 99.31% Kendall Suburban 46.60% 51.00% 13.86% 24.96% 97.27% 89.89% Kenedy Rural 0% 99.97% 0% 4.00% 91.68% 99.97% Kent Rural 0% 78.60% 2.00% 0% 3.29% 78.62% Kerr Rural 80.54% 80.83% 0% 95.97% 96.87% 99.35% Kimble Rural 61.09% 54.04% 0% 0.12% 2.24% 62.17% King Rural 0% 66.88% 0% 0.34% 0% 67.22% Kinney Rural 0% 68.23% 0% 3.00% 0% 68.26% Kleberg Rural 82.10% 86.44% 0% 0% 99.98% 90.12% Knox Rural 6.00% 79.54% 52.63% 83.95% 1.32% 99.98% Lamar Rural 69.83% 68.01% 0% 89.95% 94.75% 95.32% Lamb Rural 0% 80.94% 9.59% 87.26% 100% 98.35% Lampasas Suburban 69.82% 62.85% 0% 5.39% 89.46% 75.99% La Salle Rural 68.41% 92.71% 0.76% 72.39% 96.70% 97.70% Lavaca Rural 32.04% 49.31% 0% 90.64% 55.13% 93.52% Lee Rural 38.01% 49.79% 0% 97.67% 96.70% 98.51% Leon Rural 1.24% 38.81% 0% 12.83% 65.73% 46.52% Liberty Suburban 50.63% 51.02% 0% 1.00% 99.84% 62.69% Limestone Rural 0.20% 54.10% 0% 0% 92.00% 54.08% Lipscomb Rural 36.49% 69.65% 0% 0% 79.16% 71.63% Live Oak Rural 22.78% 2.50% 0.21% 99.18% 99.17% 99.81% Llano Rural 0% 49.35% 0% 98.21% 97.76% 98.44% Loving Rural 0% 0% 0% 0% 80.55% 0.00% Lubbock Urban 86.16% 91.07% 31.56% 100% 100% % 42 Connected Texas

43 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Lynn Rural 44.83% 82.31% 14.00% 92.96% 100% 95.05% McCulloch Rural 69.24% 84.55% 0% 84.74% 0% 98.38% McLennan Urban 91.48% 80.88% 0% 76.84% 99.97% 95.28% McMullen Rural 0% 89.34% 19.80% 31.53% 24.43% 95.70% Madison Rural 16.02% 46.75% 0% 12.99% 99.83% 68.06% Marion Rural 17.51% 49.12% 3.70% 0% 75.06% 56.35% Martin Rural 56.71% 38.88% 0% 15.40% 100% 72.81% Mason Rural 58.75% 74.96% 0% 0.79% 0% 77.98% Matagorda Rural 68.78% 58.64% 0% 90% 99.98% 92.37% Maverick Rural 93.16% 87.02% 0% 0% 95.00% 96.29% Medina Suburban 50.52% 59.71% 0% 92.84% 98.67% 94.70% Menard Rural 0% 51.69% 0% 0.39% 0% 52.09% Midland Urban 92.89% 89.72% 0% 99.59% 99.96% 99.62% Milam Rural 53.75% 52.82% 0% 96.83% 98.31% 97.31% Mills Rural 1.20% 99.77% 0% 83.44% 0% 99.92% Mitchell Rural 0% 33.59% 0% 0.72% 99.94% 34.14% Montague Rural 53.26% 56.61% 0% 37.65% 95.23% 74.25% Montgomery Suburban 82.02% 86.82% 0% 53.52% 99.87% 97.37% Moore Rural 71.92% 87.98% 0% 0% 99.99% 92.98% Morris Rural 40.96% 41.05% 1.38% 0% 99.76% 57.28% Motley Rural 0% 85.41% 0% 1.33% 0.11% 86.74% Nacogdoches Rural 70.57% 66.97% 0% 84.52% 93.85% 92.47% Navarro Rural 0% 67.67% 0% 3.83% 93.36% 70.99% Newton Rural 3.00% 10.83% 0% 0% 96.47% 10.82% Nolan Rural 75.48% 40.99% 0% 0% 99.79% 83.74% Nueces Urban 95.95% 84.31% 0% 99.68% 99.74% 99.98% Ochiltree Rural 87.03% 86.04% 0% 93.66% 99.69% 93.79% Oldham Rural 0% 51.30% 0% 0% 27.82% 51.16% The Broadband Landscape in the State of Texas 43

44 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Orange Suburban 81.65% 78.52% 0% 0% 99.99% 92.48% Palo Pinto Rural 69.63% 55.30% 0% 83.87% 96.68% 94.81% Panola Rural 10.68% 47.23% 0% 0% 99.91% 50.54% Parker Suburban 34.19% 74.21% 0% 100% 99.34% % Parmer Rural 0.18% 75.89% 0% 22.67% 98.95% 81.79% Pecos Rural 0% 76.61% 2.34% 3.51% 86.18% 79.40% Polk Rural 52.57% 88.55% 0% 74.94% 99.89% 95.73% Potter Urban 94.23% 94.20% 0% 92.17% 99.99% 97.12% Presidio Rural 85.01% 91.61% 0.77% 0% 0% 97.87% Rains Rural 0% 38.84% 0% 99.83% 100% 99.83% Randall Suburban 93.74% 91.64% 0% 84.10% 100% 97.61% Reagan Rural 86.27% 86.66% 0% 51.48% 0% 88.08% Real Rural 1.61% 81.69% 0% 33.40% 0.15% 81.69% Red River Rural 55.09% 38.59% 0% 3.00% 96.11% 56.31% Reeves Rural 79.98% 74.80% 0% 37.86% 98.03% 87.07% Refugio Rural 62.78% 66.76% 0% 93.61% 97.39% 95.60% Roberts Rural 0% 59.69% 0% 11.83% 93.19% 71.46% Robertson Suburban 7.91% 51.58% 0% 25.85% 98.04% 73.70% Rockwall Suburban 94.81% 97.05% 0% 99.99% 99.99% 99.99% Runnels Rural 64.19% 74.80% 0.74% 0% 0.83% 80.29% Rusk Suburban 54.55% 44.12% 0% 0.68% 98.37% 86.40% Sabine Rural 0% 11.44% 0% 0% 3.39% 11.39% San Augustine Rural 27.44% 26.90% 0% 1.00% 3.79% 28.63% San Jacinto Suburban 51.72% 68.07% 0% 42.87% 99.95% 89.17% San Patricio Suburban 84.16% 16.73% 0% 99.87% 99.93% 99.93% San Saba Rural 43.86% 99.98% 0% 53.98% 1.00% 99.98% Schleicher Rural 0% 63.77% 0% 0% 90.91% 63.75% Scurry Rural 82.21% 74.87% 0% 1.57% 99.70% 84.76% 44 Connected Texas

45 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Shackelford Rural 0% 64.87% 0% 1.00% 23.28% 64.85% Shelby Rural 29.79% 36.89% 0% 3.46% 10.42% 46.39% Sherman Rural 0% 91.27% 1.80% 0% 99.78% 93.06% Smith Urban 88.71% 73.67% 2.00% 80.68% 100% 98.07% Somervell Rural 29.94% 42.09% 0% 99.97% 97.10% 99.97% Starr Rural 84.44% 8.20% 0.74% 15.12% 99.75% 92.93% Stephens Rural 84.38% 61.27% 0% 7.00% 3.65% 85.43% Sterling Rural 0% 75.05% 0% 2.00% 98.28% 74.90% Stonewall Rural 0% 38.04% 78.08% 9.00% 0% 88.43% Sutton Rural 74.92% 73.47% 0% 0.57% 93.60% 77.62% Swisher Rural 58.05% 84.05% 0% 1.95% 99.02% 96.41% Tarrant Suburban 89.26% 97.63% 0% 100% 100% % Taylor Urban 87.01% 95.85% 0.88% 91.37% 99.96% 98.63% Terrell Rural 0% 100% 0.25% 0% 0% % Terry Rural 72.53% 73.11% 0% 99.93% 100% 99.95% Throckmorton Rural 49.27% 69.38% 0.11% 1.10% 0% 77.31% Titus Rural 58.44% 41.04% 0% 0% 99.98% 64.25% Tom Green Urban 89.79% 87.27% 0% 0% 99.91% 91.37% Travis Urban 96.29% 96.85% 0% 98.14% 99.92% 99.91% Trinity Rural 34.46% 37.17% 0% 2.00% 98.62% 56.73% Tyler Rural 13.78% 24.26% 0% 43.21% 99.39% 53.57% Upshur Suburban 42.20% 74.55% 17.96% 3.13% 66.79% 92.03% Upton Rural 0% 75.37% 0% 25.66% 0.81% 82.34% Uvalde Rural 68.81% 64.75% 0% 0.82% 91.24% 84.56% Val Verde Rural 89.96% 1.84% 2.00% 1.91% 96.35% 92.36% Van Zandt Rural 10.61% 26.22% 0% 84.51% 99.01% 93.28% Victoria Urban 84.06% 75.69% 0% 98.47% 99.89% 98.97% Walker Rural 69.80% 67.30% 0% 0% 99.99% 80.85% The Broadband Landscape in the State of Texas 45

46 County Urban/Rural Classification Cable DSL Fiber Fixed Wireless Mobile Wireless All Platforms Except Mobile Waller Suburban 5.07% 49.83% 0% 68.59% 99.87% 93.25% Ward Rural 76.21% 63.74% 0% 97.27% 99.99% 97.89% Washington Rural 57.68% 66.23% 0% 96.99% 99.75% 99.00% Webb Urban 0% 87.87% 0.25% 0% 99.46% 87.87% Wharton Rural 55.76% 63.56% 0% 54.74% 99.80% 83.10% Wheeler Rural 39.17% 57.62% 0% 90.38% 5.20% 91.97% Wichita Urban 96.42% 88.52% 0% 99.82% 99.98% 99.99% Wilbarger Rural 86.24% 84.97% 2.20% 94.33% 96.14% 96.76% Willacy Rural 55.70% 17.73% 1.46% 92.22% 99.97% 99.84% Williamson Suburban 89.36% 90.13% 0% 94.28% 99.89% 98.82% Wilson Suburban 1.00% 0.30% 0% 99.73% 98.83% 99.73% Winkler Rural 82.04% 84.42% 0% 99.79% 100% 99.79% Wise Suburban 25.40% 81.85% 0% 99.56% 98.15% 99.82% Wood Rural 42.65% 49.27% 4.67% 63.39% 71.90% 92.01% Yoakum Rural 55.72% 71.67% 0% 99.87% 99.79% 99.87% Young Rural 22.42% 79.41% 0% 23.09% 58.43% 82.31% Zapata Rural 79.73% 70.99% 0% 0% 99.81% 86.55% Zavala Rural 61.93% 59.15% 0% 0% 71.22% 66.74% State Total NA 81.45% 86.17% 0.78% 82.69% 97.71% 96.63% Source: Connected Texas, May Connected Texas

47 2.4 Facilities-Based Broadband Competition in the Texas Broadband Market This section analyzes the number of facilities-based broadband providers across Texas counties. While the number of facilities-based providers is not a direct measure of competition within the broadband market (because providers networks need not overlap, but instead offer service in different parts of a county), this measure is indicative of potential competition from existing or potentially redundant networks offering similar service to consumers. For a historical view on similar data, see the Texas Public Utility Commission s study on the Scope of Competition in Telecommunications Markets of Texas. 27 Figure 7 and Table 13 below report the number of broadband providers across counties in Texas. The provider information is derived from the broadband mapping effort underway by Connected Texas and includes all terrestrial, non-mobile providers, including DSL, cable, fiber-to-the-home, and fixed wireless providers. Table 13 - Number of Broadband Providers in the State of Texas Number of Broadband Providers Number of Counties Household Density Percent Served Households by at least 768 Kbps Percent Served Households by at least 3 Mbps % 82.51% % 90.28% % 96.04% % 97.98% % 99.96% Table 13 is a summary of the providers groups from Figure 7. The data indicate that there exists more facilitiesbased providers in areas of high population density. Further, service provision is more prevalent in counties where there are more facilities-based providers present. Whether this fact is due to greater competition or simply the fact that the economics of network build-out are more robust in high-density of population areas is unclear. The data also show that across Texas, every county has the presence of at least one broadband provider. Irion, Loving, Schleicher, and Terrell are four counties that only have one provider. These counties are in the western portion of Texas, and it can be seen in Figure 7 that many counties in that region have fewer than four broadband providers. In contrast, Kaufman, Johnson, Dallas, Parker, Hunt, Denton, Collin, and Tarrant counties have at least 15 providers. In fact, every county with at least 15 providers is in the Dallas-Fort Worth area. A majority of counties with a high number of broadband providers are around major metropolitan population centers in the eastern portion of Texas. Statewide, 87 counties (or 34%) have between one and four broadband providers present. Most of these counties are in the panhandle, western, and southwestern portions of Texas. The 28 counties (or 11%) each having at least 11 providers are mostly counties in or around Dallas-Fort Worth, San Antonio, Austin, and Houston. The statewide average for providers within a county in Texas is six. 27 Scope of Competition in Telecommunications Markets of Texas, Report to the 82nd Texas Legislature, Public Utility Commission of Texas, 2009 and 2011, Available at and reports/scope/2011/2011scope_tele.pdf. The Broadband Landscape in the State of Texas 47

48 Figure 7 Number of Broadband Providers by County Number of in Broadband the State Providers of Texas by County in the State of Texas Broadband providers on this map are terrestrial, non-mobile Broadband providers on this map are broadband service providers. terrestrial, non-mobile broadband service providers. Broadband Providers by County Connected Texas

49 2.5 Universal Service Funding Programs Across Texas This section reviews the Universal Service Fund (USF) support programs across Texas. There are two USF programs benefiting Texas providers, communities, and households: the federal USF program, administered by the USAC on behalf of the FCC, and the Texas USF program (TUSF), administered by the Texas Public Utilities Commission. The Texas USF is amongst the largest state USF programs in the nation and is larger than the federal USF program for the state. The Texas USF fund is important in understanding the dynamics of the broadband landscape across the state, particularly in rural areas. Total federal USF disbursements across Texas between 1998 and 2009 amounted to $4.95 billion, while Texas USF program disbursements between 2000 and 2008 amounted to $5.09 billion, with an average $566 million per year. 28 The impact of past federal and state USF disbursements across rural areas in Texas is important to understand the broadband landscape in The National Broadband Plan recommends reform to key aspects of the USF program and the related Intercarrier Compensation rates. In light of the amount of federal USF disbursements across Texas, this reform currently underway at the FCC is likely to have an important impact on Texas. A description of the proposed reforms is included in this section. Furthermore, because the Texas USF program is built to complement the federal program, federal USF reform could have a significant impact upon the TUSF and the communities and households that benefit from it. Further research is merited to better understand the impact of these USF programs on the expansion of broadband networks Federal USF Disbursements in Texas Nationwide, the FCC projects a total of $8.7 billion allocated to the federal Universal Service Fund in The FCC s USF includes three core programs: the High Cost support program, providing subsidies to network providers in predominantly rural areas; the Low Income support programs, providing support for telecommunication needs to low-income households; and the e-rate program, providing support for telecommunication services to schools and libraries. 29 The High Cost support program is designed to ensure that consumers have access to and pay rates for telecommunications services that are reasonably comparable to those services provided and rates paid in urban areas. In 2010, a budget of $4.6 billion was projected for the High Cost (HC) program, currently funding an estimated 1,800 eligible telecommunications carriers; $1.2 billion was projected to subsidize low-income households under the Lifeline and Linkup programs; $2.7 billion was projected for the school and libraries E-Rate program; and $214 million was projected for the Rural Health Care subsidy program. 30 Under current federal USF rules for eligibility and apportionment, small rate-of-return providers serving rural areas are more likely to receive funding under the program. According to the FCC, in 2009 approximately $2 billion of the High Cost program went to 814 rate-of-return carriers, $1 billion to 17 price-cap carriers, and $1.3 billion to 212 competitive eligible telecommunications carriers (CTECs) across the nation. 31 The Texas communications market is characterized by a large number of small providers, many of which are likely to meet federal USF HC eligibility requirements. In 2009 the total federal USF program disbursement in Texas was $520 million, with a total disbursement of $4.95 billion from 1998 to High Cost support disbursements for 28 Annual Report, 2010, Universal Service Administration Company. ( Annual Report 2009, USAC ). Available at: documents/about/pdf/usac-annual-report-2009.pdf. Report to the 80th Texas Legislature Review and Evaluation of the Texas Universal Service Fund Pursuant to PURA Section , Public Utility Commission of Texas, January 2007, pg. 7, available at and Report to the 81st Texas Legislature Scope of Competition in Telecommunications Markets of Texas, Public Utility Commission of Texas, January 2009, page NBP, p. 140 and Annual Report 2009, USAC. 31 NBP, p The Broadband Landscape in the State of Texas 49

50 the state of Texas in 2009 totaled $262 million, or 6.1% of all federal High Cost USF disbursements in The majority of these funds, or $223.5 million, were disbursed among providers classified as rural. 32 The low income support program disbursements in 2009 across Texas were $102 million, or almost 10% of this program s budget for E-rate program disbursements amounted to $155 million, or 8.2% total disbursement for this program. 33 Table 14 summarizes these data. Table 14 Federal Universal Service Fund Disbursements in the State of Texas (millions) 2009 From High Cost Program $262 $2,400 Low Income $102 $700 E-Rate $155 $1,846 Total USF Disbursement $520 $4,950 Source: For Federal USF Annual Report, USAC Texas USF Program The Texas Legislature established the Texas Universal Service Fund (TUSF) in 1987 to complement the federal USF program. Since then, changes have been made in the overall program. The TUSF program is currently financed by a charge of about 3.4% of all taxable telecommunications receipts of Texas telecommunications providers (reduced from 4.4% in 2009). Telecommunications providers are allowed to pass the costs of the TUSF through to residential and business customers on their monthly bills. 34 There are eleven TUSF programs, of which the following four are the largest and in 2008 amounted to over 97% of overall TUSF disbursements: Texas High-Cost Universal Service Plan (THCUSP) provides financial assistance to eligible telecommunications providers (ETPs) that serve high cost, rural areas of the state. The program seeks to ensure that all customers throughout the state have access to basic local telecommunications service at just, reasonable, and affordable rates; Small and Rural ILEC Universal Service Plan establishes guidelines for financial assistance support to ETPs that provide service in the study areas of small and rural Incumbent Local Exchange Carriers (ILECs) within the state. The program seeks to ensure that all customers throughout the state have access to basic local telecommunications service at just, reasonable, and affordable rates; Lifeline retail local service offering in which an ETP or a RETP provides a discount of up to $7.00 per monthly bill on its local service rates and waives the Federal Subscriber Line Charge (SLC) for qualifying low-income customers. In addition, in 2009 eligible customers in the service areas of AT&T Texas, Verizon Southwest, Embarq, and Windstream Communications Southwest, or their successors, will receive a discount equal to 25% of any increases to residential basic service rates in regulated exchanges of these four Annual Report, 2009, USAC, p Texas Public Utilities Commission, 50 Connected Texas

51 companies. Some or all of these discounts are reimbursed from the TUSF; Specialized Telecommunications Assistance Program provides reimbursement to vendors and service providers that offer reduced rates for telecommunications equipment and services for hearingimpaired customers. 35 Texas USF program disbursements in 2008 are reported in Table 15 below. 36 Table 15 Texas Universal Service Fund Disbursements 2008 ($Millions) Large Company High Cost US Plan $393.8 Small and Rural Service Plan $90.2 Lifeline and Linkup $34.5 Specialized Telecommunications Assistance Program $9.58 Total TUSF Disbursement $543.5 Source: Texas Public Utilities Commission TUSF disbursements from 2000 to 2008 amount to $5.09 billion, with average annual disbursements of $566 million. Annual TUSF disbursements have been declining slightly since The National Broadband Plan recommends reform of key aspects of the USF program and the related Intercarrier Compensation rates. There are overall three key goals of this reform: a shift in the overall objective of the program progressively from its present goal of supporting traditional telecommunications service to support twenty-first century broadband capacity; eligibility conditions for the various programs, including the High Cost programs that have an important impact in rural areas; and a reform of the USF contribution base. 38 Through the federal and Texas USF programs combined, total USF disbursements in the state amount to more than $10.04 billion between 1998 and The majority of these, or approximately $5.96 billion, provide subsidies for telecommunications infrastructure capital and operational costs in rural, or High Cost, areas. In light of the amount of federal USF disbursements across Texas, this FCC reform currently underway is likely to have an important impact upon communities across the state. Furthermore, because the Texas USF program is built to complement this federal program, the reform of the federal USF program could have significant impact upon the TUSF and the communities and households that benefit from it. 35 Report to the 80th Texas Legislature Review and Evaluation of the Texas Universal Service Fund Pursuant to PURA Section , Public Utility Commission of Texas, January 2007, pg. 7, available at and Report to the 81st Texas Legislature Scope of Competition in Telecommunications Markets of Texas, Public Utility Commission of Texas, January 2009, page 78. Available at 36 Report to the 81st Texas Legislature Scope of Competition in Telecommunications Markets of Texas, Public Utility Commission of Texas, January 2009, page Report to the 81st Texas Legislature Scope of Competition in Telecommunications Markets of Texas, Public Utility Commission of Texas, January 2009, page NBP, pp ; and NOI and NPRM, Connect America Fund, A National Broadband Plan for Our Future, High-Cost Universal Service Support, WC Docket No , GN Docket No , WC Docket No , April 21, 2010, Federal Communications Commission. Available at hraunfoss.fcc.gov/edocs_public/attachmatch/fcc-10-58a1.pdf Report to the 80th Texas Legislature Review and Evaluation of the Texas Universal Service Fund Pursuant to PURA Section , Public Utility Commission of Texas, January 2007, pg. 7, available at and Report to the 81st Texas Legislature Scope of Competition in Telecommunications Markets of Texas, Public Utility Commission of Texas, January The Broadband Landscape in the State of Texas 51

52 Further research, including by Connected Texas, is merited to better understand the impact of these USF programs on the expansion of broadband networks; and how efficient the use of the funds has been, to ensure the goals of the USF programs are met, and whether USF historical disbursements explain some of the rural-urban digital divide across the state. Under current federal USF rules, small rate-of-return providers are more likely to receive funding under this program. As stated above, according to the FCC, in 2009, approximately $4.3 billion of the High Cost program went to 814 rate-of-return carriers, 17 price-cap carriers, and 212 competitive eligible telecommunications carriers (CTECs) nationwide. 40 A significant determinant of whether a community receives federal USF subsidies is the size and type of provider serving that community. 2.6 FCC and Connected Texas Availability Estimates A Comparative Analysis As part of the National Broadband Plan, the FCC published in April 2010 a study titled The Broadband Availability Gap, which includes research assessing the level of funding necessary to provide broadband of at least 4 Mbps download and 1 Mbps upload speeds to all U.S. households that don t currently have service available. 41 The study includes a simulation of the current state of broadband availability that estimates 123 million households, or 95% of the U.S. population, have or will have in the near-term without government support service supported at these speeds; while 7 million households, or 5% of the nation, do not. 42 It further estimates that the cost to serve these households at the National Broadband Availability Target capacity is $23.5 billion, or approximately $3,350 per unserved household. 43 This FCC simulation constitutes the only nationwide estimate of broadband inventory and sets the stage for the national debate over reform of the Universal Service Fund program. As such, it is an important benchmark in the public policy debate. The FCC Availability Gap study includes simulated estimates of broadband inventory for each county across the nation. For the state of Texas, these estimates are the result of a simulation based on commercially available data and data from other states. This section compares the FCC estimates with Connected Texas measured broadband inventory across all counties in Texas. Connected Texas has collected broadband inventory data by speed tiers as required by NTIA s SBDD NOFA. 44 This comparative analysis contrasts broadband inventory across Texas of at least 3 Mbps download speeds (the closest NTIA defined speed tier to the FCC s National Broadband Availability Target) with the FCC simulation estimates of at least 4 Mbps download speeds. The FCC s Availability Gap study estimates that 95% of US households are currently served by broadband of at least 4 Mbps download and 1 Mbps upload speeds, or will be in the near future without the need for government subsidies. 45 Connected Texas estimates that in the spring of 2010, 95.3% of Texas households were served by broadband of at least 3 Mbps download speeds and 93.19% of Texas households were served by broadband of at least 6 Mbps download speeds. 46 Connected Texas state-level broadband inventory estimates are in line with the FCC s NBP nationwide simulation of broadband availability. A more granular, county-level evaluation of the two studies, however, reveals discrepancies. Table 16 reports FCC 40 NBP, p FCC Availability Gap at footnote 3, FCC Availability Gap, FCC Availability Gap, SBDD NOFA, Technical Appendix. 45 FCC Availability Gap, See Table Connected Texas

53 and Connected Texas estimates of broadband availability by county. 47 The data is sorted according to density of population and showcases that the FCC and Connected Texas estimates are relatively similar across high population density, urban counties. By contrast, results from the two studies differ across rural counties, and in some cases the estimates are significantly different. Statewide, correlation estimates between FCC and Connected Texas broadband inventory estimates is Correlation across rural counties is only 0.33, contrasting with 0.47 across suburban counties and 0.67 across urban counties. And while the statewide estimates across the two studies are on par, the two estimates differ significantly in rural counties such as Terrell and Cottle, where the FCC estimates 100% coverage and Connected Texas measures less than 5% of households served at 3 Mbps speeds or above; or counties such as Floyd, Karnes, La Salle, Hopkins, Dimmit, and Walker, where the FCC estimates less than 10% of households served, compared to Connected Texas estimates of more than 80% of households served by at least 3 Mbps broadband service. What appears to be driving these differences? The FCC Availability Gap study is based on limited data available from commercial sources and a handful of states. This limited data is used to simulate broadband inventory across other states where, as in the case of Texas, robust broadband inventory data did not exist in April Furthermore, the FCC Availability Gap simulation is based on a series of assumptions of national broadband market trends that are not necessarily applicable to the Texas broadband market. These discrepancies likely explain the measured differences between the FCC and Connected Texas estimates across rural areas in Texas. The FCC Availability Gap simulation estimates national cable penetration based on cable penetration data from both commercially and publicly available data from the state of Massachusetts. 48 Wireless network coverage is estimated using a commercial dataset from American Roamer. However, due to lack of reliable sources for Wireless ISP (WISP) provider data, this type of platform is not included in the FCC analysis. 49 National estimates of DSL (or telco) penetration are based on data from Minnesota, California, Alabama, Wyoming, and Pennsylvania. 50 For all other states, the FCC Availability Gap analysis estimates broadband penetration using statistical simulation modeling. According to the FCC Availability Gap analysis, the main risk in this approach is the possibility of systematic differences between the states for which we have data and the states for which we do not. Since the statistical regression relies on a small number of states, to the extent that the tie between demographics and network availability in the rest of the country is not the same as these states, the regression will not be accurate. The states we used in our analysis have a wide variety of rural and urban areas and have varied geographic challenges which are advantageous, but there is no way to verify our outputs without additional data. 51 Because of the large number and small size of telecommunications operators in the state, it is likely that a relatively high percentage of households across rural Texas are served by rate-of-return DSL providers, as opposed to Regional Bell Operating Companies (RBOCs) or mid-size price-cap carriers. This has important implications for eligibility under the Universal Service Fund program, which currently is based, among other factors, upon the regulatory framework that applies to each provider. Small rate-of-return carriers, in particular, are more likely to benefit from the High Cost program. 52 It is unclear from the FCC Availability Gap report whether the FCC s simulation includes USF funding as a factor driving the broadband inventory simulation across the nation. Omission of 47 FCC county availability gap simulation estimates are available at 48 FCC Broadband Availability Gap, p FCC Broadband Availability Gap, p FCC Broadband Availability Gap, p FCC Broadband Availability Gap, p NBP, p. 141 and USF NOI, footnote 7. The Broadband Landscape in the State of Texas 53

54 such factors may explain the discrepancies across the two studies, particularly in rural states with a large number of small providers, like Texas. The Texas broadband market presents unique structural factors that collectively amount to important differences between Texas and the states of Massachusetts, Minnesota, California, Alabama, Wyoming, or Pennsylvania, upon which the FCC relies to formulate its broadband inventory analysis. These structural differences likely explain the discrepancies between the Connected Texas broadband inventory and the FCC Availability Gap simulation for Texas. It is important to continue gathering and validating broadband inventory and adoption data in Texas particularly in rural areas in order to accurately measure broadband gaps and demand across the state, and better inform the ongoing Universal Service Fund reform debate currently underway at the FCC. Table 16 - Broadband Estimated Availability in the State of Texas by County: FCC and Connected Texas Estimates Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Anderson % 72.15% % Andrews % 99.08% 0.92% Angelina % 92.53% -5.53% Aransas % 98.37% 1.63% Archer % 95.08% 4.92% Armstrong % 92.00% % Atascosa % 89.33% % Austin % 73.99% 9.01% Bailey % 92.72% % Bandera % 39.26% 49.74% Bastrop % 97.84% % Baylor % 99.02% 0.98% Bee % 97.91% -5.91% Bell % 97.64% 2.36% Bexar % 99.93% -0.93% Blanco % 99.61% % Borden % 30.40% % 54 Connected Texas

55 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Bosque % 59.74% -2.74% Bowie % 85.38% 3.62% Brazoria % 95.47% -5.47% Brazos % 97.11% 1.89% Brewster % 75.27% 5.73% Briscoe % 65.60% -1.60% Brooks % 68.70% 31.30% Brown % 79.27% % Burleson % 45.18% 16.82% Burnet % 95.29% 4.71% Caldwell % 99.84% -5.84% Calhoun % 73.60% 14.40% Callahan % 74.84% 0.16% Cameron % 99.33% -2.33% Camp % 57.74% 28.26% Carson % 83.96% 2.04% Cass % 35.97% -4.97% Castro % 56.40% 13.60% Chambers % 75.56% 8.44% Cherokee % 61.00% 22.00% Childress % 88.86% 11.14% Clay % 93.73% -8.73% Cochran % 94.98% % Coke % 5.44% 42.56% Coleman % 56.69% 0.31% Collin % % -1.00% The Broadband Landscape in the State of Texas 55

56 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Collingsworth % 60.15% 39.85% Colorado % 56.00% % Comal % 99.94% 0.06% Comanche % 93.89% % Concho % 68.17% % Cooke % 98.44% % Coryell % 92.37% % Cottle % 4.46% 95.54% Crane % 99.22% 0.78% Crockett % 74.18% -2.18% Crosby % 95.48% % Culberson % 66.18% 13.82% Dallam % 77.46% -1.46% Dallas % % 0.00% Dawson % 96.53% % Deaf Smith % 88.65% 3.35% Delta % 99.60% % Denton % % 0.00% DeWitt % 83.31% -1.31% Dickens % 4.75% 44.25% Dimmit % 80.14% % Donley % 77.05% 13.95% Duval % 77.16% % Eastland % 80.66% 8.34% Ector % % -1.00% Edwards % 93.37% % 56 Connected Texas

57 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Ellis % 99.52% -1.52% El Paso % 98.49% 0.51% Erath % 85.70% -5.70% Falls % 69.43% % Fannin % 93.65% % Fayette % 55.59% 14.41% Fisher % 48.01% 11.99% Floyd % 99.20% % Foard % 98.35% % Fort Bend % 97.86% 1.14% Franklin % 81.30% 8.70% Freestone % 52.85% 26.15% Frio % 92.53% % Gaines % 99.49% 0.51% Galveston % 99.21% -3.21% Garza % 95.08% 4.92% Gillespie % 61.20% 14.80% Glasscock % 7.37% -7.37% Goliad % 54.87% % Gonzales % 98.72% % Gray % 97.68% -4.68% Grayson % % % Gregg % 95.69% 4.31% Grimes % 78.29% -8.29% Guadalupe % % % Hale % 99.35% -8.35% The Broadband Landscape in the State of Texas 57

58 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Hall % 62.89% 22.11% Hamilton % 73.88% % Hansford % 73.31% % Hardeman % 66.15% -8.15% Hardin % 76.96% 18.04% Harris % 99.91% 0.09% Harrison % 63.12% 32.88% Hartley % 83.91% % Haskell % 93.84% % Hays % 99.99% -7.99% Hemphill % 59.71% 13.29% Henderson % 85.73% -3.73% Hidalgo % 99.95% -1.95% Hill % 71.69% 0.31% Hockley % 99.78% % Hood % 99.97% % Hopkins % 87.89% % Houston % 34.96% 45.04% Howard % 98.59% -2.59% Hudspeth % 47.76% % Hunt % 99.99% % Hutchinson % 93.80% 6.20% Irion % 44.77% 6.23% Jack % 66.83% 20.17% Jackson % 66.17% 8.83% Jasper % 44.53% 36.47% 58 Connected Texas

59 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Jeff Davis % 46.89% 2.11% Jefferson % 96.25% 2.75% Jim Hogg % 95.18% % Jim Wells % 92.94% -6.94% Johnson % 99.92% % Jones % 50.87% 8.13% Karnes % 94.65% % Kaufman % 97.50% -4.50% Kendall % 83.25% -2.25% Kenedy % 0.04% 16.96% Kent % 0.00% 53.00% Kerr % 95.80% 0.20% Kimble % 54.02% 45.98% King % 0.92% 0.08% Kinney % 68.23% % Kleberg % 84.40% 0.60% Knox % 99.98% % Lamar % 94.37% % Lamb % 98.26% % Lampasas % 66.49% 19.51% La Salle % 89.51% % Lavaca % 77.37% 6.63% Lee % 91.64% -9.64% Leon % 39.55% 6.45% Liberty % 61.54% 24.46% Limestone % 53.34% 15.66% The Broadband Landscape in the State of Texas 59

60 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Lipscomb % 71.63% 8.37% Live Oak % 99.26% % Llano % 98.44% % Loving % 0.00% 16.00% Lubbock % 99.99% -6.99% Lynn % 93.37% % McCulloch % 98.38% % McLennan % 93.80% 0.20% McMullen % 50.55% % Madison % 58.95% % Marion % 56.33% -0.33% Martin % 45.39% % Mason % 74.95% -0.95% Matagorda % 75.82% 21.18% Maverick % 96.21% 3.79% Medina % 94.68% % Menard % 52.09% -9.09% Midland % 99.62% 0.38% Milam % 96.81% % Mills % 99.92% % Mitchell % 33.57% % Montague % 65.12% 17.88% Montgomery % 97.31% -2.31% Moore % 92.91% 7.09% Morris % 57.26% 23.74% Motley % 3.06% 51.94% 60 Connected Texas

61 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Nacogdoches % 92.36% % Navarro % 70.68% 13.32% Newton % 10.76% 17.24% Nolan % 82.38% 1.62% Nueces % 99.93% 0.07% Ochiltree % 93.67% 6.33% Oldham % 50.84% 49.16% Orange % 92.44% 7.56% Palo Pinto % 91.46% -9.46% Panola % 37.72% % Parker % % -9.00% Parmer % 81.61% 3.39% Pecos % 72.10% 22.90% Polk % 81.83% % Potter % 96.99% -0.99% Presidio % 86.07% 13.93% Rains % 60.07% % Randall % 97.60% -4.60% Reagan % 87.40% 12.60% Real % 81.69% % Red River % 56.22% 29.78% Reeves % 85.81% 14.19% Refugio % 72.26% 27.74% Roberts % 71.44% -7.44% Robertson % 58.73% % Rockwall % 99.99% 0.01% The Broadband Landscape in the State of Texas 61

62 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Runnels % 80.30% 12.70% Rusk % 64.16% 7.84% Sabine % 11.38% 55.62% San Augustine % 26.91% 38.09% San Jacinto % 74.74% -1.74% San Patricio % 96.30% 2.70% San Saba % 99.98% % Schleicher % 63.75% -2.75% Scurry % 83.22% 7.78% Shackelford % 64.85% 30.15% Shelby % 35.00% 15.00% Sherman % 65.43% 4.57% Smith % 96.69% -0.69% Somervell % 99.97% 0.03% Starr % 88.49% 0.51% Stephens % 84.63% 0.37% Sterling % 74.90% -4.90% Stonewall % 78.34% % Sutton % 73.37% 5.63% Swisher % 95.56% -7.56% Tarrant % % 0.00% Taylor % 98.60% -0.60% Terrell % 0.00% % Terry % 99.67% % Throckmorton % 39.42% 22.58% Titus % 64.24% 14.76% 62 Connected Texas

63 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Tom Green % 91.25% 2.75% Travis % 99.91% -1.91% Trinity % 40.51% 20.49% Tyler % 50.46% 5.54% Upshur % 91.54% % Upton % 82.34% 17.66% Uvalde % 82.06% 4.94% Val Verde % 89.95% 5.05% Van Zandt % 65.61% % Victoria % 85.28% 3.72% Walker % 80.64% % Waller % 91.33% % Ward % 97.90% % Washington % 75.97% % Webb % 86.11% 6.89% Wharton % 65.80% 20.20% Wheeler % 91.76% % Wichita % 99.07% 0.93% Wilbarger % 93.92% -5.92% Willacy % 92.74% % Williamson % 98.56% 1.44% Wilson % 98.75% % Winkler % 99.79% -8.79% Wise % 99.56% % Wood % 79.08% 17.92% Yoakum % 99.87% -8.87% The Broadband Landscape in the State of Texas 63

64 Percent Households Served County Household Density FCC Gap Simulation ( 4 Mbps) Connected Texas Estimates ( 3 Mbps) Difference (= FCC-CTX % Estimate) Young % 71.70% % Zapata % 84.79% % Zavala % 66.63% -8.63% STATE TOTAL % 95.30% -0.30% Source: Household Numbers and Density: Census Bureau, FCC Availability Gap. Broadband Availability Estimates: Connected Texas, May Connected Texas

65 3 The Broadband Adoption Gap in the State of Texas As part of the SBDD grant program, Connected Texas has collected consumer survey data aimed at understanding demand-side trends and barriers in the Texas broadband market. This section summarizes the main findings of this research, contrasts Texas trends with available national benchmarks, and discusses policy recommendations that stem from the data and the FCC s NBP policy recommendations. 53 Appendix B of this report presents the Connected Texas, released in November 2010, which includes detailed results of Texas consumer survey research. Approximately two-fifths (38%) of Texas residents do not have broadband service in the home, a figure that is below the national adoption gap measured by the FCC. The percentage of households across Texas that have broadband service in the home is 62%; by comparison, national surveys show that 67% of American households subscribe to home broadband service. Statewide, 81% of all residents own a home computer. This translates into over 3.4 million adults in Texas without a home computer, with 35% of those same adults stating that cost was the major limiting factor. Nine percent of Texas residents use dial-up service to connect to the Internet and six percent are not certain whether they use broadband or dial-up in their home. Ten percent of adults surveyed report that their only way of accessing the Internet is at a location outside their home. A total of 87% of Texans report they access the Internet from either their home or another location; this contrasts with national estimates of 74% of adult residents who access the Internet from home or somewhere else. 54 Across Texas, 77% of surveyed adults report accessing the Internet from home, 34% from work, and 12% from a library. Thirty percent of Texas residents access the Internet via a cell phone or mobile device. Finally, 13% report that they do not use the Internet, as shown in Figure 8. Figure 8: Texas Technology Adoption Summary Use dial-up from home 9% Use the Internet someplace other than home 10% Use broadband from home 62% Do not use the Internet 13% Don t know if home Internet service is dial-up or broadband 6% 53 All Texas data in this section is based on Connected Texas consumer survey research, available in Appendix A: Connected Texas Residential Technology Assessment, November All national data, unless otherwise indicated, is based on the FCC study Broadband Adoption and Use in America: OBI Working Paper Series No. 1, J. Horrigan, Federal Communications Commission, February 2010, ( FCC Broadband Adoption and Use ). Available at 54 Internet, Broadband, and Cell Phone Statistics, Pew Internet and American Life Project, January 5, The Broadband Landscape in the State of Texas 65

66 As previously noted, according to Connected Texas broadband inventory estimates, 96.63% of all Texas households have broadband available (or are served) at the basic speeds of 768 Kbps download/200 Kbps upload. 55 Texas 62% broadband adoption rate indicates that approximately 34% of Texas households have broadband available, but, for various reasons, are choosing not to subscribe to the service in the home. Texas adoption gap is consistent with that measured by the FCC at the national level and suggests that when it comes to broadband, the old adage of build it and they will come does not always work. The NBP suggests the adoption gap needs to be tackled at the federal, state, and local level through a series of complementary strategies. The NBP also recommends modernizing programs aimed to increase adoption rates for low-income people to support broadband, improve participation in the digital economy and society, and protect against waste, fraud, and abuse. 3.1 Broadband Adopters and Non-Adopters FCC national data shows that non-adopters are generally senior citizens, members of ethnic minorities, rural dwellers, people with disabilities, people of low income, and/or people with less education. 56 These data are largely in line with estimated adoption rates by similar demographic groups in Texas. Figure 9 reports Texas computer and broadband adoption data across these same demographic groups. 57 Figure 9: Texas Technology Adoption by Demographic Computer ownership Broadband adoption 81% 62% 59% 62% 68% 72% 72% 48% 51% 49% 36% 37% 21% 21% Statewide Adults with disabilities Age 65 or older Low-income households* Low-income households with children Minority Rural residents * Low-income household is defined as a household with annual income below $25,000 While the statewide average broadband adoption rate is 62%, broadband adoption rates in Texas are 36% for adults with disabilities; 37% among adults age 65 and older; 21% among households with annual incomes below 55 See Section 2 of this report. 56 See FCC Broadband Adoption and Use, Exhibit 1, p See Appendix B, Slide Connected Texas

67 $25,000; 21% among low-income households with children; 51% among minority households; and 49% among rural households. 3.2 Barriers to Adoption The FCC Broadband Adoption and Use study indicates that the main reason people do not adopt broadband is cost of the service, with 36% of respondents who do not adopt broadband citing cost as a barrier to adoption. Fifteen percent specifically point to monthly fees for service, 10% say they cannot afford a computer, and 9% cite activation fees and reluctance to enter into long-term contracts as a barrier to adoption. Twenty percent of nonadopters cite digital literacy as an adoption barrier. Twelve percent of respondents cite lack of comfort with computers, and 10% cite concerns about online safety. Relevance is the third most commonly cited barrier to adoption; nineteen percent of non-adopters cite relevance as a barrier. Five percent report that they are content with existing dial-up service or don t need more speed; 5% believe the Internet is a waste of time; 4% report there is nothing they want to see online; and 4% don t use the Internet much. Other measured reasons include use of the Internet at work, with 3% of non-adopters citing this, and lack of broadband availability reported by 5% of nonadopters. 58 Figure 10 reports data collected in Texas, which identifies similar barriers to adoption of broadband technology. Figure 11 also represents data collected by Connected Texas on barriers to computer ownership. Figure 10: Texas Barriers to Broadband Adoption Among Texas residents with no home broadband service* I don t need broadband/the Internet, or don t know why I don t subscribe 30% I don t have a computer 27% Too expensive 21% Broadband is not available in my area 12% I can get broadband access somewhere else 7% I don t know enough about broadband 5% Concerns about fraud or identity theft Available broadband service is not fast enough 2% 3% *Percentages do not add up to 100% because individuals could give multiple responses. 58 FCC Broadband Adoption and Use. The Broadband Landscape in the State of Texas 67

68 Figure 11: Texas Barriers to Computer Adoption Among Texas residents who do not own a home computer* Too expensive 35% I don t need a computer, or don t know why I need one 34% Computers are too complicated 18% I use a computer someplace else Other 8% 18% *Percentages do not add up to 100% because individuals could give multiple responses. The top barriers to adoption among Texas adults who do not have broadband in the home and those who do not own a computer in the home are: Relevance: Thirty percent of Texas residents who do not have home broadband service say it is because they do not need Internet service or don t understand the benefits it affords. Thirty-four percent of adults who do not have a computer in the home say they don t need it or don t know what they need a computer for. Among rural non-subscribers, the belief that they do not need a computer or don t know why they need a computer is still the top barrier to adoption (43%). Computer Ownership: Twenty-seven percent of broadband non-adopters say that the lack of a home computer is a barrier to broadband adoption. Affordability: Twenty-one percent of broadband non-adopters say broadband is too expensive and 35% of those lacking a computer in the home say it is because computers are too expensive. Availability: Twelve percent of Texans who do not subscribe to home broadband service report a lack of available broadband service. Other Locations: Seven percent of broadband non-adopters claim they access the Internet from somewhere else (11% of those without any home Internet access report accessing the Internet from somewhere else). Digital Literacy and Perceived Online Risks: Eighteen percent of non-computer-owners report they don t have one because computers are too complicated. Five percent of non-broadband subscribers say I don t know enough about broadband. Fourteen percent of dial-up users say they don t upgrade to broadband because they don t know enough about broadband. Three percent of broadband non-adopters and five percent of Internet nonadopters report concerns about fraud and identity theft as a barrier to adoption Broadband Applications and Uses Broadband is a tool that enables citizens, companies, and government to better communicate, connect, and engage. To better understand how broadband is currently affecting the lives and endeavors of Texans today, and what opportunities exist to expand the benefits of this technology, survey research conducted by Connected Texas explores the online applications used by Texans See Appendix B. 60 See Appendix B. 68 Connected Texas

69 The top applications used by Texas Internet users include sending or receiving , researching and purchasing products or services online, using a search engine, and communicating with friends and family online. E-Health: Slightly more than two-thirds of Texas Internet users (68%) search for health or medical information online, while 40% communicate with their health insurance company, and 37% interact with doctors or healthcare professionals online. E-Government Services: E-government services are utilized by many Texas Internet users: 57% report that they search online for information about government services or policies. In addition, 45% conduct online transactions with government offices (such as e-filing taxes or filling out forms), 31% interact with Texas state government offices, 27% interact with local government offices, and 22% interact with elected officials or candidates online. E-Education: Many Texas Internet users go online for educational purposes. Statewide, 44% conduct research for schoolwork online, 39% interact with teachers online, and 24% take classes online. E-Jobs: Texas residents also use the Internet for work purposes. Among Texas Internet users, 57% interact with businesses, 53% interact with their co-workers online, 51% go online to search for jobs or employment, and 34% report that they go online to work from home at least occasionally. Further, in Texas, 17% of employed adults report that they telework. Teleworking could also provide an additional boost to the state s workforce, as one-sixth of retirees, and more than one-third of adults with disabilities and homemakers say they would likely join the workforce if empowered to do so by teleworking. The Broadband Landscape in the State of Texas 69

70 4 Connectivity Across Community Anchor Institutions in Texas Connected Texas has identified the names and addresses of 16,682 Community Anchor Institutions (CAIs) across the state of Texas, including 1,134 libraries, 10,648 K-12 schools, 418 institutions of higher education, 2,890 public safety facilities (including fire departments, state and local police, and sheriff s offices), 868 healthcare institutions (hospitals and medical clinics), and 724 other state, local, and federal government facilities. From this extensive list, 16,180 have been geocoded to determine their latitude and longitude for inclusion on the Connected Texas interactive broadband map. Of these identified CAIs, Connected Texas has gathered partial broadband connectivity data (such as broadband platform, download speed, or upload speed) from 1,786 institutions, or 10.7% of all identified CAIs, including: 321 Texas libraries, 68 K-12 schools, 98 higher education institutions, 609 public safety facilities, 180 healthcare facilities, and 510 other identified government institutions across the state. Among those CAIs that reported their service download speeds, the largest share of CAIs subscribe to service between 1.5 Mbps and 3.0 Mbps (45.2%), followed by those that subscribe to broadband service with an advertised download speed between 10 Mbps and 25 Mbps (14.2%). Among these CAIs that know their advertised download speeds, 11.4% reported that they consider their service to be broadband, yet they have download speeds below 768 Kbps. While these data are suggestive of the type of broadband subscriptions by CAIs across the state of Texas, the data should be interpreted cautiously. As noted, these broadband connectivity data represent only 10.7% of the identified CAIs across Texas, a percentage too low to be representative of the current state of CAI connectivity in the state. Connected Texas is currently engaged in gathering broadband connectivity data (broadband platform, download speed, and upload speed) from these identified institutions. It is important to continue the SBDD data collection effort to build a more complete dataset because of the policy implications of these connectivity data. A CAI layer has been introduced on Connected Texas interactive map, and is available for viewing at the following link in the advanced tab: This layer clearly demonstrates the current data that has been gathered for the seven different categories of CAIs by a unique identifier and displays their location, technology category, and speed (if available). This layer will be updated in the future to provide a clear visual representation of current broadband capacity at CAIs and provide an overview of what services are available to these institutions in each community throughout the state. The CAI layer will be used as a communications tool throughout the coming months to engage with CAIs throughout the state. An overview of this new technology and a link to the site will be provided to all CAI contacts that have been engaged through past outreach and will also serve as an introduction to new contacts as they are identified. Connected Texas has an ongoing mission to educate CAIs throughout the state on the importance of reporting their connectivity information for inclusion on the map and to be analyzed as a part of this report. Participation by these institutions will raise awareness about the importance of broadband connectivity and the impact that CAIs can have with access to a high-speed broadband connection. 70 Connected Texas

71 5 Broadband Stimulus Investments in Texas through the American Recovery and Reinvestment Act In addition to federal funding for telecommunications that comes through the Universal Service Fund, a second and significant source of support for broadband improvements in the state of Texas comes from the American Recovery and Reinvestment Act. Funding provided through five separate programs at the U.S. Department of Commerce or U.S. Department of Agriculture has been awarded to various grantees that exist in Texas. Figure 12: BTOP CCI $67,698,503 RUS BIP $206,487,414 BTOP PCC $26,805,892 BTOP SBA $2,015,025 The U.S. Department of Commerce s National Telecommunications and Information Administration (NTIA) administers the Broadband Technology Opportunities Program (BTOP) within three program categories: Comprehensive Community Infrastructure (CCI) -- Projects to deploy new or improved broadband Internet facilities (e.g., laying new fiber-optic cables or upgrading wireless towers) and to connect community anchor institutions such as schools, libraries, hospitals, and public safety facilities. These networks help ensure sustainable community growth and provide the foundation for enhanced household and business broadband Internet services. 61 Public Computer Centers (PCC) -- Projects to establish new public computer facilities or upgrade existing ones that provide broadband access to the general public or to specific vulnerable populations, such as low-income individuals, the unemployed, seniors, children, minorities, and people with disabilities. 62 Sustainable Broadband Adoption (SBA) -- Projects that focus on increasing broadband Internet usage and adoption, including among vulnerable populations where broadband technology traditionally has been underutilized. Many projects include digital literacy training and outreach campaigns to increase the relevance of broad The Broadband Landscape in the State of Texas 71

72 band in people s everyday lives. 63 NTIA also administers the State Broadband Data and Development Program, which is funding the Connected Texas initiative, Texas broadband inventory map and planning activities. 64 The U.S. Department of Agriculture s Rural Utilities Service (RUS) administers the Broadband Initiatives Program (BIP). BIP furnishes loans, grants, and loan/grant combinations to assist with addressing the challenge of rapidly expanding the access and quality of broadband services across rural America. 65 Below is a list of grants announced for the state of Texas under the programs listed above, totaling $303,006, Although it is too early to report on the impact these projects have had in Texas, Connected Texas will work to track these projects and their results and provide updates on them in future reports. BTOP CCI (Total Awarded = $67,698,503): 67 The Expanding Broadband Access Across Texas Project Level 3 EON, LLC received $4.67 million to build 17 new access points on Level 3 s existing broadband network to enable last mile providers to offer affordable high-speed services to underserved areas. The additional points of interconnection will offer broadband speeds between 50 Mbps and 10 Gbps on an open and nondiscriminatory basis to last-mile Internet service providers. The project could enhance broadband capabilities for as many as 400,000 households, 21,000 businesses, and 214 community anchor institutions, including schools, government agencies, and healthcare providers. The East Texas Medical and Educational Fiber Optic Network Project Peoples Telephone Cooperative received $28,825,356 to deploy broadband service to educational, healthcare, and government organizations across an economically distressed 13-county area in eastern Texas. The project plans to connect community anchor institutions, especially hospitals, in Camp, Delta, Fannin, Franklin, Hopkins, Hunt, Lamar, Rains, Red River, Smith, Titus, Van Zandt, and Wood counties to one another and to the University of Texas Health Science Center at Tyler, which serves as the region s hub for medical care and education. Connect Southwest Texas Project Region 18 (a 19-county region in southwest Texas) received $11,946,728 to deploy new, high-speed middle-mile infrastructure across the area as part of a publicprivate collaboration with five regional broadband service providers. The project also aims to deploy or improve videoconferencing capabilities at local K-12 and higher-education institutions and work with the Texas Department of Public Safety to link its locations in Midland, Alpine, and Fort Stockton to the new network. Texas A&M University System this project by Texas A&M received $6,550,775 to deploy a fiber optic broadband network to provide 1 Gbps to 10 Gbps service to almost 50 community anchor institutions. The project plans to extend service to 13 campuses and the surrounding communities in Corpus Christi, Kingsville, College Station/Bryan, Waco, Canyon, Prairie View, Laredo, Texarkana, Commerce, Galveston, Stephenville, San Antonio, and Killeen. These areas encompass four predominantly Hispanic communities, the Historically Black College of Prairie View A&M, and the area immediately adjacent to Fort Hood, the largest U.S. Army post in the country. The project predicts that the network will serve 114,000 students and 27,000 faculty and staff, as well as connect the university police departments to the State of Texas Other projects that are intended to service multiple states are not listed in the graph above. They are listed below in separate categories and total $144,842, Connected Texas

73 Department of Public Safety to enhance security and safety and help advance Texas Next Generation 911 network. Rio Grande Valley Fiber Optic Network Valley Telephone Cooperative received $15,697,856 to deploy a 166-mile fiber network to improve existing service and increase dark fiber resources available to local anchor institutions. With day-to-day network management conducted by VTX, users plan to connect to one another, the public Internet, and to state and national research and education networks such as LEARN, Internet2, and National Lambda Rail. The project plans to connect 23 anchor institutions affiliated with the higher education community, significantly improving instruction, research, and health services in the region. BTOP CCI Multi-state (Total Awarded = $90,253,043): 68 University Corporation for Advanced Internet Development this $62 million project seeks to interconnect more than 30 existing research and education networks across all 50 U.S. states that will benefit approximately 121,000 community anchor institutions. ENMR Telephone Cooperative, Inc. dba ENMR-Plateau this $11.25 million middle-mile project intends to enhance broadband capabilities for critical community anchor institutions in eastern New Mexico and west Texas by lighting a more than 1,600-mile ring of fiber and constructing 74 miles of new fiber in five communities. The project plans to connect more than 200 anchor institutions including educational institutions, public safety organizations, healthcare facilities, and government agencies at speeds of up to 1 Gbps. In addition, the network intends to offer wholesale services and facilitate broadband expansion to an estimated 20 communities and an area with nearly 700,000 homes, over 36,000 businesses, and 263 anchor institutions. ENMR Telephone Cooperative, Inc. dba ENMR-Plateau this $16.46 million project plans to construct 189 miles of new fiber and utilize 418 miles of additional existing fiber to create a middle-mile broadband network spanning central and eastern New Mexico and parts of western Texas. Expanding its $11.2M BTOP Round One infrastructure award, ENMR plans to deploy its network into additional underserved areas with 1 Gbps middle-mile speeds. The project proposes to facilitate distance learning and education for tens of thousands of residents by significantly improving broadband connections at schools and higher education institutions. ENMR-Plateau plans to partner with both New Mexico and Texas colleges and universities, regional utility companies, and other service providers as needed to further maximize use of fiber and broadband capacity. BTOP PCC (Total Awarded = $26,805,892): 69 Connect Brownsville The City of Brownsville, TX received $865,920 to increase public computer access and awareness of the benefits of broadband among residents over the next three years. The project proposes to bolster the town library s broadband speeds and provide 176 new computers to the library and to deploy a mobile lab in collaboration with Texas Southmost College to make available another 30 laptop computers for residents. The project also expects to deploy five new workstations to the United Way of Southern Cameron County, and allow community members to benefit from services such as basic math and reading, GED preparation, computer skills training, and English-as-a-second-language classes through the Brownsville Literacy Center. Virtual Village The City of El Paso, TX received $8,395,752 for this project that includes an extensive overhaul and expansion of its public computing capacity. The project pledges to engage hundreds of agencies, community institutions, and local organizations to target vulnerable populations, particularly atrisk youth, the elderly, the unemployed, and minorities, with training in and access to computer technology The Broadband Landscape in the State of Texas 73

74 Technology for All, Inc. this project received $9,588,279 to provide computer access, technical support, digital literacy, workforce development, and other services to low-income and vulnerable populations via more than 60 centers across southwest Texas, Houston, Austin, San Antonio, Duval County, and small rural communities in the Texas Brazos Valley. Centers will be located in both urban and rural areas of Texas at libraries, workforce development centers, public housing facilities, and other community locations. Technology Expertise, Access, and Learning (TEAL) for all Texans Project the Texas State Library & Archives Commission received $7,955,941 to add and upgrade public computer centers at libraries, community colleges, public schools, recreation centers, and health facilities across the state. TEAL plans to target youth groups, senior citizens, and English as a Second Language (ESL) residents in an area where more than 31 percent of persons speak a language other than English at home. TEAL proposes to facilitate statewide training for libraries on making existing software and computer centers more accessible to people with disabilities, as well as the unemployed, by providing staff to assist with finding and applying for jobs, maintaining contact with employers, training to find better jobs, and other basic aspects of employment. BTOP PCC Multi-state (Total Awarded = $5,014,641): 70 Mission Economic Development Agency this multi-state, $3.7 million project seeks, in collaboration with the National Association for Latino Community Asset Builders and a national network of Latino-serving economic development organizations, to create 12 new public computer centers and expand five existing ones in 13 communities throughout the United States, including San Antonio and Laredo, TX. Deaf Action Center of Louisiana this multi-state, $1.38 million project seeks to install 81 new videoconferencing stations, and enhance the user experience at 19 existing stations that serve individuals who are deaf or hard-of-hearing in Northwest Louisiana, and sites in Alabama, California, and Texas. The project intends to use broadband and videoconference technology to provide on-demand sign language interpretation at a total of 100 community partner sites, including community anchor institutions such as hospitals, courts, public safety agencies, shelters, schools, and libraries. BTOP SBA (Total Awarded = $2,015,025): 71 Mexican Institute of Greater Houston, Inc. this project received $2,015,025 to create a broadband outreach and training program that will target and engage Hispanic and minority communities, as well as improve adoption rates in the Greater Houston, Beaumont, and San Antonio areas. The project plans to utilize its network of over 100 existing community centers, many located at K-12 public schools in the region, to conduct technology training sessions in Spanish for students and their families. BTOP SBA Multi-state (Total Awarded = $46,826,170 across project areas of 32 states and 56 states/territories, respectively): 72 Portland State University this $3.31 million project proposes to lead the Learner Web Partnership project to increase broadband use among low-income, minority, and other vulnerable populations by teaching digital literacy along with English literacy, educating participants to become informed consumers, and providing access to career paths in the digital economy. One Economy Corporation the One Economy Corporation was awarded $28.5 million to create a program in 31 states including Texas. The 21st Century Information and Support Ecosystem program of computer training, wireless Internet access, broadband awareness marketing, and online content and applications will serve 159 affordable and public housing developments and low-income communities in 50 cities and towns across 31 states and the District of Columbia Connected Texas

75 Communication Service for the Deaf, Inc. this $14.9 million project will provide services in all 56 U.S. states and territories including Texas. The grantee intends to employ a combination of discounted broadband service and specialized computers, technology training from an online state-of-the art support center customized to the community s needs, public access to videophones at anchor institutions from coast to coast, and a nationwide outreach initiative. RUS BIP (Total Awarded = $206,487,414 all awards are grant/loan combinations, unless otherwise noted): 73 Red River Broadband Expansion Project the Blossom Telephone Company received $2,777,676 for a project that will provide middle-mile fiber and transmission facilities that will enhance broadband services in Blossom, TX making it available to unserved/underserved customers in remote, rural areas in Northeast Texas. BTC has obtained a RUS loan to provide Fiber-To-The-Home (FTTH) in their exchange. The proposed 26.5 mile route of middle-mile fiber facilities will enable the FTTH facilities to deliver significantly greater bandwidth at a reasonable cost. By leveraging the middle-mile fiber with wireless, last-mile facilities, the project will enable BTC to provide affordable broadband service to households, businesses, and critical community facilities currently lacking high-speed broadband service. Broadband service potential will exceed 5 Mbps to all Blossom wireline customers upon completion. Wireless customers will be offered packages up to 3 Mbps along the middle-mile route that is currently unserved. Central Texas Rural Wireless Expansion Project Electronic Corporate Pages Inc. received $1,893,298 for a project that will offer over 3 Mbps in aggregate (upstream and downstream) to an area with an average household density of 10 households per square mile. Using the latest in available backhaul technology and proven network management systems, ECPI proposes to build a solid and reliable network for Central Texas of a quality that only the stimulus funds will allow. Rural Texas Panhandle Mid Plains Project Mid Plains Rural Telephone Cooperative, Inc. received $2.8 million to provide FTTH to customers located in six rural areas in the Texas Panhandle. This project will serve rural subscribers located in 227 square miles within the counties of Armstrong, Briscoe, Randall, and Swisher in the central Texas Panhandle area. Fiber-To-The-Premise (FTTP) service offerings will give the highest speed capabilities for current and future applications, support telephone service, and allow an introduction of video offerings in the future. This project will extend full fiber capabilities to the most rural of establishments and give them the increased bandwidth comparable with any urban establishment. PRIDE Network (Texas South Plains) Project PRIDE Network, Inc. received $44,550,100 to construct a FTTP telecommunications infrastructure, with a WiMAX service extension overlay, that will bring advanced broadband services to rural communities in the Texas South Plains region. The network will initially offer synchronous data speeds of 1 to 100 Mbps with the ability to increase to even higher speeds to ensure the greatest broadband benefits possible. Pride Network: Burkburnett & Iowa Park, TX Project PRIDE Network, Inc. received $19,121,002 to construct a FTTP telecommunications infrastructure, with a WiMAX service extension overlay, that will bring advanced broadband services to rural communities of Burkburnett and Iowa Park, TX. The network will initially offer synchronous data speeds of 1 to 100 Mbps with the ability to increase to even higher speeds to ensure the greatest broadband benefits possible. Southern Texas Broadband Infrastructure Development and Adoption Project Valley Telephone Cooperative, Inc. received $78,614,021 for a project that will develop broadband infrastructure in rural areas of the south Texas Plains. Wes Tex: Western Texas Broadband Infrastructure Development Project Wes Tex Telephone Cooperative, 73 RUS BIP project summaries adapted from grant announcement notifications issued by U.S. Department of Agriculture. The Broadband Landscape in the State of Texas 75

76 Inc. received $33,783,752 to develop broadband infrastructure to increase Internet availability levels and access speeds in rural areas of western Texas. Wes Tex proposes to provide advanced broadband services to 11 communities in western Texas. Windstream Sugar Land, Inc. Project Windstream Corporation received $1,613,509 (100% grant) to extend its broadband network. Windstream will extend broadband service using the same architecture, equipment vendors, technologies, processes, and procedures that it uses to provide broadband service to over 1 million current customers. Windstream proposes to use industry standard ADSL2+ (Asynchronous Digital Subscriber Line) protocols that will allow customers to enjoy broadband at speeds of up to 12 Mpbs. The project will bring broadband to 1,250 homes and 139 businesses that otherwise may never enjoy the benefits of broadband. XIT Rural Telephone Cooperative FTTP & VDSL2 Combination Project XIT Rural Telephone Cooperative, Inc. received $3,065,440 (100% grant) to deploy a combination of FTTP and Fiber To The Node (FTTN) advanced DSL technology (VDSL2) within two separate service areas in and around the communities of Dalhart and Stratford, TX. XIT plans to utilize a combination of existing fiber and copper infrastructure to deploy VDSL2 service and new fiber infrastructure to deploy FTTP service. XIT Rural Telephone Cooperative, Inc. Round 2 Rural FTTP Project XIT Rural Telephone Cooperative, Inc. received $2,112,950 (100% grant) to deploy FTTP to multiple PFSAs within their existing service area in the Northwest Texas panhandle. XIT will build fiber to homes and businesses in these areas and will utilize standards based GPON technology to connect these customers to XIT s existing broadband and voice network. West Texas Broadband Infrastructure Development to Support Internet Adoption Project Five Area Telephone Cooperative Inc. received $2,454,223 (100% grant) to provide broadband service to the towns of Bledsoe, Bula, Clays Corner, Lazbuddie, Maple, and Needmore in rural west Texas via a FTTP network. The network will provide service to 87 households and 408 businesses in Bailey, Cochran, and Parmer counties. Project Rural Connect Hill Country Telephone Cooperative, Inc. received $12,234,217 to expand fiber optic facilities throughout the most rural of HCTC's 15 telephone exchange areas. The deployed architecture will be a mix of FTTP and FTTN with dramatically shortened copper loops enabling downloads up to 20 Mbps on retained copper up to gigabit Ethernet on fiber. South Texas Broadband Technology Progreso TX Project ATSI Communications, Inc. received $833,176 to build out a wireline network infrastructure. This infrastructure will allow ATSI to provide last mile service of up to 6 Mbps to subscribers in the underserved area of Progreso, TX. Last Mile Remote/Rural Telecom Cable Project Telecom Cable LLC received $634,050 to provide the rural areas of Corrigan and Weston Lakes, TX with broadband service that meets or exceeds the definitions of broadband service provided by RUS. Telecom Cable will increase its bandwidth capacity and create a two way environment which will support the economic development as required by the Recovery Act. A combination of in house and contract labor will be utilized to engineer and construct the last mile. RUS BIP Multi-state (Total Awarded = $2,658,210): 74 Sterling Oklahoma to Scotland Texas Rural Fiber Optic Route Project Medicine Park Telephone Company received $2,658,210 to install a 70 mile Fiber transport network between Sterling, OK and Scotland, TX. This network will pass through three communities and provide high-speed fiber connections to two health clinics, three town halls, four fire departments, and one library. In addition, two Internet companies and multiple cellular companies have been contacted regarding bandwidth opportunities Connected Texas

77 6 Policy Considerations The FCC s NBP recommends a series of strategies to ensure that broadband is more affordable and accessible to all Americans. The NBP recommends a holistic approach to address the availability and adoption gaps by tackling key barriers to adoption including relevance, affordability, digital literacy, and availability. The holistic approach includes programs aimed to encourage adoption in the home, as well as the strengthening of public computing and Internet access capacity at community anchor institutions. This approach is consistent with the programs that Congress unanimously mandated in the BDIA. The NBP and BDIA call for a series of principles and programs to be implemented at the federal, state, and local levels for achieving pragmatic solutions to the broadband availability and adoption gaps. Key among these are the following recommendations and programs particularly relevant to the state of Texas and its communities. Strategies to Address the Broadband Availability Gap Conduct further analysis of the impact of the Texas Universal Service Fund, and of federal Universal Service Fund & Intercarrier Compensation Rules Reform upon communities across Texas. As stated above, data suggests that the USF program has had significant impact across the state. Further research and analysis of these programs, FCC data and proposals is recommended to better understand the impact of proposed reforms and to prepare stakeholders and policy makers to establish policies on the use of the funds in the future. Encourage coordination at the state and local level aimed to achieve economies of scale and encourage efficiency of public investments, including comprehensive planning for broadband infrastructure projects; joint deployment of broadband conduit alongside state finance or enabled infrastructure projects; establishment of Gigabit Communities or Broadband Corridors in regions in the state; assessing the possibility of developing a set of state master contracts to expedite the placement of wireless towers on state government property and buildings. Facilitate further expansion of mobile 3G and 4G networks by evaluating whether there are opportunities for streamlining local and state rules and regulations affecting the cost and build-out speed of towers supporting these networks; encourage further development of statewide smart grids that leverage the state s broadband infrastructure, making Texas more competitive. Evaluating whether there are opportunities for promoting lower costs of access to key network inputs such as utility-owned poles, ducts, conduits, and rights-of-way. Leverage the opportunities potentially available under the extended SBDD grant program to promote public-private partnerships to address existing gaps in the network at the local level. Continue efforts to measure and map broadband inventory data. The May 2010 Connected Texas estimate of broadband inventory and mapping is a first of its kind tool that enables a clearer picture of the challenges and opportunities for broadband expansion in Texas. This report summarizes the results of this research at the county level, and concludes that when it comes to broadband, one-size-fits-all does not apply. It is not enough to evaluate statewide trends and broadband inventory. Granular data at the county level and beyond is necessary to accurately measure the challenges on the ground and develop sound, pragmatic policy to address them. Hence, continued efforts to collect, validate, and benchmark broadband inventory data across the state under the SBDD program is recommended, especially if it will be used by the public, private, and non-profit sectors to expand broadband availability. Strategies to Address the Broadband Adoption Gap Promote public-private partnerships at the state and local levels to build awareness campaigns about the benefits of broadband technology among at-risk populations. Awareness campaigns should target at- The Broadband Landscape in the State of Texas 77

78 risk populations and address the concrete and pragmatic benefits that broadband technology can afford every community, neighborhood, school, library, community center, and household. Leverage the potential opportunity under the extended SBDD grant program to conduct statewide broadband awareness campaigns and local, grassroots broadband adoption stimulation strategies. Promote and facilitate local community engagement aimed to address local barriers to adoption and develop pragmatic solutions tailored to each community. Expand, improve, or create pragmatic digital literacy programs at the state and local level and leverage digital literacy resources available via the NBP proposed National Digital Literacy Program. Encourage public-private collaboration to educate consumers and families about the reality of online risks and promote online safety practices among children and citizens. Work with not-for-profits promoting online safety practices and encourage online safety practices and principles across various state departments and among educators in the state of Texas. Leverage the extended SBDD grant program s statewide broadband awareness campaign strategies. Leverage the proposed federal National Broadband Clearinghouse portal aimed to promote best practices and information sharing, as well as the federal Online Digital Literacy Portal program. Promote expansion of publicly available computing and online resources leveraging federal, state, local, and private funds. Federal resources available through programs such as the USF Schools and Libraries (E-Rate) and Rural Health Care support programs and public funding available through the federal Institute of Museum and Library Services (IMLS). Monitor and assess how the proposed reform of the Low Income Support programs under the Universal Service Fund will affect Texans. Coordinate with Texas tribal nations on broadband issues. The NBP recognizes the importance of working with tribal nations to develop programs tailored to address the particular technology adoption challenges faced by these communities. 78 Connected Texas

79 Appendix A: List of Participating Providers in Connected Texas Broadband Inventory Connected Texas most recent data submission to the National Telecommunications and Information Administration as part of the State Broadband Data and Development (SBDD) Grant Program included the participation of approximately 73.3% of the Texas provider community, or 137 of 187 total providers. 75 Data collected under the SBDD formed the basis of the broadband availability information supplied in the above report. A complete roster by provider depicting participation status is below. It is the collective opinion of the Connected Texas principals that all commercially-reasonable efforts were made to account for 100% of the known Texas broadband provider community. At the program s inception, Connected Texas launched a website to create awareness about the initiative. During the provider outreach process, the website prominently featured an informational page specifically for Texas broadband providers. Connectedtx.org continues to serve a prominent role in the outreach and data collection effort. While one-to-one contact was made with each and every identified provider, the portal page was created to ensure that no provider was overlooked. The website offered clear instructions about the data transfer process and a means to contact a Connected Texas representative. This program asset provides a way for the general public to participate in the process by offering interactive tools for users to test their connection speed, submit broadband inquiries, or contact a program representative. These program stakeholders are an essential component in the larger Connected Texas data validation methodology. As an indicator of stakeholder penetration, the Connected Texas website encountered 22,377 unique visits during the most recent reporting period, which included 22,309 visits to the English website and 68 visits to the Spanish website (24,459 total to date for the life of the grant awarded on January 1, 2010, which included 24,327 to the English website and 132 to the Spanish website). Additionally, this pronounced Web activity netted 325 broadband inquiries over the same reporting period (363 to date since grant inception). The website also provides the BroadbandStat application, which allows the consumer to confirm or dispute the coverage represented on the broadband inventory map. These consumer-initiated actions are facilitated through the Connected Texas website and offer the citizens a vehicle to provide information regarding availability in their respective service area, either in affirmation or contest of the reported data represented in the Connected Texas mapping artifacts. Since the initial data collection and release of corresponding maps, feedback in the form of broadband inquiries has allowed Connected Texas to identify additional areas that are in need of field validation, which is scheduled as soon as possible. Additional information on field validation can be found in the Field Validation Narrative. 75 The total number of broadband providers listed includes instances of the same broadband provider company that is providing broadband via multiple platforms. For the purposes of the listed contained in Appendix A, each broadband provider entity is listed once. Thus, the list included in Appendix A may not match the total number of providers mentioned in the accompanying text. The Broadband Landscape in the State of Texas 79

80 Providers Participating in the Connected Texas Broadband Inventory: 360networks AirBand Communications, Inc. Aledo Broadband Alenco Communications, Inc. Allegiance Communications AT&T Communications of Texas, Inc. AwesomeNet, Inc. Basin 2 Way Radio, Inc. Basin Broadband, Inc. Big Bend Telephone Company, Inc. Blossom Telephone Company, Inc. Border to Border Communications, Inc. Brazoria Telephone Company Broadband Data Services of Texas, LLC Broadcomm.US Cable ONE Inc. Cameron Telephone Company, LLC Cap Rock Telephone Cooperative, Inc. Cebridge Acquisition, LP Central Texas Cable Partners, Inc. Central Texas Telephone Cooperative, Inc. Centrovision CenturyLink Charter Communications, Inc. CIT Broadband Clearwire Corporation Cogent Communications of Texas, Inc Coleman County Telephone Cooperative, Inc. Colorado Valley Telephone Cooperative, Inc. Comcast Cable Communications, LLC Community Telephone Company, Inc. Connextions Telcom Consolidated Communications Covad Communications CTX Unwired Cumby Telephone Cooperative, Inc. DCTexas.Net Dell Telephone Cooperative, Inc. Digitex.com Dot11 Networks East Texas DSL Eastex Telephone Cooperative, Inc. Eccentrix Technologies, LLC ECTISP ELC Internet Services, Inc. Electra Telephone Company Element Networks, LLC enet ENMR Telephone Cooperative, Inc. ERF Wireless ETAN Industries ETEX Communications, LP ETS Cablevision Co., Inc. Farm to Market Broadband LP Five Area Telephone Cooperative, Inc. Galaxy Cable, Inc. Ganado Telephone Company, Inc. GEUS Gilmer Cable Television Company, Inc. Gower Computer Support, Inc. Grande Communications Network LLC Grayson CableRocket, LLC Greasy Bend Ventures, Inc. GTEK Communications Guadalupe Valley Communications Systems GVEC.net Hill Country Telephone Cooperative, Inc. Industry Tel. Co. JAB Wireless, Inc. James Cable, LLC KeyOn Communications, Inc. La Ward Telephone Exchange, Inc. Lake Livingston Telephone Company Leap Wireless International, Inc. Level 3 Communications, LLC Livingston Telephone Company Incorporated Maverick Internet McDonald Group McleodUSA Telecommunications Services, Inc. Mid-Plains Rural Tel. Co-op. Inc. Millenium Telcom, LLC NetWest Online, Inc. Neu Ventures, Inc. Nextlink Wireless, Inc. Nortex Communications North Texas Broadband, LLC North Texas Cellular, Inc. North Texas Telephone Company Northland Communications NTS Communications Our-Town Internet Service Panhandle Telephone Cooperative, Inc. Partnership Broadband, Inc Peoples Communication, Inc. 80 Connected Texas

81 Phantom Wave Poka Lambro Telephone Cooperative, Inc. Promptwireless, LLP Pulsestream Internet Services RB3, LLC Rhino Communications Ridgewood Cable Rioplex Wireless LTD Riviera Telephone Company, Inc. Rock Solid Internet & Telephone Santa Rosa Telephone Cooperative, Inc. SmartBurst, LLC Smithville System South Plains Telephone Cooperative, Inc. Southwest Arkansas Telephone Cooperative, Inc. Southwest Texas Telephone Company Speed of Light Broadband, Inc. Sprint Nextel Corporation Stelera Wireless, LLC Tatum Telephone Company Taylor Telephone Cooperative, Inc. Texas Broadband, Inc. Texas CellNet Texas Wireless Internet Texhoma Wireless TGN Cable Tier One Converged Networks, Inc. Time Warner Cable LLC TISD T-Mobile USA, Inc. Totelcom Communications, LLC tw telecom of Texas, LLC UrNet US Cable Corp. Valley Telephone Cooperative, Inc. Verizon Southwest, Inc. Versalink Enterprises, LLC WEHCo Video West Texas Rural Telephone Cooperative, Inc. Wes-Tex Telecommunications, Ltd. Wharton County Electric Cooperative, Inc. Windstream Communications XIT Telecommunications & Technology, Ltd. XO Communications, LLC Zayo Group, LLC The Broadband Landscape in the State of Texas 81

82 Appendix B: Connected Texas Residential Technology Assessment 82 Connected Texas

83 Connected Texas 2010 Technology Assessment of Texas Residential Consumers 2010 Technology Assessment of Texas Residential Consumers Presentation Outline Summary of Key Findings 5 Broadband Adoption and Usage 11 Computer and Internet Adoption 25 Prices Paid by Texas Residents for Internet Service 33 Online Activities Among Texas Internet Users 39 Mobile Technology Use 47 Teleworking and Working From Home Through an Internet Connection 53 Technology Adoption Barriers 57

84 2010 Technology Assessment of Texas Residential Consumers Presentation Outline (Continued) s Assessment by Annual Household Income 63 Assessment by Urban-Rural Classification 75 Assessment by Age 87 Assessment by Race/Ethnicity 99 Assessment by Education 111 Assessment of Households With Children 123 Assessment by Employment Status 135 Research Methodology 147 This page left intentionally blank. 4

85 Summary of Key Findings Key Findings 2010 Key Technology Benchmarks: Households with broadband service: 62% Households with a computer: 81% Residents who access the Internet from home or someplace else: 87% Residents who access the Internet via a cell phone or mobile device: 30% Other Key Findings: Across Texas, 62% of all residents subscribe to home broadband service; by comparison, a national survey shows that 67% of American households subscribe to home broadband service. Statewide, 81% of all residents own a home computer. This translates into approximately 3.4 million adults without a home computer, with 35% of those without a computer saying that a computer is too expensive. Statewide, 6% of Texas residents report that broadband is not available where they live, 82% say with certainty that broadband is available, and 12% do not know whether broadband service is available. By comparison, Connected Texas provider-validated Broadband Service Inventory found that 3.5% of households do not have terrestrial fixed broadband service access. In rural Texas, 12% of adults report that broadband service is not available where they live, 16% do not know whether broadband is available, and 72% say with certainty that broadband is available. By comparison, Connected Texas provider-validated Broadband Service Inventory reports that 10.7% of rural households do not have terrestrial fixed broadband access.

86 2010 Key Findings (Continued) Broadband adoption among rural residents is significantly lower than the state average. Residents ages 65 or older are less likely to subscribe to home broadband service, and they are also less likely to access the Internet altogether (from home or any other location). Statewide, 39% of broadband subscribers report that they have cable modem service at home, while 35% subscribe via DSL. Fiber to the home service accounts for 9%, and fixed wireless broadband service accounts for 8% of home broadband subscribers in Texas. Satellite broadband accounts for 4% of all Texas broadband subscribers. More than three-fourths of Texas Internet subscribers (77%) also subscribe to other bundled services from their Internet service provider. The most popular service to be bundled is home phone service, followed by television and cell phone service. On average, Texas broadband subscribers pay $42.60 per month for their home broadband. Among those who do not subscribe to home broadband service, 21% cite cost as a barrier to adoption. One-third of Texas residents who do not have home broadband service say it is because they do not need broadband or don t know why they don t subscribe. More than one-fourth say it is because they do not own a computer. Among rural non-subscribers, the belief that they do not need broadband is still the top barrier, cited by three out of ten rural residents without home broadband service Key Findings (Continued) The top applications used by Texas Internet users include communicating with friends and family, sending or receiving , using a search engine, and searching for products or services online. More than two-thirds of Texas Internet users (68%) search for health or medical information online, while 37% interact with doctors or healthcare professionals online. E-government services are utilized by many Texas Internet users; 57% report that they search online for information about government services or policies. In addition, 45% conduct online transactions with government offices (such as e-filing taxes or filling out forms), 31% interact with Texas state government offices, 27% interact with local government offices, and 22% interact with elected officials or candidates online. Many Texas Internet users go online for educational purposes. Statewide, 44% conduct research for schoolwork online, 39% interact with teachers online, and 24% take classes online. Texas residents also use the Internet for work purposes. Among Texas Internet users, 53% interact with their co-workers online, 51% go online to search for jobs or employment, and 34% report that they go online to work from home at least occasionally. In Texas, 17% of employed adults report that they telework. Teleworking could also provide an additional boost to the state s workforce, as over one-fifth of retirees, and over one-fourth of homemakers and adults with disabilities say they would likely telework if empowered to do so.

87 Texas Technology Adoption Summary Percent of all Texas residents Use broadband from home 62% Use dial-up from home 9% Use the Internet someplace other than home 10% Q: Do you have an Internet connection at home?, Q: Do you have access to the Internet from any locations outside of your own home?, and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Do not use the Internet 13% Don't know if home Internet service is dial-up or broadband 6% Technology Adoption by Demographic Computer ownership Broadband adoption 81% 62% 59% 62% 68% 72% 72% 48% 51% 49% 36% 37% 21% 21% Statewide Adults with disabilities Age 65 or older Low-income households* Low-income households with children Minority Rural residents *Low-income=household income less than $25,000 Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) 10

88 Broadband Adoption and Usage Texas Residents Who Subscribe to Home Broadband Service Percent of all Texas residents who subscribe to home broadband service 62% Statewide, 62% of all Texas residents subscribe to home broadband service. This translates into approximately 10.9 million adults with broadband service at home. Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents)

89 Texas Residents Who Subscribe to Home Broadband Service Percent of all Texas residents with broadband service at home Statewide, 62% of Texans (approximately 10.9 million adults) subscribe to home broadband service. 67% 62% National surveys indicate that 67% of adults subscribe to home broadband service.* National Average* Texas Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) *Source: Federal Communications Commission, Broadband Adoption and Use in America, Texas Types of Broadband Service That Texas Residents Use Percent of all Texas broadband subscribers* Cable modem 39% DSL 35% Fiber to the home Fixed wireless broadband Satellite broadband Don't know/refused 4% 9% 8% 8% Statewide, 62% of all Texas residents have broadband service at home. *Percentages do not add up to 100% because individuals could give multiple responses. Q: Which of the following describes the broadband service you have at home? (n=721 TX residents with home broadband service)

90 Broadband Availability Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map 15 Perceptions of Broadband Availability in Texas Statewide, 6% of Texas residents report that broadband is not available where they live, and 12% do not know whether broadband service is available. According to Connected Texas provider-validated Broadband Service Inventory, 3.5% of households do not have broadband access. Say broadband is not available where they live 6% Awareness of broadband availability among Texas residents Don't know if broadband is available where they live 12% Have broadband service, or say broadband is available where they live 82% Q: To the best of your knowledge, is broadband or high-speed Internet service available in the area where you live? (n=1,221 TX residents)

91 Perceptions of Broadband Availability in Texas Among Rural Residents In rural Texas, 12% of residents report that broadband is not available where they live, and 16% do not know whether broadband service is available where they live. According to Connected Texas provider-validated Broadband Service Inventory, 10.7% of households do not have broadband access. Say broadband is not available where they live 12% Don't know if broadband is available where they live 16% Awareness of broadband availability among rural Texas residents Have broadband service, or say broadband is available where they live 72% Q: To the best of your knowledge, is broadband or high-speed Internet service available in the area where you live? (n=400 rural TX residents) When Texas Residents First Subscribed to Broadband When Texas broadband users began subscribing 23% 15% 14% 15% 17% 14% Within the last year 1-2 years ago 2-3 years ago 3-5 years ago 5-7 years ago More than 7 years ago Q: When did you first begin subscribing to broadband service? (n=721 TX residents with home broadband service)

92 Why Texas Residents Subscribe to Broadband Percent of Texas residents with a broadband connection at home* Broadband became available in my area Realized broadband was worth the extra money The cost of broadband became more affordable I purchased (or received) a computer for my home 30% 27% 26% 25% I needed to conduct business online I heard about the benefits of broadband 18% 21% Friends or family convinced me Other 14% 14% *Percentages do not add up to 100% because individuals could give multiple responses. Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service) Broadband Download Speeds Download speeds among Texas broadband subscribers Over 10.0 Mbps 9% About 10.0 Mbps About 6.0 Mbps About 3.0 Mbps About 1.5 Mbps About 768 Kbps Less than 768 Kbps Don't know 4% 7% 7% 8% 4% 3% Texas broadband subscribers who know their download speeds report an average speed of 7.1 Mbps. 58% Q: To the best of your knowledge, what is the approximate download speed provided by your Internet service provider? (n=721 TX residents with home broadband service)

93 Bundling Services Offered by Internet Providers Among Texas residents with Internet access at home Other services bundled with home Internet service Don't know 1% Internet service is bundled 77% Home phone service Television 63% 76% Internet service is not bundled 22% Cell phone service 14% Don't know 2% Q: Does your Internet provider also provide your home with other services, such as our telephone, cell phone service, or television? This is often called bundling? (n=911 TX residents with Internet service at home) and Q: What other services are bundled with your home Internet service? (n=674 TX residents with bundled Internet access) 21 Actual Broadband Speeds vs. Advertised Speeds Among Texas residents with home broadband service Two-thirds of Texas broadband subscribers (66%) say that their download speed is the same or faster than advertised. On the other hand, nearly one-fourth (23%) say that their broadband speed is slower than advertised. Download speeds are slower than advertised 23% Download speeds are faster than advertised 6% Download speeds are about the same as advertised 60% Don't know 11% Q: To what extent would you say the actual speeds you receive compare to the speeds advertised by the Internet provider you use? Would you say the actual speed you receive is usually (n=721 TX residents with home broadband service)

94 Satisfaction With Broadband Service Satisfaction among Texas residents with home broadband service Satisfied 68% Not satisfied 3% Somewhat satisfied 29% Only 3% of Texas broadband subscribers report that they are not satisfied with their current home broadband service. Q: Overall, how satisfied are you with your broadband service? (n=721 TX residents with home broadband service) Reason for Dissatisfaction With Broadband Service Among Texas residents with home broadband service* Frequent service outages 1.5% Overall, 3% of Texas broadband subscribers report that they are dissatisfied with their current service. Too slow Latency Poor customer service 0.6% 0.5% 1.3% Too expensive 0.4% *Respondents could provide more than one answer. Q: What is it about your broadband service that is not satisfactory? (n=721 TX residents with home broadband service) 24

95 Computer and Internet Adoption Texas Residents With a Computer in Their Household Percent of all Texas residents who own a computer 81% Statewide, 81% of all residents own a home computer. This translates into approximately 3.4 million Texas adults without a home computer. Q: Does your household have a computer? (n=1,221 TX residents)

96 Texas Residents Who Use a Computer (At Home or Someplace Else) Percent of all Texas residents who use a computer 88% Statewide, 88% of all adults use a computer. This translates into over 2 million Texas adults that do not use a computer at all. Q: Does your household have a computer? and Q: Do you have access to the Internet from any locations outside of your own home? (n=1,221 TX residents) Texas Residents With a Computer in Their Household When Texas computer owners purchased their home computer 36% 27% 17% 17% 3% Within the past year 1-2 years ago 3-4 years ago More than 4 years ago Don't know Q: When was the last time you purchased a home computer? (n=965 TX computer owners)

97 Types of Computers That Texas Residents Own Percent of all Texas residents No computer at home 19% Desktop only 32% Both desktop and laptop 30% Laptop only 19% Q: Does your household have a computer? and Q: What type of computer do you have at home? (n=1,221 TX residents) ( Texas Residents Who Subscribe to Home Internet Service Percent of all Texas residents who subscribe to home Internet service 77% Statewide, 77% of all Texas residents subscribe to home Internet service. This translates into over 13.4 million adults with either dial-up or broadband Internet service at home. Q. Do you have access to the Internet at home? (n=1,221 TX residents)

98 Texas Residents Who Use the Internet (Any Internet Connection, From Any Location) Percent of all Texas residents who access the Internet from home or some other place Eighty-seven percent of Texas residents access the Internet either from their home or from some other place (such as school, work, or Wi-Fi hot spots ). By comparison, a national study recently found that 79% of American adults use the Internet. 79% 87% Q: Do you use the Internet from any locations outside of your own home? and Q: Do you have access to the Internet at home? (n=1,221 TX residents) National Average* Texas *Source: Pew Internet and American Life Project, Home Broadband 2010, released Aug. 11, Texas Where Texas Residents Access the Internet Locations where Texas residents access the Internet* Home Work Library Someone else's home School Restaurants Hotels Community center Airports No access, any location 12% 6% 5% 5% 2% 2% 1% 13% 34% 77% Statewide, 87% of Texas residents access the Internet from home or some other location. *Percentages do not add up to 100% because individuals could give multiple responses. Q: Do you have access to the Internet at home? and Q: At what locations outside of your own home do you have access to the Internet? (n=1,221 TX residents)

99 Prices Paid by Texas Residents for Internet Service $32.42 Average Monthly Price Texas Residents Pay for Internet Service (Either Dial-Up or Broadband) Average monthly price paid for home Internet service $41.22 $42.60 Home dial-up subscribers All Internet subscribers Home broadband subscribers Q: What do you pay each month for your Internet service? (n=911 TX residents with Internet service at home)

100 Average Monthly Price Texas Residents Pay for Broadband Service Average price paid for home broadband service On average, Texas residents pay $42.60 per month for their broadband service. By comparison, a national study recently found that Americans pay an average of $41.18 a month for broadband Internet service.* $41.18 $42.60 Q: What do you pay each month for your Internet service? (n=721 TX residents with home broadband service) National Average* Texas *Source: Pew Internet and American Life Project, Home Broadband 2010, released Aug. 11, Texas Monthly Price Texas Residents Pay for Internet Service (Either Dial-Up or Broadband) Percent of Texas residents with either dial-up or broadband Internet service at home $50.00 or more 19% $ $49.99 $ $39.99 $ $ % 17% 20% On average, Texas residents pay $41.22 per month for Internet service. $ $ % Less than $ % Don't know/refused 23% Q: What do you pay each month for your Internet service? (n=911 TX residents with Internet service at home)

101 Monthly Price Texas Residents Pay for Broadband Service Percent of Texas residents with broadband service at home $50.00 or more 20% $ $49.99 $ $39.99 $ $29.99 $ $ % 13% 18% 20% On average, Texas residents pay $42.60 per month for broadband service. Less than $ % Don't know/refused 24% Q: What do you pay each month for your Internet service? (n=721 TX residents with home broadband service) This page left intentionally blank. 38

102 Online Activities Among Texas Internet Users Searching for Information Online Percent of Texas Internet users who search for the following types of information online Product or service information 81% Health or medical information Information about events in your community Information about government services or policies Jobs or employment Research for schoolwork 68% 61% 57% 51% 44% Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users)

103 Communicating Online Percent of Texas Internet users who communicate in the following ways 89% Through a social networking site Instant messages Posting content to a website 55% 44% 33% Posting content to a blog Posting content to a microblog Chatting in chat rooms 19% 16% 15% Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users) Interacting Online Texas Internet users who interact with the following individuals or organizations online Friends or family Businesses Co-workers Health insurance companies Teachers Doctors or healthcare professionals Texas state government Local government Elected officials or candidates 40% 39% 37% 31% 27% 22% 57% 53% 84% Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users)

104 Online Transactions Percent of Texas Internet users who conduct the following transactions online Purchasing a product or service online Paying bills Online banking Booking travel arrangements 73% 66% 65% 63% Online transactions with government offices 45% Selling a product or service online Buying, selling, or trading investments 21% 28% Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users) Online Activities Percent of Texas Internet users who conduct the following activities online Using a search engine Sending or receiving photos Reading online newspapers or other news sources 72% 67% 80% Downloading music Watching videos, movies, or TV shows online Playing games online 52% 50% 47% Working from home Reading blogs Taking online classes Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) 34% 29% 24%

105 Use of the Internet to Make or Receive Phone Calls Among Texas residents who have broadband service at home Don't know 1% Do not make or receive home phone calls through the Internet 81% Make or receive home telephone calls through the Internet 18% Statewide, 18% of Texas residents with broadband make or receive home telephone calls using their Internet connection. Q: Do you make or receive home telephone calls through your Internet connection? (n=721 TX residents with home broadband service) This page left intentionally blank. 46

106 Mobile Technology Use Texas Residents Who Own or Use a Cell Phone Percent of all Texas residents who own or use a cell phone 80% Statewide, 80% of all Texas residents own or use a cell phone. This translates into over 14.1 million adults who have or use a cell phone. Q: Do you have a cell phone? (n=1,221 TX residents)

107 Mobile Wireless Broadband Adoption Subscribe to mobile wireless via laptop 3% Subscribe to mobile wireless via cell phone or mobile device 25% Subscribe to mobile wireless via laptop AND cell phone/mobile device 7% Percent of all Texas residents Do not subscribe to mobile wireless broadband 65% Although almost one- half of Texas residents own a laptop computer (49%), and 80% of residents own a cell phone, nearly two-thirds of Texas residents (65%) do not subscribe to mobile wireless broadband. Q: On your laptop computer, do you subscribe to mobile wireless service that allows you to access the Internet through a cellular network? and Q: Do you access the Internet through a cellular phone or other mobile device? (n=1,221 TX residents) Mobile Wireless Broadband Use Among Laptop Computer Owners Statewide, 22% of laptop owners (or 11% of all Texas residents) subscribe to a mobile wireless service that allows them to access the Internet on their laptop computer via a cellular network. Don't own a laptop 51% Among all Texas residents Among Texas laptop owners Do not Don't know subscribe to 6% mobile wireless service 72% Own a laptop 49% Subscribe to mobile wireless service 22% Q: What type of computer do you have at home? (n=1,221 TX residents) and Q: On your laptop computer, do you subscribe to a mobile wireless service that allows you to access the Internet through a cellular network? (n=575 TX residents who own laptop computers)

108 Hot Spot Usage Among Laptop Computer Owners Among Texas laptop computer owners Most popular places to access hot spots (among wireless hot spot users) Do not access wireless hot spots 44% Hotels Restaurants 55% 55% Access wireless hot spots 52% Work Airports Libraries 39% 38% 29% Don't know 4% Outdoor public places Community centers 19% 15% Q: Do you use Wi-Fi zones, sometimes called hot spots, to access the Internet? (n=575 TX residents who own a laptop) and Q: Do you regularly use hot spots at any of the following locations? (n=290 TX wireless hot spot users) This page left intentionally blank. 52

109 Teleworking and Working From Home Through an Internet Connection Texas Residents and Telework Among Texas residents employed full-time or part-time 30% 17% Regularly telework now Would telework if allowed Q: Which of the following describe the way you work from home? and Q: Would you be interested in teleworking if your employer allowed it? (n=762 TX residents employed full-time or part-time)

110 The Potential Impact of Telework on the Labor Force Teleworking could provide an additional boost to Texas workforce, as one-third of adults who are not currently employed said they would telework if empowered to do so. Texas residents who do not currently work and are very likely or somewhat likely to work outside the home if allowed to telework 33% 21% 27% 28% This includes over one-fifth of retirees, and over one-fourth of homemakers and adults with disabilities who say they would likely telework if empowered to do so. Not employed full- or parttime Retirees Homemakers Adults with disabilities Q: If you were able to work from home through a broadband connection - commonly known as teleworking - how likely is it that you would work outside the home? (n=459 TX residents not employed full-time or part-time) This page left intentionally blank. 56

111 Technology Adoption Barriers Barriers to Computer Ownership Among Texas residents who do not own a home computer* Too expensive 35% I don't need a computer, or don't know why I need one 34% Computers are too complicated 18% I use a computer someplace else 8% Other 18% *Percentages do not add up to 100% because individuals could give multiple responses. Q: Why don't you have a computer at home? (n=256 TX residents with no home computer)

112 Barriers to Internet Adoption Among Texas residents with no Internet connection at home* I don't own a computer 44% I don't need the Internet, or don't know why I don't subscribe Internet service is too expensive 23% 28% I access the Internet somewhere else 11% Concerns about fraud or identity theft Broadband isn't available in my area 5% 5% Other 12% *Percentages do not add up to 100% because individuals could give multiple responses. Q: Why don't you subscribe to the Internet at home? (n=310 TX residents with no Internet service in their household) Barriers to Broadband Adoption Among Texas residents with no home broadband service* I don't need broadband/the Internet, or don't know why I don't subscribe I don't have a computer 27% 30% Too expensive 21% Broadband is not available in my area I can get broadband access somewhere else I don't know enough about broadband Concerns about fraud or identity theft Available broadband service is not fast enough 7% 5% 3% 2% 12% Nearly one-third of Texas residents who do not have home broadband service say it is because they do not need Internet service or don t understand the benefits. *Percentages do not add up to 100% because individuals could give multiple responses. Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

113 Barriers to Broadband Adoption Among Dial-Up Users Among Texas Internet subscribers with no home broadband service* The top barrier to broadband adoption among dial-up users is the belief that they do not need broadband service, though many dial-up users feel that broadband is too expensive. I don't need broadband or don't know why I don't subscribe Broadband is not available Too expensive I don t know enough about broadband The broadband service offered where I live is not fast enough 4% 23% 17% 14% 35% I access broadband someplace else 3% Other 11% *Percentages do not add up to 100% because individuals could give multiple responses. Q: Why don't you subscribe to broadband at home? (n=190 TX Internet subscribers who do not have home broadband service) Lack of Availability as a Barrier to Broadband Adoption Over 40% of Texas dial-up subscribers who say broadband service is unavailable say they would subscribe if it were available. Among Texas dial-up subscribers who say broadband service is not available where they live Would subscribe 42% Nearly three out of ten, though, would not subscribe to broadband even if it were available where they live. Would not subscribe 29% Don't know 29% Q: Would you sign up for broadband service if it were available in your area? (n=113 TX Internet subscribers who do not have broadband and report that broadband is not available where they live)

114 Residential Technology Assessment by Annual Household Income Broadband Availability and Median Household Income Median Household Income $23,083 - $36,026 $36,027 - $43,814 $43,815 - $55,650 $55,651 - $83,968 Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Census (2008 SAIPE) 64

115 Technology Adoption by Income Computer ownership Broadband adoption 81% 75% 87% 93% 80% 98% 87% 62% 58% 51% 59% 38% 17% 26% Statewide Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more Annual household income Q: Does your household have a computer? and Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 83% 92% 98% 99% 69% 52% Statewide Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more Annual household income Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

116 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more Product or service information 63% 51% 75% 86% 83% 90% Community events 47% 38% 66% 53% 59% 71% Health or medical information 60% 50% 69% 67% 65% 76% Government services 41% 39% 56% 60% 65% 58% Research for schoolwork 49% 41% 49% 40% 46% 44% Jobs or employment 58% 54% 66% 55% 45% 46% *Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more 66% 68% 86% 91% 93% 94% Social or professional networking sites such as Facebook 55% 36% 64% 49% 61% 62% Instant messages 41% 31% 53% 42% 50% 45% Posting content to a website 22% 16% 32% 30% 38% 34% Microblogs such as Twitter 15% 16% 23% 11% 16% 16% Posting content to a blog 23% 6% 25% 12% 24% 19% Chatting in chat rooms 17% 16% 24% 15% 19% 12% *Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

117 Interacting Online Percent of Texas Internet users who interact online with the following Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more Friends or family 80% 65% 79% 83% 87% 91% Companies with which you do business 25% 19% 51% 57% 66% 70% Co-workers 24% 28% 45% 50% 62% 65% Texas state government 20% 19% 30% 29% 39% 35% Your health insurance company 15% 23% 32% 33% 48% 53% Doctors or other healthcare professionals 28% 18% 32% 34% 46% 41% Teachers 35% 27% 33% 28% 47% 47% Local government 19% 19% 25% 20% 33% 31% Elected officials or candidates 15% 9% 19% 16% 27% 27% *Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percent of Texas Internet users who conduct the following transactions online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more Purchasing a product or service online 44% 42% 66% 79% 78% 87% Online banking 21% 34% 57% 67% 73% 81% Paying bills 23% 48% 64% 68% 72% 79% Booking travel arrangements 24% 32% 49% 58% 73% 84% Online transactions with government 15% 27% 33% 49% 55% 57% Selling a product or service online 5% 14% 18% 27% 33% 38% Buying, selling, or trading investments 4% 8% 16% 14% 25% 33% *Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

118 Online Activities Percent of Texas Internet users who conduct the following activities online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Less than $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 $50,000 to $74,999 $75,000 or more Using a search engine 51% 58% 72% 83% 86% 92% Reading online newspapers 53% 49% 56% 64% 73% 77% Sending or receiving photos 49% 46% 63% 78% 72% 86% Playing games online 49% 45% 51% 54% 44% 45% Downloading music 45% 33% 51% 61% 54% 63% Watching videos, movies, or TV shows 52% 30% 55% 56% 51% 52% Working from home 7% 8% 23% 21% 40% 53% Reading blogs 29% 18% 27% 24% 32% 34% Taking online classes 9% 13% 25% 24% 29% 31% *Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Less than $25,000 $25,000 to $49,999 $50,000 or more I realized broadband was worth the extra money 21% 19% 31% I needed to conduct business online 11% 19% 23% Broadband became available in my area 13% 23% 34% The cost of broadband became more affordable 21% 28% 24% I purchased (or received) a computer for my home 29% 32% 22% I heard about the benefits of broadband 18% 17% 17% Friends or family convinced me 15% 19% 12% *Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

119 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer Too expensive I don't need a computer or I don't know why I need one Too complicated I use a computer at a different location 35% 41% 42% 34% 32% 34% 30% 18% 20% 16% 13% 8% 7% 7% 9% 29% Statewide Less than $25,000 $25,000 to $49,999 $50,000 or more Annual household income Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Broadband is too expensive I can get broadband access somewhere else 38% 30% 27% 28% 25% 21% 21% 7% 7% 22% 28% 32% 16% 16% 11% 11% Statewide Less than $25,000 $25,000 to $49,999 $50,000 or more Annual household income Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

120 Residential Technology Assessment by Urban-Rural Classification Broadband Availability and Household Density Households per Square Mile of Land Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Bureau of Labor Statistics (March, 2010) 76

121 Technology Adoption by Urban-Rural Classification Computer ownership Broadband adoption 81% 80% 62% 62% 86% 67% 72% 49% Statewide Urban Suburban Rural Respondent s county of residence Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 85% 91% 81% Statewide Urban Suburban Rural Respondent s county of residence Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

122 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Urban Suburban Rural Product or service information 80% 82% 80% Community events 63% 60% 50% Health or medical information 68% 70% 65% Government services 57% 59% 52% Research for schoolwork 47% 38% 44% Jobs or employment 54% 47% 45% *Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Urban Suburban Rural 89% 89% 86% Social or professional networking sites 54% 58% 55% Instant messages 48% 38% 44% Posting content to a website 34% 32% 31% Posting content to a microblog such as Twitter 17% 13% 14% Posting content to a blog 21% 16% 14% Chatting in chat rooms 15% 14% 15% *Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

123 Interacting Online Percent of Texas Internet users who interact online with the following Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Urban Suburban Rural Friends or family 85% 86% 76% Companies with which you do business 56% 60% 53% Co-workers 53% 55% 45% Texas state government 31% 32% 28% Health insurance company 41% 41% 31% Doctors or other healthcare professionals 39% 38% 27% Teachers 38% 41% 39% Local government 28% 28% 21% Elected officials or candidates 22% 24% 21% *Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percent of Texas Internet users who conduct the following transactions online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Urban Suburban Rural Purchasing a product or service online 74% 71% 76% Online banking 65% 66% 63% Paying bills 68% 64% 62% Booking travel arrangements 65% 64% 56% Online transactions with government 46% 45% 36% Selling a product or service online 28% 28% 25% Buying, selling, or trading investments 21% 21% 21% *Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

124 Online Activities Percent of Texas Internet users who conduct the following activities online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Urban Suburban Rural Using a search engine 80% 81% 75% Reading online newspapers 67% 67% 65% Sending or receiving photos 74% 69% 71% Playing games online 47% 45% 48% Downloading music 54% 50% 49% Watching videos, movies, or TV shows 53% 46% 43% Working from home 35% 36% 22% Reading blogs 30% 28% 24% Taking online classes 23% 25% 26% *Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Urban Suburban Rural I realized broadband was worth the extra money 30% 21% 29% I needed to conduct business online 22% 20% 17% Broadband became available in my area 28% 33% 31% The cost of broadband became more affordable 26% 26% 29% I purchased (or received) a computer for my home 28% 21% 26% I heard about the benefits of broadband 21% 14% 15% Friends or family convinced me 15% 12% 15% *Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

125 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer Too expensive I don't need a computer or don't know why I need one Too complicated I use a computer at a different location 35% 42% 34% 36% 33% 27% 18% 20% 13% 8% 8% 7% 24% 43% 17% 10% Statewide Urban Suburban Rural Respondent s county of residence Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Broadband is too expensive Broadband is not available in my area 30% 32% 31% 27% 28% 30% 21% 21% 23% 23% 20% 19% 20% 16% 12% 7% Statewide Urban Suburban Rural Respondent s county of residence Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

126 Residential Technology Assessment by Age Broadband Availability and Population Age 65 or Older Percent of the Resident Population Age 65 or Older Less than 12.1% 12.1% % 16.11% % Greater than 20.9% Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Census (2008 estimate) 88

127 Technology Adoption by Age Computer ownership Broadband adoption 81% 62% 86% 87% 67% 69% 83% 64% 76% 60% 62% 37% Statewide 18 to to to to or older Respondent s age Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 91% 93% 87% 86% 66% Statewide 18 to to to to or older Respondent s age Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

128 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: 18 to to to to or older Product or service information 82% 81% 85% 80% 70% Community events 66% 65% 64% 50% 42% Health or medical information 69% 71% 71% 63% 61% Government services 55% 60% 58% 58% 52% Research for schoolwork 52% 56% 44% 22% 15% Jobs or employment 63% 58% 50% 37% 10% *Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: 18 to to to to or older 89% 91% 90% 90% 79% Instant messages 53% 49% 44% 30% 26% Posting content to a website 37% 33% 30% 31% 26% Chatting in chat rooms 20% 13% 12% 10% 8% Posting content to a blog 26% 14% 17% 17% 11% Social or professional networking sites 72% 59% 52% 32% 25% Microblogs such as Twitter 22% 17% 10% 12% 7% *Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

129 Interacting Online Percent of Texas Internet users who interact online with the following Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: 18 to to to to or older Friends or family 87% 85% 86% 82% 73% Companies with which you do business 57% 52% 67% 61% 45% Co-workers 59% 57% 52% 53% 25% Texas state government 29% 31% 35% 38% 24% Your health insurance company 39% 40% 48% 40% 24% Doctors or other healthcare professionals 37% 42% 42% 32% 24% Teachers for yourself or someone else 44% 47% 43% 26% 17% Local government 22% 30% 34% 34% 17% Elected officials or candidates 20% 23% 23% 24% 25% *Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percent of Texas Internet users who conduct the following transactions online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: 18 to to to to or older Purchasing a product or service online 75% 77% 78% 69% 55% Online banking 70% 71% 64% 60% 44% Paying bills 72% 72% 64% 60% 40% Booking travel arrangements 63% 68% 71% 60% 45% Online transactions with government 48% 46% 47% 43% 26% Selling a product or service online 31% 29% 32% 22% 11% Buying, selling, or trading investments 22% 22% 23% 22% 10% *Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

130 Online Activities Percent of Texas Internet users who conduct the following activities online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: 18 to to to to or older Using a search engine 87% 83% 79% 76% 56% Reading online newspapers 72% 69% 66% 63% 46% Sending or receiving photos 79% 75% 68% 64% 63% Playing games online 57% 48% 47% 33% 24% Downloading music 71% 57% 51% 26% 13% Watching videos, movies, or TV shows 66% 57% 41% 28% 20% Working from home 32% 37% 41% 36% 17% Reading blogs 38% 31% 24% 14% 17% Taking online classes 31% 26% 23% 17% 9% *Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: 18 to to to to or older I realized broadband was worth the extra money 28% 31% 26% 24% 17% I needed to conduct business online 20% 22% 25% 23% 11% Broadband became available in my area 25% 36% 32% 34% 20% The cost of broadband became more affordable 32% 29% 25% 16% 11% I purchased (or received) a computer for my home 31% 27% 23% 18% 14% I heard about the benefits of broadband 19% 18% 21% 15% 12% Friends or family convinced me 13% 9% 17% 19% 20% *Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

131 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer Too expensive I don't need a computer or don't know why I need one Too complicated I use a computer at a different location 35% 34% 43% 34% 34% 27% 24% 27% 18% 16% 14% 8% 12% 9% 27% 2% Statewide 18 to to or older Respondent s age Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Broadband is too expensive I can get broadband access somewhere else 30% 32% 27% 23% 24% 26% 21% 24% 7% 11% 43% 32% 18% 17% 5% 3% Statewide 18 to to or older Respondent s age Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

132 Residential Technology Assessment by Race/Ethnicity Broadband Availability and Minority Population Percent of the Population that is Minority Less than 27.1% 27.1% % 43.81% % Greater than 68.2% Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Census (2008 estimate) 100

133 Technology Adoption by Race/Ethnicity Computer ownership Broadband adoption 81% 62% 87% 69% 73% 51% 69% 47% 86% 71% Statewide Caucasian Black Hispanic Other Respondent s race/ethnicity Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 92% 84% 76% 93% Statewide Caucasian Black Hispanic Other Respondent s race/ethnicity Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

134 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Caucasian Black Hispanic Other Product or service information 85% 75% 72% 81% Community events 61% 55% 60% 63% Health or medical information 70% 62% 66% 72% Government services 56% 65% 51% 62% Research for schoolwork 37% 63% 54% 46% Jobs or employment 44% 72% 59% 46% *Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Caucasian Black Hispanic Other 92% 79% 83% 91% Through a social professional networking site 54% 50% 59% 57% Instant messages 40% 49% 51% 50% Posting content to a website 33% 33% 29% 35% Posting content to a microblog such as Twitter 14% 24% 17% 20% Posting content to a blog 18% 17% 20% 23% Chatting in chat rooms 10% 27% 20% 24% *Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

135 Interacting Online Percent of Texas Internet users who interact online with the following Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Caucasian Black Hispanic Other Friends or family 86% 80% 80% 82% Companies with which you do business 63% 54% 42% 61% Co-workers 54% 44% 50% 56% Texas state government 32% 34% 26% 32% Your health insurance company 43% 36% 30% 51% Doctors or other healthcare professionals 38% 35% 32% 42% Teachers 38% 41% 41% 36% Local government 27% 31% 24% 31% Elected officials or candidates 23% 26% 17% 26% *Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percent of Texas Internet users who conduct the following transactions online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Caucasian Black Hispanic Other Purchasing a product or service online 79% 59% 65% 73% Booking travel arrangements 67% 64% 50% 75% Paying bills 68% 70% 59% 71% Online banking 70% 54% 56% 70% Online transactions with government 52% 32% 30% 46% Selling a product or service online 31% 19% 21% 34% Buying, selling, or trading investments 24% 14% 18% 22% *Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

136 Online Activities Percent of Texas Internet users who conduct the following activities online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Caucasian Black Hispanic Other Using a search engine 84% 78% 70% 82% Sending or receiving photos 76% 56% 69% 71% Reading newspapers or other news sources 68% 67% 66% 57% Playing games online 46% 51% 51% 40% Downloading music 52% 48% 59% 43% Watching videos, movies, or TV shows 47% 56% 57% 47% Working from home 38% 20% 25% 49% Reading blogs 29% 23% 29% 32% Taking online classes 23% 33% 23% 30% *Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Caucasian Black Hispanic Other I realized broadband was worth the extra money 28% 25% 26% 25% I needed to conduct business online 22% 17% 18% 21% Broadband became available in my area 30% 35% 27% 26% The cost of broadband became more affordable 24% 43% 27% 24% I purchased (or received) a computer for my home 21% 27% 35% 38% I heard about the benefits of broadband 17% 19% 17% 21% Friends or family convinced me 11% 13% 22% 22% *Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

137 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer Too expensive I don't need a computer or don't know why I need one Too complicated I use a computer at a different location 35% 34% 46% 37% 39% 32% 32% 26% 23% 18% 14% 16% 8% 9% 8% 9% Statewide Caucasian Hispanic Other Respondent s race/ethnicity Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Broadband is too expensive Broadband is not available in my area 30% 27% 33% 21% 21% 19% 19% 12% 31% 33% 26% 25% 28% 7% 18% 4% Statewide Caucasian Hispanic Other Respondent s race/ethnicity Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

138 Residential Technology Assessment by Education Broadband Availability and Educational Attainment Percent of the Population Age 25+ With a Bachelor s, Graduate, or Professional Degree Less than 13.1% 13.1% % 18.31% % Greater than 27.7% Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Census (2000) 112

139 Technology Adoption by Education Computer ownership Broadband adoption 81% 62% 45% 75% 50% 85% 66% 93% 79% 97% 84% 22% Statewide Less than high school diploma High school diploma Some College College degree Advanced or professional degree Highest education level attained Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 86% 90% 96% 99% 50% Statewide Less than high school diploma High school diploma Some College College degree Advanced or professional degree Highest education level attained Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

140 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: No HS diploma HS diploma Some college College degree (4 yr) Advanced or professional degree Product or service information 64% 69% 86% 86% 86% Health or medical information 65% 57% 72% 71% 74% Information about events in your community Information about government services 55% 53% 59% 64% 71% 49% 48% 61% 59% 62% Jobs or employment 58% 52% 49% 48% 46% Research for schoolwork 51% 43% 46% 39% 47% *Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: No HS diploma HS diploma Some college College degree (4 yr) Advanced or professional degree 67% 78% 93% 94% 97% Social or professional networking sites such as Facebook 55% 51% 56% 57% 55% Instant messages 49% 40% 46% 46% 42% Posting content to a website 35% 29% 34% 33% 32% Posting content to a microblog such as Twitter 26% 17% 15% 13% 11% Posting content to a blog 19% 20% 19% 16% 20% Chatting in chat rooms 20% 15% 15% 13% 14% *Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

141 Interacting Online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: No HS diploma HS diploma Some college College degree (4 yr) Advanced or professional degree Friends or family 77% 73% 83% 91% 95% Companies with which you do business Percent of Texas Internet users who interact online with the following 31% 38% 61% 67% 75% Co-workers 39% 37% 47% 62% 75% Texas state government 24% 20% 34% 36% 38% Health insurance company 26% 26% 41% 46% 56% Doctors or other healthcare professionals 27% 32% 35% 38% 50% Teachers 27% 32% 40% 41% 53% Local government 21% 19% 28% 29% 35% Elected officials or candidates 14% 13% 25% 27% 30% *Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Percent of Texas Internet users who conduct the following transactions online No HS diploma HS diploma Some college College degree (4 yr) Advanced or professional degree Purchasing a product or service online 55% 58% 78% 83% 82% Online banking 33% 51% 67% 78% 75% Paying bills 45% 55% 66% 76% 74% Booking travel arrangements 30% 45% 64% 76% 83% Online transactions with government Selling a product or service online Buying, selling, or trading investments 20% 32% 48% 53% 56% 21% 21% 27% 30% 39% 17% 12% 17% 30% 28% *Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

142 Online Activities Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Percent of Texas Internet users who conduct the following activities online No HS diploma HS diploma Some college College degree (4 yr) Advanced or professional degree Using a search engine 60% 68% 82% 89% 92% Reading online newspapers 62% 50% 72% 70% 82% Sending or receiving photos 53% 63% 72% 81% 84% Playing games online 53% 44% 56% 45% 37% Downloading music 54% 50% 51% 54% 57% Watching videos, movies, or TV shows online 59% 41% 51% 50% 55% Working from home 19% 19% 29% 44% 58% Reading blogs 37% 22% 29% 29% 35% Taking online classes 16% 17% 27% 26% 32% *Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: No college education Any college education I realized broadband was worth the extra money 16% 30% I needed to conduct business online 16% 22% Broadband became available in my area 24% 31% The cost of broadband became more affordable 22% 27% I purchased (or received) a computer for my home 28% 25% I heard about the benefits of broadband 21% 16% Friends or family convinced me 20% 13% *Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

143 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer Too expensive I don't need a computer or don't know why I need one Too complicated I use a computer at a different location 35% 40% 34% 33% 36% 23% 24% 18% 8% 3% 8% 21% Statewide No college education College education Highest education level attained Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Too expensive Broadband is not available in my area 30% 33% 27% 28% 30% 21% 22% 21% 21% 12% 10% 15% Statewide No college education College education Highest education level attained Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

144 Residential Technology Assessment Of Households With Children Broadband Availability and Children Living in Poverty Percent of Children Living in Poverty Less than 17.6% 17.6% - 25% 25.1% % Greater than 33.7% Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Census (2000) 124

145 Technology Adoption Among Households With Children Computer ownership Broadband adoption 81% 62% 89% 67% 75% 84% 68% 57% 56% 21% Statewide Households with children Households without children Low-income* households with children Single-parent households *Low-income=annual household income less than $25,000 Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 91% 83% 87% 68% Statewide Households with children Households without children Low-income* households with children Single-parent hosueholds *Low-income=annual household income less than $25,000 Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

146 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly** higher than the state average: Percentage is significantly** lower than the state average: Households with children Households without children Low-income* households with children Singleparent households Product or service information 84% 78% 67% 74% Community events 66% 56% 45% 62% Health or medical information 73% 64% 63% 67% Government services 56% 57% 44% 54% Research for schoolwork 56% 34% 63% 68% Jobs or employment 58% 43% 71% 71% *Low-income=annual household income less than $25,000 **Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly** higher than the state average: Percentage is significantly** lower than the state average: Households with children Households without children Low-income* households with children Single-parent households 92% 86% 77% 87% Social or professional networking sites 65% 47% 54% 69% Instant messages 51% 39% 44% 67% Posting content to a website 36% 29% 14% 35% Posting content to a microblog such as Twitter 19% 13% 16% 27% Posting content to a blog 21% 17% 15% 29% Chatting in chat rooms 17% 13% 26% 24% *Low-income=annual household income less than $25,000 **Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

147 Interacting Online Percent of Texas Internet users who interact online with the following Percentage is significantly** higher than the state average: Percentage is significantly** lower than the state average: Households with children Households without children Low-income* households with children Singleparent households Friends or family 88% 81% 90% 90% Companies with which you do business 57% 57% 23% 46% Co-workers 56% 49% 34% 55% Texas state government 31% 31% 22% 33% Health insurance company 43% 37% 14% 35% Doctors or other healthcare professionals 42% 32% 28% 52% Teachers 52% 29% 45% 57% Local government 29% 25% 19% 26% Elected officials or candidates 22% 23% 8% 23% *Low-income=annual household income less than $25,000 **Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percent of Texas Internet users who conduct the following transactions online Percentage is significantly** higher than the state average: Percentage is significantly** lower than the state average: Households with children Households without children Low-income* households with children Singleparent households Purchasing a product or service online 79% 69% 52% 77% Online banking 73% 58% 33% 64% Paying bills 75% 58% 48% 69% Booking travel arrangements 67% 60% 28% 57% Online transactions with government 50% 40% 25% 45% Selling a product or service online 32% 24% 10% 34% Buying, selling, or trading investments 23% 20% 5% 22% *Low-income=annual household income less than $25,000 **Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

148 Online Activities Percentage is significantly** higher than the state average: Percentage is significantly** lower than the state average: Percent of Texas Internet users who conduct the following activities online Households with children Households without children Low-income* households with children Singleparent households Using a search engine 86% 75% 69% 84% Reading online newspapers 74% 62% 65% 76% Sending or receiving photos 76% 70% 50% 70% Playing games online 53% 42% 60% 65% Downloading music 69% 39% 55% 74% Watching videos, movies, or TV shows 59% 42% 50% 71% Working from home 39% 30% 10% 35% Reading blogs 35% 24% 33% 36% Taking online classes 29% 20% 19% 31% *Low-income=annual household income less than $25,000 **Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Households with children Households without children I realized broadband was worth the extra money 27% 26% I needed to conduct business online 24% 18% Broadband became available in my area 28% 31% The cost of broadband became more affordable 28% 24% I purchased (or received) a computer for my home 26% 25% I heard about the benefits of broadband 18% 17% Friends or family convinced me 10% 18% *Low-income=annual household income less than $25,000 **Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

149 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer Too expensive I don't need a computer or don't know why I need a computer Too complicated I use a computer at a different location 35% 34% 18% 43% 37% 32% 24% 22% 18% 8% 8% 8% Statewide Households with children Households without children Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Too expensive Broadband is not available in my area 30% 27% 25% 21% 23% 12% 15% 19% 33% 33% 20% 7% Statewide Households with children Households without children Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

150 Residential Technology Assessment by Employment Status Broadband Availability and Unemployment Rate Unemployment Rate Less than 6.9% 6.9% - 9.1% 9.11% % Greater than 12.3% Broadband Availability* Less than 85% 85.00% - 90% 90.01% - 93% 93.01% - 96% 96.01% - 98% 98.01% - 100% *Percentage of households served by terrestrial, non-mobile service with speeds of at least 768 Kbps download and 200 Kbps upload Source: 2010 Q3 Connected Texas statewide broadband inventory map and United States Bureau of Labor Statistics (March, 2010) 136

151 Technology Adoption by Employment Status Computer ownership Broadband adoption 81% 62% 87% 71% 65% 63% 59% 83% 56% 40% 38% 36% Statewide Employed (fullor part-time) Unemployed Retired Adults with disabilities Other Q: Does your household have a computer? and Q: Which of the following describe the type of Internet service you have at home? (n=1,221 TX residents) Texas Residents Who Access the Internet (At Home or Someplace Else) Percent of all Texas residents who access the Internet from home or some other place 87% 93% 77% 69% 68% 84% Statewide Employed (fullor part-time) Unemployed Retired Adults with disabilities Other Q: Do you use the Internet from any locations outside of your own home? and Q. Do you have access to the Internet at home? (n=1,221 TX residents)

152 Searching for Information Online Percent of Texas Internet users who search for the following types of information online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Employed (full-time or part-time) Unemployed Retired Adults with disabilities Other Product or service information 84% 65% 73% 70% 73% Community events 64% 56% 39% 48% 64% Health or medical information 70% 58% 61% 63% 68% Government services 58% 54% 51% 53% 56% Research for schoolwork 47% 43% 19% 20% 59% Jobs or employment 52% 82% 19% 50% 59% *Significance measured at a 95% confidence level Q: Which of the following types of information do you use the Internet to look for online? (n=1,043 TX Internet users) Communicating Online Percent of Texas Internet users who communicate with others in the following ways Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Employed (full-time or part-time) Unemployed Retired Adults with disabilities Other 93% 76% 76% 79% 84% Social or professional networking sites 60% 47% 24% 56% 60% Instant messages 48% 42% 26% 32% 49% Posting content to a website 33% 37% 24% 34% 28% Microblogs such as Twitter 17% 23% 6% 12% 14% Posting content to a blog 19% 15% 10% 23% 22% Chatting in chat rooms 15% 22% 8% 9% 19% *Significance measured at a 95% confidence level Q: Which of the following ways of communicating with others do you use? (n=1,043 TX Internet users)

153 Interacting Online Percent of Texas Internet users who interact online with the following Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Employed (full-time or part-time) Unemployed Retired Adults with disabilities Other Friends or family 87% 73% 70% 76% 87% Companies with which you do business 63% 33% 44% 47% 45% Co-workers 63% 42% 17% 14% 39% Texas state government 31% 32% 28% 35% 29% Your health insurance company 42% 21% 29% 37% 38% Doctors or other healthcare professionals 38% 28% 22% 48% 39% Teachers 42% 29% 20% 41% 48% Local government 29% 23% 19% 14% 24% Elected officials or candidates 23% 22% 24% 8% 17% *Significance measured at a 95% confidence level Q: Which of the following types of individuals or organizations do you interact with online, by visiting a website or communicating online to obtain information? (n=1,043 TX Internet users) Online Transactions Percent of Texas Internet users who conduct the following transactions online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Employed (full-time or part-time) Unemployed Retired Adults with disabilities Other Purchasing a product or service online 78% 62% 53% 68% 74% Online banking 72% 51% 42% 44% 55% Paying bills 72% 66% 39% 55% 59% Booking travel arrangements 70% 43% 44% 43% 58% Online transactions with government Selling a product or service online Buying, selling, or trading investments 49% 30% 28% 28% 44% 31% 14% 14% 17% 30% 23% 13% 15% 15% 24% *Significance measured at a 95% confidence level Q: Which of the following types of transactions have you completed online? (n=1,043 TX Internet users)

154 Online Activities Percent of Texas Internet users who conduct the following activities online Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Employed (full-time or part-time) Unemployed Retired Adults with disabilities Other Using a search engine 85% 67% 60% 58% 82% Reading online newspapers 70% 69% 46% 53% 71% Sending or receiving photos 77% 66% 56% 65% 70% Playing games online 47% 50% 30% 54% 63% Downloading music 59% 48% 15% 41% 58% Watching videos, movies, or TV shows 52% 50% 23% 36% 62% Working from home 40% 17% 14% 10% 30% Reading blogs 30% 29% 16% 29% 33% Taking online classes 26% 15% 8% 18% 36% *Significance measured at a 95% confidence level Q: Which of the following activities do you conduct online? (n=1,043 TX Internet users) Why Texas Residents Subscribe to Broadband Percent of Texas residents who subscribe to broadband for the following reasons Percentage is significantly* higher than the state average: Percentage is significantly* lower than the state average: Employed (full-time or part-time) Retired Other I realized broadband was worth the extra money 28% 14% 26% I needed to conduct business online 22% 5% 20% Broadband became available in my area 31% 24% 24% The cost of broadband became more affordable 27% 12% 28% I purchased (or received) a computer for my home 26% 16% 24% I heard about the benefits of broadband 18% 13% 17% Friends or family convinced me 12% 23% 19% *Significance measured at a 95% confidence level Q: Which of the following contributed to your decision to subscribe to broadband service? (n=721 TX residents with home broadband service)

155 Top Barriers to Computer Ownership Among Texas residents who do not own a home computer I don't need a computer or don't know why I need one Too expensive Too complicated I use a computer at a different location 47% 49% 46% 34%35% 33% 28% 18% 16% 8% 11% 26% 26% 2% 24% 20% 7% 30% 21% 1% Statewide Employed (full- or part-time) Retired Adults with disabilities* Other *Sample size less than 30 Q: Why don't you have a computer at home? (n=256 TX residents with no home computer) Top Barriers to Broadband Adoption Percent of Texas residents without home broadband service I don't need broadband or don't know why I don't subscribe No computer Broadband is too expensive Broadband is not available in my area 30% 27% 28% 21% 23% 24% 16% 12% 39% 32% 18% 5% 32% 23% 19% 7% 29% 25% 17% 12% Statewide Employed (full- or part-time) Retired Adults with disabilities Other Q: Why don't you subscribe to broadband at home? (n=500 TX residents who do not have home broadband service)

156 Research Methodology Methodology Data were collected by telephone through live computer-assisted interviews from a statewide random digit dial (RDD) sample of 1,221 households contacted between March 12 and April 3, On average, each survey took approximately 10 minutes to complete. Data were collected by Eastern Research in Springfield, PA. This research was designed to measure technology adoption and the awareness of available broadband service, and establish benchmarks for these metrics. The questionnaire screened to include only adults age 18 or older with quotas set by gender, age, and county of residence (urban, suburban, or rural) to ensure adequate representation of all adults in the state. Weights were applied to correct for minor variations and ensure that the sample matches the most recent U.S. Census estimates of the state s population by age, gender, and urban/rural classification of the respondent s county of residence. Weighting and research consultation were provided by Lucidity Research, LLC. Sampling margin of error: Statewide, full sample (n=1,221): +3.1% at the 95% level of confidence. This sample error accounts for sample weighting, using the effective sample size.

157 Urban-Rural Classifications Defined The U.S. Census Bureau uses an urban-rural classification based on Metropolitan Statistical Areas (MSAs), which are designated by the United States Office of Management and Budget to collect, tabulate, and publish federal statistics. Metropolitan statistical areas contain a core urban area with a population of 50,000 or more. Each MSA also includes one or more counties that have a high degree of social and economic interaction with the urban core (further information on definitions for MSAs can be found at: When classifying urban, suburban, and rural counties, we follow the Census Bureau definition whereby counties are categorized as urban if they contain the core city of an MSA. Suburban counties are MSA counties that do not contain a core city, and rural counties include all remaining counties that are not part of an MSA. Using these definitions, there are currently 25 urban, 51 suburban, and 178 rural counties in Texas. State Survey Sample (n=1,221 Adults) Gender: Employment Status: Male 49% Employed full-time or part-time 63% Female 51% Retired 14% Age: Homemaker not employed outside home 7% 34 or younger 34% Student not working for wages 3% 35 to 44 20% Unemployed 5% 45 to 54 19% Disabled, not employed outside the home 4% 55 to 64 13% Other / no answer 3% 65 or older 14% Educational Attainment: Mean age (years) 45 Less than high school 13% Median age (years) 40 High school graduate 24% Any children under age 18 in household 42% Some college 23% Race: College graduate or higher 38% White (non-hispanic) 55% Refused 2% Black (non-hispanic) 8% Household Income: Any other (non-hispanic) 5% Under $25,000 18% Refused (non-hispanic) 4% $25,000 to $49,999 23% Of Hispanic descent 28% $50,000 to $74,999 15% Marital Status: $75,000 or higher 25% Single, never married 16% No answer / refused 18% Married or living in partnership 62% Mean household income ($000) $56 Separated or divorced 12% Median household income ($000) $49 Widowed 7% Average household size (# of persons) 3.2 Refused 3% Note: Sample profile shown here is after weighting to U.S. Census by age, gender and urban/suburban/rural county classification. 150