FCC Hearing, May 22, 2000

Good Morning. My name is Chuck Podesta and I am the Chief Information Officer for Berkshire Health Systems in Pittsfield, MA. I have been involved with Berkshire Connect since its inception in 1997 and I most recently have been a Steering Committee member along with participating in contract negotiations.

Berkshire County is a relatively long (50 miles) and narrow region encompassing the Housatonic and Hoosic river valley in Western Ma. The Berkshires is home to 135,000 people, most of whom reside in one of three population clusters in North (North Adams), Central (Pittsfield) and South (Great Barrington) County. Once the home of a thriving defense and manufacturing base, the county like much of New England has seen its share of plant closings and realignments. Currently, the Berkshire economy is undergoing a transformation from a 19/20^th century industrial based economy to a 21^st century services and knowledge based economy. The county is home to a growing number of new media, arts & entertainment, and resort companies. This new economy relies heavily on advanced communications to grow and sustain their businesses.

In 1997 the telecommunications infrastructure of Berkshire County created a competitive disadvantage for its businesses and limited citizen access to a wealth of opportunities and services made possible by advanced communications. This was mainly due to four in-county variables.

1. Low population density and shrinking population base.
2. Low business concentration.
3. Lower mean income relative to state average.
4. Costs for telecom service were 3-4 times higher than urban areas.

Berkshire County was at a crossroads. While the public sector was saying to the private telecommunications sector, "Build it and they will come". The private telecommunications sector was saying, "Show me the money". We were truly the "have-nots" in the digital divide.

In June of 1997, the Berkshire Legislative Delegation led by state representative, Dan Bosley partly in response to a decision by Tripod to leave the county due to the high telecommunication costs and poor services contacted the Berkshire Regional Planning Commission and Berkshire Connect was born. With the full support of the delegation and the support of Governor Paul Cellucci, Berkshire Connect received a $250,000 grant to begin work. A project task force committee was created from a cross-section of Berkshire County businesses, cultural institutions, large businesses, public access organizations, local business consultants and the Chamber of Commerce were all represented. The Legislative Delegation also asked and received assistance from the Massachusetts Technology Collaborative in addressing the information technology needs throughout the county.

The initial charge of Berkshire Connect was to examine and assess the current state of affairs and to propose a strategy for enhancing the Berkshires telecommunications and information infrastructure and also to reduce the cost. To facilitate the complex process of needs assessment; the task force was divided into a series of formal subcommittees and ad hoc groups. The groups included critical users, educational users, cultural & arts users, government & public service users, and small business users. The critical users subcommittee drove the technology assessment activities of the task force. A strategy emerged consisting of the following:

1. Identify the regions advanced telecommunications and information users.
2. Examine current telecommunications infrastructure and identify near and long term opportunities.

A survey was developed and the results provided the following:

1. A demographic characterization of respondents.
2. A telecommunications market saturation and technology sophistication assessment.
3. A demand aggregation.
4. Future telecommunications needs.

It is interesting to note that the majority of the respondents felt that they were under-served, that the Internet was critical to their business, that state assets should be applied to solve the problem and 90% said they would join a co-op if it solved the problem.

In March of 1998 a Steering Committee was created to move the project into a new phase. Don Dubendorf of Grinnell, Dubendorf and Smith volunteered to lead the group. Berkshire Connect would now shift work to the area of business planning & Network Design. At that time all options were in play. Berkshire Connect could privatize and build the infrastructure using private dollars. Berkshire Connect could form a non-profit co-op and build the infrastructure using public money. Berkshire Connect could partner with the private sector and utilize both public and private funds to build the infrastructure.

Berkshire Connect felt that a business plan was needed to study the best approach and to prove that the project was viable. A national consulting company, Flack & Kurtz was retained to work with Berkshire Connect on the Business Plan and Network Design. The Business Plan recommended that we aggregate demand and stimulate market demand by increasing education and awareness of what an improved infrastructure will do. A return on investment was also included.

In parallel with the business planning, we also determined that we needed a legal entity to assess organizational structures for managing the technology option and seek appropriate financing mechanisms. An RFP was created and sent to all interested private sector companies. We assessed the responses based on the following criteria:

1. Service History
2. Price
3. Technology
4. Balance Sheet
5. Mission Fit (county-wide unbundled solution)
6. Goodwill
7. Timing of Solution

After extensive interviewing, Global Crossing/Equal Access was selected and we moved into contract negotiations. Also, as a result of the RFP process we realized that the infrastructure build-out could be accomplished with privately funded dollars through our partner.

The term of the contract is three years although members can terminate based on price or service issues.

Berkshire Connect Obligations:

1. Act as marketing representative.
2. Facilitate access to customers.
3. Public Relations
4. Assist with Permitting Approvals.

Partner Obligations:

1. Complete In-County Egress Network (Wireless).
2. Privately financed.
3. Provides dramatic discounts regardless of location or size of business.
4. Elimination of distance factor for T-1 pricing.

The unique aspect of this agreement is the ability to discount based on aggregate of demand. As more businesses join Berkshire Connect and sign up for services, prices go down for all members based on a tiered pricing structure. Essentially, each member of Berkshire Connect becomes a marketing representative. I have personally talked to many businesses to promote Berkshire Connect and Global Crossing not only because I am committed to Berkshire Connect, but also knowing that the health systems telecommunication costs will go down as more businesses join. During the three years of the agreement, Berkshire Connect will also provide ongoing oversight of the contract and act as an advocate to the community to insure that we don’t replace one monopoly with another.

I would like to acknowledge at this time the support and guidance we received from Senator Kennedy, Senator Kerry and FCC Chairman, William Kennard. They were instrumental in helping us keep the process moving and we could not have met all our goals without their continued attention and assistance.

Berkshire Health Systems is made up of two hospitals, clinics, MD offices and a Visiting Nurse Association serving Berkshire County. Also, Berkshire has seventeen long-term care facilities serving Ohio, PA, the North Shore of MA, South Shore, Springfield area and Berkshire County. For Berkshire Health Systems the impact of Berkshire Connect is significant. Our telecommunication costs will drop by approximately 45%. Currently, we are spending $90,000 per month on long distance, local digital service, Internet and data lines. By July of 2000 when fully implemented, our expenditures will be approximately $48,000 per month for the same services. This equates to $500,000 per year, which can be used to expand health services for our community. Due to the explosion of internet-based applications and the information needs of our patients and physicians, we will be expanding the network capacity. We could not afford to do this without Berkshire Connect.

Even though I have been discussing the benefits to businesses, there is a direct human-interest impact also. Most of our nursing home residents have families that live outside the local calling area. In some instances this is the only contact they have with their families. Many are also on fixed incomes. It gives me great satisfaction to know that through our efforts the long distance rates for these residents will be cut by 50%. Lastly, it is also extremely satisfying to know that with this particular initiative, statistics and economics did not get in the way of doing the right thing.