Broadband Players Vie For Stimulus FundsBroadband Players Vie For Stimulus Funds
With more than $7 billion up for grabs, there's no shortage of parties looking to cash in.
The federal government plans to spend $7.2 billion in stimulus funds to expand broadband access -- not surprisingly, there's plenty of debate over where the money should go.
President Obama approved the spending through the American Recovery and Reinvestment Act and urged agencies to move as quickly as possible to put the funds to use. The Federal Communications Commission must still come up with definitions and parameters that will help determine allocations.
The National Telecommunications and Information Administration and the Department of Agriculture must also draft guidelines for the types of projects they will fund, while adhering to government rules that require waiting periods for public input. Eligibility guidelines will be released within two months, and officials said they hope to release the first of three portions of the funds by summer.
Last month, the FCC, the NTIA, and the Agriculture Department issued public notices seeking input until April 13 and held a series of hearings on the issue. Bart Forbes, public affairs officer for the NTIA, said that about 3,000 people had responded by April 3. Forbes said he could not provide any details about the NTIA's plans for spending about $4.7 billion or the direction it will take because it's too early in the process.
An official with the Department of Agriculture's Rural Utilities Service indicated that broadband programs created with its $2.5 billion in stimulus funds would likely be open to a wider variety of groups than those funded through existing programs.
Carly Fiorina, former Hewlett-Packard CEO and current chair of the board of directors for the Technology Policy Institute, said in a conference call with reporters that she finds it encouraging that Congress is spending substantial amounts of money on broadband infrastructure.
"We know from experience that simply throwing money at technology is not a solution," she said. "We should think about spending it wisely and making sure we actually achieve the goal, which is that we have 21st century infrastructure."
The FCC has given every indication that it will stress the importance of allowing competition and the need for carriers to manage traffic neutrally, regardless of the content or its source. Several large telecommunications companies oppose such "network neutrality" provisions, saying it goes against free-market principles and hampers their ability to raise money for expansion.
Despite rumors that Verizon and AT&T may not participate in stimulus programs because of potential restrictions and requirements, a Verizon spokesman indicated that his company has not made a decision yet.
"Whether we participate in a specific government program or not, our intent is to do our part, and to work cooperatively with governments, nonprofits, and others to ensure that next-generation ultrafast and mobile broadband become ubiquitous," he said.
Either way, "Verizon is playing a significant role in stimulating the economy and deploying broadband," he said.
Verizon has invested $50 billion in technology infrastructure in three years, first through its high-speed FiOS network and now through developing a new 4G wireless LTE network. FiOS served 13 million homes last year.
If Verizon does apply for funds, it's more likely to go through the NTIA, which is likely to offer matching grants. Even if the Department of Agriculture favors prior grant recipients and Verizon would not qualify, large carriers such as Verizon could benefit from those funds if they're asked to lay the infrastructure for smaller providers. Another area of uncertainty is what constitutes an underserved population and therefore which areas are eligible for funds.
The National Cable and Telecommunications Association estimated in a recent report that 10 million U.S. households lack broadband access, but it has been difficult to pinpoint underserved areas because some cable companies report access in ZIP codes where one customer is served. One of the NTIA's tasks will be to create a broadband map that shows which parts of the country lack broadband and which parts lack infrastructure for broadband.
The Communications Workers of America recently issued a report stating that 57% of urban homes and 60% of suburban homes have broadband, while just 38% of rural homes have it. That group urges spending in rural areas with slow speeds. Some of the biggest players, like AT&T, argue that speed is less important than access to carriers.
A Qwest Communications spokesman said the money should go to unserved areas rather than underserved areas. The company provides service to 2.8 million subscribers in its local regions in 14 states in the West and Midwest.
It has not participated in programs administered by the Department of Agriculture in the past, but the company could be eligible for stimulus funds. The Agriculture Department is trying to decide whether it will fund broadband expansion through loans and loan guarantees, grants, or a combination of both. Qwest would need grants to meet the expenses of going into many new areas, the spokesman said.
"It's difficult to make a business case in some of these areas," he said during a recent interview. "The question is whether there's enough of a population for people to use it and for us to make a profit after investment."
He said wirelines offer the fastest speeds but conceded that wireless networks may be better in some areas because it will be less cost prohibitive to build them. Without guidelines, no one knows how much of the stimulus funds will go toward wireless or how much the programs will stress the importance of high-speed connections.
"We applaud the programs and think it's a great idea, and we think they should focus on unserved areas, but we're waiting for them to issue rules," Quest's spokesman said.
With Obama's push to move quickly, money is likely to flow in September or October. By this summer, all of the players will have a clearer idea of what the programs and grants will look like.
Without receiving guidelines to help target specific areas, providers cannot say how many Americans or how many square miles will benefit from the stimulus funds. Every area has unique factors to contend with, including the size of its population, terrain, distance from networks, local regulations, and other variables that will affect costs and completion schedules.
The Verizon spokesman said that no matter how the programs turn out, Verizon's goal is the same as the Obama administration's -- "to ensure that every American has broadband access to the Internet."
"We all need to play a role to accomplish this, and Verizon is considering what more it can do to contribute to this national priority," he said.
Thomas Lenard, president and senior policy fellow of the Technology Policy Institute, a Washington think tank, said that if the goal is to spur adoption, the focus should be on those with low incomes. "All of these programs always end up focusing on rural areas literally at the expense of the poor who have to pay into these funds but get very little benefit from it," he said.
In a recent position paper, TPI Senior Fellow Scott Wallsten said that in order to be successful, the federal government should fund projects that nobody would take on without the subsidy.
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