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Should Broadband Stimulus Requirements Be Loosened?

September 9, 2009 By

A debate has erupted over whether or not broadband stimulus requirements should change to satisfy large telecommunications companies that snubbed the first round of funding in August. Many saw their absence as a sign that the broadband stimulus strategy had failed, but roughly $28 billion in applications were submitted to the National Telecommunications and Information Administration (NTIA) and Rural Utilities Services (RUS), the two agencies distributing $7.2 billion set aside in the American Recovery and Reinvestment Act for broadband projects. With volume like that already in place, is it even necessary for large telecommunications companies to participate in the broadband stimulus?

Some answer no, like Sandie Terry, IT director of Franklin County, Va. In 2005, she deployed a broadband network that now serves 70 percent of Franklin County in partnership with a small Internet service provider startup called B2X Online Inc. Large telecommunications companies declined because building infrastructure in her area wouldn't have fit their business models. However, Franklin County managed to make wireless broadband services profitable for B2X Online by paying part of the company's startup costs. Terry used $83,000 from the county's general fund and $50,000 in federal grant money to build a wireless tower. The vendor got free access to existing city structures, like water tanks and streetlights to deploy the rest of the network. The municipality also agreed to be an anchor tenant with B2X Online. This arrangement enabled the company to grow from being a three-employee startup to an operation with 20 employees.

Terry said she was pleased with the company's performance.

"They're very nimble. They're very flexible. They're very responsive. We have a local franchise cable company in the area and we do not have that kind of partnership with it," Terry said, later adding, "I want to see the stimulus go to small providers to allow them to grow. If we want to create jobs in this country and we have a need for broadband, why not allow people to create broadband delivery companies, grow that industry and reach the rural areas?"

Others think pointing to small provider successes like Franklin County's is too anecdotal a case for brushing larger companies aside.

"The last thing you want to do is scare away the folks with the most experience, the most resources and the most historically capable of wiring people up," said Bruce Mehlman, executive director of the Internet Innovation Alliance, a coalition representing small and large telecommunications companies.

Even Terry cautioned that small companies needed to be given funding with careful discretion. She warned that some small businesses might not have the skills to operate as fully fledged businesses once they expanded using government money.

"You can deploy a network. You can be technical. You can hang the equipment. You can make it talk and make it work, but when that network continues to grow and that business grows, then you need to become business people," Terry said.

Oakland, Calif.-based municipal broadband analyst Craig Settles suspects large companies are protesting the "network neutrality" language in the current broadband stimulus notice of funds available (NOFA). The concept behind network neutrality, which is generally already enforced by the FCC, says that telecommunications companies shouldn't restrict the content and applications users operate on the Internet. Settles theorized that telecommunications companies also wanted to punish NOFA language affirming rules that incumbent broadband providers should allow competitors to use their network infrastructures, for the sake of competition. Settles thinks the lack of participation from large telecommunications providers was possibly preferable.

The Telecommunications Industry Association (TIA) preferred to withhold its public opinions of the requirements until the federal government decided whether or not to change them, according to Mike Snyder, public relations manager for the TIA.

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