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Broadband Stimulus Funds Bring Debate Over Distribution; Package Moves to Vote

WASHINGTON, February 7, 2009 – Funding for broadband deployment makes up approximately one percent of President Obama’s approximately $820 billion economic stimulus package. But a hearty debate has unfolded over how, where, and to whom those funds should be distributed.

Andrew Feinberg



WASHINGTON, February 7, 2009 – Funding for broadband deployment makes up approximately one percent of President Obama's approximately $820 billion economic stimulus package. But a hearty debate has unfolded over how, where, and to whom those funds should be distributed.

After a late-Friday deal that keeps the momentum going on negotiations in the Senate, a vote to cut off debate on the broader package was expected on Monday, to be followed by a final Senate vote on Tuesday.

As regards the Senate’s $9 billion proposed for broadband – a sum that CNN and The New York Times reported had been cut to $7 billion – the heart of the debate was over who would receive the billions of dollars in funding for broadband deployment.

The House-passed bill split its $6 billion for broadband between $2.825 billion in grants to be made from the Commerce Department and $2.825 billion in loans to be made by the Agriculture Department. An additional $350 million would go to administering the new grants at Commerce.

By contrast, the Senate bill would put the Commerce Department’s National Telecommunications and Information Administration in charge of channeling almost all of the $9 billion in Thursday’s version of the Senate bill. That Senate version also allowed for some of those funds to be transferred to the Agriculture Department, or the Federal Communications Commission, subject to various preconditions.

An amendment to the Senate bill that would incorporate the House language had been offered by Senator Patrick Leahy, D-Vt. The amendment was not one of the many that were considered as debate on the bill went late into Friday evening.

On Wednesday, the non-profit advocacy group Free Press and the National Cable and Telecommunications Association sent a joint letter to Senate leaders urging that NTIA be the sole arbiter of funding broadband.

“While there may be appropriate roles for other agencies to play in broadband, the size and scope of this program—as well as its necessary integration into other telecommunications policies—strongly indicates a single agency strategy as the correct path,” wrote NCTA President Kyle McSlarrow and Free Press Policy Director Ben Scott.

The two groups often butt heads over cable operators' network management policies and network neutrality.

The NCTA wants to limit the role of the FCC in administering any broadband programs to data collection and definitions, said vice president for communications Brian Dietz. The Commission's role should be limited to defining "underserved" and "unserved" areas for targeting, Dietz said. But it should not have a role in allocating funds. Instead, Dietz stressed that NTIA is the agency best equipped to allocate resources based on FCC data.

The goal of the joint letter is only to prevent splitting the funding among different agencies with varying goals and experience with broadband, said Free Press research director Derek Turner.

While the two longtime adversaries are in agreement on this "very narrow issue," industry observers should not expect any kind of detente between the industry and the watchdog group. Free Press is "not going soft in any way...on other issues," said Turner.

Even while supporting NTIA's role in the stimulus, Free Press broke with NCTA on the FCC's role. As the single agency with the most experience overseeing telecom policy and universal access, Turner said the commission should play a "very active role" in crafting the program.

Turner pointed out that the Senate bill directs the FCC to cooperate with NTIA to craft a national broadband strategy. The commission has largely abdicated its role in promoting competition, he said, and should "certainly be doing more."

Some other industry veterans have raised criticisms of how effective the stimulus will be. During a roundtable webcast discussion on Friday morning, K&L Gates' Marty Stern said he wasn't sure how much competition $9 billion in funds would lead to. We don't know who the "winners" will be, Stern said. But the program should have few restrictions in order to all companies to build out infrastructure.

The focus of the build-out was a subject of further debate during the webcast program, which was sponsored by TV Mainstream. (Editor’s Note: TV Mainstream has partnered with in providing webcasts of the Broadband Breakfast Club. The next event is scheduled for Tuesday, February 10, from 8 a.m. to 10 a.m.)

Dow Lohnes attorney Jim Burger wasn't sure building out to rural areas would be the best use of the funds. "What we need to do is get fatter pipes into the densest portions of the population," he said.

Concentrating on denser areas would lead to more job creation, Burger suggested, and pointed out that wireless broadband could be a less expensive solution for increased service over the "last mile" compared to other solutions. "Laying fiber to the curb is expensive," he said of building out to far-flung areas.

But the administration's focus on universal broadband is "entirely appropriate," said Consumer Electronics Association vice president Michael Petricone. He compared broadband deployment to the government's construction of roads and canals to rural areas. The key to the program's success will be competition and a "technology neutral" approach, he said.

Burger cautioned against unrealistic expectations. The stimulus won't create an environment like South Korea, he said, citing that country's dense population and massive urban centers. Instead, the program should direct funds to where businesses can use it to create jobs, he said.

Petricone agreed with Burger's sobering assessment, but stressed the urgent need for action to upgrade the nation's infrastructure: "We're never going to be Korea, but we shouldn't be 15th in the world either." Broadband Stimulus Wiki has been collecting proposals about broadband-related stimulus proposals on the Broadband Stimulus Wiki.

Broadband Breakfast Club

Don't miss the Broadband Breakfast Club on Tuesday, February 10, 2009, with Donald C. Brittingham (Verizon Communications), Tom DeRiggi (Rapid DSL & Wireless), John Kneuer (formerly of NTIA), John Muleta (M2Z Networks) and Steve B. Sharkey (Motorola) on "The Role of Wireless Frequencies in Widespread Broadband Deployment" at the Old Ebbitt Grill, from 8 a.m. - 10 a.m.

Webcasts of the Broadband Breakfast Club Produced in Partnership with:

TV Mainstream

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  1. Drew Clark

    Drew Clark

    February 7, 2009 at 10:45 pm

    National Journal’s Kevin Friedly has an analysis of how President Obama gets to 60 votes on the stimulus package. Note the bottom vote, S.Amdt. 110: To strengthen infrastructure investments.

  2. Drew Clark

    Drew Clark

    February 7, 2009 at 10:56 pm

    Fierce Telecom also has a report, and it highlights Saul Hansen’s New York Times blog Bits on Thursday night maneuvers.

  3. Avatar

    Craig Settles

    February 8, 2009 at 3:14 am

    People’s continual comparison of the broadband stimulus to building roads and canals is effective in making the value of a complex technology easy to understand. But it also limits people’s appreciation of the breadth and depth of broadband’s potential impact on the economy where it is deployed. This limitation increases the vulnerability of the broadband investment to its critics.

    While it is be true that jobs will be created building networks, there are several dozen cases places such as Pulaski, TN, Lafayette, LS and Greene County, NC where their highspeed networks attracted businesses that brought hundreds of jobs. This is on-going job creation, not just a one-shot job creation network project. In Bristol, VA, not only did their highspeed network bring jobs, these jobs paid on average $10,000 or more per year than the average job in this rural part of the state.

    Broadband enables home-based businesses to be created by people who have expertise that translates to consulting services, or people who sell crafts and homemade products to a regional and even national audience. These businesses serve as either supplemental income while people work day jobs, or replacement income for those looking for, or unable to work regular jobs.

    Broadband enables worker-retraining programs for a workforce displaced by plant shutdowns, or other factors, that doesn’t have the technology skills needed in this new economy. Greene County is a great example of broadband being used to dramatically raise high school students’ proficiency, tech skills and ability to get into college, and many return to the area after college because of the increase in jobs requiring tech skills.

    Broadband also raises the quality of healthcare delivery, in both rural and urban areas, which affects other healthcare-related items in the overall stimulus bill. If you plan to digitize patient data and automate healthcare practices and procedures to ease the economic drain of current healthcare business operations, broadband is the backbone that facilitates and enhances these changes.

    These and other issues to consider in this broadband stimulus discussion are presented very well by people currently delivering broadband to their communities in a couple of recent reports –

  4. Avatar

    Peter Hurd

    February 8, 2009 at 4:01 am

    Hello Mr. Feinberg –

    Thank you very much for posting this report. I’m glad to hear that as of this moment (things could well change) a large portion of the broadband deployment is still in the Senate economic stimulus bill.

    I’m a little perplexed. Your report is all about grants and loans. When I use Google News to search for [senate broadband] all of the results I get back in the “mainstream media” only talk about 20% – 40% temporary, project specific tax breaks for firms that rollout new net service or increase the performance of current net offerings to a “next generation” level.

    I don’t know who is giving the correct information. Mr. Feinberg could you address this please?

    I have some friends who live in a very rural area 20 minutes from the nearest reasonably sized town. They can’t get either cable or DSL. At the moment their hookup is a 30kbps modem connection. Yuck. It would be great if they could get some kind of wireless IP connectivity. WiMax configured for “maximum range/slowest speed” would be a HUGE step up for folks like that.

    I hope that this bill helps as many folks like that as possible within reason. I understand that it isn’t as profitable to serve rural areas, but those are the folks that currently have no broadband.

    Thank you,
    Pete H.

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