At Monday's NTIA/RUS Open Meeting, A Debate About Eligibility for Funds

Broadband Stimulus, NTIA March 16th, 2009

, Publisher, BroadbandBreakfast.com

News | NTIA-RUS Forum | Day 1, Session 1

WASHINGTON, March 16, 2009 – The detail-oriented open meetings to consider the structure for deploying the federal government’s $7.2 billion in broadband stimulus funds began on Monday morning with five presentations about which sorts of private-sector entities should be eligible for the grants.

Speaking at the Commerce Department’s auditorium in a joint meeting of the National Telecommunications and Information Administration and the Agriculture Department’s Rural Utilities Service, representatives of the technology industry urged the most liberal interpretation of the federal stimulus legislation’s provisions that successful applicants be deemed to be in the “public interest.”

“We think that the congressional intent is not to preclude anyone from applying,” said Grant Seiffert, president of the Telecommunications Industry Association. “I don’t think that Congress wanted to exclude anyone.”

Taking the strictest view of eligibility was Debbie Goldman, telecommunications policy director of the Communications Workers of America. Goldman said that applicants should have “the endorsement of a state or political subdivision”; shall demonstrate financial, technical, managerial and operational qualification; and that the application will “result in sustainable and quality job creation and economic development.”

Somewhere in between those poles were the positions taken by the telecommunications carriers, the states, and a spokesman for a non-profit group.

“The goals of the Broadband Technology Opportunities Program (BTOP) will be furthered if any provider of broadband service and infrastructure is eligible for a grant,” said Curt Stamp, president of the Independent Telephone and Telecommunications Alliance, but speaking for a wide variety of carrier groups.

Stamp said that providers should be eligible to apply for a grant if they have either “an FCC license, a state certificate of public convenience and necessity, a cable franchise, or similar government authorization, or otherwise provides broadband services under applicable federal, state and local laws.”

Such a standard would allow incumbent carriers to be eligible – but most pose a barrier to entry for new entrants. Under audience questioning, he said that companies without such certfication would be able to get funding, but should be scrutinized more strictly by the NTIA.

Different standards were articulated by Sasha Meinrath, director of the Open Technology Initiative of the New America Foundation, and Betty Ann Kane, chairwoman of the D.C. public service commission.

Meinrath said: “diversity and heterogeneity of business models is critically important to ensure universal, affordable broadband access.” He said that there is a divide between the dynamics of selecting on-the-ground entities that could build out broadband, and crafting a strict “public interest” rule that could end up excluding needed players.

Meinrath was critical of Goldman’s standard, saying that “predatory pricing and redlining were happening in many portions of the country,” and that new players were needed to shake up the mix of broadband providers.

Betty Ann Kane, speaking on behalf of the National Association of Regulatory Utilities Commissioners, said that the eligibility standard was met by “an entity is applying to serve otherwise unserved citizens (where unserved means no facilities-based internet access other than dial-up or satellite-based access) or the entity’s offering would improve the quality or affordability of broadband in an area.”

She also said that it should be clear that state entities should apply for the grants.

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5 Responses to “At Monday's NTIA/RUS Open Meeting, A Debate About Eligibility for Funds”

  1. Brett Glass Says:

    This article fails to mention one of the most serious problems with current regulations: the USDA’s RUS program egregiously, and for no acceptable reason, discriminates against small businesses. In particular, it will not give grants to sole proprietorships, which constitute the majority of all American businesses and the overwhelming majority of all small businesses. It has even enshrined this prejudice in its regulations; see 7 CFR 1738.16 (a)(1).

    This discrimination, implemented at the behest of the ILECs, appears to have been intended to prevent small competitors and new entrants from receiving broadband funding. And what it will do, if it remains in place, is prevent American small business from stepping up to the plate to provide service where the large providers are not willing to reach. It is vital that this be changed, or the entire USDA portion of the program will be a farce; only large entitieswill get the money.

  2. Craig Settles Says:

    The scales should tilt heavily towards local government partnerships with service providers and vendors in order to ensure that the networks that get built address the needs of the local community and local stakeholders. The incumbents are selling services that often are not be fast enough, efficient enough or affordable relative to the price they want to charge and the speeds they deliver, and thus are unable to address economic development, new business attraction, healthcare delivery, education reform and a host of other real needs.

    Let local communities define their needs, and let them select which partners they want to work with. I’ve documented local governments that first tried to get what they wanted from incumbents, then moved to other alternatives after incumbents refused to meet the governments’ needs – http://www.successful.com/msp/snapshot-1-09.pdf.

    When governments found or created what they wanted, those same incumbents fought the communities tooth and nail to prevent the networks that were eventually built. These sharks circling around the NTIA have no credibility and obviously no shame.

    Why should NTIA and RUS let history repeat itself by turning money over to incumbents? The incumbents aren’t the only game in town, and the free world will not collapse into Armageddon when local governments and local providers create successful networks. I agree with Brett that there’s no place in this stimulus program for rules that exclude sole proprietors.

  3. Brett Glass Says:

    While small business should definitely be allowed to do the projects, it would be a very bad idea to have not one but two levels of government micromanaging them. It’s difficult enough to deal with one — the paperwork, overhead, meetings, and wasted time involved in dealing with two would be enormous. And involving local government drags in local politics. You’d see city officials trying to get grants awarded to people whom they like, favoritism toward areas which have more political clout (especially ones that are more affluent), and worse. What’s more, despite the fact that we’ve seen clearly that municipal broadband efforts don’t work, you’d see local governments trying to grab the money and start up unsustainable municipal projects that would shut out or compete directly with private business — simply because they want to grab the power, the control, and (most of all) the dollars.

    Similar issues are also starting to crop up on the state level. State officials know that the legislation guarantees that one grant will go to each state. So, they are already trying to figure out ways to get control of the funding and divert it to their own pet projects rather than allowing the funds to be expended where they’re really needed.

    As Thoreau said, “Government never of itself furthered any enterprise, but by the alacrity with which it got out of the way.” Government should fund worthy projects — as much as possible by the private sector, not bureaucracy-ridden local government. If it does, things will happen so fast that all it will NEED to do is get out of the way.

  4. Mel Levine Says:

    I am in agreement with Brett’s comments about the risk of local government control. I was with an ILEC heading their wireless broadband efforts during the height of the ‘free’ muni WiFI craze. The demand and expectations were unrealistic and unsustainable but for them it was easy to make demands since they had no $kin in the game.

    When brought in to consult with the account teams and the local political officials they refused to listen when I told them that the technology couldn’t support what they wanted to do, that the business model wouldn’t work (as far as they were concerned that wasn’t their problem) and that the cost would be significantly more than they were estimating. That said, they had more than their fair share of retained or vendor consultants telling them just what they wanted to hear.

    What is needed is a realistic set of requirements that meets today;s “unserved and underserved” communities along with a plan to keep the network ‘current’. I predict every community is going to demand a network solution that is ‘state of the art’ (what ever that means).

    I managed to keep our company out of any of the bids but I fear that this too will lead to demands for “Star Wars” technology that someone is telling them will convert their rural economy into the next Silicon Valley. No demand is unrealistic, outlandish or unaffordable when your local taxpayer is not footing the bill.

  5. Saul Dalrymple Says:

    Very nice post. Do you accept guest writers?

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