NCTA White Paper: Focus Broadband Stimulus Funds on Unserved and Adoption

WASHINGTON, March 18, 2009 – A White Paper released Tuesday by the National Cable and Telecommunications Association recommends broadband stimulus grants prioritize built-out to remote, unserved areas. Remaining monies should be used to fund programs to promote and encourage use of broadband services.

“Broadband is a crucial driver of economic recovery and global competitiveness,” said the report, “Moving the Needle on Broadband: Stimulus Strategies to Spur Adoption and Extend Access Across America.”

The paper acknowledges that the grant programs established by the American Reinvestment and Recovery Act can help bring broadband to the “small percentage of the nation’s homes” that have no physical line connecting them to broadband networks, “to ensure that broadband fulfills its full promise as an engine of job creation… educational and healthcare opportunities.”

But the grant program must follow the Hippocratic principle of “first, do no harm” to existing industry efforts, some of which dwarf the $7.2 billion allocated in the stimulus, said the report.

This can be accomplished by making competitively and technologically neutral grants to reach the approximately 10 million households without broadband, said the report. Once it is determined where most of these homes are – a task made more difficult by the lack of publicly-available data about broadband, and the two-year timetable for the NTIA’s national broadband map – the focus should be to reach those homes: “[A]gencies should distribute grants so that new infrastructure is constructed in areas where none exists.”

The next, and equally important challenge will be to facilitate adoption and “digital literacy” among the 35 million households that choose not to subscribe, the report says. “Demand-side stimulus investment programs that promote the use of broadband… serve an important purpose.”

Congress has set no upper-limit on demand-side expenditures, the report notes. The report goes on to note Congress’ finding that Americans with low income and low education suffer a “double-whammy”  with regard to broadband: “lack of interest and lack of resources.”

And while the lack of interest can be attributed to different cultural views of technology’s impact on productivity, the report points out the lack of resources may only be a perception, since broadband is 4 percent cheaper today than in 2003, while dial-up is 9 percent more costly. Based on survey and price data, the report says researchers have concluded that “the decision to not obtain broadband service is due to perceived value, not the inability to pay.”

Grant programs should be targeted towards educational programs that promote broadband adoption and technology use, the report suggests.

Further grant funding should provide “targeted subsidies” similar to the FCC’s Life Line and Link Up programs: “Programs that support an increase in computer ownership are very promising and should be supported extensively.”  Such grants, the report says, will be “one of the most effective and appropriate ways to stimulate broadband adoption and use.”