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.

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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