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Recovery Act: Cable Shortchanged

Granted, there's a lot more to be doled out, but the cable guys almost came up empty Thursday when the feds announced who won the first $182 million in broadband stimulus grants. (See Recovery Act: $182M Awarded for Broadband.)

There's still more than $7 billion left to be handed out, but here's a listing of the early winners, which include 18 separate broadband projects in 17 states.

According to an earlier tally from the American Cable Association (ACA) , more than 83 small, independent cable companies applied for $1.3 billion to fund a range of last-mile and middle-mile broadband projects. Tier 1 MSOs such as Comcast Corp. (Nasdaq: CMCSA, CMCSK) opted to stay on the sidelines. (See Recovery Act: Cable Bids for Broadband Funds.)

So far, just one ACA member, Pine Telephone Co., has made the cut, winning a $9.5 million grant (with an additional $4.6 million in private funds) to provide wireless broadband services (using 3G UMTS technology, and entry-level speeds of 1 Mbit/s) to a remote, unserved "severely economically disadvantaged community" in Southeast Oklahoma. According to the application (PDF), the proposed deployment region falls entirely within the boundaries of the tribal lands of the Choctaw Nation. Pine Telephone expects to use the funds to provide high-speed services to about 7,815 households there.

Several small phone companies that are not ACA members also won grants. The largest grant awarded (so far) went to ION Hold Co. LLC, which got $39.7 million (with $9.9 million in matching funds) to build 10 new segments of fiber, middle-mile broadband infrastructure serving more than 70 rural communities in upstate New York, and parts of Pennsylvania and Vermont.

Here's how the initial batch of cash was handed out:

  • Middle Mile Awards -- $121.6 million for improving connections to communities lacking sufficient broadband access.

  • Last Mile Awards -- $51.4 million to connect "end-users" (homes, hospitals, and schools) to middle mile broadband hubs.

  • Public Computing -- $7.3 million to expand computer center capacity in libraries, community colleges, and other public venues.

  • Sustainable Adoption -- $2.4 million to fund projects that promote broadband demand "with population groups where the technology has traditionally been underutilized." One example is the New Mexico State Library, which won a $1.5 million grant, plus $591,000 in matching funds, to promote computer literacy and Internet use among "vulnerable populations," Hispanic and Native American users, small businesses, and entrepreneurs, through trainings and statewide outreach.


When will the vendors benefit?
All told, $4.7 billion will be awarded through the National Telecommunications and Information Administration (NTIA) , and $2.5 billion through the Rural Utilities Service (RUS) .

The Feds are expected to announce $2 billion in project awards withing 75 days, implying early March, Jefferies & Co. Inc. analyst George Notter noted yesterday.

But that doesn't match previous expectations: Originally, the first round, announced Thursday, was supposed to be handed out on November 7 and include grants worth $4 billion.

"The timeline for awards is clearly sliding out," Notter wrote. Given the expected chain of events, he doesn't expect stimulus spending to affect equipment vendor income statements until as late as the fourth quarter of 2010.

— Jeff Baumgartner, Site Editor, Cable Digital News



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