The Broadband Stimulus Package Is Broken
12:05 PM -- If you are a cable TV or telecom service provider, the risks associated with both applying for and receiving federal funds for rural broadband coverage are not only daunting, but can render the whole exercise as downright useless. The intricacies and complexities in completing just the paperwork for submission can cost lots of time and money, and that should factor in for any venture that's attempting to provide high-speed broadband to "unserved" or "underserved" areas. (See Accessing Obama's Broadband Billions.) Here's a list of problems and solutions:
- The problem: The Broadband stimulus project, helmed by the Rural Utilities Service (RUS) and the National Telecommunications and Information Administration (NTIA) , does not have maps highlighting where residents do not have access to broadband service, yet they have asked for detailed maps from applicants vying for federal dollars. The solution: Meet with and ask for submissions of maps by incumbents that are not serving contiguous areas surrounding them, and award grants to companies that can prove how the funds would benefit their interests and the public's to increase their respective broadband footprints.
- The problem: The current rules preclude some applicants from applying since they are considered to be in the footprint of incumbent operators, which sometimes choose to serve more lucrative areas, like suburbs. These less economically attractive areas can also include urban regions and cities with lower homes-passed densities and demographics that do not meet company pay-back requirements. The solution: Offer incumbent companies the incentive to build out low-density areas, within or adjacent to their footprints. Since they are already making a profit from high-density areas, it would make a more compelling “business carrot” to just extend their plant. It does not make good business sense for applicants who are not already within the area, or have a profitable business within the area, to build new plant for low density areas. The cost would be prohibitive; the pay-back would be less than desired; cities and county governments could end up subsidizing the venture with tax dollars in the long-term; and federal dollars would be wasted if these ventures went belly up.
- The problem: The rules seem to favor incumbent providers -- those that serve a particular area, but have not served the larger contiguous areas within their regions. These areas seem to be in a “black hole” under current rules that preclude applicants from applying where these operators can reach and serve the “underserved." Incumbents also have the right to “veto” applications that are aimed at their territories. The solution: Offer these incumbents an incentive to serve this new base within their contiguous footprint. Federal stimulus funds could be doled out to those companies, large or small, to subsidize investment of the “underserved." Allocate funds to half the project (on a home-passed per mile basis) at the beginning, and supply the remaining funds based on the number of additional homes passed from the expansion.
- Find those homes and businesses representing the “underserved, or acquire/construct maps.
- Offer incentives to those companies with contiguous plant to serve these targets, since these operations are most likely to be successful in the long term.
- After the initial round of disbursements based on the above criteria, initiate a second round to clean up the remainder of underserved areas.
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