Shovel-ready Broadband Stimulus

The White House and Congress now plan to spend tens of billions of dollars on a revamp of the nation's infrastructure, including bridges, roads and highways.

That effort includes a bold, new national strategy to build a powerful broadband highway right into rural American homes, a countryside that has been kept largely in the dark when it comes to ramping up onto the Information super highway.

There's a lot of money at stake in getting the country up to speed with South Korea, Taiwan and Japan, which have long eclipsed the USA in broadband services. Even Australia, France and Sweden have already launched ambitious broadband build outs for their rural residents.

Some $7.2 bn in broadband government stimulus spending comes amidst the controversial government bailouts and a massive $3.6 tn budget, bailout and deficit spending packages which have seemed to careen from pillar to post worse than the Jamaican Olympic bobsled team.

The government's pell mell fire brigade has been hosing down economic fires with taxpayer money in order to avert a national nervous breakdown in the economy and to stop the wheels from coming off the banking sector, as banks continue to behave like invalids lurching around in a hospital gown.

But take note, this is important: The government's spending on a broadband build out, though, is separate from all that, officials with the Federal Communications Commission say.

That's because linking the countryside to broadband networks could kick start the US out of its Great Recession, as the economy continues to bicycle through quicksand.

Despite what you hear from the government about the supposedly cinematically picture perfect bailouts restoring confidence in the economy, the US is now spending at a faster rate than before Woodstock, before man walked on the moon, and before the Miracle Mets.

And the way the government spends money on the overlooked broadband piece of the stimulus package will seriously impact you, your wallet, and the economy.

I'll be untangling all of this with industry experts and analysts at a conference starting this Thursday in Las Vegas run by the Cable & Telecommunications Association for Marketing, (CTAM West is hosting the conference) a non-profit professional association dedicated to helping the cable business grow.

The Broadband Revolution

The government has now put the broadband build out on a revolutionary par with the launching in 1792 by President George Washington of the U.S. Postal Service, the building of the railroads in the 1800s, the nationwide electrical grid launch in the '30s (when electricity reached only 12% of US homes), the interstate highway system, and the Internet backbone (which has its seminal days in the weeks after the 1957 launch of Sputnik in Russia, when President Eisenhower debuted the Advanced Research Projects Agency).

All of these programs were done via public-private partnerships, notes a report entitled "Bringing Broadband to Rural America: Report on a Rural Broadband Strategy" by acting FCC chairman Michael Copps.

And the broadband challenge is doable, it shouldn't be as daunting compared to what the country faced in 1869, six years after a government-private effort to build a cross country train system, a transcontinental rail line that connected America through harsh backland and finally let travelers go coast to coast in just seven days, Copps notes in his report.

Moreover, Copps calls the $7.2 bn a "down payment" and says that more money will be needed to ensure that every American has access to broadband.

But improved cooperation between governments, tribes and agencies is needed to extend broadband Internet access to rural America, officials say.

US Far Behind in Broadband

Nearly two-thirds of urban and suburban residents have broadband access at home versus almost half, 38%, of rural residents.

And mobile broadband networks cover 96% of the total urban/suburban population, but they cover only 83% of rural America, the Copps report notes. Overall, fewer than 35% of households earning a family income of less than $50,000 subscribe to broadband services, versus 76% of households earning a family income of more than $50,000.

The FCC's Copps decries a country where a rural "grade school child living on a farm cannot research a science project, or a high school student living on a remote Indian reservation cannot submit a college application, or an entrepreneur in a rural hamlet cannot order spare parts, or a local law enforcement officer cannot download pictures of a missing child without traveling to a city or town that has broadband internet access."

A Big Black Hole of Understanding

Trouble is, the Copps report shows the FCC, the government agency overseeing this effort, has no idea how much of the countryside in America is actually hardwired into the Internet via broadband.

The FCC, though, essentially doesn't have a clue where broadband is available in rural America (much less rural broadband demand, transfer speeds, and prices as well as infrastructure already extant).

Copps says that "the (FCC) and other federal agencies simply have not collected the comprehensive and reliable data needed to answer" the question of who needs broadband where (the report is based on Copps' opinions, not the full FCC).

So Congress has earmarked $350 mn for states to graph out local broadband maps so that federal bureaucrats can, hopefully, more efficiently dole out that $7 bn, instead of in a buckshot manner, over the next two years.

But mapping the countryside to see who has broadband and who doesn't could take longer than two years, however, given how fast the government moves.

The fear here is that more government studies, more government commissions to navel gaze the issue, will delay a desperately needed broadband infrastructure for America's countryside.

Because whenever the government studies an issue, the findings are often dismissed as mere mood music as the real world, in the meantime, tends to move on.

Broadband Boosts the Economy

Broadband "is the interstate highway of the 21st century for small towns and rural communities, the vital connection to the broader nation and, increasingly, the global economy," Copps said in his report.

Broadband doesn't just help small businesses in all sorts of ways.

Disasters like Hurricane Katrina show that vast swaths of the population have zero broadband communications that could save their lives-including those rural residents in Tornado Alley.

And bringing broadband to rural residents can improve healthcare, where people in the hinterlands often don't have access to even medical clinics, much less hospitals.

Wiring rural America would also increase telecommuting and teleconferencing.

That would cut down on the long car drives residents have to make to get to their jobs-not only reducing the hit to the their wallets, but the hit to the climate from greenhouse gases, the Copps report adds.

Farmers, too, can more readily get information on plant blight, a livestock disease or an insect infestation to protect their crops, the report adds.

Bureaucratic Broadband Lethargy

The US has fallen dramatically behind the rest of the world when it comes to a broadband build out.

America is still largely a "dial up download" nation, versus the rapid, high-speed wireless nations in Asia.

The average download speed for residential broadband subscribers in the US is currently more than 30 times slower than the speeds with which residential subscribers in Japan are accessing the Internet via broadband. Hong Kong, South Korea and Singapore offer speeds at exponential multiples of what the US has for its residents.

Part of the blame for the slow build out of broadband in the country rests with the US Department of Agriculture, which has historically overseen the wiring for rural America.

Last March, the Agriculture Department's inspector general blasted the USDA for chronically awarding funding to areas where broadband service is already available, and not to help people in rural, unserved areas.

Show Me the Money

In the American Recovery and Reinvestment Act of 2009, Congress appropriated $7.2 bn for broadband grants, loans, and loan guarantees to be administered by the USDA's Rural Utilities Service (RUS) and the Department of Commerce's National Telecommunications and Information Administration (NTIA).

Of the $7.2 bn, $3.75 bn is specifically targeted to provide broadband access to schools, libraries, medical and other healthcare facilities, colleges and other institutions of higher learning and other community support organizations, as well as to assist with better use of broadband service by public safety agencies.

What Does "Unserved" Really Mean?

The $7.2 bn subsidy will fund up to 80% of the cost of building private high-speed data networks in "unserved" and "underserved" areas.

But one sticking point is the fact that the government has yet to define these terms, which is crucial as the terms will drive how the funds are distributed.

One definition says unserved should be described as an area where no provider offers Internet access at speeds of more than 768 Kilobits per second in at least one direction.

Another definition says unserved should mean areas where at least 50% of households have Internet access at speeds of 1.5 Mbps downstream and 128 Kbps upstream.

And the Universal Service for America Coalition (a rural wireless group) calls "underserved" any area in which at least 90% of residents lack access to a current-generation broadband service (1 Mbps downstream and 200 Kbps upstream), or where broadband service is priced more than 150% above the average price for comparable service in the top 25 urban areas in the country.

There's more.

Sprint Nextel says "underserved" should be any area where there are fewer than three broadband service providers.

Government Propping up Competitors?

Another controversial point: Should the government avoid the pitfall of defining important terms in ways that would give artificial advantages to broadband competitors in areas where broadband is already available from one provider?

Time Warner says that "service providers that have expended billions of risk capital to build out broadband networks naturally will be wary of making further investments if the government pays for a competitor to construct overlapping facilities."

Verizon Communications notes that it already plans to spend $23 bn by 2010 in building out its FiOS network to 18 mn homes. But Verizon added that it committed to that build out after being assured by the FCC that it "would not be subject to intrusive network sharing or open-access obligations."

Will that promise still hold? Haven't we seen with the automotive and financial services bailouts that the government's promises are typically written in pencil and not pen?

Questions for Broadband Companies Remain

Nowhere has the FCC indicated what happens to broadband funded projects now underway. The question for broadband companies now is, if a project was planned but not yet funded, then would that project qualify for federal dollars?

Industry officials warn that if private funds were already committed, then it might be too late to qualify for federal dollars.

So does that mean that "funded" projects can easily become "unfunded" under the new legislation? Has the building of broadband networks been halted or delayed because broadband executives now instead must attend meetings and schmooze government officials to get this vital build out going?

And doesn't all of this bureaucratic meddling mean even more delays for what could kick this country and its economy into the 21^st century, booting up the USA into broadband land on a par with Asia and the rest of the world?