Broadband "Stimulus" Rules Still Unsettled

Some $7.2 billion is set aside in the American Recovery and Reinvestment Act (the "stimulus" bill) for construction or other provision of broadband access facilities to underserved areas. Of the total, the Commerce Department’s National Telecommunications and Information Administration will dispense $4.7 billion, while the Department of Agriculture’s Rural Utilities Service will disburse $2.5 billion.

 

Of course, that's just the beginning. Nobody is quite sure what will be required of potential applicants, what the actual definitions of concepts such as "underserved" or "open" are, or even who can apply for grants or loans.

 

Remember, this is the bill that was voted on without having been read, in its entirety, by anybody. So it is a fair bet no money is going anywhere anytime soon, as guidelines are not yet available.

 

At a high level, it appears wireline, unlicensed wireless broadband (WISPs), satellite, mobile broadband providers and other non-profit entities seem to be eligible for grants or loans. So some workable and "fair" process has to be created so that no segment believes it has been unfairly treated. But some will favor funding for "upstarts" rather than "incumbents," even if the incumbents are ready to move faster.

 

Inevitably, conflicting goals will emerge. The investment is supposed to spur new broadband availability. But the "stimulus" bill is supposed to create jobs. Those two goals are not necessarily aligned.

 

RUS funds typically have required use of "approved" equipment only. It is not clear whether this provision will apply to the stimulus funds or not. If such rules do apply, and if the application procedures are consistent with existing policies, rural telcos should be in the best position to snare grants, as they are familiar with the processes and the required equipment.

 

On the other hand, WiMAX (News - Alert) and Long Term Evolution network equipment should be in commercial production in time for applicants to propose broadband wireless approaches that could favor either mobile providers or WISPs.

 

The NTIA funds come with a requirement for "nondiscrimination and openness principles" that might mean nothing, or might mean new strings on any awards.

 

Likewise, the RUS funds seem to give higher priority for projects that give consumers a choice of more than one service provider. What precisely that means is open to debate. Does that indicate a preference for a "wholesale" infrastructure approach, leasing capacity to all retail providers? If so, will anybody step forward to do so? And if there is intent, is there the matching 20 percent of capital the guidelines also seem to indicate are required?

 

It appears applicants can tap into one, but not both of these pools of funds, if their application is approved by NTIA or RUS. But the window is shorter for RUS funds, which apparently must be disbursed by September 30, 2009. The NTIA projects must be funded by September 30, 2010.