Could the broadband stimulus package be a coup for wireless broadband?

The $825 billion economic stimulus proposal from the incoming Obama administration and House Democrats contains $6 billion for improving the U.S. broadband infrastructure, and the wireless industry is cheering because it was included.

A summary of the proposed spending plan released by House Democrats calls for the money to be used for "broadband and wireless grants in under-served areas to strengthen the economy and provide business and job opportunities in every section of America, with benefits to e-commerce, education, and health care. For every dollar invested in broadband, the economy sees a ten-fold return on that investment."  

The plan seems to be vague on the particulars, but Obama transition team member Blair Levin, speaking at the Congressional Internet Caucus' State of the Net 2009 [1] conference, said any monies that came from the economic stimulus package likely would use "existing structures" and programs to get money pumped into the economy as soon as possible [2]. A more comprehensive broadband policy, it appears, has yet to be determined as the Obama administration is considering a host of possibilities.

The House version of the stimulus package [3] includes $2.8 billion for the Rural Utilities Service (RUS) of the U.S. Department of Agriculture to give out as grants and loans to broadband providers. The bill also would give $2.8 billion to the U.S. National Telecommunications and Information Administration (NTIA) for broadband deployment grants, with $1 billion of those funds going to wireless broadband projects. Another $350 million would go toward a national program to map areas that don't have broadband access.

According to the bill [3], about 25 percent of the NTIA broadband grants would go to areas without broadband, and 75 percent to areas with limited broadband options. The money going to unserved areas would focus on providing basic broadband service of more than 5 Mbps on the downlink speed for wired broadband or basic wireless broadband.

Interestingly, the way most of these grants and loans are set up may become a coup for wireless providers when it comes to providing broadband service to those communities with limited options. In order to qualify for the 75 percent of the money going to underserved areas, a wired broadband provider has to deploy a service offering 45 Mbps on the downlink, while a wireless broadband operator must provide 3 Mbps on the downlink. Rob Atkins, president of the Information Technology and Innovation Foundation (ITIF), speaking at a broadband stimulus form late last week [3], said wired broadband providers such as AT&T and Qwest aren't set up at this point to deliver broadband connections at 45 Mbps.

Perhaps what we've seen with Colorado-based rural broadband service operator Open Range Communications could be the expectation of what we'll see with more government money. Open Range, which has a deal with Globalstar to deploy WiMAX in some 500 rural communities, secured a $267 million broadband access loan from the U.S. Department of Agriculture in November [4]. The private equity arm of JPMorgan Chase & Co. followed this month with a $100 million investment, which was part of the condition of the government loan.

Open Range said the money also would allow it to launch "affordable" high-speed broadband Internet and voice services to more than 6 million consumers in 546 "underserved and rural communities" within five years.--Lynnette [5]