The more I listen to the things that need to be clarified in terms of guidelines the federal government will use to issue the $7.2 billion in stimulus money for broadband, the more I realize there are a lot of ways to screw this up.
This is especially evident as the government agencies in charge of the money, the National Telecommunications & Information Administration (NTIA) and the U.S. Department of Agriculture (USDA), work to craft rules as fast as possible in order to get the money as fast as possible to stimulate the economy. And these agencies, including the FCC, are facing intense lobbying and varying comments from different players that want the guidelines to fall in the favor of their businesses.
During a breakfast hosted by WiMAX vendor Alvarion yesterday at the CTIA Wireless 2009 show, James Schlichting, acting Wireless Bureau chief with the FCC, reiterated that the commission is developing a broadband plan and will give advice to the NTIA, which is charged with distributing $4.7 billion of the money. Comments are due April 30.
Schlichting said the broadband plan is viewed in the FCC as the most important task since the 1998 Telecom Act.
Some critical questions need to be answered: What speeds are considered broadband? Right now, the USDA uses the FCC's current definition of 200 kbps. Randy Jenkins, a broadband field representative for the USDA who works with applicants who are looking to receive loan money, says the consensus is those speeds are too low, but then there are capital expenditure issues when the bar is set too high.
Moreover, the USDA, charged with issuing $2.5 billion of the stimulus funds, must follow guidelines that say funds can be used anywhere but that 75 percent has to be in rural areas without sufficient broadband access. Jenkins said "sufficient broadband access" has to be better defined to determine what that means.
Other issues speakers raised: Winners of broadband stimulus loans have to come up with another 20 percent in funding elsewhere. What sort of proof do entities have to show that they can obtain that funding? Commercial entities may benefit over government groups.
It may very well be that commercial entities will be the ones with the upper hand to receive the next 20 percent of funding, but I would hate to see local governments shut out of the process. To me, the winning combination is a public-private partnership because local governments are best suited to define their own broadband needs and manage implementation of projects, and private companies have the power to obtain funding.
Moreover, there already are players proving they are making a go of a business model in rural areas. Kelly Dunne, CEO of Digital Bridges, which already has rolled out mobile WiMAX in three rural areas, made that point. A company like his has the power to raise the money necessary while partnering with local governments. He quipped: "We are suddenly the cool people in the room."
But Digital Bridges had some impressive numbers: The operator has achieved 20 percent penetration in less than 18 months where it has launched WiMAX, and it is EBITDA positive without government funding. "Imagine what we could do," Dunne said.
The wireless industry in general is concerned the NTIA and USDA will not take the mobility factor into account when issuing loans. Teresa Kellett, director with Sprint 4G, said Sprint is in favor of the overall goals for the broadband stimulus money, but "we think as a scoring system is developed, attention needs to be paid to wireless vs. wireline. It's not just about speed. Mobility needs to be taken into account. It's short-sighted to make speed the only criteria. Mobility should be taken into account."
Jenkins said today that mobility is not specified in the rules, but could be taken into account on a case-by-case basis. Barry West, president and chief architect with Clearwire, said that if America wants to move into the lead position when it comes to broadband, then simple access to the Internet is not enough. "Mobility transforms a society," he said. Suddenly, I can work from home."
At any rate, in the haste to get stimulus money out the door, I would hate to see a less-than-thoughtful approach to bridging the digital divide. Then again, not everyone is going to be happy.--Lynnette [1]
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[1] mailto:lluna@fiercemarkets.com