Broadband stimulus package no blank check

The $825 billion economic stimulus proposal from the incoming Obama administration and House Democrats contains $6 billion for improving the U.S. broadband infrastructure, but lawmakers are cautioning that this is just the first step as the Obama administration kicks around a more comprehensive plan.

Nevertheless, the broadband industry was disappointed. Most players were apparently looking for some easy money. As envisioned now in the House version of the package, operators will have to jump through some hoops. The current version 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.

The broadband industry wanted taxes incentives, arguing that this avenue would offer a quicker stimulus to the economy and speed up buildouts. The industry says the grant and loan avenue could take months to make inroads as the money would funnel through the bureaucratic process. Moreover, the open access requirements have yet to be defined. As written in the bill, the FCC is supposed to create the rules. Newly appointed FCC Chairman Julius Genachowski likely won't deal with that issue for months. If broadband players are required to open up their networks to competitors, they'll likely pass on any grants, experts warn.

And finally, the broadband speed requirements will likely be another hindrance. In order to qualify for the bulk of the money, 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. Experts say wired players aren't prepared to deploy such systems in rural areas, and wireless broadband operators will have the upper hand.

All said, however, this looks like a boon for rural wireless players, such as rural broadband service operator Open Range Communications, which has a deal with Globalstar to deploy WiMAX in some 500 rural communities. It secured a $267 million broadband access loan from the U.S. Department of Agriculture in November. That's certainly not a bad thing, but it's clear that in order to blanket the U.S., the country's larger players should be engaged. The trick is finding the proper incentives for those players without simply giving them a blank check. There must be accountability.--Lynnette