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editor’s note
Learning from the Broadband
Ambush at Stimulus Gulch
By Steven S. Ross ■ Editor-in-Chief
It helps to know who your friends are
– and how few understand the stakes
involved in adding broadband to the
stimulus package. As this went to press,
the package had passed the House and
was moving toward a final Senate vote.
The $6 billion voted by the House had
ballooned to as much as $9 billion in the
Senate bill, but stood at $7.1 billion as
we went to press.
A late February 6 agreement among
senators negotiating the stimulus package
allocated $6.65 billion to broadband
investments and $350 million to broadband
mapping.
One would have expected fairly clear
sailing on the merits. But money devoted
to broadband – less than 1 percent
of the total, and one of the few items in
the package that actually looks toward
the future, rather than patching the past
– had become a special target thanks
mainly to well-placed public relations
barbs launched by some incumbents.
Republicans took advantage of that
opposition. The Republican leadership
in the Senate wants the stimulus package
to be mainly tax relief for big business.
They argue that too much of the
Democrats’ plan depends on public
works funding that may take months or
years to “stimulate” anything. The Democrats
reply that their plan includes $400
billion in fast-acting tax cuts, and that
much of the rest shores up state finances
to keep police and teachers employed.
Honest people can disagree. But how
does one respond to the nonsense about
broadband in the House Republicans’
press release attacking the plan House
Republican leader John Boehner (R-
Ohio) said he used information provided
by Senate Republicans for this line:
In its haste to spend taxpayer money,
the bill is rife with potential for waste.
For example, it contains $350 million
to map the current condition of the nation’s
broadband network and to determine
what areas need broadband.
But it also contains $7 billion to begin
constructing broadband infrastructure
without any map or plan.
Professionals in our business know
the argument is silly. The mapping will
indeed help network providers see underserved
areas and commercial opportunities.
It may also help state agencies
pressure incumbents to enter underserved
areas. But billions of dollars of
fiber-to-the-home builds are held up,
right now, for lack of funding. Mapping
has very little to do with those projects.
BRIDGES
This “shovel ready” batch is made up of
projects with what appear to us to be
solid business plans. And even if they
fell a bit short, the economic benefits
to the (mainly rural) communities that
get broadband are indisputable. But that
hasn’t kept the whole idea of federal investment
in broadband from being characterized
as a “cyberbridge to nowhere.”
The line had been shopped by incumbents’
PR people for about 10 days.
With the Senate vote pending the first
week of February, The Wall Street Journal
and The New York Times picked it
off the shelf. The particularly silly Times
February 3 front-page story by David
M. Herszenhorn was headlined, “Internet
Money in Fiscal Plan: Wise or
Waste” Although the “cyberbridge”
phrase appeared in the story’s third
paragraph, named sources later in the
story all agreed that unlike Alaska’s infamous
“bridge to nowhere,” building
rural broadband networks makes a lot
of economic sense. Why create the bad
impression in the first place, then
Can the networks be built in time
to provide an economic stimulus The
Times story states flatly that they cannot
be finished until 2015. Oddly, there’s no
source for the statement, not even an
anonymous source.
Two days later, the Congressional
Budget Office said the same thing. CBO
At the Broadband Summit,
April 27 – 29, learn in
detail how the stimulus
bill may help you finance
your network expansion.
was nervous mainly about how fast the
National Telecommunications and Information
Administration could scale up
to hand out the money. Good point. But
the scale-up could happen in weeks if
people were serious about getting the job
done. And CBO had no way of knowing
what is actually ready to build.
Verizon’s FiOS build alone costs
about $5 billion a year and rural deployments
involves mainly stringing aerial
cable. The skills and equipment to do
that are in surplus right now, in the
wake of the housing market collapse.
The Senate has deleted the $2.85
billion the House had allocated to networks
that meet minimum bandwidth
requirements, but included provisions to
spend at least $200 million on competitive
grants aimed at expanding public
computer center capacity, at least $250
million on “competitive grants for innovative
programs to encourage sustainable
adoption of broadband service,” and $10
million for audits by the Commerce Department’s
Office of Inspector General.
Another $80 million for distance
learning grants, and $20 million for distance
learning loans, would be administered
by the Agriculture Department.
A billion here, a billion there, and
soon you’re talking about real money in
Washington. But the process has made
clear that there’s a lot of ignorance out
there. The industry has a lot of educating
to do.
Steve@broadbandproperties.com
6 | BROADBAND PROPERTIES | www.broadbandproperties.com | January/February 2009