MTA Commentary–Broadband Issues

I thought you’d be interested in this month’s commentary of the Montana Telecommunications Association (MTA), which discusses some of the issues raised by the federal Recovery Act’s broadband stimulus funding. Rules (120 pages of them!) were released last week. Broadband providers are studying them now, in preparation for potentially filing applications for grants and/or loans under the broadband funding programs.

Concurrently, broadband mapping initiatives are being implemented, and the FCC is preparing a National Broadband Plan for submission next year to Congress.

Please feel free to call or reply if you have any questions or comments regarding this month’s commentary or any telecom-related issues.

You’re welcome to share this commentary with anyone, too.

Best regards,

Geoff Feiss
Montana Telecommunications Association
406.442.4316 (office)
406.594.0424 (mobile)

Serving Montana’s telecommunications industry for 55 years

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Commentary—Broadband Issues: Funding, Planning, Mapping & Ranking

In February of this year, President Obama signed into law the American
Recovery and Reinvestment Act of 2009. This Recovery Act appropriated over
$7 billion to the U.S. Departments of Agriculture and Commerce for grants and
loans awarded in a competitive application process to eligible broadband
providers.

On July 1, the Departments of Commerce and Agriculture released the
rules by which applications may be funded. The first $4 billion will be awarded to
applicants who file applications by August 14. The remainder of funds will be
awarded in two subsequent application rounds. All funds will be awarded by
September 30, 2010.

Department of Commerce grants will fund projects that deliver broadband
service to unserved and underserved areas. “Unserved” areas are areas in
which at least 90 percent of households in the area lack access to broadband
service. “Underserved” are defined as areas lacking either sufficient speed,
availability or adoption of broadband service.
The rules define “broadband” as either fixed or mobile two-way data
transmission with advertised speeds of at least 768 kbps downstream and at
least 200 kbps upstream. These are fairly conservative speeds, but they’re
capable of reasonably delivering most commonly-used broadband applications
today. And since the Recovery Act provides relatively limited funding, the more
conservative speed requirements mean that dollars can be stretched to reach
more areas than if the speed (and consequent cost) requirements were more
aggressive. The theory behind the rules appears to be to get basic broadband to
unserved and underserved areas first, then worry about increasing speeds on a
gong-forward basis.

The Department of Agriculture’s Broadband Investment Program will use
$2.5 billion from the Recovery Act to provide loans, grants and loan/grant
combinations to expand access to broadband services in Rural America. By combining $2 billion of grants and $0.5 billion of loans the Department estimates
it can yield a potential total investment of $9 billion in rural broadband.
Obviously, there’s lots of interest among Montana’s rural
telecommunications providers in applying for broadband stimulus funding.
Companies are currently reviewing the recently-released rules, which are over
120 pages. Among the many technicalities of the rules is a requirement that
applications must demonstrate that any stimulus funding is directed at projects
that otherwise would not have been undertaken without stimulus funding. While
it’s understandable that funds should not pay for projects that have already left
the starting blocks, the flip side of this policy is that available funds effectively
reward telecommunications providers who have failed adequately to invest in
their networks. Companies that have committed to deploying broadband
networks do not stand to gain from stimulus funding, while companies that have
sat on their hands potentially stand to benefit substantially.

Another troublesome
provision appears to award bonus points for every 10,000 households served.
Again, that would appear to penalize companies, like Montana’s rural telecom
providers, that have deployed broadband to the edges of their networks, and
might apply for stimulus funds to reach the final few hundred, or perhaps a
thousand—but certainly not 10,000—customers in an unserved or underserved
area.

The Recovery Act includes two other key provisions. One requires a
national broadband inventory, which more accurately will measure broadband
access and usage in the U.S. Hopefully, this will put to rest oft-cited inaccurate
data from Paris-based Organisation for Economic Cooperation and Development
(OECD), which places the U.S. at 15th or lower in broadband usage among 30
industrialized nations. Contradicting the OECD rankings, the Pew Internet and
American Life Project released its Home Broadband Adoption study last month.
That study finds a home broadband adoption rate of 63% of adult Americans this
year, up from 55% a year ago, with the most significant growth among lower
income populations. While there remains room for improvement, the research by
the Pew Internet Project and other institutions like the Phoenix Center for Advanced Legal and Economic Studies, clearly refutes OECD’s inaccurate
findings. So a national broadband inventory will help establish a common
benchmark by which broadband availability can be measured.
Finally, the Recovery Act requires the Federal Communications
Commission to develop a National Broadband Plan and report to Congress next
February. The Commission received hundreds of comments in June and is now
planning a series of public workshops in August and September.

For more
information on this initiative, visit http://www.broadband.gov

Montana’s rural telecom providers continue to invest substantially in
deploying advanced broadband networks throughout their service areas—with or
without stimulus money. Meanwhile, the Recovery Act potentially may help by
encouraging even further investment in broadband services in America’s
unserved and underserved areas.

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Contact:

Geoff Feiss, General Manager

Montana Telecommunications Association

208 N. Montana Ave, Suite 105

Helena, Montana 59601

406.442.4316

[email protected]