Where's the so-called liberal media when you need it? Large carriers like Verizon, Qwest and AT&T say they are refusing to apply for broadband stimulus funds because they don't want to accept government "strings" and because they can't "compete" with government, and the national media repeats their charges verbatim.

Michael Hickins, Contributor

August 18, 2009

6 Min Read

Where's the so-called liberal media when you need it? Large carriers like Verizon, Qwest and AT&T say they are refusing to apply for broadband stimulus funds because they don't want to accept government "strings" and because they can't "compete" with government, and the national media repeats their charges verbatim.The National Telecommunications and Information Agency (NTIA) and the Rural Utility Service (RUS) are the two federal agencies tasked with distributing $7.2 billion for projects extending broadband Internet services to areas that have been largely abandoned by the incumbent carriers. The agencies have started processing applications and expect to start doling out grants later this year.

It's not surprising that the carriers would squawk about this program -- it puts their failures under a harsh spotlight -- but it's a little startling to see the media swallow their propaganda lock, stock and hogwash. And hogwash is what it is.

- One canard being floated is that lack of large carrier participation is proof that the broadband stimulus program is failing. That's absurd on the face of it -- thousands of vendors are competing for billions of dollars in grants to introduce broadband in areas that the large carriers haven't deigned to serve.

Craig Settles, president of broadband strategy consulting firm Successful.com, wrote in an email that "Just knowing that the bigger companies weren't likely to play by itself probably encouraged a few more organizations to apply."

- The media has fallen for the propaganda that the extension the NTIA and RUS gave for filing applications was further proof of a lack of interest.

Either because he's too lazy to check facts, or because he's happy to carry the industry's water, Internet Evoluton's Chris Poley writes:

Although no one's admitting it openly, the extension is in large part a consequence of a lack of participation in the program.

On the contrary, the number of applications flooding the system caused delays that made it impossible for applicants to finish filing by the original deadline. The extension, which I wrote about last week, shows the success the program has had in attracting applicants.

Furthermore, NTIA spokesman Mark Tolbert said specifically that the extension was valid only for applicants who had started the process by the original deadline -- in other words, the extension won't mean more applications. It would have been easy enough for Poley to figure this out if he'd bothered to check.

- The carriers claim that government is funding competitors to their services and creating new network neutrality rules, according to this Bloomberg report.

They're urging the government not to help other companies compete with them through broadband grants or to set new conditions on how Internet access should be provided.

The broadband stimulus program isn't adding additional net neutrality provisions -- it's just merely articulating net neutrality provisions the carriers always said were unnecessary because they would never, ever in a million years violate their public trust, scout's honor. New FCC chair Julius Genachowski has made it clear that the FCC intends to enforce network neutrality across the board, and net neutrality legislation is on the way.

So what's the end-game for the large incumbent carriers? Are they going to stand aside and let smaller rural carriers such as CenturyTel , Embarq and Frontier Communications take remote rural areas away from them, potentially allowing a new competitor to arise from humble beginnings to challenge them? Not likely.

Their current statements are aimed at shareholders who might worry about losing out on a boatload of free federal money. But they also fully intend to take advantage of a loophole they negotiated for themselves that will allow them to challenge projects by claiming they already serve those areas.

This is why the carriers want to keep mapping so secret -- did you know that maps showing which areas they cover are closeted by non-disclosure agreements that the NTIA has agreed to protect? Now, the NTIA did say that the carriers will have to actually prove their assertions, but their track records show they will try to claim a lot more coverage than they actually offer. (Settles notes that maps from carrier-sponsored, pseudo-non-profit Connected Nation shows 81 percent broadband coverage for West Virginia, a state that is "ranked 47th or 48th in broadband coverage.")

According to the Washington Post

While most of these carriers are likely in the best position to implement the dream of installing services in far-fetched areas, they are also the ones who least likely need the funding, or want it.

But services in far-fetched areas isn't any more of a "dream" than the idea of bringing electricity to those areas -- and as far as I can tell, the Rural Electrification Agency hasn't destroyed capitalism or energy markets. And while those carriers may be in the best position to implement those services, they're simply lacking any incentive to do so.

This is where the profit motive fails society -- there's no real financial incentive to provide coverage for someplace like Gilboa, New York, so therefore it isn't covered. But there is an incentive to prevent anyone else -- including the small town itself or, heaven forbid, the entire county -- from providing services to Gilboa because a David may grow up with the potential of killing Goliath.

Government does have an interest in seeing Gilboa, New York get access to broadband Internet coverage, because that would mean more employment opportunities, better educational facilities, and even more self-employment. In other words, like roads, sewage and utilities, broadband infrastructure is necessary to economic development.

This isn't a priority for the likes of Verizon and AT&T, and I'm not saying it should be. (It would be nice if corporations behaved as more enlightened corporate citizens, but that's another post for another day.)

But as Settles puts it,

[Local] coalitions such as OpenCape [in Massachusetts] and Missouri's home-grown technology partner, to me, are the ones likely to produce some of the most successful networks because they're being driven by communities to meet communities' needs. They don't have the profit motive that raises costs to consumers and businesses, nor leads them to abandon the network at the first sign of trouble. I believe these kinds of organizations will find more creative ways to build the financial sustainability of their networks.

The media will have you believe that, since they're reporting what the carriers say, they're reporting the facts. They've abnegated the responsibility of using their judgment as to whether what someone is saying contains even a grain a truth.

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