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Broadband Players Vie For Stimulus Funds

With more than $7 billion up for grabs, there's no shortage of parties looking to cash in.
Another area of uncertainty is what constitutes an underserved population and therefore which areas are eligible for funds.

The National Cable and Telecommunications Association estimated in a recent report that 10 million U.S. households lack broadband access, but it has been difficult to pinpoint underserved areas because some cable companies report access in ZIP codes where one customer is served. One of the NTIA's tasks will be to create a broadband map that shows which parts of the country lack broadband and which parts lack infrastructure for broadband.

The Communications Workers of America recently issued a report stating that 57% of urban homes and 60% of suburban homes have broadband, while just 38% of rural homes have it. That group urges spending in rural areas with slow speeds. Some of the biggest players, like AT&T, argue that speed is less important than access to carriers.

A Qwest Communications spokesman said the money should go to unserved areas rather than underserved areas. The company provides service to 2.8 million subscribers in its local regions in 14 states in the West and Midwest.

It has not participated in programs administered by the Department of Agriculture in the past, but the company could be eligible for stimulus funds. The Agriculture Department is trying to decide whether it will fund broadband expansion through loans and loan guarantees, grants, or a combination of both. Qwest would need grants to meet the expenses of going into many new areas, the spokesman said.

"It's difficult to make a business case in some of these areas," he said during a recent interview. "The question is whether there's enough of a population for people to use it and for us to make a profit after investment."

He said wirelines offer the fastest speeds but conceded that wireless networks may be better in some areas because it will be less cost prohibitive to build them. Without guidelines, no one knows how much of the stimulus funds will go toward wireless or how much the programs will stress the importance of high-speed connections.

"We applaud the programs and think it's a great idea, and we think they should focus on unserved areas, but we're waiting for them to issue rules," Quest's spokesman said.

With Obama's push to move quickly, money is likely to flow in September or October. By this summer, all of the players will have a clearer idea of what the programs and grants will look like.

Without receiving guidelines to help target specific areas, providers cannot say how many Americans or how many square miles will benefit from the stimulus funds. Every area has unique factors to contend with, including the size of its population, terrain, distance from networks, local regulations, and other variables that will affect costs and completion schedules.

The Verizon spokesman said that no matter how the programs turn out, Verizon's goal is the same as the Obama administration's -- "to ensure that every American has broadband access to the Internet."

"We all need to play a role to accomplish this, and Verizon is considering what more it can do to contribute to this national priority," he said.

Thomas Lenard, president and senior policy fellow of the Technology Policy Institute, a Washington think tank, said that if the goal is to spur adoption, the focus should be on those with low incomes. "All of these programs always end up focusing on rural areas literally at the expense of the poor who have to pay into these funds but get very little benefit from it," he said.

In a recent position paper, TPI Senior Fellow Scott Wallsten said that in order to be successful, the federal government should fund projects that nobody would take on without the subsidy.

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