Cable Operators

Industry Weighs In On $7.2 Billion Broadband Stimulus Plan

4/20/2009 2:00 PM Eastern

More than 1,400 trade associations, municipalities, companies and individuals weighed in on the federal government's $7.2 billion broadband stimulus plan, offering their takes on the definitions of two terms that could determine the program's success or failure.

BroadbandThe comments were filed with the Federal Communications Commission, the National Telecommunications and Information Administration and the U.S. Dept. of Agriculture's Rural Utilities Service regarding how the agencies should define “unserved” and “underserved” communities across the country, according to NTIA spokesman Mark Tolbert.

Just how the government construes those two seemingly innocuous words will determine how the NTIA and the RUS — the two government agencies charged with administering the broadband stimulus program — will figure out how the funds are distributed.

At the FCC, which has been mandated by Congress to develop a national broadband plan by Feb. 17, the most-recent comment period was part of a more informal advisory capacity for the agency. According to FCC spokesman Mark Wigfield, the agency will likely make a recommendation to the NTIA and RUS regarding the characterizations, but there is no set time frame to do so. And, he said, neither the NTIA nor the RUS is required to take the FCC recommendation to heart.

Tolbert, the NTIA spokesman, said the agency is working with closely with the other agencies involved in the project. The definitions of unserved and underserved are expected to be finalized along with other details on how the funding plan will be distributed when the NTIA issues its Notice of Funding Availability within the next two to three months. The NoFA, as it is called, will set the criteria for applying for grants and loans through the program.

For cable's part, the two largest trade groups serving MSOs — the National Cable and Telecommunications Association and the American Cable Association — filed their comments and came up with somewhat different definitions.

According to the NCTA, unserved should be described as an area where no provider offers Internet access at speeds of more than 768 Kilobits per second in at least one direction. In that group, areas where the fastest speeds are 200 Kbps or less should receive funding first. Underserved areas should be characterized as those places where no households have access to at least one provider of Internet access with transmission speed of at least 3 Megabits per second downstream and 768 Kbps upstream.

For the ACA's purposes, it's a little different: unserved should mean areas where at least 50% of households have Internet access at speeds of 1.5 Mbps downstream and 128 Kbps upstream. The trade group representing smaller, predominantly rural independent systems believes underserved areas should be defined as those where at least 50% of residents don't have Internet access at speeds of 5 Mbps downstream and 500 Kbps upstream.

Whether that could translate into millions of homes receiving or not receiving the benefits of the stimulus remains to be seen. Neither side would attach a number to their definitions.

“The ACA believes that the stimulus package money should go to unserved and underserved areas,” said ACA vice president of communications Ted Hearn. “The law clearly states that money should flow to both areas.”

At the NCTA, the tone was the same. Vice president of communications Brian Dietz said that although his organization's definition differs from the ACA's, it is ultimately up to the government to make the final decision.

“We should know more as the overall process progresses,” Dietz said. “The NTIA and the RUS will ultimately make that decision.”

While the NCTA appears to be placing its emphasis on areas that are not served by broadband at all, the ACA's priority seems to be on “middle-mile” projects in underserved areas. According to the ACA, the problem with delivering broadband to underserved markets isn't the lack of last-mile infrastructure, but the inability for operators to run their networks at top speeds because of slow connections linking their facilities to network-access points — that so-called middle mile — that are located in distant urban areas.

“Broadband speeds in underserved communities would ramp up dramatically if NTIA and RUS opted to steer millions in loan and grant dollars toward middle-mile projects in 'underserved' areas and insisted that access to those facilities be provided on fair and reasonable terms,” ACA president Matt Polka said in a statement.

Most of the other respondents seemed to agree on a definition for an unserved community: any area where no broadband service (defined by the FCC as 768 Kbps or higher) is available. But they differed widely on the meaning of “underserved.”

Some proposed “underserved” definitions were complicated — the Universal Service for America Coalition (a rural wireless group) called it any area in which at least 90% of residents lack access to a current-generation broadband service (1 Mbps downstream and 200 Kbps upstream), or where broadband service is priced more than 150% above the average price for comparable service in the top 25 urban areas in the country. Others were broader — Sprint Nextel said it should be any area where there are fewer than three broadband service providers.

While other commenters focused on specific speeds to define underserved communities, the NCTA and others stressed that the initial focus should be on unserved areas. Money should shift to the underserved only if there is funding left over.

In that vein, the NCTA also stressed that funds available for underserved communities should be allocated to improve broadband adoption rates through computer training or subsidies, for example.

Cable operators don't want the government to subsidize competitors, or to set a broadband-speed threshold that will classify areas already served by current-generation broadband as underserved.

That was also a big priority for Time Warner Cable, which filed separate comments on April 13.

The No. 2 U.S. cable operator wrote that the government should avoid the pitfall of defining the terms in ways that would give artificial advantages to competitors in areas where broadband is already available from one provider.

“Subsidizing competition in that manner could have the opposite impact intended by Congress, as it would retard, rather than promote, the investment of private capital,” Time Warner Cable wrote. “Service providers that have expended billions of risk capital to build out broadband networks naturally will be wary of making further investments if the government pays for a competitor to construct overlapping facilities.”

While TWC's comments could be construed as self-serving, telco competitors tooted their own horn, pointing to the investment they have already made in high-speed networks and stressing that a heavy regulatory burden attached to stimulus assistance would not help the agency achieve its goals.

Verizon Communications, in its comments, pointed to the $23 billion it will spend by 2010 in building out its FiOS network to 18 million homes. And Verizon added that it committed to that buildout after being assured by the FCC that it “would not be subject to intrusive network sharing or open-access obligations.”

AT&T, in its comments, even went as far as to propose a point system for projects — awarding points to a proposal if it created jobs, served vulnerable populations or deployed service to previously unserved areas. Additional points could be awarded, AT&T wrote, to projects that received the endorsement of the states and those with the most points would receive funding.

September