Panel weighs impact of $7.2B broadband stimulus on competition

As three federal agencies prepared for an initial meeting on Tuesday in Washington, DC about implementing a sweeping new broadband program, public advocates gathered on Monday to give their ideas on how to use the funding to stimulate jobs and extend high-speed Internet communications throughout the US.

Signed into law last month by President Barack Obama, the American Reinvestment and Recovery Act allocates $4.7 billion to the National Telecommunications and Information Administration (NTIA) for broadband deployment to "unserved," "underserved," and low-income communities, plus another $2.5 billion to the Department of Agriculture's Rural Utilities Service (RUS), while also directing the FCC to develop a "national broadband strategy."

During a freewheeling conference call with journalists on Monday afternoon, former Rep. Chip Pickering (R - Miss.) and speakers from the Open Internet Coalition (OIC) and the advocacy group Free Press each floated a variety of recommendations around use of the government-approved funds. But many of the suggestions focused on opening up the field wider to newer Internet access providers.

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The free market has been "very successful" in shaping the direction of the Internet so far, Pickering said. Still, though, the broadband plank of the Reinvestment and Recovery Act brings new opportunities for government and private industry to work together in meeting the needs of the public.

But in examining grant applications for broadband funding, the NTIA should give due consideration to applications from newer market entrants, according to the former Congressman. IXCs (interexchange carriers) such as AT&T and Sprint and ILECs (independent local exchange carriers) such as Verizon have also been vying heavily for stimulus funds.

Alternatively, Pickering cautioned, instead of attaining "a more vibrant marketplace," the US might end up with a "duopoly" of two main network providers, a situation that could keep prices high while reducing innovation.

Ben Scott of Free Press stressed the need to take account of the requirements of specific regions in making decisions about grant applications.

The numbers of wireless, cable, and/or fiber providers in a region is less important than the ubiquity of services beyond certain local population "clusters," high access speeds, and pricing which is affordable to people living in that part of the country, Scott said. Even with four wireless providers serving the same region, he illustrated, four would not be sufficient if all four providers charged $80 per month and service quality wasn't good enough.

But Scott said competition is also important, especially in areas that are particularly underserved. Competition brings greater "parity."

Providers from the local area might be especially well suited to expanding broadband access within their own communities, given that a provider is up to the task. "If there is someone from [the] local area, that would be a factor to their advantage," according to Scott.

Markham Erickson of the OIC said the federal agencies should make sure to extend high-quality Internet access not just to consumers but to organizations such as schools and small businesses in underserved areas.

"This will also be an important part of re-stimulating the economy," according to Erickson.

Applications should also be considered from communities that are not either rural or poor, Pickering indicated. From a public safety standpoint, for instance, it might be wise to use government funding to build out more broadband access on the East Coast, an area that might be "at higher risk of terrorism," he noted.

ILECs have already "received tremendous levels of [government] subsidies to build networks," and this has "protected them from competition," Pickering contended. The ILECs received their "first wireless licenses for free," he observed.

"I'm not sure if [it's] fair for them to now say that nobody should receive any [subsidies] but them," according to the former Congressman.

One reporter asked about the interplay between decisions reached by the NTIA and FCC. The NTIA is mandated to consider grant applications and disburse all funds by the end of 2010, according to Scott.

The FCC is supposed to complete its broadband strategy by the middle of the same year. But the FCC's strategy will be more all encompassing, covering more than the types of issues addressed in the grant disbursements, Scott said.

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