Tuesday, March 31, 2009

Big Telcos: "Thanks, But No Thanks" to Broadband Stimulus 03/31/09 Boston - is reporting, in a copyrighted story by Washington reporter Molly Peterson of today's date, that the two largest incumbent local exchange carriers (ILECS) in the US, AT&T (NYSE: T) and Verizon (NYSE: VZ), most probably will not seek any grants or loans under the "broadband stimulus" provisions of the federal stimulus package.

Formally called The American Recovery and Reinvestment Act of 2009 (ARRA), the legislation signed by President Barack Obama on February 17, of this year appropriates a total of $787 billion in federal funds for a wide variety of projects, including a total of $ 7.2 billion for broadband stimulus programs.

For those paying attention, the Bloomberg piece, which quotes industry analysts and corporate flacks at both ILECs, comes as no surprise. The big telcos have been cool for years to the entire government broadband incentive agenda for unserved and underserved areas. Just as they have consistently fought community broadband and municipal network efforts, lobbying in numerous states to make illegal "government owned networks", they have never lobbied for direct grants or loans for rural broadband. The ILECS instead have always pushed for tax incentives, including tax credits and accelerated depreciation schedules for new capital expenditures on high speed networks.

Famously, the Congressional mark-up process for the ARRA featured several tax break packages for the ILECs. As Seth Hansell posted on his Bits blog in the New York Times on January 20, analysts estimated Verizon alone could capture $1.6 billion should then draft tax incentive language become law. Verizon's policy blog reflected its support of the Senate Budget Committee's tax proposal at that time. Analysts looking at the tax provisions during the Committee mark-up process, like Jacqueline Emigh over on betanews documented that "next generation" network developers, those building facilities delivering speed at 100 Mbps and over, would receive tax incentives of up to 40% of eligible capital expenditure. 

Those tax portions of the stimulus package were removed, despite the efforts of Senate Commerce Committee Chairman, Senator Jay Rockefeller (D-WV), who has pushed for such tax changes for rural telecom for over a decade.

As distinct from the large telcos, small to medium sized telcos and cable operators, and wireless Internet service providers (WISPS) prefer direct grants and loans as codified in the ARRA for rural broadband efforts. These smaller providers have less ability to secure investment capital, and a reduced ability to take advantage of increased tax incentives.

Wednesday, March 11, 2009

Rural Broadband: Ten Senators Say Unserved Rural Areas Must Be Funded First 03/11/09 Boston - A bipartisan group of US senators, drawn from states with substantial rural populations, has called upon agencies in the Obama Administration to prioritize broadband stimulus fund spending in unserved rural areas.

Sen. Jeanne Shaheen (D-NH)
Freshman Senator Jeanne Shaheen (D-NH) was the lead author of a letter sent to Agriculture Secretary Tom Vilsack, Acting Chairman of the Federal Communications Commission (FCC), Michael Copps, and Acting Secretary of Commerce Otto Wolfe.

As first reported via a story in MultiChannel News, the Senators' letter was issued on March 9, a day before the multi-agency public meeting which kicked-off the rulemaking process for broadband stimulus grants. The Federal Communications Commission (FCC), National Telecommunications and Information Administration (NTIA) of the Commerce Department, and the Rural Utilities Service of the Department of Agriculture (USDA-RUS) held a first-of-its-kind joint meeting to inform stakeholders of the regulation drafting processes for the broadband stimulus programs at each agency.

With the letter, Shaheen and her 9 Senate colleagues clearly staked-out their positions in favor of their rural constituencies as the agency processes got underway. Areas of the US fully "unserved" by broadband networks are overwhelming rural, while "underserved" areas have no working definition in current federal regulations, and can include urban and suburban locations.

Rural interests already achieved a political win as broadband stimulus monies in the American Recovery and Reinvestment Act (ARRA) were allotted to the USDA-RUS, with an appropriation of $2.5 billion. During the congressional mark-ups that resulted in the broadband stimulus provisions in ARRA, several leading broadband advocates had pushed for centralizing all appropriations and program frameworks for broadband grants and loans at NTIA. 

Sen. Russ Feingold (D-WI)
The media reform and net neutrality advocacy group Free Press, for example, stated in a letter to Congress in January that "..grant monies should flow through a single administrative agency to ensure that accountability is clear and strict". In the final version of the ARRA, signed by President Obama on February 17, NTIA received a $4.7 billion appropriation for its Broadband Technology Opportunities Program (BTOP).

Joining Shaheen in issuing the letter were fellow Senators: Mark Begich (D-AK), Sam Brownback (R-KS), (Russ Feingold (D-WI), Kay Hagan (D-NC), Mary Landrieu (D-LA), Jeff Merkley (D-OR), Pat Roberts (R-KS), Debbie Stabenow (D-MI), and Ron Weyden (D-OR).

Senators Feingold, Merkley, Stabenow, and Weyden all serve on the important Budget Committee, from which they can frame the authorizations in the federal FY 2010 budget for further broadband grant, loan, or tax incentive support.

Feingold is the first among equals of the letter signatories, based on his position on the Budget Committee, his recent experience in 2007 and 2008 in winning greater funding in the Farm Bill of those years for rural broadband programs, and his political alliance with the lead appropriator in the House, Congressman Dave Obey (D-WI).

Obey, as Chairman of the House Appropriations Committee, was the lead sponsor of ARRA. He originates all appropriation bills on the Hill. Representing the very rural Wisconsin 7th Congressional District, Obey early on championed broadband funding in ARRA. His site that explains ARRA to his constituents states his view that "...
For every dollar invested in broadband, the economy sees a ten-fold return on that investment."

Continued federal appropriations, estimated widely at between $15 billion and $50 billion, will be necessary to build out high capacity networks to presently unserved regions. Senator Shaheen and her fellow signatories, together with their allies in the House, will need to continue to work as a rural broadband coalition to get that job done. It makes sense that they form common cause with the recently announced Congressional Rural Caucuss to do so.

Tuesday, March 10, 2009


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We are undergoing a soft launch between March 10 and April 10, 2009. If you have any news items, position papers, or comments on the broadband funding aspects of the federal stimulus bill, the American Recovery and Reinvestment Act of 2009 (ARRA), please send to: is an electronic publishing property of PrattNetworks LLC, a telecom sector advisory firm based in Boston, MA.

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