Tuesday, May 19, 2009

Broadband Stimulus Timeframe: USDA Confirms Separate and Simultaneous Notice for Launch of Stimulus Funding Round 05/19/09 The US Department of Agriculture (USDA) has confirmed that the Department will be issuing a separate Notice – separate from the similar Notice to be issued by the Commerce Department -- launching the first funding round for broadband stimulus funds.

USDA has also confirmed information we first reported here that the Department will be issuing its Notice simultaneously with that of Commerce, and that both Notices will be promulgated “between mid- to late June” of this year.

Separate and Simultaneous Issuance

As we first reported on April 13, the specific name for the federal guidelines to be separately and simultaneously issued is Notice of Funds Availability (NOFA). The significance of the issuance date and listed specific criteria of the agency NOFAs is that the documents will launch the grant, loan, and loan guarantee rounds for the total of $7.2 billion in broadband stimulus funds contained in the federal Recovery Act.

Under the Act, formally called the American Recovery and Reinvestment Act of 2009 (ARRA), the Rural Utilities Service (RUS) of USDA, and the National Telecommunications and Information Administration (NTIA) of the Department of Commerce will be dispersing $2.5 billion and $4.7 billion in ARRA funds, respectively.

USDA Rural Development Spokesman Jay Fletcher stated in an interview, “We emphasize that we have been, and will continue to, work very closely with NTIA” as the USDA drafts its NOFA. Mr. Fletcher also stated that Agriculture and Commerce are working to issue their respective NOFAs at the same time, both in the "mid- to late June" window.

Oversight by Executive Office of the President

Fletcher also confirmed that as the 2 line agencies work together on their respective policies and funding criteria, their efforts are further coordinated by staff of the Executive Office of the President (EOP). The USDA spokesman stated that the Department "Absolutely is in constant communications, and in cooperative communication, with the Administration."

In our story of May 8, we quoted colleague Ms. Liz Zucco about the coordination of RUS - NTIA policies by the Obama Administration, " Senior officials have now confirmed that the final rule making has now been placed back at the Administration level. This should help adhere to the original standards as set forth by Congress, and in the Federal Register." Ms. Zucco, President of Georgia based MarketSYS USA, is a telecommunications consultant with years of experience successfully supporting grant applicants for RUS funds.

Existing USDA Rural Telecom Regulations

Speaking about the decision to issue separate NOFAs, a USDA Rural Development senior policy official reported to on background, and not for specific attribution, that both agencies, RUS and NTIA, had recently determined in consultation with unnamed officials of the Obama Administration that “one size does not fit all”. The need for separate, albeit simultaneously issued, NOFAs is driven by the fact that USDA has ongoing programs funding rural telecom.

Given that these continuing programmatic efforts of the Rural Development division of USDA -- the division which includes RUS -- operate under an established body of regulations, the NOFA to be issued by the agency for ARRA broadband stimulus funds must be groomed to coordinate with those strictures already in use in rural jurisdictions around the country.

Saturday, May 16, 2009

Analyst Buzz from Telecompetitor: Rise of the Rural 'Super' Carrier 05/16/09 (Editor's Note: We are pleased to present one of the most incisive pieces of industry analysis on the clear current trend in rural telecom: Divestiture by the Tier 1 ILECs of rural landlines, and consolidation by the largest RLECs. Bernie Arnason is managing Partner & Founder of telecom consulting and market research firm Pivot Media, and Principal Contributor / Managing Editor of the firm' Telecompetitor industry reporting blog. We welcome his insights.)

By Bernie Arnason/Telecompetitor  via

Recent activity in the rural telecom sector leads us to speculate about a rural ‘super’ carrier trend. We define this trend as the formation of large scale, larger than we’ve ever witnessed before, telecom service providers focused mostly on rural markets.

Despite the 1,000+ carriers serving rural territory in the U.S., the three largest ‘RBOCs’ combined, still serve the majority of rural customers. That’s beginning to change, and leading to the rise of the rural ‘super’ carrier. Companies like CenturyTel, Embarq, Windstream, FairPoint, Frontier, TDS, and maybe Qwest are on a path to become rural ‘super’ carriers.

Communications conglomerates like AT&T and Verizon are laying their cards on the table – their future does not include rural access lines. Verizon referred to them as ‘non-strategic’ assets when explaining their recent Frontier transaction. Verizon also announced they have probably finished shedding access lines and will now focus on wireless, FiOS, and global IP connectivity.

That leaves AT&T and Qwest to reveal their rural plans. Will AT&T shed their rural assets as well? They have a lot to shed. The wildcard among the RBOCs may be Qwest, because they have an opportunity to become the rural ‘super’ carrier themselves. There has been speculation that Qwest would divest itself of its long distance and enterprise units and basically morph back into its US West heritage. In so doing, they may become an aggregator of rural access lines in an attempt to build the scale necessary for a so called rural ‘super’ carrier. Qwest lacks the wireless assets of its RBOC brethren, AT&T and Verizon. Are Qwest and AT&T already talking? Of course, Qwest may be limited by its financial troubles to take on AT&T’s rural assets.

Perhaps the other rural ‘super’ carrier in waiting to watch is Windstream. They were one of the largest rural carriers, but will be eclipsed by Century Tel-Embarq and Frontier-Verizon. You have to think Windstream's Little Rock, Arkansas headquarters is all abuzz over finding the right deal so they can keep up. The flights between Little Rock and Dallas, AT&T's headquarters, may be a little busier. What about a Windstream-TDS combination?

We’re not big proponents of bigger is always better. But in the quickly evolving telecom landscape, scale means everything. For carriers that lack wireless assets, building the scale that can create operational efficiencies and provide the means to profitably build and leverage broadband applications is paramount for future survival.

Whatever the outcome, the U.S. telecom industry is reshaping. Rural ‘super’ carriers are forming, as the largest communications conglomerates shed their rural access lines, and focus on wireless and broadband. It’s a scenario that’s been talked about for many years. It’s now forming in front of our very eyes.

Bernie Arnason is Partner & Founder of Pivot Media

This article is © Pivot Media 2009, and used by with the permission of the copyright holder.

Friday, May 15, 2009

Broadband Conduit Act of Rep. Eshoo: Full Text of Bill 05/15/09 Boston - Thanks to the staff of Congresswoman Anna G. Eshoo (D-CA-14), we are able to bring to our readers the full text of the federal Broadband Conduit Act filed yesterday by Representative Eshoo and 3 important co-sponsors.

A filed .PDF version of the 4 page bill text is available here.

We reported on the filing of the legislation last evening here.
We have received multiple inquiries about the actual text of the bill today. Given that the electronic filing of the bill takes some time to be posted on the Thomas site of the Library of Congress, Congresswoman Eshoo wanted to have interested readers be able to study the bill's full text immediately.

The Thomas site now designates the Broadband Conduit Act as H.R. 2428.

As we reported last evening, Rep. Eshoo's co-sponsors of the legislation are fellow Democratic members of the House Energy & Commerce Committee: Henry A. Waxman (CA-30), Chair. of the full Committee; Rick Boucher (VA-9), Chair. of the Subcommittee on Communications, Technology and the Internet; and Edward J. Markey (MA-7), Chair. of the Select Committee on Energy Independence and Global Warming. will update on the expected route of the H.R. 2428 through the appropriate Committees of Congress, and on the pending filing of a Senate companion bill by Senator Amy Klobuchar (D-MN).

Topic Resources at StimulatingBroadband on Scribd:

1. H.R. 2428 Broadband Conduit Deployment Act

2. S. 1266 Klobuchar Broadband Conduit Deployment Act

Broadband Stimulus as the "Next Telecom Boom"? ...We Hope Not 05/15/09 An unidentified (except apparently to clients) author over on Gerson Lehman Group's blog last week posted an analysis story with the title Broadband Stimulus: The Next Telecom Boom.

While agreeing with several of the story's key points, we can only respond to the title saying: The Stimulus Act is going to trigger another telecom boom?

Dear god, we hope not.

The "broadband stimulus" provisions of the American Recovery and Renewal Act of 2009 (ARRA), with their $7.2 billion in federal appropriations, have generated keen interest in industry, and in communities around the nation.

Is this level of interest in broadband stimulus really about to trigger another "telecom boom", akin to that of the 1997-2001 era?

If a consensus in government or industry holds that the federal broadband stimulus provisions will over-inflate equities markets, drive speculative frenzy, or trigger a boom that leads to an inevitable bust, we need to collectively reboot the program and our consensus view straight away.

The - Telecom Boom and Bust
Those of us that had a hand in the positive aspects of that era -- branded by Om Malik in his definitive history of the period as the time of Broadbandits -- have a responsibility to better police our industry, to better check our own exuberance this time around. What would have been good business models for several new fiber-rich carriers in each geographic market (for the metro new builds), and nationally (for the backbone new entrants) turned into an economic train wreck when too many carriers crowded the market.

Much of the capacity that we built is in the ground today as dark and lit optical fiber, in data center capacity, and in submarine cables. That is real infrastructure. It creates real jobs, real wealth, and real American competitiveness. Could we have avoided however the catastrophic collapse of the web and competitive telecom industries? Could government, industry, and the capital markets done something to prevent the resultant loss of hundreds of thousands of jobs, and the destruction of upwards of an estimated $10 trillion in wealth?

Several economists have equated the Internet / telecom boom and bust cycle of the past decade with that of one of the underlying industries of American's rise to the leading global economic power: the railroads. A detailed study examining the telecom boom as a result of both regulatory restructuring, via the Federal Telecom Act of 1996, and speculative behavior of Wall Street was published in 2003 by economists Couper, Hejkal and Wolman writing for the Federal Reserve Bank of Richmond (download .PDF). Following their analysis of the telecom sector's market capitalization for the period, they mention the telecom / railroad analogy as potentially reflecting a perennial problem facing the construction of national networked infrastructures.

Government Blows Up the Bubble
Daniel Gross, formerly of the New America Foundation, in his The Fiber-Optic Network Bubble: Back to the Future, published in 2002 makes the same point, with even more historical parallels.

Gross wrote, "Indeed, similar infrastructure manias surrounded the telegraph in the 1850s, the railroads in the 1880s and 1890s, and telephony in the 1890s and 1900s. To be sure, the circumstances surrounding these bubbles differed. But their stories bear striking similarities." In his subsequent book, Pop!: Why Bubbles are great for the Economy (2007), Gross argues that the creative destruction of boom and bust cycles leave behind vital infrastructures that indeed fuel the economy even in times of moderate growth.

Telling for our present purposes, Gross makes the point that the role of government in the boom-bust creative cycle is omnipresent.
"Rather than simply helping to clean up the mess it leaves behind, government has been present at the creation of virtually every bubble," says the New America Foundation in summary of Gross' work. "Public policy—through subsidies and tariffs, tax breaks and land grants—has always played an important role in encouraging investors to succumb to irrational exuberance."

Lessons Learned

Boston telecom attorney Alan D. Mandl, who has practiced through each telecom developmental cycle since before divestiture in 1984, gives us keen observations as we enter an new phase of telecom development. He observes that while 80% of a project cost may be covered by a NTIA grant, the agency recognizes the need for assessing both the long-term feasibility of an investment, and the ability of a recipient to encourage the sustainable adoption of broadband services.

“Hopefully NTIA scrutiny of grant applications and funded projects will give due consideration to these factors and guard against stranded expenditures," commented Mandl. "Because operation and maintenance costs are not funded by grants, those costs must be estimated in assessing the feasibility of an investment. Adequate due diligence must be required from grant applicants, states, and the NTIA before grants are awarded. Parties providing private funding tied to the long-term success of a project also must conduct adequate due diligence. Based upon past experience, project-specific due diligence is of critical importance.”

"It also is very important that before federal and state funds are committed to broadband expansion projects, state public service commissions and the Federal Communications Commission take proactive steps to assure that federal grant money and any state funding of investment are not wasted."

"For example, excessive make ready charges or delays could cause an increase in project costs as well as implementation delays. Private investors in broadband projects also need to conduct due diligence on the market," concluded Attorney Mandl, a former Massachusetts Assistant Attorney General.

Capital Market Discipline
What can government and the private sector do correctly now to avoid the boom-to-bust train wreck as President Obama calls us to a new commitment to nationwide broadband?

Broadband networks slated to be built in unserved rural areas, and underserved urban precints with federal and state capital subsidies are different. They are neither purely "civil works" referenced in non-broadband sections of ARRA, nor investor owned facilities. They will be public-private hybrids which, by definition, are are not being built today without government subsidies.

The responsibility for building sustainable businesses with broadband stimulus monies therefore, needs to be shared by government, by the telecom industry sector, and by American capital markets. The latter sector, which raises private capital from private investors, will always provide the majority of broadband capital expenditures (capex) in the American economy at any given time.

Broadband networks slated to be built in unserved rural areas, and underserved urban precincts with federal and state capital subsidies are sui generis. They are neither purely "civil works" referenced in non-broadband sections of ARRA, nor investor owned facilities. They will be public-private hybrids which, by definition, are not being built today without government subsidies.

The responsibility for building sustainable businesses with broadband stimulus monies therefore, needs to be shared by government, by the telecom industry sector, and by American capital markets. The latter sector, which raises private capital from private investors, will always provide the majority of broadband capital expenditures (capex) in the American economy at any given time.

Securities analysts and market researchers should guide all of us involved in this new cycle of investment with due diligence investigations of the actual businesses proposed for broadband stimulus funding.

Thursday, May 14, 2009

Rep. Eshoo 'Gets It': Files Legislation Requiring Fiber Optic Conduits in Federal Highway Projects 05/14/09 Congresswoman Anna G. Eshoo (D-CA) today introduced legislation to require new conduit banks for fiber optic communications cable be installed in all federal highway projects going forward.
“According to industry experts, more than half of the cost of new broadband deployment is attributable to the expense of tearing up and repaving roads,” stated Rep. Eshoo in a press release of today.

“By putting the broadband conduit in place while the ground beneath the roadways is exposed, we will enable any authorized communications provider to come in later and install fiber-optic cable at far less cost."

Eshoo, a member of the House Energy & Commerce Committee, and her colleagues are calling the proposed legislation the Broadband Conduit Deployment Act. will post a full text of the bill when it becomes available online.

Of critical importance to the legislative success of Eshoo's bill are her influential colleagues on Energy & Commerce that are co-sponsoring the legislation: Chairman Henry Waxman (D-CA), Communications, Technology and the Internet Subcommittee Chairman Rick Boucher (D-Virginia), and Rep. Edward J. Markey (D-MA). Senator Amy Klobuchar (D-Minnesota) is working on similar legislation for introduction in the United States Senate.

According to the Eshoo release: The legislation will require all new federal highway projects to include “broadband conduit” – plastic pipes which house fiber-optic communications cable.

The Broadband Conduit Deployment Act would apply to all new road projects funded by federal surface transportation legislation, which is due to be reauthorized this year. The Department of Transportation is permitted to waive the requirement where necessary and is required to work with the FCC to determine levels of existing service and potential demand for broadband service in a particular area.

“Depending on what study you look at, the U.S. ranks anywhere from 15th to 22nd in broadband, behind countries such as Finland, Belgium, and Luxembourg,” said Eshoo. “Anything we can do to reduce the barriers to deployment and increase investment and competition for broadband will make our country more connected, more competitive, and more prosperous. This simple, commonsense proposal will actually do a great deal to connect more Americans to more affordable, higher quality broadband connectivity.”

Eshoo, of California's 14th. congressional district, represents what is arguably (along with her neighbor Mike Honda in the California 15th.) the most technology intensive congressional district in the nation. It is no surprise that such a tech savvy Member of Congress would introduce such a piece of forward looking legislation.

Our Take: Representative Eshoo absolutely positively "gets it" with the filing of her legislation today. Conduit construction, pole attachment policies, and local public rights-of-way (ROW) permitting are literally the bricks and mortar of broadband networks.

Those of us that build large scale carrier-grade networks know the time and dollars that are too often lost when state highway czars, local officials, and engineers treat the public ROW as their individual fiefdoms. Some officials treat the American telecom industry as a golden goose that they believe can be strangled for confiscatory levels of fees, permits, and "franchises".

The Eshoo bill is a good start, but it is just that. We hope that a coalition of network developers will come forward to address Congress about the urgent need for federal ROW policy that will end obstructionist state and local practices where they exist. America's 21st Century broadband future is too important to be held hostage by today's Boss Tweeds reminiscent of the 19th Century.

Frontier Gains Immediate Broadband Stimulus Advantage with Verizon Rural Acquisitions 05/14/09 A day after announcing its $5.25 billion acquisition of the remaining rural landline business of Verizon (NYSE: VZ), Frontier Communications (NYSE: FTR) is reporting that it will pursue broadband stimulus funds from the federal Recovery Act.

"We are absolutely planning on applying for funds, once the federal rules are in place," said Frontier spokesperson Steven Crosby in a telephone interview with of today.

The business and telecom press has been awash with detailed stories reporting on the Verizon - Frontier announcement of yesterday, stating that Frontier is acquiring all of Verizon's remaining rural landlines in 14 states. Not mentioned to date is the competitive advantage, under current federal rural telecom funding regulations, the deal delivers to Frontier as it applies for "broadband stimulus" grants or loans going forward.

The federal Recovery Act appropriated a total of $7.2 billion in broadband stimulus monies to be administered by 2 federal agencies. The Act, formally called the American Recovery and Reinvestment Act of 2009 (ARRA), was singed into law by president Obama on February 17.

Frontier's Rural Focus
A story published yesterday on the deal quotes Frontier Chairman and CEO Maggie Wilderotter stating that the acquisition makes her company "the largest rural pure play in the United States."

In Frontier's press release on the deal, Wilderotter states,"With more than 7 million access lines in 27 states, we will be the largest pure rural communications provider of voice, broadband and video services in the U.S. Frontier is committed to providing our customers with state-of-the-art technology and innovative products."

Perhaps responding to the pitched rhetoric from fights over the merits of broadband around the nation, the Frontier executive also said, "We know that broadband is a catalyst for a healthy local economy and job growth.”

It is in this context -- an agile player in the rural telecom market -- that we see the statement of today made to by Frontier spokesman Steven Crosby.

Present Federal Rural Telecom Rules of USDA-RUS
For much of the American telecom industry, rural telecom and the federal programs that subsidize it is a world unto itself which remains arcane if not unfathomable. An understanding of those rules however demonstrates the clear advantages that Frontier has gained in the highly competitive arena defined by both broadband stimulus funds under ARRA, and by existing programs.

Current rules of the Rural Utilities Service (RUS) division of the US Department of Agriculture (USDA) state that once a rural telecom carrier receives grants or loans for network construction or expansion in a designated area, no additional grants or loans may be issued to any other communications company for that same rural area.

As our colleague, Liz Zucco, CEO of rural telecom consulting firm MarketSys USA in Georgia tells us, "No one else can become a borrower of, or receive a grant from, RUS once a grant or loan is issued for a given rural service footprint."

Simultaneously, RUS specifically has rules for the "nonduplication" of "existing" carrier facilities and services as applicants apply for new grants and loans. Agency regulations also give a competitive advantage to existing carriers operating adjacent to unserved areas, as they plan to expand facilities and services into those regions lacking broadband.

RUS at the Department of Agriculture, and the National Telecommunications and Information Administration (NTIA) at the Commerce Department are the 2 agencies designated by ARRA for the dispersal of funds from the Act. Both agencies have had regulations in place for years as they have distributed funds under the Technology Opportunities Program (NTIA) and the telecommunications sections of the Rural Development divisions of RUS. The broadband stimulus regulation drafting process now going on at both agencies will follow existing rules in place where they exist.

A Game Changer in 14 States
The Frontier acquisition of new operating territories in the 14 states is thus a potential game changer for communities in and adjacent to those areas that are today "unserved" by broadband facilities. This is particularly true given the fact that Verizon executives have repeated the carrier's displeasure with the open access strictures of ARRA, leading most of us in the community of 'broadband stim' observers to conclude that the firm will not apply for federal funds.

According to data released by Frontier yesterday, via its investor relations site, the carrier will acquire all current Verizon landline operations in
Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin, and some border areas of California.

Business Case for the Deal
In its continuing effort to shed rural customers, Verizon
Communications Inc. (NYSE: VZ) yesterday announced it is divesting itself of its rural landlines in 14 states, and transferring that installed base to Frontier Communications Corp. (NYSE: FTR). The transitional company comprised of former Verizon assets within Frontier will be called SpinCo as the integration process move forward. Frontier will credit Verizon with an estimated $5.25 billion in Frontier stock for the transaction, and pay to Verizon an additional $3.3 billion in cash raised via a debt offering at a later date.

The story by Roger Cheng of Dow Jones Newswires on the deal calls it a Reverse Morris Trust which results in tax free consequences for Verizon.

Frontier executives yesterday stated repeatedly that the carrier will achieve positive economies of scale as it expands into the new operating territories. In an obvious reference to the operational woes of Fairpoint Communications, Inc. (NYSE: FRP) as it acquired the former Verizon holdings in rural Northern New England, Frontier stressed that it faces an easy migration path for SpinCo's supporting systems. Frontier's IR site makes the point that "13 states run on a separate billing platform that comes with SpinCo in the acquisition; Only one state, representing 13% of SpinCo access lines, (are) required to be converted by closing."

As best documented in the Fairpoint Watch site of the Nashua Telegraph (NH), the North Carolina based rural telco has had a nearly disastrous time transferring former Verizon customers in Maine, New Hampshire, and Vermont onto its own operational support systems (OSS) from multiple legacy systems.

Our Take: If Frontier can indeed avoid the operational nightmare that has become the Fairpoint franchise in New England, the carrier will achieve a competitive advantage for broadband stimulus funds, and for associated rural telecom federal subsidies, going forward.

State broadband program directors, community broadband advocates, and in-region carriers from the 14 states about to be part of the new SpinCo entity are well advised to reach out to Frontier.

Friday, May 8, 2009

2009 Fiber to the Home Conference to Focus on Broadband Stimulus

BUSINESS WIRE via 05/08/09 Generating revenue from next-generation, fiber to the home (FTTH) networks and building subscriber loyalty in today’s competitive marketplace will be the focus of the 2009 FTTH Conference & Expo, scheduled for September 27 – October 1, 2009 at the Hilton-Americas Houston and the George R, Brown Convention Center in Houston, TX.

The event is expected to attract 2,000 executives from FTTH service providers – including telecoms, cable companies, municipalities and utilities – as well as key decision makers from optical access equipment manufacturers and other segments of the broadband industry.

Under the banner Building the Business of FTTH, the conference will highlight practical information and marketing strategies to help operators take their networks to the next level of business success. The conference will also serve as a one-stop information center on the broadband initiatives program of the American Recovery and Reinvestment Act. During a number of presentations and panel discussions, the Fiber-to-the-Home Council, which has been instrumental in shaping the stimulus legislation and programs, will shed light on the evolving process and procedures for accessing the funds made available through the programs.

Adelstein to Give Closing Keynote
In addition, Jonathan Adelstein, the recently-nominated Administrator of the U.S. Rural Utilities Service, will update attendees on guidelines for the distribution of funds through the agency’s broadband stimulus program at the closing general session on Wednesday, September 30th.

Opening keynote speaker Richard Lynch, Executive Vice President and CTO of Verizon Communications, will discuss how fiber to the home has changed the game for Verizon – broadening the company’s product offerings, making it more competitive in the marketplace and creating new opportunities for growth through innovation.

“This conference will be focused on two vitally important areas,” said Joe Savage, President of the FTTH Council. “One is the business success that both large and small telephone companies are having in providing enhanced television and Internet services over end-to-end fiber networks. And the other involves the enormous opportunities that the federal broadband stimulus programs are offering for telecom providers to upgrade to FTTH or expand their existing networks.”

Among the more than 50 track sessions are presentations covering marketing, financial and technology issues, including a broad range of case studies, best practices and success stories. Special panels will feature industry leaders in discussions of legislative and regulatory issues, MDU considerations and marketing for success. The Expo Hall, featuring more than 160 vendors and suppliers from all corners of the FTTH industry, will provide the latest solutions in fiber to the home services, content and technology. Online registration is now open at

New to this year’s conference will be presentations offered in Spanish covering issues specific to Latin America. The FTTH Council’s recently launched Latin America chapter will hold its second meeting during the conference, which is expect to attract increased attendance from South America and other parts of the globe.

Home PNA, a non-profit association of more than 100 technology companies working together to ensure adoption of a phone line networking standard to provide high-speed, affordable home networking, will collocate its Home PNA Summit with the FTTH Conference & Expo. The one-day summit will take place on Thursday, October 1, 2009.

About the Fiber-to-the-Home (FTTH) Council
The Fiber-to-the-Home (FTTH) Council is a non-profit association consisting of companies and organizations that deliver video, Internet and/or voice services over high-bandwidth, next-generation, direct fiber optic connections – as well as those involved in planning and building FTTH networks. The Council works to create a cohesive group to share knowledge and build industry consensus on key issues surrounding fiber to the home.

Communities and organizations interested in exploring FTTH options may find information on the FTTH Council web site at

Obama's Federal Broadband Stimulus: Separate Funding Notices to be Released by NTIA and RUS, Coordinated by Administration 05/08/09 The two federal agencies that will be administering a total of $7.2 billion in "broadband stimulus" funds will each be issuing its own separate official document launching the applicable funding round of each agency.

Separate Notices Confirmed
Some confusion around this point has existed in the press and in the community of practitioners that follows the funding opportunities for new broadband networks enabled by appropriations in the American Recovery and Reinvestment Act of 2009 (ARRA). The Act designates $4.7 billion to be administered by the National Telecommunications and Information Administration (NTIA) of the Department of Commerce, and $2.5 to be managed by the Rural Utilities Service (RUS) of the Department of Agriculture.

Under federal practice, the document to be released by each agency, as each launches the funding rounds for ARRA broadband stimulus monies, is called a Notice of Funds Availability (NOFA). The confusion has existed given the fact that NTIA and RUS jointly administered the public comment phase of the process.

Mr. Mark Tolbert, Spokesman for NTIA this afternoon confirmed for that the NOFA issuance phases will be legally separate, but coordinated for reasons of policy and "user friendly" consistency for grant applicants. "There will be separate NOFAs," stated Tolbert. "To my knowledge, NTIA and RUS will each issue their own NOFA."

NTIA and RUS Notices to be Released Simultaneously
Tolbert, speaking this afternoon via telephone from NTIA offices in Washington, did state however that NTIA and RUS are working cooperatively in an attempt to issue their NOFAs simultaneously.

"This is a unique undertaking with the Recovery Act," said the NTIA Spokesman. "We have been in consultation with FCC, and working with USDA and RUS folks. We want to make this process as user friendly, and as fluid, for the grant applicants as the end users of this process."

That effort to make the grant application process as understandable as possible for potential applicants drives the goal of simultaneous issuance of the two NOFAs. The Congressional mandates in ARRA for both fiscal accountability, and rapid funds dispersal are also being juggled by line agencies, and by Obama Administration officials. "We will both serve the tax payers well," concluded Tolbert, and make sure all funds are "released by September 2010" as directed by ARRA.

Obama Administration Coordination
Clearly with multiple agencies working to coordinate new federal broadband policy, and to administer ARRA broadband stimulus funds, the central role of Obama Administration policy makers comes to the forefront. Several media reports over the past 2 weeks have identified Administration official Ms. Susan Crawford as playing such a coordination role. Crawford, a former law professor at the University of Michigan Law School, was appointed in April by the President to serve on the National Economic Council.

Ms. Liz Zucco, contributor to reported this afternoon on the NTIA-RUS policy coordination process within the Administration.

"Senior officials have now confirmed that the final rule making has now been placed back at the Administration level," reports Zucco. "This should help adhere to the original standards as set forth by Congress, and in the Federal Register." Ms. Zucco, President of Georgia based MarketSYS USA, is a telecommunications consultant with years of experience successfully supporting grant applicants for RUS funds.

Thursday, May 7, 2009

North Carolina Legislature Sends Two Anti-Municipal Network Bills to Study in Two Days: City-Industry Rhetoric Simmers 05/07/09 The North Carolina General Assembly has sent two bills, both of which sought to outlaw the deployment of broadband networks by cities and municipal utilities, to study committees over the past 2 days.

Time Warner Cable, the North Carolina cable trade association, and rural telecom carrier Embarq strongly supported both bills. A coalition of broadband advocates and municipal officials have fought both bills, mobilizing city spokesmen, bloggers, and social network-enabled activists. The legislative initiatives are being closely watched by broadband activists, industry trade groups, and regulators around the country.

This recent attention results largely from the new focus put on broadband as a result of the “broadband stimulus” provisions of the federal Recovery Act.

“I think the Legislature can see that while this was specifically about North Carolina,” said Brian Bowman, spokesman for the City of Wilson, NC “it fits into a bigger picture.” He suggested that in the face of emerging broadband applications like You Tube, Facebook, and Twitter that incumbent service providers “had just not kept up, but people understood that, especially the social networking folks” who rallied to the cause of the municipalities.

Legislative Details
Mr. Bowman spoke this afternoon with in a telephone interview from his office in Wilson. He had attended a Senate committee hearing this morning on SB1004, and the House committee proceeding yesterday that took action on HB1252. Both hearings were held at the state capitol in Raleigh.

The effort by two separate committees of the Legislature to send the bills to study committees, effectively tabling the legislation until next year, is seen by in-state broadband activists as a defeat of the lobbying efforts of Embarq (NYSE: EQ), the Time Warner Cable division of Time Warner, Inc. (NYSE: TWX), and the North Carolina Cable Telecommunications Association (NCCTA).

Industry spokespeople, especially NCCTA President Mr. Brad Phillips see the legislative maneuver positively, as an objective effort to study all of the relevant policy, business, and public revenue aspects of the legislation.
“We are pleased by the results of the actions in both the House and the Senate,” stated Mr. Phillips to StimulatingBroadband late this afternoon “because we think the legislation will be seriously studied.”

Phillips, is both the current president of the NCCTA and a corporate spokesperson employed by Time Warner Cable’s North Carolina operations. He further stated “as the bills were originally presented early on in this process, they were focused just on phone, high speed Internet and cable. I think by going into the Revenue Laws Study Committee, the look at the bills will not be limited to those issues. The door will be open to study any number of different issues."

The Revenue Laws Study Committee is a joint Committee of both the North Carolina House and Senate, with an equal number of members appointed by the presiding officer of each chamber. Mr. Bowman, who maintains the city sponsored blog Save NC, mentions that he received positive blog comments from “around the globe.”

The City of Wilson, with a population of 49,000, has been operating a fiber-to-the-home (FTTH) network since 2007 which delivers video programming, high speed Internet access, and voice telephony. The City of Salisbury, NC also has fought in the current session of the General Assembly against the bills. Salisbury has not begun network operations to date, but has locally committed to building a fiber-rich network similar to the system now serving Wilson.

Ebarq spokesman Tom Matthews stressed to his company's perspective of a "level playing field" for both government and industry. "Our position has always been," said Matthews "that as long as it is a level playing field, we are good with that. Competing with governments, is inherently not level. A lot of safeguards that many states have built into legislation over the years were to avoid private companies competing with government."

Simmering Rhetoric
Public officials in the City of Wilson see their $28 million FTTH city operated system as an economic developmental necessity. They refer to broadband as a public infrastructure needed for job growth and private investment in a region decimated by the loss of tobacco processing firms over the past decade.

"We didn't wake up one morning and just decide to get into the broadband business," said Bowman. He says that the City initially "reached out" to both Time Warner Cable and Embarq, attempting to engage in a public-private partnership to bring high capacity broadband to the City. Both providers were incumbent firms already operating franchised systems in Wilson.
Mr. Matthews of Embarq confirms that the carrier did have discussions with the City prior to the announcement of the FTTH plan. In his opinion however, the city did not at first look toward broadband Internet access as the driver of its planning. "Broadband was not the original impetus," stated Matthews "we had broadband deployed to 97% in the city, via DSL, before this began."

"The issues in Wilson were not at first about broadband", said Matthews "they were about entertainment." By "entertainment", the Embarq spokesperson confirmed that he was referencing the cable / video programming channels then offered by Time Warner.
While the City and Embarq agree that discussions aimed at a joint venture were held, little agreement exists between the City and Time Warner. City spokesperson Bowman stated that when Wilson first approached the cable operator about a high capacity FTTH plan, "Time Warner literally laughed at us".

In response, Time Warner's Phillips sees it differently, "I was the one who received the letter from the City Manager in Wilson, asking us to come discuss public private partnerships." When asked if any representative of the cable operator had ever 'laughed at the city' in discussions, Mr. Phillips stated, speaking on behalf of Time Warner, "That comment is absolutely untrue."

Jay Cuthrell based in both Montana and North Carolina, is a telecom consultant with years of experience working with rural operators. After attending both hearings in Raleigh, he urged us to see the inherent differences between the rural operators and the large national cablecos and telcos. "In my experience, said Cuthrell, "the smaller more rural players outperform the franchise large plays in their ability to serve their communities. The local guys, including municipalities and regional fiber networks, succeed because both their hearts and their wallets are in the right place."

Our Take:
The bloggers and municipal advocates won this round, using the very tools that are enabled by broadband services, especially social networks.

The cable industry is correct that the new study committee berth for the anti-muni net / level playing field bills will allow for detailed examination of the relevant facts.

In this way, perhaps the Tar Heel State will host a version of our needed national debate about the ability of private investment to deliver adequately on the societal benefits of broadband. If the North Carolina debate is a microcosm of the national policy questions we are working through, we need to remember this particular debate is about broadband in a rural state. Rural telecom has its own dynamics, including those local guys with the hearts and wallets, we can't overlook.

Photo Credits: Jay Cuthrell, via a Creative Commons license. Photos may be republished only with attribution to Mr. Jay

Wednesday, May 6, 2009

New York Broadband: New York State Council for Universal Broadband Issues First Report

05/06/09 New York State Chief Information Officer via Dr. Melodie Mayberry-Stewart, New York State Chief Information Officer, Director of the Office for Technology and Chair of the New York State Council for Universal Broadband announced today the release of the first New York State Universal Broadband Annual Report prepared by the Council.

The Report (download .PDF) covers the activities of Council during calendar year 2008.

In support of the mandate of Governor David A. Paterson for greater transparency and accountability, the Council for Universal Broadband released the first Annual Report highlighting the accomplishments of the Council in its first full year of operations. The report highlights efforts to ensure every New Yorker has access to affordable, high speed broadband.

"Broadband telecommunications is critical to urban and rural communities to improve the economic competitiveness of New York State. Our accomplishments reflect the important work put forth by our public and private partners to advance Governor David A. Paterson's vision of affordable broadband access for all New Yorkers," said Dr. Melodie Mayberry-Stewart, New York State Chief Information Officer and Director of the Office for Technology.

"I want to thank our many Council members who helped to launch our state's broadband initiative and achieve our first years' results. Together, we can improve broadband infrastructure and increase digital literacy throughout New York State."

"Over the past year, the Digital Literacy Action Team developed a set of statewide Digital Literacy Standards which were approved by the Broadband Council. We hope to have the Governor, Board of Regents and Legislature endorse these standards for statewide use," said Michael Borges, Executive Director, NY Library Association and Chair of the Digital Literacy Action Team of the Council.

"In 2008, the Government Initiatives Action Team began exploring how existing state assets could be deployed to expand broadband service to our communities. Also they began to examine the current broadband infrastructure investment policies of departments, agencies and authorities to see if current best practices can be extended to others," said Edward Reinfurt, Executive Director New York State Foundation for Science, Technology and Innovation and Chair of the Government Initiatives Action Team of the Council.

Focusing on Governor David A. Paterson's vision, the Council for Universal Broadband is committed to ensuring every New Yorker has access to affordable high speed broadband services.

Friday, May 1, 2009

Maine Broadband: ConnectME Authority Announces New Grant Round 05/01/09 Executive Director Phillip Lindley of the ConnectME Authority, the state broadband authority of the State of Maine, today announced the third grant round of the authority's funding program. ConnectME was established by Act of the Maine Legislature in June of 2007, in response to the focus on rural broadband issues placed by Governor John E. Baldacci for much of his tenure.

Quoting verbatim a message sent by ConnectME this afternoon, May 1, 2009, relays the following information:

"On behalf of the ConnectME Authority I am pleased to announce the third grant round of our funding program. We are looking for creative solutions for expanding affordable broadband service to the unserved areas of Maine. For this round, we are requesting smaller, more focused proposals than in previous grant rounds, with a suggested grant limit for each project of $100,000, funding no more than 50% of the total project, while recognizing that we can be flexible for exceptional proposals.

Attached is the announcement of the opening of this grant round that provides instructions for the pre-application letter due June 1, 2009. The letter is also posted to our website in PDF and MS Word."

The grant announcement message is signed by Mr. Lindley, with the following contact information:

Phillip Lindley
Executive Director
ConnectME Authority
138 State House Station
Augusta, ME 0433-0138
P: (207) 624-9970
C: (207) 441-0498

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