Results tagged “broadband grants”

December 29, 2009 11:57 PM

First Round of BTOP Grant Awards Show Some Solid "WINS"

Earlier this month, on December 17th, the White House announced the distribution of the first round of Recovery Act broadband grant awards. Notably, of the $183 million in broadband grant awards to be awarded by the Department of Commerce (through the NTIA) and the Department of Agriculture (through the RUS), the NTIA awarded over $120 million toward wholesale, "middle mile" infrastructure.  A short summary of the NTIA awards, including the "middle mile" projects is available here.

The reason that I highlight the NTIA's decision to devote the bulk of its funds to wholesale infrastructure supply projects is that--as I explained back in April--I truly believe that this approach is the best way to do a job that is extremely difficult to do well.  The Recovery Act requires both the NTIA and the RUS to distribute a very large amount of money in a very short period of time.  While the Recovery Act does contain policy guidance to the awarding agencies, and some built-in safeguards, such as limiting the federal government to funding, at most, 80 percent of a project's cost (unless the grantee obtains a waiver from the awarding agency), the responsibilities charged to the NTIA and the RUS are still formidable.

The combination of: 1) direct aid (grants, not loans), 2) the sheer amount of that direct aid (a little less than $6.5 billion in "unrestricted" grant funds, and a total of $7.2 billion in total funds), 3) being distributed by government bureaucracies, 4) in a very short time period (by September 30, 2010) makes the job of efficiently distributing the grant money extremely difficult.  Adding to the difficulty of efficiently distributing the broadband grants is the fact that the agencies have little objective tools--such as the "broadband map" (my thoughts here)   authorized by the Recovery Act, but not required to be completed until after the grant funds are required to be awarded (the map must be completed 2 years after adoption of the Recovery Act--February 17, 2011--though, as noted, the awards must be completed by the end of fiscal year 2010).

In my April post, I argued that Wholesale INfrastructure Supply projects ("WINS") were the best way for the agencies to allocate discretional grants in the allotted time, because allocating grants to wholesale infrastructure providers allows the agencies to transfer the even-more-difficult job of identifying unserved, existing demand to the most efficient prospective suppliers.  The attempt at creating my own acronym was, admittedly, weak (like, "wow-that's-weak" weak), and maybe the idea itself was obvious--but even "obvious" good ideas are not always embraced by the government.  

This is why I really think the NTIA got it right by allowing itself a lot of discretion to fund "broadband infrastructure projects" (without any more specificity), and then by pushing more funds into wholesale-oriented projects.  Multi-party, combination wholesale/retail ("middle mile"/"last mile") projects benefit from the ongoing incentives of the wholesale provider to: 1) stimulate output by seeking out new wholesale customers, as well as 2) monitor its retail partners success in increasing and promoting retail penetration.  These projects offer the promise of being easier to "generically" identify and to police on a forward-looking basis than more "unique" projects.  

Continue reading First Round of BTOP Grant Awards Show Some Solid "WINS"
April 16, 2009 5:32 PM

Broadband Grant Derby: And the Winner Is . . . The Rural LEC! (Unless . . .)

After diligently not poring over the many ( no doubt, well thought out) Comments submitted Monday to the NTIA in response to its request for comments on its implementation of the Broadband Technology Opportunities Program, and casually perusing the FCC's Notice of Inquiry ("NOI") regarding a "National Broadband Plan", I can now tell you the answer to who gets the $7.2 billion in broadband funds.  The winner is  . . . the same firms who now take the majority of the USF high cost/low income fund:  the rural LECs and their progeny. 

How do I know?  Because the politics haven't changed, and when big, entrenched interests are at stake, the status quo is the safest course of action. When I say the "winners" are the "rural LECs", I mean no disrespect at all toward the firms that I generically paint with that label; it's just a shorthand way of referring to the firms that are currently subsidized via the USF high cost fund.  My only point is that firms respond to incentives, and firms that currently benefit under the status quo will continue to prosper, because it seems unlikely that the regulation-related incentives will even be clarified any time soon, much less changed in a way designed to promote financially-risky broadband deployment.  Said differently, for all the questions the FCC asks in its NOI, the key to the success of the broadband stimulus grants (or any other broadband plan) hinges on the one key question that the Commission declined to ask, much less address: the jurisdictional classification of VoIP.

Continue reading Broadband Grant Derby: And the Winner Is . . . The Rural LEC! (Unless . . .)