Telecom Sense

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"

Broadband Mapping NOFA: "NOFA" Enough, But Not "BADFA" A First Try

After reading the NTIA Broadband Mapping Notice of Funding Availability ("NOFA"), it's clear that the "treasure map" I was hoping for isn't going to materialize.  However, I'm not destroyed, because--relative to my expectations, the NTIA--with one really weird exception, and another, more minor, nit--didn't do so bad at all, especially for having a limited amount of time and no confirmed leader until less than a week prior to the NOFA being released.

OK, to get us all on the same page, Congress told the NTIA to come up with a broadband inventory map when it passed the American Reinvestment and Recovery Act ("Recovery Act") earlier this year.  Prior to passage of the Recovery Act, though, Congress also instructed the Commerce Department (NTIA) to collect very similar data, and instructed other federal agencies to collect different, relevant broadband-related data, in the 2008 Broadband Data Improvement Act ("BDIA").  

Both laws, essentially, seek the same thing--a static inventory of broadband availability in America.  The NOFA requires periodic updates, so "static" isn't an entirely fair characterization, but it's not that far away.  "Backward-looking" is probably a more accurate characterization.  The ultimate "purpose" of the map can be as obvious (and useful) as just letting policymakers know who still needs access to broadband service.  Another good use of the map/data is to provide feedback on whether policies are working.  More importantly, though, the mapping data can be even more helpful to broadband penetration and deployment if it helps to eliminate information gaps/inefficiencies that prevent forces of supply and demand from working as they should.  A broadband map that helped to facilitate this intermediation function would easily pay for the $350 million allocated for the map. 

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Quoth the Banker, "Watch Cash Flow"

Whaaat?  Isn't this blog supposed to be about telecom policy?  The title of this post is from a poem by the same name originally written by Herbert S. Bailey, Jr. and published in 1975.  The poem is familiar to many, because it has found its way into successive editions of a very commonly used finance textbook.  However, when I was doing an exercise in policy issue forecasting last year, these words popped into my head, as (regrettably) a good way to read and predict government actions in the telecom policy arena.  So, read the poem - it's a good parody of "The Raven" by Edgar Allan Poe--but just keep the title in mind; it'll be a frequent source for getting some of the material you'll see in this blog.  Call it "street" political science!

Here's a short counter-example from earlier this week, and it has to do with a timely issue - the stimulus package.  The language below is verbatim from the Conference summary report on the Energy and Commerce provisions on broadband in the American Recovery and Reinvestment Bill of 2009:

Continue reading Quoth the Banker, "Watch Cash Flow"