Government Enforces the Status Quo With Broadband Stimulus Bucks

[qi:101] The two national agencies responsible for allocating $7.2 billion in broadband grants as part of the stimulus bill today released the rules governing the process and said the government would provide about $4 billion in loans for the first of three funding rounds. That money will start flowing to projects in November. It’s a bittersweet moment for folks hoping for better broadband in the U.S., as the rules don’t mandate faster speeds or abide by current net neutrality regulations, but will send a lot of money to both states and private companies hoping to build out Internet access.

First off, the definition of broadband in the rules is set in the last century — defining it as advertised speeds of 768kbps down and 200kbps up. Senior administration officials said on a conference call today that the broadband bar was set low in order to ensure that difficult terrain and sparsely populated areas of the country could still apply for grants. Since I’ve written about satellite providers that can deliver 1.5Mbps down (or at least advertise that they do), I’m not impressed with this reasoning.

However, a senior official said that applications for funds will be judged on the speeds they offer, so presumably, a firm offering a fiber connection to the same amount of people may fare better than a project that is pushing DSL, but multiple other factors such as cost will come into play. As for net neutrality, the rules state that all of the projects will have to at least meet the net neutrality guidelines set forth in the FCC’s 2005 broadband policy statement, which may anger some ISPs. It’s unclear, however, if projects will be held to the standards of any future net neutrality proposals that may be adopted.

The rules do allow broadband money to go to private companies as well as nonprofit agencies (at one point, there were concerns that only nonprofits would reap the cash), but individual states will have the chance to vet projects and submit feedback on them. The agencies will also split their funding between underserved and unserved areas, which was another big point of contention.

So let’s do a quick breakdown here of how the first wave of funding will play out. The Department of Agriculture has $2.3 billion it plans to allocate through the Rural Utilities Service: $400 million in grants and $800 million in grants and loans will be allocated toward last-mile services that connect to a consumer’s home; $800 million in loans and grants will be available for the middle mile; and $325 million will be kept in reserve to fund worthy projects in either of the above categories. RUS grants will go only to rural, remote and unserved areas, while loans will go toward rural, remote and non-remote, underserved areas.

The National Telecommunications and Information Administration has $1.6 billion it plans to dispense as grants, with $1.2 billion allocated to provide last- and middle-mile services to unserved and underserved areas that meet one of several possible criteria, $50 million for computer centers, $150 million to drive broadband demand, and $200 million held in reserve to spread among the three segments if needed. Applications will be accepted between July 14 and Aug. 14, and finalists will be chosen by Sept. 15. The money will start flowing to accepted projects by Nov. 7.