First round of U.S. broadband stimulus funding draws deluge of applications

It's a good thing the Obama administration sees the $7.2 billion in grants and loans for broadband infrastructure allocated in the American Recovery and Reinvestment Act of 2009 (ARRA) as a mere down payment on building out the nation's incomplete telecommunications infrastructure.

The two federal agencies overseeing the disbursement of the funding -- the Commerce Department's National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) -- announced today they received proposals requesting seven times the $4 billion set aside for the first funding round. Two more rounds later this year and early in 2010 will dispense the balance of the allocated ARRA funding.

Link to the agencies' press release here.

Universal broadband could "change face of Britian as we know it"

Universally available high speed Internet connectivity would redistribute Britian's population and alter its economy, according to a study reported today by Sky News.

The report also revealed that UK businesses could save up to £31.7bn, if more people were able to work from home.Robert Ainger, Orange's director of corporate business said: "The long-entrenched domination of the South East in Britain's economic structure could at last be coming to a close, with many workers wanting to trade their city lives to work from more rural and idyllic parts of the country."Our report reveals that a digitally connected country could change the face of Britain as we know it."

The findings could have even larger implications for the United States as advanced telecommunications infrastructure is more widely built out.

Socio-economist Jack Lessinger predicted in his 1991 book Penturbia: Where Real Estate Will Boom After the Crash of Suburbia that Americans would emigrate from large metro area suburbs for smaller towns outside of metro areas. Around the same time, early proponents of telecommuting or telework -- your blogger among them -- began to see how telecommunications could fuel the trend that same way freeways fed the surburban boom immediately following World War II.

FCC wants comment on defining broadband

The Federal Communications Commission has issued a public notice requesting comment on how it should define broadband, a question that arose not long before the Obama administration assumed office at the start of the year. The notice contains a caveat on focusing on throughput speed:

Much of the discussion of any proposal to define “broadband” tends to center on download and upload throughput. Download and upload throughput are important, but neither is precise or diverse enough to describe broadband satisfactorily.

Indeed. The issue isn't broadband itself, but the poor state of the U.S. telecommunications infrastructure that has tended to keep the focus on speed and latency, largely because it's so lousy in much of the nation that its ability to deliver what could even be charitably described as broadband is sketchy and often nonexistent.

Broadband should be instead be defined as fiber infrastructure to the premises. As the FCC notice suggests, any definition based what the pipes can carry rather than the pipes themselves will devolve the discussion into a "how many angels can dance on the head of a pin?" debate and result in the the lowest possible standard chosen in order to dispose of the question in the most politically expedient manner.

Fiber is proven technology and remains the most obsolescence proof advanced telecommunications infrastructure going to best accommodate the growing volume of bandwidth hungry applications and multiple services.

Second NOFA for broadband stimulus funds should include seed funding for telecom coops

Cooperatives are in the news a lot this week. Specifically, health care cooperatives as a more politically palatable alternative to a Medicare- like government insurance "public option" plan that is generating a lot of controversy as Congress crafts an overhaul of private U.S. health care finance.

Sen. Kent Conrad (D-N.D.) is currently fleshing out the concept, which would reportedly include about $6 billion in seed funding to help the health care cooperatives get up and running.

As the National Telecommunications and Information Administraiton (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) prepare the Notice of Funds Availability (NOFA) for the second round of federal economic stimulus subsidies for broadband infrastructure this fall, they should include a similar provision for telecom consumer coops. Getting adequate funding and/or loan guarantees to cover the not insignificant cost of experts and consultants to put together a preliminary network design and business case analysis/long range business plan in time to meet the NOFA application deadline can be an insurmountable hurdle for coops that might otherwise propose solid plans to better connect areas that are unserved or underserved when it comes to broadband.

The guidelines for the first NOFA (applications are due this week) allowed for up to five percent of project planning costs to be refunded -- but only if the project is approved. However, that creates a Catch-22 for coops since they can't even develop a proposal that meets the NOFA requirements without these costs covered at the outset, which means a lot of potentially meritorious projects could fall by the wayside.

The second NOFA should include a preliminary step to allow telecom coops that have or have applied for 501(c)(12) tax exempt status to apply for grant funding or loan guarantees to cover project planning costs on the condition that they engage qualified consultants on an arms-length basis and put forth a good faith effort to complete the work within a relatively short period of time (60 days, for example).

They would then have to propose their projects immediately thereafter if the planning work shows the proposed project would meet the NOFA guidelines and be economically sustainable. If the project turns out not to be so based on preliminary design and business planning, that would give coops the opportunity to tweak their proposals to comply with the guidelines or drop them, saving both them and the federal agencies the time and effort of reviewing unfeasible proposals.

Full disclosure: Your blogger is founder and president of a startup telecom cooperative in El Dorado County, California.

Big telcos, cablecos say no thanks to broadand stimulus funds

This week saw the nation's three big telcos (AT&T, Verizon, Qwest) and the dominant cable company issue a firm "no thanks" to the $7.2 billion in broadband infrastructure grants and loans in the American Recovery and Reinvestment Act.

The San Francisco Chronicle reports AT&T, Verizon and Comcast say they are flush with cash to upgrade and expand their networks on their own and don't need the money. They also don't like the conditions attached to the funding, fearing it would create regulatory precedents that would threaten their closed, proprietary networks. "We are concerned that some new mandates seem to go well beyond current laws and FCC rules," said Walter McCormick, president of USTelecom, a trade group that represents telecom companies including AT&T and Verizon, is quoted as saying.

This is all well and good. Subsidies should be directed to smaller providers, local governments and cooperatives who have a greater commitment to their local areas and can likely do a far better job than the big guys.

Migration of boomers to Penturbia will boost small town broadband

The Daily Yonder has an interesting item in today's issue that lends credence to Jack Lessinger's prediction two decades ago that America is poised to enter its fifth major settlement pattern. This fifth era -- dubbed Penturbia by Lessinger in the title of his 1990 book on the topic -- will be marked by a shift away from metro areas and suburbs to less populated smaller towns outside of metro areas.

The Daily Yonder story cites a U.S. Department of Agriculture Economic Research Service forecast that the baby boomers -- a hugely populous demographic group -- will shun the burbs in favor of Lessinger's Penturbs. A big draw will be natural amenities, which a map accompanying the article shows are primarily in the western U.S.

This is also where the nation's telecommunications infrastructure is least likely to offer broadband and other advanced telecommunications services, services the boomers are likely to expect and demand but telcos and cable companies have found difficult to profitably provide there. An influx of boomers could change those economics. And where the providers won't upgrade or expand their infrastructures, look for the boomers to form telecom cooperatives and do the job themselves.

Promises, promises: FCC building record to rebut telco broadband deployment claims

Federal Communications Commission Chairman Julius Genachowski is ramping up his agency's work on a national broadband deployment plan due six months from now as required by the American Recovery and Reinvestment Act of 2009.

As the plan is developed, the FCC will be heavily lobbied by telcos and given assurances the companies will be building out advanced telecommunications infrastructure and turning up service pronto, as one failed AT&T deployment scheme that turned out not to be such was dubbed. Therefore, the pitch will go, the best national plan is no plan. Just leave it to us and we'll get 'er done.

But such platitudes aren't satisfactory to FCC officials, who have publicly complained they have received too much empty rhetoric and not enough substantive input in response to the agency's call for industry and public comment on what a broadband plan for the United States should include.

Being a careful, methodical lawyer, Genachowski is already building the record to rebut industry puffery with facts. Multichannel News reports the FCC has retained the Columbia Institute for Tele-Information (CITI) at Columbia's Business School in New York, to fact check previous broadband deployment capital expenditure claims of telecom companies.

"CITI will provide an analysis of the public statements of companies as to their future plans to deploy and upgrade broadband networks," Multichannel News quoted the FCC as saying, "as well as an historical evaluation of the relationship between previous such announcements and actual deployment."

Little upside, major downside risk for incumbents challenging proposed broadband stimulus projects

There's an increasing amount of speculation in cyberspace that incumbent telcos and cable companies could opt to exercise a broadband black hole preservation provision in the rules governing the first round of federal broadband stimulus funding applications due Aug. 14. The provision allows incumbent providers to challenge proposed projects in their territories as not meeting the criteria of "unserved" or "underserved" areas under the rules.

Already law firms are warning incumbents that these projects could infringe on their footprints in thinly veiled inducements to challenge or litigate against them. As with lawsuits by incumbents against local governments that have proposed their own fiber to the premises deployments, the goal isn't to prevail on the merits but rather to delay and buy time. Moreover, while the rules place the burden of proof on incumbents to demonstrate a proposed project encompasses census blocks that aren't unserved or underserved, it's likely to be very difficult for project proponents to rebut the incumbents since the rules don't require incumbents to make their own deployment data publicly available.

The problem for the incumbents is that buying more time won't help them since their infrastructures are already built out to the extent their business models permit. Challenging proposed broadband stimulus projects has little upside and significant downside risk: fueling negative public perception and increased scrutiny from regulators likely to view such conduct as monopolistic and contrary to current federal policy to expand broadband access.

New FCC chair must consider alternative business models for telecom infrastructure

Newly minted Federal Communications Commission Chairman Julius Genachowski has kicked off a major initiative to get the United States' telecommunications infrastructure upgraded so that it can deliver broadband to all Americans.

In meetings with newspaper editorial boards, Genachowski noted 40 percent of U.S. households don't subscribe to broadband. "That's not where you want to be on something that we think is a core infrastructure for the United States," he told reporters and editors of the San Jose Mercury News this week. "And I think it is. Broadband will be our platform for commerce, for democratic engagement, and for addressing a whole series of vital national priorities."

To accomplish his goal of full build out of advanced telecommunications infrastructure, Genachowski, who is to present a plan to Congress in February to make it happen, will clearly have to consider alternative business models. The current model in which most telecom infrastructure is held by large publicly traded corporations cannot because it lacks sufficient patient capital to make the necessary investment. These companies can play an important role in providing long haul Internet backbone and much of the middle mile infrastructure. But to ensure last mile access, nonprofit telecommunications cooperatives, small local providers and local governments will have to play the same role they did in the early part of the 20th century where they provided electrical, water and telecommunications infrastructure where shareholder-held companies could not profitably do so.

Genachowski should also recommend Congress put in place incentives to help bridge the last mile gap such as tax breaks allowing property owners to deduct initial costs they would pay to join telecom cooperatives offering fiber connections to their properties.

California local governments, nonprofits eligible for 90% broadband stimulus subsidization

California local governments and nonprofit entities that can successfully navigate the complex, 121-page set of rules governing the first round of grants providing up to 80 percent subsidization of broadband infrastructure build outs under the National Telecommunications and Information Administration's Broadband Technology Opportunities Program -- and do so in the just two weeks remaining before the Aug. 14 application deadline -- could get as much as 90 percent of their project costs subsidized.

To leverage the federal broadband stimulus funds, the California Public Utilities Commission had previously approved an order expanding its subsidy program for broadband infrastructure, the California Advanced Services Fund, to provide up to half of the 20 percent match required of regulated telecom providers proposing BTOP projects.

Expanding the CASF funding to include local governments, telecom cooperatives and other non commercial providers required legislative authorization. Gov. Arnold Schwarzenegger signed the legislation, AB 1555, into law July 29. An urgency measure, the bill takes effect immediately.

It remains to be seen if any such projects will be proposed given BTOP rules that make it difficult to qualify projects and give incumbent providers effective veto power, particularly in areas deemed "underserved" under the guidelines.

Jump in online video calls for higher FCC minimum broadband definition

PC Magazine reports this week on a survey by the Pew Internet & American Life Project that found the percentage of adults who watch video online has nearly doubled since 2006, up to 62 percent versus 33 percent in December 2006.

The item underscores the inadequacy of the current minimum definition of broadband of at leasat 768 Kbs download standard adopted by the U.S. Federal Communications Commission, which has also been written into the rules governing the disbursement of $7.2 billion in federal economic stimulus funds for broadband infrastructure. That speed isn't going to hack it for video, which most observers agree is the fastest growing form of online content.

The 768 Kbs standard also represents a huge step down from the speeds Congress contemplated in a January draft version of the American Recovery and Reinvestment Act as minimally defining wireline broadband of at least 5 Mbs download and 1 Mbs uploads and 45 Mbs on the downside and 20 Mbs up for "advanced" wireline broadband.

Under the stimulus legislation, the FCC is required to develop a national broadband plan and present it to Congress next February. The agency should dispose of its outdated definition of broadband and instead adopt the minimum standards outlined in the draft stimulus legislation as they are better matched to meet the growing bandwidth requirements of online video.

U.S. broadband stimulus rules favor telco/cable duopoly, turn back clock to 1998

Take a look at Christopher Mitchell's critique of the Notice of Funds Availability (NOFA) issued at the beginning of the month by the National Telecommunications and Information Administration (NTIA) for the first round of grants and loans to subsidize broadband infrastructure allocated in the American Recovery and Reinvestment Act (ARRA).

Mitchell's complaint is rather than getting the United States on a path toward upgrading its obsolete copper-based telecommunications infrastructure to modern fiber optic-based networks owned by local governments and community-based organizations, the rules instead instead favor incumbent private sector providers and effectively revert to the status quo of a decade ago. That's directly at odds with the intent and language of the ARRA, Mitchell asserts, suggesting the rules will require additional future government subsidies since they encourage construction of on the cheap, technologically obsolete telecom infrastructure in a race to the bottom rather than the top.

Here's an excerpt from Mitchell's How the NTIA Dismantled the Public Interest Provisions of the Broadband Stimulus Package:

NTIA has charted a path to bring the slowest networks to people who live in areas that are the most uneconomical to reach. Rather than doing it right the first time (i.e. a strategy that starts with modern speeds and identifies an upgrade path moving forward), NTIA’s path will likely expand 1998-era networks, certainly requiring future appropriations to bring residents to networks with contemporary speeds.

Mixed messages inside a broadband black hole

Life can be odd inside a broadband black hole where the normal laws of logic and common sense get twisted and break down.

Consider, for example, today's mail delivery. It contained the contradictory mix of 1) A letter soliciting Comcast Business Class service, a $79/month bundle of "business class Internet up to 4 times faster than DSL." (Query: how can it be compared to a nonexistent service -- no DSL here) and 2) A big postcard from HughesNet addressed to "DIAL UP INTERNET HOUSEHOLD" inviting me to suck a satellite to get speeds "50X FASTER than dialup." (Thanks but I'll pass).

Two direct mail solicitations: One from a provider that can't deliver what it pitches (Comcast) and another selling a costly, latency larded service (HughesNet) that could be more aptly dubbed MolassesNet.

Somehow these companies don't have their marketing campaigns straight. It's no wonder the government wants to map broadband availability because apparently the providers themselves are confused.

After 13 months, persistent Firefox/My Yahoo! bug finally squashed

After nearly 13 months -- longer than the lifespan of most biological insects -- a persistent bug in the interaction of the Firefox browser and the My Yahoo! home page has finally been squashed. This blog first wrote about the issue last September, which surfaced when Yahoo did a forced upgrade to a new home page.

The problem: when Firefox users clicked on an article on the home back and then attempted to navigate back to their My Yahoo! home page, they would lose their place on the home page which would reset to the top of the page. They then had to scroll down the page to find where they left off, making for a very kludgy browsing experience.

With the recent release of the latest version of the browser, Firefox 3.5, the problem appears to have been finally resolved.

U.S. residential DSL access shows no gain since 2006

U.S. residential DSL availability in the first half of 2008 continued to show no increase since it virtually hit the wall in 2006, with about a fifth of the nation still unable to access it.

That's pretty much the same story reported on this blog back in January based on Federal Communications Commission data covering the previous six-month period of July to December 2007. Readers can see for themselves by looking at the first column of Table 14 in the latest FCC report on Internet access released last week.

The same states continue to rank low on residential DSL access, including Vermont, Virginia, New Hampshire, Maine Michigan, Mississippi, Maryland and New York. The FCC withheld DSL availability for some states including Delaware, Massachusetts, Rhode Island, and Hawaii citing "firm confidentiality."

This redaction and other mechanisms to obfuscate where broadband infrastructure deployment exists and where it doesn't are increasingly cropping up at a time when government initiatives to increase broadband access demand greater transparency. It will be interesting to see how federal and state governments resolve this fundamental conflict.

Memo to RUS and NTIA: Proposed revisions for broadband stimulus funding rules

The two agencies administering rules governing the disbursement of $7.2 billion of grants and loans for allocated for broadband infrastructure construction in the American Recovery and Reinvestment Act -- the Rural Utilities Service and the National Telecommunications and Information Administration -- should revise the guidelines as follows:

1. Liberalize the rules to encourage consumer telecom cooperatives, recession ravaged local governments and small local fiber providers to propose projects. While the guidelines for the first round of applications issued July 1 allow up to five percent of application preparation costs (e.g. infrastructure engineering, development of minimum 5-year business plan) to be awarded in grants and/or loans, only projects accepted for funding can get these substantial costs credited back. This creates sizable up front risk and funding hurdles that discourage infrastructure builds by non-incumbent entities and providers. Revise the guidelines to include loan guarantees for engineering and business planning for projects that demonstrate good faith, diligent planning work. Doing so will encourage more projects and also help weed out those that seem like a good idea but won't pencil out.

2. Don't require non incumbent providers to be census takers and go door or door to document the level of broadband availability and adoption in census blocks comprising their proposed projects. That's a job for the Census Bureau and introduces cost and delay that are contrary to the stimulus funding goal of rapid deployment of broadband infrastructure.

3. Lose the broadband black hole preservation provision in the current rules that allows incumbent providers to challenge proposed projects. Also trash a provision in the definition of "underserved" areas deeming these areas as such if no wireless provider merely advertises service with at least 3MBs download connectivity. Both of these provisions will only introduce delay and may lead to litigation that's at cross purposes with the speedy build out of broadband infrastructure.

Minnesota municipalities don't like broadband stimulus rules

The Minneapolis StarTribune.com reports Minnesota municipalities are having second thoughts about applying for some of the $7.2 billion in taxpayer subsidized grants and loans allocated in the federal economic stimulus package for broadband infrastructure construction.

The reason is the 121 pages of guidelines issued July 1 by the two federal agencies that will review and determine which projects get funded require applicants to conduct door to door censuses of their proposed project areas to determine if the census blocks contained in their contemplated project areas qualify for funding under the rules' definitions of what constitutes an unserved or underserved census block. Skipping this step could jeopardize a project since it could be rejected outright by the agencies for lack of required documentation of need or challenged by incumbent providers as permitted under the guidelines.

An excerpt from the article:

The problem, as city and county broadband planners see it, has less to do with technology than with the sheer legwork required to create an acceptable proposal.

Applicants must prove that all the areas they propose to serve would meet a narrow federal definition of being underserved -- that 50 percent or more households in the area lack broadband access, or that fewer than 40 percent of the households already subscribe to broadband. That puts the burden on cities and counties to undertake expensive and time-consuming door-to-door surveys, because telephone and cable companies don't reveal which areas they serve.

The Minnesota munis' concerns are understandable. They don't see themselves as being in the census business. Conducting a door to door survey is a costly and time consuming task that means many prospective applicants have concluded there's no way they can submit project applications to the agencies by the Aug. 14 deadline for the first round of funding.