Sunday, July 12, 2009

Ironically, some broadband stimulus projects may need stimulation of their own

Grants and loan subsidies totalling $7.2 billion in the Obama administration's economic stimulus package are aimed at "shovel ready" broadband telecommunications infrastructure projects that can generate employment and do so quickly while expanding access to broadband .

Project plans that have already been drawn up and have been sitting on the shelf and not proceeding but for sufficient capitalization will likely be the only ones that will be able to meet the fast approaching Aug. 14 deadline for the first round of funding under rules developed by the two federal bodies administering the funds, the Dept. of Agriculture's Rural Utilities Service (RUS) and the Commerce Department's National Telecommunications and Information Administration (NTIA).

However to qualify for subsequent rounds of funding, start up projects -- particularly those proposed by nonprofits and telecommunications cooperatives -- ironically face significant financial hurdles just to get their stimulus funded project proposals ready. That's because the funding application guidelines jointly issued by the RUS and the NTIA and published last week in the Federal Register require extensive preparation including the foundational step of identifying contiguous census blocks that fall within the guidelines' definition of "unserved" and "underserved" when it comes to broadband access. And that doesn't include the actual project network plan that in the case of a project that will cost more than $1 million or more to build requires retaining professional engineering consultants to review and sign off on the build.

Both of these pre-build steps can run anywhere from $30,000 to $100,000 and potentially far more depending upon the size and scope of the proposed project. While the rules allow these application preparation costs to be reimbursed should a proposed project be approved for funding, raising these sums on the front end with no guarantee of reimbursement given both the complexity of the rules as well as likely challenges of proposed projects by incumbent providers as specifically provided under the guidelines could prove to be an insurmountable hurdle for projects by telecom coops and cash-strapped local governments. That will lead to far fewer potentially meritorious projects being proposed than might otherwise be the case. For the next two rounds of broadband stimulus funding this fall and next year, the RUS and the NTIA should liberalize the rules to include at least some of these costs for broadband build out projects proposed by nonprofits and local governments.

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