Wednesday, July 01, 2009

Much anticipated broadband economic stimulus rules released

The U.S. Department of Agriculture's Rural Utilities Service and the Department of Commerce's National Telecommunications and Information Administration's much anticipated regulations governing disbursement of $7.2 billion allocated for broadband telecommunications infrastructure in the federal economic stimulus bill enacted in late February were issued today.

At 121 pages, the rules are mind numbingly complex. They're also certain to disappoint many by adopting the Federal Communications Commission's wimpy standard of broadband of just 768 Kbps downstream and 200 Kbps upstream that's inadequate to deliver even low quality video.

"RUS and NTIA favor this broadband speed threshold because it leverages the FCC’s expertise, utilizes an established standard, facilitates the use of many currently common broadband applications (e.g., web browsing, VOIP, and one-way video), allows for consideration of cost-effective solutions for difficult-to-serve areas, and is the most technology-neutral option because it encompasses all major wired and wireless technologies," the two agencies explain in an appendix to the rules. "For these same reasons, RUS and NTIA decline to impose a latency requirement or technology-specific definitions."

That's quite a 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. Wireless providers would have had to provide connectivity of 3 Mbs down and 1 Mbs up under the draft legislation that set off howls of protest from both incumbent wireline providers as well as wireless broadband providers complaining those standards were simply too tough to meet. The good news is the RUS and NTIA will give bonus points to projects that will offer higher speeds and an upgrade path to them. And point demerits are given for high latency.

The rules also define another controversial aspect of where the funds will go: areas considered unserved for broadband and underserved. The former is defined as one or more contiguous census blocks where at least 90 percent of households lack access to facilities-based, terrestrial broadband service, either fixed or mobile.

Underserved gets a bit more complex. The rules define it as one or more contiguous census blocks where one or more conditions exist: 1) No more than 50 percent of the households in the proposed funded service area have access to facilities-based, terrestrial broadband service (presumably including fixed terrestrial wireless); 2) No fixed or mobile broadband service provider advertises (yes, advertises, believe it or not) broadband speeds of at least 3 Mbs down and; 3) The rate of broadband subscribership is 40 percent of households or less.

Buried deep inside the rules at page 72 is a troubling broadband black hole preservation provision. It essentially gives incumbent providers (read the telco/cable duopoly) the power to effectively veto or at least delay the award of grants and loans for broadband infrastructure projects proposed by smaller players, local governments and telecom consumer cooperatives. Proposed project areas are publicly disclosed under the regulations. If an incumbent provider doesn't like what it sees, it can file its own application and challenge the upstarts by claiming their project proposes to serve an area that's neither unserved nor underserved.

"If the information submitted by an existing service provider establishes that the applicant’s proposed funded service area is not underserved, both RUS and NTIA may reject the application," the rules state. Moreover, the rules exempt existing providers from the requirement they publicly disclose the area to be served by their projects as well as the tight application timeframe governing other proposed deployments.

The window for this first round of applications is narrow indeed: just one month between July 14 and Aug. 14 after which the bulk of the funding --$4 billion of the $7.2 billion total -- will be awarded. The balance will be disbursed in two follow on rounds of funding with all $7.2 billion due out the door by Sept. 30, 2010. That means those seeking the funds will have to act very quickly to get their applications in order and gather the large amount of information required under the highly data driven, two-step application process.

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