Government funded info tech, telecom spending as potential economic elixir

This item in today's L.A. Times paints a bleak outlook for the U.S. economy during Barack Obama's four-year presidential term that begins tomorrow. Additionally, investment in information and telecommunications technology has remained weak since the 1999 dot com bust and the 2001-02 recession, the article notes, suggesting goverment spending in this sector could help stimulate the overall economy.

Broadband infrastructure provisions of U.S. economic stimulus legislation

The House Appropriations Committee has released a draft of the economic stimulus legislation titled the American Recovery and Reinvestment Act of 2009 appropriating $6 billion in loans, loan guarantees and grants for the build out open access broadband telecommunications infrastructure.

Slightly less than half of the funds will be directed to the Rural Utilities Service prioritizing rural areas that received funding for electrification under the Rural Electrification Act of 1936. The Secretary of Agriculture would determine which rural areas lack sufficient access to high speed broadband service.

The balance of the funding would be directed to a State Broadband Data and Development Grant Program administered by the National Telecommunications and Information Administration. (NTIA) $1 billion would be allocated to wireless and $1.85 billion to wireline broadband; up to 20 percent could be shifted between wireless and wireline.

Within 75 days of the proposed legislation's enactment, states desiring access to funding would be required to submit reports to the NTIA identifying areas with the greatest need for broadband infrastructure. States would be required to identify those areas that lack basic wireline broadband -- defined asymetrically under the measure as capable of providing throughput of at least (not "up to") 5 Mbs download and 1 Mbs upload -- and advanced wireline broadband -- defined asymetrically as 45 Mbs download and 20 Mbs for uploads. Both voice only and advanced wireless telecommunications infrastructure are eligible for funding, however 75 percent would be set aside for advanced wireless infrastructure in capable of providing broadband connectivity of 3 Mbs down and 1 Mbs up.

Lacking from the throughput requirements for both wireline and wireless broadband are latency standards, which should be a maximum of 50-60 milliseconds.

Notably, entities eligible for grant funding include private providers of broadband services, states, local governments and other entities as authorized by the NTIA. The measure requires the agency to adopt rules to prevent unjust enrichment of grant recipients including meeting build out requirements for proposed projects.

The bill leaves it to the Federal Communications Commission to define broadband ‘‘unserved" and "underserved" areas as well as what constitutes open access broadband infrastructure. I would suggest that it be defined to mean the opposite of the proprietary broadband infrastructure owned by the large telcos and cable companies that has been only partially built out, leaving gaping broadband black holes and lack of access to modern IP-based telecommunications services. As World Wide Web creator Vint Cerf observed in 2008, these providers have impeded the expansion of broadband since they have large amounts invested in legacy infrastructure that was never intended for broadband and IP-based services.

Economic stimulus measure includes $6 billion down payment on U.S. broadband infrastructure

The House Appropriations Committee today released an outline of the economic stimulus funding bill being readied for President-elect Barack Obama's signature after he takes office next week.

The American Recovery and Reinvestment Bill of 2009 will include $6 billion in grants earmarked for broadband and wireless services in underserved areas of the nation "to strengthen the economy and provide business and job opportunities in every section of America with benefits to e-commerce, education, and healthcare." The summary of the stimulus measure estimates that the $6 billion investment in broadband will produce a $60 billion multiplier effect for the nation's struggling economy.

This is just for starters. Blair Levin, a technology advisor to the incoming president, told the State of the Net Conference in Washington Jan. 14 that the $6 billion being set aside for broadband in the stimulus legislation represents only a portion of the incoming administration's planned efforts to boost broadband deployment in the U.S.

Update 1/16/08: For details on how the funding is parsed out, here's what I've obtained from the actual draft legislation.

Fiber infrastructure build out -- not throughput speed-- should be focus of planned stimulus funding

The Washington Post reports today a debate is brewing over how broadband should be defined under the incoming Obama administration's goal to fund new broadband telecommunications infrastructure as part of its planned economic stimulus package. Specifically, the debate is over what level of throughput defines broadband.

Throughput speed is not the issue. Building out fiber optic infrastructure over the local access network -- the so-called "last mile" -- is. Fiber provides a proven, future proof technology that can accommodate the rapidly increasing demand for bandwidth needed by video and other bandwidth-intensive applications. Art Brodsky of Public Knowledge correctly observes in the Post article that providing stimulus funding to telcos for increasingly obsolete metal wire-based broadband services would turn into a wasteful boondoggle.

History supports Brodsky's warning. The bell companies that today comprise AT&T, Verizon and Qwest were to have built out their networks with the tax incentives provided more than a decade ago under the Telecommunications Act of 1996 to provide fiber connections to all homes and businesses by 2006. They didn't. Consequently, the U.S. suffers with incomplete telecom networks that leave millions unable to get decent Internet access more than a decade after the law's enactment. Repeating this error would ignite a race to the bottom and leave the U.S. even further behind other developed nations when it comes to broadband Internet access and modern IP-based telecommunications services.

Rather than large telcos and cable companies, economic stimulus funding should be directed to local entities including for profit companies, nonprofit cooperatives and local governments to construct fiber optic infrastructure over the critical but long neglected last mile.

Minnesota muni fiber project prime example of where broadband infrastructure stimulus funding should go

Blandin on Broadband tipped me to this municipal fiber project whose $18.5 million bond financing goes before North St. Paul, Minnesota voters next month.

It's a prime example of where the new Congress and the incoming Obama administration should be directing economic stimulus infrastructure funding. Federal funding would help reduce the financial risk of these municipal fiber projects by helping them cover their start up costs sooner while creating badly needed jobs and stimulating electronic commerce.

North St. Paul City Manager Wally Wysopal has the right idea in suggesting this isn't simply about filling in broadband black holes but instead is putting in place vital telecommunications infrastructure that can meet the city's needs going into the future. This approach is far superior to simply playing catch up by wasting stimulus funding on rolling out increasingly obsolete copper cable-based DSL that should have been more widely deployed years ago under the incentives and tax breaks of the 1996 federal Telecommunications Act.

"The idea here is to become the best-connected small town in Minnesota," Wysopal told the TwinCities.com Pioneer Press. "We're not getting into this for the sake of providing lower rates for cable or telephone but to provide a service that's superior to anything that's being contemplated today."

Obama calls for U.S. broadband build out

Here's the relevant passage from a speech U.S. President-elect Barack Obama delivered Thursday on his proposed American Recovery and Reinvestment Plan:

To build an economy that can lead this future, we will begin to rebuild America. Yes, we’ll put people to work repairing crumbling roads, bridges, and schools by eliminating the backlog of well-planned, worthy and needed infrastructure projects. But we’ll also do more to retrofit America for a global economy. That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation. It means expanding broadband lines across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.

The President-elect raised the issue again two days later in his Saturday, Jan. 10 radio address:

We’ll put nearly 400,000 people to work by repairing our infrastructure – our crumbling roads, bridges and schools. And we’ll build the new infrastructure we need to succeed in this new century, investing in science and technology, and laying down miles of new broadband lines so that businesses across our nation can compete with their counterparts around the world.