While broadband service provider networks and utilities’ two-way smart grids belong together, the utilities are acting like a reluctant bride in an arranged marriage. Reasonable adults can see that combining the two is a good idea, but utilities and communications companies are oftentimes miles apart over standards, access and security. As a result, utilities are resisting any forced union that would involve hooking up their meters to customers’ broadband connections rather than a private network.

And that’s a shame, given how combining broadband and utility-provided smart meters could help consumers access web-based applications from Google’s PowerMeter to Microsoft’s Hohm, and to deliver innovative services such as tweets about home energy consumption. It’s also cheaper to use a home’s broadband than for a utility to build its own network. And data can be displayed to the customer a lot faster, too, because the speed of a normal broadband connection is generally faster than a utility’s private network. It can take as long as 24 hours to display the info back to the consumer on utility networks.

After reading about innovation in Germany where an electric company uses a customer’s broadband connection to help deliver intelligence about power use, I called my local utility, Austin Energy, which is considered an innovator in green energy. I wanted to find out how broadband and utility companies would deliver such services without using the same network, and why Austin Energy isn’t eager for any marriage of networks.

Andres Carvallo, chief information officer at Austin Energy, which in late summer will launch a citywide smart grid that will be able to deliver energy consumption data to subscribers every 50 minutes, says using a customer’s broadband access isn’t going to work. The Austin Energy grid uses a combination of 950 MHz wireless network and a fiber backbone. Part of the problem with using a subscriber’s broadband is that only about 80 percent of Austin Energy customers has broadband access or a broadband subscription, and the utility needs to reach everyone. The other issue is that the utility wants to control the network and information moving to and from the meter.

“The meter is the cash register for the utility,” said Carvallo, “so you have to have a reliable way of managing that cash register, and managing it everywhere — something we’re not able to do over a carrier’s broadband.”

But even if his utility isn’t eager to wed a consumer’s broadband subscription to the utility’s smart meter, he has hope that the two will be joined through other relationships. He sees a future in which a cable company or a security company might charge a consumer an extra $20 a month to monitor and manage home energy usage. Or one in which the utility will work with the Googles and Microsofts of the world to let consumers send their Austin Energy data to providers so they can manage it. Another Texas utility, TXU, provides its own tools for customers to use.

Carvallo thinks that by sharing the information flowing over its network with other providers, Austin Energy can strike a a balance between providing tools to help consumers who want to be engaged in managing their energy consumption, and not overwhelming those who could care less.

How would you like to help determine which projects will receive some of the $4.7 billion in federal funds allocated for broadband improvement around the country? Well, the National Telecommunications and Information Administration has the job for you — as a volunteer grant reviewer. That’s right, when the government wants to give out $4.7 billion (only $1.6 billion in this first round) in 14 months it has to cut some corners to make sure it can handle the load. That means bringing on citizens to review grant applications. From the letter calling for volunteers:

As a reviewer, your evaluations will be an important factor considered by NTIA in determining whether to award grant funding. To be considered as a reviewer you must have significant expertise and experience in at least one of the following areas: 1) the design, funding, construction, and operation of broadband networks or public computer centers; 2) broadband-related outreach, training, or education; and 3) innovative programs to increase the demand for broadband services. In addition you must agree to comply with Department of Commerce policies on conflict of interest and confidentiality.

Presumably the Department of Commerce policies on conflicts of interest and confidentiality excludes folks working for projects or private firms that are applying for grants. That’s good, but it probably disqualifies a lot of educated volunteers. An NTIA spokesman said the org uses volunteers to review applications for many of its grant programs, and stressed that reviewers don’t decide if the project is funded or not. Regardless, I have a lot of questions about how the process works, mainly as to the scope of a volunteer’s responsibility. Are they matching application items against a checklist, scoring items against a set list, or will they be make their own value judgments? The Department of Agriculture, which is giving out $2.5 billion, will not use volunteer reviewers.

If the NTIA gets back to me on these questions I’ll update the story. In case any of you guys are interested, I also asked how many people the program will need and how much of a time commitment it will take. You can also email the NTIA your own questions about this process at BTOPReviewers@ntia.doc.gov. If anyone steps up, all I ask is that you help spend my taxpayer dollars wisely when it comes to delivering broadband.

Updated with new maps from Akamai: Akamai, a Cambridge, Mass.-based company that has built a content delivery network that spans the globe, will soon be releasing the latest edition of its “State of The Internet” report, which looks at some of the key Internet developments, including growth in network speeds, actual connections and the number of web sites. I got an early look at the first-quarter 2009 report, from which I have cobbled together some interesting stats.

• Akamai observed a nearly 5 percent increase (from the fourth quarter of 2008) globally in the number of unique IP addresses connecting to its network. The year-over-year change was 27.51 percent, while the U.S. saw a 20 percent jump in unique IPs. China saw a 37 percent year-over-year annual gain in unique IP addresses.
• In the first quarter of 2009, one-fifth of the Internet connections around the world were at speeds greater than 5 Mbps, up 5 percent from the prior quarter and nearly 30 percent higher than the first quarter of 2008.
• WiMAX is gaining traction around the planet. Many of us focus on Clearwire in the U.S. and often overlook the growth of WiMAX in emerging economies such as Eastern Europe, the Baltics and Africa.
• Plans for four new submarine cables were announced that would bring more bandwidth to the African continent, which is also seeing a massive mobile phone boom, thus driving the need for more bandwidth. These cables include Glo-1 launched by Nigerian operators Globalcom.

Related: State of the Internet reports, Q1 2008 and Q4 2008 Report

Almost half of those currently subscribing to a mobile broadband plan are willing to cut such plans in order to make ends meet, according to research from Strategy Analytics (profiled at eMarketer). Two-thirds would keep their in-home broadband, while 48 percent would dump mobile data plans. Of course they would. Any thinking person who looks at the costs per megabyte realizes that like buying diapers in airports, you’re paying a premium for convenience. So it’s not as difficult to give these plans up when times are tough.

But those stats also make clear that the promise of ubiquitous mobile computing hasn’t become as important to the average consumer as it may be to us here at GigaOM. Simply put, plenty of people can live without constant access to the cloud. As much as we love our smartphones, mobile broadband access over a 3G network is still a luxury for most.

Indeed, paying up to $60 a month for 5 GB or $40 for around 250 MB isn’t for the faint of heart, or the thin of wallet. We’ve worried how the recession would affect mobile data plans, especially as employers stopped subsidizing them. However there are signs that wireless data may become less expensive. MetroPCS and Leap Wireless both offer cheaper mobile data plans, while Verizon recently introduced its MiFi device, which uses the 3G network to deliver a Wi-Fi signal.

Since it requires no software, multiple people could share the MiFi. My husband and I each have a data connection and are thinking it might make sense to consolidate down to one. As wireless broadband speeds get faster through HSPA or LTE network upgrades in coming years, more consumers may join the few folks out there who already use their wireless data plans as their primary web connection — eliminating a home broadband bill entirely. I don’t recommend that step for multi-user homes or for heavy video streamers, however.

The rules surrounding the release of $4 billion in federal funds aimed at providing better broadband and creating jobs announced last week have so far disappointed applicants hoping to deliver advanced broadband services such as fiber to the home. Instead, the rules associated with the first release of grant funds appear to be targeted at getting connectivity to rural areas – ignoring places where customers can get the minimum standard of broadband, which the government has set at 768 kbps. This means projects like a downtown fiber optic pipe in tiny Canby, Ore., aren’t going to get money, since that area of Canby already has service that meets the definition of broadband.

Keith Galitz, the CEO of Canby Telcom, who spoke to Om about his plans back in February, told me yesterday that he will still apply for grants to provide DSL to the fewer than 100 residents who live outside of Canby Telcom’s service area, a project that will result in service speeds of 10 Mbps or 20 Mbps to residents who have no access. But he’s disappointed, saying that so far the stimulus program doesn’t seem to give him the opportunity to improve access for most of his customers. If I were on the planned fiber route, I’d be more than disappointed, as 768 kbps was slow five years ago, and feels almost like dial-up today. The government so far looks to be spending $4 billion to push outdated technology.

Rich Wonders, vice president of strategic marketing for Alcatel-Lucent, a telco gear provider hoping to see a boost in equipment buys from grant applicants, believes that this first phase will not impress those hoping to see advanced broadband services. However he expects applicants trying to deliver rural coverage and wireless broadband to benefit under this set of rules. This first set of rules, announced on July 1, governs how $4 billion of the $7.2 billion will be spent. It releases almost all of the money allocated to the Department of Agriculture’s Rural Utilities Service under the stimulus bill and about a third of the money allocated to the National Telecommunications and Information Administration program.

“I believe the object is by end of first round to produce a map of the United States that shows the entire U.S…as having 768 kbps service,” Wonders said. “This round has less to do with advanced broadband such as fiber and fourth-generation wireless, and is more binary — a place either has coverage or it doesn’t.”

He also said the rules are surprisingly favorable to wireless, something he wasn’t anticipating before the first round of rules came out. Given the speed criteria, he expects that cellular providers wanting to use grant money or loans to expand their 3G networks to rural locations might win under these grants. However, since those carriers would have to abide by net neutrality provisions if they accept federal grant money, it may not be something to which the larger carriers are ready to commit.

Michael Jackson’s memorial held today at the Staples Center in Los Angeles turned out to be one of the biggest online events ever, according to various reports. Akamai says that it was the second-largest day in terms of total traffic on its network. Akamai delivered more than 2,185,000 live and on-demand streams in both the Flash and Windows Media formats. Total traffic on the Akamai network surpassed a rate of more than 2 terabits per second during the memorial service. Akamai says that it delivered 548 Gbps of live and on-demand Flash streams utilizing Adobe Flash technology.

There were 3,924,370 visitors per minute as of 1 pm EST and an average of more than 3.3 million visitors per minute overall. That is second only to the 4,247,971 global visitors per minute who visited news sites on June 25th when the news of Michael Jackson first hit the web. Unlike June 25th, there weren’t many outages reported, but there were widespread slowdowns. According to Gomez, a company that monitors the web, the availability of the home pages of seven of the mainstream news media sites from 12:45 pm-3 pm EST only dipped as low as 98.2 percent even though the response time was slower than usual. Response time (page load times) ranged from 6.5 seconds to 18.5 seconds (usually spans 3.5-7.3 seconds), according to Gomez. However, when it comes to live streaming, Gomez saw lots of rebuffering (i.e.. video ‘stalling issues’) at these news sites — time spent waiting rather than watching was under 5 percent in the U.S. but as high as 40 percent in Asia.

According to AlertSite, which also monitors web performance, E!Online and TMZ reported a few errors during the 12 pm-2 pm EST period. The response time for E!Online’s home page reached as high as 20.75 seconds at 2 pm EST. TMZ’s home page response time reached 10.41 seconds at 1 pm EST. “Overall we saw about a 10 percent uptick in response times on average for the sites we were monitoring,” said AlertSite Chief Strategy Officer Ken Godskind, who pointed out that, “Even Twitter was affected, with login success in the 50 percent range during the 1 pm, 2 pm and 3 pm hours (EST).”

Here are some other random stats associated with this event.

• Verizon Wireless network says that from 1 pm-3 pm EST today, voice attempts on Verizon network around the Staples Center went up 10 percent from same time Monday, while data attempts for texting and mobile web were up 86 percent around the Staples Center from same time Monday.
• Michael Jackson tributes accounted for nearly 5 percent of the total tweets on Twitter, according to Twist (via Pete Cashmore.)

• According to Facebook, a million users posted about 800,000 status updates. That compares to the 1.8 million Facebook status updates with the word “Obama” on Inauguration Day. The Michael Jackson page, however, has grown to have nearly 7 million fans, a million more than President Obama’s page. And Facebook says some 800,000 virtual MJ gloves have been given away as gifts.

Related post: Live streaming grief: Saying goodbye to Michael Jackson.

Twitter traffic visualization, courtesy of Twist via Mashable

Keep your landline or your loved ones may die, seems to be the messaging tied to AT&T’s Home Base campaign released today. It comes on the heels of a Verizon ad aimed at getting non-Verizon landline customers to ditch their wires in exchange for wireless. The battle between wired and wireless is heating up.  The AT&T campaign, complete with a picture of an ambulance racing to the scene, highlights the reliability and certainty that comes from being able to dial 9-1-1 from a landline. Copper, it could save your life.

I can’t fault AT&T for its scare tactics, given that those fears are exactly why we chose to revert back to a landline in our own home after going completely wireless. My mother-in-law was just too concerned about watching our toddler without that copper connection, since she often has a less-than-fully-charged wireless phone. However, some of the other reasons, pulled directly from an AT&T PDF, offer pretty lame rationales (fax machines? finding a phone in the dark?), as well as a failed grasp of numbering. How many of the reasons below do y’all find legit — or merely worth the $20 per month to connect via a copper landline?

The $7.2 billion to be paid out to companies that plan to expand the nation’s broadband access isn’t just about tossing funds to private and public organizations to lay fiber or place wireless towers — it’s about job creation. This was brought home to me during an interview with Jeff Thompson, CEO of Towerstream, a fixed WiMAX provider that hopes to take advantage of broadband stimulus grants to build out wireless networks in more areas of the country.

Along the way, Thompson hopes to rehire some of the 34 people he’s had to lay off in the last few months since the economy has soured. Towerstream, which currently employs 150 people, provides last-mile WiMAX-based service in nine markets. Thompson hopes to expand into new markets with the aid of some stimulus money, but declined to detail his plans, citing competitive concerns. However, once Towerstream’s applications are in, they will become public. In the meantime, I was struck by Thompson’s focus on new jobs during our conversation, since I have been viewing this legislation mostly for its potential to boost broadband in rural and underserved areas. In my haste to write about speeds and technology, I’ve neglected to consider how many jobs are created, a criterion in the grant process. The rules associated with applying for a grant mention job creation on 15 different pages.

If the Department of Justice wants to scrutinize the telecommunications industry, as The Wall Street Journal suggests it does, then it should get in line behind the new FCC, Congress and possibly the Federal Trade Commission. It also should focus on the much less sexy aspect of middle-mile access, rather than which network operator gets exclusive access to the iPhone. The Journal cites sources in the DOJ that say the agency is taking a close look at the influence and relationships Verizon and AT&T have, and how they use their market power.

Potential targets for the investigation include handset exclusivity on wireless networks and net neutrality, according to the sources cited in the story. But for the Justice Department to bring a case, it needs to be sure it can prove that these firms have a monopoly, and that they are using their power to artificially keep it — something that could prove difficult in the above-mentioned areas, given the number of competitors in the wireless market and the amount of ISPs on the wired side.

An AT&T spokesman said via email, “We are not aware of any formal investigation by the Department of Justice, nor have they asked us to provide any information. The U.S. wireless industry is highly competitive and, as a result, delivers terrific innovation, many choices and attractive pricing for all customer segments.” A Verizon spokesman said via email, “We haven’t had any indication from the DOJ about any such review.”

Given the number of wireless providers, as well as other types of wired broadband companies, it’s hard to prove a monopoly situation. (I’m not arguing either of those areas are all that competitive, only that they’re not a monopoly). However, in terms of the agreements between carriers that allow them to connect back to the Internet backbone, Verizon and AT&T appear to own the lion’s share of those connection points — between 80 percent and 90 percent, according to an industry group that wants to see that access regulated.

The group, called NoChokePoints, is agitating for solid data to prove monopolistic pricing by AT&T and Verizon that causes harm to consumers and businesses — from wireless Internet access providers in rural areas stuck delivering service on pricey T-1 lines to businesses that can’t get Internet service to their buildings. Because the special access providers can also provide the backhaul for cellular towers, and both AT&T and Verizon operate wireless networks, it’s a situation where they can use their monopoly to make Internet access more expensive for direct competitors on the cellular side, the group says.

The NoChokePoints group is composed of firms that have to pay AT&T and Verizon for connections to their backhaul networks. It argues that the two hold a duopoly that enables them to charge artificially high fees for access to the Internet backbone. The organization was formed in June to bring special access issues before the FCC. Members include Sprint, T-Mobile, Clearwire, BT, Covad, CBeyond, XO Communications, US Cellular, Time Warner Telecom and assorted other players.

BT, the UK’s largest ISP, has decided to cut ties with Phorm, the deep packet inspection company that offered ISPs a way of targeting advertisements based on where their subscribers surfed on the web. When the relationship between the two was first made public last year, a privacy brouhaha ensued that led some other ISPs to distance themselves from the controversial technology, especially in the U.S. The European Commission got involved after folks in the UK discovered that in 2006 and 2007, BT had conducted secret pilots of the Phorm technology that had some customers feeling spied upon. Talk Talk and Virgin Media are still eyeing Phorm’s technology, although neither has seemed as enthusiastic as BT.

BT has said it needs to focus on its fiber buildout and deployments of its triple-play bundle, but the concerns about privacy were likely a contributing factor to its ending its relationship with Phorm (although BT doesn’t seem to mind negative headlines about its service). Plus, there’s another business model around targeted advertising that may look more appealing. Mobile carriers in Europe are playing around with an opt-in model for targeted ads that are directed at the younger set. German carrier E-plus offers text messaging and credits to mobile users who release their personal information and personal preferences to advertisers and agree to receive a certain number of ads each week. Orange, a UK ISP and mobile operator, may also be entering into a partnership to deliver a similar service.

Ad-supported dial-up access is still around, so carriers may be eyeing some kind of opt-in for wired broadband as well, especially if the experience can be less intrusive than a giant ad taking up a third of the browsing screen, as past efforts have. If these efforts succeed, it will be a bittersweet victory for privacy advocates. If ISPs realize that opt-out ad services, in which a customer must elect to opt out of an advertising trial, don’t work, and instead turn to an opt-in model in which the ISP entices users to give up their personal information in exchange for some incentive, consumers would get more control over their data, but advertising would become more insidious.

So while Phorm and rival firm NebuAd are struggling, they may pop up again with a slightly less invasive form of advertising to sell to ISPs. After, ISPs don’t want to let a perfectly good stream of data flowing through their pipes make money for the likes of Google when they’re the ones providing the pipe. Consumers may pay for their monthly broadband, but ISPs definitely want to find ways to charge more.

Amongst all the burning wrecks of the voice over IP startup scene, is it possible that a $40 device hawked on late-night TV may be emerging as one of the biggest VoIP success stories ever? If you believe founder Dan Borislow, that is what is happening with his idea called MagicJack, a simple USB-based VoIP device that Borislow claims will generate $100 million in revenue this year, a market momentum that may spark an initial public offering to help fund his ambitious expansion plans.

Before we get too far into IPO dreamland, a caveat — Borislow’s company, which we wrote about when it was getting off the ground a couple years ago — is still privately held, so there’s no proof behind any of MagicJack’s claims other than your trust in Borislow’s word. That said, Borislow and MagicJack seem to have largely delivered on their main promise of two years ago, to create an easy-to-use, dirt-cheap voice service based on a simple device that you can now buy at Radio Shack or Best Buy.

Following the suggestion of one of the ardent followers of our earlier post on MagicJack — which has turned into somewhat of an ad hoc user forum board — we decided to call Borislow for a MagicJack update. (Even though I have moved on to other blogging locales myself, I am honored to update the GigaOM MagicJack followers.) As usual, the always-interesting Mr. Borislow didn’t disappoint, talking up lots of innovative ideas while dissing Skype as a competitor because of its “inferior voice quality.”

In addition to hinting that an IPO was “something we have in our mind,” Borislow said that sometime in the next year, MagicJack will ship a femtocell device which (he says) will allow users to make MagicJack-based calls from any GSM cell phone — theoretically saving cell phone minutes while in your home. Perhaps more believable is Borislow’s claim that a “major PC manufacturer” will soon include a MagicJack softphone pre-installed, eliminating the need for the USB device now necessary to link the broadband-enabled PC to a standard phone. Borislow also said there is a new device planned that will eliminate the need for users to leave their PCs powered on while making MagicJack calls; unfortunately, no ship date was given.

On the subject of number porting — the ability to switch your current telephone number to a MagicJack account, something the company has promised but never delivered — Borislow said he’d rather weather the storm of user complaints instead of subjecting potential customers to the mercies of the incumbent telcos who might hold their numbers.

“We’ve built up a lot of love over the last year or so, and I don’t want to give that love away [by making people tussle with sometimes-uncooperative telcos],” Borislow said. While he is confident that new FCC rules will help ease the number-porting pain, Borislow didn’t seem too concerned about hitting the latest self-imposed number-porting deadline of late 2009.

He also hinted of some new applications — perhaps VoIP-based conferencing — but there is only so much time and space, so we’ll leave those ideas for a day when they are closer to reality. As far as a potential IPO goes, Borislow said he took his last big company public on his birthday in September — “why not keep that love?” he asked, about using the same date.

Could MagicJack be the next big tech IPO? In this economy, who knows what the rules are? What MagicJack has in its favor is a solid network core and patentable technology. In a public statement earlier this year, Borislow claimed the company had a big network footprint with lots of hardware and interconect sites, and had patents pending for femto equipment based on designs from a chip company MagicJack’s parent company bought up along the way.

Perhaps most important is how many people are actually using the MagicJack, which is still an unanswered question. While Borislow is quick to claim that MagicJack has “sold” almost 4 million of its devices, now at a rate of “10,000 per day,” he won’t own up to the exact number of active accounts, so nobody’s sure yet whether MagicJack has passed Vonage’s base of around 2.6 million in terms of VoIP users, or whether there are a lot of MagicJacks buried unused in desk drawers. Maybe that answer can wait for the MagicJack SEC filings, where we might see exactly what Borislow has up his sleeve.

(Paul Kapustka, former managing editor at GigaOM, is the editor and founder of Sidecut Reports.)

Orange, a UK ISP and mobile phone company, is reportedly close to signing a deal with an ad-supported mobile virtual network called Blyk that would offer certain Orange customers credits on their service in exchange for receiving text-based ads on their mobile phones. According to an article in New Media Age, Orange has been in talks with Blyk for months to offer subscribers aged 16-24 credits of £15 ($25) if they receive ads on their phones. The partnership looks similar to an effort by German carrier E-Plus to offer lower-cost mobile phone service to customers in exchange for ads.

Customers are asked to detail certain personal information when they sign up for the Blyk service, which is then shared with advertisers that use it to deliver targeted ads. I have little doubt that people in the desired age range would give up a bit of their privacy in exchange for cheaper phone service, and Orange could possibly see profits from advertising. Like, many ISPs and carriers, Orange has been looking at ways to offer advertising. It may also use this as a way to attract new customers who would graduate to an ad-free version of its service, although depending on how many ads subscribers viewed and how well the campaigns worked, perhaps selling eyeballs would be more valuable than selling phone service. My guess is that so far it isn’t. Blyk originally resold mobile service with the goal of delivering ads to its customers, but later backed off of that model, possibly because they couldn’t make enough money selling ads.

However, as mobile operators and ISPs try to mine the rich amount of customer data they have access to without alienating their subscribers, an opt-in program in which young adults sell their attention for credits on mobile phone service looks like something consumers would accept. Although there’s a certain irony in targeting ads at a group that’s too cheap to spring for ad-free cell-phone service, I wonder how long it will take to cross the pond into the U.S.

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.

Globalstar today closed on $738 million in financing, while rival satellite operator TerreStar launched its new bird, TerreStar-1. Globalstar plans to use its money to fund operations and launch a new generation of satellites in 2010 that will deliver all IP-based voice and data to its customers through 2025. Before celebrating, know that Globalstar’s new constellation of satellites will  provide speeds of up to 256kbps down.

Like the slow data speeds, the financing is less exciting than it first appears. It mostly comprises a previously announced credit facility, which Globalstar will have to pay back. The financing combines the $586 million credit facility with convertible debt and warrants for $55 million, and a deposit by its majority shareholder of $60 million into a contingent equity account. The financing also includes funding of a debt service reserve account. Basically, Globalstar has a large credit line, and someone fronted the company the money to fill a reserve account in case some of that debt can’t be paid. That’s a position Globalstar has been in before. It filed for bankruptcy in 2002 and emerged from its financial failure in 2004.

While Globalstar plans to launch multiple satellites next year, TereStar today flung its single, huge satellite into space after a few delays. We’ve written about the capabilities of TerreStar’s new bird, as well as our doubts about the business of providing satellite data services to a consumer audience as TerreStar hopes to do. TerreStar-1 will be able to deliver speeds of 64kbps down to the smaller, consumer-style handsets, while truck-mounted phones such as those used by emergency workers could receive speeds of up to 400kbps down. But satellite service is expensive (and slow) compared with other available mobile data services, and few people really need the kind of coverage satellites provide. The industry went bankrupt en masse before, and I find it hard to believe it will fare well this time around, especially without some consolidation. However, like the orbits of their satellites around the Earth, I’m concerned these companies can’t stop coming around again.

Image of TerreStar-1 courtesy of Arianespace.

CenturyTel and Embarq today announced the completion of their $11.6 billion merger, which results in a phone company that will serve 7.5 million customers in 33 states. The combined company will now be known as CenturyLink — and the aging copper-based DSL lines it offers to most of its subscribers will certainly act as a link to the previous century for customers of the new entity. As part of the FCC approval for the merger, the agency imposed several conditions on the combined company, presumably to ensure that consolidation doesn’t hurt consumers.

Conditions included a requirement that the company deliver within three years 768kbps service to 90 percent of broadband customers and DSL of at least 3Mbps to 80 percent of consumers. But industry watchers feel that the FCC was sleeping on the job, given that the conditions will result in microscopic advances in service areas and broadband speeds for CenturyLink’s customers. CenturyLink’s conditions were approved by a somnolent FCC that last week gained a new chair, so perhaps the requirements demanded in the Verizon-Frontier deal will be decided upon by an agency awake to the stagnation that consolidation can mean for broadband customers, especially in rural areas.

As for expansion plans, CenturyTel has a fiber network that appears to provide backhaul mostly (but check out its on-site marketing that implies it’s an all-fiber network). According to a CenturyTel spokeswoman, the fiber network will soon “stretch from coast to coast,” but she said she’d have to get back to me on details about what percentage of the new CenturyLink customers would have fiber-to-the-node or fiber-to-the-premise. CenturyTel does provide IPTV services, which require faster speeds, and may involve a fiber-to-the-home or a fiber-to-the-node deployment in two markets — Colombia, Mo., and La Crosse, Wis. May there be more, despite a lack of FCC mandates.

Only 2 percent of the world lives in a country where broadband penetration has exceeded 80 percent, according to a report out today from TeleGeography. The report noted that worries over broadband saturation are really only appropriate in 10 countries out of the 127 the firm tracks, and the U.S. isn’t even one of those saturated markets. There are 36 countries where broadband providers serve less than 5 percent of the population.

So while there’s concern in the U.S. cable and telecommunications industries over growth in their fixed line businesses, what we really should be pondering is whether or not the low-hanging fruit of fixed-broadband access has been plucked, and if so, how do we get broadband to the rest of the world? TeleGeography defines broadband as a fixed network service having a downlink speed of 256kbps or greater. It includes services provided via DSL, cable, fiber and fixed wireless broadband/WiMAX technologies. It excludes 3G/mobile services.

I suspect it’s not cost-effective to build out a wired infrastructure in some parts of the world, either because equipment is stolen or because the rates customers might pay don’t justify the investment required. But  given its importance in the 21st Century economy, giving up on broadband access would be wrong. There are two solutions I can see, but I welcome our readers’ thoughts.

The government can subsidize a wired infrastructure much like Australia’s government is doing today with its $31 billion investment in fiber, or providers can focus on wireless if it’s not cost-effective to build out wired broadband. In that case, their governments should consider policies that provide for available spectrum and understand how the current wired infrastructure needs to provide backhaul for wireless access. Actually, we have a similar issue in rural areas of our country, where wireless Internet service providers pay through the nose for access lines back to the Internet backbone — making it expensive to provide wireless broadband.