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Consumer Groups Attack Broadband Stimulus Rules

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capitolGroups representing municipal broadband advisers and consumer-oriented nonprofits have written a letter protesting the way the first tranche of $4 billion in broadband stimulus funds is being distributed. They sent the letter to Larry Strickling, the administrator of the National Telecommunications and Information Administration, which is in charge of distributing $1.6 billion in stimulus funds in the first of three rounds. The groups, which include Consumers Union, Public Knowledge and the National Association of Telecommunications Officers and Advisors, say that the definitions used in the rules mean that the money won’t go toward advanced technology such as fiber or projects aimed at delivering cheaper broadband to constituents.

The issue they raise is one we wrote about two weeks ago when we noted that most of the money allocated in this first round of grants and loans is limited to projects that will reach areas that have no broadband at all, while excluding efforts to boost speeds or provide cheaper services. Part of the problem lies with the government’s definition of broadband as 768 kbps. According to the rules, areas that already have Internet speeds at that level or higher aren’t eligible for loans or grants.  From the letter:

The definition of “underserved” has the effect of precluding any residential infrastructure program in an area where a minimal level of broadband, even first-generation DSL, is generally available. This preclusion occurs regardless of whether advertised speeds are actually delivered; whether service is affordable; whether systems are capable of serving all interested consumers (in many communities where DSL is advertised, residents and small businesses are refused service because circuits are tapped out); and whether the speed of service meets the needs of the consumer (for example, DSL and even cable modem service are woefully insufficient for home-based business and teleworking).

The letter asks the NTIA to pay attention to how affordable broadband services are within a given area and also asks that the rules be changed to allow schools and other public institutions located outside of underserved areas to be eligible for grants. Another troubling aspect of the funding rules alleged in this letter is that carriers have the potential to veto projects in underserved areas if they already offer service in those regions. This is only the first of three rounds of funding that the NTIA will deploy, but it’s still $1.6 billion spent delivering the least amount of broadband to the people who need it the most.

7 Responses to “Consumer Groups Attack Broadband Stimulus Rules”

  1. Tim, I agree wholeheartedly that we should not send public money to the large providers – Congress intended to keep the money away from them, but NTIA overruled them in making the rules and set it up the program to benefit the large companies in multiple ways – I discuss it at

    However, I disagree about wireless. It is not more advanced – the fastest speeds possible are over fiber optic connections. In wireless networks, that wireless area is the bottleneck – from the tower to the Internet is all fiber, which offers more bandwidth and higher reliability.

    Tom, the money is not meant to provide free connections to people, it is to build the networks that we need to make sure everyone is able to access broadband (as in pay for a connection). The way to properly build these networks is to make sure they can support higher speeds so they can be upgraded over time. At this point, few are discussing a means to subsidize the monthly connections to the poor.

  2. I think that if we are going to have this type of spending we should be considering smaller providers who are using more advanced and flexible technology like wireless. To continue to feed large providers dollars so that they can advance their footprint and monopolize is not sustainable. If their networks won’t pay for themselves over time the consumer ends up with poor and outdated service until the next stimulus comes along. Bad plan in a bad economy.

  3. many interested users live in areas that are developed with broadband but it is price prohibitive. why not use the money to help fund competitors that will drive the price down. personally i think 768 kbps if fine for a subsidiesed service; but i woul dlike to see price caps to keep the cost to consumers as low as possible.

    i do not care for my tax dollars to provide super high speed service to be used for tons of video streaming,etc. but i do not mind at all if i am taxed so that a person who currently can not afford to have internet at home gets a basic connection for email, web surfing, etc.

  4. Free money for telecoms? This is getting way out of hand. What they will do with our money? This does not make sense. It seems the government is going out of its way to stuff the pockets of fat corporation with money and at the same time tax the little guy! Makes me sick….