Broadband Stimulus: A View from the Trenches

Snapshot 2009-08-20 12-17-30Friday marks the final day for electronic applications to be submitted for the first tranche of $7.2 billion in broadband stimulus funding. As Stacey has noted, after being given just 45 days to get their applications together, many have opted to wait until the second and third tranches to hand them in. And of those she’s talked to that have submitted applications, the lion’s share have been wireless providers.

However, based on interactions with our wireline customers here at Calix, to whom we provide broadband service delivery equipment, we’re confident that they shouldn’t be discounted just yet. Nearly 100 of our wireline service provider customers or their representative consulting firms have either asked us to issue recommendation letters on their behalf, or have made us aware of their stimulus proposal submissions in this first ”window.” These proposals have ranged in size from a few hundred thousand dollars to more than half a billion dollars. Average proposal size? Well over $10 million.

From a technology perspective, the choice has been clear: Deploy fiber. Fiber to the premises (FTTP) architectures, specifically GPON, have dominated the proposals, showing up in more than 90 percent of them. What about the notion that the Notice of Funds Available (the document that spells out rules for the first tranche of funding) was pre-wired for wireless? Don’t forget that, in the Broadband Initiatives Program (BIP) administered by the USDA’s Rural Utilities Service, service providers offering over 20 Mbps of aggregate bandwidth receive just as many bonus points (10) on the scorecard as wireless proposals offering over 2 Mbps. As for affordability, FTTP is likely to be more expensive (a sacrifice of up to 5 potential points), but it’s also an “open” technology, capable of supporting other potential service providers (a gain of 5 more points over closed wireless solutions).

From a service provider perspective, the range has been very broad. Many of the proposals that we’ve seen have come from small, rural operators. Taken together, according to our calculations, they aim to address more than half a million homes. Not a bad start.

Interestingly, some of the proposals have had both technologies integrated into a single proposal. However, the USDA’s program and the program run by the National Telecommunications and Information Administration place a lot of stock in broadband deployment experience and, in the case of the USDA’s program, the scorecard actually favors existing service providers with Rural Utilities Service relationships. While no one can say for sure which providers will be awarded funds, that would appear to leave wireline providers — at least on the face of it — disproportionately qualified to win awards.

But the real winners will likely be the residents of these “unserved” or “underserved” areas of the country. With two more submission “windows” left, and some of our largest customers — despite spending millions of dollars to prepare their applications, choosing to sit this round out until they get further clarification on some key issues — we expect to see a lot more homes get broadband for the very first time.

Geoff Burke is the senior director of corporate marketing at Calix and a speaker at the FCC National Broadband Plan Staff Workshops.