Broadband Economic Stimulus Plan

Interesting article from WSJ Blog

By Amy Schatz
Differences between the two broadband stimulus proposals working their way through Congress could take a little while to work out, but details of the plans that have popped up this week offer a map of where things might end up. The House and Senate haven’t agreed on much about the broadband stimulus so far, neither the cost ($6 billion in the House, $9 billion in the Senate) nor Internet speeds (“advanced broadband” in the House clocks in at 45mbps, while the Senate says “next-generation” broadband is 100 mpbs). Cable operators aren’t thrilled about language in the House and Senate bills, which sets aside grant money for broadband providers who can provide 100 mbps service, since that would tend to favor phone companies installing fiber-to-the-home service.

House lawmakers would hand out $6 billion in broadband grants. Half would be given out by the U.S. Department of Agriculture without speed requirements, although 75% of the money has to be used in “rural area(s) without sufficient access to high-speed broadband service.”
A quarter of the grant money handed out by the Commerce Department would be for “basic” broadband service (a.k.a 5 mbps download/1 mbps upload) to “un-served” areas while the rest would go for “advanced” broadband service (a.k.a 45 mbps/15 mbps) in “underserved” areas. Wireless providers would need to offer Internet service with a download speed of at least 3 mbps and upload of 1 mbps.

The House would leave it up to the FCC to decide how to define un-served and underserved areas. Senators want $9 billion in broadband, half of which would be set aside for providing service in rural areas. The Senate Finance Committee tacked on limited tax credits of 10% or 20% to providers offering “current generation” (a.k.a. 5 mbps/1 mbps) service in rural areas and 20% credit for “next generation” (a.k.a. 100 mbps/20mbps) service in rural or low-income areas. The tax credits are relatively small, estimated to cost about $110 million over 10 years.
Open access, or net neutrality, conditions could be a major sticking point for phone and cable companies, which don’t want significant government constraints on their network management practices. Right now, companies are concerned about how “open access” might be defined in the legislation.

In the House, lawmakers say the FCC would be required to define “open access” within 45 days of the legislation’s passage. Senate lawmakers say their grants would be dependent on “interconnection and nondiscrimination requirements,” although they spell out what that means.
The broadband spending would also fall on the long-term side of benefits which may came from the economic stimulus plan.

The Congressional Budget Office said Wednesday that much of the spending on broadband wouldn’t really have much of an impact on consumers for several years. It could take “up to five to seven years” to finish some projects funded by the $2.8 billion handed out by the Agriculture Department’s rural development broadband program.