Let the real debates begin. Now that Congress has passed the $787 billion economic stimulus package, communications experts are picking apart the details of the broadband provisions, in some cases, to an incendiary level.
Take, for example, this pronouncement from former FCC economist Michael Katz: "The notion that we should be helping people who live in rural areas avoid the costs that they impose on society ... is misguided from an efficiency point of view and an equity one."
Katz was speaking on a panel for think tank American Enterprise Institute last week; National Public Radio on Monday ran a segment featuring Katz’s comments in an exploration of how the $7.2 billion set aside for bringing broadband to rural and underserved areas is rousing controversy.
Indeed, the results of weeks of negotiations among senators and representatives are earning wide-ranging reactions, from lukewarm acceptance to all-out praise. Much of that is because the money allotted for broadband expansion totals far less than the $25 billion and $44 billion proposals put forth late last year by advocacy groups and telecom associations. There are other reasons as well, including how the money will be distributed and in what forms.
Congress divided the $7.2 billion between the U.S. Commerce Department’s National Telecommunications and Information Administration (NTIA) – the agency that’s handling the DTV converter box coupon program – and the Agriculture Department’s Rural Utilities Service (RUS). The NTIA will have oversight of $4.7 billion in grants while the RUS will administer $2.5 billion in grants and loans. Broadband deployment projects funded through the NTIA must be completed within two years.
Some factions of the communications industry aren’t pleased that RUS will distribute some of the stimulus funds. Early this year, American Cable Association President Matt Polka told xchange that the NTIA should handle all government broadband money because the RUS favors rural telcos over other providers when it comes to loans. The NTIA “is more focused on getting business done and encouraging business development” than the RUS, Polka said in January.
Perhaps in response to such fears, Congress did place the majority of the broadband stimulus money under NTIA’s auspices.
Meanwhile, carriers, cable operators and equipment makers should find the combination grants and loans “of some use,” said telecom analysts for investment bank Stifel Nicolaus in a Feb. 13 note to clients. The overall market impact, however, “will likely be modest,” said David Kaut and Rebecca Arbogast.