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Thumbs up New Broadband Funding Starts Slowly - 19-December-2009, 22:00

Broadband Funding Starts Slowly
Eighteen Projects Get $182 Million From $7.2 Billion in Stimulus Funds
by John Eggerton -- Multichannel News, 12/21/2009 2:00:00 AM

Washington Vice President Joe Biden used the setting of a fabrication plant in Dawsonville, Ga., to announce the first winning broadband stimulus money bidders. But the government didn't deliver much product.

Only 18 bidders in 17 states were announced, for a total of $182 million in broadband stimulus funds out of a couple of billion dollars that needs to be handed out ASAP. The balance of the first-round winners will be announced on a rolling schedule between now and February, according to the National Telecommunications and Information Administration.

At about $10 million apiece, the grants were a small fraction of the $7.2 billion the government has to dole out on such projects, and no big-name players were among the initial winners.

Most of the just-announced funds are for middle-mile projects (see chart), those that hook up communities, rather than last-mile projects, which connect end-users such as homes, schools or businesses to the middle mile.

Money also went to projects to expand public computer centers and to boost adoption, though only a total of $9.7 million.

Boston, for example, received $1.9 million computer center funds. Massachusetts legislators, led by Sen. John Kerry, a Democrat, were quick to tout the potential broadband benefits to their constituents, calling the grant a significant step toward bridging the digital divide and saying it would give Boston residents critical access to computers and new training.

The public-interest group Free Press had nice things to say about the first awards, calling the announcement a welcome holiday gift for the thousands of Americans living in these areas that have yet to know the transformative benefits of broadband technology. It praised the emphasis on middle-mile projects.

We are especially pleased to see the Commerce Department's emphasis on middle-mile grants an often overlooked piece of the broadband puzzle that is essential to ensuring that consumers in these areas have access to affordable broadband services that can scale as demand grows, said Free Press policy director Ben Scott in a statement.

One observer underwhelmed by what he suggested were a few drops in too few buckets was Dan Hays, telecom partner in PRTM, a Washington, D.C., management consulting firm. The pace and the magnitude of the awards that have been released have been extremely disappointing, he said. It is extremely small and extremely fragmented.

Hays said the small average size also calls into question whether the projects have sufficient scale to be sustainable, one of the key goals of the stimulus package.

He told Multichannel News he thought the Commerce Department's NTIA and the Agriculture Department's Rural Utilities Service were under pressure from the administration to get something out the door.

He said he was not surprised by the relatively small number of applicants and the size of the grants, given the volume or complexity of the application procedures. Applicants have complained about the process, and NTIA has pledged to simplify the second round.

Hays said he has spoken with a quarter of the 2,200 applicants and that applications were averaging 300-500 pages long.

Of the $7.2 billion NTIA and RUS have the power to distribute over two rounds of funding, $4.7 billion comes from NTIA and $2.5 billion comes from RUS, in the form of grants and loans.

Here's how the first round of stimulus-funded broadband projects break down by category:
SOURCE: U.S. government
Middle-Mile Awards: $121.6 million to communities
Last-Mile Awards: $51.4 million to connect end users to the middle mile.
Public Computing: $7.3 million to expand computer centers (libraries, community centers, colleges).
Sustainable Adoption: $2.4 million for adoption by groups where the technology has traditionally been underutilized.

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