The Promise of Universal Broadband

The Obama administration’s economic stimulus package contains a broadband promise for rural America.  $7 billion was appropriated by the American Reconstruction and Recovery Act (ARRA) for the construction of broadband networks in areas that are un-served or under-served by incumbent local carriers. 

The funds will be disbursed through two new federal government programs, the USDA’s Rural Utilities Service (RUS) Broadband Initiatives Program (BIP) and the Broadband Technology Opportunities Program (BTOP) administered by The Department of Commerce’s National Telecommunications and Information Administration (NTIA).  Although the RUS’s share of the kitty is “only” $2.5 billion, it will actually drive as much as $9 billion in broadband network construction, in the form of grants, loans and loan guarantees.  So, rural America is about to be stimulated to a high degree.

The Notice of Funds Availability (NOFA) for the first $4 billion of broadband stimuli was issued on July 1.  The NOFA is 121 pages of rules and requirements for applicants to qualify for funding, and it has already stimulated a great deal of commentary in the press, numerous webinars, and some new newsletters and blogs filled with punditry of uncertain value.

Some commentators have been a bit over-stimulated by the NOFA’s definition of what is, at minimum, broadband.  The NOFA requires an applicant to show plans to provide two-way transmission at speeds of at least 768 kbps downstream and 200 kbps upstream.  Even though these minimum speeds are faster than what’re actually available to most everybody, they have been widely decried as shortchanging rural America.

Maybe the critics should read the entire NOFA.

First, the NOFA requires that an access network be designed for 100% coverage.  Broadband connections at minimum speeds, at least, must be available to every home and every business.  Not just the ones closest to the CO.  Not just the ones passed by FTTH.  Not just the ones in nice neighborhoods.  Every home and every business will have broadband access.  From the get-go.  Universal broadband!

Second, the NOFA allocates funds for broadband “second mile” networks, i.e. broadband backhaul.  The leased lines that connect rural areas to the Internet today are ruinously expensive – one of the reasons so many rural areas are “under-served”.  If the government is going to fund broadband access in the “first mile”, it wants to be darn sure that those connections are not choked off in the “second mile”!

Third, the NOFA requires that broadband networks be open and neutral.  It requires that both first and second mile networks be available to multiple service providers at wholesale rates.  Furthermore, it requires that services be handled in a “nondiscriminatory” manner, with no service provider’s packets getting more favorable treatment others’.

So, the NOFA stipulates networks that reach everybody, have backhaul capacity to insure that everybody can get online, and are open to many providers of services and applications.  Then, fill them up with services, applications, wholesale and retail revenues and profits. 

Sounds like a pretty good reason to spend the government’s money, right?

The big telcos that under-serve much of rural America don’t think so!  They’d rather stick with closed, under-utilized networks delivering overpriced, proprietary services to only the customers who are easiest to reach.  But, the small telephone companies who are really in touch with rural America are figuring out that open access and broadband connectivity for everybody will bring new services, plentiful applications, more revenues, higher profits and better lives for all their customers.  (Maybe even to the big telcos’ customers in adjoining territories, too!)  These small telcos also know that if they don’t step up and build universal broadband networks, there’s plenty of federal money available for those who will.

The FCC’s report, “On A Rural Broadband Strategy”, makes a broadband promise to rural America:  “…just as rural electrification created a new group of home appliance consumers, so will a broadband-connected rural America want Internet Protocol (IP)-enabled phones, smart meters, telehealth, distance learning, video relay services, online music, streaming movies, interactive gaming, and a host of other broadband-related products and services.  Simply put, broadband buildout to rural Americans promotes and encourages sustained economic development, to the benefit of us all.”

This is a promise worth keeping!