Uncommon Wisdom

Jan 16 2009   5:19PM GMT

Obama broadband stimulus plan: Reality vs. industry dreams

Tom Nolle Tom Nolle Profile: Tom Nolle

The broadband stimulus plan, part of Obama’s broader economic stimulus, appears to be all but a done deal, but the value of the package falls far short of what some had hoped.

As currently proposed, the initiative would be focused on rural and underserved areas and would likely come largely in the form of low-interest loans and grants. There is no talk now of tax credits or accelerated depreciation.

Keep in mind, though, that this is only the beginning of the road for the stimulus bill and that there are already some differences between House and Senate approaches. However, the total amount involved now is between $6 and $8 billion, which falls far short of the $44 billion to $100 billion some had advocated.

As we indicated previously, our model was unable to validate benefits for a stimulus more than about $20 billion. The most significant factor about the new form of the program is that it would offer nothing to incumbents for their normal service expansion, a sticking point for some critics of former proposals. Apart from this, though, we are still hearing that the FCC would change its definition of “broadband” to somewhere between 4 and 8 Mbps, something that would spur competition between telcos and cable.

The UK is also rolling out a universal broadband program. The speeds are low (2 Mbps) but the goal of touching every household is probably more ambitious than those here.

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