broadband stimulus package

Government-sponsored broadband: Hard track record to overcome

You’d think that municipal and state governments in the U.S. were drinking too much Fosters. Many of them are looking actively at applying for some of the broadband stimulus dollars to create government networks for their citizens, following the same model as Australia but on a smaller scale.

There is obviously a lot of opportunism and manipulation going on here. Big OTT players like Google have long supported any municipal or governmental network alternatives to the big cable and telco providers because they fear that for-profit access will eventually stop investing in capacity unless access ROI is improved.

The question (here or in Australia) is whether it’s prudent to spend tax dollars of any sort to create a government program for broadband. Most of these plans, based on WiFi for example, have failed completely. We’re skeptical, but programs that would use tax dollars (including stimulus dollars) to fund FTTH, which would then be “lit” by companies, might be a way of advancing broadband without creating a catastrophic collision with commercial providers.

US RBOCs: Just how open is open?

The US RBOCs are concerned about applying for aid under the broadband stimulus package because it may force them to open their networks to competitors. The provision in the rural broadband aid portion of the stimulus requires the grantees to adhere to FCC principles of open interconnection, but it is not clear just what those principles are. The fear is that the interpretation given to this requirement would force the RBOCs who apply to open the networks, and just how far that “open-ness” might extend (to the grant-funded lines or to all lines) is also open to debate.

This issue has received a bit of negative publicity, but from what we hear the issue is simply one of clarification. One RBOC executive told us that if the use of grant money on a single hypothetical line were to create a broadband unbundling obligation through their whole region, they’d surely not be interested. We doubt, and most RBOCs doubt, that is the interpretation intended, but they want to be sure before moving forward. This demonstrates how vulnerable broadband investment is to the issues of wholesaling, and clearly that should be considered in any rules and legislation involving broadband deployment.