Could Stimulus Grants Be about the Path of Least Resistence

Monday Morning Quarterback here. Actually, more like checking in to see what happened to the bets I placed so far on the broadband stimulus program. Here are some more of my observations after some pondering. 

I believe that, even though it probably wasn’t their intention, NTIA has established in this first round of awards parameters for following the path of least resistance. Many of those funded are middle mile projects, each serving a lot of people and/or covering a huge amount of geography. It’s probably easier (read: faster) for a reviewer to make award decisions to fund five middle mile projects, each covering 10 counties, than to make decisions for 50 individual county proposals.

I said early this year, as grant reviewers get pushed closer to a drop-dead date to reach some particular milestone of the funding process, the pressure is going to be huge to find that path of least resistance wherever possible and still be able to approve a worthy project. When it’s near drop-dead time in February, and if there’s still a backlog of applications, I expect you’ll see more middle mile projects funded.

A sizable portion of infrastructure grants went to public/private partnerships and nonprofits versus private entities that are the sole operator of the network. Even when you look at the general list of proposals and pull back the details on entities whose names seem to indicate “private company,” there are a few that are equally public and private sectors together at the helm.

I bring up the public sector and nonprofits because I believe in May-June, based on comments I’d read or hear at events, quite a few people were assuming mostly private sector companies would get money to build networks, not public sector and nonprofits. However, what I see so far reflects the wording of the stimulus bill that gives top priority to local and regional governments, nonprofits and public/private partnerships. Private sector companies are dead last on that list.

I tend to think that the size of the telcos getting awards may also be a surprise because a couple of those announced last week are local, small companies. If this trend continues, I believe it’s going to be a blow to all that propaganda you hear from the big incumbents that make you think they are the key to innovation and deployment when it’s time to roll out a national broadband strategy.

Traditionally in technology and in telecommunications, it is most often the small companies that are the leaders of innovation. They are the problem solvers. As a recent report from Accenture points out, 42% of the big telcos fall way short on innovation.

Almost all of the BTOP grants were awarded to projects recommended by their respective states’ governors. Coming back to the “drop dead date” scenario, I believe that when pressed for time reviewers are going to defer to those projects approved by governors, basically trusting the state’s judgment when proposals appear to be of similar value. And how much blow-back are you going to get in Congressional oversight hearings if you defer to public-private partnerships, because that’s what Congress in the legislation said they want. 

Someone asked me if I think the funding process is moving too slowly. This pace will always be too slow to an administration that desperately needs to show some kind of results for all of the deficit spending. It will be too fast for people who want to score political points against the administration, as well as those who think we put the cart of execution before the horse of planning. And that is exactly what I expected to be one outcome of this program.

One final observation. Another item I brought up earlier in the year was that stakeholder partnerships were going to be a major factor. The winning infrastructure proposals have a lot of chest thumping going on about how many institutions they intend to serve, some talking about 250-300 or more. Whether you call ’em stakeholders, institutions, anchor tenants or your Payday Insurance Package, I’m thinking you better have a clearly articulated plan for how they’re going to play a big role in your network’s financial sustainability.

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First Broadband Stimulus Awards for Infrastructure Announced Today

THE WHITE HOUSE
Office of the Vice President
EMBARGOED UNTIL DECEMBER 17TH, 6:00 AM EST
December 16, 2009 

Vice President Biden will kick off over $2 billion in Recovery Act grants and loans that will be made on a rolling basis over the next 75 days to bring broadband to communities that currently have little or no access to the technology. 

At an event at Impulse Manufacturing in Dawsonville, Georgia, he will announce an initial $182 million investment in eighteen broadband projects benefiting seventeen states which has already been matched by over $46 million in private capital.  The awards are not only expected to provide initial job opportunities in infrastructure and manufacturing, but help bridge the digital divide and boost economic development for communities held back by limited or no access to the technology.  Secretaries Locke and Vilsack will also visit communities benefiting from these initial awards in the coming days.

Dawsonville is part of an entire northern Georgia region that stands to benefit from a $33 million award the Vice President will announce on Thursday for the North Georgia Network Cooperative, Inc.  The funding will bring sufficient broadband access to the same rural Georgia foothill communities that in the early 1960s benefited from significant investments by President Kennedy’s Appalachian Regional Commission.  ARC investments at the time brought a new job-producing textile and manufacturing base to these counties, including Union, Towns, Rabun, Habersham, White, Lumpkin, Dawson and Forsyth.

Now, almost 50 years later, the region is facing serious economic challenges as manufacturing jobs are cut and factories shuttered, and is looking to reinvent itself once again by building a technology-based economy – which is heavily dependent on broadband access.  The proposed project will benefit an eight county area with an estimated population of more than 334,000 people and pass through 146 county government facilities, 82 public schools, 7 technical institutions, colleges and universities and 4 hospitals. 

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 The release only named one of the winners. Once the whole list is revealed and I have some time to review the details on the proposals, I’ll write a full analysis. But in the meantime, there are a couple of interesting first impressions worth mentioning.

This is a middle mile project. One of my Twitter contacts indicated that this initial batch of winners will all be middle mile or infrastructure for anchor institutions such as hospitals, libraries, etc. If this proves to be true, it would seem to indicate that these are easier projects to rally around. Expect more of the same. The first batch of winners will only increase the pressure to award money faster, so why not go with what you know.

Biden should be giving these award winners a Purple Heart along with everything else given what applicants had to go through to get to this magic moment.  This Georgia project was challenged by a regional DSL service provider, which obviously didn’t alter the final outcome, so everyone should breathe a little easier knowing that a challenge isn’t an automatic kiss of death. In my opinion, though, a mechanism enabling incumbent providers to challenge an applicant for proposing to cover an area already covered loses some street cred when 11,000 challenges are filed. I immediately think of frivolous lawsuits. 

The northern Georgia proposal was endorsed by the Governor’s office, which if holds true for most of the other 17 awardees, then people who did not get a nod from their respective governors may start to get a little nervous. The precedence will be set for the agencies to follow the path of least resistance.

An interesting thing happened at the FCC’s meeting yesterday to give their progress report on the national broadband strategy they’re creating. Most of the news accounts of this meeting talked about how public activists are very unhappy that the FCC didn’t talk a lot more about how they plan to foster competition, in part with an open Internet that allows competitors to use the same infrastructure.

What caught my ear were the statements that said, in essence, community and public broadband networks are going to be part of the mix as far a the national strategy goes. Translation: municipal networks will be encouraged. The FCC crew at the field workshop on Monday in Memphis made a similar statement. And lookie here today. One of the first stimulus grant winners announced is run by a nonprofit public coop. 

The winds are blowing toward municipal run networks or municipal/nonprofit-driven public/private partnerships. I do agree that in the national strategy, emphasis needs to go to wrestling the incumbents into a position that opens up more Internet infrastructure to competition. But I also know that funding public and nonprofit networks guarantee some infrastructures will foster competition. I believe that these stimulus projects and FCC strategy will encourage more open public networks, particularly if Universal Service Fund reform produces billions in additional funding for open broadband infrastructure.

More here once I see the full list. 18.

Possible Game Changer in Broadband Strategy Development

It seems Universal Service Fund (USF) reform is THE news item of the day since yesterday telecos wireless ISPs and others filed comments with the FCC regarding the agency’s efforts in this initiative. The Feds want to expand the USF, which now mainly addresses telephone service in rural areas, to make a few additional billion dollars available for broadband.  

I put my comments on record with the general public a few weeks ago, but now’s a good time to bring these back around. Someone has to be the voice of the community and small telcos in the midst of all the big incumbents jockeying to  get FCC rules that favor their profits and adds more barriers to competition. 

Universal Service Fund Reform could be a game changer

The High Cost Fund is the specific USF program that would support the broadband funding. Currently it provides vital telephone services (and occasionally some broadband projects are funded) for which many are thankful. But there probably isn’t much resulting from this you’d call innovative. This can change if creative people are willing to influence the hearts and minds of those writing and eventually voting on the reform bill, as well as inspire the business thinking of rural telecom companies that are intended fund recipients.

Congress should change the High Cost Fund into a Digital Communication Enhancement Fund. Just nuke once and for all this concept that there are separate worlds of voice communication and data communication. It’s a digital world now, folks! Voice can be reduced to 0’s and 1’s similar to everything else we use to communicate information. Our legislation and rules for grants need to reflect and reinforce this reality.

[Read the rest of my FierceBroadband column here

Luckily. there are additional voices speaking up for communities in this FCC discussion, including these folks – http://www.benton.org/node/30365.

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