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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