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Last Wednesday I discussed the absurdity of the PR campaign promoting the concept that the broadband stimulus program was a failure because the incumbent telcos and cable companies refuse to submit proposals.

 

Then Thursday morning the news broke that some 2,200 applicants submitted proposals totaling almost $28 billion in pursuit of the $4 billion that’s available from NTIA/RUS in this funding round. Hmm, so much for the “failure” gambit. On several levels it appears the stage is set for major successes. But let’s not count too many chickens just yet.

 

We should, however, look at the implications of this pretty amazing turnout on both the stimulus program and our national broadband strategy.

 

First, put the incumbents’ future role into proper perspective by considering the historical context. These captains of broadband industry were at the helm influencing lots of legislation and what little regulation there is, which has collectively contributed to the United States’ woeful broadband standing in the world. They refused to deliver broadband in many parts of the country while making it extremely difficult for competitors everywhere. 

 

Yes, 2,200 applicants bear witness to the fact that we don’t need the large incumbents to bring broadband to those communities that incumbents have ignored or poorly served. So go ahead and invite them to play a role in the future of broadband, but don’t bend over backwards to meet their demands that do not align with the public’s best interest. There are obviously many others who can step into the breach.

 

Second, we have to open the door wider (meaning less cumbersome, telco-centric rules) so all kinds of applicants have a fair shot at stimulus grants. Maintain rules that protect consumer interests, such as enforcing open access and net neutrality, requiring proposed projects to financially sustain themselves and giving extra points to networks that provide megs-per-second of speed. But deep-six rules that eclipse the public good, such as letting advertised speeds define broadband, convoluted definitions of last-mile, middle mile, remote, etc. and requests for profit projections when community networks define success in quite different terms.

 

Third, financial institutions and other investment sources need to sit up and take notice. Read the signs beneath the covers. 2,200 applicants waded through NOFA rules that required proposals document a strong business case, plausible financial sustainability once networks became operational and strong management teams. Applicants had to provide, or solicit from elsewhere, 20 percent of the total project costs. For $28 billion in requests there are $10 billion in private and local/state public funds have been committed to these proposals. These requirements are similar to those investors use to evaluate prospects.

 

We’re looking at reasonably well-crafted business plans for billions of dollars worth of broadband projects, backed with billions those creating the plans have brought to the table. Financial institutions need to examine some of these deals. With applicants collectively asking for seven times more money than what’s available, that means hundreds of business plans won’t get stimulus money, yet are worthy of other investment considerations.

 

Is this a pipe dream? I think not. Calix (News - Alert), a large communications equipment company that has lots of customers among the 2,200 applicants, just received $100 million in investments to help fully capitalize on the stimulus opportunities. If the financial community stops sitting on its assets, they might make a few dollars. The number of entities that applied and waiting on the sidelines for Round 2 funding proves the broadband need is widespread and isn’t going away, while applicants’ diversity reveals a deep well of innovation, creativity and planning that should inspire investors.

 

Last, but truly not least, if you look at the variety of applicants, one thing jumping out is that the answer to the question, “what should our national broadband strategy be?” lies in the communities with the need. Note this paragraph from the NTIA/RUS press release: 

 

“Applications came in from a diverse range of parties including state, local, and tribal governments; nonprofits; industry; anchor institutions, such as libraries, universities, community colleges, and hospitals; public safety organizations; and other entities in rural, suburban, and urban areas.”

 

I spoke two weeks ago on a panel for one of the FCC (News - Alert) workshops on developing national broadband strategy. An interesting experience. My main takeaway? The FCC and any of us involved with broadband as consultants, vendors and service providers are participants in the strategy development process, but the communities with the broadband need are the ones to drive the process. They own the problem and they have to live with the solutions. 

 

In my blog last week I laid out some guidelines that should govern what is essentially an end-user technology needs analysis exercise. As we see with the stimulus grant applicants, many of the ideas, the creativity and innovation are coming from the small towns, local stakeholders, regional providers, and those who work underserved communities daily.

 

It appears the FCC will be taking their workshops to the “field,” which I gather is Fed-speak for communities. The success of this field trip depends entirely how well the FCC listens and acts in response to what communities have to say.