TMCnews Featured Article

August 26, 2009

Broadband Stimulus: Don't Get a Headache from the Incumbents' Latest Whine

By Craig Settles, Founder and President,

How do you know when you’re at a fine restaurant? According to some, by the responsiveness of its service and the quality of its wine. How do you know when the public is being played by the telecom incumbents? By the responsiveness of its service and the quality of its whine.
Right now, we’re being subjected to a particularly ridiculous varietal.
Shortly after the deadline for broadband stimulus grant applications, a program started by the poor or total lack of broadband service in many parts of the country, the incumbent whine started to flow. “We’re not going to play in the stimulus game because we don’t like the rules.” <pout> “You’re stupid ole game is a failure because we’re not going to play.” <foot stomp> One state even put out a public plea to Qwest (News - Alert), “please come back and play with us.”
All these articles you’ve seen starting the day after the deadline, I believe, are part of an orchestrated PR campaign by the telcos who want to set the stage so they can get incumbent-friendlier NOFA rules for Round 2 grant funding. “If the first round is a failure because we’re not playing, and we’re not playing because we don’t like the rules, then you need to change the rules to make us happy if you don’t want Round 2 to be a failure.”
Debunking the “failure” myth
Those of you queuing up community-focused broadband proposals, make your voices heard during the NTIA’s upcoming request for input on improving the rules, or else you could wake new ones that are worse than some of the current rules. This assumption that the incumbents not applying for stimulus spells failure for the broadband stimulus program is totally without merit because the logic underneath the claim is flawed.
Incumbents have said since Day 1 that they were disenchanted with the stimulus bill, and if you read between the lines during this time, you could see it was highly unlikely they would apply. I’m surprised their comments last week created so many headlines. You have to give the incumbent PR machine its due.
The flawed assumption driving the PR is that the incumbents are the only players who can make broadband a success. This thinking pervades the discussion nationally and sometimes locally. People need to wake up! There are various alternatives that are more beneficial to the drive for broadband. Look at the laundry list of communities, rural service providers, public-private partnerships submitting proposals and you see the success this stimulus is poised to deliver.
OpenCape, which is a community-driven application, has put in a proposal for $30 million. Eleven Maryland counties and other jurisdictions are seeking $100 million in stimulus grants.
Missouri and an electric power co-op have put in a proposal for that state for $142 million. California is a huge state and we had several multi-county projects on track for submission. Even Philadelphia is getting into the act with its own sizeable middle mile and broadband adoption proposal, probably one of very few large urban areas to apply. You don’t need a whole lot of applicants at these rates to easily exceed $3.5 billion.
Coalitions such as OpenCape and Missouri with its home-grown technology partner are the ones likely to produce some of the most successful networks because they’re being driven by communities to meet communities’ needs. They don’t have the profit motive that raises costs to consumers and businesses, nor leads them to abandon the network at the first sign of trouble. I believe these kinds of organizations will find more creative ways to build the financial sustainability of their networks.
Besides trying to get more favorable Round 2 funding rules, this incumbent PR campaign helps set the stage for projects such as these to become victims of the “backdoor” clause in the NOFA that gives incumbents a 30-day window to challenge applicants’ proposals. Currently there’s no opportunity for applicants to defend their proposal from these challenges.
As a counterweight to all of these negative activities, the grant applicants in every state need to continue their own PR campaign of announcing the details of their proposals. Start rallying constituents and lobbying their elected state officials and even their Congressmen and Senators to support their proposals, as well as support new rules that streamline this grant application process.
The governors of all the states will have an opportunity to give feedback on the list of applicants within their respective states that NTIA/RUS plan to fund. In fact, in quite a few states, the governor’s offices are contributors to, and the driving forces behind, large comprehensive proposals. This is one of your strongest leverage points. Use it!
Don’t sit silently on the sidelines. As your broadband strategy consultant, I’d advise rejecting this bad whine. Bring on the good stuff!

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Craig Settles helps organizations use broadband technologies to improve government and stakeholders' operating efficiency, as well as local economic development.

Edited by Michael Dinan