http://www.bloomberg.com/apps/news?pid=20601070&sid=aaLAwKRK4Spg&refer=home
By Christopher Stern
Jan. 27 (Bloomberg) -- Qwest Communications International Inc. says it can start immediately on the kind of “shovel ready” projects to expand Internet service President Barack Obama wants to stimulate the economy. The company and the industry may be disappointed.
The current House version of the $825 billion stimulus package sets aside just $6 billion for broadband deployment, about a third of the amount that some Democratic lawmakers had wanted. In addition, the money comes with conditions that some companies said discourage them from participating in the program.
“It’s not a lot of money and then you have to jump through a lot of hoops to get it,” said Paul Glenchur, a Washington- based telecommunications policy analyst with Stanford Group Co.
While Obama made a campaign promise to extend the reach of high-speed Internet networks, the economic crisis forced the incoming administration to redirect resources to other programs such as repairing roads and bridges. In a bill before the House, Qwest would end up competing for about half the $6 billion for broadband, as $2.8 billion of the amount is set aside for smaller telecommunications companies that already serve remote rural areas.
Qwest ‘Disappointed’
“We continue to be disappointed,” said Shirley Bloomfield, Qwest’s top Washington lobbyist. She said the Denver-based local phone company operates in 14 Western states and can quickly put people to work digging trenches and installing fiber-optic lines in rural areas that lack high-speed Internet access.
That disappointment is shared by lawmakers such as U.S. Representative Anna Eshoo, a California Democrat, who had been pushing for as much as $15 billion in the stimulus proposal to extend the reach of broadband.
“I don’t think it’s enough,” said Eshoo of the current plan.
While Democrats such as Eshoo hold out hope for expanding broadband’s slice of the stimulus package, some Republicans are criticizing the broadband funding.
U.S. Senator John McCain, the Arizona Republican who made cutting wasteful government spending a hallmark of his own presidential campaign last year, said new wiring couldn’t be built fast enough to have an immediate impact on the economy.
Republican Objections
“That will take years,” McCain said on Fox News on Jan. 25.
Eshoo said improving broadband goes beyond helping California companies such as San Jose-based Cisco Systems Inc., the world’s largest maker of networking equipment. She said the U.S. now ranks 16th in the world for broadband penetration and Internet speed, with South Korea in first place.
“Our country is way behind,” Eshoo said.
Separately, Senator Jay Rockefeller plans to propose including in the stimulus package tax credits to encourage telephone, cable and wireless companies to expand broadband access, an aide said. The West Virginia Democrat is chairman of the Commerce Committee, which is meeting on the plan today.
Obama, 47, continues to highlight broadband expansion, which he mentioned in his inaugural address and his first radio address as president, on Jan. 24, when he called for “expanding broadband to millions of Americans.”
In a speech last year in Flint, Michigan, Obama described a more ambitious broadband agenda.
“As president, I will set a simple goal: every American should have the highest form of broadband access, no matter where you live, or how much money you have,” he said.
Economic Crisis
That campaign rhetoric, however, has clashed with the fiscal situation he inherits. The Digital Policy Institute at Ball State University in Muncie, Indiana, estimates that it would cost $28 billion to build high-speed Internet networks for the parts of rural America that currently have no broadband access.
Under the current plan, the government is going to administer two grant programs, one through the Department of Commerce and another through the Department of Agriculture.
Companies that accept grants would have to fulfill several conditions such as a timetable for starting and finishing completion of the networks.
The grants would be conditioned on companies building so- called open-access networks, which would allow other companies to offer competing service over the same lines.
Those requirements, which are still vague, are causing concern among the companies that would be most likely to participate in the program.
‘Chilling Investment’
“We thought this effort was supposed to be about stimulating the economy and stimulating investment and not chilling investment, and frankly additional conditions would likely do that,” said David Zesiger, the senior vice president for public policy and external affairs for Embarq Holdings Co. LLC., an independent local phone company based in Overland Park, Kansas.
Zesiger said several states already have grant programs that subsidize construction of broadband networks in rural areas with fewer conditions.
Like Bloomfield at Qwest, Zesiger said his company could hire workers, including some of the 500 that it announced would be laid off this year, “effectively immediately,” if they could get the stimulus funds.
The conditions imposed on the money could limit his company’s participation in the program, he said.
“This is about getting out of the way of business so they can invest money, hire high-tech jobs and deploy broadband that is economically valuable,” Zesiger said.
Unprecedented Opportunity
Both Bloomfield and Zesiger said the stimulus package could be an unprecedented opportunity to connect rural Americans to broadband by subsidizing lines in areas so sparsely populated the company can’t afford to install them without government aid.
“If there were a business model to do this, we would be doing it right now,” Bloomfield said.
U.S. Senator Mark Warner of Virginia, who previously worked as a telecommunications-industry executive, said companies must expect some strings in exchange for taxpayer money to build networks.
“If you are taking federal dollars, you’ve got to agree to certain principles,” said Warner, a former Virginia governor.
