September 16, 2014 Jessica Sims
Broadband Stimulus Round Two and You

Broadband Stimulus Round Two and You

$2.7 billion dollars.  That is a lot of the proverbial cheese, and it is the current number of U.S. Dollars being dedicated to revitalizing the nation’s flagging broadband infrastructure by the Obama administration.  On Friday, President Obama announced a new round of grants, loans, and other government programs that were expected to comprise approximately $1 billion of that $2.7 billion figure, and add a projected 5000 desperately needed jobs.  These jobs could prove to be a godsend for those that have been laid off from industries that look as if they will be outsourcing as the shaky economy continues to recover.

Broadband is America’s Future

America is a country that is increasingly moving towards an economy based on the exchange and licensing of intellectual property, and broadband plays a major role in this.  After all, how can the next generation of backup software or IPTV be developed in a nation that suffers from dismal broadband performance?  In short, falling behind now will mean giving up entire avenues of research and development on American soil and that could result in catastrophic long term damage to the economy and future of America.

The Washington Post quotes Obama as saying “And once we emerge from the immediate crisis, the long-term economic gains to communities that have been left behind in the digital age will be immeasurable.”

Whether you are a-political, ultra-partisan, or on the political fence, it would be hard to disagree with that observation.

Political Divide and Broadband

While few politicians would debate the merits of shoring up the nation’s flagging broadband infrastructure, the ultra-polarized partisan conflict in Washington D.C. has led to many picking Obama’s plan apart.  The Washington Post has criticized this effort as being nothing more than a continuation of a previous effort that did not generate a significant increase in jobs.  Whether or not the statistics used by the Washington Post as genuine and unbiased is debatable, but it is certainly not debatable that both parties disagree strongly with how the money should be spent.

For example, the Miami Herald offers this interesting Obama quote on the subject of broadband stimulus: “We’re competing aggressively to make sure the jobs and industries and the markets of tomorrow take root right here in the United States. We’re moving forward. And to every American who is looking for work, I promise you, we are going to keep on doing everything that we can.”

This quote seems in line with current FCC programs to help ISPs hit the 100/100 by 2020 standard as well as in line with previous comments made by Obama about the economy.  Unfortunately, all politicians are given to speaking out of both sides of their mouth.  Whether or not the $2.7 billion will help generate new jobs or have a tangible effect is a big question.

How Much Broadband Will $2.7 Billion Buy?

Obama’s newest broadband stimulus plan offers loans and grants under a number of conditions.  Companies that retrain out of work individuals can receive a substantial grant for doing so, though there is some debate as to whether or not the amount of money in grants on a per-individual basis is enough to entice large ISPs.  Smaller ISPs may also benefit from the new round of stimulus money in the broadband sector, but it would seem that they would be at a slight disadvantage unless they already had relatively deep pockets.

The problem is that smaller companies lack the financial means to go out on a limb and wait for the government repayment to kick in, at least in many cases.  This could be a signal that the government is backing off of its previous stance that seemed to favor giving startups a decided edge over larger broadband providers.  While small companies may not benefit as much as they were hoping, there are still plenty of incentives for smaller and medium sized broadband providers that are willing to hire workers and expand their reach.

So, just how much will $2.7 billion in broadband stimulus buy?  If measured by jobs, the estimate is that the number will be around 12,000 over 3 years with the new round of budget increases accounting for nearly 5,000 of those in the next 12 months.  Schools, libraries, and other public places should also receive tangible benefits from incentives that specifically target fiber optic deployments.

What Will $2.7 Billion in Grants Get You?

The big question that just about everyone has whenever the government starts talking about spending money on programs is something along the lines of: “What’s in it for me?”  Fair enough question to ask, yet a difficult one to answer.  For those living in big cities, the answer is likely to be little to nothing as big cities are already places where there are strong incentives for broadband providers to compete.  The first round of broadband stimulus did see more ‘middle mile’ fiber deployments that brought fiber a few miles closer to many big-city residents, but it is widely believed that actually FTTH deployments due directly to the government broadband stimulus have been few and far between.  This trend is likely to continue as the government’s motives are rather clear: get broadband to people who are being under-served.

This is bad news for satellite broadband providers, but it could be excellent news for anyone living in an area that is under-served by broadband providers.  How can you tell if you are under-served?  Here are some guidelines:

  • You have no broadband options at all.  Hello dialupYou have mail!
  • You have a single broadband option.
  • Your only broadband option is ISDN or a T-line.
  • You have two or three options, but they are all slow.  20 Mbps is on the cusp of being considered slow, and will be incredibly slow by the end of 2011.

Feedback

We’d like to know how the new stimulus package sounds to you.  Do you feel that it will help increase broadband availability and/or quality in your region?  Will it bring about more jobs?  Or is this just another case of politicians blowing smoke?  Let us know what you think in our comments section.

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