January 2009 Archives

What Broadband Competition Means In A 100Mbps Nation

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"Competition" is a key buzzword in telecom policy. Existing providers think there's plenty, while many public interest groups think we need more. But getting in the way of effective policymaking is that the truth lies somewhere in between.

If you only consider the broadband speeds of today then in some areas the marketplace can look pretty competitive. Between cable, DSL, possibly fiber, and a variety of wireless technologies, consumers do often have multiple choices for 1Mbps+ service.

And as new wireless technologies are deployed the possibility of a competitive 5Mbps marketplace isn't out of reach over the next few years.

But let's look forward to 2015. That's the year that Senator Rockefeller and others have set out as the goal for achieving a 100Mbps Nation. What will competition look like then?

First off, DSL and BPL are out of the picture. BPL in particular may find more targeted uses than delivering generic connectivity, but neither of these technologies are able to deliver 100Mbps, and assuming 100Mbps is universally available DSL is likely to go the way of the dinosaur.

Secondly, while wireless 4G technology promises speeds at 100Mbps, there's no guarantee these networks will be universally available in the US, their claims of 100Mbps refer to the capacity of each tower not how much each user will get, and a number of factors can contribute to lowering that number further, like rain and fog. No other existing wireless technology can reach 100Mbps speeds besides point-to-point systems that don't offer the advantages of mobility.

So what are we left with? DOCSIS 3.0-enabled cable and full fiber networks. That's it.

Assuming consumers will need and demand reliable 100Mbps speeds by 2015, that means the most competition we can hope for is between cable and fiber.

Taking that a step further, the only chance we'll have any broadband competition at 100Mbps is if we have a fiber pipe to every home, otherwise we'll be left with a cable monopoly, which is less reliable with fiber.

This doesn't mean wireless goes away, just that as overall demand for bandwidth outstrips the capacity of wireless it will become increasingly clear that it doesn't compete with wireline, it's complementary to it. Though within the wireless world there's likely to be competition between companies and technologies for quite some time.

What this all means is that contrary to industry opinion, without someone deploying fiber we either won't have any competition or we won't be able to achieve a 100Mbps Nation. But contrary to public interest opinion, the best competition we can hope for is a duopoly in a 100Mbps Nation.

Of course there's always a chance a new technology will come about that will enable 100Mbps competition either over wireless or copper. But not only does it need to be invented it will have to be deployed, which will be expensive and take a lot of time. Because of this we can't afford to wait around for something to show up that may never arrive.

Instead a pragmatic national broadband strategy must acknowledge the truth about competition in a 100Mbps Nation, and make one of two choices:

- Specifically support the deployment of both DOCSIS 3.0 and fiber in the hope of preserving competition between technologies.
- Or focus on establishing competition between services on the same strand of fiber.

This second option is important to understand and consider as with fiber everywhere it would be relatively easy to enable a world where any number of service providers could compete over the same infrastructure. In fact, our only hope for insuring competition beyond a duopoly in a 100Mbps Nation is if we pursue this model.

Looking further ahead there will come a time when we'll need a 1Gbps or even 10Gbps Nation and beyond, the outlook for competition between last-mile access technologies looks increasingly bleak.

At some point in the not-too-distant future demand for bandwidth will outstrip the supply that copper cable networks can offer. The total capacity of a cable plant today is 5Gbps if you took out TV. But fiber has no real limitation. While cable's testing 300Mbps service in the labs today, fiber's being tested at 6Tbps, or 20,000 times higher than cable.

And the odds of any other technology coming along that can keep up with fiber are essentially zero as fiber transmits data at the speed of light. So this will eventually lead us into fiber being a natural monopoly.

The only way we can prevent this is by either getting multiple fiber pipes to every house or encouraging competition between services on the same pipe. But given the high cost of deploying fiber and its ability to accommodate any number of service providers, the former of these approaches doesn't appear to be the most pragmatic relative to concentrating investment on establishing the latter.

But the most important takeaway from this post isn't necessarily that we need to be moving full-steam ahead to a One Pipe, Multi-Service World, which may take decades to fully realize, but instead that we must acknowledge the shifting dynamics of broadband competition that will be taking place over the next few years.

We can't afford to continue taking a "all broadband is created equal" approach and assume that all broadband will be roughly equivalent for all time. If we do then we risk not even having the competition of a cable/fiber duopoly.

And this isn't a discussion about some time in the distant future, we're talking about less than a decade. Policymakers need to understand that the broadband they're subsidizing today will be in place for at least a decade. So while these may sound like way out there issues, the decisions being made today must take into consideration where the market's going tomorrow otherwise we'll hamstring our country's ability to continue evolving its digital economy in the 21st century.

To date the reactions I've seen to the rural broadband portion of the economic stimulus package have ranged from mild satisfaction to mild dissatisfaction.

Those who like it are glad to see open access provisions and appreciate the sense that this won't just be another government handout.

Those who don't either think it's not big enough, it's too big, or it won't work fast enough to create jobs and stimulate the economy.

But what's disappointed me about all this is the general lack of effort being put forth to discuss if there could be a better way to accomplish our goals than what's been laid out so far. All I've seen on this is nothing more than companies and interest groups continuing to push their now-weeks-old plans that quite frankly are no longer relevant.

The new administration and Congress have set pretty clear parameters as to what the economic stimulus package is going to focus on with regards to broadband. So talking about what could've been is not nearly as important right now as helping insure that whatever can and does pass actually works well.

So let's unpack what a broadband stimulus package should do and then see if we can craft a new policy framework that takes a more comprehensive approach towards bringing world-class broadband to rural America.


My take on what a broadband stimulus package must do is simple:

- Spur deployment of networks
- Create jobs
- Provide long-term value
- Work as quickly as possible

With this in mind, the first thing I'd do is identify if there is any backlog of shovel-ready projects that policy can help get moving. These are the projects that can start deploying and creating jobs most quickly, in weeks rather than months or years, so this would be my number one priority.

The second thing I'd do is put resources into the hands of communities so they can start determining their own fate now rather than waiting for higher levels of government and industry to make decisions for them. Empowering communities that already know what they want but need a little help getting the ball rolling is essential if we want to build momentum that can sweep across all of rural America.

The third thing is make a big pot of money available to anyone willing to bring broadband to the unserved as quickly as possible.

The fourth thing is to provide a mechanism whereby competition can still be encouraged so wherever possible we don't invite the establishment of monopoly providers.

And the fifth thing is to start writing checks to get all education, healthcare, and government facilities wired together as we can't afford to have any of these vital institutions not online.

So with these thoughts in mind, let's consider a specific policy framework that can accomplish all these goals in a comprehensive manner.

Framework for a Comprehensive, Pragmatic Rural Broadband Stimulus Package

Size: $10 billion
(I've argued before that 10% of all stimulus dollars going into infrastructure should be spent on broadband. With $140 billion currently slated for infrastructure, a bump up from $6 billion to $10 billion is the least we can do for rural America.)

Structure: A five-pronged approach to spurring deployment

Fast-track partial loan guarantees for full fiber networks - Everyone agrees that full fiber networks are the gold standard for broadband. There's a bigger backlog of shovel-ready rural fiber projects caught in the credit crunch than any other form of broadband. By making these guarantees available we'll loosen up capital, and by not relying on government handouts we'll require these fiber networks to prove their financial viability to the private capital markets. In this way we can bring world-class broadband to huge swathes of rural America and start creating jobs immediately. ($1 billion, RUS)

Matching grants to communities without fiber for preplanning costs - We have to give communities a chance to determine their own future, and we should be rewarding those communities that are ready to move forward aggressively into that future. By providing these matching grants we'll empower communities to organize and either attract private providers or put in motion plans to build their own networks. ($1 billion, RUS)

No-interest loans for projects bringing broadband to unserved areas - If a community doesn't have any broadband we need to move with all haste to get them connected, even if it's only with the broadband of today and not tomorrow. We make this money available, set parameters around which projects are eligible (like any project that at least half of which is bringing 3Mbps down/1Mbps up to unserved areas), and let the marketplace fight over who gets government support to deploy to these areas. ($2.65 billion, RUS)

Competitive tax credits - We want to avoid establishing monopolies and spur the deployment of all broadband technologies wherever possible, so these tax credits would be available to any company bringing 5Mbps down/1Mbps up service to communities that don't already have those speeds, as well as any company bringing 45Mbps/15Mbps service to any rural community. ($2 billion, NTIA)

State-prioritized grants to connect education/healthcare/government facilities - States should have the best sense for where there are schools, hospitals, libraries, and other government facilities with inadequate connectivity. Allow them to identify those areas and then have government step in to make sure these vital institutions get connected. Particular emphasis could be put on projects that touch the greatest number of users. And grants could be rewarded through a competitive bidding process where private providers try to come up with the best ways to leverage existing assets to get these networks built quickly and cheaply. ($3 billion, NTIA)

Mapping of broadband availability and adoption - I've got no complaints about funding these efforts but we should make sure the data we collect is comprehensive. For availability that includes price, speed, and reliability. For adoption that includes not just how many people but also how are they actually using it. ($350 million, FCC)


By taking this more comprehensive approach towards stimulating rural broadband deployment we can bring the fastest speeds in the most expedient manner while maximizing the impact of government dollars.

So what do you think? Are there any other ways we could improve upon the policy proposals that have come out of DC? If you have any thoughts add them as a comment below!

Why Republicans Should Love The Rural Fiber Fund

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The Rural Fiber Fund is precisely the kind of broadband stimulus Republicans should be able to behind. Why? Because it aligns with many facets of their core ideals. Let me count the ways:

1. It's a small government initiative.
At the core of the RFF is an effort to reduce the need for burdensome administration and regulations so that government can support the acceleration of broadband deployment and not slow it down as most other big government programs have done to date.

2. It's market-driven.
Instead of government trying to determine what projects are financially viable, the RFF leverages the expertise of the private capital markets to pick projects worthy of funding. In this way we move government away from picking winners and losers and instead rely on the market to decide.

3. It's community-centric.
Rather than a top-down approach of federal and state government making decisions about what's best for communities, the RFF equips localities with matching grants for preplanning costs that will help them determine their own future. By doing this we reward communities that are progressive over those that are just politically connected. We don't just hand out entitlements, we support those who take the initiative.

4. It maximizes government dollars.
Grants count dollar for dollar against the budget. Loans demand lots of administrative overhead to vet applications and require government to take on all of the risk. Partial loan guarantees, though, leverage private capital to share the risk and put up the funds to build networks while reducing the cost of administration. For every billion dollars worth of budget authority, $25 billion in loan guarantees can be distributed, which enables $50 billion in private investment.

5. It will allow America to compete in the global economy.
If globalism is a good thing and we prioritize competition over protectionism, then we need to get America equipped with the world-class broadband of full fiber networks that our global competitors are already deploying. Anything less will set us at a competitive disadvantage and hurt our ability to maintain our position as an economic leader in the 21st century.

6. It secures the future of small town America.
If Republicans truly believe that the heart and soul of America can be found in small town America, then they need to prove their commitment to the continued viability of rural communities by supporting this initiative that will bring them the world-class broadband they need so they can not just survive but thrive in the digital economy.


I don't consider myself a Republican or a Democrat, but at a time when the relationships between the two sides are splintering during the debate around the economic stimulus package, the Rural Fiber Fund seems like the rare opportunity to push forward a program that can garner bipartisan approval.

So I'd encourage all Republicans on the Hill to consider strongly the possibility of supporting and even championing the inclusion of the RFF as one of their contributions to the overall economic stimulus package. By doing so they'll demonstrate their forward-looking tech savvy, prove their commitment to rural America, and be able to claim credit for the transformative changes that will begin to occur as fiber gets deployed across rural America.

I continue to be amazed at how many respectable, knowledgeable people still think that DOCSIS 3.0 is the answer to all our broadband problems.

Take this blog post by Saul Hansell on NYTimes.com entitled: "Does Broadband Need a Stimulus?"

Let's parse through the details of the arguments he's trying to make:

"The notion of a broadband gap is hooey."
While I have my qualms with the OECD rankings I can't see how anyone can say with a straight face that other nations aren't ahead of us on the broadband curve. And then there's the glaring gap between suburban and rural communities within the US. To say there is no broadband gap is wrongheaded at best and misleading at worst.

"With new cable modem technology becoming available, 19 out of 20 American homes eventually will be able to have Internet service that is faster than any available now anywhere in the world."
First off, we can't discount the importance of reaching that 20th home; they don't deserve to be left behind and rural communities need more robust connectivity than more densely populated areas.

Secondly, a key word in this is "eventually." What does that mean? How long will it take for DOCSIS 3.0 to get everywhere? At the pace it's going now possibly decades.

Thirdly, what good is "eventually" delivering service that is faster than is available today? Can we guarantee that it will be fast enough to keep up with the demands of tomorrow?

"Running a new fiber-optic cable to every American home may well increase competition in broadband providers, but it isn't needed to deliver high-speed Internet service."
The only way we'll have competition in wireline broadband is if there's a fiber pipe and a DOCSIS 3.0-enabled copper pipe. Without fiber, cable will become a monopoly as demand for bandwidth increases and wireless can't keep up. If we want competition, we have to have fiber.

Additionally, while you may be able to deliver "high speed" Internet service, cable networks will always be less reliable than fiber. They're more prone to equipment malfunctions, and the more people using the cable network the worse its quality becomes. If we want people to rely on networked experiences more, they need reliable networks, and that means fiber.

"What is most significant about Docsis 3 is that it turns out to be quite inexpensive to upgrade existing cable systems to use it. As a result, Comcast and other cable systems are already deploying the technology rather quickly. In other words, with no government intervention, the country is going to have the infrastructure very soon to provide almost everyone with the fastest possible Internet service."
True upgrading cable networks to DOCSIS 3.0 is cheaper than laying new fiber, which is why I'm all for seeing all cable networks get this upgrade. But to say this technology is being deployed "rather quickly" is rather disingenuous. Only some cable operators are deploying it at all, and most of those are only doing so in areas where they face competition from fiber. It'll be many years before DOCSIS is anywhere near universally available.

And to say that DOCSIS 3.0 will deliver "the fastest possible Internet service" is just plain false. Sure it may eventually be able to bring 1Gbps to homes, but fiber can deliver 100Gbps+ today. DOCSIS 3.0 or not, delivering data via electricity over copper has physical limitations, whereas sending data via light through glass has no limits. If we want to be able to enable space-age 3D experiences that go beyond just HD then we're going to need big broadband highways that can add lanes indefinitely to keep up with demand, and that means fiber.

"Also, much of the money devoted to wired broadband is meant for service that is at least 45 megabits per second, faster than all but a few homes can get now. But since the technology to deliver service that fast is already well developed, this may not have much impact other than making sure that when some people get broadband for the first time, it will be of the very fastest speeds."
Saul finishes his piece by glossing over one of the most important aspects of the debate over rural broadband. It's vitally important that as we're getting people online we're providing them with infrastructure that can deliver the fastest possible speeds both today and tomorrow. This may be our one shot for the next decade to subsidize broadband deployment to rural areas, so let's make sure we do this right the first time and bring broadband that's truly world class to every corner of our great nation.


In summation: Look, I'm not saying Saul's a bad guy who doesn't know what he's talking about and who may be on the cable companies payroll, he's just misguided. He's looking at broadband through the paradigm of today and not tomorrow. He understands the need to get big broadband connectivity, but wonders why spend all the money for fiber when you can get the functional equivalent in DOCSIS 3.0.

What he fails to understand, though, is that only fiber has the capacity to keep up with the demands of the 21st century. Only fiber delivers the reliability we need to created reliable networked experiences. And only by having fiber can we have competition in wireline broadband.

He also fails to touch on the upload side of the equation. Every DOCSIS 3.0 deployment that I've seen to date is still heavily asymmetric, with much slower speeds upstream than downstream. But if we continue going down this road we're going to enable consumers without empowering creators. We're going to encourage a digital economy where we only import rather than export digital content. We're going to miss the opportunity to encourage a generation of lean-forward mass media, where citizens actively engage in rather than passively watch the rebirth of America in the 21st century.

The simple, inescapable truth is that DOCSIS 3.0 or not, we can't build the next 100 years of our economy on a copper infrastructure; we need fiber. Anything less and we're committing ourselves to a future of being good but not great. And that's something I and others can't and won't accept.

An Analysis of the House Broadband Stimulus Package

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Now that we have draft legislation from the House we can start diving into the details of the broadband stimulus portion of it.

The breakdown is this:

$2.825 billion to RUS for loans, loan guarantees, and grants to projects where at least 75% of the area to be served "shall be in a rural area without sufficient access to high speed broadband service to facilitate rural economic development."

$350 million to NTIA for establishing and funding the State Broadband Data and Development Grant Program, which will track the availability and adoption of broadband.

$2.825 billion to NTIA for Wireless ($1 billion) and Broadband ($1.85 billion) Deployment Grants where wireless grants must prioritize unserved areas without wireless voice and underserved areas without wireless broadband, and broadband grants must prioritize projects that bring basic broadband service to unserved and advanced broadband to underserved areas.

Here are some questions I have about these parameters and some of the details found therein:

Why split the baby between two agencies?
If the goal is to bring government dollars to un/underserved regions, then why are we splitting that money up between two agencies with overlapping agendas? The only differences I can see is that NTIA's money is grants only but can be used for projects anywhere, and RUS's money can be loans, loan guarantees, or grants but only be used in rural areas. The question becomes, if a project qualifies for both programs, which should they apply to? Also, how will these two agencies coordinate their efforts to make sure they're not missing opportunities for projects to leverage each others' assets in order to create a greater whole?

My take: I'd focus each agency more narrowly on a specific task. This could be as simple as saying RUS handle rural and NTIA everything else, or have both focus on rural but have RUS deal with residential and NTIA institutional. But however else this could be split up, it's vitally important that there are mechanisms in place to coordinate funding between the two agencies, at a minimum so they're aware of what the other is doing.

Why subsidize "high speed" broadband and wireless voice but not fiber?
Of course some connectivity is better than no connectivity, which is why this bill supports deploying "high speed" broadband and voice-only wireless networks. But in the context of an economic stimulus package full fiber deployment creates the most jobs in the short-term and provides the greatest long-term benefits. In fact, only fiber delivers the connectivity needed to spur rural economic development if the goal is that businesses in these areas need to be able to compete in the global economy.

My take: If we're going to specifically subsidize yesterday's broadband then we should put at least the same amount of support behind tomorrow's broadband, especially since fiber deployment will have the greatest impact on stimulating the economy.

Why separate wireline and wireless support?
First off, you can't have wireless without a robust wireline network to plug into. And once you have that robust wireline network, wireless becomes easy. So the most efficient/effective broadband networks are those that include both components. By splitting support we risk encouraging the deployment of disjointed networks.

My take: I'd get rid of the distinctions entirely. Instead create a simple chart/equation that weighs the number of unserved homes that will be connected and underserved homes that will be delivered advanced broadband and reward grants based on that. If we're going to be technology neutral we shouldn't be distinguishing between wireline and wireless. And we can't afford to limit the deployment of integrated networks as the future will be one where both wireline and wireless connectivity is universally available.

Why force artificial timelines on an overburdened NTIA?
So the bill says that half of the NTIA grants must be distributed by Sept 30th of this year despite the fact that even if everything goes right they won't be ready to start giving any money out until the second half of '09. And to have any hope of the NTIA being ready to make sound decisions about which projects to fund by then means both that the FCC is able to define contentious terms like "underserved" and "open access" in a timely manner and that the DTV transition doesn't drag on as a continuing distraction.

My take: I can understand why the Sept 30th deadline was put in--as a way to make sure this money gets flowing and stimulating the economy quickly--but when you look at the timing and complexities of everything doing this seems likely to set NTIA up for failure. If the idea is to give one grant to all 50 states, then let's say their goal is to have 25 grants lined up by Sept 30th. Assuming each state has at least 3-4 applicants and that applications won't be able to start being accepted and reviewed until April 1st when the definitions are set, that leaves roughly 120 working days to vet 75-100 applications and distribute $1.4 billion equitably and effectively. An alternative to this would be to set a rule that prioritizes and fast tracks shovel-ready projects. Each state could submit one project that's already ready to go that could be approved quickly so they can start deploying immediately. This fast lane would only be available to projects that have already been in the works and that have most if not all of the details worked out. Then instead of saying every state gets its fair share, I'd weight things towards a first-come-first-served model in an effort to reward progressive states and incentivize the laggards to get moving more quickly lest they miss out on the grants.

Why limit projects to 20% of a state's area/population?
The primary reason would seem to be to insure each state gets their fair share and a secondary reason could be to insure incumbents don't face competition that's too widespread. Yet I'd be willing to bet that in a state like Montana well over 20% of its area must be underserved since so much of it is rural. And even though NTIA grants can be used for non-rural areas, by restricting population percentage we're basically saying that bigger cities in smaller states can't qualify even if they are underserved.

My take: I'd remove this provision. If the point is to make sure there's enough money to go around, then I'd either increase the budget or use this as an opportunity to spur competition between states as mentioned above. If a project's going to reach 25% of a rural state instead of 20%, I can't see how that's a bad thing, especially as the bigger the project the better the economies of scale, so we want to be encouraging large-scale deployment not discouraging it.


After having a chance to more thoroughly review the House's proposal and discuss it with others I find my opinion of it becoming increasingly favorable. While I may not agree with all the details and still think it could be improved, there's no denying that this policy shows that our policymakers are more worried about the public good than private interests, and that they're willing to take bold steps to push America into its digital future.

It leaves me optimistic that 2009 will be a truly transformative year for national broadband policy and more excited than ever at having the opportunity to be here in DC in the heart of the action.

Misconceptions About Rural Broadband

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One of the more frustrating things I've had to deal with in advocating for the Rural Fiber Fund are the many misconceptions about what it'll take to crack the rural broadband nut.

But by clarifying a few key points we will better understand the challenge and therefore be better able to craft a more effective legislative solution. Let's jump right in:

All rural areas are uneconomical to deploy broadband to without grants.
Not true: some fiber deployers actually prefer to build in rural areas as they're able to realize extremely high take-rates. And while there are remote areas that will need grants to get connected, all the deployers in the Rural Fiber Fund Working Group require to start bringing world-class broadband to rural America are partial loan guarantees.

Rural networks need continuing government subsidies like the USF to stay afloat.
Absolutely not. All of the projects that will be enabled by the Rural Fiber Fund will be self-sustaining, based on business models that offer great services at fair prices without government having to write a support check every month.

Rural America doesn't need/deserve world-class broadband.
While in theory most would disagree with this, actions speak louder than words. By setting lower speed requirements for rural areas than urban and suburban communities we're basically saying that we're OK with rural America getting left behind again. That bringing them up to today's broadband is good enough and that we don't care if or when they actually get the world-class connectivity that they need to compete in the global economy and that only fiber can deliver.

The market will eventually bring them world-class broadband.
The whole point of government intervention is that the market isn't working. So what that means is these communities will likely only get whatever broadband government incentivizes the deployment of. This means if we spur today's broadband that'll be all they have tomorrow, which is why we should focus at least some attention on equipping them with tomorrow's broadband so that they can be competitive well into the 21st century and not just the next few years.

Government has all the solutions and should make all the decisions.
By focusing solely on a top-down approach of federal grants prioritized by state governments we do nothing to empower local communities to make decisions or leverage market forces to guide investments. The Rural Fiber Fund provides a mechanism that's both community-centric and market-driven, a bottom-up approach that supports financially viable projects and rewards communities that are engaged, committed, and ready to move versus those that are politically well-connected.

Rural America can wait for world-class broadband.
These government grants won't even start to be distributed until the second half of '09. By that point billions worth of shovel-ready Rural Fiber Fund projects could have already been deploying for months. Deploying new networks takes time, so the sooner we can get people moving the better. And the rest of the world isn't waiting around for us to catch up. The longer it takes to stimulate deployment the further behind rural communities will fall.

$6 billion in grants is enough to make a difference in rural America.
Now $6 billion is nothing to sneeze at, and it's supposed to lead to $10 billion in rural investment, but that's not enough. In total it's going to take upwards of $50 billion to lay fiber to every last home in rural America. So enabling anything less than $20 billion in investment will have limited impact, at best incremental rather than transformative. And simply giving out grants will only benefit those lucky few projects that receive them, whereas the Rural Fiber Fund can be a tool that benefits all rural fiber projects.


So there we have it: we can get rural America sustainable world-class connectivity sooner rather than later so long as we don't let these misconceptions get in the way of establishing a community-centric, market-driven approach to spurring deployment.

We can change the course of history and secure the future of rural America through the establishment of the Rural Fiber Fund.

Goal: Spend stimulus dollars in the most effective and efficient way to equip rural America with the world-class broadband they both need and deserve.

Solution: The Rural Fiber Fund.

Fiber is our future. It's the only broadband that's considered true 21st century infrastructure, and only full fiber networks equal world-class broadband.

Whatever broadband we subsidize today rural communities will be left with for decades.
We should do this right the first time and make sure they're not left behind again.

The Rural Fiber Fund uses government guarantees to unclog billions from the capital markets to shovel-ready rural fiber projects, and sets communities on the path to a connected future.

The Rural Fiber Fund includes:

$5 billion of Government Guarantees
Partial loan guarantees available to all models of owner/operator/capital or
Backstop guarantees for municipal bond insurers.

Allocated on an sliding scale of density relative to percentage: >25HH*/40% to <10HH/60%

Guarantees cover all losses on this percentage of the total value of defaulted loans/bonds.

A fast-track approval process awards guarantees within 60 days to all market-ready projects. Once granted, projects have 120 days to secure capital before the guarantee expires.

$5 billion budget equals at least $20 billion in guarantees enabling $40 billion in investment.

* HH = premises per linear mile of inhabited road

$1 billion of Matching Grants
Available to all eligible communities

A 10/90 match where the federal government covers 90% of preplanning costs such as feasibility studies and engineering expenses while the community puts up 10%.

These grants could provide $100,000 to 10,000 rural communities.

Community - Communities must be <20,000 residents and not have a full fiber network.

Project - Projects can include communities up to 50,000 so long as the overall density of the project does not exceed 25HH. All projects must live up to the Network Requirements. Simultaneous wireless deployment is encouraged but can not exceed 20% of the total project.

Market-ready Project - Projects must be ready to take a government guarantee directly to the capital markets and once funds are available start deploying immediately.

Applicant - All owner/operator models are eligible with explicit legitimization of municipal models. All forms of capital can be guaranteed as well.

Network Requirements
Universal Access - RFF projects must build out to anyone wanting service in an exchange.

Open Access - RFF networks must pledge to follow the spirit of common carriage, with the specific requirements to sell bandwidth to anyone, to not interfere with legitimate Internet traffic, and to be transparent in any network management practices.

100Mbps to 1Gbps - RFF networks must be able to support at least 100Mbps of symmetrical in-network capacity to every home initially, and be scalable to 1Gbps in the near future.

Stimulus Impact
The Rural Fiber Fund Working Group includes more than $3 billion of shovel-ready rural fiber projects that can be approved within weeks and deploying in months, creating jobs.

Supporting communities with matching grants will set in motion a second wave of projects ready to apply for guarantees within months and be deploying before the end of the year.

And fiber will deliver more long-term benefits to rural America than any other broadband.

Loan guarantees can be distributed quickly through a streamlined RUS approval process.

Matching grants can be administered on a first-come-first-served basis by either RUS or NTIA.

To join the RFF Working Group add a comment below and we will contact you.

Advantages of the Rural Fiber Fund

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The Rural Fiber Fund Working Group supports the intent of the rural broadband grants in the draft stimulus package but respectfully suggests that for the same money the RFF can deliver greater stimulus faster and more benefits in the long-term while requiring less administration.

The Advantages
Market-driven approach - Communities decide what they want, capital markets decide if the project's financially viable; government doesn't pick winners and losers, the market does

Light government touch - A streamlined administration enables rather than inhibits innovation

Works for everyone - A tool that can be utilized by and benefit all owner/operator models

Unclogs capital markets - By sharing risk through loan guarantees capital will start flowing

Empowers communities - Matching grants give communities tools to determine their future

World-class broadband - Fiber empowers rural America to not just access the Internet but to compete on a level-playing field in the global economy

Creates the most jobs - Deploying fiber creates 33% more jobs than any other broadband

Enables creative class - Fiber means people can not just consume content but produce and distribute it as well, creating a digital economy that doesn't just import but exports too

Long-term investment - Imagine roads that can expand as traffic grows - that's fiber

Most bang for the buck - Loan guarantees get two multipliers as each guarantee creates twice as much investment yet only a fraction of that guaranteed dollar counts against the budget

Will work quickly - Get more than $3 billion of projects caught in the credit crunch moving

Compared to Rural Broadband Grants
It'll take months for grants to be distributed. RFF projects could be deploying within weeks.

Grants mean picking winners. The RFF rewards a market-driven, community-centric approach.

Grants don't leverage private dollars to create as large of a multiplier effect as guarantees.

Whatever broadband we subsidize today rural America will have for decades. Getting them today's broadband won't be enough to allow them to compete in tomorrow's global economy.

$6 Billion For Rural Broadband: A Hatchet Or A Scalpel?

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So the first domino has dropped. A draft of the stimulus package is now circulating the Hill. In it the new administration has proven its commitment to the future viability of rural America by allocating $6 billion to bring broadband to underserved areas.

While the details are still sketchy, there's a lot of good to be found in them. Like how they cite that for every dollar invested in broadband the economy realizes a tenfold return on that investment.

But at the same time I'm not satisfied. $6 billion is a healthy number, but are grants really the best way to distribute that money quickly, ensure accountability, deliver rural areas the connectivity they need to compete globally, and maximize the impact of government dollars?

First off, who's going to distribute these grants? Which communities qualify as "underserved"? Who qualifies to receive these grants? What shovel-ready projects are lined up to start deploying using this money immediately?

Secondly, how do we make sure this doesn't turn into another government boondoggle? How do we avoid broadband lines to nowhere? How do make sure the interests of communities come first?

Thirdly, what qualifies as "broadband"? Can rural areas really compete in tomorrow's global economy with today's connectivity? Why don't they deserve a world-class communications infrastructure?

Fourthly, will grants give the most bang for the government buck? How can we create a multiplier effect around government support?

While this plan is good, the Rural Fiber Fund is great. While this plan is incremental, the Rural Fiber Fund is transformative. While this plan should get broadband deploying eventually, the Rural Fiber Fund can get full fiber networks deploying immediately.

Let's consider some of the details:

- The RFF's partial loan guarantees would be approved within 60 days and capital allocated within 120 days after that. And the RFF Working Group represents more than $3 billion in shovel-ready projects. So within months if not weeks, the RFF would directly result in fiber getting deployed across rural America.

- The only projects that would get RFF support are those that are market-ready and financially viable enough to attract outside capital. These wouldn't be government-subsidized projects that spend money because it's there to be spent, these will be government-enabled projects that are driven by market forces to establish self-sustaining business models.

- It's unconscionable that we think getting today's broadband to rural America is good enough. While there is an argument that some broadband is better than no broadband, we need to be thinking long term and recognizing that the future is fiber. The RFF focuses on fiber to insure that rural communities are able to compete on a level playing field with the rest of the world and are no longer left behind.

- Which should we do: give out $6 billion in grants or $5 billion in loan guarantees that will translate into $10 billion in investment? Grants are checks we have to write and give out immediately, whereas loan guarantees are checks we write but then put away in a safe deposit box that may never have to be cashed. And only a fraction of the value of these guarantees count against the budget, so really $5 billion in guarantees will only cost $1-2 billion and yet will realize $10 billion in total investment.

- Finally, we need to help communities that already know they want fiber start moving forward with plans to get it. Yet their budgets are preventing them from doing so. They can't afford to wait around until a private entity decides it's time they deserve to get connected. We need to empower them to take hold of their own destiny.

So in summation, the Rural Fiber Fund:

- Will work more quickly
- Will require less administration
- Will be less likely to turn into a boondoggle
- Will bring world-class broadband infrastructure to rural America
- Will deliver the most bang for the government buck

We'll be releasing a stimulus-ready, detailed plan for the RFF shortly. Hopefully it's not too late to take a decent plan with good intentions and make it great so that we can maximize the short-term job creation and long-term impact of broadband in the economic stimulus package.

Obama Supports Deploying Fiber As Economic Stimulus!

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OK, I'll be honest: this title's a little misleading. I've never actually heard the word "fiber" come out of our new president's mouth.

But when you consider what he's been saying about broadband it's hard not to infer that he strongly supports the notion of a Full Fiber Nation being our ultimate goal and that deploying fiber can stimulate the economy in both the short and long term.

Let's take a look at some of his relevant quotes:

"[The stimulus] means expanding broadband lines across America, so that a small business in a rural town can connect and compete with its counterparts anywhere in the world."
If a small business in a rural town really wants to compete in the 21st century global economy, 20th century broadband won't cut it. They need fiber just to get into the game as that's what everyone else in the world is rapidly gaining access to. Anything less will leave us at a competitive disadvantage. And since I don't think Obama's one to accept mediocrity, I read this statement as a sign he understands why fiber is so important to our long-term economic future.

"...laying down miles of new broadband lines..."
He's used this turn of phrase frequently. The only new wireline infrastructure that we should be laying down new lines for is fiber; it's now cheaper to build and operate while affording infinitely more capacity than copper, so any actually laying of new copper in the ground would be foolish. Additionally this suggests Obama's understanding that laying new fiber lines requires a lot of jobs to be created just like rebuilding roads and bridges.

"...a 21st century healthcare, education, and workforce..."
This is not to say 20th century broadband has no value, but instead that the only truly 21st century broadband infrastructure is full fiber networks. Whether it be schools, hospitals, businesses, and beyond, they can't afford to be constrained by the lack of robust connectivity any longer, and only fiber completely removes the shackles of the era of bandwidth scarcity and introduces one of bandwidth abundance.

"...a downpayment on our economic future..."
There's no better description of what full fiber networks represent. Sure they're expensive to deploy, but can we really put a price on insuring the continued viability of our economy for the next hundred years? As I've said before, do we regret the time and expense it took to lay a copper telephone line to every last home a century ago?

Unfortunately, while the deployment of fiber aligns perfectly with Obama's goals, he has yet to come out publicly in support of fiber specifically rather than broadband generally.

Hopefully this is just a case of playing politics, of not wanting to rock the boat with established interests, and that Obama does understand the urgent need for us to set clear national goals focused on installing a fully fiber-based telecommunications infrastructure.

As his team releases their plan for broadband in the economic stimulus package we'll be able to clearly see if they're going to live up to his promise of transformational rather than incremental change.

Ever the optimist, I can't help but keep hope alive. Yes we can!

So earlier today I laid out the challenges of trying to subsidize broadband based on speed and why I don't think it's the right way to go. But being the pragmatist that I am I realize that Congress's aversion to "picking a technology" may mean speed is what we have to work with.

To that end, if we're going to subsidize broadband based on speeds, here are the key things we should be requiring:

- No less than 100Mbps today scalable to 1Gbps tomorrow.
Anything less than 100Mbps is insufficient. How can we say 25 or 50 is OK when our global competitors are setting 100Mbps as the baseline? And to not require infrastructure be easily scalable to 1Gbps and beyond is irresponsible as we don't want to build highways too small to carry the bandwidth we'll all be demanding within the next ten years. If we continually subsidize broadband with only enough capacity for today and not tomorrow, then we'll always be playing catch up with the rest of the world.

- All speeds must be symmetrical.
I'm still flabbergasted that we're even considering subsidizing broadband that isn't symmetrical. Almost the entire last wave of online innovation has come as a result of having more upstream capacity, where users can contribute as much as they consume. And think about this from an economics point of view: what good is an economy made entirely of consumers? Do we want to be always importing and never exporting? That's what having upstream capacity means: empowering our creative class to be producing and delivering goods more efficiently into the digital economy.

- Require some level of guaranteed access and/or reliability.
We can't continue to allow some broadband providers to advertise one speed but deliver another. If we do then even if we demanded 100Mbps symmetrical that number would be illusory as no one would be getting those speeds. In fact, how can we mandate speeds at all without assuring that consumers actually realize them? Also important to consider is that if we want more people using and relying upon broadband, then reliability has to be as important as speed. And this reliability ties into the need for some guarantee minimum level of access that broadband providers would have to share alongside their advertised maximums. This would mean either that your speed would never drop below a certain level and/or that if it did you wouldn't have to pay for service.

These are just three simple principles that any speed-based broadband stimulus package must abide by, otherwise we're basically saying that we're fine lagging behind the rest of the world, that we shouldn't set goals to be the best, that if we can just eke into the top ten in the international broadband rankings that that will be good enough, that it's more important to protect the short-term interests of private providers than to insure the long-term health of our country's economy.

I acknowledge that these are lofty goals, but I think America deserves nothing but the best, and that if we work together we can accomplish these goals and beyond.

I know some say we don't need this much speed, but I'm willing to argue that point with anyone and most everyone who feels this way is thinking about what's best for their company's bottom line and not for the country's future.

And I agree that in areas without broadband today something is better than nothing, but that doesn't mean we should lose sight of the long-term especially if we're talking about subsidizing infrastructure that's likely to be in place for decades to come.

So it's simple: if we want to subsidize broadband based on speed we should require no less than a reliable, symmetrical 100Mbps pipe to every home.

We Shouldn't Base Broadband Subsidies on Speed

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A common theme I've been hearing on the Hill is that broadband subsidies should be based on speed requirements rather than technologies. The idea is that Congress shouldn't be picking technology winners but instead setting minimum levels of access and letting the market decide which technologies to use to get there.

While I can see how politically this provides a lot of cover, in terms of what's the best policy for America, I think going down this road is a mistake.

My first argument against this is how are you going to determine who's actually delivering what they promise? Are we going to allow broadband providers to qualify for support who advertise high speeds but don't actually deliver them?

Already at today's broadband speeds this is a major problem. I rarely get the 10Mbps Comcast has sold me, especially when lots of people in my apartment building are online. And even with some cable companies moving to DOCSIS 3.0, which enables them to sell 50Mbps packages, these speeds are far from guaranteed.

Even worse is that I've heard from many people that the network management practices of broadband providers are trending towards ever higher over-subscription rates, meaning more and more customers sharing smaller pipes onto the Internet despite being promised higher advertised speeds.

So if we're going to subsidize based on speed we need to have a clear and strong set of regulatory guidelines that are enforced on an ongoing basis about what advertised speeds actually mean in terms of the actual throughput realized by consumers. But this can get very messy very quickly, and it will undoubtedly require a lot of administrative overhead.

Alongside these issues is how do we make sure these top-end speeds are offered at affordable prices? What good is mandating 50/10 networks if that service costs $500 a month to subscribe to? And yet even if broadband providers want to offer these speeds at lower prices they often can't due to the prohibitively high cost of backhaul access. So how are we going to resolve this issue?

Another problem with mandating the speeds broadband providers must offer is what if no one wants to buy those speeds in a given market? Why is government making decisions that are better left up to the marketplace to decide? While ultimately I think everyone's going to want the biggest pipe they can get, the market isn't there yet. So unless a 50/10 service can be offered for the same or less than a 5/1 service is today, there aren't going to be that many consumers signing up for it.

What's arguably more important than Internet speeds is that any last-mile broadband access infrastructure being put in place has the in-network capacity to scale indefinitely to meet demand and that that in-network capacity is open to all applications developers to deliver high bandwidth applications. Access to the Internet should only be one consideration in terms of the kinds of broadband networks we're supporting.

Additionally, how can we not mandate symmetrical speeds? The biggest bottleneck in broadband networks is the upstream capacity. Why? Because broadband providers didn't see the Internet as a two-way medium. Yet there are as many reasons for users to be sending as receiving data, so if we're trying to spur the deployment of next-generation broadband it would be irresponsible to not guarantee that consumers will be able to contribute as much as they consume.

And we also need to realize that whatever speeds we mandate today will be too slow tomorrow. So we need infrastructure to be put in place that can quickly and easily scale to meet whatever demand for bandwidth materializes in the future. We can't assume that just because infrastructure can deliver 50/10 today that it'll be able to turn up the spigot in the future. The only technology that works for is fiber. With fiber you just swap out the electronics at either end and you can scale up indefinitely. With everything else you're going to have to go back and lay new fiber lines.

But we shouldn't be putting ourselves in a position where we're going to have to rip up roads every 5 years to keep up with the growing demand for bandwidth. If we just put in fiber now, then we won't have to dig into the ground to put in new infrastructure for at least 100 years. No copper or wireless broadband infrastructure can say the same thing.

The simple fact is that the rest of the world has already decided that the infrastructure that's going to form the foundation of 21st century economies are full fiber networks. China, Japan, South Korea, Sweden, and beyond: they're all picking a technological horse because there's no question that not only is fiber the best, it's the only one that we know today can not just deliver Mbps but easily Gbps to every home.

If we allow ourselves to buy into the idea that all broadband is created equal, and that all we need is infrastructure that can live up to today's demands without being prepared to handle tomorrow's, then we're setting ourselves on a road that will cement our lagging international broadband rankings in stone for future generations until we finally come around to recognizing that fiber is our future.

The only question left for us to answer is: do we want to achieve that future now before the rest of the world leaves us behind, or do we want to continue muddling through convinced that today's broadband is good enough to secure our future in the global economy.

In Vegas at CES last week I caught a policy session featuring FCC Commissioners Adelstein and McDowell. While most of the discussion focused on the DTV transition, they touched on broadband at the end and I had the opportunity to ask the following question:

"Do you believe that a Full Fiber Nation is the endgame of the Internet and the ultimate goal we should have for our country? That we built the greatest economy in the 20th century on our copper telephone infrastructure, and to build the greatest economy in the 21st century we now need fiber?"

Unfortunately, I didn't get the clear, unequivocal "Yes!" that I was hoping for, but there were still two interesting tidbits in their responses I wanted to share.

First off, Commissioner Adelstein's response revolved around an analogy to highways, that we can't afford to build them too small lest they can't keep up with the growing amount of traffic, or bandwidth in network terms.

This is an extremely savvy observation as it suggests that while it's important to get any road to areas that aren't already connected to the world, that it's equally important we don't build broadband networks that only support the bandwidth demands of today but not those of tomorrow.

But there's an additional level to this that highlights the importance of setting full fiber networks as our goal: only fiber-based highways have the ability to add lanes indefinitely as traffic grows.

Every other broadband has clear capacity limitations. And to have any chance of overcoming them in the future will inevitably mean having to do more digging and laying more fiber. Whereas if we just put in full fiber networks to begin with we can quickly and easily add an essentially infinite number of lanes to handle any amount of growth in demand for bandwidth.

Part of Commissioner McDowell's response left me equally optimistic about the outlook for the Rural Fiber Fund. With regards to how to spur next-generation broadband deployment he specifically cited the need to make these risky investments more attractive to investors.

Well that's exactly what the Rural Fiber Fund's partial loan guarantees do! By government stepping in to share the risk, we're going to enable an environment where full fiber deployment even to rural areas will be dramatically less risky. So much so that it's going to loosen up billions in capital.

So while neither Commissioner would out right say that a Full Fiber Nation should be our country's ultimate goal, their answers could not have fit any better into the arguments we're making for the Rural Fiber Fund. And this week I'll be following up with both of them setting up my first meetings at the FCC to continue my efforts as a guerrilla lobbyist fighting for a pragmatic broadband policy that can secure the future of rural America.

So there's endless talk about how to spur broadband deployment as part of the economic stimulus package. But it all seems to focus on the three standard mechanisms for doing so--tax incentives, direct government loans, and grants--without considering a fourth option: loan guarantees.

First off let me say that in no way am I against tax incentives, loans, or grants.

In fact, I wholeheartedly support tax incentives if that'll lead to faster, cheaper, more widely available broadband, but they're really only impactful for those entities that already have tax burdens to reduce.

And I absolutely see how in some circumstances there can be a need for direct government loans and grants, but both tend to take a long time to approve, require the government to take on all the risk, and especially in the case of grants can sometimes lead to boondoggles where people are spending government money simply because its there to be spent.

But we should also be seriously considering loan guarantees as not only an alternative to these more traditional mechanisms but also as a way to create a fast track for government approval.

Here's how we've laid out how they'll work so far in the Rural Fiber Fund: if you have a market-ready rural full fiber project within 60 days you can get a partial loan guarantee of 80% of the losses up to 60% of the total loan that must be used within 120 days of approval. (Admittedly, we're still finalizing these numbers so they may change.)

What these guarantees do is dramatically reduce the risk of a full fiber project, which is essential to loosening up private capital to invest in these networks as they're still perceived as being very risky projects, especially in rural areas. By lowering the risk we're able to make more (and hopefully all market-ready) projects viable while also lowering the interest rates projects that are already viable have to pay.

But there are also a number of other notable benefits:

- So long as we keep it flexible, just about everyone can benefit. The only entities it might not are those that are already highly leveraged, but even then by allowing things like the guarantees to apply to public money we create many possibilities for public/private partnerships to leverage the strengths of both private and public entities.

- It will enable us to create a fast lane for government support. Rather than doing all the vetting itself, government can instead rely on private capital markets and the communities themselves to decide which projects are viable. The goal of the RFF is to allow all market-ready projects (those with committed communities, a proven management team, and verifiable capital) to get approval quickly.

- These guarantees don't require immediate government outlay. In fact, if we're lucky government will never have to pay out any of these guarantees as all the networks could succeed.

- They deliver huge bang for the buck. First off because they're only partial guarantees that means $1 billion in guarantees will create $2 billion in investment. And even better, because they're guarantees rather than grants government only has to budget for a percentage of that $1 billion. So millions in guarantees can translate into billions in investment. And that's not counting all the benefits and growth that'll come out of having these networks!

- And partial guarantees like this work especially well for full fiber deployment. Why? Because so long as the applicant is competent and actually builds a working network, then that network should retain at least half the value of that loan even if the overall business model doesn't hold up. So by guaranteeing 80% of 60% of a loan, we dramatically reduce the risk.

All in all, I can't imagine a better way to leverage government involvement to spur full fiber deployment than these partial loan guarantees. Although I could be wrong, so if you disagree then add a comment and say so!

Our country's at a point where we need to all come together to find new solutions to old problems. We can't afford to have any great minds sitting on the sidelines during these policy-making decisions. Their ramifications are of too much importance.

Which is why later today we're going to be putting up the latest draft of the RFF policy paper online for public review and comment. I look forward to everyone contributing!

Hey President Obama: Ever Heard of Broadband?

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Color me officially frustrated. I've long lamented the lack of emphasis policymakers put on broadband, often relegating it to the back burner when it's the key enabler of their other goals, but this angst reached a new high on Saturday when President-Elect Obama released his latest weekly address on YouTube.

In it he argued for why we need an America Recovery and Reinvestment Plan. Yet he did something that perturbs me to no end: not one mention of broadband generally or fiber specifically.

But what's most puzzling/infuriating is that other elements of his plan can only happen if broadband's available.

Let's parse through one of the last paragraphs in his remarks to show what I mean:

"To put people back to work today and reduce our dependence on foreign oil tomorrow, we will double renewable energy production and renovate public buildings to make them more energy efficient." - To make buildings more energy efficient they need broadband to become smarter and more connected. And he fails to mention the many other energy/environmental efficiencies that can be driven by leading more networked lives.

"To build a 21st century economy, we must engage contractors across the nation to create jobs rebuilding our crumbling roads, bridges, and schools." - Laying fiber creates jobs building infrastructure too!!! Plus these jobs tend to be higher quality, requiring special training and lasting longer then laying asphalt. And how in the heck can we talk about building a "21st century economy" without talking about broadband?

"To save not only jobs, but money and lives, we will update and computerize our health care system to cut red tape, prevent medical mistakes, and help reduce health care costs by billions of dollars each year." - What good does it do to "computerize our health care system" if we don't have the broadband in place that makes this digital information accessible to everyone from everywhere? And nothing will reduce healthcare expenditures more than the possibilities of in-home medical care, which can only exist in a wired world.

"To make America, and our children, a success in this new global economy, we will build 21st century classrooms, labs, and libraries." - What good are "21st century classrooms" if students have to stop learning when they go home? What could possibly be more impactful to education than having access to all the world's information and an unlimited number of tutors, classmates, and other online resources?

I find this all rather bizarre. Obama obviously understands the value of broadband. He used it brilliantly in his presidential campaign, and one of his campaign promises has been to bring broadband to all corners of America.

Yet in this address it almost feels like he's forgotten about that promise and instead is assuming we're already living in a fully wired world.

To some degree I actually find this exciting as it shows that he is thinking about how can we use these networks to improve all facets of society.

But I'm also deeply concerned as it suggests that amidst all the other issues on his plate, Obama has taken his eye off the broadband ball at what's arguably the most critical time in broadband's history.

Everyone knows broadband's going to be included in some way as part of the economic stimulus package. What no one seems to know is how much and how impactful it will be.

Our new president faces a choice over the next couple of weeks as he rallies support behind his first major policy initiative: does he want to marginally improve the status quo or take a transformative step into America's future?

Does he want to make things a little bit better for a little while, or lay the foundation for America's competitiveness in the 21st century?

Does he want to push forward into a digital tomorrow that only some can benefit from or that everyone has access to?

Does he want to fall back on the same old legislative solutions that have gotten us to this point, or does he want to embrace new ideas like the Rural Fiber Fund that leverage government's strengths while avoiding its weaknesses?

President Obama, our future rides on your answers to these questions. We cannot afford another 8 years of a president who won't lead the push to fiberize America. We believe that you're up to the challenge, and we're ready, willing, and able to help.

But please, if for no other reason than to preserve the sanity of broadband advocates, can you at least mention it in speeches like this from now on?

Calvin and Hobbes' Ageless Take on Economic Stimulus

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I've long loved Calvin and Hobbes, having read all of it I can get my hands on. Since the series stopped years ago that means there's basically nothing I haven't seen.

But that doesn't mean what's old can seem new when looked at in a new light. Like this Sunday strip sent to me this morning by a friend who works in the financial world.

It features Calvin trying to sell a perturbed Susie Derkins glasses of "lemonade" (sludge water with lemons) for $15 a pop. After she refuses he asks his parents to subsidize him.

Given our current economic conditions the parallels are uncanny.

We've got these multi-billion corporations run by executives making millions that too often try getting away with offering less but charging more and blaming competition for their cutbacks who now because their business models aren't holding up are asking their metaphysical parents for help. And yet like Calvin is wont to do once they're given support they're not likely to change their ways.

To some degree I feel this applies to the world of broadband as well. For years incumbents have been telling us what we need and how much we should pay for it regardless of whether what they're delivering is worth it or truly what we need.

Don't get me wrong, I would never equate the broadband we have today as equaling sludgy lemonade (maybe Crystal Light lemonade, too sweet and not enough substance?) and no one can be quite as unreasonable as Calvin, yet I can't help but wonder: where's Hobbes in this strip?

He was always the one to suggest alternative viewpoints to Calvin to try and help him see the err of his ways. That if he didn't move off his current path he was headed for almost certain demise, like when they sat on a sled together teetering over the edge of a mountainous hill.

Some might argue Calvin gets what he deserves because of his inability to adapt, and I know many who feel the same way about incumbent broadband providers. But I have a different take.

First off, I do think they're in for a reckoning. To be frank, their years of charging too much and delivering too little has created the dissatisfaction that's led directly to the municipal broadband movement and has created fertile ground for entrepreneurs who see opportunities to reap a great harvest by offering more for less.

But secondly, I don't necessarily want to see them go crashing into a ravine. Not only could it have a detrimental affect on our entire economy, but it also would mean that we missed an opportunity to leverage their considerable assets to help continue driving the broadband revolution forward.

Looking into the future there's three general outcomes: we maintain the status quo, we change the status quo in spite of the incumbents and they wither away, or we change the status quo with the incumbents and harness their energy and resources for the good of the country.

I'm not saying achieving this third option is going to be easy. And in fact it may be a simpler matter to convince Calvin to put down that snowball rather than throwing it at Susie Derkins' head.

But we'd be remiss if we didn't try to affect this change as unlike Calvin these companies won't necessarily be able to bounce back like nothing happened if they do crash into that ravine. If the paradigm shifts and they're left behind, there may not be the opportunity for them to get back up for another ride.

So bringing this back to the economic stimulus, I'm not against bolstering incumbent business models with tax incentives and other mechanisms, so long as there's the understanding that they need to be preparing for this new era of telecommunications (where bandwidth is abundant and competition between services enhanced) rather than fighting against it.

Or put in the terms of this Calvin and Hobbes strip, let's subsidize but only if there's a commitment to deliver more lemonade of better quality for a fairer price, both for the good of the country as well as the companies.

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