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Geoff Daily

App-Rising.com covers the development and adoption of broadband applications, the deployment of and need for broadband networks, and the demands placed on policy to adapt to the revolutionary opportunities made possible by the Internet.

App-Rising.com is written by Geoff Daily, a DC-based technology journalist, broadband activist, marketing consultant, and Internet entrepreneur.

App-Rising.com is supported in part by AT&T;, however all views and opinions expressed herein are solely my own.

« Obama Supports Deploying Fiber As Economic Stimulus! | Main | Advantages of the Rural Fiber Fund »

January 15, 2009 12:21 PM

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

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.

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