Page last updated at 00:53 GMT, Tuesday, 10 March 2009

Warning over US broadband funding

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

Fibre-optic cables, Eyewire
Pressure groups see broadband investment as vital to the US economy

US agencies in charge of more than $7bn (£5bn) in grants for high-speed broadband networks have been urged to deliver the "best bang for the buck".

The Free Press, which represents consumers, made the call ahead of a meeting where federal bodies will discuss how the grants should be spent.

The money is part of an overall $787bn package bill to stimulate the economy.

"It all hinges on getting the policy right to make sure the money is spent right" said the Free Press's Ben Scott.

"We're going into an extraordinary period where the government is directly investing in broadband infrastructure.

"This process of handing out $7bn, although there's a great deal of urgency to get the money out the door, must fundamentally be data driven.

"We need to make sure the money is spent wisely," added Mr Scott who likened this period to that of previous big public spending programmes involving electrification and the highways.


Technology companies, telecommunications service providers and other internet service providers will compete for the grant money through a bidding process.

On Tuesday, the Federal Communications Commission (FCC), the US National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) are expected to hold the first of many public meetings over how to disperse the money.

US residents endure some of the slowest broadband speeds

The lions share, $4.7bn (£3.3bn), will go to the NTIA with the remainder of $2.5bn (£1.7bn) going to the RUS, an agency within the Department of Agriculture.

The agencies will concentrate on "unserved" and "underserved" parts of the country like small towns and rural areas.

The money will also be aimed at paying for "broadband education, awareness, training, access, equipment and support" in an effort to create jobs.

"It's very important that they (the grants) go to economically viable commercial entities that are sustainable over the long term," said former Representative Charles "Chip" Pickering, who represented a rural district in Mississippi and was an active member on the House Telecommunications Subcommittee

He championed public-private partnerships that "maximise the leverage" of stimulus funding.

"When we have competition we have much greater innovation and investment," he said.

"Where we have a duopoly, we have seen reduced economic activity, reduced investment and reduced innovation."

Both agencies are required by law to commit all the funding by the end of 2010.

"The question of how fast we should move has been taken out of our hands by Congress," said Markham Erikson of the Open Internet Coalition, an advocacy group representing tech companies like Google, Amazon and eBay.

"NTIA has to move by Washington standards in lighting-fast time," he told the BBC in a conference call.

The coalition has sent a letter to the NTIA to urge it to "adhere to common-sense openness principles" which Mr Erickson said "has fed the engine of economic and job growth in the information, communications and technology sector for over a decade."

'Need for speed'

While the NTIA and RUS is charged with the here and now to some degree, the FCC is tasked with drawing up a broadband strategy for the future.

A report at the end of last week by the Information Technology & Innovation Foundation also looked further down the road to how the U.S. should spend future investments.

Broadband access is regarded as "long-overdue" in many areas

In its study entitled The Need for Speed: The Importance of Next-Generation Broadband Networks, the foundation called for broadband deployments with speeds of at least 50 megabits per second of Mbps.

The report noted that average broadband speeds to American residents is 5 Mbps compared to 63 Mbps in Japan and 49 Mbps in South Korea.

"This shows us that deploying next generation broadband networks will have profoundly positive benefits for consumers, businesses, academic institutions and society in general," said ITIF President Robert Atkinson.

"Deploying next generation broadband to 80% of US households that currently lack it can bring the needed economic stimulus by ensuring approximately two million American jobs," he claimed.

Mr Scott of the Free Press backed the call for the government to fund high-speed networks and not just basic broadband.

He has proposed minimum speed requirements, affordable rates and a cost model showing effective use of taxpayer dollars.

"We're concerned that stimulus dollars not be used to build obsolete networks. We want to make sure that we're not simply re-creating a digital divide by building a substandard network that then has to take another leap to catch up," he said.

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