Show Us the Money: What the Stimulus Bill Can Do for Wi-Fi

By Jeff Goldman

February 11, 2009

House and Senate negotiators reached an agreement today on a compromised version of the stimulus bill, which will be put to a vote in the Senate as early as tomorrow. While it includes significant investments in wireless, a number of questions remain about the real impact of the broadband provisions of the plan.

House and Senate negotiators reached an agreement today on a compromised version of the stimulus bill, which will be put to a vote in the Senate as early as tomorrow. While it includes significant investments in wireless high-speed Internet access, a number of questions remain about the real impact of the broadband provisions of the  plan.


With stimulus packages from the House and Senate now in conference committee (you can read them both in their entirety, if you’re so inclined, at ReadTheStimulus.org), it’s clear that whatever version of the bills finally emerges will include a significant investment in broadband wireless deployments throughout un-served and underserved areas of the United States.

Still, it’s a bit early to assess the likely impact of that investment just yet.

As Yankee Group analyst Vince Vittore puts it, the recipe is still being finalized. “The stimulus  packages are well along their way to baking—but the broadband elements of it and the wireless elements of it are still very much at the mixing stage, where you’re reading the recipe and trying to figure out the amounts to put in for each different element,” he says.

The House bill provides for funding of $2.825 billion to the National Telecommunications and Information Association (NTIA), including $1 billion for wireless voice service or advanced wireless broadband and $1.825 billion for basic or advanced broadband service. It also provides for another $2.825 billion in loans for broadband deployments to be made through the Rural Utilities Service, and another $350 million to the NTIA for tracking the adoption of broadband.

The Senate bill more broadly allocates $7 billion (reduced from a previously-proposed $9 billion) to the NTIA’s Broadband Technology Opportunities Program, with at least 50 percent of the funds to be used for projects in rural areas. It also creates a ten percent tax credit for current generation broadband in underserved areas, a 20 percent tax credit for current generation broadband in un-served areas, and a 20 percent credit for next-generation broadband. The tax credits are expected to cost $110 million over the next ten years.

The key question still remaining, Vittore says, is this: if you build it, will they come? “I think some vendors are probably going to benefit from this, because there’s going to be more equipment sold,” he says. “But what I don’t think has been mentioned in these goals, and I really think it needs to be addressed, is how do you address the overall broadband adoption rates… there’s more to it than just introducing competition into certain markets to get prices down.”

What’s more, even once the bill is finalized, the process of dispersing funds and completing deployment may take significantly longer than expected. In an analysis of the Senate bill, the Congressional Budget Office (CBO) warned, “CBO anticipates that funds provided to the NTIA to administer the broadband grant program would take longer to spend—seven years—because the new appropriations would far exceed the agency's 2009 funding of $17 million, and the legislation would require, in most circumstances, that grant recipients provide 20 percent of the project's cost from nonfederal sources. In total, about 60 percent of the funds provided in title II would be spent during fiscal years 2009 through 2011.”

Still, Fred Campbell, president of the Wireless Communications Association International (WCAI), is cautiously optimistic. “There’s good potential for funding in the economic recovery and reinvestment bills to spark new wireless deployment in rural and underserved areas,” he says. “It’s not clear that the amount of funding included in the bills would be sufficient to build all un-served and underserved areas, but it’s certainly a good start—both bills contain provisions that would be helpful to smaller and rural providers, and also some provisions that would be helpful to big, established players.”

And Campbell points out that the actual deadlines for allocation of funds won’t really be set until the bill comes out of the conference committee. “The two bills don’t have consistent provisions regarding timing, so it depends on what the final bill actually ends up saying… I would be hopeful that whatever comes out of the process would allow the agencies to move forward relatively quickly, such that funding can be made available this year,” he says. “If funding is made available this year, we have members with shovel-ready projects that would be able to take advantage of it in 2009.”

Most importantly, Compass Intelligence analyst Dan Blacharski says the broadband provisions in the stimulus package can make a real difference for the country as a whole. “We’ve already seen examples in other parts of the world, such as Southeast Asia, where satellite broadband has connected rural areas, created opportunities, and boosted local economies,” he says. “Now, rural and underserved parts of the United States will get that same opportunity, but only if a wireless broadband provision is made. In the digital age, it’s just not possible for a region to have a flourishing economy and attract jobs if the broadband infrastructure isn’t there—and putting it in place in these areas will give an economic lift to those who need it most.”

Jeff Goldman is a veteran technology journalist and frequent contributor to Wi-Fi Planet. He is based in Southern California.



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