Think Big When Swimming in the Stimulus Pool

by Vince Vittore, Principal Analyst – enabling technologies for Yankee Group

The recently passed American Recovery and Reinvestment Act includes either an enormous amount of pork-barrel spending or is an injection of much-needed capital for a faltering economy. It all depends on one’s perspective.

For small telcos and cable operators, the key sections from the stimulus bill, of course, are those two parts that carve out $7.2 billion to improve broadband availability and penetration rates in this country. The pool of money is divided into two pools: $2.5 billion to be funneled through the Rural Utilities Service (RUS) and $4.7 billion to be delivered via the National Telecommunications and Information Association (NTIA).

With this law, the Obama Administration has started to fulfill a promise that has been made since the second Clinton Administration – to provide every American the ability to connect to the Internet at high speed. Like most laws, though, the devil is in the details and the specific interpretation.

For those carriers that already have received loans or loan guarantees from RUS, congratulations. You have a huge leg up on all others because the law gives priority to previous RUS recipients. That’s good news for small rural operators that are traditional recipients. Among the many unknowns, however, is the impact Universal Service will have on those RUS funds.

The larger, more ambiguous and potentially more interesting of the pools will come from NTIA under the auspices of the Broadband Technology Opportunities Program. As of this writing, the NTIA is in the middle of its first series of public meetings to discuss the multiplicity of details that have yet to be defined. What we know so far is that NTIA has a large set of criteria that could be interpreted in any direction.

Among the most interesting decisions will be putting definitions behind such basic terms as “unserved,” “underserved,” “broadband” and the really big one of “public interest.” We also believe there will be significant debate over the level of openness that NTIA will be asking of funding recipients as well as the exact structure that constitutes a service provider.

Whether the law actually increases broadband penetration – which is one of the stated objectives – is debatable. Increasing broadband availability clearly will help, but getting penetration rates to move beyond the 66 percent of households that currently subscribe will take more than just bringing it to those that currently don’t have it.

If the objective is to be reached, a long-term goal must be set. It also will require facing the difficult economic issues that have heretofore prevented operators from deploying broadband and keep potential users from subscribing to the service. In the Yankee Group’s U.S. Penetration and Usage Survey last year, we found that among the 9 percent of the population that still use dial-up, 42 percent would make the move to broadband if it was priced appropriately, while 15 percent have absolutely no interest in making the jump. It’s the job of the entire industry – but more specifically, service providers – to convince that 9 percent, as well as those that don’t access the Internet at all, that high-speed connectivity is more than surfing the Web. This is where the new law comes in to play.

Think of the American Recovery and Reinvestment Act not as an opportunity just to expand your broadband footprint, but as an economic and social development tool. Small operators across the country have hundreds of great examples of users becoming more productive, better educated and healthier when given high-speed access to the network. I’ve personally seen dozens of these, including a group of high school students in rural Iowa learning advanced calculus via distant learning. There’s also a health clinic in New Mexico that provides diagnostic services with a video camera, some basic medical monitoring devices and a high-speed connection. Both were feasible only with federal funding.

Outside the U.S., there are even more examples. From elderly care and monitoring in Sweden to connecting remote aboriginal villages in Australia, broadband clearly is making a difference in people’s everyday lives.

The new Administration has challenged all Americans to think big and consider different ways of tackling difficult problems. For service providers, thinking big requires linking the benefits of broadband to the greater context of society at large. It also means partnering with entities that aren’t the most obvious, like healthcare organizations and educational institutions outside your territory. Most important, it will require a concerted effort to educate the public about the benefits of connectivity.

Sure, brining broadband to every house in America will allow them to surf the Web. However, to fully realize the benefits of ubiquitous connectivity – what we call the Anywhere Network – every stakeholder in the industry must think big.


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