Broadband Stimulus Grants: To Apply or Not to Apply

At this writing, the first deadline for federal broadband grants has been extended from Aug. 14 to Aug. 20, and many smaller communities may be burning the midnight oil to gather the terabytes of data required for the paperwork to apply for a grant. Applications must still be initiated by Aug. 14. Yet given that the current rules - i.e., notice of funds availability (NOFA) - seem to favor private-sector telecom companies more than communities, the advice from some experts is that smaller applicants or communities should probably sit out the initial round of the broadband stimulus grant and watch the stance National Telecommunications and Information Administration (NTIA) and the U.S. Department of Agriculture's Rural Utilities Service (RUS) take to disburse the funds.

Experts also feel that if communities, specially the smaller ones, can find a way to roll their broadband out on their own, it may be make more sense not to go for funding at all.

"Winning the grant will come with all its baggage. So if a community can't find a way out without the grant, it may well go ahead and apply. Others could give it a second thought," said Craig Settles, the founder of broadband consultancy firm Successful.com.

Settles is not alone. Gigi Sohn, president of Public Knowledge, a Washington, D.C.-based public-interest advocacy group who has been advising potential bidders also feels that the guidelines do little to help "the little guys." In a comment to a local publication, she said there is an awful lot of concern among institutional providers like libraries and schools, as well as small municipal Wi-Fi providers and smaller network providers, as to whether the stimulus package could really stimulate broadband rollout in the unwired regions of America.

The deadline for the first round of the broadband stimulus program that contains $4 billion of cash giveaway to help bring broadband service to underserved and unserved areas of America is August 14. The disbursal of funds is handled by NTIA and RUS. This is part of the $7.2 billion broadband stimulus program carved out of federal bailout package, the American Recovery and Reinvestment Act. The rest of the grants would be given away in later rounds, one at the end of this year and the other sometime in September 2010.

Although this stimulus program may be America's first big-bang effort to give its citizens the opportunity to decide their own broadband future, Settles, who for 20 years specialized in using broadband to improve government efficiency and boosting economic development in communities, has many criticisms. His biggest complaint is that he feels NOFA is unfair and biased toward incumbent telecom companies by giving existing service providers 30 days to protest any proposal that wants to cover an un- or underserved area that an existing provider or incumbent telecom company feels it has already covered.

"This backdoor clause that allows incumbents to challenge proposals by claiming to cover areas that the applicants determine to be unserved, leaves applicants vulnerable to a challenge," Settles said.

According to him, a big problem that could arise out of this clause is that in the absence of a published challenge procedure, applicants won't know if they have the opportunity to defend their proposals if they are challenged.

Other Hurdles

There are other hurdles as well. NOFA, for instance, favors incumbents with "ridiculously low" minimum speeds that define broadband -- 768 kbps download, 200 kbps upload -- and ties this to the definitions of un- and underserved.

"At these minimum speeds, a project that brings faster speeds to areas where incumbents already have dial-up or DSL may not get funding at all," Settles said. "So incumbents win without even having to lift a finger to deliver