Telecom-related programs will get $7.2 billion under the economic stimulus bill set for President Barack Obama’s signature today, with $6.39 billion of those funds targeted at promoting broadband access in rural areas with little to no broadband access.
“There are a number of wireless broadband startups that have been looking for funding to build out their businesses,” says Jorge Fuenzalida, vice president of technology consulting company inCode Telecom Group. “Many tier two independent local exchange companies covering rural markets picked up spectrum in their specific geographies. This additional funding from the government should create some energy there.”
The emergence of 3G (HSPA) and 4G (WiMAX and LTE) technologies and the capacity of recently auctioned spectrum bands have made the rural use of terrestrial wireless more financially viable since 2000. As a result, rurally-based and small local-exchange providers likely will seek funding to serve the estimated 10 percent of household customers that do not have a DSL-provisioned line, reports inCode.
These technologies, although optimized for mobile services, suffer no degradation in fixed deployment and offer superior spectral efficiency. While the fixed WiMAX standard will help incubate the market, its long-term viability may be limited due to a shriveled ecosystem and limited economies of scale, according to inCode.
The most viable spectrum bands for fixed wireless include 700 MHz, 2.3-2.5 GHz, 3.5 GHz and AWS. The bands all have tradeoffs of propagation, geographic reach and cost-effectiveness to support Internet speeds of 3 Mbps or more.
The stimulus measure was praised for technological- and server-agnostic policies, the broadband map and its push to serve rural areas. However, concern remains over its failure to address the trade-off between affordability and high-speed service.
“… certain low-density rural areas may in fact best be served by fixed satellite or terrestrial wireless services that cannot charge competitive, urban-centric prices for high-speed (up- and downlink) broadband, no matter how efficient their technology,” say analysts from inCode.
The bill’s imprecise definitions of open access and net neutrality and aggressive timeline could also pose problems by pushing service providers to make short-term technology decisions that could be quickly superseded by better technologies.
The money will be dispersed over a number of years, with only 2 percent of the funds to be spent in 2009, according to estimates from the Congressional Budget Office. Another 15 percent will be spent in 2010, with about 20 percent being spent every year from 2011 to 2013, and the remainder spent between 2014 and 2015.
The funds will be allocated by the Department of Commerce’s National Telecommunications and Information Administration (NTIA) and the Department of Agriculture’s Rural Utilities Service (RUS).
The NTIA will disperse $3.9 billion in grants and the RUS will hand out $2.5 billion in grants, loans and loan guarantees with the goal of accelerating broadband deployment to unserved and underserved areas. The funds must be used for infrastructure investments, with the NTIA grants stipulating a 20 percent match requirement.
The final version of the bill removed earlier provisions on minimum speed requirements, percentage allocation of wireless or wireline and definitions of the terms broadband, unserved and underserved.
Filed Under: Carriers
