March 05, 2009, 3:50 PM — I like presents, even when they're bought with my own money -- provided they're good enough (steak, booze and cheese almost always qualify). So you can imagine my delight over the broadband stimulus package. If we're spending my money, at least it's going toward my industry. That's a good thing, right?
Having carefully studied the stimulus package -- or "The American Recovery and Reinvestment Act," as it's formally known -- the answer is a qualified "maybe." Here's the rundown:
The package provides for a US$7.2 billion investment in broadband services, split into two buckets: $2.5 billion, almost exclusively in the form of loans and loan backing, to be administered through the Rural Utilities Service (a division of the Department of Agriculture) and another $4.7 billion as part of the Broadband Opportunities Program, which is administered through the National Telecommunications and Information Department of Commerce "in consultation with" (whatever that means) the FCC.
The pros: Thankfully, the Feds are not handing the initiative over to the incompetent Universal Services Administrative Company (USAC), the quasi-governmental agency that administers the Universal Services Fund. I've previously detailed the many weaknesses of that organization -- they've given bailouts to billionaires and mobsters, and have failed to provide even the most elementary oversight. The fact that the Feds are picking other entities to run this initiative is a tacit admission of the USAC's failure.
Speaking of oversight, the act calls for reports every 90 days on the status of grants and loans, and specifically earmarks $10 million for oversight. Of course, the entity doing the oversight (the Department of Commerce's Office of the Inspector General) is ultimately the same entity administering the majority of the funds, so it's a case of the fox watching the henhouse. But still, it's a start.
Where's the money going? Outside of the $2.5 billion in loan backing for rural broadband build-outs, $200 million is earmarked for community college and library computing systems. Another $250 million goes to programs to enable broadband deployment. And $350 million goes towards broadband mapping. The remainder can be transferred to the FCC to develop a national broadband strategy.
Who can get it? Both nonprofit and for-profit entities. The act details who's eligible to apply for the funds, and specifically includes "broadband service or infrastructure providers."
What's not to like? For one thing, the act fails to define "broadband." And while it requires "open access" -- which proponents take to mean net neutrality -- that's not defined, either. That vagueness will lead to lots of wrangling downstream.
Worse, the metrics on which applications will be rated are almost entirely absent. This means the entire process is likely to be intensely political, with a high risk of "good-old-boy" cronyism tainting the process. (Haven't we had enough of that?)
Finally, there's that notion of giving the FCC and its newly appointed chair, Julius Genachowski, the bulk of the money "to develop a strategy." Sorry, strategies don't cost billions. Something's fishy here.
Bottom line: There's a definite potential upside. But the chance of misfiring is high. On the whole, I'd rather have had that steak.