By Cecilia Kang
Washington Post Staff Writer
Wednesday, December 17, 2008
President-elect Barack Obama's call to bring high-speed Internet to all Americans has set off a scramble among service providers for a piece of the action.
Building out networks to rural and underserved urban areas -- with possible help from the economic stimulus plan being crafted by Congress -- could create hundreds of thousands of jobs and enrich telecom, wireless and cable companies whose businesses have suffered as households tighten spending.
Within the well-funded world of telecom lobbying, even fierce opponents are in rare agreement that Obama's plans to expand networks would boost the economy with jobs digging trenches for fiber lines and designing complex networks. But the interest groups differ on how that ambition should be executed, and that has sparked a race that one lobbyist calls a "telecom takefest."
For the Telecommunications Industry Association, tax breaks are a priority. In a letter to House Leader Nancy Pelosi (D-Calif.) last week, the trade group asked for tax breaks to build broadband infrastructure and $25 billion in grants to companies that build networks in hard-to-reach areas.
Corning, a supplier of ultra-fast fiber-optic technology, wants companies to offer higher speed standards to qualify for financial help. Corning wants network operators to meet higher standards for speed and quality of service, which no doubt would require faster fiber optics.
Free Press, a public interest group, has urged lawmakers and Obama's tech advisers to give oversight of the plan to an agency familiar with technology policy such as the Federal Communications Commission or the National Telecommunications and Information Administration, which is the White House's telecom office. The group insists the service should be affordable and seeks subsidies for low-income families with school-age children so they can buy laptop computers and deduct the cost of home Internet access.
"The worst-case scenario would be to write a billion-dollar check in tax breaks and funnel money directly to prop up a stock price," said Ben Scott, policy director at Free Press.
The Communications Workers of America wants Congress to approve tax breaks that would allow network operators to expense, through tax deductions, a larger portion of their broadband deployment costs right away, which the union says would encourage operators to build networks more quickly. The CWA asserts that for every $5 billion invested in the broadband networks, nearly 100,000 jobs are created.
"We need to aim high with this," said Larry Cohen, president of CWA, "and public policy needs to catch up with the realities of the global economy."
The United States has dropped in international ranking for broadband access over the past decade to 15th place, with 6 million to 8 million households cut off from the digital superhighway, according to public interest groups.
Wireless trade group CTIA met with Obama's tech advisers this month to suggest that wireless technology should be the focus for broadband expansion because people are increasingly using Internet data services over their cellphones and wireless laptops.
Telecom carriers are among a chorus of companies that have called for repurposing a fund that uses monthly charges from telephone bills to pay for expanding basic phone service in rural and underserved urban areas. The fund, they say, should be channeled to build broadband networks instead of land lines. But Public Knowledge, a public interest group, cautioned that arguing over the $7 billion fund could hold up progress.
Obama is considering a variety of options for achieving his broadband vision, including tax incentives, grants and bidding on contracts to build the networks, according to a transition adviser who spoke on the condition of anonymity because he was not authorized to speak publicly.
The source said Obama thinks the United States needs better broadband infrastructure to compete globally in the same way it needs physical infrastructure like roads and airports.
"Here, in the country that invented the Internet, every child should have the chance to get online," Obama said in a recent address, "because that's how we'll strengthen America's competitiveness in the world,"
Rep. Edward J. Markey (D-Mass.), chairman of the House Subcommittee on Telecommunications and the Internet, said there are no specific plans for broadband yet in an economic stimulus package that lawmakers want to vote on in January and have ready for Obama soon after he is sworn in as president.
But Markey said any incentive should be distributed with conditions that prevent network operators from stalling or blocking traffic, a contentious issue known as net neutrality that the network firms argue would drive up costs as Web traffic increases.
"In subsidizing a commercial enterprise, it should not be to enhance their ability to run a closed network that walls out other applications and devices," Markey said in an interview.
Recent history suggests other obstacles could arise as well. For example, projects to bring free wireless broadband, or WiFi, in cities such as Philadelphia and Arlington failed after proving more expensive than expected.
And a much smaller and slower-growing economy means money for broadband deployment will be an issue even with financial aid. Already, AT&T, the nation's largest telephone company, has had to cut 12,000 jobs and said it would cut back on capital expenses.
"For the last eight years we've had an administration that hasn't cared about broadband, and that's why we're where we are today," said Gigi Sohn, executive director of Public Knowledge.