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Government Makes $4 Billion 'Down Payment' on Project to Expand Broadband

By Cecilia Kang
Washington Post Staff Writer
Thursday, July 2, 2009

Vice President Biden yesterday announced guidelines for $4 billion in stimulus funds to expand high-speed Internet access across the nation, jump-starting a program that has been criticized for taking too long to get off the ground.

The first round of grants and loans is part of a total $7.2 billion in funds for expanding broadband networks tucked into the $787 billion fiscal stimulus package signed by President Obama in February. The administration has touted the expansion of broadband access as a way to quickly create jobs during a stubborn recession.

"This funding is a downpayment on the President's commitment to bring the educational and economic benefits of the Internet to all communities," Biden said in a statement.

While many other stimulus projects are already in the works, the first dollars for broadband expansion won't be spent until the end of the year at the earliest. Some analysts and telecommunications industry insiders have said that orders for telecommunications network equipment and services have been delayed as potential applicants for broadband funds wait for the government to push forward with the grants and loans.

The Commerce and Agriculture departments said yesterday that they will accept applications from private firms, nonprofit groups, and state and local governments for the first allotment of $4 billion from July 14 through Aug. 14. The winners will be announced in early November, and the grants are expected to be distributed within 30 days. The timing, however, coincides with the start of winter, when the ground freezes in some parts of the country. That could delay for months some projects that require digging trenches to lay fiber and cable lines. The other two rounds of funding are expected to be completed by Sept. 30, 2010.

"If they wanted to get this done in the fastest way, they could have done tax credits and not grants, but given you do grants, you have to make the process fair and that takes time to set up," said Debbie Goldman, director of research at the Communications Workers of America labor union.

The guidelines also set minimum speeds for new broadband networks at 768 kilobits per second -- speeds that would not allow Internet users to download picture files or watch video clips. Harold Feld, legal director at public interest group Public Knowledge, said the low speed standards were set to include wireless Internet access in some remote areas where cable and fiber-optic networks are more difficult and costly to build. The administration said in its rules that projects that deliver higher speeds will be weighted more heavily than those with lower speeds.

The largest network operators, Verizon Communications, AT&T and Comcast, said they aren't likely to apply for the grants or loans. But equipment makers and some carriers such as Level 3, XO Communications and RCN, which provide network services for businesses and Internet providers, could benefit from the broadband program.

"Broadband stimulus is a big opportunity Level 3 is excited about," said Sureel Choksi, chief marketing officer at Level 3. "We are working through details on how we might participate directly and indirectly through our customers who are last mile providers."

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