Broadband Stimulus - another "be careful of what you wish for" lesson in the making?

Not everyone agrees that a "broadband stimulus" package is necessary. Take a look at this contrarian view posted today on Business Week's Tech Beat (click here)

I think the rural industry can benefit from a stimulus package, but I fear that will not be the result unless the industry works quickly to take a more critical look at what should be included in that package. I'm concerned that rural industry endorsement of the general stimulus idea in the absence of specifics that will benefit the rural industry will only end up fostering the efforts of competitors looking for new gaming opportunities.

It's easy to jump on a bandwagon. Murmurs of money for broadband investement? "Let's jump on it" is literally the knee-jerk reaction And, the normal course of action ensues. E-mail campaigns from the rural associations asking rural companies to endorse a proposal for Congress to provide billions for broadband, and to ask their Congressional representatives to support the proposal as much needed in their rural areas.

Any effort to shape a proposal to benefit rural telephone companies instead of their competitors? You can make a safe bet that the competitors are expending effort and dollars to make certain any broadband stimulus package will help them. What's being done on behalf of rural telephone companies? And, most importantly, what do rural telephone companies need in a stimulus package?

Most rural company service areas, in contrast to the rural areas served by larger incumbent carriers, already provide high speed internet to over 90% of their subscribers. If you're a rural incumbent carrier that is already providing high speed internet, a broadband "stimulus" package may only end up being another stimulating gaming opportunity for poetential competitors similar to USF "identical support. Does a rural incumbent carrier really want to give its blanket endorsement to providing other carriers with funding and tax credits to deploy more rural broadband? (And, can someone explain to me again how providing tax credits for infrastructure investment is helpful to non-taxable rural cooperatives?)

What is lacking in the discussion and debate are specifics that address the needs and issues of the rural industry. The irony is that the broadband deployment issue is an ideal opportunity for rural industry advocates to contrast the broadband situation in rural areas served by rural independent carriers to the status of broadband in rural areas served by other incumbent carriers. It's a great story: Bell Companies obtain regulatory "reform" and price cap regulation and fail to meet rural customer needs; and, in contrast, the rural telecom industry succeeds by prudently using effective government regulatory programs (USF and access charges) to recover costs and generate margins that have produced widespread broadband deployment.

The last thing the rural industry needs to do is to give a blank check endorsement to another "identical support" type money game. We don't need to endorse a program that provides infrastructure funds and tax credits for competitors to build broadband infrastructure where rural companies have already deployed high speed connectivity. We do need a program that helps defray the costs of transport to the internet portal which will lower costs and lead to lower more affordable rates that will, in turn, increase customer take rates. And, we need other directed funding in a stimulus package that helps customers with affordable access to computers and promotes job stimulation in rural areas (eg., tax credits for new jobs and businesses like bringing back customer service call centers from other nations to America's rural areas).

Anyone else care or is everyone busy running with the herd and sending their letters to Congressmen seeking endorsement of a proposal they haven't read?

Steve Kraskin, January 12, 2009