Examining Obama Administration’s Broadband Stimulus

President Barack Obama signed into law the sweeping US Economic Stimulus Bill on 17 February in Denver. One of the most anticipated sections of the Bill for the technology community was Broadband Stimulus. (With the other being Health IT stimulus provisions)

The lack of cheap, ubiquitous broadband connectivity throughout the US has been a large stumbling block that has prevented technology solutions such as Cloud Computing and SaaS from being adopted by a larger number of American businesses and consumers. The US has fallen far behind the rest of the industrialized world (and its key economic and technology competitors in the 21st century) in the past 8 years and now ranks number 15 in Broadband adoption worldwide.

The US Economic Stimulus Bill includes $7.2 billion dollars in broadband subsidies. The broadband subsidies are to be used to fund grants and loans that focus on areas of the country that are unserved and underserved by broadband providers, particularly remote and rural areas of the US in addition to underserved urban communities. A large portion of America’s economic engine and overall employment is driven not by Fortune 1000 companies but by SMB’s in rural and urban area of the US.

$4.7 billion dollars of the subsidy will be distributed via grant programs administered by the U.S. National Telecommunications and Information Administration’s (NTIA)  Technology Opportunities Program. (TOP) This is great news for those who like transparency in government as the NTIA’s TOP program’s grantees are searchable via the TOP Legacy Project. The remaining $2.5 billion of the subsides will be distributed by the U.S. Department of Agriculture’s Rural Utilities Service in the form of grants and loans to broadband providers targeting service in rural areas. 

The final version of broadband stimulus is not without its drawbacks. Chief among them is the fact that minimum broadband speed requirements were removed from the final version of the funding. In the US broadband speeds average a mediocre 4.9 megabits per second, far lower than the average in South Korea which averages 49.5 megabits per second or Japan which averages 63.6 megabits per second.  The US will be in a mad scramble with Japan and South Korea to regain market share in the auto, electronics and countless other industries once the current recession ends and it will not help that the US will continue to be one step behind its trading partners and competitors in its broadband infrastructure.

But despite the drawbacks broadband stimulus could not have come at a better time for the US technology industry. Many jobs will be created by both large and small broadband providers to build out their broadband infrastructure, SaaS and Cloud Computing Service providers will have access to a larger pool of customers and industry stalwarts like Cisco and Sun will benefit due to increased purchases of hardware to support the broadband build out.

1. Aaron ONeil , February 17, 2009:

   Heres hoping that the grants and loans for the broadband stimulus do actually go to small broadband providers instead of all to the Cox’s and Verizon’s of the world.

   Reply To This Comment

   Bruce Payson reply on February 17th, 2009 :

   @Aaron ONeil,

   After the fiasco with some of the banks misusing TARP funds last fall, I dont think anyone will blindly trust the government to oversee that the funds are being used for their stated purpose.

   There should be stronger oversight of taxpayer money this time around with the Obama admin.

   Reply To This Comment

2. Alexander Alvaro , February 18, 2009:

   We could use a bit of that stimulus over in the European technology industry

   Reply To This Comment

3. Harry Milrose , February 18, 2009:

   Funny that you mentioned SMB in this Blog Post. This Stimulus Bill totally missed any stimulus or help for small businesses.

   Most small businesses are on life support or are closing yet other than Obama’s campaign rhetoric, nothing in this bill directly addresses small business.

   Yet the automakers and the banks still have their grubby paws out for a handout.

   Reply To This Comment

   Ameed Taylor reply on February 18th, 2009 :

   Harry,

   To be fair the Stimulus Bill was not meant to directly address small business (although it indirectly helps small businesses via many of the health, technology and energy provisions) but I do hope that the administration addresses some of its plans for small business soon. ( http://tinyurl.com/58o8e3 )

   Aaron,
   This time around oversight is a key component of the spending bill. Once the Stimulus Bill was signed on the 17th http://www.recovery.gov/ was launched as a site where the public can track the use of Stimulus funds.

   So I dont think oversight will be an issue this time around….I for one will be checking the site often to see who is being allocated what funds and how they are being used.

   Also, most state, county and local governments are forming Oversight Committees at the state, county and local level to monitor the use of funds

   Reply To This Comment