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With $6B for telecom, gov’t stimulus package could spark feeding frenzy: Wireless providers may face off against public-interest groups over possible conditions

The $825 billion economic stimulus package unveiled by congressional Democrats will include $6 billion in grants for broadband and wireless services in underserved areas, a funding level that is lower than anticipated and that could come with controversial strings attached.
In a press release, the House Appropriations Committee said the $6 billion broadband-wireless monies are designed to “strengthen the economy and provide business opportunities in every section of America with benefits to e-commerce, education and health care. For every dollar invested in broadband the economy sees a ten-fold return on that investment.”
Obama transition tech-policy advisor Blair Levin on Wednesday appeared to try to tamp down expectations for the broadband component in economic recovery legislation, saying it represents only a piece of the president-elect’s universal broadband agenda.
House Speaker Nancy Pelosi (D-Calif.) said she would like to see a final bill passed by Congress and sent to incoming president Barack Obama for signing by mid-February.
Bickering begins
However, there are signs that a fight could break out between telecom service providers and public-interest groups over possible conditions that could be attached to broadband and wireless stimulus funding.
In a letter to the chairmen of House and Senate Appropriations Committees, Free Press said that “tax dollars should not be used to fund closed, proprietary networks that shut out content providers, control consumer behavior and encourage anticompetitive activity. That outcome would be anathema to the goal of building infrastructure of maximum utility to all of the American economy and society. There are several paths that Congress can take to protect consumers. These networks could be made open to all providers on a wholesale basis to promote competition. They could come with mandatory requirements to ensure nondiscrimination between network owners, content providers and consumers.”
During his presidential campaign, Obama voiced support for an open Internet, or net neutrality, policy.
Markham Erickson, executive director of the Open Internet Coalition, said the House Appropriations Committee’s economic stimulus blueprint “is the first step to help ensure all Americans can take part in the broadband Internet revolution. Unfortunately, millions of Americans have been bypassed by the buildout of these networks. Hopefully, this money will extend an important economic lifeline to these families in a time of economic challenge for our country.”
A boon to equipment vendors?
Telecom analysts at Stifel, Nicolaus & Co. said they doubt a $6 billion to $8 billion grant program will have a major impact on large service providers, but could prove beneficial to equipment vendors. They said tax credits and other incentives for expanded broadband deployment could surface later in separate legislation.
Meantime, the analysts said the structure of broadband-wireless stimulus grants could be fertile ground for warfare among telecom firms and special-interest groups.
“We understand that there remains considerable controversy regarding what speeds would qualify for eligibility. This will be key,” Stifel analysts stated. “Public-interest groups and some larger companies are advocating wireline speeds of 100/20 Mbps down/up. We believe this could exclude AT&T (Inc.) and some cable companies, and others are urging speeds in the range of 10-50 Mbps down.
“Wireless broadband is being discussed separately, with qualifying speeds on the order of 10/2 Mbps down/up, which could exclude Clearwire (Corp.). Although we expect the government to aim for technological neutrality in order not to distort market structure, the speeds that are ultimately chosen as qualifying will determine who falls outside the benefit of the grants. One possible approach that we believe some are considering is a sliding scale which would make more money eligible for faster speeds.”
The analysts noted that Rep. Anna Eshoo (D-Calif.) and other House Democrats may pursue a separate broadband bond proposal, which could make up to $10 billion available over three years.

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