Transcript EDUCAUSE LIVE! APRIL 24, 2009 The “Blueprint” is Born: Broadband Policy in the 2009 Economic Stimulus Legislation.

EDUCAUSE LIVE!
APRIL 24, 2009
The “Blueprint” is Born:
Broadband Policy in the
2009 Economic Stimulus Legislation
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“A Blueprint for Big Broadband”
An EDUCAUSE White Paper Issued January 2008
Key Recommendation:
The U.S. Should allocate $33 Billion to a
new Universal Broadband Fund (UBF)
to subsidize the construction of 100
Mbps local broadband connections to
every home and business.
www.educause.edu/ir/library/pdf/EPO0801.pdf
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Why Did Congress Include Broadband
Funding in the Stimulus Act?
1.
Broadband demand exploding; broadband investment
dawdling.
2. U.S. falling behind in international rankings of
broadband capabilities.
3. Industry (except for Verizon) investing less than what
America needs (microeconomics trumping
macroeconomics).
4. Need to stimulate the economy and create jobs.
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1. Broadband Demand Growth
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Internet Growth Studies
 Minnesota Internet Traffic Studies
(MINTS) says the rate of growth has
slowed somewhat, but still:
U.S.
50-60% per year
World
50-60% per year
 Cisco: White papers also estimate growth
at 50-60% per year (despite John
Chambers).
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Japan: First Documented Evidence that
Broadband Demand Growing PER SUBSCRIBER.
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United States Broadband
Subscribership: 2002-2008
30.00
25.00
20.00
15.00
United States
10.00
5.00
0.00
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2. U.S. Falling Behind in International Broadband Rankings. BB
Subscriber Growth: US/Europe
40.00
35.00
30.00
Denmark
Netherlands
Norway
25.00
20.00
Sweden
United Kingdom
France
15.00
10.00
Germany
United States
Spain
5.00
0.00
Ireland
Italy
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Countries with more rural population and
smaller GDP per capita than the U.S. have
better BB Penetration.
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International Speed and Price
Comparison:
Japan
South Korea
Sweden
France
Australia
United States
0.0
10.0
20.0
30.0
Average Speed
40.0
50.0
60.0
70.0
Price per Month
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Japan: FTTH Growth
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3. Industry Reluctant to Invest in
Broadband. Is this why??
"Today, fiber serves no purpose," Philippe
Capron, chief financial officer of Vivendi.
"There is no new revenue stream and no
supplemental service to offset the
considerable investment. All that it does is
to encourage the illegal downloading
of films.”
“Expanding broadband to bail out economies,” by Eric Pfanner; February 25, 2009; International
Herald Tribute, available at
http://www.iht.com/articles/2009/02/25/technology/broadband.php?page=1
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Cable’s “Long-term” Vision
 Rouzbeh Yassini: The "Father of the Cable
Modem" praised the cable industry's
DOCSIS 3.0 modems:
 It's "a great technology... a technology that
will go on for five, six, seven, or even eight
years.” [!]
http://www.lightreading.com/document.asp?doc_id=172668&site=cdn
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Why Invest When You Control the Market?
0.05%
1.39%
4.45%
0.01%
38.16%
55.94%
DSL
Cable
Fiber
Satellite
Wireless
Power Line
FCC Broadband Report: Cable-Telco BB Market Share
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In Comparison . . .
 Australia spending AUS$43B (US$30B) to
build a nationwide fiber to the node
network;
 New Zealand allocates $1.5 B to build dark
fiber backbone.
 Sweden spent $800M to build municipal
broadband, now investing more in fiber
 Greece announces $2.7B plan to build
fiber connections to 2 M homes (open
access)
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4.
The Recession
 Jobs, jobs, jobs, jobs, jobs . . .
 Overall attention to crumbling infrastructure
also benefited telecom. (Minnesota bridge
collapse; Water main breaks; California
energy crisis, etc.)
 Political support from Communications
Workers of America (CWA) and other unions
for Pres. Obama.
 Broadband funding ($7.2B) only an
ornament on the huge stimulus “Christmas
tree.”
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Broadband Funding in the
American Recovery and Reinvestment Act (ARRA )
NTIA
RUS
 Broadband Technology
Opportunities Program
 Distance Learning,
Telemedicine and
(BTOP)
 Dept. of Commerce
 $4.7 B to provide BB to
unserved and
underserved areas.
Broadband Program [?]
 Dept. of Agriculture
 $2.5 B to provide BB to
rural areas.
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ARRA Summary
• No limitation to last mile, middle mile,
backbone;
• No specification of technologies, wired or
wireless;
• Not a block grant to the states (although
governors will have influence)
• No definitions of “unserved”,
“underserved,” or “broadband”.
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NTIA Funding Breakdown
$ 200 Million
 Expanding public computer center
capacity (“at least”)
$ 250 Million
 Stimulate broadband demand and
usage (“at least”)
$ 350 Million
 Broadband Mapping (“up to”)
$
 Inspector General for audits
$
10 Million
141 Million
$ ~3.75 Billion
 Administrative Expenses
 Broadband Grants
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NTIA BTOP Grant Criteria (selected):
 20% matching funds (unless waived);
 Must comply with Net Neutrality-lite;
 Preference for serving public institutions;
 Preference for highest speed possible;
 Preference for serving underprivileged people
and small businesses;
 Must be completed in two years (use it or lose
it);
 Funding may cover equipment and software
but may not cover operational expenses.
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RUS Broadband Program Criteria
(Selected)
 Loans, loan guarantees or grants
 At least 75% of each project’s service
territory must be a rural area w/o
sufficient high-speed broadband;
 Preference for former RUS borrowers;
 Preference for applications permitting
multiple service providers.
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NTIA/RUS Process
Written
Comments:
 Comments filed last week April 13
Notice of Funds
 NOFAs (application guidelines)
Availability (NOFA):
expected in May 2009
Application
Deadline(s):
 Applications due in three stages
(Summer ‘09; Winter ‘09; Spring ‘10)
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Summary of Comments
 Prefer that funding be used to
Cable/Telcos:
Equipment
Providers:
stimulate demand; concerned about
subsidizing their competition.
 Varied: some prefer funding to
stimulate adoption, some prefer
middle mile funding, some prefer
funding for schools, hospitals and
libraries.
 Funding should go to companies
Rural Telcos
with a track record of performance
for local, middle mile and backbone
facilities.
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Summary of Comments
State Gov’ts:
 States should rank proposals from their
state; given significant weight
Local Gov’ts:
 Suggests priorities for anchor
institutions (schools, libraries); NTIA
should not defer to states.
Consumer
Organizations:
Schools
 Emphasize affordability, adoption and
speed. Strong non-discrimination
enforcement.
 In-kind contributions should satisfy
20% match; affordability is important;
to the classroom.
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Summary of Comments
EDUCAUSE :
State Nets:
 Supports middle mile funding and last
mile funding to anchor institutions, 100
Mbps should be the goal.
 Support extending reach of existing state
networks; have proven success of serving
public and community institutions
Internet2/NLR:  Supports enhanced broadband for
research and education; supports
partnership with NSF
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Key Issues to Watch
 Will NTIA/RUS go beyond the FCC’s Four
Openness:
Matching
Funds:
Middle
Mile:
RUS
Grants or
Loans:
Principles? Will they apply Openness
requirements to private networks (such as
research and education networks)?
 Will In-kind contributions be permitted?
 Will funding for middle mile connections
be permitted, or only retail services to
consumers?
 RUS has traditionally given low-interest
loans, but not effectively. Will RUS award
some funding in grants?
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Key Issues to Watch
RUS:
Competition:
 What does it mean that RUS must give a
Set-Asides:
 Will NTIA/RUS set aside a certain % of
Re-granting?
Re-Applying?
preference to applicants that allow
“multiple service providers”?
funds for “special” cases (schools and
libraries? Low-income?)
 Will grantees be allowed to re-grant funds
to eligible users, or will this weaken the
accountability ?
 Will NTIA/RUS allow applicants to re-
apply if they are denied in the fist round?
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Necessary steps to prove that you
are “shovel-ready”. . .
 Arrange financing (for 20% match, for






ongoing feasibility)
Technology plan
Rights-of-way approval
Environmental impact statement
Support from state government
Support from private sector/municipality
Support from public institutions and users
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