[1st-mile-nm] Obama broadband plan

[Carroll Cagle]

There is a golden opportunity, with the Obama Administration coming in, to
re-think (and, more importantly, to re-DO) communications infrastructure in
these United States - including our own.  However, 

there is some worrisome content in this article (along with only one hopeful
note).  Emphasis supplied.

 

      Neither public, nor public-private "open" networks, seem to be under
consideration at this point.

 

Carroll

 

 

 


Obama's Broadband Plan


Tax breaks for companies that increase Internet speed or create new networks
are likely to go to existing large players 


January 7, 2009

BusinessWeek

David Foldvari

By Arik Hesseldahl  <http://www.businessweek.com/bios/Arik_Hesseldahl.htm> 

The Obama Administration has pledged support for universal broadband, or
making speedy Internet service available to all Americans. But the ideas
under consideration by the President-elect's transition team are likely to
fall short of the radical changes some activists have sought. 

At the core of the $20 billion to $30 billion effort under discussion by
Obama's advisers are tax breaks for companies that extend the availability
of broadband or, in regions where it already exists, boost the speed of
service, several people involved in the discussions tell BusinessWeek.
Companies that build broadband networks in areas with no service could
receive as much as 60% of their investment back in tax credits. Companies
that increase the speed of existing networks could get tax credits of as
much as 40%. The tax incentives also could be structured to promote high
broadband speeds, according to Jeffrey Campbell, director of technology and
communications policy for network equipment maker Cisco Systems (CSCO
<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?sym
bol=CSCO> ). For example, some analysts say the government could give 20%
tax credits for 20-megabit-per-second service and 40% credits for
100-megabit service. 

As currently conceived, the incentives would be available to any company.
However, those most likely to benefit would be existing broadband providers
such as AT&T (T
<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?sym
bol=T> ), Verizon Communications (VZ
<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?sym
bol=VZ> ), and Comcast (CMCSA
<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?sym
bol=CMCSA> ), because they have the capital to make investments, and it
costs less to extend their networks than it does to build new ones. The new
Administration appears unlikely to push forcefully for more competition in
broadband, an idea that activist groups such as Free Press and Public
Knowledge say is essential if the U.S. wants to catch up to broadband
leaders such as Korea. "Broadband is a natural duopoly," counters Robert D.
Atkinson, president of the Information Technology & Innovation Foundation, a
nonpartisan think tank. Proposals to create a third competitor to take on
the telecom and cable companies in most markets, he says, are "misguided." 


Bonds in the Offing?


The Obama transition team is still working on the broadband plan, and
details could change. One issue that has not been resolved is whether the
federal government will help companies issue bonds to finance broadband
buildouts. Such a program could help companies such as Clearwire (CLWR
<http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?sym
bol=CLWR> ), a struggling Kirkland (Wash.) startup that wants to roll out
wireless broadband service across the country. Blair Levin, point person for
broadband on the transition team, declined to comment for this story. 

Levin and his team are working on proposals to stimulate demand for
broadband service. Schools, libraries, and health-care organizations could
get tax breaks or grants for expanding the range of services they offer
online. One of Obama's talking points during the Presidential campaign was
that wider use of digital health records could improve the industry's
productivity and cut costs. 

In addition to the tax credits under discussion, the federal government may
also provide grants to states for the construction of broadband networks in
regions that never get coverage. States probably would use the money to hire
private companies to build networks in remote areas. The Agriculture Dept.
already has a Rural Development Broadband Program, which has connected
nearly 600,000 households in 40 states since 2002. 

The broadband push is an important part of the Obama Administration's
broader stimulus plan because it addresses several goals. Besides creating
immediate jobs in construction and allowing more people to use the Internet,
the effort could raise the country's broadband standing internationally.
Once ranked fourth in the world by the Organization for Economic Cooperation
& Development, the U.S. has fallen to 15th among developed countries in
broadband penetration, well behind nations such as Denmark, the Netherlands,
and Norway. "Broadband is the key to America's economic future," says S.
Derek Turner, research director at Free Press. "Broadband is a great way to
create thousands of new jobs, but we have to do it in the right way." 

Although details of the Obama plan have not been announced, telecom and
cable companies are in favor of the government's support for universal
broadband. "It's a worthy goal," says Thomas J. Tauke, executive
vice-president at Verizon Communications. The existing broadband companies
say it's crucial that Washington doesn't hurt the ongoing investments in
Internet infrastructure. Many outfits, for example, don't think the
government should make direct investments in broadband networks that could
compete against the telecom and cable players' services. 

But Turner at Free Press is skeptical that a broadband program relying
heavily on tax credits is the best approach. The risk, he says, is that the
country will fail to encourage competition, and the money spent will go
largely to the telecom and cable companies that already dominate the
business. "There's no point to doing all this if all we're doing is writing
the incumbent [players] a blank check," he says. 

With Pete Engardio and Peter Elstrom in New York. 

 

 

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