[RTC List] Obama Broadband Push

Tue Dec 30 09:22:39 PST 2008

Based on our recent discussions, I thought you would all find this very
interesting:

Need a Real Sponsor here

DECEMBER 30, 2008

Internet Providers Move to Shape Broadband Push 

By HYPERLINK
"http://online.wsj.com/search/search_center.html?KEYWORDS=AMOL+SHARMA&ARTICL
ESEARCHQUERY_PARSER=bylineAND"AMOL SHARMA

President-elect Barack Obama's call to improve the nation's broadband
infrastructure has cable and phone company lobbyists maneuvering to get a
leg up.

Lawmakers in Congress want a plan that will create jobs over the next two to
three years while also tackling the longer-term goal of improving the
availability and quality of high-speed Web access in the U.S. The U.S. has
slipped to 15th from fourth place since 2001 in broadband penetration,
according to the Organization for Economic Cooperation and Development.
Advocates say broadband deployment is critical to the competitiveness of the
U.S. economy.

Among the issues are what speed Congress should define as broadband and
whether government money should be funneled only to areas that have no
broadband access, or if it should also subsidize upgrades to existing
networks.

Policies under serious consideration are corporate tax credits to build new
wireless or landline infrastructure, government-backed broadband "bonds" and
grants to companies or local governments, legislative aides and lobbyists
close to the process say. There also is strong agreement that low-income
consumers need to be encouraged to sign up for broadband -- for example,
through vouchers to purchase computers or discounts on monthly service.

Senate Finance Committee and Commerce Committee members are drawing up a few
options, as are House members such as California Rep. Anna Eshoo and
Massachusetts Rep. Ed Markey, chairman of the telecommunications
subcommittee. The Obama transition team's point person has been former
Federal Communications Commission chief of staff Blair Levin.

"There aren't any quarrels about the need for more broadband," says Ms.
Eshoo, who outlined a series of broadband stimulus options in a memo to the
House leadership in October. "It's a matter of how we're going to do it and
the actual language."

The Obama transition team declined to comment.

Large cable operators are seeking to increase the FCC's definition of
broadband download speed to about five megabits per second, about 6½ times
as fast as the current definition, according to people familiar with the
situation. Internet-service providers building out "unserved" regions, where
service of that speed isn't available, would be given the full benefit of
tax incentives or grants.

The big cable providers also want to target "underserved" areas, where there
is only one broadband provider or the service isn't widely available. In
those markets, companies would get incentives to build out next-generation
services. The download speed that would qualify as next-generation would
likely be in the range of 40 to 50 megabits per second, people involved in
the discussions say.

The cable plan would disadvantage phone companies, especially smaller ones
whose digital-subscriber-line services are slower than cable modems. The
Independent Telephone and Telecommunications Alliance, which represents
midsize phone companies, is pushing for a slower broadband standard, in the
range of 1.5 to three megabits per second. Curt Stamp, the group's
president, says the federal largesse should be used to subsidize carrier
investments in rural areas rather than to finance upgrades to their existing
networks.

Wireless services will likely be able to qualify as broadband at a slower
download speed than landline services. But if the mark is set above two
megabits per second it could be a boost for HYPERLINK
"http://online.wsj.com/public/quotes/main.html?type=djn&symbol=CLWR"Clearwir
e Corp., a start-up operator that is rolling out a WiMax network capable of
download speeds of two to four megabits per second. Other carriers weren't
planning major wireless upgrades until at least 2010.

Equipment makers such as HYPERLINK
"http://online.wsj.com/public/quotes/main.html?type=djn&symbol=csco"Cisco
Systems Inc. and HYPERLINK
"http://online.wsj.com/public/quotes/main.html?type=djn&symbol=mot"Motorola
Inc. stand to benefit if carriers undertake massive upgrades. Carl Russo,
CEO of HYPERLINK
"http://online.wsj.com/public/quotes/main.html?type=djn&symbol=DSGX"Calix,
which supplies equipment to phone and cable providers, says Congress should
define broadband as 10 megabits per second so the networks it builds now
will be able to support bandwidth-hogging applications of the future, such
as high-definition video.

"Remember, you only get to do this once, so you want to build the widest
highway possible," Mr. Russo says. The Telecommunications Industry
Association, which represents equipment makers, is pushing for a $25 billion
grant program for Internet service providers. Under another proposal that is
being discussed, grants could go to state and municipal authorities, which
would build high-speed networks and then open them up to competing service
providers. That would likely meet with considerable resistance from large
carriers like Verizon Communications Inc., which have challenged attempts by
local governments to build and operate their own wireless or high-speed
fiber networks.

Steve Davis, senior vice president of policy for HYPERLINK
"http://online.wsj.com/public/quotes/main.html?type=djn&symbol=q"Qwest
Communications International Inc., says the big phone company wouldn't
object to public broadband projects in areas that currently have no
high-speed Internet service, provided private operators have a right of
first refusal in building the networks. "The first place the government
should look is to the industry," Mr. Davis says.

Meanwhile, outside groups are offering various proposals to Congress.
Consumer advocacy group Free Press released a 31-page broadband-stimulus
proposal that calls for a $44 billion investment in Internet services over
three years, much of which would be funneled through the FCC's existing
Universal Service Fund, which subsidizes telephone services in rural areas
and for low-income people.

Public-interest groups are clamoring for conditions to be imposed on
carriers that receive tax credits, such as pledges not to degrade any
Internet traffic, a principle referred to as "net neutrality."

—Vishesh Kumar and Amy Schatz contributed to this article.

Write to Amol Sharma at HYPERLINK
"mailto:amol.sharma at wsj.com"amol.sharma at wsj.com

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