Study: Broadband stimulus overlapped existing service

A study from a cable broadband trade group finds that 85 percent of households in three projects already have service
  • (IDG News Service)
  • — 14 April, 2011 08:03

Three large broadband projects funded recently by the U.S. Rural Utilities Service (RUS) largely cover areas already served by broadband providers, according to a study released Wednesday by a trade group representing cable broadband providers.

More than 85 percent of the households covered by the three projects, using money from the American Recovery and Reinvestment Act (ARRA) of 2009, have wired or fixed wireless broadband service available to them, not including 3G mobile broadband service, said the study, released by the National Cable and Telecommunications Association (NCTA).

Including 3G service, nearly 99 percent of the households covered by the three projects, in northeastern Minnesota, southwestern Montana and northwestern Kansas, have broadband service, the study said. The study counts 3G, with download speeds of 600 Kbps to 1.4 Mbps, and DSL (digital subscriber lines), with speeds up to 3 Mbps, as broadband, although providers covering parts of the areas deliver faster service.

The three RUS projects largely focus on providing fiber service to the home, with speeds in the tens of megabits per second.

"While it may be too early for a comprehensive assessment of the ARRA's broadband programs, it is not too early to conclude that, at least in some cases, millions of dollars in grants and loans have been made in areas where a significant majority of households already have broadband coverage," wrote study authors Jeffrey Eisenach and Kevin Caves of Navigant Economics, a Washington, D.C., analysis firm generally opposed to government programs and regulations. "In addition, the [RUS] program creates strong disincentives to private broadband investment in the long run, as potential future investors will discount expected returns for the possibility that the government may step in, ex post, to subsidize a competitor."

The study largely depends on broadband providers to report their coverage areas. Navigant employees did not go to the three states to check the reported coverage areas, an NCTA spokesman said.

The cost of bringing broadband to each unserved home in the three projects is US$30,104, if 3G service isn't counted as broadband, the study said. If 3G service is counted, the cost rises to $349,234 per unserved home.

"Either comparison shows the cost to connect unserved households to be extraordinarily high because the vast majority of homes are already being served by another provider," said NCTA spokesman Brian Dietz.

The ARRA allocated RUS and the U.S. National Telecommunications and Information Administration (NTIA) more than $7 billion for broadband deployment and related projects. RUS gave the Kansas project $101.2 million in grants and loans to cover 4,247 square miles with fiber- or Wi-Max-based broadband.

The Montana project received $64.1 million in grants and loans to cover 154 square miles in Gallatin County with a fiber network. The Lake County Fiber Network project in Minnesota received $66.4 million to build a fiber network in Lake County and parts of St. Louis County.

Within the boundaries of the Kansas project, five companies offer seven broadband services, including 3G, the study said. In Montana, seven broadband providers offer services, and in Minnesota, eight broadband providers, including 3G carriers, offer service, the study said. In some cases, the broadband providers offer service to a small percentage of residents within the project areas.

An RUS spokesman called the program awards process "fair and open."

"The projects highlighted in the NCTA study are in rural areas that lacked sufficient broadband for rural economic development, as required by the statute," the spokesman said. "All were carefully vetted on the ground by RUS field staff, received strong support from the local community, and will vastly increase broadband capacity in their communities."

Craig Settles, a community broadband adviser, also questioned the study. Communities applying for grants had to show that residents were not getting services or were not getting adequate speeds, he said.

"Just because a community has a private sector provider does not mean the service provided is adequate to meet the economic development, education, telemedicine and other needs of the community that require tens, if not hundreds, of megs of speed," Settles said in an e-mail. "It is borderline criminal how telecom and cable companies have suckered some congresspeople into believing an area covered by 'advertised speeds' means individuals and businesses actually have broadband coverage."

The study represents "sour-grapes tactics" by broadband providers, Settles added. He also questioned the study for equating 3G service to broadband.

"It's tiring listening to incumbents whine about 'duplicate coverage' when so many of them fail to deliver speeds that impact local economic development," he said. "We have to stop being taken in by the hype of the industry, and get into the community trenches to see what they're really dealing with, and why these stimulus awards make sense."

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Topics: Navigant Economics, U.S. National Telecommunications and Information Administration, National Cable and Telecommunications Association, telecommunication, U.S. Rural Utilities Service, government, broadband
Comments are now closed.

Latest News Articles

Most Popular Articles

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Resources

Best Deals on GoodGearGuide

Compare & Save

Deals powered by WhistleOut
WhistleOut

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?