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Major Carriers Shun Broadband Stimulus
Funds Would Come With Tighter Rules
The Obama administration made a national priority of spreading high-speed Internet access to every American home and offered stimulus money to help companies pay for it, but the biggest network operators are staying away from the program.
As the Aug. 20 deadline nears to apply for $4.7 billion in broadband grants, AT&T, Verizon and Comcast are unlikely to go for the stimulus money, sources close to the companies said.
Their reasons are varied. All three say they are flush with cash, enough to upgrade and expand their broadband networks on their own. Some say taking money could draw unwanted scrutiny of business practices and compensation, as seen with automakers and banks that have taken government bailouts. And privately, some companies are griping about conditions attached to the money, including a net-neutrality rule that they say would prevent them from managing traffic on their networks in the way they want.
"We are concerned that some new mandates seem to go well beyond current laws and [Federal Communications Commission] rules, and may lead to the kind of continuing uncertainty and delay that is antithetical to the president's primary goals of economic stimulus and job creation," said Walter B. McCormick Jr., president of USTelecom, a trade group that represents telecoms including AT&T and Verizon.
Yet those firms might be the best positioned to achieve the goal of spreading Internet access to underserved areas, some experts say.
"If you want to get broadband out, you have to do it with [those] who brought you to the dance in the first place, and in this case it is the incumbent cable and telephone carriers who have 85 percent of lines in the country," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a Washington tech policy think tank. "This is not basket weaving. This is really complex and intensive technical stuff that takes a fair amount of sophistication and scale to be able to do right and to continue to upgrade."
Obama has pushed for universal access to broadband since his presidential campaign, saying it would underpin the country's economic future. The stimulus funds target homes and businesses in the hinterlands that have largely been overlooked by broadband providers because of the hefty costs to lay down fiber-optic and other broadband pipes to small communities.
At the same time, the government has promised more scrutiny of industry practices that seem to limit consumer access to services, such as Comcast blocking the peer-to-peer file sharing service BitTorrent in 2007 and Apple's recent decision to block Google's voice service and the free Internet calling service Skype on the iPhone.
Those efforts have alarmed the major carriers. Specifically, some of the biggest firms fear that a clause in the stimulus plan that says recipients of the grants cannot "favor any lawful Internet applications and content over others" -- the concept known as net neutrality -- could lead to more rules down the road.
This condition goes beyond guidelines at the FCC that have been criticized by consumer advocacy groups as too vague. Carriers have pushed to keep current rules in place and see the condition on the stimulus grants as a potential precursor for additional rules at the FCC on how carriers can manage content over the Web.
The companies paint dire scenarios where new rules would lead to networks getting clogged with spam and too much video content, slowing down service for all users.
"It's not cost-effective for the big network operators to play in rural [markets] in the first place, and if they take federal money that comes with all these strings attached to it, they are opening themselves up to being regulated even further," said Roger Entner, head of communications research for Nielsen IAG.
McCormick said net-neutrality conditions on the grants are fuzzy and may give network operators pause before investing in long and expensive projects that could end up in a tangle of technical and legal hang-ups over how the firms oversee their networks.
"Clearly, it's causing potential applicants to reflect upon the uncertainties," McCormick said.
Verizon said it decided not to apply before conditions were announced. Comcast, which mainly serves urban and suburban areas, said it would also abstain. AT&T said that it likely would not apply but that it is open to partnership with state and local governments who win the grants.
Corporate officials have also said it would look bad for a company like AT&T or Comcast to come to the government with hat in hand when they are among the few companies in the economy flush with billions of dollars in cash reserves.
One official at a large network operator said on the condition of anonymity that once taken, government funds incite a "mob mentality" that could preclude sponsoring golf tournaments or giving executives bonuses, for fear of political backlash.
Some public advocates and analysts say the carriers never had a compelling reason to seek the grants.
"They weren't going to apply," said Ben Scott, head of policy at public advocacy group Free Press. "They are using this as an opportunity to grandstand against net neutrality."
Rebecca Arbogast, head of tech-policy research at Stifel Nicolaus, notes that the biggest carriers would be less inclined to deploy networks in rural areas because there is not enough demand to justify the ongoing financial investments. She said the companies should have expected stronger net-neutrality conditions because it was mandated by Congress in the stimulus act.
"With a few exceptions, the net-neutrality provisions were not a great departure from what I think was already out there and is consistent with the path that most recognize we were already headed down," Arbogast said.
The Commerce and Agriculture departments, which are handing out a total of $7.2 billion in broadband stimulus grants through 2011, say the plan to bring high-speed Internet to the hinterlands and urban poor can be accomplished without the big carriers. Companies like wireless broadband provider Clearwire and small cable and telecom operators may introduce more competition into the industry by using the funds to build networks that could compete with AT&T, Verizon and Comcast, analysts and government officials say.
"I think if the big carriers want to participate and play by the rules, great. If not, I'm not that concerned," said Mark Seifert, a senior adviser for the National Telecommunications and Information Administration, which is overseeing grants for the Commerce Department.
Seifert said the rules for broadband grants were not written to favor any size or kind of network operator. Further, the $7.2 billion is not intended to complete Obama's goal of spreading broadband to every home; rather, it is a "down payment" on a larger plan being crafted by the FCC, he said.
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17 Comments so far
Show AllLet's boil it down and make it simple.
The people want the internet to operate in the manner of a public utility with equitable access and common services for all, often referred to as "net neutrality."
The communications industry wants the internet to operate like other mass media where access AND MESSAGE DELIVERY SERVICES are determined by corporate interests and their paid sponsorship.
In other words, the industry wants to make the internet into just another part of the vast media/propaganda wasteland and are telling us that, if they can't have it their way, they won't play.
Not only that, but the big carriers are afraid that if we had widespread, affordable high-speed web, people would download and stream video content much more than they do now, and it would ruin the cable end of their monopoly.
Exactly,
It's all about making us pay MORE for video.
Message to Verizon , Comcast and other profit pirates:
When you charge $19.95 OR LESS a month for broadband, I'll consider it. Until then, you can stick it. I already disconnected cable a year ago so I've put about $600 in my pocket that you used to steal.
Here in Maine our university system has a plan to cover the entire state with a wireless grid that would connect all parts of the state with a seemless interoperable high speed network. being a rural state the big telecoms have left us in the dust with antique phone and internet solutions. Braking into the grant system to get funding for an educational system that would teach and train Maine students to build, maintain, and operate this system has been difficult over the past three years that we have been working to get it in gear.
As expected it is the big telecom industry flush with cash that has already infected our elected and appointed Public utility officials and are fighting tooth and nail against the people behind this school and system that would bring us up to world standards. It would seem that our own legislators are determined to keep us from state of the art communications with each other, big benefits to local small businesses, educational opportunities for rural citizens and the advanced technology of a doctors visit from home via video conferencing.
As we move into a future with reduced and expensive fossil fuels the ability to build community and small local businesses with wireless high speed connectivity will be greatly hampered and hamstrung by control of our airwaves by the big players.
I do not however expect Obama to help with these advances as he has already demonstrated that he is a sock puppet for corporate control of this technology by voting to allow the illegal tapping of all communications between we the people and our business partners, family and friends.
Spot on RV.
Job creation, opportunities for households seeking to work in our economy and possibly world economy to provide service via telecommute from rural and urban areas and last but not least get democratic information flow from the internet. Is lost in the corporations responsible for setting up telecommunication in this country.
These corporations are showing again that they only care about their own motives of profits and control to preserve their own myopic interests. Openly colluding within their industry. No Give, All Take.
We should not trust them with our tax dollars any more. They have also forgotten that they were once subsidized by tax dollars ( for telecommunication inventions, use of public frequencies, tax credits etc. ) to perform build out in urban areas in this country.
Solution is to create local co-ops with the monies, free good conscientious workers from related industry to join the co-op and build out the infrastructure and services using open source software. In spite of the Death Star surrounding our orbit.
toophat for you!
Catch 22. Let's face it. Rural communities have less educational and economic opportunities. Broadband would help alleviate some of this. That's why the oligarchs can't allow it. Who would grow the GMO's? Expose themselves to toxic soups to eke out a living, if the underclass didn't exist.
A lot of the older folks here don't understand the difference these communication technologies could make for their children and grandchildren so they don't advocate for it. The uneducated parent class is being battered with subsistence issues and don't see the tie in either. The children who haven't been exposed to these things can't miss what they've never experienced.
That's why the Maine University and educational initiative is so important, Abe Winken. Wisconsin is a state with a lot of the same characteristics as Maine. I know because I used to vacation every summer up on Lake Moosam in Sanford-Springvale. I work in a school and we keep butting up against the same issues here as well. Government sanctioned monopolies not living up to the terms of carrier service contracts while trying to keep out alternatives to close down competition. What the Corps haven't thought of is the ingenuity of the savvy children to meet their own needs. There are peer networks out here that are blowing my mind with their ability to overcome barriers, through legal lower power alternatives and cobbling together linkages. It will happen with or without the Corps, with or without the Fed money. It would just be nice if it could economically and socially empower us sooner rather than later.
I'm pleased to hear the kids are putting together peer networks. I've long argued that with home computer's increasing speed, storage and wireless connections that if the corporate controlled net becomes intolerable there is the alternative citizens net that would be free and capable of widespread connections.
Are they entirely off the internet and what addressing protocols are the kids using?
AFAIK, it's just standard IPv4 so far, making use of the IANA reserved address space for private networks.
Most of Europe and much of Asia offer better high-speed internet service than does the U.S.
I live a few hundred yards from an expensive wireless cell-phone tower, but Verizon, my telephone carrier, continues to fail to offer high-speed internet, so I cannot watch video on my high-speed Mac.
We do have Time-Warner cable here in rural backwater SE Indiana as well as their Roadrunner (so why not high-speed Verizon?) but the cost is outrageous and the company corrupt.
After the June 12 mass conversion to digital TV, I went without TV for 6 weeks and then built my own antenna out of old metal coathangers and now receive PBS stations NOT available via cable.
Stupid, corrupt, incoherent America. If I had decent high-speed internet access I could work from home instead of having to commute to work. No wonder we can't compete.
-30-
I don't live near cell phone tower but down the block from fire rescue and police. I miss PBS since stupid digital conversion. None of the stations, commercially or otherwise work consistently anymore especially when you want information the most, in bad weather. Bought new "proper" antenna, still crap reception. Any particular design involved with the coat hangers, care to give any pointers. Thanks. minnow
The stimulus was designed to foster job creation. That's an important point that the carrier companies are trying to control. Fewer employees to provide jobs for helps to improve these companies productivity rates.
The Bureau of Labor and Statistics has been all over the internet this week trying to explain how after 10 months of a shrinking economy the continued profitability of these dinosaur-sized companies is in fact only related to an ever shrinking payroll ratio (compared to their lost production orders).
They're not making a dime, but they aren't bleeding to death with wage payments.
I'm afraid that this might actually be the real goal of not accepting the President's stimulus money, remember now, they aren't required to pay off this "Job Creation Grant", and they would be subject to a hugely divisive public issue described by supporters as the internet carriers providing news and information media over publically available and still free service features (Net Neutrality).
Just an observation but you realize that if everybody had broadband, we could have instant mega polling and a shot at real democracy. I don't think the government wants that. There are enough retired people in this country to ride herd on each and every congressperson and senator 24/7 and to post this for the benefit of those younger folks that still have to work for a living. I would volunteer my services for free.
Great. My switch to CREDO will be well worth it.
I suspect that part of the problem is that the large carriers are Already making money on secret deals that favor some sites and choke back the speed of others.
Accepting the stimulus money would leave them in big trouble if there Are such deals already in place.
Such deals could range from slowing down access to certain sites to slowing down access based on which Operating System is being used.
The best evidence for this possibility is already implicit in the carrier's offers to "Turbo Charge" your connection if you will only pay them a slight Premium and allow them to install a bit of Software on your computer.
The sales pitch blames the slow connection on Your Computer. But, if it were a problem with the Computer, why doesn't the problem just disappear when you install the latest OS Software Upgrade ???
The simpler explanation is that the software they are offering to install just identifies you as someone who has Paid the Piper for the extra speed.
Jerry, I'm sure you're right about the secret deals on carrier streams. It reminds me of a time we had cable. We couldn't afford it after a while and were threatened with cut off. My husband said to collections agent who was insulting him" Do what you must". We were told to expect the tech that afternoon. Well long story short, my husband was working in the shed, expecting a guy in a truck to come up the drive and be let in the house to 'cut off the cable'. The guy never comes. So at 5 o'clock my husband calls carrier and says the guy never came. The operator says, "You still have cable?" the husband calls out to me, 'Honey you got the tv on?" I answer yup cuz at the time I was watching Jeopardy on a broadcast channel, mourning the loss of AMC. He tells the operator, the wife says its on. Operator is ticked because she assumes truck driver is lying about having completed that part of his route. About 1/2 hour later company truck pulls up to the phone pole on the road, at the beginning of the driveway. Guy climbs the pole and is back down less than one minute later. I later am overjoyed during the task of thinking I had to reprogram the remote to find I DO have AMC. Husband realizes what has occurred and decides to fight the power by permitting the honest mistake consequences to continue unchecked. End of this story? It was truly a comedy of errors, no one on our end misstating the truth to the questions posed. Definitely a sin of omission. Result? The cable transmissions continued for years, about 6 years total, 3 years after we had moved on so other relatives could enjoy the cabin. Points? 1) it turns out that outrageous start up fee is to send a guy in a truck that is already driving around your neighborhood to switch an unlabeled switch the opposite to its current position. Too cheap to consistently wire or label the switches. 2) How much could it possibly be costing that corporation to provide that service on the lines that the Feds paid for? Do you think any corporation would be letting a major expense continue unchecked for YEARS if individual home service was such a drain? At most pennies, for which, at the time, they charged 45 bucks a month.
Same for internet, turbocharge, broad band,don't forget these are the exact same carriers from the 15 years past incident I am referring to. SOP.
How would they get away with the Paid the Piper chip JerryM has outlined? That falls under the convenient heading of proprietary information which is where they file everything that violates the public trust portions of their charters.
You corporate media scum are infinitely more corrosive to democracy than all foreign threats combined.