Wednesday, August 26, 2009

The "Digital Divide" Is An Opportunity For Those With VIsion


LinK To Article In VON: Another Broadband Divide?

By Luc Ceuppens, Juniper Networks

The application period for the first round of applicants for the National Broadband Stimulus funds ended on Aug. 14. And while it likely won’t be known for a while who will receive funding and how much, we can be sure of one thing: There will be a lot of controversy around these funds. The plan, originally proposed by Obama during his campaign for presidency, is intended to bring broadband to lesser-served portions of the country, such as rural areas and economically challenged neighborhoods. While the intent is lofty, there are many issues and concerns that need to be addressed.

While no one will argue that bringing broadband connections to new customers in the United States is not a positive development, the question is who is in the best position to do that. Under Obama’s original plan, there was little in the way of defining how recipients of the funds would be chosen. Only now is this coming to light. The Wall Street. Journal reported on Aug. 14 that officials from 38 states are requesting input into deciding where the funds go. Their argument is that each state knows best where they have the biggest need. My home state, California, already has mapped out broadband coverage areas, while South Carolina and Missouri are doing the same. The federal government actually has set aside $350 million for mapping out national broadband coverage. While this may sound like a good plan, this mapping isn’t expected to be complete until 2011 – long after the broadband funds will have been spent. GigaOm notes in a recent blog that besides being late, this mapping project comes at a ridiculous cost to taxpayers. Other bloggers have mentioned similar concerns.

To complicate things even more, the federal government has its own proposal – let volunteers make the choice. As you can imagine, this suggestion has been met with its share of ridicule, but there are potential benefits to this – free input from educated decision makers, a diverse background of reviewers and decision-makers who may be less politically motivated than a group of elected officials or employees of a government organization.

Assuming that the two agencies handing out the loans – the National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) – decide who gets them, the next challenge lies in the strings attached to the money, like net neutrality and “openness” of devices that can be allowed on networks built with the funds. This potentially eliminates many of the nation’s largest carriers from using the funds to expand their coverage into remote areas. Qwest is one of the first large carriers to pass on the program. In press reports, Steve Davis, Qwest’s senior vice president for public policy, said “...upon evaluation of the funding opportunity and the various requirements for participation, we were unable to make the business case for filing an application for more rural opportunities.”

The bright side to these restrictions is that they have the potential to open the market to several small players who can serve the niche rural markets. These smaller players may be able to bring new services that fit better for the special needs of the underserved markets. On the other hand, the reality is that running a telecom provider business is capital intensive and survival is often tied to economies of scale that can only be achieved by high numbers of subscribers, questioning whether the small providers who receive the federal funds may be the best candidates in the long run.

Assuming that the government can decide who gets the funds, and what restrictions will be placed on them, there is opportunity for growth in the U.S. broadband sector. I don’t anticipate that these problems will be resolved soon, or that there will be easy answers. Whenever there are large dollars at play, there are always many outstretched open hands, all with their own interpretations of the “best” way to divide it and spend it.

Luc Ceuppens is vice president of product marketing, High-End Systems Business unit at Juniper Networks (JNPR).

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