After speaking about broadband stimulus at an RCR Wireless event last week, I was approached by an engineer that was a volunteer application reviewer for the National Telecommunications and Information Administration (“NTIA”). He said that he had review a number of fixed wireless applications and scored them very highly, and was later shocked to find out that NTIA staff had rejected his findings in favor of granting middle mile proposals. The engineer felt betrayed.
Although I can’t confirm the engineer’s story, the available evidence does indicate that NTIA and the Rural Utilities Service (“RUS”) missed an opportunity to close the broadband gap in rural America. The FCC, in OBI Technical Paper No. 1, analyzes the extent of the broadband available gap and the cost to close it. According to the FCC, using a combination of fixed wireless and DSL technologies, it would take $23.5 billion to extend broadband to the 7 million homes that do not have access today (at speeds of 4 Mbps downstream and 1 Mbps upstream). (OBI Technical Paper No. 1 at 2.) Although that seems like a large number, “the highest-gap 250,000 housing units account for $13.4 billion of the total $23.5 billion investment gap.” (OBI Technical Paper No. 1 at 5.) In other words, only 250,000 homes account for over half the total dollars need – meaning that 6,750,000 homes could be served with approximately $10.1 billion.
As part of the American Recovery and Reinvestment Act of 2009 (“ARRA”) (i.e., the economic stimulus act), Congress allocated $7.2 billion to the NTIA ($4.7 billion) and RUS ($2.5 billion) to provide broadband access to unserved and underserved areas. Because applicants were generally required to provide 20-50 percent of the funding for their projects, the actual amount of spending on broadband access was intended to exceed the $7.2 billion in funding provided by Congress. It’s not unlikely that, when applicant-provided funding is taken into account, the total funding available for broadband under the ARRA could approach or exceed the $10.1 billion the FCC believes is needed to cover the vast majority of unserved households in this country. Thus, if NTIA and RUS had focused on the cost-effective types of deployment envisioned by the FCC – fixed wireless and DSL – this country’s broadband gap could have been largely closed.
Unfortunately, that’s not what happened. For example, out of the $910 million in awards provided by RUS in its first funding round, RUS issued only $27 million (or about 3 percent of the total funding) to wireless projects – even though wireless is the most cost effective broadband solution. In total, the RUS made 42 awards for fiber totaling $680 million and 12 awards to DSL totaling $309 million, compared to the $27 million for 14 wireless awards. Rather than attempt to close the broadband gap by covering as many homes as possible, the agency’s strong bias towards fiber virtually ensured that the broadband gap would persist for the foreseeable future. Apparently, if the choice is between fixed wireless access and no broadband at all, the government would prefer that rural residents get nothing.