Rural broadband access is just half the battle -- maybe less than half, says Frank Odasz. Broadband doesn't produce jobs, people do, and they need training in best practices and entrepreneurship and trusted networks of support.
The Senate has nipped some of the spending for rural broadband out of the stimulus bill. The argument has been that this provision won't create jobs fast enough. The Wausau (Wisconsin, in picture above) Daily Herald takes on this argument in an editorial today:
"(W)e'll leave the debate about the economic theory behind the bill for another day. Because the substance matters, too. This bill also represents a serious long-term investment in the nation's infrastructure, and it is equally reasonable and right for citizens to scrutinize its substance. That's why it's important to remember that for the 21st century, infrastructure does not mean only old-school stuff like roads, bridges and railroad tracks.
"It also ought to mean expansion of high-speed Internet cables into rural areas. The House bill included $6 billion in broadband grants and the Senate bill includes $9 billion. The number in the final bill may be somewhere in between, or it may change altogether. But this represents an important investment, and one that can help especially Northwoods Wisconsin to thrive economically in years to come. The legislation's broadband grants will work as economic stimulus in the sense that some jobs will be created for producers, shippers and installers of the cable lines themselves. But the long-term economic benefits are even greater. Broadband availability will allow Northwoods tourism to thrive."
A bipartisan group
of Senators have cut $90 billion from the stimulus plan, including $1.5
billion for the extension of internet broadband into rural areas. The
group is led by Senators Ben Nelson (Democrat of Nebraska) and Susan
Collins (Republican of Maine, above).
According to the New York Times,
the two "spent much of the day "scrutinizing the 736-page bill and
wrangling over what to remove." The Times reported late Thursday night
that "the group had drafted a list of nearly $90 billion in cuts,
including $40 billion in aid for states, $4.1 billion to make federal
buildings energy efficient and $1.5 billion for broadband Internet
service in rural areas. But they remained short of a deal, and talks
were expected to go all night."
The Senate had included $9 billion for broadband extension in the original bill. The House had $6 billion.
The stimulus bill is hung up in the Senate, and it appears the one way to pass a bill is to cut its size. Obama talked
with a group of "centrist" senators Wednesday about cutting the size of
the bill by $50 billion. Sen. Ben Nelson, a Nebraska Democrat, is
talking about $90 billion in cuts. Some more moderate Republican
senators propose cutting the bill by a third, to $600 billion.
One
of the criteria for cutting projects is how quickly they will create
jobs. On that score, rural broadband spending is now getting some bad
ink. The Congressional Budget Office reports that most technology money
in the bill would be spent quickly, "with one primary exception. CBO
anticipates that funds provided to the National Telecommunications and
Information Administration (NTIA) to administer the broadband grant
program would take longer to spend—seven years—because the new
appropriations would far exceed the agency's 2009 funding of $17
million, and the legislation would require, in most circumstances, that
grant recipients provide 20 percent of the project's cost from
nonfederal sources."
Sounds bad, and the quote has been used in stories
as proof that the broadband provision is not a job creator. But nearly
half the broadband money (at least in the House bill) was to be
distributed by the U.S. Department of Agriculture, not NTIA. We need to
hear from USDA about the agency's readiness to put people to work.
Criticism of plans to spend billions of dollars on extending
broadband Internet service to rural communities is growing louder. The
questions largely came from Republicans, who said spending money on
rural broadband would not create many new jobs. On the Hannity show
last night on Fox News, Sen. John McCain of Arizona specifically
mentioned the rural broadband proposal when asked what he didn't like
in the Senate stimulus bill.
"There is no end to the spending,"
said the 2008 Republican presidential nominee. "Many of the projects
will take such access to broadband and wireless for rural America that
will take years, just years. Much of the spending can't be done in a
short time, and it is spending programs that the Democrats have tried
to put into law and enact for a long time, and now, they are doing
that."
Today's Investor's Business Daily singled out the broadband provision
as part of a "laundry list of provisions that critics say have little
relation to economic stimulus." Last night on CNN's Lou Dobbs show,
industry analysts said the rural broadband proposal would have little
stimulative effect. "The number of jobs that broadband stimulus is
meant to create is highly debatable," one analyst said.
In a front page (and above the fold) story in today’s New York Times, reporter David Herszenhorn asks if the “billions pegged to expand broadband Internet service to rural and underserved areas” will create jobs, expand services and help businesses or “become a $9 billion cyberbridge to nowhere, representing the worst kind of mistakes that lawmakers could make in rushing to approve one of the largest spending bills in history without considering unintended results.”
“The first rule of technology investment is you spend time understanding the end user, what they need and the conditions under which they will use the technology,” said Craig Settles, an industry analyst and consultant who has studied broadband applications in rural and urban areas. “If you don’t do this well, you end up throwing millions or, in this case, potentially billions down a rat hole. You will spend money for things that people don’t need or can’t use.” This argument mirrors a discussion taking place in Great Britain, where an expansion of broadband into rural areas is being questioned. The reporter does find, however, that the “the potential benefits of wider network access are indisputable,” but that it will take years to complete the work, negating any immediate stimulative effect.
The bill does leave open lots of questions. Who will benefit from its tax provisions? How will this work fit in with plans to build a “next generation” (i.e., much faster) Internet? “We can’t sit around waiting for the perfect in technology when we have the good before us,” Sen. Ben Nelson of Nebraska said.
The Senate stimulus bill contains funding and tax credits that aimed at encouraging extension of broadband to rural and underserved urban communities. But the New York Times notes that a four-word addition in the bill may divert credits from rural regions to areas that are already well-served with broadband, a change that appears to benefit Verizon.
The bill gives companies a 20 percent tax credit on investments on "current-generation" broadband (serve with speeds of at least 5 megabits per second). "Next-generation broadband" (100 megabits) also receives a 20 percent tax credit for unserved, low-income and rural areas. But a new section defines a "qualified subscriber" for this credit as "any nonresidential subscriber maintaining a permanent place of business in a rural, underserved, or unserved area, or any residential subscriber."
So the credit now goes to the extension of next-generation service to "any residential subscriber" — rural, suburban, urban! Verizon has the most fiber optic cables and is best able to roll out this service. The company already plans to add 3 million more customers this year and another 3 million in 2010, a $4 billion investment that will qualify for $800 million a year in tax credits with no change in the company's plans.