Fox Guarding the Hen House?

This is the last topic I thought I would be writing about, but in the past few weeks it has caught my interest in a big way.

A few weeks ago, a colleague of mine that works for a regional high speed internet provider called me to ask if ID Insight maintained information about which households in the country have high speed internet access? When I asked why, I didn’t realize how this would lead me on an odyssey canvassing the government, the Obama Stimulus package and a lot of bickering.

The Broadband Stimulus Package is a $7.2 Billion grant program that is part of the American Recovery and Reinvestment Act. Remember: Cash for Clunkers? Ya – that one. Anyway – the Broadband stimulus is intended to bring high speed internet to the hinterlands of rural America.

The way the grant works is generally as follows. If you apply and receive a grant, the government will subsdize 80% of the costs to bring high speed to a particular area. So, if you are a regional operator and it would normally cost you $5 million to lay down the fiber, cable, etc… now it will only cost $1 million. Obviously, this can be very lucrative for the carriers and enable high speed to areas where it may have previously not been possible.

Here’s the kicker. To receive a grant, the applicant must demonstrate that an area is under-served. Here’s the second kicker. The data does not exist. So how do you get the data? Enter Connected Nation. This non-profit was formed to obtain the data and information needed. They do this by working directly with the carriers to obtain their subscriber lists and develop these broadband maps.

Sounds logical on the surface – right? However, when you do a deeper dive, you find the following. Connected Nation was formed and is managed by the biggest telcos in the world. You know ’em – AT&T;, Comcast, Verizon, etc….

So here’s the rub. Many smaller and regional telco’s are vying for the grant monies, but they don’t have all the data. When they apply, the big telco’s are now protesting those grants saying that the area is “served”. They then hold up Connected Nation as their proof. The regional carriers are left to try to disprove. Their motive is to not allow competition where they don’t want it.

The regional carriers and municipalities are furious. And they should be. Why should the major carriers be able to control who goes where and stifle competition? Connected Nation lobbied for this data requirement, and then turned around and lobbied for a separate grant of $350 million to collect the data themselves. Wow!

This saga will continue to play out in the weeks and months to come. Attached is a recent report issued on Connected Nation.

Also – we have a little secret. We have already compiled the data, and it was not collected through the major carriers. It cost us just a trifle less than the $350 million that the government just set aside. Shhhhh. Don’t tell anyone.

Date Posted: November 2, 2009 Author: Category:   IDI Blog

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