Since the Stimulus Bill passed early this year, countless private and public organizations have begun gathering information to apply for billions of dollars in stimulus grants and loans. However, these groups tend to underestimate satellite broadband technology’s ability to meet the goals of the US Congress and the Obama Administration. Not to be left out, some of the largest satellite companies have launched their own campaign to get the message out to Washington and the public.
The American Recovery and Reinvestment Act (ARRA), the official name of the stimulus package, earmarks $7.2 billion for grants and loans to improve broadband Internet access, and this money will be split between two different departments.
The National Telecommunications and Information Administration (NTIA) is part of the Department of Commerce and will receive US $4.7 billion to distribute for the ARRA’s Broadband Technology Opportunities Program. The grants and loans from this program are meant to encourage access to broadband, broadening availability of Internet at community locations like libraries and educational institutions as well as the development of a system for tracking broadband inventory across the US which can be maintained into the future. The latter is the responsibility of the FCC.
The other US $2.5 billion will be distributed by Rural Utilities Services (RUS), a subdivision of the Department of Agriculture (USDA) through the Distance Learning, Telemedicine, and Broadband Program. This program requires at least 75% of the area to be served by a project receiving funds to "be in a rural area without sufficient access to high speed broadband service." In this case "without sufficient access" includes areas where broadband is available but end users don’t have more then one choice of service provider. It also gives priority to projects that provide service to the highest proportion of rural residents lacking access to broadband service.
Neither of these are newly formed departments, being founded in 1978 and 1935 respectively, so they have pre-existing funded programs that can provide an idea of what the application process will be like. The amount of time to acquire a grant or loan in one of the current RUS programs can take multiple years. However, the ARRA gives a deadline of the end of the fiscal year 2010 to distribute all of the money, so the RUS and the NTIA have to streamline the process. There will be three application windows from this year through 2010; the first of these windows will open for applications this summer, with the second opening in the winter of this year and the third in the spring of 2010. Each of these windows will be preceded with Notices of Funds, the first of which will be released before the end of June. The notices will not only include information about how much money will be available for what sorts of applications during that window but specifics about what is needed to apply as well. The NTIA and the RUS will use these windows to learn from the application process and improve it over time.
These are only the programs that mention broadband specifically. The ARRA itself is available on the internet at http://recovery.com, searching through it reveals a number of programs with funds to "expand and modernize" civil government, educational and emergency facilities.
The ARRA, as it was signed into law, contains a lot of terminology, some of which was intentionally left undefined. Terms like "unserved," "underserved," "sustainable" and "broadband". In other programs, definitions are dealt with on a community by community basis. The Commonwealth of Virginia says dial-up or no service at all is considered to be "unserved"; but in California, "underserved" is defined as an area that contains 1 or 2 ISPs offering broadband access where the highest rate in either direction does not exceed 1 Mbps but is not less than 200 Kbps. Consider also that the Public Utilities Commission in Maine includes Satellite Internet with dial-up in the definition of "unserved" regardless of speed. "Broadband" is similarly ambiguous in the ARRA, though last year the FCC set 768Kbps to 1.5 Mbps download speed as "Basic Broadband".
In regards to the definitions of these terms the ARRA says local governments may be consulted on what those terms should mean. As a result, the Assistant Secretary of Commerce for Communications and Information and will announce the definitions by the end of June 2009.
A lot is being made, in the media and the ARRA itself, of "sustainable" and "shovel-ready" projects. This means applicants should have plans which can be put into action almost immediately while being affordable and technologically sound enough to continue on after the ARRA money has run out. Satellite networks are well positioned because the technology and the infrastructure is already in place and switched on; i.e., it is completely shovel-ready, as far as infrastructure is concerned. What is needed is for end users to have equipment and somebody to install that, both of which are readily available. With ARRA funds to subsidize those things, service can be provided very rapidly.
For example, Hughes and WildBlue recently revealed they are working on a joint application which focuses primarily on subsidizing the initial costs of equipment and installation, as well as some advertising to make potential end users aware of the availability and quality of Satellite Broadband. Together, the two service providers already cover the United States, so there is no waiting or cost to build the infrastructure and the subsidized equipment will remove the initial cost barrier to adoption. The continuing cost of subscription could be an issue in getting approved for a grant. Satellite providers claim that subscription fees are equivalent to cable service, but for those who are underserved for economic reasons subsidized equipment may not be enough to support the business as time goes on.
That aside, Hughes and WildBlue’s decision to partner on an application may be a wise one. Applicants for these grants can be state or local governments, a territory or possession of the US, a Native American Indian tribe or Hawaiian organization, a nonprofit or "any other entity, including a broadband service or infrastructure provider". It also requires that each state receive at least one grant or loan and that no more then 80% of a particular project be funded by the money provided by the ARRA. Clearly, the door is open to many non-profit and for-profit groups to address the need for broadband by individuals, communities, educational institutions and emergency services. There will be a lot of competition for funds in each of the three application windows , and partnerships will not only offset the 20% cost that must be contributed but reinforce the idea that a project is more "shovel-ready" then a project proposed by any one company, organization or local government on its own.
In a recent presentation, Karen Jackson, the Director of the Virginia Office of Telework Promotion and Broadband Assistance, explained a situation of far flung students in a rural area who sit through an hour long bus ride to and from school. She suggested a program that would provide distance learning provided by satellite. Partnering with service and equipment providers to submit the application would show that negotiations and planning had already been put into the project, as opposed to a school district applying on its own which would appear more theoretical by comparison.
It’s not an easy thing to begin planning for an application when the specific requirements haven’t yet been released. The good news is that the wait won’t be very long at this point, and satellite is technologically primed to be a leading solution for the needs these funds are meant to fill through ease of roll-out and comparable speeds. The satellite industry’s challenge appears to be one of perception about the quality and cost. Through education and partnerships, a slice of the stimulus pie is attainable for satellite companies.
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Announcements by the NTIA about broadband stimulus funds can be found at: http://www.ntia.doc.gov/broadbandgrants/
Announcements by the USDA (RUS) about broadband stimulus funds can be found at: http://www.usda.gov/wps/portal/?navid=USDA_ARRA
Official ARRA website can be found at: http://www.recovery.gov
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Michelle Elbert is the Director of Marketing for Satellite Markets and Research. She has extensive experience in the business consulting and research side of satellite and other industries. She is currently completing her MBA from Concordia University in Irvine, California and can be reached at michelle@satellitemarkets.com
