stimulus

Bristol Virginia is again expanding broadband access in rural Virginia. Following a $22.7 million BTOP (broadband stimulus) grant and matching $5.7 million grant from the Virginia Tobacco Commission, in combination with in-kind contributions from the Virginia Department of Transportation, BVU will greatly expand middle-mile broadband throughout 8 counties in Southwest Virginia. The project is expected to take 2.5 years to complete.

The Bluefield Daily Telegraph covered the story:

“With this broadband network, Bristol Virginia Utilities will enable service to more than 120 of what we refer to as anchor institutions,” [US Senator] Boucher said. “That includes schools, libraries, hospitals, clinics, major government facilities and other large public facilities. The new network will also come within two miles of 18,000 homes and 500 businesses. That makes it feasible for what we refer to as last mile service to be provided to these 18,000 homes and 500 businesses. Some of these have broadband today, but not all of them do.”

This project will add onto the economic development successes resulting from previous networks built by the publicly owned utility:

Boucher said the original broadband line deployed across the region several years ago has already helped to create a number of new jobs, including 137 new virtual call center jobs that have been created in the region by DirectTV, and another 700 plus jobs that have been created by the Northrop Grumman and CGI technology centers in Lebanon.

Read BVU's press release on the grant award [pdf].

Though BVU is expanding middle mile access, it cannot offer last-mile services in most of these communities. Virginia law prevents BVU from offering some services outside its existing footprint - a policy that is great for telco profits but terrible for people that actually want modern telecom services.

For its existing broadband subscribers where it is allowed to offer services, the utility has boosted downstream and upstream speeds [pdf]. The new tiers remain asymmetrical, as with a number of the earlier muni broadband networks. Tiers are now 16/2, 30/10, and 50/20.

For its electrical customers, BVU has announced a smart-grid investment, as have many other utilities in the forward-looking Tennessee Valley - a hotbed of publicly owned utilities following the private sector failure to wire their communities 100 years ago.

One of the dangers of federal programs like the broadband stimulus programs BTOP and BIP is that the feds make the rules... and sometimes they just change the rules.

I previously wrote about how the BTOP rules privileged private companies over the public sector (despite Congress' clear intent to prioritize the public sector). As this article notes, NTIA effectively changed those rules along the way -- resulting in what might technically be termed "screwing over" a variety of applicants.

Though the Round 1 rules encouraged applicants to apply for last-mile funds, the vast majority of awards went to middle mile applications. In fact, while in Lafayette, we tried to name more than 5 last-mile grants. Why the change in focus? The most likely reason seems to be opposition from powerful, well connected incumbent companies that did not want to deal with the hassle of competition in small parts of their territories.

So NTIA quietly chose to award funds to less controversial projects. The problem is that the hundreds of applicants poured money and resources into proposals for last-mile projects that they believed would be considered in good faith.

We never miss an opportunity to note that whoever owns the network makes the rules. Well, whoever disburses the funds, makes the rules (and in this case, quietly changes the rules). And in DC, corporate interests all have a seat at the table. When one goes begging to DC for funds, one should not be surprised at the many hoops and frustrations of that process.

Not only are communities better off owning their infrastructure - they are generally better off when they take responsibility for financing the network and do not depend on free money (whether from the private sector or DC). Communities have financed networks with a variety of means -- from a loan from a local bank to bonds (taxable, nontaxable, general obligation, revenue, etc) to slowly expanding networks over a longer period of time.

TANSTAAFL - There Ain't No Such Thing as a Free Lunch - Robert A. Heinlein

In Mankato, the local Fox station covered the stimulus grants that will allow WindomNet to expand and offer services to nearby rural communities. This is an excellent example of how publicly owned broadband networks can partner with others nearby to expand access:

Jackson Mayor Mitch Jasper says, "Windom took the lead and brought a bunch of communities together saying hey, we can put together a program that applies for stimulus as a group rather than individuals and all of us jumped onboard and the end results is a 12 million dollar broadband project."

Last summer, I predicted the NTIA's rules for the broadband stimulus would disadvantage the public sector and tilt the playing field toward the private sector. I was right.

Consider a recent story about the first round of the stimulus:

With time and resources scarce and applications to review from nearly 2,200 entities, favoring vendors was less complicated because they wrote savvier proposals and required less follow-up, in Winogradoff's view.

Private companies were able to submit savvier proposals and generally swamp the system with far more proposals, slowing the entire process because the federal agencies did not expect the volume. NTIA claimed they wanted to make the funds more widely available and instead shut out much of the public sector.

NTIA, along with most federal agencies, simply does not understand that a "level playing field" between private companies and the public sector is simply not possible. The public sector has different interests - maximizing social benefits whereas the private sector is interested in generating profits. Public and private entities are different creatures, operating in different regulatory environments, with divergent motivations. You can no more create an objectively level playing field between the two than one could in designing a contest between basketball and soccer teams. The rules are simply going to favor one or the other.

The question becomes, who should the rules favor? When it comes to infrastructure and tax dollars, the rules should favor those who put the public interest first. This was the lesson of the Rural Electrification Administration, which was horrified at the idea of lavishing grants on profitable companies in the hopes they would temporarily invest in rural areas. Instead, they offered loans to cooperatives and extended electricity to farms across the country during the worst Depression in our history.

What have we learned from that? Nothing. We contort our policies while offering more and more money to companies that time and time again show they have no interest in serving rural America. This is ludicrous - not only have we already built a wire out to almost every home in America, we still have the polls!

We should ramp up loans - not grants unless absolutely necessary - to rural cooperatives, nonprofits, and other publicly-oriented organizations that put the common good first. This is a long term solution to a very serious infrastructure problem. Publicly owned fiber networks would offer faster services at lower prices -- ensuring all Americans would benefit from this communications revolution.

The second round of stimulus learned nothing from the first. We might hope the FCC National Broadband Plan does better, but the real solution is for your community to consider how it can best invest for its future.