Large Broadband Providers Pass up Stimulus Funding

Three of the four largest broadband providers in the U.S. say they will not apply for broadband deployment stimulus funding from the U.S. government, and a fourth said it is unlikely to apply as the deadline for the first round of funding nears.

Representatives of AT&T, Comcast and Time Warner Cable all said late this week that their companies will not apply for broadband deployment funding approved in a huge economic stimulus package passed early this year. In addition, representatives of Verizon Communications and Verizon Wireless said it was unlikely that they would apply for stimulus funding.

The US$7.2 billion in broadband stimulus funding was pushed by U.S. President Barack Obama and several consumer groups in an effort to provide universal access to broadband across the country. The first round of funding, in which the application deadline has been extended from Friday to Aug. 20, will distribute about $4 billion in deployment grants and loans, with awards scheduled for November.

Representatives of some of the companies did not respond when asked why they would not apply. But AT&T, in a statement, said the company has "closely examined the current rules and, as others have expressed, [has] concerns about the complexity and uncertainty they create for grant applicants."

"AT&T remains supportive of the federal government's effort to fund greater broadband deployment and adoption throughout the states," the company said in the statement. "In fact, we applaud any initiatives that will ultimately result in the creation of a national broadband strategy with the goal of 100 percent broadband availability and a 100 percent broadband take-rate. AT&T is already making significant broadband investments."

In July, USTelecom, a trade group that counts AT&T and Verizon among its members, sent letters to the U.S. National Telecommunications and Information Administration (NTIA) and the U.S. Rural Utilities Service (RUS) about the requirements the two agencies will include with the grants. The letters raised particular concern about net neutrality rules, saying the NTIA's rules create "broad, new and open-ended nondiscrimination and interconnection requirements" beyond what's required by the U.S. Federal Communications Commission.

Earlier this week, Qwest Communications International, a broadband provider in the mostly rural Mountain West region of the U.S., also said it would not apply for broadband stimulus funds, with the company pointing to the complaints raised by USTelecom. Many rural areas are among the parts of the U.S. without broadband service.

Qwest has about 2.9 million broadband customers. AT&T is the largest broadband provider in the U.S. with 16.9 million subscribers, and Comcast is second with 15.3 million customers. Verizon counts 9.1 million subscribers, and Time Warner has about 9 million subscribers.

A RUS representative downplayed any potential concerns about the big providers not applying. The RUS and NTIA extended the application deadline for the first round of funding because the number of applications was slowing down the agencies' servers.

The number of applicants is not yet available.

"We are seeing strong interest from potential applicants, but we are not going to give preliminary numbers or speculate on the amount of applications that will be submitted," said Bartel Kendrick, the RUS spokesman. "The choice to apply is a decision made by the company."

Craig Settles, a broadband consultant and president of Successful.com, said Qwest and the other large broadband providers won't be missed. Much of the next round of funding should go to communities that have formed partnerships with vendors willing to meet their needs, he said.

"If [the large providers] have no willingness to play by open access and net neutrality rules, then communities should look for other options," he said.

Large providers that have refused to cover certain areas could easily pull out of unprofitable communities even after receiving stimulus funding, he said. Several communities, including Wilson, North Carolina, and Lafayette, Louisiana, have already built their own broadband networks, Settles added.

"Communities that own their own networks don't have the same profit motive," he said. "They need to sustain the network, but not take care of high executive salaries and stakeholders. Communities can pick from a greater variety of technologies than any one incumbent can offer."

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