Technology: The stimulus and broadband

SAN FRANCISCO — Congress has passed a stimulus bill that includes $7.2 billion to bring broadband to underserved rural areas but experts say that is only a modest start toward making the United States more competitive with Japan, South Korea and leading European nations.

"We needed a bigger level of investment," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a Washington, D.C.-based think tank that has been at the forefront of advocating for a national broadband policy.

The episode encapsulates the challenges facing the Obama administration as it tries to enact a far-reaching agenda at a time of economic peril. At the same time, a new cable technology waiting in the wings could help close the broadband gap between the U.S. and its leading industrial rivals faster than is generally understood.

The first admission that the stimulus would not solve all the nation’s broadband ills came last month, when telecommunications advisor Blair Levin, a member of the administration’s transition team, told broadband advocates at the State of the Net conference not to pin all their hopes on the bill. "The Obama broadband agenda is not being done solely in the economic recovery package," he said in January.

What was included in the stimulus package that cleared Congress were two chunks of grant money, both aimed at rural areas where low population density and big distances between homes makes service uneconomic. The stimulus seeks to get broadband to those blank spots with $4.7 billion in grants funneled through the Commerce Department’s National Telecommunications and Information Administration and another $2.5 billion channeled through the Department of Agriculture, which already has a rural broadband program.

What got left out — regrettably in Atkinson’s view — were tax credits proposed by Senator John D. Rockefeller IV, the West Virginia Democrat. Atkinson said Rockefeller started out offering tax credits to broadband providers for 2009 investments that exceeded 85 percent of their 2008 outlays, to encourage firms to continue installing higher-speed lines rather than cutting expenses during the recession. Atkinson said Rockefeller’s initial proposal was not restricted to rural areas and gave the greatest rewards to the fastest installations. But there was nothing similar in the House version of the stimulus, and the Rockefeller proposal seemed to favor Verizon, which is in the middle of deploying fast fiber connections in its service areas. The credit proposals were repeatedly narrowed and eventually dropped.

In the final analysis the package will target an estimated 10 million U.S. homes and businesses in rural areas that currently lack broadband access, but will do nothing to help urban Americans get faster service.

The deadline pressures on the stimulus negotiations didn’t allow enough time to work out the compromises needed to create a larger national policy, as the Obama administration recognized with Levin’s cautionary remarks. But the stimulus talks may have encouraged the deal-making mentality that will be critical to crafting the national broadband strategy that, in principle, commands such wide support. At one point during the stimulus negotiations, for instance, the normally adversarial Free Press, an activist group, and National Cable & Telecommunications Association, the cable industry’s lobby, issued a joint statement supporting minor tweaks to the legislation.

The stimulus debate also highlighted the cable industry’s potential to play a pivotal role in driving faster broadband into wider circulation. Most cable networks are already wired to boost their broadband speeds using a technology called Docsis 3.0 that requires new modems but not new lines to the home. Comcast is already starting to offer download speeds of 50 megabits per second in some cities.

Docsis is said to be capable of reaching speeds above 300 megabits per second, which compares favorably to the 100 megabit per second services already available in Japan and Korea. How quickly cable providers roll out this faster technology to how many homes — and how the recession may affect their plans — are unanswered questions.

But with cable lines reaching upwards of 90 percent of U.S. homes, some have argued that the quickest and cheapest national broadband policy would be to induce cable operators into accelerating their deployment of Docsis 3.0, a tactic that might prod telephone companies to speed up their own plans to stay competitive.