Last week the federal government finally let go of some of that money it’s been flashing around for broadband stimulus. The American Recovery and Reinvestment Act will eventually be providing $7.2 billion to stimulate the economy with more broadband infrastructure, but for the first round, the government awarded $182 million for 18 projects.
Four different types of awards were made, but the lion’s share went to middle mile projects.
- Middle Mile Awards – $121.6
- Last Mile Awards – $51.4
- Public Computing – $7.3 million
- Sustainable Adoption – $2.4 million
The government’s decision to boost middle-mile infrastructure indicates that maybe it did its due diligence.
At a Morgan Keegan conference in August, J.D. Sherman, CFO of Akamai Technologies said that there’s a bottleneck in Internet service at the middle mile because of economics. Residential subscribers pay their Internet service providers (ISPs) for last mile connectivity. Businesses and data centers pay telecommunications service providers for the first mile. But nobody really makes a profit from the middle mile, Sherman said, so there’s been little incentive to invest. (For more, click here).
Some MSOs with their own metro and regional area networks (RANs) extending to second and third tier markets may disagree with that assessment, but a report from the Executive Office of the President, National Economic Council, released December 17 concurs with Sherman.
"Economic analysis shows that the private sector may under-invest in the middle mile, leaving many communities without adequate access to broadband services," said the report. "The distance from the community to the Internet backbone may be so large that the cost of upgrading middle-mile facilities to these communities is too high for a private provider to make a profit."
Of the 18 initially-funded projects, only one small ACA member, Pine Telephone Company, was awarded a grant. The 18 projects are:
Broadband Technology Opportunities Program (BTOP) awards from NTIA:
- Georgia: North Georgia Network $33.5 million?
- Maine: Biddleford Internet Corp. – $25.4 million?
- New York: ION Upstate New York Rural Broadband – $39.7 million?
- South Dakota: Project Connect South Dakota – $20.6 million
- Arizona: Arizona Public Computer Centers – $1.3 million
- ?Massachusetts: (Boston) City of Boston Public Computing Centers – $1.9 million
- ?Minnesota: (Minneapolis/St. Paul) Broadband Access Project – $2.9 million
- ?Washington: (Spokane) Spokane Broadband Technology Alliance – $1.3 million
- New Mexico: Fast-Forward New Mexico – $1.5 million
- ?Washington: (Spokane) Spokane Broadband Technology Alliance – $980,000
U.S. Department of Agriculture awards from Rural Utilities Service (RUS):
- Alaska: Alaska Native Corporation $25.3 million
- Hawaii: Big Island Broadband/Aloha Broadband $106,503
- Colorado: Peetz Cooperative Telephone Co. $1.5 million
- Michigan: The Chatham Telephone Company $8.6 million
- New Hampshire: Bretton Woods Telephone Company $985,000
- New York: Slic Network Solutions $5.4 million
- Ohio: Consolidated Electric Cooperative in Ohio $2.4 million
- Oklahoma: The Pine Telephone Company $9.5 million
Although cable didn’t fare too well in the first awards, the middle mile investments may help it reach new markets, eventually. The Dec. 17 report said, "Strategic investments in the middle mile leverage federal dollars to bring broadband services to communities that would otherwise be left behind. The Recovery Act investments in middle-mile infrastructure will lower the cost of providing last-mile services to these communities."
And the first $182 million is just the beginning. The government will continue awarding grants and loans on a rolling basis and anticipates awards of $2 billion over the next 75 days.
The government agencies handling the broadband stimulus program have been almost overwhelmed with interest, receiving 2,200 applications equating to total requests of $28 billion.