Internet Money in Fiscal Plan - Wise or Waste? - NYTimes.com

[David Farber <dave () farber net>]

http://www.nytimes.com/2009/02/03/us/politics/03broadband.html?_r=1&th=&emc=th&pagewanted=print

February 3, 2009
Internet Money in Fiscal Plan: Wise or Waste?

By DAVID M. HERSZENHORN
WASHINGTON — At first glance, perhaps no line item in the nearly $900  
billion stimulus program under consideration on Capitol Hill would  
seem to offer a more perfect way to jump-start the economy than the  
billions pegged to expand broadband Internet service to rural and  
underserved areas.

Proponents say it will create jobs, build crucial infrastructure and  
begin to fulfill one of President Obama’s major campaign promises: to  
expand the information superhighway to every corner of the land,  
giving local businesses an electronic edge and offering residents a  
dazzling array of services like online health care and virtual college  
courses.

But experts warn that the rural broadband effort could just as easily  
become a $9 billion cyberbridge to nowhere, representing the worst  
kind of mistakes that lawmakers could make in rushing to approve one  
of the largest spending bills in history without considering  
unintended results.

“The first rule of technology investment is you spend time  
understanding the end user, what they need and the conditions under  
which they will use the technology,” said Craig Settles, an industry  
analyst and consultant who has studied broadband applications in rural  
and urban areas. “If you don’t do this well, you end up throwing  
millions or, in this case, potentially billions down a rat hole. You  
will spend money for things that people don’t need or can’t use.”

Dozens of programs included in the stimulus measure could entail a  
similarly complicated cost-benefit analysis. But with Congress and the  
White House intent on adopting the economic recovery package by the  
end of next week, taxpayers are unlikely to find out whether these  
programs are great investments or a total waste — or something in  
between — until long after the money is out the door.

The proposals for expanding broadband service offer a particularly  
useful case study because the potential benefits of wider network  
access are indisputable. And yet, supporters cannot simply wave away  
the potential pitfalls, including the fact that it will take at least  
until 2015 to spend all the money on infrastructure to deliver the  
service — vastly limiting the stimulating punch.

The Congressional Budget Office said Monday that, over all, the Senate  
version of the stimulus package would provide a swifter boost to the  
economy, with a combined $694 billion in spending and tax breaks by  
October 2010, compared with $526 billion for the bill that the House  
approved.

The total cost of the Senate bill is $884 billion over 10 years, $64  
billion more than the House plan. The new cost analysis came as the  
Senate opened debate on the recovery package and Democrats  
Congressional leaders met with Mr. Obama at the White House to discuss  
the looming floor fight.

Senate Republicans, meanwhile, said they would push hard for changes,  
like a provision to help all creditworthy homeowners refinance their  
mortgages at rates of 4.5 percent or lower.

Changes to the broadband proposal are also possible. Already there has  
been sharp criticism of $110 million in tax breaks in the Senate bill  
that could benefit large Internet service providers. “I do see a  
motivation to try to stimulate the economy,” said Brett Glass, the  
founder of Lariat.net, an Internet service provider in Laramie, Wyo.,  
who is an advocate for expanded broadband access. “I think that’s a  
good thing. I also see a motivation to hand out money to certain large  
corporations that are very good at lobbying.”

Critics like Mr. Glass say the legislation being developed in Congress  
is flawed in various ways that could mean much of the money is wasted,  
or potentially not spent at all — arguably just as bad an outcome  
given that the most immediate goal of the stimulus measure is to pump  
new spending into the economy.

An “open access” requirement in the bill might discourage some  
companies from applying for grants because any investments in  
broadband infrastructure could benefit competitors who would gain  
access to the network down the line.

Meeting minimum speed requirements set forth in the House version  
could force overly costly investments by essentially providing  
Cadillac service where an economy car would be just as useful. And  
some worry that government may pay for technology that will be  
obsolete even before the work is completed.

“Really the devil is in the details,” Mr. Glass said. “Yes, there is  
$9 billion worth of good that we can do, but the bill doesn’t target  
the funds toward those needs.”

Other critics say the effort will provide neither a true nationwide  
information superhighway, which some advocacy groups say will cost up  
to $100 billion, nor a good short-term lift to the economy, because  
there are so many requirements to be met in applying for federal  
broadband grants.

The broadband effort also runs another risk inherent to government  
stimulus spending, by reducing private investment. Experts say tax  
money should be used only where private firms clearly cannot profit.  
But even figuring out where service is needed is not easy. There is  
$350 million in the bill to develop a “comprehensive nationwide  
inventory map of existing broadband service.”

Supporters of the measure say the potential benefits of broadband  
access outweigh any risks.

“Broadband can be the great equalizer between the rural areas and the  
urban-suburban areas,” said Representative Mike McIntyre, a North  
Carolina Democrat who is the chairman of a subcommittee on rural  
development.

Mr. McIntyre said his district, in a rural part of the state, had seen  
many benefits from broadband — not just in businesses but also in  
schools and health care clinics, which can now link via the Internet  
to top research hospitals more than 100 miles away. But he said  
several counties still had little broadband coverage.

Other supporters said that while the bill could be improved, the core  
proposal — grant programs to provide billions for wired and wireless  
network development — is solid policy.

“They are targeted at rural underserved areas,” said Ben Scott, the  
policy director for Free Press, an advocacy group. “They are pegged to  
a speed requirement, a build-out requirement and consumer protections  
like open-network requirements. These are all ways to make sure that  
the money is used properly and is not just a handout that props up the  
stock price of an ailing telco.”

Senator Ben Nelson, Democrat of Nebraska, has said he will press to  
remove provisions that do not provide a relatively quick jolt to the  
economy. Mr. Nelson said that money should be available for broadband  
projects ready to roll.

“We can’t sit around waiting for the perfect in technology when we  
have the good before us,” he said.





-------------------------------------------
Archives: https://www.listbox.com/member/archive/247/=now
RSS Feed: https://www.listbox.com/member/archive/rss/247/
Powered by Listbox: http://www.listbox.com