10,000 broadband jobs to be created from stimulus package: Towerstream, Clearwire, others examine legislation’s opportunities

The billions of dollars set aside in the government’s stimulus bill to promote broadband access across the country may help create thousands of new jobs – and wireless firms are already evaluating the legislation for potential opportunities.
The $787 billion American Recovery and Reinvestment Act sets aside $7.2 billion for telecom-related programs, with $6.39 billion to be doled out in grants and loans to promote broadband in rural areas that don’t have access to the technology or are underserved. The legislation didn’t include tax credits for wireless carriers and other service providers, as some backers had hoped for.
With the bill signed last week in Denver by President Barack Obama, wireless companies are now starting to examine how the money can be incorporated into business plans.
Craig Settles, founder of consulting firm Successful.com, said the money set aside for broadband is a first step in how the country plans a nationwide network to meet the needs of government, the public and businesses.
“This is an important down payment,” Settles said. “The success that could roll out of this is a national broadband strategy.
“Building infrastructure will help in the short term, but the potential impact is rather huge here.”
Settles said the stimulus package is designed to put people to work, but building successful networks in rural areas of the country is more important. Broadband networks can help small towns and rural areas attract businesses looking to expand and relocate. Broadband connections can also help some who are unemployed get job training online or work from home.
“If you give small towns and rural areas speedy connections, these areas become attractive to businesses,” he said.
Rural areas are attractive because of the low cost of land and wages compared with those in a large city, Settles said.
Industry consulting firm inCode Telecom has analyzed the bill’s broadband portion and projects that the legislation will create 10,000 jobs during the next four to five years.
Jorge Fuenzalida, inCode VP and general manager, said the bill could change market dynamics in rural areas. The bill could spur competition in areas that now have a single provider, and could also lower rates as companies build out networks.
The $6.39 billion will be administered by the Department of Commerce’s National Telecommunications and Information Administration and the Department of Agriculture’s Rural Utilities Service.
NTIA will be responsible for $3.9 billion in grants, and recipients will have to underwrite up 20% of the proposed project’s cost, though hardship waivers will be available. It is anticipated that there will be at least one grant in every state.
The RUS will dole out $2.5 billion in grants, loans and loan guarantees.
According to inCode, the bill will create a much needed broadband map, and does not specify whether the money should be used for wireline or wireless technology. Thus, money can be used on the most effective networks.
Limitations of the bill
However, the bill does not address a key adoption driver regarding cost. Lack of affordability is the main reason why many consumers with access to broadband don’t purchase it. The bill also enforces an aggressive timeline, meaning companies may build out a particular technology only to see it eclipsed by a more advanced technology down the road.
Settles is encouraging companies interested in applying for the stimulus money to get involved in the process. He said smaller companies can’t afford to sit back and wait as the federal agencies decide how to grant the money.
“If the little guys don’t want to be bowled over by the big guys, they need to be part of the process,” he said.
Rules and guidelines that will govern key areas such as eligibility, data speeds and nondiscrimination and interconnection obligations still have to be finalized.
Michael Fitch, CEO of the PCIA, the wireless infrastructure association, said the legislation is a significant investment in the country’s communications infrastructure.
“PCIA and its members are committed to the deployment of network infrastructure that makes wireless and broadband available everywhere, and look forward to working with policymakers to achieve the improvements envisioned by the act,” Fitch said in a statement.
Intel officials recently said they were hopeful the federal stimulus plan could be used to build WiMAX networks, a broadband wireless technology that is backed by the joint venture created by Clearwire Corp. and Sprint Nextel Corp.
In a statement, Clearwire officials said they are encouraged the government has set aside money for broadband services, and WiMAX could benefit because of the technology’s multi-megabit speed and low cost.
“Clearwire intends to look closely at ways we may be able to deploy our networks further and faster than we might otherwise as a result of funding that may be available under the stimulus package, but it’s important to note that our current plans are not dependent on securing government funding,” according to a company statement.
Although the majority of the money is geared toward rural areas, Settles said there are also opportunities for urban areas that are underserved.
Fixed WiMAX service provider Towerstream Corp. is examining the stimulus bill. The company operates WiMAX networks in nine markets – New York City, Boston, Los Angeles, Chicago, San Francisco, Miami, Seattle, Dallas-Fort Worth and Providence, R.I.
“We are evaluating the stimulus package to see if it fits in with Towerstream’s business model,” CEO Jeff Thompson said.
Settles said companies that partner with municipalities and cities might be given preference in the grant and loan process.
“Partnering with a government entity may give companies greater credibility,” he said.