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Fight brews over how to build a better Internet

The stimulus bill has $6 billion to expand broadband access. But who can do it soonest vs. best?

By Staff writer / January 28, 2009

Switch and Data’s PAIX in Palo Alto is a primary Internet exchange point in North America.

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Oakland, Calif.

America, where the Internet was invented, has fallen behind many European and East Asian countries in Internet speed, cost, and reach.

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Roughly 10 percent of US households have no access to a high-speed, or broadband, data connection. Barely 3 percent have fiber-optic connections capable of delivering high-speed data that future industries are expected to rely on. While countries like Sweden are wiring themselves up with the next-generation Internet, the US is making do with a network roughly on par with Iceland.

So a $6 billion effort to upgrade America’s Internet – part of the stimulus package Congress is trying to pass – would seem a political slam-dunk. The US stimulates its economy right away with projects that would pay dividends well into the 21st century.

Unfortunately, it’s not that simple. Stakeholders are at odds over whether it’s more important to quickly stimulate or wisely invest, to get the most speed from federal bucks – or the most bang.

That tension, inherent throughout the $825 billion stimulus package, is especially acute in broadband development. Congress is sympathetic to reformers who see this as a chance to inject more competition into the market, even if that means relying less on big companies that could quickly lay new fiber-optic cable.

“The goals of getting the most broadband built in 2009 and early 2010 are in conflict with the goals of layering up the process with a number of reform proposals,” says Rob Atkinson, president of the Information Technology and Innovation Foundation (ITIF).

Few dispute the importance of upgrading America’s Internet. Slow connection speeds are delaying advances in everything from remote video-conferencing to telemedicine to technologies and new industries not yet invented.

There’s also consensus that broadband investment brings jobs. Put $5 billion into broadband expansion and 100,000 new jobs in telecom and information technology materialize within a year of the money being spent, according to the Communications Workers of America (CWA), using data from the Department of Commerce. Once built, the economic gifts keep coming: Every percentage point increase in broadband penetration raises employment 0.2 to 0.3 percent, according to the Brookings Institution.

Who should get the money?

The key question is how to do it.

If Congress wants speed, it should turn to the big players. Large telephone and cable companies, which employ most CWA members, could move quickly with tax incentives, particularly to upgrade the speeds of existing networks.

“You need big projects, and you need to leverage private capital,” says Debbie Goldman, the CWA’s telecommunications policy director. She says she fears the money would go to small entities that don’t have the resources to operate the network.

Indeed, Congress appears to be taking a slower, more considered approach. Under the current House bill, all the spending will be allocated through project grants rather than tax credits that large companies favor. The CWA and others contend that the grant system won’t get going for another year whereas tax credits would jump-start projects immediately.

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