Fight brews over how to build a better Internet

But nonprofit groups, small businesses, and municipalities that provide Internet service in underserved areas need grants for the upfront costs of laying fiber-optic cable.

Public-interest groups are cheering the House approach since it could open the nation’s networks up to competition from these smaller groups. It also signals lawmakers’ willingness to focus money on bringing broadband to new places.

“Giving tax breaks to these big carriers to build out into these areas where their business models don’t work – it’s not a good long-term investment for them or for us, the taxpayers,” says Wally Bowen, who runs a nonprofit community Internet service in Asheville, N.C. Besides, he says, big companies don’t have shovel-ready projects in areas like his.

Small, local entities may also do a better job running a network and helping customers since their engineers are local, not in distant call centers in India, he adds.

When Mr. Bowen first began offering dial-up Internet more than a decade ago, it saved Spring Creek, an isolated valley in the North Carolina mountains. Residents sold goods worldwide via eBay and took advantage of other online business opportunities. And telecommuting brought new residents to the area.

A stimulus with strings

The broadband stimulus package requires that networks built with grant money meet minimum speed thresholds and allow open access – that is, let other providers use the lines.

“The underlying principles of the recovery package are that it goes very quickly in the short-term but it also is an investment in the long term to be built upon,” says Rep. Anna Eshoo (D) of California. She calls the bill a “down payment,” with initial investments structured to ensure there’s no “disconnect with the future.”

Such provisions are anathema to large companies. They don’t want other companies piggybacking on their lines and the mandated speeds are too high to justify commercially, says Ms. Goldman of the CWA. Most companies won’t even bid under these rules, she adds.

In Bowen’s region of western North Carolina alone, though, a handful of scrappy nonprofits and cooperatives have $26 million in shovel-ready broadband projects. Such backlogs among smaller groups suggest some projects could happen quickly without big companies.

“There are lots of folks out there who are ready to make investments that have been constrained by lack of capital and those folks are people who are ready to go right now,” says Drew Clark, editor of BroadbandCensus.com, an online industry journal. Grants and tax incentives are just “different ways of rewarding different types of investment.”

There’s no reason the US shouldn’t do both, argues Atkinson of the ITIF. The two funding mechanisms come from different government coffers, so legislators wouldn’t have to cut into grants to add tax incentives.

Six billion dollars is too small, says Atkinson. “We’d have to invest $30 billion to get to the same level [of broadband penetration] as the Swedes.”

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