Tough Fight Ahead for Share of Broadband Stimulus Money

By | May 1, 2009 | Editor's Note, Telecom

The $7.2 billion included for broadband stimulus in President Obama’s American Recovery and Reinvestment Act is tantalizing to say the least, and the satellite industry seems to be a perfect fit to help meet the goals of expanding broadband connections to areas of the United States largely unserved by terrestrial means.

The success of WildBlue Communications and Hughes has provided long-overdue examples of success for satellite in the consumer broadband market. "When are you looking to stimulate the growth of broadband in those places (rural communities), satellite makes an excellent case for gaining that stimulus money," says Paul Gaske, executive vice president and general manager of Hughes’ North American division.

There also are examples from around the globe of how a combination of government support and satellite technology has helped conquer the digital divide. One of the most striking examples is the Australia Broadband Guarantee program, where satellite operators such as Optus are benefiting from subsidies available to customers for equipment for satellite-based broadband services. Earlier this year, the European Commission announced a 1 billion euro ($1.3 billion) program as part of the European Economic Recovery Plan to get rural areas online.

The dynamics for satellite broadband services also have changed in recent years. Prices for the services are now more comparable than ever before to terrestrial alternatives and having government support in rolling out the service to even more customers will continue to drive the price down.

But satellite players in the United States will face a fight for a share of the stimulus money. Terrestrial players will use their connections to convince lawmakers that they can use this funding to finally do what they haven’t been doing for years — expand their offerings to unserved parts of the country.

Erwin Hudson, executive vice president and CTO, WildBlue, says the operator has been work with state governments and the federal government to make sure satellite is not ignored when it comes to distributing the broadband stimulus money. "We have to make sure the satellite industry has access to funds. In theory, we could use broadband stimulus money to buy another satellite."

But that argument may not be the best one to make with local governments, as the terrestrial players will work to convince local lawmakers distributing their share of the money that the terrestrial options are the ones to favor if looking to create jobs and stimulate the local economy. The also will continue to pitch the idea that satellite services are slow, expensive and outdated — and conversations I’ve had with representatives from at least two states indicate that the argument will not be a hard sell.

Unless satellite players want to be left out with just a small share of the broadband rollout funding, it is time to get moving.

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