WiMax Companies Request Much More Broadband Stimulus Funding than Satellite

By | August 27, 2009 | Feature, Telecom

[Satellite News 08-27-09] KeyOn Communications, a wireless broadband provider specializing in connecting rural areas, submitted multiple applications requesting a total of $150 million in U.S. broadband stimulus funding, the company announced Aug. 27.
    While KeyOn promises to connect millions of households within three years, the WiMax company will bill taxpayers much more than satellite companies. The company’s requested funding is five-times larger than satellite Internet provider WildBlue’s application, filed Aug. 26.
    WildBlue applied for $30 million of American Recovery and Reinvestment Act (ARRA) money in the bill’s first funding window, which closed Aug. 14. The company said the funding would help subsidize satellite broadband connections for about 10,000 homes in Colorado and Wyoming and another 10,000 in Arizona that are out of reach of high-speed cable, fiber and DSL lines. About $15 million of that sum would go toward the Colorado/Wyoming effort, with the rest earmarked for the Arizona project, the company said.
   “The management, employees, and key consultants of KeyOn have spent the past three months focusing on and refining our plan to submit these applications under the BIP for rural broadband deployment. … I believe we are strongly positioned to extend the reach of broadband to the neediest areas in the country," KeyOn Ceo Jonathan Snyder said in a statement.
    Other WiMax companies also have applied for funding but have not revealed specific amounts. Clearwire, which was blasted in a recent report by Analysys Mason over its major investors pulling back their financial support from the company, said it requested a “modest” amount in stimulus funding. Major WiMax operators Verizon, AT&T, Qwest, Comcast and others have said they will not file for stimulus money due to a range of factors, including net neutrality stipulations, which restrict funding distribution.
    “We’ve been very involved in what’s going on with the stimulus plan, and we do think that there is a possibility that some of that funding could be used to help us build out some of the more rural areas — areas that frankly wouldn’t necessarily be the top of our list,” former Clearwire CEO Ben Wolff said in the company’s 2008 fourth quarter results, released in March.
    Analysys Mason’s report also cited WiMax’s current Long Term Evolution (LTE) troubles as a concern. Terry Norman, senior analyst at Anlaysys Mason, predicted that North American CDMA operators may move to LTE rather than to WiMax and that Ericsson’s purchase of Nortel’s interests in CDMA and LTE will encourage CDMA operators to shift to LTE, creating greater acceptance of LTE in North America. “In the developed markets of Europe and the United States, we see some early signs of a difficult future for WiMax. In developed European markets, operators are almost certainly upgrading their 3G technologies to 4G LTE in order to match the rising demand for data,” said Norman. “We expect that [the WiMax operators] will compete head-to-head for the same customer base, and LTE will have a clear advantage in this.”
    While WiMax may be looking at broadband stimulus funding as a much-needed and well-timed boost, their solutions may be too wide in scale to meet government requirements. According to its issuance guidelines, the U.S. Rural Utilities Service (RUS), which is responsible for awarding $2.5 billion of the $7.2 billion total for rural deployment, said it would not fund more than one project to serve any given geographic area. KeyOn said its existing wireless networks, which currently cover approximately 2.5 million people, would be expanded to cover as many as 16 states, and provide wireless broadband access to as many as 6.5 million people.
    The U.S. National Telecommunications and Information Administration (NTIA) has oversight for other types of broadband stimulus applications under the same guidelines.
    SkyTerra Safety Access LLC filed an application with the U.S. National Telecommunications and Information Administration (NTIA) on Aug. 18 to request $37 million to deploy two new wireless devices for public safety workers. In addition to the $37 million of stimulus funding, SkyTerra said it would contribute $9 million more to build out the wireless device deployment infrastructure it needs to launch new services.
    Despite the tense environment, the RUS and NTIA have reported that they are swamped with applications and that competition is healthy. “Over the last several days, the online application system has experienced service delays due to the volume of activity from potential applicants,” the U.S. Departments of Commerce and Agriculture said in a joint statement, released Aug. 14.  To address the capacity issues, the agencies added additional servers and six more days to the deadline for companies who already started the application process.
    The broadband stimulus funding has two more windows, which run from October to December and April to June, respectively. Additionally, the U.S. Federal Communications Commission is required to submit a national broadband plan to Congress by February 17, outlining the benefits of improved broadband infrastructure for such things as education, employment, and heath care as well as the issues related to deployment, adoption and affordability.

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