With countries like Australia and New Zealand implementing infrastructure that can deliver 100Mb/s for their next generation broadband—and with most Europeans not too far behind this—it is quite shocking to see that the $7.2 billion economic stimulus package in the USA (under the RUS Broadband Initiatives Program (BIP) and the NTIA Broadband Technology Opportunities Program (BTOP)) requires nothing more than 768 kilobits per second (kb/s) downstream and 200 kb/s upstream.

I am sure that some of you will think that I have misread this but, no, that is indeed the case.

In 2003 Hong Kong decided not to classify as broadband any service that didn’t provide 2Mb/s!

The sad part of the story is that, as this money will mainly be deployed in rural America, this guarantees an enormous digital divide in the USA. AT&T and Verizon already offer FttH services in some of the more affluent suburbs, and they are currently extending these services guaranteeing a progressive increase in the quality of broadband services provided to these markets; however, for the foreseeable future there is little hope of seeing such service quality increase (speed) beyond the major cities.

Google’s Vint Cerf comment is lethal:

The definition of broadband sucks so badly we should use it to sequester carbon dioxide.

With little government leadership it will now depend on the competitive process of the allocations of funds to see if there are some good, willing providers who will offer a better service for the same money they receive from the funds. This might happen in the upper end of the target areas but those communities further down the list might be stuck for a decade or longer with what can only be described as one of the worst broadband services available anywhere in the world.

My colleague Susan Estrada, on her blog, made further mention:

Cost-effectiveness for the BTOP local loop projects is based on the ratio of the total cost of the project to households passed. That just seems dumb. Lots of cities with urban density will be very happy to see that.

For some unknown reason it is not seen as one single infrastructure project and this is beyond the understanding of most people in the industry. The plan places artificial breaks between last mile, middle mile, public computing and innovative programs. This makes the production of integrated programs, which the Department of Commerce says it wants to see implemented, very difficult.

Susan comments on this as follows:

The money chunks (available funds) are oddly constructed. It’s not very clear why. The BIPpers have made all of their $2.4B available, chunked out as $1.2B for last mile projects—remote or non-remote areas. Middle mile projects are allotted $.8B. The BTOPers set aside $1.6B in this round out of their $4.3B. $1.2B goes to infrastructure but only $50M to public computer centers and $150M to sustainable broadband adoption in this round. Kinda cheesy.

But the bad news doesn’t end there. The documentation of underserved by census block is totally inadequate and is going to cause endless discussions and delays.

Susan:

Underserved and unserved definitions require more study and a deep knowledge of Census blocks, last calculated in 2000. There is also a strange and weird condition of funding where, after an organization has jumped through all the stage 1 and 2 hoops, the BIPpers and BTOPers will post their planned awards so the masses can object to funding if there is already service in the area awarded. This needs much further cogitation and I can see a potential of some very bad outcomes due to this rule.

On the more positive side—because of certain other parts in the rules—there are indications that most of the RUS & BTOP money could be going to fibre deployments, and this would provide higher speed services, despite the low requirements. With the government paying for most of the build the carriers hopefully will in general choose fibre (for landlines) and more than 3Mb/s for wireless. The real exception would be in poor areas.

The extremely low speed the policies have prescribed is a way of ensuring that there will be very limited exceptions, thus avoiding the politics.

So far, however, our interpretation, and the comments that I have received from my American colleagues, raises very serious concerns, and represents a massive setback for the deployment of broadband in regional and rural America.