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Networking for a boost to broadband

A $7.2-billion provision in the economic stimulus bill to extend high-speed Internet service to the rural U.S. and other underserved areas has been hailed in Congress as the 21st century equivalent of government programs that brought electricity and modern highways to every corner of the country.

Others think the benefits may be overstated -- especially the notion that every dollar invested will produce a $10 boost to the economy.

But even as the larger questions were being debated, the Internet access provision was the subject of a furious lobbying campaign as interest groups, industries and individual companies sought to bend the details to their advantage.

In Congress, committee chairs fought turf battles for jurisdiction over the spending. And rural lawmakers squared off against their urban counterparts, quarreling over which Cabinet department should get control of the purse strings.

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Such lobbying is business as usual in Washington, but the stakes were particularly high with the stimulus bill. It’s the biggest spending bill in memory and is considered pivotal in reviving the moribund economy.

At one point, for instance, the technical details for some of the money were written in a way that would seem to benefit telecom giant Verizon Communications Inc.

That language was dropped in the push to cleanse the bill of controversial components. But insiders said some of the compromises forged by House and Senate negotiators could lead to problems in how the billions of dollars of new grants for broadband access are distributed.

For instance, the final bill divides the money -- and the power to dispense it -- between the Commerce Department and an Agriculture Department agency with a history of mismanagement of technology issues.

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“The question is, why are we having two grant-making infrastructures developed for broadband grants, one of which is at the Department of Agriculture?” said Ben Scott, policy director for Free Press, a nonpartisan media reform group that focuses on technology issues.

The answer is an old story in Washington: A large pile of government money attracts a lot of attention.

The Internet access segment of the stimulus bill was designed broadly, with the goal of providing grants to applicants submitting proposals for improving the availability of high-speed service.

The money can be used for extending wired lines or wireless access -- although specific data speeds are not stipulated -- and for equipment such as computers or training to help people use the Internet.

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Most of the money would be distributed in grants, which could go to companies, nonprofit groups or municipalities. The federal government would pay up to 80% of the cost in most cases. All the grants must be made by the end of the 2010 fiscal year, and at least one grant must go to each state.

The projects must be substantially completed in two years. They might include, for instance, laying fiber-optic cable or erecting wireless communications towers and other infrastructure needed to make high-speed service available in areas that lack it.

The idea is that such service would encourage companies to locate in these areas, spur local entrepreneurs to start Internet-dependent businesses, and encourage economic growth by linking these regions to technologically more advanced and productive parts of the country. At least 75% of the targeted area must be rural and without sufficient access to broadband service to allow for economic development.

The Commerce Department will distribute $4.7 billion of the money, the Agriculture Department $2.5 billion.

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The struggle over the bill demonstrated the faith many in Congress have in the economic power of the Internet and computer technology.

It also showed how much the digital industry has learned about dealing with members of Congress whose techno-literacy may lag.

Along with the usual lobbyist tools of campaign contributions and personal contacts with key lawmakers, major technology companies have invested in think tanks and other organizations that churn out ostensibly objective technical reports that support their points of view.

For example, the prospect of enormous job growth was a key element in the provision’s near-universal appeal. But some of the most impressive numbers -- predicting the creation of 1 million jobs -- came from studies funded directly and indirectly by the trade unions and telecom companies that would benefit from the subsidy.

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“A lot of the numbers that were used in this debate were exaggerated,” said Robert Crandall, an economist at the Brookings Institution. “The problem with broadband subsidies in the stimulus bill is that they focus so much on rural areas. Those areas already get lots of subsidies for telecommunications, and there is no evidence that those subsidies work.”

The drive for federal support of broadband access had its origins years ago, when the power of the Internet was just becoming fully appreciated and high-speed connections were limited to large urban areas.

Companies with a stake in the Internet, including fiber-optic equipment makers and telephone service firms, urged Washington to encourage the buildout with reduced regulation, tax breaks or subsidies. Or all three.

Now, more than 90% of the country has access to high-speed Internet service, and some economists question how stimulative federal tax breaks and grants will be.

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But the United States has been falling in international rankings of broadband penetration. More and more Internet content, particularly video, requires faster connections. And many companies demand high-speed service to enable online teleconferencing and make it easier to exchange large amounts of data.

As a result, many lawmakers have embraced the call for expanding and improving broadband access. And they’ve been encouraged by technology companies, which have become more active in Washington policy debates -- as well as in delivering campaign contributions.

The increasingly powerful tech lobby and the Communications Workers of America spent much of 2008 pushing presidential candidates to support federal funding for initiatives including broadband Internet expansion and healthcare technology. They argued that faster Internet systems would create jobs.

The Communications Workers pushed successfully to get broadband expansion in the Democratic Party platform. House Speaker Nancy Pelosi (D-San Francisco), whose district sits on the fringes of Silicon Valley, made technology a key part of her agenda when Democrats took control of the House in 2007.

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Obama seized on the issue during his campaign, calling for broadband expansion during his stump speeches.

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tom.hamburger@latimes.com

jim.puzzanghera@latimes.com

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