Wired broadband for all may not work out
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| Tue, 02-03-2009 - 8:14pm |
Part of our new stimulus bill, is a broadband infrastructure improvement. This in an attempt to get everyone access to broadband.
It doesn't look like the companies which are capable of providing service are very keen on the idea.
http://www.bloomberg.com/apps/news?pid=20601204&sid=aElDFE0IfbEc&refer=technology
Cable Providers Scoff at Obama’s Plan to Get Every Child Online
President Barack Obama may face pushback from Comcast Corp. and other cable providers on his plan to wire rural areas for high-speed Internet access.
The biggest companies, including Comcast and AT&T Inc., probably won’t take part in the plan unless lawmakers provide more money for installation of costly broadband lines and drop speed and access requirements, said Robert Atkinson of the Information Technology & Innovation Foundation.
“As the bill is currently structured, the companies that provide 90 to 95 percent of broadband won’t be applying for these grants,” said Atkinson, who leads the Washington-based think tank. “It’s just not a good trade-off for them.”
The House of Representatives approved $6 billion in funding for the Internet buildout, while the current version of the Senate bill allocates $9 billion. Even smaller providers, such as Roseville, California-based SureWest Communications, say that won’t cover the cost of building to remote areas or ensure that enough customers sign up to justify the expansion.
“The stimulus package doesn’t make any sense for us,” said Steven Oldham, chief executive officer of SureWest, which provides service to customers in Northern California and Kansas City, Missouri. “If there was an economic model to build out to these homes, we would’ve already been there.”
Rural users have long suffered sluggish Internet dial-up service because there is no financial incentive for cable companies to bring high-speed lines to their homes. President Obama, when he was running for office, made connecting these areas a priority.
“It’s unacceptable that the United States ranks 15th in the world in broadband adoption,” Obama said in a speech in December. “Here in the country that invented the Internet, every child should have a chance to get online.”
Mediacom’s Spending
Representatives at Comcast, AT&T and Verizon Communications Inc. declined to comment.
Reaching that goal will be expensive. Mediacom Communications Corp, the eighth-largest cable provider in the U.S., estimates it spends $30,000 to build one mile (1.6 kilometers) of fiber-optic cable. The more homes it signs up on that mile, the faster the return.
The enterprise value for Comcast to connect one household to its line is about $1,200, according to Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. Based on those figures, with just one household on a mile of cable, a company would have to wait decades before it breaks even.
“We’ve built those lines with no government subsidies,” said Rocco Commisso, Mediacom’s CEO. “Now our competitors are going to get free money for the same build-out and it’s just not fair.”
Stimulus Bill
Under the stimulus bill passed by the House of Representatives last week, $6 billion was dedicated to broadband build-out. Cable operators that accept grants may have to share the networks they build with competitors and meet speed requirements.
“If I make the investment, why should I have to share?” said Commisso. “Government subsidies don’t allow us to compete on an even playing field.”
General Communications Inc., a cable provider based in Anchorage, Alaska, likes the idea of federal aid, though is hesitant about the speed requirements. The House plan calls for companies that get grants to build broadband networks with speeds of at least 45 megabits per second, faster than most homes can get now. The Senate version includes speeds of up to 100 megabits.
Faster Speeds
Any speed faster than 5 megabits is “more than most people need,” said Ronald Duncan, General Communications’ CEO. The demand may “put the capital case out of reach for us and instead of getting some access, you’d get nothing.”
General Communications currently offers households speeds of as much as 10 megabits per second.
The short-term aspect of the plan also concerns some providers.
“The stimulus package is temporary,” SureWest’s Oldham said. “From our perspective, if the demand is there for a high capacity network service we don’t need a stimulus grant of any kind to do it.”

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I agree with libraone - if you believe this is such a problem, please report it to iVillage.
The relevant area is item 3.
Did you see my post to you?
Yes, I saw the post.
Part of my job it to obtain copyright clearance for my organization.
I've spent the past hour reading many sites...and I still feel that there is grey area here because the laws allow for total copies for purposes of education, etc.
I appreciate your position. Since, I perform work in this area I guess I tend to get a little picky.
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