Good news for broadband minority start-ups?

Posted February 1st, 2011 in Broadband, economy, stimulus and tagged , , by Alton Drew

With all the talk about how government policy can help minority content providers get online, this is probably one of the better policies out there. Yes, I’m talking about tax credits.

Interesting piece in The Wall Street Journal describing a proposal by the Obama administration to make the small business tax cuts, negotiated between Mr. Obama and the GOP in December, permanent. Included in the proposal are additional tax cuts for investment in start-ups and small businesses operating in low-income communities.

While we are waiting for Congress and the Federal Communications Commission to get their acts together on the national broadband plan, entrepreneurs can start serving minority and low-income communities by either getting them the digital content they demand, wiring their homes for broadband adoption, or offering less expensive broadband access services.

With a GOP-dominated House of Representatives, passing a permanent tax cut, even with the pressures of an increasing deficit, may be easier and quicker than approving the national broadband plan.

Time is running out on stimulus

Philadelphia Inquirer blogger and columnist Joseph N. DiStefano provides an update on stimulus funding for underserved areas in Pennsylvania. Recently, Pennsylvania Governor Edward G. Rendell (D) has been advocating the importance of spending on infrastructure as a way to fast track economic development in the United States.

On February 17, 2009, President Barack Obama signed into law a $787 billion stimulus package which included $7.2 billion for broadband development and deployment. Funding is scheduled for exhaustion by 30 September 2010.


The White House today announced another $1.8 billion in subsidies to dozens of high-speed broadband Internet projects around the country for “underserved communities,” including two Pennsylvania systems:

- $36.4 million to Keystone Wireless LLC, “to offer 3G broadband service in central
Pennsylvania['s] Centre, Lycoming, Union, Northumberland, Snyder, Clinton, Schuylkill, Berks, and Mountour counties. Approximately 963,820 people stand to benefit, as do roughly
26,882 businesses and 9,035 community institutions.”

- $0.8 million to DOC Wireless Neighborhoods PA, “to provide enhanced Internet access and
online tools to predominantly low-income communities in Pittsburgh, Pennsylvania. The project plans to deploy 160 new public workstations at four new computer centers in the city.”

Nothing, this time, for city networks in Philadelphia that applied for grants. Why the farm-country focus? While the government is giving money “to build out the Internet infrastructure primarily in rural parts, we are (also) financing numerous computing centers… in the urban areas,” where companies like Comcast and Verizon already do “provide the service,” US Commerce Secretary Gary Locke told me in a conference call.

“In the urban areas there generally is not as high a level of need for new [broadband] construction,” Jared Bernstein, chief economist to Vice President Biden, told me. Because private companies (like Comcast and Verizon) have already built it and sell it for a fee, Instead, the government hopes to be “educating consumers” about what they can do with private high-speed broadband, while also “providing public centers for people who cannot afford to have a computer in their home.”

Obama announces broadband grants. Too bad we are focusing on supply, not demand

Posted July 9th, 2010 in Broadband, stimulus and tagged , , by Alton Drew

Last night I had the good fortune of chatting with Leslie Marshall on her talk show. We briefly discussed President Obama’s overall performance rating and specifically his performance on managing the economy.

For the record, I gave him a “B-”. Part of the reason for the lower grade has to do with his stimulus package. As a reformed Keynesian, I subscribe now to the supply-side school of thought, which calls for reduced taxes on business investment which should spur more innovation and lead to greater growth.

I’m not naïve, however. As I pointed out on Ms. Marshall’s show, part of my problem with the stimulus package had to do with less focus on stimulating demand and too much focus on the pie-in-the-sky items like green jobs.

This past Tuesday, President Obama announced $795 million in grants designed to provide access to broadband facilities.  These grants are indicative of the problem with the stimulus package. The focus of these grants should be on making broadband more affordable to the consumer, once we have determined that there is indeed a willingness on the part of consumers to buy broadband. We haven’t done so yet.

The stimulus train has already left the station, but I would hate to see a lot of dark fiber sitting in the ground because we never created the necessary components for consumer demand in the first place.