Jul 1, 2003 12:00 PM, By Ed Gubbins Telephony

The federal government this month issued $20 million in grants to 17 telcos in 40 states as part of an effort to deploy broadband in unserved rural areas.

The aid was the first in an effort by the U. S. Department of Agriculture's Rural Development Office to comply with recent broadband-related amendments to the 1936 Rural Electrification Act.

This year, the 2002 Farm Security and Reinvestment Act will add $1.455 billion in low-interest loans and loan guarantees.

Such aid is likely to be cut short in the near future, however.

In addition to a 50% reduction for 2003 grants (those issued this month are from 2002), the Bush administration's proposed federal budget for 2004 calls for slimming the grant program to $2 million next year and shrinking the $1.5 billion loan program to $196 million.

Though Congress hasn't yet ratified the 2004 budget, Damian Kunko, CEO of the Rural Broadband Coalition, intends to lobby strenuously to lift those numbers.

But he conceded that it won't be easy. “We're in deficit spending, and we have to rebuild Afghanistan and Iraq. It's kind of tough to claim a priority over that,” he said.

Skyline Telecom, a part of Central Utah Telephone, was one of the telcos to receive a grant this month. One of Skyline's customers is the Goshute Indian reservation in central Utah, whose nearest neighbor is the federal government's testing grounds for chemical weapons about 20 miles away.

Despite its location, the tribe of 127 Native Americans will soon be getting a new community center outfitted with a broadband connection and PCs, thanks to Skyline and an $850,000 grant from the USDA.

Eddie Cox, general manager of Skyline Telephone, said he was “disappointed” with the proposed cuts and hopes Congress will reconsider.

Thirteen of the 40 grants issued this month will serve Native American and Native Alaskan communities.

The USDA press release announcing the grant recipients makes reference to the economic summit held last year in Waco, Texas, in which President Bush remarked, “In order to make sure the economy grows, we must bring the promise of broadband technology to millions of Americans… and broadband technology is going to be incredibly important for us to stay on the cutting edge of innovation.”

When asked about the disparity between that sentiment and sharp cuts in federal aid for rural broadband, a spokesman for the Rural Development office of the USDA said the president's commitment is firm.

The aid package may be a mute point for some carriers. John Scrivner, co-founder of Mount Vernon Net, a rural Illinois ISP, said he suspects a diminished government role won't affect rural broadband deployment much. Scrivner's proposal to serve Bluford, Ill. — a town of 780 whose Boy Scouts conducted door-to-door surveys to assess broadband demand — was rejected along with about 300 others.

Scrivner plans to proceed with the deployment anyway without the extra perks the grant money would have allowed.

However, during the six months he waited for the USDA to consider his application, he turned up wireless broadband service to two more small towns.

“There's such a lag there,” he said. “If anything, [the aid] may slow the spread of rural broadband.”

Gubbins writes for Telephony magazine, a sister publication of Mobile Radio Technology.

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