Recently I attended a seminar in Charlottesville, Va., to get the inside dope on the broadband stimulus programs, which are being managed by the U.S. Department of Agriculture and the National Telecommunications and Information Administration. The seminar was hosted by Sen. Mark Warner. As Warner's claim to fame is that he co-founded Nextel, I figured that he might have the skinny on how to get a piece of the $9 billion pie earmarked to bring high-speed connectivity to rural and underserved areas.

I couldn't help but notice that the FCC was not represented on the dias. I also noticed that none of the speakers were discussing the source of the spectrum that would be used to deliver broadband to rural areas. They spoke about equipment, business plans, underserved-area needs and improving the quality of grant requests. They did not mention a pretty important element — spectrum.

When the question-and-answer period came up, I decided to deal with the elephant in the room. I asked the honorable speakers about their plan of tossing money at a situation, when there may be no spectrum to pull it off. This little “cart-and-horse” problem was particularly important if the entity seeking the stimulus money was a local government instead of a commercial carrier.

Their response unfortunately was expected: No spectrum, no dough from the feds. If a rural community wants to get broadband via RF, it will have to deal with the companies that bought wide-area broadband licenses in previous auctions, use unlicensed spectrum — or some combination thereof. Regardless, the prospects for this program delivering reliable, economical service to rural areas seemed to dim immediately.

Let's say that a rural town cut a deal with a commercial carrier that was financed with stimulus money. The carrier would build the middle mile to connect services to the Internet and also lease its spectrum to the town for the last mile. That sounds feasible until you consider that the stimulus money is going to run out and the whole thing will need to support itself. What then? It's hard to support a system of, say, 1,000 customers in the middle of the Blue Ridge Mountains, given the costs of operation.

That's why the FCC was supposed to have the wide-area carriers make sure that their systems covered the entire geographic area for which they are licensed. But the FCC didn't have the political will to do it. It still doesn't. As long as a broadband carrier can claim 80% population coverage, the FCC isn't looking to have that carrier cover the last 20%.

Verizon and AT&T make tens of billions in profit serving the sweet spots in our nation's geography, while rural communities are lucky to get dial-up. Meanwhile, Congress has to produce a $9 billion carrot to get anyone to consider serving rural areas. To me, that $9 billion represents the profit that the broadband carriers are not spending on providing universal coverage, except it's my tax dollars subsidizing their recalcitrance.

I have a better idea. The FCC should amend its rules and require the existing broadband carriers to do the job as a condition of their license renewal. Alternatively, the FCC should give licenses to local governments for that spectrum that the broadband carriers aren't using throughout their area. Then let the local governments obtain stimulus money to construct their own last mile.

Of course, that would be allowing people to help themselves, without a profit motive. Now there's an idea that will never fly with the FCC.

What do you think? Tell us in the comment box below.

Robert H. Schwaninger Jr. is the president of Schwaninger & Associates. He can be reached at rschwaninger@sa-lawyers.net.

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