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story category Largest ISPs Say No Thanks To Stimulus Funds
Already flush with cash, ISPs don't want added scrutiny...
10:07AM Friday Aug 14 2009 by Karl Bode
tags: legal · fcc · coverage · business · Op/Ed · Politics
When Qwest recently announced they'd be turning down stimulus funds, we noted that other carriers would likely follow suit as part of a coordinated effort to have broadband grant money rules changed. As it stands, the grants are being restricted to carriers willing to offer service in more rural areas, markets companies like Verizon have been busy selling because they don't provide enough income to please investors. The Washington Post now cites sources close to AT&T, Comcast and Verizon that say all three won't apply for the funds for various reasons:
Their reasons are varied. All three say they are flush with cash, enough to upgrade and expand their broadband networks on their own. Some say taking money could draw unwanted scrutiny of business practices and compensation, as seen with automakers and banks that have taken government bailouts. And privately, some companies are griping about conditions attached to the money, including a net-neutrality rule that they say would prevent them from managing traffic on their networks in the way they want.
Privately? The Post interviews two ISP lobbying organizations (USTelecom and the Information Technology and Innovation Foundation) who've been very publicly whining about the unfairness of the attached conditions for months to anyone who'll listen. Their complaints have been anything but private.

The nation's super carriers, already flush with cash reserves, had no real intention of pursuing the funds anyway, but it gives their lobbying organizations a nice opportunity to publicly grandstand about the unfairness of the fairly tepid network neutrality protections attached to the funds. Like any American company, these carriers prefer their taxpayer dollars with no conditions and no accountability. Of course, there's no denying the long and sordid history of these carriers taking incentives, tax breaks and subsidies, with politicians conveniently falling asleep when it came time to see if promises were kept, or if the incentives were used as intended.

Giving millions to these companies may not make sense anyway, given most of them have no real interest in rural deployment, and in many cases have already spent millions on lobbying efforts geared toward banning towns and cities from wiring themselves when major ISPs wouldn't (surely somebody somewhere sees the irony here). As it stands, there's a flood of new rural-focused ISPs and smaller wireless operators for whom the funds make much more sense. These smaller carriers actually want to do business in rural America, and actually need the cash.

Related:
  1. 'New' FCC, Same Regulatory Rubber Stamp For CenturyLink
  2. FCC Greenlights Centurytel/Embarq With Wimpy Conditions
  3. One Last Warning Before America Screws Up Broadband Mapping
  4. 5 Signs Our Broadband Plan May Already Be In Trouble
  5. FCC Launches New Broadband Plan Blog
  6. Verizon: We're Not Setting Broadband Definition Bar Low
  7. FCC To Announce New Net Neutrality Rules Monday
  8. What Network Neutrality Is REALLY About
Forums » Largest ISPs Say No Thanks To Stimulus Funds
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pnh102
Reptiles Are Cuddly And Pretty
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Good!

The last thing this country needs is even more companies on welfare.
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TKJunkMail
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1 edit

Feds will deal to get the big ISPs on board

They have already pushed back the deadline to apply for the broadband stimulus funds and I suspect that after this round 1, the rules will be changed to encourage the likes of Verizon, AT&T, & Comcast to apply in rounds 2 & 3. Unless the Feds ease the rules, the big ISPs just won't play along. I expect the rules will be eased soon.
chimera

join:2009-06-09
Washington, DC

Re: Feds will deal to get the big ISPs on board

Which will be a shame since this ought to be taken care of by small buisness, and that's what these ISPs are setting us up for.

en102
Canadian, eh?

join:2001-01-26
Valencia, CA

Re: Feds will deal to get the big ISPs on board

I tend to agree... these big corporations have plenty of cash and lobbiests to ensure that their business model doesn't get touched by gov't.
Small businesses should be able to step in here though.
--
Canada = Hollywood North
me1212

join:2008-11-20
Pleasant Hill, MO
·VOIPo

What rules do you think will change?

As long as some net neutrality(ISPs can NOT make it so they have much better services than competition, ie an ISP that offers non-landline phone cannot make a VoIP not work very well as they[the ISP] can get the upper hand) and the it must be used on unserved first and then whatever is left must be used on under served areas, it could work.

TKJunkMail
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2 edits

Re: Feds will deal to get the big ISPs on board

said by me1212 See Profile :

What rules do you think will change?
Anyone accepting the funds would need to apply the new net neutrality rules(stronger than the FCC principles) to their whole network. The major ISPs just won't do that - get a few measly 100's of millions and then apply the rules to tens of billions of existing assets. Unless those rules go, the big ISPs won't play along. Of course, the Congress and the FCC may MANDATE new net neutrality rules anyway. In that case, the big ISPs may decide to take money in the future if they have to take the medicine anyway.

Besides, from what I read, to provide broadband to all the unserved and underserved areas will take about $300 billion. The gov't is only, for now at least, kicking in $7.2 billion. More will come along later, but the gov't thinks(the fools) that they can prime the pump so to speak and that the big ISPs will fund the rest. But unserved and underserved areas don't provide a good ROI for private industry.

If the gov't is going to move real broadband in to the hinterlands, the poor stupid taxpayers are going to have to fund the whole $300 billion.
me1212

join:2008-11-20
Pleasant Hill, MO

Re: Feds will deal to get the big ISPs on board

Is the 300B for wired or wireless? Does it include Amish country? Some areas may not be profitable enough for wired ISPs(well the big ones anyway) But may be enough for wireless, if the right guy comes along.

TKJunkMail
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1 edit

Re: Feds will deal to get the big ISPs on board

said by me1212 See Profile :

Is the 300B for wired or wireless? Does it include Amish country? Some areas may not be profitable enough for wired ISPs(well the big ones anyway) But may be enough for wireless, if the right guy comes along.
The $300 billion would be for multiple methods of delivery - wired and wireless.

P.S.>> interesting side note. The Amish around Lancaster, PA do shun high technology for themselves. But they are smart business people and have signed very lucrative deals to put cell towers on their farms. The ones I have seen are disguised as grain silos to blend in with the scenery.
me1212

join:2008-11-20
Pleasant Hill, MO

Re: Feds will deal to get the big ISPs on board

Ok, thanks for clearing that up.
sonicmerlin

join:2009-05-24
Cleveland, OH

said by TKJunkMail See Profile :

said by me1212 See Profile :

What rules do you think will change?
Anyone accepting the funds would need to apply the new net neutrality rules(stronger than the FCC principles) to their whole network. The major ISPs just won't do that - get a few measly 100's of millions and then apply the rules to tens of billions of existing assets. Unless those rules go, the big ISPs won't play along. Of course, the Congress and the FCC may MANDATE new net neutrality rules anyway. In that case, the big ISPs may decide to take money in the future if they have to take the medicine anyway.

Besides, from what I read, to provide broadband to all the unserved and underserved areas will take about $300 billion. The gov't is only, for now at least, kicking in $7.2 billion. More will come along later, but the gov't thinks(the fools) that they can prime the pump so to speak and that the big ISPs will fund the rest. But unserved and underserved areas don't provide a good ROI for private industry.

If the gov't is going to move real broadband in to the hinterlands, the poor stupid taxpayers are going to have to fund the whole $300 billion.
Considering Verizon claims to have gotten FIOS fiber installs down to $900/home, and rural carriers are approaching $1500/home, I think $300 billion is a little on the high end.
iansltx

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Re: Feds will deal to get the big ISPs on board

Also, considering you can get a decent wireless radio and antenna setup now for under $200 (Ubiquiti Bullet M) wireless distribution isn't so bad for areas that would cost $20k per customer to roll fiber to. At that point, it'd be unwise for government to spend that kind of money, and there isn't even enough ROI for telephone cooperatives, see

»www.businessweek.com/technology/···ge_2.htm

FiberChuck

@gaslightmedia.com

Re: Feds will deal to get the big ISPs on board

Except that in many areas no wireless is going to work well. If you have hills, trees, valleys, your cost to deliver wireless goes up substantially. Also, wireless does not support higher-end services that are needed by the businesses and institutions in many of these rural areas (unless you really start spending money), so building wireless infrastructure doesn't result in revenues for them to offset the costs to the residents and SOHOs. If you look at the long-term economic effects and the fact that the wireless will have to be replaced many times over the 50-100 year life of fiber to keep up with demand, it's a simple decision. Take the bite, go for the long-term and pay off the infrastructure over some 30 years. But, you have to include the larger institutional users (which gets right in the shorts of the telcos). Makes you want to just jump in and do this, doesn't it?
nasadude

join:2001-10-05
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said by TKJunkMail See Profile :

.. Unless the Feds ease the rules, the big ISPs just won't play along. ...
here's to hoping the feds DON'T ease the rules. having money go to the incumbents will just be a waste of money.
JSRoman
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Callahan, FL


1 edit

Congressional Grandstanding

The dog and pony show that happened to banks,FNM,FRE and automakers is #1 in my book. I can't imagine why any company would want to be subjected to a bunch of blowhards questioning every business decision they have made in last couple years especially when some of these elected officials have never run a business in their lives and some are directly responsible for not providing oversight over these very same companies they are no blasting.

On that same note, the rules that come with that money are cleary defined. Don't like it then step away from the table and give the little guy behind you a chance to eat.
--
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GlobalMind
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Re: Congressional Grandstanding

said by JSRoman See Profile :

... these elected officials have never run a business in their lives and some are directly responsible for not providing oversight over these very same companies they are no blasting.
That's so dead on. They've generally never had to fight & scrap to make payroll and keep the lights on.

And it applies to Congresscritters on both sides of the aisle who like to proclaim how much more well informed they are over the other side.
--
TheGlobalMind.com / Speed costs money. How fast do you want to go? / Trust the instinct to the end, though you can render no reason. - Ralph Waldo Emerson / Free market capitalism is the best path to prosperity.

pkarlos_76

join:2004-08-24
Edmonton, AB

said by JSRoman See Profile :

The dog and pony show that happened to banks,FNM,FRE and automakers is #1 in my book. I can't imagine why any company would want to be subjected to a bunch of blowhards questioning every business decision they have made in last couple years especially when some of these elected officials have never run a business in their lives and some are directly responsible for not providing oversight over these very same companies they are no blasting.

On that same note, the rules that come with that money are cleary defined. Don't like it then step away from the table and give the little guy behind you a chance to eat.
Next thing someone will say is that you can't question whether they can question big business decisions! There goes free speech! And for the record, the Government is by the people and for the people, so they have every right to ask those question about your Tax Dollars and how its spent. It doesn't matter if they know how to run a business, what matters is is their right to ask the questions for the people so that we can understand if someone is trying to scam us or not. It's your head in the sand attitude thats lets businesses get away with what they have so far.
me1212

join:2008-11-20
Pleasant Hill, MO
·VOIPo


2 edits

Um ok.

Does it really matter? These big ISPs have already made it very clear that they do not want to serve rural areas, there aren't enough people for it to be worth their time or (in their eyes) enough profit. Haven't we given them money before for this?

Give the money to small ISPs I don't care if they are wired or not, wireless is getting to the point where it is almost as good as DSL wimax can do 12/1 thats better than DSL in a lot of places. Plus a lot of these WISPs DO want to serve rural areas and think there is enough profit in it for them.

And what do areas that have WISPs count as? Un-served, underserved, or served? Most of the rural parts of the kc area( there is a lot more than one may think) is served by a wisp, so what do those areas count as?

EDIT:Also these new small ISPs would most likely have to hire a guy or 2, meaning more jobs, somethine we despriatly need.

Killa200
Premium
join:2005-12-02
Spring City, TN
·AT&T Southeast

Re: Um ok.

And its almost a promise that the small guys will be hiring in the US job pool... even if its not in their own state (things like phone tech support, consulting, etc).

I say move aside incumbents, here come the small isps that actually care about rural USA.
me1212

join:2008-11-20
Pleasant Hill, MO

Re: Um ok.

Yup! Small business FTW!
Mr Matt

join:2008-01-29
Eustis, FL
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ISP's want to treat subscribers like a Mushrooms!

ISP's want to keep subscribers in the dark and feed them Bull Feces. They make enough money by charging high prices for their service and limiting how subscribers use their service so that they don't need stimulus money. If they take Stimulus Funds they will have to shed some light on how they are making their money and how they are doing business. The Government might stop the cherry picking of subscribers. They might be forced to extend their networks to areas that are not profitable in order to provide universal service.

TKJunkMail
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Re: ISP's want to treat subscribers like a Mushrooms!

said by Mr Matt See Profile :

They might be forced to extend their networks to areas that are not profitable in order to provide universal service.
Yes, what company wouldn't want to sign up for that?

en102
Canadian, eh?

join:2001-01-26
Valencia, CA
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Re: ISP's want to treat subscribers like a Mushrooms!

Exactly.
In many areas (wasn't it PA?), companies like to promote fiber and all sorts of high speed internet options, but only if the government stays out of its business.
Government is willing to pay (stimulus) to these companies, but want control.

Its a stalemate, in general. The only companies that I would suspect want to take stimulus, are those that are nearing Chapter 11, and have no choice. (eg Frontier, Charter, Fairpoint). The 'big' corps don't like serving rural in general (VZ) and have pulled themselves out of the wireline business in those areas, but are building wireless there (VZW / LTE buildout, Sprint/Nextel/Clearwire / WiMAX).
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iansltx

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Re: ISP's want to treat subscribers like a Mushrooms!

Yeah, rather interesting to see that the former wireline operators (Verizon and AT&T) are now pulling for 700mHz LTE deployments that will probably cover many of the areas Verizon sold off in the landline arena.

Brilliant. Especially when people are used to 5GB mobile caps and thus, having no other alternatives due to being served by a bankrupt telco, are offered 25GB by Verizon or AT&T on their new LTE equipment.

en102
Canadian, eh?

join:2001-01-26
Valencia, CA

Re: ISP's want to treat subscribers like a Mushrooms!

I'd almost expect that to be the case:

Business/Cities: POTS exist
Rural: wireless land line over LTE only
--
Canada = Hollywood North
iansltx

join:2007-02-19
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Re: ISP's want to treat subscribers like a Mushrooms!

Actually, there are plenty of rural cell carriers that use Telular gear to offer POTS-style service over a cellular signal right now. not so hot for internet though; I don't know of a single rural carrier that has upgraded to 3G, though some regionals have rolled out EvDO networks (Bluegrass Cellular for example).

DrModem
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I would right now pay $50 bucks a month just for a low latency 256k/128k connection. That's nowhere near as speedy as anything you people on fast internet would think of would be nice, but for me, on 28k dialup, or any of the frustrated users of satellite service which is just dialup with 3,000ms of latency for $70/month, it would be great for us...

It's not that it isn't profitable, it's that it isn't profitable enough.

funchords
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Receding has Stopped! If so, then let's spend more wisely.

I've heard that we have passed the deepest part of this recession (we're in the midst of winter). While happier days are still in the distance, we're probably past the point where the government needs to provide "stimulus" money to keep us from falling further backward.

If that's true, then let things recover naturally. No need to encourage inflation. Getting the money out there should no longer be a first priority.

If the government wants to afford a project to wire rural America, it does not need to compromise on its net neutrality principles to encourage the large telecoms to take the money.
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chimera

join:2009-06-09
Washington, DC

Re: Receding has Stopped! If so, then let's spend more wisely.

Actually from an economic standpoint pushing this money into small businesses will produce more stimulus than pushing it to large companies. This is because small companies often allocate manpower less efficiency (from a cost perspective) and since they tend to use more local products, which may be more expensive but this results in a larger stimulus multiplier.

So there is really no reason that we should try to cater to these large vendors instead of helping small ones build themselves up, and who knows. Some day they may end up competing with the big boys except they would be doing it as dumb pipes which is what consumers want.

El Quintron
Could you spare a consulting gig?

join:2008-04-28
Etobicoke, ON

Re: Receding has Stopped! If so, then let's spend more wisely.

Isn't that the whole reason for stimulus in the first place along with the buy American provisions...

Makes sense to me.
--
Working to bring you closer to a Bell and Rogers free household.
chimera

join:2009-06-09
Washington, DC

Re: Receding has Stopped! If so, then let's spend more wisely.

Except the buy american sections of the stimulus have been largely striped out so large companies have the resources to get around it. The difference in the supply chains between small and large ISPs. A large ISP can easily purchase their products directly from a wholesaler in another country. While a smaller ISP has to go through local retailers. While this does produce higher prices it employees more people at higher wages and results in greater tax revenue through sales tax.
iansltx

join:2007-02-19
Golden, CO

Re: Receding has Stopped! If so, then let's spend more wisely.

There's a problem with "Buy American" though: only a few brands of networking euqipment (Zhone for examle) are totally US-based. Ubiquiti has their stuff made overseas, and they're big in the wireless department...

Eat Me

join:2002-09-25
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Caps, throttling and anticompetitive behavior here to stay

The bottom line is that the broadband companies don't want to be reduced to just being dumb pipes, much like Ford didn't want the Government deciding what kind of cars they should be making.

Therefore, caps, throttling and anticompetitive behavior under the guise of "network management" is here to stay.

Duramax08
Oh rly?

join:2008-08-03
San Antonio, TX
·Clearwire Wireless
·Juno Express

Sure AT&T might have the money...

But they sure dont want to use it on unserved people in rural areas. You would have to be crazy for them to do that. They would only go serve rural areas if there were no strings attached if they didnt already go upgrade all other places with uverse first. You got to be a choosen one to get DSL with AT&T
--
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See 21 replies to this post

anononon

@charter.com

...

Glad to hear that at least some of my stolen tax money will not be given away to some corporation that doesn't need it (nor want it).

What gets me is how suprised people are that when you have central regulating authority such as DC, that special interest money would go and buy out those regulators in their favor!

That's why we have a Constitution which limits the powers of government and those powers are specifically enumerated throughout.
fpilot

join:2007-02-24
Camino, CA
·Remotely Located W..

No irony here

Giving millions to these companies may not make sense anyway, given most of them have no real interest in rural deployment, and in many cases have already spent millions on lobbying efforts geared toward banning towns and cities from wiring themselves when major ISPs wouldn't (surely somebody somewhere sees the irony here).
It may seem ironic, but it isn't if viewed from the proper perspective. The big telcos see these areas as their proprietary service territories/franchises and don't want anyone else offering service within them even if they opt not to do so. It's called monopolistic market conduct.
Forums » Largest ISPs Say No Thanks To Stimulus Funds


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