Satellite May Be Skipped Over in Grant Allocation, Analysts Say
Executives at Hughes and WildBlue said they're pleased with the technology-neutral stance and rural focus of the recently released broadband stimulus grant rules. But important questions about grant allocation procedures and census block statistical information need to be addressed, they said. Lisa Scalpone, WildBlue vice president of legal and government affairs, said she was worried by language in the rules that said the Rural Utilities Service would not fund more than one project in any given geographic area.
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“We hope the RUS will not interpret the rule so as to preclude a nationwide satellite project,” Scalpone said. “To find that satellite broadband projects are ineligible because they provide universal coverage of rural and remote areas would be inconsistent with the Recovery Act’s requirement to include all technologies.” Dean Manson, Hughes senior vice president and general counsel, agreed: “We need clarification.” But he said he is optimistic that the language referred only to terrestrial providers. The rules say: “RUS will not fund more than one project to serve any given geographic area. If more than one application would serve any overlapping geographic area, the application with the highest score will be funded.”
Manson said another important concern is how satellite operators could make sure they meet the census block specifications in the rules. For example, the rules define an unserved market as contiguous census blocks, where at least 90 percent of households lack access to terrestrial broadband service. “Where do we get that data?” Manson asked. He said it was only recently that the FCC has began to track broadband penetration, but that data is gathered by ZIP code, not census block.
Both providers said they plan to seek funds to help subsidize equipment cost for low-income customers, as well as funding toward launching new satellites. Neither disclosed the exact amount of funding they plan to seek.
Satellite firms may face difficulty in securing the funding they seek, despite the technology-neutral language of the rules, analysts and experts said. Craig Settles, president of consulting firm Successful.com, said many people still believe satellite broadband is too slow, despite meeting the NTIA and RUS speed qualifications, and the consumer cost is too high. The perceptions, plus the fact that governors must sign off on how the stimulus funds will be used in their states, could count against satellite he said: “Politics and perceptions are pretty potent factors.”
Nailing down exactly what part of satellite infrastructure the federal grants should pay for could prove challenging for Hughes and WildBlue, said Gregory Rohde, president of e-Copernicus, a consulting firm on broadband and telecommunications project financing. “There is not enough money to put up a new satellite,” he said. So “it’s going to take some creativity to structure their applications to qualify,” he said.
While the actual allocation of funds is still months away, and questions go unanswered, Scalpone said she remains hopeful that the rural focus of the stimulus rules means satellite broadband providers will receive the funding they need: “It comes down to who is in the best position to serve those communities, and that’s where I think we come out ahead.” - Virgil Dickson