The Best Billion We Can Spend On Rural Broadband

First off let me get out of the way upfront my belief that there's a lot of good related to broadband in both the House and Senate versions of the stimulus package. Without grants and loans some areas of the country may never get broadband of any sort, and prioritizing rural areas makes sense on all levels.

But are we stimulating rural broadband deployment to the best of our ability by focusing solely on a big-government, top-down approach to federal and state officials picking winners and losers by writing big checks?

Could there be some way to enhance what's already there with a small-government, market-driven strategy that rewards progressive projects, gets money flowing quickly, and maximizes the impact of government dollars?

Yes there is! Introducing the Best Billion Dollars We Could Spend On Rural Broadband!

The following is an outline of the details and benefits of committing $1 billion of budget authority in the economic stimulus package to the distribution of fast-track partial loan guarantees for next-generation broadband in rural areas.

Here's how it would work:

$1 billion in budget authority for fast-track partial loan guarantees for next-generation broadband.

$1 billion in budget authority would allow $25 billion in guarantees to be distributed thereby enabling $50 billion in total investment to be realized.

These guarantees cover 100% of the losses up to 40-60% of the total value of the loan.

The size of the guarantees will be based on a sliding scale relative to the overall density of a project. Projects under 10 premises per linear mile of inhabited road could get 60%; projects over 25 premises could get 40%; and in between is the sliding scale.

The fast-track approval process would require applicants to have market-ready projects but would approve projects based on a simple checklist that insures they have what they need to take their plans to the private capital markets. Once given a guarantee, applicants would have 120 days to secure financing before the guarantees expire. In this way we rely on the capital markets to vet which projects are financially viable and deserve funding.

Any project supported by these guarantees must provide universal, open, and next-generation broadband access.

These guaranteed loans can be used to fund all aspects of network deployment and operation. And while the emphasis is on wireline broadband, up to 20% of these loans can go to deploying complementary next-generation wireless access.

All communities under 50,000 without a next-generation wireline broadband provider are eligible.

All owner/operator models are eligible.

All forms of capital can be guaranteed.

DEFINITIONS

Market-ready - Projects must have the following in place:
* A fully fleshed out business plan
* A viable financing plan in place
* A proven management team ready to start
* Regulatory requirements figured out
* A completed corporate structure
* Identified local stakeholders

Universal Access - Projects must build out to everyone in an exchange that wants service.

Open Access - Projects must pledge to sell bandwidth to anyone, be transparent in any network management practices, and not interfere with legitimate Internet traffic.

Next-Generation Broadband - Next-generation wireline broadband is defined as networks capable of offering at least 100Mbps symmetrical and delivering at least 25Mbps symmetrical simultaneously of in-network capacity. Next-generation wireless starts at no less than 5Mbps symmetrical.

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Advantages
These fast-track partial loan guarantees complement the existing funds set aside for rural broadband in the following ways:

They deliver more bang for the buck - $1 billion in budget authority can enable $50 billion in private investment, enough to wire almost all of rural America with next-generation broadband without government having to write a big check for the whole thing.

They will get networks deploying more quickly - There are billions in shovel-ready projects that need only access to capital to start to deploying. So rather than wait 6 months or longer for grants to be processed, these fast-track guarantees can allow deployers to start moving and creating jobs within weeks, which is especially important in northern states where if nothing happens until the fall we'll have lost another year to make progress as the ground freezes. We need them deploying by April if we want to make a difference there.

They rely on a market-driven approach - Instead of only employing a top-down approach of government picking winners and losers, these guarantees allow government to empower a market-driven, community-centric approach where the projects that are supported are those most financially viable and progressive in their development, not just those that are the most politically well-connected.

They support truly next-generation broadband - If all we get rural communities is the broadband of today, then that's all they'll be left with as the rest of the world benefits from the broadband of tomorrow. We need to set high goals and support those entities that can reach them if we are to insure the continued economic viability of rural America in the 21st century.

Next-generation broadband deployment creates the most jobs - In particular full fiber networks creates 33% more jobs to deploy than any other form of broadband. And having next-generation broadband will equip rural communities with the connectivity they need to attract and retain businesses in the global economy.

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I'm headed up to the Hill again today in search of champions in the Senate willing to prove their commitment to the future viability of rural America by adding this billion dollars in budget authority for fast-track partial loan guarantees to the stimulus package.

If you support this initiative and/or want to help out in some way to make it a reality, submit a comment below and I'll contact you directly to discuss further.

Never before and perhaps never again will we have this opportunity. Let's make sure we make the most of it by creating the best possible rural broadband stimulus!