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Regulatory Tug-of-War for Broadband Stimulus

Broadband stimulus
The polls have closed, and now all the businesses, public agencies and watchdog groups concerned with where the $7.2 of broadband stimulus money will go can do is wait.

The period for submitting comments to the National Telecommunications Information Administration (NTIA) and the Rural Utilities Service (RUS), the agencies administering the broadband stimulus funding, ended on Monday. With some 1,400 responses filed, they'll have their hands full.

Both agencies are giving themselves two months to sort through the comments and come up with rules for how the grants will be evaluated. The parameters they set could determine in great measure which entities will apply for the grant money and which will sit the stimulus funding out. As with any government grant program, would-be applicants are looking ahead to the regulatory strings the agencies will attach to the money.

In the case of the broadband grants, the response from industry could hinge on how the agencies define key concepts for the funds that were written into the American Recovery and Reinvestment Act, such as network "nondiscrimination" and "interconnection" requirements.

With the meat behind those terms left to the agencies to decide, it follows that groups on opposing sides of the Net neutrality debate took the call for comments as an opportunity to sway the agencies into adopting stronger or weaker requirements into the grant rules, depending on where they stand on the issue.

In comments on behalf of the Open Internet Coalition, an organization that includes pro-neutrality Web companies and advocacy groups like Google, Amazon and Free Press, Executive Director Markham Erickson offered "enthusiastic support" for the "common-sense notion that grant recipients must adhere to general openness principles."

Erickson also urged the NTIA to require grant recipients not to "operate their networks in such a way that privileges, degrades, prioritizes or discriminates against any lawful Internet content application or service transmitted over the grant recipient's network."

For an opposing view, one need look no farther than the National Cable and Telecommunications Association (NCTA), the trade association representing the cable industry and an outspoken opponent of overreaching Net neutrality regulations.

In its comments (PDF), NCTA advised that the agencies "should resist calls to apply the interconnection and nondiscrimination provisions of the Recovery Act in a manner that creates uncertainty and discourages new investment."

With two months to set rules for the grant applications, the agencies will have to reconcile a bewildering array of comments as they set rules for the first of three grant-application periods.

Larry Irving, a former assistant Commerce Secretary under the Clinton administration and co-chairman of the Internet Innovation Alliance, said the agencies are unlikely to take the stimulus process as an opportunity to rewrite the existing regulatory regime for the Internet.

"My sense is what's likely to happen is something along the lines that there are existing regulatory models that can be bootstrapped for the purposes of these grants," Irving said.

Irving, recently returned from a stint with the Obama transition team, joined fellow IIA co-chair Bruce Mehlman, himself a former assistant Commerce Secretary under the George W. Bush administration, on a conference call with reporters discussing the decision-making process the agencies

The grants, Mehlman said, "offer a nice chance to jumpstart progress toward national broadband." Nevertheless, he cautioned that the federal money is only a small fraction of what ISPs invest each year toward expanding and maintaining their networks, suggesting that the ultimate goal of delivering broadband to more people would be best-served by a relaxed regulatory approach.

"After the 7 billion is spent, we're going to need ongoing private investment," Mehlman said. "If regulations are onerous, then yes, it will slow down investment."

NCTA counseled a similar position in its comments, urging the agencies to prioritize projects that are sustainable and can be completed quickly, and are submitted by groups with experience in the Internet arena -- criteria that could be seen as apt descriptors for many of NCTA's members.

Irving, who at Commerce oversaw a previous iteration of an NTIA Internet grant program, said he expected the agency to closely scrutinize the applications to weed out proposals coming out of "grant mills" by writers trained to churn out "very pretty grants with all the right buzzwords" but without a real sense of how the project will improve a community.

"You're going to want to make sure that applications area viable. You're going to want to take a look at the partners," Irving said, to ensure that the grants "can actually do what they say they can do."

That said, Irving expects NTIA to allocate at least a small portion of the money to what he called "stretch grants," that is, projects that may seem tenuous on paper but could have a transformative effect if they took off. He described the decisions to fund projects that put laptops in police cars and fire trucks as stretch grants he presided over while at Commerce.

"I think they're going to want structured flexibility," Irving said. The agencies will have to adhere to the statutory requirements for the grants, such as awarding funding to at least one project in each state. The Recovery Act also directs the agencies to disperse several hundreds of millions of dollars for projects to tackle the broadband problem on other fronts, such as public access to computers and programs to kindle consumer demand. Within those parameters, Irving said he looks for the NTIA to give itself wiggle in evaluating the applications, suggesting that the agency might not bind itself to an objective point scale as some groups have recommended.

"I don't think they want at this point to get overly structured," he said. "It's a balancing act."