Big ISPs on Sidelines for Broadband Grants

The application deadline for the first round of funding for projects under the broadband stimulus program has come and gone with barely a flicker of interest from the country’s largest Internet service providers.

The nation’s four largest ISPs have each confirmed to InternetNews.com that they don’t intend to apply for any of the $7.2 billion for broadband projects set aside in the economic stimulus package, particularly if some of the conditions attached to the first portion of the money remain unchanged.

The agencies administering the grant and loan programs set the deadline for the first of three funding rounds today at 5 pm ET.

“We closely examined the current rules and, as others have expressed, have concerns about the complexity and uncertainty they create for grant applicants,” an AT&T spokesman said in a statement e-mailed to InternetNews.com. “At this time, we are not able to participate in any of the broadband infrastructure stimulus projects that will become available through this funding program.”

Time Warner Cable spokesman Alex Dudley flatly said the company would not be applying for stimulus grants through the programs. A Verizon spokesman told InternetNews.com that the company would “likely not” seek broadband grants from the National Telecommunications Information Administration or the Rural Utilities Service, the two agencies administering the funding.

Comcast offered a similarly dim assessment of its prospects for seeking government funds.

“We support the administration’s stimulus efforts but will not likely apply for funding ourselves,” company spokeswoman Sena Fitzmaurice told InternetNews.com. She added that Comcast “will assess our plans with respect to future rounds of stimulus funding.”

The agencies are making $4 billion of the total broadband stimulus money available in the first round of funding, which prioritizes projects that will bring high-speed access to rural areas. To that end, RUS is making almost all of its portion of the money available in the first tranche.

The subsidies for areas defined as “unserved” aim to subsidize broadband in sparsely populated regions where large ISPs haven’t found it practical to invest in deployments.

“These geographic areas are not served by broadband because it makes no economic sense for a company to build networks there,” Comcast Executive Vice President David Cohen noted recently.

But even if the next two rounds of funding relaxed the focus on rural areas, there are other conditions that, if retained, would still likely deter the largest carriers from applying, according to Gary Bolton, global vice president of marketing for ADTRAN, a provider of networking gear that has been advising interested parties on the broadband stimulus programs.

Beyond the rural focus, the broadband grant and loan programs are unattractive to many carriers because of the vaguely worded non-discrimination and open-access requirements they carry. For the largest cable and telecom providers, which have rigidly opposed Net neutrality regulation, the uncertainty such provisions would entail could put the stimulus funding out of reach, Bolton told InternetNews.com.

The same goes for the reporting and oversight requirements attached to the grants and loans.

“The carriers want the stimulus money,” Bolton said. “Unfortunately, there are some rules and obligations that will not allow them to apply in this round.”

When they announced the roadmap for the funding process, officials said that they would modify the rules for the final two rounds based on their experience in the first.

The stimulus bill directed NTIA and RUS to award all $7.2 billion of broadband funding by Sept. 10, 2010.