House OKs Billions for Broadband

Government broadband stimulus

After a long day of contentious debate, the House passed the $819 billion economic stimulus package — moving one step closer to a large portion of those funds landing in the laps of tech companies.

The stimulus bill that hit the floor Wednesday morning would funnel billions of dollars to clean energy, health IT and broadband deployment, while an alternate version is making its way through the Senate.

The bill cleared the House by a margin of 244 to 188. Not a single Republican voted for it. Eleven Democrats defected.

Broadband’s role in the bill is being especially closely watched by the industry. Its portion of the stimulus windfall could total $6 billion in grants to spur network build-out in rural and underserved areas, which supporters say would create millions of jobs and improve U.S. competitiveness with other leading Internet countries.

Throughout Wednesday’s proceedings, Republicans blasted the other side of the aisle for freezing them out of the debate, describing the stimulus package as a kitchen-sink bill larded with government spending that will fail to achieve its primary goal of creating jobs in the short term.

“It’s a broad brush of everything the majority has wanted to do in the last decade,” said Roy Blunt, R-Mo.

Republicans put forward an alternative bill that would have prioritized tax cuts over government spending, but that was shot down by a largely partisan vote.

In the morning proceedings, Cliff Stearns, R-Fl., tried to derail the House’s consideration of the stimulus package altogether, saying that the Rules Committee had “capriciously and arbitrarily” excluded from the final version Republican amendments that had passed in committee. The procedural roll call was shot down by a partisan split of 240 to 174.

President Obama praised the House for passing the stimulus package, and pledged to continue to work with Republicans to strike a compromise as the bill moves to the Senate.

“I hope that we can continue to strengthen this plan before it gets to my desk,” Obama said yesterday evening. “But what we can’t do is drag our feet or allow the same partisan differences to get in our way.”

Obama met with House and Senate Republican leaders Tuesday to discuss their concerns about the bill, chief among them its massive deficit spending and what they describe as a lack of cooperation in the process.

Speaking after meeting with Obama Tuesday, Republican Conference Chairman Mike Pence lauded the president for working in a bipartisan spirit, but the Indiana congressman castigated his Democratic colleagues for failing to do so.

“The bill that is scheduled to come to the floor this week will come to the floor without any consultation among House Republicans, and with categorical opposition to the kind of Republican solutions that we believe are necessary to truly get this economy moving again,” Pence said. “The bill that House Democrats will bring to the floor tomorrow will literally be a catch-all of traditional pet programs and more government. The only thing it will stimulate is more government and more debt.”

Likely outcomes for broadband’s share

The broadband provisions in the House bill differ substantially from the Senate version, which is likely to be more palatable to Republicans. The House bill allocates $6 billion in grants to build out wireless and wireline broadband in rural and underserved areas.

In the Senate, where Democrats hold a narrower majority, members of the Finance Committee introduced an amendment that would add tax cuts to the broadband provisions, which total $9 billion.

Page 2: Weighing possible results

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Sens. John Rockefeller, D-W.V., and Olympia Snowe, R-Maine, brought forward a measure to give ISPs a 10 percent tax credit for wireline deployments of current-generation speeds (defined as 5 megabits, or Mbps, downstream and 1 Mbps up), and a 20 percent tax credit for next-generation build-outs, which would be set at 100 Mbps downstream and 20 Mbps up. For wireless service, the next-generation threshold would be set at 3 Mbps and 768 Kbps up.

The Rockefeller-Snowe amendment passed into the Senate’s draft legislation, which makes the broadband portion of the two versions of the bill fundamentally different.

Of course, the House and Senate will have to reach a consensus before the American Recovery and Reinvestment Act heads to the president’s desk.

After an accounting review of the House bill, the Congressional Budget Office brought the original cost of $825 billion down to $816 billion. Then Democrats introduced and passed a $3 billion amendment for mass transit projects in yesterday’s floor debate, bringing the total to $819 billion.

The Senate version now stands at more than $900 billion.

Likely, the final version of the broadband stimulus will include both the grants that Republicans oppose and the tax credits they have been calling for, according to Rebecca Arbogast, an analyst with Stifel Nicolaus.

“The compromise could end up being some package that includes the two, giving some greater tax incentives along the lines of what Sen. Rockefeller proposed,” Arbogast told

She noted that the tax cuts are lower than what some telcos had been hoping for, but that providers such as AT&T (NYSE: T) and Verizon (NYSE: VZ) would still stand to benefit.

Among other points that the two chambers will have to reconcile are how the broadband funding is administered, and what conditions are attached. The House bill splits the funding between a division of the Commerce Department and the Rural Utilities Service, a branch of the Department of Agriculture. Under the Senate bill, all the money is allocated to the National Telecommunication and Information Administration in the Commerce Department.

Both bills contain provisions following the spirit of Net neutrality, but they use different wording. The House bill insists that providers offer “open access” to their networks. The Senate version calls for “nondiscrimination and network interconnection.”

The openness provisions have drawn praise from long-time champions of Net neutrality, such as the media-reform group Free Press.

“The open Internet is a proven economic engine,” said Ben Scott, policy director at Free Press. “The openness conditions passed by the House and included in the Senate bill are a positive step forward and signal that Congress is committed to promoting the open Internet.”

After a bitter day of carping at the substantial Democratic majority, House Republicans are ending their week in frustration.

But the compromise with the Senate, where the bill’s provisions are still at committee level, offers a ray of hope for Republicans, who complained that they had been essentially frozen out of the legislative process.

“When it gets to the Senate, we all understand there will be changes,” said Jack Kingston, R-Ga.

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