House Proposal Floats $6b for Broadband

After weeks of speculation, the House Appropriations Committee offered the first clear glimpse into how much money the economic stimulus package might infuse into the IT industry.

Committee Chairman Dave Obey (D-WI) today recommended that the government invest $6 billion in deploying broadband in rural and underserved areas and $20 billion in IT infrastructure for the healthcare industry.

In the coming weeks, Congress will engage in a contentious debate over the American Recovery and Reinvestment Act, which aims to create jobs and provide relief for struggling states, businesses and individuals.

While the package is framed with accountability at its core, some legislators have questioned the wisdom of a new round of massive government spending that would bring the price tag for the federal response to the economic meltdown close to $2 trillion.

The bill aims to create or save three million to four million jobs.

In addition to the broadband and health IT provisions, the bill also calls for $10 billion in funding for research and science facilities, $32 billion for renewable energy initiatives and upgrading the country’s power supply infrastructure to a so-called smart grid, and $650 million to fund the coupon program set up to help defray the cost of the converter boxes millions of Americans will need to keep their analog TV sets working after the transition to all-digital signals later this year.

President-elect Barack Obama praised the House for moving forward with his plan, and pledged to make the dispersal of funds a transparent process free of government waste.

“This plan is a significant down payment on our most urgent challenges, and it will contain the kind of strict, independent oversight that will allow the American people to hold Washington accountable for how and where their tax dollars are spent,” Obama said in a statement.

A parallel plan has yet to emerge in the Senate, but Stifel Nicholas analyst Rebecca Arbogast said one was likely to emerge with a slightly larger sum allocated for broadband.

“Our sense is that the Senate leadership, working with the Obama team, is developing an analogous grants proposal, which could be aiming at $8 billion,” she wrote in a research note.

Obama has long championed government’s role in spurring broadband deployment in areas where service is unavailable or connection speeds are slow. Numerous Internet advocacy groups have praised his commitment to bridging the digital divide, though many were hoping for a higher funding level.

“While $6 billion is not as much as we had hoped for, it is a substantial investment that represents an important public commitment to broadband,” said Ben Scott, policy director of Free Press, a media reform group that had been calling for a broadband stimulus of $44 billion.

Under provisions spelled out in the 1936 Rural Electrification Act, the bill would allocate $2.825 billion in loans and grants to providers to build broadband networks in rural regions where at least 75 percent of the area is currently without sufficient access to high-speed Internet service. It calls for at least half of that funding to be dispersed by Sept. 30.

The bill would also create a Broadband Deployment Grants Program, allocating $1 billion for wireless data networks and $1.825 billion for conventional broadband. That money would be withheld until Congress had a chance to review a report on spending priorities prepared by the National Telecommunications and Information Administration.

The remaining $350 million in broadband spending would be used to fund the Broadband Data Improvement Act, signed into law last October to encourage states and federal agencies to collect better data about broadband deployment.

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