NCTA Chief Urges Feds to Rethink Stimulus Plans

WASHINGTON — The head of the leading cable industry association today took aim at the government’s efforts to spur broadband deployment, arguing that rather than funneling billions of stimulus dollars into new networks, the money would be better spent on programs to drive adoption of the technology.

Kyle McSlarrow, the president and CEO of the National Cable and Telecommunications Association (NCTA), made his pitch here at a conference hosted by the Family Online Safety Institute.

“If the stimulus package and the broadband fund is going to be a success, the way we need to think about this is to think about this in terms of broadband adoption,” McSlarrow said. “We have it a little backwards right now.”

The economic stimulus package, enacted in February, allocated $7.2 billion for broadband projects, but only $250 million of that was set aside for programs to drive sustainable adoption. An additional $250 million was earmarked for upgrading community facilities like libraries and senior centers, with another $350 million for mapping programs.

But for McSlarrow, who argues that the companies he represents offer high-speed Internet access to 92 percent of U.S. households, that split gives short shrift to the demand side of the broadband equation.

“There are a lot of reasons why people who have broadband at their doorstop don’t take it,” he said.

McSlarrow pointed to the broadband research of the Pew Internet Project, which has identified a significant segment of Americans who don’t see the value in broadband service.

“You really need to take a step back and think about how you spend these monies,” he said. The stimulus “seemed to me a little bit of a mismatch between the goals and the means.”

Is USF wasting billions of dollars?

Only a few hours after McSlarrow’s talk at the FOSI conference this morning, NCTA released a petition it submitted to the Federal Communications Commission urging the agency to cut back on the subsidies it distributes to telephone companies in favor of programs to spur broadband adoption and deployment.

NCTA argued that the FCC’s Universal Service Fund wastes as much as $2 billion funneling money to rural phone providers in areas where unsubsidized companies are already operating and the market is competitive.

“The commission’s high-cost support mechanisms are premised on the assumption that a particular location would not have affordable service available but for the support provided by the program,” the group said in its petition. “But in markets with extensive facilities-based competition, that assumption no longer holds true.”

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