IT Firms See Hope in Stimulus

by Jamie Walden  on Monday, Feb. 16, 2009 12:00 am  

Buried in Congress' mammoth $789 billion economic stimulus package is one category of grants that could send a ripple through Arkansas' economy, starting with some homegrown technology firms.

Wireline telecommunications firm Windstream Corp. and wireless Internet provider Aristotle Inc., both of Little Rock, stand to received sizable grants that could significantly boost broadband connectivity in the state.

Arkansas may also stand to get a larger cut than other states because of some prescient work by Connect Arkansas.

Last week members of Congress hustled to reconcile the two versions of the stimulus package. Within the American Recovery & Reinvestment Act of 2009 exists the Broadband Technology Opportunities Program to propagate broadband Internet access in areas with insufficient or no Internet access. As of Thursday, House and Senate negotiators had reportedly settled on a grant pool of $7.2 billion. The broadband provisions started in the House of Representatives at about $6 billion, while the Senate began with a bid of $9 billion.

As to who will oversee and distribute the funds, Mike Rhoda, senior vice president of government affairs at Windstream, explained that the National Telecommunications & Information Administration is the most likely organization to run point on the broadband program.

However, the Rural Utilities Service, a division of the U.S. Department of Agriculture, may play a role since both bills specified that 50 percent of the budget must be used to support projects in rural communities.

The Federal Communications Commission could play a disbursing role as well.

A Tale of Two Bills

At first glance, the bills appeared similar with regard to the broadband provisions, but included a few major differences.

Both offered $350 million to develop what the House called a "broadband inventory map."

The House bill would then give half of the remaining $5.65 billion to rural broadband development and the other half to general broadband development. However, with the general broadband pot, the House imposes an important restriction: Exactly $1 billion must be allocated to wireless broadband development. The rest – $1.825 billion – can be used for wireline or wireless.

One of the aspects unique to the Senate bill was a $200 million portion carved out specifically to expand "public computer center capacity, including at community colleges and pubic libraries," the bill said.

The Senate also specified $250 million must be available for grants for "innovative programs to encourage sustainable adoption of broadband service," the bill said. That portion could be used to fund the educational endeavors of organizations such as Connect Arkansas.

The Senate bill, in an effort to expedite the stimulative effect, tacked a use-it-or-lose-it clause onto the funds, which will remain available until Sept. 30, 2010, the end of the country's fiscal year.

The House urged the distributing parties to immediately start handing out the cash by ordering that at least $3 billion must be awarded by Sept. 30, 2009.

Ahead of the Game?

Also within the House's 647-page draft of the recovery act is a 20-word clause that, if retained in the final bill, could put Arkansas in a position to receive a larger-than-average cut of the money. Here's how:

The House bill, presumably in an effort to accelerate economic development, says that organizations that can act the quickest on broadband deployment become priority recipients.

"That priority for awarding such funds shall be given to activities that can commence promptly following enactment of this Act," the bill states.

Legislation passed in 2007 created Connect Arkansas, a nonprofit under the umbrella of Arkansas Capital Corp. Group of Little Rock and dedicated to expanding broadband access around the state.

"We're optimistic that maybe we have a running start," said Les Lane, vice president of Connect Arkansas.

Connect Arkansas will play a strategic planning and educational role to help counties in Arkansas streamline the process of launching broadband in unserved and underserved areas.

Many states will first need to determine which areas don't have broadband or have inadequate broadband before deploying broadband in those areas, but Connect Arkansas completed that year-long project last week and immediately shared its broadband inventory map (PDF) with Arkansas Business. (Click here (PDF) to see a map of wireline broadband availability in Arkansas.)

Lane said many states don't have a Connect Arkansas-like organization, putting them a bit behind states like Arkansas, Kentucky and Ohio.

Arkansas, thanks to some gubernatorial forethought, has already done its mapping process.

The Ripple Effect

With myriad companies hemorrhaging jobs, Windstream's Rhoda said that the broadband provisions in the package might not create many jobs but could at least help stop the bleeding.

"Times are getting tight and businesses are cutting back. What these stimulus dollars could do is they could change the economics for several businesses in the chain of whatever component of the stimulus package they are," Rhoda said. "So for instance, if we were to get a significant share of stimulus dollars to build out our broadband, No. 1, we'd need more people in our engineering group to design the broadband expansion."

From there, the economic dominoes continue to topple in a positive direction.

Windstream would need to hire contractors to execute the build-outs, providing much needed circulation in the sluggish construction industry.

"And then take it all the way to the people who are providing the electronics that make the broadband network work," Rhoda said. "In theory, their orders are going to be significantly greater because of this national program. And, therefore, they're going to have to be producing more and more equipment than they are otherwise forecasting."

Another significant link in the economic chain will be the consumers who, until now, have been unable to participate in the broadband economy, Rhoda said. Welcoming them into the fold ought to inject some new blood into Internet commerce, he added.

Different Styles

Windstream and Aristotle will be major vehicles to bolster broadband connectivity in Arkansas, once fueled by the stimulus dollars.

Although the companies both offer broadband Internet access, their methods of doing so differ.

Windstream, a wireline broadband provider, trenches and lays fiber optic cabling to bring service to customers. Aristotle, on the other hand, erects towers to provide wireless Internet access – a technology called "hub and spoke," said Elizabeth Bowles, president of Aristotle Inc. and its ISP division, Aristotle.net.

Aristotle, in some cases, uses wireless mesh technology, in which individual routers relay a signal to other routers, such as the Internet access Aristotle offers in the River Market District of downtown Little Rock or the network in downtown North Little Rock hosted by Argenta Wireless.

Bowles said expanding into areas that have insufficient or no Internet access is already part of the company's business plan. This week Aristotle is scheduled to bring online East End, a mostly unserved area south of Mabelvale.

Bowles said that, as a wireless broadband provider, Aristotle can expand into certain areas cheaper than a wireline provider because it doesn't have the costs associated with digging and laying fiber optic cabling to each house. Areas that are either too rural or just not economically feasible for some wireline ISPs to cover may not be for Aristotle.

"There is a reason unserved and underserved areas are currently underserved," Bowles said. "And the grants need to help get around that because it is absolutely critical.

"Broadband is critical infrastructure. It is as critical as roads. It's as critical as electricity. We have got to get broadband to every single household and every single business in the state of Arkansas; one way or the other, that has to happen. And the stimulus package could go a long way to helping that happen."

Whatever broadband budget lawmakers decide on – whether $6 billion or $7 billion or some other number – one thing is certain: The broadband budget in the economic stimulus bill "by no means is anywhere near enough of an investment to solve this issue in the country," said C. Sam Walls, CEO of Arkansas Capital Corp. Group. "It's just a down payment."    

 

 

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