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Jury out on Obama telecom policy, but broadband stimulus gives hope

As confirmation hearings drag on, telecoms remain undecided about how telecom-friendly the Obama administration will ultimately be, even as regional players start to make plays for broadband stimulus funds.

Roughly four months into President Barack Obama's administration, telecoms are still uncertain of how friendly his administration will be, but regional players are gearing up plans to take advantage of the $7.2 billion of the broadband stimulus fund.

The jury is still out for telecoms because Obama's telecom-related nominees are not in place yet.

"The Obama telecom team really isn't in, so we don't know what they're going to do," said Lawrence J. Spiwak, president of Washington, D.C.-based telecommunications think tank The Phoenix Center. He added that there are reasons to be hopeful. "The people who Obama has nominated are all exceptionally talented people in the telecom world. What they're going to do -- we don't know."

The highest-profile telecom nominee so far is Julius Genachowski, Obama's nominee for chairman of the Federal Communications Commission (FCC). Genachowski, a law school classmate of Obama's and one of his early campaign advisers, was an FCC commissioner under President Bill Clinton and has extensive experience in telecommunications as a venture capitalist.

Genachowski's confirmation hearing has not yet begun, largely because of the federal government's generally plodding pace. The Senate Commerce Committee, which must approve Genachowski's appointment before forwarding it to the full Senate, originally announced a hearing date only to delay it later without a clear reason.

"I think the delay is more structural and organizational than questioning who [Obama] has nominated," said Vince Vittore, an analyst with Yankee Group. "A lot of [his nominees] are good choices, and these people are well qualified." Vittore said that it is less a question of who is going to be approved than when they will be approved.

Also up for approval now, and both widely expected to receive it, are Lawrence Strickling as head of the National Telecommunications and Information Administration (NTIA), which functions within the Commerce Department, and Aneesh Chopra as the nation's first chief technology officer.

If approved, Strickling will be charged with doling out much of the broadband stimulus funds and ensuring that Obama's vision for greatly expanded broadband access, particularly in rural markets, becomes a reality.

Strickling brings some direct telecom experience from his time as a legal adviser to Ameritech, one of the Baby Bells. He also served as chief of the FCC's Common Carrier Bureau in the Clinton administration.

Overall, the industry reception to the Obama nominees has been relatively warm.

"Everything I've read about who Julius may be bringing in [is that they are] absolutely top-flight people," Spiwak said.

Broadband stimulus potentially big opportunity for small players

While the Obama appointments await confirmation, new details are emerging for how the administration plans to dole out the $7.2 billion portion of the American Recovery and Reinvestment Act of 2009 that was designated for broadband stimulus.

Most of the largest service providers have quietly indicated that they will pass on the opportunity, particularly as the federal government puts more strings on the grants being proposed.

The proposed inclusion of requirements on network sharing is a deal breaker for the likes of Verizon and AT&T, Vittore said. They are loath to help competitors enter the markets in which they've invested serious capital expenditures.

"You really have to get the largest players involved, and doing that is going to be very challenging given the way the law is written and is likely to be interpreted," he said. "It's great intentions and not so great execution."

But while the broadband stimulus will attract little interest from the biggest telecoms, some smaller service providers are leaping at the chance to expand.

Cinergy MetroNet, which serves 11 Indiana communities with fewer than 20,000 people, has been preparing to apply for stimulus grants as soon as the details are finalized, probably within the next several months, according to Cinergy president John Cinelli.

"We're extremely interested in the rural broadband dollars that are available," he said. "We think it could double the amount of towns we can service."

But Cinelli admitted such investments were no sure thing. "We also recognize that there are a lot of other service providers going for it too," he said.

Enough regional carriers have recognized the potential for new investments, however restricted, and some telecom equipment vendors have responded by creating special programs to help them along in the process.

Alcatel-Lucent, for example, established a website for its customers that highlights the latest in broadband stimulus news. The company is also advocating at the federal level for more favorable conditions for likely recipients of the stimulus funds.

Cinelli is grateful for all the help he can get.

"We're kind of operations guys," he said. "And they're helping us write grants, and with advocacy."

Contact article author Michael Morisy at

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