Obama Administration Will Spend Almost $2 Billion in Stimulus Funds to Subsidize Broadband Internet Service in Poor, Rural Areas

By Matt Cover | August 19, 2010 | 8:27 AM EDT

(CNSNews.com) – Commerce Secretary Gary Locke, Agriculture Secretary Tom Vilsack, and White House Economist Jared Bernstein on Wednesday announced $1.8 billion in new broadband Internet subsidies funded by the stimulus program. 
The subsidies are intended to encourage telecommunications companies to build broadband networks in rural areas where it is not normally profitable to do so.  (See White House news release)
In a conference call on Wednesday, Locke described the subsidies as “investments.” He said the taxpayer money would help build high-speed Internet networks in areas where the private sector has been “unwilling or unable” to do so.
“We’re seeing that without this investment by the federal government, so many of the for-profit, independent Internet service providers don’t find it economical to go into these [rural] regions,” Locke explained.
The subsidies will allow telecom companies to extend their services into poor, rural areas where demand has not been high enough to justify the companies investing their own money to build the networks – areas where there are not enough potential customers to make building the networks an economically sound decision.
By footing the bill for the upfront costs of building these networks, the government will give the telecom companies access to millions of potential new residential and commercial customers.
Vilsack noted that half of all rural Americans lack access to high-speed Internet services.
“We recognize that a substantial part of rural America simply did not have access to broadband and that folks couldn’t take advantage of the opportunities that this important technology provides,” Vilsack said. “Nearly half of Americans living in rural America today do not have access to broadband.”
CNSNews.com asked Locke, Vilsack, and Bernstein whether – in light of the nation’s $1.2 trillion deficit – the government considered high-speed Internet to be a luxury or a necessity.
“When you talk to some of the small businesses that I’ve come across throughout [my] travels across America – for them high-speed Internet service is a necessity,” Locke said. “For them, high-speed Internet service is just as important as electrification was to the country and to rural America in the 30’s.”
Vilsack said that subsidizing broadband Internet is a necessity because the country cannot afford a “digital divide” between rural and urban populations.
“This country can’t afford to have a digital divide,” he said. “Failure to connect rural America to 21st century technology now will really make it much more difficult for farmers and ranchers, small business owners to have any connection to the 21st century economy.”
Bernstein said that subsidizing broadband to bring it into non-economical areas should be considered an “investment” in what the administration sees as a burgeoning economic recovery.
“When you’re thinking about this kind of spending that we’re doing today, these announcements, there’s a key word here that has to do with accelerating the pace of this recovery, and that word is investment,” Bernstein said.
“Clearly in an economy which is moving from recession to recovery, consumers play a critical role. But in moving from recovery to a more accelerated, dynamic recovery…the investment agenda is critical.”
Connecting ‘Native America
In another move aimed at boosting Internet access, the FCC last week established an Office of Native Affairs and Policy, which will work to bring broadband Internet service to all tribal lands and native communities (Indian, Eskimo, Hawaiian, etc.).
“Tribal lands and Native communities suffer unacceptably low levels of communications services, especially broadband,” FCC Chairman Julius Genachowski said in the Aug. 12 news release.
“Increasing connectivity in Native America is one of the FCC’s top priorities. With this new office, the Commission will work closely with Native leaders to develop and implement policies that ensure their communities enjoy the benefits of 21st Century communications infrastructure.”  
The new office will be part of the FCC’s Consumer and Governmental Affairs Bureau.