Stimulus Seekers Should Heed Own Advice

I recently had the privilege of chairing a panel on the broadband stimulus that included representatives from leading carriers and industry associations. While perspectives varied, the one thing that everyone agreed on was concern about the government’s ability to appropriately select and administer suitable projects. These concerns take a number of forms, but the most prevalent are standards on which proposals will be evaluated, the role states will play in the selection process and the interpretation of key terms in the preliminary objectives as outline in the bill.

The umbrella term of "broadband stimulus" includes a number of government funded initiatives, but the primary considerations are the grants and loans coming from the National Telecommunications and Information Association and the Rural Utility Service which, combined, total $7.2 billion. The NTIA will administer $4.7 billion of the funds, and some already have been earmarked for specific objectives, including $350 million for broadband mapping, $250 million for programs to encourage sustainable broadband adoption and $200 million for expanding public computer center capacity. The RUS has $2.5 billion to distribute, and its focus will be on providing broadband access to rural communities that don’t currently have adequate access.

The bid selection process and administration of the funds will be a considerable task, and the staffing currently enlisted to manage these projects is somewhat limited. The NTIA budget for 2010 appropriates funds for only 73 FTEs to distribute and oversee $4.7 billion, which works out to roughly $65 million per employee.

The NTIA is scheduled to award a “grant program support” contract by June 30, which presumably will go to a private firm that will support the evaluation of grant proposals, so the burden will not be exclusively on the shoulders of the NTIA. Regardless, NTIA and RUS will be required to oversee any private contractors, which in a project of this scale is a daunting task in-and-of itself. Because of the magnitude of the task, the fairly loose guidelines for the selection process that have been released to date will have to be honed to a finite set of weighted criteria. Furthermore, it is safe to assume that any proposal that does not immediately address all key areas of evaluation will be cut in the first round of reviews purely for the sake of efficiency.

The role of states seems a double-edged sword for most carriers. While larger carriers worry that state involvement will favor local operators, they also see value in partnering with states to add weight to their proposals. Certainly, the endorsement of state and local entities will be a vital means of evaluation, but at the same time, if given too much influence, local entities may not act in the interest of the greater good.

All these elements speak to the need for carriers to vary the size, scope and partners they choose for their proposals. It's hard to imagine that carriers alone, without partnering with a state or local government, a non-profit institution, or one of the other key targets already laid out within the guidelines, will fare very well. Therefore, carriers must fight to partner with a variety of influential entities to support their bids.

Moreover, carriers must vary the scope and target of their proposals. Since there is no way the government agencies overseeing these programs can manage countless small projects, it is a certainty that a number of large projects will be selected. This is not to say, however, that smaller projects, or smaller carriers, will not be successful as well. I think AT&T’s request that the agencies be “flexible” in their selection process could be applied to carriers as well. By being flexible in their proposals, carriers stand a much better chance of fighting their way through what is sure to be a slash-and-burn selection process.

Fedor Smith is president of ATLANTIC-ACM, a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for ATLANTIC-ACM, where he oversees proprietary projects as well as the firm's Carrier Report Card series, which serves as the telecommunications industry's principle source of benchmarking tools. In addition, he has authored several studies on telecommunications industry growth and opportunities. Prior to joining ATLANTIC-ACM, he worked at Alloy Media and Marketing in New York developing youth-oriented marketing programs around the evolving technology consumption and adoption habits of high-school and college-age consumers. He holds a degree in history and economics from Hamilton College.

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