High-Price Presence of AT&T & Comcast Disqualifies Underserved Cities for Broadband Stimulus

The presence of giants usually limits the options of peasants. Despite stereotypes of accessibility, it is especially true for underserved urban areas:

the rules governing the grants are stacked against cities like San Francisco, even though urban areas are among the places least reached by broadband and most in need of efforts like the one under way.

"I don't want to be seen as criticizing the Administration's efforts on the broadband problem around the country," Vein says. "I applaud its efforts. But the rules are written in such a way that it's difficult for a city like San Francisco to meet the requirements." An Aug. 14 deadline for applicants for the first wave of funds was extended by six days after technical glitches snagged the application process.

To qualify for funding, applicants need to prove they're catering to an "underserved" area. Yet the National Telecommunications & Information Administration (NTIA), which is overseeing the program, defines underserved as one where at least half of all households lack broadband, or where fewer than 40% of households subscribe to broadband, or a place where no service provider advertises broadband speeds of at least 3 megabits per second. In a densely populated city like San Francisco, where telecom providers like AT&T (T) and Comcast (CMCSA) widely advertise residential broadband all over the city, it's hard to point to a place that technically meets the "underserved" definition.

According to BusinessWeek a small town near Nashville has the same problem as San Francisco:

In 2007, the local power utility, Pulaski Electric, built its own fiber-optic network to serve homes and local businesses. The service, which has about 1,500 customers, is called Energize and offers 10 megabits per second plus TV and voice calling for $99 per month. Pulaski Electric CEO Wes Kelley says he'd like to expand the service to some 2,500 households in outlying rural communities.

But Pulaski runs afoul of the same "underserved" definition as San Francisco does. A patchwork of local phone, cable, and wireless companies offer varying levels of DSL and fixed wireless services, making it difficult to argue in a grant application that these areas are "underserved," Kelly says, even though some of them have no broadband service at all. "There's a combination of hit-and-miss providers in these communities that made it too complicated, so we decided to sit out the first round and wait," Kelley says.