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<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
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<p class=MsoNormal><font size=3 color=black face="Times New Roman"><span
style='font-size:12.0pt;font-family:"Times New Roman";color:windowtext'>T</span></font><font
color=black face=Verdana><span style='font-family:Verdana;color:windowtext'>here
is a golden opportunity, with the Obama Administration coming in, to re-think
(and, more importantly, to re-DO) communications infrastructure in these <st1:country-region
w:st="on"><st1:place w:st="on">United States</st1:place></st1:country-region> –
including our own. However, <o:p></o:p></span></font></p>
</div>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'>there is some
worrisome content in this article (along with only one hopeful note)</span></font><font
face=Verdana><span style='font-family:Verdana'>. Emphasis supplied.</span></font><font
color=black face=Verdana><span style='font-family:Verdana;color:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'> </span></font><font
face=Verdana><span style='font-family:Verdana'>Neither p</span></font><font
color=black face=Verdana><span style='font-family:Verdana;color:windowtext'>ublic,
</span></font><font face=Verdana><span style='font-family:Verdana'>nor</span></font><font
color=black face=Verdana><span style='font-family:Verdana;color:windowtext'>
public-private “open” networks</span></font><font face=Verdana><span
style='font-family:Verdana'>, seem to be under consideration at this point.</span></font><font
color=black face=Verdana><span style='font-family:Verdana;color:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'>Carroll<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Verdana><span
style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
<h1><b><font size=6 face="Times New Roman"><span style='font-size:24.0pt'>Obama's
Broadband Plan<o:p></o:p></span></font></b></h1>
<h2><b><font size=5 face="Times New Roman"><span style='font-size:18.0pt'>Tax
breaks for companies that increase Internet speed or create new networks are
likely to go to existing large players <o:p></o:p></span></font></b></h2>
<p class=MsoNormal><span class=date><font size=3 color=black face=Arial><span
style='font-size:12.0pt'>January 7, 2009<o:p></o:p></span></font></span></p>
<p class=MsoNormal><span class=date><font size=3 color=black face=Arial><span
style='font-size:12.0pt'>BusinessWeek</span></font></span><o:p></o:p></p>
<p><span class=photocredit><font size=3 face=Verdana><span style='font-size:
12.0pt;font-family:Verdana'>David Foldvari</span></font></span><font
face=Verdana><span style='font-family:Verdana'><o:p></o:p></span></font></p>
<p class=byline><font size=3 face=Verdana><span style='font-size:12.0pt;
font-family:Verdana'>By <a
href="http://www.businessweek.com/bios/Arik_Hesseldahl.htm">Arik Hesseldahl </a><o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
Obama Administration has pledged support for universal broadband, or making
speedy Internet service available to all Americans. But the ideas under
consideration by the President-elect's transition team are likely to fall short
of the radical changes some activists have sought. <o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>At
the core of the $20 billion to $30 billion effort under discussion by Obama's
advisers are tax breaks for companies that extend the availability of broadband
or, in regions where it already exists, boost the speed of service, several
people involved in the discussions tell <cite><i><font face=Verdana><span
style='font-family:Verdana'>BusinessWeek</span></font></i></cite>. Companies
that build broadband networks in areas with no service could receive as much as
60% of their investment back in tax credits. Companies that increase the speed
of existing networks could get tax credits of as much as 40%. The tax
incentives also could be structured to promote high broadband speeds, according
to Jeffrey Campbell, director of technology and communications policy for
network equipment maker Cisco Systems (<a
href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CSCO">CSCO</a>).
For example, some analysts say the government could give 20% tax credits for 20-megabit-per-second
service and 40% credits for 100-megabit service. <o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>As
currently conceived, the incentives would be available to any company. <b><span
style='font-weight:bold'>However, those most likely to benefit would be
existing broadband providers such as AT&T (<a
href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=T">T</a>),
Verizon Communications (<a
href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=VZ">VZ</a>),
and Comcast (<a
href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CMCSA">CMCSA</a>),
because they have the capital to make investments, and it costs less to extend
their networks than it does to build new ones. The new Administration appears
unlikely to push forcefully for more competition in broadband, an idea that
activist groups such as Free Press and Public Knowledge say is essential if the
U.S. wants to catch up to broadband leaders such as Korea. "Broadband is a
natural duopoly," counters Robert D. Atkinson, president of the
Information Technology & Innovation Foundation, a nonpartisan think tank.
Proposals to create a third competitor to take on the telecom and cable
companies in most markets, he says, are "misguided." <o:p></o:p></span></b></span></font></p>
<h3><b><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:
Verdana'>Bonds in the Offing?<o:p></o:p></span></font></b></h3>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
Obama transition team is still working on the broadband plan, and details could
change. One issue that has not been resolved is whether the federal government
will help companies issue bonds to finance broadband buildouts. Such a program could
help companies such as Clearwire (<a
href="http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=CLWR">CLWR</a>),
a struggling <st1:City w:st="on">Kirkland</st1:City> (<st1:place w:st="on"><st1:State
w:st="on">Wash.</st1:State></st1:place>) startup that wants to roll out
wireless broadband service across the country. Blair Levin, point person for
broadband on the transition team, declined to comment for this story. <o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>Levin
and his team are working on proposals to stimulate demand for broadband
service. Schools, libraries, and health-care organizations could get tax breaks
or grants for expanding the range of services they offer online. One of Obama's
talking points during the Presidential campaign was that wider use of digital
health records could improve the industry's productivity and cut costs. <o:p></o:p></span></font></p>
<p><b><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana;
font-weight:bold'>In addition to the tax credits under discussion, the federal
government may also provide grants to states for the construction of broadband
networks in regions that never get coverage</span></font></b><font
face=Verdana><span style='font-family:Verdana'>. States probably would use the
money to hire private companies to build networks in remote areas. The
Agriculture Dept. already has a Rural Development Broadband Program, which has
connected nearly 600,000 households in 40 states since 2002. <o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>The
broadband push is an important part of the Obama Administration's broader
stimulus plan because it addresses several goals. Besides creating immediate
jobs in construction and allowing more people to use the Internet, the effort
could raise the country's broadband standing internationally. Once ranked
fourth in the world by the Organization for Economic Cooperation &
Development, the <st1:country-region w:st="on">U.S.</st1:country-region> has
fallen to 15th among developed countries in broadband penetration, well behind
nations such as <st1:country-region w:st="on">Denmark</st1:country-region>, the
<st1:country-region w:st="on">Netherlands</st1:country-region>, and <st1:place
w:st="on"><st1:country-region w:st="on">Norway</st1:country-region></st1:place>.
"Broadband is the key to <st1:place w:st="on"><st1:country-region w:st="on">America</st1:country-region></st1:place>'s
economic future," says S. Derek Turner, research director at Free Press.
"Broadband is a great way to create thousands of new jobs, but we have to
do it in the right way." <o:p></o:p></span></font></p>
<p><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana'>Although
details of the Obama plan have not been announced, t<b><span style='font-weight:
bold'>elecom and cable companies are in favor of the government's support for
universal broadband. "</span></b>It's a worthy goal," says Thomas J.
Tauke, executive vice-president at Verizon Communications. <b><span
style='font-weight:bold'>The existing broadband companies say it's crucial that
<st1:place w:st="on"><st1:State w:st="on">Washington</st1:State></st1:place>
doesn't hurt the ongoing investments in Internet infrastructure. Many outfits,
for example, don't think the government should make direct investments in
broadband networks that could compete against the telecom and cable players'
services. <o:p></o:p></span></b></span></font></p>
<p><b><font size=3 face=Verdana><span style='font-size:12.0pt;font-family:Verdana;
font-weight:bold'>But Turner at Free Press is skeptical that a broadband
program relying heavily on tax credits is the best approach. The risk, he says,
is that the country will fail to encourage competition, and the money spent
will go largely to the telecom and cable companies that already dominate the
business. "There's no point to doing all this if all we're doing is
writing the incumbent [players] a blank check," he says. <o:p></o:p></span></font></b></p>
<p class=tagline><i><font size=3 face=Verdana><span style='font-size:12.0pt;
font-family:Verdana;font-style:italic'>With Pete Engardio and Peter Elstrom in <st1:place
w:st="on"><st1:State w:st="on">New York</st1:State></st1:place>. <o:p></o:p></span></font></i></p>
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style='font-size:12.0pt;font-family:Verdana;color:windowtext'><o:p> </o:p></span></font></p>
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