Does Oregon need Obama’s broadband stimulus grant?

By Alyssa Williams,
Biz Reporter

The impacts of the Obama Administration’s pledged support for universal broadband in the U.S. may be questionable in Oregon due to existing increases of high-speed lines and the competition of wireless providers in the state.

High-speed lines from competitive broadband companies in Oregon rose from 91,400 lines in June 2001 to 1.29 million lines in June 2007, a 1,300 percent increase. In comparison, traditional landlines and services from current local exchange carriers such as Qwest Communications, CenturyTel, Embarq and Verizon Communications increased only 100 percent to 1.43 million lines in 2007 over the same time period.

With the competitive nature of the market, the substantial growth of high-speed lines would appear to be taking care of the situation which demonstrates the possible limited influence of President Obama’s plan in Oregon.

The results of the March 2008 Federal Communication Commission’s report of high-speed services for Internet access also questions the necessity of the universal broadband plan. While the U.S. is ranked 15th among developed nations in broadband access, the FCC report concluded that more than 99 percent of the nation’s population lives in more than 99 percent of zip codes where a provider reports having at least one high-speed service subscriber. Additionally, high-speed modem service was available to 96 percent of households to whom cable operators could provide cable TV service.

The Obama Administration’s universal broadband effort would extend the availability of the Internet, as well as boost the speed of the service in areas where it already exists, by providing incentives to companies to extend their networks. Companies that create new networks in areas with no service could receive up to 60 percent of their expenses back in tax credits.  Increasing the speed of service in already existing networks could give companies up to 40 percent of their investment in tax credits.

Critics of the plan claim the potentially $30 billion approach fails to encourage competition, giving most of the benefits to existing broadband providers that have the capital to finance more broadband buildouts like AT&T, Verizon Communications and Comcast.

Wireless industry experts agree incentives would help companies reach underserved areas. However, the already existing competition from 150 wireless providers and a country where most people have access to broadband, the costs of President Obama’s plan appear high with minimal impact.

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