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<p class=MsoNormal style='mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:.25in'><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Based on our recent discussions, I thought you would all find this very
interesting:<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:.25in'><font size=3 face="Times New Roman"><span style='font-size:
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<p class=MsoNormal style='mso-margin-top-alt:auto;mso-margin-bottom-alt:auto'><font
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<!-- ID: SB123059580600140977 --><!-- TYPE: Politics and Policy --><!-- DISPLAY-NAME: Politics and Policy --><!-- PUBLICATION: The Wall Street Journal Interactive Edition --><!-- DATE: 2008-12-30 00:01 --><!-- COPYRIGHT: Dow Jones & Company, Inc. --><!-- ORIGINAL-ID: --><!-- article start --><!--
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<h1><b><font size=6 face="Times New Roman"><span style='font-size:24.0pt'>Internet
Providers Move to Shape Broadband Push <o:p></o:p></span></font></b></h1>
<h3><b><font size=4 face="Times New Roman"><span style='font-size:13.5pt'>By <a
href="http://online.wsj.com/search/search_center.html?KEYWORDS=AMOL+SHARMA&ARTICLESEARCHQUERY_PARSER=bylineAND">AMOL
SHARMA</a><o:p></o:p></span></font></b></h3>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>President-elect
Barack Obama's call to improve the nation's broadband infrastructure has cable
and phone company lobbyists maneuvering to get a leg up.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Lawmakers
in Congress want a plan that will create jobs over the next two to three years
while also tackling the longer-term goal of improving the availability and
quality of high-speed Web access in the <st1:country-region w:st="on"><st1:place
w:st="on">U.S.</st1:place></st1:country-region> The <st1:country-region w:st="on"><st1:place
w:st="on">U.S.</st1:place></st1:country-region> has slipped to 15th from
fourth place since 2001 in broadband penetration, according to the Organization
for Economic Cooperation and Development. Advocates say broadband deployment is
critical to the competitiveness of the <st1:country-region w:st="on"><st1:place
w:st="on">U.S.</st1:place></st1:country-region> economy.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Among the
issues are what speed Congress should define as broadband and whether
government money should be funneled only to areas that have no broadband
access, or if it should also subsidize upgrades to existing networks.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Policies
under serious consideration are corporate tax credits to build new wireless or
landline infrastructure, government-backed broadband "bonds" and
grants to companies or local governments, legislative aides and lobbyists close
to the process say. There also is strong agreement that low-income consumers
need to be encouraged to sign up for broadband -- for example, through vouchers
to purchase computers or discounts on monthly service.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Senate
Finance Committee and Commerce Committee members are drawing up a few options,
as are House members such as California Rep. Anna Eshoo and Massachusetts Rep.
Ed Markey, chairman of the telecommunications subcommittee. The Obama
transition team's point person has been former Federal Communications
Commission chief of staff Blair Levin.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>"There
aren't any quarrels about the need for more broadband," says Ms. Eshoo,
who outlined a series of broadband stimulus options in a memo to the House
leadership in October. "It's a matter of how we're going to do it and the
actual language."<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>The Obama
transition team declined to comment.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Large
cable operators are seeking to increase the FCC's definition of broadband
download speed to about five megabits per second, about 6½ times as fast as the
current definition, according to people familiar with the situation.
Internet-service providers building out "unserved" regions, where
service of that speed isn't available, would be given the full benefit of tax
incentives or grants.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>The big
cable providers also want to target "underserved" areas, where there
is only one broadband provider or the service isn't widely available. In those
markets, companies would get incentives to build out next-generation services.
The download speed that would qualify as next-generation would likely be in the
range of 40 to 50 megabits per second, people involved in the discussions say.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>The cable
plan would disadvantage phone companies, especially smaller ones whose
digital-subscriber-line services are slower than cable modems. The Independent
Telephone and Telecommunications Alliance, which represents midsize phone
companies, is pushing for a slower broadband standard, in the range of 1.5 to
three megabits per second. Curt Stamp, the group's president, says the federal
largesse should be used to subsidize carrier investments in rural areas rather
than to finance upgrades to their existing networks.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Wireless
services will likely be able to qualify as broadband at a slower download speed
than landline services. But if the mark is set above two megabits per second it
could be a boost for <a
href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=CLWR">Clearwire</a>
Corp., a start-up operator that is rolling out a WiMax network capable of
download speeds of two to four megabits per second. Other carriers weren't
planning major wireless upgrades until at least 2010.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Equipment
makers such as <a
href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=csco">Cisco
Systems</a> Inc. and <a
href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=mot">Motorola</a>
Inc. stand to benefit if carriers undertake massive upgrades. Carl Russo, CEO
of <a href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=DSGX">Calix</a>,
which supplies equipment to phone and cable providers, says Congress should
define broadband as 10 megabits per second so the networks it builds now will
be able to support bandwidth-hogging applications of the future, such as
high-definition video.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>"Remember,
you only get to do this once, so you want to build the widest highway
possible," Mr. Russo says. The Telecommunications Industry Association,
which represents equipment makers, is pushing for a $25 billion grant program
for Internet service providers. Under another proposal that is being discussed,
grants could go to state and municipal authorities, which would build
high-speed networks and then open them up to competing service providers. That
would likely meet with considerable resistance from large carriers like Verizon
Communications Inc., which have challenged attempts by local governments to
build and operate their own wireless or high-speed fiber networks.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Steve
Davis, senior vice president of policy for <a
href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=q">Qwest
Communications International</a> Inc., says the big phone company wouldn't
object to public broadband projects in areas that currently have no high-speed
Internet service, provided private operators have a right of first refusal in
building the networks. "The first place the government should look is to
the industry," Mr. Davis says.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Meanwhile,
outside groups are offering various proposals to Congress. Consumer advocacy
group Free Press released a 31-page broadband-stimulus proposal that calls for
a $44 billion investment in Internet services over three years, much of which
would be funneled through the FCC's existing Universal Service Fund, which
subsidizes telephone services in rural areas and for low-income people.<o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Public-interest
groups are clamoring for conditions to be imposed on carriers that receive tax
credits, such as pledges not to degrade any Internet traffic, a principle
referred to as "net neutrality."<o:p></o:p></span></font></p>
<p class=MsoNormal><cite><i><font size=3 face="Times New Roman"><span
style='font-size:12.0pt'>—Vishesh Kumar and Amy Schatz contributed to this
article.</span></font></i></cite><o:p></o:p></p>
<p><strong><b><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Write
to </span></font></b></strong>Amol Sharma at <a
href="mailto:amol.sharma@wsj.com">amol.sharma@wsj.com</a><o:p></o:p></p>
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