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IBM, IBEC do rural Internet broadband

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It looks like broadband over power lines is going to get another pass, thanks to the economic stimulus bill that President Obama just signed into law this week.

One of the key IT-related features of the bill, and one that IBM chairman and chief executive officer, Sam Palmisano, has been supporting since last November, when Obama won the U.S. presidential election, is the delivery of broadband Internet services to rural and other underserved (meaning inner city) areas in the country. The final $787bn law, called the American Recovery and Reinvestment Act of 2009 (ARRA), has provisioned $4.35bn for expanding wireless and broadband Internet coverage.

According to IBM, $2.5bn of this is being allocated for rural broadband Internet services and is being dumped into the US Department of Agriculture's rural grants and loans programs. IBM and its partner in broadband over power lines (BPL), International Broadband Electric Communications, waited until this week to make an announcement that they were delivering Internet services to 200,000 residents in rural areas in Alabama, Indiana, Michigan, and Virginia so they could ride the stimulus wave and perhaps capture a lot more business.

As previously reported, Palmisano and a Washington DC think tank with IBM's intellectual (and perhaps financial) backing called the Information Technology and Innovation Foundation have been arguing for the economic stimulus to include $10bn in investments for expanding Internet service to the estimated 40 per cent of households in the United States that are suffering with dialup Internet or who have no Internet service at all.

Not only will bringing high-speed Internet service to underserved communities help spur innovation and do what is right by American citizens, President Obama has also argued, but with the help of stats provided by IBM and the ITIF, it will create (or maintain) jobs. The number that was floated for a $10bn investment came to just under 500,000 jobs created or maintained within the first year of the investment, but only a little less than 64,000 of those jobs would be created or maintained at ISPs and equipment providers who are involved in the Internet buildout. Most of the jobs that came from the $10bn investment were indirect or induced jobs because of the employment of those workers, who spend their paychecks on all manner of things.

Clearly, IBM, the telecommunications companies, and cable operators in the States who were loving all of this talk did not get as much dough as was hoped. But billions are billions, and they will make a beeline to get some of that stimulus sugar.

The main issue with broadband service in rural and inner city areas is that it is expensive to run a fat wire into these areas relative to the size of the revenue stream that Internet providers can expect to get from subscribers in these areas. Power companies have the advantage of already having run wires into these areas to provide power to households.

These wires can be used to transmit radio signals that carry Internet and voice traffic and that can be captured by a modem like cable operators use. The benefit of the BPL approach is that there are almost 900 electric cooperatives in the US, which comprise 45 per cent of the electric grid and, more importantly, span 75 per cent of the acreage of the country.

Under the deal announced this week, which a report in the Albany Business Review pegs at $9.6m, IBM and IBEC will work with Cullman Electric Cooperative in Alabama; Utilities District of Western Indiana REMC, Parke Country REMC and South Central REMC in Indiana; Midwest Energy Cooperative in Michigan; and BARC Electric Cooperative and Central Virginia Electric Cooperative in Virginia to install BPL for 200,000 residents.

Seven down, 893 to go. ®

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