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US telcos reject broadband cash as connections drop

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US telcos are turning up their noses at broadband build-out stimulus funds just as US broadband growth hits a record low.

Despite the Obama administration's offer of $4.7bn in broadband grants, and its stated intent to make broadband available to all Americans, AT&T, Verizon and Comcast couldn't be bothered, and appear to be ready to let the August 20 deadline for applying for those funds pass.

The Washington Post has reported "sources close to the companies" say they're taking a pass because don't want the scrutiny that government support brings with it. For example, they don't want Washington interfering with their executive-compensation decisions.

The Post's sources also say privately that the telcos don't like the net-neutrality provisions attached to the grants.

Besides, the sources say, the telcos are flush with cash, and if money comes with strings, they'll just as well do without, thankyouverymuch.

So sinks Obama's plan to bring broadband to rural America. The sticks are not a profitable place for telcos to play - they prefer the higher ROI of urban and suburban environments.

Which is too bad for Mr. and Mrs. Hick.

And US broadband growth is slowing, according to a just-released report by the Leichtman Research Group (LRG). Researchers noted that: "Net broadband additions in the [second quarter of 2009] were the fewest of any quarter in the eight years LRG has been tracking the industry."

You might think that the slowing of broadband build-out is because the market is saturated - but if you did, you'd be wrong.

The US ranks 20th in the world in broadband reach, according to a June 2009 report by Strategy Analytics. South Korea leads the globe with a 95 per cent adoption rate, while the US, at 60 per cent, trails the UK's 67 per cent, lags even Estonia's 62 per cent, and barely edges out Slovenia's 58 per cent.

Forty per cent of the US is without broadband, its build-out is the slowest it's been in eight years, and the Post quotes Ben Scott of the advocacy group Free Press as saying about the telcos: "They weren't going to apply. They are using this as an opportunity to grandstand against net neutrality."

The Post also cites an anonymous corporate source as saying that: "Once taken, government funds incite a 'mob mentality' that could preclude sponsoring golf tournaments or giving executives bonuses, for fear of political backlash."

In the first half of the last century, rural America joined the rest of the country in having electricity in every home thanks to government projects such as the Tennessee Valley Authority. The east and west coasts were linked with the more-rural continental core in mid-century through the government-run Interstate Highway System.

The next national-unification project, rural broadband, was supposed to be a public-private partnership. Looks like it won't work, though. The public sector was ready, but the private sector has passed. ®

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