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4 key points on broadband stimulus money

By Brad Reese on Wed, 06/03/09 - 7:47am.

Catharine TrebnickIn her research note this week, Boston based Avian Securities Senior Telecom Research Analyst - Catharine Trebnick, gave an update on the broadband initiatives of the American Recovery and Reinvestment Act (ARRA).

According to Trebnick, "Under the ARRA, the Rural Utilities Service (RUS) of USDA and the National Telecommunications and Information Administration (NTIA) of the Department of Commerce, will be dispersing $2.5 billion and $4.7 billion respectively for broadband initiatives. The Department of Energy has $11 billion for ‘smart grid’ projects, of which telecommunications is a key piece."

Interestingly, Trebnick outlined 4 key points:

1. Near term we don’t see ARRA driving incremental CapEx in FY09.

The Office of Management and Budgets (OMB) released the new timeframes for distribution of the funds. Initial grants from NTIA are now expected December 31st, 2009. RUS awards are expected by the end of FY09 and/or distributed during 1Q10.

2. Who is expected to apply for grants?

States, local counties, non-profit organizations, cable, fixed and mobile service providers are all likely to apply for grants. RFPs likely to succeed are those that have already secured funding, such as Vermont’s Telecommunication Authority (VAT).

3. Rural Operators with a large rural customer base are likely to benefit.

Fixed and Mobile operators such as DigitalBridge, Embarq (NYSE :EQ) Frontier (NYSE: FTR) and Qwest (NYSE: Q) all have rural customers and could benefit from NTIA and/or RUS grants. Verizon (NYSE: VZ) maybe able to apply depending upon markets designated for LTE and the final language adopted in the NoFAs (Notice of Funds Availability).

4. We estimate approximately 50-60% or approximately $3.9 billion of ARRA funding will go to pay equipment vendors.

Suppliers most likely to directly benefit are those tied to FTTx and 3G/4G with a tangible benefit to VoIP. FTTH networks reach 13% of North American households, with end-to-end fiber connections used by 4% of the residential market. (Source: FTTH Council).

Timeline for Awards: 2009 - 2010

Timeline for Awards

Agency and Programs Overview - RUS

RUSSource: USDA, NTIA, Zhone Technologies and Avian Securities, LLC

Broadband Technology Opportunities Program (BTOP)

Broadband Technology Opportunities Program (BTOP)Source: USDA, NTIA, Zhone Technologies and Avian Securities, LLC

Smart Grids

Smart GridsSource: USDA, NTIA, Zhone Technologies and Avian Securities, LLC

Find up-to-date recovery information from state and territorial governments on how funds are being distributed and used to create jobs and stimulate economic growth:

State State Recovery Site
Alabama View Site
Alaska View Site
American Samoa View Site
Arizona View Site
Arkansas View Site
California View Site
Colorado View Site
Connecticut View Site
Delaware View Site
District of Columbia View Site
Florida View Site
Georgia View Site
Guam View Site
Hawaii View Site
Idaho View Site
Illinois View Site
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Puerto Rico View Site
Rhode Island View Site
South Carolina View Site
South Dakota View Site
Tennessee View Site
Texas View Site
Utah View Site
Vermont View Site
Virginia View Site
Washington View Site
West Virginia View Site
Wisconsin View Site
Wyoming View Site

What has been your experience so far seeking stimulus money?

Brad Reese
BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware
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