Broadband stimulus applicants abound; who needs big carriers?

Government Technology raises an interesting question about the broadband stimulus initiative: Should anyone care if big broadband providers don’t like the rules?

Early on, there was a lot of talk about major carriers taking a pass on broadband stimulus because of the strings attached (e.g., net neutrality, etc.). Last month, Calix CEO Carl Russo argued that a lot of likely candidates who passed on the first funding round will pounce on the second and third, lobbying for changes to the rules that kept them on the sidelines thus far.

“Everybody’s going to watch what happens in this round, and then you’re going to see a whole lot of gaming in the second round,” Russo said. “People are going to watch who won awards, why they won, why they didn’t, and you’re going to see reinterpretations of the rules. I don’t know that the rules will change, but you’ll see a lot of lobbying. There’s a lot of people that may not choose to be in round one and are public about, ‘Well, this is not for us;’ if you think for a moment that they’re not going to be back in right after round one, you’re dreaming. This is not going be three tranches of the same rule set done the same way.”

(Comments from Windstream’s CEO at an investor conference today bear that out, by the way. Windstream said it sat out the first round but is now trying to convince the feds to change the rules for the second wave.)

But the first round was packed. There were 2200 applicants asking for a total of $28 billion — about seven times the amount of money available. With that much participation, who cares if some carriers want to sit it out? How much negotiating power can the big service providers wield if their voices are drowned out by throngs of alternative broadband providers that are ready to play by the rules as they are today?

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