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 2% of the stimulus, $100-150M, is enough to reach several hundred thousand "unserved" homes. The first $3B in spending that will start to go out in December probably won't connect that many. That's either a scandal or an opportunity. Charter passes 11,909,500 homes with video but only 11,292,800 of with cable modem service. Over 600,000 homes can't get cable modem, about 5%. That compares to less than 1% at both Comcast and Time Warner.
Some of these homes are served by wireless or DSL and others are prohibitively expensive to reach with backhaul. Probably 200-400K can be inexpensively covered. If 200,000 can be upgraded at $500/home (high estimate,) that’s $100M total. 300,000 would cost $150M. $500/home is 50-90% cheaper than most of the last mile stimulus proposals. The “middle mile” spending is even less sensible. Massachusetts is asking over $100M just for middle mile in an area with fewer than 3,000 "unserved" homes, an amazing $30,000/home for backhaul in an area that has already has fiber backhaul nearly throughout.
Charter is in bankruptcy and has faced financial problems for years, so it's no surprise they are far behind. Cable modems are an extremely profitable service - often 70-80% EBITDA margins - so most carriers have deployed to almost everyone. But Charter hasn't had ordinary access to capital. Most of the money can be offered as loans, not grants. The buildouts are profitable so the company can repay the loans. Paul Allen is continuing in effective control of the company, and news reports claim he is looking for a favorable tax outcome. Surely he can find a way to help the President bring broadband to all. (That's Paul, with Bill Gates and his other colleagues in the early days of Microsoft.)
4M homes with cable TV but not data are the key target for stimulus spending because most can be upgraded for between $100 & $500. In hindsight, requesting proposals from everywhere for the stimulus was a serious mistake that overwhelmed the system. Many of the 2200 applications are totally bogus, filed by people who hope to win a lottery. Instead, NTIA should have defined areas that need service and looked for the best way to provide it. I call that the engineer's approach: define the problem to be solved, and then find the best solution.
The Massachusetts proposal, at first glance, appears a typical example of how the system went wrong. In some cases, middle mile builds are crucial for broadband deployment because backhaul is unavailable or brutally expensive. Overbuilds rarely are the right choice where backhaul is in place, which applies to most of the Massachusetts proposal. They would have to offer a price so much lower than the existing service the numbers usually don't add up. There's a better way to help rural areas like this: narrowly-tailored "special access" rules that bring down monopoly-like prices. I need to look more closely at the Massachusetts application before I can say anything certain, however. It's likely to go through, because Sharon Gillett was in charge and she knew enough to write a proposal that fits the funding. Sharon is now the head of an FCC Bureau, so RUS/NTIA will want to approve the money.
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