House panel backs $3 billion Internet stimulus

WASHINGTON Thu Jan 22, 2009 5:51pm EST

Smoke rises in the background as utility workers repair fire damaged fiber optic lines while firefighters continue to fight the Santiago fire in Orange County October 27, 2007. Wildfires continue to burn in California. REUTERS/Phil McCarten

Smoke rises in the background as utility workers repair fire damaged fiber optic lines while firefighters continue to fight the Santiago fire in Orange County October 27, 2007. Wildfires continue to burn in California.

Credit: Reuters/Phil McCarten

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WASHINGTON (Reuters) - The House Energy and Commerce Committee backed including about $3 billion in grants to expand Internet service as part of a larger economic stimulus bill, including a provision requiring "open access" in wireless service and on the Internet.

The Democratically-controlled committee on Thursday cleared the provisions aimed at expanding high-speed Internet and wireless service in rural and hard-to-serve areas over objections from several Republican members.

Another $3 billion sought for broadband expansion in rural areas will be considered by the House Agriculture Committee.

The Democrats' overall $825-billion stimulus plan is expected to go before the full House next week for a vote. The massive package includes tax cuts plus funding for roads, mass transit, healthcare and other projects.

Some Republicans on the commerce panel tried to block the $3 billion Internet provision, saying it would not stimulate the economy.

"This is not an economic stimulus, it's a massive spending bill," said Joseph Pitts, a Republican from Pennsylvania.

A provision opposed by mobile phone companies would require Internet service providers that receive grant money to abide by so-called "open access" principles, which bar providers from discriminating against applications and content requiring more bandwidth.

"These are public dollars and networks built with this funding should be open," said Rep. Anna Eshoo, a California Democrat with many technology companies in her district.

The public interest group Free Press defines openness as prohibiting "discrimination against any lawful content" and giving consumers freedom of choice among Internet providers.

Lawmakers who support the funding say it will create jobs to help jumpstart the ailing economy. A Brookings Institution study found that every one percentage point increase in broadband penetration per year could yield 300,000 jobs.

Potential recipients of the grant money include Internet service providers AT&T Inc, Verizon Communications and Comcast Corp.

Rural telephone companies could also apply, such as CenturyTel Inc, Windstream Corp and Frontier Communications Corp.

Despite start-up costs funded by the government, "you still have operational costs. It will be a tough decision (for the companies) given the economics of serving these areas," said Paul Glenchur, an analyst at Stanford Washington Group.

Democratic Rep. Henry Waxman of California, chairman of the House panel, said the $3 billion in grants was aimed at "service providers, infrastructure companies, or a state or unit of local government."

The House Energy and Commerce Committee, which has jurisdiction over most Internet and telecommunications issues, is also reviewing $20 billion in healthcare information technology for the stimulus bill.

(Editing by Tim Dobbyn)

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