Stimulus 1st step in Obama's broadband goals: aide

WASHINGTON (Reuters) - The $7.2 billion in funding to promote high-speed Internet in the stimulus package is just the first step in the Obama administration's effort to fuel expansion of telecommunications services, an adviser to the president said on Monday.

"Despite new federal money, the amount is but a fraction of what is needed" to establish the United States in terms of broadband versus other developed countries, said Blair Levin, an adviser to U.S. President Barack Obama on telecom matters during the transition and now an informal adviser.

"You've got to take a long view," he said.

Blair, who recently returned to his position as an investment adviser at investment banking firm Stifel Nicolaus, spoke at a conference of state utility regulators in Washington.

Obama's campaign promise to vault the U.S. out of its slump in terms of connectivity, speeds and access to broadband among its industrial peers has raised the hopes of the technology community.

The hopes were somewhat dashed by the size of the stimulus package devoted to broadband. One public interest group had called for $44 billion to build networks to connect rural and other unserved parts of the U.S. to the Internet to help bridge the digital divide.

Obama is expected to sign the nearly $800 billion economic measure, which passed largely down partisan lines, later this week.

Eyes are now on the U.S. Federal Communications Commission as it has a year under the bill to develop a national strategy for broadband.

No new FCC chairman has been named, but Julius Genachowski, a technology executive and former FCC staffer, is widely expected to be nominated.

Gerald Granovsky, a senior analyst at Moody's, said a key area to watch is reform of the universal service fund, which provides nationwide telephone service.

There is an effort to use some of the money collected from that fund for broadband, which is currently not technically allowed in the law.

(Editing by Jeffrey Benkoe)