Companies want no set Internet speeds in stimulus

WASHINGTON (Reuters) - Telecom companies vying for $7.2 billion in broadband funds included in President Obama’s economic stimulus plan urged regulators not to mandate a super-fast Internet speed as a criterion for winning the money.

A woman browses web at an Internet cafe in Madrid May 23, 2008. REUTERS/Andrea Comas

Critics of this approach, though, say no government standards led to the United States lagging its industrialized peers in average broadband speed, viewed as a key driver of economic development.

Telecommunications, Internet firms and others are lobbying to shape the still unwritten rules that will govern how regulators dole out the billions.

“Speed is a movable target,” said Dave Malfara, speaking for Comptel, an industry group that represents smaller rivals to companies such as AT&T Inc.

“One of the fears that we have is that a definition would be too high” and the cost of providing such fast service would eat into profits, he said at a public meeting on the funding.

The Wireless Communications Association, which represents wireless broadband companies including AT&T and Clearwire Corp, agreed with that view.

Companies say Internet speeds should be set by the market, but public interest groups say that is one reason why the United States is behind Japan, France and Korea, among others, in broadband speeds, according to data from the Organization for Economic Cooperation and Development.

“The government’s role is to set some targets and some policy goals and to push the market,” said Mark Lloyd, vice president of strategy for the Leadership Conference on Civil Rights. “We’ve relied on market forces for the last 15 years. ... We have a market failure here.”

The U.S. Federal Communications Commission defines broadband speed at about 768 kilobits per second, slow by most standards, most experts agree.

Conventional dial-up is about 56 kilobits per second, but cable companies offer high-speed Internet at typically a minimum of 1 megabit per second, and in most cases, more than that.

The U.S. departments of commerce and agriculture will disperse broadband funding, intended to bring technology to unserved and underserved areas.

Small to midsize carriers with inroads in rural areas are the most likely to seek the funds, Wall Street analysts said. These carriers include CenturyTel Inc, Windstream Corp and Frontier Communications Corp.

But equipment makers including Cisco Systems Inc and other companies are expected also to benefit.