Broadband Stimulus Attracting A Great Deal Of Attention As Echostar Sets Record

Last Updated Sep 28, 2009 5:58 AM EDT

As part of the "Stimulus" bill or the American Recovery and Reinvestment Act (ARRA) signed by President Obama in March was a provision to set aside about $4 billion to aid in expanding broadband coverage. Part of this is also to be used in especially low served rural areas. There has been a scramble of different companies applying for this money to the tune of over seven times the amount set aside.

Echostar the company that provides satellite television services through Dish Network and competes with Direct TV for that market has made some of the largest bids for the money. They have joined with other companies to try and get funding to help develop and launch satellites to aid in providing broadband services. They are planning to leverage investments of their own money to pay some of the cost and use the "Stimulus" funds for the majority of the bill.

Echostar and ViaSat have asked for a total of $1.1 billion to build and launch a satellite that would cover the Western United States. Ideally other companies would pay to use the satellite to provide service with Echostar selling wholesale band width.

Echostar is also trying to build another satellite in concert with WildBlue Communications. This would be to help rural areas get more service. Again the majority of the funding would come from stimulus funds as WildBlue has so far been unable to raise their own capital for this project.

Echostar has finally made a bid for money to just support their own current operations. This is in a way proper use as it extends broadband just by keeping the company and its satellites going.

This discussion hearkens back to the idea that companies and Governments are just using the "Stimulus" funds to keep projects going that might have to compete in the proper budget. Many states have used the money to keep teachers and police employed which they may have had to lay off due to declining tax revenues. Two of the biggest contracts are to carry out clean up operations at existing nuclear weapons site. That work would have to be done no matter what and paid for.

Now the broadband companies are trying to use it for things that might not be economically feasible or viable. That is not to say the project isn't worthy but if it does not make economic sense then either eventually it will have to fail or rely on government subsidies to make it work. Yes, some jobs will be created and kept but at what cost as well as there being other uses for the money.

The fact that so many applications have been made indicate that there are a lot of companies trying to leverage the money for their projects. Eventually these will have to stand on their own or be absorbed into the government. The bill may be passed off from the Federal level to the state or local one which would require re-working those budgets. All of this will be in the near future as the effect of the $787 billion falls out. The biggest question remains to see how many of the jobs created by the ARRA are permanent?

  • Matthew Potter

    Matthew Potter is a resident of Huntsville, Ala., where he works supporting U.S. Army aviation programs. After serving in the U.S. Navy, he began work as a defense contractor in Washington D.C. specializing in program management and budget development and execution. In the last 15 years Matthew has worked for several companies, large and small, involved in all aspects of government contracting and procurement. He holds two degrees in history as well as studying at the Defense Acquisition University. He has written for Seeking Alpha and at his own website,