 | 4 key points on broadband stimulus money
In her research note this week, Boston based Avian Securities Senior Telecom Research Analyst - Catharine Trebnick, gave an update on the broadband initiatives of the American Recovery and Reinvestment Act (ARRA). According to Trebnick, "Under the ARRA, the Rural Utilities Service (RUS) of USDA and the National Telecommunications and Information Administration (NTIA) of the Department of Commerce, will be dispersing $2.5 billion and $4.7 billion respectively for broadband initiatives. The Department of Energy has $11 billion for 'smart grid' projects, of which telecommunications is a key piece." Interestingly, Trebnick outlined 4 key points: 1. Near term we don't see ARRA driving incremental CapEx in FY09. The Office of Management and Budgets (OMB) released the new timeframes for distribution of the funds. Initial grants from NTIA are now expected December 31st, 2009. RUS awards are expected by the end of FY09 and/or distributed during 1Q10. 2. Who is expected to apply for grants? States, local counties, non-profit organizations, cable, fixed and mobile service providers are all likely to apply for grants. RFPs likely to succeed are those that have already secured funding, such as Vermont's Telecommunication Authority (VAT). 3. Rural Operators with a large rural customer base are likely to benefit. Fixed and Mobile operators such as DigitalBridge, Embarq (NYSE :EQ) Frontier (NYSE: FTR) and Qwest (NYSE: Q) all have rural customers and could benefit from NTIA and/or RUS grants. Verizon (NYSE: VZ) maybe able to apply depending upon markets designated for LTE and the final language adopted in the NoFAs (Notice of Funds Availability). 4. We estimate approximately 50-60% or approximately $3.9 billion of ARRA funding will go to pay equipment vendors. Suppliers most likely to directly benefit are those tied to FTTx and 3G/4G with a tangible benefit to VoIP. FTTH networks reach 13% of North American households, with end-to-end fiber connections used by 4% of the residential market. (Source: FTTH Council). Timeline for Awards, 2009 - 2010 Cisco CTO reasserts video's value for work, home
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