RUS About to Waste Lots of Money on Broadband Stimulus?

The Department of Agriculture's Rural Utilities Service might not be able to properly dispense funds supporting rural broadband as part of the American Recovery and Reinvestment Act "broadband stimulus" program, an audit of RUS by the Department of Agriculture's Office of the Inspector General for the Southwest Region warns.

In fact, an audit of RUS funding has been underway for some time, since irregularities were alleged in 2005. The problem is that RUS funds are alleged to have been disbursed in areas where broadband service already is available, rather than to projects that bring broadband to areas where there is no service.

The inspector general's audit finds that RUS has not corrected problems identified in 2005, and warns that the new "broadband stimulus" funds likewise will fail to achieve that program's objectives.

To date, irregularities have lead to wasting hundreds of millions of dollars. The USDA Rural Utilities Service has spent $1.35 billion on projects for Internet service since 2001 and of course is preparing to spend $2.5 billion or so as part of ARRA. The inspector general's report of 2005 found that RUS funds went to communities including Las Vegas and Chicago.

In fact, 77 percent of the communities that benefited from the rural broadband loans already had access to the technology, and 27 percent already had three or more Internet providers, the inspector general says.

http://www.wallowacountychieftain.info/main.asp?SectionID=6&SubSectionID=6&ArticleID=19090&TM=54946.27

http://www.usda.gov/oig/webdocs/09601-8-TE.pdf

Wireless Carterfone on the Way?

Despite all the attention that will be paid to the $7.2 billion "broadband stimulus" provisions of the American Recovery and Reinvestment Act of 2009, it is a sideshow compared to the much more important activities now building at the Federal Communications Commission, which is conducting an inquiry into national broadband policy, and a new inquiry that could radically change the way consumers and businesses buy their handsets and mobile service.

Mandatory bans on bundling of handsets with wireless service—referred to by many as “wireless Carterfone”—could be the result of a new proceeding the Federal Communications Commission already has directed staffers to open.

Acting FCC Chairman Michael Copps, in fact, says he already has authorized FCC staffers to open an inquiry into the handset subsidy issue, and that the commission will "take action if required."

Many warn that the result will be higher upfront device costs for all consumers, as the trade off for service without contracts. But others say the rules will spur innovation and free consumers from contracts that tie them to their service providers.

And though some praise wireless Carterfone (unlocked devices) as a way to spur innovation, some think the opposite could happen, as higher phone costs lead to less-frequent handset replacements. And since higher-functionality handsets are a spur to innovation and new services, slower diffusion of new handsets actually will retard innovation.

The FCC national broadband policy also could radically change the way the communications business operates, instituting strong forms of "network neutrality" that some say would radically affect the profitability of the broadband business, minimize techniques for managing network congestion and drastically affect the equity values, borrowing capability and retail strategies service providers could contemplate.

In some cases, the ability to offer higher quality of service might be limited or impossible because no packets could be offered higher priority than any others.

Depending on one's point of view, will drag the entire industry backwards into old regulatory models that will stifle continued investment, or alleviate what Acting FCC Chairman Michael Copps is the problem of "all of America being an under-served area" in terms of broadband.

The coming debates over the shape of national broadband policy,  and possible wireless Carterfone rules, will dwarf the broadband stimulus in impact.

IBM to Invest $100 Million on Easy-to-Use Mobile Internet Apps

IBM is investing $100 million over the next five years on development of easy-to-use mobile Internet services. The number of mobile Internet users will grow by 191 percent from 2006 to 2011 to reach roughly one billion users, IBM says, and emerging markets like India and China will be a main area of focus for the company.

One initiative will be developing ways for users to speak into their phones to grab content, so Web-enabled smartphones are not even needed. Two other areas IBM will concentrate on include mobile enterprise enablement and enterprise end-user mobile experiences.

http://news.bbc.co.uk/2/hi/technology/8106293.stm

U.S. Broadband Usage Grows Despite Recession

Broadband adoption appears to have been largely immune to the effects of the current economic recession, say researchers at the Pew Internet & American Life Project.

In an April 2009 survey, more than twice as many respondents said they had cut back or cancelled a cell phone plan or cable TV service than said the same about their Internet service.

About nine percent of Internet users (seven percent of all adults) say that in the past 12 months they have cancelled or cut back online service.

Some 22 percent of adults say they have cancelled or cut back cable TV service in the past 12

months.

About 22 percent of cell phone users (19 percent of all adults) report that in the past 12 months they have cancelled or cut back cell phone service.

The latest survey also shows that U.S. home broadband adoption has reached 63 percent of adult Americans as of April 2009, up from 55 percent in May, 2008, say researchers at the Pew Internet & American Life Project.

Perhaps the better news is that the greatest growth in broadband adoption in the past year has taken place among population subgroups which have below average usage rates.

Among them, broadband usage among adults ages 65 or older grew from 19 percent in

May, 2008 to 30 percent in April, 2009.

Respondents living in households whose annual household income is $20,000 or

less, saw broadband adoption grow from 25 percent in 2008 to 35 percent in 2009.

Respondents living in households whose annual incomes are between $20,000

and $30,000 annually experienced a growth in broadband penetration from 42 percent

to 53 percent.

Overall, respondents reporting that they live in homes with annual household incomes

below $30,000 experienced a 34 percent growth in home broadband adoption from 2008 to

2009, Pew says.

Among adults whose highest level of educational attainment is a high school degree, broadband adoption grew from 40 percent in 2008 to 52 percent in 2009.

Among adults ages 50-64, broadband usage increased from 50 percent in 2008 to 61 percent in 2009.

Adults living in rural America had home high-speed usage grow from 38 percent in 2008 to 46 percent in 2009.

Big Brand Online Advertising Grows 27% in First Quarter: Momentum Shift?

Anamolies always are interesting, and sometimes they are important. No doubt advertising is down overall because of the recession. 

But ad spending for display ads placed by some of the biggest brands actually increased 27 percent in the first quarter this year, compared to the first quarter of 2008.

And note where that spending went: YouTube. In fact, display ad impression volume on the site jumped by nearly 580 percent year-over-year, says Nielsen. 

Large consumer packaged goods brands have generally been incrementally increasing their digital spending. The latest shift indicates some momentum for online video and online venues generally.

http://paidcontent.org/article/419-what-display-meltdown-big-brands-actually-upped-their-spending-in-q1

Online Video Viewing Up 49%, Nielsen Online Says

People who watch online video spent 49 percent more time doing so in May 2009, compared to May 2009, says Nielsen Online. The "average" viewer watched 189 minutes of video during the month.

Unique viewers grew 13 percent over the same period, while total streams viewed grew 35 percent and streams per viewer also grew 20 percent.

None of that would surprise anybody.

http://www.nielsen-online.com/pr/pr_090615.pdf

U.K. Officials Expect 10 to 100 Times Digital Content Growth in 3 to 5 Years

U.K. officials believe the volume of digital content used by consumers will increase 10 times to 100 times over the next three to five years.

So officials at the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport have proposed an interim goal of 2 Mbps connections to all U.K. residences by 2012, and also propose a new tax of 50 pence per month on all fixed copper lines to fund the next generation of access networks.

The "Digital Britain" report suggests the funds raised by the tax will be available to fund construction to the one third of U.K. homes that are unlikely to get next-generation access because costs are too high.

"We are at a tipping point in relation to the online world," the report says. "It is moving from conferring advantage on those who are in it to conferring active disadvantage on those who are without."

The report also notes that the broadband "problem" has a few sources, not just "access." Though availability is an issue, affordability, ability to use the Internet and PCs, as well as the perceived relevance of broadband all are issues.

Building facilities addresses one of the problems. The others are more difficult, ranging from disinterest to the price of service. Ofcom, the U.K. communications regulator, points out in a recent survey of its own that 42 percent of U.K. residents say they would not use broadband even if the service were provided free, and they also got a free PC to use.