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Community courts high-tech venture

If a Denver-based Internet provider, Southwest Colorado Broadband (SWCBB), receives a $27 million grant in stimulus package money allocated from the American Recovery and Reinvestment Act (ARRA) of 2009, Pagosa Springs and Archuleta county could benefit big if that company elects to locate its regional data center in the area.

In 2009, the Obama administration set aside $7.2 billion in the stimulus package to develop broadband Internet infrastructure in unserved and underserved rural communities. That package goes away in November of this year.

“For this community, this means 42 high-paying jobs and the construction of a 10,000 square-foot facility,” said Pagosa Springs Town Manager David Mitchem.

SWCBB won’t know if it has been awarded the grant until the end of September. It is unknown when SWCBB will announce its preferred location for the proposed data center.

The proposed grant and infrastructure upgrade has not been without controversy, however. Earlier this summer, SWCBB approached the Southwest Council of Governments (COG) requesting a letter of support for the company’s stimulus fund application.

The COG was formed in early 2009 and includes Archuleta County, Pagosa Springs, Bayfield, Ignacio, Durango, La Plata County, Mancos, Dolores, Cortez, Silverton, San Juan County, Dolores County, Rico and Dove Creek (the Ute Mountain and Southern Ute Tribes participate in COG meetings but are not members of the council). Bayfield, Durango and La Plata County opposed the SWCBB request.

Conversely, letters of support were submitted by the director of the Rural Utilities Service, Colorado Governor Bill Ritter, the town managers from Ignacio, Dolores and Pagosa Springs, the mayors of Cortez and Pagosa Springs, a council member from Mancos, a representative from Dove Creek, a county commissioner from Montezuma along with the Tech Director of that county’s school district, the President of Pueblo Community College, executive directors from the Dolores County Health Association, the Pagosa Springs Community Development Corporation and the Archuleta County Education Center, CEOs from Pagosa Mountain Hospital and H2X, and the Archuleta County Administrator.

The COG was formed to cooperatively pursue state and federal funds for larger infrastructure projects that would not normally be awarded to individual municipalities or counties. In fact, the COG was awarded $3 million earlier this year from the same ARRA pot dedicated to rural broadband connectivity.

With $216,268 in local matching funds (necessary for securing the town and county’s participation in the grant), $865,073 has been set aside for a project that has become known as “Beanpole II” and will expand broadband and wireless Internet services in the area by spring of 2011.

The proposed SWCBB project, if successful in landing the requested ARRA funds, would further expand broadband services in Archuleta county — Beanpole II is mostly limited to Pagosa Springs with just a few areas in the county connected — as well as providing redundancy for broadband services. Whereas Beanpole II will route fiber optic connectivity to Durango, the proposed SWCBB network would route through New Mexico. With that redundancy in place, failure by one network would most likely not interrupt broadband service locally.

Durango and La Plata County opposed the SWCBB proposal on the grounds that the project was not needed and would provide unfair competition for existing broadband providers (federal funding providing the bulk of investment for the project versus private money). However, other members of the COG supported the proposal, acknowledging the need for expanded broadband availability outside of La Plata County.

Mitchem dismissed the project’s impact on existing broadband providers saying, “Other vendors will have access to the infrastructure,” and stressed the importance of moving high-speed Internet beyond the confines of La Plata County.

“This will level the playing field for broadband connectivity,” he said. “We will be able to compete for high-tech companies in the same way a city like Denver can.”

Indeed, the issue of broadband accessibility is one of national economic importance. A report released earlier this month by the Brookings Institute indicated that the U.S. lagged far behind other industrialized nations in broadband infrastructure, ranking 28th in Internet speeds and 15th in high-speed Internet adoption.

The economic impact of broadband development is substantial; the same report cited a study conducted between 1980-2006 which estimated that 1.3 percent is added to a high-income country’s gross domestic product for every 10 percentage point increase in broadband penetration, with a 1.21 percent boost to the GDP for low-to-middle-income countries.

Currently, the average Internet speed in the U.S. is 5.1 Mbps (Megabits per second). In Pagosa Springs, residential customers can get a 15 Mbps with cable, 10 Mbps with wireless access and 1.5 Mbps with a DSL connection.

In comparison, according to the Brookings Institute report, South Korea leads with a nationwide average Internet connection of 20.4 Mbps and is aiming to achieve average speeds of up to a Gigabit. Likewise, Australia and Finland have announced their intentions of achieving average speeds of 100 Mbps within the next several years, while Germany, currently ranked 13th in average Internet speeds, has stated a goal of achieving 50 Mbps by 2014.

While other countries seek to boost Internet speeds to compete in an increasingly global — and interconnected — economy, the U.S. continues to slip in achieving broadband parity. Unfortunately, the Brookings report cites Federal Communications Commission estimates that suggest universal broadband coverage in the United States at 100 Mbps would cost $350 billion — far less than the $7.2 billion allocated by the ARRA broadband stimulus package.

While the much-maligned stimulus package has drawn heavy criticism in recent months, a report released Tuesday by the non-partisan Congressional Budget Office suggests that ARRA funding added as many as 3.3 million jobs to the economy during the second quarter of this year and may have prevented the U.S. from lapsing back into further recession.

What impact ARRA funding for broadband expansion will have on the national economy remains to be seen. Nonetheless, should SWCBB secure the ARRA funds it has requested and elect to build its data center in Pagosa Springs, the impact of those stimulus funds on the local economy will be clear: 42 more jobs (paying above median wages), a potential for more high-tech companies relocating to the area or more local businesses sprouting from increased broadband capabilities — and all of those potential incomes spending money in local brick-and-mortar businesses.

jim@pagosasun.com