Telecom Companies Scramble for Funding

(page 3 of 3)

Mostly, RUS has granted loans for service delivered via fiber-optic cables, followed by broadband wireless services and so-called digital subscriber line (DSL) connections.

IBEC's Lee says he'll be able to use stimulus funds efficiently. His confidence stems in part from the company's backing by IBM (IBM). In November, about a week after President Obama was elected, IBEC and IBM announced a $9.6 million agreement for IBM to install broadband over power lines at electric cooperatives throughout the U.S. IBM has lobbied for stimulus funds, and the company's CEO, Samuel Palmisano, was one of 13 executives who met with President Obama in January in an appearance aimed at pressuring the House of Representatives to pass the economic stimulus bill.

Before the stimulus was announced, IBEC had already won $62 million in RUS funding. If IBEC gets more, IBM stands to gain as well. The company will do consulting and installation of BPL technology—everything from training people to walking the entire network to ensure proper placement of devices—says Ray Blair, director of advanced networks at IBM. Blair and IBEC's Lee say BPL technology has gotten a bad rap and that it's now ready for prime time.

"There hasn't been a tremendous amount of success with broadband over power line, and this is the first foray into it [for RUS]," says Villano, referring to the loan RUS gave IBEC. "It was a unique technology that we felt had strong merit and particularly with the partnership with IBM…so far the loan we've made to [IBEC] is working out there." Whether that goodwill will translate into stimulus funds remains to be seen, but one thing's certain: Both IBEC and IBM are working hard to persuade the government to include BPL among the technologies they deem fit for wiring rural America with high-speed Internet access.

With Arik Hesseldahl in New York. King is a writer for BusinessWeek.com in San Francisco.

Business Exchange

Track and share business topics across the Web.