Sen. Ernest "Fritz” Hollings, D-S.C., Thursday introduced a bill in the Senate that would quicken the pace of broadband deployment and adoption, particularly in rural and underserved areas, by tapping monies from the existing telephone excise tax to fund low-interest loans and grants that could be used by carriers to build out their networks.

The legislation would also provide grants to universities and a variety of research and development laboratories with the goal of developing technology that would achieve transport speeds of 50 Mb/s to 100 Mb/s. In addition, the bill would establish pilot projects for wireless and other non-wireline broadband technologies for deployment in rural and underserved areas.

John Windhausen, president of the Association for Local Telecommunications Services, said the bill effectively addresses the key hurdle to rural broadband deployment—the cost of putting remote terminals in under-populated areas where it is significantly more difficult for service providers to recover their investment costs, much less make a profit, on those deployments.

He added that federal funding of remote terminals would ensure that rural Americans would receive high-speed services and have a choice of competitive carriers.

"Whether or not CLECs receive any funding under this bill, it is the right kind of approach to broadband deployment," Windhausen said.

United States Telecom Association President Walter McCormick praised Hollings for recognizing the need to stimulate broadband deployment, but said the bill "leaves unchanged the fundamental disincentive to investment" that is getting in the way of rural growth.

"Of the four competing providers of high-speed internet access -- telephone companies, cable companies, fixed wireless and satellite -- only telephone companies are subject to extensive federal and state regulation, and are required to allow non-facilities-based competitors to ride their infrastructure at rates that are below costs," McCormick said in a statement.

Hollings introduced his bill one day after submitting a letter to Senate colleagues criticizing the broadband parity bill introduced on Monday by Sens. John Breaux, D-La., and Don Nickles, R-Okla. Hollings called the Breaux-Nickles nothing more than a "Trojan horse" that would extend Bell company monopolies.

"The Bells and their CEOs are out and about arguing they need to be deregulated so they can fuel the broadband explosion and finally deliver on the promise of the Information Age," Hollings said in the letter. "We've heard their promises before, and we know the truth. There is not now, and there has never been, any prohibition on the Bells offering their customers broadband."

Hollings further said that passage of Breaux-Nickles would create a duopoly between cable providers and the Bell companies in the residential market, and an uncontrolled monopoly in the “money rich” business market. The result would be higher prices, shoddy service and less innovation, "the exact opposite of what the Bells claimed and what Congress should be promoting," he said.

--Glenn Bischoff, Senior Writer