Some $4.7 billion in federal broadband stimulus funds is attracting applications from companies all over the country–and even above it.
Aircell, an Itasca, Illinois-based company that provides fee-based wi-fi on commercial airlines, is seeking $65 million in federal funding, stating broadband on airplanes is as valuable as an underserved land community.
In a press release, the company calls it “the link we’ve all been waiting for.”
‘Classic Example of Rent-Seeking’
The $4.7 billion in broadband stimulus funding was set aside for encouraging broadband development in “underserved” and “unserved” areas. Its use in the sky was unforeseen, and it is unnecessary, says Ryan Young, Warren T. Brookes Journalism Fellow at the Competitive Enterprise Institute in Washington, DC.
“This is a classic example of rent-seeking. If Aircell thinks it can make money by providing in-air broadband, it should be happy to put its own money at risk,” Young said. “So why is it chasing after ours? This should send up red flags for investors.”
The U.S. Department of Commerce’s National Telecommunications and Information Administration (NTIA) will distribute the broadband funding. An Aircell spokesman said the company believed it would hear back from the NTIA by the end of the year.
“The stimulus grant, if made, would be anti-competitive,” Young said. “If a rival firm steps in and tries to compete with Aircell, it would be at an instant $65 million competitive disadvantage. Or would that company also go to Washington for a handout? Companies should compete in the marketplace, not Washington.
“Maybe in-air broadband has a bright future. Maybe it doesn’t. Nobody knows yet. But taxpayer dollars should not be used to find out. In short: I don’t think it’s a necessary grant,” said Young.
Krystle Russin ([email protected]) writes from Texas.