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Leap applies for stimulus funds as big carriers pass

Major ISPs, such as Verizon, AT&T, and Comcast, are sitting out the first round of stimulus funding, but smaller players like Leap Wireless are applying.

Big Internet service providers don't seem to be interested in applying for federal stimulus funds, but smaller players like Leap Wireless are looking at the grant program as an opportunity to provide wireless service to underserved populations.

Prepaid wireless carrier Cricket Communications, which is owned by Leap Wireless, on Monday filed an application with the nonprofit organization One Economy for $8.6 million to help it expand a program called Project Change Access. This project, which launched last fall in Portland, Ore., has helped low income residents get online to improve their access to education, job training programs, health care, and social assistance, according to Leap.

The federal funding is expected to pay for about 80 percent of the cost of expanding the program to five other cities. Specifically, the plan is to provide high-speed wireless Internet access to 23,000 low-income families in Baltimore, Houston, Memphis, San Diego, and Washington, D.C.

Leap said it submitted its proposal to the National Telecommunications and Information Administration, which is overseeing the allocation of $7.2 billion in broadband stimulus grants. These grants are part of the bigger $787 billion stimulus package that Congress passed earlier this year. The government recently extended the application deadline to August 20 for applications for the broadband stimulus grants.

Much of the money is intended to help bring broadband access to rural areas where it's traditionally been difficult to get broadband service, as well as help provide affordable access and education to people who can't afford broadband access.

What makes Cricket's application interesting is that many larger Internet service providers and wireless operators are not applying for funds.

According to a recent article in The Washington Post, AT&T, Comcast, and Verizon Communications aren't expected to apply for funds at least in the initial round of funding. The companies aren't talking publicly about their decision. But the Post reported that the companies are leery about possible strings attached to the federal money that would include Net neutrality conditions. The companies also supposedly don't want to deal with unwanted scrutiny from the government and the public on how it builds out its network.

"We are concerned that some new mandates seem to go well beyond current laws and FCC rules, and may lead to the kind of continuing uncertainty and delay that is antithetical to the president's primary goals of economic stimulus and job creation," Walter McCormick, president of USTelecom, told the Post. USTelecom is a trade group that represents AT&T and Verizon.

Meanwhile, some companies affiliated with these bigger service providers are expected to ask for grant money. Clearwire, a company that is backed by some big service providers like Comcast, Time Warner Cable, and Sprint Nextel, said it plans to apply for stimulus grant money. But an executive recently said that the money received for broadband stimulus would have to be used outside its current expansion plan.

Even though Verizon doesn't seem interested in taking any government money now to help build networks to reach underserved customers, the company says its new 4G wireless network will reach more rural customers than its existing wireless network. And due to conditions established by the Federal Communications Commission on spectrum Verizon will use build this network, Verizon will have to make the 4G network more open than its traditional wireless network.

Still, even as Verizon pledges to offer more wireless access to rural customers, it is actually selling off traditional phone lines in rural areas. And even though it is required to make its 4G wireless network more "open," the company still opposes new rules or legislation mandating Net neutrality.