Broadband Firm Level 3 Submits $15 Million Bid For Stimulus Funds

Level 3 Communications Inc. (LVLT) said Friday it had submitted a proposal to receive $15 million in federal stimulus funds that would be used to enhance high-speed Internet access throughout U.S. rural communities.

The Colorado-based wholesaler of broadband access applied for the stimulus grant via the Agriculture Department's Rural Utility Service, or RUS, and the Commerce Department's National Telecommunications and Information Administration, or NTIA.

President Barack Obama's stimulus packages made available $7.2 billion for broadband investments, but only $4 billion will be distributed in this first round. The two departmental units - RUS and NTIA - are tasked with overseeing and doling out the $4 billion in grants and loans.

Larger telecom firms like Qwest Communications International Inc. (Q), Verizon Communications Inc. (VZ) and AT&T Inc. (T) may steer clear of the grants because of the open-Internet strings that come with government funding.

In the meantime, Level 3 is planning to use its grant funds, if received, to expand Internet access throughout six states. The company has declined to release the names of those states as the application process is continuing.

Additionally, Level 3 plans to use $5 million of its own cash to help fund the expansion.

The broadband stimulus awards are expected to be announced around November, with actual funds hopefully being distributed by the end of the year, Level 3 officials said.

Other companies that could benefit from the stimulus money include wireless companies like Sprint Nextel Corp. (S) and Leap Wireless International Inc. (LEAP).

-By Darrell A. Hughes, Dow Jones Newswires; 202-862-6684; [e-mail]

(Fawn Johnson contributed to this report.)