Colorado wants stimulus money for broadband.

DENVER (AP) -- Before Glenwood Springs installed its own fiber network for high-speed Internet access, some businesses got by with connections barely above dial-up speeds.

"You used to have to set things up to send in the middle of the night and hopefully they'd be gone by morning," said Bruce Christensen, mayor of this Colorado River resort city of about 8,500 people.

Christensen says the city's $3 million investment lured and retained businesses and nudged commercial providers into expanding high-speed access. Colorado officials want to do the same statewide, an effort that could be pushed along if the state is awarded a share of $7.2 billion in federal stimulus money meant to extend broadband access in underserved and unserved areas.

Washington's push for cheaper, widely available broadband service has its challenges, from creating demand to making it financially worthwhile for providers. Some of the federal funds will boost computing capacity at community colleges and libraries. Details on how grants, loans and loan guarantees will be awarded are being decided, but the state plans to apply.

The state Office of Information Technology will coordinate funding requests from broadband providers, nonprofits, Native American tribes, municipalities and others.

One of the first steps is figuring out who isn't getting affordable and reliable high-speed service, which the state currently defines as at least 768 kilobits per second. Colorado set aside $350,000 to map those areas, and that job should be done by August, said John Conley, Colorado's deputy chief information officer.

The state has suggested it might score requests for stimulus money by the number of jobs created and people served, high speeds and low cost.

Conley also wants to ensure services are sustainable and that competing providers don't run each other out of business in rural areas, where there are fewer customers to share infrastructure costs.

In Glenwood Springs, officials are exploring whether to invest $10 million to $12 million to extend the city network, which serves businesses and resellers, to homes despite concerns it will waste taxpayer money. Its existing network loses about $200,000 a year, and about one-third of households would need to subscribe for it to make a profit within two or three years, Christensen estimated.

"We're sort of at a cross roads," he said.

The city isn't certain it would qualify as an underserved area eligible for stimulus money. Qwest Communications International Inc. and Comcast Corp. have their own high-speed offerings, and wireless and satellite providers also offer Internet service.

An April study by the Convergence Law Institute questioned Glenwood Springs' plans at a time when companies offer competing service. The institute is affiliated with a Denver law firm whose clients include communications and Internet companies.

The Colorado Telecommunications Association, which represents 26 rural independent phone companies, is familiar with the challenges of serving sparsely populated rural areas. Some of the group's members are reviewing whether they can afford to launch bids for stimulus money.

Pete Kirchhof, the group's executive vice president, said about 95 percent of its members' customers already have broadband access. That doesn't mean they subscribe to it.

"You can provide the facilities, but you can't make the customers take the service," Kirchhof said.

"There are people who don't think it's necessary or don't have the means to pay for monthly service, or there are people who don't have computers out there," he said. "If we make it available, how do we make people use it and want to subscribe?"

Several companies, including Denver-based Qwest, say they can benefit from stimulus money to expand high-speed access in thinly populated areas.

ViaSat Inc. senior vice president Tom Moore, a member of the Colorado Governor's Innovation Council, said solutions should be judged by the same criteria, regardless of the technology.

"To the extent that people are applying, they really should say exactly how they'll deliver this grade service, how much it will cost, how many people they will serve," Moore said, arguing that recipients of stimulus funding should pay it back if they miss goals.

ViaSat, based in Carlsbad, Calif., contends that a next-generation satellite like one it hopes to launch in 2011 could economically serve the most people in spots hard to reach.

By CATHERINE TSAI, AP BUSINESS WRITER