High-speed Internet can exert a profound impact on how local businesses and consumers improve their own personal productivity and expand their entertainment venues. Our thinking here is very much along the lines of our “Cell Phone Indicator” that we use in emerging markets – improved communications boost the local economy.

The House Energy and Commerce Committee approved $6 billion in rules for billions in government funds to spur high-speed Internet networks in unserved and underserved areas.

The Internet funding portion of the stimulus bill — a potential huge boon to phone, cable, and wireless companies – helps fulfill President Obama’s campaign promise to make high-speed communications ubiquitous in America. The $6 billion is widely considered a first step in a program that could last several years.

The grants will be issued by the Commerce Department and the U.S. Department of Agriculture. Lawmakers and trade groups are arguing over some language ambiguity regarding spending, but that is not expected to become a major impediment to the roll out of these new services.

Once the new high-speed infrastructure is in place, customers can expect to have access to services that many Americans currently enjoy such as streaming video, teleconferencing, mobile Internet and effective e-commerce.

Even more important, a reliable and fast Internet infrastructure is perhaps the number-one motivator for larger corporations to relocate into these regions that can provider low-cost, high-quality labor forces. Coupled with tax incentives, rural Internet can substantially boost local economies – and the fortunes of independent telephone companies that can deliver bundled communications services.

How big is this rural Internet market? A 2007 survey by the Pew Internet and American Life Project concluded that only 38% of rural residents have a broadband Internet connection. In the cities and suburbs, the penetration rate is 55%.

The new bill also allocates $1 billion solely for wireless carriers to bolster their infrastructure for mobile cell phone and laptop connections.

While major players such as Verizon, AT&T, Comcast and others will profit from this new cash infusion, we believe local services stand to gain as well. One in particular that we identified is CenturyTel, Inc. (NYSE: CTL), in Monroe, Louisiana.

Currently trading at slightly over $27.00, CTL is in the low end of its 52-week range of 20.45 – 40.35.

In the third quarter ending September 30, 2008, CTL reported revenues of $650,000, down 8.2% from the same period the year before. Its net income plunged 23.5% to $82,760.

So why do you we believe CTL merits your attention? Because CTL added 20,600 high-speed Internet customers during Q3 – representing a 2.5% revenue contribution from Q3 in 2007 for similar services.

One troubling piece of data about CTL is its recent acquisition of local telco, Embarq Corp. in Overland Park, Kansas. As part of the deal, CenturyTel will assume $5.8 billion in debt as part of the all-stock merger.

Still, what remains to be seen is how much Embarq’s territory could benefit from the $6-billion dole out.

We suggest you keep an eye on CTL as the money pours forth from Washington. Local economies, and their telephone companies, could stand to benefit mightily from an upgraded digital network.

Verizon Wireless is 55% owned by Verizon Communications Inc. (VZ) and 45% owned by Britian’s Vodaphone Group PLC (ADR:VOD).

The deal values Alltel – the fifth-largest wireless carrier in the United States – at more than eight times its earnings before interest, tax, depreciation and amortization (EBITDA). Or about $22 billion, which includes Alltel’s debts.

In November, Alltel’s $27.5 billion sale to private equity firms TPG Capital and GS Capital Partners LP, an arm of Goldman Sachs Group, Inc. (GS) was nine times EBITDA.

Alltel has 13 million customers and spans rural markets and smaller cities in 34 states, comprising a 5% share of the market. It also handles calls for Verizon and AT&T in areas where they don’t have coverage.

The purchase will allow Verizon to offer service in 57 rural markets. Synergies are expected to generate incremental savings of $1 billion in the second year after the deal closes, Verizon Wireless said a statement.

“This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services,” Lowell McAdam, Verizon Wireless president and chief executive officer, said in the statement.

An Alltel acquisition would not only shoot Verizon Wireless past AT&T as the top U.S. wireless service provider, but it will also put additional downward pressure on the T-Mobile USA Inc. and troubled Sprint Nextel Corp. (S).

Telecom Titans Getting Bigger Around the World

The high profile merger of telecom titans has quickly developed into a strong global trend.

In Europe, France Telecom SA’s (FTE) $41.9 billion offer for Finnish fixed-line provider TeliaSonera AB (PINK:TLSNF) was rejected Thursday. But that doesn’t mean the deal is over.

“The question is how much can they raise the offer,” Thomas Romig, a fund manager at Cominvest Asset Management in Frankfurt, told Bloomberg Television.

Earlier this week, Telkom South Africa Ltd. (ADR:TKG) said it received a takeover offer from Mvelaphanda Resources Ltd. and Vodaphone.

And in China, the telecom market is undergoing a massive government-ordered restructuring – with the top six companies being melded into three – as the country ramps up efforts to adopt third-generation wireless technology.

Domestically, the industry trends only makes expansion more difficult for large – but not large enough – wireless providers such United States Cellular Corp. (USM), Rural Cellular Corp. (RCCC) and Shenandoah Telecommunications Co. (SHEN) to compete.

Unfortunately, that’s their problem to deal with because the mobile industry is expanding by leaps and bounds as customers increasingly ditch fixed-line service to wireless.

And the leaders of wireless service and technology are the ones that will thrive.

Source: Verizon to Buy Alltel for $28 Billion, Vaults Past AT&T as No. 1 U.S. Mobile Provider

• Chinese Internet media company Sohu.com Inc. (SOHU) announced its first quarter revenue soared 156% year-over-year to $84.8 million, exceeding the high end of company guidance by $16.3 million. Shares climbed 14.51% on the news, closing at $70.81 a share.

• Crude oil rose to a record $119.93 a barrel in New York on the shutdown of a North Sea pipeline and as a strike and militant attacks reduced output from Nigeria. Oil has shot up 80% in the past year as supply failed to keep up with surging demand in China, India and the Middle East.

• Investor Kirk Kerkorian said he bought 100 million Ford Motor Co. (F) shares – a 4.7% stake in the company. He intends to buy more in a vote of support for Chief Executive Officer Alan R. Mulally, according to Bloomberg News.  Ford rose 9.5% to close at $8.21 a share.

• Verizon Communications Inc.’s (VZ) profit climbed 9.8% boosted largely by the telecommunications carrier’s wireless growth. Verizon reported net income of $1.64 billion, or 57 cents a share, for the first quarter, compared with $1.5 billion, or 51 cents a share, a year earlier. Revenue rose 5.5% to $23.83 billion.

• Visa Inc. (V) said profit jumped 28% in the company’s first earnings report since its record $19 billion initial public offering last month. Net income climbed to $314 million, or 39 cents a share, in the quarter ended March 31, from $246 million a year earlier, the company said today in a statement distributed by PR Newswire.

• Bank of America Corp. (BAC) will expand efforts to help Countrywide Financial Corp. (CFC) borrowers avoid foreclosure on troubled mortgages, the Associated Press reported. Liam McGee, president of Bank of America’s global consumer and small business banking operation, said the bank would modify at least $40 billion in loans from at least 265,000 borrowers over the next two years. “Bank of America will continue to offer home loan products to those who can afford them,” McGee said. “We also recognize that some consumers who are experiencing financial challenges but who ultimately have the ability to pay their loans need our help to pay their loans, and we are ready to help them.”

• Corn prices jumped yesterday (Monday) as investors bet that more rain in Midwestern states would force farmers to plant less of the staple crop. Corn for May delivery jumped 22.75 cents to settle at $6 a bushel on the Chicago Board of Trade. Corn prices have shot up 26% this year.

• Natural-gas producer Questar Corp. (STR) announced first-quarter profit rose 23% on higher output and soaring fuel prices yesterday (Monday). Net income for the three months ended March 31 rose to $185.8 million ($1.05 per share) compared with $151.1 million (86 cents per share) a year ago.