The race is on for networking vendors to get their share of the $7 billion in broadband grants being offered through the Obama administration's massive economic stimulus bill.

At its core, the program will involve billions in new networking gear to help improve the state of broadband in the United States, and networking vendors like Alcatel-Lucent (NYSE: ALU) and Juniper Networks (NASDAQ: JNPR) are planning to cash in, helping their carrier customers across the United States figure out how to get a piece of the stimulus pie.

That, in turn, is likely to lead to greater sales of their own offerings, with the final outcome potentially becoming a bonanza for networking vendors. For one thing, the volume of stimulus grant applications could well exceed the dollars allocated by the government -- and that could lead to sales even beyond the $7 billion allocated in the stimulus package.

"Our customers are starting to wonder what does the broadband stimulus mean to them and whether they should take advantage of the dollars," Rich Wonders, an executive vice president at Alcatel-Lucent, told InternetNews.com. "The government has made it clear that although this is about delivering broadband to consumers in rural market, there is also a set of target institutions and audiences that they are very interested in being part of the program -- healthcare, schools and libraries are all on the targeted list."

Wonders added that Alcatel-Lucent realized that many of its smaller customers were not equipped to navigate their way through a federal program like the broadband stimulus and craft a federal grant proposal. To that end, Alcatel-Lucent is helping its customers to draft their funding applications.

It's also retained the services of Nancy Victory, the former head of the U.S. National Telecommunications and Information Administration (NTIA), to help with its stimulus-related efforts. The NTIA is tasked with figuring out the rules by which the broadband stimulus grants will be awarded. The agency has also launched its own informational Web site to help promote its efforts.

At Alcatel-Lucent, Wonders said the company is trying to engage its own employees as well.

"We employ over 20,000 people in the U.S.," Wonders said. "So our employees also live and work in cities -- some have broadband, some don't -- and as taxpayers and citizens, we want to make sure they have a voice."

Juniper Networks is also engaging with its customers on stimulus-related work.

"As you may be aware, the majority of broadband stimulus funding is targeted at smaller, rural providers -- since the portion that included funding for larger players was cut from the final version" of the stimulus bill, Don Root, public sector marketing manager at Juniper, told InternetNews.com. "With that said, many of Juniper's customers in this space already have local expertise in applying for grants and are already doing so. We work with them on an as-needed basis."

Networking tech for stimulus

There are broad range of broadband related items that the stimulus funding will end up supporting. From a networking vendor point of view, Wonders commented that transport and routing are key as are the community applications that ride on top of the network.

In his view, the stimulus effort is about more than just providing basic internet access such that those in rural America can connect to Facebook. Rather, he noted that the plan is about connecting Americans to education and health care resources where such access is not currently available.

Wonders expects that in order to expand broadband access, carriers will need to expand both their edge networks, which connect to users, as well as their core networks, which deliver the network traffic infrastructure. Wonders said he sees it as an opportunity for Alcatel-Lucent to grow its Metro Ethernet deployments to provide access.

Business and social motives

But it's also an opportunity to dramatically improve Internet access for many Americans, vendors said. One of the key goals of the broadband stimulus effort is to help underserved areas of the U.S. -- a fact that they say is also a key driver behind their efforts.

[cob:Special_Report]For Juniper's Root, the challenge of expanding broadband adoption in the U.S. for service providers is about addressing the "digital divide" of the haves and have-nots.

"This concept is where a lack of a U.S. national strategy that emphasizes universal access with affordable prices, creates a division between citizens that can or can't connect to the Internet," he said. "So it's not really a problem with adoption, but rather a problem with access, one that we hope the stimulus will help resolve."

That could lay the groundwork for a major reshaping of rural providers' capabilities, he added.

"There are many rural areas within the U.S. that do not have sufficient access to high-speed broadband infrastructure," Root said. "There are still a lot of areas that don't even have basic telephone infrastructure in place, thereby steering some of the smaller Tier 2 / Tier 3 service providers to look at options like broadband over power (BPL) technology. The key issue here is by not being linked up to the global economy, businesses in these rural and underserved areas are at a distinct disadvantage as the world of e-commerce continues to grow."

Win-win for networking vendors?

Alcatel-Lucent's Wonders said he doesn't expect that all those grant proposals that his company helps put together will result in government funding. Still, he said that having qualified leads and interested customers is never a bad thing.

"We clearly expect that there will be more opportunities than there is free money, but I don't think that means that every project that doesn't get funded from the government will die on the vine," Wonders said.