UPDATE 2-U.S. gov't to release $4 bln soon for broadband

* US officials expect competition among applicants

* Applications accepted from July 14-Aug. 14

* Minimum speed 768 kbps downstream, 200 kbps upstream

* Public interest groups support guidelines
(Adds industry, public interest group comments, other
details)

WASHINGTON, July 1 (Reuters) - The U.S. government will
soon release $4 billion of loans and grants aimed at expanding
broadband access to underserved areas across the United States,
officials said on Wednesday.

The funds are part of a $7.2 billion program to build an
affordable high-speed Internet structure in rural areas. The
project is being pushed by President Barack Obama, in part, to
shore up the U.S. economy with job creation in the
telecommunications sector.

"This funding is a down payment on the president's
commitment to bring the educational and economic benefits of
the Internet to all communities," Vice President Joe Biden said
in a statement.

The broadband program was tucked into a $787 billion fiscal
stimulus package Obama signed into law in February.

Applications for loans and grants will be accepted starting
on July 14 and will continue through Aug. 14. Details of the
funding process can be found at www.broadbandusa.gov.

State and local governments as well as non- and for-profit
organizations are eligible to apply.

The Commerce and Agriculture departments and the Federal
Communications Commission are developing a national broadband
program to reach those American households and small businesses
lacking what many officials consider a necessary service.

Under the rules announced on Wednesday, the USDA and
Commerce will review applications, announce a group of
finalists on Sept. 15 and start naming winners on Nov. 7,
senior administration officials said.

Some industry and public interest groups applauded the
release of the guidelines. The National Cable &
Telecommunications Association, which represents Comcast Corp
(CMCSA.O), Time Warner Cable Inc (TWC.N) and Cox, said it is
reviewing the guidelines.

U.S. Telecom, a trade group that represents Verizon
Communications Inc (VZ.N) and AT&T Inc (T.N), did not comment
on the guidelines and said it was reviewing them.

NET NEUTRALITY

The Open Internet Coalition, which comprises public
interest groups that support so-called net neutrality, said it
strongly supports the guidelines. They favor preventing
Internet service providers like Verizon and AT&T from giving
preference to certain content.

The guidelines said: "This requirement ensures neutral
traffic routing."

"The first major decision regarding broadband policy by the
new administration sets a clear course in favor of the open
Internet," said Markham Erickson, OIC executive director.

Of the $4 billion to be released soon, $1.6 billion of
grants will be administered by Commerce's National
Telecommunications and Information Administration and $2.4
billion of grants and loans by the USDA's Rural Utilities
Service.

The grants and loans will be released in three tranches,
they said.

Under the rules the minimum Internet speed an applicant
can provide is 768 kilobits per second (kbps) downstream,
considered slow by some standards, and at least 200 kbps
upstream to end users.

However, due to likely competition, officials said they
expect applicants to offer higher speeds.
(Reporting by John Poirier; Editing by Derek Caney, Steve
Orlofsky and Matthew Lewis)