Telecommunications firms vying for $7.2 billion in funding for broadband expansion urged regulators to allow all companies that have current government licenses to be eligible to apply.

Telecommunications and Internet officials, state regulators and consumer groups are lobbying to shape the still unwritten rules that will govern how regulators dole out the money.

The U.S. Commerce Department will disperse most of the broadband funding included in the Obama administration's stimulus valued at nearly $800 billion. The broadband portion aims to bring technology to unserved and underserved areas.

If we are to reach the goal of ubiquitous broadband availability, we must use all tools available and the private sector should be a part of that, Curt Stamp, president of the Independent Telephone and Telecommunication Alliance, told a public meeting on the program.

Stamp was also speaking for the broader wireless, phone and cable industry, as part of a broader industry coalition.

But state and consumer groups said the bar should be set higher for private sector eligibility, including a track record in supporting local communities and in working with state governments.

States, local governments and nonprofits can apply for the funds, but private companies must prove their projects serve the public interest, which has yet to be defined by regulators.

If just having a license would accomplish the goals, we would have broadband available everywhere and it would be affordable, said Betty Anne Kane, chairwoman of the District of Columbia Public Services Commission.

Small to mid-sized carriers with inroads in rural areas are the most likely to seek the funds, Wall Street analysts said. These carriers include CenturyTel Inc, Windstream Corp and Frontier Communications Corp.

Stamp said that is because it's not economically viable to operate in hard-to-serve areas -- the exact point of the government funding.

Sascha Meinrath, a technology expert at the public interest group New America Foundation, said profits will be a byproduct of the program, not the end-goal of this stimulus funding.

We clearly don't want another subsidy for carriers that have failed to serve in unserved and underserved areas in the past, Meinrath said.

An official speaking for equipment vendors, Internet companies and consumer electronics makers said entrepreneurs who may not have prior government licenses should not be excluded.

I don't think Congress wanted to exclude anyone from applying, said Grant Seiffert, President of the Telecommunications Industry Association. The challenge is not setting the bar too low, but too high.

(Editing by Gerald E. McCormick)