US Lawmakers Question Use of Broadband Stimulus Funds

Several U.S. lawmakers questioned Thursday whether two agencies distributing US$7.2 billion for broadband deployment are making the best use of that money, when some of the funding is going for projects in places where broadband networks already exist.

The lawmakers, mostly Republicans, complained that the U.S. National Telecommunications and Information Administration (NTIA) and the U.S. Rural Utilities Service (RUS) are directing money to areas the agencies define as underserved by broadband instead of unserved. It appears that "quite a few" projects funded by the two agencies are going to areas that already have broadband providers, said Representative Joe Barton, a Texas Republican.

It's "troubling" for lawmakers to see stories about the broadband stimulus money duplicating existing service, added Representative Marsha Blackburn, a Tennessee Republican. "When these grants are subsidizing areas that already have broadband service, which in essence is government-subsidized competition, there is opportunity for lost jobs and overbuilding, which defeats the purpose of these funds," she said during a hearing of a subcommittee of the House Energy and Commerce Committee.

But NTIA administrator Larry Strickling told lawmakers that he has heard major complaints from just two incumbent broadband providers, Windstream Communications in Georgia and FairPoint Communications in Maine.

In both of those areas, the incumbent provider isn't serving a large portion of the population, said Strickling, an appointee of Democratic President Barack Obama.

The northern Georgia project "will lead to the growth of new jobs in an otherwise very depressed area," he said when questioned about reports of Windstream's objections. "The fact of the matter is every indication we have in the record on that project is that they are not doing their job."

In addition, the projects funded by the NTIA are required to share their networks with other broadband providers, including the incumbents, Strickling said. "This feature ... enables companies who are already present in the area to offer broadband to homes and businesses, to improve their service offerings and to reach neighbors that are not adequately served today," he said. "It is fundamentally not the case that we are subsidizing competitors here. These projects benefit the existing providers."

Windstream officials have said they serve a significantly larger portion of the population in north Georgia than NTIA says the company does.

The agencies do not accept the statistics given by the incumbent carrier or the broadband project applicant, but send employees to the areas to check broadband deployment and speeds, said Jonathan Adelstein, RUS administrator.

Some Republican lawmakers complained that the definition of "underserved" areas eligible for funding wasn't clear. "It becomes carte blanche just to put [a project] anywhere, and it's going to meet the definition," said Representative Lee Terry, a Nebraska Republican. "The retort was, 'this money needs to get out.' It isn't really about a comprehensive broadband policy, it was just about getting the money out as quickly as possible."

But NTIA has a definition of "underserved" in place, Strickling said. To qualify as underserved, one or more of three criteria must be met, according to NTIA rules published in July: no more than 50 percent of households have access to broadband service, no broadband provider provides service of at least 3M bps (bits per second), or less than 40 percent of households subscribe to broadband.

Terry questioned the Maine project, but "many, many communities" in the project's area qualify as underserved in the NTIA definition, Strickling said.

Terry also complained that the broadband money in the American Recovery and Reinvestment Act, approved by Congress early last year, will be largely allocated before the U.S. Federal Communications Commission was required to complete a national broadband plan. That decision was made by Congress, however, not NTIA or RUS.

The FCC broadband plan is due out March 17, and the NTIA and RUS had awarded about $1.7 billion in broadband grants and loans as of earlier this week.

"Would it have not made more sense to give the FCC the authority to create the national broadband plan, and then legislate policy that would stimulate our economy by creating the incentive needed to build more broadband?" he said. "Instead, Congress rushes to spend money, and we have the hope that they get it right."

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