Congress Grills RUS Head About Broadband Loan Program
Members of Congress criticized the Rural Utilities Service (RUS) Tues. for not targeting underserved areas for broadband loans, saying the govt. shouldn’t be subsidizing new providers in areas that have broadband services. RUS Administrator Jim Andrew said RUS can’t survey the country to determine which rural areas are underserved. RUS considered a “mapping” project, but “by the time it was done it would be obsolete,” Andrew said at a hearing by a subcommittee of the House Agriculture Committee.
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RUS is “not getting any applications from entities proposing to serve only underserved areas,” Andrew said in answer to a question from House Agriculture Chmn. Peterson (D-Minn.). Peterson said the loan program was “an area that needs some focus.” The program has been criticized for not meeting rural needs, for a “very cumbersome” application process and delays in loan approval, Peterson said. “Furthermore, the agency has been unable to effectively define rural and suburban areas,” Peterson said. “As a result, the outlying subdivisions of our largest cities, as well as affluent smaller communities, are receiving multiple RUS loans.” Peterson said if this criticism “is true and you don’t fix it, I'll guarantee we will.”
RUS’s broadband loan program may be encouraging “build- over rather than build out,” said Rep. Pomeroy (D-N.D.). Most policymakers want to expand areas capable of receiving broadband, not increase competition in already-served areas, he said. “I'm also concerned about damage to providers competing against someone with government subsidies,” Pomeroy said. An “overall needs assessment” should be conducted to determine where broadband is available and where it’s not,” said Rep. Smith (R-Neb.). Rep. Marshall (D-Ga.) asked Andrew whether RUS has the flexibility to attract new entrants to underserved areas that the private market has shunned, for example through no-interest loans. The broadband loan program doesn’t have that kind of flexibility, he said.
Midcontinent Communications is “very concerned about how this program has been implemented and managed,” said Senior Vp Tom Simmons. “The RUS loans are largely being used to subsidize broadband deployment in areas already served by companies that deployed broadband service without a government subsidy, using private risk capital,” he said. Plus, “RUS rules make it difficult for anyone… even RUS staff… to determine whether the grant of a loan will undermine private sector competition.”
Andrew said in introductory remarks that he’s getting satellite broadband in his home in Millen, Ga. Rep. Barrow (D-Ga.) asked whether RUS is reaching out to satellite providers for the loan program. Andrew said RUS is “not soliciting satellite business” but RUS “would like to work with them.” He told Barrow he got satellite service through an electric cooperative.
Andrew defended a long delay in issuing new rules for the broadband loan program, which RUS started writing in Dec. 2005. He said there have been snags, including difficulty coming up with definitions of terms such as “rural.” Barrow said he hoped RUS would “do better in defining unserved areas than it has done in defining rural areas” because “we need to make some progress.” He also defended delays in processing applications, saying staff needed to overcome a “learning curve.” Pomeroy said he liked Andrew’s “candor,” but Congress “didn’t anticipate a learning curve” when it funded the loan program.
The RUS broadband program “has achieved some successes… in its relatively brief history” but could achieve much more with just “modest changes,” said USTelecom Pres. Walter McCormick. The subcommittee could do a lot “to advance our collective goal of helping the nation achieve universal broadband penetration” by making 5 changes, McCormick said: (1) Better target unserved areas. (2) Improve incentives for investment in such areas. (3) Expand program eligibility. (4) Speed loan application processing. (5) Explore public-private partnerships. The subcommittee’s RUS review is part of the committee’s review of the Farm Bill every 5 years.