Strickling Defends Broadband Grants to Allegedly Served Areas

Republicans want to see broadband programs fund unserved areas first, but “there appears to be quite a bit of evidence” that money is going to areas that have broadband already, said Commerce Committee Ranking Member Joe Barton, R-Texas. Rep. Lee Terry, R-Neb., questioned a $17 million grant for an area in Maine served by incumbent FairPoint. And Subcommittee Ranking Member Cliff Stearns, R-Fla., questioned a $33.5 million grant to an area in north Georgia served by incumbent Windstream. “All Americans should have access to robust broadband, but if the goal of the stimulus was to bring broadband to areas without any access, then this $33.5 million could have been better spent,” Stearns said. “If the NTIA and RUS broadband programs are subsidizing areas where existing providers are already offering service, the programs will harm deployment and cost jobs rather than promote broadband and stimulate the economy.”

FairPoint and Windstream’s complaints about grants in Maine and Georgia are “very misguided and self-serving,” said Strickling. He said both areas are underserved and therefore deserving of grant money. In north Georgia, Windstream is “not doing their job,” because fewer than 40 percent of people there have subscribed to broadband, he said. RUS Administrator Jonathan Adelstein said the agencies don’t take the word of either applicants or incumbents that an area is served or not: “We have to do our own analysis and we do.”

Democrats and Republicans criticized the agencies for shortening the window for incumbents to protest applications to 15 days from 30. Many thought 30 days wasn’t enough time, said Stearns. “I cannot conceive of how a 15-day window will ensure that NTIA is not subsidizing broadband competition rather than extending service to rural areas.” Rep. Bart Stupak, D-Mich., said the change increases the risk of fraud and abuse.

Chairman Rick Boucher, D-Va., said rule changes in the second round “largely” addressed his concerns. He praised changes related to the definition of a remote area, application process and satellite broadband. But Boucher said there’s still room for improvement. The agencies should give “ample guidance” to applicants denied in round one, including how many points they received, so they can improve their application for the second round and know how close they were to winning money, he said.

NTIA didn’t use a point system to decide who to fund, said Strickling. “Once projects went into due diligence, we worked with the applicant to see if the project met our goals.” About 400 went into due diligence and fewer than 100 will be funded, he said. “That would be the group you would call having been near the goal line, and through their discussions with us … they have learned a tremendous amount about their applications,” he said. “They will be well prepared to come back in round two.” RUS has sent more than 1,000 rejection letters with explanations, and the agency’s help desk is answering questions on them, said Adelstein. “We'll continue to be as responsive as we can.”

But Rep. Peter Welch, D-Vt., said applicants in his state haven’t been happy with the quality of feedback. “They just don’t get that sense that there’s somebody on the other end of the line” to answer their questions, he said. Officials are responding, but applicants aren’t getting helpful answers, he said.

Boucher asked about an RUS rule in round two requiring the price of a project not to exceed $10,000 per home passed. That should be waived when the situation merits, he said. RUS plans to give waivers of the $10,000 cost requirement in certain cases, said Adelstein. “Our waivers do allow for well above that amount if there is persistent poverty or chronically underserved areas,” among other factors, he said.

There’s “little evidence” that nondiscrimination and interconnection requirements discouraged groups from applying for funds in the first round, said Strickling. The agencies received a combined 2,200 applications, he said. The rules may have been one factor in large carriers’ decisions not to apply, he said: “But I think the overall complexity of the program, the fact that this was open to such scrutiny may have discouraged them in round one. … I don’t remember hearing any carrier telling me it was solely because of the interconnection obligations.” Some are reconsidering in round two, he added.

Strickling expects the NTIA will have awarded 111 broadband grants totaling $1.1 billion by this weekend, he said. The agency is “on track” to award all $4.7 billion by Sept. 30, he said. NTIA has funded projects in all 50 states and “several territories,” including 52 mapping grants worth $100 million and 59 BTOP grants worth more than $960 million. Applicants have pledged an extra $270 million in matching contributions, he said. NTIA has funded 34 infrastructure projects, 18 public computer center projects and seven broadband adoption projects, he said.

RUS has announced more than $895 million in funding for 55 projects in 28 states and one territory, and plans to reveal more awards soon, said Adelstein. RUS has given grants to “a diversity of providers” using “a variety of Internet technologies,” he said. The agency Thursday announced 22 more grants for broadband infrastructure projects in 18 states or territories, totaling $254.6 million. Applicants contributed an extra $13.1 million in matching funds.