NTIA Makes Final BTOP Grants Ahead of Deadline

NTIA awarded a final $206.8 million in grants late Monday, with $154.6 million going to fund a 700 MHz public safety network in Los Angeles County (CD Sept 28 p4). The only other grant above $10 million made in the final round was $12.1 million for a first responder network serving Adams County, Colo., and Denver International Airport.

NTIA said BTOP funded installation or upgrade of about 120,000 miles of broadband networks, “including fiber-optics, wireless, microwave, and other technologies,” with 70,000 miles of that in the form of facilities. Other grants provide broadband access to 24,000 community anchor institutions, including schools, libraries, government offices and healthcare facilities or pay for more than 3,500 new or upgraded public computer centers, the agency said. BTOP also provides middle-mile infrastructure in areas with nearly 40 million households and 4 million businesses.

The NTIA and RUS programs both faced major problems early on, especially before the first application deadline when both agencies’ systems proved unable to handle the massive amounts of data filed by many applicants (CD Aug 14/09 p1). The agencies had fewer problems during a second round. But questions continue to trail both programs, for example over RUS’s award to fund broadband at a ski resort in Bretton Woods, N.H., while many other projects went unfunded (CD March 15 p1). In August, Congress cut $302 million from BTOP (CD Aug 13 p1).

With fewer dollars to award than applicants sought, both agencies had to pick winners and losers, choosing between similar projects. On public safety, for example, NTIA awarded grants to the San Francisco Bay area, Mississippi and Los Angeles to build 700 MHz networks, but turned down applications from New York City, Washington, D.C., and Boston.

RUS and NTIA faced a major challenge, said former RUS Administrator Hilda Legg, now a consultant at Wiley Rein. “Both agencies are to be commended for being able to function and get things out in a timely manner,” she said in an interview. “In reflection, I think it is an amazing that the agencies have been able to turn around the amount of work they have … in the timeframe” required, she said: “Now we'll see if the awardees are able to act equally successfully” to meet aggressive build-out deadlines. Legg conceded that the first round was difficult for the agencies and applicants. “The second round went so much smoother,” she said.

NTIA and RUS staff were handicapped by the tight timeframes for assessing applications and making awards laid out in the American Recovery and Reinvestment Act, which created both programs, said Craig Settles of Successful.com. “I think they did the best they could under the circumstances, but it was not an ideal work situation, it was not an ideal approach,” he said. “The concept was good. The programs were needed,” he said. “There are going to be communities that will get better broadband as a result of what has gone on."

In some cases, NTIA and RUS officials had to choose between very similar projects and make a call equivalent to a coin toss, Settles said. “You can’t escape that,” he said. “If you have several thousand entities applying for money you can’t fund them all,” he said. “Just by the law of averages there are going to be good projects pitted against other good projects and it’s not going to be clear who has the best.”

The “staying power” and “competence” of grant recipients is critical for how successful the programs prove to be long term, said Jeff Silva, analyst at Medley Global Advisors. “I believe the concept of marrying government economic stimulus dollars to broadband projects demonstrating clear need/qualification was largely a solid one at the time it was conceived,” he said. “It could be difficult to measure the effectiveness of the program in the near term … in part because the intrinsic value of broadband connectivity lies in its ability to leverage a host of societal mainstays such as education, public safety, healthcare, governance and business productivity. Quantifying such benefits is not always easy or clear at first.”

The agencies appeared to make good choices, but have yet to prove themselves, an industry observer said. The money seems to have been distributed across all the states for a wide variety of programs but they lack focus and may not provide the results that the government is hoping for, she said: “Only time will tell,” she said. “So far I'm not sure I see jobs or development from these grants.”

A lot of the money went to public entities, public-private partnerships and a modest amount went to existing carriers, said communications lawyer Andrew Lipman of Bingham McCutchen. Attached conditions made some carriers sit on the sideline, he said. But “there are some real opportunities for traditional carriers to come in and help build, operate and manage the network” for those that aren’t traditional operators, he said. There has also been some concern that stimulus money will be spent to overbuild existing infrastructure, he noted. The administration looks at broadband as a long-term driver of sustainable growth, Lipman said. In the short term, the program could enable some job creation and economic growth, he said. The stimulus money pays for infrastructure, not operational costs, so making sure the projects are sustainable is critical, he said.