State Legislatures’ Action Sought as Companies Protest Stimulus Projects

The Wisconsin State Telecom Association is opposing the University of Wisconsin’s plan to use the two stimulus grants it received, totaling $32.3 million, to expand broadband in the state. Four members of the Joint Committee on Finance of the state House and Senate recently sent a letter to the co-chairs of the committee asking for a review of the project, saying the school’s proposed Community Area Networks appears to “duplicate and needlessly compete” with BadgerNet. That’s a statewide broadband service provided under a state contract. AT&T is the prime contractor, in a partnership with the Wisconsin BadgerNet Access Alliance, made up of more than 70 independent telecom companies. The four lawmakers questioned the propriety and legality of UW’s involvement in offering telecom services: “State law allows UW to purchase telecom services, but also states UW shall not offer, resell, or provide telecommunications services. … Clearly, the legislature has already weighed in against UW becoming a service provider."

A spokesman for Wisconsin state Sen. Mark Miller, D-Monona, co-chair of the Joint Committee on Finance, told us that the co-chairs have received the letter and haven’t decided whether they will do a review. But the joint committee normally doesn’t hold public hearings on matters other than budget, he said, so a review is not likely. AT&T isn’t a member of the Wisconsin State Telecom Association and hasn’t been for several years, said Bill Esbeck, executive director of the group. The UW intends to duplicate the statewide, publicly-funded fiber network that already exists, he said. Building a duplicative statewide network is a waste of public money, he said.

"NTIA strongly supports this project and we expect it to bring many educational, healthcare, and job-creation benefits to the people of Wisconsin,” said Angela Simpson, advisor to the assistant secretary. “All our awards went through a rigorous due diligence process and have been thoroughly vetted by NTIA and the Department of Commerce. NTIA will take into consideration any legitimate inquiries it may receive as it’s fully committed to the strong oversight of the program and ensuring projects are implemented in a way consistent with the goals of the Recovery Act, Simpson said.

It’s a false assumption that the school wants to become a service provider or will, said David Giroux, executive director of communications of UW System. What’s at stake is building the capacity and connecting local institutions, he said.

NTIA has given the incumbents a full and fair opportunity to challenge claims that proposed service areas were unserved or underserved, said attorney Jim Baller, who has represented municipalities. Incumbents that didn’t file such challenges or couldn’t meet NTIA’s standards have no legitimate basis for complaining now, he said. He noted legislation in Maine this year that would have blocked the University of Maine from taking advantage of its $25 million BTOP grant. The bill died. That measure’s purpose was to have a public discussion not preventing the university from expanding broadband, state Rep. Kenneth Fletcher, R-Winslow, co-sponsor of the bill, told us. There haven’t been other efforts challenging stimulus projects, he noted. Going forward, it’s a question of publicly funded and private bodies working together and finding the right balance in rural states like Maine, he said. Public subsidies for UMaine put companies like FairPoint at a competitive disadvantage, a company spokesman said. It’s a matter of fair competition, he said. It also would harm FairPoint’s ability to meet its regulatory obligation to deploy broadband in the state, he said.

Regardless of how projects are funded, there will be similar attacks, said consultant Craig Settles. Some attackers seek lawsuits against community broadband projects but, given that the stimulus is a federally mandated program, the assumption is that lawsuits are unlikely, he said. NTIA considers the comments of existing broadband service providers in its evaluation of an applicant’s last mile or middle mile service areas, the agency said. The providers are asked to offer information about service to households and businesses in the provider’s service territory by census block group and tract, the type or service offered, the number of subscribers and cost. The agency has also hired ASR Analytics to examine the impact of BTOP grants. (See separate story in this issue.)