House Holds Hearing on Stimulus Expansion of Broadband

WASHINGTON--(BUSINESS WIRE)--The House Energy and Commerce Subcommittee on Communications and Technology held a hearing today, “Is the Broadband Stimulus Working?” The American Recovery and Reinvestment Act of 2009 (stimulus) included unprecedented increases to the budgets of the U.S. Department of Agriculture’s Rural Utilities Service (RUS) for its Broadband Initiatives Program (BIP) and the Commerce Department’s National Telecommunications and Information Administration’s (NTIA) Broadband Technology Opportunities Program (BTOP), both of which purported to improve and increase distribution of broadband access to underserved and unserved communities across the nation.

“However, if federally-financed broadband expansion cannot even stick to its goal of providing access to unserved and underserved communities, it is engaging in the destruction of private-sector jobs as well as wasting taxpayer dollars. Both offenses are aggravating; combined, they are inexcusable.”

From fiscal year (FY) 2002 to FY 2009, BIP’s funding averaged $13 million annually; under the stimulus, the program received $2.5 billion. NTIA’s Public Safety Interoperable Communications Program, the predecessor to BTOP, received just $1 billion in its largest funding year, FY 2007; BTOP received $4.7 billion under the stimulus. At the time, Citizens Against Government Waste (CAGW) was wary of the implications of such large funding increases to what had been small (and not especially well-run) programs. An October 2009 Government Accountability Office report pointed out that RUS and NTIA would “face the challenge of monitoring these projects with far fewer staff per project than were available for their legacy grant and loan programs,” and that both programs “lack[ed] funding for oversight beyond fiscal year 2010.”

Subsequent developments have done little to abate CAGW’s fears. As of December, 2012, the Recovery.gov website showed that of the 844 grant awards and contracts totaling $4.5 billion issued by the NTIA, only 26 have been completed, 192 are less than 50 percent complete, 623 are more than 50 percent complete and three have not yet started. RUS has given out 227 loans, grants, and contracts totaling $1.2 billion. From these awards, 15 projects have been completed, 110 are less than 50 percent complete, 69 are more than 50 percent complete, and 33 have not yet started. All of the stimulus-funded broadband projects were given a deadline for completion of September 30, 2013.

Further, based on today’s hearing, it appears that much of the stimulus broadband funding has produced overbuild leading to direct competition with incumbent private sector providers of broadband services. Hearing witness and Vermont State President of FairPoint Communications Michael K. Smith described millions in federal dollars for overbuild throughout New England that serve to “create a publicly financed competitor aimed at putting FairPoint and other private providers at a competitive disadvantage.”

“When following the activities of the federal government, one becomes accustomed to inefficiency, missed deadlines, and shoddy work,” said CAGW President Tom Schatz. “However, if federally-financed broadband expansion cannot even stick to its goal of providing access to unserved and underserved communities, it is engaging in the destruction of private-sector jobs as well as wasting taxpayer dollars. Both offenses are aggravating; combined, they are inexcusable.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. To learn more, visit www.cagw.org.