House Holds Hearing on Stimulus Expansion of Broadband

  House Holds Hearing on Stimulus Expansion of Broadband

Business Wire

WASHINGTON -- February 27, 2013

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.

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.

Contact:

Citizens Against Government Waste
Luke Gelber, 202-467-5318
Leslie K. Paige, 202-467-5334
 
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