Millions Said to Be Wasted on U.S. Broadband Expansion

The U.S. wasted millions of dollars on a program to spread high-speed Internet service, a Republican lawmaker overseeing the spending said. A Democrat defended the initiative as helping localities.

“The government has spent millions on equipment it did not need and on stringing fiber to areas that already had fiber,” Representative Greg Walden of Oregon said in an e-mail yesterday.

Walden is chairman of the House Energy and Commerce panel’s communications subcommittee, which is to hold a hearing tomorrow on the $7 billion program that was part of the 2009 stimulus plan set up to spark a struggling U.S. economy. The hearing is scheduled as Republicans and Democrats argue over across-the- board spending cuts set to take effect March 1 unless there’s an agreement.

“At a time when government is considering cutting meat inspectors and FAA traffic controllers to address the federal spending problem, we need to be careful how we use taxpayer dollars,” Walden said.

“There are undoubtedly some success stories but, overall, was the program well-conceived and well-implemented?” Walden said. “I won’t tolerate any waste or abuse, and it appears we’ve uncovered millions that fit that category.”

‘Profound Impact’

Representative Anna Eshoo of California, the top Democrat on the subcommittee, in remarks prepared for the hearing said the stimulus spending is working and “having a profound impact in local communities around the country.”

“There is no doubt we have much more work ahead because approximately 19 million Americans remain unable to obtain a broadband connection,” Eshoo said in remarks her office distributed today by e-mail.

Many projects funded under the programs haven’t been completed and some have been criticized as overbuilding, or installing lines where private companies already offer broadband service, according to a memo prepared by the subcommittee’s Republican staff.

A Commerce Department program has deployed or improved 78,000 miles of lines carrying broadband, and connected more than 11,200 institutions such as schools and libraries, according to a fact sheet posted on its website. The Broadband Technology Opportunities Program, known as BTOP, is run by the department’s National Telecommunications & Information Administration.

Program Performance

A separate program is run by the Agriculture Department’s Rural Utilities Service.

“The vast majority of BTOP projects have performed well,” Lawrence Strickling, administrator of the telecommunications administration, said in a Feb. 22 blog posting. Officials identified problems with nine projects out of 233 awarded and have taken “enforcement actions to ensure that taxpayer dollars weren’t being wasted,” Strickling said.

“Many carriers” have complained the U.S. funds are subsidizing competitors, and the Energy & Commerce Committee’s investigations subcommittee is looking into whether the Agriculture Department program funded such overbuilding in areas of Minnesota served by closely held Mediacom Communications Corp., according to the memo.

Robust Broadband

The Agriculture Department “made the award to help meet our goal to fund affordable, robust broadband to help strengthen rural economies,” Justin DeJong, an agency spokesman, said in an e-mail.

The Commerce Department’s inspector general found overspending on computer gear of between $500,000 and $1.2 million in West Virginia by the Commerce Department program, according to the memo.

An aide to West Virginia’s governor disputed the finding, and in a letter to the inspector general said the spending allowed the state to buy more computer gear at a discount.

“West Virginia lags behind nationally in broadband capabilities,” Rob Alsop, chief of staff for West Virginia Governor Earl Ray Tomblin, a Democrat, said in the Jan. 25 letter. “This grant is drastically expanding broadband capabilities into our schools, libraries, public facilities, and public safety offices.”

Juliana Gruenwald, a spokeswoman for the telecommunications administration, declined to comment.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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