House Republicans Press NTIA, RUS on Overbuild Issue

Hearing on broadband loans and grants featured witnesses Strickling, Adelstein
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Government administrators came in for some tough questioning from House Republicans on the broadband loans and grants they administer through various programs, particularly the stimulus act BTOP and BIP grant and loan programs that funded $7 billion-plus in projects.

That came in a House Communications Subcommittee hearing on broadband loans and grants, part of the reauthorization of the Farm Bill, which also includes broadband funding. The hearing featured four witnesses: Larry Strickling, head of the National Telecommunications & Information Association, which has been dispensing billions in stimulus package broadband aid; Jonathan Adelstein, former FCC commissioner and head of RUS, which has been doing the same; Todd Zinser, inspector general of the Commerce Department (NTIA is under Commerce); and David Gray, deputy inspector general of the Department of Agriculture.

Republicans focused on money that had been rescinded, what they saw as the slow progress of build-outs and spending, and complaints of overbuilding existing service, an issue near and dear to the hearts of cable operators. Communications Subcommittee Chair Greg Walden (R-Ore.) called overbuilding "a perennial concern" and Rep. Lee Terry (R-Neb.), vice chair, said it had been a question "since day one."

Rep. Charles Bass (R-N.H.) said he wanted to make sure funds were being spent where they were supposed to be. He did not want to be holding "embarrassing" hearings at a later date about abuses in the program. He said the build-outs should be going where they are needed, not paralleling existing capacity.

Cable operators are all for building out broadband, to the tune of $185 billion investment to reach 93% of U.S. homes the National Cable & Telecommunications Association pointed out in a blog posting on the eve of the hearing.

NCTA also aired its concerns last month at a House Agriculture Rural Development Subcommittee hearing on the rural development programs.

The terms of the loans and grants allow for some overlap, since the theory is that in order to make a go of serving unserved areas for which there has been no business case, grantees will need to serve more profitable areas. Adelstein made that point at the hearing when pressed by Republicans, several of whom had stories from their home districts of companies who had been overbuilt.

They were also concerned that broadband stimulus monies were duplicating Universal Service Fund broadband subsidies -- Adelstein said he did not think they were duplicative.

Communications Subcommittee Chair Greg Walden (R-Ore.) said that RUS appeared to be funding the same kinds of programs as USF -- which is being migrated to broadband subsidies, and perhaps those efforts should be coordinated and consolidated.

He pointed out that broadband penetration was already at upwards of 98%, an increase from last year's 95% figure, but said that since most of the broadband stimulus money had yet to filter into that equation, he wondered whether the "cumbersome" subsidy program had been needed.

Rep. Anna Eshoo (D-Calif.), ranking member of the subcommittee, suggested it did, saying the funds had made "real progress" in creating jobs and economic opportunities. She suggested that some of the Republicans were simply trying to "relitigate" the stimulus package, which they had opposed.

And while various Republicans took the stimulus packages BTOP (NTIA) and BIP (RUS) broadband programs to task for projects that had failed to be built or canceled and money that had been rescinded because it turned out to have been aimed at anchor institutions that already had broadband access, Strickling pointed to the latter as a success, since it prevented overbuilds, and added that over 99% of the money for those projects had been recovered. Adelstein said the percentage was comparable for RUS-funded projects that had been canceled, and pointed out that some percentage of such grants historically doesn't pan out for a number of reasons.

Adelstein took some of the most pointed questioning from the panel, including from ranking Energy & Commerce Democrat Henry Waxman, who said it had been difficult getting some info from RUS on its loans/grants. Waxman praised Strickling for NTIA's transparency and accountability, and encouraged Adelstein to follow that lead, saying better tracking would increase confidence in the RUS program. Like Eshoo, he was upbeat about the subsidies themselves. He pointed out that NTIA's grantees were "meeting or exceeding" project benchmarks and would be completed by the September 2013 deadline. Strickling said he was not even entertaining requests for delays and was pushing those grantees to hit their marks. He also said there was no point in relitigating the Recovery Act stimulus package.

Rep. Cliff Stearns (R-Fla.) had even more pointed criticisms of Adelstein during an exchange over documents related to a failed program, documents Adelstein had said would be turned over to the committee by the end of January. But when Adelstein said the volume of documents was the hold-up, Stearns seemed satisfied with that answer.

But Walden and Strickling also had a lengthy and pointed exchange over reports that a West Virginia grantee had overpaid by millions of dollars for routers that could handle 500 computers going to anchor institutions -- libraries, schools -- with only a handful of workstations.

"Don't believe everything you read in the newspaper," responded Strickling. He said that the grantee had solicited competitive bids, that the routers cost $12,000 apiece, not $22,000 as had been reported, and that because it was a discounted group deal with Cisco, it was the cheapest price. Walden seemed skeptical.

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