US lawmakers look for waste in broadband stimulus

Republicans complain about overbuilding and overspending in some broadband projects

Some Republican lawmakers on Wednesday accused two U.S. agencies of wasting hundreds of millions of dollars in broadband stimulus money on failed projects, but supporters of the broadband spending questioned the Republican numbers.

Some projects that were part of a US$7 billion broadband stimulus program passed by Congress in early 2009 have spent money on equipment they didn't need and other projects overbuilt existing broadband service, said critics of the broadband programs.

The U.S. National Telecommunications and Information Administration (NTIA) and the U.S. Rural Utilities Service (RUS) have suspended or revoked awards to 42 projects, which received $611 million in funding, said Representative Greg Walden, an Oregon Republican and chairman of the House Energy and Commerce Committee's communications subcommittee.

In some cases, the broadband stimulus projects are competing with privately built networks, Walden said during a subcommittee hearing. "Promoting broadband is a laudable goal, but there are many laudable goals in our government," he added. "When the government's borrowing 40 cents on every dollar to fund government services, we cannot afford them all, especially if the private sector is succeeding without government involvement."

In West Virginia, the state used federal funds to purchase "enterprise-grade" routers with support for 200 simultaneous users for small-town libraries, including one housed in a single-wide mobile home in a town of 1,500, Walden said. In Colorado, federal funds paid for a third fiber connection to a school with 11 students, he said.

But subcommittee Democrats and NTIA Administrator Larry Strickling disputed Republican allegations of large amounts of waste in the programs. The NTIA suspended nine projects out of about 220 funded, but four of those projects are back on track after working with the agency and the agency is still working with three others, Strickling said.

The NTIA terminated two projects, but awardees spent only $11 million before the agency shut them down, Strickling said.

That $11 million represented 0.3 percent of the NTIA broadband funding, said Representative Anna Eshoo, a California Democrat. "Let's keep things in context," she said.

Strickling and Walden tangled over West Virginia's spending on high-capacity, $20,000 Cisco Systems routers for small-town libraries. While Walden raised concerns that the state did not use proper procurement procedures, Strickling suggested that a state report on potential cost savings with smaller routers didn't take into account discounts the project received, including 100 free routers.

The actual cost savings would have been minimal and the larger routers give the libraries room for growth in broadband demand, Strickling said.

"So you're happy with the outcome in West Virginia?" Walden said. "You believe that what they did ... is a good use of taxpayer money? We're talking about millions and millions of dollars here that were wasted, and I expect you to go after."

Auditors have not found waste in West Virginia, Strickling said. "We're confusing the capabilities of what they're getting with the cost that they paid," he said.

Another Republican, Representative Joe Barton of Texas, suggested the NTIA spent $100,000 per house connected to broadband. Strickling questioned how Barton came up with those numbers, because the NTIA's broadband grants focused on middle-mile capacity to hospitals, schools and libraries and not on residential users.

When Barton demanded Strickling provide a count of how many end-user customers the NTIA projects have served, Strickling said he didn't know. In some cases, the NTIA-funded projects provide wholesale service to other Internet service providers.

The broadband program wasn't needed, even if it did provide some benefits, Barton said. "If you obligate and spend $7 billion, you darn well better help somebody," he said.

Several Republicans and two witnesses focused on alleged overbuilding in Colorado and other states. A $100.6 million project in Colorado, the EAGLE-Net Alliance, has laid fiber in populated areas already covered by other ISPs, said Pete Kirchhof, executive vice president of the Colorado Telecommunications Association.

EAGLE-Net should focus on its "original mission to provide service to unserved and underserved areas," Kirchhof said. "We respectfully ask committee members to strongly encourage EAGLE-Net to negotiate in good faith with local providers to use existing local facilities and to avoid duplication of existing infrastructure."

Strickling defended the EAGLE-Net project, saying its focus is on providing high-bandwidth connections to schools, some of which have dozens of users sharing a 4Mbps connection. Schools have "much higher needs" for broadband than individual customers, he said.

NTIA is trying to negotiate "peace" between EAGLE-Net and other ISPs, he added.

Some of the ISPs complaining about competition from broadband stimulus money also receive telecom subsidies from RUS and the U.S. Federal Communications Commission, added Peter Welch, a Vermont Democrat. Private companies have spent billions of dollars to roll out broadband, but "these investments have been enabled, to some extent, by public resources," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags telecommunicationPeter WelchColorado Telecommunications AssociationU.S. Rural Utilities ServiceLarry StricklingU.S. House of Representatives Energy and Commerce CommitteeAnna EshoolegislationGreg WaldenCisco SystemsU.S. National Telecommunications and Information AdministrationJoe BartonPete KirchhofEAGLE-Net Alliancegovernmentbroadband

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