House Lawmakers Rightly Question Value of Broadband “Stimulus”

The House Communications Subcommittee convened last week to question agency officials’ disbursement of taxpayer loans and grants that subsidize broadband networks. When the subsidy programs known as BTOP and BIP were introduced, grants and loans were supposed to be given to programs that were ready to begin work immediately and would be completed in two years; projects that were “shovel ready.” Despite this instruction, between the National Telecommunication and Information Administration (NTIA) and the USDA’s Rural Utility Service (RUS), 553 loans and grants were given out and, as of this week, less than 17 projects have been completed.

Of the $7 billion that was given to the NTIA and RUS, only about $2.5 billion has been spent so far and some grants and loans have been returned or rescinded due to companies being unable to meet the requirements. Additionally, there have been allegations that NTIA and RUS funds have been used to overbuild already serviced areas rather than extending broadband service to unserved areas.

Free-market advocates and many committee members expressed concerns at the hearing about the lack of transparency in the RUS, overlapping of funding between the broadband stimulus and the Universal Service Fund (USF), the overbuilding of existing broadband services, and waste and abuse in loan/grant spending.

The RUS took fire for their uncooperative attitude towards making loan/grant information readily available. Ranking Commerce and Energy Dem Henry Waxman said that increased transparency would in turn increase confidence in the program. But transparency should not be a strategy to improve public relations, it should be a necessity for any government agency that taxpayers financially support.

Communications Subcommittee chair Greg Walden (R-Ore.) expressed his concern that USF and RUS are funding many of the same programs and proposed that their efforts be more coordinated. Adelstein responded to this by claiming that he did not believe there was any overlap of funding. The debate stopped there, but it is imperative that elected officials hold agencies responsible for efficiently using the money that has been entrusted to them.

As a response to the overbuilding question, Adelstein pointed out that some overlap is allowed in the terms of the grants and loans since grantees need to work in some profitable areas in order to justify serving the rural areas. But these taxpayer dollars were not given to companies in order to increase their profits. The subsidies, which in many cases were even grants, were given to extend broadband availability. But many of the grantees have been allowed to use the subsidies to increase competition in already overly connected areas and to increase the money in their coffers rather than actually completing the job they have been contracted to do. Taxpayers are not interested in propping up broadband suppliers and legislators cannot turn a blind eye to this wasteful use of taxpayer dollars.