Killing Government Broadband Loans
Believe it or not, the U.S. Department of Agriculture’s Rural Utilities Service (RUS) runs a program that provides low-interest, taxpayer-backed loans to companies to build-out broadband Internet. The program has a long record of waste, fraud, and abuse, beginning with a 2005 USDA Inspector General report that found over half of the money was spent on unrelated projects or was awarded to companies that did not even complete loan applications. Many of the loans also defaulted, costing taxpayers millions of dollars.
The program is also engaged in consistent overbuilding of current broadband infrastructure, despite being intended for rural, underserved areas. In 2009, three-quarters of loans were spent in communities that already had broadband access, and almost 60 percent of spending occurred in places with two or more providers.
Despite its failings, RUS was handed another $2.5 billion in the 2009 “stimulus” package to expand the program with little oversight. It continued to overbuild broadband infrastructure, and pick winners and losers in the market using taxpayer dollars to give some companies a competitive advantage over others utilizing only private capital.
Now, the U.S. House of Representatives is taking the program head on, proposing to scrap funding for it entirely in the 2012 Agriculture Appropriations bill. Yet, a last minute amendment from Rep. Chris Gibson (R-NY) would reinstate the costly, taxpayer-backed program with $6 million out of another administrative fund. Digital Liberty, along with Americans for Tax Reform and the Center for Fiscal Accountability, sent an alert to lawmakers today urging them to kill the amendment and scrap the USDA's broadband program entirely.