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House Hearing: Political Divide Over Broadband Stimulus

The House Communications & Internet Subcommittee's oversight hearing on broadband stimulus money was primarily a platform for debating the digital divide between Republicans and Democrats over how that program had been run and ought to be run.

Republicans generally see it as government money that was handed out with insufficient oversight and with a shotgun approach that could wound the economy and discourage investment. Democrats view it as a necessary long-term stimulus to the broadband-centric economy by insuring affordable access to broadband to everyone.

One thing both sides agreed on Thursday at the Subcommittee's first hearing under Republican leadership was that the Department of Commerce and Ag Department's programs to fund billions of dollars in broadband infrastructure and education programs would need ongoing oversight to make sure the projects were giving the public bang for their increasingly precious buck.

But Republicans and Democrats remained divided over whether the government should be overbuilding existing service; how unserved vs. underserved should be defined; whether unspent money was turned over to the treasury or potentially recycled into other grants/loans, and how well, or poorly, the National Telecommunications & Information Administration and AG's Rural Utilities Service were overseeing their perspective broadband stimulus programs.

Republicans, starting with Subcommittee Chairman Greg Walden (R-Ore.) pointed out that they had wanted the broadband stimulus recovery program to be targeted only to unserved households and that the money should not have been handed out until a separate government-mandated national database had been released. NTIA will release that map by its Feb. 17, 2011 deadline, its administrator, Lawrence Strickling, told B&C this week, but all the money has already been allocated, though only a fraction has yet to make it into the hands of the grantees.

The Inspector Generals (IGs) of both Commerce and the Agriculture Department said they continued to have issues with how both programs were run and overseen.

Commerce IG Todd Zinser, for example, said that the NTIA program had been a high-risk operation from the large dollar amounts, the number of grants, the mix of grantees with different levels of experience with the process, the highly technical nature of the grants, and more.

AG Department IG Phyllis Fong expressed a number of concerns with the RUS program, including that it did not have final regulations in place to implement the program and had not given the staff enough guidance on decision making.

The bottom line from both IGs was that, while the agencies were doing their best with a herculean task, there were opportunities for waste, fraud and abuse that would need ongoing oversight and money from Congress to do it.

With Eagle Communications President and CEO Gary Shorman one of the witnesses, the issue of overbuilding
existing service was a major one.

Shorman says that the government gave $101 million to a grantee, who proceeded to use it to overbuild Eagle where it and AT&T were already providing service. Shorman said that was not what the program was supposed to be about; that the government should not be subsidizing a competitor, and that it could mean he would have to reduce his investment in his network or cut jobs.

Rep. John Shimkus (R-Ill.) said there were similar overbuilding stories "all over the country," and cited one in his district, where he said a company providing speeds of 10 megabits per second (mbps) downstream and 1 mbps up (in excess of the FCC standard for high-speed service) was surprised to find that a grant had gone to a wireless competitor committed to providing slower speeds.

As the stimulus program was drawn up, grantees can have some spill-over into served geographic areas, but Shorman and Republicans on the committee suggested that violated the spirit of the program if it meant that serving an area where 99% of the geography was unserved meant overbuilding a small area where most of the people were and were already getting service.

Rep. Phil Gingrey (R-Ga.) may have put it more bluntly than others, but seemed to sum it up for many Republicans when he said it was time for the government "to stop pouring federal dollars down a sinkhole."

One committee Democrat pointed out that to make an ongoing business of serving unserved populations--sustainability is one of the goals of the program--it was necessary to let them overbuild the area where they could make money as part of the effort to build out the areas where it was uneconomical.

There seemed to be no immediate answer to the question of whether unspent money from the program automatically reverted to the treasury. The Republicans have drafted a bill that would make it explicit, but Democrats on the committee, including full committee ranking member Henry Waxman (D-Calif.), suggested that was already the law.

Mark Goldstein, director of physical infrastructure for the government accountability office, said it was a complicated question that he said he would look into, but also said he thought there was a way for unspent money, at NTIA's discretion, to be transferred to another broadband program before it triggered the funding "de-obligation" that meant an automatic trip back to the government coffers.

"The Inspector General plays an essential role in ensuring that taxpayers' hard-earned dollars are well spent," said NTIA Chief of Staff Tom Power in a statement Thursday. "Since the inception of the program, NTIA has worked with the IG to design our program in a manner that minimizes the risk of waste, fraud and abuse. We appreciate the Inspector General's feedback and look forward to continuing working with his office - our combined oversight activities strengthen BTOP."

Gingrey, one of those who would have preferred the government map where broadband wasn't before granting money to fill in those gaps, asked how the NTIA's Feb. 17 release of the online map would help determine if there had been waste, fraud or abuse.

Zinser pointed out that NTIA had checked with state governors on whether the grants squared with where their were gaps in their states, but the map would now help determine "whether the government officers were on target."

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.