Mediacom Communications Corp. and the Iowa Cable & Telecommunications Association are challenging a federal program that they said is subsidizing cable competition rather than pursuing the statutory goal of driving broadband into unserved rural communities.
In a lawsuit filed Tuesday in U.S. District Court for the Southern District of Iowa, the association and the cable operator cited an audit done on the disputed program -- the broadband grant and loan program administered by the Rural Utilities Service -- by the office of the Inspector General of the U.S. Department of Agriculture.
That audit found that some grants have been given to build broadband and cable systems in some of the country's most affluent suburbs and to fund builds in some communities where there are already two or more technology providers.
The loan program was authorized by Congress in 2002, allowing the USDA to provide grants and below-market-rate loans for the construction and improvement of facilities in rural areas. Program rules specify that the money is to go where no other broadband providers exist.
"The program's implementation is seriously flawed, and while we work with policymakers to fix the flaws, RUS should temporarily stop processing loans until appropriate changes are made so that the program serves the purpose that Congress intended," said Ed Pardini, Mediacom vice president, north-central division, in a prepared statement.
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