Hard Questions for the Broadband Stimulus Program

We learned yesterday of the first 18 projects that will be funded from the $7.2 billion allocated for broadband access under the stimulus program. For example, we learned that The Bretton Woods Telephone Co. in New Hampshire is getting almost $1 million for 20 Mbps service to residents and businesses, and that the North Georgia Network Cooperative got a $33.5 million grant for so-called middle-mile access. But there’s a lot that we — and the two programs doling out the dough — don’t know. And that knowledge gap is troubling.

Already in my original story on these grants I pointed out how there appears to be $2.1 billion missing from this first tranche of allocations. Back in July, the National Telecommunications and Information Administration and the USDA’s Rural Utilities Service set a plan to allocate $4.1 billion in the first tranche, but only $2 billion was talked about yesterday. When I asked the NTIA about the missing money, I was referred to the RUS, which sent me the following statement:

“We are making solid progress in evaluating proposals. Loan and grant announcements will be made on a rolling basis so not everything goes through the system at one time.”

But while I get that it’s difficult to allocate $7.2 billion worth of grants in less than two years, as the NTIA and RUS is charged with, I still want to know if the RUS only plans to make $400 million in grants available to this first class of applicants.

Under the terms of the stimulus bill the RUS is supposed to distribute $2.5 billion in total funds. In July they said all of that was supposed to be allocated in the first tranche. So if the RUS is only sending out $400 million as part of this first disbursement, then knowing when the rest will become available, and the rules that will govern who gets it, is important. Both agencies are seeking input as to how to adjust the rules for the second tranche, so what happens to those who applied under the older rules thinking the first tranche was the only chance they had at RUS funds?

Those are my questions related to the missing $2.1 billion, so let’s now talk about missing data. On a conference call held to discuss the disbursements, the heads of the NTIA and RUS admitted that they don’t have household-level data as to who has broadband. That’s because we’re spending this money without a nationwide broadband map, something I covered four months ago.

However, a key element of the overall legislation was getting broadband to places deemed unserved or underserved. So existing service providers were allowed to file reports with the NTIA and the RUS notifying the agencies that they already offered broadband in an area. Sources tell me some 50-85 percent of the original 2,200 applicants have such comments filed against them.

Mike Rodha, senior vice president at rural telecommunications provider Windstream (s decc), told me that his company filed “hundreds of them.” Other filers include Qwest (s q), TDS Telecom, Time Warner Cable (s twc), AT&T (s T) and Charter Communications. Rhoda says that the NTIA didn’t really discuss any of the comments with his firm, but that he’s not going to kick up a fuss about the process by trying to block awards to projects where Windstream already provides service.

“At this point we diplomatically get the facts out,” Rhoda said. “As we were afraid of, some of this money is ultimately going to areas that already have service. It’s like building a new interstate highway near where one that has adequate capacity already exists.”

TDS Telecom, another provider, said that rather than objecting to other projects, it was going to focus instead on the $8.6 million grant it won in Michigan. Still, I wonder to what degree those objections slowed down the overall application review process. Comcast (s cmcsa) spokesperson Sena Fitzmaurice told me that the agencies had followed up with the cable provider on some of its comments, and had sent agents to certain rural areas to see if consumers and businesses had service.  That’s a slow process without a national broadband map, so it takes a while to prove if carriers serve a project area or not.

So as the government keeps churning out grant announcements over the next two-and-a-half months, hopefully it will also spend time answering these questions, and maybe even tinkering  with the rules ahead of the second call for applications that’s due to occur “early next year.” Which leads to another question: When early next year, exactly?

Sign image courtesy of Flickr user Orin Zebest; question image courtesy of Flickr user  Marco Belluci