    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

      OVERSIGHT OF THE AMERICAN RECOVERY AND REINVESTMENT ACT: BROADBAND,
                                     PART 3

    =======================================================================

                                    HEARING

                                   BEFORE THE

          SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 4, 2010

                                   __________

                               Serial No. 111-101

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                          HENRY A. WAXMAN, California
                                     Chairman
    JOHN D. DINGELL, Michigan            JOE BARTON, Texas
      Chairman Emeritus                    Ranking Member
    EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
    RICK BOUCHER, Virginia               FRED UPTON, Michigan
    FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
    BART GORDON, Tennessee               NATHAN DEAL, Georgia
    BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
    ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
    BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
    ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
    GENE GREEN, Texas                    STEVE BUYER, Indiana
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
      Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
    LOIS CAPPS, California               MARY BONO MACK, California
    MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
    JANE HARMAN, California              LEE TERRY, Nebraska
    TOM ALLEN, Maine                     MIKE ROGERS, Michigan
    JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
    HILDA L. SOLIS, California           JOHN SULLIVAN, Oklahoma
    CHARLES A. GONZALEZ, Texas           TIM MURPHY, Pennsylvania
    JAY INSLEE, Washington               MICHAEL C. BURGESS, Texas
    TAMMY BALDWIN, Wisconsin             MARSHA BLACKBURN, Tennessee
    MIKE ROSS, Arkansas                  PHIL GINGREY, Georgia
    ANTHONY D. WEINER, New York          STEVE SCALISE, Louisiana
    JIM MATHESON, Utah
    G.K. BUTTERFIELD, North Carolina
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana
    DORIS O. MATSUI, California
    DONNA M. CHRISTENSEN, Virgin
        Islands
    KATHY CASTOR, Florida
    JOHN P. SARBANES, Maryland
    CHRISTOPHER S. MURPHY, Connecticut
    ZACHARY T. SPACE, Ohio
    JERRY McNERNEY, California
    BETTY SUTTON, Ohio
    BRUCE L. BRALEY, Iowa
    PETER WELCH, Vermont
          Subcommittee on Communications, Technology, and the Internet

                             RICK BOUCHER, Virginia
                                     Chairman
    EDWARD J. MARKEY, Massachusetts      FRED UPTON, Michigan
    BART GORDON, Tennessee                 Ranking Member
    BOBBY L. RUSH, Illinois              CLIFF STEARNS, Florida
    ANNA G. ESHOO, California            NATHAN DEAL, Georgia
    BART STUPAK, Michigan                JOHN SHIMKUS, Illinois
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
    MICHAEL F. DOYLE, Pennsylvania       MARY BONO MACK, California
    JAY INSLEE, Washington               GREG WALDEN, Oregon
    ANTHONY D. WEINER, New York          LEE TERRY, Nebraska
    G.K. BUTTERFIELD, North Carolina     MIKE FERGUSON, New Jersey
    CHARLIE MELANCON, Louisiana
    BARON P. HILL, Indiana
    DORIS O. MATSUI, California
    DONNA M. CHRISTENSEN, Virgin
        Islands
    KATHY CASTOR, Florida
    CHRISTOPHER S. MURPHY, Connecticut
    ZACHARY T. SPACE, Ohio
    JERRY McNERNEY, California
    PETER WELCH, Vermont
    JOHN D. DINGELL, Michigan (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Rick Boucher, a Representative in Congress from the
      Commonwealth of Virginia, opening statement....................     1
    Hon. Cliff Stearns, a Representative in Congress from the State
      of Florida, opening statement..................................     3
    Hon. Edward J. Markey, a Representative in Congress from the
      Commonwealth of Massachusetts, opening statement...............     5
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, prepared statement......................................     7
    Hon. Bart Stupak, a Representative in Congress from the State of
      Michigan, opening statement....................................    13
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................    13
        Prepared statement...........................................    15
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................    16
    Hon. Lee Terry, a Representative in Congress from the State of
      Nebraska, opening statement....................................    17
    Hon. Michael F. Doyle, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................    17
    Hon. John Shimkus, a Representative in Congress from the State of
      Illinois, opening statement....................................    19
    Hon. Steve Buyer, a Representative in Congress from the State of
      Indiana, opening statement.....................................    20
    Hon. Zachary T. Space, a Representative in Congress from the
      State of Ohio, opening statement...............................    21
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, prepared statement..............................    62
    Hon. Kathy Castor, a Representative in Congress from the State of
      Florida, prepared statement....................................    65

                                   Witnesses

    Lawrence E. Strickling, Assistant Secretary for Communications
      and Information, National Telecommunications and Information
      Administration.................................................    22
        Prepared statement...........................................    25
        Answers to submitted questions...............................    82
    Jonathan S. Adelstein, Administrator, Rural Utilities Service,
      USDA...........................................................    38
        Prepared statement...........................................    40
        Answers to submitted questions...............................   100

                       Submitted Materials for the Record

    Letter of January 22, 2010, from United States Department of
      Commerce to Senate Committee on Appropriations, submitted by
      Mr. Stearns....................................................    67
    Letter of March 3, 2010, from USTelecom to the NTIA, submitted by
      Mr. Stearns....................................................    70
    Letter of March 3, 2010, from the National Cable &
      Telecommunications Association to United States Department of
      Agriculture, submitted by Mr. Stearns..........................    77

      OVERSIGHT OF THE AMERICAN RECOVERY AND REINVESTMENT ACT: BROADBAND,
                                     PART 3

                                  ----------

                            THURSDAY, MARCH 4, 2010

                  House of Representatives,
                Subcommittee on Communications,
                          Technology, and the Internet,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The Subcommittee met, pursuant to call, at 10:01 a.m., in
    Room 2123 of the Rayburn House Office Building, Hon. Rick
    Boucher [Chairman of the Subcommittee] presiding.
        Members present: Representatives Boucher, Markey, Stupak,
    Doyle, Matsui, Christensen, Space, McNerney, Welch, Dingell,
    Waxman (ex officio), Stearns, Shimkus, Buyer, Terry, Blackburn,
    Barton (ex officio) and Griffith.
        Staff present: Roger Sherman, Chief Counsel; Bruce Wolpe,
    Advisor; Amy Levine, Counsel; Tim Powderly, Counsel; Shawn
    Chang, Counsel; Greg Guice, Counsel; Sarah Fisher, Special
    Assistant; Michael Perry, Intern; Elizabeth Letter, Special
    Assistant; Neil Fried, Minority Counsel; Will Carty, Minority
    Professional Staff; and Garrett Golding, Minority Legislative
    Analyst.

      OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

        Mr. Boucher. The subcommittee will come to order.
        Good morning to everyone, and welcome to our hearing today,
    our third oversight hearing regarding the $7.2 billion provided
    by the Economic Recovery Act for broadband programs. The
    programs are administered by the U.S. Department of Commerce
    through the NTIA and the Department of Agriculture through its
    Rural Utilities Service. It is our pleasure this morning to
    welcome the NTIA director, Assistant Secretary for
    Communications and Information, Larry Strickling, and Rural
    Utilities Service Administrator Jonathan Adelstein, who will
    discuss the process that they have undertaken for awarding
    grants for the first round of funding and the standards their
    agencies have developed that will govern the funding awards
    during the second round.
        The Recovery Act's broadband program presents an historic
    opportunity for increasing the availability of broadband and
    elevating the standing of the United States among developed
    nations and the percentage of our population that uses it. How
    effectively these goals are met will be determined in large
    part by the standards that govern the deployment of the
    program's funds.
        During our last oversight hearing, I expressed a range of
    concerns about the standards that had governed the first round
    of funding and encouraged the agencies to consider modifying
    those standards prior to publication of the notice of funds
    available for the second round. I am pleased to note this
    morning that the rules for round 2 largely address those
    concerns. For example, in the RUS program, grants of more than
    50 percent of project cost are no longer only available to
    communities that are deemed remote, meaning that those
    communities are more than 50 miles from a city of at least
    20,000 people. That round 1 restriction had disqualified from
    major grant awards small, isolated communities, typically those
    ringed by mountains that are located throughout the astern
    United States. I am pleased that this remoteness test has been
    removed from the round 2 standards.
        The rules for round 2 have also been changed so that rural
    applicants are no longer required to apply first to RUS and be
    rejected before NTIA can make an award to that applicant, and I
    am pleased to note that in round 2, RUS has specified a measure
    of funding that will be available for satellite-delivered
    broadband services. I very much appreciate the agency's
    responsiveness to our concerns on these matters and I commend
    them for the positive changes that they have made in the
    program rules.
        I do want to offer this morning a couple of suggestions for
    round 2. First, I urge the agencies to give round 1 applicants
    whose applications were rejected ample guidance so that they
    can improve their applications for round 2. For example, round
    1 applicants at the present time cannot find out how many
    points the winning applications scored during round 1 so those
    who were not successful in round 1 currently really don't know
    how close they came to receiving an award. Many of those round
    1 applicants could have been on the cusp of receiving an award
    and they may be discouraged from applying in round 2. If they
    knew they were close, they would be encouraged, they should be
    aware of that fact, and the agency should give them guidance
    about how to improve their round 2 applications.
        I also urge the RUS to give serious consideration to
    granting waivers of the requirement that projects cost no more
    than $10,000 per home passed. Many areas without access to
    broadband today are among the most difficult and expensive to
    serve due to terrain--many of these communities are
    mountainous--and also because of the distances that are
    involved over which the infrastructures would have to be
    deployed, and many communities of the eastern United States
    that are in fact isolated, ringed by mountains, a long way from
    the nearest metropolitan area will simply not be served if the
    requirement that the project costs no more than $10,000 per
    home passed remains inviolate. And so I would strongly
    encourage generous waivers to that requirement where the
    situation merits those waivers.
        I want to commend NTIA and RUS for the tremendous work that
    they have done on the broadband program to date. The agencies
    have had to crease these programs out of whole cloth. You have
    had to hire staff and train that staff over a short period of
    time and then begin to make grant awards, and I believe you
    have done an outstanding job of that and you have this
    committee's thanks for the fine work that you have both
    performed and that your staffs have performed. You have done so
    under short time frames and with a lot of uncontrollable
    events, like the snowstorm that I know was a major impediment
    but didn't slow you down, and so congratulations for that
    performance.
        Mr. Strickling, Mr. Adelstein, thank you for joining us
    this morning. I look forward to your comments on the matters
    that I have raised and matters that other members will raise.
        At this time I am pleased to recognize our ranking member,
    the gentleman from Florida, Mr. Stearns.

     OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Mr. Stearns. Good morning, and thank you, Mr. Chairman.
    Thank you for holding this hearing, and I want to also thank
    our witnesses for being here. We look forward to their
    testimony.
        Mr. Chairman, before we go any further, I would like to
    recognize the newest member of our Subcommittee on
    Telecommunications, and the Internet, Mr. Parker Griffith from
    Alabama. So welcome. We are delighted to have you on the
    subcommittee.
        I think, Mr. Chairman, your terms when you said you have a
    range of concerns, I like that terminology that you used. That
    was diplomatic and also pointing out there are some legitimate
    feelings here on both sides. We feel that the NTIA and RUS
    broadband stimulus programs are not working as well as they
    could. There are a number of cases that we want to bring up to
    question the effectiveness of the programs, and I know many on
    that side particularly touted that this would be a huge
    stimulus and start sort of a new technological revolution,
    which ultimately I believe it can. I think honestly done right,
    this can move towards huge opportunity for everybody.
        But let me just, for example, give you a case where it has
    come to my attention there have been some specific complaints
    about the overbuilding of existing networks. In north Georgia,
    NTIA awarded a $33.5 million grant to an area that already has
    extensive broadband service. According to a letter from the
    incumbent provider Windstream, 90 percent of the homes and
    businesses in the project already have access to broadband. All
    Americans should have access to broadband, robust broadband,
    but if the goal of the stimulus was to bring broadband to areas
    without any access, then this $33.5 million could have been
    better spent. We all agree on that.
        Now, supporters of the stimulus promise that it would
    create millions of new jobs and that all Americans would have
    access to fast and affordable broadband, yet here we are a year
    later. I am not sure we see the huge change and the early
    reviews don't bear that out.
        Now, during the markup, as I mentioned, all of us were
    hopeful that this would create more jobs. In fact, many people
    talked about it would spark sorely needed economic development
    and creation. I mean, those are the exact words of some people
    on the other side. It appears that some of this money may be
    going to pay for duplicate services and facilities where
    consumers already have broadband access. If that is the case,
    the money will not be bringing access to unserved areas.
    Moreover, it will make it much more difficult for the existing
    providers to operate their businesses in the face of a
    government-subsidized competitor.
        For the United States to achieve ubiquitous broadband
    deployment, the private sector will have to shoulder the bulk
    of the financial burden. To the extent that any government
    money will be spent on financing broadband deployment, such
    money should be made available in areas that are otherwise
    uneconomic to serve. The broadband stimulus programs violated,
    I think, this central tenet.
        Congress attached strings to the NTIA program in the form
    of network neutrality and interconnection obligations that
    dissuaded experienced providers from participating in the
    program. In addition to driving away the companies most likely
    to help us achieve ubiquitous broadband deployment, NTIA is now
    actually subsidizing broadband competition rather than
    extending coverage to unserved areas.
        During the first round of funding, NTIA set up a process
    whereby providers only had 30 days to identify applications
    that would grant funding in areas they already served and to
    contest such applications. The consensus is that 30 days has
    not been enough time. And NTIA has granted applications that
    appear to subsidize broadband competition rather than extent
    services to unserved areas. Now NTIA has actually proposed to
    shorten the window for contesting applications to 15 days. Now,
    I just can't conceive of how a 15-day window will ensure that
    NTIA is not subsidizing broadband competition rather than
    extending service to rural areas. In fact, during the stimulus
    markup we had a Republican amendment that would have ensured
    that unserved areas would get priority over underserved.
    Unfortunately, this amendment failed on a party-line vote. This
    program would have really benefit if our amendment had been
    adopted.
        If the NTIA and RUS broadband programs were subsidizing
    areas where existing providers are already offering service,
    the programs will harm deployment and cost jobs rather than
    promote broadband and stimulate the economy. Further deployment
    in areas that already have access will not expand broadband
    availability and providers in high-cost sparsely populated
    areas already have difficulty covering the cost of deployment.
    Splitting their subscribers based upon subsidizing a new
    competitor will only make it harder to recover broadband
    investments, putting jobs in jeopardy rather than creating
    them.
        So those, Mr. Chairman, are my range of concerns and I
    appreciate you having the hearing. I look forward to our
    witnesses.
        Mr. Boucher. Thank you very much, Mr. Stearns.
        The gentleman from Massachusetts, Mr. Markey, is recognized
    for 2 minutes.

    OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
            CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

        Mr. Markey. Thank you, Mr. Chairman, and thank you for
    having this very important hearing.
        You know, we had a very bad period of time during the 8
    years of the Bush Administration where we dropped from second
    in broadband deployment and adoption to 15th in the world. It
    was not a good record. And since broadband deployment is for
    all intents and purposes a proxy for kind of determining how
    rapidly our economy is advancing, we obviously need a plan to
    make sure that we get back on the road where we don't allow
    Luxembourg and Finland and other countries to pass us, which
    they have done over the last 8 years.
        So that is really what this is all about, and the Recovery
    Act was a significant step forward in increasing deployment and
    adoption levels and unleashing the power of broadband to create
    jobs, improve health care. Actually looking right across the
    whole board including public safety tools and the national
    broadband plan which I inserted language into the stimulus bill
    to require the Administration to produce a national broadband
    plan is due back on March 17th, and to the Irish, that is a
    very lucky day, you know, not only for the Irish but for the
    whole country when this broadband plan is produced, and I look
    forward to that plan being released in the next couple of
    weeks.
        In addition, there is non-discrimination in network
    interconnection obligations that was built into the stimulus
    bill, and I was proud to be able to write that language in as
    well because that is central to ensuring that all of those
    applications, all those new gadgets that are out there have an
    incentive to be developed because they will have access to this
    network. That is the whole key. It is competition. It is to
    ensure that we do have that set of incentives, and the
    broadband mapping plan so that we know where we have to go,
    what we have to do. All of that is central as well, all of that
    in legislation.
        So Mr. Chairman, this is about as important a hearing as we
    can have for our country long term in economic growth. I thank
    you for having it. I look forward to our witnesses.
        Mr. Boucher. Thank you very much, Mr. Markey.
        The ranking Republican member of the Energy and Commerce
    Committee, the gentleman from Texas, Mr. Barton, is recognized
    for 5 minutes.
        Mr. Barton. Thank you, Mr. Chairman, and thank you for
    holding this hearing. Thank you to our witnesses. I am used to
    seeing Mr. Adelstein as part of the FCC. It is a little bit
    difficult to recognize him in his new role, but we appreciate
    you being here.
        I am going to submit my written statement for the record,
    Mr. Chairman. The concern that myself and I think most of the
    minority have is that we really feel this money should have
    gone to unserved areas before going to areas that are already
    served, and there appears to be quite a bit of evidence that a
    number of the projects that have been awarded have gone to
    areas that are already being served, and in round 2, there
    doesn't appear to be any requirement at all that they
    discriminate between served and unserved. So that would our big
    objection, that we really try to target these projects to areas
    that don't have broadband before we begin to give awards to
    areas that do.
        And with that, I will yield back.
        [The prepared statement of Mr. Barton follows:]

        [GRAPHIC] [TIFF OMITTED] T6013A.001

        [GRAPHIC] [TIFF OMITTED] T6013A.002

        [GRAPHIC] [TIFF OMITTED] T6013A.003

        [GRAPHIC] [TIFF OMITTED] T6013A.004

        [GRAPHIC] [TIFF OMITTED] T6013A.005

        [GRAPHIC] [TIFF OMITTED] T6013A.006

        Mr. Boucher. Thank you very much, Mr. Barton.
        The gentleman from Michigan, Mr. Stupak, is recognized for
    2 minutes.

      OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Stupak. Thank you, Mr. Chairman, for holding this
    hearing.
        One provision in the ARRA that has generated excitement in
    rural communities is the broadband funding. In the coming
    months, due to a broadband stimulus grant from the Rural
    Utilities Service, 14 townships in Michigan's Upper Peninsula
    with populations ranging from 5,000 to as few as 175 people
    will begin to realize the benefits of high-speed broadband
    access for the first time ever. The private company that
    received the funding estimates that during construction of the
    broadband project, approximately 170 jobs will be created in
    the area. My office has received numerous letters from
    constituents in the area asking one simple question: will this
    project finally give me broadband services? While I wish I
    could respond to every single letter with an emphatic yes, the
    project will only benefit residents in three of the 31 rural
    counties in my district, so more work remains.
        The NTIA will also provide a loan and grant for a Michigan
    company to build a fiber optic network which will run through
    nine counties in the northern Lower Peninsula. This project
    will for the first time in Michigan's history connect the Upper
    and Lower Peninsula with fiber at the Mackinaw Bridge. An
    immediate impact of this fiber connection will be that Michigan
    Tech University will have access to the Internet to high-speed
    network and will be connected to 210 educational institutions,
    70 corporations and 45 nonprofit and government agencies. These
    projects never would have happened without the stimulus
    broadband funding, so I have a special appreciation for the
    benefits that the NTIA and RUS programs will provide for rural
    communities.
        However, I want to caution both NTIA and RUS to be diligent
    in distributing this funding in a timely manner but not to rush
    it out the door without ensuring it is going to where it will
    do the most good. I am specifically concerned with NTIA's rule
    change from 30 days for incumbent rural broadband providers to
    inform the agency of a proposed project that overlaps with
    their service area. I want this proceed to succeed. I do not
    want us to look back and talk about waste, fraud and abuse at
    the end of this year.
        Mr. Chairman, thanks for holding this hearing. I look
    forward to discussing these issues with our witnesses, how we
    can work together to maximize broadband deployment throughout
    rural America.
        Mr. Boucher. Thank you very much, Mr. Stupak.
        The gentlelady from Tennessee, Ms. Blackburn, is recognized
    for 2 minutes.

    OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF TENNESSEE

        Mrs. Blackburn. Thank you, Mr. Chairman, and again, I
    welcome our witnesses. I had the opportunity to visit with them
    before the hearing started, and I think that they know we are
    all interested in seeing how quickly broadband is going to get
    to our State. We do know, as Secretary Strickling mentioned, we
    have had two awards in Tennessee and we know that there will be
    more that are going to come forward.
        As we go forward on the Recovery Act, which so many of us
    have really been skeptical of in the first place, and we talked
    about that, it is troubling to hear a steady flow of stories
    that much of the money being spent is duplicative. Furthermore,
    when these grants are subsidizing areas that already have
    broadband service, which in essence is government-subsidized
    competition, there is the opportunity for lost jobs and
    overbuilding, which defeats the purpose of these funds. It
    seems odd that we have put aside all this money for broadband
    deployment, have instructed the Administration to send the
    money out to the States without the staff to execute or a
    reasonable timetable in which to do it and to top it all off,
    we are doing all of it before we even have the mapping plan.
    And as I mentioned to you in our conversation, this is
    something that our constituents are aware of. The creative
    community that is headquartered in my State is watching this
    very closely and they are very conversant on this issue and
    come to us regularly, and we are going to look forward to
    drilling down a little deeper on these issues with you, and we
    are so appreciative of your time of coming before us.
        And Mr. Chairman, thank you for the hearing.
        [The prepared statement of Mrs. Blackburn follows:]

        [GRAPHIC] [TIFF OMITTED] T6013A.007

        Mr. Boucher. Thank you very much, Ms. Blackburn.
        The chairman of the Energy and Commerce Committee, the
    gentleman from California, Mr. Waxman, is recognized for 5
    minutes.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you, Chairman Boucher, for holding this
    hearing to continue our committee's oversight of broadband
    programs created by the Recovery Act.
        The broadband funding in the Recovery Act is dedicated to
    building essential digital infrastructure for the 21st century
    throughout the United States and it is creating jobs for today
    and tomorrow. This is the subcommittee's third oversight
    hearing to review this important Recovery Act program, and it
    will likely not be the last. Although I am confident that the
    National Telecommunications and Information Administration and
    the Rural Utilities Service have been managing this program
    diligently, the committee will continue to fulfill its
    oversight role going forward.
        I know that the Obama Administration is also committed to
    conducting rigorous oversight of Recovery Act programs
    including broadband funding. In addition to unprecedented
    transparency, the President's 2011 budget proposes to
    reallocate funds to allow specifically for continued NTIA
    oversight, monitoring grant evaluation and reporting essential
    to meet the highest standards for transparency and
    accountability in this program.
        At our first oversight on this matter, I stated NTIA and
    RUS have the difficult task of spending the taxpayers' money
    quickly yet wisely. They would have to act in a decisive manner
    but so in ways that were fair, open and transparent to the
    taxpayers. As the first funding cycle for the Broadband
    Technology Opportunities Program and the Broadband Initiatives
    Program comes to a conclusion, I believe the agencies have met
    this difficult challenge. To date, the two agencies have
    awarded over 60 projects totaling over $1.25 billion in grants
    and loans. The NTIA has also awarded nearly $100 million in
    broadband mapping grants to almost every State and several
    territories. The projects are touching every corner of the
    country and range from the creation of a fiber optic network
    throughout Maine to broadband connectivity in 65 communities in
    southwestern Alaska to digital literacy training throughout
    southern California. BTOP and BIP projects will not only extend
    and enhance broadband offerings in the United States, they will
    also serve the Recovery Act's central objective of creating and
    preserving jobs. I want to commend Assistant Secretary
    Strickling and Administrator Adelstein for their efforts, not
    to mention the staff at NTIA and RUS, in rising to this
    challenge. NTIA and RUS also merit praise for being open to
    suggestions for improvements.
        I am encouraged by the changes made in the second Notice of
    Funds Availability issued late last year. The reduced
    administrative burdens on applicants streamline the application
    process and now allow satellite providers to play a role in
    providing broadband service to rural areas. I am particularly
    pleased with NTIA's emphasis on so-called middle mile projects
    and a commitment to provide the best services at the best value
    to the American taxpayer.
        I look forward to your testimony today and I appreciate the
    participation and the active role of our subcommittee. Thank
    you, Mr. Chairman.
        Mr. Boucher. Thank you very much, Chairman Waxman.
        The gentleman from Nebraska, Mr. Terry, is recognized for 2
    minutes.

       OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEBRASKA

        Mr. Terry. Thank you, Mr. Chairman.
        I must admit, Mr. Chairman, that the entire process of
    establishing a policy that will spur broadband deployment in
    this country seems to be a little backwards. Soon we will have
    a document submitted to Congress by the FCC that will provide
    us with a national broadband plan. I support the efforts of the
    FCC and everyone involved in creating such a document but I
    find it odd and backwards that the FCC was instructed to create
    a national broadband policy within the same legislation that
    appropriated over $7 billion to build out broadband. If we
    acknowledge that our broadband infrastructure in America is in
    need of a national policy to make us more competitive with the
    rest of the world, then would it have not made more sense to
    give the FCC to community the national broadband plan and then
    legislate policy that would stimulate our economy by creating
    these incentives needed to build more broadband. Instead,
    Congress rushes to spend money and we have the hope that they
    get it right.
        While I hope to stand corrected, I am sure that we got the
    broadband stimulus right. I am growing increasingly concerned
    that NTIA and RUS are finding entities that want to build
    broadband networks over existing broadband networks. The term
    ``underserved'' is too subjective and it is an excuse to use
    taxpayer dollars to build networks that the government wants to
    build under their terms and conditions.
        Mr. Chairman, over a year ago before the stimulus passed
    Congress, this subcommittee had the opportunity to use its
    sacred taxpayer dollars to build networks for Americans that
    have no broadband today. Delivering broadband to unserved
    Americans will stimulate our economy and create jobs. That
    should have been the focus of the federal broadband stimulus
    program. Today I look at the list of projects funded under the
    first round and I see $7.5 million to the city of Los Angeles,
    $1.9 million to the city of Boston and $25 million to a fund
    network in Maine that completely overlaps existing fiber
    network yet many unserved areas received nothing.
        Yield back.
        Mr. Boucher. Thank you very much, Mr. Terry.
        The gentleman from Pennsylvania, Mr. Doyle, is recognized
    for 2 minutes.

    OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Doyle. Thank you, Mr. Chairman.
        Well, we have given you guys a pretty tough task. From
    hearing our members here today, want you to have all this money
    deployed yesterday, but we also want you to do your due
    diligence to make sure that you are not putting projects out
    there that are later going to embarrass you and embarrass all
    of us. So it is a tough balancing act that we have given you
    but I think you are up to the task.
        I would say to some of my friends, I support deploying
    broadband in areas that don't have it. That is what we want to
    do and that is the key to the future, but I would also say to
    my friends that many of us who represent urban areas and
    especially poor urban areas have many communities that are
    underserved. The private sector has not put broadband or not
    sufficient, you know, the up-to-date broadband in these areas
    and people are falling behind, and as a result, these people
    aren't going to have access to the jobs of tomorrow if we are
    not able to serve these underserved areas also. So I don't
    think it should be an either-or proposition. Obviously we need
    to do both, and I support both.
        The projects in Pennsylvania so far, the two projects that
    have been awarded, I am happy to see the Pennren project that
    is going to create a high-speed middle-mile network to connect
    anchor institutions like schools and libraries and
    universities, community colleges and hospitals and more to each
    other while helping these last-mile companies connect to that
    high-speed network. The other project, which invests in
    wireless and wireline backhaul, provide wholesale access over
    an existing public safety wireless network in my State. Both of
    these projects I think they make sense. They leverage existing
    revenues and both serve areas that are in need of broadband.
        So with that being said, I look forward to asking some
    questions on the sustainable broadband adoption grants that are
    coming up in round 2. I would just say it is one thing to have
    connectivity but it is another thing to use it and use it
    effectively to promote education, economic development and
    improve health care. Broadband is the dial tone of the 21st
    century, Mr. Chairman, and I am looking forward to the
    testimony of our witnesses and the questions to follow. Thank
    you.
        Mr. Boucher. Thank you very much, Mr. Doyle.
        I would like to add the subcommittee's welcome to the
    gentleman from Alabama, Mr. Griffith, and Mr. Griffith, you are
    recognized for 2 minutes.
        Mr. Griffith. Thank you, Mr. Chairman, and I have no
    comment, and I appreciate so much the opportunity to
    participate in the committee. Thank you.
        Mr. Boucher. Thank you, Mr. Griffith. We will add 2 minutes
    to your questioning time for this distinguished panel of
    witnesses.
        The gentleman from California, Mr. McNerney, is recognized
    for 2 minutes.
        Mr. McNerney. Thank you, Mr. Chairman. I want to thank you
    for holding today's hearing to discuss the current status of
    the broadband grants provided by the American Recovery and
    Reinvestment Act. As we all know, expanding broadband access is
    crucial to promoting American innovation and improving our
    economy.
        I do hope to learn today about how the NTIA is progressing
    with its Broadband Technology Opportunities Program now that
    the agency is accepting a second round of funding distribution
    proposals. I understand that some changes have been made to
    improve the application process and I am anxious to see how
    these changes have resulted in positive outcomes. It is crucial
    to fully understand where to focus our energies as we continue
    working to expand broadband services and I am eager to see the
    results of the broadband mapping grants.
        Again, I want to thank the panelists, Mr. Strickling and
    Mr. Adelstein, for coming today and I look forward to working
    with you to improve the grant process.
        Thank you, Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. McNerney.
        The gentleman from Illinois, Mr. Shimkus, is recognized for
    2 minutes.

      OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Shimkus. Thank you, Mr. Chairman, and I want to welcome
    Secretary Strickling and of course Jonathan Adelstein, who we
    worked with a long time ago.
        It is unfortunate that we are doing this and we still don't
    address what is underserved and what is unserved. We have been
    trying to get a definition of underserved. The opening
    statements are part of this debate. In bills, we try to define
    that. We weren't allowed to get a definition of that, and that
    is why we are going to continue to have this frustration about
    where does the money go and are people being incentivized by
    the fact that we have gone into additional debt. That is what
    we have done with ARRA. We have gone into additional debt to
    help an undefined purpose, whether it is unserved or
    underserved, and the definition of underserved, what is that?
        So, Mr. Chairman, I would recommend we clarify this to help
    us as we move forward, and if anything, that should be part of
    the oversight hearing. If we are incentivizing people who
    already have broadband access with taxpayers' dollars and there
    are areas of our country that have no service, shame on us. And
    that is simplistic and that is clear, and we should get it
    straight.
        Now, to be on the nicer side, I would like NTIA to come in
    so we can talk about E911, the digital platform, where do we
    move next, but this is key in this whole debate. If 911
    services are going to go over a broadband platform, we better
    have broadband deployment in areas where there is not broadband
    deployment now. And as the commissioner from the State of
    California said in testimony here, if we are giving out money
    before we have a plan, we are going to waste money, and I fear
    that is where we are going. Thank you, Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. Shimkus.
        The gentlelady from the Virgin Islands, Ms. Christensen, is
    recognized for 2 minutes.
        Mrs. Christensen. Thank you, Mr. Chairman, and I want to
    again thank you, Chairman Boucher, and Ranking Member Stearns
    for holding this third oversight hearing on the broadband
    programs and initiatives created under the ARRA and for your
    commitment to exercising our oversight responsibilities on
    these programs. The ARRA is making a positive difference in
    many, many areas and we just want to ensure that the same is
    true for broadband reaching unserved and underserved areas. As
    Mr. Stupak said, the programs and initiatives are particularly
    important to rural areas, and although people don't think of
    the Virgin Islands as a rural area, I understand that we are
    just second to Puerto Rico in the lack of Internet access. We
    are very, very much un- and underserved.
        I want to applaud both NTIA and RUS, though, for what I see
    as a continuing great collaboration between the two agencies as
    well as for the outreach you have done, the technical
    assistance you provided, for extending the deadlines, for the
    simplification and streamlining of the process and the other
    changes that you have made to assist applicants and to better
    meet your mandate. Obviously there are several concerns and I
    look forward to hearing your testimony and being able to
    interact with you during the question-and-answer period.
        Thank you, Mr. Chairman. I yield back the balance of my
    time.
        Mr. Boucher. Thank you very much, Mrs. Christensen.
        The gentleman from Indiana, Mr. Buyer, is recognized for 2
    minutes.

      OPENING STATEMENT OF HON. STEVE BUYER, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF INDIANA

        Mr. Buyer. Thank you very much.
        I also would like to welcome Dr. Griffith. I welcome you to
    the Republican Party. I welcome you to the committee. I think
    your expertise is going to be very valuable to the committee. I
    also want to note that as you go into the next Congress, I am
    not going to be here so I am going to bring this to your
    attention. Since you are sitting way down at the bottom of the
    dais, what happened in this committee was something that we had
    not seen here in Congress for a very, very long time, and it
    was the distortion of the committee ratios, and this
    committee's ratio got distorted because we had a new President
    who said he is going to deliver change that America can believe
    in, and what we have learned in order to deliver the change
    that he thinks America needs, he needed a process that he could
    jam it through. In order to do that, you control the process by
    manipulating it. So they distorted the ratio on this committee
    so they could actually achieve the goal of passing a climate
    change bill and passing health care which Americans said they
    don't want. So what has happened is, some of the Democratic
    colleagues have folded over onto this side of the aisle. So
    Republicans, which I believe are going to take control of the
    next Congress, do not be upset when you are sitting back on the
    Democrat side of the aisle, okay? I just want to alert you
    ahead of time.
        The other is, I am going to call you Dr. Griffith. I am
    going to call you Doctor because you understand triage. You
    take care of the worst patients first. We are dealing with what
    I call a policy of shame, a policy of shame because we aren't
    even waiting for the maps to be done and we are pushing the
    money out. Why? To make sure money gets to underserved instead
    of unserved. So we are actually leaving people out. So your
    premise as a doctor in how you view the world, you are going to
    have some challenges here because we are actually exercising
    policies of shame and I think it is absolutely wrong, and I am
    very, very bothered that we are doing that in this committee
    and I welcome your dimension.
        With that, I yield back.
        Mr. Boucher. Thank you very much, Mr. Buyer.
        The gentleman from Ohio, Mr. Space, is recognized for 2
    minutes.

    OPENING STATEMENT OF HON. ZACHARY T. SPACE, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Mr. Space. Thank you, Mr. Chairman, and thank you, Ranking
    Member Stearns for holding this hearing this morning.
        Before I begin, I would like to welcome my colleague Parker
    to the committee. It is not how I envisioned you ascending to
    this committee but it is good to see you here, Parker.
        To date, the State of Ohio has received a total of six
    awards under the Recovery Act for the broadband programs, four
    of which are RUS programs, two NTIA, and all are worthy.
    However, the NTIA programs deal primarily with--one deals with
    state mapping, one deals with awareness, both of which are very
    important. The RUS programs deal kind of on a microcosm basis,
    small programs covering no more than three or four counties,
    and I don't want to forget that these are very important
    projects and we are supportive of all of them. However, we
    haven't seen what we believe is necessary in terms of providing
    a regional approach, in Appalachian Ohio in particular where
    regardless of how you define underserved or unserved, we will
    meet that definition. The counties that I represent, and I
    represent 16, almost all of them fall within Appalachia proper
    and we are missing out on the hope that broadband provides,
    both with respect to economic development but pertaining to
    quality-of-life issues as well, health care access, educational
    access, all areas where we find ourselves at a disadvantage,
    and we know that broadband fulfills and will fulfill the
    promise of bridging those divides.
        We have been working with stakeholders in the district, and
    I am optimistic that in spite of the successes that the NTIA
    and RUS have had thus far, you understand and are fully
    appreciative that there is much more work to be done, and I
    certainly hope that some of that work will be done in
    Appalachian Ohio.
        Again, thank you gentlemen for being here today and for
    your hard work in your capacities.
        Mr. Boucher. Thank you very much, Mr. Space.
        We welcome now our witnesses for this morning, a
    distinguished panel consisting of the two individuals who are
    responsible for administering the $7.2 billion stimulus fund
    enacted through the American Recovery Act. Mr. Larry Strickling
    is the Assistant Secretary of Communications and Information at
    NTIA, the U.S. Department of Commerce. Mr. Jonathan Adelstein
    is the Administrator of the Rural Utilities Service and the
    U.S. Department of Agriculture. From 2002 until 2009, he served
    as a commissioner on the Federal Communications Commission. We
    welcome both of you. This is your third appearance, as I
    recall, before our subcommittee, and we thank you for taking
    the time to share your views with us this morning on round 1
    and your plans for round 2.
        Without objection, your prepared written statements will be
    made part of the record. We would welcome your oral summary and
    ask that you keep that to about 5 minutes.
        Mr. Strickling.

     STATEMENTS OF LAWRENCE E. STRICKLING, ASSISTANT SECRETARY FOR
    COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND
        INFORMATION ADMINISTRATION; AND JONATHAN S. ADELSTEIN,
              ADMINISTRATOR, RURAL UTILITIES SERVICE, USDA

                  STATEMENT OF LAWRENCE E. STRICKLING

        Mr. Strickling. Thank you, Chairman Boucher and thank
    Ranking Member Stearns and thank members of the subcommittee
    for the invitation to testify today on our programs to expand
    broadband access and adoption pursuant to the Recovery Act. I
    am also very pleased to make what is now the sixth appearance
    with Administrator Adelstein as we make the rounds of oversight
    hearings among the various committees that are interested in
    this topic, and I think that points out how important this
    topic is to so many people.
        I am pleased to report that by the end of this week, we at
    NTIA will have awarded over $1 billion in grants to build
    broadband infrastructure, to equip public computer centers, to
    increase the adoption of broadband services, and to have the
    States collect data for the national broadband map. These
    investments will help bridge the technological divide. They
    will create jobs. They will improve health care and education
    in communities across America.
        When I testified here before the subcommittee last
    September, we had just received the first round of applications
    and were starting our review of more than 1,800 applications
    that had been submitted. I want to assure you that projects
    that we have funded to date, for those projects the money is
    well spent and I report to you today that the projects we have
    selected for funding constitute a major investment in upgrading
    our Nation's infrastructure, creating new jobs and improving
    our economic health.
        As I indicated, by the end of this week we will have
    awarded over $1 billion in grants. We have awarded grants in
    all 50 States and in several of the territories. This includes
    54 broadband mapping grants totaling about $100 million and 49
    BTOP grants worth more than $960 million. We are funding four
    types of projects, and I would like to give you a brief update
    on each of those.
        First, the infrastructure projects. These are funds to
    build out improved infrastructure or new infrastructure in
    unserved and underserved areas, and I look forward to clearing
    up what is obviously a misunderstanding about exactly what the
    difference is between unserved and underserved. We will do that
    in the question-and-answer period. But the point I want to make
    is that our infrastructure projects are what we call
    comprehensive community infrastructure projects. We bring high-
    speed middle-mile infrastructure into communities or regions
    and then connect key community anchor institutions--the
    libraries, the hospitals, the community colleges. This core
    infrastructure once it is built is available to any service
    provider in the area under our open network requirements. This
    feature, which is required of all of our projects and indeed
    the Recovery Act, enables companies who are already present in
    the area who offer broadband to homes and businesses to improve
    their service offerings and reach neighborhoods that are not
    adequately served today. We would need to come back to this in
    the questions and answers, but it is fundamentally not the case
    that we are subsidizing competitors here. These projects
    benefit the existing providers because they have access to
    these facilities to reach customers that perhaps for economic
    reasons they haven't been able to adequately serve before this
    project is built.
        So let me give you some examples. In Michigan, we have
    funded Merit Network to build a 955-mile advanced fiber optic
    network through underserved counties in Michigan's Lower
    Peninsula. This project will build direct connections to 44
    anchor institutions like libraries, universities, community
    colleges, but as I noted, this infrastructure is available to
    all the providers in the area which means that this investment
    can lead to new or improved broadband service for more than
    886,000 households, 45,000 businesses and 422 anchor
    institutions. In north Florida, we awarded $30 million to the
    North Florida Broadband Authority, a collaboration of 14 north
    Florida county governments who had assessed that they had a
    need for these services in those counties. It is a 1,200-mile
    fixed wireless broadband network that will directly 300 anchor
    institutions, but again, existing service providers will be
    able to use this network to offer broadband to an estimated
    150,000 households and 27,000 businesses. Overall, the
    infrastructure projects we are funding in round 1 will result
    in the construction of 20,000 miles of broadband networks. They
    will build connections into more than 5,000 community anchor
    institutions and they will enable existing providers to offer
    new or improved broadband services to an estimated 10 million
    households.
        The Recovery Act also directs us to award grants to public
    computer centers. These grants are important for communities
    where residents cannot easily subscribe to broadband at home
    due to its unavailability or affordability. They can be a vital
    link to give people access to jobs, health and educational
    information and to gain the skills they need to get jobs and
    compete in the 21st century economy. The 18 projects we have
    selected for funding will all significantly increase the
    ability of thousands of Americans to get access to high-speed
    Internet services at their local libraries, their community
    centers and other local institutions. For example, our $6
    million grant in South Carolina will enable a computer center
    to be open to the public in every community college in the
    South Carolina Technical College system, will serve 21,000 new
    users per week. Rhode Island, a $1.2 million grant will serve
    an additional 7,000 users per week. Michigan, we awarded a
    $900,000 grant to Michigan State University to upgrade computer
    centers at public libraries, serve an additional 13,000 users
    per week across the State.
        Our third group of projects is sustainable broadband
    adoption. These focus on how we can spend a dollar to increase
    the adoption rate for broadband services. Last month, we issued
    a report analyzing data collected by our sister bureau, the
    Census Bureau, on the levels of broadband subscription across
    the country. We asked folks why do they not use broadband, and
    the reasons they gave us were, one, they didn't need or
    understand the service, or two, they found it too expensive. So
    our sustainable broadband adoption projects have therefore
    focused on addressing the reasons people have given for not
    subscribing. So for example, just this week we awarded $18
    million to the Cleveland-based organization One Community for a
    largely Ohio project that will reach over 330,000 people with
    an awareness campaign. It will train 33,000 people in both
    urban and rural areas and provide households with discounted
    computers. For all these adoption projects, our key focus is on
    the ability of the grantee to measure the level of
    subscribership in the target communities both before the
    program and at various times throughout the program. We want to
    make sure that the dollars are well spent, and it is imperative
    that we be able to measure the program impact to determine
    which of these approaches to increasing adoption actually work.
        Our last category, broadband mapping. By the end of this
    week, we will have awarded 54 out of a possible 56 grants to
    States and territories totaling approximately $100 million.
    They will use these funds to collect and verify broadband
    subscription and infrastructure data, and we are expecting the
    first data by the end of the month. This will be used to create
    the national broadband map, and assuming the carriers follow
    through on their promises to supply the data, we hope to use it
    in our review of the second round applications for
    infrastructure projects.
        Very quickly, I will just talk about round 2. Earlier this
    week we announced an extension of our March 15th deadline for
    all infrastructure projects to March 26th. Our deadline for
    public computer center and sustainable adoption projects
    remains March 15th. In round 2, we will continue our focus on
    funding comprehensive community infrastructure projects, and
    Administrator Adelstein at the RUS will be focusing on rural
    last-mile projects. I tell you that I am confident that we will
    continue to meet the challenges we face between now and the
    statutory deadline of September 30th, and I expect that by the
    end of this year, as the Recovery Act requires, our program
    will have benefited every State to the extent practicable.
        So thank you for the opportunity to testify, and I look
    forward, I really look forward to your questions.
        [The prepared statement of Mr. Strickling follows:]

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        Mr. Boucher. Thank you very much, Mr. Strickling.
        Mr. Adelstein.

                   STATEMENT OF JONATHAN S. ADELSTEIN

        Mr. Adelstein. Mr. Chairman, Ranking Member Stearns and
    members of the committee, it is great to have the opportunity
    to testify. It is great to be back. I certainly appreciate the
    leadership of this committee in promoting rural broadband
    deployment and deployment across the country. This committee
    has been really on top of bringing this back to the national
    agenda where it belongs. As Congressman Markey indicated, it
    was left behind for too long and I appreciate your resources
    and leadership.
        On behalf of our secretary, Secretary Vilsack, and our
    Under Secretary, Dallas Tonsager, I do want to express the high
    priority that the USDA places on getting this job done and
    getting it done right. Broadband is one of the central pillars
    of the Secretary's view of supporting the future of rural
    America, and it is a special honor to appear with my friend and
    partner in this, Larry Strickling. He is such an outstanding
    leader. We work hand and glove on every aspect of this and will
    continue to until we complete this effort.
        Today I am happy to announce that the USDA is awarding $254
    million for 22 outstanding projects in 18 States. This brings
    our total to date of awards to over $895 million for 55
    projects in 29 States and territories. These awards are going
    to bring broadband to hundreds of thousands of homes,
    businesses and key community anchor institutions.
        Just in terms of this committee alone today, there have
    been previous awards made to members of this committee's
    districts but today's announcement includes an $11.4 million
    loan-grant combination in Congressman Hill's district that will
    serve 52,000 homes, 11,000 businesses and 135 community
    facilities. Today's announcement also includes an $8.3 million
    in Congressman Upton's district that will provide fiber to over
    1,400 homes and it provides $2.3 million in Congressman Space's
    district that will deliver broadband to 11,000 homes that
    currently lack service, and I know this is our second award in
    your district. Also, we had the Consolidated Electric
    Cooperative get an award recent in Appalachian Ohio. It should
    also be of interest to Chairman Markey because it connects all
    of the substations of CEC's electric grid so they can provide
    smart grid, a real model for the future of rural electric
    cooperatives.
        Now, in this first round, the number of applications, as
    you know, is higher than expected, and they underwent a very
    rigorous review process. We had to ensure that taxpayer funds
    were invested wisely. Applicants that didn't receive funding
    received a letter explaining why, and we have streamlined and
    refined the application process for the next round which should
    speed the assessment process. As you know, we have indicated
    that we announced our NOFA on January 15th. On February 16th,
    we opened the window. We are giving applicants more time this
    round to apply and to be notified about what the rules are the
    second time around. The original application deadline was March
    15th, as Secretary Strickling noted. We have extended that. We
    went until March 29th in order to encourage applicants that
    were notified late in the process to reapply and also to give
    everyone time to submit the best possible materials.
        We have also recently issued clarifications regarding the
    extension of service to Native American lands, which remains a
    very high priority for this Administration because they are
    among the most underserved in the country.
        Now, in response to your feedback and issues raised by
    stakeholders, as you indicated, Mr. Chairman, we have made
    major changes in our second NOFA. First, RUS and NTIA published
    separate but very coordinated NOFAs so applicants now can
    choose which program better suits their needs. Under NOFA 1,
    the only applicants eligible for 100 percent grants were those
    that were remote or 50 miles away from a city or town, although
    their applicants were limited to a grant of no more than 50
    percent of the project cost. And as you noted, Mr. Chairman, in
    response to concerns raised by this committee, among others,
    and you, we eliminated the special funding category for remote
    projects. We heard you and we responded. RUS now offers a 75/25
    grant-loan combination as a base instead of our 50/50 loan-
    grant combination, so we spilt the difference between 100
    percent grant for remote areas and the 50 percent for non-
    remote areas, and to stretch our funds and our impact, we
    provided incentives for higher loan components and higher
    contributions of outside capital. Now, we can increase that
    grant amount up to 100 percent for areas where it is needed
    most, the most rural areas or the areas that are hardest hit by
    the economic downturn. RUS will focus on last-mile projects
    that are really urgently needed in many rural communities. They
    connect directly to homes, businesses and key community anchor
    institutions.
        NOFA 2 allows us to have more flexibility to award points
    for projects that target essential community facilities,
    promote rural economic development and support persistent
    poverty counties or chronically underserved or unserved areas,
    and we are offering additional funding opportunities in the
    second NOFA. We are allowing satellite providers to compete for
    around $100 million to provide equipment and installation for
    rural premises that remain unserved after all other Recovery
    Act funds are obligated, and awardees of either NOFA can apply
    for technical assistance grants, to develop a regional
    broadband plan or to provide broadband to rural libraries.
        We are on track to obligate the $2.5 billion the broadband
    authority provided to us by September 30. There was almost $900
    million awarded to date by RUS. We have funded a wide range of
    technologies from wireless to wireline and we have funded a
    broad range of applicants from wireless broadband companies to
    cable companies to incumbent telecos. Our ability to offer
    these programs with these great economic opportunities for the
    future is really a result of your work and your support. It is
    an honor to work with you on behalf of the 50 million Americans
    in our rural communities, and I appreciate your continued
    oversight and how carefully you have overseen this program and
    look forward to your questions. Thank you.
        [The prepared statement of Mr. Adelstein follows:]

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        Mr. Boucher. Thank you very much, Mr. Adelstein.
        Mr. Strickling, we appreciate your sharing those thoughts
    with us this morning.
        I have a question for both of you. I think to the extent
    that you provide guidance to the applicants from round 1 who
    were not successful, it might improve the quality of the
    applications you get for round 2 and those that were
    particularly close that almost made the award in round 1 should
    know that fact so they are encouraged to apply again, and those
    might be some of the best applications you get. So Mr.
    Strickling, Mr. Adelstein, what are your plans to provide that
    kind of guidance?
        Mr. Strickling. Thank you, Mr. Chairman. So in terms of
    round 1 feedback, first off, we did not use a point system to
    decide whether we would fund or not. We used it to screen
    applications, and then once projects went into due diligence,
    we worked with the applicant to see if the project met our
    goals, did it deliver the benefits, was is sustainable, did it
    have experience management. So about 400 applications went into
    due diligence. Fewer than 100 will be funded. But I will tell
    you, that would be the group that you would call having been
    near the goal line, and through their discussions with us
    through the due diligence process, they have learned a
    tremendous amount about their applications, the strengths and
    weaknesses.
        Mr. Boucher. So you have already given them that kind of
    guidance just as a part of the round 1 process?
        Mr. Strickling. Yes, they will be well prepared to come
    back in round 2, and we hope many of them do.
        Mr. Boucher. Okay. That is good.
        Mr. Adelstein.
        Mr. Adelstein. We sent out a thousand letters by February
    26th offering reasons, exact reasons why applications weren't
    funded. Now, we are still getting questions about that. We have
    a help desk that offers more detailed explanations to those who
    have questions and we are striving to answer those calls as
    quickly as we can. We will continue to be as responsive as we
    can. We are going up to put up materials on the Web, and we
    have, to explain some of the issues in the first round. We are
    really urging applicants to reapply in round 2. We think it is
    crucial they come back to us. We addressed a lot of the major
    factors that were affecting applicants in round 1, and round 2
    is really a different ballgame, so we want them to focus on
    what is in the second NOFA and to get at it that way.
        Mr. Boucher. All right. Thank you. I mean, if an applicant,
    Mr. Adelstein, that was not successful in round 1 has specific
    questions, do you have somebody they can interact with? Is
    there a process for doing that?
        Mr. Adelstein. There is. We have our help desk, and we will
    answer calls, and we have gotten a lot of them about people
    trying to ask for an explanation as to what was in their
    letter, and we have provided that and explained that to them.
    We plan to do more of that.
        Mr. Boucher. Thank you very much.
        Mr. Adelstein, you have a requirement for round 2 that in
    order to be eligible for assistance from RUS, the project must
    cost no more than $10,000 per home passed, and let me just
    express some real concern I have about that requirement. I
    represent and I know that many other members do districts that
    are mountainous where communities are a long way from the
    nearest municipality and they may be ringed by mountains,
    meaning that literally you have to cross mountains with
    infrastructure and that necessarily elevates project costs, and
    these are some of the communities that really was the purpose
    of the stimulus legislation to serve, and I am concerned they
    are going to be disqualified. Now, I know you have a waiver
    procedure that is attached to this $10,000-per-home limitation.
    Tell me about how generous you intend to be with that waiver
    procedure. I am looking for some reassurance that these very
    deserving communities that are just expensive to serve are not
    going to be disqualified.
        Mr. Adelstein. We certainly understand your concern. The
    goal in the stimulus package is to stretch the tax dollars you
    have given us as far as possible, and we aim to strike a
    balance between expanding service and encouraging cost-
    effective investment. I understand that more remote areas are
    more expensive to serve, and that is why we do have the waivers
    that you indicated. Now, our waivers do allow for going above
    that amount if there are persistent poverty or chronically
    underserved areas, for regional development, which some members
    have talked about today, connecting rural libraries, tribal
    areas, community facilities. So we will be looking at
    particular issues like that.
        Mr. Boucher. All right. But you do intend to apply some
    waivers in those instances where the community just by virtue
    of distance or terrain can't meet that $10,000 standard?
        Mr. Adelstein. We will have to evaluate each waiver request
    as it comes in based on the criteria that we put in the NOFA.
        Mr. Boucher. Mr. Strickling, let me ask you this question.
    Did the non-discrimination and interconnection requirements
    that were a part of the NTIA set of standards discourage
    applicants from applying for benefits under your program?
        Mr. Strickling. There is little evidence of that in the
    sense that we received over 2,200 applications between our two
    programs in round 1. We did hear from some of the larger
    carriers that not just those provisions but I think the overall
    complexity of the program, the fact that this was open to such
    scrutiny may have discouraged some of them in round 1. I don't
    remember hearing any carrier tell me it was solely because of
    the interconnection obligations that that was a reason they
    didn't apply. I have heard other reasons from other carriers.
    Some of them are reconsidering, I know, in round 2.
        But I want to come back on this interconnection issue. The
    fact that we require interconnection in our projects I think is
    an important one to putting to rest this idea that we are
    overbuilding or building duplicative facilities. We are putting
    in these high-speed middle-mile facilities that will serve an
    entire region and a set of communities, and again, because they
    are open to everybody, every provider can interconnect with
    them and offer service. So if you are AT&T or a small incumbent
    telephone company, if you are the local cable company, perhaps
    you haven't been able to serve a large anchor institution in
    your community because the anchor institution didn't have the
    $30,000 you were going to charge to build the fiber out to the
    hospital.
        Mr. Boucher. Well, okay, Mr. Strickling.
        Mr. Strickling. We will pay for it and then the incumbent
    can then use that.
        Mr. Boucher. I understand that completely. You are going
    to, I am sure, get questions on that very subject from some of
    my colleagues momentarily.
        My time has expired. We have a series of recorded votes
    pending on the House Floor, three votes in all, and this will
    take about 45 minutes. So stay close. We are going to adjourn
    until those votes are concluded, and we will pick up
    momentarily.
        [Recess.]
        Mr. Boucher. The subcommittee will reconvene. I thank our
    witnesses for their patience.
        Mrs. Christensen from the Virgin Islands, you are
    recognized for 5 minutes.
        Mrs. Christensen. Thank you, Mr. Chairman. I am not sure I
    have all my questions together.
        Let me ask this, and this would really go to Assistant
    Secretary Strickling. I have a letter that is actually dated
    yesterday from U.S. Telecom and they were suggesting a
    screening process that would again with the intention of
    ensuring that broadband really gets to those unserved areas, a
    screening process based on the presence of existing locations
    where connection to the Internet could be readily obtain, where
    they recommend relying on an Internet gateway and that the
    middle-mile project funding be focused on support and
    construction of new facilities extending from that gateway to
    the community institutions and households, et cetera, but not
    redundant with facilities or duplicating the process with those
    that already exist. When you were doing your opening testimony,
    it sounded pretty much like that is what you are doing. Have
    you seen this letter or the proposal?
        Mr. Strickling. Yes, it came in at the close of business
    yesterday. I haven't had time to do anything other than skim it
    quickly. There are some interesting ideas in there, and we do
    intend to take a look at it. I don't know, given the fact that
    our second-round rules are already out, to what extent we could
    incorporate those ideas to the extent they make sense in what
    we are doing but we will be happy to take a look at it.
        Mrs. Christensen. It just sounded like you were pretty much
    doing the same thing. You are looking at sort of a gateway and
    funding there for the middle mile to move it out to the
    households, the businesses and so forth. It doesn't sound
    dissimilar.
        Mr. Strickling. Your description is an accurate description
    of what we are doing. I can't confirm that that is what they
    are proposing.
        Mrs. Christensen. So are all of the funds out? All of the
    round 1 funds, have they already been allocated for sustainable
    adoption? I guess that is your----
        Mr. Strickling. No, that would be me also. We are still
    looking at, I think, approximately eight adoption and/or public
    computer center projects still in round 1. Those are listed on
    our websites so everybody can see what we are still looking at,
    and so there may be some additional awards yet this month in
    that area.
        Mrs. Christensen. I believe it was RUS that was, or
    probably both of you had gone to some of the round 1 applicants
    and I guess it was one of the other programs or initiatives and
    suggested that they reapply. Are they going to be given
    preference over new applicants even though they are reapplying
    for a second time? Is it a level playing field?
        Mr. Adelstein. There is no preference for reapplications
    but we certainly are encouraging applicants to do so. We had
    some great applications that for many reasons we weren't able
    to fund in the first round, and we aren't giving them
    preference but they do have the advantage of having gone
    through it once and be able to refine their applications for
    the next round.
        Mrs. Christensen. Thank you, Mr. Chairman. I don't have any
    further questions.
        Mr. Boucher. Thank you very much, Mrs. Christensen.
        The gentleman from Florida, Mr. Stearns, is recognized for
    5 minutes.
        Mr. Stearns. Thank you, Mr. Chairman. I request unanimous
    consent to submit for the record a letter from the Department
    of Commerce Inspector General expressing concern that the NTIA
    does not have the staff or resources to meet the September 2010
    statutory deadline for completion of the Broadband Technology
    Opportunities Program.
        [The information appears at the conclusion of the hearing.]
        Mr. Boucher. Without objection.
        Mr. Stearns. Secretary Strickling, did the stimulus bill
    provide you with enough time and resources to run the program
    right and are you going to meet the statutory deadline?
        Mr. Strickling. I fully expect to meet the statutory
    deadline. We can meet it with the resources we have. I will say
    that it is typical for programs of this nature that
    administrative expenses be budgeted at 6 percent of the total
    project cost. We are doing it at the statutory mandated amount
    of 3 percent, so we could probably do it better if we had been
    given the 6 percent. But we will get it done with what we have.
        Mr. Stearns. So would I say that you disagree with the
    letter I put in the record?
        Mr. Strickling. Well, I think to be fair to the Inspector
    General, they raised it as a concern, but feel that we have
    answered that concern and are adequately staffed to do what we
    need to do.
        Mr. Stearns. Also, Mr. Chairman, I request unanimous
    consent to submit two letters into the record from the phone
    and cable associations to the NTIA and RUS expressing concern
    that they are granting awards to projects that are deploying
    broadband where it is already available.
        [The information appears at the conclusion of the hearing.]
        Mr. Boucher. Without objection.
        Mr. Stearns. So again, Secretary Strickling, and I guess,
    Administrator Adelstein, these two letters point out a problem.
    Do you agree with these letters, and what do you plan to do to
    make sure you don't grant additional awards that simply build
    redundant facilities?
        Mr. Strickling. I most emphatically disagree with the
    letters. They are obviously quite self-serving, and they don't
    reflect what is actually happening on the ground.
        Congressman Stearns, you mentioned the north Georgia
    project in your opening remarks. I would like if I can to take
    a minute and let us talk about the north Georgia project.
    Windstream claims that they have service available to 90
    percent of the people who live in that area. Nonetheless, the
    governor of the State of Georgia rated this as his most
    important project to be funded because of the inadequate
    service that is being made available in that part of the State.
    The project was put together by five counties, each of which
    had their economic development agencies work with the anchor
    institutions and other people in the community to identify huge
    gaps in the adequacy of the service that Windstream is
    currently providing there. They took a survey of the area to
    determine that fewer than 40 percent of the people in the area
    actually subscribed to service, which again, if Windstream has
    it available to 90 percent and only 40 percent are taking it,
    that tells us there is a problem there.
        We had the specific example of the university in that
    particular region having sent us a note indicating that they
    had tried to get adequate service from the incumbent. They were
    told they would have to wait 18 months to get it, and when they
    did get it, it would cost four times as much as the same
    service would have cost in Atlanta. That area in north Georgia
    is a perfect example of an area that is not being adequately
    served by the existing provider. The people in those
    communities came together with a project to solve that because
    they suffer from a lack of economic growth. Companies have been
    fleeing that region because of a lack of adequate
    infrastructure, and our project as recommended by the governor
    there as well as others we think will be an important addition
    to the overall economy there and will lead to the growth of new
    jobs in an otherwise very depressed area.
        So I understand the concerns of a company like Windstream,
    but the fact of the matter is, every indication we have in the
    record on that project is that they are not doing their job.
        Mr. Stearns. Yes, but just----
        Mr. Strickling. But more importantly, if I could just
    finish, Congressman----
        Mr. Stearns. I can't have you take all my time.
        Mr. Strickling. Once this infrastructure is built----
        Mr. Stearns. I know. You know how it is. Windstream says it
    is 58 percent, you say it is 40. I don't know. Did you
    investigate independently or is this just your----
        Mr. Strickling. That information, the 58 percent, was not
    provided to us in the challenge process.
        Mr. Stearns. Mr. Adelstein, why don't you answer the
    question I also asked.
        Mr. Adelstein. Yes, we have a major emphasis in our first
    and second NOFA to go into areas that are unserved, for
    example, give 10 points for the proportion of residents in
    unserved areas. We target rural areas. Distance from non-rural
    areas is still a factor. We are very carefully evaluating every
    complaint that comes in that we are going into an area where
    there is service. We independently evaluate that and ensure
    that that is not the case. In the case of one of the concerns
    that was raised, I mean, 4,600 square miles, almost all of it,
    no broadband service. So I would take issue with the letter.
        Mr. Stearns. Okay. My last question, Secretary Strickling,
    in your February 24th remarks before the Media Institute, you
    acknowledged that the country's statutorily set policy was to
    leave the Internet unfettered--these are your words--
    ``unfettered by federal or State regulation.'' You said that
    that policy was once appropriate but now it should be changed.
    If the policy was set by statute, doesn't that mean it is the
    providence of Congress, not regulators like yourself, to decide
    whether it needs to be changed?
        Mr. Strickling. I did not say it was set by statute.
        Mr. Stearns. Well, you said that the policy was once
    appropriate but should now be changed.
        Mr. Strickling. I think I raised the question as to whether
    it should be changed, and I pointed out in those remarks--
        Mr. Stearns. Okay. Well, let us just take your words today.
    Do you think it should be changed?
        Mr. Strickling. I think there is a role for government to
    play to preserve trust on the Internet.
        Mr. Stearns. Do you think administrators should make that
    change or Congress?
        Mr. Strickling. I think the type or intervention or
    facilitation, I talked about in my remarks which was to serve
    as a convener and a facilitator----
        Mr. Stearns. Just yes or no.
        Mr. Strickling. To bring parties together does not require
    any intervention from Congress.
        Mr. Stearns. So you can make this decision yourself and
    Congress, it is not the providence of Congress to do it, so you
    have the right to make these changes yourself?
        Mr. Strickling. To bring parties together to sit down and
    talk about copyright piracy, to try to come up with what might
    be a legislative proposal to Congress, yes, sir, I think I can
    do that without asking permission from Congress.
        Mr. Stearns. All right. Thank you, Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. Stearns.
        The gentleman from Nebraska, Mr. Terry, is recognized for 5
    minutes.
        Mr. Terry. Thank you, Mr. Chairman, and to quote my good
    friend, John Dingell, I have utmost respect and appreciation
    for you but--so let us go into that.
        Mr. Adelstein, I was a little disappointed that you decided
    to associate yourself with Mr. Markey's remarks. I am getting a
    little frustrated that somehow any problem is associated with
    the terrible 8 Bush years, and I think you belittle yourself
    when you engage in that, so I am disappointed in that. Other
    than that, I like you and I think you and I share the same
    dedication to getting broadband rolled out throughout America.
        In the debate we had on the stimulus in here, I would say
    out of the entire package that we had before us, we probably
    spent a third of our time debating the nebulous terms on the
    broadband rollout of underserved and unserved, what does that
    mean. It becomes carte blanche to just put it anywhere and it
    is going to meet the definitions. The retort was, this money
    needs to get out. It isn't really about a comprehensive
    broadband policy, it was just about getting the money out the
    door as quickly as possible, which then we came back and said
    well, then you are going to have redundant systems and wasted
    money, and maybe there is evidence of that actually occurring
    and I want to walk through with you particularly on the Maine
    situation. Have I gotten permission to put the Maine up?
        This was provided to us by one of the telecom associations,
    so I may have only gotten one side here, Mr. Adelstein. This is
    an NTIA project, so you get the question. But it appears from
    the map, and it is a little hard to see on the screen, but the
    red on there is the existing broadband infrastructure. A blue
    dotted line, which is right next to the main loop, is the grant
    applicant that is receiving, I think, $17 million. The grant
    applicant is Biddeford Internet Corp, now calling themselves
    Fiber Maine, that is ostensibly associated with the University
    of Maine. So it looks here that all we are doing is putting in
    a redundant line as opposed to providing unserved areas.
        So first question is, what is the policy with the NTIA in
    regard to unserved versus underserved? Follow-up question for
    your answer, is this underserved? Is Maine underserved?
        Mr. Strickling. Sir, this is my----
        Mr. Terry. No, I am asking Mr. Adelstein.
        Mr. Strickling. My project.
        Mr. Terry. Oh, I was told this is NTIA.
        Mr. Strickling. I am NTIA.
        Mr. Terry. Oh, I am sorry. You are RUS. I wanted to talk to
    you.
        Sorry, Mr. Strickling. Well, you have been pretty combative
    and argumentative, so let us keep going with that.
        Mr. Strickling. Very good. I would love to. Maine is
    definitely underserved, and that map I think is not an accurate
    reflection of actual broadband serving in terms of customer-
    serving facilities. I think what you have there is a map of
    interoffice fiber to allow the incumbent carrier to move their
    own traffic on their own network but it is not really being
    used to provide adequate broadband service to homes and
    businesses in that community. What our network will do when it
    is put in will be open to any provider, unlike the incumbent's
    network where nobody else can use it, who will then be able to
    tap into that network and serve homes and businesses that we
    are not serving directly in our funding but it now enables
    these homes and businesses throughout this area, most of which
    is underserved, if not unserved, and are not receiving consumer
    services from the incumbent of the sort that will now be made
    available with this funding.
        Mr. Terry. Well, I have 37 seconds left, and good job being
    combative again.
        Mr. Strickling. No, sir, I am giving you the facts.
        Mr. Terry. You are, so hold on. Will you give me NTIA's
    definition of underserved?
        Mr. Strickling. I would be happy to. It has been
    established from the NOFA last July. There are three parts to
    our definition. Number one, does the area have less than--do
    the people in the area, less than 50 percent have access to
    broadband. That is one prong of the test.
        Mr. Terry. Okay, access.
        Mr. Strickling. The second prong is, do fewer than 40
    percent actually subscribe, and the third prong, any one of the
    three which is required to be met is, does the incumbent offer
    service of 3 megabits per second or greater. In the case of
    Maine, along that fiber that is being built in this project,
    there are many, many communities that satisfy the underserved
    test. I don't have a clear recollection of the unserved. I am
    sure there are some unserved----
        Mr. Terry. Would you----
        Mr. Boucher. Thank you, Mr. Terry.
        Mr. Terry. Where do we get the information about what
    communities are underserved?
        Mr. Boucher. Mr. Terry, your time has expired.
        The gentleman from----
        Mr. Boucher. Will we get a second round?
        Mr. Terry. I don't think we are going to have time for that
    today, Mr. Terry.
        Mr. Terry. Can we have another hearing?
        Mr. Boucher. Well, we will be able to submit questions in
    writing to the witnesses.
        The gentleman from Michigan, Mr. Dingell, is recognized for
    5 minutes.
        Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I
    would like to welcome our panel.
        First question to Secretary Strickling. I hope you can give
    me a yes or no answer to this, Mr. Secretary. I notice in the
    second Notice of Funds Availability, that NTIA has removed the
    requirement that infrastructure projects connecting to
    community anchor institutions, community colleges and so forth
    must be located in unserved or underserved areas. This appears
    to me to be contradictory of the intent of Congress that
    stimulus funds would be used to bring broadband directly to
    unserved and underserved communities and households. Am I
    correct in this, yes or no?
        Mr. Strickling. Yes.
        Mr. Dingell. Now, Mr. Secretary----
        Mr. Strickling. At least you are correct in terms of
    whether we have removed it. I wouldn't necessarily agree with
    the rest of your comment.
        Mr. Dingell. Okay. Now, Mr. Secretary, what is the
    rationale then behind this shift? I find it very troubling
    because we have huge unserved areas and we have a real serious
    problem in the fact that funding for the kind of changes to
    bring them service is desperately needed and we are not giving
    it to them. Now, how does this relate to your policy?
        Mr. Strickling. We are still quite consistent with that
    concern, Congressman. Number one, the statute had five
    purposes. In round 1, you are correct, that we did require
    anchor institutions to be unserved or underserved areas to
    qualify for funding. It was pointed out to us by many people
    including many people in this subcommittee that the statute did
    not require that. The statute allowed--suggested that we should
    support anchor institutions regardless of where they are
    located. So in response to those criticisms, we removed it. But
    as we assess the benefits of the program, we will continue to
    evaluate the extent to which the applicant is serving unserved
    and underserved areas in order to demonstrate--
        Mr. Dingell. Now----
        Mr. Strickling. That the benefits of the program will be
    realized.
        Mr. Dingell. I don't mean to interrupt you, Mr. Secretary,
    and I hope you don't regard this as discourteous, but you are
    telling me that you are not going to emphasize service to
    unserved and underserved areas.
        Mr. Strickling. Just the contrary. I just said we will. It
    is in our NOFA that you get priority for serving unserved and
    underserved areas.
        Mr. Dingell. I am going to submit to you some questions in
    writing on this point, and I ask unanimous consent, Mr.
    Chairman, that I be permitted so to do.
        Mr. Boucher. Without objection.
        Mr. Dingell. Now, Mr. Secretary, do you believe that this
    is--how do you intend to prevent overbuilding broadband
    infrastructure in areas of the country that are already served
    at the expense of the unserved areas?
        Mr. Strickling. We engage in a very detailed analysis as we
    assess the benefits of any given project. So on the question of
    what is already in an area, we have the submission of the
    applicant, we have the submission of the carriers in the area
    should they choose to provide that information. This spring we
    hope to have information collected by the States pursuant to
    the broadband map----
        Mr. Dingell. Now, I beg your pardon for interrupting but we
    have limited time. What steps is NTIA taking to ensure that
    these funds are not being used to fund projects that would lead
    to overbuilding of broadband in already served areas while the
    unserved areas continue to be inadequately or unserved?
        Mr. Strickling. Right. So we take all of that information I
    described and do an evaluation. Now, by its nature, a middle-
    mile project connects back into the Internet, so it will come
    into a served area almost certainly but we look at the overall
    project and the overall benefits that the project brings to
    ensure that the amount of overbuild is minimal and it is
    justified only when the facilities in the area are currently
    inadequate.
        Mr. Dingell. Now, with apologies again, Mr. Secretary, how
    many complaints have you received from incumbent providers
    contesting middle-mile projects to be funded under BTOP and
    what has NTIA done about these complaints?
        Mr. Strickling. Well, we receive information during round
    1, not--I wouldn't characterize them as complaints. They were
    information. If you are asking me how many complaints have we
    received for projects that have been funded, I am aware that
    Windstream is upset about Georgia and I understand FairPoint in
    bankruptcy is concerned about the Maine project.
        Mr. Dingell. It would be fair to observe, though, that the
    information you have received has not been complimentary. Am I
    correct on that?
        Mr. Strickling. I think it has been very misguided and
    self-serving.
        Mr. Dingell. ARRA requires NTIA to make available not less
    than $250 million for programs to encourage sustainable
    adoption of broadband service. I note that in its second round
    of NOFA, NTIA pledges to award the minimum, i.e., $250 million,
    required under the statute for sustainable adoption projects.
    Given that a recent FCC report finds only 4 percent of
    Americans do not have access to broadband but 31 percent have
    access to it if they choose to, do you believe that the bare
    minimum required under the statute is sufficient to achieve
    ARRA's goal of sustainable broadband adoption? Can you answer
    that yes or no, Mr. Secretary, please?
        Mr. Strickling. I don't know. I know that if we get quality
    applications, we will go above the $250 million.
        Mr. Dingell. Thank you, Mr. Secretary.
        Mr. Chairman, I thank you for your courtesy.
        Mr. Boucher. Thank you very much, Chairman Dingell.
        The gentleman from Vermont, Mr. Welch, is recognized for 5
    minutes.
        Mr. Welch. Thank you very much, Mr. Chairman. Thank you,
    members of the panel.
        We have been pretty frustrated in Vermont with the kind of
    hurry-up-and-wait situation. We had some of our folks
    submitting applications in round 1 not getting much of an
    answer. We have been unsuccessful in getting any awards in
    round 1. But I think the biggest frustration that our
    applicants have had is trying to figure out what the rules and
    regulations and the requirements are, and I know from my
    colleagues that they share an awful lot of that same
    frustration. So I have a couple of questions that I want to get
    to on that.
        But number one, my understanding, and correct me if I am
    wrong, is that only 15 percent of the amount promised for round
    1 has been awarded. Is that right, Mr. Adelstein?
        Mr. Adelstein. The amount is actually larger than that. We
    have done----
        Mr. Welch. The percentage is what then?
        Mr. Adelstein. The percentage I would say, by the time we
    complete this round in the very near future, we will have
    probably done 33 percent.
        Mr. Welch. But by now it was supposed to have all been
    awarded, right?
        Mr. Adelstein. Not by now, no. It has to be awarded by
    September 30, 2010.
        Mr. Welch. When folks in round 1 who applied were denied,
    did you provide applicants with information about what their
    technical problems were so that the proposals would be ready
    for round 2? I mean, this is just a practical issue.
        Mr. Adelstein. We did. We provided letters, over 1,000
    letters to folks that had applied in the first round explaining
    why the application wasn't funded. In addition, we have a help
    desk set up that offers more detailed explanations and we are
    striving to answer those calls as quickly as we can.
        Mr. Welch. You know, the dilemma--I don't want to be
    critical but I do want to express the frustration that our
    folks in Vermont have had. They just don't get that sense that
    there is somebody on the other end of the line when they are
    making a call and they are not getting those practical answers.
    There may be somebody ``answering'' in an official way but it
    is not as though there is some helpful information and
    knowledge to give them confidence that it is worth the time,
    effort and expense to do a round 2. So that is just for your
    consideration.
        Given the RUS focus on the last-mile projects and NTIA's
    emphasis on middle-mile projects, several Vermont companies or
    applicants have pointed out that they will be, from their
    perspective, unfairly disadvantaged by RUS preference for
    previous borrowers as they have traditionally avoided borrowing
    from government. Vermont needs the investments from broadband
    investments just like Mr. Terry's district does to build these
    last-mile facilities. So I am just wondering on a practical
    level, can you speak to that in a way that would be meaningful
    to our applicants in Vermont?
        Mr. Adelstein. We really want to see those applicants. I
    mean, we are dead serious about having diversity. Congress did
    mandate a priority, in the statute for existing borrowers but
    we really are funding the strongest applications we get in. We
    are funding a diversity of technologies, a diversity of
    applicants, many of whom are not Title II borrowers already. We
    really want to see those applicants come in.
        Mr. Welch. Well, let me ask you this, because you have got
    applications from all over. You know, this creates--there is
    available money. Some people call it free money and they are
    going to be scrambling to apply and try to get it. What were
    the considerations that were the basis of you deciding to make
    awards in round 1 and what were the obstacles or the
    deficiencies in applications that you found on a pattern in the
    rejected applications?
        Mr. Adelstein. Well, we were looking for projects that
    served areas that didn't have adequate service today was the
    main feature, particularly rural areas. Looking at Vermont, it
    was very much like much of the country. The issues that we
    looked at primarily that caused applications to fall through
    were that a number of applicants that were supposed to be more
    than 50 miles away from a town or city in fact weren't, and
    therefore we weren't eligible. We have eliminated that issue so
    in the second round people should be encouraged to apply on
    that. A number of applicants applied for more than a 50 percent
    grant amount, which is the maximum in the first round. Again,
    we have gone up to 75 and we have provided flexibility, and
    again, that should encourage applicants to reapply.
        Mr. Welch. Well, and there is a process by which incumbents
    can challenge the qualifications of an applicant's service area
    so it torpedoes an application. How are you going to handle
    that? I mean, how on a practical level will you handle that?
        Mr. Adelstein. We don't take the word of the incumbent or
    the word of the applicant. We actually will go into the field
    to determine whether there is service there. We have a field
    operation in virtually every State in the country and we will
    go out and look at an applicant's word versus the incumbent and
    make our own determination. Now, applicants will say their
    areas are underserved, incumbent will say it is served. We
    can't just take either one or the other as a priority, what
    they are saying. We have to do our own analysis, and we do. So
    people, just because they are getting those assertions, they
    should really know who is in their area. If you are applying
    for funding, our competitive analysis requires them to say who
    else is in a district that they are trying to serve, the
    service area, and let us know and then we will evaluate that in
    terms of whether the project is actually feasible.
        Mr. Welch. Thank you. I yield back, Mr. Chairman.
        Mr. Boucher. Thank you very much, Mr. Welch.
        I want to say thank you on behalf of the subcommittee to
    Mr. Strickling and Mr. Adelstein for your time here this
    morning. You have been very forthright in your answers. We were
    informed by them. We thank you for that.
        I want to congratulate you again on the good job you have
    done. I think given the time frames under which you have had to
    operate, your performance has absolutely been remarkable and
    you have this subcommittee's thanks for that.
        Other members will be submitting to you written questions.
    Chairman Dingell has indicated his intention to do so. I think
    Mr. Terry may well have some additional questions, and other
    members. When those are received, please try to answer them
    promptly, and the record of this hearing shall remain open in
    order to receive them.
        So with the subcommittee's thanks to both of you, this
    hearing stands adjourned.
        [Whereupon, at 12:30 p.m., the Subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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