[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:]
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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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