[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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