[Senate Hearing 111-509]
[From the U.S. Government Publishing Office]
S. Hrg. 111-509
OVERSIGHT OF THE BROADBAND STIMULUS
PROGRAMS IN THE AMERICAN RECOVERY
AND REINVESTMENT ACT
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 27, 2009
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas,
JOHN F. KERRY, Massachusetts Ranking
BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California JOHN ENSIGN, Nevada
BILL NELSON, Florida JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas GEORGE S. LeMIEUX, Florida
CLAIRE McCASKILL, Missouri JOHNNY ISAKSON, Georgia
AMY KLOBUCHAR, Minnesota DAVID VITTER, Louisiana
TOM UDALL, New Mexico SAM BROWNBACK, Kansas
MARK WARNER, Virginia MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska
Ellen L. Doneski, Staff Director
James Reid, Deputy Staff Director
Bruce H. Andrews, General Counsel
Ann Begeman, Acting Republican Staff Director
Brian M. Hendricks, Republican Chief Counsel
C O N T E N T S
----------
Page
Hearing held on October 27, 2009................................. 1
Statement of Senator Rockefeller................................. 1
Statement of Senator Hutchison................................... 2
Prepared statement........................................... 3
Statement of Senator Kerry....................................... 4
Statement of Senator LeMieux..................................... 6
Statement of Senator Pryor....................................... 36
Statement of Senator McCaskill................................... 40
Statement of Senator Ensign...................................... 42
Prepared statement........................................... 44
Statement of Senator Klobuchar................................... 45
Witnesses
Hon. Lawrence E. Strickling, Assistant Secretary, Communications
and Information, National Telecommunications and Information
Administration, U.S. Department of Commerce.................... 7
Prepared statement........................................... 10
Hon. Jonathan Adelstein, Administrator, Rural Utilities Service,
USDA Rural Development......................................... 13
Prepared statement........................................... 15
Mark Goldstein, Director, Physical Infrastructure Issues, U.S.
Government Accountability Office............................... 20
Prepared statement........................................... 21
Appendix
Response to written questions submitted to Hon. Lawrence E.
Strickling by:
Hon. John D. Rockefeller IV.................................. 53
Hon. John Kerry.............................................. 55
Hon. Barbara Boxer........................................... 57
Hon. Maria Cantwell.......................................... 59
Hon. Mark Pryor.............................................. 62
Hon. Frank R. Lautenberg..................................... 63
Hon. Tom Udall............................................... 64
Hon. Mark Warner............................................. 67
Hon. Mark Begich............................................. 68
Hon. John Ensign............................................. 73
Hon. Jim DeMint.............................................. 74
Hon. David Vitter............................................ 75
Response to written questions submitted to Hon. Jonathan
Adelstein by:
Hon. John D. Rockefeller IV.................................. 76
Hon. Mark Pryor.............................................. 77
Hon. Frank R. Lautenberg..................................... 79
Hon. Tom Udall............................................... 80
Hon. Mark Begich............................................. 84
Written questions submitted to Mark Goldstein by:
Hon. Mark Warner............................................. 86
Hon. Mark Begich............................................. 86
OVERSIGHT OF THE BROADBAND STIMULUS PROGRAMS IN THE AMERICAN RECOVERY
AND REINVESTMENT ACT
----------
TUESDAY, OCTOBER 27, 2009
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 2:55 p.m. in room
SR-253, Russell Senate Office Building, Hon. John D.
Rockefeller IV, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. This hearing will come to order.
And I apologize for my lateness. We had a variety of things
going on--nominees, a lot of Commerce nominees who had been
through the process, but which had been held up, but we got a
lot of them through, and that's important.
But, this is a hearing on the oversight of the Broadband
Stimulus Program in the Recovery Act, and it's an important
one. Broadband can help us reinvigorate our economy. Without
broadband, we won't have an economy. With the networks that we
could produce, if we would, we can change education, we can
change the way people think about the way they look at the
world, the way they look at each other, interracial matters,
the world at large. They're all available if we have broadband;
and if we use it properly, we can learn how to be civil to each
other, which would be a shock, but which would be very good for
America. But, these are all good things, and that's why I've
fought to make sure that broadband was included in the Recovery
Act. I think sometimes it pays to be tenacious. In this case,
Jonathan, you'll have to forgive me--I wasn't quite tenacious
enough, because I really wanted all that broadband money to go
to NTIA. And a certain Midwestern Senator, who is on
Appropriations, and I was not, changed that. But, I care about
you a great deal.
[Laughter.]
The Chairman. So, we tasked the Federal Communications
Commission with drafting a plan to help crisscross the country
with high-speed lines and deliver broadband across inner cities
and mystical places in East Texas and southern West Virginia
and--Do you have any mystical places?
Senator Kerry. Absolutely. Western Mass.
[Laughter.]
The Chairman. Yes, that's true.
I think the whole focus brought new energy to our Nation's
broadband challenge. All of a sudden there was money to be
spent. I believe the law sets us on the right road, but, make
no mistake, if we want these programs to succeed, the NTIA and
RUS and the FCC must address critical challenges ahead. And
it's going to be very hard for them to do that. And that's what
this is about.
First, we have the Broadband Technologies Opportunity
Program at the NTIA. This is an extraordinary undertaking. It's
a good one. That's about a $4.7-billion allocation. It's high,
but the rules governing it are very complex. Subject of our
hearing: complex rules. I believe that, to be fair to
applicants, we need to find a way to simplify the process,
going forward. And so do you. I know you all do.
Second, we have the Broadband Initiatives Program as RUS.
The inspector general at the Agriculture Department has
criticized broadband programs at RUS in the past. And there are
lingering doubts, as I guess I indicated, in the minds of some,
that the Agriculture Department is the right place to be
locating a broadband policy in the first place. But, Jonathan,
you give us hope. So, it's our job, and the job of the new
administrator of RUS to prove that these critics are wrong. And
I'm sure that you will be up to the task.
Third, and finally, we have the National Broadband Plan in
development at the FCC. This is not the subject of our stimulus
focus hearing today but, it is vitally important, so let me say
a few words about it. I want to see concrete action on the day
the plan is delivered, because I believe we need real broadband
solutions for real people, and we need them now. A mere menu of
options for the FCC and the Congress, with far-off timeframes,
isn't going to cut it. Furthermore, it's the agency's
responsibility to use this plan to address the detail--in
detail, the thorny issues, like universal service, that the FCC
has dodged for too long, but can no longer.
And finally, some thoughts need to be given to how this
plan can be harmonized between the NTIA and the RUS stimulus
programs. And that will hard. Turf battles, things of that
sort.
In short, before us today we are charged with making the
stimulus program a success.
So, I thank all of you for your service. And I guarantee
you the American people are looking forward to the process.
Senator Hutchison.
STATEMENT OF HON. KAY BAILEY HUTCHISON,
U.S. SENATOR FROM TEXAS
Senator Hutchison. Thank you, Mr. Chairman.
Let me say that this has been a very important priority for
me, as well. I am concerned about having broadband throughout
our country, and the priorities that we would put on the use of
money that has been allocated for it. But, I do think it is
such an important thing that we try to accomplish, and that
is--the availability of distance learning for education, and
also healthcare in rural areas, are the two major reasons that
I think we need to pursue this. However, the estimates are that
to solve the problem completely will cost about $300 billion.
And that is certainly something that I don't think we can
accomplish reasonably in the public sector. And that's why I
introduced another bill, the Connecting America Act, that would
give tax incentives for private companies to go into unserved
areas and make continuing investments in existing facilities so
that it wouldn't be a completely public burden to do the
expansion of broadband.
The $7 billion that was in the stimulus package now, I
think, is in your hands, and we are responsible for oversight
in that area. It's very hard, I think, to target funds to areas
that need infrastructure without good data, and we don't have
the full mapping plan yet for where we need to have it, where
the priorities ought to be, because, for example, we don't have
any service whatsoever, versus areas that may be underserved.
And one of the things that I think is highly required here is
that unserved areas go first, before underserved areas, if
we're going to get the benefits for education and rural
healthcare.
I'm concerned about some of the things that we have heard
about putting volunteers into vetting the grant requests, and
I'd like to--I will ask you to address that issue, and how
we're sure that we have people with the knowledge to be able to
determine where the grants ought to go. And also, the fact that
the funding goes until probably 2012 or 2013, but the funding
for oversight stops next year. So, I'm concerned that our
oversight has not been well thought out, either.
So, these are some of the questions that I hope you will
answer and I will look forward to hearing from you as we
proceed, because if we don't use this money wisely, it will be
certainly a waste of our resources, but also the waste of an
opportunity to do something really important for our country.
Thank you very much.
Thank you, Mr. Chairman.
[The prepared statement of Senator Hutchison follows:]
Prepared Statement of Hon. Kay Bailey Hutchison, U.S. Senator from
Texas
Thank you, Mr. Chairman, for holding this important oversight
hearing. I believe we all share the common goal of encouraging the
development of broadband communications in areas of the country that
continue to lack access. Texas is almost 80 percent rural, and I worry
about the lack of access to broadband in many communities across my
state.
The technology has a truly transformative capability. We can
dramatically expand the availability of distance learning to improve
educational opportunities, and increase the quality of rural health
care delivery through telemedicine, including remote diagnostic
services made possible through the sharing of detailed medical imaging
across broadband facilities.
In short, we can bring a world of information to every child
regardless of where they live, and guarantee that geography is not a
barrier to receiving the best health care available. We can, and must.
do more to close the gap on broadband access.
Tackling this issue will require that we find a way to meaningfully
engage the private sector through incentives that will draw investment
into unserved and underserved areas. This problem is simply too large
to solve with public funding, Mr. Chairman. Estimates suggest it could
cost as much as $300 billion to ensure universal access to broadband.
That is why earlier this year; I introduced the Connecting America
Act. This bill would provide tax incentives for private companies to
invest in unserved areas and to make continuing investments in existing
facilities to improve both capacity and capability of our broadband
networks.
The bill also includes new authority for localities to offer
broadband bonds to raise money for the design and construction of
facilities if they are unserved. Local governments would decide in
consultation with private companies the infrastructure that best meets
the needs of the homes and businesses in that area.
So, while we are here today to look at two Federal programs to
encourage broadband construction and adoption, I hope that we will not
forget that the private sector is a critical component of closing the
access gap.
With respect to the publicly funded efforts to close the access
gap, the Stimulus bill passed earlier this year includes more than $7
billion in taxpayer money for grants and loans to further this purpose.
That is a significant amount of money, and we need to make certain it
is being spent effectively and that there are appropriate safeguards
against waste, fraud and abuse in place.
I had significant concerns during the Stimulus debate about moving
quickly to deploy public funds before the FCC completes its report to
us on a national broadband plan, and before completing national
broadband mapping efforts. It is extremely difficult to target funds to
areas that need infrastructure without good data.
Since adoption of the Stimulus bill, I have consistently called on
these two agencies to prioritize funding to areas that are completely
unserved over areas that some feel are underserved. There are signs
that the predictable challenges presented by the lack of good data are
complicating efforts to confirm whether an area contained in an
application for funding already has service. It is my hope that we can
discuss these challenges today and implement safeguards before funding
goes out.
If communities remain totally unserved after this effort, and we
later discover that some of the funding went to projects in areas where
service was already robustly available, I think we will have missed an
important opportunity!
There are also concerns about plans for post-grant oversight by the
agencies. I believe that it is critical that members of this committee
understand the staffing levels and plans at both agencies here today to
guarantee that projects they approve are completed on time, on budget,
and in a way that ensures that the infrastructure remains viable for
years to come.
Many of the projects funded through these programs will not be
completed until 2012 or 2013, so it is important that we know the plans
both agencies have in place to provide this crucial oversight to deter
waste, fraud and abuse, and to verify that all of the projects are
completed.
Based on what I have heard to date, I am deeply concerned that the
oversight plans are inadequate. I look forward to Mr. Strickling and
Mr. Adelstein detailing for us how they will address these issues, and
to the recommendations of GAO on additional steps we can take to
guarantee that we maximize the effectiveness of the money we committed
to this effort.
Mr. Chairman, thank you again for holding this hearing.
The Chairman. Thank you, Senator Hutchison.
Senator Kerry.
STATEMENT OF HON. JOHN F. KERRY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Kerry. Thank you, Mr. Chairman.
I was busy asking the staff, just trying to remind myself--
I remember, back in 2004, President Bush promised that the
United States was going to commit to this and that--the
Administration would--and that we were going to get all of
America access to broadband. Since then, I mean, we've gone
from 4th in the world down to 15th or 16th, depending on whose
measure it is. And obviously that's simply unacceptable, for
reasons I want to talk about in a minute.
But, before I do, Mr. Chairman, I really want to thank you.
You know, I remember sitting here in this committee when you
and I probably sat way down there, I think it was, but for a
long time, you have made tireless efforts to bring broadband,
particularly, to rural America--to schools and to anchor
institutions. And I remember your championing the E-Rate, which
was so important to our ability to begin to do all of that. And
you had the foresight to encourage broadband access and
deployment long before it became, sort of, the core component
of our political dialogue.
So, I want to make it clear, I do not believe we'd be in
the position we are in today if it hadn't been for your
efforts, and I thank you for championing that.
People--you know, we hear a lot of talk about the
transformative power of broadband, and often it's put in the
context--or it used to be, at least--when we began this
discussion on this committee, it was in the context of access
to information, shopping, social networks, all those things
that broadband provides. And all of those are true. They're a
part of it. But, as the Internet has matured, even to our
position as 15th or 16th in the world, which is unacceptable,
what was once a novelty is now an economic and fundamental
necessity. And so, today broadband means educational tools. It
means job opportunities. It means government services. It means
healthcare, telemedicine. And those without that access are now
in the minority, and they are at risk of being, frankly,
second-class citizens as a consequence of that.
It's also discriminatory, incidentally. You know, the
studies indicate that 78 percent of students regularly use the
Internet for classroom work. Seventy-seven percent of Fortune
500 companies accept applications for jobs only online. So, if
you don't have that access, or you don't know that--and most
people who don't have access to broadband don't know that--
you're out of luck.
More and more government services are being provided
online. That means that children of families without broadband
are at a disadvantage in school. Qualified workers lose access
to jobs. Laborers are forced to take time off from work in
order to go wait in the government office line in order to get
what other people can get online.
And so, if you look at who those people are without
broadband--no surprise, folks, in America--many are low-income
households, the elderly, and those living in rural communities.
According to an FCC presentation last month, only 35 percent of
households with incomes less than $20,000 use broadband
service, compared to a nationwide average of 63 percent. So,
those statistics and those realities really come home to roost.
In Boston, Mayor Tom Menino has developed a very ambitious
and greatly needed Digital Inclusion Initiative in order to
help increase access to broadband for the city's lowest-income
neighborhoods. And that's well and good, and it's helpful, but
it hasn't been able to, you know, do all we'd like to do. The
Open Cape Corporation, from Cape Cod, has also put together a
proposal to bring the next generation of broadband
infrastructure to southeastern Massachusetts. And these are
great examples of how the BTOP Program can help expand
opportunity, improve public safety, and create jobs.
Now, the fact is that in the American Recovery Reinvestment
Act, we recognized the need to promote equal access and
opportunity for all Americans, no matter where you live. And,
in particular, the BTOP, the Broadband Technology Opportunity
Program, prioritized two categories of recipients--public
computing centers and sustainable broadband adoption projects--
as key to guaranteeing that no one is left behind.
Now, the public computing centers, such as libraries and
schools, provide broad access for a lot of community members,
many of whom obviously would lack service without them. And
these centers act as anchor tenants by bringing basic
infrastructure to underserved areas. Once that infrastructure
exists, then the cost of extending broadband service to the
surrounding community comes down.
But, infrastructure is not enough. And adoption programs
are critical to preventing the creation of a digital
underclass. I don't think any child--I don't think anybody in
this committee believes that any child's education ought to
suffer because their parents can't afford broadband. And no
worker ought to lose access to a job because they don't know
how to apply online, or don't have the ability to.
So, in implementing this program, gentlemen, I am
concerned--I think the Committee, and I know the Chairman is
concerned--that the NTIA did not adequately prioritize grants
to public computing centers and adoption projects. And I hope
that in the next round of applications, we're going to dedicate
greater resources to adoption programs, as well as recognize
the community anchor institutions as priority recipients,
consistent with the Recovery Act.
And finally, I'd be remiss if I didn't mention that the--
the FCC's National Broadband Initiative. $7.2 billion is a
large amount of money, but it's not, compared to what Franklin
Roosevelt did when he decided America had to have electricity
and we put, back in the 1930s, about $5 billion--you can do the
math; it's somewhere in the 20, 30, 40 right now--in order to
guarantee that people have access to something that becomes a
fundamental necessity to sort of share a life on an equal basis
in America in terms of access to the economy. I mean, we all
understand there are--there are God-given and birth
differentials. But, beyond those, we have an ability, as a
government, to make some difference when we make choices, and
this is one of those choices.
So, these are the things that I think we need to do. And
I'm hopeful that the FCC plan is going to include self-
executing steps to expeditiously make good on the promise of
broadband to consumers across the country. I think our GDP will
go up. I think our unemployment will go down. I think we will
increase our sales in certain products. And we will expand
opportunities significantly. And in the end, it will probably
wind up returning far more than the cost, in terms of revenue
to our country. So, we ought to get smart and make it happen.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Kerry.
In that we are a fair and balanced full committee, there
will be two Democrats and two Republicans who speak. And
Senator Thune came in just a bit too late.
[Laughter.]
The Chairman. So, Senator LeMieux is recognized.
STATEMENT OF HON. GEORGE S. LeMIEUX,
U.S. SENATOR FROM FLORIDA
Senator LeMieux. Thank you, Mr. Chairman. Thank you for
having this important hearing on broadband deployment programs
funded by the American Recovery and Reinvestment Act.
The $7.2 billion in funding for these efforts dwarfs
previous government efforts to expand broadband development to
rural and underserved areas of the country. While these
investments are certainly welcome to communities in Florida and
across the nation, such a massive increase in funding brings
with it a host of challenges. The agencies responsible for
administering the programs must dramatically ramp up their
efforts to ensure both timely and appropriate award of these
funds. I will be interested to hear today how much you have
spent and how much the progress of implementation has occurred.
Also, with such a large investment of taxpayer money, it is
critical that those responsible for execution do all they can
to avoid potentials for waste and fraud and abuse.
Additionally, it has been reported that many of the larger
companies involved in broadband deployment commercially have
not opted to participate in the programs due to some of the
programs requirements, that these companies who are most
involved in deploying broadband are not interested is
interesting to me, and I will be looking forward to hearing
from you on--your thoughts on why they have chosen not to
participate.
I also have a letter here, dated October 14, 2009, from Don
Winstead, who's the special advisor to the Governor in Florida,
that I'd like to talk to you about, about some of the
challenges and frustrations they're having in the
implementation of this process.
But, again, Mr. Chairman, thank you for holding this
important hearing, and look forward to the testimony of the
witnesses.
The Chairman. Thank you, Senator.
And we go now immediately to the NTIA Administrator, Mr.
Strickling.
STATEMENT OF HON. LAWRENCE E. STRICKLING, ASSISTANT SECRETARY,
COMMUNICATIONS AND INFORMATION,
NATIONAL TELECOMMUNICATIONS AND INFORMATION
ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Mr. Strickling. Thank you, Chairman Rockefeller.
Members of the Committee, thank you for your invitation to
testify today on behalf of the NTIA on the implementation of
our Broadband Technology Opportunities Program, as well as he
development of the National Broadband Map, as set forth in the
Recovery Act. I thank the Committee for the leadership it has
shown in this area and I welcome the opportunity to testify
this afternoon, with the hope that we can engage in a
productive dialogue and collaboration on our shared priorities
of, first, fostering innovation and growth, and second,
ensuring that all of our citizens are able to participate in
today's information age.
I'm very pleased to appear here today with Jonathan
Adelstein, who oversees the Broadband Initiatives Program at
the U.S. Department of Agriculture. Our two agencies have
worked hand-in-hand to implement the broadband provisions of
the Recovery Act. And the result has been a highly coordinated
and well thought out approach that has taken advantage of the
individual expertise of each agency. Mr. Chairman, I assure you
there have been no turf battles as we have worked together to
put our programs together.
I'd also like to acknowledge Mark Goldstein and the work
that the Government Accountability Office has performed with
respect to our programs. We are working closely and cooperating
fully with all of the inquiries from the GAO, as well as those
from our Inspector General at the Department of Commerce. We
appreciate the input that GAO and our Inspector General have
provided to ensure that our program is managed fairly and
effectively and that we distribute the grant funds in the most
efficient and impactful way possible and with minimal risk of
waste, fraud, and abuse.
Our agencies have received an extraordinary response to our
initial round of funding, and we look forward to the challenge
of awarding grants to a diverse set of grant recipients. I want
to assure you today that these funds will be well spent. And
with these funds, I am confident that America will take a
significant step forward to achieve President Obama's vision of
bringing the benefits of broadband to all citizens.
The President's Innovation Plan, announced in September,
makes clear that the foundation for durable and sustainable
economic growth must be innovation and investment. A key
component of the President's plan is to invest in the building
blocks of innovation, specifically including development of an
advanced telecommunications ecosystem. The Recovery Act and its
$7 billion for broadband grants directly supports that
initiative.
Today, we're in the thick of reviewing the initial
applications we received in late August for our first round of
funding. Between our two agencies, we received over 2200
applications, requesting nearly $28 billion in funding, seven
times the funding we had made available in the first round. We
received at least one application for every State, territory,
and the District of Columbia.
In our process, the applications are first reviewed by a
panel of three independent experts. Those scoring the highest
are being moved into our due diligence review, where NTIA
staff, assisted by experts from our contractor, Booz Allen,
perform a top-to-bottom review of all aspects of the
applications.
We are finding that our applications, particularly those
for infrastructure projects, are very complex. In addition, our
review is taking into consideration the recommendations each
state has submitted on the applications proposed for the State.
And we are also going to need to factor in the responses, due
tomorrow, from service providers as to whether the proposed
service areas for infrastructure projects meet our definitions
of unserved or underserved.
We want and need to provide full and fair consideration to
our pool of applications. Given the large number of complex
applications and the voluminous amount of information that we
need to review, we have decided to expand our review period,
and we are now targeting our first grant awards for mid-
December, about a month later than we originally projected last
July, when we announced the first round of funding.
Similarly, we will not conclude the first round of funding
at the end of this year, as we had originally hoped. But, we
expect to do so in February of next year.
I am confident that by expanding our first-round review
period, we will maximize the significant and lasting
improvements in America's technological innovation and economic
health promised by our program.
As we review the pool of applications, we are devoting
substantial time and attention to determining how we can apply
the Recovery Act funds to have the greatest impact in a number
of dimensions: job creation, the expansion of infrastructure
into unserved and underserved areas, the number of people
subscribing or getting access to broadband, and the immediate
and sustainable economic benefits of funding.
As we compare the different types of projects that have
been proposed, we are starting to focus on what we call a
``comprehensive communities approach'' as the type of project
that offers the greatest benefits per dollar spent. The
paradigm for a comprehensive communities proposal is a middle-
mile project that links the key anchor institutions in one or
more unserved or underserved communities. And by ``anchor
institutions,'' I mean schools, community colleges, libraries,
hospitals, government facilities.
The ideal project would also include commitments by
providers of end-user services to use this new infrastructure,
which is an open platform, to offer broadband services to end-
users throughout these communities.
We also think that public-private partnerships may offer
the greatest potential for the ultimate success of projects.
The involvement of public entities ensures that the needs of
communities are met. And the participation of qualified and
experienced private companies gives us great confidence that
the budget numbers and financial assumptions are reasonable and
that the project is sustainable for the long term. We will
continue to test these assumptions as we review our
applications and select the best ones for funding.
But, even in the middle of all this activity to review our
current applications, we're constantly thinking about ways we
can improve the program. We are working with RUS to complete a
request for information to collect input from the public as to
how to improve the program in the second round, and we welcome
your input, today and in the days to come, as we complete that
evaluation. With this RFI, we will ask for suggestions as to
how we can improve the application process and for comments on
some of the key program definitions.
I would just like to take a second and update the Committee
on our progress in developing the National Broadband Map. Under
our Mapping Grant Program, for which Congress appropriated $350
million, our plan is to award a broadband mapping grant to
every state and territory, provided each applicant can
demonstrate that it will collect and verify broadband data in
accordance with the standards we've set.
We have now awarded eight grants, totaling over $14
million, under this program to States, including Indiana, North
Carolina, West Virginia, Arkansas and Vermont, as well as
California, New York, and the District of Columbia.
In addition, we're in the final stages of awarding
additional grants to be announced next week, and we will
continue to announce these awards on a rolling basis.
One improvement we've already made to this program is to
limit our funding to 2 years instead of the 5 years originally
planned. This approach will allow us to conduct a complete
program review next spring, after the States supply us their
initial submissions, and in that review we will assess lessons
learned, determine best practices, and investigate
opportunities for improved data collection prior to awarding
funds for subsequent years. At the end of the day, though, we
will meet our goal and the statutory obligation to complete and
publish this map on or before February 2011.
In closing, NTIA is working extremely hard to ensure that
the broadband projects funded by the Recovery Act and the
broadband mapping information developed by the Mapping Grant
Program will serve as valuable inputs to our long-term
broadband strategy.
I look forward to working with all of you in the months
ahead to ensure that the Nation's policies benefit our
communications and information industries and American
consumers.
So, thank you for the opportunity to testify today. And I
look forward to your questions.
[The prepared statement of Mr. Strickling follows:]
Prepared Statement of Hon. Lawrence E. Strickling, Assistant Secretary,
Communications and Information, National Telecommunications and
Information Administration, U.S. Department of Commerce
I. Introduction
Chairman Rockefeller, Ranking Member Hutchison, and members of the
Committee, thank you for your invitation to testify on behalf of the
National Telecommunications and Information Administration (NTIA) on
the implementation of the Broadband Technology Opportunities Program
(BTOP) and the development of the national broadband map as set forth
in the American Recovery and Reinvestment Act (Recovery Act).
I am pleased to be here today with Jonathan Adelstein, the new
Administrator of the U.S. Department of Agriculture's Rural Utilities
Program (RUS), which administers BTOP's sister project, the Broadband
Initiatives Program (BIP). Our two agencies have worked together
closely to implement the broadband provisions of the Recovery Act to
ensure a well-coordinated and thoughtful approach that takes advantage
of the individual expertise of each agency.
I also want to thank the Committee for its leadership on broadband
policy, especially for your work to help enact the Recovery Act and
Broadband Data Improvement Act. This Committee has a long history of
furthering the Nation's economic activity and overseeing the
infrastructure necessary for the Nation's commerce--whether in aviation
or seaports, railroads or highways. The Recovery Act's broadband
initiatives, crafted by Congress earlier this year, are the modern
version of these past successes. These initiatives will not solve all
of America's broadband challenges, but they will allow us to take
significant steps in bringing the benefits of broadband throughout
America.
I assure you these Recovery Act funds will be money well spent.
Just as investments in transportation infrastructure supported the
development of the national highway system, these investments will
serve as valuable building blocks for future private investment that
will ultimately deliver the promise of truly ubiquitous broadband. At
NTIA, we will target Recovery Act funds to the areas of the country
that need them the most. In doing so, we want to make broadband more
widely available, especially to community anchor institutions, such as
hospitals, schools, and libraries. In short, I believe that we can
leverage these programs into significant and lasting improvements in
America's broadband deployment, technological innovation, and economic
health.
As directed by Congress, NTIA is implementing BTOP in line with
several critical goals. First, reduce the broadband gap in America,
focusing in particular on ensuring that unserved and underserved
areas--whether rural or urban--have access to modern communications
services and the benefits those services offer for education, high-
value jobs, quality health care and more.
Second, bring the maximum broadband benefits possible to our
community anchor institutions, such as schools, libraries, community
centers, and medical centers.
Third, improve broadband service for public safety users, whose
ability to access modern communications services is of vital importance
in their role as first responders.
Fourth, help stimulate broadband demand, economic growth, and job
creation. Broadband has a transformative power to generate growth
across many sectors of the economy, improve America's overall
competitiveness, and contribute to solving some of our Nation's most
pressing problems. Our challenge is to award high-quality grants that
will have measurable impacts on broadband availability and adoption in
a time-frame that maximizes the usefulness of these dollars to help the
Nation recover from the recession.
Additionally, NTIA will develop a publicly accessible and regularly
updated national broadband map. This map will serve to educate
consumers and businesses about broadband availability, enable broadband
providers and investors to make better-informed decisions regarding the
use of their private capital, and allow Federal, State, and local
policy-makers to make more data-driven decisions on behalf of their
constituents.
My testimony today will begin with a snapshot of the first round
applications we have received. I will then briefly describe our review
process for the first round and will conclude my testimony by
discussing what is ahead for BTOP and the Broadband Mapping Program and
by identifying a few issues and challenges I see on the horizon for
NTIA in the coming months.
II. Overview of First Round Broadband Applications Received
The level of interest shown by applicants in the first round of
BTOP and BIP funding has been extraordinary. We received almost 2,200
applications requesting nearly $28 billion in funding for proposed
broadband projects reaching all 50 U.S. states, five territories, and
the District of Columbia. When including about $10.5 billion in
matching funds committed by the applicants, these applications
represent more than $38 billion in proposed broadband projects. The
fact that applicants requested nearly seven times the total amount of
funding available in this initial round of broadband funding
underscores the interest for expanded access to broadband service
throughout the country.
Applications came in from a diverse range of parties including
state, tribal and local governments; nonprofits; industry; small
businesses; anchor institutions, such as libraries, universities,
community colleges, and hospitals; public safety organizations; and
other entities in rural, suburban, and urban areas. As I mentioned,
applicants proposed over $10 billion in matching funds. The Recovery
Act requires BTOP applicants to commit matching funds equal to at least
20 percent of the value of the project, but in the aggregate,
applicants' proposed matches actually exceeded 25 percent of the value
of all projects, meaning that the Recovery Act is already stimulating
private sector interest and investment beyond the statutory baseline
minimum.
A review of the first round applications also supports NTIA's and
RUS's decision to implement our respective Recovery Act broadband
initiatives in a coordinated fashion, and underscores the success of
those joint efforts in both educating the public about BTOP and BIP and
establishing rules and intake mechanisms that encourage diverse and
broad-based participation.
One result of our collaboration was the decision to allow
applicants in rural areas to apply for funding simultaneously under
both RUS's BIP and under NTIA's BTOP, although pursuant to the Recovery
Act, projects will only be funded in a single agency. Parties submitted
more than 830 applications jointly, requesting nearly $12.8 billion in
infrastructure funding. A rural applicant who is not awarded funding by
BIP remains eligible for BTOP funding without needing to refile.
NTIA received an additional 260 infrastructure applications that
were filed solely with the BTOP program, requesting over $5.4 billion
in grants to fund broadband infrastructure projects in unserved and
underserved areas. In addition, parties filed more than 320
applications with NTIA requesting nearly $2.5 billion in grants from
BTOP for innovative projects that promote sustainable demand for
broadband services, including projects to provide broadband education,
access, equipment or support, particularly among vulnerable population
groups where broadband technology has traditionally been underutilized.
Parties submitted more than 360 applications with NTIA requesting more
than $1.9 billion in grants from BTOP for public computer center
projects, which will expand access to broadband service and enhance
broadband capacity at public libraries, community colleges, and other
institutions that provide the benefits of broadband to the general
public or specific vulnerable populations. NTIA and RUS posted online--
at www.broadbandusa.gov--a searchable database containing descriptions
of all applications received, as well as maps of the geographic areas
of coverage proposed by applicants in the first funding round.
Having received nearly 2,200 applications in our first funding
round, we are now fully engaged in reviewing these applications to
determine which best meet the goals of the Recovery Act. In this phase,
at least three expert reviewers are evaluating each application against
established criteria, including the proposed project's purpose,
benefits, viability, budget, and sustainability. Those applications
considered the most highly qualified in this review phase advance for
further ``due diligence'' consideration.
Each state, territory, and tribal government has been given the
opportunity to prioritize and comment on the applications relevant to
its jurisdiction, and I am pleased that every state has provided NTIA
with its input. NTIA, like the Recovery Act, recognizes that state,
territorial, and tribal officials have a unique perspective on
broadband needs within their jurisdictions; we welcome and appreciate
the effort and thought they have put into their admissions.
As applications qualify for the due diligence phase, applicants
then submit supplementary information to NTIA as necessary to
substantiate representations made in their applications. NTIA staff
reviews and analyzes this supplemental information. I will make the
final selections of BTOP awards, consistent with the statutory
directives established by Congress in the Recovery Act.
III. Broadband Mapping
I also welcome the opportunity to discuss NTIA's State Broadband
Data and Development Grant Program, commonly referred to as NTIA's
Broadband Mapping Program. The Broadband Mapping Program, also funded
by the Recovery Act, will increase broadband access and adoption over
the long haul through better data collection and broadband planning.
This is an unprecedented effort to collect data on broadband deployment
in the United States, which will culminate in the creation of a
national broadband map.
I am pleased that we have received broadband mapping application
packages from every state, territory, and the District of Columbia,
meaning that all governments that were eligible to apply for grants did
so, whether directly or through a designated entity. These 56
applicants to the Broadband Mapping Program requested a total of
approximately $100 million in grant awards to fund broadband mapping
projects and $26 million to fund broadband planning projects. Unlike
BTOP's multiple round approach, only a single, state-designated entity
per state or territory is eligible to receive a grant, which helps
guarantee that the projects will benefit from significant state
involvement and oversight. As with BTOP, applications for broadband
mapping grants also are being evaluated by at least three expert
technical reviewers, with program staff performing a second review of
the application.
NTIA is funding the state mapping and data collection efforts for a
two-year period as opposed to the five-year period as originally
contemplated. This approach will allow NTIA to assess lessons learned,
determine best practices, and investigate opportunities for improved
data collection methods prior to awarding funds for subsequent years.
NTIA recently signed an agreement with the FCC through which the
Commission will provide technical and other services needed to develop
the national broadband map. As you know, the Recovery Act requires NTIA
to make the national broadband map available to the public February 17,
2011.
Earlier this month, NTIA awarded the first four grants under this
program to fund mapping activities in California, Indiana, North
Carolina, and Vermont. Specifically, NTIA awarded $1.8 million to the
California Public Utilities Commission (CPUC); $1.3 million to the
Indiana Office of Technology (IOT); $1.6 million to the Rural Economic
Development Center, Inc. (e-NC Authority); and $1.2 million to the
Vermont Center for Geographic Information (VCGI) to collect and verify
the availability, speed, and location of broadband across the states of
California, Indiana, North Carolina, and Vermont, respectively.
Today, I am pleased to announce that NTIA is awarding four
additional grants to fund broadband mapping and planning activities in
West Virginia, Arkansas, New York, and the District of Columbia. We
will continue to announce awards on a rolling basis throughout the
fall.
We hope to provide a broadband mapping grant to every program
applicant. If necessary, NTIA is working with applicants to revise and
refine project proposals such that each proposal meets the program's
standards. We will continue to award grants to other states as they
improve and refine their applications to bring them up to our quality
standards. The timing of subsequent award announcements will depend on
the quality of the applications and the necessary amount of revision
and refinement.
We aim to leverage the information gathered by this mapping program
to make datadriven decisions on BTOP grants. We will have the first
grantees' substantially complete broadband mapping data by February
2010, and we will complete a comprehensive, interactive national
broadband map by February 17, 2011, as directed by the statute.
IV. Next Funding Round
As we prepare for the next funding round, the first task is to
evaluate how the first round has worked. NTIA and RUS are finalizing a
new request for information that will help us shape the Round Two
process. The request for information will solicit the public's views on
how the first round worked for applicants and what changes and
clarifications should be made for the second round of applications. Our
goal is to improve the broadband programs and specifically the
application experience, and we will have the time necessary to adjust
those aspects of the process that need to be improved. Also, parties
who wish to collaborate on an application, such as through consortia or
public-private partnerships, will have additional time to work out the
details of those arrangements.
Looking forward, I must underscore the importance of our oversight
objectives for the program. NTIA is committed to ensuring that
taxpayers' money is spent wisely and efficiently. Since the inception
of BTOP, we have been working with the Department of Commerce's
Inspector General to design this program in a manner that minimizes the
risk of waste, fraud, and abuse. As we move forward and project
construction begins, NTIA will enhance its auditing and monitoring
responsibilities, including site visits to grantees. I will, of course,
keep the Committee apprised of our progress on those efforts.
NTIA also is working diligently to make certain that the broadband
projects funded by BTOP and the broadband mapping information developed
under the Broadband Mapping Program serve as valuable inputs to our
long-term broadband strategy. At its core, the broadband initiatives in
the Recovery Act offer a tremendous opportunity to stimulate job
creation and economic growth both in the near term and for the future.
We will continue to ensure that implementation of the Recovery Act
broadband initiatives is a collaborative and coordinated effort with
RUS and others in the Administration. We are also committed to making
this process as transparent and as efficient as possible, and we will
obligate all $7.2 billion in Recovery Act broadband funds by September
30, 2010, as the Act requires.
Thank you again for the opportunity to testify this morning. I will
be happy to answer your questions.
The Chairman. Thank you very much.
And now Mr. Adelstein.
STATEMENT OF HON. JONATHAN ADELSTEIN,
ADMINISTRATOR, RURAL UTILITIES SERVICE,
USDA RURAL DEVELOPMENT
Mr. Adelstein. Thank you, Mr. Chairman, members of the
Committee. Thank you for inviting me back to the Committee. I--
in my previous capacity in the FCC, I worked with a lot of you
to try to promote broadband throughout the country, and to
rural areas in particular. It's wonderful to be back, to be
among so many of the great visionary leaders who moved
broadband forward in this country, particularly you, Mr.
Chairman, in your efforts on the E-Rate. As my colleague
indicated, now we're going to build on those pioneering efforts
to try to give even fatter pipes to these anchor institutions,
including schools, libraries, hospitals, and other critical
facilities. So, this is a great opportunity.
I think--you referenced your opening statement that--I
think you've been just tenacious enough on the stimulus
package. Increasing broadband deployment and--in rural areas,
of course, has been a top priority for this President--
President Obama--for USDA Secretary Tom Vilsak, and, of course,
I know, for this Committee and for this Congress, as indicated
in the enormous support you gave in the Recovery Act.
It's a special honor to appear with my good friend,
Assistant Secretary Larry Strickling, who's done such an
outstanding job of leading the NTIA. It's a real tribute to his
leadership that we have worked so seamlessly together and that
we have been able to do so much.
You've really given us a historic opportunity, in the
Recovery Act, to improve access to broadband nationwide,
something we've talked about for so many years together, and
yet, it hasn't been accomplished. And it's because of your
leadership, now we have an opportunity to begin moving much
more down that path.
The RUS has a long and successful experience in doing this.
Senator Kerry, you mentioned the Rural Electrification
Administration. Of course, that was the beginnings of the--
today's RUS. It began as the REA in 1935, as President
Roosevelt sought to send electricity across America. It was our
little agency that financed it. And we've since moved on to
fund telephone and water service. In fact, tomorrow is the 60th
anniversary of when the RUS first began to provide financing
for telephone service in rural areas. So, we do have a long
history, here. And we're now applying that expertise, that we
developed over the years, to broadband.
Since 1995, we've been on the cutting edge. We have
required all new telecommunications capacity that we finance to
be broadband capable. We've also had great success with our
Community Connect and distance learning and telemedicine
programs. The USDA broadband loan program, which was created in
the 2002 farm bill, has provided over $1.1 billion in loans to
more than 90 broadband projects in rural areas spanning 42
states. On top of that, we provided $4.4 billion, since 2001,
in loans, to our regular program for broadband-capable
infrastructure.
The Recovery Act, though, marks a major new chapter in this
effort. As GAO indicated, it is a big challenge, and it's much
bigger than what we've done in the past.
Since the enactment of it, we have worked side-by-side with
our partners at NTIA, the FCC, the White House, to fulfill the
President's vision for promoting broadband access across
America. And as the Secretary indicated, the collaboration has
been unprecedented.
RUS and NTIA are now fully engaged in our respective
reviews of applications for over $28 billion in funding
requests. We at RUS have 75 years, as I've said, in lending
experience in rural America, and our default rate is less that
1 percent in our telecommunications portfolio. And we want to
try to replicate that success.
Using the $2.5 billion in funds the RUS received, we plan
to leverage these funds, to use our budget authority, provided
by Congress, to provide loans--grants and loans, and
combinations of them, to prospective applicants. So, we hope to
stretch that $2.5 billion significantly to facilitate the
deployment of more broadband to more parts of the country.
We are now in the process of evaluating the first-round
applicants and expect to begin issuing awards as soon as
possible. As the Assistant Secretary indicated, our initial
plan to begin making award announcements in early November may
slip, due to program complexity and the overwhelming demand
that we've experienced, but we hope to begin making
announcements only about a month after our initial estimate.
And well over half of the total investment projected under
the BIP program has been reserved for subsequent funding
rounds. So, there's still--the vast bulk of the money is left
to be distributed under the new rules that we can develop, with
your input. It continues to be our belief that we should move
to combine the plan for second and third rounds into a single
round, in order to give applicants additional time to create
strong proposals and to ensure that we're able to meet to goal
of obligating all funds by September 30, as you required. So,
we hope to put forward announcements soon on this.
And we'll take what we learn in that first round of funding
to heart in developing our next round of funding. We're aware
of concerns that have been raised on a wide range of issues.
These include the definition of ``rural'' and ``remote'' areas;
eligibility standards for unserved and underserved areas;
scoring rates for various factors; and concerns regarding
satellite service. Without speculating about specific changes,
we will be guided by an evaluation of our experience and the
feedback that we're getting on this first round, and we're
prepared to make changes accordingly.
So, we certainly welcome input from everyone on this
committee, input from GAO on how best to move forward and apply
the lessons learned in round one toward the work ahead of us in
the next round, which we anticipate will be announced in the
coming months. To that end, RUS and NTIA plan to seek formal
written comments on ways to better meet the requirements of the
Recovery Act. We'll be releasing a Request For Information
shortly to gather that information. And we'd certainly welcome
the Committee's input on any key issues you think we need to be
raising.
We'll continue to ensure that the implementation of the
ARRA Broadband Initiative is collaborative and a coordinated
effort with our partners at NTIA and throughout the
Administration.
It's certainly an honor to work with you on behalf of the
65 million Americans in our rural communities, and we look
forward to continuing to work closely with Congress in making
affordable broadband service available widely throughout
America.
Thank you for inviting me to testify, and I'd be happy to
answer any questions.
[The prepared statement of Mr. Adelstein follows:]
Prepared Statement of Hon. Jonathan Adelstein, Administrator,
Rural Utilities Service, USDA Rural Development
Mr. Chairman, Ranking Member Hutchison, and distinguished members
of the Committee, thank you for the opportunity to testify on the U.S.
Department of Agriculture's Broadband Initiatives Program (BIP). Having
testified before this Committee previously as a member of the Federal
Communications Commission, I have had the pleasure of working with you
Mr. Chairman and many of the Committee members to promote the
deployment of affordable quality broadband service in rural America,
and throughout the country.
I commend your leadership and the ongoing work of this Committee
to promote the critical role that broadband plays in our Nation's
economic recovery efforts. The major commitment of resources in the
American Recovery and Reinvestment Act (ARRA) sends a strong message
about the need to provide improved access to high speed network
facilities in a timely and effective manner nationwide. Broadband
erodes the barriers of time and distance that traditionally have
hindered rural communities from enjoying the access to health care,
educational opportunities and financial markets. Today, broadband is a
key foundation of our economy and necessary for rural businesses to
survive and remain competitive.
Together, we can foster the greatest level of broadband access
throughout rural America. The funds we will administer in the next 12
months will cultivate new investment opportunities in as many rural
remote communities as possible.
On behalf of Secretary Vilsack, USDA stands committed and ready to
fulfill its rural broadband mandate outlined by this Congress and the
President. Improving the quality of life for rural families and
businesses is the centerpiece of USDA's overall mission. Secretary
Vilsack has repeatedly acknowledged how this Congress and the
Administration have helped to provide the building blocks for a new
rural economy. These building blocks include renewable energy, local
and regional food systems, regional collaboration and investment in
broadband. Each of these areas is a key component of USDA's focus
toward rebuilding and revitalizing economic growth in rural America.
However, broadband enables all of these building blocks to function and
deliver benefits to rural Americans.
To underscore the importance of broadband in renewing the rural
economy, Secretary Vilsack directed the USDA's Economic Research
Service (ERS) to examine the economic effects of having broadband
access in rural communities. In August, the ERS published a report,
entitled ``Broadband Internet's Value for Rural America,'' which
concluded that employment growth was higher and non-farm private
earnings greater in counties with a longer history of broadband
availability.
The report also cited certain key benefits of broadband access in
rural communities. Such benefits include access to online course
offerings for students in remote areas and the access to telemedicine
and telehealth services which often reduce transportation costs for
patients living in rural areas in need of urgent care. Agricultural
workers and farm based businesses are also more reliant on Internet
access to conduct sales transactions, marketing and advertising,
monitor real time changes in the commodities markets and track global
trends that impact U.S. crop prices to stay in business.
I am pleased to provide you with a roadmap for how the Rural
Utilities Service will accomplish President Obama's goal of investing
heavily in rural America with broadband. First, I want to provide you
with a brief overview of our mission in serving rural communities and
how we are prepared to meet the goals articulated in the Recovery Act.
Since 1935, beginning with the Rural Electrification
Administration, we have been a premier lender for rural infrastructure
investment. Our current loan portfolio is over $54. billion and
includes Federal financing for water and wastewater,
telecommunications, broadband, electric and renewable energy
infrastructure projects.
We are now tasked with applying the technical skills and historical
knowledge we have amassed in issuing financing for electricity,
telecommunications and water over the past 75 years to obligate the
funds over the next year to construct next generation broadband
facilities in rural areas to serve as many customers as possible with
the funds provided.
Our goal is to recreate the successes we have achieved in financing
the electric grid for rural utilities toward building new broadband
networks in the most rural and remote regions of the country.
We are grateful to Congress and the Administration for giving the
USDA the opportunity to contribute its expertise toward rebuilding
economic prosperity in rural America. Through the Recovery Act,
Congress and the Administration entrusted the Rural Utilities Service
with nearly $4 billion in stimulus funds for infrastructure investment,
dedicating $2.5 billion for rural broadband deployment and $1.38
billion for rural water infrastructure projects.
Since the enactment of the Recovery Act in February, we have worked
side by side with our partners at the National Telecommunications
Information Administration (NTIA) and the Federal Communications
Commission to fulfill the President's vision for promoting ubiquitous
broadband access across the Nation. Assistant Secretary Larry
Strickling has been an outstanding and visionary partner throughout
this process. The Federal Communications Commission has also been an
active contributor to this discussion. I am grateful for this
Committee's continued leadership and guidance as we work toward
accomplishing this mandate.
RUS and NTIA are fully engaged in our respective reviews of
applications for over $28 billion in funding requests. There is a high
degree of interest in our respective loan and grant programs and the
great demand for broadband in rural America.
However, it's worth noting that RUS has encountered several
challenges as we have worked to review applications for this round of
funding. These concerns have prompted us to consider alternative
approaches for the second round of funding that would simplify the
application process and support our efforts to fund high-quality
projects. In particular, we have seen applicants struggle to comply
with the requirements of the ``remote'' definition for last-mile rural
remote projects. This definition was an attempt to ensure that the
program targets funding to some of the most remote and difficult to
serve areas in the United States, which we understand is the intent of
Congress. The use of this term was also part of an effort to correct
previous program criticism that RUS has historically funded less-remote
project areas. We are contemplating major revisions that will continue
to target highly-rural areas that are difficult to serve while making
it easier for applicants to comply with any new definition we may
establish.
Among other issues, we have also seen some applicants encounter
challenges with our program's rural definition. In addition, some
applicants have found it difficult to comply with the loan requirement
for middle mile and last mile non-remote projects.
We will be working with NTIA to publish a Request for Information
(RFI) in the near future that asks questions about these items and many
others. We would welcome the Committee's input on these key issues.
USDA's Historic Role in Telecommunications Infrastructure Investment
USDA has a history of success in this arena. The telecommunications
program was initiated in 1949 to fund the build out of
telecommunications facilities in rural America. By the 1970s, the
Telecommunications Program led the Nation in funding one of the first
commercial fiber optic systems, Commonwealth Telephone Company in
Pennsylvania.
To ensure that rural communities get access to quality broadband
services, since 1995 RUS required that telecommunications
infrastructure for both new construction and upgrades of existing
systems be capable of supporting at least 1 Mbps in both directions.
Today, the RUS Telecommunications portfolio--built up over 60 years--
totals $4.1 billion.
As technology continues to evolve, we will continue to find new
ways to deliver next generation services and facilities to end users in
rural and high cost areas. We are committed to ensuring that all
infrastructure awards are made in a technology neutral manner so that
rural end users get the benefit of a variety of technologies servicing
their region, not just one.
Our legacy in funding telecommunications facilities was enhanced in
both the 2002 and 2008 Farm Bills, which authorized RUS to administer
three broadband-related programs. The most prominent of these is the
Broadband Loan Program, which to date has approved over $1.1 billion in
loans to more than 90 broadband infrastructure projects in rural
communities spanning 42 states. In addition, through the Community
Connect Grant Program and the Distance Learning and Telemedicine Loan
and Grant Program, we have achieved considerable success and gained
invaluable experience in deploying broadband and related services to
remote rural and underserved communities. Through these two programs,
RUS has invested $498 million in rural underserved areas.
Applying the Lessons Learned from the 2002 Farm Bill to Future
Applications
Since the enactment of the Broadband Loan Program in 2002, we have
gained tremendous insights into the unique challenges of deploying loan
financing for next-generation Internet architecture in rural high-cost
markets. As we develop the regulations for the changes required under
the 2008 Farm Bill, we are incorporating the lessons we have learned
since 2002 regarding the funding of broadband networks in a competitive
environment to improve our existing track record. Once these
regulations are published, we will launch a national outreach effort to
help guide applicants on the new requirements and how to apply for
funding. Outreach and education are important function of our work in
reaching as many rural populations as possible, and we will continue to
dedicate resources and attention toward educating the American public
of our Farm Bill once regulations are released.
To further assist prospective applicants with the new Farm Bill
requirements, we will utilize the expertise of our nationwide network
of Rural Development field offices and RUS' own General Field
Representatives (GFRs), who are stationed in local communities across
the country to hold workshops, deliver presentations, and respond to
inquiries about the program. Within weeks of my arrival at RUS, I met
with most of our GFRs and State Directors, who are among our most
effective resources throughout the Federal Government in reaching rural
Americans.
Rural Development has hundreds of experienced field professionals
who work with the community every day in every way. We have
approximately 6,000 employees in over 470 offices nationwide. Through
the outstanding local outreach performed by our field staff, we have
enormous capacity to coordinate our programs and provide assistance and
guidance to our borrowers. Our field staff stands ready to assist
service providers and rural community leaders with these programs, as
well as with the current loan and grant programs. We expect that these
new regulations and procedures will continue to keep our loan portfolio
healthy well into the future.
Implementation of the BIP Program under the American Recovery and
Reinvestment Act: Building on our Service to Rural America
In February of this year, ARRA provided the USDA with $2.5 billion
in budget authority to deploy broadband in rural, unserved and
underserved areas nationwide under the Broadband Initiatives Program
(BIP). Of the funds we received in the Recovery Act for broadband, we
estimate that we could deliver up to $7 to $9 billion in loans, grants
and loan grant combinations to prospective applicants, based on our
ability to leverage our funding levels. This strategy is designed to
build on RUS' demonstrated expertise in finance and to complement
NTIA's Broadband Telecommunications Opportunity Program (BTOP), which
is a grant-only program. Supporting investments through our loan
authority will help leverage Federal resources, and is a goal that we
intend to continue to promote.
Under our first Notice of Funding Availability (NOFA), published on
July 9, 2009, RUS made available up to $1.2 billion for Last Mile
projects, up to $800 million for Middle Mile projects, and established
$325 million for a National Reserve.
Our goal is to move further toward the President's vision of
improved access, ensure that every community has a fair opportunity to
compete for available funding, and leverage taxpayers' dollars to the
greatest extent possible. We are careful stewards of funds we manage
and obligate, which is how we built our reputation as an attractive
low-cost lender.
To implement our coordinated broadband program, in March the USDA
and NTIA initially published a joint Request for Information in the
Federal Register soliciting public comment on implementation of ARRA.
We held six public meetings to provide an opportunity for further
public comment and received over 1,000 comments from institutions and
individuals on key questions, including the definitions of
``broadband,'' ``unserved,'' and ``underserved.'' Based on the diverse
nature of comments received from a wide cross section of public and
private stakeholders, our agencies drafted a Notice of Funds
Availability (NOFA) which was posted on-line on July 1 and published in
the Federal Register July 9.
The NOFA incorporated the requirements for both the BIP and BTOP
programs so that applicants could file a single application for one or
both funding opportunities offered. This NOFA announced the first round
of funding under ARRA, with the expectation that one or more additional
NOFAs will be released in Fiscal Year 2010. We are mindful of the fact
that all funds must be obligated no later than September 30, 2010, so
we are trying to move as quickly, but as prudently, as possible to meet
the objectives outlined in the statute.
RUS and NTIA Coordinated Outreach and Public Education
An outreach and communications strategy was developed jointly by
both agencies to ensure that the prospective applicants and other
stakeholders would receive accurate, timely and comprehensive
information on the programs. The objective of the outreach strategy was
to explain the application process to prospective applicants in a short
period of time. USDA and the Department of Commerce determined that a
series of joint how-to-apply workshops would be conducted by program
staff from both agencies. Since the Federal Communications Commission
(FCC) is an integral partner to both agencies in addressing
telecommunications issues, the FCC was invited to participate in the
workshops to provide information on broadband technologies and
resources available at the FCC.
The outreach and education workshops jointly sponsored by RUS and
NTIA were held in a variety of regions throughout the country, with
locations chosen to provide maximum geographic diversity and to focus
on targeted applicant segments. Workshop locations were also chosen
based on their proximity to transportation to facilitate attendance
from surrounding areas. We promoted the effort through the USDA/
Department of Commerce joint ARRA broadband website
(www.broadbandusa.gov), as well as through our own agency websites and
Public Information Coordinators throughout the country, targeted media
alerts and e-mailings to state economic development organizations,
industry and consumer associations, prospective applicants, and state/
local government offices nation wide.
The Application Process
The application window opened on July 14 and the electronic
application system went live on July 31. The volume of applications and
the compressed time-frame led to a number of application processing
issues, and we took a series of steps to deal with these issues. First,
we added server capacity. We also extended the deadline to submit
electronic applications from August 14 to August 20. Applicants who had
submitted core applications by 5 p.m. (EST) on August 14, 2009 (the
original application deadline), were also given the opportunity to
submit electronic applications through August 20.
We notified applicants by posting the deadline extension on both
the BroadbandUSA.gov joint website and respective agency websites. We
published a legal notice in the Federal Register and sent it to each
applicant by e-mail. The website help desk hours and staff were
increased to answer questions from applicants throughout the weekend.
Due to the extraordinary level of demand to upload attachments
directly into the system, the RUS and NTIA issued an additional notice
on August 19 informing applicants that they would be permitted to
submit attachments to their application by alternative means that
included CD, DVD, thumb drive, or other electronic media. Attachments
delivered by regular mail postmarked by August 24, 2009, were accepted.
Next Steps for Round One and Round Two
We are now in the process of evaluating First Round applications
and expect to begin issuing awards shortly. The first NOFA made
available up to $2.4 billion in program level (loans and grants)
funding. Well over half of the total investment projected under the BIP
program has been reserved for subsequent funding rounds. There have
been previous conversations regarding plans for subsequent funding. It
continues to be our belief that we should move to compress the planned-
for second and third rounds into a single round in order to give
applicants additional time to create strong proposals and to ensure
that we are able to meet the goal of obligating all funds by September
2010. We continue to work through mechanics of effectuating this
change, and we hope to put forward an announcement in the near future
on this matter.
Subsequent funding may include enhancements to eligibility and
scoring criteria used in Round One. We are cognizant of the concerns
and suggestions that have been raised regarding a wide range of issues
including the definition of rural and remote areas, eligibility
standards for unserved and underserved areas, scoring weights for
various factors and concerns regarding overlapping service territories
for satellite providers. It would be premature to speculate about
specific changes to our regulations until we have completed the
evaluation of first round projects, but it is important to note that
this is not a static process. We will consider changes to these rules
based on the feedback we have received to date.
We welcome input from everyone on this Committee on how best to
move forward and apply the lessons learned in Round One toward the work
ahead of us in the next round of funding, which we anticipate will be
announced in the coming months. To that end, RUS and NTIA plan to seek
formal written comments on ways to better meet the requirements of the
Recovery Act and will be releasing a Request for Information (RFI) very
shortly to gather such information. Our next steps will be guided by
the input we receive during this process. We will make necessary
changes based on these suggestions and our experience.
We will continue to ensure that implementation of the ARRA
broadband initiative is a collaborative and coordinated effort with our
partners at the NTIA and in the Administration. We are also committed
to making this process as transparent and as efficient as possible. The
purpose of the Recovery Act is to spur job creation and stimulate long-
term economic growth and investment. To date, we are on track to
obligate the $7.2 billion in ARRA broadband budget authority by
September 30, 2010.
This week we are celebrating our 60 year anniversary of financing
telecommunications infrastructure, which has evolved from delivering
voice to distance learning, telemedicine and broadband. On behalf of
all of us at USDA Rural Development and the Rural Utilities Service,
thank you for your continuing and generous support of this critical
mission. Our ability to offer programs to create economic opportunity
and improve the quality of life in rural America is a result of your
work. It is an honor and privilege to work with you on behalf of the 65
million Americans in our rural communities. We look forward to working
closely with Congress and our Federal partners throughout the Obama
Administration in making affordable broadband service widely available
throughout rural America.
Thank you again for inviting me here to testify and I will be glad
to address any questions you have.
The Chairman. Thank you, sir.
Mr. Goldstein.
STATEMENT OF MARK L. GOLDSTEIN, DIRECTOR,
PHYSICAL INFRASTRUCTURE ISSUES,
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Goldstein. Thank you, Mr. Chairman and Members of the
Committee. Thank you for the opportunity to discuss GAO's
preliminary findings on Broadband Telecommunications and
Recovery Act Programs, designed to increase access for all
Americans and to stimulate the economy and create jobs.
Access to broadband service is seen as seen as vital to
economic, social, and educational development. Yet, many areas
of the country lack access to, or their residents do not, use
broadband.
To expand broadband deployment and adoption, the Recovery
Act provided $7.2 billion to the Department of Commerce's NTIA
and to the Department of Agriculture's Rural Utility Service
for grants or loans to a variety of program applicants. The
agencies must award all funds by September 30, 2010.
This testimony provides preliminary information on the
challenges NTIA and RUS face, steps taken to address the
challenges, and the remaining risks in evaluating applications
and awarding funds, and overseeing funded projects. This
statement is based on related ongoing work that GAO expects to
complete in November. While this testimony does not include
recommendations, we do expect to make recommendations in our
November report.
We recognize this program is just getting started, but its
impact can be considerable. Despite significant efforts, we do
have some observations. Our preliminary findings are as
follows:
First, with respect to application evaluation and awards,
NTIA and RUS face scheduling, staffing, and data challenges, in
evaluating applications and awarding funds. NTIA, through its
new Broadband Technology Opportunities Program, and RUS,
through its new Broadband Initiatives Program, must review more
applications and award far more funds than the agencies
formerly handled through their legacy telecommunications grant
or loan programs.
Additionally, NTIA and RUS initially proposed distributing
these funds in three rounds. To meet these challenges, the
agencies have established a two-step process that uses
contractors and volunteers for application reviews, and plan to
publish information on applicants' proposed service areas to
help ensure the eligibility of proposed projects. While these
steps address some challenges, the upcoming deadline for
awarding funds may pose risks to the thoroughness of the
application evaluation process. In particular, the agencies may
lack time to apply lessons learned from the first funding round
and to thoroughly evaluate applications for the remaining
rounds, even if an extension does occur as NTIA indicates.
The agencies also face problems with the process of
allowing challenges by existing companies to claims for service
areas. Concerns have been raised that the current 30-day
challenge period is not sufficient.
GAO also remains concerned that the Broadband Mapping
Program, with its current timelines, may not be completely
useful for helping NTIA and RUS determine how best to award
funding in ways that meet the goals of the Recovery Act.
Second, with respect to oversight of funded projects, NTIA
and RUS will oversee a significant number of projects,
including projects with far larger budgets and diverse purposes
and locations. In doing so, the agencies face the challenge of
monitoring these projects with far fewer staff per project than
were available for their legacy grant and loan programs. To
address this challenge, NTIA and RUS have hired contractors to
assist with oversight activities and plan to require funding
recipients to complete quarterly reports and, in some cases,
obtain annual audits.
Despite these steps, however, several risks remain,
including a lack of funding for oversight beyond Fiscal Year
2010 and a lack of updated performance measures to ensure
accountability for NTIA and RUS.
In addition, NTIA has yet to define annual audit
requirements for commercial entities funded under the Broadband
Technologies Opportunities Program.
Mr. Chairman, this concludes my statement. I'd be happy to
respond to any comments or questions you may have.
[The prepared statement of Mr. Goldstein follows:]
Prepared Statement of Mark L. Goldstein, Director, Physical
Infrastructure Issues, U.S. Government Accountability Office
Mr. Chairman and Members of the Committee: We appreciate the
opportunity to participate in this hearing to discuss the
implementation and oversight of the broadband programs funded through
the American Recovery and Reinvestment Act \1\ (the Recovery Act). As
you know, access to broadband is seen as vital to economic, social, and
educational development, yet many areas of the country lack access to,
or their residents do not use, broadband. The Recovery Act appropriated
$7.2 billion to extend access to broadband throughout the United
States. Of the $7.2 billion, $4.7 billion was appropriated for the
Department of Commerce's (DOC) National Telecommunications and
Information Administration (NTIA) and $2.5 billion for the Department
of Agriculture's (USDA) Rural Utilities Service (RUS). Specifically,
the Recovery Act authorized NTIA, in consultation with the Federal
Communications Commission (FCC), to create the Broadband Technology
Opportunities Program (BTOP) to manage competitive grants to a variety
of entities for broadband infrastructure, public computer centers, and
innovative projects to stimulate demand for, and adoption of,
broadband. Of the $4.7 billion, up to $350 million was available
pursuant to the Broadband Data Improvement Act for the purpose of
developing and maintaining a nationwide map featuring the availability
of broadband service, with some funds available for transfer to FCC for
the development of a national broadband plan to help ensure that all
people in the United States have access to broadband. Similarly, RUS
established the Broadband Initiatives Program (BIP) to make loans and
to award grants and loan/grant combinations for broadband
infrastructure projects in rural areas.
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\1\ Pub. L. No. 111-5, 123 Stat. 115 (2009).
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NTIA and RUS have taken many important steps to implement the
broadband provisions in the Recovery Act. NTIA, RUS, and FCC held a
series of public meetings in March 2009, explaining the overall goals
of the new broadband programs. NTIA and RUS also sought public comments
from interested stakeholders on various challenges that the agencies
would face in implementing the broadband programs through these
meetings and by issuing a Request for Information. NTIA and RUS
received over 1,500 comments. FCC, in a consultative role, provided
support in developing technical definitions and participated in the
public meetings. NTIA and RUS initially indicated that they would award
Recovery Act broadband program funds in three jointly-conducted rounds.
On July 1, 2009, Vice President Joe Biden, Secretary of Commerce Gary
Locke, and Secretary of Agriculture Tom Vilsack announced the release
of the first joint Notice of Funds Availability (NOFA) detailing the
requirements, rules, and procedures for applying for BTOP grants and
BIP grants, loans, and loan/grant combinations.\2\ Subsequently, the
agencies held 10 joint informational workshops throughout the country
for potential applicants to explain the programs, the application
process, and the evaluation and compliance procedures, and to answer
stakeholder questions. NTIA and RUS coordinated and developed a single
online intake system whereby applicants could apply for either BTOP or
BIP funding. NTIA and RUS must award all funds by September 30, 2010,
and both BTOP and BIP projects must be substantially complete within 2
years and fully complete no later than 3 years following the date of
issuance of their award.
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\2\ 74 Fed. Reg. 33104 (2009).
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My testimony today discusses: (1) the challenges and risks, if any,
NTIA and RUS face in evaluating applications and awarding funds, and
the steps they have they taken to address identified risks, and (2) the
challenges and risks, if any, the agencies face in overseeing funded
projects, and the steps they have taken to address identified risks. My
testimony presents preliminary observations based on ongoing work we
expect to complete this fall.
To conduct our work, we are reviewing FCC, NTIA, and RUS program
documentation. We are also interviewing relevant staff from the three
agencies regarding their agencies' efforts to implement the broadband
provisions of the Recovery Act. We are reviewing relevant laws and
regulations; guidance from the Office of Management and Budget (OMB),
DOC and the Department of Justice, and the Domestic Working Group; and
prior GAO reports. We are comparing the agencies' efforts to the laws,
regulations, and guidance to identify strengths and weaknesses in their
efforts. To determine what reporting and audit requirements will apply
to recipients of NTIA and RUS funding, we are reviewing the Single
Audit Act,\3\ agency regulations and documents, and OMB guidance, and
interviewing agency officials. Finally, we are interviewing stakeholder
organizations representing a range of interests, including associations
representing wireline, wireless, cable, and satellite service
providers; consumer advocates; telecommunication policy researchers;
and state telecommunications regulators to obtain their views on the
potential challenges and risks facing the agencies. We are conducting
this performance audit, which began in April 2009, in accordance with
generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
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\3\ 31 U.S.C. ch. 75.
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NTIA and RUS Have Taken Steps to Address Scheduling, Staffing, and Data
Challenges; However, Some Risks Remain
NTIA and RUS face scheduling, staffing, and data challenges in
evaluating applications and awarding funds. The agencies have taken
steps to meet these challenges, such as adopting a two-step evaluation
process, utilizing nongovernmental personnel, and publishing
information on the applicant's proposed service area. While these steps
address some challenges, the agencies lack the needed time to apply
lessons learned from the first funding round and face a compressed
schedule to review new applications. As a result, the agencies may risk
awarding funds to projects that are not sustainable or do not meet the
priorities of the Recovery Act.
NTIA and RUS Face Scheduling, Staffing, and Data Challenges in the
Evaluation of Applications and Awarding of Funds
Scheduling challenges. The agencies have 18 months to establish
their respective programs, solicit and evaluate applications, and award
all funds. While in some instances a compressed schedule does not pose
a challenge, two factors enhance the challenges associated with the 18-
month schedule. First, NTIA must establish the BTOP program from
scratch, and RUS has existing broadband grant and loan programs, albeit
on a much smaller scale than BIP. Second, the agencies face an
unprecedented volume of funds and anticipated number of applications
compared to their previous experiences.
The funding associated with BTOP and BIP exceed NTIA's and RUS's
prior experience with other grant or loan programs (see fig. 1). In
comparison to the $4.7 billion appropriation NTIA received for BTOP,
its Public Telecommunications Facilities Program received an average of
$23 million annually and its Telecommunications Opportunities Program
received $24 million annually. NTIA also administered the one-time
Public Safety Interoperable Communications Program (PSIC), with an
appropriation of about $1 billion, in close coordination with the
Department of Homeland Security (DHS). In comparison to the $2.5
billion appropriation RUS received for BIP,\4\ its Community Connect
Program's average annual appropriation was $12 million and its
Broadband Access Loan Program's average annual appropriation was $15
million.
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\4\ RUS received $2.5 billion for both grants and the cost of
loans. RUS stated that it will allocate $2 billion for grants and $500
million for loans. RUS expects the $500 million allocation to support
loans with a total principle amount of approximately $7 billion.
Source: GAO analysis of NTIA and RUS data.
Note: RUS's loan allocation will support a principal amount
exceeding the appropriation. For example, RUS expects the $500 million
allocated to loans under BIP will support a total principal amount of
loans of about $7 billion. Similarly, RUS officials indicated that, on
average, the corresponding annual total principal amount for loans
under the Broadband Access Loan Program was $300 million.
NTIA and RUS also face an increase in the number of applications
that they must review and evaluate in comparison to similar programs
(see fig. 2). According to preliminary information from the agencies,
they received approximately 2,200 applications requesting $28 billion
in grants and loans in the first funding round. Of these 2,200
applications, NTIA received 940 applications exclusively for BTOP and
RUS received 400 applications exclusively for BIP and 830 dual
applications that both agencies will review. In comparison, NTIA
received an average of 838 applications annually for the
Telecommunications Opportunities Program; for PSIC, NTIA and DHS
received 56 applications from state and territorial governments
containing a total of 301 proposed projects. RUS received an average of
35 applications annually for the Broadband Access Loan program and an
average of 105 applications annually for the Community Connect Program.
Source: GAO analysis of NTIA and RUS data.
a In 2007, through the PSIC grant program, NTIA
coordinated with the DHS's grants office to review 56 grant
applications from states and territories, representing about 301
individual projects, and awarding almost $1 billion in grant funds to
assist public safety agencies in enhancing communications
interoperability nationwide.
Staffing challenges. NTIA and RUS will need additional personnel to
administer BTOP and BIP. NTIA's initial risk assessment indicated that
a lack of experienced and knowledgeable staff was a key risk to
properly implementing the program in accordance with the priorities of
the Recovery Act. In its Fiscal Year 2010 budget request to Congress,
NTIA estimated that it will need 30 full-time-equivalent staff in
Fiscal Year 2009 and 40 more full-time-equivalent staff for Fiscal Year
2010. While RUS already has broadband loan and grant programs in place
and staff to administer them, it also faces a shortage of personnel.
RUS's staffing assessments indicated that the agency will need 47
additional full-time-equivalents to administer BIP.
Data challenges. NTIA and RUS lack detailed data on the
availability of broadband service throughout the country that may limit
their ability to target funds to priority areas. According to the
agencies, priority areas include unserved and underserved areas. The
agencies require applicants to assemble their proposed service areas
from contiguous census blocks and to identify the proposed service area
as unserved or underserved. However, the agencies will be awarding
loans and grants before the national broadband plan or broadband
mapping is complete. FCC must complete the national broadband plan by
February 17, 2010, and NTIA does not expect to have complete, national
data on broadband service levels at the census block level until at
least March 2010.\5\
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\5\ As required by the Recovery Act, NTIA must make available a
national broadband map by February 17, 2011.
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NTIA and RUS Have Taken Steps That Address Some Challenges in the
Evaluation of Applications and Awarding of Funds
Two-step evaluation process. To address the scheduling and staffing
challenges, NTIA and RUS are using a two-step process. In the first
step, the agencies will evaluate and score applications based on the
criteria in the NOFA, such as project purpose and project viability.
During this step, the agencies will select which applications proceed
to the second step. After the first step is complete and the pool of
potential projects is reduced, the agencies intend to conduct the
second step--due diligence, which involves requesting extra
documentation to confirm and verify information contained in an
application. Since not all applications will proceed to the second
step, not all applicants will be required to submit extra documentation
which will reduce the amount of information the agencies must review.
Use of nongovernmental personnel. Both NTIA and RUS are using
nongovernmental personnel to address anticipated staffing needs
associated with the evaluation of applications and awarding of funds.
To evaluate applications, NTIA is using a volunteer peer review system,
in which three unpaid, expert reviewers examine and score applications;
these volunteers must have significant expertise and experience in
broadband-related activities, such as the construction and operation of
a broadband network. In addition, NTIA will use contractors in an
administrative role to assist the expert reviewers. RUS will also use
contractors to evaluate and score applications. Regardless of who
reviews the application, the final selection and funding decisions are
to be formally made by a selecting official in each agency.
Publish applicant information. To address the challenge of
incomplete data on broadband service, NTIA and RUS require applicants
to identify and attest to the service availability--either unserved or
underserved--in their proposed service area. In order to verify these
self-attestations, NTIA and RUS will post a public notice identifying
the proposed funded service area of each broadband infrastructure
applicant. The agencies intend to allow existing service providers in
the proposed service area to question an applicant's characterization
of broadband service in that area. If this information raises
eligibility issues, RUS may send field staff to the proposed service
area to conduct a market survey. RUS will resolve eligibility issues by
determining the actual availability of broadband service in the
proposed service area. NTIA has no procedure for resolving these types
of issues.
The Agencies' Remaining Schedule May Pose Risks to the Review of
Applications
During the first funding round, the compressed schedule posed a
challenge for both applicants and the agencies. As mentioned
previously, NTIA and RUS initially proposed to utilize three separate
funding rounds during the 18-month window to award the $7.2 billion. As
such, each funding round would operate under a compressed schedule.
Eight of the 15 industry stakeholders with whom we spoke expressed
concern that a small entity would have difficulties in completing an
application in a timely manner. The compressed schedule also posed
challenges for the agencies. During the first funding round, the
agencies missed several milestones. For example, RUS originally
intended to select a contractor on June 12, 2009, and NTIA intended to
select a contractor on June 30, 2009; however, both agencies missed
their target dates, with RUS selecting its contractor on July 31, 2009,
and NTIA selecting its contractor on August 3, 2009.
Because of the compressed schedule within the individual funding
rounds, NTIA and RUS have less time to review applications than similar
grant and loan programs. In the first funding round, the agencies have
approximately 2 months to review 2,200 applications. In contrast, from
Fiscal Year 2005 through 2008, RUS took from 4 to 7 months to receive
and review an average of 26 applications per year for its Broadband
Access Loan Program. NTIA's Public Telecommunications Facilities
Program operated on a year-long grant award cycle. For the PSIC
program, NTIA and DHS completed application reviews in roughly 6
months.
Based on their experience with the first funding round, NTIA and
RUS are considering reducing the number of funding rounds from three to
two. In the second and final funding round, the agencies anticipate
extending the window for entities to submit applications. This change
will help mitigate the challenges the compressed schedule posed for
applicants in the first funding round. However, it is unclear whether
the agencies will similarly extend the amount of time to review the
applications and thereby bring the review time more in line with the
experiences of other broadband grant and loan programs. NTIA officials
indicated that the agency would like to make all awards by summer 2010,
to promote the stimulative effect of the BTOP program. Alternatively,
RUS officials indicated that the agency will make all awards by
September 30, 2010, as required by the Recovery Act, indicating a
potentially longer review process.
Depending on the timeframes NTIA and RUS select, the risks for both
applicants and the agencies may persist with two funding rounds. In
particular, these risks include:
Limited opportunity for ``lessons learned.'' Based on the
current schedule, NTIA and RUS will have less than 1 month
between the completion of the first funding round and the
beginning of the second funding round. Because of this
compressed timeframe, applicants might not have sufficient time
to analyze their experiences with the first funding round to
provide constructive comments to the agencies. Further, the
agencies might not have sufficient time to analyze the outcomes
of the first round and the comments from potential applicants.
As such, a compressed schedule limits the opportunity to apply
lessons learned from the first funding round to improve the
second round.
Compressed schedule to review applications. Due to the
complex nature of many projects, NTIA and RUS need adequate
time to evaluate the wide range of applications and verify the
information contained in the applications. NTIA is soliciting
applications for infrastructure, public computer center, and
sustainable adoption projects. Therefore, NTIA will receive
applications containing information responding to different
criteria and it will evaluate the applications with different
standards. Even among infrastructure applications, a wide
variability exists in the estimates, projections, and
performance measures considered reasonable for a project. For
example, in RUS's Broadband Access Loan Program, approved
broadband loans for the highest-cost projects, on a cost-per-
subscriber basis, ranged as much as 15, 18, and even 70 times
as high as the lowest-cost project, even among projects using
the same technology to deploy broadband.
Continued lack of broadband data and plan. According to
NTIA, national broadband data provide critical information for
grant making. NTIA does not expect to have complete data for a
national broadband map until at least March 2010. Also, as
mentioned previously, FCC must deliver to Congress a national
broadband plan by February 17, 2010. By operating on a
compressed schedule, NTIA and RUS will complete the first
funding round before the agencies have the data needed to
target funds to unserved and underserved areas and before FCC
completes the national broadband plan. Depending on the
timeframes the agencies select for the second funding round,
they may again review applications without the benefit of
national broadband data and a national broadband plan.
NTIA and RUS Face Staffing Challenges in Overseeing Funded Projects,
and Despite Steps Taken, Several Risks to Project Oversight
Remain
NTIA and RUS will need to oversee a far greater number of projects
than in the past, including projects with large budgets and a diversity
of purposes and locations. In doing so, the agencies face the challenge
of monitoring these projects with far fewer staff per project than were
available in similar grant and loan programs they have managed. To
address this challenge, NTIA and RUS procured contractors to assist
with oversight activities and will require funding recipients to
complete quarterly reports and, in some cases, obtain annual audits.
Despite the steps taken, several risks remain to adequate oversight.
These risks include insufficient resources to actively monitor funded
projects beyond Fiscal Year 2010 and a lack of updated performance
measures for NTIA and RUS. In addition, NTIA has yet to define annual
audit requirements for commercial entities funded under BTOP.
A Large Number of Projects to Oversee Creates Staffing Challenges
NTIA and RUS will need to oversee a far greater number of projects
than in the past. Although the exact number of funded projects is
unknown, both agencies have estimated that they could fund as many as
1,000 projects each--or 2,000 projects in total--before September 30,
2010.\6\ In comparison, from Fiscal Year 1994 through Fiscal Year 2004,
NTIA awarded a total of 610 grants through its Technology Opportunities
Program--or an average of 55 grants per year. From Fiscal Year 2005
through Fiscal Year 2008, RUS awarded a total of 84 Community Connect
grants, averaging 21 grants per year; and through its Broadband Access
Loan Program, RUS approved 92 loans from Fiscal Year 2003 through
Fiscal Year 2008, or about 15 loans per year.
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\6\ Based on the average request in the first funding round, NTIA
and RUS may fund fewer projects than they originally estimated, but
those funded projects may be of higher cost. For example, according to
NTIA and RUS data, the average funding request for infrastructure
projects in the first round was more than $20 million for BTOP, more
than $12 million for BIP, and more than $15 million for projects
requesting funding from either agency. If NTIA and RUS fund projects at
the average requested funding amount--and based on the total available
funding for the different types of projects--NTIA and RUS would award
about 930 projects in total.
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In addition to overseeing a large number of projects, the scale and
diversity of BTOP-and BIP-funded projects are likely to be much greater
than projects funded under the agencies' prior grant programs. Based on
NTIA's estimated funding authority for BTOP grants and RUS's estimated
potential total funding for BIP grants, loans, and loan/grant
combinations, if the agencies fund 1,000 projects each, as estimated,
the average funded amount for BTOP and BIP projects would be about
$4.35 million and $9 million, respectively. In comparison, from Fiscal
Year 1994 to Fiscal Year 2004, NTIA's average grant award for its
Technology Opportunities Program was about $382,000 and from Fiscal
Year 2005 to Fiscal Year 2008, RUS awarded, on average, about $521,000
per Community Connect grant award. Further, the agencies expect to fund
several different types of projects that will be dispersed nationwide,
such as infrastructure and public computer center projects.
Because of the volume of expected projects, NTIA and RUS plan to
oversee and monitor BTOP- and BIP-funded projects with fewer staff
resources per project than the agencies used in similar grant and loan
programs (see table 1). NTIA reported that it will need 41 full-time-
equivalent staff to manage BTOP; at the time of our review it had
filled 33 of these positions. Based on NTIA's estimate of funding 1,000
projects and its estimated 41 full-time-equivalent staff needed, NTIA
will have about 1 full-time-equivalent staff available for every 24
projects. NTIA reported that it is continually assessing its resources
and is considering additional staff hires. Similarly, RUS reported that
it will need 47 full-time-equivalent staff to administer all aspects of
BIP, and the majority of these positions were to be filled by the end
of September 2009. These 47 staff members are in addition to the 114
full-time-equivalent staff in the Rural Development Telecommunications
program which support four existing loan or grant programs.\7\ If RUS
funds a total of 1,000 projects, as estimated, based on the 47 staff
assigned to BIP, it would have 1 staff of any capacity available for
every 21 funded projects. RUS reported that it could use other staff in
the Rural Development Telecommunications program to address BIP
staffing needs, if necessary.
---------------------------------------------------------------------------
\7\ These programs are RUS's Telecommunications Infrastructure loan
program, the Distance Learning and Telemedicine loan and grant program,
the Broadband Access Loan Program, and Community Connect grant program.
----------------------------------------------------------------------------------------------------------------
Table 1: Estimated NTIA and RUS Full-Time-Equivalent Staff for Grant and Loan Programs
----------------------------------------------------------------------------------------------------------------
Average number of Average full-time- Ratio of funded
Program projects funded per equivalent staff per projects to full-time-
year year equivalent staff
----------------------------------------------------------------------------------------------------------------
NTIA BTOP (FY 2010) 1,000 in FY 2010 41 24 to 1
(NTIA estimate)
----------------------------------------------------------------------------------------------------------------
NTIA Technology Opportunities Program 55 16 3 to 1
a
----------------------------------------------------------------------------------------------------------------
RUS BIP (FY 2010) 1,000 in FY 2010 47 21 to 1
(RUS estimate)
----------------------------------------------------------------------------------------------------------------
RUS Broadband 15 17 .9 to 1
Access Loan Program b
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of NTIA and RUS data.
Note: In our review, we did not evaluate whether the per-project staffing levels available to NTIA for its
Technology Opportunities Program or to RUS for its Broadband Access Loan Program were appropriate for those
programs.
a NTIA Technology Opportunities Program data are for Fiscal Years 1994 through 2004.
b RUS Broadband Access Loan Program data are for Fiscal Years 2003 through 2008. RUS Community Connect Grant
program data are not included here because RUS reported that it does not have full-time staff dedicated to
this program.
To Address Project Oversight Challenges, NTIA and RUS Are Procuring
Contractor Services and Requiring Funding Recipient Reports and
Audits
Contractor services. NTIA and RUS will use contractors to help
monitor and provide technical assistance for BTOP and BIP projects. On
August 3, 2009, NTIA procured contractor services to assist in a range
of tasks, including tracking and summarizing grantees' performance,
developing grant-monitoring guidance, and assisting with site visits
and responses to audits of BTOP-funded projects. On July 31, 2009, RUS
awarded a contract to a separate contractor for a wide range of program
management activities for BIP. RUS's contractor will be responsible for
a number of grant-monitoring activities, including developing a
workflow system to track grants and loans, assisting RUS in developing
project monitoring guidance and policies, and assisting in site visits
to monitor projects and guard against waste, fraud, and abuse.
In addition to its contractor, RUS intends to use existing field
staff for program oversight. RUS reported that it currently has 30
general field representatives in the telecommunications program and 31
field accountants in USDA's Rural Development mission area that may be
available to monitor broadband programs. In addition, RUS officials
told us that Rural Development has an estimated 5,000 field staff
available across the country that support a variety of Rural
Development loan and grant programs. Although these individuals do not
have specific experience with telecommunications or broadband projects,
according to RUS, this staff has experience supporting RUS's business
and community development loan programs, and this workforce could be
used for project monitoring activities if there were an acute need.
Unlike RUS, NTIA does not have field staff. According to NTIA, the
agency has been in talks with RUS about sharing some of RUS's field
staff to monitor BTOP projects, although no formal agreement is in
place.
Recipient reports and audits. To help address the challenge of
monitoring a large number of diverse projects, NTIA and RUS have
developed program-specific reporting requirements that are intended to
provide transparency on the progress of funded projects. Based on our
review of the requirements, if NTIA and RUS have sufficient capacity to
review and verify that information provided by funding recipients is
accurate and reliable, these requirements could provide the agencies
with useful information to help them monitor projects. The following
reporting requirements apply to BTOP and BIP funding recipients:
General recovery act reports. Section 1512 of the Recovery
Act and related OMB guidance requires all funding recipients to
report quarterly to a centralized reporting system on, among
other things, the amount of funding received that was expended
or obligated, the project completion status, and an estimate of
the number of jobs created or retained through the funded
project, among other information.\8\ Under OMB guidance,
awarding agencies are responsible for ensuring that funding
recipients submit timely reports, and must perform a data
quality review and request further information or corrections
by funding recipients, if necessary.\9\
---------------------------------------------------------------------------
\8\ Pub. L. No. 111-5, div. A, tit. XV, 1512(c),(d) (2009).
\9\ See OMB memorandum, M-09-21, Implementing Guidance for the
Reports on Use of Funds Pursuant to the American Recovery and
Reinvestment Act of 2009 (June 22, 2009).
BTOP-specific reports. The Recovery Act requires BTOP
funding recipients to report quarterly on their use of funds
and NTIA to make these reports available to the public.\10\
NTIA also requires that funding recipients report quarterly on
their broadband equipment purchases and progress made in
achieving goals, objectives, and milestones identified in the
recipient's application, including whether the recipient is on
schedule to substantially complete its project no later than 2
years after the award and complete its project no later than 3
years after the award. Recipients of funding for infrastructure
projects must report on a number of metrics, such as the number
of households and businesses receiving new or improved access
to broadband as a result of the project, and the advertised and
averaged broadband speeds and the price of the broadband
services provided.\11\
---------------------------------------------------------------------------
\10\ Pub. L. No. 111-5, div. B, tit. VI, 6001(i)(1) (2009).
\11\ BTOP recipients of sustainable adoption and public computer
center funding must report project-specific information, such as the
increase in the number of households, businesses, and community anchor
institutions subscribing to broadband service and the primary uses of
the public computer center. 74 Fed. Reg. 33104, 33125.
BIP-specific reports. RUS requires BIP funding recipients to
submit quarterly balance sheets, income and cash-flow
statements, and the number of customers taking broadband
service on a per community basis, among other information. BIP
funding recipients must also report annually on the number of
households; businesses; and educational, library, health care,
and public safety providers subscribing to new or improved
access to broadband. RUS officials reported that it plans to
use quarterly reports to identify specific projects for on-site
monitoring and to determine when that monitoring should take
---------------------------------------------------------------------------
place.
NTIA and RUS also require some funding recipients to obtain annual,
independent audits of their projects; however, NTIA has yet to
determine what annual audit requirements, if any, will apply to
commercial grantees (see table 2). The primary tool for monitoring
Federal awards through annual audits is the single audit report
required under the Single Audit Act, as amended.\12\ We recently
reported that the Single Audit is a valuable source of information on
internal control and compliance for use in a management's risk
assessment and monitoring processes--and with some adjustments, we
said, the Single Audit process could be improved for Recovery Act
oversight.\13\ The Single Audit report is prepared in accordance with
OMB's implementing guidance in OMB Circular No. A-133.\14\ All states,
local governments, and nonprofit organizations that expend over
$500,000 in Federal awards per year must obtain an annual Single Audit
or, in some cases, a program-specific audit. Commercial (for profit)
entities awarded Federal funding of any amount are not covered by the
Single Audit Act, and states, local governments, and nonprofit
organizations expending less than $500,000 in Federal awards per year
are also not required to obtain an annual Single Audit under the Single
Audit Act.\15\ RUS, however, requires all commercial recipients of BIP
funds to obtain an annual, independent audit of their financial
statements under requirements that also apply to RUS's existing
broadband grant and loan programs.\16\ NTIA has yet to determine what
annual audit requirements, if any, will apply to commercial grantees.
---------------------------------------------------------------------------
\12\ 31 U.S.C. ch. 75. A Single Audit consists of: (1) an audit and
opinions on the fair presentation of the financial statements and the
Schedule of Expenditures of Federal Awards; (2) gaining an
understanding of and testing internal control over financial reporting
and the entity's compliance with laws, regulations, and contract or
grant provisions that have a direct and material effect on certain
Federal programs (i.e., the program requirements); and (3) an audit and
an opinion on compliance with applicable program requirements for
certain Federal programs. The audit report also includes the auditor's
schedule of findings and questioned costs, and the auditee's corrective
action plans and a summary of prior audit findings that includes
planned and completed corrective actions. Auditors are also required to
report on significant deficiencies in internal control and on
compliance associated with the audit of the financial statements.
Entities that expend Federal awards under only one program may elect to
have a program-specific audit in lieu of the single audit.
\13\ See GAO, Recovery Act: As Initial Implementation Unfolds in
States and Localities, Continued Attention to Accountability Issues Is
Essential, GAO-09-580 (Washington, D.C.: Apr. 23, 2009), and Recovery
Act: States' and Localities' Current and Planned Uses of Funds While
Facing Fiscal Stresses, GAO-09-831T (Washington, D.C.: July 8, 2009).
\14\ OMB Circular No. A-133, Audits of States, Local Governments,
and Non-Profit Organizations.
\15\ Under DOC regulations, for-profit hospitals and commercial and
other organizations not subject to the Single Audit Act may be subject
to an audit requirement to the extent one is included in the Federal
award document. See 15 C.F.R. 14.26.
\16\ 7 C.F.R. 1773.3. All RUS commercial grantees must obtain an
annual audit of their financial statements by an independent, certified
public accountant meeting the standards set by RUS.
----------------------------------------------------------------------------------------------------------------
Table 2: Annual Audit Requirements for BTOP and BIP Funding Recipients
------------------------------------------------------------------------
Amount of
federal
awards Type of entity BTOP annual audit BIP annual audit
expended requirements requirements
annually
------------------------------------------------------------------------
More than Nonprofit Single audit, OMB Single audit, OMB
$500,000 organizations, Circular A-133 Circular A-133
state or local
government, or
tribal authority
------------------------------------------------------------------------
Commercial To be determined Financial
organizations statement audit,
7 CFR 1773.3
------------------------------------------------------------------------
Less than Nonprofit To be determined None
$500,000 organizations,
state or local
government, or
tribal authority
------------------------------------------------------------------------
Commercial To be determined Financial
organizations statement audit,
7 CFR 1773.3
------------------------------------------------------------------------
Source: GAO analysis of NTIA and RUS data.
Several Risks to Project Oversight Remain
Lack of sufficient resources beyond Fiscal Year 2010. Both NTIA and
RUS face the risk of having insufficient resources to actively monitor
BTOP-and BIP-funded projects after September 30, 2010, which could
result in insufficient oversight of projects not yet completed by that
date. As required by the Recovery Act, NTIA and RUS must ensure that
all awards are made before the end of Fiscal Year 2010. Under the
current timeline, the agencies do not anticipate completing the award
of funds until that date. Funded projects must be substantially
complete no later than 2 years, and complete no later than 3 years
following the date of issuance of the award. Yet, the Recovery Act
provides funding through September 30, 2010. The DOC Inspector General
has expressed concerns that ``without sufficient funding for a BTOP
program office, funded projects that are still underway at September
30, 2010, will no longer be actively managed, monitored, and closed.''
\17\ NTIA officials told us that NTIA has consulted with the OMB about
seeking BTOP funding after September 30, 2010, to allow it to close
grants. RUS officials reported that given the large increase in its
project portfolio from BIP, RUS's capacity to actively monitor these
projects after its BIP funding expires may be stressed. Without
sufficient resources to actively monitor and close BTOP grants and BIP
grants and loans by the required completion dates, NTIA and RUS may be
unable to ensure that all recipients have expended their funding and
completed projects as required.
---------------------------------------------------------------------------
\17\ Department of Commerce, Office of Inspector General Recovery
Act Flash Report: NTIA Should Apply Lessons Learned from Public Safety
Interoperable Communications Program to Ensure Sound Management and
Timely Execution of $4.7 Billion Broadband Technology Opportunities
Program (Washington, D.C., March 2009).
---------------------------------------------------------------------------
Lack of updated performance measures. The Government Performance
and Results Act of 1993 (GPRA) directs Federal agencies to establish
objective, quantifiable, and measurable goals within annual performance
plans to improve program effectiveness, accountability, and service
delivery.\18\ Specifically, performance measures allow an agency to
track its progress in achieving intended results and help inform
management decisions about such issues as the need to redirect
resources or shift priorities.
---------------------------------------------------------------------------
\18\ 31 U.S.C. 1115.
---------------------------------------------------------------------------
NTIA has established preliminary program performance measures for
BTOP, including job creation, increasing broadband access, stimulation
of private sector investment, and spurring broadband demand. However,
NTIA has not established quantitative, outcome-based goals for those
measures. NTIA officials reported that the agency lacks sufficient data
to develop such goals and is using applications for the first round of
funding to gather data, such as the expected number of households that
will receive new or improved broadband service. According to NTIA
officials, data collected from applications for the first funding round
could be used to develop program goals for future funding rounds.
RUS has established quantifiable program goals for its existing
broadband grant and loan programs, including a measure for the number
of subscribers receiving new or improved broadband service as a result
of the programs. However, according to USDA's Fiscal Year 2010 annual
performance plan, RUS has not updated its measures to reflect the large
increase in funding it received for broadband programs under the
Recovery Act. In addition, RUS officials told us that the agency's
existing measure for the number of subscribers receiving new or
improved broadband access as a result of its programs is based on the
estimates provided by RUS borrowers in their applications.
Consequently, these program goals do not reflect actual program
outcomes, but rather the estimates of applicants prior to the execution
of their funded projects.
Undefined audit requirements for commercial recipients. At the time
of our review, NTIA did not have audit requirements or guidelines in
place for annual audits of commercial entities receiving BTOP grants.
NTIA officials reported that because BTOP is the first program managed
by NTIA to make grants to commercial entities, the agency does not have
existing audit guidelines for commercial entities. However, NTIA
reported that it intends to develop program-specific audit requirements
and guidelines that will apply to commercial recipients that receive
broadband grants and it plans to have those guidelines in place by
December 2009. In the absence of clear audit requirements and
guidelines for commercial recipients of BTOP funding, NTIA will lack an
important oversight tool to identify risks and monitor BTOP grant
expenditures.
Mr. Chairman and Members of the Committee, this concludes my
prepared statement. Our future work, which we expect to complete in
November, will provide additional information on the implementation and
oversight of the broadband programs. We also expect to make
recommendations at that time. I would be pleased to respond to any
questions that you or other members of the Committee might have.
The Chairman. Thank you very much, Mr. Goldstein. Actually,
you were quite provocative, and helpfully so.
I will start the questioning with you, Jonathan Adelstein.
There's--and, Mr. Goldstein referred to this--a definitional
problem, which actually becomes a very large problem. And, you
know, you've got your BIP program, but only projects in remote
areas--that's your term--are eligible for 100-percent grant
funding.
If I were to look at West Virginia, I would say that most
of it was remote. If I were to look at it with your eyes, I
could not say that, because we have one City of almost 50,000
people, but no more. And therefore, the definition of the word
``remote'' is extremely important to us. This definition
doesn't make any sense to me when you're trying to put
broadband into areas that need it the most. The classic
pattern, of course, is for broadband providers--Verizon, in our
State, and others--to simply go to where the companies are and
where the population is. And that's relatively easy. But, then
you go into southern West Virginia or into the eastern
highlands, just across from the Virginia border, and that
becomes much more difficult.
So, the question is--remote becomes very important,
because--let's say you're in a farming community and the
average age is somewhere between Senator Kerry's and mine, and
you would say, ``Well, I mean, these folks really don't know--
you know, they don't do Internet, and they're probably not
going to react to this, so this probably isn't a wise
allocation of funding.'' And I just reject that the same way as
I reject the fact that there are plenty of people in West
Virginia and other States that don't sign up for the Children's
Health Insurance Program because they don't know where to sign
up, how to sign up, and maybe don't know how to write, in some
cases. So, this is the culture which is not unique to West
Virginia. I'm sure it's true in all of our States. So, I'm very
interested in how you define ``remote'' and how, in fact,
you're going to target, from RUS's point of view, your
contributions to areas that need it the most, and how you'll be
able to do that.
Mr. Adelstein. Senator Rockefeller, I absolutely understand
your concerns. I mean, we've heard a lot of concerns about the
definition of ``remote,'' and we're going to completely revisit
that in the next NOFA. As I indicated, we're going to put out
comment requests very shortly. And one of the big questions we
see is, How do you deal with this? I've been to West Virginia.
I've seen how remote it is. That's what I love about it. I
think it's beautiful. I think we need to get broadband into
some of those hollers, where it's not available right now. We
need to get out to the most remote areas. But, the question
becomes, as you raised it, Is a 50-mile definition, from an
urban area, the best way to go? And, I think, we're beginning
to reach the conclusion that there are real problems with that,
as you've indicated; how it affects the eastern part of the
United States versus the western part. What are some of the
other factors? We are looking at other factors that we could
use besides just remoteness from an urban area. You could look
at density, you could look at income. Geographic barriers are a
harder thing to measure, but certainly, when it comes to a
place like West Virginia, they are very real. So, we are
looking at other ways to evaluate this.
The goal--just so I can get this out--is that we wanted to
have a place that was the hardest to reach, where we'd focus
our grants, and have loans in areas that are not as hard to
reach. I think there is widespread agreement, we might not have
gotten the balance right in setting the remote definition as a
50-mile distance. And we are completely open to changing that,
and are asking all of the questions in our upcoming Request For
Information.
The Chairman. So, that will be done.
Mr. Adelstein. We're going to review that, top to bottom.
The Chairman. Is the planning for that to be a fact
underway?
Mr. Adelstein. Yes, we are--we're already thinking about
other ways of defining----
The Chairman. So, you'll take in, for example, that some
roads go like that, and that's a lot of ``that'' to get to 50
miles; the fact that some people are just detached and, you
know, the sun doesn't come up, because the mountains are high
where they are, until noon, on any given day. You don't see it.
And those are remote. But, those are people, they have needs,
and they need to do the things that Senator Kerry talked about,
and that is to be able to make application online. And their
children are going to know how to do that and they've got to
know how to do that. And it's being taught in the schools. So,
there's really no excuse for us not being able to do that, at
which point I have run out of my time.
So, I'm now turning to Senator Hutchison.
Senator Hutchison. Well, thank you.
I'm interested in a couple of things. First of all, I'm
concerned that we are--and frankly, the bill was written this
way so, it is no fault of any of yours here--but, my concern is
that we have the mapping that is required to see where the real
priorities in America because they don't have broadband, and
where it's most needed or the most unserved area. And yet, the
funding has to start before the mapping is finished. And it
seems like--I understand that this was a stimulus package, and
it was supposed to be stimulative, but I also am concerned that
we're not going to be using the right priorities for the
taxpayer dollars that we--if we don't have the mapping first.
So, can you answer for me, either Mr. Strickling or Mr.
Adelstein, if that is a valid concern, and if there is any--do
you have anything preliminary that gives you a priority, or are
you just looking at grants and making these decisions based on
the grant request, rather than our information about what the
priorities are?
Mr. Strickling. I'll speak first.
At NTIA we are not relying solely on the information the
applicant provides us. You are correct that the National
Broadband Map is not scheduled to be completed until 2011. Our
goal is to make sure that the money is spent wisely. And, at
least for the infrastructure projects, our focus is on unserved
and underserved areas. We do not need a National Broadband Map
to make that evaluation. We do have other sources of
information. And let me enumerate them for you:
First, we do have the information that each applicant has
supplied with its application, in terms of the census blocks in
their proposed service area. And they characterize it, with
whatever data they have, as unserved or underserved.
In addition to that, the states--some have already done
their own mapping projects, so we have access to that
information.
In addition, we invited every state to provide us input as
to what they viewed as their priority areas within the state.
This is not an actual mapping tool, but it allows each state to
provide input--and each state, in fact, has provided that
input--to tell us that a particular part of a state is an area
of particular need and interest for them. So, we have that
information.
In addition, there is a process underway, that will
conclude tomorrow, I believe, where existing service providers,
if they're not the applicant in a given location, may provide
very specific information to us, in terms of the availability
and the subscribership for broadband services in an area.
So, if we take all of that information together, I think we
have a pretty good picture for the particular applications
we're looking at, as to whether or not they are truly unserved
or underserved, or whether or not they're within the priority
areas identified by the state.
You are right that, in a perfect world, if we had the map,
our task would be simpler. But, I don't think we are in any way
thwarted from carrying out the legislative goals with the
information we do have.
Senator Hutchison. Did you have anything to add?
Mr. Adelstein. Just that, yes, I think you're right.
Ideally, we would have the maps first, but given--as you also
indicated, this is a stimulus package, the need to urgently get
the jobs back in America, we needed to move forward, and we're
using all the tools at our disposal to try to target those
funds, as you indicated in you opening statement, toward the
areas that are unserved first, areas that don't have any
service at all. And we are having to basically look application
by application to determine if those areas are, in fact,
unserved. Looking at our own due diligence, we've gone into the
areas where we're looking at applications to see if, in fact,
if they say they're unserved, if they are; looking at all the
other tools that are available, with state broadband data, with
FCC data, other data that we can use.
Senator Hutchison. Let me just ask you also, quickly, the
volunteer program that is being utilized, can you describe how
you use the volunteers and how you assure that the agency
personnel are following up or making a decision based on more
information, perhaps, than the volunteers could provide? Or
just how is that working? Because it's a little bit of a
concern. Maybe it's not warranted. But, why don't you describe
how you're using 1100 volunteers--is that correct?
Mr. Strickling. Approximately 1,100, that's correct. And I
prefer to refer to them as independent experts, but they--yes,
they are volunteering their time, and we thank them for
stepping up----
Senator Hutchison. Do they have qualifications that you
could----
Mr. Strickling. They do. Each person who offered their
services--and I have to emphasize that these include executives
from telecommunications companies; in one case, I know, we have
the former chair of the State Public Utility Commission who is
participating; we have very well known academics who are
participating. So, these are very expert people who are
participating in this program. But, nonetheless, for the entire
pool, each person had to submit their credentials in the form
of a resume. Each person also had to provide a conflict of
interest certification to us, to ensure that we don't have
issues of people working on applications, but then also seeking
to evaluate other applications. So, everybody was screened. I
think, as I remember the numbers, we have about 1,100 who have
come through the process. And at least 200 or 300 were
rejected, either for conflict of interest or for lack of
qualifications. So, I think that shows the seriousness with
which we took the obligation to vet these people before we sent
applications to them.
I also want to emphasize that their role is the first-round
screener. In other words, they are not making determinations or
selecting applications for funding. What they're helping us to
do is to identify the cream of the application pool. With seven
times oversubscription, there are going to be very good
applications that do not get funded out of this program, with
the dollars we have available to us. I view my mission, and I
remind our staff constantly, that our mission is to make sure
we don't fund any bad applications. And, in that sense--in that
context, if you understand what the reviewers are doing, is
really letting us focus in on that part of the application pool
that offers the greatest potential for the--to provide the
greatest benefits. We then do a top-to-bottom scrub in due
diligence of these applications, and make the real
determinations. Is this project sustainable? Is the budget
reasonable? Do these people have a track record that
demonstrates they can build this project? What are the benefits
that are going to happen? So, we're making independent
evaluations for those projects that pass through to due
diligence, to ensure that when we pick a project for funding,
it will be a quality and successful project.
Senator Hutchison. Thank you. Thank you, very much.
The Chairman. Thank you very much, Senator Hutchison.
And now Senator Kerry, who's actually--this is his
Subcommittee. I'm just cheating.
Senator Kerry. Thank you, Mr. Chairman.
I'd ask unanimous consent that the list--the OECD broadband
statistics list, which makes us number 15--be placed in the
record.
The Chairman. Unhappily, it will be.
[The information referred to follows:]
OECD Broadband Statistics [oecd.org/sti/ict/broadband]
OECD Broadband Subscribers per 100 Inhabitants, by Technology, June 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total
Rank Country DSL Cable Fibre/LAN Other Total Subscribers Source
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Netherlands 22.5 13.7 1.1 0.8 38.1 6,262,500 Government supplied
2 Denmark 22.4 9.9 3.9 0.9 37.0 2,031,000 Government supplied
3 Norway 22.7 7.7 3.5 0.7 34.5 1,645,619 Government supplied
4 Switzerland 23.3 10.0 0.2 0.3 33.8 2,603,400 Government supplied
5 Korea 7.2 10.5 15.1 0.0 32.8 15,938,529 Government supplied
6 Iceland 30.7 0.0 1.3 0.7 32.8 104,604 Government supplied
7 Sweden 18.5 6.3 6.7 0.1 31.6 2,915,000 Government supplied estimates
8 Luxembourg 26.0 5.3 0.0 0.0 31.3 153,172 Estimate: OECD
9 Finland 24.9 4.1 0.0 0.8 29.7 1,579,600 Government supplied
10 Canada 13.2 15.2 0.0 1.3 29.7 9,916,217 Estimate: OECD estimation based on
company reporting
11 Germany 26.7 2.4 0.1 0.1 29.3 24,043,000 Government supplied
12 France 27.5 1.6 0.1 0.0 29.1 18,675,000 Government supplied
13 United Kingdom 22.8 6.1 0.0 0.1 28.9 17,742,676 Government supplied
14 Belgium 16.3 11.8 0.0 0.2 28.4 3,041,311 Government supplied
15 United States 10.3 13.8 1.6 0.9 26.7 81,170,428 Estimate: OECD estimation based on
company reporting
16 Australia 19.4 4.3 0.0 1.2 24.9 5,356,000 Government supplied
17 Japan 8.5 3.3 12.4 0.0 24.2 30,927,003 Government supplied
18 New Zealand 20.4 1.4 0.0 1.0 22.8 980,649 OECD estimation based on government-
supplied data
19 Austria 14.5 6.8 0.1 0.5 21.8 1,821,000 Government supplied
20 Ireland 15.5 2.8 0.1 3.0 21.4 950,082 Government supplied
21 Spain 16.6 4.0 0.1 0.2 20.8 9,477,901 Government supplied
22 Italy 19.2 0.0 0.5 0.1 19.8 11,878,000 Government supplied
23 Czech Republic 7.0 3.9 0.9 6.3 18.1 1,891,958 Government supplied
24 Portugal 10.0 6.7 0.1 0.2 17.0 1,809,354 Government supplied
25 Greece 17.0 0.0 0.0 0.0 17.0 1,908,000 Government supplied
26 Hungary 8.2 7.6 1.0 0.0 16.8 1,688,414 Government supplied
27 Slovak Republic 6.6 1.3 2.7 2.0 12.6 680,351 Government supplied
28 Poland 7.4 3.7 0.1 0.1 11.3 4,307,992 Government supplied
29 Turkey 8.5 0.1 0.0 0.0 8.7 6,188,676 Government supplied
30 Mexico 6.3 1.9 0.0 0.2 8.4 8,959,426 Government supplied
OECD 13.7 6.6 2.1 0.5 22.8 271,134,392
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: OECD
Notes: See source column of table
Senator Kerry. And I'd just note that, you know, Korea is
number 6. Countries with large spaces, like Norway, Sweden, are
number 3 and 7. Canada is number 10. United Kingdom, number 11.
So, I think everybody would agree, you know, we can do better,
and I hope this list serves as a good motivator.
Administrator Adelstein, let me just ask you very quickly--
I have the same issue that Senator Rockefeller does, and I just
want to hear where you're going on the definition. I mean, most
people--you know, we don't technically qualify with remote
areas under your--under the current definition. And I know
you've said you're going to consider it, et cetera, et cetera.
But, I just want to make the point. The Berkshires, in
Massachusetts, we work to--I don't know, maybe 8 or 9 years
ago, we put together something called Berkshire Connect,
because we have to work out a special kind of pool deal to try
to attract people to bid, because they wouldn't bid, and they
wouldn't come in with broadband, because there weren't
sufficient people. They didn't deem it--it's remote. Believe
me. You can go out there and find plenty of remote communities,
which is part of what people love about it. But, you know,
we're fighting for economic development out there. We're
struggling with small startups. A lot of the quality of life,
which is terrific, it's very attractive to a lot of people.
But, we need high speed. We need broadband. We need the
capacity to be able to do that. In places like that, there are
those concerns.
So, just share with us very quickly, sort of, what changes
you're specifically considering in the application process to
create a greater accessibility to the funding on this remote
area. Could you just be more specific?
Mr. Adelstein. Everything is on the table. I mean, we are
really asking for a top-to-bottom review of, How are we going
to target these funds to areas that most need it? Remoteness
from an urban area is one measure, but it's only one measure.
It's also something we need to do in a way that's easy for
applicants to understand. I mean, if we give them a very
complex formula that, well, you have to be this far from an
urban area, you have to have this density and this income
level, how do you make that simple for applicants, so that
there's no confusion, and so that they can easily apply,
without having undue challenges? I mean we--you and me were
actually supposed to meet in the Berkshires to talk about
broadband a few years ago, but there was a blizzard that snowed
us out. I wish we could have done that, but I----
Senator Kerry. It made it even more remote.
Mr. Adelstein. That's right. They needed broadband out
there, when they were stuck inside with 2 feet of snow.
We do need to think about this. And we're going to ask for
comment about it. I mean, this is the idea. We want to put this
out. We're not going to prejudge exactly what we're going to
arrive at. We're thinking very hard about it now.
Senator Kerry. Well, we'll help you. And I hope you'll just
take note of what I've, sort of, said, because you're well
aware of here, and you understand the complication there.
Boston, incidentally, is one of the few cities, if not the
only city, to apply for BTOP money for underserved communities.
And their research shows that fewer than--what is it--40
percent of the residents in certain census blocks have adopted
broadband service. So, my question is, Are you going to treat
underserved blocks within an urban area with the same sense of
priority that you give to other areas, where broadband is not
there? Because those can be even more impacting and
discriminatory, for all the obvious reasons.
Mr. Strickling. This is really a question limited to our
program at the Department of Commerce. And yes, we're very
focused on underserved areas along with unserved areas. I mean,
it is a fact that in an underserved area, under our
definitions, there is a very large number of unserved members
of that population in that community, and we have to be
concerned about their access to broadband services, just as we
would in an area that was totally unserved.
Senator Kerry. So, you're saying you will treat them in the
same way? You're planning to, in this next round?
Mr. Strickling. Not only that--well, not just in the
current round. Plus, as you mentioned in your opening remarks,
Senator, we also have specific buckets of funding for public
computer centers and for sustainable adoption projects. Those
dollars really are headed--are going to be used, more likely
than not, in underserved areas more in the urban areas. And
as--not just limited to rural areas. So, those are two other
tools we have to combat this issue.
Senator Kerry. Before my time runs out completely, let me
just ask you quickly, and I ask you for a fairly rapid answer.
But, can you help us on the anchor institutions--the hospitals,
the schools, libraries, et cetera? What's your approach going
to be on the anchor institutions? Because a lot of them are
feeling unsettled, and I think you've probably heard from them.
Mr. Strickling. We have. And as I indicated in my remarks,
we're actually thinking that those are the types of projects
where we perhaps should be focusing most of our money, both in
round one, the current pool, as well as round two.
Senator Kerry. Good. Well, I appreciate that very much.
Thanks, Mr. Chairman.
The Chairman. Thank you, Senator Kerry.
According to our order-of-arrival tradition here, Senator
Pryor is next.
STATEMENT OF HON. MARK PRYOR,
U.S. SENATOR FROM ARKANSAS
Senator Pryor. Thank you, Mr. Chairman. And thank you for
your leadership on this.
And I do believe that broadband--the broadband portion of
the American Recovery and Reinvestment Act is an unprecedented
opportunity. We know that broadband has the power to create
jobs, expand economic opportunity, and enrich the lives of the
public through education, healthcare, social and civic
engagement.
One of the things that I did before this hearing is, we
contacted our local phone companies there, the small rural
phone companies that are family owned, and we ask them about
how it is to get--how hard it is to get broadband out to rural
Arkansas. And one of the interesting stories that we got back--
and I'll quote from the e-mail. It says, ``one of our broadband
customers who lives off the Cave Mountain Road in Newton
County''--which is very remote--``is a computer programmer
without commercial power.'' He doesn't have electricity, he
lives so far out. He uses both solar power and batteries. This
customer lives over 1 mile from the county road and over 10
miles from a paved road. But, what they've done is, they've
installed some--they call it, I think, a closer cabinet. I'm
not quite sure what that is. But, it allows him to have
broadband. And apparently it's solar powered. So, here's a
person who's making a living as a computer program--computer
programmer, literally out in the mountains and out in the
woods. But, that's the power of broadband. You can do that. And
it connects you to the world and connects you to the economy in
ways that, before, weren't possible.
My staff has put up two maps here. And the one map is the
one that you all are using, about remote. And you can see that
we just have a couple of areas in our state that are quote/
unquote, ``remote,'' like in West Virginia. And I've looked at
some of the other States involved. Basically, if you're east of
the Mississippi River--we're immediately west of it--but, if
you're east of the Mississippi River, you have a very, very
small footprint for access to this funding. Within this
Arkansas wireline and broadband availability map is what our
state really looks like. And it's a little complicated because
of the different colors, but you can see, in the eastern part
of the state and the southern part of the State, clearly those
are underserved areas. And it actually goes--loops on around
into the western part, as well.
So, I just--I know that you've all said that you will
change this, next time. And I hope you do. And I hope you'll
take into consideration the reality on the ground and not just
arbitrary X number of miles from certain things.
Let me ask about how--if you know, because I'm not sure
either of you were there--but, how did the 50-mile radius come
into being? Who made that decision and how did that happen?
Mr. Adelstein. I wasn't at the agency at the time, but my
understanding is that the goal was to make sure there is an
area where you focus the grant funds. RUS has the unique
opportunity to provide loans, which can leverage Federal
dollars, basically, 14 to 1. So, we want to be able to maximize
the Federal investment by doing that. And we said, Which areas
would be the most difficult to serve? And they used that
definition as the basis of saying, ``We're going to target
funds to the rural remote areas.'' You might recall, the RUS
was criticized in the past for focusing some of its funds in
areas that weren't as rural. And that's what some of the IG
report, that the Chairman referred to at the beginning--so, the
idea was to actually go more remote. Now, maybe they didn't
reach the exact line that was appropriate, but that was the
goal. I think it was a good goal, and it's a goal that we
continue to pursue, which is figuring out, Where do you target
the grant funds? Where do you try to get the loan funds? And,
speaking of loans, your constituent with no energy, we can get
that energy loan to your local coop and maybe get them powered
up.
Senator Pryor. Yes, we do some of that, too. And thank you
for that.
Now, one more thing to cover before I ask my last question,
and that would be--there is an open network provision that is
causing question marks with several of the people that might
apply for this. And you don't have to do it for us today,
because it's probably too technical for us, on what you--how
that will be interpreted, but I hope you will give
clarification to the industry and to interested parties on what
you mean by ``open network,'' because that is causing some
concern.
Let me ask about the goals and if we're accomplishing the
goals of the American Recovery and Reinvestment Act, and that
is to create jobs. Are we creating jobs through this? How many
jobs are we creating? And I know that you're going to have some
jobs in just the hardware, stringing the wire, et cetera, et
cetera. But, also I'm assuming there's some way to measure the
number of jobs you create by having broadband going into rural
areas. So, can you all discuss that?
Mr. Adelstein. Well, one of the primary metrics that we
have in our Notice of Funds Availability is the number of jobs
created. So, we're asking each company to tell how many jobs
are created by the project itself. It's much more difficult to
measure how many jobs are created by the availability of
broadband in areas that otherwise didn't have it. We know from
experience that it is an enormous number. And the increase in
productivity and the economic growth is very large, based on
what we know. But, actually measuring it, saying, ``This
particular project created this many jobs,'' is somewhat
difficult for the government. So, our metrics, at this point,
are focused on how many jobs are created by the actual
infrastructure development.
Senator Pryor. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Pryor.
Senator LeMieux.
Senator LeMieux. Thank you, Mr. Chairman.
I want to follow up on my colleague's questions concerning
how many jobs have been created or how much money has been
actually granted. My understanding of this $7.2 billion is, the
grants have not yet been issued. Is that--am I correct in that?
Mr. Strickling. Other than the $14 million for mapping,
that's right.
Senator LeMieux. OK.
Well, it seems to me--I guess this was appropriated in
February, and I understand we have to have a thorough process,
Mr. Chairman, to make sure that there are appropriate
applications, but I would think, one, that you had a sense of
where the areas that were underserved were when the money was
appropriated, and here we are, 8 months later, we have more
than 10 percent unemployment in Florida; almost 10 percent
unemployment, nationwide. And I'm a little concerned that money
that's supposed to stimulate the economy is not yet out there
turning dirt, stimulating the economy.
To that, I want to, if I can, bring up to you some concerns
that were raised by Don Winstead, who is the special advisor to
the Governor in Florida. I mentioned to Mr. Strickling before
the hearing started today, he prepared a letter on October 14,
and he--they're having some challenges. Under your provisions,
you've asked for the Governors to provide feedback on the best
way to provide this funding and provide a list of
prioritization and recommended projects. And he says in his
letter that, of 52 applications for expanding broadband
infrastructure, there was no factual proof in the applications
of the need for investing the funds in the area. He also says
that the reviewers were hindered by Florida's coverage map not
yet being available, which goes to the point that was being
raised earlier. And perhaps most importantly, ``NTIA will not
provide us with the information it's collecting from challenges
to coverage area attestation.''
So, here's a guy on the ground, trying to get the stimulus
money spent so that we can create jobs. And I would like for
you to talk to his concerns, and also, you know, what's your
focus on getting this money spent as quickly as possible so we
can stimulate the economy?
Mr. Strickling. Right. Well, let me speak specifically to
the latter. There may be a misapprehension, in terms of what
exactly we asked the states to do. We invited states to provide
us whatever input they wanted to. Our concern and our interest
was hearing from them about the areas of the state that they
viewed as priority areas. To the extent that they wished and
were able to provide specific comments on specific
applications, we certainly did not discourage that, but we
certainly weren't requiring it. So, I'm not sure that--some of
the categories of information that you listed from his letter,
I don't know would necessarily have been pertinent to answering
the question we asked them, which was, What are the priority
areas in your state? If they were hampered by not having that
information from their own mapping efforts, I think that was
shared by a number of other states. Yet, many states have their
own broadband commissions or committees and have anecdotal
information about their state even if they don't have precise
maps. So, most states, I think, were able to comply with our
request, as we asked them to.
In terms of the speed of getting the dollars out, I don't
think anybody feels the pressure more than Administrator
Adelstein and myself about the need to get these dollars out.
At the same time, this--in our case, this is a totally new
program. We are dependent on the quality of the applications
that are brought to us by the applicants. And as you indicated
from the letter you just read from, it sounds as if Florida is
concerned that many of the applications in their state just
aren't up to snuff. Well, I will not fund a bad application. We
have to fund grants that are going to be successful projects
that--5 years from now, after the Federal money is long gone,
these projects need to be continuing to be operating and be out
there serving their community. Otherwise, this program won't be
a success. And, as I indicated in my opening remarks, we're
going to take a few more weeks here to make sure we get this
right. And we absolutely understand the need to use this money
to stimulate the economy. But, I don't think anybody will be
happy if we rush the dollars out a few weeks early now, and 5
years from now we're wondering why the project failed.
Senator LeMieux. Have you gotten any good applications yet?
Mr. Strickling. As the selecting official, I look at the
slates of grants as they're presented to me through the staff
process. So, I am not personally reviewing applications. I hear
from my staff that we have lots of very high quality
applications.
Senator LeMieux. Can we start funding the ones that are
high quality now instead of waiting for another month?
Mr. Strickling. Well, we would like to be able to do that,
but I think it's incumbent upon us to really understand the
situation in individual states before we fund any particular
application in a state. So, even if I have a good project now,
if I have three more in the queue from that same state that may
be better projects, I really want to have the ability to look
at these and rate them against each other so we're picking the
best of the best.
Senator LeMieux. Mr. Adelstein? You want to speak to those
issues?
Mr. Adelstein. Well, we certainly are trying to move as
quickly as possible. I share your frustration about how long it
takes. Our agency, for example, has $4 billion in stimulus
funds for water programs, and we've been able to obligate $1.8
billion already. So, it's not the nature of the agencies, it's
the nature of the program, in its complexity, in its being a
new program that we haven't initiated before, and needing to
establish new standards and ensure that we target the money
properly.
Senator LeMieux. Yes. I mean, I'm all for doing it the
correct way. And obviously we want it to be done--targeted
properly. It just--thinking that this is almost 1 percent of
the entire stimulus package, and we're 8 months down the road,
and we haven't--you know, except for the mapping dollars, we
haven't put one dollar on the street yet--we've got people who
are hurting, who need jobs. So, that's what was the purpose of
the stimulus appropriation, as I understand it. So----
But, I thank you for your answers.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator McCaskill.
STATEMENT OF HON. CLAIRE McCASKILL,
U.S. SENATOR FROM MISSOURI
Senator McCaskill. Thank you, Mr. Chairman.
Let me just start by saying, while it's great to see you
both, Mr. Strickling and Mr. Adelstein, I must make one
comment, and there shouldn't be two of you here. Only in the
Federal Government would we have two different departments of
government doing the same thing. And I don't care how closely
you're working together, there is duplication, there is
overlap. And I know it goes to the culture of jurisdiction in
this august body I'm lucky to serve in, but it is nonsense that
we have two different programs. And it makes it complicated for
people who are trying to access the programs. It really makes
it complicated for those of us who are trying to oversee the
programs. So, if I could wave a magic wand, I would morph you
into one person and combine your two agencies with a snap of
the fingers.
I have a tendency to look at IG and audit reports, as you
all well know. And the last time we had a hearing about this
was in April 2007, and I had only been here a few months, and I
had spent time reading a 2005 IG report as it related to RUS.
At that point in time, there was an issue because there was two
problems that were pointed out in that IG report. One was the
definition of ``remote'' and ``rural'' and the other was
providing funding in areas that already had multiple providers,
because these monies are supposed to be going to areas that are
unserved, was the idea, that we were going to get broadband
where it wasn't.
Now, that audit was done. We had this hearing, and then
nothing happened. And ironically, the excuse RUS used was, they
were waiting for the farm bill. OK? That they didn't want to
pay out guidance or regulations yet, because they knew the farm
bill was coming. The farm bill was going to change all that.
Well, so the farm bill comes out and redefines both of
those issues in specific language. Now, here's the unbelievable
part. They define what ``remote'' is. So, we have this stimulus
money, and guess what happens? RUS picks a new definition. Why
in the world, when RUS used the definition that was passed in
the farm bill--I mean, this thing is--the print's not even dry
on the farm bill. Congress had just said specifically what the
definition of ``remote'' was: less than 20,000 inhabitants that
is not in an urbanized area contiguous and adjacent to a city
or town greater than 50,000 inhabitants. And then somebody
decided to improve upon the farm bill and pulled ``50 miles''
out of the air. How did that happen? Who did that? Who was the
person who did that?
Mr. Adelstein. That definition was used for the definition
of ``rural areas.'' That was the definition of ``rural,'' but
it wasn't the definition of ``remote.'' The definition of
``remote'' was the one that was ``50 miles or more from a urban
area.'' So, the--we only fund areas that are in the definition
of ``remote'' that was used in the farm bill. But, we try to
target funds toward a more--the more remote area--the grant
funds--towards the areas that were the hardest and most
expensive to serve. So, that was the distinction.
Senator McCaskill. OK. Well, it--to me, it seems like that
we worked pretty hard on getting language in the farm bill, and
everybody at RUS said they couldn't do anything on the
recommendations in the IG report til the farm bill was over,
and then the farm bill's over, and they do a new and different
definition. It just seems nonsensical to me.
On the second point--let me talk about the second point.
This IG report, that came out in March of this year, went back
and looked at all of the funding, 37 applications approved by
RUS since September 2005, and they received $873 million, those
37 applications. Only three of those 37 provided service to
totally unserved areas. Only three. Even though there had been
a finding in the audit saying that this should not be a program
that's providing competition, with government help, to four or
more providers that are already in the area. So, three out of
37 were totally unserved. And here's the kick in the gut. One
of those three was, in fact, in a pretty large-sized community,
but you guys had to fund it, because it was laid out in an
earmark that you're required to fund two communities in
Florida, by name. So, that means two applications out of 37, in
the time period between 2005 until this audit came out,
actually went to areas where someone hadn't already come in,
without any help from the government, and provided broadband
service. Two, totaling $25 million.
Now, that's a problem. And I know you're new there, and I
have great confidence that you're going to try to change
things, but do you agree that you need to--as you all review
these applications, that we shouldn't be providing loans and
grants to compete with companies that have not done it with
Federal money when they're already serving these areas?
Mr. Adelstein. I think we do need to move toward areas that
are unserved. As a matter of fact, that's exactly why, in
response to the IG report, that the RUS decided to come up with
this 50-mile ``remote'' definition, for which we're now hearing
so many concerns, and valid concerns. We were trying to move
away from what was being criticized, and I think legitimately
so, of going to areas that had service, by saying, ``Let's go
to places that are unserved. Let's go to the most remote
places, and really focus our grant money there.'' So, that was
a direct response. As a matter of fact, we went beyond what the
farm bill required, in trying to push money even further away
from cities--for example, suburban areas that were funded under
the previous administration--for which the RUS was criticized.
So, you know, we, on the one hand, take criticism for going too
remote, on the other hand, say that we are not supposed to do
that. So, we're in a--between a rock and a hard place on that.
I think we really do need to think about how we target
resources to places the market won't serve. That's where
Federal taxpayer dollars should be focused. How do we help that
happen? And we try to do that also through loans, to ensure
that the market can pick up on it. So, we wanted to use our
loan authority in order to have sustainable projects that--for
areas that could get revenue, that weren't so remote and
unserved that they could prove they had a business plan that
would be able to repay, and we could take one Federal dollar
that you appropriated, and come up with $14 in loans for it,
and stretch those monies as far as possible, but, for those
areas that were the furthest away, really target the resources
that Congress provided to those remote areas. And that's what
the RUS was trying to do.
Senator McCaskill. Well, I--and I know I'm out of time,
but, I just think it just--you know, I sit here and I'm
following it, and I've read a lot about it, and my head starts
spinning. Seems to me it's a pretty simple test. Is this a
small community? And are there already three or more providers
there? And, if it is a small community, not contiguous or
adjacent to an urban community, and if there are three or fewer
providers there, I think that's just all we'd have to say,
isn't it? Why would we have to say anything more than that?
Wouldn't that get it?
Mr. Adelstein. Well, that is the definition of ``rural''
that we use, where we will fund applications for areas that are
underserved. We also, as I said, tried to target areas that are
unserved, that are even more remote than that. In other words,
let's take the money even further away from being just outside
of a City of 50,000, or just outside a City of 20,000, or town
of 20,000; go even further out. And it turns out maybe we went
too far, and a lot of West Virginia wasn't counted, and a lot
of Arkansas wasn't counted. So, now we're thinking back, How do
we do that? But, our goal is, I think, shared, which is to take
that--those funds and reach the hardest-to-reach areas.
Senator McCaskill. Yes. I just don't want Federal money
competing with people who have made investments without the
help of Federal money. I don't think that's fair to those
companies, and I know how many communities there are in my
state that are not going to get help under this NOFA because
they happen to be within 50 miles of--a community called St.
Joseph Albany is a good example--1,900 people within 50 miles
of St. Joseph, and I think St. Joseph has run at about 25-
percent unemployment right now, so they're--they need this
stimulus badly.
Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator McCaskill.
Senator Ensign.
STATEMENT OF HON. JOHN ENSIGN,
U.S. SENATOR FROM NEVADA
Senator Ensign. Thank you, Mr. Chairman.
Yes, I agree with you, I don't think it's a good idea for
the government to compete with the private sector. Just a
little side comment there. I have a couple of questions.
First of all we know that the BTOP program is a massive
undertaking. And while I'm concerned about the evaluation of
the award-making process during this first fund round, I am
just as concerned about NTIA's ability to oversee the BTOP
projects once the money has gone out the door. Mr. Goldstein,
in your testimony, you note that the NTIA has never made grants
to commercial entities, and that it has no audit guidelines or
requirements in place. It seems to me that having such
processes in place is extremely important to prevent funds from
being wasted. What sort of problems with BTOP could arise if
NTIA does not implement such procedures before funds are
awarded? Without adequate audit processes, is there a higher
risk of fraud and abuse?
Mr. Goldstein. Well, at this point in time, there are no
audit guidelines for the commercial entities. There are, for
the nonprofit entities and the States and the like. There are
required reports that OMB is going to ask all recipients of
recovery funds, for one thing, which will provide, I believe,
quarterly reports, which will help NTIA and RUS evaluate how
funds are being spent and, you know, rates of completion of
projects and things like that. But, there is some concern,
certainly. There is a cutoff, even for--in the single audit
act, it has to be $500,000 and above for them to be covered,
even for the nonprofits and State and local governments and the
like. But, there are no requirements, at this point, for the
commercial entities. And it's one of the things that we feel
probably ought to be considered, and is one of the preliminary
recommendations that we've made to NTIA in our report.
Mr. Strickling. And, Senator, if I could add, there will be
audit requirements for commercial entities.
Senator Ensign. That was going to be my question of you.
Mr. Strickling. Right.
Senator Ensign.What would those audit requirements be? I
want to ask you that question, and then ask Mr. Goldstein if he
thinks they are going to be adequate.
Mr. Strickling. Right. Well, we'll be working on that. But,
we won't be issuing grants to commercial entities without those
requirements being scoped out. And we'll be working with our
Inspector General as well as keeping GAO informed of those
requirements, as we develop them, because we want to have an
effective set of requirements. And they will be in place before
a commercial entity receives any grant money.
Senator Ensign. And obviously GAO will be following up with
that to make sure that the----
Mr. Strickling. Yes.
Senator Ensign.--whether they've been effective. One of the
things that Congress does, in our oversight role, and it is the
same thing with the GAO, is to make sure that there isn't
fraud, there isn't abuse going on in these especially massive
programs, where the money is put out so quickly. There is a
large potential for abuse.
I just want to make one more comment. A lot of folks up
here have been drilling you all about these ``remote'' versus
``rural'' distinctions. I realize your job is very difficult,
with some of these definitions, because the states are so
different and your challenges are huge. But, your goal, I
think, is right, in trying to focus more on the completely
unserved communities versus the underserved communities. And I
would encourage you to not completely go away from what you've
been doing, but maybe try to strike just some balance there.
I appreciate that you both have huge challenges. We've put
a big job on your plate, and you have a lot of work to do. And
with all this money, I just hope that you do take your time,
you do do it as well as you can possibly do it, and then we'll
have IGs and GAO and everybody point out exactly what you did
wrong. And then we'll have you before the Committee again.
Mr. Strickling. Right. It comes with the territory.
Senator Ensign. Mr. Chairman, I'd ask my opening statement
also be made part of the record. And thank you, for holding
this hearing.
The Chairman. Thank you. And it will be a part of the
record.
[The prepared statement of Senator Ensign follows:]
Prepared Statement of Hon. John Ensign, U.S. Senator from Nevada
Thank you, Mr. Chairman, for holding today's hearing on the
Recovery Act's broadband stimulus programs.
As we all know, the Internet is the most transformational
technology of the last 20 years. It has democratized information,
created millions of jobs, and made the world a smaller place. It is now
an indispensible part of our lives.
Because of the immense benefits the Internet provides to families
and businesses alike, demand has spurred tremendous investment in our
Nation's broadband Internet infrastructure. Indeed, according to the
Federal Communications Commission, 96 percent of all households in
America have access to broadband at least as fast as 3 megabits per
second--which is fast enough to stream video online. Over 70 percent of
homes can subscribe to broadband service fast enough to watch high-
definition video on their computers, speeds nearly unheard of just 5
years ago.
While such rapid deployment of broadband is extremely impressive,
we want to make sure all Americans participate in the Internet
revolution and do not fall victim to a Digital Divide. This is
precisely why BTOP and BIP were created.
While I would have rather seen the government pursue market-based
proposals rather than top-down government grant programs, I know that
everyone here today shares the goal of getting broadband to more
Americans and wants to see BTOP and BIP succeed. With over $7 billion
in taxpayer money at stake, we must ensure that these programs are as
effective and efficient as possible.
Unfortunately, Congress did not make that easy for the agencies
represented here today. Mr. Strickling and Mr. Adelstein, I do not envy
the task in front of you. Congress dealt you both a difficult hand.
According to GAO, the size of the broadband programs is
unprecedented, and their scope exceeds the previous experiences of both
NTIA and RUS. Furthermore, Congress ensured that the programs would be
completed in reverse order by requiring over $7 billion to be spent
well before the national broadband map is completed. Too big, too new,
and too fast--this is not a recipe for success.
Congress also put the cart before the horse by starting the
broadband programs before the FCC could complete its comprehensive
national plan for broadband.
Going forward, I hope NTIA and RUS will focus primarily on bringing
broadband to communities that do not have any access, rather than
subsidizing multiple competitors or experimenting with unproven
business models. Furthermore, the agencies should err on the side of
caution and take every possible step to reduce the very real risk of
waste, fraud, and abuse.
I hope that Congress, NTIA, and RUS will work together in a
deliberative manner to ensure that these programs are implemented
properly. The last thing I want to see a year from now is a front page
headline screaming about taxpayer dollars being wasted and misused in
these programs.
Again, thank you Mr. Chairman for holding this hearing. I look
forward to listening to our witnesses.
The Chairman. Senator Klobuchar.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you very much, Mr. Chairman.
Thank you, to our witnesses.
I want to thank you, Mr. Chairman, for your leadership in
working with so many of us to make sure that this money was
contained in this stimulus package. I know you have some issues
in your state with broadband, which we have as well in
Minnesota. I always figure I'd rather have kids that grow up in
the rural area of our state be able to work in Thief River
Falls or in Lanesboro, Minnesota, rather than having these jobs
go to China or India. And that's why I'm devoted to this idea
of investing in broadband in our country.
My state actually is 44th out of 50 when it comes to
Internet speed. And so, I'm focused on that issue, because I've
seen the issues where you may have some kind of access, but
it's very slow and cumbersome. So, that's my first question, is
about that. Our average broadband speed in our country compares
very poorly with other industrialized nations. And, in the
programs, the broadband programs that you administer, the speed
has been defined as 768 kilobits for broadband. How does that
compare to the average speed in the rest of the world? And do
you think that we need to rethink that minimum speed
requirement for the next round of funding?
Mr. Strickling. I'll take it. First, understand that that
figure was just set to determine the eligibility for filing an
application. We made it very clear, in the notice that was put
out last July, that one could get additional consideration for
their application if they were proposing faster speeds. And I'm
reasonably confident, based on what I'm hearing about the
applicant pool, that, for the most part, we will be awarding
grants at substantially higher speeds than 768 kilobits. So, it
was there as an eligibility criteria, because we didn't want to
be excluding any particular area of the country where it might
actually be the case that 768 is the best that could be done in
an area. And if we had picked a speed substantially above that,
we might have basically told parts of the country, ``You can't
even apply, because there's no technology that will work in
your--in that particular geographic area.'' So, we kept it low,
as an eligibility criteria. And you'll see grants awarded at
higher speeds. And yes, we will ask folks about that issue, in
the request for information, before we put the second round
together.
Mr. Adelstein. That definition reflects a floor. And we
provide higher points for higher speeds. So, we recognize speed
matters, and we are trying to promote higher speeds in the
application process.
Senator Klobuchar. So, you know, hearing from all my
colleagues here, and some of the concerns, do you think you're
going to make some changes as you prepare for the next round of
funding, in terms of criteria?
Mr. Adelstein. We will. No question.
Senator Klobuchar. Not just on speed; anything.
Mr. Adelstein. No question we're going to make changes. I
mean, there's a--we're putting the RFI out shortly, and we're
going to learn from this round. I mean, there has been enormous
experience that we've gained through this. And we really
welcome your input, GAO's input, expert input that we're going
to be soliciting over the next week or so, to figure out, top
to bottom, How can we change this? How can we make sure we get
to those remote areas you talked about and yet not exclude
certain areas that we all would agree should be reached?
Mr. Strickling. And I would just add, and echo
Administrator Adelstein, we want to apply the lessons from the
first round to the second round. And that will be reflected in
the questions we ask in this RFI that will come out shortly. It
will be reflected in the actual notice, when that is issued
later on.
Senator Klobuchar. So, were the number of applications and
demand higher than you envisioned? And is that the issue with
having to use volunteers and contractors?
Mr. Strickling. Well, we had always planned to use
independent experts to review the applications. I think the
size of the applications, the fact that we were oversubscribed
seven times, yes, that surprised me. I didn't expect we would
see that level.
Senator Klobuchar. You should have gone on the broadband
tour I took in Minnesota----
Mr. Strickling. Right.
Senator Klobuchar.--to 22 cities. I could have guessed
that----
Mr. Strickling. Right.
Senator Klobuchar.--that might happen. But it's--so, it's--
just was more than you thought would come in the door?
Mr. Strickling. In terms of the dollar amount, absolutely.
Senator Klobuchar. So, when you use these volunteers and
contractors, where do they come from? Is there a check on them?
Is there any kind of conflicts that you look at before they
sign on?
Mr. Strickling. Yes. As I mentioned earlier in my
testimony, first off, this is just an issue for the Department
of Commerce, and Jonathan has not been using these independent
experts who have volunteered their time. But, as I indicated
earlier, these folks are very accomplished in their field. I am
aware of one former chair of a state public utility commission
that is serving as a reviewer. We have former senior executives
from telecommunications companies who have built these kinds of
projects before and are volunteering their time. We have, I
think, roughly around 200 folks from the U.S. Government who
are experts in economic analysis, who are engineers. Many of
the people in my organization, who are not devoted to the
program, have been serving as experts. In every case, however,
we review the qualifications of anyone seeking to serve as an
expert. We, I think, received about 1,300 expressions of
interest to serve as a reviewer. We've rejected, I think,
roughly 300 people, either due to a conflict of interest,
because we also have very a tight conflict of interest
provision, as well as not having the qualifications reflected
in their resume that we thought would be useful to us.
Senator Klobuchar. Very good. Well, I just want to thank
both of you. I know this has been more work than was
anticipated, but I think you also understand how important this
work is. I know, from working with you, that you do. And we're
looking forward to working with you on the criteria for the
next round of funding.
Thank you.
The Chairman. Thank you, Senator Klobuchar.
Let me just conclude with a final question and a small
sermon.
Is it not true that applicants have to submit separate
applications to each of you?
Mr. Strickling. They can submit an application and then
indicate they want both of us to review it. So, we do have a
number of--I think, roughly, 800 or so joint applications.
Mr. Adelstein. Eight hundred or twelve hundred.
The Chairman. All right. Well then, I'll stick to my text,
that it was structured in a manner that requires individuals to
submit a significant amount of data both to NTIA and RUS.
Mr. Strickling. That's true.
The Chairman. Is that used in the same way by you both? Do
you read it, both, the same way? Do you react to it, both, the
same way?
Mr. Strickling. I hope so.
The Chairman. Well, let me give you my philosophy. I'm on
the Intelligence Committee, and it's been absolutely stunning
over the years to watch the FBI not respond to their newfound
responsibilities to act as an intelligence agency. They're all,
by definition, lawyers, they carry long legal yellow pads, and
they like to arrest people for breaking the law. But
surveilling people who might lead them to much further and
broader and more dangerous networks is not something they do.
Moussaovi is the classic case of that. They arrested him
because his French driver's license had expired; the worst
possible thing they could have done.
Now, the Director of the FBI would come up, and he couldn't
get his, you know, computer system to work, and so, he'd buy
another one for another $350 million, and it didn't work, so
he'd get another one. And he'd come up and, ``We need time. We
need time.'' And in the meantime, the fact of the matter was
that, in the world of intelligence, there really wasn't a
cultural change taking place in either the CIA or the FBI, that
the FBI, after all, was made up of leaders--and I'm looking
right at you, Jonathan--or, I should say, Your Excellency--and
that you want this change to work. And that--it has been, in an
odd way, reconfigured so that you need to. I don't approve of
the way it was done, but that's what we're living with, and
you're going to try your very best. But, for example, when you
came in, all the rules for ``remote'' had already been set by
the bureaucracy--you didn't have anything to do with it. So,
now you've got to change those. You can't just do that by
yourself. Or maybe you can. How many people do you have working
for you?
Mr. Adelstein. We have about 300 in Washington----
The Chairman. Well, you have a 3 percent chance, then, of
getting it done. But, you understand what I'm saying.
Bureaucracies don't change. I'm not helping by saying that I
don't think that you all should have gotten it, I think it
should have all gone to them. That's what we've all said.
That's what you've heard from the House. And now we're talking
about the definitions of ``remoteness'' and the difficulties of
integrating your work together, and NOFAs going out and, Is
there going to be more coordination on all of that? And, my
conclusion is that we are where we are. And therefore, you have
to work. But, after 9/11, the first law that we had to pass was
allowing the CIA and the FBI to talk to each other. We actually
passed a law, a week later. They previously weren't allowed to
talk to each other. Now they both do intelligence, but in a
discrete and external/internal manner. But, it has not worked
well. It has not worked well.
Now, national intelligence is probably a higher priority,
given the state of the world, than broadband, but viewed from
West Virginia, it isn't. I mean, we don't advance, and Senator
Klobuchar's folks don't advance unless they have a broadband
package which is coordinated and which works.
So, what I want each of you to do is to--you don't have to
look at each other as you do this, but I want you to tell me
what troubles you have as a result of this being a bifurcated
process. And don't tell me you don't have any, because I won't
believe it.
Mr. Strickling. Do you want to go first?
Mr. Adelstein. I'll go first, if you insist.
I think one of the issues is--the loan versus grant is a
big issue, because people actually want grants. They don't want
loans. If they can get all Federal money, they'll take it. And
yet, our expertise, since 1935, is finance, is doing loans.
We're a bank, a rural development bank with a $54 billion
portfolio. So, we want to take those dollars and stretch them
as far as possible. And a lot of people looked at the
applications and they said, ``Well, you know, we're forced into
the loan portfolio, but we really would rather get a grant.''
And that's been a fairly big issue. So, I think the hardest
thing for us----
The Chairman. That's a fairly big problem. Maybe some
people will decide that a loan, to them, means that they're not
certain that they have your full confidence, or that's not what
they've come to expect, let's say, from NTIA. And you can
correct me if I'm wrong. But, then they may withdraw or lose
enthusiasm. I'm probing.
Mr. Adelstein. They certainly seem to prefer----
The Chairman. You do loans. That's what you've always done.
That's what I didn't want to hear.
Mr. Adelstein. Well, what I'm saying is that we want to
stretch those dollars as far as possible, and we want to
leverage our expertise in this in order to have stable business
plans. I think--the important thing is, if they can pay back a
loan, we look in great detail on their ability to pay it back.
As I said at the beginning, we only have a 1 percent default
rate. So, we have the ability to say, ``Give us a business plan
that works.'' If we just give you all a grant, you can go out,
you can blow the money, and then, 5 years later, there'll be
nothing for the community, because they didn't have a business
plan that could sustain that investment. But, if we can give
them half of it in grant, to get them over the hump and get
them out to those areas that are hard to serve, and make them
pay back the other half, we can double, almost, the amount of
investment that is leveraged by those Federal dollars, and we
can make sure they have a sustainable business plan. So, I
think it's a very good policy goal. It's a very good fiscally
responsible goal. But, it's not necessarily in cahoots with
human nature, which is, ``I'd rather just have all grant.'' And
so, trying to coordinate these two programs to ensure that he
gets the grant money out, we get the loan money out, and we
maximize the bang for the buck, has been a challenge for us.
The Chairman. Well, that implies that, if you do primarily
grants, that you're kind of pitching your money out there into
the wind. I'm sorry, but this is what I wanted to get. I mean,
you're saying his grants plan is not a wise one because people
just say, ``Good. Now we'll just do whatever we want.'' Yours,
you're saying, is more disciplined. And I'm suggesting that
this is exactly what confuses people, and probably prevents a
lot of people from applying--you know, you have $28 billion
worth of applications, and I understand that. It's very
impressive. On the other hand, maybe there are missing people,
who could really do much more valuable work, but they just sort
of get confused as to what they're meant to do. They've got
these two agencies they've got to do business with.
Mr. Strickling. Well, the rules were structured to require
people who could qualify under the RUS program to have their
application considered there first. In line with the policy
initiatives that Jonathan mentioned, which were, ``The dollars
will go further if we can give loans out before we resort to
grant dollars,'' it's hard to argue with that logic. The
dollars will go further. It's also absolutely the fact that
there have been people who have not applied for this program
because they didn't want to take a loan and were concerned that
they wouldn't ever get to the grant piece of this, because they
might well be awarded a loan, under the RUS program, which they
don't want to take. So, as a result, they just didn't apply.
I'm aware of companies in that situation, and they are
companies that we would like to have in the program. I mean,
these are, you know, significant companies that just felt
discouraged by the way the rules were set up. So, you have
the----
The Chairman. OK. So, how do you harmonize that?
Mr. Strickling. Well, the problem is that if we're going to
take, as the national goal, to have the dollars go as far as
possible, it's hard to reconcile the two, because as Jonathan
mentioned, you have human nature, which wants the full grant,
if they can get it, and not the loan, as against the national
policy of trying to make the loan dollars go out first as a way
to make the total appropriated $7 billion go as far as
possible.
And I think--we will continue to evaluate this for round
two but----
The Chairman. So, I'm reading----
Mr. Strickling.--there is a natural tension here.
The Chairman.--I'm reading you both to say that you
basically agree with the criticism that is being showered upon
you, but you're stuck with what you got, and you've both got to
proceed as best as you can. And so, you just don't want to be
sidetracked by those issues. I mean, you have a couple good
companies that you missed because they wanted grants, not
loans. And Jonathan was shaking his head a little bit, like
that, so he obviously agreed with that. So, we just----
Mr. Strickling. I think we'll look at it again for round
two.
The Chairman.--we just have to accept it.
Mr. Strickling. Yes, well, we will look at it again for
round two, but I think the policy imperative is strong enough
here, I wouldn't tell you, today, we will definitely change
from what we had in round one.
The Chairman. All right. Well, let me ask you one final
question.
And, Senator Klobuchar, if you've got questions----
Senator Klobuchar. No.
The Chairman.--you're welcome to them.
Sometimes, an underserved area or an unserved area may be,
in fact, the next terrific industrial park, but it hasn't been
established yet, and the businesses haven't come yet, and the
land movers haven't flattened it yet. But, it fits. And
somewhere, beknownst to some of us, let's say, in each State,
there are entrepreneurs who want to do business and want to
build factories in those areas, but they're underserved and
they're remote. They're not going to show up in either of your
definitions. But, if you are looking toward the growth of a
State, and bringing jobs to a state through broadband, it may
be that this remote--and actually I'm thinking, you know,
people love to beat up on mountaintop removal, but in West
Virginia, only 4 percent of our land is flat and the rest of it
going either up or down--that's the only place you build all of
your high schools, you build all of your airports, you build
all of your industrial parks on tops of mountains. Now, they're
very ugly, right after you stop removing, you know, the
overburden of the coal, whatever, but that changes very
quickly, and they can be used for industrial parks. Now, how do
you take that kind of thing--I mean, to me, that's stimulus,
that's what you ought to be looking at. But, it doesn't sound
to me like you can.
Mr. Adelstein. Well, one of the things that the Secretary
of Agriculture is very focused on is regional economic
development, not just in one community, but looking at, How are
regional plans developed which would involve having those kind
of areas that are enterprise zones? And how does that fit into
the broader----
The Chairman. Yes, but he doesn't know about it. He doesn't
know this is going on. And you don't know that it's going on.
There's a plan where there are a couple of entrepreneurs--I can
think of four or five instances, as I'm talking right now, and
I'm sure Senator Klobuchar can do the same--where there are
entrepreneurs who have big plans for remote areas, because
they're remote. If they were served by broadband, of course,
they would become extremely popular and create a lot of jobs.
But, you can't know that.
Mr. Adelstein. It's sort of our job to know that. We have
5,000 people in offices in 47 states--470 offices across the
country do rural economic development. And we are going every
day and talking to local entrepreneurs and businesspeople
about, What can we do to support your efforts to build new
jobs, to build new factories, to find places that are underused
and make them happen? And what are the resources we have
available--one of them being broadband--to make that happen?
So, the Secretary really wants us to find out, he wants us to--
--
The Chairman. No. Now, wait. Jonathan, you're making this
too easy on yourself. ``We know what's going on.'' First of
all, I'm skeptical about that. ``Well, we've got people in
offices and they know what's going on.'' Well, I'm skeptical
about that. Decisions of these sorts are usually made on an
inner-sanctum basis, within a Governor's office, and it's all
highly confidential and nobody's saying anything to anybody,
because they want it to happen and nobody is meant to know
about it. But, it will not happen at all unless there's
broadband made available to those areas. And I'm sort of asking
you to--you know, to push back on me, if you think you can do
it. I don't think you can.
Mr. Strickling. I don't think our grant programs are well
suited for this type of initiative. However, the hypothetical
you describe--I would be willing to wager, that the organizers
of that sort of project, particularly if it's a greenfield
project, almost certainly would have the capability to build
broadband into their development plans. And then the only
question is, Can they get a connection back into the overall
network? And, at that point, if they really are putting a big
project together, it's hard for me to imagine that private
industry wouldn't step up to provide the connection, the middle
mile into that type of significant development, once it's
built. But, we're speculating, here, in the absence of specific
facts, obviously.
The Chairman. OK. Well, look, this has been useful, this
has been helpful. I'm not thrilled, but you're two good people
and you're running one and a half good organizations. And----
[Laughter.]
The Chairman.--and I don't mean to be unkind about that,
but I do feel that way. I don't know why it was divided up the
way it was, but that's what political power does around here.
And I'm unhappy about that.
And broadband, you know, I think that I was fighting for
broadband before I was fighting for E-Rate, back in the mid-
1990s. But, that doesn't make any sense; you can't fight for
broadband before you fight for E-Rate. But, it's very, very
important, that's all I'm saying; the results of this are very,
very important. And so, your work has to really be clever, and
you'd better, you know, bug a lot of Governors' offices or
something so you can find what's being secretly planned,
because a lot of what's being planned is planned in secret.
End of hearing.
[Whereupon, at 4:35 p.m., the hearing was adjourned.]
A P P E N D I X
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Hon. Lawrence E. Strickling
Question 1. Congress intended that the Broadband Technology
Opportunity Program (BTOP) and the Broadband Infrastructure Program
(BIP) be targeted to unserved and underserved communities. In order to
identify such areas, the applicant must provide broadband availability
data to the National Telecommunications and Information Administration
(NTIA) and the Rural Utility Service (RUS). In addition, the BTOP and
BIP rules allow existing service providers to provide comment on
proposed projects, including data regarding broadband service in such
areas. The rules suggest that if existing service providers do not
provide such data within 30 days, the agencies will presume that there
is no existing service provider in those areas.
Incumbent providers have complained that the database used to
collected data is cumbersome and inefficient. As a result, they may not
be able to provide complete information by the deadline set forth in
the rules. What is being done to make sure that RUS and NTIA have
sufficient and accurate information on which to base their funding
decisions? Are there ways for incumbent providers to supply additional
data after the deadline?
Answer. NTIA and RUS provided existing service providers with a 30-
day window to voluntarily submit information regarding the proposed
funded service areas of BTOP/BIP infrastructure applicants to help us
ensure that BTOP funds support projects in areas that meet the
definition of unserved or underserved. NTIA and RUS worked diligently
to ensure that existing providers had an adequate opportunity to
provide information regarding their services. To the extent that
existing providers were not able or willing to use the online tool,
they were invited to submit supplemental information in writing to
NTIA. NTIA will consider this information, along with any other data at
its disposal, as part of its due diligence review process.
Comments were permitted after the 30-day window, but the agency
informed service providers that it could not guarantee that late-filed
comments will be considered. In addition to the availability data
submitted by applicants and incumbent providers, the agencies have
access to additional information to evaluate whether an area is
unserved or underserved, including broadband maps compiled by States
and additional comments submitted by State Governors. We are confident
that NTIA will have sufficient and accurate information on which to
base funding decisions.
Question 1a. Conversely, applicants have voiced concern that
incumbent providers may supply inaccurate data that they will not have
the opportunity to rebut. Is there an appeals process to the extent
that there is a conflict over the data provided to the RUS and NTIA?
Answer. Before making a grant, NTIA will determine whether an area
is unserved or underserved based on all information available to it.
The submissions of service providers are not dispositive but are just
additional information we will consider. NTIA is also utilizing any
other data at its disposal to help evaluate claims made by both
applicants and commenters. Although there is no appeals process
regarding NTIA's determination of the unserved or underserved status of
a proposed funded service area, NTIA may request additional information
from applicants and commenters as necessary and appropriate.
Question 1b. Once an application reaches the second due diligence
phase, what efforts will be made to assess the accuracy of the
broadband service data in the proposed project areas?
Answer. NTIA will review submissions made by existing service
providers and compare them against proposed funded service area
designations and the methodology used to evaluate the unserved or
underserved status of the area. NTIA is also utilizing any other data
at its disposal to help evaluate claims made by both applicants and
commenters. The NOFA provides that RUS and NTIA will reject an
application if it is determined that a proposed funded service area
identified by an applicant does not meet the unserved or underserved
definitions or does not qualify as a ``rural'' area without sufficient
access to broadband service.
Question 2. I am concerned that coordinating grant programs between
NTIA and RUS has made the application process unnecessarily complex and
delayed the use of stimulus funds. I would like to have a better
understanding of how the agencies have worked together to date and plan
to proceed with respect to the second notice of funds available (NOFA).
When do you anticipate that RUS and NTIA will begin taking comment on
the second NOFA?
Answer. NTIA has coordinated closely with the other agencies
directed to lead the Federal Government's broadband efforts, in
particular the RUS of the Department of Agriculture, to provide
applicants and the public with a unified approach to addressing the
Nation's broadband needs. Our coordinated efforts included the initial
public meetings, release of the first Request for Information,
development of the first NOFA, applicant workshops, joint application
intake, development of the website www.broadbandusa.gov, and the
release of the second RFI on November 10, 2009. The comment period
closed on November 30, 2009. As we plan for the second round of
funding, the agencies will evaluate our success in coordinating our
efforts and may make targeted adjustments to improve efficiency as
appropriate.
The second RFI sought public comment on certain issues relating to
the implementation of BIP and BTOP and is available at http://
www.ntia.doc.gov/frnotices/2009/FR_BIP_BTOP_RFI_091109.pdf. The RFI
sought information that will help the agencies improve the broadband
programs by enhancing the applicant experience and making targeted
revisions to the first NOFA, if necessary. The agencies requested
comment on topics related to the application and review process,
including:
Streamlining the applications;
Transparency and confidentiality;
Outreach and support;
NTIA expert review process;
Policy issues including funding priorities and objectives;
program definitions; public notice of service areas;
interconnection and nondiscrimination requirements; sale of
project assets; cost effectiveness; and
Other substantive changes to encourage participation and
enhance the program.
Question 2a. Why should applications be considered for both a BTOP
and a BIP award, if the applicant is only interested in one of the
programs?
Answer. Pursuant to the first NOFA, broadband infrastructure
projects in areas that are at least 75 percent rural were required to
be submitted to RUS for consideration under BIP. If an applicant
intending to serve such rural areas also chose to have its application
considered for BTOP funding, the applicant completed the additional
application questions required of BTOP infrastructure applicants. NTIA
may determine such applications to be meritorious and make grant awards
if RUS reviews the application and determines not to fund it. This
approach reflects the statutory requirement that RUS fund broadband
projects exclusively in rural areas and that NTIA funding not be
applied in an area funded by RUS under the Recovery Act. NTIA and RUS
sought comment on this issue as part of the second joint RFI.
Question 2b. How can the second NOFA be streamlined without
increasing the risk of fraud or abuse?
Answer. In the second funding round, NTIA will seek to improve the
application process as much as possible and will make targeted
revisions to the first NOFA, if necessary, to better achieve the goals
of the Recovery Act. In the second RFI, we sought public comment on
ways to streamline the second NOFA. NTIA is committed to ensuring that
taxpayer dollars are spent efficiently and will take every step
necessary to prevent fraud or abuse. However, the first application may
have requested information that is not necessary to making a full
evaluation of the proposal or to preventing fraud or abuse or may have
requested it in a format that can be streamlined in the second round.
NTIA will continue to request as much detailed information in the
application process as necessary but I am confident we can streamline
the process in an efficient and effective manner.
______
Response to Written Questions Submitted by Hon. John Kerry to
Hon. Lawrence E. Strickling
Question 1. All of the first round applications are in, and have
been for a number of months now. When will you be able to make public
the applicants who have advanced onto the ``due diligence'' phase of
this process?
Answer. NTIA has begun notifying some applicants that have advanced
to the due diligence phase of application review. This will continue on
a rolling basis until all awards are made. Given the competitive nature
of the program, NTIA is not making public the status of applications.
We have advised all applicants to consider their application to be
under consideration in due diligence until they hear otherwise from
NTIA.
Question 2. Can you estimate the number of first round applications
you anticipate moving on to Phase 2?
Answer. As noted previously, applications are advancing to Phase 2
due diligence--and NTIA will begin announcing awards--on a rolling
basis. At this time, NTIA is not able to estimate the total number of
applications that will advance to Phase 2.
Question 3. Have you had sufficient staff and resources to work
through the vast number of applications for funds you have received?
Answer. At present, NTIA has sufficient staff and resources to
administer the BTOP program. NTIA is authorized to spend up to $141
million for BTOP administrative expenses through September 30, 2010. At
this time, NTIA has filled 38 positions with new hires and details from
other bureaus for this program. On August 3, 2009, NTIA entered into a
contract with Booz Allen Hamilton for program development and
administration services. The contractor is assisting NTIA staff in the
grants administration process to ensure that we can award Recovery Act
funds in the most effective, equitable, and accountable manner
possible.
While our current staff is adequate, the Recovery Act does not
provide authority or funding for administration and oversight of BTOP-
funded projects beyond the end of Fiscal Year 2010. NTIA is examining
options to ensure sufficient administration and monitoring of BTOP
grant projects and to carry the program to conclusion. NTIA intends to
work with Congress on this matter.
Question 4. Mark Goldstein from GAO testified that there may not be
enough time to make the necessary changes to the application process
before the second round begins. Do you agree with his assessment?
Answer. No. NTIA is working as expeditiously as possible to
evaluate and award the first round of grants, apply lessons learned
from the first round to the design of the second funding round, and
take all steps to ensure that funds are obligated by September 30,
2010, as required by the Recovery Act. NTIA appreciates the GAO's
observation that NTIA faces several challenges in evaluating and
awarding BTOP funds in the relatively short period of time required by
the Recovery Act.
NTIA has already taken a number of steps to reduce the risks the
GAO identified, including adding additional review time for first round
grants, shifting from three funding rounds to two, procuring contractor
support, and taking other steps to effectively evaluate, award, and
monitor BTOP grants. NTIA will continue to take all appropriate
additional steps to apply lessons learned and address GAO's concerns.
Question 5. How much time do you believe is needed to develop the
second notice of funds availability?
Answer. On November 10, 2009, RUS and NTIA released the second
joint Request for Information (RFI) seeking public comment on certain
issues relating to the implementation of BIP and BTOP. The RFI sought
information that will help the agencies improve the broadband programs
by enhancing the applicant experience and making targeted revisions to
the first NOFA, if necessary. NTIA will use the comments received from
all interested parties to determine what changes, if any, are
appropriate. NTIA currently plans to release a second NOFA in January,
2010.
Question 6. When do you anticipate beginning and completing that
process?
Answer. NTIA will use the RFI comments received from all interested
parties to determine what changes, if any, are appropriate. NTIA then
plans to prepare and release a second NOFA in January, 2010.
Question 7. In order to prevent funds for unserved and underserved
areas from being used for projects in areas that are already served by
existing service providers, I understand that NTIA and RUS allow for
existing service providers to submit data about their broadband service
in response to applications for funds. Some existing service providers
have expressed concern that the 30 day comment period is not sufficient
for them to review every application, while some applicants are
concerned that there is no established appeals process in cases where
objections are made by existing service providers.
If existing service providers do not object to an application, is
there any additional check to ensure the funds are going to areas
intended by Congress? Also, given the timing constraints, do you have a
procedure in place to deal with concerns raised by existing service
providers outside of the 30 day comment period?
Answer. NTIA and RUS provided existing service providers with a 30-
day window to voluntarily submit information regarding the proposed
funded service areas of BTOP/BIP infrastructure applicants to help us
ensure that BTOP funds support projects in areas that meet the
definition of unserved or underserved. NTIA and RUS worked diligently
to ensure that existing providers had an adequate opportunity to
provide information regarding their services. To the extent that
existing providers were not able or willing to use the online tool,
they were invited to submit supplemental information in writing to
NTIA. NTIA may consider this information, along with any other data at
its disposal, as part of its due diligence review process.
Comments were permitted after the 30-day window, but the agency
informed service providers that it could not guarantee that late-filed
comments will be considered. In addition to the availability data
submitted by applicants and incumbent providers, the agencies have
access to additional information to evaluate whether an area is
unserved or underserved, including broadband maps compiled by States
and additional comments submitted by State Governors. We are confident
that NTIA will have sufficient and accurate information on which to
base funding decisions.
Question 8. If existing service providers object to an application,
will their objections be made public? And if so, where will those
objections be available for public viewing and in what timeframe?
Finally, what is the appeals process for the applicants to undertake?
Answer. The name of existing service providers submitting
information and a summary of their response is linked to the relevant
application and is publicly available on www.broadbandusa.gov. In
filing responses to a Public Notice Filing, however, existing service
providers were asked to submit specific information about their
existing service offerings, including the number of households and
businesses that have access to broadband service in the proposed funded
service area and the price, speed, and number of subscribers for the
broadband services offered. Such information submitted will be treated
as proprietary and confidential to the extent permitted under
applicable law.
NTIA will review the submissions made by existing service providers
and compare them against the applicants' proposed funded service area
designations and the methodologies used to evaluate the unserved or
underserved status of the area is. The NOFA gives RUS and NTIA
discretion to reject an application if it is determined that a proposed
funded service area identified by an applicant does not meet the
unserved or underserved definitions or does not qualify as a ``rural''
area without sufficient access to broadband service. The agencies will
make the required determination before awarding a grant. Although there
is no appeals process regarding NTIA's determination of the unserved or
underserved status of a proposed funded service area, NTIA may request
additional information from applicants and commenters as necessary and
appropriate.
Question 9. There are several requirements for applicants to meet
in order to be eligible for BTOP funding, including minimum Internet
speeds. The minimum speed required is enough for consumers to access
simple e-mails and simple websites. Unfortunately, it is not fast
enough to run more complex websites and streaming video. Why did you
settle on such a low minimum speed requirement?
Answer. There may be rural or remote areas of the country where the
only practical technology available delivers speeds of roughly 768
kbps. NTIA did not want to summarily exclude such areas of the country
from being eligible for funding without at least considering the range
of applications filed. The commitment to provide a minimum downstream
speed of 768 kbps is a preliminary eligibility factor, and it does not
reflect the speeds we would expect to fund. In fact, greater
consideration will be given to applications proposing faster speeds and
NTIA is confident that BTOP will fund projects that provide broadband
at speeds significantly greater than the minimum requirement.
Question 10. How many of the applications will only meet the
minimum speed requirements?
Answer. At this time, NTIA does not know how many awards will be
made for infrastructure applications proposing to offer broadband at
various speeds. However, considering that the commitment to provide a
minimum downstream speed of 768 kbps is only an eligibility factor and
that greater consideration will be given to applications proposing
faster speeds, NTIA is confident that BTOP will fund projects that
provide broadband at speeds significantly greater than the minimum
requirement.
Question 11. How significantly does speed and utility factor into
your decisions in awarding funds?
Answer. BTOP applications will be evaluated and selected based on
their ability to provide the greatest benefits--including the greatest
broadband speeds--to the greatest population of users, consistent with
objectives outlined by Congress in the Recovery Act. In order to be
eligible for broadband infrastructure grants, applicants must, among
other requirements, commit to providing minimum broadband speeds of at
least 768 kbps downstream and 200 kbps upstream in an unserved or
underserved proposed funded service area. Applications offering higher
broadband speeds will receive more favorable consideration than those
services with speeds meeting the minimum broadband definition. NTIA is
confident that BTOP will fund projects that provide broadband at speeds
significantly greater than the minimum requirement.
______
Response to Written Questions Submitted by Hon. Barbara Boxer to
Hon. Lawrence E. Strickling
Question 1. I was pleased that the implementing rules for the
broadband grant program included language requiring non-discriminatory
practices by grant awardees, while also allowing awardees to ``employ
generally accepted technical measures . . . to address spam, denial of
service attacks, illegal content, and other harmful activities.'' In
your response to questions for the record following your confirmation
hearing in May, you stated ``[i]f confirmed, I will ensure that
purveyors of unlawful content find no legal immunity for their conduct
under the non-discrimination obligations that the Recovery Act directs
NTIA to impose.''
The rules and your statement demonstrate that NTIA intends for the
broadband grant program to balance the interests of open Internet
access with permitting reasonable management practices to prevent the
transmission of illegal content.
Please describe, in detail, specific measures implemented by NTIA
and RUS to ensure that proposed broadband programs by applicants
contain sufficient measures to protect against the transmission of
illegal content.
Answer. The Recovery Act requires NTIA to establish non-
discrimination and interconnection obligations as contractual terms of
awards under BTOP that, at a minimum, adhere to the principles
contained in the FCC's Internet policy statement. The five non-
discrimination and network interconnection requirements in the NOFA
ensure that public funds will support the public goal of open networks
while also permitting reasonable network management that may be used to
prevent the transmission of illegal content. Specifically, the NOFA
states that awardees may employ generally accepted technical measures
to address illegal content. The focus of these provisions is to avoid
imposing requirements that would prevent applicants from taking action
they would otherwise take to address illegal content.
Question 2. The American Recovery and Reinvestment Act of 2009
required that grants be provided for several purposes, such as serving
unserved and underserved communities, and ``to ensure access to
broadband service by community anchor institutions.'' Indeed, you
stated in your testimony that NTIA intends for the broadband grants
program to ``bring maximum broadband benefits possible to our community
broadband anchor institutions, such as schools, libraries, community
centers, and medical centers.
Please explain, in detail, why NTIA decided to place the unserved/
underserved requirement on anchor institution applicants.
Answer. The NOFA reflects our goal and, we believe, the intent of
Congress to fund projects that will provide the greatest benefits to
the greatest population of users and to focus on areas that have no
broadband or inadequate broadband, rather than supporting projects
located in areas with more substantial broadband services. Accordingly,
an anchor institution may establish eligibility for funding by
proposing an infrastructure project that includes an interconnection
point in only a single unserved or underserved census block. This
requirement allows any anchor institution, by teaming with an
institution in an unserved or underserved area, to apply for funding,
without regard to whether every institution in the application is
located in an unserved or underserved area. Anchor institutions may
also apply for funding under the other two project categories--public
computing center and sustainable broadband adoption programs--without
regard to the institution's location.
Question 3. Please explain, in detail, specific measures
implemented, or to be implemented, by NTIA to ensure that ``maximum
benefits'' are provided to anchor institutions, as set forth in the
Recovery Act.
Answer. Expanding and enhancing broadband capabilities for
community anchor institutions such as schools, libraries, and health
care facilities is an important priority for NTIA and the BTOP. Such
organizations are eligible entities for BTOP funding through the
Broadband Infrastructure, Public Computer Center, and Sustainable
Broadband Adoption pools of funding. Anchor institutions can qualify
for the Public Computer Center or Sustainable Broadband Adoption
categories of grants without demonstrating that their proposed service
areas are unserved or underserved.
Just as broadband infrastructure applicants must demonstrate that
they plan to cover unserved or underserved areas of the United States,
they must also demonstrate that anchor institutions such as schools,
libraries, and health care facilities will benefit from BTOP grants in
order to receive highly-favorable consideration. All applications for
BTOP grants will be evaluated, in part, on their ability to enhance
broadband capabilities for anchor institutions.
In the recently-released joint Request for Information, NTIA and
RUS have asked for public comment on focusing the next round of
broadband funding on connecting key anchor institutions as part of a
broader ``comprehensive communities'' approach. NTIA is confident that
BTOP funds will be used to enhance broadband services for community
anchor institutions consistent with Congressional directives in the
Recovery Act.
Question 4. The American Recovery and Reinvestment Act of 2009
provides that several factors shall be considered in awarding broadband
grants, including ``whether the applicant is a socially and
economically disadvantaged small business concern,'' which includes
minority-owned and women-owned businesses.
Please describe, in detail, specific measures that NTIA has
implemented to ensure that small businesses and disadvantaged small
businesses receive a fair share of competitive broadband grants.
Answer. NTIA welcomes, encourages, and indeed provides additional
consideration to applications including participation by minority and
small businesses. Eligible entities were required to indicate in their
application for BTOP grants whether they are, or will collaborate with,
socially and economically disadvantaged small business concerns (SDBs).
Collaboration is defined to include the involvement of SDBs as a sub-
awardee, contractor, subcontractor, or vendor. Of the four Project
Purposes criteria against which reviewers evaluate applications, one is
whether the applicant is a SDB or is collaborating with SDBs. In their
evaluation of Project Viability, reviewers score a project's linkages
to unaffiliated organizations as an ongoing and integral part of the
project planning and operation. In order to receive the full score for
this criterion, at least one partner needs to meet the definition of a
SDB. Furthermore, during the final selection of BTOP awardees, NTIA
will take into account, among other factors, the extent to which the
application satisfies the BTOP program purposes, including whether the
applicant is a socially and economically disadvantaged small business
concern. NTIA is committed to ensuring that socially and economically
disadvantaged small businesses have every opportunity to participate in
this important initiative.
Question 5. Please provide the percentage of applicants to NTIA for
broadband grants under the Recovery Act that are small businesses, and
disadvantaged small businesses.
Answer. In the first funding round, NTIA was pleased to see strong
participation from the small business community, especially from
socially and economically disadvantaged businesses (SDBs). Of the 1,785
applications to BTOP and joint BTOP and BIP programs, 13.9 percent were
from SDBs or from applicants collaborating with SDBs. Specifically,
approximately 114 SDBs applied, and another 135 applicants indicated
collaboration with SDBs, either as a sub-awardee, contractor,
subcontractor, or vendor. In the first round, SDBs requested
approximately $1.86 billion in Federal grants and loans, with a total
match commitment of $640 million. When including applications received
from the entire small business community, the participation levels are
significantly higher.
Question 6. Please describe, in detail, any and all outreach and
program education efforts made by NTIA to small businesses and
disadvantaged small businesses.
Answer. To assist potential applicants with the application
process, NTIA and RUS embarked on an extensive educational campaign
earlier this year, holding 10 workshops across the country. For SDBs,
we held three additional meetings focusing exclusively on the
challenges faced by minorities and small and economically disadvantaged
businesses. The Commerce Department's Minority Business Development
Agency (MBDA) and Office of Small and Disadvantaged Business
Utilization (OSDBU) supported our efforts to publicize BTOP's
opportunities to minority firms and small businesses and recruit
application reviewers. NTIA is committed to continue this outreach to
encourage SDB participation in the next BTOP funding round.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Lawrence E. Strickling
Question 1. Mr. Strickling, you have said that NTIA is learning
from the first BTOP funding round. As a result, the NOFA for the second
BTOP funding round may ``contain different programmatic information*to
better achieve the agencies' goals and to adjust the process based on
the applications received.'' My understanding is that BTOP has a two-
step review process.
What level of detail should unsuccessful applicants expect to
receive as part of their debriefing if their proposal is eliminated
during the first step of the review process? If it is eliminated during
the second step of the review process?
Answer. NTIA aims to notify all first round applicants of the
decision on their applications prior to the date on which applications
will be due for the second BTOP round. At this time, NTIA has not
determined the precise level of detail applicants will receive if they
are not selected for funding. All applicants will be notified in
writing if they are rejected for funding along with information
regarding the reason for the rejection. We do not anticipate that time
or resources will permit detailed or in-person debriefings with
applicants.
We will advise all rejected applicants to refer to the second NOFA,
technical assistance materials we will make available, upcoming planned
workshops, and to study the projects NTIA does fund as models they can
use to prepare applications for the second funding round. Our next NOFA
will also provide specific guidance as to the requirements for a
successful application. NTIA has received far more applications that it
can accommodate in the first funding round. We anticipate that there
will be many highly-qualified applications that do not receive funding
in this round.
Question 2. Will unsuccessful applicants have the opportunity to
appeal their elimination if after their debriefing they believe their
elimination was based on factually inaccurate information?
Answer. BTOP is a discretionary grant program and, as such,
applicants denied for funding cannot appeal the agency's decision.
Applicants denied funding in the first round, however, may file in the
second round with updated or additional information.
Question 3. Will all applicants have received debriefings prior to
the release of the NOFA for the second BTOP round?
Answer. NTIA aims to notify all first round applicants of a
decision on their applications prior to the date on which applications
will be due for the second BTOP round. We do not anticipate that our
resources will permit detailed or in-person debriefings with
applicants.
Question 4. Mr. Strickling, my understanding is that NTIA is
posting a public notice of the proposed funded service area for each
broadband infrastructure application under BTOP so that any `existing
broadband provider' can comment on whether a proposed area is unserved
(or underserved). The information provided by the `existing broadband
provider' is proprietary and confidential.
If an existing broadband provider asserts that an applicant is
proposing to build `last mile' broadband infrastructure for an unserved
or underserved area that it considers served, what process is NTIA
putting in place to resolve the claim?
Answer. NTIA and RUS provided existing service providers with a 30-
day window voluntarily to submit information regarding the proposed
funded service area(s) of BTOP/BIP infrastructure applicants to help
inform the application review process and ensure that BTOP funds
support projects in areas that meet the definition of unserved or
underserved. NTIA will review the submissions made by existing service
providers and compare them against the applicants' proposed funded
service areas and the methodologies the applicants used to evaluate the
unserved or underserved status of the areas. NTIA will also utilize any
other data at its disposal to help evaluate claims made by both
applicants and commenters, such as broadband maps compiled by many
States. The NOFA gives RUS and NTIA discretion to reject an application
if it is determined that a proposed funded service area identified by
an applicant does not meet the unserved or underserved definitions or
does not qualify as a ``rural'' area without sufficient access to
broadband service. NTIA may request additional information from
applicants and commenters as necessary and appropriate.
Question 5. How will NTIA approach proposed `middle mile' projects
that terminate in several `last mile' end points in unserved and
undeserved areas, but which traverse served areas? Will middle mile
project applicants be subject to the same challenge by existing
providers as applicants of last mile broadband projects?
Answer. A proposed funded service area may qualify as unserved or
underserved for Middle Mile projects if at least one interconnection
point is located in a proposed funded service area that qualifies as
unserved or underserved. A proposed funded service area may qualify as
underserved if at least one of the following factors is met: (1) no
more than 50 percent of the households in the proposed funded service
area have access to facilities-based, terrestrial broadband service at
greater than 768 kbps downstream and 200 kbps upstream; (2) no fixed or
mobile broadband service provider advertises broadband speeds of at
least 3 mbps downstream in the proposed funded service area; or (3) the
rate of broadband subscribership for the proposed funded service area
is 40 percent of households or less. Existing service providers may
comment on the proposed funded service area(s) of Middle Mile projects
just as they can for Last Mile projects. NTIA will consider the
information provided by applicants and commenters regarding Middle Mile
projects in the same fashion that it will for Last Mile projects.
Question 6. Mr. Strickling, much of the focus for NTIA awarding its
BTOP grants in a timely way focuses on the process culminating in a
decision made by the selection official. I want to focus a little on
all of the back office work that needs to be completed in order for the
grant recipients to receive their award. Does NTIA have its own grants
office?
Answer. No.
Question 6a. If not, which part of the Commerce Department handles
grants for NTIA?
Answer. NTIA has entered into agreements with the Grants Offices of
the National Oceanic and Atmospheric Administration (NOAA) and the
National Institute of Standards and Technology (NIST) to provide Grants
Office services for the NTIA BTOP grants. The NOAA and NIST Grant
Offices will play an important role in helping NTIA award and
administer BTOP funds in as quick and accountable manner as possible.
Question 7. Is the current staffing level at that grants office
adequate to ensure that it doesn't become a bottleneck for BTOP awards
(or later payments)?
Answer. NTIA has been closely coordinating with the Grants Offices
of NOAA and NIST to ensure they are able to assist with the award of
BTOP grants. These offices are scaling their operations and leveraging
existing resources to ensure that critical milestones are met.
Question 8. How will the BTOP grant funds be made available to
grantees? For example, will the BTOP grants be reimbursable on a
quarterly basis or will the grantee receive a lump sum (based on its
proposed budget) upon completion of the grants agreement?
Answer. NTIA will obligate all grant funds upon award, and
recipients can either draw down funds in accordance with the schedule
outlined in the grant award documentation or request advance payments
for project expenses as long as the recipient is in compliance with
relevant conditions of the grant award. Consistent with Department of
Commerce and other Federal standard grants management practices,
project expenses subject to the advanced payment must be incurred
within 30 days of the date the funds are transferred to the recipient's
account.
Question 9. BTOP award winners will have varying levels of
sophistication when it comes to meeting the administrative requirements
of government grant programs, especially one with the level of detail
found in this program. Does NTIA intend to hold workshops, in-person or
virtual, to provide technical assistance to BTOP award winners to
increase the chances that they will be compliant with all the award
requirements?
Answer. Yes. NTIA is in the process of developing training,
guidance, and technical assistance for grant recipients. NTIA is
committed to ensuring that BTOP awardees fulfill all of the relevant
compliance, reporting, and auditing requirements to ensure that
taxpayer funds are well spent and that BTOP projects fulfill the goals
of the Recovery Act.
Question 10. Does NTIA intend to establish a process for
determining non-performing projects? Will NTIA terminate non-performing
projects?
Answer. The July 9, 2009 Notice of Funds Availability (NOFA)
describes the reporting and compliance requirements for BTOP grant
recipients. The Department of Commerce has the authority, and will
exercise it as necessary and appropriate, to suspend, terminate, or
deobligate funding to grant recipients that do not comply with their
reporting or compliance requirements.
Question 11. Mr. Strickling, in some of the more rural parts of my
state where communities cannot afford to keep schools and libraries
open late, community technology centers serve as a community anchor
institution. Would NTIA consider amending its definition of community
anchor institutions in the second BTOP NOFA to include community
technology centers?
Answer. Community technology centers currently qualify as anchor
institutions. The NOFA defines ``community anchor institutions'' as
``schools, libraries, medical and healthcare providers, public safety
entities, community colleges and other institutions of higher
education, and other community support organizations and agencies that
provide outreach, access, equipment and support services to facilitate
greater use of broadband service by vulnerable populations, including
low-income, unemployed, and the aged.'' Additionally, the NOFA defines
``public computer center'' as ``a place*that provide[s] broadband
access to the general public or a specific vulnerable population, such
as low-income, unemployed, aged, children, minorities and people with
disabilities.'' Thus, community technology centers can also qualify to
receive BTOP funding through the public computer centers pool of
funding, of which more than $50 million was allocated in the first
funding round and at least $200 million will be made available over the
life of the program.
Question 12. Mr. Strickling, based on your meetings with Tribal
leaders, do you believe that Native American Tribes have any unique
financial and/or structural impediments that make it more difficult for
them to assemble competitive BTOP proposals based on the program
requirements in first NOFA? Should there be a set aside for Tribes in
the second NOFA?
Answer. Expanding and enhancing broadband capabilities for Indian
Country and Tribal communities is an important priority for NTIA and
BTOP. To inform the public about BTOP grant opportunities, NTIA and RUS
jointly conducted ten public outreach workshops in locations throughout
the country, including several workshops specifically targeted to
Tribal communities. In addition, NTIA and RUS have participated in
several key annual Tribal conferences around the country, including
Affiliated Tribe Northwest Indians (ATNI), National Congress of
American Indians (NCAI), and National Association of Tribal Historic
Preservation Officers (NATHPO). Most recently, Secretary of Commerce
Gary Locke and NTIA Assistant Secretary Strickling also hosted a
conference call with Tribal leaders to solicit Tribal input on the BTOP
program.
While there is not currently a set-aside for Tribes in the BTOP
program, the NOFA gives added consideration to any BTOP application
submitted by, or which provides benefits to, Native Americans and other
vulnerable populations. In the recently-released RFI, NTIA and RUS
request public input on whether the agencies should revise elements of
the programs to ensure that Tribal entities or entities proposing to
serve Tribal lands, have sufficient resources to provide these
historically unserved and underserved areas with access to broadband
service. NTIA will use the comments received from all interested
parties to determine what changes, if any, are appropriate for the
second round of funding.
Question 13. How much say should Tribes have over non-Tribal
applicants claiming to serve Tribal lands?
Answer. As part of our effort to consult with States, territories,
and possessions regarding the identification of unserved and
underserved areas and their priorities for broadband investment, NTIA
has invited Tribal leaders to comment upon applications that propose to
serve Tribal communities--including including applications from both
Tribal entities and non-Tribal applicants proposing to serve Tribal
lands. We highly value the input of Tribes in our review process and
will take into consideration the comments they provide before making
grant awards. However, NTIA will conduct its own thorough reviews of
the applications and retain the final authority to decide which
applications to fund.
Question 14. What is the status of consultations between NTIA, the
National Congress of American Indians, and other Tribal stakeholders
regarding the Nationwide Programmatic Agreement, and in particular,
progress in addressing ``undertakings'' (broadband infrastructure
projects) that are subject to review under Section 106 of the National
Historic Preservation Act?
Answer. NTIA has collaborated with RUS and the Council of
Environmental Quality to create a uniform, efficient, and streamlined
NEPA environmental review process for BTOP and BIP applicants. NTIA has
also taken a number of steps to ensure that BTOP complies with all
relevant environmental and historic preservation requirements,
including working with RUS, the FCC, and the Advisory Council on
Historic Preservation (ACHP) to ensure that projects comply with the
National Historic Preservation Act (NHPA).
NTIA is also working to streamline the NHPA Section 106
consultation process with State and/or Tribal Historic Preservation
Officers as it relates to tower construction. Specifically, NTIA worked
in close collaboration with RUS, the FCC, and Indian Tribes to improve
Section 106 notification for Indian Tribes regarding BTOP/BIP
applications being considered for funding. RUS and NTIA have adopted a
modified version of the ``Tower Construction Notification System''
(TCNS), an innovative FCC tool and database which will enable RUS and
NTIA to provide fast, reliable information about BTOP/BIP proposals to
Tribes in order to expedite historic preservation compliance. NTIA and
RUS also worked in close collaboration with the FCC, ACHP, and other
key stakeholders on a Program Comment that was recently approved by the
ACHP. The Program Comment will streamline Section 106 historic
preservation review for the construction and modification of wireless
communication facilities subject to, or exempted by, two FCC Nationwide
Programmatic Agreements: (1) the Nationwide Programmatic Agreement for
Review of Effects on Historic Properties for Certain Undertakings
Approved by the FCC (2004), and (2) the Nationwide Programmatic
Agreement for the Collocation of Wireless Antennas (2001). Under this
Program Comment, NTIA and RUS will not be required to conduct an
independent review under Section 106 of NHPA for the construction and
modification of wireless communication facilities already subject to
review by the FCC under the two Nationwide Programmatic Agreements.
______
Response to Written Questions Submitted by Hon. Mark Pryor to
Hon. Lawrence E. Strickling
Question 1. I appreciate the tremendous strain that you and your
staff are under to evaluate these applications and distribute an
enormous amount of funds in a relatively short timeframe. I thank you
all for your service and dedication. I firmly believe in the potential
of these broadband stimulus programs if implemented correctly. I am
particularly concerned that the funding gets into the right hands. In
drafting the NOFA, did you consider an appeals process so that if
errors were found they could be rectified?
Answer. Yes, we did consider this but decided against instituting
an appeals process. While there is no appeals process once an award has
been made, there are a number of steps NTIA is taking to ensure that
funding goes to projects that will best fulfill the objectives of the
Recovery Act. The July 9, 2009 Notice of Funds Availability (NOFA)
outlined the multi-step evaluation process and the criteria that is
being used to review and score applications. This includes the ability
for NTIA to seek additional information or clarification from
applicants as part of the review process. NTIA has consulted with
States, Tribes, territories, possessions and the District of Columbia
to solicit their feedback on the initial pool of BTOP applications.
NTIA has provided existing service providers with the opportunity to
submit information to RUS and NTIA regarding their existing service
offerings to help inform the application review process.
Looking forward, I must underscore the importance of our oversight
objectives for the program. NTIA is committed to ensuring that
taxpayers' money is spent wisely and efficiently. As we move forward
and project construction begins, NTIA will enhance its post-grant
auditing and monitoring responsibilities, including site visits to
grantees. In addition, the Recovery Act permits NTIA to deobligate
awards to grant recipients that demonstrate an insufficient level of
performance, or wasteful or fraudulent spending and award these funds
to new or existing applicants.
All of these steps will help ensure that NTIA awards funds to
projects that fulfill Recovery Act objectives and spend taxpayer
dollars wisely.
Question 2. In the GAO's testimony, Mr. Goldstein pointed out that
NTIA and RUS lack resources for oversight beyond FY2010. What steps are
you taking to secure funding for proper and continued oversight?
Answer. The Recovery Act authorized NTIA to spend not more than 3
percent of BTOP funds for administrative costs. This has been a serious
challenge for a new grant program of this size and scope. Consistent
with the statutory limitations, however, NTIA is planning and budgeting
to perform the needed tasks within the authorized timeframes. However,
this funding constraint limits the resources available for important
tasks such as application review prior to September 30, 2010.
More significantly, the Recovery Act does not provide NTIA with
authority or funding for administration and oversight of BTOP-funded
projects beyond the Fiscal Year of 2010. NTIA is examining all
appropriate options to ensure continued oversight of the program after
September 30, 2010. NTIA intends to work with Congress on this matter.
Question 3. In the RUS program under the NOFA, a project must
exclusively involve a `remote area' to quality for a BIP grant that
covers 80-100 percent of the project cost. However, the definition of
`remote area' as defined in the NOFA would not apply to almost the
entire State of Arkansas. I know my state and many parts of Arkansas
are indeed remote and hard to reach areas. I would be happy to drive
you around and show you these areas. Would you be willing to amend this
definition for round 2 to include areas that are by other definitions
considered remote?
Answer. The remote and rural definitions apply only to the RUS BIP
awards. Therefore, NTIA defers to RUS for a response to this question.
Question 4. I believe it is necessary that you ensure funds
targeted for unserved and underserved areas are truly unserved and
underserved. I am concerned that smaller and more rural broadband
providers are having trouble responding to the applications RUS and
NTIA have received in order to show areas that they are currently
serving. What happens if broadband providers cannot or do not submit
territory maps?
Answer. NTIA and RUS have provided existing service providers with
ample opportunity to voluntarily submit information regarding the
proposed funded service areas of BTOP/BIP infrastructure applicants to
help us ensure that BTOP funds support projects in areas that meet the
definition of unserved or underserved. To the extent that existing
providers are not able or willing to use the online tool available for
their use in providing service information, they were invited to submit
supplemental information in writing to NTIA. In addition to the
availability data submitted by applicants and incumbent providers, the
agencies have access to additional information to evaluate whether an
area is unserved or underserved, including broadband maps compiled by
States and additional comments submitted by State Governors. NTIA may
consider this information, along with any other data at its disposal,
as part of the due diligence review process.
Question 5. Are you considering modifications to the mapping tool
to ensure that broadband providers have ample opportunity to provide
accurate information about the territory they serve?
Answer. Yes. On November 10, 2009, RUS and NTIA announced the
release of the second joint Request for Information (RFI) seeking
public comment on certain issues relating to the implementation of BIP
and BTOP. Among other topics, the RFI asked for comments regarding the
Public Notice Filing Comment process and the mapping tool. The comment
period closed November 30, 2009. NTIA will use the comments received
from all interested parties to determine what changes, if any, are
appropriate in the second funding round.
Question 6. What changes are you willing to make to your
application process to guarantee that broadband stimulus funds aren't
given to ineligible areas?
Answer. RUS and NTIA have sought public comment on issues relating
to the implementation of BIP and BTOP. We hope to gather information
that will help us improve the broadband programs by enhancing the
applicant experience and making targeted revisions to the first NOFA,
if necessary. We sought comment on, among other things, potentially
clarifying the eligibility requirements; the application and review
process, including streamlining the applications; transparency and
confidentiality; and the NTIA expert review process. The RFI also asked
for comments regarding the Public Notice Filing Comment process and the
mapping tool. Each of these areas is important to ensuring that awards
are limited to eligible areas. NTIA will use the comments received from
all interested parties to determine what changes, if any, are
appropriate in the second funding round.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Hon. Lawrence E. Strickling
Question 1. When broadband grants are announced, will significant
resources be devoted to improving broadband access in underserved urban
areas in states like New Jersey, and not just rural areas?
Answer. In the Recovery Act, Congress directed NTIA to address the
broadband needs of both ``unserved'' and ``underserved'' areas--without
regard as to whether they are urban, suburban, rural, or frontier parts
of the United States--to enhance broadband for institutions that
provide important public benefits, and to stimulate demand for
broadband services. NTIA developed its first round of BTOP funding with
each of these priorities in mind and is taking all appropriate steps to
ensure that BTOP funds will be used to support broadband services in
unserved and underserved urban areas as well as rural ones.
Question 2. NTIA invited Governors to provide their comments on
broadband grant applications seeking to serve their states. In my home
state of New Jersey, the Governor's office set up a formal review
process and shared its views with NTIA. In evaluating applications, how
will NTIA use the comments and priorities provided by the states?
Answer. We highly value the input of States in our review process
and will take into consideration the comments provided before making
final awards. Of course, NTIA will conduct its own thorough review of
the applications and retains the final authority to decide which
applications to fund.
Question 3. As you know, the Recovery Act requires the FCC to
develop a national broadband plan by February 2010--after NTIA and RUS
will award their first round of grants. In reviewing the broadband
applications, what kind of coordination have NTIA and RUS had with the
FCC to make the grant awards consistent with the national broadband
plan?
Answer. NTIA and RUS consulted with the FCC in the development of
the first round Notice of Funds Availability (NOFA). The FCC provided
substantive input on many of the policies outlined in the NOFA. The
selection process and detailed evaluation criteria described in the
NOFA will govern the selection of BTOP grants. The FCC will have no
input on the selection of BTOP awards. NTIA intends to collaborate with
the FCC in a similar manner in the development of the second round
NOFA, and will make every effort to contribute to the FCC's development
of the national broadband plan, using experiences from the first round
of BTOP grants to inform those efforts.
Question 4. Will you provide applicants who are rejected in the
first round with detailed information so they can improve their
applications for subsequent rounds of funding?
Answer. NTIA aims to notify applicants in the first funding round
of the decision on their applications prior to the date on which
applications will be due for the second BTOP round. At this time, NTIA
has not determined the precise level of detail that applicants will
receive if they are not selected for funding. All applicants will be
notified in writing if they are denied funding along with information
regarding the reason for the rejection. We will advise all rejected
applicants to refer to the second NOFA, technical assistance materials
we will make available, upcoming planned workshops, and to study the
projects NTIA does fund as models for potential replication in second
funding round.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Hon. Lawrence E. Strickling
Question 1. ``Rural'' and ``Non-Rural'' definitions impede
statewide and regional broadband proposals.
Mr. Adelstein's testimony notes that ``some applicants encounter
challenges with our program's rural definition'' and that you are aware
of ``suggestions that have been raised regarding'' this issue.
What New Mexican applicants have told me is that RUS and NTIA
programs effectively divide ``rural'' and ``non-rural'' areas. In New
Mexico, this prevented an integrated approach to deploying broadband
statewide and at regional levels.
Since grant proposals had to be separated into ``rural'' and ``non
rural'' areas, the New Mexico entities could not easily apply for
grants that would fund backbone infrastructure to serve both types of
areas. For example, the northern New Mexico region had to submit
multiple applications for separate areas rather than a single, region-
wide application.
Regional and statewide approaches to broadband deployment seem like
a more strategic way to solve digital divide problems facing rural
states like New Mexico. Will RUS and NTIA allow a more flexible
approach in the second round of funding for applicants who want to
serve ``rural'' and ``non rural'' areas with one grant proposal?
Answer. The round one program rules did not require applicants to
divide their applications between rural and non-rural areas in order to
be considered by both RUS and NTIA but some applicants may have done so
as a strategic decision. The approach developed by RUS and NTIA was
intended to give applicants maximum flexibility to be considered by
both programs while also fulfilling the intent of Congress that RUS
fund broadband projects in rural areas and that NTIA not replicate RUS
funding. The Request for Information (RFI) released by NTIA and RUS on
November 10, 2009, sought public input on this issue, and NTIA will use
the comments received from all interested parties to determine what
changes, if any, are appropriate in the second funding round.
Question 2. Could you elaborate on your planned changes for the
second round of funding?
Answer. On November 10, 2009, RUS and NTIA announced the release of
the second joint RFI seeking public comment on certain issues relating
to the implementation of BIP and BTOP. The comment period closed on
November 30, 2009. The RFI sought to gather information that will help
the agencies improve the broadband programs by enhancing the applicant
experience and making targeted revisions to the first NOFA, if
necessary. The agencies sought comment on topics related to the
application and review process, including streamlining the
applications; transparency and confidentiality; outreach and support;
and the NTIA expert review process. The RFI also sought input on policy
issues addressed in the NOFA, including program definitions; public
notice of service areas; interconnection and nondiscrimination
requirements; sale of project assets; cost effectiveness; and other
substantive changes to encourage participation and enhance the program.
We also sought comment on the possibility of focusing future funding on
middle-mile ``comprehensive communities'' projects, regional economic
development projects, or specific target communities. NTIA will use the
comments received from all interested parties as to how the program can
be improved to determine what changes, if any, are appropriate in the
second funding round.
Question 3. Mr. Strickling, I know you have direct experience with
digital divide challenges facing Tribal Lands. Indian Country has some
of the lowest broadband penetration rates in the entire country,
perhaps just 10 percent.
Your testimony states that Tribal governments applied for funding.
However, out of over 2,000 total applications, there appears to be only
19 applications for BIP grants submitted by Tribes.
I am concerned that this low participation may be partly due to the
requirements of the first round Notice of Funds Availability (NOFA),
which did not recognize the unique challenges and legal status of
Tribal Nations.
For example, the NOFA deducts points from applications for not
being Title II borrowers, and Tribal governments have more difficulty
meeting local matching fund requirements. Has NTIA or RUS considered
giving extra points--or other favorable consideration--to broadband
applications submitted by Tribal communities for which the Federal
Government has a trust responsibility?
Answer. Your question references 19 applications received by RUS'
BIP program but Tribal communities submitted more than 125 applications
to NTIA's BTOP program. Expanding and enhancing broadband capabilities
for Native Americans and Tribal communities is an important priority
for NTIA and BTOP. The July 2009 Notice of Funds Availability (NOFA)
encourages and gives added consideration to any BTOP application
submitted by, or which provides benefits to, Native Americans and other
vulnerable populations. As part of our effort to consult with States,
territories, and possessions regarding the identification of unserved
and underserved areas and priorities for broadband investment, NTIA has
also invited Tribal leaders to comment upon applications that propose
to serve Tribal communities so that we may do our best to fund projects
that best meet the needs of their areas. NTIA is making every effort to
ensure that BTOP funding benefits Tribal lands of the United States. In
the recently-released RFI, NTIA and RUS requested public input on
whether the agencies should revise elements of the programs to ensure
that Tribal entities, or entities proposing to serve Tribal lands, have
sufficient resources to provide these historically unserved and
underserved areas with access to broadband service. NTIA will use the
comments received from all interested parties to determine what
changes, if any, are appropriate for the second funding round.
Question 4. In recognition of Tribal sovereignty, could NTIA and
RUS change the second round NOFA to exempt applications from Tribal
communities from review by state governments?
Answer. As part of our effort to consult with States, territories,
and possessions regarding the identification of unserved and
underserved areas, and their priorities for broadband investment, NTIA
has also invited Tribal leaders to comment upon applications that
propose to serve Tribal communities so that we may do our best to fund
projects that best meet the needs of their areas. We highly value the
input of Tribes in our review process and will take into consideration
the comments they provide before making final awards. NTIA informed
States that we would be seeking the input of Tribal leaders regarding
applications that propose to serve their respective Tribal lands and
that States do not need to comment on Tribal land applications. NTIA
will prioritize Tribal input on applications solely affecting Tribal
lands. Before making an award, NTIA will conduct its own thorough
reviews of the applications and retain the final authority to decide
which applications to fund. To the extent that changes are required in
the second funding round to more properly accommodate Tribal
sovereignty, NTIA will make appropriate changes based upon the comments
received from the public and stakeholders in response to the recently
issued RFI.
Question 5. What are you doing with the second round NOFA--beyond
simple outreach--to provide a meaningful opportunity for Tribal Nations
to successfully apply for deployment in their own communities?
Answer. Expanding and enhancing broadband capabilities for Native
Americans and Tribal areas is an important priority for NTIA and BTOP.
The first round NOFA encourages and gives added consideration to any
BTOP application submitted by, or which provides benefits to, Native
Americans and other vulnerable populations. We have also collaborated
with Tribal entities and Federal regulators to expedite historic
preservation compliance to help better position Tribal projects for
success. In the recently-released RFI, NTIA and RUS requested public
input on whether the agencies should revise elements of the programs to
ensure that Tribal entities, or entities proposing to serve Tribal
lands, have sufficient resources to provide these historically unserved
and underserved areas with access to broadband service. NTIA will use
the comments received from all interested parties as to how the program
can be improved to determine what changes, if any, are appropriate for
the second funding round. NTIA also anticipates participating in
training workshops for Indian Tribes.
Question 6. The NOFA and application was very technical in nature
and confusing for some small organizations that applied for grants,
particularly nonprofits seeking money for ``sustainable broadband
adoption'' projects. One person told me that ``it seemed as if small
organizations were forced to hire consultants just to write the
grant.'' This creates the impression that the broadband stimulus
program is not a level playing field for small organizations with
limited staff. Has NTIA considered ways to address these concerns?
Answer. I appreciate that small organizations and other entities
may face challenges in developing a competitive proposals for grant
funds. To inform the public, including small organizations, about first
round BTOP grant opportunities, NTIA and RUS jointly conducted ten
public outreach workshops in locations throughout the country,
including several workshops specifically targeted to minorities and
small businesses. Since BTOP is a government program with rules and
procedures, our efforts also included guidance as to compliance with
generally applicable statutes and Congressional rules imposed on
applicants to safeguard the expenditure of taxpayer dollars from waste,
fraud, and abuse. Further, the first NOFA encourages and gives
consideration to any BTOP application submitted by, or which provides
benefits to, minorities, small businesses, and other vulnerable
populations.
NTIA is making every effort to streamline the application process
in the second funding round to facilitate the process of applying for
grants, while also ensuring that we collect the information necessary
to award grants to projects that will fulfill the objectives of the
Recovery Act and utilize taxpayer dollars in the most effective manner
possible. In the recently-released RFI, NTIA and RUS requested public
input on whether the agencies should revise elements of the programs to
better achieve the goals of the Recovery Act, which places a high
priority on benefiting small and disadvantaged businesses. We also
intend to conduct additional workshops for the second funding round
that will target issues such as collaborating on and creating winning
applications and training on the mechanics of filing applications
electronically.
Question 7. Is there a way to streamline the application process
for less technical, ``sustainable adoption'' grant proposals?
Answer. NTIA is making every effort to streamline the application
process in the second funding round to facilitate the process of
applying for grants, while also ensuring that we collect the
information necessary to award grants to projects that will best
fulfill the objectives of the Recovery Act and utilize taxpayer dollars
in the most effective manner possible. Notably, the applications for
Public Computer Center (PCC) and Sustainable Broadband Adoption (SA)
projects released by NTIA in July 2009 differ from the application
questions required for BTOP Infrastructure projects and were designed
to streamline the process for PCC and SA applicants to the maximum
extent possible. In the recently-released RFI, NTIA and RUS requested
public input on whether the agencies should revise elements of the
programs and the application process to further enhance the applicant
experience and better achieve the goals of the Recovery Act.
Question 8. Mr. Strickling, some New Mexicans live in rural areas
where satellite broadband may be the most efficient means of providing
Internet access. Yet the NOFA rules seem to preclude satellite
broadband providers from participating in the broadband stimulus
programs. For example, satellite broadband providers, due to the nature
of the technology, would potentially provide access to overlapping
areas that are rural and remote, underserved and unserved. Yet
Broadband Technology Opportunities Program (BTOP) rules effectively
mean that NTIA is pursuing a policy of ``one project for each area,''
which could put satellite broadband providers at a disadvantage. In the
next funding round, will the NOFA rules provide meaningful
opportunities for satellite broadband providers to compete for
broadband grants?
Answer. NTIA has encouraged applications that will best meet the
broadband needs of unserved and underserved areas of the United States
regardless of technology. The requirement that applicants for Last Mile
and Middle Mile infrastructure grants demonstrate that their proposed
funded service area is unserved or underserved reflects our goal, and
we believe the intent of Congress, to fund projects that will provide
the greatest benefits to the greatest population of users, and to focus
on areas that have no broadband or inadequate broadband rather than
supporting projects located in areas with more substantial broadband
services. As part of our effort to stretch taxpayer dollars and fulfill
Recovery Act objectives, our intent is not to fund more than one
project in a proposed funded service area. The November 10, 2009 RFI,
however, sought specific comment regarding the treatment of satellite
applications. NTIA will use the comments received from all interested
parties to determine what changes, if any, are appropriate in the
second funding round.
Question 9. What changes to the first NOFA rules are necessary to
allow satellite broadband proposals to be considered fairly on the
merits of their applications?
Answer. The November 10, 2009 RFI sought specific comment regarding
the treatment of satellite applications. NTIA will use the comments
received from all interested parties to determine what changes, if any,
are appropriate in the second funding round.
Question 10. Blair Levin was recently quoted in the press that
current broadband stimulus efforts and existing FCC programs will not
be sufficient to provide universal broadband access. He apparently
stated that, ``BTOP's not going to do it, BIP isn't going to finish the
job, [and the FCC's] universal service isn't going to do the job
right.''
Recognizing that much work will need to follow the BIP and BTOP
initiatives in order to ensure that all Americans enjoy broadband
access, what lessons learned or policy recommendations from the first
round of broadband stimulus funding should inform the FCC's National
Broadband Plan?
Answer. We are in the middle of our first round of funding and are
still learning lessons from our initial experience with the program. We
also released a Request for Information seeking public comment on the
process so far. The $7.2 billion authorized by the Recovery Act for the
BTOP and BIP broadband initiatives will not solve all of America's
broadband challenges. However, NTIA is working to ensure that this
funding is utilized in the best possible way to bring the benefits of
broadband to more Americans. The Federal Communications Commission is
evaluating these questions further as part of their development of a
national broadband plan. NTIA will make every effort to contribute to
the FCC's development of the national broadband plan and will use
experiences from the first round of BTOP grants to inform those
efforts.
Question 11. Will you communicate these recommendations to this
committee and directly to the FCC before the publication of the
National Broadband Plan?
Answer. At this time, NTIA has not determined whether it will file
formal comments in the FCC's proceeding as part of the development of
the national broadband plan. If it chooses to do so, NTIA would be
happy to share them with the Committee. In addition, I look forward to
a continuing dialogue with the Committee on these matters.
______
Response to Written Questions Submitted by Hon. Mark Warner to
Hon. Lawrence E. Strickling
Question 1. I understand that, under the State Broadband Data and
Development Program, the FCC and the NTIA will use the broadband data
collected by states in their broadband mapping efforts. What about the
reverse, i.e., is there any way the FCC could share its Form 477 data
(or equivalent) with states--or at least share with states which
providers submitted such forms--to assist states with their broadband
data collection efforts? If not, why not? What could be done to make
that possible?
Answer. The Broadband Data Improvement Act (BDIA), one of the two
pieces of authorizing legislation underlying NTIA's State Broadband
Data and Development Grant Program, provides that the FCC ``shall
provide eligible entities access, in electronic form, to aggregate data
collected by the [FCC] based on the Form 477 submissions of broadband
service providers.'' We understand that the FCC is currently resolving
the terms of access to Form 477 data by entities--including state
commissions--that are eligible for mapping grants under the BDIA. In
addition, the FCC has an established practice of sharing state-specific
FCC Form 477 data with state regulatory commissions, subject to certain
conditions, through the implementation of data-sharing agreements with
such commissions. Information on the process for obtaining state-
specific Form 477 data can be found at http://www.fcc.gov/form477/
datashareprocess.html. As a general matter, NTIA supports efforts to
make broadband data publicly-available to the extent allowable and
practicable.
Question 2. At this point, your agency has had an opportunity to
see exactly how its application process works, its strengths and
weaknesses. For example, I've heard from some constituents that there
needs to be increased coordination among some of the pre-existing
broadband grant programs offered across the Federal Government, and
that this would help applicants create the sustainable demand to keep
projects successful in the long-term. What advice, if any, would you
give the FCC on increasing coordination about Federal broadband grant
and loan programs, as it drafts the National Broadband Plan?
Answer. NTIA has coordinated closely with the other agencies
directed to lead the Federal Government's broadband efforts, including
RUS and the FCC, in an effort to provide applicants and the public with
a unified approach to addressing the Nation's broadband needs. Our
coordinated efforts included the initial public meetings, release of
the first and second Requests for Information, development of the NOFA,
applicant workshops, joint application intake, and development of the
website www.broadbandusa.gov. NTIA plans to continue to work closely
with its Federal partners to fulfill the objectives of the Recovery Act
and enhance broadband capabilities in the United States.
______
Response to Written Questions Submitted by Hon. Mark Begich to
Hon. Lawrence E. Strickling
Question 1. I am concerned about the constant rule and guidance
changing that the applicants have experienced. I understand the
difficulty your agencies have experienced pushing through the money as
quickly as possible, but can you assure us you will not change the
rules throughout the final round of funding?
Answer. To clarify, there have been no substantive changes to the
rules and guidance of the BTOP Program. NTIA intends to maintain as
much of the definitions, rules, and processes from the first funding
round as possible while improving the BTOP program, improving the
application process, and ensuring that the program fulfills the
objectives of the Recovery Act. On November 10, 2009, RUS and NTIA
announced the release of the second joint Request for Information (RFI)
seeking public comment on topics related to the application and review
process, including streamlining the applications; transparency and
confidentiality; outreach and support; and the NTIA expert review
process. The RFI also sought input on policy issues addressed in the
NOFA, including funding priorities and objectives; program definitions;
public notice of service areas; interconnection and nondiscrimination
requirements; sale of project assets; cost effectiveness; and other
substantive changes to encourage participation and enhance the program.
NTIA will use the comments received from all interested parties to
determine what changes, if any, are appropriate.
Question 2. Many people found the combined application confusing
and onerous. Under the second NOFA, what steps will your agencies take
to improve the process?
Answer. NTIA is making every effort to streamline the application
process in the second funding round to facilitate the process of
applying for grants, while also ensuring that we collect the
information necessary to award grants to projects that will fulfill the
objectives of the Recovery Act and utilize taxpayer dollars in the most
effective manner possible. In the recently-released RFI, NTIA and RUS
requested public input on steps the agencies can take to improve the
application process. NTIA will use the comments received from all
interested parties to determine what changes, if any, are appropriate
in the second funding round.
Question 3. When will applicants be notified if they have made the
first cut? It is essential for project managers to be able to improve
their applications for the second and final round of funding?
Answer. NTIA notifies applicants if and when their projects advance
to the second phase of application review. This will continue on a
rolling basis until all awards are made. NTIA aims to notify all
applicants in the first funding round of a decision on their
applications prior to the date on which applications will be due for
the second BTOP round. All applicants will be notified in writing if
they are denied funding along with information regarding the reason for
the rejection. At this time, NTIA has not determined the precise level
of detail that applicants will receive if they are not selected for
funding. We will advise all rejected applicants to refer to the second
NOFA, technical assistance materials we will make available, upcoming
planned workshops, and to study the projects NTIA does fund as models
they can use to prepare applications for the second funding round.
Notably, NTIA has received far more applications and requests for
funding that it can accommodate in the first funding round. We
anticipate that there will be many highly-qualified applications that
do not receive funding in this round.
Question 4. Do you believe the tight timelines have damaged the
process or may cause problems with the projects as we move forward? I
understand and support the need to get the projects funded as quickly
as possible but I am very concerned the deadlines are going to damage
the process and our ability to have worthy projects funded.
Answer. NTIA is working as expeditiously as possible to evaluate
and award the first round of grants and take all steps to ensure that
funds are obligated by September 30, 2010, as required by the Recovery
Act. NTIA is committed to ensuring that applications receive a thorough
review and that no project is funded unless it fulfills the objectives
of the Recovery Act. NTIA has already expanded the review period for
the initial award of funds by approximately 1 month to ensure that
projects receive the appropriate due diligence review.
Question 5. Since the deadlines have been pushed back repeatedly, I
am concerned about the actual stimulative effects of the projects. What
assurance do we have that the first round of project awards will
actually be completed in February? Alaska's construction season is
incredibly short especially in our most remote locations. If the
projects are pushed back any more then we run the risk of high cost
overruns because the materials will have to be flown in to the
communities. Is it possible to let the Alaska projects know as soon as
possible so they are able to have supplies ready for the first spring
barge?
Answer. To clarify, there has been only a single one-month
extension of the date on which award announcements will begin, which
was necessary to ensure that projects receive the appropriate due
diligence review.
I appreciate that the unique climate and construction season in
areas like Alaska may impact the timing of BTOP project performance.
NTIA will make every effort to consider the needs of Alaska as we
complete the review of proposals received during the first round. As we
make awards, we will work closely with recipients to ensure that funds
are released and projects are completed as expeditiously as possible.
Question 6. If an applicant has not even started the Federal and
state permitting processes for their project, especially under NEPA and
the Endangered Species Act, how will that be viewed in the due
diligence phases by RUS and NTIA given that you are looking for truly
shovel ready projects?
Answer. Among other criteria, BTOP applications will be evaluated
on whether they will be able to start promptly and be completed in an
appropriate time-frame for the size and scope of the project. NTIA will
consider the planned start date of the project; the reasonableness of
the project timeline and associated milestones; whether the applicant
has secured all licenses, franchises, and regulatory approvals required
to complete the project; and whether the required contractors and
vendors necessary to implement the project are prepared to enter into
contracts as soon as the funds are made available. While it is not a
requirement that applicants have completed all permitting processes
before applying for BTOP funds, those applicants that have totally or
substantially completed such requirements will receive more favorable
consideration. This approach helps fulfill the Recovery Act's
instruction that agencies commence project activities as quickly as
possible consistent with prudent management.
Question 7. What is the due diligence process for confirming that
an applicant's project can deliver broadband at the promised speeds or
even at the minimum speeds required in the NOFA?
Answer. The NOFA and application requires applicants to certify
that, at a minimum, they will provide broadband speeds at or greater
than 768 kbps. NTIA anticipates that the projects it funds will provide
broadband speeds far greater than the minimum requirement. During due
diligence, NTIA requires applicants to provide a detailed description
of the proposed technology that will be used to provide service at the
proposed broadband speed. For Last Mile projects, this description must
clearly demonstrate that all households and businesses in the proposed
funded service area will be offered service at the proposed broadband
speed. If after making a grant award, NTIA determines that an entity is
not able to deliver the broadband speeds it has certified in its
application, the Department of Commerce can exercise its authority to
suspend, terminate, or deobligate funding.
Question 8. How are the agencies confirming an applicant's
representations, such as whether a technology can deliver service at
the speeds that the applicant promises or that the rules require?
Answer. The NOFA and application requires applicants to certify
that, at a minimum, they will provide broadband speeds at or greater
than 768 kbps. NTIA anticipates that the projects it funds will provide
broadband speeds far greater than the minimum requirement. As part of
its due diligence, NTIA reviews and evaluates the applicant's
description of the proposed technology that will be used to provide
service at the proposed broadband speed. For Last Mile projects, this
description must clearly demonstrate that all households and businesses
in the proposed funded service area will be offered service at the
proposed broadband speed. Evaluators consider whether the technology
proposed by the applicant is capable of delivering speeds, quality, and
capacity necessary to meet the needs of the area. NTIA may request
additional information from applicants and review other sources of data
to confirm the attestations made by applicants in their applications.
If after making a grant award, NTIA determines that an entity is not
able to deliver the broadband speeds it has certified in its
application, the Department of Commerce can exercise its authority to
suspend, terminate, or deobligate funding.
Question 9. When do you expect middle-mile projects in Alaska to
learn whether they are progressing to the next stage (Step II)?
Answer. NTIA has begun notifying some applicants that have advanced
to the Step 2, due diligence, phase of application review. This will
continue on a rolling basis until all awards are made. NTIA aims to
notify all applicants in the first funding round of a decision on their
applications prior to the date on which applications will be due for
the second BTOP round.
Question 10. Have any middle mile projects, anywhere in the
country, been notified that they have progressed to Step II?
Answer. Yes.
Question 11. I understand you reached out to each of the states and
requested them to rank their priorities and gave them 20 days to
evaluate the merits of the projects. However, you did not offer to
allow them to view the reports from your technical assistance teams. My
state in particular withheld ranking projects because they could not
access this information. On the next round of funding, do you
anticipate reaching out to the states again?
Answer. Yes. We highly value the input of States in our review
process and will take into consideration the comments they have
provided before making final awards. To clear up a misconception, NTIA
did not require States to ``evaluate the merits of the projects.'' If
they wished to do so, and many did, States were free to request
additional information from the applicants themselves.
Question 12. Will you allow them to have access to this information
in the future?
Answer. NTIA requested public input in the recently-released
Request for Information on ways to improve the first round. For
example, NTIA asked for comment on what application data should be
treated as confidential and proprietary. While NTIA did not require
States to review specific applications, NTIA will take all comments
received into consideration regarding the State and Tribal consultation
process, and determine what changes, if any, are appropriate in the
second funding round.
Question 13. Given the public commitment for transparency, why
hasn't NTIA published the names of applicants that have moved to Step 2
of the application process? No official information has been released
regarding the application review, selection for step 2, the scoring of
applications or the general progress of the applications since they
were submitted. Shouldn't transparency include periodic status reports?
Answer. NTIA has been working as quickly and thoroughly as possible
to evaluate the first round of applications. NTIA and RUS received more
than 2,200 applications requesting nearly $28 billion in funding, more
than seven times the amount of available funding in the first round.
NTIA has begun notifying some applicants that have advanced to the Step
2, due diligence, phase of application review. This will continue on a
rolling basis until all awards are made. Given the competitive nature
of the program, NTIA is not making publicly available the list of
applications currently in Step 2 due diligence in part because
advancing to Step 2 does not guarantee or ensure that an application
will receive funding. NTIA plans to release additional information
regarding our progress in evaluating and awarding BTOP funds as soon as
possible.
Question 14. There appears to be a bias toward last mile projects
in an apparent effort to assure the public and Congress that funds are
being spent effectively. In Alaska, middle mile backhaul is a bigger
issue than last mile infrastructure. During a recent meeting I had with
the Arctic Slope Telephone Association Cooperative at the University of
Alaska Fairbanks, there is a wealth of last mile infrastructure in many
of the villages but no reliable way to access the backhaul necessary to
provide broadband and Internet access.
Why was only a small fraction of the first round of broadband
funding set aside specifically to reach remote sites? In Alaska and
elsewhere, these are probably the neediest places in America. Will the
funding for remote locations be more substantial in subsequent funding
rounds?
Answer. First, it is not correct to conclude that there is a bias
toward last mile projects in the BTOP Program. Moreover, funding for
``remote'' and ``rural'' areas is the responsibility of RUS. In the
Recovery Act, Congress directed NTIA to address the broadband needs of
both ``unserved'' and ``underserved'' areas--without regard as to
whether they are urban, suburban, rural, or frontier parts of the
United States--to enhance broadband for institutions that provide
important public benefits, and to stimulate demand for broadband
services. NTIA developed its first round of BTOP funding with each of
these priorities in mind and is taking all appropriate steps to ensure
that BTOP funds will be used to support broadband services in unserved
and underserved urban areas as well as rural ones. To the extent that
``remote'' areas of Alaska and other States also meet the definition of
``unserved'' or ``underserved,'' then such areas may be eligible to
apply to both the BIP and BTOP pools of funding. In this way, remote
areas have an even larger pool of funding to which they may apply.
Question 15. There is at least one project that proposes to connect
to fiber optic cable owned by a private non-telecom and non-regulated
company. This interconnect is in the middle of the proposed middle mile
transport route on the North Slope of Alaska and critical to the
delivery of broadband to the proposed funded service area. How will the
NTIA ensure broadband service to the proposed communities is maintained
and non-discriminatory access is honored when no Federal agency has
authority over the privately held fiber?
Answer. While I cannot comment on a specific application, I do note
that the nondiscrimination and interconnection obligations required of
BTOP recipients do not apply to the portions of the recipient's network
that are not funded by BTOP.
Question 16. Many applications claim to have solved the latency
issues inherent with satellite services. How will the NTIA verify that
these claims are accurate and shouldn't this information be available
to the general public?
Answer. The NOFA and application requires applicants to describe
the performance of the proposed service. Applications will be scored
for the extent to which the advertised speed for the network's highest
offered speed tier exceeds the minimum speed requirement for broadband
service (768 kbps downstream and 200 kbps upstream). Proposed networks
with high latency will be viewed unfavorably. If NTIA determines as
part of its due diligence review that an entity is not able to deliver
the broadband speeds it has certified in its application, the
application may be denied. After award, if a project is not delivering
adequate broadband speeds, the Department of Commerce can exercise its
authority to suspend, terminate, or deobligate funding.
Question 17. Capital investments cannot ensure universal broadband
due to the significant costs of operating and maintaining these
systems. What analysis is NTIA and the RUS doing to ensure that money
is being invested in sustainable projects? Alternatively, what
solutions are the NTIA and RUS prepared to recommend to Congress to
solve the sustainability problems to ensure broadband reaches rural
America?
Answer. NTIA is committed to funding projects that clearly
demonstrate they will be sustainable beyond the end of the grant
period. All BTOP projects are being evaluated against four scoring
criteria, one of which is Project Budget and Sustainability. For BTOP
Broadband Infrastructure and Public Computer Center projects,
applicants must convincingly demonstrate the ability of the project to
be sustained beyond the funding period. Reviewers will consider
business plans, market projections, third-party funding commitments,
and other data as may be appropriate to the nature of the applicant and
the proposed project. To be sustainable, an infrastructure project must
demonstrate a positive net present value for the 5-year period for
which the applicant supplies financial information. For Sustainable
Broadband Adoption projects, reviewers will consider whether the
increases in broadband adoption rates in the project area caused by the
project will be sustained beyond the conclusion of the project.
NTIA anticipates that the lessons learned and experiences from the
first and second round of BTOP funds will help inform efforts in
Congress and elsewhere to deliver sustainable broadband services for
unserved and underserved areas of the United States.
Question 18. For most of rural Alaska, there is no fiber optic
cable, and the State of Alaska, our state public utility commission,
and many carriers, are on the record at the agencies and the FCC that
satellite service, which provides middle-mile connectivity, simply
cannot support the existing and coming broadband needs. Word from my
state of Alaska is that at least one last-mile project has been moved
into phase 2 of your funding process.
Given that no middle-mile solution is yet in place for much of
Alaska, what are you doing to deal with getting such middle-mile
backbone infrastructure in place soon so the last-mile projects can
link up with something other than satellite which everyone knows is
burdened with low throughput, frequent interruptions, high-latency, and
is extremely expensive?
Answer. The NOFA reflects our goal and, we believe, the intent of
Congress to fund projects that will provide the greatest benefits to
the greatest population of users and to focus on areas that have no
broadband or inadequate broadband, rather than supporting projects
located in areas with more substantial broadband service. I believe
that middle mile projects have a significant role to play in this
regard, as they can provide a more robust link to existing last mile
networks, as well as stimulate private investment in new last mile
networks. Although each project must be evaluated on its own merits, I
appreciate your description of how middle mile projects could prove
especially beneficial for Alaskans.
Question 19. What are you doing to insure we are not funding
stranded last-mile investments in areas where no middle-mile fiber
optic system exists?
Answer. Applications for BTOP Last Mile Infrastructure projects
will be evaluated in part on their ability to provide broadband service
to end users or end user devices (including households, businesses,
community anchor institutions, public safety entities, and critical
community facilities). Last Mile applicants unable to demonstrate that
they can promptly serve end users with broadband service--such as a
Last Mile project where no Middle Mile transport exists--will not
receive favorable consideration.
Question 20. Background for this question is that NTIA is under the
Department of Commerce and some of your sister agencies in the
Department of Commerce are the National Marine Fisheries Service, the
National Oceanic and Atmospheric Administration, the National Science
Foundation, the Office of Arctic Programs, and others.
Given Alaska's unique roles in the areas of Federal fisheries
policy, climate change, ocean studies and new shipping lanes opening in
the Arctic, is NTIA taking this funding opportunity to see if broadband
applications pending before you can simultaneously meet the separate
objectives of your sister agencies in the Department?
Answer. NTIA welcomes and encourages applications that leverage
other governmental development programs as well as those that
coordinate with other Recovery Act programs. BTOP applicants have the
opportunity to describe how they will leverage other programs in order
to maximize the benefits of the government's broadband investments.
Applicants that demonstrate such benefits can receive favorable
consideration in the evaluation process.
Question 21. Have you asked NOAA, NMFS, the Arctic Research
Commission, NSF, the U.S. Coast Guard or other Federal agencies what
their telecommunications needs are going to be in Alaska in the next 5,
10, 20 years or beyond, and how to make sure projects you fund now take
those needs into account?
Answer. NTIA has worked to coordinate with other Federal agencies
in the development of the BTOP program and to ensure that BTOP
investments are consistent with their goals. For example, NTIA has
participated in a number of Federal broadband coordinating meetings
convened by the White House with agencies from across the Federal
Government. These meetings have been convened in part to ensure that
all Federal agencies can communicate their telecommunications and
broadband needs. NTIA also sought the input of many Federal agencies
during the development of the first NOFA and will encourage agencies to
submit comments in response to the recently released Request for
Information so that NTIA may take their input into consideration as we
develop the second funding round.
However, NTIA also expects applicants to leverage the needs of
other agencies in formulating their applications. Projects that reflect
this type of coordination with other Federal programs and agencies
receive additional consideration from NTIA.
Question 22. Doesn't it make sense to engage in this kind of
coordination, and leveraging of taxpayer dollars?
Answer. Yes. I believe that coordination among Federal agencies can
provide substantial public benefits and efficiencies. NTIA has
coordinated closely with the other agencies directed to lead the
Federal Government's broadband efforts, including RUS and the FCC, in
an effort to provide applicants and the public with a unified approach
to addressing the Nation's broadband needs. NTIA plans to continue to
work closely with its Federal partners to fulfill the objectives of the
Recovery Act and enhance broadband capabilities in the United States.
Question 23. Are you able to commit to ensuring that your agency
talks with these other agencies now, and any other agency with an
Arctic focused mission, so we do make maximum use of this ARRA funding?
Answer. NTIA will continue to seek the input of any and all Federal
agencies into the administration of the BTOP program so that we may
fulfill the Recovery Act's objectives to the maximum extent possible.
NTIA would be happy to communicate with the agencies you listed as well
as any Federal agency that would like to provide input into the
implementation of BTOP.
However, NTIA expects applicants to leverage the needs of other
agencies in formulating their applications. Projects that reflect this
type of coordination with other Federal programs and agencies receive
additional consideration from NTIA.
______
Response to Written Questions Submitted by Hon. John Ensign to
Hon. Lawrence E. Strickling
Question 1. The first NOFA provided very specific definitions of
what unserved and underserved areas are for the purposes of the STOP
and BIP programs. It is critical for the success of these programs and
to avoid waste, fraud, and abuse that funds are only awarded to
eligible areas. Given that providers have faced many problems with the
comment process established in the NOFA and that such comments are due
by October 28, it seems quite possible that we may learn next month or
even next year that an application for a supposedly unserved project
turns out to be in a fully-served community. Ultimately, whose
responsibility is it to ensure that program funds are not awarded to
ineligible projects, your agencies or the existing service providers?
Answer. NTIA makes the decision as to whether an area is unserved
or underserved. NTIA will make these decisions based on data supplied
by the applicant, data supplied by existing service providers who
choose to comment, and broadband maps compiled by States, additional
comments submitted by State Governors, and other data bases. NTIA
generally believes the mapping tool has performed as intended and
provided existing service providers ample opportunity to comment on
proposed funded service areas. To the extent that existing service
providers did experience issues with the mapping tool, NTIA will
explore ways to further improve this process for the next round of
funding. I am confident that NTIA will have sufficient and accurate
information on which to base funding decisions in this funding round.
Question 2. How will NTIA deal with projects that turn out to be
ineligible after they have been awarded the funds?
Answer. NTIA determines eligibility during the initial review and
approval process based on information supplied by the applicant, the
States, other third parties, and other information available to us. If,
despite this thorough review, we determine after an award that the
project is ineligible, the Recovery Act authorizes NTIA to de-obligate
funds in a variety of circumstances. The application of this provision
of the Recovery Act to a specific grant will, of course, depend upon
the facts and circumstances of the particular case. However, the
availability of this remedy at the backend should not and will not
reduce the scrutiny NTIA applies during the initial phase of review to
determine eligibility. The efficient expenditure of taxpayer dollars
demands that we take all available steps to ensure that the initial
determination of eligibility is accurate, and based on all of the data
available to us.
Question 3. Does your agency have any redress or appeals processes
in place in case it is discovered later that an awarded project is
inappropriately overbuilding an existing service provider?
Answer. The eligibility standard for BTOP awards is not whether
there is some level of existing broadband service or whether a project
would be ``overbuilding,'' but whether the applicant has demonstrated
that their proposed funded service area is unserved or underserved. The
underserved criteria can be met by showing that the proposed funded
service area exhibits low levels of availability, adoption, or
broadband speeds. This standard allows for BTOP funds to support areas
where some level of broadband service may exist, but robust investment
or adoption has not yet taken shape. However, there are a number of
steps NTIA is taking to ensure that funding goes to projects that will
enhance broadband service in areas with demonstrated need and best
fulfill the objectives of the Recovery Act. NTIA has provided existing
service providers with the opportunity to submit information to RUS and
NTIA regarding their existing service offerings to help inform the
application review process, and is also utilizing any other data at its
disposal to help evaluate claims made by both applicants and
commenters. NTIA is confident that it will have sufficient and accurate
information on which to base funding decisions.
______
Response to Written Questions Submitted by Hon. Jim DeMint to
Hon. Lawrence E. Strickling
Question 1. What restrictions are included in the rules related to
the sale or lease of assets by a recipient of a grant or loan?
Answer. BTOP funds are intended for recipients committed to
investing in and improving their communities, not those seeking to use
taxpayer dollars to turn a quick profit. Thus, NTIA and RUS will
generally prohibit the sale or lease of Recovery Act-funded broadband
facilities. However, the NOFA also sets out an exception to this
prohibition when, among other things, an applicant can demonstrate that
a sale or lease of the property would be in the best interest of those
that are served by the project. In addition to minimizing instances of
unjust enrichment, these restrictions will help ensure that BTOP-funded
projects are used for the purposes established by Congress in the
Recovery Act and that they provide the maximum benefits to the proposed
funded service area.
Question 1a. For how long are the restrictions in effect, and is
there a waiver process during the effective period?
Answer. As set forth in the NOFA, the sale or lease of any portion
of the award-funded broadband facilities during their life is generally
prohibited. The NOFA, however, establishes a three-prong exception to
this general prohibition. Specifically, the agencies may approve a sale
or lease if it is for adequate consideration, the purchaser agrees to
fulfill the terms and conditions relating to the project, and either
the applicant includes the proposed sale or lease in its application as
part of its original request for grant funds or the agencies waive this
provision for any sale or lease occurring after the tenth year from the
date the grant, loan, or loan/grant award is issued.
Question 1b. Does this kind of limitation of property rights
discourage bona fide applicants with real experience in the business of
deploying broadband networks from applying?
Answer. Given that NTIA and RUS received almost 2,200 first round
applications requesting nearly $28 billion in funding for broadband
projects--more than seven times the amount of available funding in the
first round--it does not appear that applicants were deterred by this
restriction. Nevertheless, we are examining all aspects of the first
round of grant applications to determine what changes should be made in
the next round.
Question 1c. Are you planning to remove this limitation for the
next round of funding?
Answer. On November 10, 2009, RUS and NTIA announced the release of
the second joint Request for Information (RFI) seeking public comment
on certain issues relating to the implementation of BIP and BTOP. Among
other topics, the RFI asks for comments regarding whether the section
of the NOFA relating to the sale or lease of award-funded broadband
facilities should be revised to adopt a more flexible approach toward
awardee mergers, consistent with USDA and DOC regulations, while still
ensuring that awardees are not unjustly enriched from the sale of
award-funded assets for profit. NTIA will use the comments received
from all interested parties to determine what changes, if any, are
appropriate in the second funding round.
Question 2. Most broadband providers did not apply for stimulus
funding in the first round, particularly incumbent telephone and cable
providers with experience in serving rural America. Are the
interconnection/non-discrimination provisions in the rules contributing
to this lack of interest?
Answer. As noted above, NTIA and RUS received almost 2,200 first
round applications requesting nearly $28 billion in funding for
broadband projects--more than seven times the amount of available
funding in the first round. These applicants were clearly not deterred
by the interconnection/non-discrimination provisions that were included
in the NOFA pursuant to the requirements of the Recovery Act.
Question 2a. Will you consider modifying them for round two?
Answer. As noted, the Recovery Act requires NTIA to establish non-
discrimination and interconnection obligations as contractual terms of
awards under BTOP that, at a minimum, adhere to the principles
contained in the FCC's Internet policy statement. RUS and NTIA recently
announced the release of the second joint Request for Information (RFI)
seeking public comment on certain issues relating to the implementation
of BIP and BTOP. Among other topics, the RFI asks for comments
regarding the interconnection and nondiscrimination requirements.
Specifically, the RFI asks whether interconnection and
nondiscrimination requirements should continue to be applied to all
types of infrastructure projects regardless of the nature of the
entity; whether the scope of the reasonable network management and
managed services exceptions should be modified, and if so, in what way;
and whether it is necessary to clarify the term ``interconnection'' or
the extent of the interconnection obligation. NTIA will use the
comments received from all interested parties to determine what
changes, if any, are appropriate in the second funding round.
Question 3. Have you established a process for the public or
existing service providers to appeal a decision to issue a loan or
grant if they feel an area should not have been considered eligible
because it is already served?
Answer. While there is no appeals process once an award has been
made, there are a number of steps NTIA is taking to ensure that funding
goes to projects that will best fulfill the objectives of the Recovery
Act and meet the requirements of the statute and the NOFA. The NOFA
outlined the multi-step evaluation process and the criteria that are
being used to review and score applications, including the ability of
NTIA to seek additional information or clarification from applicants as
part of the review process. NTIA has consulted with States, Tribes,
territories, possessions and the District of Columbia to solicit their
feedback on the initial pool of BTOP applications. NTIA provided
existing service providers with the opportunity to submit information
to RUS and NTIA regarding their existing service offerings to help
inform the application review process, and is also utilizing other data
at its disposal to help evaluate claims made by both applicants and
commenters.
In addition, as already noted, the Recovery Act permits NTIA to
deobligate awards to grant recipients in appropriate circumstances.
These steps will help ensure that NTIA awards funds to projects that
fulfill Recovery Act objectives and spend taxpayer dollars wisely.
______
Response to Written Questions Submitted by Hon. David Vitter to
Hon. Lawrence E. Strickling
Question 1. I understand that for middle mile projects, the rules
require applicants to show that there is a termination point in an
unserved or underserved area. I also understand that the mapping and
response tool does not identify where that termination point is. How
can existing service providers comment on whether those areas are
unserved or underserved if they are not clearly identified?
Answer. NTIA and RUS provided existing service providers with a 30-
day window voluntarily to submit information regarding the proposed
funded service area(s) of BTOP/BIP infrastructure applicants to help
inform the application review process and ensure that BTOP funds
support projects in areas that meet the definition of unserved or
underserved. With respect to middle mile projects, existing service
providers were able to comment on the unserved or underserved status of
each census block within the applicant's proposed service area. The
reviewing agencies must then take the commenters' information, along
with data supplied by the States and other available data, to determine
whether any of the proposed interconnection points identified in the
application itself are located in an unserved or underserved area, thus
establishing the applicant's eligibility for funding under this prong
of the eligibility criteria.
Question 2. How do you intend to verify conflicting data received
from the applicant and from those who submit comments, including
existing providers and the states?
Answer. NTIA will review submissions made by existing service
providers and compare them against proposed funded service area
designations, taking into account the methodology used by both, to
evaluate the unserved or underserved status of the area. NTIA may also
seek additional information or clarification from applicants as part of
the review process. NTIA is also utilizing other data at its disposal
to help evaluate claims made by both applicants and commenters.
Question 3. Will there be an appeals process in place if your
agencies award funding for a project that is found to be duplicative
and doesn't address an unserved or underserved area?
Answer. No. The eligibility standard for BTOP awards is not whether
there is some level of existing broadband service or whether projects
would be ``duplicative,'' but whether the applicant has demonstrated
that their proposed funded service area is unserved or underserved. The
underserved criteria can be met by showing that the proposed funded
service area exhibits low levels of availability, adoption, or
broadband speeds. This standard allows for BTOP funds to support areas
where some level of broadband service may exist, but robust investment
or adoption has not yet taken shape. However, there are a number of
steps NTIA is taking to ensure that funding goes to projects that will
enhance broadband service in areas with demonstrated need and best
fulfill the objectives of the Recovery Act. NTIA has provided existing
service providers with the opportunity to submit information to RUS and
NTIA regarding their existing service offerings to help inform the
application review process, and is also utilizing any other data at its
disposal to help evaluate claims made by both applicants and
commenters. NTIA is confident that it will have sufficient and accurate
information on which to base funding decisions.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Hon. Jonathan Adelstein
Question 1. Congress intended that Broadband Technology Opportunity
Program (BTOP) and Broadband Infrastructure Program (BIP) be targeted
to unserved and underserved communities. In order to identify such
areas, the applicant must provide broadband availability data to the
National Telecommunications and Information Administration (NTIA) and
the Rural Utility Service (RUS). In addition, the BTOP and BIP rules
allow existing service providers to provide comment on proposed
projects, including data regarding broadband service in such areas. The
rules suggest that if existing service providers do not provide such
data within 30 days, the agencies will presume that there is no
existing service provider in those areas.
Incumbent providers have complained that the database used to
collected data is cumbersome and inefficient. As a result, they may not
be able to provide complete information by the deadline set forth in
the rules. What is being done to make sure that RUS and NTIA have
sufficient and accurate information on which to base their funding
decisions? Are there ways for incumbent providers to supply additional
data after the deadline?
Answer. The 30-day response time-frame was a requirement of the
Notice of Funding Availability (NOFA) published in the Federal Register
on July 9, 2009. For the over 1450 applications where the window closed
for filing Public Notice Responses as of October 28, 2009, there were
over 11,000 individual responses received. At least 1 response was
received for over 80 percent of the total number of applications. Both
RUS and NTIA feel that incumbent service providers had ample
opportunity to supply comments as evidenced by this overwhelming
response. Under this competitive loan and grant program, RUS cannot
allow applicants or incumbent service providers to submit additional
substantive information for consideration not authorized by the NOFA.
Both RUS and NTIA will rely upon the information submitted by the
applicant, and state broadband maps (where available). In cases where
RUS determines necessary, it will rely upon its nationwide network of
RUS General Field Representatives (GFRs) or Rural Development field
staff to assist with our assessment.
Question 2. Conversely, applicants have voiced concern that
incumbent providers may supply inaccurate data that they will not have
the opportunity to rebut. Is there an appeals process to the extent
that there is a conflict over the data provided to the RUS and NTIA?
Answer. It is incumbent upon the Agencies to prudently assess the
information provided by the applicants against any comments received
from the public or incumbent service providers. RUS will also use state
broadband maps (where available). In cases where RUS determines
necessary, it will rely upon its nationwide network of RUS General
Field Representatives (GFRs) or Rural Development field staff to assist
with our assessment.
Question 3. Once an application reaches the second due diligence
phase, what efforts will be made to assess the accuracy of the
broadband service data in the proposed project areas?
Answer. During the two-step application process outlined in the
NOFA, there is one due diligence process and one validation process.
During the validation process, which is more commonly referred to as
``Step 2,'' RUS will complete its assessment regarding the availability
of broadband service in the proposed service area.
Question 4. I am concerned that coordinating grant programs between
NTIA and RUS has made the application process unnecessarily complex and
delayed the use of stimulus funds. I would like to have a better
understanding of how the agencies have worked together to date and play
to proceed with respect to the second notice of funds available (NOFA).
Has the RUS identified which applications it will not fund so that the
NTIA can focus on those applications? Please provide a timeline
detailing when applications or groups of applications were identified
by RUS as not being funded and therefore eligible for BTOP funding.
Answer. As indicated in the NOFA, and previous testimony, both RUS
and NTIA are simultaneously reviewing joint BIP and BTOP applications.
This simultaneous process ensures that neither Agency is delayed in
processing joint applications. We are closely coordinating the review
of applications, and are advancing applications to Step 2 on a rolling
basis. Our initial awards were announced on December 17, 2009;
subsequent awards will be announced on a rolling basis in early 2010.
Question 5. Approximately how many applications for ``remote
areas'' do you anticipate will receive BIP funding?
Answer. At this time, RUS has not completed the review of all
applications for remote rural areas to make such an assessment. Thirty
remote rural projects have been advanced to Step 2.
Question 6. When do you anticipate that RUS and NTIA will begin
taking comment on the second NOFA?
Answer. Both RUS and NTIA published our joint Request for
Information (RFI) on November 16, 2009 in the Federal Register. We are
currently reviewing comments.
Question 7. Why should applications be considered for both a BTOP
and a BIP award, if the applicant is only interested in one of the
programs?
Answer. The Recovery Act provided both RUS and NTIA with the
tremendous opportunity to bring broadband service to rural, unserved
and underserved areas. RUS was given the ability to provide loans and
loan/grant combinations which will allow the Agency to stretch its $2.5
billion in budget authority as far as possible. To ensure that the
maximum leverage is received from the taxpayer's investment, all
applicants for rural areas needed to apply to the BIP program.
Applicants were also given the opportunity to jointly apply for the
BTOP program by answering a few additional BTOP-only questions. In this
manner, the Agencies could ensure that valuable grant resources were
only directed to rural applicants that needed an 80 or 100 percent
grant. If RUS determines that an applicant cannot afford a loan
component and the applicant jointly filed for BTOP, NTIA can then
consider the applicant for a grant. The RUS determination that an
applicant could not afford a partial loan also helps the applicant and
NTIA meet the statutory requirements that a BTOP project would not be
possible ``but for'' the NTIA grant.
Question 8. How can the second NOFA be streamlined without
increasing the risk of fraud or abuse?
Answer. That is an excellent question. Both RUS and NTIA are
seeking comments on how the application process can be streamlined
without increasing the risk of fraud or abuse through its Request for
Information (RFI) published in the Federal Register on November 16,
2009. With over 60 years of successful telecommunication financing
experience, RUS will continue to strive to ensure that it provides
loans and/or grants resources to eligible projects. This is evident in
our low default rate of less than 1 percent.
______
Response to Written Questions Submitted by Hon. Mark Pryor to
Hon. Jonathan Adelstein
Question 1. I appreciate the tremendous strain that you and your
staff are under to evaluate these applications and distribute an
enormous amount of funds in a relatively short timeframe. I thank you
all for your service and dedication.
I firmly believe in the potential of these broadband stimulus
programs if implemented correctly.
I am particularly concerned that the funding gets into the right
hands. In drafting the NOFA, did you consider an appeals process so
that if errors were found they could be rectified?
Answer. With over 60 years of successful telecommunication
financing experience, RUS will continue to strive to ensure that it
provides loans and/or grants resources to eligible projects. This is
evident in our low default rate of less than 1 percent. In the unlikely
event that a project is awarded funds that would not have been eligible
for the program, RUS security documents clearly identify how such loans
or grants are handled. Each case is reviewed on its own merits to
determine the most appropriate action to protect the integrity of the
program and the taxpayer's investment.
Question 2. In the GAO's testimony, Mr. Goldstein pointed out that
NTIA and RUS lack resources for oversight beyond FY2010. What steps are
you taking to secure funding for proper and continued oversight?
Answer. RUS fully agrees and is committed to ensuring not only
those funds are obligated by September 30, 2010, but also that adequate
oversight of projects will be available beyond FY 2010. We fully
recognize that these additional loans and grants will expand the
portfolio beyond the capacity of the existing telecommunications staff.
We continue to work all channels, including the use of Rural
Development Field staff to ensure that we continue to be good stewards
of the taxpayer's resources. We are aware of the out-year needs to fund
oversight activities that may exceed our current budget and are working
to explore options so that we are able to properly oversee
implementation.
In response to GAO's testimony regarding challenges RUS may
experience in implementing the BIP program, I would like to take this
opportunity to share some of the steps RUS is taking to make the
program a success:
1. RUS brings 75 years of history making electric,
telecommunication, water and environmental loan, grant and technical
assistance to rural America. RUS manages a $54 billion loan portfolio
with a success rate envied by the private sector financial markets. The
Department of Commerce's National Telecommunications and Information
Administration (NTIA) brings years of experience as the President's
chief advisor on telecommunication policy in America. Collectively,
both RUS and NTIA have marshaled our resources to develop and publish
the BIP and BTOP initiatives. The Agencies, together with guidance and
collaboration with the White House and the FCC, are working together as
a team to make the programs a success.
2. RUS has 114 existing full-time staff dedicated solely to the
telecommunications program that work collectively as a Team. This Team
administers RUS' existing telecommunication programs including:
Farm Bill Broadband Loan Program
REAct Infrastructure Loan Program
Distance Learning and Telemedicine Loan and Grant Program
Community Connect Grant Program
3. RUS will hire approximately 47 additional temporary Recovery Act
employees to assist with the BIP program. These challenging economic
times have afforded RUS an opportunity to hire extremely well qualified
applicants for these positions. This is a 40 percent increase in the
Telecommunications Team.
4. RUS is part of the Rural Development mission area. Rural
Development, including RUS, has over six thousand employees in
Washington, D.C., and throughout rural America. This staff has
extensive commercial loan experience and stands ready and able to
assist the telecommunications Team with BIP as needed. The Secretary
has made the success of all Recovery Act programs and BIP a top
priority.
5. Rural Development has successfully obligated funds in all of its
other Recovery Act programs. For example, in our homeownership
programs, Rural Development has obligated almost $10 of $11 billion in
funding assisting almost eighty thousand families to become homeowners
in rural America. In our Rural Business Enterprise Grant program,
almost 80 percent of available funds have been obligated and nearly
half of our Community Facility funds have been obligated.
6. Beyond the Rural Development mission area, the RUS
Telecommunication Team is supported by the assistance of an experienced
contractor--ICF International. ICF has extensive experience in working
with economic development programs including other Rural Development
programs, USDA's Farm Service Agency and the Department of Housing and
Urban Development. ICF has assisted state governments with disaster
recovery and has the ability to ramp-up staff resources to quickly
deliver results. ICF was able to ramp-up staff immediately when the
results of the first funding round were announced.
Question 3. In the RUS program under the NOFA, a project must
exclusively involve a `remote area' to quality for a BIP grant that
covers 80-100 percent of the project cost. However, the definition of
`remote area' as defined in the NOFA would not apply to almost the
entire State of Arkansas.
I know my state and many parts of Arkansas are indeed remote and
hard to reach areas. I would be happy to drive you around and show you
these areas. Would you be willing to amend this definition for round 2
to include areas that are by other definitions considered remote?
Answer. RUS recognizes the concerns raised with the definition of
``remote'' included in the first NOFA and is considering changes to the
definition for the second NOFA. The Agency's intent under the first
NOFA was to direct our limited grant resources to the most rural and
the most remote areas. Both RUS and NTIA published our joint Request
for Information (RFI) on November 16, 2009, in the Federal Register.
RUS and NTIA invited comments for 14 days and appreciates these, which
focused on how it can direct grant funds to the most unserved areas.
Question 4. I believe it is necessary that you ensure funds
targeted for un-served and underserved areas are truly un-served and
underserved. I am concerned that smaller and more rural broadband
providers are having trouble responding to the applications RUS and
NTIA have received in order to show areas that they are currently
serving. What happens if broadband providers cannot or do not submit
territory maps?
Answer. Both the Rural Utilities Service (RUS) and the National
Telecommunications Information Agency (NTIA) are responsible to ensure
that projects funded by Recovery Act funds meet the requirements of
unserved or underserved. To do so, we will rely heavily upon the
information submitted by the applicant and the Public Notice Responses
(PNRs) received under the comment period which ended for most
applications on October 28, 2009. For the over 1450 applications where
the window closed for filing PNRs on October 28, there were over 11,000
individual responses received. At least 1 response was received for
over 80 percent of the total number of applications. RUS will rely upon
these comments, along with state broadband maps (where available), and
both RUS and Rural Development Field Staff to validate the information
when necessary.
Question 5. Are you considering modifications to the mapping tool
to ensure that broadband providers have ample opportunity to provide
accurate information about the territory they serve?
Answer. Both RUS and NTIA published our joint Request for
Information (RFI) on November 16, 2009, in the Federal Register.
Comments were invited for 14 days, and the Agencies are currently
reviewing comments received on how it can streamline the comment
process on proposed service areas.
Question 6. What changes are you willing to make to your
application process to guarantee that broadband stimulus funds aren't
given to ineligible areas?
Answer. Both RUS and NTIA published our joint Request for
Information (RFI) on November 16, 2009, in the Federal Register.
Comments were invited for 14 days, and RUS is currently reviewing the
comments received on how the Agencies can ensure that broadband
stimulus funds are only provided in eligible areas.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Hon. Jonathan Adelstein
Question 1. As you know, the Recovery Act requires the FCC to
develop a national broadband plan by February 2010--after NTIA and RUS
will award their first round of grants. In reviewing the broadband
applications, what kind of coordination have NTIA and RUS had with the
FCC to make the grant awards consistent with the national broadband
plan?
Answer. The FCC has been an invaluable resource to both RUS and
NTIA throughout the development of the broadband stimulus program. We
are all working together to ensure the coordination of our efforts to
the extent practicable. As you are aware, RUS has over 60 years
experience in providing financial resources for telecommunications in
rural America. We continue to work with the FCC to provide valuable
input into the national broadband plan. RUS also looks forward to
publication of the plan along with the national broadband map to more
readily deploy appropriate resources to unserved and underserved areas.
Question 2. Will you provide applicants who are rejected in the
first round with detailed information so they can improve their
applications for subsequent rounds of funding?
Answer. RUS fully intends to provide applicants who are
unsuccessful in receiving awards under the first NOFA with detailed
information so they may improve their application for consideration in
our subsequent NOFA.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Hon. Jonathan Adelstein
Question 1. Mr. Adelstein, in your testimony, you note that ``some
applicants encounter challenges with our program's rural definition''
and that you are aware of ``suggestions that have been raised
regarding'' this issue.
What New Mexican applicants have told me is that RUS and NTIA
programs effectively divide ``rural'' and ``non-rural'' areas. In New
Mexico, this prevented an integrated approach to deploying broadband
statewide and at regional levels.
Since grant proposals had to be separated into ``rural'' and ``non
rural'' areas, the New Mexico entities could not easily apply for
grants that would fund backbone infrastructure to serve both types of
areas. For example, the northern New Mexico region had to submit
multiple applications for separate areas rather than a single, region-
wide application.
Regional and statewide approaches to broadband deployment seem like
a more strategic way to solve digital divide problems facing rural
states like New Mexico. Will RUS and NTIA allow a more flexible
approach in the second round of funding for applicants who want to
serve ``rural'' and ``non rural'' areas with one grant proposal?
Answer. Both RUS and NTIA published our joint Request for
Information (RFI) on November 16, 2009, in the Federal Register.
Comments were invited for 14 days, and we are currently reviewing
comments on how the Agencies can be more flexible in deployment of our
programs.
It should be noted that RUS has a statutory requirement to serve
areas that are at least 75 percent rural. This is intended to allow
regional approaches to rural broadband deployment that may encompass a
geographic area that is up to 25 percent non-rural.
Question 2. Could you elaborate on your planned changes for the
second round of funding?
Answer. While no final decisions have been made, RUS anticipates
changes in the definition of ``remote,'' the potential for targeting
resources to unserved applicants such Native Americans, ways to
streamline both the application and comment process, and is considering
options that may provide satellite providers with additional
opportunities to compete for Recovery Act funds. Both RUS and NTIA
published our joint Request for Information (RFI) on November 16, 2009,
in the Federal Register. Comments were invited for 14 days, and we are
currently reviewing comments on how the Agencies can make the second
round of funding a success.
Question 3. In the current Notice of Funds Availability (NOFA),
broadband projects that qualify for NTIA funding can receive up to 80
percent funding. For more rural areas, however, projects funded by RUS
funding are capped at 50 percent funding. In New Mexico, this means
that applicants who file their predominantly rural applications are
likely to receive less financial support from RUS than those applicants
who receive NTIA funding for more densely populated areas. Moreover,
grant applicants cannot choose whether their application should be
reviewed by RUS or NTIA. Mr. Adelstein, what flexibility do you have
within current statutes to increase the grant funding percentage for
RUS broadband projects?
Answer. The Recovery Act provided both RUS and NTIA with the
tremendous opportunity to bring broadband service to rural, unserved
and underserved areas. RUS was given the ability to provide loans and
loan/grant combinations which will allow the Agency to stretch its $2.5
billion in budget authority as far as possible. To ensure that the
maximum leverage is received from the taxpayer's investment, all
applicants for rural areas needed to apply to the BIP program.
Applicants were also given the opportunity to jointly apply for the
BTOP program by answering a few additional BTOP-only questions. In this
manner, the Agencies could ensure that valuable grant resources were
only directed to rural applicants that needed an 80 or 100 percent
grant. If RUS determines that an applicant cannot afford a loan
component and the applicant jointly filed for BTOP, NTIA can then
consider the applicant for a grant. The RUS determination that an
applicant could not afford a partial loan also helps the applicant and
NTIA meet the statutory requirements that a BTOP project would not be
possible ``but for'' the NTIA grant.
RUS is currently reviewing comments under its Request for
Information (RFI) published in the Federal Register on November 16,
2009, as to whether more flexibility should be given into the loan/
grant percentages offered by RUS. These percentages are not statutory
but are intended to maximum the leverage provided to RUS to makes loans
available for viable projects, consistent with other important program
goals.
Question 4. Could the NOFA rules for the second round allow all
rural applicants to bypass RUS and apply directly for the more generous
NTIA grants?
Answer. Both RUS and NTIA worked closely together to ensure that
the taxpayer's resources made available under the Recovery Act were
leveraged to the maximum extent possible. As mentioned, RUS was given
the ability to provide loans and loan/grant combinations which will
allow the Agency to stretch its $2.5 billion in budget authority as far
as possible. This increases the effect of the the taxpayer's investment
and will help deliver broadband to many more unserved and underserved
households. To ensure that the most leverage is received for the
taxpayer's resources, all applicants for rural areas under the NOFA
needed to apply to the BIP program. Applicants were also given the
opportunity to jointly apply for the BTOP program by answering a few
additional BTOP-only questions. In this manner, the Agencies could
ensure that valuable grant resources were only directed to rural
applicants that needed an 80 or 100 percent grant. If RUS determines
that an applicant cannot afford a loan component and the applicant
jointly filed for BTOP, NTIA can then consider the applicant for a
grant. The RUS determination that an applicant could not afford a
partial loan also helps the applicant and NTIA meet the statutory
requirements that a BTOP project would not be possible ``but for'' the
NTIA grant.
The Agencies are fully committed to streamlining the application
and coordination process and sought comments through our joint Request
for Information (RFI) published in the Federal Register on November 16,
2009.
Question 5. Mr. Adelstein, I know you have direct experience with
digital divide challenges facing Tribal Lands. Indian Country has some
of the lowest broadband penetration rates in the entire country,
perhaps just 10 percent. Mr. Strickling states that Tribal governments
applied for funding. However, out of over 2,000 total applications,
there appears to be only 19 applications for BIP grants submitted by
Tribes.
I am concerned that this low participation may be partly due to the
requirements of the first round Notice of Funds Availability (NOFA),
which did not recognize the unique challenges and legal status of
Tribal Nations.
For example, the NOFA deducts points from applications for not
being Title II borrowers, and Tribal governments have more difficulty
meeting local matching fund requirements. Has NTIA or RUS considered
giving extra points--or other favorable consideration--to broadband
applications submitted by tribal communities for which the Federal
Government has a trust responsibility?
Answer. First, let me assure you that RUS did not deduct any points
for applicants that were not Title II borrowers. As you are aware, the
statute provided a direct priority for Title II borrowers. RUS
recognized this priority by allowing additional points for Title II
borrowers. It is also important to note that many tribally owned
telecommunication providers are Title II borrowers and can receive
additional priority as required by the statute.
RUS has a long history of providing financial resources in Indian
Country. For example, RUS has funded a broadband infrastructure project
in northeastern New Mexico, on the Navajo Nation reservation to Sacred
Wind Communications. Two infrastructure loans, totaling $70.2 million,
are financing telecommunications services being deployed across the
reservation. Most of the homes were previously unserved by broadband,
and did not even have access to basic phone service. Additionally, RUS
awarded a Community Connect grant to Sacred Wind to bring broadband
service to Huerfano, New Mexico. This previously unserved community is
now part of an integrated broadband network which connects all critical
facilities and the grant also funded a new Community Center, where
public broadband access and computer training is available. Residents
of the reservation now use the Community Center computers for education
and training, for job hunting, for communicating, and for selling
Navajo arts and crafts on e-Bay. Recently Sacred Wind was recognized
nationally by American Express and NBC Universal by winning the ``Shine
a Light'' contest for the most inspiring small business in America.
The following chart also represents RUS funding in Indian Country
for Fiscal Years 2005 through 2008.
Rural Utilities Programs--FY 05 thru FY 08
Investments in Indian Country
------------------------------------------------------------------------------------------------------------------------------------------------
Rural Electrification Loans and High Energy Cost Grants $121,095,393
Distance Learning and Telemedicine Loans and Grants $24,981,971
Community Connect Grants $7,775,881
Telecommunication Infrastructure Loans $132,724,280
Broadband Loans $1,257,300
Weather Radio Grants $42,841
Public Television Digital Transition Grants $65,354
Water and Environmental Program Loans and Grants (Lower $123,196,136
48)
Water and Environmental Program Loans and Grants $40,295,736
(Alaska)
TOTAL $451,434,892
------------------------------------------------------------------------
In FY 2009, Rural Development invested over $87 million in ARRA
funds in Indian Country and almost $500 million in non-ARRA funds
benefiting Native Americans.
In response to your specific question, RUS requested comments on
how the Agencies can potentially recognize the challenges faced by
tribal communities through its Request for Information (RFI) published
in the Federal Register on November 16, 2009. The Agencies requested
comments and suggestions on this very subject.
Question 6. In recognition of tribal sovereignty, could NTIA and
RUS change the second round NOFA to exempt applications from Tribal
communities from review by state governments?
Answer. Under the NOFA, RUS does not seek comments from state
governments on tribal or other BIP applications. The statutory
requirement to seek review by state governments only applies to NTIA
funds.
Question 7. What are you doing with the second round NOFA--beyond
simple outreach--to provide a meaningful opportunity for Tribal Nations
to successfully apply for deployment in their own communities?
Answer. As evidenced in our response above, RUS and Rural
Development not only has a significant track record in providing
outreach to Tribal Nations, but has successfully invested millions of
dollars to benefit the Native American community. In response to your
specific question, RUS sought public comment on how the Agencies can
potentially recognize the challenges faced by tribal communities
through its Request for Information (RFI) published in the Federal
Register on November 16, 2009. The Agencies requested suggestions on
this very subject and is currently reviewing same.
Question 8. Given that States will administer broadband mapping
grants, what steps will NTIA take to ensure that tribal lands will be
properly included and identified in the broadband mapping efforts?
Answer. Not applicable to RUS.
Question 9. Both the wireless industry and Tribal nations have
previously expressed their concerns to Congress about the need to
balance rules that help build wireless infrastructure and avoid impacts
on Native American sacred sites and cultural properties.
Several procedures already exist, such as the National Historic
Preservation Act Section 106 process and more recent FCC rules
regarding new tower construction. The FCC and the Tribes negotiated a
Best Practices Agreement to provide process guidance and assurances to
all involved.
NTIA and RUS currently seek to use a similar streamlined process
for the purposes of the Recovery Act, including a new Nationwide
Programmatic Agreement for fiber deployment. Some Tribes have again
expressed concern that this infrastructure building could impact sacred
religious places. What steps are you taking, beyond simply outreach, to
take into consideration the concerns of Tribal Nations that these new
procedures for broadband deployment will avoid potential adverse
impacts on Tribal cultural and religious sites?
Answer. Under Section 106 of the National Historic Preservation Act
and its implementing regulation (36 CFR Part 800), RUS and NTIA are
legally responsible for conducting more than simple outreach to Indian
tribes for BIP/BTOP projects. Indian tribes must be consulted whenever
a proposal has the potential to affect properties to which tribes might
attach religious and cultural significance. Such consultation must be
on government-to-government basis and must occur throughout a
proposal's review process. In order to involve tribes more effectively
in the Section 106 review process for BIP/BTOP infrastructure projects,
the agencies have taken several steps.
First, in October 2009 the RUS and NTIA received approval from the
Advisory Council on Historic Preservation to accept Section 106 reviews
completed by the Federal Communications Commission (FCC) for the
construction and modification of wireless communication facilities
subject to, or exempted by, two nationwide programmatic agreements: (1)
Nationwide Programmatic Agreement for Review of Effects on Historic
Properties for Certain Undertakings Approved by the Federal
Communications Commission (2004); and/or (2) Nationwide Programmatic
Agreement for the Collocation of Wireless Antennas (2001). In
implementing these agreements, FCC has developed a tribal consultation
program that relies on an electronic system to notify and involve
tribes early and directly, and is well supported and managed by the
agency. This program and its electronic notification system, Tower
Construction Notification System (TCNS), have been developed and
refined over several years by FCC working directly and collaboratively
with Indian tribes. Therefore, by relying on FCC's 106 review process
under the terms of these agreements and the associated program for
their implementation, RUS and NTIA are making maximum use of existing,
successful systems for the early and meaningful involvement of Indian
tribes in the agency's Section 106 review responsibilities. The earlier
tribes are involved in the review process the more likely it is that
adverse impacts on properties of importance to them can be avoided.
In addition to this effort, RUS and NTIA have worked closely with
FCC to modify TCNS for purposes of BIP/BTOP. Using a modified version
of TCNS enables RUS and NTIA to notify tribes about qualified
applications before any decision about the project has been made. TCNS,
however, is more than a simple notification system. Upon receipt of a
notification, a tribe may elect to respond with concerns about the
proposal or information about properties important to the tribe that
might be located in or near the proposal's defined service territories.
At the very least, tribal responses of interest to TCNS notices permit
RUS and NTIA to identify those tribes that wish to proceed and consult
on each proposal's Section 106 review process.
Use of this electronic system will enable RUS and NTIA to provide
fast and reliable initial information about proposals to tribes; this
should facilitate their early participation in Section 106 reviews.
Following the TCNS notification and for all approved applications, RUS
and NTIA will consult with interested tribes in accordance with the
regulations implementing Section 106 of NHPA. No other comparable
system or database exists within the Federal Government that contains
current, accurate and comprehensive information about Indian tribes and
their geographic areas of interest. Utilizing TCNS will help ensure RUS
and NTIA pursues an appropriate level of and opportunity for tribal
consultation for all BIP/BTOP actions.
Finally, RUS and NTIA proposed to develop a nationwide programmatic
agreement that would cover all of the proposals reviewed under BIP/
BTOP, not just those that included fiber optic or cable deployment.
During initial reviews of a conceptual plan and a draft version of the
nationwide programmatic agreement, Indian tribes and State Historic
Preservation Offices expressed concerns about proposed compressed
review timeframes. In the initial agreement RUS and NTIA proposed to
limit review of proposals that called for the installation of cable
under certain circumstances, such as previously disturbed rows-of-way,
because of the limited potential and likelihood of affecting ``historic
properties.'' The intent of this approach did not include those
properties of religious and cultural significance to Indian tribes. RUS
and NTIA agreed that such properties have value to Indian tribes beyond
their National Register significance; therefore, typical assumptions
about previous impacts were not applicable. In response to these
concerns, RUS and NTIA has abandoned its initial intent and redrafted
another agreement that is more limited in scope. This agreement is
currently under consideration for execution.
RUS and NTIA will apply the regulatory standard in the Section 106
regulations to make a reasonable and good faith effort to identify
historic properties affected by BIP/BTOP proposals. For proposals that
propose cable installation, including fiber optic, this means
consulting with tribes so that adverse effects to properties of
religious and cultural significance to them can be avoided or
minimized. Achieving this goal will be aided by the direct
participation of RUS and NTIA in all aspects of Section 106 review
process, as opposed to solely relying on the efforts of applicants
which both agencies agree are not consistent with the Section 106
review process.
Question 10. Mr. Adelstein, some New Mexicans live in rural areas
where satellite broadband may be the most efficient means of providing
Internet access. Yet the NOFA rules seem to preclude satellite
broadband providers from participating in the broadband stimulus
programs. For example, satellite broadband providers, due to the nature
of the technology, would potentially provide access to overlapping
areas that are rural and remote, underserved and unserved. In the next
funding round, will the NOFA rules provide meaningful opportunities for
satellite broadband providers to compete for broadband grants?
Answer. Satellite providers were not excluded from applying for BIP
or BTOP funding under the first NOFA; in fact, both Agencies received
several applications from satellite providers. Both RUS and NTIA
published our joint Request for Information (RFI) on November 16, 2009,
in the Federal Register. We are currently reviewing comments on how the
Agencies may provide more meaningful opportunities for satellite
broadband providers to compete for broadband resources.
Question 11. What changes to the first NOFA rules are necessary to
allow satellite broadband proposals to be considered fairly on the
merits of their applications?
Answer. We understand that satellite providers were concerned with
the requirements that proposed service territories could only include
unserved and underserved areas, and by their very nature, satellites
can provide service virtually anywhere in the country. Both RUS and
NTIA published our joint Request for Information (RFI) on November 16,
2009, in the Federal Register. We are currently reviewing those
comments and will focus on how the Agencies can be more inclusive of
satellite providers.
Question 12. Blair Levin was recently quoted in the press that
current broadband stimulus efforts and existing FCC programs will not
be sufficient to provide universal broadband access. He apparently
stated that, ``BTOP's not going to do it, BIP isn't going to finish the
job, [and the FCC's] universal service isn't going to do the job
right.'' Recognizing that much work will need to follow the BIP and
BTOP initiatives in order to ensure that all Americans enjoy broadband
access, what lessons learned or policy recommendations from the first
round of broadband stimulus funding should inform the FCC's National
Broadband Plan?
Answer. The FCC has been an invaluable resource to both RUS and
NTIA throughout the development of the broadband stimulus program. We
are all working together to ensure that the coordination of our efforts
to the extent practicable. As you are aware, RUS has over 60 years
experience in providing financial resources for telecommunications in
rural America. We continue to work with the FCC to provide valuable
input into the national broadband plan. RUS looks forward to
publication of the plan along with the national broadband map to more
readily deploy appropriate resources to unserved and underserved areas.
Question 13. Will you communicate these recommendations to this
committee and directly to the FCC before the publication of the
National Broadband Plan?
Answer. RUS welcomes the opportunity to provide input into the
National Broadband Plan and with your Committee on our 60 years of
experience with providing financial resources for telecommunications
and with the additional opportunities provided under the broadband
stimulus programs.
______
Response to Written Questions Submitted by Hon. Mark Begich to
Hon. Jonathan Adelstein
Question 1. Thank you for the great work your agency has done in
Alaska. I have had the honor of touring many of the sites in Alaska and
appreciate the investment that RUS has made to our communities. I would
also like to thank your Alaska team for their hard work. Wes Lannen
recently participated in a round table discussion with me and other
groups and I appreciated the time he took out of his very busy
schedule. However, I am very concerned that RUS will mainly focus on
last mile projects for the BIP. Are you able to assure me there will be
a thorough assessment of all the projects and consideration will be
made to the very expensive middle mile projects?
Answer. Thank you for your comments about Wes Lannen, one of our
General Field Representatives (GFRs) which are located throughout rural
America and serve as our ``boots on the ground'' to help facilitate the
deployment of broadband to rural unserved and underserved areas. I can
assure you that RUS is committed to both last mile and middle mile
projects. Under our first NOFA, funds were set-aside in three funding
buckets. Up to $800 million in RUS loans and grants were devoted solely
to middle mile projects.
Question 2. I am concerned about the constant rule and guidance
changing that the applicants have experienced. I understand the
difficulty your agencies have experienced pushing through the money as
quickly as possible, but can you assure us you will not change the
rules throughout the final round of funding?
Answer. While we appreciate your interest in minimizing changes to
our final NOFA, both RUS and NTIA have learned from our first NOFA and
received numerous comments and suggestions on how we can streamline
this document. As such, both RUS and NTIA published our joint Request
for Information (RFI) on November 16, 2009, in the Federal Register. We
are currently reviewing comments on how to minimize the burden of
changes in the next NOFA.
Question 3. Many people found the combined application confusing
and onerous. Under the second NOFA, what steps will your agencies take
to improve the process?
Answer. The Agencies employed a two-step application process under
the first NOFA in an effort to streamline the application process and
minimize the burden on applicants. WE also held 10 Outreach and
Training Workshops throughout the country to help applicants understand
the NOFA and application process. We regret that many of your
constituents may have found the application cumbersome. Both RUS and
NTIA published our joint Request for Information (RFI) on November 16,
2009, in the Federal Register. Comments were invited for 14 days, and
we welcome comments on how to streamline the application process.
Question 4. When will applicants be notified if they have made the
first cut? It is essential for project managers to be able to improve
their applications for the second and final round of funding.
Answer. The first awards were announced December 17, 2009.
Additional first round awards will be announced on a rolling basis in
early 2010. Our goal is to notify applicants that did not receive an
award under NOFA 1 before NOFA 2 is published in the Federal Register.
Question 5. Do you believe the tight timelines have damaged the
process or may cause problems with the projects as we move forward? I
understand and support the need to get the projects funded as quickly
as possible but I am very concerned the deadlines are going to damage
the process and our ability to have worthy projects funded.
Answer. No. RUS and NTIA received over 2200 applications totaling
in excess of $28 billion for the first NOFA. Under the first NOFA, our
goal was to target shovel-ready projects that could be deployed as
quickly as possible and as a result, help facilitate our Nation's
economic recovery.
Question 6. Since the deadlines have been pushed back repeatedly, I
am concerned about the actual stimulative effects of the projects. What
assurance do we have that the first round of project awards will
actually be completed in February? Alaska's construction season is
incredibly short especially in our most remote locations. If the
projects are pushed back any more than we run the risk of high cost
overruns because the materials will have to be flown in to the
communities. Is it possible to let the Alaska projects know as soon as
possible so they are able to have supplies ready for the first spring
barge?
Answer. We share your concern and are working hard to meet our
deadlines. The first awards were announced December 17, 2009.
Additional first round awards will be announced on a rolling basis in
early 2010. We need to balance the needs of our customers with those of
the American taxpayer who want both RUS and NTIA to ensure that their
hard earned tax dollars build viable and sustainable broadband in
rural, unserved and underserved areas.
Question 7. If an applicant has not even started the Federal and
state permitting processes for their project, especially under NEPA and
the Endangered Species Act, how will that be viewed in the due
diligence phases by RUS and NTIA given that you are looking for truly
shovel ready projects?
Answer. The statute requires a preference for projects that can
both commence and be completed as quickly as possible. We would
encourage any viable applicant to begin seeking any necessary approvals
for their project to ensure that it is competitive through the NOFA
process.
Question 8. What is the due diligence process for confirming that
an applicant's project can deliver broadband at the promised speeds or
even at the minimum speeds required in the NOFA?
Answer. With over 60 years of successful telecommunication
financing experience, RUS will continue to strive to ensure that it
provides loans and/or grants resources to eligible projects. This is
evident in our low default rate of less than 1 percent. RUS has
experienced telecommunication engineers on staff that review all
applications to ensure that the applicant's project is technically
sound and can deliver broadband at the required speeds. Applicants were
also required to submit a state from a Professional Engineer to certify
to the technical feasibility of their proposal.
Question 9. How are the agencies confirming an applicant's
representations, such as whether a technology can deliver service at
the speeds that the applicant promises or that the rules require?
Answer. With over 60 years of successful telecommunication
financing experience, RUS will continue to strive to ensure that it
provides loans and/or grants resources to eligible projects. This is
evident in our low default rate of less than 1 percent. RUS has
experienced telecommunication engineers on staff and through contract
that will review all applications to ensure that the applicant's
project is technically sound and can deliver broadband at the required
speeds. As part of the application process, applicants were also
required to submit a Statement from a licensed Professional Engineer to
certify to the technical feasibility of their proposal.
Question 10. When do you expect middle-mile projects in Alaska to
learn whether they are progressing to the next stage (Step II)?
Answer. RUS and NTIA are advancing middle mile projects to Step 2
on a rolling basis. Agency staff is still evaluating applications and
comments on proposed service territory maps. In addition, we continue
to coordinate our efforts with NTIA. Both RUS and NTIA are committed to
advancing middle mile projects as expeditiously as possible and on
December 17, announced several middle mile awards.
Question 11. Have any middle mile projects, anywhere in the
country, been notified that they have progressed to Step II?
Answer. RUS and NTIA on December 17 announced several middle mile
awards.
Question 12. Mr. Adelstein, can we get your commitment to also have
your agency seek such interagency coordination?
Answer. RUS has always sought to maximize cooperation with all
applicable Federal or state agencies for evaluating the environmental
impacts and implications of our actions or proposals under
consideration. A recent RUS example is a joint preparation of an
Environmental Assessment with the Department of Defense for undersea
cables in the Pacific. We fully intend to continue with these efforts
and work with NTIA to leverage assets and best deploy our broadband
recovery act resources.
______
Written Questions Submitted by Hon. Mark Warner to
Mark Goldstein
Question 1. You note in your testimony that the NTIA has not yet
created quantitative, outcome-based goals for the BTOP program's
performance measures. Is it typical to expect that such goals be
crafted after a program has commenced? How do most agencies do this?
How have other agencies implementing brand-new stimulus programs
created such goals?
[The witness did not respond.]
Question 2. How does USDA's and RUS's use of contractors to help
monitor and provide technical assistance for BTOP and BIP programs
compare to other stimulus programs? To other non-stimulus grant
programs? What advice, if any, would you give to agencies when using
contractors in this manner?
[The witness did not respond.]
______
Written Question Submitted by Hon. Mark Begich to
Mark Goldstein
Question. The GAO issued a report on the barriers to broadband
deployment. In this report they spoke to a number of stakeholders--from
academics to consumer advocacy groups and of course broadband
providers. Unfortunately, not even one of the providers currently
offers broadband or DSL service in Alaska. I understand you interviewed
the trade associations with members in Alaska and respect the important
role the trade association's play, but they are not the actual people
working hard to deploy broadband in areas that national companies turn
away from. How did you pick the providers you interviewed? Did you
consider that not even one of those providers currently provide
broadband or DSL service in Alaska? The providers in Alaska have a
unique set of circumstances and could shed light on providing service
too hard to reach areas.
[The witness did not respond.]