[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.
---------------------------------------------------------------------------
    \1\ Pub. L. No. 111-5, 123 Stat. 115 (2009).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \2\ 74 Fed. Reg. 33104 (2009).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.]

                                  
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