[Senate Hearing 111-698]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-698
 
    OVERSIGHT OF THE DEPARTMENT OF COMMERCE'S BROADBAND TECHNOLOGY 
                         OPPORTUNITIES PROGRAM

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

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARING

                    JANUARY 28, 2010--WASHINGTON, DC

                               __________

         Printed for the use of the Committee on Appropriations


       Available via the World Wide Web: http://www.gpo.gov/fdsys

                               __________



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                      COMMITTEE ON APPROPRIATIONS

                   DANIEL K. INOUYE, Hawaii, Chairman
ROBERT C. BYRD, West Virginia        THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont            CHRISTOPHER S. BOND, Missouri
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin                 JUDD GREGG, New Hampshire
PATTY MURRAY, Washington             ROBERT F. BENNETT, Utah
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
DIANNE FEINSTEIN, California         SAM BROWNBACK, Kansas
RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            SUSAN COLLINS, Maine
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
FRANK R. LAUTENBERG, New Jersey
BEN NELSON, Nebraska
MARK PRYOR, Arkansas
JON TESTER, Montana
ARLEN SPECTER, Pennsylvania

                    Charles J. Houy, Staff Director
                  Bruce Evans, Minority Staff Director
                                 ------                                

    Subcommittee on Commerce, Justice, Science, and Related Agencies

                BARBARA A. MIKULSKI, Maryland, Chairman
DANIEL K. INOUYE, Hawaii             RICHARD C. SHELBY, Alabama
PATRICK J. LEAHY, Vermont            JUDD GREGG, New Hampshire
HERB KOHL, Wisconsin                 MITCH McCONNELL, Kentucky
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
DIANNE FEINSTEIN, California         LAMAR ALEXANDER, Tennessee
JACK REED, Rhode Island              GEORGE V. VOINOVICH, Ohio
FRANK R. LAUTENBERG, New Jersey      LISA MURKOWSKI, Alaska
BEN NELSON, Nebraska                 THAD COCHRAN, Mississippi (ex 
MARK PRYOR, Arkansas                     officio)

                           Professional Staff

                            Gabrielle Batkin
                            Jessica M. Berry
                             Jeremy Weirich
                            Jean Toal Eisen
                         Art Cameron (Minority)
                        Allen Cutler (Minority)
                       Goodloe Sutton (Minority)

                         Administrative Support

                              Michael Bain
                         Katie Batte (Minority)


                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening Statement of Senator Barbara A. Mikulski.................     1
Opening Statement of Senator Richard C. Shelby...................     2
Statement of Hon. Gary Locke, Secretary, Department of Commerce..     5
Hon. Lawrence E. Strickling, Assistant Secretary for 
  Communications and Information, and Administrator, National 
  Telecommunications and Information Administration (NTIA), 
  Department of Commerce.........................................     5
Prepared Statement of Hon. Gary Locke............................     8
Long and Short-term Benefits.....................................     8
Progress to Date.................................................     9
Looking Ahead....................................................    11
Broadband Funding Issues.........................................    12
Streamline the Broadband Process.................................    13
Broadband Infrastructure Projects................................    14
Benefits of the Broadband Program................................    14
Criteria for Broadband Funding...................................    15
Broadband Grant in Rural Georgia.................................    16
Distribution of Grants...........................................    17
Broadband Infrastructure in Unserved and Underserved Areas.......    19
Fishery Failure for the Yukon River Chinook Salmon...............    20
Peer Review Process..............................................    21
Application Requirements.........................................    22
Post-grant Auditing..............................................    22
Broadband Grant Awards...........................................    22
Digital Television Conversion....................................    22
Additional Committee Questions...................................    24
Questions Submitted to Hon. Gary Locke...........................    24
Questions Submitted by Senator Patrick J. Leahy..................    24
NTIA BTOP Program................................................    24
Question Submitted to Hon. Lawrence E. Strickling................    26
Question Submitted by Senator Frank R. Lautenberg................    26
Broadband Adoption...............................................    26


    OVERSIGHT OF THE DEPARTMENT OF COMMERCE'S BROADBAND TECHNOLOGY 
                         OPPORTUNITIES PROGRAM

                              ----------                              


                       THURSDAY, JANUARY 28, 2010

                           U.S. Senate,    
Subcommittee on Commerce, Justice, Science,
                              and Related Agencies,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:31 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Barbara A. Mikulski (chairwoman) 
presiding.
    Present: Senators Mikulski, Reed, Pryor, Shelby, and 
Murkowski.


            OPENING STATEMENT OF SENATOR BARBARA A. MIKULSKI


    Senator Mikulski. The Subcommittee on Commerce, Justice, 
and Science will come together and will come to order. This is 
our first hearing of the year 2010 of the subcommittee. Later 
on in the year, we will be taking testimony from our cabinet 
officers and also from inspector generals, who will advise us 
on how to make sure we're getting value for our dollar.
    Today we're here--and that is the focus of today's 
testimony, getting value for the dollar in terms of the 
Commerce broadband program run by the National 
Telecommunications and Information Administration.
    We want to thank Secretary Locke and Mr. Strickling for 
being here and starting early. We have votes at 10:30. I'm 
going to dramatically condense my opening remarks. But know 
this; the No. 1 issue is creating jobs for the country. They 
really want job creation. We on this subcommittee, just as the 
Nation, we believe that jobs must come from the private sector, 
but government often creates an infrastructure that enables the 
private sector to go forth. The example would be the highway 
system that opened up rural communities and new 
entrepreneurship.
    What we love about broadband is as that super information 
highway goes out, particularly to our rural communities, 
everyone from the homemaker who might be an eBay entrepreneur 
to a seafood industry in Maryland trying to go on a global 
market--broadband is their tool to expanding private sector 
jobs.
    In the Recovery Act, the wisdom of the President said that 
as we move ahead we will not only do infrastructure in roads, 
but in information superhighway. The Recovery Act included over 
$7 billion to create rural broadband infrastructure projects, 
$4.7 billion of that came to the Commerce Department. Now, we 
want to set the stage. Seven billion dollars is a lot of money. 
About $3 billion went to Agriculture, but $7 billion is exactly 
what we give the FBI to run their whole operation worldwide. So 
$7 billion is a lot of money.
    We know what it was used for and it was to focus on un-
served areas and underserved areas. What we are concerned 
about, because we are hearing from our constituents that since 
the $4.7 billion was given to the Commerce Department in 
February 2009 the Department has only awarded $200 million for 
the entire program, including infrastructure and mapping 
grants.
    Now, we know that there is an inherent problem between 
getting the money out fast and doing the due diligence which 
this subcommittee is insisting on. And Mr. Secretary, I know 
you. We don't want to have the boondoggles like what happened 
at Census, what is going on over at NPOESS, what I had at 
Justice, at the FBI. No boondoggles on your watch and no 
boondoggles on this subcommittee's watch.
    So we know you need to do due diligence, but at the same 
time we're getting calls from our constituents saying, when are 
we going to know what happened to our grant? We've got to get 
started and we've got to plan.
    So I want to better understand why these recovery funds are 
taking so long to reach communities, and do we need to help you 
with either resources, changing the statutory deadline--again, 
due diligence as well as promptness. Second, we hope to hear 
what you've learned from the actual applications. Are these 
ideas really a tool for economic development?
    I know in our hearing when you come before the subcommittee 
in its regular order for the 2011 budget we will talk about 
ongoing monitoring. But right now what we want to know is why 
can't we get the money out faster? What are you doing to get 
the money out faster, at the same time meeting almost our 
schoolmarmish insistence on due diligence?
    We're also very aware that the Inspector General, who we 
rely upon, has issued several reports, which I will talk about 
later on during the hearing.
    This hearing is not to scold or to finger-point. It is 
really to pinpoint how we serve the Nation.
    So I'm going to turn to my colleague Senator Shelby and 
then we're going to move right into your testimony. Senator 
Reed, perhaps for your opening statement you could incorporate 
it in your questions.
    Senator Reed. I'm fine.
    Senator Mikulski. Senator Shelby.


             OPENING STATEMENT OF SENATOR RICHARD C. SHELBY


    Senator Shelby. Thank you. Thank you, Chairwoman Mikulski.
    First of all, I would like to thank the chairwoman for 
calling this hearing. Secretary Locke, Assistant Secretary 
Strickling, thank you for taking the time and thank you for 
serving.
    The National Telecommunications and Information 
Administration, NTIA, is supposed to be the smallest agency 
within the Department of Commerce, with approximately 270 
employees and an annual budget of $20 million. It has now 
increased its number of employees to over 310 and it has one of 
the largest pots of money in not only the Department of 
Commerce, as Senator Mikulski alluded to, but in all of the 
Federal Government.
    Interestingly, NTIA alone has more funding than three of 
the Federal law enforcement agencies under this subcommittee's 
jurisdiction combined, the Drug Enforcement Administration, the 
U.S. Marshals Service, and the Bureau of Alcohol, Tobacco, and 
Firearms Agency. Apparently, the administration cares more 
about our Nation's ability to update their facebook status than 
fighting crime. We'll see.
    Last year the administration hastily requested and received 
$7.2 billion of taxpayers' money for rural broadband funding in 
the economic stimulus bill, $4.7 billion was appropriated to 
NTIA and $2.5 billion to the Department of Agriculture. Today, 
Mr. Secretary, $4.3 billion it's my understanding idly sits in 
your bank over there, NTIA, and $2.2 billion remains unspent by 
the Department of Agriculture.
    The administration that so desperately needed $7.2 billion 
in the President's stimulus bill for rural broadband funding is 
now negligently, I believe, and wastefully sitting on a grand 
total of $6.5 billion of taxpayers' money, $6.5 billion. This 
is almost half of the total savings that the President claimed 
would be saved in the upcoming fiscal year 2011 budget request.
    NTIA, with billions of dollars, has been besieged with 
great proposals, grand proposals. The smallest agency in the 
Department of Commerce is now tasked with funding $4.7 billion 
in grants. And yet the administration, Mr. Secretary, 
overestimated NTIA's capacity to deliver this funding and 
tasked an agency that does not even have a grant administrating 
office with disbursing $4.7 billion. Something's got to give.
    After scrambling to find a way to oversee this program, the 
Department has tasked grant officers in NOAA and NIST to 
disburse the funding. Further, panels of outside contractors 
have been hired to review applications. Many of these 
contractors have never been interviewed in person by anyone at 
the Department of Commerce and yet are responsible for ensuring 
that all applicants are qualified.
    Mr. Secretary, what is being done to ensure that a 
competitive process is in place, we would like to know; that 
this process is fair, we'd like to know that; and that none of 
these contractors have a conflict of interest in awarding these 
funds?
    This program I believe is not stimulating the economy. It's 
simply more Government spending that is forcing our Nation 
further and further into debt.
    The stimulus broadband funding has taken what was once a 
small agency and turned it into, some people believe, a 
bureaucratic nightmare. What was supposed to be a program to 
provide broadband access across the Nation has become the 
poster child for why the stimulus was and continues to be in my 
opinion a disaster for the American taxpayer and the Federal 
budget.
    There are now hundreds of private consultants taking over 
what should have been newly created jobs, and the NTIA still 
has distributed only a pittance of the funds given to this 
program, while a September 10, 2010, deadline looms.
    I believe we should save the taxpayer from suffering from 
any further problems at the Department of Commerce and rescind 
this money. I opposed the stimulus bills that created this 
program and these results or lack thereof only confirm my 
previous concerns about the entire bill. This program has not 
been the promised downpayment on economic prosperity and I 
think it can hardly be described as getting off the ground yet.
    Mr. Secretary, I'm confident that, since this hearing has 
publicly exposed this problem, the administration and the 
Department of Commerce will blindly and frantically attempt to 
hastily distribute the remaining funds. That could be a 
problem. We're talking about billions of dollars that would be 
rushed out the door to, for all practical purposes, unknown 
recipients, with no accountability, whether it would truly 
provide any broadband coverage or not.
    Mr. Secretary, I hope it won't be the case. I would have 
preferred this hearing to be about the success the NTIA is 
having with implementing the program, but there's no way around 
the fact that NTIA has fallen well short of the results we were 
promised from the start.
    If only NTIA's broadband program was the only failure at 
the Department. Unfortunately, there are many more that are 
costing the taxpayers billions of dollars. One in particular is 
the National Polar Orbiting Environmental Satellite program 
that we call NPOESS. It's another Government program that's 
been deemed too big to fail. I believe, Mr. Secretary, the 
program is failing. The question is what are you going to do 
about it.
    The June 2009 GAO report indicates that, while things with 
the program may be better, the program is still a disaster. 
Going from worse to bad is not an improvement the American 
taxpayer should have to endure. While I understand your 
Department has a big announcement today about the future of 
this program, anything less than a complete termination 
probably is unacceptable. NPOESS has and will continue to drain 
billions out of other critical science, weather, and research 
programs at NOAA.
    This administration is no better manager of this program 
than the last administration, and now are at a point where 
there is real danger that there will be no satellite continuity 
of coverage for weather forecasts.
    Mr. Secretary, I believe this program is poorly managed, is 
billions of dollars over budget, is behind schedule, and its 
functionality decreases by the hour. It's a failure and should 
be put out of its misery.
    I know this is a your about NTIA's broadband stimulus 
program, so I will leave further comments about the 
Department's programmatic, budgetary, and managerial woes for 
when we meet again. However, Mr. Secretary, you've got your 
hands full. I know that. You're new on the job. The symptoms of 
what could be a greater systemic problem in the Department are 
hard to ignore. I look forward to working with you and I know 
you're challenged. Thank you.
    Senator Mikulski. Secretary Locke.

STATEMENT OF HON. GARY LOCKE, SECRETARY, DEPARTMENT OF 
            COMMERCE
ACCOMPANIED BY HON. LAWRENCE E. STRICKLING, ASSISTANT SECRETARY FOR 
            COMMUNICATIONS AND INFORMATION, AND ADMINISTRATOR, NATIONAL 
            TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION (NTIA), 
            DEPARTMENT OF COMMERCE

    Secretary Locke. Thank you very much, Chairwoman Mikulski 
and Ranking Member Shelby and Senator Reed. It's a pleasure for 
me and Assistant Secretary Strickling to be before you to talk 
about the $4.7 billion allocated by Congress to the Commerce 
Department for two initiatives to increase the state of 
broadband access in underserved communities across America, the 
Broadband Technology Opportunities Program, BTOP, and the State 
Broadband Data and Development Program, or the mapping program.
    This program is moving ahead on an aggressive timetable and 
I am absolutely confident that you will see that we are 
delivering and that all funds will be disbursed in a timely and 
in a safe and prudent fashion. These grants are historic and 
appropriately ambitious, and they're designed to create jobs in 
the near term, but more importantly to create a physical 
infrastructure that enables sustainable long-term economic 
growth, working in concert and leveraging the resources of the 
private sector.
    This program will bring America closer to President Obama's 
vision of a nationwide 21st century communications 
infrastructure that allows all of our citizens to fully 
participate in the global economy. To meet this goal, NTIA is 
adopting a comprehensive communities approach, where we 
emphasize investments in what we call ``middle mile'' broadband 
capabilities that will help localities connect anchor 
institutions like schools, libraries, medical facilities, and 
government facilities to high-speed Internet access.
    Let me just briefly define what we mean by ``middle mile,'' 
which is the core of the programs and the dollars that the 
Department of Commerce, NTIA, is distributing, unlike the 
programs at the Department of Agriculture. Just as the Federal 
Government has provided funding to build a major highway or a 
beltway like the 495 beltway here in the D.C. area and then 
private or local interests fund the construction of streets 
that branch off of that highway, most of NTIA's funding is to 
help build a broadband backbone or highway. Once built, the 
highway companies or local communities will construct the last 
mile of fiber optic lines that will then bring high-speed 
Internet access directly to businesses and to individual homes.
    So the ultimate goal is to have the $4.7 billion in NTIA 
funding serve as a catalyst for billions of dollars more in 
private sector and local investment. This is absolutely 
essential for America's long-term prosperity.
    Among other things, expanding broadband access helps 
provide job training to the unemployed at our community 
colleges, school kids with material that they need to learn 
from resources all around the world, connecting rural doctors 
with more advanced medical centers, and, importantly, allowing 
businesses, whether located remotely or out of the home or on 
Main Street, to offer their services to national and 
international markets.
    We believe, based on the report by the National Economic 
Council, that our investments in the short term will directly 
help create thousands of jobs doing everything from the 
manufacturing of fiber optic cable and other high-tech 
components, to digging the trenches, to installing telephone 
poles, to stringing of that fiber from pole to pole, and to the 
installation of the broadband networking hubs and equipment.
    Thus far, the Department of Commerce has announced 66 
broadband grants totaling some $300 million. We have awarded 51 
broadband mapping grants totaling almost $100 million and 15 
BTOP grants worth approximately $200 million. But the true 
impact of the program can be found by looking at the measurable 
impact it's going to have on local communities. Take the $28 
million local infrastructure grant we awarded to North Carolina 
just last week. In the months and years ahead, the award winner 
will be laying almost 500 miles of new fiber rings in the 
western and eastern part of North Carolina. The project has the 
potential to connect almost one-half of the population of North 
Carolina to the high-speed 21st century Internet backbone.
    The grant winner will provide new and robust broadband 
access for schools that need it, including 58 community 
colleges and 181 libraries, as well as public health 
facilities, including health clinics and almost 180 county 
health agencies and hospitals.
    Meanwhile, seven other private sector broadband service 
providers have expressed interest in connecting to this 
backbone or middle mile project to provide high-speed Internet 
service to over 300,000 families or households, service that 
these private sector businesses could not have provided without 
this middle mile highway first being paid for and constructed 
by the Federal Government.
    We've already provided grants for infrastructure, computer 
centers, and sustainable adoption in Georgia, Maine, Michigan, 
New York, South Dakota, Arizona, Massachusetts, Minnesota, 
Washington, California, and New Mexico, and we're not done. We 
will continue to fund meritorious proposals received during the 
first round on a rolling basis, and then we're turning our 
attention to round two applications, armed with more targeted 
objectives, streamlined processes, and valuable experience 
based on the lessons we've learned.
    We know that a lot of people would like these grants to 
flow out more quickly and we share that sense of urgency. We 
understand the urgency of getting funds out to the communities 
as fast as possible, but we're also balancing that imperative 
with the need to ensure, No. 1, that we're funding the most 
sustainable worthy projects that will have the broadest impact 
on the communities they serve; and No. 2, that we minimize the 
risk of waste, fraud, and ensure that the taxpayers are getting 
solid returns on their investment. Indeed, the Government 
Accountability Office has urged that we perhaps slow down.
    I would add that in the first round of funding we had over 
1,800 applications requesting $19 billion in Federal funds, 
from a pot of just over $1 billion that was available. Given 
the large number of complex applications NTIA received, the 
review period was extended to ensure each application received 
full and fair consideration. But despite that extended review 
period, the first wave of announcements was only delayed by 1 
month.
    In less than a year, NTIA has created a sophisticated, 
entirely new grants program and we've only hired 43 additional 
employees. We have new rules and regulations, new oversight and 
organizational framework that we've had to create from the 
ground up. Going forward, we're building on what we've learned.
    We've also developed an exceptionally rigorous review 
process not unlike the review process for scientific grants or 
medical research, where we have independent reviewers from 
established communities or the scientific community helping 
assess and review these grants. Every grant was looked at by 
three independent reviewers, virtually volunteers, totaling 
over 1,000 individuals.
    The most highly qualified applications based on reviewer 
scores were then moved into a due diligence review to assess a 
project's long-term sustainability and impact, and where our 
agency reviewers then examined the veracity of all submitted 
data, projected revenues and expenses to ensure viability. FBI 
background checks were conducted on the key personnel of the 
granting--the requesting organization, to minimize any 
potential for fraud. Then we had to ensure compliance with 
State and Federal regulations.
    Those were just some of the criteria. In fact, some 
projects were very appealing until due diligence revealed that 
the projects had not yet looked into securing the necessary 
local construction or environmental permits, which could have 
taken even years or could have even rendered the project 
impossible.
    We are now completing our multi-step review process for all 
first round applications. We've already sent out 1,400 letters 
to applicants who will not receive funding in the first round, 
so they have been notified, and we will continue to inform 
grant applicants of our funding decisions. In the next few 
weeks, we expect that every applicant will have heard from us, 
either as part of a due diligence query that they're still 
being considered or a letter informing that they will not be 
receiving funding.
    Of course, those applicants denied in round one will be 
allowed to apply in round two. We've already announced the 
funding rules for the second round of funding and we're 
conducting informational workshops throughout the country. 
Grant applications for the second round of funding are due 
March 15.
    In order to enable full and fair review of all applications 
and meet our September 2010 deadline, NTIA is consolidating the 
final two rounds of funding into one and we're making a number 
of changes to sharpen the focus, to truly inform people what 
our priorities are and how they can be more competitive.


                           PREPARED STATEMENT


    We have full confidence in the direction of this grant 
program, and I thank you, Madam Chairman, for your leadership 
in establishing this program as well as for the opportunity to 
testify, and Assistant Secretary Strickling and I are happy to 
answer any questions you may have.
    [The statement follows:]

                 Prepared Statement of Hon. Gary Locke

                              INTRODUCTION

    Chairwoman Mikulski, Ranking Member Shelby, and distinguished 
members of the subcommittee, I am pleased to join you to discuss the 
broadband grant programs funded by the American Recovery and 
Reinvestment Act (Recovery Act). I am also very pleased to be here 
alongside Assistant Secretary Larry Strickling, head of the National 
Telecommunications and Information Administration (NTIA), which 
administers these programs for the Department.
    Thanks in great part to your leadership, Madam Chair, Congress, 
through the Recovery Act, allocated NTIA $4.7 billion to implement two 
initiatives to increase sustainable broadband access--the Broadband 
Technology Opportunities Program (BTOP) and the State Broadband Data 
and Development Program (Broadband Mapping program).
    President Obama has articulated a vision of a nationwide, 21st 
century communications infrastructure. These Recovery Act broadband 
grants are appropriately ambitious--they are designed to increase 
broadband access in unserved and underserved communities across America 
as well as to create jobs and jumpstart economic growth. These grants 
will help lay the groundwork for sustainable economic growth for years 
to come. That goal, more than any other, is the No. 1 priority of the 
Obama administration.
    The over-arching objective we want BTOP to fulfill is facilitating 
``comprehensive communities''--that is, communities with broadband 
capabilities connecting anchor institutions like schools, libraries, 
and government users with networks that also provide the foundation for 
greater household and business access. This can be accomplished by 
communities that: combine the forces of public and private entities to 
propose multi-faceted and collaborative broadband projects to meet 
local needs; leverage funded BTOP projects to provide even more access 
to broadband for residential users and businesses; and leverage the 
power of broadband to increase education, training, innovation, and 
jobs, to benefit the economy, enhance public safety, and improve 
healthcare. This is certainly ambitious, but possible.

                      LONG AND SHORT-TERM BENEFITS

    In the long-term, the Department of Commerce's investments will 
help bridge the digital divide, improve education and healthcare, and 
boost economic development for communities held back by limited or no 
access to broadband--communities that would otherwise be left behind. 
In particular, the investments we are making in infrastructure, 
sustainability and adoption will provide job training to the 
unemployed, help school children get the materials they need to learn, 
allow rural doctors to connect to more advanced medical centers, and--
importantly--allow remotely located businesses to offer their services 
to national and international markets.
    These investments will help preserve America's economic 
competitiveness in the world and will accrue benefits especially to 
unserved and underserved Americans. By enabling our people to 
communicate with each other at broadband speeds, to create new products 
and to invent new ways of doing business, we will help sustain economic 
capacity in communities across America. As Vice President Biden has 
said, ``This is what the Recovery Act is all about--sparking new 
growth, tapping into the ingenuity of the American people and giving 
folks the tools they need to help build a new economy in the 21st 
century.''
    Consistent with the Recovery Act, we are implementing a myriad of 
broadband grant programs. We are in the final stages of awarding 
broadband mapping grants to every State, territory, and the District of 
Columbia. In addition, the Commerce Department expects to fund at least 
$250 million to encourage adoption of broadband services. In some parts 
of the country, broadband is available but is used by less than half of 
local residents. We want to close this gap. In addition, we will award 
at least $200 million to enhance public computer center capacity at 
colleges, public libraries and community centers to make it easier for 
those without computers to receive training and apply for jobs. The 
bulk of funds available, approximately $3.7 billion, will be used to 
fund shovels in the ground for infrastructure projects that will 
provide broadband capabilities for decades.
    According to a report by the National Economic Council, the 
Department of Commerce's investments in the short-term will directly 
help create thousands of jobs building infrastructure. These jobs range 
from the manufacture of fiber optic cable and other high-tech 
components, to the stringing of that fiber from pole-to-pole, to 
trenching, and to the installation of broadband networking hubs. 
Computers will be added to public computing centers in the short-term 
as well, providing users access to the resources they need to thrive in 
today's world. Broadband training will also occur in the near term, 
providing information and tools to help people get back on their feet 
sooner.
    Many of the infrastructure projects we fund will be large 
undertakings in remote parts of the country. For example, Vice 
President Joe Biden announced last month that our first BTOP 
infrastructure grant would be centered in rural Appalachian Georgia. 
The proposal was initially developed by the economic development 
departments of five different counties, along with the North Georgia 
College and State University. It will be supplemented by $192,000 in 
State grant funding. The $33.5 million Federal grant will fund 
deployment of a 260 mile, regional fiber-optic ring throughout the 
North Georgia foothills. It will make broadband more readily available 
to 42,000 households and 9,200 businesses, as well as to 367 hospitals, 
libraries, universities, and other community anchor institutions.
    In implementing the Act, NTIA has had to keep in mind both these 
long and short-term economic objectives. Even those who emphasize the 
near-term job benefits of infrastructure investment, such as the 
Communications Workers of America (CWA), recognize the significant 
multiplying effect that broadband can have on job creation. For 
instance, even as it advocated for near-term job stimulus, CWA 
highlighted projections that suggest the wise expenditure of amounts 
such as those involved in BTOP could ultimately yield significant 
spillover jobs. This is an indication of the long-term growth potential 
of greater broadband access, and it undergirds our ongoing emphasis on 
only funding projects that are economically viable for the long-term.

                            PROGRESS TO DATE

    The Commerce Department has announced 66 Recovery Act broadband 
grants totaling almost $300 million. These awards have funded historic 
broadband projects in nearly every State across the country and include 
51 broadband mapping grants totaling $97 million, and 15 BTOP grants 
worth approximately $200 million.
    We know that participants in the application process want the BTOP 
grants to flow more quickly, and we share that sense of urgency. In the 
next several weeks, we will be announcing additional hundreds of 
millions of dollars in grants. NTIA is focused on ensuring the 
broadband initiative is successful and is fully committed to 
responsibly deploying the funds Congress appropriated by the end-of-
September deadline. NTIA is choosing the most sustainable projects that 
will have the broadest impact on the communities they will serve. We 
are working diligently to ensure taxpayers get solid returns on their 
investment, and are committed to minimizing the risk of waste and 
fraud.

The Mapping Program
    The Recovery Act directs that up to $350 million of BTOP funding be 
used for the development and maintenance of a national broadband 
inventory map. NTIA has made rapid progress awarding these grants. We 
made the first 51 awards over the course of approximately 4 months 
since the closing of the application window. NTIA plans to award the 
remaining five grants in the coming weeks. Our effort here will 
culminate in the creation of the National Broadband Map by February 
2011, which will further 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 policymakers to make more 
data-driven decisions on behalf of their rural constituents.

Reviewing BTOP Applications
    Reviewing 1,800 applications for BTOP funding--while staying true 
to the multiple goals Congress has established--requires a great deal 
of sophistication, which is why NTIA implemented a multi-step review 
process to find the most beneficial and sustainable projects.
    The multi-step process employed in Round One included a pre-
screening of applications to determine eligibility. Then, applications 
received a thorough evaluation by a cadre of independent expert 
reviewers. The most highly qualified applications based on reviewer 
scores then moved into a ``due diligence'' review. This due diligence 
process involves an exceedingly thorough, top-to-bottom evaluation of 
each application. The goal of this phase is to rigorously validate a 
project's long-term sustainability and impact, including:
  --Data verification to validate the required initial and supplemental 
        information;
  --Technical and financial analysis by NTIA staff, with the support of 
        experts;
  --Environmental and historic preservation review;
  --Analysis of State and tribal comments;
  --Analysis of information supplied by existing service providers and 
        other information to verify the unserved or underserved status 
        of applications;
  --Examining financial information for projected revenues and expenses 
        to ensure viability;
  --Cost analysis: in particular, during due diligence, we ensure 
        applicants are not ``gold plating'' by comparing their proposed 
        costs to industry standards, market prices, and other 
        benchmarks;
  --Background checks on key personnel to minimize potential for fraud;
  --Ensuring project complies with other Federal and State regulations; 
        and
  --Adjudication of any waiver requests submitted by an applicant, 
        including waivers of matching (requirement of 20 percent match 
        from private funds), ``Buy American'' (generally preferring 
        that products such as fiber be bought from American sources), 
        and others.
    As stewards of the Federal funds, we are determined to invest every 
dollar of taxpayer money wisely. We need to guard against the very real 
risk--if we were to move along too hastily--of funding projects that 
cannot sustain themselves or that do not warrant generous taxpayer 
support. In its oversight activities, the Government Accountability 
Office (GAO) in fact has cited concerns that NTIA not rush its job. We 
know we need to guard against investments that are not cost-effective 
or that largely duplicate coverage in areas that are well served. This 
requires not only that NTIA personnel move apace, but also 
deliberately.

Overcoming Challenges
    BTOP has attracted extraordinary interest from a wide range of 
applicants across the country. In Round One, demand for Federal grant 
money wildly outstripped supply, nearly seven to one. Given the large 
number of complex applications and the voluminous amount of information 
NTIA has had to review, the review period had to be extended to ensure 
each application full and fair consideration.
    By the end of February 2010, the Recovery Act will be just 1 year 
old. In less than a year, NTIA has created a sophisticated, entirely 
new grants program--including the governing rules and regulations, and 
oversight and organizational framework--from the ground up. NTIA had to 
rapidly increase staffing levels for the creation and proper 
administration of BTOP. To address staffing needs, NTIA recruited and 
trained 43 new employees and utilized staff detailed from other bureaus 
and agencies, brought on board hundreds of contractors, and recruited 
more than 1,000 volunteer independent experts to assist in the first 
stages of the application review process. The NTIA team has established 
sophisticated back-office systems to handle the flow of application 
processing, and issued rules governing the application process and 
grantees. It has run numerous public awareness programs and forums 
around the country. Next month, the anniversary of the act's passage, 
we will be nearing the conclusion of our first round of funding, and 
the second funding round will be well underway.

Status of Applications
    NTIA is completing its multi-step review process for all first 
round applications submitted to BTOP. NTIA has already sent out 
approximately 1,400 letters to applicants who will not receive funding 
in the first round. In the next few weeks, we expect that every 
applicant will have heard from us--either as part of a due diligence 
query or a letter declining funding. Those whose applications were 
denied in Round One, of course, may apply again in Round Two. So far, 
NTIA has made BTOP awards for infrastructure, computer centers, and 
sustainable adoption in Maine, New York, South Dakota, Arizona, 
Massachusetts, Minnesota, Washington, California and New Mexico, and we 
are far from done.
    The best guidance for those who wish to apply in the second round 
is to examine the Notice of Funds Availability (NOFA) for that round 
and study the projects we selected for funding. For example, many of 
our awarded projects successfully partnered with anchor institutions 
and other key stakeholders in extending broadband to unserved and 
underserved areas. To illustrate, NTIA has announced millions of 
dollars in BTOP grants to the following high quality infrastructure 
projects, public computing centers, and sustainable adoption awards:
  --An infrastructure grant totaling $33.3 million to build a 955 mile 
        fiber optic network through 32 counties in Michigan's Lower 
        Peninsula. It will directly connect with 44 schools, libraries, 
        hospitals and other community anchor institutions and will have 
        the ability to serve an area covering as many as 866,000 
        households, 45,800 businesses, and an additional 378 anchor 
        institutions.
  --A public computer center award of $7.5 million to double the number 
        of workstations in 73 public library locations, 43 workforce 
        centers and 72 recreation centers, senior centers and child 
        care centers in low-income and non-English speaking communities 
        throughout the city of Los Angeles. The majority of the 188 
        proposed centers would be located in or within 3 miles of 
        Federal- and State-designated ``Enterprise Zones'' and 35 of 
        the youth and senior centers will be connected to broadband 
        Internet service for the first time.
  --A sustainable adoption grant of $1.5 million to increase broadband 
        adoption and promote computer literacy and Internet use among 
        vulnerable populations, Hispanic and Native American users, 
        small businesses, and entrepreneurs in New Mexico.
    We will continue to fund meritorious proposals received during the 
first funding round on a rolling basis. We will then be turning to the 
Round Two applications armed with more targeted objectives, streamlined 
processes, and valuable experience based on the lessons we have 
learned. These awards create jobs, expand economic opportunities, and 
enhance community Internet availability.

                             LOOKING AHEAD

    At mid-course, building from lessons-learned, we are making 
adjustments to the program. In order to enable full and fair review of 
all applications and meet our September 2010 deadline, we consolidated 
the final two rounds of funding into one. This approach, recommended by 
the Government Accountability Office (GAO), was announced on January 
15, 2010, in the second BTOP Notice of Funds Availability. 
Consolidation of funding rounds, coupled with refining the priorities 
of BTOP and improving the application process, will help expedite the 
grant-making process to the fullest extent possible and ensure that the 
highest-impact projects are funded by the deadline of September 30, 
2010.
    For the second and final round of funding, NTIA is also making a 
number of changes to sharpen the program's funding focus. In 
particular, NTIA is adopting a ``comprehensive communities'' approach 
to award BTOP grants for infrastructure projects that emphasize Middle 
Mile broadband capabilities offering new or substantially upgraded 
connections to community anchor institutions to maximize the benefits 
of BTOP funds. The Department of Commerce will ensure that BTOP is 
committed to extending the power of broadband farther than ever before: 
helping community anchor institutions obtain the broadband connections 
necessary to provide essential and forward-looking services, including 
remote medical care, distance learning, job training, access to e-
government benefits, and more; enabling more people to utilize 
broadband regardless of their ability to afford personal computers and 
broadband service; and helping introduce people to the benefits of 
broadband of which they may not have been aware. The public's response 
to our focus has been very positive.
    NTIA has also received support from prospective applicants on our 
Round Two changes to make the application process more user-friendly. 
NTIA's adjustments to the online application will streamline the intake 
of information and reduce applicant burden. These steps include 
eliminating NTIA's and the Rural Utilities Service's joint application, 
which many applicants found burdensome; increasing the amount of time 
available to applicants to submit due diligence materials; and 
eliminating or altering a number of previously required attachments.
    Looking forward, I am confident that the team will continue to meet 
the challenges it will face between now and September. People often 
criticize the Government for not being nimble. In my view, the NTIA 
team has been as nimble as any private sector enterprise. By the end of 
the fiscal year, as the Recovery Act requires, the grants will have 
reached every State. The NTIA team will have wisely allocated taxpayer 
dollars to high-impact broadband projects around the Nation.

                               CONCLUSION

    I must underscore the importance of NTIA's and the Commerce 
Department's oversight objectives for BTOP. We are committed to 
ensuring that taxpayers' money is spent wisely and efficiently. Since 
the inception of BTOP, NTIA and the Commerce Department have been 
working with our Inspector General to design this program in a manner 
that minimizes the risk of waste, fraud, and abuse. With project 
construction beginning, NTIA will enhance its auditing and monitoring 
responsibilities, including site visits to grantees.
    The Recovery Act does not provide authority or funding for 
administration and oversight of BTOP-funded projects beyond the end of 
fiscal year 2010; however, the Commerce Department and NTIA intend to 
work with Congress this year to ensure sufficient authority and funding 
to administer and monitor the execution of BTOP grant projects and 
carry the program to a successful conclusion.
    I assure you that these Recovery Act funds will be spent wisely on 
projects that provide high-value broadband services to the neediest 
areas. In doing so, we will make broadband more widely available, 
especially to anchor institutions, such as hospitals, schools, and 
libraries. We will continue to ensure that implementation of the 
Recovery Act broadband initiatives is a collaborative and coordinated 
effort with the Agriculture Department and others in the 
administration. We are also committed to making this process as 
transparent and as efficient as possible.
    Thank you again Madam Chair for the opportunity to testify and for 
your leadership in making this program possible. Assistant Secretary 
Strickling and I are happy to answer your questions.

                        BROADBAND FUNDING ISSUES

    Senator Mikulski. Thank you, Mr. Chairman. I'll get right 
to my questions, and we will go by the 5-minute rule to ensure 
that every Senator can ask the questions before the vote 
begins. Then if we have time we'll go to a second round.
    As I go into this, I just want to make clear that, No. 1, 
we inherited boondoggles. We want to prevent this from being 
one. The two mentioned were NPOESS, which we inherited; there 
was the FBI boondoggle, $171 million. That's been straightened 
out. Then both this subcommittee and you inherited the Census 
boondoggle.
    The lax oversight of previous cabinet secretaries will not 
be tolerated now, and the lax oversight of this subcommittee is 
a legacy of the past. We will be tough, we will be fair, and we 
will be firm. But the days of go-go spending of yesterday and 
the previous administration are over.
    I think it's a false choice to say don't do broadband and 
compare it to law enforcement. I was just comparing the 
magnitude. You can't have law enforcement without high-tech 
tools, and I believe that effective protection of our Nation, 
both for our military, our first responders, and our law 
enforcement, depends on access to high-speed Internet, whether 
it's to identify a sexual predator crossing State lines or 
whether it's an infection of swine flu sweeping the Nation and 
public health places can go on alert.
    So laxity of the past and oversight is over.
    Now let's get right to this. There seems to be an inherent 
contradiction between doing due diligence and moving the money 
out with the speed to meet a statutory deadline of September 
10. My question is a very--is a very straightforward one. Given 
the inspector general--the inspector general himself says this, 
``BTOP''--Mr. Strickling, that's your shop--``was given less 
than 18 months, a level of grant activity no Commerce operating 
unit has ever undertaken, to do this job.'' Then it goes on to 
list operational challenges.
    My question to you is why are these funds taking so long to 
reach communities to create jobs and economic growth? Do you 
need to extend the deadline? Do you need to streamline the 
process? Do you need to hire more people? Give us your views?
    Secretary Locke. We don't need to extend the deadlines, 
Madam Chair. Within the next few weeks we will be able to 
announce, we will be announcing, the last grants of round one, 
so that round one grants will have exceeded over $1 billion, 
and we hope to have that all wrapped up by around the end of 
February.
    Again, despite the extension of the review process and the 
application process, we only delayed the first wave 
announcements of round one BTOP grants by only a month. But we 
have learned from our experience and we're making 
consolidations, we're streamlining the process for round two. 
We're sharpening the focus, the criteria, so that people 
understand what we're looking for. And we've separated the 
application process between Agriculture and Department of 
Commerce so that there's no confusion, there's no perhaps 
redundancy in deciding who's going to look at which type of 
grants and avoiding redundancy in review process.
    So those two programs are more clearly defined and that 
will also ensure a more speedy process.

                    STREAMLINE THE BROADBAND PROCESS

    Senator Mikulski. Well, I was stunned by the detail of the 
process. This is not a complaint; it's a comment, and I want to 
get your views on this. I was really frustrated, and also 
hearing from other colleagues, when in the hell is the money 
coming out? I'm getting calls from my Chamber of Commerce. 
We've got this co-op, just bursting with the desire to create 
jobs in the installation of rural broadband and then the 
entrepreneurship either in traditional or new jobs.
    Then I looked at data verification, environmental and 
historic review, background checks, and I thought, my gosh, 
this is as comprehensive as a Federal highway system. We would 
never ask Department of Transportation to do it this fast, et 
cetera.
    So my question is this. Then I found out as we dug into it 
that in some instances it took 200 hours to look at one, 200 
hours. If I had spent 200 hours--it's just a stunning amount of 
time.
    So my question to you, because you've done everything, that 
it's pretty detailed, should this process be streamlined or do 
you feel as part of the due diligence function this is the 
criteria that must be used and we've got to get real about our 
expectations?
    Secretary Locke. I will let Assistant Secretary Strickling 
join in, but I do think that it's important that, given the 
concerns raised by the Inspector General, that we have thorough 
review of applications. When you have such incredible interest 
around the country for a limited pot of money--we had 19,000 
applications--excuse me--1,800 applications, totaling, asking 
for $19 billion out of a pot of only about $1.6 billion.
    So we need to make sure that the most worthy, the most 
dynamic projects, are funded. That's why you just can't rely on 
one reviewer, because you want to make sure that there aren't 
any biases or preferences of one reviewer, so you have multi-
reviews. Just like scientific grants or medical research grants 
given out by various organizations that we have around the 
country, you have that peer review to make sure that there's 
consistency and that one strength or weakness by one reviewer 
is balanced out by the thoughts of someone else.
    Then once we think we have a worthy project, then we have 
to make sure that the project has complied with State 
regulations, local regulations.
    Senator Mikulski. So are you saying we've got to stick to 
this process to do it, to do due diligence?
    Secretary Locke. Well, we're looking--and Larry will talk 
about, Mr. Strickling will talk about some of the streamlining 
that we are incorporating. But if we want to ensure that, for 
instance, we're not giving a grant to a company that's going to 
go bankrupt or does not have financial capability, doesn't have 
the wherewithal to really carry out the project--we don't want 
to announce grants and then disappoint people.
    Senator Mikulski. Well, or add to the cynicism that 
government can't get it right. We do not want to add to the 
cynicism of dysfunction. We do not want a techno-Katrina here.
    Mr. Strickling. If I could put the 200 hours into context--
--
    Senator Mikulski. I'm not complaining about it.

                   BROADBAND INFRASTRUCTURE PROJECTS

    Mr. Strickling. Understood. I think on average what we are 
spending to do our due diligence on infrastructure projects--
these projects, based on what we've funded so far, are $30, 
$40, $50 million projects, and we'll be funding projects even 
larger than that. I think our role is not unlike that of a 
private equity firm or a venture capital firm trying to do due 
diligence to determine, is this the investment in 
infrastructure that we want to make.
    As I've said from the beginning, my absolute mandate here 
is to make sure we don't fund a bad project, because if these 
projects aren't running 5 years from now after the Federal 
dollars are long gone then we haven't done our job. So I do 
believe that when we get to the due diligence phase, the amount 
of time we're spending on these is quite reasonable. A venture 
capital firm would send a due diligence team in for 4 weeks, 5 
weeks, 6 weeks, a 4-man team working full-time, at far more 
than the 200 hours we're spending on average on a project, 
before they make an investment that's not unlike the kind of 
investment we're making in these projects.
    So I think we are absolutely doing the right thing when we 
get to the due diligence phase. What we need to be doing is 
perhaps spending less time on the projects that aren't going to 
be funded, and that's a lesson we learned from round one, and 
we've taken steps in terms of streamlining the independent 
reviewer process, because those folks are really just screening 
these applications to help us find the high quality ones.
    Senator Mikulski. Doesn't that function like a triage 
system, things that look like a dog from the very beginning?
    Mr. Strickling. Yes, yes. That's a very good analogy.
    Senator Mikulski. And see which one moves up----
    Mr. Strickling. So we are able then to identify the good 
projects, and then our team, the NTIA employees augmented by 
our support from Booz Allen, do the deep dive that takes the 
200 hours. I don't want to skimp on that, but I do think--and 
we have taken measures to reduce the number of independent 
reviewers from three to two so that that process will go 
quicker, because again those folks are doing the screening to 
help us identify out of this large pool of applications which 
are the ones that are really top quality, that we ought to take 
time on.
    But as the Secretary mentioned, even when we get into 
looking at those, we will find warts at any point in the 
process that will knock that application out of consideration, 
for example not having done the environmental work and gotten 
the permits they need. So we have to do this work to ensure 
that we're not putting bad projects out there.
    Senator Mikulski. Senator Shelby.

                   BENEFITS OF THE BROADBAND PROGRAM

    Senator Shelby. Thank you, Senator Mikulski.
    It's my understanding that this program was sold, the 
broadband program, as a benefit to the whole country. But in 
reviewing the distribution of barely $300 million in funds, I 
think it can't be described as equitable or proportional. To 
date it's my understanding that two-thirds of the money has 
gone to only six States: Georgia, Maine, Michigan, North 
Carolina, New York, and South Dakota.
    How is NTIA ensuring that all Americans, the whole country, 
can at least get some benefit from this program? And does NTIA 
have a plan that will ensure that grants from all 50 States are 
distributed according to need, merit, and not just concentrate 
funding on whichever State was in the grant line first?
    Mr. Strickling. Yes, Senator. That's a good question. In 
fact, the legislation urges us to make sure that every State 
receives at least one grant. I believe that as long as we get 
good applications from each of the States, we will meet that 
directive by the end of this program in September.
    I think all I can suggest to you in terms of what you've 
seen so far is it's just the beginning and we will see over the 
next couple of weeks a much broader geographical distribution 
of grants, and then that will continue on through round two. We 
are quite cognizant of the need to be fair to each of the 
States in the process and we intend to do that as we work our 
way through both round one and round two.

                     CRITERIA FOR BROADBAND FUNDING

    Senator Shelby. What determines who gets funding? Is it 
need? Is it amount of people served? What's the criteria?
    Mr. Strickling. First and foremost, is it a good project? 
It means that it had----
    Senator Shelby. What does that mean, ``is it a good 
project?'' Could you just explain?
    Mr. Strickling. Well, a good project--we have a whole set 
of criteria laid out in the original funding rules: project 
benefits, project viability, project sustainability. And all 
these projects are scored against those criteria to determine 
which ones go into due diligence.
    Once we're in due diligence, we look at all of these 
projects to find which ones are truly sustainable, which ones 
have qualified management, which ones are going to bring the 
benefits to the community that they state that they do.
    Senator Mikulski. Helping Senator Shelby--I'm not using his 
time--he wants to know, what's the bottom line? Are you looking 
at will this create jobs? In other words, you're looking at 
sustainability, viability, and compliance with other Federal 
regs. But our question is, will in the hell this create jobs 
and do it over the short run and the long haul?
    Isn't that it?
    Senator Shelby. That's a good question.
    Mr. Strickling. Absolutely, job creation is----
    Senator Mikulski. I never thought I'd be a mouthpiece for 
Shelby. But go ahead.
    Mr. Strickling. Understand, we can't put a lot of stock in 
the predictions these applicants make, but we definitely look 
at that. And they will definitely be reporting out each quarter 
on the actual jobs that are created. So that's a factor.
    The number of anchor institutions that will be served is a 
factor we're looking at in round one.
    Senator Shelby. What about population density, density of 
the population? Is that any of the criteria?
    Mr. Strickling. No, but what it would be is the extent to 
which the area is unserved or underserved. We definitely are 
concerned about making sure that these dollars are going into 
areas that truly need the service.
    Senator Shelby. In other words, if a provider is already 
there why do you need to go there, right?
    Mr. Strickling. If the provider's there and providing 
adequate service, the question would be why do you need to go 
there.
    Senator Shelby. What does ``adequate service'' mean?
    Mr. Strickling. Well, I'll give you a perfect example. One 
of the first projects we funded was in Georgia, the North 
Georgia Network. There is an existing provider there who by all 
accounts from the people in this region is not adequately 
serving the communities. Fewer than 40 percent of the people 
who live in the area subscribe to broadband service, which 
meets our criteria for an underserved community. We had issues 
where the college in that community wanted to buy service from 
the incumbent and were told they would have to wait 18 months 
to get it and it would cost four times as much as what it would 
cost if they were in Atlanta. Those are all indicators that we 
have an underserved area and justified making the investment 
there.

                    BROADBAND GRANT IN RURAL GEORGIA

    Senator Shelby. Let me share this with you. You noted, Mr. 
Secretary, you noted in your testimony that Vice President 
Biden announced the first broadband grant in rural Georgia, 
stating that the $33.5 million Federal grant will fund 
deployment of a 260-mile fiber optic ring to provide broadband 
to 42,000 households and 9,200 businesses.
    It's my understanding that the entire area receiving the 
grant that you cited as a poster child is already 90 percent 
served by existing broadband carriers. I don't know this. This 
is what I've been told.
    So if that were true, of the 51,000 households and 
businesses in the grant area that you mentioned in your 
testimony, if that were true, only about 4,500 are not already 
served with broadband. So if you put the numbers to it, 
broadband would be provided at a cost of no less than $9,600 
per new household or business, assuming that every single home 
and business subscribes to your new service. That's a lot of 
money if that were true.
    Mr. Strickling. Senator, that's the project I just talked 
about.
    Senator Shelby. I know that.
    Mr. Strickling. The project is in an underserved area. In 
fact, the company you referred to was invited to participate in 
this project and said no, they wanted no part of it.
    What we saw, we had five county development offices in that 
part of the State say they can't get the service they need to 
attract new businesses into that area, to encourage the 
economic development they need. This is a classic case of an 
underserved area, where the provider who's there is not meeting 
the needs of the folks who live there.
    Senator Shelby. Are those numbers about right, what we're 
talking about, $9,600 per household? That's a lot of money?
    Mr. Strickling. I couldn't verify the amount.
    Senator Shelby. Would you check those records? Would you 
check it out for the record and furnish it?
    Mr. Strickling. Sure, happy to do so.
    [The information follows:]

    Our records do not corroborate the data you were provided 
indicating that 90 percent of households and businesses in the funded 
area are already served by existing broadband providers.
    In this case, and in accordance with our rules, North Georgia 
Network (NGN) sought to establish its eligibility for BTOP funding 
based on low levels of subscription in the area, as demonstrated by a 
market survey conducted a few months prior to the application. 
Incumbent providers responded to the application with comments 
describing their presence in the proposed service area, but those 
comments did not include any substantial subscription figures 
challenging NGN's assertion. Given the absence of any data 
contradicting the results of NGN's market survey, NGN established its 
eligibility for funding.
    Please note, however, that a determination of eligibility is only 
one step in NTIA's analysis of the extent to which a proposed 
application serves the needs of a community, particularly when other 
broadband providers are present. NTIA evaluates the broadband needs of 
the community in the most comprehensive manner possible. This includes 
considering whether existing broadband service is sufficient to meet 
the area's economic development, education, and job creation needs and 
the needs of community anchor institutions.
    As noted in my testimony, NTIA heard from a number of community 
stakeholders in the NGN service territory who indicated that the area's 
existing broadband capabilities are insufficient. Five county 
development offices stated that funding of the NGN project was critical 
to establishing the broadband capabilities necessary to restore 
economic vitality to the region. In addition, NTIA received comments 
from the Chief Information Officer of a local university who had 
approached the incumbent provider, seeking 100 megabit-per-second 
service so that its students could enjoy the type of broadband service 
commonly enjoyed by thousands of college students at larger and more 
urban institutions. The incumbent provider responded that it could not 
guarantee the provision of such service in anything less than 18 
months, and even then the university would be required to lock in to a 
long-term contract at rates four times the cost of the same service in 
the Atlanta metro area. These testimonials demonstrated a community in 
clear need of increased broadband investment, consistent with the goals 
of the Recovery Act.
    Finally, please note that the incumbents themselves can benefit 
from NGN's project. As I testified, NGN plans to deploy a 260-mile 
regional fiber-optic ring to deliver high-speed ``middle mile'' 
broadband service. As a condition of its grant, NGN will maintain an 
open network for other ``last mile'' service providers to build-out 
their own broadband services to homes and businesses. Thus, this award 
can bring direct benefits to incumbent providers in the area by way of 
2,600 open interconnection points and eight co-location sites that NGN 
will maintain for their use.

    Senator Shelby. Okay.
    Thank you, Madam Chair.
    Senator Mikulski. Senator Reed.

                         DISTRIBUTION OF GRANTS

    Senator Reed. Thank you very much, Madam Chairman.
    Senator Shelby mentioned the distribution of these grants. 
One point he made is that the legislation refers to the 
expectation that there is one per State. Just to reconfirm 
that, your expectation is there will be at least one per State; 
is that correct?
    Mr. Strickling. That's our expectation, and in fact we 
invite each of the Governors to comment on all the applications 
received from their State to help us prioritize and indicate 
which they feel are the most worthy projects.
    Senator Reed. Another aspect of the distribution is that 
there are some States that have significant unemployment 
problems and there are some States that don't. Is that a factor 
that you're considering at all? For example, my sense is that 
in some of the Northern Plains States the unemployment rate is 
7 percent or less. In Rhode Island it's 13 percent. In 
California it's more than that. Is there any expectation or any 
factor that that's being considered?
    Mr. Strickling. I can speak to that, Senator. In round two 
we have identified seven high priority factors of what we would 
like to see in projects, and an applicant meeting those seven 
criteria will get the highest priority for review and 
ultimately selection. Whether or not they're serving an 
economically depressed area is one of those seven criteria.
    Senator Reed. Thank you very much, Mr. Secretary.
    I note also that your next round, ``comprehensive 
communities.'' In my State, for example, there is a proposal 
that would unite basically the universities, which would be 
leveraged not only for access to broadband but all the research 
endeavors. It is I think in this context a significant 
improvement to our educational infrastructure and our data 
transmission. So I would appreciate your consideration of that.
    But the other issue I think applies across the board is, 
those projects which have not been favorably reviewed, is there 
an opportunity for the proponent to sit down and be debriefed 
about the proposal so that in a second round or in a future 
round that they have a better idea of what you're looking for?
    Secretary Locke. With the resources that we have and the 
time limitations that we have, we don't have the capability to 
sit down with some 1,400 applicants to give them a debrief. But 
we have sharpened the focus so that there's clearer criteria or 
indicators and factors that will be weighted as we look at 
these second round applications. And we are conducting 
workshops all across the country now so that those, the 1,400 
who have received rejection letters, denial letters, are able 
to attend that, and they can ask some of those questions in 
these informational briefings and understand what the more 
sharpened, focused criteria are for the second round.
    Mr. Strickling. If I could piggyback on that----
    Senator Reed. Yes.
    Mr. Strickling. We are urging all applicants to look at 
what we are funding in round one. We're hearing already from 
some of the people who have been awarded grants that they're 
now being besieged by phone calls from other applicants to try 
to understand what the secret sauce is that they need to have 
in their applications. So that is as good a tool as any to 
understand what makes for a successful application.
    In your case, I would certainly urge the folks that you're 
talking about to take a look at what we've funded, because 
there are some projects that have a strong educational focus 
that have been funded that could serve as models for the folks 
in your State.
    Senator Reed. But as we move through this process, 
particularly if there's additional funding available in the 
future, I presume from what your comments are that you would 
consider a better, more consistent feedback mechanism. Is that 
fair?
    Mr. Strickling. We'd certainly like to. In this case, since 
we have very clear funding priorities for round two, frankly, 
even if we had the resources I don't know how much help it 
would be to sit down with a round one applicant, because what 
they really need to understand is what is it that our focus is 
on for round two.
    Senator Reed. Thank you very much, gentlemen.
    Thank you, Madam Chairman.
    Senator Mikulski. Senator Murkowski.
    Senator Murkowski. Thank you, Madam Chairman.

       BROADBAND INFRASTRUCTURE IN UNSERVED AND UNDERSERVED AREAS

    Mr. Secretary, good morning. Mr. Secretary, I'm pleased 
that you were able to visit my State not too long ago. You have 
spent some time there. You know that in Alaska we're extremely 
rural, extremely big, and in the vast majority of the State we 
have communities that have very limited or certainly in many 
cases no access whatsoever to the high-speed Internet, service 
unavailable, oftentimes prohibitively expensive, and 
unreliable. As we look at how we develop out our economic 
opportunities, we're really counting on our ability to connect 
to the rest of the world.
    I've listened with interest to the discussion from Senator 
Shelby about the underserved and unserved areas and then the 
discussion with Senator Reed about this next round. I'm 
concerned because we have heard that in this second round the 
administration may no longer be requiring that the grants 
specifically go to the underserved or unserved areas, and I 
would like to know whether or not that's just a rumor, whether 
I have any reason to be concerned about that.
    But if you can speak to--I think you mentioned, Mr. 
Strickling, that there are seven criteria. Will there be a 
continued emphasis on ensuring that these areas that are 
underserved or unserved will be addressed? And I guess I want a 
little bit of the same assurance that Senator Shelby was 
seeking, that in areas where we have networks already that 
we're not going to be--we're not going to be building out 
networks there when we still have broad areas of the country 
that are yet unserved.
    Secretary Locke. Well, let me just say that the emphasis on 
unserved and underserved is still a top priority. That is our 
focus.
    Senator Murkowski. And that is continuing in the next 
round?
    Mr. Strickling. And that will continue in round two.
    Senator Murkowski. So when we look at the criteria, I don't 
know whether you have prioritized within your levels of 
criteria, but will that remain a high priority or will it be 
the number of jobs created that is the highest priority? How 
does that shake out?
    Mr. Strickling. We are still focused like a laser beam on 
ensuring that each of these projects are bringing benefits to 
the area that they will be built in. And as the Secretary said, 
we will continue to look to see if these areas are unserved or 
underserved. It's no longer a technical eligibility 
requirement, but instead----
    Senator Murkowski. When you say it's no longer a technical 
eligibility----
    Mr. Strickling. Well, under the law--and we heard from many 
people after the first set of rules was put out--the law does 
not require as a purpose increasing or expanding broadband 
access to anchor institutions, whether or not they are in 
unserved or underserved areas. We received a lot of criticism 
in round one for having even required grants to anchor 
institutions to be only those located in unserved or 
underserved areas.
    So we've removed it as an eligibility requirement, but it 
is still a major focus of ours. In fact, what we think a better 
analysis is the type of analysis that Senator Shelby and I 
discussed, which is to look at the total service area and 
understand the extent to which there's an overbuild of existing 
providers involved and to ensure that we minimize that as much 
as possible, because it does us no good and we don't get 
project benefits if all we're doing is building infrastructure 
on top of an adequate infrastructure that's already in place.
    So it's very much a focus of ours.

           FISHERY FAILURE FOR THE YUKON RIVER CHINOOK SALMON

    Senator Murkowski. I appreciate that assurance.
    Secretary, I'd like to just deviate from broadband here for 
one second to ask a more parochial question. This is your 
declaration of the fishery failure for the Yukon River chinook 
salmon fishery. I wasn't able to be in the State when you made 
that announcement, but I was pleased that you have moved 
forward with that.
    As you've recognized, we've got some communities along the 
Yukon River that are really in peril in terms of being 
economically disadvantaged. In your decision you stated your 
commitment to expedite the delivery of resources should they 
become available. I realize that the budget is not expected to 
be delivered here to us in Congress until next week, but the 
question to you this morning is what is the administration and 
the Department, Department of Commerce, doing to mitigate the 
effects of the fishery failure and whether or not we can expect 
to see funding to mitigate the effects in this upcoming budget, 
if you can just very quickly address that.
    Secretary Locke. We worked with your local officials and 
your State officials in making that disaster declaration. Of 
course, just the last season there was a shutdown of the 
fishery altogether, and the previous year there was a dramatic 
reduction of that fishery. So it was very obvious from the data 
and the science that the fishery stock was in trouble and that 
a disaster declaration was warranted.
    Disaster declaration in and of itself does not follow or 
bring with it Federal dollars. But we then have the resources 
of other Federal agencies within the Department of Commerce, 
such as economic development assistance grants, if applied for 
by the State and the communities, to help in mitigation. Of 
course, the declaration really enables Members of Congress to 
push for specific funding to meet the particular needs of the 
affected communities. Really, that declaration makes it much 
more possible to line up Congressional support using that 
declaration as a foundation for additional funds.
    Senator Murkowski. Well, we appreciate the recognition of 
the significance of this, the economic devastation, and we'll 
look forward to working with you on it. Thank you.
    Thank you, Madam Chair.
    Senator Mikulski. Senator Pryor.

                          PEER REVIEW PROCESS

    Senator Pryor. Thank you, Madam Chair.
    Secretary Locke, good to see you again. Thank you for your 
trip to Arkansas a few months ago. It was very well received.
    Secretary Strickling, if I may, let me start with you 
today. I know that so far no Arkansas application has been--I 
guess application has been granted in this first round. One of 
the reasons that have been given in the rejection letters is a 
low peer review score. Can you talk a little bit more about the 
peer review process and how that works?
    Mr. Strickling. Yes, Senator. The peer review was the 
method we used to screen the 1,800 applications that came in to 
us to identify the creme de la creme that we wanted to then put 
into the due diligence process that we've also discussed here 
this morning. What we had was each application was reviewed by 
three independent experts. These were folks that----
    Senator Pryor. Are they volunteers?
    Mr. Strickling. In round one these were folks who, yes, 
donated their time, did their patriotic duty and helped serve 
the country. But they were people who--in some cases we had a 
former chair of a State public utility commission. We had 
corporate executives, retired corporate executives who have 
built these kinds of networks.
    So we had over 1,400 people or approximately 1,400 people 
volunteer. We vetted those folks to determine if they had 
credentials that allowed us to put them into the process. We 
also had all of them sign conflict of interest forms to make 
sure that they weren't also working for applicants as part of 
the process. That knocked out over 300 of the people who had 
expressed interest in participating in the program.
    So from the group that was left, we had each application 
reviewed by three people. They were to score it according to 
the criteria laid out in the funding rules in round one. Then 
we took those scores and averaged them, and those above a 
certain threshold moved into due diligence, where--that's where 
the real heavy work happens, where we go back and scrub the 
application from top to bottom to make funding decisions.
    Senator Pryor. Were you satisfied with the peer review 
process?
    Mr. Strickling. Relatively we were. I think in the 
timeframes that we have--it would have been nice if it could 
have happened faster. One of the things we encountered, with 
human nature being what it is, is we got two scores in on 
projects very quickly and it became an effort to get the third 
score in. As soon as we saw that happening, we took corrective 
measures of starting to call the third reviewer every day to 
ask when the score would be in, and if the reviewer didn't 
respond promptly we actually assigned another reviewer to get 
the third score in.
    So we ran into the kind of issues that just human nature 
forces you to encounter as part of the process. But overall, in 
terms of the quality of the work that was done, yes, we were 
quite satisfied with it.

                        APPLICATION REQUIREMENTS

    Senator Pryor. Did the applicants know what the criteria 
would be before they filled out the application?
    Mr. Strickling. Absolutely. It was laid out in the NOFA 
from last July.
    Senator Pryor. As I understand it--and I think Senator 
Murkowski, if I'm not mistaken, touched on this--in the second 
round are you moving away from the unserved and underserved 
requirement?
    Mr. Strickling. Only as an eligibility requirement. It will 
be just as important a piece of our analysis as it has been in 
round one.
    Senator Pryor. So in other words, you'll still consider 
unserved and underserved?
    Mr. Strickling. Oh, absolutely, absolutely.

                          POST-GRANT AUDITING

    Senator Pryor. Secretary Locke, I was going to ask you if--
I'm sorry. Secretary Strickling again, I had another question 
for you. I'm sorry. We talked before--maybe it was you, 
Secretary Locke.
    We talked before about post-grant auditing. Did we talk 
about that, about making sure that after all this was done we 
look at what we did and figured out if we did the right thing 
and handled it the right way. Is there post-grant auditing 
here? Maybe this is better for Mr. Strickling. I'm not quite 
sure.
    Secretary Locke. Well, there is post-grant auditing, and 
one of the issues that we face is that the Department has been 
provided very little funding, and we are hoping that the budget 
announcement for 2011 will provide us some funding to conduct 
these audits and to ensure that the applicants are doing as 
they said and that everything is being done properly. So we 
need to focus on that auditing function.

                         BROADBAND GRANT AWARDS

    But our immediate task right now is making sure that we 
have thorough diligence, due diligence in the review, and that 
we get the first round out. I want to assure you that the first 
round for the broadband grants of about $1 billion will be 
completed by the end of February and we will have the full 
amount of BTOP grants awarded before the end of September 2010. 
That is our assurance to you.
    We're streamlining the process. We're learning from the 
lessons from the first round, including not using three 
reviewers, going down to two. But we've had--we've only added 
43 people to the Department to handle this massive undertaking. 
And while the Government Accountability Office recommended we 
should slow down, we're moving aggressively forward, and we're 
going to do this within the timetables that you have given us 
and I'm confident that NTIA will succeed.

                     DIGITAL TELEVISION CONVERSION

    I want to mention one thing. The Congress gave us some $650 
million last year to focus on the digital television conversion 
and that was a boondoggle that we inherited. But within a few 
weeks with folks on board, we were able to remove and eliminate 
the backlog for all converter box coupons and in fact by the 
end of the project we had some 99 percent of all households in 
America either capable of receiving, accepting the switch, 
accommodating the switch, either because they got cable, they 
got satellite, or they used a converter box that we provided.
    I want to say, NTIA did it in a very cost effective manner. 
In fact, NTIA has already returned $128 million to the Treasury 
and are planning to return approximately $370 million more from 
unused funds in the coupon program.
    These unused funds that are returning to the Treasury are 
from two programs within NTIA. Funds of nearly $239 million 
remain from the DTV coupon related program in the American 
Recovery and Reinvestment Act of 2009, (ARRA) Public Law 111-5, 
and funds of $258 million remain from the Digital Transition 
and Public Safety Fund's (DTTPSF) coupon program authorized in 
the Deficit Reduction Act of 2005, Public Law 109-171.
    Of the remaining ARRA funds, $128 million has been 
rescinded in the Defense Appropriation Act, Public Law 111-118, 
and $111 million is proposed for rescission in the Jobs for 
Main Street Act, 2010.
    So I have every confidence that any era of boondoggles 
throughout the Department of Commerce--and especially given the 
great management that we have at NTIA, we're going to do this 
project, we're going to succeed, we're going to meet the 
timetables, with due diligence, avoiding waste, fraud, and 
abuse, and we're going to have great projects and we're going 
to meet all the requirements.
    Senator Pryor. Thank you, Mr. Secretary. Thank you both.
    Senator Mikulski. We're actually going to be on time with 
this hearing, which is--Congress needs to take its own 
admonition for speed sometimes.
    First of all, Mr. Secretary, we want to thank you for your 
forthrightness and, Mr. Strickling, yours as well. Mr. Locke, 
we know that part of your leadership signature is what I call 
the M and Ms, management and metrics. You're a management guy 
and a metrics guy. So we believe now we've gotten a good 
picture from you and from Mr. Strickling, and I think what we 
can see as members, it was a tremendous magnitude. There were 
so many forces that converged on NTIA.
    The magnitude of the pent-up demand for rural broadband is 
stunning. Second, you had no previous infrastructure to do 
this. It wasn't like shovel-ready projects. These were not 
shovel-ready. You had a variety of legal compliances, from 
historical preservation to environment. You had to--so part of 
your due diligence was to see that.
    The very staff that you had to get could not be permanent 
staff because after this year there is no guarantee that there 
will ever be money for rural broadband again. So you couldn't 
build up a talented civil service or whatever. So you needed 
very sophisticated staff on a temp basis. Am I correct in that?
    Mr. Strickling. Yes, and they are very talented, I will 
add.
    Senator Mikulski. Yes, we want to acknowledge it because of 
this.
    Then we wanted speed. So I think what we need to do is 
right-size our expectations.
    Second, I think this is also an admonition, which is: surge 
funds, which are what the recovery funds are, are terrific. It 
got the ball rolling. But if we're going to keep the ball 
rolling on economic growth and the jobs of the future--and jobs 
in rural communities--every one of us--I've got a robust 
corridor in the Baltimore-Washington corridor, but I've got 
mountain counties and the Eastern Shore, that this is the way 
to bring the new economy to our community.
    So I'm going to thank you for this. I think we've got a 
good picture. We see that you are listening to the inspector 
general and also to the GAO. So we want to thank you for what 
you've done. I think we've got a better idea about the time and 
the collision course between speed and due diligence. I think 
the taxpayers prefer us to err on the side of due diligence 
that if we had to tell the story and we had to go back to those 
thousands of applicants, the taxpayer right now would say: Get 
it right. I believe that you're making every effort to do so. 
And if you need more elasticity in the 2010--we don't want to 
drag it out.
    But I just say, I think rural broadband is really one of 
the crucial programs the President advocates. I would hope that 
from the lessons learned from what we're doing now we could see 
if there is a need for, not big new Government spending, but 
targeted Government spending that creates private sector jobs.

                     ADDITIONAL COMMITTEE QUESTIONS

    At this time I would like to ask the subcommittee members 
to please submit any additional questions they have for the 
record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

                 Questions Submitted to Hon. Gary Locke
            Questions Submitted by Senator Patrick J. Leahy

                           NTIA BTOP PROGRAM

    Question. Last winter, as Congress considered the American Recovery 
and Reinvestment Act, I was a strong proponent of including funding in 
the package to bridge the digital divide. Too many Americans, 
especially those living in rural areas, have inadequate access to high-
speed Internet, and the landmark $7.2 billion investment in cyber 
infrastructure promises to bring more Americans online and create 
thousands of jobs through construction and thousands more jobs through 
new broadband-enabled economic opportunities. I believe that this 
investment could become one of the great long-term benefits of the 
American Recovery and Reinvestment Act.
    In my home State of Vermont, between 10- and 20-percent of Vermont 
households and businesses have no access to broadband. Of those that do 
have high-speed access, many pay exorbitantly higher access fees than 
those living in urban areas.
    Vermont is currently undertaking an e-state initiative--a 3-year-
old program that aims to ensure every Vermonter has access to high-
speed-Internet and cell-phone coverage. Limited funding from both the 
State and Federal Governments has slowed the success of this 
initiative--something I hoped may be resolved through the Rural 
Utilities Services' Broadband Improvement Program and the Department of 
Commerce's Broadband Technology Opportunities Program.
    During round one, several Vermont organizations--including JM 
Solutions, the Southern Vermont Health and Recreation Center, the 
Northern Community Development Corporation, the Vermont Department of 
Libraries, TelJet Longhaul, East Central Vermont Fiber, the Health Care 
and Rehab Services of Southeastern Vermont, the Vermont Telephone 
Company and the Vermont Council on Rural Development--submitted 
applications to RUS and NTIA for funding. To date, no Vermont 
applications have been funded and little if any feedback has been given 
to the applicants. This is especially frustrating given NTIA's goal of 
closing round two in less than 2 months.
    While I understand the tremendous time burden placed upon RUS and 
NTIA, I am concerned that both programs have taken too long to deploy 
funds into the economy--leaving a tremendous void in our economic-
recovery efforts. I am also concerned that the second round Notice of 
Funds Availability published by the NTIA may leave millions of 
Americans unconnected at the expense of focusing on middle-mile 
efforts.
    The American Recovery and Reinvestment Act specifically requires 
NTIA to grant at least one award to each State. Does the NTIA plan to 
meet that requirement in round one?
    Answer. The Recovery Act directs NTIA, to the extent practical, to 
award at least one grant in each State by September 30, 2010. As of 
March 15, 2010, NTIA has announced 59 BTOP awards for middle mile 
infrastructure, public computer centers, and sustainable broadband 
adoption projects impacting 34 States and territories. In addition, 
NTIA has awarded 54 Broadband Mapping grants to every State as well as 
nearly all territories. While more BTOP grants will be forthcoming in 
round one, not all 56 States and territories will receive a BTOP 
Infrastructure, Public Computer Center, or Sustainable Broadband 
Adoption grant in this round. The adherence to this provision of the 
Recovery Act will continue to be one of the considerations I take into 
account as I make funding decisions in round two.
    Question. I have heard from several constituents concerned that 
they have heard little feedback on their round one applications. Will 
NTIA provide unsuccessful round-one applicants with constructive 
feedback in time to incorporate useful application edits before closing 
the round-two NOFA?
    Answer. Due to our legal obligation to treat all applicants fairly, 
the high level of interest in BTOP, and the statutory deadline to make 
all BTOP awards by September 30, 2010, NTIA was unable to provide 
detailed individualized feedback to those first-round applicants who 
were not selected for an award. But given the more specific focus of 
round two priorities, providing feedback on round one applications 
would have not been particularly helpful. Instead, we urged applicants 
for round two to:
  --Consult the January 22, 2010 Notice of Funds Availability (NOFAs);
  --Read the round two Grant Guidance;
  --Examine answers to frequently asked questions;
  --Watch recorded public workshops;
  --Study maps depicting service areas already funded with Recovery Act 
        broadband funds; and
  --Study round one award summaries.
    All of these materials are available at www.broadbandusa.gov. 
Focusing on this material and incorporating it into round two 
applications was the best advice for applicants to enable them to put 
together a strong round two proposal.
    Question. The American Recovery and Reinvestment Act allocates a 
majority of the $7.2 billion broadband investment to the NTIA. The 
NTIA's decision to focus on mid-mile infrastructure in round two means 
that a majority of the Recovery Act funding will not, in the immediate 
future, connect more end-users to the system. What will the NTIA do to 
ensure more last-mile build outs from the middle-mile focus?
    Answer. For the second funding round, NTIA has adopted a 
``comprehensive communities'' approach as its top priority in awarding 
infrastructure grants, focusing on middle mile broadband projects that 
connect key community anchor institutions such as libraries, hospitals, 
community colleges, universities, and public safety institutions. 
Comprehensive Community Infrastructure (CCI) projects maximize the 
benefits of BTOP by leveraging resources, promoting sustainable 
community growth, and ultimately laying the foundation for the 
expansion of last mile broadband service to households and businesses. 
In fact, NTIA seeks CCI projects that include a last mile component in 
unserved or underserved areas, or commitments from one or more last 
mile providers to serve the community. Middle mile applications that 
incorporate a last mile component receive priority over those that do 
not. The nondiscrimination and interconnection requirements of BTOP 
grants will facilitate the provision of enhanced broadband service to 
households and businesses by these other last mile broadband providers. 
Once middle mile facilities are built and made available to providers 
serving homes and businesses, the costs of providing last mile services 
to users will be reduced. For these reasons, NTIA believes that its 
investments in BTOP will result in significant and substantial benefits 
for end-users throughout the United States.
    Question. In my home State of Vermont, thousands of people remain 
unserved by broadband carriers. I understand several successful round 
one proposals have significant overlap with existing carriers--
dedicating valuable resources to overbuilds. What percentage of the 
NTIA's funding has gone to overbuild proposals?
    Answer. BTOP infrastructure projects must interconnect with 
existing facilities in order to provide broadband to the service area, 
and thus some level of overlap is expected in almost every case. 
Therefore, our goal is to fund projects that provide broadband services 
in areas with demonstrated need. The Recovery Act directed NTIA to 
address the broadband needs of both unserved and underserved areas of 
the Nation, among other objectives. NTIA defined underserved to include 
areas where broadband service may exist, but which exhibit low levels 
of adoption, speed, or availability. Thus, the mere presence of an 
existing service provider in an area does not mean that there is 
adequate service available and does not preclude NTIA's consideration 
of a project that will bring substantial benefits to the area. NTIA 
undertakes extensive review of information presented by the applicant, 
community anchor institutions, States and tribal entities, existing 
service providers, and other sources to ensure that its projects will 
have a substantial impact on improving broadband access and adoption. 
This includes considering whether existing broadband service is 
sufficient to meet the area's economic development, education, and job 
creation needs. NTIA takes into consideration, among other factors, 
whether anchor institutions in a proposed funded service area have 
access to broadband services at the speeds, prices, and quality they 
need to fulfill their missions for the community, or whether such 
institutions have been unsuccessful in obtaining the services they need 
within a reasonable timeframe. It is also important to reiterate that 
the middle mile projects supported by NTIA will operate on an open and 
nondiscriminatory basis that allow all third-party broadband providers 
to benefit, including last mile providers that can use our projects to 
build-out their own broadband services to homes and businesses.
    Question. Of the NTIA round one grants awarded to date, how many 
unserved customers (households, businesses, anchor institutions) do you 
estimate will receive service as a result? Similarly, how many 
customers will receive redundant services (similar access speeds)?
    Answer. As explained above, NTIA does not fund projects in areas 
that are adequately served by existing providers. The open and 
nondiscriminatory middle mile projects funded by NTIA will directly 
connect key community anchor institutions, such as schools, hospitals, 
and public safety entities, in underserved areas of the United States, 
and will enable other broadband providers to expand and enhance their 
services to homes, businesses, and anchor institutions. In this way, 
NTIA supports projects that provide benefits to the entire community in 
the most comprehensive manner possible. Round one BTOP grant recipients 
have estimated that their projects will install or upgrade 
approximately 20,000 miles of wired and wireless broadband networks to 
directly connect 5,000 community anchor institutions, and enable last 
mile providers to make broadband more readily accessible to a combined 
area with more than 10 million households and 1 million businesses. 
NTIA will continue to monitor the progress of recipients in achieving 
the outcomes they have estimated, and we expect round two recipients to 
greatly increase the number of homes, businesses, and community anchor 
institutions that benefit from BTOP awards.
                                 ______
                                 
           Question Submitted to Hon. Lawrence E. Strickling
           Question Submitted by Senator Frank R. Lautenberg

                           BROADBAND ADOPTION

    Question. While broadband has been deployed widely for Americans, 
the adoption rate still remains relatively low. In the second round of 
broadband stimulus grants, you have announced that you may only 
allocate $150 million of approximately $2.6 billion in second-round 
funding for the purpose of increasing broadband adoption by end-user 
customers. If we want to increase the rate of broadband adoption, 
shouldn't more of the stimulus funds be allocated toward ensuring that 
those who have access to broadband actually have the tools to use it?
    Answer. I wholeheartedly agree with you that increasing broadband 
adoption should remain a top national priority. The Broadband 
Technology Opportunities Program (BTOP) provides grants to support the 
deployment of broadband infrastructure, enhance and expand public 
computer centers, encourage sustainable adoption of broadband service, 
and develop and maintain a nationwide public map of broadband service 
capability and availability. The Recovery Act instructed that NTIA 
shall award not less than $250 million in grants for innovative 
projects to encourage sustainable adoption of broadband service. The 
act also instructed NTIA to award grants for projects that, among other 
priorities, provide broadband service to consumers in unserved and 
underserved areas of the United States; provide broadband education, 
awareness, training, access, equipment, and support to community anchor 
institutions and vulnerable populations; and improve access to, and use 
of, broadband service by public safety agencies. NTIA takes each of 
these priorities very seriously and seeks to fulfill all of the 
objectives established by Congress in the Recovery Act as efficiently 
and effectively as possible.
    As you correctly note, the $250 million for Sustainable Broadband 
Adoption projects is a floor rather than a ceiling, and as such, NTIA 
will continue to evaluate the quality of applications it receives to 
consider whether to award more than the Recovery Act's allotted minimum 
amount in this category.
    However, as indicated in the January 15, 2010 Notice of Funds 
Availability, NTIA is adopting a ``comprehensive communities'' approach 
as its top priority, focusing on middle mile broadband projects that 
connect key community anchor institutions--such as libraries, 
hospitals, community colleges, universities, and public safety 
institutions. Comprehensive Community Infrastructure projects maximize 
the benefits of BTOP by leveraging resources, promoting sustainable 
community growth, and ultimately laying the foundation for reasonably 
priced broadband service to consumers and businesses.

                         CONCLUSION OF HEARING

    Senator Mikulski. So thank you. Thank you for the 
management, thank you for the metrics, and thank you for the 
efforts that are being made.
    This hearing is recessed and we will reconvene subject to 
the call of the Chair.
    [Whereupon, at 10:31 a.m., Thursday, January 28, the 
hearing was concluded, and the subcommittee was recessed, to 
reconvene subject to the call of the Chair.]

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