[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW RURAL BROADBAND PROGRAMS FUNDED BY THE AMERICAN
RECOVERY AND REINVESTMENT ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RURAL DEVELOPMENT, BIOTECHNOLOGY, SPECIALTY CROPS,
AND FOREIGN AGRICULTURE
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 19, 2009
__________
Serial No. 111-37
Printed for the use of the Committee on Agriculture
agriculture.house.gov
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COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, FRANK D. LUCAS, Oklahoma, Ranking
Vice Chairman Minority Member
MIKE McINTYRE, North Carolina BOB GOODLATTE, Virginia
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California TIMOTHY V. JOHNSON, Illinois
DENNIS A. CARDOZA, California SAM GRAVES, Missouri
DAVID SCOTT, Georgia MIKE ROGERS, Alabama
JIM MARSHALL, Georgia STEVE KING, Iowa
STEPHANIE HERSETH SANDLIN, South RANDY NEUGEBAUER, Texas
Dakota K. MICHAEL CONAWAY, Texas
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
JIM COSTA, California JEAN SCHMIDT, Ohio
BRAD ELLSWORTH, Indiana ADRIAN SMITH, Nebraska
TIMOTHY J. WALZ, Minnesota ROBERT E. LATTA, Ohio
STEVE KAGEN, Wisconsin DAVID P. ROE, Tennessee
KURT SCHRADER, Oregon BLAINE LUETKEMEYER, Missouri
DEBORAH L. HALVORSON, Illinois GLENN THOMPSON, Pennsylvania
KATHLEEN A. DAHLKEMPER, BILL CASSIDY, Louisiana
Pennsylvania CYNTHIA M. LUMMIS, Wyoming
ERIC J.J. MASSA, New York
BOBBY BRIGHT, Alabama
BETSY MARKEY, Colorado
FRANK KRATOVIL, Jr., Maryland
MARK H. SCHAUER, Michigan
LARRY KISSELL, North Carolina
JOHN A. BOCCIERI, Ohio
SCOTT MURPHY, New York
EARL POMEROY, North Dakota
TRAVIS W. CHILDERS, Mississippi
WALT MINNICK, Idaho
______
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
Nicole Scott, Minority Staff Director
______
Subcommittee on Rural Development, Biotechnology, Specialty Crops, and
Foreign Agriculture
MIKE McINTYRE, North Carolina, Chairman
BOBBY BRIGHT, Alabama K. MICHAEL CONAWAY, Texas, Ranking
JIM MARSHALL, Georgia Minority Member
HENRY CUELLAR, Texas DAVID P. ROE, Tennessee
LARRY KISSELL, North Carolina GLENN THOMPSON, Pennsylvania
WALT MINNICK, Idaho BILL CASSIDY, Louisiana
Aleta Botts, Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 4
Prepared statement........................................... 6
McIntyre, Hon. Mike, a Representative in Congress from North
Carolina, opening statement.................................... 1
Prepared statement........................................... 3
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, prepared statement.................................. 7
Witnesses
Adelstein, Hon. Jonathan, Administrator, Rural Utilities Service,
U.S. Department of Agriculture, Washington, D.C................ 8
Prepared statement........................................... 10
Strickling, Hon. Lawrence E., Assistant Secretary for
Communications and Information, National Telecommunications and
Information Administration, U.S. Department of Commerce,
Washington, D.C................................................ 13
Prepared statement........................................... 14
Submitted Material
Submitted questions.............................................. 31
Wilson, Delbert, General Manager, Hill Country Telephone
Cooperative; on behalf of National Telecommunications
Cooperative Association, submitted statement................... 33
HEARING TO REVIEW RURAL BROADBAND PROGRAMS FUNDED BY THE AMERICAN
RECOVERY AND REINVESTMENT ACT
----------
THURSDAY, NOVEMBER 19, 2009
House of Representatives,
Subcommittee on Rural Development, Biotechnology,
Specialty Crops, and Foreign Agriculture,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 11:04 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Mike
McIntyre [Chairman of the Subcommittee] presiding.
Members present: Representatives McIntyre, Bright, Cuellar,
Kissell, Minnick, Conaway, Roe, and Lummis.
Staff present: Aleta Botts, Claiborn Crain, Tony Jackson,
Tyler Jameson, John Konya, James Ryder, April Slayton, Patricia
Barr, Mike Dunlap, Jamie Mitchell, and Sangina Wright.
OPENING STATEMENT OF HON. MIKE McINTYRE, A REPRESENTATIVE IN
CONGRESS FROM NORTH CAROLINA
The Chairman. The Subcommittee on Rural Development,
Biotechnology, Specialty Crops, and Foreign Agriculture to
review rural broadband programs will now come to order. Good
morning. Welcome to this hearing today to review rural
broadband programs funded by the American Recovery and
Reinvestment Act. I am Mike McIntyre, Chairman of the
Subcommittee and I want to welcome all of you here today on
business and those who may be visiting as well. I especially
want to thank our witnesses who will testify before us today
whom we just greeted up here at the front as you may have seen.
We especially appreciate your time and effort in being here.
This is the second hearing that this Subcommittee has held
in the past 4 months on rural broadband deployment, indicating
that there is a great level of interest and concern that our
Subcommittee has with the implementation of this program. The
funding provided in the Recovery Act has the potential to set
the stage for many years of broadband deployment, and it can
help, if done the right way and if done soon enough, in
unserved and underserved rural areas.
Alternatively, that funding could go toward areas with
existing levels of adequate service and then the digital divide
between areas with access and without access would only
continue to grow. I know that members of this panel want to be
able to look back on the Recovery Act spending and see that
broadband access became a reality in those rural communities
that currently do not have that benefit and that these results
will be directly tied to the work of the broadband programs
that we are discussing today.
Without a doubt it is critical, it is essential that the
Federal Government get this right. Certainly the effect on
individuals left out of the digital loop is significant. By
some estimates almost 80 percent of Fortune 500 companies now
require online job applications. Most software for personal
computers receive updates via online communication. Tax
preparation software communicates online with parent company
files to ensure that users have the most up-to-date
information. Banks offer better deals to customers who go
paperless.
All of these are examples to show that access to broadband
goes much beyond just getting a better bargain on a shopping
deal, trying to compare prices, as important as we all know
that is in today's economy and with Christmas on the horizon.
All of this is in addition to the basic family value factors
such as helping your children do their homework in this age of
technology, as they are more accustomed to using computers in
the classroom and computers in the library, and for those who
can, computers at home.
This speaks to the very ability of rural citizens to
participate at a basic level in the broader economy, and like I
have mentioned before, in months past, when President Clinton
came to rural southeastern North Carolina, the district I
represent, back in the year of 2000, it was one of three places
in America where he said that we should be bridging the digital
divide. I think now almost a decade later it is time that that
dream is fulfilled.
And I know that it was exciting then and even more so now
that a farmer could compare bargains and opportunities for
shopping not just across the street or across town, but,
literally, across the country with broadband access and how
much more that means to tele-health, tele-medicine, when we
talk about healthcare reform. This is the real way to put
people, at a local level, in touch with the very finest in
medical research as is happening in places like Faison, North
Carolina, in Duplin County in our district where Vice President
Biden and Secretary of Agriculture, Tom Vilsack, visited back
in the summer to highlight Goshen Medical Center in its tele-
medicine efforts connecting it to East Carolina University
School of Medicine.
The debate on universal access has assumed that the
benefits to widespread deployment accrue only to the
individual, but that is simply not the case. The companies who
cannot communicate via online connection with their consumers
will not be able to serve those consumers' needs, and will have
to rely on less-efficient means of communications. Businesses
in rural areas that have inadequate broadband speeds will be
unable to participate in the online marketplace and be unable
to build the jobs in rural areas that are most critical.
I join many of my colleagues in expressing concerns over
the first funding notice released by the Rural Utilities
Service, the National Telecommunications and Information
Administration. From a definition of remote that simply was
unworkable to a situation whereby rural applications may be
disadvantaged in receipt of grant funds when compared to non-
rural applications, numerous issues have arisen from the first
funding notice.
However, I know that these two agencies are working
diligently to make these programs work and are attempting to
make changes in the program to address many of these concerns
raised. We look forward to hearing about that effort today.
As I said back in July, the funding provided in the
stimulus holds enormous potential to reduce the digital divide.
Yet, we know that this funding will not be sufficient to reach
every rural, unserved area, particularly if a large proportion
of those funds go to increasing speeds in already served areas,
or goes to provide service for providers who are already
present. With limited funds, we must prioritize. If our goal is
universal access to broadband, the programs we construct must
aim for that goal.
I look forward to hearing from both agencies on their plans
for these programs and appreciate their time and interest. I
would encourage the witnesses to use the 5 minutes provided for
their statements to highlight the most important points in
their testimony. Please do not read your testimony unless you
can read all of it within 5 minutes.
Pursuant to the Committee rules, testimony by witnesses,
along with questions and answers by Members or witnesses, will
be stopped at 5 minutes. Your complete written testimony, be
assured, will be allowed in its entirety in the record. So
please know that we will be happy to receive the full
statement. The same goes for Members.
[The prepared statement of Mr. McIntyre follows:]
Prepared Statement of Hon. Mike McIntyre, a Representative in Congress
from North Carolina
Good morning, and welcome to today's hearing to review rural
broadband programs funded by the American Recovery and Reinvestment
Act. I want to thank all of you for being here as we examine this
important topic, and I want to especially thank our witnesses who will
be testifying before us today.
This is the second hearing this Subcommittee has held in the past 4
months on rural broadband deployment, indicating the level of interest
and concern that our Subcommittee panel has with regard to programs
with incentives for this deployment. Quite simply, the funding provided
in the Recovery Act has the potential to set the stage for many years
of broadband access in rural areas. Alternatively, that funding could
go toward areas with existing levels of adequate service, and the
digital divide between areas with access and without access would only
continue to grow. I know that the Members of this panel want to be able
to look back on the Recovery Act spending and see broadband access
where it was not prior to this funding and see rural communities
benefiting in ways they could not before the deployment of the
infrastructure.
Without a doubt, it is essential that the Federal Government get
this right. Certainly the effect on individuals left out of the digital
loop is significant. By some estimates, almost 80% of Fortune 500
companies require online job applications. Most software for personal
computers receive updates via online communication. Tax preparation
software communicates online with parent company files to ensure that
users have the most up-to-date information. Banks offer better deals to
customers who go paperless. All of these examples show that access to
broadband goes much beyond doing your Christmas shopping online or
helping your children with their homework. They speak to the very
ability of rural citizens to participate at a basic level in the
broader economy.
Additionally, too often the debate on universal access has assumed
that the benefits of widespread deployment accrue only to the
individual. That is simply not the case. Companies who cannot
communicate via online connections with their consumers will not be
able to serve those consumers' needs and will have to rely on less
efficient means of communications. Businesses in rural areas that have
inadequate broadband speeds will be unable to participate in the online
marketplace and be able to build the jobs in rural areas that are most
critical.
I joined many of my colleagues in expressing concerns over the
first funding notice released by the Rural Utilities Service and the
National Telecommunications and Information Administration. From a
definition of remote that simply was unworkable to a situation whereby
rural applications may be disadvantaged in receipt of grant funds when
compared to non-rural applications, numerous issues have arisen from
the first funding notice. However, I know that the two agencies are
working diligently to make these programs work and are attempting to
make changes in the program to address many of the concerns raised.
As I said in July, the funding provided in the stimulus holds
enormous potential to reduce the digital divide and yet, we know that
this funding will not be sufficient to reach every rural, unserved
area, particularly if a large proportion of those funds go to
increasing speeds in already served areas or goes to provide service
where providers are already present. With limited funds, we must
prioritize and if our goal is universal access to broadband, the
programs we construct must aim for that goal. I look forward to hearing
from both agencies on their plans for these programs.
Conclusion
I would encourage witnesses to use the 5 minutes provided for their
statements to highlight the most important points in their testimony.
Do not read your testimony unless you can complete it within the
allotted 5 minutes or can read the highlights within the 5 minutes.
Pursuant to Committee rules, testimony by witnesses along with
questions and answers by Members of the witnesses will be stopped at 5
minutes. Your complete written testimony will be submitted in its
entirety in the record.
At this time, I would like to recognize the Ranking Member of the
Subcommittee, Rep. Mike Conaway, for any opening comments that he may
have.
The Chairman. At this time I would like to recognize the
Ranking Member of the Subcommittee, Representative Mike
Conaway, for any opening comments that he may have. Mr.
Conaway.
OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS
Mr. Conaway. Well, thank you, Mr. Chairman. I appreciate
you agreeing to hold this hearing.
The current economic climate has placed acute burdens on
rural America from the small businesses in each of our
communities to the farmers and ranchers working every daylight
hour. The benefits of broadband access can help them compete in
the global market. Bridging the broadband divide could send
jobs to rural America, not overseas.
For instance, in Mason, Texas, the heart of my district,
with a population of 2,500, the local provider there just
connected their first 100 megabyte line to a business which
connects to other offices around the country. This allows them
to centralize their locations in a small, rural town with the
same connectivity they would have had in New York or Houston.
It is this kind of investment that can spur tremendous economic
growth throughout rural America.
In July this Subcommittee reviewed the first broadband
notice of funding availability under the stimulus bill, which
included rules governing how funding would be made available
for remote areas of rural America. At that time Deputy Under
Secretary Cheryl Cook committed RUS to immediately solving
glaring issues with the rules from that July NOFA. When we
visited these programs in July, everyone agreed to come back
and review these programs this fall. Here we are 4 months later
and that action has not been taken to address the concerns of
the Committee, concerns which have been echoed throughout the
committees and Congress.
Releasing funds at the same time as the very rule which
governs that funding is an approach that may not direct $7.9
billion in grants and loan authority to places most in need.
The stimulus bill provided minimal guidance, but made it clear
that reaching unserved areas of rural America was a priority.
Unfortunately, we still do not know if the approach RUS has
taken will effectively reach those areas. Today we are looking
ahead to what RUS is going to do in early 2010, to effectively
deploy broadband into those areas of rural America which are
currently unserved, without a nationwide broadband map.
Many of the problems that broadband applicants and
providers experienced are the results of not having an adequate
nationwide broadband map. The agency's decision to announce the
final rules, awards, and comment period within a few short
weeks has the potential to create more problems without
allowing time for a proper resolution.
Even though RUS has spent a great deal of time collecting
comments and has heard criticisms of the July NOFA, by not
providing a proposed rule in advance for comment they are
almost guaranteed to repeat the mistakes made in July. As we
approach the final opportunity for RUS to get this right,
nothing we have heard has assured this Committee that RUS is
making effective changes to the rules or their processes.
What I am most perplexed about is the agency's position to
include non-discrimination provisions that go beyond what the
FCC proposed in the October 22 rule. Experts from both sides of
this debate believe the FCC is the best governing body to find
the right balance between protecting broadband consumers, while
allowing broadband providers to manage their networks against
security threats and congestion.
We are concerned that the July NOFA inhibited and prevented
competitive grant and loan applicants. Sixty percent of all
applications included a wireless component, and 73 percent of
all last-mile, non-remote applications included a wireless
component. Existing broadband providers or providers that are
not connected to a larger network are not applying for the
grant and the loan funding, in part because these requirements
will place costly restrictions on their network and will impose
net neutrality policies that go above and beyond those
regulated by the FCC.
We are concerned that RUS's decision to include non-
discrimination provisions undermines the technology neutral
mandate set forth in the statute, a statute that deliberately
did not include non-discrimination provisions for RUS funding
so that the most competitive applicants could apply. The next
NOFA must use the FCC statutory authority to regulate and
govern broadband providers network management to avoid
conflicting policies and allow the FCC rulemaking to govern
this controversial issue.
Both of your agencies have committed several times to this
Committee that you want feedback on how best to move forward.
Listening to suggestions without effective action to implement
those suggestions in a timely manner does not move the process
forward. We will suggest to you that, in part, your promise to
allow a brief comment period after you release the rules of the
next NOFA with time enough to incorporate critical changes
would go a long way to demonstrating your commitment to
listening.
I appreciate the time both of you are taking to be here
today, and I am looking forward to discussing specific options
with you on, perhaps, multiple rounds of questions this
morning. So, Mr. Chairman, with that I yield back.
[The prepared statement of Mr. Conaway follows:]
Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Thank you, Mr. Chairman, for holding this hearing. The current
economic climate has placed acute burdens on rural America. From the
small businesses in each of our communities to the farmers and ranchers
working every daylight hour, the benefits of broadband access can help
them compete in the global market. Bridging the broadband divide could
send jobs to rural America, not overseas. For instance, in Mason, Texas
in the heart of my district with a population of about 2,500, the local
provider there just connected their first 100 Mb line to a business
which connects to other offices around the country. This allows them to
centralize their operations in a small rural town with the same
connectivity they would have in New York or Houston. It is this kind of
investment which can spur tremendous economic growth throughout rural
America.
In July this Subcommittee reviewed the first broadband NOFA under
the stimulus bill, which included rules governing how funding would be
made available for the remote areas of rural America. At that time,
Deputy Under Secretary Cheryl Cook committed RUS to immediately solving
glaring issues with the rules from the July NOFA. When we visited these
programs in July, everyone agreed to come back and review these
programs this fall. Here we are 4 months later, and action has not been
taken to address the concerns of this Committee; concerns which have
been echoed throughout Committees in Congress.
Releasing funds at the same time as the very rule which governs
that funding is an approach that may not direct $7.9 billion in grant
and loan authority to the places most in need. The stimulus bill
provided minimal guidance but made it clear that reaching unserved
areas of rural America was a priority. Unfortunately, we still do not
know if the approach RUS has taken will effectively reach those areas.
Today we are looking ahead to what RUS is going to do in early 2010
to effectively deploy broadband into those areas of rural America which
are currently unserved without a nationwide broadband map. Many of the
problems that applicants and broadband providers experienced are the
result of not having an adequate nationwide broadband map. The
agencies' decision to announce the final rules, awards, and comment
period within a few short weeks has the potential to create more
problems without allowing time for a proper resolution.
Even though RUS spent a great deal of time collecting comments and
has heard criticisms of the July NOFA, by not providing a proposed rule
in advance for comment they are almost guaranteed to repeat the
mistakes made in July. As we approach the final opportunity for RUS to
get this right, nothing we have heard has assured this Committee that
RUS is making effective changes to the rules or to their process.
What I am most perplexed about is the agencies' position to include
non-discrimination provisions that go beyond what the FCC proposed in
the October 22 rule. Experts on both sides of this debate believe the
FCC is the best governing body to find the right balance between
protecting broadband consumers while allowing broadband providers to
manage their networks against security threats and congestion.
We are concerned that the July NOFA inhibited and prevented
competitive grant and loan applications. Sixty-percent of all
applications included a wireless component and 73% of all Last Mile
Non-Remote applications included a wireless component. Existing
broadband providers or providers that are not connected to a larger
network are not applying for the grant and loan funding, in part
because these requirements will place costly restrictions on their
network and will impose net-neutrality policies that go above and
beyond what is regulated by the FCC. We are concerned that RUS'
decision to include non-discrimination provisions undermines the
technology neutral mandate set forth in the statue; a statue that
deliberately does not include non-discrimination provisions for RUS
funding so that the most competitive applicants could apply.
The next NOFA must use the FCC's statutory authority to regulate
and govern broadband provider's network management to avoid conflicting
policies and allow FCC's rulemaking to govern this controversial issue.
Both of your agencies have testified several times that you want
feedback on how best to move forward. Listening to suggestions without
effective action to implement those suggestions in a timely manner does
not move the process forward. We would suggest to you that, in part,
your promise to allow a brief comment period after you release the
rules in the next NOFA, with time enough to incorporate critical
changes, would go a long way to demonstrating your commitment to
listening.
I appreciate the time both of you are taking to be here with us
today, and I am looking forward to discussing specific options you have
available to keep these programs moving forward. Thank you Mr.
Chairman.
The Chairman. Thank you, and we are going to be moving
fast, faster than our southern drawl would normally let us,
because we understand we may have votes in the next 15 to 20
minutes. So I will ask the witnesses to comply with the 5
minute rule, and I will ask the Members to be very cognizant of
the time constraints so that, hopefully, we can complete this
before being interrupted by votes.
The chair would request that other Members submit their
opening statements for the record so witnesses may begin their
testimony and that we ensure there is time for the answers.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Thank you, Chairman McIntyre, for holding what will be this year's
second hearing of this Subcommittee to look at Federal rural broadband
programs.
USDA's Rural Development programs are responsible for financing
essential infrastructure that most urban and suburban residents take
for granted.
Reliable, affordable broadband Internet service is an essential but
often lacking resource in rural communities across the country. Access
to quality broadband service creates and preserves jobs while
encouraging economic development, business innovation, education, and
medical technology in areas where these priorities may otherwise go
unmet.
On the Agriculture Committee, our Members have been watching
carefully to be sure that the government programs dedicated to
expanding broadband services are effectively targeting funds to areas
that are truly rural and unserved.
We understand that this is a complicated issue and that rules
written too strictly may exclude deserving projects, and rules that are
too broad might allow projects in less deserving communities to jump in
front of other projects.
In the 2008 Farm Bill, we made several important improvements to
the criteria used by USDA to prioritize applications for the broadband
loan program. We clarified the definition of rural areas so that
communities near larger cities and towns will not get preference over
areas that are actually rural. Areas where more than three providers
are already providing broadband service were also made ineligible for
the program. These are necessary changes that will help to ensure that
the right projects receive funding, but USDA still has not finalized
the regulations on these farm bill changes. It has been almost 18
months since the farm bill passed, and it is inexcusable that
regulations on this are not complete, and I hope that Mr. Adelstein can
explain what the status is for this rule and why we are still waiting.
For the funding provided in the stimulus bill, I warned people that
there was no way that the Federal Government, specifically the National
Telecommunications and Information Administration, was going to be able
to get this much money out to the right areas in an efficient and
effective way on the timeline they wanted. Unfortunately, I was right.
The first funding notice contained a lot of issues that called into
question the targeting of the programs. Now, with more than 2,200
applications to review, I am concerned that these agencies do not have
sufficient resources to ensure that applications receive the necessary
review.
The Government Accountability Office released a report just this
week warning that the potential exists for waste, fraud and abuse in
the distribution of these stimulus funds. This money is too important
to the communities that really need it for us to stand by and let that
happen, which is why this Committee has been and will continue to be
extremely active in monitoring this process.
I thank our witnesses for being here today. I hope they have some
answers for us, because I know we have a lot of questions.
The Chairman. We welcome today our panel. Jonathan
Adelstein, Administrator for Rural Utilities Service, U.S.
Department of Agriculture, and Lawrence Strickling, Assistant
Secretary for Communications and Information, for the U.S.
Department of Commerce. And a special welcome also to Mr.
Strickling's son, who I understand lived in my hometown of
Lumberton for a few months last year down in North Carolina.
Mr. Adelstein, please begin.
STATEMENT OF HON. JONATHAN ADELSTEIN,
ADMINISTRATOR, RURAL UTILITIES SERVICE, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.
Mr. Adelstein. Thank you, Mr. Chairman, Ranking Member
Conaway, and Members of the Committee for this opportunity to
testify. It is a special honor to be here with my good friend,
Larry Strickling, who is doing such an outstanding job of
leading the NTIA, at the Department of Commerce.
Obviously, increasing broadband deployment and adoption in
rural areas is a top priority for the President, USDA Secretary
Tom Vilsack, and all of us at RUS. I know that that is true for
this Committee as well, and this Congress. And thanks to your
strong leadership to improve access to broadband in rural
areas, Mr. Chairman, and that of others in Congress you have
given USDA an historic opportunity in the Recovery Act.
You are aware that the RUS has a long and highly-successful
track record since its beginnings as the Rural Electrification
Administration in 1935, in the deployment of electric,
telephone, and water service in rural areas. We are now
applying this expertise to broadband.
Since 1995, we have required all new telecommunications
capacities that we finance to be broadband capable. We have
also had great success with our Community Connect and Distance
Learning and Tele-medicine programs, which have allowed us to
invest nearly $500 million in rural, underserved areas. The
USDA Broadband Loan Program created by the 2002 Farm Bill has
already provided over $1.1 billion in loans to more than 90
broadband projects in rural communities spanning 42 states.
The Recovery Act marks a major new chapter in this effort.
Since its enactment we have worked side by side with our
partners at NTIA, the FCC, and the White House to fulfill the
President's vision for promoting broadband across the nation.
This collaboration has been unprecedented. We are now immersed
in our review of over $28 billion in applications. We have a
long history of expertise in this area. The Telecom Program was
initiated in 1949, so this year is our 60th anniversary that we
have been building rural telecommunications infrastructure. To
ensure that rural communities get access to quality broadband
services, since 1995, RUS has ensured that all
telecommunications infrastructure we finance be capable of
supporting broadband, at least 1 megabit in both directions.
Today the RUS telecommunications portfolio, built up over
60 years, is $4.1 billion. We have recently averaged $700
million a year in new telecom loans. Since the enactment of the
Broadband Loan Program in 2002, we have gained great insight
into the unique challenges in deploying rural broadband. We
have developed regulations for the changes required in the 2008
Farm Bill incorporating the lessons we have learned since 2002,
regarding the wide variety of broadband networks, and we want
to improve on our existing track record by learning from the
current Recovery Act process as well.
With the $2.5 billion in Recovery Act funds the RUS has
received, we plan to deliver an even higher level of funding in
loans, grants, and loan-grant combinations based on our ability
to leverage our budget authority. We are now evaluating first-
round applications and expect to begin issuing awards very
shortly. Well over half of the total investment projected under
the BIP Program has been reserved for the next funding round.
We have compressed the plan for the second and third rounds
into a single round. This should give applicants more time to
develop strong proposals and help us ensure that we obligate
all funds by September 2010. It will also give us more time to
analyze, as you suggested, Congressman Conaway, and to really
evaluate and take into account what we learn.
Subsequent funding may also include enhancements to
criteria that we used in round one. We are certainly well aware
of concerns that have been raised regarding a wide range of
issues, including the definition of rural and remote areas,
about which we have heard extensively from this Committee and
others. We are also reviewing eligibility standards for
unserved and underserved areas, scoring rates for various
factors, and concerns regarding overlapping service territories
for satellite providers.
It would be premature to speculate about specific changes
that we are going to make until we have completed our
evaluation of the first round of applications. But, we are
prepared to make changes that may be significant based on our
experience, the feedback we have received during the RFI
process, and of course, your views. We certainly encourage
input from everyone on this Committee on how best to move
forward and apply the lessons learned in round one for the work
ahead of us in the next round.
We will continue to ensure that our implementation of this
program is collaborative and coordinated with our partners at
NTIA. Our ability to continue to finance rural
telecommunications is the result of your support of this
mission. We can't thank you enough for your leadership on this,
and for your longstanding support for our agency. We are
working hard to justify the trust that you have placed in us to
deliver affordable broadband services throughout rural America.
It an honor and privilege to work with you on behalf of our
65 million Americans who reside in rural communities. Thank you
for inviting me to testify, and I would be glad to address any
questions you may have.
[The prepared statement of Mr. Adelstein follows:]
Prepared Statement of Hon. Jonathan Adelstein, Administrator, Rural
Utilities Service, U.S. Department of Agriculture, Washington, D.C.
Chairman McIntyre, Ranking Member Conaway, and distinguished
Members of the Committee, thank you for the opportunity to testify on
the U.S. Department of Agriculture's Broadband Initiatives Program
(BIP).
Your support as we implement this critical program is invaluable
and much appreciated. The Obama Administration and Secretary of
Agriculture Tom Vilsack share your goal of improving access to
affordable broadband service. You understand the role that broadband
plays in bridging the barriers of time and distance. It is often the
key factor that can level the economic playing field, provide rural
businesses access to national and international markets, and allow new,
small and home-based businesses to thrive. It is the element that makes
rural areas competitive.
The funds we will administer in the next 12 months will cultivate
new investment opportunities in as many rural communities as possible.
On behalf of Secretary Vilsack, I am here to say that USDA stands
committed and ready to fulfill its rural broadband mandate outlined by
Congress and the President. Improving the quality of life for rural
families and businesses is the centerpiece of USDA's overall mission,
and we view broadband as an essential ingredient.
Secretary Vilsack has striven to identify the many ways this
Congress and the Administration have worked for our rural economy. The
programs you are putting into place--renewable energy, local and
regional food systems, regional collaboration and investment in
broadband--are key components of USDA's focus toward rebuilding and
revitalizing economic growth in rural America. Broadband provides
connectivity for efficient delivery of not just these programs, but of
all of the major issues facing rural residents, including health care,
educational and financial services. These are necessary to a vital
economy, not just for rural areas, but nationwide.
To document the importance of broadband in renewing the rural
economy, Secretary Vilsack directed the USDA's Economic Research
Service (ERS) to examine the economic effects of having broadband
access in rural communities. In August, the ERS published a report,
entitled ``Broadband Internet's Value for Rural America,'' which
concluded that employment growth was higher and non-farm private
earnings greater in counties with a longer history of broadband
availability.
The report also cited certain key benefits of broadband access in
rural communities. These include access to online course offerings for
students in remote areas and the access to tele-medicine and tele-
health services for patients living in rural areas in need of urgent
and often specialized care. Agricultural producers and farm based
businesses are also more reliant on Internet access to conduct sales
transactions, marketing and advertising, monitor real time changes in
the commodities markets and track global trends that impact U.S. crop
prices to stay in business. The direct benefits of broadband to the
rural economy, both on and off the farm, are tangible and significant.
The report also clearly notes that areas with low or dispersed
populations, or demanding terrain, generally have difficulty attracting
broadband service providers. These characteristics, as you know, can
make the fixed cost of providing broadband service too high to make a
business case for investment. Yet, we also know from experience that
leadership, policy support, resources and social factors can overcome
barriers to broadband expansion.
And that is why we are here. This Committee is aware that since
1935, beginning with the Rural Electrification Administration, we have
been a premier lender for rural infrastructure investment. Our current
loan portfolio is $54.5 billion and includes Federal financing for
water and wastewater, telecommunications, broadband, electric and
renewable energy infrastructure projects.
We are now applying our technical skills, historical knowledge and
financial expertise gained over the past 75 years to meet the new
challenge of deploying next generation broadband capability in rural
communities. Our goal is to recreate the successes we have achieved in
financing the rural electric grid for rural utilities and the rural
telephone network toward building new broadband networks in the most
rural and difficult to serve regions of the country.
We are grateful to Congress and the Administration for giving the
USDA the opportunity to contribute its expertise towards rebuilding
economic prosperity in rural America. Through the Recovery Act,
Congress and the Administration entrusted the Rural Utilities Service
with nearly $4 billion in stimulus funds for infrastructure investment,
dedicating $2.5 billion for rural broadband deployment and $1.38
billion for rural water infrastructure projects.
Since the enactment of the Recovery Act in February, we have worked
side by side with our partners at the National Telecommunications
Information Administration (NTIA) and the Federal Communications
Commission to fulfill the President's vision for promoting ubiquitous
broadband access across the nation. Assistant Secretary Lawrence
Strickling has been an outstanding and visionary partner throughout
this process. The Federal Communications Commission has also been an
active contributor to this discussion.
RUS and NTIA are fully engaged in our respective reviews of
applications for over $28 billion in funding requests. There is a high
degree of interest in our respective loan and grant programs that
reflects the great demand for broadband in rural America.
It's worth noting that RUS has encountered several challenges as we
have worked to review applications for this round of funding. These
concerns have prompted us to consider alternative approaches that would
simplify the application process and support our efforts to fund high-
quality projects for the next round of funding.
In particular, we have seen applicants struggle to comply with the
requirements of the ``remote'' definition for last-mile rural remote
projects. This definition was an attempt to ensure that the program
targets funding to some of the most remote and difficult to serve areas
in the United States, which we understand is the intent of Congress.
The use of this term was also part of an effort to address previous
program criticism that RUS has historically funded less-remote project
areas. We are contemplating major revisions that will continue to
target highly-rural areas that are difficult to serve while making it
easier for applicants to comply with any new definition we may
establish.
Among other issues, we have also seen some applicants encounter
challenges with our program's rural definition. In addition, some
applicants have found it difficult to comply with the 50% loan
requirement for middle mile and last mile non-remote projects.
The Request for Information (RFI) that NTIA and RUS released last
week asks questions about these items and many others. We would welcome
the Committee's input on these and any other issues of concern.
USDA's Historic Role in Telecommunications Infrastructure Investment
Today, the RUS Telecommunications portfolio--built up over 60
years--totals $4.1 billion. As technology continues to evolve, we will
continue to find new ways to deliver next generation services and
facilities to end-users in rural and high cost areas.
We have also achieved considerable success and gained invaluable
experience in deploying broadband and related services to remote rural
and underserved communities. Through the Community Connect Grant
Program and the Distance Learning and Tele-medicine Loan and Grant
Program, RUS has invested $498 million in rural underserved areas.
Applying the Lessons Learned from the 2002 Farm Bill to Future
Applications
Since the enactment of the Broadband Loan Program in 2002, we have
gained tremendous insights into the unique challenges of deploying loan
financing for next-generation Internet architecture in rural high-cost
markets. As we develop the regulations for the changes required under
the 2008 Farm Bill, we are incorporating the lessons we have learned
since 2002 regarding the funding of broadband networks in a competitive
environment to improve our existing track record.
Once these regulations are published, we will launch a national
outreach effort to help guide applicants on the new requirements and
how to apply for funding. Outreach and education are important
functions of our work in reaching as many rural populations as
possible, and we will continue to dedicate resources and attention
toward educating the American public of our farm bill once regulations
are released.
To further assist prospective applicants with the new farm bill
requirements, we will utilize the expertise of our nationwide network
of Rural Development field offices and RUS' own General Field
Representatives (GFRs), who are stationed in local communities across
the country to hold workshops, deliver presentations, and respond to
inquiries about the program. Rural Development has approximately 6,000
employees in over 470 offices nationwide. Through the outstanding local
outreach performed by our field staff, we have enormous capacity to
coordinate our programs and provide assistance and guidance to our
borrowers.
Implementation of the BIP Program Under the American Recovery and
Reinvestment Act: Building on Our Service to Rural America
With the funds we received in the Recovery Act for broadband, we
estimate that we can employ the $2.5 billion in budget authority USDA
received to deliver an even larger volume of program level in loans,
grants and loan-grant combinations to prospective applicants, based on
our ability to leverage our funding levels. This strategy is designed
to build on RUS' demonstrated expertise in finance and to complement
NTIA's Broadband Telecommunications Opportunity Program (BTOP), which
is a grant-only program. Supporting investments through our loan
authority will help leverage Federal resources, and is a goal that we
intend to continue to promote.
Under our first Notice of Funding Availability (NOFA), published on
July 9, 2009, RUS made available up to $1.2 billion for Last Mile
projects, up to $800 million for Middle Mile projects, and established
$325 million for a National Reserve.
Next Steps
We are now in the process of evaluating First Round applications
and expect to begin issuing awards shortly. The first NOFA made
available up to $2.4 billion in program level (loans and grants)
funding. Well over half of the total investment projected under the BIP
program has been reserved for subsequent funding rounds. There have
been previous conversations regarding plans for subsequent funding. One
suggestion, which we have now implemented, is to compress the planned-
for second and third rounds into a single round to give applicants
additional time to develop strong proposals and to ensure that we are
able to meet the goal of obligating all funds by September 2010. RUS
and NTIA announced this change on November 10.
Subsequent funding may also include enhancements to eligibility and
scoring criteria used in Round One. We are cognizant of the concerns
and suggestions that have been raised regarding a wide range of issues
including the definition of rural and remote areas, eligibility
standards for unserved and underserved areas, scoring weights for
various factors and concerns regarding overlapping service territories
for satellite providers. It would be premature to speculate about
specific changes to our funding requirements until we have completed
the evaluation of first round projects. But it is important to note
that we are prepared to do a top-to-bottom review of what went right
and wrong in the first round, and make major changes, as necessary, to
improve the program and the application process. We will consider
changes to these rules based on our experience and the feedback we have
received during the RFI process.
We welcome input from the Members of this Committee on how best to
move forward and apply the lessons learned in Round One toward the work
ahead of us in the next round of funding, which we anticipate will be
announced in the coming months.
We will continue to ensure that implementation of the ARRA
broadband initiative is a collaborative and coordinated effort with our
partners at the NTIA. We will continue to work to make this process as
transparent and as efficient as possible. The purpose of the Recovery
Act is to spur job creation and stimulate long-term economic growth and
investment. To date, we are on track to obligate the $2.5 billion in
broadband budget authority by September 30, 2010.
On October 28, RUS celebrated our 60 year anniversary of financing
telecommunications infrastructure, which has evolved from delivering
voice to distance learning, tele-medicine and broadband. On behalf of
all of us at USDA Rural Development and the Rural Utilities Service,
thank you for your continuing and generous support of this critical
mission. Our ability to offer programs to create economic opportunity
and improve the quality of life in rural America is a result of your
work. It is an honor and privilege to work with you on behalf of the 65
million Americans in our rural communities. We look forward to working
closely with Congress and our Federal partners throughout the Obama
Administration in making affordable broadband service widely available
throughout rural America.
Thank you again for inviting me here to testify and I will be glad
to address any questions you have.
The Chairman. Thank you very much. You did that in less
than 5 minutes in spite of the sirens. Thank you.
Mr. Strickling.
STATEMENT OF HON. LAWRENCE E. STRICKLING, ASSISTANT
SECRETARY FOR COMMUNICATIONS AND INFORMATION, NATIONAL
TELECOMMUNICATIONS AND INFORMATION
ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE,
WASHINGTON, D.C.
Mr. Strickling. Mr. Chairman, Ranking Member Conaway, and
Members of the Subcommittee, thank you for your invitation to
testify on behalf of the Department of Commerce on the
broadband initiatives funded by the Recovery Act. I am very
pleased to appear here today with Jonathan Adelstein. Our two
agencies, as he indicated, have been working hand in hand to
implement this program, and the result it has been a highly-
coordinated and well-thought-out approach that has taken
advantage of the individual expertise of both of our agencies.
Under the Recovery Act, Congress has directed the
Departments of Agriculture and Commerce to award grants to
build broadband infrastructure in unserved and underserved
areas of the United States. Such unserved and underserved areas
exist in our cities, but there is little question that
extending high-speed Internet to rural America is a particular
focus for both of our agencies.
A 2009 study by the Pew Internet & American Life Project
reports that only 46 percent of rural American households
subscribe to broadband. Now, that is an improvement from the 18
percent reported in 2005, but it still doesn't measure up to
the 63 percent overall adoption rate for the country, which
itself is an unacceptably low number. The broad expanses of
rural lands, combined with lower population densities, has made
it difficult for private industry, on its own, to invest
profitably in broadband infrastructure in rural America. And we
are dedicated, along with our colleagues at the Department of
Agriculture, to use the dollars appropriated by Congress in the
Recovery Act to improve the availability and adoption of
broadband services in rural America.
Today, as Jonathan mentioned, we are working diligently to
review the applications received in round one. These
applications requested $28 billion in funding, which was seven
times the funding we had allocated to the first round. We will
begin announcing awards in mid-December, and will continue to
announce grants on a rolling basis in 2010.
We have a number of factors that go into the selection
process at the Department of Commerce, but the two that I would
like to emphasize for you this morning are, one, where can our
dollars have the most impact, and two, the sustainability of
these projects after the Federal grant dollars are spent.
On the first issue, we are devoting substantial time and
attention to determining how we can apply Recovery Act dollars
to have the greatest impact in a number of dimensions: the
creation of jobs, the expansion of infrastructure into unserved
and underserved areas, the number of people subscribing or
getting access to broadband, and the immediate and sustainable
economic benefits of funding.
As we compare the different types of projects that have
been proposed, NTIA is focusing on what we call a comprehensive
communities approach as the type of project that we think
offers the greatest benefit per dollar spent. The paradigm for
a comprehensive communities proposal is a Middle-Mile project
that brings fiber or another broadband facility into one or
more unserved and underserved communities, and then links the
key anchor institutions in those communities to that facility.
And by anchor institutions I mean schools, libraries,
hospitals, and government facilities.
We think that there needs to be the strong community
infrastructure in place so that people are using broadband at
their job, and their children are using broadband in their
schools in order to bring the full benefits of high-speed
Internet to our citizens.
On the second issue, sustainability, we want to fund
projects that will still serve their communities long after the
Federal dollars have been spent. We think public-private
partnerships may offer the greatest potential for successful
and sustainable projects. The involvement of public entities
ensures that the needs of communities are met, and the
participation of qualified and experienced private companies
gives us a greater confidence that the budget numbers and the
financial assumptions are reasonable and that the project is
sustainable for the long term. We will continue to test these
assumptions as we review applications and select the best ones
for funding.
But even in the middle of all this activity we are
constantly thinking about ways to improve the program. As
Jonathan mentioned, and we continue to work with RUS on this,
we have gone out to the community and asked for comments on how
round one has worked for them. We want to take those comments
as to how we can improve the application process. We are
interested in comments on the key program definitions and
policy judgments. We will use that information to set the rules
for one more funding round, which we expect to launch in
January. The key for us in setting that start date will be to
make sure that we are able to apply the lessons learned from
the first funding round in designing the second funding round.
So in closing, we are working extremely hard to ensure that
these projects serve as valuable inputs to our long-term
broadband strategy. I look forward to working with all of you
in the months ahead on these programs. Thank you for the
opportunity to testify, and I look forward to your questions.
[The prepared statement of Mr. Strickling follows:]
Prepared Statement of Hon. Lawrence E. Strickling, Assistant Secretary
for Communications and Information, National Telecommunications and
Information Administration, U.S. Department of Commerce, Washington,
D.C.
I. Introduction.
Chairman McIntyre, Ranking Member Conaway, and Members of the
Subcommittee, thank you for your invitation to testify on behalf of the
National Telecommunications and Information Administration (NTIA) on
the broadband initiatives funded in the American Recovery and
Reinvestment Act (Recovery Act).
For many Americans, life without broadband is becoming unthinkable.
For all of us here, the Internet has transformed the way we live, work,
communicate, shop, and learn. However, we have not yet succeeded in
connecting everyone to the benefits of broadband. Despite being the
world's leader in technological innovation and where the Internet was
pioneered, extending fast connections to small towns and rural areas
has proven especially daunting. Mr. Chairman, I am sure you remember
President Clinton declaring the need to ``bridge the digital divide''
in Whiteville, North Carolina in 1999. Ten years later, the divide
remains. According to the Pew Internet & American Life Project, only 38
percent of rural American households subscribe to broadband at home.
That's an improvement from 18 percent in 2005, but it still doesn't
stack up to the 57 percent and 60 percent broadband uptake rate for
cities and suburbs. Geographic challenges and sparse populations are
real challenges, but President Obama is committed to working toward
making the United States the world leader in broadband penetration and
adoption.
As we move forward in achieving President Obama's vision of
universal access to broadband service, Recovery Act initiatives such as
NTIA's Broadband Technology Opportunities Program (BTOP) and State
Broadband Data and Development Grant Program (Broadband Mapping and
Planning Program) will have significant positive impacts on the growth
and development of businesses and communities in rural America. I am
pleased to be here today with Jonathan Adelstein, the Administrator of
the U.S. Department of Agriculture's Rural Utilities Service (RUS),
which administers BTOP's sister project, the Broadband Initiatives
Program (BIP). Our two agencies have worked together closely to
implement the broadband provisions of the Recovery Act to ensure a
well-coordinated and thoughtful approach that takes advantage of the
individual expertise of each agency.
Congress authorized NTIA to expend $4.7 billion to implement BTOP.
We will award the bulk of the dollars in support of projects to deploy
broadband networks in unserved and underserved areas. In addition, we
will provide at least $250 million to projects that encourage
sustainable adoption of broadband services, and at least $200 million
to enhance public computer center capacity at institutions such as
community colleges and public libraries. The Recovery Act further
directs that up to $350 million of BTOP funding should be used for the
development and maintenance of a national broadband inventory map.
NTIA is implementing BTOP in line with several critical goals.
First, the Administration is committed to reducing the broadband gap in
America, focusing in particular on ensuring that unserved and
underserved areas have access to modern communications services and the
benefits those services offer for education, high-value jobs, quality
health care, and more. Second, the Administration is committed to
bringing the maximum broadband benefits possible to our community
anchor institutions, such as schools, libraries, community centers, and
medical centers. Third, the Administration is committed to improving
broadband service for public safety users, whose ability to access
modern communications services is of vital importance in their role as
first responders. And fourth, the Administration is committed to
helping stimulate broadband demand, economic growth, and job creation.
These programs will not solve all of rural America's broadband
challenges; however, in conjunction with BIP, and with the continued
support of Members of this Subcommittee, NTIA will use these funds to
take significant steps in bringing rural communities the benefits of
broadband.
II. Recovery Act Grant Awards for Broadband Mapping and Planning.
Our efforts to bring robust and affordable broadband to rural
America begin with a simple question: what is the current state of
broadband in rural America? We would like to answer this question
definitively, and detail the extent, type, and speed of broadband
availability throughout rural America. However, as a 2009 Federal
Communications Commission (FCC) report on ``Bringing Broadband to Rural
America'' concluded, ``[r]egrettably, we cannot.'' \1\ At this moment,
no Federal agency has collected comprehensive and reliable data needed
to answer this question.
---------------------------------------------------------------------------
\1\ See Bringing Broadband to Rural America: Report on a Rural
Broadband Strategy, FCC Acting Chairman Michael J. Coops (2009),
available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
291012A1.pdf.
---------------------------------------------------------------------------
With the Broadband Mapping and Planning Program funded by the
Recovery Act, NTIA is now well-positioned to obtain the most complete
set of data on the deployment of broadband service in rural communities
across the nation. In the past few weeks, NTIA has announced fifteen
grant awards for broadband mapping and planning activities totaling
nearly $28 million. States receiving awards to date are: Alabama,
Arkansas, California, the District of Columbia, Idaho, Indiana,
Maryland, Massachusetts, New York, North Carolina, Vermont, Washington,
West Virginia, Wisconsin, and Wyoming. These awards fund 2 years of
broadband mapping efforts and up to 5 years of broadband planning
activities.
NTIA expects to award a mapping grant to every state and territory,
and is currently working with the remaining applicants to revise and
refine their project proposals to ensure that each proposal meets the
program's standards. We expect to complete all mapping awards by next
month.
The effort will culminate in the creation of a national broadband
map by February 2011. The national broadband map will educate rural
consumers and businesses about broadband availability, enable broadband
providers and investors to make better-informed decisions regarding the
use of their private capital, and allow Federal, state, and local
policy-makers to make more data-driven decisions on behalf of their
rural constituents.
III. Forthcoming BTOP Awards for Broadband Development and Expansion.
Congress funded programs in the Recovery Act to accelerate the
deployment of and subscription to broadband services in rural
communities. Much like extending the reach of railroads across the
country or bringing electricity and telephones to rural areas, NTIA's
BTOP investments will serve as valuable building blocks for future
private investment that will ultimately deliver significant and lasting
improvements in rural America's broadband deployment, technological
innovation, and economic health.
There is much good news to report since we last testified before
this Subcommittee. For the first funding round of BTOP, NTIA and RUS
received almost 2,200 applications requesting nearly $28 billion in
funding for proposed broadband projects reaching all 50 U.S. States,
five territories, and the District of Columbia. When you include the
approximately $10.5 billion in matching funds committed by the
applicants, these applications represent more than $38 billion in
proposed broadband projects. The fact that applicants requested nearly
seven times the total amount of funding available in this initial round
of broadband funding underscores the interest for expanded access to
broadband service throughout the country.
Applications came in from a diverse range of parties, including
state, tribal, and local governments; nonprofits; industry; small
businesses; anchor institutions, such as libraries, universities,
community colleges, and hospitals; public safety organizations; and
other entities in rural, suburban, and urban areas.
As a result of NTIA and RUS coordination, applicants could apply
for funding simultaneously under both RUS's BIP and under NTIA's BTOP,
although pursuant to the Recovery Act, projects will only be funded in
a single agency. Parties submitted more than 830 applications jointly,
requesting nearly $12.8 billion in infrastructure grants and loans.
In addition, NTIA and RUS worked together to make publicly
available--at www.broadbandusa.gov--a searchable database containing
information on all applications received, as well as maps of the
geographic service areas proposed by entities applying for
infrastructure grants. We provided each state, territory, and tribal
government with an opportunity to prioritize and comment on
applications relevant to its jurisdiction, and we've provided existing
service providers with the opportunity to comment on their existing
service offerings.
We are now fully engaged in a thorough review of the nearly 2,200
applications to determine which best meet the goals of the Recovery
Act. Each eligible BTOP application is evaluated by at least three
expert reviewers against established criteria, including the proposed
project's purpose, benefits, viability, budget, and sustainability. For
this phase, NTIA recruited and selected over 1,000 highly-qualified
BTOP application reviewers. Those applications considered the most
highly qualified then advance for further consideration by NTIA.
Applicants in the second phase of review submit supplementary
information to NTIA as necessary to substantiate representations made
in their applications. NTIA staff reviews and analyzes this
supplemental information. I will make the final selections of BTOP
awards, consistent with the statutory directives established by
Congress in the Recovery Act.
I expect that BTOP grant announcements for the $1.6 billion
available in the first funding round will begin by mid-December and
will continue into early 2010. This is approximately 1 month later than
we originally communicated to the Subcommittee in July. However, we
felt it necessary to expand the review period to provide full and fair
reviews to the large number of complex applications we received.
IV. Next Funding Round.
Even in the middle of all this activity to review the current
applications, we are constantly thinking about ways to improve the
program. On November 10, 2009, NTIA and RUS announced that there will
be one more BTOP and BIP funding round, which will begin early in 2010.
Although NTIA and RUS previously indicated that we planned to hold up
to three rounds of funding, our experience in the first round led us to
opt for just one more round of funding. This more consolidated approach
should yield multiple benefits for all stakeholders.
First and foremost, it will enable us to complete the entire grant-
making process earlier, expediting the stimulative benefits for the
economy and job creation that the Recovery Act promises. It also
affords additional time--both to stakeholders, to provide us with well-
informed views on how the first round worked for applicants, and to
NTIA and RUS, to learn from our experience and adjust those aspects of
the process that need to be improved. Also, parties who wish to
collaborate on an application, such as through consortia or public-
private partnerships, will have additional time to work out the details
of those arrangements. This policy will produce better results for the
American public, in terms of both the quality of the broadband projects
we support and the speed with which the program will contribute to our
economic recovery.
On November 10, 2009, NTIA and RUS also announced the release of a
second joint Request for Information (RFI) requesting public comment on
issues relating to the implementation of BTOP and BIP for the next
funding round. Stakeholders will have the opportunity to provide us
with feedback on how the first round worked for applicants, what policy
clarifications or changes should be made, and how the agencies can make
improvements to the process.
Of particular interest to potential rural applicants, we are
seeking comment on whether more targeted regional economic development
or ``comprehensive community'' approaches focusing on middle mile
infrastructure projects could maximize broadband benefits to unserved
and underserved areas. The deadline for comments is November 30, 2009,
and we look forward to using those comments to improve the program.
V. Oversight.
Looking forward, I must underscore the importance of our oversight
objectives for the program. NTIA is committed to ensuring that
taxpayers' money is spent wisely and efficiently. Since the inception
of BTOP, we have been working with the Department of Commerce's
Inspector General to design this program in a manner that minimizes the
risk of waste, fraud, and abuse. As we move forward and project
construction begins, NTIA will enhance its auditing and monitoring
responsibilities, including site visits to grantees.
The Recovery Act does not provide authority or funding for
administration and oversight of BTOP-funded projects beyond the end of
Fiscal Year 2010. NTIA intends to work with Congress in the coming
months to ensure sufficient authority and funding to administer and
monitor the execution of BTOP grant projects and carry the program to
conclusion.
VI. Conclusion.
NTIA is working diligently to make certain that the broadband
projects funded by BTOP and the broadband mapping information developed
under the Broadband Mapping and Planning Program serve as valuable
inputs to our long-term broadband strategy. At its core, the broadband
initiatives in the Recovery Act offer a tremendous opportunity to
stimulate job creation and economic growth both in the near term and
for the future.
I assure you these Recovery Act funds will be money well spent and
that we will do our best to target Recovery Act funds to areas of the
country that need them the most. In doing so, we will make broadband
more widely available, especially to rural 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 RUS and others in the
Administration. We are also committed to making this process as
transparent and as efficient as possible.
Thank you again for the opportunity to testify this morning. I will
be happy to answer your questions.
The Chairman. Thank you, gentlemen. Thank you for your
promptness and efficiency.
The gentlewoman from Wyoming, Mrs. Lummis, although not a
Member of the Subcommittee, has joined us, and we are pleased
to have her. I have consulted with the Ranking Member, and we
welcome you to join us at the appropriate time in questioning
of the witnesses.
With regard to that I am just going to ask one question for
now, so that, hopefully, before these votes occur everybody can
at least get in one question. To both of you or either of you,
whichever may prefer to answer, you both may have a different
take on this. In your statements you have recited 2,200
applications requesting nearly $28 billion in funding as good
news from the first round. However, in looking at some of the
public information provided, it is clear that many of the
applications filed under remote propose to serve areas that are
clearly not meeting the definition of remote, and that many
applications are proposing to serve areas that appear to have
adequate service.
Have you been able to determine what percentage of those
2,200 applications that were actually viable and qualified
under the definitions for which they applied? Can you first
answer that question? Have you been able to determine the
percentage?
Mr. Adelstein. We are currently evaluating just that
question. We are not complete yet in our evaluation, because we
are still going through the applications. We have a number of
them that have, indeed, displayed that there was a certain
misunderstanding of the definition of remote. That is one of
the reasons we think we really need to revisit the definition
of remote. I certainly have heard loud and clear from this
Committee that there have been major concerns about that, and
we heard loud and clear also from applicants that there was
some confusion out there about how it worked. I think we need
to be much clearer in the second round. We want to scrub from
top to bottom that idea of remote, and we are now evaluating
how many of those applications were not, in fact, for remote
areas.
As to the second question that you asked about, how many of
those areas that said they were remote, in fact, have service?
We are finding that some areas, even the ones that are remote,
do have service in them, and we are going through our due
diligence. So we don't yet have the final numbers on that as we
are still going through our evaluation.
The Chairman. When do you think you will have the final
numbers?
Mr. Adelstein. We should have them pretty soon, as soon as
we wrap up the review process for the last-mile remotes. I
would hope we would have them when we complete that process. We
are hoping to, at least, begin awarding grants next month and
we should have that information around next month.
The Chairman. All right. If you would please provide that
to us next month, especially before the Christmas holidays.
Mr. Adelstein. Yes, sir.
Mr. Strickling. And could I indicate that our applications
at the Department of Commerce, there is really a two-step
review for us. First, we make sure that the applicant has
appropriately defined a service area that qualifies as either
unserved or underserved. While I don't have the figures on
that, I would say that the vast, vast majority of our
applicants have adequately made the prima facie showing that
their area they wish to serve is unserved or underserved.
But then we have also collected information from existing
service providers and states in terms of what the availability
is of service in these areas. We will only evaluate that
information as applications go into due diligence, because we
make the final determination as to whether or not an area is
unserved or underserved that is going to be funded with
government dollars. We won't do that for the entire application
pool. We will only do that for those projects that have scored
high enough to move into due diligence, and they are projects
we are considering funding.
The Chairman. All right. Thank you. Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman.
Back in July this Committee expressed some concerns about
the ability of both agencies to deal with what was expected to
be a pretty significant response to the NOFA. Mr. Adelstein, by
the way, thank you very much for taking the time to come see me
yesterday ahead of this hearing. I appreciate that.
Your agency decided to hire folks. Mr. Strickling, your
agency decided to go with volunteers. Can you talk to us about
how that is working for both of you? Mr. Strickling in
particular, how you screened more than 1,000 applicants at the
same time you are doing these other applications. Given the
fact that you are going to roll out these grants during the
same time-frame that you are seeking additional new
applications, and change the rules as the result of the input
you have gotten, for the folks who have made an application in
the first round, will they be able to just roll their
applications into the second round, how is that going to work?
Mr. Adelstein. In terms of our staff capacity, as I
mentioned, we have been making loans since 1935. The default
rate in telecom is less than one percent. So we have a lot of
experience. We have 114 FTEs in telecom, including 26 general
field representatives out in the states across the country. We
are hiring 47 additional employees, including ten more GFRs and
ten field accountants.
Mr. Conaway. And those have all been hired?
Mr. Adelstein. Not yet. We are in the process of doing
that. We have hired about half of them.
Mr. Conaway. So the review process is almost done?
Mr. Adelstein. Well, no. We are still in the middle of the
review process. The second round is going to be much bigger
than the first one, so we need to get them in place soon. We
are relying on a lot of our staff from across the country to
help us as well, and we have a contractor that we hired to
assist us on top of that. So we feel that we have sufficient
resources now to review the applications that we have.
In terms of the other question about giving applicants a
chance to know--we are not going to close the next round of
funding until applicants that were denied in the first round
have a sufficient opportunity to reapply in the second round. I
think it is crucial that they be given a significant period of
time in order to do that. If we need to keep the second round
open, we will do that so that people have the opportunity to
reapply. I don't think that it will be possible for applicants
simply to roll over into the second round, given that we may
make changes in the application process in the second round.
It may be possible to take their applications. We are going
to give all applicants that were denied some explanation as to
what the issues were so they can take that into account in
filing a new application for the second round.
Mr. Conaway. Mr. Strickling.
Mr. Strickling. On the second point, the one Jonathan just
referred to, I am confident that by the time we open up round
two, and open up the application window for round two, everyone
in round one will have a good understanding of where their
application ended up. So I don't think that there will be a
problem of people not knowing whether or not they should apply
in round two. They will know.
Again, as Jonathan said, it may well be that people will
need to reapply into round two. We just won't roll the
applications over. It may well be that depending on the changes
that are made in the program, if any significant ones are made,
that they will have to tweak their application. What I would
hope most people would do, though, is that they look at what we
do fund in round one to see what goes into a successful
application, learn from that, and on their own upgrade their
application to make it more attractive in round two.
With respect to our staffing, volunteers were only a piece
of our overall staffing approach to this program. We have added
approximately 40 new staff at NTIA to work on this program.
That staff has been augmented by about 100 folks that have come
in through Booz Allen and Hamilton, who we brought in as a
contractor to support us.
The issue of the independent reviewers was that all these
applications had to be reviewed under the terms of our grant
rules by three independent reviewers, and we did seek
volunteers, independent experts to come in and do that. Over
1,300 people responded to that call; 200 or 300 were rejected
for conflicts of interest or lack of qualifications. We have
used roughly 1,000 of these folks or will be using roughly
1,000 of these folks to review these applications in the first
round. The expertise of these people is quite, quite
remarkable. We have a former chair of a Public Utility
Commission, we have former executives from telecommunications
companies who have built these kinds of projects. So, people
responded to the call to serve their country and have stepped
up and have provided a very valuable service to us.
The Chairman. Thank you very much.
Mr. Bright.
Mr. Bright. Yes, sir. Thank you, Mr. Chairman and Ranking
Member for calling this hearing, and let me thank the two guys
for your testimony today. We appreciate you being here.
And for the benefit of time because we do have votes coming
up, I have one question, and I will yield back, and really
either one of you or both of you can answer if you can. We
recognize that only $4 billion is not enough to ensure that
everyone in this country has access to broadband. It is key for
communications, education, medicine in rural areas such as mine
in southeast Alabama. But if your agencies were to award the
full grants that we have access to today, how much closer will
we be to deploying broadband Internet to all Americans across
our country? Do either one of you have an intelligent or an
expert answer to that question?
Mr. Strickling. I am the visiting team here, but I could go
first.
Mr. Bright. Okay.
Mr. Strickling. No. I don't think we truly do. We are
awarding grants according to the applications we receive, and
so it is impossible to predict today as to how far we are going
to be able to move the needle overall. It will depend, in large
part, on who applies and where we can fund the applications.
But I am confident we are going to have a substantial impact on
improving service in our unserved and underserved communities.
Mr. Bright. So is it correct to assume that this is really
just a drop in the bucket compared to what we really need
throughout our country to make sure every American has access
to broadband?
Mr. Strickling. The FCC has estimated that the need is
anywhere from $20 to $350 billion, depending on how fast a
speed of service you want to guarantee for everyone. So, yes, I
think it is fair to say that $4.7 billion here is not going to
get us all the way there.
Mr. Bright. Sure. Okay. Mr. Chairman, I will yield back my
time for the benefit of another Member.
The Chairman. Thank you. We will have three votes coming
up. Mr. Roe, do you have a short question?
Mr. Roe. Very short.
The Chairman. Okay. We will go ahead and work you in, and
after his question we will recess. If further Members are going
to have questions, we will come back. If you do, we will come
back briefly to finish up. We only have three votes, so
hopefully we will not be gone that long. All right. We will
conclude with Mr. Roe's question.
Mr. Roe. Thank you, Mr. Chairman. Very quickly: One, I may
have just gotten here too late, but I live in a rural area in
Tennessee, what is your definition of remote, and second, do
the applicants who have been denied, do they know to reapply?
Have they been informed in writing so that they won't call us
later and say, ``Well, I didn't know you had to reapply.''
And then one very quick question. I get asked his every
time I go home. How much of the money are we going to spend on
signs to say that this project has been funded by the stimulus
package? I get worn out by that every time I go home. I hope
there are no signs. I hope you put them on the Internet. Thank
you. I appreciate it.
Mr. Adelstein. Well, in terms of the definition of remote,
we are going to work on that. As far as your question about
will applicants be informed, we are going to let every single
applicant know what their status is before we finalize the
second round of funding. So we will clearly indicate that we
want to encourage them to reapply. In many cases we are going
to give them some idea about what happened in the first round
so they will be able to target their next application more
effectively to meet our standards. We want to make sure that we
give everybody an opportunity to do that.
Mr. Roe. And the signs?
Mr. Adelstein. It is a good idea to put them on the
Internet. I think there might be some requirements in the Act
about that. We want to minimize, of course, the expense that
would be used for that purpose, and I don't anticipate there
being extensive signage.
Mr. Roe. Thank you, Mr. Chairman.
The Chairman. Thank you. We will recess and reconvene
immediately after votes.
[Recess.]
The Chairman. We will now reconvene this Subcommittee
hearing on Rural Development, Biotechnology, Specialty Crops,
and Foreign Agriculture. Thank you for your patience.
While we are waiting on the other Members to come in from
the votes, I am going to go ahead and yield to the Ranking
Member for his second round of questioning.
Mr. Conaway.
Mr. Conaway. Thanks, Mike. I appreciate that.
Forgive me, Mr. Adelstein, for reading this, but I need to
get it correct. Mr. Adelstein, do you believe you violated the
technology neutral statute by including the non-discrimination
provisions and the provisions of the NOFA in considering the
applicants who applied?
And to follow up, why do the non-discrimination provisions
go beyond the regulations proposed by the FCC in October by
applying these rules? Existing broadband providers or providers
that are not connected to a large network are not applying for
the grant and loan funding, in part, because these requirements
will place costly restrictions on the network and will impose
neutrality policies to go above and beyond what has been
regulated by the FCC. And I, for the record, recognize that you
come from the FCC and know a little bit about this subject, so
what are your thoughts.
Mr. Adelstein. As you noted, we are not specifically
required by the legislation to include non-discrimination
provisions, but we do believe that we have authority to do so
under the statute. We have found----
Mr. Conaway. The fact that we said it once means you say
that you have the authority to do it?
Mr. Adelstein. Yes. I mean, NTIA is required to do it, but
we believe we have the authority. We wanted these programs,
basically, to operate in concert and to be as consistent as
possible. So working in concert with the NTIA, and with the
Administration, we came up with the exact same definition of
non-discriminatory networks with the goal that public funds
should support interconnected and non-discriminatory networks.
That was an important policy goal.
Mr. Conaway. And so you are setting yourself up now as a
mini FCC to be the arbitrator of that, or shouldn't we defer in
all these matters, arguments from both sides, to the FCC;
rather than setting up your new system that is now a second
layer that makes it even more difficult to comply with.
Mr. Adelstein. This system was actually developed in
consultation with the FCC with their expert input. They didn't
have a formal role in making the decision. We did as the
Administration, but we did consult with the FCC in terms of
their expertise on that, and of course, also with the NTIA,
which is an expert agency of the Federal Government on
telecommunications.
Mr. Conaway. Yes, and your explanation of why 60 percent of
the applicants are wireless rather than cable or non-wireless.
Mr. Adelstein. Well, that 60 percent is not all wireless.
It means that 60 percent of the applications had at least a
wireless component in them. Some of them were all wireless, but
we believe that is because wireless technology is such an
effective way of reaching hard-to-reach areas it can really
shorten distance, and it can be much cheaper than laying fiber.
Some of the very high bandwidth, microwave, for example, is not
necessarily wireless to the last mile. Some of it is Middle-
Mile wireless that involves backhaul. So there are a variety of
different uses of wireless in this. We did get a large number
of applications, and we had overwhelming demand despite the
interconnection and non-discrimination requirements for the
program. So there were a number of wireline companies that did
apply.
Mr. Conaway. Okay. Thank you. The fact that you got 2,200
applications is eye opening, but until you tell me that 2,229
of them met all of criteria and are all viable, I am going to
be hard-pressed to argue that that is a great statistic to use,
and you told me earlier that you are not prepared to tell us
that yet.
This is not staff driven. The tyranny of an artificial
deadline is driving much of this pace. Mr. Strickling's team
has been working with states to build a broadband map, but it
won't be completed until February of 2010. As a business
person, as a protector of the taxpayer dollars, and again, I
know it is the stimulus hard date, but does it make sense that
we would spend all the rest of this money before we have that
map? And I can understand maybe the first round picking up the
low-hanging fruit, but in addition we have allocated $350
million for the map. You have allocated $28 million so far in
15 states, multiply that by three or 3\1/2\ to get the rest of
the country.
You have also included 5 years of broadband planning, which
may be beyond the scope of what that map was supposed to be,
but are you going to spend all $350 million on this? And why
wouldn't we wait until we get the map to spend the rest of the
money, except for the artificial deadline?
Mr. Strickling. Yes, sir. You have a number of questions
there. Let me try to address them in order, but if I miss one,
please come back and follow up.
In an ideal world, yes, one would probably like to have a
map available to us from which to be making these grant
decisions, but that is not the world that was handed to us last
February. And it is not really our issue. Our issue is to fund
projects in unserved and underserved areas. The presence of a
map would assist in that effort, but it is by no means the only
way we can make that judgment.
And so as I indicated earlier, we have collected
information from the applicants themselves in terms of the
availability of broadband in the area they propose to serve. We
have collected information from other service providers in
those areas as to the availability of whatever they might be
offering. We have asked the states to provide whatever
information they can bring to bear on this, and a number of
states have previously done maps of varying quality that
provide----
Mr. Conaway. So all of that information is available now to
your decision makers?
Mr. Strickling. Yes, sir, and our obligation is to award a
grant only to an area that meets the standard of unserved or
underserved. So I am confident we can do that even without the
national broadband map.
Mr. Conaway. And one last follow up then. Let us assume
that you don't have enough qualified grants. Would you
recommend that the money not get spent by September 30 if it,
in effect, would be wasted?
Mr. Strickling. We are not going to waste any money,
Congressman, so----
Mr. Conaway. Be very careful. This is $9 billion, so you
need to be very careful making those statements.
Mr. Strickling. Yes, sir, but avoiding waste, fraud, and
abuse is right at the top of our list, and we would not fund a
project that we do not think is a quality project. We will not
fund a project that we don't think is sustainable and will not
be continuing to serve the community 5 years from now. And so
those are all part of our factors.
Based on what I have seen in the pool so far, I think we
could spend well more than $7 billion that Congress
appropriated and fund quality projects, but if the hypothetical
you offer were to be the case, we would certainly step back.
The Chairman. Thank you very much. Mr. Kissell.
Mr. Kissell. Thank you, Mr. Chairman. Thank you, gentlemen,
for being with us today and staying with us through the votes.
I have to admit that all the talk about the first round,
second round, changing definitions of remote, underserved, it
would seem to me to make it hard to know for some of the people
that are wanting to participate in this just exactly where they
stand, and you said that, that it is a work in progress.
As I look at a map of North Carolina, which is also my home
state, we have two remote areas, and it is the very eastern
part of the state, Outer Banks and very western part of the
state up in the mountains. But we have a lot of areas that do
not have access.
So my question is this, and for both of you, is your modus
operandi in determining how we go about this, is to provide
access to as large of a percentage of those that don't have
service population wise or geography wise?
Mr. Adelstein. We are really looking at people. I mean, how
many people can we get this service to? The remote definition,
which we are reviewing from top to bottom and thinking about
what we could do, was one way of identifying the most hard-to-
serve areas. We want to target the funding towards the areas
that are hardest to serve. I think you know that in the past--
--
Mr. Kissell. Let me interrupt just one second. I know my
time is limited, but remote, by definition, sometimes it means
there are no people there, and the area where we have people
that are underserved, who is going to get the money? Is it
going to be where we have the people that have not fit the
definition of remote because they are closer than whatever
miles to a population center, but they don't have service now,
or are we going to look at geography, which is beyond that,
where there are not as many people?
So my question is, is it people and percentage of
population, or are we trying to cover percentage of the map in
geography?
Mr. Adelstein. Right now we have that very question out for
comment in the RFI process. We were trying to determine exactly
how we can reach the people that need broadband that don't have
broadband because the marketplace left them behind.
Now, remoteness is one factor, and certainly there are
other factors such as density or income that we have asked for
comment on. We haven't determined, yet, exactly how to do it,
but our goal is, as you say, to target those people who really
need the Federal assistance, and whether we have it right is
certainly----
Mr. Kissell. Well, you have to understand that it is not
the most consoling idea to me that we are spending billions of
dollars and still asking these questions. To have consideration
towards the people that are asking me and my staff how can they
go about doing this, getting the grant or whatever, but yet we
are still so fluid that we don't have it. To say we are going
to cover the largest percentage of people that don't have
service, and recognize that may not be as much of the map as we
would like to cover. But the percentage of people, that is
where, it seems, we are heading.
And with all the questions that are still out there, is
that the driving force behind what we are trying to do, to
cover the largest number of people versus the largest
percentage of the map?
Mr. Adelstein. The largest number of people served is one
of the factors in our current NOFA. We do award extra points
for those applications that have more individuals that are
unserved that are covered. So we already have that taken into
account.
We also look at the remoteness issue, and next time around
we are going to figure out how to get the mix right so that we
can maximize the effectiveness of the dollars. In the case of
the remote area definition, if anything, the definition
protected us from spending money that we wouldn't otherwise
spend. So we are not wasting any money. We have \2/3\ of the
funding left in the next round. The idea of doing this in
multiple rounds was to learn about exactly these kinds of
issues to better target the funds in the second round. If
anything, in the first round the remoteness definition was very
tight. So, we have funds left to target in the second round,
appropriately, to make sure that we can maximize the bang for
the taxpayer buck.
Mr. Kissell. Well, it would seem that we still have a lot
of the basic questions, Mr. Chairman, that we were looking at
last summer unanswered, yet, we are giving out the money--I
know there is a lot of need out there, but it just seems like
we really have to zero in on where this needs to go to do the
most good to bring the people in for all the reasons we talked
about.
I yield back, Mr. Chairman.
The Chairman. Thank you, and thank you, Mr. Kissell.
Dr. Minnick.
Mr. Minnick. I am from Idaho, and we are less concerned
about Congressman Kissell's problems in North Carolina, but we
have some problems of our own. We have the problem that you
have addressed, and I appreciate your willingness to take
another look at the remote definition. We have lots of places
that are between 5 and 50 miles of metropolitan areas that have
big mountains in-between and really no communications. So that
definition is too restrictive for our geography for the reasons
others have said.
We also have another problem--I don't know if it is similar
to what my colleagues have been addressing--but the process of
prioritizing, to the extent there is local input, was directed
by Congress to go through the governor or at least a portion of
it. And in our case, perhaps inadvertently or perhaps because
it was premature, we have many applications that were very
worthwhile and worthy, at least as Congressman Simpson and I
looked at it, that did not get prioritized as highly as we
might have hoped the governor's staff would have done.
Will there be an opportunity in the next round for
Congressman Simpson and I, and others that participated to give
you some direct feedback with respect to why we think a
particular proposal is meritorious and whether or not it was
prioritized by our governor?
Mr. Adelstein. We would certainly welcome your input. RUS
doesn't have a formal role for the states, so I will leave that
to Assistant Secretary Strickling, but as far as your input, we
would really welcome any thoughts you have on the merits of the
application.
Mr. Minnick. Well, thank you, and we appreciate your
wanting to do this in rounds. We appreciate, hopefully, the
opportunity to give feedback to the applicants who failed to
receive a grant so that they might be able to get your advice
in addition to just looking at other successful proposals as to
how they could strengthen their proposal. And then if you would
as you just stated, give those of us in the Congressional
delegation an opportunity to at least express our opinion, we
would be appreciative of that process.
So thank you very much.
Mr. Strickling. Congressman, could I just fill you in on
how the process does work at Commerce on the state
consultation, to clear up some confusion?
Mr. Minnick. Certainly.
Mr. Strickling. We did solicit each state to provide
whatever input they wished to concerning the priority areas in
their state for funding. If they wanted to comment on specific
applications, they were permitted to do so, and many states did
do that. That information is another factor in our process. If
a project was very low-scored by our reviewers, the fact that a
state liked it will not rescue that project, and just the same
if it is a good project as our reviewers have determined, the
fact that a state didn't recommend it is not the death knell
for that project either. It is just another factor we take into
account.
And then I have received dozens of letters from Members of
Congress in support of individual projects. So, again, that is
available at the Department of Commerce and will continue to be
available.
Mr. Minnick. You can expect some more, and I might ask
would it be helpful if in these subsequent rounds the state
were to give you some additional comments with respect to how
they view this next tier of applicants? Are you taking that
information from them as well?
Mr. Strickling. There is no question about that, we will.
It is required by the statute for the program we are running at
the Commerce Department.
Mr. Minnick. Well, great. I appreciate that information,
and I appreciate your receptivity, and you will be hearing from
Idaho.
I yield back.
The Chairman. Thank you, sir.
Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman. I do have several
questions to add for the record, but I have one final one that
is a bit time-sensitive, and that is that as we approach this
final notice of funding availability to spend the remaining \2/
3\ of the money, what changes to the rulemaking processes are
you contemplating implementing? Would you respond to the
concerns of this Committee and allow for a comment period
following the rules you published in January, and allow enough
time to make some critical adjustments?
The idea being that if we are working off of a flawed rule
now and we don't know what the new rule is until the new NOFA
is done, and we are off and running again with a bad rule. As
we heard the conversation about remote areas last summer, are
we going to repeat that same process, or will there be some
amount of time to digest and comment on what you are doing?
I just need a commitment from you guys on that this
morning, and we will submit the rest of the questions for the
record.
Mr. Adelstein. We certainly welcome your input. It is most
helpful to get it sooner rather than later, obviously, because
given the time crunch as you indicated earlier, we can't afford
to delay the process.
Mr. Conaway. I guess the problem, though, Mr. Adelstein, is
if you publish the NOFA and the rule and all this stuff on the
same day, then our input would be much like the input we were
able to give in July, which was a very similar process.
Will there be some limited amount of time between your rule
publishing, and all the changes you are making to what you
decided to do in July and the NOFA, to allow a comment period
and allow for some response?
Mr. Adelstein. It is not currently contemplated to do that.
Right now we do have the RFI out for comment, and we would
welcome comments from Congress, obviously subsequent to the
closing of the RFI. We always keep that open for Congress
anytime that you want to make comments. Our goal now is to
publish a NOFA that would begin the process for applicants to
apply, because if we have another comment period on top of
that, it would delay the actual opening of the window for
applicants.
Mr. Conaway. So the changes you are making to the
definition of remote will we know those in advance before you
publish the NOFA? Or will those be published concurrent with
the NOFA?
Mr. Adelstein. The NOFA would be the document in which we
would publish those changes but we----
Mr. Conaway. Don't you think there would be some advantage
to publishing those changes first?
Mr. Adelstein. If we had time, it would be an advantage.
Mr. Conaway. Okay. So what I am hearing, Jonathan, is that
we are going to keep the same process as we did in July. Yes or
no?
Mr. Adelstein. Well, we would be happy to talk to you about
it. I mean, in other words, as we are getting closer, we could
come to the Committee informally or formally and discuss what
we are contemplating if that would be helpful.
Mr. Conaway. Well, it is not just the Committee. I am not
going to file an application, but the folks out there in the
hinterlands who will be in the process of not knowing at that
point whether their first application made the cut or not; or
they may know it didn't make the cut, and they are in the
second round, but they don't know if that is going to go
forward. It seems to me you are putting the cart before the
horse, and this is a classic ready, fire, aim approach that we
saw happen in July, and you don't have to answer. I just
encourage you that that doesn't make sense to spend, as Mr.
Strickling said, the money in the best interest of the
taxpayer.
I yield back.
The Chairman. Thank you, Mr. Conaway.
Gentlemen, one last question during this hearing and any
other questions as Mr. Conaway indicated can be submitted in
writing.
How have the agencies processed the tremendous amount of
information provided during the public comment period by
incumbent service providers? And in particular, what is the
process once a competing provider asserts that there are other
providers, or rather what is the process once a competing
provider asserts the area is adequately served?
Do the agencies contact the original applicant or do their
own research, or do you determine who is correct or a
combination? How do you resolve that?
Mr. Adelstein. I can go first. Okay. I will go ahead. We
make the final determination, obviously, based on everything in
the record. We look at all of the information that was filed by
incumbents, for example, that they have a concern in the area
that an applicant said wasn't served, that was served. Then we
have at that point competing information in the record. One
person says it is served, one person says it is not. We have to
make that determination. We look at as many sources as we
possibly can. Some states have broadband maps. We have GFRs or
general field representatives, that we actually have going out
to service areas to make the determination themselves, even if
there wasn't a challenge that was made by the applicant
themselves.
We have over 1,181 applications with comments on them now.
Out of all the applications we had 11,000 responses on 80
percent of the applications, and we plan to assess all of those
service areas in the step two applications in particular. We
are focusing on only those ones that we are contemplating
funding. So, after we finalize the scores and determine what we
send in for what we call our step two process, where we get
additional information from applicants, we are then focusing on
these. That is where we are sending our staff out in the field,
that is where we are analyzing additional data that we have in
addition to our own due diligence.
We have 100 employees that are analyzing incumbent
responses. We take very seriously making sure that we are not
providing service where it is not needed, where there is
already service provided. We are digging very deeply into this
on an applicant-by-applicant basis, particularly those
applications that are ones that are close to being funded.
The Chairman. Thank you.
Mr. Strickling.
Mr. Strickling. Similar to what Jonathan described, we are
only evaluating this information on projects that are in due
diligence, so we won't do it for the entire application pool.
But if the project scores high enough and is carried forward
for additional detailed study, then we will evaluate the
information the applicant provided, the information that may
have been provided by any other service provider in the area,
as well as the other sources of information from states and
otherwise, to evaluate whether the service area proposed by the
applicant meets the unserved or underserved definition.
I would go beyond that to say that even when a project
satisfies the tests that we set forward in the definitions, we
are cognizant of trying to minimize the amount of overlap that
there might be between the project and any existing
infrastructure. As Jonathan said, it is not going to be a
useful expenditure of Federal dollars to fund a project that
simply duplicates facilities that are already in place without
a very, very good reason why we might do that. So even a
project that might meet the definition of unserved or
underserved still might not make it through our review process
because of the overlap question.
The Chairman. All right. Thank you very much. Thank you for
your attendance today and attention to these matters. As you
can see, they are of great concern, and there have been some
questions asked that you, I know, will need to get back with us
on. Please do so, except for the one that I said to get back to
us before the Christmas holidays, which I understood, would
take longer. I would ask you otherwise for all other questions
to submit, pursuant to the rules of the Committee, and that the
record of today's hearing will remain open for 10 calendar days
to receive additional material and supplementary written
responses from the witnesses to any question posed by a Member.
If you would do that, we would greatly appreciate it. May
God bless all of you during this Thanksgiving season. I hope
you will travel safely and enjoy this special time with your
families. We wish you a happy Thanksgiving.
I will now conclude this hearing of the Subcommittee on
Rural Development, Biotechnology, Specialty Crops, and Foreign
Agriculture. We are adjourned.
[Whereupon, at 12:40 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement of Delbert Wilson, General Manager, Hill Country
Telephone Cooperative; on Behalf of National Telecommunications
Cooperative Association
Chairman McIntyre, Ranking Member Conaway, Members of the
Subcommittee, I would like to thank you for holding a hearing to review
the American Recovery and Reinvestment Act's (Recovery Act) broadband
programs. I offer the following statement on behalf of Hill Country
Telephone Cooperative of Ingram, Texas and the National
Telecommunications Cooperative Association (NTCA), which represents
more than 580 small, rural, community-based communications service
providers throughout the nation.
Hill Country, where I serve as the General Manager, provides
telecommunication services in 15 exchanges located in 14 counties
spread over 2,900 square miles in rugged terrain--equivalent to the
combined size of Rhode Island and Maryland. Organized as a cooperative,
Hill Country's top priority has always been to provide every one of our
consumers, who are also our owners, with the very best communications
and customer service possible--an entrepreneurial spirit that is
representative of our 1,100+ rural counterparts that together serve 50%
of the nation's land mass but only 10% of the population.
Hill Country came into being, like many other telecommunications
systems, soon after the 1949 passage of the Telephone Amendment to the
Rural Electrification Act, which made Rural Utilities Service (RUS)
loan funds available to finance rural telecommunications systems. At
that time, the Bell companies and other large telecommunications
companies were already well established in the nation's cities and
growing suburban areas. However, they often did not provide telephone
service, much as they often today do not provide broadband service, to
the most sparsely populated rural areas. Therefore, in part due to
support from RUS, the unfulfilled need for telephone service was been
met by the men and women of rural communities who joined together to
develop, finance, and build their own community based
telecommunications systems. If it were not for RUS and crucial Federal
cost recovery mechanisms, like the Universal Service program and the
intercarrier compensation regime, many rural areas of our nation would
still be without adequate telephone services.
Now, the focus and the need have appropriately shifted to more
advanced communications services. Working in tandem with the
aforementioned cost recovery mechanisms and private investment, the
Recovery Act's broadband initiatives are additional tools that will
help rural communications service providers continue the effort to
replicate the success of their telephone service build-out by steadily
deploying broadband infrastructure and related services to an
increasing percentage of their subscribers.
Listening to the needs of rural consumers and understanding the
ever-growing importance of broadband in everyday life, Hill Country is
actively engaged in a major outside plant modernization project. This
$57 million initiative involves the deployment of 560 miles of fiber
optic cable, 280 digital loop carriers and state-of-the-art soft
switches throughout a substantial portion of our market area. Why are
we doing this? Quite simply, in an effort to provide the broadband
infrastructure that is necessary to support the growing bandwidth needs
of our members.
However, even in spite of all our efforts tied to this
modernization project, including the maximization of our debt load, 543
households--approximately five percent of our market area--will remain
unserved from a broadband perspective, because the costs of providing
service in these remote, economically challenging areas are simply
overwhelming. These 543 households are in outlying areas that are
beyond the 18,000 kilofeet standard where DSL will typically operate
effectively. According to a recent study conducted by Hill Country, 522
miles of fiber optic cable would need to be installed to provide
broadband service to the five percent of our market that remains
unserved. This effort would cost $20 million at an average cost of
$37,000 per subscriber--about four times the average cost per
subscriber of the other 95 percent of our market.
A typical business plan that would sustain itself simply cannot be
constructed for this segment of our market. It is in these unserved
areas that support from the RUS and National Telecommunications and
Information Administration (NTIA) broadband funding incentives, which
are associated with the Recovery Act, could be critical in enabling our
system to overcome the economic challenges of providing broadband to
100% of our customers. Clearly, there is a real and true need for these
dollars and undoubtedly they would have an immediately stimulating
effect during the construction stage and thereafter during the consumer
usage stage.
While we had hoped to apply for a RUS Broadband Initiatives Program
grant to serve the 543 households in our outlying areas, we were
disappointed to discover that because the proposed project was within
50 miles of a community with a population of slightly more than 20,000,
the project did not meet the program's definition of a remote area and
could not be considered for a grant. While I respect RUS's efforts to
ensure funding is not directed toward projects located near urban
areas, it is difficult to argue that the 543 households we wish to
serve are not in a remote area. I know many Members of the House of
Representatives have raised similar concerns, and I hope RUS will make
changes to this definition in subsequent rounds. Since it is not
financially feasible to provide service to these households, without a
stimulus grant or some other similar form of outside support, these
households, and many households like them throughout the country, will
continue to be left without broadband service.
Rural areas throughout our nation are low density and even higher
cost. Some refer to these unserved areas as ``market failures,'' where
competition and existing Federal programs have failed to help provide
consumer choice. I like to refer to these areas as ``economic
realities.'' Serving our nation's rural citizens with telephone service
has always been challenging and bringing broadband to these sparsely
populated areas is even more challenging. It is these ``economic
realities'' that lead to our discussion today about the potential
impact of the Recovery Act's broadband programs.
As a recent USDA study report found, rural communities with greater
broadband Internet access had greater economic growth than areas with
less access. The study compared counties that had broadband access with
similar counties that had little or no broadband access. It's not
surprising that the study showed that employment growth was higher and
non-farm private earnings greater in counties with a longer history of
broadband availability.
Broadband is not only the great equalizer between rural and
suburban/urban areas of our nation, but also with the United States in
relation to the rest of the world. Broadband infrastructure deployment
is critical to the economic development and national security of our
nation. As applications evolve over broadband, all Americans connected
will experience untold opportunities for employment, health care,
education, as well as entertainment. As the world is getting
increasingly competitive, it is essential that the United States have a
ubiquitous national broadband network where all Americans, whether
urban, suburban, or rural have access. Although our rural areas are
sparse in population, these people are critical in our nation's economy
and security--providing food, fiber, and energy for a growing nation.
As the process continues to move forward for the BIP and BTOP, we
would like to highlight several areas we believe could be improved upon
for subsequent rounds:
(1) As I mentioned earlier in my testimony, BIP's definition of
remote should be reconsidered. In addition, the BIP evaluation
criteria rewards one point to a project for every 10,000
unserved households that receive broadband service. Considering
that many small, rural communication service providers have
only a few thousand access lines in their service area, it is
nearly impossible to collect points based on this scoring
criteria. For these smaller companies, perhaps a system that
rewards points based on a project's expansion in percent of
households served would be more equitable to providers of all
sizes.
(2) As everyone knows, as a result of technical problems during the
first round, many applicants had difficulty submitting
applications. This had a significant impact on small broadband
providers with limited staff and other resources. We understand
the server capacity and browser incompatibility issues are
being addressed. Therefore, we remain cautiously optimistic
that applicants will not be confronted with delays caused by
these technical problems in subsequent rounds.
(3) It's important to ensure that states and municipalities do not
receive stimulus funding to compete with private, incumbent
providers for the same services in the same location. We
believe the Recovery Act broadband programs should first focus
their resources on unserved areas, and are particularly
concerned that states and municipalities have submitted
proposals to overbuild areas which can, at best, support only
one broadband provider.
(4) We are concerned about the apparent conflict of interest posed
by the ability of states to both apply for BTOP funds and to
make recommendations concerning the allocation of funds for
qualifying projects in each state. States must not be able to
prioritize their own applications above other applicants'
proposals without sound justification.
(5) We hope that the lessons learned from the first round of
funding can be used to make the application process for
subsequent rounds more streamlined and efficient--taking into
consideration the considerable time and costs for very small
broadband providers with limited resources.
(6) Without a challenge mechanism or verification measures,
inaccurate ``advertised'' broadband transmission speeds may
block broadband service providers from submitting applications
to serve areas that, based on actual transmission speeds, would
qualify as underserved and unserved areas.
(7) As has been noted by other Associations, NTCA believes the
process would be more efficient if existing providers had the
ability to download or otherwise access Census block/group/
tract data from applications and then match that information to
their own service area database which could then be uploaded to
the agencies.
(8) NTCA supports lifting the current limitation that only displays
up to 7,500 Census blocks per proposed funded service areas.
The database limitation requires members to use a mapping tool
to zoom in on each individual Census block and manually note
the blocks included in a project.
(9) The current system does not link applications to all states
covered by funding service area requests. The agencies can help
ensure more complete responses if the database links
applications to all states in which service is proposed.
(10) NTCA is concerned that BIP non-remote, rural applicants can
receive a maximum of only 50% grant funding when BTOP projects,
that may not be in high cost, rural areas, may receive a grant
of 80% for projects.
We believe that the funding provided by the stimulus bill, in
combination with other programs, such as the RUS Broadband Loan and
Loan Guarantee Program, the Community Connect Program, Universal
Service, and the intercarrier compensation regime will help enable
America's rural, community-based telecommunication system providers to
meet the broadband needs of our nation's rural citizens. The nearly
2,200 applications for broadband stimulus funding are an indication of
the strong interest in and support needed to extend broadband service
to unserved and underserved areas--particularly in rural areas.
However, once these Recovery Act programs are over, it's important to
remember that much more will have to be done if we are to achieve the
national goal of ubiquitous broadband. According to a recent FCC task
force study, preliminary estimates indicate that investments in the
range of $20 billion to $350 billion may be needed for broadband
infrastructure, depending on the speed of service.
As for rural independent telecom providers, we emerged in these
markets where no one else was willing to go. We understand these areas
and what their needs are. We are committed to these markets because our
systems are locally owned and operated. And we understand the programs,
like the stimulus broadband programs, and how to utilize them to
achieve your goal of ubiquitous broadband deployment that will reclaim
our international leadership in the communications sphere.
Thank you again for your work to address these important matters.
______
Submitted Questions
Response from Hon. Jonathan Adelstein, Administrator, Rural Utilities
Service, U.S. Department of Agriculture
Questions Submitted By Hon. Mike McIntyre, a Representative in Congress
from North Carolina
Question 1. According to the Government Accountability Office, NTIA
has been in talks with RUS about sharing some of RUS's field staff to
monitor NTIA projects, although no formal agreement is in place. How do
you expect this to work in practice?
Answer. At this time, NTIA has not approached RUS over sharing RUS
field staff to monitor NTIA projects. RUS and Rural Development have
experienced field staff throughout the country that currently monitor
our telecommunication, electric, water & environmental, renewable
energy, business, housing and community facility loans and grants. To
ensure our mutual interests in making the broadband recovery program a
success, we would certainly entertain the concept of collaborating with
NTIA on field monitoring. When one Federal agency performs services for
another Federal agency, cost reimbursements are generally handled
pursuant to the Economy Act.
Question 2. It was promising to see in the GAO report that you
anticipate extending the window for entities to submit applications in
the second round. Do you plan to also extend the review period to allow
incumbents to review potential violations of their service area?
Answer. Through our Request for Information (RFI) we are seeking
comments on ways to streamline the process by which incumbent service
providers can provide input into whether a proposed service territory
is unserved or underserved.
Question 3. The Request for Information indicates that you are
going to try and apply the regional economic development concept to
broadband deployment. Could you elaborate on what a successful project
within that initiative would look like?
Answer. Just as RUS supports the concept of leveraging our $2.5
billion in budget authority to deliver a higher level of program
activity through loan, and loan-grant funding, we also support the
concept of regional economic development. We believe that communities
working together, rather than independently, may increase economies of
scale to the project, promote broader rural economic development
strategies, and ensure more rural Americans in unserved and underserved
communities receive broadband service. A successful project could
involve a regional economic development plan that includes broadband
deployment as one of its key elements upon which business would be
developed.
Question 4. How have you ensured that applications applying to both
BIP and BTOP are processed in a timely manner without disadvantaging
rural areas seeking the higher grant funds available in NTIA? How has
the process of working some applications through both agencies been
handled? How successful has it been? How much delay has it caused?
Answer. RUS has the ability to make loans, grants, and loan-grant
combinations under ARRA. NTIA's BTOP program has grant authority and
can provide a grant only if the applicant can document that ``but for''
the NTIA grant, the project could not be built.
To best leverage taxpayer resources, the agencies decided that all
applications for a rural area should first seek BIP funds to determine
whether they could afford a loan product. At the same time, applicants
could elect to apply concurrently for the BTOP program in the event
that they did not qualify for BIP funding or provided evidence of being
unable to support a loan.
Once again, this approach is intended to identify whether a rural
applicant could afford a loan product, which would reduce the cost of
the program and target grants only to the neediest areas. If rural
applicants cannot afford loan products, they can automatically be
considered by the BTOP program for grants. Through this policy, the
agencies can leverage resources, maximize the number of communities
that can be assisted, help applicants and NTIA document compliance with
the ``but for'' test, ensure that grant funds are used judiciously, and
provide rural applicants with two funding opportunities.
Both RUS and NTIA are simultaneously reviewing joint applications
to ensure that applications are not delayed. We have closely
coordinated with NTIA throughout this process. We believe the process
has worked well and ensures that Recovery Act broadband resources are
leveraged to the maximum extent possible.
In addition, in our RFI, we asked for public comment on the joint
application process and we will plan to address this process in the 2nd
NOFA.
Question 5. What is the average monthly cost to the end-user for
broadband service in rural areas? Do you know how this compares with
the average broadband costs in urban and suburban areas?
Answer. The RUS is unaware of any comprehensive or conclusive study
that provides sufficient granular or aggregate data to make this
comparison.
Question 6. Are you getting applications from high poverty areas?
Do matching funds become a problem in any of these areas?
Answer. Yes, RUS has received applications to serve areas with high
poverty. Since RUS can provide up to 100% financial resources through
loans, grants and loan-grant combinations, matching funds are not
applicable to RUS's BIP program. We have asked for public comment in
the RFI on how we can best serve low-income areas.
Questions Submitted By Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. Please provide an update for the Committee regarding
how much funding will be approved to devote toward expenses not
directly related to building infrastructure, such as signs which
advertise the use of stimulus funds for each project?
Answer. Since no awards have been made, this information is not yet
available.
Question 2. We understand that 2,229 applications were received
through the first NOFA. How many were found ineligible for RUS funding,
and how many were ineligible for any funding?
Answer. At this time, all applications are still under review by
RUS, NTIA or by both agencies for jointly BIP/BTOP applications. RUS
has notified NTIA that we have determined that a loan request would not
appear feasible for a limited number of joint applications. Those
applications are still under review by NTIA. To date, no applicants
have been informed that that were ineligible for consideration for any
Recovery Act broadband funding.
Question 3. It is our understanding that last mile, remote
applications constituted 18% of the 2,229 applications, and $3.84
billion in requested funds. This is almost equal to the entire amount
of program level funding made available in the July NOFA. In spite of
the flaws in the July NOFA, this clearly shows a need to reach unserved
areas in deep rural America and a desire by stakeholders to fulfill
this mission. How is RUS viewing this response, and are you going to
reprioritize the funding you have available for rural broadband in the
second NOFA?
Answer. RUS has extensive experience in handling oversubscribed
broadband programs in unserved areas. In Fiscal Year (FY) 2009, RUS
received over $200 million in applications for its Community Connect
Broadband program, which serves rural communities with no broadband
service. This was an oversubscription rate of almost twice that which
was received under our first NOFA. Secretary Vilsack recently announced
awards for the full $13 million under our FY 2009 appropriation.
Through our experience with the first NOFA and the comments
received under our RFI due by November 30, 2009, RUS is considering
several options to ensure that limited grant funds reach the most
rural, difficult-to-serve and unserved areas.
Question 4. You said you are contemplating major revisions to the
rules for the final NOFA. Could you please list in detail which options
you are considering?
Answer. RUS will consider what we learned in this first round in
developing our next round of funding. We are aware of concerns that
have been raised regarding a wide range of issues. These include the
definition of rural and remote areas; eligibility standards for
unserved and underserved areas; scoring weights for various factors;
and concerns regarding satellite service. Other options that both NTIA
and RUS are considering are outlined in our RFI published in the
Federal Register on November 16, 2009. We look forward to the comments
received from the public before any final decisions are made. We will
be guided by an evaluation of the experience and feedback from the
first round of projects and comments received under the RFI.
Question 5. You mentioned that it was suggested combining the
remaining funds into a single NOFA would be advantageous. Who suggested
this?
Answer. This was a mutual determination made by RUS and NTIA based
upon our experience under the first NOFA. The recommendation was also
made by the General Accountability Office (GAO).
Question 6. You assert that moving up the timeline allows more time
for stakeholders to create a stronger application. Could you clarify
how an earlier deadline provides that kind of advantage over a deadline
a few months later in 2010? For those public-private entities who might
have been looking toward that third NOFA in 2010, how does moving up
the deadline assist them in their planning efforts?
Answer. With one additional NOFA as opposed to two, the agencies
have the ability to give applicants a longer timeframe (application
window) to submit applications. This longer application window provides
for more opportunities for collaboration among applicants and for
stronger and more strategic applications.
Question 7. You mentioned that your experiences with the first NOFA
have prompted you to consider alternative approaches to support your
efforts going into the final NOFA. Could you please outline
specifically what options you are considering?
Answer. RUS will take what we learned in this first round to heart
in developing our next round of funding. We are aware of concerns that
have been raised regarding a wide range of issues. These include the
definition of rural and remote areas; eligibility standards for
unserved and underserved areas; scoring weights for various factors;
and concerns regarding satellite service. Other options that both NTIA
and RUS are considering are outlined in our RFI published in the
Federal Register on November 16, 2009. We look forward to the comments
received from the public before any final decisions are made. We will
be guided by an evaluation of the experience and feedback from the
first round of projects and comments received under the RFI.
Question 8. Given that part of the intent of the stimulus bill is
to add jobs to rural communities, can you describe the formula you use
to calculate the number of jobs impacted through the broadband program?
Answer. There are many factors that will be used to determine the
success of the BIP and BTOP programs. Some of those measurements will
include short-term through jobs created in building these projects and
long-term through economic and social benefits that will result. At
this time, RUS is planning to utilize and track the number of jobs that
the applicant proposed to create. Our websites, www.broadbandusa.gov,
and www.recovery.gov lay out the performance measures for BIP and BTOP
and will track the success of these projects.
Questions Submitted By Hon. Glenn Thompson, a Representative in
Congress from Pennsylvania
Question 1. I understand that the carriers have commented on the
Advanced Regional Communications Cooperative's broadband application in
my district. Each of these providers stated that everything is fine
with broadband service in Clarion County. Well, as someone who
represents that region and hears from residents and businesses in the
area, I know that is not the case, with lack of reliable service the
norm. I know that both agencies will be focusing on the definition of
underserved and unserved, so can you talk a little more about those
definitions?
Answer. As required under the NOFA, to be eligible for funding
under the Recovery Act broadband programs, the applicant must provide
service in unserved and underserved areas. These definitions were
created jointly by RUS and NTIA after our initial Public Hearings, RFI
process and in collaboration with the FCC. The definitions and
requirements were clearly outlined in the NOFA. Applicants needed to
supply information on how they determined that their proposed service
territory met the requirements of the NOFA. The agencies also provided
the public and incumbent service providers the opportunity to provide
comments on whether an applicant's proposed service territory is
unserved or underserved through submission of documentation. The
agencies will evaluate the information submitted by the applicant and
documentation provided by the public and incumbent service providers
and make a final determination of whether the applicant met the
requirements of the NOFA.
Question 2. What restrictions are included in the rules related to
the sale or lease of assets by a recipient of a grant or loan?
Answer. The Notice of Funding Availability (NOFA) provides that
``The sale or lease of any portion of the award-funded broadband
facilities during their life is prohibited, except as provided herein.
The agencies may approve a sale or lease . . .'' under specific
conditions which are outlined in the NOFA.
This restriction was included in the NOFA to ensure that award
recipients did not sell or lease assets which were funded under the
Recovery Act. Such a 10 year restriction is common in other Department
of Commerce grant programs and was utilized for the broadband recovery
programs.
Question 2a. For how long are the restrictions in effect, and is
there a waiver process during the effective period?
Answer. The restriction period is the life of the asset or 10 years
after award. Both RUS and NTIA can generally approve the sale or lease
of funded equipment in cases where the sale or lease was set forth in
the original application and was part of the applicant's proposal, the
loan or grant is repaid, the project is continuing to fulfill its
intended purpose, and such a sale is in the best financial interests of
the government.
Question 2b. Does this kind of limitation discourage bona fide
applicants with real experience in the business of deploying broadband
networks from applying?
Answer. We are not aware that such a restriction discouraged
applicants from applying for the program. As mentioned, the restriction
is typical of other Department of Commerce grant programs.
Question 2c. Are you planning to remove this limitation for the
next round of funding?
Answer. Under our RFI published in the Federal Register on November
16, 2009, both agencies are looking for ways to improve the program
under the next NOFA. We will certainly entertain comments regarding
this subject and balance those against the potential for waste and
abuse.
Question 3. Most broadband providers did not apply for stimulus
funding in the first round, particularly incumbent telephone and cable
providers with experience in serving rural America. Are the
interconnection/non-discrimination provisions in the rules contributing
to this lack of interest? Will you consider modifying them for round
two?
Answer. We believe the overwhelming response of 2,200 applications
seeking $28 billion in funds clearly demonstrates that the requirements
of the NOFA were not excessively cumbersome. We regret that some
established phone companies chose not to participate in this NOFA, and
welcome the participation of the widest possible number of applicants
in the next round. All companies with concerns are encouraged to
comment under our RFI. We will certainly entertain comments regarding
this subject and ways to ensure that funds sought under this program
are used to the maximum benefit for all Americans.
Question 4. Have you established a process for the public or
existing service providers to appeal a decision to issue a loan or
grant if they feel an area should not have been considered eligible
because it is already served?
Answer. The public and existing service providers were provided a
30 day period to submit comments on the proposed service territories of
all infrastructure applicants. This timeframe ended for most
applications on October 28, 2009, and both agencies are currently
reviewing those comments.
Question 5. In the absence of a national broadband map, isn't it
important to have existing broadband service providers' data about
where they are providing service in order for you to determine if an
area is already served?
Answer. As required under the NOFA, to be eligible for RUS's BIP
program, any rural area proposed to be served by an applicant must be
unserved or underserved. Applicants needed to supply information on how
they determined that their proposed service territory meet the
requirements of the NOFA. The agencies also provided the public and
incumbent service providers the opportunity to provide comments on
whether an applicant's proposed service territory is unserved or
underserved through submission of documentation. RUS will evaluate the
information submitted by the applicant and the documentation provided
by the public and incumbent service providers to make a final
determination.
Question 6. What type of due diligence are the agencies undertaking
to determine if an area is unserved or underserved? How are you
verifying applicant's claims about whether an area is unserved or
underserved? What data are you relying on? Are your field
representatives working to verify this information?
Answer. As required under the NOFA, to be eligible for RUS's BIP
program, any rural area proposed to be served by an applicant must be
unserved or underserved. Applicants needed to supply information on how
they determined that their proposed service territory meet the
requirements of the NOFA. The agencies also provided the public and
incumbent service providers the opportunity to provide comments on
whether an applicant's proposed service territory is unserved or
underserved through submission of documentation. RUS will evaluate the
information submitted by the applicant and the documentation provided
by the public and incumbent service providers. We will also rely upon
FCC data, state broadband maps where available, and other available
data. In cases where the documentation is inconsistent, RUS may deploy
RUS and Rural Development staff to these areas to make a final
determination.
Question 7. Are you planning to make public whether you've
determined that a proposed funded service area is unserved or
underserved?
Answer. RUS will advise unsuccessful applicants why their
applications were not awarded funding under the first NOFA. This could
include eligibility concerns, low rating and ranking scores, and a
determination that all or a portion of an applicant's proposed service
territory may not have met the definition of unserved or underserved.
When completed, we believe the State Broadband Maps funded by NTIA will
provide a more comprehensive, granular and detailed map of unserved and
underserved areas.
Question 8. For the next round of funding is it possible that your
agencies could make public a list of all Census blocks in a proposed
funded service area, and allow existing broadband service providers to
submit information about whether they provide service in those Census
blocks, along with the number of households they serve? Wouldn't this
make it easier for you to determine whether an area is unserved or
underserved?
Answer. RUS appreciates the concerns offered by the Committee and
those from respondents to the proposed service territories. The Agency
has also received many suggestions on ways to improve this process.
Both RUS and NTIA are jointly seeking public comments on how the entire
NOFA process can be streamlined in our recently published RFI. We look
forward to carefully considering all these comments in developing our
second and final NOFA on this issue and other concerns that have been
raised.
Questions Submitted By Hon. Bobby Bright, a Representative in Congress
from Alabama
Question 1. You have taken a great deal of heat for the remote
definition published in the first Notice of Funding Availability. I,
like many other Members of this body, share this concern. But I also
understand that in past years RUS has been criticized for funding less-
remote project areas. As you move into the second round of funding, how
do you plan to thread the needle in finding a definition of remote that
suits your critics on both sides?
Answer. We appreciate the comments on our definition of ``remote''
rural areas included in our first NOFA. Our goal was, and continues to
be, to provide grants to the most rural and unserved areas that cannot
make a business case for a loan or loan-grant combination. Some
suggestions that have been offered to RUS to better define ``remote''
include density, population and income. These suggestions were included
in our RFI, as we seek comments from the public on how we ensure that
limited grant funds reach the neediest rural areas.
Question 2. During your recent testimony in the Senate, one Member
stated that there should only be one agency distributing this broadband
funding, instead of both NTIA and RUS. Do you believe that this Senator
was right? If not, why is the current dual structure appropriate?
Answer. Since the enactment of the Recovery Act in February, we
have worked side by side with our partners at the NTIA and the Federal
Communications Commission (FCC) to fulfill the President's vision for
promoting broadband access across the nation. RUS brings over 60 years
of experience in providing loans and grants for advanced
telecommunications in rural America. Our expertise in financing rural
telecommunications services is unparalleled. NTIA is the President's
advisor on telecommunications policy. Together, we have marshaled our
talents and joined forces to meet the President's vision. Congress
recognized this division of labor when it provided broadband funding to
both RUS and NTIA in the Recovery Act. In fact, this is a statutory
requirement under terms of the Act. We believe that the leverage
created by the two agencies will increase the availability and economic
development potential of unserved, underserved and rural communities
throughout the United States.
Question 3. Given that rural areas are some of the most difficult
and economically challenging to serve, will changes be made in future
rounds to allow 100% grant funding for all rural, unserved projects?
Answer. Under the Broadband Initiatives Program (BIP), RUS could
provide $2.5 billion in 100% grants to rural areas. With that same
budget authority, RUS can leverage these resources and provide far more
in loans, grants, and loan-grant combinations, which would increase the
taxpayer's investment and provide more rural Americans with access to
broadband. Our challenge is to provide a flexible mix of loans and
loan-grant combinations to those applicants that can support a business
case for a loan, and make grant funds available to those rural areas
that could not be served through any other means. This is one of the
areas that RUS is specifically seeking comments under our RFI. We look
forward to reviewing these suggestions to determine out best approach
to leveraging these resources under the next NOFA.
Question 4. As you are both aware, the application process for both
BTOP and BIP is a complex one. The ability to navigate through such an
intricate application process is a significant hurdle for many small
businesses. In your testimonies, you mention that you are working on a
plan for ensuring that the second round's application process is more
small business-friendly. Could you discuss your plans in more detail?
Answer. Both RUS and NTIA have learned a tremendous amount under
our first NOFA. While we have ideas for making the entire application
more user-friendly, we have specifically sought comments on how this
can be accomplished through our Request for Information (RFI). We will
rely heavily upon the suggestions and experiences from those comments.
Also, we intend to use this knowledge in developing our next series of
Outreach and Training Workshops.
Question 5. From news reports I have read that ARRA funding
applications total $28 billion in loans and grants. I recognize that
even $4 billion is likely not enough to ensure that everyone in this
country has access to broadband, but if your agencies award the full
amounts allowed for grants and loans in the first round of funding how
much closer will we be to deploying broadband Internet to all Americans
currently without it?
Answer. We believe that funding in the first round will make a
solid contribution toward deploying broadband to unserved and
underserved rural areas. Further, the middle mile projects funded under
the program will lay the foundation for future broadband expansion. The
experiences learned through the Recovery Act programs will provide
business models that can easily be replicated in unserved and
underserved communities and lead to enhancements to RUS's existing
broadband programs.
Question 6. Many are concerned about overlapping already-served
areas with these stimulus dollars. I strongly believe that NTIA and RUS
should not waste taxpayer dollars on funding broadband projects that
intend to provide service in areas already served. Is this a concern to
your respective agencies? And how do you plan to avoid overlapping in
the second round of funding?
Answer. RUS shares your concern that these valuable taxpayer
resources are put to the best use and provide broadband service in
rural, unserved and underserved communities. As required under our
first NOFA, to be eligible for RUS's BIP program, the applicant was
required to predominantly serve unserved or underserved rural areas.
Applicants needed to supply information on how they determined that
their proposed service territory meet the requirements of the NOFA. The
agencies also provided the public and incumbent service providers the
opportunity to provide comments on whether an applicant's proposed
service territory is unserved or underserved through submission of
documentation. RUS will evaluate the information submitted by the
applicant and the documentation provided by the public and incumbent
service providers. We will also rely upon FCC data, state broadband
maps where available, and other available data. In cases where the
documentation is inconsistent, RUS may deploy RUS and Rural Development
staff to these areas to make a final determination.
RUS is evaluating this process and will be evaluating comments
received under our RFI to determine how to address this concern in the
most prudent manner.
Response from Hon. Lawrence E. Strickling, Assistant Secretary for
Communications and Information, National Telecommunications and
Information Administration, U.S. Department of Commerce
Questions Submitted By Hon. Mike McIntyre, a Representative in Congress
from North Carolina
Question 1. According to the Government Accountability Office, NTIA
has been in talks with RUS about sharing some of RUS's field staff to
monitor NTIA projects, although no formal agreement is in place. How do
you expect this to work in practice?
Answer. NTIA will monitor all BTOP projects using NTIA staff and
the help of its contractor. NTIA will not use RUS staff to monitor
NTIA-funded projects. NTIA is working diligently to develop
comprehensive monitoring and reporting systems to help ensure that BTOP
projects fulfill the purposes of the Recovery Act and spend taxpayer
dollars wisely.
Question 2. It was promising to see in the GAO report that you
anticipate extending the window for entities to submit applications in
the second round. Do you plan to also extend the review period to allow
incumbents to review potential violations of their service area?
Answer. NTIA generally believes the first round process provided
existing service providers ample opportunity to submit information
regarding their services and ensure that BTOP funds support projects in
areas that meet the definition of unserved or underserved.
Nevertheless, in the recent Request for Information (RFI), NTIA and RUS
requested public comment on whether and to what extent the public
notice comment process should be revised in the second funding round.
We are reviewing those comments now as we consider potential changes to
the programs in the second round.
Question 3. You mentioned a possible targeting of ``regional
economic development'' or ``comprehensive community'' approaches in the
second round of funding. Please elaborate on what you intend there.
Answer. NTIA is exploring what we call a ``comprehensive
communities'' approach as the type of BTOP project that may offer the
greatest benefits per dollar spent. The paradigm for a ``comprehensive
communities'' proposal is a middle mile infrastructure project that
also connects key anchor institutions such as schools, community
colleges, libraries, hospitals, government facilities, public safety
entities, and other organizations that provide important community
services. The ideal project would also include commitments by providers
of end-user ``last mile'' services to use the new infrastructure to
offer broadband services throughout the relevant communities. Such
projects may be made stronger when proposed by public-private
partnerships, with the public involvement providing greater assurance
that the needs of the community are met, while experienced private
participants can bring appropriate know-how and expertise to the
project.
``Comprehensive communities'' projects can leverage resources and
better ensure sustainable community growth and prosperity. They also
can create consumer demand and lay the foundation for the ultimate
provision of reasonably-priced end-user or ``last mile'' broadband
services in unserved and underserved communities. As NTIA continues to
review BTOP projects, we will evaluate this approach and develop
further guidance for BTOP applicants.
Question 4. When a proposed service area is disputed by an
incumbent provider, the RUS sends field staff out to conduct a market
survey to investigate the claim. However, the GAO report says that NTIA
does not yet have procedures in place to address the claims but rather
is in the process of developing them. What has NTIA been doing for the
first round if it doesn't yet have a process?
Answer. NTIA has in place a process to evaluate claims regarding
the unserved and underserved status of a proposed funded service area
using information from several sources. NTIA considers data supplied by
the applicant, data supplied by existing service providers who choose
to comment, broadband maps compiled by states (if available), and
independent research. NTIA may request additional information from
applicants and commenters as necessary and appropriate. We are
confident that NTIA has sufficient information on which to base our
findings of project eligibility.
Question 5. Can you give us a brief explanation of the expertise
NTIA has in reviewing and making loans and grants?
Answer. From 1994 to 2004, NTIA managed the Technology
Opportunities Program (TOP), awarding over $230 million in grants to
over 600 projects that demonstrated the use of new telecommunications
and information technologies to provide education, health care, or
public information in the public and nonprofit sectors. In addition,
through the Public Safety Interoperable Communications (PSIC) Grant
Program, NTIA, in consultation with DHS, provides funding to help
state, local and Federal first responders better communicate during a
natural or man-made disaster. The program will make payments totaling
up to $1 billion through Fiscal Year 2010 to carry out the PSIC
program. NTIA also manages the Public Telecommunications Facilities
Program (PTFP), a long-running competitive grant program that helps
public broadcasting stations, state and local governments, Indian
Tribes, and nonprofit organizations construct facilities to bring
educational and cultural programs using broadcast and non-broadcast
telecommunications. For over 45 years, PTFP has awarded over $800
million in Federal funds for approximately 4,500 grants. NTIA's Low
Power Television and Translator Assistance Programs include the Low-
Power TV and Translator Digital-to-Analog Conversion (Conversion)
Program and the Low-Power TV and Translator Upgrade (Upgrade) Program,
which assist low-power TV broadcast stations to broadcast in analog
after the June 12, 2009 digital conversion deadline for full power
television stations or helps upgrade these types of facilities in rural
communities to digital transmission. NTIA also managed the Digital TV
Converter Box Coupon Program through which all U.S. households were be
eligible to request up to two coupons, worth $40 each, to be used
toward the purchase of digital-to-analog converter boxes. Under this
program, consumers redeemed 34.9 million coupons with a total value of
$1.4 billion.
Question 6. In a GAO report released this week, it is mentioned
that NTIA's initial risk assessment indicated that a lack of
experienced and knowledgeable staff was a key risk to properly
implementing the program in accordance with the priorities of the
Recovery Act. What has been done to address this?
Answer. NTIA has filled 42 positions with new employees and has
utilized staff detailed from other bureaus and agencies, each of whom
is working as hard as possible to effectively implement BTOP. NTIA also
has entered into a contract with Booz Allen Hamilton (BAH) to assist
NTIA staff in the grants administration process to ensure that we can
award Recovery Act funds in the most effective, equitable, and
accountable manner possible. NTIA has also entered into agreements with
the Grants Offices of the National Oceanic and Atmospheric
Administration (NOAA) and the National Institute of Standards and
Technology (NIST) to provide Grants Office services for the NTIA BTOP
grants. A major concern, however, is the fact that the Recovery Act
does not provide authority or funding for administration and oversight
of BTOP-funded projects beyond the end of Fiscal Year 2010. NTIA is
examining options to ensure sufficient administration and monitoring of
BTOP grant projects and to carry the program to conclusion. NTIA
intends to work with Congress on this matter.
Questions Submitted By Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. You referenced the current RFI (Request for
Information) you published, with comments due by the end of this month,
and how this will assist you in making improvements to the final NOFA.
Do you plan to publish the rules for the final NOFA to allow
stakeholders to comment on the rules before you open the application
period? Does it not make sense for stakeholders to comment on the
actual rule, rather than speculating on changes to a flawed rule?
Answer. Although not required by the Recovery Act, NTIA sought
public comment prior to establishing the BTOP rules in the first NOFA
earlier this year and, as you note, we have chosen to do so again as we
prepare the second NOFA. At the same time, we are mindful of Congress's
intent that BTOP funds stimulate the economy and create jobs as quickly
as possible, as well as its specific deadline requiring that all funds
be obligated by September 30, 2010. In view of these exigencies, we do
not have sufficient time to publish draft rules and allow for yet
another comment period before the rules are finalized. However, NTIA
will use the experiences and lessons learned from the first funding
round and all comments received in response to its Request for
Information to inform the development of the second NOFA.
Question 2. You testified that by combining all the remaining funds
into a single NOFA that it will yield multiple benefits for
stakeholders. Given the difficulties you have experienced in getting
the rules right within your artificial deadlines, how does rushing to
finish the grant-making process well ahead of your statutory deadline
in September add value to the program, if it does not allow you to
adequately address the concerns of those stakeholders you claim to be
helping?
Answer. We believe our plans for the second NOFA will adequately
address the concerns stakeholders raised about the first round. In the
Recovery Act, Congress expressed its intent that NTIA adopt rules to
stimulate economic growth and job creation and, specifically, that it
make all grant awards by September 30, 2010. Our first NOFA established
appropriate rules to further these goals for the first round of
funding. By combining the second and third rounds of funding, we will
give round two applicants more time to complete their proposals, and
NTIA more time to review applications, than would have been available
had we attempted to squeeze in three rounds of funding before the
deadline of September 30, 2010. At the same time, by having only one
additional round, we believe that we can complete funding somewhat
ahead of that deadline, thus better fulfilling the economic recovery
goals of the Recovery Act. NTIA is thus confident that combining the
second and third rounds of funding will provide substantial benefits
for taxpayers and applicants.
Question 3. NTIA and RUS used dramatically different approaches in
staffing the significant burden of reviewing applications. By your
testimony, this included 1,000 volunteers to review applications. Would
the time spent reviewing and certifying those volunteers have been
better spent reviewing the more than 1,700 applications NTIA had before
them? Would you have been better able to meet your intended timeline to
fund applications if you had followed RUS's process rather than
interviewing and training 1,000 volunteers?
Answer. No. NTIA's size and structure prevented us from utilizing
the same application review process as RUS. Also, the practice of using
independent expert reviewers is common in the Federal grant making
process, and we have used it with success at NTlA and the Commerce
Department in the past. This practice is especially valuable when
evaluating grant applications of a scientific or technical nature due
to the specialized expertise needed to carefully evaluate these
applications. We are, however, considering changes to the BTOP
application review process to better ensure maximally-efficient and
effective review of future applications.
Question 4. You highlighted the efforts underway to produce a
broadband map of America which would show exactly where broadband
Internet is accessible. In that narrative, you indicated that no
Federal agency has collected comprehensive and reliable data needed to
describe Internet access across America. Has the information gathered
by incumbent providers in response to applications been useful in
compiling data for your mapping efforts?
Answer. To date, our mapping efforts have focused on the review of
grant applications submitted by states or their designated entities,
and the awarding of grants to them, to fund the direct collection of
data from incumbent providers and the verification of that data, as
directed by the Recovery Act. NTIA has not determined whether or to
what extent information collected from the public notice comment period
will be used in the development of the national broadband map.
Question 5. You mentioned that NTIA will be enhancing its auditing
and monitoring responsibilities, including visits to project sites. At
what stage of the project do you typically start making these visits?
When do you anticipate the first projects will break ground?
Answer. NTIA is working diligently to develop comprehensive
monitoring and reporting systems to help ensure that BTOP projects
fulfill the purposes of the Recovery Act and spend taxpayer dollars
wisely. Monitoring of grant projects will commence almost immediately
upon award, although the frequency of on-site visits has not yet been
determined. NTIA plans to incorporate a risk assessment model that will
be used to determine the level of monitoring associated with each
project. Those projects with the highest risk assessment would likely
be subject to site visits early in the award period. NTIA expects to
perform site visits on a periodic basis through the period of
performance of the award in accordance with the risk methodology and as
resources permit.
Our current plan is to begin announcing awards in December 2009 and
complete first round award announcements in February 2010. NTIA intends
to award funds to projects that can commence as quickly as possible in
order to fulfill the Recovery Act's objective to jump-start investments
in the economy and create jobs. Those projects which have addressed all
environmental, historic preservation, and other regulatory requirements
could move toward implementation shortly after award.
Questions Submitted By Hon. Glenn Thompson, a Representative in
Congress from Pennsylvania
Question 1. I understand that the carriers have commented on the
Advanced Regional Communications Cooperative's broadband application in
my district. Each of these providers stated that everything is fine
with broadband service in Clarion County. Well, as someone who
represents that region and hears from residents and businesses in the
area, I know that is not the case, with lack of reliable service the
norm. I know that both agencies will be focusing on the definition of
underserved and unserved, so can you talk a little more about those
definitions?
Answer. In the Recovery Act, Congress instructed NTIA to address
the broadband needs of both unserved and underserved areas of the
United States. The first round NOFA defined ``unserved'' as those areas
where at least 90 percent of households lack access to facilities-
based, terrestrial broadband service. The NOFA defined ``underserved''
as those areas where either:
(1) no more than 50 percent of the households in the proposed
funded service area have access to facilities-based,
terrestrial broadband service at greater than 768 kbps and 200
kbps upstream;
(2) no fixed or mobile broadband service provider advertises
broadband speeds of at least 3 mbps downstream in the proposed
funded service area; or
(3) the rate of broadband subscribership for the proposed funded
service area is 40 percent of households or less.
A proposed funded service area may qualify as underserved for
Middle Mile projects if one interconnection point terminates in a
proposed funded service area that qualifies as unserved or underserved
for Last Mile projects.
The recently-released RFI sought public comment on a range of
issues relating to NTIA's implementation of BTOP, including the
definitions used to determine eligibility, such as ``unserved,''
``underserved,'' and ``broadband,'' and other rules governing the award
of funds. NTIA will use the comments received from all interested
parties to determine what, if any, changes are necessary in the second
funding round.
Question 2. What restrictions are included in the rules related to
the sale or lease of assets by a recipient of a grant or loan?
Answer. BTOP funds are intended for recipients committed to
investing in and improving their communities, not those seeking to use
taxpayer dollars to turn a quick profit. Thus, to help ensure that
BTOP-funded projects are used for the purposes established by Congress
in the Recovery Act and that they provide the maximum benefits to the
proposed funded service area, the NOFA rules generally discourage the
sale or lease of Recovery Act-funded broadband facilities. However, our
rules recognize that there are instances where a grantee can
demonstrate that a sale or lease of the property would be in the best
interest of those that are served by the project and allow grantees to
seek approval to sell or lease BTOP-related assets.
Question 2a. For how long are the restrictions in effect, and is
there a waiver process during the effective period?
Answer. As set forth in the NOFA, the sale or lease of any portion
of the award-funded broadband facilities during their life is generally
prohibited. The NOFA, however, establishes a three-prong exception to
this general prohibition. Specifically, the agencies may approve a sale
or lease if it is for adequate consideration, the purchaser agrees to
fulfill the terms and conditions relating to the project, and either
the applicant includes the proposed sale or lease in its application as
part of its original request for grant funds or the agencies waive this
provision for any sale or lease occurring after the tenth year from the
date the grant, loan, or loan/grant award is issued.
Question 2b. Does this kind of limitation discourage bona fide
applicants with real experience in the business of deploying broadband
networks from applying?
Answer. Given that NTIA and RUS received almost 2,200 first round
applications requesting nearly $28 billion in funding for broadband
projects--more than seven times the amount of available funding in the
first round--it does not appear that applicants were deterred by this
restriction. Nevertheless, we are examining all aspects of the first
round of grant applications to determine what changes should be made in
the next round.
Question 2c. Are you planning to remove this limitation for the
next round of funding?
Answer. Among other topics, the recently-released RFI asks for
comments regarding whether the section of the NOFA relating to the sale
or lease of award-funded broadband facilities should be revised to
adopt a more flexible approach toward awardee mergers, consistent with
USDA and DOC regulations, while still ensuring that awardees are not
unjustly enriched from the sale of award-funded assets for profit. NTIA
is now reviewing those comments to determine what changes, if any, are
appropriate in the second funding round.
Question 3. Most broadband providers did not apply for stimulus
funding in the first round, particularly incumbent telephone and cable
providers with experience in serving rural America. Are the
interconnection/non-discrimination provisions in the rules contributing
to this lack of interest? Will you consider modifying them for round
two?
Answer. As noted above, NTIA and RUS received almost 2,200 first
round applications requesting nearly $28 billion in funding for
broadband projects--more than seven times the amount of available
funding in the first round. These applicants were clearly not deterred
by the interconnection and non-discrimination provisions that were
included in the NOFA pursuant to the requirements of the Recovery Act.
Specifically, the Recovery Act requires NTIA to establish non-
discrimination and interconnection obligations as contractual terms of
awards under BTOP that, at a minimum, adhere to the principles
contained in the FCC's Internet policy statement. RUS and NTIA recently
released a second joint Request for Information (RFI) to receive public
comment on certain issues relating to the implementation of BIP and
BTOP. Among other topics, the RFI asked whether interconnection and
nondiscrimination requirements should continue to be applied to all
types of infrastructure projects regardless of the nature of the
entity; whether the scope of the reasonable network management and
managed services exceptions should be modified, and if so, in what way;
and whether it is necessary to clarify the term ``interconnection'' or
the extent of the interconnection obligation. NTIA is now reviewing
those comments to determine what changes, if any, are appropriate in
the second funding round.
Question 4. Have you established a process for the public or
existing service providers to appeal a decision to issue a loan or
grant if they feel an area should not have been considered eligible
because it is already served?
Answer. As noted above, the eligibility standard for BTOP awards is
not whether there is some level of existing broadband service in a
project area, but whether the applicant has demonstrated that their
proposed funded service area is unserved or underserved according to
the provisions of the NOFA. The underserved criteria can be met by
showing that the proposed funded service area exhibits low levels of
availability, adoption, or broadband speeds. A proposed funded service
area may qualify as underserved for Middle Mile projects if one
interconnection point terminates in a proposed funded service area that
qualifies as unserved or underserved for Last Mile projects. This
standard allows for BTOP funds to support areas where some level of
broadband service may exist, but robust investment or adoption has not
yet taken shape.
The Recovery Act directed NTIA to make this determination in the
case of BTOP applications and NTIA is taking a number of steps to
ensure that funding goes to projects that will best fulfill the
objectives of the Recovery Act and meet the requirements of the statute
and the NOFA. The NOFA outlined the multi-step evaluation process and
the criteria that are being used to review and score applications,
including the ability of NTIA to seek additional information or
clarification from applicants as part of the review process. NTIA has
consulted with states, Tribes, territories, possessions and the
District of Columbia to solicit their feedback on the initial pool of
BTOP applications. NTIA provided existing service providers with the
opportunity to submit information regarding their existing service
offerings to help inform the application review process, and is also
utilizing other data at its disposal to help evaluate claims made by
both applicants and commenters.
In addition, as already noted, the Recovery Act permits NTIA to
deobligate awards to grant recipients in appropriate circumstances.
These steps will help ensure that NTIA awards funds to projects that
fulfill Recovery Act objectives and spend taxpayer dollars wisely. In
view of these steps, we did not include an appeals process, which we
believe would add uncertainty and unnecessarily prolong the funding
cycle.
Question 5. In the absence of a national broadband map, isn't it
important to have existing broadband service providers' data about
where they are providing service in order for you to determine if an
area is already served?
Answer. NTIA welcomes information from existing service providers
regarding the unserved and underserved status of proposed funded
service areas. NTIA will make the decision as to whether an area is
unserved or underserved based on all information available to it. The
submissions of service providers are not dispositive but do provide
additional information we will consider. NTIA is also utilizing any
other data at its disposal to help evaluate claims made by both
applicants and commenters.
Question 6. What type of due diligence are the agencies undertaking
to determine if an area is unserved or underserved? How are you
verifying applicant's claims about whether an area is unserved or
underserved? What data are you relying on? Are your field
representatives working to verify this information?
Answer. NTIA has in place a process to evaluate claims regarding
the unserved and underserved status of a proposed funded service area
using information from several sources. NTIA is considering data
supplied by the applicant, data supplied by existing service providers
who choose to comment, broadband maps compiled by states (if
available), and independent research. NTIA may request additional
information from applicants and commenters as necessary and
appropriate. We are confident that NTIA has sufficient information on
which to base funding decisions.
Question 7. Are you planning to make public whether you've
determined that a proposed funded service area is unserved or
underserved?
Answer. The grant of an infrastructure application will indicate
that the applicant has satisfied the definition of unserved or
underserved. However, NTIA is developing a publicly accessible and
regularly updated national broadband map. This map will serve to
educate consumers and businesses about broadband availability, enable
broadband providers and investors to make better-informed decisions
regarding the use of their private capital, and allow Federal, state,
and local policy-makers to make more data-driven decisions on behalf of
their constituents.
Additionally, RUS and NTIA have posted Public Notice Filings of the
proposed funded service area(s) of each BIP and BTOP Infrastructure
application at www.broadbandusa.gov. NTIA and RUS also posted online
the name of each service provider submitting information regarding the
unserved and underserved status of an application and a summary of
their response.
Question 8. For the next round of funding is it possible that your
agencies could make public a list of all Census blocks in a proposed
funded service area, and allow existing broadband service providers to
submit information about whether they provide service in those Census
blocks, along with the number of households they serve? Wouldn't this
make it easier for you to determine whether an area is unserved or
underserved?
Answer. In the recently released Request for Information (RFI),
NTIA and RUS requested public comment on whether and to what extent the
public notice comment process should be revised in the second funding
round. NTIA is now reviewing those comments to determine what changes,
if any, are appropriate in the second funding round. Our intent is to
provide existing providers with an adequate opportunity to submit
information regarding their services and ensure that BTOP funds support
projects in areas that meet the definition of unserved or underserved.
Questions Submitted By Hon. Bobby Bright, a Representative in Congress
from Alabama
Question 1. How does the NTIA staff interact with RUS? Would it be
faster for both agencies if you did not have to work with each other?
Answer. NTIA and RUS have worked closely together to implement the
broadband provisions of the Recovery Act and to ensure a well-
coordinated and thoughtful approach that takes advantage of the
individual expertise of each agency. The agencies cooperated in the
hosting of the initial kickoff meetings in March 2009 and in the
development of the first NOFA, which incorporated shared definitions
and policies to the maximum extent possible. We combined efforts to
host 10 workshops for potential applicants in locations across the
country. And we worked together to develop www.broadbandusa.gov as a
single portal to provide technical assistance, accept applications, and
communicate information about the programs. As we review and evaluate
applications, we are in regular communication to ensure that we do not
use Recovery Act funds for projects in the same area. We believe that
this coordinated approach provided benefits for first round applicants
and the general public. At the same time, as we plan for the second
round of funding, the agencies are evaluating whether to make
adjustments to improve efficiency as appropriate.
Question 2. In your testimony, you mention the NTIA's upcoming
efforts at implementing the Recovery Act's ``Broadband Mapping and
Planning Program.'' Coming up with a nationwide broadband strategy is a
great task, and it is vital that we do it right. Could you discuss how
the mapping process will work and how the mapping grants will be used?
Your goal is to complete the mapping by February 2011. Is this goal
attainable? Are there any potential roadblocks keeping you from
completing the map by this time?
Answer. The State Broadband Data and Development Program (Mapping
Program) is a competitive, merit-based matching grant program to fund
projects that collect comprehensive and accurate state-level broadband
mapping data, develop state-level broadband maps, aid in the
development and maintenance of a national broadband map, and fund
statewide initiatives directed at broadband planning. NTIA has
announced 36 grant awards for broadband mapping and planning activities
totaling approximately $69 million. States and territories receiving
awards to date include: Alabama, Alaska, Arizona, Arkansas, California,
Colorado, Delaware, the District of Columbia, Florida, Georgia, Idaho,
Illinois, Indiana, Kansas, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, Nevada, New York, North Carolina, North
Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota,
Vermont, Washington, West Virginia, Wisconsin, and Wyoming, as well as
Puerto Rico. These awards fund 2 years of broadband mapping efforts and
up to 5 years of broadband planning activities. NTIA expects to award a
mapping grant to every state and territory, and is currently working
with the remaining applicants to revise and refine their project
proposals to ensure that each proposal meets the program's standards.
We expect to complete all mapping awards by the end of 2009.
Awardees will then collect and verify the availability, speed, and
location of broadband across the state. This activity is to be
conducted on a semi-annual basis between 2009 and 2011, with the data
to be presented in a clear and accessible format to the public,
government, and the research community. The initial sets of state
broadband data will be provided to NTIA in spring 2010, and the effort
will culminate in the creation of a national broadband map by February
2011. The national broadband map will educate consumers and businesses
about broadband availability, enable broadband providers and investors
to make better-informed decisions regarding the use of their private
capital, and allow Federal, state, and local policy-makers to make more
data-driven decisions on behalf of their rural constituents.
Question 3. As you are both aware, the application process for both
BTOP and BIP is a complex one. The ability to navigate through such an
intricate application process is a significant hurdle for many small
businesses. In your testimonies, you mention that you are working on a
plan for ensuring that the second round's application process is more
small business-friendly. Could you discuss your plans in more detail?
Answer. In the recently-released RFI, NTIA and RUS requested public
input on whether the agencies should revise elements of the programs to
better achieve the goals of the Recovery Act, which places a high
priority on benefiting small and disadvantaged businesses. NTIA is now
reviewing those comments to determine what changes, if any, are
appropriate in the second funding round. We also intend to conduct
additional workshops for the second funding round that will address
issues such as collaborating on and creating winning applications and
training on the mechanics of filing applications electronically. NTIA
is making every effort to streamline the application process in the
second funding round to facilitate the process of applying for grants,
while also ensuring that we collect the information necessary to award
grants to projects that will fulfill the objectives of the Recovery Act
and utilize taxpayer dollars in the most effective manner possible.
Question 4. From news reports I have read that ARRA funding
applications total $28 billion in loans and grants. I recognize that
even $4 billion is likely not enough to ensure that everyone in this
country has access to broadband, but if your agencies award the full
amounts allowed for grants and loans in the first round of funding how
much closer will we be to deploying broadband Internet to all Americans
currently without it?
Answer. The $7.2 billion authorized by the Recovery Act for the
BTOP and BIP broadband initiatives will not solve all of America's
broadband challenges. However, NTIA is working to ensure that they are
stretched as far as possible to bring the benefits of broadband to more
Americans. At this time, NTlA is not able to estimate the total cost of
deploying broadband to all Americans that currently lack it. Nor does
NTIA have an estimate of the total cost of enhancing broadband service
for the underserved areas of the United States that have some level of
broadband access but exhibit lower levels of speeds, adoption, or
availability than more fortunate areas of the country. The Federal
Communications Commission is evaluating these questions further as part
of its development of a national broadband plan. NTIA anticipates that
information gathered from through BTOP applications, recipient reports,
and through the State Broadband Data and Development Grant Program will
help inform these estimates in the future.
Question 5. Many are concerned about overlapping already-served
areas with these stimulus dollars. I strongly believe that NTIA and RUS
should not waste taxpayer dollars on funding broadband projects that
intend to provide service in areas already served. Is this a concern to
your respective agencies? And how do you plan to avoid overlapping in
the second round of funding?
Answer. While there are a number of steps NTIA is taking to ensure
that funding goes to projects that will enhance broadband service in
areas with demonstrated need and best fulfill the objectives of the
Recovery Act, the eligibility standard for BTOP awards is not whether
there is some level of existing broadband service or whether a project
would be ``overlapping,'' but whether the applicant has demonstrated
that their proposed funded service area is unserved or underserved. The
underserved criteria can be met by showing that the proposed funded
service area exhibits low levels of availability, adoption, or
broadband speeds. A proposed funded service area may qualify as
underserved for Middle Mile projects if one interconnection point
terminates in a proposed funded service area that qualifies as unserved
or underserved for Last Mile projects. This standard allows for BTOP
funds to support areas where some level of broadband service may exist,
but robust investment or adoption has not yet taken shape.
NTIA has provided existing service providers with the opportunity
to submit information regarding their existing service offerings to
help inform the application review process, and is also utilizing any
other data at its disposal, including broadband maps compiled by states
(if available), additional comments submitted by state Governors, and
other databases to help evaluate claims made by both applicants and
commenters to determine the unserved or underserved status of a
proposed funded service area.
In the recently released Request for Information (RFI), NTIA and
RUS requested public comment on whether and to what extent the public
notice comment process should be revised in the second funding round.
NTIA is now reviewing those comments to determine what changes, if any,
are appropriate in the second funding round.