As Congress Holds Hearing, CAGW Highlights Broadband Waste | Citizens Against Government Waste

As Congress Holds Hearing, CAGW Highlights Broadband Waste

For Immediate Release
February 10, 2011


Contact:  Leslie K. Paige 202-467-5334 Luke Gelber 202-467-5318

As Congress Holds Hearing, CAGW Highlights Broadband Waste

(Washington, D.C.) – Today, while the House Committee on Energy and Commerce held a hearing on Broadband Spending in the American Recovery and Reinvestment Act (stimulus), Citizens Against Government Waste (CAGW) reiterated its opposition to federal broadband expansion. The stimulus bill included $7.2 billion for broadband, $2.5 billion of which went to the Rural Utilities Service (RUS) for its Broadband Initiatives Program (BIP), and $4.7 billion of which went to the Commerce Department’s National Telecommunications and Information Administration (NTIA). Both programs have been inefficient, and they also crowd out private investment.

Despite claims by the Obama administration that every penny of the stimulus would be tracked, nothing was allocated to the NTIA for oversight. Before any stimulus money was provided to the agency, the Government Accountability Office expressed concerns with NTIA’s inability to correctly track prior grants, and in October 2009 CAGW identified 23 grant submissions worth $550 million that should have been rejected outright by the NTIA.

Not to be outdone, the Department of Agriculture’s (USDA) Rural Utilities Service also has a history of incompetence in broadband. According to a 2009 Washington Post article, since the RUS broadband program “began 6 years ago, $1.8 billion in loans have been distributed. Of the 68 projects funded, 21 are nearly complete and about half have not begun. An Agriculture spokesman could not confirm whether the rural utilities service program has completed any projects.” More than $30 million of RUS broadband loans have gone into default.

To make matters worse, the RUS has strayed from its original goal of reaching rural communities, spilling into communities near metropolitan areas. Predictably, this overreach has led the federal government to subsidize private companies in areas already serviced by other private companies. In Hays, Kansas, Lenora-based Rural Telephone Service Co. received a grant and loan package worth $101 million for an area already served by Eagle Communications and AT&T. Eagle Ceo Gary Shorman, who testified today at the broadband hearing, has called Hays “one of the best-served communities in western Kansas.”

“CAGW has been critical of government-funded broadband from the start,” said CAGW President Tom Schatz. “The misuse of stimulus funds was a foreseeable consequence of swelling the budgets and obfuscating the goals of previously modest programs. We hope today’s hearing starts to undo the damage done to taxpayers and companies like Eagle, which have been subjected to unfair ‘competition’ from the broadband program.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.

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