Broadband Boondoggles | Citizens Against Government Waste

Broadband Boondoggles

The WasteWatcher

Wanted:  $4.7 billion for a national broadband grant program.  Prior experience not necessary.

With its not-so-infinite wisdom, Congress included $4.7 billion in the stimulus bill for the National Telecommunications Information Administration (NTIA) to issue grants under a new Broadband Technology Opportunities Program.  NTIA’s prior experience in broadband grants consisted of the Technology Opportunities Program, which spent $233 million from 1994-2004 until it was terminated.  That is only 5 percent of the amount now being provided to NTIA, which has to spend it all by September 30, 2010.

The Department of Commerce Office of Inspector General examined NTIA’s most recent grant program, the $1 billion Public Safety Interoperable Communications (PSIC) program, which had a three-year funding time frame.  The OIG found that the PSIC grantees are unlikely to finish their projects on time; the release of funds was delayed by six to 12 months as state spending plans also had to be considered; and the environmental impact studies, while necessary, further delayed the awarding of projects.

In other words, Congress laid a heaping pile of money on the NTIA and gave the agency an impossible deadline to meet.  If the NTIA exercises due diligence, it could take up to a year to approve the grants, based on the experience with the PSIC program (which won’t even be completed within its three-year time frame).  If NTIA moves too quickly, it will likely approve grants that will not achieve the program’s goals.

Regardless of the process, Citizens Against Government Waste (CAGW) has identified 23 grant submissions worth $550 million that should be rejected outright by the NTIA.  CAGW sent letters to the agency on October 27 urging it to examine these grants and just say no.

There are many reasons to question the 23 applications.  Due to a 20 percent matching fund requirement, states with large budget deficits, such as New York and Maryland, will have to come up with tens of millions of dollars that they simply don’t have to spend on broadband services.  One applicant, the California Broadband Cooperative, is seeking $81 million to serve 400 housing units, equal to $202,500 per unit; even worse, it does not have the 20 percent matching funds and is seeking 100 percent funding from NTIA.  The city of Philadelphia is asking for $21,818,411 to build a fiber backbone/ring in the city; and Wilco Electronic Systems, as part of a Philadelphia Housing Authority project, is asking for a suspiciously similar $21,865,647 to provide broadband service in parts of  the city; both are examples of municipal overbuild.

Apparently the state of Delaware is bereft of any service providers; four of the applications cover all or part of the state.  Application #1188 from 01 Data Center seeks $15.5 million to subsidize a “last mile remote area” project in Delaware, Florida and New Hampshire.  The proposal first attacks the use of satellite access and then proposes to use that method to deliver its “solution.”  Application #297 by AlphaStar America LLC is asking for more than $25 million to build networks to connect ISPs, schools, and municipalities in unserved areas.  The application erroneously includes Delaware City, New Castle and Odessa as unserved, even though all have multiple ISPs. 

MegaPath Inc. in application #1435 wants more than $42 million for underserved markets, and includes Wilmington, Newark, and areas north of Wilmington on its list.  Again, they all have multiple providers in place.  Finally, the most ridiculous request of all was made by the E-Mac Corporation in application #1121, which seeks $35.5 million for its Multimedia Digital Project, claiming that there are 397,104 underserved households and 395,323 unserved homes in Delaware when there are approximately 300,000 households, period, in the entire state.

CAGW’s letters note that the entire NTIA budget in fiscal year 2009 was $658 million.  The $4.7 billion being provided in the stimulus for the BTOP is 624.5 percent greater than that amount.

CAGW’s concerns over the NTIA grant proposals are just the latest in a series of questions about how stimulus money is being spent.  For example, there were hundreds of underage “first-time homebuyers,” including a four year-old, seeking the $8,000 tax credit.  Yet Congress is considering extending that program past its November 30 expiration date, or possibly opening it up to any homebuyer, which will invite even more fraud.

With $4.7 billion at stake in the Broadband Technology Opportunities Program, it should not become another opportunity to waste the taxpayers’ money.

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