Tracking the U.S. broadband investment is hard work

[Ace Pace]

Ars technica

The deadline for the last round of Recovery Act grants for broadband stimulus projects is September 30, less than two months from now. But the Government Accountability Office isn't sure that the key federal departments handing out these funds have the resources to keep tabs on where that money's all going.

These agencies "will need to oversee far more projects than in the past and these projects are likely to be much larger and more diverse than projects funded under the agencies' prior broadband-related programs," the GAO warned in a report issued on Tuesday.

And both departments "face the risk of having insufficient resources" to oversee these Recovery Act-funded broadband projects—in particular to make sure that award winners roll out Internet service to everyone in their designated areas, not just the most profitable cities and towns.
Round one accomplished

It seemed like it would take forever, but eventually the Rural Utilities Service and National Telecommunications and Information Administration started getting some of that $7.2 billion dollars in broadband project stimulus cash into the hands of applicants. Round one of the stimulus rollout awarded 150 grants or loans worth $2.2 billion to entities across the United States. NTIA mostly provided grants to states, cities, and schools. RUS offered loans and grants to companies and co-ops.

The helter skelter process lasted from December through April. At one point during round one, NTIA asked for volunteers to help the agency evaluate grant requests. Later both departments contracted with Booz Allen Hamilton and ICF International to speed up the process. State governors' offices also weighed in on grants affecting their states.

In the end, however, GAO thought both agencies did a decent job of evaluating these first phase applications—in particular ciphering the claims of existing broadband providers who charged that funding a new entity would result in the "overbuilding" of broadband infrastructure in their service region.

In the case of Rural Utilities Service, "field staff personally contacted the entities that submitted the comments to verify their claims that they provided service in the affected areas," GAO noted, then "reconciled any difference between the application and commenter, and where necessary, conducted an actual field visit to the proposed service territory."
More money / less time

But by September 30, both agencies have to disperse the rest of that money to the remaining battalion of applicants. That's $4.8 billion—over twice as much funding —and they have less time to make decisions using an expanded array of grant categories. Round one included three categories. Round two has five:

Comprehensive Community Infrastructure
Up to $2.35 billion for Middle Mile projects and connection upgrades to "community anchor institutions," especially community colleges.

Public Computer Centers
At least $150 million to provide broadband access to the "general public or a specific vulnerable population" in the form of a new or upgraded public computer center.

Last mile
Up to $1.7 billion for last mile projects, with the Rural Utilities Service encouraging them in the "most remote and rural areas."

Middle Mile
Up to $300 million for loans and grants.

Satellite, rural library, and technical assistant projects
Up to $100 million to connect rural libraries to the 'Net and to develop "regional broadband strategies in rural areas."


The good news is that there are fewer applicants for round two, and as of the beginning of July, the agencies have already made award decisions regarding 66 projects worth almost $800 million.

The more challenging news is that the quality of these second round applications have improved. That often happens as the community of eligible stakeholders become more familiar with a grant program. That will make it tougher for RUS and NTIA to make choices.

"As the Recovery Act's obligation deadline [September 30] draws near, the agencies may face increased pressure to approve awards," GAO worries. "Agency officials state that their programs' goals remain to fund as many projects as possible that meet the requirements of the act and to select the projects that will have the most economic impact; simply awarding funds is not the goal."

But it's obvious that the Accountability Office isn't convinced that the government will always turn that goal into a reality.
Where's the data?

Then there's still a serious cartography problem. Congress set aside millions for the construction of a National Broadband Map, but it won't be completed until 2011.

And so, due to "the lack of current data," GAO writes, these grant providers "are using a cumbersome process to verify the status of broadband services in particular geographic locations. The agencies must collect and assess statements by applicants as well as the aforementioned public comments submitted by existing broadband providers delineating their service areas and speeds available."

In several instances, both departments have already found existing companies making false claims of providing broadband service in various areas, the report noted. The question is whether they'll be able to keep this vigilance up as the late September deadline approaches.

"Because the National Broadband Map will not be completed until 2011, NTIA and RUS will have to complete awards for round two based on existing data," GAO says. We're translating the report's use of the word "existing" as "inadequate."
Bad incentives

The probe's post-award worry is whether the government will be able to keep an adequate eye on these projects after all the funding has been dispersed. The big concern is making sure that recipients build out their infrastructure through their entire project areas, not just the places where providing service will be most profitable.

"Companies may have an incentive to build first where they have the most opportunity for profit and leave the unserved parts of their projects for last in order to achieve the highest number of subscribers as possible," GAO warns.

"In addition, funding projects in low-density areas where there may already be existing providers could potentially discourage further private investment in the area and undermine the viability of both the incumbents' investment and the broadband stimulus project."

Several things come out of this report, most smacking of the "duh" that is still useful to be reminded of. One is that dispensing money in a smart fashion is not easy, more so when it's government money. Second is that tracking all these investments over time is hard,expensive and will take more manpower than many of these agencies currently have.