Thursday, April 16, 2009

Rural Utilities Service (RUS) at USDA: Failing Report 04/16/09 Boston - There is a good summary story carried in today's issue of reviewing the recent regional Inspector General's report on the Rural Utilities Service (RUS) division of the US Department of Agriculture. 

ProPublica's Michael Grabell did a deeper review in a story on Monday. As many close observers of RUS, and several Members of Congress have complained for years, many of the grants and loans expended by RUS in recent years for "rural broadband" have gone to build new networks in non-rural suburban areas.

To the distress of incumbent carriers, a sizable percentage of this programmatic spending has gone to deploy "overbuild" networks -- systems built in areas already served by one or more commercial carriers, and thus most probably not "underserved".

While much attention has recently focused on RUS, several Members of Congress from rural states worked to correct the "suburban" network deployment record of the agency in the Farm Bills of the past several years. In a message to constituents about the 2008 Farm Bill, Senator Russ Feingold (D-WI) highlighted his efforts to reform the 'suburbanization' of RUS: "Rural Broadband: Building on provisions in Russ's Rural Opportunities Act, the Farm Bill clearly defined "rural" so that broadband programs and funds targeted for rural communities in Wisconsin stay in rural areas and are not used for various suburban developments."

Our analysis: The Notice of Funds Availability (NOFA) which will issue on or about June 12 and which will describe the criteria for grant, loan, and loan guarantees for the $2.5 billion in ARRA appropriations to be administered by RUS will seek to correct the non-rural / suburban spending pattern by the agency. These regulatory changes will certainly be made in the wake of the recently highly publicized reports that have highlighted this past history during the Bush Administration.

Politically, the coalition of rural Senators that has already signaled to the Obama Administration that rural broadband spending must be the priority for ARRA broadband funds, will demand such reform.

Importantly, current FCC Commissioner Jonathan S. Adelstein, President Obama's nominee to be the new head of RUS has a long public service record of advocating for the specialized telecom needs of rural communities.

As Administrator, Adelstein will drive the reform agenda at RUS. His lateral move to RUS is urgently needed for the successful ramp-up of ARRA. In order to maintain a legal quorum at the FCC however, his Democratic successor at the Commission must be nominated, approved, and seated before the move can occur.

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