Monday, April 26, 2010

Broadband Stimulus Round 1 Ends with 150 Awards, $2.2 Billion Issued 04/26/2010 San Francisco - The U.S. Commerce Department brought funding Round 1 of the Obama Administration's broadband stimulus program to a close this afternoon with its announcement of the last 9 awards in this first phase of the total $7.2 billion program.

With today's announcement's of 9 awards to 7 separate entities, Commerce and the U.S. Department of Agriculture have together issued just over $2.2 billion in the first funding round of the program.

All of the 9 grant applications we reported as pending in our story of Friday, April 23 were awarded today.

Details following.

Puerto Rico Undersea Fiber Link Gets $25.7 Million in Broadband Stimulus Bucks 04/26/2010 San Francisco - We are getting word that Critical Hub Networks, the Puerto Rico based Internet Service Provider (ISP), has received a $25.7 million broadband stimulus award for its innovative plan to construct an undersea optical fiber link between Florida and the U.S. island Commonwealth.

Details to follow.

Friday, April 23, 2010

Broadband Stimulus Awards Near $2.2 Billion as 7 Applicants Wait in Round 1 04/23/2010 San Francisco - The tally of funds awarded by the Obama Administration’s broadband stimulus program is inching toward the $2.2 billion mark, while 7 of the program’s Round 1 applicants wait for word on 9 remaining applications worth a total of $134 million.

The National Telecommunications and Information Administration (NTIA) at the Commerce Department, and its sister agency, the Rural Utilities Service of the U.S. Department of Agriculture (RUS) have together issued 141 announcements of grants, loans, and grant / loan combinations for a total of $2.16 billion in awarded funds.

NTIA Works to Close Round 1 
Contrary to the statements of some consultants and the business press, Round 1 of the program remains open as the last determinations are made by NTIA on the 9 applications identified below.  RUS issued its final Round 1 award on March 30th.

Clearly the current status is not one of NTIA’s choosing.  The agency is trying mightily to meet the statutory deadline of September 30 for awarding its allotment of $4.7 billion from the program.  Following the Round 1 application deadline of last August 20, it has taken 8 months to award the nearly $2.2 billion.  Working from a reduced application load now in Round 2, the 2 agencies have 7 months following their submittal deadlines of late March to comply with the congressional mandate. has confirmed that 9 applications, from 7 separate applicants, remain in the Round 1 pipeline.  All 7 applicants have been informed that they had been passed into the due diligence phase of the review cycle by NTIA.

9 Applications Pending in Round 1 at NTIA

1. Buggs Island Telephone Cooperative
Headquarters: Bracey, VA   
Proposed Service Area: 15 County Area, Southside Virgina
Project: BIT Broadband Initiative
Grant Request: $ 11.873 million
Loan Request: $   5.928 million
Total Request: $ 17.801 million
Program Category: BIP/BTOP – Last Mile Non-Remote
Technology Platform: WiMAX

2. City of Williamstown, KY
Headquarters: Williamstown, KYY   
Proposed Service Area: Corinth, Grant, Owens Counties, KY
Project: Deploy. of Broadband to Corinth Co.; Parts of Grant and Owens Co.
Grant Request: $ 327,876
Loan Request:  $ 341,259
Total Request: $ 699,135
Program Category: BIP/BTOP – Last Mile Non-Remote
Technology Platform: FTTH

3. Critical Hub Networks, Inc.
Headquarters: San Juan, PR   
Proposed Service Area: Puerto Rico, Culebra and Vieques Islands, PR
Project: Puerto Rico Bridge Initiative
Grant Request: $ 26.376 million
Loan Request: $ 0
Total Request: $ 26.376 million
Program Category: BTOP – Middle Mile
Technology Platform: Undersea Optical Fiber

4. Digital Bridge Communications Corp.
Headquarters: Ashburn, VA   
Proposed Service Area:  Cassia County, ID
Project: Last Mile Broadbandband for Underserved Areas of Cassia County, Idaho
Grant Request: $ 1.141 million
Loan Request: $ 995,065
Total Request:  $ 2.096 million
Program Category: BIP/BTOP – Last Mile Non-Remote
Technology Platform: WiMAX

5. Digital Bridge Communications Corp.
Headquarters: Ashburn, VA   
Proposed Service Area: Jerome County, ID
Project: Last Mile Broadband for Underserved Areas of Jerome County, Idaho
Grant Request: $ 787,326
Loan Request:  $ 658,782
Total Request: $ 1.446 million
Program Category: BIP/BTOP – Last Mile Non-Remote
Technology Platform: WiMAX

6. Digital Bridge Communications Corp.
Headquarters: Ashburn, VA   
Proposed Service Area: Twin Falls, ID
Project: Last Mile Broadband for Underserved Areas of Twin Falls County, Idaho 
Grant Request: $ 3.270 million
Loan Request: $ 0
Total Request: $ 3.270 million
Program Category: BIP/BTOP – Last Mile Non-Remote
Technology Platform: WiMAX 

7. One Economy
Headquarters: Washington, DC   
Proposed Service Area: Locations in 32 States
Project: 21st Century Information and Support Ecosystem
Grant Request: $ 45.527 million
Loan Request: $ 0
Total Request: $ 45.527 million
Program Category: BTOP – Sustainable Broadband Adoption 
Technology Platform: Content, Education and Service Provision

8. Pine Telephone Company
Headquarters: Broken Bow, OK  
Proposed Service Area: Southeast OK, including the Choctaw Nation
Project: Broadband Grant for Isolated Southeast OK and Choctaw Nation
Grant Request: $ 9.472 million
Loan Request: $ 0
Total Request:  9.472 million
Program Category: BIP/BTOP – Last Mile Non-Remote 
Technology Platform: 3G UMTS
Headquarters: Newport, WA  
Proposed Service Area: 
Grant Request: $ 9.472 million
Loan Request: $ 0
Total Request: $ 9.472 million
Program Category: BIP/BTOP – Last Mile Non-Remote 
Technology Platform: Optical Fiber

Information is reported here following our confirmation of its veracity via sources within government and industry.  Our interviews of the past 48 hours were based on our tracking and analysis of the federal program’s public database, and our periodic reports issued as we document significant events in the Round 1 review and award processes.

Given the sensitivity of the current status for both the applicants and the lead agency involved, we will not disclose the organizations we spoke with, nor the personnel consulted.  All quoted data relative to specific applications is derived from the federal public database of the program.  We have validated this public information with interviews to confirm the specific status of each application, and to rule out other listed applications, given the lag in reporting seen in several areas of the database.  

Friday, April 16, 2010

Alert: USDA Has $11.2 Billion in Round 2 Broadband Stimulus Applications 04/16/2010 San Francisco - The Rural Utilities Service (RUS) of the U. S. Department of Agriculture (USDA) today announced that it has received nearly $11.2 billion in applications for its second and final funding round of the federal broadband stimulus program.

According to a RUS email sent to this afternoon 776 applications were submitted.

The agency has published a 778 page Round Two Application Directory which lists the grant and loan requests it has received and has begun to process. The document is republished on our document site, accessible below.

Update: Public Database Time Frame is Unknown
As of early evening today, Washington time, the Applications Database portion of the online site maintained by the federal agencies managing the broadband stimulus programs has not been updated with data representing any of the 776 Round 2 applications.

The Outreach Coordinator of the RUS telecom section informed us that the agency does not now have a time estimate for the posting of the applications in the online database. Given the past experience of the federal agencies with the Easygrants application system, we suspect that RUS employees and contractors are yet again experiencing difficulties and delays in posting application data via the system.

By releasing the Round Two Application Directory despite problems with the online system, RUS met its target of getting the data disseminated this week, as we reported on Tuesday of this week.

Guam Governor Lobbied for Broadband Stimulus Monies to Grant Winner - Brother's Employer 04/16/2010 San Francisco – Governor Felix P. Camacho (R-GU), the incumbent governor of the U.S. territory of Guam, lobbied the U.S. Commerce Department for federal broadband stimulus monies for a Philippine owned firm which both won $8 million in funds, and employs the Governor's brother.

IT&E CEO Jose Ricardo P.R. "Ricky" Delgado (l); Guam Governor
Felix P. Camacho; and Ricardo C. Delgado, Chairman Pacific Telecom, Inc.
/ Citadel Holdings at a June 2009 trade event in Manila.  Photo: Rhoy Cobilla
On April 1, Assistant Secretary of Commerce Lawrence E. Strickling announced the award of $8.039 million in a broadband infrastructure grant to the integrated services telecom carrier called Island Telecommunications and Engineering (IT&E). 

Governor Camacho sent a letter 5 days earlier to Mr. Strickling strongly recommending funding of the firm's stimulus efforts. Mr. Carlos Camacho, brother of the Governor, serves as Public Relations and Special Projects Manager at IT&E.

Delgado vs Disney
IT&E is a foreign owned corporation, controlled by Citadel Holdings, headquartered in the booming Makati central business district of of Manila, Republic of the Philippines. Citadel is the privately held conglomerate of the Delgado family, concentrated in aviation services, logistics and telecom. IT&E additionally has a 25% equity stake from Japan’s Sumitomo Corp., the electronic and industrial corporation.

Earlier this week, GTA Teleguam, the privatized former state quasi public authority which had been the monopoly provider for the U.S. territory, issued a press statement which became widely covered in the general business and telecom sector media. GTA described the award as an unnecessary and federally financed overbuild of its modern broadband network. GTA Teleguam is owned by Shamrock Capital Advisors, the Burbank, CA private equity firm launched by the late Roy E. Disney.

Letter Authentic, Manager Camacho Interviewed obtained a copy of Governor Camacho’s letter to Mr. Strickling yesterday from a confidential source. Ms. Charlene Calip, the Governor’s spokesperson, confirmed to us that Governor Camacho did issue the letter in late March to Mr. Strickling, just prior to the Round 1 award announcement. Ms. Calip provided a copy of the same letter to us, for confirmation of its authenticity.

Larry Strickling serves as the Administrator of the National Telecommunications and Information Administration (NTIA). NTIA, part of the Commerce Department, is charged by Congress with the management of $4.7 of the total $7.2 billion broadband stimulus program within the $787 billion Recovery Act. Prior to our receipt of the Camacho letter to Strickling from the confidential source, we had found no previous public posting of the letter, nor any report of its existence.

In the fourth quarter of 2009, we had attempted to secure a copy of Governor Camacho’s letter of recommendation to NTIA submitted in October relative to Guam's input on any Round 1 applications to NTIA which proposed projects on the island. Given our efforts of last year, has assembled the largest collection of such documents available outside the NTIA itself. Ms. Calip this evening was kind enough to forward a copy of that letter, dated October 14, 2010 and sent to Mr. Ian Martinez, the outreach director at NTIA.

In a telephone interview of last evening, Mr. Carlos Camacho stated that his position with IT&E is that of Public Relations and Special Projects Manager. A previous call to the firm's human resources office confirmed with that Mr. Camacho is an employee of the carrier.

No Gubernatorial Recusal
Thursday afternoon, Guam time, we asked spokesperson Calip if, prior to issuing his March 25th letter touting his brother's employer, did the Governor consider recusing himself from the action, given the appearance of conflict of interest.

Ms. Calip responded “I couldn’t say if he took the opportunity to recuse himself or not, I will need to check on that, and to get back.” She continued by saying, “what I can say is that the offer was extended to all applicants, and IT&E was the only applicant to take up on the offer.”

Our brief reading of the public ethics statutes of Guam, together with the guidelines published by the territory's Office of Public Accountability lead us to believe that any effort of a public official to use the powers of office to benefit the interests of a family member are clearly prohibited. The Office is the official anti-corruption agency of Guam established in response to historically endemic levels of public corrupt practices. As of this posting, our inquiries to the agency have gone unanswered.

Governor’s Recommendation Points to U.S. Military Buildup
In his 1 page letter dated March 25 addressed to Strickling, Governor Camacho opens by saying “The Government of Guam is facing drastic infrastructure challenges as our community prepares for the military buildup planned for our island.” He is referring to the highly controversial effort of the U.S. defense establishment to proceed with the relocation of some 8,000 U.S. Marines from bases in Okinawa, Japan to new and upgraded military facilities on Guam.

Oddly however, the Governor's lengthy submittal to the U.S. government of February 16, commenting for Guam on the Draft Environmental Impact Statement / Overseas Environmental Impact Statement for the proposed rebasing makes no mention of any telecom / broadband infrastructure insufficiencies. The Governor's letter of March 25 appears to be heavy on points aligned with the interests of IT&E, yet not aligned with the federal filing of 5 weeks earlier.

No Transparency at NTIA
Equally difficult to fathom is the influence, if any, of the Governor's lobbying on the Round 1 award to IT&E, given the lack of transparent processes at NTIA, conducted in contravention of President Obama's open government directives.

The March 25 letter may have been issued in support of IT&E's Round 2 application in the far greater requested amount of $89.687 million, as the specifics of the projects being recommended are not identified. To date, the NTIA still considers all state and territorial letters of recommendation to be non-public, a situation which allows jurisdictions like Guam, Minnesota, North Dakota, Puerto Rico and a handful of others to treat government-to-government communications about federal tax dollars as private missives.

Only with the current dust-up in the media between GTA and IT&E, and the concurrent leaks and disclosures from public employees are we getting a possible picture of the patterns of influence in Guam. We are not able to see into the decision making process in Washington however.

It appears that NTIA's public disclosure of ex parte meetings about the broadband stimulus program continues to lag months behind. The agency also continues to withhold all application scoring records of reviewers, and metrics about broadband unserved / underserved areas as presented by both applicants and the incumbent providers disputing applicant statements. The relative weight assigned these and other factors in the discretionary judgments of the Administrator become especially open to speculation in the absence of open data sources.

Taken together, the lack of a transparent process at the federal level drives a growing lack of public confidence in a program that should be a model for government action. Rare glimpses behind the veil of secrecy that briefly reveal potential untoward influence, like that of Governor Camacho, on add to such diminished confidence given the paucity of information.

Our Take: More Questions Than Answers
Earlier this week GTA, correctly in the view of most of us that have looked at the existing infrastructure in perhaps the most wired small island in the world, raised fundamental questions about how the federal broadband stimulus program is being managed. Are we indeed spending tens of millions - or hundreds of millions - of public dollars to wastefully overbuild existing high capacity network facilities? That is a critically important question.

The actions of The Honorable Felix P. Camacho tell us however that an even more basic question of governmental accountability and transparency needs be addressed in Washington, and fast.

Tuesday, April 13, 2010

Report on Broadband Stimulus by Inspector General at Commerce Hands Ammunition to Program's Critics 04/13/2010 San Francisco – The Office of Inspector General (OIG) of the U.S. Department of Commerce yesterday made public its final report of the first major departmental oversight of Commerce’s portion of the broadband stimulus program.

Todd J. Zinser, Inspector General, U.S. Dept.
of Commerce
The report is entitled NTIA Must Continue to Improve its Program Management and Pre-Award Process for its Broadband Grants Program. The 23 page document, issued over the signature of Commerce's IG, Todd J. Zinser, shows a history of OIG recommendations to the National Telecommunications and Information Administration (NTIA) for improvement in the agency’s management of the program, and NTIA’s lagging efforts to implement those recommendations.

While its statements are frequently couched, in the best tradition of federal intra-departmental practice, the details and overall message of the 23 page report are scathing and stark: Management of Commerce’s $4.7 billion component of the overall $7.2 billion broadband stimulus program has been poor, and remains inadequate to either disperse Round 2 program appropriations by the September 30, 2010 statutory deadline or to correctly monitor Round 1 compliance and spending by awardees. 

Four programmatic categories of funding – Broadband Infrastructure, Broadband Mapping, Public Computing Centers, and Sustainable broadband Adoption - are managed together by NTIA under its Broadband Technology Opportunities Program (BTOP). 

Ammunition for Hill Staff Pushing for Better Oversight, Dollar Shift to RUS
Publication of the report signals that current internal departmental inspection and oversight at the U.S. Department of Commerce is filling the void created by the lack of adequate congressional oversight of the program.  Until now, NTIA’s public relations resources, and the continued defiance of the Obama Administration's open government requirements by NTIA Administrator Larry Strickling have shielded many of the program’s severe shortcomings of procedure and strategy from full public view or effective remediation.

In the near term, the report gives ammunition to congressional staff from both parties who have been strongly recommending to the leadership of investigatory and oversight committees that more needs be done to get the program on track.

Specifically, the report strengthens the arguments on Capitol Hill favoring statutory changes to the Recovery Act, if necessary.  Quiet suggestions to remedy the program have been made primarily by Democratic staffers in favor of the program's goals but severly concerned about the reports from Members fielding calls from funding applicants in their distrcits.  Included in these discussions have been ideas to move the spending deadline past September 30 of this year, and to shift greater broadband stimulus appropriations from NTIA to the Rural Utilities Service (RUS) of the U.S. Department of Agriculture.

5 Key Findings
The Inspector General’s report published 5 key findings (quoted from the Report):

1.     BTOP’s size and complexity have presented NTIA with significant challenges. NTIA’s pro-gram staffing levels appear to be insufficient to simultaneously perform the necessary first-and second-round award activities. The office must rely heavily on a few key individuals and personnel from other agencies to carry out the program’s operations.

2.     NTIA’s inconsistent documentation of important information such as policies, procedures, staff roles, and key management decisions could lead to inefficiency and miscommunication.

3.     The first round of BTOP grant application processing exposed several problems with the online grant intake system, which affected efficiency and users’ experiences.

4.     A shortage of volunteer peer reviewers meant that application review for the first round was delayed. As NTIA manages the second-round process and handles post-award activities for first-round grant recipients, it must be careful to obtain enough reviewers for the workload.

5. NTIA will need to closely monitor grantees during the post-award phase to ensure they are in compliance with the National Environmental Policy Act (NEPA).

5 Recommendations
Additionally, the report made 5 recommendations (quoted from the Report):

1.    Create a staffing plan that outlines the necessary resources to manage BTOP, and that makes provisions to adjust to the loss of key positions.

2. Develop and implement policies and procedures that articulate key roles, responsibilities, and requirements for documentation.

3.    Have its in-house counsel document any program issues that arise and receive documented opinions from the Department of Commerce’s Office of General Counsel.

4. Supplement the existing pool of reviewers to address unforeseen delays or other impacts that could affect the application review timeline.

5.Continue to develop monitoring procedures to identify, track, and assist recipients at risk of experiencing delays in completing post-award (National Environmental Policy Act (NEPA) requirements.

The full text document is available via StimulatingBroadband on Scribd, here:
(posted document has been corrected to allow printing, sorry for the glitch)Inspector General US Dept of Commerce Report on NTIA Broadband Stimulus Published 04-12-2010                                                     

USDA-RUS Works to Post Broadband Stimulus Applications This Week 04/13/2010 San Francisco - The Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA) is working with a target date of this week to post its listing of Round 2 applicants for broadband stimulus funds.

March 29 was the filing deadline for applicants for RUS funding in the second and final funding round of the federal program.  Agency employees and retained contractors have spent the intervening time processing an unknown number of applications responding to the Notice of Funds Availability (NOFA), issued on January 15 by the agency.

RUS authorized spokesperson Bart Kendrick confirmed for this publication that RUS is still working to publish its list sometime this week, via the Applications Database component within the main federal online site of the overall broadband stimulus program,

The National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce released its database of Round 2 applicants on April 2, confirming a total of 867 second round requests on April 7.  The Round 2 application submittal deadline of NTIA's program was March 26.

Monday, April 12, 2010

IG at Commerce Dept Issues Harsh Report on NTIA Broadband Stimulus Effort

(Editor's Note: This story was published on 04/12/2010, quickly after the public release of the report by the Office of Inspector General, U.S. Department of Commerce.  We gave our analysis of the Report in a story published 04/13/2010.) 04/12/2010 San Francisco - A day after a national wire story slammed the Obama Administration's broadband stimulus program, the Inspector General of the U.S. Commerce Department has published a report that is harshly critical of the management of the program as conducted by Commerce itself.

The full text of document is available via StimulatingBroadband on Scribd, here:
Inspector General US Department of Commerce Report on Broadband Stimulus Published 04-12-2010

Sunday, April 11, 2010

AP Slams Obama's Broadband Stimulus Program…Using Republican Talking Points 04/11/2010 San Francisco – An Associated Press (AP) business story receiving wide national distribution this weekend slams the Obama Administration's $7.2 billion broadband stimulus program.  The underlying point of such criticism, and all 3 alleged instances of the program’s waste in the field, are based wholly on talking points recently lobbed against the federal effort by congressional Republicans. 
Rep. Cliff Stearns (R-FL-06) , Ranking Member, House
Subcommittee on Communications, Technology and the
Internet.  The industry documents and points he raised at a March
hearing are the basis of today's widely read
Associated Press story.
The Republican points of attack are, in turn, based solely on input from the 2 largest trade groups representing the cable TV and telecom industries.

The AP article makes no mention that the specific criticisms of the program originated with powerful industry lobbyists.  Nor does the story state such industry complaints were used as partisan attack points against the Administration's program in a divisive hearing, of the House Subcommittee on Communications, Technology and the Internet on March 4.

Large Weekend Audience
The article, written by the AP's staff technology writer Ms. Joelle Tessler is sure to receive a large national readership as local Sunday papers use reams of wire copy to fill weekend editions.  The article, running under various titles including Some find fault with broadband stimulus and Broadband funds stimulate laments from companies has already appeared in the online editions of hundreds of local and regional papers, since its debut yesterday. 

A feature length version of the piece, with accompanying photos from AP staff photographers, has been embargoed until now for publication in Sunday editions.  Given its wide distribution, today's story will become a primary image of President Obama’s broadband stimulus initiatives in the minds of many Americans.  The story gives untold public relations and governmental relations value to the large incumbent cable and telephone operating companies, their Washington based trade associations, and their Republican allies in Congress.

Questionable Veracity of the "Overbuild" Allegations
The story focuses on 3 claimed instances in which federal broadband stimulus monies are being used to "overbuild" existing cable and telephone company networks.  In each quoted case - 1 each in Georgia, Kansas, and Maine - the incumbent service provider says that the federal subsidies have been awarded improperly, unnecessarily, and wastefully.  Each operator and carrier state it is already delivering extensive broadband services within the service areas of the new federally supported networks.

Overbuilding of existing broadband networks -- constructing new networks where broadband systems operate - is prohibited under federal rules of the program.  It is counter to the policy of Congress expressed in the broadband stimulus program within the $787 billion stimulus package (the American Recovery and Reinvestment Act of 2009, ARRA).  The broadband provisions of ARRA are intended to fund new broadband networks, particularly in rural regions, which are "unserved" and "underserved" with broadband services by current providers

Documented findings from around the country that federal funds are being used directly to compete with broadband operations already existing would thus amount to a fundamental, and potentially legal, challenge to the program which is run jointly by the Departments of Agriculture and Commerce.  The story however relies on only anecdotal statements from service providers that their networks are currently delivering high speed broadband services.

Local officials in rural Georgia are quoted supporting 1 of the 3 alleged unnecessary federally funded new networks. No voices representing rural economic developers, rural state governors, or other officials from areas awarded broadband funds are quoted by AP.  Typically such local officials and business people describe how the lack of broadband networks restrains economic growth in their areas.

Based on the article’s information, there is no way to verify the claims of the carrier / provider incumbents, nor review the extensive data inspected by the feds which resulted in the awards based on a finding of a lack of broadband facilities in the areas identified by the AP report.

Familiar Territory
To observers of the broadband stimulus effort, the award locations mentioned in the AP story are familiar, as they mark the first major points of partisan challenge to the program by congressional Republicans.

The North Georgia Network project of Clarkesville, GA, the Three Ring Binder regional system based in Biddeford, Maine, and the Rural Telephone Co. $100 million project in northwestern Kansas were awarded federal subsidies in funding Round 1 of the program.  The Georgia and Maine awards were widely reported media events of December 17, 2009 as Vice President Joe Biden and Commerce Secretary Gary Locke travelled to the proposed network locations to make the first public announcements of funded projects under the program.

Rep. Stearns Opens Congressional Attack on Broadband Program
More recently, the middle mile fiber optic systems in Georgia and Maine, and the Rural Telephone project in Kansas were characterized as examples of wasteful government overbuilding of incumbent networks by Congressman Cliff Stearns (R-FL-06).  Rep. Stearns is the Ranking Member of the House subcommittee with oversight jurisdiction of the broadband stimulus program.   At the March 4 oversight hearing of the Subcommittee, chaired by Rep. Rick Boucher (D-VA-09), Stearns submitted into the record letters addressed to him from the 2 largest trade associations of the cable and telephone sectors. 

The letter from the National Cable Television Association (NCTA) directly accused the Rural Utilities Service (RUS) of the Department of Agriculture of funding an overbuild of cable operator Eagle Communications by Rural Telephone of Lenora, KS.  The letter from the U.S. Telecom Association, trade group of the large incumbent telephone companies like AT&T and Verizon, did not call out a specific funded project. 

U.S. Telecom however did propose, almost 2 months after the rules for Round 2 were promulgated, that the Commerce Department adopt a new approach to funding middle mile projects.  The association stated its leading complaint about the program is that federal monies are “flowing to support the construction of redundant broadband connections rather than being prioritized to get broadband out to those who don’t have it.”

In his prepared remarks at the hearing, Rep. Stearns spoke several times about his opinion that the North Georgia Network was in the process of overbuilding network in place owned by the carrier Windstream.  His fellow minority colleagues, especially Rep. Lee Terry (R-NE-02) spent time attacking the Three Ring Binder project in Maine, and defending the interests of FairPoint Communications in its repeated claims of unfair competition and overbuilding lodged against the federally funded effort.

Our Take: AP Replays Partisan Attacks
It is not a coincidence that the broadband stimulus awards most heavily singled out for criticism by industry lobbyists and by the Republican minority members on the House Subcommittee became grist for the mill of Ms. Tessler’s AP story now reaching far and wide across the nation.  Ms. Tessler and AP took an easy, yet partisan, approach to reporting on a complex issue.  Rather than look independently at any of the 140 Round 1 awards made to date, the AP instead chose the route of simply replaying the critique of 2 industry powerhouses that have not been supportive of the President’s broadband program from the beginning.

Ms. Tessler and her editors at the Associated Press, at the very least, have gotten lazy and sloppy in their examination of an important federal program.

Far worse is the fact that potentially millions of Americans will today see a story about that program based fully on industry and partisan rhetoric.  One of the last remaining great wire services in America should know better.

Wednesday, April 7, 2010

Commerce Department Confirms $11 Billion in Applications for Round 2 Broadband Stimulus

(Editor's Note: Commerce - NTIA is now confirming that the Round 2 application database universe we first reported on April 2 and April 3 is the final definitive inventory of grant requests received by NTIA's BTOP program for the second funding cycle.  Our analysis will follow, now that the agency has confirmed its database entries of late last week are final.  As of this posting, no Round 2 applications have been entered into the publicly facing database by USDA - RUS.  We continue to inquire as to that agency's schedule.)  

U.S. Commerce Department Press Release via 04/07/2010 Washington - The Commerce Department’s National Telecommunications and Information Administration (NTIA) announced today that it received 867 applications requesting $11 billion in funding for proposed broadband projects reaching across the United States. These applications are for the second round of NTIA’s American Recovery and Reinvestment Act funding aimed at expanding broadband access and adoption to help bridge the technological divide; expand economic opportunities; create jobs; and improve healthcare, education, and public safety. NTIA allocated approximately $2.6 billion for the second round of its Broadband Technology Opportunities Program (BTOP).

Applications came in from a diverse range of parties including state, local, and tribal governments; nonprofits; industry; anchor institutions, such as libraries, universities, community colleges, and hospitals; public safety organizations; and other entities in rural, suburban, and urban areas.

“For the second round of BTOP funding, we sharpened our program focus and encouraged applicants to create comprehensive proposals to meet the needs of their communities. We are pleased that a high percentage of applicants appear to have met our priorities and we look forward to reviewing this more targeted pool of applications,” said Lawrence E. Strickling, Assistant Secretary for Communications and Information and Administrator of NTIA. “We will move quickly but carefully to fund the best projects to bring broadband and jobs to more Americans.”

A preliminary analysis of applicant-reported data shows that NTIA received requests for grants totaling more than $11 billion. When including about $4.5 billion in non-Federal matching funds committed by the applicants, there are over $15.5 billion in proposed broadband projects. NTIA will employ a thorough review process with the goal of making the first Round 2 grant awards this summer.

BTOP applications were received in three categories and break down as follows:

Comprehensive Community Infrastructure: 355 of the applications, requesting approximately $8.4 billion in grants, are for Comprehensive Community Infrastructure projects, which focus on deployment of middle mile broadband infrastructure that connects community anchor institutions, such as schools, libraries, hospitals, and public safety facilities. For the second funding round, NTIA has allocated approximately $2.35 billion for such infrastructure projects.

Sustainable Broadband Adoption: 251 of the applications, requesting approximately $1.7 billion in grants, are for projects that promote sustainable demand for broadband services, including projects to provide broadband education, training, and equipment, particularly among vulnerable population groups where broadband technology has traditionally been underutilized. In the second funding round, NTIA has allocated at least $100 million for such projects.

Public Computer Centers: 261 of the applications, requesting more than $922 million in grants, are for public computer center projects, which will expand access to broadband service and enhance broadband capacity at public libraries, community colleges, and other institutions that serve the public. In the second funding round, NTIA has allocated at least $150 million for such projects.

NTIA has posted online a searchable database containing summaries of applications received.  The dollar figures cited today represent applicants’ self-reported totals, however these totals are preliminary estimates and may change as the applications are reviewed for errors, omissions, and duplications.

The Recovery Act provided a total of $7.2 billion to NTIA and the Department of Agriculture's Rural Utilities Service (RUS) to expand access to and adoption of broadband services. Of that funding, NTIA will utilize $4.7 billion to deploy broadband infrastructure, expand public computer center capacity, and encourage sustainable adoption of broadband service. RUS will invest $2.5 billion to facilitate broadband deployment in rural communities.

FairPoint Seeks New Broadband Stimulus Funds to Overbuild Maine Broadband Stimulus Grantee 04/07/2010 San Francisco FairPoint Communications, Inc. (OTC: FRCMQ.PK) has applied for federal broadband stimulus funds to overbuild the network facilities of the Maine Fiber Company, the operator of the new network being funded with broadband stimulus monies which Fairpoint has accused of seeking to improperly overbuild its (FairPoint’s) network facilities.

FairPoint is the Charlotte, NC based rural local exchange carrier (RLEC) which acquired the northern New England assets of Verizon Communications Inc. (NYSE: VZ) for $2.7 billion, effective March 31, 2008.  The firm filed for Chapter 11 federal bankruptcy protection in October 2009 as it became unable to make debt payments taken on as a result of the Verizon purchase, and following a string of operational and regulatory disasters not seen in the modern history of American telecom sector.

While there was considerable public discussion and controversy ensuing from FairPoint’s applications for a total of $31.001 million in broadband stimulus monies, in 8 separate grants, in funding Round 1 of the federal program, this is the first public report of the carrier’s federal grant filing in the current Round 2 of the program.

FairPoint has been harsh in its ongoing criticism of the the Three Ring Binder large middle mile optical fiber project managed by the Maine Fiber Company (MFC), a project awarded on December 17 to Biddeford Internet Corp.  Recent local and national news reports have stated that Fairpoint is using its control of tens of thousands of Maine's utility poles to slow the construction of the federally subsidised project.  

Fairpoint's Round II Maine Middle Mile Project Detailed
Fairpoint has applied for $20.595 million in 1 single grant application to the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce.

In the published description of the proposed project the company states: "This BTOP middle mile project will expand high speed broadband to 626 critical community facilities throughout Maine. A last mile component will extend high speed broadband to remote, underserved areas of Washington and Hancock Counties in northeast Maine. The FairPoint Communications, Inc. (Applicant) and Northern New England Telephone Operations LLC (Co-Applicant)".  The latter entity is a Fairpoint affiliate created to manage the transition of former Verizon assets.

From the further description of the project, outlined in the firm's Executive Summary submitted with its Round 2 grant application, it appears that the company is proposing to both build last mile network facilities throughout its Maine exchanges targeted for extension of its broadband xDSL service, and to extend high capacity facilities to community anchor institutions.  This latter category of proposed federally subsidized network facilities appears to be intended to overbuild portions of the regional fiber rings of MFC.

No Public Statement by FairPoint To Date
The application is 1 of 867 applications released last Friday, April 2, into a public facing federal database which is part of the online portal operated by the 2 agencies managing the total $7.2 billion broadband stimulus program. To date, the carrier has issued no statement about its Round II application.

NTIA and its sister agency managing the program, the Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA) both rejected all 8 of the carrier’s applications in funding Round I, for reasons that neither agency has publicly disclosed.  Fairpoint had applied jointly to both agencies for 6 applications, and solely to NTIA for 2.
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