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Friday, October 28, 2011

Strickling Says $80 Million from Louisiana Failed Broadband Project Goes Back to Treasury

StimulatingBroadband.com 10/28//2011 San Francisco - Assistant U.S. Commerce Secretary Lawrence E. Strickling says his agency did all it could to save the large broadband stimulus network project in Louisiana that was terminated earlier this week. In a statement to this publication of this morning however, Strickling puts the blame for the $80 million project collapse squarely on State of Louisiana officials in the Administration of Governor Bobby Jindal (R-LA). 


Assistant Commerce Secretary Lawrence Strickling at the UCANN 40
Conference of March 2011
 “NTIA is vigorously overseeing broadband grant projects to ensure they are completed on time, on budget, and deliver the promised benefits to the communities they serve. It is our goal to intervene early with projects that are getting off track and correct problems to ensure that taxpayer dollars are not wasted on projects that otherwise would fail," said Administrator Strickling via an email from his spokesperson of this morning to StimulatingBroadband.com.


"The Louisiana project, as originally submitted, promised great benefits to unserved and underserved areas of the state. However, after the state determined it was unable to implement the original project plan and fell significantly behind schedule, it proposed major modifications to its original proposal without adequate technical and financial details and a viable schedule for completing the project."


"We have worked closely with the state throughout the last several months to rescue this project but have now concluded that we have to move on. Accordingly, as a responsible steward of taxpayer dollars, NTIA terminated the grant and will return the funds to the U.S. Treasury," concluded the statement from the Assistant Secretary, who was appointed in 2009 by President Barack Obama. StimulatingBroadband.com

Jindal Administration Triggers Largest Broadband Stimulus Project Termination in Nation

Jindal's Administrative Chief Attempted Privatization of Federal $80 Million Investment, Echo of Wisconsin $23 Million Stimulus Giveback Seen


StimulatingBroadband.com 10/28/2011 San Francisco - The Administration of Louisiana Governor Bobby Jindal (R-LA) has triggered the termination of an $80.596 million broadband stimulus project by the U.S. Department of Commerce. The Louisiana Broadband Alliance (LBA) project was slated to support the major academic institutions of the state with expanded optical fiber networking capacity, and to provide middle mile 'big pipes' to numerous unserved communities in rural areas.
Louisiana Governor Bobby Jindal (R-LA)


In an October 26 letter, a grants officer at the U.S. Department of Commerce informed the Louisiana State Board of Regents, sponsor and legal owner of the project, that the $80.59 million Broadband Technology Opportunities Program (BTOP) grant for LBA "is terminated immediately."

Based on our tracking of the status of all such federal projects, the cancellation is the largest termination to date, by dollar value of federal funding, of any such project under the Obama Administration's $7.2 billion broadband stimulus program.


Louisiana's senior U.S. Senator, Mary Landrieu (D-LA), put the blame for the termination squarely on officials in Jindal's government. "Despite receiving the green light for more than $80 million in federal funds," said Landrieu in a press statement of Thursday, "the State fumbled the ball and was either unable or unwilling to complete the project, which could have been a tremendous boost to central and Northeast Louisiana." 


Similar Louisiana - Wisconsin Stimulus Givebacks
The scenario behind the termination is strikingly similar to that carried out in February by the administration of Jindal's fellow Republican Governor, Wisconsin's Scott Walker when the latter returned a $22.978 million BTOP award. Both administrations chose to turn back federal capital monies awarded for state construction of state university owned network facilities in favor of using private carrier leased lines for academic network expansion.


In the world of high capacity optical networks, both the Louisiana Broadband Alliance and the Wisconsin BadgerNet Converged Network are research and educational  networks (RENs). RENs often interconnect campus fiber rings across which are deployed shared supercomputer resources -- key elements of advanced research supporting leading centers of American innovation.  

900 + New Miles of Funded Fiber Gone
Project funding had been awarded in March 2010 for the new construction of 910 miles of optical fiber network routed to educational institutions across Louisiana.  Additionally, the project was planned to interconnect the existing state REN, the Louisiana Optical Network Initiative (LONI) to a similar public network in adjacent Mississippi. The award rolled out in Round I of the national program, and was issued in a rare joint statement by then Commerce Secretary Gary Locke and Senator Landrieu.    

According to yesterday's letter, the Louisiana termination resulted from delays in the environmental engineering phase of the project, and from the absence "of a strong deployment plan in place" a full year after the funding award of March 2010. Importantly, two allied efforts by Jindal's Department of Administration (DOA) to impose privatization strategies on the project after its award changed the project's business model, milestones, and cost structure. 

The termination statement concludes that this post-award "pattern of schedule delays, uncertainties and contingencies demonstrate a lack of management ability and control by Louisiana to get this project built on schedule and on budget.".

Privatization Agenda Proposed After Award
According to the letter, Jindal's DOA attempted to convert grant funded state owned last mile fiber connections slated for scores of community anchor institutions (CAIs) to investor-owned carrier circuits to be installed by existing providers. In this way, the federal grants officer saw that the project's promised "benefits will be contingent on last mile providers to provide the services to CAIs". 


As project delays continued, an alternative plan was floated to substitute for the entire fiber build. 'Alternatively, Louisiana then proposed significant modifications to the project to exclude the construction component and to make up for its schedule delays by pursing and alternative design centered on the purchase of indefeasible rights-of-use agreements (IRUs) from private providers," reads the Commerce letter. 


Under the stimulus package legislation, and rules of NTIA for BTOP, funds are to be expended for the capital construction of large networks and the telecom equipment to operate them. Funds may not be expended under the program for operating costs, like those incurred in carrier line rental. While technically IRUs can be accounted for as fiber capital leases, by definition run counter to the legal purposes of the program's funding by Congress.  


Additionally, the letter went on to document that the "DOA Office of Information Technology (OIT) will provide IT project oversight to ensure that implementation of the BTOP grant will not be in direct competition with private providers." Although noisome to many elements of the U.S. telecom sector, there is no legal requirement that BTOP-funded networks do not, in any all cases, compete with existing providers. 


As the role of DOA in the management of the LBA project increased, NTIA actually had to demand an inter-agency Memorandum of Understanding (MOU), be executed between the Regents and DOA to clearly lay out the project responsibilities of each agency. Previously, LBA and LONI had been administered solely by the Regents

Former Jindal chief of staff Paul Rainwater was appointed by the Governor to head DOA in June 2010 with what many observers of Louisiana's government state is a clear privatization agenda. Most recently Rainwater has been at the center of a political firestorm in the state over the potential privatization of state employee health insurance, and the issuance of a legislative subpoena to Rainwater's agency for documents about the plan. 

Louisiana BTOP Cancellation Letter 10-26-2011

Thursday, October 27, 2011

FCC Releases Summary of USF Reform Order

StimulatingBroadband.com 10/27/2011 San Francisco - In keeping with its arcane practice of releasing final written regulatory orders days and sometimes months after they are voted on, the Federal Communications Commission has so far issued only an executive summary of its important Universal Service Fund / Intercarrier Compensation reform Order.

The Order and Final Notice of Proposed Rulemaking, of ultimate importance to American's rural telecom providers, was adopted by unanimous vote by the Commission this morning. The 7-page Executive Summary, released to the media by the Commission's Office of Communications following this morning's open meeting, is comprised of 26 paragraph sections which address 17 key points.

In a simultaneously issued press release, the Commission summarized the Order's thrust in 4 areas:
·         INCREASED CONSUMER BENEFITS: The FCC estimates that, over the next six years, the Connect America Fund will expand broadband access to over 7 million residents of rural areas who are currently unserved, and will put the country on the path to universal broadband within a decade. The Mobility Fund will expand advanced mobile broadband access to tens of thousands of road miles, where millions of people work, live, and travel, and will include dedicated support for Tribal areas. Intercarrier compensation reform will eliminate hidden costs in consumer bills, providing economic benefits to long distance and wireless consumers across the nation of $2.2 billion annually in the form of lower prices, better value for the money, or both. Expanded broadband access will generate approximately 500,000 jobs over the next six years. As part of this reform, some consumers may pay, on average, an additional 10 to 15 cents a month on their bills; but for every dollar in cost, reform will provide $3 in benefits for consumers. And no additional charges can be imposed on consumer phone bills that are at or above $30 a month (inclusive of most fees consumers pay on their bills), nor can such charges be imposed on low-income consumers served by the FCC’s Lifeline program. Any new charges will begin to decline after six years.



·         COMMIT TO FISCAL RESPONSIBILITY: A firm annual budget set at current levels—$4.5 billion—will prevent growth in the Fund and help protect consumers from increased contribution fees. Programs that provide subsidies where they are not needed are eliminated, and compensation for corporate overhead expenses is reduced. Market-based mechanisms, including competitive bidding, will be used to distribute money more efficiently.



·         DEMAND ACCOUNTABILITY: In order to receive Connect America Fund support, carriers must demonstrate they are deploying broadband to their customers. These networks must meet performance criteria that enable the use of common applications such as distance learning, remote health monitoring, VoIP, two-way high quality video conferencing, Web browsing, and email.



·         ENCOURAGE DEPLOYMENT OF MODERN NETWORKS: Intercarrier compensation distorts investment in technology and discourages investment in modern Internet Protocol networks. It is also unfair to consumers, forcing wireless and long distance customers to provide billions of dollars per year in hidden subsidies to phone companies. Reform will ensure fairness to consumers, promote competition, and foster innovation in communications services.  In addition, the Order takes immediate action to end wasteful and costly gaming of the intercarrier system, including schemes such as phantom traffic and traffic pumping.


The 7-page document is attached:
FCC Executive Summary - USF-ICC Order & FNPRM

Friday, October 21, 2011

Vilsack: Jobs Act Will Put 1.9 Million Americans Back to Work

USDA Office of Communications via StimulatingBroadband.com 10/21/2011 San Francisco - 
By Agriculture Secretary Tom Vilsack 

U.S. Agriculture Secretary Tom Vilsack

Recently, both houses of Congress took action to support tens-of-thousands of American jobs by ratifying trade agreements with South Korea, Colombia and Panama, as well as passing trade adjustment assistance to help train workers for the 21st century economy.  And last week, the President signed them. 

These agreements are a win for the American economy.  For American agriculture, their passage will mean over $2.3 billion in additional exports, supporting nearly 20,000 jobs here at home for folks who package, ship, and market agricultural products.

That’s why President Obama made these trade deals a key part of his jobs agenda.  And once they are implemented, they’ll level the playing field for America's farmers, ranchers and growers.  They’ll open up opportunities for our businesses and immediately secure new markets as the majority of American products exported to Korea, Colombia and Panama become duty-free. 

These trade agreements help build on the success story of American agriculture – already a bright spot in the American economy – by continuing record exports that support more than a million jobs here at home. 

In the past months, I’ve crisscrossed the United States talking about trade and another opportunity for Congress to create jobs for the American people —President Obama’s American Jobs Act.  The bill would cut taxes for small business owners and middle-class Americans.  Private forecasts suggest it would put 1.9 million people back to work next year.

Right now, Congress is looking at the bill piece-by-piece, starting with a proposal to prevent teacher layoffs, keep police officers on the beat and keep firefighters on the job.  $35 billion in assistance to states would support nearly 400,000 educator jobs – keeping teachers in the classroom.  And it would keep cops and fire fighters in place to protect our communities. 

In the same way that they supported trade deals to create jobs and help agriculture, I know that members of Congress can step up and take action to pass the American Jobs Act. 

If we’re going to get Americans working again, folks in Washington DC need to come together and find solutions that work for everyone to build our economy that makes, creates, and innovates products that the rest of the world needs and wants.  In doing so, America can be an exporting nation – a key to rebuilding America’s middle class.


  StimulatingBroadband.com

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