Friday, December 7, 2012

Feds Suspend Eagle-NET $100 Million Broadband Stimulus Grant 12/07/2012 San Francisco -  Federal grant managers overseeing the controversial $100.635 million Eagle-NET middle mile broadband stimulus project in Colorado have suspended funding for the statewide network effort.

In a letter dated yesterday, the Director of the Grants Management Division of the National Oceanic and Atmospheric Administration (NOAA) stated to the Vice President of Operations of Eagle-NET that the federal agency "is suspending your award, effective immediately."

The suspension was issued, "Due to ongoing concerns relating to your compliance with grant terms and conditions."

The project grant being administered by the Eagle-NET Alliance (ENA) was awarded in Round 2 of the Obama Administration's broadband stimulus program by the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce. 

Given the chronically short resources available to NTIA to oversee its issued grants under the program, NOAA personnel have been contracted by NTIA, a sister agency within Commerce, to oversee grant management issues.

New Network Design of Eagle-NET Triggers Suspension 
Of greatest surprise in the NOAA letter is the fact that the network project had earlier this year been cited for problems "regarding certain programmatic and financial issues surrounding ENA's award." On August 9, NOAA "placed ENA's award under a Corrective Action Plan (CAP)," which ENA responded to on September 14. It was actually the response to the federal inquiry which triggered the funding suspension.

Yesterday's letter tells Eagle-NET that "statements in the document raised additional concerns related to ENA's failure to consult with NTIA in advance on its new network design."  That new network plan, lacking NTIA review and apparently without having undergone environmental review, was "partially implemented" by ENA according to the letter.

No Previous Disclosure
Based on our review of published sources, our inquiries to the lead ENA spokesperson, past inquiries to NTIA, and on our off the record interviews with the major parties complaining about Eagle-NET, we have found no prior public disclosure of the August corrective plan issued by the federal agency to Eagle-NET. 

NOAA Eagle-NET Suspension Letter

Friday, October 5, 2012

NTIA Gives Slowroll to Congressional Complaint on Colorado’s Eagle-Net

Is One Federally Financed Network Overbuilding Others? 10/05/2012 San Francisco -  The National Telecommunications and Information Administration (NTIA) has declined to give a time frame for its response to a sharply worded letter issued  by  four Members of Congress against the agency’s stimulus funded  Eagle-Net Alliance (ENA) network in Colorado.

NTIA Chief Larry Strickling, Assistant Secretary of Commerce
“We received the letter and will respond accordingly,” stated a NTIA spokeswoman when asked by this publication about the agency’s planned response to the letter dated September 17.

 The letter was sent by four Colorado Republican congressmen and addressed to NTIA chief Larry Strickling. Mr. Strickling’s communications staff did not return a call for further clarification of the agency’s planned response.

The four congressmen – Representatives Mike Coffman (R-CO-06), Cory Gardner (R-CO-04), Doug Lamborn (R-CO-05), and Scott Tipton (R-CO-03) - charged that the $100.635 million federally funded ENA network is directly overbuilding numerous small independent operating telephone companies (IOCs).

The House members also state that the ENA is failing to bring high speed fiber links to the state's areas that are most undeserved and fully unserved by broadband networks.

Eagle-Net Meets Congressional Staff
Following the letter’s release representatives of ENA's executive team met in Washington, as part of previously scheduled meetings, with congressional staff assigned to the letter’s authors. The charges made in the letter were the focus of discussions.

Eagle-Net’s communications Vice President, Gretchen Dirks and Business Development V.P. Chip White represented ENA at the meetings. When asked to describe the meetings by this publication, Ms. Dirks responded, “We thought they went very well.”

Before learning of the Washington meetings from other sources, this publication was informed by Ms. Dirks that ENA would have no written response to the congressional complaint. “As the letter you are referring to was addressed to the NTIA and not EAGLE-Net we are deferring to the NTIA and are not responding, and will continue to share updates as our efforts progress,” stated the ENA spokeswoman before we learned of the Washington meetings.  

Is One Federally Financed Network Overbuilding Others?
The most serious charge in the congressional statement is that the IOCs being overbuilt with the federal network grant are themselves recipients of federal rural telecom subsidized loans issued by the U.S. Department of Agriculture (USDA).

Critics of Eagle-Net, lead by the Colorado Telephone Association (CTA) say that ENA’s effort to provide broadband service to community anchor institutions (CAI) takes important revenue away from those small IOCs in the state – virtually all of which today hold USDA loans.

Federal rules protect the tax supported loan portfolio to telecom providers across rural America from precisely this type of federally subsidized overbuilding.

Under regulations of the USDA’s Rural Utilities Service (RUS), once a rural telecom carrier secures a federal loan for network construction under the Telecommunications Infrastructure Loan Program, the agency is prohibited from issuing any new loan for the same area.

This simple rule means that federal funds may not be used to subsidize competition against an existing federal network investment. The rule is part of a fundamental policy allowing federal loan supports to flow to rural telecom providers. That policy was inaugurated when President Harry Truman first allowed such funding for rural telephone cooperatives.

It was Truman that in 1949 signed into law amendments to the Rural Electrification Act (REA) which authorized REA loans to support rural telephone investments. REA is, of course, one of the signature programs of President Franklin Roosevelt’s New Deal.  

Rural telecom providers today are already telling Washington they are under significant financial stress. The the Universal Service Fund (USF) Reform proceeding of the Federal Communications Commission (FCC) which creates the new Connect America Fund has brought capital spending  by IOCs on network projects to a new low.

If a large BTOP network is truly about to start taking CAI based revenues from rural telcos in Colorado which have already invested in broadband facilities using federal loans, that lost revenue could mean the difference between survival and bankruptcy for some carriers. Bankruptcy for these rural providers would mean defaults within the RUS portfolio -- defaults triggered by a federal stimulus program designed to bring broadband to unserved rural America.

If a practice is prohibited by one set of federal rules issued by RUS, can the same practice be somehow allowed under those of NTIA?

Large Broadband Stimulus Award Under Round 2 Program Rules
Eagle-Net is one of only a handful of large broadband stimulus projects funded at more than $100 million under the $7.2 billion program within the American Recovery and Reinvestment Act of 2009 (ARRA).

Former Colorado Governor Bill Ritter (D-CO) announced the award, part of NTIA’s stimulus Broadband Technology Opportunities Program (BTOP), on September 13, 2010. The announcement came just 2 weeks before then U.S. Commerce Secretary Gary Locke issued the last awards from Commerce in the program. Final program funding awards were announced by RUS 3 days later to close out the entire broadband component of ARRA.

Those dates are significant for any close observer of the broadband stimulus effort. Eagle-Net and the scores of other awards made under Round 2 of the program were issued under a set of BTOP rules which streamlined the application review process, and gave greater emphasis to the goal of connecting CAIs.

Serious Questions for Analysis
One of the lead detailed level questions now raised by the criticism of Eagle-Net is this: Did the loosened rules for broadband stimulus Round 2 allow a breach of the federal rules protecting existing public investment in rural networks to occur?

Another is this: In Eagle-Net's legitimate quest to secure revenue to make it a sustainable enterprise, has it short changed the undeserved and unserved areas of Colorado in violation of the founding purposes of the broadband stimulus parts of the Recovery Act? 

And another: Are the problems of Eagle-Net, as expressed by CTA and the Members of Congress, more indicators of the lack of adequate oversight of the BTOP program by NTIA and by Congress itself?  No less than the Inspector General of the Commerce Department has reported multiple times that NTIA's BTOP remains in serious need of better management and oversight.

EAGLE Net Colorado Letter

Thursday, October 4, 2012

USDA: 'We're Still Issuing Farm Bill Broadband Loans' 10/04/2012 San Francisco -  The Rural Utilities Service of the U.S. Department of Agriculture (RUS) is still accepting and issuing Farm Bill Broadband Loan Program loans under legal authority extended by the recently passed congressional continuing resolution (CR).

“We are operating under a continuing resolution, so the program will continue to make loans,” stated Mr. Jay Fletcher, USDA Rural Development spokesperson, in emailed answers to questions of this publication.

We estimate that a minimum of some $300 million - $400 million remains in "program level" loan capacity for carry over into the new federal fiscal year 2013, based on previous appropriations and authorized loan leverage rates.

Broadband service providers, including telecommunications wireline carriers, wireless providers, cable television operators, rural electric cooperatives, and municipal power departments serving rural areas are all eligible for Broadband Loan funding. Loans are extended at federally subsidized low rates of interest.

Questions about the Broadband Loan Program had been raised given the lapse of legal authority of the 2008 Farm Bill at midnight, Sunday, September 30th. The expiration of congressional authorization under the legislation resulted in the suspension of a number of high profile programs that support American agriculture. All of the Farm Bill programs, from crop subsidies to rural infrastructure support programs, are managed by the U.S. Department of Agriculture (USDA).

Spokesperson Fletcher explained that the Rural Utilities Service of USDA (RUS) will continue to both accept for review new Broadband Loan Program applications, and to process applications submitted prior to the Sunday's Farm Bill cut off date.   

The Republican controlled U.S. House of Representatives and the Democratic U.S. Senate have not reached a legislative compromise allowing the new 2012 Farm Bill to be voted into law. At the start of the new federal fiscal year on October 1, the scores of provisions and programs in the 2008 Farm Bill expired unless parts of the CR authorized them to continue on a temporary basis.

The CR was passed by vote of the Senate, concurring in previous House action, on September 26 and quickly signed by President Obama.

Vilsack Statement
Questions from the rural telecom industry emerged on Monday of this week as Agriculture Secretary Tom Vilsack issued a statement to the press which outlined a slew of signature USDA programs that had to be suspended at midnight.

U.S. Secretary of Agriculture Tom Vilsack
"Many programs and policies of the U.S. Department of Agriculture were authorized under the Food, Conservation and Energy Act of 2008 ("2008 Farm Bill") through September 30, 2012,” said Vilsack in the release issued by his media staff.

“These include a great number of critical programs impacting millions of Americans, including programs for farm commodity and price support, conservation, research, nutrition, food safety, and agricultural trade.”

“As of today, USDA's authority or funding to deliver many of these programs has expired, leaving USDA with far fewer tools to help strengthen American agriculture and grow a rural economy that supports 1 in 12 American jobs. Authority and funding for additional programs is set to expire in the coming months. Without action by the House of Representatives on a multi-year Food, Farm and Jobs bill, rural communities are today being asked to shoulder additional burdens and additional uncertainty in a tough time."

"As we continue to urge Congress to give USDA more tools to grow the rural economy, USDA will work hard to keep producers and farm families informed regarding those programs which are no longer available to them." 

Friday, February 17, 2012

Happy Birthday Broadband Stimulus 02/17/2012 San Francisco - President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) into law 3 years ago today, within the first month of his presidency.
President Barack Obama signs the American Recovery and Reinvestment
Act at a Denver ceremony of February 17, 2009 while Vice President Joe Biden
looks on.  Photo: Pete Souza, The White House
For our industry, the stimulus gave us both the National Broadband Plan and the $7.2 billion spending injection of the broadband stimulus program. Taken together these 2 efforts amount to the greatest net positive benefit delivered by government to the sector since the 1996 passage of the Telecom Act. 

This publication has been, and will remain, critical of the broadband stimulus where we find fault in either overall program execution, or in a handful of truly flawed awards. In the 3 years of the stimulus we have attempted to reach beyond the platitudes of left or right by reporting on both accomplishments and problems where we see them. 

We do this because anything of great value is worthy of great improvement. We do this because the goal of bringing  broadband to every American is important for our country. We see every day the broadband stimulus has helped put Americans back to work. The program gave the nation a road map of how and where to extend broadband to all of rural America, if we are smart enough to follow it.

Could the broadband initiatives within the stimulus have been better conceived and executed? Of course they could. Many of us work daily to apply lessons learned from the stimulus to the new funding proposals that enlightened members of both parties are working to implement. 

In all of this we pose a simple question, and give a simple answer:  Would the American telecom industry or rural communities choose to roll back the clock and take the broadband sections out of the ARRA legislation the President signed 3 years ago?  

Not on your life.

Monday, February 13, 2012

White House to Honor 3 Broadband Stimulus Awardees

3 Exemplars of the Program Previously Awarded Total of $212 Million in Stimulus Funds; 
2 Middle Mile RENs, 1 FTTP Project Honored 02/13/2012 San Francisco - Three awardees of the Obama Administration’s broadband stimulus program will be honored as Champions of Change in a White House ceremony this Wednesday, February 15. The event, which will highlight recipients of federal broadband and transportation infrastructure investments, is part of the national Winning the Future public relations campaign of the Administration. Winning the Future is the branded title of the fiscal year 2013 federal budget released by the President today. 

Key personnel at North Carolina’s MCNC Golden LEAF Rural Broadband Initiative, Merit Network, Inc. of Michigan, and South Dakota’s Venture Communications Cooperative will each be designated as a White House Champion of Change in an afternoon program. The Champion of Change effort, coordinated by White House Senior Advisor and Obama confidant Valerie Jarrett, was launched separately last year. 

North Carolina’s MCNC

“MCNC is honored with recognition by the White House as a Champion of Change.  MCNC’s work is greatly supported by our Governor, North Carolina’s General Assembly, the NCREN Community, the Golden LEAF Foundation, and by a great team at MCNC,” said Joe Freddoso, President and CEO of MCNC in a statement to this publication of today.

Gov. Purdue (l) with MCNC 's Joe Freddoso at project ground breaking
of October 8, 2010. Photo: CommScope

“Two members of the MCNC team have really led our work that led to receiving this recognition; MCNC’s CFO Patricia Moody and VP of Network Initiatives Tommy Jacobson deserve special recognition. MCNC’s two BTOP projects working as the Golden LEAF Rural Broadband Initiative is and will continue to provide the broadband infrastructure required to help our state be successful and remain competitive now and for years to come,” concluded Freddoso.

The MCNC chief, a veteran of the North Carolina high tech sector, has been the driving force behind the successful stimulus-funded expansion of the state research and educational network (REN) by the administration of Governor Bev Purdue (D-NC). While Purdue announced last month that she is not seeking reelection, the statewide expansion of MCNC will be one of the signature technology projects of her tenure. Like her Democratic colleagues Deval Patrick in Massachusetts and Jay Nixon in Missouri, Purdue has taken a hands on role in state broadband developmental initiatives, especially the federal broadband stimulus effort under Obama.

The North Carolina initiative was funded with two broadband stimulus middle mile grants totaling $104 million from the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce, and further matched with $40 million in locally raised funding. MCNC won $28.2 million in funding in Round 1, and $75.5 million in Round 2 of the federal program. 

Michigan’s Merit Network, Inc.

Similarly, Michigan’s Merit Network, Inc. is an existing statewide REN which is being expanded to be an open access middle mile network, with $102.928 million in grant funds also issued by the National Telecommunications and Information Administration (NTIA) of Commerce as part of the stimulus package. Like MCNC, Merit receiving grant monies in both Round 1 and Round 2 of the program. 

"I am grateful to have Merit recognized for the work we are doing," said Merit's CEO Dr. Don Welch in a statement issued this afternoon to this publication.  "Our vision of equal opportunity for access to information regardless of  geography is coming to fruition and this reinforces our belief in the importance of this effort," said Dr. Welch, who has headed Merit since 2006.

Merit CEO Dr. Don Welch (l) and then Michigan Governor Jennifer Granholm
at August 2010 event announcing Round 2 award to Merit Network.
Photo: Melanie Maxwell,
"Projects like this that create 21st century infrastructure will have benefits far beyond just the laying of the fiber and those who dig the trenches," said then Michigan Governor Jennifer Granholm (D-MI) at a ceremony in August 2010 announcing the funding round 2 award of $69.6 million.

"This will be huge for Michigan's future in terms of education, giving all children access to the globe, and in terms of entrepreneurship, by giving everybody the chance to transact business online. There are so many corners of Michigan that up to this point have not had that opportunity", concluded Granholm, who now teaches at the Goldman School of Public policy at UC Berkley.

South Dakota’s Venture Communications Cooperative

At the White House event this Wednesday, Ms. Janelle Jesson will receive a Champions of Change award on behalf of Venture Communications of Highmore, South Dakota. Jesson has been doing the all important work providing the internal accounting function for federal funds used in Venture’s funded fiber network expansion project.

                           RUS Administrator Jonathan Adelstein, Randy Houdek – Venture, RUS                                                    State Director Elsie M. Meeks, Bryan Roth – TrioTel, and then U.S. Rep. Stephanie Herseth Sandlin (D-SD-AL) at the 2010 award event. Photo: USDA
Venture, is a member-owned telephone cooperative organized in 1952, just 3 years after Congress and the Truman Administration allowed federally funded rural electric cooperatives to move into telephone network construction using federal subsidies. 

The cooperative received a total of $5.230 million in grant and loan stimulus funding from the Rural Utilities Service of the U.S. Department of Agriculture (RUS) to build out a Gigabit Passive Optical Network (G-PON) Fiber to the Premises (FTTP) network.

Venture is matching the federal investment with another $1.7 million in locally secured capital. The grant / loan combination award was announced by RUS Administrator Jonathan Adelstein at the annual convention of the South Dakota Telephone Cooperative Association (SDTA) annual convention on August 26, 2010, within days of the end of Round 2 awards cycle. At the time, the Administrator also awarded a separate $12.3 million grant / loan combo package to TrioTel Communications of Salem, SD.

The cooperative is now constructing the FTTP system in the exchanges of Cresbard, Faulkton and Orient, serving the rural communities of Faulkton, Orient, Cresbard, Wecota, Burkmere, Norbeck, Millard, Devoe, Miranda and Polo.
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