well good morning to everyone today our subcommittee conducts a second oversight hearing regarding the seven point two billion dollars provided by the economic recovery act for broadband programs the act requires that the programs be administered by the u s department of commerce through the hand by the department of agriculture of rural utilities service it's our pleasure this morning to welcome the  director assistant secretary for communications and information to larry struggling and to the rural utilities service administrator jonathan adelstein both of whom are well known to members of the subcommittee they will discuss the process they have undertaken for the first round of funding and the standards that their agencies have developed that will govern the funding award the recovery act broadband program presents on a stor to nitty for increasing the availability broadband and elevating the standing of the united states among the developed nations in the world in the percentage of the population that uses broadband but the program but only be as effective as the standards that govern the grant awards and the loans as those standards and able to be i have some concerns which i'll express this morning that the standards that have governed of the first round of funding need to be modified for the the upcoming rounds and i will encourage the agencies to consider modifying them accordingly my first concern regards access to grant funding for rural applicants in many circumstances involving very small communities that lack broadband only through grant funding as distinct from the lone funding can broadband access be achieved while in some situations alone funding can be sufficient for communities with very small populations that are isolated by mountains the cost of building broadband can be great and with populations of as few as one hundred homes that cost cannot be recovered through the revenues to be realised from the broadband service itself and those situations which are commonly found only through the award of grants can broadband infrastructure be built in the our us program a grant of between eighty percent had one hundred percent of project cost is only available to communities that are determined to be remote and any community that is within fifty miles of a city of at least twenty thousand and population is considered to be non remote disqualifying that community from receiving grants of more than fifty percent under the our us program oh most of the entire eastern united states is disqualified from the eighty percent of one hundred percent grants by what i think is a very inappropriate standard and that and in mountainous terrain the standard of being within fifty miles of something less than fifty miles of a city of twenty thousand is not a reason a reasonable yardstick for determining needs in virginia and west virginia and other states in the appalachian region hundreds of communities and isolated mountain valleys may be within only a few miles of the city but because of the high cost of building the fiber optics or wireless links and those challenging topographies and given the very small size of the population to be served only three grants of eighty percent or more of a project cost can these communities receive broadband the previously existing r us community connect program is well suited to the needs that i've described but that program is very small with only thirteen billion dollars having been available for grants on a nationwide basis and one recent year i would urge that in round two the definition of remote be changed to qualify more truly isolated communities that may be close to a city in the circumstances i've described that proximity is functionally irrelevant my second concern is that for rural applicants to be considered for the n t i a program which has more flexible rules for making gr eighty percent to one hundred percent the application must first go to our us and be rejected by our us before a can make an award to that applicant as a principal matter i wonder if by the time our us has reviewed and rejected an application has not qualified under our us rules if there is time remaining within that funding cycle for in aid to review the application and consider it on an equal footing with applications that are initially directed to n t i a and in the next funding round i hope that you will consider allowing applicants to designate the funding agency that will be primary for purposes of considering an applicant's application my third concern relates to the standards that are used to determine areas that are under served they appear to be highly restrictive one of three standards would have to be satisfied for an area to be deemed under served the first of these is that no more than fifty percent of homes could have a broadband connection greater than seven hundred sixty eight kilobits per second that's a very slow data rate that many would not consider to be true broadband the speed of at least one point five megabits per second might be more appropriate a second standard that independently could qualify as application for under served funding is that no provider advertises download speeds up at least three megabits per second in the area but i would suggest that advertising is not a truly reliable measure of genuine broadband availability since advertised speeds frequently exceed the real data rate that applicants that subscribers receive the third standard is that the rate for households subscribership is forty percent or less in areas that have broadband the national take rate i would notice fifty five percent and we're told that few places where broadband is found have take rates of forty percent or less and so i'm concerned that these standards will result in many communities finding that the program is less helpful to them than we intended for it to be my final concern is that apparently the states have been handed into the entire basket of applications for initial review we intended for n t i to have final decision making over its applications and i'm looking that in fact we'll have that final decision making we have recently heard in our case from the state of virginia that they were somewhat surprised to have received the entire group of state doesn't feel prepared to undertake that challenge and so i would appreciate your response as to why that happened and also some suggestion that we're looking for that you are going to retain final decision making with regard to these  i have exceeded my time rather substantially as the chair intends to be very generous with other members who want to express their concerns or make their comments with regard to these matters the gentleman from florida the ranking republican on our subcommittee mr stearns is recognized for his opening statement good morning and thank you mr chairman thank you for holding this hearing and let me ask first of all congratulate secretary strict laying on his confirmation as commerce  secretary for communications and information i believe this is your first opportunity to testify so welcome i also want to welcome the administrator adelstein has testified before this committee before in fact a number of times appreciate your public service here these issues are of tremendous importance to the telecommunications sector and in fact when you talk about that sector you're talking about the entire economy the american recovery and reinvestment act of two thousand nine provides a total of seven point two billion dollars for broadband two and a half billion of which will go to the rural utility services and the remaining four point seven billion will go to the national telecommunications and information administration in addition the federal communications commission will consult with the n t i a and our u s and develop a national broadband strategy making sure these programs are administered fairly efficiently and transparently is one of their top priorities and my top priority also all of us agree that broadband has the opportunity to transform everyday lives from how we work how we receive medical information telemedicine in the future and how we are entertained what is needed my colleagues is a long term investment in broadband infrastructure that is based upon free market principles and not just a government run and owned operated system we have a remarkable opportunity to start another technological revolution and i hope we don't squander this opportunity so i applaud the focus on this type of transformational infrastructure this can be only transformational if done right and provides enormous long term economic benefit unfortunately the haste i believe with which this stimulus package was drafted in enacted and the short the very short time frame it this amount of money intrusted to the n t i a and they are us in a manner that is fair and efficient effective that will be a significant challenge to both you gentlemen we're going to have to commit ourselves to a vigorous oversight and so  am i recommend a later time we do have further hearings to look into oversight how much of this huge billions and billions of dollars that are there going to be going on a short amount of time how it's being used to ensure that the n t i and the our s would prioritize grants and states that have completed broadband map so that we know that the grants are well targeted this can also help to ensure that requests are made and provide a valuable incentive to complete maps in the remaining states as thoroughly and quickly as possible in fact i believe that no money should be spent and tell mapping is complete and the f c c broadband plan is finished and which i think will be early next year this national broadband plan will set forth goals and policies on how to best improve broadband access so it just makes sense that we should know where to spend the money before is actually spent and why not have these studies complete first in addition the t i a and the r us what should prioritize grants in unserved areas before under served areas we should ensure that everyone gets first before others are allowed to get seconds and thirds allocating funds to under served areas first could distort the marketplace because companies will be forced to compete with government subsidized competitors this will also spread the subscriber base then in what is already a difficult market to serve providing each company with even less revenue to upgrade their facilities and finally the fun should be targeted to projects that demonstrate they can exist can exist government continue subsidizing into the future so that in three to four years we do not need to have them come back and say we need a bailout because we cannot meet  continued development the n t i a and the our us should not be in the business of funding projects that will impose new and expensive expansive demands on the universal service fund tomorrow how they recognize these projects will be a difficult task i'm also concerned about the use of the stimulus funding process to expand on the f c c broadband policy statement obligations i have been a skeptic of net neutrality and these obligations strike me as another unjustified step down the slippery slope towards regulation of the internet i doubt that these nondiscrimination rules will benefit consumers expand broadband adoption or drive network availability in areas that simply lack broadband access i fail to see how the imposition of these obligations dovetail with the rationale for the stimulus package in the first place the near term creation of jobs if done right we have a tremendous opportunity to boost our economy and transform the way we live but if we throw money indiscriminately at the problem only to say we're doing something i don't think will accomplish our long term economic goals and also will not provide broadband  investment the best means of deployment so we cannot let this opportunity pass i welcome this hearing and as chairman i look forward to do further discussions in talking to our witnesses thank you thank you very much mr and let me assure you we will be having further hearings on the broadband stimulus program the gentleman from michigan mr stupak is recognized for two minutes chairman and thank you for holding this oversight hearing on american appropriated towards expanding broadband access but we all knew that demand would help fund the broadband technology opportunities program in the broadband initiative program represents opportunities for the federal government to demonstrate the american recovery and that will make world america's economy competitive for years to come that leaves an enormous challenge for a witness and they represent there's a lot of questions on how the applications will be handled and what mechanisms will be put in spend a huge chunk of taxpayers dollars and actually increased and deadness for this program and this oversight hearing and next door side hearings that the chairman has promised are very very important in this process as an opponent of the stimulus bill i am receptive to being proved wrong in certain areas during the district work period i want to carl lake according to your lake and really fifty percent of their backlog of unmet needs are being filled by some stimulus dollars where i still would have voted no willing to say there are some positive things that might be going on and and  t that so that's the importance of the oversight to really make sure that taxpayers indebtedness there is a good return on that and that's the importance of the job that you all are doing when we had our first oversight hearing we had the california public utilities commissioner here and the question i posed which i think is already kind of precedent based upon what some of the commentary been made as she testified that they would have spent money poorly had they not had done broadband mapping first and so i would like to encourage that i would not go as far as the ranking member of this committee saying no money should be doled out before that but i do think that those areas that have done broadband mapping and have already invested should also be taken into consideration of one we look at where the money should  and urban under served communities achieve greater access broadband services in the current economic climate more and more hard working families need access to the internet to find a new job manage your finances join the carriers that were shovel ready are not willing to apply and i'm concerned that the n t i a in our us may award money to applicants who do not have the expertise or business to sustain networks in rural high cost america i want to associate with my myself with the chairman's remarks particularly about the speed and hope to learn in today's hearing more about how the applications are being will meet america's  remote areas in rural needs thank you very much mr terry the chairman of the full energy and commerce committee the gentleman from california mr waxman is recognized for five minutes thank you chairman bou for holding this timely hearing i want to welcome assistant secretary strictly who is appearing before a committee for the first time as the administrator of the national telecommunications and information administration n t i a as well as jonathan adelstein who left the federal communications commission after seven years of service as a commissioner to lead the rural utilities service i also want to congratulate both of you on your recent confirmations and we look forward to working with you as you are well aware the overriding purpose of the american recovery and reinvestment act of two thousand and nine was to stimulate the economy by creating and preserving jobs  reflects the objectives of the recovery act in relating the economy creating and saving jobs and extending broadband to hard to reach it under served communities you and your staff have worked around the clock to get the program up and running so that recovery act funds might have an immediate impact and thank you for your ongoing efforts there are many skeptics who said you could not get it done and there were those who said that congress placed so many conditions on these funds there would be too few applicants to make this effort worthwhile contrary to these fears the response to the no fuss has been overwhelming it is clear that the public interest obligations attached to this public money have not deterred interest or innovation and it's clear that with twenty two hundred applications seeking over twenty eight billion dollars in funds there is a keen interest across the telecommunications and technology sector in providing all of our citizens with access to advanced broadband networks i'm confident that broadband stimulus funds will lead to new and innovative offerings that benefit our nation but we all understand that your work is just beginning now that you have established a framework for releasing these funds you must make certain they are released wisely transparently and efficiently i think most members of this committee and the american public recognize that there's overall program is an unprecedented every endeavor in scope and speed we understand that you will want to be find certain details to improve performance and maximize the benefits of the public's investment in these efforts and i know you'll be interested in receiving constructive suggestions from both sides of the aisle i look forward to hearing your testimony and i thank you for being here today and i thank the chairman for conveniently here thank you very much chairman waxman the gentle lady from mr strickland turn graduations i've enjoyed my visit with you and look forward to more i think all of you know that i am very concerned about broadband william and the effect this that has on my constituents in tennessee seventh congressional district and i am also going to look forward to hearing from you all not only about how we go about with that broadband deployment and the program that is before us and the oversight we need to do on this addressing the applications addressing spectrum relocation how to best cheve our shared goal of universal access and the development of a broadband map the use of those maps all topics that you've heard from others this morning i do want to touch on one thing i don't think anyone's touched on in that nondiscrimination internet content and i support the policy goal of ensuring that all americans do have access to broadband universal broadband access can greatly increase economic opportunity for all americans indeed many times we've talked about the need for this in the rural part of my district is a look at economic jobs recruitment and retention so it's them important and not only to me but to all of us the internet should not it's not and should not be neutral with respect to on lawful content i fear that misguided nondiscrimination regulations that fail to distinguish between legal and illegal content would undermine broadband adoption so i know i am out of time but i do want to highlight that with you all i'm also going to want to look at how you spin the seven billion in broadband stimulus funds for that going to go how those are going to be we're going to battle vetting those applications i've got a couple of concerns that i want to highlight on that thank you mr chairman look forward daunting i commend both of your teams for taking on the challenges of the statute and implementing a number of innovative approaches streamlining the application process to eliminate the place city and promote efficiency in time and  warranted praise from many sectors in the effort you've undertaken in holding public forums and workshops are to be commended as well furthermore i hope that your commitment to transparency remains as we move ahead i do believe that following the completion of the first round of funding there is some room room for improvement fortunately the process is structured to allow for such changes to be made before progressing with the second round of funding specifically i'm concerned that the u s is definition of remote exclude regions of the country very worthy of seeing those recovery act dollars the state of ohio in particular remains essentially ineligible for funds and i think some of my constituents would argue that they live in truly remote areas i do look forward to working with you both as part of this ongoing process and of course i share your support for providing broadband access and the seemingly infinite benefits that such access affords to americans i thank you and i yield back my time thank you very much mr space the gentle lady from the virgin islands most christians is recognized for two minutes thank you mr chairman and thank you for holding this hearing you know when it came to deciding my also want to welcome the secretary struggling and administrate adelstein both positions and here this morning going to use my opening remarks to lay out concerns i'll get to some of those in question and the questioning period but i share some of them already been expressed today i just want to commend both agencies for the way you work together and reach across the country and for your commitment to simplifying the process of bringing broadband to every country and we appreciate not only that you don't forget us but you always include the territory and we applaud your ability to leverage your two point five billion to over seven billion dollars when you were here before you convince me that you are not only aware of the territories but embrace the fact that your responsibility extended to us and being a representative both in my district and as a racial minority of those who are referred to in your testimony and your priorities as our most vulnerable populations i applaud the goal to close the broadband gap and bring maximum broadband benefits to communities that are often left out and left behind and other providers we also appreciate that simulating broadband demand is also one of the priorities i look forward to session after your presentations i know the devil is in the details but thank you once again for your aggressive approach to building for our future thank you very much the gentleman from california mr mcnerney is recognized for two minutes thank chairman i do want to thank you for your leadership on this issue especially holding this hearing this morning i don't think mr stricklin and mr adelstein for your work in developing the definitions and putting together a framework for releasing the funds  i understand that a large number of applications have been received far larger than what was predicted so it's critically important we distribute those monies in a way that creates jobs and improves broadband service throughout the country so administrator the new administrator john opened adelstein it's wonderful to see you in your new position and i congratulate you i'm really pleased that we have this opportunity to talk not only about your rol economic recovery in our country it's why the language and the dollars were placed in that very large package and i think one of the most important parts of it so i know that you're going to work gears and readjusting its priorities you've gone from handing out d t v coupons to reviewing broadband applications in the space of a few weeks so that's a big shift and we want to see you prosper in this in may of this year representative markey and i wrote to secretary locke and secretary vilsack to urge the prior zation of broadband projects under the recovery act based on advanced capabilities and speed improved access to distance learning telemedicine economic growth and job creation are dependent upon network construction that delivers capacity for high bandwidth applications we don't want to start out moving like a turtle we want to do when this is implemented we wanted at the highest speeds possible that's really  we're going to define success in my view anyway the recovery fund should go toward this goal as well as projects aimed at unserved areas i know that the first round of applications brought forward some complaints  from software breakdowns to onerous application questions that might reveal proprietary information there are concerns that the program doesn't encourage hires to be in under served markets or spur anchor institutions but focuses instead on lower speeds in rural regions rural regions should not be subjected to lower speed period this is the united states of america i think we should have the highest standards and the highest speeds across the entire country just because they're rural should not equate to the low speed thankfully we're only in the first round of the process and the funds plan for addressing concerns about the application process and improving it during the next round again thank you for taking the jobs that you have i'm sure that we're going to be working closely with one another and tracking because it really is so important for the future of our country congratulations again and i look forward to working not only working with you but also a question you thank you very much ms the gentleman from north carolina mr butterfield is recognized for two minutes thank you mr chairman chairman thank you for holding this the second part of this very important hearing this is an you to better serve the people of my state which is a state of north carolina congressional district my district is a road district in fact we are the fourth poorest district among the congressional districts in the country as you know three point eight billion dollars was made available through the first of two notices of funds available it will broadband deployment across the u s and these are critically important funds needed to help ensure that i was struggling communities able to join the global economy america's unserved and under served communities are behind our technologically advanced areas of the country i know because i represent many of these communities access to broadband is something many of us take granted yet it is still reach for nearly half of all u s households we have a responsibility to make certain that funding for broadband deployment be distributed to those communities with the greatest need it is vitally important that these funds be distributed quickly and efficiently so that access to broadband technology will be realized throughout the country last january during the full committee markup and strongly advocated for congress to have the discretion to define affordable for low income populations and this is a situation in my home town of wilson north carolina since two thousand and eight through a public effort my city has spent thirty million dollars in an effort to provide broadband service to every household the city has been proactive in deploying broadband to house aims to poor boy provide broadband services at reduced cost to every home within the city while this city of wilson is is partially served by a high priced broadband service provider the city's service called green light provides a fiber to home alternative unfortunately without additional assistance the city will be unable to continue to deploy affordable broadband access to low income sections of the city the ranking member of the full energy and commerce committee the gentleman from texas mr barton mr chairman normally i wouldn't interrupt but my staff feelings are going to be hurt if i don't read at least some of their excellent opening statement me thank you mr chairman for calling this hearing let me welcome assistant commerce secretary strickland and congratulate him on his recent appointment and their other witness you've got a new job now i'm used to seeing you as the f c c commissioner and now you've moved over so we're glad that you're here i'm glad we've got the transition behind us mr chairman you know all of those worries of armageddon turned out not to be true the biggest problem was that i never got around to asking for a coupon so i still i still have television sets that are  simply say that in terms of broadband implementation my staff indicated that over two thousand requests have been received twenty billion dollars that's  four times the amount of money that congress is allotted so let me tell you two gentlemen as long as you fund the applications in my congressional district we won't have a lot of problems and i guess mr boucher and you know mr terry i'm looking on the other side my friends over there you know on the ones that are here in attendance when the gavel sounds and we'll be ok least ten states and there are ten other states where they're almost completed this is an opinion and not necessarily a fact but i believe that there should be some  witnesses and we look forward to hearing your testimony thank you mr chairman thank you very much mr barton and now i'm pleased to welcome our two witnesses and i congratulate both of them up on their appointments to head their respective agencies the subcommittee is very familiar with both of these gentlemen who have appeared before us previously mr strickland was at one time head of the common carrier bureau at the f and mr for a number of years served as a commissioner at the f c c and i can say that both of these agencies are certainly fortunate to have your services as the united states agriculture and i want to commend both of you for the way in which you have coordinated your work as the standards for making grants and loans under the broadband program have been developed i think it's commendable that you have worked together this well and that you have a seamless program for all intents and purposes i think that serves our purposes in terms of making sure the program is effective and i commend you for the coordination that  undertaken without objection your prepared written statement will be made a part of the record and we would welcome your oral presentation of approximately five minutes mr strickland will be pleased to begin with you and you will need to turn your microwave at a little closer to you we can hear you better even closer still if you can  of the broadband technology opportunities program and the development of the national broadband map forth in the recovery act i welcome this opportunity to come before you early in my tenure as assistant secretary to begin the dialog collaboration on our shared priorities of fostering innovation and growth in the communications and information and ensuring that all of our citizens are able to participate in today's information age i'm also very pleased to appear here today with jonathan adelstein who oversees the broadband initiatives program at the u s department of agriculture our two agencies have been noted have worked hand in hand the last several months to implement the broadband provisions of the recovery and the result has been a highly coordinated and well thought out approach that takes advantage of the individual the message we bring to you today is that we have put our programs in place we have received an overwhelming significant and lasting improvements in america's technological innovation and economic which will allow us to take a significant step forward to president obama's vision of bringing the benefits of broadband to all americans today we are in the thick of reviewing the initial applications in late august between our two over twenty two hundred applications requesting nearly twenty billion dollars in funding which was seven times the funding available in the first round when we include the over ten billion dollars in matching funds that are applicants have committed these applications represent more than thirty billion dollars in proposed projects at least one reviewers have been selected based on their expertise and background and we are carefully screening them for any actual or apparent conflicts of interest the reviewer scores for each application will be averaged in those applications considered the most highly qualified will advance for further consideration mr chairman you made a comment raising concern about the sequencing of our review and i want to assure you that we're going to be looking at all of the applications that we will not be waiting to review the join applications submitted to both of our department of agriculture has completed its review everything will be looked at in sequence with out each state and territory will be given the opportunity to to which grants will be awarded however the act does recognize tauriel officials have a unique perspective on broad been within their jurisdiction and we look forward to their input for those applications that merit further consideration in additional due diligence which will include our requesting supplementary information from applicants a staff will review and analyze this information and prepare recommendations as to which project should be funded those recommendations will be presented to me and i will make the final selections consistent with the statutory director established in the recovery act we expect to begin announcing grant awards in november and hope to complete the first round of awards by the end of the year i'd also like to up the subcommittee on our progress to develop the national broadband map under the broadband data and development grant program for which congress appropriated three hundred fifty million dollars i'm pleased to report that we received an application from every state territory in the district of columbia we will also be awarding grants support their own planning effort just as the recovery act allows with respect to those planning we expect to receive a substantially complete set of state level of ability data by november followed by a complete set of all requests we will complete that map by february two thousand and eleven as required by the recovery act even in the middle of all this activity to review the broadband applications in the mapping applications we're constantly thinking about ways to improve the program for example our experience  with both of our jointly to explore the option of holding just one more round of funding have the potential of yielding benefits for all stakeholders it would enable us to complete the entire grant making process in the summer combining the two rounds may also administrative expenses with respect to the mapping program we announced yesterday that we will initially fund the data collection efforts for a two year period as opposed to the five year period originally  years will cost approximately one hundred million dollars far less than the three hundred fifty million appropriated by congress and in no way will this change affect our ability to publish a comprehensive by the february deadline for both the broadband grants and the mapping grants we are devoting substantial efforts to meeting our oversight obligations for the program we are committed to ensuring the taxpayers money is spent wisely and efficiently since the passage of the act we have been working with the department of commerce inspector general to design the program in a manner that minimizes the risk just last week we met with the inspector general's office to kick off its audit of the program as called for in the recovery act as we move forward and begin to make awards we will ramp up and monitoring responsibilities including we're working extremely hard to ensure that the projects funded by the recovery act serve as valuable inputs to our long term broadband strategy i look forward to working with all of you member ranking member barton and members of the subcommittee and thank you for inviting me back to testify mr chairman especially appreciate your longstanding leadership and support of our mission to serve rural america in my previous capacity  lag in rural america and we can't allow this to continue the recent study that we provided to the committee documented how rural communities with access to broadband create more jobs and have higher earnings those which lag  economically handicapped you've given us an historic opportunity through the recovery act to address his challenge at the same time provide urgently needed stimulus to our economy our us as long and highly successful experience since  all the telecommunications capacity that we finance to be broadband capable of also a great success with our community connect and this is learning in telemedicine program us via broadband loan program created by the two thousand and two farm bill has provided over one point one billion in loans to more than ninety broadband projects in rural communities spending forty two states so we've got experience recovery act marks a major new chapter in this effort since it's an act but we work side by side with our partners at n c a as s roles but i've been thrilled to join forces with someone of secretary strickland's caliber as well as his talented staff to bring broadband across united states as mr strictly indicated we received an overwhelming demand for funding the volume of applications demonstrates very clearly the still unmet need for broadband in rural america our u s nearly eighteen billion requests for two point four billion in funding in this round and applications came from a wide array of of  partners including state and local tribal governments non profits industry and public sector sector organizations and altered states and all territories are now value adding them to and we begin we expect to begin awarding grants in november we estimate that the two point five billion in budget authority entrusted to the us could translate into as much as seventy nine billion in grants loans and loan grant combinations to applicants the first made available two point four billion of th total three quarters of the total funds left for subsequent rounds so any potential applicant was unsuccessful in the first round or missed the opportunity to apply we'll still have ample opportunity to compete as we did in the first with the first  jefferson open this process to as many potential applicants as possible we'll take what we learned in the first round and your concerns as many of you of articulated them today to heart in developing our next round of funding were aware of the concerns that many of you and others have raised regarding a wide range of issues these include the definition of rural and remote areas eligibility standards or unserved in under served areas scoring waits for various factors and concerns regarding satellite service without speculating about specific changes we will be guided by your council and of course evaluation of the experience in the feedback from the first round of projects we're prepared to make changes accordingly this is a thoroughly collaborative process with our partners process as transparent as efficient as possible in fact yesterday we posted on the web all of the applications in a searchable database i see the congressman's back has already looked at it and see how many he has in his district and i encourage all of you to look at that you'll be able to see exactly what has been  posed in your district as a map right there congressman terry has the plan to post maps of their service areas very shortly so on behalf of all of us at u s d a we thank you again for your support for this critical mission your work has made possible to storch opportunity to store economic prosperity and improve the quality of life in rural america is honored to work with you on behalf of the sixty five million americans who live in our rural communities i'd be happy to answer any questions that you have thank you mr stain and thanks to both witnesses for your fine presentations here this morning you heard my concerns expressed in my opening statement about the definition of remote and i was pleased to hear you must say that that is one of the things that may be reconsidered with regard to the standards for the second round but let me get you to elaborate just a bit on whether or not you share the concern that i've expressed there are areas that are truly isolated that could be fairly close to the city i saw a map yesterday that shows that virtually the entire eastern u s is disqualified from your highest level of grant which is eighty percent to one hundred percent by virtue of the array requirement and any area that is within fifty miles of a city of at least twenty thousand population is considered non remote and therefore not qualified this is the map i don't know if you can see it is fairly small but as you can see the dark areas around the eastern u s are the unqualified areas based on your definition of remote there are some places in the west that are qualified but in the east not and in the appalachian region we have very small pockets of communities that are in mountainous areas that could be within five or ten miles of the city but for all practical purposes inaccessible it's difficult to build a fiber length or wireless facilities that can serve such a community very expensive and if you've got one hundred homes the revenues that would be derived from a service that expensive serving that small a population would not be sufficient to repay a loan or perhaps encourage a private sector partner to apply for a that could only be fifty percent of project cost and yet that is the maximum grant to which under your rules such a community would be eligible so that's the concern broadly stated had and i would just welcome your response either of you mr a that's more in your territory so let me start with you and your concern i understand your concern all of these issues are under consideration as we the results of the first we're going to go out for comment shortly in october and we will make a decision based on our experience of the current applications in the round of data that we were getting from that the r us in the past has been criticized for being too or been for going too close to urban areas with our funds and we want to restore our mission to being as rural as possible to go into the remote areas and that was the really forcing the largest amount of grant funds in the most remote parts of the country we set aside forty million dollars for remote gran and huge demand some people thought that there wouldn't be interest because of the narrow number of areas that are l but let me just ask you if there was a geographic waiting with regard to where those applications from came from i'll bet most of them came from the western u i would like to get your further elaboration on the concern we have just had expressed at least by my state of virginia perhaps some other states that unexpectedly they have now received your basket of applications whereas in the past they ha been given to understand that you were going to do the prescreening and that only maybe the final applicants would be sent to them for their comments and they feel unprepared from a resource standpoint  review the entire basket of applicants so what's your response to that why did that happen and what is it you're looking for from from the state and your microphone please thank you let me start with the second part of your question because i think the burden on the state is not as great as perhaps they fear it is what we're looking for from them is prioritization of the applications they were specifically interested in understanding what end to the extent of is it a viable project is it a sustainable project they're welcome to do that that's not what we're asking them to do in terms of what they've been given they've been given obviously the same public access to the search database that everyone has in addition they will have access to the executive summaries which is a about a five page description of each project that will be available to them we hope starting next week beyond that if they want more information from the applications we will facilitate getting them more information but we are not sending them the full applications for their review well let me ask you in the end are going to retain final decision making with regard to all of these applications are you not absolutely and so you're looking to the states for comments and you will consider those comments along with other matters in order to make those final decisions that's correct one one a dditional question that i want to ask of you you have said that you will be reviewing applications that are directed to both agencies where that box is checked on the application saying that it is to be considered by both agencies you will be reviewing those applications simultaneously with our us reviewing those applications and you will not be waiting until are you makes a decision with regard to whether or not that application is qualified before you start your review so it would not have to be rejected at r us before you begin to review it is that correct that's correct so here's my follow up question  i understand that answer as a practical matter let's suppose that in the funding cycle our us doesn't get around to really rejecting that application until fairly late in the cycle now in theory at least it will have been reviewed in your office already but by then you well may have made your prioritization of the application so would that application with the rejection from our u s coming so late in the process potentially mean that that application as a practical matter would be considered on equal footing with the applications that were primarily directed to you or i think we will be able to handle that we will obviously be in coordination and in contact with our us through the review process i would hope to avoid the situation where there is a last minute rejection on their part of a program that we would like to find if we know they're not going to fund  it and i think that through the coordination we expect that we should be able to avoid that problem so as i interpret your answer you would be prioritizing all of the applications you receive whether they are directed solely to you or directed both to you and or us at the same time and you would not be preparing one priority list just of the applications directed to you applications you receive weather only to you or to you and or us would be eligible for that initial priority list so that if the rejection comes late that application would in fact still be on equal footing with those directed just to you is that correct thank you mr strickland my time has expired the gentleman from florida mr stearns is my understanding that the bill indicates that you have to spend all of this by the time of next year that you're roughly your understanding yes now when you set the criteria to determine who is going to get awarded  you going to put this on the web page so that the applicants have an understanding when they compete with others what is it what is a minimal minimum acceptable requirements for a proposed  materials as well as through our workshops we have taken through all of the criteria for the project most of which are drawn directly from the legislation so folks should have a clear understanding of that we also expect that awards  not clear about is it possible that a lot of people who apply will be subpar and are you under the obligation that you have to spend all this money by next september as a possibility because you know twenty to thirty percent of the applicants are not we will not fund a project unless we have a high confidence level that it's a sustainable project that will deliver lasting benefits so would you would you agree then the small morning if you don't find qualified people you won't spend the money and you'll get back the the to one for five hundred million that you're going to take off the top do you have a plan of any leverage here that you're using under the legislation our us as a preexisting ability to make loans we do not all of our projects will map and i think would be helpful here the purpose of this project being stimulus in some sense we're moving ahead but the mapping that we're putting up on the web as soon as today or tomorrow it's going to allow anybody in the public to take a look at the service there is being proposed for a project and challenge that say that in fact there is service an area where somebody says there isn't and that would be a great way for us to evaluate that particular application in terms of whether that area is served under sir i just have one last question this is strictly latest report indicates that you have roughly about three hundred eighteen million dollars in the money left over as of august nineteenth now if you take an extrapolation fifty five percent redemption rate in the remaining months need for this cost delay knowing that you're getting almost three hundred eighty million back so the question is do you plan to give this money back as i understand it congressman the money goes back we don't have the option under the current legislation to many we can stretch the dollars that we have because of our track record we have a seven point two four percent subsidy rate which means that we can take seventy two thousand dollars and get a million dollars worth of loans out of that we are in fact we have a hundred fourteen people now the telecommunications projects but we're going to add fifty temporary employees under funding from the stimulus act we also have four hundred seventy field offices across the country and we're drafting  but the loans on that will be repaid going to need staff and monitoring of these loans to make sure the repayments well after the stimulus package is basically over we absolutely will it's very important we continue to monitor these loans to way next question is about the universal service fund i don't think it's any secret to you two gentlemen that i'm not a big fan of that program and i'm working with mr boucher another mr mar to come up with a reform program for it but in terms of this program that you two gentlemen are implementing can we be assured that you're only going to award funds to projects that will be sustainable without we generally look very closely at the balance sheets at the financial companies with our experience as basically a lender of the fifty four billion dollar loan portfolio we are very experienced at evaluating the financial capability of companies and their any application in which your employer's application might apply and certainly you won't be able to review your employer's application if you work for a broadband service provider whether or not that company has filed an application you will service we have to address not only the populations who don't have access to broadband but those who have access but are not able to afford to services in california an estimated ninety six percent of california residents have access to broadband but the problem is adoption is barely more than half of californians have adopted broadband at home in most cases adoption rates are associated with income as seen in the recent data from the public policy institute of california we telecommunications in my district cover about eighty percent of the territory qwest and century link both chose not to apply for grants and they cited uncertainty of the consequences of accepting grant money issues about ill defined network nondiscrimination requirements prohibition on sales of the syllabus how all that work application process constituents in a district as vast and under served as mine benefit from the broadband stimulus grant program if the rules and regulations of the program scare away the big providers the big folks who can participate and frankly the only ones that are poised to participate in a district like mine are you finding this elsewhere around the country twe percent funding from our us r us defines an unserved areas remote rural if it's at least fifty miles from a non rural area and yet i'm hearing from some that the projects may not be able to meet this criteria that  if any will meet this criteria we actually set aside four hundred million dollars into that category three point eight billion in loan requests for that four hundred million dollars so we are well oversubscribed ten to one so  number of a number of applicants find that they were in areas that were remote that we haven't verified that in fact they were in remote areas but we have an overwhelming demand for that category us really wants to serve the hardest rural areas the united stimulus funding should of course go first to those that aren't served when you are here commissioner i mean you understand that sometimes money goes out and has in the past areas that have multiple services and i think it ought to go to individuals today i have some questions and i just want to put my questions out and and then have you respond to them but i want to go back to my opening statement and just reemphasize them is not a question just to set it down again that  under served and unserved areas that that the broadband will be really at the highest level in terms of speed and that's really a top priority for me and  i think that those communities deserve that and it's going to be in your hands to help to see that that happens now you're in the first round and whether you're going to just do a second round and not have to do with third  obviously that's going to be up to you but in the in the first round of application how many included requests for waivers of information the reason that i ask that is  because it's my understanding that there were applicants who claimed that they were unable to apply due to a software issues and problems  know not being resolved before the deadline so i'd like to know my first question is what steps you're taking to ensure that the process runs smoother in the next round and i'd also like to know  more about the process whereby incumbents can challenge applications that seek to serve under served areas now in the be top in the bin the notice  of available funding it provides for existing service providers an opportunity to challenge and demonstrate that a project is not unserved or under served what i want to make sure of is that there's competition and if the incumbents can just knock out people because they don't want any competition to come in i don't really think that's the way for us to go  so does this mean that an applicant will have to provide proprietary information that's why i was asking them asking the question about the requests for waivers that i think would undercut their ability to  compete and other than the most obvious cases where there's competition what's the criteria for deciding how do you weigh in on this and what's the administrative process in place for challenges encountered challenges and fact finding so you can tell what my questions are and i also would like to add a comment to reinforce what congresswoman matuidi raised about anchor institutions i think it's a very important one and the two of us are going to follow up with you with the with the more questions in writing but i think that these anchor institutions bear that designation in our communities because they really are anchors that's where correct this is an unprecedented transparency that we're going to conduct we're going to put all those maps up on the web so anybody can look at the entire public to make sure that people are being accurate about their representing whether or not areas  served under served but the final determination is by our u s and we're going to make that determination all claims of challenges have to be verified as we have in every state in the country many of them in california four and seventy ops is across the country and we're challenge and to get to the bottom line truth as to what is happening in those areas to make sure that we're targeting our funds that are truly under served we have the capacity to make those determinations with your staff is going to be a challenge i mean we're  having to basically take people that are normally doing other other work and put them onto this job given what challenge congress has put before us we think that is a valuable reproaches ation of our staff and we're working with all of our staff to get them ready for been expressed by the chairman will be taken quite seriously by you thank you for your testimony just a couple of questions broadband obviously is big everywhere including in vermont but simply building the i understand it in the first round for someone to propose a combination of sustainable adoption and the infrastructure project and i'm wondering whether the n t i a will consider this in the next round that's not really true we actually ways to do that as we go through these applications and certainly if we get those sorts of learning from the application pool we have we will find a way to make those learnings available to the general pool but if it's a continuing issue we are going to look at  making it harder to define served areas using the measurement and i'm wondering whether any will allow applicants a little bit more flexibility to define their service areas to better conform  to essentially relate to the facts on the ground the boundaries of serving under served areas frankly would be a problem folks who understood the process because they could define their service area by linking together strickland spectrum relocation improvement act which we hope to move forward on in this draft and i have have introduced and ranking members but a couple questions for mr pickering we heard from washington state that the process congressman i can confirm that i'm not sure how it arose but it is not accurate in terms of what the role of the states will be as we discussed earlier in the the states have or are being asked to provide us prioritization they wish to they are not being asked to review applications no decisions have been handed over to them we retain the ultimate decision making authority on those grants the states will provide input to the process just as the legislation expects i welcome your statement that regard in and that would obviate the problems if we had fifty different sets of priorities ation the rules could end up so you don't see that as being a jointly you know to have to be considered by both agencies but your application has to be reviewed and and acted on by our u s before and an opportunity to act on it and  concern is this that our u s could review the application and decide that it is not eligible for the eighty percent of one hundred percent grants because for example it is a  non remote area maybe one of these little pockets that is fairly close to a city even if it's isolated and would be deemed a non remote under that definition which we hope to see changed and if that were to happen our u s might still find that application could be eligible for a fifty percent grant or for some grant a lower combination whereas if  i had been looking at that application standing on its own it could have been qualified for a grant of between eighty and one hundred percent so there is a barrier here that many applicants may face where under  a standard a grant of eighty percent of one hundred percent could be provided but where under our us the maximum grant is only fifty percent and i would hope that at a minimum as you consider modifying the standards for your next round that you would enable applications to be acted upon based upon the higher level of funding that could be provided by either changes that would address those circumstances assuming i have properly interpreted them that could be an issue however i would respond that if they can qualify for a grant loan combination that would be a wiser use of taxpayer dollars we want to minimize the amount of grant so that we can maximize the amount of rural broadband infrastructure that we can that we can leverage to get out to the to the consumers so if in fact there is an application that would be viable that would be able to repay that fifty percent we actually design a system to encourage that that's one of the reasons the system is designed the way it is with us getting that first look at it so that we could try to stretch those taxpayer dollars as far as we possibly could project as it is dissipated by the applicant on applied for can be billed with something less than full grant obviously it's optimal to do so but in those instances where that can't happen and you deem the project  eligible for the full grant but offer a fifty percent grant that a grant of a higher level could be provided by your sister agency that might enable the full project to be built and build more rapidly or in a better  last the higher level of grant then that would be what the applicant but it would be your determination that the full project can be built for that amount right if we determine that the full project can't be sustained and if you determine it cannot be a full project cannot be built for that amount for the maximum amount for which under the applications are qualified then could take it from there and potentially funded at the higher level to fund the whole project is  have provided to all of our questions as you could hear expressions on a bipartisan basis today there is concern by members about the definition of remote and i very much hope that you will address that before you put  out for a second round of funding you've heard are other concerns and to the extent that you can consider and and make modifications to accommodate those that would be much appreciated as well we will be having  mr stern recommended at least another hearing to oversee this program at some appropriate time to be determined and we will welcome you back when that hearing occurs thank you for your testimony and your participation today