we're just waiting for the ranking member to get here we were on the floor so investments in broadband deployment and in fact every ten billion dollars in broadband investment creates or saves four hundred ninety eight thousand jobs of those positions more than half are supported by but unfortunately that process has been less than seamless many small businesses stop complained of challenges ranging from excessive paperwork to restrictive capital requirements in today's hearing we are going to  technology compared to sixty seven percent in non rural areas many low income urban communities have also fallen behind given the role that the internet plays in when economy this disparity marks more than a simple digital divide it means missed opportunities for small businesses new investments in broadband can help recapture those opportunities but so far airforce are off to a rock businesses cannot afford in house lawyers accountants or support staff is streamlined up the creation process will mean less red tape and more productivity and is worth considering for small throw struggling to access capital it increased matching requirements also go a long way asking small businesses to match twenty percent of total project cost is a tall order especially at a time is increasingly hard to come by nine times out of ten small businesses offered the best value for the taxpayer dollar our policies should reflect that fact but when it comes to brought  projects it since we're not there yet small firms do serve a level playing field i know that both our us and n t i a are committed to creating inlaw efficient process and look forward to working with both agencies in the coming weeks and months that knowledge is often called the great equalizer of the business world if done properly increasing access to broadband we don't allow small firms to compete with big companies it would also create new opportunities for small businesses all while connecting our country with the fastest means of communication we have come a long way since the days of dialogue new investments in broadband can take that stimulus package and i think madam chair for holding this timely hearing it's no secret that i voted against the american recovery and reinvestment act or the stimulus bill i felt that the amount of spending contained in the measure was unprecedented and i believe fiscally irresponsible however that voters come and gone and i think we need to move forward to ensure that the seven hundred eighty seven billion dollars worth of taxpayer dollars is used widely wisely and not abused the stimulus bill provided seven point two billion primarily for broadband grants and loan programs to expand broadband access to those who do not have it a very worthy goal and one with significant economic consequences the advantages of broadband service in communities both urban and rural are substantial access to these services puts information at the fingertips of our students job seekers can search and apply for job opportunities that many of today's leading businesses small businesses can improve market access and compete with larger counterparts on a more level playing field health information technology can help doctors share patient information that leads to quicker diagnosis consumers can shop better smarter and more efficiently and the economic development opportunities are absolutely endless however the lack of sufficient access and speeds it's put a growing number of people at a disadvantage students can access the level of information as they're connected peers job searches are more difficult communities are enabled to attract new investment and opportunities for small businesses are limited the advantages of broadband service are clear now we must review the various programs that are designed to bring to broadband to bring broadband everyone and ensure the dollars are being spent efficiently effectively and without  if an application is too complicated or costly to complete then we need to reinvent or even evaluate the process if definitions are defined by government officials if they are having intended consequences and they should be revised bureaucratic red tape should not be prohibiting businesses from providing high speed broadband service to everyone moreover the government should not be subsidizing areas with adequate broadband coverage is important to make sure that steps are being taken to prevent government subsidized competition as a first round of broadband funding concluded parroted that the government make changes to address these concerns and ensure that future rounds operate in a way that improves the economy help small businesses and providers and expands broadband coverage to everyone we have a distinguished panel of witnesses here today and i look forward to hearing all their thoughts on the broadband issue and programs including the stimulus bill and how they have been working again thank you madam chairman for coming thank you to the witnesses for coming in today to decades of experience knowledge policy welcome so thank you madam chair and ranking member graves and members of the committee thank you for your invitation to testify on behalf of the  implementation of the broadband initiative set out in the recovery act i welcome the opportunity to testify this morning and i bring you the message that these broadband initiatives have the potential to have a profoundly positive impact on the growth and development of small businesses i'm 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 worked hand in hand to implement the broadband provisions of the recovery act and the result has been a highly coordinated and well thought out approach that has taken advantage of the individual expertise of each agency the president's innovation plan announced in september makes clear that the foundation for durable sustainable economic growth must be innovation and investment the recovery act by providing over seven billion dollars for broadband grants and loans directly supports building that foundation with these funds i am confident that america will take a significant step forward in achieving president obama's vision of bringing the benefits of broadband to all americans small businesses are the backbone of the american economy and broadband connectivity is essential for small business they stand to gain significantly from the broadband stimulus in the recovery act either by applying for funds directly or by benefiting from the improved infrastructure that will result from projects built in their communities the economic impact of broadband access is real and measurable studies by experts at mit and carnegie mellon have demonstrated how community communities with broadband see more rapid growth in employment more rapid growth in business activity relative to comparable communities without broadband with access to modern infrastructure small businesses can reach consumers worldwide in a manner they could have only dreamed of years ago and they can now cost effectively compete against the largest corporations if they have a product the world wants and these benefits reach small business wherever they are located ated including rural areas a recent report from the department of agriculture concluded that rural communities with high speed broadband facilities experienced greater economic growth specifically job growth and higher revenues than their counterparts that lacked the infrastructure there are a myriad of other benefits to small businesses and communities from increased broadband availability for example the increased use of tele health assist rural hospitals and remote health care systems in improving their capacity for treating patients telic health can help cut health care costs for all firms but especially for small businesses which consistently cite the rising cost of health care as a major concern our agencies have received an extraordinary response to our initial round of funding and we look forward to the challenge of awarding grants to a diverse set of recent b s between our two agencies we received over two twenty two hundred applications requesting nearly twenty eight billion dollars in funding seven times the funding we had made available in the first round at least one application was filed for each state territory and the district of columbia the applicant pool is diverse include states tribal nations local governments nonprofit organizations telephone cable and wireless companies and anchor institutions such as libraries schools and hospitals were particularly pleased to see strong participation from the small business community in the first round particularly socially and economic disadvantage businesses out of the total pool of applications submitted to us around fifteen percent were made by socially disadvantaged businesses or from applicants who are partnering with the bees these applications account for just under two billion dollars of the total twenty eight billion requested in the first round this occurred because we made special efforts to encourage s t bees to apply to our programs during our educational campaign last summer to inform interested parties about the grant program we conducted three workshops that focused exclusively on providing guidance to small businesses including small and economically disadvantaged businesses as to how they could apply for grants the minority business development agency in the department of commerce also helped publicize the opportunities of the grant program to minority firms overall i believe the significant number of applications filed by s t b s demonstrates the success of our outreach campaign to this business community and we look forward to strengthening the program in our next funding round we are currently in the midst of reviewing o applications and as i noted yesterday at the senate commerce committee oversight hearing we are now targeting mid december for the announcement of the first grant awards but even in the middle of all this activity to review the current applications we are constantly thinking about ways to improve the program we are working with the department of agriculture to finalize a request for information to collect input from the public as to how to improve the program in the second round in this r f i we will ask for suggestions as to how we can streamline the application process and for comments on some of the key program definitions as has been previously reported r us and then t i a are evaluating whether to combine the original rounds two and three into a single funding round if we do so we would expect to initiate the new application round after the first of the year the key for us in setting that start date will be to make sure we are able to apply the lessons learned from the first round in designing the second funding round but as required by the recovery act we will award all of the broadband stimulus dollars by september thirtieth two thousand and ten in my remaining time i'd like to spend just a minute on our progress in developing the national broadband map under our state broadband data and development grant program for which congress appropriated three hundred fifty million dollars our plan is to award a broad been mapping grant to every state and territory for the purpose of collecting and verifying broadband data in accordance with the standards we have we have now awarded eight grants totaling over fourteen million dollars under this program to indiana north carolina west virginia arkansas vermont as well as california new york and the district of columbia in addition we are in the final stages of awarding additional grants next week then we will continue to announce these words on a rolling basis our statutory deadline to publish a comprehensive interactive national broadband map is february two thousand eleven in closing we are working extremely hard to ensure that the broadband projects funded by the recovery act and the broadband mapping information developed from our mapping grant program serve as a valuable inputs to the nation's long term broadband strategy communications commission from two thousand to two thousand and nine well thank you madam chairwoman ranking member graves and members of the committee certainly appreciate the opportunity to testify here today and it's a special honor to appear with my good friend  assistant secretary larry strickland who has done such an outstanding job of leading the n t i a and it's a real tribute to his leadership in our good working relationship that we work so seamlessly together as he noted and make sure these programs are coordinated from top to bottom sixtieth anniversary of the telecommunications program in our u s we first began the telephone program trying to serve areas of the country one third of the country of people in rural areas did not have phones and eight hundred forty nine and thanks to  the u s has programs today it's virtually universal we're now applying this expertise that we developed beginning six years ago to this newer technology to broadband and it's indicated by the major resources that congress provided in recovery act improve access to affordable broadband is a high priority for the obama administration and congress and i know it is for this committee as well and certainly critical for the small business community as you noted broadband levels the playing field gives real businesses access to national and international markets and abel's very small home based businesses to succeed it's one of the key foundations of the twenty first century economy that will businesses need to survive and remain competitive and we've done extensive outreach to small businesses assistan secretary strictly as noted we have to put the benefits to small business front and center as you are doing here through this hearing today this summer the u s d a s own economic research service examined economic effects of having broadband in real communities its report concluded that employment growth was higher in non farm private earnings greater and counties with a longer history of broadband availability benefits include access to online course offerings telemedicine intel health services living for those remote areas agricultural producers and farm based businesses are also more reliant on internet access to conduct sales transactions advertiser businesses and monitor real time changes in commodities markets and tracking global crop prices is clear that broadband access is a necessary component for sustainable growth in rural communities small businesses are the engine of economic growth and they just can't make it without broadband today enroll america so we need to make sure that small businesses in rural america have every bit as much access to broadband as those in any other parts of the country if our overall economy is to survive and thrive in our growth has to be maximized this isn't just an issue for rural areas the success of rural small business is an issue of concern to our overall economy we're seeing jobs outsourced overseas at a time  it should be in source to rural parts of the united states that can happen if they have broadband in korea but they don't have it in rural alabama we have to make sure that we do that and they are us i think is in a position to help since  we've required that all new telecommunications capacity that we finance be broadband capable our community connecting distance learning telemedicine programs are examples of highly successful and oversubscribed programs that are here in the ability of rural areas to attract and retain small business low program which was created in two thousand to farm bills provided over one point one billion to more than ninety broadband projects and real community spending forty two states thirty six percent of those loans have gone to startup companies many of which of course are small businesses so we know how to work with small business we like to do it we like to work with startups and on top of that we provided four point four billion in loans since two thousand and one to regular program for broadband capable in infrastructure now the recovery act marks a huge new chapter for us in this effort since it's an act and we've worked side by side with our partners in n c a the white house the f c c and throughout the administration to fulfill the president's vision of promoting broadband access to every part of the united states the collaboration we've seen has really been unprecedented so the our us and share now engaged in our respective reviews of applications for over twenty eight billion in funding requests and we're using the seventy five years experience that we have been lending to rural america we have less than one percent the fault rate for our telecommunications portfolio so you're i think you have been hearing this after you had a hearing last week on capital formation of capital availability and we are at a time when most lenders are reluctant to extend loans we're looking at doubling our loans grants and loans grants combinations to prospective applicants be up to speed stretches two point five billion significantly to facilitate the deployment of broadband technology is far and wide as we can we're now in the process of  applications and expect to begin issuing awards shortly our initial plan to move back by a few weeks but we still hope to make announcements within a month of when we originally planned well over half of the investment that we have is planned for the second round so the concerns that you raise today in the changes we make can be applied in future rounds of funding i think we should continue to plan to combine our plan for second third rounds into a single round in order to give applicants additional time to create strong proposals and  able to meet the goal of obligating all funds by some temper twenty ten and we certainly do need to streamline the process as you indicated we won't want to make this is easy for small business as we possibly can and we understand some of the challenges that they face in the application process so  an announcement soon about how we're going to move forward on these rounds and we'll certainly take to heart what we learn in the first round some the problems that small businesses have experienced we want to listen to the concerns of and raise were very aware of concerns have been raised about a wide range of issues not only the application process but things like the definition of rural and remote areas eligibility standards for unserved in under served areas it's going way through various factors and some concerns raised by satellite companies as well without speculating on specific changes we might make will certainly be guided by an evaluation of our experience in the first round and prepared to make changes accordingly so we certainly welcome your input from this committee on how we can best move forward and apply the lessons learned in round one toward the work ahead of us in the next round which we anticipate in the coming months to that end the u s n t a is assistant secretary strictly indicated plan to seek formal written comments on ways to better meet the requirements of recovery act very soon we will release a request for information shortly to gather that information and certainly welcome the committee's input on that will continue to assure that implementation of the broad been issued is a collaborative and coordinated effort with our partners in ca and throughout the administration  in honor privileged to work with you on behalf of the sixty five million americans who live in rural america we look forward to continue to work closely with congress in making affordable broadband service widely available throughout the country thank you again for the opportunity to finally be happy to answer any questions you may have thank you in the first application period to different approaches to evaluating applications by small businesses can you discuss the process on what by the socially disadvantaged businesses would receive extra consideration this appears to two parts of our evaluation we have four areas in which we review applications and in two of the areas purpose and viability  the reviewers evaluating these applications are directed to give extra consideration in terms of extra scoring for projects that the applicant is an s t b or where the applicant has partnered with an s t b those two categories account for over fifty percent of the total score of an application so depending on how the reviewer evaluates the application they can give substantial weight to that and in fact in one of categories they cannot even give a  perfect score and last an s t b is actually part of the application we sell this we also provided advantage for small and us venture businesses in our application process we did extensive outreach along with the a throughout the country particularly trying to reach out to small businesses one of the problems we've had of course you talked about the application process being unwieldy we did agree to have a two step process so that rather than have to provide all of the information in the first round there would be a two step application process where the applicant would give an issue information and we would ask certain applicants that were to dance into the process for additional information so that a small business would not be burdened with the entire need to provide all the detailed financial information the first round but rather would give them a two round process and also during the application process we found some issues in the system that would make it difficult for businesses to get their applications in we tried to respond to that by providing an extra week to you have any preliminary estimates of how much money will actually go to a small firms we don't know yet we're still in the middle of the application process and it's very difficult to predict who is going to end up with  we know how many we got in but we don't necessarily know yet how many will go out to small businesses that's true for us as well it's just the requirement that the top provide much influence twenty percent could  provide the full match we can take that into consideration we have not yet take brought forward any of those requests for decision yet and will only do so as projects go through the due diligence process the other thing that i guess i would the consideration of is the fact that one of the big benefits of this program even in communities that don't actually receive funding from us is the discussions that this program has generated all across the country and we're getting groups together who haven't been talking to each other in the past to talk about how can our community be served by the broadband grant program in organizing themselves in partnerships in consortium in terms of putting applications together so  even if an individual small business might find the application process challenging might have concerns about finding the matching dollars on its own we are seeing case after case of groups of entities forming together banding together to bring an application to us we think that that's a very important and interesting development that the act has caused without spending a single dollar and we hope to see that sort of organizational activity continue on across the nation as a way of people to kind of bring their demand aggregate their demand together into a project that will be able to fund but even if we're not it becomes perhaps a more attractive project for private industry to fund thanks  possibly we may be able to get some out in november yet not clear but given the complexity and the overwhelming demand for the program it appears that is slipping by at least a few weeks so what type of update have you given to the applicants regarding their pending up and well we're still of i would mostly applications we have sent some forward to due diligence and we've asked for that second round of information from a handful of applicants and we're considering asking more and yes we are looking at different legal opportunities for them i actually spoke before the hearing with the representative who will testify this afternoon for the american cable association who indicated for them it was a major hurdle and we understand that obviously we have a very long history in doing loans and we tend to put a very strong first lien on the assets of the company in order to secure the position of the united states so that we can ensure that were our positions protected that's critical for a number of reasons  to protect the taxpayers but also to protect the program so that going forward we can continue to have that one percent of all right i talked about an extent that we do get the faults with there's a smaller minimized loss to united states that being said i understand that for small businesses they have a hard time because they may have financing out from a private bank or financier and we come in and say we need to have the first lien and that can create a conflict with their existing fire laid on the terms of those loans have been granted to them exactly so that requires either a renegotiation or their existing financier some fear about applying in the first place normally what we do in this situation is do individual ised custom mortgage and work with the other lenders to come up with an arrangement accommodation in the case of this program our concern is that because of the size of the scope and the number of applications that are coming through in short order that it's more difficult for us to do a custom mortgage for each one of the applicants which makes it portal people to see what it would look like to have the first lien which is a very strong one i think might have scared away some applicants and understandably so now we're looking at coming up with maybe a of writing of them rather than having custom ones for each applicant that comes in maybe  small number a limited number of different options that they could choose from some of which may be accommodate their existing financial arrangements and this is a very important issue for small companies and i hope that you can get it way to meet the gates  year agency is going to take to ensure that stimulus dollars are not used to duplicate or overbuild existing infrastructure i mean are you going to be there can you be the backstop to make sure that that you know we're not going to be spending money going into areas that are already adequately served and that's a pretty important question i'll take the first response on that for infrastructure projects we will not award dollars unless the funds are going to a proposed service area that meets our definition of unserved or under served in either situation those would be areas that by definition are not being adequately served by existing providers so i think we meet your concern what is that definition just as a curiosity unserved would be that ninety percent of the people living in the proposed service area do not have access to broadband service for under served it's a three part test any part of which can be satisfied to satisfy the definition which would be that fifty percent or more of the residents do not subscribe i'm sorry do not have it available that forty percent or more do not actually subscribe or that there is not already an existing provider who advertises a service three megabits per second or faster if any of those conditions are met then the areas deem under served for purposes of infrastructure  projects we use the same definition of an served as he said according to program so the same definition one server doesn't serve and we've really tried to target those most remote areas of the country that have no service at all we are going to continue to figure out ways to even improve that process and target the funds towards unserved areas it's really the mission of the u s d a to get service to people who don't have any at all there are other important areas that are under served that we are permitted in created by the statute to serve as well but i think we need to try to target our areas on the most remote areas in fact we've come under some criticism for going to two remote oven areas and we're thinking about ways that we can adjust that but we do want to focus on surveys that's extremely important i mean this is you know if anything we want to make sure that those areas that don't have any access at all going to get it in the future lisa funding rounds are you taking steps or trying to figure out ways to make this process easier and more or less costly absolutely and as we both indicated in our statements we will be going out to the public very soon to get their input as to what changes they would like to see so that we're in a position to consider an accommodate as many of those concerns as we can for the second round gentleman you mentioned before that will start at the beginning of the year we don't have a firm date but i would say today i would expect it would start sometime in january we are almost november almost you would be listening to small businesses this is a session that you're going to be conductin evaluating what other outreach we might conduct during that period certainly once our rules are issued to kick off the second round just as we did for the first round we will go around the country and conduct  workshops just as we did the last time including some focused exclusively on small business and socially disadvantaged businesses to help work their way through the application process and explain ways that they can get through the system thank  county in my district to highlight the role of the recovery act broadband programs and as i noted then broadband access is critical to rural business competitiveness astraddle stain can you highlight how some of the proposed projects you've seen address those rural competitiveness issues particularly in areas of education health care where we have seen we've seen a lot of that you know your district is where this whole thing kicked off and my boss secretary bill sack came out there and was thrilled to see the possibilities for yri we've been involved in a number of projects in the past community connect projects that for what we call our distance learning telemedicine program in our community connect program that fund educational and health care services that are really critical for sustainable growth in rural areas and make people want to live there we have seen great success in allowing remote clinics for example to be able to get access to specialty hospitals that have the expertise that can deal with emergencies that come up in rural areas that otherwise they wouldn't have available that kind of expertise in a real clinic and it may not have time to get to the to the urban area but because of the beautiful the beauty of telemedicine they can they can do that but you can't send these large data is really a graphical information in communication with the specialty hospitals to do the diagnostics they need to unless you have broadband so for healthcare i think it's it's critical i was in alaska up in cars to be once i mean if you're out in the bush outside of kotzebue these little voters you can take sixty miles by dog sled is the only way to get the cars we just even that health clinic so if we don't we don't have broadband out there and they're using satellite now which has got issues in that particular community they don't have the bill to get the health care they need so for education for health care i think you're exactly right the d s are critical applications for small businesses and small rural areas i have a question regarding the actual process of determination as to who actually you know receives these grants i had one of the applicants come into my office actually this week and they have come through highly recommended but were not recommended by the state how much is the state's recommendation going to play in this because part of the question was because the state is also applying for their own projects you know is there some waiting going on there within the state to try to make sure that their own projects are getting funded and they're recommending who who gets funded who not who does not so i guess i'm asking the question you know  is there a fairness in this and how much is that state this is really unique to our program at the department of commerce we did give each state an opportunity to provide input to us on the applicant pool what we were primarily focused on was getting information from them in terms of what they would identify as the areas of their state geographically that they viewed as priority areas for our project dollars you are correct that in some cases states have applied directly themselves for grants the statute however gives states the ability to provide this input to us i think the conflict is out in the open for everyone to see when we get these letters back they are just another piece of input for us to our process they're not determinative of anything for an application to pass into due diligence it's reviewed by three independent reviewers that has to pass a threshold score from those reviewers to be passed in the due diligence of state cannot recommend a project and have it come into due diligence if it doesn't otherwise merit that evaluation from our end of reviews so if there is two projects that were equal and the state recommendations probably would have some weight and that that's another earlier this year and t i a s mark siefert concurs applicants that involve partnerships among small businesses i mean it's apologies and others join together to promote broadband in my own community i've got to these two applicants one who came in to talk to me who have joined together what steps are being taken to encourage this partnership across the country and as we go into further application process it's going to raise that issue because it's actually something we're thinking a lot about at u s d a our secretary said bill sack is very interested in regional economic development being and he regions that are banding together to try to work towards the development of that of that area tend to be more successful historically than those that are operating on their own so we are in the r f i that we're going to put out planning to ask questions about how can we encourage exactly those efforts how can we look to regional planning that includes an element that would support broadband how would broadband fit into that regional economic development plan to encourage these communities to work together towards a confluence of solution is not enough to get broadband the community we want them to have a broader economic development plan that would so do they get a higher store score if this is included because i've seen great things happen in my own district where they are coming together county government small businesses other economic development engines that's one of the options that we have for the next round of questions we're going to ask in this in this request for information is should award higher points to those that have regional development plans that include a broadband element i think it's a good suggestion my time's expired thank you of those definitions of remote or under served or on served in terms of broadband technology the importance and the need for access road broadband just really illustrated time and time again as i spent time throughout the district business and economic development jobs as a result of that education health care and certainly within the pension if if there are many many communities in counties that are on served or under served with broadband technology communities like you know pennsylvania and western clinton county you know where the you know the small businesses the school the rural hospital frankly are very hopeful that this investment may at some point finally bring access to broadband that they need because  mr stricklin was or what guidance of criterion were provided to the states such as pennsylvania during that the projects that they recommended met the definition of served under certain criterion or guidance provided or this is just the wish list that comes from the states the states were given an opportunity to provide whatever input they wanted to is we're not relying on that to tell us what's an uncertain under served area we wanted them to tell us what they view as a priority area for projects we will make right already based on it could be largely based on the absence of the service being in the community today but we will the judgment whether any particular application satisfies our test for unserved or under served we absolutely invited states to provide data that they might have to help us answer that question but they won't make that decision we well ok thank you  can you understand about twenty two hundred applications and explain the process for reviewing those applications seeking federal funds and and your use of volunteers to help in the process as i said yesterday i prefer to call them independent experts but in fact they are doing this at no cost to the federal government i like to say they're doing their patriotic duty to help us and the pool is an impressive poor i mean we have folks who are volunteering their time who are have served as senior executives in telecommunications companies people who have built these kinds of projects before but maybe they're retired now and they just want to give back to the community we have in one case the former chair of the state public utility commission who's dealt with these issues for years and years so they are highly qualified people are pool of experts is over a thousand each of them was vetted for expertise we reviewed their resumes and we also reviewed whether or not they might have a conflict of interest because they had worked on an application that had been filed or they work for a company that either filed an application or might be competing with somebody who filed an application so we eliminated about three hundred people from the pool for conflicts or for lack of qualification so the process is that each application is reviewed by a panel of three of these experts and they each individually provide us a score based on criteria that we provide them in a fairly voluminous manual to guide them through the process all that  is a screening all that does is those scores come back in those applications who have an average score above a certain threshold are then moved into due diligence at that point my staff the professional staff supported by experts from our contractor booz allen do a complete top to bottom scrub of the application and really look very carefully at do these people have the management capability to build a project does the budget make sense is this project sustainable meaning will it still be operating five years from now when there's no federal money to support it are the benefits that are claimed really real benefits that we can expect so we do all that evaluation ourselves on the top applications with and then we will select from that pool based on the review we do so the first part of this is really just an initial screen to find the best applications in the pool as i have said repeatedly and i tell my staff every day don't worry we are going to have good applications that don't get funded because we were oversubscribed by seven times what we need to do though is make sure that every application we do find is a good application and it's one that five years from now will still be operating and still providing service in their indicated of joint projects and we're evaluating them simultaneously at the same time we're looking at them and ca's looking at them so we're not slowing one another down yet we haven't yet made determinations as to which ones exactly we are  yes absolutely we had indicated a total funding around of about one point four to one point six billion and we absolutely are interested in looking at the projects that are us determines not the funding has administrators said we are reviewing the applications in parallel so we're not waiting to hear from the department of agriculture to actually initiate a review of a joint application we're looking at them right now and if a project sponsor has requested smid the project due to the rural nature of its proposed serviced area if they haven't heard anything back from ross by now or in t i a does that mean the project is no longer being considered you know definitely not we are considering a number of projects for which they haven't heard back from us because we're still reviewing them a number of them are alive and i know we've had some concern from some applicants that are wondering you know where they're at in the process because they haven't heard back from us but we're because of the number of applications we receive we haven't yet made those determinations so there's no need for concern we have sent out a small handful of due diligence requests for a number of companies but it's a very small number and we're going to be we will look at it we will take it into account it doesn't have any particular weight on its own and what about ross ross give any weight to a state recommendation we don't have a legislative  requirement to create a formal state process like n t a does we do have a very good relationship though the states and i think that to the degree that they have input we are looking at what they have to say is a factor but it's not something that we are required to do through a formal process five very detailed requirements and very explicit criteria by which we are indicating what we are looking for in the funding pot so we have been very clear i think about what the what the main criteria by which we're going to judge applications in an objective way it will greater amount of funding be committed to smaller type projects over larger initiatives well we certainly hope so i mean we have a lot of applications from small businesses thirty four percent of our applications are for less than a million dollars so we traditionally in our past experience have given a lot of funding to small companies and startups and we hope to continue down that path in this process is agree that good applications score high in our objective  criteria we're going to look forward to finding a lot of them and you plan on utilizing all the funding that you have i've heard some concerns about ross even though there's money appropriated sometimes they don't like to give all the money out small businesses in my district operate in rule areas and studies indicated this puts them at a further disadvantage when it comes to compete with other businesses out there the small business administration found this rule small businesses do not subscribe to broadband services as frequently as urban small businesses do finding finding the difference in broadband use between rule and urban areas to be statistically significant also know that rule small businesses tend to pay higher prices for  broadband services than rules small businesses probably because of the cost associated with serving less populated areas and the lack of competition in rural areas highlights the importance of the seven point two billion statement and you really didn't go into great detail i would like for you to go into great detail as much as you can defining and going through the procedure of determining what is a remote area or a ru area fifty thousand or more and it was a fifty mile circle around them which some have complained excluded to many communities and we understand those concerns have been raised and we're really reconsidering whether that's the right way to go forward in the second round we understand that a number of communities were excluded that in fact have very high cost of providing service that are truly under served and or unserved and so we're looking at how we can alter that definition we'd certainly welcome your input on how  best to define that going forward you know we really wanted to target the funds on the most remote areas in the most hard to serve areas but maybe we didn't draw the line exactly where we should have and that's something that we're contemplating now we're going to ask that question in the next round of funding where should we go how should we define this what are the other factors do you intend to do with control or remove the definition at all at this point in time in the new or the next we are completely open to changing it i think we're finding that there are challenges associate with that that we hadn't fully anticipated and we are doing a top to bottom review of whether or not it's a good idea to change that and if so how what are the other factors we might look at besides simply distance from from an urbanized area so we are open to change and really welcoming all comments on that in the next week or two you are a five figure out how we address that going forward thank you very much my time is  funding to what the second round has a very good question let me explain what we mean by the two point four million because we actually are able to leverage our budget authority provided by congress to provide up to seventy nine billion in loans and grants for the two point four billion is only the loan and grand amount combined not just grants so we anticipate that well over half of the amount is still left i know the math and sound right with two point four versus two point five but that's because the two point we anticipate includes a major loan component so our total program amount being seventy nine billion we're only using two point four out of seven to nine total program level so in fact upwards of two thirds of the funding remains for the following rounds of funding and will be available for any of the change criteria that we use ok and any other man at this point thank you so very much for being here today and we will continue this conversation with you  making sure that you're listening to small businesses and that in the second round some of the concerns that have been raised will be addressed so that we could have a more level playing field for small business thank you companies providing internet access to predominate rural and smaller markets in every state my company new wave serves one hundred fifteen thousand customers in kentucky illinois southeast missouri northeast arkansas west tennessee and i headquartered sykes in missouri are members have historically invested in communities where the big guys find it unattractive to provide service ac a members of built these networks without any direct federal subsidy we view the broadband stimulus program a important investment aboard networks deeper into rural communities so they can enjoy the benefits of access that many urban consumers take for granted i'm pleased to report that all eighty three members have applied for one point three billion dollars in grants and loans my company new wave has applied for ten point one billion dollars in funds the fiber and cable facility these in eleven needy communities in illinois indiana missouri and south carolina the network upgrades will be state of the art fiber the curve designs that will offer offer data speeds up to one hundred megabits per second we're hopeful while we are hopeful that our application will be accepted the process cost us over fifty thousand dollars to complete with no guarantee on funding the vast majority of these areas new wave is applied for currently unserved and would not have broadband access without this program as companies with decades of experience in rural america a ca members have a proud track record of achievement that demonstrates why their ideal candidates to receive funding from n t i a in our u s a c s pleased with the eight hundred million dollars that has been dedicated for middle mile projects which are critical to the goal of speeding broadband bloom and rural areas our members have already upgraded their last mile networks to provide faster broadband speeds what's still needed is a better and more affordable middle mile connection that's the part of the network that runs between a cable broadband provider central office and an access point to the internet backbone even though i see a members of upgraded their last mile networks the data choke point persist or the lack of middle mile facilities and insufficient capacity and user speeds in rural areas suffer as a result of limited or nonexistent middlemount capacity concerning the application process there are many a ca members who have applied for funding but were discouraged because of two specific requirements both of which were discussed previously and that's the first lien rule and the resale rule the government's insistence on holding a first lane would violate the terms and conditions of many of our bank loan agreements making it impossible to apply for funds next the resale rule prohibits the sale of a federally funded project for ten years such a restriction ignores that sometimes such transactions can be beneficial for consumers while a company can see seek a waiver the standard  meet the waiver is very ambiguous the application proper review process that process should be streamlined and simplified to because the agencies have not vetted applications to determine whether a market is already served every broadband provider whether they apply for funds or not is burdened with reviewing all of the applications otherwise the government could waste the limited resources funding a project where we are already providing broadband service new wave alone is spending more than thirty thousand dollars just to prove to the government where we already provide broadband service this process is burdensome and time consuming it is almost impossible for our members to fully respond to applications in our service areas within the thirty day deadline as recently as yesterday the mapping tool was down for significant periods of time limiting the ability of existing service providers to respond if no objections are filed the agencies presume there is no existing service where the applicant applied for funds the agency should confirm if an area is already served and therefore not eligible for funding such information is readily available our members are already required to report to the f c c the broadband areas we serve along with the number of subscribers and speeds every year by census track location at the very least the agency should eliminate those applications that clearly do not meet the minimum criteria but for incumbents are expected to review applications finally we believe applicants should be able to apply for funding through either our us or in t i a all rural applicants must first file with our us the definition of remote as has been discussed here today is so narrow that it's hard to find areas even in iowa that meet that standard non remote rural areas are only eligible for a fifty percent loan grant combination in conclusion we believe that reasonable revisions infrastructure well the middle mile component of something i think a lot of times gets missed in the discussion of fast internet speeds and as i mentioned particularly in our company's case the last mile component the card that the part that goes throughout the community into the customer's home has been upgraded is very capable of delivering very high data rights what is missing many cases is if you think of the interstate highway system the broadband long haul fiber network in this country is similar to the interstates it goes to the big cities what's different is there's not really off ramps to rural areas and so i think the agencies have done a good job by dedicating eight hundred million dollars to the development of open access middle model components so that there will be more more competition in that area bringing high higher capacity lines out to rural areas so we're very hopeful that since they've done that that after the funding period and after case we already have a bank and they all have they already have a lien on our on the assets of ours our company and the systems that have not yet been upgraded and that's due to the fact that they're remote and not commercially feasible so i applaud what mr adelson said that they're going to come up with five or six different options for applicants to apply for or to try to buttonhole into options to where that firstly might be modified i really think that they're a lender so what they're going to have to do in order to get these funds out they're going to have to be a flexible lender because you don't want to you don't want to lemonade incumbents in certain areas that already have customers we're applying for an area and carol an oil which is a very disadvantaged area and no broadband service exists today but there's already a lien on those properties so in order and we already have three hundred fifty video customers there so we would be a very qualified provider of broadband service and carol because we have an embedded customer base but we've got to have them be flexible when it comes to lean requirements so that we can work around that i know for a fact that in our memberships case we had a number of companies that would have applied but for the first lien rule and the ten year old you heard that a lot of the members here race the concern about most intensive to complete the biggest part the biggest problem that we found in the application process is that we were required to complete to have the complete design projects done for the communities we proposed to serve and by doing that that meant we had to go and specifically walk out from pole to pole house to house provide measurements do a complete system design project for every community that cost somewhere in the neighborhood of at least five hundred dollars a mile even in a small town you're talking about twenty five miles of cable to provide broadband service so that was a very expensive and time concerning proposal what we would have liked to  would be and would have the ability to say look we provide service to two hundred fifty communities and we propose to build a system in kero that looks just like this one and and then the design we will warrant will look just like this design that currently provides broadband service and i think if our us would take a look at that that would really really lower the threshold and the expense and supplying an application if you had any question about the application where you able to get a person on the phone to answer any questions in the early parts of the application process we were and they were helpful but that some of the rules are so specific that were set out in the process like the one i just discussed they were they weren't able to say well here's a way around it it just has to be that way so while they were accessible i'm not sure exactly how helpful that was that i wanted to make sure that we asked as well so first of all just in general what recommendations would you make to the committee to improve the process and sure that taxpayers are getting the most out of these provisions well i got a couple a couple of issues i think that still exist one the application review process is very very troublesome particularly for small businesses i had a fellow cable operator is a small businessman and missouri give me a call and he's a he's a company that's got two thousand cable customers and a thousand broadband customers and the processes were all the applications have been put out on the internet for in company operators to to notify the r us of where you are where broadband service already exists and he called and said i'm not sure what i'm supposed to do i don't even know how to do this have you hired help to go and get this done we did and we've spent in excess of thirty thousand dollars to to show where our areas already serve but many small business guys who are already providing broadband service have to do that and the problem that i see is all twenty two hundred applications have been put out on the web for incumbents to go look at and vet through i think the organization should have done some preventing of all those applications to say look these clearly don't meet these criteria so we need to set those aside secondly i'm still concerned even though the it was mentioned earlier that we're going to make sure we don't duplicate service and provide money to duplicate service in under served and unserved areas i'm not completely convinced that they're going to be able to do that one reason is the mapping as i'm done and as it was said here today the mapping won't be done until two thousand and eleven that's very concerning and i and i have some follow up concerns after the application review process goes forward as to what we're supposed to do to ensure that duplications doesn't occur so i'm not not completely convinced that where we're real sure that we're going to keep from doing that do you feel that you'll have access to the adequate resources to refute applications that plans to the planned service areas already served well i hope so although it's expensive that goes back to the having to all through all twenty two hundred applications and see if any of them are in our current service areas you know we've launched we've we've built thousands of miles of fiber optic cable just ourselves in the last three years and launched broadband service in more than one hundred new communities mostly very rural small town communities and our take rates and our success has been wonderful but we're trying to go out here with private capital and do that and we want to make sure that  we that we make sure we tell the government those areas are already served we provide as i mentioned in my testimony that data to the f c c every year and i think on that forms for seventy seven that we fill out i think these agencies could use that data to prevent these applications you had mentioned that it cost probably your company specifically fifty thousand dollars to to apply within this process with no guarantees that's right going forward as has the industry done in the estimates of you know if that's fifty thousand for just with your organization your businesses and the across the industry any projections of what the cost has been the investment for applications customers a lot of invest a lot of applications that that i don't know what percentage of applications will in the final you know in the final day will be funded we have not but i i would think that you could extrapolate that number pretty easily across  the miles of last mile cable and fiber optic cable to be built like ours of that fifty thousand about two thirds of that was in the mapping and design process that had to be completed prior to filing your application that kind of goes back to the suggestion of why don't you say our design will be this type of design and here's a sample and here's exactly what it looks like and wants granted then we'll go and designed specifically that community i think to a certain extent that process favors wireless provide providers over wire line providers because while a wireless distribution system is much easier to design you just pick points on a map where you going to put towers i may be oversimplifying a bet but or towers are going to go and how you're going to communicate between those towers but the broadband speeds that we currently offer and will offer up to one hundred megabits per second are far and away x in excess of what wireless communication provide so while the process is supposed to be tech neutral it doesn't seem to be when in the application process my final question is do your members plan on hiring more people if they're successful in obtaining stimulus dollars or well absolutely will hire additional people and that's that's i think what the beauty of this program does is not only does it provide economic advantages to these rural communities that we're going to provide but also just in amongst our company we've hired hundreds more people over the last three years as we have developed our broad brand infrastructure in our current operations so these systems will do the same thing as we've done in our past operations just a follow up then  other folks out there with the skills available that you're not sure what different type of positions you need but i mean are the people there the qualified workforce to hire you know it's interesting in a lot of cases we look kind of for two full people one technicians that are field based people that do installation work and maintenance work on broadband networks and that is a little tougher to find although we're working with community colleges and other institutions to help train that workforce all so so far that's good on the flip side where we use customer support personnel and we're finding you know we operate our call center in sikeston missouri so it's a small community rural community and i worried about that when we established that call center there but we've been pleasantly surprised that the abundance of people that can work on computers and no computer added tasks and that sort of thing particularly younger people who who have been trained in that and schools are doing a good job with that so we've had a very that's been a good opportunity for their relationship between farm mean and brought back my question to you is for the small road all cable operator how do you promote greater adoption one small business in your local community that's a good question and i think it's it's kind of twofold and i think our membership of our group is very similar to the one we have developed a complete business sales force that's different from our residential work and that business sales force we've done a lot of work because we're and we're obviously incentivized to sell more services that we can so that business sales force has done a good job of learning applications for broadband services so we can go to an insurance business say here's why  a buyer broadband service we can go to an ag a grain elevator and say here's why you want to buy our broadband service so that's that's one area where we have really gone to very very small businesses and we've come up with a very very affordable business rights for those businesses to get extremely fast data connections then secondly we've done a lot of partnerships particularly in this application we've got a we've done a partnership with the local community college we've done a partnership with school systems in these communities we've applied for the city governments the first responders groups mental health center chambers of commerce so we've we've really tried to be very broad in terms of reaching out to get organisations to support our application but also to get out to those organisation to say here's why broadband is important to you so we've conducted a lot of citywide events things like that that really go a long ways i think to promote the the adoption of broadband usage ok well thank you do you have any other question well thank you so very much for being here you have shed a lot of light into the importance