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80–019 2014

IS THE BROADBAND STIMULUS WORKING? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 27, 2013 

Serial No. 113–9 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

ROBERT E. LATTA, Ohio 

Vice Chairman 

JOHN SHIMKUS, Illinois 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan, ex officio 

ANNA G. ESHOO, California 

Ranking Member 

EDWARD J. MARKEY, Massachusetts 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., NEW JERSEY

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

HENRY A. WAXMAN, California, ex officio 

(V) 

C O N T E N T S 

Page 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 5 

Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 6 

Hon. Cory Gardner, a Representative in Congress from the State of Colorado, 

opening statement ................................................................................................ 6 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

Hon. Leonard Lance, a Representative in Congress from the State of New 

Jersey, prepared statement ................................................................................. 163 

Hon. Bruce L. Braley, a Representative in Congress from the State of Iowa, 

prepared statement .............................................................................................. 163 

WITNESSES

Lawrence E. Strickling, Assistant Secretary for Communications and Information, and Administrator, National Telecommunications and Information Administration (NTIA), U.S. Department of Commerce ....................................... 9 

Prepared statement .......................................................................................... 12 

Answers to submitted questions ...................................................................... 243 

John Padalino, Acting Administrator, Rural Utilities Service (RUS), U.S. 

Department of Agriculture .................................................................................. 28 

Prepared statement .......................................................................................... 30 

Peter Kirchhof, Executive Vice President, Colorado Telecommunications Association .................................................................................................................... 70 

Prepared statement .......................................................................................... 72 

Answers to submitted questions ...................................................................... 251 

Ann Eilers, Principal Assistant Inspector General for Audit and Evaluation, 

Office of Inspector General, U.S. Department of Commerce ............................ 82 

Prepared statement .......................................................................................... 84 

Michael K. Smith, State President-Vermont, Fairpoint Communications .......... 107 

Prepared statement .......................................................................................... 109 

Answers to submitted questions ...................................................................... 253 

Bruce Abraham, Board of Directors, North Georgia Network ............................. 115 

Prepared statement .......................................................................................... 118 

Joe Freddoso, President and CEO, MCNC ............................................................ 126 

Prepared statement .......................................................................................... 128 

SUBMITTED MATERIAL

Letter of February 26, 2013, from the School, Health & Libraries Broadband 

Coalition, submitted by Ms. Matsui ................................................................... 165 

Article entitled, ‘‘Why a one-room West Virginia Library runs a 20,000 Cisco 

router,’’ submitted by Mr. Walden ...................................................................... 173 

Letter of February 26, 2013, from the National Association of Telecommunications Officers and Advivors, submitted by Mr. Walden ................................ 178 

Article entitled, ‘‘Waste is Seen in Program to Give Internet Access to Rural 

U.S.,’’February 11, 2013, the New York Times, submitted by Ms. Eshoo ....... 181 

Letters of support, submitted by Ms. Degette ....................................................... 185 

Page

VI 

Chart entitled, ‘‘75 percent of schools in North Caroline have broadband 

over 50 Mbps compared to 4 percent of schools in Colorado,’’ submitted 

by Ms. DeGette ..................................................................................................... 229 

Statement of Christopher Thurow, Sr., submitted by Mr. Kinzinger ................. 230 

Letters of support, submitted by Mr. Gardner ...................................................... 232 

(1) 

IS THE BROADBAND STIMULUS WORKING? 

WEDNESDAY, FEBRUARY 27, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:03 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Shimkus, 

Gardner, Pompeo, Kinzinger, Long, Ellmers, Barton, Eshoo, Doyle, 

Matsui, Welch, Pallone, DeGette, and Waxman (ex officio). 

Staff present: Ray Baum, Senior Policy Advisor/Director of Coalitions; Sean Bonyun, Communications Director; Matt Bravo, Professional Staff Member; Andy Duberstein, Deputy Press Secretary; 

Neil Fried, Chief Counsel, Communications and Technology; 

Debbee Hancock, Press Secretary; Heidi King, Chief Economist; 

Brian McCullough, Senior Professional Staff Member, Commerce, 

Manufacturing, and Trade; Gib Mullan, Chief Counsel, Commerce, 

Manufacturing, and Trade; Andrew Powaleny, Deputy Press Secretary; David Redl, Counsel, Telecom; Charlotte Savercool, Executive Assistant, Legislative Clerk; Roger Sherman, Democratic Chief 

Counsel; Shawn Chang, Democratic Senior Counsel; Margaret 

McCarthy, Democratic Staff; Patrick Donovan, FCC Detailee; and 

Kara van Stralen, Democratic Special Assistant. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. We will call the Subcommittee on Communications 

and Technology hearing to order. Our hearing today is entitled, 

‘‘The Broadband Stimulus: Is It Working?’’ 

Good morning, everyone. I want to welcome our witnesses today 

for this hearing, which will look at all these issues related to how 

the stimulus money was spent on building out broadband. 

I am just going to tell you, at a time when President Obama and 

his administration is threatening to lay off meat inspectors, FAA 

controllers, TSA agents, throw Head Start students out of class, 

and cut teachers as the best way to deal with the sequester, our 

subcommittee will look at how parts of the Obama administration 

have allowed millions, perhaps hundreds of millions of dollars in 

overspending, overbuilding, and waste in their rush to spend the 

7 billion in broadband stimulus money for underserved and 

unserved areas of this country. 

2 

To be sure, some of the money may be being spent as intended 

while other awards have been revoked and the money returned to 

the Treasury. When this bill was rushed through this committee, 

my Republican colleagues and I raised questions about how prudent it was to spend the money before the broadband maps were 

completed showing where it was spent, where would be appropriate 

to spend it in unserved areas. They wanted to get the money out 

the door before the maps were drawn. Republicans pointed out that 

the private sector was investing an order of magnitude more extending service all across America. For the government, which borrows 40 cents of every dollar it spends, to get in this game seemed 

unnecessary. Today, we know that the private sector has spent $65 billion a 

year on broadband for the past decade, but the government meanwhile can’t find the money to cover veterans who have to wait in 

line 2 years to get their claims for benefits approved because it 

says it doesn’t have the funds. 

So the Obama administration’s priority was to fund routers designed to support more than 200 simultaneous users to a library 

in West Virginia housed in a single-wide trailer with just one internet connection. Here is a picture of that library. To put this in context, even accounting for 100 times growth in the number of internet users at the library, routers capable of handling 100 users each 

cost at least $16,000 less than were purchased. $16,000 less. 

The NTIA and RUS likely made some good choices. In many 

areas of the country, the money may have been spent appropriately, probably was. And that is a good thing. That is what we 

would all want. After all, if the money was going to get spent, then 

we would all hope it would get spent appropriately. However, approximately $611 million of the funding covering 42 

projects has been revoked, relinquished, or suspended. Advocates of 

the law said it needed to be rushed through Congress to infuse 

money into the troubled economy and that the funding would go to 

shovel-ready projects. Yet we know even in West Virginia some of 

these routers are sitting idle for 3 years. Yet 4 years in to the program only 60 percent of the broadband funds have been put to use. 

And of the 553 projects funded, only 58 are finished or in the finishing stages, even though all were originally supposed to be completed by next September. 

Allegations of overbuilding persist. Indeed, a spate of national 

stories in recent weeks have pointed to the $100 million EAGLE– 

Net grant in Colorado as a quintessential example of overbuild. According to the New York Times, the currently suspended project 

built a third fiber connection—a third fiber connection—to an 11- 

student elementary school in Agate, which the school said it didn’t 

want or need, instead of to rural mountain communities desperate 

for access. The Department of Commerce Inspector General and the 

state auditor have both recently concluded that West Virginia overspent hundreds of thousands or even millions of dollars on enterprise-grade servers for small libraries with only a few computers. 

By contrast, the private sector has built out broadband to 96 percent of the population last decade and 70 percent of the country 

now subscribes. The number of Americans with broadband at home 

grew from 8 million to 200 million between 2000 and 2009. Another 

3 

20 million signed up by 2011. There was no need to reinvent this 

wheel. Doing so is not only inefficient; it is counterproductive. 

First, overbuilding provides ‘‘seconds’’ or ‘‘thirds’’ to some parts of 

the country before others have even had ‘‘firsts.’’ Second, it unfairly 

subjects to government-subsidized competition businesses that 

have invested their own funds. 

So in conclusion, promoting broadband is a laudable goal. But 

there are many laudable goals in our government. And when the 

government is borrowing 40 cents on every dollar to fund government services, we cannot afford them all, especially if the private 

sector is succeeding without government involvement. From what 

we now know, the government has spent millions if not hundreds 

of millions on equipment it did not need and on stringing fiber to 

areas that already have it. Republicans won’t tolerate wasteful government spending, and it appears we have uncovered millions that 

fit that category. If the Obama Administration was going to spend 

this money wisely, it would have targeted it to the 4 percent of the 

country where there is no economic business case to be made for 

private sector investment. Increasing stories of overbuilding and 

waste suggest the administration has failed to adequately do so. 

And I understand as result of our work and other audits and investigations, there may be deals in the works to actually reclaim 

some of this money or at least make other adjustments. My suggestion to both Colorado and West Virginia, if the money wasn’t supposed to be spent the way you spent it, the federal taxpayers deserve to have it all back. 

And with that I recognize the gentlelady from California. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

At a time when President Obama and his administration is threatening to lay off 

meat inspectors, FAA controllers, TSA agents, throw head-start students out of class 

and cut teachers as the best way to deal with the sequester, our subcommittee will 

look at how parts of the Obama administration have allowed millions—perhaps hundreds of millions—of dollars in overspending, overbuilding and waste in their rush 

to spend the $7 billion in broadband stimulus money for underserved and unserved 

areas of the country. 

To be sure, some of the money may be being spent as intended while other awards 

have been revoked and the money returned to the treasury. But when this bill was 

rushed through this committee, my Republican colleagues and I raised questions 

about how prudent it was to spend the money before the broadband maps were completed showing where the unserved areas were. Republicans pointed out that the 

private sector was investing an order of magnitude more extending service all across 

America. For the government, which borrows 40 cents of every dollar it spends, to 

get in this game seemed unnecessary. Today, we know that the private sector has 

spent $65 billion a year on broadband for the past decade, but the government 

makes veterans wait years to get their claims for benefits approved because it says 

it doesn’t have the funds. 

So the Obama administration’s priority was to fund routers designed to support 

more than 200 simultaneous users to a library housed in a single-wide trailer with 

just one Internet connection. To put this in context, even accounting for one hundred times growth in the number of Internet users at the library, routers capable 

of handling 100 users each costs at least $16,000 less than what was purchased. 

The NTIA and RUS likely made some good choices. In many areas of the country 

the money may have been spent appropriately. That’s a good thing. After all, if the 

money was going to get spent, then we would all hope it would get spent well. 

However, approximately $611 million of the funding covering 42 projects has been 

revoked, relinquished, or suspended. Advocates of the law said it needed to be 

rushed through Congress to infuse money into the troubled economy and that the 

4 

funding would go to shovel-ready projects. Yet four years into the program, only 60 

percent of the broadband funds have been put to use. And of the 553 projects funded, only 58 are finished or in the finishing stages, even though all were originally 

supposed to be completed by September 30, 2013. 

Allegations of overbuilding persist. Indeed, a spate of national stories in recent 

weeks have pointed to the $100 million EagleNet grant in Colorado as the quintessential example. According to the New York Times, the currently suspended 

project built a third fiber connection to an 11-student elementary school in Agatewhich the school says it does not need or want-instead of to rural mountain communities desperate for access. The Department of Commerce Inspector General and a 

state auditor have both recently concluded that West Virginia overspent hundreds 

of thousands or even millions of dollars on enterprise-grade servers for small libraries with only a few computers. 

By contrast, the private sector has built out broadband to 96 percent of the population in the last decade and 70 percent of the country now subscribes. The number 

of Americans with broadband at home grew from eight million to 200 million between 2000 and 2009. Another 20 million signed up by 2011. There was no need 

to reinvent the wheel. Doing so is not only inefficient, it’s counter-productive. First, 

overbuilding provides ‘‘seconds or thirds’’ to some parts of the country before others 

have even had ‘‘firsts.’’ Second, it unfairly subjects to government-subsidized competition businesses that have invested their own funds. This potentially divides the 

customer base from which the company can recover costs, jeopardizing its business 

and the jobs it created. Third, it puts the federal dollars at greater risk, since the 

subsidized entity must similarly compete with the existing private businesses. 

Promoting broadband is a laudable goal. But there are many laudable goals. 

When the government is borrowing almost 40 cents on every dollar to fund government services, we cannot afford them all, especially if the private sector is succeeding without our involvement. From what we know now, the government has 

spent millions on equipment it did not need and on stringing fiber to areas that already had it. Republicans won’t tolerate wasteful government spending, and it appears we’ve uncovered millions that fit that category. If the Obama administration 

was going to spend this money wisely it would have targeted it to 4 percent of the 

country where there is no economic business case for private sector investment. Increasing stories of overbuilding and waste suggest the Obama administration failed 

to adequately do so. 

# # # 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Good morning, Mr. Chairman, members of the committee. And to our witnesses, welcome. 

I didn’t have this in my prepared remarks but I can’t help but 

say so. What is the answer, sequester? I think that, number one, 

the President of the United States, with all due respect to the 

Chairman, is not the purchasing agent for this program. So let us 

keep things in context. 

I think the title of today’s hearing—‘‘Is the Broadband Stimulus 

Working?’’—I believe that it is. Are there some issues that we need 

to discuss? Do we need to do serious oversight of everything to 

track taxpayer dollars? Of course we do. That is the responsibility 

of the Congress. The investments made in broadband infrastructure are having, I believe, a profound impact in local communities 

around the country. 

The Chairman said that approximately $611 million of the BTOP 

and BIP funding covering 42 projects has been revoked, relinquished, or suspended. The fact of the matter is, is that the terminated BTOP projects have spent approximately $11 million representing 0.3 percent of BTOP funds. Should we track those down? 

5 

Sure we should. But let us keep things in context. I mean it is kind 

of like down boy. We don’t need hair on fire here. And additionally, approximately $200 million in previously suspended BTOP grants are now back on track. So thanks to BTOP 

funding, the rural Iowa Telehealth Initiative is enabling Iowans 

living in rural and medically underserved areas to receive the affordable healthcare they need. In Oregon the Monroe Telephone 

Company has used BIP funds to bring fiber to the premises to more 

than 2,300 residents, 29 local businesses and 7 local institutions. 

And at the College of Menominee Nation in Wisconsin, BTOP funding has enabled the reservation to open a community technology 

center where previously only dial-up internet was available. These 

are real-life stories in real-life States in real-life communities of 

how the Act is working. 

As we have discussed in oversight hearings throughout the last 

two Congresses, there are always challenges along the way. I have 

never seen a program in a Republican administration or a Democratic administration or a Republican Congress or a Democratic 

Congress that doesn’t have issues. They are sticky wickets. Life is 

not tidy. But it is our responsibility to track all of that down. 

I don’t think the solution is to attack the overall merits of a program. Instead, as I said previously, rigorous oversight by NTIA, 

RUS, and the Inspector General of these respective agencies is necessary to ensure that the projects remain on track and achieve 

their intended goals. There is no doubt that we have much more 

work ahead of us because something that still dogs us is the following: 19 million Americans remain unable to obtain a broadband 

connection. This is not a source of pride to our country. So should 

we blow up what we have set out to do? I don’t think so. I don’t 

think so. 

The problem is particularly pervasive in rural and tribal areas 

where between 1⁄4 and 1⁄3 of the population remains without access 

to broadband. The BTOP and BIP programs are helping to tackle 

these challenges, and with this subcommittee’s continued focus on 

broadband, we can and one day, I think, be able to meet the challenge, be the envy of the world in availability and speed of service. 

I am very grateful to each of the witnesses for your commitment 

to expanding the deployment and adoption of broadband nationwide. And in particular, I would like to offer a special thanks to 

Bruce Abraham and Joe Freddoso who have traveled to Washington, as many witnesses do, to share the successes of the BTOP 

program. And I don’t know. Do I have any time remaining? 

Do you want 14 seconds, Ms. Matsui? You are fine? OK. 

With that I will yield back the balance of my time. 

Mr. WALDEN. Gentlelady yields back the balance of her time. The 

chair now recognizes the gentleman from Texas, Mr. Barton. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. I apologize for being a 

little bit late, but I am here. So that is good. 

The American Reinvestment and Recovery Act was signed into 

law in 2009. I didn’t support that Act at that time. That law drastically increased spending. It also created some opportunities in my 

6 

opinion for wasteful spending. It appears that both the Broadband 

Technology Opportunities Program, which most people call BTOP, 

and the Broadband Incentive Program, which most people call BIP, 

have fallen victim to the hated government waste. 

During the time that I served as ranking member of the full committee, I questioned both the National Technology and Information 

Administration and the Rural Utility Service Corporation over 

their ability to carry out the Broadband Initiative. When executed 

correctly—and I want to emphasize correctly—I believe that both 

BTOP and BIP are programs that can add value to the lives of our 

citizens. The goal of these programs are to ‘‘provide access to 

broadband services to consumers residing in underserved areas.’’ 

Yet, it doesn’t appear to me that the results so far have achieved 

that goal. 

The complaints of overbuilding, we hear from the carriers and 

the facts that we see regarding the actual number of projects, 

which is abysmal in my opinion, that have been completed, leads 

to me to believe that this is a program that needs to be reviewed 

very strongly and perhaps restructured. 

And with that, Mr. Chairman, I thank you for your time and I 

yield back. 

Mr. WALDEN. I now recognize the vice chair of the subcommittee, 

Mr. Latta. 

OPENING STATEMENT OF HON. ROBERT E. LATTA, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Mr. LATTA. Thank you very much, Mr. Chairman. And thank you 

very much for holding the hearing today. And I also welcome our 

distinguished panel of guests for testifying today. 

High-speed broadband has become a necessity of life. It has already transformed our economy and the possibilities for the future 

are endless. I represent not only rural areas of the State of Ohio 

but also suburban, and I am keenly aware of the importance that 

broadband deployment plays in economic development and the 

nexus this access has to job creation. I feel very strongly that the 

country’s free market private investment approach to broadband 

expansion has been very successful. It is outstanding that the private sector wired and wireless broadband providers have invested 

billions each year since 2002 through 2011. 

While there are many positive stories of BTOP and BIP projects, 

including several in the state of Ohio, the stories of waste, fraud, 

and abuse are alarming. As with all of our government programs, 

taxpayers deserve thorough oversight of the billions of dollars spent 

on these programs. 

And with that, Mr. Chairman, I yield back. Thank you. 

Mr. WALDEN. I now recognize the gentleman from Colorado, Mr. 

Gardner. 

OPENING STATEMENT OF HON. CORY GARDNER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Mr. GARDNER. Thank you, Mr. Chairman. And thank you very 

much for the time to hold this hearing today, and thank you, Mr. 

7 

Strickling, and the other witnesses today. Mr. Kirchhof from Colorado, thank you for being here. 

I guess I had some prepared comments yesterday that we were 

going over to talk about this morning’s hearing. And then I spent 

an hour yesterday listing to a Legislative Audit Committee in the 

Colorado State Legislature. It is a bipartisan committee, equal 

amount of Republicans and Democrats on this committee where the 

end statement by a leading State Senator, a Democrat, was this: 

the more we hear about EAGLE–Net, the more questions we have. 

I just read some comments from constituents that I have before 

we get into this about EAGLE–Net. And that is the subject of this 

hearing. What is happening, what is going on, and why do we have 

so much overbuild in Colorado out of $100 million at a time when 

this government is trying to scrape money together? 

One constituent, PC Telecom, having overbuilt nearly 100 percent of PCT’s fiber-optic facilities in Colorado, and we have another 

company in Colorado. All of C–Com’s network information was 

available to EAGLE–Net in advance of their overbuilds. We have 

another company, private company in Colorado. Blanca was more 

than willing to offer NTIA reasonable terms that would have saved 

them an estimated $20 million, but NTIA, with full knowledge that 

Blanca served almost every community institution in its service 

territory, chose instead to duplicate their high-speed internet services. 

These are private sector jobs. At a time when the White House, 

at a time when all of us talk about creating middle-class jobs, goodpaying jobs, we have a $100 million grant that went to the State 

of Colorado that is putting at risk private sector jobs, the very 

good, middle-class-paying jobs that we are trying so desperately to 

create and preserve. 

In the Denver Post yesterday there was a story, 96 million out of the $100 million has already been tied up in this grant, yet only 

25 percent of the more than 220 K through 12 school districts, libraries, community colleges and other educational institutions that 

are supposed to be wired into the network are actually connected. 

At the hearing yesterday, the representatives of EAGLE–Net 

couldn’t tell us who they served, who their members were, how 

much has been built, how much money they have. When a non-partisan audit committee says the more we hear, the more questions 

we have, something has gone dramatically wrong. And the fact is, 

when we hear statements from the intergovernmental entity itself 

that they don’t know, they can’t provide the answers, but they have 

spent almost all of this and are 25 percent completed, this isn’t 

working. 

Mr. WALDEN. The gentleman’s time has expired. The chair recognizes the ranking member of the committee, Mr. Waxman. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Today is the Committee’s seventh oversight hearing regarding 

the Broadband Technology Opportunities Program, or what we call 

BTOP, and the Broadband Initiative Program, or BIP. I may not 

8 

agree with the chairman’s conclusions, but I commend him for his 

diligence. When we ask questions as part of our congressional oversight, it helps protect the taxpayers. 

I would like to welcome all of our witnesses. In the case of Assistant Secretary Strickling, welcome back. To our other witnesses, we 

appreciate your willingness to share your perspectives. I am particularly pleased to have two grantees who can speak directly to 

the success of the Broadband Recovery Act Programs. Bruce Abraham is here from North Georgia Network, a project that is bringing 

economic and educational benefits to rural areas of his state. And 

on behalf of Mr. Butterfield, I would like to offer a special welcome 

to Mr. Freddoso, who has worked extensively with Mr. Butterfield 

to bring broadband to unserved and underserved areas of eastern 

North Carolina. 

Oversight of BTOP and BIP began as soon as the ink was dry 

on the Recovery Act. Indeed, Congress built oversight into the very 

structure of these programs by providing millions of dollars to the 

Inspectors General at the Departments of Commerce and Agriculture in order to conduct vigorous audits and reviews of the programs. We knew that NTIA and RUS had a daunting task—investing taxpayers’ dollars both quickly and wisely in a manner that 

was fair, open and transparent to the American people. Assistant 

Secretary Strickling and Acting Administrator Padalino, your agencies are meeting this challenge. 

The projects funded by BTOP and BIP are transforming communities across the country. We all recognize and applaud the billions 

of dollars in private investments that has delivered broadband to 

millions of Americans. But as demonstrated by the overwhelming 

demand from applicants when the programs were launched, public 

investments are also needed to connect persistently unserved and 

underserved areas of our Nation. Without these investments, some 

Americans would be excluded from today’s digital economy. 

As this committee’s continued interest in the broadband program 

indicates, we expect NTIA and RUS to be careful stewards of public 

dollars. Assistant Secretary Strickling, NTIA has been a model of 

transparency and accountability. As you stated in your testimony, 

the majority of BTOP projects are meeting and exceeding their 

project timetables. And we have every reason to expect they will 

be completed on schedule. 

Acting Administrator Padalino, as I have said before, I believe 

RUS still has work to do on this score. The GAO recently recommended that your agency collect more reliable data to assess 

progress of BIP. I am interested to hear what your agency is doing 

to respond to the GAO’s recommendations, and in particular, what 

steps you are taking to make such information publicly available. 

I am also disappointed that the Office of the Inspector General 

from the Department of Agriculture is not testifying today to update the Committee on its work to ensure BIP funds are being 

well-managed. 

I thank everybody who is going to be testifying today, and I want 

to yield the balance of my time to my fellow Californian member 

from Sacramento, Ms. Matsui. 

Ms. MATSUI. Thank you, Ranking Member Waxman, for yielding 

me time and I thank the witnesses for being with us today. 

9 

Throughout the BTOP process, I have advocated for broadband 

adoption and digital literacy grants for urban underserved and anchor institutions. In addition to adoption, I believe digital literacy 

will be even more important as more and more Americans rely on 

their mobile devices, Smartphones and tablets for their daily communications. 

In my opinion, the BTOP program has laid a foundation for advancing our internet economy. It has connected more than 11,000 

community anchor institutions to high-speed broadband internet 

services. As a result of the State of California’s Broadband Adoption Grant, community colleges like Los Rios Community College 

are now able to provide training and digital literacy skills for local 

residents in my district of Sacramento. Additionally, a BTOP grant 

allocated to the California Emerging Technology Fund will initiate 

an innovative program that provides computers to low-income middle school students in Sacramento. While I continue to strive for 

universal broadband adoption, I do believe the BTOP program has 

provided a path towards helping to close our Nation’s digital divide. 

Finally, I would like to ask unanimous consent to enter into the 

record a letter from the Schools, Health, and Libraries Broadband 

Coalition. 

Mr. WALDEN. Without objection. 

[The information appears at the conclusion of the hearing.] 

Ms. MATSUI. Thank you, and I yield back my time. 

Mr. WALDEN. The gentlelady yields back her time. 

I think that covers the scope of opening statements so we will 

proceed into the questions. I request—oh, I am sorry. That is right. 

We are so eager to get into our questions. 

Mr. STRICKLING. I know you are anxious to ask me questions, but 

I—— 

Mr. WALDEN. If you want to waive your opening statement, we 

can just get right at this. You are right. We are going to go to opening statements. 

And so I want to welcome Hon. Lawrence E. Strickling, Assistant 

Secretary for Communications and Information, and Administrator 

of the National Telecommunications and Information Administration—which is a mouthful—U.S. Department of Commerce; and 

John Padalino, the Acting Administrator of Rural Utilities Service 

(RUS), U.S. Department of Agriculture. 

Mr. Strickling, we welcome both you and Mr. Padalino here and 

we look forward to your testimony. 

STATEMENTS OF LAWRENCE E. STRICKLING, ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, AND 

ADMINISTRATOR, NATIONAL TELECOMMUNICATIONS AND 

INFORMATION ADMINISTRATION (NTIA), U.S. DEPARTMENT 

OF COMMERCE; AND JOHN PADALINO, ACTING ADMINISTRATOR, RURAL UTILITIES SERVICE (RUS), U.S. DEPARTMENT OF AGRICULTURE 

STATEMENT OF LAWRENCE E. STRICKLING 

Mr. STRICKLING. Well, thank you, Mr. Chairman, and to you, and 

to Ranking Member Eshoo, and members of the subcommittee. 

10 

I am here today to update this subcommittee on NTIA’s work to 

expand the availability and adoption of broadband in the United 

States. And I am pleased to welcome a new partner to the witness 

table, John Padalino, the Administrator of the Rural Utility Service, who has taken over for Jonathan Adelstein, and I look forward 

to working with Administrator Padalino in his new capacity. 

Four years after the American Recovery and Reinvestment Act, 

I am pleased to report that our broadband efforts are delivering 

substantial and meaningful benefits across the country. Our grantees are delivering on their promises to create jobs, stimulate economic development, spur private sector investment, and open up 

new opportunities in employment, education, and healthcare. And 

they are exceeding the program’s goals for deploying new fiberoptic infrastructure, constructing new public computer centers, and 

encouraging greater internet adoption. 

To date, our grantees have deployed or upgraded more than 

86,000 miles of broadband infrastructure. They are building more 

than 2,300 network nodes in 1,400 communities, and over 80 percent of these communities will receive speeds greater than a gigabit 

per second. Our grantees have connected almost 12,000 schools, libraries, and other community anchor institutions to high-speed 

broadband. Eventually, they will connect more than 20,000 community anchors in 5,100 communities, and more than 20 percent of 

these institutions will receive bandwidths greater than a gigabit 

per second. They have entered into more than 600 interconnections 

agreements with other companies and organizations to allow them 

to provide new or improved services to their homes and businesses 

that they serve. 

Our grantees have installed more than 40,000 public computer 

workstations, provided nearly 10 million hours of training to 2.8 

million people, and have generated over 500,000 new broadband 

subscribers. These projects are directly funding thousands of jobs 

and delivering training that has allowed thousands more Americans to find jobs of their own. 

From the beginning of this program, NTIA has been cognizant of 

the need to design and administer this program in the most efficient manner possible. And indeed, our costs of administration are 

among the lowest of any comparable program in the government. 

Similarly, the need to protect taxpayer funds against waste, 

fraud, and abuse and to ensure that the projects deliver their 

promised benefits has been of paramount importance to us. We 

have performed extensive and diligent oversight of these projects 

without micromanaging them. We have provided technical assistance to recipients to help them perform well and deliver the benefits they have promised. And this oversight involves a significant 

level of effort and requires hard decision-making at times when 

necessary to protect taxpayer investments. 

The vast majority of our projects have performed well. You will 

hear from representatives of two of these projects in the second 

panel; Joe Freddoso of MCNC in North Carolina; and Bruce Abraham of the North Georgia Network. But as with any program of 

this size and complexity, we have had cases where intervention by 

us was necessary. Fortunately, because we work hard to identify 

11 

issues as early as possible, we have been able to get projects back 

on track. 

One of our oversight tools is project suspension. We use it sparingly and only after efforts to improve performance with improvement plans or corrective action programs have not deliver the desired results. Over the history of this program—keeping in mind 

that we have about 220 some grantees—we have suspended a total 

of nine projects. But a suspension does not mean the project is lost. 

In four cases we worked with the grant recipients to get their 

projects back in shape and we lifted the suspensions after the 

grantees addressed our concerns. As a result, those projects are 

stronger, more successful, and more responsible stewards of taxpayer dollars due to our interventions. 

And, Mr. Chairman, of the figure you gave of, I think, 600 million of projects suspended/revoked, those projects—those four 

projects—account for $221 million, which means those dollars are 

back at work in their communities. 

The North Florida Broadband Authority Wireless Infrastructure 

Project offers a prime example. Our oversight identified concerns 

regarding project management and vendor oversight. We froze distribution of funds to the project, conducted several site visits, and 

provided extensive technical assistance to the grantee. We lifted 

the project suspension once the recipient implemented management and vendor changes, and now, about a year later, that project 

is nearing completion and benefiting dozens of communities in 

rural North Florida. 

Currently, we have three projects on suspension for performancerelated issues. And this accounts for $158 million of the total number that the Chairman presented in his opening remarks. We are 

working closely with the recipients and we are hopeful that they 

will get their projects back on track at which time we would be 

able to lift the suspensions and allow the grantees to complete 

their projects. One of those three projects is EAGLE–Net, which I 

am sure we will be talking about in greater detail through the 

course of the questioning. 

There have been two situations where, despite our best efforts, 

we had to terminate projects. However, in those cases our early 

intervention allowed us to make the difficult decision to terminate 

before either grantee had spent much of its grant award. These 

projects account for $139 million of the Chairman’s total, but when 

we terminated, they had only spent about $11 million of federal 

funds, which represents substantially less than even 1 percent of 

the total grant dollars awarded under the Recovery Act. 

Mr. Chairman, I am grateful to this subcommittee for its efforts 

to ensure that NTIA has had the resources it needs to oversee this 

program. I look forward to answering your questions and to continuing to work together to increase broadband access and adoption 

across the country in the most effective and efficient manner possible. Thank you. 

[The prepared statement of Mr. Strickling follows:] 

12 


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Testimony of 

The Honorable Lawrence E. Strickling 

Assistant Secretary for Communications and Information 

National Telecommunications and Information Administration 

United States Department of Commerce 

I. Introduction 

Before the 

Committee on Energy and Commerce 

Subcommittee on Communications and Tecbnology 

United States House of Representatives 

Hearing Entitled 

"Is the Broadband Stimulus Working?" 

February 27, 2013 

Chairman Walden, Ranking Member Eshoo, and Members of the Subcommittee, I am 

pleased to be here to today to update the Subcommittee on the National Telecommunications and 

Information Administration's (NTIA) work to expand access to and adoption of broadband in the 

United States. Four years after the American Recovery and Reinvestment Act, I can report that 

our efforts with the Broadband Technology Opportunities Program (BTOP) and State Broadband 

Initiative (SBI) are delivering substantial and meaningful benefits to thousands of communities 

in every state, the territories, and the District of Columbia. 

The $4 billion NTIA invested in roughly 230 projects to expand broadband access and 

adoption across the country, including leveraging over $1.4 billion in non-Federal matching 

funds to enhance the sustainability of these investments, is helping to ensure that Americans 

have the resources and skills needed to benefit from the economic, educational, and civic 

opportunities the Internet makes possible. The projects range from large statewide infrastructure 

projects supporting the Internet-based economy of the future andjumpstarting economic 
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80019.002

development in areas hard hit by the recession, to high-impact small projects to upgrade library 

public computer centers in remote rural towns so residents can access state-of the-art skills 

training, to sustainable broadband adoption projects delivering comprehensive, personalized 

programs to reduce the number of Americans without broadband in the home. 

II. Success in Achieving Program Objectives 

a. Exceeding Pertormance Goals 

Today, nearly two and a half years after NT/A met the Congressionally-mandated 

deadline to award all funds by September 30, 2010, I am pleased to report that recipients are 

delivering on their promises to create jobs, stimulate economic development, spur private-sector 

investment, and open up new opportunities in employment, education, and healthcare. NT/A's 

broadband recipients are exceeding programmatic goals for deploying new fiber-optic 

infrastructure, constructing new public computer centers, and encouraging greater Internet 

adoption. Through December 31, 2012, they have: 

• deployed or upgraded more than 86,000 miles of broadband infrastructure; 

• connected almost 12,000 community anchor institutions to high-speed broadband 

Internet service; 

• entered into more than 600 agreements with third-party providers to leverage or 

interconnect with their networks; 

• installed more than 40,000 workstations in public computer centers benefitting 

approximately 20 percent of the country's libraries; I 

I See American Library Association, First Report on "BTOP and U.S. Public Libraries" Shares Community Impacts, 

February 12.2013. http://www.ala.org!news/pr?ido·12415. 

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• provided more than 9.9 million hours of technology training to approximately 2.8 

million users; 

• generated over 520,000 new broadband Internet subscribers; and 

• funded approximately 4,000 jobs each quarter for the past five quarters and 

enabled the beneficiaries of digital literacy training to secure thousands more. 

On every metric against which NTIA is measuring progress within the broadband 

programs, grantees exceeded their targets in 2012 and are well on their way to meeting or 

exceeding their 2013 targets as well. 

In all, NTlA's broadband recipients have spent approximately $2.8 billion in federal 

funds and approximately $900 million more in matching funds in meeting these metrics. 

Notwithstanding project delays caused by environmental reviews, complex procurements and 

severe weather, program progress remains strong with over 70 percent of NT lA's Recovery Act 

funding expended. 

b. Impacting Local Communities 

The numbers only tell part of the story. Another important gauge of the success of 

NTIA's broadband programs can be found in the countless stories from individuals and 

communities of how the broadband projects are transforming their lives. A good example is 

Maine, where a combination of NT lA-funded broadband projects is making tremendous 

differences in broadband access, economic development, health care, education, and digital 

literacy. 

The Three Ring Binder project - one of the first awards announced in December of2009 

- which is supported by the Maine state government, the state university system, and a group of 

small telecom carriers, used $25.4 million in Recovery Act funds to build a I, I OO-mile dark-fiber 

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network across the state consisting of three interconnected fiber rings. Thirteen local carriers are 

now leasing that fiber to bring broadband to rural communities that, in many cases, previously 

had only dial-up service. 

The Three Ring Binder project is also connecting community anchor institutions across 

the state. The University of Maine system will now be able to bring 1 O-gigabit connections to all 

seven university campuses to support big data-driven research and collaboration with other major 

academic institutions around the nation. The project is also turning on a I O-gigabit connection to 

the Jackson Lab, a genetics lab, so that it can exchange extremely large gene sequencing datasets 

with a new facility in Farmington, Connecticut. 

Axiom Technologies is using a $1.4 million broadband adoption grant in very innovative 

ways in Washington County, Maine. It is transforming Down East Community Hospital - a 25-

bed critical-care hospital in Machias, connected by the Three Ring Binder project - into a 

teaching facility for nursing students. The grant paid for video-conferencing equipment that 

allows nursing students to take necessary classes through a nursing college in Lewiston, nearly 

200 miles away. The grant also paid for a state-of-the-art teaching mannequin used to train the 

nursing students in Machias that can be controlled by instructors in Lewiston. The first group of 

nurses will complete the program this May. Shelby Leighton, one of the first graduates, is 

grateful the program allowed her to pursue her dream of becoming a nurse without uprooting her 

family. Leighton is confident she will find a local job with her new specialized skills after she 

graduates so that she can - as she put it - care for the community that raised her. 

Axiom is also equipping locallobstermen and blueberry farmers with rugged wireless 

devices, broadband connections, and broadband training to help them manage extensive state 

data collection and reporting requirements. Axiom is developing software to move these tasks 

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out of old-fashioned paper-and-pencil logbooks and into the electronic realm. It is also teaching 

the farmers and fishermen - some of whom have never turned on a computer before - how to 

design web sites, develop spreadsheets, and use programs such as Photoshop to advance their 

businesses. For example, Ellen Johnson, owner of an organic blueberry farm, took the training, 

and now has a brand new website to show off her blueberries, jams, and pies along with the 

website design and Photoshop skills to keep the site updated. 

Axiom is offering digital literacy training in multiple locations around Washington 

County, including 18 public libraries. Many of those facilities have new computers thanks to a 

$1.4 million public computer center award to the Maine State Library to distribute more than 500 

desktops and laptops across 107 public libraries statewide and equip 11 with videoconferencing 

equipment. In NTlA's quarterly reports to Congress, we have highlighted dozens more success 

stories and have compiled even more on our website in the form ofblogs, profiles, and recipient 

reports. 2 

c. JumpstartingAdditional Private Investment through Open Access Policies 

Our broadband grants are helping to "prime the pump" for additional investment by 

public and private entities. In particular, the open access and interconnection requirements 

imposed on federally-funded infrastructure are encouraging last-mile and other broadband 

providers to tap into these predominantly middle mile networks to expand broadband services 

and speeds for American consumers and businesses. Across the country, providers have signed 

over 600 agreements with our grantees to use federally-funded networks to better serve their 

customers. 

2 NTIA Quarterly Reports to Congress are available on NTIA's website at http://www2.ntia.doc.goviBTOP-Reports. 

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The Three Ring Binder project is a good example of how this works. One of the 13 local 

carriers leasing fiber is Pioneer Broadband, which serves Aroostook County, a poor, rural county 

of potato fields and blueberry barrens where Interstate 95 literally comes to an end. Pioneer is 

leasing capacity on the Three Ring Binder network to bring DSL and even fiber-to-the-home to a 

string of remote towns that had no broadband whatsoever until now. 

Ohio is another good example. NTIA was able to fund $140 million in linked 

infrastructure projects to Ohio Middle Mile Consortium partners ComNet, Inc.; Horizon 

Telecom, Inc.; and OneCommunity. 3 In addition to constructing over 2,000 miles of new 

infrastructure and upgrading 1,700 miles more, these awardees have entered into 63 agreements 

with other service providers, further leveraging the investments and benefitting communities 

with an urgent need for improved broadband capabilities. 

Combined, NTIA's grant recipients are building more than 2,600 "points of presence" -

or network nodes - in 1,500 communities. Over 80 percent of these communities will receive 

speeds greater than a gigabit per second, dramatically increasing the availability of truly highspeed broadband necessary for economic development, education, and research. 

d Empowering States and Collecting Broadband Data 

In addition to its infrastructure, sustainable adoption, and public computer center grants, 

NTIA has become the leading source of public data on broadband access and adoption in 

America. SBI grants fund states to collect and verify broadband data in each state, territory, and 

the District of Columbia and to leverage knowledge of local needs to advance broadband 

technology and better compete in the digital economy. One example is in Utah, where a health 

3 More infonnation about these projects is available at http://www2.ntia.doc.goviohio and 

http://w\\w.ohiomiddle.l1il~lndex.html. 

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infonnation exchange company with approximately 200 employees lost both time and money at 

its rural call center facility due to frequent broadband outages. The company considered moving 

the rural jobs to a more urban location. However, working with the Utah Broadband Project, it 

used the Map to identify other broadband companies that could provide redundancy and were 

able to retain the rural jobs. A loss of200 jobs in a small city with a population of5,000 would 

have been significant. In Kansas, the Kansas Department of Commerce and Convergys Corp 

used the National Broadband Map to identify communities with the connectivity required for 

Convergys's home-based hiring needs. Convergys has hired about 200 workers and plans to hire 

more, providing much-needed jobs in small towns. 

NTIA has updated the National Broadband Map five times since its original February 

2010 release. It is America's first public, searchable nationwide map of broadband Internet 

availability, and it contains more than 20 million records collected from nearly 1,800 broadband 

providers. The map shows where broadband is available, the technology used to provide the 

service, the maximum advertised speeds, and the names of the service providers. It is the most 

extensive dataset of its kind, and it is being used by consumers and businesses comparison 

shopping for broadband service, economic development agencies enticing businesses to relocate, 

and policy makers determining where to focus funding. The next update is scheduled for this 

summer. 

e. Promoting Digital Literacy 

NTIA's Digital Nation survey with the Census Bureau indicates that a third of 

households more than 100 million Americans do not subscribe to broadband Internet access 

at home. In addition, about one in five households 20 percent do not use the Internet from 

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any location. 4 Although the U.S. has come a long way in broadband adoption over the past ten 

years, this data point is significant in light of the importance of broadband access to our citizens 

and our economy. Our survey results indicate that the reasons consumers give most often for not 

subscribing is that they do not need broadband or are not interested in it. Cost is the second most 

frequently given reason, followed by the lack of an adequate computer. 

Digital literacy is fundamental to sustainable broadband adoption. Through our 

broadband programs, awardees are gathering a tremendous portfolio of innovative approaches 

that communities will be able to replicate for years to come. Both sustainable broadband 

adoption projects and public computer center projects are reaching people who may never have 

even turned on a computer a group that includes a disproportionate number oflower income 

Americans, senior citizens, and members of minority groups - and teaching them how to 

navigate the Internet, set up an email account, write a resume, and even apply for jobs over the 

Internet. 

A key learning is that we cannot solve the adoption gap by focusing on only one of the 

barriers. A successful program must address all the major barriers in a comprehensive fashion 

and be tailored to the specific needs ofthe community and the individual. Another key point is 

to take advantage of the opportunity to provide digital literacy training to also focus on 

workforce training, particularly in areas of higher unemployment. Many grantees have found a 

natural extension of the digital literacy training to also assist their communities to take advantage 

of the online environment to find jobs. 

4 See Press Release, "New Commerce Department Report Shows Broadband Adoption Rises but Digital Divide 

Persists," available at http://w,,w.ntia.doc.gov Ipress-rclease/20 ll/new-commerce-deparlment -report-sholVsbroadband-adoption-rises-digital-divide-pers. The full Digital Nation report entitled, "Exploring the Digital NationComputer and Internet Use at Home," is available at 

http://w\\w.esa.doc.gov/sites/defaultlfiles/reports/documents/exploringthedigitalnationcomputerandinternetuseathome.pdf. 

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Digital literacy includes skills that many of us take for granted. But for those stuck on 

the wrong side of the digital divide, not having basic digital literacy can be a significant barrier 

to employment. Many job listings are only posted online these days and many employers only 

accept job applications online. Even further, today'sjob market demands a basic knowledge of 

computers, software, and the Internet. The California Emerging Technology Fund, through a 

$14 million Recovery Act investment, has helped over 2,600 people find jobs by providing 

digital literacy training. Combined, the more than 9.9 million hours of technology training to 

approximately 2.8 million users through NTIA grantees is helping equip Americans for the skills 

necessary to compete in the 21 st century. 

In addition, NTIA, in collaboration with the Department of Education and other federal 

agencies, created www.DigitaILiteracy.gov to provide librarians, teachers, workforce trainers, 

and others access to resources and tools to teach computer and online skills necessary for success 

in today's economy. We continue to assemble materials from grantees and other leaders in the 

field and have made these tools freely available to anyone, anywhere, anytime. The portal now 

contains more than 500 resources (e.g., videos, tutorials, and lesson plans) to help prepare more 

Americans for today's jobs. 

III. Monitoring, Oversight, and Technical Assistance 

Ensuring projects deliver their promised benefits and protecting taxpayer funds are of 

paramount importance to NTIA. NTIA proactively performs extensive and diligent oversight 

and provides technical assistance to recipients tailored to their needs. Such oversight involves a 

significant level of effort and requires hard decision-making at times when all else fails to protect 

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80019.010

taxpayer investments. We appreciate the bipartisan support shown by this Subcommittee to 

ensure we have the resources needed to do so. 

a. Providing High-Quality Oversight and Customer Service 

The technical assistance, oversight, and outreach activities that NTIA has conducted 

since the last time I testified before the subcommittee include the following: 

• An additional 3,000 check-in and conference calls conducted with recipients to monitor 

progress in achieving outcomes (over 6,000 total to date). This is the primary means of 

identifYing and proactively addressing project issues such as milestone deviations, cost 

overruns, local approval or equipment delivery delays, and management challenges; 

• Continued site visits (NTIA has now visited projects representing a total of 94 percent of 

program funds); 

• Webinars and drop-in calls for awardees to provide guidance and share lessons learned 

on a variety of topics, including sustainability planning, mobile technology in schools, 

regional interconnection among recipients, and providing services to veterans; 

• Four new fact sheets on sale/lease restrictions, Indefeasible Rights-of-Use, fiber swaps, 

and clarifying match documentation;5 

• Monthly recipient newsletters published and as-needed emails generated regarding 

training, lessons learned, project closeout and answers to frequently asked questions. 

b. Acting Early to Address Issues that Arise 

A primary goal ofNTIA's rigorous outreach, oversight, and monitoring is to proactively 

identifY issues as early in the process as possible and resolve them promptly. NTIA utilizes tools 

such as technical assistance, Performance Improvement Plans (PIPs), Corrective Action Plans 

5 These facl sheets are available at http://w\\w2.nlia.doc.Qov/ManagemenIResources. 

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(CAPs), Award Suspension, or Award Termination to highlight concerns, provide opportunities 

for recipients to get back on track, and protect taxpayer investments. We use these tools and 

technical assistance to get projects back on track as quickly as possible. 

NTlA has suspended nine BTOP grant recipients for performance related issues at one 

point or another during the program. 6 In four cases, totaling approximately $229 million in grant 

funds, we were able to work with the recipients to get the projects back in shape and lift the 

suspensions after the grantees addressed our concerns. As a result, the projects are stronger, 

more successful, and more responsible stewards of taxpayer dollars due to our interventions. 

The North Florida Broadband Authority wireless infrastructure project offers a prime example of 

where NTIA's oversight and technical assistance successfully enabled a project to get back on 

track after encountering initial obstacles that hindered its performance. Our oversight efforts 

identified concerns regarding project management, vendor oversight, and ongoing sustainability. 

We froze distribution of federal funds to the project for a month beginning in September 2011, 

helped the awardee navigate through the Corrective Action Plan process, conducted several site 

visits, and provided extensive technical assistance to the grantee. NTlA lifted the project 

suspension about a month later, after the recipient implemented management and vendor 

changes. Now, about a year later, the North Florida Broadband Authority project is nearing 

completion and benefiting dozens of communities in rural North Florida. 

6 This number does not include the seven public safety BTOP grants that were partially suspended May 2012 

following enactment of the law creating the First Responder Network Authority (FirstNet). Passage ofthe Middle 

Class Tax Relief and Job Creation Act of2012 last February created FirstNet to build, deploy, and operate a 

nationwide public safety broadband network. As a result, NTIA partially suspended seven BTOP 700 MHz public 

safety projects to avoid activities that might lead to added costs or stranded investments. Once appointed in August 

2012, the FirstNet Board quickly engaged. spoke with the BTOP awardees and their vendors, and conducted site 

visits of each projcct. On February 12,2013, the FirstNet Board adopted a resolution determining that the seven 

projects could provide substantial benciits to FirstNet. See http://www.ntia.doc.gov/press-rclcasc/2013ltirstnctboard-charts-path-rorward-btop-public-safet)::Illi~t; .. NTIA will act expeditiously to lift thc partial suspensions 

upon recciving notification that each awardee has reached agreement with FirstNet on the terms and conditions of its 

spectrum lease and each project details a reasonable path forward. 

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Three broadband infrastructure projects are currently suspended for performance-related 

issues, representing $158.9 million of taxpayer funds. NTlA staffis working closely with these 

recipients, and we are hopeful that they will get their projects back on track so NTlA can lift the 

suspensions and the communities they target can receive the benefits promised by the projects. 

c. Acting Decisively to Protect Taxpaver Funds When Projects Fail 

In many cases, recipients get their projects back on track. For two projects, however, 

NTIA's strong oversight led to termination of their awards with minimal expenditure of public 

funds. In each case, NTlA stepped in and took action quickly once it had identified concerns. 

Among the first actions NTlA takes in such circumstances is to prevent awardees from further 

drawing down federal funds until our concerns are adequately addressed. In these two cases, 

NTlA took action to terminate grants to recipients that materially failed to comply with the terms 

and conditions of their awards. In the case of project tennination, we maximize the amount of 

funds returned by taking actions such as carefully reviewing costs incurred, securing property 

and equipment related to the project, and seeking to repurpose or sell any equipment purchased 

with federal funds. The two terminated projects were awarded approximately $139 million and 

have expended approximately $ 11 million, representing less than 0.3 percent ofthe total grant 

dollars awarded under BTOP. While I am disappointed that these particular projects will not 

deliver their intended benefits to unserved and underserved areas, these experiences underscore 

the importance and value of NT lA's strong federal oversight and monitoring of its broadband 

projects, and highlight its commitment to working closely and proactively with all recipients to 

ensure the success of the program as a whole. 

In addition, seven other awards were voluntarily terminated by the grantee early in the 

program. Just one of these seven grantees drew down any federal dollars from its account, which 

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amounted to approximately $36,000, and the remaining approximately $44 million in federal 

funds were returned to NTiA. 

d. Collaborating with the Inspector General 

NTiA has worked closely with the Department of Commerce's Office ofInspector 

General (OlG) since the broadband grant programs began. Our shared goal has been to prevent 

waste, fraud, and abuse oftaxpayer dollars by implementing these programs in the most 

responsible and efficient manner possible. The 01G has issued several reports that have 

provided valuable input to strengthen our oversight, identify lessons learned for the future, and 

ultimately demonstrate that we have managed our broadband programs with the highest degree 

of responsibility, efficiency, and vigor possible for a program of this size, scope, and speed of 

implementation. 

e. Program Close-Out 

As we approach the end of Fiscal Year 2013, NTiA is focused on ensuring that the 

broadband grants deliver on their promises on time. To date, four projects have completely 

closed out, meaning that the grantees have reconciled all project finances, submitted final 

reports, and the government has a full accounting of the property paid for with taxpayer funds. 

Approximately 30 more projects are in what we call the "closeout phase," meaning that they are 

in the process of submitting their final grant paperwork. These projects will return over $10 

million in project savings. 

Once projects close, the federal government maintains an interest in real and personal 

property acquired or improved using federal funds. 7 Recipients and subrecipients of broadband 

grants hold all property acquired or improved, in whole or in part, with federal funds in trust for 

the public purposes for which the grant was made. This exists throughout the duration of the 

7 See 15 C.F.R. §§ 14.30-37 and 24.31-34. 

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useful life of the property. 8 During its useful life, awardees must obtain approval from the 

Department of Commerce prior to selling or leasing the federally-funded property or using the 

property for a different purpose than intended. These requirements ensure that the assets the 

recipients acquired for their broadband projects continue to deliver their promised benefits long 

after NTIA closes out the awards. 

We expect the majority of remaining projects to be complete by the end of Fiscal Year 

2013. Approximately 15 percent of the BTOP projects may require additional time to complete 

their work due to delays caused by weather, environmental and historic preservation approvals, 

permitting, the statutory creation of the First Responder Network Authority, and other factors. 

Despite these delays, NTIA is focused on moving these projects forward quickly to deliver the 

intended benefits to the nation. 

f Sharing Lessons Learned 

Because BTOP is a one-time program, NTIA is committed to leveraging these 

investments to the maximum extent possible. One way we will do that is by sharing successful 

strategies across the grant portfolio on issues ranging from procuring fiber to streamlining the 

environmental review process. In September 20 I 0, NTIA contracted with ASR Analytics, LLC 

(ASR) to conduct an evaluation of the program's economic and social impacts. The study will 

assess the degree to which NTIA has met the Recovery Act goals by measuring the short- and 

long-term economic gains in the grant-funded communities. ASR has already submitted an 

Interim Report summarizing results of its analysis of public computer center and broadband 

adoption recipients, and will deliver its Final Report, including analysis ofthe broadband 

8 More information on the useful life of property is available at 

http://wmv2.ntia.doc.gov/files!fltct sheet useful life schedule 082510 v I.pdf. 

14 
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80019.015

infrastructure projects, in 2014,9 The initial findings confirm that NTIA's broadband 

investments have already begun to demonstrate a meaningful and positive impact in their 

communities by training at-risk populations with the skills essential for today's economy. 

Furthermore, the broadband adoption projects are identifying best practices to overcome 

hurdles in advancing broadband adoption in the United States. NTIA is finalizing a Sustainable 

Broadband Adoption Toolkit that will provide detailed guidance for replicating the success of 

these broadband adoption projects and utilizing the lessons learned. The Broadband Adoption 

Toolkit harvests the innovations of our sustainable broadband adoption projects. It lays out the 

steps for effective broadband adoption efforts and provides concrete, field-tested approaches to 

leaping the barriers to adoption - such as lack of skills, lack of understanding, and plain old 

fear. Many of our grantees contributed their detailed and specialized knowledge about what 

works on the ground, and we will include information that covers outreach, awareness-building, 

training, curriculum, and making broadband affordable to low-income Americans. The Toolkit 

contains a wealth of information on good project ideas, incentivizing target audiences, and 

avoiding common pitfalls. We are hopeful that the Toolkit will help communities throughout the 

United States develop tailored adoption programs to help more Americans harness the power of 

broadband technology to improve their lives. 

IV. Conclusion 

Four years after passage of the Recovery Act, the record is clear that the more than 220 

BTOP projects and 56 SBI projects funded through NTIA's broadband programs are delivering 

9 See Progress towards BTOP Goals: Interim Report on PCC and SBA Case Studies, available at 

http://\\'\\'\\I .ntia.doc.go,,/report!20 12/proQ.ress-tO\\<ards-htoD-goal s-i nteri m-report-pcc-and-sba-case-studies. 

15 
27 


80019.016

economical, tangible, and extremely valuable benefits to communities and individuals 

nationwide. 

Thank you. 

16 
28 

Mr. WALDEN. Thank you, Mr. Strickling. 

We will now go to Mr. John Padalino, the Acting Administrator, 

Rural Utility Service. We welcome you here and look forward to 

your testimony. 

STATEMENT OF JOHN PADALINO 

Mr. PADALINO. Thank you, Mr. Chairman. And Mr. Chairman, 

Ranking Member Eshoo, and members of the subcommittee, thank 

you for the opportunity to testify on the U.S. Department of Agriculture’s Broadband Initiative Program, or BIP, and the progress 

of the Rural Utility Service broadband investments under the 

American Recovery and Reinvestment Act of 2009. 

Because access to affordable broadband is crucial for economic 

development, the Rural Utility Service remains focused on the Recovery Act projects. We continue to work to expedite delivery of affordable, robust broadband service. Broadband creates jobs when 

projects are planned and built, adds jobs when these projects become operational, and again as communities continue economic expansion. 

The Rural Utility Service leveraged its budget authority appropriated by the Recovery Act to make grants, loans, and loan/grant 

combination awards to 320 projects totaling $3.5 billion. The agency targeted grant funds to the most rural areas and to those in 

greatest need of service. The Rural Utility Service also leveraged 

grant dollars with additional private investments in broadband infrastructure projects to help communities gain sufficient access to 

high-speed broadband service, to facilitate rural economic development as directed by the Recovery Act statute. 

Rural broadband systems may take 5 years to build out. All of 

our U.S. projects must comply with federal and state environmental, historic preservation, and in some cases, tribal or intergovernmental reviews that can require significant consultation with 

the public prior to receiving loan and/or grant funds. To ensure recipients comply with the broadband program’s requirements, including the budget and network system design submitted during 

the application process, the Rural Utility Service technical and financial staff review requests for funding advances and continue to 

provide technical and financial oversight throughout the project’s 

life and beyond. Our rigorous project oversight has led to the rescission of 38 Recovery Act awards and nearly $266 million returned to the U.S. Treasury. 

Under the Recovery Act, contracts signed by awardees require 

that all loan grant funds must be advanced by September 30, 2015. 

Funds not advanced will be rescinded and returned to the U.S. 

Treasury. The Rural Utility Service and senior USDA officials have 

repeatedly encouraged awardees to complete Recovery Act projects 

as quickly as possible. Our 19 technical assistance awards have 

been fully disbursed. The Satellite Broadband Program has now 

dispersed 86 percent of its $100 million to date. 

Infrastructure projects continue to progress. Over 98 percent of 

the projects have drawn funds. The Rural Utility Service continues 

to closely oversee and work with the few awardees that have not 

yet drawn down funds. 

29 

Since 1949, the Agency has played an important role in financing 

rural telecommunications. Our current rural broadband expansion 

efforts were initiated through the Rural Utility Service Telecommunications Infrastructure Loan Program, which has required 

that financed projects be broadband-capable since 1995. The 2002 

Farm Bill authorized the Rural Broadband Loan Program, which 

has provided broadband service to more than half a million rural 

subscribers. And the community connect grants are available to 

areas completely lacking broadband service. 

For this reason, the Recovery Act gave priority in funding to 

RUS infrastructure borrowers. For example, Baca Valley Telephone 

Company in New Mexico received their first loan in 1979. Today, 

Baca Valley Telephone Company covers over 2,600 square miles 

providing rural residential and cellular service, local internet access, business telephone and security systems, and network cabling 

throughout northeastern New Mexico and southeastern Colorado. 

Baca Telephone received Recovery Act funding to provide fiber 

optic connectivity and deploy a last mile access system, to provide 

broadband services to households and businesses in the northeast 

area of New Mexico. 

Now fully operational, contract savings allowed the project to expand into unserved areas and provide a solid framework for future 

needs. In Oregon, the Confederated Tribes of Warm Springs received an award for a broadband network on the reservation to improve public safety, enhance educational opportunities, and allow 

access to medical professionals on the reservation. The new network continues to assist employment growth as community members start online, home-based businesses. 

With a combined loan portfolio of over $6 billion, the Rural Utility Service Telecommunications Programs help deliver affordable, 

reliable, advanced telecommunication services critical to the future 

prosperity of rural communities. 

Despite Rule Utility Service investment, rural areas lag urban 

and suburban areas in broadband deployment. The RUS continues 

to address challenges to bring broadband to rural communities, yet 

we remain concerned over the impacts slow broadband investment 

may have on rural economies. 

Mr. Chairman, I thank the Committee and its members for its 

continued interest in the Recovery Act and other Rural Utility 

Service broadband programs. 

[The prepared statement of Mr. Padalino follows:] 

30 


80019.017

Statement of John Padalino 

Administrator, Rural Utilities Service 

United States Department of Agriculture 

House Energy and Commerce Subcommittee on Communications and Technology 

Wednesday, February 2ib

, 2013 

Chainnan Walden, Ranking Member Eshoo, and members of this Subcommittee, thank you for 

the opportunity to testify on the U.S. Department of Agriculture's Broadband Initiatives Program 

(BIP) and the progress on the Rural Utilities Service (RUS) broadband investments under the 

American Recovery and Reinvestment Act of2009 (Recovery Act). 

Among the goals of Congress and this Administration is to increase the number of rural 

Americans with access to robust broadband service. Broadband has already diminished the 

barriers of distance and increased web-based business and services, helping strengthen rural 

economies. Continued investment in broadband infrastructure will allow rural areas to take full 

advantage of the same speed and efficiency that the Internet delivers to nonrural areas. 

Because access to affordable broadband is crucial for economic development, RUS remains 

focused on Recovery Act projects. We continue to work to expedite delivery of affordable, 

robust broadband service through this program. 

Infrastructure investment has been a cornerstone ofthis Administration's economic recovery 

strategy. Broadband creates jobs when projects are planned and built, adds jobs when these 

1 
31 


80019.018

projects become operational, and continues to contribute to job growth as these services are used 

by communities to spur further economic expansion. 

To maximize the level of funds available for broadband projects, the agency leveraged its budget 

authority appropriated by the Recovery Act to make grants, loans, and loan/grant combination 

awards. In total for the broadband program, over $2.33 billion in grants and $1.19 billion in 

loans were made to 320 projects, totaling over $3.5 billion. Of those original 320 projects, 297 

were for infrastructure, 4 for satellite broadband service support, and 19 for technical assistance, 

the majority of which went to tribal communities. 

RUS targeted grant funds to areas in the greatest need of service and the most rural. RUS also 

leveraged grant dollars with additional private investments in broadband infrastructure projects 

to help communities gain "sufficient access to high speed broadband service to facilitate rural 

economic development," as directed by the Recovery Act. 

RUS BlP investments will bring broadband access to nearly 7 million rural Americans, along 

with more than 360,000 businesses and critical community facilities, such as schools, healthcare 

facilities, and rural public safety agencies. These projects will span more than 300,000 square 

miles in 45 states and I U.S. territory. These projects also overlap with 31 tribal lands and 125 

persistent poverty counties, and are estimated to create more than 25,000 immediate and direct 

jobs for rural workers in a variety of industries. 

2 
32 


80019.019

Rural broadband systems, which are large infrastructure projects, may take as many as five years 

to build out. All RUS projects must comply with federal and state environmental, historic 

preservation and in some cases tribal or intergovernmental reviews that can require significant 

consultation with the public prior to receiving loan and/or grant funds. Also the RUS worked 

closely with Federal and state partners to complete required reviews and to address regulatory or 

processing issues. RUS technical and financial oversight continues throughout the project's life 

and beyond. 

To ensure recipients comply with the BIP requirements, including the budget and network 

system design submitted during the application process, RUS technical and financial staff review 

requests for funding advances and continue to provide technical and financial oversight 

throughout the project's life and beyond. Our rigorous project oversight has led to the 

rescission of 38 Recovery Act awards. As a result, nearly $266 million has been returned to the 

Treasury. 

Under the Recovery Act, contracts signed by awardees require that all loan or grant funds must 

be advanced by September 30, 2015. Funds not advanced will be rescinded by RUS and 

returned to the U.S. Treasury. However, in light of the current economic climate and the urgent 

need to put Americans back to work, in September of2011, the President directed Federal 

agencies to take steps to complete all Recovery Act projects .. RUS and senior USDA officials 

have repeatedly encouraged awardees to complete Recovery Act projects as quickly as possible. 

RUS field employees continue to vigorously monitor the progress of construction and 

3 
33 


80019.020

compliance of the projects. Projects are progressing well and within the Department's 

expectations. 

All 19 Technical Assistance awards have been fully disbursed. 

The $100 million satellite broadband program has now disbursed 86 percent of its funds to date 

to the tour satellite awardees. 

Infrastructure projects, many of them large and complex, continue to progress and offer more 

rural residential and business consumers access to broadband service. Of these, 116 projects, 

representing $1.5 billion in funding, are partially operational or have been completed. About 

$2.6 billion of construction for projects has been completed or is actively being worked 

on. Because recipients generally determine the timing of the loan or grant advances, the pace of 

construction continues to exceed the pace of reim bursement. 

Loan or grant funds have been drawn in 98.4 percent of these projects, representing 

approximately 98.2 percent of the funding. RUS continues to closely oversee the few projects 

that have not yet advanced far enough to draw funds and is working with these awardees, Federal 

partners, and government entities to address issues affecting completion of these projects. RUS 

will work to ensure that projects remain viable. Our goal is to make each award a success. 

4 
34 


80019.021

Determining the financial feasibility and sustainability of the proposed service territory continues 

to remain a significant challenge in funding broadband construction in unserved rural areas. It is 

important to ensure the availability of sufficient revenue from all sources to make projects 

successful in accelerating broadband service to underserved areas of the country. RUS has 

played an important role in financing rural telecommunications since 1949. Our current rural 

broadband expansion efforts were initiated through RUS' telecommunications programs, 

including the Telecommunications Infrastructure Loan Program, the Rural Broadband Loan 

Program and the Community Connect Program. The traditional Telecommunications 

Infrastructure Loan program, authorized in 1949 under Titles II and III of the Rural 

Electrification Act (REA), was created to ensure rural areas had access to reliable and affordable 

telecommunications systems. Beginning in 1995, RUS required that telecommunications 

infrastructure financed be broadband-capable to facilitate business, educational, and medical 

service needs. Since 2009, this program has provided broadband service to more than half a 

million rural subscribers. For this reason, the Recovery Act gave priority in funding to REA 

Title II borrowers. 

The Rural Broadband Loan Program, first authorized under the 2002 Farm Bill and revised by 

the 2008 Farm Bill, has provided broadband loans to independent telephone companies, cable 

companies, and wireless broadband service providers. Community Connect grants are available 

to areas completely lacking broadband service. The funds are used to build broadband 

infrastructure, and awardees are required to establish community centers that offer free public 

access to broadband. 

5 
35 


80019.022

These programs, with a combined loan portfolio of over $6 billion, help deliver affordable, 

reliable advanced telecommunications services critical to the future prosperity of rural 

communities. 

Despite this investment, recent surveys and studies indicate that in general, rural areas remain 

behind urban and suburban areas in broadband deployment. The Federal Communications 

Commission (FCC) noted in its Eighth Broadband Progress Report that 14.5 million rural 

Americans living in 6.5 million households - nearly one-fourth of the rural population -lack 

access to robust broadband service. This digital divide is most exacerbated along racial and 

ethnic lines. The FCC estimated that it will cost $23.5 billion to make broadband available to 

those homes currently without access. 

Since this data was released, the pace of rural broadband investment has slowed, although the 

need for rural broadband service remains high. We continue to address the challenges in 

bringing broadband to rural communities. Solutions to difficult terrain, sparse population, low 

income levels, limited access to a skilled workforce, and issues surrounding the long term 

financial feasibility of small rural systems are not easy to develop. 

RUS also continues to work to expand broadband connectivity and capacity, and to extend 

service to the millions of rural Americans still lacking affordable access to the Internet. 

Infrastructure investment offers returns-building, deploying, and using broadband increases 

access to health care and education, expanded markets for business, and jobs. 

6 
36 


80019.023

I thank the Committee and its members for its continued interest in the Recovery Act and other 

RUS broadband programs. 

7 
37 

Mr. WALDEN. Mr. Padalino, thank you. And Mr. Strickling, thank 

you for your testimony. 

I request unanimous consent to submit for the record the Ars 

Technica story about allegations West Virginia wasted millions of 

dollars putting enterprise-grade routers in small libraries like the 

one that I held up the picture for earlier. 

Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. WALDEN. Assistant Secretary Strickling, the West Virginia 

auditor concluded, ‘‘The decision to spend the federal funds on oversized routers resulted in millions of dollars in federal funds not 

being spent on expanding the states fiber-optic broadband network.’’ The auditor said that ‘‘A capacity and a user’s need survey 

prior to the procurement of the routers would have determined the 

appropriate router size, but such surveys were not conducted.’’ The 

Commerce IG’s report also concluded that West Virginia overspent, 

noting that West Virginia ‘‘did not perform a study to determine 

which size router would most effectively and efficiently meet its 

needs.’’ 

Did the NTIA require any kind of site assessment or use-case 

analysis before approving a grant or authorizing the purchase? And 

if not, should it have? And will you do so going forward? Are you 

reviewing any other grants with questionable purchases? And how 

are you monitoring these grant recipients to prevent this from happening again? 

As you know this came up in a hearing we had back in May—— 

Mr. STRICKLING. Yes. 

Mr. WALDEN [continuing]. and we sparred back and forth about 

this very situation. And so it is a matter of keen interest to me and 

this subcommittee. 

Mr. STRICKLING. Yes, sir. Well, to answer the second part of your 

question, as you know, we don’t have any more grant dollars to be 

giving out. So the issue of what we would do in terms of looking 

at a new application is a moot question because we are not in the 

business of giving out any new money. Now, with respect to these 

findings in West Virginia, I have had a chance to look over the 

auditor’s report and I am certainly familiar with the Inspector General’s report at the Department of Commerce. I think it is not at 

all clear from those reports that what West Virginia did was unreasonable in terms of its choice of a platform, a single platform, the 

Cisco router, at the time they made it. 

And I think part of the confusion we are having here, and it is 

reflected in the articles about this project, is we are confusing cost 

with capability. There is no question that the routers that West 

Virginia chose through its process that it used are providing superior capabilities. And there is no doubt that there are places in 

West Virginia that if those routers are installed, they are going to 

have far more capability than one would expect they would need 

now and probably in the next 10 years. But what West Virginia did 

was they were looking in terms of, how do we do this in the futureproof way? 

Because the question we have here is not what do you need 

today to serve these facilities? What do we need for the next 10 

years? 

38 

Mr. WALDEN. Mr. Strickling, with all due respect, hold up that 

library. The Market Public Library is open Thursdays—what does 

is it say here—Thursdays, Fridays, and Saturdays—in a singlewide trailer with one internet connection. Do you really think that 

is going to build out to where they have the need for a couple hundred internet connection router in a community of 1,500? 

Mr. STRICKLING. I don’t know, Mr. Chairman. But I do know that 

that community has plans to build a 5500 square foot library to replace the temporary one that is in your picture. So—— 

Mr. WALDEN. A 5,500 square foot library in a town of 1,500 needs a $20,000 router? 

Mr. STRICKLING. Well, sir, the $20,000 is a list price and I am 

not in any way suggesting that every one of these locations in West 

Virginia will make full use of these capabilities. But it still comes 

back to the cost question. The question is, how did they waste 

money if they wasted money? And the fact is that the financial 

analysis of this shows that the prices that were paid in the aggregate by West Virginia are pretty close to what they would have 

paid under an alternative model. 

Mr. WALDEN. So you have read the audit from the West Virginia. 

Mr. STRICKLING. Our Inspector General did a review of this 

project and said that if you assume that they would have gotten 

the same level of discount on the lower-class router and if they had 

gotten 100 free routers, there might have been a savings of 2 to 5 

percent—— 

Mr. WALDEN. Mr. Strickling—— 

Mr. STRICKLING [continuing]. but our Inspector General finally 

just finished, Mr. Chairman, concluded that if either of those assumptions wasn’t true, if in fact they couldn’t get the 100 free routers, then the cost would have been a wash. 

Mr. WALDEN. So you are happy with the outcome in West Virginia is what I hear you defending. Is that correct? 

Mr. STRICKLING. I am saying—— 

Mr. WALDEN. You believe that what they did is accurate and a 

good use of taxpayer money? Have you read the West Virginia 

audit itself? The IG didn’t dig as the as the West Virginia auditor 

did. 

Mr. STRICKLING. The West Virginia auditor used list prices. They 

didn’t use the actual prices—— 

Mr. WALDEN. And they identify that there was no competitive 

that process—just a moment, sir. 

Mr. STRICKLING. Sir—— 

Mr. WALDEN. Did they use a competitive bidding process in West 

Virginia in accordance with their statutes? No, they did not according to the auditor. Correct? 

Mr. STRICKLING. Well, I think we need to hear from the State on 

that. My understanding is they use a process that they have used 

in the past in terms of the—— 

Mr. WALDEN. I don’t believe that is true. I don’t believe that is 

true at all. Have you read the West Virginia audit? 

Mr. STRICKLING. I have, sir. But I am telling you that it—— 

Mr. WALDEN. That clearly identifies the problem and the waste 

here and calls for future investigations? 

Mr. STRICKLING. It used list prices, not the actual prices. 

39 

Mr. WALDEN. So you are oK with this little single-wide trailer having a $15 or $20,000—— 

Mr. STRICKLING. That is not what I said, Mr. Chairman. 

Mr. WALDEN. But I believe it is. 

Mr. STRICKLING. I have indicated to you that what we are talking 

about is the decision of West Virginia to make—— 

Mr. WALDEN. We are talking millions and millions of dollars 

being wasted here that we don’t have that I expect you to go after 

if they have been wasted in West Virginia to give back to us. 

Mr. STRICKLING. That is my point, sir. There is no real showing 

of wasted dollars expended here. 

Mr. WALDEN. Wow. 

Mr. STRICKLING. Look at our IG’s report. 

Mr. WALDEN. I have. 

Mr. STRICKLING. Our IG concluded a possible 2 to 5 percent savings had they used different routers if they would have gotten 100 

free routers, which they got by buying the higher-capacity gear and 

if they had gotten the same level of discount. If they wouldn’t have 

gotten the free routers, the price of buying the lower capable routers would have been the same as what they bought. So that is 

what we are confusing here, Mr. Chairman. We are confusing the 

capabilities of what they are getting with the cost that they paid. 

Mr. WALDEN. Well, it is interesting that we have gotten a letter 

from the Chief of Staff of the Governor asking for all kinds of flexibility now going forward to deal with this issue of routers that have 

overcapacity. 

My time has expired. I recognize the gentlelady from California. 

Ms. ESHOO. Thank you, Mr. Chairman. I think that if this little 

town—wherever it is in West Virginia—had their 5,500 square foot 

library built with not only capacity for today but capacity for the 

future that was purchased that we wouldn’t be having this discussion. It is the shed that doesn’t look good. Because when you look 

at what is going on, I mean you don’t just buy something with capacity for today. You shortchange yourself. And there is—if you 

want to get into the weeds, and it is important to—that the pricing 

of these routers are very important. 

Now, just for the record, I have spoken to some of the companies 

that are a part of this. Well, first of all, Cisco did not write up the 

order. They responded to the customer and sold them what they 

asked for. Number two, if there is any kind of shadow over these 

dollars, Cisco is willing to refund the federal program. I don’t think 

that is going to be the case, but nonetheless, I think it is important 

to state that. 

Now, the GAO recently raised concerns about the quality of the 

data being collected by BTOP and BIP. Have your agencies taken 

any action to respond to the GAO’s recommendations? You want to 

be brief because I have got a lot of questions to ask. 

Mr. STRICKLING. In fact there weren’t any recommendations—— 

Ms. ESHOO. There weren’t? 

Mr. STRICKLING [continuing]. directed at us. In fact they used us, 

I think, as a model of a good way to collect data. They did—— 

Ms. ESHOO. Terrific. 

Mr. STRICKLING. They did raise some questions about how they 

collected data. 

40 

Ms. ESHOO. I hope all of the members are listing to this. I mean 

we have a tendency to insulate ourselves from any kind of good 

news. 

Mr. Padalino? 

Mr. PADALINO. Yes, the recommendation in the GAO audit was 

directed at the Rural Utility Service and the Broadband Initiative 

Program. 

Ms. ESHOO. So what are you doing with it? 

Mr. PADALINO. At the time the audit was published, we had at 

that point developed a dashboard and required project-by-project 

reporting so that we could—— 

Ms. ESHOO. I don’t know what that means. What are you doing 

with it? 

Mr. PADALINO. Well, what we are now collecting is the data similar to what NTIA is collecting as far as network miles, wireless access points, number of—— 

Ms. ESHOO. When are you going to finish with your absorption 

of that and what you are going to do with recommendations? 

Mr. PADALINO. We plan to try to make that data publicly available. 

Ms. ESHOO. But don’t try. You need to. You just need to do it. 

Mr. PADALINO. Yes, ma’am. 

Ms. ESHOO. Try is not good enough. OK? Really. We are in the 

public business, all right, or the business of the public. 

Now, the RUS has been, I think, less than forthcoming than 

NTIA about publicly reporting on the progress of your grantees. So 

what are you doing to make sure or ensure that the public has access to information where BIP projects are building and whether 

they are on track to meet their milestones? 

Mr. PADALINO. One of the first things we do even before an 

award is made is have each of the applicants go out for public comment. And they notify the public that they are seeking RUS funds. 

And the public has an opportunity to comment on that application. 

Afterwards, as I said, we developed a dashboard so we are—— 

Ms. ESHOO. But my question is about the progress of the grantees. You are talking about who is bidding and the public knows 

that Company A, Company B, Company C. That is not what I 

asked you. 

Mr. PADALINO. Earlier this year, we had a webinar with all of 

the Broadband Initiative Program awardees, and the very same 

question was asked of how we can make this information available. 

We are working to get that information available online so we can 

report on the progress of our projects. 

Ms. ESHOO. Yes, I mean the public needs to know, and in a very 

clear way, how they can track the progress of this. That is essentially what the hearing is about. All right? And it is very important 

that you do that. 

At the Subcommittee’s last hearing on BTOP and BIP in May of 

last year, USDA’s Deputy Inspector General identified that the IG 

had begun an audit of the BIP application process. And he estimated that the audit would be complete in September of last year 

and that a second phase examining the post-award process would 

be completed by December of last year. Has either of these audits 

been released? 

41 

Mr. PADALINO. Those audits have not been released yet. 

Ms. ESHOO. Why? 

Mr. PADALINO. I am not sure. 

Ms. ESHOO. Do you know? 

Mr. PADALINO. We could look to the Inspector General’s office to 

ask why. I think they will be coming out shortly, and when they 

are publicly available, we would be happy to discuss it with you. 

Ms. ESHOO. Well, if they are publicly available, then we will get 

them, too. Let me ask you this. Are you pressing them for it? 

Mr. PADALINO. Yes, we have been working closely with them on 

the audit. 

Ms. ESHOO. Are you? Good. OK. Do you have a timeline of 

when—well, you just said you think it is going to be made available 

publicly shortly. Shortly in government time is what, in the next 

6 months or the next 6 weeks? 

Mr. PADALINO. I think in the next few months. I can’t speak for 

the Inspector General—— 

Ms. ESHOO. I know. It is a guess. It is a guess. 

I just want to also request, Mr. Chairman, while I still have 

some time, that a unanimous consent request that the letter dated 

February 26 from the National Association of Telecommunications 

Officers and Advisors be made part of the record. 

Mr. WALDEN. Without objection. 

[The information appears at the conclusion of the hearing.] 

Ms. ESHOO. Thank you, Mr. Chairman. 

And I would also like the majority to follow up on something that 

was said at the beginning of the hearing, that there is documented 

fraud. And if there is documented fraud, we need to know about 

it. I don’t know, you know, if it is documented, if it is speculative, 

then say if it is speculative and we will look into it. But fraud is 

a heavy charge. Some of these issues, obviously, you can debate 

them. You know, I don’t think the Cisco router look so great in the 

shed. You know, it kind of pulls down, I think, the value of the 

brand. But on the other hand, if there is documented fraud, we 

need to cast a spotlight on that and examine it. 

And with that I yield back. 

Mr. WALDEN. The gentlelady’s time has expired and she yields 

back. 

The Chair recognizes the vice chair of the subcommittee. 

Mr. LATTA. Mr. Chairman, I will yield 2 minutes to you. Thank 

you. 

Mr. WALDEN. I thank the gentleman for yielding. 

I want to go to this point of the West Virginia audit. I will quote 

from the audit, page 29 of the audit. ‘‘The State Office of Technology used a purchasing process which is unauthorized by West 

Virginia statute or legislative rule to purchase 1164 Cisco model 

3945 branch routers at a cost of 24 million on behalf of the Broad 

and Technology Opportunity Program, BTOP, Grant Implementation Team.’’ The Office of Technology used a ‘‘secondary bid process’’ on an existing contract approved by the state purchasing division instead of a competitive bid process open to non-Cisco vendors 

as required by law. 

Now, if you go back to some of the points I was making earlier, 

according to the audit, ‘‘The auditors research, some conclusions 

42 

can be readily drawn. Smaller, less-extensive routers could have 

been purchased for the State’s 172 libraries. If the average cost 

savings was 16,265 less per router, 2.8 million could have been 

saved.’’ Smaller, less-extensive routers, if necessary, could have 

been purchased for the state police for $15,000 less per router saving $1 million more. Several of the State’s public schools are presently able to meet the 2017 broadband standards set by the State 

Educational Technology Directors Association, and in the opinion of 

the legislative auditor, routers significantly smaller than the Cisco 

model 3945 could have been purchased to ensure almost all the 

state schools meet the standards. Purchasing approximately sized 

routers, which could have cost $10,000 less for at least the 368 

schools with enrollment less than 500 which received Cisco 3945 

routers could have achieved the same result for $3.68 million less.’’ 

So these are issues that we are reading in an independent auditor’s report from the State of West Virginia that went much deeper 

than the IG’s report did—are disturbing. 

I yield back to the vice chair. 

Mr. STRICKLING. But if I could just say, Mr. Chairman, they are 

still using list prices. They didn’t focus on the actual discounts that 

were provided. 

Mr. WALDEN. We will look forward to getting the data that you 

have. 

Mr. LATTA. Thank you very much, Mr. Chairman. Reclaiming my 

time. 

Mr. Padalino, if I could ask you, could you explain the criteria 

and application process for the BIP awards, please? 

Mr. PADALINO. When we are reviewing a BIP award application, 

we are looking to see if this is a project that can promote rural economic development and if it is in an area to be served is at least 

75 percent rural. Then, we take a look at the technical and financial feasibility of the project. The project applicant will go out for 

public comment. They will, you know, notify the public that they 

are seeking RUS funding. We will take those comments, we take 

application, and then do the technical and financial feasibility review to see if, based on the totality of the application, if one, if it 

is technically feasible; and two, if it is financially feasible, and basically, can this loan be repaid? 

Mr. LATTA. OK. In your testimony you state that nearly $266 

million were turned back into the Treasury because after you had 

done your oversight there was a rescission of 38 of the Recovery 

Act awards. How long did it take you to find that these 38 awards 

weren’t up to the standards that had been set? 

Mr. PADALINO. We have a rigorous oversight process even after 

the award is made. We continue to work with each and every 

project through the life of the construction and even afterwards. 

We have auditors and field representatives who regularly meet 

with these individual projects as those 38 came—and different reasons. Each one has a slightly different story. As they would come 

up to the Agency, a decision at some point was made that this 

project couldn’t move forward. And maybe in some cases the applicant just decided they did not want to pursue it even after the 

award was made. So those funds were rescinded and returned to 

the Treasury. 

43 

Mr. LATTA. OK. So had the money already been allocated out to 

those 38 or how is that done? 

Mr. PADALINO. The funds had been obligated but they had not 

been—— 

Mr. LATTA. They had been allocated. Let me ask this, too. Now, 

after these award grants have been rescinded, can those organizations, groups, et cetera, come back to you and reapply? 

Mr. PADALINO. They can reapply if they are—well, they can always reapply under the regular programs that we have. I mentioned our Traditional Infrastructure Loan Program and our 

Broadband Loan Program. The Broadband Initiative Program 

money, if those funds are rescinded, go right back to the Treasury 

and are no longer available. 

Mr. LATTA. And so those should be no longer available to those. 

But you are saying they could apply it under another grant? 

Mr. PADALINO. Under another loan program. 

Mr. LATTA. But not under BIP? OK. 

Mr. Chairman, I see that my time has expired and I yield back. 

Mr. WALDEN. The gentleman yields back his time. The Chair now 

recognizes—I think Mr. Doyle is next with Mr. Waxman out of the 

room. So we welcome your comments. 

Mr. DOYLE. Thank you, Mr. Chairman. To both of our witnesses, 

welcome. We appreciate you coming here today to update us on 

these important programs. 

Mr. Chairman, I think BTOP and BIP are programs we should 

be really proud of because they are creating opportunities for our 

constituents to have faster, cheaper internet service. I want to say 

for the record that I am not happy with the direction this hearing 

is taking. I don’t really understand how any of my colleagues can 

argue that providing that better, faster internet and more digital 

literacy training to unserved and underserved areas of this country 

is something we should criticize. Is this program perfect? Of course 

it is not perfect. In the 19 years that I have been here I have yet 

to see the first perfect government program run at this scale. 

If you want to criticize or ask questions about West Virginia or 

Colorado, you have every right to do so. And I support that. What 

you don’t have the right to do is to imply that this program in its 

totality is a waste of government money and hasn’t met its mission. 

Congress passed the Recovery Act mandating the NTIA and RUS 

support programs in unserved and underserved communities, and 

that is what they have been doing. In Pittsburgh, BTOP has funded four public computing centers in low-income neighborhoods. Mr. 

Chairman, I have toured these centers and I have seen firsthand 

what an important service they provide to my constituents who 

don’t have computers or internet access at home or don’t know how 

to use computers. And in Pennsylvania statewide, BTOP is funding 

the construction of a massive middle-mile fiber network called 

PennREN, which will connect anchor institutions including universities, K through 12 schools, libraries, and hospitals to a robust 

internet backbone. Both of these programs are thriving and are on 

track. 

So I think rather than apologizing for these programs, we should 

be proud of them because they are providing real tangible benefits 

to our constituents. 

44 

Gentlemen, I have question for both of you regarding interconnection. As you know, one of the requirements put in place by 

the Recovery Act is the ability for other providers to interconnect 

to BTOP- and BIP-funded facilities on a reasonable and nondiscriminatory rates and terms. Can you share with us whether 

other broadband providers have used interconnection agreements 

to leverage the investment being made by BTOP and BIP? 

Mr. STRICKLING. I will start. And thank you for the question. 

Yes, it has been a fundamental feature of our program from the 

start that we wanted to use this investment to prime the pump for 

additional private sector investment. And as a result, we do have 

interconnection and nondiscrimination obligations that apply to 

any facilities built with federal dollars. It is a very clear standard. 

These dollars come from the public; the public should benefit from 

it. And therefore, the facilities should be open to anyone who wants 

to use them to offer new or improved services to their constituents. 

To date, we have had 600 interconnection agreements signed 

with our various grantees. And what these people are able to do 

then is get cheaper backhaul to internet exchange points, which 

may allow them to better serve homes and residences that they 

want to serve. Our projects, for the most part, do not serve enduser homes and businesses. We do serve anchor institutions, but 

for the most part, we have left it to the private sector to serve 

homes and businesses and we think that is the appropriate way to 

do it. 

What we have done for all those companies, whether they are incumbents or new entrants, is offering them a lower-cost middlemile to get back to the internet exchange points. That cost for 

many of these providers is a barrier to expanding or even entering 

the business. And we have been able to see successes with that by 

virtue of the middle-mile capacity that we offer. 

And I know there has been a lot of comment about overbuild and 

I am sure we will hear more, but I say fundamentally, the construction of middle-mile facilities is not overbuilt in this country. 

The amount of internet usage is expanding at a rate so great that 

we need as much middle-mile as we can get. And in fact, the last 

statistics that I saw is that we expect internet usage to double from 

what we had last year to 2016. In 2011 we had 1 billion devices 

connected to the network. That is projected to be 3 billion in 2016. 

So what our projects are doing is laying these facilities out there 

for anybody to use to help future-proof and improve our opportunities in the global economy by having this capacity available as we 

need it. 

Mr. DOYLE. I agree totally. Mr. Padalino? 

Mr. PADALINO. Thank you, Congressman. 

Where our projects under the Broadband Initiative Program 

focus was on the last mile, the connections to the home. And many 

of our awardees are providing service where there was no service 

available. And so in many cases they are the only provider out 

there. 

We heard a number earlier in the testimony or in the opening 

statements of 19 million Americans who lack access to broadband 

today; 14.5 million of those Americans are in rural America. And 

so what we see in our applications are applications that propose to 

45 

provide broadband to new areas, to areas where there has been no 

service before. 

As Assistant Secretary Strickling mentioned, we are aware of the 

issues of overbuild and we take those issues very seriously and 

work with our federal partners and local borrowers to ensure that 

we are dealing with those issues as they come up. 

Mr. DOYLE. Thank you, Mr. Chairman. I yield back. 

Mr. WALDEN. The gentleman yields back. 

The Chair recognizes the gentleman from Texas, Mr. Barton. 

Mr. BARTON. Thank you, Mr. Chairman. 

I am going to have some technical questions for the record for 

some of the FirstNET or NetOne projects down in Texas I would 

ask unanimous consent that we have those in the written format. 

Mr. WALDEN. Without objection. 

Mr. BARTON. I want to focus on a little bit broader issue. I am 

so glad that Congressman Doyle got to go right before me because 

he gave a very passionate defense of the program and how it is 

helping constituents in his district. And I don’t doubt that for a 

minute. I don’t doubt that for second. If you spend or are obligated 

to spend over $7 billion you darn sure better help somebody. And 

it is good that that some people in Pennsylvania have been helped. 

But I looked at this, and I haven’t focused on the math of the 

program, but we obligated or authorized over $7 billion to be spent 

on these two programs, and it looks to me like we spent about $4.5 

billion. And it looks like for that $4.5 billion, NTIA has provided 

access to about a half a million homes and the RUS, it says, has 

access—it doesn’t say connections—to about 2.8 million. So I don’t 

know how many of those people actually signed up. 

But it looks like per recipient—and the gentleman from RUS 

said that we are not really trying to connect homes; we are trying 

to provide that middle mile and then let the private market do the 

rest of it. And I don’t have a problem with that. But if you looked 

at the end result, it is about $100,000 a home. Now, we could have 

given everyone of Mike Doyle’s constituents $25,000, and I bet they 

would have been able to go out and find some sort of broadband. 

When 220 million Americans have access to broadband in their 

homes and on their iPhones and iPads, 96 percent of the country 

has access in some shape, form, or fashion. It really calls into question why we need the program. It is not that it is a bad program. 

It is not that it is even a wasteful program, but is it a necessary 

program when this weekend we are going to have sequestration 

kick in? It is going to cut $85 billion, and if you believe President 

Obama, the sky is falling. You know, we are borrowing $1.5 trillion a year. We don’t need 

the program. We don’t need it. It is not that it is a bad program. 

It is not that these are bad administrators. These gentlemen look 

to me to be very credible, competent, government servants. I think 

we could have taken at $7 billion, set up some sort of a voucher 

program for people that really needed it, and we would have been 

much better off. 

So here is my question. We spent over 4.5 billion which means 

there is still about 2.5 billion that hasn’t been spent. What would 

be the harm of just rescinding the funding that has not yet in been 

spent saying game over, save the taxpayers $2.5 billion. 

46 

Mr. STRICKLING. Well, first, I wouldn’t be a credible and competent administrator if I didn’t at least ask you about your math. 

How did you arrive at that number? You used the 500,000 number 

for NTIA. 

Mr. BARTON. I just use the numbers provided—— 

Mr. STRICKLING. That is the results of our adoption program. 

That has nothing to do with the infrastructure program. 

Mr. BARTON. Well, it says that NTIA has provided access to 

510,000 homes or something like that or has signed up for it. 

Mr. STRICKLING. No. What we report—— 

Mr. BARTON. That number—— 

Mr. STRICKLING [continuing]. And what was in my testimony was 

the fact that our adoption programs, the digital literacy training, 

the low-cost computers, those programs have reported adding 

500,000 adopters as new subscribers to already existing services. 

Mr. BARTON. Well, give me your number. 

Mr. STRICKLING. We don’t have number for infrastructure 

projects. 

Mr. BARTON. Give me a guess. Give me guess. How many homes? 

Mr. STRICKLING. I don’t know because our focus has been on 

building the middle-mile infrastructure for private industry. 

Mr. BARTON. How much money have you spent? Do you accept the $2.8 billion? Is that a good number? 

Mr. STRICKLING. We have spent 2.8 of the 4.1 we had. But—— 

Mr. BARTON. All right. How many people should be getting serv- ice for $2.8 billion? 

Mr. STRICKLING. But you are misapprehending the focus of our 

program. Our program focused on—— 

Mr. BARTON. I thought it is to serve people in underserved areas? 

Mr. STRICKLING [continuing]. Comprehensive community infrastructure projects where we were extending middle-mile to try to 

bring a gigabit into as many communities as we could to allow private industry—from that, use those facilities to offer improved and 

new services to homes and businesses. We have had 600 interconnection agreements but we don’t have any control over those 

600 companies. 

Mr. BARTON. Well—— 

Mr. STRICKLING. I don’t know what they have actually delivered. 

Mr. BARTON [continuing]. Let me go at it a different way. Do you 

dispute the number that 220 million homes have access to 

broadband and 96 percent of the population has access to 

broadband? Do you dispute that number? 

Mr. STRICKLING. No, sir. Depending again on—— 

Mr. BARTON. So you accept that number? 

Mr. STRICKLING [continuing]. Using a fairly low speed to define 

broadband. But what that ignores is the need—— 

Mr. BARTON. Well, we are using the speed—— 

Mr. STRICKLING [continuing]. Of our anchor institutions. Our 

schools cannot get by with the 3 or 4 megabits per service that 

might work perfectly fine in the home of a, you know, a single family. When we are talking about schools and we are talking about 

libraries and were talking hospitals, we are talking about dozens 

and in some cases hundreds of students or people in the library—— 

Mr. BARTON. But you can’t justify—— 

47 

Mr. STRICKLING [continuing]. Trying to be online the same time. 

Those folks need much—— 

Mr. BARTON. You give me—— 

Mr. STRICKLING [continuing]. Greater bandwidth than what can 

be supplied with 4 megabits per second. 

Mr. BARTON. You give me your number. Don’t accept my number; 

give me your number. 

Mr. STRICKLING. But what I am telling you is that our program 

is attempting to—— 

Mr. BARTON. What have we got for $2.8 billion? 

Mr. STRICKLING [continuing]. Increase the level of broadband capacity in these very important anchor institutions like schools and 

libraries and hospitals and government facilities as a way to then 

serve as anchors for the rest of the community. 

Mr. BARTON. I don’t know the number but I expect—— 

Mr. STRICKLING. I am telling you that your number is only a 

piece of what we are trying to accomplish with this program. 

Mr. BARTON. Except for some very remote rural schools, every 

school in America has access to broadband. It is closer to 100 percent than it is to 70 percent. 

Mr. STRICKLING. But again—— 

Mr. BARTON. It is probably closer to 100 percent than is to 95 

percent. Whatever it is, it is a high number. Do you dispute that? 

Mr. STRICKLING. The technology directors of the schools in this 

country believe that we are in a crisis in terms of getting 

broadband to schools because again 4 megabits per second does not 

meet our need for schools. 

Mr. BARTON. If that is the case, sir, give me the number of the 

schools that don’t have it. 

Mr. STRICKLING. Well, I can—— 

Mr. BARTON. Give us a number. Then, we can have a debate. 

Mr. WALDEN. The gentleman’s time has expired. 

Mr. STRICKLING. Well, I know with our national broadband map, 

when we issued it, we said that only 25 percent of schools at that 

time, 2 years ago, had access to even 25 megabits-per-second 

speeds. The state education technology directors say that today, 

schools of 1,000 students need at least 100 megabit-per-second 

service, and in a couple of years, they are going to need a gigabitper-second service. Very few schools have access to that in this 

country except in those States that have taken the initiative to deliver that kind of statewide network. 

Mr. WALDEN. The gentleman’s time has expired. 

Mr. BARTON. Give us the number. Give us the number. 

Mr. WALDEN. The gentleman’s time has expired. 

The Chair recognizes the gentleman from California, Ms. Matsui 

for 5 minutes. 

Ms. MATSUI. Thank you, Mr. Chairman. 

Let me just say that no program of this magnitude will be perfect. But I do believe that these programs have achieved laudable 

goals, most notably, expanding broadband access to more Americans. 

Now, let me switch to the BTOP program, Secretary Strickling. 

You will be releasing soon a digital literacy toolkit that is to serve 

48 

as best practices for promoting digital literacy. Can you explain the 

reason and goals for such a digital literacy plan? 

Mr. STRICKLING. Yes. As you know, Congress provided us $250 

million for sustainable broadband adoption projects. So we have 

had a number of very exciting and innovative, very creative programs performed around the country in terms of delivering digital 

literacy training to people to provide job skills training, to work on 

providing low-cost computers, finding discounted service. We are 

finding that all of these different elements are required to have an 

effective adoption strategy to get people to subscribe to broadband. 

But we only reached those communities we could reach with the 

$250 million in grants we had. Yet we know this is still a national 

problem. 

As Mr. Barton said, we have got 96 percent availability of 

broadband, but today, only about 68 percent of people subscribe. 

Ms. MATSUI. Yes. 

Mr. STRICKLING. So the toolkit is an effort to get our best practices out to the entire country so that other communities can take 

advantage of what we have learned from the programs we have 

done. 

Ms. MATSUI. Certainly. And I just want you to expand on this, 

too. What do we stand to lose if we leave underserved areas behind? And I am thinking about all underserved areas. Will these 

communities have the same ability to attract economic development and benefit from educational and healthcare opportunities 

that require high bandwidth? 

Mr. STRICKLING. Well—— 

Ms. MATSUI. And I want you to expand on this because anchor 

institutions are important. I have advocated for that previously. 

And I understand what you are saying about not all schools have 

the technology that we believe they should have. So could you expand on all that? 

Mr. STRICKLING. Sure. So in terms of the question of the adoption issue in the underserved areas, yes. There is no question that 

people who have not been able to adopt broadband service are 

going to be left behind in the modern economy. If you don’t know 

how to go online and write a resume and submit a job application, 

you are going to find it hard to get a job. So we have felt that moving that adoption needle from 68 percent up to a higher number 

is critical if we are going to have all of our citizens able to fully 

participate in today’s economy. So we do think it is an area of emphasis. 

The good news is that it doesn’t take a lot of money to expand 

adoption. The bad news is you really need a very comprehensive individualized approach in terms of meeting the needs of individuals 

as they are trying to get over that hurdle of becoming an adopter 

of broadband service. But it is an absolutely important area and 

one in which we want to continue to work in even after the grant 

program is completed. 

Ms. MATSUI. Well, isn’t it true that even though we might say, 

you know, 95 percent of Americans have access to broadband, that 

is not true across the Nation. It depends on where you live. And 

I think that that is a situation where you cannot—it is just apples 

and oranges. And I would like you to explain further about some 

49 

of the differences that occur on, you know—and I would also think 

the other witness can chime in, too—about the difficulties to have 

broadband access across the Nation as a whole so all Americans 

have access. 

Mr. STRICKLING. Right. So we know that businesses look at this 

issue and they determine where to locate a plant and to get new 

jobs. We have several cases through our State Broadband Initiative 

which collects the data for the national broadband map where we 

know businesses have been able to use that data and make decisions only to go into communities that have adequate broadband 

infrastructure. And that is where the jobs are going come. 

Ms. MATSUI. Right. 

Mr. STRICKLING. So if you are a community that doesn’t have 

this, you risk being left behind in terms of when companies are deciding where to locate. 

Mr. MATSUI. Mr. Padalino, would you like to chime in on this, 

too? 

Mr. PADALINO. I would, and thank you. I mentioned earlier of the 

19 million Americans who lack access to broadband, 14.5 million of 

those Americans are in rural America. And we applaud the efforts 

that NTIA has focused on the anchor institutions. And at the Rural 

Utility Service, we also focus on the anchor institutions. But we 

also want to focus on those rural household and rural businesses 

and all the other subscribers out there who can take advantage of 

increased access to broadband. 

Assistant Secretary Strickling mentioned all the benefits that 

can come from that, but in rural America, it is so much more. That 

means a 2- or 3-hour trip to the metro area could be avoided because you can take advantage of a telehealth facility. It means that 

children can take advantage of distance learning opportunities and 

receive educational opportunities that they may not have been able 

to benefit from without having to move from home or take an hourlong drive or 2-hour-long drive to get to that educational facility. 

In addition, in the ag sector where we are seeing a lot of—right 

now, we have tractors that—if they had access to all of the 

broadband technologies that are available—could, on a squaremeter basis, be able to determine the amount of fertilizer, the 

amount of seed, all the different variables that go into keeping our 

ag sector the most prosperous, most abundant, affordable food supply in the world. 

Ms. MATSUI. Well, thank you very much. 

And I see my time has expired. Thank you. 

Mr. WALDEN. Thank you. The gentlelady yields back. 

The chair now recognizes the gentleman from Colorado, Mr. 

Gardner. 

Mr. GARDNER. Thank you, Mr. Chairman. 

And Mr. Padalino, to your response, I mean we are a farm equipment dealership. We sell tractors. We have never once relied on the 

government to provide our GPS signal. That comes from satellites; 

that comes from a tower that we ourselves put up. That is a private sector solution. 

Mr. STRICKLING. I believe, sir, that GPS satellites are government satellites, but—— 

50 

Mr. GARDNER. Mr. Chairman, I would request unanimous consent to submit for the record this New York Times story describing 

how EAGLE-Net used its 100 million BTOP award in Colorado to 

overbuild existing providers, including building a third fiber line to 

an 11-student elementary school that it says it neither needs nor 

wanted. 

Mr. WALDEN. Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. GARDNER. I have several other letters that I would ask to be 

unanimous consent. 

Mr. WALDEN. Without objection. 

Mr. GARDNER. Thank you. Administrator Strickling—— 

Mr. WALDEN. Suspend. I am sorry? 

Mr. GARDNER. Letters from companies in my district and 

throughout Colorado, PC Telecom, C-COM, Blanca, one from—— 

Mr. WALDEN. Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. GARDNER. Thank you, Mr. Chairman. 

Administrator Strickling, Administrator Padalino, at prior 

broadband stimulus oversight hearings, the NTIA and the RUS 

have claimed overbuilding is not occurring. Do you still maintain 

that position? Mr. Strickling? 

Mr. STRICKLING. Sorry? 

Mr. GARDNER. Is overbuilding occurring? 

Mr. STRICKLING. Well, that depends on what you mean by overbuilding. But as I said earlier—— 

Mr. GARDNER. All right. It is just a simple question. Are we overbuilding? Are you laying fiber where existing fiber exists? 

Mr. STRICKLING. That is not necessarily overbuilding as I explained in my previous answer. 

Mr. GARDNER. Are you laying fiber where existing fiber exists? 

Mr. STRICKLING. I am sure that some of our grantees are doing 

that. 

Mr. GARDNER. Has EAGLE–Net in Colorado put fiber in the 

ground where existing fiber exists? 

Mr. STRICKLING. Yes. But that doesn’t tell you whether or not it 

is needed or not. 

Mr. GARDNER. Let me tell you a story about a school in my district. I spoke at a graduation in southeastern Colorado several 

years ago. The graduating class was one. There was one graduating 

senior. That school that had one graduating senior when I spoke 

there has three fiber connections, C–COM, FairPoint and EAGLE– 

Net. Three of them to a school that I spoke to that had one graduating senior. 

I have got a map that I would like to display and it talks about the overbuild that is occurring, $100 million in Colorado. 

Now, the other question I had yesterday at the hearing in Colorado before the Audit Committee with EAGLE–Net, they said that 

a federal—this is EAGLE–Net testifying—that a federal handler 

watches every move we make and are onsite from the beginning. 

Yet their grant was suspended. If there is a federal handler—and 

they identified NTIA—watching every move they make, why after 

several years, after $96 million was committed out of the 100 million, why did NTIA wait so long to suspend the grant? 

51 

Mr. STRICKLING. Well, I am not sure what they mean by a federal handler. We certainly have provided oversight to this project. 

But then to the specific question of the suspension—— 

Mr. GARDNER. Why were they suspended? 

Mr. STRICKLING. They were suspended because they wanted to 

take advantage of the economies of using fiber where originally 

they had proposed using microwave. Now, this is a good change. 

Mr. GARDNER. They blame—— 

Mr. STRICKLING. Because this means that they will be able to 

have greater capacity than they otherwise would have, but by 

doing so, it changes their environmental approval. 

Mr. GARDNER. In testimony before the State Legislature yesterday, they blamed the clay-loving buckwheat in Montrose and the 

Pagosa Springs blooming plant. 

Mr. STRICKLING. Right. So what happens is when you come off 

of the radio towers from microwave and come down to the ground 

for fiber, you now have the potential of passing through areas of 

habitats of endangered species. 

Mr. GARDNER. So if you provided oversight, why were they—and 

the other comments that they made were that they have to get a 

permit from every jurisdiction. Why did they not know about the 

clay-loving buckwheat? 

Mr. STRICKLING. Well, I think it is been discovered as part of the 

process. 

But there are two separate issues here. One is the permitting 

that they need to get whether or not they are federal grantee, but 

as a federal grantee, they also have to get an overall environmental 

assessment. 

Mr. GARDNER. Let me show you a little bit about this. This map 

shows and identifies EAGLE–Net’s current route in pink. The 

green identifies existing routes of CenturyLink. The purple identifies existing routes of businesses represented in this room with the 

Colorado Telecommunications Association. Look at the duplication. 

PC Telecom, a company 60 miles away from my hometown in rural 

Colorado, 100 percent overbuilt by EAGLE–Net. 100 percent 

overbuilt by EAGLE–Net. This is the eastern plains. Yesterday, 

they testified, they said that it is built on the eastern plains first 

because this is the easiest to get to. But that is also why you have 

all of these other companies that have built existing fiber in the 

ground while places on the Western Slope that truly need it because of the mountainous terrain have received nothing. 

Mr. STRICKLING. Well, that is not true. There has been plenty of 

construction on the western part of the State. 

But let us back up a second. The EAGLE–Net project is a statewide educational network—— 

Mr. GARDNER. This is off of Eagle-Net’s Website. I mean this 

is—— 

Mr. STRICKLING. I understand that, sir. But what we are trying 

to accomplish with this project is to improve educational opportunities in the State of Colorado. The fact is that in Colorado only 4 

percent of schools in Colorado are able to get or subscribe to services of greater than 50 megabits per second. You are going to hear 

from—— 

Mr. GARDNER. Let me just interrupt you real quick. 

52 

Mr. STRICKLING [continuing]. Mr. Freddoso at North Carolina 

that his network—— 

Mr. GARDNER. So you are saying that this is not—— 

Mr. STRICKLING [continuing]. A statewide network is able to provide much greater speed. 

Mr. GARDNER [continuing]. Overbuilding; this was all necessary? 

Mr. STRICKLING. It is not true. If you are going to have a statewide—— 

Mr. GARDNER. This is not overbuild? 

Mr. STRICKLING. No, I disagree wholeheartedly. 

Mr. GARDNER. So you are saying that PC Telecom that sent a letter saying that there is 100 percent overbuild isn’t true? 

Mr. STRICKLING. No. 

Mr. GARDNER. You are saying—— 

Mr. STRICKLING. You are missing my point, sir. What I am trying 

to say is that what is trying to be accomplished in EAGLE–Net is 

to figure out why Colorado—and fix the problem that Colorado is 

so far behind the rest of the Nation—— 

Mr. GARDNER. I live in rural Colorado—— 

Mr. STRICKLING [continuing]. In terms of broadband at schools. 

This has to be accomplished through statewide network. 

Mr. GARDNER. I live in a town of 3,500 people 30 miles away 

from the border of Kansas. 

Mr. STRICKLING. I am sorry? 

Mr. GARDNER. I live 30 miles away from the border of Kansas, 

a town of 3,000 people. I have high-speed DSL. I have 4G connections. I have an incredible—I have two, three other high-speed 

internet connections that I can choose from. My daughter goes to 

school there. I have never once heard them come to me saying we 

don’t have the internet that is necessary for our kids to learn. And 

my daughter goes to school there. Now, this—— 

Mr. STRICKLING. Well, sir, can I put into the record this chart 

that shows that Colorado is behind States like North Carolina? I 

mean your problem is that 4 megabits per second to a school—— 

Mr. GARDNER. Why did EAGLE–Net turn down $20 million? Why did EAGLE–Net turn down the opportunity to use it, $20 million 

worth of technology that a private telecom in Colorado had offered 

them instead of overbuilding? 

Mr. STRICKLING. Well, let us go through the facts here because 

I think—let us take just a moment to go through this. At the time 

at which EAGLE–Net went out to build the eastern part of the 

State they went out on an RFP. And a group of the carriers who 

are now complaining about this put in a bid to deal with this. We 

didn’t hear anything about overbuild at that point in time. 

Mr. GARDNER. They support EAGLE–Net. 

Mr. STRICKLING. But they put in a bid that was hundreds of 

thousands of dollars higher than the lower bidder. 

Mr. GARDNER. Because of absolute miscommunication from 

NTIA. 

Mr. STRICKLING. I disagree. But more importantly most of the 

network. 

Mr. WALDEN. Gentleman. Gentlemen. The gentleman’s time has 

expired. 

Mr. GARDNER. It is actually using existing—— 

53 

Mr. WALDEN. The gentleman’s time has expired. The gentleman’s 

time has expired. 

The Chair recognizes the gentleman from California, Mr. Waxman. 

Mr. WAXMAN. Thank you, Mr. Chairman. I want to move to a different issue if I might, Mr. Strickling. 

Mr. STRICKLING. I have plenty more to say about EAGLE–Net if 

you like to stay there. But—— 

Mr. WAXMAN. Well, if I have any time left, I will let you expand 

on that because you were interrupted many times. 

It is critical that the administration implement the provisions of 

the law that set up the Public Safety Response Program, and your 

agency is tasked with hosting the First Responder Network Authority, also known as FirstNET. 

NTIA has a critical role in ensuring the success of the Public 

Safety Network. In May 2012, NTIA partially suspended funding 

for seven public safety BTOP awardees. And I was encouraged that 

FirstNET recently adopted a resolution that could lead to NTIA 

lifting that partial suspension of these BTOP Public Safety Program funding. 

Can you explain the path forward for the seven public safety 

BTOP awardees? What can we tell cities like Los Angeles—which 

is of particular interest to me—San Francisco and Charlotte, as 

well as States like New Jersey about the likelihood of retaining 

their BTOP grants, and how quickly do you expect FirstNET at 

NTIA to make their decisions? 

Mr. STRICKLING. Yes, sir. We suspended the projects a year ago 

because when FirstNET came into being, we wanted to make sure 

FirstNET had an opportunity to evaluate these projects and make 

sure that they would continue to be a prudent use of taxpayer 

money to build out. These projects were originally approved in 2010 

based on a totally different concept about how do public safety 

broadband that was changed in the Middleclass Tax Relief Act last 

year where Congress directed this be done as a single, nationwide 

network. 

So before we spent another dollar on this technology, we wanted 

to make sure what was planned would fit in with FirstNET’s plan. 

So the Board has completed its review. They have visited every one 

of these locations and their initial recommendation is they believe 

all of these projects can add value to the ultimate FirstNET buildout, and they would like to see all of the projects reinstated. They 

intend to spend the next 90 days negotiating the spectrum conditions because each of these localities has to get a spectrum license 

from FirstNET. 

So they are going to negotiate some conditions on that. And if 

they are successful in that, they are then—as I understand it— 

going to recommend to us at NTIA to go ahead and lift the suspensions. And at that point in time when we receive that information, 

it is certainly our hope and intent that we would like to see all 

those projects continue if they are able to negotiate the appropriate 

conditions with FirstNET going forward. 

Mr. WAXMAN. Thank you. I want to go to this West Virginia 

BTOP grant. Did the Inspector General’s review of the grant 

awarded to the Executive Office of the State of West Virginia disVerDate Nov 24 2008 12:33 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-9 CHRIS
54 

cover any fraud? And was the grantee in noncompliance with any 

of the terms of its BTOP grant? 

Mr. STRICKLING. There was no fraud found. The IG certainly 

made some recommendations in terms of inventorying and management of the equipment, all of which West Virginia—as I understand it—has agreed to do and has either done or is the process 

of doing. I don’t know that any of those were findings of noncompliance with grant conditions but they were certainly improvements 

that were appropriate and which the IG was fit to recommend and 

which West Virginia has gone on to implement. 

Mr. WAXMAN. What is the typical application and award-monitoring process for these BTOP grantees? Were those processes followed in the case of the West Virginia BTOP grant? 

Mr. STRICKLING. Yes. 

Mr. WAXMAN. OK. You were asked about overbuilding in areas 

where there is already lines or communication systems set up, in 

this situation in Colorado particularly. Does that mean if they have 

something in place, there is no need for something else to be in 

place? 

Mr. STRICKLING. I think some people would like that to be the 

definition, but that goes back what I said earlier. I don’t believe 

any addition of middle-mile capacity to our Nation’s infrastructure 

should in any way be considered overbuild. And that is the vast, 

vast majority of our projects are spending dollars on. The two 

towns that Congressman Gardner mentioned—at least the two 

towns mentioned in the New York Times article, Agate and 

Flagler—sit right on Interstate 70. Maybe it will become internet 

70. And that is, you know, a major east-west route. This country 

is going to need lots of capacity along that highway to allow—as 

people continue to use more and more wireless devices, as schools, 

as homeowners continue to use more and more bandwidth, we need 

that. 

And the fact is, in 70 percent of the build that EAGLE–Net is 

doing in Colorado, they are using existing facilities to do it. It is 

part of our program that people should do this in the lowest-cost 

manner and use existing facilities where we can. What we have 

here is a group of companies that bid on this project, lost the bid, 

and then we started to hear about overbuilding. 

Mr. WAXMAN. I see. Well, my time is expired and I thank you 

for that response. 

Mr. WALDEN. The gentleman yields back. 

And the chair recognizes the gentleman from Illinois, Mr. 

Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

I guess I have missed some exciting testimony. So I was another 

hearing. So I apologize for being absent. 

Welcome back, Mr. Strickling. Mr. Padalino, welcome. 

And Mr. Strickling, you and I talked about the West Virginia 

case last time. 

Mr. STRICKLING. Right, we have talked about a lot here this 

morning, too. 

Mr. SHIMKUS. Oh, oK. And I am not going to spend a lot of time 

on it, but you did say don’t believe everything you read in the 

55 

newspaper. And after government review and oversight, the reality 

is you can believe what you read in that newspaper article. 

I think the best way to get out of this mess is to just owning up 

to when there is problems and also bragging about the successful 

deployment. And that is where I hope we go because we are going 

to have people on the second panel that actually have been very 

appreciative. But there are also problems. It is oK, you know. We 

are human. We make mistakes. It is oK. So I am sorry about the 

emotionalism, but we are emotive people here. 

Mr. STRICKLING. And actually to your point, Congressman, if I 

could just add, there are steps underway to do just that in West 

Virginia. 

Mr. SHIMKUS. Excellent. 

Mr. STRICKLING. We sent a letter to them after our IG issued a 

report and asked them to do another look at their long-term capacity requirements, and I understand that—— 

Mr. SHIMKUS. Well, that is a great segue—— 

Mr. STRICKLING [continuing]. Us today—— 

Mr. SHIMKUS [continuing]. Into my question. 

Mr. STRICKLING. Then, I will leave today’s news to you. 

Mr. SHIMKUS. So, you know, what can West Virginia do to remedy this situation? Can West Virginia trade in or sell back their 

routers, or does it need NTIA approval to do so? 

Mr. STRICKLING. Well, my understanding is that the governor 

and Cisco, who is the supplier of the routers, are going to be working together along with perhaps some other people as part of a 

group the Governor is pulling together. 

Mr. SHIMKUS. But you don’t think you have to have a role in 

this? 

Mr. STRICKLING. I think it will depend on what they are able to 

work out. 

Mr. SHIMKUS. Will you exercise oversight over this as what they 

decide to do and make sure that it makes sense—— 

Mr. STRICKLING. Yes, sir. 

Mr. SHIMKUS [continuing]. And in the taxpayers’ interest and 

that—I mean our biggest concern is—there is a lot of concerns, especially when you are from rural America. One is that we want the 

unserved areas served. We really hate overbuilding of systems that 

are providing service to rural America because there are so few 

people there that to have the government come in with taxpayers 

dollars compete against the private sector is really un-American is 

the problem. And we appreciate our people who roll out and assume the risk, raise the capital, assume the risk to provide access 

to rural America and we don’t want them competing against the 

government. So you understand that. We have talked about that 

before. Let me—— 

Mr. STRICKLING. That guided us in our whole philosophy. That 

is why we have chosen the middle-mile approach to projects. 

Mr. SHIMKUS. OK. Not always, right? Not always. 

Let me talk about a specific provider, and this goes to both of 

you. Frontier in Illinois has requested wholesale services for access 

to the BTOP-funded project. But according to the rules and fact 

sheet online, recipients should offer wholesale broadband services 

at rates and terms that are reasonable and nondiscriminatory. The 

56 

Illinois BTOP recipient, who is Clearwave, came back with an offer 

of wholesale prices that were about 100 percent higher than its retail offering. The rules state that ‘‘recipients that failed to accept 

or comply with the terms listed above may be considered in default 

or breach of their loan or grant agreements.’’ RUS and NTIA may 

exercise all available remedies to cure the default. Assuming the 

parties do not work this out—and of course that is the best solution—what are the next steps for NTIA to remedy the situation? 

Mr. STRICKLING. Well, I am not going to speculate on that, but 

I will say this, that this is a hallmark of our program. We are going 

to make every effort to ensure that Frontier is able to get the 

wholesale service that they are entitled to under the rules of our 

program. I mean, it goes right to the heart of why we want to use 

these investments to prime the pump for private investment. And 

it doesn’t work if our grantees are not offering wholesale services 

at reasonable prices. That is why that is a requirement of our program. 

And the case you described was one we first heard about last 

summer. We had urged the parties to work it out, and frankly, we 

hadn’t heard back from Frontier until yesterday, the day before the 

hearing. Everybody kind of gets their house in order the day before 

a hearing. 

Mr. SHIMKUS. As we receive testimony sometimes, even the day 

of, so it comes both ways. 

Mr. STRICKLING. Yes, sir. So we are on this. We will go right 

back and look at this but this is a very serious issue for us because 

it is part of the whole philosophy of our program. 

Mr. SHIMKUS. Please do. Thank you. 

Mr. WALDEN. The gentleman’s time has expired and yields back. 

And next is the gentlelady from Colorado, Ms. DeGette. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. Strickling, I am going to be honest. Some of the facts of this 

EAGLE–Net project don’t look very good. And I want to ask you 

a series of questions. I feel like the questions you have been asked 

so far have not really been designed to get answers from you. So 

what I am trying to do in the 5 minutes that I have is get some 

answers. If you could listen closely to these questions and if possible, answer yes or no, or short as you can, that would be helpful 

because I want to clear up the record. I think it is important. 

Now the first thing is, this program that EAGLE–Net has its 

funding under is approximately, I believe, a $4 billion program. Is 

that correct? 

Mr. STRICKLING. Yes. 

Ms. DEGETTE. And the EAGLE–Net program is $100 million. Is 

that correct? 

Mr. STRICKLING. Of federal dollars. The state will supply a 

match. 

Ms. DEGETTE. Of federal dollars. It is $100 million of federal dollars. And I am going to assume that your agency—part of your 

oversight obligation—is to make sure that that $100 million, or for 

that matter the $4 billion, is not misspent in any way. Is that correct? 

Mr. STRICKLING. Yes. 

57 

Ms. DEGETTE. And the NTIA has been aware of difficulties— 

many of them political—around the EAGLE–Net project for many 

months now. Is that correct? 

Mr. STRICKLING. We first started hearing about this late last 

summer. 

Mr. DEGETTE. So you have been aware of these problems for 

many months? 

Mr. STRICKLING. Yes. 

Ms. DEGETTE. And you are investigating these allegations in a 

robust manner, aren’t you? 

Mr. STRICKLING. Yes. We have made a number of trips out there. 

I personally—— 

Ms. DEGETTE. OK. 

Mr. STRICKLING [continuing]. Was on the ground a couple of 

weeks ago with some of the parties. 

Ms. DEGETTE. And you have also asked for a lot of data around 

this. Is that correct? 

Mr. STRICKLING. Yes. 

Ms. DEGETTE. And EAGLE–Net’s grant is under suspension 

right now. Is that correct? 

Mr. STRICKLING. Yes. 

Ms. DEGETTE. And it is under suspension because—and you tried 

to say this before but you got cut off—it is under suspension because the original application was for microwave technology and 

EAGLE–Net decided to abandon that and go to fiber. Is that right? 

Mr. STRICKLING. In part, that is right. 

Ms. DEGETTE. And you like fiber better. I think that is what you 

were trying to say, right? 

Mr. STRICKLING. Absolutely. 

Ms. DEGETTE. But the problem is EAGLE–Net didn’t get the environmental approvals to lay that fiber. That is also what you were 

trying to say. Is that right? 

Mr. STRICKLING. And that is why it was suspended. 

Ms. DEGETTE. And so that is why you put them under suspension, right? 

Mr. STRICKLING. Yes. And we are working through those issues 

now with the hope the suspension will be lifted shortly. 

Ms. DEGETTE. OK. So now I have got to admit, I don’t understand either. And Mr. Gardner, my colleague from the Eastern 

Plains, was asking you this question. Why would EAGLE–Net be 

going so much into these markets in eastern Colorado where there 

is already fiber laid and not going into the areas in western Colorado which are underserved? Can you please explain clearly why 

that is happening and why the NTIA approves of that or doesn’t 

approve of that? Or, what is your position on that? 

Mr. STRICKLING. Well, that is not a true statement in terms 

of—— 

Ms. DEGETTE. OK. 

Mr. STRICKLING [continuing]. Not going into western Colorado. 

This is a statewide project. The reason western Colorado is underserved is because there has never been an economic case for serving it. What we have is we had a group of educational organizations that wanted to deal with educational needs on a statewide 

basis. So that means building the entire State or providing network 

58 

in the entire State. In order to be able to economically serve the 

western part of the State, you need to have enough people on this 

network that you are able to have the project be sustainable. 

Ms. DEGETTE. So it is for economics? That is why they are building in the east first? 

Mr. STRICKLING. In part. Sustainability is key, but there are 

huge advantages to a State they can bring all of their K to 12 

schools onto a single network. There are advantages in terms of the 

speeds that can be provided, in terms of the security that can be 

provided, in terms of the applications—the ability for schools to be 

connected with each other, to have distance-learning, to have, you 

know, courses from colleges provided. There are huge advantages 

to a statewide approach to this. And you will hear about that in 

the next panel from Joe Freddoso, because he is doing exactly that 

in North Carolina. 

Ms. DEGETTE. OK. So what you are saying is that duplication 

doesn’t necessarily mean waste, fraud, and abuse. 

Mr. STRICKLING. That is right. 

Ms. DEGETTE. And if there was a waste, fraud, and abuse, you 

feel that your agency has the procedures in place to identify that 

and to either suspend or eliminate the funding. Is that correct? 

Mr. STRICKLING. Yes. But if I could just say, having said all of 

this, we would like to see peace in Colorado. I have been out—I 

have worked with the Congressman—we would like to find a way 

to accommodate everybody out there even those bidders who were 

unsuccessful before. If there is a way to find a win-win here, which 

is the goal of all of our projects, we want to do that. 

Ms. DEGETTE. Mr. Strickling, I will say to date I really haven’t 

been part of those discussions, but as a senior member of this committee, I will make you the offer and I will make Mr. Gardner the 

offer. I would be happy to sit down on a bipartisan basis with him 

and with your office and see if we can make peace in Colorado. I 

think that would be a win-win situation for everybody, especially 

these school children. 

And I yield back. 

Mr. WALDEN. The gentlelady yields back and her time has expired. 

The gentleman from Kansas, Mr. Pompeo, is recognized for 5 

minutes. 

Mr. POMPEO. Thank you, Mr. Chairman. 

You know, as I am sitting here listening to this discussion today, 

this reminds me an awful lot of the Solyndra hearings where you 

had enormous amounts of federal money being rushed out the door 

under tight deadlines and constraints, and it just went scattershot. 

And you see the GAO report, you see your efforts, and I take you 

at good faith that you are trying to collect data and make sure that 

you are overseeing these funds in a way. You all were given a task 

that was darn near possible. 

Mr. STRICKLING. I disagree. 

Mr. POMPEO. But no, you haven’t succeeded. I will say that 

much. In my judgment, you have not succeeded. 

Mr. STRICKLING. Well, I disagree. 

Mr. POMPEO. I understand. I haven’t asked a question yet. You 

will get a chance to talk. You have a different view. You think it 

59 

has been wildly successful. I have a fundamentally different view 

of this. 

Let me ask a couple of yes or no questions because I want to be 

as quick as I can today. Yes or no, do you both think that teaching 

someone to create an email account is a proper task for the United 

States Federal Government? 

Mr. STRICKLING. Yes. 

Mr. PADALINO. Yes. 

Mr. POMPEO. Wow. So you don’t think a city could do that? You 

don’t think a school board could do that? You don’t think a county 

could do that, a state could do that? You think Kansans ought to 

teach people from New Mexico to create an email account and folks 

in Alaska ought to pay to teach someone in Illinois to create an 

email account? Is that correct also? 

Mr. STRICKLING. Well, maybe I didn’t understand your question. 

We have funded programs to let local institutions do just that. 

Mr. POMPEO. It is federal taxpayer dollars, sir. With all due respect—— 

Mr. STRICKLING. Yes. 

Mr. POMPEO [continuing]. This is federal money that is going for 

the tasks that I—— 

Mr. STRICKLING. Right. So I think it is appropriate to use federal 

money. Who actually does the teaching, we have left up to the local 

communities to do that. 

Mr. POMPEO. Great. You talked, Mr. Strickland, for a moment 

about how much speed was there, and I have heard this discussion—I am amazed that the chairman’s not here—but you had the 

discussion about the right size of routers in broadband. To see 

Members of Congress discussing this at the federal level when I 

have trouble figuring it out at Best Buy, and so does every one of 

my constituents. But they can make good value decisions for themselves and cities can, too, whether it is in Hays, Kansas, where this 

program was overbuilt just like we are talking about Colorado 

today. And that was from a previous hearing. I don’t really want 

to spend much time going back into that today. 

To hear that discussion here, how do you know what the right 

speed is? You said, well, they don’t have enough megabits, or in the 

case of schools, gigabits. How do you know what the right speed 

is? 

Mr. STRICKLING. Well, I am relying on the experts—the state 

educational technology directors. These recommended speeds are 

based on the work that they have done. But it is also based on 

some simple math. If we agree that 4 megabits per second is an 

appropriate speed for a homeowner today in terms of their day-today needs, all you have to do is now project that to a library or 

project it to a school where you now have several hundred people 

all trying to use that bandwidth at the same time. Just do the 

math. It is not hard to see how we are up to 100 megabits per second as a basic need for schools. 

Mr. POMPEO. I don’t dispute that. It might be 1,000 tomorrow. 

And the challenge here—— 

Mr. STRICKLING. It is going to be a—— 

Mr. POMPEO. The challenge is you have no idea and you have no 

incentive to get it right because you don’t have your own personal 

60 

skin in the game. You have no risk. You have the taxpayers’ money 

making arbitrary decisions about the proper speed at the proper location instead of risk-taking people making evaluations for themselves about the right risk to take. 

And with that I will yield the balance of my time to Mr. Gardner. 

Mr. WALDEN. The gentleman yields. 

Mr. GARDNER. I thank the gentleman from Kansas for his additional time. 

And I just want to read a House Joint Resolution that was 

passed in Colorado back in 2010 ‘‘whereas every effort should be 

made to prioritize the provision of broadband service to unserved 

customers throughout the efficient distribution of resources to 

avoid overbuilding of existing facilities and to strongly encourage 

the use of private sector local telecommunication providers.’’ Has 

that been achieved in Colorado? 

Mr. STRICKLING. It has been attempted. 

Mr. GARDNER. Has that been achieved? If you can grade 

EAGLE–Net on a scale of A to F, what would you give EAGLE– 

Net? 

Mr. STRICKLING. I wouldn’t speculate on a grade, but what I can 

tell you is that the process that was used gave everybody an opportunity to bid on this project to provide these services. Not everybody could be selected. But the fact is there was an open competitive process to do just this. And again, in light of that resolution, 

as I said earlier, 70 percent of the build-out there is on existing facilities. 

Mr. GARDNER. But you have 100 percent build-out of PC 

Telecom. The town that I mentioned that had one graduating senior, that wasn’t on I–70. That is in Kiowa County out by the Kansas border. It is a long way away from I–70. 

Mr. STRICKLING. Yes. 

Mr. GARDNER. It is closer to Kansas. Three fiber connections. But 

yet EAGLE–Net is providing service to the Denver Museum of Natural History, to Cherry Creek School District in the Denver Metro 

area—— 

Mr. STRICKLING. Yes. 

Mr. GARDNER [continuing]. One of the State’s largest and 

wealthiest school districts. They have approached the City of Lone 

Tree, which has a Nordstrom’s in it, about whether or not they 

should receive EAGLE–Net Service. After a build-out in Yuma 

County, Colorado, of the local private internet provider, EAGLE– 

Net went and approached them about peeling off their anchor institutions. You were asked earlier whether or not you believed there 

was waste in West Virginia. Is there waste in Colorado? 

Mr. STRICKLING. I can’t answer that. But I do believe that the 

process—— 

Mr. GARDNER. NTIA has oversight. 

Mr. STRICKLING. Yes. 

Mr. GARDNER. You know this project. Is there waste in Colorado? 

Mr. STRICKLING. I can’t answer that yes or no today. 

Mr. WALDEN. The—— 

Mr. STRICKLING. What we know is that the process that has been 

used has gotten us to result where we have people who are complaining about the project. We have been working to try to resolve 

61 

those complaints. I absolutely believe this is a critical project for 

the future of education in Colorado. We would like to see it succeed 

to deal with the fact it Colorado has such slow speeds across the 

state in terms of broadband into its schools. That is what we are 

trying to accomplish here. What we would like to find is an opportunity for everybody to come together in support of this project. 

And we are still committed to doing that. 

Mr. WALDEN. Thank you. The gentleman’s time has expired. 

The chair now recognizes the gentleman from New Mexico, Mr. 

Lujan, for 5 minutes. 

Mr. LUJAN. Thank you very much, Mr. Chairman. And Mr. 

Chairman, I look forward to the day when consumers across America are able to go to that Best Buy and make decisions on those 

routers because they can go home and use them. It doesn’t matter 

which one they may get their hands on, that they can go home— 

they have speeds—the ability to use the pipe, the bandwidth, the 

amount of information and data that can stream in this magical 

realm sometimes that is lit up by light rather than an old copper 

wire that provides plain old telephone service that oftentimes is 

paired, which means is split over and over and over and loses its 

capacity. 

There is a reason why we pave our roads in America. I still come 

from rural America. We have a lot of dirt roads. But a lot of people 

don’t drive their cars on those dirt roads. They drive bigger pickup 

trucks or vehicles they don’t mind getting beat up a little bit. I am 

hoping that we can pave the information highway for America. We 

have talked about this a lot, and that is what this is. 

Mr. Strickling, I very much appreciate your willingness based on 

the questioning from Ms. DeGette to go and make peace in Colorado. That is all we should ever want. And for you to go and solve 

this problem out there and be willing to do that is important. 

Ranking Member Eshoo talked about the importance of cracking 

down on waste, fraud, and abuse. We can’t emphasize that enough. 

I hope that that is something we both share as Democrats and Republicans in this Congress. And I appreciate your willingness to 

help us work on that. 

To the witnesses, I am going to read a few statements and ask 

you if you agree or disagree that these statements support the 

goals of what this program was. All-encompassing and affordable 

broadband connectivity will go a long way toward returning our region to long-term growth and productivity for which it is known. 

Would you agree that that is the goal of the program? 

Mr. STRICKLING. Yes. 

Mr. PADALINO. Yes, I agree. 

Mr. LUJAN. A BIP grant to extend broadband service would help 

the poor and underserved areas become highly productive. Would 

you agree? 

Mr. STRICKLING. Yes. 

Mr. PADALINO. Yes. 

Mr. LUJAN. With these grants, providers could expand educational opportunities; assist hospital patients, families, and 

nurses; improve services for the disabled; empower the elderly to 

use technology; offer job training and retraining; help displaced 

62 

workers in the area; and establish additional libraries. Do you 

agree? 

Mr. STRICKLING. Yes. 

Mr. PADALINO. Yes. 

Mr. LUJAN. Could bring us into true integrated technological advances that we ask our communities to strive for but are unable 

to achieve since they are at the mercy of companies only looking 

for densely populated areas. Do you agree? 

Mr. PADALINO. Yes. 

Mr. STRICKLING. I guess I don’t want to castigate industry. I 

think industry is doing the economically reasonable thing here. But 

when they do that, it is still going to leave behind areas where they 

just can’t find the economic case to serve them. 

Mr. LUJAN. I appreciate that, Mr. Strickland. 

Mr. PADALINO. And if I could expand on that little bit. 

Mr. LUJAN. Please. 

Mr. PADALINO. I think that touches on the issue of overbuild. 

And, you know, we take that issue very seriously. I mentioned earlier that we go out for public comment and at times we will receive 

a comment from a provider who may provide service in that densely populated rural town but not in the outer reaches, on those dirt 

road areas that you mentioned. And that is a lot of times what the 

applications that we are entertaining at the Rural Utility Service. 

Mr. LUJAN. I appreciate that. 

This project is part of a larger plan to not only upgrade and extend high-speed broadband access across the State but transform 

our State’s economy. Would you agree? 

Mr. PADALINO. Yes. 

Mr. STRICKLING. Yes. 

Mr. LUJAN. And I will just read one more. These areas either do 

not have high-speed access to the internet or it is available only at 

speeds that are insufficient for the bandwidth intensive applications essential for delivering programs such as telemedicine, distance learning, public safety, economic development that will create 

and maintain jobs and improve the lives of all of our constituents. 

Mr. PADALINO. Yes, I agree. 

Mr. STRICKLING. Yes. 

Mr. LUJAN. I was intrigued, Chairman, when I saw the title of 

the hearing—named ‘‘Is the Broadband Stimulus Working’’—and 

thought that that is something that we would be tackling and talking about today. The statements that I read were from my Republican colleagues in support of these projects to you guys to your departments. It is working. The instances where we found fraud and 

abuse or problems or where peace needs be found and healed, we 

need to work on. But in the same way that RUS benefits rural 

America from electrifying it, because there are places in America 

that still raise our crops and produce our beef or lamb like our family raises, these areas of the country need a little bit of help. And 

that federal investment goes a long way. These are immense benefits. 

And Mr. Chairman, I certainly hope that we can find more common ground as we talk about the commonalities and the kind 

words that I just read, which I agree with wholeheartedly, where 

different parts of America have benefited, let us talk about those 

63 

areas and let us work together to make sure that we go and heal 

and help our brothers and sisters up in Colorado. 

And if there is anything that I can do, Ms. DeGette and Mr. 

Gardner, to provide some assistance from a neighbor to the south, 

you got it. 

With that, Mr. Chairman, I yield back the balance of my time. 

Mr. WALDEN. Thank you very much. The gentleman yields back. 

And the chair now recognizes the gentleman from Missouri, Mr. 

Long, for 5 minutes. 

Mr. LONG. Thank you, Mr. Chairman. 

Mr. Strickling, when a baseball player gets suspended for 

steroids or something like that, normally they have done a bad 

thing. Suspension in this case, I believe you said there are three 

contracts under suspension at this time? 

Mr. STRICKLING. That is correct. 

Mr. LONG. Is that a good thing or a bad thing? When you were 

talking about EAGLE–Net, you described it as they have come up 

with better technology. They want to from microwave to fiber. So 

it is like we suspended them because they are going to do a good 

thing. So is suspension normally—and the other two cases—is that 

a good thing or bad thing? 

Mr. STRICKLING. Well, the reason for the suspension in the case 

of EAGLE–Net is, having made that good decision to move to fiber, 

it had consequences in terms of their compliance with the grant 

conditions, in particular, the need to go back and do an environmental review, which brought us into the two endangered species 

that Congressman Gardner talked about. So they have to work that 

through with the Fish and Wildlife Service in order to be able to 

resume construction. And they are in the process of doing that 

right now. 

Mr. LONG. And the other two instances, do you know off the top 

of your head whether they are good things or bad things they have 

been suspended for? 

Mr. STRICKLING. I think in the case of the other two projects, we 

have some management challenges that we need to see fixed there 

in order to allow them to continue to spend money. Yes. And so—— 

Mr. LONG. So we might have one good thing and two bad things? 

Mr. STRICKLING. I am not sure how to respond to that. But it is 

not—— 

Mr. LONG. I am not trying to be argumentative. I am just trying 

to—because my original question was going to be how does one get 

suspended? But then, as I sat here waiting for all my other colleagues to go ahead of me, I came to realize that EAGLE–Net, who 

we have heard a lot of complaints about today—I don’t know if 

their proven or not—but we have heard a lot of complaints about 

them. And when I heard they were suspended, I thought, oh, they 

have done something bad. But now we have learned that they are 

suspended because they are doing something good. So I am just 

trying to get a handle on how one would get suspended. 

Mr. STRICKLING. Well, it is not something you should aspire to 

do. I guess I would say that. 

Mr. LONG. OK. Let us see. You also referenced two her three 

times—you seem to be upset with one of my colleagues; I can’t remember which one—but the fact that they were using—— 

64 

Mr. STRICKLING. Sir, I am not upset with anybody. We are just 

having an active discussion. 

Mr. LONG. Then, don’t come back when you are upset. But you 

have mentioned two or three times that—you spoke in a louder 

tone, perhaps—that they—— 

Mr. STRICKLING. Guilty as charged. 

Mr. LONG [continuing]. Were not using discounts and they should 

of been or should not have been using a discounted figure on the 

equipment cost, I presume. 

Mr. STRICKLING. What we were talking about was the West Virginia auditor’s report and the way the auditor came up with the 

alleged millions of dollars of overspend was, I believe—I am not entirely certain because the report is a little ambiguous on this—but 

it looked to be based on list prices of routers. And I only say that 

because when we did our calculation, we came up with an average 

price, including the discounts, for what they bought at about 

$12,000. That doesn’t even include the 100 free routers they got. 

And in one case the auditor referred that they could of save 

$16,000 per router. Well, that suggests to me they weren’t using 

a discounted price when they did that analysis. 

Mr. LONG. And this was in West Virginia, correct? 

Mr. STRICKLING. Yes, we are talking about West Virginia. 

Mr. LONG. OK. 

Mr. STRICKLING. Now, if you look, our Inspector General did a report where they looked at the same exact issue and concluded that 

possibly West Virginia could have saved 2 to 5 percent on the router purchases had they bought lower capacity routers. But our IG 

made an assumption that they would have still gotten the 100 free 

routers even under that scenario. And they acknowledged that, if 

in fact the 100 free routers weren’t available under the alternative 

purchase, that there would have been no net savings by going to 

the lower-capacity routers. 

Mr. LONG. But my question that I am trying to lead up to is that 

in West Virginia, which we are speaking now, we agree they used 

no competitive bid process? 

Mr. STRICKLING. That has been raised by the West Virginia auditor in its report. 

Mr. LONG. Right. OK. So the West Virginia auditor believes they 

used no competitive bid process. Later—— 

Mr. STRICKLING. We understood that they certainly got multiple 

bids on Cisco routers—— 

Mr. LONG. Later in your—— 

Mr. STRICKLING [continuing]. But I think it is correct that they 

didn’t have bids from other company gear. 

Mr. LONG. Later in your testimony, you said EAGLE–Net went 

out on an RFP, Request for Proposal. So are these contracting 

things handled differently in different States? I mean, if somebody 

goes out on an RFP, they have to prove their worth. That is a request to earn the proposal but yet then we go to West Virginia and 

they don’t even bid competitively, apparently, according to their 

auditor. 

Mr. STRICKLING. So each State has to—if it is a state government 

organization—has to comply with their own procurement rules. We 

don’t have a set of federal procurement regulations for our grants 

65 

other than you have to follow the rules that apply to you in your 

State. 

Mr. LONG. OK. 

Mr. STRICKLING. So, yes, you could have different procurements 

happening in different States based on differences in their laws 

and regulations. 

Mr. LONG. OK. I was going to yield to someone else but I have 

taken up too much of my time. 

So Mr. Chairman, I yield back. 

Mr. WALDEN. The gentleman yields back. Mr. Welch, I believe, 

is next. 

Mr. WELCH. Thank you very much, Mr. Chairman. 

Mr. Strickling, I would like to clarify some of the discussion 

about the West Virginia project. Did NTIA approve individual contracts executed by West Virginia or any grantee? 

Mr. STRICKLING. I am sorry. Could you repeat that? I am not 

sure I understand the question. 

Mr. WELCH. Well, does the NTIA approve every purchase made 

by every grantee—— 

Mr. STRICKLING. No, no. 

Mr. WELCH [continuing]. Or do grantees have to follow guidelines 

set by the NTIA? 

Mr. STRICKLING. So we approve the grantee’s budget at the beginning of the project, and then we would look at their quarterly 

spend reports to see if there had been anything that got out of line. 

But no, for the typical project we don’t review individual purchases. 

Now, in some cases when we get a project that is somewhat challenged, we will put them on a reimbursement-basis only at which 

point we are looking at individual invoices and making sure those 

are appropriate to be paid. 

Mr. WELCH. OK. And we have heard the suggestion today that 

because 95 percent of the population already has access, government action to extend broadband is unnecessary. That is an argument some folks are making. But is it the case that extending infrastructure to every corner of our country, and especially in rural 

areas—and a lot of us on this committee represent rural areas— 

always require some public resources in participation? 

Mr. STRICKLING. I am not sure that I can give you a categorical 

answer to it. But what I can tell you is that the 95 or 96 percent 

figure is a figure for the mass market. We know from our program, 

and it is been well documented, that these anchor institutions have 

much higher needs for broadband, much greater speed requirements. Those aren’t factored into that 96 percent. And as I said before, we know that schools overall have been at the low end of what 

their needs are. So our program has been trying to deal with some 

of these specific needs of anchor institutions which was set out as 

a standalone obligation or purpose under the Recovery Act. It was 

to serve unserved and underserved areas and to serve anchor institutions. And we have taken that to heart in the philosophy of our 

program. 

Mr. WELCH. Good. Yes. And, you know, the private sector has 

spent billions and that is tremendous. But I believe it is the case 

that these investments have been enabled, to some extent, by pubVerDate Nov 24 2008 12:33 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00071 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-9 CHRIS
66 

lic resources including the Universal Service Fund and the RUS 

loans. Is that your sense as well? 

Mr. STRICKLING. Well, there is no question that in rural areas 

the USF money and the RUS support has definitely had an impact. 

Yes. 

Mr. WELCH. OK. Thank you. 

I yield back, Mr. Chairman. 

Mr. WALDEN. The gentleman yields back the balance of his time. 

Does that cover—— 

Ms. DEGETTE. Mr. Chairman? 

Mr. WALDEN. Oh, Ms. DeGette. 

Ms. DEGETTE. I ask unanimous consent to place the documents 

that Mr. Strickling was referring to—— 

Mr. WALDEN. Oh, absolutely. 

Ms. DEGETTE [continuing]. The charts into the record. 

Mr. WALDEN. Yes, without objection. Of course. 

[The information appears at the conclusion of the hearing.] 

Mr. WALDEN. And I think we have covered everybody who had 

to step out. Right? Or have you gone, Mr. Kinzinger? Oh, oK. Mr. 

Kinzinger, for 5 minutes. 

Mr. KINZINGER. Thank you, Mr. Chairman. 

Mr. WALDEN. Oh, but before you start. 

Mr. KINZINGER. Uh-oh. 

Ms. DEGETTE. Yes, we want to—— 

Mr. WALDEN. This is his birthday. 

Ms. DEGETTE. This is his birthday so we have—— 

Mr. STRICKLING. Do we get to sing, and does it come off his time? 

Mr. WALDEN. What is that? Yes, it comes off as questioning time, 

Mr. Strickling. So happy birthday to our colleague, Mr. Kinzinger. 

Mr. KINZINGER. Thank you. I am now old enough to have—— 

Mr. WALDEN. I look good for 70; he looks good for 35. 

Mr. KINZINGER. Well, thank you. And thank you all for coming 

out. I know this was touched on a bit. I want to change gears from 

what we have been talking about, talking about FirstNET. Our 

subcommittee did help to create this authority in order to establish 

a nationwide interoperability public safety broadband network. But 

there were some differences of opinion on what this board, among 

other things, should look like. That being said, it is now our job to 

have a bit of oversight on the activities of this board with respect 

to the NTIA. In the most recent FirstNET board meeting, there 

were a couple of resolutions adopted in order to move forward with 

last year’s previously suspended public safety BTOP projects. These 

resolutions stated that the suspensions were to be resolved within 

90 days. And I was glad to hear this since there are States and localities who have committed vast amounts of resources to these 

now dormant projects. 

My concern in these resolutions is the special award conditions 

being required to end the suspensions, specifically, the condition 

which ensures BTOP projects systems from interoperability problems and the requirement that a State’s BTOP public safety assets 

be transferred to FirstNET. The former seems like an overly broad 

indemnification, while the latter seems a bit premature since 

States don’t even know what options they will have in regards to 

a FirstNET network. My question to Secretary Strickling is this: 

67 

Why has the reinstatement of these BTOP public safety project 

awards taken so long and are those special conditions really necessary? 

Mr. STRICKLING. Well, the board only met a week ago. 

Mr. KINZINGER. Yes. It is 2013 so I was just, like, you know—— 

Mr. STRICKLING. Right. So they were on suspension to give the 

board an opportunity to go visit the projects and to make their recommendation. The board didn’t come into being until last September when they had their first meeting. One of the first tasks 

they organized to do was to conduct a review of the projects. They 

have now been out; they have been on the ground to visit every one 

of them, and that led to recommendation that they just passed last 

week. 

Mr. KINZINGER. We are hoping then that can move forward very 

quickly. 

Mr. STRICKLING. Yes. And again, they are going to take the 90 

days to sit down with each of these projects. 

Mr. KINZINGER. And then, what are your thoughts on the special 

conditions on them? 

Mr. STRICKLING. I will reserve judgment on those until they are 

presented back to us as part of the process. 

Mr. KINZINGER. Then I can submit that for the record, if you 

wouldn’t mind getting back to me on them. 

Mr. STRICKLING. Yes. Sure. 

Mr. KINZINGER. And also, while your testimony highlights the 

ability to get grants back on track after suspensions, we have been 

contacted by a number of people who remain very concerned about 

the grant to the North Florida Broadband Authority. Mr. Chairman, I seek unanimous consent to enter into the record a letter 

from Mr. Chris Thurow, Sr., a former North Florida Broadband Authority board member raising concerns about the program. 

Mr. WALDEN. Without objection, so ordered. 

[The information appears at the conclusion of the record.] 

Mr. KINZINGER. My understanding is it has had problems from 

the start and NTIA suspended the grant for a period in 2011—— 

Mr. STRICKLING. Yes. 

Mr. KINZINGER [continuing]. Requiring a corrective action plan. 

The outside contractor, law firm, and compliance firm have been 

replaced. Additionally, 7 of the 14 counties have dropped out of the 

project. We have been told the project has very few paying customers left and its revenue is only a fraction of the monthly operating expenses. A few questions on this. Is the project financially 

sustainable? If not, what happens next? Because, specifically, 7 of 

the 14 counties have withdrawn because they see a project. So 

what is it that the NTIA sees regarding its viability that the local 

counties are missing? 

Mr. STRICKLING. Well, as of right now, we still think it is a good 

project and it is sustainable. And I will tell you that even in the 

case of at least one of the counties, the project is still picking up 

customers within that county even though that county might have 

dropped out. It is the Suwannee County, but the City of Live Oak 

has remained a customer and is very interested in the project. So 

I think the fact that the 7 counties have left—while not a great 

68 

event for us or for North Florida—doesn’t necessarily mean that 

those counties are not going to continue to supply customers. 

Mr. KINZINGER. You still see this to be a financially feasible venture? 

Mr. STRICKLING. Yes. At this time, yes. 

Mr. KINZINGER. All right, then we will obviously see how this 

goes over time. 

Mr. STRICKLING. Right. 

Mr. KINZINGER. With my remaining minute I would like to yield 

to Mr. Gardner of Colorado. 

Mr. GARDNER. I would like to thank the gentleman from Illinois 

for the time. And just a couple of follow-up questions on what he 

asked. 

Mr. Padalino, are you concerned that these rural telecoms in Colorado that have RUS loans may be unable to pay their loans due 

to competition from EAGLE–Net? 

Mr. PADALINO. We have been monitoring the situation closely. 

We have heard from some of the borrowers in Colorado. We forwarded that correspondence over to NTIA. The rural development 

undersecretary Mr. Strickling met I think late last summer and we 

allowed NTIA to take the lead as it was there awardee. 

Mr. GARDNER. So that is a concern? 

Mr. PADALINO. Well, we are concerned with all of our borrowers 

to make sure that the loans are repaid. 

Mr. GARDNER. Thank you. And Mr. Strickling, is EAGLE–Net 

sustainable financially? 

Mr. STRICKLING. I think that is still to be determined. 

Mr. GARDNER. Wasn’t that a condition of the grant, that they be 

sustainable? 

Mr. STRICKLING. As presented to us, yes. But I think we certainly 

are watching it carefully. The events of the suspension, the events 

of the controversy clearly could have an impact on its ultimate sustainability, which is why I would like to work with you and Congresswoman DeGette and the entire delegation to find a way to 

make sure this project is sustainable and can serve the schoolchildren of Colorado. 

Mr. GARDNER. Will the grant be reinstated before the issues are 

worked out in Colorado? 

Mr. STRICKLING. The grant suspension would be lifted once they 

work out the environmental issues. But as you know, and we have 

committed to you to work and make sure EAGLE–Net is working 

with all of the stakeholders out there to try to resolve these other 

issues as quickly as we can. 

Mr. GARDNER. And the last question. I am out of time. With 96 

million out of the $109 obligated or spent, is there enough money 

to finish the west slope build-out? 

Mr. STRICKLING. Well, that doesn’t include a bank loan that they 

also had sought and I think they are still working through some 

of the issues with the bank because of the delays in the project. 

There are some issues about whether the bank will continue on or 

not. So yes, I think ultimate financing is a concern, and again, that 

is an issue we would like to work with you on to make sure that 

the bank might carry through on that or that other sources of funding could be found. 

69 

Mr. GARDNER. That is a bank loan they haven’t received yet. Or 

they have? 

Mr. STRICKLING. They haven’t received all of the proceeds of it. 

I think they have received a small amount of the loan so far. 

Mr. GARDNER. They told the audit committee about $500,000. I 

don’t know if that is the same loan. 

Mr. STRICKLING. I think that is what they have received so far. 

Yes, sir. 

Mr. WALDEN. All right. The gentleman’s time has expired. 

I want to thank our two public servants for being here today and 

answering our questions—or attempting to—to the best of your 

abilities. And we look forward to continuing the discussion. And 

again, thank you for your service and we appreciate your participation in our hearing. 

We are going to move on now to the second panel. As we change 

out here, we will have Mr. Pete Kirchhof, Executive Vice President, 

Colorado Telecommunications Association; Ann Eilers, the Principal Assistant Inspector General for Audit and Evaluation, Office 

of Inspector General, U.S. Department of Commerce; Michael K. 

Smith, the State President, Vermont, FairPoint Communications; 

and Bruce Abraham, Board of Directors, North Georgia Network; 

and Joe Freddoso, President and CEO of MCNC. I hope I got all 

those names correct. 

And if you all will take your seats and I will just tell you with 

regards to these microphones, they do have an actuator button 

there at the base. And the closer you are between the microphone 

and your mouth, the better we will be able to hear you once the 

light is lit. 

So we thank all of you for coming today to help enlighten us on 

what is working and what is not this program, and to how we can 

be good stewards of the taxpayers’ money. So with that—— 

Ms. DEGETTE. May I take a moment, sir? 

Mr. WALDEN [continuing]. I would like to recognize my friend 

and colleague from Colorado, Ms. DeGette—— 

Ms. DEGETTE. Thank you. 

Mr. WALDEN [continuing]. To introduce our first witness. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

I am really delighted to introduce our first witness because he 

is an elementary school classmate of mine from St. John’s Elementary School in Denver, Colorado. And he does a wonderful job in 

his current role—I am getting his exact title—Executive Vice President of the Colorado Telecommunications Association. And we are 

hoping he can sort all this out for us in 5 minutes or less. Thanks, 

Mr. Chairman. 

Mr. WALDEN. So Mr. Kirchhof, if you would like to lead off. We 

are delighted to have a fellow westerner out here. And please go 

ahead. 

70 

STATEMENTS OF PETER KIRCHHOF, EXECUTIVE VICE PRESIDENT, COLORADO TELECOMMUNICATIONS ASSOCIATION; 

ANN EILERS, PRINCIPAL ASSISTANT INSPECTOR GENERAL 

FOR AUDIT AND EVALUATION, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF COMMERCE; MICHAEL K. 

SMITH, STATE PRESIDENT–VERMONT, FAIRPOINT COMMUNICATIONS; BRUCE ABRAHAM, BOARD OF DIRECTORS, 

NORTH GEORGIA NETWORK; AND JOE FREDDOSO, PRESIDENT AND CEO, MCNC 

STATEMENT OF PETER KIRCHHOF 

Mr. KIRCHHOF. Thank you, Chairman Walden, Ranking Member 

DeGette, now, I guess it is. And I hope the elementary school comment does not become part of the permanent record. 

But to the rest of the committee members, my name is Pete 

Kirchhof, Executive Vice President of the Colorado Telecommunications Association. CTA represents 25 small rural communications 

companies that provide voice, video, and data service to approximately 30,000 customers located in 25,000 square miles, a very diverse geography. That equates to approximately 1.2 customers per 

square mile, which presents huge challenges in providing services 

to these customers where the cost is determined by distance and 

density. 

Attached to my written testimony is a colored service area map 

that shows you graphically those large geographic areas served by 

our members. 

CTA members receive support from two federal programs, the 

Universal Service Fund and the Rural Utility Service. Both of 

these programs were and are instrumental in helping our members 

grow their companies, upgrade their networks, and provide highquality affordable communications service. CTA members appreciate the confidence shown by these agencies in supporting service 

for rural Colorado. 

In 2010, NTIA was awarded a grant to an entity called EAGLE– 

Net. The purpose of the grant was to provide broadband service to 

unserved, underserved entities through construction of a middlemile infrastructure and in collaboration with local telecommunication companies like CTA members. Several CTA members sent 

letters of support to NTIA and were referenced as potential partners by EAGLE–Net in their original application. Our members 

truly believed that this project would be a tremendous benefit to 

rural communities. EAGLE–Net would build facilities where needed, i.e. fill in the gaps or reinforce existing facilities or lease existing facilities from companies where possible to provide broadband 

service to these targeted institutions. 

It now appears to us that this project was not intended to serve 

unserved or underserved areas or to collaborate with the local providers but rather to build a government-owned and operated duplicative network, overbuilding hundreds of miles of existing fiber infrastructure from our members and other providers throughout the 

State to serve as many government entities as possible, including 

many in urban, highly competitive and densely populated areas. 

As I discussed in my written testimony, the attached maps also 

demonstrate there are several examples of where duplicate faciliVerDate Nov 24 2008 12:33 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00076 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-9 CHRIS
71 

ties were built. And even more troubling, they were funded by 

three different federal programs. 

In addition, facilities and services are being provided to customers in Denver, hardly unserved or underserved by anyone’s definition. 

Congressman Gardner referenced the resolution passed, the 

House Joint Resolution 26. I won’t read the section. He and I had 

the same sections to discuss. But the overall, I think, goal of the 

State Legislature was to make sure that there was not duplicating 

facilities and that there was use of the private sector facilities 

where possible. 

In our opinion, EAGLE–Net has done just the opposite by overbuilding existing networks on the eastern plains, south-central Colorado, the Denver Metro area, as well as Laramie, Wyoming, while 

largely ignoring the western slope communities where broadband 

facilities are desperately needed and would be welcomed by those 

communities. 

CTA member service areas have small populations, are costly to 

serve, and generate limited revenues. Supporting even one network 

under those circumstances is a challenge even with the subsidies. 

Maintaining two competitive government-funded networks is highly 

unlikely. And since most of the CTA members RUS funding is in 

terms of loans, not grants, overbuilding presents a serious impact 

to the financial stability of our members and ultimately to RUS if 

our ability to repay those loans is compromised. 

First and foremost in our mind, federal agencies should ensure 

that taxpayer dollars are not used to duplicate infrastructure development in rural communities. The Federal Government is the Federal Government. Any conflicts should be resolved through an 

interagency agreement or cooperation. 

I do want to publicly thank Assistant Secretary Strickling for his 

attention and for recently meeting with us in Colorado. But in conclusion, I would say this: CTA members still support the mission 

of EAGLE–Net as it was originally constituted, but I think what 

has happened is is it has gone far from what the original intent 

was. We respectfully ask committee members to encourage 

EAGLE–Net to negotiate with local providers in good faith to avoid 

duplicating facilities. And we would hope that any additional monies left over could be redirected to the western slope. 

Thank you, Mr. Chairman and members of the committee, for 

your time. 

[The prepared statement of Mr. Kirchhof follows:] 

72 


80019.024

Testimony of Mr. Peter Kirchhof 

Executive Vice President 

Colorado Telecommunications Association 

Subcommittee on Communications and Technology 

February 27, 2013 

CTA Mission Statement 

To promote the availability of resources and enhance the opportunity of its 

members to provide the most advanced and highest quality communications 

networks and services to customers in rural Colorado and link residents of the state 

to the global network. 
73 


80019.025

Summary 

The 25 CTA member companies provide voice, video and data services to 

approximately 30,000 Colorado customers that are located in 25,000 square miles 

of very diverse geographical territory (1.2 customers per square mile). Our 

members supported EagleNet because they believed it would benefit rural 

communities by building facilities where truly needed and/or lease existing 

facilities from companies where possible. It appears to CTA members that this 

project was never intended just for unserved or underserved areas but rather to 

build a government owned and operated duplicate network to serve as many 

government entities as possible. EagleNet is primarily overbuilding networks on 

the Eastern Plains, South Central Colorado and in the Denver Metro Area while 

largely ignoring Western Slope Communities. Since most of the RUS funding to 

our members is through loans not grants, overbuilding presents a serious risk to the 

financial stability of our members operations and ultimately to RUS if their ability 

to re-pay the loans is compromised. CTA members still support the original 

mission to provide service to unserved and underserved areas. We respectfully ask 

committee members to strongly encourage EagleNet to negotiate in good faith with 

local providers to use existing local facilities and to avoid duplication of existing 

infrastructure. EagleNet should redeploy remaining funds to areas of the state 

(Western Slope) where it is badly needed. 
74 


80019.026

Chainnan Walden, Ranking Member Eshoo and subcommittee members 

My name is Pete KirchhofExecutive Vice President of the Colorado 

Telecommunications Association (CTA). 

Background on CT A 

The association was founded in 1963 to support companies providing 

communications facilities in rural Colorado. The association now has 25 small 

rural communications companies. Our member companies were fonned decades 

ago out of necessity because the fonner bell operating company Mountain Bell 

refused to serve customers in sparse rural areas of Colorado. These companies 

evolved in to several different operating structures: family owned, cooperatives 

(owned by their members) and publicly or privately held entities. They provide 

voice, video and data services to approximately 30,000 customers that are located 

in 25,000 square miles of very diverse geographical territory. That equates to 1.2 

customers per square mile which presents huge challenges (high cost, low revenue) 

in providing service to these customers. The attached service area maps show the 

large geographic area served by our members. 
75 


80019.027

CTA Members Support Local Communities 

Our members are also very connected (pun intended) in their communities. They 

live, work and raise families side-by-side with their customers. 

In 2010, an economist with Colorado State University issued a study on the 

economic impacts of member companies in their communities. They provide: 

• 165 direct jobs (428 total) 

• Average salary $61,300 (35 percent higher than the average rural job) 

• $21 million in annual payroll 

CTA Members Receive Federal Funds 

CTA members receive support from two federal programs: Universal Service Fund 

(USF) and Rural Utilities Service (RUS). Both of these programs were and are 

instrumental in helping our members grow their companies, upgrade their networks 

and provide high quality affordable communications service. In Colorado, 

members receive approximately $23 million dollars annually from the USF and 

with the changes in the USF program are focusing those dollars on providing 

broadband service. RUS has long been a partner of the rural companies providing 

primarily loans and some grants to build their networks. There is approximately 

$114 million dollars in outstanding CTA member loans for communications 

infrastructure and broadband deployment. 
76 


80019.028

NTIA Awards EagleNet $100.6 Million for Broadband Deployment 

In 2010, the National Telecommunications and Infonnation Administration 

(NTIA) awarded a grant to an entity in Colorado now known as EagleNet. The 

purpose of the grant is to provide broadband service to unservedlunderserved 

schools, libraries and community anchor institutions through construction of 

middle mile infrastructure and in collaboration with local communications 

companies like CT A members. Several CTA members sent letters of support to 

NTIA and were referenced as potential partners by EagleNet in its original 

application. Our members truly believed that this project would be a tremendous 

benefit to rural communities. EagleNet would build facilities where needed (fill in 

the gaps or reinforce existing facilities) or lease existing facilities from companies 

where possible to provide broadband service to the targeted institutions. However, 

EagleNet's implementation did not match its initial promise. Discussions both 

fonnal (responses to RFP and RFI) and infonnal (including network infonnation) 

took place with individual CT A companies for several years but with little success. 

The original CEO of EagleNet was invited to speak at one of our membership 

meetings to help the members understand their mission and to develop 

relationships. I am personally aware of only two companies that signed an 

agreement but even then - one was not spared from being overbuilt by EagleNet 

(even after the manager attended a press conference in support of the project). 
77 


80019.029

A sobering reality when that company discovered in the summer of2012 plows 

were burying fiber optic lines right next to existing company lines. 

EagleNet builds Duplicate Network (see attached maps) 

It appears to CT A members that this project was never intended just for unserved 

or underserved areas, building middle mile infrastructure or collaboration with 

local providers but rather to build a government owned and operated duplicate 

network (overbuilding hundreds of miles of existing infrastructure from our 

members and other providers) to serve as many government entities as possible 

including many in urban, highly competitive and densely populated areas. There 

are two very clear examples where duplicative facilities were built and, even more 

troubling, were funded by three different federal programs. Agate, Colorado is 

located 71 miles east of Denver. CTA member, Agate Mutual Telephone 

Cooperative Association, has facilities in place to serve the local K-5 school with 

11 students. Another provider using federal E-rate dollars from the USF has a 

facility at the school and now EagleNet has recently supplied a third facility to the 

school. All three facilities were built using federal money (USF, RUS, NTIA) for 

a school so small that several strands of fiber would likely provide all the 

bandwidth they could ever use. A similar situation exists in the town of Flaglerpopulation 56l. This eastern plains K-12 school has 140 students and will have 

three fiber connections to the school funded by RUS, NTIA and USF. 
78 


80019.030

Other examples of overbuilt facilities exist or are planned in other areas of the state 

including CTA members PC TeIcom, Blanca Telephone and SECOM. In Denver, 

they have connected several schools, cities and even a museum. One example is 

the Cherry Creek School District which is the 4th largest in the state; serves a very 

highly populated and middle/upper income community and has many, many 

choices of providers for broadband service and the necessary bandwidth to support 

their needs. Hardly unserved and/or underserved by anyone's definition. The 

Colorado General Assembly wanted to avoid this very situation when they 

approved a resolution (HJR 10-1026) in support ofthe grant. In part, it stated: 

"WHEREAS, Every effort should be made to prioritize the provision 

of broadband service to unserved customers through the efficient 

distribution of resources to avoid over-building of existing facilities and 

to strongly encourage the use of private sector local telecommunications 

providers; now, therefore," (emphasis added) 

Interestingly, EagleNet has done just the opposite of what the legislature intended 

by primarily overbuilding (and not collaborating with local providers) networks on 

the Eastern Plains, South Central Colorado, in the Denver Metro Area as well as to 

Laramie, Wyoming while largely ignoring Western Slope Communities 

(i.e., Silverton and Routt County) where broadband facilities are desperately 

needed and would be welcomed by those communities. 
79 


80019.031

EagleNet Undermines RUS Loans in Colorado 

CTA member service areas have small populations, are costly to serve and 

generate limited revenues. Supporting even one network under these 

circumstances is a challenge even with subsidies. Maintaining two competing 

government funded networks is highly unlikely. Since most of the CTA members' 

RUS funding is through loans not grants, overbuilding presents a serious risk to the 

financial stability of our members operations and ultimately to RUS if their ability 

to re-pay the loans is compromised. In addition, EagJeNet's open network and 

excess capacity availability for resale will likely have the effect of funding new 

commercial carriers to enter the market to compete with the local provider 

(including our members) for non-governmental (residence and business) 

customers. Many of our members already face varying degrees (access and 

reliability may be limited) of competition from the private sector: wireless 

providers (including one provider that also receives federal USF dollars and 

recently won a Connect America Fund grant), and cable and satellite providers. 

CT A members cannot "compete" with EagleNet or its network because it is not 

regulated, does not pay taxes, has no debt (their money was a grant not a loan) and 

has no state oversight. 
80 


80019.032

Conflicting Agency Policies, Practices and Grant Conditions 

Conflicting federal agency policies and strict grant conditions limit CTA member's 

ability to secure agreements with EagleNet. First and foremost, federal agencies 

should insure that taxpayer dollars are not used to duplicate infrastructure 

development in rural communities. In addition, NTIA should reconsider its' policy 

of primarily leasing Dark Fiber Facilities because of an internal accounting 

requirement that leases can only be categorized as a capital expenditure. Some lit 

fiber solutions may provide better service at a more reasonable price with greater 

reliability. Also, both RUS and NTIA require that they be in the first lien position 

on owned or leased fiber facilities. This is counterproductive and leaves CTA 

members stuck in the middle. The federal government is the federal government -

this should be resolved through internal accounting or inter-agency agreement not 

by penalizing local providers. 

Assistant Secretary Strickling Meets with CTA in Colorado 

CTA was able to meet with Mr. Strickling earlier this month while he was in 

Colorado to speak at a conference. In addition, the meeting included Mr. Gardner 

and his staff, myself and CTA Board President Kevin Felty as well as other NTIA 

staff and Congressional staff. Newly appointed EagleNet CEO Mike Ryan also 

attended the meeting. 
81 


80019.033

While no agreements or commitments were made by either party Mr. Ryan agreed 

to make every effort to work with our members where feasible. 

Conclusion 

• CTA members still support EagleNet's original mission to provide service 

where there is a demonstrated need that is not being met by another provider 

• We respectfully ask committee members to strongly encourage EagleNet to 

negotiate in good faith with local providers to use existing local facilities 

and to avoid duplication of existing infrastructure 

• Eliminate conflicts within federal agencies to allow for collaboration 

• EagleNet should redeploy remaining funds to areas of the state (Western 

Slope) where it is badly needed 

Mr. Chairman, Ranking Committee Member Eshoo thank you for your time and 

attention to this very important issue affecting our members. I would be happy to 

answer questions. 
82 

Mr. WALDEN. Mr. Kirchhof, thank you for your testimony. We appreciate your participation in our hearing. 

We will turn now to Ann Eilers, the Principal Assistant Inspector 

General for Audit and Evaluation, Office of the Inspector General, 

U.S. Department of Commerce. 

Ms. Eilers, thank you for being here this afternoon. We look forward to your testimony. 

STATEMENT OF ANN EILERS 

Ms. EILERS. Great. Thank you, Chairman Walden, Ranking 

Member DeGette, and members of the subcommittee. I appreciate 

the opportunity to appear before you today to discuss our continued 

oversight of the Broadband Technology Opportunities Program, or 

BTOP. 

The American Recovery and Reinvestment Act of 2009 was 

signed into law 4 years ago. The Act provided the National Telecommunications and Information Administration, or NTIA, approximately 4.7 billion to establish BTOP. Since then, BTOP has 

developed into a program of approximately 225 projects that are 

providing broadband services. NTIA issued grants in three major 

areas: comprehensive community infrastructure, public computing 

centers, and sustainable broadband adoption. Many of the projects 

are nearing completion, with the last projects scheduled for September of this year. Extensions have been granted to a number of 

grantees, some through September 2013. Additionally, we understand NTIA has requested a waiver from OMB for grant funds to 

be spent after September 2013. 

The Recovery Act also established a central role for the Offices 

of the Inspector General to monitor their agencies use of funds to 

prevent fraud, waste, and abuse. Our oversight began immediately 

after the passage of the Act. We have provided over 50 sessions of 

compliance and controls training to program staff and grant recipients. We also assisted with the development of the program-specific 

Audit Guide for for-profit BTOP award recipients. 

Our oversight efforts have continued, and to date, we have both 

assessed the program operations of BTOP and reviewed specific 

issues with some individual awards. Our work includes 10 published products containing over 40 recommendations developed to 

improve BTOP administration and monitoring of the grant awards. 

Additionally, our review of single- and program-audit reports has 

identified findings and questioned costs within the grant operations. 

Finally, we have established procedures to closely monitor, follow 

up on, and analyze complaints made to our hotline. The hotline is 

available online by telephone. It provides stakeholders a fast, anonymous, or confidential means to report fraud, waste, and abuse. 

Since appearing before the Subcommittee last May, we have reported that BTOP continues to face challenges with issues in grant 

match, acquisition and implementation of equipment, and sub-recipient monitoring. Most recently, we issued reports on the need for 

sub-recipient monitoring to be strengthened and problems associated with an infrastructure award to West Virginia. 

We reviewed the West Virginia award at the request of this committee. We found that the grantee had not demonstrated it had 

83 

used award funds cost-effectively to purchase routers. We also 

identified problems with the grantee’s inventory management. 

We currently have two BTOP reviews in progress. One is on assessing the internal controls NTIA has in place to monitor grantee 

equipment procurement and deployments. The other is to review 

NTIA’s closeout operations as they assess that all laws, regulations, and grant terms are met by these projects. 

Finally, we will continue to work on BTOP hotline complaints 

and tracking audit issues identified in audits performed by independent accounting firms. 

Again, we appreciate the opportunity to appear before the Subcommittee. I am pleased to respond to any questions that you may 

have. 

[The prepared statement of Ms. Eilers follows:] 

84 


80019.034

Testimony of 

Ann C. Eilers 

Principal Assistant Inspector General 

For Audit and Evaluation 

u.s. Department of Commerce 

before the 

House Energy and Commerce Committee 

Subcommittee on Communications and Technology 

Is the Broadband Stimulus Working? 

February 27, 2012 
85 


80019.035

Chairman Walden. Ranking Member Eshoo. and Members of the Subcommittee: 

I appreciate the opportunity to testify today about our continued oversight of the Sroadband 

Technology Opportunities Program (STOP). as well as the challenges the National 

Telecommunications and Information Administration (NTIA) faces in its oversight of STOP 

projects as they are completed and the grant awards closed out. 

The American Recovery and Reinvestment Act of 2009 (Recovery Act), passed four years ago 

this month, provided NTiA approximately $4.7 billion to establish STOP. This competitive grant 

program was established to provide funds for deploying broadband infrastructure in unserved and 

underserved areas of the United States, enhance broadband capacity at public computing 

centers, improve access to broadband services for public safety agencies, and promote 

sustainable broadband adoption. STOP awards were made in three major areas: 

• program infrastructure (comprehensive community infrastructure, or CCI), to provide 

institutions such as schools, libraries, and medical facilities with internet connectivity, 

including seven grant awards, totaling approximately $382 million, targeting 700 

megahertz (MHz) interoperable public safety wireless networks; 

• public computing centers (PCCs), to establish new public computer facilities or upgrade 

existing ones to provide broadband access to the general public or specific populations 

such as low-income individuals, the unemployed, seniors, children, minorities, and 

people with disabilities; and 

2 
86 


80019.036

• sustainable broadband adoption (SBA), to promote broadband Internet usage and adoption, 

including among specific populations traditionally underserved by this technology. 

NTIA also administers the State Broadband Initiative Program that supports the twice yearly 

update of the National Broadband Map, a searchable map of broadband availability. 

Table I provides a summary of BTOP funding with these and other categories: 

Table I. BTOP Funding 

C I No_ of Actual 

ategory Awards {miHions} 

eel 

state Broadband Initiative Program 

pee 

Source: OIG. based on NTIA data 

117 $3,348 

147 

171 

~ Includes transfer to OIG. transfer to Federal Communications Commission. and NTIA 

administrative expenses (figures have been rounded). 

At the conclusion of the BTOP award process on September 30, 20 I 0, NTIA had awarded 233 

grants. As of December 31, 2012, the total number of BTOP grants decreased from 233 to 225 

due to grant cancellations, modifications, and terminations, which resulted in approximately 

$171 million returned to the U.S. Department of the Treasury. Most of the awards are in CCI 
87 


80019.037

projects (see table I). 

The Recovery Act also established a central role for Offices of Inspector General in monitoring 

their agencies' use of funds to prevent fraud, waste, and abuse. To date, our oversight efforts 

have (I) assessed the establishment, implementation, and program operations of BTOP and (2) 

reviewed specific issues with some individual awards. This includes 10 published products and 

44 recommendations developed to improve the administration of BTOP and monitoring of 

approximately $4 billion in grant awards. We have also provided training to NTIA and grant 

recipients on the need for compliance with terms of the award. Our nonfederal audit review of 

single and program-specific audit reports has identified audit findings and questioned costs with 

BTOP awards. Since our testimony on May 16,2012, to this subcommittee, we have reported on 

STOP grantees' matching share, NTIA's management and oversight of its contract for STOP 

administration, subrecipient monitoring, and the review of a CCI award to West Virginia. 

We currently have two STOP review engagements in process, including a review of STOP 

equipment and an audit of NTIA's closeout of its awards. (Please see appendix for further 

details.) Further, we have established procedures to closely monitor, follow up on, and analyze 

trends for Hotline complaints. The Hotline, available online or by telephone, provides 

stakeholders with a fast and-should they wish-anonymous or confidential means to report 

waste, fraud, and abuse and to hold BTOP awardees and NTIA accountable for federal dollars. 

These represent our most immediate efforts to anticipate and address NTIA's ongoing 

challenges in administering the program. 

My testimony will address the following challenges that we believe NTIA faces: 

4 
88 


80019.038

I. Some BTOP projects are at risk of not being completed by September 30. 2013; 

2. Additional monitoring of equipment may be needed; 

3. Findings from OIG and nonfederal audits require close attention; 

4. NTIA needs to address challenges associated with the First Responder Network 

Authority (FirstNet) program and BTOP public safety projects that were affected by its 

establishment; and 

S. Effective oversight remains essential as awards are closed out. 

I. Some BTOP Projects Are at Risk of Not Being Completed by September 30, 

2013 

In our May 2012 testimony. we reported that slow Recovery Act spending represented a 

challenge. Although overall BTOP disbursement increased from 42 percent as of April 30. 2012. 

to 67 percent as of December 31. 2012. 27 grants continue to lag. with reported spending at 

less than 50 percent of their available grant funds (see table 3 below). For all awards. more than 

$1.0 billion had not been disbursed at the close of calendar year 2012. Figure I below provides a 

summary of BTOP disbursements through December 31. 2012. 

5 
89 


80019.039

Figure I. BTOP Disbursements by Project Type (as of December 31, 2012) 

$5.5X 5::',3'::'8 81% 79% 

S3,XQ 

5D% 

ssm 

s G% 

S8.A 

Source: U.S. Department of the Treasury, Automated Standard Application for Payment 

ns,;,.,J D$bu:5Em~ljt5 

(12/31/20:2.) 

The July 2009 and January 20 I 0 notice of funds availability (NO FA) required that all BTOP 

BTOP grants be awarded by September 30. 20 I 0 and projects be fully completed within 3 years 

of the grant issuance. Since the first BTOP grants were awarded in December 2009. the 

forecasted completion dates ranged from November 2012 to September 2013, However. as of 

February I. 2013. extensions to complete projects had been requested for more than 35 

awards-many until September 30. 2013. 

Further. on September 15. 20 II. the Office of Management and Budget (OMB) issued 

memorandum M-II-34. stating that federal agencies "should work collaboratively and 

transparently with recipients of discretionary Recovery Act grants to accelerate the spending 

rate for all awarded funds while still achieving core programmatic objectives." M-I 1-34 also 

directs federal agencies to "establish aggressive targets. consistent with programmatic objectives. 

6 
90 


80019.040

for outlaying remaining funds [and] take steps to complete Recovery Act projects by September 

30, 2013." While federal agencies were directed to "accelerate the spending rate for all 

awarded funds while still achieving core programmatic objectives," M-II-34 does allow for 

deadline extension waivers where a project must undergo complex environmental review, the 

long-term nature of programs prevent acceleration, contractual commitments prevent adjusting 

the timeline for spending or other special circumstances exist. NTIA has informed us that it has 

requested such a waiver for STOP projects. 

Table 2 provides additional details on the 27 projects with spending levels at 50 percent or less 

as of December 31, 2012. With approximately 7 months of the 3-year grant life remaining, 

those projects that have spent 50 percent or less of their grants present a higher risk of not 

meeting their spending deadlines. 

Table 2. STOP Grants with Spending Less Than 

or Equal to 50 Percent (as of December 31, 2012) 

f Pederal l?ottion of . Number 0 

l?rolect Type G Funds Type's rants (millions) Total Grants 

eel 21 $720.2 18% 

~SBA 4 $15.4 9% 

pee 2 $ff4 3% 

Total 27 $744:0 12% 

Source: u.s. Department of the Treasury, Automated Standard Application 

for Payment 

Spending delays result from multiple causes. For example. special award conditions included in 

eel awards require that an environmental assessment (EA) conclude prior to the start of 

7 
91 


80019.041

construction. Additionally, in its September 2012 Quarterly Program Status Report, I BTOP 

reported to Congress that local permitting and agreements for rights-of-way and other land 

easements, utility pole agreements and make-ready work. and other predeployment activities 

have caused implementation schedule delays for some grant awards. Also, passage of legislation 

that established an interoperable nationwide public safety network (discussed later) delayed 

seven pUblic safety projects because assessments of the legislation's effect on their 

implementation became necessary. 

2. Additional Monitoring of Equipment Procurement May Be Needed 

With a complex grant portfolio and recipient profile, NTIA's continual monitoring of the 

program and technological challenges is essential to ensuring that approximately $4 billion in 

federal funds are safeguarded. It is important to verify that the equipment procured under 

BTOP is appropriate for its intended use; complies with market standards; and has been tested 

for functionality and properly implemented and inventoried. In December 2012, OIG initiated 

an equipment review of a sample of STOP projects. The objectives of this audit include 

verifying (I) whether NTIA has adequate internal controls in place to monitor equipment 

procurements and federal interest, (2) whether grantees have appropriately acquired, tested, 

and implemented the most effective equipment, and (3) whether grantees are on track to 

complete the projects on time and achieve program goals. As we discussed in our May 2012 

testimony, our November 2011 BTOP award monitoring report provided recommendations to 

N1lA for improving internal controls over monitoring activities. NTIA submitted a responSive 

action plan to our report and took a number of corrective actions. NTIA committed to 

1 National Telecommunications and Information Administration, March 2012. Broadband Technology Opportunities 

Program (BTOP) Quarterly Program Status Report. Washington, DC: NTIA 

8 
92 


80019.042

strengthen its procedures for following up on inconsistent performance reporting, documenting 

identified and resolved grant implementation issues; and strengthening site visits by verifying 

certain documentation (Le., grant match). Also, NTIA committed to working closely with 

recipients that are at risk of not completing projects on time. 

In our January 23, 2013, response to the June 4, 2012, congressional request to review the 

BTOP grant awarded to the Executive Office of the State of West Virginia (EOWV), OIG found 

several issues associated with the implementation of the award. 2 We concluded that EOWV: 

• had not demonstrated that BTOP funds used to purchase routers were spent costeffectively, 

• had not effectively managed and tracked router inventory, and 

• did not administer agreements with community anchor institutions (CAls) for the 

receipt of federal property. 

Specifically, EOWV did not perform a study to determine the appropriate size router that 

would most effectively and efficiently meet the individual CAl needs. As a result, it is uncertain 

whether the selected approach was the most cost-effective. Savings could have been achieved if 

less expensive routers had been purchased for some locations. The issues we identified with 

inventory and agreements for the receipt offederal property reflect concerns over the 

2 On june 4. 2012, the Chairmen of the Subcommittee on Communications and Technology and Subcommittee 

on Environment and the Economy requested the review. 

9 
93 


80019.043

accountability of purchased assets. The West Virginia legislative auditor also reported that 

federal funds had been misspent on oversized routers. 

3. Findings from OIG and Nonfederal Audits Require Close Attention 

Our audits of cross-cutting issues affecting STOP awards resulted in the issuance of reports 

containing recommendations to strengthen grant match and subrecipient monitoring. 

In June of 2012. we issued a report on whether NTIA has processes in place to monitor STOP 

recipient match and verify that match contributions meet federal administrative requirements. 

We concluded that: (I) pee and SSA grantees do not receive the same detailed match review 

as eel projects; (2) grantees permitted a contractor and a subrecipient to access cash 

drawdowns through the U.S. Department of the Treasury; (3) grantees did not record the grant 

match in the financial records; and (4) some grantees were behind schedule in contributing their 

nonfederal match. Steps were needed to ensure that grant match requirements were met and 

to guard against the unauthorized use of funds. NTIA submitted a responsive action plan to 

address the report's recommendations. 

In January of 2013. we issued a report on the effectiveness of subrecipient monitoring for 

BTOP. 3 We concluded that: (I) awards that had a vendor might not be properly classified. (2) 

subrecipient monitoring plans were not in place or were inadequate. (3) subrecipient 

agreements did not contain all required provisions. and (4) recipients were not reporting all 

3 U.S. Department of Commerce. Office of Inspector General. January 2013. Proper Classification and Strengthened 

Monitoring of Subrecipients Are Needed for the Broadband Technology Opportunities Program (OIG-13-0 13-A). 

WaShington. D.C,; Department of Commerce OIG. 

10 
94 


80019.044

required information into FederaIReporting.gov. Effective monitoring of subrecipients is 

necessary to ensure that project costs are allowable. allocable. and reasonable: program goals 

are achieved; and that Recovery Act transparency reporting requirements are met. 

We also noted other matters not directly related to subrecipient monitoring that warrant 

attention. including: (I) recipients might not complete projects on time. (2) recipients' financial 

information was not reconciled to the Recovery Act website, (3) vendors were not reviewed 

for suspension and debarment. (4) not all vendor contracts were competed for STOP grants, 

and (5) recipients did not maintain vendor contracts. 

Finally. our nonfederal audit review of single and program-specific audit reports identified 

questioned costs and noncompliance concerning STOP awards.' OIG also worked with NTIA to 

develop a program-specific audit guide for STOP award recipients that are for-profit entities. 

The most common findings included noncompliance with (I) applicable policies or procedures 

(either not having them or not following them), (2) cost principles for allowable costs. and (3) 

reporting requirements (either deficient or late reports). Please see appendix for further 

details. 

4 Nonfederal entities (Le., states, local governments, tribes, colleges and universities, and nonprofit organizations) 

that expend $500,000 or more in federal awards in a year are required to have these awards audited annually in 

accordance with OMS Circular A-133. Commercial organizations that receive federal funds from the Department 

are subject to award requirements as stipulated in the award document. 

II 
95 


80019.045

4. NTIA Needs to Address Challenges Associated with the First Responder 

Network Authority (FirstNet) Program and Existing STOP Public Safety 

Projects That Were Affected by Its Establishment 

The passage of new legislation requiring NTIA to establish an interoperable nationwide public 

safety broadband network (PSSN) while continuing to oversee STOP places additional 

requirements on NTIA. increasing program risk. As we continue to track the establishment of 

FirstNet. its impact on key STOP pUblic safety projects should be closely monitored. 

On February 22. 2012. Congress enacted the Middle Class Tax Relief and Job Creation Act of 

2012 (P.L. 112-96), reallocating the D-block spectrum and $7 billion in funding to NTIA for the 

establishment of PSSN. Specifically. the law requires the establishment of an independent 

authority within NTIA called the First Responder Network Authority (FirstNet) to (I) 

administer the D-block and existing public safety spectrum and (2) oversee the establishment 

and deployment of the PSSN. 

Several STOP projects involve networks similar to FirstNet's PSBN. As a result. our STOP 

oversight helps us anticipate issues and concerns that could potentially arise with FirstNet. We 

have been closely following the progress of STOP's seven existing public safety grant awards 

(totaling $382 million), having already reviewed the BayWES grant in a report issued May 2011 

and a memorandum issued in January 2012. These seven large. complex infrastructure projects 

have faced multiple deployment challenges. resulting in slow awardees spending and a 

subsequent halt: 

12 
96 


80019.046

• Adams County (Colorado) Communications Center. Inc. (ADCOM) 

• City of Charlotte. North Carolina (CharMeck Connect) 

• Executive Office of the State of Mississippi (MESHNet) 

• Los Angeles Regional Interoperable Communications System (LA-RICS) 

• Motorola. Inc. (in the San Francisco Bay area) 

• New Jersey Department of Treasury 

• New Mexico Department of Information Technology 

Causes include delays in EAs. vendor selection. design modifications. establishment of 

governance structure. and the partial suspension of these awards on May 1 I. 2012. Figure 2 

depicts the federal fund amounts and the spending rates as of December 31. 2012. for these 

projects. 

13 
97 


80019.047

Figure 2. Disbursement of BTOP Public Safety Grant Funds 

5160 5155 

$140 

$120 

1$100 

E 

:§. $80 $70 

1: 

.!! 

"0 $60 Q 

$40 $39 

$40 

520 $17 

$.4 

NJ Treasury LA·RICS Motorola CharMeck MESHNet NM Dept of ADCOM 

Connect IT 

Source: U. S. Department of the Treasury, Automated Standard Application for Payment 

YGrant Amount 

j,; Disbursements 

(12/31/2012) 

If the suspension from NTIA is lifted. FirstNet will integrate the progress achieved by the seven 

public safety grantees into the PSBN. 

Given the complexity and time requirements of PSBN. it has taken FirstNet several months to 

fully establish itself and its rules and regulations. While FirstNet hires staff to handle its day-today operations. it receives support from NTIA for establishment of its program guidelines. This 

has put additional requirements on NTIA staff. which could negatively affect oversight of BTOP. 

Since its establishment, the FirstNet board has held three meetings. Per the February 12. 2013. 

meeting. the FirstNet board has informed the public that they have made site visits to each of 

14 
98 


80019.048

the seven BTOP public safety awards and are moving forward with issuing new spectrum leases 

with each. Also, the board has made its recommendations to NTIA to lift its partial suspension, 

so that the recipients can continue their long-term evolution (L TE) network build-out. 

Several challenges remain for FirstNet in the establishment of PSBN, including: 

• Integration of the seven BTOP grants into the PSBN. Despite the FirstNet board's 

recommendations, NTIA has to be willing to lift the partial suspension and allow the 

projects to integrate into FirstNetlPSBN. 

• Construction of a nationwide LTE network. Due to the size of this network, vendor 

participation, equipment readiness, and build-out will represent significant challenges. 

• Ensure sufficient funding for build-out and sustenance of a truly nationwide network. The 

public safety customer base is a fraction of the commercial network customer base. 

Therefore, it will be challenging for FirstNet to ensure funding for its network without 

future congressional funding. 

• Regional and statewide cooperation. Getting various state and local public safety agencies 

to cooperate with each other and truly realize the benefits of such a network could 

pose challenges, as was stated in our May 6, 20 I I. 

With so much significant spending on public safety equipment procurement and deployment, it 

is imperative to ensure that the equipment works and meets the intended BTOP objectives. 

15 
99 


80019.049

OIG continues to oversee NTIA efforts to ensure it can monitor grantees' equipment 

procurements. 

S. Effective Oversight Remains Essential as STOP Awards Are Closed Out 

Finally. Mr. Chairman. we would like to update the Subcommittee on concerns we expressed at 

our May 2012 testimony relating to funding of oversight. Section 1306 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act requires that unobligated Recovery Act funds be 

returned to the U.S. Department Qfthe Treasury on December 31. 2012. On that date, OIG 

had $4.8 million in unobligated oversight funds that OIG needed for continued overSight of 

BTOP. in addition to approximately $600,000 for other ARRA oversight activities. OIG 

requested and received a waiver from this provision for $4 million, to be divided between 

BTOP and other ARRA oversight. 

Our future BTOP overSight plan includes a combination of program audits and targeted reviews 

of risky grants. In addition, we will continue investigating and resolving complaints of 

wrongdoing made against BTOP award recipients. for which we have established a formal 

complaint monitoring process. The number of complaints has increased over time. and it is 

reasonable to expect that number to continue to go up as the program matures. 

As of January 14, 2013. NTIA identified 15 awards as being currently in the closeout phase. with 

an additional 55 scheduled to end within 90 days. Closeout procedures are actions performed 

at the expiration of an award to ensure that all activities are complete and ensure that the 

recipient has complied with applicable laws, regulations, OMB circulars. and grant terms and 

16 
100 


80019.050

conditions. Of those 55 grants, 26 have submitted a request to extend their performance 

period to September 30, 2013. The risks associated with inadequate closeout processes include 

the possibility that assets purchased with federal funds are not properly secured and that 

unused funds are not promptly returned to the Treasury. Grant closeout procedures also 

represent one of the final opportunities to detect unallowable uses of funds. 

We have initiated an audit of grant closeout procedures to ensure adequate operations are in 

place to effectively close out the BTOP grants as their period of performance comes to an 

end. The audit objectives are to evaluate whether grant project closeout policies and 

procedures established for BTOP are adequate to effectively administer closeout activities and 

to assess whether closeout procedures are being followed as BTOP grants are closed. 

Additionally, while OIG is not in a position to speak to the Administration's budget request for 

NTIA oversight, it is essential that NTIA receive sufficient funding for the oversight of BTOP. As 

BTOP projects progress toward completion dates, NTIA must continue to monitor the awards. 

Oversight will need to continue beyond September 30, 2013 (the target end date for the last of 

the BTOP awards) to monitor (I) projects receiving extensions and (2) projects that have been 

completed for which closeout procedures are being performed. 

In conclusion, Mr. Chairman, for FY 2013 and beyond, BTOP continues to face challenges, in 

the oversight of projects as they are being completed and grant awards are closed out. The 

Subcommittee's continued attention and oversight are important. For the Department to 

ensure effective implementation of BTOP, especially in light of fulfilling OMB and legislative 

17 
101 


80019.051

requirements. OIG and NTIA will need Congress to continue your oversight efforts. This 

concludes my prepared statement, and I will be pleased to respond to any questions you or 

other Subcommittee members may have. 

18 
102 


80019.052

Appendix 

OIG STOP-Related Testimony, Reports and Memorandums, Works in Progress, 

and Training 

OIG's BTOP oversight efforts began immediately after passage of the Recovery Act. Our 

ongoing monitoring activities include: tracking grant recipient spending, reviewing quarterly 

progress reports submitted by recipients, attending BTOP biweekly meetings to learn updates 

on program status, attending quarterly meetings with contractors providing program services, 

reviewing single audit and program-specific audit reports (as well as complaints), and responding 

to BTOP program office questions. Further, our outreach efforts have resulted in 53 total 

training sessions, reaching more than 3,250 program staff and grant recipients with more than 

3,500 total training hours. For further detail, see table below. 

Table A. OIG Oversight of BTOP (2009-Current) 

Related Testimoll}l 

Title (Number) 

Broadband Loans and Grants 

(OIG-12-026-T) 

Stimulus Oversight: An Update on 

Accountability, Transparency, and 

Performance 

(OIG-12-012-T) 

ARRA Broadband Spending 

(OIG-II-019-T) 

Date Congressional Audience 

Committee on Energy and Commerce 

May 16. 2012 Subcommittee on Communications and Technology 

(U.S. House of Representatives) 

Committee on SCience, Space, and Technology 

November 30, 20 I I Subcommittee on Investigations and Oversight 

(U.s. House of Representatives) 

Committee on Energy and Commerce 

February 10, 20 II Subcommittee on Communications and Technology 

(U.s. House of Representatives) 

19 
103 


80019.053

Related Repprts and Memorandums 

TItle (Number) 

Proper Classification and 

Strengthened Monitoring 

of Subrecipients Are 

Needed for the 

Broadband Technology 

Program (OIG-13-0 13-A) 

Letter to Representatives 

Walden and Shimkus re: 

Review of NTIA's BTOP 

Grant Award to the 

Executive Office of the 

State of West Virginia 

(OIG-1 3-012-1) 

Review of NTIA's 

Oversight of the Booz 

Allen Hamilton Contract 

Supporting the Broadband 

Technology Opportunities 

Program 

(OIG-1 2-03 I-M) 

Release Date 

January 31. 2013 

January 23, 2013 

August 9, 2012 

Synopsis of Recommendations 

NTIA should: . .. .. .... . .. 

Review grants to ensure subrecipients are 

properly classified and funds are appropriately 

accounted for 

Work with recipients to ensure effective 

monitoring mechanisms are in place and 

reemphasize the importance of including BTOP 

provisions in subsequent agreements 

Notify recipients of the OMB M-092 I 

vendorlsubrecipient reporting requirements and 

ensure recipients understand what should be 

reported as federal expenditures 

Encourage recipients to review vendors and 

principals for suspension and debarment 

throughout the life of the grant and promote 

appropriate competition 

Communicate to recipients the importance of 

maintaining vendor contracts 

Results of our work: 

EOVVV should have had an adequate inventory 

systems and agreements with CAls for the router 

equipment 

EOVVV should have done a detailed data rate 

capacity study of each CAl, before signing up for a 

one-size-fits-all router approach 

NTIA should: .. . 

20 

Consider improving contract oversight controls: 

o invoice and payroll reconciliation 

o closeout audit by the Defense Contract Audit 

Agency 
104 


80019.054

NTIA Needs Stronger 

Monitoring of BTOP 

Grant Recipients' Match 

(OIG-12-029-A) 

Misrepresentations 

Regarding Project 

Readiness, Governance 

Structure Put at Risk the 

Success of the San 

Francisco Bay Area 

Wireless Enhanced 

Broadband 

(SayWEB) Project 

(OIG-12-0 16-M) 

NTIA Has an 

Established Foundation 

to Oversee BTOP 

Awards, But Better 

Execution of 

Monitoring Is Needed 

(OIG-12-0 13-A) 

June 18,2012 

January I 0, 20 12 

November 17,2011 

NTIA should: 

Develop and implement improved processes for 

reviewing PCC and SBA grant match amounts 

Formally communicate the risk associated with 

third-party cash drawdowns to all grant 

recipients and stress the importance of increased 

monitoring on their behalf when allowing third 

parties to draw down grant funds from the 

Treasury ASAP system 

Implement program office controls to closely 

monitor ASAP drawdowns on a timely basis, 

especially those grant recipients that have 

delegated ASAP system access to third parties 

Communicate to recipients that match 

expenditures must be supported and correctly 

reflected in their financial records 

Work with NIST and NOAA grants officers to 

provide NTIA with the BTOP grantees' quarterly 

financial status reports and monitor the 

contribution trends and proportionality waiver 

activity to ensure grantees are providing their 

reqUired match 

NTIA should: 

"[M]ake a determination whether the 

corrective actions underway by the grantee and 

political jurisdictions are sufficient to overcome 

the defects in the initial application" 

"[With the Department.] gather lessons 

learned from this award to employ on other 

BTOP and future grant programs" 

NTIA should: 

21 

Take prompt steps to strengthen 

federal program officers' monitoring 

efforts 

Verify source documentation as part of 

its monitoring efforts 

Strengthen its monitoring tools' internal 

control capabilities 

Improve guidance for recipient 

match documentation during site 

visits 

Help recipients at risk of noncompliance with 

award progress and completion requirements 

to revise completion dates. request project 

extensions, or rescope projects 

Incorporate continuous trend analysis into 

its award monitoring process 
105 


80019.055

Review of BTOP 

Award for the San 

Francisco Bay Area 

Wireless Enhanced 

Broadband (BayWEB) 

Project (OIG-II-024-1) 

Broadband Program Faces 

Uncertain Funding, and 

NTIA Needs to Strengthen 

Its Post-Award Operations 

(OIG-II-OOS-A) 

NTIA Must Continue to 

Improve its Program 

Management and PreAward Process for its 

Broadband Grants 

Program (ARR-19842-1) 

NTIA Should Apply 

Lessons Learned from 

Public Safety Interoperable 

Communications Program 

to Ensure Sound 

Management and Timely 

Execution of $4.7 Billion 

Broadband Technology 

Opportunities Program 

(ARR-19583) 

May 6, 2011 

November 4, 20 I 0 

April 8, 2010 

March 3 I, 2009 

NTIA should: 

Ensure independent review of complaints 

and document responses and results 

Develop policies and procedures for 

timely response to complaints, including 

the communication of issues with OIG 

Emphasize for BTOP staff the importance 

of communication with the grants office 

when responding to complaints 

Ensure, when monitoring awards, that 

equipment is valued at cost (consistent with 

cost principles) 

Direct BTOP to promptly communicate 

potential problems or deviations to the grants 

officer 

NTIA should: 

Manage the future lack of funding for BTOP by 

developing alternative approaches to 

monitoring and oversight 

Ensure that agreements with other agencies, 

manuals and guidance, training and 

development. and monitoring procedures are 

clearly documented and fully adhered to 

NTIA should: 

Create a staffing plan that outlines the 

necessary management resources and adjusts 

to key positions lost 

Develop and implement documentation 

policies and procedures 

Have in-house counsel document arising 

program issues and opinions from the 

Department's 

Office of General Counsel 

Supplement reviewing staff to 

address unforeseen delays 

Develop procedures for monitoring recipients 

at risk of experiencing delays in completing 

post- award NEPA requirements 

NTIA should: 

22 

Seek to extend program office funding to ensure 

proper oversight 

Use joint peer reviews before making grant 

awards 

Complete a prompt environmental assessment of 

BTOP 
106 


80019.056

Nonfe'deral Audit Review {2111J2:00'-2/2012013) 

Audit Type Total Questioned Costs" RepOrts 

. Reviewed 

Total Number of FIndings 

Single Audits S9 63 $2,220,000 

Program-Specific Audits 6S 91 $ 73,000 

aCosts related to audits completed by independent public accountants. We work with NTIA grants officers to resolve these 

issues, which can result in repayment. 

Related Works in Pl'ogress 

Subject 

Acquisition of Equipment for BTOP 

Infrastructure Projects 

BTOP Grant Closeout Procedures 

selected tlirainings 

Subject 

OIG oversight and reemphasis on the 

importance of effective subrecipient 

monitoring 

Project management, grant match, and 

nonfederal audits 

State Broadband Initiative on common 

audit findings and the need for strong 

recipient internal controls 

Webinar on importance of 

subrecipient monitoring and common 

issues with subrecipients 

Fraud prevention (identifying red flags 

and providing tips to prevent fraud) 

Summary of Objectives 

Determine (I) whether NTIA has the personnel and processes in place 

to effectively monitor grantees' equipment acquisitions, including 

security, inventory control, and report submittals; (2) assess whether 

grantees have appropriately acquired, tested, and implemented the most 

effective equipment; and (3) evaluate whether grantees are on track to 

complete the BTOP projects on schedule and achieve project goals. 

Determine whether adequate closeout policies and operations have been 

established to effectively close out the approximately 230 BTOP awards 

and assess if closeout procedures are being followed as BTOP projects 

are completed and closed. 

Date 

May 24, 2012 

October 6, 20 II 

April 28, 20 II 

February 3, 20 I I 

Various 

23 

Audience BTOP grantees 

Grant recipients (mixed local, state, 

nonprofit) 

NTIA staff; awardees 

NTIA staff; awardees 

NTIA staff; awardees 
107 

Mr. WALDEN. Ms. Eilers, thank you very much for the work you 

and your team do. We appreciate it. It is very valuable in the 

course of our activities. 

We will turn out to Mr. Michael K. Smith, State PresidentVermont, FairPoint Communications. 

Mr. Smith, thank you for being here today. We look forward to 

your testimony. 

STATEMENT OF MICHAEL K. SMITH 

Mr. SMITH. Well, thank you very much. I want to thank the Subcommittee Chairman Walden and Ranking Member DeGette for allowing me here to testify. I also wanted to thank Hon. Peter Welch 

of my home State of Vermont for his continuing dedication and attention to the needs of Vermonters who are unserved and waiting 

for reliable high-speed broadband connections. He has been a great 

partner with us, especially in our efforts to thwart scammers who 

prey on our elderly. 

My name is Michael Smith and I am the Vermont State President for FairPoint Communications. I have more than 30 years of 

experience in executive leadership positions in both the public and 

private sector, most recently as secretary of administration under 

Governor Jim Douglas, and now with FairPoint Communications. 

My testimony will concentrate on providing some specific examples of how well intentioned public policies can go off track when 

put into implementation opening the possibility of wasting millions 

of dollars of taxpayers’ money and potentially leaving people without the promise of reliable broadband access. 

As a State President in Vermont, I have been very vocal that 

public money used to overbuild existing networks is duplicative of 

private sector efforts, and in many cases, undercuts those efforts. 

The key term I would ask you to focus is on overbuild. This practice is wasteful and does not provide broadband to those who are 

now unserved. 

Let me give you a specific example. Vermont was awarded the 

stimulus award of $33 million that went to the Vermont Telecommunications Authority on behalf of its private partner 

Cybernet. As an aside, I can tell you that when I was secretary of 

administration, I helped create the VTA. It was not to create a 

publicly financed competitor aimed at putting FairPoint and other 

private providers at a competitive disadvantage. 

The VTA Cybernet project that is underway is a middle-mile 

project. Vermont is a State unlike other States in the country that 

has plenty of existing middle-mile networks built and maintained 

by FairPoint, as well as other private sector providers. In my opinion, stimulus funding should be directed to the last mile where the 

need is greatest. 

The Vermont Telecommunications Authority stimulus-funded 

project simply overbuilds existing privately funded middle-mile networks. It is a waste of taxpayers’ money and duplicates existing 

networks and does not bring meaningful last mile broadband to 

Vermonters. In fact, it actually undercuts the private investment 

that has already been made in Vermont. 

There are other examples of stimulus money being used to overbuild existing networks. In New Hampshire, the University of New 

108 

Hampshire received $65.8 million to overbuild the existing private 

sector networks. What is worse is the Federal Government permitted UNH to essentially give away most of this network to a private for-profit company named Waveguide. When this project is 

complete, not a single residential or business customer in New 

Hampshire will have the ability to call UNH or Waveguide and request internet access service. 

In Maine there is a similar example of $25 million in stimulus 

money being used to overbuild existing private sector-funded networks. Between VTA and VTel, the other large recipient of stimulus funds, a large portion of stimulus money is being spent on 

overbuilding existing middle-mile networks. With that in mind, I 

asked our engineers to do a quick estimate to find out if we had 

been awarded all the stimulus grant funds that are being used for 

middle-mile overbuilds in Vermont, could we have built broadband 

to every last unserved location in the State? The answer is yes. 

And in New Hampshire, the benefits to residents and businesses 

would be that they could actually call and order services. 

So you asked me the question: Is broadband stimulus working? 

Succinctly, I don’t believe it is working as efficiently and as effectively as it should be. And the programs I am familiar with actually undercut the efforts of private broadband infrastructure investment. In my view, the implementation of the program did result in 

ways that unwarranted competitive harm to companies whose networks were overbuilt with federal money. 

In closing, FairPoint will to continue to work with NTIA, RUS, 

FCC, Congress, U.S. Telecom, ITTA, and the BTOP and BIP 

awardees to ensure taxpayer dollars are used to better benefit the 

shared public policy goal of nearly ubiquitous broadband. 

Thank you. And I would be more than happy to answer any 

questions. 

[The prepared statement of Mr. Smith follows:] 

109 


80019.057

Testimony before the Subcommittee on Communications and Technology Hearing, 

"Is Broadband Stimulus Working?" 

House Committee on Energy and Commerce 

Rayburn House Office Building 

Wednesday, February 27, 2013, 10 a.m. 

Good morning. I want to thank the subcommittee, Chairman Walden and Rep. Eshoo for the invitation 

to testify today. I want to also thank the honorable Representative Peter Welch, of my home state of 

Vermont, for his continuing dedication and attention to the needs of Vermonters who are still unserved 

and waiting for reliable, high-speed broadband connections where they live and work. He has also been 

a great partner in our efforts to thwart the efforts of scammers who prey on our elderly. 

My name is Michael Smith and I am the Vermont State President for FairPoint Communications. I have 

more than 30 years of experience in executive leadership positions in both the public and private sector, 

most recently as Secretary of Administration under Governor Jim Douglas and now with FairPoint 

Communications. I hold both masters and bachelor degrees from the University of Vermont and served 

in the U.S. Navy as a member of SEAL Team Two. 

FairPoint is a leading provider of advanced communications services to business, wholesale and 

residential customers within its service territories. FairPoint offers its customers a suite of advanced 

data services such as Ethernet, high-capacity data transport and other IP-based services over a 

ubiquitous, next-generation fiber network with more than 15,000 route miles. 
110 


80019.058

FairPoint is the incumbent communications provider in the markets it serves, primarily rural 

communities and small urban markets. Many of its local exchange carriers have served their respective 

communities for more than 80 years. Our service territory spans 17 states, including Ohio, Illinois, 

Colorado, Kansas, Missouri and Pennsylvania. With headquarters in Charlotte, North Carolina, FairPoint 

serves approximately 1.3 million access line equivalents, including approximately 326 thousand 

broadband subscribers. We have more than 3,300 employees. FairPoint recently was ranked as the sixth 

largest telecommunications company in the country. 

Since April 2008, throughout northern New England we have invested more than $196 million to build a 

sophisticated and ubiquitous IP-based fiber network that serves not only our residential customers but 

an extensive base of retail customers, such as financial institutions, medical facilities, and governmental 

and educational institutions. 

*** 

My testimony will concentrate on providing some specific examples of how well-intentioned public 

policies can go off track when put into implementation, opening the possibility of wasting millions of 

dollars of taxpayers' money and potentially leaving people without the promise of reliable broadband 

access. 

As the State President in Vermont, I have been very vocal that public money used to overbuild existing 

networks is duplicative of private sector efforts, and in many respects, undercuts those efforts. 

By way of background, it is very important to highlight that FairPoint, through our Washington trade 

association, ITTA, filed comments before NTIA, RUS, and Congress in support ofthe broadband stimulus 

efforts. In fact, FairPoint and many other telecommunication providers saw the broadband stimulus 

program as an opportunity to bring broadband services to those areas which are rural and 
111 


80019.059

geographically challenging, where the business model makes it difficult to bring broadband to those 

consumers. 

In 2009, FairPoint applied for stimulus grants in the first round offunding. Although each of our seven 

applications in NNE achieved the highest level of endorsement in their respective states, we did not win 

any of the funding in the first round. We also applied for funding in Florida and Missouri and were not 

awarded funding. 

Given the experiences of the first round, we questioned internally whether to apply again, especially 

when Vermont indicated that the state was only endorsing its own application. As the deadline 

approach we decided to apply, but were only able to submit an application for Maine. It was turned 

down again. Never, did we expect the federal government to fund programs that overbuilt existing 

networks. We thought the emphasis would be on providing broadband to those residents and 

businesses that have no access to Internet services, those customers we know as "unserved". In fact, 

we appealed BTOP grants in both Vermont and New Hampshire specifically on the overbuild issue. 

Nonetheless, NTIA awarded the grants and duplicative networks are being built with taxpayer funds. 

The key term that I ask you to focus on is "overbuild." This practice is wasteful, and does not provide 

broadband to those who are now unserved. Let me give you some specific examples: Vermont was 

awarded a stimulus award of $33 million that went to the Vermont Telecommunications Authority 

("VTA") on behalf of its private partner, Sovernet. 

As an aside, I can tell you that when I was Secretary of Administration and helped created the VTA, it 

was not to create a publicly financed competitor aimed at putting FairPoint and other private providers 

at a competitive disadvantage. 
112 


80019.060

The VTA/Sovernet project that is underway is a middle-mile project. Vermont is a state that has plenty 

of existing middle-mile networks -- built and maintained by FairPoint as well as other private sector 

providers. 

In my opinion, stimulus funding should be directed to the last mile where the need is the greatest. The 

Vermont Telecommunications Authority stimulus-funded project simply overbuilds existing privately 

funded, middle-mile networks. It is a waste of taxpayers' money and duplicates existing networks and 

does not bring meaningful last-mile broadband to Vermonters. In fact, it actually undercuts the private 

investment that has already been made in Vermont. 

There are other examples of stimulus money being used to overbuild existing networks. In New 

Hampshire, the University of New Hampshire received $65.8 million to overbuild the existing private 

sector-funded networks. What is worse, the federal government permitted UNH to essentially give 

away most of this network to a private, for-profit company named Waveguide. When this network is 

complete, not a single residential or business customer in New Hampshire will have the ability to call 

UNH or Waveguide and request Internet access service. 

In Maine there is a similar example of where $25 million in stimulus money was used to overbuild 

existing private-sector funded networks. 

In Vermont, the other major recipient of federal stimulus money was VTel, or the Vermont Telephone 

Company, which received a total of $129 million, including a BTOP grant of $12 million to build middlemile networks and another $117 million in grants and loans that include more than $81 million to build 

its wireless network to deliver broadband-like services outside its territory, and build a CATV system and 

fiber inside its territory. 
113 


80019.061

Between the VTA and VTel, a large portion ofthe stimulus money is being spent on overbuilding existing 

middle-mile networks. 

Compare all of this to FairPoint, which has invested more than $196 million so far of its own money in 

Maine, New Hampshire and Vermont over the past 4 years to expand broadband and continues to 

invest. 

With that in mind, I asked our engineers to do a very quick estimate to find out if we had been awarded 

all ofthe stimulus grant funds that are being used for middle-mile overbuilds in Vermont, could we have 

built broadband to every last unserved location in the state. Their answer, yes! And in the case of New 

Hampshire, the benefit to residents and businesses would be that they can actually call and order 

service. 

You asked me to provide testimony on the question of "Is the Broadband Stimulus Working?" 

Succinctly the answer is it is not working as effectively and efficiently as it should be and the programs I 

am familiar with actually undercut the efforts of private sector broadband infrastructure investment. 

Certainly a program from the federal or state government to help providers expand broadband makes 

sense. Also, the Universal Service Fund can assist in meeting the challenges of deploying broadband to 

these markets with programs that are properly designed. But the implementation of this program did 

result in waste and unwarranted competitive harm to companies whose networks were overbuilt with 

federa I money. 

In clOSing, FairPoint will continue to work with the NTIA, RUS, FCC, Congress and the BTOP and BIP 

awardees to ensure taxpayer dollars are used to better benefit the shared public policy goal of nearly 

ubiquitous broadband. Thank you and I would be happy to answer any questions. 
114 


80019.062

Testimony before the Subcommittee on Communications and Technology Hearing, 

"Is Broadband Stimulus Working?" 

SUMMARY: 

House Committee on Energy and Commerce 

Rayburn House Office Building 

Wednesday, February 27, 2013, 10 a.m. 

My testimony will concentrate on providing some specific examples of how well-intentioned public 

policies can go off track when put into implementation, opening the possibility of wasting millions of 

dollars of taxpayers' money and potentially leaving people without the promise of reliable 

broadband access. 

As the State President in Vermont, I have been very vocal that public money used to overbuild 

existing networks is duplicative of private sector efforts, and in many respects, undercuts those 

efforts. 

FairPoint and many other telecommunication providers saw the broadband stimulus program as an 

opportunity to bring broadband services to those areas which are rural and geographically 

challenging, where the business model makes it difficult to bring broadband to those consumers. 

Never, did we expect the federal government to fund programs that overbuilt existing networks. 

We thought the emphasis would be on providing broadband to those residents and businesses that 

have no access to Internet services, those customers we know as "unserved". Nonetheless, NTIA 

awarded the grants and duplicative networks are being built with taxpayer funds. 

• The key term that I ask you to focus on is "overbuild." This practice is wasteful, and does not 

provide broadband to those who are now unserved. 

• In my opinion, stimulus funding should be directed to the last mile where the need is the greatest. It 

is a waste oftaxpayers' money and duplicates existing networks and does not bring meaningful lastmile broadband to Vermonters. In fact, it actually undercuts the private investment that has already 

been made in Vermont. 

• The implementation of this program did result in waste and unwarranted competitive harm to 

companies whose networks were overbuilt with federal money. 

FairPoint will continue to work with the NTIA, RUS, FCC, Congress and the STOP and SIP awardees to 

ensure taxpayer dollars are used to better benefit the shared public policy goal of nearly ubiquitous 

broadband. 
115 

Mr. WALDEN. Mr. Smith, I am sure we will have some and we 

appreciate your testimony. It is very enlightening. 

Mr. WELCH. Mr. Chairman, just one objection. I wasn’t here 

when I understand this witness said a few things about me. 

Mr. WALDEN. He said nice things about you. 

Mr. WELCH. Well, I want it on the record that I object to me not 

being here to hear that. 

Mr. WALDEN. Is there any objection to his—— 

Ms. DEGETTE. I will be happy to move to strike that testimony 

from the record because you weren’t here. 

Mr. WALDEN. Mr. Smith said very nice things about you. We did 

have that removed from the record. No. 

Let us go now to Mr. Bruce Abraham. He is on the Board of Directors of the North Georgia Network. 

Mr. Abraham, thank you for being here this afternoon. We look 

forward to your testimony, sir. 

STATEMENT OF BRUCE ABRAHAM 

Mr. ABRAHAM. Thank you, sir, Mr. Walden. 

Mr. WALDEN. If you will pull that microphone close and push the 

little button. 

Mr. ABRAHAM. There we go. I am a country boy. 

Thank you, Chairman Walden, members of the subcommittee. It 

is a great honor for me to be here today to talk about the effects 

of the National Broadband Opportunities Program on my home 

community in North Georgia. I very much appreciate this. I will remember this all my life and I will tell my grandkids about this and 

the great things that we did here today. 

I would also like to thank our partners in this project, the University of North Georgia, Habersham and Blue Ridge, Mountain 

EMCs, as well as the State of Georgia who together we put up $9 

million in matching money to leverage $33 million in federal money 

to bring modern high-speed internet to our region. 

I would most like to thank my group of economic developers in 

the region, who supported this project with their money and their 

time and who, like me 4 years ago, faced a barrier to expanding 

and recruiting jobs to this region. Our region had lost about 22,000 

jobs before this project started. And in Dahlonega, where I worked, 

we closed the doors of our largest employer—a textile manufacturing operation that employed 365 people, most of who had quit 

school to go to work there at an early age. My group of economic 

developers and I were losing jobs and business prospects not only 

because of the national economic downturn, but also because our 

local companies told us they had inadequate broadband. 

My community owned a 65,000 square foot building that a prospective internet company walked away from because they told me 

‘‘it would be too painful to get the broadband that they needed 

there.’’ Our local medical lab that does breast cancer analysis was 

trying to communicate with other hospitals in Georgia and they 

told me they may have to move back to Atlanta because they could 

not get patient medical information files back and forth on the 

internet. 

Our local university was doubling their student enrollment and 

their internet service from their provider was only 50 megabits of 

116 

service for 5,000 students. The college internet went down for 37 

hours as they began a new school year, so some classes’ course information, homework, and assignments were inaccessible to students and to teachers. The university tried to dramatically up their 

internet speed and reliability but their single provider said it was 

just not cost-effective. 

In rural Georgia, our local governments in economic development 

are constantly challenged to remove barriers to growth whether it 

is by improving a road, running a water line, or building a sewer 

plant. I can tell you from 20 years of local economic development 

experience that companies won’t locate to areas where they operate 

off of wells or septic tanks or one-lane roads. And now, high-speed 

broadband is right up there with the must-haves to get jobs and 

growth in rural America. 

As part of their strategic plan, the State of Georgia made almost $10 million in broadband investments in Georgia. Georgia provided 

us with the original funding for a study, and this was no pie-inthe-sky research. We sat down with our schools, colleges, libraries, 

governments, hospitals—asked them how they use the internet. 

They said they needed more internet, and many of them said they 

need what is called redundant internet so if it breaks down with 

one provider, they can get it from another provider. 

When we finished our community study, the National Broadband 

Program came along and we reached out to break our internet barrier. Our communities in the State applied and we built 1,100 

thousand miles of fiber optic network that we just finished in December. Already, we have eight school systems connected with the 

majority of them getting a gigabit of service, whereas before, they 

had less than 50 megabits. We provided our schools at no cost a 

10 gigabit network so they can share distance learning with the 

university, they can share online coursework, textbooks, and meetings. The university is also happy because we provided them a gigabit of service at less cost than they would have paid for 100 megabits of service from their old provider. 

Now, the physician at Dahlonega Foot and Ankle does not have 

to drive over to the hospital to pick up his x-rays. Impulse Manufacturing fabricates products for global distribution can now talk to 

companies overseas without choppy internet. And they can operate 

in what is called the Fortune 500 Protocol. 

Even our churches can now broadcast their services live online. 

And they are reaching the elderly, homebound, and hospitalized 

members. They report that 90 percent of their internet viewing is 

live during their church services. 

Our local community bank can now communicate between its 

branch offices and safely store their financial information on their 

network. The Louver Shop that makes louvers in Dahlonega can 

communicate with their West Coast office and conduct live business meetings. Telecommuters who live in our region don’t have to 

wait until midnight to send their work over the internet to their 

office in Atlanta. 

We now have two technology parks in the region. And in a final 

example, we have attracted our first data center to the region. And 

because of this network—one of our local economic developers 

should announce this in March—the company proposes to make an 

117 

$800 million investment in this facility. They will initially hire 10 

people at $100,000 per job. The company needs 2 gigabits of internet. This is an unheard-of investment in our region. This increases 

our local county tax base by 1⁄4 and $1 million in payroll equals 60 

jobs that would normally pay $8 an hour in our region. 

In closing, let me say thank you again for this investment you 

made in our communities. And let me sum up what you did for us. 

We have a low-wage, low-skilled, low-tech economy in rural America and you helped us reach for a high-skilled, high-wage, high-tech 

economy that we all see ahead. 

We are mindful as a generation, right behind us the young digital Americans—the guy sitting right behind you—who were born 

under the influence of this powerful internet engine. They are not 

going to tolerate 1990s internet as they start a business, look for 

job, or move into positions of business leadership and public decision-making. They will move out of internet lazy rural towns that 

do not provide robust internet connectivity. They will go, as we all 

did, to where there is promising economic opportunity. And that 

opportunity, as far as we can see, is being created right now by the 

high-speed internet. 

Thank you very much. God bless you. 

[The prepared statement of Mr. Abraham follows:] 

118 


80019.063

Congress of the United States 

U.S. House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Communications and Technology 

Washington, D.C. 

February 27, 2013 

"The North Georgia Network Brings Economic and Educational 

Progress to Rural North Georgia from Broadband Investment. II 

Testimony of: 

Bruce Abraham 

Board Member North Georgia Network 

President Connect North Georgia 

Dahlonega, Georgia 

1 
119 


80019.064

Chairman Walden, Members of the Subcommittee, it is a great honor for me to be here today 

to talk about the effects of the National Broadband Opportunities Program on my home 

community in rural North Georgia. I would like to personally thank you and all the citizens of my 

country for investing 33 million dollars in a modern fiber optics network that reaches from 

metro Atlanta and crosses the Appalachian Trail to the North Carolina line. I would also like to 

thank our partners in this project, the University of North Georgia, Habersham and Blue Ridge 

Mountains Electric Membership Corporations as well as the State of Georgia, who all put up 

nine million local dollars to bring high-speed modern communications to the students, 

businesses and citizens who call this area home. 

I would most like to thank my group of economic developers in the region who supported this 

project with their money and their time and, and who like me four years ago, faced a barrier to 

expanding and recruiting jobs to this region. Our region had lost about twenty-two thousand 

jobs when this project started four years ago. In Dahlonega where I worked then, we closed the 

doors of our largest employer, a textile manufacturing operation that employed 365 people, 

many of whom had quit high school to take a job at the local plant. 

My group of economic developers and I were losing jobs and business prospects not only 

because of the national economic downturn, but also because our local companies told us they 

had inadequate broadband. My community owned a 65,000 square foot building that a 

prospect internet company walked away from buying because they told me we did not have 

enough broadband. They told me "It would be too painful to get the bandwidth they needed." 

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Our local medical lab, that does breast cancer analysis, was trying to communicate with other 

hospitals in Georgia and they told me they might have to move back to Atlanta because they 

could not get patient medical files back and forth on the Internet. 

Our local university was anticipating doubling their student enrollment, and their internet 

service from their provider was only about 50 megabits for 5,000 students. The college internet 

also went down for 37 hours as they began the new school year, so some classes, course 

information, homework and assignments were inaccessible. The university tried to dramatically 

up their speed and reliability, but their single provider said "it was just not cost effective." 

In rural Georgia, our local governments and economic development people are constantly 

challenged to remove barriers to growth and attract jobs, whether it is by improving a road, 

running a water line or building a sewer plant. I can tell you from 20 years in local economic 

development that companies won't locate to areas where they will have to operate off of wells, 

septic tanks and one-lane roads. Now high-speed broadband is right up there with the "must 

haves" to get jobs and growth in our communities. 

As part of their state strategic plan, the State of Georgia has made almost 10 million dollars in 

broadband investment in rural Georgia. As a part of that plan, Georgia provided us with the 

original funding in 2008 to study our broadband barriers. Again, please appreciate that in 2008 

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in our area of the state our weekly wages averaged one-third less than the rest of the state and 

41% less than other workers in the United States. 

And this was no "pie in the sky" research we did with that study. We sat down with our schools, 

colleges, libraries, businesses, governments and hospitals and asked them about how they used 

the internet. Universally, they said they needed much more internet, and many of them said 

they needed what is called "redundant internet" from two providers, so that like the University 

I mentioned, if their internet goes down, the entire organization is not shut down. 

Right as we finished our community study, the National Broadband Opportunities Program 

offered us a chance to solve the internet barrier we had run into. Our communities applied 

through BTOP for a project to build 1,100 miles of new fiber optic network across eight 

counties. They invested nine million dollars in match money, with again, the State of Georgia 

making the largest contribution of two-and-a-half million dollars. 

So we just finished building this network in December of last year, and already we have our 

eight school systems connected, with the majority of them getting a gigabit of service, whereas 

before they had less than 50 megabits to share with thousands of students and teachers. We 

have provided our schools, at no cost to them, a 10 gigabit network which we can do with fiber 

optics, so they can share distance learning with the university, on-line coursework, text books, 

meetings between schools, all because of abundant internet. The University is also happy 

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because we have provided them a gigabit of service at less cost than they would have paid for 

100 megabits of service with their old provider. 

Now the physician at Dahlonega Foot and Ankle does not have to drive over to the hospital to 

look at patient x-rays. With our network the hospital can now send the doctor the radiology 

files and he can read them at his office. 

Impulse Manufacturing that designs and fabricates products for global distribution can now talk 

to companies overseas without choppy internet problems and operate in what they describe as 

"the Fortune 500 ProtocoL" They are not only a growing, smart rural company, but can now 

play in the big leagues for big contracts and move big technical files without losing their 

internet connection. They recently won a major production contract, and say they are buying 

another building in the region. 

Even our churches can now broadcast their services live on this network, and they are reaching 

their elderly, homebound and hospitalized members. And this means more than just putting a 

canned sermon or a wedding last week up on an internet site. They report that 90% or their 

internet viewing is live during the church service, with people who want to sing and pray and 

participate on-line in their home church on Sunday morning. 

Our local United Community Bank can now communicate between its branch offices and safely 

store their financial information on our network. They can provide service to their customers 

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and conduct financial transactions in four milliseconds, which is the speed of our core network 

with its modern fiber optic capabilities. 

The Louver Shop that makes window louvers in Dahlonega can now communicate real-time 

with its West Coast office, and conduct live business meetings on the internet without having to 

fly its salespeople to Georgia. Telecommuters who live in our beautiful region don't have to 

wait until midnight to send their work over the internet to their Atlanta office, as they report 

they have to do. Dawsonville Hardware told me they sold an expensive Stihl chain saw to a 

customer in South Carolina with their new internet connection. 

We now have two Technology Parks and Lumpkin and White Counties that are being developed 

to attract companies that need the business high-speed internet that fiber optics provide. 

And in a final example, we have attracted our first data center to the region because of this 

network, and one of our local economic developers plans the announcement the first of March. 

The company proposes to make an 800 million dollar investment in this facility, and initially will 

hire 10 people at 100,000 dollars per job. The company needs about two gigabits of internet to 

start and two megawatts of electricity. This is an unheard of investment in our region where 

county tax bases run about two and a half billion dollars, so this increases the local tax base by 

a quarter. And the new million dollars in payroll will equal 60 jobs that would normally pay 

eight dollars an hour in our area. 

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My far-sighted State also just recently invested 1.3 million dollars in two more fiber optics 

extensions at the edge of our network, bringing those communities the same high-speed 

broadband that our original communities now proudly boast of having. 

We just turned in a project last week to the USDA proposing to teach business internet 

applications on a bus all over the region through our local chambers of commerce. We will also 

take this bus to local high schools and bring students on the bus to tell them about good paying 

jobs and technology-related career opportunities that will be available to them. 

Please let me again thank you and my fellow citizens for the critical investment that was made 

in the North Georgia Network, and let me sum up what you have helped us to do: In rural 

America, we constantly fight a low-wage, low-skill, low-tech economy. This broadband 

investment in our towns, our schools and our businesses will help us crack that low ceiling, and 

let us reach for the high-skill, high wage, high tech economy that we all see ahead. 

In summary, I would ask you to please recall that we as a country invested in interstate highway 

infrastructure, railroads, airports and even telecommunications which drove major economic 

advancements. But unfortunately those major engines of economic growth do not reach very 

deeply into rural America to help us drive commerce. 

But we do have plenty of rural electricity to run the internet, thanks to the rural electric system 

which again, was made possible by federal investment. The internet engine of economic 

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growth is barely 20 years old, but it is already transforming small business, education, medicine, 

government services, almost everything it touches. And this new form of infrastructure is not 

constrained by walls, mountains, oceans or the 8-hour day. It is only constrained by availability 

and its scarcity in rural America. 

We are very proud and thankful in North Georgia that we have the new internet engine in rural 

America. We have put our foot on the throttle and we have set about to attract jobs and 

opportunity and prosperity, God willing. 

But we are also mindful that here is a generation right behind us, the young digital Americans, 

who were born under the influence of this powerful Internet engine. They will not tolerate 

quaint 1990's internet as they start a small business, look for a job or move into positions of 

business leadership and public decision making. They will move out of lazy-internet rural towns 

that do not provide robust internet connectivity. They will not locate their growing companies 

to charming rural business parks that offer dial-up or DSL connections to the world. They will 

go, as we all did, to where there is promising economic opportunity. And that opportunity, as 

far as we can see, is being created now by high-speed internet. 

Thank you Chairman Walden and members of the Committee. I am honored that you invited 

me to talk today. 

8 
126 

Mr. WALDEN. Mr. Abraham, thank you very much. Thank you for 

your very kind comments and your very valuable testimony. We appreciate your participation today. And no matter how much you 

shower us with compliments, we are still going to ask you questions. 

Mr. ABRAHAM. That will work. 

Mr. WALDEN. I am just kidding. 

Mr. Freddoso, we appreciate you being here today from—let me 

get this right—president and CEO of MCNC. And so we welcome 

you and look forward to your comments as well, sir. 

STATEMENT OF JOE FREDDOSO 

Mr. FREDDOSO. Well, thank you, Chairman Walden and Ranking 

Member DeGette and members of the subcommittee for this opportunity to present congressional testimony regarding the successful 

implementation of broadband stimulus funds in North Carolina. I 

particularly want to thank Congresswoman Rene ́e Ellmers from 

MCNC’s home State of North Carolina. She represents the great 

people of North Carolina’s 2nd District and is a champion of better 

healthcare education and access to technology. 

Mr. Chairman, for over 25 years the private nonprofit organization that I lead, MCNC, has operated North Carolina’s fiber-optic 

highway of innovation, the North Carolina Research and Education 

Network, or NCREN. While the roots of NCREN are in serving the 

vast research needs of the University of North Carolina system, the 

community of connectors at NCREN has grown in the last several 

years to include connections to more than 450 community anchor 

institutions, including all of K through 20 public education, many 

private universities, numerous nonprofit healthcare providers, and 

several state and federal research organizations. 

The anchor institutions that we serve require large amounts of 

low latency high-speed connectivity and collectively, their demand 

for bandwidth doubles every 2 years. A couple of examples: since 

2011, the 58 community colleges we serve have reported a fivefold 

increase in bandwidth demand. And since 2007, our K through 12 

public school districts have recorded a 20-fold increase in bandwidth use. Students in our community colleges now directly access 

and program advanced manufacturing equipment virtually over 

NCREN to get current skills needed in the workforce while the colleges avoid having to spend precious capital purchasing these machines directly. 

MCNC also has a long history of cooperative work with our incumbent service providers, telephone membership cooperatives, 

electric membership cooperatives and independent telecommunications companies in North Carolina. We spend about $9 million 

per year for local circuits and internet bandwidth with these providers. 

In 2007 in our meetings with our private sector service provider 

partners, it became evident that NCREN’s need for bandwidth— 

particularly in rural North Carolina—was going to outstrip the capacity of the existing middle-mile fiber in the State. There was either no fiber available in certain sections of North Carolina or a 

limited fiber capacity to meet the growing needs of the anchor institutions served by our network. 

127 

We also found that these service providers, even supported by a 

proposed $8 million investment from MCNC, lacked the business 

case to build in the areas with no fiber or to add fiber capacity in 

underserved areas. 

To serve the needs of the students, healthcare providers, and research institutions connected to NCREN, MCNC made the decision 

to pursue BTOP funds. For matching funds, we allocated $8 million 

from our capital refresh fund. We also raised $4 million from private sector wholesale service provider FRC. We raise $24 million 

from North Carolina’s nonprofit Golden Leaf Foundation, and $4 

million in donated conduit and land. MCNC brought a total of $40 

million to the table in a vision for a statewide network that would 

bring broadband to some of the most rural mountainous and difficult areas to reach in the State. 

Leveraging these matching funds, MCNC applied for and won 

two rounds of BTOP funding totaling $104 million. Today, MCNC 

is within 50 miles of completing a 2,600-mile middle-mile network. 

The network is comprised of 1,800 miles of new build fiber, and 800 

miles of leased fiber. MCNC leased 800 miles of fiber from service 

providers, typically under 20-year terms. These leases are tangible 

demonstrations of the solid relationships that we enjoy with our 

service provider partners and how MCNC was able to leverage 

local infrastructure into its statewide broadband network. 

The construction phase of the project has given a badly needed 

infusion of revenue to private sector companies. Our fiber and conduit supply company is CommScope. CommScope is headquartered 

in Hickory, North Carolina. When we chose CommScope as our 

supplier, their conduit plant was idled. During the height of our 

project over a 2-year period, they operated 24/7 with more than 100 

workers to keep up with demand. 

Much of the BTOP fiber is already in use, benefiting the 450 

community anchor institutions served by NCREN and allowing us 

to serve 1,500 more community anchor institutions. The BTOP 

award will allow us to scale connectivity to these institutions to the 

multi-gigabit level they demand as they need additional bandwidth. 

And our sustainability plan will allow this scalability to happen at 

today’s costs. 

Also, MCNC is in discussions with more than 10 wholesale and 

last-mile service providers interested in the new fiber build. Many 

are looking to enter areas previously unavailable to them. Rural 

broadband is migrating quickly from wired services like DSL to 

wireless services like WiMAX, Wi-Fi mesh and 4G LTE as last-mile 

solutions. The commonality in all of these over-the-air last-mile 

services is the need for fiber-based backhaul and transport services. 

Mr. Chairman, our story is a great success story. It is based on 

leveraging privately raised matching funds, utilizing existing local 

infrastructure, and attracting BTOP federal investment to build 

the digital highway that directly supports innovative research, idea 

formation, equity of access to education, better healthcare outcomes 

for North Carolinians, and also supports the private sector as they 

look to put new wireless services into rural areas of the State. 

Thank you. 

[The prepared statement of Mr. Freddoso follows:] 

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MCNC 

Corml!'ctil19 North Carolina's Future Today 

U.S. House of Representatives 

House Committee on Energy and Commerce 

Subcommittee on Communications and Technology Hearing 

"Is The Broadband Stimulus Working?" 

Testimony of 

Joe Freddoso 

President and CEO 

MCNC 

February 27,2013 

Thank you Chairman Walden and Ranking Member Eshoo and Members of the 

Subcommittee for this opportunity to present congressional testimony 

regarding the successful implementation of broadband stimulus funds in 

North Carolina. I particularly want to thank Congresswoman Renee Ellmers 

from MCNC's home state of North Carolina. She represents the great people 
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of North Carolina's second congressional district and is a champion of better 

healthcare, education and access to technology - all benefitting from the 

investments made by the BTOP program. 

For over Z5 years, the private non-profit organization that I lead, MCNC, has 

operated North Carolina's fiber optic highway of innovation, the North 

Carolina Research and Education Network or NCREN. While the roots of 

NCREN are in serving the vast research needs of the 16 universities in the 

University of North Carolina System, the community of connectors to NCREN 

has grown the last several years to include connections to more than 450 

Community Anchor Institutions, including all of K-ZO public education, many 

private universities, numerous non-profit healthcare providers, and several 

state and federal research organizations. 

These anchor institutions require large amounts of very low latency, highspeed connectivity and collectively their demand for bandwidth doubles 

every two years. 

An example of the growth in demand comes from our North Carolina 

Community Colleges. Since Z011, the 58 community colleges in North 

Carolina have reported a 5-fold increase in bandwidth demand, and since 

Z007 our K-1Z public school districts have recorded a ZO-fold increase in 

bandwidth use. Students in our community colleges now directly access and 

program advanced manufacturing equipment virtually over NCREN to gain 
130 


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current skills needed in the workforce while the colleges avoid having to 

spend precious capital purchasing these machines. 

MCNC has a long history of cooperative work with our incumbent service 

providers, telephone membership cooperatives, electric membership 

cooperatives, and independent telecommunications companies in North 

Carolina. We spend about $9 million per year for local circuits and Internet 

bandwidth with these providers. 

In 2007, in our meetings with our service provider partners, it became 

evident that NCREN's need for bandwidth particularly in rural North 

Carolina was going to outstrip the capacity of the existing middle-mile 

fiber. There was either no fiber available in certain sections of North 

Carolina or limited fiber capacity to meet the growing needs of the anchor 

institutions served by our network. We also found that these service 

providers, even supported by a proposed $8 million MCNC investment, 

lacked a business case to build into areas with no fiber or to add fiber 

capacity to underserved areas. 

To serve the needs of the students, healthcare providers and research 

institutions connected to NCREN, MCNC made the decision to pursue BTOP 

funds. For matching funds, MCNC allocated $8 million from its capital 

refresh fund for NCREN. MCNC also raised $4 million from private-sector 
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wholesale service provider FRC, $24 million from North Carolina's non-profit 

Golden LEAF Foundation, and $4 million in donated conduit and land. MCNC 

brought a total of $40 million to the table, and a vision for a statewide 

network that would bring broadband to some of the most rural, 

mountainous and difficult areas to reach in the state. Leveraging these 

matching funds, MCNC applied for and won two rounds of BTOP funding 

totaling $104 Million. 

Today, MCNC is within 50 miles of completing a 2,600 middle mile network. 

This network is comprised of 1,800 miles of new build fiber and 800 miles of 

leased fiber. MCNC leased 800 miles of fiber from service providers through 

long-term contractual arrangements common in the industry that 

committed this fiber to MCNC's exclusive use, typically for 20 years. These 

leases are a tangible demonstration of the solid relationship MCNC enjoys 

with its service provider partners, and how MCNC was able to leverage local 

infrastructure into its new statewide broadband network. 

The construction phase of the project has given a badly needed infusion of 

revenue to engineering, construction, optical equipment, and fiber/conduit 

companies. Our fiber/conduit supply company is CommScope. CommScope 

is headquartered in Hickory, N.C. When we chose CommScope as our 

supplier, their conduit plant was idled. During the height of our project, 

over a two-year period they operated 2417 with more than 100 workers to 
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keep up with demand. Since our project, CommScope has been awarded 

business through other BTOP winners and outside of the BTOP program. 

Keeping these workers employed. 

Much of the BTOP fiber is already in use and benefitting 450 Community 

Anchor institutions served by NCREN and allowing NCREN to serve over 1500 

more Community Anchor Institutions. The BTOP award will allow us to scale 

connectivity to these institutions to the multi-gigabit level as these 

institutions need additional bandwidth and our sustainability plan will allow 

this scalability to occur at today's costs. 

Also, MCNC is in discussions with more than 10 wholesale and last-mile 

service providers interested in the new build fiber. Many are looking to 

enter areas unavailable to them in the past. Rural broadband is migrating 

quickly from wired services like DSL to wireless services like WiMAX, Wi-Fi 

mesh and 4G/LTE as the primary last-mile solution. The commonality in all 

these over-the-air, last-mile services is the need for fiber-based wireless 

backhaul and transport services. The BTOP funded fiber is of high interest 

and likely positions North Carolina to be an early deployment state for these 

services and a test bed for emerging services. 

Mr. Chairman, our story is a great success story. It's based on leveraging 

privately-raised matching funds, utilizing existing local infrastructure and 
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attracting BTOP federal investment to build a digital highway that directly 

supports innovative research, idea formation, equity of access to education, 

and better healthcare outcomes for rural North Carolinians. Also through 

partnership, this is a highway that private and public non-profit service 

providers can use to drive new resources and value into the last mile for 

our rural citizens. 

MCNC owes much of our success to the BTOP staff at the NT/A. Their 

guiding hand has led to a highly successful broadband investment in rural 

North Carolina. 

Thank you. 
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Supplemental Materials: 

About MCNC 

For more than a quarter century MCNC has operated a robust, secure, exclusive 

communications network that has connected institutions of the University of 

North Carolina System, Duke University, and Wake Forest University to each 

other and through advanced research networks such as Internet2 and National 

Lambda Rail, to the world. 

Over the last 5 years, MCNC has expanded the reach of its services to nonprofit and university hospitals, public safety, libraries and other key CAls. 

Through two Broadband Technology Opportunities (BTOP) grants and other 

private investments, MCNC is investing over $140M in a network infrastructure 

that is able to meet the rapidly increasing bandwidth demands and shared 

services needs of North Carolina-based CAls for the foreseeable future. 

About NCREN 

NCREN, operated by the non-profit organization MCNC, is one of the nation's 

first statewide education and research networks. It provides broadband 

communications technology services and support to K-12 school districts, higher 

education campuses and academic research institutions across North Carolina. 

MCNC offers NCREN technology tools and services to guarantee equal access to 

21st century learning by providing a future-proof technology network that is 

the foundation for change and innovation in our educational systems. In 

addition to all public school districts in North Carolina, the NCREN usercommunity now includes: 17 institutions of the UNC System and General 

Administration; 40 North Carolina Charter Schools; 27 of the 36 North Carolina 

Independent Colleges and Universities; 58 North Carolina Community Colleges; 

research institutions and foundations; and, along with the N.C. Office of 

Information Technology Services and other partners, MCNC provides broadband 

services for 70 Public Health agencies and 30 Non-Profit Hospitals through the 

N.C. Telehealth Network. 

MCNC and NCREN 

MCNC is the company and NCREN is the network, our flagship product MCNC is 

Connecting North Carolina's Future Today. 

MCNC History - A Brief Timeline 
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1980 North Carolina General Assembly initially funds the Microelectronics 

Center of North Carolina to be a catalyst for technology-based economic 

development throughout the state. 

1985 MCNC receives state mandate for providing and operating an advanced 

communications network CONCERT (subsequently called NCREN). Initial 

microwave system linking NCSU, UNC-CH, Duke, NC A&T, UNC-C, RTI and MCNC 

is completed. This is the first broadcast-quality, two-way interactive, 

multipoint video and audio system in the United States. 

1987 - The mcnc.org domain was registered on the Internet on January 15, 

1987. It is number 6 on the list of the oldest .org registered domains. 

In 1991, the VistaNet project focused on research in communications, 

computer science, and the use of supercomputing to support cancer treatment 

through computer visualization. 

1990 - VISTAnet project is implemented - first operational national gigabit test 

bed using OC48 backbone. 3-D imaging computers at UNC use supercomputing 

resources to enable medical researchers to simulate thousands of possible 

treatment options to find the optimal therapy for individual patients, targeting 

radiation in a much more precise way than was possible before. 

1993 NCREN completes broadband connections to each of the 18 core 

members of the network, combining video and data, using a combination of 

digital microwave technology and broadband ATM technology. 

1994 - Through a collaborative effort between the N.C. State Government 

Office of Information Technology Services (ITS) and NCREN, North Carolina 

becomes the first state to deploy high-speed network capabilities to every 

county through the North Carolina Information Highway. 

1995 - All 16 campuses of the UNC system, Duke and Wake Forest are able to 

fully participate in the high-quality, two-way interactive video capabilities 

enabled by NCREN. 

1997 - World '5 first "GigaPOP" is developed - an extremely fast access point, 

or high-speed on-ramp, to the next generation Internet. This network 

infrastructure becomes a model throughout the world and is used to test nextgeneration networking applications and systems, leading to the establishment 

of a national network testing laboratory in North Carolina. The GigaPOP 

becomes the gateway for all Internet service for all NCREN customers and the 

state government. This includes North Carolina becoming one of the first states 

to connect to Internet 2. 
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2000 - NCREN becomes the nation's first near-broadcast quality two-way 

interactive video system using Internet-based technology (IP using MPEG2) to 

support up to 20 simultaneous locations in that service with full, continuous 

presence audio for all participants all the time. All participants at remote sites 

can hear audio and see video from all other sites - exactly how a conversation 

would work if they were all in the same room. 

2000 - Cronos is sold to JDS Uniphase Corporation. Proceeds to MCNC enables 

over $100 million investment in the state. 

2000 MCNC pledges $30 million to Rural Internet Access Authority, now 

operating as The e-NC Authority. The donation helps accelerate the spread of 

high-speed Internet access across North Carolina. 

2001 - North Carolina BioGrid establishes partnership with universities, the 

N.C. Biotechnology Center and private-sector companies. The N.C. BioGrid is 

one of the nation's first scientific grid computing test beds. 

2003 - MCNC is restructured into two companies. Research and venture funding 

activities are established as a separate company, MCNC Research and 

Development Institute (MCNC-RDI). 

2005 - The research operations of MCNC-RDI are sold to RTI International. 

MCNC-RDI changes name to NC IDEA with mission to provide early-stage 

companies with venture funding, grants and loans. 

2005 - MCNC is selected to lead applications support for Internet2's Hybrid 

Optical and Packet Infrastructure test bed. 

2005 - NCREN and N.C. State University are selected by National LambdaRail 

(NLR) to operate its first national Experiment Support Services. 

2006 - MCNC leads U.S. consortium for first international demonstration of 

integrated computing and network technology as part of the Global Lambda 

Integrated Facility, including Virtual Computing Lab resources at N.C. State 

University. 

2008 - MCNC provides connectivity to the K12 community, creating a K20 

network in the state. 

2009 - MCNC celebrated 25 years of the North Carolina Education and Research 

Network (NCREN). 
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2010 - MCNC was awarded two rounds of Broadband Technologies 

Opportunities Program (BTOP) historic funding to expand high-speed 

connectivity through the North Carolina Research and Education Network. 

MCNC BTOP Background: 

MCNC currently is working on a $144 million expansion of the North Carolina 

Research and Education Network (NCREN) scheduled to be completed by 2013. 

This initiative has been labeled the Golden LEAF Rural Broadband Initiative. 

To fund this expansion, MCNC applied for and received two U.S. Department of 

Commerce Broadband Technology Opportunities Program (BTOP) awards 

totaling $104 million. 

In addition, MCNC raised $40 million in private matching funds as required by 

the BTOP program. MCNC's sources of matching funds included $24 million from 

the Golden LEAF Foundation, $8 million from the MCNC Endowment, $4 million 

from private-sector wholesale telecommunications company FRC, and an 

estimated $4 million through donations of land and existing conduit from 

individual community colleges, universities, and others including the Albemarle 

Pamlico Economic Development Corporation. No direct funding from the State 

of North Carolina was required. 

MCNC estimates the expansion of NCREN will create or save 2,500 engineering, 

construction, and manufacturing jobs in the state. 

Both MCNC awards are a part of a coordinated strategy developed by the Office 

of former North Carolina Governor Bev Perdue, the N.C. Office of Economic 

Recovery & Investment, and e-NC Authority to improve broadband access for 

businesses and residents in underserved areas. 

Once all work is complete, the two rounds of BTOP infrastructure have the 

potential to serve directly, or through MCNC partnerships with private-sector 

service providers, more than 1,500 community anchor institutions, 180,000 

businesses, and reach more than 300,000 underserved families. 
138 


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BTOP PROGRESS MAP 
139 


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BTOPl CONSTRUCTION PROGRESS 

BTOP2 CONSTRUCTION PROGRESS 
140 


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IHOP:/' 
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REQUESTS FOR PROPOSAL (RFP) OR 

REQUESTS FOR INFORMATION (RFI) 

MCNC applied for and received two U.S. Department of Commerce Broadband 

Technology Opportunities Program (BTOP) awards totaling $104 million in 2010 

as part of the American Recovery and Reinvestment Act of 2009 (ARRA). The 

awards are administered through the National Telecommunications and 

Information Administration's (NTIA). 

What is the difference between a RFP and RFI? 

Requests for Proposals (RFP) will be submitted as definitive requirements for 

portions of the project as identified. These requests will be related to the 

procurement of services and or products required to implement the project. 

Requests for Information (RFI) will be submitted from time to time to gain 

information related to certain sorts of services and products for which RFP's 

may ultimately be released. The purpose of the RFl's will be for identification 

of vendors who can meet certain requirements for delivery of formal services 

and products. 

Topic Status 

Engineering, Design Services and AWARDED Environmental Assessment 

Materials Availability related to NCREN 

Southeaster and Western North Carolina AWARDED 

Fiber Expansion Project 

Optical Network Design NCREN Southeaster 

and Western North Carolina Fiber Expansion AWARDED 

Project 

Materials Related to NCREN Southeastern 

and Western North Carolina Fiber Expansion AWARDED 

Project 

Fiber Asset Management Software Related 

to NCREN Southeastern and Western North AWARDED 

Carolina Fiber Expansion Project 

Construction and Splicing of the Fiber Optic 

Middle Mile Project Related to NCREN AWARDED Southeastern and Western North Carolina 

Fiber Expansion 

Optical Network Design and DWDM·based AWARDED 
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Optical Networking Equipment Related to 

NCREN Southeastern and Western North 

Carolina Fiber Expansion Project 

Waterway Crossing Construction Related to 

NCREN Southeastern and Western North AWARDED 

Carolina Fiber Expansion Project 

Topic Status 

Engineering Design Services and 

Environmental Assessment for MCNC Golden AWARDED LEAF North Carolina Rural Broadband 

Initiative 

Fiber Asset Management and Mapping 

Software for MCNC Golden LEAF North AWARDED 

Carolina Rural Broadband Initiative 

Materials Related to MCNC's Golden LEAF I AWARDED North Carolina Rural Broadband Initiative 

Construction and Splicing of the Golden LEAF 

• AWARDED Rural Broadband Initiative (GLRBI) 

Marketing and Sales Vendor of the Golden 

LEAF North Carolina Rural Broadband AWARDED 

Initiative 

Attachment of Conduit and Fiber Optic Cable 

to Bridge Railings for the Golden LEAF Rural AWARDED 

Broadband Initiative 

DWDM-based Optical and/or Carrier Ethernet 

Network Design and Equipment Related to AWARDED the Golden LEAF North Carolina Rural 

Broadband Initiative 

Topic Status 

Locate Services and Maintenance of the 

Conduit, Fiber Optic Cable, and Access Points AWARDED for the Golden LEAF North Carolina Rural 

Broadband Initiative 

Samples of recent Press Coverage: 
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December 2012 - January 2013 

Updated Jan. 28, 2013 at 5:52 a.m. 

Broadband boosts power of 

national climate center in 

Asheville 

By WRAL Tech Wire 

ASHEVILLE, N.C. - Last year, NOAA said it was the 

warmest year on record in the lower 48 states. 

In 2012, the average temperature was 55.3°F, which 

eclipsed 1998, the previous record holder, by 1°F. That 

difference from 1998 is an unusually large margin since 

annual temperature records are typically broken by just 

tenths of a degree. 

This report is just one example of the important work 

happening at NOAA's National Climatic Data Center 

(NCDC) in Asheville. 

However, since most of the data for this particular 

announcement is station-based throughout the U.S., this 

is relatively a small volume of data compared to what the 

facility ingests on a day-to-day basis with satellites and 
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radar. 

And, without high-speed broadband connectivity, none of 

this would be possible to tackle in a timely fashion. 

NCDC maintains the world's largest climate data archive 

and provides climatological services and data to every 

sector of the United States economy and to users 

worldwide. The center's mission is to preserve this data 

and make it available to the public, business, industry, 

government, and researchers. 

NCDC recently initiated a satellite Climate Data Record 

(CDR) program to continuously provide objective climate 

information derived from weather satellite data that 

NOAA has collected for more than 30 years. This data 

comprises the longest record of global satellite mapping 

measurements in the world, and is complemented by 

data from other sources including NASA and U.S. 

Department of Defense satellites as well as foreign 

satellites. 

For the first time, NOAA is applying modern data analysis 

methods, which have advanced significantly in the last 

decade, to these historical global satellite data. This 

process will unravel the underlying climate trend and 

variability information and return new economic and 

scientific value from the records. In parallel, NCDC will 

maintain and extend these Climate Data Records by 

applying the same methods to present-day and future 

satellite measurements. 

In fall 2011, NCDC received two 10G broadband 

connections as part of the build-out through the first 

phase of the of Golden LEAF Rural Broadband Initiative 
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administered through RTP-based non- profit MCNC. 

These connections were a significant upgrade from the 

two 1 G connections previously used at NCDC. 

Most of the specific uses of these 10G connections are 

classified, but one use mentioned is for the Suomi 

National Polar-orbiting Partnership (NPP), which 

represents a critical first step in building next-generation 

Earth-observing satellite systems. The NPP is the result 

of a partnership between NASA, NOAA, and the U.S. 

Department of Defense. 

Since Oct. 2011, 1.3 petabytes of data has streamed into 

NCDC for consumption and storage from the NPP. In 

that process, a copy also is made of all data and is sent 

as a backup to Colorado. This means since this project 

went active, more than 2 petabytes of information has 

traveled over broadband-based pipes to researchers all 

over the world. 

"Broadband is absolutely critical to what we do now," 

said Alan Hall, IT project manager at NCDC. "If we didn't 

have broadband, we wouldn't be able to move all this 

data in a timely manner and get it to researchers who 

need it ... it is absolutely critical and broadband is a must 

to be able to do what we do." 

"As more data comes in and out every day, we need 

high-speed connections to realize all these data sets," 

added Preston Carter, an IT specialist at NCDC who 

works on network operations and storage. "We have 

better download rates now and as others get more 

speeds soon, we will be ready as we continue to futureproof our infrastructure." 
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NCDC has seen astronomical spikes in data in recent 

years with new technology and higher-speed 

connections. On a typical day, about a terabyte of data 

comes in to be stored and archived - most in real-time. 

During major weather events, like Hurricane Sandy last 

fall, that would jump three-to- six times that amount. 

NCDC was incorporated with all civil weather entities as 

part of NOAA in 1970. Twelve years later, the 

organization was renamed the National Climatic Data 

Center and has remained housed at the Veach-Baley 

Federal Building since 1995. 

Today, data comes to NCDC from not only land-based 

stations but also from ships, buoys, weather balloons, 

radars, satellites, and even sophisticated weather and 

climate models. In the past 10 years, NCDC's digital 

archive experienced a six-fold increase from 1 petabyte 

to 6 petabytes. With increasing sophistication of data 

collection equipment, data is expected to exceed 15 

petabytes by 2020. 

The United States has made tremendous investments in 

Earth-observing satellites over the past five decades. 

Despite remarkable success, great potential remains in 

the nation's archived measurements for climate change 

applications. 

NOAA's new Climate Data Record Project promises to 

unleash the potential of this data to address critical 

climate questions. But again, doing this type of work 

today would not be possible without high-speed, low 

latency broadband. WRAL Tech Wire any time: Twitter, 

Facebook 
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The Daily Advance Dale: 

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G!fc .... laUon (Df>.<1A:: Type (F'equB""cy;: 

Thwrsday_ NovO'Ybor 29, 20~2 

F! 17A.8F:-H CITV_Nr:: 

9,935 (421 

Newspaper p; Page: 4 

Sec1ion: W"W Key"WOfd WCNC 

Benefits of broadband cable coming into focus 

Many things that will happen in 

the year ahead that we can't yet 

see, but one of them that is coming into clear focus is the completion of 

a $144 million project to bring high·speed 

broadband cable to all counties in the AI· 

bemarle. 

Large Internet users are eagerly awaiting the March target date for comple· 

tion of the second phase of building 

1.200 miles of broadband infrastructure 

through eastern North Carolina. 

Broadband - a far cry from the days 

of dial-up Internet connection - is the 

fastest Internet technology currently 

available. While many residents already 

have access to broadband through pro· 

viders such as Century Link and Time 

Warner, the need for greater bandwidth 

by schools, colleges, hospitals, libraries 

and government buildings will soon be 

met. 

The project was kicked off more than 

two years ago with Gov. Beverly Perdue 

annoullcing that $115 million in federal 

stimulus money had been obtained to ex· 

tend broadband service to 69 rural coun· 

· ties. 

:' The benefitting counties encompass 

· nearly 6 million residences, or about 66 

· percent of the state's population, and 

IBO,OOO businesses, or 

about 68 percent of busi· 

nesses in the state. Among 

the counties to benefit are 

Pasquotank, Camden, Currituck, Perquimans, Chow' 

an and Gates. 

The largest grant 

awarded, $75.8 million, went to the nonprofit Mi· 

croelectronics Center of 

North Carolina based 

in Research Triangle Park - which followed another 

$39.9 million awarded to 

~ in January 2010. 

There was also a $24 million grant from the Golden 

LEAF ~'oundation and $B 

million from MCNC's en· 

dowment. Today, the total 

project cost is estimated at 

$144 million. 

( ;;:,12 L*'~\, l,.>j~\K,1:'. 

A 

The project has received 

much praise from area 

business leaders, educators and elected 

officials. 

"The world we live in today is defined 

less and less by distance and more and 

more by connections," U.S. Sen. Kay 

Hagan, D-N.C., said last year. She noted 

that broadband "has quickly become as important 

to a community's success 

as traditional infrastruc· 

ture" such as highways, 

raillincs, sewer and water 

systems. 

It means North Carolina 

will be able to compete on equal footing with other 

states, when it comes to of· 

fering the best in technol· 

ogy. 

Along with offering a 

great location to live, work 

and raise a family close 

to growing southeastern 

Virginia and the coastal 

N.C. Outer Banks - area economic development 

leaders will soon have an 

added enticement, allow· 

ing them to go after larger 

companies that require 

broadband. 

The result will be an exPanded tax 

base, good paying jobs, and economic 

growth that benefits us all. 

"1 can't think of a company that 

doesn't want the fastest broadband that 

is available," said Currituck's Economic 

Development Director Peter Bishop. 

Also, Camden's Economic Develop· ment Commission is already looking at 

getting high·speed service to the county's 

new Eco-Industrial Park on U.S. Highway 

17. Economic Developer Charlie Bauman 

said offering that service will be as important as providing water and sewer at 

the eco-park. 

Others are also excited. Albemarle 

Hospital, which already has broadband 

capabilities, sees a benefit by having a 

backup cable in case its main connec· 

tion is lost, and doctors and patients will more easily be able to access medical 

ACCOd'~f: '%'4 nhi) '1"';" 
148 


80019.091

records and talk to physicians electronically. 

The new line will connect many major 

institutions, but won't go everywhere. 

Nevertheless, Elizabeth City is already 

calculating how much it will cost to extend the broadband line a couple miles 

to the Elizabeth City Regional Airport 

and aviation park, where new jobs are 

expected. 

Considering the potential benefits of 

widely available broadband to schools, 

medical facilities and industry; this project will have immense impact on the Albemarle region in the years ahead. It's 

just now coming into focus. 

OUR VIEW 

August 2011 : 

The issue 

A new broadband 

cable line that will serve 

the Albemarle will be 

installed by the end of 

March. 

Our position 

While some argue 

that high-speed Internet is already available, 

the broadband network 

will offer additional connections to schools, 

colleges and hospitals, 

governments and be a 

valuable tool in helping 

to attract new business 

and industry. 

MCNC begins Round 2 of 

Golden LEAF Rural 

Broadband Initiative 

Historic event showcases NCREN's 

capabilities with virtual groundbreaking in 

four locations 
149 


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KANNAPOLIS, N.C. (Aug. 12,2011) - MCNC [3], the 

private, not-for-profit operator of the North Carolina 

Research and Education Network (NCREN), hosted a 

Statewide Virtual Groundbreaking Ceremony today in four 

locations throughout the state to highlight the start of 

construction on Round 2 of the of the Golden LEAF Rural 

Broadband Initiative (GLRBI). 

The GLRBI is funded through grants from U.S. Department 

of Commerce's Broadband Technology Opportunities 

Program (BTOP) and significant matching funds from private 

donations and investments including a $24 million 

investment from the Golden LEAF Foundation. The GLRBI 

will greatly expand the reach and capacity of NCREN in 

northeastern, north central, western and south central North 

Carolina. 

"Today, we can link several sites via HD video for a one-time 

event. The GLRBI expansion, when complete, will allow us 

to host hundreds of these sessions simultaneously across 

the state. It will impact all facilities and institutions connected 

to NCREN. It will broaden the way teachers teach, students 

learn, doctors provide care, and for citizens at a loca/library 

searching to find a job." -- Joe Freddoso, MCNC President 
150 


80019.093

and CEO 

The high-definition simulcast event was hosted at AshevilleBuncombe Tech Community College, Elizabeth City State 

University, the North Carolina Research Campus in 

Kannapolis, and UNC Pembroke. The event leveraged the 

existing video capabilities of NCREN. These video 

capabilities and capacity for HD video use among NCREN 

connectors will greatly expand as a result of the GLRBI. 

"Thanks to the Recovery Act, this project is creating jobs and 

will support continued innovation and expanded economic 

and educational opportunities in North Carolina," said 

Lawrence E. Strickling, Administrator of the U.S. Department 

of Commerce's National Telecommunications and 

Information Administration (NTIA). 

MCNC received federal approval to begin GLRBI phase 2 

construction in late June. Since that time, MCNC has 

mobilized efforts and worked to finalize all necessary permits 

and materials to begin construction. 

The Round 2 project is three-times the size of MCNC's 

BTOP Round 1 project. Those areas of construction for 

Round 2 include 1,200 miles of broadband infrastructure 

through 79 counties in North Carolina. Sixty-nine of these 

counties include significant areas that meet the federal 

definition of "underserved" for access to affordable 

broadband services. 

"Thanks to the Recovery Act, this project is creating jobs and 

will support continued innovation and expanded economic 

and educational opportunities in North Carolina. " 

Lawrence E. Strickling, Administrator of the 

U.S. Department of Commerce's NTIA 
151 


80019.094

The total second phase project cost of $104 million was 

funded by two sources. The first was a federal BTOP grant 

of $75.75 million awarded in August 2010 through the NTIA. 

The BTOP investment was matched by $28.25 million in 

private donations including the $24 million investment from 

the Golden LEAF Foundation. 

The total investment for both Round 1 and Round 2 of the 

broadband infrastructure build is $144 million and includes 

an investment of $8 million in funds from the MCNC 

endowment that was used as matching funds for the Round 

1 project. This level of investment represents one of the 

largest in broadband infrastructure in North Carolina history. 

The majority of the project funds have been spent with 

private-sector engineering, construction, materials, and 

technology companies who will assist with the build. No 

direct funding from the State of North Carolina was required, 

and MCNC estimates the expansion of NCREN will create or 

save 2,500 engineering, construction, and manufacturing 

jobs in the state. 

"MCNC is excited to begin the second phase of building 

North Carolina's highway to the future. We want to thank our 

state and federal leaders for their continued support for the 

Golden LEAF Rural Broadband Initiative," said Joe 

Freddoso, president and CEO of MCNC. "Today, we can link 

several sites via HD video for a one-time event. The GLRBI 

expansion, when complete, will allow us to host hundreds of 

these sessions simultaneously across the state. It will impact 

all facilities and institutions connected to NCREN. It will 

broaden the way teachers teach, students learn, doctors 

provide care, and for citizens at a local library searching to 

find a job." 

To date, MCNC has awarded contracts for Round 2 to the 
152 


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following firms: CommScope for fiber-optic cable and 

materials; Edwards Telecommunications, Fiber 

Technologies, and Globe Communications for construction 

and fiber installation, and Kimley-Horn & Associates for 

engineering design, project planning, and related services. 

All construction is to be complete by 2013. 
153 

Mr. WALDEN. Thank you very much to all of our panelists for 

your testimony. 

Mr. Freddoso, thank you especially for yours here at the end. 

In my district, 70,000 square miles—regular watchers of our 

hearings know I have used this before—but it would stretch from 

the Atlantic to Ohio, larger than just about any State east of the 

Mississippi. And so I am very familiar with very rural areas—remote areas—that lack broadband. 

And so my view here is that 4 percent is a lot of my district that 

didn’t have access to broadband and that the federal money should 

go into those areas where it is really difficult to make a financial 

case for broadband on a commercial basis. If we are going to spend 

money out, that is where it should have gone. That is my point in 

this oversight hearing and in the arguments I made, frankly, when 

this bill was being marked up a number of years ago to say go 

serve the unserved areas first, the places you all have talked about, 

and avoid overbuilding where we already have commercial networks, which by the way will be made less viable because the government has come on with another competitor on top. And so this 

leads to this oversight. 

Probably most of this money has been spent appropriately. We 

will find out over time whether or not we got our money for it. Obviously, in your areas, you feel it has and it has got great benefit. 

And we have seen that in some projects even in my own district, 

an Indian reservation that frankly, the incumbent carrier hadn’t 

done much there and, you know, they got one of these grants and 

now they got broadband. That made sense. And same in another 

area in central Oregon where it made sense to fill in. 

One of my questions, though, is how is this money getting spent? 

Where are the stewards of the taxpayers’ dollars? I hear about this 

in every town hall I have. I have done 18 so far this year in 18 

counties. 

And, Ms. Eilers, you have heard our discussion here today about 

the West Virginia audit. You all looked at some of these questions 

for us kind of at a top level. Have you had a chance to review the 

West Virginia audit in any detail? Because it is, to me—and this 

is my money in effect—it is pretty damning. 

Ms. EILERS. I have reviewed the West Virginia report. Yes. 

Mr. WALDEN. And my understanding is that there may be a delta 

here of about $9 million that maybe didn’t have to be spent and 

that they didn’t follow their own contracting rules and laws. Is 

that—— 

Ms. EILERS. I am not going to speak for the West Virginia report. 

But yes, based on my reviews, it does appear—— 

Mr. WALDEN. And so wouldn’t it make sense whether—I know 

Mr. Strickling has said, look, we have spent this money. It is out. 

It is allocated, whatever. But going forward if one of these programs were to spring up again or money get put out, what recommendations would you have for these agencies to make sure that 

sort of waste doesn’t occur that has been identified in the West Virginia audit? Did they need to do a site analysis? Does that need 

to be a requirement? How do we prevent this from happening 

again? 

154 

Ms. EILERS. I mean, both the West Virginia auditor and our 

audit team cited that there should have been a detailed study of 

all the locations to size the routers appropriately. So yes, we were 

looking for that same due diligence. 

Mr. WALDEN. And are you confident now, knowing what we 

know, that the agencies will either have put those requirements 

into their RFPs or whatever going forward or are they still were 

they were? Or can you tell? 

Ms. EILERS. As I understand it—and I can just speak for how 

they are looking at West Virginia right now—they are going back 

and doing some due diligence on the sites to—— 

Mr. WALDEN. Right. 

Ms. EILERS [continuing]. Make an appropriate size, if you will, of 

the communications ability. For the other grants, I can’t speak to 

the other 255 grants and how this would impact them. 

Mr. WALDEN. You know this really came to our attention, as I 

recall, from a newspaper article somebody shared with me. And 

that kind of led the Committee into its look and our questions to 

you. And I don’t know if that is what triggered the auditor or not 

in West Virginia, but it raises a troubling set of questions about 

how the government’s money—the taxpayers’ money—is actually 

being spent. 

Mr. Kirchhof, Mr. Smith, this overbuild issue is something that 

seems to me there is always going to be a little bit because you 

have got to connect somewhere, right? So you are always going to 

have some overbuild. But I was really concerned, Mr. Smith, especially in your Vermont discussion, about how the middle mile got 

overbuilt and the last mile didn’t get built in effect. And aren’t we 

really after the last mile that—I mean you need both. I get the notion that more people using the internet means you need more capacity on the overall internet. I get that. I understand that. It is 

not the number of subscribers per se, it is both. But it is the 

amount of data that is being transmitted back and forth so you 

need capacity, but you also need access. So from your perspective, 

is it last mile, is it middle mile, is it both but not overbuild? 

Mr. SMITH. Mr. Chair, from my perspective, it is last mile in 

Vermont. I mean, no one has invested more in broadband in 

Vermont than FairPoint over the last few years. And I think it is 

safe to say that, you know, the horse is out of the barn now. I 

mean, this is for future reference but it is safe to say I would think 

most Vermonters feel that if you are going to use money, use it for 

the last mile and not overbuild an existing network that provides 

the same service as the networks being built, and actually, the 

fiber being put up on the same polls that the fiber that we are running on. So it is an issue. 

Mr. WALDEN. My time has expired. Do you have any disagreement with that, Mr. Kirchhof? 

Mr. KIRCHHOF. I don’t, Mr. Chairman. The only thing I would 

add is you do need both, right, in some cases. That is why you need 

to go area-by-area and do an evaluation to see what is needed 

there. I think we do have probably a little bit of a fundamental disagreement on how you define middle mile. To us middle mile is 

very similar to the federal interstate system, that you use the backbone to be able to get that traffic out to the world, right, but you 

155 

rely on the local roads and the state highways to provide that. So 

I think there is a fundamental disagreement with what we consider 

middle mile. 

Mr. WALDEN. All right. Thank you all again for your participation. 

I now turn to my friend and colleague from Colorado, Ms. 

DeGette, for 5 minutes. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. Smith, you said in Vermont the middle mile is not the issue; 

it is really the last mile. But you are speaking for Vermont, right? 

Mr. SMITH. I am—— 

Ms. DEGETTE. Yes. 

Mr. SMITH [continuing]. Where I most know it. And I—— 

Ms. DEGETTE. Where you most know. And here is the other thing 

though, I mean, our concept is to get this broadband everywhere. 

And so actually, the last mile providers benefit from the middle 

mile, right? 

Mr. SMITH. Well—— 

Ms. DEGETTE. If they build out the middle mile, then the lastmile providers benefit from that, right? 

Mr. SMITH. That is right—— 

Ms. DEGETTE. And FairPoint, in fact, has been paid $7 million 

as a vendor to these BTOP grantees, right? 

Mr. SMITH. Say that again? I am sorry. 

Ms. DEGETTE. FairPoint has been paid approximately $7 million 

as a vendor to BTOP grantees? 

Mr. SMITH. Yes, I am not familiar with that number but I will 

look. 

Ms. DEGETTE. But they have been paid money. I mean, they 

have benefited from some of this federal money, right? 

Mr. SMITH. I am sure that we have had middle-mile participants 

giving money to FairPoint for some services. 

Ms. DEGETTE. Vermont Telecommunications Authority, right? 

Mr. SMITH. Oh, I see what you are saying. 

Ms. DEGETTE. Yes. 

Mr. SMITH. OK. OK. 

Ms. DEGETTE. Yes. 

Mr. SMITH. Vermont Telecommunications Authority has—— 

Ms. DEGETTE. And Vermont Telephone Company, right? 

Mr. SMITH. Vermont Telephone Company. 

Ms. DEGETTE. ION NewCo and Maine Fiber, you have got money 

from them, right? 

Mr. SMITH. Let me just go back, Congresswoman, to sort of go 

from there. We have got money to build last-mile—— 

Ms. DEGETTE. Right. 

Mr. SMITH [continuing]. From the VTA. 

Ms. DEGETTE. Right. 

Mr. SMITH. Absolutely. 

Ms. DEGETTE. Right. 

Mr. SMITH. OK. 

Ms. DEGETTE. And that is some of this federal money. They are 

getting the federal money and then they are giving it to—— 

Mr. SMITH. In the case of the VTA, I believe it is all state money. 

156 

Ms. DEGETTE. OK. Well, we can check that out. But, you know, 

the whole point is we are trying to get broadband to everybody, 

right, Mr. Abraham? 

Mr. ABRAHAM. Yes. 

Ms. DEGETTE. I mean, it doesn’t help you if you have the last 

mile if you don’t have the middle. 

Mr. ABRAHAM. That is right. 

Ms. DEGETTE. You need it all, right? And also you, too, Mr. 

Freddoso, right? 

Mr. FREDDOSO. Right, Ms. DeGette. I think the leap we have to 

take care here is that you are looking at a critical infrastructure 

now. So you have got to look at it from both perspectives. The last 

mile in a lot of rural areas is going to move towards wireless. 

Ms. DEGETTE. Right. 

Mr. FREDDOSO. Wireless needs to find fiber as quickly as possible 

for backhaul traffic. 

Ms. DEGETTE. Right. 

Mr. FREDDOSO. Our providers in North Carolina have told us 

that their deployments into rural areas like some of the eastern 

parts of the State that Congresswoman Ellmers represents is going 

to be 4G LTE or WiMAX or Wi-Fi. There is not enough middle-mile 

fiber right now along specific routes in the area. We did this 

verification because we were trying to serve schools—— 

Ms. DEGETTE. Right. 

Mr. FREDDOSO [continuing]. That take that backhaul traffic. 

Ms. DEGETTE. OK. 

Mr. FREDDOSO. The second piece of this is that it is critical infrastructure. 

Ms. DEGETTE. Yes. Right. 

Mr. FREDDOSO. And you are not going to run a hospital that you 

are putting on healthcare information exchange or telehealth on 

one single fiber connection to that hospital. 

Ms. DEGETTE. Right. 

Mr. FREDDOSO. And that is what the middle-mile serves directly. 

Ms. DEGETTE. Right. 

Mr. FREDDOSO. So you need multiple paths. 

Ms. DEGETTE. And you know something else I was thinking 

about while I was sitting here, Mr. Kirchhof, in looking at your 

map is, you know, the whole purpose of these BTOP and BIP programs was so that we could build out these systems but then they 

wouldn’t be dependent on federal dollars for the rest of their existence. And so in doing that, I suppose you would have to have some 

kind of business model. Otherwise, to do these 5 percent that aren’t 

built out right now, then you would have to just subsidize them indefinitely. Do you understand? Does that make sense to you? 

Mr. KIRCHHOF. Thank you, Congresswoman. I do understand, but 

I guess what I would be concerned about is, we agree with Secretary Strickling on the 50,000 foot level—— 

Ms. DEGETTE. Right. 

Mr. KIRCHHOF [continuing]. Of what we are all trying to do. 

Ms. DEGETTE. Right. 

Mr. KIRCHHOF. But when it came down to what is being done in 

Colorado, we believe you should have done an area-by-area assessVerDate Nov 24 2008 12:33 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00162 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-9 CHRIS
157 

ment to look at what the needs were. Are they middle mile? Are 

they the last mile? 

Ms. DEGETTE. Right. 

Mr. KIRCHHOF. Instead, what we believe has happened is the 

goal ended up to be to build a statewide network for the government to be in the telecom business for the long haul instead of reinforcing or using existing facilities. So if the goal is to build a sustainable model for the government to be in the telecom business, 

then I think that what they are doing is probably accurate. But if 

it was to come in and provide broadband to unserved and underserved areas, I don’t believe that is what they have done. 

Ms. DEGETTE. Right. I mean, I don’t know. I am not here to defend anybody. But what I am hearing is that EAGLE–Net is trying 

to get contracts for some of the existing company and access some 

of the existing fiber so that they can build out into some of these 

underserved areas. And I think what we might have here—I was 

talking to the Chairman about this—is we really do need to all sit 

down. And I will make the same offer to you that I made to the 

previous witness, which is if I can do something with Mr. Gardner 

to sit down and try to sort this all out, you know, we are happy 

to sit down and do it. 

We actually had delegation breakfast yesterday morning where 

we all sat down and said, you know, people be surprised of how we 

can work together in a bipartisan way in our delegation because we 

don’t want to see private, you know, telecom companies being hurt 

by this government program. But on the other hand, we all have 

an interest in having this be built out to communities like Mr. 

Abraham’s and Mr. Freddoso’s. I think you would agree with that, 

too. 

Mr. KIRCHHOF. I do, thank you, Congresswoman. 

Ms. DEGETTE. Thank you. 

Mr. GARDNER. [Presiding] The gentlelady’s time has expired. 

And I will yield myself 5 minutes. To Mr. Smith and Mr. 

Kirchhof, I mentioned to Mr. Padalino the question about whether 

or not you have concerns or know of concerns in the industry about 

the ability to repay RUS loans if competition by government-backed 

BTOP programs were to interfere with their business model. Are 

there concerns, Mr. Kirchhof, that you have heard of, know about? 

Mr. KIRCHHOF. Yes, thank you, Mr. Gardner. I think what we 

are concerned about is that what is being proposed as middle mile 

is actually putting fiber facilities directly to an end-user customer 

and then encouraging that customer to leave member’s network 

and to go with EAGLE–Net. As you know, because of where you 

live, the larger government institutions—schools, community anchor institutions—provide a source of revenue to those companies 

today. And so if you remove that revenue—and yes, Mr. Strickling 

said that we are not providing to residents and businesses—that is 

true—but those are also the high-cost, low-revenue customers. So 

the community anchor institutions are a very important part of our 

financing. So depending on if a company lost a number of those, it 

could hurt them financially. 

Mr. GARDNER. So let me follow up with that, too, because I think 

you bring up an interesting point. If an anchor institution like a 

school or library bought more bandwidth or was provided with 

158 

more bandwidth than they needed, could they turn around then 

and sell that excess bandwidth? 

Mr. KIRCHHOF. In our belief, yes. And in fact I have stated in my 

testimony that, in fact, we think that they are subsidizing potential 

new competitors to come into the market. And in many cases we 

want that. I understand that. But in rural communities, as I said 

before, there is a limited amount of revenue to support a limited 

amount of networks to be built there. 

Mr. GARDNER. Mr. Kirchhof, do you believe that there is overbuild in Colorado? 

Mr. KIRCHHOF. My members do definitely believe that. When 

EAGLE–Net is laying fiber literally right next to the existing fiber 

optics, we believe that is an overbuild. 

Mr. GARDNER. Mr. Smith? 

Mr. SMITH. I definitely believe there is an overbuild in Vermont 

and I believe there is an overbuild in New Hampshire and I believe 

there is an overbuild in Maine, although I am primarily concentrated on Vermont. 

Mr. GARDNER. And Mr. Kirchhof, going back to you, have the 

terms of the House Joint Resolution in Colorado been met? Do you 

believe it was focused on unserved and underserved areas and not 

in competition with the private sector? Has that been adhered to? 

Mr. KIRCHHOF. No, I do not believe that, particularly the section 

you highlighted earlier. 

Mr. GARDNER. And a couple of other questions that I have for 

you relating to today’s testimony, following up on that statement, 

EAGLE–Net clearly has gone beyond its mission at that point. 

Would you agree? 

Mr. KIRCHHOF. Yes. 

Mr. GARDNER. And are there areas of the State that still need 

fiber in the ground where EAGLE–Net has not gone? 

Mr. KIRCHHOF. Well, from our understanding—and they have 

made changes to their network—but we believe that the western 

slope, while there may be some service coming from EAGLE–Net, 

there is certainly not going to be as much as there is on the eastern 

plains. 

Mr. GARDNER. Do you think that their business model is sustainable? 

Mr. KIRCHHOF. I don’t know. I don’t have any ability to know 

that. 

Mr. GARDNER. I understand. 

Mr. KIRCHHOF. But having said that, you know, our companies 

have been in business for decades and we struggle occasionally and 

we require subsidies from you to make that work. So I don’t know 

how you can sustain that model going forward. 

Mr. GARDNER. And in the testimony that Mr. Strickling presented, he talked about how—you have also mention this in your 

testimony—were supportive of EAGLE–Net’s efforts. But there was 

an element almost of sour grapes that was trying to be implied in 

terms of the opposition and concerns with EAGLE–Net today over 

the grant. But as I believe, you were bidding on apples and oranges. Is that correct? 

Mr. KIRCHHOF. Well, I would say I did take exception to the fact 

that it does sound like it is sour grapes. But we have been trying 

159 

for 3 years to work with EAGLE–Net to get something done. There 

was an RFP that was submitted by a group of northeast Colorado 

companies that was rejected. I don’t know the reason. I heard 

today it was financial reasons, but I don’t know if that was the only 

reason that was out there. 

Mr. GARDNER. Some of the letters that I have received, and I 

don’t know if you have had a chance to see them or not, but they 

were submitted for the record, one talking about Blanca, others 

talking about PC Telecom where they said they were trying to 

work with NTIA trying to convince them that, hey, if you use this 

infrastructure, we could save you $20 million, I think, was the 

Blanca letter where they said we could save $20 million if you use 

this infrastructure, but they never received a response. Do you believe that money was wasted by and through the overbuild? 

Mr. KIRCHHOF. I can’t speak to the savings that those companies 

are suggesting, but I really believe that there were opportunities 

for more efficiencies, to be able to take that money then and spend 

it where it is really needed. 

Mr. GARDNER. I see that my time has expired. The gentleman 

from Vermont is recognized for 5 minutes. 

Mr. WELCH. Thank you very much, Mr. Chairman. 

Mr. Smith, thank you so much for coming and it is good to have 

you here. 

Many of us on this panel do represent rural areas. And this is 

an open-ended question. Would you have suggestions for this panel 

about what policies the Federal Government could pursue that 

would be best helpful in deploying a full range of broadband to our 

rural areas? 

Mr. SMITH. I do, Congressman. I think, you know, in retrospect 

looking at how this program rolled out, I don’t think there was 

enough emphasis on the last mile. You know, in our State and in 

other States, particularly in northern New England, the middle 

mile isn’t the issue. I understand there are other States where the 

middle mile maybe the issue. There is plenty of competition in the 

middle mile. In fact, there is a lot of competition going to the very 

anchor institutions that we talked about. So putting on a government-funded middle-mile program in those sort of States makes no 

sense at all because what you are doing is just undercutting the 

private investment. 

We have invested $200 million in northern New England—in 

Maine, New Hampshire, and Vermont. You undercut that investment. So what I would say is, particularly in areas where we are 

familiar with, concentrate on the last mile. And—— 

Mr. WELCH. So is it your thought that policy would be helpful 

whether it was our district in Vermont or Ms. Ellmers’ district 

where she is in eastern—you are applying this generally to rural 

areas? 

Mr. SMITH. Right. And Congressman, I think that is where the 

downfall the program lies because there are different needs in different places. And if I was going to give some advice, I would say 

look at the regions in terms of what their specific needs are. 

In our region, it is last mile. It is not middle mile; it is the last 

mile. The other thing that I would do sort of, you know, now that 

160 

everything is sort of out the door, I would monitor these programs 

continuously in terms of what is being spent. 

The third thing that I would do, is that any unspent money 

needs to come back to the Treasury in terms of what happens. And 

the fourth thing I would do is hold these entities to deadlines that 

they have promised to obtain. So those are the sort of things off 

the top of my head that I can think of. 

Mr. WELCH. Well, thank you very much. Mr. Abraham and Mr. 

Freddoso, we have heard the argument from some of the incumbent 

broadband providers that there was no need for Recovery Act funding. They can’t compete with networks funded in part with public 

dollars and BTOP recipients are overbuilding their networks. What 

has been your experience with getting private investment for the 

deployment of broadband in your communities? 

Mr. ABRAHAM. When we started this project, we went to our private providers and asked them to participate. My county commissioner went with me and said, why don’t you let Bruce leverage 

this money and help you get this? And they said we don’t really 

want to mess with a government project. We have got plenty of infrastructure out there. And then I said, well, if you can’t do that, 

could you show us where your infrastructure is? So well, no. I 

mean, as an economic development guy, I would like to know 

where the water and sewer lines are. And they said that was proprietary information. 

So when this started there was kind of wall between us and the 

private providers. Since then, we have met with all of them and 

talk about interconnections and working with them to get places 

where they want to go because we have very robust network in the 

areas where they don’t now, but—— 

Mr. WELCH. Mr. Freddoso, thank you. 

Mr. FREDDOSO. Thank you, Mr. Welch. I think an important fact 

to know is that we are a private nonprofit and we have been operating this network for 25 years. So we have built really good relationships with our private sector service providers in North Carolina. 

We had similar discussions to what Mr. Abraham had in Georgia. But let me give you one example. We had to upgrade one 

route, one connection between Rocky Mount and Greenville—part 

of it touches Congresswoman Ellmers’ district. And we get a quote 

of 5 times the price for 2 times the bandwidth. And the reason was 

is that we lack fiber availability. The carrier lacked fiber availability. 

So we took it upon ourselves to partner with them, figure out 

where they had availability, lease from them as part of the BTOP 

program, but then build in the gaps in the State so we could serve 

these anchor institutions. And we serve all of K through 20 public 

education. Their need is growing greatly. But this also now offers 

North Carolina an opportunity to be a test bed for some these wireless technologies in the last mile, work with these private sector 

service providers to make fiber available to them on attractive 

terms to allow them to deploy these services in areas that they 

couldn’t reach before. 

So our stories are a bit different. I don’t know Colorado. I don’t 

know Vermont. But I know that we did the diligence upfront to 

161 

make certain that the overbuild was kept to a minimum to interconnect points. 

Mr. WELCH. OK. Thank you. I yield back. 

Mr. GARDNER. The gentleman yields back. The gentlelady from 

North Carolina is recognized for 5 minutes. 

Mrs. ELLMERS. Thank you, Mr. Chairman. 

My question is for Mr. Freddoso, and I have been listening carefully to your testimony. My questioning is about the opinion from 

the private sector that the middle-mile network has been overbuilt. 

You just gave us information that you built a very strong relationship with the private sector. With government-subsidized entities 

there is an opportunity to pick lucrative places to serve rather than 

build the underserved areas? 

Mr. FREDDOSO. I would agree with Mr. Smith and Mr. Kirchhof. 

There has to be some regional assessment, Congresswoman 

Ellmers, of what is available in those areas. I believe that we are 

entering a time, particularly for rural economic development and 

for rural healthcare, that more than one path of fiber is going to 

be needed into some rural communities. 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO. You are very familiar, obviously, with the 

healthcare industry being a nurse. As we move more into telehealth for critical areas that touches part of your district and the 

healthcare providers that work, if we are doing telehealth over 

these connections, I wouldn’t want one route of fiber into that hospital. 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO. If we are delivering healthcare based on these 

connections, it would be like saying I have one road in and out of 

the hospital and if it is blocked by a car wreck—— 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO [continuing]. I can’t get to the hospital. If I have 

one path of fiber to a hospital and that gets cut, I don’t want 

healthcare to stop in the hospital. 

Mrs. ELLMERS. Mr. FREDDOSO. I don’t want to healthcare to effectively stop. So 

you have got to be smart about those things. 

Mrs. ELLMERS. Right. So what I am hearing you say is that although some may view overbuild in one instance, there may also 

be a need for additional infrastructure. 

Mr. FREDDOSO. Yes, exactly. 

Mrs. ELLMERS. Now—— 

Mr. FREDDOSO. Exactly. And you are familiar with the parts of 

the State—one more example, and I am sorry. 

Mrs. ELLMERS. Sure. 

Mr. FREDDOSO. But you are familiar with the parts of the State 

and Rutherfordton and Shelby—— 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO [continuing]. That have attracted a lot of data 

centers. Facebook is not going to build a data center in Rutherfordton, North Carolina, unless they have three or four paths of 

fiber alternatives there. If they get one fiber cut and their data 

goes down from that data center, it costs them literally millions of 

dollars. They could build their own fiber and justify that based on 

162 

the return on investment. So it has got to be a regional approach. 

You have got to look at what the economic drivers and what the 

education drivers are in those regions—— 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO [continuing]. And understand what the infrastructure is needed to serve those. 

Mrs. ELLMERS. Yes. And you do agree that the underserved areas 

should definitely be a focus as well? 

Mr. FREDDOSO. Absolutely. And we had a requirement of the 

grant that we had to terminate at least one endpoint on every segment that we built in underserved area. 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO. And we have done that in North Carolina 

through the implementation. 

Mrs. ELLMERS. OK. Mr. Kirchhof, would you agreed with some 

of the comments that Mr. Freddoso has made in relation to your 

geographical area? 

Mr. FREDDOSO. Thank you, Congresswoman. Yes, I would. And 

I am sitting here thinking that is the model that I wish we could 

have used in Colorado to be quite frank because it sounds against 

working very well. 

Mrs. ELLMERS. Yes. Yes. Well, thank you. And I appreciate that. 

Now, Mr. Freddoso, along this line of thinking, I know that in 

your testimony you point out that you are 50 miles from completing 

the 2,600 middle-mile network. Where are you now with subsidized 

funding? Are you up and running and sustainable? 

Mr. FREDDOSO. Oh, yes. We have operated the network, as you 

know, Congresswoman for 25 years—— 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO [continuing]. With the community anchor institutions as our key constituents on the network. We can operate the 

network, financially and fiscally, with those endpoints on the network and keep prices relatively flat. We are depending on interest 

in the fiber strands for commercial use in rural parts of the State 

and we are seeing strong demand for those. 

So, for example, wholesalers are coming to us and wanting to buy 

fiber to supply a data center. Or they are wanting to buy fiber to 

the tower in rural areas to deploy 4G LTE services—— 

Mrs. ELLMERS. Yes. 

Mr. FREDDOSO [continuing]. Enhancing the broadband offerings 

in those areas. So it is a large part of our sustainability plan to 

close those deals, but we feel very confident will be able to have 

a sustainable model for the long-term, serve those education and 

healthcare institutions that we serve. 

Mrs. ELLMERS. So in your opinion—and I have got 10 seconds 

left—you will or will not need additional federal funds? 

Mr. FREDDOSO. We will not need additional federal funds. 

Mrs. ELLMERS. OK. Thank you, sir. And I yield back the remainder of my time. 

Mr. GARDNER. The gentlelady yields back at this time. Seeing no 

more questions, I want to thank the panel. I ask that the witnesses—— 

Ms. DEGETTE. Mr. Chairman, before—— 

Mr. GARDNER. The gentlelady from Colorado? 

163 

Ms. DEGETTE. I would ask unanimous consent to put into the 

record some more letters that I was just handed regarding this 

EAGLE–Net situation. I think they complete the record. 

Mr. GARDNER. Without objection. 

[The information appears at the conclusion of the hearing] 

Ms. DEGETTE. Thank you. 

Mr. GARDNER. And the members will have 10 days to submit additional items for the record. And I want to thank the witnesses 

for being here today. 

And this meeting is adjourned. 

[Whereupon, at 1:03 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. LEONARD LANCE

I thank our witness for joining us today and providing their respective insights 

into the Broadband Technology Opportunities Program. Like many stimulus bill 

programs I think the goals of the BTOP are laudable. Particularly in today’s information based economy we should be finding ways to ensure that those who live in 

the most rural communities have access to the true broadband internet connections. 

More broadband access for Americans means more opportunities for professional development and education. 

Unfortunately, after reviewing the information provided to the subcommittee in 

preparation for this hearing I am left with significant concerns about the true efficacy and efficiency of the use of taxpayer funds under this program. It is true that 

there are a number of success stories, instances where consumers who were truly 

‘‘un-served’’ by any commercial broadband provider now have access due to this program. At the same time there seems to be a troubling amount of evidence of waste 

and abuse under this program. 

In particular, the numerous instances where BTOP grantees have overlapped existing broadband infrastructure rather than build out to new truly un-served areas 

is disturbing to me. Each of these instances represents waste of hundreds of thousands of taxpayer dollars. We have witnesses on our second panel today who will 

talk about some specific and egregious cases and I have read a number of press reports of others such as rural schools being connected to second or even third high 

speed connections that they don’t need while other rural communities continue to 

rely on dial up access only. 

The funds the government uses to promote and expand broadband access rightfully belong to all of our constituents and we must always act as responsible stewards of that money. Allowing one commercial entity to overbuild another using taxpayer funds, thereby putting the incumbent provider who built the network with either private funds or loans, at a competitive disadvantage while at the same time 

leaving other consumers in the dark is not being responsible with our constituents 

money. 

I am also concerned with some of the testimony provided by the Commerce Department Inspector General’s Office and how it in some ways conflicts with the testimony provided by the NTIA relating to how the projects that have received the 

BTOP funds are coming along. The NTIA tells us that for the most part these 

projects are moving along and meeting their markers for completing their projects 

by the end of September. At the same time the Inspector General’s Office testimony 

implies that a considerable number of these projects are woefully behind in using 

the provided funding with only seven months left until the projects are meant to 

be completed. 

In conclusion, I will reiterate that while I find the goals of the BTOP to be laudable I am very concerned that the program, in reality, has not done the best job 

possible in accomplishing its goals while at the same time living up the fiduciary 

responsibilities of the federal government. 

PREPARED STATEMENT OF HON. BRUCE L. BRALEY

I’m glad to see the Subcommittee tackling the issue of broadband expansion this 

early in the Congress, because there is an important link between broadband expansion and economic development. Providing access to broadband services around the 

164 

country, and especially in rural areas, increases the strength of local economies and 

improves the quality of life for American families. It’s good for Congress to take a 

look at the effectiveness of some of our broadband investments, and, even though 

this hearing is focused on the Recovery Act, I hope we don’t lose sight of the broader 

positive impacts of our ongoing investments in rural broadband, and the impact on 

families, businesses and communities in rural areas. 

There are many Iowa telecom companies that have had a long and successful history with the USDA Rural Utilities Service. RUS has done a great job in my home 

state, under the leadership of our Rural Development Director Bill Menner, and 

there are thousands of Iowans who now have broadband service thanks to RUS programs. In fact, many of these investments in Iowa and in other rural states are only 

possible because of the public/private partnership between rural providers, RUS and 

the Universal Service Fund. 

For example, OmniTel Communications in Floyd County, Iowa, serves a number 

of communities, including some very rural parts of North Iowa. Funds from the Recovery Act allowed them to replace old technology in some communities, and to 

build fiber to higher cost, remote communities that were previously too far out for 

broadband. Much of this area had no broadband, no video, and no other advanced 

services. This is an example of an investment working, where it needs to work, and 

thousands of Iowa families, businesses and students benefiting as a result. 

Another successful RUS project was a $7 million loan for Interstate Communications in Truro, south of Des Moines, to extend fiber to exchanges in Truro, St. 

Charles and St. Marys. The network expansion has helped the I–35 School District 

and has developed a space that can be used to recruit a call center, and the jobs 

to come with it, to St. Charles. This is a real example of economic development 

thanks to these types of investments in rural broadband. 

All of that said, I recognize that not everywhere is a success story. And it’s frustrating to see when loans or grants go where they aren’t needed, or are used in ways 

that aren’t targeted, or are duplicative. The focus should be on the customer—those 

families, students and businesses who are put at a competitive disadvantage because they don’t happen to live in a place that has affordable access to this type 

of technology. 

About 150,000 Iowans are still unserved. As we examine these needs, I’d be interested to hear about lessons learned that can be applied in the future. I would hope 

we all agree on some of the goals: serving those areas that need broadband, and 

doing it in a way that is using taxpayer money smartly and effectively. Thank you 

to the witnesses for being here today, and I look forward to today’s testimony. 

Thank you Mr. Chairman. 

165 


80019.096

February 26, 2013 

Chairman Greg Walden 

Subcommittee on Communications and Technology 

u.s. House Committee on Energy and Commerce 

Ranking Member Anna Eshoo 

Subcommittee on Communications and Technology 

U.S. House Committee on Energy and Commerce 

Dear Chairman Walden, Ranking Member Eshoo, Members of the Subcommittee on 

Communications and Technology: 

The Schools, Health and libraries Broadband Coalition (SHLB Coalition or "Shell-bee" Coalition) 

respectfully submits the following views in support of the Broadband Technology Opportunities 

Program (BTOP) and asks this statement to be entered into the record of the Subcommittee 

hearing entitled "Is the Broadband Stimulus Working?" scheduled for Wednesday, February 27, 

2013.' 

The SHLB Coalition is extremely pleased with the progress made by the BTOP program in 

bringing affordable, open, high-capacity broadband services to community anchor institutions 

across the country. Community anchor institutions are the "third leg of the stool" of an 

economically vibrant community (along with business and residential users)? Unfortunately, 

1 The SHLB Coalition is a broad-based coalition consisting of representatives of schools, health care 

providers, libraries, private sector companies, for-profit and not-for-profit broadband providers, state 

and national research and education (R&E) networks, municipalities, philanthropic foundations, 

consumer organizations and others. All members of the SHLB Coalition share the common goal of 

bringing affordable, open, high-capacity broadband to community anchor institutions (CAls) across the 

United States. For more information, visit www.shlb.org. 

2 NTIA defines anchor institutions as "schools, libraries, medical and healthcare providers, public safety 

entities, community colleges and other institutions of higher education, and other community support 

organizations and entities." http://www.ntia.doc.gov/legacy/broadbandgrants/guidance/Glossary 01-

29-10 v6.pdf. 

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the needs of community anchor institutions for high-capacity bandwidth are often overlooked 

or misunderstood. The BTOP program3 is wisely designed to address the shortage of highquality broadband services for community anchor institutions. Our members report that the 

BTOP program is extending Middle Mile broadband infrastructure where it is needed, helping 

consumers subscribe to broadband services, improving educational access to technology, 

reducing the cost and increasing the quality of medical care, and providing millions of people 

with high-speed Internet access who otherwise would not have it.4 

1. The Vast Majority of BTOP Projects Are Successfully Bringing High-Speed Internet 

Services to Underserved Communities. 

The SHLB Coalition appreciates that the Subcommittee is exercising its responsibility to oversee 

this federal program to ensure that it is meeting its objectives. Despite occasionally critical 

press accounts, the real "story" about the BTOP program has been its great success. Almost all 

the BTOP grants are successfully meeting the urgent broadband needs of anchor institutions 

and their communities. Of the 233 grants that were initially awarded, 221 projects are 

successfully nearing completion and bringing enormous benefits to 7,200 communities across 

the country.s The BTOP program is in the process of connecting 20,000 community anchor 

institutions with "future-proof" broadband capacity that will allow them to meet their demands 

for high-speed, high-quality Internet connections for decades. Members of Congress should be 

proud of the role they played in investing to improve America's broadband infrastructure and 

for enhancing America's economic growth through broadband technologies and services. 

2. The BTOP Infrastructure Grant Program Is An Essential Component of a 

Comprehensive National Strategy to Improve the Nation's Broadband Capabilities. 

The BTOP Infrastructure grant program is one piece of a comprehensive broadband strategy 

enacted by Congress in 2009 to address the nation's broadband deficiencies. This 

comprehensive approach provided funding for broadband adoption, for public computer 

centers, for state broadband mapping and planning, as well as for infrastructure deployment. 

3 This statement focuses on the BTOP infrastructure grants, which are the focus of this hearing. It should 

be noted, however, that the BTOP program also provided funding for Sustainable Broadband Adoption 

projects, Public Computer Center projects, and broadband mapping and planning. By providing funding 

for such a wide variety of broadband projects, the BTOP program reflects a balanced and comprehensive 

approach to improving the nation's broadband needs. 

4 Separate from the BTOP program, the Rural Utility Service (RUSj has funded $3.5 billion in BIP projects 

that will bring broadband service to an additional 2.8 million households, reaching nearly 7 million 

people, 360,000 businesses, and 30,000 anchor institutions across more than 300,000 square miles. 

5 "NTIA Administrator Strickling Delivers Remarks at the Brookings Institution on Broadband Technology 

Opportunities Program," Jan. 16,2013, available at http://www.ntia.doc.gov/press-release/2013/ntiaadministrator-strickling-delivers-remarks-brookings-institution. 

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The comprehensive package of programs accommodated the needs of many stakeholders in 

the broadband ecosystem, including incumbent private sector companies primarily focused on 

broadband adoption. In crafting this balanced approach, Congress also recognized that anchor 

institutions deserve improved broadband connections whether they are located in urban, 

suburban or rural areas of the country. Congress wisely decided that, if a hospital needs a fiber 

connection for life-saving telemedicine services, or if a school or library needs fiber to provide 

distance learning or job-training, it should not be denied such a connection because the 

surrounding residential consumers have DSL service. 6 

3. The BTOP Program Wisely Recognizes that Community Anchor Institutions Require 

Much More Bandwidth Than the 3-4 Mbps Standard That Was Set for Residential 

Consumers. 

Schools, libraries, community colleges, health clinics, museums, public media, and other CAls 

are "multi-user environments" that may have 10 or 50 or 200 or more computers accessing the 

Internet simultaneously and sharing the same broadband connection. A single individual 

computer user at one of these institutions may need a 1.5 Mbps bandwidth simply to run a 

distance learning class or a job-training video - if dozens of users are engaged in online 

learning, testing, researching, creating content and engaging in on-line collaboration at the 

same time, the CAl may need 100 Mbps or even more. 

For this reason, the FCC's National Broadband Plan Goal #4 said that community anchor 

institutions in every community in the country should have 1 Gigabit per second (Gbps) 

broadband service by the year 2020. This reflects the fact that anchor institutions' demands for 

enhanced Internet access are growing by leaps and bounds. For instance, a recent report 

prepared by the Columbia Telecommunications Corp. of the broadband needs of community 

anchor institutions in Kansas found that "the need for bandwidth by schools, libraries, and 

hospitals is growing dramatically.',7 K-12 schools in particular, are implementing "ubiquitous 

computing" solutions that encourage students and teachers to have laptops, smartphones, 

tablets and other mobile devices that they can use for on-line learning at all times of the day. 

6 The statutory language in Section 6001 of the American Recovery and Reinvestment Act (ARRA) does 

not apply the terms "unserved" or "underserved" to the anchor institutions. These terms are used to 

describe service to "consumers residing" in unserved or underserved areas in Section 6001(b)(1) and 

(b)(2), but are not used in the provisions that govern the deployment of broadband to anchor 

institutions in sections (b)(3). (b)(4) or (b)(5). In other words, the statutory language allows anchor 

institutions in any geographic location of the country to receive funding for broadband connections, 

whether or not the surrounding residential customers have broadband service. 

7 Building the Broadband Future: The Communications Needs of Kansas Schools, Libraries, and Hospitals, 

January 31,2013, available at http://www.ctcnet.us/KansasCAINeeds.pdf. 

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To give another example, the State Educational Technology Directors Association (SETDA) 

issued a report last year comparing the broadband available to schools with the broadband that 

they need for the future.8 SETDA recommends that schools have external Internet connections 

to an Internet service provider of 100 Mbps for every 1,000 students and staff. These 

recommendations increase in the 2017-18 school year to 1 Gbps for every 1,000 students and 

teachers for external connections, and 10 Gbps for internal network connections, "in 

anticipation of future technologies not yet conceived." Indeed, online assessments entail large 

numbers of students working online simultaneously-a function that simply cannot be 

accommodated, even in a small school, over copper-based Internet access. 

A growing number of states are beginning to administer tests to their students online. 

Beginning in 2014, the 46 states and the District of Columbia that have adopted the Common 

Core State Standards will administer 'next generation' assessments almost exclusively online.7 

These tests will require the transmission of high-definition videos and sound files 

simultaneously, generating enormous demands for increased bandwidth. 9 

Several factors make community anchor institutions very different from residential users: 

o First, the applications are increasingly bandwidth-intensive. Videoconferencing does 

not just involve a single low-resolution video; next generation videoconferencing 

involves simultaneous graphics and presentations, involving multiple locations at once. 

o Second, K-12 schools and libraries are increasingly using "cloud computing," which 

means that workstations need a strong enough broadband connection to access 

material in the cloud. Coupled with cloud computing is a growing trend of adopting a 

"thin client" approach which reduces the cost of the computer because information is 

stored on the network rather than in the computer itself. 

o Third, public access computers used by students and library patrons often share the 

same broadband connection with teachers and staff of schools and libraries. 

o Fourth, schools, libraries and public media centers typically offer free Wi-Fi, which is 

used by students, patrons and other consumers when they bring their own devices 

(smartphones, tablets, laptop computers, etc.). These devices place additional 

demands on the community anchor institutions' broadband connection. 

o Fifth, additional bandwidth must be provided for support and maintenance. All 

computers now have a regular cycle of software patches, virus scanner updates, and 

new feature additions. Because many community anchor institutions lack the human 

8 Fox, et al., 2012, "The Broadband Imperative: Recommendations to Address K-12 Education 

Infrastructure Needs," Washington D.C.: State Educational Technology Directors Association (SETDA). 

http://www.setda.org/c/document library/get file?folderld=353&name=DLFE-1515.pdf. 

9 Ian Quillen, "Bandwidth Demands Rise as Schools Move to Common Core," Education Week: Digital Directions, 

October 17, 2012, Vol. 6. at 19-20. http://www.edweek.org/dd/articies/2012/10/17/01bandwidth.h06.html. 

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and financial resources to run caching servers and schedule updates to run during low 

demand, these support and maintenance needs must often be incorporated during 

normal business hours. 

4. Concerns About "Overbuilding" to Anchor Institutions Are Misplaced. 

There are several reasons why the concerns expressed about alleged "overbuilding" are 

misplaced: 

i. Community Anchor Institutions Need High-Quality Bandwidth. 

Some observers allege that the BTOP program has improperly sponsored "overbuilding" 

because the private sector networks already provide 3 or 4 Mbps service to anchor institutions. 

This is like saying students do not need computers because they already have calculators. The 

burgeoning use of broadband services by students, teachers and administrative staff at schools 

and libraries is simply overwhelming existing broadband capacity. Community anchor 

institutions must have very high-capacity and high-quality bandwidth to serve the educational, 

medical and information needs of their communities. 

Smartphones, tablets, laptop computers and desktop computers are increasingly being 

integrated into classroom teaching and learning. Medical clinics need to transmit medical 

images and patient records to specialists simultaneously. Libraries provide digital literacy 

training to dozens of consumers to help promote broadband adoption. Some schools are 

seeing their bandwidth demands increasing by 200% in a single year. In all these cases, the 

community anchor institution will need substantially greater higher quality bandwidth than a 

residential user because they often serve dozens, or even hundreds, of Internet-connected 

devices simultaneously. 

ii. Community Anchor Institutions Need Affordable Rates. 

Even where fiber may be available in the community, it may not be accessible if the provider is 

charging rates that are beyond the community anchor institutions' budget. Schools, libraries, 

medical clinics have suffered extreme budget reductions over the past few years, and they 

often cannot afford to pay the rates offered by the incumbent provider. BTOP grant recipients 

are often able to provide fiber-based services to community anchor institutions at rates that are 

substantially less than those of the incumbent provider. 

SIPage 
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iii. Community Anchor Institutions Need the Fiber Connection at their Specific 

Location. 

Even if an incumbent provider may have a fiber optic cable deployed somewhere in the 

community, it may not serve the needs of the anchor institution unless there is a way to 

connect directly to that fiber. If, for instance, the existing fiber cable is located in the city 

business district, across town, or is inaccessible, providing funding to a new fiber deployment 

project may be the only way to serve that community anchor institution. 

iv. Community Anchor Institutions Sometimes Need Route Diversity. 

Some community anchor institutions, particularly those involved with public safety, need 

multiple fiber connections from a diversity of suppliers to ensure that they have adequate 

Internet connectivity in times of natural disaster, terrorist attacks or other emergency 

situations. 

v. Community Anchor institutions Need Higher-Quality Internet Connections than 

Residential. 

Because of their role in providing essential services to their communities, anchor institutions 

require higher-quality bandwidth than typically demanded by residential users. The BTOP 

program wisely funds networks that have extremely low latency and low packet-loss. 

vi. The 3 Mbps/4 Mbps Standard was Designed for Residential Consumers, not 

Community Anchor Institutions. 

Arguing that a community anchor institution is already "served" if it has 3 or 4 Mbps service not 

only misunderstands the typical broadband needs of anchor institutions, it also misunderstands 

the origins of the FCC's standard of measurement. The FCC established the 3 Mbps (download) 

and 768 kbps (upload) as the minimum standard for residential consumers, not for CAls. In 

2011, the FCC stated: 

Since the 3 Mbps/768 kbps benchmark was calculated with household usage in mind, it 

is likely that such a level of connectivity is insufficient for an entire school, which may 

have dozens, hundreds, or even thousands of students seeking to use the school's 

broadband connection simultaneously.lO 

10 2011 Seventh Broadband Progress Report, 26 FCC Red at 8036-37, para. 56. 

61Page 
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vii. Community Anchor Institutions Often Have Difficulty Obtaining the Bandwidth 

They Need. 

Despite their needs for high-capacity, high-quality bandwidth, community anchor institutions 

often have difficulty obtaining it. For instance, the FCC's 2011 survey of E-Rate institutions 

revealed as many as 80 percent of E-Rate recipients said that their broadband connections do 

not fully meet their needs, and 78 percent of recipients say that they need additional 

bandwidth.ll The survey results suggest that E-Rate recipients face challenges when trying to 

provide students higher-bandwidth applications. Furthermore, when NTIA released the 

National Broadband Map, it found that community anchor institutions were "largely unserved" 

and that two-thirds of surveyed schools and 96% of libraries subscribe to speeds slower than 25 Mbps.12 

Ever since the demand for broadband services began about a decade ago, the private sector 

has had an opportunity to fulfill the demands of community anchor institutions for higher 

quality bandwidth. Many private sector companies have done so, providing fiber and coaxial 

cable services to thousands of anchor institutions across the country. Unfortunately, in many 

other cases, the private sector decided that there was no business case to deploy high-capacity 

bandwidth. To its credit, the BTOP program has filled the gaps in broadband facilities to 

thousands of anchor institutions that were not otherwise able to obtain them. 

5. The BTOP Program is a Cost-Effective Investment in America's Future. 

The BTOP program is a cost-effective investment in improving America's broadband capabilities 

and economic growth. Rather than funding the build-out of Last Mile facilities to connect 

homes and businesses, the BTOP program focuses on providing Middle Mile capacity to anchor 

institutions and the community. This maximizes the number of communities that will benefit 

from having a high-capacity broadband "pipe" available. The fiber optic networks being 

deployed under the program are "scalable" (additional capacity can be provided simply by 

changing the electronics at either end of the fiber "pipe" or "lighting up" dark fiber strands), 

which means they will be able to accommodate growing Internet traffic needs for decades into 

the future. 

Furthermore, the BTOP program also wisely includes an interconnection requirement that is 

designed to stimulate greater broadband deployment by the private sector and other providers. 

This open interconnection obligation is consistent with the "comprehensive community" 

approach to ensure that these public investments in broadband networks meet local needs and 

11 2010 E-Rate Program and Broadband Usage Survey: Report, Federal Communications Commission, 

Wireline Competition Bureau, DA 10-2414, released Jan. 6, 2011, available at www.fcc.gov. 

12 http://www.ntia.doc.gov/press-releases/2011/commerce%C3%A2%E2%82%AC%E2%84%A2s-ntia-unveilsnational-broadband-map-and-new-broadband-adoption-surveV 

71Page 
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interests. By encouraging and enabling community anchor institutions to share high-capacity 

broadband network assets, the program leverages local community investments to benefit 

more than one public purpose. 

6. The BTOP Program Addresses only a Fraction of the Need for More Bandwidth. 

According to some estimates there are 200,000 to 350,000 community anchor institutions13 

nationwide. It is estimated that the broadband networks built with BTOP funding will 

eventually connect 20,000 or more community anchor institutions.14 While this is significant, 

this will address only about 10% of all the anchor institutions across the country. NTIA has 

already acknowledged that the program will only connect 10% of all K-12 schools in the 

country.iS Thus, even after the current BTOP program completes its network build-out, the 

majority of communities across the country will still be in need of a high-capacity Middle Mile 

network serving the needs of community anchor institutions. 

Respectfully Submitted, 

John Wind hausen, Jr. 

Executive Director 

Schools, Health and Libraries Broadband (SHLB) Coalition 

jwindhausen@shlb.org 

(202) 256-9616 

13 The National Broadband Plan web site estimates 328,000 Community Anchor Institutions, although 

the number of libraries cited (22,165) is higher than the ALA estimates of slightly less than 17,000. See, 

http://www.broadbandmap.gov/summarize/nationwide. Internet2 estimates the number of anchor 

institutions at approximately 200,000. See, 

http://fjallfoss.fcc.gov/ecfs/document/view?id=7021700239. 

14 httD:l!www.ntia.doc.gov/press-release(2013(ntia-administrator-strickling-delivers-remarksbrookings-institution. ("Our grantees are in the process of connecting more than 20,000 community 

anchor institutions in 5,100 communities.") 

"Id. ("For schools, our program will bring 100 megabits per second service to less than 10 percent of 

the nation's K-12 schools. Another 30 percent, it is estimated, already receive broadband service at the 

speeds recommended by the school technology directors association. That leaves around 60 percent of 

our schools still needing upgrades in order to deliver the quality of education that our students need in 

the 21" century.") 

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Why a one-room West Virginia library runs a 

$20,000 Cisco router 

Cisco, West Virginia wasted $5M on enterprise-class gear, 

by Nate Anderson- Feb 25 2013, 6:40pm EST 

Yes, this library has a Cisco 3945 router. 

Marmet, West Virginia is a town of 1,500 people living in a thin ribbon along the banks of the 

Kanawha River just below Charleston, The town's public library is only open Thursdays, Fridays, and 

Saturdays, It's housed in a small building the size of a trailer, which the state of West Virginia 

describes as an "extremely small facility with only one Internet connection," Which is why it's such a 

surprise to learn the Marmet Public Library runs this connection through a $15,000 to $20,000 Cisco 

3945 router intended for "mid-size to large deployments," according to Cisco, 

In an absolutely scathing report (PDF) just released by the state's legislative auditor, West Virginia 

officials are accused of overspending at least $5 million of federal money on such routers, installed 

indiscriminately in both large institutions and one-room libraries across the state, The routers were 

purchased without ever asking the state's libraries, cops, and schools what they needed, And when 

distributed, the expensive routers were passed out without much apparent care, The small town of 

Clay received seven of them to serve a total population of 491 people .. , and all seven routers were 

installed within only .44 miles of each other at a total cost of more than $100,000, 
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In total, $24 million was spent on the routers through a not-very-open bidding process under which 

non-Cisco router manufacturers such as Juniper and Alcatel-Lucent were not "given notice or any 

opportunity to bid." As for Cisco, which helped put the massive package together, the legislative 

auditor concluded that the company "had a moral responsibility to propose a plan which reasonably 

complied with Cisco's own engineering standards" but that instead "Cisco representatives showed a 

wanton indifference to the interests of the public in recommending using $24 million of public funds 

to purchase 1,164 Cisco model 3945 branch routers." 

In other words, the project has been a stellar example of what not to do and how not to do it 

Clay, WV, a tiny outpost among the mountains, has 7 Cisco 3945 routers within .44 miles of each 

other. 

A million here, a million there 

The routers in question were purchased as part of a much larger grant from the Broadband 

Technology Opportunities Program (BTOP), which passed out several billion dollars to help upgrade 

broadband networks across America as part of President Obama's initial stimulus package in 2009. 

West Virginia's cash was meant to wire up the many "community anchor institutions" such as 

libraries, schools, police, and hospitals across the state with Internet access delivered over fiberoptic lines. As part of the project, the state also had to purchase some sort of router for each 

institution. Instead of "right-sizing" the routers for their intended destinations, the state group of 

officials charged with implementing the grant decided they would make things easy by purchasing 

the exact same router and installing it everywhere, even in the most rural locations they planned to 

reach. 
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This became controversial in 2012 when local newspapers brought the issue to light and questioned 

whether the state had not just been boondoggled. The Charleston Gazette noted an official in the 

state's Office of Technology had actually e-mailed his colleagues to say "this equipment may be 

grossly oversized for several of the facilities in which it is currently slated to be installed" but that the 

warning was not heeded. The issue quickly escalated to Congress, where officials from the 

executive branch were grilled about the West Virginia situation and whether the federal government 

had exercised enough oversight of the project. 

The state of West Virginia has now weighed in with its own report on the routers, and it makes for 

mind-boggling reading. Consider, for instance, how routers were purchased for the state police. 

When the West Virginia State Police purchased their own routers a few years earlier, they chose 

Cisco model2xxx machines at a cost of only $5,000 or so apiece, with only a single Cisco 3xxx 

model purchased for the largest deployment. In 2010, when the state received its grant money, no 

one asked the State Police what they wanted or needed; indeed, the police were "never contacted" 

at all by the Grant Implementation Team. (This was a widespread problem; the report notes no 

capacity or user needs surveys were ever done before the money was spent). Instead, the team 

simply ordered 77 Cisco 3945 routers at a cost of $20,661 apiece-that's one $20,000 router for 

every 13.7 state police employees-and sent them off to the police. (Each router can handle several 

hundred concurrent users.) 

Had the Grant Implementation Team replaced 70 of these routers with the cheaper model, the state 

could have saved $1.4 million. And that's assuming that the routers were even needed to begin 

with-in many cases, they were not. 

Such cost savings could have been found all over the state. Nearly all of the West Virginia's 172 

libraries could have saved $16,000 per router, saving the state $2.8 million more. Many of the state's 

public schools are likewise small institutions that could have easily used smaller routers and saved 

another $3.68 million. In total, another $5+ million could have been spent on tech that was actually 

useful for the state's residents. 

What was the grant team thinking? 
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Cisco's 3900 series of routers, 

Cisco 

How it happened 

The state Office of Technology contends the massive routers might save the state money in the long 

run by supporting cheap VolP systems instead of standard telephone lines, But the legislative 

auditor notes that each of the 3945 routers can handle 700 to 1,200 VolP lines, which means that 

the 1,164 routers purchased by the state could support up to 1,39 million lines, As the auditor's 

report dryly notes, only a single library in the entire state has more than eight phone lines; most have 

one or two, (None use a VolP system anyway,) 

Ironically, the routers can't even be used for VolP in some key cases, The state police already have 

a VolP-based phone system, but the new 3945 series routers did not come with "the appropriate 

Cisco VolP modules" to work with the system. The state now has to spend another $84,768 to 

purchase those modules; without them, the state police can't use the routers, only two of which are 

actually installed and operating, (For those keeping score at home, this means that 75 $20,000 

routers are depreciating in a state police warehouse somewhere in West Virginia,) 

The report also lays a good deal of blame on Cisco and on the company's engineer for the project 

The engineer told the auditor he was simply following the state's instructions, which required him to 

spec out a proposal using only routers with "internal dual power supplies"-hence the 3945s, As the 

auditor dug into the story, demanding to know when this exact request was made, the Cisco 

engineer said it originated with the state Department of Education, But the engineer was "unable to 

provide the legislative auditor with any e-mails or other documentation" to this effect 

The auditor began digging, speaking to many people in West Virginia state government who had 

been involved with the project The Department of Education told him that it "did not request or 

require that the routers for the state's schools have internal dual power supplies, Education would 

not have made this requirement because unless a school has two power sources the feature of dual 

power supplies would have no use," A network engineer for the Department of Education confirmed 

that he had not requested such a feature. 

So the auditor went to the state's Office of Technology, which was also involved in the project An 

employee there said that dual power supplies had come up, but only for "24/7/365 locations such as 

regional jails and DHHR state hospitals," VolP support was discussed "but not required," he added, 

and he concluded by saying, "It was never implied to put each feature in all routers," 

Cisco defended itself by saying it had drawn up a complete spreadsheet of its proposed bid, and the 

state had reviewed it If it didn't need or want these features, or if it thought the routers were too 

large, it should have said so. 

The legislative auditor was also apparently quite peeved by this entire investigation, The auditor's 

office sent off a fairly testy e-mail to Cisco noting that the 3945 routers were not appropriate for most 
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West Virginia deployments-even according to Cisco's own literature. "I would appreciate an 

explanation as to why you believe the 3945 routers are not oversized and misconfigured for 

hundreds of locations," the auditor concluded, "and, thus, a significant over expenditure of millions of 

dollars for Cisco equipment." The Cisco rep responded the state had reviewed his spreadsheets and 

not objected and that the 3945s were large enough to allow for future expansion. 

The auditor then asked the legislature's own tech team what they used. The West Virginia legislature 

at peak times can have over 600 internal users and numerous guests accessing "multiple Web 

servers, up to eight simultaneous live audio webcasts, multiple SQl servers, and rnultiple Google 

search appliances located in the legislature's server farms." Despite all this, the legislature doesn't 

even use a router but instead runs a cheaper Cisco switch ... and it has never exceeded capacity. 

The auditor asked one of the legislature's network specialists if he would even want a 3945 router; 

the man said no because "it greatly exceeds the legislature's needs." And yet somehow more than 

1,000 of them had been sent to the very furthest, most rural corners of the state. 

Debarment 

The report finds plenty of blame to go around. The ultimate cause of the fiasco, it says, was the fact 

the grant implementers did not conduct a capacity or use study before spending $24 million. They 

also used a "legally unauthorized purchasing process" to buy the routers, which resulted in only 

modest competition for the bid. Finally, Cisco is accused of knowingly selling the state larger routers 

than it needed and of showing a "wanton indifference to the interests of the public." 

Getting any of the money back seems unlikely at this pOint, but the legislative auditor does have one 

solid recommendation to make. The State Purchasing division should determine whether Cisco's 

actions in this matter fall afoul of section 5A-3-33d of the West Virginia Code, and whether the 

company should be barred from bidding on future projects. 

Cisco tells Ars "the criticism of the State is misplaced and fails to recognize the forward-looking 

nature of their vision. The positive impact of broadband infrastructure on education, job creation, and 

economic development is well established, and we are committed to working with the State to realize 

these benefits for the people of West Virginia now and into the future." 

As for that $5+ million the slate could have saved, it would have paid for 104 additional miles of fiber. 
178 


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February 26, 2013 

Chainnan Greg Walden 

Subcommittee on Communications and Technology 

Committee on Energy and Commerce 

Ranking Member Anna Eshoo 

Subcommittee on Communications and Technology 

Committee on Energy and Commerce 

RE: Is the Broadband Stimulus Working? 

Dear Chainnan Walden, Ranking Member Eshoo, Members of the Subcommittee on Communications 

and Technology: 

The National Association of Telecommunications Officers and Advisors (NATOA)' has long 

advocated for increased broadband deployment and adoption. We believe that increased access to 

affordable, high-speed broadband is essential to spur economic groV\1h and development, improve the 

educational opportunities and experiences for our children, and provide badly needed telemedicine 

services to all Americans. But as we have seen, the private sector is not always willing or able to provide 

these services to all parts of our country due to financial or other logistical considerations. This is why 

our association has repeatedly expressed our support for the BTOP and BIP programs. 

One of the BTOP projects being looked at by this Subcommittee at its scheduled February 27, 

2013 hearing is the Colorado-based EAGLE-Net project. Attached is an October 23, 2012 letter NA TOA, 

along with the Benton Foundation, sent to Assistant Secretary Larry Strickling in support of this project. 

What we said then is just as relevant today we urge that the aggressive public relations campaign waged 

against this and other BTOP and BIP projects not serve to diminish the important job-creating, 

competition-enhancing accomplishments of these vital programs that are bringing advanced 

communications services to our schools, libraries and other anchor institutions across our nation. 

Sincerely, 

Steve Traylor 

Executive Director 

1 NA TOA is the national association that represents the communications needs and 

interests of local governments, and those who advise local governments. NATOA's membership 

includes local government officials and staff members from across the nation whose 

responsibility is to advise and implement telecommunications policy for the nation's local 

governments. These responsibilities range from cable franchising, rights-of-way management 

and government access programming to infonnation technologies and Institutional Network (INet) 

planning and management. 
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October 23,2012 

Lawrence E. Strickling 

Assistant Secretary for Communications and Information 

Administrator, National Telecommunications and Information Administration (NTIA) 

u.S. Department of Commerce 

1401 Constitution Ave., NW 

Washington, D.C. 20230-0002 

Dear Assistant Secretary Strickling: 

We write in regard to the EAGLE-Net project-the important middle-mile statewide Colorado 

fiber initiative that was funded by NTIA under BTOP. The EAGLE -Net program and model are 

exemplary, and exactly the kind of project that our members and stakeholders support as 

furthering the public interest in communications. EAGLE-Net plans to create a statewide fiber 

infrastructure with a combination of newly constructed fiber optics and leased fiber (where such 

tiber is available on the market). 

EAGLE-Net's network will reach every school district in Colorado and, in partnership with local 

providers, will have the potential to reach every school and library in Colorado. Its planned 

infrastructure reaches into the most rural, mountainous, hard-to-reach parts of the state. As a 

result of these partnerships and the new fiber, schools and libraries in Colorado will have access 

to high-bandwidth fiber-based services at prices that reflect that the network is connected to the 

Internet backbone, removing the pricing disparity so often faced by rural areas relative to urban 

and suburban areas because of their distance from an Internet point of presence, such as that in 

Denver. 

At the same time as delivering this tremendous capacity to community anchor institutions, 

EAGLE-Net will provide non-discriminatory, open access to any and all qualified private sector 

providers who choose to use its infrastructure-thus bridging, for the commercial sector, that 

same divide that currently exists between suburban and urban areas on the one hand, and rural 

areas on the other. The emergence of a fiber-based competitive market on those routes will open 

up rural markets and enable cost-effective access to those markets for private entities that wish to 

serve residential and small business customers. 

We understand that there has been significant opposition to this new fiber, and to the potential 

for competition in underserved rural areas. We also understand that a range of allegations have 

been made about the management of the project. In this regard, we have great confidence that 

NTIA-which has done an exemplary job of creating and overseeing BTOP-has more than 

adequately overseen the EAGLE-Net project. And for that reason, we are quite dubious about 

wild allegations made by self-interested parties that oppose EAGLE-Net. 
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October 23,2013 

Page 2 

We certainly hope that the aggressive public relations campaign that has been mounted by 

EAGLE-Net's opponents does not serve to put this important job-creating, competitionenhancing network at risk-thereby depriving the school children, library users, and rural 

residents of Colorado of such a significant investment in their future. 

We note, too, that if this opposition to EAGLE-Net is allowed to succeed, the precedent that 

would be set could have the effect of putting at risk similar initiatives throughout the country 

(funded by BTOP or otherwise) by inviting similar anti-competition campaigns. 

We thank you and your staff for the efforts made over the past few years to use BTOP to enable 

the potential of broadband in rural America. 

Sincerely, 

Steve Traylor 

Executive Director, NA TOA 

cc: Governor John Hickenlooper 

Senator Mark Udall 

Senator Michael Bennet 

Representative Diana DeGette 

Representative Jared Polis 

Representative Scott Tipton 

Representative Cory Gardner 

Representative Doug Lamborn 

Representative Mike Coffman 

Representative Ed Perlmutter 

Charles Benton 

Chairman, Benton Foundation 
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February 11, 2013 

Waste Is Seen in Program to Give Internet Access 

to Rural U.S. By EDWARD WYATT 

AGATE, Colo. The bank is gone from this once-thriving ranching and farming community on 

Colorado's windblown eastern plain, as are the dairies, the hotel and the Union Pacific depot. The post 

office remains, at the corner of Main Street and First Avenue, the intersection of the town's two paved 

streets. 

There is not much that is modern in Agate, except at the n-student elementary school, which has three 

high-speed fiber optic Internet connections - more than nearly every school in Denver, 70 miles to the 

west, and, for that matter, just about any school in the country. And it is something, the school says, that it 

doesn't need. 

The latest chapter in Agate's recent broadband boom came thanks to the $4 billion Broadband 

Technology Opportunities Program, part of the Obama administration's 2009 economic stimulus effort. 

The aim of the grant program is to extend high-speed Internet access to parts of the country that had little 

or none of it because private companies said it was too expensive to build. 

"These investments have the potential to reshape our nation," said Lawrence E. Strickling, an assistant 

commerce secretary and the administrator of the National Telecommunications and Information 

Administration, which runs the federal grant program. "We know that Americans who don't have access 

to the Internet are increasingly cut off from job opportunities, education resources, health care 

information and even government services." 

But local phone companies have complained about waste or unfair competition, like using some of the 

grants to build fiber networks where they already exist - including, in Colorado, in the easily accessible 

eastern plains that include Agate - rather than where they are most needed, in rural mountain towns. 

Nationally, $594 million in spending has been temporarily or permanently halted, 14 percent of the 

overall program, and the Commerce Department's inspector general has raised questions about the 

program's ability to adequately monitor spending of the more than 230 grants. 

In Illinois, for example, a $12 million broadband grant was sanctioned when a subcontractor was caught 

routing fiber optic cable through neighborhoods where its project engineers lived. A $39 million grant in 
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Arizona was suspended over questionable expenditures on travel, transactions that appeared to involve 

conflicts of interest and other unbudgeted activities. 

Broadband grants in Alabama and Louisiana, totaling $140 million, were terminated over nndocumented 

expenditnres and failure to adhere to construction plans and schedules. Four other grants, worth $42 

million, returned the money before even getting off the ground. 

Here in Agate, two high-speed connections already existed in the school, which had been teaching 

students from kindergarten through 12th grade. Now the oldest students are fifth graders, and the school 

says the high-speed fiber optic service is of little use and beyond its means. (It has requested bids for a 

slower-speed connection to replace it.) 

Agate's third fiber optic connection was among the projects built with fonds from a $100 million grant to 

an education consortium called called Eagle-Net. The grant has been suspended since December, when 

officials discovered that Eagle-Net had changed nearly all of its plans for wiring the state. Four months 

earlier, Eagle-Net was warned about questionable spending and lack of budgetary controls, according to 

Commerce Department documents. 

Congress is preparing to take a closer look at the overall program. Representative Cory Gardner, a 

Colorado Republican whose district includes Agate, said in an interview Monday that the House 

subcommittee overseeing the grant program was preparing for a hearing into possible program waste. 

Eagle-Net says it has tried to work with the rural telecom companies. Gretchen Dirks, a spokeswoman, 

said several of the rural telephone companies now raising objections supported Eagle-Net's plans in the 

beginning. 

Ms. Dirks also said Eagle-Net had not been avoiding mountain areas. "The more difficult-to-reach areas of 

Colorado, due to diverse geographic and weather conditions, have been slated for completion in 2013 

since the very beginning of the funding process," she said. 

Obama administration officials say that the problem with certain grants, including Eagle-Net's, are being 

addressed. But it is misleading, they say, to focus on the 14 grants that have been suspended or 

terminated when most have been successful. (Five of the programs whose grants were suspended are back 

up and running.) 

Among the more promising, Mr. Strickling said, were a $102 million program in Arksnsas that has paid 

for high-speed video and data links between rural doctors' offices and the state university's medical center 
183 


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in Little Rock, and a $33 million grant to build a 1,000-mile fiber loop linking communities in rural 

northern Georgia to Atlanta. 

Rural areas certainly suffer a lack of high-speed Internet access. While about 88 percent of urban 

households in the United States have access to high-speed cable Internet service, only 40 percent of rural 

households do, according to the Federal Communications Commission and the Commerce Department. 

About 20 percent of United States households have access to fiber optic Internet service, the fastest 

connection, compared with 86 percent in Japan and two-thirds in South Korea. But the Eagle-Net 

experience in Colorado demonstrates that in the haste to get broadband everywhere, some grant planners 

appeared not to have taken into account the current condition of infrastructure. 

Among the earliest fiber optic connections that Eagle-Net turned on, for example, was not in a remote, 

unserved area but in the Cherry Creek School District, located in a wealthy Denver suburb. 

Ben Startzer, chief information officer for Cherry Creek schools, said in an interview that before Eagle-Net 

came to visit, the district already had a fiber optic connection that operated at 300 megabits per second 

100 times faster than the average residential broadband speed. The schools didn't need the new network, 

Mr. Startzer said, but it allowed the district to nearly double its speed while increasing the network's 

backup redundancy. 

A two-hour drive to the east, in Flagler, Colo., the 180-student public school, which serves 

prekindergarten through 12th grade, also recently got a third fiber optic connection, thanks to Eagle-Net, 

whose cable was installed underground within a few feet of fiber optic cables already laid by Eastern Slope 

Rural Telephone. 

Eastern Slope's network was financed in part by an $18 million loan from the Department of Agriculture's 

Rural Utilities Service - which, unlike Eagle-Net's grant, has to be repaid. 

"Here you have a quasi-governmental agency that has free federal money and is spending it to provide the 

exact same service that is already there, competing against companies that are borrowing federally backed 

money," said Senator Greg Brophy, a Colorado state legislator whose district covers a large swath of rural 

northeastern Colorado. 

The types ofJocal government institutions that Eagle-Net is focusing on are often the largest customers of 

the rural telecommunications companies, said Kevin Felty, president of the Colorado 

Telecommunications Association and president of Plains Cooperative Telephone. 

Revenue from those larger entities supports affordable residential service in the area, he said. 
184 


80019.115

Ms. Dirks of Eagle-Net said that if local institutions were happy with the service they already had, they 

would not have welcomed a new provider. 

One of those enthusiastic about Eagle-Net is Brainstorm Internet, of Durango, Colo. Russ Elliott, 

president of Brainstorm, said connecting to Eagle-Net had allowed his company to offer substantially 

faster service that costs less to provide than before. "They came in and said 'What can we do to help you 

get to these rural communities?'" he said. 

In Agate, however, Daniel Hollembeak, general manager of the Agate Mutual Telephone, whose 

headquarters are in a mobile home across a dirt lot from the school, said Eagle-Net's wiring of schools and 

other government institutions would drive companies like his further toward the brink. 

"We employ local people," he said. "If Eagle-Net takes away these institutions, it will have a big negative 

effect on the company." 
185 


80019.116

)Dinlngfj!T~stj!tnridlfdu"'tlonaIOpporhmJtW$fcrStudtnl$ 

January 16, 2013 

Mr. Larry Strickling 

Assistant Secretary for Communications and Information 

National Telecommunications and Information Administration (NTIA) 

1401 Constitution Avenue, Room 4898 

Washington, D. C. 20230 

Dear Mr. Strickling, 

This letter is written by the Colorado BOCES Association to strongly support the Eagle-Net Alliance and their 

implementation of the NTIA Grant in Colorado. The Eagle-Net Alliance work is essential to all school districts .(especially 

rural school districts) and BOCES in Colorado. 

The Colorado BOCES Association and the nineteen (19) BOCES in Colorado are comprised of 169 of the 178 school 

districts in Colorado ~s members. All of these 169 school districts and nineteen (19) BOCES strongly support the EagleNet Alliance for the following reasons. 

Eagle-Net is: 

Building a statewide middle-mile high-speed broadband netWork that will connect all school districts and BOCES 

in over 170 Colorado communities. 

Offers local carriers a choice for middle-mile network access at a lower cost. 

Creating a robust and redundant system that compliments and enhances existing infrastructure and is governed 

by representatives from across the state on the Eagle-Net Board (a public-private alliance board). 

Under the existing system without the Eagle-Net middle-mile broadband network, school districts and BOCES in many 

parts ofthe state have very limited access to affordable and reliable increased bandwidth. This increased affordable and 

reliable bandwidth is necessary for students to partiCipate in distance learning programs, online learning programs, etc. 

Several BOCES currently provide distance learning and online programs for their member districts and desperately need 

more bandwidth. This Eagle-Net Alliance program will provide a much needed service and reduce the digital divide 

between rural, suburban and urban communities and benefits all students in the Colorado K-12 education system. An 

individual student's zip code in Colorado currently determines the access to information and the quality of education 

received. This Eagle-Net Alliance Network will help level the playing field for students and schools that are currently 

underserved with inadequate broadband capacity. 

In my 40 plus years in education in Colorado, historically as a school administrator in rural Colorado, I have personally 

experienced situations where a local telephone company provider charged school districts more to offset costs to their 

other consumers. Also, I have recently become aware of a situation where students in a rural school in Colorado were 

unable to take a college entrance test at their school due to lack of broadband capacity and, therefore, the students had 

to travel a significant distance to the college to complete the entrance exam. The Eagle-Net Alliance program will 

provide fiber with increased broadband capacity to this school. This increased broadband capacity was not historically 

Page 2 

11274 Weld County Rd. 17 . Longmont, CO 80504 . H 970-785-2064 • C 970-381-0720 . Fox 970-785-6324 . Email dafe.mcwff@wiJdbfue.net 
186 


80019.117

provided by the local telephone company as it was not feasible as a business venture and thus, the school would have 

remained vastly underserved for the foreseeable future without the Eagle-Net Project. 

In addition, I want to point out that Eagle-Net is a choice and local providers, schools, etc. are not required to buy 

through Eagle-Net. Each local provider makes that choice. 

Again, The Colorado BOCES Association strongly supports the Eagle-Net Alliance Project. It is essential to all school 

districts and BOCES throughout Colorado (especially rural Colorado) to allow students the appropriate learning 

opportunities. 

Sincerely, 

Dale McCall, Executive Director 

Colorado BOCES Association 

11274 Weld County Road #17 

longmont, CO 80504 

Email: dale.mccall@wildblue.net 

Cell: ,970-381-0720 

Home: 970-785-2064 

Fax: 970-785-6324 

Website: www.coloradoboces.org 

cc: Colorado's Federal legislative Delegation 

11274 Wefd County Rd. 17 'Longmont, [080504 'H970-785-2064' C970-381-0720' Fox 970-785-6324 • Emoildafe.mccall@wildblue,net 
187 


80019.118

4101 South Bannock Street Eng!ewood, CO 80110-4606 

Phone 303.762,8762 Fax 303.762.8697 W"W\IV,ccrcase,org 

October 8, 2012 

letter of Support for EAGLE-Net, from CASE and CASSA 

EAGLE-Net is a lifeline being developed in Colorado that will be the first of its kind network. It will allow 

remote and rural areas to compete, and from the perspective of education leaders, is going to allow 21 sf 

Century learning to take place. The 170 communities being connected will allow equal access to bandwidth at 

a competitive rate. Anymore, broadband is not a "nice to have/' it is a uneed to have" in order to keep our 

communities vital and to ensure the free flow of knowledge. 

The grant and governance of the project is something that we think is moving Colorado in the right direction. 

For schools, this additional broadband capacity allows students more equal access to the bandwidth needed 

to learn remotely and, ultimately, to take online tests with quick turnaround. For example, a rural student 

who currently has minimal access to high-speed Internet could use EAGlE-Net's network for a faster, reliable 

connection, resulting in quicker test response time. Additionally, as Colorado educators work to instill 21st 

Century skills in students, delivered in an online or blend.ed environment, they need the advanced 

connectivity. 

When you look at coursework offered in a large suburban high school and compare it to rural Colorado, it is 

dear that abundant bandwidth is critical for delivering qu.alitY distance learning programs to schools. As the 

state moves to embrace new content standards, assessments, and evaluation systems that require significant 

professional tearning, we must seek to support videoconferenclng, online interactive tools, and other training 

aids. 

It is only by working together that local, state, and federal government entities can share resources an·d 

information over a secure and cost-effective network, This includes shared software and cloud services, 

training dasses, and connecting public safety systems and other resources that may be too costly for some of 

the smaller entities to afford on their own. Additional bandwidth is the only way to truly connect services and 

economic development opportunities to smaller communities, 

Reliability is the key. EAGLE-Net offers a redundant pathway into communities who may not currently have 

one. Redundancy helps maintain a healthy and consistent broadband connection into and out of a 

community. 

I just want to thank you for your continued support of this critical program for the future of Colorado's youth 

and the economic well-being of our great state. 

SincerelYI 

Bruce H. Caughey 

Executive Director 

CASE Departments 

CAES Colorado A~iation of Edu~tiona! Specialist; CAESP Colorado Association of Elementary School Principals CALEr Colorado Association of Leaders in EduCiltionalTeclmobgy 

CASPA Colorado Assodation of School Persoonel AdminlstratM. CASSA Colorado Association of Supermle:flcients and Senior Adm\nlstrat0!5 

CASSP Colorado M!mCliltion of 5e<:OI1dary School PrinCIpals DBO Department of Busmess Officials 
188 


80019.119

.. .. -- -.-. 

November 2, 2012 

.. 

--

Via Email: esloan@Jttia.doc.gov 

Elaine Sloan 

Federal Program Officer 

Colorado Association of School Boards 

1200 Grant Street 

Denver. Colorado 80203-2306 

Phone: (303) 832-1000· (800) 530-8430 

Fax: (303) 832-1086 

www,casb,org 

NationaLTelecommunications and Information Administration 

1401 Constitution Ave" Room 4898 

Washington, D.C, 20230 

Dear Ms. Sloan: 

In brief introduction, I am thy Exectitive Director ofthe Colorado Association of School Boards 

(CASB) .. CASB's members are nearly everyone of the 178 locally elected school boards in 

Colorado. CASB and its local boards strongly support EAGLI;:-Net. EAGLE-Net is building the 

, broadband capacity our schools need to deliver a 21 st century cun'iculum to our ~tudents at an 

afford~ble cost. 

Today's students come to school to learn what they need to know to thrive in tomorrow's 

society. So in addition to civics, the three R's, the arts, history, and science, public schools must 

help students learn to use technology, That technology, in tum, can help students learn civics, 

the three R's, the arts, history, and science better than ever before. Whether a child grows up on 

a busy city street, in a quiet neighborhood, or along a dusty, slow dirt road, the internet access 

provided at her public school is essential to her academic success and must be consistently 

available, reliable, and fast. 

Yet in much of Colorado, we have failed to provide adequate internet service to public schools 

and other essential public entities. As a result, many students do not learn to navigate the rich 

landscape oftoday's best source of information. As students train to compete in a global 

economy, access to the full range of services and opportunities available through reliable, highspeed broadband internet is not a matter ofluxury; it's a matter of urgent necessity. And our 

state's record of supplying broadband to some students, but not to all, is a matter of inequity. 

EAGLE-Net's work will level the playing field for Colorado students by connecting 

communities across the state to the same quality of broadband access enjoyed by the Front 

Range. Some will receive broadband services for the first time; others will receive 

enhancements to existing infrastructure, ensuring network reliability. Colorado and each and 

everyone of its 178 school districts will benefit. 
189 


80019.120

EAGLE-Net's grant work began in 2010, and the grant funding runs out in August of2013. 

With less than a year remaining, some voices are calling for a halt to EAGLE-Net's project in the 

interests of competing utility companies, companies that have historically failed to offer 

affordable broadband to local public entities. Students cannot wait for market conditions to 

permit companies to offer schools affordable rates. The high dollar value of this generous grant 

attests to high costs associated with huilding the broadband infrastructure Colorado's schools 

need. Facing shrinking budgets and rising technology demands, neither the state of Colorado nor 

school districts can afford the deals offered by the private sector. The NTIA grant allows 

EAGLE-Net to offer a deal schools can afford now. EAGLE-Net's dedicated leaders and staff, 

individuals hailing from localities across Colorado, work hard to deliver what they promise. 

Wiring an entire mountainous state in three years is an ambitious, complex project. Decisions 

about logistics, order, and scheduling will naturally raise questions, but as local community 

meetings with EAGLE-Net reveal, such questions have reasonable answers. EAGLE-Net, bound 

by its grant terms, is well monitored by both its knowledgeable Board of Directors and its 

sophisticated grant providers. Moreover, EAGLE-Net is a transparent organization with a 

comprehensive website detailing its current work and network plan, providing quarterly progress 

reports, and noting its agreements with local service providers regarding use of its middle-mile 

connections. There is no evidence EAGLE-Net has departed from the primary purpose of its 

work, and no goodwill come from stopping this badly needed work to spend months hunting for 

a reason to cease operations. . 

As CASB knows well, and as the growing stack of $UPport letters demonstrates, EAGLE-Net has 

already succeeded ,in many unserved and underserved areas. This is no time to stop the work. 

With less than a third of the grant period remaining, EAGLE-Net is racing the clock to serve the 

remaining schools, libraries, and other public entities still hoping this program .will open the 

gateway of opportunity for their communities. These communities need this program, this state 

needs this program, and this program needs support. 

EAGLE-Net has CASB's and its members' ongoing support. I hope EAGLE-Net and the 

Colorado students it serves can count on your support, as well. 

Sincerely, 

Kenneth DeLay 

Executive Director 

Cc: Randy ZiIa, CEO, EAGLE-Net Alliance (Via email: randy.zila@co-eaglenet.net) 
190 


80019.121

From: Scott Thomassen [scott@dascomp.com] 

Sent: Thursday, October 11, 2012 4:44 PM 

To: Larry Strickling; Anthony G. Wilhelm; Laura Dodson; Elaine Sloan; 

sarah hughes@bennet.senate.gov; jennifer rokala@markudall.senate.gov; 

mike.bennett@majl.house.gov; morns.price@mail.house.gov; joe.rall@mail.house.gov; 

andy.schultheiss@mail.house.gov; andy.merrltt@mail.house.gov; danielle.radovlch@mail.house.qoy; 

nicholas.zupandc@mail.house.gov; randy.zila@co-eaqlenet.net; patrick.swonger@co-eaqlenet.net 

Subject: Support for Eagle-Net and other broadband initiatives. 

To all concerned, 

As members of the Delta County Local Technology Planning Team we believe that support for 

any initiative that brings or improves broadband internet service to the rural areas of the State of 

Colorado are very important to our economic future. 

The effort Eagle-Net is making within our state to put significant new infrastructure in place for 

the benefit of education, is just such an initiative. We hope that Eagle-Net lines will carry important new 

capabilities for high speed internet access to many of the rural educational and anchor institutions who 

need them most. As these lines are built, they may also prOVide new paths for startup companies to 

provide internet and telecom services, competitive with what is available in larger cities. In our rural 

areas these services are desperately needed for our economicfuture. 

Whether it is by public or private effort, the Delta County local Technology Planning Team is in 

support of any legitimate effort to improve the backbone of internet infrastructure. We cannot sustain 

our communities with the completely inadequate service we currently suffer. We encourage anyone 

concerned to consider what's best for all of the communities that would benefit the most from better 

service, rather than what's best those few who believe they will continue to benefit from the lack of 

competition in their markets. 

Thank you, 

Members of the Delta County Local Technology Planning Team 

Glen Black 

City of De Ita 

Anthony Cooper 

Delta County School District 51 

Bruce Hovde 

Delta County Commissioner 

John Latta 

Information Technology 

Delta County 

Scott Thomassen 

Businessman and concerned citizen 

Classic Computers of Delta 
191 


80019.122

Tom Huerkamp 

Businessman and concerned citizen 

President 

ProSpace Interiors of Delta 

Kirby Clock 

District Manager 

Delta County Ambulance District 

Mary Cooper 

Delta City Counsel 

Sarah Carlquist 

Director 

Delta County Economic Development 

Gyneepher Thomassen 

President 

Delta Area Chamber of Commerce 
192 


80019.123

From: Hammond, Robert [mailto'hammond r@cde.state.co.usJ 

Sent: Friday, October OS, 20122:52 PM 

To: Anthony G. Wilhelm 

Subject: Colorado EAGLE-Net Alliance 

Dear M r. Wilhelm, 

I am writing to make you aware of the EAGLE-Net Alliance in Colorado, a critical organization for 

Colorado's future. As Colorado Commissioner of Education I have worked first hand with EAGLE-Net 

Alliance and believe in and support their work. We supported their original grant application and 

continue to support their work as they build their infrastructure. 

EAGLE-Net is building a first-of-its-kind statewide middle-mile high-speed broadband network that will· 

connect to about 170 Colorado communities, offering local carriers a choice for middle mile network 

access at a lower cost and greater access for their customers. EAGLE-Net is currently working to create a 

robust and redundant system that complements and enhances existing infrastructure. Having a 

redundant network is not a luxury, it is necessary to ensure network reliability. Especially given the 

increasing data demands on our schools and distri~s across the state. 

We strongly believe this work will have a positive impact on quality of life, increased access to 

educational support, and student achievement across Colorado. For schools, additional broadband 

capacity allows students more equal access to the bandwidth needed to take timed, online tests. For 

example, a rural student who currently has minimal access to high speed Internet could use EAGLE-Net's 

network for a faster, reliable connection, resulting in.quicker test response time. Abundant bandwidth is 

also critical for delivering distance learning programs to schools across Colorado to support 

videoconferencing, online interactive tools, and blended and online learning options. As districts must 

deal with diminishing resources, a reliance on alternative instructional models is critical. 

The project always envisioned that local, state and federal government entities could share resources 

and information over a secure network that is time and cost effective. Shared software, cloud services, 

online training, public safety connectivity and other resourcE'!S that may be cost prohibitive to smaller 

entities can become affordable and accessible through EAGLE"Net's infrastructure. By adding additional 

bandwidth options and availability, smaller communities will be able to have services and economic 

development opportunities that may be eluding them today. 

Please consider supporting this effort and the important work EAGLE-Net has underway. Thank you for 

your consideration and please don't hesitate to contact me if you have any questions. 

Best regards, 

Robert K. Hammond 

Commissioner of Education 

Colorado Department of Education 

Robert K. Hammond I Commissioner of Education I Colorado Department of Education I 201 E. Colfax 

Ave., Denver, CO 80203 I tel 303.866.6646 I www.cde.state.co.us 
193 


80019.124

EATON SCHOOL DISTRICT RE-2 Dr. Randy Miller 

Superintendent 

(970) 454-5402 

(970)454-5195 Fax 

October 11, 2012 

larry Strickling 

Assistant Secretary for Communications and Information 

National Telecommunications and Information Administration 

U.S. Department of Commerce 

1401 Constitution Ave., Room 4898 

Washington, DC 20230 

Dear Assistant Secretary Strickling, 

200 ParkAvenue 

Eaton, Colorado 80615 

lam writing you in support of Eaglel\!et Alliance for Eaton S~hool District. We will soon be able 

to tap into twice the amount of bandwidth for the same cost that we are paying now by going, 

through EagleNet. This will allow us to expand our technology throughout the district, as we 

are piloting laptops at the middle school and are looking to expand into grades 6-12, Eaton 

School District would not be able to cover these costs without EagleNet. 

As part of Centennial BOCES (Board of Cooperative Educational Services) our premise from the 

start was to provide the middle-mile and help make internet a possibility for ali of Colorado 

schools. By creating a robust and redundant system it will only enhance existing infrastructure. 

I understand there is some concern that this creates competition and may c~use some business 

to lower their rates. ,I do not see that as a problem at all. In fact, I believe this is healthy and will 

ultimately benefit the students, staff and parents at Eaton. 

Eaton School District continually strives to improve student achievement and with more 

pressure from stale and federal government we need to take advantage of everything we have. 

EagleNet will help our school prepare and be ahead of all of the demands placed upon us. We 

will now be better able to share resources with other local, state and federal government 

entitles. Once again this can only serve to help everyone at our school district. 

In closing, EagleNet will only serve to help communities like ours to better serve our students 

and community. Please feel free to contact me if you have any questions or would like more 

information on EagleNet and Eaton School District. 

~;.) ":-L .. c7~ superinten1ent 

Cc: Dr. Randy Zila, CEO EagleNet 

Eaton School District Re-2 Board of Education 
194 


80019.125

Admh1istrotion 

tlr.MlchelteJlthnttone 

Supe.r!nt8ndeflt 

CyndlHofmeisfer 

Dil"ed'orllfl.&crlling 

...... '" TrCIcyAmltl\ 

HA Sptc/Exea.rtiYe ASSlstol!t 

October 2, 2012 

lawrence E. Strickling 

Brush Public Schools 

Re-2(J) 

p.o. Box 585 - 527 Industrial Park Road 

Brush, co 80723 

Telephone (970)842-5176 Fax (970)842-4481 

Assistant Secretary for Communications and Information 

National Telecommunications and Information Administration 

u.s. Department of Commerce 

1401 Constitution Ave., NW 

Washington, D.C. 20230 

RE: EagleNet Alliance 

Dear Assistant Secretary Strickling, 

Soard of Edutlrtion 

OonOillehoy 

MJc.hIldO!xon 

fn:lllk Phillips Jr. 

IMrty StrotlMlI 

Margo Much 9lohw:Uhrlg 

WGI'WIWolku 

Brush School District is a small rura I district with 1500 students. Through Eagle-Net we will be able to 

utilize world class broadband services provided directly to us by the same carrier that has been our 

service provider in the past. EagleNet is creating a robust and redundant system that compliments and 

enhances existing infrastructure. Having a redundant network is not a lUXUry -It's a necessity to ensure 

network reliability. Redundancy helps maintain a healthy and consistent broadband connection into 

and out of a community. 

What this means for Colorado: 

Beyond what EagleNet can do for us and other school districts, it will allow for local, state and federal 

government entities to share resources and Information with each other over a secure network for cost 

savings, and time efficiency. This Includes shared software and cloud services, training classes, 

connecting public safety systems and other resources that may be too costly for some of the smaller 

entities to afford on their own. By adding additional bandwidth options and availability, smaller 

communities will be able to have services and economic development opportunities that may be eluding 

them today. This can be a win-win situation for not only Colorado communities but also small Internet 

providers in Colorado as well. 

What this means for Brush School District: 

Here in the Brush School District we are pushing forward to use technology in the classroom, provide 

distance learning opportunities, and support concurrent enrollment. In the classroom, teachers are 

better able to differentiate instruction which increases student achievement. Increasingly districts are 

coming together to provide educational opportunities for students, in our instance we just received a 
195 


80019.126

USDA Grant that creates distance learning for the Brush School District and three significantly smaller 

rural districts. Through the distance learning labs we will offer additional science, technology, and post 

secondary learning opportunities. Through distance learning we are able to offer concurrent enrollment 

with Morgan Community College, and will soon have the opportunity to reach beyond Morgan County. 

Our school facilities are becoming more equipped with Promethean Boards and Mimeo Teach in every 

classroom which allows for team teaching, differentiated instruction, and an increase in student 

engagement. As we work to increase educational opportunities for our students the need for 

technology and broadband increases drastically. We are thankful that we have this opportunity today 

and the ability for greater broadband opportunities in the future. The limitlessness is an incredible 

opportunity for rural Colorado. 

As you are aware, school districts are faced with great budget constraints. In our school district we will 

be able to reach broadband levels that were not previously available for an amount significantly less 

than we have paid in the past for inferior service. We need to focus on every opportunity to reduce the 

expenses that we can while facing the need to increase services especially in the area of internet 

technology. Our internet services will Increase exponentially over time while the cost will be reduced to 

a fraction of the prior costs as a result of the infrastructure that EagleNet is providing in C;olorado. 

We are members ofthe Centennial BOCES group that prepared the originill and the second application 

seeking a grant from theU 5 Department of Commerce's Broadband Technology ,Opportunities Program 

(BTOP) in coordination with the American Recovery and Reinvestment Act (ARRA). C·BOCES represents a 

major portion of the northeast corner of Colorado, including school districts in Morgan, Weld, larimer 

and Boulder Counties. The very premises of our application dealt with the tremendous need in rural 

Colorado for AFFORDABLE broadband connectivity. Colorado' rural areas need to be able to be on an 

~qual playing field with other states with fast broadband service. Only a few of the 178 school districts 

in Colorado are on an equal playing field with most of the nation. It seems that those few that are, may 

be paying a much higher rate for the broadband services than many of their equals across the nation. 

It was from the very beginning, an intent to 'not offend or distance those who were already making an 

effort to provide quality internet. There was never intent to take away clients and customers that the 

current providers were attempting to prOVide. The purpose is to allow ali providers to make available 

outstanding service at a price that school districts with meager incomes could afford to use. The 

administration of the grant and the 'services have moved from our BOCES (Board of Cooperative 

Educational Services) into a state-wide governmental service group with dynamic state-wide 

representation with members that have a diverse and appropriate understanding of the type of services 

that EagleNet was created to provide. 

EagleNet does not provide service directly to any of the users of their services. They are a middle-mile 

provider. To get the broadband services that they are establishing to the end user, there must be a local 

carrier. What EagleNet is able to do is give the local provider an option for what shOUld be a new 

opportunity to provide less expensive services to those school districts, libraries, junior colleges and 

universities as well as other local governmental institutions a greatly reduced cost of a greater level of 

service to internet in Colorado. 

No one has ever been able to do this in Colorado before. This grant of $100.6 million has given the kids 

of Colorado an opportunity that puts them in the position of being competitive with the kids in big cities 

of the east coast and the west coast where these types of services already exist. Indeed we are already 

seeing new opportunities that are afforded us in distance learning that was only a dream a few months 

ago. 
196 


80019.127

We stand in support of EagleNet Alliance and we ask you to support this initiative. In an era of 

decreasing resources, we are able to increase learning opportunities for our students and those in all of 

the school districts of Colorado as well as the libraries, colleges, universities and local governmental 

entities at a much lower cost. We invite you to visit the Brush School District or call with questions. We 

would be proud to show each and every one who has an interest in the future of EagleNet Alliance to 

see what it has already done for us. 

Sincerely, 

~::;:, Fo,k """",,". _b~ LilL-fJ~, Warren Walker, Member Dr. Miche ~~- Ie 10 

Cc: 

Anthony Wilhelm 

Elaine Sloan 

Laura Dodson 

Senator Mark Udall 

Senator Michael Bennet. 

Representative Cory Gardner 

Representative Diana DeGette 

Representative Doug Lamborn 

Representative Ed Perlmutter 

Representative Jared Polis 

Representative Michael Coffman 

Representative Scott Tipton 
197 


80019.128

()NET COLORADO 

October 8, 2012 

To whom it may concern: 

eNetColorado is a statewide project who's mission is "to provide educators and districts statewide access to high 

quality content and resources that support the improvement of student achievement." We are working with 14 Boards of 

Cooperative Educational Services iBOCES) which are supporting over 150 of the smailest school districts in Colorado. We 

are working with these districts and BOCES to bring staff developmen'; and high quality content that will support classroom 

instruction in districts that lack some of the necessary and basic broadband access that many of the larger districts in 

Colorado already have access too. 

Until the EagleNet Alliance was formed and began reaching out to these smaller rural districts ihey had little hope of being 

able to support access to many of the resources that the eNetColorado partnership o(?ver 20 community organizations like 

the Museum of Nature and Science, History Colorado, Junior Achievement, ahd the Denver Art Museum and many others 

have developed to support students across the state of Colorado. Time after time we would hear from these districts that 

their local providers just could not provide and/or they could not afford the level of access necessary to support the 

students and teachers in these districts to access these outstanding resources. 

As eNetColorado works to identify high quality. resources that all students in Colorado should have "access to it seems 

imperative that a project like the EagleNet Alliance be in place and supported by local, state, and national governments. 

The Eagle-Net Alliance is providing the necessary broadband access so there are opportunities for the smallest school 

districts and communities in Colorado to provide their students online access to the best possible learning resources. It also 

seems imperative that through government and private partnerships, which the Eagle-Net Alliance supports, local 

communities and companies can better work together to ensure, all residents in our rural communities have sufficient 

broadband access to support their current and future needs. 

I have been an educator in Colorado for over 40 years and believe that the Eagle-Net Alliance offers the best hope and 

opportunity for our smallest schools and communities to have the access they need to meet the demands on the 2ft 

century. 

Sincerely, 

Director, eNetColorado 

303-917-3922 

danmorris@enetcolorado.org 

A Digital Resource Exchange and Marketplace of Ideas www.enetcolorado.org 
198 


80019.129

-~(j(/ 

!,,~q 

] 

MORGAN 

COUNTY 

SCHOOL DISTRICT RE-3, 

Great 5chools for a Great Community 

October 15, 2012 

Anthony Wilhelm 

District Support Center 

715 West Platte Avenue 

Fort Morgan, Colorado 80701 

970-867-5633 

Fax: 970-867-0262 

www.morgan.k12.co.us 

Director, Broadband Technology Opportunities Program 

1401 Constitution Ave., Room 4898 

Washington, DC 20230 

RE, EagleNct Alliance 

Dear Director, Anthony Wilhelm, 

The Morgan County School District has been and contil'lues to be a strong supporter of the EagleN et Alliance, 

Our support for this project has remained steadfast since the beginnfng. In rural Colorado there is.very little opportunity for 

high speed lntenlet access. We do not have the vast amount of companies that canl will PT?vicle internet access at speeds 

which are needed and at an equivalent price of metro areas. We understand that it does not·meet their business models for 

profitability. Even though we Understand, it is hard to explain to school staff and students that their internet cannot be 

upgraded to higher speeds because of the location of where they live and the higher costs for the interpet1 which is due to the 

lack (or non~existence) of comp~tition, 

Morgan County School District believes in this project because cooperation of all the school districts within the state of 

Colorado will bring better services at a much lower cost, as·evident with our communities! model. The Morgan County 

School District has been in cooperation with the City of Fort Morgan Government (which oversees the public library) and 

the Morgan County Government for over seven years to provide higher internet connectivity between all entities. All three 

of the entities could not have obtained our current level of services without the cooperation to install and run fiber optics 

between all separated entities, As a group we are at the point of reqUiring faster internet services to avoid the daily 

slowdowns, but are unable to upgrade due to the high cost. 

Growth and change is easily feared by individuals and businesses because of a scarcity mentality. The completion of the 

EagleN et project will not only provide a robust and redundant system that complements and enhances existing 

inlrastructure but also provide economic benefits to those communities. This project will connect 170 Colorado 

communities and if it prOVides similar opportunities that we have gained by cooperating with just our three local 

governments, the results will far surpass the prOjected outcomes, 

Sincerely. 

0r-E~ 

Ron Echols, Superintendent 

~~ Brian Amack, Director of Technology 
199 


80019.130

Weld County School District RE-l 

Gilcrest· LaSalle' Platteville 

Dr. Jo Barbie, Superintendent 

Scott Spearnakt Director of Learning Services 

October 23,2012 

Mr. Lawrence E. Strickling 

Assistant Secretary for Communication and Information 

National Telecommunications and Information Administration 

U.S. Department of Commerce 

1401 Constitution Ave., NW 

Washington, D.C. 20230 

Dear Assistant Secretary Strickling: 

P.O. Box IS7 

14827 W.C.1l42 

Gilcrest, CO 80623 

Phone 970-737-2403 

Fax 970-737-2516 

Metro 303-629-9337 

Weld County School District·RE-1 is a small rural school district north of Denver, Colorado. The school 

district's enrollment is approximately 2,000 students: Weld RE-l is a member of theCel1teunial Board of 

Cooperating Education Services. As Superintendent of Schools, I currently serve on the Superintendent's 

Advisory Council for Centermial B.O.C.E.S and on the EagleNet Alliance Board of Directors as a 

Centermial B.O.C.E.S. representative. 

WeldRE-1 was one of the first school districts in Colorado to deploy-a 1:1 laptop initiative at the high 

school level. The district was also one of the first school districts to establish wifi solutions in all schools 

and buildings in conjunction with the laptop initiative. Due to the I: 1 laptop initiative and wifi solutions 

demands, broadband services expanded far beyond the T-l line tbat was initially available to the school 

district. Only through EagJeNet was the school district able to expand to meet the demands of stndents 

and staff. The cost to purchase almost 50 times the amount broadband needed was made affordable by the 

efforts of Eagle Net. This entity created a robust and redundant system that complimented and enhanced 

existing infrastructure. It is only tln'ough the EagleNet Alliance and the U. S. Department of Commerce's 

Broadband Technology Opportunities Program (BTOP) grant that Weld RE-I was able to expand its 

broadband and it is only through this grant that all 178 school districts and 170 municipalities in Colorado 

will have a similar opportunity. 

From the very beginning, it was never the intention of EagleNet to offend entities already providing 

internet services. There was never intent to capture customers from current providers. The pllll'oSe was tn 

provide affordable internet access to school districts across the state. EagleNet is a middle-mile provider. 

Marsha Harris President Randy Ray Vice President 

BOARD OF EDUCATION 

Ken Gtircia Secretary David Eckhardt 

Treasurer Steve ReatnS Director 

Our Total Commitment is to Provide an £Jemplary Education and Safe Environment for all Students 

Nancy Sarchet 

Director 
200 


80019.131

The end user must use a local provider. EagleNet is able to give the local provider an option for what 

should be a new opportunity to provide less expensive services to school districts, libraries, junior colleges, 

universities and local governments. The BTOP grant will provide children across the state opportunity that 

puts them in the position of being competitive with children all over the United States. 

Weld COlmty School District RE-l strongly supports the EagleNet Alliance and the school district asks for 

your 'support. It is only through the effort of Eagle Net and the BTOP grant that Weld RE-l is able to 

provide technologically rich and ever expanding learning opportunities for our students. The school 

district invites you to visit our schools in LaSalle, Gilcrest and Platteville. We are extremely proud of the 

technology that has been made possible by our partnership with EagleNet. 

Sincerely, 

.. ~~ 

Dr. Jo Barbie 

Superintendent of Schools 

pc: Anthony Wilhelm, Director - Broadband Technology Opportunities 

Laura Dodson, Director - BTOP Infrastructure Projects ' 

Elaine Sloan, Federal Program Officer 

Senator'Michael Berinet 

Senator Mark Udall 

Representative Corey Gardner 

Representative Diana DeGette 

Representative Doug Lambom 

Representative Jared Polis 

Representative Michael Coffman 

Representative Ed Perlmutter 

Representative Scott Tipton 

BOARD OF EDueA nON 

Marsha Harris 

President 

Randy Ray Vice President Ken Garcia 

Secretary 

David Eckhardt 

Treasurer 

Steve Reams 

Director 

Our Total Commitment is to Provide an Exemplary Education and Safe Environment for all Students 

Nancy Sarchet 

Director 
201 


80019.132

PO Box 773390 sO m~_ 

1~~.~_~~~~~ ~ ______ J1JO;'''~Og~'O~;CC~'~'O~,"~''C;h,,~"~,"~,o~na~' '-_________ !II~slcamboat Springs, CO 80477 0pr<lrtumhes for Northlf,'(:S! ColCltado 970·879-0391 • FAX 970·879·0442 

BOCES 

NORtHWEST COLORADO JO<.II)or:lXI'6\i1MtnJ~SEJro'I',;!S 

East Grand Schools 

PO Box 125 

Granoy. GO 80446 

970·887-(581 

Hayden Schoels: 

PO. Box 70 

Pilyden,C081539 

970-276·3864 

North Park Schools 

PO Box 798 . 

'r'Ia!defl.COa04S0 

97Q·72:'\<:Goo 

October 9, 2012 

Mr. larry Strickling 

Assistant Secretary for Communications and Information 

National Telecommunications and Information Administration (NTIA) 

1401 Constitution Avenue, Room 4898 

'washington, O. C. 20230 

Dear Mr. Strickling, 

S;~':'o~~~rt School. This letter is written by the NW Colorado BOCES to support the Eagle-Net Alliance and their 

0,. c,," co 80'67 implementation of the NTIA Grant in Northwest Colorado. The Eagle-Net Alliance work is essential to 

970·73&-'313 school districts in Northwest Colorado. Steamboat Sprtngs SchoolS 

PO R(lx774358 

~ea~b<Jat So"nus. CO SI)I:the NW Colorado BDCES works with seven rural school districts in the northwest corner of Colorado and 

~!~~S~;~: SchoO'ls the compl~tion of this project is very important to t~e infrastruc.ture needs in this area ~f t,he state. 

PO Box 515 Eag[e~Net IS creating a robust and redundant system that compliments and enhances eXlstmg 

Kemm'lflg, co 8044£5 infrastructure and is governed by representatives from across the state on the Eagle~Net Board (a 

97()·724·J217 public-private alliance board). 

Under the existing system without the Eagle-Net middle-mile broadband network, school districts and 

our BOCES have very limited access to affordable and reliable increased bandwidth. This increased 

affordable and reliable bandwidth is necessary for students to participate in distance learning programs, 

online learning programs, etc. This Eagle-Net Alliance program will provide a muth needed service and 

reduce the digital divide between rural, suburban and urban communities and benefits all students in 

the Colorado K-12 education system. 

Recently the Eagle-Net Alliance met with school and community stakeholders in the northwest region 

with the meeting location in Steamboat Springs. Many questions were discussed and partlcipants 

seemed to have a better understanding of the project including !imelines and the focus of the project. 

The NW Colorado BDCES supports the Eagle·Net Alliance Project. It is essential to all school districts and 

BOCES throughout Colorado (especially rural Colorado) to allow students the appropriate learning 

opportunities. 

Sincerel~ 

~haker NW BOCES Executive Director 

11274 WeidCoulllv Rd. 17 'l.onamOn!. [080504 • H 970-785-2064 ' C 970-381-0720' fax 970-785·6324 ' tmot! dole.mccolf(5J;Vlldbhu~ ner 
202 


80019.133

TOWN OF DOLORES 

October II, 2012 

Scott Tipton 

United States Representative 

#10 West Main Street, Suite 107 

Cortez, CO 81321 

Incorporated 1900 

420 Cenlral Avenue' P. O. Box G30 

Dolores. Colorado 81323 

Phone (970) 802-7720 

RE: September 17'h Letter to Lawrence Strickling 

Dear Mr. Tipton: 

I recently read the letter sent to Lawrence Strickling, dated September 17,2012 and signed by 

the Republican Congressional representatives for Colorado asking that the EAGLE-Net project 

be put on hold. I am troubled by this position and even more so that the Town of Dolores, where 

a current construction project is underway may be stalled by these actions. The Town of Dolores 

is getting read-y to insfall a fiber optic pack-bone within town that wiu connect with the EAGLENet project and ultimately supply the Town Hall and Library with a much faster internet 

connection than is currently available. In addition, EAGLE-Net has just completed the 

installatjOll of conduit to both the Dolores School District RE-4a school administration building 

and the school complex. 

The intent of tlus "open access" network that the Town and EAGLE-Net are pursuing is not only 

to extend a supel'ior infrastlUcture to our anchor institutions but to allow private providers an 

OPPOrtulUty to establish their services in town. We welcome the competition and the resulting 

menu of options that could become available to our residents and businesses, 

It appears, fi'om your Jetter, that several internet providers are concerned abont the EAGLE-Net 

project indicating that they were able to supply a similar product in lUral Colorado. In the case 

of Dolores, two separate companies own fiber optic infrastl'llctore that passes through town but 

they have yet to provide these services here. I find their argument a bit disingenuous and feel 

that their lack of action in OUI' cornnmnity helps legitimize the efforts underway by EAGLE-Net 

and the Towll. 

If EAGLE-Net is stalled, there will be little reason for the Town of Dolores to continue with its 

fiber build that was funded by the Department of Local Affairs. We are dependent 011 EAGLE-

"flOME OF TliE GALLOPING GOOSE" 

DOLORES' CENTENNIAL 

YEAR 2000 
203 


80019.134

Net to be able to piggy-back on their "middle-mile" fiber optic infrastructure to reach the 

"outside world." We are also working under a similar thneframe as EAGLE-Net and mus! 

complete our build by the end of20 13. The last thing we need is for the money already spent on 

this cooperative project to go to waste. 

I would like to see EAGLE-Net fulfill their promise here in Dolores and in order to do so, we 

need a commitment from them which may vanish if they are put on hold. There will 

undoubtedly be extra cost to re-start such a project iftheit· contractors are forced to re-mobilize 

after being pulled off the job. 

If you have any questions l'egal'ding our local effol1s 01' our experience with EAGLE-Net, please 

do not hesitate to contact me at the Dolorcs Town Hall (970) 882-7720 01' 

manager@townofdolol'es.com. 

SincereJx!'~ d Rya~~ Town Manager 
204 


80019.135

October 5, 2012 

We are writing this letter in support of the Eagle-Net Alliance BTOP grant initiative, that is 

investing in critical communications infrastructure and increasing broadband access to public 

institutions and private service providers through a statewide broadband network. 

Massive Networks is working with Colorado Eagle-Net to provide an extreme diverse and 

scalable private network for the medical industry which is by far more secure than traversing the 

public internet. When connected to an Ethernet connection the customer can access a (PNT) 

Private Network Transport on the Massive Private Cloud to access Collocated gear or Managed 

Hosting Solutions or access public Internet ' 

EAGLE-Net is building a first-of-i,ts-kind statewide middle-mile high-speed broadband network 

that will connect to about 170 Colorado communities, urban and rural. Public and private 

healthcare facilities in cities, counties, schools, clinics and even first responder locations (fire 

and police) will benefit from the improved broadband access and new virtual hosted healthcare 

solutions. 

Abundant bandwidth is also critical for deliveri~g telemedicine and tele-health applications; 

,distance learning programs to schools providing nursing and EMS programs and other robust 

cloud based online interactive tools, and other training aids, 

Local, state and federal government entities can share resources and information amongst one 

another from both urban to rural environments over a secure statewide network for cost savings, 

and time efficiency. This includes shared software and cloud services connecting public safety 

systems and other resources that may be too costly to enable singularly or on their own in rural 

areas. 

We stand in support of Eagle Net Alliance and we ask you to support this initiative as well. In an 

era of decreasing resources, we are able to increase or improve healthcare resource access for 

doctors, clinics, hospitals, students and first responders at a much lower cost. We invite you to 

call with any question you may have. 

Sincerely, 

Kevin Flake 

181 Inverness DR w 

EngleWOOd CO. 80112 

www.massivenetworks.net 

kflake@massivenetworks.net 

303-800-1300 ex 5001 
205 


80019.136

322 Main Street • PO Box 232 • Mead, CO 80542 * 970-535-6323 

October 1, 2012 

To whom it may concern; 

My name is Gary Shields and I am the owner of K2 Communications, LlC (K2), we are a family owned 

CATV franchise serving the community of Mead, Colorado and Mead is centrally located between Ft. 

Collins and Denver along the Interstate 2S corridor. 

I am writing this Jetter to you so that you will know about the positive impact that EagleNet Alliance has 

had upon the K2 business model and the community or Mead, CO. 

In 2002, I purchased the operating assets of the Mead system at a bankruptcy auction and in May of 

2005 we introduced the first high speed internet connection (other than dial-up) to the Mead 

Community. At that time, the only available bandwidth services in the area were T-llines and from May 

of 2005 to December 2008, we supported the entire community on 2 T-llines, a total of 3 Mbps. 

In June of 2008, we began working with Qwest to install a DS-3 circuit (45 Mbps) and I was told it would 

take approximately 6 weeks to deliver this service, 6 MONTHS later; we finally turned up the DS-3 circuit 

and have operated on that circuit until just 2 weeks ago. 

Recently, the bandwidth demand from our customers had exceeded our capacity on the DS-3 circuit and 

has existed that way forthe past 11 months (since November 2011).1 credit this increased bandwidth 

demand to three basic issues: 

1. Expanded Uses forthe Internet-expanded uses ofthe internet such as TiVO, Roku, Playstations, 

Netflix, Blockbuster, Amazon and Apple TV have contributed significantly to customer 

bandwidth demand. 

2. New homes being built- In the past 18 months there have been approximately 165 homes built 

within our service area, this is more than 10% growth for the homes passed within our service 

area. 

3. Open Range Communications bankruptcy- when Open Range Communications went out of 

business, we picked up the majority oftheir subscribers within our service area. Open Range is a 

good example of a bad program for federal funding. I say this because they were a company 

implementing an unproven technology that had invaded our service area by representing that it 

was underserved and made us ineligible for USDA funding. 

Until recently, our only option for additional bandwidth appeared to be adding another DS-3 circuit thru 

an incumbent provider. Not only was this option undesirable because it did not make technological 

sense, but also that it would have doubled our cost of bandwidth. 
206 


80019.137

And now with all of the above being said, I can now get to the point of this letter which is to let you 

know that I support EagleNet Alliance. In the short time that I have been involved with EagleNet, we 

have been able to increase our bandwidth capacity nearly 7 fold while decreasing our month costs by 

more than $500 per month over the single DS-3 circuit. A further illustration of (2) DS-3 circuits would be 

that we have been able to secure more than 3 times the bandwidth at a savings of nearly $3,500 

monthly. 

In addition to the benefits of expanded bandwidth and better pricing, my association with EagleNet has 

allowed me to expand my service offerings and to look further into deploying services in other areas 

both locally and across the state that were previously unavailable to me. These opportunities were 

unavailable because of the lack of bandwidth availability and lack of connectivity throughout the state. 

I guess that my final point would be: that for a very long time there has been a condition that appeared 

to exist where there were very few municipalities across the state of Colorado that had adequate 

bandwidth available to local service providers and ultimately to residential end users. I believe that 

EagleNet Alliance has done more in the past few months to even the divi.de of bandwidth availability 

than would have been possible over the next decade had they not been funded. 

In my estimation, funding of EagleNet alliance is tax payer money well spent. I believe this not only 

because of what they have done for me and my bUSiness but because of my interaction with the EA 

team. I have been able to have discussions with their management team, executives and board 

members and I believe that they have the right personnel in place to accomplish their mission and that 

they have a firm understanding on what has been lacking' in Colorado. 

I appreciate you taking the time to read this letter and would be happy to discuss my support of 

EagleNet Alliance with you at length if you would like further clarification or understanding from me. 

Best Regards, 

Gary Shields 

K2 Communications, LlC 

garv.shields@k2cable.net 

970-535-6323 
207 


80019.138

October 23, 2012 

Lawrence E. Strickling 

Assistant Secretary for Communications and Information 

Administrator, National Telecommunications and Information Administration (NTIA) 

U.S. Department of Commerce 

1401 Constitution Ave., NW 

Washington, D.C. 20230-0002 

Dear Assistant Secretary Strickling: 

We write in regard to the EAGLE-Net project-the important middle-mile statewide Colorado 

fiber initiative that was funded by NTIA under BTOP. The'EAGLE -Net program and model are 

exemplary, and exactly the kind of project that our members and stakeholders support as 

furthering the public interest in communications. EAGLE-Net plans to create a statewide fiber 

infrastructure with a combination of newly constructed fiber optics and leased fiber (where such 

fiber is available on the market). 

EAGLE-Net's network will reach every school district in Colorado and, in partnership with local 

providers, will have the potential to reach every school and library in Colorado. Its planned 

infrastructure reaches into the most rural, mountainous, hard-to-reach parts of the state. As a 

result of these partnerships and the new fiber, schools and libraries in Colorado will have access 

to high-bandwidth fiber-based services at prices that reflect that the network is connected to the 

Internet backbone, removing the pricing disparity so often faced by rural areas relative to urban 

and suburban areas because of their distance from an Internet point of presence, such as that in 

Denver. 

At the same time as delivering this tremendous capacity to community anchor institutions, 

EAGLE-Net will provide non-discriminatory, open access to any and all qualified private sector 

providers who choose to use its infrastructure_hus bridging, for the commercial sector, that 

same divide that currently exists between suburban and urban areas on the one hand, and rural 

areas on the other. The emergence of a fiber-based competitive market on those routes will open 

up rural markets and enable cost-effective access to those markets for private entities that wish to 

serve residential and small business customers. 

We understand that there has been significant opposition to this new fiber, and to the potential 

for competition in underserved rural areas. We also understand that a range of allegations have 

been made about the management of the project. In this regard, we have great confidence that 

NTIA-which has done an exemplary job of creating and overseeing BTOP-has more than 

adequately overseen the EAGLE-Net project. And for that reason, we are quite dubious about 

wild allegations made by self-interested patties that oppose EAGLE-Net. 

NaUonal Association of Telecommunications Officers and Advisors ~--- . - -.- -- "- _. - -- - .-.- - - _. '" - -_ ... " -- -" 3213 Dlw.(;! Slrl'flt #695. A/1l"xBnddfl. Vhginitl, 22314. jiD3) 51$·8035 (703) 997·7080« FAX. W\'fW,lllljon,r.<IY 
208 


80019.139

October 23,2013 

Page 2 

We certainly hope that the aggressive public relations campaign that has been mounted by 

EAGLE-Net's opponents does not serve to put this important job-creating, competitionenhancing network at risk-thereby depriving the school children, library users, and rural 

residents of Colorado of such a significant investment in their future. 

We note, too, that if this opposition to EAGLE-Net is allowed to succeed, the precedent that 

would be set could have the effect of putting at risk similar initiatives throughout the country 

(funded by BTOP or otherwise) by inviting similar anti-competition campaigns. 

We thank you and your staff for the efforts made over the past few years to use BTOP to enable 

the potential of broadband in rural America. 

Sincerely, 

~~ 

Steve Traylor 

Executive Director, NA TOA 

cc: Governor John Hickenlooper 

Senator Mark Udall 

Senator Michael Bennet 

Representative Diana DeGette 

Representative Jared Polis 

Representative Scott Tipton 

Representative Cory Gardner 

Representative Doug Lamborn 

Representative Mike Coffman 

Representative Ed Perlmutter 

Charles Benton 

Chairman, Benton Foundation 

Naliona! Association of Telecommunications Officers and Advlsors 

3213 DHke Sue!)!: #6'95. Atexnndri;,Vilginta,'22314. j703) 5'19-e03~, (703-)'997.7080. FAX. \'I\'/w,nnlo,Ull[/ 
209 


80019.140

~B(])ES E BOARD ./COOPERATIVE 

EDUCATIONAL SERVICES 

MAIN OFFICE 

1713 MT. LINCOLN DRIVE WEST 

LEADVILLE COLORADO 80461 

p 719.486.2603 f 719.486.2109 

WWW.M:rNBOCES.ORG 

Serl.!iug ASPEN BUENA VISTA CMC EAGLE GA FjElD 16 GARFIELD RE 2 LAKE PARK ROARING FORK SALIDA SUMMIT 

October 22,2012 

Mr. Larry Strickling 

Assistant Secretary for Communications and Information 

National Telecommunications and Information Administration (NTIA) 

1401 Constitution Avenue, Room 4898 

Washington, D. C. 20230 

Dear Mr. Strickling, 

I am writing to strongly support the Eagle-Net Alliance and their implementation of the NTIA Grant in Colorado, which is 

essential to improving educational opportunities in the ten rural school districts that are members of the Mountain Board of 

Cooperative Educational Services (Mountain BOCES). 

All of our school districts support the Eagle-Net Alliance because Eagle-Net provides affordable, reliable increased 

bandwidth necessary for students to participate in distance learning programs and make use of online learning tools and 

opportunities, reducing the digital divide between rural and urban communities and providing more equal access for rural 

students. Eagle-Net would also improve district access to all sorts of education related opportunities-including sharing of 

resources, professional development, and economic development-all, of which would improve the quality of education for 

all students in Colorado's K-12 education system. 

Eagle-Net is 

Building a statewide, middle-mile, high-speed broadband network that will connect all school districts and BOCES in 

more than 170 Colorado comf1:1unities 

Offering local carriers a choice for middle-mile network access at a fower cost 

Creating a robust redundant system that complements and enhances existing lnfrastructure-a necessity to ensure 

network reliability 

Governed by a board of representatives from across the state (a public-private alliance board) 

In the interests of improving educational opportunities throughout Colorado, I strongly encourage you to support the EagleNet Alliance Project. 

Sincerely, 

Troy 

~~ A. Lange 

Executive Director 

cc: Senator Michael Bennet, Senator Mark Udall, Representative Michael Coffman, Representative Diana DeGette, 

Representative Corey Gardner, Representative Doug lamborn, Representative Jared Polis, Representative Ed Perlmutter, 

Representative Scott Tipton, Executive Director Dale McCall of the Colorado BOCES Association, Eagle-Net CEO Randy 

Zila 

enl'iching educational opportunities 
210 


80019.141

Eagle-Net Alliance 

Attn: Randy Zila, Chief Executive Officer 

11800 Ridge Parkway, Suite 450 

Broomfield, CO. 80021 

Deal' Mr. ZilaSeptember 10, 20 12 

Tlmnk you for your timely return conespondcnce to us dated August 281", III addition, much 

appreciation to Chip White and Gretchen Dirks individually for visiting with us here in Silverton 

on September 5th and to the Eagle-Net Alliance ("ENA") in general for removing any 

ambiguities with respect to Eaglc Net's intention to complete a fibcr optic build to Silverton. We 

appreciate the definitive signs of progress and the answers to our specific questions and 

concerns, and greatly value the fact that you took these inquiries to heart as demonstrated in your 

detail cd response, As you know, wc have long advocated tirelessly fot, the installation of a fiber 

optic line to Silverton. As the Jast county seat in the State of Colorado without a fiber link, we 

have pushecl, prodded, cajoled, harassed, and begged for various governmental and priVate 

entities to bring a tiber optic line into our community. In our 12 years of advocacy work, EagleNet is the only entity thai has come forth with both a vision and the funding for a viable solution 

to our long standing telecommunications quagmire. 

It is deeply reassuring that in response to the concerns and questions raised in our letter, EagleNet has reaffirmed its commitment to bringing a fiber line to the Silverton School and by 

association, the Silverioll community. In support of that end, we appreciate your offer to keep us 

apprised of all relevant developments toward project completion including the execution of 

necessary contracts, acquisition of required permits, ot cetera. In ordat· to assist us all in that 

infol111ntion-sharing process, please note that OUI' designated local technology planning team, 

Operation Link-Up, meets regularly at 8:30 am on the second Tuesday of each 1110nth in the 

Silverton Town I-Iall. We would like extend a standing invitation tor an ENA representative to 

attend or participate in that monthly meeting so as to report on any relevant progress. We feel 

that such participation will allow us respond from a more informed perspective to any furthcl' 

concerns we might receive from outside interests while also allowing for a productive 

collaboration process between tiS from a planning standpoint. 

liP" gc 
211 


80019.142

As you well know - and as Mr, White and Ms, Dirks observed personally upon their recent visit 

(0 Town- the community has acted with what it believes to be reasonable reliance on ENA's 

impending fiber build as it has undertaken state-of-lhe-art improvements to the school's 

communications systems, which are now capable providing 10 gigabyte broadband-based 

educational services. But such services are possible only via a presently-lacking, ground-based 

connection to the outside world. With ENA having pledged to establish such a connection, the 

school will be able to actually employ the tools it provided for itself in anticipation ofthe ENA 

project completion. 

[n similar fashion through joint participation in the Southwest Colorado Open Access Network 

("SCAN") project, the Town and County have'dedicated significant tlnancial and human 

resources to the construction of an intcr-community tiber optic ring meant to connect all public 

facilities in town. In the course of committing their respective grant match amounts to this state 

Department of Local Affairs-funded enterprise, the Town and County have continued to operate 

under the assumption that this local fiber ring would not exist in a technological void. Rather, 

the respective governments have acted on the basis of ENA's repeated assurances that this 

locally fill1ded asset would be connected to a regional fiber optic extension that ENA has pledged 

to extend northward up the U.S. 550 corridor at least to Silvclton jfnot beyond. 

Please note that notwithstanding the long-awaited benefits an ENA.fiber cOl'Ulectioll will confer 

upon us as a County, a county seat, and a,school district, we have always maintained - and we 

will continue to maintain - that the completion of these impl'Ovell1cnts represents far 1110re than 

merely a large step toward the solution to the Silvcrton-San Juan County technological divide. 

Rathcr, we.and other leaders in our sUlTounding communities feel that this build represents a 

crucial undertaking ill sholing up the entire region's economic development potential, all along 

the U,S. 501550 corridor from Durango to Grand Junction, On behalf of not only the local 

residents we represent here in Silverton, but for those business interests and residents all along 

this vastly underserved corridor, we arc oncc again thankful for the enhm1ced connectivity ENA 

promises for the region 011 a collective basis. All of southwest Colorado spoke though the 

Govel'l1or's Bottom-Up Economic Development Plan process of the need to expand broadband 

access throughollt underserved areas in (he region and we see ENA responding to that universal 

plea through its completion of this component of its larger statewide network creation. 

So again, while we are sure a myriad oful1answered questions and host of logistical and 

teclU1ical complications remain, we would like to continue to offer our unyielding support to 

Eagle Net in whatever form that may take as your organization continues in good faith to move 

fOl'wat'd with brining expanded COlU1ectivity to Ollr community and broader region. We sense that 

we are as close to a solution as we have ever been given Eagle Net's recent assurances to us and 

have confidence that your goal to link every school district in the state with a tiber connection is 

sincere. On our end, know that Operation Link Up's persisting goal is to bring fiber optics to our 

school and other public-sector facilities through whatever means feasible and reasonable. With 

that in mind, ifENA's solution involves the installation of tiber from the south alone, trust that 

Link-Up will remain committed to closing the gap between Silvelton and Ouray to the north 

thereby providing a seamless fiber path along this p011ion of the Wcstel'l1 Slope in ordcr to level 

our area's playing field with rcspect to both educational opportunities and economic 

dcvelopment potential. 

21Page 
212 


80019.143

We I1ppreciatc that you have taken on the challenge of providing a sO!utiollthat no one else has 

been willing or able to do. We look forward to a sllccessful20 13 fiber build and remain ready to 

help problem·solve ill whatever manner we can. 

Most Sincerely. 

/~\ ') •. 1' c.·/fl(,M.,~ V\/'h"a..... 

Ri;-;l' White, Superintendent 

Silverton School District 

~~-q~ .. - William Tookey 

San Juan County Adminislmt()l' 

cc: Lnl'ry Strickling, Assistant Secretary Hll' C01l111ltlllicQt1011S and InfonnatiOli 

Representative Greg Walden, Chairman orthe C0l11111lll1ication3 Subcommittee 

RCj)fcsentative Terry Lce, Communications Subcommittee 

Jonatho11 Adelstein, RUS Administrator 

Jessica Z\ltblo, RUS Deputy Administrator 

Tom Yenncrcll, Chairman of thc· Southwest Colorado Council ofGovcl'nments 

Congressman Scot( Tipton Gardner 

Senator Mark Udall 

Senalor Michael Bennet 
213 


80019.144

Representative Scott Tipton 

835 E. Second Avenue, Suite 230 

Durango, CO 81301 

Representative Cory Gardner 

213 Cannon HOB 

Washington, DC 20515 

Dear Congressmen, 

P_,- .,' 

SA.'ll JUA.'llCO UlITY 

Representative Mike Coffman 

1222 Longworth HOB 

Washington, D.C. 20515 

Representative Doug Lamborn 

437 Cannon House Office Building 

Washington, DC 20515 

September 26,2012 

We are writing to you in response to your joint letter dated September 17th and directed to National 

Telecommunications & Infonnation Administration ("NTIA") Administrator, Lawrence E. Sttickling. In 

this communication, you collectively called for an immediate halt to telecommunications build-out eff0l1s 

currently underway across the State of Colorado through the NTIA-funded Eagle-Net Alliance ("EN A") 

project. In light of this request, we wish to advise you of our opposition to such extreme measures and of 

our general support for ENA's organizational mimdate to bring enhanced telecommunications abilities to 

unserved and underserved areas such as ours. 

Insofar as ENA has expressed its intent to complete a fiber optic build to our community where the 

entirety our communications systems has long subsisted via only a tenuous microwave lin1e to the greater 

world, we feel that ENA's plans to complete this cOlll1ectionnOlthward up the U.S. 550 corridor will not 

only serve the primary ohjective of affording our school system the use ofmucll needed 21" Century 

technology, but also the secondary effect of providing our entire region with the infrastructure it needs to 

expand economically in these challenging times. We t1ms feel that any cessation of EN A's progress in 

Southwest Colorado would necessarily dampen the prospects of positive growth in the region, thus 

placing us at a distinct economic disadvantage as other states and nations continue to build out their 

telecommunications networks in such a manner as to afford interests in both the public and private sectors 

crucial opportunities to succeed and aptly serve their constituencies in the global marketplace. 

We recognize that ENA has suffered wide criticism for purpoliedly not focusing resources more acutely 

in the most technologically disadvantaged areas ofllie state and we stand firmly with our other 

lmderserved mountain communities in calling for the organization to use this federal grant award as an 

opportunity to deliver state-of-the-mi connectivity where the private sector has failed to do so. But we 

11 P age 
214 


80019.145

feel that putting ENA's expansion plans "on hold," as you have called for, while the Department of 

Commerce undellakes an exhaustive audit of the program would be not only wasteful and inefficient, but 

counterproductive as such a measure would undoubtedly depress both the educational opportunities ENA 

seeks to afford as well as the secondary economic benefits that might be realized via a strong and 

redundant fiber connection from Durango to Grand Junction. 

Though this build may not completely close what we have come to call the "Silvellon Gap," its 

completion would mark a substantial step in that direction and stands to serve as a tremendous success 

story in one part of rural, underserved Colorado. We thus view any attempt to subvelt this effort and those 

in other underserved communities across the state as an impediment to our respective abilities to compete 

both educationally and commercially on a technologically even playing field. So again, Wf$ object here to 

your call to put the ENA project on hold and will continue to oppose to any efforts to curtail what we 

view as substantial progress in the realm oftelecommunications advancement. We hope that in response 

to this plea, you will talce our firm and united position under strong advisement as you continue to 

scrutinize the ENA build-out. 

Most Eamestly, 

L.- 'l=I""CJL:-=~...:.:Vv"-~~~'le.:::,t=L·> '--_ 

K ill White, Superintendent 

Silvelton School District 

William Tookey / 

San Juan County Administrator 

CC: U.S. Senator Mark Udall 

U.S. Senator Michael Bennet 

U.S. Representative Diana DeGette 

U.S. Representative Jared Polis 

U.S. Representative Ed Perlmutter 

Jason S. Wells 

Silverton Administrator 

Larry Strickling, Assistant Secretary for Communications and Information 

Representative Greg Walden, Chairman of the Communications SubcOlmnittee 

Representative Terry Lee, COImnunications Subcommittee 

Jonathon Adelstein, RUS Administrator 

Jessica Zufolo, RUS Deputy Administrator 

Tom Yenl1erell, Chairman oftbe Southwest Colorado COllllcil of Govermnents 

21Page 
215 


80019.146
216 


80019.147

to thB Broadband TBchnology Opportunilies 

Whereas, Colorado's communiUes in rural and remole areas continue to lack ,~uffid8nt 

access to and infrastructure for br(19dbanej interne: ser'\dces; and 

VIIh8H-:CiS, thf';l Brt)H(!band ()pportunWes Odrninislered by the l)S 

Department of Commerce. NatIonal Tc,!ecommunic:,ltions ,md InforrnaUQP 

fl\.(jrrlini;stt8tion. ~s a ~:;rant prograrl1 dedicatBd to in~p!ert1€'nt {'lna increase broadband 

~1CCe-SS In areas th3t (';urrentfy ~ack stich $er\:ice~,:;: and 

VVhOfe83. :hc state t't~cognizes the va!uo of 

c0!1abo'~tion; cmd 

9cver;-anent 

VVherHas 1 :he state 2Jonn \Vitfl jocal90vernrncnts; leaders ir) the Health Can;; 

K-i2 ccnlm~tfiitYI Cor;~munlty Centers. Librar:es, f1nd 

Educ31tion: and privatH c()rnpan;es in Colcrado have d8veicped an innovative 

appHcatior: fc'( the STOP grant, Colorado Cmmf'lunity Anchors Broadband ConsoltiJm 

(CeASC) Gran! ,t;.pplicatlcfl, to ::luHd. upgrade, {)X!flfl(\ and cit)liwJr 

broadband internet 

Whereas, these entities have come in a 

Centenr.iai Board of Edtlcationa: Serv[c6s, 

edljcaHon~1 services "f"tnm,;,j,,,,, 

\rVherei'~s, the CCf~BC Grant ,.!l,ppl:cation w;1I iny,,;:;;1 up to SI50,000.000 in the br()?,dbsnd 

Infras!rcciure 

V>Jhe-iC;SS) U'H73 CCfl.8C Gn:H~t v~:m corJ'ect i 18 1<~'12 ,S\:h~)Oi C!sttfC~S 

servinfJ ever 2,000 sr:hools ;;,nd 300,000 :;;ludenls" 16 

tJDr,Jiies. 12 BOCES. ;;~ institutions ~lf Cducation, Pvblic 

Ci:ies, (';nd CQunties, iI 

GorrlrnurPlies; ;:,nd 

VJhoreas. the CeASe Grant V)<I~ enh2~nce deHvery ::;/ bfO(;ldbt-H:d 

s(;fvices, sU0h as l'i!qh definition video/audio dist8nce uduU educ8tion and 

cppol~uniUest ~<lea!th cane or:entod tnEKltc?}' r;,ervlces; 

ht~a1th C(3re and broadband servict:s to honl':;s cti)d busines.s(~s 

priVB:18 sectct' partner '\fi,·."'t~f~"")!i service providers; and 
217 


80019.148

Wtl{?reaS, ,he CCAaC Gran! Ap:Jlica[QI) has the sLlppert of Ine COlorado 1<,.12 edUG3tiQn 

communit)', fncludi:ig Ille ColofaClO Dep"mment of Education, the Colorado ASSOc;;i;ion 

of 80hool E:;Y0CUt:V8S, the Colorado Association 01 School Bcards, the Cc!arado 

Educa:ion Assoc!a:Jcn. and the (;o;oraco BOCES ;:\,Ssocj~tion 

Be It Reso'ved by the ,~,,~, ___ ' ()f 'J:e :";,~h',,,o\'·"'rltr, Semoml ,1\ssemb!y :jlti'10 State 01 

COf()rlS~do, the hc;rt:dn: 

SIJpPo1i of the Cofo;'adc Cornrnunity f~~lichnffi 3roadband Consortiurr1 Gront ~'},'l-"'\c,,"')I1 

under cons:der¢t~ion by U.S, Dr:pr:yrtrnHnt of (':onlrnerce. Natk)lt?i TeteC(HllnlunicB:ion 

info:mat:on J\crninistratton ti~e Broadband ProgfB1Tt 

cf the Sta:e oi 

Cororado, ie:nd C'Uf' su~)po11 to this proposal at~d respectfuiiy reqvesl a favcrable 

ccnsiderat:of1 U'l(! fun(iin(i of lhi$ application to assisllfi ihe Impler"1er,tation uur 

staiewide bC08dband Detv4ork, 
218 


80019.149

0dlfrrl.th..in n'i't'flll Color,:,\Jo h.;:;s b(~''(}-t~l::!:" ~t;'ilt; to 1,'!J~ltch ~;S we 

thiH.:lt:l,,'{~$·- r:::n-cng th:ru re8l~LHDe a~:it':.:'~r'H:nts~ t~v~ Ct)~on~do 

,('llillUI<!jn,,1 'Sl'.HJ{}'li>zh'lL1 [.y-,tf'~qJ~ :,tF..' #H; plmn{H'l!'ElPOH ~)r nfl 

.\dilH~ fC:;f)t}I'(:tt; for W:-\C1f<~'r$ .;2~Hj p~fn:ntt via $d10(l1Vl;~;,.".vrg, 

br~htJ~;in~J ~{;t'vl~{:!.. f'dti;:,;.;~ l:.'J ;nt?lintaiHing fbis jC:'\';~HTl n)n~'rI{)ttt<~Hn, 

thVigh f O. Jr.mes Comt!\b~,l;.'rH:;'~ o! E.j.)1~;;j:;r1 

C:ornmU;'jjty Andt~,'ir;.;; t,lt'~)tlJbaHd ((lm,t1ttim;)"; 

fstt{;!'Hf"t r{,nht'tl'iv}ty tfw;yut;h i;i1 

fi::nt,tn .. :s ilSt'i-1tt:::g1t: p~u.t1 t\.! 

c~f r~v~ :.rk(;t.'.t~fJl~~'}intt(;$ ~v 

ttC ,stHt!., l:Yh;~(~;. H"!!lrf':, t!~;s ;:;.tlti:l;,'gy~ 

,u)tf distrlc;s, tins trr:rntl llduu:; :<:tlJ1P-0H 

Bn:\t'~! {)fr:d!)~.>tlkm rttHl c;~hCt·cduG~tiGn '''"-"".,,,1,>(, 

HH vJlcl f,'A[owi:11,: ;:V)gt:. En~n ch<: Ikm~njn\~Htoftr~U1::;~iOi t,l:f(1H 

it'S imtno:ll$B i()-1dn.: "!Er:.di(;;~ 
219 


80019.150

The l'kl~101 flb~c 1...tl:,Y S~;'}c:ki:tlg 

Z 

Ct}tor ado A'S ~mdattGn 

of School eo:m:i" 

TQHy ~':J1.lZ.l!r~ f~7C(:H:h'c 

'::":'lbt,;dn ni..;U,:;~~l{;<l 

(;-:)k'l're.".;/j n::;So-dOt'0n 

':;:t,hc":.o.i "X"~"!",'M 
220 


80019.151

ill, ' 
221 


80019.152
222 


80019.153

DEPARTMENT Of LA.BOR A.ND EMPLOYMENT 

'\ali,i.;tut '~'ctC(;~m~mU:jir,:Hii('Il:S 

t .s. DrV(lrtlll:::,lt of ('i);na1:;,.'f(,,'~ 

140: (>~'h{ituttt:l:~ :\;;~, :i\\, 

:ni:lu:d'L D.<· ::0230 

J<t:: ).t~titTJt T :.:l,:cnmtl;Ui'..i{:;H.:·()n~; in!brm:Hll}L :\Jrnini~~la!i,m t;\ I !.t\ ~ 

BCi,t~td},md lcchnokb!:. nrp(xltmitk:~i Pt'i,lgJ~im 

C(l!lirnl :\umb"'l O{f(;O-Oft11 

('omDn.:hl"~',si\\_' CC>nlt'iILnil\' Infr~t"f.(n,dHr~ CLj~1 :\ilpl;c;\tlllB 

CI)to;{hlt) (\1-1Jlf:1W'ity (\nd~~{r-; groaI..U":il~d 

I!:~h·dditlil);'tl \ 

;\:'::,111 
223 


80019.154

eDf t: i..; II} fuH SUPpd:i ~Jh.t dl.-sir'-.'s b~~~(~;nL' panl('ipaot in thi~.; 

('(', \!~C ::lL;i'[ ,tad dpplicili:.m k.t:, h.:.'\~n &.'\'~:l+)p • .:d th,,' (t'I.l( 

(ucding :omd<:1 Lk .. B n (;l';H:( pn .. '~r~i:r:. \\' .... :-""~r.ll,.\.'UHH> 

Ib: (in~nl ~;.~ndin~ r'.> .. IU1.~~;tcJ (Ill') i:ll' iT;"'L::'Il'l'lu!k·n ;)f 

('(i:~;H:Hmlt~ /\nchti)' 'l::H\c,rK. 

non~~!d J, -' i;u\,':~ 

D'ort..'i.'lti~ 

\.'d(t:'~1di~ D"T~~nn''::lH ttl' t .:;tll'l t :mp~\l:, rOi...:nt 

\:\.\} th~lt {he 

,;1 ;h:.: ft:;,.pircI;t.:,nt:-: llif 

ll:':lhk ('\~n'-id{.'r,}i!l.'fn Df 

:,1:l.~..:\\i,J(' btl\:dhH:J 
224 


80019.155

It 1$ without h2S!tatio31 and a;,.;lua; Jt1tkipattc-n that ! ,;~ntb~ :his lett'f!r 

(~uppt}n: for :::h2 Hi:;t.oqt Colo:racl",)/C,,:)k~t ado Hi5tort('o~ Society Ttv;i~~ 

stat-ewide:: ~!d\Jcatjon $V$h.H~l propos-al ~s vGr~~ rrn.Jth a "~;!f{ectk)n ,nsat~n 

the Soda! Studk:!.; ;";chl<:<3t/.):i in COki7Bdo. As the ric):'; $o~jal studies CO)Jtent 

~ that h0S be;,: () ff:r ov~r t6tl: '1i'~Elr$ ~n Colorado .. 

w\~u!d fill ;; ~tfitc thut WO"J ,d fac!lit;;t,! H,e 

I l°{:x:c;Yt:d rny n€!w PQsiUoq in October \:If 20DB :;1HC the fir~t 

introdu(.d thef'use;v';$ and tvant tc or 

!7ducaLNl WnS the CoiDra.do tjV?fe is '3 n.;\<,J WtfllJ 

b1o\,vmg thrD~Jgh our ~t3re fij,nt is tocLfSi ng n~~) C;()U:00ov\::.Uon and 

History Coio-raJj(J has uernofrstriJted its Iezzdt~r5hip c1:{pabi!l:fes ~1e:'t)re in Pest 

p';:;ftnerSflip~;, Thf2 COlorado O~'p2Htfnent of Education ai(.mg vttth the ColorC'ld<) 

Sw':kt)': Colorado HHrnnrHt1es, Cfj~Orf.!<~o 1 OPe! C .. )i,)rLl~~o 

Ec;ucz,Uon CfJnSQrOUf'0 

ol'df:t 1:0 tfoin t(:Hct1ers thrcugnout 

N0th')n;;:Ji Er)ij0v~;Tflei'it f{'}f the HfJm3n~tics 

a if! t;'H$ ~ff~)rt. 
225 


80019.156

/\'$.$lS{[lHt Secretnry 

ij,S ~;r'''-''H'''''" 

bl{).:dofmd 

nei.,»w that nfm(i5~ other $;at~~, TrH:~ :,;hl~.c}s 

l"H~ ;;xp,:wded f'f th~ ~~kc i..)rb(,(t\'~r pJ{ulic $aft::ty ~nd efft'cti','e 

and service::;.. 
226 


80019.157

!r,;;titlJ~,; U~ r·jh}M,:,y,tW {''rl'1 

!h·1tS He'i.<e'N (OPHU;:{;!=' 

~ SD'O \\4" :;~(,"·.:~t, ih'tl/ 

::C }OOJ6,f,BfJ2 

! ttri- wnt",i-tf.jlhiS It'tt~f ~n "£l)Pi>Of~' of the Hsw.ri<:,,{ $~}cfety',; r1":l:tkt ret.tt~?;;t fn,)rn t:1~ 

I. 

of f\Ji'JSetuH End ~ibr.«Ty Sc(v~(e$ for it !;t'1t(A.vlaf§ f.U1..r.:a,;:fo,,: pt'cgran1 This pt{}g;~111~ ,'!;:~t 

CULr1g;·,:t il-\6t 

rOt!:'~:i.r;) OWr:e's Pr~lf4'hln h:tt', {~!i:tifi)~:ti;.J W7Jn{~ to. f(::;!{}·~'t~l 

hHtlJ,se tL~lJn~t;J :;n,;~:.,1;::>; ~.·U05"S- the 5!:;1h; t::< ,o)sist witr"] th~ ct:\'tfc;.;\fnent; ;,;nd- ::m)mo~jon ~,f o:;r 

~ttlt>;;"$ h!:~tcr;( f"t0-'; T!lll focus 0'" rmpro,r;ug edt};::)iih)n;:f nutrBilch by !w;~tl s..ltC'& (e:.pop1).s 

-dire~tty lO nt'f~ds Uen1!fied t-lcra:;~, tilt" ~t<tt; thr0\if;h -;:lh! Het'it:ige "[OUflS711 Progr;:;m:'::- .qu,Jit:l 

st&nd,:rt'!S ;1$s,-e.!;~r':1et~t::, The xe'IitD.\Stf "tourism f"rvg(~,.,~ h{!$ ~cl\C:ur.tPd the!:c on-site ~'S~~:;.srt;:1rrts. 

':\,I1th $-itlZb, and ccn~:ist·::n~y \<V\? h,..;~( lfdt bl$tor~:: $i:€'~ t"voutd! h~ ~f) pL,;V;t ,a1;;'ffiiH 

(.f(l!-<fl.:;siS on p(;u:ahc-.r:td pn;!gt~1fi\,";;:1g watt CChoOt"2[;.c s.:udents bl.~t do f1Qf h':},-.,tl:;' tht!-

j.)15,tn-e1 ;.;b~p H:sturicl.tl SO(:l(:tv',& 

fool'S. ~D flRS-a S:t';:;i Inc:<:Js\"S' thf'h' .3bl!I~,¥ ~o 

As ria atide1 hF:'nef:t to t~H:m!{ {l lJ-M't -ef the Cojvf~dn Hjst0~'j(a! 

1'0';;:;1-1 si~r$ v,' ij nd<>lc ;,(.':\:-:.1. to h:.Jp 

~l;;"pe(j{~lirJi 
227 


80019.158

COLOHADO DEljARTMENT OF EDUCATION 

The H:)[1:)f?bl() Lvln Strickling 

Assfstant SeC'€t3i'V of C:;,.~(n:nen:e 

Administrator 

NJt1oriQ:f T~t~Ct;HTiiYIUI\~cbtli.)ljS a;;(} 7!'doff'lc.:tlon 

1.).5, Depdrt'1l'~nt i)f C::'irnnif"r~1' 

1401 C0nS(ltd'CI) !we. NVi 

;;veshingtct)< D.C 2023rJ 

I':i.ltional Te:e{crnrrHJt',;ctltlcns Inf:>rmation /\dministratioi"j {NTV\j 

3n;')2di)ana Technology 

ONI} Control Ncomber 

Cornprehensive Ccmn1ul11ty infr~stru(:turH Cr.Qnt !\PP!tCB\icn Norch 25, 

Colcrado CDr1HI1Vrity ArctJors 6ro.adb6nd CDn~cfUu:n 

Tile Colorado State Ubrary 

support ;}f 0 seconC,·round oiJ'phcatlOll 

C~\'1tetli1h~1 Bo::')rd of Cooc'erC!t,vt' .~,"·.!r;"'r:"i't 

eoucatiQn..::;1 3enJ!(€S mml:;Pl'''ln 

1Mse 

deve:oped;,;i nLH.:.h '~eedec p!an to !JuHd, up9fac~r extend, and 

!)iYF1dbetf;Q lr':ter!'1et cot.rectl\lI:ty Lo Cc'ml~1Ui)lty Anchor lo-c.atk.ns 

COJ:::.lf?dp, prnj2tt ',r.iiH lnte~f!f.?t Se;'dce:s sdch 

resean::h/ and online k:~::rnir,g 

Hf:\Cl:ith C;:r'B cnent'(~d rr'Of2SSj()i1~::a! j€\f(~bprnBr .. t 

fr'Onl urban 1"9~,th tar~ 

IOC;::UOfiS: separate Hbn,trv' 

tn;:,H) l34,500 residents n area;; 

tl'P:c:~UV the :cn.st ?tle to g:::fOt'(j efficle':t 
228 


80019.159
229 


80019.160

North Carolina vs. Colorado 

iii Colorado North Carolina 

100% 97% 

75% 

68% 

,,3 Mbps ,,10 Mbps ,,50 Mbps ,,100 Mbps 

Data as of June 30, 2012 
230 


80019.161

February 26, 2013 

Chairman Greg Walden 

Subcommittee on Communications and Technology 

U.S. House Committee on Energy and Commerce 

Ranking Member Anna Eshoo 

Subcommittee on Communications and Technology 

U.S. House Committee on Energy and Commerce 

Dear Chairman Walden, Ranking Member 

Dear Chairman Walden, Ranking Member Eshoo, Members of the Subcommittee on 

Communications and Technology: 

My name is Christopher Thurow Sr. and I am a resident of the State of Florida. I represented Bradford 

County Florida on the board of the North Florida Broadband Authority since its inception in 2009. I also 

served as the chair of the technical operations committee for the same. Bradford County has since 

withdrawn from participation in the program. I have more than 35 years of experience in in both the 

public and private sector, currently serving as Director of Information Technology in Bradford County 

Florida. I am providing my personal experience with the North Florida Broadband Authority which is a 

BTOP recipient and I am not representing any party other than myself. 

The North Florida Broadband Authority was awarded a grant to provide ubiquitous middle mile gigabit 

broadband connectivity. More than 28 million dollars have been spent to date on this project and it is 

questionable if the recipient matching portion of the grant has been met. 

There have been numerous miscalculations as to the intent, delivery, planning and funding for this 

particular BTOP program. Allegations of waste, fraud and abuse led to NOAA withholding funding and 

eventually led to the NTIA recommending the removal of the general manager, the legal firm and the 

grant compliance company that were managing the entire project. The investigation is still underway at 

the Office of the Inspector General. Seven of the original fourteen counties have withdrawn from the 

NFBA. 

Currently the program has an estimated five thousand to twelve thousand dollars month total revenue. 

This revenue is not from the targeted middle mile users but is primarily end users that the NFBA has 

provided both equipment and installation at no charge to the user. Anchor institutions may comprise of 

S-lO of these connections. The anchor institutions that were provided service had broadband 

capabilities already through the private sector. 

The grant required sustainability to be met by January 31st 2013. 
231 


80019.162

A low estimate of monthly expenses for the NFBA would be in the vicinity of three-hundred thousand 

dollars a month. 

The NTIA program office has constantly modified program rules to accommodate the recipient however 

grant non-conformity persists. Indeed, at the expense of the grant the NFBA has hired a full time 

"lobbyist/law firm" to parlay with the NTIA and NOAA to make certain virtually all costs are grant 

eligible. 

After no less than four "cost and sustainability studies" the NFBA late last year spent another one 

hundred thousand dollars on consulting fees to generate more of the same. The NTIA clearly wanted to 

hear about revenue sustainability and it didn't mind spending taxpayer money to get the answers they 

were looking for. At this very moment the NFBA is spending taxpayer money on yet another 

sustainability study. 

The revenue model is untenable thus the NFBA has clearly failed in its intended objective. 

Christopher Thurow Sr. 

Morriston, Florida 

Christopher Thurow ~~~~:;~!:~:~~=~~;:;?::: 
232 


80019.163

Congressman COl)' Gardner 

213 Cannon House Office Building 

Washington, DC 20003 

-fe/com 

RE: Congressional E & C Oversight Hearing- Is the Broadband Stimulus Wondng 

Dear Congressman Gardner: 

The following points have been summarized to provide a brief summary of the BTOP Grantee, EAGLENET 

and its overbuild of PC Telearn's operating area. 

• ENA is established as a quasi-state agency and is restricted from selling to non-members (CO Senate 

Bill I 52) which goes directly against their open access requirements within the BTOP grant. 

• PCT has served and continuously upgraded its network in northeastern Colorado since 1906. 

• PCT currently serves more than lOCAls via locally owned and maintained fiber optic network 

throughout several rural northeastern Colorado counties with available multi-gigabit capacities. Fiber 

middle mile and area schools have been served for approximately 10 years. 

• PCT offered and EAGLE-Net (ENA) I NTIA agreed to a preferred lit services arrangement in 

February of 2012. PCT provided detailed network mapping and information to ENA and NTlA 

repeatedly throughout 2010, 2011 and 2012. There can be no question that ENAINTIA knew that 

PCT's territory was fully served by fiber optic. 

• In July and August of20 12, ENAlNTlA spent approximately $4 million to construct new duplicative 

fiber optic systems throughout PCT territOI)', overbuilding routes already served by conduit containing 

a minimum of 24 strands of fiber optic (and thereby near infinite capacity as PCT deploys the latest 

dense wave division multiplexing technologies). 

• Having overbuilt nearly 100% of PCT's fiber optic facilities connecting Community Anchor 

Institutions to high capacity and reliable broadband services, ENAINTIA is actively courting all of 

PCT's highest paying customers with below-cost federal services. This is utterly contrary to federal 

law, state law and the promises ENA made to the state to serve unserved and underserved areas while 

partnering with carriers in already served areas. Collaboration was stressed repeatedly in ENA's pregrant discussions and its application. 

• PCT's backbone connection is on an industJy compliant redundant ring that can failover to alternate 

routes in milliseconds offering redundant routes to ENA's single threaded network running more than 

160 miles from Denver to the far northeastern corner of the state. ENA cannot maintain its network; it 

has neither the personnel nor experience; it simply used federal money to hire contractors and build 

network without any real idea of what it was doing. 

• PCT has offered to assume ownership of the overbuilt network and maintain it for NTIA and ENA in a 

sustainable locally owned fashion that PCT can repay RUS loan of approximately S8 million while 

retaining PCT's largest and most reliable institutional and commercial customers. 

• Community leaders, county executives and more than 350 Coloradans across PC Tel's territory have 

repeatedly urged NTIA not to overbuild existing carriers and to remedy the overbuilds where they 

have. 

l!;;" j{ -A ••. ••• ." v~. :::;:I( " 0 L YO K e. c 0 80 7 3 4 

1'11,"'70.854.2201 

FX,,970.854.i!668 

WWW.PCTElCOM.COOP 
233 


80019.164

February 27, 2013 

Representative Gardner 

United States Representative 

re: Eagle Net 

Dear Sir: 

I want to first thank you for all you have done for the residents of rural Colorado to 

receive adequate and equal broadband service as our metropolitan counterparts. 

As Mayor of Bayfield we have witnessed businesses pass our community due to a 

lack of broadband service. 

In the southwest both the local governments and the carriers recognize that we 

must work together to bring broadband to our residents and businesses. Our local 

carriers are working tirelessly to expand broadband in our area but lack the 

necessary capital to complete the job. Eagle Net represented a viable option to 

bring this to fruition. However, we will not sacrifice collaboration for money to 

accomplish our broadband initiatives. 

Please find attached a document I support and personally hand delivered to Eagle 

Net's new CEO Mike Ryan on behalf of our local carriers outlining how we will 

continue to work collaboratively. Eagle Net is welcome to join the collaborative 

model we have established. 

Thank you again Representative Gardner for your efforts to assist rural Colorado in 

our plight. 

Dr. Rick K. Smith 

Mayor of Bayfield 
234 


80019.165

GOAL; 

FACTS; 

STATUS; 

To connect all municipalities in the region with a fiber network by 

maximizing the fiber investment made by the private sector, the Southwest 

Colorado Council of Governments (SWCCOG) and the federal government in 

southwest Colorado. 

Southwest Colorado has challenging terrain for fiber projects whether buried 

or aerial installations are contemplated. 

The local carriers have substantial investments in fiber routes throughout 

the southwest. The combined routes connect approximately 80% of the 

southwest (see attached map). 

The SWCCOG has a $4 million fiber investment with maior funding coming 

from Colorado's Department of Local Affairs (DoLA) connecting the schools 

and government buildings in each of its member municipalities. 

The local fiber loops connect the schools, libraries, municipal and county 

buildings together and bring them to a neutral location. 

Many of the SWCCOG's smaller municipalities partnered with the local 

carriers to complete their local fiber loops through a collaborative effort. 

The southwest local fiber carriers currently connect 80% of its municipalities 

though a system of fiber routes. 

The southwest wireless carriers currently provide middle mile and last mile 

connectivity to customers with a backhaul services component as well. 

Each of the SWCCOG member municipalities has scheduled or completed a 

local fiber loop connecting schools, libraries, municipal and county 

government buildings. 

Eagle Net has installed empty conduit sporadically around the southwest, 

mainly in Montezuma and Dolores Counties. 
235 


80019.166

COG Beliefs: Oversight, transparency, accountability, and public access information are 

important components of all broadband development projects funded by tax 

payer's money. 

OPTIONS: 

Public funds allocated for broadband development may be used to 

compensate for the lack of private broadband investment in unserved and 

underserved communities, such as rural areas and low-income areas. 

The SWCCOG defines underserved as: The ability of an organization to 

continually utilize applications and tools to meet the organizational mission 

and goals. As applications are enhanced with a need for increased 

broadband capabilities and the current infrastructure cannot support the 

increased need, the area is deemed underserved. 

The SWCCOG recognizes three plausible options for the NTIA and Eagle 

Net to complete the middle mile fiber network in the time allotted. 

1) Eagle Net work cooperatively with the local providers to complete the 

middle mile fiber network utilizing local providers' assets currently 

installed. Elimination of duplicate/parallel fiber builds in order to 

maximize NTIA funding, local carrier investment and the DoLA funded 

SCAN project. 

2) The SWCCOG assist NTIA and Eagle Net by facilitating a collaborative 

effort on Eagle Net's behalf between local carriers and NTIA to complete 

the middle mile fiber network utilizing local providers' assets currently 

installed. Elimination of duplicate/parallel fiber builds in order to 

maximize NTIA funding, local carrier investment and the DoLA funded 

SCAN project. 

3) The SWCCOG and the local carriers collaborate to acquire the necessary 

funding to complete the middle mile fiber network utilizing local 

providers' assets currently installed. Elimination of duplicate/parallel 

fiber builds in order to maximize the funding, local carrier investment 

and the DoLA funded SCAN project. 

80019.167

Dove 

Creek 

Cortez Mancos 

Rico 

Farmington & 

Albuquerque 

Silverton 

LEGEND 

Tri-State Sub-Station 

Multiple Fiber Routes 

Single Fiber Route 
237 


80019.168

J'ebruQry 25, 2013 

Representative Cory Gardner 

213 CannOll HOB 

Washington_ DC 20~ 15 

Dear Congressman Gardner: 

This letter summarizes Ihe experiences oflllane. Telephone I Jade Communications with regard to EagleNet .Ild 

i, 10 be incorporated iOlo the record of the Committee <In Energy and Commerce Subcommittee on 

Communications and Technology with regard to the hearing on Wednesday. February 27. 2013. at 10:30 a.m_ in 

2322 Rayburn House Office Building emitled "Is the Broadband Stimulus Working?" 

Blanca Telephone I Jade Communications ("Blanca") 

Blanca is a famil; owned and operated provider proving high quality, 100001Iy owned and maintAined 

telecommunications services in the S"" Luis Valley since 1937_ 

The Blanca Telephone and Jade Communications service area is 6 times Jarger than the state of Rhode 

Island or 1.3 times larger than the state ofCOIlnecticut or just a liul. smailer than the entire state of New 

Jersey_ It includes rour of Colorado's persi.tent poverty counties_ 

In square mlles. Blanca Telephone's fiber optic broadband service territory spans 1000 square miles in 

counlies where the population densities is 2_9 people per square mile_ Jade Communicari<:>ns fiber and 

Microwave facilities span approximately 73n square miles with an average density of7A persons per 

square mile. Blanca Telephone has assiduously invested In these nreas for 91 years to bring 21st Century 

nerwork infi'astructures to these extremely remote and hard t9 serve areas. 

Despite these enormous challenges of massive distances, and a harSh winter climate. depressed rural 

economies suffering from not only a continuing weak ~conomy, but historical drought conditions_ 

extremely low population densities and average income way below the nationallevcls, Blanca Telephone 

ha$ succeeded in building out more than 230 miles of advanced fiher optic network providing high speed 

Internet services 10 some of the most remote, hardest to serve areas in the United States_ Schools and 

community anchors located in CO$lilla County aT<) hundr<1ds of miles away from largcrpopulatioll centers. 

TIle tlose5t popUlation cemer of any significance is 100 mlles away. The Blanca Telephone Company 

serves approximately 1,000 residences, businesses and I school and Jade has over 11 towers that provide 

dedicawd high capacity fixed wireless service 10 more than 1,500 residences, businesses, schools and 

libraries_ 

Century-I ink (Qwes!) is lhe mllior local exchange carrier in the San Luis Valley_ They buried a fiber line 

many years ago. TIlis tiber was the only lifeline 10 tIle outside world. When the fiber was CUI, all orlhe 
238 


80019.169

services: imcmel, cell phones, land line phones, e-mail. credit card machines and 911 were completely cut 

off and remain off ~ntil the fiber was spliced. I remember once we had 00 rolTInlunications with the 

outside world for over g hours. The Blanca Telephone Company/Jade Communications took on the 

challenge and teamed up with T aosNet.net, an internet provider in Taos New Mexico. TacsNet.net. like 

Blanca Telephone Company/Jade only had one way in and one way of their respective Valleys. Together 

we teamed up and buill a microwave route between the two companies. See \Vww.Chil~routecom. We 

discovered thai w~ depended on the Chileroute on 8 daily basis. One day the Century-Link fiber WaS cut 

and the entire Century-Link emergency personal showed up at our offiee 10 ~all for help. With this history 

behind us, the Blanca Tel~()ne Company constructed fiber optic conduIt lUId multiple fiber count along 

a route front Alamosa 10 Waisellberg providing a new, robust, physically diverse nigh capacity 

connectivity forall of tile San Luis Valley. This ensures the Volley's economic future, as no business 

~iII consid~r loeating in an area with unreliable broadband where connectivity can go down fot any 

appreciable amount of time. Willl this new build, .Blanca can ensure that its cuswmers will 00 served 

within milliseconds on diverse routes thereby assuring the contil1ued progress of economic development 

in this area of Colorado. 

• As Blanca Tefcpbone and Jl\de Communications bas repeatedly represented to Eagle'Net through multiple 

filings with the entity as well as multiple letters provided to N'r!A, countless meetings, negotiations and 

Loca! Technology "Planning Team sessions over the pest several years. Blanca Telepil9ne and Jade 

Communications network, service capabllilies, cuslomerserl'ice $l\d pricing, rivals lhoseof!argcrdli~s 

in the Slal~ of Colorndo ~ate or any state in the US, Blanca has supplied maps and other lnfornmion 10 

ENA and NTIA repeatedly. 

• Blanca was the first to.dcploy high-speed fiber optic and ne~t generation dedicated wireless broadband 

ronnectivi!y services tbroughout Costilla, Alamosa, Rio Grande, Saguache and Conejos Counties in fhe 

San Luis Valley. 

• Blanca's l1etwork is capable of near-infinite capacity. is locally maintained, ItlcclS art industry standards 

and is supported by (three)divcrse routes in and out oillle San Luis Valley. Blanca provides three 

physically diverse Itliddlc-mile routes in and out of the San Luis Valley while other competing carriers 

provide an additional dll'CC diverse and redundant routes for a Willi of 6 diverse and redundant middle 

mile routes, exclusive of ENA. already serving the San Luis Valley. 

• Blanca was more th3n willing 10 olTer NTlA reasonable !ems that would have saved them lin estimated 

$2() million, but NiiA wIlh full advance knowledge that Blanca/Jade served almost every CAl in its 

service lerritory with high capacity broadband services chose instead to duplicate BlllDcu's high speed 

network with a second WI of conduit fiber optic. network acce!.'S points, regClleration gear, and 

collocation fllcilltie.t wasting tcns of millions of federal dollars that cpuid have been used for unserved 

and undcrserved areas in the western part of tile state, si)ch as those mentioned in the recent Wall Street 

Journal and New York times artides. 

• NTIA is now unillirly competing for Blanca's largest customers using federal grant dollarsto offer belowcost services and telling !he.'l1 to distonncci Blanca is high-speed services in favor of the federal 

government's bl!16w cost services, Schools in La Veta, for example. now has three separate fiber oplic 

systems connecting them. They lire opting for governmtnt-spoll5orcd tonnectivity simply becaure (he 

laXJl8}e~ have fOoted the bill fnrihis duplicative network. 

• With only a handlul of institutional ~ustomers to $Upporl millions of dollars of private investment 

including a recently completed fiOOr optk route between Walsenburg lind AtamoSll, NT1A has stranded 

Blanell's multimillion-llollar investment in a diverse underground route containing 48 fiber optic slrnnd 

and harming long lerm economic development througllOUl the San Luis Valley. 

• Blanca requests that fiber optic strands on overbuilt portions where it was providing compliaru high 

capecity wrvicl:S to schools and community institutiOns be transferred lQ Blanca and other reasonable 

restitution be made. 

Please fully examine N'nA '5 and BaglcNc\'s activities in Colorado;lS they have refused to obey the mKndates 

of federal law, ignored tne express will ofColorado's communities, overbuilt fiber optic systems in the San 
239 


80019.170

Luis Valley and statewide, and still insist that they somehow need to make l! profit- as if tile fedeml 

Government" ere ever charged with the duty to enter the telecommunications markets as a taxpayer funded 

enti!} and compete \I ith the private market. This must be stopped and justice must be served for the many 

communities throughout the state hanlled by duplicative and wasteful overbuilds as well as those deserving 

communities who never received a dime despite, fur example, in tile case of Gunnison Colorado, fiber optic 

cable hl\i1ging fully ellpQSeil on caule fencing connected with a zip tie. 

Thank you for your prompt attention in these matters. 

Blanca Communications/Jade Communications 
240 


80019.171

Internet - Phone - Data 40Z San'" Fe Ave, PO Box 357, La }untu. CO 81(15(1 

800-657-7149 719-383-1349 

www.semm.net 

February 25, 2013 

Representative Cory Gardner 

United States House of Representatives 

213 Cannon HOB 

Washington, DC 20515 

Dear Congressman Gardner: 

This letter summarizes the experiences of Southeast Communications, Inc. (SECOM) 

with regard to EagieNet Alliance (ENA) and is to be incorporated into the record of the 

Committee on Energy and Commerce Subcommittee on Communications and 

Technology with regard to the hearing on Wednesday, February 27,2013, at 10:30 a_m. 

in 2322 Raybum House Office Building entitled "Is the Broadband StinlUlus Working?" 

By way of introduction, Colorado is the nation's eighth largest state covering more than 

104,000 square miles. It could contain the states of Maryland, Virginia, West Virginia, 

New Jersey, Connecticut, Delaware and Rhode Island and still have more than 4,000 

square miles to spare. 

SECOM's territory covers the counties of Baca, Bent, Crowley, Kiowa, Las Animas, 

Otero, Prowers and reaches into Cheyenne, EI Paso, Huerfano, Lincoln, and Pueblo. Las 

Animas County alone covers 4,771 square miles. That's larger than the states of 

Delaware and Rhode Island combined and just short of the size of the entire state of 

Connecticut. 

In square miles, SECOM's fiber optic broadband service territory spans 24,685 square 

miles in counties where the population densities are less than one person per square mile. 

Only three of these twelve counties have population densities above 10 persons per 

square mile. 

To understand what it means to serve an area nearly 25,000 square miles in size consider 

that SECOM's service territory is more than twice the size of the state of Maryland, 

larger than the states of Vermont and New Hampshire combined, or larger than the states 

of Massachusetts and New Jersey combined. Stated otherwise, SECOM serves schools, 

hospitals, community colleges, municipal governn1ents, fire departments, police stations, 

local businesses and everyday Coloradans in an area that is precisely half of the entire 

state of New York. 

Under no circumstances can the federal government be allowed to enter into private 

telecommunications markets as a taxpayer subsidized competitor, which is exactly what 

ENA desires to do despite having a statutory charge of serving unserved and underserved 
241 


80019.172

communities, which, as applied to Colorado exist almost entirely in specified areas in the 

western half of the state. As should be clear, ENA not only has failed to serve the 

western half of the state, they have overbuilt carriers, including SECOM in the eastern 

half of the state. This duplication of existing fiber optic and high capacity fixed 

microwave systems providing 100mbps and above while leaving the west unserved 

results in an egregious waste of taxpayer money. It harms the viability of carriers 

providing critical broadband infrastructures in eastern slope communities where 

community-based carriers have successfully operated for decades while leaving other 

communities without those infrastructures. The entire intent of the program has been 

turned inside out and has resulted in significant statewide harm. Nothing could be further 

from the direction Congress gave to the NTIA, from the promises made to the state by 

ENA, from the published statements in their grant applications, from the NTIA rules 

themselves, from the statements of the Colorado legislature who supported the grant on 

the condition that it cooperate and partner with existing carriers while ensuring unserved 

areas received appropriate infrastructures and from common sense. 

In summary: 

Southeast Communications (SECOM) 

• SECOM has served southeastern Colorado with fiber optic since 1998. 

• SECOM offers multi-megabit services throughout its 25,000 square mile territory 

including offering residential customers 100mpbs down I 50mbps up, which is far 

better than most urban customers receive not to mention these service offerings 

are at competitive prices. 

• SECOM currently serves more than 250 Community Anchor Institutions (CAIs) 

via locally owned and maintained fiber optic network throughout 12 rural 

southeastern Colorado counties with available multi-gigabit capacities. These 

CAls have been on-net to SECOM fiber optic since before the ENA overbuilds 

started. All of SECOM' s network information was made available to ENA in 

advance of their overbuilds and SECOM responded to RFPs from ENA but they 

never replied. 

• SECOM has also offered EagleNet Alliance (ENA) a preferred lit services 

arrangement that will provide service quality, reliability, maintenance and pricing 

that ENA concedes is superior in every respect to what it can offer. 

• SECOM's offer provided ENA with a minimum of $10 million in direct savings, 

while preserving SECOM's role as an effective provider of highly competitive, 

world-class fiber optic to the premises provider throughout southeastern 

Colorado. By the same token ENA would extend competitive neutrality to 

SECOM across the ENA network, thus ensuring continued competition 

throughout the state. 

• This $10 million could be redeployed to supply critical middle mile connectivity 

and boost economies in hard-hid Western slope communities including Silverton, 

Pagosa Springs, Mancos, Dolores, Bayfield, and Crested Butte. 
242 


80019.173

• Since December 7,2012 NTIA has not spoken with SECOM and recently began 

offering below-cost services in SECOM territory despite having the entire 

territory covered with fiber optic. 

SECOM asks that the House Committee on Energy and Commerce Subcommittee on 

Communications and Technology expeditiously resolve the issues with ENA, ensure 

that no further overbuilding can occur, and properly dispose of EN A's assets in ways 

that are consistent with the express will of dozens of communities statewide whose 

county executives, economic development organizations, businesses and ordinary 

citizens of the State of Colorado who were promised an organization that would not 

overbuild, that would cooperate with the carriers and that would use taxpayer money 

only where there was actual need. The government must take responsibility and 

compensate those who have been harmed and ensure that such harm not recur 

whether through BTOP or some other federal program. 

On behalf of dozens of county executives, communities throughout the southeastern 

corner of Colorado, and citizens statewide, please see to it that these issues are 

resolved completely, comprehensively, irrevocably and immediately. 

Thank you, 

Jon Saunders, General Manager, 

SECOM 
243 


80019.174

UNITED STATES DEPARTMENT OF COMMERCE 

The Assistant Secretary for Communicacions 

and Information 

Washington, D,C. 20230 

JUN 5 2013 

The Honorable Greg Walden 

ChailIDall 

Subcommittee on Communications and Technology 

C01ll1llittee on Energy and Commerce. 

House of Representatives 

Washington, DC 20515 

Deal' ChailIDan Walden: 

ThalJk you for the opportunity to testify on Feb11lary 27,2013 before the Subcommittee 

on Communications and Technology at the hell1'ing entitled "Is the Broadband Stimulus 

Working?" I appreciate your forwarding additional questions for the record to me on March 28, 

2013, . 

My responses to the questions are enclosed, If you or your staff have any additional 

questions, please do not hesitate to contact me or James Wasilewski, NTlA's Director of 

Congressional Affairs, at (202) 482-1840, 

Sincerely, 

~m::~~m!td cc: The Honorable Alma G. Eshoo, Ranking Member 

Subcommittee on Communications and Teclmology 

Enclosure 
244 


80019.175

Responses to Questions from the Honorable Joe Barton 

1. NTIA recently issued the funding announcement for the state planning grant 

program. I understand the grant performance period is three years and that there 

could be a second phase adding another two years. How do you reconcile a three to 

five year planning period with the fact that on Saturday during the National 

Governors Association conference Board Chairman Sam Ginn testified that the 

Board has already "architected the system" and "know[s] what it's going to look 

like"? 

The State and Local Implementation Grant Program (SLIGP) will run concurrently with the First 

Responder Network Authority'S (FirstNet's) work to design and develop the nationwide public 

safety broadband network. The Middle Class Tax Reliefand Job Creation Act of2012 (Act) 

directs NTIA to establish SLIGP to assist state, regional, tribal, and local jurisdictions with 

identifYing, planning, and implementing the most efficient and effective means to use and 

integrate the infrastructure, equipment, and other architecture associated with the nationwide 

public safety broadband network to satisfy the wireless broadband and data service needs oftheir 

jurisdictions. SLIGP also supports and facilitates the states' consultations with FirstNet, which 

the Act created as an independent authority within NTIA to oversee the design, construction, and 

operation of a nationwide public safety broadband network that is based on a single, national 

network architecture. 

The grant program has a three-year period of performance. Within this three-year period, the 

program is divided into two phases. The initial phase allows up to 50 percent ofthe federal 

funds to be used by states and territories to start planning, outreach, and governance activities, as 

well as the initial consultations with FirstNet. The second phase will be opened once FirstNet 

has determined what data elements it needs collected from the state, local, and tribal 

stakeholders. NTIA will release the remaining 50 percent of federal funds sometime during the 

first three years of SLIGP, at which time the states and territories will have access to all federal 

funds to complete all activities, including the outreach, planning, consultation, and data 

collection. 

NTIA received SLIGP applications and expects to award grants this summer. The efforts funded 

under SLIGP will complement and facilitate FirstNet's consultations with regional, state, tribal, 

local, and federal jurisdictions and public safety, which FirstNet Board Chairman Ginn has stated 

will be ongoing. To the extent FirstNet is "'architecting the system," it is merely in the 

preliminary phases of exploring various design, deployment, and financing options, consistent 

with the Act, and is not making final decisions on network design. Indeed, FirstNet needs to 

have a thorough understanding of these options in order to have meaningful consultations with 

state, tribal, and local governments and public safety, and to incorporate their requirements into 

the ultimate network design. 

2. I am encouraged that FirstNet has been visiting the states, including Texas recently, 

and may potentially move forward with all the suspended BTOP projects if terms 

and conditions can be successfully negotiated over the next 90 days. I understand, 

however, that one such condition would be to transfer control of the BTOP assets to 

2 
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80019.176

FirstNet. Wouldn't the effect of this transfer of assets be to eliminate a state's 

statutory right to opt-out of the FirstNet deployment since it would otherwise be left 

with no beneficial access to these assets? Stated differently, wouldn't this create a 

de facto opt-in position for BTOP jurisdictions prior to their being presented a plan 

to make an opt in/opt out decision? What would be the purpose of requiring 

agreement to a transfer of control now as opposed to waiting until the plan for a 

particular state is complete? 

In February 2013, the FirstNet Board adopted a resolution outlining its path forward with the 

seven public safety BTOP grantees, whose funding was partially suspended by NTJA following 

enactment of the law creating FirstNet. Currently, Board member Sue Swenson is negotiating 

700 MHz lease agreements with each ofthese seven projects. As this process has not yet 

concluded, FirstNet has not provided me with the terms of any agreement and I cannot speculate 

on the possible effect any hypothetical term may have on a state's decision to opt-out. 

Moreover, as five of the seven projects are with entities other than states, whatever conditions 

those grantees might negotiate would have no effect on a state's opt-out rights. 

3. In the last FirstNet meeting held on Feb 12,2013, the board approved resolution 18 

directing the board to negotiate spectrum lease agreemeuts with BTOP public safety 

grant recipients within 90 days. Texas was not included within that resolution and 

there are concerns with the Special Temporary Authority (STA) process being 

temporary causing jurisdictions concern about investing money into the network 

and planning within Texas. Is there planning within NTIA and FirstNet to ensure 

that Texas also is allowed to negotiate a long term spectrum lease agreement and if 

so when can it be expected. 

While the Board's February resolution applies only to its negotiations with BTOP awardees, a 

representative ofthe 700 MHz public safety project in Harris County, Texas, which was funded 

with grants awarded by the U.S. Department of Homeland Security, has been participating in the 

group's discussions as an observer. At its April 23, 2013 meeting, the FirstNet Board adopted a 

similar resolution authorizing Ms. Swenson to commence negotiations on a spectrum lease 

agreement with the State of Texas to cover operations under the Harris County project. Texas is 

currently engaged in discussions with FirstNet regarding a spectrum lease. 

4. The current authority for the Texas Public Safety Broadband build out is only for a 

total of 14 sites within Harris Co area. Just to deploy the Harris Co area would 

require approximately 90 sites. It is my understanding that jurisdictions within 

Texas have local funding to invest in infrastructure however they cannot proceed 

within the current approved authority. What is being done within NTIA and 

FirstNet to work with Texas to allow them to continue to buildout infrastructure 

beyond the current 14 sites? 

The Harris County, Texas project was funded through grants awarded by the Department of 

Homeland Security. Thus, unlike the circumstances with the BTOP public safety projects, NTJA 

does not have an administrative role in monitoring and overseeing the project. 

3 
246 


80019.177

Responses to Questions from the Honorable Cory Gardner 

1. Is delivering middle mile facilities to unserved and underserved locations one of the 

main objectives of the NTIA BTQP grant? 

The broadband grant program of the American Recovery and Reinvestment Act (Recovery Act) 

has several statutory purposes: providing broadband to unserved and underserved areas; 

enhancing broadband for community anchor institutions (CAls) such as schools, libraries, and 

healthcare providers; improving broadband for public safety agencies; and stimulating broadband 

demand. 

In the first round ofBTOP funding, NTlA solicited applications for both last mile and middle 

mile projects. NTIA defined middle mile projects as any broadband infrastructure project that 

does not predominantly provide broadband service to end users or to end-user devices and that 

may include interoffice transport, backhaul, Intemet connectivity, or special access. In the first 

round, NTlA also had as a goal to expand and enhance broadband services for community 

anchor institutions such as schools, libraries, colleges and universities, medical and healthcare 

providers, public safety entities, and other community support organizations. 

NTIA found that the strongest applications were from those entities that proposed a 

comprehensive approach to meeting the community's broadband needs by both expanding on 

middle mile investments and providing new or substantially upgraded connections to community 

anchor institutions. As a result of these tremendous benefits, NTlA awarded a significant portion 

of funds in the first round ofBTOP funding to such projects, and in the second round ofBTOP 

funding, adopted the "comprehensive communities" approach that prioritized applications that 

would deliver middle mile broadband infrastructure and offer new or substantially upgraded 

connections to CAls. 

Middle mile investments also help "prime the pump" for additional investment by public and 

private entities. In particular, the open access and interconnection requirements imposed on 

federally-funded infrastructure encourage last mile and other broadband providers to tap into the 

middle mile networks to expand broadband services and speeds for American consumers and 

businesses. Across the country, providers have signed over 600 agreements with our grantees to 

use federally-funded networks to better serve their customers. In this way, NTIA leverages 

limited federal funding to significantly improve broadband capabilities for the greatest number of 

Americans. 

The additional focus on connecting anchor institutions provides a number of important benefits 

to the nation. Schools, libraries, colleges and universities, medical and healthcare providers, 

public safety entities, and other community support organizations increasingly rely on highspeed Internet connectivity to serve their constituencies and their communities. Expanding 

broadband capabilities for community anchor institutions enables them to deliver significantlyimproved education, healthcare, and economic development. Healthcare providers will be able 

to monitor patient health remotely, consult with other medical professionals, and share medical 

records in real-time. Emergency responders will be able to share real-time video and other 

situational awareness to help protect the public and respond quickly and efficiently to disasters 

4 
247 


80019.178

and other emergencies. Broadband connections in libraries enable students to conduct research 

and locate information and allow workers to identify and apply for jobs. Schools and colleges 

are able to stream audio and video content from other institutions, provide and receive 

instruction through online distance-learning programs, and facilitate training and skill 

development for adult learners. 

2. Was it a goal of NTIA to collaborate with existing providers where sufficient 

broadband already existed? 

NTIA's goal was to encourage our grantees to utilize existing infrastructure where it was 

available, and BTOP grantees took steps to obtain information about existing infrastructure and 

leverage these facilities as much as possible. In cases where some broadband facilities existed, 

NTIA encouraged applicants to solicit information from incumbent broadband providers on the 

availability of existing infrastructure and to lease "dark fiber," or otherwise leverage the existing 

facilities where possible. In these cases, federal funding was used to upgrade or improve the 

level of broadband infrastructure in the community, such as lighting unused existing fiber with 

appropriate electronics. By authorizing recipients in those circumstances to use grant funds to 

light existing dark fiber and bring it online, NTIA's grant recipients have made good use of 

existing facilities. In the case of Eagle-Net, approximately 1,900 network miles, or more than 65 

percent of the total miles in the State of Colorado, have been leased or upgraded from existing 

broadband providers. Across the United States, BTOP grantees have upgraded more than 55,000 

miles of existing broadband infrastructure, demonstrating the ability of BTOP to identiry winwin opportunities for our grantees and existing broadband providers. 

3. What were the criteria used to determiue whether sufficient broadband existed 

within unserved and underserved areas, and did NTIA have a step-by-step process 

in place to determine where sufficient fiber optic facilities existed? If so, what was 

that process? 

NTIA defined unserved to mean an area where at least 90 percent of the households lack access 

to facilities-based, terrestrial broadband service of at least 768 kilobits per second (kbps). It 

defined underserved to mean an area where either no more than 50 percent of the households 

have access to broadband service greater than 768 kbps, no broadband service provider 

advertises broadband speeds of at least 3 Mbps, or the rate of broadband subscribership is 40 

percent of households or less. The second round of funding did not require projects to serve only 

unserved or underserved areas, but the extent to which the project proposed to serve those areas, 

along with meeting the other goals of the Recovery Act, was a significant factor in consideration 

of the application. 

The mere presence of an existing provider did not necessarily indicate that the area was 

adequately served. For example, community anchor institutions such as schools and libraries 

need broadband speeds many times faster than the basic mass market broadband offered to 

residential customers. The State Educational Technology Directors Association (SETDA) has 

reported that schools need bandwidth of at least 100 megabits per second (Mbps) for every 1,000 

students and staff. SETDA expects that requirement to increase to one gigabit per second by 

2017-18. Compare those speeds to a basic mass market broadband offering of3 Mbps. In 

5 
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80019.179

Colorado, only 4 percent of schools subscribe to broadband speeds greater than 50 Mbps, 

compared with North Carolina where a statewide educational network allows 75 percent of 

schools to have broadband service at speeds of 50 Mbps or greater. Clearly, Colorado is an 

example of a state with significant need for additional broadband investment to deliver the high 

Internet speeds that students need to be competitive in the 21 st century. 

In reviewing applications, NTIA relied on such information submitted by applicants as data 

collected by states or other government entities, or evidence that CAIs lacked sufficient 

broadband service. NTIA received thousands of letters and testimonials from schools, libraries, 

healthcare facilities, and public safety entities indicating that they could not obtain the broadband 

services they needed to fulfill their missions in today's technological age. In many cases, this 

evidence was bolstered by the support ofleadership representing the state. To give just one 

example, the Eagle-Net project in Colorado was endorsed by the Governor, the state legislature, 

the Colorado Department of Education, and numerous incumbent providers. Republican and 

Democratic members of the Colorado Congressional delegation wrote: 

"As representatives of Colorado's congressional delegation, we are well aware of the 

inconsistent and in some cases, completely non-existent high speed broadband services 

for some of our most vulnerable communities. EAGLE-Net's proposal will address this 

need among the communities where market forces have failed to attract affordable 

broadband infrastructure and investment. EAGLE-Net will serve as the non-profit 

network to Community Anchor Institutions throughout the state, including 178 K-12 

school districts serving over 2,000 schools & 800,000 students, 16 community colleges, 

26 libraries, 12 BOCES, two institutions of higher education, public safety and health 

care providers, as well as city and county governments." 

To further avoid duplicating existing infrastructure, NTIA published detailed information about 

the proposed service areas ofBTOP applications and requested comment from incumbent 

broadband providers on their level of service in these areas. NTIA reviewed the information 

submitted by these providers and took it into consideration during the review process. 

4. If sufficient broadband existed, did NTIA guidelines have steps in place to ensure 

that BTOP grant awardees had a process to evaluate the best possible use of existing 

facilities and BTOP grant dollars? 

Please see my answer to question 2 above. NTIA encouraged awardees to utilize existing 

infrastructure, such as by lighting dark fiber, to ensure the efficient use of taxpayer dollars. Of 

course, this outcome was only possible where existing providers were willing to make dark fiber 

available on reasonable terms and conditions. 

5. Can you justify a circumstance where an unserved or underserved community did 

not get fiber with Eaglenet's BTOP middle mile grant, yet other locations that 

appeared to be well served received funding? Please explain in the context of the 

priorities of the BTOP grant program how this could occur. 

6 
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80019.180

In 20 I 0, NTlA awarded a grant to Eagle-Net to construct a high-speed broadband network to 

connect schools and other community anchor institutions throughout the state. Eagle-Net 

developed the project application based on its assessment of the needs and priorities of schools in 

Colorado. As described in my answer to question 3, data indicate that Colorado schools have 

tremendous need when it comes to broadband investment. 

The goal ofthe Eagle-Net project is to connect schools across Colorado to a statewide education 

network. We have seen from our experience in other states that students, teachers and the state 

more generally will benefit tremendously from a statewide education network. A statewide 

education network can significantly lower costs for schools and teachers by combining their 

purchasing power to lower costs for bandwidth. Teachers, students, and parents can harness the 

power of a statewide network to share resources, best practices, and software applications. 

Students can engage in distance learning more efficiently over a statewide network and take 

advantage ofteacher instruction in areas across the state. By lowering bandwidth costs and 

increasing broadband speeds for schools, students and teachers can conduct coursework online 

and leverage the global resources that the Internet provides. Most schools in the United States 

now require that student and teacher assessments be administered online, making high-speed 

broadband even more of a necessity. The proliferation of tablets and low-cost notebook 

computers is providing students with unparalleled new opportunities to learn that were 

unimaginable just a few years ago, but also straining antiquated broadband networks in some 

communities. Schools that lack sufficient broadband service will continue to be at a 

disadvantage in their ability to give students the tools and services they need to compete in the 

twenty-first Century. 

Development of a statewide network will involve connecting schools located in unserved, 

underserved, and served areas of a state. It also makes economic sense, because Eagle-Net 

would be unsustainable otherwise. Revenues from school districts in more densely populated 

areas of Colorado allow Eagle-Net to provide service in underserved school districts in a 

supportable and self-sustaining manner well into the future. 

As noted in the answer to question 2, NTlA encourages all our grantees to utilize existing 

infrastructure where they can, which has been the case with Eagle-Net in Colorado. In addition, 

Eagle-Net has delivered significant network assets in western Colorado, deploying over 500 

miles of broadband infrastructure in the West. These assets include leasing existing 

infrastructure that interconnects cities such as Craig, Grand Junction, Montrose, and Durango. 

Additionally, core network routers have been deployed in major interconnect locations, including 

Durango and Grand Junction. Eagle-Net has encountered delays in delivering other parts of the 

Western build due to contractor and procurement issues. Additionally, the terrain in the western 

parts of the state has made deploying broadband infrastructure more challenging. 

In April 2013, NTIA lifted the suspension on the Eagle-Net project after the recipient addressed 

its environmental requirements and developed a viable path forward for the project's long term 

sustainability. Eagle-Net now has a plan to focus on constructing in western Colorado during the 

limited 2013 construction season, working closely with community stakeholders and existing 

broadband service providers. Eagle-Net is committed to continuing discussions with the 

Colorado Telecommunications Association and its members to identifY partnership opportunities 

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that will benefit Colorado schools. Eagle-Net will implement a plan that focuses immediately on 

29 school districts west of 1-25, including Silverton. Eagle-Net plans to complete the majority of 

this construction by August 2013 and request an extension of its BTOP project to 2014. At the 

end of this phase, over 50 percent of the 190 combined school districts (178) and Board of 

Cooperative Educational Services (12) in Colorado will be on-net to the Eagle-Net network. 

6. Are BTOP awardees such as Eaglenct required to provide annual audited 

financials? If so, where are they sent? 

Yes, the Department of Commerce Standard Terms and Conditions require all BTOP grant 

recipients to have their award audited, if they meet certain financial thresholds. State, local, and 

tribal governments; universities; and non-profit organizations such as Eagle-Net must have an A133 audit for every fiscal year in which the recipient expends $500,000 or more in federal 

funding. Recipients submit their A-133 audit reports to the Federal Audit Clearinghouse via 

http://harvester.census.gov/sac/9 months after their fiscal year ends. For more infonnation on 

BTOP audit requirements, see htlp://www2.ntia.doc.gov/compliancc#audit and 

http://www. whitehouse.gov/sitcs/default/files/omb/assets/a 133/a 133 revised 2007.pdf. 

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8.. 

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Fa''P.oinl 

communications 

April 5, 2013 

Charlotte Savercool, Executive Assistant 

U,S, House Committee on Energy and Commerce 

2125 Rayburn House Building 

Washington, DC 20515-6115 

Dear Ms, Savercool: 

Michael K. Smith 

State President - Venuont 

800 Hinesburg Road 

South Burlington. VT 05403 

msmith5@fairpoinLcom 

I am submitting answers to the questions that you send after my testimony at the Subcommittee 

on Communications and Technology on Wednesday, February 27,2013, to testify at the hearing 

entitled "Is the Broadband Stimulus Working," Please find my answers attached, 

If you have any further questions please do not hesitate to give me a call. 

Sincerely, 

Michael K. Smith 

State President-Vermont 
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The Honorable COry Gardner 

1. Mr. Smith, during the second panel, Congressman DeGette asked about a $7 million payment that 

FairPoint received as a vendor from an award winner. I believe she was asking about the federal 

NTIA grant program and your answer referenced a state program. Did FairPoint receive any money 

from a AARA BTOP grant award recipient? 

ANSWER 

Thank you for the question. For clarification, we received $8.6 million in reimbursement from 

either ARRA grant recipients or their contractors working for BTOP award winners. These 

monies partially reimbursed us for our costs for make-ready work necessary for the applicants 

to attach their cable to FairPoint's poles. In most cases this was right on top of our existing fiber. 

This work includes modifying existing pole attachments, which include FairPoint's, CLEe's, Cable 

TV's and in some cases the electric utilities facilities. It is important to note that this 

"reimbursement of costs" is recovery of money spent by FairPoint to make changes to the pole 

and does not directly benefit either FairPoint or any last mile broadband customers. 

The Honorable Henry Waxman 

1. I understand that during the time period of the Recovery Act implementation, FairPoint was the 

subject of a significant number of customer service complaints to the Vermont Public Service 

Board-roughly 9,000 complaints in 2009 and almost 4,000 in 2010. Do you believe FairPoint's 

customer service record have impacted the company's suitability to receive Recovery Act funding? 

If not, why not? 

ANSWER 

Thank you for the question. If the above Vermont complaint data was a contributing factor to 

impacting FairPoint's suitability to receive Recovery Act funding then this is truly unfortunate 

since this data appears to be interpreted incorrectly and appears to be inaccurate. There is no 

data that we could find that corresponds to the Vermont Public Service Board receiving 9,000 

complaints in 2009 or nearly 4,000 complaints in 2010. Our records indicate that for 2009 there 

were 2,606 complaints made to the state in Vermont (less than one-percent of our total access 

lines in Vermont) and in 2010 there were 1,339 complaints (less than one-half of a percent of 

our total access lines in Vermont). It is uncertain what the source of the data is for the 

assertions that we received 9,000 complaints in Vermont in 2009, but if the Federal 

Communications Commission's ("FCC's") report "State Complaints Per 1,000,000 lines" from the 

Automated Record Management Information System (ARMIS) was the source for these 

complaint numbers, there is a conversion that must be done before reporting complaint data 
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because it is based on "Per 1,000,000 Access Lines." Using only Vermont data from the 2009 

FCC Report 43-05 "The ARMIS Service Quality Report", the FairPoint Vermont complaint number 

was 993. The difference between this figure and what we have in our Vermont data base is 

probably because by all accounts Vermont has a more liberal interpretation of what constitutes 

a complaint than most other states or the federal government. 

In large part these complaints were based on a massive IT conversion and were largely resolved 

between the fourth quarter of 2009 and the first quarter of 2010 and it had no bearing on our 

operational capabilities to expand broadband. In fact, we kept an aggressive broadband 

expansion program in full deployment in Vermont during that time. Digging deeper about 

complaint levels in Vermont during this timeframe finds a dramatic decrease in complaints 

(almost 50%) from the third to the fourth quarter of 2009. In 2010, there was another significant 

decrease in complaints (55%). Certainly these numbers needed improvement, and at the time of 

the grant application and process, they were improving significantly. Today, FairPoint is 

achieving high service quality standards that are predicated on the turnaround that was 

happening toward the last quarter of 2009 and beginning of 2010. 

2. Your testimony stated FairPoint's concern about "overbuilding." Yet it is my understanding that 

FairPoint's own application for Recovery Act broadband funding would have included some areas 

that were already served by cable, DSL, and satellite providers. Would FairPoint's proposed project 

have raised the type of "overbuild" concerns that you stated in your testimony? If not, why not? 

ANSWER 

I have reviewed FairPoint's 2009 applications in Vermont, New Hampshire, and Maine. It is safe 

to conclude that the intent of those applications was to build where state officials thought that 

broadband was needed in their respective states. Although I can't confirm that in every case 

there was no one being overbuilt-- since satellite transmission by its very definition couid be 

considered to be an overbuild in loosely defined terms--it was the primary intent of the 

applications to bring broadband to the unserved. FairPoint's 2010 Maine application had the 

same intended purpose. This intention is quite different than funding programs whose primary 

intent is to overbuild existing carriers. 

3. According to the Committee's annual request for oversight data on the high cost program, FairPoint 

is a major recipient of Universal Service funding through the FCC. in your testimony you noted that 

FairPoint invested $196 million for the deployment of broadband services. Did you include any USF 

subsidies in this $196 million calculation? If so, how much of USF subsidy did you include? 
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ANSWER 

FairPoint has spent approximately $196M on broadband expansion in the northern New England 

markets pu rchased from Verizon. During that same period the Company received approximately 

2% of its revenues from USF. The high cost model support was spent in accordance with the 

various FCC rules and as such could have contributed, although fractionally, towards the total 

investment. 

4. Is FairPoint using any USF funding to build in areas that may already have some broadband service 

such as from a local cable company or satellite provider? 

ANSWER 

USF funding comes in a variety of programs, but generally it is based on reimbursement for 

required operational spending and recovery of existing investments. The single USF program 

that FairPoint participates in and that is tied to specific broadband buildout is the CAF Phase I 

Incremental support funding which can only be used for broadband in unserved areas. In fact 

one of the issues with CAF Phase 1 funding is that if just one household is served by another 

provider within the entire census block then that census block can't be used for CAF Phase 1 

funding.