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76–013 2012

OVERSIGHT OF THE AMERICAN RECOVERY AND 

REINVESTMENT ACT: BROADBAND, PART 3 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS, 

TECHNOLOGY, AND THE INTERNET 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 4, 2010 

Serial No. 111–101 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California 

Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 


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SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

RICK BOUCHER, Virginia 

Chairman 

EDWARD J. MARKEY, Massachusetts 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JAY INSLEE, Washington 

ANTHONY D. WEINER, New York 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

JOHN SHIMKUS, Illinois 

GEORGE RADANOVICH, California 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 


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C O N T E N T S 

Page 

Hon. Rick Boucher, a Representative in Congress from the Commonwealth 

of Virginia, opening statement ............................................................................ 1 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 3 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 5 

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

prepared statement .............................................................................................. 7 

Hon. Bart Stupak, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 13 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 13 

Prepared statement .......................................................................................... 15 

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

California, opening statement ............................................................................. 16 

Hon. Lee Terry, a Representative in Congress from the State of Nebraska, 

opening statement ................................................................................................ 17 

Hon. Michael F. Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 17 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 19 

Hon. Steve Buyer, a Representative in Congress from the State of Indiana, 

opening statement ................................................................................................ 20 

Hon. Zachary T. Space, a Representative in Congress from the State of 

Ohio, opening statement ...................................................................................... 21 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, prepared statement .................................................................................. 62 

Hon. Kathy Castor, a Representative in Congress from the State of Florida, 

prepared statement .............................................................................................. 65 

WITNESSES

Lawrence E. Strickling, Assistant Secretary for Communications and Information, National Telecommunications and Information Administration ............. 22 

Prepared statement .......................................................................................... 25 

Answers to submitted questions ...................................................................... 82 

Jonathan S. Adelstein, Administrator, Rural Utilities Service, USDA ............... 38 

Prepared statement .......................................................................................... 40 

Answers to submitted questions ...................................................................... 100 

SUBMITTED MATERIALS FOR THE RECORD

Letter of January 22, 2010, from United States Department of Commerce 

to Senate Committee on Appropriations, submitted by Mr. Stearns ............... 67 

Letter of March 3, 2010, from USTelecom to the NTIA, submitted by Mr. 

Stearns .................................................................................................................. 70 

Letter of March 3, 2010, from the National Cable & Telecommunications 

Association to United States Department of Agriculture, submitted by Mr. 

Stearns .................................................................................................................. 77 


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OVERSIGHT OF THE AMERICAN RECOVERY 

AND REINVESTMENT ACT: BROADBAND, 

PART 3 

THURSDAY, MARCH 4, 2010 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMUNICATIONS, 

TECHNOLOGY, AND THE INTERNET, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:01 a.m., in Room 

2123 of the Rayburn House Office Building, Hon. Rick Boucher 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Boucher, Markey, Stupak, 

Doyle, Matsui, Christensen, Space, McNerney, Welch, Dingell, 

Waxman (ex officio), Stearns, Shimkus, Buyer, Terry, Blackburn, 

Barton (ex officio) and Griffith. 

Staff present: Roger Sherman, Chief Counsel; Bruce Wolpe, Advisor; Amy Levine, Counsel; Tim Powderly, Counsel; Shawn Chang, 

Counsel; Greg Guice, Counsel; Sarah Fisher, Special Assistant; Michael Perry, Intern; Elizabeth Letter, Special Assistant; Neil Fried, 

Minority Counsel; Will Carty, Minority Professional Staff; and Garrett Golding, Minority Legislative Analyst. 

OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF VIRGINIA 

Mr. BOUCHER. The subcommittee will come to order. 

Good morning to everyone, and welcome to our hearing today, our third oversight hearing regarding the $7.2 billion provided by 

the Economic Recovery Act for broadband programs. The programs 

are administered by the U.S. Department of Commerce through the 

NTIA and the Department of Agriculture through its Rural Utilities Service. It is our pleasure this morning to welcome the NTIA 

director, Assistant Secretary for Communications and Information, 

Larry Strickling, and Rural Utilities Service Administrator Jonathan Adelstein, who will discuss the process that they have undertaken for awarding grants for the first round of funding and the 

standards their agencies have developed that will govern the funding awards during the second round. 

The Recovery Act’s broadband program presents an historic opportunity for increasing the availability of broadband and elevating 

the standing of the United States among developed nations and the 

percentage of our population that uses it. How effectively these 


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goals are met will be determined in large part by the standards 

that govern the deployment of the program’s funds. 

During our last oversight hearing, I expressed a range of concerns about the standards that had governed the first round of 

funding and encouraged the agencies to consider modifying those 

standards prior to publication of the notice of funds available for 

the second round. I am pleased to note this morning that the rules 

for round 2 largely address those concerns. For example, in the 

RUS program, grants of more than 50 percent of project cost are 

no longer only available to communities that are deemed remote, 

meaning that those communities are more than 50 miles from a 

city of at least 20,000 people. That round 1 restriction had disqualified from major grant awards small, isolated communities, typically 

those ringed by mountains that are located throughout the astern 

United States. I am pleased that this remoteness test has been removed from the round 2 standards. 

The rules for round 2 have also been changed so that rural applicants are no longer required to apply first to RUS and be rejected 

before NTIA can make an award to that applicant, and I am 

pleased to note that in round 2, RUS has specified a measure of 

funding that will be available for satellite-delivered broadband 

services. I very much appreciate the agency’s responsiveness to our 

concerns on these matters and I commend them for the positive 

changes that they have made in the program rules. 

I do want to offer this morning a couple of suggestions for round 

2. First, I urge the agencies to give round 1 applicants whose applications were rejected ample guidance so that they can improve 

their applications for round 2. For example, round 1 applicants at 

the present time cannot find out how many points the winning applications scored during round 1 so those who were not successful 

in round 1 currently really don’t know how close they came to receiving an award. Many of those round 1 applicants could have 

been on the cusp of receiving an award and they may be discouraged from applying in round 2. If they knew they were close, they 

would be encouraged, they should be aware of that fact, and the 

agency should give them guidance about how to improve their 

round 2 applications. 

I also urge the RUS to give serious consideration to granting 

waivers of the requirement that projects cost no more than $10,000 

per home passed. Many areas without access to broadband today 

are among the most difficult and expensive to serve due to terrain—many of these communities are mountainous—and also because of the distances that are involved over which the infrastructures would have to be deployed, and many communities of the 

eastern United States that are in fact isolated, ringed by mountains, a long way from the nearest metropolitan area will simply 

not be served if the requirement that the project costs no more 

than $10,000 per home passed remains inviolate. And so I would 

strongly encourage generous waivers to that requirement where 

the situation merits those waivers. 

I want to commend NTIA and RUS for the tremendous work that 

they have done on the broadband program to date. The agencies 

have had to crease these programs out of whole cloth. You have 

had to hire staff and train that staff over a short period of time 


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and then begin to make grant awards, and I believe you have done 

an outstanding job of that and you have this committee’s thanks 

for the fine work that you have both performed and that your staffs 

have performed. You have done so under short time frames and 

with a lot of uncontrollable events, like the snowstorm that I know 

was a major impediment but didn’t slow you down, and so congratulations for that performance. 

Mr. Strickling, Mr. Adelstein, thank you for joining us this morning. I look forward to your comments on the matters that I have 

raised and matters that other members will raise. 

At this time I am pleased to recognize our ranking member, the 

gentleman from Florida, Mr. Stearns. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, and thank you, Mr. Chairman. 

Thank you for holding this hearing, and I want to also thank our 

witnesses for being here. We look forward to their testimony. 

Mr. Chairman, before we go any further, I would like to recognize the newest member of our Subcommittee on Telecommunications, and the Internet, Mr. Parker Griffith from Alabama. So 

welcome. We are delighted to have you on the subcommittee. 

I think, Mr. Chairman, your terms when you said you have a 

range of concerns, I like that terminology that you used. That was 

diplomatic and also pointing out there are some legitimate feelings 

here on both sides. We feel that the NTIA and RUS broadband 

stimulus programs are not working as well as they could. There are 

a number of cases that we want to bring up to question the effectiveness of the programs, and I know many on that side particularly touted that this would be a huge stimulus and start sort of 

a new technological revolution, which ultimately I believe it can. I 

think honestly done right, this can move towards huge opportunity 

for everybody. 

But let me just, for example, give you a case where it has come 

to my attention there have been some specific complaints about the 

overbuilding of existing networks. In north Georgia, NTIA awarded 

a $33.5 million grant to an area that already has extensive 

broadband service. According to a letter from the incumbent provider Windstream, 90 percent of the homes and businesses in the 

project already have access to broadband. All Americans should 

have access to broadband, robust broadband, but if the goal of the 

stimulus was to bring broadband to areas without any access, then 

this $33.5 million could have been better spent. We all agree on 

that. 

Now, supporters of the stimulus promise that it would create 

millions of new jobs and that all Americans would have access to 

fast and affordable broadband, yet here we are a year later. I am 

not sure we see the huge change and the early reviews don’t bear 

that out. 

Now, during the markup, as I mentioned, all of us were hopeful 

that this would create more jobs. In fact, many people talked about 

it would spark sorely needed economic development and creation. 

I mean, those are the exact words of some people on the other side. 

It appears that some of this money may be going to pay for dupliVerDate Mar 15 2010 02:39 Nov 27, 2012 Jkt 076013 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 E:\HR\OC\A013.XXX A013

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cate services and facilities where consumers already have 

broadband access. If that is the case, the money will not be bringing access to unserved areas. Moreover, it will make it much more 

difficult for the existing providers to operate their businesses in the 

face of a government-subsidized competitor. 

For the United States to achieve ubiquitous broadband deployment, the private sector will have to shoulder the bulk of the financial burden. To the extent that any government money will be 

spent on financing broadband deployment, such money should be 

made available in areas that are otherwise uneconomic to serve. 

The broadband stimulus programs violated, I think, this central 

tenet. 

Congress attached strings to the NTIA program in the form of 

network neutrality and interconnection obligations that dissuaded 

experienced providers from participating in the program. In addition to driving away the companies most likely to help us achieve 

ubiquitous broadband deployment, NTIA is now actually subsidizing broadband competition rather than extending coverage to 

unserved areas. 

During the first round of funding, NTIA set up a process whereby providers only had 30 days to identify applications that would 

grant funding in areas they already served and to contest such applications. The consensus is that 30 days has not been enough 

time. And NTIA has granted applications that appear to subsidize 

broadband competition rather than extent services to unserved 

areas. Now NTIA has actually proposed to shorten the window for 

contesting applications to 15 days. Now, I just can’t conceive of how 

a 15-day window will ensure that NTIA is not subsidizing 

broadband competition rather than extending service to rural 

areas. In fact, during the stimulus markup we had a Republican 

amendment that would have ensured that unserved areas would 

get priority over underserved. Unfortunately, this amendment 

failed on a party-line vote. This program would have really benefit 

if our amendment had been adopted. 

If the NTIA and RUS broadband programs were subsidizing 

areas where existing providers are already offering service, the programs will harm deployment and cost jobs rather than promote 

broadband and stimulate the economy. Further deployment in 

areas that already have access will not expand broadband availability and providers in high-cost sparsely populated areas already 

have difficulty covering the cost of deployment. Splitting their subscribers based upon subsidizing a new competitor will only make 

it harder to recover broadband investments, putting jobs in jeopardy rather than creating them. 

So those, Mr. Chairman, are my range of concerns and I appreciate you having the hearing. I look forward to our witnesses. 

Mr. BOUCHER. Thank you very much, Mr. Stearns. 

The gentleman from Massachusetts, Mr. Markey, is recognized 

for 2 minutes. 


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OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. Thank you, Mr. Chairman, and thank you for having this very important hearing. 

You know, we had a very bad period of time during the 8 years 

of the Bush Administration where we dropped from second in 

broadband deployment and adoption to 15th in the world. It was 

not a good record. And since broadband deployment is for all intents and purposes a proxy for kind of determining how rapidly our 

economy is advancing, we obviously need a plan to make sure that 

we get back on the road where we don’t allow Luxembourg and 

Finland and other countries to pass us, which they have done over 

the last 8 years. 

So that is really what this is all about, and the Recovery Act was 

a significant step forward in increasing deployment and adoption 

levels and unleashing the power of broadband to create jobs, improve health care. Actually looking right across the whole board including public safety tools and the national broadband plan which 

I inserted language into the stimulus bill to require the Administration to produce a national broadband plan is due back on March 

17th, and to the Irish, that is a very lucky day, you know, not only 

for the Irish but for the whole country when this broadband plan 

is produced, and I look forward to that plan being released in the 

next couple of weeks. 

In addition, there is non-discrimination in network interconnection obligations that was built into the stimulus bill, and I was 

proud to be able to write that language in as well because that is 

central to ensuring that all of those applications, all those new 

gadgets that are out there have an incentive to be developed because they will have access to this network. That is the whole key. 

It is competition. It is to ensure that we do have that set of incentives, and the broadband mapping plan so that we know where we 

have to go, what we have to do. All of that is central as well, all 

of that in legislation. 

So Mr. Chairman, this is about as important a hearing as we can 

have for our country long term in economic growth. I thank you for 

having it. I look forward to our witnesses. 

Mr. BOUCHER. Thank you very much, Mr. Markey. 

The ranking Republican member of the Energy and Commerce 

Committee, the gentleman from Texas, Mr. Barton, is recognized 

for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman, and thank you for holding this hearing. Thank you to our witnesses. I am used to seeing 

Mr. Adelstein as part of the FCC. It is a little bit difficult to recognize him in his new role, but we appreciate you being here. 

I am going to submit my written statement for the record, Mr. 

Chairman. The concern that myself and I think most of the minority have is that we really feel this money should have gone to 

unserved areas before going to areas that are already served, and 

there appears to be quite a bit of evidence that a number of the 

projects that have been awarded have gone to areas that are already being served, and in round 2, there doesn’t appear to be any 

requirement at all that they discriminate between served and 


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unserved. So that would our big objection, that we really try to target these projects to areas that don’t have broadband before we 

begin to give awards to areas that do. 

And with that, I will yield back. 

[The prepared statement of Mr. Barton follows:] 


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Statement of the Honorable Rep. Joe Barton 

Ranking Member, House Energy & Commerce Committee 

Subcommittee on Communications, Technology, & the Internet 

"Oversight of the American Recovery and 

Reinvestment Act: Broadband, Part 3" 

March 4, 2010 

Thank you, Mr. Chairman. This hearing speaks to the basic 

stated reason for the economic stimulus bills: jobs, jobs, jobs. But it 

also speaks to the basic o~jection to it: government waste, waste, 

waste. 

Overseeing the spending of taxpayers' dollars is a fundamental 

responsibility, and we must do everything we can to ensure money 

is not being misspent or simply thrown away. So thank you, Mr. 

Chairman, for calling this hearing, and I also want to thank Assistant 

Secretary Strickling and Administrator Adelstein for making 

themselves available to the Subcommittee. 
8 


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The FCC says that getting high-speed broadband to 100 

million households will cost approximately $350 billion. That's 

billion with a "b." The combined cost of the NTIA's and the RUS's 

programs is $7.2 billion. That's barely 2 percent of the stated total 

cost, but it is not pocket change for taxpayers, and I want to make 

sure that we don't treat any number of billions of taxpayers' dollars 

like it was walking around money. 

So while very real, very large costs are involved, it will be 

difficult to move the needle with these programs, especially if we 

are not very precise in how we spend the money. Luckily, there are 

people in this country who are still willing to risk their own money 

in the hopes of building a strong business, delivering customers 

good service, and making a profit. And if we don't tax them out of 

existence, that will continue, even in a down economy. In fact, the 

industry has invested more than $60 billion in broadband in the last 

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year alone. That is a testament to the competitive and dynamic 

nature of this economic sector and these businesses. 

What disturbs me most are the rumors that some of the funds 

that have been distributed by NTIA and RUS are for projects that 

overlay existing broadband infrastructure. I'm aware of at least two 

projects that appear to be overbuilds, and given the relaxing of the 

rules for the next round of funding from the NTIA, this problem will 

only get worse. What due diligence are the NTIA and the RUS 

doing themselves to ensure money is not being spent where facilities 

already exist? 

When a company makes a decision to dig holes and lay fiber at 

great cost, it does so with the hope and expectation that it will 

recover its investment. When that construction is done in rural, 

remote, and sparsely populated areas, the decision is more risky 

because it is that much harder to make a profit. And when the 

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government subsidizes a competitor, the financial pressures on that 

business are increased, which may lead to cost-cutting measures, 

including job losses. This results in the polar opposite of the stated 

goals of the economic stimulus, these programs, the Congress, and 

the Administration. It certainly isn't '~job, jobs, jobs." 

Everybody here will remember that the Republicans on this 

Committee made an explicit effort to avoid this problem. When we 

marked up the stimulus over a year ago, Mr. Blunt offered an 

amendment to ensure that the stimulus funds went to unserved areas 

before they went to under-served areas. Not one Democrat voted 

for the amendment. That vote was confirmation that the broadband 

stimulus funds were not about quickly getting service to those who 

don't have it, but about subsidizing companies and projects that 

were not otherwise economically viable. 

4 
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Looking back from today, it is clear that the only idea was to 

flood the country with money regardless of whether the arrival of 

that money produced recovery. It was a talking point instead of a 

program. 

Now, I have some sympathy for the agencies that are before us 

today. They were given a huge job and not much time to get it 

done. While there have been-and there will be-some flaws in the 

administration of these programs, the problem is the underlying law 

that some of us knew would finance an explosion of waste. But I 

hope, Mr. Chairman, that as these agencies move forward, they do 

so with the goal of significantly improving broadband penetration. 

If you are going to meet that goal, you must prioritize. 

Ranking Member Stearns and I wrote a Jetter in March to the 

Commerce and Agriculture Departments with some ideas for how 

this should be done. First, we suggested that you prioritize projects 

5 
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in states where broadband mapping is complete. Second, you 

should prioritize money toward unserved areas. No one should get 

"seconds" before others get "firsts." Third, you should prioritize 

money toward projects that are sustainable without additional 

government funding. And finally, you should give priority to 

projects that can increase broadband availability the most for every 

dollar spent. If these guidelines arc followed, as more money is 

granted, we can avoid the criticisms and the overbuild problems that 

we are already hearing about. 

Thank you, Mr. Chairman, and I yield back. 

6 
13 

Mr. BOUCHER. Thank you very much, Mr. Barton. 

The gentleman from Michigan, Mr. Stupak, is recognized for 2 

minutes. 

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. STUPAK. Thank you, Mr. Chairman, for holding this hearing. 

One provision in the ARRA that has generated excitement in 

rural communities is the broadband funding. In the coming 

months, due to a broadband stimulus grant from the Rural Utilities Service, 14 townships in Michigan’s Upper Peninsula with populations ranging from 5,000 to as few as 175 people will begin to 

realize the benefits of high-speed broadband access for the first 

time ever. The private company that received the funding estimates that during construction of the broadband project, approximately 170 jobs will be created in the area. My office has received 

numerous letters from constituents in the area asking one simple 

question: will this project finally give me broadband services? 

While I wish I could respond to every single letter with an emphatic yes, the project will only benefit residents in three of the 31 

rural counties in my district, so more work remains. 

The NTIA will also provide a loan and grant for a Michigan company to build a fiber optic network which will run through nine 

counties in the northern Lower Peninsula. This project will for the 

first time in Michigan’s history connect the Upper and Lower Peninsula with fiber at the Mackinaw Bridge. An immediate impact 

of this fiber connection will be that Michigan Tech University will 

have access to the Internet to high-speed network and will be connected to 210 educational institutions, 70 corporations and 45 nonprofit and government agencies. These projects never would have 

happened without the stimulus broadband funding, so I have a special appreciation for the benefits that the NTIA and RUS programs 

will provide for rural communities. 

However, I want to caution both NTIA and RUS to be diligent 

in distributing this funding in a timely manner but not to rush it 

out the door without ensuring it is going to where it will do the 

most good. I am specifically concerned with NTIA’s rule change 

from 30 days for incumbent rural broadband providers to inform 

the agency of a proposed project that overlaps with their service 

area. I want this proceed to succeed. I do not want us to look back 

and talk about waste, fraud and abuse at the end of this year. 

Mr. Chairman, thanks for holding this hearing. I look forward to 

discussing these issues with our witnesses, how we can work together to maximize broadband deployment throughout rural America. 

Mr. BOUCHER. Thank you very much, Mr. Stupak. 

The gentlelady from Tennessee, Ms. Blackburn, is recognized for 

2 minutes. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and again, I welcome our witnesses. I had the opportunity to visit with them before 


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the hearing started, and I think that they know we are all interested in seeing how quickly broadband is going to get to our State. 

We do know, as Secretary Strickling mentioned, we have had two 

awards in Tennessee and we know that there will be more that are 

going to come forward. 

As we go forward on the Recovery Act, which so many of us have 

really been skeptical of in the first place, and we talked about that, 

it is troubling to hear a steady flow of stories that much of the 

money being spent is duplicative. Furthermore, when these grants 

are subsidizing areas that already have broadband service, which 

in essence is government-subsidized competition, there is the opportunity for lost jobs and overbuilding, which defeats the purpose 

of these funds. It seems odd that we have put aside all this money 

for broadband deployment, have instructed the Administration to 

send the money out to the States without the staff to execute or 

a reasonable timetable in which to do it and to top it all off, we 

are doing all of it before we even have the mapping plan. And as 

I mentioned to you in our conversation, this is something that our 

constituents are aware of. The creative community that is 

headquartered in my State is watching this very closely and they 

are very conversant on this issue and come to us regularly, and we 

are going to look forward to drilling down a little deeper on these 

issues with you, and we are so appreciative of your time of coming 

before us. 

And Mr. Chairman, thank you for the hearing. 

[The prepared statement of Mrs. Blackburn follows:] 


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Honorable Marsha Blackburn (TN-07) 

Committee on Energy and Commerce 

Subcommittee on Communications, Technology, and the 

Internet 

Hearing: "Oversight of the American Recovery and 

Reinvestment Act: Broadband, Part Three" 

Opening Statement 

March 4, 2010 

Thank you, Chairman Boucher for calling this important hearing. This 

serves as a great opportunity to evaluate how the ARRA has been 

implemented and how we can improve upon our mistakes and best move 

forward. 

As we go torward on this Recovery Act, which so many of us were skeptical 

of in the first place, it is troubling to hear a steady How of stories that much 

of the money being spent is duplicative. Furthermore, when these grants are 

subsidizing areas that already have broadband service, which in essence is 

government-subsidized competition, there is the opportunity for lost jobs 

and overbilling, which defeats the purpose of having these funds. 

It seems odd that we have put aside all this money for broadband 

deployment, have instructed the Administration to send this money out to 

the states without the staff to execute or a reasonable timetable in which to 

do it, and to top it all off, we're doing this BEFORE we even have a 

mapping plan. 

I look forward to drilling down a little deeper with Administrator Adelstein 

and Assistant Secretary Strickling and yield back the balance of my time. 
16 

Mr. BOUCHER. Thank you very much, Ms. Blackburn. 

The chairman of the Energy and Commerce Committee, the gentleman from California, Mr. Waxman, is recognized for 5 minutes. 

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

Mr. WAXMAN. Thank you, Chairman Boucher, for holding this 

hearing to continue our committee’s oversight of broadband programs created by the Recovery Act. 

The broadband funding in the Recovery Act is dedicated to building essential digital infrastructure for the 21st century throughout 

the United States and it is creating jobs for today and tomorrow. 

This is the subcommittee’s third oversight hearing to review this 

important Recovery Act program, and it will likely not be the last. 

Although I am confident that the National Telecommunications 

and Information Administration and the Rural Utilities Service 

have been managing this program diligently, the committee will 

continue to fulfill its oversight role going forward. 

I know that the Obama Administration is also committed to conducting rigorous oversight of Recovery Act programs including 

broadband funding. In addition to unprecedented transparency, the 

President’s 2011 budget proposes to reallocate funds to allow specifically for continued NTIA oversight, monitoring grant evaluation 

and reporting essential to meet the highest standards for transparency and accountability in this program. 

At our first oversight on this matter, I stated NTIA and RUS 

have the difficult task of spending the taxpayers’ money quickly yet 

wisely. They would have to act in a decisive manner but so in ways 

that were fair, open and transparent to the taxpayers. As the first 

funding cycle for the Broadband Technology Opportunities Program 

and the Broadband Initiatives Program comes to a conclusion, I believe the agencies have met this difficult challenge. To date, the 

two agencies have awarded over 60 projects totaling over $1.25 billion in grants and loans. The NTIA has also awarded nearly $100 

million in broadband mapping grants to almost every State and 

several territories. The projects are touching every corner of the 

country and range from the creation of a fiber optic network 

throughout Maine to broadband connectivity in 65 communities in 

southwestern Alaska to digital literacy training throughout southern California. BTOP and BIP projects will not only extend and enhance broadband offerings in the United States, they will also 

serve the Recovery Act’s central objective of creating and preserving jobs. I want to commend Assistant Secretary Strickling and 

Administrator Adelstein for their efforts, not to mention the staff 

at NTIA and RUS, in rising to this challenge. NTIA and RUS also 

merit praise for being open to suggestions for improvements. 

I am encouraged by the changes made in the second Notice of 

Funds Availability issued late last year. The reduced administrative burdens on applicants streamline the application process and 

now allow satellite providers to play a role in providing broadband 

service to rural areas. I am particularly pleased with NTIA’s emphasis on so-called middle mile projects and a commitment to provide the best services at the best value to the American taxpayer. 


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I look forward to your testimony today and I appreciate the participation and the active role of our subcommittee. Thank you, Mr. 

Chairman. 

Mr. BOUCHER. Thank you very much, Chairman Waxman. 

The gentleman from Nebraska, Mr. Terry, is recognized for 2 

minutes. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. Thank you, Mr. Chairman. 

I must admit, Mr. Chairman, that the entire process of establishing a policy that will spur broadband deployment in this country seems to be a little backwards. Soon we will have a document 

submitted to Congress by the FCC that will provide us with a national broadband plan. I support the efforts of the FCC and everyone involved in creating such a document but I find it odd and 

backwards that the FCC was instructed to create a national 

broadband policy within the same legislation that appropriated 

over $7 billion to build out broadband. If we acknowledge that our 

broadband infrastructure in America is in need of a national policy 

to make us more competitive with the rest of the world, then would 

it have not made more sense to give the FCC to community the national broadband plan and then legislate policy that would stimulate our economy by creating these incentives needed to build more 

broadband. Instead, Congress rushes to spend money and we have 

the hope that they get it right. 

While I hope to stand corrected, I am sure that we got the 

broadband stimulus right. I am growing increasingly concerned 

that NTIA and RUS are finding entities that want to build 

broadband networks over existing broadband networks. The term 

‘‘underserved’’ is too subjective and it is an excuse to use taxpayer 

dollars to build networks that the government wants to build under 

their terms and conditions. 

Mr. Chairman, over a year ago before the stimulus passed Congress, this subcommittee had the opportunity to use its sacred taxpayer dollars to build networks for Americans that have no 

broadband today. Delivering broadband to unserved Americans will 

stimulate our economy and create jobs. That should have been the 

focus of the federal broadband stimulus program. Today I look at 

the list of projects funded under the first round and I see $7.5 million to the city of Los Angeles, $1.9 million to the city of Boston 

and $25 million to a fund network in Maine that completely overlaps existing fiber network yet many unserved areas received nothing. 

Yield back. 

Mr. BOUCHER. Thank you very much, Mr. Terry. 

The gentleman from Pennsylvania, Mr. Doyle, is recognized for 

2 minutes. 

OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman. 


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Well, we have given you guys a pretty tough task. From hearing 

our members here today, want you to have all this money deployed 

yesterday, but we also want you to do your due diligence to make 

sure that you are not putting projects out there that are later going 

to embarrass you and embarrass all of us. So it is a tough balancing act that we have given you but I think you are up to the 

task. 

I would say to some of my friends, I support deploying broadband 

in areas that don’t have it. That is what we want to do and that 

is the key to the future, but I would also say to my friends that 

many of us who represent urban areas and especially poor urban 

areas have many communities that are underserved. The private 

sector has not put broadband or not sufficient, you know, the upto-date broadband in these areas and people are falling behind, and 

as a result, these people aren’t going to have access to the jobs of 

tomorrow if we are not able to serve these underserved areas also. 

So I don’t think it should be an either-or proposition. Obviously we 

need to do both, and I support both. 

The projects in Pennsylvania so far, the two projects that have 

been awarded, I am happy to see the Pennren project that is going 

to create a high-speed middle-mile network to connect anchor institutions like schools and libraries and universities, community colleges and hospitals and more to each other while helping these 

last-mile companies connect to that high-speed network. The other 

project, which invests in wireless and wireline backhaul, provide 

wholesale access over an existing public safety wireless network in 

my State. Both of these projects I think they make sense. They leverage existing revenues and both serve areas that are in need of 

broadband. 

So with that being said, I look forward to asking some questions 

on the sustainable broadband adoption grants that are coming up 

in round 2. I would just say it is one thing to have connectivity but 

it is another thing to use it and use it effectively to promote education, economic development and improve health care. Broadband 

is the dial tone of the 21st century, Mr. Chairman, and I am looking forward to the testimony of our witnesses and the questions to 

follow. Thank you. 

Mr. BOUCHER. Thank you very much, Mr. Doyle. 

I would like to add the subcommittee’s welcome to the gentleman 

from Alabama, Mr. Griffith, and Mr. Griffith, you are recognized 

for 2 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman, and I have no comment, and I appreciate so much the opportunity to participate in 

the committee. Thank you. 

Mr. BOUCHER. Thank you, Mr. Griffith. We will add 2 minutes 

to your questioning time for this distinguished panel of witnesses. 

The gentleman from California, Mr. McNerney, is recognized for 

2 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. I want to thank you 

for holding today’s hearing to discuss the current status of the 

broadband grants provided by the American Recovery and Reinvestment Act. As we all know, expanding broadband access is crucial to promoting American innovation and improving our economy. 


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I do hope to learn today about how the NTIA is progressing with 

its Broadband Technology Opportunities Program now that the 

agency is accepting a second round of funding distribution proposals. I understand that some changes have been made to improve 

the application process and I am anxious to see how these changes 

have resulted in positive outcomes. It is crucial to fully understand 

where to focus our energies as we continue working to expand 

broadband services and I am eager to see the results of the 

broadband mapping grants. 

Again, I want to thank the panelists, Mr. Strickling and Mr. 

Adelstein, for coming today and I look forward to working with you 

to improve the grant process. 

Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. McNerney. 

The gentleman from Illinois, Mr. Shimkus, is recognized for 2 

minutes. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Thank you, Mr. Chairman, and I want to welcome 

Secretary Strickling and of course Jonathan Adelstein, who we 

worked with a long time ago. 

It is unfortunate that we are doing this and we still don’t address 

what is underserved and what is unserved. We have been trying 

to get a definition of underserved. The opening statements are part 

of this debate. In bills, we try to define that. We weren’t allowed 

to get a definition of that, and that is why we are going to continue 

to have this frustration about where does the money go and are 

people being incentivized by the fact that we have gone into additional debt. That is what we have done with ARRA. We have gone 

into additional debt to help an undefined purpose, whether it is 

unserved or underserved, and the definition of underserved, what 

is that? 

So, Mr. Chairman, I would recommend we clarify this to help us 

as we move forward, and if anything, that should be part of the 

oversight hearing. If we are incentivizing people who already have 

broadband access with taxpayers’ dollars and there are areas of our 

country that have no service, shame on us. And that is simplistic 

and that is clear, and we should get it straight. 

Now, to be on the nicer side, I would like NTIA to come in so 

we can talk about E911, the digital platform, where do we move 

next, but this is key in this whole debate. If 911 services are going 

to go over a broadband platform, we better have broadband deployment in areas where there is not broadband deployment now. And 

as the commissioner from the State of California said in testimony 

here, if we are giving out money before we have a plan, we are 

going to waste money, and I fear that is where we are going. 

Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Shimkus. 

The gentlelady from the Virgin Islands, Ms. Christensen, is recognized for 2 minutes. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman, and I want to 

again thank you, Chairman Boucher, and Ranking Member 

Stearns for holding this third oversight hearing on the broadband 


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programs and initiatives created under the ARRA and for your 

commitment to exercising our oversight responsibilities on these 

programs. The ARRA is making a positive difference in many, 

many areas and we just want to ensure that the same is true for 

broadband reaching unserved and underserved areas. As Mr. Stupak said, the programs and initiatives are particularly important 

to rural areas, and although people don’t think of the Virgin Islands as a rural area, I understand that we are just second to 

Puerto Rico in the lack of Internet access. We are very, very much 

un- and underserved. 

I want to applaud both NTIA and RUS, though, for what I see 

as a continuing great collaboration between the two agencies as 

well as for the outreach you have done, the technical assistance you 

provided, for extending the deadlines, for the simplification and 

streamlining of the process and the other changes that you have 

made to assist applicants and to better meet your mandate. Obviously there are several concerns and I look forward to hearing your 

testimony and being able to interact with you during the questionand-answer period. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. BOUCHER. Thank you very much, Mrs. Christensen. 

The gentleman from Indiana, Mr. Buyer, is recognized for 2 minutes. 

OPENING STATEMENT OF HON. STEVE BUYER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA 

Mr. BUYER. Thank you very much. 

I also would like to welcome Dr. Griffith. I welcome you to the 

Republican Party. I welcome you to the committee. I think your expertise is going to be very valuable to the committee. I also want 

to note that as you go into the next Congress, I am not going to 

be here so I am going to bring this to your attention. Since you are 

sitting way down at the bottom of the dais, what happened in this 

committee was something that we had not seen here in Congress 

for a very, very long time, and it was the distortion of the committee ratios, and this committee’s ratio got distorted because we 

had a new President who said he is going to deliver change that 

America can believe in, and what we have learned in order to deliver the change that he thinks America needs, he needed a process 

that he could jam it through. In order to do that, you control the 

process by manipulating it. So they distorted the ratio on this committee so they could actually achieve the goal of passing a climate 

change bill and passing health care which Americans said they 

don’t want. So what has happened is, some of the Democratic colleagues have folded over onto this side of the aisle. So Republicans, 

which I believe are going to take control of the next Congress, do 

not be upset when you are sitting back on the Democrat side of the 

aisle, okay? I just want to alert you ahead of time. 

The other is, I am going to call you Dr. Griffith. I am going to 

call you Doctor because you understand triage. You take care of the 

worst patients first. We are dealing with what I call a policy of 

shame, a policy of shame because we aren’t even waiting for the 

maps to be done and we are pushing the money out. Why? To make 

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tually leaving people out. So your premise as a doctor in how you 

view the world, you are going to have some challenges here because 

we are actually exercising policies of shame and I think it is absolutely wrong, and I am very, very bothered that we are doing that 

in this committee and I welcome your dimension. 

With that, I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Buyer. 

The gentleman from Ohio, Mr. Space, is recognized for 2 minutes. 

OPENING STATEMENT OF HON. ZACHARY T. SPACE, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Mr. SPACE. Thank you, Mr. Chairman, and thank you, Ranking 

Member Stearns for holding this hearing this morning. 

Before I begin, I would like to welcome my colleague Parker to 

the committee. It is not how I envisioned you ascending to this 

committee but it is good to see you here, Parker. 

To date, the State of Ohio has received a total of six awards 

under the Recovery Act for the broadband programs, four of which 

are RUS programs, two NTIA, and all are worthy. However, the 

NTIA programs deal primarily with—one deals with state mapping, one deals with awareness, both of which are very important. 

The RUS programs deal kind of on a microcosm basis, small programs covering no more than three or four counties, and I don’t 

want to forget that these are very important projects and we are 

supportive of all of them. However, we haven’t seen what we believe is necessary in terms of providing a regional approach, in Appalachian Ohio in particular where regardless of how you define 

underserved or unserved, we will meet that definition. The counties 

that I represent, and I represent 16, almost all of them fall within 

Appalachia proper and we are missing out on the hope that 

broadband provides, both with respect to economic development but 

pertaining to quality-of-life issues as well, health care access, educational access, all areas where we find ourselves at a disadvantage, and we know that broadband fulfills and will fulfill the promise of bridging those divides. 

We have been working with stakeholders in the district, and I 

am optimistic that in spite of the successes that the NTIA and RUS 

have had thus far, you understand and are fully appreciative that 

there is much more work to be done, and I certainly hope that 

some of that work will be done in Appalachian Ohio. 

Again, thank you gentlemen for being here today and for your 

hard work in your capacities. 

Mr. BOUCHER. Thank you very much, Mr. Space. 

We welcome now our witnesses for this morning, a distinguished 

panel consisting of the two individuals who are responsible for administering the $7.2 billion stimulus fund enacted through the 

American Recovery Act. Mr. Larry Strickling is the Assistant Secretary of Communications and Information at NTIA, the U.S. Department of Commerce. Mr. Jonathan Adelstein is the Administrator of the Rural Utilities Service and the U.S. Department of 

Agriculture. From 2002 until 2009, he served as a commissioner on 

the Federal Communications Commission. We welcome both of you. 

This is your third appearance, as I recall, before our subcommittee, 


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and we thank you for taking the time to share your views with us 

this morning on round 1 and your plans for round 2. 

Without objection, your prepared written statements will be 

made part of the record. We would welcome your oral summary 

and ask that you keep that to about 5 minutes. 

Mr. Strickling. 

STATEMENTS OF LAWRENCE E. STRICKLING, ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION; AND JONATHAN S. ADELSTEIN, ADMINISTRATOR, RURAL UTILITIES SERVICE, USDA 

STATEMENT OF LAWRENCE E. STRICKLING 

Mr. STRICKLING. Thank you, Chairman Boucher and thank Ranking Member Stearns and thank members of the subcommittee for 

the invitation to testify today on our programs to expand 

broadband access and adoption pursuant to the Recovery Act. I am 

also very pleased to make what is now the sixth appearance with 

Administrator Adelstein as we make the rounds of oversight hearings among the various committees that are interested in this 

topic, and I think that points out how important this topic is to so 

many people. 

I am pleased to report that by the end of this week, we at NTIA will have awarded over $1 billion in grants to build broadband infrastructure, to equip public computer centers, to increase the 

adoption of broadband services, and to have the States collect data 

for the national broadband map. These investments will help 

bridge the technological divide. They will create jobs. They will improve health care and education in communities across America. 

When I testified here before the subcommittee last September, 

we had just received the first round of applications and were starting our review of more than 1,800 applications that had been submitted. I want to assure you that projects that we have funded to 

date, for those projects the money is well spent and I report to you 

today that the projects we have selected for funding constitute a 

major investment in upgrading our Nation’s infrastructure, creating new jobs and improving our economic health. 

As I indicated, by the end of this week we will have awarded 

over $1 billion in grants. We have awarded grants in all 50 States 

and in several of the territories. This includes 54 broadband mapping grants totaling about $100 million and 49 BTOP grants worth 

more than $960 million. We are funding four types of projects, and 

I would like to give you a brief update on each of those. 

First, the infrastructure projects. These are funds to build out 

improved infrastructure or new infrastructure in unserved and underserved areas, and I look forward to clearing up what is obviously a misunderstanding about exactly what the difference is between unserved and underserved. We will do that in the questionand-answer period. But the point I want to make is that our infrastructure projects are what we call comprehensive community infrastructure projects. We bring high-speed middle-mile infrastructure into communities or regions and then connect key community 

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leges. This core infrastructure once it is built is available to any 

service provider in the area under our open network requirements. 

This feature, which is required of all of our projects and indeed the 

Recovery Act, enables companies who are already present in the 

area who offer broadband to homes and businesses to improve their 

service offerings and reach neighborhoods that are not adequately 

served today. We would need to come back to this in the questions 

and answers, but it is fundamentally not the case that we are subsidizing competitors here. These projects benefit the existing providers because they have access to these facilities to reach customers that perhaps for economic reasons they haven’t been able 

to adequately serve before this project is built. 

So let me give you some examples. In Michigan, we have funded 

Merit Network to build a 955-mile advanced fiber optic network 

through underserved counties in Michigan’s Lower Peninsula. This 

project will build direct connections to 44 anchor institutions like 

libraries, universities, community colleges, but as I noted, this infrastructure is available to all the providers in the area which 

means that this investment can lead to new or improved broadband 

service for more than 886,000 households, 45,000 businesses and 

422 anchor institutions. In north Florida, we awarded $30 million 

to the North Florida Broadband Authority, a collaboration of 14 

north Florida county governments who had assessed that they had 

a need for these services in those counties. It is a 1,200-mile fixed 

wireless broadband network that will directly 300 anchor institutions, but again, existing service providers will be able to use this 

network to offer broadband to an estimated 150,000 households 

and 27,000 businesses. Overall, the infrastructure projects we are 

funding in round 1 will result in the construction of 20,000 miles 

of broadband networks. They will build connections into more than 

5,000 community anchor institutions and they will enable existing 

providers to offer new or improved broadband services to an estimated 10 million households. 

The Recovery Act also directs us to award grants to public computer centers. These grants are important for communities where 

residents cannot easily subscribe to broadband at home due to its 

unavailability or affordability. They can be a vital link to give people access to jobs, health and educational information and to gain 

the skills they need to get jobs and compete in the 21st century 

economy. The 18 projects we have selected for funding will all significantly increase the ability of thousands of Americans to get access to high-speed Internet services at their local libraries, their 

community centers and other local institutions. For example, our 

$6 million grant in South Carolina will enable a computer center 

to be open to the public in every community college in the South 

Carolina Technical College system, will serve 21,000 new users per 

week. Rhode Island, a $1.2 million grant will serve an additional 

7,000 users per week. Michigan, we awarded a $900,000 grant to 

Michigan State University to upgrade computer centers at public 

libraries, serve an additional 13,000 users per week across the 

State. 

Our third group of projects is sustainable broadband adoption. 

These focus on how we can spend a dollar to increase the adoption 

rate for broadband services. Last month, we issued a report anaVerDate Mar 15 2010 02:39 Nov 27, 2012 Jkt 076013 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 E:\HR\OC\A013.XXX A013

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lyzing data collected by our sister bureau, the Census Bureau, on 

the levels of broadband subscription across the country. We asked 

folks why do they not use broadband, and the reasons they gave 

us were, one, they didn’t need or understand the service, or two, 

they found it too expensive. So our sustainable broadband adoption 

projects have therefore focused on addressing the reasons people 

have given for not subscribing. So for example, just this week we 

awarded $18 million to the Cleveland-based organization One Community for a largely Ohio project that will reach over 330,000 people with an awareness campaign. It will train 33,000 people in both 

urban and rural areas and provide households with discounted 

computers. For all these adoption projects, our key focus is on the 

ability of the grantee to measure the level of subscribership in the 

target communities both before the program and at various times 

throughout the program. We want to make sure that the dollars 

are well spent, and it is imperative that we be able to measure the 

program impact to determine which of these approaches to increasing adoption actually work. 

Our last category, broadband mapping. By the end of this week, 

we will have awarded 54 out of a possible 56 grants to States and 

territories totaling approximately $100 million. They will use these 

funds to collect and verify broadband subscription and infrastructure data, and we are expecting the first data by the end of the 

month. This will be used to create the national broadband map, 

and assuming the carriers follow through on their promises to supply the data, we hope to use it in our review of the second round 

applications for infrastructure projects. 

Very quickly, I will just talk about round 2. Earlier this week we 

announced an extension of our March 15th deadline for all infrastructure projects to March 26th. Our deadline for public computer 

center and sustainable adoption projects remains March 15th. In 

round 2, we will continue our focus on funding comprehensive community infrastructure projects, and Administrator Adelstein at the 

RUS will be focusing on rural last-mile projects. I tell you that I 

am confident that we will continue to meet the challenges we face 

between now and the statutory deadline of September 30th, and I 

expect that by the end of this year, as the Recovery Act requires, 

our program will have benefited every State to the extent practicable. 

So thank you for the opportunity to testify, and I look forward, 

I really look forward to your questions. 

[The prepared statement of Mr. Strickling follows:] 


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Testimony of 

The Honorable Lawrence E. Strickling 

Assistant Secretary for Communications and Information 

United States Department of Commerce 

Before the 

Subcommittee on Communications. Technology and the Internet 

Committee on Energy and Commerce 

United States House of Represcntati\es 

Oversight of the American Recovery and Reinvestment Act: Broadband 

March 4. 20 I 0 

Chairman Boucher. Ranking Member Stearns. and Members of the Subcommittee. thank 

you for your invitation to testity on behalf of the l\ational Telecommunications and Information 

Administration (NTIA) on the implementation and successes oftlle Broadband Technology 

Opportunities Program. Last year. Congress allocated $4.7 billion to NTIA to implement two 

Recovery Act initiatives to expand the availability and adoption of broadband Internet accessthe Broadband Technology Opportunities Program (J3TOP) and the State Broadband Data and 

Development Program (Broadband Mapping Program). When we first testified on these 

initiatives. we were at the very earliest stages of conducting outreach and standing up a complex 

and large-scale grant program. Now. one year later. I am gratified to report that NTIA has 

already awarded over one billion dollars for projects that will have a significant impact on 

achieving President Obama's broadband agenda. The Agency is on track to meet our statutory 

obligation to award all grant dollars by September 30, 2010. 
26 


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I. Progress To-Date. 

By the end of this week. NTIA will have awarded 111 Recovery Act grants totaling $1.1 

billion. NTJA has fundcd projects in all 50 States and several territories as well. This includcs 

52 broadband mapping grants totaling approximately $100 million. and 59 BTOP grants worth 

more than $960 million. An additional $270 million in matching contributions has been pledged 

by the applicants themselvcs. These diverse projects are designcd to increase broadband access 

and adoption in unserved and underserved communities across America as well as to create jobs. 

promote broadband training and adoption. and lay the groundwork for sustainable economic 

growth for years to come. 

Over the past twelvc months. we have met the challenge of implementing these critical 

broadband programs. balancing the urgency to address one of the worst economic crises in 

history with the need to demonstrate prudent stc\\'ardship of taxpayer dollars. NTIA is lDcused 

on ensuring that its broadband initiatives are successful and that the projects we fund will have 

an enduring impact in communities across the nation. As described more fully in my testimony. 

we have funded some truly excellent projects that promise to be game changers in the 

communities in which they are deployed. We are working diligently to ensure that projects will 

be sustainable. that taxpayers will get solid returns on their investment. and that the risk of waste 

and fraud \vill be minimal. As we look forward to our second funding round. NTIA is fully 

committed to making all grant awards by the September 30, 20 I O. deadline. 

a. BTOP. 

Of the available grant funds, we will award $4 billion to fund infrastructurc projects to 

expand and enhance broadband capacity and adoption in areas where the need is great. Over the 

course of the program. at least $250 million will be used to encourage sustainable adoption of 

2 
27 


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broadband services. and at least $200 million will enhance public computer center capacity to 

make it easier for those without computers or broadband at home to search and apply for jobs 

and receive workforce training opportunities. These funds not only meet the near-term economic 

objectives of the Recovery Act. but they also will continue to pay dividends far into the future in 

the form of improved education and hcalthcare, heightened innovation. and long-term global 

economic and competitive benefits. 

For the first round of funding. NTIA undertook an extensive and thorough review of 

applications to ensure the prudent use of taxpayer funds. The multi-step process included an 

eligibility pre-screening. an evaluation by expert reviewers to identify the best projects. and a 

thorough top-to-bottom scrubbing during our due di I igence review phase to ensure that only the 

highest quality and most sustainable investments \\ere funded. 

As depicted in the attachment to this testimony, our due diligence includes: 

• performing detailed assessments of the application's proposed project benefits and 

service areas; 

• analyzing the project's technical viability; 

• analyzing the project's budget and financial slIstainability; 

• reviewing audit findings and credit checks: 

• evaluating potential environmental and historic preservation impacts of the project; 

• validating the proposal's feasibility, consistency, and accuracy; and 

• reviewing information supplied by existing service providers to evaluate the served 

status of applications. 

During due diligence review, NTIA staff engaged directly with applicants to resolve concems or 

questions. requested supplemental information in order to support the in-depth application 

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review. and analyzed any requests for waivers from programmatic or statutory requirements. 

think this process worked well to ensure funding of solid and sustainable projects. 

During the first funding round, a compelling common theme - "Comprehensive 

Communities" among strong applications began to emerge. "Comprehensive Communities" 

projects bring high-speed middle mile infrastructure into communities or regions and then 

connect key community anchor institutions such as libraries. hospitals, community colleges. 

universities, and public safety institutions. These types of projects will allow community 

institutions to obtain the robust broadband connections necessary to enable them to deliver 

critical services such as remote medical care. distance learning, online job training. access to egovernment benefits. and more. Building this core infrastructure will also enable providers of 

services to homes and businesses to improve their service offerings and reach neighborhoods that 

are not adequately served today. The comprehensive communities theme also synthesizes well 

the infi·astructure. computer center. and broadband adoption aspects of our broadband program 

into a fully-integrated approach to solving the nation's broadband challenges. 

As of this week, we have funded 34 infrastructure projects. 18 public computer center 

projects. and seven sustainable broadband adoption projects. These projects will improve 

broadband use and capabilities in 34 states and territories. The following provide a sense of the 

breadth and scope of BTOP awards: 

• Merit Network. Inc., REACH Michigan Middle Mile Collaborative Project: An 

infrastructure grant totaling $33.2 million with an additional $8.3 million applicantprovided match to build a 955-mile advanced tiber-optic network through underserved 

counties in Michigan's Lower Peninsula to serve institutiolls, businesses. and households. 

The project will directly connect 44 anchor institutions including libraries, universities. 

community colleges. and community health centers and make broadband more easily 

available to more than 886.000 households. 45.800 businesses. and 422 anchor 

institutions. In addition. the proposcd service area inclUdes 86 government organizations. 

69 K-12 institutions, 63 public library systems, 58 major healthcarc tacilities, and 50 

higher education locations. 

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• Mid-Atlantic Broadband Cooperative Middle Mile Expansion for Southern Virginia 

Project: An inti-astructure grant totaling $16 million with a $4 million applicant provided 

match to add 465 -miles of new fiber to an existing 800-mile fiber netvvork, directly 

connecting 121 K-12 schools, a majority of which are in unserved and underserved areas 

of southern Virginia. The project will spur affordable broadband service to local 

consumers by enabling more than 30 Internet service providers to connect to the project's 

open network and benefit public safety agencies by providing access to the open network 

to improve emcrgency coordination and services. 

• Virginia Tech Foundation, Inc., Allegheny Fiber: Extending Virginia's Open Access 

Fiber Backbone to the Ridge and Valley Middle Mile Project: An infrastructure grant 

totaling $5.5 million with a $1.4 million applicant provided match to construct a II O-mile 

open access fiber-optic network between Blacksburg in Montgomery County to Bedford 

City in Bedford County. The project will spur affordable broadband service to local 

consumers. potentially including up to 98.500 households, nearly 5,400 businesses, and 

128 anchor institutions, by enabling more than 30 Internet service providers to connect to 

the project's open network. 

• Zayo Bandwidth. LLC Indiana Middle Mile Fiber for Schools. Communities. and Anchor 

Institutions Project: An infi'astructure grant totaling $25.1 million with a $10.7 million 

applicant provided match to deploy a 626-mile fiber-optic network. The project will 

provide 413 points of interconnection along the route. enabling last mile providers to 

serve an area with an estimatcd 480,000 households, 49,000 businesses, and almost 4,800 

anchor institutions, including health centers. schools. public safety organizations, and 

government officcs. 

• Kevstone Initiative for Network Based Education and Research's Pennsvlvania Research 

and Education Network Project: An infrastrueture grant totaling $99.7 million with an 

additional $29 million applicant-provided match to build a network of nearly ],700 miles 

of fiber and directly connect 60 critical community anchor institutions in 39 counties 

across south and central Pennsylvania. The award will enhance health care delivery, 

research, education, workforce development. and public safety. 

• MCNC Building a Sustainable Middle Mile Network for Underserved Rural North 

Carolina Project: An infrastructure grant totaling $28.2 million with an additional $11.8 

million applicant-provided match to build a 494-mile network serving almost one half the 

population of North Carolina in 37 cOllnties. The project connects all 58 community 

colleges, the remaining independent colleges, the State's charter schools. 50 free 

healthcarc c1inies, 179 county health agencies and hospitals, 181 libraries and their public 

computer centers, and the three largest state museums. It will also enable service 

providers to directly connect to the network to make broadband more easily available to 

approximately 1.8 million households. 139.000 businesses. and more than 2.400 anchor 

institutions. 

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• North Florida Broadband Authority Ubiquitous Middle Mile Project: An infrastructure 

grant totaling $30.1 million with an additional $9.2 million applicant-provided match to 

bring high-speed broadband service to underserved areas in 14 North Central Florida 

counties through the deployment of an I ,200-mile fixcd wireless broadband network. 

The network plans to directly connect more than 300 community anchor institutions, such 

as public schools. universities. libraries. health care facilities. public safety organizations, 

and government agencies. 

• California Emerging Tcchnology Fund Broadband Awareness and Adoption Project: A 

sustainable adoption grant totaling $7.3 million with an additional $2.1 million applicantprovided match to increase adoption of broadband in vulnerable and low-income 

communities in Los Angeles. The project will provide digital literacy training for more 

than 678.000 low-income individuals. including more than 300.000 youth. The project 

expects to increase houschold adoption of broadband in these high-priority. low-income 

communities by more than 133.000 households. The project also focuses on the 

unemployed. African Americans. Latinos. other ethnic and rural residents. and people 

with disabilities. whose technology usage lags significantly behind the rest of the State. 

• New York State Education Department BroadbandexpressrWyourlibrary Public Computer 

Center Project: A public computer center grant totaling $9.5 million leveraged with a 

$5.4 million applicant match to provide approximately 860 computers in 30 libraries and 

five mobile training centers across 41 economically distressed Upstate New York 

counties. The project is designed to address unemployment; a lack of affordable 

broadband service, education. training. and technical support; and to increase access to 

essential e-government and other online resources necessary to facilitate work, health 

care. education. and citizenship. The grant will allow the State Library to extend library 

hours. provide 2417 access to job search resources, and serve an estimated 50.000 users 

per week system-wide. 

• DeltaCom. Inc. East Tennessee Middle Mile Fiber Broadband Project: A $9.4 million 

broadband infrastructure grant with an additional $2.3 million applicant-provided match 

to build a 544-mile high-capacity fiber-optic broadband network that will provide highspeed connections for more than 50 community anchor institutions in five Eastern 

Tennessee communities. fi'om Chattanooga through Knoxville to Johnson City and 

Bristol. The project expects to spur more af10rdable broadband Internet access for over 

34,000 households. 5.000 businesses, and 270 anchor institutions by allowing local 

Internet providers to connect to the project's open network. 

• Level 3 EON Expanding Broadband Across Texas Project: A $4.7 million broadband 

infrastructure grant with an additional $1.6 million applicant-provided match to build 17 

new access points on Level 3's existing broadband netv,iOrk. These additional points of 

interconnection will offer broadband speeds between 50 Mbps and 10 Gbps on an open 

and nondiscriminatory basis to local Internet service providers. enabling them to provide 

enhanced broadband capabilities to as many as 400.000 households. 2 J .000 businesses. 

and 214 community anchor institutions, including schools. government agencies. and 

healthcare providers. 

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As stewards of taxpayer funds, we are determined to invest every dollar wisely. My goal 

is to not make a bad grant and you have my assurances we have the processes and protections in 

place to prevent that from happening. Our review process helps guard against investments that 

are not cost-effective or where it appears that the applicant cannot Ilnancially sustain the project 

beyond the life of the grant. Another aspect of responsible stewardship of the BTOP funds is to 

provide every opportunity for our grantees to be successtltl through post-award orientation, 

training, and technical assistance. 

b. Broadband Mapping Program. 

The Recovery Act directs that up to $350 million ofBTOP funding be used le)r the 

development and maintenance of a national broadband inventory map. We have now awarded 

52 of a possible 56 grants, totaling approximately $100 million. We will award the remaining 

four grants shortly, and we are expecting the states to submit the first data sets by the end of this 

month. We are partnering with the Federal Communications Commission (FCC) to utilize these 

data in the National Broadband Map, which will be available to the public no later than February 

2011. The map will educate consumers and businesses about broadband availability, enable 

broadband providers and investors to make better-inlormed decisions regarding the lise of their 

pri\'ate capital. and allow Federal, State. and local policy-makers to make more data-dri\'en 

decisions on behalf of their constituents. 

II. Round Two. 

Earlier this week, NTIA announced an extension of the March 15, 2010 filing deadline 

for all infi'astructure projects to March 26, 2010. The deadline for filing applications lor Round 

2 PCC and SBA projects remains March IS. 20 I O. 

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The Rural Utilities Service (RUS) and NTlA issued separate NOFAs in Round Two to 

allow each agency to focus on its distinct funding objectives. We took this action in response to 

feedback received from Round One applicants. and it will help speed application review. RUS 

and N'flA will continue to collaborate to maximize the impact of available federal funding. to 

best leverage the experience and expertise of each agency. and to avoid duplication in projects 

funded by the two agencies. 

NTIA also made a number of targeted changes to increase efficiency. sharpen STOP's 

funding focus. and improve the applicant experience. Based on our Round One experience. 

NTIA formally adopted the "comprehensive communities" approach undcr which we will give 

review and funding priority to infrastructure projects that emphasize middle mile broadband 

capabilities offering new or substantially upgraded connections to community anchor 

institutions. NTIA also made adjustments to the online application that will streamline the intake 

of information and reduce applicant burden. These steps include eliminating the joint NTIARUS application. increasing the amount oftillle available to applicants to submit due diligence 

materials. and eliminating or altering a number of previously required attachments. These 

improvements. coupled with significantly upgraded applicant support services and bolstered 

back-office portal functionalities. will improve the applicant experience and facilitate the 

application process this time around. 

Early indications suggest there will be a strong demand for Round Two funding. In 

January, we established BroadbandMatch. which allows applicants 10 identify potential pr~iect 

partners. This online tool allows a broadband infrastructure provider to identify potential project 

partners. like universities. hospitals. or libraries for a proposal to bring high-speed Internet 

service to their facilities. More than 1.200 entities have signed up for SroadbandMatch, 

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including anchor institutions. small and disadvantaged businesses. non-profits. public safety 

entities. municipalities, tribal organizations, technical experts. and others. I have high hopes that 

this forum will lead to truly comprehensive projects that meet the broad needs of entire 

communities, which is the centerpiece of Round Two funding. In addition, we are encouraged 

by the number of applications that applicants have started online, including many from new 

applicants who did not participate in Round One. These early results are encouraging and show 

that there is keen interest in the grant program across the stakeholder community. 

III. Oversight and Compliance. 

As Round One wraps up and Round Two starts, we arc also making headway on of the 

necessary oversight and compliance ofawardees. Since the inception of the program, NTiA has 

been working with the Department ofCommercc's Inspector General to design thc program in a 

manner that minimizes the risk ofwastc, fraud, and abuse. NTIA has developed rigorous post 

award processes for grants including: 

• training sessions for applicants and awardees; 

• oversight of every awardee's project progress; 

• auditing of an awardee's grant administration; 

• requiring extensive reporting Irom awardees; and 

• developing an outline of best practices. 

NTIA is committed to cnsuring that taxpayers' money is spent wisely and efficiently. 

NTJA has been working to develop comprehensive monitoring, reporting, and oversight 

systems to ensure that BTOP funds fulfill the purposes of the Recovery Act. We are using a risk 

assessment model to determine the level of monitoring required for each project. Recipients that 

expend $500,000 or more of federal funds during the fiscal year will be required to submit an 

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organization-wide financial and compliance audit report. For-profit awardees will be required to 

comply with the program-specific audit requirements. 

In addition. grant recipients will be required to report quarterly and annually on the 

progress of their project and their use of grant funds. Infrastructure awardees will be required to 

demonstrate progress in achieving important programmatic goals such as broadband availability. 

adoption. transmission speeds, and prices associated with their projects. Recipients of Public 

Computer Center funding will be required to provide information on the expansion of their 

facilities and training provided to their users, and Sustainable Broadband Adoption recipients 

will report information on their success in stimulating dcmand and adoption. In addition to these 

BTOP-specific reporting requirements. grant recipients must comply with Recovery Act 

reporting requirements that include detailed infonnation regarding the use of funds and jobs 

created. 

IV. Short- and Long-Term Benefits. 

The lessons learned fl'OI11 the BTOP-funded projects and broadband mapping efforts can 

be leveraged to help improve the nation's broadband landscape in the coming years. In the 

short-term. the metrics associated with these programs are just starting to materialize. The first 

awardees are in the early stages of turning their funded proposals into reality. and will file their 

initial reports next month: mapping grantees will provide their first data sets at the end of the 

month. I think. however, that it will be important to measure the results against the baseline, 

capture the lessons learned, and share the information so that successes can be replicated. 

In the short-term. the Department ofComI11ercc's investments will help create thousands 

of jobs for building infrastructure, installing computers. and developing and implementing 

oLltreach to broadband consumers. At this early stage, it is impossible to predict the precise 

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number of jobs the BTOP program will create. However. the jobs range from manufacture of 

fiber optic cable and other high-tech components, to the stringing of that fiber from pole-to-pole. 

to trenching, and to the installation of broadband networking hubs. Computer centers need to be 

built, and new computers and related hardware and software will be installed and networked into 

public computing centers in the short-term as well. Outreach strategies need to be planned and 

executed. and trainers will need to be trained how to bcst provide communities with needed 

broadband information and skills. The data we collect in the near-term will show how the 

broadband initiatives contributed to the overall Recovery Act economic stimulus activity. It will 

also start establishing the measurable impact these projects will have. 

In the longer-term, BTOP investments will have secondary benefits that will be critical to 

our nation's overall economic future. BTOP-funded projects will help bridge the digital divide, 

improve the nation's education, provide improved access to better health care, heighten safety 

and security, increase employment options, foster innovation, and boost economic development 

for communities held back by limited or no access to broadband. These investments will also 

help preserve America's economic competitiveness in the world, and will accrue benefits 

especially to disadvantaged. rural. and remote Amcrica. The ripple effccts of these broadband 

investments could be positively transformative. 

V. Looking Ahead, 

Once the application window for Round Two closes. NT1A will again carefully review 

and analyze the merits of each application, based upon the funding priorities and requirements 

outlined in the second Notice of Funds Availability. Looking torward, J am confident that the 

team will continue to meet the challenges it will face between now and September 30th . By the 

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end of the fiscal year. as the Recovery Act requires. our program "ill have benefitted every state 

to the extent practicable. 

As you know, the Recovery Act does not provide authority or funding for administration 

and oversight ofBTOP-funded projects beyond the end of Fiscal Year 2010. For this reason. the 

President's budget set forth authority and funding for NTIA to administer and monitor the 

execution of grant projects and carry the program to its conclusion. These funds are vital to 

ensuring that BTOP projects are seen to their successful completion. and I look forward to 

working with you to achieve this important objective. 

Thank you again for the opportunity to testify. I alll happy to answer your questions. 

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38 

Mr. BOUCHER. Thank you very much, Mr. Strickling. 

Mr. Adelstein. 

STATEMENT OF JONATHAN S. ADELSTEIN 

Mr. ADELSTEIN. Mr. Chairman, Ranking Member Stearns and 

members of the committee, it is great to have the opportunity to 

testify. It is great to be back. I certainly appreciate the leadership 

of this committee in promoting rural broadband deployment and 

deployment across the country. This committee has been really on 

top of bringing this back to the national agenda where it belongs. 

As Congressman Markey indicated, it was left behind for too long 

and I appreciate your resources and leadership. 

On behalf of our secretary, Secretary Vilsack, and our Under Secretary, Dallas Tonsager, I do want to express the high priority that 

the USDA places on getting this job done and getting it done right. 

Broadband is one of the central pillars of the Secretary’s view of 

supporting the future of rural America, and it is a special honor 

to appear with my friend and partner in this, Larry Strickling. He 

is such an outstanding leader. We work hand and glove on every 

aspect of this and will continue to until we complete this effort. Today I am happy to announce that the USDA is awarding $254 

million for 22 outstanding projects in 18 States. This brings our 

total to date of awards to over $895 million for 55 projects in 29 

States and territories. These awards are going to bring broadband 

to hundreds of thousands of homes, businesses and key community 

anchor institutions. 

Just in terms of this committee alone today, there have been previous awards made to members of this committee’s districts but today’s announcement includes an $11.4 million loan-grant combination in Congressman Hill’s district that will serve 52,000 homes, 

11,000 businesses and 135 community facilities. Today’s announcement also includes an $8.3 million in Congressman Upton’s district 

that will provide fiber to over 1,400 homes and it provides $2.3 million in Congressman Space’s district that will deliver broadband to 

11,000 homes that currently lack service, and I know this is our 

second award in your district. Also, we had the Consolidated Electric Cooperative get an award recent in Appalachian Ohio. It 

should also be of interest to Chairman Markey because it connects 

all of the substations of CEC’s electric grid so they can provide 

smart grid, a real model for the future of rural electric cooperatives. 

Now, in this first round, the number of applications, as you 

know, is higher than expected, and they underwent a very rigorous 

review process. We had to ensure that taxpayer funds were invested wisely. Applicants that didn’t receive funding received a letter explaining why, and we have streamlined and refined the application process for the next round which should speed the assessment process. As you know, we have indicated that we announced 

our NOFA on January 15th. On February 16th, we opened the window. We are giving applicants more time this round to apply and 

to be notified about what the rules are the second time around. The 

original application deadline was March 15th, as Secretary 

Strickling noted. We have extended that. We went until March 

29th in order to encourage applicants that were notified late in the 


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39 

process to reapply and also to give everyone time to submit the 

best possible materials. 

We have also recently issued clarifications regarding the extension of service to Native American lands, which remains a very 

high priority for this Administration because they are among the 

most underserved in the country. 

Now, in response to your feedback and issues raised by stakeholders, as you indicated, Mr. Chairman, we have made major 

changes in our second NOFA. First, RUS and NTIA published separate but very coordinated NOFAs so applicants now can choose 

which program better suits their needs. Under NOFA 1, the only 

applicants eligible for 100 percent grants were those that were remote or 50 miles away from a city or town, although their applicants were limited to a grant of no more than 50 percent of the 

project cost. And as you noted, Mr. Chairman, in response to concerns raised by this committee, among others, and you, we eliminated the special funding category for remote projects. We heard 

you and we responded. RUS now offers a 75/25 grant-loan combination as a base instead of our 50/50 loan-grant combination, so we 

spilt the difference between 100 percent grant for remote areas and 

the 50 percent for non-remote areas, and to stretch our funds and 

our impact, we provided incentives for higher loan components and 

higher contributions of outside capital. Now, we can increase that 

grant amount up to 100 percent for areas where it is needed most, 

the most rural areas or the areas that are hardest hit by the economic downturn. RUS will focus on last-mile projects that are really urgently needed in many rural communities. They connect directly to homes, businesses and key community anchor institutions. 

NOFA 2 allows us to have more flexibility to award points for 

projects that target essential community facilities, promote rural 

economic development and support persistent poverty counties or 

chronically underserved or unserved areas, and we are offering additional funding opportunities in the second NOFA. We are allowing satellite providers to compete for around $100 million to provide equipment and installation for rural premises that remain 

unserved after all other Recovery Act funds are obligated, and 

awardees of either NOFA can apply for technical assistance grants, 

to develop a regional broadband plan or to provide broadband to 

rural libraries. 

We are on track to obligate the $2.5 billion the broadband authority provided to us by September 30. There was almost $900 

million awarded to date by RUS. We have funded a wide range of 

technologies from wireless to wireline and we have funded a broad 

range of applicants from wireless broadband companies to cable 

companies to incumbent telecos. Our ability to offer these programs 

with these great economic opportunities for the future is really a 

result of your work and your support. It is an honor to work with 

you on behalf of the 50 million Americans in our rural communities, and I appreciate your continued oversight and how carefully 

you have overseen this program and look forward to your questions. Thank you. 

[The prepared statement of Mr. Adelstein follows:] 


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Statement of Jonathan Adelstein 

Administrator, Rural Utilities Service 

United States Dellartment of Agriculture 

Before the Communications, Technology and the Internet Subcommittee 

U.S. House of Representatives 

March 4,2010 

Chairman Boucher. Ranking Member Stearns, and distinguished members of the Committee. 

thank you for the opportunity to testify on the U.S. Department of Agriculture's 13roadband 

Initiatives Program (HIP). 

Your continued guidance and SUpp0l1 as we implement this critical program is deeply appreciated. 

The Obama Administration and Secretary of Agriculture Tom Vilsack share your goal of 

improving access to affordable broadband service. As members of this Committee know, 

broadband connectivity lays the foundation for economic development. Broadband can level the 

economic playing field. particularly for rural areas. and provide access to national and international 

markets. and help new. small and home-based businesses to thrive. It delivers health care services 

through tclellledicine and offers educational opportunities through distance learning. 

Building better networks to improve access to aflol'dable high speed Internet service is not only 

central to jumpstarting our rural economy by creating urgently needed jobs now. but it will 

enhance the quality oflife for rural families and businesses for years to come. On behalf of 

Secretary Vilsack. I am here to say that USDA stands prepared to fulfill its rural broadband 

mandate outlined by Congress and the President. 
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Economic uncertainty has been the hallmark of this past year. The programs Secretary Vilsack, 

the Administration and this Congress have put into place-renewable energy, expansion oflocal 

and regional food systems, regional collaboration and investment in broadband--are key pillars 

of USDA's focus toward rebuilding and revitalizing economic growth in rural America. 

We have worked side by side with our partners at the National Telecommunications Information 

Administration (NTIA) and the Federal Communications Commission to fulfill the President's 

vision for promoting broadband access nationwide. Assistant Secretary Lawrence Strickling has 

been an outstanding and visionary partner throughout this process. And the Federal 

Communications Commission has been an active contributor to this effort as well. Together, we 

have made significant advances since this new program was enacted last February. We 

recognize that there is much work left to do still. 

Status of Awards 

Under the first funding notice, RUS and NTIA received over 2200 proposals from applicants 

wanting to improve broadband service. Applicants requested over $28 billion in funding. Of 

this total. 401 applications were B1P-only requesting a total of$4.974 billion: another 833 

applications were joint applications to BIP and BTOP totaling $12.791 billion. 

In December, we began announcing the awards under the first round of Recovery Act broadband 

funding. To date. RUS has announced over $895 million in funding for 55 projects in 28 states 

and 1 territory and expects to announce additional awards shOlily. We are enthusiastic about 

potential of the projects anlJounced thus far. Funding has been awarded to a diversity of providers 

- from small telecommunications companies. wireless providers. rural electric and telephone 

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cooperatives to cable providers - to build out our rural networks, creating urgently needed jobs in 

rural America. These projects feature a variety of internet technologies - ti'om wireline to wireless 

- providing quality internet connectivity to hundreds of thousands of homes. businesses and key 

anchor institutions in rural cOlllmunities. 

On January, 15,20 I 0, RUS and NTIA announced their second NOFAs for the BIP and BTOP 

programs, opening the windows for accepting applications on February 16th • In the interest of 

ensuring that Recovery Act funding is made available in the most equitable manner, RUS 

extended its deadline for application submissions from March 15 to March 29, 2010. We wanted 

to give applicants the maximum opportunity to apply and to strengthen the quality of their 

applications. 

As of March 1, RUS had sent over I OOOletters to non-selected NOFA I applicants. providing 

them with an opportunity to reapply under NOF A 2. These notifications also supplied applicants 

with information as to why their applications were not successful under NOrA l. The most 

coml11on reasons applicants were not funded were that they applied as proposing to serve 

--renlote" arcas~ \Io,:hen in fact the areas they were proposing to serve did not nlcct the remote 

definition. The second reason was that applicants requested a grant amount greater than the 50 

percent allowed for non-remote applicants. Both of these provisions have changed in the second 

NOFA. and we are encouraging those applicants not funded to resubmit their applications. 

The applications and associated proposed maps of coverage areas have been and will continue to 

be posted on www.broadbandusa.!!ov for public review and comment. 

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The challenges that RUS encountered while revie\\ ing the applications for the first round of 

funding. as well as feedback we received from you and others. resulted in development of 

alternative approaches to simplify the application process. After hearing concerns raised by 

members of this Committee and others. we made significant changes in the second BIP NOFA. 

We have addressed all onhe major concerns that were raised. and believe this is a strong NOFA 

that will effectively address the needs of rural America. 

Changes in NOFA II 

The first NOF A was published jointly by USDA and the DepaJiment of Commerce. The NOFA 

required that all "rural"' applications had to be filed with USDA or jointly with USDA and 

Commerce. Both USDA and Commerce received comments from the public and Hill over the 

':joint"' application process. As a result. in the second round. USDA and Commerce published 

separate. but coordinated. NOFAs. Applicants must choose between BTOP and BIP. 

Under the first NOFA. USDA offered either a 100 percent grant product for "remote" rural areas 

or 50/50 loan/grant product for non-remote areas. USDA now offers one product. which is a 

75/25 grant/loan combination with incentives for higher loan components and greater outside 

leverage. 

For the second NOF A, USDA eliminates the separate funding bucket for "remote" projects. as 

suggested by many members of this Committee. Instead. USDA offers higher points lor projects 

in the most rural areas. USDA also allows applicants to request a grant amount greater than the 

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standard 75 percent grant. up to 100 percent grant. This waiver process will allow USDA to 

make viable awards to the most rural areas and those areas with density issues, low median 

income, and high unemployment. 

With scparate NOFAs and no joint applications. USDA and Commerce have elected to 

concentrate on specific types of projects. Commerce will focus on Middle Mile projects that 

connect community anchor institutions and USDA will focus on Last Mile projects. which are 

urgently needed in many rural communities and which directly connect to homes, businesses and 

key community anchor institutions. USDA will finance Middle Mile projects for current RUS 

borrowers and grantees. 

The second NOFA also provides more flexibility. For example. USDA can add priority points 

for projects that provide significant assistance to essential community facilities. promote rural 

economic development. and support persistcnt poverty counties or chronically underserved areas. 

In addition, in the unexpected event that we receive an insufficient number of high scoring 

applications, RUS can elect a "second review" ofmcritorious applications which meet Recovery 

Act objectives. USDA may also accept an application from Commerce which it cannot fund but 

appears meritorious under USDA's BIP program. 

Streamlining the application process 

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USDA received many comments on how to imprO\e the application process. These suggestions 

led to the decision to issue separate but coordinated applications and to increase efficiency by 

eliminating the two-step application. 

In addition. applicants previollsly had to list all Census blocks in their application. USDA's 

mapping tool now does this for them. 

Additional Fnnding Opportunities 

To ensure that all Recovery Act BIP funds are judiciously utilized. additionallunding 

opportunities will be offered to ensure the long term benefits of the program in rural America. 

The second NOFA allows satellite providers to compete for approximately $ I 00 million (0 

provide equipment and installation to rural premises-customers-that remain unserved after all 

other Recovery Act funds are obligated. 

Awardees of both NOFAs. and applicants under NOFA 2. can apply for Technical Assistance 

grants for the development of a USDA-approved regional broadband plan. This will further 

broadband deployment and rural economic development beyond projects funded by the 

Recovery Act. Indian Tribes are encouraged to apply for the Technical Assistance grants 

whether they are awardees under both NOFAs or applicants under NOrA 2. 

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Awardees under either NOF A may also apply for grant funds (0 provide broadband connectivity 

to rural libraries funded by USDA's Community Facilities program. 

Modification of Eligible Service Areas 

In this second NOFA. RUS refocused efforts on rural economic development and unserved rural 

areas. As a result, any rural area where at least 50 percent of the premises in the area lack access 

to broadband service at the rate of 5 Mbps (upstream and downstream combined) will qualify for 

funding. USDA has determined that these areas lack high speed broadband service sufficient to 

facilitate rural econom ic development as required by the Recovery Act. Service ofTerings must 

still be within proposed funded service areas which are at least 75 percent rural as required by 

the Recovery Act. 

Cost Effectiveness 

To effectively leverage Recovery Act broadband funds for Last Mile projects. RUS will limit 

Federal assistance to no more than $10,000 per premise passed, unless a waiver is granted. In 

review of waiver requests, RUS will consider whether the application provides assistance to a 

significant number of critical community facilities. supports a recognized rural regional 

development plan. supports public safety projects, enhances broadband service to rural libraries. 

or supports persistent poverty counties or substantially unserved areas, including Indian country. 

If the waiver request is denied, any award may be made contingent on improving cost 

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effcctiveness. or the application may be placed in the second review process and the Applicant 

\vill have an opportunity to revise its proposal. 

Outreach Efforts 

Outreach to the general public continues to focus on distribution of information to national. 

regional and local print and broadcast media. Additional information for the public has been 

provided in testimony before various Federal committees. such as this hearing. USDA staff have 

also participated as both panelists and keynote speakers for associations. state and regional 

governmcnts, and at inter-agency functions. 

Following the announcement of the second NOF A, RUS and NTIA conducted nine additional 

workshops for the general public to help prospective applicants better understand the mission, 

scope. process and requirements of the BlP and BTOP programs. The FCC was also invited to 

participate to provide information for prospective applicants regarding broadband technology 

and licensed spectrum. RUS and NTIA also jointly hosted six Pre-Workshop Outreach Events 

targeted toward vulnerable populations. including minority groups and tribal entities who 

otherwise might not fully paliicipate in the Recovery Act broadband programs. 

Our goals continue to be to modernize our nation's inf1-astructure, create or save jobs and begin 

addressing many of these long-neglected challenges, Secretary Vilsack directed the USDA's 

Economic Research Service (ERS) to examine the economic effects of having broadband access 

in rural communities. The result of this effort was the publication about six months ago of a 

report titled "Broadband Internet's Value for Rural America." This report concluded that 

employment growth was higher and non-farm private earnings greater in counties with a longer 

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history of broadband availability. In addition. this report found key benefits of broadband access 

in rural communities. such as access to online course ofrerings for students in remote areas and 

the access to telemedicine and telehealth services for patients living in rural areas in need of 

urgent and often specialized care. Agricultural producers and farm based businesses rely on 

internet access to conduct sales transactions. marketing and adveliising. monitor real time 

changes in the commodities markets and track global trends that impact US crop prices to stay in 

business. The direct benefits of broadband to the rural economy are tangible and significant. 

The report also clearly notes that areas with low or dispersed populations. or demanding terrain. 

generally have difficulty attracting broadband service providers. These characteristics. as you 

know. can make the fixed cost of providing broadband service too high to make a business case 

for investment. That is also where our years of expertise with a variety oftcchnologies have a 

distinct advantage. 

With the over $895 million in funding awarded by RUS. we have funded a diversity of 

technologies and a diversity of applicants to build out these broadband networks. This program 

is proof that leadership. policy support, resources. and community support overcome harriers to 

broadband expansion. 

We welcome input from the Members of this Committee as we turn our attention to NOFA 2. 

We will continue to ensure that implementation of the Recovery Act broadband initiative is a 

collaborative and coordinated effort with our partners at the NTIA. and we wiI! continue to work 

to make this process as transparent and efficient as possible. The purpose of the Recovery Act is 

to spur job creation and stimulate long-term economic growth and investment. To date, we 

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remain on track to obligate the $2.5 billion in broadband budget authority by September 30, 

2010. 

Our ability to offer programs to create economic opportunity and improve the quality of life in 

rural America is a result of your work. It is an honor and privilege to work with you on behalf of 

the 65 million Americans in our rural communities. We look forward to working closely with 

Congress and our federal partners throughout the Obam3 Administration in making affordable 

broadband service widely available throughout rural America. 

Thank you again for inviting me here to testify and I will be glad to address any questions you 

have. 

10 
50 

Mr. BOUCHER. Thank you very much, Mr. Adelstein. 

Mr. Strickling, we appreciate your sharing those thoughts with 

us this morning. 

I have a question for both of you. I think to the extent that you 

provide guidance to the applicants from round 1 who were not successful, it might improve the quality of the applications you get for 

round 2 and those that were particularly close that almost made 

the award in round 1 should know that fact so they are encouraged 

to apply again, and those might be some of the best applications 

you get. So Mr. Strickling, Mr. Adelstein, what are your plans to 

provide that kind of guidance? 

Mr. STRICKLING. Thank you, Mr. Chairman. So in terms of round 

1 feedback, first off, we did not use a point system to decide whether we would fund or not. We used it to screen applications, and 

then once projects went into due diligence, we worked with the applicant to see if the project met our goals, did it deliver the benefits, was is sustainable, did it have experience management. So 

about 400 applications went into due diligence. Fewer than 100 will 

be funded. But I will tell you, that would be the group that you 

would call having been near the goal line, and through their discussions with us through the due diligence process, they have 

learned a tremendous amount about their applications, the 

strengths and weaknesses. 

Mr. BOUCHER. So you have already given them that kind of guidance just as a part of the round 1 process? 

Mr. STRICKLING. Yes, they will be well prepared to come back in 

round 2, and we hope many of them do. 

Mr. BOUCHER. Okay. That is good. 

Mr. Adelstein. 

Mr. ADELSTEIN. We sent out a thousand letters by February 26th 

offering reasons, exact reasons why applications weren’t funded. 

Now, we are still getting questions about that. We have a help desk 

that offers more detailed explanations to those who have questions 

and we are striving to answer those calls as quickly as we can. We 

will continue to be as responsive as we can. We are going up to put 

up materials on the Web, and we have, to explain some of the 

issues in the first round. We are really urging applicants to reapply 

in round 2. We think it is crucial they come back to us. We addressed a lot of the major factors that were affecting applicants in 

round 1, and round 2 is really a different ballgame, so we want 

them to focus on what is in the second NOFA and to get at it that 

way. 

Mr. BOUCHER. All right. Thank you. I mean, if an applicant, Mr. 

Adelstein, that was not successful in round 1 has specific questions, 

do you have somebody they can interact with? Is there a process 

for doing that? 

Mr. ADELSTEIN. There is. We have our help desk, and we will answer calls, and we have gotten a lot of them about people trying 

to ask for an explanation as to what was in their letter, and we 

have provided that and explained that to them. We plan to do more 

of that. 

Mr. BOUCHER. Thank you very much. 

Mr. Adelstein, you have a requirement for round 2 that in order 

to be eligible for assistance from RUS, the project must cost no 


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more than $10,000 per home passed, and let me just express some 

real concern I have about that requirement. I represent and I know 

that many other members do districts that are mountainous where 

communities are a long way from the nearest municipality and 

they may be ringed by mountains, meaning that literally you have 

to cross mountains with infrastructure and that necessarily elevates project costs, and these are some of the communities that 

really was the purpose of the stimulus legislation to serve, and I 

am concerned they are going to be disqualified. Now, I know you 

have a waiver procedure that is attached to this $10,000-per-home 

limitation. Tell me about how generous you intend to be with that 

waiver procedure. I am looking for some reassurance that these 

very deserving communities that are just expensive to serve are not 

going to be disqualified. 

Mr. ADELSTEIN. We certainly understand your concern. The goal 

in the stimulus package is to stretch the tax dollars you have given 

us as far as possible, and we aim to strike a balance between expanding service and encouraging cost-effective investment. I understand that more remote areas are more expensive to serve, and 

that is why we do have the waivers that you indicated. Now, our 

waivers do allow for going above that amount if there are persistent poverty or chronically underserved areas, for regional development, which some members have talked about today, connecting 

rural libraries, tribal areas, community facilities. So we will be 

looking at particular issues like that. 

Mr. BOUCHER. All right. But you do intend to apply some waivers 

in those instances where the community just by virtue of distance 

or terrain can’t meet that $10,000 standard? 

Mr. ADELSTEIN. We will have to evaluate each waiver request as 

it comes in based on the criteria that we put in the NOFA. 

Mr. BOUCHER. Mr. Strickling, let me ask you this question. Did 

the non-discrimination and interconnection requirements that were 

a part of the NTIA set of standards discourage applicants from applying for benefits under your program? 

Mr. STRICKLING. There is little evidence of that in the sense that 

we received over 2,200 applications between our two programs in 

round 1. We did hear from some of the larger carriers that not just 

those provisions but I think the overall complexity of the program, 

the fact that this was open to such scrutiny may have discouraged 

some of them in round 1. I don’t remember hearing any carrier tell 

me it was solely because of the interconnection obligations that 

that was a reason they didn’t apply. I have heard other reasons 

from other carriers. Some of them are reconsidering, I know, in 

round 2. 

But I want to come back on this interconnection issue. The fact 

that we require interconnection in our projects I think is an important one to putting to rest this idea that we are overbuilding or 

building duplicative facilities. We are putting in these high-speed 

middle-mile facilities that will serve an entire region and a set of 

communities, and again, because they are open to everybody, every 

provider can interconnect with them and offer service. So if you are 

AT&T or a small incumbent telephone company, if you are the local 

cable company, perhaps you haven’t been able to serve a large anchor institution in your community because the anchor institution 


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didn’t have the $30,000 you were going to charge to build the fiber 

out to the hospital. 

Mr. BOUCHER. Well, okay, Mr. Strickling. 

Mr. STRICKLING. We will pay for it and then the incumbent can 

then use that. 

Mr. BOUCHER. I understand that completely. You are going to, I 

am sure, get questions on that very subject from some of my colleagues momentarily. 

My time has expired. We have a series of recorded votes pending 

on the House Floor, three votes in all, and this will take about 45 

minutes. So stay close. We are going to adjourn until those votes 

are concluded, and we will pick up momentarily. 

[Recess.] 

Mr. BOUCHER. The subcommittee will reconvene. I thank our witnesses for their patience. 

Mrs. Christensen from the Virgin Islands, you are recognized for 

5 minutes. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. I am not sure I 

have all my questions together. 

Let me ask this, and this would really go to Assistant Secretary 

Strickling. I have a letter that is actually dated yesterday from 

U.S. Telecom and they were suggesting a screening process that 

would again with the intention of ensuring that broadband really 

gets to those unserved areas, a screening process based on the 

presence of existing locations where connection to the Internet 

could be readily obtain, where they recommend relying on an Internet gateway and that the middle-mile project funding be focused on 

support and construction of new facilities extending from that gateway to the community institutions and households, et cetera, but 

not redundant with facilities or duplicating the process with those 

that already exist. When you were doing your opening testimony, 

it sounded pretty much like that is what you are doing. Have you 

seen this letter or the proposal? 

Mr. STRICKLING. Yes, it came in at the close of business yesterday. I haven’t had time to do anything other than skim it quickly. 

There are some interesting ideas in there, and we do intend to take 

a look at it. I don’t know, given the fact that our second-round 

rules are already out, to what extent we could incorporate those 

ideas to the extent they make sense in what we are doing but we 

will be happy to take a look at it. 

Mrs. CHRISTENSEN. It just sounded like you were pretty much 

doing the same thing. You are looking at sort of a gateway and 

funding there for the middle mile to move it out to the households, 

the businesses and so forth. It doesn’t sound dissimilar. 

Mr. STRICKLING. Your description is an accurate description of 

what we are doing. I can’t confirm that that is what they are proposing. 

Mrs. CHRISTENSEN. So are all of the funds out? All of the round 

1 funds, have they already been allocated for sustainable adoption? 

I guess that is your—— 

Mr. STRICKLING. No, that would be me also. We are still looking 

at, I think, approximately eight adoption and/or public computer 

center projects still in round 1. Those are listed on our websites so 


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everybody can see what we are still looking at, and so there may 

be some additional awards yet this month in that area. 

Mrs. CHRISTENSEN. I believe it was RUS that was, or probably 

both of you had gone to some of the round 1 applicants and I guess 

it was one of the other programs or initiatives and suggested that 

they reapply. Are they going to be given preference over new applicants even though they are reapplying for a second time? Is it a 

level playing field? 

Mr. ADELSTEIN. There is no preference for reapplications but we 

certainly are encouraging applicants to do so. We had some great 

applications that for many reasons we weren’t able to fund in the 

first round, and we aren’t giving them preference but they do have 

the advantage of having gone through it once and be able to refine 

their applications for the next round. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. I don’t have any 

further questions. 

Mr. BOUCHER. Thank you very much, Mrs. Christensen. 

The gentleman from Florida, Mr. Stearns, is recognized for 5 

minutes. 

Mr. STEARNS. Thank you, Mr. Chairman. I request unanimous 

consent to submit for the record a letter from the Department of 

Commerce Inspector General expressing concern that the NTIA 

does not have the staff or resources to meet the September 2010 

statutory deadline for completion of the Broadband Technology Opportunities Program. 

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

Mr. BOUCHER. Without objection. 

Mr. STEARNS. Secretary Strickling, did the stimulus bill provide 

you with enough time and resources to run the program right and 

are you going to meet the statutory deadline? 

Mr. STRICKLING. I fully expect to meet the statutory deadline. We 

can meet it with the resources we have. I will say that it is typical 

for programs of this nature that administrative expenses be budgeted at 6 percent of the total project cost. We are doing it at the 

statutory mandated amount of 3 percent, so we could probably do 

it better if we had been given the 6 percent. But we will get it done 

with what we have. 

Mr. STEARNS. So would I say that you disagree with the letter 

I put in the record? 

Mr. STRICKLING. Well, I think to be fair to the Inspector General, 

they raised it as a concern, but feel that we have answered that 

concern and are adequately staffed to do what we need to do. 

Mr. STEARNS. Also, Mr. Chairman, I request unanimous consent 

to submit two letters into the record from the phone and cable associations to the NTIA and RUS expressing concern that they are 

granting awards to projects that are deploying broadband where it 

is already available. 

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

Mr. BOUCHER. Without objection. 

Mr. STEARNS. So again, Secretary Strickling, and I guess, Administrator Adelstein, these two letters point out a problem. Do you 

agree with these letters, and what do you plan to do to make sure 

you don’t grant additional awards that simply build redundant facilities? 


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Mr. STRICKLING. I most emphatically disagree with the letters. 

They are obviously quite self-serving, and they don’t reflect what 

is actually happening on the ground. 

Congressman Stearns, you mentioned the north Georgia project 

in your opening remarks. I would like if I can to take a minute and 

let us talk about the north Georgia project. Windstream claims that 

they have service available to 90 percent of the people who live in 

that area. Nonetheless, the governor of the State of Georgia rated 

this as his most important project to be funded because of the inadequate service that is being made available in that part of the 

State. The project was put together by five counties, each of which 

had their economic development agencies work with the anchor institutions and other people in the community to identify huge gaps 

in the adequacy of the service that Windstream is currently providing there. They took a survey of the area to determine that 

fewer than 40 percent of the people in the area actually subscribed 

to service, which again, if Windstream has it available to 90 percent and only 40 percent are taking it, that tells us there is a problem there. 

We had the specific example of the university in that particular 

region having sent us a note indicating that they had tried to get 

adequate service from the incumbent. They were told they would 

have to wait 18 months to get it, and when they did get it, it would 

cost four times as much as the same service would have cost in Atlanta. That area in north Georgia is a perfect example of an area 

that is not being adequately served by the existing provider. The 

people in those communities came together with a project to solve 

that because they suffer from a lack of economic growth. Companies have been fleeing that region because of a lack of adequate infrastructure, and our project as recommended by the governor 

there as well as others we think will be an important addition to 

the overall economy there and will lead to the growth of new jobs 

in an otherwise very depressed area. 

So I understand the concerns of a company like Windstream, but 

the fact of the matter is, every indication we have in the record on 

that project is that they are not doing their job. 

Mr. STEARNS. Yes, but just—— 

Mr. STRICKLING. But more importantly, if I could just finish, 

Congressman—— 

Mr. STEARNS. I can’t have you take all my time. 

Mr. STRICKLING. Once this infrastructure is built—— 

Mr. STEARNS. I know. You know how it is. Windstream says it 

is 58 percent, you say it is 40. I don’t know. Did you investigate 

independently or is this just your—— 

Mr. STRICKLING. That information, the 58 percent, was not provided to us in the challenge process. 

Mr. STEARNS. Mr. Adelstein, why don’t you answer the question 

I also asked. 

Mr. ADELSTEIN. Yes, we have a major emphasis in our first and 

second NOFA to go into areas that are unserved, for example, give 

10 points for the proportion of residents in unserved areas. We target rural areas. Distance from non-rural areas is still a factor. We 

are very carefully evaluating every complaint that comes in that we 

are going into an area where there is service. We independently 


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evaluate that and ensure that that is not the case. In the case of 

one of the concerns that was raised, I mean, 4,600 square miles, 

almost all of it, no broadband service. So I would take issue with 

the letter. 

Mr. STEARNS. Okay. My last question, Secretary Strickling, in 

your February 24th remarks before the Media Institute, you acknowledged that the country’s statutorily set policy was to leave 

the Internet unfettered—these are your words—‘‘unfettered by federal or State regulation.’’ You said that that policy was once appropriate but now it should be changed. If the policy was set by statute, doesn’t that mean it is the providence of Congress, not regulators like yourself, to decide whether it needs to be changed? 

Mr. STRICKLING. I did not say it was set by statute. 

Mr. STEARNS. Well, you said that the policy was once appropriate 

but should now be changed. 

Mr. STRICKLING. I think I raised the question as to whether it 

should be changed, and I pointed out in those remarks— 

Mr. STEARNS. Okay. Well, let us just take your words today. Do 

you think it should be changed? 

Mr. STRICKLING. I think there is a role for government to play 

to preserve trust on the Internet. 

Mr. STEARNS. Do you think administrators should make that 

change or Congress? 

Mr. STRICKLING. I think the type or intervention or facilitation, 

I talked about in my remarks which was to serve as a convener 

and a facilitator—— 

Mr. STEARNS. Just yes or no. 

Mr. STRICKLING. To bring parties together does not require any 

intervention from Congress. 

Mr. STEARNS. So you can make this decision yourself and Congress, it is not the providence of Congress to do it, so you have the 

right to make these changes yourself? 

Mr. STRICKLING. To bring parties together to sit down and talk 

about copyright piracy, to try to come up with what might be a legislative proposal to Congress, yes, sir, I think I can do that without 

asking permission from Congress. 

Mr. STEARNS. All right. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Stearns. 

The gentleman from Nebraska, Mr. Terry, is recognized for 5 

minutes. 

Mr. TERRY. Thank you, Mr. Chairman, and to quote my good 

friend, John Dingell, I have utmost respect and appreciation for 

you but—so let us go into that. 

Mr. Adelstein, I was a little disappointed that you decided to associate yourself with Mr. Markey’s remarks. I am getting a little 

frustrated that somehow any problem is associated with the terrible 8 Bush years, and I think you belittle yourself when you engage in that, so I am disappointed in that. Other than that, I like 

you and I think you and I share the same dedication to getting 

broadband rolled out throughout America. 

In the debate we had on the stimulus in here, I would say out 

of the entire package that we had before us, we probably spent a 

third of our time debating the nebulous terms on the broadband 

rollout of underserved and unserved, what does that mean. It beVerDate Mar 15 2010 02:39 Nov 27, 2012 Jkt 076013 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 E:\HR\OC\A013.XXX A013

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comes carte blanche to just put it anywhere and it is going to meet 

the definitions. The retort was, this money needs to get out. It isn’t 

really about a comprehensive broadband policy, it was just about 

getting the money out the door as quickly as possible, which then 

we came back and said well, then you are going to have redundant 

systems and wasted money, and maybe there is evidence of that actually occurring and I want to walk through with you particularly 

on the Maine situation. Have I gotten permission to put the Maine 

up? 

This was provided to us by one of the telecom associations, so I 

may have only gotten one side here, Mr. Adelstein. This is an NTIA 

project, so you get the question. But it appears from the map, and 

it is a little hard to see on the screen, but the red on there is the 

existing broadband infrastructure. A blue dotted line, which is 

right next to the main loop, is the grant applicant that is receiving, 

I think, $17 million. The grant applicant is Biddeford Internet 

Corp, now calling themselves Fiber Maine, that is ostensibly associated with the University of Maine. So it looks here that all we are 

doing is putting in a redundant line as opposed to providing 

unserved areas. 

So first question is, what is the policy with the NTIA in regard 

to unserved versus underserved? Follow-up question for your answer, is this underserved? Is Maine underserved? 

Mr. STRICKLING. Sir, this is my—— 

Mr. TERRY. No, I am asking Mr. Adelstein. 

Mr. STRICKLING. My project. 

Mr. TERRY. Oh, I was told this is NTIA. 

Mr. STRICKLING. I am NTIA. 

Mr. TERRY. Oh, I am sorry. You are RUS. I wanted to talk to 

you. 

Sorry, Mr. Strickling. Well, you have been pretty combative and 

argumentative, so let us keep going with that. 

Mr. STRICKLING. Very good. I would love to. Maine is definitely 

underserved, and that map I think is not an accurate reflection of 

actual broadband serving in terms of customer-serving facilities. I 

think what you have there is a map of interoffice fiber to allow the 

incumbent carrier to move their own traffic on their own network 

but it is not really being used to provide adequate broadband service to homes and businesses in that community. What our network 

will do when it is put in will be open to any provider, unlike the 

incumbent’s network where nobody else can use it, who will then 

be able to tap into that network and serve homes and businesses 

that we are not serving directly in our funding but it now enables 

these homes and businesses throughout this area, most of which is 

underserved, if not unserved, and are not receiving consumer services from the incumbent of the sort that will now be made available 

with this funding. 

Mr. TERRY. Well, I have 37 seconds left, and good job being combative again. 

Mr. STRICKLING. No, sir, I am giving you the facts. 

Mr. TERRY. You are, so hold on. Will you give me NTIA’s definition of underserved? 

Mr. STRICKLING. I would be happy to. It has been established 

from the NOFA last July. There are three parts to our definition. 


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Number one, does the area have less than—do the people in the 

area, less than 50 percent have access to broadband. That is one 

prong of the test. 

Mr. TERRY. Okay, access. 

Mr. STRICKLING. The second prong is, do fewer than 40 percent 

actually subscribe, and the third prong, any one of the three which 

is required to be met is, does the incumbent offer service of 3 megabits per second or greater. In the case of Maine, along that fiber 

that is being built in this project, there are many, many communities that satisfy the underserved test. I don’t have a clear recollection of the unserved. I am sure there are some unserved—— 

Mr. TERRY. Would you—— 

Mr. BOUCHER. Thank you, Mr. Terry. 

Mr. TERRY. Where do we get the information about what communities are underserved? 

Mr. BOUCHER. Mr. Terry, your time has expired. 

The gentleman from—— 

Mr. BOUCHER. Will we get a second round? 

Mr. TERRY. I don’t think we are going to have time for that 

today, Mr. Terry. 

Mr. TERRY. Can we have another hearing? 

Mr. BOUCHER. Well, we will be able to submit questions in writing to the witnesses. 

The gentleman from Michigan, Mr. Dingell, is recognized for 5 

minutes. 

Mr. DINGELL. Mr. Chairman, I thank you for your courtesy. I 

would like to welcome our panel. 

First question to Secretary Strickling. I hope you can give me a 

yes or no answer to this, Mr. Secretary. I notice in the second Notice of Funds Availability, that NTIA has removed the requirement 

that infrastructure projects connecting to community anchor institutions, community colleges and so forth must be located in 

unserved or underserved areas. This appears to me to be contradictory of the intent of Congress that stimulus funds would be used 

to bring broadband directly to unserved and underserved communities and households. Am I correct in this, yes or no? 

Mr. STRICKLING. Yes. 

Mr. DINGELL. Now, Mr. Secretary—— 

Mr. STRICKLING. At least you are correct in terms of whether we 

have removed it. I wouldn’t necessarily agree with the rest of your 

comment. 

Mr. DINGELL. Okay. Now, Mr. Secretary, what is the rationale 

then behind this shift? I find it very troubling because we have 

huge unserved areas and we have a real serious problem in the fact 

that funding for the kind of changes to bring them service is desperately needed and we are not giving it to them. Now, how does 

this relate to your policy? 

Mr. STRICKLING. We are still quite consistent with that concern, 

Congressman. Number one, the statute had five purposes. In round 

1, you are correct, that we did require anchor institutions to be 

unserved or underserved areas to qualify for funding. It was pointed out to us by many people including many people in this subcommittee that the statute did not require that. The statute allowed—suggested that we should support anchor institutions reVerDate Mar 15 2010 02:39 Nov 27, 2012 Jkt 076013 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 E:\HR\OC\A013.XXX A013

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gardless of where they are located. So in response to those criticisms, we removed it. But as we assess the benefits of the program, 

we will continue to evaluate the extent to which the applicant is 

serving unserved and underserved areas in order to demonstrate— 

Mr. DINGELL. Now—— 

Mr. STRICKLING. That the benefits of the program will be realized. 

Mr. DINGELL. I don’t mean to interrupt you, Mr. Secretary, and 

I hope you don’t regard this as discourteous, but you are telling me 

that you are not going to emphasize service to unserved and underserved areas. 

Mr. STRICKLING. Just the contrary. I just said we will. It is in 

our NOFA that you get priority for serving unserved and underserved areas. 

Mr. DINGELL. I am going to submit to you some questions in 

writing on this point, and I ask unanimous consent, Mr. Chairman, 

that I be permitted so to do. 

Mr. BOUCHER. Without objection. 

Mr. DINGELL. Now, Mr. Secretary, do you believe that this is— 

how do you intend to prevent overbuilding broadband infrastructure in areas of the country that are already served at the expense 

of the unserved areas? 

Mr. STRICKLING. We engage in a very detailed analysis as we assess the benefits of any given project. So on the question of what 

is already in an area, we have the submission of the applicant, we 

have the submission of the carriers in the area should they choose 

to provide that information. This spring we hope to have information collected by the States pursuant to the broadband map—— 

Mr. DINGELL. Now, I beg your pardon for interrupting but we 

have limited time. What steps is NTIA taking to ensure that these 

funds are not being used to fund projects that would lead to overbuilding of broadband in already served areas while the unserved 

areas continue to be inadequately or unserved? 

Mr. STRICKLING. Right. So we take all of that information I described and do an evaluation. Now, by its nature, a middle-mile 

project connects back into the Internet, so it will come into a served 

area almost certainly but we look at the overall project and the 

overall benefits that the project brings to ensure that the amount 

of overbuild is minimal and it is justified only when the facilities 

in the area are currently inadequate. 

Mr. DINGELL. Now, with apologies again, Mr. Secretary, how 

many complaints have you received from incumbent providers contesting middle-mile projects to be funded under BTOP and what 

has NTIA done about these complaints? 

Mr. STRICKLING. Well, we receive information during round 1, 

not—I wouldn’t characterize them as complaints. They were information. If you are asking me how many complaints have we received for projects that have been funded, I am aware that 

Windstream is upset about Georgia and I understand FairPoint in 

bankruptcy is concerned about the Maine project. 

Mr. DINGELL. It would be fair to observe, though, that the information you have received has not been complimentary. Am I correct on that? 


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Mr. STRICKLING. I think it has been very misguided and selfserving. 

Mr. DINGELL. ARRA requires NTIA to make available not less than $250 million for programs to encourage sustainable adoption 

of broadband service. I note that in its second round of NOFA, 

NTIA pledges to award the minimum, i.e., $250 million, required 

under the statute for sustainable adoption projects. Given that a 

recent FCC report finds only 4 percent of Americans do not have 

access to broadband but 31 percent have access to it if they choose 

to, do you believe that the bare minimum required under the statute is sufficient to achieve ARRA’s goal of sustainable broadband 

adoption? Can you answer that yes or no, Mr. Secretary, please? 

Mr. STRICKLING. I don’t know. I know that if we get quality applications, we will go above the $250 million. 

Mr. DINGELL. Thank you, Mr. Secretary. 

Mr. Chairman, I thank you for your courtesy. 

Mr. BOUCHER. Thank you very much, Chairman Dingell. 

The gentleman from Vermont, Mr. Welch, is recognized for 5 

minutes. 

Mr. WELCH. Thank you very much, Mr. Chairman. Thank you, 

members of the panel. 

We have been pretty frustrated in Vermont with the kind of 

hurry-up-and-wait situation. We had some of our folks submitting 

applications in round 1 not getting much of an answer. We have 

been unsuccessful in getting any awards in round 1. But I think 

the biggest frustration that our applicants have had is trying to figure out what the rules and regulations and the requirements are, 

and I know from my colleagues that they share an awful lot of that 

same frustration. So I have a couple of questions that I want to get 

to on that. 

But number one, my understanding, and correct me if I am 

wrong, is that only 15 percent of the amount promised for round 

1 has been awarded. Is that right, Mr. Adelstein? 

Mr. ADELSTEIN. The amount is actually larger than that. We 

have done—— 

Mr. WELCH. The percentage is what then? 

Mr. ADELSTEIN. The percentage I would say, by the time we complete this round in the very near future, we will have probably 

done 33 percent. 

Mr. WELCH. But by now it was supposed to have all been awarded, right? 

Mr. ADELSTEIN. Not by now, no. It has to be awarded by September 30, 2010. 

Mr. WELCH. When folks in round 1 who applied were denied, did 

you provide applicants with information about what their technical 

problems were so that the proposals would be ready for round 2? 

I mean, this is just a practical issue. 

Mr. ADELSTEIN. We did. We provided letters, over 1,000 letters 

to folks that had applied in the first round explaining why the application wasn’t funded. In addition, we have a help desk set up 

that offers more detailed explanations and we are striving to answer those calls as quickly as we can. 

Mr. WELCH. You know, the dilemma—I don’t want to be critical 

but I do want to express the frustration that our folks in Vermont 


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have had. They just don’t get that sense that there is somebody on 

the other end of the line when they are making a call and they are 

not getting those practical answers. There may be somebody ‘‘answering’’ in an official way but it is not as though there is some 

helpful information and knowledge to give them confidence that it 

is worth the time, effort and expense to do a round 2. So that is 

just for your consideration. 

Given the RUS focus on the last-mile projects and NTIA’s emphasis on middle-mile projects, several Vermont companies or applicants have pointed out that they will be, from their perspective, 

unfairly disadvantaged by RUS preference for previous borrowers 

as they have traditionally avoided borrowing from government. 

Vermont needs the investments from broadband investments just 

like Mr. Terry’s district does to build these last-mile facilities. So 

I am just wondering on a practical level, can you speak to that in 

a way that would be meaningful to our applicants in Vermont? 

Mr. ADELSTEIN. We really want to see those applicants. I mean, 

we are dead serious about having diversity. Congress did mandate 

a priority, in the statute for existing borrowers but we really are 

funding the strongest applications we get in. We are funding a diversity of technologies, a diversity of applicants, many of whom are 

not Title II borrowers already. We really want to see those applicants come in. 

Mr. WELCH. Well, let me ask you this, because you have got applications from all over. You know, this creates—there is available 

money. Some people call it free money and they are going to be 

scrambling to apply and try to get it. What were the considerations 

that were the basis of you deciding to make awards in round 1 and 

what were the obstacles or the deficiencies in applications that you 

found on a pattern in the rejected applications? 

Mr. ADELSTEIN. Well, we were looking for projects that served 

areas that didn’t have adequate service today was the main feature, particularly rural areas. Looking at Vermont, it was very 

much like much of the country. The issues that we looked at primarily that caused applications to fall through were that a number 

of applicants that were supposed to be more than 50 miles away 

from a town or city in fact weren’t, and therefore we weren’t eligible. We have eliminated that issue so in the second round people 

should be encouraged to apply on that. A number of applicants applied for more than a 50 percent grant amount, which is the maximum in the first round. Again, we have gone up to 75 and we have 

provided flexibility, and again, that should encourage applicants to 

reapply. 

Mr. WELCH. Well, and there is a process by which incumbents 

can challenge the qualifications of an applicant’s service area so it 

torpedoes an application. How are you going to handle that? I 

mean, how on a practical level will you handle that? 

Mr. ADELSTEIN. We don’t take the word of the incumbent or the 

word of the applicant. We actually will go into the field to determine whether there is service there. We have a field operation in 

virtually every State in the country and we will go out and look 

at an applicant’s word versus the incumbent and make our own determination. Now, applicants will say their areas are underserved, 

incumbent will say it is served. We can’t just take either one or the 


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other as a priority, what they are saying. We have to do our own 

analysis, and we do. So people, just because they are getting those 

assertions, they should really know who is in their area. If you are 

applying for funding, our competitive analysis requires them to say 

who else is in a district that they are trying to serve, the service 

area, and let us know and then we will evaluate that in terms of 

whether the project is actually feasible. 

Mr. WELCH. Thank you. I yield back, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Welch. 

I want to say thank you on behalf of the subcommittee to Mr. 

Strickling and Mr. Adelstein for your time here this morning. You 

have been very forthright in your answers. We were informed by 

them. We thank you for that. 

I want to congratulate you again on the good job you have done. 

I think given the time frames under which you have had to operate, your performance has absolutely been remarkable and you 

have this subcommittee’s thanks for that. 

Other members will be submitting to you written questions. 

Chairman Dingell has indicated his intention to do so. I think Mr. 

Terry may well have some additional questions, and other members. When those are received, please try to answer them promptly, 

and the record of this hearing shall remain open in order to receive 

them. 

So with the subcommittee’s thanks to both of you, this hearing 

stands adjourned. 

[Whereupon, at 12:30 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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Statement of Representative Anna G. Eshoo 

Subcommittee on Conununications, Technology. and the Internet 

House Committee on Energy and Commerce 

"Oversight of the American Recovery and Reinvestment Act"' 

2123 Rayburn House Office Building 

March 4, 20 I 0 

Thank you, Chairman Boucher for scheduling this hearing to follow-up on 

the concerns that many of us expressed on September 101h about the 

direction of the BTOP and BIP programs. These Stimulus grants are 

essential to broadband deployment nationwide, and the sooner the money is 

disbursed, the sooner we will have sustainable programs in place. 

Those of us involved in drafting the funding language are well aware of the 

importance ofthe expeditious distribution of these grants to achieve the 

purpose for which the stimulus funding was intended: Ensuring the highest 

speed broadband delivery services for Americans who might not otherwise 

have access, and creating new jobs in a sector that is robust and destined to 

drive the economy in the future. 

I'm pleased to see Assistant Secretary Strickland and Administrator 

Adelstein here again to give us their progress reports. The last time you 

were here, we discussed the need to ensure the highest possible speeds for 
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winning applicants, and you assured me that the sky was the limit; that you 

had set a floor but no ceiling. I'm interested in hearing how this philosophy 

has fared during the application process. 

I also want to commend you both for recognizing the importance of Anchor 

Institutions to nationwide broadband rollout. Along with my colleagues, 

Ms. Matsui and Mr. Markey, I asked you to re-emphasize the importance of 

using central locations to provide broadband service to as many people as 

possible. In many libraries around the nation, people without the means to 

afford their own computers or broadband service, line up 10 deep to access 

something which many financially secure Americans take for granted. 

High Speed Broadband will provide essential tools to school children, as 

well as seniors and the generations in between. We all need access, 

regardless of our age, economic bracket or regional affiliation. Anchor 

Institutions can bridge this gap. It may take some time for national 

broadband service to reach remote areas or places where consumers are 

unable to pay for it, but we can at least provide the means for access. 
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My thanks to Assistant Secretary Strickland and Administrator Adelstein for 

listening to and ANSWERING our concerns. 

I also want to take this opportunity to make clear my support for a national 

broadband wireless lifelinc. The FCC can make this service available 

immediately by deploying the A WS-3 spectrum. I hope the FCC can help 

with broadband rollout by making this spectrum available expeditiously. 

Funding is essential to broadband deployment, but public interest oriented 

spectrum allocation will certainly grease the skids. Let's all work together 

to make nationwide broadband deployment a rcality, and make the phrase 

"digital divide" an historical anachronism. 

Thank you Mr. Chairn1an. I look forward to the testimony this morning. 
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Opening Statement for "Oversight of the American Recovery and Reinvestment 

Act: Broadband, Part 3" for Rep. Kathy Castor, FL-ll 

• Thank you, Chairman Boucher, and good morning to my 

colleagues. Today's hearing gives us all an opportunity to 

find out how successful we have been in terms of 

implementing the Administration's broadband plan created 

by the Recovery Act. 

• I am looking forward to hearing the testimony of the 

witnesses, and I thank them for their contributions to the 

oversight process. 

• Thanks to the Recovery Act, billions of dollars in grants and 

low-interest loans have gone to build out the nation's 

broadband infrastructure. 

• Florida has already been awarded nearly $36 million for three 

separate projects under the Broadband Technology 

Opportunities Program. 

• These projects will bring affordable broadband to some of 

Florida's poorest communities and will promote economic 

development and education throughout the region. 

• Public schools, universities, libraries, and emergency 

response services, among others, will benefit from access to 

high-quality, high-speed access to the internet and other 

wireless data services. 

• Those of us in this room, I'm sure, already know the benefits 

of broadband and how it has truly revolutionized the way we 

learn, do business, communicate, and interact with the world. 

• We are already on board this high-speed train, so to speak, 

but many people have been left behind for far too long. 

• Leveling the broadband playing field holds the promise of 

elevating entire communities-from improvements in the 

classroom and hospitals to faster response times for first 

responders. 

• The possibilities are practically wide open. 
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• The hope is that expanding broadband will increase 

competition, which in turn will lower costs, and spur 

innovation. 

• We know that virtuous cycles like these can generate 

exponential benefits to all of society, including those who 

may have been left behind in the past by the internet 

revolution. 

• My purpose here today, as always, is to ensure that my 

constituents, the hard-working people of Florida's 11 lh 

district, will also benefit from the two programs under review 

today. 

• Even if program funds haven't gone directly to my district, I 

want to know what kind of impact broadband will have on 

them and their families and their hope that they won't be left 

behind any longer. 

• So, my questions for the witnesses today will focus on my 

constituent's needs and how they are being met under these 

programs. The opportunity to bring people up to speed 

seems to be within our reach. Now it's time to make sure 

everyone is on board. 

• Thank you all. I look forward to the testimony of our 

witnesses, and I yield the balance of my time. 
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January 22,2010 

The Honorable Barbara Mikulski 

UNITED STATES DEPARTMENT OF COMMERCE 

The Inspector General 

Washington. D.C. 20230 

Chairwoman, Subcommittee on Commerce, Justice, Science, 

and Related Agencies 

Committee on Appropriations 

United States Senate 

Washington D.C. 20510 

The Honorable Richard Shelby 

Ranking Member, Subcommittee on Commerce, Justice, Science, 

and Related Agencies 

Committee on Appropriations 

United States Senate 

Washington, D.C. 20510 

Dear Madam Chairwoman and Ranking Member Shelby, 

This letter responds to your inquiry regarding the status of the National Telecommunications and 

Information Administration's (NTlA) Broadband Technology Opportunities Program (BTOP). Sincc the 

initiation of this $4.7-billion program, created by the American Recovery and Reinvestment Act of 

2009, our office has completed significant oversight of the program's start-up activities. This letter 

describes the challenges that we believe the program currently faces, along with an overview of our 

activities to date (see attachment). 

BTOP, which aims to award approximately $4.5 billion in grants in less than 18 months, represents a 

level of grant activity that no Commerce operating unit has ever undertaken. With BTOP, NTIA has had 

to c{)nrront a number of challenges, including staffing a program office, developing grant program rules 

and regulations, coordinating development activities with other departments and agencies (including 

Agriculture and the Federal Communications Commission), awarding grants, and performing effective 

oversight ofactivities--while limiting expenditures to 3 percent of the program appropriation ($141 

million). 

On January 6, 20 I 0, we met with the Assistant Secretary for Communications and Information to 

discuss the status of our evaluation. We communicated program challenges that-if not addressed-we 

believe may cause NTIA to face difficulties in meeting its statutory deadline of issuing broadband grants 

by September 30, 2010, and in monitoring the grants after they are awarded. We shared the following 

concerns: 

NTIA faces operational challenges with its current staffing levels, especially given the program's 

complexity and deadline. The establishment of the program office required recruiting and training of 

staff, drafting of operational procedures, development of systems, and monitoring of a signilicant 

contract and several Memorandums of Understanding with other Commerce bureaus and federal 

agencies, all while managing the policy, award, and monitoring operations. The staffing constraints 

are due in part to the time-intensive requirements involved with setting up new operations, as well as 

key dependencies on a few senior team personnel who handle multiple roles within BTOP and, in 

some instances, in other NTiA programs as well. 
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Documentation is not consistently available for operational program procedures, program staff roles 

and responsibilities, and key management decisions. Such documentation is needed to ensure that 

government staff and contractors understand and effectively carry out their responsibilities, 

Adequate documentation is particularly important to ensure continuity in the event the program loses 

any of its limited number of key staff, while documentation of key decisions is needed to achieve 

transparency in decision making. 

• NTIA encountered problems with the application-intake system during the first round of the 

applications process because the system was unable to handle the volume of applications submitted. 

This resulted in extending the deadline for receiving applications and implementing procedures for 

collecting select application materials on paper. While system modifications have been made to 

address these issues, only a short period of time remains in which to sufficiently test the system and 

ensure that adequate functionality is delivered for the second-round production cycle. 

• NTIA also encountered challenges with the application review process. Volunteer peer reviewers 

failed to complete reviews or submit review scores in a timely manner, and thus were not meeting 

timeliness expectations. Supplemental reviewers obtained from Booz Allen Hamilton were 

subsequently used to complete many of the application reviews. The review of applications, 

originally expected to be complete by mid-September 2009, was delayed by 3 months, to midDecember 2009. 

As NT/A enters its second round of issuing broadband grants, it must not only avoid the problems with 

application intake and the recruitment of sufficient application reviewers that hindered the first round of 

awards, it must also enhance internal program management operations for grants already awarded. We 

are concerned that the program is at risk of not being able to efficiently and effectively issue its second 

round of awards by the statutory deadline of September 30, 20 I 0, while simultaneously providing postaward monitoring of first-round recipients. Continued focus on improving program operations in these 

areas is essentiaL 

Attached to this letter is a listing of our activities related to BTOP since passage of the Recovery Act. 

If we can provide any further information, please contact Ann C. Eilers, Project Lead. Recovery Act 

Oversight Task Force, at 202.482.4328, or myself, at 202.482.4661. 

Sincerely, 

rj~~,S~' Todd J. Zinser 

Attachment 

2 
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Attachment 

OFFICE OF INSPECTOR GENERAL ACTIVITIES SINCE PASSAGE 

OF THE RECOVERY ACT RELATED TO THE 

BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM (BTOP) 

• In March 2009, we issued of a brief report entitled NT/A Should Apply Lessons Learnedfrom Public 

Safety Interoperable Communications Program to Ensure Sound Management and Timely Execution 

of$4. 7-billion Broadband Technology Opportunities Program (ARR-19583). The report noted that 

NTIA needs to seek extended funding for the program office beyond 2010 to ensure proper 

oversight, evaluate and approve detailed project proposals and spending plans with joint peer 

reviews before making grant awards, and complete an environmental assessment of BTOP promptly. 

• In May 2009, we issued a brief report entitled Commerce Experience with Past Relief and Recovery 

Initiatives Provides Best Practices and Lessons Learned on How to Balance Expediency with 

Accountability (ARR-19692). The report provided best practices and recommendations of 

approaches Commerce Agencies could adopt to achieve accountability and transparency while 

spending expeditiously. 

• In July 2009, we made presentations on Transparency and Accountability in Broadband Grants to 

potential applicants at the ten NTIA and Rural Utility Service workshops conducted for the first 

Notice of Funding Availability. 

• In September 2009, we initiated an evaluation of BTOP with the following objectives: (1) assess 

how effectively NTIA is implementing BTOP, including management controls, contractor oversight, 

and program office staffing; (2) evaluate the proposal pre-award review measures that NTIA is 

taking to ensure an effective and fair application and award process; and (3) evaluate the integrity 

and reliability of the online application system. Since that time, we have been tracking the pre-award 

process for the first round of BTOP awards, keeping BTOP personnel informed of our concerns. We 

have identified several issues that must be addressed as the second round of awards-in which NTIA 

plans to award more funds, $2.6 billion, as opposed to $1.6 billion in the first round-approaches. 

This letter highlights these concerns, and we will soon be issuing a full report with more detail on 

these issues. 

• In October 2009, we issued a report entitled Commerce Has Implemented Operations to Promote 

Accurate Recipient Reporting. but Improvements are Needed (ARR-19847). In December 2009, we 

issued a report entitled More Automated ProceSSing by Commerce Bureaus Would Improve 

Recovery Act Reporting (ARR-19779). In these two reports we made recommendations to improve 

overall Commerce Recovery Act reporting (including NTIA). 

• Also in October 2009, our Office ofInvestigations provided Recovery Act Oversight Program Fraud 

Prevention Training and Recovery Act Oversight Program Fraud Indicators Training to BTOP 

personnel. 

• In November 2009, we presented a First Time Grantee Workshop to BTOP personnel because many 

of the recipients of broadband grants were expected to be first-time awardees. 

3 
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WALTER B. MCCORMICK, JR. 

Presldent and Chief Executive Officer 

March 3, 2010 

The Honorable Lawrence E. Strickling 

Assistant Secretary for Communications 

and Information 

National Telecommunications and 

Information Administration 

U.S. Department of Commerce 

1401 Constitution Ave., N.W. 

Washington, D.C. 20230 

Dear Assistant Secretary Strickling: 

The United States Telecom Association and its member companies have been 

enthusiastic supporters of efforts by Congress and the Administration to stimulate 

economic growth and job creation through broadband deployment and adoption. As 

leaders in the effort to bring the full promise of broadband to consumers and businesses 

in every comer of the nation, our member companies are well aware ofthe difficult 

challenges posed by building and operating broadband facilities in rural and remote parts 

of the country. Indeed, our industry continued investing in broadband deployment at an 

extraordinary rate throughout the recession, and has now succeeded in extending wire line 

broadband connections to over 90% of rural business sites, far in excess of competing 

technologies. 1 For these reasons, we welcomed the stimulus funding Congress provided 

in the Recovery Act, believing that NTIA's Broadband Technology Opportunity Program 

(BTOP) could make a real difference in increasing broadband deployment and adoption 

by helping build broadband connections to the remaining unserved and underserved 

consumers and businesses where geography and demographics make it uneconomic for 

private companies to proceed on their own. 

We are deeply concerned, however, that some funding under the BTOP is flowing 

to support the construction of redundant broadband connections rather than being 

prioritized to get broadband out to those who don't have it. And, for that reason, we 

make the proposal described below. 

I Prepared Remarks of Chairman Julius Genachowski, FCC, NAURC Conference, Washington, D.C. 

(February 16, 2010). 
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The Honorable Lawrence E. Strickling 

March 3. 2010 

Page 2 of7 

Background 

In the Comprehensive Community Infrastructure (CCI) program that NTIA has 

proposed for its second round ofBTOP funding. NTIA has explicitly "removed any 

requiremcnt that projccts connecting community anchor institutions. including 

community collcges. must be located in unserved or underserved areas:· 2 This appears to 

represent a formal departure ti'om the program purposes to fund infrastructurc projects 

that extend broadband directly to unserved communities and houscholds and to 

underserved communities and households, which were two ofCongress's key priorities 

for the Recovery Act's broadband program. Indeed. as currently constructed, NTIA 

could implcment thc CCI program without funding any projects that satisfy either of 

these goals. For cxample. a last mile project that would bring broadband service to an 

area that completely lacks broadband today would receive the lowest level of 

prioritization under NTIA's criteria. Likewise. a middle mile project could be highly 

prioritized by NTIA even though the applicant proposes to serve a geographic arca that 

has multiplc middle mile providers today. Although supporting the construction of 

second, third. and fourth networks may produce short-term construction jobs. it does little 

to create the ongoing job opportunities and economic stimulus that extending broadband 

to new communities, new institutions, and ncw households promises to bring. And, 

given the fragile economics of extending broadband to increasingly rural areas of the 

country. this approach may endanger the jobs of workers currently employed in building 

and operating private broadband networks. It also seems (0 conflict with both the core 

purposes underlying the BTOP and the economic priorities articulated by the President, 

who has said that "government spending should catalyze, rather than supplant. private 

sector investment and innovations."} 

Thcrefore, in order to maximize the economic impact of broadband stimulus 

dollars. and to promote broadband deployment and adoption. we propose that NTIA use a 

screening process for grant applications. as discussed in more detail in the attached 

proposal, based on the presence of existing locations where connections to the Internet 

can be readily obtained. In essence, NTIA should rely on the presence of an "Internet 

Gateway," which should be defined as a location in existing middle mile networks that 

provides an interconnection point for third-party Internet tramc and that serves as an 

aggregation point for delivering Internet-bound tramc over very high capacity facilities 

to and from the Internet. Transport from an Internet Gateway to the Internet is based on 

the capacity of the connection purchased, and is independent of the distance from the 

Internet Gateway to the final point of connection with the Internet. Middle mile project 

funding would then be focused on supporting the construction of new facilities extending 

broadband connectivity from Internet Gateways to community institutions and unserved 

or underserved households or businesses from an Internet Gateway, but not redundant 

= 75 Fed. Reg. 3792, 3819 (Jan.22. 2010). 

3 Recovery Act Investment In Broadband: Leveraging Federal Dollars To Create Jobs And Connect 

America, Executive Office of the President, December 2009, at 3. 
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The Honorable Lawrence E. Strickling 

March 3. 2010 

Page 3 of7 

facilities duplicating the already-existing very high capacity connection from an Internet 

Gateway to the final point of connection with the Internet. Our industry would be 

delighted to assist you in identifying such projects by expeditiously assembling the 

information necessary to identitY Internet Gateways, and to make sure it is available to 

both NTIA and potential applicants in a useful way. By aggregating industry information 

about the location of hundreds oflnternet Gateways nationwide, NTIA will be in a much 

better position to evaluate middle mile infrastructurc applications and effectively target 

broadband stimulus support. 

We believe that such a screening process will make the application and evaluation 

process more efficient and that it will sprcad the bcnefits of scarce broadband dollars as 

widely as possible, catalyzing greater private investment and creating new jobs and new 

economic opportunities in a manner consistent with congressional purposes and 

Administration policy. 

We look forward to working with you to maximize the economic stimulus and job 

creation made possible with BTOP funding. as well as opening up new broadband 

opportunities tor consumers and businesses across the country. 

Sincerely, 

A TT ACHM ENTS: Internet Gateway Screen Recommendation 

Diagram 
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Internet Gateway Screen 

Recommendation: 

• Brightfine Funding Standard. NTIA should utilize a brightline standard that funding 

for broadband stimulus middle mile infrastructure projects will be targeted to 

infrastructure that extends outside of an existing Internet Gateway Service Area. 

". An applicant for middle mile broadband infrastructure should only receive 

broadband stimulus funding for the portion of middle mile infi'astructure that 

extends outside of an existing Internet Gateway Service Area. 

>- Where possible. an applicant should demonstrate that a proposed middle mile 

project will connect to existing Internet Gateways. 

• Definition of Internet Gateway. An "Internet Gateway" is an intermediate point in a 

middle mile broadband network that provides an interconnection point for third-party 

broadband networks and serves as an aggregation point for delivering traffic to and 

from the Internet over higb-capacity facilities. The following four objective critcria 

should be used to define an Internet Gateway location: 

I. Internet Gateway serves as an interconncction point for third-party broadband 

networks where an Internet service provider or other business may obtain 

access to the Internet; 

2. Connection from thc Internct Gateway location to an Internet POP (i.e., 

Internet backbone edge) is included in the capacity-based charge for Internet 

access and no distance-sensitive transport charges apply; 

3. Internet Gateway is supported by a high-capacity (e.g, 100 Mbps or more) 

connection to an Internet POP: and 

4. Connection between tbe Internet Gateway and an Internet POP generally offers 

redundancy. 

• Definition of Internet Gateway Sen'ice Area. The "Internet Gateway Service Area" is 

an area that is already being served by existing middle mile broadband infrastructure 

for purposes of allocating broadband stimulus funding. 

>- The Internet Gateway Service Area is defined as a 25-mile radius around an 

Internet Gateway. wbich is a conservative representation of the area that can be 

readily accessed with standard last-mile connections from an end-user location to 

the Internet Gateway. 

>- Within the Internet Gateway Service Area. broadband stimulus funding should be 

targeted for eligible last-mile broadband infi'astructure projects that connect enduser locations to the Internet Gateway. 

• Reporting and A1apping. NTIA can aggregate and map data about the location of 

existing Internet Gateways to facilitate the application process. 

>- Applicants would be able to reference the aggregate data as a way of ensuring tbat 

their proposed project does not duplicate existing middle mile broadband 

infrastructure and that any stimulus funding will be targeted to infrastructure that 

extends beyond existing Internet Gateways. 
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• Other Considerations. NTIA should continue to consider other information in 

assessing proposed middle mile infrastructure projects. such as last mile broadband 

availability and the presence of existing fiber networks. 

• NTIA should modify the application response process for broadband infrastructure 

projects to provide for using aggregate industry information about Internet Gateway 

locations and last mile broadband service availability to evaluate whether applications 

are appropriately targeted. This would allow NTIA to more effectively analyze 

applications and compare them to footprints of existing broadband service providers. 

Insert graphic folio 84 76013A.044jbell on DSK7SPTVN1PROD with 

Last Mile 

Aggregation 

Point 

Middle Mile Definition 

L..-

__ 

NOFA BTOP Definition of Middle Mile: Middle Mile means 

those components of a CCI project that provide broadband 

service from one or more centralized facilities, (i.e., the central 

office, the cable headend, the wireless switching station, or 

other equivalent centralized facility) to an Internet point of 

presence. The Middle Mile includes, among other things, the 

centralized facilities and all of the equipment in those facilities, 

except for any equipment that would qualify as part of a Last 

Mile component as defined in this NOFA. 

Insert graphic folio 85 76013A.045jbell on DSK7SPTVN1PROD with 

Middle Mile Stimulus Funding Proposal 

last Mile 

Aggregation 

Point 

(I;',g: Central Omce) 

Internet Gateway Service Area· 25 Miles from an Internet Gateway 

Area Only Eligible for Last Mile 

Stimulus Funding 

* Note: In some cases, the Internet Gateway and the Internet POP are at the same location, 
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cable 

National Cable" Telecommunications Ass-ociatlon 

25 Ma,sachusetts Avenue, NW - Suit. 100 

www.flcta.com 

March 3, 2010 

The Honorable Tom Vilsack 

Secretary of Agriculture 

U.s, Department of Agriculture 

1400 Independence Avenue, SW 

Washington, DC 20250-0700 

The Honorable Jonathan Adelstein 

Administrator 

Rural Utilities Service 

U,S, Department of Agriculture 

1400 Independence Avenue, SW 

Washington, DC 20250 

Dear Secretary Vilsack and Administrator Adelstein: 

Kyle McSlam>w 

P""iden! and 0'0 

(202) 222-2500 

(202)222-2514Fax 

As you know, NCTA strongly supports the primary goals of the Broadband Initiatives Program 

("BIP") and efforts to extend funding for broadband deployment in areas that lack service today. 

We appreciate, moreover, that BIP is a complex plan to administer with competing priorities and 

fully acknowledge your efforts to implement the program fairly and consistent with 

Congressional intent. 

However, I am writing to urge to you to redouble the Department's efforts to ensure that BIP 

awards are consistent with the goals of the program in light of recent indications that awards are 

not being made with full awareness of marketplace realities. 

Specifically, as one example, I am attaching a letter from Gary Shorman, President and CEO of 

an NCTA member company, Eagle Communications, Eagle is a small employee-owned 

company based in Hays, Kansas and a longstanding provider of broadband service in western 

Kansas. Mr. Shorman's letter expresses his serious concerns about the $101 million Broadband 

Initiatives Program award announced on January 25. As Mr. Shorman states in his letter, "while 

the January 25 announcement of the award indicates that funding from this award would 

'provide service in an area 99.5 percent unservedlunderserved,' it appears that much of this 

funding will be directed at broadband deployment in [Hays lone of the best-served communities 

in western Kansas" and will result in an overbuild of Eagle's facilities in that non-rural area. 

It simply cannot be the intent of this program for funding to be used in a way that devotes scarce 

federal resources to communities which already have access to broadband when there are other 

communities in the United States with no access. Moreover, at a time of economic hardship, 
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public policy should not threaten the livelihood ofa small, local business that has invested 

millions of its own private capital to deploy a host of advanced broadband services, 

For these reasons, I respectfully request you review this grant and the implementation of BIP in 

order to ensure that the program is focused on the right priorities, 

Sincerely, 

Kyle McSlarrow 
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The Honorable Tom Vii sack 

Secretary of Agriculture 

U.S. Department of Agriculture 

1400 Independence Avenue, SW 

Washington, DC 20250-0700 

The Honorable Jonathan Adelstein 

Administrator 

Rural Utilities Service 

U.S. Department of Agriculture 

1400 Independence Avenue, SW 

Washington, DC 20250 

CAG:L-E COMMUNfCA'TIONS 

March 2, 20 I 0 

Dear Secretary Vilsack and Administrator Adelstein: 

I am writing on behalf of my company, Eagle Communications, to express concern about the 

USDA Rural Utilities Service's $101 million award to Rural Telephone Service Company (RTS) 

that was announced on January 25, as part of the Broadband Initiatives Program (BTP) 

established by the American Recovery and Reinvestment Act of2009. Eagle is a western 

Kansas-based company with 277 employees, 212 of which are employee-owners. 

I support the primary goals of the BIP, which are to extend funding to projects that lack 

"sufficient access to high speed broadband service to facilitate rural economic development" and 

to give "priority for awarding funds to projects that provide service to the highest proportion of 

residents that do not have access to broadband service." However, I am extremely concerned 

about aspects of this particular $101 million award which do not appear to satisfY either of the 

above goals of the Broadband Initiatives Program. In particular, while the January 25 

announcement of the award indicates that funding from this award would "provide service in an 

area 99.5 percent unserved/underserved," it appears that much of this funding will be directed at 

broadband deployment in one of the best-served communities in western Kansas. 

Corporate Headquarters 

Eagle Business Plaza' 2703 Hall, Suite 15 • Hays, KS 67601-1987 

www.eaglecom.net • 785.625.4000 • Fax 785.625.8030 
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Specifically. as has been reported. RTS plans to use flll1ds to bring fiber-to-the-home to at least 

10.000 homes and businesses 1 in Hays. Kansas. a non-rural arca that accounts for almost half of 

the 23,000 homes and busincsses that are reportedly within the RTS project area.:: Hays. 

however, is already served not only by the award recipient's affiliatc. Ncx-Tech. but also by 

Eagle and other carriers. In fact, Connect Kansas just reported that or 11,193 households in the 

Hays area, 11,002 already have access to broadband3 In other words. much of the funding will 

go to a non-rural area that has fewer than 200 households without access to broadband. 

The use of this award money to overbuild Eagle. which has invested over $20 million in private 

capital in Hays and surrounding arcas,' jeopardizes the company's survival and the jobs of its 

277 employees. Eagle currently offers Hays residents and businesses broadband service of up to 

100 mbps. as well as cablc television and digital phone service. It also offers local businesses 

web hosting. e-business. and wireless solutions. 

Until we saw recent press articles, Eagle believed that most of Hays was excluded from the 

application based on the map that was published on the broadbandusa.gov website. In an 

exercise of caution. however, we submitted data to the RUS to show that we provide extensive 

broadband service in Hays. and an RUS field representative made an on-site visit to verify this 

information. We also urged RUS to seek out information about the broadband service being 

offered in Hays by other carriers. 

Eagle cannot now determine, because of the lack of transparent intonnation available to the 

public. whether the RUS obtained this data and what the tactual predicate is for its determination 

that the non-rural area of Hays. KS is underservcd. Nor is there a regulatory process in the BIP 

guidelines to seek reconsideration of or to appeal whatever determination was made in order to 

make sure the award money is appropriately spent. 

Allowing our facilities in Hays to be overbuilt using government subsidized funding turns the 

core purpose of the Recovery Act on its head. It threatens the jobs of the 277 Eagle employees 

who live in the very communities the award was intended to benefit. offsetting new jobs created 

by the project; and it would undermine one broadband provider in the area. otfsetting the new 

I Nex-Tech has already hired a contractor to begin canvassing the community "asking for permission to make the 

liber optic connection to each residence and business in Ha)s -- nearly 10.000 of them:" Ha\s DailY News. 

February 14. 2010 hili" '(,,\\ \\ .hdne\\ s.ncUStor\iruro I02.HJ(I. 

3 Sec http::,'\Y\'~j~,y..Qnn('ctkansq::i.1~lnum~-mlQ/Ccnsus BflKk-Lc\'t:1 Dal~ (Ellis County census block data: also 

includes a tab that directs the user to the Ellis County map). 

4 Eagle otTers cable telc\'ision. broadband Internet. and digital telephone s-.;r\'icc in the following communities: 

Abilene. Bird City. Chapman. Clay Center. Cuba. Ellis. Ells\\onh. Florence. Goodland. Hays. Hillsboro. Hope. 

Ho,ie. Kanopolis. Lincoln. Lincolll\IlIe. Marion. McDonald. Milford. Minneapolis. Oherlin. Riley. Russell. 

Solomon. St. Francis. WaKeeney. Wakelield. \Vhite City. and Woodbine. Kansas. as \\ell as Wray. Colorado. The 

company also oJlers web-hosting. e-busincss. and wireless solutions. 

Corporate Headquarters 

Eagle Business Plaza· 2703 Hall, Suite 15· Hays, KS 67601-1987 

www.eaglecom.net • 785,625.4000 • Fax 785.625,8030 
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SUppOlt for another. The government should not penalize a small company that has invested 

private capital in its communities while supporting another company that has repeatedly 

benefittcd from government subsidies not only from RUS (with which it has p3ltnered on at least 

32 other projects, according to the January 25 release), but also from federal USF funding (over 

$58 million in 2007 and 2008 alone), and state USF funding ($13 million during those same two 

years).' 

In light of this. and RTS' plans to immediately use "eight people to canvass the city, working 

evenings and weekends to contact everyonc" to get permission to make the libel' optic 

connection to "each residence and husiness in Hays -- nearly 10,000 ofthem:·6 \ve request that 

the RUS immediately reconsider this award and that it: 

• defer the use offunding in Hays until the RUS can (1) determine the impact of the 

overbuild on Eagle and other carriers in Hays, and (2) verify the extent of existing 

broadband service in Hays based upon available data. including data from Eagle and 

other carriers already offering broadband in Hays (including RTS' affiliate Nex-Tech and 

AT&T). 

• disclose the areas that the RUS determines to be rural and non-rural and unserved or 

underserved. or otherwise lacking sufficient access to high speed broadband service. 

along with the data underlying that determination. 

Thank you for your consideration of my concerns. 

~ Gary Shorman 

President. Eagle COl11ll1unications 

5 FCC, Response dated May 4. 2009 to liS House of Representati, es Committee on Energy and Commerce 

Lniversal Ser,iee Fund Data Request of April L 2009. 139.177.215 

Corporate Headquarters 

Eagle Business Plaza' 2703 Hall, Suite 15 • Hays, KS 67601-1987 

www.eaglecom.net • 785.625.4000 • Fax 785.625.8030 
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Questions for the Record for NTIA Assistant Secretary Lawrence E. Strickling 

March 4,2010 Hearing before the Honse Communications, Technology 

and the Internet Subcommittee 

The Honorable Cliff Stearns 

1. The project you awarded a grant to in North Georgia works out to 8310,000 

per mile, twice the cost of any other award. Why are we spending so much 

money on one grant? 

The cost-per-mile figure that gives rise to the question is inaccurate. The North Georgia 

project received a grant of$33.5 million and will feature a 260-mile fiber-optic ring, 

which translates into a per-mile figure of about $125.000, not the $310,000 figure cited in 

the question. In fact, even if the applicant's matching contribution of$8.8 million were 

included in this rough calculation, the cost per mile would approximate $160.000. 

Simply dividing the grant amount (or the project cost) by the number of fiber miles, 

however. produces a figure of limited usefulness. There are many costs associated with a 

broadband network that do not closely correspond with the number of fiber miles 

installed. The industry practice is to calculate a per-mile figure based not on the total 

project cost, but instead on the capital costs of building or installing the network (i.e .• 

outside plant). Using this industry standard, the North Georgia project comes in at about 

$40.000 per mile for the middle mile components. 

Whatever the cost. it needs to be balanced against the benefits of a broadband network 

which. like costs, are only partially dependent upon the number of fiber miles installed. 

Benefits can be measured against a number of different metrics. In this case, the North 

Georgia project will deliver gigabit broadband speeds. reliability. affordability, and 

abundant interconnection points for last mile service to stimulate economic growth and 

job creation in eight counties in the North Georgia foothills. The North Georgia Network 

is intended to deliver these high-speed broadband capabilities to an estimated 245 

community anchor institutions and last mile service to approximately 24.000 households 

in previously inaccessible and unaffordable areas. The project will improve broadband 

speeds and enable community colleges. hospitals. libraries, public safety. and government 

agencies to fulfill their missions more efficiently and effectively. The open network 

architecture will permit other broadband service providers to interconnect at affordable 

rates to deliver enhanced broadband services to homes. businesses, and anchor 

institutions in the region. The investment in the North Georgia Network is an excellent 

use of taxpayer dollars and exactly the type of project that Congress. in the Recovery Act. 

instructed NTIA to support. 

2. Was the report produced by the Georgia Tech Enterprise Innovation 

Institute entitled "The Economic Devclopment Potential of Information 

Infrastructure Investments in the North Georgia Network (NGN)," the 

source used by NGN to demonstrate the grant area was below 40 percent 

subscribership? If not, please provide the survey supplied to NTIA by NGN. 
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NTIA did not rely on the report you referenced or the underlying data used in the report. 

[n general, the contents ofBTOP applications are treated as proprietary and contidential 

to the extent permitted under law, and unless otherwise specified in the Program's rules. 

3. We understand that a significant portion of the north Georgia project area 

was not on the map made available to the public during the project comment 

period. According to the local broadband provider, the missing area is 98 

percent broadband capable. Why was a significant portion of the project 

area not made available for public disclosure? 

NTIA is not aware, nor do we have any reason to believe, that any portion of the North 

Georgia Network map was not made publicly available during the public notice comment 

period. The map of the proposed funded service area reflects the geographic area in 

which an applicant intends to offer service. Parts of the physical network may pass 

through areas that are not included in the proposed funded service area. because the 

applicant docs not intend to offer service in those areas. For example, in the case of the 

North Georgia Network, spans of the network will run tl'om the proposed funded service 

area to the Atlanta Internet Exchange for the purpose of providing connectivity to the 

Internet throughout the network. These spans were excluded from the map of the 

proposed funded service area because the network will not offer service along these 

spans. NT[A and RliS afforded existing service providers the opportunity to comment 

on the proposed funded service areas of BTOP infrastructure applications. [n the case of 

the North Georgia Network. the comments of the existing service providers did not 

overcome the applicant's showing that the proposed funded service area is underserved. 

4. Was North Georgia College and State University the institution in the grant 

area that Assistant Secretary Strickling indicated will have to wait 18 months 

to reeeive broadband at a cost four times that of the Atlanta region? Ifnot, 

please provide the name of the institution. 

Yes. 

5. Free Press submitted a filing at the FCC expressing concern that according 

to FCC data, there are already between four and six providers of broadband 

in the north Georgia area that received an award, and seven or more 

providers in the South Dakota area that received an award. Why are you 

issuing awards in places that already have so much access to broadband? 

The question assumes that Free Press agreed with the FCC data and that Free Press was 

"expressing concern" about the wisdom of the NTIA grants, when, in fact, just the 

opposite is true. In its tiling, Free Press challenged "the accuracy of the [FCC's] 

2 
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information and analysis" and specifically questioned the assertions about Georgia and 

South Dakota that form the basis or your question. It is my understanding that there are 

one or more service providers in some parts or the North Georgia Network or South 

Dakota service areas. but that does not prove that the area is served. nor does it preclude 

NTIA from considering projects that will meet unfulfilled needs in the area. The 

Recovery Act directed NTIA to address the broadband needs of both unserved and 

underserved areas oflhe Nation. among other objectives. NTIA and RUS de1ined 

underserved to include areas where broadband service may exist, but which exhibit low 

levels of adoption, speed, or availability. Thus, the mere presence of an existing service 

provider in an area does not mean that there is adequate broadband service available. 

NTIA undertakes an extensive review of info rmati 011 presented by the applicant, 

community anchor institutions, States and Tribal entities, existing service providers, and 

other sources to ensure that its projects will have a substantial impact on improving 

broadband access and adoption. This includes considering whether existing broadband 

service is sufficient to meet the area's economic development, education, and job creation 

needs. NTIA takes into consideration, among other factors. whether community anchor 

institutions in a proposed funded service area have access to broadband services at the 

specds, prices. and quality they necd to fulfill their missions for the community, or 

whether such institutions have been unsuccessful in obtaining the broadband services 

they need within a reasonable timeframe. It is also important to reiterate that the Middle 

Mile projects supported by NTIA will opcrate on an open and nomiiscriminatory basis 

that allows all third-party broadband service providers to benefit. including last mile 

providcrs that can use our projects to build-out their own broadband services to homes 

and businesses. 

6. How many more jobs and how many more broadband subscribers should we 

be getting for the $7.2 billion in taxpayer money these programs are costing? 

Should it cost us $1,000 dollars for each job and snbscriber created? 

$10,000? $100,000? Do you have performance measures in place to evaluate 

how many jobs and subscribers per dollar we would get from each proposed 

project, and whether the approved applications end up fulfilling those goals? 

Are you conducting a rigorous cost-benefit analysis as you consider 

applications? If so, how do you perform that analysis? The stimulus bill was 

supposed to be about "jobs, jobs, jobs." As you examined specific 

applications for funding, what analysis did you conduct regarding how many 

jobs they would produce? 

Job creation is a critically important goal for NTiA and RUS. As you know. job creation 

is an explicit objective outlined in the BTOP provisions of the Recovery Act. and it is one 

of the factors NTIA considers when awarding grants. The Recovery Act also instructed 

NTIA, in awarding grants. to consider whether an application will increase broadband 

atTordability and subscribership, improve broadband speeds. and enhance service for 

health care delivery. education or children. among other factors. but BTOP applicants 

include job projections in their applications. NTIA considers not just job creation in 

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determining 'l'hether BTOP projects will benefit cOll1l11unities in the most comprehensive 

manner possible. 

I expect that BTOP grants will result in significant job creation. Direct jobs will result 

from the billions in investments in broadband facilities and related equipment. training. 

and services. In the short-term. STOP investments will help create thousands of jobs for 

building infrastructure. installing computer workstations. and developing and 

implementing outreach to broadband consumers. The types of jobs range from 

manufacturing fiber-optic cable and other high-tech components. to stringing fiber from 

pole to pole. to trenching. and to the installation of broadband networking hubs. 

Computer centers need to be built. and new computers and related hardware and software 

will be installed and networked into public computing centers. Outreach strategies need 

to be planned and executed. and staff will need to be trained how to best provide 

communities with needed broadband information and workforce skills. 

In the longer term. BTOP grants will improve education. job-training. tele-working 

opportunities. and access to markets which will lay a foundation for economic 

development. competitiveness. and job creation for years to come. With respect to how 

many jobs will ultimately be created. estimates vary. One \videly-cited projection 

estimated that $5 billion in broadband stimulus spending could generate almost 100.000 

jobs directly and as many as 2.5 l11illionjobs in the long fun. Of course, a number of 

variables and subjective judgments go into projections such as this one and diffcring 

variables and judgments would obviously change the forecasted numbers. 

BTOP grant recipients will be required to report the number of jobs supported by 

Recoyery Act funds as a condition of their grant. among other reporting clements. 

Recipient reports will be made available on a public website. as required by the Recoyery 

Act. I am confident that as this program advances, we will be able to demonstrate how 

BTOP investments have resulted in significant job creation for the American people. 

Like job creation. the extent of subscribership measures will vary with the project. We 

consider the subscribership projections ofBTOP applicants and require awardees to 

report subscribership and adoption results. for both infrastructure and non-infrastructure 

projects. The ability to measure results is a critical factor ill considering the merit of 

individual applications. an approach recently endorsed by the FCC ill the National 

Broadband Plan. We will have a much firmer factual basis upon which to make 

predictions and judgments of the type you suggest as we measure the results of our grants 

over the next few years. 

7. When carriers allege that an application is seeking funding for an area they 

already serve, what independent due diligence are you doing to investigate 

the claim? How do you ensure that the proposal meets the unserved and 

underserved requirements other than just relying on information from the 

applicant? 

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In the first funding round, NTIA and the Department of Agriculture's Rural Utilities 

Service (RLJS) published maps depicting the proposed funded service areas of 

infrastructure applicants and aftorded existing broadband service providers the 

opportunity to provide information on their services in the area(s). Existing providers 

could provide data on broadband availability. subscription. and speed in each area. NTIA 

reviewed information supplied by the applicants. existing service providers. maps of 

existing services as available. the comments of State and Tribal entities. and other 

information to evaluate the unserved or underserved status of the proposed funded service 

areas. As necessary. NTIA requested additional information from applicants to help 

inform its decision-making process. NTIA has not funded infrastructure projects in areas 

where the in formation available demonstrated that the proposed service arca is fully and 

adequately served. Our review process makes use of as much information as possible 

and helps ensure that BTOP supports broadband investment in areas with demonstrated 

need. 

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The Honorable Marsha Blackburn 

1. Leaving the agency some time to evaluate applications this spring, and time 

in August and September to finalize contracts with grant recipients, NTIA is 

essentially iu a position where it must annouuce awards at a rate of about 

one billion dollars a month. Is that feasible? You already missed your 

targeted funding level in the first round. Do you have sufficient time and 

staff to responsibly obligate these funds'! Are you contemplating asking 

Congress for an extension on the September 30th obligation deadline? 

NTIA is on schedule to award all BTOP grants by its statutory deadline of September 3D, 

20 I O. The agency has been working diligently to ensure that it has sufficient resources. 

human and otherwise. to meet this goal. We have taken steps to enhance the review 

process. including streamlining the application. reducing the number offonns. and 

moving from three volunteer expert reviewers per application to two paid expert 

reviewers per application. We continue to increase staffing levels and better utilize our 

contractor. Booz Allen Hamilton. to ensure that applications are reviewed in the most 

thorough and efficient manner possible. I am confident that we will achieve the goals 

established by Congress in the Recovery Act. 

2. In your February 24 remarks before the Media Institute you said that the 

government needs to stop its policy of leaving the Internet alone and instead 

start managing the "conversations" that go on there. This smacks of the 

Fairness Doctrine. You don't really mean to suggest that the government, 

rather than the marketplace of ideas and services, should be making sure 

everyone gets a turn to speak on the Internet, do you? 

Your question does not accurately rcflect my comments at the Media Institute. Neither in 

that speech nor anywhere else have I suggested the imposition of the Fairness Doctrine 

on Internet speech. 

3. It would seem as though an extra 15 days to ensure taxpayer dollars are not 

being wasted on overbuilding existing broadband would be a good idea. If 

anything, NTIA should become more generous and increase the window to 

challenge an application. Why has NTIA shortened the challenging window 

from 30 days in the first NOFA to 15 in the second? 

The provider comment process has been greatly simplified and streamlined for Round 

Two. In the First Round. incumbents had to await the online posting of maps showing 

the proposed service areas of each BTOP applicant and then, if it so chose. respond 

individually to cach proposed project. 

The Second Notice of Funds Availability (NOFA) explained that. in the interests of 

promoting transparency and strengthening the selection process, NTIA will post on its 

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\\ebsite WI\ IV .broadbandusa.Qo\ an announcement identifying the Census block groups 

or tracts that each Comprehensive Community Infrastructure (CO) applicant has 

proposed to serve. This announcement will allow existing broadband service providers to 

voluntarily submit information about the broadband services they currently offer in their 

respective service territories only once for each Census block group or tract rather than 

multiple times in response to each application. Notwithstanding this streamlined and 

simplified process. we have decided to extend the comment period from our original 15 

days to 25 days. 

4. During the first NOFA iuterested parties could use an electronic mapping 

tool to identify service al'eas to reduce duplicative networks. The second 

NOFA NTIA eliminated the mapping tool. Why? 

Many existing service providers expressed frustration over using the mapping tool, which 

required them to comment on each individual service area for each infrastructure 

applicant. Prior to issuing a Second NOF A, NTIA and RUS solicited public comment 

through a Request for Information. Several com mentel's, including a number of 

incumbent broadband providers, suggested that NTIA amend its service area comment 

process consistent with the process outlincd above, which is intended to streamline the 

process for applicants. existing service providers. and the agency. This process will 

provide a more uniform, transparent. and automated method of collecting service area 

information and analyzing it to determine the extent to which an area is unserved or 

underserved. 

5. What have you done to make sure grants go toward unserved areas before 

underserved areas? 

In the Recovery Act. Congress identified five purposes of BTOP. including the provision 

of new broadband access to unserved areas and the provision of improved broadband 

access to underserved areas. Congress did not prioritize one over the other. nor has 

NTIA. Underserved areas contain many unserved consumers and. in general. the projects 

we have funded include both unserved and underserved areas. 

6. What is NTIA doing to minimize and prevent overlapping of funds? Have 

YOIl done market analyses to make sure you arc being as efficient as possible? 

NT/A and RUS agree that in the interest of efficiency and using taxpayer dollars as 

wisely as possible, NT/A and the Department of Agriculture's Rural Utilities Service 

(RUS) should not fund Recovery Act broadband projects that substantially overlap or 

duplicate service in the same area. The agencies regularly coordinate to identify potential 

service area overlaps and work to resolve sllch conflicts in the manner that best satisfIes 

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the statutory objectives of both programs. We will continue to collaborate to avoid 

duplicative projects or substantial overlap in the Second Round. 

7. Leaving the ageney some time to evaluate applieations this spring, and time 

in August and September to finalize eontracts with grant recipients, NTIA is 

essentially in a position where it must announce awards at a rate of about 

one billion dollars a month. Is that feasible? You already missed your 

targeted funding level in the first round. Do you have sufficient time and 

staff to responsibly obligate these funds'? Are you contemplating asking 

Congress for an extension on the September 30th obligation deadline? 

Please see the answer to your Question 1 above. 

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The Honorable Lee Terrv 

1. When will the agencies complete announcing grants for round I? And what 

process should round 2 applicants follow to propose projects that otherwise 

would be prohibited by a round 1 grant in case the round 1 grant is not 

completed'! 

NTIA plans to award all Round One awards by the end of April. To date, the agency has 

awarded more than $1 billion for more than 70 grants to expand broadband inti'astructure, 

enhance public computer center capacity, and promote sustainable broadband adoption. 

NTIA plans to announce a small number of remaining grants before the end of April. To 

assist applicants preparing a Round Two application to determine where projects have 

been and/or may be awarded. NTlA posted a list of awarded and pending Round 1 BTOP 

Sustainable Broadband Adoption, Public Computer Center, Middle Mile Infrastructure, 

and Last Mile Infrastructure applications. It is not correct that a Round Two application 

could be prohibited by a Round One grant, except in a very rare case where the second 

application exactly duplicated the first round project. 

2. I understand that FairPoint Communication fiber network currently handles 

national and regional wireless traffic, national and regional ISP traffic, public 

entity traffic, regional MS traffic, and local WISP traffic. What is NTIA's 

definition of a "closed" netwol'k? 

The Recovery Act instructs NTIA to publish the nondiscrimination and network 

interconnection obligations that shall be contractual conditions ofBTOP grants, 

including. at a minimum, adherence to the principles contained in the Federal 

Communications Commission's (FCC) Internet Policy Statement of2005. In its January 

22.2010 Second Notice olFlllldl' A mi!abi!i!) , (NOFA). NTIA explained that. in addition. 

infrastructure applicants must: 

• not favor any lavdul Intcrnet applications and content over others; 

• display any network management policies in a prominent location on the service 

provider's web page and provide notice to customers of changes to these policies 

(awardees must describe any business practices or technical mechanisms they 

employ. other than standard best efforts Internet delivery, to allocate capacity; 

differentiate among applications, providers. or sources; limit usage: and manage 

illegal or harmful content): 

• connect to the public Internet directly or indirectly, such that the project is not an 

entirely private closed network: and 

• offer interconnection. where technically feasible without exceeding current or 

reasonably anticipated capacity limitations, at reasonable rates and terms to be 

negotiated with requesting parties. This includes both the ability to connect to the 

public Internet and physical interconnection for the exchange of traffic. 

All these requirements are subject to the needs of law enforcement and reasonable 

network management. Thus, awardees may employ generally accepted technical 

measures to provide acceptable service levcls to all customers. such as caching (including 

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content delivery networks) and application-neutral bandwidth allocation, as well as 

measures to address spam, denial of service attacks. illcgal content, and othcr harmful 

activities. In evaluating the reasonableness of network management techniques. NTIA 

will be guided by any applicable rules or findings established by the FCC. whether by 

rulemaking or adjudication. In addition to providing the required connection to the 

Internet, awardees may offer managed services. such as telemedicine, public safety 

communications, distance learning, and virtual private networks, that use private netw'ork 

connections for enhanced quality of service rather than traversing the public Internet. 

The open and nondiscriminatory projects funded by BTOP will enablc all other service 

providers to utilize the network to serve the community and lay the foundation for the 

ultimate provision of atTordable end-user broadband services in unserved and 

underserved communities. 

3, In round 2 NTIA is not allowing challengers to use the mapping tool to identifY 

applications that may compete with existing networks, Why was the decision 

made not to use the mapping tool for round 2? 

Many existing service providers expressed fhlstration over using the Round One mapping 

tool, which required them to comment on each individual service area for each 

infrastructure applicant. In an effort to streamline the process for applicants. existing 

service providers. and the agency. NTIA determined that it will post on its website 

}~~,bro,!dballdus!!,gQ~ an announcement identitying the Ccnsus block groups or tracts 

that each Comprehensive Community Infrastructure (CCI) applicant has proposed to 

serve. This announcement will allow existing broadband service providers to voluntarily 

submit information about the broadband services they currently offer in their respective 

service territories by Census block group or tract. Because the NOF A listed the type of 

information NTIA will request and the method by which it will be collected. providers 

could begin preparing this intormation well in advance of comment period established in 

the Second NOFA. In addition, unlike Round One, providers will only nced to provide 

this information once for a given Census block group or tract. as opposed to repcatedly 

submitting the same information for multiple applications. 

4. With respect to the Maine Three Ring Binder project can you identify how many 

challenges were filed in response to the project? Does NTIA contact identities 

that file challenges? Does NTIA have a field team similar to RUS that 

investigates challenges and verifies applications? 

The Three Ring Binder project identified lour unique service areas in its application. 

Each service area received public comment by at least one existing service provider. 

often the same service provider. In total, 9 existing service providers submitted 

comments on one or more of the service areas that comprise the Biddeford proposed 

funded service area, for a total of 19 comments. NTJA does not typically contact entities 

that file COllllllents on the proposed funded service areas ofBTOP applications. NTIA 

also does not have field representatives. NTIA reviewed information supplied by the 

applicants. existing service providers. maps of existing broadband services as available, 

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the comments of State and Tribal entities, and other information to evaluate the unserved 

or underserved status of the proposed funded service areas. As necessary, NTIA 

requested additional information from applicants to help intorm its decision-making 

process. NTIA has not funded infrastructure projects in areas where the information 

available demonstrated that a proposed service area is fully or adequately served. Our 

review process makes use of as much information as possible to ensure that BTOP 

supports broadband investment in areas with demonstrated need. 

5. With respect to the Maine Three Ring Binder I understand from the application 

filed that the Maine project did not at the time of filing their application have 

the authority and permits to operate in the state of Maine. How can a project 

that does not have the proper permits be "shovel ready" and how does the NTIA 

determine if a project can move beyond the due diligence phase if at the time of 

awarding the grant the applicant still has not received the proper pel'mits to 

operate in the state of Maine? 

NTJA seeks to fund projects that can commence as quickly as possible consistent with 

relevant laws in order to maximize the stimulative effect on the economy and job 

creation. BTOP infrastructure projects are often fairly complex and must frequently meet 

a number of requirements before construetion can start. These may include complying 

with environmental and historic preservation requirements, soliciting bids for contracts 

from vendors. and obtaining licenses and permits, such as construction permits. wireless 

service licenses, fire and safety permits. and more. NTIA does not require applicants to 

have every license or permit in place before making an award. Indeed. in some cases, 

the applicant may be legally or practically precluded from seeking a particular license 

until after the BTOP grant is awarded. Further. this approach avoids deterring potential 

applicants with worthy projects from applying because of the high cost of acquiring 

licenses and permits prior to filing. 

NTIA does require each BTOP applicant to identify in its application all licenses. 

regulatory approvals. and agreements that will be required to provide the proposed 

services. In reviewing the proposed project. we consider the extent to which licensing 

requirements \~ill delay or present risk to the project. We will not fund projects where it 

appears unlikely that the applicant will acquire the necessary permits and licenses on a 

timely basis. Further, the acquisition of such permits and licenses becomes a condition of 

the grant; following the grant award, NTIA will monitor its grant recipients' progress in 

satisfYing such conditions and achieving all of their project milestones to ensure that the 

American public may enjoy the benefits of BTOP investments as quickly as possible. 

### 

• Enclosure: Remarks of Assistant Secretary for Communications and Information 

Lawrence E. Strickling at the Media Institute. Washington. DC 

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The Internet: Evolving Responsibility for Preserving a First Amendment Miracle 

Remarks of Lawrence E. Strickling, 

Assistant Secretary of Commerce for Communications and Information 

-As Prepared for DeliveryThe Media Institute 

February 24, 2010 

It is a pleasure to be here with you at the Media Institute. As most of you know, at NTIA 

we have been almost totally consumed with reviewing and awarding broadband grants 

under the Recovery Act. As of today, we've announced over $620 million in awards and 

we'll be continuing to make awards as quickly as we can as we close out the first funding 

round. We're already accepting applications for round two, and for those of you working 

on applications. we have a finn deadline of March 15th for all applications to be 

submitted and we will not extend that date given our statutory obligation to complete all 

awards by the end ofSeptemb<:r. 

But that's not what I came here to talk about today. Instead, I'd like to focus on the 

Internet and some key policy questions that NTIA will be working on this year. 

The United States, and indeed all nations that depend on the Internet. face an increasingly 

urgent set of questions regarding the roles of the commercial sector, civil society, 

governments. and multi-stakeholder institutions in the very dynamic evolution of the 

Internet. I can think of no more appropriate place to discuss these issues than the Media 

Institute. given the vital role the Internet plays in advancing our Nation's First 

Amendment values, and the Institute's long tradition as a forum for exploring the nexus 

between the First Amendment and communications policy. 

From the very iirst encounter between our Constitution and the Internet, courts have 

recognized the Internet as an unprecedented gift to the First Amendment. When the 

Supreme Court first considered the relationship between the Internet and freedom of 

speech, the Court recognized the Internet as a "never ending world-wide conversation." 

(ACLUv. Reno. 521 Us. 8-1-1 (]997).) Since then. the conversation has only grown, but 

as we become more economically, socially. politically-and even emotionallydependent on the Internet, we must continue to examine how best to assure that this 

conversation can continue. can engage more and more people. and can be a platform for 

innovation in both public and private sectors of societies around the world. 

The wide reach and central role that the Internet plays in our society has prompted many 

to refer to the Internet as an 'ecosystem.' I'd like to spend a little time examining just 

whether the ecosystem metaphor is a useful guide for policy makers. What lessons can 

we draw from this metaphor and which lessons should we avoid? 

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In the physieal \\orld, I assoeiate the dynamics of a natural ecosystem with two important 

eoncepts: first, the presence of some set of biological laws such as natural selection, that 

second, leads to a balance or equilibrium state so that even when there is a disturbance 

these natural operations and laws bring the ecosystem back to a equilibrium state (maybe 

different than before, but an equilibrium). 

Applying this concept to the online ecosystem could lead us to accept the idea that the 

Internet is self-regulating and there is some natural order that will always emerge no 

matter how the system may be disturbed. From this concept some argue that 

policymakers should just leave the Internet alone. 

In fact, "leaving the Internet alone" has been the nation's Internet policy since the 

Internet was first commercialized in the mid-1990s. The primary government imperative 

then was just to get out of the way to encourage its growth. And the policy set forth in 

the Telecommunications Act of 1996 was: "to preserve the vibrant and competitive fl'ee 

market that presently exists for the Internet and other interactiYe computer services, 

unfettered by Federal or State regulation." 

This was the right policy for the United States in the early stages of the Internet. and the 

right message to send to the rest of the world. But that was then and this is now. 

As we at NTIA approach a wide range of Internet policy issues, we take the view that we 

are now in the third generation of(nternet policy making. Here's how history looks to us. 

l. Internet Folic}' i.O: transition to commercialization (1990-2000): In the 1990s, 

let's call this period, Internet Policy 1.0, when the tirst commereiallnternet service 

providers began providing commercial service and the World Wide Web was created, 

oppoliunities for innovation and investment "at the edges" of the network and in the last 

mile were drivers of growth. Innovation "at the edges" meant the development of 

exciting and novel applications that were often, literally. conceived in a garage. The 

guiding philosophy was: the more the better. The government imperative \vas to seek 

unrestrained growth of the Internet. It not only worked, but some of those very 

innovations continue to facilitate the Internet's vitality and growth. 

7 internel Policy 2.0:.f;·ol11lhe garage 10 Main Street (2001-2009): At1er the turn of 

the century and for the last decade, the Internet experienced tremendous economie 

growth and social innovation. We call this period. Internet Policy 2.0. By one estimate, 

half the number of U.S. homes had Internet access within ten years after 

commercialization. and NTIA estimates that today, about 70 pereent of U.S. households 

have Internet access. Despite this growth, policy issues emerged during this era which 

have not been effectively addressed: 

Privacy: During this past decade, more and more personal data was being 

collected leading to a growing unease with the 'notice & choice' model. How 

many orus really read those privacy policies or just click away at the "Yes, I 

agree ... " in order to get on with what you want to buy, read or post? 

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Security: Individual users and large enterprises found that they were required to 

devote more time and money to addressing security threats. 

• Copyright infringement: Over the last ten years, we've seen great innovation in 

the development of new business models, such as iTunes, but at the same time, 

we've also seen a surge in the piracy ofintellectual property, and the negative 

impacts this disregard for copyright law has had on traditional content industries. 

3. Internel Poli(~v 3.0: It's now time to respond to all the social changes being driven 

by the growth of the Internet. We need Internet Policy 3.0. We enter this new decade 

recognizing that we rely on the Internet tor essential social purposes: health, energy 

efficiency, and education. It's also a general engine for economic and social innovation. 

We must take rules more seriously if we want full participation, but we must keep the 

need for flexibility in mind. 

We have much higher expectations of the Internet today than we've had in the 

intervening years. The Internet and particularly broadband Internet, are the central 

nervous system of our information economy and society, and can provide unprecedented 

opportunities to address our current challenges in health care, energy efticiency. 

education. and government openness. 

It is important not only to preserve, but to enhance aeeess to this open and dynamic 

medium that fosters unprecedented innovation and public par1ieipation. Going back to the 

'ecosystem' metaphor, the lnkrnet is not a natural park or wilderness area that should be 

left to nature. In fact I don't think any of you in this room really believe that we should 

"leave the Internet alone." 

It's more accurate to describe the Internet is an ~ggloll1eration of human actors-it's a 

large and growing social organization. There are no natural laws to guide it-and there is 

most certainly no self·regulating equilibrium point because this cacophony of human 

actors participating in this organization demands that there be rules or laws created to 

protect our interests. That's human nature. For example: 

If you're a user, you want to know that you can make a transaction online without 

your credit card information falling into the wrong hands. 

If you're a content owner, you want to be allowed take action against users that 

infringe your copyright. 

• If you are a small backbone provider, yOli want rules to govern peering 

relationships with large providers. 

If you're a large enterprise, you want your investment to protect against hacking 

and intrusion to be sound. 

If you are a network owner, you may be against Net Neutrality rules, but that does 

not mean there are not any rules, it just means the network owners get to create 

their own rules about whether and when to discriminate. 

Despite the tremendous economic growth and social innovation that has occurred online 

over the past decade, policy tensions slIch as these have arisen and have not been 

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effectively addressed. Given all the human actors involved in the Internet with all their 

competing interests. we have to ask. do governments have to be involved to sort out these 

interests so that the Internet will continue to thrive? 

I say ycs but just as emphatically. I say that the government's role need not bc one ofa 

heavy-handed regulator. There's little question that our existing regulatory structures are 

poorly equipped to deal with these issues. They are too slow, they are too backward 

looking, and they are too political to be effective. 

But it concerns me that in the absence of some level of government involvement we will 

lose the one thing that the Internet must havc-notjust to thrive, but to survive-the trust 

of all actors on the Internet. 

If users do not trust that their credit card numbers and private information are safe 

on the Internet, they won't use it. 

If content providcrs do not trust that their content will be protected. they will 

threaten to stop putting it online. 

If large enterprises don't have contldence that their network will not be breached 

over the Internet. they will disconnect their network and limit access to business 

partners and customers. 

Iffixeign governments do not trust the Internet governance systems. they will 

threatcn to balkanize the Domain Namc Systcm which will jeopardize the 

worldwide reach of the Internet. 

Those are just some examples but I think this issue of trust applics to every actor on the 

Internet. 

A good place for policymakers to start as we define our role and what our actions should 

be is to preservc and maintain trust in the Internet. (Interestingly it's easier for 

government agencies to organize to prevent bad actions rather than nurture good ones. So 

we have the DOJ Antitrust Division bm \\e do nol have an agency that is ror trust). 

At NTIA, we're not a regulatory agency, but as the principal advisor to the President on 

telecommunications and information policy. I think we have role to play in preserving 

and building trust on the Internet. 

Our agenda this year is to refocus on the "1" in NTIA - Internet and intormation policyand play the role of preserving and building trust and to balance out the policy tensions I 

mentioned earlier. 

Let me list for you our initiatives lor the year: 

Privacy policy. Here's the question: How can we enable the development of 

innovative new services and applications that will make intensive use of personal 

information but at same time protect users against harm and unwanted intrusion 

into their privacy? We are launching a series of listening sessions this spring with 

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industry, advocates and academics in the field, and will follow up with a notice of 

inquiry and public outreach events. 

Child protection and Freedom of Expression: As more children go online. how do 

we ensure proper targeting of law enforcement resources against serious crime 

while remembering that most important line of defense against harmful content is 

the \\ell- informed and engaged parent or teacher? Later this year, the Online 

Safety Technology Working Group, created by Congress and convened by NTlA, 

will issue a report on the state of the art in child protection strategies online. 

• Cybersecurity: How do we meet the security challenge posed by the global 

Internet which will require increased law enforcement and private sector 

technology innovation yet respect citizen privacy and protect civil liberties. We're 

participating in a Commerce Department cybersecurity initiative that will address 

these issues, particularly as they relate to improving the preparedness of industry 

for cyber attacks. 

Copyright protection: How do we protect against illegal piracy of copyrighted 

works and intellectual property on the Internet while preserving the rights of users 

to access lawful content? NTIA and our sister agency at the Department of 

Commerce. the US Patent and Trademark Office, are beginning a comprehensive 

consultation process that will help the Administration develop a forward-looking 

set of policies to address online copyright infringement in a balanced. Internetsavvy manner. 

Internet Governance: In our role administering the Fedcral government's 

relationship with the Internet Corporation for Assigned Names and Numbers 

(JCANN). how do we ensure that ICANN serves the public interest and conducts 

its activities with the openness and transparency that the global Internet 

community demands? Last fall, NTIA and ICANN set forth a framework for 

technical coordination of the naming and numbering system and I am looking 

forward to soon participating in the first of the administrative reviews to ensure 

that these commitments are carried out in full. 

All of these effolis must involve collaboration among government agencies, foreign 

governments when appropriate. and key Internet constituencies-commercial, academia, 

civi I soc iety. 

Our approach to answering these questions will be to engage the key constituencies and 

serve as a convener. NTIA is looking for solutions to these issues through consultations 

to advance the ball forward. 

We will be flexible in terms of outcomes the solutions that emerge through our 

consultations may be recommendations for legislation or regulation, but if they result in 

individual actors accepting new processes. so much the better. 

At the end of the day. all of these initiatives have as their goal to preserve and protect the 

trustworthiness of this extraordinary medium. 

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Ifwe are successful, maybe we will change our name to the National Trust the Internet 

Administration. 

Thank you. 

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The Honorable Jonathan S. Adelstein 

Administrator 

Rural Utilities Service 

U.S. Dcn,m'ln,cnt 

Room 

1400 Independence Ave, SW 

Washington, DC 20250 

Dear Mr. Adelstein: 

March 25, 2010 

'Thank you for appearing belore the Subcommittee on Communicati<lns. Technology, and 

the Internet on Mareh 4, 20 I 0, at the hearing entitled "Oversight of the American Recovery and 

Reinvestment Act: Broadband, Part 3." 

Putsnillli to the Committee's Rules, attached are written questions lor the record directed 

to you from certain Members oflhe Committee. 1n preparing your answers, please address your 

response to the Member who submitted the questions. 

Please provide your responses by April 12, 20 I 0, to Earley Green, Chief Clerk via e-mail 

: ~~~~·~w1ill.llil1!!iQ,g(lY. Please contact Earley Green or Jennifer Berenholz at (202) 

Sincerely, 

Attachment 
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Oversight of the American Recovery and Reinvestment Act: Broadband, Part 3 

Subcommittee on Communications, Technology, and the Internet 

March 4,2010 

Questions for the Record 

The Honorable Cliff Stearns 

1. How many more jobs and how many more broadband subscribers should we be getting 

for the S7.2 billion in taxpayer money these programs are costing? Should it cost us SI,OOO 

dollars for each job and subscriber created? SlO,OOO? $100,000? Do you have performance 

measures in place to evaluate how many jobs and subscribers per dollar we would get from 

each proposed project, and whether the approved applications end up fulfilling those 

goals? Are you conducting a rigorous cost-benefit analysis as you consider applications? If 

so, how do you perform that analysis? The stimulus bill was supposed to be about "jobs, 

jobs, jobs." As you examined specific applications for funding, what analysis did you 

conduct regarding how many jobs they would produce'! 

Response: Job creation is a key objective for the Broadband Initiatives Program (BlP). There 

are many factors that will be used to evaluate its success. These measurements will include both 

short-term job creation in building these networks. as well as the long-term effect on jobs 

through the economic development made possible by the network improvements. Rural Utilities 

Service (RUS) is planning to utilize and track thc number of jobs that the applicant proposed to 

create which were validated for reasonableness during our evaluation process .. Our wcbsites, 

\\ \\\\'.broadbandusa.gov, and \\w\\ .recmcrv.gov layout the performance measures for BIP and 

will track the success of these projects. RUS is in the process of finalizing the BlP performance 

measures and targets with OMB. In the second NOFA, RUS limits Federal assistance for 

broadband deployment to a target of not more than $10.000 per premise passed. Recognizing the 

rural areas are often more costly to servc, the NOFA contains a waiver process if the cost per 

premises must exceed the target .. The NOFA includes the specific circumstances and reasons 

under which the Administrator may consider granting a waiver of this requirement. 

In order to maximize short-term and long-term job creation. RUS performs extensive financial 

and technical reviews to ensure all projects it funds are sustainable so they will continue to serve 

their rural communities for years to come. In order (0 target resources where they are needed 

most, the second NOFA permits higher grant levels to areas with high unemployment and low 

median household income. 

2. When carriers allege that an application is seeking funding for an area they already 

serve, what independent due diligence are you doing to investigate the claim? How do you 

ensure that the proposal meets the unserved and underserved requirements other than just 

relying on information from the applicant'! 
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Answer: Under BIP. RUS has established an objective scoring process which gives priority to 

incent applicants to bring the most robust service to the most rural and unserved areas. RUS 

evaluates the information submitted hy the applicant to demonstrate the need for broadband 

service. To validate this information. RUS posts all proposed service territory maps on 

~~\\\ . broadballflusa. gov and allows incumbent providers to comment on whether these areas are 

unserved or underserved through Public Notice Responses (PNRs) received during a 30-day 

comment period. RUS weighs these comments. along with state broadband maps and any other 

data available. In the final analysis. we depend heavily on Field Staff we assign from both RUS 

and other Rural Development staff to be our ""boots on the ground" to validate the information 

when necessary. 

3. We've heard that a Kansas company that received the largest RUS award yet will 

use that money to compete with Eagle Communications in Hays rather than serve 

any surrounding unserved areas. Eagle is a small employee-owned company that 

already provides up to 100 megabit per second broadband service there. The 

Connect Kausas broadbaud map shows the presence not just of Eagle but of other 

providers, and that the vast majority of Hays is already served. Is this sound use 

of the taxpayer dollars you have been entrusted with? What is the recourse of 

Eagle, which has invested millions of dollars in private capital, to appeal? 

Response: All BIP awards. including the one you referred to for Rural Telephone Service Co .• 

Jnc .• were made to entities that met the eligibility requirements or the NOFA and the standards 

set by Congress in the Recovery Act. Eagle Communications chose not to apply for the BJP 

program to serve unserved customers outside the city limits of Hays. Kansas. Rural Telephone 

submitted an all-encompassing application that will close the digital divide between Hays and 

the outlying rural arcas that currently lack service. and lor that reason won the award. 

All applicants needed to supply ini()fmation on how they determined that their proposed service 

territory met the requirements of the NOFA. RUS also provided incumbent service providers 

such as Eagle the opportunity to provide comments on whether an applicant's proposed service 

territory is unserved or underserved through submission of documentation. In cases like this 

where the documentation was inconsistent. RUS deployed RUS and other Rural Development 

field staff to provide ""boots on the ground" in these areas to make a tinal determination. The 

Agency evaluated the information submitted by the applicant and dc)cumcntation provided by 

incumbent service providers, including meeting directly with Eagle. and made a final 

determination or whether the applicant met the requirements oftbc NOFA. There is no appeal 

process included in the NOFA. In the case at hand. all pertinent information was carefully and 

properly evaluated and the award was made accordingly. consistent with the NOF A. 

In this case. the BIP awardee will provide broadband service to thousands of unserved and 

underserved premises outside the Hays. Kansas area. The applicant chose to include the city of 

Hays ill its proposed service territory so that the entire service area was offered service rather 

than to arbitrarily exclude a single community. Hays accounts for a tiny fraction of the 4.600 

square mile service area the applicant proposed to serve. Hays. Kansas. constitutes less than I 

percent of the BIP awardee's service territory. and the vast m<ljority of BIP award funds will be 

lIsed to provide service in the expansive rural areas outside of Hays. 
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The Honorable Lee Terry 

When will the agencies complete annonncing grants for round I? And what process should 

round 2 applicants follow to propose projects that otherwise would be prohibited by a 

round 1 grant in case the round 1 grant is lIot completed? 

Response: As of March 31, 20 I 0, the RUS had completed all funding awards under NOFA I 

and notified all non-awardecs \\hy their application could not be funded under the NOF A. RUS 

awarded $1.067 billion lor 68 broadband projects under NOFA I reaching more than 529,000 

households and 96,000 rural business and anchor institutions across 31 states, one territory and 

include 17 Tribal Land areas in ruralunservcd and underserved comlllunities. 

As indicated in our NOFA the proposed service territories of last miic projects areas awarded 

under NO FA I may not receive another award under NOF A 2. These service territories maps 

were posted on \\ww.broadbandusa.[(ov Illore than a month belore the NOFA 2 application window 

closed to ensure that all applicants were clearly a\\are of these areas. The Agency may also reject 

any application under NOFA 2 that proposes to serve an area funded under NO FA I. 

The Honorable Marsha Blackburn 

What is RUS doing to minimize and prevent overlapping of funds? Have you done market 

analyses to make sure you are being as efficient as possible? 

Response: Under BIP. RUS has established an objective scoring process which incents 

applicants to bring the most robust service to the most rural and unserved areas. In fact, RUS 

gives priority to unserved and highly rural areas. All applicants must supply maps of their 

proposed service territories. Shortly after the closing ofNOF A 2. RUS will post all proposed 

service territory maps on www.broadbandusa.gov. RUS will then allow incumbent service 

providers the opportunity to comment on whether these areas meet the requircments of the 

NOFA through Public Notice Responses received during a 30-day comment period. RUS will 

rely upon thcse comments. state broadband maps (where available). and both RUS and Rural 

Development Field Sluff to validate the information when necessary. The Agenc) will evaluate 

the information submitted by the applicant and documentation provided by the public and 

incumbent service providers and make a tinal determination ofwhcther the applicant met the 

requirements of the NOFA. 

o